Provisional Remedies Cases - Rule 57 PDF

PROVISIONAL REMEDIES
Rule 57: Preliminary Attachment

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Section 3 ................................................................................................... 94
Section 1 ...................................................................................................... 4
KO Glass v. Valenzuela, 116 S 563 (See under Section 1 page 9) ...................... 94
Calo v. Roldan, 76 Phil. 445 ................................................................................. 4
Guzman v. Catolico, 65 Phil. 261 ........................................................................ 94
KO Glass v. Valenzuela, 116 S 563 ........................................................................ 9
Jardine Manila Finance v. CA, 171 S 636 ............................................................ 97
General v. De Venecia, 78 Phil. 780, July 30, 1947 ............................................. 14
Ting v. Villarin, 176 S 532 ................................................................................... 102
Miailhe v. De Lencquesaing, 142 S 694 ............................................................... 16
Cu Unjieng v. Goddard, 58 Phil. 482 ................................................................. 106
Insular Savings Bank v. CA, 460 S 122 ................................................................ 19
Carlos v. Sandoval, 471 S 266 ............................................................................. 112
Tan v. Zandueta, 61 Phil. 526 .............................................................................. 23
Salgado v. CA, March 26, 1984, 128 SCRA 395 (Case Not Found!) ................. 127
Walter Olsen v. Olsen, 48 Phil. 238 .................................................................... 25
PCIB v. Alejandro, September 21, 2007 (See under Section 1, page 60) .......... 127
Santos v. Bernabe, 54 Phil. 19 ..............................................................................27
Republic v. Flores, July 12, 2007 ......................................................................... 127
State Investment House v. CA, 163 S 799 .......................................................... 29
Aboitiz v. Cotabato Bus, 105 S 88 ....................................................................... 32 Section 4 ................................................................................................... 131
People's Bank & Trust Co. v. Syvel, 164 S 247 .................................................... 35 Arellano v. Flojo, 238 S 72 ................................................................................... 131
Adlawan v. Torres, 233 S 645 .............................................................................. 39 Calderon v. IAC, 155 S 531 .................................................................................. 134
Claude Neon Lights v. Phil Advertising, 57 Phil. 607 (Case not Found) ......... 45
Section 5 .................................................................................................. 139
State Investment House v. Citibank, 203 S 9 .................................................... 46
Gotauco v. ROD, 59 Phil 756............................................................................. 139
Mabanag v. Gallemore, 81 Phil. 254 .................................................................... 53
nd
Onate v. Abrogar (2 Division), 230 S 181/131 .................................................. 140
Philippine Bank of Communications v. CA, February 23, 2001 ........................ 56
Onate v. Abrogar (En Banc), 240/241 S 659 ..................................................... 144
PCIB v. Alejandro, September 21, 2007 .............................................................. 60
HB Zachary v. CA, 232 S 329 ............................................................................. 149
Wee v. Tankiansee, February 13, 2008 ............................................................... 68
Metro, Inc. v. Lara’s Gift & Decor, November 27, 2009.....................................72 Section 6 .................................................................................................. 159
Section 2 ................................................................................................... 76 Roque v. CA, 93 S 540 ........................................................................................ 159
Sievert v. CA, 168 S 692 ....................................................................................... 76 Section 7 .................................................................................................. 164

Davao Light v. CA, 204 S 343 ............................................................................. 79 Siari Valley Estates v. Lucasan, 109 Phil. 294 .................................................. 164
Cuartero v. CA, 212 S 260 .................................................................................... 85 Ravanera v. Imperial, 93 S 589 .......................................................................... 167
Salas v. Adil, 90 S 121 ........................................................................................... 89 Obana v. CA, 172 S 866 ...................................................................................... 175
La Granja v. Samson, 58 Phil. 378 ..................................................................... 92 Du v. Stronghold Insurance, 433 S 43 ................................................................ 181
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Valdevieso v. Damalerio, 451 S 664................................................................... 186 Section 12 ................................................................................................. 297

Walker v. McMicking, 14 Phil. 668 ................................................................... 189
The Manila Remnant v. CA, 231 S 281 (See under Section 8 page 257) .......... 297
NBI v. Tuliao, March 24, 1997 ........................................................................... 193
Insular Savings Bank v. CA, June 15, 2005 (See under Section 1 page 19) ...... 297
Villanueva-Fabella v. Judge Ralph Lee, 419 S 440 ............................................ 197
KO Glass v. Valenzuela, 116 S 563 (See under Section 1 page 9) .................... 297
Sebastian v. Valino, 224 S 256 ...........................................................................203
Calderon v. IAC, 155 S 531 (See under Section 4 page 134) .............................. 297
Villareal v. Rarama, 247 S 493 ......................................................................... 206
Security Pacific Assurance Corp. v. Tria-Infante, 468 S 526 ......................... 298
Balantes v. Ocampo III, 242 S 327 ..................................................................... 210
Elipe v. Fabre, 241 S 249 ..................................................................................... 212 Section 13 ................................................................................................ 304
Roque v. CA, 93 S 540 (See under Section 6) .................................................... 215 Jopillo, Jr. v. CA, 167 S 247 ................................................................................ 304
Summit Trading v. Avendano, 135 S 397 ........................................................... 215 Mindanao Savings Loan v. CA, 172 S 480 ........................................................ 308
Chemphil Export and Import v. CA, 251 S 286 ................................................. 217 Benitez v. IAC, 154 S 41 ...................................................................................... 314
Tayabas Land v. Sharruf, 41 Phil. 382 ............................................................... 235 Davao Light v. CA, 204 S 343 (See under Section 2 page 79) .......................... 317
Gotauco v. ROD, 59 Phil. 756 (See under Section 5 page 139) ........................239 Cuartero v. CA, 212 S 260 (See under Section 2 page 85) ................................. 317
Rural Bank of Sta. Barbara v. Manila Mission, August 19, 2009 ....................239 Uy Kimpang v. Javier, 65 Phil 170 (1937) ........................................................... 318
Section 8 ................................................................................................. 245 Filinvest Credit v. Relova, 117 S 420 ................................................................... 323
Miranda v. CA, 178 S 702 ...................................................................................329
Engineering Construction v. NPC, 163 S 9 .......................................................245
Adlawan v. Torres, 233 S 645 (see under Section 1 page 39) ............................ 331
RCBC v. Judge Castro, 168 S 49 .........................................................................250
Peroxide Philippines Corp. v. CA, 199 S 882 ..................................................... 332
The Manila Remnant v. CA, 231 S 281 ............................................................... 257
Chemphil Export and Import v. CA, 251 S 286 (See under Section 7 page 217) Section 14 ................................................................................................. 339
............................................................................................................................262
Uy v. CA, 191 S ....................................................................................................339
Abinujar v. CA, April 18, 1995 ............................................................................262
Manila Herald Publishing v. Ramos, 88 Phil. 94 .............................................345
National Bank v. Olutanga, 54 Phil. 346 ......................................................... 266
Traders Royal Bank v. IAC, 133 S 141 ................................................................ 349
Perla Compania de Seguros v. Ramolete, 203 S 487 ....................................... 270
Ching v. CA, 423 S 356 ....................................................................................... 353
Tec Bi and co. v. Chartered Bank of India, 41 Phil.596 ....................................274
Section 15 ................................................................................................ 360
Consolidated Bank and Trust Corporation v. IAC, 150 S 591 .......................... 281
BF Homes v. CA, 190 S 262 ............................................................................... 286 Tayabas Land v. Sharruf, 41 Phil. 382 (See under Section 7 page 235) .......... 360
Republic v. Saludares, 327 S 449 .......................................................................292 Bilag-Rivera v. Flora, July 6, 1995 ..................................................................... 360
PNB v. Vasquez, 71 Phil. 433 ..............................................................................365
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PAL v. CA, 181 S 557........................................................................................... 367 Sps Yu v. Ngo Yet Te, February 6, 2007 ........................................................... 496
Section 17 .................................................................................................385
Luzon Steel v. Sia, 28 S 58 .................................................................................385

Phil. British Assurance Co. v. IAC, 150 S 520 .................................................. 389
The Imperial Insurance v. de los Angeles, 111 S 25 ...........................................393
Vadil v. de Venecia, 9 S 374 .............................................................................. 399
Zaragoza v. Fidelino, 163 S 443 ........................................................................ 402
Dizon v. Valdez, 23 S 200 ................................................................................. 406
Pioneer Insurance v. Camilon, 116 S 190 .......................................................... 408
UPPC v. Acropolis, January 25, 2012 ................................................................. 410
Section 20 ................................................................................................416
Calderon v. IAC, 155 S 531 (See under Section 4 page 134) ............................... 416
Pioneer Insurance and Surety Corp. v. Hontanosas, 78 S 447 ........................ 416
Stronghold Insurance v. CA, November 6, 1989 ............................................. 428
Carlos v. Sandoval, 471 S 266 (See under Section 3 page 112) ..........................432
Maningo v. IAC, 183 S 691.................................................................................. 433
Santos v. CA, 95 Phil. 360................................................................................. 439
Aquino v. Socorro, 35 S 373 .............................................................................. 442
Hanil Development v. IAC, 144 S 557 ............................................................... 445
BA Finance v. CA, 161 S 608 ............................................................................... 451
Malayan Insurance v. Salas, 90 S 252 .............................................................. 456
Philippine Charter Insurance v. CA, 179 S 468................................................ 464
Zaragoza v. Fidelino, 163 S 443 (See under Section 17 page 402) ................... 469
Zenith Insurance v. CA, 119 S 485 .................................................................... 469
Lazatin v. Twano, 2 S 842 ..................................................................................473
MC Engineering v. CA, 380 S 116 ...................................................................... 477
DM Wenceslao v. Readycon Trading & Const. Corp., 433 S 251 ..................... 491
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3. That parcel No. (a) described above is now an unplanted rice land
Section 1 and parcel No. (b) described in the complaint is a coconut land, both
under the possession of the plaintiffs..
Calo v. Roldan, 76 Phil. 445
4. That the defendants, without any legal right whatsoever and in
G.R. No. L-252 March 30, 1946 connivance with each other, through the use of force, stealth, threats
and intimidation, intend or are intending to enter and work or harvest
TRANQUILINO CALO and DOROTEO SAN JOSE, petitioners, whatever existing fruits may now be found in the lands above-
vs. mentioned in violation of plaintiff's in this case ineffectual..
ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO
RELOVA and TEODULA BARTOLOME,respondents. 5. That unless defendants are barred, restrained, enjoined, and
prohibited from entering or harvesting the lands or working therein
Zosimo D. Tanalega for petitioners. through ex-parte injunction, the plaintiffs will suffer injustice,
Estanislao A. Fernandez for respondents Relova and Bartolome. damages and irreparable injury to their great prejudice..
No appearance for respondent Judge.
6. That the plaintiffs are offering a bond in their application for ex-
FERIA, J.: parte injunction in the amount of P2,000, subject to the approval of
this Hon. Court, which bond is attached hereto marked as Annex A
This is a petition for writ of certiorari against the respondent Judge Arsenio C. and made an integral part of this complaint..
Roldan of the Court First Instance of Laguna, on the ground that the latter has
exceeded his jurisdiction or acted with grave abuse of discretion in appointing 7. That on or about June 26, 1945, the defendants, through force,
a receiver of certain lands and their fruits which, according to the complainant destroyed and took away the madre-cacao fencer, and barbed wires
filed by the other respondents, as plaintiffs, against petitioners, as defendants, built on the northwestern portion of the land designated as parcel No.
in case No. 7951, were in the actual possession of and belong to said plaintiffs. (b) of this complaint to the damage and prejudice of the plaintiffs in
the amount of at least P200..
The complaint filed by plaintiffs and respondents against defendants and
petitioners in the Court of First Instance of Laguna reads as follows: Wherefore, it is respectfully prayed:.
1. That the plaintiffs and the defendants are all of legal age, Filipino (a) That the accompanying bond in the amount of P2,000 be
citizens, and residents of Pila, Laguna; the plaintiffs are husband and approved;
wife..
(b) That a writ of preliminary injunction be issued ex-
2. That the plaintiff spouses are the owners and the possessors of the parte immediately restraining, enjoining and prohibiting the
following described parcels of land, to wit:. defendants, their agents, servants, representatives, attorneys, and, (or)
other persons acting for and in their behalf, from entering in,
xxx xxx xxx interfering with and/or in any wise taking any participation in the
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harvest of the lands belonging to the plaintiffs; or in any wise working the properties described in the complaint, on the ground that (a) the plaintiffs
the lands above-described; have an interest in the properties in question, and the fruits thereof were in
danger of being lost unless a receiver was appointed; and that (b) the
(c) That judgment be rendered, after due hearing, declaring the appointment of a receiver was the most convenient and feasible means of
preliminary injunction final;. preserving, administering and or disposing of the properties in litigation which
included their fruits. Respondents Judge Roldan, on the same date, December
(d) That the defendants be condemned jointly and severally to pay the 17, 1945, decided that the court would consider the motion for reconsideration
plaintiffs the sum of P200 as damages; and. in due time, and granted the petition for appointment of and appointed a
receiver in the case.
(e) That plaintiffs be given such other and further relief just and
equitable with costs of suit to the defendants. The question to be determined in the present special civil action
of certiorari is, whether or not the respondent judge acted in excess of his
The defendants filed an opposition dated August 8, 1945, to the issuance of the jurisdiction or with grave abuse of discretion in issuing the order appointing a
writ of preliminary injunction prayed for in the above-quoted complaint, on receiver in the case No. 7951 of the Court of First Instance of Laguna; for it is
the ground that they are owners of the lands and have been in actual evident that there is no appeal or any other plain, speedy, and adequate
possession thereof since the year 1925; and their answer to the complaint filed remedy in the ordinary course of the law against the said order, which is an
on August 14, 1945, they reiterate that they are the owners and were then in incidental or interlocutory one.
actual possession of said property, and that the plaintiffs have never been in
possession thereof. It is a truism in legal procedure that what determines the nature of an action
filed in the courts are the facts alleged in the complaint as constituting the
The hearing of the petition for preliminary injunction was held on August 9, cause of the action. The facts averred as a defense in the defendant's answer do
1945, at which evidence was introduced by both parties. After the hearing, not and can not determine or change the nature of the plaintiff's action. The
Judge Rilloraza, then presiding over the Court of First Instance of Laguna, theory adopted by the plaintiff in his complaint is one thing, and that of the
denied the petition on the ground that the defendants were in actual defendant in his answer is another. The plaintiff has to establish or prove his
possession of said lands. A motion for reconsideration was filed by plaintiffs on theory or cause of action in order to obtain the remedy he prays for; and the
August 20, 1945, but said motion had not yet, up to the hearing of the present defendant his theory, if necessary, in order to defeat the claim or action of the
case, been decided either by Judge Rilloraza, who was assigned to another plaintiff..
court, or by the respondent judge.
According to the complaint filed in the said case No. 7951, the plaintiff's action
The plaintiffs (respondents) filed on September 4, 1945, a reply to defendants' is one of ordinary injunction, for the plaintiffs allege that they are the owners
answer in which, among others, they reiterate their allegation in the complaint of the lands therein described, and were in actual possession thereof, and that
that they are possessors in good faith of the properties in question. "the defendants without any legal right whatever and in connivance with each
other, through the use of force, stealth, threat and intimidation, intend or are
And on December 17, plaintiffs filed an urgent petition ex-parte praying that intending to enter and work or harvest whatever existing fruits may be found
plaintiffs' motion for reconsideration of the order denying their petition for in the lands above mentioned in violation of plaintiffs' proprietary rights
preliminary injunction be granted and or for the appointment of a receiver of thereto;" and prays "that the defendants, their agents, servants,
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representatives, and other persons acting for or in their behalf, be restrained, their fruits, the action of injunction filed by them is the proper and adequate
enjoined and prohibited from entering in, interfering with, or in any way remedy in law, for a judgment in favor of plaintiffs would quiet their title to
taking any participation in the harvest of the lands above describe belonging said lands..
to the plaintiffs."
The provisional remedies denominated attachment, preliminary injunction,
That this is the nature of plaintiffs' action corroborated by the fact that they receivership, and delivery of personal property, provided in Rules 59, 60, 61,
petitioned in the same complaint for a preliminary prohibitory injunction, and 62 of the Rules of Court, respectively, are remedies to which parties
which was denied by the court in its order dated August 17, 1945, and that the litigant may resort for the preservation or protection of their rights or interest,
plaintiffs, in their motion for reconsideration of said order filed on August 20 and for no other purpose, during the pendency of the principal action. If an
of the same year, and in their urgent petition dated December 17, moving the action, by its nature, does not require such protection or preservation, said
court to grant said motion for reconsideration, reiterated that they were actual remedies can not be applied for and granted. To each kind of action or actions
possessors of the land in question. a proper provisional remedy is provided for by law. The Rules of Court clearly
specify the case in which they may be properly granted. .
The fact that plaintiffs, in their reply dated September 4, after reiterating their
allegation or claim that they are the owners in fee simple and possessors in Attachment may be issued only in the case or actions specifically stated in
good faith of the properties in question, pray that they be declared the owners section 1, Rule 59, in order that the defendant may not dispose of his property
in fee simple, has not changed the nature of the action alleged in the attached, and thus secure the satisfaction of any judgment that may be
complaint or added a new cause of action thereto; because the allegations in recovered by plaintiff from defendant. For that reason a property subject of
plaintiffs' reply were in answer to defendants' defenses, and the nature of litigation between the parties, or claimed by plaintiff as his, can not be
plaintiffs' cause of action, as set forth in their complaint, was not and could attached upon motion of the same plaintiff..
not be amended or changed by the reply, which plaintiffs had the right to
present as a matter of course. A plaintiff can not, after defendant's answer, The special remedy of preliminary prohibitory injunction lies when the
amend his complaint by changing the cause of action or adding a new one plaintiff's principal action is an ordinary action of injunction, that is, when the
without previously obtaining leave of court (section 2, Rule 17).. relief demanded in the plaintiff's complaint consists in restraining the
commission or continuance of the act complained of, either perpetually or for
Respondents' contention in paragraph I of their answer that the action filed by a limited period, and the other conditions required by section 3 of Rule 60 are
them against petitioners in the case No. 7951 of the Court of First Instance of present. The purpose of this provisional remedy is to preserve the status quo of
Laguna is not only for injunction, but also to quiet title over the two parcels of the things subject of the action or the relation between the parties, in order to
land described in the complaint, is untenable for the reasons stated in the protect the rights of the plaintiff respecting the subject of the action during
previous paragraph. Besides, an equitable action to quiet title, in order to the pendency of the suit. Because, otherwise or if no preliminary prohibition
prevent harrassment by continued assertion of adverse title, or to protect the injunction were issued, the defendant may, before final judgment, do or
plaintiff's legal title and possession, may be filed in courts of equity (and our continue the doing of the act which the plaintiff asks the court to restrain, and
courts are also of equity), only where no other remedy at law exists or where thus make ineffectual the final judgment rendered afterwards granting the
the legal remedy invokable would not afford adequate remedy (32 Cyc., 1306, relief sought by the plaintiff. But, as this court has repeatedly held, a writ of
1307). In the present case wherein plaintiffs alleged that they are the owners preliminary injunction should not be granted to take the property out of the
and were in actual possession of the lands described in the complaint and
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possession of one party to place it in the hands of another whose title has not From the foregoing it appears evident that the respondent judge acted in
been clearly established.. excess of his jurisdiction in appointing a receiver in case No. 7951 of the Court
of First Instance of Laguna. Appointment of a receiver is not proper or does
A receiver may be appointed to take charge of personal or real property which not lie in an action of injunction such as the one filed by the plaintiff. The
is the subject of an ordinary civil action, when it appears that the party petition for appointment of a receiver filed by the plaintiffs (Exhibit I of the
applying for the appointment of a receiver has an interest in the property or petition) is based on the ground that it is the most convenient and feasible
fund which is the subject of the action or litigation, and that such property or means of preserving, administering and disposing of the properties in
fund is in danger of being lost, removed or materially injured unless a receiver litigation; and according to plaintiffs' theory or allegations in their complaint,
is appointed to guard and preserve it (section 1 [b], Rule 61); or when it appears neither the lands nor the palay harvested therein, are in litigation. The
that the appointment of a receiver is the most convenient and feasible means litigation or issue raised by plaintiffs in their complaint is not the ownership or
of preserving, administering or disposing of the property in litigation (section 1 possession of the lands and their fruits. It is whether or not defendants intend
[e] of said Rule). The property or fund must, therefore be in litigation or were intending to enter or work or harvest whatever existing fruits could
according to the allegations of the complaint, and the object of appointing a then be found in the lands described in the complaint, alleged to be the
receiver is to secure and preserve the property or thing in controversy pending exclusive property and in the actual possession of the plaintiffs. It is a matter
the litigation. Of course, if it is not in litigation and is in actual possession of not only of law but of plain common sense that a plaintiff will not and legally
the plaintiff, the latter can not apply for and obtain the appointment of a can not ask for the appointment or receiver of property which he alleges to
receiver thereof, for there would be no reason for such appointment. belong to him and to be actually in his possession. For the owner and
possessor of a property is more interested than persons in preserving and
Delivery of personal property as a provisional remedy consists in the delivery, administering it.
by order of the court, of a personal property by the defendant to the plaintiff,
who shall give a bond to assure the return thereof or the payment of damages Besides, even if the plaintiffs had amended their complaint and alleged that
to the defendant in the plaintiff's action to recover possession of the same the lands and palay harvested therein are being claimed by the defendants,
property fails, in order to protect the plaintiff's right of possession of said and consequently the ownership and possession thereof were in litigation, it
property, or prevent the defendant from damaging, destroying or disposing of appearing that the defendants (now petitioners) were in possession of the
the same during the pendency of the suit. lands and had planted the crop or palay harvested therein, as alleged in
paragraph 6 (a) and (b) of the petition filed in this court and not denied by the
Undoubtedly, according to law, the provisional remedy proper to plaintiffs' respondent in paragraph 2 of his answer, the respondent judge would have
action of injunction is a preliminary prohibitory injunction, if plaintiff's acted in excess of his jurisdiction or with a grave abuse of discretion in
theory, as set forth in the complaint, that he is the owner and in actual appointing a receiver thereof. Because relief by way of receivership is equitable
possession of the premises is correct. But as the lower court found at the in nature, and a court of equity will not ordinarily appoint a receiver where the
hearing of the said petition for preliminary injunction that the defendants rights of the parties depend on the determination of adverse claims of legal
were in possession of the lands, the lower court acted in accordance with law title to real property and one party is in possession (53 C. J., p. 26). The present
in denying the petition, although their motion for reconsideration, which was case falls within this rule..
still pending at the time the petition in the present case was heard in this
court, plaintiffs insist that they are in actual possession of the lands and, In the case of Mendoza vs. Arellano and B. de Arellano, this court said:
therefore, of the fruits thereof.
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Appointments of receivers of real estate in cases of this kind lie largely evidence in the record that the palay was harvested by the receiver and not by
in the sound discretion of the court, and where the effect of such an said respondents, the petition for contempt of court is denied. So ordered,
appointment is to take real estate out of the possession of the with costs against the respondents.
defendant before the final adjudication of the rights of the parties, the
appointment should be made only in extreme cases and on a clear Moran, C. J., Ozaeta, Jaranilla, De Joya, Pablo, Perfecto, Hilado, and Bengzon,
showing of necessity therefor in order to save the plaintiff from grave JJ., concur.
and irremediable loss or damage. (34 Cyc., 51, and cases there cited.)
No such showing has been made in this case as would justify us in
interfering with the exercise by trial judge of his discretion in denying
the application for receiver. (36 Phil., 59, 63, 64.).
Although the petition is silent on the matter, as the respondents in their

answer allege that the Court of First Instance of Laguna has appointed a
receiver in another case No. 7989 of said court, instituted by the respondents
Relova against Roberto Calo and his brothers and sisters, children of Sofia de
Oca and Tranquilino Calo (petitioner in this case), and submitted copy of the
complaint filed by the plaintiffs (now respondents) in case No. 7989 (Exhibit 9
of the respondents' answer), we may properly express and do hereby express
here our opinion, in order to avoid multiplicity of suits, that as the cause of
action alleged in the in the complaint filed by the respondents Relova in the
other case is substantially the same as the cause of action averred in the
complaint filed in the present case, the order of the Court of First Instance of
Laguna appointing a receiver in said case No. 7989 was issued in excess of its
jurisdiction, and is therefore null and void.
In view of all the foregoing, we hold that the respondent Judge Arsenio C.
Roldan of the Court of First Instance of Laguna has exceeded his jurisdiction in
appointing a receiver in the present case, and therefore the order of said
respondent judge appointing the receiver, as well as all other orders and
proceedings of the court presided over by said judge in connection with the
receivership, are null and void.
As to the petitioners' petition that respondents Relova be punished for

contempt of court for having disobeyed the injunction issued by this court
against the respondents requiring them to desist and refrain from enforcing
the order of receivership and entering the palay therein, it appearing from the
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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
KO Glass v. Valenzuela, 116 S 563 the defendant upon the plaintiff's filing of a bond in the amount of
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P37,190.00.
G.R. No. L-48756 September 11, 1982
Thereupon, on November 22, 1977, the defendant Kenneth O. Glass moved to
K.O. GLASS CONSTRUCTION CO., INC., petitioner, quash the writ of attachment on the grounds that there is no cause of action
vs. against him since the transactions or claims of the plaintiff were entered into
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First by and between the plaintiff and the K.O. Glass Construction Co., Inc., a
Instance of Rizal, and ANTONIO D. PINZON, respondents. corporation duly organized and existing under Philippine laws; that there is no
ground for the issuance of the writ of preliminary attachment as defendant
Guillermo E. Aragones for petitioner. 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
Ruben V. Lopez for respondent Antonio D. Pinzon. 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.,
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Inc. and not to defendant Kenneth O. Glass.
CONCEPCION, JR., J.: By reason thereof, Pinzon amended his complaint to include K.O. Glass
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Construction Co., Inc. as co-defendant of Kenneth O. Glass.
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 On January 26, 1978, the defendants therein filed a supplementary motion to
Court of First Instance of Rizal, entitled: Antonio D. Pinzon plaintiff, versus discharge and/or dissolve the writ of preliminary attachment upon the ground
K.O. Glass Construction Co., Inc., and Kenneth O. Glass, defendants, and for that the affidavit filed in support of the motion for preliminary attachment
the release of the amount of P37,190.00, which had been deposited with the was not sufficient or wanting in law for the reason that: (1) the affidavit did not
Clerk of Court, to the petitioner. 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)
On October 6, 1977, an action was instituted in the Court of First Instance of the affidavit did not state that there is no other sufficient security for the claim
Rizal by Antonio D. Pinzon to recover from Kenneth O. Glass the sum of sought to be recovered by the action as also required by said Sec. 3; and (3) the
P37,190.00, alleged to be the agreed rentals of his truck, as well as the value of affidavit did not specify any of the grounds enumerated in Sec. 1 of Rule
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spare parts which have not been returned to him upon termination of the 57, but, the respondent Judge denied the motion and ordered the Philippine
lease. In his verified complaint, the plaintiff asked for an attachment against Geothermal, Inc. to deliver and deposit with the Clerk of Court the amount of
the property of the defendant consisting of collectibles and payables with the P37,190.00 immediately upon receipt of the order which amount shall remain
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Philippine Geothermal, Inc., on the grounds that the defendant is a foreigner; so deposited to await the judgment to be rendered in the case.
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 On June 19, 1978, the defendants therein filed a bond in the amount of
1
judgment is rendered in his favor. P37,190.00 and asked the court for the release of the same amount deposited
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with the Clerk of Court, but, the respondent Judge did not order the release (c) In an action to recover the possession of personal property
8
of the money deposited. unjustly detained, when the property, or any part thereof, has
been concealed, removed, or disposed of to prevent its being
Hence, the present recourse. As prayed for, the Court issued a temporary found or taken by the applicant or an officer;
restraining order, restraining the respondent Judge from further proceeding
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with the trial of the case. (d) In an action against the party who has been guilty of a
fraud in contracting the debt or incurring the obligation upon
We find merit in the petition. The respondent Judge gravely abused his which the action is brought, or in concealing or disposing of
discretion in issuing the writ of preliminary attachment and in not ordering the property for the taking, detention or conversion of which
the release of the money which had been deposited with the Clerk of Court for the action is brought;
the following reasons:
(e) In an action against a party who has removed or disposed
First, there was no ground for the issuance of the writ of preliminary of his property, or is about to do so, with intent to defraud his
attachment. Section 1, Rule 57 of the Revised Rules of Court, which creditors;
enumerates the grounds for the issuance of a writ of preliminary attachment,
reads, as follows: (f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by
Sec. 1. Grounds upon which attachment may issue. —A publication.
plaintiff or any proper party may, at the commencement of
the action or at any time thereafter, have the property of the In ordering the issuance of the controversial writ of preliminary attachment,
adverse party attached as security for the satisfaction of any the respondent Judge said and We quote:
judgment that may be recovered in the following cases:
The plaintiff filed a complaint for a sum of money with prayer
(a) In an action for the recovery of money or damages on a for Writ of Preliminary Attachment dated September 14, 1977,
cause of action arising from contract, express or implied, alleging that the defendant who is a foreigner may, at any
against a party who is about to depart from the Philippines time, depart from the Philippines with intent to defraud his
with intent to defraud his creditor; creditors including the plaintiff herein; that there is no
sufficient security for the claim sought to be enforced by this
(b) In an action for money or property embezzled or action; that the amount due the plaintiff is as much as the
fraudulently misapplied or converted to his own use by a sum for which an order of attachment is sought to be granted;
public officer, or an officer of a corporation, or an attorney, and that defendant has sufficient leviable assets in the
factor, broker, agent, or clerk, in the course of his Philippines consisting of collectibles and payables due from
employment as such, or by any other person in a fiduciary Philippine Geothermal, Inc., which may be disposed of at any
capacity, or for a willful violation of duty; time, by defendant if no Writ of Preliminary Attachment may
be issued. Finding said motion and petition to be sufficient in
10
form and substance.
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Pinzon however, did not allege that the defendant Kenneth O. Glass "is a sufficient security for his claim against thedefendants in the
foreigner (who) may, at any time, depart from the Philippines with intent to event a judgment be rendered in favor of the plaintiff.
defraud his creditors including the plaintiff." He merely stated that the however, defendant CORPORATION has sufficient assets in
defendant Kenneth O. Glass is a foreigner. The pertinent portion of the the Philippines in the form of collectibles and payables due
complaint reads, as follows: from the Philippine Geothermal., Inc. with office address at
Citibank Center, Paseo de Roxas, Makati, Metro Manila, but
15. Plaintiff hereby avers under oath that defendant is a which properties, if not timely attached, may be disposed of
foreigner and that said defendant has a valid and just by defendants and would render ineffectual the reliefs prayed
12
obligation to plaintiff in the total sum of P32,290.00 arising for by plaintiff in this Complaint.
out from his failure to pay (i) service charges for the hauling
of construction materials; (ii) rentals for the lease of plaintiff's There being no showing, much less an allegation, that the defendants are
Isuzu Cargo truck, and (iii) total cost of the missing/destroyed about to depart from the Philippines with intent to defraud their creditor, or
spare parts of said leased unit; hence, a sufficient cause of that they are non-resident aliens, the attachment of their properties is not
action exists against saiddefendant. Plaintiff also avers under justified.
oath that there is no sufficient security for his claim against
the defendantin the event a judgment be rendered in favor of Second, the affidavit submitted by Pinzon does not comply with the Rules.
the plaintiff. however, defendant has sufficient assets in the Under the Rules, an affidavit for attachment must state that (a) sufficient
Philippines in the form of collectible and payables due from cause of action exists, (b) the case is one of those mentioned in Section I (a) of
the Philippine Geothermal, Inc. with office address at Rule 57; (c) there is no other sufficient security 'or the claim sought to be
Citibank Center, Paseo de Roxas, Makati, Metro Manila, but enforced by the action, and (d) the amount due to the applicant for
which properties, if not timely attached, may be disposed of attachment or the value of the property the possession of which he is entitled
by defendants and would render ineffectual the reliefs prayed to recover, is as much as the sum for which the order is granted above all legal
11
for by plaintiff in this Complaint. counterclaims. Section 3, Rule 57 of the Revised Rules of Court reads. as
follows:
In his Amended Complaint, Pinzon alleged the following:
Section 3. Affidavit and bond required.—An order of
15. Plaintiff hereby avers under oath that defendant GLASS is attachment shall be granted only when it is made to appear
an American citizen who controls most, if not all, the affairs by the affidavit of the applicant, or of some person who
of defendant CORPORATION. Defendants CORPORATION personally knows the facts, that a sufficient cause of action
and GLASS have a valid and just obligation to plaintiff in the exists that the case is one of those mentioned in Section 1
total sum of P32,290.00 arising out for their failure to pay (i) hereof; that there is no other sufficient security for the claim
service charges for hauling of construction materials, (ii) sought to be enforced by the action, and that the amount due
rentals for the lease of plaintiff's Isuzu Cargo truck, and (iii) to the applicant, or the value of the property the possession of
total cost of the missing/destroyed spare parts of said leased which he is entitled to recover, is as much as the sum for
unit: hence, a sufficient cause of action exist against which the order is granted above all legal counterclaims. The
saiddefendants. Plaintiff also avers under oath that there is no affidavit, and the bond required by the next succeeding
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section, must be duly filed with the clerk or judge of the court arising from the hauling of his construction materials,
before the order issues. monthly rentals for the lease Isuzu truck and the peso
equivalent of the spare parts that were either destroyed or
In his affidavit, Pinzon stated the following: misappropriated by him;
I, ANTONIO D. PINZON Filipino, of legal age, married and 4. I am executing this Affidavit to attest to the truthfulness of
with residence and postal address at 1422 A. Mabini Street, the foregoing and in compliance with the provisions of Rule
13
Ermita, Manila, subscribing under oath, depose and states 57 of the Revised Rules of Court.
that.
While Pinzon may have stated in his affidavit that a sufficient cause of action
1. On October 6,1977,I filed with the Court of First Instance of exists against the defendant Kenneth O. Glass, he did not state therein that
Rizal, Pasay City Branch, a case against Kenneth O. Glass "the case is one of those mentioned in Section 1 hereof; that there is no other
entitled 'ANTONIO D. PINZON vs. KENNETH O. GLASS', sufficient security for the claim sought to be enforced by the action; and that
docketed as Civil Case No. 5902-P; 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
2. My Complaint against Kenneth O. Glass is based on several allege in the affidavit the requisites prescribed for the issuance of a writ of
causes of action, namely: preliminary attachment, renders the writ of preliminary attachment issued
against the property of the defendant fatally defective, and the judge issuing it
14
(i) On February 15, 1977, we mutually agreed that I undertake is deemed to have acted in excess of his jurisdiction.
to haul his construction materials from Manila to his
construction project in Bulalo, Bay, Laguna and vice-versa, for Finally, it appears that the petitioner has filed a counterbond in the amount of
a consideration of P50.00 per hour; 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
(ii) Also, on June 18, 1977, we entered into a separate have discharged the attachment pursuant to Section 12, Rule 57 of the Revised
agreement whereby my Isuzu cargo truck will be leased to Rules of Court which reads, as follows:
him for a consideration of P4,000.00 a month payable on the
15th day of each month; Section 12. Discharge of attachment upon giving
counterbond.—At any time after an order of attachment has
(iii) On September 7, 1977, after making use of my Isuzu been granted, the party whose property has been attached, or
truck, he surrendered the same without paying the monthly the person appearing on his behalf, may upon reasonable
rentals for the leased Isuzu truck and the peso equivalent of notice to the applicant, apply to the judge who granted the
the spare parts that were either destroyed or misappropriated order, or to the judge of the court in which the action is
by him; pending, for an order discharging the attachment wholly or in
part on the security given. The judge shall, after hearing,
3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still owes order the discharge of the attachment if a cash deposit is
me the total sum of P32,290.00 representing his obligation made or a counterbond executed to the attaching creditor is
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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
15
judgment that may be obtained against the defendant.
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.
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(Executive Orders Nos. 25 and 32 of 1945). Denial of this motion and of the
subsequent plea for reconsideration, prompted the institution of this special
General v. De Venecia, 78 Phil. 780, July 30, 1947 civil action, which we find to be meritorious, for the reason that the
attachment was improvidently permitted, the debt being within the terms of
G.R. No. L-894 the decree of moratorium (Executive Order No. 32).
LUIS F. GENERAL, petitioner,
vs. It is our view that, upon objection by the debtor, no court may now proceed to
JOSE R. DE VENECIA, Judge of First Instance of Camarines Sur, and hear a complaint that seeks to compel payment of a monetary obligation
PETRA VDA. DE RUEDAS, also representing Ernesto, Armando and coming within the purview of the moratorium. And the issuance of a writ of
Gracia (minors), respondents. attachment upon such complaint may not, of course, be allowed. Such levy is
necessarily one step in the enforcement of the obligation, enforcement which,
Cea, Blancaflor and Cea for petitioner. as stated in the order, is suspended temporarily, pending action by the
Jose M. Peñas for respondents Ruedas. Government.
Bengzon (Jose), J.:
Petition for certiorari to annul the order of the Court of First Instance of But the case for petitioner is stronger when we reflect that his promise is to
Camarines Sur denying the motion to dismiss the complaint, and to vacate the pay P4,000 “within six months after peace has been declared.” It being a
attachment issued, in civil case No. 364 therein entitled, “Ruedas vs. Luis F. matter of contemporary history that the peace treaty between the United
General.” States and Japan has not even been drafted, and that no competent official has
That complaint was filed on June 4, 1946, to recover the value of a promissory formally declared the advent of peace (see Raquiza vs. Bardford, 75 Phil. 50), it
note, worded as follows: is obvious that the six-month period has not begun; and Luis F. General has at
present and in June, 1946, no demandable duty to make payment to plaintiffs,
For value received, I promise to pay Mr. Gregorio Ruedas the amount of four independently of the moratorium directive.
thousand pesos (P4,000), in Philippine currency within six (6) months after
peace has been declared and government established in the Philippines. On the question of validity of the attachment, “the general rule is that, unless
the statute expressly so provides, the remedy by attachment is not available in
Naga, Camarines Sur, September 25, 1944. respect to a demand which is not due and payable, and if an attachment is
issued upon such a demand without statutory authority it is void.” (7 C.J.S., p.
(Sgd.) LUIS F. GENERAL 204.)
It prayed additionally for preliminary attachment of defendant’s property, It must be observed that under our rules governing the matter the person
upon the allegation that the latter was about to dispose of his assets to defraud seeking a preliminary attachment must show that “a sufficient cause of action
creditors. Two days later, the writ of attachment was issued upon the filing of exists” and that the amount due him is as much as the sum for which the order
a suitable bond. of attachment is granted” (sec. 3, Rule 59). Inasmuch as the commitment of
Luis F. General has not as yet become demandable, there existed no cause of
Having been served with summons, the defendant therein, Luis F. General,
action against him, and the complaint should have been dismissed and the
submitted, on June 11, 1946, a motion praying for dismissal of the complaint
attachment lifted. (Orbeta vs. Sotto, 58 Phil. 505.)
and dissolution of the attachment. He claimed it was premature, in view of the
provisions of the debt moratorium orders of the President of the Philippines
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And although it is the general principle that certiorari is not available to

correct judicial errors that could be straightened out in an appeal, we have
adopted the course that where an attachment has been wrongly levied the writ
may be applied for, because the remedy by appeal is either unavailable or
inadequate. (Leung Ben vs. O’Brien, 38 Phil. 182; Director of Commerce and
Industry vs. Concepcion, 43 Phil. 384; Orbeta vs. Sotto, supra.)
Wherefore, the writ of attachment is quashed and the complaint is dismissed.
Costs for petitioner. So ordered.
Moran, C.J., Paras, Feria, Pablo, Hilado, Padilla, and Tuason, JJ., concur.
Perfecto, J., concurs in the result.

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examined, respondent Elaine filed a motion praying that the sum of

P203,167.36 which allegedly appeared as a cash balance in her favor as of
Miailhe v. De Lencquesaing, 142 S 694 December 31, 1982, be ordered delivered to her by petitioner William Alain.
Against the opposition of petitioner and the other co-owners, Judge Pedro
G.R. No. L-67715 July 11, 1986 Ramirez granted the motion in his Order dated December 19, 1983 which order
is now the subject of a certiorari proceeding in the Intermediate Appellate
WILLIAM ALAIN MIAILHE and THE HON. FELIX V. BARBERS, in his Court under AC-G.R. No. SP-03070.
capacity as Presiding Judge, RTC of Manila, Branch XXXIII, petitioners-
appellants, Meanwhile however, and more specifically on February 28, 1983, respondent
vs. Elaine filed a criminal complaint for estafa against petitioner William Alain,
ELAINE M. DE LENCQUESAING and HERVE DE with the office of the City Fiscal of Manila, alleging in her supporting affidavit
LENCQUESAING, respondents-appellees. that on the face of the very account submitted by him as Administrator, he
had misappropriated considerable amounts, which should have been turned
PARAS, J.: over to her as her share in the net rentals of the common properties. Two days
after filing the complaint, respondent flew back to Paris, the City of her
This petition is an appeal by certiorari from the Decision of the Intermediate residence. Likewise, a few days after the filing of the criminal complaint, an
Appellate Court in AC-G.R. SP. No. 01914 which declared null-and void, the extensive news item about it appeared prominently in the Bulletin Today,
Order of the Hon. Judge Felix V. Barbers, issued in Civil Case No. 83-16829, March 4, 1983 issue, stating substantially that Alain Miailhe, a consul of the
dated April 14, 1983, granting petitioner's application for the issuance of a writ Philippines in the Republic of France, had been charged with Estafa of several
of preliminary attachment and the Order dated September 13, 1983 denying million pesos by his own sister with the office of the City Fiscal of Manila.
respondent's motion to lift said attachment.
On April 12, 1983, petitioner Alain filed a verified complaint against respondent
The pertinent facts that gave rise to the instant petition are as follows: Elaine, for Damages in the amount of P2,000,000.00 and attorney's fees of
Petitioner William Alain Miailhe, his sisters Monique Miailhe Sichere, Elaine P250,000.00 allegedly sustained by him by reason of the filing by respondent
Miailhe de Lencquesaing and their mother, Madame Victoria D. Miailhe are (then defendant) of a criminal complaint for estafa, solely for the purpose of
co-owners of several registered real properties located in Metro Manila. By embarrassing petitioner (then plaintiff) and besmirching his honor and
common consent of the said co-owners, petitioner William Alain has been reputation as a private person and as an Honorary Consul of the Republic of
administering said properties since 1960. As Madame Victoria D. Miailhe, her the Philippine's in the City of Bordeaux, France. Petitioner further charged
daughter Monique and son William Alain (herein petitioner) failed to secure respondent with having caused the publication in the March 4, 1983 issue of
an out-of court partition thereof due to the unwillingness or opposition of the Bulletin Today, of a libelous news item. In his verified complaint,
respondent Elaine, they filed in the Court of First Instance of Manila (now petitioner prayed for the issuance of a writ of preliminary attachment of the
Regional Trial Court) an action for Partition, which was docketed as Civil Case properties of respondent consisting of 1/6 undivided interests in certain real
No. 105774 and assigned to Branch . . . thereof, presided over by Judge Pedro properties in the City of Manila on the ground that "respondent-defendant is a
Ramirez. Among the issues presented in the partition case was the matter of non-resident of the Philippines", pursuant to paragraph (f), Section 1, Rule 57,
petitioner's account as administrator of the properties sought to be in relation to Section 17, Rule 14 of the Revised Rules of Court.
partitioned. But while the said administrator's account was still being
17 of 501
This case for Damages was docketed as Civil Case No. 83-16829 of the Regional resident of the Philippines. Because of the uncertainty of the
Trial Court of Manila, Branch XXXIII presided over by the Honorable Felix V. amount of plaintiff's claim it cannot be said that said claim is
Barbers. over and above all legal counterclaims that defendant may
have against plaintiff, one of the indispensable requirements
On April 14, 1983, Judge Barbers granted petitioner's application for for the issuance of a writ of attachment which should be
preliminary attachment upon a bond to be filed by petitioner in the amount of stated in the affidavit of applicant as required in Sec. 3 of Rule
P2,000,000.00. Petitioner filed said bond and upon its approval, the Writ of 57 or alleged in the verified complaint of plaintiff. The
Preliminary Attachment was issued on April 18, 1983 which was served on the attachment issued in the case was therefore null and void.
Deputy Clerk of Court of Branch XXX before whom the action for Partition
was pending. We agree.
On May 17, 1983, respondent thru counsel filed a motion to lift or dissolve the Section 1 of Rule 57 of the Rules of Court provides —
writ of attachment on the ground that the complaint did not comply with the
provisions of Sec. 3 of Rule 57, Rules of Court and that petitioner's claim was SEC. 1. Grounds upon which attachment may issue. A plaintiff
for unliquidated damages. The motion to lift attachment having been denied, or any proper party may, at the commencement of the action
respondent filed with the Intermediate Appellate Court a special action for or at any time thereafter, have the property of the adverse
certiorari under AC-G.R. SP No. 01914 alleging that Judge Barbers had acted party attached as security for the satisfaction of any judgment
with grave abuse of discretion in the premises. On April 4, 1984, the IAC issued that may be recovered in the following cases:
its now assailed Decision declaring null and void the aforesaid Writ of
preliminary attachment. Petitioner filed a motion for the reconsideration of (a) In an action for the recovery of money or damages on a
the Decision but it was denied hence, this present petition which was given cause of action arising fromcontract, express or implied,
due course in the Resolution of this Court dated February 6, 1985. against a party who is about to depart from the Philippines
with intent to defraud his creditors;
We find the petition meritless. The most important issue raised by petitioner
is whether or not the Intermediate Appellate Court erred in construing Section (b) In an action for money or property embezzled or
1 par. (f) Rule 57 of the Rules of Court to be applicable only in case the claim of fraudulently misapplied or converted to his own use by a
the plaintiff is for liquidated damages (and therefore not where he seeks to public officer, or an officer of a corporation or an attorney,
recover unliquidated damages arising from a crime or tort). factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary
In its now assailed decision, the IAC stated — capacity, or for a willful violation of duty;
We find, therefore, and so hold that respondent court had (c) In an action to recover the possession of personal property
exceeded its jurisdiction in issuing the writ of attachment on unjustly detained, when the property, or any part thereof, has
a claim based on an action for damages arising from delict and been concealed. removed, or disposed of to prevent its being
quasi delict the amount of which is uncertain and had not found or taken by the applicant or an officer;
been reduced to judgment just because the defendant is not a
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(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 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. (emphasis supplied)
While it is true that from the aforequoted provision attachment may issue "in
an action against a party who resides out of the Philippines, " irrespective of the
nature of the action or suit, and while it is also true that in the case of Cu
Unjieng, et al vs. Albert, 58 Phil. 495, it was held that "each of the six grounds
treated ante is independent of the others," still it is imperative that the
amount sought be liquidated.
In view of the foregoing, the Decision appealed from is hereby AFFIRMED.
SO ORDERED.
19 of 501
drawn against respondent Bank and were presented by petitioner for clearing.
As respondent Bank returned the checks beyond the reglementary period, [but
Insular Savings Bank v. CA, 460 S 122 after petitioner’s account with PCHC was credited with the amount of
P25,200,000.00] petitioner refused to refund the money to respondent Bank.
G.R. NO. 123638 June 15, 2005 While the dispute was pending arbitration, on January 17, 1992, respondent
Bank instituted Civil Case No. 92-145 in the Regional Trial Court of Makati
INSULAR SAVINGS BANK, Petitioner, and prayed for the issuance of a writ of preliminary attachment. On January
vs. 22, 1992, Branch 133 of the Regional Trial Court of Makati issued an Order
COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity as granting the application for preliminary attachment upon posting by
Presiding Judge of Branch 135 of the Regional Trial Court of Makati, and respondent Bank of an attachment bond in the amount of P6,000,000.00. On
FAR EAST BANK AND TRUST COMPANY, Respondents. January 27, 1992, Branch 133 of the Regional Trial Court of Makati issued a writ
of preliminary attachment for the amount of P25,200,000.00. During the
DECISION hearing on February 11, 1992 before the Arbitration Committee of the
Philippine Clearing House Corporation, petitioner and respondent Bank
GARCIA, J.: agreed to temporarily divide between them the disputed amount
of P25,200,000.00 while the dispute has not yet been resolved. As a result, the
Thru this appeal via a petition for review on certiorari under Rule 45 of the sum ofP12,600,000.00 is in the possession of respondent Bank. On March 9,
Rules of Court, petitioner Insular Savings Bankseeks to set aside the D E C I 1994, petitioner filed a motion to discharge attachment by counter-bond in the
1
S I O N dated October 9, 1995 of the Court of Appeals in CA-G.R. SP No. amount of P12,600,000.00. On June 13, 1994, respondent Judge issued the
2
34876 and itsresolution dated January 24, 1996, denying petitioner’s motion first assailed order denying the motion. On June 27, 1994, petitioner
for reconsideration. filed a motion for reconsideration which was denied in the second
assailed order dated July 20, 1994" (Emphasis and words in bracket added).
The assailed decision of October 9, 1995 cleared the Regional Trial Court
(RTC) at Makati, Branch 135, of committing, as petitioner alleged, grave abuse From the order denying its motion to discharge attachment by counter-bond,
of discretion in denying petitioner’s motion to discharge attachment by petitioner went to the Court of Appeals on a petition for certiorari thereat
counter-bond in Civil Case No. 92-145, while the equally assailed resolution of docketed as CA-G.R. SP No. 34876, ascribing on the trial court the commission
January 24, 1996 denied petitioner’s motion for reconsideration. of grave abuse of discretion amounting to lack of jurisdiction.
3
The undisputed facts are summarized in the appellate court’s decision under While acknowledging that "[R]espondent Judge may have erred in his Order of
review, as follows: June 13, 1994 that the counter-bond should be in the amount of P27,237,700.00",
in that he erroneously factored in, in arriving at such amount, unliquidated
"On December 11, 1991, respondent Bank [Far East Bank and Trust Company] claim items, such as actual and exemplary damages, legal interest, attorney’s
instituted Arbitration Case No. 91-069 against petitioner [Insular Savings fees and expenses of litigation, the CA, in the herein assailed decision dated
Bank] before the Arbitration Committee of the Philippine Clearing House October 9, 1995, nonetheless denied due course to and dismissed the petition.
Corporation [PCHC]. The dispute between the parties involved three For, according to the appellate court, the RTC’s order may be defended by,
[unfunded] checks with a total value of P25,200,000.00. The checks were among others, the provision of Section 12 of Rule 57 of the Rules of
20 of 501
Court, infra. The CA added that, assuming that the RTC erred on the matter of October 21, 1991 in the amount of P7,827,500.00; Legal interest of 12% percent
computing the amount of the discharging counter-bond, its error does not per annum from October 21, 1991 in the amount of P3,805,200.00; Exemplary
amount to grave abuse of discretion. damages in the amount ofP2,000,000.00; and attorney’s fees and expenses of
litigation in the amount of P1,000,000.00 with a total amount ofP27,237,700.00
With its motion for reconsideration having been similarly denied, petitioner is (Adlawan vs. Tomol, 184 SCRA 31 (1990)".
now with us, faulting the appellate court, as follows:
Petitioner, on the other hand, argues that the starting point in computing the
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE amount of counter-bond is the amount of the respondent’s demand or claim
PRINCIPAL AMOUNT CLAIMED BY RESPONDENT BANK SHOULD only, in this case P25,200,000.00, excluding contingent expenses and
BE THE BASIS FOR COMPUTING THE AMOUNT OF THE unliquidated amount of damages. And since there was a mutual agreement
COUNTER-BOND, FOR THE PRELIMINARY ATTACHMENT WAS between the parties to temporarily, but equally, divide between themselves the
ISSUED FOR THE SAID AMOUNT ONLY. said amount pending and subject to the final outcome of the arbitration, the
amount of P12,600,000.00 should, so petitioner argues, be the basis for
"II. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE computing the amount of the counter-bond.
ARGUMENT THAT THE AMOUNT OF THE COUNTER-BOND
SHOULD BE BASED ON THE VALUE OF THE PROPERTY The Court rules for the petitioner.
ATTACHED CANNOT BE RAISED FOR THE FIRST TIME IN THE
COURT OF APPEALS. The then pertinent provision of Rule 57 (Preliminary Attachment) of the Rules
of Court under which the appellate court issued its assailed decision and
"III. THE COURT OF APPEALS ERRED IN RULING THAT THE resolution, provides as follows:
AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON THE
VALUE OF THE PROPERTY ATTACHED EVEN IF IT WILL RESULT "SEC. 12. Discharge of attachment upon giving counter-bond. – At any time
IN MAKING THE AMOUNT OF THE COUNTER-BOND EXCEED after an order of attachment has been granted, the party whose property has
THE AMOUNT FOR WHICH PRELIMINARY ATTACHMENT WAS been attached, . . . may upon reasonable notice to the applicant, apply to the
ISSUED." judge who granted the order or to the judge of the court which the action is
pending, for an order discharging the attachment wholly or in part on the
Simply put, the issue is whether or not the CA erred in not ruling that the trial security given. The judge shall, after hearing, order the discharge of the
court committed grave abuse of discretion in denying petitioner’s motion to attachment if a cash deposit is made, or a counter-bond executed to the
discharge attachment by counter-bond in the amount of P12,600,000.00. 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
Says the trial court in its Order of June 13, 1994: 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
"xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank should action. x x x . Should such counter-bond for any reason be found to be, or
include the unsecured portion of [respondent’s] claim of P12,600,000.00 as become insufficient, and the party furnishing the same fail to file an additional
agreed by means of arbitration between [respondent] and [petitioner]; Actual counter-bond, the attaching party may apply for a new order of
4 4
damages at 25% percent per annum of unsecured amount of claim from attachment" (Emphasis supplied).
21 of 501
As may be noted, the amount of the counter-attachment bond is, under the Turning to the case at bar, the records show that the principal claim of
6
terms of the aforequoted Section 12, to be measured against the value of the respondent, as plaintiff a quo, is in the amount ofP25,200,000.00, representing
attached property, as determined by the judge to secure the payment of any the three (3) unfunded checks drawn against, and presented for clearing to,
judgment that the attaching creditor may recover in the action. Albeit not respondent bank. Jurisprudence teaches that a writ of attachment cannot be
explicitly stated in the same section and without necessarily diminishing the issued for moral and exemplary damages, and other unliquidated or
7
sound discretion of the issuing judge on matters of bond approval, there can contingent claim.
be no serious objection, in turn, to the proposition that the attached property -
and logically the counter-bond necessary to discharge the lien on such The order of attachment dated January 22, 1992 fixed the bond to be posted by
property - should as much as possible correspond in value to, or approximately respondent, as applicant, atP6,000,000.00. The writ of attachment issued on
match the attaching creditor’s principal claim. Else, excessive attachment, January 27, 1992, in turn, expressly indicated that petitioner is justly indebted
8
which ought to be avoided at all times, shall ensue. As we held in Asuncion vs. to respondent in the amount of P25,200,000.00. On February 11, 1992, before
5
Court of Appeals: the Arbitration Committee of the Philippine Clearing House Corporation,
petitioner and respondent, however, agreed to equally divide between
"We, however, find the counter-attachment bond in the amount of P301,935.41 themselves, albeit on a temporary basis, the disputed amount
required of the private respondent by the trial court as rather excessive under of P25,200,000.00, subject to the outcome of the arbitration proceedings.
the circumstances. Considering that the principal amounts claimed by the Thus, the release by petitioner of the amount of P12,600,000.00 to respondent.
petitioner . . . total only P185,685.00, and that he had posted a bond of only On March 7, 1994, petitioner filed a motion to discharge attachment by
9
P80,000.00 for the issuance of the writ of preliminary attachment, we deem it counter-bond in the amount of P12,600,000.00 which, to petitioner, is the
reasonable to lower the amount of the counter-attachment bond to be posted extent that respondent may actually be prejudiced in the event its basic
by the private respondent . . . to the sum of P185,685.00." complaint for recovery of money against petitioner prospers.
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII, 1997 ed., p. 61, As things stood, therefore, respondent’s principal claim against petitioner
citing retired Justice Jose Y. Feria, drive home the same point articulated immediately prior to the filing of the motion to discharge attachment has
in Asuncion: effectively been pruned down to P12,600,000.00. The trial court was fully
aware of this reality. Accordingly, it should have allowed a total discharge of
"The sheriff is required to attach only so much of the property of the party the attachment on a counter-bond based on the reduced claim of respondent.
against whom the order is issued as may be sufficient to satisfy the applicant’s If a portion of the claim is already secured, we see no justifiable reason why
demand, the amount of which is stated in the order, unless a deposit is such portion should still be subject of counter-bond. It may be that a counter-
made or a counter-bond is given equal to said amount. However, if the bond is intended to secure the payment of any judgment that the attaching
value of the property to be attached is less than the amount of the demand, party may recover in the main action. Simple common sense, if not
the amount of the applicant’s bond may be equal to the value of said property, consideration of fair play, however, dictates that a part of a possible judgment
and the amount of the adverse party’s deposit or counter-bond may be that has veritably been preemptively satisfied or secured need not be covered
equal to the applicant’s bond. The writ of preliminary attachment is issued by the counter-bond.
upon approval of the requisite bond". (Emphasis supplied).1avvphi1.net
With the view we take of this case, the trial court, in requiring petitioner to
post a counter-bond in the amount ofP27,237,700.00,
22 of 501
obviously glossed over one certain fundamental. We refer to the fact that the hereby REVERSED and SET ASIDE, along with the orders dated June 13, 1994
attachment respondent applied for and the corresponding writ issued was only and July 20, 1994 of the Regional Trial Court at Makati, Branch 135, in Civil
for the amount of P25.2 Million. Respondent, it bears to stress, did not pray for Case No. 92-145 insofar they denied petitioner’s motion to discharge
attachment on its other claims, contingent and unliquidated as they were. attachment by counter-bond in the amount of P12,600,000.00, and a new one
Then, too, the attaching writ rightly excluded such claims. While the records entered GRANTING such motion upon the reposting of the same counter-
do not indicate, let alone provide a clear answer as to the actual value of the bond.
property levied upon, it may reasonably be assumed that it is equal to
respondent’s principal claim. Be that as it may, it was simply unjust for the SO ORDERED.
trial court to base the amount of the counter-bond on a figure beyond
the P25,200,000.00 threshold, as later reduced to P12,600,200.00.
The trial court, therefore, committed grave abuse of discretion when it denied
petitioner’s motion to discharge attachment by counter-bond in the amount
of P12,600,000.00, an amount more than double the attachment bond required
of, and given by, respondent. As a necessary consequence, the Court of
Appeals committed reversible error when it dismissed petitioner’s recourse
thereto in CA-G.R. SP No. 34876.
It bears to stress, as a final consideration, that the certiorari proceedings

before the appellate court and the denial of the motion to discharge
attachment subject of such proceedings, transpired under the old rules on
10
preliminary attachment which has since been revised. And unlike the former
Section 12 of Rule 57 of the Rules of Court where the value of the property
attached shall be the defining measure in the computation of the discharging
counter-attachment bond, the present less stringent Section 12 of Rule 57
provides that the court shall order the discharge of attachment if the movant
"makes a cash deposit, or files a counter-bond . . . in an amount equal to that
fixed by the court in the order of attachment, exclusive of costs." Not being in
the nature of a penal statute, the Rules of Court cannot be given retroactive
11
effect.
This disposition should be taken in the light of then Section 12, Rule 57 of the
Rules of Court.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed

decision and resolution of the Courts of Appeals are
23 of 501
reconsideration presented by the defendant, asking that the writ referred to be

lifted, the respondent judge issued another order, dated April 20, confirmatory
Tan v. Zandueta, 61 Phil. 526 of that of the 1st of said month, by virtue of which the defendant put up the
required counter bond, and immediately thereafter, that is, on the same day,
June 15, 1935 April 20, 1935, withdrew from the Philippine National Bank an amount of
money of which P22,000 had been attached under the aforesaid order of
G.R. No. L-43772 February 26, 1935. On the third day, that is, on April 23, 1935, the respondent
ISIDRO TAN (alias Tan Lit), petitioner, Tiu Chay (alias Tan Kia) asked that Isidro Tan (alias Tan Lit) be required to
vs. put up another counter bond in the amount of P22,500 instead of P5,000
FRANCISCO ZANDUETA, Judge of First Instances of Manila, the already filed. The respondent judge, passing on said motion, already Isidro Tan
DIRECTOR OF PRISON AND TIU CHAY (alias Tan Kia), respondents. (alias Tan Lit), on May 2, 1935, to file an additional counter bond in the
amount of P10,000 only, giving him ten days to do so. Four days thereafter,
Laurel, Del Rosario and Sabido for petitioner.
that is, on May 6, 1935, the respondent judge entered another order requiring
Palma and Guevara for respondents.
Isidro Tan (alias Tan Lit), to put up a counter bond of P17,000 instead of
Diaz, J.:
P15,000, or in default thereof, to deposit anew in the Philippine National Bank
Isidro Tan (alias Tan Lit), who is at present confined in Bilibid Prison, prays
P17,000 of the amount withdrawn therefrom days before. For failure to file
that he be released from confinement alleging that he is deprived of his liberty
either the counter bond in the amount of P10,000 or that in the amount of
by virtue of an illegal order entered in civil case No. 47826 of the Court of First
P17,000 to which it was later raised, the respondent judge required Isidro Tan
Instance of Manila, by the respondent judge, Francisco Zandueta. The order
(alias Tan Lit) to appear before him and show cause, if any, why he should not
referred to was issued by the said respondent on May 17, 1935, the dispositive
be punished for contempt of court. Believing, however, that Isidro Tan (alias
part of which reads:
Tan Lit) was not given sufficient time to comply with the order of May 2 and 6,
The court finds the defendant in contempt of court and order that, pending 1935, the respondent judge granted him another day to comply therewith, but
the deposit by him of the amount of P12,000 above-mentioned in the order of reducing this time the counter bond required of him to P12,000 only, with an
May 6, 1935, or the filing of a bond in the aforesaid amount, he will not be option to deposit in the bank said amount in case of failure to put up the
released. counter bond as reduced. As the petitioner, notwithstanding these facilities,
neither filed any additional counter bond nor made the deposit required of
The facts alleged in the pleadings may be briefly stated as follows: In case No. him, the respondent judge ordered his arrest on May 17, 1935, and on the same
47826 of the Court of First Instance of Manila, the respondent Tiu Chay (alias day, after hearing his explanations which the said judge considered
Tan Kia), as plaintiff, obtained a writ of preliminary attachment against the unsatisfactory, he was sent to jail there to remain until he should deposit the
petitioner Isidro Tan (alias Tan Lit) upon the filing of a bond in the amount of amount required of him or file the aforementioned counter bond.
P5,000. The respondent judge issued said writ on February 26, 1935,
authorizing the attachment of the properties of the defendant Isidro Tan (alias The petitioner argues that under the provisions of section 440 of Act No. 190,
Tan Lit) to the amount of P22,500. Upon motion of said defendant, the after filing the counter bond of P5,000 required of him by the court in its order
respondent judge issued an order on April 1, 1935, lifting the writ of of April 20, 1935, he was authorized and had a perfect right to withdraw from
attachment conditioned on the filing of a counter bond in the amount of the Philippine National Bank the amount of his deposit which was attached by
P5,000. After sundry proceedings brought about by a motion of virtue of the orders of February 26 and April 20, 1935. In truth, when he
24 of 501
withdrew the aforesaid amount, there was still no order preventing or complaint, because he permitted and the law likewise permits that the counter
restraining him from doing so, and requiring him to file an additional counter bond of the petitioner stand and answer for the said property.
bound, because the order which imposed upon him that obligation was issued
very much later, that is, on May 2, 1935, or twelve days after the said In view of the foregoing, we are of the opinion, and so hold, that the petitioner
withdrawal. is in fact deprived of his liberty by virtue of an illegal order; wherefore, we
order his immediate release, with the costs taxes against the respondent Tiu
A reading of the aforesaid section of law readily shows, that when the property Chay (alias Tan Kia). So ordered.
release from an attachment cannot be returned by the party who secured its
release upon the filing of a bond, the bond takes the place of said property,
that is, answers therefor, because the law on the points is couched in the
following language: “the obligation aforesaid standing in place of the property
so released.”
Moreover, the provision of said section, to the effect that the defendant and
surety will, on demand, pay to the plaintiff the full value of the property
released, proceeds on the assumption that a judgment has been rendered in
favor of the plaintiff; and the case at bar, in connection with the present status
of case No. 47826 of the Court of First Instance of Manila, is not such as to fall
under said provision of law, because up to the present no judgment has been
rendered against the defendant, that is, the petitioner Isidro Tan (alias Tan
Lit), the question of whether or not the respondent Tiu Chay (alias Tan Kia) is
entitled to the amount claimed by him as plaintiff in the said case, being still
pending resolution.
Respondents’ contention that the respondent judge proceeded according to

law in requiring an additional counter bond of P12,000 and in later ordering
the confinement of the petitioner pending the filing of said bond or the
deposit of an equal amount with the bank, because he had not lost jurisdiction
over the property released pursuant to the provisions of section 440 of Act No.
90, is not only without merit but also untenable. From the moment the said
respondent authorized the petitioner to put up the counter bond of P5,000
and from the moment the said petitioner filed said counter bond in order to
be able to withdraw his deposit in the Philippine National Bank, it can be said
that the respondent lost jurisdiction over the said property, although he
retained jurisdiction to resolve the principal question whether or not the
respondent Tiu Chay (alias Tan Kia) was entitled to the relief prayed for in his
25 of 501
The preliminary attachment is an auxiliary remedy the granting of which lies

within the sound discretion of the judge taking cognizance of the principal
Walter Olsen v. Olsen, 48 Phil. 238 case upon whose existence it depends. The order of the judge denying a
motion for the annulment of a writ of preliminary attachment, being of an
November 14, 1925 incidental or interlocutory and auxiliary character, cannot be the subject of an
appeal independently from the principal case, because our procedural law now
G.R. No. L-23237 in force authorizes an appeal only from a final judgement which gives an end
WALTER E. OLSEN & CO., plaintiff-appellee, to the litigation. (Section 143, Act No. 190: 3 C. J., 549 par. 389.) This lack of
vs. ordinary remedy through an appeal does not mean, however, that any excess a
WALTER E. OLSEN, defendant-appellant. lower court may commit in the exercise of its jurisdiction is without remedy;
because there are the especial remedies, such as certiorari, for the purpose.
Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr., for appellant.
(Leung Ben vs. O’Brien, 38 Phil., 182.)
Gibbs and McDonough for appellee.
While it is true that an order denying a motion for the annulment of a
VILLAREAL, J.:
preliminary attachment is not subject to review through an appeal
This is an appeal taken by the defendant from a judgment of the Court of First
independently from the principal case, it not consisting a final order, yet when
Instance of Manila, sentencing him to pay plaintiff corporation the sum of
the writ of preliminary attachment becomes final by virtue of a final judgment
P66,207.62 with legal interest thereon at the rate of 6 per cent per annum from
rendered in the principal case, said writ is subject to review jointly with the
February 1, 1923, the date of the filing of the complaint, until full payment and
judgment rendered in the principal case through an ordinary appeal. The
the costs, and dismissing the cross-complaint and counterclaim set up by him.
appellate court has the power to revoke or confirm said order, in like manner
As ground of his appeal, the defendant assigns four errors as committed by the as a judgment on the merits; because it is a ruling to which an exception may
trial court, to wit: (1) The holding that the defendant-appellant contracted be taken, and therefore is subject to review in an appeal by bill of exceptions.
fraudulently the debt which the plaintiff-appellee seeks to recover in its (Secs. 141-143,Act No. 190.) The fact that section 441 of the Code of Civil
complaint; (2) its failure to set aside the writ of preliminary attachment issued Procedure does not provide any remedy against the granting or denial of a
by it ex parte; (3) the fact of it not having absolved the defendant from the motion for the annulment of a writ of preliminary attachment, except in case
complaint of the plaintiff corporation and of not having given judgment for of excess of jurisdiction, does not confer upon said order a final and
the defendant and against the plaintiff for the amount of his counterclaim, irrevocable character, taking it out from the general provisions as to appeal
after deducing the debt due from him to the plaintiff corporation in the sum of and review, for a special provision is necessary for that purpose.
P66,207.62; and (4) its action in denying the motion for new trial of the Having arrived at the conclusion that an order denying a motion for the
defendant. annulment of a preliminary attachment may be reviewed in an appeal taken
from a final judgment rendered in the principal case, in which said order was
As the first two supposed errors are intimately connected with each other, we entered as an auxiliary remedy, we will now turn to consider the question
will discuss them jointly. whether or not the trial court committed error in denying the motion for the
annulment of the preliminary attachment levied upon the property of the
The first question that arises is whether or not an order denying a motion for
defendant-appellant.
the annulment of a preliminary attachment may be reviewed through an
appeal.
26 of 501
It is admitted by the defendant-appellant that he is indebted to the plaintiff- that other officers of the corporation, such as the vice-president, the secretary
appellee corporation in the sum of P66,207.62, but denies that he has and other chiefs and employees, were doing the same thing, because that does
contracted said debt fraudulently. not show but that his bad example had spread among his subordinates and all
believed themselves with the same right as their chief to dispose of the funds
The evidence shows that the defendant-appellant was president-treasurer and of the corporation for their personal use, although it were merely by way of
general manager of the plaintiff-appellee corporation and exercised direct and loan, without any security of whatever kind of course. The approval of his
almost exclusive supervision over its function, funds and books of account account at the first meeting of the stockholders cannot be considered as a
until about the month of August, 1921. During that time he has been taking justification of his conduct, nor does it remove every suspicion of bad faith,
money of the corporation without being duly authorized to do so either by the because the corporation was constituted exclusively by the defendant-
board of directors or by the by-laws, the money taken by him having appellant himself and his cospeculator, Marker, and nothing else could be
amounted to the considerable sum of P66,207.62. Of this sum, P19,000 was expected from it. As to the debt he owed to the corporation, Walter E. Olsen
invested in the purchase of the house and lot now under attachment in this was in effect a lender and a borrower at the same time. The conduct of the
case, and P50,000 in the purchase of 500 shares of stock of Prising at the price defendant-appellant in connection with the funds of the corporation he
of P100 per share for himself and Marker. A few days afterwards he began to represented was more than an irregularity; and while it is not sufficiently
sell the ordinary shares of the corporation for P430 each. The defendant- serious to constitute a criminal fraud, it is undoubtedly a fraud of a civil
appellant attempted to justify his conduct, alleging that the withdrawal of the character, because it is an abuse of confidence to the damage of the
funds of the corporation for his personal use was made in his current account corporation and its stockholders, and constitutes one of the grounds
with said corporation, in whose treasury he deposited his own money and the enumerated in section 424, in connection with section 412, of the Code of Civil
certificates of title of his shares, as well as of his estate, and that at the first Procedure for the issuance of a preliminary attachment, and the order of the
meeting of the stockholders, which took place on February 1, 1919, a statement Court of First Instance of Manila, denying the motion for the annulment of the
of his account with a debit balance was submitted and approved. injunction in question, is in accordance with law.
Having, as he had, absolute and almost exclusive control over the function of As to the counterclaim set up by the defendant-appellant, we have nothing to
the corporation and its funds by virtue of his triple capacity as president, add to the considerations of the trial court which we make ours.
treasurer and general manager, the defendant-appellant should have been
more scrupulous in the application of the funds of said corporation to his own For the foregoing, and no error having been found in the judgment appealed
use. As a trustee of said corporation, it was his duty to see by all legal means from, the same is hereby affirmed, with the costs against the defendant-
possible that the interests of the stockholders were protected, and should not appellant. So ordered.
abuse the extraordinary opportunity which his triple position offered him to
dispose of the funds of the corporation. Ordinary delicacy required that in the
disposition of the funds of the corporation for his personal use, he should be
very careful, so as to do it in such a way as would be compatible with the
interest of the stockholders and his fiduciary character. And let it not also be
said that he did every thing openly and with the security of his shares of stock,
because as he could dispose of the funds of the corporation so he could
dispose of his won shares and with greater freedom. And let it not also be said
27 of 501
3. The court erred in denying the defendants' motion for a new

trial.1awphil.net
Santos v. Bernabe, 54 Phil. 19
The following facts were conclusively proved at the trial:
G.R. No. L-31163 November 6, 1929
On March 20, 1928, there were deposited in Jose C. Bernabe's warehouse
URBANO SANTOS, plaintiff-appellee, by the plaintiff Urbano Santos 778 cavans and 38 kilos of palay and by Pablo
vs. Tiongson 1,026 cavans and 9 kilos of the same grain.
JOSE C. BERNABE, ET AL., defendants.
PABLO TIONGSON and THE PROVINCIAL SHERIFF OF On said date, March 20, 1928, Pablo Tiongson filed with the Court of
BULACAN, appellants. First Instance of Bulacan a complaint against Jose C. Bernabe, to recover from
the latter the 1,026 cavans and 9 kilos of palay deposited in the defendant's
Arcadio Ejercito and Guevara, Francisco and Recto for appellants. warehouse. At the same time, the application of Pablo Tiongson for a writ of
Eusebio Orense And Nicolas Belmonte for appellee. attachment was granted, and the attachable property of Jose C. Bernabe,
including 924 cavans and 31 1/2 kilos of palay found by the sheriff in his
warehouse, were attached, sold at public auction, and the proceeds thereof
delivered to said defendant Pablo Tiongson, who obtained judgment in said
VILLA-REAL, J.: case.
This appeal was taken by the defendants Pablo Tiongson and the The herein plaintiff, Urbano Santos, intervened in the attachment of the
Provincial Sheriff of Bulacan from the judgment of the Court of First of said palay, but upon Pablo Tiongson's filing the proper bond, the sheriff proceeded
province, wherein said defendant Pablo Tiongson was ordered to pay the with the attachment, giving rise to the present complaint.
plaintiff Urbano Santos the value of 778 cavans and 38 kilos of palay, at the
rate of P3 per cavan, without special pronouncement as to costs. It does not appear that the sacks of palay of Urbano Santos and those of
Pablo Tiongson, deposited in Jose C. Bernabe's warehouse, bore any marks or
In support of their appeal, the appellants assign the following alleged signs, nor were they separated one from the other.
errors committed by the lower court in its judgment, to wit:
The plaintiff-appellee Urbano Santos contends that Pablo Tiongson
1. The court erred in holding that it has been proved that in the cavans cannot claim the 924 cavans and 31 ½ kilos of palay attached by the defendant
of palay attached by the herein defendant Pablo Tiongson from the sheriff as part of those deposited by him in Jose C. Bernabe's warehouse,
defendant Jose C. Bernabe were included those claimed by the because, in asking for the attachment thereof, he impliedly acknowledged that
plaintiff in this cause. the same belonged to Jose C. Bernabe and not to him.
2. The court erred in ordering the defendant Pablo Tiongson to pay In the complaint filed by Pablo Tiongson against Jose C. Bernabe, civil
the plaintiff the value of 778 cavans and 38 kilos of palay, the refund of case No. 3665 of the Court of First Instance of Bulacan, it is alleged that said
which is claimed by said plaintiff. plaintiff deposited in the defendant's warehouse 1,026 cavans and 9 kilos of
28 of 501
palay, the return of which, or the value thereof, at the rate of P3 per cavan was belonging to him, according to the value of the things mixed or
claimed therein. Upon filing said complaint, the plaintiff applied for a commingled.
preliminary writ of attachment of the defendant's property, which was
accordingly issued, and the defendant's property, including the 924 cavans and The number of kilos in a cavan not having been determined, we will take
31 ½ kilos of palay found by the sheriff in his warehouse, were attached. the proportion only of the 924 cavans of palay which were attached and sold,
thereby giving Urbano Santos, who deposited 778 cavans, 398.49 thereof, and
It will be seen that the action brought by Pablo Tiongson against Jose C. Pablo Tiongson, who deposited 1,026 cavans, 525.51, or the value thereof at the
Bernabe is that provided in section 262 of the Code of Civil Procedure for the rate of P3 per cavan.
delivery of personal property. Although it is true that the plaintiff and his
attorney did not follow strictly the procedure provided in said section for Wherefore, the judgment appealed from is hereby modified, and Pablo
claiming the delivery of said personal property nevertheless, the procedure Tiongson is hereby ordered to pay the plaintiff Urbano Santos the value of
followed by him may be construed as equivalent thereto, considering the 398.49 cavans of palay at the rate of P3 a cavan, without special
provisions of section 2 of the Code of Civil Procedure of the effect that "the pronouncement as to costs. So ordered.
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."
Liberally construing, therefore, the above cited provisions of section 262

of the Code of Civil Procedure, the writ of attachment applied for by Pablo
Tiongson against the property of Jose C. Bernabe may be construed as a claim
for the delivery of the sacks of palay deposited by the former with the latter.
The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano
Santos, having been mixed with the 1,026 cavans and 9 kilos of palay belonging
to the defendant Pablo Tiongson in Jose C. Bernabe's warehouse; the sheriff
having found only 924 cavans and 31 1/2 kilos of palay in said warehouse at the
time of the attachment thereof; and there being no means of separating form
said 924 cavans and 31 1/2 of palay belonging to Urbano Santos and those
belonging to Pablo Tiongson, the following rule prescribed in article 381 of the
Civil Code for cases of this nature, is applicable:
Art. 381. If, by the will of their owners, two things of identical or
dissimilar nature are mixed, or if the mixture occurs accidentally, if in
the latter case the things cannot be separated without injury, each
owner shall acquire a right in the mixture proportionate to the part
29 of 501
At the time the basic loan agreement (which is the Agreement

dated July 30, 1981) was entered into, respondent P.O. Valdez,
State Investment House v. CA, 163 S 799 Inc. was required to provide collateral security for the loan.
And pursuant thereto, private respondents turned over to the
G.R. No. 82446 July 29, 1988 petitioner various certificates of stock of several corporations
such as CDCP-Mining, Northern Lines, Inc., Oriental
STATE INVESTMENT HOUSE, INC., petitioner, Petroleum and others. In addition, private respondents
vs. executed a Real Estate Mortgage in favor of the petitioner
HON. COURT OF APPEALS, HON. DOROTEO N. CANEBA, in his covering two (2) parcels of land located outside Baguio City.
capacity as Presiding Judge of Branch 20, Regional Trial Court, Manila, Later, private respondents were also made to execute a Deed
P.O. VALDEZ, INC., and PEDRO 0. VALDEZ, respondents. of Sale dated December 29, 1982 covering the proceeds of a
postdated check for P4,066,410.20, another Deed of Sale dated
Macalino, Salonga & Associates for petitioner. January 4, 1983, covering the proceeds as a postdated check
for P197,010.31 and a Deed of Assignment dated January 4,
Benjamin Relova for private respondents. 1983, covering P.O. Valdez, Inc.'s construction receivables
from the Development Academy of the Philippines to the
extent of P100,000.00. (p. 34, Rollo.)
GRIÑO-AQUINO, J.: When Pedro Valdez' two checks were deposited by the petitioner upon
maturity, they bounced for insufficient funds. Despite demands, respondent
The issue posed by the petition in this case is whether the trial court (whom corporation failed to pay its obligations to petitioner amounting to
the Court of Appeals sustained) gravely abused its discretion in lifting the P6,342,855.70 as of April 11, 1985.
preliminary attachment on the private respondents' properties.
Petitioner foreclosed its real estate mortgage on the two lots in Benguet of
On September 30 and October 31,1977, Pedro 0. Valdez and Rudy H. Sales Pedro and Remedios Valdez on April 11, 1985 and acquired them as the highest
executed two Comprehensive Surety Agreements to secure any and all loans of bidder in the foreclosure sale. Presumably because the proceeds of the
P.O. Valdez, Inc. not exceeding the sums of P500,000 (Annex C) and foreclosure were insufficient to satisfy the debt, petitioner also filed a
P4,934,000 (Annex D) from the petitioner State Investment House, Inc., a collection suit, with a prayer for preliminary attachment. It was docketed in
domestic corporation engaged in quasi banking. the Regional Trial Court of Manila as Civil Case No. 8533050 entitled "STATE
INVESTMENT HOUSE, INC. vs. P.O. VALDEZ, INC., PEDRO 0. VALDEZ and
Four years later, on July 30, 1981, petitioner and P.O. Valdez, Inc. entered into RUDY H. SALES." On November 5, 1985, the court, through Judge (now CA
an agreement for discounting with the petitioner the receivables of P.O. Justice) Antonio Martinez, issued a writ of preliminary attachment against the
Valdez, Inc. (Annex E). The other details of the transactions between the defendants' properties (Annex J). Pursuant thereto, certain real and personal
petitioner and P.O. Valdez, Inc. are recited in the decision of the Court of properties of the defendants were attached.
Appeals as follows:
30 of 501
Tropical Homes, Inc. filed a third-party claim to certain properties titled in the The Court of Appeals dismissed the petition on January 28, 1988 (Annex A). It
name of Pedro Valdez. As the sheriff failed to act on the third-party claim, the affirmed the lower court's finding that there was no fraud in contracting the
claimant filed on March 26, 1986, a motion to lift the attachment on those debt. It observed that:
properties. It was opposed by the petitioner. On May 22, 1 986, respondent
Judge Doroteo N. Caneba (who succeeded Justice Martinez) denied the 1. With respect to the shares of stock which the respondents pledged as
motion. additional security for the loan, the decline in their value did not mean that
the private respondents entered into the loan transaction in bad faith or with
In the meantime, the defendants filed their answer to the complaint. They fraudulent intent. For the private respondents could not have foreseen how
admitted that they obtained loans from the petitioner to finance their the stocks would fare in the market. And if the petitioner thought they were
construction projects, namely, the DAP Building in Pasig, the National worthless at the time, it should have rejected them as collateral.
Engineering Building in the U.P. Campus, and the UP Hostel for Economics,
also in U.P. Diliman, Quezon City. 2. With respect to the two parcels of land which were mortgaged to the
petitioner, the latter should also have declined to accept them as collateral if it
On June 24, 1986, P.O. Valdez, Inc. and Pedro Valdez filed a motion to believed they were worth less than their supposed value.
discharge the attachment on the ground that there was no fraud in contracting
the loans, and if any fraud existed, it was in the performance of the 3. With respect to the two postdated checks which bounced, the Court of
obligations. The motion was opposed by the petitioner. It was denied by the Appeals observed that since they were "sold" to the petitioner after the loan
lower court on November 19, 1986. had been granted to private respondents, their issuance did not fraudulently
induce the petitioner to grant the loan applied for. They were "mere evidence
Valdez filed a motion for reconsideration. The petitioner opposed it. of the private respondents" standing loan obligation to the petitioner" or
Nevertheless, Judge Cañeba granted the motion for reconsideration and "mere collaterals for the loan granted by the petitioner to the private
discharged the preliminary attachment on the properties of Pedro O. Valdez respondents" (Annex A).
and Remedios Valdez on the ground that their conjugal properties may not be
attached to answer for the debts of the corporation which has a juridical These factual conclusions of the Court of Appeals are binding on US (Bernardo
personality distinct from its incorporators. It held that "neither P.O. Valdez, vs. Bernardo, 101 SCRA 351).
Inc. and (sic) Pedro O. Valdez can be faulted nor could they be charged of
incurring fraudulent acts in obtaining the loan agreement." (Annex K). It was Furthermore, We have examined the grounds enumerated in the petitioner's
the petitioner's turn to file a motion for reconsideration, but without success prayer for a writ of preliminary attachment, as reproduced in the decision of
(Annex L). the Court of Appeals, the petitioner having failed to submit a copy of its
complaint as an annex of its petition for certiorari. The main thrust of the
Petitioner went to the Court of Appeals on a petition for certiorari and prayer for preliminary attachment is the alleged misrepresentation of the
prohibition alleging grave abuse of discretion on the part of the lower court in debtor P.O. Valdez, Inc., in the Agreement for Discounting Receivables and in
lifting the writ of preliminary attachment on the properties of the Valdez the deeds of sale of said receivables. (Annexes E, F, and G); that the two checks
spouses (Annex K). or receivables" issued by Pedro Valdez were payment for "actual sales of its
merchandise and/or personalities made to its customers or otherwise arising
from its other legitimate business transactions" (par. a) and "that the
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receivables . . . were genuine, valid and subsisting and represent bona fide sales
of merchandise and/or personalities made in the ordinary course of business"
(par. c).
It can hardly be doubted that those representations in petitioner's printed

deeds of sale were false. But false though they were, the petitioners cannot
claim to have been deceived or deluded by them because it knew, or should
have known , that the issuer of the checks, Pedro O. Valdez, was not a "buyer"
of the "merchandise and personalities made in the ordinary course of business"
by P.O. Valdez, Inc. of which he was the president.
Since the petitioner failed to prove during the hearing of private respondents'
motion to lift the preliminary writ of attachment, that P.O. Valdez, Inc.
received from it independent consideration for the "sale" of Pedro Valdez'
checks to it, apart from the loans previously extended to the corporations, We
are constrained to affirm the finding of the court of Appeals that Valdez's
checks are "mere evidence of the outstanding obligation of P.O. Valdez, Inc. to
the petitioner." The petition was not defrauded by their issuance for the loans
had been contracted and released to P.O. Valdez, Inc. long before the checks
were issued.
WHEREFORE, the petition for certiorari is denied for lack of merit.
SO ORDERED.
32 of 501
Cotabato Bus Company, Inc. has been acquiring and buying more assets". An
opposition and a supplemental opposition were filed to the urgent motion.
Aboitiz v. Cotabato Bus, 105 S 88 The lower court denied the motion stating in its Order that "the testimony of
Baldovino Lagbao, witness for the defendant, corroborates the facts in the
G.R. No. L-35990 June 17, 1981 plaintiff's affidavit instead of disproving or showing them to be untrue."
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge A motion for reconsideration was filed by the defendant bus company but the
of the Court of First Instance of Davao, and the PROVINCIAL SHERIFF lower court denied it. Hence, the defendant went to the Court of Appeals on a
OF DAVAO DEL SUR, petitioners, petition for certiorari alleging grave abuse of discretion on the part of herein
vs. respondent Judge, Hon. Vicente R. Cusi Jr. On giving due course to the
COTABATO BUS COMPANY, INC., respondent. petition, the Court of Appeals issued a restraining order restraining the trial
court from enforcing further the writ of attachment and from proceeding with
the hearing of Civil Case No. 7329. In its decision promulgated on October 3,
1971, the Court of Appeals declared "null and void the order/writ of attachment
DE CASTRO, J.: dated November 3, 1971 and the orders of December 2, 1971, as well as that of
December 11, 1971, ordered the release of the attached properties, and made the
The instant petition stemmed from Civil Case No. 7329 of the Court of First restraining order originally issued permanent.
Instance of Davao (Branch 1) in which a writ of preliminary attachment was
issued ex-parte by the Court on the strength of an affidavit of merit attached to The present recourse is an appeal by certiorari from the decision of the Court
the verified complaint filed by petitioner herein, Aboitiz & Co., Inc., on of Appeals reversing the assailed orders of the Court of First Instance of Davao,
November 2, 1971, as plaintiff in said case, for the collection of money in the (Branch I), petitioner assigning against the lower court the following errors:
sum of P 155,739.41, which defendant therein, the respondent in the instant
case, Cotabato Bus Co., owed the said petitioner. ERROR I
By virtue of the writ of preliminary attachment, the provincial sheriff attached THE COURT OF APPEALS ERRED IN HASTILY AND
personal properties of the defendant bus company consisting of some buses, PERFUNCTORILY RENDERING, ON OCTOBER 3, 1971, A
machinery and equipment. The ground for the issuance of the writ is, as DECISION WITHOUT CONSIDERING MOST OF THE
alleged in the complaint and the affidavit of merit executed by the Assistant EVIDENCE SUCH THAT —
Manager of petitioner, that the defendant "has removed or disposed of its
properties or assets, or is about to do so, with intent to defraud its creditors." l) EVEN AN IMPORTANT FACT, ESTABLISHED BY
DOCUMENTARY EVIDENCE AND NOT DENIED BY
Respondent company filed in the lower court an "Urgent Motion to Dissolve RESPONDENT, IS MENTIONED ONLY AS A "CLAIM" OF
or Quash Writ of Attachment" to which was attached an affidavit executed by PETITIONER COMPANY;
its Assistant Manager, Baldovino Lagbao, alleging among other things that
"the Cotabato Bus Company has not been selling or disposing of its properties, 2) THE DECISION CONTAINS NO DISCUSSION AND
neither does it intend to do so, much less to defraud its creditors; that also the APPRECIATION OF THE FACTS AS PROVED, ASSEMBLED
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AND PRESENTED BY PETITIONER COMPANY SHOWING THE COURT OF APPEALS ERRED IN NOT APPRECIATING
IN — THEIR TOTALITY — THAT RESPONDENT HAS THE RESCUE AND REMOVAL BY RESPONDENT OF FIVE
REMOVED, DIVERTED OR DISPOSED OF ITS BANK ATTACHED BUSES, DURING THE DEPENDENCY OF ITS
DEPOSITS, INCOME AND OTHER LIQUID ASSETS WITH MOTION TO DISSOLVE THE ATTACHMENT IN THE,
INTENT TO DEFRAUD ITS CREDITORS, ESPECIALLY ITS TRIAL COURT, AS A FURTHER ACT OF REMOVAL OF
UNSECURED SUPPLIERS; PROPERTIES BY RESPONDENT WITH INTENT TO
DEFRAUD PETITIONER COMPANY, FOR WHOSE BENEFIT
3) THE DECISION IGNORES THE SIGNIFICANCE OF THE SAID BUSES HAD BEEN ATTACHED.
REFUSAL OF RESPONDENT TO PERMIT, UNDER REP. ACT
NO. 1405, THE METROPOLITAN BANK & TRUST CO. TO The questions raised are mainly, if not solely, factual revolving on whether
BRING, IN COMPLIANCE WITH A subpoena DUCES TECUM respondent bus company has in fact removed its properties, or is about to do
TO THE TRIAL COURT ALL THE RECORDS OF so, in fraud of its creditors. This being so, the findings of the Court of Appeals
RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER on said issues of facts are generally considered conclusive and final, and
ITS CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR should no longer be disturbed. However, We gave due course to the petition
EXAMINATION BY PETITIONER COMPANY FOR THE because it raises also a legal question of whether the writ of attachment was
PURPOSE OF SHOWING DIRECTLY THE REMOVAL, properly issued upon a showing that defendant is on the verge of insolvency
DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS and may no longer satisfy its just debts without issuing the writ. This may be
AND INCOME WITH INTENT TO DEFRAUD ITS inferred from the emphasis laid by petitioner on the fact that even for the
CREDITORS. measly amount of P 634.00 payment thereof was made with a personal check
of the respondent company's president and majority stockholder, and its debts
ERROR II to several creditors, including secured ones like the DBP, have remained
unpaid, despite its supposed daily income of an average of P 12,000.00, as
1
THE COURT OF APPEALS ERRED IN NOT APPRECIATING declared by its assistant manager, Baldovino Lagbao.
THE FACTS THAT RESPONDENT'S BANK DEPOSITS ARE
NIL AS PROOF WHICH - TOGETHER WITH Going forthwith to this question of whether insolvency, which petitioners in
RESPONDENT'S ADMISSION OF AN INCOME OF FROM effect claims to have been proven by the evidence, particularly by company's
P10,000.00 to P 14,000.00 A DAY AND THE EVIDENCE THAT bank account which has been reduced to nil, may be a ground for the issuance
IT CANNOT PRODUCE P 634.00 WITHOUT USING A of a writ of attachment, the respondent Court of Appeals correctly took its
PERSONAL CHECK OF ITS PRESIDENT AND MAJORITY position in the negative on the strength of the explicit ruling of this Court
STOCKHOLDER, AND OTHER EVIDENCE — SHOWS THE in Max Chamorro & Co. vs. Philippine Ready Mix Concrete Company, Inc. and
2
REMOVAL OR CHANNELING OF ITS INCOME TO THE Hon. Manuel P. Barcelona.
LATTER.
Petitioner, however, disclaims any intention of advancing the theory that
3
ERROR III insolvency is a ground for the issuance of a writ of attachment , and insists
that its evidence -is intended to prove his assertion that respondent company
has disposed, or is about to dispose, of its properties, in fraud of its creditors.
34 of 501
Aside from the reference petitioner had made to respondent company's "nil" or other form of disposition of any of this kind of property is not difficult of
bank account, as if to show removal of company's funds, petitioner also cited detection or discovery, and strangely, petitioner, has adduced no proof of any
the alleged non-payment of its other creditors, including secured creditors like sale or transfer of any of them, which should have been easily obtainable.
the DBP to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and the rescue and removal of five attached buses. In the main, therefore, We find that the respondent Court of Appeals has not
committed any reversible error, much less grave abuse of discretion, except
It is an undisputed fact that, as averred by petitioner itself, the several buses that the restraining order issued by it should not have included restraining the
attached are nearly junks. However, upon permission by the sheriff, five of trial court from hearing the case, altogether. Accordingly, the instant petition
them were repaired, but they were substituted with five buses which were also is hereby denied, but the trial court is hereby ordered to immediately proceed
in the same condition as the five repaired ones before the repair. This cannot with the hearing of Civil Case No. 7329 and decide it in accordance with the
be the removal intended as ground for the issuance of a writ of attachment law and the evidence. No special pronouncement as to costs.
under section 1 (e), Rule 57, of the Rules of Court. The repair of the five buses
was evidently motivated by a desire to serve the interest of the riding public, SO ORDERED.
clearly not to defraud its creditors, as there is no showing that they were not
put on the run after their repairs, as was the obvious purpose of their
substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal or disposal
as alleged by petitioner to provide the basis for its prayer for the issuance of a
writ of attachment should be very remote, if not nil. If removal of the buses
had in fact been committed, which seems to exist only in petitioner's
apprehensive imagination, the DBP should not have failed to take proper court
action, both civil and criminal, which apparently has not been done.
The dwindling of respondent's bank account despite its daily income of from
P10,000.00 to P14,000.00 is easily explained by its having to meet heavy
operating expenses, which include salaries and wages of employees and
workers. If, indeed the income of the company were sufficiently profitable, it
should not allow its buses to fall into disuse by lack of repairs. It should also
maintain a good credit standing with its suppliers of equipment, and other
needs of the company to keep its business a going concern. Petitioner is only
one of the suppliers.
It is, indeed, extremely hard to remove the buses, machinery and other
equipments which respondent company have to own and keep to be able to
engage and continue in the operation of its transportation business. The sale
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and in the light of the authorities above cited, is dismissed for

lack of merit.
People's Bank & Trust Co. v. Syvel, 164 S 247
SO ORDERED
G.R. No. L-29280 August 11, 1988
(pp. 89-90, Record on Appeal; p. 15, Rollo)
PEOPLE'S BANK AND TRUST COMPANY, plaintiff-appellee,
vs. The facts of the case based on the statement of facts, made by the trial court in
SYVEL'S INCORPORATED, ANTONIO Y. SYYAP and ANGEL Y its decision as cited in the briefs of both parties are as follows:
SYYAP, defendants-appellants.
This is an action for foreclosure of chattel mortgage executed
Araneta, Mendoza & Papa for plaintiff-appellee. in favor of the plaintiff by the defendant Syvel's Incorporated
on its stocks of goods, personal properties and other materials
Quasha, Asperilia, Zafra, Tayag & Ancheta for defendants-appellants. owned by it and located at its stores or warehouses at No.
406, Escolta, Manila; Nos. 764-766 Rizal Avenue, Manila; Nos.
10-11 Cartimar Avenue, Pasay City; No. 886 Nicanor Reyes, Sr.
(formerly Morayta), Manila; as evidenced by Annex"A."The
PARAS, J.: chattel mortgage was duly registered in the corresponding
registry of deeds of Manila and Pasay City. The chattel
This is an appeal from the decision dated May 16, 1968 rendered by the Court mortgage was in connection with a credit commercial line in
of First Instance of Manila, Branch XII in Civil Case No. 68095, the decretal the amount of P900,000.00 granted the said defendant
portion of which states: corporation, the expiry date of which was May 20, 1966. On
May 20, 1965, defendants Antonio V. Syyap and Angel Y.
IN VIEW OF THE FOREGOING, judgment is rendered Syyap executed an undertaking in favor of the plaintiff
sentencing all the defendants to pay the plaintiff jointly and whereby they both agreed to guarantee absolutely and
severally the sum of P601,633.01 with interest thereon at the unconditionally and without the benefit of excussion the full
rate of 11% per annum from June 17, 1967, until the whole and prompt payment of any indebtedness to be incurred on
amount is paid, plus 10% of the total amount due for account of the said credit line. Against the credit line granted
attorney's fees and the costs of suit. Should the defendants fail the defendant Syvel's Incorporated the latter drew advances
to pay the same to the plaintiff, then it is ordered that all the in the form of promissory notes which are attached to the
effects, materials and stocks covered by the chattel mortgages complaint as Annexes "C" to "l." In view of the failure of the
be sold at public auction in conformity with the Provisions of defendant corporation to make payment in accordance with
Sec. 14 of the Chattel Mortgage Law, and the proceeds thereof the terms and conditions agreed upon in the Commercial
applied to satisfy the judgment herein rendered. The Credit Agreement the plaintiff started to foreclose
counterclaim of the defendants, upon the evidence presented extrajudicially the chattel mortgage. However, because of an
attempt to have the matter settled, the extra-judicial
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foreclosure was not pushed thru. As no payment had been As regards the liabilities of the defendants, there is no dispute
paid, this case was even tually filed in this Court. that a credit line to the maximum amount of P900,000.00 was
granted to the defendant corporation on the guaranty of the
On petition of the plaintiff based on the affidavits executed by merchandise or stocks in goods of the said corporation which
Mr. Leopoldo R. Rivera, Assistant Vice President of the were covered by chattel mortgage duly registered as required
plaintiff bank and Atty. Eduardo J. Berenguer on January 12, by law. There is likewise no dispute that the defendants Syyap
1967, to the effect, among others, that the defendants are guaranteed absolutely and unconditionally and without the
disposing of their properties with intent to defraud their benefit of excussion the full and prompt payment of any
creditors, particularly the plaintiff herein, a preliminary writ indebtedness incurred by the defendant corporation under
of attachment was issued. As a consequence of the issuance of the credit line granted it by the plaintiff. As of June 16, 1967,
the writ of attachment, the defendants, in their answer to the its indebtedness was in the total amount of P601,633.01. This
complaint set up a compulsory counterclaim for damages. was admitted by defendant Antonio V. Syyap in the deed of
real estate mortgage executed by him. No part of the amount
After the filing of this case in this court and during its has been paid by either of the defendants. Hence their
pendency defendant Antonio v. Syyap proposed to have the liabilities cannot be questioned. (pp. 3-6, Brief for Appellee; p.
case settled amicably and to that end a conference was held in 26, Rollo)
which Mr. Antonio de las Alas, Jr., Vice President of the Bank,
plaintiff, defendant Antonio V. Syyap and Atty. Mendoza were In their brief, appellants assign the following errors:
present. Mr. Syyap requested that the plaintiff dismiss this
case because he did not want to have the goodwill of Syvel's I
Incorporated impaired, and offered to execute a real estate
mortgage on his real property located in Bacoor, Cavite. Mr. The lower court erred in not holding that the obligation
De las Alas consented, and so the Real Estate Mortgage, secured by the Chattel Mortgage sought to be foreclosed in
marked as Exhibit A, was executed by the defendant Antonio the above-entitled case was novated by the subsequent
V. Syyap and his wife Margarita Bengco Syyap on June 22, execution between appellee and appellant Antonio V, Syyap
1967. In that deed of mortgage, defendant Syyap admitted of a real estate mortgage as additional collateral to the
that as of June 16, 1967, the indebtedness of Syvel's obligation secured by said chattel mortgage.
Incorporated was P601,633.01, the breakdown of which is as
follows: P568,577.76 as principal and P33,055.25 as interest. II
Complying with the promise of the plaintiff thru its Vice
President to ask for the dismissal of this case, a motion to The lower court erred in not dismissing the above-entitled
dismiss this case without prejudice was prepared, Exhibit C, case and in finding appellants liable under the complaint.
but the defendants did not want to agree if the dismissal
would mean also the dismissal of their counterclaim Against III
the plaintiff. Hence, trial proceeded.
37 of 501
The lower court erred in not holding that the writ of Novation takes place when the object or principal condition of an obligation is
preliminary attachment is devoid of any legal and factual changed or altered. It is elementary that novation is never presumed; it must
basis whatsoever. be explicitly stated or there must be manifest incompatibility between the old
and the new obligations in every aspect (Goni v. CA, 144 SCRA 223 [1986];
IV National Power Corp. v. Dayrit, 125 SCRA 849 [1983]).
The lower court erred in dismissing appellants'counterclaim In the case at bar, there is nothing in the Real Estate Mortgage which supports
and in not holding appellee liable to appellants for the appellants'submission. The contract on its face does not show the existence of
consequent damages arising out of a wrongful attachment. an explicit novation nor incompatibility on every point between the "old and
(pp. 1-2, Brief for the Appellants, p. 25, Rollo) the "new" agreements as the second contract evidently indicates that the same
was executed as new additional security to the chattel mortgage previously
Appellants admit that they are indebted to the appellee bank in the amount of entered into by the parties.
P601,633.01, breakdown of which is as follows: P568,577.76 as principal and
P33,055.25 as interest. After the filing of the case and during its pendency, Moreover, records show that in the real estate mortgage, appellants agreed
defendant Antonio V. Syyap proposed to have the case amicably settled and that the chattel mortgage "shall remain in full force and shall not be impaired
for that purpose a conference was held in which Mr. Antonio de las Alas, Jr., by this (real estate) mortgage."
Vice President of plaintiff People's Bank and Trust Company, defendant
Antonio V. Syyap and Atty. Mendoza were present. Mr. Syyap requested that The pertinent provision of the contract is quoted as follows:
the plaintiff dismiss this case as he did not want to have the goodwill of Syvel's
Incorporated impaired, and offered to execute a real estate mortgage on his That the chattel mortgage executed by Syvel's Inc. (Doc. No.
real property located in Bacoor, Cavite. Mr. de las Alas consented, and so the 439, Book No. I, Series of 1965, Notary Public Jose C. Merris,
Real Estate Mortgage (Exhibit "A") was executed by defendant Antonio Syyap Manila); real estate mortgage executed by Angel V. Syyap and
and his wife Margarita Bengco Syyap on June 22, 1967. Defendants did not Rita V. Syyap (Doc. No. 441, Page No. 90, Book No. I, Series of
agree with plaintiffs motion to dismiss which included the dismissal of their 1965, Notary Public Jose C. Merris, Manila) shall remain in full
counterclaim and filed instead their own motion to dismiss (Record on force and shall not be impaired by this mortgage (par. 5,
Appeal, pp. 68-72) on the ground that by the execution of said real estate Exhibit"A," Emphasis ours).
mortgage, the obligation secured by the chattel mortgage subject of this case
was novated, and therefore, appellee's cause of action thereon was It is clear, therefore, that a novation was not intended. The real estate
extinguished. mortgage was evidently taken as additional security for the performance of the
contract (Bank of P.I. v. Herrige, 47 Phil. 57).
In an Order dated September 23, 1967, the motion was denied for not being
well founded (record on Appeal, p. 78). In the determination of the legality of the writ of attachment by the Court of
First Instance of Manila, it is a well established rule that the grant or denial of
Appellants contention is without merit. a writ of attachment rests upon the sound discretion of the court. Records are
bereft of any evidence that grave abuse of discretion was committed by
respondent judge in the issuance of the writ of attachment.
38 of 501
Appellants contend that the affidavits of Messrs. Rivera and Berenguer on trying to spirit away a port;.on of the stocks of Syvel's Incorporated in order to
which the lower court based the issuance of the writ of preliminary render ineffectual at least partially anyjudgment that may be rendered in favor
attachment relied on the reports of credit investigators sent to the field and of the plaintiff." (Decision; Civil Case No. 68095; Record on Appeal, pp. 88-89).
not on the personal knowledge of the affiants. Such contention deserves scant
consideration. Evidence adduced during the trial strongly shows that the Appellants having failed to adduce evidence of bad faith or malice on the part
witnesses have personal knowledge of the facts stated in their affidavits in of appellee in the procurement of the writ of preliminary attachment, the
support of the application for the writ. They testified that Syvel's Inc. had claim of the former for damages is evidently negated. In fact, the allegations in
disposed of all the articles covered by the chattel mortgage but had not the appellee's complaint more than justify the issuance of the writ of
remitted the proceeds to appellee bank; that the Syvel's Stores at the Escolta, attachment.
Rizal Avenue and Morayta Street were no longer operated by appellants and
that the latter were disposing of their properties to defraud appellee bank. PREMISES CONSIDERED, this appeal is DISMISSED for lack of merit and the
Such testimonies and circumstances were given full credit by the trial court in judgment appealed from is AFFIRMED.
its decision (Brief for Appellee, p. 14). Hence, the attachment sought on the
ground of actual removal of property is justified where there is physical SO ORDERED.
removal thereof by the debtor, as shown by the records (McTaggert v. Putnam
Corset Co., 8 N.Y. S 800 cited in Moran, Comments on the Rules of Court, 1970
Ed., Vol. 3, p. 7).
Besides, the actuations of appellants were clearly seen by the witnesses who
"saw a Fiat Bantam Car-Fiat Car, a small car and about three or four persons
hurrying; they were carrying goods coming from the back portion of this store
of Syvels at the Escolta, between 5:30 and 6:00 o'clock in the evening." (Record
on Appeal, pp. 45-46). Therefore, "the act of debtor (appellant) in taking his
stock of goods from the rear of his store at night, is sufficient to support an
attachment upon the ground of the fraudulent concealment of property for the
purpose of delaying and defrauding creditors." (4 Am. Jur., 841 cited in
Francisco, Revised Rules of Court, Second Edition, 1985, p. 24).
In any case, intent to defraud may be and usually is inferred from the facts and
circumstances of the case; it can rarely be proved by direct evidence. It may be
gleaned also from the statements and conduct of the debtor, and in this
connection, the principle may be applied that every person is presumed to
intend the natural consequences of his acts (Francisco, Revised Rules of
Court, supra, pp. 24-25), In fact the trial court is impressed "that not only has
the plaintiff acted in perfect good faith but also on facts sufficient in
themselves to convince an ordinary man that the defendants were obviously
39 of 501
and Company, Inc. (Aboitiz) sought to collect from petitioners a sum of

money representing payments for: (1) the unpaid amortizations of a loan; (2)
Adlawan v. Torres, 233 S 645 technical and managerial services rendered; and (3) the unpaid installments of
the equipment provided by respondent Aboitiz to petitioners (Rollo, p. 37).
G.R. Nos. 65957-58 July 5, 1994
Acting on the ex parte application for attachment, the Executive Judge of the
ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners, Court of First Instance of Cebu, issued on May 14, 1982, an order directing the
vs. issuance of the writ of preliminary attachment against the property of
Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch 6, petitioners upon the filing by respondent Aboitiz of an attachment bond.
Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE
PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA, Subsequently, the case was raffled to Branch 11 of the Court of First Instance of
Respectively,respondents. Cebu, which issued a writ of attachment addressed to the Provincial Sheriffs of
Cebu and the City Sheriff of Davao City. It was the Sheriff of Davao City who
Pablo P. Garcia for petitioners. enforced the writ of attachment, resulting in the seizure of heavy construction
equipment, motor vehicle spare parts, and other personal property with the
Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for Aboitiz & Co., Inc. aggregate value of P15,000,000.00. The said court also granted the motion of
respondent Aboitiz to take possession and custody of the attached property of
petitioners and ordered the Provincial Sheriff of Davao to deliver the property
to respondent Aboitiz.
QUIASON, J.:
Petitioners moved for a bill of particulars and to set aside the ex parte writ of
This is a petitioner for certiorari and mandamus with preliminary injunction or attachment. Finding merit in the motion to set aside the writ, Branch 11
restraining order to nullify: (1) the Order dated September 14, 1983 of ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge
respondent Judge Ramon Am. Torres of the Regional Trial Court, Branch 6, of the property levied upon.
Cebu City, in Civil Case No. CEB-1185 and the Order dated September 26, 1983
of Judge Emilio A. Jacinto of Branch 23 of the same court in Civil Case No. Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the
CEB-1186, which granted the motion for the issuance of writs of preliminary July 6, 1982 Order for a period of 15 days for it to be able to appeal the order.
attachment for the seizure of the property of petitioners by respondent The motion was favorably acted upon.
Provincial Sheriffs; and (2) the Order dated December 12, 1983 of respondent
Judge Ramon Am. Torres in the consolidated cases, Civil Case No. CEB-1185 However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its
and Civil Case No. CEB-1186. complaint in accordance with Section 1, Rule 17 of the Revised Rules of Court.
Consequently, Branch 11 issued an order confirming the notice of dismissal,
I emphasizing that all orders of the court issued prior to the filing of said notice
of dismissal had been rendered functus oficio, and considering all pending
In a complaint dated April 24, 1982 filed with the Court of First Instance of incidents in the case as moot and academic.
Cebu, now Regional Trial Court, (Civil Case No. R-21761), respondent Aboitiz
40 of 501
Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order not found it illegal. The motion was, however, denied with finality in the
be implemented and enforced. On December 20, however, Branch 11 denied Resolution of July 11, 1990.
the motion on account of the filing by respondent Aboitiz before Branch 16 of
the Court of First Instance of Cebu in Lapu-lapu City of an action for delivery Undaunted, respondent Aboitiz filed a second motion for reconsideration with
of personal property (Civil Case No. 619-L), and the filing by petitioner Eleazar a prayer that the dispositive portion of the decision be clarified. It asserted
Adlawan before Branch 10 of the same court of an action for damages in that because the writ of preliminary attachment was different from the writ of
connection with the seizure of his property under the writ of attachment. replevin, we should rule that the property subject of the latter writ should
remain in custodia legis of the court issuing the said writ.
In the replevin suit, Branch 16 ordered the seizure and delivery of the property
described in the complaint. Said property were later delivered by the In the Resolution dated September 10, 1990, the Third Division stated that "the
provincial sheriff to respondent Aboitiz. Alleging that while his office was properties to be returned to petitioner are only those held by private
situated in Cebu City, Adlawan was a resident of Minglanilla, and therefore, respondent (Aboitiz) by virtue of the writ of attachment which has been
the Lapu-lapu City court should not entertain the action for replevin. declared non-existent." Accordingly, the dispositive portion of the April 3, 1990
Petitioner Eleazar Adlawan filed an omnibus motion praying for the decision of the Third Division of this Court was modified to read as follows:
reconsideration and dissolution of the writ of seizure, the retrieval of the
property seized, and the dismissal of the complaint. He also averred that the WHEREFORE, in view of the foregoing, this Court rules that
property seized were incustodia legis by virtue of the writ of attachment issued the properties in the custody of the private respondent
by Branch 11. His omnibus motion was denied. Subsequently, he filed a motion Aboitiz & Company by virtue of the writ of attachment issued
for reconsideration which was not granted. in Civil Case No. R-21761 be returned to the petitioner, but
properties in the custody of the private respondent by virtue
The denial of his omnibus motion led petitioner Eleazar Adlawan to file a of the writ of replevin issued in Civil Case No. 619-L be
petition for certiorari and mandamus in the Supreme Court (G.R. No. 63225). continued in custodia legis of said court pending litigation
The Third Division of this Court ruled on April 3, 1990 that since attachment is therein.
an ancillary remedy, the withdrawal of the complaint left it with no leg to
stand on. Thus, the Court disposed of the case as follows: The Decision in G.R. No. 63225 having become final and executory, entry of
judgment was made on November 15, 1990. This should have terminated the
WHEREFORE, in view of the foregoing, this Court rules that controversy between petitioners and respondent Aboitiz insofar as the
the attached properties left in the custody of private Supreme Court was concerned, but that was not to be. On September 9, 1983
respondent Aboitiz and Company, Inc. be returned to respondent Aboitiz filed against petitioners two complaints for collection of
petitioner Eleazar V. Adlawan without prejudice to the sums of money with prayers for the issuance of writs of attachment in the
outcome of the cases filed by both parties (Rollo, p. 324). Regional Trail Court, Branch 23, Cebu City, docketed as Civil Cases Nos. CEB-
1185 and CEB-1186. The complaint in Civil Case No. CEB-1185 alleged that
Respondent Aboitiz filed a motion for reconsideration of the decision, petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the
contending that the replevin case was distinct and separate from the case construction of the Tago Diversion Works for the Tago River Irrigation Project
where the writ of attachment was issued. It argued that the writ of replevin, by the National Irrigation Administration and that respondent Aboitiz
therefore, remained in force as the Third Division of the Supreme Court had
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(plaintiff therein) loaned him money and equipment, which indebtedness as of writs of attachment, constituted undue interference with the processes of this
June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the complaint states: court in the then pending petition involving the same property.
16. That, in view of the enormous liabilities which the Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an
defendants have with the plaintiff, defendants executed a real order directing the transfer to Branch 6 of Civil Case No. CEB-1186 for
estate mortgage covering eleven (11) parcels of land in favor of consolidation with Civil Case No. CEB-1185.
Philippine Commercial and Industrial Bank (PCIB) to secure a
P1,000,000.00 loan with said bank and was able to remove, Meanwhile, in its comment on petitioners' motion to withhold the
conceal and dispose of their properties, obviously to defraud enforcement of the writs of attachment, respondent Aboitiz alleged that the
the plaintiff, . . . (Rollo, pp. 65-66). voluntary dismissal of Civil Case No. R-21761 under Section 1, Rule 17 of the
Revised Rules of Court was without prejudice to the institution of another
The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar action based on the same subject matter. It averred that the issuance of the
Adlawan (defendant therein) was awarded a contract for the construction of writ of attachment was justified because petitioners were intending to defraud
the Lasang River Irrigation Project by the National Irrigation Administration respondent Aboitiz by mortgaging 11 parcels of land to the Philippine
and that respondent Aboitiz (plaintiff therein) loaned him money and Commercial and Industrial Bank (PCIB) in consideration of the loan of
equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08. P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice of
Paragraph 15 of the complaint is similarly worded as paragraph 16 of the respondent Aboitiz, which had an exposure amounting to P13,430,259.14.
complaint in Civil Case No. CEB-1185.
Petitioners then filed a rejoinder to said comment, contending that since the
Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, property subject of the writ of attachment have earlier been attached or
presided by respondent Judge Ramon Am. Torres. On September 14, 1983, replevied, the same property were under custodia legis and therefore could not
respondent Judge ordered the issuance of a writ of attachment upon be the subject of other writs of attachment.
respondent Aboitiz' filing of a bond of P5,000,000.00. Similarly, in Civil Case
No. CEB-1186, which was raffled to Branch 23, presiding Judge Emilio A. On December 12, 1983, respondent Judge issued an order finding no merit in
Jacinto ordered the issuance of a writ of attachment upon the filing of a bond petitioners' motion for reconsideration and directing the sheriffs of Cebu,
of P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Davao and Metro Manila "to proceed with the enforcement and
Provincial Sheriff of Cebu issued separate writs dated September 26, 1983 implementation of the writs of preliminary attachment." Respondent Judge
addressed to the Sheriffs of Cebu, Davao and Metro Manila. No writ of ruled that the writs of attachment were issued on the basis of the supporting
preliminary attachment was, however, issued in Civil Case No. CEB-1186. affidavits alleging that petitioner had removed or disposed of their property
with intent to defraud respondent Aboitiz (Rollo, pp. 109-113).
Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent
motions to hold in abeyance the enforcement of the writs of attachments. On December 15, petitioners filed an ex parte motion praying: (1) that the
They alleged in the main that since their property had been previously December 12, 1983 Order be set for hearing; (2) that they be given 15 days
attached and said attachment was being questioned before the Supreme Court within which to either file a motion for reconsideration or elevate the matter
in G.R. No. 63225, the filing of the two cases, as well as the issuance of the to this Court or the then Intermediate Appellate Court; and (3) that within the
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same 15-day period the implementation or enforcement of the writs of The resolution of this case centers on the issue of the legality of the writ of
attachment be held in abeyance. attachment issued by respondent Judge in the consolidated cases for collection
of sums of money.
On the same day, respondent Judge issued an order holding in abeyance the
enforcement of the writs of preliminary attachment in order to afford The affidavit submitted by respondent Aboitiz in support of its prayer for the
petitioners an opportunity to seek their other remedies (Rollo, p. 116). writ of attachment does not meet the requirements of Rule 57 of the Revised
Rules of Court regarding the allegations on impending fraudulent removal,
On December 27, petitioners filed the instant petition concealment and disposition of defendant's property. As held in Carpio v.
for certiorari and mandamus. They alleged that respondent Judge gravely Macadaeg, 9 SCRA 552 (1963), to justify a preliminary attachment, the removal
abused his discretion in ordering the issuance of the writs of preliminary or disposal must have been made with intent to defraud defendant's creditors.
attachment inasmuch as the real estate mortgage executed by them in favor of Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of
PCIB did not constitute fraudulent removal, concealment or disposition of the Revised Rules of Court on the grounds upon which attachment may issue.
property. They argued that granting the mortgage constituted removal or Thus, the factual basis on defendant's intent to defraud must be clearly alleged
disposition of property, it was not per se a ground for attachment lacking proof in the affidavit in support of the prayer for the writ of attachment if not so
of intent to defraud the creditors of the defendant. specifically alleged in the verified complaint. The affidavit submitted by
respondent Aboitiz states:
Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the
loan for which the mortgage was executed was contracted in good faith, as it REPUBLIC OF THE PHILIPPINES
was necessary for them to continue their business operations even after CITY OF CEBU ...............) S.S.
respondent Aboitiz had stopped giving them financial aid.
I, ROMAN S. RONQUILLO, of legal age, married and a
Petitioners also contended that respondent Judge exceeded his jurisdiction resident of Cebu City, after being sworn in accordance with
when he issued the Order of December 12, 1983, without first hearing the law, hereby depose and say:
parties on the motion for attachment and the motion to dissolve the
attachment. Moreover, they argued that respondent Judge gravely abused his That I am the Vice-President of the plaintiff corporation in
discretion in proceeding with the case, notwithstanding that his attention had the above-entitled case;
been called with regard to the pendency of G.R. No. 63225 in this Court.
That a sufficient cause of action exists against the defendants
As prayed for by petitioners, we issued a temporary restraining order on named therein because the said defendants are indebted to
January 6, 1984 "enjoining the respondents from enforcing or implementing the plaintiffs in the amount of P13,430,259.14 exclusive of
the writs of preliminary attachment against the property of petitioners, all interests thereon and damages claimed;
dated September 26, 1983 and issued in Civil Cases Nos. CEB 1185 and 1186"
(Rollo, p. 118). That the defendants have removed or disposed of their
properties with intent to defraud the plaintiff, their creditor,
II because on May 27, 1982 they executed a real estate mortgage
in favor of Philippine Commercial and Industrial Bank (PCIB)
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covering eleven (11) of their fifteen (15) parcels of land in Cebu Bare allegation that an encumbrance of a property is in fraud of the creditor
to secure a P1,000,000.00 loan with the same bank; does not suffice. Factual bases for such conclusion must be clearly averred.
That this action is one of those specifically mentioned in The execution of a mortgage in favor of another creditor is not conceived by
Section 1, Rule 57 of the Rules of Court, whereby a writ the Rules as one of the means of fraudulently disposing of one's property. By
preliminary attachment may lawfully issue because the action mortgaging a piece of property, a debtor merely subjects it to a lien but
therein is one against parties who have removed or disposed ownership thereof is not parted with.
of their properties with intent to defraud their creditor,
plaintiff herein; Furthermore, the inability to pay one's creditors is not necessarily synonymous
with fraudulent intent not to honor an obligation (Insular Bank of Asia &
That there is no sufficient security for the claims sought to be America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]).
enforced by the present action;
Consequently, when petitioners filed a motion for the reconsideration of the
That the total amount due to the plaintiff in the above- order directing the issuance of the writ of attachment, respondent Judge
entitled case is P13,430,259.14, excluding interests and claim should have considered it as a motion for the discharge of the attachment and
for damages and is as much the sum for which an order of should have conducted a hearing or required submission of counter-affidavits
attachment is herein sought to be granted; above all legal from the petitioners, if only to gather facts in support of the allegation of fraud
counter-claims on the part of the defendants. (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of
Rule 57 mandates.
IN VIEW WHEREOF, I hereunto set my hand this 24th day of
August 1983 at Cebu City, Philippines. This procedure should be followed because, as the Court has time and again
said, attachment is a harsh, extraordinary and summary remedy and the rules
(Rollo, pp. 171-172) governing its issuance must be construed strictly against the applicant. Verily,
a writ of attachment can only be granted on concrete and specific grounds and
It is evident from said affidavit that the prayer for attachment rests on the not on general averments quoting perfunctorily the words of the Rules (D.P.
mortgage by petitioners of 11 parcels of land in Cebu, which encumbrance Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]).
respondent Aboitiz considered as fraudulent concealment of property to its
prejudice. We find, however, that there is no factual allegation which may The judge before whom the application is made exercises full discretion in
constitute as a valid basis for the contention that the mortgage was in fraud of considering the supporting evidence proffered by the applicant. One
respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v. Court overriding consideration is that a writ of attachment is substantially a writ of
of Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the execution except that it emanates at the beginning, instead of at the
foundation of the writ, and if none be filed or one be filed which wholly fails to termination of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun
set out some facts required by law to be stated therein, there is no jurisdiction Suy v. Court of Appeals, 212 SCRA 713 [1992]).
and the proceedings are null and void."
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We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and
CEB-1186 constituted undue interference with the proceedings in G.R. No.
63225 in view of the entry of judgment in the latter case.
WHEREFORE, the petition is GRANTED and the Temporary Restraining

Order issued on January 6, 1984 is made PERMANENT. Respondent Judge or
whoever is the presiding judge of the Regional Trial Court, Branch 6, Cebu
City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos. CEB-
1185 and CEB-1186 with deliberate dispatch.
SO ORDERED.
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Claude Neon Lights v. Phil Advertising, 57 Phil. 607 (Case not Found)
46 of 501
aggregate not less than one thousand pesos: Provided, that

none of said creditors has become a creditor by assignment,
State Investment House v. Citibank, 203 S 9 however made, within thirty days prior to the filing of said
petition. Such petition must be filed in the Court of First
FIRST DIVISION Instance of the province or city in which the debtor resides or
has his principal place of business, and must be verified by at
least three (3) of the petitioners. . . .
G.R. Nos. 79926-27 October 17, 1991 The foreign banks involved in the controversy are Bank of America NT and SA,
Citibank N.A. and Hongkong and Shanghai Banking Corporation. On
STATE INVESTMENT HOUSE, INC. and STATE FINANCING CENTER, December 11, 1981, they jointly filed with the Court of First Instance of Rizal a
INC., petitioners, petition for involuntary insolvency of Consolidated Mines, Inc. (CMI), which
vs. they amended four days later. 2 The case was docketed as Sp. Proc. No. 9263
CITIBANK, N.A., BANK OF AMERICA, NT & SA, HONGKONG & and assigned to Branch 28 of the Court.
SHANGHAI BANKING CORPORATION, and the COURT OF
APPEALS, respondents. The petition for involuntary insolvency alleged:
Roco, Bunag, Kapunan & Migallos for petitioners. 1) that CMI had obtained loans from the three petitioning banks, and that as of
November/December, 1981, its outstanding obligations were as follows:
Agcaoili & Associates for Citibank, N.A, and Bank of America NT & SA.
a) In favor of Bank of America (BA)
Belo, Abiera & Associates for Hongkong & Shanghai Banking Corp. P15,297,367.67
(as of December 10, 1981) US$ 4,175,831.88
NARVASA, J.:p (b) In favor of Citibank US$ 4,920,548.85
The chief question in the appeal at bar is whether or not foreign banks (as of December 10, 1981)
licensed to do business in the Philippines, may be considered "residents of the
Philippine Islands" within the meaning of Section 20 of the Insolvency Law c) In favor of Hongkong & Shanghai Bank
(Act No. 1956, as amended, eff. May 20, 1909) reading in part as follows: 1 US$ 5,389,434.12
An adjudication of insolvency may be made on the petition of (as of November 30, 1981); P6,233,969.24
three or more creditors, residents of the Philippine Islands,
whose credits or demands accrued in the Philippine Islands, 2) that in November, 1981, State Investment House, Inc. (SIHI) and State
and the amount of which credits or demands are in the Financing Center, Inc. (SFCI) had separately instituted actions for collection of
47 of 501
sums of money and damages in the Court of First Instance of Rizal against 3) the Court had no jurisdiction to take cognizance of the petition for
CMI, docketed respectively as Civil Cases Numbered 43588 and 43677; and insolvency because petitioners are not resident creditors of CMI in
that on application of said plaintiffs, writs of preliminary attachment had been contemplation of the Insolvency Law; and
issued which were executed on "the royalty/profit sharing payments due CMI
from Benguet Consolidated Mining, Inc;" and 4) the Court has no power to set aside the attachment issued in favor of
intervenors-oppositors SIHI and SFCI.
3) that CMI had "committed specific acts of insolvency as provided in Section
20 of the Insolvency Law, to wit: CMI filed its Answer to the petition for insolvency, asserting in the main that
it was not insolvent, 4 and later filed a "Motion to Dismiss Based on
xxx xxx xxx Affirmative Defense of Petitioner's Lack of Capacity to Sue," echoing the
theory of SIHI and SFCI that the petitioner banks are not "Philippine
5. that he (CMI) has suffered his (CMI's) property to remain residents." 5 Resolution on the motion was "deferred until after hearing of the
under attachment or legal process for three days for the case on the merits" it appearing to the Court that the grounds therefor did not
purpose of hindering or delaying or defrauding his (CMI's) appear to be indubitable. 6
creditors;
SIHI and SFCI filed their own Answer-in-Intervention, 7 and served on the
xxx xxx xxx three petitioner banks requests for admission of certain facts in accordance
with Rule 26 of the Rules of Court, 8 receiving a response only from Hongkong
11. that being a merchant or tradesman he (CMI) has generally & Shanghai Bank. 9
defaulted in the payment of his (CMI's) current obligations
for a period of thirty days; . . . SIHI and SFCI then filed a Motion for Summary Judgment dated May 23, 1983
"on the ground that, based on the pleadings and admissions on record, the
The petition was opposed by State Investment House, Inc. (SIHI) and State trial court had no jurisdiction to adjudicate CMI insolvent since the petitioners
Financing Center, Inc. (SFCI). 3 It claimed that: (respondent foreign banks) are not "resident creditors" of CMI as required
under the Insolvency Law." 10 Oppositions to the motion were filed, 11 to
1) the three petitioner banks had come to court with unclean hands in that which a reply was submitted. 12
they filed the petition for insolvency — alleging the CMI was defrauding its
creditors, and they wished all creditors to share in its assets — although a few The Regional Trial Court 13 found merit in the motion for summary judgment.
days earlier, they had "received for the account of CMI substantial payments By Order dated October 10, 1983, it rendered "summary judgment dismissing
aggregating P10,800,000.00;" the . . . petition for lack of jurisdiction over the subject matter, with costs
against petitioners." 14 It ruled that on the basis of the "facts on record, as
2) the Court had no jurisdiction because the alleged acts of insolvency were shown in the pleadings, motions and admissions of the parties, an insolvency
false: the writs of attachment against CMI had remained in force because there court could "not acquire jurisdiction to adjudicate the debtor as insolvent if
were "just, valid and lawful grounds for the(ir) issuance," and CMI was not a the creditors petitioning for adjudication of insolvency are not "residents" of
"merchant or tradesman" nor had it "generally defaulted in the payment of the Philippines" — citing a decision of the California Supreme Court which it
(its) obligations for a period of thirty days . . . ;" declared "squarely applicable especially considering that one of the sources of
48 of 501
our Insolvency Law is the Insolvency Act of California of 1895 . . . " And it honest debtor from the weight of oppressive indebtedness and permit him to
declared that since petitioners had been merely licensed to do business in the start life anew, free from the obligations and responsibilities consequent upon
Philippines, they could not be deemed residents thereof. business misfortunes;" 19 and that it was "crystal clear" that the law was
"designed not only for the benefit of the creditors but more importantly for
The three foreign banks sought to take an appeal from the Order of October the benefit of the debtor himself," the object being "to provide not only for the
10, 1983. They filed a notice of appeal and arecord on appeal. 15 SIHI and SFCI suspension of payments and the protection of creditors but also the discharge
moved to dismiss their appeal claiming it was attempted out of time. The Trial of insolvent honest debtors to enable them to have a fresh start;"
Court denied the motion.
2) that the Trial Court had placed "a very strained and restrictive
SIHI and SFCI filed with this Court a petition for certiorari and prohibition interpretation of the term "resident," as to exclude foreign banks which have
(G.R. NO. 66449), impugning that denial. The Court dismissed the petition been operating in this country since the early part of the century," and "the
and instead required the three banks to file a petition for review in accordance better approach . . . would have been to harmonize the provisions . . . (of the
with Rule 45 of the Rules of Court. 16 This the banks did (their petition was Insolvency Law) with similar provisions of other succeeding laws, like the
docketed as G.R. No. 66804). However, by Resolution dated May 16, 1984, the Corporation Code of the Philippines, the General Banking Act, the Offshore
court referred the petition for review to the Intermediate Appellate Court, Banking Law and the National Internal Revenue Code in connection with or
where it was docketed as AC SP-03674. 17 related to their doing business in the Philippines;"
In the meantime, the Trial Court approved on May 3, 1985 the banks' record on 3) that in light of said statutes, the three banks "are in truth and in fact
appeal and transmitted it to this Court, where it was recorded as UDK-6866. considered as "residents" of the Philippines for purposes of doing business in
As might have been expected, this Court required the banks to file a petition the Philippines and even for taxation matters;"
for review under Rule 45, but they asked to be excused from doing so since
they had already filed such a petition, which had been referred to the 4) that the banks had "complied with all the laws, rules and regulations (for
Intermediate Appellate Court and was there pending as AC-G.R. No. SP doing business in the country) and have been doing business in the
03674, supra. This Court then also referred UDK-6866 to the Intermediate Philippines for many years now;" that the authority granted to them by the
Appellate Court where it was docketed as AC-G.R. No. CV 07830. Securities and Exchange Commission upon orders of the Monetary Board
"covers not only transacting banking business . . . but likewise maintaining
Both referred cases, AC-G.R. No. SP 03674 and AC-G.R. No. CV 07830, were suits "for recovery of any debt, claims or demand whatsoever," and that their
consolidated by Resolution of the Court of Appeals dated April 9, 1986, and petition for involuntary insolvency was "nothing more than a suit aimed at
Decision thereon was promulgated on July 14, 1987 by the Fifteenth Division of recovering a debt granted by them to Consolidated Mines, Inc., or at least a
said Court. 18 portion thereof;"
The Appellate Court reversed the Trial Court's Order of October 10, 1983 and 4) that to deprive the foreign banks of their right to proceed against their
remanded the case to it for further proceedings. It ruled: debtors through insolvency proceedings would "contravene the basic
standards of equity and fair play, . . . would discourage their operations in
1) that the purpose of the Insolvency Law was "to convert the assets of the economic development projects that create not only jobs for our people but
bankrupt in cash for distribution among creditors, and then to relieve the also opportunities for advancement as a nation;" and
49 of 501
5) that the terms "residence" and "domicile" do not mean the same thing, and 6) no substantive law explicitly grants foreign banks the power to petition for
that as regards a corporation, it is generally deemed an "inhabitant" of the the adjudication of the Philippine corporation as a bankrupt;
state under whose law it is incorporated, and has a "residence" wherever it
conducts its ordinary business, and may have its legal "domicile" in one place 7) the Monetary Board can not appoint a conservator or receiver for a foreign
and "residence" in another. bank or orders its liquidation having only the power to revoke its license,
subject to such proceedings as the Solicitor General may thereafter deem
SIHI and SFCI moved for reconsideration and then, when rebuffed, took an proper to protect its creditors;
appeal to this Court. Here, they argue that the Appellate Court's judgment
should be reversed because it failed to declare that — 8) the foreign banks are not denied the right to collect their credits against
Philippine debtors, only the right to "petition for the harsh remedy of
1) the failure of the three foreign banks to allege under oath in their petition involuntary insolvency" not being conceded to them;
for involuntary insolvency that they are Philippine residents, wishing only to
"be considered Philippine residents," is fatal to their cause; 9) said banks have come to court with unclean hands, their filing of the
petition for involuntary insolvency being an attempt to defeat validly acquired
2) also fatal to their cause is their failure to prove, much less allege, that under rights of domestic corporations.
the domiciliary laws of the foreign banks, a Philippine corporation is allowed
the reciprocal right to petition for a debtor's involuntary insolvency; The concept of a foreign corporation under Section 123 of the Corporation
Code is of "one formed, organized or existing under laws other than those of
3) in fact and in law, the three banks are not Philippine residents because: the Philippines and . . . (which) laws allow Filipino citizens and corporations
to do business . . . ." There is no question that the three banks are foreign
a) corporations have domicile and residence corporations in this sence, with principal offices situated outside of the
only in the state of their incorporation or in Philippines. There is no question either that said banks have been licensed to
the place designated by law, although do business in this country and have in fact been doing business here for many
for limited and exclusive purposes, other years, through branch offices or agencies, including "foreign currency deposit
states may consider them as residents; units;" in fact, one of them, Hongkong & Shanghai Bank has been doing
business in the Philippines since as early as 1875.
b) juridical persons may not have residence
separate from their domicile; The issue is whether these Philippine branches or units may be considered
"residents of the Philippine Islands" as that term is used in Section 20 of the
4) actually, the non-resident status of the banks within the context of the Insolvency Law, supra, 20 or residents of the state under the laws of which
Insolvency Law is confirmed by other laws; they were respectively incorporated. The answer cannot be found in the
Insolvency Law itself, which contains no definition of the term, resident, or
5) the license granted to the banks to do business in the Philippines does not any clear indication of its meaning. There are however other statutes, albeit of
make them residents; subsequent enactment and effectivity, from which enlightening notions of the
term may be derived.
50 of 501
The National Internal Revenue Code declares that the term "'resident foreign Philippines, or as a party who resides out of the country, then, logically, it
corporation' applies to a foreign corporation engaged in trade or business must be considered a party who does reside in the Philippines, who is a
within the Philippines," as distinguished from a " "non-resident foreign resident of the country. Be this as it may, this Court pointed out that:
corporation" . . . (which is one) not engaged in trade or business within the
Philippines." 21 . . . Our laws and jurisprudence indicate a purpose to
assimilate foreign corporations, duly licensed to do business
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, here, to the status of domestic corporations. (Cf. Section 73,
subsidiaries, affiliation, extension offices or any other units of corporation or Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser &
juridical person organized under the laws of any foreign country operating in Co., 46 Phil. 70, 76; Yu; Cong Eng vs. Trinidad, 47 Phil. 385,
the Philippines shall be considered residents of the Philippines." 22 411) We think it would be entirely out of line with this policy
should we make a discrimination against a foreign
The General Banking Act, Republic Act No. 337, places "branches and agencies corporation, like the petitioner, and subject its property to the
in the Philippines of foreign banks . . . (which are) called Philippine branches," harsh writ of seizure by attachment when it has complied not
in the same category as "commercial banks, savings associations, mortgage only with every requirement of law made specially of foreign
banks, development banks, rural banks, stock savings and loan associations" corporations, but in addition with every requirement of law
(which have been formed and organized under Philippine laws), making no made of domestic corporations. . . . .
distinction between the former and the later in so far, as the terms "banking
institutions" and "bank" are used in the Act, 23 declaring on the contrary that Obviously, the assimilation of foreign corporations authorized to do business
in "all matters not specifically covered by special provisions applicable only to in the Philippines "to the status of domesticcorporations," subsumes their
foreign banks, or their branches and agencies in the Philippines, said foreign being found and operating as corporations, hence, residing, in the country.
banks or their branches and agencies lawfully doing business in the
Philippines "shall be bound by all laws, rules, and regulations applicable to The same principle is recognized in American law: that the "residence of a
domestic banking corporations of the same class, except such laws, rules and corporation, if it can be said to have a residence, is necessarily where it
regulations as provided for the creation, formation, organization, or exercises corporate functions . . . ;" that it is .considered as dwelling "in the
dissolution of corporations or as fix the relation, liabilities, responsibilities, or place where its business is done . . . ," as being "located where its franchises are
duties of members, stockholders or officers or corporations." 24 exercised . . . ," and as being "present where it is engaged in the prosecution of
the corporate enterprise;" that a "foreign corporation licensed to do business
This Court itself has already had occasion to hold 25 that a foreign corporation in a state is a resident of any country where it maintains an office or agent for
licitly doing business in the Philippines, which is a defendant in a civil suit, transaction of its usual and customary business for venue purposes;" and that
may not be considered a non-resident within the scope of the legal provision the "necessary element in its signification is locality of existence." 27 Courts
authorizing attachment against a defendant not residing in the Philippine have held that "a domestic corporation is regarded as having a residence
Islands;" 26 in other words, a preliminary attachment may not be applied for within the state at any place where it is engaged in the particulars of the
and granted solely on the asserted fact that the defendant is a foreign corporate enterprise, and not only at its chief place or home office;" 28 that "a
corporation authorized to do business in the Philippines — and is corporation may be domiciled in one state and resident in another; its legal
consequently and necessarily, "a party who resides out of the Philippines." domicil in the state of its creation presents no impediment to its residence in a
Parenthetically, if it may not be considered as a party not residing in the real and practical sense in the state of its business activities." 29
51 of 501
The foregoing propositions are in accord with the dictionary concept of The petitioners next argue that "Philippine law is emphatic that only foreign
residence as applied to juridical persons, a term which appears to comprehend corporations whose own laws give Philippine nationals reciprocal rights may
permanent as well as temporary residence. do business in the Philippines." As basis for the argument they invoke Section
123 of the Corporation Code which, however, does not formulate the
The Court cannot thus accept the petitioners' theory that corporations may proposition in the same way. Section 123 does not say, as petitioners assert,
not have a residence (i.e., the place where they operate and transact business) that it is required that the laws under which foreign corporations are formed
separate from their domicile (i.e., the state of their formation or organization), "give Philippine nationals, reciprocal rights." What it does say is that the laws of
and that they may be considered by other states as residents only for limited the country or state under which a foreign corporation is "formed, organized
and exclusive purposes. Of course, as petitioners correctly aver, it is not really or existing . . . allow Filipino citizens and corporations to do business in its own
the grant of a license to a foreign corporation to do business in this country country or state," which is not quite the same thing. Now, it seems to the
that makes it a resident; the license merely gives legitimacy to its doing Court that there can be no serious debate about the fact that the laws of the
business here. What effectively makes such a foreign corporation a resident countries under which the three (3) respondent banks were formed or
corporation in the Philippines is its actually being in the Philippines and licitly organized (Hongkong and the United States) do "allow Filipino citizens and
doing business here, "locality of existence" being, to repeat, the "necessary corporations to do business" in their own territory and jurisdiction. It also
element in . . . (the) signification" of the term, resident corporation. seems to the Court quite apparent that the Insolvency Law contains no
requirement that the laws of the state under which a foreign corporation has
Neither can the Court accept the theory that the omission by the banks in been formed or organized should grant reciprocal rights to Philippine citizens
their petition for involuntary insolvency of an explicit and categorical to apply for involuntary insolvency of a resident or citizen thereof. The
statement that they are "residents of the Philippine Islands," is fatal to their petitioners' point is thus not well taken and need not be belabored.
cause. In truth, in light of the concept of resident foreign corporations just
expounded, when they alleged in that petition that they are foreign banking That the Monetary Board can not appoint a conservator or receiver for a
corporations, licensed to do business in the Philippines, and actually doing foreign bank or order its liquidation having only the power to revoke its
business in this Country through branch offices or agencies, they were in effect license, subject to such proceedings as the Solicitor General may thereafter
stating that they are resident foreign corporations in the Philippines. deem proper to protect its creditors, which is another point that petitioners
seek to make, is of no moment. It has no logical connection to the matter of
There is, of course, as petitioners argue, no substantive law explicitly whether or not the foreign bank may properly ask for a judicial declaration of
granting foreign banks the power to petition for the adjudication of a the involuntary insolvency of a domestic corporation, which is the issue at
Philippine corporation as a bankrupt. This is inconsequential, for neither is hand. The fact is, in any event, that the law is not lacking in sanctions against
there any legal provision expressly giving domestic banks the same power, foreign banks or powerless to protect the latter's creditors.
although their capacity to petition for insolvency can scarcely be disputed and
is not in truth disputed by petitioners. The law plainly grants to a juridical The petitioners contend, too, that the respondent banks have come to court
person, whether it be a bank or not or it be a foreign or domestic corporation, with unclean hands, their filing of the petition for involuntary insolvency
as to natural persons as well, such a power to petition for the adjudication of being an attempt to defeat validly acquired rights of domestic corporations.
bankruptcy of any person, natural or juridical, provided that it is a resident The Court wishes to simply point out that the effects of the institution of
corporation and joins at least two other residents in presenting the petition to bankruptcy proceedings on all the creditors of the alleged bankrupt are clearly
the Bankruptcy Court. spelled out by the law, and will be observed by the Insolvency Court regardless
52 of 501
of whatever motives — apart from the desire to share in the assets of the The petitioners allege that three days before respondent banks filed their
insolvent in satisfying its credits — that the party instituting the proceedings petition for involuntary insolvency against CMI, they received from the latter
might have. substantial payments on account in the aggregate amount of P6,010,800.00,
with the result that they were "preferred in the distribution of CMI's assets
Still another argument put forth by the petitioners is that the three banks' thereby defrauding other creditors of CMI." Non sequitur. It is in any case a
failure to incorporate their branches in the Philippines into new banks in circumstance that the Bankruptcy Court may well take into consideration in
accordance with said Section 68 of the General Banking Act connotes an determining the manner and proportion by which the assets of the insolvent
intention on their part to continue as residents of their respective states of company shall be distributed among its creditors; but it should not be
incorporation and not to be regarded as residents of the Philippines. The considered a ground for giving the petition for insolvency short shrift.
argument is based on an incomplete and inaccurate quotation of the cited Moreover, the payment adverted to does not appear to be all that large. The
Section. What Section 68 required of a "foreign bank presently having total liabilities of CMI to the three respondent banks as of December, 1981 was
branches and agencies in the Philippines, . . . within one year from the P21,531,336.91, and US$14,485,814.85. Converted into Philippine currency at the
effectivity" of the General Banking Act, was to comply with any of three (3) rate of P7.899 to the dollar, the average rate of exchange during December,
options, not merely with one sole requirement. These three (3) options are the 1981, 30 the dollar account would be P114,423,451.50. Thus, the aggregate
following: liabilities of CMI to the banks, expressed in Philippine currency, was
P135,954,788.41 as of December, 1981, and therefore the payment to them of
1) (that singled out and quoted by the petitioners, i.e.:) P6,010,800.00 constituted only some 4.42% of the total indebtedness.
"incorporate its branch or branches into a new bank in
accordance with Philippine laws . . . ; or WHEREFORE, the petition is DENIED and the challenged Decision of the
Court of Appeals is AFFIRMED in toto, with costs against the petitioners.
2) "assign capital permanently to the local branch with the
concurrent maintenance of a 'net due to' head office account SO ORDERED.
which shall include all net amounts due to other branches
outside the Philippines in an amount which when added to
the assigned capital shall at all times be not less than the
minimum amount of capital accounts required for domestic
commercial banks under section twenty-two of this Act;" or
3) "maintain a "net due to" head office account which shall

include all net amounts due to other branches outside the
Philippines, in an amount which shall not be less than the
minimum amount of capital accounts required for domestic
commercial banks under section twenty-two of this Act."
The less said about this argument then, the better.

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Section 2, Rule 5, of the Rules of Court provides:
Mabanag v. Gallemore, 81 Phil. 254 If any of the defendants does not reside and is not found in the Philippines,
and the action effects the personal status of the plaintiff, or any property of the
EN BANC defendant located in the Philippines, the action may be commenced and tried
in the province where the plaintiff resides or the property, or any portion
DECISION thereof, is situated or found.
July 20, 1948 The Philippine leading cases in which this Rule, or its counterpart in the
former Code of Civil Procedure, section 377 and 395, were cited and applied,
G.R. No. L-825 are Banco Español-Filipino vs. Palanca, 37 Phil. 921, and Slade Perkins vs.
ROMAN MABANAG, plaintiff-appellant, Dizon, 40 O.G. [3d Suppl.], No. 7, p. 216. The gist of this Court’s ruling in these
vs. cases, in so far as it is relevant to the present issues, is given in I Moran’s
JOSEPH M. GALLEMORE, defendant-appellee. Comments on the Rules of Court, 2d Ed., 105:
Santiago Catane for appellant. As a general rule, when the defendant is not residing and is not found in the
No appearance for appellee. Philippines, the Philippine courts cannot try any case against him because of
, J.: the impossibility of acquiring jurisdiction over his person, unless he
This case, here on appeal from an order dismissal by the Court of First voluntarily appears in court. But, when the action affects the personal status of
Instance of Occidental Misamis, raises the question of the court’s jurisdiction. the plaintiff residing in the Philippines, or is intended to seize or dispose of
More specifically, the question is whether the action is in personamor one in any property, real or personal, of the defendant, located in the Philippines, it
rem. The trial court opined that it is the first and that it “has no authority nor may be validly tried by the Philippine courts, for then, they have jurisdiction
jurisdiction to render judgment against the herein defendant, Joseph M. over the res, i.e., the personal status of the plaintiff or the property of the
Gallemore for being a non-resident. defendant, and their jurisdiction over the person of the non-resident
The purpose of the action is to recover P735.18, an amount said to have been defendant is not essential. Venue in such cases may be laid in the province
paid by the plaintiff to the defendant for two parcels of land whose sale was where the plaintiff whose personal status is in question resides, or where the
afterward annulled. The defendant is said to be residing in Los Angeles, property of the defendant or a part thereof involved in the litigation is located.
California, U. S. A. He has no property in the Philippine except an alleged debt
owing him by a resident of the municipality of Occidental Misamis. This debt, Literally this Court said:
upon petition of the plaintiff, after the filing of the complaint and before the
suit was dismissed, was attached to the extent of plaintiff’s claim for the Jurisdiction over the property which is the subject of litigation may result
payment of which the action was brought. But the attachment was dissolved in either from a seizure of the property under legal process, whereby it is brought
the same order dismissing the case. into the actual custody of the law, or it may result from the institution of legal
proceedings wherein, under special provisions of law, the power of the court
It was Atty. Valeriano S. Kaamino who has amicus curiæ filed the motion to over the property is recognized and made effective. In the latter case the
dismiss and to set aside the attachment. There is no appearance before this property, though at all times within the potential power of the court, may
Court to oppose the appeal. never be taken into actual custody at all. An illustration of the jurisdiction
54 of 501
acquired by actual seizure is found in attachment proceedings, where the the State, there is nothing upon which the tribunals can adjudicate. (Slade
property is seized at the beginning of the action, or some subsequent stage of Perkins vs. Dizon, 40 O.G. [3d Supplement], No. 7, p. 216.).
its progress, and held to abide the final event of the litigation. An illustration
of what we term potential jurisdiction over the res, is found in the proceeding A fuller statement of the principle whereunder attachment or garnishment of
to register the title of land under our system for the registration of land. Here property of a non-resident defendant confers jurisdiction on the court in an
the court, without taking actual physical control over the property assumes, at otherwise personal action, appears in two well known and authoritative works:
the instance of some person claiming to be owner, to exercise a jurisdiction in
The main action in an attachment or garnishment suit is in rem until
rem over the property and to adjudicate the title in favor of the petitioner
jurisdiction of the defendant is secured. Thereafter, it is in personam and
against all the world. (Banco Español-Filipino vs. Palanca, supra, 927-928.).
also in rem, unless jurisdiction of the res is lost as by dissolution of the
In an ordinary attachment proceeding, if the defendant is not personally
attachment. If jurisdiction of the defendant is acquired but jurisdiction of the
served, the preliminary seizure is to be considered necessary in order to confer
res is lost, it is then purely in personam. . . a proceeding against property
jurisdiction upon the court. In this case the lien on the property is acquired by
without jurisdiction of the person of the defendant is in substance a
the seizure; and the purpose of the proceeding is to subject the property to
proceeding in rem; and where there is jurisdiction of the defendant, but the
that lien. If a lien already exists, whether created by mortgage, contract, or
proceedings against the property continues, that proceedings is none the less
statute, the preliminary seizure is not necessary; and the court proceeds to
necessarily in rem, although in form there is but a single proceeding. (4 Am.
enforce such lien in the manner provided by law precisely as though the
Jur., 556-557.)
property had been seized upon attachment. (Roller vs. Holly, 176 U.S. 398, 405;
As the remedy is administered in some states, the theory of an attachment,
44 Law. ed. 520.) It results that the mere circumstance that in an attachment
whether it is by process against or to subject the property or effects of a
the property may be seized at the inception of the proceedings, while in the
resident or non-resident of the state, is that it partakes essentially of the
foreclosure suit it is not taken into legal custody until the time comes for the
nature and character of the proceeding in personam and not of a proceeding in
sale, does not materially affect the fundamental principle involved in both
rem. And if the defendant appears the action proceeds in accordance with the
cases, which is that the court is here exercising a jurisdiction over the property
practice governing proceedings in personam. But were the defendant fails to
in a proceeding directed essentially in rem. (Id., 929-930.).
appear in the action, the proceeding is to be considered as one in the nature of
When, however, the action relates to property located in the Philippines, the
a proceeding in rem. And where the court acts directly on the property, the
Philippine courts may validly try the case, upon the principles that a “State,
title thereof being charged by the court without the intervention of the party,
through its tribunals, may subject property situated within its limit owned by
the proceeding unquestionably is one in rem in the fullest meaning of the
non-residents to the payment of the demand of its own citizens against them;
term.
and the exercise of this jurisdiction in no respect infringes upon the
In attachment proceedings against a non-resident defendant where personal
sovereignty of the State were the owners are domiciled. Every State owes
service on him is lacking, it is elementary that the court must obtain
protection to its own citizens; and, when non-residents deal with them, it is a
jurisdiction of the property of the defendant. If no steps have been taken to
legitimate and just exercise of authority to hold any appropriate any property
acquire jurisdiction of the defendant’s person, and he has not appeared and
owned by such non-residents to satisfy the claims of its citizens. It is in virtue
answered or otherwise submitted himself to the jurisdiction of the court, the
of the State’s jurisdiction over the property of the non-resident situated within
court is without jurisdiction to render judgment until there has been a lawful
its limits that its tribunals can inquire into the non-resident’s obligations to its
seizure of property owned by him within the jurisdiction of the court. (2 R. C.
own citizens, and the inquiry can then be carried only to the extent necessary
L., 800-804.).
to control disposition of the property. If the non-resident has no property in
55 of 501
Tested by the foregoing decisions and authorities, the Court has acquired
jurisdiction of the case at bar by virtue of the attachment of the defendant’s
credit. Those authorities and decisions, so plain and comprehensive as to
make any discussion unnecessary, are in agreement that though no
jurisdiction is obtained over the debtor’s person, the case may proceed to
judgment if there is property in the custody of the court that can be applied to
its satisfaction.
It is our judgment that the court below erred in dismissing the case and
dissolving the attachment; and it is ordered that, upon petition of the plaintiff,
it issue a new writ of attachment and then proceed to trial. The costs of this
appeal will be charged to defendant and appellee.
56 of 501
Philippine Bank of Communications v. CA, February 23, 2001 of credit and trust receipts executed by petitioner with private respondent
Filipinas Textile Mills as obligor; which, in turn, were covered by surety
FIRST DIVISION agreements executed by private respondent Bernardino Villanueva and Sochi
Villanueva. In their Answer, private respondents admitted the existence of the
G.R. No. 115678 February 23, 2001 surety agreements and trust receipts but countered that they had already
made payments on the amount demanded and that the interest and other
PHILIPPINES BANK OF COMMUNICATIONS, petitioner, charges imposed by petitioner were onerous.
vs.
4
HON. COURT OF APPEALS and BERNARDINO On May 31, 1993, petitioner filed a Motion for Attachment, contending that
VILLANUEVA, respondents. violation of the trust receipts law constitutes estafa, thus providing ground for
the issuance of a writ of preliminary attachment; specifically under paragraphs
x ---------------------------------------- x "b" and "d," Section 1, Rule 57 of the Revised Rules of Court. Petitioner further
claimed that attachment was necessary since private respondents were
G.R. No. 119723 February 23, 2001 disposing of their properties to its detriment as a creditor. Finally, petitioner
offered to post a bond for the issuance of such writ of attachment.
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs. The Motion was duly opposed by private respondents and, after the filing of a
HON. COURT OF APPEALS and FILIPINAS TEXTILE MILLS, Reply thereto by petitioner, the lower court issued its August 11, 1993 Order for
INC., respondents. the issuance of a writ of preliminary attachment, conditioned upon the filing
of an attachment bond. Following the denial of the Motion for
YNARES-SANTIAGO, J.: Reconsideration filed by private respondent Filipinas Textile Mills, both
private respondents filed separate petitions for certiorari before respondent
Before us are consolidated petitions for review both filed by Philippine Bank of Court assailing the order granting the writ of preliminary
Communications; one against the May 24, 1994 Decision of respondent Court attachment.1âwphi1.nêt
1
of Appeals in CA-G.R. SP No. 32863 and the other against its March 31, 1995
2 Both petitions were granted, albeit on different grounds. In CA-G.R. SP No.
Decision in CA-G.R. SP No. 32762. Both Decisions set aside and nullified the
3 32762, respondent Court of Appeals ruled that the lower court was guilty of
August 11, 1993 Order of the Regional Trial Court of Manila, Branch 7,
granting the issuance of a writ of preliminary attachment in Civil Case No. 91- grave abuse of discretion in not conducting a hearing on the application for a
56711. writ of preliminary attachment and not requiring petitioner to substantiate its
allegations of fraud, embezzlement or misappropriation. On the other hand, in
The case commenced with the filing by petitioner, on April 8, 1991, of a CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds
Complaint against private respondent Bernardino Villanueva, private cited by petitioner in its Motion do not provide sufficient basis for the
respondent Filipinas Textile Mills and one Sochi Villanueva (now deceased) issuance of a writ of preliminary attachment, they being mere general
before the Regional Trial Court of Manila. In the said Complaint, petitioner averments. Respondent Court of appeals held that neither embezzlement,
sought the payment of P2,244,926.30 representing the proceeds or value of misappropriation nor incipient fraud may be presumed; they must be
various textile goods, the purchase of which was covered by irrevocable letters established in order for a writ of preliminary attachment to issue.
57 of 501
5
Hence, the instant consolidated petitions charging that respondent Court of and "d", i.e. for embezzlement or fraudulent misapplication or
Appeals erred in – conversion of money (proceeds) or property (goods entrusted) by an
agent (entrustee) in violation of his fiduciary duty as such, and against
"1. Holding that there was no sufficient basis for the issuance of the a party who has been guilty of fraud in contracting or incurring the
writ of preliminary attachment in spite of the allegations of fraud, debt or obligation;
embezzlement and misappropriation of the proceeds or goods
entrusted to the private respondents; 4. The issuance of a writ of preliminary attachment is likewise
urgently necessary as there exist(s) no sufficient security for the
2. Disregarding the fact that the failure of FTMI and Villanueva to satisfaction of any judgment that may be rendered against the
remit the proceeds or return the goods entrusted, in violation of defendants as the latter appears to have disposed of their properties to
private respondents' fiduciary duty as entrustee, constitute the detriment of the creditors like the herein plaintiff;
embezzlement or misappropriation which is a valid ground for the
6
issuance of a writ of preliminary attachment." 5. Herein plaintiff is willing to post a bond in the amount fixed by this
Honorable Court as a condition to the issuance of a writ of
We find no merit in the instant petitions. preliminary attachment against the properties of the defendants.
To begin with, we are in accord with respondent Court of Appeals in CA-G.R. Section 1 (b) and (d), Rule 57 of the then controlling Revised Rules of Court,
SP No. 32863 that the Motion for Attachment filed by petitioner and its provides, to wit –
supporting affidavit did not sufficiently establish the grounds relied upon in
applying for the writ of preliminary attachment. SECTION 1. Grounds upon which attachment may issue. – A plaintiff or
any proper party may, at the commencement of the action or at any
The Motion for Attachment of petitioner states that – time thereafter, have the property of the adverse party attached as
security for the satisfaction of any judgment that may be recovered in
1. The instant case is based on the failure of defendants as entrustee to the following cases:
pay or remit the proceeds of the goods entrusted by plaintiff to
defendant as evidenced by the trust receipts (Annexes "B", "C" and "D" xxx xxx xxx
of the complaint), nor to return the goods entrusted thereto, in
violation of their fiduciary duty as agent or entrustee; (b) In an action for money or property embezzled or fraudulently
misapplied or converted to his us by a public officer, or an officer of a
2. Under Section 13 of P.D. 115, as amended, violation of the trust corporation, or an attorney, factor, broker, agent or clerk, in the
receipt law constitute(s) estafa (fraud and/or deceit) punishable under course of his employment as such, or by any other person in a
Article 315 par. 1[b] of the Revised Penal Code; fiduciary capacity, or for a willful violation of duty;
3. On account of the foregoing, there exist(s) valid ground for the xxx xxx xxx
issuance of a writ of preliminary attachment under Section 1 of Rule 57
of the Revised Rules of Court particularly under sub-paragraphs "b"
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(d) In an action against a party who has been guilty of fraud in attachment may be issued against the defendants, particularly
contracting the debt or incurring the obligation upon which the subparagraphs "b" and "d" of said section;
action is brought, or in concealing or disposing of the property for the
taking, detention or conversion of which the action is brought; 5. There is no other sufficient security for the claim sought to be
enforced by the instant case and the amount due to herein plaintiff or
xxx xxx xxx the value of the property sought to be recovered is as much as the sum
for which the order for attachment is granted, above all legal
While the Motion refers to the transaction complained of as involving trust counterclaims.
receipts, the violation of the terms of which is qualified by law as constituting
estafa, it does not follow that a writ of attachment can and should Again, it lacks particulars upon which the court can discern whether or not a
automatically issue. Petitioner cannot merely cite Section 1(b) and (d), Rule 57, writ of attachment should issue.
of the Revised Rules of Court, as mere reproduction of the rules, without more,
cannot serve as good ground for issuing a writ of attachment. An order of Petitioner cannot insist that its allegation that private respondents failed to
attachment cannot be issued on a general averment, such as one remit the proceeds of the sale of the entrusted goods nor to return the same is
7
ceremoniously quoting from a pertinent rule. sufficient for attachment to issue. We note that petitioner anchors its
application upon Section 1(d), Rule 57. This particular provision was
8
The supporting Affidavit is even less instructive. It merely states, as follows – adequately explained in Liberty Insurance Corporation v. Court of Appeals, as
follows –
I, DOMINGO S. AURE, of legal age, married, with address at No. 214-
216 Juan Luna Street, Binondo, Manila, after having been sworn in To sustain an attachment on this ground, it must be shown that the
accordance with law, do hereby depose and say, THAT: debtor in contracting the debt or incurring the obligation intended to
defraud the creditor. The fraud must relate to the execution of the
1. I am the Assistant Manager for Central Collection Units agreement and must have been the reason which induced the other
Acquired Assets Section of the plaintiff, Philippine Bank of party into giving consent which he would not have otherwise given.
Communications, and as such I have caused the preparation of the To constitute a ground for attachment in Section 1 (d), Rule 57 of the
above motion for issuance of a writ of preliminary attachment; Rules of Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted if at the
2. I have read and understood its contents which are true and time of contracting it the debtor has a preconceived plan or
correct of my own knowledge; intention not to pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be inferred from the
3. There exist(s) sufficient cause of action against the defendants in circumstances attendant in each case (Republic v. Gonzales, 13 SCRA
the instant case; 633). (Emphasis ours)
4. The instant case is one of those mentioned in Section 1 of Rule We find an absence of factual allegations as to how the fraud alleged by
57 of the Revised Rules of Court wherein a writ of preliminary petitioner was committed. As correctly held by respondent Court of Appeals,
such fraudulent intent not to honor the admitted obligation cannot be
59 of 501
11
inferred from the debtor's inability to pay or to comply with the As was frowned upon in D.P. Lub Oil Marketing Center, Inc., not only was
9
obligations. On the other hand, as stressed, above, fraud may be gleaned from petitioner's application defective for having merely given general averments;
a preconceived plan or intention not to pay. This does not appear to be so in what is worse, there was no hearing to afford private respondents an
the case at bar. In fact, it is alleged by private respondents that out of the total opportunity to ventilate their side, in accordance with due process, in order to
P419,613.96 covered by the subject trust receipts, the amount of P400,000.00 determine the truthfulness of the allegations of petitioner. As already
had already been paid, leaving only P19,613.96 as balance. Hence, regardless of mentioned, private respondents claimed that substantial payments were made
the arguments regarding penalty and interest, it can hardly be said that private on the proceeds of the trust receipts sued upon. They also refuted the
respondents harbored a preconceived plan or intention not to pay petitioner. allegations of fraud, embezzlement and misappropriation by averring that
private respondent Filipinas Textile Mills could not have done these as it had
The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. ceased its operations starting in June of 1984 due to workers' strike. These are
32863 that neither petitioner's Motion or its supporting Affidavit provides matters which should have been addressed in a preliminary hearing to guide
sufficient basis for the issuance of the writ of attachment prayed for. the lower court to a judicious exercise of its discretion regarding the
attachment prayed for. On this score, respondent Court of Appeals was correct
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that in setting aside the issued writ of preliminary attachment.
the lower court should have conducted a hearing and required private
petitioner to substantiate its allegations of fraud, embezzlement and Time and again, we have held that the rules on the issuance of a writ of
misappropriation. attachment must be construed strictly against the applicants. This stringency
is required because the remedy of attachment is harsh, extraordinary and
To reiterate, petitioner's Motion for Attachment fails to meet the standard set summary in nature. If all the requisites for the granting of the writ are not
10 12
in D.P. Lub Oil Marketing Center, Inc. v. Nicolas, in applications for present, then the court which issues it acts in excess of its jurisdiction.
attachment. In the said case, this Court cautioned –
WHEREFORE, for the foregoing reasons, the instant petitions are DENIED.
The petitioner's prayer for a writ of preliminary attachment hinges on The decision of the Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP
the allegations in paragraph 16 of the complaint and paragraph 4 of No. 32762 are AFFIRMED. No pronouncement as to costs.1âwphi1.nêt
the affidavit of Daniel Pe which are couched in general terms devoid
of particulars of time, persons and places to support support such a SO ORDERED.
serious assertion that "defendants are disposing of their properties in
fraud of creditors." There is thus the necessity of giving to the private
respondents an opportunity to ventilate their side in a hearing, in
accordance with due process, in order to determine the truthfulness of
the allegations. But no hearing was afforded to the private
respondents the writ having been issued ex parte. A writ of
attachment can only be granted on concrete and specific grounds and
not on general averments merely quoting the words of the rules.
60 of 501
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
PCIB v. Alejandro, September 21, 2007 (1) respondent fraudulently withdrew his unassigned deposits notwithstanding
his verbal promise to PCIB Assistant Vice President Corazon B. Nepomuceno
G.R. No. 175587 September 21, 2007 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
6
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner, the issuance of a writ was supported with the affidavit of Nepomuceno.
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent. On October 24, 1997, the trial court granted the application and issued the
7
writ ex parte after petitioner posted a bond in the amount of P18,798,734.69,
DECISION issued by Prudential Guarantee & Assurance Inc., under Bond No. HO-46764-
97. On the same date, the bank deposits of respondent with Rizal Commercial
YNARES-SANTIAGO, J.: Banking Corporation (RCBC) were garnished. On October 27, 1997,
respondent, through counsel, filed a manifestation informing the court that he
1 8
This petition for review assails the May 31, 2006 Decision of the Court of is voluntarily submitting to its jurisdiction.
2
Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision of
9
the Regional Trial Court of Makati, which granted respondent Joseph Anthony Subsequently, respondent filed a motion to quash the writ contending that
M. Alejandro’s claim for damages arising from petitioner Philippine the withdrawal of his unassigned deposits was not fraudulent as it was
Commercial International Bank’s (PCIB) invalid garnishment of respondent’s approved by petitioner. He also alleged that petitioner knew that he maintains
deposits. 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
3 10
On October 23, 1997, petitioner filed against respondent a complaint for sum Buenaventura Sayoc & De los Angeles, where he is a partner. In both
of money with prayer for the issuance of a writ of preliminary attachment. Said addresses, petitioner regularly communicated with him through its
complaint alleged that on September 10, 1997, respondent, a resident of Hong representatives. Respondent added that he is the managing partner of the
Kong, executed in favor of petitioner a promissory note obligating himself to Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign temporary; and that he frequently travels back to the Philippines.
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 On December 24, 1997, the trial court issued an order quashing the writ and
additional security for the loan. Respondent, however, sought a holding that the withdrawal of respondent’s unassigned deposits was not
reconsideration of said request pointing out petitioner’s alleged mishandling intended to defraud petitioner. It also found that the representatives of
of his account due to its failure to carry out his instruction to close his account petitioner personally transacted with respondent through his home address in
as early as April 1997, when the prevailing rate of exchange of the US Dollar to Quezon City and/or his office in Makati City. It thus concluded that petitioner
4
Japanese yen was US$1.00:JPY127.50. It appears that the amount misrepresented and suppressed the facts regarding respondent’s residence
of P249,828,588.90 was the consolidated amount of a series of yen loans considering that it has personal and official knowledge that for purposes of
granted by petitioner to respondent during the months of February and April service of summons, respondent’s residence and office addresses are located in
5
1997. the Philippines. The dispositive portion of the court’s decision is as follows:
61 of 501
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is WHEREFORE, premises above considered, and defendant having duly
hereby GRANTED, and the ORDER of 24 October 1997 is hereby established his claim in the amount ofP25,000,000.00, judgment is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the same is rendered ordering Prudential Guarantee & [Assurance] Co., which is solidarily
hereby DISCHARGED. 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
11
SO ORDERED. 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,
12
With the denial of petitioner’s motion for reconsideration, it elevated the plaintiff is hereby ordered to pay defendant the amount ofP6,201,265.31.
case to the Court of Appeals (CA-G.R. SP No. 50748) via a petition for
20
certiorari. On May 10, 1999, the petition was dismissed for failure to prove that SO ORDERED.
13
the trial court abused its discretion in issuing the aforesaid order. Petitioner
14
filed a motion for reconsideration but was denied on October 28, 1999. On The trial court denied petitioner’s motion for reconsideration on October 24,
21
petition with this Court, the case was dismissed for late filing in a minute 2000.
15
resolution (G.R. No. 140605) dated January 19, 2000. Petitioner filed a motion
for reconsideration but was likewise denied with finality on March 6, Petitioner elevated the case to the Court of Appeals which affirmed the
16
2000. 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
Meanwhile, on May 20, 1998, respondent filed a claim for damages in the faith considering that its knowledge of respondent’s Philippine residence and
17
amount of P25 Million on the attachment bond (posted by Prudential office address goes into the very issue of the trial court’s jurisdiction which
Guarantee & Assurance, Inc., under JCL(4) No. 01081, Bond No. HO-46764-97) would have been defective had respondent not voluntarily appeared before it.
on account of the wrongful garnishment of his deposits. He presented
evidence showing that his P150,000.00 RCBC check payable to his counsel as The Court of Appeals, however, reduced the amount of damages awarded to
attorney’s fees, was dishonored by reason of the garnishment of his deposits. petitioner and specified their basis. The dispositive portion of the decision of
He also testified that he is a graduate of the Ateneo de Manila University in the Court of Appeals states:
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. WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed
Respondent likewise presented witnesses to prove that he is a well known from is hereby MODIFIED. The award of damages in the amount
lawyer in the business community both in the Philippines and in Hong of P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee &
18
Kong. For its part, the lone witness presented by petitioner was Nepomuceno [Assurance, Inc.], which is solidarily liable with appellant [herein petitioner], is
who claimed that she acted in good faith in alleging that respondent is a ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal
19
resident of Hong Kong. damages; P5,000,000.00 as moral damages; and P1,000,000.00 as attorney’s
fees, to be satisfied against the attachment bond under Prudential Guarantee
On August 30, 2000, the trial court awarded damages to respondent in the & Assurance, Inc. JCL (4) No. 01081.
amount of P25 Million without specifying the basis thereof, thus:
22
SO ORDERED.
62 of 501
Both parties moved for reconsideration. On November 21, 2006, the Court of considered a resident of the Philippines, attachment is still proper under
Appeals denied petitioner’s motion for reconsideration but granted that of Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is
respondent’s by ordering petitioner to pay additional P5Million as exemplary a resident who is temporarily out of the Philippines upon whom service of
23
damages. summons may be effected by publication.
Hence, the instant petition. Petitioner’s contentions are without merit.
At the outset, it must be noted that the ruling of the trial court that petitioner While the final order of the trial court which quashed the writ did not
is not entitled to a writ of attachment because respondent is a resident of the categorically use the word "bad faith" in characterizing the representations of
Philippines and that his act of withdrawing his deposits with petitioner was petitioner, the tenor of said order evidently considers the latter to have acted
without intent to defraud, can no longer be passed upon by this Court. More in bad faith by resorting to a deliberate strategy to mislead the court. Thus –
importantly, the conclusions of the court that petitioner bank misrepresented
that respondent was residing out of the Philippines and suppressed the fact In the hearings of the motion, and oral arguments of counsels before the
that respondent has a permanent residence in Metro Manila where he may be Court, it appears that plaintiff BANK through its contracting officers Vice
served with summons, are now beyond the power of this Court to review President Corazon B. Nepomuceno and Executive Vice President Jose Ramon
having been the subject of a final and executory order. Said findings were F. Revilla, personally transacted with defendant mainly through defendant’s
sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this Court permanent residence in METRO-MANILA, either in defendant’s home address
in G.R. No. 140605. The rule on conclusiveness of judgment, which obtains in Quezon City or his main business address at the Romulo Mabanta
under the premises, precludes the relitigation of a particular fact or issue in Buenaventura Sayoc & Delos Angeles in MAKATI and while at times follow
another action between the same parties even if based on a different claim or ups were made through defendant’s temporary home and business addresses
cause of action. The judgment in the prior action operates as estoppel as to in Hongkong. It is therefore clear that plaintiff could not deny their personal
those matters in issue or points controverted, upon the determination of and official knowledge that defendant’s permanent and official residence for
which the finding or judgment was rendered. The previous judgment is purposes of service of summons is in the Philippines. In fact, this finding is
conclusive in the second case, as to those matters actually and directly further confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
24
controverted and determined. Hence, the issues of misrepresentation by Executive Committee of plaintiff BANK, in his letter dated 6 October 1997 on
petitioner and the residence of respondent for purposes of service of summons the subject loan to defendant of the same law firm was addressed to the
can no longer be questioned by petitioner in this case. ROMULO LAW FIRM in MAKATI.
The core issue for resolution is whether petitioner bank is liable for damages [Anent the] second ground of attachment x x x [t]he Court finds that the
for the improper issuance of the writ of attachment against respondent. amount withdrawn was not part of defendant’s peso deposits assigned with
the bank to secure the loan and as proof that the withdrawal was not intended
We rule in the affirmative. 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
Notwithstanding the final judgment that petitioner is guilty of attachment it was mainly on the first ground under Section 1(f) of Rule 57 of
misrepresentation and suppression of a material fact, the latter contends that the 1997 Rules of Civil Procedure, that defendant resides out of the
it acted in good faith. Petitioner also contends that even if respondent is Philippines.
63 of 501
On the above findings, it is obvious that plaintiff already knew from the (Hanil’s) equipment in Cagayan de Oro City, it appears that the equipments
beginning the deficiency of its second ground for attachment [i.e.,] disposing were no longer existing from their compound." All these allegations of Escobar
properties with intent to defraud his creditors, and therefore plaintiff had to were found to be totally baseless and untrue.
resort to this misrepresentation that defendant was residing out of the
Philippines and suppressed the fact that defendant’s permanent residence is in Even assuming that the trial court did not make a categorical pronouncement
METRO MANILA where he could be served with summons. of misrepresentation and suppression of material facts on the part of
petitioner, the factual backdrop of this case does not support petitioner’s claim
On the above findings, and mainly on the misrepresentations made by plaintiff of good faith. The facts and circumstances omitted are highly material and
on the grounds for the issuance of the attachment in the verified complaint, relevant to the grant or denial of writ of attachment applied for.
the Court concludes that defendant has duly proven its grounds in the
25
MOTION and that plaintiff is not entitled to the attachment. Finally, there is no merit in petitioner’s contention that respondent can be
considered a resident who is temporarily out of the Philippines upon whom
Petitioner is therefore barred by the principle of conclusiveness of judgment service of summons may be effected by publication, and therefore qualifies as
from again invoking good faith in the application for the issuance of the writ. among those against whom a writ of attachment may be issued under Section
26
Similarly, in the case of Hanil Development Co., Ltd. v. Court of Appeals, the 1, paragraph (f), Rule 57 of the Rules of Court which provides:
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 (f) In an action against a party x x x on whom summons may be served by
previously determined in a final decision which voided the assailed writ. Thus publication.
–
In so arguing, petitioner attempts to give the impression that although it
Apropos the Application for Judgment on the Attachment Bond, Escobar erroneously invoked the ground that respondent does not reside in the
claims in its petition that the award of attorney’s fees and injunction bond Philippines, it should not be made to pay damages because it is in fact entitled
premium in favor of Hanil is [contrary] to law and jurisprudence. It contends to a writ of attachment had it invoked the proper ground under Rule 57.
that no malice or bad faith may be imputed to it in procuring the writ. However, even on this alternative ground, petitioner is still not entitled to the
issuance of a writ of attachment.
Escobar’s protestation is now too late in the day. The question of the illegality
of the attachment and Escobar’s bad faith in obtaining it has long been settled The circumstances under which a writ of preliminary attachment may be
in one of the earlier incidents of this case. The Court of Appeals, in its decision issued are set forth in Section 1, Rule 57 of the Rules of Court, to wit:
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. Escobar’s bad faith in SEC. 1. Grounds upon which attachment may issue. — At the commencement
procuring the writ cannot be doubted. Its Petition for the Issuance of of the action or at any time before entry of judgment, a plaintiff or any proper
Preliminary Attachment made such damning allegations that: Hanil was party may have the property of the adverse party attached as security for the
already able to secure a complete release of its final collection from the satisfaction of any judgment that may be recovered in the following cases:
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 (a) In an action for the recovery of a specified amount of money or
to Resolve Petition alleged that "after personal verification by (Escobar) of damages, other than moral and exemplary, on a cause of action arising
64 of 501
from law, contract, quasi-contract, delict or quasi-delict against a otherwise the court will not acquire jurisdiction over the defendant. In case
party who is about to depart from the Philippines with intent to the defendant does not reside and is not found in the Philippines (and hence
defraud his creditors; 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
(b) In an action for money or property embezzled or fraudulently convert the action into a proceeding in rem or quasi in rem by attaching the
29
misapplied or converted to his own use by a public officer, or an property of the defendant. Thus, in order to acquire jurisdiction in actions in
officer of a corporation or an attorney, factor, broker, agent, or clerk, personam where defendant resides out of and is not found in the Philippines,
in the course of his employment as such, or by any other person in a it becomes a matter of course for the court to convert the action into a
fiduciary capacity, or for a willful violation of duty; proceeding in rem or quasi in rem by attaching the defendant’s property. The
service of summons in this case (which may be by publication coupled with
(c) In an action to recover the possession of personal property unjustly the sending by registered mail of the copy of the summons and the court order
or fraudulently taken, detained, or converted, when the property, or to the last known address of the defendant), is no longer for the purpose of
any part thereof, has been concealed, removed, or disposed of to acquiring jurisdiction but for compliance with the requirements of due
30
prevent its being found or taken by the applicant or an authorized process.
person;
However, where the defendant is a resident who is temporarily out of the
(d) In an action against a party who has been guilty of a fraud in Philippines, attachment of his/her property in an action in personam, is not
contracting the debt or incurring the obligation upon which the always necessary in order for the court to acquire jurisdiction to hear the case.
action is brought, or in the performance thereof;
Section 16, Rule 14 of the Rules of Court reads:
(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; Sec. 16. Residents temporarily out of the Philippines. – When an action is
commenced against a defendant who ordinarily resides within the Philippines,
(f) In an action against a party who resides out of the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected
or on whom summons may be served by publication. out of the Philippines, as under the preceding section.
The purposes of preliminary attachment are: (1) to seize the property of the The preceding section referred to in the above provision is Section 15 which
debtor in advance of final judgment and to hold it for purposes of satisfying provides for extraterritorial service – (a) personal service out of the
said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Philippines, (b) publication coupled with the sending by registered mail of the
Rule 57 of the Rules of Court; or (2) to acquire jurisdiction over the action by copy of the summons and the court order to the last known address of the
actual or constructive seizure of the property in those instances where defendant; or (c) in any other manner which the court may deem sufficient.
personal or substituted service of summons on the defendant cannot be
27 31
effected, as in paragraph (f) of the same provision. In Montalban v. Maximo, however, the Court held that substituted service of
summons (under the present Section 7, Rule 14 of the Rules of Court) is the
Corollarily, in actions in personam, such as the instant case for collection of normal mode of service of summons that will confer jurisdiction on the court
28
sum of money, summons must be served by personal or substituted service, over the person of residents temporarily out of the Philippines. Meaning,
65 of 501
service of summons may be effected by (a) leaving copies of the summons at In the instant case, it must be stressed that the writ was issued by the trial
the defendant’s residence with some person of suitable discretion residing court mainly on the representation of petitioner that respondent is not a
34
therein, or (b) by leaving copies at the defendant’s office or regular place of resident of the Philippines. Obviously, the trial court’s issuance of the writ
32
business with some competent person in charge thereof. Hence, the court was for the sole purpose of acquiring jurisdiction to hear and decide the case.
may acquire jurisdiction over an action in personam by mere substituted Had the allegations in the complaint disclosed that respondent has a residence
service without need of attaching the property of the defendant. 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
The rationale in providing for substituted service as the normal mode of service on the said addresses, instead of attaching the property of the
service for residents temporarily out of the Philippines, was expounded in defendant. The rules on the application of a writ of attachment must be
33
Montalban v. Maximo, in this wise: strictly construed in favor of the defendant. For attachment is harsh,
extraordinary, and summary in nature; it is a rigorous remedy which exposes
35
A man temporarily absent from this country leaves a definite place of the debtor to humiliation and annoyance. It should be resorted to only when
residence, a dwelling where he lives, a local base, so to speak, to which any necessary and as a last remedy.
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 It is clear from the foregoing that even on the allegation that respondent is a
may be reasonably expected to act in his place and stead; to do all that is resident temporarily out of the Philippines, petitioner is still not entitled to a
necessary to protect his interests; and to communicate with him from time to writ of attachment because the trial court could acquire jurisdiction over the
time any incident of importance that may affect him or his business or his case by substituted service instead of attaching the property of the defendant.
affairs. It is usual for such a man to leave at his home or with his business The misrepresentation of petitioner that respondent does not reside in the
associates information as to where he may be contacted in the event a Philippines and its omission of his local addresses was thus a deliberate move
question that affects him crops up. to ensure that the application for the writ will be granted.
Thus, in actions in personam against residents temporarily out of the In light of the foregoing, the Court of Appeals properly sustained the finding
Philippines, the court need not always attach the defendant’s property in order of the trial court that petitioner is liable for damages for the wrongful issuance
to have authority to try the case. Where the plaintiff seeks to attach the of a writ of attachment against respondent.
defendant’s property and to resort to the concomitant service of summons by
publication, the same must be with prior leave, precisely because, if the sole Anent the actual damages, the Court of Appeals is correct in not awarding the
purpose of the attachment is for the court to acquire jurisdiction, the latter same inasmuch as the respondent failed to establish the amount garnished by
must determine whether from the allegations in the complaint, substituted petitioner. It is a well settled rule that one who has been injured by a wrongful
service (to persons of suitable discretion at the defendant’s residence or to a attachment can recover damages for the actual loss resulting therefrom. But
competent person in charge of his office or regular place of business) will for such losses to be recoverable, they must constitute actual damages duly
suffice, or whether there is a need to attach the property of the defendant and established by competent proofs, which are, however, wanting in the present
36
resort to service of summons by publication in order for the court to acquire case.
jurisdiction over the case and to comply with the requirements of due process.
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
66 of 501
recognizing that right, and not for indemnifying the plaintiff for any loss The courts below correctly awarded moral damages on account of petitioner’s
suffered by him. Its award is thus not for the purpose of indemnification for a misrepresentation and bad faith; however, we find the award in the amount
loss but for the recognition and vindication of a right. Indeed, nominal of P5 Million excessive. Moral damages are to be fixed upon the discretion of
37
damages are damages in name only and not in fact. They are recoverable the court taking into consideration the educational, social and financial
41
where some injury has been done but the pecuniary value of the damage is not standing of the parties. Moral damages are not intended to enrich a
42
shown by evidence and are thus subject to the discretion of the court complainant at the expense of a defendant. They are awarded only to enable
38
according to the circumstances of the case. the injured party to obtain means, diversion or amusements that will serve to
obviate the moral suffering he has undergone, by reason of petitioner’s
In this case, the award of nominal damages is proper considering that the right culpable action. Moral damages must be commensurate with the loss or injury
of respondent to use his money has been violated by its garnishment. The suffered. Hence, the award of moral damages is reduced to P500,000.00.
amount of nominal damages must, however, be reduced from P2 million
to P50,000.00 considering the short period of 2 months during which the writ Considering petitioner’s bad faith in securing the writ of attachment, we
was in effect as well as the lack of evidence as to the amount garnished.1âwphi1 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
Likewise, the award of attorney’s fees is proper when a party is compelled to and preposterous allegations to obtain writs of attachments. While as a
incur expenses to lift a wrongfully issued writ of attachment. The basis of the general rule, the liability on the attachment bond is limited to actual (or in
award thereof is also the amount of money garnished, and the length of time some cases, temperate or nominal) damages, exemplary damages may be
respondents have been deprived of the use of their money by reason of the recovered where the attachment was established to be maliciously sued
39 43
wrongful attachment. It may also be based upon (1) the amount and the out. Nevertheless, the award of exemplary damages in this case should be
character of the services rendered; (2) the labor, time and trouble involved; (3) reduced from P5M to P500,000.00.
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 Finally, contrary to the claim of petitioner, the instant case for damages by
the value of the property affected by the controversy or involved in the reason of the invalid issuance of the writ, survives the dismissal of the main
employment; (6) the skill and the experience called for in the performance of case for sum of money. Suffice it to state that the claim for damages arising
the services; (7) the professional character and the social standing of the from such wrongful attachment may arise and be decided separately from the
44
attorney; (8) the results secured, it being a recognized rule that an attorney merits of the main action.
may properly charge a much larger fee when it is contingent than when it is
40
not. 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
All the aforementioned weighed, and considering the short period of time it MODIFICATIONS. As modified, petitioner Philippine Commercial
took to have the writ lifted, the favorable decisions of the courts below, the International Bank is ordered to pay respondent Joseph Anthony M. Alejandro
absence of evidence as to the professional character and the social standing of the following amounts: P50,000.00 as nominal damages,P200,000.00 as
the attorney handling the case and the amount garnished, the award of attorney’s fees; and P500,000.00 as moral damages, and P500,000.00 as
attorney’s fees should be fixed not at P1 Million, but only at P200,000.00. exemplary damages, to be satisfied against the attachment bond issued by
45
Prudential Guarantee & Assurance Inc., under JCL (4) No. 01081, Bond No.
HO-46764-97.
67 of 501
No pronouncement as to costs.
SO ORDERED.
68 of 501
in its obligation, Wincorp instituted a case against it and its surety. Settlement
was, however, reached in which Hottick's president, Luis Juan L. Virata
4
Wee v. Tankiansee, February 13, 2008 (Virata), assumed the obligation of the surety.
Under the scheme agreed upon by Wincorp and Hottick's president,

petitioner's money placements were transferred without his knowledge and
THIRD DIVISION consent to the loan account of Power Merge through an agreement that
virtually freed the latter of any liability. Allegedly, through the false
G.R. No. 171124 February 13, 2008 representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same to
5
ALEJANDRO NG WEE, petitioner, Virata/Power Merge.
vs.
MANUEL TANKIANSEE, respondent. Finding that Virata purportedly used Power Merge as a conduit and connived
with Wincorp's officers and directors to fraudulently obtain for his benefit
DECISION without any intention of paying the said placements, petitioner instituted, on
October 19, 2000, Civil Case No. 00-99006 for damages with the Regional Trial
6
NACHURA, J.: Court (RTC) of Manila. One of the defendants impleaded in the complaint is
herein respondent Manuel Tankiansee, Vice-Chairman and Director of
7
Before the Court is a petition for review on certiorari under Rule 45 of the Wincorp.
1
Rules of Court assailing the September 14, 2005 Decision of the Court of
Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 On October 26, 2000, on the basis of the allegations in the complaint and the
2 8
Resolution denying the motion for reconsideration thereof. October 12, 2000 Affidavit of petitioner, the trial court ordered the issuance of
a writ of preliminary attachment against the properties not exempt from
The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of execution of all the defendants in the civil case subject, among others, to
9
Westmont Bank (now United Overseas Bank), made several money petitioner's filing of a P50M-bond. The writ was, consequently, issued on
10
placements totaling P210,595,991.62 with the bank's affiliate, Westmont November 6, 2000.
Investment Corporation (Wincorp), a domestic entity engaged in the business
3
of an investment house with the authority and license to extend credit. Arguing that the writ was improperly issued and that the bond furnished was
grossly insufficient, respondent, on December 22, 2000, moved for the
11
Sometime in February 2000, petitioner received disturbing news on Wincorp's discharge of the attachment. The other defendants likewise filed similar
12 13
financial condition prompting him to inquire about and investigate the motions. On October 23, 2001, the RTC, in an Omnibus Order, denied all
company's operations and transactions with its borrowers. He then discovered the motions for the discharge of the attachment. The defendants, including
14
that the company extended a loan equal to his total money placement to a respondent herein, filed their respective motions for reconsideration but the
15
corporation [Power Merge] with a subscribed capital of onlyP37.5M. This trial court denied the same on October 14, 2002.
credit facility originated from another loan of about P1.5B extended by
Wincorp to another corporation [Hottick Holdings]. When the latter defaulted
69 of 501
Incidentally, while respondent opted not to question anymore the said orders, A.
his co-defendants, Virata and UEM-MARA Philippines Corporation (UEM-
MARA), assailed the same via certiorari under Rule 65 before the CA [docketed IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS
as CA-G.R. SP No. 74610]. The appellate court, however, denied SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR
16
the certiorari petition on August 21, 2003, and the motion for reconsideration CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED
17
thereof on March 16, 2004. In a petition for review on certiorari before this ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING
Court, in G.R. No. 162928, we denied the petition and affirmed the CA rulings JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT
on May 19, 2004 for Virata's and UEM-MARA's failure to sufficiently show that OF CERTIORARI.
18
the appellate court committed any reversible error. We subsequently denied
19
the petition with finality on August 23, 2004. B.
On September 30, 2004, respondent filed before the trial court another Motion MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT
20
to Discharge Attachment, re-pleading the grounds he raised in his first OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING
motion but raising the following additional grounds: (1) that he was not FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS
present in Wincorp's board meetings approving the questionable PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY
21
transactions; and (2) that he could not have connived with Wincorp and the ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO
other defendants because he and Pearlbank Securities, Inc., in which he is a THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER
major stockholder, filed cases against the company as they were also PREVAILING JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC)
22
victimized by its fraudulent schemes. FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.
Ruling that the grounds raised were already passed upon by it in the previous C.
orders affirmed by the CA and this Court, and that the additional grounds
were respondent's affirmative defenses that properly pertained to the merits of LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT
23
the case, the trial court denied the motion in its January 6, 2005 Order. OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT
ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE
24
With the denial of its motion for reconsideration, respondent filed BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF
a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN
28
September 14, 2005, the appellate court rendered the assailed RESOLVED WITH FINALITY BY THE LOWER COURT.
25
Decision reversing and setting aside the aforementioned orders of the trial
26
court and lifting the November 6, 2000 Writ of Preliminary Attachment to For his part, respondent counters, among others, that the general and
the extent that it concerned respondent's properties. Petitioner moved for the sweeping allegation of fraud against respondent in petitioner's affidavit-
reconsideration of the said ruling, but the CA denied the same in its January 6, respondent as an officer and director of Wincorp allegedly connived with the
27
2006 Resolution. other defendants to defraud petitioner-is not sufficient basis for the trial court
to order the attachment of respondent's properties. Nowhere in the said
Thus, petitioner filed the instant petition on the following grounds: affidavit does petitioner mention the name of respondent and any specific act
committed by the latter to defraud the former. A writ of attachment can only
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be granted on concrete and specific grounds and not on general averments To sustain an attachment on this ground, it must be shown that the
quoting perfunctorily the words of the Rules. Connivance cannot also be based debtor in contracting the debt or incurring the obligation intended to
on mere association but must be particularly alleged and established as a fact. defraud the creditor. The fraud must relate to the execution of the
Respondent further contends that the trial court, in resolving the Motion to agreement and must have been the reason which induced the other
Discharge Attachment, need not actually delve into the merits of the case. All party into giving consent which he would not have otherwise given.
that the court has to examine are the allegations in the complaint and the To constitute a ground for attachment in Section 1 (d), Rule 57 of the
supporting affidavit. Petitioner cannot also rely on the decisions of the Rules of Court, fraud should be committed upon contracting the
appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to obligation sued upon. A debt is fraudulently contracted if at the time
29
support his claim because respondent is not a party to the said cases. of contracting it the debtor has a preconceived plan or intention not
to pay, as it is in this case. Fraud is a state of mind and need not be
We agree with respondent's contentions and deny the petition. proved by direct evidence but may be inferred from the circumstances
33
attendant in each case.
In the case at bench, the basis of petitioner's application for the issuance of the
34
writ of preliminary attachment against the properties of respondent is Section In the instant case, petitioner's October 12, 2000 Affidavit is bereft of any
1(d) of Rule 57 of the Rules of Court which pertinently reads: factual statement that respondent committed a fraud. The affidavit narrated
only the alleged fraudulent transaction between Wincorp and Virata and/or
Section 1. Grounds upon which attachment may issue.-At the Power Merge, which, by the way, explains why this Court, in G.R. No. 162928,
commencement of the action or at any time before entry of judgment, affirmed the writ of attachment issued against the latter. As to the
a plaintiff or any proper party may have the property of the adverse participation of respondent in the said transaction, the affidavit merely states
party attached as security for the satisfaction of any judgment that that respondent, an officer and director of Wincorp, connived with the other
may be recovered in the following cases: defendants in the civil case to defraud petitioner of his money placements. No
other factual averment or circumstance details how respondent committed a
xxxx fraud or how he connived with the other defendants to commit a fraud in the
transaction sued upon. In other words, petitioner has not shown any specific
(d) In an action against a party who has been guilty of a fraud in act or deed to support the allegation that respondent is guilty of fraud.
contracting the debt or incurring the obligation upon which the
35
action is brought, or in the performance thereof. The affidavit, being the foundation of the writ, must contain such particulars
as to how the fraud imputed to respondent was committed for the court to
36
For a writ of attachment to issue under this rule, the applicant must decide whether or not to issue the writ. Absent any statement of other
sufficiently show the factual circumstances of the alleged fraud because factual circumstances to show that respondent, at the time of contracting the
fraudulent intent cannot be inferred from the debtor's mere non-payment of obligation, had a preconceived plan or intention not to pay, or without any
30
the debt or failure to comply with his obligation. The applicant must then be showing of how respondent committed the alleged fraud, the general
able to demonstrate that the debtor has intended to defraud the averment in the affidavit that respondent is an officer and director of Wincorp
31 32
creditor. In Liberty Insurance Corporation v. Court of Appeals, we explained who allegedly connived with the other defendants to commit a fraud, is
37
as follows: insufficient to support the issuance of a writ of preliminary attachment. In
the application for the writ under the said ground, compelling is the need to
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give a hint about what constituted the fraud and how it was issuance of the writ in this case can be determined by simply reading the
38
perpetrated because established is the rule that fraud is never complaint and the affidavit in support of the application.
39
presumed. Verily, the mere fact that respondent is an officer and director of
the company does not necessarily give rise to the inference that he committed Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of
a fraud or that he connived with the other defendants to commit a fraud. attachment is properly issued insofar as it concerns the properties of Virata
While under certain circumstances, courts may treat a corporation as a mere and UEM-MARA, does not affect respondent herein, for, as correctly ruled by
48
aggroupment of persons, to whom liability will directly attach, this is only the CA, respondent is "never a party thereto." Also, he is not in the same
40
done when the wrongdoing has been clearly and convincingly established. situation as Virata and UEM-MARA since, as aforesaid, while petitioner's
affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or
Let it be stressed that the provisional remedy of preliminary attachment is Power Merge, only a general allegation of fraud was made against respondent.
harsh and rigorous for it exposes the debtor to humiliation and
41
annoyance. The rules governing its issuance are, therefore, strictly construed We state, in closing, that our ruling herein deals only with the writ of
42
against the applicant, such that if the requisites for its grant are not shown to preliminary attachment issued against the properties of respondent-it does not
be all present, the court shall refrain from issuing it, for, otherwise, the court concern the other parties in the civil case, nor affect the trial court's resolution
43
which issues it acts in excess of its jurisdiction. Likewise, the writ should not on the merits of the aforesaid civil case.
be abused to cause unnecessary prejudice. If it is wrongfully issued on the
44
basis of false or insufficient allegations, it should at once be corrected. WHEREFORE, premises considered, the petition is DENIED. The September
14, 2005 Decision and the January 6, 2006 Resolution of the Court of Appeals
Considering, therefore, that, in this case, petitioner has not fully satisfied the in CA-G.R. SP No. 90130 are AFFIRMED.
legal obligation to show the specific acts constitutive of the alleged fraud
committed by respondent, the trial court acted in excess of its jurisdiction SO ORDERED.
when it issued the writ of preliminary attachment against the properties of
respondent.
We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et
45
al., that
[t]he merits of the main action are not triable in a motion to discharge
an attachment otherwise an applicant for the dissolution could force a
46
trial of the merits of the case on his motion.
However, the principle finds no application here because petitioner has not
yet fulfilled the requirements set by the Rules of Court for the issuance of the
47
writ against the properties of respondent. The evil sought to be prevented by
the said ruling will not arise, because the propriety or impropriety of the
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Sometime in 2001, petitioners and respondents agreed that respondents would

endorse to petitioners purchase orders received by respondents from their
Metro, Inc. v. Lara’s Gift & Decor, November 27, 2009 buyers in the United States of America in exchange for a 15% commission, to
be shared equally by respondents and James R. Paddon (JRP), LGD’s agent.
SECOND DIVISION The terms of the agreement were later embodied in an e-mail labeled as the
4
"2001 Agreement."
G.R. No. 171741 November 27, 2009
In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las
METRO, INC. and SPOUSES FREDERICK JUAN and LIZA Piñas City (trial court) a complaint against petitioners for sum of money and
JUAN, Petitioners, damages with a prayer for the issuance of a writ of preliminary attachment.
5
vs. Subsequently, respondents filed an amended complaint and alleged that, as of
LARA'S GIFTS AND DECORS, INC., LUIS VILLAFUERTE, JR. and LARA July 2002, petitioners defrauded them in the amount of $521,841.62.
MARIA R. VILLAFUERTE, Respondents. Respondents also prayed for P1,000,000 as moral damages, P1,000,000 as
exemplary damages and 10% of the judgment award as attorney’s fees.
DECISION Respondents also prayed for the issuance of a writ of preliminary attachment.
6
CARPIO, J.: In its 23 June 2003 Order, the trial court granted respondents’ prayer and
issued the writ of attachment against the properties and assets of petitioners.
The Case The 23 June 2003 Order provides:
1 2
This is a petition for review of the 29 September 2004 Decision and 2 March WHEREFORE, let a Writ of Preliminary Attachment issue against the
3
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475. In its 29 properties and assets of Defendant METRO, INC. and against the properties
September 2004 Decision, the Court of Appeals granted the petition for and assets of Defendant SPOUSES FREDERICK AND LIZA JUAN not exempt
certiorari of respondents Lara’s Gifts and Decors, Inc., Luis Villafuerte, Jr., and from execution, as may be sufficient to satisfy the applicants’ demand of
Lara Maria R. Villafuerte (respondents). In its 2 March 2006 Resolution, the US$521,841.62 US Dollars or its equivalent in Pesos upon actual attachment,
Court of Appeals denied the motion for reconsideration of petitioners Metro, which is about P27 Million, unless such Defendants make a deposit or give a
Inc., Frederick Juan and Liza Juan (petitioners). bond in an amount equal to P27 Million to satisfy the applicants’ demand
exclusive of costs, upon posting by the Plaintiffs of a Bond for Preliminary
The Facts Attachment in the amount of twenty five million pesos (P25,000,000.00),
subject to the approval of this Court.
Lara’s Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in
7
the business of manufacturing, producing, selling and exporting handicrafts. SO ORDERED.
Luis Villafuerte, Jr. and Lara Maria R. Villafuerte are the president and vice-
president of LGD respectively. Frederick Juan and Liza Juan are the principal On 26 June 2003, petitioners filed a motion to discharge the writ of
officers of Metro, Inc. attachment. Petitioners argued that the writ of attachment should be
discharged on the following grounds: (1) that the 2001 agreement was not a
73 of 501
valid contract because it did not show that there was a meeting of the minds Writ of Preliminary Attachment may be ordered discharged upon the filing by
between the parties; (2) assuming that the 2001 agreement was a valid the private respondents of the proper counter-bond pursuant to Section 12,
contract, the same was inadmissible because respondents failed to Rule 57 of the Rules of Civil Procedure.
authenticate it in accordance with the Rules on Electronic Evidence; (3) that
10
respondents failed to substantiate their allegations of fraud with specific acts SO ORDERED.
or deeds showing how petitioners defrauded them; and (4) that respondents
failed to establish that the unpaid commissions were already due and Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution,
demandable. the Court of Appeals denied the motion.
After considering the arguments of the parties, the trial court granted Hence, this petition.
petitioners’ motion and lifted the writ of attachment. The 12 August 2003
8
Order of the trial court provides: The 12 August 2003 Order of the Trial Court
Premises considered, after having taken a second hard look at the Order dated According to the trial court, respondents failed to sufficiently show that
June 23, 2003 granting plaintiff’s application for the issuance of a writ of petitioners were guilty of fraud either in incurring the obligation upon which
preliminary attachment, the Court holds that the issuance of a writ of the action was brought, or in the performance thereof. The trial court found
preliminary attachment in this case is not justified. no proof that petitioners were motivated by malice in entering into the 2001
agreement. The trial court also declared that petitioners’ failure to fully
WHEREFORE, the writ of preliminary attachment issued in the instant case is comply with their obligation, absent other facts or circumstances to indicate
hereby ordered immediately discharged and/or lifted. evil intent, does not automatically amount to fraud. Consequently, the trial
court ordered the discharge of the writ of attachment for lack of evidence of
9
SO ORDERED. fraud.
Respondents filed a motion for reconsideration. In its 10 September 2003 The 29 September 2004 Decision of the Court of Appeals
Order, the trial court denied the motion.
According to the Court Appeals, the trial court gravely abused its discretion
Respondents filed a petition for certiorari before the Court of Appeals. when it ordered the discharge of the writ of attachment without requiring
Respondents alleged that the trial court gravely abused its discretion when it petitioners to post a counter-bond. The Court of Appeals said that when the
ordered the discharge of the writ of attachment without requiring petitioners writ of attachment is issued upon a ground which is at the same time also the
to post a counter-bond. applicant’s cause of action, courts are precluded from hearing the motion for
dissolution of the writ when such hearing would necessarily force a trial on the
11
In its 29 September 2004 Decision, the Court of Appeals granted respondents’ merits of a case on a mere motion. The Court of Appeals pointed out that, in
petition. The 29 September 2004 Decision provides: this case, fraud was not only alleged as the ground for the issuance of the writ
of attachment, but was actually the core of respondents’ complaint. The Court
WHEREFORE, finding merit in the petition, We GRANT the same. The of Appeals declared that the only way that the writ of attachment can be
assailed Orders are hereby ANNULLED and SET ASIDE. However, the issued
74 of 501
12
discharged is by posting a counter-bond in accordance with Section 12, Rule SEC. 1. Grounds upon which attachment may issue. — At the commencement
57 of the Rules of Court. 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
The Issue satisfaction of any judgment that maybe recovered in the following cases: x x x
Petitioners raise the question of whether the writ of attachment issued by the (d) In an action against a party who has been guilty of fraud in contracting the
trial court was improperly issued such that it may be discharged without the debt or incurring the obligation upon which the action is brought, or in the
filing of a counter-bond. performance thereof; x x x
14
The Ruling of the Court In Liberty Insurance Corporation v. Court of Appeals, we explained:
The petition has no merit. To sustain an attachment on this ground, it must be shown that the debtor in
contracting the debt or incurring the obligation intended to defraud the
Petitioners contend that the writ of attachment was improperly issued because creditor. The fraud must relate to the execution of the agreement and must
respondents’ amended complaint failed to allege specific acts or circumstances have been the reason which induced the other party into giving consent which
constitutive of fraud. Petitioners insist that the improperly issued writ of he would not have otherwise given. To constitute a ground for attachment in
attachment may be discharged without the necessity of filing a counter-bond. Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon
Petitioners also argue that respondents failed to show that the writ of contracting the obligation sued upon. A debt is fraudulently contracted if at
attachment was issued upon a ground which is at the same time also the time of contracting it the debtor has a preconceived plan or intention not
15
respondents’ cause of action. Petitioners maintain that respondents’ amended to pay, as it is in this case.
complaint was not an action based on fraud but was a simple case for
collection of sum of money plus damages. The applicant for a writ of preliminary attachment must sufficiently show the
factual circumstances of the alleged fraud because fraudulent intent cannot be
On the other hand, respondents argue that the Court of Appeals did not err in inferred from the debtor’s mere non-payment of the debt or failure to comply
16
ruling that the writ of attachment can only be discharged by filing a counter- with his obligation.
13
bond. According to respondents, petitioners cannot avail of Section 13, Rule
57 of the Rules of Court to have the attachment set aside because the ground In their amended complaint, respondents alleged the following in support of
for the issuance of the writ of attachment is also the basis of respondents’ their prayer for a writ of preliminary attachment:
amended complaint. Respondents assert that the amended complaint is a
complaint for damages for the breach of obligation and acts of fraud 5. Sometime in early 2001, defendant Frederick Juan approached plaintiff
committed by petitioners.1 a vv p h i 1 spouses and asked them to help defendants’ export business. Defendants
enticed plaintiffs to enter into a business deal. He proposed to plaintiff
In this case, the basis of respondents’ application for the issuance of a writ of spouses the following:
preliminary attachment is Section 1(d), Rule 57 of the Rules of Court which
provides: a. That plaintiffs transfer and endorse to defendant Metro some of the
Purchase Orders (PO’s) they will receive from their US buyers;
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b. That defendants will sell exclusively and "only thru" plaintiffs for We rule that respondents’ allegation that petitioners undertook to sell
their US buyer; exclusively and only through JRP/LGD for Target Stores Corporation but that
petitioners transacted directly with respondents’ foreign buyer is sufficient
xxx allegation of fraud to support their application for a writ of preliminary
attachment. Since the writ of preliminary attachment was properly issued, the
6. After several discussions on the matter and further inducement on the part only way it can be dissolved is by filing a counter-bond in accordance with
of defendant spouses, plaintiff spouses agreed. Thus, on April 21, 2001, Section 12, Rule 57 of the Rules of Court.
defendant spouses confirmed and finalized the agreement in a letter-
document entitled "2001 Agreement" they emailed to plaintiff spouses, a copy Moreover, the reliance of the Court of Appeals in the cases of Chuidian v.
18
of which is hereto attached as Annex "A". Sandiganbayan, FCY Construction Group, Inc. v. Court of
19 20
Appeals, and Liberty Insurance Corporation v. Court of Appeals is proper.
xxx The rule 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
21
20. Defendants are guilty of fraud committed both at the inception of the be lifted or dissolved is by a counter-bond" is applicable in this case. It is
agreement and in the performance of the obligation. Through machinations clear that in respondents’ amended complaint of fraud is not only alleged as a
and schemes, defendants successfully enticed plaintiffs to enter into the 2001 ground for the issuance of the writ of preliminary attachment, but it is also the
Agreement. In order to secure plaintiffs’ full trust in them and lure plaintiffs to core of respondents’ complaint. The fear of the Court of Appeals that
endorse more POs and increase the volume of the orders, defendants during petitioners could force a trial on the merits of the case on the strength of a
the early part, remitted to plaintiffs shares under the Agreement. mere motion to dissolve the attachment has a basis.
21. However, soon thereafter, just when the orders increased and the amount WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004
involved likewise increased, defendants suddenly, without any justifiable Decision and 2 March 2006 Resolution of the Court of Appeals in CA-G.R. SP
reasons and in pure bad faith and fraud, abandoned their contractual No. 79475. SO ORDERED.
obligations to remit to plaintiffs their shares. And worse, defendants
transacted directly with plaintiffs’ foreign buyer to the latter’s exclusion and
damage. Clearly, defendants planned everything from the beginning,
employed ploy and machinations to defraud plaintiffs, and consequently take
from them a valuable client.
22. Defendants are likewise guilty of fraud by violating the trust and
confidence reposed upon them by plaintiffs. Defendants received the proceeds
of plaintiffs’ LCs with the clear obligation of remitting 15% thereof to the
plaintiffs. Their refusal and failure to remit the said amount despite demand
17
constitutes a breach of trust amounting to malice and fraud. (Emphasis and
underscoring in the original) (Boldfacing and italicization supplied)
76 of 501
in the main case, no jurisdiction over the person of the petitioner had been
acquired by the trial court.
Section 2
The trial court denied the petitioner's objection and issued in open court an
order which, in relevant part, read as follows:
Sievert v. CA, 168 S 692
Under Section 1, Rule 57, Rules of Court, it is clear that a
G.R. No. L-84034 December 22, 1988 plaintiff or any proper party may "... at the commencement of
the action or at any time thereafter, have the property of the
ALBERTO SIEVERT, petitioner, adverse party attached as the security for the satisfaction of
vs. any judgment ..." This rule would overrule the contention that
COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and AURELIO this Court has no jurisdiction to act on the application,
CAMPOSANO, respondents. although if counsel for defendant so desire, she is given five
(5) days from today within which to submit her further
King & Adorio Law Offices for petitioner. position why the writ should not be issued, upon the receipt
of which or expiration of the period, the pending incident
Moises C. Kallos for private respondent. shall be considered submitted for resolution. (Underscoring
1
in the original)
Thereupon, on the same day, petitioner filed a Petition for certiorari with the
FELICIANO, J.: Court of Appeals. On 13 July 1988, the respondent appellate court rendered a
decision, notable principally for its brevity, dismissing the Petition. The
On 18 May 1988 petitioner Alberto Sievert a citizen and resident of the relevant portion of the Court of Appeals' decision is quoted below:
Philippines received by mail a Petition for Issuance of a Preliminary
Attachment filed with the Regional Trial Court of Manila Branch 32 in Civil The grounds raised in this petition state that the court a
Case No. 88-44346. Petitioner had not previously received any summons and quo had not acquired jurisdiction over defendant (now
any copy of a complaint against him in Civil Case No. 88-44346. petitioner) since no summons had been served on him, and
that respondent Judge had committed a grave abuse of
On the day set for hearing of the Petition for a Preliminary Writ of discretion in issuing the questioned order without
Attachment, petitioner's counsel went before the trial court and entered a jurisdiction.
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 In short, the issue presented to us is whether respondent Judge
trial court to hear or act upon the Petition for Issuance of a Preliminary Writ may issue a writ of preliminary attachment against petitioner
of Attachment. In this written objection, petitioner prayed for denial of that before summons is served on the latter.
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 We rule for respondent Judge.
77 of 501
Under Sec. 1, Rule 57, it is clear that, at the commencement of with a copy of the complaint in the main case has been validly served upon
the action, a party may have the property of the adverse party him.
attached as security. The resolution of this issue depends,
therefore, on what is meant by "Commencement of the We are unable to agree with the respondent courts.
action." Moran, citing American jurisprudence on this point,
stated thus: "Commencement of action. — Action is There is no question that a writ of preliminary attachment may be applied for
commenced by filing of the complaint, even though summons a plaintiff "at the commencement of the actionor at any time thereafter" in the
is not issued until a later date." (Comment on the Rules of cases enumerated in Section 1 of Rule 57 of the Revised Rules of Court. The
Court, Vol. I, p. 150, 1979). Thus, a writ of preliminary issue posed in this case, however, is not to be resolved by determining when
attachment may issue upon filing of the complaint even before an action may be regarded as having been commenced, a point in time which,
issuance of the summons. 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
WHEREFORE, for lack of merit, the petition is hereby denied must be Identified is, rather, when the trial court acquires authority under law
2
and, accordingly, dismissed. (Emphasis supplied) 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
The petitioner is now before this Court on a Petition for Review on Certiorari, of jurisdiction in the court over the person of the defendant in the main case.
assailing the above-quoted decision of the Court of Appeals. The petitioner
assigns two (2) errors:
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
1. The proceedings taken and the order issued on plaintiffs 4
expected to be granted in the main or principal action . A court which has
petition for attachment prior to the service of summons on
not acquired jurisdiction over the person of defendant, cannot bind that
the defendant were contrary to law and jurisprudence and
defendant whether in the main case or in any ancillary proceeding such as
violated the defendant's right to due process.
attachment proceedings. The service of a petition for preliminary
attachment without the prior or simultaneous service of summons and a
2. The Court of Appeals committed a grave abuse of discretion
copy of the complaint in the main case — and that is what happened in this
amounting to lack of jurisdiction in ruling that a writ of
case — does not of course confer jurisdiction upon the issuing court over
preliminary attachment may issue upon filing of the
3
the person of the defendant.
complaint even prior to issuance of the summons.
The two (2) assignments of error relate to the single issue which we perceive to Ordinarily, the prayer in a petition for a writ of preliminary attachment is
be at stake here, that is, whether a court which has not acquired jurisdiction embodied or incorporated in the main complaint itself as one of the forms of
over the person of the defendant in the main case, may bind such defendant or relief sought in such complaint. Thus, valid service of summons and a copy of
his property by issuing a writ of preliminary attachment. 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
Both the trial court and the Court of Appeals held that the defendant may be remedy of attachment. In such case, notice of the main case is at the same
bound by a writ of preliminary attachment even before summons together time notice of the auxiliary proceeding in attachment. Where, however, the
78 of 501
petition for a writ of preliminary attachment is embodied in a discrete WHEREFORE, the Petition for Review on certiorari is GRANTED due course
pleading, such petition must be served either simultaneously with service of and the Order of the trial court dated 20 May 1988 and the Decision of the
summons and a copy of the main complaint, or after jurisdiction over the Court of Appeals dated 13 July 1988 are hereby SET ASIDE and ANNULLED.
defendant has already been acquired by such service of summons. Notice of the No pronouncement as to costs.
separate attachment petition is not notice of the main action. Put a little
differently, jurisdiction whether ratione personae or ratione materiae in an SO ORDERED.
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
5
of the nature of this provisional remedy. In Salas v. Adil, 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
6
and void. (Emphasis supplied )
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.
79 of 501
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
Davao Light v. CA, 204 S 343 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
EN BANC preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by
raffle, issued an Order granting the ex parte application and fixing the
G.R. No. 93262 December 29, 1991 attachment bond at P4,600,513.37.
DAVAO LIGHT & POWER CO., INC., petitioner, 3. On May 11, 1989 the attachment bond having been submitted by Davao
vs. Light, the writ of attachment issued.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or
QUEENSLAND TOURIST INN, and TEODORICO ADARNA, respondents. 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
Breva & Breva Law Offices for petitioner. defendants Queensland and Adarna; and pursuant to the writ, the sheriff
seized properties belonging to the latter.
Goc-Ong & Associates for private respondents.
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
NARVASA, J.:p attachment writ issued (May 11, 1989), the Trial Court had not yet acquired
jurisdiction over the cause and over the persons of the defendants.
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 6. On September 14, 1989, Davao Light filed an opposition to the motion to
Adarna v. Davao Light & Power Co., Inc.," promulgated on May 4, 1990. 1 That discharge attachment.
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 7. On September 19, 1989, the Trial Court issued an Order denying the motion
application of the plaintiff (Davao Light & Power Co.), before the service of to discharge.
summons on the defendants (herein respondents Queensland Co., Inc. and
Adarna). This Order of September 19, 1989 was successfully challenged by Queensland
and Adarna in a special civil action ofcertiorari instituted by them in the Court
Following is the chronology of the undisputed material facts culled from the of Appeals. The Order was, as aforestated, annulled by the Court of Appeals in
Appellate Tribunal's judgment of May 4, 1990. its Decision of May 4, 1990. The Appellate Court's decision closed with the
following disposition:
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. . . the Orders dated May 3, 1989 granting the issuance of a The Court rules that the question must be answered in the affirmative and
writ of preliminary attachment, dated September 19, 1989 that consequently, the petition for review will have to be granted.
denying the motion to discharge attachment; dated
November 7, 1989 denying petitioner's motion for It is incorrect to theorize that after an action or proceeding has been
reconsideration; as well as all other orders emanating commenced and jurisdiction over the person of the plaintiff has been vested in
therefrom, specially the Writ of Attachment dated May 11, the court, but before the acquisition of jurisdiction over the person of the
1989 and Notice of Levy on Preliminary Attachment dated defendant (either by service of summons or his voluntary submission to the
May 11, 1989, are hereby declared null and void and the court's authority), nothing can be validly done by the plaintiff or the court. It is
attachment hereby ordered DISCHARGED. 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
The Appellate Tribunal declared that — 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
. . . While it is true that a prayer for the issuance of a writ of jurisdiction over the person of the plaintiff or over the subject-matter or
preliminary attachment may be included m the complaint, as nature of the action, or the res or object hereof.
is usually done, it is likewise true that the Court does not
acquire jurisdiction over the person of the defendant until he An action or proceeding is commenced by the filing of the complaint or other
is duly summoned or voluntarily appears, and adding the initiatory pleading. 4 By that act, the jurisdiction of the court over the subject
phrase that it be issued "ex parte" does not confer said matter or nature of the action or proceeding is invoked or called into
jurisdiction before actual summons had been made, nor activity; 5 and it is thus that the court acquires jurisdiction over said subject
retroact jurisdiction upon summons being made. . . . 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
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a which he signifies his submission to the court's power and authority — that
proceedings in attachment," the "critical time which must be jurisdiction is acquired by the court over his person. 7 On the other hand,
identified is . . . when the trial court acquires authority under law to jurisdiction over the person of the defendant is obtained, as above stated, by
act coercively against the defendant or his property . . .;" and that "the the service of summons or other coercive process upon him or by his voluntary
critical time is the of the vesting of jurisdiction in the court over the submission to the authority of the court. 8
person of the defendant in the main case."
The events that follow the filing of the complaint as a matter of routine are
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao well known. After the complaint is filed, summons issues to the defendant, the
Light seeks in the present appellate proceedings. 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
The question is whether or not a writ of preliminary attachment may issue ex Rules of Court. There is thus ordinarily some appreciable interval of time
parte against a defendant before acquisition of jurisdiction of the latter's between the day of the filing of the complaint and the day of service of
person by service of summons or his voluntary submission to the Court's summons of the defendant. During this period, different acts may be done by
authority. 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
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grant of authority to the plaintiff to prosecute the suit as a pauper parte at the commencement of the action if it finds the application otherwise
litigant, 10 the amendment of the complaint by the plaintiff as a matter of sufficient in form and substance.
right without leave of court, 11authorization by the Court of service of
summons by publication, 12 the dismissal of the action by the plaintiff on mere In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or
notice. 13 application for preliminary attachment is not generally necessary unless
otherwise directed by the Trial Court in its discretion. 20 And in Filinvest
This, too, is true with regard to the provisional remedies of preliminary Credit Corporation v. Relova, 21the Court declared that "(n)othing in the Rules
attachment, preliminary injunction, receivership or replevin. 14 They may be of Court makes notice and hearing indispensable and mandatory requisites for
validly and properly applied for and granted even before the defendant is the issuance of a writ of attachment." The only pre-requisite is that the Court
summoned or is heard from. 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
A preliminary attachment may be defined, paraphrasing the Rules of Court, as exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that
the provisional remedy in virtue of which a plaintiff or other party may, at the there is no other sufficient security for the claim sought to be enforced by the
commencement of the action or at any time thereafter, have the property of action, and that the amount due to the applicant, or the value of the property
the adverse party taken into the custody of the court as security for the the possession of which he is entitled to recover, is as much as the sum for
satisfaction of any judgment that may be recovered. 15 It is a remedy which is which the order (of attachment) is granted above all legal counterclaims." 22 If
purely statutory in respect of which the law requires a strict construction of the court be so satisfied, the "order of attachment shall be granted," 23 and the
the provisions granting it. 16Withal no principle, statutory or jurisprudential, writ shall issue upon the applicant's posting of "a bond executed to the adverse
prohibits its issuance by any court before acquisition of jurisdiction over the party in an amount to be fixed by the judge, not exceeding the plaintiffs claim,
person of the defendant. 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
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the attachment, if the court shall finally adjudge that the applicant was not
action or at any time thereafter." 17 The phase, "at the commencement of the entitled thereto." 24
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 In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on
action;" 18 and the reference plainly is to a time before summons is served on April 18, 1989, 25 this Court had occasion to emphasize the postulate that no
the defendant, or even before summons issues. What the rule is saying quite hearing is required on an application for preliminary attachment, with notice
clearly is that after an action is properly commenced — by the filing of the to the defendant, for the reason that this "would defeat the objective of the
complaint and the payment of all requisite docket and other fees — the remedy . . . (since the) time which such a hearing would take, could be enough
plaintiff may apply for and obtain a writ of preliminary attachment upon to enable the defendant to abscond or dispose of his property before a writ of
fulfillment of the pertinent requisites laid down by law, and that he may do so attachment issues." As observed by a former member of this Court, 26 such a
at any time, either before or after service of summons on the defendant. And procedure would warn absconding debtors-defendants of the commencement
this indeed, has been the immemorial practice sanctioned by the courts: for of the suit against them and the probable seizure of their properties, and thus
the plaintiff or other proper party to incorporate the application for give them the advantage of time to hide their assets, leaving the creditor-
attachment in the complaint or other appropriate pleading (counter-claim, plaintiff holding the proverbial empty bag; it would place the creditor-
cross-claim, third-party claim) and for the Trial Court to issue the writ ex-
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applicant in danger of losing any security for a favorable judgment and thus property is seized before seeking the discharge of the attachment by a
give him only an illusory victory. counterbond. This is made possible by Section 5 of Rule 57.
Withal, ample modes of recourse against a preliminary attachment are secured Sec. 5. Manner of attaching property. — The officer executing
by law to the defendant. The relative ease with which a preliminary the order shall without delay attach, to await judgment and
attachment may be obtained is matched and paralleled by the relative facility execution in the action, all the properties of the party against
with which the attachment may legitimately be prevented or frustrated. These whom the order is issued in the province, not exempt from
modes of recourse against preliminary attachments granted by Rule 57 were execution, or so much thereof as may be sufficient to satisfy
discussed at some length by the separate opinion in Mindanao Savings & the applicant's demand, unless the former makes a deposit
Loans Asso. Inc. v. CA., supra. with the clerk or judge of the court from which the order issued,
or gives a counter-bond executed to the applicant, in an
That separate opinion stressed that there are two (2) ways of discharging an amount sufficient to satisfy such demand besides costs, or in an
attachment: first, by the posting of a counterbond; and second, by a showing of amount equal to the value of the property which is about to be
its improper or irregular issuance. attached, to secure payment to the applicant of any judgment
which he may recover in the action. . . . (Emphasis supplied)
1.0. The submission of a counterbond is an efficacious mode of lifting an
attachment already enforced against property, or even of preventing its 2.0. Aside from the filing of a counterbond, a preliminary attachment may also
enforcement altogether. 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
1.1. When property has already been seized under attachment, the attachment mode of lifting an attachment may be resorted to even before any property has
may be discharged upon counterbond in accordance with Section 12 of Rule 57. 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. 12. Discharge of attachment upon giving counterbond. —
At any time after an order of attachment has been granted, Sec. 13. Discharge of attachment for improper or irregular
the party whose property has been attached or the person issuance. — The party whose property has been attached may
appearing in his behalf, may, upon reasonable notice to the also, at any time either BEFORE or AFTER the release of the
applicant, apply to the judge who granted the order, or to the attached property, or before any attachment shall have been
judge of the court in which the action is pending, for an order actually levied, upon reasonable notice to the attaching
discharging the attachment wholly or in part on the security creditor, apply to the judge who granted the order, or to the
given . . . in an amount equal to the value of the property judge of the court in which the action is pending, for an order
attached as determined by the judge to secure the payment of to discharge the attachment on the ground that the same was
any judgment that the attaching creditor may recover in the improperly or irregularly issued. If the motion be made on
action. . . . affidavits on the part of the party whose property has been
attached, but not otherwise, the attaching creditor may
1.2. But even before actual levy on property, seizure under attachment may be oppose the same by counter-affidavits or other evidence in
prevented also upon counterbond. The defendant need not wait until his
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addition to that on which the attachment was made. . . . be tantamount to a trial of the merits of the action. In other
(Emphasis supplied) words, the merits of the action would be ventilated at a mere
hearing of a motion, instead of at the regular trial. Therefore,
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), when the writ of attachment is of this nature, the only way it
The attachment debtor cannot be deemed to have waived any defect in the can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98
issuance of the attachment writ by simply availing himself of one way of Phil. 886).
discharging the attachment writ, instead of the other. Moreover, the filing of a
counterbond is a speedier way of discharging the attachment writ maliciously (b) Effect of the dissolution of a preliminary attachment on the plaintiffs
sought out by the attaching creditor instead of the other way, which, in most attachment bond:
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 . . . The dissolution of the preliminary attachment upon
security given, or a showing of its irregular or improper
It may not be amiss to here reiterate other related principles dealt with issuance, does not of course operate to discharge the sureties
in Mindanao Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit: on plaintiff's own attachment bond. The reason is simple.
That bond is "executed to the adverse party, . . . conditioned
(a) When an attachment may not be dissolved by a showing of that the . . . (applicant) will pay all the costs which may be
its irregular or improper issuance: adjudged to the adverse party and all damages which he may
sustain by reason of the attachment, if the court shall finally
. . . (W)hen the preliminary attachment is issued upon a adjudge that the applicant was not entitled thereto" (SEC. 4,
ground which is at the same time the applicant's cause of Rule 57). Hence, until that determination is made, as to the
action; e.g., "an action for money or property embezzled or applicant's entitlement to the attachment, his bond must
fraudulently misapplied or converted to his own use by a stand and cannot be with-drawn.
public officer, or an officer of a corporation, or an attorney,
factor, broker, agent, or clerk, in the course of his With respect to the other provisional remedies, i.e., preliminary injunction
employment as such, or by any other person in a fiduciary (Rule 58), receivership (Rule 59), replevin or delivery of personal property
capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), (Rule 60), the rule is the same: they may also issue ex parte. 29
or "an action against a party who has been guilty of fraud m
contracting the debt or incurring the obligation upon which It goes without saying that whatever be the acts done by the Court prior to the
the action is brought" (Sec. 1 [d], Rule 57), the defendant is acquisition of jurisdiction over the person of defendant, as above indicated —
not allowed to file a motion to dissolve the attachment under issuance of summons, order of attachment and writ of attachment (and/or
Section 13 of Rule 57 by offering to show the falsity of the appointments of guardian ad litem, or grant of authority to the plaintiff to
factual averments in the plaintiff's application and affidavits prosecute the suit as a pauper litigant, or amendment of the complaint by the
on which the writ was based — and consequently that the plaintiff as a matter of right without leave of court 30 — and however valid
writ based thereon had been improperly or irregularly issued and proper they might otherwise be, these do not and cannot bind and affect
(SEE Benitez v. I.A.C., 154 SCRA 41) — the reason being that the defendant until and unless jurisdiction over his person is eventually
the hearing on such a motion for dissolution of the writ would obtained by the court, either by service on him of summons or other coercive
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process or his voluntary submission to the court's authority. Hence, when the the applicant, although it may, in its discretion, require prior hearing on the
sheriff or other proper officer commences implementation of the writ of application with notice to the defendant; but that levy on property pursuant to
attachment, it is essential that he serve on the defendant not only a copy of the writ thus issued may not be validly effected unless preceded, or
the applicant's affidavit and attachment bond, and of the order of attachment, contemporaneously accompanied, by service on the defendant of summons, a
as explicity required by Section 5 of Rule 57, but also the summons addressed copy of the complaint (and of the appointment of guardian ad litem, if any),
to said defendant as well as a copy of the complaint and order for appointment the application for attachment (if not incorporated in but submitted
of guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of separately from the complaint), the order of attachment, and the plaintiff's
the Rules of Court. Service of all such documents is indispensable not only for attachment bond.
the acquisition of jurisdiction over the person of the defendant, but also upon
considerations of fairness, to apprise the defendant of the complaint against WHEREFORE, the petition is GRANTED; the challenged decision of the Court
him, of the issuance of a writ of preliminary attachment and the grounds of Appeals is hereby REVERSED, and the order and writ of attachment issued
therefor and thus accord him the opportunity to prevent attachment of his by Hon. Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial
property by the posting of a counterbond in an amount equal to the plaintiff's Court of Davao City in Civil Case No. 19513-89 against Queensland Hotel or
claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or Motel or Queensland Tourist Inn and Teodorico Adarna are hereby
dissolving it by causing dismissal of the complaint itself on any of the grounds REINSTATED. Costs against private respondents.
set forth in Rule 16, or demonstrating the insufficiency of the applicant's
affidavit or bond in accordance with Section 13, Rule 57. SO ORDERED.
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
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issuance of a writ of preliminary attachment. The complaint was docketed as

Civil Case No. Q-90-6471.
Cuartero v. CA, 212 S 260
On August 24, 1990, the lower court issued an order granting ex-parte the
THIRD DIVISION petitioner's prayer for the issuance of a writ of preliminary attachment.
G.R. No. 102448 August 5, 1992 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
RICARDO CUARTERO, petitioner, summons for the spouses Evangelista was likewise prepared.
vs.
COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA The following day, that is, on September 20, 1990, a copy of the writ of
EVANGELISTA, respondents. preliminary attachment, the order dated August 24, 1990, the summons and
the complaint were all simultaneously served upon the private respondents at
Abesamis, Medialdea & Abesamis for petitioner. their residence. Immediately thereafter, Deputy Sheriff Ernesto L. Sula levied,
attached and pulled out the properties in compliance with the court's directive
Eufemio Law Offices for private respondent. 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.
GUTIERREZ, JR., J.: Subsequently, the spouses Evangelista filed motion to set aside the order dated
August 24, 1990 and discharge the writ of preliminary attachment for having
This is a petition for review on certiorari seeking to annul the decision of the been irregularly and improperly issued. On October 4, 1990, the lower court
Court of Appeals promulgated on June 27, 1991 as well as the subsequent denied the motion for lack of merit.
resolution dated October 22, 1991 denying the motion for reconsideration in
CA-G.R. SP No. 23199 entitled "Spouses Roberto and Felicia Evangelista v. Private respondents, then, filed a special civil action for certiorari with the
Honorable Cezar C. Peralejo, Presiding Judge Regional Trial Court of Quezon Court of Appeals questioning the orders of the lower court dated August 24,
City, Branch 98, and Ricardo Cuartero," which nullified the orders of the trial 1990 and October 4, 1990 with a prayer for a restraining order or writ of
court dated August 24, 1990 and October 4, 1990 and cancelled the writ of preliminary injunction to enjoin the judge from taking further proceedings
preliminary attachment issued on September 19, 1990. below.
Following are the series of events giving rise to the present controversy. 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
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before the being no clear showing that the spouses Evangelista were entitled thereto.
Regional Trial Court of Quezon City against the private respondents,
Evangelista spouses, for a sum of money plus damages with a prayer for the On June 27, 1991, the Court of Appeals granted the petition for certiorari and
rendered the questioned decision. The motion for reconsideration filed by
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herein petitioner Cuartero was denied for lack of merit in a resolution dated The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168
October 22, 1991. Hence, the present recourse to this Court. SCRA 692 (1988) in arriving at the foregoing conclusion. It stated that:
The petitioner raises the following assignment of errors: Valid service of summons and a copy of the complaint vest
jurisdiction in the court over the defendant both for the
I purpose of the main case and for purposes of the ancillary
remedy of attachment and a court which has not acquired
THE COURT OF APPEALS ERRED AND COMMITTED A jurisdiction over the person of defendant, cannot bind the
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK defendant whether in the main case or in any ancillary
OF JURISDICTION WHEN IT HELD THAT THE REGIONAL proceeding such as attachment proceedings (Sievert v. Court
TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER of Appeals, 168 SCRA 692). (Rollo, p. 24)
RESPONDENT SPOUSES.
The private respondents, in their comment, adopted and reiterated the
II 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
THE COURT OF APPEALS ERRED AND ACTED WITH of preliminary attachment. They stress that the fraud in contracting the debt
GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT or incurring the obligation upon which the action is brought which comprises
THE REGIONAL TRIAL COURT COULD NOT VALIDLY a ground for attachment must have already been intended at the inception of
ISSUE THE SUBJECT WRIT OF PRELIMINARY the contract. According to them, there was no intent to defraud the petitioner
ATTACHMENT WHICH IS AN ANCILLARY REMEDY. (Rollo, when the postdated checks were issued inasmuch as the latter was aware that
p. 13) the same were not yet funded and that they were issued only for purposes of
creating an evidence to prove a pre-existing obligation.
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 Another point which the private respondents raised in their comment is the
respondents herein). It declared that: alleged violation of their constitutionally guaranteed right to due process
when the writ was issued without notice and hearing.
. . . the want of jurisdiction of the trial court to proceed in the
main case as well as the ancillary remedy of attachment is In the later case of Davao Light and Power Co., Inc. v. Court of Appeals, G.R.
quite clear. It is not disputed that neither service of summons No. 93262, November 29, 1991, we had occasion to deal with certain
with a copy of the complaint nor voluntary appearance of misconceptions which may have arisen from our Sievert ruling. The question
petitioners was had in this case before the trial court issued which was resolved in the Davao Light case is whether or not a writ of
the assailed order dated August 24, 1990, as well as the writ of preliminary attachment may issue ex-parte against a defendant before the
preliminary attachment dated September 19, 1990. This is court acquires jurisdiction over the latter's person by service of summons or
reversible error and must be corrected on certiorari. (Rollo, p. his voluntary submission to the court's authority. The Court answered in the
24) affirmative. This should have clarified the matter but apparently another
ruling is necessary.
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A writ of preliminary attachment is defined as a provisional remedy issued proper party to incorporate the application for attachment in
upon order of the court where an action is pending to be levied upon the the complaint or other appropriate pleading (counter-claim,
property or properties of the defendant therein, the same to be held thereafter cross-claim, third-party-claim) and for the Trial Court to issue
by the sheriff as security for the satisfaction of whatever judgment might be the writex-parte at the commencement of the action if it finds
secured in said action by the attaching creditor against the defendant the application otherwise sufficient in form and substance.
(Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31
[1973]). The Court also pointed out that:
Under section 3, Rule 57 of the Rules of Court, the only requisites for the . . . It is incorrect to theorize that after an action or
issuance of the writ are the affidavit and bond of the applicant. As has been proceeding has been commenced and jurisdiction over the
expressly ruled in BF Homes, Inc. v. Court of Appeals, 190 SCRA 262 (1990), person of the plaintiff has been vested in the Court, but before
citing Mindanao Savings and Loan Association, Inc. v. Court of Appeals, 172 acquisition of jurisdiction over the person of the
SCRA 480 (1989), no notice to the adverse party or hearing of the application defendant (either by service of summons or his voluntary
is required inasmuch as the time which the hearing will take could be enough submission to the Court's authority), nothing can be validly
to enable the defendant to abscond or dispose of his property before a writ of done by the plaintiff or the Court. It is wrong to assume that
attachment issues. In such a case, a hearing would render nugatory the the validity of acts done during the period should be
purpose of this provisional remedy. The ruling remains good law. There is, dependent on, or held in suspension until, the actual
thus, no merit in the private respondents' claim of violation of their obtention of jurisdiction over the defendants person. The
constitutionally guaranteed right to due process. obtention by the court of jurisdiction over the person of the
defendant is one thing; quite another is the acquisition of
The writ of preliminary attachment can be applied for and granted at the jurisdiction over the person of the plaintiff or over the subject
commencement of the action or at any time thereafter (Section 1, Rule 57, matter or nature of the action, or the res or object thereof.
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 It is clear from our pronouncements that a writ of preliminary attachment may
the date of the filing of the complaint which is a time before summons is issue even before summons is served upon the defendant. However, we have
served on the defendant or even before summons issues. The Court added that 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
. . . after an action is properly commenced — by filing of the that when the proper officer commences implementation of the writ of
complaint and the payment of all requisite docket and other attachment, service of summons should be simultaneously made.
fees — the plaintiff may apply and obtain a writ of
preliminary attachment upon the fulfillment of the pertinent It must be emphasized that the grant of the provisional remedy of attachment
requisites laid down by law, and that he may do so at any practically involves three stages: first, the court issues the order granting the
time, either before or after service of summons on the application; second, the writ of attachment issues pursuant to the order
defendant. And this, indeed, has been the immemorial granting the writ; and third, the writ is implemented. For the initial two
practice sanctioned by the courts: for the plaintiff or other stages, it is not necessary that jurisdiction over the person of the defendant
88 of 501
should first be obtained. However, once the implementation commences, it is the spouses Evangelista's motion to discharge the writ of preliminary
required that the court must have acquired jurisdiction over the defendant for attachment was denied by the lower court for lack of merit. There is no
without such jurisdiction, the court has no power and authority to act in any showing that there was an abuse of discretion on the part of the lower court in
manner against the defendant. Any order issuing from the Court will not bind denying the motion.
the defendant.
Moreover, an attachment may not be dissolved by a showing of its irregular or
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its improper issuance if it is upon a ground which is at the same time the
questioned decision, the writ of attachment issuedex-parte was struck down applicant's cause of action in the main case since an anomalous situation
because when the writ of attachment was being implemented, no jurisdiction would result if the issues of the main case would be ventilated and resolved in
over the person of the defendant had as yet been obtained. The court had a mere hearing of a motion (Davao Light and Power Co., Inc. v. Court of
failed to serve the summons to the defendant. Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank) v. Court
of Appeals, 197 SCRA 663 [1991]).
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 In the present case, one of the allegations in petitioner's complaint below is
and copy of the complaint were also simultaneously served. 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
It is appropriate to reiterate this Court's exposition in the Davao Light and postdated cheeks for payment of the stipulated interest (Annex "B"). The issue
Power case cited earlier, to wit: of fraud, then, is clearly within the competence of the lower court in the main
action.
. . . writs of attachment may properly issue ex-parte provided
that the Court is satisfied that the relevant requisites WHEREFORE, premises considered, the Court hereby GRANTS the petition.
therefore have been fulfilled by the applicant, although it The challenged decision of the Court of Appeals is REVERSED, and the order
may, in its discretion, require prior hearing on the application and writ of attachment issued by Hon. Cezar C. Peralejo, Presiding Judge of
with notice to the defendant, but that levy on property Branch 98, Regional Trial Court of Quezon City against spouses Evangelista
pursuant to the writ thus issued may not be validly effected are hereby REINSTATED. No pronouncement as to costs.
unless preceded, or contemporaneously accompanied by
service on the defendant of summons, a copy of the complaint SO ORDERED.
(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
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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
Salas v. Adil, 90 S 121 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
SECOND DIVISION 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
G.R. No. L-46009 May 14, 1979 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
RICARDO T. SALAS and MARIA SALAS, petitioners, damages daily from June 30, 1976 due to the stoppage in the construction of
vs. their commercial buildings on Lot No. 3, and moral damages in the amount of
HON. MIDPANTAO L. ADIL, as Judge of Branch II, Court of First P200,000.00.
Instance of Iloilo, ROSITA BEDRO and BENITA YU, respondents.
In their answer to the complaint, the Salas spouses, after specifically denying
Castro Law Office for petitioners. 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
Tirso Espelete and Fortunato A. Padilla for private respondents. 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
ANTONIO, J.: 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
Certiorari to nullify the Order of Attachment of May 13, 1977, as well as the concrete wall on the boundary thereon without providing any gate as entrance
Writ of Attachment dated May 16, 1977, issued by respondent Judge in Civil or exit towards Lot No. 5; and that private respondents have no personality to
Case No. 10770 of the Court of First Instance of Iloilo, entitled "Rosita Bedro question the validity of the deed of sale over Lot No. 5 since they were not
and Benita Yu v. Spouses Ricardo T. Salas and Maria Salas, et al. parties to the same and the sale was duly approved by the probate court.
On September 10, 1976, respondents Rosita Bedro and Benita Yu filed the In a motion dated May 12, 1977, private respondents filed a Motion for
afore-mentioned civil action with the Court of First Instance of Iloilo against Attachment, alleging, among others, that the case was "for annulment of a
herein petitioners Ricardo T. Salas and Maria Salas, the Philippine Commercial deed of sale and recovery of damages" and that the defendants have removed
& Industrial Bank, in its capacity as Administrator of the Testate Estate of the or disposed of their properties or are about to do so with intent to defraud
deceased Charles Newton Hodges, and Avelina A. Magno, in her capacity as their creditors especially the plaintiffs in this case.
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 On May 13, 1977, respondent Judge issued ex-parte a Writ of Attachment
Estate in favor of the Spouses Ricardo T. Salas and Maria Salas and for "against the properties of the defendants particularly Lots Nos. 1 and 4 of Psc-
damages. The action for annulment was predicated upon the averment that 2157 less the building standing thereon upon the plaintiffs filing a bond in the
Lot No. 5, being a subdivision road, is intend for public use and cannot be sold amount of P200,000.00 subject to the approval of this Court." After a surety
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bond in the amount of P200,000.00, executed on May 11, 1977 by the Central of the attachment if it appears that it was improperly or
Surety and Insurance Company as surety was filed, the writ itself was issued by irregularly issued and the defect is not cured forthwith.
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 Considering that petitioners have not availed of this remedy, the instant
aforesaid properties of petitioners. petition is premature.
Contending that respondent Judge gravely abused his discretion in issuing the We deem it necessary, however, for the guidance of respondent Court and of
said Writ of Attachment, petitioners filed the present petition. the parties, to stress herein the nature of attachment as an extraordinary
provisional remedy.
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 A preliminary attachment is a rigorous remedy, which exposes the debtor to
prosper, there must be no appeal nor any plain, speedy and adequate remedy humiliation and annoyance, such it should not be abused as to cause
in the ordinary course of law. Petitioners, therefore, must exhaust all available unnecessary prejudice. It is, therefore, the duty of the court, before issuing the
remedies in the lower court before filing a petition for certiorari, otherwise the writ, to ensure that all the requisites of the law have been complied with;
petition shall be held to be premature. otherwise the judge acts in excess of his jurisdiction and the so issued shall be
1
null and void .
In the instant case, it appears that petitioners have adequate remedy under the
2
law. They could have filed an application with the court a quo for the In Carpio v. Macadaeg, this Court said:
discharge of the attachment for improper or irregular issuance under section
13, Rule 57, of the Revised Rules of Court, which provides the following Respondent Judge should not have issued the two writs of
preliminary attachment (Annexes C and C-1) on Abaya's
SEC. 13. Discharge of attachment for improper or irregular simple allegation that the petitioner was about to dispose of
issuance. — The party whose property has been attached may his property, thereby leaving no security for the satisfaction of
also, at any time either before or after the release of the any judgment. Mere removal or disposal of property, by itself,
attached property, or before any attachment shall have been is not ground for issuance of preliminary attachment,
actually levied, upon reasonable notice to the attaching notwithstanding absence of any security for the satisfaction of
creditor, apply to the judge who Salas vs. Adil granted the any judgment against the defendant. The removal or disposal,
order, or to the judge of the court in which the action is to justify preliminary attachment, must have been made with
pending, for an order to discharge the attachment on the intent to defraud defendant's creditors.
ground that the same was improperly or irregularly issued. If
the motion be made on affidavits on the part of the party Respondent Judge in fact corrected himself. Acting on
whose property has been attached, but not otherwise, the petitioner's motion to discharge attachment and apparently
attaching creditor may oppose the same by counter-affidavits believing the correctness of the grounds alleged therein, he
or other evidence in addition to that on which the attachment set aside the orders of attachment (Order of March 11, 1960,
was made. After hearing, the judge shall order the discharge Annex F)
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But reversing himself again, he set aside his order of March 11, of attachment is not available 'm a suit for damages where the amount claimed
1960 (Annex K, dated March 29, 1960). This he did apparently is contingent or unliquidated.
on Abaya's contention that petitioner was about to remove or
dispose of his property in order to defraud his creditors, as We think, however, that a rule sufficient for the
examples of which disposals he pointed to the alleged sale of determination of this case has been suggested and acted
the horses and of petitioner's office furniture. ... These upon, and that the remedy does not exist where unliquidated
averments of fraudulent disposals were controverted by damages were demanded. ... In Warwick v. Chase, 23 Md 161, it
petitioner who ... reiterated the defenses against preliminary is said: 'It is necessary that the standard for ascertaining the
attachment which he had previously enumerated in his amount of damages claimed should not only appear, but that
petition to discharge the two orders of attachment. Thus the it should be fixed and certain, and in no degree dependent on
question of fraudulent disposal was put in issue; and facts either speculative or Uncertain ... The general rule is,
respondent Judge, before issuing the pre attachment anew, that unliquidated damages, ... cannot be recovered by
should have given the parties opportunity to prove their attachment, unless the contract affords a certain measure or
4
respective claims or, at the very least should have provided standard for ascertaining the amount of the damages ...
petitioner with the chance to show that he had not been
disposing of his property in fraud of creditors. (citing National Further.
Coconut Corporation v. Pecson L-4296, Feb. 25, 1952, Villongco
v. Panlilio, 6214, Nov. 20, 1953). The statute authorizing the issuance of the writ of
garnishment and that relating to the issuance of the writ of
3
And in Garcia v. Reyes, considering the allegation that the debtors were attachment ... have not been construed as authorizing the
removing or disposing of some of their properties with intent to defraud their writs to be issued when the plaintiff's suit is technically an
creditors, 'this Court said that "(a)ll in all due process would seem to require action for debt. Neither of the writs may be issued when the
that both parties further ventilate their respective contentions in a hearing suit is for damages for tort, but they may be issued when the
that could indeed reveal the truth. Fairness would be served thereby, the plaintiff's claim arises out of contract either express or
demand of reason satisfied." implied, and the demand is liquidated, that is, the amount of
the claim is not contingent, is capable of being definitely
Considering the gravity of the allegation that herein petitioners have removed ascertained by the usual means of evidence, and does not rest
5
or disposed of their properties or are about to do so with intent to defraud in the discretion of the jury.
their creditors, and further considering that the affidavit in support of the pre
attachment merely states such ground in general terms, without specific WHEREFORE, the instant petition is hereby DENIED, in order to enable
allegations of lances to show the reason why plaintiffs believe that defendants petitioners to move before respondent Court for the discharge of the
are disposing of their properties in fraud of creditors, it was incumbent upon attachment on the ground of its improper and irregular issuance, pursuant to
respondent Judge to give notice to petitioners and to allow wherein evidence is section 13, Rule 57, of the Revised Rules of Court, and for the aforesaid Court
them to present their position at a to be received. Moreover, it appears from to act thereon in accordance with the foregoing.
the records that private respondents are claiming unliquidated damages,
including moral damages, from petitioners. The authorities agree that the writ
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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
La Granja v. Samson, 58 Phil. 378 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
EN BANC 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
DECISION petition for an order of attachment.
September 14, 1933 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
G.R. No. 40054
issue an order of attachment.
LA GRANJA, INC., petitioner,
vs. Section 426 of the Code of Civil procedure provides the following:
FELIX SAMSON, Judge of First Instance of Cagayan, CHUA BIAN, CHUA
YU LEE and CHUA KI, respondents. 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
Miguel P. Pio for petitioner. of the peace by the affidavit of the plaintiff, or of some other person who
The Respondent Judge in his own behalf. knows the facts, that a sufficient cause of action exists, and that the case is one
Villareal, J.: of those mentioned in section four hundred and twenty-four, and that there is
In this original petition for mandamus filed by the corporate entity, La Granja, no other sufficient security for the claim sought to be enforced by the action,
Inc., against Felix Samson, as Judge of the Court of First Instance of Cagayan, and that the amount due to the plaintiff above all legal set-offs or
Chua Bian, Chua Yu Lee and Chua Ki, the petitioner herein, for the reasons counterclaims is as much as the sum for which the order is granted.
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 It will be seen that the legal provision just cited orders the granting of a writ of
properties of the other respondents herein, who are defendants in civil case attachment when it has been made to appear by affidavit that the facts
No. 1888 of the Court of First Instance of Cagayan. The pertinent facts mentioned by law as sufficient to warrant the issuance thereof, exist. Although
necessary for the solution of the questions raised in the present case are as the law requires nothing more than the affidavit as a means of establishing the
follows: existence of such facts, nevertheless, such affidavit must be sufficient to
On July 5, 1932, the petitioner herein, La Granja, Inc., filed a complaint in the convince the court of their existence, the court being justified in rejecting the
Court of First Instance of Cagayan, against Chua Bian, Chua Yu Lee and Chua affidavit if it does not serve this purpose and in denying the petition for an
Ki, for the recovery of the sum of P2,418.18 with interest thereon at the rate of order of attachment. The affidavit filed by the petitioner, La Granja, Inc., must
12 per cent per annum, which case was docketed as civil case No. 1888. The not have satisfied the respondent judge inasmuch as he desired to ascertain or
plaintiff at the same time, also prayed for the issuance of an order of convince himself of the truth of the facts alleged therein by requiring evidence
attachment against the aforementioned defendants’ property and to substantiate them. The sufficiency or insufficiency of an affidavit depends
accompanied said complaint with an affidavit of the manager of the aforesaid upon the amount of credit given it by the judge, and its acceptance or
petitioner, La Granja, Inc., wherein it was alleged among other essential rejection, upon his sound discretion.
93 of 501
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.
94 of 501
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,
Section 3 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
KO Glass v. Valenzuela, 116 S 563 (See under Section 1 page 9) 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,
Guzman v. Catolico, 65 Phil. 261 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
EN BANC 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
G.R. No. L-45720 December 29, 1937 preliminary attachment" (paragraph 8 of the complaint there appears the
following affidavits: "I, Alfredo Catolico, of age, married and resident of
VENTURA GUZMAN, petitioner, Tuguegarao, Cagayan, after being duly sworn, declare: That I am the same
vs. plaintiff in this case; that I have prepared and read the same (complaint) and
ALFREDO CATOLICO and SIMEON RAMOS, Judge of First Instance of that all the allegations thereof are certain and true, to the best of knowledge
Isabela, respondents. and belief."
Arnaldo J. Guzman for the petitioner. In view of the said complaint and affidavit, the respondent judge, on March 10,
Alfredo Catolico in his own behalf. 1937, issued an order granting the petition and ordering the issuance of a writ
No appearance for respondent Judge. 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
VILLA-REAL, J.: cancellation of said writ of preliminary attachment on the ground that it had
been improperly, irregularly and illegally issued, there being no allegation,
This is a petition filed by Ventura Guzman, praying this court, after proper either in the complaint or in the affidavit solemnizing it, that there is no other
proceedings, to render judgment declaring illegal and void and setting aside sufficient security for the claim sought to be enforced by the action; that the
the writ of preliminary attachment issued by the respondent judge, Honorable amount due to the plaintiff, above the legal set-off and counterclaim, is as
Simeon Ramos, as judge of the Court of First Instance of Isabela, and ordering much as the sum of which the preliminary attachment has been granted, and
the dissolution thereof. that the affidavit of the plaintiff is base in mere information and belief.
The pertinent facts necessary for the resolution of the legal question raised in Said motion was denied by the respondent judge in an order of July 10, 1937.
the present case are as follows:
95 of 501
The only question to be decided in this case is whether or not the requisites requisites constitute a defect preventing a judge of the Court of First Instance
prescribed by law for the issuance of a writ of preliminary attachment have from issuing a writ of preliminary attachment?lawphil.net
been complied with.
Attachment is a juridical institution which has for its purpose to secure the
Section 426 of the Code of the Civil Procedure provides that "A judge or justice outcome of the trial, that is, the satisfaction of the pecuniary obligation really
of the peace shall grant an order of attachment when it is made to appear to contracted by a person or believed to have been contracted by him, either by
the judge or justice of the peace by the affidavit of the plaintiff, or of some virtue of a civil obligation emanating from contract or law, or by virtue of
other person who knows the facts, that a sufficient cause of action exists, and some crime or misdemeanor that he might have committed, and the writ
that the case is one of those mentioned in section four hundred and twenty- issued, granting it, is executed by attaching and safely keeping all the movable
four, and that there is no other sufficient security for the claim sought to be property of the defendant, or so much thereof as may be sufficient to satisfy
enforced by the action, and that the amount due to the plaintiff above all legal the plaintiff's demands (sec. 428, Act No. 190), or by filing a copy of said writ
set-offs or counterclaims is as much as the sum for which the order is with the register of deeds for the province in which the real property is
granted." 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
The petitioner, in attacking the legality and validity of the writ of preliminary ownership or the right to enjoy or dispose of a thing without further
attachment, which is the subject matter of this petition, relies on the alleged limitations than those established by law (art. 348, Civil Code), since the
lack of an allegation in the complaint or in the affidavit to the effect "that owner of the property attached cannot dispose of the same free of all liens and
there is no sufficient security for the claim sought to be enforced by the action encumbrances. The law authorizing the issuance of a writ of preliminary
and that the amount alleged to be due to the plaintiff above all legal set-offs attachment should, therefore, be construed strictly in favor of the judge
and counterclaims is as much as the sum for which the writ has been granted", should require that all the requisites prescribed by law be complied with,
and on the fact that the affidavit is based on mere information and belief of without which a judge acquires no jurisdiction to issue the writ. If he does so
the plaintiff. 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.
With respect to the last requisites just stated above, the affidavit is not
defective because in it the therein plaintiff and herein respondent Alfredo The jurisdiction of attachment proceedings being a special one, it
Catolico states "that all the allegations thereof are certain and true, to the best cannot be legitimately exercised unless the attaching creditor pursues
of my knowledge and belief", and not that they are so according to his substantially the essential requirements of the statute, and the court
information and belief. can act only under the special power limited by the statute and
according to the forms of procedures it prescribes. . . . (6 C. J., 88,
As to the other two requisites, there is no allegation, either in the complaint or paragraph 121.)
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 Where the statutes requires the affidavit to show that defendant is
amount due him from the defendant, above all legal set-offs and indebted to plaintiff in an amount specified, or that the latter is
counterclaims, is as much as the sum for which the writ of preliminary entitled to recover such an amount, over and above all legal payments,
attachment has been granted. Now then, does the omission of these two set-offs, or counterclaims, compliance with this requirement is
96 of 501
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.
97 of 501
IMPACT to pay herein petitioner all of IMPACT's obligations under the

aforesaid agreement. 5
Jardine Manila Finance v. CA, 171 S 636
It was alleged that in April and May 1979, IMPACT assigned its receivables to
THIRD DIVISION 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
G.R. No. 55272 April 10, 1989 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
JARDINE-MANILA FINANCE, INC., petitioner, the amounts so collected to JARDINE.
vs.
COURT OF APPEALS, IMPACT CORPORATION, RICARDO DE LEON and JARDINE thus demanded payment of P 1,000,212.64, the total amount due
EDUARDO DE LEON, respondents. 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.
FERNAN, C.J.: Likewise contained in said complaint is petitioner's application for a writ of
preliminary attachment against private respondents. The allegations in
This is a petition for review on certiorari seeking to reverse and set aside: (a) support of said petition for a writ of preliminary attachment are quoted in full:
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. Special Allegations for Preliminary Attachment
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. A. The foregoing allegations are hereby
34617 entitled "Jardine-Manila Finance, Inc. v. Impact Corporation, et al." 2 and repleaded and made integral parts hereof.
(b) the Resolution dated October 7, 1980 denying herein petitioners motion for
reconsideration. 3 B. The defendant corporation at the time of
the execution of the aforesaid deeds of
On September 28, 1979, petitioner Jardine-Manila Finance, Inc. (JARDINE) assignment had reservation not to remit to
filed a complaint in the then Court of First Instance (CFI) of Rizal, docketed as plaintiff the proceeds of the receivables
Civil Case No. 34617, against private respondents Impact Corporation assigned to plaintiff as confirmed by their
(IMPACT), Ricardo de Leon and Eduardo de Leon, to collect various sums of refusal to remit the same to plaintiff although
money allegedly due from therein defendant IMPACT under a credit the issuers of the receivables assigned to
accomodation by way of a discounting line agreement. 4 Herein private plaintiff had already paid to defendant
respondents Ricardo de Leon and Eduardo de Leon were included as corporation their obligations on said
defendants by virtue of their undertaking covered by a Surety Agreement receivables to the latter.
under which they bound themselves jointly and severally with defendant
98 of 501
C. Defendants Ricardo de Leon and Eduardo the applicant plaintiff is not entitled
de Leon who are likewise officers of thereto.7
defendant corporation in order to elicit
plaintiffs approval to enter into said deeds of On the basis of the foregoing allegations, the lower court granted JARDINE's
assignment with defendant corporation, petition for the issuance of a writ of preliminary attachment on October 16,
executed the aforesaid surety agreement 1979. 8
(Annex L), likewise, with reservation in their
minds not to honor their obligations under On October 19, 1979, therein defendants filed a motion to set aside the writ of
the same as what they actually did when they preliminary attachment. They also submitted to the court a quo a
refused to pay the obligations of defendant memorandum in support of their motion to dissolve the attachment
corporation to plaintiff pursuant to the contending that the grounds alleged by the plaintiff in its application for a writ
provisions of said surety agreement. (Annex of attachment are not among the grounds specified under Section 1 of Rule 57;
L) 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
D. Defendant corporation, Ricardo de Leon Rule 57 and that the verification of the complaint was defective as it did not
and Eduardo de Leon have no visible other state that the amount due to the plaintiff above all legal set-ups or
sufficient security for the claim sought to be counterclaims is as much as the sum for which the order is sought. 9
enforced by this action of plaintiff other than
their real and personal properties which are JARDINE opposed the motion arguing that the mental reservation of
located in Metro Manila and in the province of defendants at the time of the execution of the deeds of assignment constituted
Rizal, Province of Nueva Ecija or elsewhere. fraud; that such fraud was further confirmed by the fact that defendants
(Emphasis supplied) 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
E. Plaintiffs action against defendant had already collected the receivables assigned by them; that the amounts
corporation is based upon documents and collected by defendant corporation were received by defendants in trust for
therefrom a sufficient cause of action exists. plaintiff and defendant corporation appropriated for itself said collection. 10
F. Plaintiff is willing to post a bond in an On November 7, 1979, the trial court denied defendant's motion to annul the
amount to be fixed by the Honorable Court, writ of preliminary attachment. Thereupon, defendant Impact Corporation
not exceeding plaintiffs claim which will be went to the appellate court on a petition for certiorari seeking to annul said
conditioned to the effect that plaintiff will writ. 11
pay all the costs which may be adjudged to
the adverse party and all damages which they The findings of the Court of Appeals are as follows:
may sustain by reason of attachment, if the
Honorable Court should finally adjudge that To our mind there is no question that the allegations of the
complaint proper which were repleaded and made integral
99 of 501
part of the application for preliminary attachment (paragraph Thus, on August 29, 1980, the Court of Appeals annulled the assailed writ of
A) made out a case of conversion or misappropriation of attachment for having been issued improperly and irregularly, the dispositive
property held in trust which is the subject of the complaint portion of which reads:
for the allegations stated that IMPACT had assigned to
JARDINE certain receivables with the understanding that it IN VIEW OF THE FOREGOING, the petition to annul the
was to collect the same from the issuers of said receivables order and the writ of attachment issued by respondent Court
and deliver the amounts collected to JARDINE, but in spite of is hereby GRANTED and judgment is rendered declaring said
the fact that IMPACT had actually collected said amounts, it order and writ of attachment null and void for having been
failed to turn over said receivables to JARDINE. There was, issued improperly and regularly. The restraining order issued
therefore, in the allegations of said complaint true conversion by this Court on November 9, 1979 restraining respondents
of the amounts received by defendant in trust for plaintiff. from enforcing the writ of attachment issued by respondent
Defendants in their motion to discharge the attachment and Judge on October 16, 1979 is hereby made PERMANENT. With
the memorandum filed by them in support of said motion had costs against private respondents. 13
in effect, admitted the conversion of the amounts collected by
defendant IMPACT, but justified the use of said amounts to Hence this recourse.
meet its operational expenses to prevent a complete
shutdown of its operations. Reduced to bare essentials, the records show that in the exercise of its
discretion, the lower court found justification in the issuance of the
While we find that the grounds alleged by plaintiff, the herein attachment. On the other hand, the Court of Appeals while in accord with the
private respondent, to support its application for preliminary lower court that a sufficient cause of action exists for petitioner and that the
attachment are among those enumerated in Section 1 of Rule ground for its application for attachment is one of those mentioned in Section
57 as grounds upon which an attachment may be issued, we 1, Rule 57 of the Rules of Court, found the issuance of the attachment irregular
are constrained nonetheless to rule against the regularity or or illegal in the absence of the following allegations in the application for
legality of the attachment issued by respondent Court attachment: (1) that "there is no sufficient security for the claim sought to be
because there was no allegation made by plaintiff in its enforced by the action; and (2) that the amount due to the applicant or the
application for the issuance of a writ of attachment to the value of the property on the basis of which he is entitled to recover, is as much
effect 'that there is no sufficient security for the claim sought as the sum for which the order is granted above all legal counterclaims."
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 Ultimately, the issue therefore, is whether or not non-compliance with the
entitled to recover, is as much as the sum for which the order formal requirements invalidate the writ of attachment.
is granted above all legal counterclaims, a requirement for the
granting of an order of attachment under Section 3 of Rule On both counts, petitioner admits not having used the exact words of the
57. 12 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
100 of 501
specifically state that the sum due is above all legal counterclaims, such On the first point, we believe a writ of preliminary attachment
conclusion of fact is no longer necessary in the face of actual proof in the may be issued in favor of a defendant who sets up a
answer which did not carry any counterclaim. In fine, petitioner stresses that counterclaim. For the purpose of the protection afforded by
mere forms must not be given more weight than substance. 14 such attachment, it is immaterial whether the defendants
Borja and wife simply presented a counterclaim or brought a
In excusing the deficiencies of its application for a writ of preliminary separate civil action against Jose de Borja, plaintiff in the
attachment, petitioner relies heavily on the case of De Borja v. Platon, 15 where previous case and petitioner herein. To lay down a subtle
this Court sustained the writ of attachment issued by the lower court in favor distinction would be to sanction that formalism and that
of the defendants based on the counterclaim of the latter despite the lack of technicality which are discountenanced by the modern laws
allegations in the affidavit attached to the petition for the issuance of the writ of procedure for the sake of speedy and substantial justice. . .
of attachment that the amount due the counterclaim was as much as the sum . 22
for which the order is granted above all legal counterclaims.
as a liberal approach to the required allegations in the application for a writ of
It will be noted however, that the trial court found that the counterclaim of preliminary attachment when what this Court actually allowed was the
the defendants exceeded the claims of the plaintiff. Thus, this Court held that presentation of a counterclaim by the defendant instead of a separate civil
"as the trial court had before it the evidence adduced by both sides, the action in compliance with one of the basic requirements for the issuance of
petition for a writ of preliminary attachment having been filed four years after said writ.
the trial court had begun, we presume that the lower court having in mind
such evidence, ordered the attachment accordingly." 16 The authority to issue an attachment, like the jurisdiction of the court over
such proceedings rests on express statutory provisions and unless there is
In sharp contrast, in the case at bar, where the records undeniably reveal that: authority in the statute, there is no power to issue the writ, and such authority
(1) the complaint was filed on September 28, 1979; 17 (2) the writ of as the statute confers must be strictly construed.23 In fact, "(E)ven where
preliminary attachment was issued on October 16, 1979; 18 (3) the motion to liberal construction is the rule, the statute or the right to attachment thereby
annul preliminary attachment dated October 19, 1979 was filed on the same granted may not be extended by judicial interpretation beyond the meaning
day; 19 (4) the answer of defendant IMPACT dated October 30, 1979 20 was conveyed by the words of the statute." 24 Petitioner's application for a writ of
received by the RTC Pasig only on November 5, 1979, 21 it is evident that the preliminary attachment must therefore be scrutinized and assessed by the
questioned writ was issued ex parte; and at a time when the Court a quo had requisites and conditions specifically prescribed by law for the issuance of
yet no basis for concluding that the amount due to petitioner is as much as the such writ.
sum for which the order is granted above all legal counterclaims.
Section 3, Rule 57 of the Revised Rules of Court governs the issuance of a writ
It is therefore, readily apparent that the conclusions in the De Borja case of attachment, to wit:
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 Sec. 3. Affidavit and bond required.-An order of attachment
that formalism and that technicality which are discountenanced by the shall be granted only when it is made to appear by the
modern laws of procedure" is an obvious misreading of the ruling of this Court affidavit of the applicant or some other person who personally
which states: knows of the facts, that a sufficient cause of action exists, that
101 of 501
the case is one of those mentioned in section 1 hereof, that statutes to obtain such writ are inconsequential, and in no sense
there is no sufficient security for the claim sought to be jurisdictional. 29
enforced by the action, and that the amount due to applicant
or the value of the property the possession of which he is Considering that petitioner's application for the subject writ of preliminary
entitled to recover is as much as the sum for which the order attachment did not fully comply with the requisites prescribed by law, said
is granted above all legal counterclaims. writ is, as it is hereby declared null and void and of no effect whatsoever.
The stringent conditions for the issuance of the writ have been echoed in all This conclusion renders a discussion of petitioner's other argument
subsequent cases, even as late as K.O. Glass Construction Co. Inc. vs. unnecessary.
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 WHEREFORE, the decision of the Court of Appeals dated August 29, 1980 is
affidavit that a sufficient cause of action exists against the defendant Kenneth hereby AFFIRMED. Costs against petitioner.
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 SO ORDERED.
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
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thereby binding themselves jointly and severally to Consolidated Bank for the
payment of the promissory notes.
Ting v. Villarin, 176 S 532
The second cause of action dwells on several violations of trust receipt
SECOND DIVISION agreements which the defendant corporation executed in favor of
Consolidated Bank. The defendant corporation's faithful compliance with the
G.R. No. L-61754 August 17, 1989 trust receipt agreements appears to have been secured by the continuing
guaranty of defendants Liu Suy Lin Angelo Leonar, and Lu Cheng Peng.
ROBERTO TING, and DOLORES TING, petitioners,
vs. In support of the application for preliminary attachment, Consolidated Bank
HON. AUGUSTO E. VILLARIN, FELICIANO GERVACIO, FERDINAND J. averred the ground of "fraud in contracting an obligation" thus —
GUERRERO, and CONSOLIDATED BANK & TRUST
COMPANY, respondents. 16. Defendants are guilty of fraud in contracting their
obligations more specifically illustrated by their violation of
Santos, Valmonte & Associates for petitioners. 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
2
of preliminary attachment.
SARMIENTO, J.: 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
On September 17, 1981, private respondent Consolidated Bank and Trust wit:
1
Company (hereinafter "Consolidated Bank") filed a complaint for a sum of
money with prayer for a writ of preliminary attachment against Perlon Textile xxx xxx xxx
Mills and its directors.
We, therefore, command you [Deputy Sheriffs Feliciano
Roberto Ting, a director, was impleaded with his wife Dolores Lim Ting. The Gervacio and Ferdinand J. Guerrero] that you attach the
complaint recites that the wife was impleaded as a party defendant in order to estate, real and personal, of the said defendants Perlon Textile
bind their conjugal partnership of gains which allegedly benefitted from the Mills, Inc., Lu Cheng Peng and Spouse; Teng See @ Teng Tik
transactions subject of the complaint. The, spouses Ting are the present Hua and Spouse; Spouses Roberto Ting and Dolores Lim Ting;
petitioners. Angelo Leonor and Spouse, Liu Suy Lin and Spouse, and Yap
Chi and Spouse, within your province to the value of said
Consolidated Bank actually sued on two (2) causes of action. The first was demands, and costs of suit, and that you keep safely the same
targeted at recovering on several promissory notes the amount of according to the Rules of Court, unless the defendant — gives
P2,972,955.51, allegedly obtained for the defendant corporation by its duly security to pay such judgment as may be recovered in this
authorized officers Lu Cheng Peng, Teng See, and Roberto Ting. These officers action in the manner provided for by the Rules of Court; and
allegedly signed the promissory notes in their personal and official capacities that you return immediately this order after executing the
103 of 501
same with a full statement of your proceedings and a preliminary attachment issued because, in effect, it pierced the veil of
3
complete inventory of the properties attached. corporate fiction. The petitioners explain that the corporation alone should be
held liable for the violation of the trust receipt agreements.
On March 3, 1982, acting on the petitioners' Motion to Quash Attachment, the
respondent judge issued a second order, to wit: Finally, the petitioners ask that the writ of preliminary attachment be struck
down by this Court because it authorized an attachment over the petitioners'
xxx xxx xxx conjugal partnership property.
Acting on defendants Roberto and Dolores Ting's motion to We agree with the petitioners.
quasi attachment and plaintiffs' opposition thereto, it
appearing from plaintiffs' allegations that the alleged fraud The complaint did not provide for a sufficient basis for the issuance of a writ of
was effected through the collective action of the defendants, preliminary attachment. It is not enough for the complaint to ritualistic ally
4
the court finds the motion to be without sufficient merit. 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,
6
xxx xxx xxx such as one ceremoniously quoting from a pertinent rule. The need for a
recitation of factual circumstances that support the application becomes more
On July 19, 1982, acting on the petitioners' motion for reconsideration, the compelling here considering that the ground relied upon is "fraud in
respondent judge issued the last disputed order the dispositive portion of contracting an obligation." The complaint utterly failed to even give a hint
which states: about what constituted the fraud and how it was perpetrated. Fraud cannot be
7
presumed.
xxx xxx xxx
The respondent judge thus failed in this duty to ensure that, before issuing the
WHEREFORE, under the circumstances, and finding no writ of preliminary attachment, all the requisites of the law have been
sufficient justification for the reconsideration of the order of complied with. He acted in excess of his jurisdiction and the writ he so issued
8
March 3, 1982, the motion for reconsideration is hereby is thus null and void.
5
DENIED.
What is more, the respondent judge plainly ignored that, as correctly pointed
xxx xxx xxx out by the petitioners, the application for preliminary attachment rests on
"fraud in contracting" the trust receipt agreements. The complaint itself, save
The petitioners came to this Court via a petition for certiorari. They are for the unwarranted sweeping reference to "defendants," alleged that only
questioning the writ of preliminary attachment principally on the ground that Consolidated Bank, as principals, and Liu Suy Lin Angelo Leonar, and Lu
the application therefor hinges on "fraud in contracting" the trust receipt Cheng Peng, as guarantors, were privy to the trust receipt agreements under
agreements under the second cause of action. 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
On the other hand, the petitioners are impleaded in the complaint merely thus relevantly alleges —
under the first cause of action. Moreover, the petitioners challenge the writ of
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FIRST CAUSE OF ACTION whether jointly, severally, or in the alternative, may, except as
otherwise provided in these rules ... be joined as defendants in
7. On March 15, 1979, defendant corporation, through its duly one complaint, where any question of law or fact common to
authorized officers Lu Cheng Peng, Tang See and Roberto all such ... defendants may arise in the action ... .
Ting obtained from plaintiff loan accommodations in the
amount of P2,972,955.51 and as evidence thereof, the Here, the two causes of action arose from different transactions. There was no
aforementioned defendants in their personal and official "series of transactions" to speak of. But above all, the complaint can
capacities executed promissory notes undertaking therein conceivably affect adversely petitioner Roberto Ting under the first cause of
11
jointly and severally with the corporation to pay plaintiff the action only but not in the second cause of action.
above-mentioned amount with interest ....
That the attachment ordered by the respondent judge called for the sheriffs to
SECOND CAUSE OF ACTION "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
8. On different occasions in 1978-1979, defendants applied to strike it down for being null and void. The attached property of the spouses
plaintiff for the opening of numerous letters of credit to Ting are conjugal, the same cannot be validly brought under the painful
finance its purchase of goods from various suppliers. process of attachment because:
xxx xxx xxx (a) First, the wife Dolores was impleaded merely because of
the fact that she is the spouse of Roberto;
ALLEGATIONS COMMON TO ALL CAUSES OF ACTION
(b) Second, the conjugal partnership cannot possibly be
12. In order to secure the credit accommodations obtained benefitted (again, here, Consolidated Bank's allegation that
and all those that the defendant Perlon Textile Mills, Inc. may the act of the husband redounded to the benefit of the
thereafter obtain from plaintiff, defendants Liu Suy Lin conjugal partnership is mere "book form" when the husband
Angelo Leonar and Lu Cheng Peng executed a continuing binds himself, as guarantor, because this act does not
9
guaranty ... . conserve or augment conjugal funds but instead threatens to
12
dissipate them by unnecessary and unwarranted risks to the
The sweeping nature of the attachment order probably stemmed from the partnership's financial stability. When the husband assumes
respondent judge's failure to detect that the two (2) causes of action had been the obligation of a guarantor, the presumption that he acts, as
misproperly joined. Joinder of causes of action is, among others, subject to the administrator, for the benefit of the conjugal partnership, is
10
rules on joinder of parties. And the rule on joinder of parties is enunciated in lost.
Sec. 6, Rule 3, Revised Rules of Court, thus —
WHEREFORE, the petition is hereby GRANTED. The questioned Orders,
Sec. 6. Permissive joinder of parties. — All persons ... against dated September 23, 1981, March 3, 1982, and July 19,1982, of the respondent
whom any right to relief in respect to or arising out of the judge, and the levy on attachment made by the deputy sheriffs against the
same transaction or series transactions is alleged to exist,
105 of 501
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.
106 of 501
B.C.M. Johnston, of legal age and resident of the City of Manila, being duly
sworn, states:
Cu Unjieng v. Goddard, 58 Phil. 482
That he is the Manager of the Hongkong and Shanghai Banking Corporation,
EN BANC 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
DECISION in the complaint on file in this case, reference to which is hereby made as an
integral part of this affidavit;
September 17, 1933
That the complaint is one for the recovery of money on a cause of action
G.R. No. 38284 arising from a fraud; and
GUILLERMO A. CU UNJIENG and MARIANO CU UNJIENG, petitioners,
vs. That, as set out in the complaint, the defendants in said cause have been guilty
LEONARD S. GODDARD, acting as Judge of First Instance of Manila, and of fraud in contracting the debt in incurring the obligation upon which this
HONGKONG & SHANGHAI BANKING CORPORATION, respondents. action is brought.
Gibbs and McDonough and Duran, Lim and Tuason for petitioners. (Sgd.) B.C.M. JOHNSTON
DeWitt, Perkins and Brady for respondents.
Hull, J.: About one week thereafter, on October 20, 1931, petitioners herein filed a
Original action for certiorari praying that a writ of attachment levied against motion to discharge the attachment on the ground that it had been
the properties of the petitioners and defendants in a civil action in the Court improperly and irregularly issued, which motion contains eight paragraphs.
of First Instance of Manila, brought by respondent Hongkong & Shanghai
Paragraph (4) alleges that the affidavit was defective in that it fails to state that
Banking Corporation, be declared null and void.
there is no other sufficient security for the claim sought to be enforced by the
In that civil action it was alleged in substance that the defendants, the
action and that the amount due the plaintiff involves as much as the sum for
petitioners in this proceeding, entered into a fraudulent conspiracy or
which the order of attachment was granted, while paragraph (5) alleges that
combination with one Fernandez, by which the conspirators would
the affidavit for attachment fails to estate that the allegations contained in the
hypothecate and pledge forged securities of various kinds with the various
unverified complaint to which it refers are true and that likewise the affidavit
banking institutions and other commercial firms of the City of Manila, and
fails to estate that affiant knows the facts.
pursuant to said fraudulent conspiracy, secured credit with the bank, and the
plaintiff was defrauded by the defendants and Fernandez in the sum of Shortly after the hearing to discharge the attachment had begun, plaintiff
P1,411,312.80. Simultaneously with the filing of the complaint, plaintiffs asked asked leave to file an amended affidavit in support of its petition for a writ of
for a writ of attachment, which was granted. attachment.
The affidavit filed at the time reads: After oral and written arguments, the respondent judge on November 25, 1931,
entered an order admitting the amended affidavit of attachment. The
AFFIDAVIT
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,
107 of 501
which sets out what must be shown to the court before a writ of attachment SEC. 2. Construction of Code. – The provisions of this Code and the
shall issue. proceedings under it, shall be liberally construed, in order to promote its
object and assist the parties in obtaining speedy justice.
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 This court has held in the case of Central Capiz vs. Salas (43 Phil. 930), that
attachment. On October 4, 1932, these proceedings were instituted, based on section 2 applies to applications for writs of attachment and that the affidavit
the two propositions (1) that an affidavit of attachment cannot be amended may be read in connection with the complaint.
and (2) that if a cause of action arises ex delicto, it is not within the terms of
our attachment statutes. 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
Respondents claim that petitioners had not exhausted their rights in the trial which the attachment was sought to be secured, is paragraph 4 of section 412
court and that if the petitioner regarded the order of April 11 as a final order, of the Code of Civil Procedure. It is defective in (a) that there is no allegation,
petitioners are guilty of laches by waiting until October before filing a either in the affidavit or the complaint, that there was no other sufficient
complaint. 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
Without considering the minor questions raised by respondents, we believe it as the sum for which the order is granted. The claim of petitioners that the
is for the best interests of all concerned to dispose of the case on the points original affidavit is defective is virtually admitted by respondents by their
raised by petitioners. having filed a amended affidavit and by their insistence upon their right to
amend.
As to whether amendments should be admitted, respondents rely upon
section 110 of the Code of Civil Procedure, which reads: 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
SEC. 110. Amendments in General. – The court shall, in furtherance of justice,
discretion of the court, any amendment, in the further interest of justice, of
and on such terms, if any, as may be proper, allow a party to amend any
pleadings or procedure at any stage of the action. Proceedings in the Court of
pleading or proceeding and at any stage of the action, in either the Court of
First Instance to discharge the attachment were taken under section 441 of the
first Instance or the Supreme Court, by adding or striking out the name of any
Code of Civil Procedure, which reads:
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 SEC. 441. Discharge of Attachment on Motion. – The defendant may also at
respect, so that the actual merits of the controversy may speedily be any time either before or after the release of the attachment property, or
determined, without regard to technicalities, and in the most expeditious and before any attachment shall have been actually levied, upon reasonable notice
inexpensive manner. The court may also, upon like terms, allow an answer or to the plaintiff, apply to the judge or justice of the peace who granted the
other pleading to be made after the time limited by the rules of the court for order of attachment, or to the judge of the court in which the action is
filing the same. Orders of the court upon the matters provided in this section pending, for an order to discharge the attachment on the ground that the
shall be made upon motion filed in this court, and after notice to the adverse same was improperly or irregularly issued. If the motion be made on affidavits
party, and an opportunity to be heard.” and claim it should read in connection on the part of the defendant, but not otherwise, the plaintiff may oppose the
with section 2 of the same Code: same by affidavits or other evidence in addition to those on which the
attachment was made.
108 of 501
If upon such application it satisfactorily appears that the writ of attachment The provision of our Code of Civil Procedure having been adopted from
was improperly or irregularly issued, it must be discharged. 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.”
The corresponding sections of the California Code, namely section 556, 557, Where a provision of the Code of Civil Procedure has been adopted bodily
and 558, read: 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
SEC. 556. When a motion to discharge attachment may be made, and upon
construction that had already been placed upon it.
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 At the time sections 110 and 114 were adopted, the similar provisions of the
actually levied, apply, on motion, upon reasonable notice to the plaintiff, to California Code had already been construed by the Supreme Court of
the court in which the action is brought, or to a judge thereof, that the writ of California. In Winters vs. Pearson (72 Cal., 553), that court used the following
attachment be discharged on the ground that the same was improperly or language:
irregularly issued.
On a motion to discharge a writ of attachment, on the ground that it was
SEC. 557. When motion made on affidavit, it may be opposed by affidavit. – If improperly or irregularly issued, the affidavit on which the writ was issued is
the motion be made upon affidavits on the part of the defendant, but not not amendable. This, in our opinion, is in accordance with section 558 of the
otherwise, the plaintiff may oppose the same by affidavits or other evidence, in Code of Civil Procedure, which provides that the writ was improperly or
addition to those on which the attachment was made. irregularly issued, it must be discharged.
SEC. 558. When writ must be discharged. – If upon such application it To allow the affidavit to be made good by amendment, and upon such action
satisfactorily appears that the writ of attachment was improperly or irregularly refused to discharge the writ, would, in our judgment, violate the
issued it must be discharged; provided that such attachment shall not be requirements of the section just above cited.
discharged if at or before the hearing of such application, the writ of
attachment, or the affidavit, or undertaking upon which such attachment was In Tibbet vs. Tom Sue (122 Cal., 206), the court followed Winters vs. Pearson,
based shall be amended and made to conform to the provisions of this saying:
chapter.
Respondent asks the privilege of amending the undertaking, if it be held
In a long line of decisions from Castle Bros., Wolf & Sons vs. Go-Juno (7 Phil. defective by this court. From such relief he invokes section 473 of the Code of
144), where it was said: 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
Inasmuch as this section 95 is taken bodily from the California Code of attachment, the Code says: “If upon such application it satisfactorily appears
Procedure, we feel justified in following the decisions of the Supreme Court of that the writ of attachment was improperly or irregularly issued, it must be
California in the interpretation of the same. 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
to Pando vs. Kette and Sellner (54 Phil. 683), where this court uses the
general provisions of the aforesaid section 473. The lawmaking body has
following language:
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
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said in Winters vs. Pearson (72 Cal., 553), that the affidavit on attachment is The complaint filed in the civil action in which the writ of attachment was
not amendable. The undertaking upon attachment stands upon the same issued contains, among others, the following allegations:
ground.
III
The facts that California in 1909 changed the law by permitting amendments
of a defective affidavit for attachment under certain specified circumstances, That during the years 1930 and 1931, the said defendants entered into a
does not affect this case, as our Legislature has allowed the law to stand fraudulent conspiracy or combination with one Rafael Fernandez, who has
unchanged. 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
It therefore allows that where the affidavit for attachment is fatally defective, which fraudulent conspiracy and combination, it was agreed that the said
the attachment must be held to have been improperly or irregularly issued and Fernandez, or the said Fernandez, or the said defendant Guillermo A. Cu
must be discharged, and such fatal defect cannot be cured by amendment. The Unjieng, or the said Mariano Cu Unjieng should hypothecate and pledge
writ of attachment in this case should therefore have been discharged. forged share certificates, forged warehouse receipts, and forged securities of
other kinds, in large amounts, with various banking institutions and other
In view of the above views, the second ground for the discharge of the writ of commercial firms of the City of Manila, with a view to a division of the
attachment presented by petitioners herein, is reserved for discussion in proceeds among the said fraudulent conspirators.
another case.
IV
The writ of certiorari herein prayed for must be granted. So ordered.
Avanceña, C.J., Street, Malcolm, Villa-Real, Abad Santos, and Butte, JJ., concur. That pursuant to said fraudulent combination and conspiracy the said
Guillermo A. Cu Unjieng employed a forger to forge the signatures of the
IMPERIAL, J.: proper officers on a large number of warehouse receipts and share certificates
of the Pampanga Sugar Development Company, Inc., a corporation organized
Petitioners brought this certiorari proceeding to annul the writ of attachment
under the laws of the Philippine Islands, and operating a large sugar central in
issued by the Court of First Instance of Manila on October 14, 1931, as well as
the Province of Pampanga, Philippine Islands, after the said Rafael Fernandez,
the orders of November 25, 1931, March 4 and April 11, 1932, granting the
pursuant to said fraudulent combination and conspiracy, had caused a large
admission of an amended affidavit and denying the motion to dissolve the
number of said share certificates and warehouse receipts to be printed in
attachment, respectively.
blank, for the purpose of having them so forged.
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 V
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 That pursuant to said fraudulent combination and conspiracy, the said
petition for attachment was based is sufficient and has substantially complied defendants, Guillermo and Mariano Cu Unjieng and the said Rafael Fernandez
with the grounds required by section 426 of the Code of Civil Procedure, and pledged and hypothecated said forged share certificates and said forged
(c) that the respondent judge did not act in excess of his jurisdiction when warehouse receipts in large amounts with various banking institutions and
issued the writ of attachment and denied the motion for dissolution. 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
110 of 501
longest in other time, and in other cases, dividing among themselves the defrauded by the defendants herein and by the said Fernandez in the sum of
proceeds of the loans obtained on the security of said forged share certificates P1,411,312.80, with interest on P1,010,886.96 thereof at the rate of 9 per cent per
and forged warehouse receipts so fraudulently pledged and hypothecated. 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.
VI
The affidavit above referred to read as follows:
That pursuant to said fraudulent conspiracy and combination, the said Rafael
Fernandez, at various dates, on and after June 16th, 1931, pledged and AFFIDAVIT
hypothecated various forged warehouse receipts and promissory notes to the
plaintiff herein, as security for loans in account current granted said B.C.M. Johnston, of legal age and a resident of the City of Manila, being duly
Fernandez by the plaintiff in reliance therein, on which there was a total debit sworn states:
balance due of P1,411,312.80, on the date of the adjudication of Fernandez as an
That he is the Manager of the Hongkong & Shanghai Banking Corporation, the
insolvent, that is, on the 1st day of August, 1931, together with interest at 9 per
plaintiff in the above entitled cause, and that he knows that there exists a
cent per annum on P1,010,886.96 thereof from the 1st day of July, 1931, and
cause of action in favor of the said plaintiff and against the defendant, as
interest on the balance at the rate of 9 per cent per annum from July 8, 1931.
appears in the complaint on file in this case, reference to which is hereby made
VII as an integral part of this affidavit.
That of the amounts so obtained by the said Fernandez from this plaintiff by That the complaint is one for the recovery of money on a cause of action
the fraudulent pledging and hypothecation of said forged warehouse receipts arising from a fraud: and
and promissory notes, pursuant to said fraudulent combination and
That as set out in the complaint, the defendant in said cause has been guilty of
conspiracy, as hereinbefore alleged, said Fernandez, pursuant to said
fraud in contracting the debt and in incurring the obligation upon this action
combination and conspiracy, paid directly to the defendant herein, Guilermo
is brought.
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 (Sgd.) B.C.M. JOHNSTON
defendants indirectly through other banking institutions in the City of Manila;
and utilized the balance in covering overdrafts and loans obtained in his name Subscribed and sworn to before me this 11th day of July, 1931, affiant exhibiting
with other banking institutions in the City of Manila, on the security of forged to me his cedula certificate No. F-14401, issued at Manila, P.I., January 19, 1931.
share certificates, warehouse receipts and other forged securities the proceeds
Doc. No. 420 (Sgd.) “DOMINGO A. GUEVARA
of which were divided between him and the defendants herein pursuant to
said fraudulent combination and conspiracy. Page 71 Notary Public
VIII Book III Until December 31, 1932
That as a result of said fraudulent conspiracy and combination, between the Section 426 of Act No. 190 provides:
defendants herein and the said insolvent, Rafael Fernandez, and the pledging
and hypothecation by said Fernandez of said forged warehouse receipts and SEC. 426. Granting order of attachment. – A judge or justice of the peace shall
promissory notes with the plaintiff herein, the said plaintiff has been grant an order of attachment when it is made to appear to the judge or justice
111 of 501
of the peace by the affidavit of the plaintiff, or of some other person who complaint. The same inference was undoubtedly gathered by the respondent
knows the facts, that a sufficient cause of action exists, and that the case is one judge when he granted the attachment upon said original affidavit and as far
of those mentioned in section four hundred and twenty-four, and that there is as I am concerned I believed he did not exceed in the exercise of the
no other sufficient security for the claim sought to be enforced by the action, jurisdiction conferred upon him by the law. As to the other ground, the same
and that the amount due to the plaintiff above all legal set-offs or thing could be said.
counterclaims is as much as the sum for which the order is granted.
In deciding this case I believe technicalities of law should be overlooked in
From a perusal of said section it is obvious that the law does not require order to attain the ends of justice. If the main action fails the petitioners, as
conclusive evidence to establish the requisites necessary in order a justice or defendants, will get compensation for any damages or injury they may have
judge may issue a writ of attachment; all what the law requires is the suffered upon the bond given by plaintiff-respondent, while should the action
presentation of prima facie evidence which shows the existence of said prosper and the attachment is already quashed plaintiff would not get
grounds. This is the reason why it calls for affidavit in lieu of other material anything so much so as there are other creditors who are claiming big
and competent evidence. amounts from the same defendants.
As alleged in the affidavit affiant made a part of his statement all material and Based on the foregoing reasons I dissent from the majority’s decision and I am
necessary averments contained in the complaint undoubtedly for the purpose of the opinion that the liberal construction of the statute on attachment
of making a complete narration of the facts and at the same time to avoid should have been applied in this particular instance and the petition denied.
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
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FELICIDAD SANDOVAL CARLOS OR FELICIDAD SANDOVAL VDA. DE

CARLOS and TEOFILO CARLOS II, Respondent.
Carlos v. Sandoval, 471 S 266
DECISION
SECOND DIVISION
Tinga, J.:
G.R. No. 135830 September 30, 2005
These consolidated petitions emanated from a civil case filed by Juan de Dios
JUAN DE DIOS CARLOS, Petitioners, Carlos ("Carlos") against respondents Felicidad Sandoval ("Sandoval") and
vs. Teofilo Carlos II (Teofilo II) docketed with the Regional Trial Court (RTC) of
FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE CARLOS Muntinlupa City as Civil Case No. 95-135.
or FELICIDAD S. CARLOS or FELICIDAD SANDOVAL DE CARLOS, and
TEOFILO CARLOS II, Respondent. In his Complaint before the RTC, Carlos asserted that he was the sole surviving
1
compulsory heir of his parents, Felix B. Carlos and Felipa Elemia, who had
x-------------------------------------------------------------------x acquired during their marriage, six parcels of land (subject properties). His
brother, Teofilo ("Teofilo"), died intestate in 1992. At the time of his death,
G.R. No. 136035 Teofilo was apparently married to Sandoval, and cohabiting with her and their
child, respondent Teofilo II. Nonetheless, Carlos alleged in his Complaint that
SIDDCOR (now MEGA PACIFIC) INSURANCE Teofilo and Sandoval were not validly married as they had not obtained any
2
CORPORATION, Petitioners, marriage license. Furthermore, Carlos also asserted that Teofilo II could not
vs. be considered as Teofilo’s child. As a result, Carlos concluded that he was also
FELICIAD SANDOVAL VDA. DE CARLOS and TEOFILO CARLOS the sole heir of his brother Teofilo, since the latter had died without leaving
II, Respondent. any heirs.
x------------------------------------------------------------------x Carlos also claimed that Teofilo, prior to their father Felix’s death in 1963,
developed a scheme to save the elder Carlos’s estate from inheritance taxes.
G.R. No. 137743 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
SIDDCOR (now MEGA PACIFIC) INSURANCE delivered to them. Felix assented to the plan, and the subject properties were
CORPORATION, Petitioners, transferred in the name of Teofilo. After Teofilo’s death, Carlos entered into
vs. certain agreements with Sandoval in connection with the subject properties.
HON. COURT OF APPEALS (FORMER SPECIAL FOURTH DIVISION), Carlos did so, believing that the latter was the lawful wife of his brother
HON. ALBERTO L. LERMA and/or the REGIONAL TRIAL COURT OF THE Teofilo. Subsequently though, Carlos discovered that Sandoval and his brother
CITY OF MUNTINLUPA, BRANCH 256, FELICIDAD SANDOVAL, also were never validly married, as their marriage was contracted without a
3
known as FELICIDAD S. VDA. DE CARLOS OR FELICIDAD S. CARLOS OR marriage license.
113 of 501
Carlos now sought to nullify these agreements with Sandoval for want of In the meantime, the hearing on Carlos’s Complaint ensued before the RTC.
consideration, the premise for these contracts being non-existent. Thus, Carlos Respondents duly filed their Answer and thereafter filed a Motion for Summary
prayed of the RTC to declare the alleged marriage between Teofilo and Judgment. Carlos opposed the motion and countered with his own Motion for
Sandoval void ab initio, provided that Teofilo died without issue, order that Summary Judgment. On 8 April 1996, the RTC rendered a summary judgment
new titles covering the subject properties be issued in the name of Carlos, and in favor of Carlos. Carlos’s victory was wholesale, with the RTC making the
4
require Sandoval to restitute Carlos in the amount of P18,924,800.00. following pronouncements:
Carlos likewise prayed for the issuance of the provisional relief of preliminary 1. Declaring the marriage between defendant Felicidad Sandoval and Teofilo
attachment. The RTC issued an Order dated 7 September 1995 granting the Carlos solemnized at Silang, Cavite, on May 14, 1962, evidenced by the
prayer for preliminary attachment, and on 15 September 1995, a writ of Marriage Contract submitted in this case, null and void ab initio for lack of the
preliminary attachment. Carlos posted a bond for P20,000,000.00 issued by requisite marriage license;
herein petitioner
2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the natural,
5
SIDDCOR Insurance Corporation (SIDDCOR). Shortly thereafter, a Notice of illegitimate, or legally adopted child of the late Teofilo E. Carlos;
Garnishment was served upon the Philippine National Bank (PNB) over the
deposit accounts maintained by respondents. 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
Respondents filed an Urgent Motion to Discharge the Writ of Attachment, date of filing of the instant complaint until fully paid;
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 4. Declaring plaintiff as the sole and exclusive owner of the parcel of land, less
Certiorari with the Court of Appeals, seeking to set aside the RTC order the portion adjudicated to the plaintiffs in Civil Case No. 11975, covered by
granting the writ of preliminary attachment denying the motion for the TCT No. 139061 of the Register of Deeds of Makati City, and ordering said
6
discharge of the writ. This case was docketed as CA-G.R. SP No. 39267. Register of Deeds to cancel said title and to issue another title in the sole name
of plaintiff herein;
On 27 February 1996, the Court of Appeals Second Division promulgated
its Decision in CA-G.R. SP No. 39267, wherein itgranted the Petition for 5. Declaring the Contract, Annex K of the Complaint, between plaintiff and
Certiorari and ordered the discharge and dissolution of the Writ of defendant Sandoval null and void, and ordering the Register of Deeds of
7
Attachment and Notice of Garnishment. The Court of Appeals found that Makati City to cancel TCT No. 139058 in the name of Teofilo Carlos, and to
there was no sufficient cause of action to warrant the preliminary attachment, issue another title in the sole name of the plaintiff herein;
since Carlos had merely alleged general averments in order to support his
8
prayer. Carlos elevated the said Decision to this Court by way of Petition for 6. Declaring the Contract, Annex M of the Complaint, between plaintiff and
Review on Certiorari, which was docketed as G.R. No. L-125717. In defendant Sandoval null and void;
aResolution dated 21 October 1996, the Court denied Carlos’s Petition, and
thus the Court of Appeals’ Decision ordering the dissolution of the Writ of 7. Ordering the cancellation of TCT No. 210877 in the names of defendant
Attachment and Notice of Garnishment became final. 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.
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8. Ordering the cancellation of TCT No. 210878 in the names of defendant Malolos Branch. In an Addendum to Motion for Judgment on the Attachment
13
Sandoval and defendant minor Teofilo S. Carlos II and ordering the Register of Bond, respondents additionally prayed for moral and exemplary damages.
9
Deeds of Manila to issue another title in the sole name of plaintiff herein.
After various pleadings were duly filed by the parties, the Court of Appeals
Upon promulgation of the Summary Judgment, Carlos moved before the RTC Special Fourth Division issued a Resolutiondated 23 March 1998, certifying that
for execution pending appeal. The RTC granted the motion for execution all the necessary pleadings have been filed, and that the case may already be
10
pending appeal upon the filing of a bond. On 27 May 1996, the RTC issued referred to the Raffle Committee for assignment to a ponente for study and
a Writ of Execution. report. The same Resolution likewise denied without elaboration a Motion to
14
Dismiss on the ground of forum-shopping filed earlier by Carlos.
Meanwhile, respondents filed a Motion for Reconsideration of the Summary
Judgment, which was denied in an Orderdated 20 May 1996. Respondents then On such denial, Carlos filed a Motion for Reconsideration. Respondents
appealed the RTC Decision to the Court of Appeals, wherein such appeal was likewise filed a Motion for Partial Reconsiderationdated 17 April 1998, arguing
docketed as CA-G.R. CV No. 53229. The case was raffled to the appellate that under the Revised Internal Rules of the Court of Appeals (RIRCA), the
courts’ Fourteenth Division for completion of records. Sandoval and Carlos case may be re-raffled for assignment for study and report only after there is a
15
also filed a Petition for Certiorari with Temporary Restraining Order dated 2 resolution that the case is deemed submitted for decision. They pointed out
June 1996. This special civil action primarily attacked the allowance of that re-raffle could not yet be effected, as there were still pending incidents,
execution pending appeal, and prayed for the annulment of the Ordergranting particularly the motions for reconsideration of Carlos and themselves, as well
execution pending appeal, and of the Writ of Execution as the Motion for Judgment on Attachment Bond.
On 10 December 1996, in CA-G.R. CV No. 53229, respondents filed a Motion for On 26 June 1998, the Court of Appeals Former Special Fourth Division
16
Judgment On the Attachment Bond.They noted that the Court of Appeals had promulgated two resolutions. The first, in response to Carlos’s Motion for
already ruled that the Writ of Preliminary Attachment issued by the RTC was Reconsideration, again denied Carlos’s Motion to Dismiss the Appeal
improperly granted and that its Decision, as affirmed by the Supreme Court, and Motion for Suspension, but explained the reasons for such denial.
had attained finality. Accordingly, they were entitled to damages under
Section 20, Rule 57 of the then Rules of Civil Procedure, which governed The second resolution is at the center of the present petitions. The
claims for damages on account of unlawful attachment. In support of their assailed Resolution agreed with respondents that it was first necessary to
allegation of damages, they cite the Notice of Garnishment served on PNB resolve the pending incidents before the case could be re-raffled for study and
Malolos Branch, where Felicidad Carlos maintained report. Accordingly, the Court of Appeals
11
deposits amounting to P15,546,121.98. Also presented in support of the motion proceeded to rule on these pending incidents. While the first resolution dwelt
was a Notice of Delivery/Payment by the RTC Sheriff, directing the PNB on the pending motions filed by Carlos, thisResolution tackled the other
Malolos Branch to deliver the amounts previously garnished by virtue of matter left unresolved, the Motion for Judgment on Attachment Bond. The
12
the Writ of Execution dated 27 May 1996; a Manifestation filed by PNB dated Court of Appeals found the claim for damages meritorious, citing the earlier
19 July 1996 in CA-G.R. SP No. 40819, stating that PNB had already delivered to decisions ruling that Carlos was not entitled to the preliminary attachment.
the RTC Sheriff on 27 June 1996 the amount of P15,384,509.98 drawn against Invoking Section 20, Rule 57 of the Rules of Court, as well as
17
the accounts of Carlos; and a Certification to the same effect issued by the PNB jurisprudence, the Court of Appeals ruled that it was not necessary for the
115 of 501
20
determination of damages on the injunction bond to await the decision on SO ORDERED.
appeal.
Both Carlos and SIDDCOR filed their respective motions for reconsideration
The Court of Appeals then proceeded to determine to what damages of the Resolution. For their part, respondents filed a Motion for Immediate
respondents were entitled to. In ruling that the award of actual damages was Execution dated 7 August 1998 in regard to the Resolution of 26 June 1998
warranted, the court noted: awarding them damages.
21
It is also not disputed that the PNB, on June 27, 1996, issued two manager’s In the Resolution dated 10 October 1998, the Court of Appeals denied the
checks: MC No. 938541 for P4,932,621.09 and MC 938542 for P10,451,888.89 motions for reconsideration and granted theMotion for Immediate Execution.
payable to the order of "Luis C. Bucayon II, Sheriff IV, RTC, Branch 256, In granting the Motion for Immediate Execution, the Court of Appeals cited the
Muntinlupa", duly received by the latter in the total amount of PESOS reasons that the appeal to be undertaken from the 26 June 1998 Resolution was
FIFTEEN MILLION THREE HUNDRED EIGHTY FOUR THOUSAND FIVE patently dilatory; that there were no material and substantial defenses against
HUNDRED NINE & 98/100 (P15,384,509.98), drawn against the accounts of the motion for judgment on the attachment bond, rendering the appeal pro-
Ms. Felicidad Sandoval Vda. de Carlos which were earlier garnished for the forma and dilatory; that Sandoval was of advanced age and might not enjoy
satisfaction of the above-mentioned writ of attachment (Annex "E", Motion for the fruits of the judgment on the attachment bond; and that immediate
18
Judgment on the Attachment Bond, pp. 7-8) execution would end her suffering due to the arbitrary garnishment of her
22
account pursuant to an improper attachment.
....
In its Motion for Reconsideration, SIDDCOR explicitly assailed the allowance
23
The contention of [Carlos] that the writ of attachment was not implemented of the Motion for Immediate Execution. This was denied by the Court of
24
falls flat on the face of the manifestation of PNB that the delivery of the Appeals in a Resolution dated 22 December 1998.
19
garnished P15,384,509.98 to him was effected through the sheriff.
From these antecedents, the following petitions were filed before this Court:
The Court of Appeals found that moral and exemplary damages were not
warranted, there being no malice in pursuing the attachment. The appellate G.R. No. 135830
court also found the claim of P2,000,000.00 for attorney’s fees as excessive,
and reduced the sum by half. Correspondingly, the dispositive portion of the This Appeal by Certiorari with Prayer for Temporary Restraining
assailed Resolution reads: 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
WHEREFORE, premises considered, judgment is hereby rendered against the the Resolution of 10 October 1998, which denied Carlos’s motion for
attachment bond, ordering SIDDCOR INSURANCE CORPORATION and reconsideration. Carlos argues that the Court of Appeals, through the Former
plaintiff-appellee to pay defendants-appellants, jointly and severally, the sum Special Fourth Division, could not have resolved the Motion for Judgment on
ofP15,384,509.98 and 12% interest per annum from June 27, 1996 when the the Attachment Bond since the case had not yet been re-raffled under the two-
unlawful garnishment was effected until fully paid and P1,000,000.00 as raffle system for study and report; that the Court of Appeals erred in resolving
attorney’s fees with 6% interest thereon from the trial court’s decision on April the motion without conducting any hearing; that the Court of Appeals had no
8, 1986 until fully paid. jurisdiction over the motion as the docketing fees had not yet been filed; that
116 of 501
the motion for judgment, which did not contain any certification against SIDDCOR hereunder argues that Section 2, Rule 39 of the Rules of Civil
forum-shopping, was an application subject to the requirements of Procedure requires that execution of a judgment or final order pending appeal
certification against forum-shopping; that there was no supporting evidence to may be made only on motion of the prevailing party and may be made "even
26
support the award of damages; and that the Court of Appeals committed grave before the expiration of the period to appeal." Respondents had argued in
abuse of discretion in denying the Motion for Reconsideration without their Motion for Immediate Execution that the judgment sought to be executed
25
adverting to specific reasons mentioned for the denial of each issue. (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
Carlos likewise ascribes grave abuse of discretion to the Court of Appeals in its their position. SIDDCOR cites this inconsistency as proof of a change of theory
other Resolution dated 26 June 1998 for its refusal to dismiss CA-G.R. CV No. on the part of respondents which could not be done for the theories are
53229 on the ground of forum-shopping, adding that the appellate court incompatible. Such being the case, SIDDCOR argues, the Court of Appeals
should have deferred resolution of the Motion for Judgment on the Attachment gravely abused its discretion in granting immediate execution since
Bond considering the prejudicial question raised in Carlos’s motion to dismiss respondents had filed its motion on the premise that the award on the
the main case on the ground of forum-shopping. judgment bond was interlocutory and not appealable. SIDDCOR also claims
that the judgment on the attachment bond is not interlocutory,
27
G.R. No. 136035 citing Stronghold Insurance Co., Inc. v. Court of Appeals wherein it was ruled
that such indeed constitutes a final and appealable order.
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 SIDDCOR points out that no hearing was conducted on the Motion for
1998 Resolution wherein Siddcor’s Motion for Reconsideration, among others, Immediate Execution despite the requirement in Section 2, Rule 39 that
was denied. Siddcor argues therein that the Court of Appeals erred in ruling "discretionary execution may only issue upon good reasons to be stated in a
on the motion for damages without awaiting judgment in the main case; special order after due hearing." SIDDCOR likewise notes that the motion
granting that damages may be awarded, these should encompass only such granting immediate execution was granted in the very same resolution which
damages incurred during the pendency of the appeal; and that a hearing was had denied the motion for reconsideration of the resolution sought to be
necessary to prove the claim for damages and the appellate court erred in immediately executed. For SIDDCOR, such constituted a denial of procedural
granting the award for damages despite lack of hearing. 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
G.R. No. 137743 immediate execution.
The third petition for adjudication, a Petition for Certiorari under Rule 65 with Finally, SIDDCOR contests the special reasons cited by the Court of Appeals in
Prayer for Temporary Restraining Order or Preliminary Injunction, was also granting the Motion for Immediate Execution.
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 Facts Arising Subsequent to the Filing of Instant Petitions
damages, made through the resolutions dated 10 October 1998 and 22
December 1998. On 7 May 1999, the Court of Appeals issued a Writ of Execution directing the
28
enforcement of the judgment on the attachment bond. However, in
a Resolution dated 9 June 1999, this Court through the First Division issued
117 of 501
a Temporary Restraining Order, enjoining the enforcement of the said Writ of Resolving these issues requires the determination of the proper scope and
Execution. 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,
On 15 October 2002, the Court of Appeals First Division rendered irregular or excessive attachment.
29
a Decision on the merits of CA-G.R. CV No. 53229, setting aside the Summary
30
Judgment and ordering the remand of the case for further proceedings. Both SECTION 20. Claim for damages on account of improper, irregular or
31
parties filed their respective motions for reconsideration. In addition, Carlos excessive attachment.—An application for damages on account of improper,
filed a motion to inhibit the author of the assailed decision, Justice Rebecca de irregular or excessive attachment must be filed before the trial or before
32 33
Guia-Salvador, who thereafter agreed to inhibit herself. Then on 7 August appeal is perfected or before the judgment becomes executory, with due notice
2003, the Court of Appeals Former First Division issued a Resolution deferring to the attaching obligee or his surety or sureties, setting forth the facts
action on the motions for reconsideration in light of the temporary restraining showing his right to damages and the amount thereof. Such damages may be
order issued by this Court until the resolution of the present petitions. awarded only after proper hearing and shall be included in the
judgment on the main case.
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 If the judgment of the appellate court be favorable to the party against whom
subsequent moves to secure immediate execution of such judgment. Should the attachment was issued, he must claim damages sustained during the
this Court be called upon to tackle the merits of the original action, Carlos’s pendency of the appeal by filing an application in the appellate court with
complaint, it shall be in the review of the final resolution of the Court of notice to the party in whose favor the attachment was issued or his surety or
Appeals in CA-G.R. CV No. 53229. 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
Consolidation of Issues in court.
G.R. Nos. 135830 and 136035 Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages
The petitions in G.R. Nos. 135830 and 136035 are concerned with the award of awarded to him from any property of the attaching obligee not exempt from
damages on the attachment bond. They may be treated separately from the execution should the bond or deposit given by the latter be insufficient or fail
petition in G.R. No. 137743, which relates to the immediate execution of the to fully satisfy the award. (Emphasis supplied.)
said award.
Section 20 essentially allows the application to be filed at any time before the
We consolidate the main issues in G.R. Nos. 135830 and 136035, as follows: (1) judgment becomes executory. It should be filed in the same case that is the
34
whether the assailed judgment on the attachment bond could have been main action, and cannot be instituted separately. It should be filed with the
35
rendered, as it was, prior to the adjudication of the main case; (2) whether the court having jurisdiction over the case at the time of the application. The
Court of Appeals properly complied with the hearing requirement under remedy provided by law is exclusive and by failing to file a motion for the
Section 20, Rule 57 prior to its judgment on the attachment bond; and (3) determination of the damages on time and while the judgment is still under
36
whether the Court of Appeals properly ascertained the amount of damages it the control of the court, the claimant loses his right to damages.
awarded in the judgment on the attachment bond.
118 of 501
There is no question in this case that the Motion for Judgment on the In this case, both Carlos and SIDDCOR were duly notified by the appellate
Attachment Bond filed by respondents on 10 December 1996 was properly filed court of the Motion for Judgment on the Attachment Bond and were required to
41
since it was filed with the Court of Appeals during the pendency of the appeal file their respective comments thereto. Carlos and SIDDCOR filed their
in the main case and also as an incident thereto. The core questions though lie respective comments in opposition to private
in the proper interpretation of the condition under Section 20, Rule 57 that
42
reads: "Such damages may be awarded only after proper hearing and shall be respondents’ motion. Clearly, all the relevant parties had been afforded the
included in the judgment on the main case." Petitioners assert that there was bare right to be heard on the matter.
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 Concededly, the facts of this case differ from that in Paramount, wherein the
the rendition of the main judgment. 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
"Such Damages May Be Awarded note therein that the counsel of the surety was present during the
43
hearings. In this case, unlike in Paramount, there were no open court
Only After Proper Hearing…." hearings conducted by the Court of Appeals, and it is precisely this absence
that the petitioners assert as fatal.
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 Plainly, there is no express requirement under the rule that the hearing be
damages on the attachment bond. 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
Section 20 of Rule 57 requires that there be a "proper hearing" before the hearing requirement was explained before Paramount in Peroxide Philippines
44
application for damages on the attachment bond may be granted. The hearing Corp. v. Court of Appeals, thus:
requirement ties with the indispensable demand of procedural due process.
Due notice to the adverse party and its surety setting forth the facts . . . [It] is undeniable that when the attachment is challenged for having been
supporting the applicant's right to damages and the amount thereof under the illegally or improperly issued, there must be a hearing with the burden of
bond is essential. No judgment for damages may be entered and executed proof to sustain the writ being on the attaching creditor. That hearing
against the surety without giving it an opportunity to be heard as to the reality embraces not only the right to present evidence but also a reasonable
or reasonableness of the damages resulting from the wrongful issuance of the opportunity to know the claims of the opposing parties and meet them. The
37
writ. right to submit arguments implies that opportunity, otherwise the right would
be a barren one. It means a fair and open hearing.
38
In Paramount Insurance v. Court of Appeals, the Court held that under the
rule, it was neither mandatory nor fatal that there should be a separate hearing From this pronouncement, we can discern that the "proper hearing"
in order that damages upon the bond can be claimed, ascertained and contemplated would not merely encompass the right of the parties to submit
39
awarded. What is necessary only is for the attaching party and his surety or their respective positions, but also to present evidence in support of their
40
sureties to be duly notified and given the opportunity to be heard. 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
119 of 501
or injury, and the quantifiable amount of damages sustained. Such matters Some disquisition is necessary on whether or not, as petitioners submit, a full-
cannot be established on the mere say-so of the applicant, but require blown hearing in open court is compulsory under Section 20, Rule 57. To
evidentiary support. At the same time, there was no equivocal statement from impose this as a mandatory requirement would ultimately prove too onerous
the Court in Peroxide that the hearing required under the rule should be a full- to our judicial system. Perhaps such a demand would be less burdensome on
blown hearing on the merits the regional trial courts, which, as a matter of routine, receive testimonial or
documentary evidence offered de novo, and to formulate conclusions on the
In this case, we rule that the demands of a "proper hearing" were satisfied as of admissibility and credibility of the same.
the time the Court of Appeals rendered its assailed judgment on the
attachment bond. The circumstances in this case that we consider particularly However, a different situation applies if it is the Court of Appeals or the
telling are the settled premises that the judicial finding on the wrongfulness of Supreme Court before which the application for damages is filed. Both these
the attachment was then already conclusive and beyond review, and that the courts, which are capacitated to receive and act on such actions, are generally
amount of actual damages sustained was likewise indubitable as it indeed not triers of facts, and do not, in the course of daily routine, conduct hearings.
could be found in the official case record in CA-G.R. CV No. 53229. As a result, It is partly for such reason that Section 20, Rule 57 authorizes these appellate
petitioners would have been precluded from either raising the defenses that courts to refer the application for damages to the trial court for hearing and
the preliminary attachment was valid or disputing the amount of actual decision. The trial courts are functionally attuned to ascertain and evaluate at
damages sustained by reason of the garnishment. The only matter of the first instance the necessary factual premises that would establish the right
controversy that could be litigable through the traditional hearing would be to damages. Still, reference of the application for damages to the trial court is
the matter of moral and exemplary damages, but the Court of Appeals discretionary on the part of the appellate courts. The latter, despite their
appropriately chose not to award such damages. traditional appellate jurisdiction and review function, are still empowered
under Section 20 to rule on the application for damages, notwithstanding the
Moreover, petitioners were afforded the opportunity to counter the arguments factual dimension such question presents.
extended by the respondents. They fully availed of that right by submitting
their respective comments/oppositions. In fine, the due process guarantee has To impose as mandatory on the Court of Appeals or the Supreme Court to
been satisfied in this case. 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
It should be noted that this case poses a situation different from what is would be unduly disruptive on the daily workflow of appellate courts such as
normally contemplated under Section 20, Rule 57—wherein the very the Court of Appeals and the Supreme Court, which rarely conduct open court
wrongfulness of the attachment remains one of the issues in contention in the hearings. Neither could the Court see what is so markedly special about an
main case. In such a case, there would be a greater demand for a more application for damages, fact-oriented as it may be, that would require it to be
extensive hearing on the application of damages. The modality of hearing heard by the appellate courts in open court when no such mandatory rule
should remain within the discretion of the court having jurisdiction to hear applies to other judicial matters for resolution that are also factual in nature.
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 For example, the review of death penalty convictions by the Court of Appeals
rebut the evidence and arguments of the opposing party. and the Supreme Court necessitates a thorough evaluation of the evidence
presented, notwithstanding the prior factual appreciation made by the trial
45
court. Notwithstanding the factual nature of the questions involved, there is
120 of 501
no rule requiring the Court of Appeals or the Supreme Court to call death need for open-court hearings on the application for damages on the
penalty cases for hearing or oral argument. If no such mandatory rule for attachment bond. The Court does not sanction the indolent award of damages
hearing is imposed on the appellate courts when the supreme penalty of death on the attachment bond by the appellate court without affording the adverse
is involved, why then should an exceptional rule be imposed in the case for the party and the bonding company concerned the opportunity to present their
relatively insignificant application for damages on the attachment bond? sides and adduce evidence in their behalf, or on the basis of unsubstantiated
evidence.
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 "…And Shall be Included in the
procedural rule. Indeed, there is no existing statute, procedural rule, or
jurisprudential fiat that makes it mandatory on the Court of Appeals or the Judgment on the Main Case"
Supreme Court to conduct an open-court hearing on any matter for
resolution. There is nothing demonstrably urgent with an application for Section 20, Rule 57 does state that the award of damages shall be included in
damages under Section 20, Rule 57 that would necessitate this Court to adopt the judgment on the main case, and seemingly indicates that it should not be
an unprecedented rule mandating itself or the Court of Appeals to conduct rendered prior to the adjudication of the main case.
full-blown open court hearings on a particular type of action.
The rule, which guarantees a right to damages incurred by reason of wrongful
49
This pronouncement does not contradict our ruling in Hanil Development v. attachment, has long been recognized in this jurisdiction. Under Section 20,
46
IAC, which Carlos interprets as requiring the Court of Appeals to conduct a Rule 57 of the 1964 Rules of Court, it was provided that there must be first a
proper hearing on an application for damages on the attachment judgment on the action in favor of the party against whom attachment was
50
bond. Hanil concerned the refusal by the Intermediate Appellate Court (now issued before damages can be claimed by such party. The Court however
Court of Appeals) to take cognizance of the application for damages on the subsequently clarified that under the rule, "recovery for damages may be had
attachment bond, such refusal being reversed by the Court, which ruled that by the party thus prejudiced by the wrongful attachment, even if the judgment
51
the Intermediate Appellate Court (IAC) had jurisdiction to accept and rule on be adverse to him."
such application. While the Court therein recognized that the IAC was
empowered to try cases and conduct hearings, or otherwise perform acts The language used in the 1997 revision of the Rules of Civil Procedure leaves
47
necessary to resolve factual issues in cases, it did not require the appellate no doubt that there is no longer need for a favorable judgment in favor of the
court to conduct a hearing in open court, but merely to reinstate the party against whom attachment was issued in order that damages may be
application for damages. 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
Admittedly, the dispositive portion of Hanil required the Court of Appeals to excessive attachment may be entitled to damages. This bolsters the notion
48
conduct hearings on the application for damages, but nowhere in the that the claim for damages arising from such wrongful attachment may arise
decision was a general rule laid down mandating the appellate court to and be decided separately from the merits of the main action. As noted by the
52
conduct such hearings in open court. The ascertainment of the need to Court in Philippine Charter Insurance Corp. v. Court of Appeals:
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 surety does not, to be sure, become liable on its bond simply because
the appellate courts to carefully exercise their discretion in determining the judgment is subsequently rendered against the party who obtained the
121 of 501
preliminary attachment. The surety becomes liable only when and if "the Nevertheless, Section 20, Rule 57 explicitly provides that the award for
court shall finally adjudge that the applicant was not entitled to the damages be included in the judgment on the main case. This point was
attachment." This is so regardless of the nature and character of the apparently not lost on the Court of Appeals when it rendered
judgment on the merits of the principal claims, counterclaims or cross- its Resolution dated 23 March 1998, certifying that the case may now be
claims, etc. asserted by the parties against each other. Indeed, since an referred to the Raffle Committee for assignment to a ponente. The appellate
applicant's cause of action may be entirely different from the ground court stated therein: "The Resolution of defendants-appellants’ motion for
relied upon by him for a preliminary attachment, it may well be that judgment on the attachment may be incorporated in the decision by
53
although the evidence warrants judgment in favor of said applicant, the the ponente for study and report," and such observation is in conformity with
proofs may nevertheless also establish that said applicant's proferred Section 20.
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 However, this reasoning was assailed by respondents, who argued that the
place. In that event, the final verdict should logically award to the applicant motion for judgment on the attachment bond was a pending incident that
the relief sought in his basic pleading, but at the same time sentence him— should be decided before the case can be re-raffled to a ponente for decision.
usually on the basis of a counterclaim—to pay damages caused to his Respondents may be generally correct on the point that a case can only be
adversary by the wrongful attachment. [Emphasis supplied.] deemed submitted for decision only after all pending incidents are resolved.
Yet since Section 20, Rule 57 provides that their application for damages on
Moreover, a separate rule—Section 8, Rule 58— covers instances when it is the the attachment bond "shall be included in the judgment on the main case," it
trial court that awards damages upon the bond for preliminary injunction of is clear that the award for damages need not be resolved before the case is
the adverse party. Tellingly, it requires that the amount of damages to be submitted for decision, but should instead be resolved and included in the
awarded be claimed, ascertained, and awarded under the same procedure judgment on the main case, or the decision on the Appeal by Certiorari filed by
prescribed in Section 20 of Rule 57. the respondents.
In this case, we are confronted with a situation wherein the determination that Thus, the action of the Court of Appeals in resolving the application for
the attachment was wrongful did not come from the trial court, or any court damages even before the main judgment was issued does not conform to
having jurisdiction over the main action. It was rendered by the Court of Section 20, Rule 57. However, the special particular circumstances of this case
Appeals in the exercise of its certiorari jurisdiction in the original action lead us to rule that such error is not mortal to the award of damages.
reviewing the propriety of the issuance of the Writ of Preliminary
Attachment against the private respondents. Said ruling attained finality when As noted earlier, the award of damages was made after a proper hearing had
it was affirmed by this Court. occurred wherein all the concerned parties had been given the opportunity to
present their arguments and evidence in support and in rebuttal of the
The courts are thus bound to respect the conclusiveness of this final judgment, application for damages. The premature award of damages does not negate the
deeming as it does the allowance by the RTC of preliminary attachment as fact that the parties were accorded due process, and indeed availed of their
improper. This conclusion is no longer subject to review, even by the court right to be heard.
called upon to resolve the application for damages on the attachment bond.
The only matter left for adjudication is the proper amount of damages. Moreover, we are compelled to appreciate the particular circumstance in this
case that the right of private respondents to acquire relief through the award
122 of 501
of damages on account of the wrongful preliminary attachment has been The same reasons apply in resolving the question of whether the Court of
conclusively affirmed by the highest court of the land. This differs from the Appeals could have decided the Motion for Judgment on the Attachment
normal situation under Section 20, Rule 57 wherein the court having Bond considering that the case had not yet been re-raffled under the two-raffle
jurisdiction over the main action is still required to ascertain whether the system for study and report. Under Section 5, Rule 3 of the RIRCA, a case filed
applicant actually has a right to damages. To mandatorily require that the with the Court of Appeals undergoes two raffles for assignment to a particular
56
award of damages be included in the judgment in the main case makes all the Justice. The first raffle is made for completion of records. Afterwards, "all
sense if the right to damages would be ascertained at the same time the main raffled appealed cases, the records of which have been completed and
judgment is made. However, when the said right is already made viable by submitted for decision, shall be re-raffled for assignment to a Justice for study
57
reason of a final judgment which is no longer subject to review, there should and report."
be no unnecessary impediments to its immediate implementation.
The fact that Section 20, Rule 57 provides that the award of damages on the
And finally, any ruling on our part voiding the award of damages solely for the attachment bond "shall be included in the judgment on the main case"
reason that it was not included in the judgment on the main case, and necessarily implies that it is to be made only after the case has been re-raffled
remanding the motion to the Court of Appeals for proper adjudication for study and report, and concurrently decided with the judgment of
together with the main case may exhibit fealty to the letter of the procedural the ponente in the main case. Again, the Court of Appeals failed to consider
rule, but not its avowed aims of promoting a just and speedy disposition of Section 20, Rule 57 when it acted upon the application even before the second
every action and proceeding. After all, if we were to compel the Court of raffle was made.
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 Had Section 20, Rule 57 been faithfully complied with, a different Justice of the
examining exactly the same evidence and applying exactly the same rules as it Court of Appeals would have penned the ruling on the application for
already did when it issued the assailed resolution awarding damages on the damages, in accordance with the RIRCA. Yet this circumstance does not
bond. This would be unnecessarily redundant especially considering that the outweigh the other considerations earlier mentioned that would warrant a
Supreme Court had already affirmed that there was wrongful attachment in liberal interpretation of the procedural rules in favor of respondents. The
this case. parties had adduced all their arguments and evidence before the Court of
Appeals, and indeed, these were appreciated on first instance by Justice
There is also the fact that remanding the question of damages, singly for the Demetria, who eventually penned the assailed resolutions. There was already a
purpose of adhering to the letter of the procedural rule, would further prolong final determination that the attachment was wrongful. And any delay brought
the resolution of the main case, which has been with the Court of Appeals for about by requiring that it be the ponencia, determined after the second raffle,
54
more than nine years now. Our Rules of Court precisely requires liberal who decides the application for damages may bear pro forma adherence to the
construction of the procedural rules to promote the objective of securing a letter of the rule, but would only cause the delay of the resolution of this long-
just, speedy and inexpensive disposition of every action and pending case. Procedural rules are designed, and must therefore be so
55
proceeding. With this precept, all the more justification is supplied for interpreted as, to give effect to lawful and valid claims and not to frustrate
58
allowing the award for damages despite its apparent prematurity, if it is in all them.
other respects proper.
Even SIDDCOR acknowledges that there are recognized instances where the
award of damages or judgment on the attachment bond may not be included
123 of 501
in the decision on the main case, such as if the main case was dismissed for Carlos lamely argues in his petition that there was no concrete or supporting
lack of jurisdiction and no claim for damages could have been presented in the evidence to justify the amount of actual damages, a claim that is belied by the
59
main case. official case records. The more substantive argument is presented by
SIDDCOR, which submits that any damages that may be awarded to
Scope of Damages 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
Properly Awardable 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
Next, we examine the particular award of damages made in this case, which may be adjudged to the adverse party and all damages which he may
consisting of P15,384,509.98, plus interest, as well as P1,000,000.00 as sustain by reason of the attachment, if the court shall finally adjudge
62
attorney’s fees. There seems to be no dispute that the former amount that the applicant was not entitled thereto."
constituted the amount drawn against the account of Sandoval by reason of
63
the writ of execution issued by the trial court on 27 May 1996. This fact was The case Paramount Insurance Corp. v. Court of Appeals is instructive. It
confirmed by the PNB, in its Manifestation dated 19 July 1996, confirming the discusses the scope of the bond executed by upon an application for
64
garnishment. preliminary injunction, which similarly covers "all damages which [may be]
sustain[ed] by reason of the injunction or temporary restraining order if the
65
Respondents’ burden in proving damages in this case was considerably court should finally decide that the applicant was not entitled thereto." The
lessened by the fact that there was already a final judgment, no longer subject surety in that case claimed that it could be liable "only to the amount of
to review, that the preliminary attachment allowed by the trial court was damages accruing from the time the injunction bond was issued until the
66
indeed wrongful. Hence, all that was necessary to be proved was the amount termination of the case, and not from the time the suit was commenced." In
of damage actually sustained by respondents by reason of the wrongful rebutting this claim, the Court ruled:
attachment. It is unquestioned that by virtue of the writ of preliminary
attachment, a Notice of Garnishment was served upon the PNB over deposit . . . . Rule 58, Section 4(b), provides that a bond is executed in favor of the
accounts maintained by respondents. Said Notice of Garnishment placed under party enjoined to answer for all damages which he may sustain by reason of
the control of the RTC all the accounts maintained by respondents, and the injunction. This Court already had occasion to rule on this matter in
60
prevented the transfer or disposition of these accounts. Then the Mendoza v. Cruz, where it held that "(t)he injunction bond is intended as a
subsequent Writ of Execution dated 27 May 1996 ordered the delivery to Carlos security for damages in case it is finally decided that the injunction ought not
61
of these accounts earlier subjected to garnishment. 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
Clearly, the amount of actual pecuniary loss sustained by respondents has enjoined party against loss or damage by reason of an injunction." No
been well established. The Manifestationsubmitted by the PNB further distinction was made as to when the damages should have been
67
affirmed the actual amount seized by Carlos, an amount which could not have incurred.
been acquired had it not been for the writ of preliminary attachment which
was wrongfully issued. Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals, relied
upon by the Court of Appeals, squarely applies to this case:
124 of 501
Under the circumstances, too, there can be no gainsaying the surety’s full during all the time that it was in force, not only during the pendency of
68
awareness of its undertakings under its bond: that, as the law puts it: "the the appeal. . . .
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 The rule is thus well-settled that the bond issued upon an application for
shall finally be adjudged to have been wrongful and without cause," and that preliminary attachment answers for all damages, incurred at whatever stage,
those damages plainly comprehended not only those sustained during the trial which are sustained by reason of the attachment. The award of actual damages
of the action but also those during the pendency of the appeal. This is the law, by the Court of Appeals is thus proper in amount. However, we disagree that
and this is how the surety's liability should be understood. The surety's the rate of legal interest be counted from the date of the "unlawful
liability may be enforced whether the application for damages for wrongful garnishment," or on 27 June 1996. Properly, interest should start to accrue only
attachment be submitted in the original proceedings before the Trial Court, or from the moment it had been finally determined that the attachment was
on appeal, so long as the judgment has not become executory. The surety's unlawful, since it is on that basis that the right to damages comes to existence.
liability is not and cannot be limited to the damages caused by the In this case, legal interest commences from the date the Court of Appeals
improper attachment only during the pendency of the appeal. That decision in CA-G.R. SP No. 39267 became final, by reason of its affirmation by
would be absurd. The plain and patent intendment of the law is that the this Court.
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 The award of attorney’s fees in the amount of P1,000,000.00 is also questioned
force; from levy to dissolution. . . . before this Court, considering that the Court of Appeals did not award moral
or exemplary damages. The general rule may be that an award of attorney’s
The fact that the second paragraph of the rule speaks only of "damages fees should be deleted where the award of moral and exemplary damages are
69
sustained during the pendency of the appeal" is of no moment; it eliminated. Nonetheless, attorney’s fees may be awarded under the Civil
obviously proceeds from the assumption in the first paragraph that the Code where the court deems it just and equitable that attorney’s fees and
70
award for the damages suffered during the pendency of the case in the expenses of litigation should be recovered, even if moral and exemplary
71
trial court was in fact "included in the final judgment"(or applied for damages are unavailing.
therein before the appeal was perfected or the judgment became executory);
hence, it states that the damages additionally suffered thereafter, i.e., during Particularly, the Court has recognized as just and equitable that attorney's fees
the pendency of the appeal, should be claimed before the judgment of the be awarded when a party is compelled to incur expenses to lift a wrongfully
72
appellate tribunal becomes executory. It however bears repeating that issued writ of attachment. The amount of money garnished, and the length
where. as in the case at bar, the judgment of the Trial Court has of time respondents have been deprived from use of their money by reason of
expressly or impliedly sustained the attachment and thus has given rise the wrongful attachment, all militate towards a finding that attorney’s fees are
to no occasion to speak of, much less, file an application for damages just and equitable under the circumstances. However, we deem the amount
for wrongful attachment, and it is only in the decision of the Court of ofP1,000,000.00 as excessive, and modify the award of attorney’s fees
Appeals that the attachment is declared wrongful and that the applicant to P500,000.00 which represents merely approximately three percent of the
"was not entitled thereto," the rule is, as it should be, that it is entirely actual damages suffered by and awarded to respondents. We also delete the
proper at this time for the application for damages for such wrongful imposition of legal interest made by the Court of Appeals on the awarded
attachment to be filed—i.e., for all the damages sustained thereby, attorney’s fees.
125 of 501
Other Issues Raised in G.R. No. 135830 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
The issues raised in G.R. No. 136035 have been dispensed with, and the predicated on the applicability of the need for a certification against forum
remaining issues in G.R. No. 135830 are relatively minor. There is no need to shopping, obviously does not include a claim which cannot be
75
dwell at length on them. independently set up. (Emphasis supplied.)
Carlos insists that respondents were liable to have paid docket fees upon filing It is clear that under Section 20, Rule 57, the application for damages on the
of their Motion for Judgment on Attachment Bond, on the theory that they attachment bond cannot be independently set up, but must be filed in the
claimed therein for the first time the alleged damages resulting from the main case, before the judgment therein becomes final and executory. Santo
dissolved attachment. The said motion is characterized as an initiatory Tomas squarely applies in determining that no certification against forum-
proceeding because it is claimed therein for the first time, the damages arising shopping was required in the Motion for Judgment on the Attachment Bond.
from the attachment. In the same vein, Carlos argues that the absence of a The same reasoning also sustains a ruling that neither legal fees were
certification against forum-shopping attached to the motion renders the said required for the filing of the said motion. Section 1, Rule 141 of the Rules of
motion as fatal. Again, it is pointed out that initiatory pleadings must contain Court provides that legal fees are prescribed upon the filing of the pleading or
76
the said certification against forum-shopping. other application which initiates an action or proceeding. Since the said
application for judgment on the attachment bond cannot be considered as an
73
Our ruling in Santo Tomas University Hospital v. Surla is instructive. It was initiatory pleading, as it cannot be independently set up from the main action,
argued therein that the requirement of the certification against forum- it is not likewise chargeable with legal fees.
74
shopping, as contained in Administrative Circular No. 04-94, covered
compulsory counterclaims. The Court ruled otherwise: As to the issue relating to the other Resolution dated 26 June 1998 denying the
motion to dismiss appeal on the ground of forum-shopping, we find Carlos’s
It bears stressing, once again, that the real office of Administrative Circular arguments as unmeritorious. Forum-shopping allegedly existed because
No. 04-94, made effective on 01 April 1994, is to curb the malpractice petitioners had filed two cases before the Court of Appeals, CA-G.R. CV No.
commonly referred to also as forum-shopping. . . . The language of the circular 53229, and the Petition for Certiorari with Temporary Restraining Order dated 2
distinctly suggests that it is primarily intended to cover an initiatory pleading June 1996 attacking the allowance of execution pending appeal. Evidently, the
or an incipient application of a party asserting a claim for relief. 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
It should not be too difficult, the foregoing rationale of the circular second petition assailing the subsequent allowance by the RTC of execution
aptly taken, to sustain the view that the circular in question has not, in pending appeal. There is no identity between these two causes of action that
fact, been contemplated to include a kind of claim which, by its very would warrant a finding of forum-shopping.
nature as being auxiliary to the proceeding in the suit and as deriving
its substantive and jurisdictional support therefrom, can only be Issues Raised in G.R. No. 137743
appropriately pleaded in the answer and not remain outstanding for
independent resolution except by the court where the main case To recount, respondents, having obtained a favorable decision on their Motion
pends. Prescinding from the foregoing, the proviso in the second paragraph of for Judgment on the Attachment Bond, filed a Motion for Immediate
Section 5, Rule 8, of the 1997 Rules of Civil Procedure, i.e., that the violation of Execution of the award of damages. This was granted by the Court of Appeals
126 of 501
in its Resolutiondated 16 October 1998, said resolution now specifically ultimately employed by the appellate court is correct, and it hardly would be
assailed by SIDDCOR in G.R. No. 137743. judicious to require the lower court to adhere to the movant’s erroneous
ratiocination and preclude the proper application of the law.
In their Motion for Immediate Execution, respondents’ theory in seeking the
immediate execution of the award of damages was that said award was not We need not review in length the justification of the Court of Appeals in
77
subject to appeal, the ruling thereupon being an interlocutory order. This allowing execution pending appeal. The standard set under Section 2(a), Rule
position was not adopted by the Court of Appeals in its 16 October 39 merely requires "good reasons," a "special order," and "due hearing." Due
1998 Resolution, which was otherwise favorably disposed to respondents. hearing would not require a hearing in open court, but simply the right to be
Instead, the Court of Appeals predicated the immediate execution on the heard, which SIDDCOR availed of when it filed its opposition to the motion
following grounds: (1) that the judicial finding that the writ of preliminary for immediate execution. The Resolution dated 16 October 1998 satisfies the
attachment was wrongful was already final and beyond review; (2) there were "special order" requirement, and it does enumerate at length the "good
no material and substantial defenses against the motion for the issuance of the reasons" for allowing execution pending appeal. As to the appreciation of
judgment bond; (3) Sandoval was elderly and sickly, without means of "good reasons," we simply note that the advanced age alone of Sandoval would
livelihood and may not be able to enjoy the fruits of the judgment on the have sufficiently justified execution pending appeal, pursuant to the well-
79
attachment bond; (4) that immediate execution would end her suffering settled jurisprudential rule. The wrongfulness of the attachment, and the
caused by the arbitrary garnishment of her PNB account. length of time respondents have been deprived of their money by reason of the
wrongful attachment further justifies execution pending appeal under these
There is no doubt that a judgment on the attachment bond is a final and circumstances.
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 WHEREFORE, the petitions are DISMISSED. The Temporary Restraining
they had erred in earlier characterizing the said judgment as an interlocutory Order issued in the Resolution dated 9 June 1999 is hereby LIFTED. The
order. Still, SIDDCOR argues that such earlier error is fatal, and that the Court assailed Resolution of the Court of Appeals Special Fourth Division dated 26
of Appeals abused its discretion in ruling on the motion on a theory different June 1998 is AFFIRMED with the MODIFICATIONS that the legal interest on
from that urged on by respondents. 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
By no means could respondents be deemed as estopped from changing their award of attorney’s fees is in the amount of P500,000. Costs against
legal theory, since the rule on estoppel applies to questions of fact and not petitioners.
78
questions of law. Moreover, courts are empowered to decide cases even if the
parties raise legal rationales other than that which would actually apply in the SO ORDERED.
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
127 of 501
On October 29, 2004, the Sandiganbayan issued a resolution ordering the

Salgado v. CA, March 26, 1984, 128 SCRA 395 (Case Not Found!) issuance of a writ of preliminary attachment against the properties of the
5
Garcias upon the filing by the Republic of a P1 million attachment bond. On
PCIB v. Alejandro, September 21, 2007 (See under Section 1, page 60) 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
Republic v. Flores, July 12, 2007 its claim.
FIRST DIVISION 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
G.R. No. 167741 July 12, 2007 attachment bond and praying for the release thereof.
REPUBLIC OF THE PHILIPPINES, Petitioner, In a resolution dated January 14, 2005, the Sandiganbayan ruled that there was
vs. nothing in the Rules of Court that exempted the Republic from filing an
MAJ. GEN. CARLOS FLORES GARCIA, CLARITA DEPAKAKIBO GARCIA, 6
attachment bond. It reexamined Tolentino v. Carlos which was invoked by the
IAN CARL DEPAKAKIBO GARCIA, JUAN PAULO DEPAKAKIBO GARCIA, Republic to justify its claimed exemption. That case was decided under the old
TIMOTHY DEPAKAKIBO GARCIA and THE SANDIGANBAYAN (FOURTH Code of Civil Procedure enacted more than a century ago.
DIVISION), Respondents.
The Sandiganbayan denied the Republic’s motion. Reconsideration was also
DECISION denied in a resolution dated March 2, 2005.
CORONA, J.: As already stated, these two resolutions (January 14, 2005 and March 2, 2005)
are the subject of the present petition.
1
This petition for certiorari assails the January 14, 2005 and March 2, 2005
2
resolutions of the Fourth Division of the Sandiganbayan in Civil Case No. 0193 Did the Sandiganbayan commit grave abuse of discretion when it rejected the
entitled Republic of the Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita Republic’s claim of exemption from the filing of an attachment bond? Yes.
Depakakibo Garcia, Ian Carl Depakakibo Garcia, Juan Paulo Depakakibo
Garcia and Timothy Mark Depakakibo Garcia. Sections 3 and 4, Rule 57 of the Rules of Court provide:
Civil Case No. 0193 was a petition for forfeiture of unlawfully acquired Sec. 3. Affidavit and bond required. – An order of attachment shall be granted
properties, with a verified urgent ex-parte application for the issuance of a writ only when it appears by the affidavit of the applicant, or of some other person
of preliminary attachment, filed by the Republic of the Philippines against who personally knows the facts, that a sufficient cause of action exists, that the
3 4
Maj. Gen. Carlos F. Garcia, his wife and children in the Sandiganbayan on case is one of those mentioned in section 1 hereof, that there is no other
October 27, 2004. In praying for the issuance of a writ of preliminary sufficient security for the claim sought to be enforced by the action, and that
attachment, the Republic maintained that, as a sovereign political entity, it the amount due to applicant, or the value of the property the possession of
was exempt from filing the required attachment bond. 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
128 of 501
by the next succeeding section, must be duly filed with the court before entitled to the writ of attachment. Thus, it is a security for the payment of the
the order issues. 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
Sec. 4. Condition of applicant’s bond. – The party applying for the order of the Philippines need not give this security as it is presumed to be always
must thereafter give a bond executed to the adverse party in the solvent and able to meet its obligations.
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 The Sandiganbayan thus erred when it disregarded the foregoing presumption
adverse party and all damages which he may sustain by reason of the and instead ruled that the Republic should file an attachment bond. The error
attachment, if the court shall finally adjudge that the applicant was not was not simply an error of judgment but grave abuse of discretion.
entitled thereto. (emphasis supplied)
There is grave abuse of discretion when an act is done contrary to the
10
Under these provisions, before a writ of attachment may issue, a bond must Constitution, the law or jurisprudence. Here, the Sandiganbayan’s January 14,
first be filed to answer for all costs which may be adjudged to the adverse party 2005 resolution was clearly contrary to Tolentino.
and for the damages he may sustain by reason of the attachment. However,
7
this rule does not cover the State. In Tolentino, this Court declared that the Worse, the Sandiganbayan transgressed the Constitution and arrogated upon
State as represented by the government is exempt from filing an attachment itself a power that it did not by law possess. All courts must take their bearings
bond on the theory that it is always solvent. from the decisions and rulings of this Court. Tolentino has not been
superseded or reversed. Thus, it is existing jurisprudence and continues to
11
2. Section 427 of the Code of Civil Procedure provides that before the issuance form an important part of our legal system. Surprisingly, the Sandiganbayan
of a writ of attachment, the applicant therefor or any person in his name, declared that Tolentino "need(ed) to be carefully reexamined in the light of the
should file a bond in favor of the defendant for an amount not less than P400 changes that the rule on attachment ha(d) undergone through the
12
nor more than the amount of the claim, answerable for damages in case it is years." According to the court a quo:
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 [Tolentino] was decided by the Supreme Court employing the old Code of Civil
attachment is the Commonwealth of the Philippines, as plaintiff, and Procedure (Act No. 190) which was enacted by the Philippine Commission on
under the theory that the State is always solvent it was not bound to August 7, 1901 or more than a century ago.
post the required bond and the respondent judge did not exceed his
8
jurisdiction in exempting it from such requirement. x x x (emphasis supplied) That was then, this is now. The provisions of the old Code of Civil Procedure
governing attachment have been substantially modified in the subsequent
In other words, the issuance of a writ of preliminary attachment is conditioned Rules of Court. In fact, Rule 57 of the present 1997 Rules of Civil Procedure is
on the filing of a bond unless the applicant is the State. Where the State is the an expanded modification of the provisions of the old Code of Civil Procedure
9
applicant, the filing of the attachment bond is excused. governing attachment. Unlike the old Code of Civil Procedure, the present
1997 Rules of Civil Procedure is noticeably explicit in its requirement that the
The attachment bond is contingent on and answerable for all costs which may party applying for an order of attachment should file a bond.
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 On this, Article VIII, Section 4(3) of the Constitution provides:
129 of 501
(3) Cases or matters heard by a division shall be decided or resolved with the Contrary to the pronouncement of the Sandiganbayan, Section 247 of Act No.
concurrence of majority of the Members who actually took part in the 190 explicitly required the execution of an attachment bond before a writ of
deliberations on the issues in the case and voted thereon, and in no case preliminary attachment could be issued.
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 The relevant provisions of Act No. 190 on attachment were later substantially
13
doctrine or principle of law laid down by the court in a decision adopted as Sections 3 and 4, Rule 59 of the 1940 Rules of Court.
rendered en banc or in division may be modified or reversed except by
the court sitting en banc. (emphasis supplied) 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 Constitution mandates that only this Court sitting en banc may modify or the plaintiff, or of some other person who personally knows the facts, that the
reverse a doctrine or principle of law laid down by the Court in a decision case is one of those mentioned in section 1 hereof, that there is no other
rendered en banc or in division. Any court, the Sandiganbayan included, which sufficient security for the claim sought to be enforced by the action, and that
renders a decision in violation of this constitutional precept exceeds its the amount due to the plaintiff, or the value of the property which he is
jurisdiction. 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
Therefore, the Sandiganbayan could not have validly "reexamined," much less by the next succeeding section, must be duly filed with the clerk or
reversed, Tolentino. By doing something it could not validly do, the judge of the court before the order issues. (emphasis supplied)
Sandiganbayan acted ultra vires and committed grave abuse of discretion.
Sec. 4. Bond required from plaintiff. – The party applying for the order must
The fact was, the revisions of the Rules of Court on attachment, particularly give a bond executed to the defendant in an amount to be fixed by the judge,
those pertaining to the filing of an attachment bond, did not quash Tolentino. not exceeding the plaintiff’s claim, that the plaintiff will pay all the costs which
may be adjudged to the defendant and all damages which he may sustain by
Tolentino applied Sec. 247 of Act No. 190 which provided: reason of the attachment, if the court shall finally adjudge that the plaintiff
was not entitled thereto.
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 And with the promulgation of the 1964 Rules of Court, the rules on attachment
to the defendant an obligation in an amount to be fixed by the judge, or were renumbered as Rule 57, remaining substantially the same:
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 Sec. 3. Affidavit and bond required. – An order of attachment shall be granted
exceeding the amount claimed by the plaintiff, that the plaintiff will pay all the only when it appears by the affidavit of the applicant, or of some other person
costs which may be adjudged to the defendant, and all damages which he may who personally knows the facts, that a sufficient cause of action exists, that the
sustain by reason of the attachment, if the same shall finally be adjudged to case is one of those mentioned in section 1 hereof, that there is no other
have been wrongful or without sufficient cause. (emphasis supplied) 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
130 of 501
by the next succeeding section, must be duly filed with the clerk or The pronouncement in Spouses Badillo applies in this case even if Spouses
judge of the court before the order issues. (emphasis supplied) 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
Sec. 4. Condition of applicant’s bond. – The party applying for the order must general enough to encompass attachment bonds. Moreover, the purpose of an
thereafter give a bond executed to the adverse party in an amount to be fixed attachment bond (to answer for all costs and damages which the adverse party
by the judge, not exceeding the applicant’s claim, conditioned that the latter may sustain by reason of the attachment if the court finally rules that the
will pay all the costs which may be adjudged to the adverse party and all applicant is not entitled to the writ) and a supersedeas bond (to answer for
damages which he may sustain by reason of the attachment, if the court shall damages to the winning party in case the appeal is found frivolous) is
finally adjudge that the applicant was not entitled thereto. essentially the same.1awphil.zw+
Clearly, the filing of an attachment bond before the issuance of a writ of In filing forfeiture cases against erring public officials and employees, the
preliminary attachment was expressly required under the relevant provisions Office of the Ombudsman performs the State’s sovereign functions of
of both the 1940 and 1964 Rules of Court. enforcing laws, guarding and protecting the integrity of the public service and
addressing the problem of corruption in the bureaucracy.
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 The filing of an application for the issuance of a writ of preliminary
14 15
attachment bond and that the State need not file an attachment bond. 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
Where the Republic of the Philippines as a party to an action asks for a writ of disposition of properties in the hands of unscrupulous public officers.
attachment against the properties of a defendant, it need not furnish a bond. Otherwise, even if the government subsequently wins the case, it will be left
16
This is so because the State is presumed to be solvent. holding an empty bag.
When plaintiff is the Republic of the Philippines, it need not file a bond when Accordingly, the petition is hereby GRANTED. The January 14, 2005 and
it applies for a preliminary attachment. This is on the premise that the State is March 2, 2005 resolutions of the Sandiganbayan are REVERSED and SET
17
solvent. 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
And then again, we note the significant fact that Sections 3 and 4, Rule 57 of attachment issued in Civil Case No. 0193. The Sandiganbayan is hereby
the 1964 Rules of Court were substantially incorporated as Sections 3 and 4, ordered to release the P1,000,000 bond posted by the Republic of the
18
Rule 57 of the present (1997) Rules of Court. There is thus no reason why the Philippines to the Office of the Ombudsman.
Republic should be made to file an attachment bond.1avvphi1
SO ORDERED.
19
In fact, in Spouses Badillo v. Hon. Tayag, 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
20
obligations.
131 of 501
for the issuance of a writ of attachment in the said case on the same date
despite the lack of legal basis therefor.
Section 4
(b) Felino Bangalan, then Acting Clerk of Court III, of the Aparri RTC (now
Presiding Judge, MTC, Branch 1, Aparri, Cagayan) for issuing the writ of
Arellano v. Flojo, 238 S 72 attachment in the said case despite the failure of the plaintiffs to post the
required attachment bond of P100,000.00 and for deliberately delaying the
THIRD DIVISION issuance of service of summons to the defendant in that although the case was
filed on January 21, 1986, the defendant (complainant herein) was served
summons only on May 13, 1986 or four (4) months thereafter, and that she was
not even furnished a copy of the Order authorizing the issuance of a writ of
A.M. No. RTJ-93-1008 November 14, 1994 attachment, the so-called attachment bond, as well as the writ of attachment
itself.
TERESITA P. ARELLANO, petitioner,
vs. (c) Herminio del Castillo, Branch Clerk of Court of the Aparri RTC for
JUDGE NAPOLEON R. FLOJO, FELINO BANGALAN, Clerk of Court III, deliberately delaying the issuance of service of summons on the defendant.
HERMINIO DEL CASTILLO, RTC-OCC.; LUCINO JOVE, Deputy
Sheriff, respondents. (d) Luciano Jove, Deputy Sheriff, Aparri, Cagayan — for seizing a vehicle not
owned by the defendant and entrusting the custody thereof to Sheriff Guards
Wilfredo O. Paraiso for petitioner. Rodolfo Auringan and Dioniso Co., Jr., instead of personally keeping it under
his custody, resulting in the said vehicle being cannibalized to the damage and
Tumaru, Guerrero & Tumaru Law Offices for respondents Judge Bangalan and prejudice of the complainant and the heirs of the late Ruperto Arellano.
Sheriff Jove.
The complaint against Clerk of Court Herminio del Castillo was dismissed for
RESOLUTION lack of merit by the Court in its Resolution dated June 28, 1993, as he did not
appear to have had any participation in the issuance and service of summons
MELO, J.: on the defendant in the aforementioned civil case (pp. 42-43, Rollo.)
Teresita P. Arellano, defendant in Civil Case No. 11-1041 then pending before With respect to Judge Napoleon R. Flojo, inasmuch as the charges against him
Branch 6 of the Regional Trial Court of the Second Judicial Region and were mere reiterations of the charges filed by the same complainant in
stationed in Aparri, Cagayan, filed a verified complaint for neglect of duty, A.M. Case No. RTJ-86-52 which had been earlier dismissed for lack of merit by
misconduct, bias, and partiality against — the Court en banc on March 24, 1987, the instant complaint against him was
likewise dismissed in the resolution of the Court dated November 8, 1993
(a) Judge Napoleon R. Flojo, then Presiding Judge of the aforementioned (p. 83, Rollo).
Branch 6, now assigned as Presiding Judge of Branch 2 of the Regional Trial
Court of Manila, for having irregularly issued an order dated January 21, 1986
132 of 501
Thereafter, the case was referred to Justice Ramon A. Barcelona of the Court of subscribed by the branch clerk of court does not necessarily
Appeals, for investigation, report, and recommendation in regard to the follow that it carried the imprimatur of the presiding judge
remaining respondents. thereof. As a lawyer, respondent Bangalan, who is now a
Judge should have known the glaring distinctions between a
Justice Barcelona finds Judge Bangalan (then Clerk of Court III) guilty of plain undertaking and a real attachment bond. The difference
negligence for (1) having issued the writ of attachment on January 21, 1986 in between the two is not that hard to discern. As ruled by Judge
spite of the applicants' failure to post an acceptable bond as required under Ernesto A. Talamayan in his order of April 23, 1993 (Rollo, pp.
Section 4, Rule 57 of the Rules of Court for what appears in the record is only a 18-19), no bond can be confiscated to answer for the damages
promissory note in the form of an affidavit executed by Victor Suguitan, sustained by defendants. He discovered that only a
Andres Langaman, and Mariano Retreta; having caused the implementation promissory note in the form of an affidavit executed by the
through Sheriff Jove, of the said writ of attachment on January 23, 1986, bondsmen denominated as an attachment bond appears on
knowingly fully well that no summons had as yet been issued and served as of the record. Had respondent Bangalan carefully examined the
said date upon defendant therein in violation of Section 5, Rule 57 of the Rules undertaking filed before he issued the writ of attachment,
of Court and Section 3, Rule 14 of the same rules. such a situation could have been obviated. Where a statute
authorizing attachment requires, as a condition to the
As for Sheriff Jove, Justice Barcelona found that in serving the writ of issuance of the writ, that a bond shall be given by plaintiff to
attachment, the sheriff did not serve the same on the defendant but on indemnify defendant for any loss or injury resulting from the
somebody whom he suspected only as holding the property of the attachment in case it proves to be wrongful, a failure to give
complainant. He failed to verify the ownership of the cargo truck he attached. such bond is fatal, and an attachment issued without the
To compound the sheriff's failure to exercise diligence in the execution of the necessary bond is invalid (7 C.J.S. 326). However, we do not
writ of attachment, he surrendered the custody of the property to the two find that the delay in the issuance and service of summons
alleged guards instead of depositing the same in a bonded warehouse. was deliberately done to prejudice the defendant. Bad faith
cannot be inferred by the mere fact of delay considering that
Finding both Judge Bangalan and Sheriff Jove remiss in the performance of it was issued by the Office of the Clerk of Court and not by
their duties, Justice Barcelona recommends that they each be suspended for the branch clerk to whom the case was already assigned.
one (1) month (not chargeable to their accumulated leave) without pay.
However, this Court is of the opinion and thus hereby holds that a fine of For seizing a vehicle which is not owned by the defendant,
P5,000.00 each for Judge Bangalan and Sheriff Jove is the commensurate respondent Sheriff Jove may be held administratively liable.
penalty for the irregularity that attended the civil case below. In this respect, Although his actuation may not have been tainted with bad
we agree with the factual findings and analysis of the Office of the Court faith or malice, he failed to exercise due prudence in attaching
Administrator, thus: the truck. He should have verified first if the truck he seized
was owned by the judgment debtor, especially in this case
Indeed, he issued the Writ of Attachment although the where it was found in the possession of a person other than
plaintiffs have not yet posted the required attachment bond. its real owner. Consequently, the writ of attachment was
It is explicitly stated in his Comment that what was filed was ordered dissolved in the Decision of Judge Tumacder dated
merely an undertaking. The fact that the "Undertaking" was August 9, 1989 (Rollo, pp. 25 to 41) as the property attached
133 of 501
does not belong to the judgment debtor but to her father,

Ruperto Arellano. A sheriff incurs liability if he wrongfully
levies upon the property of a third person (47 Am Jr 857). A
sheriff has no authority to attach the property of any person
under execution except that of the judgment debtor. If he
does so, the writ of execution affords him no justification, for
the action is not in obedience to the mandate of the writ
(Codesal and Ocampo vs. Ascue, 38 Phil. 902). The sheriff
maybe liable for enforcing execution on property belonging to
a third party (Sec. 17, Rule 39, Rules of Court). However, he
cannot be faulted for entrusting the custody thereof to the
sheriff guards considering that he can not physically keep the
cargo truck under his custody. His stand is sustained by the
Court in its Order of October 10, 1989 (Rollo, pp. 110 to 111),
holding the two (2) sheriff guards liable for the cannibalism of
the truck.
(pp. 132-133. Rollo)
WHEREFORE, premises considered, Judge Felino Bangalan and Sheriff Lucinio

Jove are hereby each fined the amount of FIVE THOUSAND PESOS
(P5,000.00), with the severe warning that a repetition of the same or similar
acts in the future will be dealt with more severely.
SO ORDERED.
134 of 501
On November 2, 1976, petitioner Calderon purchased from the private

respondents the following: the Luzon Brokerage Corporation (LBC for brevity)
Calderon v. IAC, 155 S 531 and its five (5) affiliate companies, namely, Luzon Air Freight, Inc., Luzon Port
Terminals Services, Inc., Luzon (GS) Warehousing Corporation, GS Industrial
SECOND DIVISION Management Corporation, and GS Luzon Trucking Corporation. Twenty one
(21) days thereafter or on November 23, 1976, the Bureau of Customs
G.R. No. 74696 November 11, 1987 suspended the operations of LBC for failure to pay the amount of
P1,475,840.00 representing customs taxes and duties incurred prior to the
JOSE D. CALDERON, petitioner, execution of the sale. In order to lift the suspension Calderon paid the sum of
vs. P606,430.00 to the Bureau of Customs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, GEORGE
SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO, and VICTOR M. On October 27, 1977, Calderon filed a complaint against private respondents to
NALUZ, respondents. recover said amount of P1,475,840.00, with damages by reason of breach of
warranty. In the same complaint, the petitioner prayed for a preliminary
G. R. No. 73916 November 11, 1987 attachment, alleging: that private respondents had deliberately and willfully
concealed from his knowledge such staggering liability of the LBC for the
FIRST INTEGRATED BONDING AND INSURANCE COMPANY, purpose of misleading him into buying the six aforesaid companies; and that
INC., petitioner, private respondent Schulze is about to depart from the Philippines in order to
vs. defraud his creditors.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE,
ANTONIO C. AMOR, MANUEL A. MOZO and VICTOR M. To support the petition for preliminary attachment, the petitioner posted a
NALUZ, respondents. surety bond of P1,475,840.00. On October 28, 1977, the trial court issued a writ
of preliminary attachment, whereupon properties of the private respondents
were attached and their bank deposits were garnished.
PARAS, J.: On November 10, 1977, petitioner Calderon filed an amended complaint,
alleging that while the liabilities of LBC are reflected in its books, the aforesaid
For review on certiorari is respondent appellate Court's decision 1 in AC-G.R. amount was fraudulently withdrawn and misappropriated by private
2
No. 01420, which affirmed the Regional Trial Court's decision appealed from respondent Schulze. (pp. 7-18, Rollo)
holding the plaintiff Jose D. Calderon (petitioner herein) and his bondsman
the Integrated Bonding and Insurance Company, Inc., jointly and severally On the other hand, private respondents claimed: that the amount of
liable to pay defendants (private respondents herein), damages caused by the P1,475,840.00 due to the Bureau of Customs represents the duties and taxes
filing by Calderon of the allegedly unwarranted suit and the wrongful and payable out of the advanced payments made by LBC's client, Philippine
malicious attachment of private respondents' properties. Refining Company (PRC, for brevity) in August, September and October, 1976,
and in the first and second weeks of November 1976, after Calderon himself
The facts of the case are briefly as follows: had taken control of the management of LBC (Exhibit A); that these deposit
135 of 501
payments were properly recorded in the books of the corporation and existing To defendant-appellee George Schulze:
as part of the corporate funds; that from the first week of June, 1976 up to P650,000.00 as moral damages and
October 30, 1976, private respondent Schulze fully disclose and explained to P200,000.00 as exemplary damages.
Calderon that these customer's advanced deposit payments (including those of
the PRC) are to be paid to the Bureau of Customs when their corresponding To defendant-appellee Antonio C. Amor:
customs taxes and duties become due; that during this phase of the P150,000.00 as moral damages and
negotiation, Calderon and his representatives inspected and studied the P30,000.00 as exemplary damages,
corporate books and records at will and learned the daily operations and
management of LBC; that the petitioner did not pay out of his own pocket but An other dispositions in the judgment appealed from,
out of the LBC funds the said amount of P606,430,30 demanded by the Bureau including the dismissal of the amended complainant are
of Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits 9, hereby affirmed in toto.
10, 11 & 38) and another facility negotiated with the Insular Bank of Asia and
America (Exhibit K-2); and that private respondents are setting up a SO ORDERED.
counterclaim for actual, moral and exemplary damages as well as attorney's
fees, as a consequence of the filing of the baseless suit and the wrongful and In his petition, petitioner Calderon asserts, among other things, that the court
malicious attachment of their properties, (pp. 217-221, Rollo) below erred:
On November 17, 1977, private respondents filed a counterbond, whereupon I

the trial court issued an order directing the sheriff to return all real and
personal properties already levied upon and to lift the notices of garnishment IN HOLDING THAT THE PETITIONER FAILED TO
issued in connection with the said attachment (Annex B, p. 42, Rollo). ESTABLISH HIS CLAIMS.
After trial, the trial court dismissed the complaint, holding Calderon and his II
surety First integrated Bonding and Insurance Co., Inc., jointly and severally
liable to pay the damages prayed for by the private respondents. IN HOLDING THAT THE PRELIMINARY ATTACHMENT
HAD BEEN WRONGFULLY AND MALICIOUSLY SUED OUT.
Said decision was affirmed on appeal, although slightly modified in the sense
that the award of moral and exemplary damages in favor of private III
respondents Schulze and Amor was reduced. The dispositive portion of the
judgment of affirmance and modification reads: IN HOLDING THAT THE PETITIONER IS LIABLE NOT
ONLY FOR ACTUAL DAMAGES BUT MORAL AND EX-
WHEREFORE, the judgment of the lower court is modified as EXEMPLARY DAMAGES AS WELL.
follows:
On the other hand, petitioner Insurance Company raises the following issues:
I
136 of 501
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE ... The record shows that appellant Calderon failed to produce
FOR DAMAGES ON ITS CONTRACTED SURETYSHIP any evidence in support of his sworn charge that appellee
NOTWITHSTANDING THE DISSOLUTION OF THE WRIT Schulze had deliberately and willfully concealed the liabilities
OF PRELIMINARY ATTACHMENT, AS A CON. SEQUENCE of Luzon Brokerage Corporation. Neither did appellant
OF THE FILING OF THE DEFENDANT'S COUNTER- BOND, Calderon prove his sworn charges that appellee Schulze had
WHEREBY LEVIED PROPERTIES WERE ORDERED BY THE maliciously and fraudulently withdrawn and misappropriated
COURT RETURNED TO PRIVATE RESPONDENTS AND THE the amount of Pl,475,840.00 and that an the defendants had
NOTICES OF GARNISHMENT ISSUED IN CONNECTION maliciously and fraudulently concealed and withheld from
THEREWITH ORDERED LIFTED. him this alleged liability of Luzon Brokerage Corporation in
breach of the contract-warranty that said corporation had no
II obligations or liabilities except those appearing in the books
and records of the said corporation. Indeed, appellant
WHETHER OR NOT THE SUBSEQUENT FILING BY Calderon never appeared in the trial court to substantiate the
PRIVATE RESPONDENTS OF A COUNTER-BOND TO charges in his verified complaints and in his affidavit to
DISCHARGE THE WRIT OF PRELIMINARY ATTACHMENT support his petition for the issuance of a writ of attachment.
CONSTITUTE A WAIVER ON ANY DEFECT IN THE He distanced himself from the appellees and avoided cross-
ISSUANCE OF THE ATTACHMENT WRIT. examination regarding his sworn allegations. ...
III ... But even though appellant Calderon failed to prove his
serious charges of fraud, malice and bad faith, the appellees
WHETHER OR NOT A SURETY IS A GUARANTOR OF THE took it upon themselves to show that they did not conceal or
EXISTENCE OF A GOOD CAUSE OF ACTION IN THE withhold from appellant's knowledge the deposits made by
COMPLAINT. Philippine Refining Co., Inc. with Luzon Brokerage
Corporation and that they did not withdraw and
The petition is devoid of merit. misappropriate the deposits made by Philippine Refining Co.,
Inc. with Luzon Brokerage Corporation.
Whether or not the amount of P1,475,840.00 was duly disclosed as an
outstanding liability of LBC or was misappropriated by private respondent The books and records of Luzon Brokerage Corporation on
Schulze is purely a factual issue. That Calderon was clearly in bad faith when which the Financial Statement of Luzon Brokerage
he asked for the attachment is indicated by the fact that he failed to appear in Corporation, as of October 31, 1976 was prepared by the
court to support his charge of misappropriation by Schulze, and in effect, auditing firm retained by appellant Calderon himself (Exhibit
preventing his being cross-examined, no document on the charges was 1), disclose that the liabilities of Luzon Brokerage Corporation
presented by him. in the total amount of P4,574,498.32 appear under the
heading 'Customers Deposit' (Exhibit 1-A) this amount
What the Appellate Court found in this regard need not be further elaborated includes the deposit of Philippine Refining Co., Inc. in the
upon. The Appellate Court ruled: sum of Pl,475,840.00.
137 of 501
But appellant Calderon contends that this financial statement It is evident from the foregoing that the attachment was maliciously sued out
was dated February 4, 1977 (see Exhibit 1-C). There is nothing and that as already pointed out Schulze was not in bad faith.
commendable in this argument because the bases of the
financial statement were the books, records and documents of While as a general rule, the liability on the attachment bond is limited to
Luzon Brokerage Corporation for the period ending October actual damages, moral and exemplary damages may be recovered where the
31, 1976, which were all turned over to and examined by attachment was alleged to be maliciously sued out and established to be
appellant Calderon and his executive, legal and financial so. (Lazatin vs. Twano et al,
staffs. There is also no merit in the contention of appellant L-12736, July 31, 1961).
Calderon that the appellees have tampered the books of
Luzon Brokerage Corporation because there is no proof to In the instant case, the issues of wrongful and malicious suing out of the writ
back this charge, let alone the fact that appellant Calderon of preliminary attachment were joined not only in private respondents' motion
did not even present the said books to support his charge. to discharge the attachment but also in their answer to the amended
complaint (p. 38, Rollo). The trial court observed that the books and records of
As stated above, the amount of customers' deposits in the Luzon Brokerage Corporation disclose that the liabilities of the said
sum of P4,574,498.32 includes the deposits of Philippine corporation in the total amount of P4,574,498.32 appear under the heading
Refining Co., Inc. (Exhibits 46-A, 46-B, 46-C, 46-D, 46-E, 46- "Customs Deposit" (Exhibit 1-A) and this amount includes the deposit of
F, 46-G, 46-H, 46-1, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). Philippine Refining Co., Inc. in the sum of P1,475,840.00 (p. 26, Rollo). On the
The amounts deposited by Philippine Refining Co., Inc. on other hand, plaintiff never appeared in court, and failed to produce any
various dates with Luzon Brokerage Corporation made before evidence to substantiate his charges (p. 26, Rollo).
the execution of the sale were all entered in three other
corporate books of Luzon Brokerage Corporation namely, the Well settled is the rule that the factual findings of the trial court are entitled to
Cash Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B great weight and respect on appeal, especially when established by unrebutted
to 39-K-1-B), the Journal Vouchers (Exhibits 42 to 46 and 42-A testimonial and documentary evidence, as in this case.
to 43- A), and the Customer's Deposit Ledger (Exhibit 46-A to
46-J) ... . Anent the petition of the surety, We say the following:
Thus, the claim of appellant Calderon that the deposits made Specifically, petitioner surety contends that the dissolution of the attachment
by Philippine Refining Co., Inc. with Luzon Brokerage extinguishes its obligation under the bond, for the basis of its liability, which is
Corporation of P406,430.00 on August 24, 1976 (Exhibit N wrongful attachment, no longer exists, the attachment bond having been
P53,640.00 on October 13, 1976 (Exhibit 0), P406,430.00 on rendered void and ineffective, by virtue of Section 12, Rule 57 of the Rules of
September 8, 1976 (Exhibit P P199,508.00 on September 24, Court. (p. 5, Petition)
1976 (Exhibit Q P52,738.00 on October 22, 1976 (Exhibit R and
P264,436.00 on October 7, 1976 (Exhibit S) were not entered While Section 12, Rule 57 of the Rules of Court provides that upon the filing of
in the books of Luzon Brokerage Corporation, is completely a counterbond, the attachment is discharged or dissolved, nowhere is it
without merit. ... (pp. 85-87, Rollo) provided that the attachment bond is rendered void and ineffective upon the
filing of counterbond.
138 of 501
The liability of the attachment bond is defined in Section 4, Rule 57 of the discharging the attachment writ, instead of the other. Moreover, the filing of a
Rules of Court, as follows: 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
Sec. 4. Condition of applicant's bond. The party applying for instances like in the present case, would require presentation of evidence in a
the order must give a bond executed to the adverse party in full-blown trial on the merits and cannot easily be settled in a pending
an amount to be fixed by the judge, not exceeding the incident of the case.
applicant's claim, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all We believe, however, that in the light of the factual situation in this case, the
damages which he may sustain by reason of the attachment, if damages awarded by the Intermediate Appellate Court are rather excessive.
the court shall finally adjudge that the applicant was not They must be reduced.
entitled thereto.
WHEREFORE, the judgment of said Appellate Court is hereby modified as
It is clear from the above provision that the responsibility of the surety arises follows: Both petitioner Calderon and petitioner First Integrated Bonding and
"if the court shall finally adjudge that the plaintiff was not entitled thereto." In Insurance Company, Inc. are hereby ordered to give jointly and severally:
Rocco vs. Meads, 96 Phil. Reports 884, we held that the liability attaches if the
plaintiff is not entitled to the attachment because the requirements entitling 1. Respondent George Schulze, P250,000.00 as moral damages
him to the writ are wanting, or if the plaintiff has no right to the attachment and P50,000.00 as exemplary damages; and
because the facts stated in his affidavit, or some of them, are untrue. It is,
therefore, evident that upon the dismissal of an attachment wrongfully issued, 2. Respondent Antonio C. Amor, P50,000.00 as moral
the surety is liable for damages as a direct result of said attachment. damages and P10,000.00 as exemplary damages.
Equally untenable is the Surety's contention that by filing a counterbond, The rest of the judgment of the Intermediate Appellate Court is hereby
private respondents waived any defect or flaw in the issuance of the AFFIRMED.
attachment writ, for they could have sought, without need of filing any
counterbond, the discharge of the attachment if the same was improperly or SO ORDERED.
irregularly issued, as provided in Section 13, Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that the order
of attachment was improperly or irregularly issued, the liability of the surety
on the attachment bond subsists because the final reckoning is when "the
Court shall finally adjudge that the attaching creditor was not entitled" to the
issuance of the attachment writ in the first place.
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
139 of 501
that Florentino Vilar was dead and that the judgment debtor Rafael Vilar is
one of the heirs of the deceased Florentino Vilar. Although the value of the
Section 5 participation of Rafael Vilar in the estate of Florentino Vilar was
indeterminable before the final liquidation of the estate, nevertheless, the
right of participation in the estate and the lands thereof may be attached and
Gotauco v. ROD, 59 Phil 756 sold. The real test was laid down by this court in the case of Reyes vs. Grey (21
Phil. 73, 76), namely: Does the judgment debtor hold such a beneficial interest
EN BANC in the property that he can sell or otherwise dispose of it for value? Nothing
appears in this record to indicate that Rafael Vilar being sui juris could not
DECISION
dispose of his interest or share as heir in the estate of Florentina Vilar. Having
March 23, 1934 this right, he could by a conveyance defeat pro tanto the provisions of section
450 of the Code of Civil Procedure and thus deprive the judgment creditor of
G.R. No. L-39596 the benefit of a lawful execution. (See also Consulta No. 441 de los Abogados de
“CONSULTA” No. 1013 OF THE REGISTER OF DEEDS OF TAYABAS. Smith, Bell & Co., 48 Phil. 656, 664, 665.)
GOTAUCO & CO., applicant-appellant, On October 12, 1932, with the knowledge which he them had, the register
vs. should have accepted and inscribed Exhibit A, B and D.
THE REGISTER OF DEEDS OF TAYABAS, oppositor-appellee.
The judgment in this consulta is reversed without special pronouncement as
Godofredo Reyes for appellant. to costs.
Office of the Solicitor-General Hilado for appellee.
BUTTE, J.:
This is an appeal from a judgment of the Fourth Branch of the Court of First
Instance of Manila in a consulta submitted by the register of deeds of Tayabas.
Our decision upon this appeal has been facilitated because both the appellant
and the appellee, the latter being represented by the Solicitor-General, agreed
that the judgment should be reversed.
On August 12, 1932, when Exhibits A and B were presented to the register, by
which a levy of execution against the judgment debtor, Rafael Vilar was made
on fifteen contracts of land described in Exhibit B and registered in the name
of Florentino Vilar, the register properly denied the inscription of said levy of
execution because the title to the lands was in the name of Florentino Vilar
and no evidence was submitted that Rafael Vilar had any present or possible
future interest in the land. On September 17, 1932, there was presented to him
a copy of a petition filed in the Court of First Instance of the province, entitled,
“Intestado del Finado Florentino Vilar”, from which he could properly infer
140 of 501
These are separate petitions for certiorari with a prayer for temporary
restraining order filed by Emmanuel C. Oñate and Econ Holdings Corporation
nd
Onate v. Abrogar (2 Division), 230 S 181/131 (in G.R. No. 107303), and Brunner Development Corporation (in G.R. No.
107491), both of which assail several orders issued by respondent Judge Zues C.
SECOND DIVISION Abrogar in Civil Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life
Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a
G.R. No. 107303 February 21, 1994 sum of money with a prayer for the immediate issuance of a writ of
attachment against petitioners, and Noel L. Diño, which was docketed as Civil
EMMANUEL C. OÑATE and ECON HOLDINGS Case No. 91-3506 and raffled to Branch 150 of the RTC Makati, presided over by
CORPORATION, petitioners, respondent Judge. The following day, December 24, 1991, respondent Judge
vs. issued an order granting the issuance of a writ of attachment, and the writ was
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the actually issued on December 27, 1991.
Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY
OF CANADA, respondents. On January 3, 1992, upon Sun Life's ex-parte motion, the trial court amended
the writ of attachment to reflect the alleged amount of the indebtedness. That
G.R. No. 107491 February 21, 1994 same day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of
Sun Life, attempted to serve summons and a copy of the amended writ of
BRUNNER DEVELOPMENT CORPORATION, petitioner, attachment upon petitioners at their known office address at 108 Aguirre St.,
vs. Makati but was not able to do so since there was no responsible officer to
1
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the receive the same. Nonetheless, Sheriff Flores proceeded, over a period of
Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY several days, to serve notices of garnishment upon several commercial banks
OF CANADA, respondents. and financial institutions, and levied on attachment a condominium unit and
a real property belonging to petitioner Oñate.
Florante A. Bautista for petitioner in G.R. No. 107303.
Summons was eventually served upon petitioners on January 9, 1992, while
Andin & Andin Law Offices for Brunner Development Corporation. defendant Diño was served with summons on January 16, 1992.
Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life Assurance Company of On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve
Canada. Writ of Attachment." That same day, Sun Life filed an ex-parte motion to
examine the books of accounts and ledgers of petitioner Brunner Development
Corporation (Brunner, for brevity) at the Urban Bank, Legaspi Village Branch,
and to obtain copies thereof, which motion was granted by respondent Judge.
NOCON, J.: The examination of said account took place on January 23, 1992. Petitioners
141 of 501
filed a motion to nullify the proceedings taken thereat since they were not applied for and granted even before the defendant is summoned or is heard
2
present. from. The rationale behind this rule was stated by the Court in this wise:
On January 30, 1992, petitioners and their co-defendants filed a memorandum A preliminary attachment may be defined, paraphrasing the
in support of the motion to discharge attachment. Also on that same day, Sun Rules of Court, as the provisional remedy in virtue of which a
Life filed another motion for examination of bank accounts, this time seeking plaintiff or other proper party may, at the commencement of
the examination of Account No. 0041-0277-03 with the Bank of Philippine the action or any time thereafter, have the property of the
Islands (BPI) — which, incidentally, petitioners claim not to be owned by adverse party taken into the custody of the court as security
them — and the records of Philippine National Bank (PNB) with regard to for the satisfaction of any judgment that may be recovered. It
checks payable to Brunner. Sun Life asked the court to order both banks to is a remedy which is purely statutory in respect of which the
comply with the notice of garnishment. law requires a strict construction of the provisions granting it.
Withal no principle, statutory or jurisprudential, prohibits its
On February 6, 1992, respondent Judge issued an order (1) denying petitioners' issuance by any court before acquisition of jurisdiction over
and the co-defendants' motion to discharge the amended writ of attachment, the person of the defendant.
(2) approving Sun Life's additional attachment, (3) granting Sun Life's motion
to examine the BPI account, and (4) denying petitioners' motion to nullify the Rule 57 in fact speaks of the grant of the remedy "at the
proceedings of January 23, 1992. commencement of the action or at any time thereafter." The
phrase "at the commencement of the action," obviously refers
On March 12, 1992, petitioners filed a motion for reconsideration of the to the date of the filing of the complaint — which, as
February 6, 1992 order. On September 6, 1992, respondent Judge denied the abovepointed out, its the date that marks "the
motion for reconsideration. commencement of the action;" and the reference plainly is to
a time before summons is served on the defendant or even
Hence, the instant petitions. Petitioners' basic argument is that respondent before summons issues. What the rule is saying quite clearly
Judge had acted with grave abuse of discretion amounting to lack or in excess is that after an action is properly
of jurisdiction in (1) issuing ex parte the original and amended writs of commenced — by the filing of the complaint and the
preliminary attachment and the corresponding notices of garnishment and payment of all requisite docket and other fees — the plaintiff
levy on attachment since the trial court had not yet acquired jurisdiction over may apply for and obtain a writ of preliminary attachment
them; and (2) allowing the examination of the bank records though no notice upon fulfillment of the pertinent requisites laid down by law,
was given to them. and that he may do so at any time, either before or after
service of summons on the defendant. And this indeed, has
We find both petitions unmeritorious. been the immemorial practice sanctioned by the courts: for
the plaintiff or other proper party to incorporate the
Petitioners initially argue that respondent Judge erred in granting Sun Life's application for attachment in the complaint or other
prayer for a writ of preliminary attachment on the ground that the trial court appropriate pleading (counterclaim, cross-claim, third-party
had not acquired jurisdiction over them. This argument is clearly unavailing claim) and for the Trial Court to issue the writ ex-parte at the
since it is well-settled that a writ of preliminary attachment may be validly
142 of 501
7
commencement of the action if it finds the application Manufacturing and Sales Corp. vs. Court of Appeals, et al., wherein this Court
3
otherwise sufficient in form and substance. held that enforcement of the writ of attachment can not bind the defendant in
view of the failure of the trial court to acquire jurisdiction over the defendant
Petitioners then contended that the writ should have been discharged since through either summons or his voluntary appearance.
the ground on which it was issued — fraud in contracting the obligation —
was not present. This cannot be considered a ground for lifting the writ since We do not agree entirely with petitioners. True, this Court had held in a recent
this delves into the very complaint of the Sun Life. As this Court stated decision that the enforcement of writ of attachment may not validly be
4
in Cuatro v. Court of Appeals: effected until and unless proceeded or contemporaneously accompanied by
8
service of summons.
Moreover, an attachment may not be dissolved by a showing
of its irregular or improper issuance if it is upon a ground But we must distinguish the case at bar from the Sievert and BAC
which is at the same time the applicant's cause of action in Manufacturing cases. In those two cases, summons was never served upon the
the main case since an anomalous situation would result if the defendants. The plaintiffs therein did not even attempt to cause service of
issues of the main case would be ventilated and resolved in a summons upon the defendants, right up to the time the cases went up to this
mere hearing of the motion (Davao Light and Power Co., Inc. Court. This is not true in the case at bar. The records reveal that Sheriff Flores
vs. Court of Appeals, supra, The Consolidated Bank and Trust and Sun Life did attempt a contemporaneous service of both summons and
Corp. (Solidbank) vs. Court of Appeals, 197 SCRA 663 [1991]). the writ of attachment on January 3, 1992, but we stymied by the absence of a
responsible officer in petitioners' offices. Note is taken of the fact that
9
In the present case, one of the allegation in petitioner's petitioners Oñate and Econ Holdings admitted in their answer that the
complaint below is that the defendant spouses induced the offices of both Brunner Development Corporation and Econ Holdings were
plaintiff to grant the loan by issuing postdated checks to cover located at the same address and that petitioner Oñate is the President of Econ
the installment payments and a separate set of postdated Holdings while petitioner Diño is the President of Brunner Development
checks for payment of the stipulated interest (Annex "B"). The Corporation as well as a stockholder and director of Econ Holdings.
issue of fraud, then, is clearly within the competence of the
5
lower court in the main action. Thus, an exception to the established rule on the enforcement of the writ of
attachment can be made where a previous attempt to serve the summons and
The fact that a criminal complaint for estafa filed by Sun Life against the the writ of attachment failed due to factors beyond the control of either the
petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati on plaintiff or the process server, provided that such service is effected within a
April 21, 1992 and was upheld by the Provincial Prosecutor on July 13, 1992 is of reasonable period thereafter.
no moment since the same can be indicative only of the absence of criminal
liability, but not of civil liability. Besides, Sun Life had elevated the case for Several reasons can be given for the exception. First, there is a possibility that
review to the Department of Justice, where the case is presently pending. a defendant, having been alerted of plaintiffs action by the attempted service
of summons and the writ of attachment, would put his properties beyond the
Finally, petitioners argue that the enforcement of the writ was invalid since it reach of the plaintiff while the latter is trying to serve the summons and the
undisputedly preceded the actual service of summons by six days at most. writ anew. By the time the plaintiff may have caused the service of summons
6
Petitioners cite the decisions in Sievert vs. Court of Appeals, et al. and BAC and the writ, there might not be any property of the defendant left to attach.
143 of 501
Second, the court eventually acquired jurisdiction over the petitioners six days before the court, to be delivered to the clerk or court, sheriff,
later. To nullify the notices of garnishment issued prior thereto would again or other proper officer on such terms as may be just, having
open the possibility that petitioners would transfer the garnished monies reference to any lien thereon or claim against the same, to
while Sun Life applied for new notices of garnishment. await the judgment in the action.
Third, the ease by which a writ of attachment can be obtained is counter- It is clear from the foregoing provision that notice need only be given to the
balanced by the ease by which the same can be discharged: the defendant can garnishee, but the person who is holding property or credits belonging to the
either make a cash deposit or post a counter-bond equivalent to the value of defendant. The provision does not require that notice be furnished the
10
the property attached. The petitioners herein tried to have the writ of defendant himself, except when there is a need to examine said defendant "for
attachment discharged by posting a counter-bond, the same was denied by the purpose of giving information respecting his property.
respondent Judge on the ground that the amount of the counter-bond was less
than that of Sun Life's bond. Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No.
1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits
II. With Any Banking Institution and Providing Penalty Therefore," for Section 2
therefore provides an exception "in cases where the money deposited or
Petitioners' second ground assail the acts of respondent Judge in allowing the invested is the subject matter of the litigation."
examination of Urban Banks' records and in ordering that the examination of
the bank records of BPI and PNB as invalid since no notice of said The examination of the bank records is not a fishing expedition, but rather a
examinations were ever given them. Sun Life grounded its requests for the method by which Sun Life could trace the proceeds of the check it paid to
examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, petitioners.
which provided, to wit:
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary
Sec. 10. Examination of party whose property is attached and restraining order issued on June 28, 1993 is hereby lifted.
persons indebted to him or controlling his property; delivery of
property to officer. — Any person owing debts to the party SO ORDERED.
whose property is attached or having in his possession or
under his control any credit or other personal property
belonging to such party, may be required to attend before the
court in which the action is pending, or before a
commissioner appointed by the court and be examined on
oath respecting the same. The party whose property is
attached may also be required to attend for the purpose of
giving information respecting his property, and may be
examined on oath. The court may, after such examination,
order personal property capable of manual delivery belonging
to him, in the possession of the person so required to attend
144 of 501
1
defendant does not render valid the previous attachment of his property. The
Court en banc accepted the referral and now issues this resolution.
Onate v. Abrogar (En Banc), 240/241 S 659
Petitioners maintain that, in accordance with prior decisions of this Court, the
EN BANC attachment of their properties was void because the trial court had not at that
time acquired jurisdiction over them and that the subsequent service of
G.R. No. 107303 February 23, 1995 summons on them did not cure the invalidity of the levy. They further contend
that the examination of the books and ledgers of the Bank of the Philippine
EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, Islands (BPI), the Philippine National Bank (PNB) and the Urban Bank was a
petitioners, "fishing expedition" which the trial court should not have authorized because
vs. petitioner Emmanuel C. Oñate, whose accounts were examined, was not a
HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of the signatory to any of the documents evidencing the transaction between Sun
Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY Life Assurance of Canada (Sun Life) and Brunner Development Corporation
OF CANADA, respondents. (Brunner).
BRUNNER DEVELOPMENT CORPORATION, petitioner, On the other hand private respondent Sun Life stresses the fact that the trial
vs. court eventually acquired jurisdiction over petitioners and contends that this
HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of the Regional cured the invalidity of the attachment of petitioners' properties. With respect
Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, to the second contention of petitioners, private respondent argues that the
respondents. examination of petitioner Oñate's bank account was justified because it was he
who signed checks transferring huge amounts from Brunner's account in the
RESOLUTION Urban Bank to the PNB and the BPI.
MENDOZA, J.: At the outset, it should be stated that the Court does not in the least doubt the
validity of the writ of attachment issued in these cases. The fact that a criminal
These are motions separately filed by petitioners, seeking reconsideration of complaint for estafa which Sun Life had filed against petitioner Oñate and
the decision of the Second Division holding that although the levy on Noel L. Diño, president of Brunner, was dismissed by the Office of the
attachment of petitioners' properties had been made before the trial court Provincial Prosecutor is immaterial to the resolution of the motions for
acquired jurisdiction over them, the subsequent service of summons on them reconsideration. In the first place, the dismissal, although later affirmed by the
cured the invalidity of the attachment. Department of Justice, is pending reconsideration. In the second place, since
the issue in the case below is precisely whether petitioners were guilty of fraud
The motions were referred to the Court en banc in view of the fact that in in contracting their obligation, resolution of the question must await the trial
another decision rendered by the Third Division on the same question, it was of the main case.
held that the subsequent acquisition of jurisdiction over the person of a
145 of 501
However, we find petitioners' contention respecting the validity of the anticipation of the eventualacquisition by the court of jurisdiction over
attachment of their properties to be well taken. We hold that the attachment petitioners.
of petitioners' properties prior to the acquisition of jurisdiction by the
respondent court is void and that the subsequent service of summons on Second. Private respondent invokes the ruling in Davao Light & Power
petitioners did not cure the invalidity of such attachment. The records show Co. v. Court of Appeals 9 in support of its contention that the subsequent
that before the summons and the complaint were served on petitioners Oñate acquisition of jurisdiction by the court cured the defect in the proceedings for
and Econ Holdings Corporation (Econ) on January 9, 1992, Deputy Sheriff attachment. It cites the following portion of the decision in Davao Light and
Arturo C. Flores had already served on January 3, 1992 notices of garnishment Power, written by Justice, now Chief Justice, Narvasa:
2
on the PNB Head office and on all its Metro Manila branches and an A.B
3
capital. In addition he made other levies before the service of summons on It goes without saying that whatever be the acts done by the
petitioners, to wit: Court prior to the acquisition of jurisdiction over the person
of the defendant, as above indicated — issuance of summons,
— On January 6, 1992, he served notices of garnishment on the Urban Bank order of attachment and writ of attachment (and/or
4 5
Head Office and all its Metro Manila branches, and on the BPI. appointment of guardian ad litem, or grant of authority to the
plaintiff to prosecute the suit as a pauper litigant, or
— On the same day, he levied on attachment Oñate's condominium unit at amendment of the complaint by the plaintiff as a matter of
the Amorsolo Apartments Condominium Project, covered by Condominium right without leave of court — and however valid and proper
6
Certificate of Title No. S-1758. they might otherwise be, these do not and cannot bind and
affect the defendant until and unless jurisdiction over his
— On January 7, 1992, he served notice of garnishment on the Union Bank of person is eventually obtained by the court, either by service
7
the Philippines. on him of summons or other coercive process or his voluntary
submission to the court's authority. Hence, when the sheriff or
— On January 8, 1992, he attached Oñate's lot, consisting of 1,256 square other proper officer commences implementation of the writ of
meters, at the Ayala-Alabang Subdivision, Alabang, Muntinlupa, covered by attachment, it is essential that he serve on the defendant not
8
TCT No. 112673. only a copy of the applicant's affidavit and attachment bond,
and of the order of attachment, as explicitly required by
First. The Deputy Sheriff claims that he had tried to serve the summons with a Section 5 of Rule 57, but also the summons addressed to said
copy of the complaint on petitioners on January 3, 1992 but that there was no defendant as well as a copy of the complaint and order for
one in the offices of petitioners on whom he could make a service. This is appointment of guardian ad litem, if any, as also explicitly
denied by petitioners who claim that their office was always open and that directed by Section 3, Rule 14 of the Rules of
10
Adeliza M. Jaranilla, Econ's Chief Accountant who eventually received Court.
summons on behalf of Oñate and Econ, was present that day. Whatever the
truth is, the fact is that no other attempt was made by the sheriff to serve the It is clear from the above excerpt, however, that while the petition for a writ of
summons except onJanuary 9, 1992, in the case of Oñate and Econ, and preliminary attachment may begranted and the writ itself issued before the
on January 16, 1992, in the case of Diño. Meantime, he made several levies, defendant is summoned, the writ of attachment cannot beimplemented until
which indicates a predisposition to serve the writ of attachment in jurisdiction over the person of the defendant is obtained. As this Court
146 of 501
explained, "levy on property pursuant to the writ thus issued may not be cannot bind and affect the defendant until jurisdiction over
validly effected unless preceded, or contemporaneouslyaccompanied, by his person is eventually obtained. Therefore, it is required that
service on the defendant of summons, a copy of the complaint (and of the when proper officer commences implementation of the writ of
appointment of guardian ad litem, if any), the application for attachment (if attachment service of summons should be simultaneously
13
not incorporated in but submitted separately from the complaint), the order of made.
11
attachment, and the plaintiff's attachment bond."
Indeed, as this Court through its First Division has ruled on facts similar to
Further clarification on this point was made in Cuartero v. Court of those in these cases, the attachment of properties before the service of
12
Appeals, in which it was held: summons on the defendant is invalid, even though the court later acquires
14
jurisdiction over the defendant. At the very least, then, the writ of
It must be emphasized that the grant of the provisional attachment must be served simultaneouslywith the service of summons before
remedy of attachment practically involves three stages; first, the writ may be enforced. As the properties of the petitioners were attached by
the court issues the order granting the application; second, the sheriff before he had served the summons on them, the levies made must
the writ of attachment issues pursuant to the order granting be considered void.
the writ; and third, the writ is implemented. For the initial
two stages, it is not necessary that jurisdiction over the person Third. Nor can the attachment of petitioners' properties before the service of
of the defendant should first be obtained. However, once the summons on them was made be justified an the ground that unless the writ
implementation commences, it is required that the court was then enforced, petitioners would be alerted and might dispose of their
must have acquired jurisdiction over the defendant for properties before summons could be served on them.
without such jurisdiction, the court has no power and
authority to act in any manner against the defendant. Any The Rules of Court do not require that issuance of the writ be kept a secret
order issuing from the Court will not bind the defendant. until it can be enforced. Otherwise in no case may the service of summons on
the defendant precede the levy on attachment. To the contrary, Rule 57, § 13
Private respondent argues that the case of Cuartero itself provides for an allows the defendant to move to discharge the attachment even before any
exception as shown in the statement that "the court [in issuing the writ of attachment is actually levied upon, thus negating any inference that before its
preliminary attachment] cannot bind and affect the defendant until enforcement, the issuance of the writ must be kept secret. Rule 57,
jurisdiction is eventually obtained" and that since petitioners were § 13 provides:
subsequently served with summons, no question can be raised against the
validity of the attachment of petitioners' properties before such service. Sec. 13. Discharge of attachment for improper or irregular
issuance. — The party whose property has been attached may
The statement in question has been taken out of context. The full statement also, at any time either before or after the release of the
reads: attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching
It is clear from our pronouncements that a writ of preliminary creditor, apply to the judge who granted the order, or to the
attachment may issue even before summons is served upon judge of the court in which the action is pending, for an order
the defendant. However, we have likewise ruled that the writ
147 of 501
to discharge the attachment on the ground that the same was II

improperly or irregularly issued. . . . (Emphasis added).
We likewise find petitioners' second contention to be meritorious. The records
15
As this Court pointed out in Davao Light and Power, the lifting of an show that, on January 21, 1992, respondent judge ordered the examination of
attachment "may be resorted to even before any property has been levied on." the books of accounts and ledgers of Brunner at the Urban Bank, Legaspi
Village branch, and on January 30, 199 the records of account of petitioner
It is indeed true that proceedings for the issuance of a writ of attachment are Oñate at the BPI, even as he ordered the PNB to produce the records regarding
generally ex parte. In Mindanao Savings and Loans Ass'n v. Court of certain checks deposited in it.
16
Appeals it was held that no hearing is required for the issuance of a writ of
attachment because this "would defeat the objective of the remedy [because] First. Sun Life defends these court orders on the ground that the money paid
the time which such hearing would take could be enough to enable the by it to Brunner was subsequently withdrawn from the Urban Bank after it had
defendant to abscond or dispose of his property before a writ of attachment been deposited by Brunner and then transferred to BPI and to the unnamed
issues." It is not, however, notice to defendant that is sought to be avoided but account in the petitioner Oñate's account in the BPI and to the unnamed
the "time which such hearing would take" because of the possibility that account in the PNB.
defendant may delay the hearing to be able to dispose of his properties. On the
contrary there may in fact be a need for a hearing before the writ is issued as The issue before the trial court, however, concerns the nature of the
17
where the issue of fraudulent disposal of property is raised. It is not true that transaction between petitioner Brunner and Sun Life. In its complaint, Sun
there should be no hearing lest a defendant learns of the application for Life alleges that Oñate, in his personal capacity and as president of Econ,
attachment and he remove's his properties before the writ can be enforced. offered to sell to Sun Life P46,990,000.00 worth of treasury bills owned by
Econ and Brunner at the discounted price of P39,526,500.82; that on
On the other hand, to authorize the attachment of property even before November 27, 1991, Sun Life paid the price by means of a check payable to
jurisdiction over the person of the defendant is acquired through the service of Brunner; that Brunner, through its president Noel L. Diño, issued to it a
summons or his voluntary appearance could lead to abuse. It is entirely receipt with undertaking to deliver the treasury bills to Sun Life; and that on
possible that the defendant may not know of the filing of a case against him December 4, 1991, Brunner and Diño delivered instead a promissory note,
and consequently may not be able to take steps to protect his interests. dated November 27, 1991, in which it was made to appear that the transaction
was a money placement instead of sale of treasury bills.
Nor may sheriff's failure to abide by the law be excused on the pretext that
after all the court later acquired jurisdiction over petitioners. More important Thus the issue is whether the money paid to Brunner was the consideration for
than the need for insuring success in the enforcement of the writ is the need the sale of treasury bills, as Sun Life claims, or whether it was money intended
for affirming a principle by insisting on that "most fundamental of all for placement, as petitioners allege. Petitioners do not deny receipt of
requisites — the jurisdiction of the court issuing attachment over the person P39,526,500.82 from Sun Life. Hence, whether the transaction is considered a
18
of the defendant." It may be that the same result would follow from sale or money placement does not make the money the "subject matter of
requiring that a new writ be served all over again. The symbolic significance of litigation" within the meaning of § 2 of Republic Act No. 1405 which prohibits
such an act, however, is that it would affirm our commitment to the rule of the disclosure or inquiry into bank deposits except "in cases where the money
19
law. deposited or invested is the subject matter of litigation." Nor will it matter
whether the money was "swindled" as Sun Life contends.
148 of 501
Second. The examination of bank books and records cannot be justified under (1) forthwith to issue an alias writ of attachment upon the same bond
Rule 57, § 10. This provision states: furnished by respondent Sun Life Assurance Company of Canada;
Sec. 10. Examination of party whose property is attached and (2) direct the sheriff to lift the levy under the original writ of attachment and
persons indebted to him or controlling his property; delivery of simultaneously levy on the same properties pursuant to the alias writ so
property to officer. — Any person owing debts to the party issued; and
whose property is attached or having in his possession or
under his control any credit or other personal property (3) take such steps as may be necessary to insure that there will be no
belonging to such party, may be required to attend before the intervening period between the lifting of the original attachment and the
court in which the action is pending, or before a subsequent levy under the alias writ.
commissioner appointed by the court, and be examined on
oath respecting the same. The party whose property is Petitioners may file the necessary counterbond to prevent subsequent levy or
attached may also be required to attend for the purpose of to dissolve the attachment after such levy.
giving information respecting his property, and may be
examined on oath. The court may, after such examination, SO ORDERED.
order personal property capable of manual delivery belonging
to him, in the possession of the person so required to attend
before the court, to be delivered to the clerk of the court,
sheriff, or other proper officer on such terms as may be just,
having reference to any lien thereon or claims against the
same, to await the judgment in the action.
Since, as already stated, the attachment of petitioners' properties was invalid,

the examination ordered in connection with such attachment must likewise be
considered invalid. Under Rule 57, § 10, as quoted above, such examination is
only proper where the property of the person examined has been validly
attached.
WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and

SET ASIDE and another one is rendered GRANTING the petitions
for certiorari and SETTING ASIDE the orders dated February 26, 1992 and
September 9, 1992, insofar as they authorize the attachment of petitioners'
properties and the examination of bank books and records pertaining to their
accounts, and ORDERING respondent Judge Zeus C. Abrogar —
149 of 501
With respect to the issue of whether or not parties should

submit the instant dispute [to] arbitration, We hereby order
HB Zachary v. CA, 232 S 329 public respondent to conduct a hearing for the determination
of the proper interpretation of the provisions of the
FIRST DIVISION Subcontract Agreement.
3
G.R. No. 106989 May 10, 1994 No pronouncement as to costs.
4
H.B. ZACHRY COMPANY INTERNATIONAL, petitioner, and its 2 September 1992 Resolution which denied the motion for partial
vs. reconsideration of H.B. Zachry Company International (hereinafter Zachry)
HON. COURT OF and VINNEL-BELVOIR CORPORATION, respondents. and the motion for reconsideration of Vinnel-Belvoir Corporation
(hereinafter VBC).
G.R. No. 107124 May 10, 1994
The pleadings of the parties and the challenged decision disclose the following
VINNEL-BELVOIR CORPORATION, petitioner, material facts:
vs.
5
THE COURT OF APPEALS and H.B. ZACHRY COMPANY On 17 July 1987, VBC entered into a written Subcontract Agreement with
INTERNATIONAL, respondents. Zachry, a foreign corporation. The latter had been engaged by the United
States Navy to design and construct 264 Family Housing Units at the US Naval
DAVIDE, JR., J.: Base at Subic, Zambales. Under the agreement, specifically under Section 3
on Payment, VBC was to perform all the construction work on the housing
Challenged in these petitions for review, which were ordered consolidated on project and would be paid "for the performance of the work the sum of Six
1
9 December 1992, is the decision of the Court of Appeals in CA-G.R. SP No. Million Four Hundred Sixty-eight Thousand U.S. Dollars (U.S. $6,468,000.00),
2
24174, promulgated on 1 July 1992, the dispositive portion of which reads: subject to additions and deductions for changes as hereinafter provided." This
"lump sum price is based on CONTRACTOR'S proposal, dated 21 May 1987
WHEREFORE, premises considered, this Petition (including drawings), submitted to OWNER for Alternate Design-
for Certiorari and Prohibition is hereby granted in so far as it Apartments." It was also provided "that substantial differences between the
prayed for the dissolution of the writ of preliminary proposal and the final drawings and Specification approved by the OWNER
attachment inasmuch as it was issued prior to the service of may be grounds for an equitable adjustment in price and/or time of
summons and a copy of the complaint on petitioner. The writ performance if requested by either party in accordance with Section 6 [on]
6
of preliminary attachment issued by respondent Court on Changes." Section 27 of the agreement reads:
March 21, 1990 is hereby ordered lifted and dissolved as
having been issued in grave abuse of discretion by respondent Section 27. DISPUTES PROCEDURE
Court.
A. In case of any dispute, except those that are specifically
provided for in this SUBCONTRACT, between the
150 of 501
SUBCONTRACTOR and the CONTRACTOR, the this SUBCONTRACT, which controversy is not controlled or
SUBCONTRACTOR agrees to be bound to the determined by subparagraph 27.A. above or other provisions
CONTRACTOR to the same extent that the CONTRACTOR is in this SUBCONTRACT, then said controversy shall be
bound to the OWNER by the terms of the GENERAL decided as follows:
CONTRACT and by any and all decisions or determinations
made thereunder by the party or boards so authorized in the 1. The SUBCONTRACTOR shall be conclusively bound and
GENERAL CONTRACT. The SUBCONTRACTOR, on items or abide by the CONTRACTOR'S written decision respecting
issues relating or attributable to the SUBCONTRACTOR, also said controversy, unless the SUBCONTRACTOR shall
agrees to be bound to the CONTRACTOR to the same extent commence arbitration proceedings as hereinafter provided
that the CONTRACTOR is bound to the OWNER by the final within thirty (30) days following receipt of such written
decision of a court of competent jurisdiction, whether or not decision.
the SUBCONTRACTOR is a party to such proceeding. If such
a dispute is prosecuted or defended by the CONTRACTOR 2. If the SUBCONTRACTOR decides to appeal from the
against the OWNER under the terms of the GENERAL written decision of the CONTRACTOR, then the controversy
CONTRACT or in court action, the SUBCONTRACTOR shall be decided by arbitration in accordance with the then
agrees to furnish all documents, statements, witnesses and current rules of the Construction Industry Arbitration Rules
other information required by the CONTRACTOR for such of the American Arbitration Association, and the arbitration
purpose. It is expressly understood that as to any and all work decision shall be final and binding on both parties; provided,
done and agreed to be done by the CONTRACTOR and as to however, that proceedings before the American Arbitration
any and all materials, equipment or services furnished or Association shall be commenced by the SUBCONTRACTOR
agreed to be furnished by the SUBCONTRACTOR, and as to not later than thirty (30) days following the CONTRACTOR'S
any and all damages incurred by the SUBCONTRACTOR in written decision pursuant to subparagraph 27.B.1 above. If the
connection with this SUBCONTRACT, the CONTRACTOR SUBCONTRACTOR does not file a demand for arbitration
shall not be liable to the SUBCONTRACTOR to any greater with the American Arbitration Association and
extent than the OWNER is liable to and pays the CONTRACTOR within this thirty (30) day period, then the
CONTRACTOR for the use and benefit of the CONTRACTOR'S written decision is final and binding.
SUBCONTRACTOR for such claims, except those claims
arising from acts of the CONTRACTOR. No dispute shall 3. This agreement to arbitrate shall be specifically
7
interfere with the progress of the WORK and the enforceable.
SUBCONTRACTOR agrees to proceed with his WORK as
directed, despite any disputes it may have with the When VBC had almost completed the project, Zachry complained of the
CONTRACTOR, the OWNER, or other parties. quality of work, making it a reason for its decision to take over the
management of the project, which paragraph c, Section 7 of the Subcontract
B. If at any time any controversy should arise between the Agreement authorized. However, prior to such take-over, the parties executed
8
CONTRACTOR and the SUBCONTRACTOR, with respect to on 18 December 1989 a Supplemental Agreement, pertinent portions of
any matter or thing involved in, related to or arising out of which read as follows:
151 of 501
2. All funds for progress as computed by the schedule of made representations to pursue its claim, including a formal claim with the
prices under the subcontract will be retained by ZACHRY to Officer-in-Charge of Construction, NAVFAC Contracts, Southwest
10
insure sufficiency of funds to finish the lump sum project as Pacific, which also failed.
scoped by the subcontract. However, one month after the
11
date of this agreement, when ZACHRY shall have determined Hence, on 20 March 1990, VBC filed a Complaint with the Regional Trial
the cost to complete the subcontract, ZACHRY shall as Court (RTC) of Makati against Zachry for the collection of the payments due it
appropriate, release to VBC the corresponding portion of the with a prayer for a writ of preliminary attachment over Zachry's bank account
amounts retained. in Subic Base and over the remaining thirty-one undelivered housing units
which were to be turned over to the US Navy by Zachry on 30 March 1990. The
xxx xxx xxx case was docketed as Civil Case No. 90-772 and was raffled to Branch 142 of the
said court presided over by Judge Salvador P. de Guzman, Jr. Paragraph 2 of
7. All costs incurred by ZACHRY chargeable to VBC under the the Complaint alleges that defendant Zachry "is a foreign corporation with
subcontract from the date of the takeover to complete the address at 527 Longwood Street, San Antonio, Texas, U.S.A. and has some of
scope of the subcontract will be to the account of VBC and/or its officers working at U.S. Naval Base, Subic Bay, Zambales where it may be
its sureties. Zachry will advise both VBC and its sureties on a served with summons."
periodic basis as to progress and accumulated costs.
On 21 March 1990, the trial court issued an order granting the application for
xxx xxx xxx the issuance of the writ of preliminary attachment and fixing the attachment
12
bond at P24,266,000.00. VBC put up the required bond and on 26 March
13
9. VBC will be invited to participate in negotiations with the 1990, the trial court issued the writ of attachment, which was served,
Navy in Change Orders concerning its scope of work. VBC together with the summons, a copy of the complaint with annexes, the bond,
will accept as final, without recourse against ZACHRY the and a copy of the order of attachment, on 27 March 1990 in the manner
14
Navy's decision regarding its interest in these Change Orders described in the Sheriff's Partial Return of 29 March 1990:
or modifications.
upon defendant H.B. Zachry Company (International) at its
In accordance with the above conditions, VBC submitted to Zachry on 10 field office in U.S. Naval Base, Subic Bay, Zambales thru Ruby
January 1990 a detailed computation of the cost to complete the subcontract Apostol who acknowledged receipt thereof. Mr. James M.
on the housing project. According to VBC's computation, there remains a Cupit, defendant's authorized officer was in their Manila
balance of $1,103,000.00 due in its favor as of 18 January 1990. This amount office at the time of service.
includes the sum of $200,000.00 allegedly withheld by Zachry and the labor
escalation adjustment granted earlier by the US Navy in the amount of The return further states:
$282,000.00 due VBC. Zachry, however, not only refused to acknowledge the
indebtedness but continually failed to submit to VBC a statement of That on March 28, 1990, the undersigned sheriff went to the
accumulated costs, as a result of which VBC was prevented from checking the office of defendant H. B. Zachry Company (International) at
accuracy of the said costs. On 2 March 1990, VBC wrote Zachry a letter c/o A.M. Oreta & Co. at 5th Floor, Ermita Building, Arquiza
9
demanding compliance with its obligations. Zachry still failed to do so. VBC corner Alhambra streets, Ermita, Manila to serve the Court's
152 of 501
processes but was informed by Atty. Felix Lobiro of A.M. Summons and a copy of the Amended Complaint were served on 24 April 1990
Oreta & Co., that defendant H.B. Zachry Company has its own on Zachry through Atty. Nunag as shown in the sheriff's return dated 24 April
20
office at Room 600, 6th Floor of the same building (Ermita 1990.
Building). However, said defendant's office was closed and
21
defendant company (ZACHRY) only holds office during On 26 April 1990, VBC filed a Manifestation to inform the court of the above
Mondays and Tuesdays of the week as per information service of summons on Zachry which it claimed rendered moot and academic
gathered from the adjacent office. the motion to dismiss.
15 22
On 27 March 1990, VBC filed an Amended Complaint in Civil Case No. 90- On 24 May 1990, Zachry filed an Omnibus Motion (a) to dismiss the
772 to implead as additional defendants the US Navy Treasury Office-Subic complaint for lack of jurisdiction over its person since the subsequent service
Naval Base and Captain A.L. Wynn, an officer of the US Navy, against whom of summons did not cure the jurisdictional defect it earlier pointed out and, in
VBC prayed for a restraining order or preliminary injunction to restrain the the alternative, to dismiss the case or suspend the proceedings therein for
latter from preparing the treasury warrant checks to be paid to Zachry and the failure of the plaintiff to submit the controversy in question to arbitration as
former from signing the said checks and to restrain both from making any provided for in its contract with Zachry; and (b) to dissolve the writ of
further payments to Zachry. It also amended paragraph 2 on the status and attachment of 26 March 1990 "for having been issued without jurisdiction,
circumstances of Zachry as follows: having been issued prior to the service of summons." The arbitration provision
referred to is Section 27.B of the Subcontract Agreement quoted earlier. In
2. Defendant, H.B. Zachry Co. (International) . . . is a foreign support of its alternative prayer for the suspension of proceedings, it cited
corporation with address at 527 Longwood Street, San Section 7 of R.A. No. 876, otherwise known as the Arbitration Act which
Antonio, Texas, U.S.A. and may be served with summons and provides:
all other legal processes at the following addresses: a) H.B.
Zachry Company (International), U.S. Naval Base, Subic Bay, Sec. 7. Stay of Civil Action —If any suit or proceeding be
Zambales; and b) H.B. Zachry Company (International) c/o brought upon an issue, arising out of an agreement providing
A.M. Oreta & Co., 5th Floor Ermita Building, Arquiza corner for the arbitration thereof, the Court in which such suit or
Alhambra Streets, Ermita, Manila, through its authorized proceeding is pending, upon being satisfied that the issue
16
officer James C. Cupit. involved in such suit or proceeding is referable to arbitration,
shall stay the action or proceeding until an arbitration has
17
On 6 April 1990, Zachry filed a motion to dismiss the complaint on the been had in accordance with the terms of the agreement. . . .
ground of lack of jurisdiction over its person because the summons was not
validly served on it. It alleges that it is a foreign corporation duly licensed on 13 This provision is almost identical with Section 3 of the United States
November 1989 by the Securities and Exchange Commission to do business in Arbitration Act.
18
the Philippines and, pursuant to Section 128 of the Corporation Code of the
19
Philippines, had appointed Atty. Lucas Nunag as its resident agent on whom As to the invalidity of the writ of attachment, Zachry avails of the decision
23
any summons and legal processes against it may be served. Atty. Nunag's in Sievert vs. Court of Appeals wherein this Court said:
address is at the 10th Floor, Shell House, 156 Valero St., Makati, Metro Manila.
153 of 501
Attachment is an ancillary remedy. It is not sought for its own 1. The proceedings before respondent trial court should be
sake but rather to enable the attaching party to realize upon suspended, pending submission of the dispute to arbitration
relief sought and expected to be granted in the main or pursuant to Section 27-B of the Subcontract Agreement;
principal action. A court which has not acquired jurisdiction
over the person of the defendant, cannot bind that defendant 2. Alternatively, the complaint should be dismissed, pending
whether in the main case or in any ancillary proceeding such arbitration pursuant to Section 27-B of the Subcontract
as attachment proceedings. The service of a petition for Agreement;
preliminary attachment without the prior or simultaneous
service of summons and a copy of the complaint in the main 3. As a third alternative, the complaint should be dismissed,
case — and that is what happened in this case—does not of because the dispute has been resolved with finality under
course confer jurisdiction upon the issuing court over the Section 27-B of the Subcontract Agreement; and
24
person of the defendant.
4. The writ of preliminary attachment should be dissolved, as
VBC opposed the Omnibus Motion. Pleadings related to the Omnibus Motion having been outside, or in excess of respondent court's
25
were subsequently filed. jurisdiction, having been issued prior to the service of
summons on petitioner.
26
In its Order of 19 September 1990, the trial court resolved the Omnibus
Motion and the related incidents by declaring that "the merits of the case can It then prays that (a) the orders of the trial court of 19 September 1990 and 9
only [be] reached after due presentation of evidence." Hence, it denied the January 1991 be annulled for having been issued without or in excess of
motion and directed the defendants to file their answer within the period jurisdiction or with grave abuse of discretion; and (b) the trial court be
provided by law. directed to immediately suspend the proceedings in Civil Case No. 90-772
pending arbitration proceedings in accordance with the terms of Section 27.B
27
On 8 October 1990, Zachry filed a motion for the reconsideration of the of the Subcontract Agreement or, alternatively, to dismiss the amended
above order assailing the court's inaction on the second and third issues raised complaint and dissolve the writ of attachment. It also prays for the issuance of
in its Omnibus Motion, viz., the necessity of arbitration and the invalidity of a temporary restraining order and a writ of preliminary injunction to restrain
28
the writ of attachment. VBC opposed the motion. On 9 January 1991, the the trial court from proceeding further in Civil Case No. 90-772.
court issued an order denying the motion for reconsideration by ruling that
the writ of preliminary attachment was regularly issued and that the violations On 18 February 1991, the Court of Appeals issued a temporary restraining
30
of the Subcontract Agreement can be "tranced [sic] only after the case is heard order.
on the merits."
On 1 July 1991, the Court of Appeals promulgated the challenged
31
Dissatisfied with the denial, Zachry filed with the Court of Appeals on 14 decision dissolving the writ of preliminary attachment issued by the trial
29
February 1991 a petition for certiorariand prohibition, which was docketed as court and ordering it to conduct a hearing to determine the proper
CA-G.R. SP No. 24174. Zachry contends therein that: interpretation of the provisions of the Subcontract Agreement. As to the writ
of attachment, the Court of Appeals held that summons was served on Zachry
32
only on 24 April 1990; hence, applying Sievert vs. Court of Appeals, the trial
154 of 501
court "had no authority yet to act coercively against the defendant" when it Hence, these petitions which were given due course in this Court's Resolution
37
issued the writ of attachment on 21 March 1990. As to arbitration, it ruled: of 8 March 1993.
We are of the reasoned opinion that unlike in the factual In G.R. No. 106989, petitioner Zachry reiterates all the issues it raised before
situation in the cases cited by petitioner, the contract the Court of Appeals, except that regarding the validity of the writ of
involved in the case at bar is, with respect to its arbitration attachment which was decided in its favor.
clause, vogue [sic] and uncertain. Section 27.B which is the
provision upon which petitioner anchors its claims is In G.R. No. 107124, petitioner VBC raises the following issues:
ambiguous in its terminology when it states that "if at
anytime any controversy should arise between the contractor A. WHETHER THE ISSUANCE OF THE WRIT OF
and the subcontractor . . . which controversy is not controlled PRELIMINARY ATTACHMENT PRIOR TO THE SERVICE OF
or determined by Section 27.A above or other provision of this THE SUMMONS AND A COPY OF THE AMENDED
subcontract . . . ." This provision states that only when a COMPLAINT ON THE RESPONDENT IS VALID.
controversy arises between the contractor and the
subcontractor which is not covered by Section 27.A or any B. WHETHER RESORT TO ARBITRATION PRIOR TO
provision of the Subcontract Agreement will the parties FILING A SUIT IN COURT IS REQUIRED BY THE
submit to arbitration. As to what controversies fall under SUBCONTRACT AGREEMENT UNDER THE FACTS
Section 27.B, it is not clear from a mere perusal of the OBTAINING IN THE PRESENT CASES.
provisions. It is therefore not correct for petitioner to say that
any and all dispute arising between the contracting parties As to the first issue, VBC takes refuge in the ruling in Davao Light & Power Co.
38
should be resolved by arbitration prior to a filing of a suit in vs. Court of Appeals and argues that the issuance of the writ of attachment
33
court. on 21 March 1990, although before the service of the summons, was valid. Its
issuance and implementation are two different and separate things; the first is
VBC and Zachry filed a motion for reconsideration and a partial motion for not affected by any defect in the implementation which may be corrected.
34
reconsideration, respectively. The former urged the Court of Appeals to Moreover, assuming arguendo that the initial service of summons was
consider the decision of this Court of 29 November 1991 in Davao Light & defective, it was cured by the numerous pleadings thereafter filed. Finally,
35
Power Co. vs. Court of Appeals wherein this Court ruled that a writ of whatever doubts existed on the effectiveness of the implementation of the writ
preliminary attachment may be issuedex-parte prior to the service of summons was erased by its re-service on the resident agent of Zachry.
and a copy of the complaint on the defendants. On the other hand, Zachry
insists that "[t]here is nothing 'vague' or 'ambiguous about' " the provision on As to the issue on arbitration, VBC maintains that arbitration is not required
dispute procedures set forth in Subsections 27.B.1 to 27.B.3 of the Subcontract under the facts obtaining in the present case because the applicable provision
Agreement. of the Subcontract Agreement is Section 3 on Payment and not Section 27.B on
Arbitration. Zachry's fraudulent actuations and gross violation of the
36
In its Resolution of 2 September 1992, the Court of Appeals denied the above Subcontract Agreement render prior resort to arbitration futile and useless.
motions of the parties. The preliminary attachment, which was essential to secure the interest of the
petitioner, could not have been obtained through arbitration proceedings.
155 of 501
39
Zachry, in its Comment, contends that pursuant to the Sievert and Davao enforcement thereof can only be validly done after it shall have acquired such
Light rulings, the issuance of the writ of attachment before the service of jurisdiction. This is the rule enunciated in Davao Light & Power Co. vs. Court
summons on Zachry's resident agent was invalid and that the various of
43
pleadings filed by the parties did not cure its invalidity. It argues that the Appeals. In that case, this Court stated:
arbitration procedure is set forth in Section 27.B of the Subcontract
Agreement. It further maintains that pursuant to General Insurance vs. Union The question is whether or not a writ of preliminary
40
Insurance, the alleged fraudulent actuations which relate to the merits of the attachment may issue ex parte against a defendant before
case may be properly addressed to the arbitrators and that there is no merit to acquisition of jurisdiction of the latter's person by service of
the claim that arbitration would be useless since the arbitration proceeding summons or his voluntary submission to the Court's
would be presided over by an independent and competent arbitral tribunal. authority.
The issues in these petitions are properly defined by VBC in G.R. No. 107124. The Court rules that the question must be answered in the
affirmative and that consequently, the petition for review will
We find for petitioner VBC. have to be granted.
It was error for the Court of Appeals to declare, on the ground of grave abuse It is incorrect to theorize that after an action or proceeding
of discretion, the nullity of the writ of attachment issued by the trial court on has been commenced and jurisdiction over the person of the
21 March 1990. In the first place, the writ was in fact issued only on 26 March plaintiff has been vested in the court, but before the
1990 and served, together with the summons, copy of the complaint, the Order acquisition of jurisdiction over the person of the defendant
of 21 March 1990, and the bond, on 27 March 1990 on Zachry at its field office (either by service of summons or his voluntary submission to
in Subic Bay, Zambales, through one Ruby Apostol. What the Court of Appeals the court's authority), nothing can be validly done by the
referred to as having been issued on 21 March 1990 is the order granting the plaintiff or the court. It is wrong to assume that the validity of
application for the issuance of a writ of preliminary attachment upon the acts done during this period should be dependent on, or held
41
posting of a bond of P24,266,000.00. In the second place, even in suspension until, the actual obtention of jurisdiction over
granting arguendo that the Court of Appeals had indeed in mind the 26 March the defendant's person. The obtention by the court of
1990 writ of attachment, its issuance, as well as the issuance of the 21 March jurisdiction over the person of the defendant is one thing;
1990 Order, did not suffer from any procedural or jurisdictional defect; the quite another is the acquisition of jurisdiction over the person
trial court could validly issue both. of the plaintiff or over the subject-matter or nature of the
44
action, or the res or object thereof.
However, the writ of attachment cannot be validly enforced through the levy
of Zachry's property before the court had acquired jurisdiction over Zachry's xxx xxx xxx
person either through its voluntary appearance or the valid service of
42
summons upon it. To put it in another way, a distinction should be made A preliminary attachment may be defined, paraphrasing the
between the issuance and the enforcement of the writ. The trial court has Rules of Court, as the provisional remedy in virtue of which a
unlimited power to issue the writ upon the commencement of the action even plaintiff or other proper party may, at the commencement of
before it acquires jurisdiction over the person of the defendant, but the action or at any time thereafter, have the property of the
156 of 501
adverse party taken into the custody of the court as security order of attachment and writ of attachment (and/or
for the satisfaction of any judgment that may be recovered. It appointment of guardian ad litem, or grant of authority to the
is a remedy which is purely statutory in respect of which the plaintiff to prosecute the suit as a pauper litigant, or
law requires a strict construction of the provisions granting it. amendment of the complaint by the plaintiff as a matter of
Withal no principle, statutory or jurisprudential, prohibits its right without leave of court) — and however valid and proper
issuance by any court before acquisition of jurisdiction over they might otherwise be, these do not and cannot bind and
the person of the defendant. affect the defendant until and unless jurisdiction over his
person is eventually obtained by the court, either by service
Rule 57 in fact speaks of the grant of the remedy "at the on him of summons or other coercive process or his voluntary
commencement of the action or at any time thereafter." The submission to the court's authority. Hence, when the sheriff
phrase "at the commencement of the action," obviously refers or other proper officer commences implementation of the
to the date of the filing of the complaint — which, as above writ of attachment, it is essential that he serve on the
pointed out, is the date that marks "the commencement of defendant not only a copy of the applicant's affidavit and
the action;" and the reference plainly is to a time before attachment bond, and of the order of attachment, as explicitly
summons is served on the defendant, or even before required by Section 5 of Rule 57, but also the summons
summons issues. What the rule is saying quite clearly is that addressed to said defendant as well as a copy of the complaint
after an action is properly commenced — by the filing of the and order for appointment of guardian ad litem, if any, as also
complaint and the payment of all requisite docket and other explicitly directed by Section 3, Rule 14 of the Rules of Court.
fees — the plaintiff may apply for and obtain a writ of Service of all such documents is indispensable not only for the
preliminary attachment upon fulfillment of the pertinent acquisition of jurisdiction over the person of the defendant,
requisites laid down by law, and that he may do so at any but also upon considerations of fairness, to apprise the
time, either before or after service of summons on the defendant of the complaint against him, of the issuance of a
defendant. And this indeed, has been the immemorial writ of preliminary attachment and the grounds therefor and
practice sanctioned by the courts: for the plaintiff or other thus accord him the opportunity to prevent attachment of his
proper party to incorporate the application for attachment in property by the posting of a counterbond in an amount equal
the complaint or other appropriate pleading (counterclaim, to the plaintiff's claim in the complaint pursuant to Section 5
cross-claim, third-party claim) and for the Trial Court to issue (or Section 12), Rule 57, or dissolving it by causing dismissal of
the writ ex-parte at the commencement of the action if it the complaint itself on any of the grounds set forth in Rule 16,
finds the application otherwise sufficient in form and or demonstrating the insufficiency of the applicant's affidavit
45 46
substance. or bond in accordance with Section 13, Rule 57.
xxx xxx xxx xxx xxx xxx
It goes without saying that whatever be the acts done by the For the guidance of all concerned, the Court reiterates and
Court prior to the acquisition of jurisdiction over the person reaffirms the proposition that writs of attachment may
of the defendant, as above indicated — issuance of summons, properly issue ex parte provided that the Court is satisfied
157 of 501
that the relevant requisites therefor have been fulfilled by the to the Corporation Code, that designation is exclusive and service of summons
49
applicant, although it may, in its discretion, require prior on any other person is inefficacious. The valid service of summons and a
hearing on the application with notice to the defendant; but copy of the amended complaint was only made upon it on 24 April 1990, and it
that levy on property pursuant to the writ thus issued may not was only then that the trial court acquired jurisdiction over Zachry's person.
be validly effected unless preceded, or contemporaneously Accordingly, the levy on attachment made by the sheriff on 27 April 1990 was
accompanied, by service on the defendant of summons, a invalid. However, the writ of preliminary attachment may be validly served
copy of the complaint (and of the appointment of guardian ad anew.
litem, if any), the application for attachment (if not
incorporated in but submitted separately from the As to the second issue of arbitration, we find that although the order of the
complaint), the order of attachment, and the plaintiff's trial court denying the motion to dismiss did not clearly state so, it is evident
47
attachment bond. that the trial court perceived the ground of the motion to be not indubitable;
hence, it could defer its resolution thereon until the trial of the case. In
We reiterated the rule laid down in Davao Light in the subsequent case deciding a motion to dismiss, Section 3, Rule 16 of the Rules of Court grants
48
of Cuartero vs. Court of Appeals wherein we stated: the court four options: (1) to deny the motion, (2) to grant the motion, (3) to
allow amendment of pleadings, or (4) to defer the hearing and determination
It must be emphasized that the grant of the provisional of the motion until the trial, if the ground alleged therein does not appear to
remedy of attachment practically involves three stages: first, be indubitable. Under the fourth option, the court is under no obligation to
the court issues the order granting the application; second, immediately hold a hearing on the motion; it is vested with discretion to defer
the writ of attachment issues pursuant to the order granting such hearing and the determination of the motion until the trial of the
50
the writ; and third, the writ is implemented. For the initial case. The lack of indubitability of the ground involved in Zachry's motion to
two stages, it is not necessary that jurisdiction over the person dismiss is confirmed by the Court of Appeals when it declared:
of the defendant should first be obtained. However, once the
implementation commences, it is required that the court Section 27. B which is the provision upon which petitioner
must have acquired jurisdiction over the person of the [Zachry] anchors its claim is ambiguous in its terminology
defendant for without such jurisdiction, the court has no when it states that "if at any time any controversy should arise
power and authority to act in any manner against the between the contractor and the subcontractor . . . which
defendant. Any order issuing from the Court will not bind the controversy is not controlled or determined by Section 27.A
defendant. above or other provisions of this subcontract' . . . . This
provision states that only when a controversy arises between
The validity then of the order granting the application for a writ of preliminary the contractor and subcontractor which is not covered by
attachment on 21 March 1990 and of the issuance of the writ of preliminary Section 27.A or any provision of the Subcontract will the
attachment on 26 March 1990 is beyond dispute. However, the enforcement of parties submit to arbitration. As to what controversies fall
the preliminary attachment on 27 March 1990, although simultaneous with the under Section 27.B, it is not clear from a mere perusal of the
service of the summons and a copy of the complaint, did not bind Zachry provisions.
because the service of the summons was not validly made. When a foreign
corporation has designated a person to receive service of summons pursuant
158 of 501
Indeed, the parties could not even agree on what controversies fall within Branch 142 of the Regional Trial Court of Makati in Civil Case No. 90-772 of 19
Section 27.B, and, perhaps, rightly so because the said Section 27.B excludes September 1990 denying the motion to dismiss and of 8 October 1990 denying
controversies controlled or determined by Section 27.A and other provisions of the motion to reconsider the former are REINSTATED. However, the service of
the Subcontract Agreement, which are themselves unclear. For that reason, the writ of preliminary attachment on 26 March 1990 is hereby declared
VBC insists that its cause of action in Civil Case No. 90-772 is based on Section invalid. The writ may, nevertheless, be served anew.
3 of the Subcontract Agreement. It may further be emphasized that VBC's
complaint was precipitated by Zachry's refusal to comply with the No pronouncement as to costs.
Supplemental Agreement. Evidently, Section 3 of the Subcontract Agreement
and the Supplemental Agreement are excluded by Section 27.B. The trial court SO ORDERED.
was, therefore, correct in denying Zachry's motion to dismiss.
However, we cannot give our assent to the Court of Appeals' order directing
the trial court to conduct a hearing for the determination of the proper
interpretation of the provisions of the Subcontract Agreement. It would re-
open the motion to dismiss — which, upon the trial court's exercise of its
discretion, was properly denied for lack of indubitability of the ground
invoked — and thereby unduly interfere with the trial court's discretion. The
proper interpretation could only be done by the trial court after presentation
of evidence during trial on the merits pursuant to the tenor of its order
denying the motion to dismiss. If the trial court should find that, indeed,
arbitration is in order, then it could apply Section 7 of R.A. No. 876 which
reads as follows:
Sec. 7. Stay of civil action. — If any suit or proceeding be

brought upon an issue arising out of an agreement providing
for the arbitration thereof, the court in which such suit or
proceeding is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to arbitration,
shall stay the action or proceeding until an arbitration has
been had in accordance with the terms of the
agreement: Provided, That the applicant for the stay is not in
default in proceeding with such arbitration.
WHEREFORE, the petition in G.R. No. 107124 is GRANTED while that in G.R.
No. 106989 is DENIED for lack of merit. The challenged Decision of 1 July 1992
and Resolution of 2 September 1992 are hereby SET ASIDE. The orders of
159 of 501
On January 31, 1973, respondent Associated Banking Corporation (the Bank, for
short) instituted an action, Civil Case No. 89692, in the Court of First Instance
Section 6 of Manila, Branch XXVIII, respondent Judge, presiding, against private
respondent Fil-Eastern Wood Industries, Inc. (Fil-Eastern, for brevity), a
domestic corporation, for recovery of a sum of money.
Roque v. CA, 93 S 540
Upon ex-parte application by the Bank for a Writ of Preliminary Attachment,
FIRST DIVISION respondent Judge, after the filing and approval of the required bond of
P220,000.00, issued, on February 4, 1974, an Order of Attachment
1
G.R. No. L-42594 October 18, 1979 commanding the Sheriff to attach the estate, real and personal, of Fil-Eastern.
ELIGIO ROQUE and RODRIGO G. MALONJAO, petitioners, On February 7, 1974, the Sheriff's "Notice of Levy Pursuant to the Writ of
vs. Attachment" was registered in the Office of the Commander of the First Coast
2
HON. COURT OF APPEALS, HON. JUDGE CARLOS L. SUNDIAM, (CFI- Guard, District of Manila, pursuant to Sec. 805 of the Tariff and Customs
Manila, Branch XXVIII) ASSOCIATED BANKING CORPORATION FIL- Code, as amended by Presidential Decree No. 34, requiring the registration of
EASTERN WOOD INDUSTRIES, INC., CITY SHERIFF OF MANILA, documents affecting titles of vessels with that entity. The said notice read,
DEPUTY SHERIFFS ADRIEL GARCIA and BENJAMIN "levy is hereby made upon all the rights, titles, interest, shares and
GARVIDA, respondents. participation which the defendant Fil-Eastern Wood Industries, Inc. has or
might have over a sea vessel or barge named Fil-Eastern V.
Laurel Law Office for petitioner.
It appears that prior to the issuance of said Writ of Attachment, Fil-Eastern
Paterno C. Pajares for respondents. had delivered the barge to the Cotabato Visayan Development Corporation
sometime in April, 1973, for repair. The job was completed in June 1973, but
Fil-Eastern failed to pay the cost of repairs of P261,190.59. Pursuant to the
3 4
provisions of Article 2112 in relation to Article 1731 of the Civil Code, the
MELENCIO-HERRERA, J.: Cotabato Visayan Development Corporation proceeded before Notary Public
Clemente R. Gonzales of Manila to the sale of said barge. In the public auction
Treating this Petition as a special civil action for Certiorari, we affirm the sale conducted by said Notary Public on April 24, 1974, petitioner Eligio Roque
Decision of the Court of Appeals denying petitioners' prayer to set aside the acquired the barge as the highest bidder, and was accordingly issued a
trial Court Order, dated April 14, 1975, to surrender the barge in question Certificate of Sale by the Notary Public. On the same date, the Cotabato
under pain of contempt, and its subsequent Orders denying their Motion for Visayan Development Corporation issued an Affidavit of Release of mechanic's
Reconsideration. lien against Fil-Eastern. The Certificate of Sale was received in the office of the
5
Philippine Coast Guard on May 3, 1974. It wag not until December 24, 1974,
There is no dispute as to the following background facts: however, that Certificate of Ownership No. 8647, a Certificate. of Philippine
Register, a Certificate of Change of Name of Vessel from Fil-Eastern V" to
"Satellite I I, " as well as a Coastwise License, were issued to Roque by the
160 of 501
6
Philippine Coast Guard. These muniments of title were issued only after Meanwhile, without prior authority from Deputy Sheriff Garvida the barge in
counsel for Eligio Roque had assured the Philippine Coast Guard, in a letter question was "spirited away" to Bacolod City by a certain Captain Marcelino
dated November 13, 1974, that "without touching on the merit of the Agito, who claimed to have been given the right to use the same by Fil-
12
preference of our client's claim in relation to the levy registered by other Eastern.
claimants, such levy is not in any manner a legal obstacle to the registration of
7
the vessels in our client's name." Acting thereon, the Acting Commandant of On January 6, 1975, respondent Judge issued an Order requiring Capt.
the Philippine Coast Guard in a letter dated November 23, 1974, authorized the Marcelino Agito, in coordination with Deputy Sheriff Benjamin E. Garvida to
13
issuance of a new certificate of registration annotating thereon any levy validly bring back to Manila the barge in question.
8
registered against said vessel(s)." However, neither the Certificate of
Ownership nor the Certificate of Philippine Register appended as Annexes "C" On March 7, 1975, respondent Judge issued a Writ of Execution and ordered
and "D", respectively, to petitioners' Urgent Manifestation and Motion filed the sale of the barge at public auction, as follows:
9
before the lower Court carry that annotation.
ORDER
On August 29, 1974, the Bank filed a "Motion for the Issuance of Another Writ
of Attachment" stating that at the time of the issuance of the Writ on February The Decision rendered by this Court under date of October 9,
4, 1974, the barge in question could not be located within the jurisdiction of 1974 having already become final and executory, let a Writ of
the trial Court. having been anchored somewhere in the Visayas, and that Execution be issued to be enforced by Sheriff Adriel V. Garcia
actual levy on the barge could not be made as "the original Order of by conducting an auction sale on the vessel placed under
attachment is allegedly in the possession of the Branch Deputy Sheriff attachment. The satisfaction of the judgment in this case shall
appointed by the Honorable Court, who has not reported to the office since be given preference and the payment of the third party claim
10
August 26, 1974, and, therefore, could not implement the writ." On the same of Alfredo H. Maligaya for and in behalf of Leonardo M.
date, August 29, 1974, the trial Court (Judge Rafael S. Sison, presiding) denied Canoso shall be satisfied from whatever remaining proceeds
the issuance of another Writ (apparently ' v because it was deemed of the auction sale on the aforedsaid vessel, if there be any.
unnecessary), but instead ordered the Deputy Sheriff of Branch XXVIII to
14
coordinate with the City Sheriff of Manila in the implementation of the Writ SO ORDERED.
11
previously issued. On August 30, 1974, Deputy Sheriff Garvida actually seized
and levied upon the vessel. On April 7, 1975, Capt. Marcelino Aguito and Deputy Sheriff Benjamin Garvida
filed a Manifestation stating that petitioner Rodrigo Malonjao, acting for and
On October 7, 1974, respondent Bank and respondent Fil-Eastern submitted a in behalf of his co-petitioner Eligio Roque, refused to-surrender the barge on
Compromise Agreement whereby Fil-Eastern bound itself to pay to the Bank the ground I d that Eligio Roque is now the new owner, having acquired the
the principal amount of P200,000.00, with 1417,9 interest, plus other amounts same by purchase at public auction, and praying that petitioners, and all
stated therein. On October 9, 1974, respondent Judge approved the Agreement persons claiming under them, be directed to surrender the barge to the
and rendered judgment accordingly. On November 6, 1974, the Bank moved custody of the Court through its duly authorized representative.
for the issuance of a Writ of Execution for failure of Fil-Eastern to make
payments within the period stipulated in the Compromise Agreement. On April 14, 1975, respondent Judge issued the following Order:
161 of 501
Upon motion filed by Capt. Marcelino Agito and Deputy remedy to obtain relief from the damaging effects of the Orders complained
Sheriff Benjamin Garvida and considering the absence of a of.
formal claim with this Court filed by Eulogio Roque,
personally or through counsel, relative to the barge Petitioner filed the present Petition on March 1, 1976 before this Court,
SATELLITE II, EX-FIL-EASTERN V', subject of the writ of claiming that they are purchasers in good faith and for valuable consideration,
Attachment issued by this Court on February 7, 1974, and in having actually paid the total amount of P354,689.00 to the Cotabato Visayan
order to prevent further delay in the implementation of the Development Corporation for three barges, one of which is the barge in
Order of this Court dated March 7, 1975, Rodrigo Malonjao question. They have also raised the following legal issues:
and Eulogio Roque and an persons claiming right under them
over the aforesaid vessel, including those acting under their 1. The decision of the respondent Court of Appeals sustaining
direction or supervision, are hereby ordered under pain of the challenged orders, writs and other processes issued by the
being cited in contempt of Court to forthwith surrender respondent Judge is contrary to the provisions of Art. 1731 in
possession of the above said vessel to Sheriff Adriel V. Garcia relation to Art. 2112 of the New Civil Code and to the ruling
so that the latter may be able to implement fully and laid down in Bank of P.I. vs. Walter A. Smith' & Co., 55 Phil.
expeditiously the aforesaid Order of this Court dated March 7, 533 and Bachrach Motor Co. vs. Mendoza, 43 Phil. 410.
15
1975. ...
2. If the levy and/or attachment by the sheriff of the barge in
On April 24, 1975, petitioners filed before the trial Court an Urgent question are illegal, will herein petitioner be required to avail
Manifestation and Motion seeking to set aside the Order of April 14, 1975, of Section 14, Rule 57 and/or Section 17, Rule 39 of the Revised
claiming that Roque is now the new owner of the barge having acquired the Rules of Court?
same at a public auction sale arising from a mechanic's lien. The Motion was
denied by respondent Judge on the ground that the records belied petitioners' On July 19, 1976, we issued a Restraining Order enjoining respondents from
claim that the auction sale occurred very much ahead of the notice of levy. proceeding with the projected sale at public auction of the barge, subject of
Petitioners' first and second Motion for Reconsideration were similarly denied. this litigation. We also declared the case submitted for decision. On January
On July 16, 1975, respondent Deputy Sheriff Adriel V. Garcia submitted a report 18, 1977, the Bank filed a Motion for Authority to Sell the barge under
informing the Court that the barge in question had been turned over to him attachment. This was opposed, however, by petitioners and we resolved to
and was anchored along Pasig River, under guard. defer resolution until decision on the merits is rendered.
On August 28, 1975, petitioners sought relief from the Court of Appeals by On May 31, 1979, the Bank filed a Motion for Early Resolution, but the same
filing a "Petition for certiorari and Prohibition with Preliminary Injunction and was agendaed only on September 24, 1979. We take note of the BANK's
Preliminary Mandatory Injunction" assailing and asking to vacate the Orders contention that ever since the Sheriff took custody of the vessel on July 16,
issued in Civil Case No. 89692 by respondent Judge as well as the Writs, 1975, the same has been lying Idle, moored at the Muelle de la Industrial, Pasig
notices and other processes emanating therefrom. The Court of Appeals, * in River, exposed to the elements, and has deteriorated rapidly, hence the need
denying the Petition in its Decision promulgated on November 24, 1975, ruled for early resolution. It should be reiterated that this is a special civil action for
that certiorari did not lie as petitioner was not without sufficient and adequate Certiorari, the main requisites for the issuance of which Writ are: 1) that the
Writ be directed against a tribunal, board or officer exercising judicial
162 of 501
functions; 2) that such tribunal, board or officer has acted without or in excess property, unless such judgment creditor or his agent, on
of jurisdiction or with grave abuse of discretion; and 3) that there is no appeal, demand of the officer, indemnify the officer against such
nor any plain, speedy and adequate remedy in the ordinary course of claim by a bond in a sum not greater than the value of the
16
law. While the first requisite has been met, the second-hand the third have property levied on. ...
not.
Petitioner Eligio Roque argues, however, that he could not avail of the
We agree with the findings of the Court of Appeals that petitioners were not foregoing Rules inasmuch as the vessel was not in the actual custody of the
without any plain, speedy and adequate remedy in the ordinary course of law. Sheriff nor of the Court, since the supposed levy by the Sheriff on February 7,
For one, upon the issuance of the Order, dated August 29, 1974, commanding 1974 was a mere paper levy which, in legal contemplation, is no levy at an. It is
the implementation of the Writ of Attachment, petitioners could have availed a fact that respondent Sheriff could not effect seizure immediately, first,
themselves of the remedy provided for in Section 14, Rule 57 of the Rules of because the barge could nowhere be found in this vicinity, and subsequently
Court, which reads: when found, because petitioners would not deliver possession to the Sheriff. It
was not until the trial Court granted the Sheriff's Motion praying for an Order
If the property taken be claimed by any person other than the directing petitioners or their agents to surrender the barge to the custody of
party against whom attachment had been issued or his agent, the Court, that the Sheriff was able to take physical custody. As a general rule,
and such person makes an affidavit of his title thereto or right however, a levy of an attachment upon personal property may be either actual
17
to the possession thereof, stating the grounds of such right or or constructive. In this case, levy had been constructively made by the
title, and serves such affidavit upon the officer while the latter registration of the same with the Philippine Coast Guard on February 7, 1974.
has possession of the property, and a copy thereof upon the Constructive possession should be held sufficient where actual possession is
18
attaching creditor, the officer shall not be bound to keep the not feasible, particularly when it was followed up by the actual seizure of the
property under attachment, unless the attaching creditor or property as soon as that could possibly be effected.
his agent, on demand of the said officer, secures him against
such claim by a bond in a sum not greater than the value of Petitioners further argue that the levy was illegal because the Writ was
the property attached. ... implemented more than sixty days after its issuance so that they need not have
complied with Section 14, Rule 57, supra. The Rules do not provide any lifetime
For another, when respondent Sheriff seized the vessel in question to be sold for a Writ of Attachment unlike a Writ of Execution. But even granting that a
at public auction in accordance with the Order of execution of March 7, 1975, Writ of Attachment is valid for only sixty days, yet, since there was
petitioner could have availed of the remedy under Section 17, Rule 39 of the constructive levy within that period the fact that actual seizure was effected
Rules of Court which provides: only thereafter cannot affect the validity of that levy.
If the property levied on be claimed by any other person than Neither can it be said that respondent Judge committed grave abuse of
the Judgment debtor or his agent, and such person make an discretion in issuing the challenged Order of April 14, 1975, supra, whereby it
affidavit of his title thereto or right to the possession thereof, commanded the immediate implementation of the Order of execution of
stating the grounds of such right or title, and serve the same March 7, 1975 and ordered petitioners to surrender possession of the barge to
upon the officer making the levy, and a copy thereof upon the the Sheriff under pain of contempt. A trial Court is enjoined by law to bring
judgment creditor, the officer shall not be bound to keep the about a prompt dispatch of the controversy pending before it. As it was, it took
163 of 501
the trial Court more than a year to cause the enforcement of its Writs and
processes. Moreover, its Decision of October 9, 1974 had become final and
executory, and execution then became purely a ministerial phase of
adjudication. It had no jurisdiction to pass upon petitioners' claim of
ownership not only because trial in that, case had already been terminated but
also considering that petitioners were not parties in the case below nor had
they filed any third-party claim for the enforcement of their rights.
Verily, petitioners' remedy was to ventilate their claims of ownership in a

separate and independent reivindicatory action, as even then suggested by the
Court of Appeals. That was the arena where the question of preferential rights,
if any, impliedly raised in the first assigned error, could have been fully
threshed out.
...a third person claiming to be the owner of the property

attached or levied upon is required to file a separate or
independent action to determine whether the property
should answer for the claim of the attaching or judgment
creditor instead of being allowed to raise that issue in the case
where the writ of attachment or execution was issued (Sec. 17,
Rule 39 and sec. 14, Rule 57, Rules of Court; Bayer Philippines,
19
Inc. vs. Agana, L-38701, April 8, 1975, 63 SCRA 355).
In the interest of justice, petitioners can still file an independent civil action to
establish their ownership over the barge, if they have not yet done so.
WHEREFORE, in the absence of jurisdictional errors, this Petition is

dismissed, and the Restraining Order, heretofore issued, hereby lifted effective
immediately.
No costs.
SO ORDERED.
164 of 501
of the lands, hence it filed a motion reiterating its petition that it be placed in
their possession.
Section 7 This time judgment debtor Filemon Lucasan filed an opposition alleging that
he was in possession of one of the parcels of land sold at public auction on
which he has erected a house and which he has extra judicially constituted as a
Siari Valley Estates v. Lucasan, 109 Phil. 294 family home, the rest being in possession of third parties. On April 30, 1957,
the court, overruling the opposition, issued an order directing the sheriff to
EN BANC place the corporation in possession of the lands sold to it. On August 7, 1957,
debtor Lucasan filed a motion for reconsideration which was denied, the court
DECISION
reiterating its previous order with little amendment, but on August 23, 1957
August 31, 1960 issued another order allowing the corporation to take possession of all lands
sold, with the exception of parcel 1 on which the family home was constituted,
G.R. No. L-13281 holding that the levy and sale made by the sheriff with regard to said parcel
SIARI VALLEY ESTATES, INC., petitioner, were not made in accordance with law and so are null and void. Having failed
vs. to have this last order reconsidered, the corporation interposed the present
FILEMON LUCASAN, ET AL., respondents. petition for certiorari.
It appears that parcel 1 is a registered land covered by Certificate of Title No.
Orendain and Sarmiento for petitioner. OCT-2492, Patent No. 50967, duly registered in the Office of the Register of
Barrios, Lucasan and Lucasan for respondents. Deeds of Zamboanga del Norte in the name of Filemon Lucasan. On this land
, J.: stands a big house of mixed materials which is asserted in the amount of
On January 30, 1952, the Court of First Instance of Zamboanga del Norte P23,270.00 as evidenced by Tax Declaration No. 7653. It also 37 3 appears that
rendered decision ordering Filemon Lucasan to deliver to the Siari Valley Filemon Lucasan and his wife constituted this house and the lot on which
Estates, Inc. the cattle inside the former’s pasture or pay its value amounting stands into a family home, the pertinent document having been registered in
to P40,000.00 and damages in another sum of P40,000.00, This decision was the office of the register of deeds on June 21, 1955. In opposing the petition of
affirmed in toto by the Supreme Court, and when the same became final and the corporation for a writ of possession insofar as this property is concerned,
executory, a writ of execution was issued. In carrying out this writ, the sheriff Lucasan contended that said lot and house having been constituted as a family
proceeded to levy on certain parcels of lands belonging to defendant. These home are beyond the reach of judicial execution. He contended that the levy
lands were sold by the sheriff at public auction to the corporation as the made by the sheriff on said property is legally ineffective because it was not
highest bidder on January 14, 1956. The judgment debtor having failed to effected in accordance with what is prescribed in Section 14, Rule 39, in
redeem the land within the period of one year, on January 26, 1957, the sheriff relation to Section 7, Rule 59, of the Rules of Court.
issued in favor of the purchaser the final certificate of sale, copy of which was
registered in the Office of the Register of Deeds of Zamboanga. On February There is merit in this contention. The evidence shows that when this property
16, 1957, upon petition of the corporation, a writ of possession was issued was levied on execution by the sheriff to satisfy the judgment rendered against
directing the sheriff to place said corporation in possession thereof. Filemon Lucasan in favor of petitioner corporation the notice of levy merely
Notwithstanding said writ, however, the corporation failed to take possession described the property as unregistered land and the same was registered under
Act 3344 in the office of the register of deeds. It also appears that in the notice
165 of 501
of sale the property was merely described according to the boundaries and Celerino Arellano, and that, therefore, no memorandum of the notice had
area appearing in the tax declaration and not according to what appears in the been entered upon the outstanding certificate of title. It may be noted that the
certificate of title. On the other hand, the rule provides that real property shall notice contained no “reference to the number of the certificate of title of the
“be levied on in like manner and with like effect as under an order of land to be effected and the volume and page in the registry book where the
attachment” (Section 14, Rule 39), and the provision regarding attachment of certificate is registered, and that t that extent, the notice did not meet the
real property postulates that the attachment shall be made “by filing with the requirements of said section 71. (De Ocampo vs. Treasurer of the Philippine
register of deeds a copy of the order, together with the description of the Islands, 50 Phil. 140, 141; Emphasis supplied).
property attached, and a notice that it is attached, and by leaving a copy of
said order, description, and notice with the occupant of the property, if any Since the notice of levy made by the sheriff as regards parcel number 1 which is
there be,” and that “Where the property has been brought under the operation a registered land contains no reference to the number of its certificate of title
of the Land Registration Act, the notice shall contain a reference to the and the volume and page in the registry book where the title is registered, it
number of the certificate of title and the volume and page in the registration follows that said notice is legally ineffective and as such did not have the effect
book where the certificate is registered” (Section 7 [a], Rule 59). of binding the property for purposes of execution. Consequently, the sale
carried out by virtue of said levy is also invalid and of no legal effect.
These provisions should be strictly construed if their purpose has to be
accomplished. The requirement that the notice of levy should contain a The second issue raised is: Is the family home extra judicially established by
reference to the number of the certificate of title and the volume and page in respondent on the lot and house in question exempt from execution?
the registration book where the certificate is registered is made in order that
Respondent sustains the affirmative considering that the money judgment
the debtor as well as a third person may be properly informed of the particular
rendered against him was appealed to the Supreme Court in which event, he
land or property that is under the custody of the court. This can only be
contends, the same could not be considered as a debt at the time the family
accomplished by making a reference to the certificate of title covering the
home was constituted for it was still inchoate and as such cannot come under
property. The situation differs if the land is unregistered in which case it is
the provisions of Article 243 (2) of the new Civil Code.
enough that the notice be registered under Act 3344. This conclusion finds
support in the following authorities: The article above referred to provides that “The family home extra judicially
formed shall be exempt from execution” except “for debts incurred before the
An attachment levied on real estate not duly recorded in the registry of
declaration was recorded in the Registry of Property.” What if the meaning of
property is not an encumbrance on the attached property, nor can such
the word debt used in this article? Does it refer to a debt that is undisputed, or
attachment, unrecorded in the registry, serve as a ground for decreeing the
may it also refer to any pecuniary obligation even if the same has not yet been
annulment of the sale of the property, at the request of another creditor.
finally determined? In other words, can a judgment for a sum of money be
(Gonzales Diez vs. Delgado and Imperial, 37 Phil. 389)
considered a debt within the meaning of this provision even if said judgment
… In conformity with the provisions of section 71 of the Land Registration Act, is still pending appeal?
the sheriff of the City of Manila filed a notice of the levy with the register of
We are inclined to uphold the affirmative considering the real purpose of the
deeds, which notice was entered in the primary entry book of the register’s
law. The reason why a family home constituted after a debt had been incurred
office, but was afterwards, on May 20, 1920, returned to the sheriff with the
is not exempt from execution is to protect the creditor against a debtor who
information that the property was registered in the name of Buenaventura
may act in bad faith by resorting to such declaration just to defeat the claim
Dizon, having been conveyed to the latter by the defendant in execution,
166 of 501
against him. If the purpose is to protect the creditor from fraud it would be
immaterial if the debt incurred be undisputed or inchoate, for a debtor acting
in good faith would prefer to wait until his case is definitely decided before
constituting the family home. Indeed, it may result, as in this case, that the
Supreme Court may affirm the judgment of the lower court. If the contention
of respondent be sustained a debtor may be allowed to circumvent this
provision of the law to the prejudice of the creditor. This the Court cannot
countenance. Hence, we are persuaded to conclude that the money judgment
in question comes within the purview of the word debt used in Article 243 (2)
of the new Civil Code.
WHEREFORE, the order appealed from is hereby affirmed, without prejudice

of the part of petitioner to file a new petition for execution following strictly
the requirements of the rule on the matter. No pronouncement as to costs.
167 of 501
by the respondent court in favor of the plaintiff on January 28,

1966.
Ravanera v. Imperial, 93 S 589
On February 17, 1966 pending approval of the Record on
FIRST DIVISION Appeal, plaintiff Archbishop of Nueva Caceres filed a Motion
for Execution of the decision or to order defendant to file
G.R. No. L-34657 October 23, 1979 supersedeas bond and to deposit the amount of P500.00 every
month as rentals.
ERLINDA RAVANERA and husband OSCAR RAVANERA, petitioners,
vs. On May 6, 1966 the respondent Court granted the motion for
FELIPE I. IMPERIAL, respondent. execution pending appeal and at the same time ordered that
to stay the execution, the defendant put up a supersedeas
Borja & Naval for petitioners. bond in the amount of P40,000.00 for the rents due as of
February, 1966, for the amount of moral damages, and for the
Abonal & Abonal for respondent. expenses of suit and to deposit the amount of P500.00 as
monthly rental of the property. This order became the subject
of a Special Civil Action for certiorari and prohibition before
the Supreme Court and by reason of the pendency of said
DE CASTRO, J.: special civil action the order of execution was not enforced by
the plaintiff.
Appeal by certiorari taken by petitioners from (a) the decision of the Court of
Appeals in CA-G.R. No. SP-00080, entitled "Felipe I. Imperial, petitioner versus On December 10, 1966, the record on appeal was approved
Hon. Delfin Vir. Sunga, Judge, Court of First Instance of Camarines Sur, Erlinda and the appealed case is now docketed as CA-G.R. No. 39115-
Ravanera and husband Oscar Ravanera, respondents" promulgated on R, in this Court.
November 16, 1971 setting aside the orders dated March 18, 1971 and March 30,
1971 issued by the Court of First Instance of Camarines Sur in Civil Case No. On May 22, 1968, the Supreme Court dismissed the petition
5292, entitled "The Roman Catholic Archbishop of Caceres, plaintiff, versus for certiorari on the ground that the order of execution being
Felipe I. Imperial, defendant," and from (b) the former's resolution of January incidental to the appeal, the same should be addressed to the
10, 1972 denying petitioners' motion for reconsideration. Court of Appeals. So on June 21, 1968, the plaintiff filed
another motion for execution. On July 16, 1968 the respondent
The facts found by the Court of Appeals are as follows: Court ordered the issuance of a writ of execution, but the
petitioner was given fifteen (15) days from receipt of the order
It appears that on October 17, 1961 the Roman Catholic to put up the P40,000.00 supersedeas bond and to deposit the
Archbishop of Caceres filed an action for Rescission of monthly rental of P500.00 in order to stay the execution.
Contract and Recovery of Possession against the herein
petitioner before the respondent court. Said case was decided
168 of 501
Inspite of his receipt of the order on July 23, 1968, petitioner

failed to post the required supersedeas bond and to deposit
the P500.00 monthly rental. Thus, on November 20, 1968, the
plaintiff Archbishop filed a motion for the issuance of a writ
of execution. On December 20, 1968 the respondent Court
granted the motion for execution requiring however the
plaintiff to put up a bond in the amount of P20,000.00 to
answer for any judgment that may be awarded to petitioners
should the decision be reversed on appeal.
The plaintiff Archbishop posted the required bond of

P20,000.00 and on February 14, 1969 a writ of execution was
issued. Said writ was not enforced upon instance of the
counsel for plaintiff as an amicable settlement was proposed
and after the 60 days period had lapsed the Sheriff made a
return of the writ stating therein:
This is to certify that this writ was not acted

upon at the instance of counsel for the
plaintiff for the reason that amicable
settlement between parties was proposed.
Upon request of counsel for the plaintiff let

this writ be returned and an alias writ be
issued for the proposed amicable settlement
abovestated failed to materialize.
Naga City, Philippines, July 14,1969.
S
G
D
.
M
A
169 of 501
f were likewise void, and that respondent Ravanera had no

f personality in the case, she not being a party thereto.
Pursuant to this return, the Clerk of Court of the respondent On March 18, 1971, the respondent Court issued an order
Court, issued an alias writ of execution on August 24, 1969. granting the motion for a writ of possession and on March 27,
On September 24, 1969 the Sheriff issued a notice of Levy by 1971 the petitioner filed a motion for reconsideration on the
which certain properties of the petitioner were attached or ground that there was no formal hearing and reception of
levied upon. On September 25, 1969 the alias writ was evidence on the motion and that the order did not state the
personally served by the Sheriff upon the petitioner. On finding of facts which could be the basis for the grant of the
October 7, 1969, the Sheriff issued a Notice of Public Auction motion. On March 30, 1971 the respondent Court issued an
sale of the properties levied upon which was published in the order denying the motion for reconsideration, however, it
"Bicol Star" a weekly newspaper of general circulation on suspended the effectivity of the writ of possession to April 25,
October 11, 18 and 25, 1969. Private respondent alleges that 1971. Hence this petition.
copies of the Notice of Levy and the Notice of Sale were sent
by Registered Mail which according to the certificate of the The petitioner attacks the order of March 15, 1971 granting the
Postmaster was received on October 15, 1969. Receipt of the motion for a writ of possession on the following grounds:
Notice of Levy is denied by petitioner.
1. That the writ of execution issued by the Court on December
On November 7, 1969 the public auction sale was held, and 30, 1968 is void defendant having on December 10, 1966
the respondent Erlinda Ravanera being the highest bidder a perfected his appeal;
Provisional Deed of Sale was issued in her favor. Within the
one-year period of redemption, the petitioner redeemed some 2. That the Alias writ of Execution issued by the Deputy
of the properties bought at auction sale, but he failed to Provincial Sheriff is void there having been no order corning
redeem some others on account of which at the end of the from the Court granting such issuance of an Alias Writ;
redemption period or on December 8, 1970 the Sheriff
executed a Definite Deed of Sale of said unredeemed 3. Notice of Levy Null and Void;
properties in the name of respondent Erlinda Ravanera. She
likewise paid the arrears in real estate taxes of said properties, 4. That Erlinda Ravanera has no personality to file Motion for
redeemed a mortgage on one of them and caused the Writ of Possession;
property to be declared in her name.
5. That there was no formal hearing or reception of evidence
On February 9, 1971 respondent Erlinda Ravanera filed a from the parties;
motion for a writ of possession of the properties covered by
the Definite Deed of Sale, to which motion petitioner filed his 6. That there is a pending appeal before the Court of Appeals
opposition alleging that the notice of levy was null and void under G.R. No. 39-115-R;
and hence the provisional as well as the definite deed of sale
170 of 501
7. That order issuing the Writ of Possession did not state 2. The Court of Appeals erred in applying to one unregistered
findings of facts as basis for the order or issuance of the writ; parcel of land and the one unregistered residential house
described in the Notice of Levy the formal requirements of
8. That the price for which the properties have been bidded is the Rules of Court which are applicable only to registered
grossly inadequate and is therefore unconscionable properties;
amounting to lack of consideration.
3. The Court of Appeals erred in requiring service upon
From the facts recited in the complaint, the answer as well as respondent Imperial of the Notice of Levy before the
the decision of the respondent court appears that the main publication of the Notice of Public Auction Sale considering
case partakes more of the nature of an unlawful detainer and that the Rules of Court does not so require;
damages case rather than one for recission of contract as it is
admitted by the parties that the contract of lease had already 4. That the Court of Appeals erred in not applying to the case
expired and there is no showing that the same had been at bar the presumption of regularity in the official acts and
expressive or impliedly renewed. Hence there was actually no proceedings of the Sheriff, particularly in the matter of
contract to be rescinded and subsequent orders of the leaving with the occupant of the land, copy of the Notice of
respondent court reveal that it considered the case as one for Levy, considering that there is no evidence to the contrary;
1
ejectment and damages.
5. The Court of Appeals erred in not applying against
On November 16, 1971, the Court of Appeals rendered a decision setting aside respondent Imperial the principle of estoppel or waiver of
the orders dated March 18, 1971 and March 30, 1971 issued by the Court of First whatever procedural defects there were in the Levy when he
Instance of Camarines Sur and making the preliminary injunction previously repurchased part of the properties levied upon by the Sheriff
2
issued permanent. but failed to repurchase properties which are now in question
herein;
Petitioners filed a motion for reconsideration of the decision which was denied
3
by the Court of Appeals in its resolution of January 10, 1972. 6. That the Court of Appeals erred in not considering against
respondent Imperial undisputed facts which show bad faith
From the above-mentioned decision and resolution, petitioners seek in this and intent to delay the proceedings and to thwart a fair
petition to correct errors committed by the Court of Appeals as follows: administration of justice,
1. The Court of Appeals erred in annulling the Notice of Levy 7. The Court of Appeals erred in not considering in favor of
merely because it did not comply with some of the formal the petitioners undisputed facts showing that they were
requirements of the Rules of Court which were not shown to innocent purchasers for value, and therefore, should not be
have prejudiced any substantial rights of the respondent made to suffer the prejudice caused by the alleged invalidity
Imperial; or ineffectiveness of the levy. (pp. 9-1 0, Rollo)
171 of 501
The main issue raised before Us in this petition is whether or not there was a Petitioners finally argue that they had not been served a
valid levy upon the properties of respondent Felipe I. Imperial. notice of the levy nor a notice of the sale as required by the
Rules. The sheriffs return, however shows that the notice of
The Court of Appeals annulled the levy and all the proceedings subsequent levy had been registered with the Register of Deeds pursuant
thereto on two grounds, to wit: 1) The occupants or possessors of the to Rule 57, Section 7 in connection with Rule 39, Section 15 of
properties levied upon were not furnished with a notice of levy and as Section the Rules, and that the notice of sale had been sent by
7 of Rule 57, paragraph (a) makes this a requirement for the validity of the registered mil on December 28, 1964, to petitioners. Even
levy, non-compliance therewith has made the levy ineffective, and 2) The assuming then that petitioners were not served a copy of the
Notice of levy made by the sheriff did not contain the volume and the page in notice of levy, yet We have already ruled in Philippine Bank of
4
the Registry where the certificates registered. Commerce vs. Macaraeg, L-14174, October 31, 1960, that this
defect is cured by service of notice of sate upon the judgment
Anent the first ground, the Court of Appeals, in support thereof, cited the case debtors prior to the sale, which was done here. The levy was
5
of Philippine Surety vs. Zabal wherein this Court held: validly effected then.
In the case at bar, no notice of the levy was given to the It appears in this case that the notice of levy was registered with the Register
occupant of the land. There was, therefore, no valid levy on of Deeds on September 29, 1969. From a certification of the Postmaster at
the land, and its registration in the registry of deeds and Naga City, it also appears that registered letter No. 13681 containing the notice
annotation in the title were invalid and ineffective. The fact of levy and the notice of auction sale addressed to respondent Felipe Imperial
that the person in whose name the land was registered was was delivered on October 15, 1969 to Pelaguia Comba, member of the
duly notified of the attachment does not cure the defect, household of the addressee. Respondent Imperial was, therefore, notified by
because personal service of the copy of the writ, description of registered mail of the levy and the auction sale long before November 3, 1969,
the property and notice to the owner, who is not the the date of the auction sale. What is required is that the judgment debtor must
occupant, does not constitute compliance with the statute. be notified of the auction sale before the actual date of sale which was done in
6
the case at bar.
The evident purpose of the law in imposing these
requirements is to make the levy public and notorious, to It cannot be gainsaid that if it were only to afford an opportunity to
prevent liens from attaching secretly and by surreptitious respondent Imperial to avoid the auction sale, he had ample opportunity to
entries and endorsements, and to enable the affected party to file his objection to such sale because the auction sale took place on November
inquire into the date and circumstances surrounding the 3, 1969. The respondent had nineteen days after he received the notice of levy
creation of the encumbrance, as well as to give him ample and the notice of auction sale on October 15, 1969 and thirty-nine (39) days
opportunity to file timely claims to the property levied upon. from September 25, 1969 when he was served personally by the Sheriff a copy
of the writ of execution to avoid the sale had he wanted to. Moreover, he had
The ruling relied upon by the Court of Appeals has already been modified by exactly one year from November 27, 1969 when the provisional Deed of Sale
the case of Pamintuan vs. Muñoz, 22 SCRA 1109 wherein tills Court briefly executed in favor of the petitioner was registered with the Register of Deeds to
stated: redeem the property.
172 of 501
Regarding the second ground, We are constrained to make a distinction for notice of levy contain the volume and page in the registration book where the
the levy of property registered under Act 496 (Land Registration Act) and the certificate is registered, impliedly, the requirement does not apply to property
property not brought under the operation of said Act. not registered under the said Act. It is enough that the notice of levy upon
unregistered land be registered under Act 3344, as was done in this case.
The Court of Appeals concluded in its Resolution dated January 10, 1972 that
7
the requirements of Section 7 of Rule 57 do not make distinction whether the In the case of Siari Valley Estates vs. Lucasan, which clearly applies to this
property is under the operation of the Land Registration Act or not. case, it was held by this Court:
Petitioners contend otherwise and such contention is not without merit,
under the provisions of Section 15 (Paragraph 2) of Rule 39 and Section 7 The requirement that the notice of levy should contain a
(Paragraph a) of Rule 57, which are pertinent. reference to the number of the certificate of title and the
volume and page in the registration book where the
Section 15 (Paragraph 2) of Rule 39 expressly provides: certificate is registered is made in order that the debtor as
well as a third person may be properly informed of the
xxx xxx xxx particular land or property that is under the custody of the
court. This can only be accomplished by making a reference
Real property, stocks, shares, debts, credits and other to the certificate of title covering the property. The situation
personal property, or any interest in either real or personal differs if the land is unregistered, in which case it is enough
property, may be levied on in like manner and with like effect that the notice be registered under Act 3344. This conclusion
as under a writ of attachment. finds support in the following authorities:
Section 7 (paragraph a) of Rule 57 also provides the following: An attachment levied on real estate not only recorded in the
registry of property is not an encumbrance on the attached
Attachment of real and personal property, recording thereof.- property, nor can such attachment, unrecorded in the
Properties shall be attached by the officer executing the order registry, serve as a ground for decreeing the annulment of the
in the following manner: sale of the property, at the request of another
creditor.(Gonzalez Diez v. Delgado and Imperial, 37 Phil. 389)
(a) ... Where the property had been brought under the
operation of the Land Registration Act, the nonce shall ... In conformity with the provisions of Section 71 of the Land
contain a reference to the number of the certificate of title Registration Act, the sheriff of the City of Manila filed a notice
and the volume and page in the registration book where the of the levy with the register of deeds, which notice was
certificate is registered. The registrar must index attachments entered in the primary entry book of the register's office, but
filed under this paragraph in the names both of the plaintiff was afterwards, on May 20, 1920, returned to the sheriff with
and of the defendants. the information that the property was registered in the name
of Buenaventura Dizon, having been conveyed to the latter by
Section 7 (paragraph a) of Rule 57 is so explicit that only as to property which the defendant in execution, Celerino Arellano, and that,
has been brought under the operation of the Land Registration Act should the therefore, no memorandum of the notice had been entered
173 of 501
upon the outstanding certificate of title. It may be noted that Naga City, Sept. 29, 1969.
the notice contained no reference to the number of the
certificate of title of the land to be effected, and the volume and Reference to the number of the certificate of title of every registered land in
page in the registry book where the certificate is registered, and the notice of levy, together with the technical description thereof, would
that to that extent the notice did not meet the requirements of certainly suffice to inform the debtor, as well as third persons what particular
said section 71. (De Ocampo v. Treasurer of the Philippine land or property is brought to the custody of the court, as is the purpose of the
Islands, 50 Phil. 140, 141; Emphasis supplied.) aforecited provision of the Rules of Court. Incidentally, no third person
appears, to be interested in the matter now before this Court. From the fact
The properties which were acquired by the petitioners as the highest bidders that respondent Imperial was able to exercise his right of redemption with
in the auction sale on November 3, 1969 are as follows: reference to three registered parcels of land, it can be easily deduced that
insofar as respondent Imperial is concerned, the purpose of the requirement of
1. A parcel of land located at Naga City registered under Act reference having to be made to the number of the certificate of title, and also
496 and covered by Transfer Certificate of Title No. 257; the volume and page in the registration book where the certificate is
registered, has been fully served or attained.
2. A two-storey residential house located at Naga City not
registered under Act 496 but covered by Tax Declaration No. It may also be pertinent to note that in the Siari Valley case, heavily relied
14276; and upon by the respondent court in voiding the notice of levy in the instant case,
the land involved which was actually registered with OCT No. 2492 was
3. A parcel of residential land located at Naga City not described in the notice of levy as unregistered land, which was thus a
registered under Act 496 but covered by Tax Declaration No. misleading information.
8732. (Annex J to Petition, pages 39 and 40, Rollo.)
We, therefore, find no substantial defect in the notice of levy on all the
From the records of the case, the notice of levy made by the sheriff as regards properties levied upon and sold to petitioners in the auction sale, that should
the registered land contains reference to the number of its certificate of title be a basis, as the respondent court deemed it to be, for annulling the sale
but not to the volume and page in the registry book where the title is made pursuant to the levy.
registered. Nevertheless from what was stated in the case of Siari Valley Estate
vs. Lucasan, supra, it would seem that the purpose of the requirement of Respondent Imperial also brands the levy as irregular for failure of the
Section 7(a), Rule 39 of the Revised Rules of Court is substantially complied occupants of the attached or levied properties to be left with copy of the order,
with. This is more so where as in this case, there appears in the notice of levy notice of levy and description of the properties. The finding of facts of the
the following certification: respondent Court of Appeals which was quoted in full above, fails to disclose
the existence of occupants of the properties levied upon other than the owner,
It is hereby certified that this instrument has been duly respondent Imperial. It was incumbent on said respondent to prove by
registered proper memorandum hereof made on transfer evidence duly submitted to the Court a fact that would tend to support his
Certificate of Title No. 257 & 258 and on its owner's duplicate claim that the levy is void or otherwise illegal. The levy being an official act of
Reg. Book No. 3; File No. 1-248. a government functionary its regularity is presumed.
174 of 501
The alleged inadequacy of the purchase price of the properties sold in the and notice of sale before the actual sale, or before redeeming some of his
execution sale is no ground to assail the validity of the sale, for the judgment properties despite the supposed defect of the notice of levy. He should have
debtor has the right to redeem the property, and the smaller the price, the interposed objection to the levy and the sale from the very beginning, from
8
easier is it for him to buy back the property. October 15, 1969 when he received notice of levy and notice of sale. A waiver
on his part to question the validity of the auction sale may also be said to arise
Respondent Imperial goes back to the issuance of the order of execution on from his failure to pay the arrears in real estate taxes, or to redeem the
December 30, 1968 to show that the order is invalid because it was issued after mortgage of one of the properties sold at public auction, during the period of
he has perfected his appeal on December 10, 1966 (p. 22, Respondent's Brief). redemption. These are omissions which are clearly an indication of
What the Court of Appeals, however, stated in its decision is that "on February acquiescence in the sale, or his awareness that the execution sale was valid and
17, 1966, pending approval of the Record on Appeals, plaintiff Archbishops of legally unassailable. To allow him to turn back on his manifest conformity to
Nueva Caceres filed a Motion for Execution of the decision or to order the levy and sale on execution of his properties, after petitioners have bought
defendant to file supersedeas bond and to deposit the amount of P500.00 the property as the highest bidder during the auction sale, would be patently
every month as rentals," and that on May 6, 1966, the respondent court (CFI of unjust to the said petitioners, who had every reason to rely on the presumed
Camarines Sur) granted the motion for execution pending appeal. This order regularity of the proceedings as official acts of both the judge and his own
was brought up by respondent Imperial to the Supreme Court on certiorari as court officer, the sheriff.
a special civil action, resulting in the stay of the enforcement of the order of
the execution. The special civil action, however, was dismissed on May WHEREFORE the decision appealed from is hereby reversed. The notice of
22,1968, by the Supreme Court, and the dismissal merely reactivated the order levy and the sale of the properties in question, both registered and
of execution pending appeal issued on May 6,1966. unregistered in favor of the petitioners are hereby declared valid. No
pronouncement as to cost.
Clearly, the original order of execution pending appeal was perfectly valid, and
the issuance of alias writ when the original writ was not acted upon at the SO ORDERED.
instance of the plaintiff for the reason that amicable settlement between the
parties was proposed but failed to materialize, did not affect the validity of
either the original or alias writ of execution. Accordingly, We rule that
contrary to the contention of respondent Imperial (see pages 22-23, Brief for
the Respondent), the writ of execution that gave rise to the levy of the
properties in question and their sale in a public auction is valid and regular in
all respects. 'That the alias writ of execution was issued by the Clerk of Court
and not by the judge is no ground for holding invalid said alias writ,
considering that the Clerk of Court is not without authority to issue ordinary
writs and processes, under the seal of the Court (Session 4, Rule 136, Revised
Rules of Court).
In any event, respondent Imperial as judgment debtor is in estoppel by his

failure to seasonably make an objection to the allegedly defective notice of levy
175 of 501
counsel in Sp. Proc. No. C-00565, filed an 'Explanation and

Motion' for the approval of attorney's fees. The defunct JDRC
Obana v. CA, 172 S 866 of Quezon City, acting on said motion, issued an order dated
May 9, 1972, the pertinent portion of which reads:
THIRD DIVISION
Considering the foregoing, the Court believes
G.R. No. 78635 April 27, 1989 that P10,000.00 attorney's fees is too
burdensome for the wards to shoulder alone
LEONORA OBAÑA, petitioner, and that the guardian should be able to be
vs. responsible for half of it.
COURT OF APPEALS, RAFAEL G. SUNTAY, REGISTER OF DEEDS OF
QUEZON CITY, and the EX-OFICIO SHERIFF OF QUEZON WHEREFORE, further to order dated April 11,
CITY, respondents. 1972, counsel is hereby authorized to collect
P5,000.00, from the ward's guardianship
George L. Howard and Ambrosio Padilla, Mempin & Reyes Law Offices for estate. (p. 3, Appellant's Brief).
petitioner.
On August 24, 1972, appellant filed in the same proceedings a
Rafael G. Suntay for private respondent. 'Motion to Order the Guardian To Pay The Attorney's Fees,'
with prayer that the guardian be ordered to pay immediately
the amount of P5,000.00 out of the ward's guardianship estate
(Exh. W). Acting upon said motion, the JDRC of Quezon City
GUTIERREZ, JR., J.: issued an order dated September 14, 1972, requiring Liberty B.
Dizon to show proof of payment of attorney's fees in
This is a petition to review on certiorari the decision of the Court of Appeals accordance with Order of May 9, 1972 and to submit a new a
which set aside the trial court's decision, dismissed herein petitioner Leonora bond releasing her former counsel as surety; failing which,
Obaña's complaint and ordered her to pay Rafael G. Suntay the amount of she shall be declared in contempt of court (Exh. X).
P5,000.00 as attorney's fees with costs against her.
It would appear that the above order was not complied with
The facts of the case as stated in the Court of Appeals' decision are as follows: by Liberty H. Dizon because on November 9, 1972, defendant-
appellant Atty. Suntay, filed with the defunct CFI of Bulacan
Records show that defendant-appellant (Rafael G. Suntay) an action for a sum of money (Civil Case No. 4238-M) against
was the former counsel of Liberty H. Dizon and her minor said Liberty M. Dizon, Nicolas Torio, Jr. and Noel Patrick
children, Nicolas and Noel Patrick, both surnamed Torio, in Torio (pp. 28, Record). In his complaint, defendant-appellant
an intestate proceeding docketed as No. 142 and in the averred among others: that his attorney's fees in Sp.
petition for guardianship over said minors in Sp. Proc. No. C- Proceedings Nos. C-412. and QC-00565 was (sic) not paid by
00565. On April 28, 1972, said defendant-appellant as such his former clients, despite repeated demands. In connection
176 of 501
with said complaint, appellant moved for the issuance of an were served upon Mrs. Dizon and her wards through
order of attachment upon a certain parcel of land covered by publication.
TCT No. 173792 together with the improvements belonging to
Liberty H. Dizon and her wards, located at 48 Damar Village, Meanwhile, pursuant to a Deed of Absolute Sale dated May 16,
Balintawak, Quezon City. On December 1, 1972, by virtue of 1973 executed by and between Liberty H. Dizon, et al., and
the Writ of Attachment issued in Civil Case No. 4238-M, a appellee Leonora Obaña involving the attached property
levy was made on said property, which levy was annotated at (Exh. S) the register of deeds of Quezon City cancelled TCT
the back of TCT No. 173792 of the Register of Deeds of No. 173792 in the name of Liberty H. Dizon and her wards,
Quezon City, to wit: and, in lieu thereof, executed in favor of Leonora Obaña a
new TCT No. 191069 necessarily transferring in the process
'PE-5839\T173792 — NOTICE OF LEVY — the encumbrance consisting of notice of levy in favor of
Affecting the rights, interests and appellant.
participation of the registered owners hereof,
the same having been levied by the Sheriff of On August 10, 1973, after summons by publication had been
Q. City by virtue of an order of attachment effected in Civil Case No. 4238-M, upon motion of appellant
issued by the CFI of Bulacan in Civil Case No. Atty. Suntay, the court declared the defendants therein,
4238-M, entitled 'Rafael G. Suntay, Pltf v. Liberty H. Dizon and her wards, in default and allowed
Liberty H. Dizon, Nicolas Torio, Jr. and Joel plaintiffs evidence to be presented ex-parte. Consequently, a
Patrick Torio, defs. to the amount of decision was rendered on September 28, 1973 awarding to
P10,000.00. appellant Atty. Suntay the amount of P10,000.00 representing
his claim for attorney's fees relative to the prosecution of said
Date of Instrument — Nov. 29, 1972 case (Exhibit K). Pursuant to said decision, a writ of execution
was issued per order of the court, and then followed by a
Date of Inscription — Dec. 1, 1972. Notice of Levy on Execution dated August 7, 1974, issued by
the sheriff of Quezon City. Thereafter, a certificate of sale
(Exh. 1-A)' (Exh. M) over the subject property (now covered by TCT
191059 in the name of Leonora Obaña) was issued in favor of
Due to the failure of the sheriff to serve the summonses the appellant, being the highest bidder. For failure of Mrs.
issued in Civil Case 4238 for the reason that Mrs. Dizon and Dizon and her wards or by appellee Leonora Obaña to redeem
her wards no longer resided at the last known address at 34-H the property on or before October 15, 1975, a 'Sheriffs Final
Road, Cypress Village, Quezon City, and that their present Deed of Sale' (Exh. N) was issued in favor of appellant. Both
address cannot be ascertained appellant as plaintiff in said certificates of sale were registered in the Register of Deeds of
civil case filed a Motion for Service of Summons by Quezon City and was annotated at the back of TCT No. 191059
Publication (Exh. H) which was granted by the court in its (Exh. A).
Order dated February 12, 1973 (Exh. 1). Accordingly, summons
177 of 501
Appellant then filed a petition in the then CFI of Rizal, The court a quo in nullifying the judgment in Civil Case No.
Quezon City, for the cancellation; of TCT No. 191059 which 4238 held that no jurisdiction was acquired over the persons
was opposed by appellee Leonora Obaña. On April 28, 1977, of defendants therein, the action being strictly in
said CFI of Quezon City in LRC-750 issued an order cancelling personam and summons by publication is insufficient; and
TCT No. 191059 and directing the Register of Deeds of Quezon that no valid attachment and levy were made by the sheriff as
to issue a new title covering the subject land in the name of no personal service of the copy of the notice to the occupant
Rafael G. Suntay married to Victoria J. Suntay. of the property was made. (Rollo, pp. 37-40).
To stop the registration of the subject land in the name of There are, therefore, three cases which eventually led to this petition. First was
appellant, appellee filed an action on August 28, 1978 before SP-C-00565, the guardianship case before the Juvenile and Domestic Relations
the court a quo for annulment of judgment rendered in Civil Court of Quezon City where the attorney's fees for Suntay were initially
Case No. 4238-M. In her complaint, appellee as plaintiff, awarded. Second was CC 4238-M before Branch VII of the Bulacan Court of
contended that the decision rendered in Civil Case No. 4238- First Instance where Atty. Suntay filed his action for sum of money to collect
M by the then CFI of Bulacan is null and void for the reason his fees and where a default judgment against Liberty Dizon and the Torio
that said court did not acquire jurisdiction over Liberty H. children was rendered. The third is the case now before us from the Court of
Dizon and her wards, since they were not properly served Appeals — Civil Case No. 5418-M, the annulment of judgment case filed in
with summons. Appellee also claimed that the proceedings Branch VIII of the Regional Trial Court of Bulacan to set aside as null and void
before the sheriff were defective in that the sheriff failed to the CFI decision in Civil Case No. 4238-M.
comply with the jurisdictional requirements on the manner of
service of notice in the New Rules of Court thus rendering the There is actually a fourth case, No. LRC 750, a petition for cancellation of the
proceedings void ab initio. petitioner's TCT No. 191059 filed by respondent Suntay with the Court of First
Instance of Quezon City.
The defendant-appellant, on the other hand, countered in his
answer that LRC-750 granting the petition for the cancellation On appeal in Civil Case No. 5418-M, the Court of Appeals dismissed petitioner
of TCT No. 191059 in favor of said appellant is res judicata to Obaña's complaint on the grounds of lack of cause of action and res judicata.
the instant case; that plaintiffs recourse under Rule 38 has
long prescribed; that insofar as the plaintiff is concerned, Hence, this present petition.
when she bought the property in question and title was
transferred to her on July 2, 1973, she is charged with Petitioner raises the following assignment of errors, namely:
knowledge of the pendency of Civil Case No. 4238-M thru the
annotation at the back of TCT No. 173792 of the Registry of (T)hat the public respondent Court of Appeals committed a
Deeds of Quezon City; and that there was no-extrinsic fraud grave abuse of discretion amounting to a lack of or in excess
committed by defendant-appellant that may constitute a of jurisdiction, in REVERSING and SETTING ASIDE, the
ground to nullify the judgment in Civil Case No. 4238-M. appealed decision of the Trial Court a quo, despite the clear
merits thereof, and these errors of public respondent are
manifest in the following:
178 of 501
1. THAT PETITIONER HAS NO CAUSE OF The sheriffs sale was affected without any personal notice to Liberty H. Dizon
ACTION, SINCE SHE WAS NOT A on the ground that she had moved out of her old address and her "present
DEFENDANT NOR A PARTY IN INTEREST address" was unknown. No notice was served on Obaña because she was not a
IN CC NO. 4238-M (BRANCH VII, CFI, party in the collection case. All notices and summonses in the collection case
BULACAN); filed on November 9, 1972 including the copy of the complaint, the original
summons, the alias summons, the notice of levy on attachment of the disputed
2. THAT THE COMPLAINT FOR property, the notice of levy on execution and the notice of sheriffs sale were
ANNULMENT OF DECISION IS BARRED served through mail to defendant Dizon at 34-H Caingin Road, Cypress
FOR REASON OF RES JUDICATA, SINCE Village, Quezon City. As earlier stated, because the Sheriff could not serve the
BETWEEN LRC-750 AND CC 5418-M, THERE complaint and the summons on Dizon who had moved out of the above
IS AN IDENTITY OF PARTIES AND address, service by publication upon Dizon was authorized by the court in the
SUBJECT MATTER, AND CAUSES OF collection case.
ACTIONS. (Rollo, pp. 10-11)
In the annulment of judgment case which led to this petition, the trial court
There are certain facts overlooked by the Court of Appeals which call for the ruled:
setting aside of its decision.
On the question as to whether the Bulacan Court of First
Civil Case No. 4238-M was an action for sum of money filed by Atty. Suntay Instance had acquired jurisdiction over the defendants in the
against liberty Dizon and her minor children in an effort to collect attorney's civil case in question thru summons by publication, the latest
fees in the guardianship case he handled for them. The guardianship court case law on the matter is to the affect that in an action
authorized the payment of P5,000.00. According to the Court of Appeals, the strictly in personam personal service of summons within the
collection case was between Suntay on one hand and Dizon and her children forum is essential to the acquisition of jurisdiction over the
on the other. It ruled that petitioner Obaña the buyer of the lot, is not a party person of the defendant who does not voluntarily submit to
in interest and had neither personality nor cause of action to ask for the the authority of the court. In other words by publication
annulment of the judgment in that case. cannot — consistently with the due process clause in the Bill
of Rights — confer upon the court jurisdiction over said
This may be so, if the facts end there. However, the judgment in Civil Case No. defendants (Magdalena Estate, Inc. v. Nieto, et al. G. R. No.
4238-M, while against Dizon and her children was executed against property 54242, November 25, 1983, citing Citizens Surety & , Inc. v.
belonging to petitioner Obaña. Judge Melencio Herrera, et al. 38 SCRA 369 [1971]; see also
Pantaleon v. Asuncion, 105 Phil. 761 [1059]; contra Fontanillal
The house and lot in Quezon City which Dizon sold to Obaña for P150,000.00 v. Dominguez, 73 Phil. 579 [1042]). There is no question that
was executed upon by the Sheriff to satisfy the P10,000.00 attorney's fees in the Civil Case No. 4238-M filed before the Court of First of
Dizon guardianship case and another P5,000.00 awarded to Suntay for his fees Bulacan was a personal action being one for the recovery of a
in prosecuting his own collection case. The house and lot were sold for sum of money as it prayed for judgment ordering the
P17,402.90 to respondent Suntay. According to the petitioner, the Property she defendants jointly and severally to pay plaintiff the sum of
purchased for P150,000.00 on May 16, 1973 is now worth over Pl,000,000.00. P10,000.00 with legal interest thereon from the date of the
179 of 501
filing of this complaint; the sum of P5,000.00 as attorney's In Baltazar v. Court of Appeals (G.R. No. 78728, December 8, 1988) we stated
fees plus actual, moral and exemplary damages upon such that the propriety of service of summons by publication is not dependent upon
amounts as this Honorable Court may deem just and the technical characterization of the action as one in rem or quasi in rem but
equitable and the costs of suit. The creditor, however, in an upon compliance with the requirements for the situations found in Sections
action in personam can take the recourse to locate properties, 16, 17, and 18 of Rule 14 of the Rules of Court. We declared the service of
real or personal of the resident defendant-debtor with summons by publication as "legally and constitutionally vitiated." In the
unknown address and causing said properties to be attached present case, however, the action was one in personam. The service was
under Rule 57 of Section l(f) in which case the attachment equally void and of no effect.
converts the action into a proceeding in rem or quasi in
rem and the summons by publication may then be deemed The Court of Appeals reversed the trial court principally on the ground that
valid and effective. (Ibid) In the at bar, it appears on record Leonora Obaña was neither a defendant nor a party-in-interest in the
that the plaintiff who is supposed to be the creditor availed of collection case. It ignored the fact that property already sold to her was
this remedy of attachment. This would have converted the attached and then bedded out to Atty. Suntay without any notice to her. And
action into a proceeding in rem and thus rendered as proper because the notice of lis pendens in the collection case was secured ex-parte
the summons by publication. But the validity of the without the defendant Dizon and petitioner Obaña who were never brought to
attachment is now contented by the herein plaintiff on the court, having any inkling about it, the notice was not annotated on the
ground that the proceedings before the sheriff in connection owner's duplicate copy of Transfer Certificate of Title No. 173792.
with Civil Case No. 4238-M especially the notice of levy of
attachment of the property subject matter of the action were Respondent Suntay cannot claim ignorance of the sale to petitioner Obaña as a
defective and invalid for not having been in accordance with ground for not bringing her into the picture. As stressed by the petitioner,
the provisions of Rule 57 of the Rules of Court on attachment. Liberty Dizon filed her motion for the approval of the sale of the disputed
(pp. 27-29, Rollo) house and lot in the guardianship case SP-C-00565 through her counsel, herein
private respondent Suntay (Exh. Q, original records). He could not have been
In Venturanza v. Court of Appeals (156 SCRA 305, 312 [1987}), this Court ruled: unaware that the house and lot he was attaching had been sold to Obaña
because the sale of the Dalmar property was authorized by the guardianship
There is no question that the case at bar which is an action for court in the case where he was counsel for the guardian.
collection of a sum of money is an action in personam thereby
requiring personal service of summons on the defendants. Considering all the foregoing circumstances, the order in LRC 750 which is
based on irregular proceedings in the prior case and which directed the
It should be noted that Section 7 of Rule 57 requires that in attaching real cancellation of Obaña's transfer certificate of title cannot assume finality. The
property a copy of the order, description, and notice must be served on the respondent court committed reversible error in using it as a basis for res
occupant, in this case the occupant at 48 Damortiz Street, Damar Village, judicata. There is the added factor that a land registration court in a
Quezon City. The trial court in the annulment case ruled that the attachment cancellation of title case could not possibly inquire into the controversial
was void from the beginning. The action in personam which required personal matters raised in the annulment of judgment case. (See Register of Deeds of
service was never converted into an action in rem where service by publication Iloilo v. Hodges, 7 SCRA 149 [1963]; Sunpongco v. Heirs of Nicolas Ronquillo,
would have been valid.
180 of 501
36 SCRA 395 [1970] and Development Bank of the Philippines v. Jimenez, 36

SCRA 426 [1976]).
The respondent court ruled that Liberty H. Dizon and her wards should have
been joined as plaintiffs by petitioner Obaña in the action to annul the
judgment in the collection case. This ruling ignores the fact that Dizon could
not even be summoned in the collection case; her whereabouts are unknown:
the judgment against her was a default judgment; she has apparently no more
interest whatsoever in the house and lot she sold to Obaña and she still owes
Atty. Suntay P10,000.00.
And finally in our capacity as a court of equity in addition to being a court of

law, we cannot close our eyes to the rank injustice whereby the owner of a
minion peso house and lot is compelled to give up her property to answer for a
P10,000.00 attorney's fee incurred by its former owner and which the lawyer
cannot apparently collect from his own client.
WHEREFORE, the petition is hereby GRANTED. The questioned decision of

the Court of Appeals is REVERSED and SET ASIDE. The decision of the trial
court in Civil Case No. 5418-M which reads:
"Premises considered, the judgment issued in Civil Case No.

4238-OM as well as the proceedings, orders and notices issued
therein including the writ of attachment, levy and execution
sale are hereby declared null and void. The Register of Deeds
is therefore permanently restrained from effecting the
cancellation of title in the name of herein plaintiff. For moral
damages, the said plaintiff is hereby awarded the amount of
P10,000.00, and for attorney's fees, the amount of P15,000.00.
Costs against the defendant." (p. 35, Rollo)
is REINSTATED.
SO ORDERED.
181 of 501
‘In line with the same principle, it was held that where a
preliminary attachment in favor of ‘A’ was recorded on
Du v. Stronghold Insurance, 433 S 43 November 11, 1932, and the private sale of the attached
property in favor of ‘B’ was executed on May 29, 1933, the
attachment lien has priority over the private sale, which
means that the purchaser took the property subject to such
FIRST DIVISION attachment lien and to all of its consequences, one of which is
the subsequent sale on execution (Tambao v. Suy, 52 Phil.
G.R. No. 156580 June 14, 2004 237). The auction sale being a necessary sequel to the levy, it
enjoys the same preference as the attachment lien enjoys over
LUZ DU, petitioner, the private sale. In other words, the auction sale retroacts to
vs. the date of the levy. [Were] the rule be otherwise, the
STRONGHOLD INSURANCE Promulgated: CO., INC., respondent. preference enjoyed by the levy of execution would be
meaningless and illusory (Capistrano v. Phil. Nat. Bank, 101
DECISION Phil. 1117).’ (Underscoring supplied)
PANGANIBAN, J.: "By and large, We find no reversible error in the appealed decision.
Preference is given to a duly registered attachment over a subsequent notice of "IN VIEW OF ALL THE FOREGOING, the instant appeal is
4
lis pendens, even if the beneficiary of the notice acquired the subject property ordered DISMISSED. No pronouncement as to cost."
before the registration of the attachment. Under the torrens system, the
auction sale of an attached realty retroacts to the date the levy was registered. The questioned Resolution, on the other hand, denied petitioner’s Motion for
Reconsideration.
The Case
The Facts
1
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking
2
to nullify the March 19, 2002 Decision and the December 5, 2002 The CA narrated the facts as follows:
3
Resolution of the Court of Appeals (CA) in CA-GR CV No. 50884. The CA
disposed as follows: "x x x Aurora Olarte de Leon was the registered owner of Lot No. 10-A
(LRC Psd 336366) per Transfer Certificate of Title No. 582/T-3.
"Parenthetically, when the decision in Civil Case No. 90-1848 became Sometime in January 1989, De Leon sold the property to Luz Du under
final and executory, levy on execution issued and the attached a ‘Conditional Deed of Sale’ wherein said vendee paid a down payment
property sold at public auction, the latter retroacts to the date of the of P75,000.00 leaving a balance of P95,000.00.
levy. Said the High Court:
"Then again, on April 28, 1989, Aurora de Leon sold [the] same
property to spouses Enrique and Rosita Caliwag without prior notice
182 of 501
to Luz Du. As a result, Transfer Certificate of Title No. 582/T-3 was "Under the above historical backdrop, Luz Du commenced the present
cancelled and Transfer Certificate of Title No. 2200 was issued in favor case (docketed as Civil Case No. 64645) to cancel Transfer Certificate
of the Caliwag spouses. of Title No. 6444 in the name of Stronghold with damages claiming
priority rights over the property by virtue of her Notice Of Lis
"Meanwhile, Stronghold Insurance Corp., Inc. x x x commenced Civil Pendens under Entry No. 13305 and inscribed on January 3, 1991, and
Case No. 90-1848 against spouses Rosita and Enrique Caliwag et al., the final and executory decision in Civil Case No. 60319 she filed
for allegedly defrauding Stronghold and misappropriating the against spouses Enrique and Rosita Caliwag. According to Luz Du,
company’s fund by falsifying and simulating purchases of despite her said notice of lis pendens annotated, Stronghold still
documentary stamps. The action was accompanied by a prayer for a proceeded with the execution of the decision in Civil Case No. 90-1848
writ of preliminary attachment duly annotated at the back of Transfer against the subject lot and ultimately the issuance of Transfer
6
Certificate of Title No. 2200 on August 7, 1990. Certificate of Title No. 6444 in its (Stronghold’s) name."
"On her part, on December 21, 1990, Luz Du initiated Civil Case No. The trial court ruled that Stronghold had superior rights over the property
60319 against Aurora de Leon and the spouses Caliwag for the because of the prior registration of the latter’s notice of levy on attachment on
annulment of the sale by De Leon in favor of the Caliwags, anchored Transfer Certificate of Title (TCT) No. 2200. For this reason, it found no basis
on the earlier mentioned Deed of Conditional Sale. to nullify TCT No. 6444, which was issued in the name of respondent after the
latter had purchased the property in a public auction.
"On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis
Pendens at the back of Transfer Certificate of Title No. 2200. Ruling of the Court of Appeals
"On February 11, 1991, the decision was handed down in Civil Case No. Sustaining the trial court in toto, the CA held that Stronghold’s notice of levy
90-1848 in favor of Stronghold, ordering the spouses Caliwag jointly on attachment had been registered almost five (5) months before petitioner’s
and severally to pay the plaintiff P8,691,681.60, among others. When notice of lis pendens. Hence, respondent enjoyed priority in time. Such
the decision became final and executory, on March 12, 1991, a notice of registration, the appellate court added, constituted constructive notice to
levy on execution was annotated on Transfer Certificate of Title No. petitioner and all third persons from the time of Stronghold’s entry, as
2200 and the attached property was sold in a public auction. On provided under the Land Registration Act -- now the Property Registration
5
[August] 5, 1991, the certificate of sale and the final Deed of Sale in Decree.
favor of Stronghold were inscribed and annotated leading to the
cancellation of Transfer Certificate of Title No. 2200 and in lieu The CA also held that respondent was a purchaser in good faith. The necessary
thereof, Transfer Certificate of Title No. 6444 was issued in the name sequels of execution and sale retroacted to the time when Stronghold
of Stronghold. registered its notice of levy on attachment, at a time when there was nothing
on TCT No. 2200 that would show any defect in the title or any adverse claim
"It came to pass that on August 5, 1992, Luz Du too was able to secure over the property.
a favorable judgment in Civil Case No. 60319 and which became final
7
and executory sometime in 1993, as well. Hence, this Petition.
183 of 501
Issues "x x x. It is true that she bought the lots with pacto de retro but the
fact of her purchase was not noted on the certificates of title until long
Petitioner submits the following issues for our consideration: after the attachment and its inscription on the certificates. In the
registry, therefore, the attachment appeared in the nature of a real
"I. lien when Apolonia Gomez had her purchase recorded. The legal
effect of the notation of said lien was to subject and subordinate the
"Whether a Notice of Levy on Attachment on the property is a right of Apolonia Gomez, as purchaser, to the lien. She acquired the
superior lien over that of the unregistered right of a buyer of a ownership of the said parcels only from the date of the recording of
property in possession pursuant to a Deed of Conditional Sale. her title in the register, which took place on November 21, 1932 (sec. 51
of Act No. 496; Liong-Wong-Shih vs. Sunico and Peterson, 8 Phil. 91;
"II. Tabigue vs. Green, 11 Phil. 102; Buzon vs. Lucauco, 13 Phil. 354; and
Worcester vs. Ocampo and Ocampo, 34 Phil. 646), and the right of
"Whether the acquisition of the subject property by Respondent ownership which she inscribed was not an absolute but a limited
8
Stronghold was tainted with bad faith." right, subject to a prior registered lien, by virtue of which Levy
Hermanos, Inc. was entitled to the execution of the judgment credit
The Court’s Ruling over the lands in question, a right which is preferred and superior to
that of the plaintiff (sec, 51, Act No. 496 and decisions cited above). x x
10
The Petition has no merit. x"
Main Issue: Indeed, the subsequent sale of the property to the attaching creditor must, of
necessity, retroact to the date of the levy. Otherwise, the preference created by
11
Superiority of Rights the levy would be meaningless and illusory, as reiterated in Defensor v. Brillo:
Petitioner submits that her unregistered right over the property by way of "x x x. The doctrine is well-settled that a levy on execution duly
a prior conditional sale in 1989 enjoys preference over the lien of Stronghold -- registered takes preference over a prior unregistered sale; and that
a lien that was created by the registration of respondent’s levy on attachment even if the prior sale is subsequently registered before the sale in
in 1990. Maintaining that the ruling in Capistrano v. PNB was improperly execution but after the levy was duly made, the validity of the
applied by the Court of Appeals, petitioner avers that unlike the circumstances execution sale should be maintained, because it retroacts to the date
in that case, the property herein had been sold to her before the levy. We do of the levy; otherwise, the preference created by the levy would be
not agree. meaningless and illusory.
The preference given to a duly registered levy on attachment or execution over "Even assuming, therefore, that the entry of appellants’ sales in the
a prior unregistered sale is well-settled in our jurisdiction. As early as Gomez v. books of the Register of Deeds on November 5, 1949 operated to
9
Levy Hermanos, this Court has held that an attachment that is duly annotated convey the lands to them even without the corresponding entry in the
on a certificate of title is superior to the right of a prior but unregistered buyer. owner’s duplicate titles, the levy on execution on the same lots in Civil
In that case, the Court explained as follows: Case No. 1182 on August 3, 1949, and their subsequent sale to appellee
184 of 501
Brillo (which retroacts to the date of the levy) still takes precedence over land to which it relates lies, be constructive notice to all persons from
and must be preferred to appellants’ deeds of sale which were registered the time of such registering, filing or entering."(Italics
only on November 5, 1949. supplied)1avvphil.net
"This result is a necessary consequence of the fact that the properties As the property in this case was covered by the torrens system, the registration
14
herein involved were duly registered under Act No. 496, and of the of Stronghold’s attachment was the operative act that gave validity to the
15
fundamental principle that registration is the operative act that transfer and created a lien upon the land in favor of respondent.
conveys and binds lands covered by Torrens titles (sections 50, 51, Act
496). Hence, if appellants became owners of the properties in Capistrano Ruling
question by virtue of the recording of the conveyances in their favor,
their title arose already subject to the levy in favor of the appellee, Correctly Applied
which had been noted ahead in the records of the Register of
12
Deeds." (Citations omitted, italics supplied) The preference created by the levy on attachment is not diminished even by
16
the subsequent registration of the prior sale. That was the import
17
The Court has steadfastly adhered to the governing principle set forth in of Capistrano v. PNB, which held that precedence should be given to a levy on
13
Sections 51 and 52 of Presidential Decree No. 1529: attachment or execution, whose registration was before that of the prior sale.
"SEC. 51. Conveyance and other dealings by registered owner. - An In Capistrano, the sale of the land in question -- though made as far back as
owner of registered land may convey, mortgage, lease, charge or 1946 -- was registered only in 1953, after the property had already been
otherwise deal with the same in accordance with existing laws. He subjected to a levy on execution by the Philippine National Bank. The present
may use such forms of deeds, mortgages, leases or other voluntary case is not much different. The stipulation of facts shows that Stronghold had
instruments as are sufficient in law. But no deed, mortgage, lease, or already registered its levy on attachment before petitioner annotated her
other voluntary instrument, except a will purporting to convey or notice of lis pendens. As in Capistrano, she invokes the alleged superior right
affect registered land shall take effect as a conveyance or bind the of a prior unregistered buyer to overcome respondent’s lien.
land, but shall operate only as a contract between the parties and as
evidence of authority to the Registry of Deeds to make registration. If either the third-party claim or the subsequent registration of the prior sale
was insufficient to defeat the previously registered attachment lien, as ruled by
"The act of registration shall be the operative act to convey or affect the the Court in Capistrano, it follows that a notice of lis pendens is likewise
land insofar as third persons are concerned, and in all cases under this insufficient for the same purpose. Such notice does not establish a lien or an
18
Decree, the registration shall be made in the office of the Register of encumbrance on the property affected. As the name suggests, a notice of lis
Deeds for the province or the city where the land lies. pendens with respect to a disputed property is intended merely to inform third
persons that any of their transactions in connection therewith -- if entered
"SEC. 52. Constructive notice upon registration. - Every conveyance, into subsequent to the notation -- would be subject to the result of the suit.
mortgage, lease, lien, attachment, order, judgment, instrument or
entry affecting registered land shall, if registered, filed or entered in In view of the foregoing, the CA correctly applied Capistrano, as follows:
the office of the Register of Deeds for the province or city where the
185 of 501
"x x x the rule now followed is that if the attachment or levy of judgment in the case. As Stronghold is deemed to have acquired the property -
execution, though posterior to the sale, is registered before the sale is - not at the time of actual purchase but at the time of the attachment -- it was
registered, it takes precedence over the latter. an innocent purchaser for value and in good faith.
"The rule is not altered by the fact that at the time of the execution sale WHEREFORE, the Petition is DENIED, and the assailed Decision and
the Philippine National Bank had information that the land levied upon Resolution AFFIRMED. Costs against petitioner.
had already been deeded by the judgment debtor and his wife to
Capistrano. The auction sale being a necessary sequel to the levy, for SO ORDERED.
this was effected precisely to carry out the sale, the purchase made by
the bank at said auction should enjoy the same legal priority that the
levy had over the sale in favor of plaintiff. In other words, the auction
sale retroacts to the date of the levy. Were the rule otherwise, the
preference enjoyed by the levy of execution in a case like the present
19
would be meaningless and illusory." (Citations omitted, italics
supplied)
Second Issue:
Taking in Bad Faith
We now tackle the next question of petitioner: whether Stronghold was a

purchaser in good faith. Suffice it to say that when Stronghold registered its
notice of attachment, it did not know that the land being attached had been
sold to petitioner. It had no such knowledge precisely because the sale, unlike
the attachment, had not been registered. It is settled that a person dealing
with registered property may rely on the title and be charged with notice of
20
only such burdens and claims as are annotated thereon. This principle
applies with more force to this case, absent any allegation or proof that
Stronghold had actual knowledge of the sale to petitioner before the
registration of its attachment.
Thus, the annotation of respondent’s notice of attachment was a registration

21
in good faith, the kind that made its prior right enforceable.
Moreover, it is only after the notice of lis pendens is inscribed in the Office of
the Register of Deeds that purchasers of the property become bound by the
186 of 501
docketed as Civil Case No. 5748 with application for the issuance of a Writ of
5
Preliminary Attachment.
Valdevieso v. Damalerio, 451 S 664
On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by
SECOND DIVISION virtue of which the property, then still in the name of Lorenzo Uy but which
had already been sold to petitioner, was levied. The levy was duly recorded in
G.R. No. 133303 February 17, 2005 the Register of Deeds of General Santos City and annotated upon TCT No. T-
6
BERNARDO VALDEVIESO, petitioner,vs. CANDELARIO DAMALERIO AND 30586.
AUREA C. DAMALERIO, respondents.
DECISION On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled
CHICO-NAZARIO, J.: and, in lieu thereof, TCT No. T-74439 was issued in the name of
7
petitioner. This new TCT carried with it the attachment in favor of
Before this Court is a Petition for Review under Rule 45 of the Rules of Court, respondents.
seeking to set aside the 25 September 1997 Decision and the 10 February 1998
Resolution of the Court of Appeals in CA-G.R. SP No. 43082 entitled, On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748
"Candelario Damalerio and Aurea Damalerio v. Honorable Antonio S. Alano, et to discharge or annul the attachment levied on the property covered by TCT
1
al." No. T-74439 on the ground that the said property belongs to him and no
8
longer to Lorenzo and Elenita Uy.
There is no dispute as to the following facts:
In a resolution dated 21 October 1996, the trial court ruled for the
9 10 11
On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses petitioner. Citing Manliguez v. Court of Appeals andSantos v. Bayhon, it
Lorenzo and Elenita Uy a parcel of land consisting of 10,000 square meters, held that the levy of the property by virtue of attachment is lawful only when
more or less, located at Bo. Tambler, General Santos City, and covered by the levied property indubitably belongs to the defendant. Applying the rulings
2
Transfer Certificate of Title (TCT) No. T-30586. in the cited cases, it opined that although defendant Lorenzo Uy remained the
registered owner of the property attached, yet the fact was that he was no
The deed of sale was not registered, nor was the title of the land transferred to longer the owner thereof as it was already sold earlier to petitioner, hence, the
3
petitioner. writ of attachment was unlawful.1awphi1.nét
On 07 December 1995, the said property was immediately declared by Respondents sought reconsideration thereof which was denied by the trial
12
petitioner for taxation purposes as Tax Declaration No. l6205 with the City court in a resolution dated 03 January 1997.
4
Assessor’s Office.
From the unfavorable resolution of the trial court in the third-party claim,
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio respondents appealed to the Court of Appeals. The appellate court reversed
(respondents) filed with the Regional Trial Court (RTC) of General Santos City, the resolution and by judgment promulgated on 25 September 1997, it
a complaint for a sum of money against spouses Lorenzo and Elenita Uy declared that an attachment or levy of execution, though posterior to the sale,
but if registered before the sale is registered, takes precedence over the
187 of 501
13
sale. The writ of attachment in favor of the respondents, being recorded enjoys preference and priority over petitioner’s earlier unregistered deed of
ahead of the sale to petitioner, will therefore take precedence. sale over the same property. They also contend that Articles 1477 and 1498 of
the Civil Code as cited by petitioner are not applicable to the case because said
Petitioner moved for reconsideration but this was denied by the Court of provisions apply only as between the parties to the deed of sale. These
14
Appeals in its Resolution of 10 February 1998. provisions do not apply to, nor bind, third parties, like respondents, because
what affects or binds third parties is the registration of the instrument in the
Hence, this Petition for Review on Certiorari. Register of Deeds. Furthermore, respondents argue that petitioner cannot
invoke equity in his favor unless the following conditions are met: (a) the
The sole issue in this case is whether or not a registered writ of attachment on absence of specific provision of a law on the matter; and (b) if the person who
the land is a superior lien over that of an earlier unregistered deed of sale. invokes it is not guilty of delay. Both conditions have not been met, however,
since there is a law on the subject matter, i.e., Section 51 of Presidential Decree
Petitioner maintains that he has a superior right over the questioned property No. 1529, and that petitioner allegedly slept on his rights by not immediately
because when the same was attached on 23 April 1996, this property was no registering an adverse claim based on his deed of sale.
longer owned by spouses Uy against whom attachment was issued as it was
already sold to petitioner on 05 December 1995. The ownership thereof was We agree with the respondents.
15
already transferred to petitioner pursuant to Article 1477 in relation to Article
16
1498 of the Civil Code. The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said
Section provides:
Dismissing the allegation that he slept on his rights by not immediately
registering at least an adverse claim based on his deed of sale, petitioner avers Sec. 51. Conveyance and other dealings by registered owner. - An owner of
that he promptly worked out for the transfer of registration in his name. The registered land may convey, mortgage, lease, charge, or otherwise deal with
slight delay in the registration, he claims was not due to his fault but the same in accordance with existing laws. He may use such forms of deeds,
attributable to the process involved in the registration of property such as the mortgages, leases or other voluntary instruments as are sufficient in law. But
issuance of the Department of Agrarian Reform clearance which was effected no deed, mortgage, lease, or other voluntary instrument, except a will
only after compliance with several requirements.1awphi1.nét purporting to convey or affect registered land, shall take effect as a conveyance
or bind the land, but shall operate only as a contract between the parties and
Considering the peculiar facts and circumstances obtaining in this case, as evidence of authority to the Register of Deeds to make registration.
petitioner submits it would be in accord with justice and equity to declare him
as having a superior right to the disputed property than the respondents. The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, and in all cases under this Decree, the
Respondents maintain the contrary view. They aver that registration of a deed registration shall be made in the office of the Register of Deeds for the
of sale is the operative act which binds the land and creates a lien thereon. province or city where the land lies.
Before the registration of the deed, the property is not bound insofar as third
persons are concerned. Since the writ of attachment in favor of respondents It is to be noted that though the subject land was deeded to petitioner as early
was registered earlier than the deed of sale to petitioner, respondents were of as 05 December 1995, it was not until 06 June 1996 that the conveyance was
the belief that their registered writ of attachment on the subject property registered, and, during that interregnum, the land was subjected to a levy on
188 of 501
attachment. It should also be observed that, at the time of the attachment of the date of the recording of his title in the register, and the right of ownership
the property on 23 April 1996, the spouses Uy were still the registered owners which he inscribed was not absolute but a limited right, subject to a prior
of said property. Under the cited law, the execution of the deed of sale in favor registered lien of respondents, a right which is preferred and superior to that
22
of petitioner was not enough as a succeeding step had to be taken, which was of petitioner.
the registration of the sale from the spouses Uy to him. Insofar as third
persons are concerned, what validly transfers or conveys a person’s interest in Anent petitioner’s reliance on the rulings laid down in Manliguez v. Court of
real property is the registration of the deed. Thus, when petitioner bought the Appeals and Santos v. Bayhon, we find the same to be misplaced. These cases
property on 05 December 1995, it was, at that point, no more than a private did not deal at all with the dilemma at hand, i.e. the question of whether or
transaction between him and the spouses Uy. It needed to be registered before not a registered writ of attachment on land is superior to that of an earlier
it could bind third parties, including respondents. When the registration unregistered deed of sale. In Santos, what was involved were machinery and
finally took place on 06 June 1996, it was already too late because, by then, the pieces of equipment which were executed upon pursuant to the favorable
levy in favor of respondents, pursuant to the preliminary attachment ordered ruling of the National Labor Relations Commission. A third party claimed that
by the General Santos City RTC, had already been annotated on the title. the machinery were already sold to her, but it does not appear in the facts of
the case if such sale was ever registered.l^vvphi1.net Manliguez is similar
The settled rule is that levy on attachment, duly registered, takes preference to Santos, except that the former involved buildings and improvements on a
17
over a prior unregistered sale. This result is a necessary consequence of the piece of land. To stress, in both cited cases, the registration of the sale, if any,
fact that the property involved was duly covered by the Torrens system which of the subject properties was never in issue.1awphi1.nét
works under the fundamental principle that registration is the operative act
18
which gives validity to the transfer or creates a lien upon the land. As to petitioner’s invocation of equity, we cannot, at this instance, yield to
such principle in the presence of a law clearly applicable to the case. We
The preference created by the levy on attachment is not diminished even by reiterate that this Court, while aware of its equity jurisdiction, is first and
23
the subsequent registration of the prior sale. This is so because an attachment foremost, a court of law. While equity might tilt on the side of one party, the
19
is a proceeding in rem. It is against the particular property, enforceable same cannot be enforced so as to overrule positive provisions of law in favor of
24 25
against the whole world. The attaching creditor acquires a specific lien on the the other. Equity cannot supplant or contravene the law. The rule must
attached property which nothing can subsequently destroy except the very stand no matter how harsh it may seem. Dura lex sed lex.
20
dissolution of the attachment or levy itself. Such a proceeding, in effect,
means that the property attached is an indebted thing and a virtual WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP
21
condemnation of it to pay the owner’s debt. The lien continues until the debt No. 43082 dated 25 September 1997, and its Resolution dated 10 February 1998,
is paid, or sale is had under execution issued on the judgment, or until the are hereby AFFIRMED. No costs.
judgment is satisfied, or the attachment discharged or vacated in some
manner provided by law. SO ORDERED.
Thus, in the registry, the attachment in favor of respondents appeared in the

nature of a real lien when petitioner had his purchase recorded. The effect of
the notation of said lien was to subject and subordinate the right of petitioner,
as purchaser, to the lien. Petitioner acquired ownership of the land only from
189 of 501
2. The court erred in holding that the sale of June 16, 1908, was rescinded in a
way affecting this defendant.
Walker v. McMicking, 14 Phil. 668
3. The court erred in holding that the rescission does not involve a precedent
condition to return the amounts paid on account of the purchase price.
EN BANC
4. The court erred in making an excessive valuation of the goods in question.
DECISION
Under the first above assignment of error, the appellant contends that the
December 23, 1909 lower court committed an error in holding the attachment of the 17th of
December, 1908, was null and void. The appellant relies upon Exhibit 1 (the
G.R. No. 5534 writ of attachment) for the purpose of showing that said attachment was valid.
HERBERT S. WALKER and W. J. ROHDE, plaintiffs-appellees, Exhibit 1 was not made a part of the record in this court. We can not,
vs. therefore, examine it for the purpose of ascertaining just what its contents
JOSE McMICKING, defendant-appellant. were. The lower court, in discussing the validity of said attachment and its
effect upon the present action, said:
O’Brien and De Witt for appellant.
Roman Lacson for appellees. The defendant is not sued in any official capacity, nor does he, in answer, or
JOHNSON, J.: elsewhere, claim any such status. In fact his answer is only a general denial. He
On the 5th day of February, 1909, the plaintiff commenced an action in the offers in evidence, however, a writ of attachment (Exhibit 1) issued by one of the
Court of First Instance of the city of Manila to recover the possession of certain judges of this court on December 16, 1908, on the back of which appears an
personal property mentioned in paragraph 1 of the complaint, or in default indorsement to the effect that the sheriff of Manila delivered a copy of the writ
thereof the sum of P1,500, its value, and costs. The defendant filed a general and affidavit upon the which the same was founded, to Arenas & Co. and that
denial. said sheriff attached certain articles therein mentioned, some of which appear to
be similar to those in controversy, though the identity does not seem to be
After hearing the evidence adduced during the trial of the cause, the lower clearly established. The indorsement further recites that “the goods are found
court rendered a judgment adjudging to Herbert S. Walker, the right to deposited . . . in the possession of the same defendants according to a stipulation
recover the articles mentioned in paragraph 1 of the complaint, of the signed by both parties which is attached to this writ.” The attached stipulation
defendant, or in default, the sum of P539, with interest at the rate of 5 per cent recites that all the goods attached “shall remain in the possession of the same
per annum, from February 6, 1909. defendants, relieving the sheriff of all responsibility as regards the care and
custody thereof.” Plaintiff Rohde further testifies (p. 13) that he never heard of
From this judgment the defendant appealed and made the following
the attachment until about the 29th of January, that he continued in possession
assignments of error:
from the time Arenas surrender to him and that the latter was permitted to enter
1. The court erred in holding that the attachment of December 17, 1908, was null only for the purpose of preparing the articles for sale.
as to this defendant. Section 428 of the Code of Civil Procedure requires: “The order of attachment
shall be served by the officer of the court by attaching, and safely keeping all the
movable property of the defendant.”
190 of 501
It will be seem from the recitals above quoted that the sheriff never claims to Walker, early in the month of January, 1909, by virtue of the said provision of
have taken into his “keeping” the articles in controversy, but, on the contrary, the contract, rescinded said sale and took possession of said factory with its
left them with the attachment defendants, expressly relieving himself of all contents. The factory was located upon land belonging to the plaintiff Rohde.
responsibility. This is clearly not a compliance with the statute and did not effect The said company had failed for some months to pay the rent for the land. The
a valid attachment. A mere verbal declaration of seizure or service of writ is plaintiff Rohde claimed that by virtue of the provisions of paragraph 7 of
insufficient. (Hollister vs. Goodale, 21 Am. Dec. 674; Jones vs. Howard, 59 Am. article 1922 of the Civil Code that he had a preferred claim against the said
St. Rep. 231; Miles vs. Brown, 38 N.Y. Supr. Ct., 400.) There must be actual factory and its contents for the payment of the rent. The plaintiff Rohde,
assumption of control (4 Cyc., 484, 485.) This is not saying that a defendant acting for himself and for the plaintiff Walker, took possession of said factory
may not be custodian; but the possession and responsibility must be the sheriff’s and its contents, on or about the first of January, 1909. Mr. Rohde testified that
and not the defendant’s. If as stated in defendant’s brief, such an arrangement is at the time he took possession of said factory, representing himself and the
an everyday occurrence in attachment levies, here the vice of it can too soon be said Walker, there was no one in possession of said property except the said
declared. Arenas & Co., and that Arenas & Co. turned said property over to him without
any objection whatever, in fact, that the delivery was made by mutual consent
The facts presented by a preponderance of the evidence seem to be as follows: and agreement.
The plaintiff, Walker, was the owner of a Filipino carriage factory. The It appears, however, that on or about the 16th of December, 1908, the
building in which the factory was operated and its contents were, on the 30th defendant, acting as sheriff of the city of Manila, levied an attachment upon
of June, 1908, sold to a partnership known as “Arenas & Co.,” by plaintiff, the said factory and its contents, by virtue of a judgment theretofore rendered
Walker, whose ownership, at the time of the sale, was not disputed by any of against the said Arenas & Co. The record does not disclose fully just what was
the parties to this action. The contract was evidenced by a writing (Exhibit A), done in effecting said attachment. It appears, however, by an indorsement
from which it appears that the said company was to pay for the said factory upon said alleged writ of attachment, or perhaps by a stipulation between the
and its contents the sum of P3,200, P600 of which was paid at the time of the parties (to the attachment), that the goods attached “shall remain in the
sale (June 30, 1908) and the balance was to be paid in three installments, due, possession of the same defendants, relieving the sheriff of all responsibility as
respectively, P600 on the 15th of July, 1908, P1,000 due on the 15th of regards the care and custody thereof.”
September, 1908, and P1,000 due on the 31st of December, 1908. The said
company paid the installment due on the 15th of July, 1908, but failed to pay The plaintiff Rohde testified that he had never heard of said attachment until
said installments due in September and December. Paragraph 4 of said about the 29th of January, 1909; that he continued in possession from the time
contract (Exhibit A) contains the following provision: (about January 1) that Arenas & Co. surrendered possession to him, and that
Arenas & Co. was only permitted to enter the premises thereafter for the
That, should the said firm of Arenas & Co. not pay me the amounts agreed to on purpose of preparing the contents of said factory for sale.
the dates stated in the previous paragraph or within the thirty days following
any of said terms, the present sale shall be rescinded, and I, Herbert S. Walker, The evident theory of the defendant and appellant is that the attachment had
shall be entitled to take possession of the building as well as of the business and the effect of defeating the right of the plaintiffs in said factory and its contents.
all the goods constituting the same. It appears in the record, that in some way the defendant obtained possession
of the articles mentioned in paragraph 1 of the complaint, and that some time
The said company having failed to pay the second and third installments due early in the month of February, 1909, they were sold for the sum of P191, and a
respectively in September and December, as above indicated, the plaintiff few cents. It is not suggested in the record that the defendant, McMicking, is
191 of 501
sued as sheriff. The defendant does not pretend that what he did was done as property adverse to and exclusive of the attachment debtor, and such property
sheriff. The plaintiff does not attempt to recover of the defendant as sheriff. must be in substantial presence and possession. (Corniff vs. Cook, 95 Ga., 61, 51
The pretension of the plaintiff is that the defendant, Jose McMicking, took Am. St. Rep., 55, 61.) Of course, this does not mean that the attaching officer
possession of certain personal property, and retains the possession of the may not, under an arrangement satisfactory to himself, put anyone in
same, which belongs to them. Even admitting that the defendant did, by virtue possession of the property for the purpose of guarding it, but he can not in this
of an attachment, as sheriff, pretend to take possession of the property in way relieve himself from liability to the parties interested in said attachment.
question, the plaintiffs contend that the attachment was void for the reason
that the defendant, as sheriff, did not comply with the law in levying the said We are of the opinion, and so hold, that the attachment was not properly
attachment. made in accordance with the provisions of the Code of the Procedure in Civil
Actions. There is no pretension, however, in record, on the part of the
The lower court, basing his conclusions upon the provisions of section 428 of defendant, that he attached said property and held the same by virtue of such
the Code of Procedure in Civil Actions, held that the attachment was null for attachment. Even thought this defense had been made by the defendant,
the reason that the defendant did not comply with said section. Section 428 which is only made by his attorney, it would be an admission of the principal
provides that - facts alleged by the plaintiffs in their complaint – to wit, that he had taken
possession of personal property belonging to them. The defense made by the
The order of attachment shall be served by the officer of the court by attaching defendant is new matter to which no reference whatever was made in the
and safely keeping all the movable property of the defendant in the Philippine pleadings, and it is, therefore, upon the whole, inadmissible. Facts not alleged
Islands, or so much thereof as may be sufficient to satisfy the plaintiff’s in the pleadings but offered as evidence, which admit the facts alleged, but
demands, unless the defendants gives security by obligation to the plaintiff, with tend to confess and avoid the facts alleged are not admissible in evidence.
sufficient surety, to be approved by the judge who granted the order of (Bliss on Code Pleadings, 3d ed., 427, and cases cited.) For example: A sues B
attachment, in an amount sufficient to satisfy such demands besides costs, . . . . on a promissory note, setting up the necessary facts in his petition. B answered
The property so attached shall be held to await final judgment in execution, by a general denial. B’s real defense is prescription. B will not be permitted to
unless released as provided in this section or section four hundred and forty. prove prescription for the reasons that (a) he denied the existence of the debt,
and (b) by his evidence tending to show that the said debt is prescribed, he
It will be noted, even admitting that the defendant is here sued as sheriff, and
thereby admits the existence of the debt, which is a confession of his liability.
that his responsibility in this action is as sheriff, that he did not comply with
In other words, the defense of prescriptions is a confession and an avoidance
said section 428, in making said attachment. He did not attach and safely keep
of the obligation.
the movable property attached. A verbal declaration of seizure of service of a
Under the second assignment of error the appellant contends that the original
writ of attachment is not sufficient. There must be an actual taking of
sale of said factory and its contents had not been rescinded by the plaintiffs
possession and placing the attached property under the control of the officer
herein in a manner which in any way affected the defendant. The fourth clause
or someone representing him. (Hollister vs. Goodale, 8 Conn. 332, 21 Am. Dec.
of the contract of sale (Exhibit A) quoted above, gave the vendor of said
674; Jones vs. Howard, 99 Ga. 451, 59 Am. St. Rep. 231.)
factory and contents the right to rescind the sale for a failure to pay any of the
We believe that under said section 428 to constitute a valid levy of an subsequent installments. The plaintiffs testified during the trial that the
attachment, the officer levying it must take actual possession of the property second installment had not been paid, in accordance with the terms of the
attached as far as under the circumstances is practicable. He must put himself contract and that he, therefore, rescinded the contract of sale, to which
in position to, and must assert and, in fact, enforce a dominion over the rescission, the said company (the purchaser) acceded and delivered to the
192 of 501
plaintiff Walker the said carriage factory and its contents. No allegation is became invalid the moment the sheriff lost either his actual or constructive
made by the defendant that either the contract or the rescission of the control over the property.
contract was corruptly made, or for the purpose of defrauding any of the
creditors. Exhibit A was the contract between the said company and the Second. The plaintiffs herein, innocently and in good faith and under a right,
plaintiff Walker. It constituted that law covering the rights of the respective acquired possession of the property in question.
parties to it. (Arts. 1254 and 1255, Civil Code.) The plaintiff Walker did all that
Third. That subsequent to the acquisition of the possession by the plaintiffs, the
was necessary for him to do to rescind said contract.
defendant, in some way which does not appear of record, acquired possession of
Under the third assignment of error, the appellant insists that the contract the property in question, and admits that he subsequently sold it.
could not be rescinded by Walker without returning to Arenas & Co. the
Fourth. The plaintiffs allege that the defendant is in possession of property
amount of money which Arenas & Co. had paid on said contract, and cities
belonging to them, and prays that the same may be returned or its value. The
several provisions of the Civil Code in support of his contention, especially
defendant denies (general denial) that he has the possession of the property. The
article 1295. Arenas & Co. are not parties to this action. Arenas & Co. have
evidence clearly shows that the defendant did take possession of property which
made no claim for the return of the money which they paid on said contract. If
was rightfully in possession of the plaintiffs. He is therefore liable, either to
they have a right to a return of the money which they paid on said contract
return said property or its value.
upon a rescission by Walker, a question which we do not now decide, they are
the only ones which can insist upon it. No such claim is here made. It is not a For all of the foregoing reasons, we are of the opinion and so hold that the
right which the defendant in this action can insist upon. This question is not judgment of the lower court should be affirmed, with costs. So ordered.
involved in the present action for the reason that Arenas & Co. make no such
claim. They are not parties to this action.
Under the fourth assignment of error, the defendant insists or contends that
the value allowed by the lower court for the property in question was
excessive. Upon an examination of the evidence brought to this court, relating
to the value of the property in question, we are of the opinion, and so hold,
that the lower court committed no error in fixing the value of said property at
the sum of P539. The price obtained for property under a forced sale is not a
fair criterion for the purpose of ascertaining the true value of such property.
We have discussed at length assignments of error made by the appellant, but

in our opinion the whole case may be stated briefly as follows:
First. The defendant attached certain property under a writ of execution issued
by one of the courts of the city of Manila, which attachment, however, was levied
upon the property in question. This attachment, however, was rendered invalid
and of no effect for the reason that the defendant did not maintain his control
over the same, either personally or by his representatives. The attachment
193 of 501
After the investigation, Agents Javier and Ancheta recommended, inter alia,
the filing of an administrative case with the Office of the Court
6
NBI v. Tuliao, March 24, 1997 Administrator. Atty. Gerarda G. Galang, Chief of the NBI Legal and
7
Evaluation Division, concurred with said recommendation. On November 13,
THIRD DIVISION 1995, Director Mariano M. Mison of the NBI transmitted to this Court a copy
of the evaluation with the recommendation that appropriate action be taken
8
against respondent.
A.M. No. P-96-1184 March 24, 1997 Hence, this administrative complaint now before us.
NATIONAL BUREAU OF INVESTIGATION and SANTIAGO N. The Facts

SALVADOR, complainants,
vs. Complainant Salvador bought a passenger jeep from Lito G. Ignacio to be paid
RODOLFO G. TULIAO, Sheriff IV of the RTC of Cauayan, Isabela, Branch in monthly installments of P7,000.00 with a down payment of P50,000.00.
20, respondent. After remitting the down payment, complainant diligently paid all monthly
amortizations until March 1994 when, in the absence of Ignacio, the
complainant was forced to pay to an unnamed brother of the seller the
amounts due for the months of April and May 1994. However, the brother
PANGANIBAN, J.: failed to remit said amount to the seller; thus, the latter filed with the Regional
9
Trial Court of Cauayan, Isabela, Branch 20 a suit for collection docketed as
Sheriffs play an important role in the administration of justice. They form an Civil Case No. 20-757, entitled Pisces Motor Works, Represented by Lito D.
integral part thereof because they are called upon to serve court writs, execute Ignacio vs. Santiago Salvador.
all processes, and carry into effect the orders of the court with due care and
1
utmost diligence. As agents of the law, high standards are expected of them. Subsequently, an order was issued by the RTC directing respondent sheriff to
In the present case, respondent sheriff failed to live up to these standards. attach the passenger jeep. Complainant, through counsel, filed a motion to
discharge attachment upon filing of a counterbond for the release of the
A complaint against Respondent Deputy Provincial Sheriff Rodolfo G. Tuliao vehicle in his favor. Due to some defects in the aforementioned motion, a
of the Regional Trial Court of Cauayan, Isabela, Branch 20 was filed by second motion with counterbond was filed. On July 13, 1994, the trial court
10
Santiago N. Salvador before the Tuguegarao Sub-Office (TUGSO) of the issued an order, the decretal portion of which reads, to wit:
2
National Bureau of Investigation ("NBI"). An investigation was conducted by
Agent-in-Charge Franklin Javier and Agent Raul A. Ancheta. On November 24, WHEREFORE, and in view of the foregoing, the counterbond
3
1994, complainant gave his statement to Agent Paul Gino Rivera. Invoking his of the defendant, is hereby approved. The Sheriff is hereby
right to remain silent, respondent sheriff refused to "submit himself to ordered to release to the defendant the attached vehicle
custodial investigation" before Agent Javier. Instead, he submitted a bearing Motor No. 6D-57-51813 with Plate No. UV BBR-127.
4 5
Compliance dated July 22, 1995 and an Answer dated August 4, 1995.
194 of 501
Respondent refused to comply with the said order. Instead, he released the Respondent's contentions are without merit. We agree with the Court
passenger jeep to Ignacio after the latter had executed a receipt therefor Administrator that respondent should be held administratively liable.
together with an undertaking that he would produce the jeep whenever
required by the court. Respondent justified such release by saying that the First Issue: Manner of Attachment
court had no storage building that would protect the jeep from damage or
11
loss. This Court finds respondent sheriff's manner of attachment irregular and his
reason therefor totally unacceptable.
12
Despite the pendency of a motion for contempt filed by complainant against
13
respondent, the case was dismissed on August 31, 1994 because jurisdiction Rule 57 of the Rules of Court provides:
over the case had been transferred to the municipal trial court as mandated by
Republic Act No. 7691 which expanded said court's jurisdiction. Sec. 5. Manner of attaching property. — The officer executing
the order shall without delay attach, to await judgment and
After receipt of respondent's Comment dated April 20, 1996, the Court referred execution in the action, all the properties of the party against
the case to the Office of the Court Administrator for evaluation, report and whom the order is issued in the province, . . .
recommendation. In a memorandum to the Chief Justice dated August 29,
1996, Acting Court Administrator Reynaldo L. Suarez recommended a finding xxx xxx xxx
14
of guilt and suspension of respondent for six (6) months without pay.
Sec. 7. Attachment of real and personal property, recording
Issue thereof — Properties shall be attached by the officer executing
the order in the following manner:
The main issue in this case is whether respondent sheriff is administratively
liable for failing to release the property undercustodia legis to the complainant xxx xxx xxx
in accordance with the order of the regional trial court.
(c) Personal property capable of manual delivery, by taking
Respondent sheriff contends that his act of not taking into his official custody and safely keeping it in his capacity, after issuing the
the attached property was not unlawful but was in fact reasonable because the corresponding receipt therefor;
court had no facility for its storage. That it could no longer be returned to
complainant's possession in accordance with the court's order was not his fault xxx xxx xxx
but that of the attaching creditor who had violated his obligation to produce
the same whenever required by the court. He offers "to pay a fine in the Clearly, respondent's act of leaving the passenger jeep in the possession and
discretion of the Honorable Court as he has not benefited any pecuniary control of the creditor did not satisfy the foregoing requirements of the Rules;
15
interest (sic)." neither did it conform to the plainly worded RTC order. The note in the
receipt that imposed on Ignacio the obligation to produce the same whenever
The Court's Ruling required by the court was no compliance either, because it did not establish
that the property was in respondent sheriff's substantial presence and
possession. Respondent fell short of his obligation to take and safely keep the
195 of 501
attached property "in his capacity." He cannot feign ignorance of this duty as remedy provided by the Rules of Court was for the party whose property had
he himself correctly cited an early decision of this Court explaining a sheriff's been attached to apply for the discharge of the attachment by filing a
18
duty in attachment, as counterbond. The effect of this remedy is the delivery of possession of the
16
follows: attached property to the party giving the counterbond. The attaching creditor
was not authorized to have possession of the attached property, contrary to
. . . A verbal declaration of seizure or service of a writ of the insistence of respondent sheriff.
attachment is not sufficient. There must be an actual taking of
possession and placing of the attached property under the Second Issue: Liability of a Sheriff
control of the officer or someone representing him. (Hollister
vs. Goodale, 8 Conn., 332, 21 Am. Dec., 674; Jones vs. Howard, A court employee should keep in mind that he is an integral part of that organ
99 Ga., 451, 59 Am. St. Rep., 231.) of the government that is involved in the sacred task of administering justice.
His conduct and behavior should perforce be circumscribed with the heavy
We believe that . . . to constitute a valid levy of an burden of responsibility and must at all times be characterized by propriety
19
attachment, the officer levying it must take actual possession and decorum.
of the property attached as far as . . . practicable (under the
circumstances). He must put himself in (a) position to, and Section 4(c) of Republic Act No. 6713 requires of every public official and
must assert and, in fact, enforce a dominion over the property employee justness and sincerity in the discharge and execution of official
adverse to and exclusive of the attachment debtor, and such duties. It exacts from him at all times respect for the rights of others and
property must be in his substantial presence and possession. proscribes him from dispensing or extending undue favors on account of his
(Corniff vs. Cook, 95 Ga., 61, 51 Am. St. Rep., 55, 61.) Of course, office.
this does not mean that the attaching officer may not, under
20
an arrangement satisfactory to himself, put anyone in The Court in Chan vs. Castillo held:
possession of the property for the purpose of guarding it, but
he can not in this way relieve himself from liability to the Every officer or employee in the judiciary is duty bound to
parties interested in said attachment. obey the orders and processes of the court without the least
delay (Pascual vs. Duncan, 216 SCRA 786 [1992]), . . .
That Ignacio was able to move the passenger jeep to an unknown location is
further proof that respondent sheriff had not taken and safely kept it in his Leaving the attached property in the possession of the attaching creditor
substantial presence, possession and control. makes a farce of the attachment. This is not compliance with the issuing
court's order. When a writ is placed in the hands of a sheriff, it is his duty, in
His claim that the regional trial court did not have any storage facility to house the absence of any instructions to the contrary, to proceed with reasonable
21
said property is no justification. He could have deposited it in a bonded celerity and promptness to execute it according to its mandate. He is
17 22
warehouse. supposed to execute the order of the court strictly to the letter. If he fails to
23
comply, he is liable to the person in whose favor the process or writ runs.
Contrary to respondent sheriff's contention, compelling the attaching creditor
to release the property in question was not in order, because the proper
196 of 501
Respondent's pretense of having acted in utmost good faith for the

preservation of the attached property is hardly credible because there was no
reason for his having acted thus. In sum, he is unable to satisfactorily explain
why he failed to take such movable in his control.
By acceding to the request of Ignacio, respondent sheriff actually extended an

undue favor which prejudiced the complainant as well as the orderly
administration of justice. He exceeded his powers which were limited to the
24
faithful execution of the court's orders and service of its processes. His
prerogatives did not give him any discretion to determine who among the
parties was entitled to possession of the attacked property.
That he exerted efforts in going to the creditor's residence in Tuguegarao,

Cagayan to obtain possession of the attached property was an act of
compliance with the writ of attachment. This action, belated as it was, did not
mitigate his liability. Much less did it exculpate him from penalty.
IN VIEW OF THE FOREGOING, respondent sheriff is hereby found

administratively liable as charged and is SUSPENDEDfor six (6) months
without pay with a warning that the commission of the same or similar acts in
the future shall be dealt with more severely by this Court.
SO ORDERED.
197 of 501
Villanueva-Fabella v. Judge Ralph Lee, 419 S 440 and a Writ of Attachment by Sheriff Dela Cruz based on the plaintiff’s
allegation that the defendants contracted a debt in bad faith with no intention
FIRST DIVISION of paying the same.
A.M. No. MTJ-04-1518 January 15, 2004 "On the aforementioned day, a printing machine was levied and delivered to
the plaintiff’s warehouse, although there was an offer by the defendants to pay
Attys. VILMA HILDA D. VILLANUEVA-FABELLA and WILMAR T. right there and then P223,457.75, the amount fixed in the order of attachment,
ARUGAY, complainants, but the plaintiff denied the defendants’ plea not to attach the machine, saying
vs. that [it] had already set [its] mind on attaching the same.
Judge RALPH S. LEE and Sheriff JUSTINIANO C. DE LA CRUZ JR., both of
the Metropolitan Trial Court, Branch 38, Quezon City, respondents. "Atty. Fabella, together with three (3) priests, asked the sheriff to levy on a less
expensive machine but to no avail. She then told the sheriff that he [would]
DECISION unnecessarily levy on the machinery because a cash deposit to discharge the
attachment could be filed that same afternoon but he just dismissed the same,
PANGANIBAN, J.: saying that it takes time before the court could approve the counterbond.
Once more, we remind members of the judicial branch – judges and judicial "The complainants claim[ed] that Sheriff Dela Cruz violated x x x Rule 57,
personnel alike -- to be conscientious, diligent and thorough in the Section 7, 1997 Rules of Civil Procedure which provide[d] that in the
performance of their functions. At all times they must observe the high attachment of personal property capable of manual delivery, [the property
standards of public service required of them. should] be taken and safely kept in the sheriff’s custody. The machinery,
according to complainants, [was] brought to [the] plaintiff’s warehouse in San
The Case and the Facts Francisco del Monte, Quezon City. The foregoing show[ed] that the
implementation of the writ of attachment was marred by excessiveness,
1
In an administrative Complaint dated November 12, 2002, Attys. Vilma Hilda irregularity and oppressiveness.
D. Villanueva-Fabella and Wilmar T. Arugay charged Judge Ralph S. Lee of the
Metropolitan Trial Court (MeTC) of Quezon City (Branch 38) with manifest xxx xxx xxx
partiality, incompetence and gross ignorance of the law; and Sheriff Justiniano
C. de la Cruz Jr. of the same MeTC, with unjust, oppressive, irregular and "On 3 July 2002, Judge Lee granted the defendants’ Urgent Motion to
excessive enforcement of a writ of attachment. The factual antecedents of the Discharge Attachment filed 19 June 2002. Thereafter, on 9 July 2002, an Urgent
matters are summarized by the Office of the Court Administrator (OCA) as Ex-Parte Motion to Withdraw Cash Deposit was filed, without notice to the
follows: defendants and despite failure of the plaintiff to set such litigious motion for
hearing and contrary to existing laws and jurisprudence. Judge Lee granted the
"The complainants are counsels for the defendants in Civil Case No. [38]-28457 same in his Order of 17 July 2002. Defendants only learned of the withdrawal
entitled ‘Star Paper Corporation vs. Society of St. Paul and Fr. Leonardo when they received a copy of the said Order.
Eleazar’ for Sum of Money with Prayer for Preliminary Attachment. They
narrated that on 19 June 2002, their clients were served a copy of the complaint
198 of 501
"A Motion for reconsideration of the 17 July 2002 Order was filed on 30 August contain a certification of non-forum shopping, but instead had a handwritten
2002. Defendants stressed that the Motion to Withdraw Cash Deposit has no verification not sworn to or subscribed before an administering officer.
basis, shows no urgency, lacks notice and hearing, and is already a
prejudgment of the case even before the pre-trial stage which is tantamount to He likewise assailed complainants’ allegations as hearsay. As to what had
the taking of property without due process of law. allegedly transpired during the implementation of the subject Writ of
Attachment, he adopted the averments in respondent sheriff’s
4
"For failure of the plaintiff to appear at the pre-trial conference, the court Comment alleging the presumption of regularity in the discharge of official
granted the motion to declare the plaintiff as non-suited as well as the prayer functions.
to allow the ex parte presentation of the defense’s evidence on its
counterclaim. Respondent judge admitted that he had committed a procedural error when
5
he released the counter-bond to the plaintiff in the said civil case. However,
"The plaintiff then filed a Verified Motion for Reconsideration of the Order when the defendants therein, through their Motion for Reconsideration, called
6 7
declaring it as non-suited[,] which was set for hearing in the morning of 24 his attention to the mistake, he immediately ordered the return of the
October 2002, the same day the aforementioned ex parte presentation of counter-bond to the custody of the Office of the Clerk of Court. He cited
evidence was supposed to commence. jurisprudence to defend his acts and asserted his good faith and lack of malice.
Moreover, he averred that he had not delayed the resolution of the Motion.
"Judge Lee was not around in the morning so the hearing on the motion did Finally, he urged the Court to dismiss the instant Complaint outright for being
not materialize with the ex-parte presentation of evidence in the afternoon instituted without basis and merely to harass him.
because the Clerk of Court refused to proceed for the reason that a motion for
8
reconsideration had been filed the day before. The Clerk of Court then In his Comment, respondent sheriff claimed that after receiving the Writ of
conferred with the respondent Judge in his chambers who produced a Preliminary Attachment, he sought its implementation through the assistance
handwritten note granting the said motion. She explained to complainant of the clerk of court of the MTC-Makati, Sheriff Ernesto Adan, and the Makati
Atty. Arugay that she did not notice that Judge Lee had already issued the police. He allowed the parties in the civil case to negotiate for a settlement,
Order granting such motion[;] thus, the ex parte presentation of evidence but when the negotiations bogged down, he attached a printing machine that
could not proceed. was not in use at the time.
"According to complainants, the Clerk of Court could not explain the He denied that there was abuse in the levy, claiming that the machine was an
irregularity in the granting of the plaintiff’s Motion for Reconsideration and old 1970 model. Moreover, he said that, contrary to complainants’ allegation
the fact that the same was swiftly resolved[,] while the defendants’ similar that the machine was valuable, no receipt to prove its true value was ever
2
motion [had] not been resolved for more than two (2) months already." shown.
3
In his Comment dated January 9, 2003, respondent judge claimed that the Respondent sheriff added that it was in his own belief and best judgment to
Complaint was fatally defective, because complainants did not have legal temporarily place the delicate printing machine in the warehouse of the
personality to file it; neither did they present affidavits, verified statements or plaintiff for safekeeping. The machine was eventually returned to the
any authority to represent their clients. Further, the Complaint did not defendants by virtue of the Order discharging the Writ. In fact, one of the
complainants personally acknowledged receipt of the machine.
199 of 501
As to the allegation that he was arrogant, respondent sheriff claimed that he Rules of Civil Procedure with a WARNING that a repetition of the same or
11
waited for more than three hours before exercising his ministerial function. similar act(s) shall be dealt with more severely in the future."
Lastly, he adopted the averments in the Comment of respondent judge on
other events that had transpired during the pendency of the civil case, the The Court’s Ruling
subject of the instant Complaint.
We agree with the findings and the recommendation of the OCA.
Evaluation and Recommendation of the OCA
Administrative Liability
The OCA opined that the provisions cited by complainants -- those in Sections
9
12 and 18 of Rule 57 of the 1997 Rules of Civil Procedure -- did not require the With respect to the charges against respondent judge, we find that his grant of
adverse party to be first notified and then heard before an attachment bond the withdrawal of the cash deposit -- an Order he later reversed by ruling that
may be released. Considering that the bond posted by the attaching creditor the deposit be returned to the clerk of court -- was a mere error of judgment,
would answer for the damages and costs the court may award the adverse not an act revealing gross ignorance of the law or procedure.
party by reason of the attachment, the better practice was for the latter to be
notified and heard before the motion to discharge attachment could be Attachment is a juridical institution intended to secure the outcome of a trial -
12
resolved. - specifically, the satisfaction of a pecuniary obligation. Such order is
enforced through a writ that may be issued at the commencement of an
13
According to the OCA, the error was corrected when respondent judge, on action, commanding the sheriff to attach property, rights, credits or effects of
14
Motion for Reconsideration, reversed himself before the adverse party a defendant to satisfy the plaintiff’s demand. Hence, the property of a
15
incurred any damage. The OCA emphasized that before the full disciplinary defendant, when taken, is put in custodia legis.
powers of this Court could befall a judge, the erroneous act should have been
committed with fraud, dishonesty, corruption, malice or bad faith. It opined In order to prevent the sheriff from levying an attachment on property, the
that such fact had not been clearly and convincingly shown in the instant defendant (also called the adverse party) may make a deposit or give a
10
case. counter-bond in an amount equal to that fixed in the order of attachment.
Such deposit or counter-bound is intended to secure the payment of any
The OCA found that respondent sheriff had erred when he deposited the judgment that the plaintiff (also called the attaching party or the applicant to
16
plaintiff’s levied property in the warehouse and thereby lost actual or the writ) may recover in the action. After a writ has been enforced, however,
constructive possession thereof. The OCA said that this legal violation could the adverse party may still move for the discharge of the attachment, wholly or
not be justified by the weight and the condition of the machine, which could in part, by also making a deposit or giving a counter-bond to secure the
17 18
have been deposited in a rented private warehouse where it could have been payment of any judgment the attaching party may recover in the action. The
guarded under his strict supervision. property attached shall then be released and delivered to the adverse party;
and the money deposited shall be applied under the direction of the court to
Consequently, the OCA recommended that respondent judge "be REMINDED the satisfaction of any judgment that may be rendered in favor of the
19
to be more circumspect in the performance of his duties and to keep abreast prevailing party.
with the law and jurisprudence"; and that respondent sheriff "be SUSPENDED
for one (1) month without pay for violation of Rule 57, Section 7(b) of the 1997
200 of 501
20
In the instant case, respondent judge had ordered the withdrawal of the cash assailed order of a judge must not only be erroneous; more important, it must
deposit of the defendant and released it in favor of the plaintiff, even before be motivated by bad faith, dishonesty, hatred or some other similar
36
judgment was rendered. This action was clearly in violation of the Rules motive. Certainly, mere error of judgment is not a ground for disciplinary
37
mandating that after the discharge of an attachment, the money deposited proceedings.
21 22
shall stand in place of the property released. However, the inadvertence of
respondent judge was not gross enough to merit sanction. Complainants alleged that respondent judge committed another violation of
38
the Rules of Court when he granted the plaintiff’s Urgent Ex-Parte Motion to
39
First, he rectified himself within the period given for deciding motions. Withdraw Cash Deposit. The Rules mandate that, except for motions that
Section 15(1) of Article VIII of the Constitution mandates all trial courts to the court may act upon without prejudicing the rights of the adverse party,
23 40
resolve all matters filed within three months from date of submission. The every written motion shall be set for hearing by the applicant. The notice of
24
Motion for Reconsideration of the July 17, 2002 Order granting the hearing shall be addressed to the defendants therein and shall specify the time
withdrawal of the deposit was filed on August 30, 2002, and submitted for and date of the hearing, which must not be later than ten (10) days after the
25 26 27 41
resolution on September 5, 2002, the date of hearing. The Order granting filing of the motion. The motion and notice shall be served at least three days
42
this Motion was then issued on November 4, 2002, well within the three- before the date of hearing. Without proof of its service, the court cannot act
43
month period. The money was returned, and no prejudice was suffered by any upon it.
of the parties.
Indeed, the plaintiff’s Motion to withdraw the cash deposit lacked notice of
28
Second, respondent judge owned up to his mistake in his Comment. This is hearing and proof of service. Respondent judge should not have acted upon it.
an admirable act. Under the Code of Judicial Conduct, judges should be the However, because he had erroneously thought that the rights of the
29
embodiment of competence and should so behave at all times as to promote defendants would not be prejudiced thereby, he took action. His poor
30
public confidence in the integrity of the judiciary. They must be faithful to judgment obviously resulted in his issuance of the erroneous Order that
31
the law. That respondent judge admitted his mistake shows his recognition of granted the release of the deposit.
his fallibility and his openness to punishment, the imposition of which
restores public confidence in the judicial system. His July 17, 2002 Order was Similarly, the verified Motion for Reconsideration of the Order declaring
merely an honest mistake of judgment -- an innocent error in the exercise of plaintiff as non-suited and allowing the ex-parte presentation of evidence by
discretion -- but not a display of gross incompetence or unfaithfulness to the the defense should have been heard in open court, not granted in chamber.
law. Respondent judge must have thought that this Motion, which had been filed
by the plaintiff, required immediate action; and so the former granted it by
We have already ruled that as long as the judgment remains unsatisfied, it ordering -- through a handwritten note which we do not approve of -- the
44
would be erroneous to order the cancellation of a bond filed for the discharge deferment of the scheduled presentation. This Order should not have been
32
of a writ of attachment. In like manner, it would be erroneous to order the issued, because the Motion had been filed only a day before the scheduled
45
withdrawal of a cash deposit before judgment is rendered. Be that as it may, "a hearing. The rules on notice of hearing and proof of service should have been
[judge] may not be held administratively accountable for every erroneous observed by both the plaintiff’s counsel and respondent judge. Unfortunately,
33 34
order x x x he renders." Otherwise, a judicial office would be untenable, for the latter’s poor judgment likewise prevailed, but still fell short of gross
"no one called upon to try the facts or interpret the law in the administration ignorance of the law or procedure.
35
of justice can be infallible." For liability to attach for ignorance of the law, the
201 of 501
58
Specious is the argument of respondent judge that complainants have no legal act as special deputy sheriff of any party litigant." The officer may put
personality to file the instant Administrative Complaint against him. His someone "in possession of the property for the purpose of guarding it," but the
46
contention that the allegations contained therein are hearsay also deserves former cannot be "relieve[d] x x x from liability to the parties interested in said
59
scant consideration. Rule 140 allows the institution of disciplinary proceedings attachment."
against judges, not only upon a verified complaint -- supported by affidavits of
60
persons who have personal knowledge of the facts alleged therein or by Sheriffs are officers of the court who serve and execute writs addressed to
documents substantiating the allegations -- but even upon an anonymous them by the court, and who prepare and submit returns of their
47 61 62
one. Complainants herein have the requisite personal knowledge and have, proceedings. They also keep custody of attached properties. As officers of
in fact, executed a joint Complaint-Affidavit and substantiated their the court, they must discharge their duties with "great care and
63
allegations with pertinent documents. diligence." They have to "perform faithfully and accurately what is incumbent
64
upon [them]" and show at all times a "high degree of professionalism in the
48 65
The verification in their Complaint, albeit handwritten after the jurat, is performance of [their] duties."
49
sufficient in form and substance. Such verification is a clear affirmation that
50
they are prepared to establish the truth of the facts pleaded. In fact, the lack The duty of sheriffs to execute a writ issued by a court is purely
51 66 67
of it is "merely a formal defect that is neither jurisdictional nor fatal." This ministerial, not discretionary. Clearly, they must keep the levied property
Court may order the correction of a pleading, "if the attending circumstances safely in their custody, not in that of any of the parties. They exercise no
are such that strict compliance with the rule may be dispensed with in order to discretion in this regard, for attachment is harsh, extraordinary and summary
52
serve the ends of justice." The jurat that preceded the verification simply in nature -- a "rigorous remedy which exposes the debtor to humiliation and
68
evidences the fact that the Affidavit was properly made and sworn to before annoyance." Contrary to the claim of respondent sheriff, his unusual zeal and
53
the officer certifying it. Furthermore, a certification against forum shopping precipitate decision to give possession of the machine to the plaintiff
is not needed in this case; Rule 140 makes no such requirement. effectively destroys, the presumption of regularity in his performance of
69
official duties. "Any method of execution falling short of the requirement of
70
We find that the charges against respondent sheriff have bases. Verily, he the law deserves reproach and should not be countenanced."
blatantly violated Section 7(b) of Rule 57 of the Rules of Court when he
deposited the machine in the warehouse of the plaintiff. In enforcing a writ of In implementing the Writ, respondent sheriff cannot afford to err without
71
attachment, a sheriff who takes personal property capable of manual delivery adversely affecting the proper dispensation of justice. 1âwphi1
shall safely keep it in custody after issuing the corresponding receipt
54
therefor. Respondent sheriff failed to do so. "Sheriffs play an important role in the administration of justice. As agents of
the law, high standards are expected of them. x x x His conduct, at all times,
To constitute a valid levy of attachment, the officer levying it must have must not only be characterized by propriety and decorum but must, and above
55 72
"actual possession of the property attached." "He must put himself in [a] all else, be above suspicion."
position to, and must assert and, in fact, enforce a dominion over the property
56
adverse to and exclusive of the attachment debtor." To this rule we add that As a public officer who is a repository of public trust, respondent sheriff has
the officer cannot even deliver the property to the attachment creditor, as the the obligation to perform the duties of his office "honestly, faithfully and to
73
parties must await the judgment in the action. The levied property must be in the best of his ability." He must be "circumspect and proper in his
57 74
the "substantial presence and possession" of the levying officer, who "cannot behavior." Reasonable skill and diligence he must use in the performance of
202 of 501
87
official duties, especially when the rights of individuals may be jeopardized by Applying the Uniform Rules on Administrative Cases in the Civil Service, we
75
neglect. find respondent sheriff guilty of simple neglect of duty for violating Section
7(b) of Rule 57 of the Rules of Court. Simple neglect of duty is the "failure x x x
88
Sheriffs must always "hold inviolate and invigorate the tenet that a public to give proper attention to a task expected" of an employee, thus signifying a
76 89
office is a public trust." As court personnel, their conduct must be beyond "disregard of a duty resulting from carelessness or indifference." Classified as
77
reproach and free from any suspicion that may taint the judiciary. In view of a less grave offense, it is punishable by a suspension of one month and one day
their exalted position as keepers of public faith, court personnel are indeed to six months. Considering that the failure of respondent sheriff to fulfill his
78
saddled with a heavy burden of responsibility to the public. Hence, they duty seems to be his first infraction during his stint in the judiciary, the Court
must thoroughly avoid any impression of impropriety, misdeed or negligence considers the recommended sanction appropriate.
79
in the performance of official duties. We have held thus:
90
WHEREFORE, the Court reiterates its REMINDER to Judge Ralph S. Lee of
"x x x [T]his Court condemns and would never countenance such conduct, act the Metropolitan Trial Court of Quezon City (Branch 38) to evince due care in
or omission on the part of all those involved in the administration of justice the exercise of his adjudicative functions. On the other hand, Sheriff Justiniano
which would violate the norm of public accountability and diminish or even C. de la Cruz Jr. of the same branch is found GUILTY of simple neglect of duty
80
just tend to diminish the faith of the people in the Judiciary." and is hereby SUSPENDED for one month and one day without pay, with a
warning that a repetition of the same or of a similar act in the future shall be
Once again we emphasize that "[a]t the grassroots of our judicial machinery, dealt with more severely.
sheriffs x x x are indispensably in close contact with the litigants, hence, their
conduct should be geared towards maintaining the prestige and integrity of SO ORDERED.
the court, for the image of a court of justice is necessarily mirrored in the
conduct, official or otherwise, of the men and women who work thereat, from
81
the judge to the least and lowest of its personnel; hence, it becomes the
imperative sacred duty of each and everyone in the court to maintain its good
82
name and standing as a temple of justice." Dismissed for lack of basis,
however, is the charge of excessive enforcement of a writ filed against
respondent sheriff.
Applying Section 8 of Rule 140 of the Rules of Court, respondent judge is found
wanting in the exercise of good discretion only. His errors of judgment fall
short of gross ignorance of the law or procedure, yet reflect poorly on his
esteemed position as a public officer in a court of justice. Judges must be
83
conscientious, studious and thorough, observing utmost diligence in the
84
performance of their judicial functions. They have to "exhibit more than just
85
cursory acquaintance with statutes and procedural rules." Moreover, they
must require court personnel to observe at all times high standards of public
86
service and fidelity.
203 of 501
2. The enforcement of the writ of seizure was delayed because of the writ of
Sebastian v. Valino, 224 S 256 preliminary injunction enjoining PDCP from proceeding with the foreclosure
sale issued by the Regional Trial Court, Pasig, Metro Manila in Civil Case No.
FIRST DIVISION 58006, It was only on October 31,1990, when the Regional Trial Court, Pasig,
dissolved the writ of preliminary injunction.
3. On November 9, 1990, at around 10:37 A.M., respondent, accompanied by

A.M. No. P-91-549 July 5, 1993 several policemen and PDCP employees, went to the office of Marblecraft at
Barrio Santolan, Pasig, to implement the writ of seizure. Respondent and his
REYNALDO SEBASTIAN, complainant, companions forcibly opened the lockers and desk drawers of the employees of
vs. complainant and took their personal belongings, as well as some office
SHERIFF ALBERTO A. VALINO, respondent. equipment issued to them. The employees filed with the Office of the
Provincial Prosecutor of Rizal two criminal complaints for robbery against
Bautista, Picaso, Buyco, Tan & Fider Law Offices for complainant. respondent and his companions.
Teresita G. Oledan for respondent. 4. Respondent only showed to complainant's counsel a copy of the writ but did
not furnish him with a copy of the application for the writ, the supporting
affidavit and the bond.
QUIASON, J.: 5. In the course of the implementation of the writ, which lasted for four days,
several pieces of machinery and equipment were destroyed or taken away by
Marblecraft, Inc., represented by its Assistant General Manager, Reynaldo respondent.
Sebastian, charges Alberto A. Valino, Senior Deputy Sheriff, Office of the
Regional Sheriff, Pasig, Metro Manila, with (1) gross abuse of authority 6. Respondent turned over the seized articles to the counsel of PDCP and
committed in connection with the implementation of the writ issued by the allowed these items to be stored in PDCP's warehouse in Taguig, Metro
Regional Trial Court, Makati, Metro Manila, in Civil Case No. 89-3368, and (2) Manila.
refusal to enforce the trial court's for the return of the seized items.
7. On November 14, 1990, complainant posted a counterbond. In an order
Complainant alleges that: issued on the same day, the Regional Trial Court, Makati, approved the bond
and directed the immediate return of the seized items. After denying PDCP's
1. On March 3, 1989, Private Development Corporation of the Philippines motion to set aside the November 14 Order, the trial court reiterated the
(PDCP) filed a replevin suit against Marblecraft, Inc., in Civil Case No. 89- directive for the return of the seized items in its November 26 Order.
3368, in order to foreclose the chattels mortgaged by Marblecraft. On March Respondent did not implement the orders.
30, 1989, the Regional Trial Court, Makati, issued a writ of seizure directed
against Marblecraft covering the chattels sought to be replevied. 8. PDCP filed a motion for reconsideration of the November 26 Order, which
was denied in an Order dated December 11, 1990.
204 of 501
In his comment, respondent branded the administrative complaint against The Order dated November 14, 1990 directed him "to immediately return to
him as pure harassment filed by Marblecraft after he had refused to defer the defendant all its properties seized and taken from its premises pursuant to the
implementation of the writ of seizure. He said that if he did not implement the writ of seizure of March 30, 1989, from receipt of this Order (sic)" (Rollo,
writ, he would have been accused by PDCP of non-performance of his duties p. 42)
as a sheriff. He pointed out that the criminal complaints for theft filed against
him by the employees of complainant were dismissed by the Provincial The Order dated November 26, 1990 directed him "to implement the Order of
Prosecutor of Rizal. this Court dated November 14, 1990 and to immediately return to defendant all
its properties seized and taken from its premises pursuant to the writ of
The administrative complaint was referred to Judge Martin S. Villarama Jr. of seizure dated March 30, 1989 from receipt of this Order (sic)" (Rollo,
the Regional Trial Court, Pasig, for investigation, report and recommendation. p. 44).
In his report, Judge Villarama, found respondent guilty of partiality when he The Order dated December 11, 1990 directed him "to implement the Order of
immediately turned over the seized items to PDCP, and of willful refusal to this Court dated November 26, 1990, within three (3) days from the receipt
enforce the November 14, 26 and December 11, 1990 Orders of the Regional hereof, otherwise this Court will be constrained to appoint and deputize
Trial Court, Makati. another sheriff to implement the order dated November 26, 1990" (Rollo, p.
47).
Under the Revised Rules of Court, the property seized under a writ of replevin
is not to be delivered immediately to the plaintiff. The sheriff must retain it in The only action taken by respondent to implement the Order dated December
his custody for five days and shall return it to the defendant, If the latter, as in 11, 1990 was to write a letter on December 12, 1990, addressed to the counsel of
the case, requires its return and files a counterbond (Sec. 4, Rule 60, Revised PDCP, requesting the turnover of seized articles. As expected, PDCP's counsel
Rules of Court). In violation of said Rule, respondent immediately turned over refused to part with the possession of the seized articles and to issue a letter of
the seized articles to PDCP. His claim that the Office of the Regional Sheriff authorization to withdraw the same from the warehouse. Instead of taking
did not have a place to store the seized items, cannot justify his violation of possession of the articles, respondent merely reported to the Regional Trial
the Rule. As aptly noted by the Investigating Judge, the articles could have Court that "[i]t is now clear that the undersigned cannot implement the Court
been deposited in a bonded warehouse. order dated December 11, 1990 by reason of the refusal of PDCP to accept or to
honor said Court order" (Rollo, p.48).
Respondent must serve on Marblecraft not only a copy of the order of seizure
but also a copy of the application, affidavit and bond (Sec. 4, Rule 60, Revised The petition for certiorari of PDCP to question the orders of the Regional Trial
Rules of Court). Respondent did not furnish defendant with a copy of the Court, Makati, was filed with the Court of Appeals only on December 17, 1990.
application, affidavit and bond. By his own admission, he only served it with a The Court of Appeals issued a temporary restraining order only on December
copy of the order of seizure (Rollo, p. 37). 21, 1990. Respondent therefore had more than seven days within which to
enforce the orders of the trial court if he was minded to do so.
The more serious infraction of respondent is his refusal to implement the
order of the Regional Trial Court, Makati for him to return to complainant the Respondent could have avoided getting into his present predicament had he
articles seized pursuant to the writ of seizure dated March 30, 1990. not turned over the possession of the seized goods prematurely to the PDCP.
205 of 501
The complainant cannot be blamed if it harbored the suspicion that

respondent was beholden to PDCP. The zeal with which respondent enforced
the order of seizure in favor of PDCP was in sharp contrast with his inaction in
enforcing the three orders of the trial court directing him to return the seized
items to complainant.
It is not for respondent to question the validity of the orders of the trial court.
It is for him to execute them. As observed by the Investigating Judge, "[t]here
is therefore no excuse for respondent's wilfull refusal to implement the Order
of the Court" (Report and Recommendation, p. 10). Disobedience by court
employees of orders of the court is not conducive to the orderly
administration of justice. The display of partially in favor of a party as against
the other party erodes public confidence in the integrity of the courts.
IN VIEW OF THE FOREGOING, the Court finds respondent guilty of serious

misconduct and RESOLVED to impose upon him the penalty of FOUR (4)
MONTHS SUSPENSION without pay, the period of which should not be
charged to his accumulated leave, with a WARNING that a repetition of the
same or of acts calling for disciplinary action will be dealt with more severely.
This resolution is IMMEDIATELY EXECUTORY, and respondent is hereby
ordered to forthwith desist from performing any further official functions
appertaining to said office.
SO ORDERED.
206 of 501
According to complainant, at around 1:30 P.M. of April 25, 1994, respondent

Villareal v. Rarama, 247 S 493 Rarama arrived at her house in Digos, Davao del Sur, together with the other
respondents and three employees of the Cooperative Rural Bank of Davao
SECOND DIVISION City, Inc., including one Vic Belo who is a collector of the bank. Respondent
Rarama introduced himself as a sheriff of Davao City and informed her that
they were going to attach her properties because she lost in a case.
A.M. No. P-94-1108 August 23, 1995 Complainant denied having been charged in court, much more of having lost
MARIANETTE VILLAREAL, complainant, vs. ROLANDO T. RARAMA, in a case, and that she did not owe anything to the bank. When respondent
RESTITUTO MADRAZO, FIDEL CASUYON, and AGUINALDO DEL Rarama persisted in getting her properties, she demanded and was shown the
CAMPO, respondents. writ of execution. She objected thereto, claiming that the same was not
addressed to her but to Felimon Cangrejo and that the writ was being served
REGALADO, J.: after more than five years from the date the decision was rendered. The reply
1
The present administrative case arose from a sworn complaint filed by given her was that she is the principal borrower and the only one who is
Marianette Villareal against respondents Rolando T. Rarama, Restituto solvent.
Madrazo, Fidel Casuyon, and Aguinaldo del Campo who are all serving as
Sheriff III in Branches V, VII, II, and III, respectively, of the Municipal Trial Despite the pleas of complainant and a neighbor for the postponement of the
Courts in cities (MTCC), Davao City, for allegedly "conniving and implementation of the writ until she shall have consulted her lawyer,
confederating in maliciously serving a writ of execution intended for another respondents immediately proceeded to pull out from complainant's house the
person who is living in another place." Pursuant to the First Indorsement of following items, viz.: one VHS player, one Singer sewing machine, one Chinese
2
Deputy Court Administrator Reynaldo L. Suarez dated August 24, 1994, the cabinet, and another Chinese cabinet with glass shelves. Allegedly,
complaint was referred to respondent Sheriff Rolando T. Rarama, through complainant was forced to sign an inventory receipt because she would
Judge Roberto Q. Canete, MTCC, Branch 5, Davao City, for comment. otherwise not be able to get back her things. She hastened to add that when
3
Subsequently, respondents submitted their joint counter-affidavit to which a she signed the receipt, the words "with my conformity" were not written
4
reply was filed by herein complainant. A rejoinder to complainant's thereon.
5
reply was also submitted by respondents.
The following day, complainant and her husband went to the bank to inquire
It appears that an action for collection of a sum of money was filed by the about the status of her loan and she was informed that, unless she settled her
Cooperative Rural Bank of Davao City against the spouses Marianette (herein account, her properties would not be released. Complainant avers that because
complainant) and Roy Villareal, Lito Lacorda and Felimon Cangrejo before the of this she was constrained to pay the amount of P10,000.00 despite earlier
MTCC, Branch 5, of Davao City docketed as Civil Case No. 548-E-M. The representations made with the bank that she had fully paid her loan to the
records show that summons was served upon respondent Cangrejo who, bank collector. She further asserts that she was thereafter forced to write a
however, failed to file his answer, as a consequence of which he was declared promissory note as dictated by the assistant manager of the bank, Gerry Alag,
6
in default. On April 19, 1989, judgment was rendered against him in favor of and the bank's lawyer, Atty. Herbert Arteg. Eventually, after she presented the
the plaintiff bank without prejudice to his right to proceed against his co- receipt of payment and the promissory note to respondent Rarama, the
7
debtors. On March 29, 1994, an alias writ of execution was issued by the trial attached properties were released to herein complainant.
court against Cangrejo.
207 of 501
On the other hand, respondent Rarama claims that on April 25, 1994, he went for in fact there was a pending criminal case for violation of the law on
to Digos, together with Vic Belo and Bading dela Fuente, employees of the bouncing checks, as well as a civil case for collection of a sum of money, filed
bank, to coordinate with Provincial Sheriff Andres regarding the against her.
implementation of the aliaswrit of execution issued in the aforementioned
Civil Case No. 548-E-M. However, he was informed that he would have to In her aforesaid reply to respondents' counter-affidavit, complainant
implement the writ on his own because the other sheriffs were not available. maintains her original stand that she did not voluntarily deposit her personal
On their way out of the Hall of Justice, they met respondents Madrazo, properties with respondents and declares as untrue respondents' claim that
Casuyon and del Campo who, upon learning that Rarama's group was going to they merely came to see her to ask for the address of Felimon Cangrejo.
Digos where they all lived, decided to join the group so they could get a free
8
ride. On January 16, 1995, this Court issued a resolution, as recommended by
Deputy Court Administrator Reynaldo L. Suarez, referring the case to
Upon the suggestion of Vic Belo, the bank collector, the group first went to the Executive Judge Augusto B. Breva of the Regional Trial Court of Davao City for
house of complainant purportedly to ask for the exact address of Felimon investigation, report and recommendation within sixty (60) days from receipt
Cangrejo against whom the writ was issued. When they reached the house of of the records thereof.
complainant, respondent Rarama introduced himself and his other
companions, and then inquired from the former about the address of Thereafter, Judge Breva submitted his report dated July 12, 1995, with the
Cangrejo. When complainant asked why they were asking her, Rarama showed recommendation that respondent sheriff Rolando T. Rarama be declared guilty
her the writ of execution and the court decision. It was then that complainant of an administrative offense and that he be suspended for three months, with a
stated that she was the principal defendant in the case. stern warning that a repetition of a similar offense will be dealt with more
severely. He further recommended that the three other respondents be
Respondents further allege that complainant requested Rarama not to exonerated.
implement the writ against Cangrejo because he was merely her co-maker who
never benefited from the loan extended to her by the Rural Bank of Davao, We quote with approval the findings of the investigating judge regarding the
after which she offered to pay her obligations in monthly installments. propriety of the respective claims of the parties and the culpability, or absence
Respondent Rarama did not agree to the proposal since he was not authorized thereof, with respect to each of the respondents herein:
to enter into that compromise but, at the same time, he suggested that
complainant deposit some of her personal properties as security for the RATIONALIZATION: The defense of Sheriff Rarama — that he along
settlement of her obligation, and the latter allegedly agreed. Much later, the with the representatives of the plaintiff bank went to the house of the
properties hereinbefore mentioned were released to complainant by virtue of a complainant only to ask for the address of Felimon Cangrejo; that the
letter from the creditor bank. four items taken by them were offered as deposit by the complainant
after requesting Rarama not to implement the alias writ against
In addition, respondents controvert the claims of complainant that they Cangrejo as it was her loan and Cangrejo was only her co-maker; and
forcibly entered her house and took possession of her personal properties that two days after, she got the items back upon making a partial
without her consent. On the contrary, they insist that complainant deposited payment of P10,000.00 to said bank and promising in writing to pay
her personal properties voluntarily and of her own free will. They likewise the balance within sixty days — cannot be accepted as true in view of
contend that it is not true that complainant has never been charged in court the followings points of the evidence:
208 of 501
(1) The alias writ of execution (Exh. "5"), although directed against principal borrower I focused more my attention on her" (TSN 6-7-95
Felimon Cangrejo only, was actually served by Sheriff Rarama on the p. 100).
complainant as evidenced by her signature at the bottom thereof
along with the date "4-25-94" (Exh. "5-A"), the date of the taking of the On the other hand, the testimony of the complainant cannot be
four items. Service of the writ on her was indicative of the intent to entirely believed for the following reasons:
implement it against her personal interests.
(a) She claims to have already fully paid her loan account with the
(2) The RECEIPT (Exh. "6") issued by Rarama to the complainant, for plaintiff bank but has not produced any receipt to substantiate it
the four items, positively shows that it was prepared in advance. The other than the official receipt for the P10,000.00 she paid on April 27,
opening paragraph is typewritten and reads: "Received from 1994, two days after the incident complained of in this case happened
defendants MARIANETTE & ROY VILLAREAL the personal properties (Exh. "G").
mentioned and particularly described below, to wit:" Thus the fact
that the names "MARIANETTE & ROY VLLLAREAL" had already been (b) In her affidavit in support of her administrative complaint she
typewritten beforehand is a further indication of said intent, alleges that "I and my husband have never been charged of (sic) any
otherwise their names would have been handwritten like the criminal and/or civil case in Davao City." But it turned out that she
descriptions of the four items appearing therein. actually received the summons issued in the same Civil Case No. 548-
E-M on September 27, 1990 as evidenced by her signature thereon
(3) There is nothing in the RECEIPT showing that the items were only (Exh."2", "2-A" & TSN 6-5-95 pp. 29-30). The decision rendered in that
deposited. On the contrary, it contains a typewritten paragraph which case against Cangrejo alone is dated April 19, 1989.
reads: "That the above-mentioned personal property/ies was/were
levied and attached by virtue of the Writ of Execution issued by The alias writ directed against Cangrejo was issued on March 29, 1994,
Honorable ROBERTO Q. CANETE, Presiding Judge, MTCC, Branch 5, which was within the five-year period.
Davao City, dated March 29, 1994".
There appears to be no clear positive evidence that respondents
(4) The four items were not brought to the plaintiff bank (which Casuyon, Madrazo and del Campo really knew that the alias writ was
would have been the case if they were merely deposited by private directed only against Cangrejo. And in her testimony the complainant
arrangement) but to the MTCC which issued the alias writ and from for the most part only named Sheriff Rarama, and named sheriff
which the complainant recovered them after paying P10,000.00 to the Casuyon only in the re-direct examination as the one who wrote down
bank. the descriptions of the four items taken from her house, writing as the
things were accordingly being pulled out "by the other sheriffs"
(5) Vic Belo — the collector of the bank, when asked in the course of without naming them (TSN 6-5-95 pp. 46-47). She did not even
his testimony in this case why he did not inquire before proceeding to identify them during the hearing, and she got the names of Madrazo
Digos on April 25, 1994, (about) the address of Felimon Cangrejo from and del Campo only days later from the Court upon instruction of her
the NFA in Davao City, where the latter had been employed — adviser, then Provincial Prosecutor Aves (same TSN p. 39). She did not
answered ". . . my perception is that since Mrs. Villareal is the particularize the participation of each of the respondents except as to
Rarama and the writing of the RECEIPT by Casuyon, referring to the
209 of 501
respondents only as Rarama, or as Rarama and the other sheriffs, or action. Considering the ministerial nature of his duty in enforcing writs of
the sheriffs. But Rarama was not only with the other respondents execution, it is incumbent upon him to ensure that only that part of a decision
sheriffs but with two employees of the bank. ordained or decreed in the dispositive portion should be the subject of
execution, no more and no less. That the title of the case specifically names
Hence, we believe that the evidence only warrants a finding of complainant as one of the defendants is of no moment as execution must
administrative accountability on the part of Rolando Rarama. conform to that which is directed in the dispositive portion and not what
12
appears in the title of the case.
While there is evidence to show that indeed complainant Marianette Villareal
is the principal debtor while Felimon Cangrejo is merely a co-maker, the fact We find the recommended penalty of three month's suspension proper and
remains that Cangrejo was the sole debtor adjuged liable for the loan obtained commensurate under the circumstances obtaining in this case. However, the
from the Cooperative Rural Bank of Davao City, Inc. and the alias writ of policy adopted by the Court, a fine equivalent to the salary of respondent for
execution was directed only against him. Hence, respondent Rarama had no three months should instead be imposed, but with some mitigation
authority to implement the same against herein complainant considering that, considering the nominal extent of the damages sustained by complainant who,
although she was named as a defendant in the collection case, there was no to a certain extent, also contributed in bringing about the situation which gave
judgment against her as of the date of the incident. rise to the incident.
The sheriff, as an officer of the court upon whom the execution of a final ACCORDINGLY, respondent Sheriff Rolando T. Rarama is hereby declared
judgment depends, must necessarily be circumspect and proper in his GUILTY of serious misconduct in the enforcement of the alias writ of
behavior. Execution is the fruit and end of the suit and is the life of the execution in Civil Case No. 548-E-M of the Municipal Trial Courts in Cities,
9
law. Thus, when a writ is placed in the hands of a sheriff it is his duty, in the Branch 5, Davao City and he is hereby ordered to pay a FINE of ten thousand
absence of any instructions to the contrary, to proceed with reasonable pesos (P10,000.00). He is further sternly warned that the commission of the
celerity and promptness to execute it according to its mandate. He is to same or a similar offense hereafter will be punished with a more severe
execute the directives of the court therein strictly in accordance with the letter sanction.
thereof and without any deviation therefrom.
The complaint against respondents Restituto Madrazo, Fidel Casuyon and
Hence, a sheriff has no authority to levy on execution upon the property of any Aguinaldo del Campo is hereby DISMISSED for lack of merit.
person other than that of the judgment debtor. If he does so, the writ of
execution affords him no justification, for such act is not in obedience to the SO ORDERED.
10
mandate of the writ. As long as the sheriff confines his acts to the authority
of the process, he is not liable, but all of his acts which are not justified by the
writ are without authority of law. This is so because if an execution against one
man would excuse the sheriff for taking the property of another, every citizen
11
would be at his mercy and none could call his estate his own.
Respondent Rarama's improvidence in enforcing a judgment against

complainant who is not the judgment debtor in the case calls for disciplinary
210 of 501
reconsideration of the demolition order but the same was denied on

Balantes v. Ocampo III, 242 S 327 December 5, 1991.
THIRD DIVISION It further appears that on August 19, 1992, a second writ of demolition was
issued by the respondent Judge, followed by a third one dated February 3,
A.M. No. MTJ-93-853 March 14, 1995 1993.
DOMINGO BALANTES, complainant, vs. JUDGE JULIAN OCAMPO III,
Municipal Trial Court in Cities, Branch I, Naga City, respondent. Complainant now alleges that respondent judge issued the orders granting
A.M. No. P-94-1013 March 14, 1995 plaintiff's motion for issuance of writ of demolition with precipitate haste,
DOMINGO BALANTES, complainant, hence, he was deprived of his right to oppose the same, that the effect of these
vs. writs of demolition is to demolish complainant's entire house,
3
LILIA S. BUENA, Clerk of Court, MTCC, Naga City/Ex-officio Naga City notwithstanding that the appellate court's writ of execution and demolition
Sheriff, respondent. issued pending appeal ordered the demolition only of the half portion of his
RESOLUTION house found standing on plaintiff's land.
ROMERO, J.: Respondent Judge Julian Ocampo III filed his comment on November 25, 1993
(A.M. No. MTJ-93-853, pp. 30-34). He explained that after a series of appeals
This resolution disposes of two related complaints of Domingo Balantes, one (to RTC, Court of Appeals and the Supreme Court), and the remand of records
of which is against respondent Judge Julian Ocampo III (A.M. No. MTJ- to court a quo, he issued the questioned writs of demolition with respect to
1
93-853) and the other against Clerk of Court Lilia S. Buena (A.M. No. P-94- the remaining portion of complainant's house situated inside the property
2
1013). which court a quo found to be owned by the plaintiff by right of accretion.
Records show that complainant is the defendant in an ejectment case (Civil Respondent Judge argues that a writ of demolition, being merely incidental to
Case No. 8339) filed by plaintiff Roberto Roco but which was decided by the execution of a final judgment, is immediately enforceable after hearing the
respondent judge against complainant. Complainant appealed the adverse arguments of both parties; that though the writ of demolition was issued on
decision to the RTC, Branch 23, Naga City (docketed as RTC 88-1467). On the same day the court issued its order of August 19, 1992, the writ was
motion of the plaintiff-appellee, the RTC, on October 23, 1989 issued a Writ of implemented only on September 2, 1992; that a motion for reconsideration was
Execution and Demolition pending appeal, ordering the removal of one-half filed by herein complainant on August 29, 1992 to forestall its implementation
(1/2) portion of complainant's residential house found to be built inside the but the same was submitted for the court's consideration only on September 3,
titled property of the plaintiff. Subsequently, the decision on appeal was 1992 and by that time the writ had already been implemented.
affirmed by the same Regional Trial Court and the records of the case were
remanded to respondent's sala for execution of the judgment. On November Respondent Judge further argues that the restraining order issued on
25, 1991, respondent Judge issued a writ ordering the demolition of the September 2, 1992 cannot be complied with because by the time it was
remaining half portion of complainant's residential house found standing on a received by the City Sheriff, the writ of demolition had already been effected
public property (legal easement). Complainant filed a motion for and the premises delivered to the plaintiff.
211 of 501
With respect to the complaint filed against respondent Clerk of Court, respondent Judge from issuing any further writs of demolition in Civil Case
complainant alleges that she immediately proceeded to implement the writs of No. 8339.
demolition without giving him a chance to move for a reconsideration of the
order granting issuance thereof. Despite this directive, respondent Judge exhibited a defiant attitude by issuing
another writ of demolition dated August 19, 1992. Said order was the subject of
We find respondent judge to have grossly abused his authority in issuing the another petition for certiorari/prohibition (SPL. Civil Action No. 92-2651)
questioned writs of demolition. wherein Judge Antonio N. Gerona of Branch 27, RTC, Naga City issued an
order dated September 2, 1992 restraining the implementation of the aforesaid
A precise determination of the total land area encroached upon by writ of demolition by the sheriff of MTC, Naga City.
complainant over subject property in Civil Case No. 8339 has been ordered by
Judge Gregorio Manio, RTC, Branch 23, Naga City in the course of the appeal As regards the charge against respondent Clerk of Court and Ex-Officio Sheriff
thereof. Records show that previous to the issuance of the writ of execution Lilia S. Buena, the same is dismissed, it appearing from the certification she
and demolition pending appeal, said judge ordered the deputy sheriff with the issued that the Temporary Restraining Order issued by the RTC, Branch 27,
assistance of a geodetic engineer to determine the metes and bounds of the Naga City was received by her on September 2, 1992 at 2:15 p.m., after the
plaintiff's property. The Sheriff's Return clearly showed that two (2) meters of demolition had been completely effected and the premises delivered to the
plaintiff's property had been more or less encroached upon by complainant's plaintiff at 1:30 p.m. of same date. It appears that respondent Buena was not
house while it occupied three (3) meters, more or less, of the legal easement aware of the existing TRO which she received within the hour after the
formed by accretion. The writ of demolition thus issued by the appellate court demolition had taken place, thus rendering said restraining order a fait
contained specifications in accordance with such findings and was returned accompli. The rule is that when a writ is placed in the hands of a sheriff, it is
fully satisfied on January 20, 1990. Moreover, the decision of the RTC, Branch his duty, in the absence of instructions, to proceed with reasonable celerity
23, Naga City which incorporated such findings was successively affirmed by and promptness to execute it according to its mandate. He may not apply his
4
the Court of Appeals and the Supreme Court. discretion as to whether to execute it or not.
Respondent Judge, therefore, was fully aware of the previous delineation of the WHEREFORE, in view of the foregoing, respondent Judge Julian Ocampo III,
property of the plaintiff. Nevertheless, when the records were remanded to MTCC, Branch I, Naga City is hereby ordered to pay a FINE of P5,000.00 with
him and upon motion of the plaintiff's counsel, he issued another writ of WARNING that a repetition of the same or similar infraction in the future will
demolition which sought to demolish the remaining portion of the defendant's merit a stiffer penalty. The complaint against respondent Clerk of Court
house which, as already found by the appellate court(s), was standing upon a and Ex-Officio Sheriff Lilia S. Buena is hereby DISMISSED.
public property.
SO ORDERED.
The order of demolition dated November 20, 1991 which he issued, in fact, was
the subject of a petition for certiorari (SPL. Civil Action No. RTC 91-2467)
before the same RTC, Branch 23, Naga City where Judge Gregorio A. Manio
declared said order of demolition and the writ issued pursuant thereto as null
and void, having been issued with grave abuse of discretion and enjoined
212 of 501
The record discloses that on June 19, 1992, the MTCC, Branch 3, at Cagayan de
Elipe v. Fabre, 241 S 249 Oro issued a writ of execution for the enforcement of a barangay agreement in
Case No. 91-144 for collection of unpaid rentals and construction materials
SECOND DIVISION amounting to P100,000.00. Complainant testified that on June 25, 1992, at nine
o'clock in the morning, respondent served the writ or judgment debtors
Michael dela Cerna and his wife but the respondent was able to levy only upon
1
a dilapidated vehicle and an old piano. Complainant stated that at ten o'clock
A.M. No. P-94-1068 February 13, 1995 in the evening of the same day, the judgment debtors surreptitiously removed
2
several pieces of furniture from the house which they rented. On June 26 and
VICTOR ELIPE, complainant, 30 and again on July 4, 11, 38 and 19, 1992, they removed appliances and other
vs. personal properties and destroyed building fixtures on the property owned by
3
HONESTO FABRE, Deputy Sheriff, MTCC, Cagayan de Oro complainant. On these occasions, according to the complainant, respondent
City, respondent did not make any effort to prevent the judgment debtors from removing
leviable properties to implement the writ, despite the fact that he had been
RESOLUTION told by complainant of the judgment debtors' activities.
Respondent Fabre denied the complainant's allegation. He claimed that he

levied on several properties of the judgment debtors, but unfortunately the bid
4
MENDOZA, J.: price paid for them at the public auction was only P10,000.00. He justified his
action in levying only on the personal properties which he found at the
This is an administrative complaint filed against respondent Honesto G. Fabre, business establishment and in desisting from enforcing the writ with respect
charging him with nonfeasance and incompetence in the performance of his to properties on the second floor of the residence of the judgment debtors on
duties as Deputy Sheriff of Branch 3 of the Municipal Trial Court in the Cities two grounds: (1) the judgment debtors refused to let him in; and (2) he did not
(MTCC) at Cagayan de Oro City. have any order from the MTCC to force open the door which had been locked.
The complaint was referred to Judge Antonio A. Orcullo of MTCC, Branch 3, The records show that on July 10, 1992, respondent sold to the complainant, as
Cagayan de Oro City who, in a report dated November 15, 1993, found the the highest bidder at public auction, personal properties of the judgment
charges to be true and accordingly recommended that respondent be debtors for P10,000.00. On July 13, 1992, respondent levied on a parcel of land
reprimanded and given a stern warning that a repetition of the same acts owned by the judgment debtors which on August 14, 1992 was also sold to
5
would be dealt with more severely. complainant for P15,006.00. On December 17, 1992, personal properties of the
judgment debtors which had been levied upon were sold, also to the
In its memorandum dated August 29, 1994, the Office of the Court complainant as the highest bidder, for P2,001.00. 6 The result is that the
Administrator concurs with the findings of the investigating judge and judgment debt of P100,000.00 was only partially satisfied to the extent of
recommends that respondent deputy sheriff be fined P1,000.00 and given a P27,007.00.
stern warning.
213 of 501
In his memorandum report, Deputy Court Administrator Juanito A. Bernad The respondent Sheriff's duty was apparent but he did not
found that, because of respondent's inaction and lack of diligence in enforcing comply with it as he should have. The attack on the
the writ of execution, the judgment debtors were able to cart away properties complainant's moral character was not necessary in this case,
which he could have levied upon execution. There is merit in the following as it would not justify the non-performance of his duties.
observations contained in his memorandum:
When a writ is placed in the hands of a sheriff, it is his duty,
Respondent Deputy Sheriff correctly argued that he was not in the absence of instructions, to proceed with reasonable
directed by any Judge by court orders to stop the carting away celerity and promptness to execute it according to its
of properties or the demolition of the fixtures. But respondent mandate. He has no discretion whether to execute it or not
Sheriff should understand that by virtue of the writ of (Young vs. Momblan, A.M. No. P89-367, 9 January 1992,
execution issued in favor of herein complainant, he Second Division, Melencio-Herrera, J.).
(respondent Sheriff) was mandated to levy upon properties of
judgment debtor to satisfy an obligation amounting to Indeed, as clearly stated in the Manual for Clerks of Court, a sheriff, to whom a
P100,000.00. However, in disregard of this Order, respondent valid writ or process is delivered to be levied upon a property within his
Sheriff chose to levy the properties of the judgment debtor jurisdiction, is liable to the person in whose favor the process or writ runs if he
which amounted only to P27,000.00. fails to make a levy upon property owned by the judgment debtor within his
jurisdiction and by reason thereof the judgment creditor is injured. It is
If indeed respondent Sheriff is dedicated in his work, omission not dependent upon intentional wrong or negligent omission to
7
respondent Sheriff could have chosen to stop the carting away seize property of judgment debtor.
of the valuable properties of judgment debtor for the very
8
purpose of levying it and for the purpose of complying with In Eduarte v. Ramos we said:
the Order.
Respondent ought to have known the correct procedure to be followed in
If the arguments of respondent Sheriff will be sustained, all order to ensure proper administration of justice, especially in its concluding
judgment debtors can easily circumvent the orders of the stage. He failed observe that degree of dedication to the duties and
court by carting away their properties thinking that sheriffs responsibilities required of him as a sheriff. He is bound to discharge his
have no authority to stop them. This line of thinking and duties with prudence, caution and attention which careful men usually
reasoning will create chaos and instability in the exercise in the management of their affairs. The sheriff, an officer of the court
administration of justice. upon whom the execution of a final judgment depends, must be circumspect
and proper in his behavior. Execution is the fruit and end of the suit and is the
Furthermore, respondent Sheriff exhibited an utter disregard life of the law.
of what is incumbent upon him when he failed to inform the
complainant that in order to levy properties of the defendant In the case at bar, it is not that respondent did not know what he should do,
9
on the second floor of the establishment, a special order of given the problem that he was confronted with. In his answer respondent
the court is necessary to force or break-open the closed door tried to excuse himself from what was his duty, claiming that he did not force
in accordance with Section 14, Rule 39 of the Rules of Court. his way into the second floor where the judgment debtors resided because a
214 of 501
special court order was needed to enable him to do this. Knowing this to be
the case, it was his duty to see to it that such an order was secured from the
court.
The fact is that he has shown himself to be less than energetic and zealous in
the performance of his duty. His lackadaisical attitude betrays his inefficiency
and incompetence which in accordance with sec. 46(b)(8) of the Civil Service
10
Law is a ground for disciplinary action.
WHEREFORE, a FINE of P2,000.00 is hereby imposed on Deputy Sheriff

Honesto G. Fabre, with a STERN WARNING that a repetition of the same or of
any act calling for disciplinary action will be dealt with more severely.
SO ORDERED.
215 of 501
be converted into commercial, industrial or residential sites (Exh. M). That

Roque v. CA, 93 S 540 (See under Section 6) conversion has not taken place. At present the two lots are still ricelands.
Summit Trading v. Avendano, 135 S 397 In a letter dated October 16, 1979, Ortega advised Ernesto Pilipinia (attorney-
in-fact of Segundo and Mindo) that he and his father would have the right of
SECOND DIVISION first refusal in case the lots were sold (Exh. E and O).
G.R. No. L-60038 March 18, 1985 Ortega resold the two lots on November 14, 1979 for P16,000 and P11,000 to
Summit Trading through its president, Virgilio P. Balaguer (Exh. N and N-1).
SUMMIT TRADING AND DEVELOPMENT CORPORATION, petitioner,
vs. On August 10, 1981, or within the five-year period, Pilipinia and Mindo filed a
JUDGE HERMINIO A. AVENDANO, Court of First Instance of Laguna, complaint against Ortega and Summit Trading for the redemption or
Binan Branch I, SEGUNDO PILIPINIA and EDGARDO MINDO, repurchase of the two lots. They deposited P100,000 with the Royal Savings
represented by ERNESTO PILIPINIA, respondents. and Loan Association for that purpose.
Ortega was duly summoned. He failed to answer the complaint. He was

declared in default. Summit Trading was also declared in default. In his
AQUINO, J.: judgment by default dated October 29, 1981, Judge Avendano (the same judge
who ordered the cancellation of the annotation) gave plaintiffs Pilipinia and
This case is about the summons intended for defendant Summit Trading and Mindo 15 days from notice within which to redeem the lots for P16,000 and
Development Corporation. As background, it should be stated that Segundo P12,000 and ordered Summit Trading to execute the corresponding deeds of
Pilipinia and Edgardo Mindo in 1973 acquired under Land Authority sale and surrender the Torrens titles. If it failed to do so, the clerk of court was
Administrative Order No. 4 two registered lots with a total area of 2 ½ directed to perform that task. The register of deeds was ordered to issue new
hectares located at Barrio San Vicente, San Pedro, Laguna. titles to Pilipinia and Mindo.
The titles of the lots contain the annotation that should Pilipinia and Mindo The default judgment was rendered on the assumption that Summit Trading
sell the same, they have the right to redeem the lots within five years from the was duly summoned through Marina Saquilayan as secretary of Summit
date of the sale (Exh. H and I). Trading. She received the summons on August 28, 1981. A copy of the
judgment was also served on her on November 13, 1981 (Exh. B, pp. 31-32, 64,
Pilipinia and Mindo sold the lots for P16,000 and P12,000 to Gavino Ortega on Record).
February 14 and April 19, 1977. They have retained possession of the lots which
are ricelands. They became tenants thereof. Actually, Saquilayan received the summons as secretary of Balaguer, already
mentioned as the president of Summit Trading which purchased the lots from
At the instance of Ortega, the said annotation was cancelled by Judge Ortega. Bonifacio Tiongson was the corporate secretary.
Avendaño in his order of September 24, 1979 ostensibly because the lots would
216 of 501
Nineteen days after Saquilayan received a copy of the decision, Summit cannot be relied upon to know what to do with the legal papers served upon
Trading filed a motion for reconsideration on the ground that the trial court them.
did not acquire jurisdiction over it because summons was not served upon it in
accordance with Rule 14 of the Rules of Court which provides: In the instant case, service was made on the president's secretary who could
have easily notified the president that an action was filed against the
SEC. 13. Service upon private domestic corporation or corporation just as she had apprised him of the judgment in this case.
partnership.-If the defendant is a corporation organized under
the laws of the Philippines or a partnership duly registered, The instant petition for certiorari, treated as an appeal under Republic Act No.
service may be made on the president, manager, secretary, 5440, was filed out of time. Considered as a special civil action under Rule 65
cashier, agent, or any of its directors. of the Rules of Court, it is baseless because the trial court had acquired
jurisdiction over Summit Trading. As already shown, summons was properly
It is true that Saquilayan is not among the persons mentioned in section 13. served on the president's secretary.
However, she, being under the control of Summit Trading, has not explained
what she has done with the summons and complaint. The logical assumption We are not saying that service on such a secretary is always proper. Generally,
is that she delivered it to her boss, the president of Summit Trading. As it is improper. The president himself must be served personally with the
already stated, she received a copy of the decision and Summit Trading summons if it is desired to effect the service on that particular officer. But, as
became aware of it. Summit Trading's motion for reconsideration was denied. already stated, under the facts of this case, the president's secretary may be
regarded as the "agent" within the meaning of section 13 since service upon her
While Summit Trading is technically correct in contending that there was no of the judgment itself came to the notice of Summit Trading.
strict compliance with section 13, we cannot close our eyes to the realities of
the situation. Under the facts of this case, Saquilayan, being the secretary of WHEREFORE, the petition is dismissed. The trial court's judgment is affirmed.
the president (whose contact with the outside world is normally through his Its implementation is now in order. The restraining order is dissolved. Costs
secretary), may be regarded as an "agent" within the meaning of section 13.(See against the petitioner.
Villa Rey Transit, Inc. vs. Far East Motor Corporation, L-31339, January 31, 1978,
81 SCRA 298; Filoil Marketing Corporation vs. Marine Development SO ORDERED.
Corporation of the Phil., L-29636, September 30, 1982, 117 SCRA 86.)
Hence summons was validly served upon Summit Trading. Its negligence in
not answering the complaint was inexcusable. In fact, up to this time, Summit
Trading has not bothered to state its defenses to the action nor stated whether
it has ameritorious case warranting the setting aside of the default judgment.
The cases of Delta Motor Sales Corporation vs. Mangosing, L-41667, April
30,1976, 70 SCRA 598 and ATM Trucking Inc. vs. Buencamino, G.R. No. 62445,
August 31, 1983, 124 SCRA 434 are not in point because the summons in the
two cases was served upon mere clerks or employees of the corporations who
217 of 501
(hereinafter referred to as the "disputed shares") in the Chemical Industries of

Chemphil Export and Import v. CA, 251 S 286 the Philippines (Chemphil/CIP).
EN BANC Our task is to determine who is the rightful owner of the disputed shares.
Pursuant to our resolution dated 30 May 1994, the instant case is a

consolidation of two petitions for review filed before us as follows:
G.R. Nos. 112438-39 December 12, 1995
In G.R. Nos. 112438-39, CEIC seeks the reversal of the decision of the Court of
CHEMPHIL EXPORT & IMPORT CORPORATION (CEIC), petitioner, Appeals (former Twelfth Division) promulgated on 30 June 1993 and its
vs. resolution of 29 October 1993, denying petitioner's motion for reconsideration
THE HONORABLE COURT OF APPEALS JAIME Y. GONZALES, as in the consolidated cases entitled "Dynetics, Inc., et al. v. PISO, et al." (CA-G.R.
Assignee of the Bank of the Philippine Islands (BPI), RIZAL No. 20467) and "Dynetics, Inc., et al. v. PISO, et al.; CEIC, Intervenor-
COMMERCIAL BANKING CORPORATION (RCBC), LAND BANK OF THE Appellee" (CA-G.R. CV No. 26511).
PHILIPPINES (LBP), PHILIPPINE COMMERCIAL & INTERNATIONAL
BANK (PCIB) and THE PHILIPPINE INVESTMENT SYSTEM The dispositive portion of the assailed decision reads, thus:
ORGANIZATION (PISO), respondents.
WHEREFORE, this Court resolves in these consolidated cases
G.R. No. 113394 December 12, 1995 as follows:
PHILIPPINE COMMERCIAL INDUSTRIAL BANK (AND ITS ASSIGNEE 1. The Orders of the Regional Trial Court, dated March 25,
JAIME Y. GONZALES) petitioner, 1988, and May 20, 1988, subject of CA-G.R. CV No. 10467, are
vs. SET ASIDE and judgment is hereby rendered in favor of the
HONORABLE COURT OR APPEALS and CHEMPHIL EXPORT AND consortium and against appellee Dynetics, Inc., the amount of
IMPORT CORPORATION (CEIC), respondents. the judgment, to be determined by Regional Trial Court,
taking into account the value of assets that the consortium
may have already recovered and shall have recovered in
accordance with the other portions of this decision.
KAPUNAN, J.:
2. The Orders of the Regional Trial Court dated December 19,
Before us is a legal tug-of-war between the Chemphil Export and Import 1989 and March 5, 1990 are hereby REVERSED and SET ASIDE
Corporation (hereinafter referred to as CEIC), on one side, and the PISO and and judgment is hereby rendered confirming the ownership of
Jaime Gonzales as assignee of the Bank of the Philippine Islands (BPI), Rizal the consortium over the Chemphil shares of stock, subject of
Commercial Banking Corporation (RCBC), Land Bank of the Philippines (LBP) CA-G.R. CV No. 26511, and the Order dated September 4,
and Philippine Commercial International Bank (PCIB), on the other 1989, is reinstated.
(hereinafter referred to as the consortium), over 1,717,678 shares of stock
218 of 501
No pronouncement as to costs. On 2 July 1985, the trial court granted SBTC's prayer for the issuance of a writ
of preliminary attachment and on 9 July 1985, a notice of garnishment
1
SO ORDERED. covering Garcia's shares in CIP/Chemphil (including the disputed shares) was
served on Chemphil through its then President. The notice of garnishment
In G.R. No. 113394, PCIB and its assignee, Jaime Gonzales, ask for the was duly annotated in the stock and transfer books of Chemphil on the same
6
annulment of the Court of Appeals' decision (former Special Ninth Division) date.
promulgated on 26 March 1993 in "PCIB v. Hon. Job B. Madayag & CEIC" (CA-
G.R. SP NO. 20474) dismissing the petition for certiorari, prohibition On 6 September 1985, the writ of attachment in favor of SBTC was lifted.
7
and mandamus filed by PCIB and of said court's resolution dated 11 January However, the same was reinstated on 30 October 1985.
2
1994 denying their motion for reconsideration of its decision.
In the meantime, on 12 July 1985, the Regional Trial Court in Civil Case No.
The antecedent facts leading to the aforementioned controversies are as 8527 (the consortium case) denied the application of Dynetics and Garcia for
follows: preliminary injunction and instead granted the consortium's prayer for a
consolidated writ of preliminary attachment. Hence, on 19 July 1985, after the
On September 25, 1984, Dynetics, Inc. and Antonio M. Garcia filed a complaint consortium had filed the required bond, a writ of attachment was issued and
for declaratory relief and/or injunction against the PISO, BPI, LBP, PCIB and various real and personal properties of Dynetics and Garcia were garnished,
8
RCBC or the consortium with the Regional Trial Court of Makati, Branch 45 including the disputed shares. This garnishment, however, was not annotated
(Civil Case No. 8527), seeking judicial declaration, construction and in Chemphil's stock and transfer book.
interpretation of the validity of the surety agreement that Dynetics and Garcia
had entered into with the consortium and to perpetually enjoin the latter from On 8 September 1987, PCIB filed a motion to dismiss the complaint of
claiming, collecting and enforcing any purported obligations which Dynetics Dynetics and Garcia for lack of interest to prosecute and to submit its
3
and Garcia might have undertaken in said agreement. counterclaims for decision, adopting the evidence it had adduced at the
9
hearing of its application for preliminary attachment.
The consortium filed their respective answers with counterclaims alleging that
the surety agreement in question was valid and binding and that Dynetics and On 25 March 1988, the Regional Trial Court dismissed the complaint of
Garcia were liable under the terms of the said agreement. It likewise applied Dynetics and Garcia in Civil Case No. 8527, as well as the counterclaims of the
for the issuance of a writ of preliminary attachment against Dynetics and consortium, thus:
4
Garcia.
Resolving defendant's, Philippine Commercial International
Seven months later, or on 23 April 1985, Dynetics, Antonio Garcia and Matrix Bank, MOTION TO DISMISS WITH MOTION TO SUBMIT
Management & Trading Corporation filed a complaint for declaratory relief DEFENDANT PCIBANK's COUNTERCLAIM FOR DECISION,
and/or injunction against the Security Bank & Trust Co. (SBTC case) before dated September 7, 1987:
the Regional Trial Court of Makati, Branch 135 docketed as Civil Case No.
5
10398. (1) The motion to dismiss is granted; and the instant case is
hereby ordered dismissed pursuant to Sec. 3, Rule 17 of the
Revised Rules of Court, plaintiff having failed to comply with
219 of 501
the order dated July 16, 1987, and having not taken further On 17 January 1989 during the pendency of consortium's appeal in CA-G.R. CV
steps to prosecute the case; and No. 20467, Antonio Garcia and the consortium entered into a Compromise
Agreement which the Court of Appeals approved on 22 May 1989 and became
(2) The motion to submit said defendant's counterclaim for the basis of its judgment by compromise. Antonio Garcia was dropped as a
decision is denied; there is no need; said counterclaim is party to the appeal leaving the consortium to proceed solely against Dynetics,
12 13
likewise dismissed under the authority of Dalman vs. City Inc. On 27 June 1989, entry of judgment was made by the Clerk of Court.
Court of Dipolog City, L-63194, January 21, 1985, wherein the
Supreme Court stated that if the civil case is dismissed, so also Hereunder quoted are the salient portions of said compromise agreement:
is the counterclaim filed therein. "A person cannot eat his
10
cake and have it at the same time" (p. 645, record, Vol. I). xxx xxx xxx
The motions for reconsideration filed by the consortium were, likewise, denied 3. Defendants, in consideration of avoiding an extended
by the trial court in its order dated 20 May 1988: litigation, having agreed to limit their claim against plaintiff
Antonio M. Garcia to a principal sum of P145 Million
The Court could have stood pat on its order dated 25 March immediately demandable and to waive all other claims to
1988, in regard to which the defendants-banks concerned filed interest, penalties, attorney's fees and other charges. The
motions for reconsideration. However, inasmuch as plaintiffs aforesaid compromise amount of indebtedness of P145 Million
commented on said motions that: "3). In any event, so as not shall earn interest of eighteen percent (18%) from the date of
to unduly foreclose on the rights of the respective parties to this Compromise.
refile and prosecute their respective causes of action, plaintiffs
manifest their conformity to the modification of this 4. Plaintiff Antonio M. Garcia and herein defendants have no
Honorable Court's order to indicate that the dismissal of the further claims against each other.
complaint and the counterclaims is without prejudice." (p. 2,
plaintiffs' COMMENT etc. dated May 20, 1988). The Court is 5. This Compromise shall be without prejudice to such claims
inclined to so modify the said order. as the parties herein may have against plaintiff Dynetics, Inc.
WHEREFORE , the order issued on March 25, 1988, is hereby 6. Plaintiff Antonio M. Garcia shall have two (2) months from
modified in the sense that the dismissal of the complaint as date of this Compromise within which to work for the entry
well as of the counterclaims of defendants RCBC, LBP, PCIB and participation of his other creditor, Security Bank and
and BPI shall be considered as without prejudice (p. 675, Trust Co., into this Compromise. Upon the expiration of this
11
record, Vol. I). period, without Security Bank and Trust Co. having joined,
this Compromise shall be submitted to the Court for its
Unsatisfied with the aforementioned order, the consortium appealed to the information and approval (pp. 27, 28-31, rollo, CA-G.R. CV No.
14
Court of Appeals, docketed as CA-G.R. CV No. 20467. 10467).
220 of 501
It appears that on 15 July 1988, Antonio Garcia under a Deed of Sale transferred For being legally proper, defendant's MOTION TO ORDER
to Ferro Chemicals, Inc. (FCI) the disputed shares and other properties for THE CORPORATE SECRETARY OF CHEMICAL INDUSTRIES
P79,207,331.28. It was agreed upon that part of the purchase price shall be paid OF THE PHILS., INC. (CHEMPIL) TO ENTER IN THE STOCK
by FCI directly to SBTC for whatever judgment credits that may be adjudged AND TRANSFER BOOKS OF CHEMPHIL THE SHERIFF'S
in the latter's favor and against Antonio Garcia in the aforementioned SBTC CERTIFICATE OF SALE DATED AUGUST 22, 1989 AND TO
15
case. ISSUE NEW CERTIFICATES OF STOCK IN THE NAME OF
THE DEFENDANT BANKS, dated August 29, 1989, is hereby
On 6 March 1989, FCI, through its President Antonio M. Garcia, issued a Bank granted.
of America Check No. 860114 in favor of SBTC in the amount of
16
P35,462,869.62. SBTC refused to accept the check claiming that the amount WHEREFORE, the corporate secretary of the aforesaid
was not sufficient to discharge the debt. The check was thus consigned by corporation, or whoever is acting for and in his behalf, is
Antonio Garcia and Dynetics with the Regional Trial Court as payment of their hereby ordered to (1) record and/or register the Certificate of
17
judgment debt in the SBTC case. Sale dated August 22, 1989 issued by Deputy Sheriff Cristobal
S. Jabson of this Court; (2) to cancel the certificates of stock of
On 26 June 1989, FCI assigned its 4,119,614 shares in Chemphil, which included plaintiff Antonio M. Garcia and all those which may have
the disputed shares, to petitioner CEIC. The shares were registered and subsequently been issued in replacement and/or in
recorded in the corporate books of Chemphil in CEIC's name and the substitution thereof; and (3) to issue in lieu of the said shares
18
corresponding stock certificates were issued to it. new shares of stock in the name of the defendant Banks,
namely, PCIB, BPI, RCBC, LBP and PISO bank in such
Meanwhile, Antonio Garcia, in the consortium case, failed to comply with the proportion as their respective claims would appear in this suit
22
terms of the compromise agreement he entered into with the consortium on 17 (p. 82, record, Vol. II).
January 1989. As a result, on 18 July 1989, the consortium filed a motion for
execution which was granted by the trial court on 11 August 1989. Among On 26 September 1989, CEIC filed a motion to intervene (dated 25 September
Garcia's properties that were levied upon on execution were his 1,717,678 1989) in the consortium case seeking the recall of the abovementioned order
23
shares in Chemphil (the disputed shares) previously garnished on 19 July on grounds that it is the rightful owner of the disputed shares. It further
19
1985. alleged that the disputed shares were previously owned by Antonio M. Garcia
but subsequently sold by him on 15 July 1988 to Ferro Chemicals, Inc. (FCI)
On 22 August 1989, the consortium acquired the disputed shares of stock at which in turn assigned the same to CEIC in an agreement dated 26 June 1989.
20
the public auction sale conducted by the sheriff for P85,000,000.00. On
same day, a Certificate of Sale covering the disputed shares was issued to it. On 27 September 1989, the trial court granted CEIC's motion allowing it to
intervene, but limited only to the incidents covered by the order dated 4
21
On 30 August 1989, the consortium filed a motion (dated 29 August 1989) to September 1989. In the same order, the trial court directed Chemphil's
order the corporate secretary of Chemphil to enter in its stock and transfer corporate secretary to temporarily refrain from implementing the 4 September
books the sheriff's certificate of sale dated 22 August 1989, and to issue new 1989
24
certificates of stock in the name of the banks concerned. The trial court order.
granted said motion in its order dated 4 September 1989, thus:
221 of 501
On 2 October 1989, the consortium filed their opposition to CEIC's motion for The Cease and Desist Order dated September 27, 1989, is
intervention alleging that their attachment lien over the disputed shares of hereby AFFIRMED and made PERMANENT.
stocks must prevail over the private sale in favor of the CEIC considering that
28
said shares of stock were garnished in the consortium's favor as early as 19 July SO ORDERED.
25
1985.
In so ruling, the trial court ratiocinated in this wise:
On 4 October 1989, the consortium filed their opposition to CEIC's motion to
set aside the 4 September 1989 order and moved to lift the 27 September 1989 xxx xxx xxx
26
order.
After careful and assiduous consideration of the facts and
On 12 October 1989, the consortium filed a manifestation and motion to lift applicable law and jurisprudence, the Court holds that CEIC's
the 27 September 1989 order, to reinstate the 4 September 1989 order and to Urgent Motion to Set Aside the Order of September 4, 1989 is
direct CEIC to surrender the disputed stock certificates of Chemphil in its impressed with merit. The CONSORTIUM has admitted that
possession within twenty-four (24) hours, failing in which the President, the writ of attachment/garnishment issued on July 19, 1985 on
Corporate Secretary and stock and transfer agent of Chemphil be directed to the shares of stock belonging to plaintiff Antonio M. Garcia
register the names of the banks making up the consortium as owners of said was not annotated and registered in the stock and transfer
shares, sign the new certificates of stocks evidencing their ownership over said books of CHEMPHIL. On the other hand, the prior
27
shares and to immediately deliver the stock certificates to them. attachment issued in favor of SBTC on July 2, 1985 by Branch
135 of this Court in Civil Case No. 10398, against the same
Resolving the foregoing motions, the trial court rendered an order dated 19 CHEMPHIL shares of Antonio M. Garcia, was duly registered
December 1989, the dispositive portion of which reads as follows: and annotated in the stock and transfer books of CHEMPHIL.
The matter of non-recording of the Consortium's attachment
WHEREFORE, premises considered, the Urgent Motion dated in Chemphil's stock and transfer book on the shares of
September 25, 1989 filed by CEIC is hereby GRANTED. Antonio M. Garcia assumes significance considering CEIC's
Accordingly, the Order of September 4, 1989, is hereby SET position that FCI and later CEIC acquired the CHEMPHIL
ASIDE, and any and all acts of the Corporate Secretary of shares of Antonio M. Garcia without knowledge of the
CHEMPHIL and/or whoever is acting for and in his behalf, as attachment of the CONSORTIUM. This is also important as
may have already been done, carried out or implemented CEIC claims that it has been subrogated to the rights of SBTC
pursuant to the Order of September 4, 1989, are hereby since CEIC's predecessor-in-interest, the FCI, had paid SBTC
nullified. the amount of P35,462,869.12 pursuant to the Deed of Sale
and Purchase of Shares of Stock executed by Antonio M.
PERFORCE, the CONSORTIUM'S Motions dated October 3, Garcia on July 15, 1988. By reason of such payment, sale with
1989 and October 11, 1989, are both hereby denied for lack of the knowledge and consent of Antonio M. Garcia, FCI and
merit. CEIC, as party-in-interest to FCI, are subrogated by operation
of law to the rights of SBTC. The Court is not unaware of the
citation in CEIC's reply that "as between two (2) attaching
222 of 501
creditors, the one whose claims was first registered on the On 16 March 1990, the consortium appealed to the Court of Appeals (CA-G.R.
books of the corporation enjoy priority." (Samahang No. 26511). In its Resolution dated 9 August 1990, the Court of Appeals
32
Magsasaka, Inc. vs. Chua Gan, 96 Phil. 974.) consolidated CA-G.R. No. 26511 with CA-G.R. No. 20467.
The Court holds that a levy on the shares of corporate stock The issues raised in the two cases, as formulated by the Court of Appeals, are
to be valid and binding on third persons, the notice of as follows:
attachment or garnishment must be registered and annotated
in the stock and transfer books of the corporation, more so I
when the shares of the corporation are listed and traded in
the stock exchange, as in this case. As a matter of fact, in the WHETHER OR NOT, UNDER THE PECULIAR
CONSORTIUM's motion of August 30, 1989, they specifically CIRCUMSTANCES OF THE CASE, THE TRIAL COURT
move to "order the Corporate Secretary of CHEMPHIL ERRED IN DISMISSING THE COUNTERCLAIMS OF THE
to enter in the stock and transfer books of CHEMPHIL the CONSORTIUM IN CIVIL CASE NO. 8527;
Sheriff's Certificate of Sale dated August 22, 1989." This goes
to show that, contrary to the arguments of the II
CONSORTIUM, in order that attachment, garnishment
and/or encumbrances affecting rights and ownership on WHETHER OR NOT THE DISMISSAL OF CIVIL CASE NO.
shares of a corporation to be valid and binding, the same has 8527 RESULTED IN THE DISCHARGE OF THE WRIT OF
to be recorded in the stock and transfer books. ATTACHMENT ISSUED THEREIN EVEN AS THE
CONSORTIUM APPEALED THE ORDER DISMISSING CIVIL
Since neither CEIC nor FCI had notice of the CONSORTIUM's CASE NO. 8527;
attachment of July 19, 1985, CEIC's shares of stock in
CHEMPHIL, legally acquired from Antonio M. Garcia, cannot III
be levied upon in execution to satisfy his judgment debts. At
the time of the Sheriff's levy on execution, Antonio M. Garcia WHETHER OR NOT THE JUDGMENT BASED ON
29
has no more in CHEMPHIL which could be levied upon. COMPROMISE RENDERED BY THIS COURT ON MAY 22,
1989 HAD THE EFFECT OF DISCHARGING THE
xxx xxx xxx ATTACHMENTS ISSUED IN CIVIL CASE NO. 8527;
On 23 January 1990, the consortium and PCIB filed separate motions for IV
reconsideration of the aforestated order which were opposed by petitioner
30
CEIC. WHETHER OR NOT THE ATTACHMENT OF SHARES OF
STOCK, IN ORDER TO BIND THIRD PERSONS, MUST BE
On 5 March 1990, the trial court denied the motions for RECORDED IN THE STOCK AND TRANSFER BOOK OF THE
31
reconsideration. CORPORATION; AND
223 of 501
V the consortium presented testimonial and documentary

evidence which clearly should have supported a judgment on
WHETHER OR NOT FERRO CHEMICALS, INC. (FCI), AND the merits in favor of the consortium. As the consortium
ITS SUCCESSOR-IN-INTEREST, CEIC, WERE SUBROGATED correctly argued, the net atrocious effect of the Regional Trial
TO THE RIGHTS OF SECURITY BANK & TRUST COMPANY Court's ruling is that it allows a situation where a party
(SBTC) IN A SEPARATE CIVIL ACTION. (This issue appears litigant is forced to plead and prove compulsory
to be material as SBTC is alleged to have obtained an earlier counterclaims only to be denied those counterclaims on
attachment over the same Chemphil shares that the account of the adverse party's failure to prosecute his case.
33
consortium seeks to recover in the case at bar). Verily, the consortium had no alternative but to present its
counterclaims in Civil Case No. 8527 since its counterclaims
On 6 April 1990, the PCIB separately filed with the Court of Appeals a petition are compulsory in nature.
for certiorari, prohibition and mandamus with a prayer for the issuance of a
writ of preliminary injunction (CA-G.R. No. SP-20474), likewise, assailing the On the second issue, the Court of Appeals opined that unless
very same orders dated 19 December 1989 and 5 March 1990, subject of CA- a writ of attachment is lifted by a special order specifically
34
G.R. No. 26511. providing for the discharge thereof, or unless a case has been
finally dismissed against the party in whose favor the
On 30 June 1993, the Court of Appeals (Twelfth Division) in CA-G.R. No. 26511 attachment has been issued, the attachment lien subsists.
and CA-G.R. No. 20467 rendered a decision reversing the orders of the trial When the consortium, therefore, took an appeal from the
court and confirming the ownership of the consortium over the disputed Regional Trial Court's orders of March 25, 1988 and May 20,
35
shares. CEIC's motion for reconsideration was denied on 29 October 1993. 1988, such appeal had the effect of preserving the
consortium's attachment liens secured at the inception of
In ruling for the consortium, the Court of Appeals made the following Civil Case No. 8527, invoking the rule in Olib v. Pastoral, 188
36
ratiocination: SCRA 692 (1988) that where the main action is appealed, the
attachment issued in the said main case is also considered
On the first issue, it ruled that the evidence offered by the appealed.
consortium in support of its counterclaims, coupled with the
failure of Dynetics and Garcia to prosecute their case, was Anent the third issue, the compromise agreement between
sufficient basis for the RTC to pass upon and determine the the consortium and Garcia dated 17 January 1989 did not
consortium's counterclaims. result in the abandonment of its attachment lien over his
properties. Said agreement was approved by the Court of
The Court of Appeals found no application for the ruling Appeals in a Resolution dated 22 May 1989. The judgment
in Dalman v. City Court of Dipolog, 134 SCRA 243 (1985) that based on the compromise agreement had the effect of
"a person cannot eat his cake and have it at the same time. If preserving the said attachment lien as security for the
the civil case is dismissed, so also is the counterclaim filed satisfaction of said judgment (citing BF Homes, Inc. v. CA, 190
therein" because the factual background of the present action SCRA 262, [1990]).
is different. In the instant case, both Dynetics and Garcia and
224 of 501
As to the fourth issue, the Court of Appeals agreed with the refuted by FCI or CEIC. It is clear, therefore, that there was an
consortium's position that the attachment of shares of stock attempt on the part of Garcia to use FCI and CEIC as
in a corporation need not be recorded in the corporation's convenient vehicles to deny the consortium its right to make
stock and transfer book in order to bind third persons. itself whole through an execution sale of the Chemphil shares
attached by the consortium at the inception of Civil Case No.
Section 7(d), Rule 57 of the Rules of Court was complied with 8527. The consortium, therefore, is entitled to the issuance of
by the consortium (through the Sheriff of the trial court) the Chemphil shares of stock in its favor. The Regional Trial
when the notice of garnishment over the Chemphil shares of Court's order of September 4, 1989, should, therefore, be
Garcia was served on the president of Chemphil on July 19, reinstated in toto.
1985. Indeed, to bind third persons, no law requires that an
attachment of shares of stock be recorded in the stock and Accordingly, the question of whether or not the attachment
transfer book of a corporation. The statement attributed by lien in favor of SBTC in the SBTC case is superior to the
the Regional Trial Court to the Supreme Court in Samahang attachment lien in favor of the consortium in Civil Case No.
Magsasaka, Inc. vs. Gonzalo Chua Guan, G.R. No. L-7252, 8527 becomes immaterial with respect to the right of
February 25, 1955 (unreported), to the effect that "as between intervenor-appellee CEIC. The said issue would have been
two attaching creditors, the one whose claim was registered relevant had CEIC established its subrogation to the rights of
first on the books of the corporation enjoys priority," is SBTC.
an obiter dictum that does not modify the procedure laid
down in Section 7(d), Rule 57 of the Rules of Court. On 26 March 1993, the Court of Appeals (Special Ninth Division) in CA-G.R.
No. SP 20474 rendered a decision denying due course to and dismissing PCIB's
Therefore, ruled the Court of Appeals, the attachment made petition for certiorari on grounds that PCIB violated the rule against forum-
over the Chemphil shares in the name of Garcia on July 19, shopping and that no grave abuse of discretion was committed by respondent
1985 was made in accordance with law and the lien created Regional Trial Court in issuing its assailed orders dated 19 December 1989 and
thereby remained valid and subsisting at the time Garcia sold 5 March 1990. PCIB's motion for reconsideration was denied on 11 January
37
those shares to FCI (predecessor-in-interest of appellee CEIC) 1994.
in 1988.
On 7 July 1993, the consortium, with the exception of PISO, assigned without
38
Anent the last issue, the Court of Appeals rejected CEIC's recourse all its rights and interests in the disputed shares to Jaime Gonzales.
subrogation theory based on Art. 1302 (2) of the New Civil
Code stating that the obligation to SBTC was paid by Garcia On 3 January 1994, CEIC filed the instant petition for review docketed as G.R.
himself and not by a third party (FCI). Nos. 112438-39 and assigned the following errors:
The Court of Appeals further opined that while the check I.

used to pay SBTC was a FCI corporate check, it was funds of
Garcia in FCI that was used to pay off SBTC. That the funds THE RESPONDENT COURT OF APPEALS GRAVELY ERRED
used to pay off SBTC were funds of Garcia has not been IN SETTING ASIDE AND REVERSING THE ORDERS OF THE
225 of 501
REGIONAL TRIAL COURT DATED DECEMBER 5, 1989 AND respondent Court erroneously characterized
MARCH 5, 1990 AND IN NOT CONFIRMING PETITIONER'S as mere obiter dictum;
OWNERSHIP OVER THE DISPUTED CHEMPHIL SHARES
AGAINST THE FRIVOLOUS AND UNFOUNDED CLAIMS OF (3) In not holding that the dismissal of the
THE CONSORTIUM. appeal of the Consortium from the order of
the trial court dismissing its counterclaim
II. against Antonio M. Garcia and the finality of
the compromise agreement which ended the
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED: litigation between the Consortium and
Antonio M. Garcia in theDynetics
(1) In not holding that the Consortium's case had ipso jure discharged the
attachment over the disputed Chemphil Consortium's purported attachment over the
shares did not vest any priority right in its disputed shares.
favor and cannot bind third parties since
admittedly its attachment on 19 July 1985 was III.
not recorded in the stock and transfer books
of Chemphil, and subordinate to the THE RESPONDENT COURT OF APPEALS GRAVELY ERRED
attachment of SBTC which SBTC registered IN NOT HOLDING THAT CEIC HAD BEEN SUBROGATED
and annotated in the stock and transfer TO THE RIGHTS OF SBTC SINCE CEIC'S PREDECESSOR IN
books of Chemphil on 2 July 1985, and that INTEREST HAD PAID SBTC PURSUANT TO THE DEED OF
the Consortium's attachment failed to SALE AND PURCHASE OF STOCK EXECUTED BY
comply with Sec. 7(d), Rule 57 of the Rules as ANTONIO M. GARCIA ON JULY 15, 1988, AND THAT BY
evidenced by the notice of garnishment of REASON OF SUCH PAYMENT, WITH THE CONSENT AND
the deputy sheriff of the trial court dated 19 KNOWLEDGE OF ANTONIO M. GARCIA, FCI AND CEIC, AS
July 1985 (annex "D") which the sheriff served PARTY IN INTEREST TO FCI, WERE SUBROGATED BY
on a certain Thelly Ruiz who was neither OPERATION OF LAW TO THE RIGHTS OF SBTC.
President nor managing agent of Chemphil;
IV.
(2) In not applying the case law enunciated
by this Honorable Supreme Court THE RESPONDENT COURT OF APPEALS GRAVELY ERRED
in Samahang Magsasaka, Inc. vs. Gonzalo AND MADE UNWARRANTED INFERENCES AND
Chua Guan, 96 Phil. 974 that as between two CONCLUSIONS, WITHOUT ANY SUPPORTING EVIDENCE,
attaching creditors, the one whose claim was THAT THERE WAS AN ATTEMPT ON THE PART OF
registered first in the books of the ANTONIO M. GARCIA TO USE FCI AND CEIC AS
corporation enjoys priority, and which CONVENIENT VEHICLES TO DENY THE CONSORTIUM ITS
RIGHTS TO MAKE ITSELF WHOLE THROUGH AN
226 of 501
EXECUTION OF THE CHEMPHIL SHARES PURPORTEDLY TRIAL COURT DATED DECEMBER 19, 1989 AND MARCH 5,
39
ATTACHED BY THE CONSORTIUM ON 19 JULY 1985. 1990 WHICH DENIED PETITIONER'S OWNERSHIP OVER
THE DISPUTED SHARES NOTWITHSTANDING
On 2 March 1994, PCIB filed its own petition for review docketed as G.R. No. PROVISIONS OF LAW AND EXTANT JURISPRUDENCE ON
113394 wherein it raised the following issues: THE MATTER THAT PETITIONER AND THE CONSORTIUM
HAVE PREFERRED SENIOR RIGHTS THEREOVER.
I. RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN RENDERING THE DECISION AND III. RESPONDENT COURT OF APPEAL COMMITTED
RESOLUTION IN QUESTION (ANNEXES A AND B) IN SERIOUS ERROR IN CONCLUDING THAT THE DISMISSAL
DEFIANCE OF LAW AND JURISPRUDENCE BY FINDING OF THE COMPLAINT AND THE COUNTERCLAIM IN CIVIL
RESPONDENT CEIC AS HAVING BEEN SUBROGATED TO CASE NO. 8527 ALSO RESULTED IN THE DISCHARGE OF
THE RIGHTS OF SBTC BY THE PAYMENT BY FCI OF THE WRIT OF ATTACHMENT DESPITE THE RULINGS OF
GARCIA'S DEBTS TO THE LATTER DESPITE THE FACT THIS HONORABLE COURT IN BF HOMES VS. COURT OF
THAT — APPEALS, G.R. NOS. 76879 AND 77143, OCTOBER 3, 1990,
190 SCRA 262, AND IN OLIB VS. PASTORAL, G.R. NO. 81120,
A. FCI PAID THE SBTC DEBT BY VIRTUE AUGUST 20, 1990, 188 SCRA 692 TO THE CONTRARY.
OF A CONTRACT BETWEEN FCI AND
GARCIA, THUS, LEGAL SUBROGATION IV. RESPONDENT COURT OF APPEALS EXCEEDED ITS
DOES NOT ARISE; JURISDICTION IN RULING ON THE MERITS OF THE MAIN
CASE NOTWITHSTANDING THAT THOSE MATTERS
B. THE SBTC DEBT WAS PAID BY GARCIA WERE NOT ON APPEAL BEFORE IT.
HIMSELF AND NOT BY FCI, HENCE,
SUBROGATION BY PAYMENT COULD NOT V. RESPONDENT COURT OF APPEALS COMMITTED
HAVE OCCURRED; SERIOUS ERROR IN HOLDING THAT PETITIONER IS
GUILTY OF FORUM SHOPPING DESPITE THE FACT THAT
C. FCI DID NOT ACQUIRE ANY RIGHT SC CIRCULAR NO. 28-91 WAS NOT YET IN FORCE AND
OVER THE DISPUTED SHARES AS SBTC EFFECT AT THE TIME THE PETITION WAS FILED BEFORE
HAD NOT YET LEVIED UPON NOR RESPONDENT APPELLATE COURT, AND THAT ITS
BOUGHT THOSE SHARES ON EXECUTION. COUNSEL AT THAT TIME HAD ADEQUATE BASIS TO
ACCORDINGLY, WHAT FCI ACQUIRED BELIEVE THAT CERTIORARI AND NOT AN APPEAL OF
FROM SBTC WAS SIMPLY A JUDGMENT THE TRIAL COURT'S ORDERS WAS THE APPROPRIATE
40
CREDIT AND AN ATTACHMENT LIEN TO RELIEF.
SECURE ITS SATISFACTION.
As previously stated, the issue boils down to who is legally entitled to the
II. RESPONDENT COURT OF APPEALS COMMITTED disputed shares of Chemphil. We shall resolve this controversy by examining
SERIOUS ERROR IN SUSTAINING THE ORDERS OF THE
227 of 501
the validity of the claims of each party and, thus, determine whose claim has (3) When, even without the knowledge of the debtor, a person
priority. interested in the fulfillment of the obligation pays, without
prejudice to the effects of confusion as to the latter's share.
CEIC's claim (Emphasis ours.)
CEIC traces its claim over the disputed shares to the attachment lien obtained Despite, however, its multitudinous arguments, CEIC presents an erroneous
by SBTC on 2 July 1985 against Antonio Garcia in Civil Case No. 10398. It avers interpretation of the concept of subrogation. An analysis of the situations
that when FCI, CEIC's predecessor-in-interest, paid SBTC the due obligations involved would reveal the clear inapplicability of Art. 1302 (2).
of Garcia to the said bank pursuant to the Deed of Absolute Sale and Purchase
41
of Shares of Stock, FCI, and later CEIC, was subrogated to the rights of SBTC, Antonio Garcia sold the disputed shares to FCI for a consideration of
particularly to the latter's aforementioned attachment lien over the disputed P79,207,331.28. FCI, however, did not pay the entire amount to Garcia as it was
shares. obligated to deliver part of the purchase price directly to SBTC pursuant to the
following stipulation in the Deed of Sale:
CEIC argues that SBTC's attachment lien is superior as it was obtained on 2
July 1985, ahead of the consortium's purported attachment on 19 July 1985. Manner of Payment
More importantly, said CEIC lien was duly recorded in the stock and transfer
books of Chemphil. Payment of the Purchase Price shall be made in accordance
with the following order of preference provided that in no
CEIC's subrogation theory is unavailing. instance shall the total amount paid by the Buyer exceed the
Purchase Price:
By definition, subrogation is "the transfer of all the rights of the creditor to a
third person, who substitutes him in all his rights. It may either be legal or a. Buyer shall pay directly to the Security Bank and Trust Co.
conventional. Legal subrogation is that which takes place without agreement the amount determined by the Supreme Court as due and owing
but by operation of law because of certain acts; this is the subrogation referred in favor of the said bank by the Seller.
to in article 1302. Conventional subrogation is that which takes place by
42
agreement of the parties . . ." The foregoing amount shall be paid within fifteen (15) days
from the date the decision of the Supreme Court in the case
CEIC's theory is premised on Art. 1302 (2) of the Civil Code which states: entitled "Antonio M. Garcia, et al. vs. Court of Appeals, et al."
43
G.R. Nos. 82282-83 becomes final and executory. (Emphasis
Art. 1302. It is presumed that there is legal subrogation: ours.)
(1) When a creditor pays another creditor who is preferred, Hence, when FCI issued the BA check to SBTC in the amount of
even without the debtor's knowledge; P35,462,869.62 to pay Garcia's indebtedness to the said bank, it was in effect
paying with Garcia's money, no longer with its own, because said amount was
(2) When a third person, not interested in the obligation, pays part of the purchase price which FCI owed Garcia in payment for the sale of
with the express or tacit approval of the debtor; the disputed shares by the latter to the former. The money "paid" by FCI to
228 of 501
SBTC, thus properly belonged to Garcia. It is as if Garcia himself paid his own SBTC's attachment lien over the disputed shares which, in turn, had already
debt to SBTC but through a third party — FCI. been lifted or discharged upon satisfaction by Garcia, through FCI, of his debt
46
to the said bank.
It is, therefore, of no consequence that what was used to pay SBTC was a
corporate check of FCI. As we have earlier stated, said check no longer The rule laid down in the case of Samahang Magsasaka, Inc. v. Chua
47
represented FCI funds but Garcia's money, being as it was part of FCI's Guan, that as between two attaching creditors the one whose claim was
payment for the acquisition of the disputed shares. The FCI check should not registered ahead on the books of the corporation enjoys priority, clearly has no
be taken at face value, the attendant circumstances must also be considered. application in the case at bench. As we have amply discussed, since CEIC was
not subrogated to SBTC's right as attaching creditor, which right in turn, had
The aforequoted contractual stipulation in the Deed of Sale dated 15 July 1988 already terminated after Garcia paid his debt to SBTC, it cannot, therefore, be
between Antonio Garcia and FCI is nothing more but an arrangement for the categorized as an attaching creditor in the present controversy. CEIC cannot
sake of convenience. Payment was to be effected in the aforesaid manner so as resurrect and claim a right which no longer exists. The issue in the instant
to prevent money from changing hands needlessly. Besides, the very purpose case, then, is priority between an attaching creditor (the consortium) and a
of Garcia in selling the disputed shares and his other properties was to "settle purchaser (FCI/CEIC) of the disputed shares of stock and not between two
44
certain civil suits filed against him." attaching creditors — the subject matter of the aforestated Samahang
Magsasaka case.
Since the money used to discharge Garcia's debt rightfully belonged to him,
FCI cannot be considered a third party payor under Art. 1302 (2). It was but a CEIC, likewise, argues that the consortium's attachment lien over the disputed
conduit, or as aptly categorized by respondents, merely an agent as defined in Chemphil shares is null and void and not binding on third parties due to the
Art. 1868 of the Civil Code: latter's failure to register said lien in the stock and transfer books of Chemphil
as mandated by the rule laid down by the Samahang Magsasaka v. Chua
48
Art. 1868. By the contract of agency a person binds himself to Guan.
render some service or to do something in representation or
on behalf of another, with the consent or authority of the The attachment lien acquired by the consortium is valid and effective. Both
latter. the Revised Rules of Court and the Corporation Code do not require
annotation in the corporation's stock and transfer books for the attachment of
FCI was merely fulfilling its obligation under the aforementioned Deed of Sale. shares of stock to be valid and binding on the corporation and third party.
Additionally, FCI is not a disinterested party as required by Art. 1302 (2) since Section 74 of the Corporation Code which enumerates the instances where
the benefits of the extinguishment of the obligation would redound to none registration in the stock and transfer books of a corporation provides:
45
other but itself. Payment of the judgment debt to SBTC resulted in the
discharge of the attachment lien on the disputed shares purchased by FCI. The Sec. 74. Books to be kept; stock transfer agent. —
latter would then have a free and "clean" title to said shares.
xxx xxx xxx
In sum, CEIC, for its failure to fulfill the requirements of Art. 1302 (2), was not
subrogated to the rights of SBTC against Antonio Garcia and did not acquire
229 of 501
Stock corporations must also keep a book to be known as the Are attachments of shares of stock included in the term "transfer" as provided
stock and transfer book, in which must be kept a record of all in Sec. 63 of the Corporation Code? We rule in the negative. As succinctly
49
stocks in the names of the stockholders alphabetically declared in the case of Monserrat v. Ceron, "chattel mortgage over shares of
arranged; the installments paid and unpaid on all stock for stock need not be registered in the corporation's stock and transfer book
which subscription has been made, and the date of payment inasmuch as chattel mortgage over shares of stock does not involve a "transfer
of any settlement; a statement of every alienation, sale or of shares," and that only absolute transfers of shares of stock are required to be
transfer of stock made, the date thereof, and by and to whom recorded in the corporation's stock and transfer book in order to have "force
made; and such other entries as the by-laws may prescribe. and effect as against third persons."
The stock and transfer book shall be kept in the principal
office of the corporation or in the office of its stock transfer xxx xxx xxx
agent and shall be open for inspection by any director or
stockholder of the corporation at reasonable hours on The word "transferencia" (transfer) is defined by the
business days. (Emphasis ours.) "Diccionario de la Academia de la Lengua Castellana" as
"accion y efecto de transfeir" (the act and effect of
xxx xxx xxx transferring); and the verb "transferir", as "ceder or renunciar
en otro el derecho o dominio que se tiene sobre una cosa,
Section 63 of the same Code states: haciendole dueno de ella" (to assign or waive the right in, or
absolute ownership of, a thing in favor of another, making
Sec. 63. Certificate of stock and transfer of shares. — The him the owner thereof).
capital stock of stock corporations shall be divided into shares
for which certificates signed by the president or vice- In the Law Dictionary of "Words and Phrases", third series,
president, countersigned by the secretary or assistant volume 7, p. 5867, the word "transfer" is defined as follows:
secretary, and sealed with the seal of the corporation shall be
issued in accordance with the by-laws. Shares of stock so "Transfer" means any act by which property
issued are personal property and may be transferred by delivery of one person is vested in another, and
of the certificate or certificates indorsed by the owner or his "transfer of shares", as used in Uniform Stock
attorney-in-fact or other person legally authorized to make the Transfer Act (Comp. St. Supp. 690), implies
transfer. No transfer, however, shall be valid, except as between any means whereby one may be divested of
the parties, until the transfer is recorded in the books of the and another acquire ownership of stock.
corporation so as to show the names of the parties to the (Wallach vs. Stein [N.J.], 136 A., 209, 210.)
transaction, the date of the transfer, the number of the
certificate or certificates and the number of shares transferred. xxx xxx xxx
No shares of stock against which the corporation holds any In the case of Noble vs. Ft. Smith Wholesale Grocery Co. (127
unpaid claim shall be transferable in the books of the Pac., 14, 17; 34 Okl., 662; 46 L.R.A. [N.S.], 455), cited in Words
corporation. (Emphasis ours.)
230 of 501
and Phrases, second series, vol. 4, p. 978, the following has reference only to absolute transfers or absolute
appears: conveyance of the ownership or title to a share.
A "transfer" is the act by which the owner of Consequently, the entry or notation on the books of the
a thing delivers it to another with the intent corporation of pledges and chattel mortgages on shares is not
of passing the rights which he has in it to the necessary to their validity (although it is advisable to do so)
latter, and a chattel mortgage is not within since they do not involve absolute alienation of ownership of
the meaning of such term. stock (Monserrat vs. Ceron, 58 Phil. 469 [1933]; Chua Guan vs.
Samahang Magsasaka, Inc., 62 Phil. 472 [1935].) To affect third
50
xxx xxx xxx. persons, it is enough that the date and description of the
shares pledged appear in a public instrument. (Art. 2096, Civil
Although the Monserrat case refers to a chattel mortgage over shares of stock, Code.) With respect to a chattel mortgage constituted on
the same may be applied to the attachment of the disputed shares of stock in shares of stock, what is necessary is its registration in the
the present controversy since an attachment does not constitute an absolute Chattel Mortgage Registry. (Act No. 1508 and Art. 2140, Civil
53
conveyance of property but is primarily used as a means "to seize the debtor's Code.)
property in order to secure the debt or claim of the creditor in the event that a
51
judgment is rendered." CEIC's reliance on the Samahang Magsasaka case is misplaced. Nowhere in the
said decision was it categorically stated that annotation of the attachment in
Known commentators on the Corporation Code expound, thus: the corporate books is mandatory for its validity and for the purpose of giving
notice to third persons.
xxx xxx xxx
The only basis, then, for petitioner CEIC's claim is the Deed of Sale under
Shares of stock being personal property, may be the subject which it purchased the disputed shares. It is, however, a settled rule that a
matter of pledge and chattel mortgage. Suchcollateral purchaser of attached property acquires it subject to an attachment legally and
54
transfers are however not covered by the registration validly levied thereon.
requirement of Section 63, since our Supreme Court has held
that such provision applies only to absolute transfers thus, the Our corollary inquiry is whether or not the consortium has indeed a prior
registration in the corporate books of pledges and chattel valid and existing attachment lien over the disputed shares.
52
mortgages of shares cannot have any legal effect. (Emphasis
ours.) Jaime Gonzales' /Consortium's Claim
xxx xxx xxx Is the consortium's attachment lien over the disputed shares valid?
The requirement that the transfer shall be recorded in the CEIC vigorously argues that the consortium's writ of attachment over the
books of the corporation to be valid as against third persons disputed shares of Chemphil is null and void, insisting as it does, that the
231 of 501
59
notice of garnishment was not validly served on the designated officers on 19 entered into a compromise agreement, which resulted in the termination of
July 1985. their case, the disputed shares were released from garnishment.
To support its contention, CEIC presented the sheriff's notice of We disagree. To subscribe to CEIC's contentions would be to totally disregard
55
garnishment dated 19 July 1985 which showed on its face that said notice was the concept and purpose of a preliminary attachment.
received by one Thelly Ruiz who was neither the president nor managing
agent of Chemphil. It makes no difference, CEIC further avers, that Thelly Ruiz A writ of preliminary attachment is a provisional remedy
was the secretary of the President of Chemphil, for under the above-quoted issued upon order of the court where an action is pending to
provision she is not among the officers so authorized or designated to be be levied upon the property or properties of the defendant
served with the notice of garnishment. therein, the same to be held thereafter by the Sheriff as
security for the satisfaction of whatever judgment might be
We cannot subscribe to such a narrow view of the rule on proper service of secured in said action by the attaching creditor against the
60
writs of attachment. defendant. (Emphasis ours.)
A secretary's major function is to assist his or her superior. He/she is in effect Attachment is a juridical institution which has for its purpose
an extension of the latter. Obviously, as such, one of her duties is to receive to secure the outcome of the trial, that is, the satisfaction of the
letters and notices for and in behalf of her superior, as in the case at bench. pecuniary obligation really contracted by a person or believed
The notice of garnishment was addressed to and was actually received by to have been contracted by him, either by virtue of a civil
Chemphil's president through his secretary who formally received it for him. obligation emanating from contract or from law, or by virtue
56
Thus, in one case, we ruled that the secretary of the president may be of some crime or misdemeanor that he might have
considered an "agent" of the corporation and held that service of summons on committed, and the writ issued, granted it, is executed by
him is binding on the corporation. attaching and safely keeping all the movable property of the
defendant, or so much thereof may be sufficient to satisfy the
61
Moreover, the service and receipt of the notice of garnishment on 19 July 1985 plaintiff's demands . . . (Emphasis ours.)
was duly acknowledged and confirmed by the corporate secretary of
Chemphil, Rolando Navarro and his successor Avelino Cruz through their The chief purpose of the remedy of attachment is to secure a
57 58
respective certifications dated 15 August 1989 and 21 August 1989. contingent lien on defendant's property until plaintiff can, by
appropriate proceedings, obtain a judgment and have such
We rule, therefore, that there was substantial compliance with Sec. 7(d), Rule property applied to its satisfaction, or to make some provision
57 of the Rules of Court. for unsecured debts in cases where the means of satisfaction
thereof are liable to be removed beyond the jurisdiction, or
Did the compromise agreement between Antonio Garcia and the consortium improperly disposed of or concealed, or otherwise placed
62
discharge the latter's attachment lien over the disputed shares? beyond the reach of creditors. (Emphasis ours.)
CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon We reiterate the rule laid down in BF Homes, Inc. v. CA 63 that an attachment
the dismissal of the case, dies a natural death. Thus, when the consortium lien continues until the debt is paid, or sale is had under execution issued on
232 of 501
the judgment or until judgment is satisfied, or the attachment discharged or discharged or vacated in some manner
vacated in the same manner provided by law. We expounded in said case that: provided by law.
The appointment of a rehabilitation receiver who took control It has been held that the lien obtained by
and custody of BF has not necessarily secured the claims of attachment stands upon as high equitable
Roa and Mendoza. In the event that the receivership is grounds as a mortgage lien:
terminated with such claims not having been satisfied, the
creditors may also find themselves without security therefor The lien or security obtained by an
in the civil action because of the dissolution of the attachment even before judgment, is a fixed
attachment. This should not be permitted. Having previously and positive security, a specific lien, and,
obtained the issuance of the writ in good faith, they should although whether it will ever be made
not be deprived of its protection if the rehabilitation plan available to the creditor depends on
does not succeed and the civil action is resumed. contingencies, its existence is in no way
contingent, conditioned or inchoate. It is a
xxx xxx xxx vested interest, an actual and substantial
security, affording specific security for
As we ruled in Government of the Philippine Islands satisfaction of the debt put in suit, which
v. Mercado: constitutes a cloud on the legal title, and is as
specific as if created by virtue of a voluntary
Attachment is in the nature of a act of the debtor and stands upon as high
proceeding in rem. It is against the particular equitable grounds as a mortgage. (Corpus
property. The attaching creditor thereby Juris Secundum, 433, and authorities therein
acquires specific lien upon the attached cited.)
property which ripens into a judgment
against the res when the order of sale is xxx xxx xxx
made. Such a proceeding is in effect a finding
that the property attached is an indebted The case at bench admits of a peculiar character in the sense that it involves a
thing and a virtual condemnation of it to pay compromise agreement. Nonetheless, the rule established in the aforequoted
the owner's debt. The law does not provide cases still applies, even more so since the terms of the agreement have to be
the length of time an attachment lien shall complied with in full by the parties thereto. The parties to the compromise
continue after the rendition of judgment, and agreement should not be deprived of the protection provided by an
it must therefore necessarily continue until attachment lien especially in an instance where one reneges on his obligations
the debt is paid, or sale is had under under the agreement, as in the case at bench, where Antonio Garcia failed to
execution issued on the judgment or until hold up his own end of the deal, so to speak.
judgment is satisfied, or the attachment
233 of 501
Moreover, a violation of the terms and conditions of a compromise agreement The Court of Appeals opined:
entitles the aggrieved party to a writ of execution.
True it is, that petitioner PCIB was not a party to the appeal
64
In Abenojar & Tana v. CA, et al., we held: made by the four other banks belonging to the consortium,
but equally true is the rule that where the rights and liabilities
The non-fulfillment of the terms and conditions of a of the parties appealing are so interwoven and dependent on
compromise agreement approved by the Court justifies each other as to be inseparable, a reversal of the appealed
execution thereof and the issuance of the writ for said decision as to those who appealed, operates as a reversal to all
purpose is the Court's ministerial duty enforceable and will inure to the benefit of those who did not join the
bymandamus. appeal (Tropical Homes vs. Fortun, 169 SCRA 80, p.
90, citing Alling vs. Wenzel, 133 111. 264-278; 4 C.J. 1206). Such
65
Likewise we ruled in Canonizado v. Benitez: principal, premised upon communality of interest of the
parties, is recognized in this jurisdiction (Director of Lands vs.
A judicial compromise may be enforced by a writ of Reyes, 69 SCRA 415). The four other banks which were part of
execution. If a party fails or refuses to abide by the the consortium, filed their notice of appeal under date of
compromise, the other party may enforce the compromise or March 16, 1990, furnishing a copy thereof upon the lawyers of
regard it as rescinded and insist upon his original demand. petitioner. The petition for certiorari in the present case was
filed on April 10, 1990, long after the other members of the
If we were to rule otherwise, we would in effect create a back door by which a consortium had appealed from the assailed order of
debtor can easily escape his creditors. Consequently, we would be faced with December 19, 1989.
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 We view with skepticism PCIB's contention that it did not join the consortium
honoring in the first place. The purpose of the provisional remedy of because it "honestly believed that certiorariwas the more efficacious and
67
attachment would thus be lost. It would become, in analogy, a declawed and speedy relief available under the circumstances." Rule 65 of the Revised
toothless tiger. Rules of Court is not difficult to understand. Certiorari is available only if there
is no appeal or other plain, speedy and adequate remedy in the ordinary
From the foregoing, it is clear that the consortium and/or its assignee Jaime course of law. Hence, in instituting a separate petition for certiorari, PCIB has
Gonzales have the better right over the disputed shares. When CEIC deliberately resorted to forum-shopping.
purchased the disputed shares from Antonio Garcia on 15 July 1988, it took the
shares subject to the prior, valid and existing attachment lien in favor of and PCIB cannot hide behind the subterfuge that Supreme Court Circular 28-91
obtained by the consortium. was not yet in force when it filed the certiorariproceedings in the Court of
Appeals. The rule against forum-shopping has long been
68
Forum Shopping in G.R. No. 113394 established. Supreme Court Circular 28-91 merely formalized the prohibition
and provided the appropriate penalties against transgressors.
We uphold the decision of the Court of Appeals finding PCIB guilty of forum-
66
shopping.
234 of 501
It alarms us to realize that we have to constantly repeat our warning against

forum-shopping. We cannot over-emphasize its ill-effects, one of which is
aptly demonstrated in the case at bench where we are confronted with two
69
divisions of the Court of Appeals issuing contradictory decisions one in favor
of CEIC and the other in favor of the consortium/Jaime Gonzales.
Forum-shopping or the act of a party against whom an adverse judgment has

been rendered in one forum, of seeking another (and possibly favorable)
opinion in another forum (other than by appeal or the special civil action
of certiorari), or the institution of two (2) or more actions or proceedings
grounded on the same cause on the supposition that one or the other court
70
would make a favorable disposition, has been characterized as an act of
malpractice that is prohibited and condemned as trifling with the Courts and
abusing their processes. It constitutes improper conduct which tends to
degrade the administration of justice. It has also been aptly described as
deplorable because it adds to the congestion of the already heavily burdened
dockets of the
71
courts.
WHEREFORE, premises considered the appealed decision in G.R. Nos. 112438-

39 is hereby AFFIRMED and the appealed decision in G.R. No. 113394, insofar
as it adjudged the CEIC the rightful owner of the disputed shares, is hereby
REVERSED. Moreover, for wantonly resorting to forum-shopping, PCIB is
hereby REPRIMANDED and WARNED that a repetition of the same or similar
acts in the future shall be dealt with more severely.
SO ORDERED.
235 of 501
To this end process of garnishment (notification de embargo) was, on April 6,

Tayabas Land v. Sharruf, 41 Phil. 382 1916, issued at the instance of Salvador Farre in aid of his execution against the
Sharrufs and was on the same or succeeding day duly served upon the Tayabas
EN BANC Land Company. By this process the Tayabas Land Company was informed that
levy had, by virtue of the execution aforesaid, been made upon all the property
G.R. No. L-15499 February 9, 1921 of S. M. Sharruf in the possession of said Tayabas Land Company and upon all
debts owing by the latter to said Sharruf, and in particular upon all
THE TAYABAS LAND COMPANY, plaintiff-appellee, participation and interest of S. M. Sharruf in the judgment rendered in his
vs. favor in the action prosecuted by him against the Tayabas Land Company and
SALOMON SHARRUF, CANUTO BARTOLOME, sheriff of Tayabas, others.
SALVADOR FARRE and FRANCISCO ALVAREZ, defendants.
SALOMON SHARRUF, appellant. In pursuance of the levy thus effected upon the judgment in favor of Salomon
M. Sharruf against the Tayabas Land Company, the sheriff of the city of
Crossfield and O'Brien for appellant. Manila, as in ordinary cases of levy upon chattels of real property, proceeded
Alfredo Chicote and Jose Arnaiz for appellee. upon April 15, 1916, to expose to sale all right, title, and interest of said Sharruf
in the judgment aforesaid. At this sale Salvador Farre, the execution creditor
STREET, J.: himself, became the purchaser of the judgment in question for the sum of
P200; but the Tayabas Land Company, with a legitimate view to its own
On December 10, 1914, one Salvador Farre recovered a joint and several protection, afterwards stepped in, and acting through Mr. Francisco Alvarez,
judgment against Salomon M. Sharruf and Farham M. Sharruf in the Court of as attorney and intermediary, purchased from Farre, on October 6, 1917, the
First Instance of the city of Manila for the sum of P1,300, with legal interest judgment of Salomon M. Sharruf against itself, paying to Farre the full amount
from September 5, 1914, and with costs. This judgment having remained due him, to wit, the sum of P1,588.24.
unsatisfied, and execution was upon April 3, 1916, issued thereon at the
instance of the plaintiff. At this point it should be stated that when levy of execution was made in the
manner above stated, upon the judgment in favor of Sharruf against the
Meanwhile on March 27, 1915, Salomon M. Sharruf had himself recovered a Tayabas Land Company and others, the time allowed by law for an appeal in
judgment, also in the Court of First Instance of the city of Manila, against the that case of the Supreme Court had not passed; and said cause was in fact
Tayabas Land Company and A.M. Ginainati, for the sum of P6,841.36, with subsequently appealed to the Supreme Court, where final judgment was
interest and costs; and as there seems to have been no visible property rendered, affirming the decision of the lower court, on February 15, 1918.1
belonging to Salomon M. Sharruf and Farham M. Sharruf subject to seizure by
the sheriff to satisfy the execution in favor of Salvador Farre, it became It may also be stated that on April 4, 1916, Salomon M. Sharruf, by a public
important for Farre to subject the judgment in favor of Salomon M. Sharruf document, which was duly incorporated in the record in his case against the
against the Tayabas Land Company and A.M. Ginainati to the payment of his Tayabas Land Company, et al., sold and transferred unto O'Brien & Company,
own claim. a corporation, his right, title, and interest in the judgment aforesaid to the
extent necessary to satisfy a debt for P988.14, owing to O'Brien & Company, for
merchandise purchased from said entity by Sharruf; and upon the same date
236 of 501
Messrs. Crossfield & O'Brien, as attorneys, filed a memorandum of an for us to proceed at once to consider the manner in which, under the
attorney's lien in their favor to the extent of 25 per cent of the amount of the provisions of our Code of Civil Procedure, a judgment for a sum of money
judgment. These transactions, as will be seen, had the result of reducing in a entered in favor of the plaintiff in one case can be reached and applied to the
considerable degree the apparent beneficial interest of Salomon M. Sharruf in payment of a judgment in another case against the party who occupies the
the result of the litigation, but they do not affect the fundamentals of the case. position of creditor in the former.
As a consequence of the facts above narrated the Tayabas Land Company In the first place, we have no hesitancy in saying that a judgment for a sum of
supposes that the judgment obtained by Salomon M. Sharruf against it and money, that is, the interest of the plaintiff in such a judgment, is liable to
A.M. Ginainati has been wholly satisfied, while Salomon M. Sharruf and those execution. A judgment for a sum of money is, as to the party entitled to
interested under him claim that the execution sale of the judgment in question payment, a credit; and as to the party who ought to pay the money, a debt.
was void and that as a consequence said judgment remains wholly unsatisfied. Furthermore, the interest of the creditor in such a judgment is clearly
Proceeding upon this conception of the case, Messrs. Crossfield and O'Brien, property, though not capable of manual delivery. All of these elements of value
as attorneys for the plaintiff in that action, procured an execution to be issued — "debts." "credits," and "all other property not capable of manual delivery" —
on August 30, 1918, upon said judgment for the entire amount of the recovery, are expressly declared, in section 450 of the Code of Civil Procedure, to be
including accrued interest and costs, less the sum of P13.21, which had been liable to execution. It will be noted, however, that under the section just cited,
secured in a garnishment proceeding against one of the local banks. debts, credits, and other property not capable of manual delivery are to be
dealt with in a different manner from that prescribed in case of the execution
Being thus menaced with the levy of an execution upon its property, the of tangible property; for while tangible property is proceeded with by seizure
Tayabas Land Company instituted the present action in the Court of First and sale under execution, debts and credits are to be attached by the citation
Instance of the city of Manila, Against Salomon M. Sharruf and others, of the debtor. The provisions governing the execution of tangible property are
including the sheriff of the Province of Tayabas, to obtain an order restraining found in sections 453 to 457, inclusive, of the Code of Civil Procedure; while
the threatened levy of execution and perpetually enjoining all proceedings for the provisions prescribing the method of reaching debts and credits are found
the enforcement of the judgment against it. Upon hearing the cause the trial chiefly in the chapter relating to attachment, consisting principally of sections
court, while recognizing the validity of the claims of O'Brien & Company and 431 to 436, inclusive, of the Code of Civil Procedure.
of Crossfield and O'Brien, held that all other interest in said judgment
pertaining to Salomon M. Sharruf had passed by virtue of the execution sale to The proceeding thus indicated as proper, in order to subject a debt or credit is
Salvador Farre and thence by transfer through Francisco Alvarez to the known in American civil procedure as the process of garnishment; and it may
Tayabas Land Company. As a consequence the court declared the preliminary be truly said that garnishment is one of the simplest processes, and the least
injunction perpetual. From said judgment Salomon M. Sharruf appealed to involved in technicalities, of any proceeding known to the law. It consists in
this court. the citation of some stranger to the litigation, who is debtor to one of the
parties to the action. By this means such debtor stranger becomes a forced
The principal question in the case relates to the validity of the proceedings intervenor; and the court, having acquired jurisdiction over his person by
whereby the judgment against the Tayabas Land Company and A.M. Ginainati means of the citation, requires him to pay his debt, not to his former creditor,
in favor of Salomon M. Sharruf was, on April 15, 1916, exposed to sale by the but to the new creditor, who is creditor in the main litigation. It is merely a
sheriff under the execution issued in the action of Salvador Farre against the case of involuntary novation by the substitution of one creditor for another.
two Sharrufs; and we believe it will be conducive to clarity in the discussion Upon principle the remedy is a species of attachment or execution for reaching
237 of 501
any property pertaining to a judgment debtor which may be found owing to Enough has now been said to show clearly that the action of the sheriff in
such debtor by a third person. exposing to public sale the judgment which had been procured by Salomon M.
Sharruf in the action against the Tayabas Land Company, et al., was wholly
The situation involved supposes the existence of at least three persons, to wit, unauthorized, and said sale must be considered void. The proper step would
a judgment creditor, a judgment debtor, and the garnishee, or person cited, have been for the court to require the Tayabas Land Company, after the
who in turn is supposed to be indebted to the first debtor (i.e., judgment judgment against it had become final, to pay into court, in the cause wherein
debtor). Salvador Farre was plaintiff, a sufficient amount of money to satisfy Farre's
claim against Sharruf; and if the judgment against the Tayabas Land Company
To proceed a little further with the barest details of the process of had been permitted to go to the stage of execution, the proceeds in the hands
garnishment, we note that a citation issues from the court having jurisdiction of the sheriff would have been applied, under the direction of the court, to the
of the principal litigations, notifying the garnishee that the property and payment of Farre's claim before any part would have been payable to Sharruf.
credits of the judgment debtor have been levied upon or attached in the hands
of such garnishee, and enjoining him not to deliver, transfer, or otherwise In dealing with the problems which have from time to time arisen in
dispose of any effects or credits belonging to that person, and requiring him connection with garnishment proceedings, courts have sometimes been
furthermore to make a statement to the court of the property of the judgment perplexed over the matter of protecting the garnishee from the danger of
debtor in his hands and of the debts owing by the garnishee to such debtor. having to pay his debt twice; and it goes without saying that the procedure
must be so adjusted as not to subject the garnishee to this risk. Otherwise it is
In cases where indebtedness is admitted, as not infrequently occurs, the a fatal obstacle to the garnishment. No such difficulty would arise in a case like
payment of the money by the garnishee to the judgment creditor or into court, this, where the two judgments are both of record in the same court, and where
brings the proceeding to a close, so far as the garnishee is concerned; but if the consequently that court has control over the process in both cases.
garnishee fails to answer, or does not admit the indebtedness, he may be
required to attend before the court in which the action is pending to be Our conclusion that the sale of the judgment in question under process of
examined on oath respecting the same. Finally, if the liability of the garnishee execution was void is supported by the decisions of the Supreme Court of
is made manifest, the officer of the court may, under paragraph No. 3 of California, construing the very section of the California Code of Civil
section 436 of the Code of Civil Procedure, collect the money and pay it to the Procedure from which section 450 of the Code of Civil Procedure of the
person entitled. Philippine Islands was taken. Thus, in McBride vs. Fallon (65 Cal., 301, 303),
the Supreme Court of that State said:
The circumstances that garnishment has not been made the subject of
independent treatment in our Code of Civil Procedure and that the rules After enumerating the kinds of property of a judgment debtor liable to
relating thereto are only brought out inferentially in connection with the execution, the Code provides that "shares and interests in any
subject of attachment has undoubtedly contributed to obscure a matter which corporation or company" and debts and credits . . . and all other
upon principle is simple enough. Additional light on the subject may, property not capable of manual delivery, may be attached on
however, be acquired by referring to sections 476, 481, and 486 of the Code of execution in like manner as upon writs of attachments.
Civil Procedures, which treat of supplementary proceedings. It will be found
that those proceedings are identical in principle with the proceeding for the "Debts and credits and property not capable of manual delivery must
citation of debtors explained in the chapter on attachment. be attached in the mode pointed out by subdivision 5, sec. 542."
238 of 501
(Corresponding to section 431 of the Philippine Code of Civil appealed to the Supreme Court after the process of garnishment had been
Procedure.) "That is "by leaving with the person owing the debt or served on the company. Suffice is to say that this circumstance would at most
having in possession or under his control such credits and other merely postpone the realization of the results without defeating the
personal property" or with his agent, a copy of the writ, and a notice garnishment.
that the debts owing by him to the defendant, or the credits and other
personal property' in his possession or under his control, belonging to Reflection upon this feature of the case, however, confirms the opinion that
the defendant are attached in pursuance of such writ. our lawmakers acted wisely in requiring that debts and credits should be
executed by means of the process of garnishment rather than by exposing
"The fact that a debt is evidenced by a judgment does not, in our them to public sale. In the case before us a judgment for a large amount was
opinion, make it anything more or less than a debt, or more capable of sold for a merely nominal sum, and such would generally be the case at a sale
manual delivery than it would be if not so evidenced. No provision is under similar conditions. This cannot fail to be highly prejudicial to the debtor
made for attaching or levying on evidences of debt. It is the debt itself who is under immediate execution. The proceeding by garnishment, on the
which may be attached by writ of attachment, or on execution in like contrary, enables all parties to realize their rights without unduly disturbing
manner as upon writs of attachment." This we think to be the the position of any.
meaning of the Code, and the mode prescribed by it is exclusively . . .
The judgment must be reserved, and the defendants will be absolved from the
In order to avoid misunderstanding, we wish to say that we make no question complaint. It is so ordered, without express pronouncement as to costs of
as to the propriety of the proceedings up to the time when the judgment in either instance.
question was advertised and exposed to sale by the sheriff. The issuance of the
execution and the service of the garnishment were appropriate; and the
garnishment was effective for the purpose of preventing the garnishee, the
Tayabas Land Company, from paying the judgment to Salomon M. Sharruf.
Moreover, the garnishment was effective for the purpose of conferring upon
the Tayabas Land Company the right to pay off the judgment which Farre had
obtained against Sharruf. This right is not only recognized in section 481 of the
Code of Civil Procedure but also in subsection 3 of article 1210 of the Civil
Code; and by satisfying Farre's claim, regardless of the manner in which it was
accomplished, the Tayabas Land Company absolved itself pro tanto from its
indebtedness to Sharruf. It results that, although the judgment against the
Tayabas Land Company has not yet been satisfied in full, said company is
entitled to be credited with the sum of P1,588.24, said by it, through Francisco
Alvarez, to Farre on October 6, 1917, with interest.
In the view we take of the case it becomes unnecessary to consider at length

the fact that Sharruf's judgment against the Tayabas Land Company was
239 of 501
petitioner included a prayer for the issuance of a Writ of Preliminary

Gotauco v. ROD, 59 Phil. 756 (See under Section 5 page 139) Attachment.
Rural Bank of Sta. Barbara v. Manila Mission, August 19, 2009 In an Order dated 7 May 1993, the RTC ordered the issuance of the Writ of
Attachment petitioner prayed for, to wit:
THIRD DIVISION
WHEREFORE, let a Writ of Attachment be issued against all the properties of
G.R. No. 130223 August 19, 2009 [Spouses Soliven] not exempt from execution or so much thereof as may be
sufficient to satisfy the [herein petitioner’s] principal claim of P338,000.00
2
RURAL BANK OF STA. BARBARA [PANGASINAN], INC., Petitioner, upon filing of [petitioner’s] bond in the amount of P100,000.00.
vs.
THE MANILA MISSION OF THE CHURCH OF JESUS CHRIST OF LATTER Upon the filing by petitioner of the required bond, the RTC issued the Writ of
DAY SAINTS, INC., Respondent. Attachment on 21 May 1993. Acting on the authority of said Writ, Sheriff
Reynaldo C. Daray attached the subject property, which was then still covered
DECISION by TCT No. T-125213 in the name of the spouses Soliven. The Writ of
Attachment was annotated on TCT No. T-125213 on 24 May 1993. Thus, when
CHICO-NAZARIO, J.: TCT No. T-125213 of the spouses Soliven was cancelled and TCT No. 195616 of
petitioner was issued on 28 April 1994, the annotation on the Writ of
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court Attachment was carried from the former to the latter.
1
seeking to set aside the Decision dated 29 July 1997 of the Court of Appeals in
CA-G.R. SP No. 41042 affirming the Orders dated 9 October 1995 and 27 While Civil Case No. D-10583 was still pending before the RTC, respondent
February 1996 of the Regional Trial Court (RTC), Branch 43, of Dagupan City, executed an Affidavit claiming title and ownership over the subject property,
in Civil Case No. D-10583. and requested the Ex-Officio Provincial and City Sheriff to release the said
property from attachment. The Sheriff, however, advised respondent to file a
Spouses Tomas and Maria Soliven (spouses Soliven) were the registered motion directly with the RTC.
owners, under Transfer Certificate of Title (TCT) No. T-125213, of a parcel of
land located in Barangay Maninding, Sta. Barbara, Pangasinan (subject On 16 March 1995, respondent filed with the RTC, in Civil Case No. D-10583, a
property). On 18 May 1992, the spouses Soliven sold the subject property to Motion to Release Property from Attachment, to which petitioner, in turn,
respondent Manila Mission of the Church of Jesus Christ of Latter Day Saints, filed an Opposition. After hearing, the RTC issued an Order on 9 October 1995
Inc. (Manila Mission). However, it was only on 28 April 1994 when TCT No. T- discharging the subject property from attachment. The RTC decreed in said
125213 in the name of the spouses Soliven was cancelled, and TCT No. 195616 Order:
was issued in the name of respondent.
WHEREFORE, the Court hereby directs the Ex-Officio Provincial Sheriff of
In the meantime, on 15 April 1993, petitioner Rural Bank of Sta. Barbara Pangasinan and City Sheriff of Dagupan to discharge and release the subject
(Pangasinan), Inc. filed with the RTC a Complaint against the spouses Soliven land from attachment and orders the notice of attachment on T.C.T. No.
3
for a sum of money, docketed as Civil Case No. D-10583. The Complaint of 195616 of the Register of Deeds of Pangasinan be cancelled.
240 of 501
Petitioner filed a Motion for Reconsideration of the 9 October 1995 Order of SEC. 14. Proceedings where property claimed by third person.—If the property
the RTC, arguing that it had a better right over the subject property and that attached is claimed by any person other than the party against whom
the filing by respondent with the RTC, in Civil Case No. D-10583, of a Motion attachment had been issued or his agent, and such person makes an affidavit
to Release Property from Attachment, was the improper remedy. In an Order of his title thereto, or right to the possession thereof, stating the grounds of
dated 27 February 1996, the RTC denied the Motion for Reconsideration of such right or title, and serves such affidavit upon the sheriff while the latter
petitioner for lack of merit. has possession of the attached property, and a copy thereof upon the attaching
party, the sheriff shall not be bound to keep the property under attachment,
On 12 April 1997, petitioner filed a Petition for Certiorari with this Court, unless the attaching party or his agent, on demand of the sheriff, shall file a
alleging that the RTC committed grave abuse of discretion, amounting to lack bond approved by the court to indemnify the third-party claimant in a sum
or excess of jurisdiction, in canceling the Writ of Attachment and ordering the not less than the value of the property levied upon. In case of disagreement as
release of the subject property. The Petition was docketed as G.R. No. 124343. to such value, the same shall be decided by the court issuing the writ of
In a Resolution dated 27 May 1997, this Court referred the case to the Court of attachment. No claim for damages for the taking or keeping of the property
Appeals for appropriate action. may be enforced against the bond unless the action therefor is filed within one
hundred twenty (120) days from the date of the filing of the bond.
The Court of Appeals docketed the Petition for Certiorari as CA-G.R. SP No.
41042. On 29 July 1997, the Court of Appeals issued the assailed Decision The sheriff shall not be liable for damages for the taking or keeping of such
dismissing the Petition. property, to any such third-party claimant, if such bond shall be filed. Nothing
herein contained shall prevent such claimant or any third person from
Hence, petitioner again comes before this Court via the present Petition for vindicating his claim to the property, or prevent the attaching party from
Review, contending that the Court of Appeals erred in not finding grave abuse claiming damages against a third-party claimant who filed a frivolous or
of discretion on the part of the RTC when the latter directed the release of the plainly spurious claim, in the same or a separate action.
subject property from attachment. Petitioner insists that it has a better right to
the subject property considering that: (1) the attachment of the subject When the writ of attachment is issued in favor of the Republic of the
property in favor of petitioner was made prior to the registration of the sale of Philippines, or any officer duly representing it, the filing of such bond shall not
the same property to respondent; and (2) respondent availed itself of the be required, and in case the sheriff is sued for damages as a result of the
wrong remedy in filing with the RTC, in Civil Case No. D-10583, a Motion to attachment, he shall be represented by the Solicitor General, and if held liable
Release Property from Attachment. We shall discuss ahead the second ground therefor, the actual damages adjudged by the court shall be paid by the
for the instant Petition, a matter of procedure, since its outcome will National Treasurer out of the funds to be appropriated for the purpose.
determine whether we still need to address the first ground, on the
substantive rights of the parties to the subject property. Petitioner argues that, pursuant to the aforequoted section, the remedy of a
third person claiming to be the owner of an attached property are limited to
Propriety of the Motion to Release Property from Attachment the following: (1) filing with the Sheriff a third-party claim, in the form of an
affidavit, per the first paragraph of Section 14; (2) intervening in the main
According to petitioner, the Motion to Release Property from Attachment filed action, with prior leave of court, per the second paragraph of Section 14, which
by respondent before the RTC, in Civil Case No. D-10583, is not the proper allows a third person to vindicate his/her claim to the attached property in the
4
remedy under Section 14, Rule 57 of the Rules of Court, which provides: "same x x x action"; and (3) filing a separate and independent action, per the
241 of 501
second paragraph of Section 14, which allows a third person to vindicate its Order dated 9 October 1995, is deemed to have allowed respondent to
his/her claim to the attached property in a "separate action." intervene in Civil Case No. D-10583.
Respondent explains that it tried to pursue the first remedy, i.e., filing a third- Moreover, it may do petitioner well to remember that rules of procedure are
party claim with the Sheriff. Respondent did file an Affidavit of Title and merely tools designed to facilitate the attainment of justice. They were
Ownership with the Sheriff, but said officer advised respondent to file a conceived and promulgated to effectively aid the court in the dispensation of
motion directly with the RTC in the main case. Respondent heeded the justice. Courts are not slaves to or robots of technical rules, shorn of judicial
Sheriff’s advice by filing with the RTC, in Civil Case No. D-10583, a Motion to discretion. In rendering justice, courts have always been, as they ought to be,
Release Property from Attachment. The Court of Appeals recognized and conscientiously guided by the norm that on the balance, technicalities take a
allowed said Motion, construing the same as an invocation by respondent of backseat to substantive rights, and not the other way around. Thus, if the
the power of control and supervision of the RTC over its officers, which application of the Rules would tend to frustrate rather than promote justice, it
includes the Sheriff. is always within the power of the Court to suspend the rules, or except a
6
particular case from its operation. Hence, even if the Motion to Release
We agree with the Court of Appeals on this score. The filing by respondent of Property from Attachment does not strictly comply with Section 14, Rule 56 of
the Motion to Release Property from Attachment was made on the advice of the Rules of Court, the RTC may still allow and act upon said Motion to render
the Sheriff upon whom respondent served its Affidavit of Title and Ownership. substantive justice.
Respondent should not be faulted for merely heeding the Sheriff’s advice.
Apparently, the Sheriff, instead of acting upon the third-party claim of This leads us to the substantive issue in this case, on which between the two
respondent on his own, would rather have some direction from the RTC. transactions should be given priority: the previous yet unregistered sale of the
Indeed, the Sheriff is an officer of the RTC and may be directed by the said subject property by the spouses Soliven to respondent, or the subsequent but
court to allow the third-party claim of respondent. Therefore, the filing of the duly annotated attachment of the same property by petitioner.
Motion in question can be deemed as a mere continuation of the third-party
claim of respondent, in the form of its Affidavit of Title and Ownership, served Previous yet unregistered sale versus subsequent but duly annotated
upon the Sheriff, in accord with the first paragraph of Section 14, Rule 57 of the attachment
Rules of Court.
Petitioner does not dispute the allegation of respondent that the subject
Alternatively, we may also consider the Motion to Release Property from property was sold by the spouses Soliven to respondent on 18 May 1992, before
Attachment, filed by respondent before the RTC, as a Motion for Intervention petitioner instituted Civil Case No. D-10583 against the spouses Soliven on 15
in Civil Case No. D-10583, pursuant to the second paragraph of Section 14, Rule April 1993; the RTC ordered the issuance of the Writ of Attachment on 7 May
56, in relation to Rule 19 of the Rules of Court. Respondent, to vindicate its 1993; and the attachment of the subject property pursuant to the Writ on 27
claim to the subject property, may intervene in the same case, i.e., Civil Case May 1993.
No. D-10583, instituted by petitioner against the spouses Soliven, in which the
said property was attached. Respondent has the personality to intervene, as it Neither did petitioner offer evidence to counter the following documents
"is so situated as to be adversely affected by a distribution or other disposition presented by respondent establishing the fact of the sale of the subject
5
of property in the custody of the court or of an officer thereof." The RTC, in property to the latter by the spouses Soliven: (1) the notarized Deed of Sale
acting upon and granting the Motion to Release Property from Attachment in dated 18 May 1992; (2) BPI Manager’s Check No. 010685 dated 8 May 1992 in
242 of 501
the sum of P42,500.00 to represent the tender of payment of capital gains tax; carried over to Valdevieso’s TCT. Valdevieso filed a third-party claim before
(3) BIR Official Receipt No. 0431320 dated 18 May 1992 of BPI Check No. 010625 the RTC seeking to annul the attachment. In a resolution, the RTC ruled in
for the payment of the sum ofP8,5000.00; and (4) a letter dated 11 August 1992 Valdevieso’s favor, but the Court of Appeals reversed said RTC resolution. On
of Manila Mission’s former counsel, Lim Duran & Associates, to the Revenue appeal, we adjudged:
District Officer, District 7, Bureau of Internal Revenue, relative to its request
for the "reconsideration/condonation" of the assessment of the capital gains The sole issue in this case is whether or not a registered writ of attachment on
tax on its purchase of the subject property. the land is a superior lien over that of an earlier unregistered deed of sale.
Petitioner, however, invokes jurisprudence wherein this Court in a number of xxxx

instances allegedly upheld a subsequent but duly annotated attachment, as
opposed to a previous yet unregistered sale of the same property. Petitioner The settled rule is that levy on attachment, duly registered, takes preference
particularly calls our attention to the following paragraph in Ruiz, Sr. v. Court over a prior unregistered sale. This result is a necessary consequence of the
7
of Appeals : fact that the property involved was duly covered by the Torrens system which
works under the fundamental principle that registration is the operative act
[I]n case of a conflict between a vendee and an attaching creditor, an attaching which gives validity to the transfer or creates a lien upon the land.
creditor who registers the order of attachment and the sale of the property to
him as the highest bidder acquires a valid title to the property, as against a The preference created by the levy on attachment is not diminished even by
vendee who had previously bought the same property from the registered the subsequent registration of the prior sale. This is so because an attachment
owner but who failed to register his deed of sale. This is because registration is is a proceeding in rem. It is against the particular property, enforceable against
the operative act that binds or affects the land insofar as third persons are the whole world. The attaching creditor acquires a specific lien on the
concerned. It is upon registration that there is notice to the whole world. attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means
8
In the more recent case Valdevieso v. Damalerio, we have expounded on our that the property attached is an indebted thing and a virtual condemnation of
foregoing pronouncement in Ruiz. 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
On 5 December 1995, therein petitioner Bernardo Valdevieso (Valdevieso) satisfied, or the attachment discharged or vacated in some manner provided
bought a parcel of land from spouses Lorenzo and Elenita Uy (spouses Uy), the by law.
registered owners thereof. On 19 April 1996, therein respondents, spouses
Candelario and Aurea Damalerio (spouses Damalario), filed a Complaint Thus, in the registry, the attachment in favor of respondents appeared in the
against the spouses Uy for a sum of money before the RTC of General Santos nature of a real lien when petitioner had his purchase recorded. The effect of
City. On 23 April 1996, the RTC issued a Writ of Preliminary Attachment by the notation of said lien was to subject and subordinate the right of petitioner,
virtue of which the subject parcel of land was levied. The levy was duly as purchaser, to the lien. Petitioner acquired ownership of the land only from
recorded in the Register of Deeds, and annotated on the TCT of the spouses the date of the recording of his title in the register, and the right of ownership
Uy over the subject parcel of land. It was only on 6 June 1996 that the TCT in which he inscribed was not absolute but a limited right, subject to a prior
the name of the spouses Uy was cancelled, and a new one issued in the name registered lien of respondents, a right which is preferred and superior to that
9
of Valdevieso. As in the case at bar, the annotation on the attachment was of petitioner.
243 of 501
It is settled, therefore, that a duly registered levy on attachment takes This knowledge of the conveyance to Honorato Hong can not be denied. The
preference over a prior unregistered sale. records disclose that after the sale, private respondent was able to introduce
improvements on the land such as a concrete two-door commercial building, a
Nonetheless, respondent argues that there is a special circumstance in the case concrete fence around the property, concrete floor of the whole area and G.I.
at bar, which should be deemed a constructive registration of the sale of the roofing. Acts of ownership and possession were exercised by the private
subject property in its favor, preceding the attachment of the same property by respondent over the land. By these overt acts, it can not therefore be gainsaid
petitioner. that petitioner was not aware that private respondent had a prior existing
10
interest over the land.
Knowledge of previous yet unregistered sale
In the case at bar, respondent averred in its Motion to Release Property from
In Ruiz, the very case cited by petitioner, we made a qualification of the Attachment that the construction of a church edifice on the subject property
general rule that a duly annotated attachment is superior to an unregistered was about to be finished at the time the Writ of Preliminary Attachment was
prior sale. In fact, we resolved Ruiz in favor of the vendee in the unregistered implemented on 24 May 1993, and that the construction of the church was
prior sale, because knowledge of the unregistered sale by the attaching actually completed by mid-1993. Respondent asserts that since petitioner did
creditor is deemed equivalent to registration. We explained in Ruiz: not deny these allegations, much less adduce evidence to the contrary, then
the latter tacitly recognized the construction of the church.
But where a party has knowledge of a prior existing interest which is
unregistered at that time he acquired a right to the same land, his knowledge Petitioner contends, on the other hand, that respondent failed to present
of that prior unregistered interest has the effect of registration as to him. evidence to prove the fact that a church had already been constructed on the
Knowledge of an unregistered sale is equivalent to registration. As held in subject property by the time the said property was attached, thus, constituting
Fernandez v. Court of Appeals [189 SCRA 780 (1990)], notice to petitioner of the claim or right of respondent to the same.lawph!1
Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the Was there, at the time of the attachment, knowledge on the part of petitioner
registration of the deed is the operative act to bind or affect the land insofar as Rural Bank of the interest of respondent Manila Mission on the subject
third persons are concerned. But where the party has knowledge of a prior property?
existing interest which is unregistered at the time he acquired a right to the
same land, his knowledge of that prior unregistered interest has the effect of If the allegation of respondent Manila Mission anent the building of the chapel
registration as to him. The torrens system cannot be used as a shield for the even before the issuance of the writ of attachment is true, this case would be
commission of fraud (Gustillo v. Maravilla, 48 Phil. 442). As far as private similar to Ruiz where the vendee of the subject property was able to introduce
respondent Zenaida Angeles and her husband Justiniano are concerned, the improvements. However, respondent Manila Mission presented no evidence of
non-registration of the affidavit admitting their sale of a portion of 110 square the building of the chapel other than its bare allegation thereof. More
meters of the subject land to petitioners cannot be invoked as a defense importantly, even assuming for the sake of argument that the chapel was
because (K)nowledge of an unregistered sale is equivalent to registration indeed being built at the time of the attachment of the property, we cannot
(Winkleman v. Veluz, 43 Phil. 604). simply apply Ruiz and conclude that this confirms knowledge of a previous
conveyance of the property at that time. In Ruiz, the attaching party was the
wife of the vendor of the subject property, whom she sued for support. It was
244 of 501
thus very probable that she knew of the sale of the property to the vendee Nevertheless, respondent Manila Mission would not be left without remedy. It
11
therein, considering that the vendee had already introduced improvements could file a counter-bond pursuant to Section 12, Rule 57 of the Rules of Court
thereon. In the case at bar, there is no special relationship between petitioner in order to discharge the attachment. If respondent Manila Mission fails to do
Rural Bank and the spouses Soliven sufficient to charge the former with an the same and the property ends up being subjected to execution, respondent
implied knowledge of the state of the latter’s properties. Unlike in the sale of can redeem the property and seek reimbursement from the spouses Soliven.
real property, an attaching creditor is not expected to inspect the property
being attached, as it is the sheriff who does the actual act of attaching the WHEREFORE, the instant Petition for Review on Certiorari is hereby
property. GRANTED. The Decision dated 29 July 1997 of the Court of Appeals in CA-G.R.
SP No. 41042 affirming the Orders of the Regional Trial Court of Dagupan City
Neither did respondent Manila Mission present any evidence of knowledge on dated 9 October 1995 and 27 February 1996 issued in Civil Case No. D-10583 is
the part of petitioner Rural Bank of the prior existing interest of the former at hereby REVERSED and SET ASIDE. No pronouncement as to costs.
the time of the attachment. Respondent Manila Mission merely argues that
there was a tacit recognition on the part of petitioner Rural Bank of the SO ORDERED.
construction of the chapel when the latter did not deny this allegation in its
Opposition to the Motion to Discharge Property from Attachment.
The Motion, however, merely mentions the construction of the chapel and
does not charge petitioner Rural Bank with knowledge of the construction.
There was, therefore, nothing to deny on the part of petitioner Rural Bank, as
the mere existence of such construction at that time would not affect the right
of petitioner Rural Bank to its lien over the subject property. Also, the mention
in the Motion of the construction of the chapel would have the effect of being
a notice of an adverse third-party claim only at the time of such Motion. Since
such notice, which was deemed in Ruiz as constructive registration of the sale,
was effected only after the attachment of the subject property, it could not
affect the validity of the attachment lien.
In sum, our decisions in Ruiz v. Court of Appeals and Valdevieso v. Damalerio

oblige us to rule that the duly registered levy on attachment by petitioner
Rural Bank takes preference over the prior but then unregistered sale of
respondent Manila Mission. There was likewise no evidence of knowledge on
the part of petitioner Rural Bank of any third-party interest in the subject
property at the time of the attachment. We are, therefore, constrained to grant
the instant Petition for Review and nullify the Orders of the RTC discharging
the subject property from attachment.
245 of 501
Section 8 in Ipo, Norzagaray, Bulacan, as a direct result of the improper and careless
opening by NPC of the spillway gates of Angat Dam at the height of typhoon
1
"Welming" on November 4,1967.
Engineering Construction v. NPC, 163 S 9
On December 23, 1970, the trial court found NPC guilty of gross negligence
THIRD DIVISION and rendered its judgment, thus:
G.R. No. L-34589 June 29, 1988 WHEREFORE, judgment is rendered in favor of plaintiff and
against defendant as follows:
ENGINEERING CONSTRUCTION INCORPORATED, petitioner,
vs. 1. Ordering defendant to pay plaintiff actual or compensatory
NATIONAL POWER CORPORATION and COURT OF damages in the amount of P675,785.31;
APPEALS, respondents.
2. Ordering defendant to pay consequential damages in the
G.R. No. L-34656 June 29, 1988 amount of P233,200.00; *
MANILA ELECTRIC COMPANY, petitioner, 3. Ordering defendant to pay plaintiff the amount of P50,000
vs. as and by way of exemplary damages; and
COURT OF APPEALS and NATIONAL POWER
CORPORATION, respondents. 4. Ordering defendant to pay plaintiff the amount of P50,000
2
as and for attorney's fees ...
NPC filed a notice of appeal from that decision but before it could perfect its
FERNAN, J.: appeal, ECI moved for and was granted execution pending appeal upon
posting a covering bond of P200,000 which it later increased to P1,109,000 to
In these related petitions for review under Rule 45 of the Rules of Court, the fully answer for whatever damages NPC might incur by reason of the
3
Engineering Construction, Inc. [ECI] and the Manila Electric Company premature execution of the lower court's decision.
[MERALCO] question the decision of the Court of Appeals in CA-G.R. No.
47528-R which set aside the orders of the trial court directing execution In granting said motion for the exceptional writ over the strong opposition of
pending appeal of a judgment for P1,108,985.31 in damages in favor of ECI. the NPC, the trial court adopted the grounds adduced by movant ECI.
Petitioners also question the resolution of said court holding them liable for
restitution of the garnished funds to the National Power Corporation [NPC]. 1. x x x.
On August 29, 1968, ECI filed a complaint for damages against the NPC in the 2. That the substantial portion of the award of damages refers
then Court of First Instance of Manila, Branch 15, alleging that it suffered to the actual or compensatory damages incurred by plaintiff,
damages to its facilities and equipment due to the inundation of its campsite which are supported by voluminous documentary evidence,
246 of 501
the genuineness and due execution of which were admitted On November 11, 1971, MERALCO sought from the Appellate Court a
and further, no evidence whatever was presented to contest clarification and reconsideration of the aforesaid decision on the ground,
the same; among others, that the decision was being used by NPC to
compel MERALCO to return the amount of P1,114,545.23 (inclusive of sheriff's
3. That this case has been pending for years, as the plaintiff fees) in two checks which it had already entrusted to the deputy sheriff on
and the Honorable Court were led to believe that the matter February 23, 1971, who then indorsed and delivered the same to ECI.
in dispute would be settled amicably; Whereupon, in its resolution of January 7, 1972, the Appellate Court held the
sheriff, MERALCO and ECI liable to restore to NPC the amount due
4. That an appeal by defendant would obviously be for to NPC which MERALCOhad earlier turned over to the sheriff for payment
8
purposes of delay; to ECI.
5. That on appeal, the case would certainly drag on for many Their two motions for reconsideration having been
years, and in the meantime, the actual loss and damages denied, ECI and MERALCO filed separate petitions for review before this
sustained by plaintiff, who because of such loss have become Court: Nos. L-34589 and 34656, the very petitions before us for adjudication.
heavily obligated and financially distressed, would remain In this connection, it must be made clear that we are not concemed with the
uncompensated and unsatisfied main appeal. For the present, we limit our discussion to the correctness of the
extraordinary writ of execution pending appeal and the ordered restitution of
6. That also, plaintiff is willing and able to file a bond to the garnished funds---two collateral matters which have greatly exacerbated
answer for any damage which defendant may suffer as a result the existing dispute between the parties.
4
of an execution pending appeal.
We shall deal first with the propriety of the execution pending appeal.
Subsequently, Deputy Sheriff Restituto R. Quemada who was assigned to
enforce the writ of execution, garnished in favor of ECI all amounts due and Section 2, Rule 39 of the Rules of Court provides:
payable to NPC which were then in possession of MERALCO and sufficient to
5
cover the judgment sum of P1,108,985.31. Execution pending appeal. — On motion of the prevailing
party with notice to the adverse party the court may, in its
Attempts to lift the order of execution having proved futile and the offer of a discretion, order execution to issue even before the expiration
supersedeas bond having been rejected by the lower court, NPC filed with the of the time to appeal, upon good reasons to be stated in a
6
Appellate Court a petition for certiorari. special order. If a record on appeal is filed thereafter, the
motion and the special order shall be included thereon.
In its challenged decision of October 20, 1971, the Court of Appeals
granted NPCs petition and nullified the execution pending appeal of the While the rule gives the court the discretionary power to allow immediate
judgment rendered by the trial court on December 28, 1970, as well as all execution, the following requisites must be satisfied for its valid exercise:
issued writs and processes in connection with the execution. One justice
7
dissented. (a) There must be a motion by the prevailing party with
notice to the adverse party;
247 of 501
(b) There must be a good reasons for issuing the execution; In the fairly recent case of RCPI, et al vs. Lantin Nos. L-59311 and 59320,
and January 31, 1985 , 134 SCRA 395, 400-401, the Court said:
(c) The good reasons must be stated in a special order. The execution of any award for moral and exemplary damages
is dependent on the outcome of the main case. Unlike actual
In its assailed decision, the Appellate Court, through Justice Salvador V. damages for which the petitioners may clearly be held liable if
Esguerra, observe that NPC, as defendant in the civil case for damages, was they breach a specific contract and the amounts of which are
being ordered to pay the amount of P 1,108,985.31 pending appeal when fixed and certain, liabilities with respect to moral and
practically 40% thereof was made up of awards of damages based on the exemplary damages as well as the exact amounts remain
court's sole and untrammeled discretion. Such amount might greatly be uncertain and indefinite pending resolution by the
reduced by the superior court, especially the items for consequential and Intermediate Appellate Court and eventually the Supreme
exemplary damages and attorney's fees which by themselves would amount to Court. The existence of the factual bases of these types of
the "staggering" sum of P433,220.00 damages and their casual relation to petitioners' act will have
to be determined in the light of the assignments or errors on
The Appellate Court noted the many instances when on review, the amounts appeal. It is possible that the petitioners, after all, while liable
for attorney's fees and exemplary and moral damages were drastically cut or for actual damages may not be liable for moral and exemplary
eliminated altogether in the absence of proof that the losing party acted with damages. Or as in some cases elevated to the Supreme Court,
malice, evident bad faith or in an oppressive manner. the awards may be reduced.
Inasmuch as the list submitted by ECI of the estimated losses and damages to Indeed, as later events would show, the Appellate Court was
its tunnel project caused by the instant flooding on November 4, 1967 was duly proven right when it postulated that it is not beyond the
supported by vouchers presented in evidence, and considering that NPC, for realm of probability that NPCs appeal from the lower court's
its part, failed to submit proofs to refute or contradict such documentary judgment could result in the substantial reduction of the
evidence, we are constrained to sustain the order of execution pending appeal consequential damages and attorney's fees and the deletion of
by the trial court but only as far as the award for actual or compensatory exemplary damages.
damages is concemed. We are not prepared to disagree with the lower court
on this point since it was not sufficiently shown that it abused or exceeded its We take judicial notice of the fact that on August 24, 1987, the
9
authority. Court of Appeals rendered a decision on the main appeal. It
affirmed the trial court's conclusion that NPC was guilty of
With respect to the consequential and exemplary damages as well as attorney's negligence but differred in the award of damages. While it
fees, however, we concur with the Appellate Court in holding that the lower upheld the court a quo's award of P675,785.31 as actual
court had exceeded the limits of its discretion. Execution should have been damages, it reduced the consequential damages from
postponed until such time as the merits of the case have been finally P333,200.00 to P19,200.00 and the attorney's fees from
determined in the regular appeal. P50,000 to P30,000.00 The grant of P50,000 as exemplary
damages was eliminated. Altogether, the award of damages
was modified from P1,108,985.31 to P724,985.31. From that
248 of 501
decision, both the ECI and NPC filed their separate appeals to are compelling reasons such as: a defect on the face of the writ or actual
10
this Court. Finally, on May 16, 1988, the Court promulgated knowledge on the part of the garnishee of lack of entitlement on the part of
its judgment affirming in all respects the Appellate Court's the garnisher, it is not incumbent upon the garnishee to inquire or to judge for
decision in CA-G.R. No. 49955-R, thus putting to rest the itself whether or not the order for the advance execution of a judgment is
question of negligence and NPCs liability for damages. valid.
The point that the Court wishes to emphasize is this: Courts look with disfavor Section 8, Rule 57 of the Rules of Court provides,
upon any attempt to execute a judgment which has not acquired a final
character. Section 2, Rule 39, authorizing the premature execution of Effect of attachment of debts and credits.-All persons having
judgments, being an exception to the general rule, must be restrictively in their possession or under their control any credits or other
construed. It would not be a sound rule to allow indiscriminately the similar personal property belonging to the party against
execution of a money judgment, even if there is a sufficient bond. "The reasons whom attachment is issued, or owing any debts to the same,
allowing execution must constitute superior circumstances demanding at the time of service upon them of a copy of the order of
urgency which will outweigh the injury or damages should the losing party attachment and notice as provided in the last preceding
11
secure a reversal of the judgment."' section, shall be liable to the applicant for the amount of such
credits, debts or other property, until the attachment be
We come now to the second issue of whether petitioners, including the sheriff, discharged, or any judgment recovered by him be satisfied,
are bound to restore to NPC the judgment amount which has been delivered unless such property be delivered or transferred, or such
to ECI in compliance with the writ of garnishment. debts be paid, to the clerk, sheriff or other proper officer of
the court issuing the attachment.
In line with our pronouncement that we are sanctioning in this particular
instance the execution pending appeal of actual but not consequential and Garnishment is considered as a specie of attachment for reaching credits
exemplary damages and attorney's fees which must necessarily depend on the belonging to the judgment debtor and owing to him from a stranger to the
final resolution of the main cases, i.e., Nos. L-47379 and 47481, the direct litigation. Under the above-cited rule, the garnishee [the third person] is
consequence would be to authorize NPC to proceed against the covering bond obliged to deliver the credits, etc. to the proper officer issuing the writ and
filed by ECI but only to the extent of the difference between the amount finally "the law exempts from liability the person having in his possession or under
adjudicated by this Court in the main cases [P724,985.31] and the amount his control any credits or other personal property be, longing to the defendant,
originally decreed by the trial court relating to the consequential and ..., if such property be delivered or transferred, ..., to the clerk, sheriff, or other
12
exemplary damages and attorney's fees [P1,108.985.31]. In other words, ECIs officer of the court in which the action is pending."
bond is held answerable to NPC for P384,000.
Applying the foregoing to the case at bar, MERALCO, as garnishee, after
But while partial restitution is warranted in favor of NPC, we find that the having been judicially compelled to pay the amount of the judgment
Appellate Court erred in not absolving MERALCO, the garnishee, from its represented by funds in its possession belonging to the judgment debtor
obligations to NPC with respect to the payment to ECI of P1,114,543.23, thus in or NPC, should be released from all responsibilities over such amount after
effect subjectingMERALCO to double liability. MERALCO should not have delivery thereof to the sheriff. The reason for the rule is self-evident. To expose
been faulted for its prompt obedience to a writ of garnishment. Unless there
249 of 501
garnishees to risks for obeying court orders and processes would only
undermine the administration of justice.
WHEREFORE, the Court in disposing of the two side issues of execution

pending appeal and petitioners' liability for restitution, hereby MODIFIES the
Court of Appeals' decision and resolution under review, and rules as follows:
[a] NPC is authorized to proceed against the P1,109,000 bond filed by ECI to
the extent of P384,000 which corresponds to the difference between the
awards for consequential and exemplary damages and attorney's fees upheld
by the Court in the main cases (Nos. L-47379 and 47481) and those decreed for
the same items by the trial court;
[b] MERALCO is declared absolved from any and all responsibilities in

connection with the amount of P1,114,545.23 representing the NPC garnished
funds and therefore relieved from the burden of restoring the same to NPC.
SO ORDERED .
250 of 501
RCBC v. Judge Castro, 168 S 49 (hereinafter referred to as "BADOC") within 48 hours the aggregate amount of
P206,916.76, with legal interests thereon.
THIRD DIVISION
On January 26,1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of
G.R. No. L-34548 November 29, 1988 Execution of the said Partial Judgment which was granted on the same day by
the herein respondent judge who acted in place of the Hon. Judge San Diego
RIZAL COMMERCIAL BANKING CORPORATION, petitioner, who had just been elevated as a Justice of the Court of Appeals. Accordingly,
vs. the Branch Clerk of Court on the very same day, issued a Writ of Execution
THE HONORABLE PACIFICO P. DE CASTRO and PHILIPPINE VIRGINIA addressed to Special Sheriff Faustino Rigor, who then issued a Notice of
TOBACCO ADMINISTRATION,respondents Garnishment addressed to the General Manager and/or Cashier of Rizal
Commercial Banking Corporation (hereinafter referred to as RCBC), the
Meer, Meer & Meer for petitioner. petitioner in this case, requesting a reply within five (5) days to said
garnishment as to any property which the Philippine Virginia Tobacco
The Solicitor General for respondents. Administration (hereinafter referred to as "PVTA") might have in the
possession or control of petitioner or of any debts owing by the petitioner to
said defendant. Upon receipt of such Notice, RCBC notified PVTA thereof to
enable the PVTA to take the necessary steps for the protection of its own
CORTES, J.: interest [Record on Appeal, p. 36]
The crux of the instant controversy dwells on the liability of a bank for Upon an Urgent Ex-Parte Motion dated January 27, 1970 filed by BADOC, the
releasing its depositor's funds upon orders of the court, pursuant to a writ of respondent Judge issued an Order granting the Ex-Parte Motion and directing
garnishment. If in compliance with the court order, the bank delivered the the herein petitioner "to deliver in check the amount garnished to Sheriff
garnished amount to the sheriff, who in turn delivered it to the judgment Faustino Rigor and Sheriff Rigor in turn is ordered to cash the check and
creditor, but subsequently, the order of the court directing payment was set deliver the amount to the plaintiff's representative and/or counsel on record."
aside by the same judge, should the bank be held solidarily liable with the [Record on Appeal, p. 20; Rollo, p. 5.] In compliance with said Order,
judgment creditor to its depositor for reimbursement of the garnished funds? petitioner delivered to Sheriff Rigor a certified check in the sum of P
The Court does not think so. 206,916.76.
In Civil Case No. Q-12785 of the Court of First Instance of Rizal, Quezon City Respondent PVTA filed a Motion for Reconsideration dated February 26,1970
Branch IX entitled "Badoc Planters, Inc. versus Philippine Virginia Tobacco which was granted in an Order dated April 6,1970, setting aside the Orders of
Administration, et al.," which was an action for recovery of unpaid tobacco Execution and of Payment and the Writ of Execution and ordering petitioner
deliveries, an Order (Partial Judgment) was issued on January 15, 1970 by the and BADOC "to restore, jointly and severally, the account of PVTA with the
Hon. Lourdes P. San Diego, then Presiding Judge, ordering the defendants said bank in the same condition and state it was before the issuance of the
therein to pay jointly and severally, the plaintiff Badoc Planters, Inc. aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with
interests at the legal rate from January 27, 1970 until fully paid to the account
of the PVTA This is without prejudice to the right of plaintiff to move for the
251 of 501
execution of the partial judgment pending appeal in case the motion for However, the questioned Order of April 6, 1970 must be set aside insofar as it
reconsideration is denied and appeal is taken from the said partial judgment." ordered the petitioner RCBC, jointly and severally with BADOC, to reimburse
[Record on Appeal, p. 58] PVTA.
The Motion for Reconsideration of the said Order of April 6, 1970 filed by The petitioner merely obeyed a mandatory directive from the respondent
herein petitioner was denied in the Order of respondent judge dated June 10, Judge dated January 27, 1970, ordering petitioner 94 "to deliver in check the
1970 and on June 19, 1970, which was within the period for perfecting an amount garnished to Sheriff Faustino Rigor and Sheriff Rigor is in turn ordered
appeal, the herein petitioner filed a Notice of Appeal to the Court of Appeals to cash the check and deliver the amount to the plaintiffs representative
from the said Orders. and/or counsel on record." [Record on Appeal, p. 20.]
This case was then certified by the Court of Appeals to this Honorable Court, PVTA however claims that the manner in which the bank complied with the
involving as it does purely questions of law. Sheriffs Notice of Garnishment indicated breach of trust and dereliction of
duty on the part of the bank as custodian of government funds. It insistently
The petitioner raises two principal queries in the instant case: 1) Whether or urges that the premature delivery of the garnished amount by RCBC to the
not PVTA funds are public funds not subject to garnishment; and 2) Whether special sheriff even in the absence of a demand to deliver made by the latter,
or not the respondent Judge correctly ordered the herein petitioner to before the expiration of the five-day period given to reply to the Notice of
reimburse the amount paid to the Special Sheriff by virtue of the execution Garnishment, without any reply having been given thereto nor any prior
issued pursuant to the Order/Partial Judgment dated January 15, 1970. authorization from its depositor, PVTA and even if the court's order of January
27, 1970 did not require the bank to immediately deliver the garnished amount
The record reveals that on February 2, 1970, private respondent PVTA filed a constitutes such lack of prudence as to make it answerable jointly and
Motion for Reconsideration of the Order/ Partial Judgment of January 15, 1970. severally with the plaintiff for the wrongful release of the money from the
This was granted and the aforementioned Partial Judgment was set aside. The deposit of the PVTA. The respondent Judge in his controverted Order
case was set for hearings on November 4, 9 and 11, 1970 [Rollo, pp. 205-207.] sustained such contention and blamed RCBC for the supposed "hasty release
However, in view of the failure of plaintiff BADOC to appear on the said dates, of the amount from the deposit of the PVTA without giving PVTA a chance to
the lower court ordered the dismissal of the case against PVTA for failure to take proper steps by informing it of the action being taken against its deposit,
prosecute [Rollo, p. 208.] thereby observing with prudence the five-day period given to it by the sheriff."
[Rollo, p. 81.]
It must be noted that the Order of respondent Judge dated April 6, 1970
directing the plaintiff to reimburse PVTA t e amount of P206,916.76 with Such allegations must be rejected for lack of merit. In the first place, it should
interests became final as to said plaintiff who failed to even file a motion for be pointed out that RCBC did not deliver the amount on the strength solely of
reconsideration, much less to appeal from the said Order. Consequently, the a Notice of Garnishment; rather, the release of the funds was made pursuant
order to restore the account of PVTA with RCBC in the same condition and to the aforesaid Order of January 27, 1970. While the Notice of Garnishment
state it was before the issuance of the questioned orders must be upheld as to dated January 26, 1970 contained no demand of payment as it was a mere
the plaintiff, BADOC. request for petitioner to withold any funds of the PVTA then in its possession,
the Order of January 27, 1970 categorically required the delivery in check of the
amount garnished to the special sheriff, Faustino Rigor.
252 of 501
In the second place, the bank had already filed a reply to the Notice of G.R. Nos. L-30871 and L-31603, December 28,1970, 36 SCRA
Garnishment stating that it had in its custody funds belonging to the PVTA, 567, 574.]
which, in fact was the basis of the plaintiff in filing a motion to secure delivery
of the garnished amount to the sheriff. [See Rollo, p. 93.] The respondent judge however, censured the petitioner for having released the
funds "simply on the strength of the Order of the court which. far from
Lastly, the bank, upon the receipt of the Notice of Garnishment, duly informed ordering an immediate release of the amount involved, merely serves as a
PVTA thereof to enable the latter to take the necessary steps for the protection standing authority to make the release at the proper time as prescribed by the
of its own interest [Record on Appeal, p. 36] rules." [Rollo, p. 81.]
It is important to stress, at this juncture, that there was nothing irregular in This argument deserves no serious consideration. As stated earlier, the order
the delivery of the funds of PVTA by check to the sheriff, whose custody is directing the bank to deliver the amount to the sheriff was distinct and
equivalent to the custody of the court, he being a court officer. The order of separate from the order directing the sheriff to encash the said check. The
the court dated January 27, 1970 was composed of two parts, requiring: 1) bank had no choice but to comply with the order demanding delivery of the
RCBC to deliver in check the amount garnished to the designated sheriff and garnished amount in check. The very tenor of the order called for immediate
2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs compliance therewith. On the other hand, the bank cannot be held liable for
representative and/or counsel on record. It must be noted that in delivering the subsequent encashment of the check as this was upon order of the court in
the garnished amount in check to the sheriff, the RCBC did not thereby make the exercise of its power of control over the funds placed in custodia legis by
any payment, for the law mandates that delivery of a check does not produce virtue of the garnishment.
the effect of payment until it has been cashed. [Article 1249, Civil Code.]
In a recent decision [Engineering Construction Inc., v. National Power
Moreover, by virtue of the order of garnishment, the same was placed Corporation, G.R. No. L-34589, June 29, 1988] penned by the now Chief Justice
in custodia legis and therefore, from that time on, RCBC was holding the funds Marcelo Fernan, this Court absolved a garnishee from any liability for prompt
subject to the orders of the court a quo. That the sheriff, upon delivery of the compliance with its order for the delivery of the garnished funds. The rationale
check to him by RCBC encashed it and turned over the proceeds thereof to the behind such ruling deserves emphasis in the present case:
plaintiff was no longer the concern of RCBC as the responsibility over the
garnished funds passed to the court. Thus, no breach of trust or dereliction of But while partial restitution is warranted in favor of NPC, we
duty can be attributed to RCBC in delivering its depositor's funds pursuant to find that the Appellate Court erred in not absolving
a court order which was merely in the exercise of its power of control over MERALCO, the garnishee, from its obligations to NPC with
such funds. respect to the payment of ECI of P 1,114,543.23, thus in effect
subjecting MERALCO to double liability. MERALCO should
... The garnishment of property to satisfy a writ of execution not have been faulted for its prompt obedience to a writ of
operates as an attachment and fastens upon the property a garnishment. Unless there are compelling reasons such as: a
lien by which the property is brought under the jurisdiction of defect on the face of the writ or actual knowledge on the part
the court issuing the writ. It is brought into custodia legis, of the garnishee of lack of entitlement on the part of the
under the sole control of such court [De Leon v. Salvador, garnisher, it is not incumbent upon the garnishee to inquire or
253 of 501
to judge for itself whether or not the order for the advance represented by funds in its possession belonging to the judgment debtor or
execution of a judgment is valid. NPC, should be released from all responsibilities over such amount after
delivery thereof to the sheriff. The reason for the rule is self-evident. To expose
Section 8, Rule 57 of the Rules of Court provides: garnishees to risks for obeying court orders and processes would only undermine
the administration of justice. [Emphasis supplied.]
Effect of attachment of debts and credits.—
All persons having in their possession or The aforequoted ruling thus bolsters RCBC's stand that its immediate
under their control any credits or other compliance with the lower court's order should not have been met with the
similar personal property belonging to the harsh penalty of joint and several liability. Nor can its liability to reimburse
party against whom attachment is issued, or PVTA of the amount delivered in check be premised upon the subsequent
owing any debts to the same, all the time of declaration of nullity of the order of delivery. As correctly pointed out by the
service upon them of a copy of the order of petitioner:
attachment and notice as provided in the last
preceding section, shall be liable to the xxx xxx xxx
applicant for the amount of such credits,
debts or other property, until the attachment That the respondent Judge, after his Order was enforced, saw
be discharged, or any judgment recovered by fit to recall said Order and decree its nullity, should not
him be satisfied, unless such property be prejudice one who dutifully abided by it, the presumption
delivered or transferred, or such debts be being that judicial orders are valid and issued in the regular
paid, to the clerk, sheriff or other proper performance of the duties of the Court" [Section 5(m) Rule
officer of the court issuing the attachment. 131, Revised Rules of Court]. This should operate with greater
force in relation to the herein petitioner which, not being a
Garnishment is considered as a specie of attachment for party in the case, was just called upon to perform an act in
reaching credits belonging to the judgment debtor and owing accordance with a judicial flat. A contrary view will invite
to him from a stranger to the litigation. Under the above- disrespect for the majesty of the law and induce reluctance in
cited rule, the garnishee [the third person] is obliged to complying with judicial orders out of fear that said orders
deliver the credits, etc. to the proper officer issuing the writ might be subsequently invalidated and thereby expose one to
and "the law exempts from liability the person having in his suffer some penalty or prejudice for obeying the same. And
possession or under his control any credits or other personal this is what will happen were the controversial orders to be
property belonging to the defendant, ..., if such property be sustained. We need not underscore the danger of this as a
delivered or transferred, ..., to the clerk, sheriff, or other precedent.
officer of the court in which the action is pending. [3 Moran,
Comments on the Rules of Court 34 (1970 ed.)] xxx xxx xxx
Applying the foregoing to the case at bar, MERALCO, as garnishee, after [ Brief for the Petitioner, Rollo, p. 212; Emphasis supplied.]
having been judicially compelled to pay the amount of the judgment
254 of 501
From the foregoing, it may be concluded that the charge of breach of trust Republic Act No. 2265 created the PVTA as an ordinary corporation with all
and/or dereliction of duty as well as lack of prudence in effecting the the attributes of a corporate entity subject to the provisions of the Corporation
immediate payment of the garnished amount is totally unfounded. Upon Law. Hence, it possesses the power "to sue and be sued" and "to acquire and
receipt of the Notice of Garnishment, RCBC duly informed PVTA thereof to hold such assets and incur such liabilities resulting directly from operations
enable the latter to take the necessary steps for its protection. However, right authorized by the provisions of this Act or as essential to the proper conduct
on the very next day after its receipt of such notice, RCBC was already served of such operations." [Section 3, Republic Act No. 2265.]
with the Order requiring delivery of the garnished amount. Confronted as it
was with a mandatory directive, disobedience to which exposed it to a Among the specific powers vested in the PVTA are: 1) to buy Virginia tobacco
contempt order, it had no choice but to comply. grown in the Philippines for resale to local bona fide tobacco manufacturers
and leaf tobacco dealers [Section 4(b), R.A. No. 2265]; 2) to contracts of any
The respondent Judge nevertheless held that the liability of RCBC for the kind as may be necessary or incidental to the attainment of its purpose with
reimbursement of the garnished amount is predicated on the ruling of the any person, firm or corporation, with the Government of the Philippines or
Supreme Court in the case of Commissioner of Public Highways v. Hon. San with any foreign government, subject to existing laws [Section 4(h), R.A. No.
Diego [G.R. No. L-30098, February 18, 1970, 31 SCRA 616] which he found 22651; and 3) generally, to exercise all the powers of a corporation under the
practically on all fours with the case at bar. Corporation Law, insofar as they are not inconsistent with the provisions of
this Act [Section 4(k), R.A. No. 2265.]
The Court disagrees.
From the foregoing, it is clear that PVTA has been endowed with a personality
The said case which reiterated the rule in Republic v. Palacio [G.R. No. L-20322, distinct and separate from the government which owns and controls it.
May 29, 1968, 23 SCRA 899] that government funds and properties may not be Accordingly, this Court has heretofore declared that the funds of the PVTA
seized under writs of execution or garnishment to satisfy such judgment is can be garnished since "funds of public corporation which can sue and be sued
definitely distinguishable from the case at bar. were not exempt from garnishment" [Philippine National Bank v. Pabalan,
G.R. No. L-33112, June 15, 1978, 83 SCRA 595, 598.]
In the Commissioner of Public Highways case [supra], the bank which
precipitately allowed the garnishment and delivery of the funds failed to In National Shipyards and Steel Corp. v. CIR [G.R. No. L-17874, August 31, 1964,
inform its depositor thereof, charged as it was with knowledge of the nullity of 8 SCRA 781], this Court held that the allegation to the effect that the funds of
the writ of execution and notice of garnishment against government funds. In the NASSCO are public funds of the government and that as such, the same
the aforementioned case, the funds involved belonged to the Bureau of Public may not be garnished, attached or levied upon is untenable for, as a
Highways, which being an arm of the executive branch of the government, has government-owned or controlled corporation, it has a personality of its own,
no personality of its own separate from the National Government. The funds distinct and separate from that of the government. This court has likewise
involved were government funds covered by the rule on exemption from ruled that other govemment-owned and controlled corporations like National
execution. Coal Company, the National Waterworks and Sewerage Authority (NAWASA),
the National Coconut Corporation (NACOCO) the National Rice and Corn
This brings us to the first issue raised by the petitioner: Are the PVTA funds Corporation (NARIC) and the Price Stabilization Council (PRISCO) which
public funds exempt from garnishment? The Court holds that they are not. possess attributes similar to those of the PVTA are clothed with personalities
of their own, separate and distinct from that of the government [National Coal
255 of 501
Company v. Collector of Internal Revenue, 46 Phil. 583 (1924); Bacani and 2. Indebtedness of the Philippine Virginia Tobacco
Matoto v. National Coconut Corporation et al., 100 Phil. 471 (1956); Reotan v. Administration and the former Agricultural Credit and
National Rice & Corn Corporation, G.R. No. L-16223, February 27, 1962, 4 SCRA Cooperative Financing Administration to the Central Bank in
418.] The rationale in vesting it with a separate personality is not difficult to gradual amounts regarding Virginia tobacco transactions in
find. It is well-settled that when the government enters into commercial previous years;
business, it abandons its sovereign capacity and is to be treated like any other
corporation [Manila Hotel Employees' Association v. Manila Hotel Co. and 3. Continuation of the Philippine Virginia Tobacco
CIR, 73 Phil. 734 (1941).] Administration support and subsidy operations including the
purchase of locally grown and produced Virginia leaf tobacco,
Accordingly, as emphatically expressed by this Court in a 1978 decision, at the present support and subsidy prices, its procurement,
"garnishment was the appropriate remedy for the prevailing party which could redrying, handling, warehousing and disposal thereof, and the
proceed against the funds of a corporate entity even if owned or controlled by redrying plants trading within the purview of their contracts;
the government" inasmuch as "by engaging in a particular business thru the
instrumentality of a corporation, the government divests itselfpro hac vice of 4. Operational, office and field expenses, and the
its sovereign character, so as to render the corporation subject to the rules of establishment of the Tobacco Research and Grading Institute.
law governing private corporations" [Philippine National Bank v. CIR, G.R No. [Emphasis supplied.]
L-32667, January 31, 1978, 81 SCRA 314, 319.]
Inasmuch as the Tobacco Fund, a special fund, was by law, earmarked
Furthermore, in the case of PVTA, the law has expressly allowed it funds to specifically to answer obligations incurred by PVTA in connection with its
answer for various obligations, including the one sought to be enforced by proprietary and commercial operations authorized under the law, it follows
plaintiff BADOC in this case (i.e. for unpaid deliveries of tobacco). Republic that said funds may be proceeded against by ordinary judicial processes such
Act No. 4155, which discounted the erstwhile support given by the Central as execution and garnishment. If such funds cannot be executed upon or
Bank to PVTA, established in lieu thereof a "Tobacco Fund" to be collected garnished pursuant to a judgment sustaining the liability of the PVTA to
from the proceeds of fifty per centum of the tariff or taxes of imported leaf answer for its obligations, then the purpose of the law in creating the PVTA
tobacco and also fifty per centum of the specific taxes on locally manufactured would be defeated. For it was declared to be a national policy, with respect to
Virginia type cigarettes. the local Virginia tobacco industry, to encourage the production of local
Virginia tobacco of the qualities needed and in quantities marketable in both
Section 5 of Republic Act No. 4155 provides that this fund shall be expended domestic and foreign markets, to establish this industry on an efficient and
for the support or payment of: economic basis, and to create a climate conducive to local cigarette
manufacture of the qualities desired by the consuming public, blending
1. Indebtedness of the Philippine Virginia Tobacco imported and native Virginia leaf tobacco to improve the quality of locally
Administration and the former Agricultural Credit and manufactured cigarettes [Section 1, Republic Act No. 4155.]
Cooperative Financing Administration to FACOMAS and
farmers and planters regarding Virginia tobacco transactions The Commissioner of Public Highways case is thus distinguishable from the
in previous years; case at bar. In said case, the Philippine National Bank (PNB) as custodian of
funds belonging to the Bureau of Public Highways, an agency of the
256 of 501
government, waschargeable with knowledge of the exemption of such SO ORDERED.

government funds from execution and garnishment pursuant to the elementary
precept that public funds cannot be disbursed without the appropriation
required by law. On the other hand, the same cannot hold true for RCBC as
the funds entrusted to its custody, which belong to a public corporation, are in
the nature of private funds insofar as their susceptibility to garnishment is
concerned. Hence, RCBC cannot be charged with lack of prudence for
immediately complying with the order to deliver the garnished amount. Since
the funds in its custody are precisely meant for the payment of lawfully-
incurred obligations, RCBC cannot rightfully resist a court order to enforce
payment of such obligations. That such court order subsequently turned out
to have been erroneously issued should not operate to the detriment of one
who complied with its clear order.
Finally, it is contended that RCBC was bound to inquire into the legality and
propriety of the Writ of Execution and Notice of Garnishment issued against
the funds of the PVTA deposited with said bank. But the bank was in no
position to question the legality of the garnishment since it was not even a
party to the case. As correctly pointed out by the petitioner, it had neither the
personality nor the interest to assail or controvert the orders of respondent
Judge. It had no choice but to obey the same inasmuch as it had no standing at
all to impugn the validity of the partial judgment rendered in favor of the
plaintiff or of the processes issued in execution of such judgment.
RCBC cannot therefore be compelled to make restitution solidarily with the

plaintiff BADOC. Plaintiff BADOC alone was responsible for the issuance of
the Writ of Execution and Order of Payment and so, the plaintiff alone should
bear the consequences of a subsequent annulment of such court orders; hence,
only the plaintiff can be ordered to restore the account of the PVTA.
WHEREFORE, the petition is hereby granted and the petitioner is ABSOLVED

from any liability to respondent PVTA for reimbursement of the funds
garnished. The questioned Order of the respondent Judge ordering the
petitioner, jointly and severally with BADOC, to restore the account of PVTA
are modified accordingly.
257 of 501
The Manila Remnant v. CA, 231 S 281 Ventanilla and Carmen Gloria Diaz for the combined contract price of
P66,571.00, payable monthly in ten years. After ten days and without the
FIRST DIVISION knowledge of the Ventanilla couple, Valencia, as president of MRCI, resold the
same parcels to Carlos Crisostomo, one of his sales agents, without any
consideration. Upon orders of Valencia, the monthly payments of the
Ventanillas were remitted to the MRCI as payments of Crisostomo, for which
G.R. No. 107282 March 16, 1994 receipts were issued in his name. The receipts were kept by Valencia without
the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued
THE MANILA REMNANT CO., INC., petitioner, paying their monthly installments.
vs.
HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA AND On May 30, 1973, MRCI informed AUVCI that it was terminating their
CARMEN GLORIA DIAZ, respondents. agreement because of discrepancies discovered in the latter's collections and
remittances. On June 6, 1973, Valencia was removed by the board of directors
Tabalingcos & Associates Law Office for petitioner. of MRCI as its president.
Oscar C. Ventanilla, Jr. and Augusto Garmaitan for private respondents. On November 21, 1978, the Ventanilla spouses, having learned of the supposed
sale of their lots to Crisostomo, commenced an action for specific
performance, annulment of deeds, and damages against Manila Remnant Co.,
Inc., A.U. Valencia and Co., Inc., and Carlos Crisostomo. It was docketed as
CRUZ, J.: Civil Case No. 26411 in the Court of First Instance of Quezon City, Branch
7-B.
The present petition is an offshoot of our decision in Manila Remnant Co., Inc.,
(MRCI) v. Court of Appeals, promulgated on November 22, 1990. On November 17, 1980, the trial court rendered a decision declaring the
contracts to sell in favor of the Ventanillas valid and subsisting, and annulling
That case involved parcels of land in Quezon City which were owned by the contract to sell in favor of Crisostomo. It ordered the MRCI to execute an
petitioner MRCI and became the subject of its agreement with A.U. Valencia absolute deed of sale in favor of the Ventanillas, free from all liens and
and Co., Inc., (AUVCI) by virtue of which the latter was to act as the encumbrances. Damages and attorney's fees in the total amount of
petitioner's agent in the development and sale of the property. For a stipulated P210,000.00 were also awarded to the Ventanillas for which the MRCI, AUVCI,
fee, AUVCI was to convert the lands into a subdivision, manage the sale of the and Crisostomo were held solidarily liable.
lots, execute contracts and issue official receipts to the lot buyers. At the time
of the agreement, the president of both MRCI and AUVCI was Artemio U. The lower court ruled further that if for any reason the transfer of the lots
Valencia. could not be effected, the defendants would be solidarily liable to the
Ventanillas for reimbursement of the sum of P73,122.35, representing the
Pursuant to the above agreement, AUVCI executed two contracts to sell dated amount paid for the two lots, and legal interest thereon from March 1970, plus
March 3, 1970, covering Lots 1 and 2, Block 17, in favor of spouses Oscar C. the decreed damages and attorney's fees. Valencia was also held liable to MRCI
for moral and exemplary damages and attorney's fees.
258 of 501
From this decision, separate appeals were filed by Valencia and MRCI. The be effected, pending litigation of said issue, the garnishment
appellate court, however, sustained the trial court in toto. made by the Sheriff upon the bank account of Manila
Remnant may be lifted only upon the deposit to the Court of
MRCI then filed before this Court a petition for certiorari to review the portion the amount of P500,000.00 in cash.
of the decision of the Court of Appeals upholding the solidary liability of
MRCI, AUVCI and Carlos Crisostomo for the payment of moral and exemplary MRCI then filed a manifestation and motion for reconsideration praying that it
damages and attorney's fees to the Ventanillas. be ordered to reimburse the Ventanillas in the amount of P263,074.10 and that
the garnishment of its bank deposit be lifted. This motion was denied by the
On November 22, 1990, this Court affirmed the decision by the Court of trial court in its order dated September 30, 1991. A second manifestation and
Appeals and declared the judgment of the trial court immediately executory. motion filed by MRCI was denied on December 18, 1991. The trial court also
required MRCI to show cause why it should not be cited for contempt for
The Present Case disobedience of its judgment.
On January 25, 1991, the spouses Ventanilla filed with the trial court a motion These orders were questioned by MRCI in a petition for certiorari before the
for the issuance of a writ of execution in Civil Case No. 26411. The writ was respondent court on the ground that they were issued with grave abuse of
issued on May 3, 1991, and served upon MRCI on May 9, 1991. discretion.
In a manifestation and motion filed by MRCI with the trial court on May 24, The Court of Appeals ruled that the contract to sell in favor of Marquez did
1991, the petitioner alleged that the subject properties could not be delivered not constitute a legal impediment to the immediate execution of the
to the Ventanillas because they had already been sold to Samuel Marquez on judgment. Furthermore, the cash bond fixed by the trial court for the lifting of
February 7, 1990, while their petition was pending in this Court. Nevertheless, the garnishment was fair and reasonable because the value of the lot in
MRCI offered to reimburse the amount paid by the respondents, including question had increased considerably. The appellate court also set aside the
legal interest plus the aforestated damages. MRCI also prayed that its tender of show-cause order and held that the trial court should have proceeded under
1
payment be accepted and all garnishments on their accounts lifted. Section 10, Rule 39 of the Rules of Court and not Section 9 thereof.
The Ventanillas accepted the amount of P210,000.00 as damages and In the petition now before us, it is submitted that the trial court and the Court
attorney's fees but opposed the reimbursement offered by MRCI in lieu of the of Appeals committed certain reversible errors to the prejudice of MRCI.
execution of the absolute deed of sale. They contended that the alleged sale to
Samuel Marquez was void, fraudulent, and in contempt of court and that no The petitioner contends that the trial court may not enforce it garnishment
claim of ownership over the properties in question had ever been made by order after the monetary judgment for damages had already been satisfied and
Marquez. the amount for reimbursement had already been deposited with the sheriff.
Garnishment as a remedy is intended to secure the payment of a judgment
On July 19, 1991, Judge Elsie Ligot-Telan issued the following order: debt when a well-founded belief exists that the erring party will abscond or
deliberately render the execution of the judgment nugatory. As there is no
To ensure that there is enough amount to cover the value of such situation in this case, there is no need for a garnishment order.
the lots involved if transfer thereof to plaintiff may no longer
259 of 501
It is also averred that the trial court gravely abused its discretion when it to the Ventanillas also shows that it even then already acknowledged the
arbitrarily fixed the amount of the cash bond for the lifting of the garnishment validity of the contract to sell in favor of the private respondents.
order at P500,000.00.
On top of all this, there are other circumstances that cast suspicion on the
MRCI further maintains that the sale to Samuel Marquez was valid and validity, not to say the very existence, of the contract with Marquez.
constitutes a legal impediment to the execution of the absolute deed of sale to
the Ventanillas. At the time of the sale to Marquez, the issue of the validity of First, the contract to sell in favor of Marquez was entered into after the lapse
the sale to the Ventanillas had not yet been resolved. Furthermore, there was of almost ten years from the rendition of the judgment of the trial court
no specific injunction against the petitioner re-selling the property. upholding the sale to the Ventanillas.
Lastly, the petitioner insists that Marquez was a buyer in good faith and had a Second, the petitioner did not invoke the contract with Marquez during the
right to rely on the recitals in the certificate of title. The subject matter of the hearing on the motion for the issuance of the writ of execution filed by the
controversy having passed to an innocent purchaser for value, the respondent private respondents. It disclosed the contract only after the writ of execution
court erred in ordering the execution of the absolute deed of sale in favor of had been served upon it.
the Ventanillas.
Third, in its manifestation and motion dated December 21, 1990, the petitioner
For their part, the respondents argue that the validity of the sale to them had said it was ready to deliver the titles to the Ventanillas provided that their
already been established even while the previous petition was still pending counterclaims against private respondents were paid or offset first. There was
resolution. That petition only questioned the solidary liability of MRCI to the no mention of the contract to sell with Marquez on February 7, 1990.
Ventanillas. The portion of the decision ordering the MRCI to execute an
absolute deed of sale in favor of the Ventanillas became final and executory Fourth, Marquez has not intervened in any of these proceedings to assert and
when the petitioner failed to appeal it to the Supreme Court. There was no protect his rights to the subject property as an alleged purchaser in good faith.
need then for an order enjoining the petitioner from re-selling the property in
litigation. At any rate, even if it be assumed that the contract to sell in favor of Marquez
is valid, it cannot prevail over the final and executory judgment ordering MRCI
They also point to the unusual lack of interest of Marquez in protecting and to execute an absolute deed of sale in favor of the Ventanillas. No less
asserting his right to the disputed property, a clear indication that the alleged importantly, the records do not show that Marquez has already paid the
sale to him was merely a ploy of the petitioner to evade the execution of the supposed balance amounting to P616,000.00 of the original price of over
2
absolute deed of sale in their favor. P800,000.00.
The petition must fail. The Court notes that the petitioner stands to benefit more from the supposed
contract with Marquez than from the contract with the Ventanillas with the
The validity of the contract to sell in favor of the Ventanilla spouses is not agreed price of only P66,571.00. Even if it paid the P210,000.00 damages to the
disputed by the parties. Even in the previous petition, the recognition of that private respondents as decreed by the trial court, the petitioner would still
contract was not assigned as error of either the trial court or appellate court. earn more profit if the Marquez contract were to be sustained.
The fact that the MRCI did not question the legality of the award for damages
260 of 501
6
We come now to the order of the trial court requiring the posting of the sum (b) the order was improperly or irregularly issued as where
7
of P500,000.00 for the lifting of its garnishment order. there is no ground for garnishment or the affidavit and/or
8
bond filed therefor are defective or insufficient;
While the petitioners have readily complied with the order of the trial court
for the payment of damages to the Ventanillas, they have, however, refused to (c) the property attached is exempt from execution, hence
9
execute the absolute deed of sale. It was for the purpose of ensuring their exempt from preliminary attachment or
compliance with this portion of the judgment that the trial court issued the
garnishment order which by its term could be lifted only upon the filling of a (d) the judgment is rendered against the attaching or
10
cash bond of P500,000.00. garnishing creditor.
The petitioner questions the propriety of this order on the ground that it has Partial execution of the judgment is not included in the above enumeration of
already partially complied with the judgment and that it has always expressed the legal grounds for the discharge of a garnishment order. Neither does the
its willingness to reimburse the amount paid by the respondents. It says that petitioner's willingness to reimburse render the garnishment order
there is no need for a garnishment order because it is willing to reimburse the unnecessary. As for the counterbond, the lower court did not err when it fixed
Ventanillas in lieu of execution of the absolute deed of sale. the same at P500,000.00. As correctly pointed out by the respondent court,
that amount corresponds to the current fair market value of the property in
The alternative judgment of reimbursement is applicable only if the litigation and was a reasonable basis for determining the amount of the
conveyance of the lots is not possible, but it has not been shown that there is counterbond.
an obstacle to such conveyance. As the main obligation of the petitioner is to
execute the absolute deed of sale in favor of the Ventanillas, its unjustified Regarding the refusal of the petitioner to execute the absolute deed of sale,
refusal to do so warranted the issuance of the garnishment order. Section 10 of Rule 39 of the Rules of Court reads as follows:
Garnishment is a species of attachment for reaching credits belonging to the Sec. 10. Judgment for specific act; vesting title — If a judgment
3
judgment debtor and owing to him from a stranger to the litigation. It is an directs a party to execute a conveyance of land, or to deliver
attachment by means of which the plaintiff seeks to subject to his claim deeds or other documents, or to perform any other specific
property of the defendant in the hands of a third person or money owed by act, and the party fails to comply within the time specified,
4
such third person or garnishee to the defendant. The rules on attachment the court may direct the act to be done at the cost of the
also apply to garnishment proceedings. disobedient party by some other person appointed by the
court and the act when so done shall have like effect as if
A garnishment order shall be lifted if it established that: done by the party. If real or personal property is within the
Philippines, the court in lieu of directing a conveyance thereof
(a) the party whose accounts have been garnished has posted may enter judgment divesting the title of any party and
5
a counterbond or has made the requisite cash deposit; vesting it in others and such judgment shall have the force
and effect of a conveyance executed in due form of law.
261 of 501
Against the unjustified refusal of the petitioner to accept payment of the WHEREFORE, the petition is DENIED and the challenged decision of the
balance of the contract price, the remedy of the respondents is consignation, Court of Appeals is AFFIRMED in toto, with costs against the petitioner. It is
conformably to the following provisions of the Civil Code: so ordered.
Art. 1256. If the creditor to whom tender of payment has been

made refuses without just cause to accept it, the debtor shall
be released from responsibility by the consignation of the
thing or sum due. . .
Art. 1258. Consignation shall be made by depositing the things

due at the disposal of the judicial authority, before whom the
tender of payment shall be proved, in a proper case, and the
announcement of the consignation in other cases.
The consignation having been made, the interested parties

shall also be notified thereof.
Art. 1260. Once the consignation has been duly made, the
debtor may ask the judge to order the cancellation of the
obligation.
Accordingly, upon consignation by the Ventanillas of the sum due, the trial
court may enter judgment canceling the title of the petitioner over the
property and transferring the same to the respondents. This judgment shall
have the same force and effect as conveyance duly executed in accordance
with the requirements of the law.
In sum, we find that:
1. No legal impediment exists to the execution, either by the petitioner or the

trial court, of an absolute deed of sale of the subject property in favor of the
respondent Ventanillas; and
2. The lower court did not abuse its discretion when it required the posting of
a P500,000.00 cash bond for the lifting of the garnishment order.
262 of 501
Chemphil Export and Import v. CA, 251 S 286 (See under Section 7 page On December 27, 1989, the parties, assisted by their counsels, executed a
217) compromise agreement. In an order dated March 15, 1990, the Metropolitan
Trial Court approved the compromise agreement. The order reproduced the
Abinujar v. CA, April 18, 1995 agreement as follows:
FIRST DIVISION 1. That defendants [petitioners herein] agree to pay plaintiffs

[private respondents herein] in the amounts and on the dates
G.R. No. 104133 April 18, 1995 specifically indicated herein below:
SPOUSES EMILIO ABINUJAR and MILAGROS M. LANA, petitioners, a. P50,000.00 on Jan. 31, 1990;
vs. b. 10,000.00 on Feb. 28, 1990;
THE COURT OF APPEALS and SPOUSES SANTIAGO RAMIRO and c. 10,000.00 on March 31, 1990;
FLORENTINA RAMIRO, respondents.
d. 10,000.00 on April 30, 1990;
e. 10,000.00 on May 31, 1990;
f. 10,000.00 on June 30, 1990;
QUIASON, J.: g. 10,000.00 on July 31,1990;
h. 10,000.00 on August 31, 1990;
This is a petition for review on ceitiorari under Rule 45 of the Revised Rules of
i. 10,000.00 on September 30, 1990;
Court of the Decision dated December 27, 1991 and the Resolution dated
February 11, 1992 of the Court of Appeals in CA-G.R. SP No. 24683.
2. That failure on the part of the defendants to pay three (3)
I consecutive payments, plaintiffs will be entitled to a writ of
execution, unless the parties agree to extend the period of
On October 10, 1987, petitioners executed a Deed of Sale with Right to entitlement to a writ of execution in writing to be submitted
Repurchase in favor of private respondents, involving a residential house and/or approved by this Honorable Court; . . . (Rollo, p. 53).
located at No. 346 Algeciras St., Sampaloc, Manila. Due to serious financial
and business reverses, petitioners were not able to redeem the property within On April 15, 1990, private respondents filed a motion for execution on the
four months as agreed upon. ground that petitioners failed to pay the first three installments stipulated in
the compromise agreement, to wit: P50,000.00 on January 31, 1990; P10,000.00
On October 24, 1989, private respondents filed a complaint for ejectment in on February 28, 1990; and P10,000.00 on March 31, 1990.
the Metropolitan Trial Court of the City of Manila, docketed as Civil Case No.
130352-CV against petitioners. On April 6, 1990, petitioners filed an "Urgent Ex-Parte Motion for
Reconsideration and/or Correct Order of this Court" calling attention to a
typographical error in the Order dated March 15, 1990, and asking that the
263 of 501
amount of P10.000.00 payable on September 30, 1990 be corrected and On December 27, 1991, the Court of Appeals dismissed the petition. Likewise,
changed to the agreed amount of P50,000. the said court denied the motion for reconsideration filed by petitioner.
On April 25, 1990, the Metropolitan Trial Court issued an order granting the II
motion for correction of the typographical error in the decision.
Petitioners contend that both the Regional Trial Court and Metropolitan Trial
On August 17, 1990, petitioners filed a motion asking that the check payments Court acted with grave abuse of discretion, the former in issuing a resolution
previously deposited by them with the court, be accepted and be given to directing the Metropolitan Trial Court to issue a writ of execution against
respondents in compliance with their compromise agreement. petitioners herein, and the latter, in issuing said writ of execution.
On August 23, 1990, respondents opposed petitioners' ex-parte motion and III
stated that they would not renew the compromise agreement with petitioners.
A compromise agreement is a contract between the parties, which if not
The Metropolitan Trial Court denied private respondents' motion for contrary to law, morals or public policy, is valid and enforceable between them
execution dated April 15, 1990 and another similar motion dated June 26, 1990. (Municipal Board of Cabanatuan City v. Samahang Magsasaka, Inc., 62 SCRA
435 [1975]). There are two kinds of compromise agreements, the judicial,
On October 12, 1990, respondents filed a petition for mandamus with us (G.R. which puts an end to a pending litigation, and the extrajudicial, which is to
No. 95470). In a resolution dated November 5, 1990, we referred the case to avoid a litigation (Civil Code of the Philippines, Art. 2028; Caguioa, VI
the Executive Judge of the Regional Trial Court, Manila. petitioners moved to Commentaries and Cases, on Civil Law 292 [1970]).
dismiss the petition for mandamus.
As a contract, a compromise agreement is perfected by mutual consent
On March 14, 1991 the Regional Trial Court denied the motion to dismiss and (Rovero v. Amparo, 91 Phil. 228 [1952]). A judicial compromise, however, while
issued the assailed resolution commanding the Metropolitan Trial Court to binding between the parties upon its execution, is not executory until it is
issue a writ of execution of the decision approving the compromise agreement approved by the court and reduced to a judgment.
in Civil Case No. 130352-CV.
Article 2037 of the Civil Code of the Philippines provides:
In compliance with the said resolution, the Metropolitan Trial Court issued an
order dated March 27, 1991 directing the issuance of a writ of execution to A compromise has upon the parties the effect and authority
enforce the compromise agreement entered into by the parties. of res judicata; but there shall be no execution except in
compliance with a judicial compromise.
On April 11, 1991, a "Sheriffs' Notice to Voluntarily Vacate the Premises" was
served on petitioner. The non-fulfillment of the terms and conditions of a compromise agreement
approved by the court justifies execution thereof and the issuance of the writ
Petitioners then filed a petition for certiorari with a prayer for the issuance of a for said purpose is the court's ministerial duty enforceable
temporary restraining order and a writ of injunction with the Court of Appeals bymandamus (Maceda, Jr. v. Moreman Builders Co., Inc., 203 SCRA 293 [1991]).
(CA-G.R. SP No. 24683).
264 of 501
In the compromise agreement, petitioners obligated themselves to pay private A perusal of the compromise agreement signed by the parties and approved by
respondents the amount of P50,000.00 on January 31, 1990, P10,000.00 on the inferior court merely provided that in case the defendants (petitioners
February 28, 1990, and P10,000.00 on March 31, 1990. herein) failed to pay three monthly installments, the plaintiffs (private
respondents herein) would be entitled to a writ of execution, without
Petitioners received a copy of the decision of the Metropolitan Trial Court specifying what the subject of execution would be. Said agreement did not
approving the compromise agreement on March 26, 1990. Clearly, there was a state that petitioners would be evicted from the premises subject of the suit in
breach, for it was only on August 17, 1990 that petitioners attempted to pay by case of any default in complying with their obligation thereunder. This was the
means of nine postdated checks the amounts agreed upon. In effect, the first result of the careless drafting thereof for which only private respondents were
installment payment of P50,000.00 due on January 31, 1990 was moved to to be blamed.
August 31, 1990, the second installment of P10,000.00 due on February 28, 1990
was moved to September 30, 1990 and so forth, thereby making the last A judgment is the foundation of a writ of execution which draws its vitality
installment of P5,000.00 due on September 30, 1990 moved to April 30, 1991. therefrom (Monaghon v. Monaghon, 25 Ohio St. 325). An officer issuing a writ
This is tantamount to novating the original agreement entered into by the of execution is required to look to the judgment for his immediate authority
parties without the consent of private respondents. (Sydnor v. Roberts, 12 Tex. 598).
Inasmuch as a judicial compromise becomes binding between the parties upon An execution must conform to and be warranted by the judgment on which it
its execution, petitioners should have paid the installments falling due even was issued (Francisco, The Revised Rules of Court 641 [1966]; Kramer v.
before the approval thereof by the trial court. But assuming that a judicial Montgomery, 206 Okla.190, 242 p. 2d 414 [1952]). There should not be a
compromise is not perfected until it is approved by the court, still petitioner substantial variance between the judgment and the writ of execution (Avery v.
should have paid the compromise agreement installments due on March 31, Lewis, 10 Vt. 332). Thus, an execution is fatally defective if the judgment was
1990, together with the installments due on January 31 and February 28, 1990 for a sum of money and the writ of execution was for the sale of mortgaged
on or before March 31, 1990. property (Bank of Philippine Islands v. Green, 48 Phil. 284 [1925]).
Petitioners also assail the validity of the issuance by the Deputy Sheriff of the As petitioners' obligation under the compromise agreement as approved by
notice to voluntarily vacate the premises by way of enforcing the decision the court was monetary in nature, private respondents can avail only of the
approving the compromise agreement. They maintain that their obligation is writ of execution provided in Section 15, Rule 39 of the Revised Rules of Court,
monetary in nature and the applicable rule should have been Section 15, Rule and not that provided in Section 13.
39 and not Section 13, Rule 39 of the Revised Rules of Court.
Section 15, Rule 39 provides:
Petitioners contention has merit.
Execution of money judgments. — The officer must enforce
When the parties entered into a compromise agreement, the original action an execution of a money judgment by levying on all the
for ejectment was set aside and the action was changed to a monetary property, real and personal of every name and nature
obligation. whatsoever, and which may be disposed of for value, of the
judgment debtor not exempt from execution, or on a
sufficient amount of such property, if there be sufficient, and
265 of 501
selling the same, and paying to the judgment creditor, or his

attorney, so much of the proceeds as will satisfy the
judgment. Any excess in the proceeds over the judgment and
accruing costs must be delivered to the judgment debtor,
unless otherwise directed by the judgment or order of the
court. When there is more property of the judgment debtor
than is sufficient to satisfy the judgment and accruing costs,
within the view of the officer, he must levy only on such part
of the property as is amply sufficient to satisfy the judgment
and costs.
Real property, stocks, shares, debts, credits, and other

personal property, or any interest in either real or personal
property, may be levied on in like manner and with like effect
as under a writ of attachment.
On the other hand, Section 13, Rule 39 provides:
How execution for the delivery or restitution of property

enforced. — The officer must enforce an execution for the
delivery or restitution of property by ousting therefrom the
person against whom the judgment is rendered and placing
the judgment creditor in possession of such property, and by
levying as hereinafter provided upon so much of the property
of the judgment debtor as will satisfy the amount of the
judgment and costs included in the writ of execution.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the

MODIFICATION that the Sheriff is directed to enforce the execution only of
the money judgment in accordance with Section 15, Rule 39 of the Revised
Rules of Court.
SO ORDERED.
266 of 501
National Bank v. Olutanga, 54 Phil. 346 unsecured creditor the petition for the involuntary insolvency of the
Olutanga Lumber Company.
EN BANC
2. The lower court erred in holding, in its said order of March 31, 1928,
G.R. No. L-30982 January 31, 1930 that the garnishment issued in the present case referred only to
P16,656.30, and in ordering the difference between said sum and the
THE PHILIPPINE NATIONAL BANK, plaintiff-appellant, amount of P30,092.11 deposited with the sheriff of Manila to be
vs. returned to the Bank of the Philippine Islands after deducting the
OLUTANGA LUMBER COMPANY, defendant-appellee. sheriff's fees therefrom.
Camus and Delgado for appellant. 3. The lower court erred in denying the motion of the appellant of
Jose Erquiaga for defendant-appellee. November 14, 1928.
Araneta and Zaragoza for appellee Bank of the Philippine Islands.
The following facts are necessary and pertinent to resolve the questions raised
VILLA-REAL, J.: in the present appeal:
This appeal is taken by the Philippine National Bank from an order of the In civil case entitled the Bank of the Philippine Islands, plaintiff and appellee,
Court of First Instance of Manila, the dispositive part of which is as follows: vs. Olutanga Lumber Company, defendant and appellant, G. R. No.
1
27045, said plaintiff and appellee was ordered by this court to pay to the
The Philippine National Bank having appeared as an ordinary creditor aforesaid defendant and appellant a certain sum amounting to P31,242.11,
in the involuntary insolvency of the Olutanga Lumber Company, civil Philippine currency. Upon the return of the case to the Court of First Instance
case No. 33048 of this court, claiming the sum attached by the sheriff, of Zamboanga, the corresponding writ of execution was issued, which was
it thereby renounced its preferred right acquired through garnishment complied with by the sheriff of said province by presenting it to the manager
issued in the present case; and for that reason, the motion of the Bank of the branch of the Bank of the Philippine Islands in the City of Zamboanga,
of the Philippine Islands is hereby granted, and the sheriff of the City on January 10, 1928, but without levying execution on any property belonging
of Manila is hereby ordered to return to it the sum deposited by virtue to the execution debtor. On the same date, the aforesaid sheriff addressed to
of the garnishment, after deducting therefrom his legal fees to which the central office of said bank at Manila the following telegram:
he has a perfect right notwithstanding the result arrived at.
Execution Bank Philippine Islands versus Olutanga Lumber Company
In support of its appeal, the appellant assigns the following alleged errors served today manager Zamboanga branch. Please authorize him pay
committed by the trial court in its judgment, to wit: amount due defendant Olutanga Lumber plus sheriff fees otherwise
levy will be made on your Zamboaga office. LUIS
1. The lower court erred in holding, in its said order of March 31, 1928, PANAGUITON, Provincial Sheriff.
that appellant the Philippine National Bank had waived its lien
acquired by garnishment in the present case by joining as an On the same date, January 10, 1928, before receiving the foregoing telegram,
the central office of the Bank of the Philippine Islands in Manila was notified
267 of 501
by the sheriff of the City of Manila that all the credits and debts contracted by On January 14, 1928, the sheriff of the City of Manila sent a telegram to the
it with the Olutanga Lumber Company, amounting to P16,656.30, plus the sheriff of the Province of Zamboanga, telling him that the amount of the
interest at the rate of 12 per cent per annum from April 19, 1922 until fully paid, judgment against the Bank of the Philippine Islands and in favor of the
were levied upon in the name of the Philippine National Rank by virtue of a Olutanga Lumber Company, which had been attached by virtue of two writs of
writ of attachment issued in civil case No. 32936 of the Court of First Instance attachment issued by the Philippine National Bank and the Standard Oil
of Manila. company of New York against the Olutanga Lumber Company, had been
deposited with him by said Bank of the Philippine Islands.
On the following day, January 11, 1928, the Bank of the Philippine Islands, in
reply to said notice, addressed a letter to the sheriff of the City of Manila, Notwithstanding the fact that the provincial sheriff of Zamboanga had been
notifying the latter that, pursuant to his notice of attachment, it retained at duly informed of the levy made by the sheriff of the City of Manila upon the
the disposal of said sheriff the aforesaid sum of P16,656.30, plus interest at the funds of the Olutanga Lumber Company in possession of the herein appellee,
rate of 12 per cent per annum from April 19, 1922 until such date as may be the Bank of the Philippine Islands, and of the delivery of said funds to said
designated. judicial officer of the City of Manila, he attempted to collect from the branch
of said Bank of the Philippine Islands at Zamboanga the amount of the
On the same date, January 11, 1928, the sheriff of the City of Manila sent a letter judgment in favor of the Olutanga Lumber Company, threatening to levy, and
to the Bank of the Philippine Islands at Manila, requiring the latter to deliver in fact did levy, an attachment against said branch.
to him the sum of P32,109,45, theretofore attached, belonging to the Olutanga
Lumber Company. In view of this act of the provincial sheriff of Zamboanga, the herein appellee,
the Bank of the Philippine Islands, had to file a petition for prohibition with
After the delivery to the sheriff of the City of Manila of the amount of the this court against the Judge of the Court of First Instance of Zamboanga, the
judgment in favor of the Olutanga Lumber Company, rendered in civil case provincial sheriff of said province and the Olutanga Lumber Company,
No. 1176 of the Court of First Instance of Zamboanga, G. R. No. 27045 of this docketed as G. R. No. 29043 of this court. Upon hearing said petition, this
court, the Bank of the Philippine Islands notified the provincial sheriff of court entered the following resolution on February 9, 1928:
Zamboanga by telegram, on January 12, 1928, that the amount of the judgment
in favor of the Olutanga Lumber Company against said bank had been Upon consideration of the petition filed in case G. R. No. 29043, Banco
delivered to the sheriff of the City of Manila, and that any question on that de las Islas Filipinas vs. J. Horilleno et al., and of the answer
subject should be taken up with him. interposed by the respondents in connection with the arguments
adduced by both parties in their memoranda and during the hearing
On January 14, 1928, the provincial sheriff of Zamboanga sent a of said case, and it appearing that the writ of execution complained of
communication to the manager of the Bank of the Philippine Islands in said was issued and served upon the petitioner before the latter received
city, notifying him that all the money he had in his possession or control, notice by the garnishment, and two days before he was required by
belonging to the Bank of the Philippine Islands, was levied upon by virtue of the sheriff of Manila to deliver the amount mentioned in the said
an order of execution issued by the Court of First Instance of Zamboanga in garnishment proceedings, wherefore, the respondent judge did not
civil case No. 1176, entitled Bank of the Philippine Islands vs. Olutanga Lumber exceed its jurisdiction in issuing the aforesaid writ of execution, it is
Company, G. R. No. 27045 of this court, copy of which order of execution was ordered that the petition for a writ of prohibition be and is hereby
served upon him on January 10, 1928.
268 of 501
denied, with costs against the petitioner. Mr. Justice Street took no Zamboanga, Zamboanga, February 11, 1928.
part. (Sgd.) LUIS PANAGUITON
Provincial Sheriff
On February 10, 1928, the clerk of this court sent the following telegram to the
provincial sheriff of Zamboanga: In view of this urgent and peremptory demand of the provincial sheriff of
Zamboanga, the manager of the Bank of the Philippine Islands at Zamboanga
Supreme Court denied writ of prohibition requested by Bank had no other remedy than to deliver to the sheriff of Zamboanga the sum of
Philippine Islands to stop execution judgment in favor Olutanga P31,596.83.
Lumber Company you may proceed with execution forthwith.
The only question necessary to be decided in this appeal is whether the funds
Upon receipt of the foregoing telegram, the provincial sheriff of Zamboanga placed by the Bank of the Philippine Islands in possession of the sheriff of the
sent the following letter to the manager of the Bank of the Philippine Islands City of Manila, which had been attached in the name of the Philippine
at Zamboanga: National Bank and against the Olutanga Lumber Company, had been released
from said attachment when the aforesaid Bank of the Philippine Islands, by
SIR: With reference to the levy made by the undersigned on your judicial order, paid the judgment rendered by this court against the said Bank
office on January 14, 1928, in the sum of thirty-two thousand pesos of the Philippine Islands and in favor of the Olutanga Lumber Company.
(P32,000), Philippine currency, to cover the amount claimed in the
order of execution issued by the Court of First Instance of Zamboanga We have seen that after the central office of the Bank of the Philippine Islands
in civil case No. 1176, "The Bank of the Philippine Islands vs. Olutanga in the City of Manila had deposited with the sheriff of the City of Manila the
Lumber Company," and R. G. No. 27045, which levy has been sum of P32,109.45, by virtue of a demand made upon it by the latter in
suspended by order of the Honorable Supreme Court by virtue of the compliance with an order of attachment issued by the Court of First Instance
writ of prohibition filed by the Bank of the Philippine Islands against of Manila in civil case No. 32936, wherein the Philippine National Bank was
the undersigned and others, I have the honor to inform you that said and still is the plaintiff and the Olutanga Lumber Company was and still is the
writ of prohibition has been denied by the Supreme Court as per defendant, — which sum of P32,109.45 was the amount of the judgment
telegram received by the undersigned, a copy of which is herewith rendered in civil case No. 1176 of the Court of First Instance of Zamboanga, G.
inclosed. R. No. 27045 of this court, in favor of the Olutanga Lumber Company and
against the Bank of the Philippine Islands, — said central office of the Bank of
In view thereof, and in pursuance of the order of execution above the Philippine Islands notified the provincial sheriff of Zamboanga of said
referred to, you are hereby ordered to deliver to the undersigned, consignation; but the latter, notwithstanding the attachment of said amount
immediately upon your receipt hereof, the sum of thirty-one thousand by the sheriff of the City of Manila, tried to collect from the branch office in
five hundred ninety-six pesos and eighty-three centavos (P31,596.83), Zamboanga of the Bank of the Philippine Islands the amount of said judgment.
Philippine currency, which is the amount recovered by the Olutanga Under the circumstances the Zamboanga branch had to resort to this court for
Lumber company in the Supreme Court including interests, costs and a remedy to prevent execution of said judgment. This court denied the remedy
sheriff's fees. prayed for, and upon receipt of notice of said denial the provincial sheriff of
Zamboanga insisted in collecting from the Zamboanga branch of the Bank of
the Philippine Islands the amount of said judgment, which said bank had to
269 of 501
pay. The general rule is that, where attached properties belonging to the
principal debtor are taken out of the hands of a person by legal process, after
he had been notified of the order of attachment, said person cannot be made
to answer for the properties in a proceeding to carry out said attachment (28
Corpus Juris, paragraph 362, page 264). In the present case, the fact that the
funds attached in the possession of the Bank of the Philippine Islands,
belonging to the Olutanga Lumber Company, had been deposited with the
sheriff of the City of Manila by order of said officer, does not change the
juridical situation of said funds as attached in the possession of the Bank of the
Philipine Islands, and, according to the above-quoted rule, the aforesaid Bank
of the Philippine Islands, having been judicially compelled to pay the amount
of the judgment represented by said funds to the Olutanga Lumber Company,
after having employed all the legal means to avoid it, is released from all
responsibility to the Philippine National Bank in whose favor the writ of
attachment was issued.
For the foregoing considerations, we are of the opinion, and so hold, that
when a person has funds in his possession belonging to a debtor, and said
funds are attached by a creditor of the latter, said person is relieved from all
responsibility to said creditor if he is judicially compelled to deliver said funds
to the aforesaid debtor.
Wherefore, the dispositive part of the order appealed from is affirmed in so far
as it grants the motion of the Bank of the Philippine Islands, and the sheriff of
the City of Manila is hereby ordered to return to said bank the amount
deposited by virtue of the writ of attachment, after deducting his legal fees,
with costs against the appellant. So ordered.
270 of 501
Perla Compania de Seguros v. Ramolete, 203 S 487 distance of about thirty (30) feet and then fell on its right side pinning down
Calixto Palmes. He died as a result of cardio-respiratory arrest due to a
FIRST DIVISION crushed chest. 4 The accident also caused physical injuries on the part of
Adeudatus Borbon who was then only two (2) years old.
G.R. No. L-60887 November 13, 1991
On 25 June 1976, private respondents Primitiva Palmes (widow of Calixto
PERLA COMPANIA DE SEGUROS, INC., petitioner, Palmes) and Honorato Borbon, Sr. (father of minor Adeudatus Borbon) filed a
vs. complaint 5 against Cosme Casas and Nelia Enriquez (assisted by her husband
HON. JOSE R. RAMOLETE, PRIMITIVA Y. PALMES, HONORATO Leonardo Enriquez) before the then Court of First Instance of Cebu, Branch 3,
BORBON, SR., OFFICE OF THE PROVINCIAL SHERIFF, PROVINCE OF claiming actual, moral, nominal and exemplary damages as a result of the
CEBU, respondents. accident.
Hector L. Fernandez for petitioner. The claim of private respondent Honorato Borbon, Sr., being distinct and
separate from that of co-plaintiff Primitiva Palmes, and the amount thereof
Domingo Quibranza and Vicente A. Quibranza for private respondents. falling properly within the jurisdiction of the inferior court, respondent Judge
Jose R. Ramolete ordered the Borbon claim excluded from the complaint,
without prejudice to its being filed with the proper inferior court.
FELICIANO, J.:p On 4 April 1977, the Court of First Instance rendered a Decision 6 in favor of
private respondent Primitiva Palmes, ordering common carrier Nelia Enriquez
The present Petition for Certiorari seeks to annul: (a) the Order dated 6 to pay her P10,000.00 as moral damages, P12,000.00 as compensatory damages
August 1979 1 which ordered the Provincial Sheriff to garnish the third-party for the death of Calixto Palmes, P3,000.00 as exemplary damages, P5,000.00 as
liability insurance policy issued by petitioner Perla Compania de Seguros, Inc. actual damages, and P1,000.00 as attorney's fees.
("Perla") in favor of Nelia Enriquez, judgment debtor in Civil Case No. R-15391;
(b) the Order dated 24 October 1979 2 which denied the motion for The judgment of the trial court became final and executory and a writ of
reconsideration of the 6 August 1979 Order; and (c) the Order dated 8 April execution was thereafter issued. The writ of execution was, however, returned
1980 3 which ordered the issuance of an alias writ of garnishment against unsatisfied. Consequently, the judgment debtor Nelia Enriquez was
petitioner. summoned before the trial court for examination on 23 July 1979. She declared
under oath that the Cimarron PUJ registered in her name was covered by a
In the afternoon of 1 June 1976, a Cimarron PUJ owned and registered in the third-party liability insurance policy issued by petitioner Perla.
name of Nelia Enriquez, and driven by Cosme Casas, was travelling from Cebu
City to Danao City. While passing through Liloan, Cebu, the Cimarron PUJ Thus, on 31 July 1979, private respondent Palmes filed a motion for
collided with a private jeep owned by the late Calixto Palmes (husband of garnishment 7 praying that an order of garnishment be issued against the
private respondent Primitiva Palmes) who was then driving the private jeep. insurance policy issued by petitioner in favor of the judgment debtor. On 6
The impact of the collision was such that the private jeep was flung away to a August 1979, respondent Judge issued an Order 8 directing the Provincial
Sheriff or his deputy to garnish the third-party liability insurance policy.
271 of 501
Petitioner then appeared before the trial court and moved for reconsideration Garnishment has been defined as a species of attachment for reaching any
of the 6 August 1979 Order and for quashal of the writ of property or credits pertaining or payable to a judgment debtor. 13 In legal
garnishment, 9 alleging that the writ was void on the ground that it (Perla) contemplation, it is a forced novation by the substitution of creditors: 14 the
was not a party to the case and that jurisdiction over its person had never been judgment debtor, who is the original creditor of the garnishee is, through
acquired by the trial court by service of summons or by any process. The trial service of the writ of garnishment, substituted by the judgment creditor who
court denied petitioner's motion.10 An Order for issuance of an alias writ of thereby becomes creditor of the garnishee. Garnishment has also been
garnishment was subsequently issued on 8 April 1980. 11 described as a warning to a person having in his possession property or credits
of the judgment debtor, not to pay the money or deliver the property to the
More than two (2) years later, the present Petition for Certiorari and latter, but rather to appear and answer the plaintiff's suit. 15
Prohibition was filed with this Court on 25 June 1982 alleging grave abuse of
discretion on the part of respondent Judge Ramolete in ordering garnishment In order that the trial court may validly acquire jurisdiction to bind the person
of the third-party liability insurance contract issued by petitioner Perla in of the garnishee, it is not necessary that summons be served upon him. The
favor of the judgment debtor, Nelia Enriquez. The Petition should have been garnishee need not be impleaded as a party to the case. All that is necessary
dismissed forthwith for having been filed way out of time but, for reasons for the trial court lawfully to bind the person of the garnishee or any person
which do not appear on the record, was nonetheless entertained. who has in his possession credits belonging to the judgment debtor is service
upon him of the writ of garnishment.
In this Petition, petitioner Perla reiterates its contention that its insurance
contract cannot be subjected to garnishment or execution to satisfy the The Rules of Court themselves do not require that the garnishee be served
judgment in Civil Case No. R-15391 because petitioner was not a party to the with summons or impleaded in the case in order to make him liable.
case and the trial court did not acquire jurisdiction over petitioner's person.
Perla further argues that the writ of garnishment had been issued solely on the Rule 39, Section 15 provides:
basis of the testimony of the judgment debtor during the examination on 23
July 1979 to the effect that the Cimarron PUJ was covered by a third-party Sec. 15. Execution of money judgments. — The officer must
liability insurance issued by Perla, without granting it the opportunity to set enforce an execution of a money judgment by levying on all
up any defenses which it may have under the insurance contract; and that the the property, real or personal of every name and nature
proceedings taken against petitioner are contrary to the procedure laid down whatsoever, and which may be disposed of for value, of the
in Economic Insurance Company, Inc. v. Torres, et al., 12 which held that under judgment debtor not exempt from execution . . .
Rule 39, Section 45, the Court "may only authorize" the judgment creditor to
institute an action against a third person who holds property belonging to the Real property, stocks, shares, debts, credits, and other
judgment debtor. personal property, or any interest in either real or personal
property, may be levied on in like manner and with like effect as
We find no grave abuse of discretion or act in excess of or without jurisdiction under a writ of attachment.(Emphasis supplied).
on the part of respondent Judge Ramolete in ordering the garnishment of the
judgment debtor's third-party liability insurance. Rule 57, Section 7(e) in turn reads:
272 of 501
Sec. 7. Attachment of real and personal property; recording garnishment is a species of attachment for reaching credits
thereof. — Properties shall be attached by the officer belonging to the judgment debtor and owing to him from a
executing the order in the following manner: stranger to the litigation. By means of the citation, the
stranger becomes a forced intervenor; and the court, having
xxx xxx xxx acquired jurisdiction over him by means of the citation,
requires him to pay his debt, not to his former creditor, but to
(e) Debts and credits, and other personal property not capable the new creditor, who is creditor in the main litigation.
of manual delivery, by leaving with the person owing such (Emphasis supplied).
debts, or having his possession or under his control such
credits or other personal property, or with his agent, a copy of In Rizal Commercial Banking Corporation v. De Castro, 17 the Court stressed
the order, and notice that the debts owing by him to the party that the asset or credit garnished is thereupon subjected to a specific lien:
against whom attachment is issued, and the credits and other
personal property in his possession, or under his control, The garnishment of property to satisfy a writ of execution
belonging to said party, are attached in pursuance of such operates as an attachment and fastens upon the property a lien
order; by which the property is brought under the jurisdiction of the
court issuing the writ. It is brought into custodia legis, under
xxx xxx xxx the sole control of such
court. 18 (Emphasis supplied)
(Emphasis supplied)
In the present case, there can be no doubt, therefore, that the trial court
Through service of the writ of garnishment, the garnishee becomes a "virtual actually acquired jurisdiction over petitioner Perla when it was served with the
party" to, or a "forced intervenor" in, the case and the trial court thereby writ of garnishment of the third-party liability insurance policy it had issued in
acquires jurisdiction to bind him to compliance with all orders and processes favor of judgment debtor Nelia Enriquez. Perla cannot successfully evade
of the trial court with a view to the complete satisfaction of the judgment of liability thereon by such a contention.
the court. In Bautista v. Barredo, 16 the Court, through Mr. Justice Bautista
Angelo, held: Every interest which the judgment debtor may have in property may be
subjected to execution.19 In the instant case, the judgment debtor Nelia
While it is true that defendant Jose M. Barredo was not a Enriquez clearly had an interest in the proceeds of the third-party liability
party in Civil Case No. 1636 when it was instituted by insurance contract. In a third-party liability insurance contract, the insurer
appellant against the Philippine Ready Mix Concrete assumes the obligation of paying the injured third party to whom the insured
Company, Inc., however, jurisdiction was acquired over him by is liable. 20 The insurer becomes liable as soon as the liability of the insured to
the court and he became a virtual party to the case when, after the injured third person attaches. Prior payment by the insured to the injured
final judgment was rendered in said case against the company, third person is not necessary in order that the obligation of the insurer may
the sheriff served upon him a writ of garnishment in behalf of arise. From the moment that the insured became liable to the third person, the
appellant.Thus, as held by this Court in the case of Tayabas insured acquired an interest in the insurance contract, which interest may be
Land Company vs. Sharruf, 41 Phil. 382, the proceeding by garnished like any other credit. 21
273 of 501
Petitioner also contends that in order that it may be held liable under the might have against the insured-judgment debtor. The only ground asserted by
third-party liability insurance, a separate action should have been commenced petitioner in its "Motion for Reconsideration of the Order dated August 6, 1979
by private respondents to establish petitioner's liability. Petitioner and to Quash Notice of Garnishment" was lack of jurisdiction of the trial court
invokes Economic Insurance Company, Inc. vs. Torres, 22 which stated: for failure to implead it in the case by serving it with summons. Accordingly,
Rule 39, Section 45 of the Rules of Court is not applicable in the instant case,
It is clear from Section 45, Rule 39 that if a persons alleged to and we see no need to require a separate action against Perla: a writ of
have property of the judgment debtor or to be indebted to him garnishment suffices to hold petitioner answerable to the judgment creditor. If
claims an interest in the property adverse to him or denies the Perla had any substantive defenses against the judgment debtor, it is properly
debt, the court may only authorize the judgment creditor to deemed to have waived them by laches.
institute an action against such person for the recovery of such
interest or debt. Said section does not authorize the court to WHEREFORE, the Petition for Certiorari and Prohibition is hereby
make a finding that the third person has in his possession DISMISSED for having been filed out of time and for lack of merit. The
property belonging to the judgment debtor or is indebted to assailed Orders of the trial court are hereby AFFIRMED. Costs against
him and to order said third person to pay the amount to the petitioner. This Decision is immediately executory.
judgment creditor.
SO ORDERED.
It has been held that the only power of the court in proceedings
supplemental to execution is to niake an order authorizing the
creditor to sue in the proper court to recover an indebtedness
due to the judgment debtor. The court has no jurisdiction to
try summarily the question whether the third party served
with notice of execution and levy is indebted to defendant
when such indebtedness is denied. To make an order in
relation to property which the garnishee claimed to own in
his own right, requiring its application in satisfaction of
judgment of another, would be to deprive the garnishee of
property upon summary proceeding and without due process
of law. (Emphasis supplied)
But reliance by petitioner on the case of Economic Insurance Company, Inc. v.

Torres (supra) is misplaced. The Court there held that a separate action needs
to be commenced when the garnishee "claims an interest in the property
adverse to him (judgment debtor) or denies the debt." In the instant case,
petitioner Perla did not deny before the trial court that it had indeed issued a
third-party liability insurance policy in favor of the judgment debtor.
Petitioner moreover refrained from setting up any substantive defense which it
274 of 501
Tec Bi and co. v. Chartered Bank of India, 41 Phil.596 It is hereby agreed that all the facts contained in paragraphs 1, 2, 3,
and 4 of the complaint are true, with the exception of that part of the
EN BANC first five lines of paragraph 2, which alleges that the plaintiff had
notice that some of the bales of tobacco in leaf which were sold to the
G.R. No. L-9802 February 5, 1916 "La Urania Cigar Factory (Ltd.)," were attempted to be sold for the
manifest purpose of defrauding the plaintiff.
TEC BI & CO., plaintiff-appelle,
vs. Referring to the answer of defendant corporation it stipulated that the
THE CHARTERED BANK OF INDIA, AUSTRALIA & CHINA, defendant- allegations of paragraphs 2, 3, 4, 5, and 6 are true.
appellant.
The defendant corporation offers in evidence the original contract of pledge
Gibbs, McDonough and Blanco for appellant. marked Exhibit 1, as part of this stipulation.
Herrero and Masigan for appellee.
With reference to the admission of the contents of paragraph 3 of the
CARSON, J.: answer, it is understood that the word "neutral" is eliminated.
The following statement of the facts upon which this case was submitted in From the allegations of the complain and answer admitted to be true in
the court below is taken literally from the brief of counsel for the appellant: conformity with the foregoing stipulation, it appears:
This is an action to recover from the defendant bank the sum of (1) That on the 7th of November 1912, the plaintiff sold to the "La
P11,572.96, the amount of a judgment recovered by the plaintiff against Urania Cigar Factory (Ltd.)," a quantity of leaf tobacco. (Paragraph 1 of
"La Urania Cigar Factory (Ltd.)," and for which the plaintiff seeks to complaint.)
hold the defendant liable by virtue of an attempted levy of attachment
upon certain leaf tobacco in the possession of the defendant bank (2) That on the 16th January, 1913, the "La Urania Cigar Factory (Ltd.),"
under a pledge executed by the said "La Urania Cigar Factory (Ltd.)." pledged to the defendant corporation as security for the payment of
The Tobacco being pledged for an amount largely in excess of its an indebtedness of P25,000 the bales of tobacco described in Exhibit A
value, the bank refused to deliver it to the sheriff, and the pledge of the answer, the original of which has been offered in evidence in
having become due, sold the tobacco and applied the proceeds on connection with the stipulation of facts as Exhibit 1.
account of the indebtedness, previous to the time when the plaintiff
finally secured judgment against "La Urania Cigar Factory (Ltd.)." and (3) That the bales of tobacco thus pledged and described in Exhibit 1
issued execution thereon. were stored in the bodega of a third person, that is to say, in the
bodega of Messrs. Sprungli & Co., situated at No. 42 (now No. 214) of
The case was submitted upon a stipulation of facts as follows: Calle David, Manila. (Paragraph 3 of answer.)
(4) That on or about the 1st day of February, 1913, the defendant
corporation demanded of the obtained from Messrs. Sprungli & Co.
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the keys to the said bodega, and discovered that of the 436 bales of refused by the bank, alleging that it held possession of the tobacco
tobacco described in Exhibit 1 there remained only those set forth in under a pledge. (Paragraph 2 of complaint.)
paragraph 4 of the answer. (Paragraph 4 of answer.)
(9) That in view of the statement of the bank, the sheriff notified it
(5) That the defendant bank did not know and had been unable to that the bales of tobacco identified in Exhibit A of the complaint were
ascertain whether "La Urania Cigar Factory (Ltd.)," misrepresented the attached subject to the results of the complaint were attached subject
quantity of the tobacco in the said warehouse at the time of the to the results of the complaint filed by Tec Bi & Co. against "La Urania
execution of said document of pledge, or whether the difference Cigar Factory (Ltd.)," (Paragraph 2 of complaint.)
between the amount described in the document of pledge and that
found on hand on the 1st of February, 1913, and in the meantime been (10) That on the 8th day of May, 1913, the bank answered the
disposed of by "La Urania Cigar Factory (Ltd.)," in collusion with notification of the sheriff, confirming the fact that it had in its
Messrs. Sprungli & Co., but that if such disposition was made it was possession the bales of tobacco specified in the notification, as
without the knowledge or consent of the defendant bank. (Paragraph security for the payment of a loan and that it intended to sell the
5 of answer.) same; that the sheriff communicated the answer of the bank to the
attorneys to Tec Bi & Co., who replied insisting upon the levy of the
(6) That from said 1st day of February, 1913, the defendant corporation attachment. (Paragraph 3 of complaint.)
had been in the absolute and exclusive possession of the tobacco
described in the fourth paragraph of the answer and in Exhibit 1 of the (11) That on the 19th day of May, 1913, the Court of First Instance
stipulation of facts, until the 15th of May, 1913, when same was sold rendered judgment in said case against "La Urania Cigar Factory
under and by virtue of the document of pledge Exhibit 1 by the (Ltd.)," in favor of Tec Bi & Co., for the sum of P11,572.96, with legal
defendant bank for the sum of P12,722.36 which was applied on interest from April 22, 1913, and costs. (Paragraph 4 of complaint.)
account of said loan, the entire amount of which was then past due
and unpaid, leaving a large balance thereof still due and unpaid. (12) That on the 22d day of May, 1913, the sheriff attempted to execute
(Paragraph 6 of answer.) the judgment upon the bales of tobacco attached and in the
possession of the defendant corporation, but was unable to do so due
(7) That on the 22nd day of April, 1913, the plaintiff Tec Bi & Co., filed to the statement of the agent of said corporation, that the tobacco had
a complaint in the Court of First Instance of Manila against "La Urania been sold and that the proceeds of the sale had been applied upon the
Cigar Factory (Ltd.)," claiming the payment of the sum of P11,572.96 as payment of the amount due to from "La Urania Cigar Factory (Ltd.),"
the balance of the unpaid purchase price of the tobacco referred to in (Paragraph 4 of complaint.)
paragraph 2. (Paragraph 1 of complaint.)
The case having been submitted on the foregoing stipulation of facts,
(8) That on the 5th day of May, 1913, Tec Bi & Co. asked for and the Court of First Instance found that the plaintiff's claim was a
obtained from the Court of First Instance an attachment against the preferred credit under the provisions of paragraph 1 of article 1922 of
said bales of tobacco, but inasmuch as the bodega was locked and the the Civil Code; that the pledge executed by "La Urania Cigar Factory
sheriff was informed that the keys were in the possession of the bank, (Ltd.)," in favor of the defendant corporation (Exhibit 1) was not
he demanded the delivery thereof from the latter, which demand was binding upon the plaintiff for the reason that it was not set forth in a
276 of 501
public instrument as required by article 1865 of the Civil Code in order Plaintiff's contention is that under the provisions of clause 1 of article 1922, his
to be effective against, third person, and rendered judgment in favor right as a preferred creditor for the amount of the purchase price of the
of the plaintiff and against the defendant for the amount of the tobacco was not prejudice and could not be prejudiced by the pledge of the
former's judgment against "La Urania Cigar Factory (Ltd.)," with tobacco to the defendant, since the date of the contract of pledge is not
interest and costs. (Pages 17 to 23, inclusive, bill of exceptions.) evidenced by a public document; and, further, that he had a perfect right to
attach the tobacco in the course of judicial proceedings for the recovery of his
From this judgment the defendant corporation appeals, assigning the claim against the pledgor, for the purchase price of the tobacco pledged to the
following errors: defendant bank.
ASSIGNMENT OF ERRORS The defendant bank, on the other hand, contends that under the provisions of
clause 2 of article 1922 of the Civil Code read together with clause 1 of section
I. The court erred in holding that the plaintiff's claim as vendor of the 1926, the right of preference in favor of the bank, to which the tobacco had
tobacco was entitled to preference over that of the defendant bank been pledged by the common debtor, excluded the preference in favor of the
secured by a pledge on the same tobacco. plaintiff; and that plaintiff could not rely on the provisions of article 1865 of
the Code, because he was not a "third person" in the sense in which these
II. The court erred in applying article 1865 of the Civil Code to the words are used in that article.
defendant's pledge, and in holding that such pledge was ineffective as
to the plaintiff. Clauses 1 and 2 of article 1922 of the Civil Code are as follows:
III. The court erred in holding that the plaintiff was a third person as 1922. With regard to the specified personal property of the debtor, the
contemplated by that term in article 1865 of the Civil Code. following are preferred:
IV. Assuming that article 1865 is applicable to the transaction in 1. Credits for the construction, repair, preservation, or for the amount
question, the court erred in holding that the plaintiff did not waive of the sale of personal property which may be in the possession of the
any defect in the private instrument of pledge by expressly admitting debtor to the extent of the value of the same.
its genuineness and the correctness of its date by stipulation, and by
failure to object to its introduction in evidence. 2. Those secured by a pledge which may be in the possession of the
creditor, with regard to the thing pledged and to the extent of its
V. The court erred in rendering judgment in favor of the plaintiff and value.
against the defendant, and in denying the latter's motion for a new
trial. Clause 1 of article 1926 of the Civil Code is as follows:
It will readily be seen that our disposition of this appeal must turn upon the 1926. Credits which enjoy preference with regard to certain personal
force and effect which should be given the instrument referred to in the property, exclude all the other to the extent of the value of the
statement of facts as the "original contract of pledge marked Exhibit 1." personal property to which the preference refers.
277 of 501
When two or more, creditors claim preference with regard to certain attachment against the tobacco; and the defendant bank could not lawfully
personal property, the following rules shall be observed as to priority assert any right as a pledgee or preferred creditor which adversely affected the
of payment: rights of the plaintiff in the premises.
1. Credits secured by a pledge exclude all other to the extent of the To these conclusions a number of objections have been raised, none of which,
value of the thing given in pledge. however, will bear close inspection.
Article 1865 of the Civil Code is as follows: It is said that even though the date of the defendant bank's pledge is not
evidenced in a public document, still the delivery of the tobacco into the
A pledge shall not be effective against a third person, when evidence possession of the bank defeated the right of the plaintiff to a preference. This
of its date does not appear in a public instrument. contention is based on the provision of article 1922 which limits the preference
for the purchase price of goods sold to the time during which they continue in
Under these provisions of the Code there can be no doubt that had the date of the possession of the purchaser.
the contract of pledge been evidenced by a public document, the preferential
right of the pledgee would have been superior to and excluded all and any To this contention there are two sufficient answers.
preferential rights of the vendor. We so held in Macke and Macke vs. Rubert
(11 Phil., 480). First. While the contract of pledge and the delivery of the tobacco
undoubtedly created a valid pledge as between the pledgor and the pledgee, so
The pledge contract (Exhibit 1) is before us, however, and it is admitted that that the pledgor himself could not disturb the possession of the pledgee; still,
the date is not evidenced by a public instrument. It cannot therefore be with relation to third person, the possession of the bank must be deemed to be
permitted to prejudice the rights of the vendor of the tobacco if he is a "third that of the purchaser of the tobacco, since under the provisions of article 1865
person: in the sense in which that term is used in the above-cited article 1865 of the Code, the execution of the pledge could not affect the right of third
of the code. person. As to third persons the pledge and the pledged property must be
treated as if the pledge never had been executed.
It cannot be doubted that with relation to the pledgor and the pledgee the
original vendor of the goods was a third person. The words are not susceptible Second. Even if it were true that the plaintiff had lost his statutory right of
of any possible explanation which would exclude him. He had no privity with preference as a result of the execution of the pledge and the delivery of
either of the parties to the pledge contract. He had no knowledge of the possession to the bank, still he had a perfect right to levy an attachment on the
execution of that contract. He did not participate in it in any way whatever. tobacco pending his action to recover the amount of the pledgor's
His rights so far as they affected the pledged property, were adverse to both indebtedness, unless the execution of the pledge had the effect of depriving
pledgor and pledgee. In a word he was as to them a third person. him of that right. But it is very clear that under the express provisions of
article 1865 of the code no such effect could be given the pledge.
It necessarily follows that since the execution of the pledge in favor of the
defendant bank without the date of execution being evidenced by a public Much is made in the brief of the appellant of the fact that one of the
instrument could have no effect as again the plaintiff, he was strictly within his allegations of the answer set forth that at the date of the issuance of the
rights in asserting his claims as a preferred creditor and in levying an attachment the defendant bank was in the absolute and exclusive possession
278 of 501
of the tobacco in question; and that the truth of this allegation was admitted attempt of counsel to fix the attention of the court upon this single averment
in the agreed statement of facts. of the answer, apart from the context and to the exclusion of the specific
allegations of fact, the truth of which, as stipulated by the parties, cannot be
1 2
The defendant's answer contains a series of allegations setting forth the questioned. (Cf. 144 U.S., 75 ; 97 Ala., 491 ; 31 Cyc., 333-337; 6 Encyc. Pl. & Pr.,
precise nature and character of the possession of the tobacco by the bank, and 334-338.)
of all the circumstances under the by virtue of which the bank came into
possession; and there is attached to the answer, as an exhibit a copy of the One other contention of counsel for the appellant remains to be considered. It
pledge contract itself. We have shown that accepting these allegations as true, is that on which his fourth assignment of error is based. Counsel insist that
the possession of the bank was not absolute and exclusive in the sense that it "assuming that article 1865 is applicable to the transaction in question, the
could in any wise affect the right of another credit of the common debtor, a court erred in holding that the plaintiff did not waive any defect in the private
"third person" with relation to the pledge contract, to levy an attachment upon instrument of pledge by expressly admitting its genuineness and the
the tobacco. We must conclude therefore that the stipulation as to the truth of correctness of its date by stipulation, and by failure to object to its
the allegation of the answer that the possession of the tobacco by the bank was introduction in evidence."
"absolute and exclusive" was intended only to mean that it was "absolute and
exclusive" so far as the pledgor himself was concerned; or else that the This contention rests on a misconception of the real purpose and object of the
stipulation as to the truth of the allegations of the answer did not include this provisions of article 1865 of the code. This article is not a mere rule of adjective
averment as to the "absolute and exclusive" possession of the tobacco by the law, prescribing the mode whereby proof may be made of the date of a
bank it being merely a conclusion of law, based upon the other allegations of contract of pledge. It is a rule of substantive law, prescribing a condition
facts alleged by the pleader. without which the execution of a pledge contract cannot affect third person
adversely.
A general admission of the truth of the allegations set forth in a pleading is not
an admission of the truth of an impossible conclusion of fact drawn from other The plaintiff in this action does not question the truth of the bank's allegations
facts set out in the pleading, nor of a wrong conclusion of law based on the that the pledge contract was executed on the day on which it purports on its
allegations of fact well pleaded, nor of the truth of a general averment of facts face to have been signed and delivered. There is no suggestion of bad faith or
contradicted by more specific averments. Thus, if a pleader alleges that two sharp practice on the part of either the pledgor or pledgee in the execution of
pesos were borrowed on one day and two more borrowed on another making the pledge. Under the circumstances plaintiff had no reason to object to the
five Pin all, a stipulation of the truth of the allegations in the pleading does not introduction of evidence which tended direct to establish his claim that
amount to an admission by the opposing party that twice two make five. Again although the pledge had been executed as alleged by the defendant bank, it
if a pleader alleges that one hundred pesos were loaned without interest for could not affect his rights on the premises. On the contrary he must have
one year and had not been paid, and that the borrower is indebted to the welcomed the introduction of this evidence, which conclusively established
lender in the sum of one hundred and ten pesos, that being the amount of the the very point upon which his whole case necessarily turns.
capital together with interest for the year for which the money was loaned, a
stipulation as to the truth of the allegation set forth in the pleadings is not an Plaintiff stands strictly on the rule of substantive law laid down in this article
admission of the truth of the conclusion of law as to the interest due by the of the code which declared that this rights, as a "third person," cannot be
borrower. These elementary principles have been quite fully developed in a adversely affected by a pledge the date of which is not evidenced in a public
great variety of cases arising on demurrers, and sufficiently dispose of the document. His right so to do cannot be successfully challenged; and indeed we
279 of 501
are inclined to think that the equities of the case, as far as they appear from contract be executed in a public writing, for, otherwise, the
the record, are with the vendor of a large quantity of tobacco, in his effort to determination of its date will be rendered difficult and its proof more
recover the unpaid purchase price, rather than the creditor, who succeeded in so, even in cases in which it is executed before witnesses, due to the
having the debtor who had failed to pay the purchase price of this tobacco, difficulty to be encountered in seeking those before whom it was
bought on credit, turn it over to him by way of a pledge to secure the payment executed.
of a preexisting debt.
Our code has not gone so far, for it does not demand in express terms
What has been said would seem to dispose of all the contentions of the that in all cases the pledge be constituted or formalized in a public
appellant; but at the risk of extending this opinion to an undue length, we writing, nor even in private document, but only that the certainty of
here insert the comment of a learned Spanish commentator (Manresa) on the the date be expressed in the first of the said class of instruments in
provisions of article 1865 of the code, because he seems to have anticipated order that it may be valid against a third party; and, in default of any
every contention of appellant in this case, and the citation demonstrates quite express provision of law, in the cases where no agreement requiring
conclusively that the plaintiff is entitled to rely on his rights in the premises as the execution in a public writing exists, it should be subjected to the
a "third person," who cannot be adversely affected by the execution of a pledge general rule, especially to that established in the last paragraph of
in the manner and form in which the pledge to the defendant bank was made. article 1280, according to which all contracts not included in the
foregoing cases of the said article should be made in writing even
Article 1865. A pledge will not be valid against a third party if the though it be private, whenever the amount of the prestation of one or
certainty of the date is not expressed in a public instrument. of the two contracting parties exceeds 1,500 pesetas.
This article, the precept of which did not exist in our old law, answers The pledge, therefore, can be constituted in whatever form, as all
the necessity for not disturbing the relationship or the status of the other contracts, and the one formalized in that way will be valid and
ownership of things with hidden or simulated contract of pledge, in will produce its natural and legal consequences in the juridical order
the same way and for the identical reasons that were taken into with respect to the contracting parties and to their assigns; but it will
account by the mortgage law in order to suppress the implied and not have effect with respect to a third party if the certainty of the date
legal mortgages which produced so much instability in real property. is not evidenced in a public writing, by which means the legislator has
tried to render impossible the existence of the fraudulent
Considering the effects of a contract of pledge, it is easily understood confabulations which we have hereinbefore indicated as otherwise
that, without this warranty demanded by law, the case may happen possible.
wherein a debtor in bad faith from the moment that he sees his
movable property in danger of execution may attempt to withdraw the That is to say, what the law wishes in the precept that we are
same from the action of justice and the reach of his creditors by examining is to impose the existence, not only of an efficacious and
simulating, through criminal confabulations, anterior and fraudulent authentic means of proof of the constitution of a pledge, but also of a
alterations in his possession by means of feigned contract of this security of its certainty and the reality of the pledge in order to avoid
nature; and, with the object of avoiding or preventing such abuses, frauds and damages to the creditors, arising from the bad faith of the
almost all the foreign writers advise that for the effectiveness of the debtor; something like the inscription of the mortgage in the Registry
pledge, it be demanded as a precise condition that in every case the
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of Property, as has been said by an author, although with less by the thing pledged which is in the possession of the creditor, up to
warranties than this one. the amount of its value, which preference may be opposed against
third parties; and, in order that the latter may not be prejudiced, it is
Some authors criticise the limitations in the wording of the article necessary that the date of the contract be expressed in a true,
insofar as it does not demand an identical expression respecting the indubitable and authentic manner and that it be certain to the end
other essential circumstances of the contract, they upholding the that even the bare possibility of fraud and of collusion between the
necessity or at lest the convenience of expressing in the public creditor keeping the pledge and the debtor owner thereof may be
instrument principally the debt for the security of which the pledge is excluded.
constituted, the date of debt, the designation of the thing pledged, the
period during which the accessory obligation is contracted form, with What has been said necessitates the entry of judgment affirming the judgment
all the other stipulations which constitute the essence of the contract. entered in the court below, with the costs of this instance against the
But his should not be imposed by the law but by the private interest appellant.
which is the only one affected, and for the same reason, a like
determination should be demanded in all contracts. Let judgment be entered accordingly. So ordered.
The only thing in this case that could interest or concern the legislator
would be to prevent or to make impossible any simulation or fraud,
supposing the existence of fraudulent pledged to be to the prejudice of
third parties and to that end, it is sufficient that the date of its
constitution be evidenced with all certainty in a public instrument.
Any thing else would amount to an attempt against the principle of
liberty with which contract of the modern legislation are inspired,
placing obstacles to it by demanding the execution in every case of a
public writing, a thing which though it constitutes a worthy and just
aspiration, yet, ca not take precedence over the will and the freedom
of the contracting parties.
Hence, any one who may wish to constitute a pledge in a private

document or verbally, if the prestations of the parties do not exceed
1,500 pesetas, can validly make it; but the contract celebrated will not
prejudice a third party while the requisite of the execution of a public
instrument referred to in the article is not complied with.
There exists another reason which justifies the precept we are

discussing. In fact, from the contract of pledge arises the preference
established in No. 2 of article 1922, respecting the credits guaranteed
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Consolidated Bank and Trust Corporation v. IAC, 150 S 591 Subsequently, NICOS failed to pay back the loan prompting SOLIDBANK to
file a collection case before the Court of First Instance of Manila, Branch XXIX.
SECOND DIVISION The case was docketed as Civil Case No. 82-11611.
G.R. No. 73976 May 29, 1987 On August 30, 1982, the court in the aforecited case issued an order of
attachment " ... upon the rights, interests and participation of which
THE CONSOLIDATED BANK and TRUST CORPORATION defendants NICOS Industrial Corporation ... may have in Transfer Certificate
(SOLIDBANK), petitioner, of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T-10580
vs. (T-32.504 M) (Annexes "B", "B-1", "B-2" and "B-3" of petition).
HON. INTERMEDIATE APPELLATE COURT, GOLDEN STAR
INDUSTRIAL CORPORATION, NICOS INDUSTRIAL CORPORATION and On September 1, 1982, pursuant to the writ of attachment issued by the Court
THE PROVINCIAL SHERIFF OF BULACAN, respondents. and upon petitioner's posting of sufficient bond, the Sheriff of Manila levied
and attached the two real properties described by the foregoing order of
C.M. Delos Reyes and Associates for petitioner. attachment, including the buildings and other improvements thereon.
Afterwards, the Sheriff sent separate Notices of Levy Upon Realty to the
Magtanggol C. Gunigundo and Fajardo Law office for respondents. Registrar of Deeds of Malolos, Bulacan, dated September 1, 1982 requesting
him "to make the proper annotation in the books of your office" by virtue of
the order of attachment dated August 30,1982 issued by the Manila Court in
Civil Case No. 82-11611.
GUTIERREZ, JR., J.:
Accordingly, on September 7, 1982, the Registrar of Deeds of Malolos, Bulacan,
The basic issue for resolution in this petition for review of the December 13, pursuant to the request of the Manila Sheriff, inscribed and annotated the
1985 decision of the Intermediate Appellate Court, now the Court of Appeals, Notices of Levy Upon Real Property at the back of Transfer Certificates of Title
as well as the resolution of March 13, 1986 denying the motion for Nos. T-210581 (T-32.505 M) and T-210580 (T-32.504 M).
reconsideration, is whether or not an attaching creditor acquires the right of
redemption of a debtor over the attached properties of the latter which are Pursuant to the foregoing ng inscription and annotations, guards were
subsequently extrajudicially foreclosed by third parties. deputized by the Manila Sheriff to secure the premises of the two attached
realties.
Briefly, the facts are as follows: Originally, petitioner Consolidated Bank and
Trust Corporation (SOLIDBANK) loaned private respondent NICOS Industrial A year later, however, on July 11, 1983, the attached properties which had been
Corporation (NICOS) sums of money in the total amount of FOUR MILLION mortgaged by NICOS to the United Coconut Planters Bank (UCPB) on March
SEVENTY SIX THOUSAND FIVE HUNDRED EIGHTEEN AND 64/100 PESOS 11, 1982, were extrajudicially foreclosed by the latter. As the highest bidder
(P4,076,518.64). therein, a certificate of sale was issued to it by the Sheriff of Bulacan over the
subject realties including the buildings and improvements thereon.
282 of 501
Surprisingly, two transactions occurred soon thereafter, both on August 29, WHEREFORE, the Omnibus Motion of movant Consolidated
1983. First, UCPB sold all of its rights, interests, and participation over the Bank and Trust Corporation to annul the writ of possession
properties in question to a certain Manuel Go; Second, Manuel Go sold all the issued by this Court in favor of Golden Star Industrial
rights he acquired from UCPB over the same lots on that very same day to Corporation and to cite for contempt those who fraudulently
private respondent Golden Star Industrial Corporation (GOLDEN STAR). secured and unlawfully implemented the writ of possession is
hereby DENIED for lack of merit. (p. 8 of the Brief for the
Barely a month later, on October 5, 1983, respondent NICOS, though fully Complainant-Oppositor-Appellant in AC-G.R. CV No. 04398
aware that it still had the right to redeem the auctioned properties within the [p.118, Rollo])
one year period of redemption from July 11, 1983, suddenly executed a
document entitled "Waiver of Right of Redemption" in favor of respondent The petitioner SOLIDBANK forthwith interposed an appeal before the
GOLDEN STAR. Intermediate Appellate Court arguing inter alia that the properties were
under custodia legis, hence the extrajudicial foreclosure and the writ of
On September 15, 1983, GOLDEN STAR filed a petition for the issuance of a possession were null and void, and that the right of NICOS to redeem the
writ of possession over the subject realties before the Regional Trial Court, auctioned properties had been acquired by SOLIDBANK.
Branch VI of Malolos, Bulacan.
On December 13, 1985, the Intermediate Appellate Court rendered its assailed
On November 4, 1983, the Malolos Court granted GOLDEN STAR's petition for decision "finding no merit in this appeal and affirming in toto the appealed
a writ of possession and issued the writ. In accordance with these orders, order of June 9, 1984, ruling that "the properties in issue ... were not
armed men of GOLDEN STAR forcibly took over the possession of the in custodia legis at the time of the extrajudicial foreclosure."
properties in dispute from the guards deputized by the Sheriff of Manila to
secure the premises. The petitioner moved for reconsideration, arguing that its writ of attachment
over the properties in question was duly registered in the Register of Deeds of
Thus on November 21, 1983, petitioner SOLIDBANK, on the strength of its Malolos, Bulacan, and that the right to redeem said properties should be
prior attachment over the lands in question filed with the Malolos court an retained or given back to SOLIDBANK as attaching creditor.
omnibus motion to annul the writ of possession issued to GOLDEN STAR and
to punish for contempt of court the persons who implemented the writ of On March 13, 1986, the Intermediate Appellate Court promulgated its
possession with the use of force and intimidation. resolution denying the motion for reconsideration for lack of merit.
The respondents NICOS and GOLDEN STAR, filed oppositions to the Hence this petition for review, on the grounds that respondent appellate court
foregoing omnibus motion, the former on the basis of the waiver of its right of decided the case contrary to law and applicable decisions of the Supreme
redemption to GOLDEN STAR, and the latter on its alleged ignorance that the Court, and has departed from the accepted and usual course of judicial
lands in question were under custodia legis, having been attached by the proceedings as to call for an exercise of the power of supervision of this Court.
Sheriff of Manila.
The fundamental question herein, which is determinative of the other issues,
On June 9, 1984, the Malolos Court issued an order denying the omnibus is whether or not the subject properties were under custodia legis by virtue of
motion, the decretal portion of which is as follows:
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the prior annotation of a writ of attachment in petitioner's favor at the time (SGD.) VIOLETA R. LINCALLO GARCIA
the properties were extrajudicially foreclosed.
TRANSFER CERTIFICATE OF TITLE
We rule in the affirmative on the following grounds:
No. T-210581 (T-32.505 M)
First of all, the records show (specifically Annexes "B," "B-1" to "B-3" of the
petition) that on September 1, 1982, the Sheriff of Branch XXIX of the Court of Entry No. 79524 (M); Kind: NOTICE OF LEVY UPON
First Instance of Manila, sent separate Notices of Levy Upon Realty to the REALTY, Executed in favor of THE CONSOLIDATED BANK
Registrar of Deeds of Malolos Bulacan, requesting him "to make the proper AND TRUST CORPORATION (SOLIDBANK) — Plaintiff;
annotation in the books of your office," "by virtue of an order of attachment Conditions: Notice is hereby given that by virtue of an Order
issued in Civil Case No. 82-11611 dated August 30, 1982, ... upon the rights, of Attachment issued by the C.F.I. of Manila, Branch XXIX, in
interests, and participation of which defendant NICOS Industrial Corporation Civil Case No. 82-11611, all the rights, interest and participation
in this case may have in ... ."Transfer Certificate of Title No. T-210581 (T-32.505 of NICOS INDUSTRIAL CORPORATION — Defendants over
M) and Transfer Certificate of Title No. T-210580 (T-32,505 M). the herein described lot is hereby levied upon attached.; Date
of Instrument; September 1, 1982; Date of Inscription:
Secondly, and more significant, the records clearly show (page 4, Annex "D" of September 7, 1982 at 2:35.
petition) that the Registrar of Deeds of Malolos, Bulacan, on September 7,
1982, inscribed and annotated the foregoing Notices of Levy at the back of Meycauayan, Bulacan.
Transfer Certificate of Title Nos. 210580 and 210581, to wit:
TRANSFER CERTIFICATE OF TITLE

Based on the foregoing evidence on record, the conclusion is clear that the
No. T-210580 (T-32.504 M) disputed real properties were under custodia legis by virtue of a valid
attachment at the time the same were extrajudicially foreclosed by a third
Entry No. 79524 (M): Kind; NOTICE OF LEVY UPON party mortgagee.
REALTY, Executed in favor of the CONSOLIDATED BANK
AND TRUST CORPORATION (SOLIDBANK);-Plaintiff; The rule is well settled that when a writ of attachment has been levied on real
Conditions: Notice is hereby given that by virtue of an Order property or any interest therein belonging to the judgment debtor, the levy
of Attachment issued by the C.F.I. of Manila, Branch XXIX, in thus effected creates a lien which nothing can destroy but its dissolution
Civil Case No. 82-11611, all the rights, interest and participation (Chua Pua Hermanos v. Register of Deeds of Batangas, 50 Phil. 670;
of NICOS INDUSTRIAL CORPORATION-Defendant over the Government, et. al. v. Mercado, 67 Phil. 409).
herein described lot is hereby levied upon attached.; Date of
Instrument: September 1, 1982; Date of Inscription: September The foregoing conclusion has two necessary consequences.
7, 1982 at 2:35.
Firstly, it follows that the writ of possession issued by the Malolos court in
Meycauayan, Bulacan. favor of respondent GOLDEN STAR is nun and void ab initio because it
284 of 501
interfered with the jurisdiction of a co-ordinate and co-equal court (See De submitted to it by GOLDEN STAR. It was thus led into the error of ruling that
Leon v. Salvador, 36 SCRA 567): the petitioner's attachment was not properly annotated.
While property or money is in custodia legis, the officer Secondly, it likewise follows that the petitioner has acquired by operation of
holding it is the mere hand of the court, his possession is the law the right of redemption over the foreclosed properties pursuant to Sec. 6
possession of the court, and to interfere with it is to invade of Act No. 3135, to wit:
the jurisdiction of the court itself (Gende v. Fleming, 371 N.E.
2d. 191; Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. 27, 7 In all such cases in which an extrajudicial sale is made ... any
CJS 320). person having a lien on the property subsequent to the
mortgage ... may redeem the same at any time within the
Of equal importance is the fact that the transactions on which respondent term of one year from and after the date of sale.
GOLDEN STAR's right to a writ of possession are based are highly irregular
and questionable, to say the least, considering the following circumstances: It has been held that "an attaching creditor may succeed to the incidental
rights to which the debtor was entitled by reason of his ownership of the
On July 11, 1983, the Sheriff of Bulacan executed a certificate of sale over the property, as for example, a right to redeem from a prior mortgage" (Lyon v.
two lots in question in favor of UCPB. Stanford, 5 Conn. 541, 7 SJS 505).
On August 29, 1983, or about a month and a half later, UCPB sold its rights, The fact that respondent NICOS executed a waiver of right of redemption in
interests and participation over the lands to Manuel Go. favor of respondent GOLDEN STAR on October 5, 1983 is of no moment as by
that time it had no more right which it may waive in favor of another,
On that very same day, August 29, 1983, Manuel Go sold the same properties
to respondent GOLDEN STAR. Finally, GOLDEN STAR argues that even if the attachment in issue was duly
registered and the petitioner has a right of redemption, the certificate of sale
On October 5, 1983, respondent NICOS which had a one year right of of the lands in question was registered on September 6, 1983. It claims that the
redemption over the lands in question executed a "Waiver of Right of period to redeem therefore lapsed on September 6, 1984 without the petitioner
Redemption in favor of respondent GOLDEN STAR." The attempts to bring bank ever exercising any right of redemption.
the disputed properties out of the petitioner's reach, inspite of the attachment,
are plain and apparent. This argument is untenable. Well settled is the rule that the pendency of an
action tolls the term of the right of redemption. Specifically, tills Court in Ong
Based on the foregoing facts, we find that respondents NICOS and GOLDEN Chua v. Carr, (53 Phil. 975, 983) categorically ruled that:
STAR conspired to defeat petitioner's lien on the attached properties and to
deny the latter its right of redemption. xxx xxx xxx
It appears that in issuing the writ of possession, the Malolos court relied on ... Neither was it error on the part of the court to hold that the
copies of documents (which did not show the memorandum of encumbrance) pendency of the action tolled the term for the right of
redemption; that is an old and well established rule.
285 of 501
This was reiterated in Fernandez v. Suplido (96 Phil. 541, 543), as follows: SO ORDERED.
xxx xxx xxx
... As pointed out in Ong Chua v. Carr, 53 Phil. 975, the

pendency of an action brought in good faith and relating to
the validity of a sale with pacto de retro tolls the term for the
right of redemption. ...
Not only that. It has been held that "under a statute limiting the time for
redemption ... the right of redemption continues after perfection of an appeal
... until the decision of the appeal (Philadelphia Mortgage Co. v. Gustus, 75
N.W. 1107).
In the case at bar, the petitioner commenced the instant action by way of an
omnibus motion before the Bulacan Court on November 21, 1983 or barely two
months after the certificate of sale was registered on September 6, 1983, well
within the one year period of redemption.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is granted and

judgment is hereby rendered:
1) declaring as valid and binding the levy and attachment by the Manila Sheriff
on the two realties in question including the buildings and improvements
thereon;
2) declaring that petitioner has acquired the right of redemption over the
aforesaid properties which it may exercise within one year from notice of entry
of judgment in this case; and
3) declaring as null and void (a) the order of the Bulacan Court dated
November 4, 1983 granting the writ of possession to respondent GOLDEN
STAR, (b) its order of June 9, 1984 denying the petitioner's omnibus motion,
and (c) the Waiver of Right of Redemption executed by respondent NICOS in
favor of respondent GOLDEN STAR.
286 of 501
BF Homes v. CA, 190 S 262 note and secured by two post-dated checks issued by BF in favor of the
lenders.
FIRST DIVISION
On September 25, 1984, BF filed a Petition for Rehabilitation and for a
G.R. No. 76879 October 3, 1990 Declaration in a State of Suspension of Payments under Sec. 5(d) of P.D. No.
902-A with a prayer that upon the filing of the petition and in the meantime,
BF HOMES, INCORPORATED, petitioner, all claims against it for any and all accounts or indebtedness be suspended, but
vs. allowing petitioner to continue with its normal operations. It also asked for
COURT OF APPEALS, ROSALINDA R. ROA and VICENTE the approval of the proposed rehabilitation plan.
MENDOZA, respondents.
On October 17, 1984, Roa and Mendoza filed a complaint against BF with the
G.R.No. 77143 October 3, 1990 Regional Trial Court of Quezon City, docketed as Civil Case No. Q-43104, for
the recovery of the loan of P250,000.00, with interest and attorney's fees. The
ROSALINDA ROA and VICENTE MENDOZA, petitioners, complaint also prayed for the issuance of a writ of preliminary attachment
vs. against the properties of BF.
COURT OF APPEALS and BF HOMES, INCORPORATED, respondents.
October 22, 1984, the trial court issued the writ against properties of BF
Espinosa, Cabrera & Associates for Rosalinda Roa, et al. sufficient to satisfy the principal claim in the amount of P257,333.33.
Balgos & Perez for BF Homes, Inc. In a motion dated October 25, 1984, BF moved for the dismissal of the case for
lack of jurisdiction, or at least for its suspension in view of the pendency of
SEC Case No. 002693. it also asked for the lifting of the writ of preliminary
attachment.
CRUZ, J.:
The trial court denied the motion to dismiss on November 20, 1984, and the
Involved here are two petitions for review assailing the decision of the Court of motion for reconsideration on January 11, 1985. Citing the case of DMRC
1
Appeals in CA-G.R. No. Sp 05411, entitledBF Homes, Inc. v. Judge Tutaan, et Enterprises v. Este del Sol Mountain Reserves, Inc., the trial court held it had
al., dated June 6, 1986, as amended on October 22, 1986. jurisdiction because what was involved was not an intra-corporate or
partnership dispute but merely a determination of the rights of the parties
BF Homes, Inc. is a domestic corporation previously engaged in the business arising out of the contract of loan.
of developing and selling residential lots and houses and other related realty
matters. On February 13, 1985, BF filed with the Intermediate Appellate Court (now
Court of Appeals) an original action for certiorariwith prayer for a writ of
On July 19, 1984, BF contracted a loan from Rosalinda R. Roa and Vicente preliminary injunction against the regional trial court, Roa and Mendoza. On
Mendoza in the amount of P250,000.00 with interest at the rate of 33% per February 14, 1985, the Court of Appeals issued an order temporarily restraining
annum payable after 32 days. The obligation was embodied in a promissory proceedings in Civil Case No. Q-43104.
287 of 501
On March 18, 1985, the SEC, finding an urgent need to rehabilitate BF issued In G.R. No. 76879, entitled "BF Homes, Inc. v. Court of Appeals, Rosalinda R.
an order creating a management committee and suspending all actions for Roa and Vicente Mendoza," the petitioner contends that the respondent court
claims against BF pending before any court, tribunal or board. committed an error and violated Sec. 5(d) of P.D. No. 902-A when it
authorized continuation of proceedings in Civil Case No. Q-43104 after the
On June 6, 1986, the Court of Appeals rendered a decision dismissing the management committee created by the SEC shall have been impleaded.
complaint in Civil Case No. Q-43104 and declaring the writ of preliminary
attachment null and void. But upon a motion for reconsideration filed by Roa In G.R. No. 77143, entitled "Rosalinda R. Roa and Vicente Mendoza v. Court of
and Mendoza, the decision was set aside and a new one was entered upholding Appeals and BF Homes, Inc.," the petitioners seek a review on the grounds
the jurisdiction of the regional trial court over the case. At the same time, that the management committee was not a proper party and should not have
however, it suspended the proceedings therein until after the management been ordered substituted as party defendant in the regional trial court and
committee shall have been impleaded as party defendant. The dissolution of that the writ of preliminary attachment should not have been dissolved.
the writ of preliminary attachment was maintained.
These two petitions were ordered consolidated in the resolution of this Court
Both parties filed separate motions for reconsideration, BF took exception to dated August 17, 1987.
the amended decision insofar as it directed the continuation of proceedings in
Civil Case No. Q-43104 until after the management committee shall have been On February 2, 1988, the SEC issued an order approving the proposed revised
impleaded. Roa and Mendoza faulted the Court of Appeals for ordering BF to rehabilitation plan and dissolving the management committee earlier created.
be substituted by the management committee and for dissolving the writ of Atty. Florencio Orendain was appointed rehabilitation receiver.
preliminary attachment without the filing of the necessary counter-bond by
the defendant. Now to the merits.
In a resolution dated December 22, 1986, the Court of Appeals denied both The parties in both cases are agreed that the proceedings in the civil case for
motions for reconsideration, noting that the proceedings in the civil case the recovery of a sum of money should be suspended. BF originally maintained
could not remain suspended forever. The purpose of the suspension, it said, that the action should be resumed only until after SEC Case No. 002693 shall
was to enable the management committee to substitute BF as party defendant have been adjudicated on the merits but now agrees with Roa and Mendoza,
and prosecute the defense to conclusion. Substitution was necessary to in line with the "assessment" of the Solicitor General, that the action should be
prevent collusion between the previous management and creditors it might suspended pending the outcome of the rehabilitation proceedings.
seek to favor, to the prejudice of its other creditors.
The pertinent provision of law dealing with the suspension of actions for
In sustaining the dissolution of the writ of preliminary attachment, the claims against the corporation is Sec. 6(c) of P.D. 902-A, as amended, which
respondent court said that Roa and Mendoza were secured in the satisfaction reads:
of any judgment they might obtain against BF since all the properties of the
latter were already in the custody of the management committee. Sec. 6. n order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
Their motions for reconsideration having been denied, both parties filed their
respective petitions for review before this Court. xxx xxx xxx
288 of 501
(c) To appoint one or more receivers of the property, real and The view of the respondent court is that the continuation of the action is
personal, which is the subject of the action pending before the necessary for the purpose of determining the extent of the liability of BF to
Commission in accordance with the pertinent provisions of Roa and Mendoza. The flaw in this theory is that even if such liability is
the Rules of Court, and in such other cases whenever determined, it still cannot be enforced by the trial court as long as BF is under
2
necessary in order to preserve the rights of parties-litigants receivership. Moreover, it disregards the possibility that such determination
and/or protect the interest of the investing public and would not be necessary at all should the rehabilitation receiver favorably
creditors: Provided, however, That the Commission may, in consider and fully acknowledge the claims made by Roa and Mendoza.
appropriate cases, appoint a rehabilitation receiver of
corporations, partnerships or other associations not Under Sec. 6(d) of P.D. No. 902-A, the management committee or
supervised or regulated by other government agencies who rehabilitation receiver is empowered to take custody and control of all existing
shall have, in addition to the powers of a regular receiver assets and properties of such corporations under management; to evaluate the
under the provisions of the Rules of Court, such functions and existing assets and liabilities, earnings and operations of such corporations; to
powers as are provided for in the succeeding paragraph (d) determine the best way to salvage and protect the interest of investors and
hereof: Provided, further, That the Commission may appoint a creditors; to study, review and evaluate the feasibility of continuing operations
rehabilitation receiver of corporations, partnership or other and restructure and rehabilitate such entities if determined to be feasible by
associations supervised or regulated by other government the SEC.
agencies, such as banks and insurance companies, upon
request of the government agency concerned: Provided, In light of these powers, the reason for suspending actions for claims against
finally, That upon appointment of a management committee, the corporation should not be difficult to discover. It is not really to enable the
rehabilitation receiver, board or body, pursuant to this Decree, management committee or the rehabilitation receiver to substitute the
all actions for claims against corporations, partnership, or defendant in any pending action against it before any court, tribunal, board or
associations under management or receivership pending before body. Obviously, the real justification is to enable the management committee
any court, tribunal, board or body shall be suspended or rehabilitation receiver to effectively exercise its/his powers free from any
accordingly. (As amended by P.D. Nos. 1653, 1758 and 1799; judicial or extra-judicial interference that might unduly hinder or prevent the
Emphasis supplied.) "rescue" of the debtor company. To allow such other action to continue would
only add to the burden of the management committee or rehabilitation
As will be noted, the duration of the suspension is not indicated in the law receiver, whose time, effort and resources would be wasted in defending
itself. And neither is it specified in the SEC order creating the management claims against the corporation instead of being directed toward its
committee. restructuring and rehabilitation.
3
The Court feels that the respondent court erred in ordering the resumption of In BF Homes, Inc. v. Hon. Fernando P. Agdamag et al., the Court of Appeals
the civil proceeding after the management committee shall have been held:
impleaded as party defendant. The explanation that the only purpose of
suspending the civil action was to enable the management committee to It must be emphasized that the suspension is only for a
substitute BF as party defendant is not acceptable. temporary period to prevent the irreversible collapse of the
corporation and give the management committee or receiver
289 of 501
the absolute tranquility to study the viability of the Coming now to the writ of preliminary attachment, we find that it must stand
corporation. During this period, the law creates a wall around despite the suspension of the proceedings in the Regional Trial Court of
the corporation against all claims. Quezon City. The writ was issued prior to the creation of the management
committee and so should not be regarded as an undue advantage of Mendoza
4
In Alemar's Sibal & Sons, Inc. v. Hon. Jesus M. Elbinias, et al., this Court, and Roa over the other creditors of BF.
explaining the legal consequences of a receivership, said:
In its amended decision and the resolution ordering the discharge of the writ
. . . When a corporation threatened by bankruptcy is taken of preliminary attachment, the respondent court did not rule on whether the
over by a receiver, all the creditors should stand on an equal issuance of the writ was improper or irregular. It simply said that the writ was
footing. Not anyone of them should be given any preference no longer proper or necessary at that time because the properties of BF were in
by paying one or some of them ahead of the others. This is the hands of the receiver. We do not think so.
precisely the reason for the suspension of all pending claims
against the corporation under receivership. Instead of The appointment of a rehabilitation receiver who took control and custody of
creditors vexing the courts with suits against the distressed BF has not necessarily secured the claims of Roa and Mendoza. In the event
firm, they are directed to file their claims with the receiver who that the receivership is terminated with such claims not having been satisfied,
is a duly appointed officer of the SEC. (Emphasis supplied) the creditors may also find themselves without security therefor in the civil
action because of the dissolution of the attachment. This should not be
Consequently, we feel that the trial court cannot at this point determine the permitted. Having previously obtained the issuance of the writ in good faith,
extent of BF's liability, if any, to Roa and Mendoza. This is true whether it is they should not be deprived of its protection if the rehabilitation plan does not
retained as party defendant or substituted by the management committee (or succeed and the civil action is resumed.
the rehabilitation receiver) as directed by the respondent court. What Roa and
Mendoza should do now is file their claims with the rehabilitation receiver and It is settled that:
submit to him such evidence as they would otherwise have to adduce before
the trial court to prove such claims. If there is an attachment or sequestration of the goods or
estate of the defendant in an action which is removed to a
As the revised rehabilitation plan approved by the SEC is expected to be bankruptcy court, such an attachment or sequestration will
implemented within ten years, the proceedings in the Regional Trial Court of continue in existence and hold the goods or estate to answer
Quezon City should be suspended during that period, to begin from February the final judgment or decree in the same manner as they
2, 1988, the date of its approval. This is without prejudice to the authority of would have been held to answer the final judgment or decree
the SEC to extend the period when warranted and even to order the rendered by the Court from which the action was removed,
liquidation of BF if the plan is found to be no longer feasible. On the other unless the attachment or sequestration is invalidated under
5
hand, on a more positive note, the SEC can also find within that period that BF applicable law. (28 USCS No. 1479 [a].)
has been sufficiently revived and able to resume its normal business
6
operations without further need of rehabilitation. As we ruled in Government of the Philippine Islands v. Mercado:
290 of 501
Attachment is in the nature of a proceeding in rem. It is Neither ground has been established in the case at bar to warrant the
against the particular property. The attaching creditor discharge of the writ. No counter-bond has been given. As for the contention
thereby acquires specific lien upon the attached property that the writ was improperly issued for lack of notice to BF on the application
which ripens into a judgment against the res when the order for the writ, it suffices to cite Mindanao Savings & Loan Association,
7
of sale is made. Such a proceeding is in effect a finding that Inc. v. Court of Appeals, where we held:
the property attached is an indebted thing and a virtual
condemnation of it to pay the owner's debt. The law does not The only requisites for the issuance of a writ of preliminary
provide the length of time an attachment lien shall continue attachment under Section 3, Rule 57 of the Rules of Court are
after the rendition of judgment, and it must therefore the affidavit and bond of the applicant.
necessarily continue until the debt is paid, or sale is had
under execution issued on the judgment or until judgment is SEC. 3. Affidavit and bond required. — An
satisfied, or the attachment discharged or vacated in some order of attachment shall be granted only
manner provided by law. when it is made to appear by the affidavit of
the applicant, or of some other person who
It has been held that the hen obtained by attachment stands personally knows the facts, that a sufficient
upon as high equitable grounds as a mortgage lien: cause of action exists, that the case is one of
those mentioned in section 1 hereof, that
The lien or security obtained by an there is no other sufficient security for the
attachment even before judgment, is a fixed claim sought to be enforced by the action
and positive security, a specific lien, and, and that the amount due to the applicant, or
although whether it will ever be made the value of the property the possession of
available to the creditor depends on which he is entitled to recover, is as much as
contingencies, its existence is in no way the sum for which the order is granted above
contingent, conditioned or inchoate. It is a all legal counterclaims. The affidavit, and the
vested interest, an actual and substantial bond required by the next succeeding section
security, affording specific security for must be duly filed with the clerk or judge of
satisfaction of the debt put in suit, which the court before the order issues.
constitutes a cloud on the legal title, and is as
specific as if created by virtue of a voluntary No notice to the adverse party or hearing of the application is
act of the debtor and stands upon as high required. As a matter of fact a hearing would defeat the
equitable grounds as a mortgage. (7 Corpus purpose of this provisional remedy. The time which such a
Juris Secundum, 433, and authorities therein hearing would take, could be enough to enable the defendant
cited.) to abscond or dispose of his property before a writ of
attachment issues. Nevertheless, while no hearing is required
Under the Rules of Court, a writ of attachment may be dissolved only upon the by the Rules of Court for the issuance of an attachment
filing of a counter-bond or upon proof of its improper or irregular issuance. (Belisle Investment & Finance Co., Inc. v. State Investment
291 of 501
House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. v.

Relova, 117 SCRA 420), a motion to quash the writ may not be
granted without "reasonable notice to the applicant" and only
"after hearing" (Secs. 12 and 13, Rule 57, Rules of Court).
In sum, the Court holds that the substitution of the management

committee/rehabilitation receiver in Civil Case No. Q-43104 in the Regional
Trial Court of Quezon City is not necessary because the proceedings therein
shall be suspended anyway pending implementation of the revised
rehabilitation plan, during which the writ of preliminary attachment shall
remain in force.
WHEREFORE, the decision of the respondent court is SET ASIDE and

judgment is rendered as follows:
(1) In G.R. No. 76879, the petition is GRANTED. The proceedings in Civil Case
No. Q-43104 shall remain suspended for a period of ten (10) years from
February 2, 1988, unless extended or shortened by the SEC as circumstances
may warrant; and
(2) In G.R.No.77143, the petition is GRANTED insofar as it seeks restoration of

the writ of preliminary attachment, issued on October 22, 1984, which is
hereby reinstated.
SO ORDERED.
292 of 501
Republic v. Saludares, 327 S 449 Mr. Aristides Escosora is hereby appointed Fiscal Agent of this Commission
and as such, he is hereby ordered to:
SECOND DIVISION
1. To implement this sequestration order with a minimum
G.R. No. 111174 March 9, 2000 disruption of business activities.
REPUBLIC OF THE PHILIPPINES, petitioner, 2. To preserve and safeguard, as well as prevent the removal
vs. concealment of records and the disposition and dissipation of
HON. BERNARDO V. SALUDARES, Presiding Judge, RTC, Br. 28, Lianga, assets, funds and resources.
Surigao del Sur, and HUNG MING KUK, respondents.
3. To prevent undue removal or withdrawal of funds, until
QUISUMBING, J.: further orders to the Commission.
1
This special civil action for certiorari assails the decision of the Regional Trial 4. To report to the Commission on Good Government within
Court of Lianga, Surigao del Sur, Branch 28, dated March 19, 1993. At issue is five (5) days.
the jurisdiction of the trial court over properties owned by Lianga Bay Logging
Company, Inc. (LBLC), but allegedly sequestered by the Presidential Further, you are authorized to request the Commission for security support
Commission on Good Government (PCGG). from the Military/Police authorities only if necessary.
The facts on record show that on April 2, 1986, the PCGG issued a writ of xxx xxx xxx
2
sequestration, which reads:
FOR THE COMMISSION:
IN THE MATTER OF THE SEQUESTRATION OF LIANGA BAY LOGGING
Originally Signed
x-----------------------x
MARY CONCEPCION BAUTISTA
TO: MR. ARISTIDES M. ESCOSORA
Baganga, Davao Oriental Commissioner
WRIT OF SEQUESTRATION The writ of sequestration was based on the ground that the shares of stocks in
LBLC owned by Peter A. Sabido formed part of "illegally acquired wealth." On
By virtue of the power vested unto this Commission and by authority of the July 27, 1987, the Republic of the Philippines through the PCGG and the Office
3
President of the Philippines, LIANGA BAY LOGGING, with offices at 2nd of the Solicitor General filed before the Sandiganbayan a complaint for
Floor, Emerald Building, Emerald Ave., Ortigas Office Bldg. Complex, Pasig, reconveyance, reversion, accounting, restitution and damages against, among
Metro Manila is hereby sequestered. others, Peter A. Sabido.
293 of 501
On August 12, 1991, Sabido filed a Motion to Lift the Writs of Sequestration On February 17, 1993, the trial court granted the writ of preliminary
before the Sandiganbayan. On November 29, 1991, the Sandiganbayan granted attachment in favor of Hung Ming Kuk.
the motion, disposing as follows:
Thereafter, Hung Ming Kuk filed a motion to declare LBLC in default for
WHEREFORE, the "Motion (to Lift Writs of Sequestration)" dated failure to file responsive pleadings pursuant to Sec. 1, Rule 18 of the Rules of
August 12, 1991, is granted. Accordingly, the Writs of Sequestration Court. The RTC of Lianga, acting on the motion of Hung Ming Kuk, issued an
issued against the Philippine Integrated Meat Corporation on March order dated March 4, 1993, declaring LBLC as in default. Consequently, on
17, 1986, and Lianga Bay Logging Company, Inc. on April 2, 1986, are March 19, 1993, the RTC rendered judgment by default, and decreed thus:
declared to have been deemed automatically lifted upon the lapse of
six months from the ratification of the 1987 Constitution on February WHEREFORE, premised on the foregoing evidences and findings, this
2, 1987, without prejudice to the continuation of the proceedings court hereby renders judgment in favor of the plaintiff, and ordering
against PIMECO and Lianga. . . . (emphasis supplied) the defendant-Corporation to pay, as follows:
xxx xxx xxx 1. To pay plaintiff the principal amount of the accrued unpaid
obligation in the total amount of P18,031,563.78, with interests
4
SO ORDERED. at 14% per annum reckoned from July 1992 to February 1993 in
the computed total of P1,250,666.66, the same to continue
On December 11, 1991, PCGG filed a motion for reconsideration of the decision until said obligation is fully paid;
of Sandiganbayan praying for the nullification of the order which lifted
the writ of sequestration of LBLC. 2. To pay plaintiff moral and exemplary damages in the total
amount of P150,000.00, plus Appearance Fee for the counsel
In the meantime, on February 11, 1993, private respondent Hung Ming Kuk in the sum of P5,000.00;
5
filed a complaint for sum of money against LBLC, with a prayer for a writ of
preliminary attachment, with the Regional Trial Court, Branch 28, of Lianga, 3. To pay plaintiff the total amount of P4,857,195.45 for
Surigao del Sur. The PCGG was not impleaded by Hung Ming Kuk as party- Sheriff's Expenses, Attached Properties Guards' Fees, Filing
defendant nor was the sequestration case referred to the RTC's proceedings. Fees, Litigation Expenses, and Attorneys Fees computed at
25% of the principal obligation, or P4,507,890.95, or a total
Thus, the Republic of the Philippines filed a special civil amount of P4,857,195.45;
6
action for certiorari under Rule 65, dated March 29, 1993, with the Supreme
Court. This petition, docketed as G.R. No. 109314, was later on consolidated 4. To pay the costs of the suit.
with other similar cases.
7
IT IS SO ORDERED.
Meantime, on February 15, 1993, the Sandiganbayan denied the motion for
reconsideration of PCGG, dated December 11, 1991. On August 11, 1993, petitioner filed this special civil action under Rule 65 of the
Rules of Court, raising the sole issue as follows:
294 of 501
WHETHER, THE TRIAL COURT FAULTED IN DECIDING THE office equipment during the time that PCOC was under a sequestration by
CLAIM OF PRIVATE RESPONDENT WHICH INVOLVED THE PCGG, the Court ruled:
PROPERTIES OF LIANGA BAY LOGGING CO. INC.
We disagree with the RTC and the CA on the issue of jurisdiction.
In the meantime, on January 23, 1995, the Supreme Court en banc issued its While there can be no dispute that PCOC was sequestered, the fact of
decision in the consolidated cases ofRepublic vs. Sandiganbayan (First sequestration alone did not automatically oust the RTC of jurisdiction
Division), 240 SCRA 376 (1995). The decision included the nullification of the to decide upon the question of ownership of the subject gaming and
resolution of the Sandiganbayan that lifted the writ of sequestration of LBLC office equipment. The PCGG must be a party to the suit in order that
properties in G.R. No. 109314. Hence, the Court effectively confirmed the the Sandiganbayan's exclusive jurisdiction may be correctly invoked.
validity of the writ of sequestration over said properties. Peter A. Sabido's This is deducible from no less than E.O. No. 14, the "Peña" and
motion for reconsideration was denied. Finally, an entry of judgment was "Nepomuceno" cases relied upon by both subordinate courts. Note
issued on April 22, 1997, in G.R. No. 109314. that in Section 2 of E.O. No. 14 which provides:
Petitioner contends that the RTC of Lianga has no jurisdiction over the subject Sec. 2. The Presidential Commission on Good Government
matter of the case inasmuch as the same are under sequestration by the PCGG. shall file all such cases, whether civil or criminal, with the
Citing Baseco vs. PCGG, 150 SCRA 181 (1987), petitioner asserts that the Sandiganbayan, which shall have exclusive and original
sequestered assets have been placed under custodia legis of the PCGG pending jurisdiction thereof.
the final determination by the Sandiganbayan that said assets are in fact ill-
gotten. Hence, the RTC has no jurisdiction to order the attachment of said it speaks of the PCGG as party-plaintiff. On the other hand, the PCGG
sequestered properties. was impleaded as co-defendant in both the "Peña" and "Nepomuceno"
cases. But here, the PCGG does not appear in either capacity, as the
Private respondent, however avers that his original complaint was for a sum of complaint is solely between PAGCOR and respondents PCOC and
money. It was a demand for payment of a valid obligation owed to him by Marcelo. The "Peña" and "Nepomuceno" cases which recognize the
LBLC. He adds that it would be unfair and unjust to declare the entire RTC independence of the PCGG and the Sandiganbayan in sequestration
proceedings regarding his claim for sum of money null and void. cases, therefore, cannot be invoked in the instant case so as to divest
the RTC of its jurisdiction, under Section 19 of B.P. Blg. 129, over
Private respondent further claims that the attachment order of the trial court PAGCOR's action for recovery of personal property.
was issued after the Sandiganbayan had lifted the writ of sequestration against
LBLC. But petitioner asserts that this order of the Sandiganbayan was reversed In the case at bar, the claim of private respondent Hung Ming Kuk is for a sum
8
by the Supreme Court in a banc decision dated January 23, 1995, resolving of money arising from a debt incurred by LBLC. Under a contract, private
several consolidated cases for which G.R. No. 109314 was included. Petitioner respondent had extended cash advances and supplied LBLC hardware
stresses that said reversal had become final and executory on April 22, 1997. materials, auto spare parts, and rendered services, for cutting and hauling logs.
The total claim amounts to P18,031,563.78. Following Section 19 of B.P. Blg. 129,
In PAGCOR vs. CA, 275 SCRA 433-434 (1997), involving ownership by as amended by R.A. No. 7691 on March 25, 1994, the complaint falls within the
Philippine Casino Operators Corporation (PCOC) over several gaming and jurisdiction of the Regional Trial Court, viz:
295 of 501
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall that the accusation that the business enterprise is "ill-gotten" be not proven, it
exercise exclusive original jurisdiction: may be returned to its rightful owner as far as possible in the same condition
9
as it was at the time of sequestration.
xxx xxx xxx
The holding in Peña which confers exclusive jurisdiction on the
(8) In all other cases in which the demand, exclusive of interest, Sandiganbayan in sequestration cases cannot also be relied upon by petitioner
damages of whatever kind, attorney's fees, litigation expenses, and in this case. We hold that the Regional Trial Court has jurisdiction over the
costs or the value of the property in controversy exceeds One hundred complaint for payment of money allegedly averred by LBLC to private
thousand pesos (P100,000.00) or, in such other cases in Metro Manila, respondent.
where the demand, exclusive of the above-mentioned items exceeds
Two hundred thousand pesos (P200,000). We now move to the ancillary issue of whether or not the provisional remedy
of attachment issued by the trial court in favor of the private respondent is
Petitioner relies, however, on the case of PCGG vs. Peña, 159 SCRA 556 (1988) valid.
and asserts that the controversy of LBLC or a sequestered company falls within
the exclusive jurisdiction of the Sandiganbayan and not of the trial court. It bears recalling that when the Sandiganbayan ordered that the writ of
sequestration be lifted, PCGG filed a special civil action for certiorari to
In the Peña case, the trial court issued a temporary restraining order which contest that order. The Supreme Court ruled in favor of PCGG when it granted
prevented PCGG from enforcing the memorandum of then PCGG the latter's petition to declare the lifting of the writ of sequestration by the
Commissioner Mary Concepcion Bautista. Her memorandum denied Sandiganbayan null and void. The Court's en banc resolution pertinently reads:
complainant's authority to sign and manage the funds of the sequestered
company. The Supreme Court ruled that the trial court had no jurisdiction WHEREFORE, judgment is hereby rendered:
over PCGG being a co-equal body, and therefore, the regional trial courts may
not interfere with and restrain the PCGG or set aside the orders and actions of A. NULLIFYING AND SETTING ASIDE:
its Commissioner.
xxx xxx xxx
In contrast, the case now before us concerns receivables of the private
10
respondent arising out of a legitimate business contract to supply goods and 17) in G.R. No. 109314, its impugned Resolutions dated November 29,
services in favor of LBLC. When a collection suit was filed against LBLC by its 1991 and February 16, 1993.
supplier, Hung Ming Kuk, evidently PCGG could not be the proper party to
defend against such claim. More so, because when PCGG had not taken over In the same en banc Resolution, the Court observed:
the LBLC's business operations.
II. Provisional Remedies in Pursuance of Policy
We note that PCGG is not an owner but a conservator. It can exercise only
powers of administration over property sequestered, frozen or provisionally Special adjective tools or devices were provided by the Revolutionary
taken over. Even resort to the provisional remedies should entail the least Government for the recovery of that "ill-gotten wealth." These took
possible interference with business operations or activities so that, in the event the form of provisional remedies akin to preliminary attachment (Rule
296 of 501
13
57), writ of seizure of personalty (Rule 60) and receivership (Rule 59). levy creates a lien which nothing can destroy but its dissolution. This well-
They were (a) sequestration and (b) freeze orders, as regards settled rule is likewise applicable to a writ of sequestration.
"unearthed instance of "ill-gotten wealth"; and (c) provisional
takeover, as regards "business enterprises and properties taken over by Attachment is in the nature of a proceeding in rem. It is against a particular
the government of the Marcos Administration or by entities or property of a debtor. The attaching creditor thereby acquires a specific lien
persons close to former President Marcos." upon the attached property which ripens into a judgment against the res when
the order of sale is made. Such a proceeding is in effect a finding that the
A. Executive Orders Re Sequestration, Freezing and Takeover property attached is an indebted thing and results in its virtual condemnation
to pay for the owner's debt. The law does not provide the length of time
These special remedies were prescribed and defined in Executive during which an attachment lien shall continue after the rendition of the
Orders Numbered 1 and 2, promulgated by President Corazon C. judgment, and it must therefore continue until the debt is paid, or sale is had
Aquino in March, 1986. Their validity and propriety were sustained by under execution issued in the judgment, or until the judgment is satisfied, or
14
this Court on May 27, 1987, against claims that they were the statement discharged or vacated in some manner provided by law.
unconstitutional as being bills of attainder, or as violative of the right
against self-incrimination and the guaranty against unreasonable In our view, the disputed properties of LBLC were already under custodia
15
searches and seizures. In the same case, the Court also set the legis by virtue of a valid writ of sequestration issued by the PCGG on April 2,
parameters for and restrictions on the proper exercise of the remedies. 1986, when respondent Judge Saludares issued the assailed writ of attachment
in favor of private respondent Hung Ming Kuk. At that time the writ of
In BASECO vs. PCGG, 150 SCRA 181, 182 (1987), sequestration is defined as the sequestration issued by PCGG against LBLC was subsisting. Said writ of the
process, which may be employed as a conservatory writ whenever the right of PCGG could not be interfered with by the RTC of Lianga, because the PCGG is
the property is involved, to preserve, pending litigation, specific property a coordinate and co-equal body. The PCGG had acquired by operation of law
11
subject to conflicting claims of ownership or liens and privileges. the right of redemption over the property until after the final determination of
the case or until its dissolution.
The Court also noted the relationship between attachment and receivership,
on one hand, and sequestration, freeze order and provisional takeover on the WHEREFORE, the instant petition is partially GRANTED. The default Order
other. The latter there are ancillary remedies in prosecuting the ill-gotten issued by the public respondent dated March 19, 1993, is AFFIRMED, but
wealth of the previous Marcos regime. The Court observed that sequestration, should be held in abeyance until the sequestration case involving LBLC before
freezing and provisional takeover are akin to the provisional remedy of the Sandiganbayan is determined. The Order of Attachment issued by the
preliminary attachment or receivership.1âwphi1 public respondent is declared NULL and VOID. No pronouncement as to
costs.1âwphi1.nêt
By an order of attachment, a sheriff seizes property of a defendant in a civil
suit so that it may stand as security for the satisfaction of any judgment that SO ORDERED.
may be obtained, and not disposed of, or dissipated, or lost intentionally, or
12
otherwise, pending the action. When a writ of attachment has been levied on
real property or any interest therein belonging to the judgment debtor, the
297 of 501
Section 12
The Manila Remnant v. CA, 231 S 281 (See under Section 8 page 257)
Insular Savings Bank v. CA, June 15, 2005 (See under Section 1 page 19)
KO Glass v. Valenzuela, 116 S 563 (See under Section 1 page 9)
Calderon v. IAC, 155 S 531 (See under Section 4 page 134)

298 of 501
3
Security Pacific Assurance Corp. v. Tria-Infante, 468 S 526 An Ex-Parte Motion for Preliminary Attachment dated 06 March 1989 was
filed by Reynaldo Anzures praying that pending the hearing on the merits of
SECOND DIVISION the case, a Writ of Preliminary Attachment be issued ordering the sheriff to
attach the properties of Villaluz in accordance with the Rules.
G.R. No. 144740 August 31, 2005
4
On 03 July 1989, the trial court issued an Order for the issuance of a writ of
SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners, preliminary attachment "upon complainant’s posting of a bond which is
vs. hereby fixed at P2,123,400.00 and the Court’s approval of the same under the
THE HON. AMELIA TRIA-INFANTE, In her official capacity as Presiding condition prescribed by Sec. 4 of Rule 57 of the Rules of Court…."
Judge, Regional Trial Court, Branch 9, Manila; THE PEOPLE OF THE
5
PHILIPPINES, represented by Spouses REYNALDO and ZENAIDA An attachment bond was thereafter posted by Reynaldo Anzures and
ANZURES; and REYNALDO R. BUAZON, In his official capacity as Sheriff approved by the court. Thereafter, the sheriff attached certain properties of
IV, Regional Trial Court, Branch 9, Manila, Respondents. Villaluz, which were duly annotated on the corresponding certificates of title.
6
DECISION On 25 May 1990, the trial court rendered a Decision on the case acquitting
Villaluz of the crime charged, but held her civilly liable. The dispositive
CHICO-NAZARIO, J.: portion of the said decision is reproduced hereunder:
1
Before Us is a petition for review on certiorari, assailing the Decision and WHEREFORE, premises considered, judgment is hereby rendered
2
Resolution of the Court of Appeals in CA-G.R. SP No. 58147, dated 16 June ACQUITTING the accused TERESITA E. VILLALUZ with cost de oficio. As to
2000 and 22 August 2000, respectively. The said Decision and Resolution the civil aspect of the case however, accused is ordered to pay complainant
declared that there was no grave abuse of discretion on the part of respondent Reynaldo Anzures the sum of TWO MILLION ONE HUNDRED TWENTY
Judge in issuing the assailed order dated 31 March 2000, which was the subject THREE THOUSAND FOUR HUNDRED (P2,123,400.00) PESOS with legal rate
in CA-G.R. SP No. 58147. of interest from December 18, 1987 until fully paid, the sum of P50,000.00 as
7
attorney’s fees and the cost of suit.
THE FACTS
Villaluz interposed an appeal with the Court of Appeals, and on 30 April 1992,
8
The factual milieu of the instant case can be traced from this Court’s decision the latter rendered its Decision, the dispositive portion of which partly reads:
in G.R. No. 106214 promulgated on 05 September 1997.
WHEREFORE, in CA-G.R. CV No. 28780, the Decision of the Regional Trial
On 26 August 1988, Reynaldo Anzures instituted a complaint against Teresita Court of Manila, Branch 9, dated May 25, 1990, as to the civil aspect of
Villaluz (Villaluz) for violation of Batas Pambansa Blg. 22. The criminal Criminal Case No. 89-69257, is hereby AFFIRMED, in all respects….
information was brought before the Regional Trial Court, City of Manila, and
raffled off to Branch 9, then presided over by Judge Edilberto G. Sandoval, The case was elevated to the Supreme Court (G.R. No. 106214), and during its
docketed as Criminal Case No. 89-69257. pendency, Villaluz posted a counter-bond in the amount of P2,500,000.00
9
issued by petitioner Security Pacific Assurance Corporation. Villaluz, on the
299 of 501
10
same date of the counter-bond, filed an Urgent Motion to Discharge corporation on its counter-attachment bond, despite the fact that said bond
11
Attachment. was not approved by the Supreme Court, and that the condition by which said
20
bond was issued did not happen.
On 05 September 1997, we promulgated our decision in G.R. No. 106214,
21
affirming in toto the decision of the Court of Appeals. On 16 June 2000, the Court of Appeals rendered a Decision, the dispositive
portion of which reads:
In view of the finality of this Court’s decision in G.R. No. 106214, the private
12
complainant moved for execution of judgment before the trial court. WHEREFORE, premises considered, the Court finds no grave abuse of
discretion on the part of respondent judge in issuing the assailed order. Hence,
On 07 May 1999, the trial court, now presided over by respondent Judge, the petition is dismissed.
13
issued a Writ of Execution.
22
A Motion for Reconsideration was filed by petitioner, but was denied for lack
23
Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, of merit by the Court of Appeals in its Resolution dated 22 August 2000.
but the latter no longer resided in her given address. This being the case, the
sheriff sent a Notice of Garnishment upon petitioner at its office in Makati Undeterred, petitioner filed the instant petition under Rule 45 of the 1997
City, by virtue of the counter-bond posted by Villaluz with said insurance Rules of Civil Procedure, with Urgent Application for a Writ of Preliminary
24
corporation in the amount of P2,500,000.00. As reported by the sheriff, Injunction and/or Temporary Restraining Order.
petitioner refused to assume its obligation on the counter-bond it posted for
14 25
the discharge of the attachment made by Villaluz. On 13 December 2000, this Court issued a Resolution requiring the private
respondents to file their Comment to the Petition, which they did. Petitioner
26
Reynaldo Anzures, through the private prosecutor, filed a Motion to Proceed was required to file its Reply thereafter.
15 16
with Garnishment, which was opposed by petitioner contending that it
should not be held liable on the counter-attachment bond. Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo and
27
Zenaida Anzures executed a Memorandum of Understanding (MOU). In it, it
17
The trial court, in its Order dated 31 March 2000, granted the Motion to was stipulated that as of said date, the total amount garnished from petitioner
Proceed with Garnishment. The sheriff issued a Follow-Up of had amounted to P1,541,063.85, and so the remaining amount still sought to be
18 28
Garnishment addressed to the President/General Manager of petitioner executed was P958,936.15. Petitioner tendered and paid the amount
dated 03 April 2000. of P300,000.00 upon signing of the MOU, and the balance of P658,936.15 was
to be paid in installment at P100,000.00 at the end of each month from
On 07 April 2000, petitioner filed a Petition for Certiorari with Preliminary February 2001 up to July 2001. At the end of August 2001, the amount
19
Injunction and/or Temporary Restraining Order with the Court of Appeals, of P58,936.00 would have to be paid. This would make the aggregate amount
29
seeking the nullification of the trial court’s order dated 31 March 2000 granting paid to the private respondentsP2,500,000.00. There was, however, a proviso
the motion to proceed with garnishment. Villaluz was also named as in the MOU which states that "this contract shall not be construed as a waiver
petitioner. The petitioners contended that the respondent Judge, in issuing the or abandonment of the appellate review pending before the Supreme Court
order dated 31 March 2000, and the sheriff committed grave abuse of and that it will be subject to all such interim orders and final outcome of said
discretion and grave errors of law in proceeding against the petitioner case."
300 of 501
33
On 13 August 2001, the instant petition was given due course, and the parties In their Comment, the private respondents assert that the filing of the
30
were obliged to submit their respective Memoranda. counter-bond by Villaluz had already ipso factodischarged the attachment on
the properties and made the petitioner liable on the bond. Upon acceptance of
ISSUES the premium, there was already an express contract for surety between
Villaluz and petitioner in the amount of P2,500,000.00 to answer for any
The petitioner raises the following issues for the resolution of this Court: adverse judgment/decision against Villaluz.
34
Main Issue - WHETHER OR NOT THE COURT OF Appeals committed Petitioner filed a Reply dated 09 May 2001 to private respondents’ Comment,
reversible error in affirming the 31 march 2000 order of public respondent admitting the binding effect of the bond as between the parties thereto. What
judge which allowed execution on the counter-bond issued by the petitioner. it did not subscribe to was the theory that the attachment was ipso facto or
automatically discharged by the mere filing of the bond in court. Such theory,
Corollary Issues – (1) WHETHER OR NOT THE COURT OF APPEALS according to petitioner, has no foundation. Without an order of discharge of
CORRECTLY RULED THAT THE ATTACHMENT ON THE PROPERTY OF attachment and approval of the bond, petitioner submits that its stipulated
VILLALUZ WAS DISCHARGED WITHOUT NEED OF COURT APPROVAL OF liability on said bond, premised on their occurrence, could not possibly arise,
THE COUNTER-BOND POSTED; and (2) WHETHER OR NOT THE COURT for to hold otherwise would be to trample upon the statutorily guaranteed
OF APPEALS CORRECTLY RULED THAT THE ATTACHMENT ON THE right of the parties to contractual autonomy.
PROPERTY OF VILLALUZ WAS DISCHARGED BY THE MERE ACT OF
POSTING THE COUNTER-BOND. Based on the circumstances present in this case, we find no compelling reason
to reverse the ruling of the Court of Appeals.
THE COURT’S RULING
Over the years, in a number of cases, we have made certain pronouncements
Petitioner seeks to escape liability by contending, in the main, that the writ of about counter-bonds.
attachment which was earlier issued against the real properties of Villaluz was
35
not discharged. Since the writ was not discharged, then its liability did not In Tijam v. Sibonghanoy, as reiterated in Vanguard Assurance Corp. v. Court
36
accrue. The alleged failure of this Court in G.R. No. 106214 to approve the of Appeals, we held:
counter-bond and to cause the discharge of the attachment against Villaluz
prevented the happening of a condition upon which the counter-bond’s . . . [A]fter the judgment for the plaintiff has become executory and the
issuance was premised, such that petitioner should not be held liable execution is ‘returned unsatisfied,’ as in this case, the liability of the bond
31
thereon. automatically attaches and, in failure of the surety to satisfy the judgment
against the defendant despite demand therefore, writ of execution may issue
Petitioner further asserts that the agreement between it and Villaluz is not a against the surety to enforce the obligation of the bond.
suretyship agreement in the sense that petitioner has become an additional
37
debtor in relation to private respondents. It is merely waiving its right of In Luzon Steel Coporation v. Sia, et al.:
32
excussion that would ordinarily apply to counter-bond guarantors as
originally contemplated in Section 12, Rule 57 of the 1997 Rules. . . . [C]ounterbonds posted to obtain the lifting of a writ of attachment is due
to these bonds being security for the payment of any judgment that the
301 of 501
attaching party may obtain; they are thus mere replacements of the property liable for the debt or duty of another although he possesses no direct or
formerly attached, and just as the latter may be levied upon after final personal interest over the obligations nor does he receive any benefit
41
judgment in the case in order to realize the amount adjudged, so is the liability therefrom.
of the countersureties ascertainable after the judgment has become final. . . .
In view of the nature and purpose of a surety agreement, petitioner, thus, is
38
In Imperial Insurance, Inc. v. De Los Angeles, we ruled: barred from disclaiming liability.
. . . Section 17, Rule 57 of the Rules of Court cannot be construed that an Petitioner’s argument that the mere filing of a counter-bond in this case
"execution against the debtor be first returned unsatisfied even if the bond cannot automatically discharge the attachment without first an order of
were a solidary one, for a procedural may not amend the substantive law discharge and approval of the bond, is lame.
expressed in the Civil Code, and further would nullify the express stipulation
of the parties that the surety’s obligation should be solidary with that of the Under the Rules, there are two (2) ways to secure the discharge of an
defendant. attachment. First, the party whose property has been attached or a person
appearing on his behalf may post a security. Second, said party may show that
39 42
In Philippine British Assurance Co., Inc. v. Intermediate Appellate Court, we the order of attachment was improperly or irregularly issued. The first
43
further held that "the counterbond is intended to secure the payment of ‘any applies in the instant case. Section 12, Rule 57, provides:
judgment’ that the attaching creditor may recover in the action."
SEC. 12. Discharge of attachment upon giving counter-bond. – After a writ of
Petitioner does not deny that the contract between it and Villaluz is one of attachment has been enforced, the party whose property has been attached, or
surety. However, it points out that the kind of surety agreement between them the person appearing on his behalf, may move for the discharge of the
is one that merely waives its right of excussion. This cannot be so. The attachment wholly or in part on the security given. The court shall, after due
counter-bond itself states that the parties jointly and severally bind themselves notice and hearing, order the discharge of the attachment if the movant makes
to secure the payment of any judgment that the plaintiff may recover against a cash deposit, or files a counter-bond executed to the attaching party with the
the defendant in the action. A surety is considered in law as being the same clerk of the court where the application is made, in an amount equal to that
party as the debtor in relation to whatever is adjudged touching the obligation fixed by the court in the order of attachment, exclusive of costs. But if the
40
of the latter, and their liabilities are interwoven as to be inseparable. attachment is sought to be discharged with respect to a particular property,
the counter-bond shall be equal to the value of that property as determined by
Suretyship is a contractual relation resulting from an agreement whereby one the court. In either case, the cash deposit or the counter-bond shall secure the
person, the surety, engages to be answerable for the debt, default or payment of any judgment that the attaching party may recover in the action. A
miscarriage of another, known as the principal. The surety’s obligation is not notice of the deposit shall forthwith be served on the attaching party. Upon
an original and direct one for the performance of his own act, but merely the discharge of an attachment in accordance with the provisions of this
accessory or collateral to the obligation contracted by the principal. section, the property attached, or the proceeds of any sale thereof, shall be
Nevertheless, although the contract of a surety is in essence secondary only to delivered to the party making the deposit or giving the counter-bond, or to the
a valid principal obligation, his liability to the creditor or promise of the person appearing on his behalf, the deposit or counter-bond aforesaid
principal is said to be direct, primary and absolute; in other words, he is standing in place of the property so released. Should such counter-bond for
directly and equally bound with the principal. The surety therefore becomes any reason be found to be or become insufficient, and the party furnishing the
302 of 501
same fail to file an additional counter-bond, the attaching party may apply for entirety will readily show that this Court has virtually discharged the
a new order of attachment. attachment after all the parties therein have been heard on the matter.
It should be noted that in G.R. No. 106214, per our Resolution dated 15 January On this score, we hew to the pertinent ratiocination of the Court of Appeals as
44
1997, we permitted Villaluz to file a counter-attachment bond. On 17 regards the heretofore cited provision of Section 12, Rule 57 of the 1997 Rules
45
February 1997, we required the private respondents to comment on the of Civil Procedure, on the discharge of attachment upon giving counter-bond:
sufficiency of the counter-bond posted by Villaluz.
. . . The filing of the counter-attachment bond by petitioner Villaluz has
It is quite palpable that the necessary steps in the discharge of an attachment discharged the attachment on the properties and made the petitioner
upon giving counter-bond have been taken. To require a specific order for the corporation liable on the counter-attachment bond. This can be gleaned from
discharge of the attachment when this Court, in our decision in G.R. No. the "DEFENDANT’S BOND FOR THE DISSOLUTION OF ATTACHMENT",
106214, had already declared that the petitioner is solidarily bound with which states that Security Pacific Assurance Corporation, as surety, in
Villaluz would be mere surplusage. Thus: consideration of the dissolution of the said attachment jointly and severally,
binds itself with petitioner Villaluz for any judgment that may be recovered by
During the pendency of this petition, a counter-attachment bond was filed by private respondent Anzures against petitioner Villaluz.
petitioner Villaluz before this Court to discharge the attachment earlier issued
by the trial court. Said bond amounting to P2.5 million was furnished by The contract of surety is only between petitioner Villaluz and petitioner
Security Pacific Assurance, Corp. which agreed to bind itself "jointly and corporation. The petitioner corporation cannot escape liability by stating that
severally" with petitioner for "any judgment" that may be recovered by private a court approval is needed before it can be made liable. This defense can only
46
respondent against the former. be availed by petitioner corporation against petitioner Villaluz but not against
third persons who are not parties to the contract of surety. The petitioners
We are not unmindful of our ruling in the case of Belisle Investment and hold themselves out as jointly and severally liable without any conditions in
47
Finance Co., Inc. v. State Investment House, Inc., where we held: the counter-attachment bond.The petitioner corporation cannot impose
requisites before it can be made liable when the law clearly does not
48
. . . [T]he Court of Appeals correctly ruled that the mere posting of a require such requisites to be fulfilled. (Emphases supplied.)
counterbond does not automatically discharge the writ of attachment. It is
only after hearing and after the judge has ordered the discharge of the Verily, a judgment must be read in its entirety, and it must be construed as a
attachment if a cash deposit is made or a counterbond is executed to the whole so as to bring all of its parts into harmony as far as this can be done by
attaching creditor is filed, that the writ of attachment is properly discharged fair and reasonable interpretation and so as to give effect to every word and
under Section 12, Rule 57 of the Rules of Court. part, if possible, and to effectuate the intention and purpose of the Court,
49
consistent with the provisions of the organic law.
The ruling in Belisle, at first glance, would suggest an error in the assailed
ruling of the Court of Appeals because there was no specific resolution Insurance companies are prone to invent excuses to avoid their just
50
discharging the attachment and approving the counter-bond. As above- obligation. It seems that this statement very well fits the instant case.
explained, however, consideration of our decision in G.R. No. 106214 in its
303 of 501
WHEREFORE, in view of all the foregoing, the Decision and Resolution of the
Court of Appeals dated 16 June 2000 and 22 August 2000, respectively, are both
AFFIRMED. Costs against petitioner.
SO ORDERED.
304 of 501
Section 13 On October 21, 1985, the trial court granted ex-parte the prayer for a writ of
preliminary attachment having found sufficient cause therefor based on the
verified complaint and the affidavit of merit executed by private respondent.
Jopillo, Jr. v. CA, 167 S 247 The court, however, required the private respondent to file a bond in the
amount of P100,000.00. Pursuant to the said order respondent sheriff Arsenio
FIRST DIVISION de Guzman attached a Chevrolet truck owned by petitioner.
G.R. No. 76026 November 9, 1988 On October 25, 1985, petitioner filed an urgent motion to discharge the writ of
attachment in accordance with Section 13, Rule 57 of the Rules of Court
PORFIRIO JOPILLO, JR., petitioner, alleging therein that the issuance of the writ was irregular and improper. At
vs. the hearing of the motion, petitioner testified that their agreement was for
HON. COURT OF APPEALS, HON. BALTAZAR R. DIZON, ARSENIO C. DE simple loans which have been fully paid by way of off-set when he delivered
GUZMAN and RAYMOND LIM,respondents. scrap materials to private respondent on various occasions. In support thereof,
petitioner presented receipts purportedly signed by the secretary of private
1
Cruz Law Office for petitioner. respondent accepting deliveries of the scrap materials.
Eduardo L. Advincula for private respondent. The trial court denied petitioner's motion in an order dated November 6, 1985.
The trial court held that the writ of attachment is within the context of the law
and instead required Petitioner to put up a counterbond in the amount equal
to the value of the property attached to discharge the writ of attachment
GANCAYCO, J.: pursuant to Section 12 of Rule 57 of the Rules of Court. Petitioner filed a
motion for reconsideration of said order asking that the writ be discharged in
By this petition the Court is asked to resolve the question of whether or not a accordance with Section 13 of Rule 57. It is alleged in the said motion that
motion to discharge a writ of attachment should be granted upon presentation through his testimony and documentary evidence, he had established that the
of evidence by the party whose property has been attached to show that the allegations in the affidavit of private respondent are not true and thus there is
attachment is improper or irregular. no cause of action to justify the issuance of a writ of attachment. The lower
court denied the motion in an order dated November 26, 1985.
On October 18, 1985, private respondent Raymond Lim filed a complaint for
the collection of a sum of money in the amount of about P100,000.00 with a Hence, the petitioner filed a petition for certiorari with prayer for the issuance
prayer for preliminary attachment in the Regional Trial Court of Pasay City. It of a restraining order or the writ of preliminary injunction in the then
is alleged in the complaint that petitioner was, among others, guilty of fraud in Intermediate Appellate Court. On June 20, 1986, the appellate court denied
contracting the obligation in that from the very beginning he had no intention due course to the petition and vacated the restraining order it earlier issued
2
to pay the same and that he is disposing of the scrap materials subject of their with costs against petitioner.
agreement to defraud private respondent.
Petitioner now comes to this Court by way of this petition for review assigning
the following errors on the part of the respondent court:
305 of 501
FIRST ERROR respondent to prove the facts in issue either by affidavit or deposition or some
4
form of evidence.
THE RESPONDENT COURT OF APPEALS COMMITTED AN
ERROR OF LAW IN RULING THAT THE PETITION FOR In denying due course to the petition, the appellate court made the following
certiorari FILED BEFORE IT BY THE PETITIONER DID NOT disqualification:
PRESENT ANY JURISDICTIONAL ISSUE.
The petition does not present any jurisdictional issue, hence,
SECOND ERROR the remedy of certiorari is unavailable. Generally, when a
court has jurisdiction over the subject matter and of the
THE RESPONDENT COURT OF APPEALS COMMITTED AN person, decisions upon all questions pertinent to the cause
ERROR OF LAW IN HOLDING (BY IMPLICATION) THAT are decisions within its jurisdiction and however irregular or
RESPONDENT JUDGE DID NOT COMMIT GRAVE ABUSE erroneous they may be, they cannot be corrected by certiorari.
OF DISCRETION AMOUNTING TO LACK OF (Napa vs. Weissenhagen, 29 Phil. 182; Gala vs. Cui and
JURISDICTION. Rodriguez, 25 Phil. 522; Matute v. Macadael and Medel, J-
9325, May 30, 1956; NAWASA v. Municipality of Libmauan, 20
THIRD ERROR SCRA 337). And as the respondent court had jurisdiction to
issue the writ of attachment its errors, if any, committed in
THE RESPONDENT COURT OF APPEALS COMMITTED AN the appreciation of the probative value of the facts stated in
ERROR OF LAW FOR HAVING ERRONEOUSLY APPLIED IN the petition for the writ and/ or in the motion to discharge
APPROPRIATE AUTHORITIES AND JURISPRUDENCE IN the attachment, does (sic) not affect its jurisdiction but
RESOLVING THE PETITION FOR CERTIORARI. (Page 12, merely the exercise of such jurisdiction. (Galang v. Endencia,
Rollo) 73 Phil. 399) In the instant case, respondent Judge having
acted within the law, there can be no capricious and
The petition is devoid of merit. whimsical exercise of judgment equivalent to lack of
jurisdiction.
Petitioner argues that the respondent judge committed a grave abuse of
discretion amounting to lack of jurisdiction when he refused to order the Furthermore, a perusal of the records shows that in order to
discharge of the Writ of attachment. He also contends that having established resolve the issue as to whether petitioner's evidence proves
by evidence that he had paid in full the obligation sued upon, the private the falsity of private respondent's allegations, respondent
respondent has no cause of action much less a ground to obtain a writ of Court would have to go into the merits of the case aside from
attachment against him. the evidence introduced in support of the motion to discharge
the attachment. More particularly, the respondent Court
3
Citing National Coconut Corporation vs. Pecson, petitioner alleges that the would have to resolve whether the alleged receipts of
attachment may be considered as improperly or irregularly issued when the deliveries are really genuine, that two (2) truckloads of scrap
facts alleged in the private respondent's affidavit have been shown to be materials worth P30,000.00 was actually delivered and
untrue by petitioner. He contends that it is incumbent upon private whether the amount of P100,000.00 covered by the
306 of 501
"Agreement" was a loan or advance payment for scrap iron Section 13, Rule 57 of the Rules of Court provides:
that petitioner promised to deliver. The merits of the action
in which a writ of preliminary attachment has been issued are SEC. 13. Discharge of a attachmnet for improper or irregular
not triable on a motion for dissolution of the attachment, issuance.—The party whose property has been may also, at
otherwise an applicant for the dissolution could force a trial any tame either before or after the release of the-attached
of the merits of the case in motion (4 Am. Jur. Sec. 635, property, or before any attachment shall have been actually
934).<äre||anº•1àw> Accordingly, while it is competent for the levied, upon reasonable notice to the attaching creditor, apply
Court to decide whether the affidavits submitted show the to the judge who granted the order, or to the judge of the
existence of a cause of action against the defendant, this gives court in which the action is pending, for an order to discharge
no general right to a trial on such motion of the merits of the attachment on the ground that the same was improperly
such cause. (4 Am. Jur. 933, 934) or irregularly issued. If the motion be made on affidavits on
the part of the party whose property has been attached, but
Moreover, in this instant petition, since petitioner (defendant not otherwise, the attaching creditor may oppose the same by
in the lower court) has not yet answered the complaint and counter-affidavits or other evidence in addition to that on
the principal action is not ready for trial, respondent Court which the attachment was made. After hearing, the judge shall
cannot resolve the issue on the merits of the case. This, order the discharge of the attachment if it appears that it was
respondent Court: would have to do to rule on the sufficiency improperly or irregularly issued and the defect is not cured
of petitioners evidence or falsity of the allegations contained forthwith. (Emphasis supplied.)
in private respondent's affidavit for attachment. Thus, it has
been held: A motion to discharge a writ of attachment on the ground that the same was
improperly or irregularly issued may be established by the affidavits submitted
...considering that the grounds invoked by by the party whose property has been attached or such other evidence
the petitioner for the issuance of the writ of presented at the hearing of the motion. The attaching creditor may oppose the
attachment form the very basis of the same by counter-affidavits or other evidence in addition to that with which
complaint .... a trial on the merits after the attachment was made.
answer shall have been filed by respondent,
was necessary. In We case the hearing of the If the movant establishes that the facts stated in the plaintiffs affidavit or some
"Motion to Discharge" was held before the of them, are shown to be false or untrue, the writ of attachment may be
5
issues have been joined, and the order of the, considered as improperly or irregularly issued. The determination of the
respondent Judge discharging the existence of said grounds to discharge a writ of attachment rests in the sound
attachment would have the effect of or discretion of the lower court.
prejudging the main action ... (G.B. Inc. vs.
Sanchez 98 Phil. 886) In the present case, although the evidence submitted by petitioner tended to
show payment of the obligation subject of the complaint, it appears that the
We agree. genuineness of the alleged receipt of the scrap materials which petitioner
claims to have delivered to private respondent to offset his obligation is in
307 of 501
issue. Besides, the nature of the agreement and the actual deliveries made of furnishing the same fail to file an additional counter-bond,
the scrap materials, among others, are factual issues that must be resolved at the attaching creditor may apply for a new order of
the trial on the merits and not at the hearing of the motion to discharge the attachment.
writ of attachment. If the private respondent did not present any counter-
affidavit or evidence to counteract what has been adduced by petitioner at the However, petitioner insists that the attachment should, he discharged in
hearing of the motion, it must be because private respondent believed that it accordance with Section 13 of Rule 57 and refuses to put up a counterbond as
was not necessary. As it is, the trial court was apparently not persuaded by the suggested by the court a quo.
evidence presented by petitioner so it ordered that the writ of attachment be
maintained and directed that if petitioner wants a discharge of the writ, he As correctly ruled by the respondent appellate court, even assuming that the
must put up a bond in accordance with Section 12, Rule 57 of the Rules which trial court committed an error in denying the motion to discharge the writ of
provides— attachment the error (if it is an error at all) is an error in judgment which
cannot be corrected through the extraordinary remedy of certiorari but by an
SEC. 12. Discharge of attachment upon giving counterbond.— ordinary appeal at the proper time.
At any time after an order of attachment has been granted,
the party whose property has been attached, or the person Finally, the findings of the trial court an to whether or not the writ of
appearing on his behalf, may, upon reasonable notice to the attachment had been improperly or irregularly issued based on the evidence
applicant, apply to the judge who granted the order, or to the submitted at the hearing may not be disturbed on appeal unless there is a
judge of the court in which the action is pending, for an order showing that it committed a grave abuse of discretion in its exercise. This
discharging the attachment wholly or in part on the security petitioner failed to establish.
given. The judge shall, after hearing, order the, discharge of
the attachment if a cash deposit is made, or a counterbond WHEREFORE, the petition is DISMISSED for lack of merit without
executed to the attaching creditor is filed, on behalf of the pronouncement as to costs.
adverse party, with the clerk or judge of the court where the
application is made, in an amount equal to the value of the SO ORDERED.
property attached as determined by the judge, to secure the
payment of any judgment that the attaching creditor may
recover in the action. Upon the filing of such counter-bond,
copy thereof shall forthwith be served on the attaching
creditor or his lawyer. Upon the discharge of an attachment in
accordance with the provisions of this section the property
attached, or the proceeds of any sale thereof, shall be
delivered to the party making the deposit or giving the
counter-bond, or the person appearing on his behalf, the
deposit or counter-bond aforesaid standing in place of the
property so released. Should such counter-bond for any
reason be found to be, or become, insufficient, and the party
308 of 501
Mindanao Savings Loan v. CA, 172 S 480 Inc. and its president, Francisco Villamor, but dropping Eugenio M. De los
Santos.
FIRST DIVISION
On November 5, 1986, Judge Dinopol issued ex parte an amended order of
G.R. No. 84481 April 18, 1989 attachment against all the defendants named in the second amended
complaint, including the petitioners but excluding Eugenio C. de los Santos.
MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (formerly Davao
Savings & Loan Association) & FRANCISCO VILLAMOR, petitioners, D. S. Homes. Inc., et al. and the Davao Savings & Loan Association (later
vs. renamed Mindanao Savings & Loan Association, Inc. or "MSLA") and Francisco
HON. COURT OF APPEALS, POLY R. MERCADO, and JUAN P. Villamor filed separate motions to quash the writ of attachment. When their
MERCADO, respondents. motions were denied by the Court, D.S. Homes, Inc., et al. offered a
counterbond in the amount of Pl,752,861.41 per certificate issued by the Land
Villarica, Tiongco & Caboverde Law Office for petitioners. Bank of the Philippines, a banking partner of petitioner MSLA The lower court
accepted the Land Bank Certificate of . Deposit for Pl,752,861.41 as
A B C Law Offices for private respondents. counterbond and lifted the writ of preliminary attachment on June 5, 1987
(Annex V)
On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a petition
GRIÑO-AQUINO, J.: for certiorari (Annex A) to annul the order of attachment and the denial of
their motion to quash the same (CA-G.R. SP No. 12467). The petitioners
On September 10, 1986, private respondents filed in the Regional Trial Court of alleged that the trial court acted in excess of its jurisdiction in issuing the ex
Davao City, a complaint against defendants D.S. Homes, Inc., and its directors, parte orders of preliminary attachment and in denying their motion to quash
Laurentino G. Cuevas, Saturnino R. Petalcorin, Engr. Uldarico D. Dumdum, the writ of attachment, D.S. Homes, Inc., et al. did not join them.
Aurora P. De Leon, Ramon D. Basa, Francisco D. Villamor, Richard F.
Magallanes, Geronimo S. Palermo Felicisima V. Ramos and Eugenio M. De los On May 5, 1988, the Court of Appeals dismissed the petition for certiorari and
Santos (hereinafter referred to as D.S. Homes, et al.) for "Rescission of remanded the records of Civil Case No. 18263 to the Regional Trial Court of
Contract and Damages" with a prayer for the issuance of a writ of preliminary Davao City, Branch 13, for expeditious proceedings. It held:
attachment, docketed as Civil Case No. 18263.
Objections against the writ may no longer be invoked once a
On September 28, 1986, Judge Dinopol issued an order granting ex parte the counterbond is filed for its lifting or dissolution.
application for a writ of preliminary attachment.
The grounds invoked for the issuance of the writ form the
On September 22, 1986, the private respondents amended their complaint and core of the complaint and it is right away obvious that a trial
on October 10, 1986, filed a second amended complaint impleading as on the merits was necessary. The merits of a main action are
additional defendants herein petitioners Davao Savings & Loan Association, not triable in a motion to discharge an attachment otherwise
an applicant for dissolution could force a trial on the merits
309 of 501
on his motion (4 Am. Jur., Sec. 635, 934, cited in G.G. Inc. vs. "reasonable notice to the applicant" and only "after hearing" (Secs. 12 and 13,
Sanchez, et al., 98 Phil. 886, 890, 891). (Annex B, p. 185, Rule 57, Rules of Court).
Rollo.)
The Court of Appeals did not err in holding that objections to the impropriety
Dissatisfied, the petitioners appealed to this Court. or irregularity of the writ of attachment "may no longer be invoked once a
counterbond is filed," when the ground for the issuance of the writ forms the
A careful consideration of the petition for review fails to yield any novel legal core of the complaint.
questions for this Court to resolve.
Indeed, after the defendant has obtained the discharge of the writ of
The only requisites for the issuance of a writ of preliminary attachment under attachment by filing a counterbond under Section 12, Rule 57 of the Rules of
Section 3, Rule 57 of the Rules of Court are the affidavit and bond of the Court, he may not file another motion under Section 13, Rule 57 to quash the
applicant. writ for impropriety or irregularity in issuing it.
SEC. 3. Affidavit and bond required .— An order of attachment The reason is simple. The writ had already been quashed by filing a
shall be granted only when it is made to appear by the counterbond, hence, another motion to quash it would be pointless.
affidavit of the applicant, or of some other person who Moreover, as the Court of Appeals correctly observed, when the ground for the
personally knows the facts, that a sufficient cause of action issuance of the writ is also the core of the complaint, the question of whether
exists that the case is one of those mentioned in section 1 the plaintiff was entitled to the writ can only be determined after, not before, a
hereof, that there is no other sufficient security for the claim full-blown trial on the merits of the case. This accords with our ruling G.B. Inc.
sought to be enforced by the action, and that the amount due vs. Sanchez, 98 Phil. 886 that: "The merits of a main action are not triable in a
to the applicant, or the value of the. property the possession motion to discharge an attachment, otherwise an applicant for the dissolution
of which he is entitled to recover, is as much as the sum for could force a trial on the merits of the case on this motion."
which the order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding May the defendant, after procuring the dissolution of the attachment by filing
section must be duly filed with the clerk or judge of the court a counterbond, ask for the cancellation of the counterbond on the ground that
before the order issues. the order of attachment was improperly issued? That question was answered
by this Court when it ruled in Uy Kimpang vs. Javier, 65 Phil. 170, that "the
No notice to the adverse party or hearing of the application is required. As a obligors in the bond are absolutely liable for the amount of any judgment that
matter of fact a hearing would defeat the purpose of this provisional remedy. the plaintiff may recover in the action without reference to the question of
The time which such a hearing would take, could be enough to enable the whether the attachment was rightfully or wrongfully issued."
defendant to abscond or dispose of his property before a writ of attachment
issues. Nevertheless, while no hearing is required by the Rules of Court for the The liability of the surety on the counterbond subsists until the Court shall
issuance of an attachment (Belisle Investment & Finance Co., Inc. vs. State have finally absolved the defendant from the plaintiff s claims. Only then may
Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. vs. Relova, the counterbond be released. The same rule applies to the plaintiffs
11 7 SCRA 420), a motion to quash the writ may not be granted without attachment bond. "The liability of the surety on the bond subsists because the
final reckoning is when the Court shall finally adjudge that the attaching
310 of 501
creditor was not entitled to the issuance of the attachment writ," (Calderon vs. SEC 12. Discharge of attachment upon giving counterbond. —
Intermediate Appellate Court, 155 SCRA 531.) At any time after an order of attachment has been granted,
the party whose property has been attached, or the person
WHEREFORE, finding no reversible error in the decision of the Court of appearing in his behalf, may, upon reasonable notice to the
Appeals in CA-G.R. SP No. 12467, the petition for review is denied for lack of applicant, apply to the judge who granted the order, or to the
merit with costs against the petitioners. judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security
SO ORDERED. given .. in an amount equal to the value of the property
attached as determined by the judge to secure the payment of
Cruz, Gancayco and Medialdea, JJ., concur. any judgment that the attaching creditor may recover in the
action. .. .
This mode of dissolution presents no apparent difficulty. It applies when there

Separate Opinions has already been a seizure of property by the sheriff. All that is entailed is the
presentation of a motion to the proper court, seeking approval of a cash or
surety bond in an amount equivalent to the value of the property seized and
the lifting of the attachment on the basis thereof. The counter-bond stands,
NARVASA, J.: Concurring And Dissenting Opinion according to the cited section, "in place of the property so released."
I agree that the decision of the Court of Appeals subject of the appeal in this 1.1. But a party need not wait until his property has been seized before seeking
case should be affirmed. I write this separate opinion simply to stress certain its dissolution upon security. In fact he may prevent the seizure of his property
principles relative to the discharge of preliminary attachments so that our own under attachment by giving security in an amount sufficient to satisfy the
1
decision or that thereby affirmed be not applied to juridical situations beyond claims against him. The relevant provision of the Rule is Section 5.
their intendment, which may well result from the statement that "after the
defendant has obtained the discharge of the writ of attachment by filing a SEC. 5. Manner of attaching property .— The officer executing
counterbond under Section 12, Rule 57 of the Rules of Court, he may not file the order shall without delay attach, to await judgment and
another motion under Section 13, Rule 57 to quash the writ for impropriety or execution in the action, all the properties of the party against
irregularity in issuing it." whom the order is issued in the province, not exempt from
execution, or so much thereof as may be sufficient to satisfy
Rule 57 specifies in clear terms the modes by which a preliminary attachment the applicant's demand, unless the former makes a deposit
may be discharged at the instance of the party against whom it has been with the clerk or judge of the court from which the order
issued. The first is by the submission of a counterbond or security. The second issued, or gives a counter-bond executed to the applicant, in
is by a demonstration of the attachment's improper or irregular issuance. an amount sufficient to satisfy such demand besides costs or
in an amount equal to the value of the property which is
1.0. The discharge of an attachment on security given is governed by Section 12 about to be attached, to secure payment to the applicant of
of the Rule. any judgment which he may recover in the action. .. .
311 of 501
4
2.0. The second way of lifting a preliminary attachment is by proving its incurring the obligation upon which the action is brought, the defendant is
irregular or improper issuance, under Section 13 of Rule 57. Like the first, this not allowed to file a motion to dissolve the attachment under Section 13 of
second mode may be availed of even before any property has been actually Rule 57 by offering to show the falsity of the factual averments in the plaintiffs
attached. It may even be resorted to after the property has already been application and affidavits on which the writ was based — and consequently
2 5
released from the levy on attachment, as the pertinent provision makes clear. 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
SEC. 13. Discharge of attachment for improper or irregular would be tantamount to a trial of the merits of the action. In other words, the
issuance. — The party whose property has been attached may merits of the action would be ventilated at a mere hearing of a motion, instead
also, at any time either before or after the release of the of at the regular trial. Therefore, when the writ of attachment is of this nature,
6
attached properly, or before any attachment shall have been the only way it can be dissolved is by a counter-bond.
actually levied, upon reasonable notice to the attaching
creditor, apply to the judge who granted the order, or to the 4.0. The dissolution of the preliminary attachment upon security given, or a
judge of the court in which the action is pending, for an order showing of its irregular or improper issuance, does not of course operate to
to discharge the attachment on the ground that the same was discharge the sureties on plaintiffs own attachment bond. The reason is
improperly or irregularly issued. If the motion be made on simple. That bond is 'executed to the adverse party, .. conditioned that the ..
affidavits on the part of the party whose property has been (applicant) will pay all the costs which may be adjudged to the adverse party
attached, but not otherwise, the attaching creditor may and all damages which he may sustain by reason of the attachment, if the
oppose the same by counter-affidavits or other evidence in court shall finally adjudge that the applicant was not entitled
7
addition to that on which the attachment was made. .. . thereto." Hence, until that determination is made, as to the applicant's
entitlement to the attachment, his bond must stand and cannot be withdrawn.
As 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 .. Separate Opinions
would require presentation of evidence in a fullblown trial on the merits and
cannot easily be settled in a pending incident of the case." NARVASA, J.: Concurring And Dissenting Opinion
3.0. However, when the preliminary attachment is issued upon a ground which I agree that the decision of the Court of Appeals subject of the appeal in this
is at the same time the applicant's cause of action; e.g., "an action for money or case should be affirmed. I write this separate opinion simply to stress certain
property embezzled or fraudulently misapplied or converted to his own use by principles relative to the discharge of preliminary attachments so that our own
a public officer, or an officer of a corporation, or an attorney, factor, broker, decision or that thereby affirmed be not applied to juridical situations beyond
agent, or clerk, in the course of his employment as such, or by any other their intendment, which may well result from the statement that "after the
3
person in a fiduciary capacity, or for a willful violation of duty," or "an action defendant has obtained the discharge of the writ of attachment by filing a
against a party who has been guilty of fraud in contracting the debt or counterbond under Section 12, Rule 57 of the Rules of Court, he may not file
312 of 501
another motion under Section 13, Rule 57 to quash the writ for impropriety or SEC. 5. Manner of attaching property. — The officer executing
irregularity in issuing it." the order shall without delay attach, to await judgment and
execution in the action, all the properties of the party against
Rule 57 specifies in clear terms the modes by which a preliminary attachment whom the order is issued in the province, not exempt from
may be discharged at the instance of the party against whom it has been execution, or so much thereof as may be sufficient to satisfy
issued. The first is by the submission of a counterbond or security. The second the applicant's demand, unless the former makes a deposit
is by a demonstration of the attachment's improper or irregular issuance. with the clerk or judge of the court from which the order
issued, or gives a counter-bond executed to the applicant, in
1.0. The discharge of an attachment on security given is governed by Section 12 an amount sufficient to satisfy such demand besides costs or
of the Rule. in an amount equal to the value of the property which is
about to be attached, to secure payment to the applicant of
SEC 12. Discharge of attachment upon giving counterbond. — any judgment which he may recover in the action. .. .
At any time after an order of attachment has been granted,
the party whose property has been attached, or the person 2.0. The second way of lifting a preliminary attachment is by proving its
appearing in his behalf, may, upon reasonable notice to the irregular or improper issuance, under Section 13 of Rule 57. Like the first, this
applicant, apply to the judge e who granted the order, or to second mode may be availed of even before any property has been actually
the judge of the court in which the action is pending, for an attached. It may even be resorted to after the property has already been
2
order discharging the attachment wholly or in part on the released from the levy on attachment, as the pertinent provision makes clear.
security given .. in an amount equal to the value of the
property attached as determined by the judge to secure the SEC. 13. Discharge of attachment for improper or irregular
payment of any judgment that the attaching creditor may issuance. — The party whose property has been attached may
recover in the action. .. . also, at any time either before or after the release of the
attached properly, or before any attachment shall have been
This mode of dissolution presents no apparent difficulty. It applies when there actually levied, upon reasonable notice to the attaching
has already been a seizure of property by the sheriff. All that is entailed is the creditor, apply to the judge who granted the order, or to the
presentation of a motion to the proper court, seeking approval of a cash or judge of the court in which the action is pending, for an order
surety bond in an amount equivalent to the value of the property seized and to discharge the attachment on the ground that the same was
the lifting of the attachment on the basis thereof. The counter- bond stands, improperly or irregularly issued. If the motion be made on
according to the cited section, "in place of the property so released." affidavits on the part of the party whose property has been
attached, but not otherwise, the attaching creditor may
1.1. But a party need not wait until his property has been seized before seeking oppose the same by counter-affidavits or other evidence in
its dissolution upon security. In fact he may prevent the seizure of his property addition to that on which the attachment was made. .. .
under attachment by giving security in an amount sufficient to satisfy the
1
claims against him. The relevant provision of the Rule is Section 5. As 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
313 of 501
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."
3.0. However, when the preliminary attachment is issued upon a ground which
is at the same time the applicant's cause of action; e.g., "an action for money or
property embezzled or fraudulently misapplied or converted to his own use by
a public officer, or an officer of a corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other
3
person in a fiduciary capacity, or for a willful violation of duty," or "an action
against a party who has been guilty of fraud in contracting the debt or
4
incurring the obligation upon which the action is brought, the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of
Rule 57 by offering to show the falsity of the factual averments in the plaintiffs
application and affidavits on which the writ was based—and consequently that
5
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. Therefore, when the writ of attachment is of this nature,
6
the only way it can be dissolved is by a counter-bond.
4.0. 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 plaintiffs 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
7
thereto." Hence, until that determination is made, as to the applicant's
entitlement to the attachment, his bond must stand and cannot be withdrawn.
314 of 501
Benitez v. IAC, 154 S 41 (P500,000.00) in the name of Benitez. On August 26, 1983, to complete the
amount of One Million Pesos as allegedly agreed upon, Casa Filipina issued
SECOND DIVISION again another check in the amount of Five Hundred Thousand Pesos
(P500,000.00). Both checks were deposited and credited in petitioner's bank
G.R. No. 71535 September 15, 1987 account. The four-month period allegedly elapsed without Benitez having
purchased nor conveyed any real estate in the total value of One Million Pesos
HELENA Z. T. BENITEZ, petitioner-appellee, (P1,000,000.00) in favor of Casa Filipina, but instead Benitez converted the
vs. entrusted money for her own personal use in violation of her fiduciary
THE INTERMEDIATE APPELLATE COURT, ROSARIO R. VELOSO, in her relationship with plaintiff and that despite repeated demands for the refund or
capacity as Judge of the Regional Trial Court, National Capital Judicial return of the aforementioned amount, Benitez chose to ignore the same.
Region, Branch 133, et al., respondents-appellants. Praying for a writ of preliminary attachment, Casa Filipina submitted with its
complaint, the affidavit of one Nestor P. Borromeo, the corporate secretary
and acting treasurer of the corporation.
YAP, J.: The writ of attachment was granted by respondent court exparte in an order
dated December 11, 1985.
This is a petition for review on certiorari of the decision of respondent
Intermediate Appellate Court dated July 25, 1985, affirming the questioned On December 27, 1984, the Clerk of Court issued a writ of preliminary
orders of the Regional Trial Court of Makati, to wit: (a) the order dated attachment, by virtue of which the respondent Sheriff served notices of
December 11, 1984, granting the private respondents' petition for a writ of garnishment to the Philippine Women's University, Taft Avenue, Manila, the
attachment ex-parte; (b) the order dated January 31, 1985, denying petitioner's Unlad Development Resources Corporation and Bank of the Philippine
urgent motion to discharge attachment; and (c) the order dated April 24, 1985, Islands, Unlad Condominium, Taft Avenue, Manila, thereby garnishing the
denying petitioner's motion for reconsideration. deposits, shares of stocks, salaries and other personal property of the
petitioner. Likewise on January 30, 1984, petitioner was advised by the Acting
The records show that on December 6, 1984, private respondent Casa Filipina Register of Deeds of Quezon City that a notice of levy was filed with the
Development Corporation (Casa Filipina for brevity) filed a complaint against Registrar's Office affecting two parcels of prime land at Mariposa Street, with
herein petitioner Helena T. Benitez for recission of contract, plus damages, an aggregate area of 4,304 square meters which are owned by and registered in
with a prayer for preliminary attachment. The complaint alleged that the name of the petitioner.
sometime on April 16, 1983, the plaintiff Casa Filipina, a real estate
corporation, represented by Renato P. Dragon, and defendant Benitez (the Earlier on January 21, 1985, Benitez filed an answer with counterclaim and
petitioner herein), entered into a verbal contract whereby Benitez allegedly opposition to the petition for issuance of a writ of preliminary attachment. On
agreed to undertake to purchase/convey land for Casa Filipina in the total the same date, Benitez also filed an Urgent Motion to Discharge Writ of
value of One Million Pesos (P1,000,000.00) within the period of four (4) Preliminary Attachment under Section 13, Rule 57 of the Rules of Court, on the
months from receipt of the total amount. On the same date, Casa Filipina ground that the same was improperly or irregularly issued. Benitez alleged
tendered a check payment in the amount of Five Hundred Thousand Pesos that sometime in March 1983, Mr. Renato Dragon, acting for himself and Casa
Filipina agreed to buy ten (10) hectares of petitioner's land in Dasmarinas,
315 of 501
Cavite, for a price of P15.00 per square meter or for a total consideration of WHEREFORE, the motion to lift and/or discharge the writ of preliminary
One Million Five Hundred Thousand Pesos (P1,500,000.00); that it was agreed attachment is hereby denied.
upon by the parties that it is only upon full payment of the amount of
P1,500,000.00 that delivery of the ten-hectare property of the petitioner will be SO ORDERED.
made; that Casa Filipina was not able to comply with the obligation to pay the
balance of P500,000.00 despite repeated demands and instead filed the On February 5, 1985, despite the lower court's denial of petitioner's motion to
present action for recission. discharge preliminary attachment, the private respondent filed a belated
opposition to the said motion, to which the petitioner filed a reply a February
In support of its urgent motion to discharge the writ of preliminary 18, 1985.
attachment, petitioner attached thereto the affidavit of her technical assistant
and attorney-in-fact by the name of Virginia Real, who alleged. among other On March 14, 1985, petitioner discovered that her motion to discharge
things, that she knows for a fact that the transaction between Benitez and preliminary attachment was denied. Hence, on March 20, 1985, petitioner filed
Dragon for Casa Filipina, was one of purchase and sale; that a copy of TCT No. a motion for reconsideration which was likewise denied by respondent judge
9833 covering the land to be purchased was furnished the office of Mr. Dragon on April 24, 1985, Whereupon, a petition for certiorari, mandamus and
on February 28, 1984; that petitioner is willing and able to execute a deed of prohibition was filed by the petitioner before respondent Intermediate
absolute sale in favor of Casa Filipina upon full payment of the balance of Appellate Court, which, as stated earlier, was dismissed for I acknowledge of
P500,000.00. merit. Hence, this petition.
The said motion was set for hearing on January 25, 1985 but the private On January 8, 1986, the Court gave due course to the petition and required the
respondent and its counsel failed to appear despite notice. Consequently, the parties to submit their memoranda.
motion was deemed submitted for resolution.
Petitioner poses the following questions for resolution, to wit:
On January 31, 1985, respondent Court denied petitioner's motion to discharge
writ of preliminary attachment. The said order reads: 1. Whether a counter-attachment bond is necessary and indispensable under
the circumstances before the subject writ of preliminary attachment may be
Considering defendant's motion to quash and/or lift the writ of preliminary recalled, quashed and/or discharged?
attachment issued by this Court upon properties of defendant on the ground
that the same was predicated upon false and untrue allegations, the Court 2. Whether or not the issue on the propriety of the issuance of the subject writ
believes and so rules that the issue cannot be determined without adducing may be resolved without going into the merits of the principal action?
evidence at the same time going into the merits of the case which in the
opinion of the Court could not be done at this stage of the proceedings. We find the petition meritorious.
Considering that the writ of preliminary attachment was issued after having The attachment was granted by the lower court ex-parte under Section 1 (b),
satisfied the requirements of the rules, the same may not be lifted or Rule 57, Rules of Court, upon the allegation of respondent Casa Filipina, that
discharged without the defendant filing a counterbond. petitioner Helena Benitez, the defendant, had violated their alleged fiduciary
relationship and had unlawfully converted the amount of P1,000,000.00 for her
316 of 501
own use. Petitioner promptly filed an urgent motion to discharge writ of that a hearing be held. The Court finds private respondent's allegation to be
preliminary attachment for improper or irregular issuance, supported by the irresponsible, for attached to petitioner's motion was the supporting affidavit
affidavit of Virginia Real, who alleged that there was no fiduciary relationship of Virginia L. Real, the technical assistant of petitioner Benitez. In her
between the plaintiff and defendant inasmuch as the transaction between affidavit, she stated that she had personal knowledge of the transaction
them was one of sale of real property. Thus, in effect, the petitioner claims that between respondent Casa Filipina and petitioner Benitez; that Mr. Renato
the private respondent's allegation of fraud was false, that hence there was no Dragon, for himself and/or Casa Filipina, agreed to buy a portion consisting of
ground for the attachment, and that consequently, the attachment order was 10 hectares of a parcel of land belonging to Benitez in Dasmarinas, Cavite, for
improperly or irregularly issued. the total price of P1,500,000.00 of which private respondent made a
downpayment of P500,000.00 on April 16, 1983; and a second payment of
In Villongco, et al. vs. Hon. Panlilio, et al., 1 we held that the affidavit P500,000.00 on August 27, 1983; that private respondent having failed to pay
supporting the petition for the issuance of the preliminary attachment may the balance of P500,000.00, the deed of sale could not be executed in favor of
have been sufficient to justify the issuance of the preliminary writ, but it private respondent. The record amply supports petitioner's version, as against
cannot be considered as proof of the allegations contained in the affidavit, the private respondent's allegation that Benitez had acted as agent in receiving
which are mere conclusions of law, not statement of facts. Petitioner in the the money and converted the same for her own use in violation of the
instant case having squarely controverted the private respondent's allegation fiduciary relationship existing between her and private respondent. Private
of fraud, it was incumbent on the latter to prove its allegation. The burden of respondent acknowledged the receipt of a xerox copy of TCT No. 9833
3
proving that there indeed was fraud lies with the party making such allegation. covering petitioner's land in Dasmarinas, Cavite, and the check voucher
This finds support in Section 1, Rule 131 of the Rules of Court which provides: issued by private respondent on April 16, 1983 showed that the check for
4
"Each party must prove his own affirmation allegations. . . . The burden of P500,000.00 was for "Payment for downpayment of lot to be purchased" and
proof lies on the party who would be defeated if no evidence were given on the check voucher dated August 27, 1983 for P500,000.00 was for "Second
2 5
either side." In this jurisdiction, fraud is never presumed. payment for lot to be purchased."
The petitioner's Urgent Motion to Discharge Writ of Preliminary Attachment It was grave abuse of discretion on the part of respondent Judge Rosario
was filed under Section 13, Rule 57. The last sentence of said provision Veloso to deny petitioner's Urgent Motion to Discharge Writ of Preliminary
indicates that a hearing must be conducted by the judge for the purpose of Attachment, without conducting a hearing and requiring the plaintiff to
determining whether or not there really was a defect in the issuance of the substantiate its allegation of fraud. Neither can respondent Judge avoid
attachment. deciding the issue raised in petitioner's urgent motion by ruling that "the issue
cannot be determined without adducing evidence at the same time going into
It appears from the records that no hearing was conducted by the lower court. the merits of the case." Having issued the writ of preliminary attachment ex
Indeed, when the case was called for hearing, the plaintiff (private respondent parte, it was incumbent on the respondent court, upon proper challenge of its
herein), failed to appear and the petitioner's motion was considered submitted order, to determine whether or not the same was improvidently issued. A
for resolution. preliminary attachment is a rigorous remedy which exposes the debtor to
humiliation and annoyance, such that it should not be abused to cause
Private respondent has alleged in its memorandum that petitioner did not file unnecessary prejudice and, if wrongfully issued on the basis of false allegation,
an affidavit in support of her Urgent Motion to Discharge Attachment, as should at once be corrected.
required under Section 13 of Rule 57, hence, it was not necessary or imperative
317 of 501
We agree with petitioner that a writ of attachment may be discharged

pursuant to Section 13, Rule 57, without the necessity of filing a cash deposit or
counterbond. The provisions of the aforesaid section grants an aggrieved party
relief from baseless and unjustifiable attachments procured, among others,
upon false allegations, without having to file any cash deposit or counterbond.
WHEREFORE, in view of the foregoing, the appealed decision is hereby

reversed and the ex parte writ of preliminary attachment issued by the
respondent Regional Trial Court on December 11, 1984 is ANNULLED and SET
ASIDE. Costs against private respondent.
SO ORDERED.
Davao Light v. CA, 204 S 343 (See under Section 2 page 79)
Cuartero v. CA, 212 S 260 (See under Section 2 page 85)

318 of 501
Uy Kimpang v. Javier, 65 Phil 170 (1937) the attachment of the properties of the defendants was null and void because
it does not appear that they were served with a copy of the writ ordering the
EN BANC same; (2) that said attachment was not inscribed in the registry of properties;
(3) that he (Autajay) was released from his obligation as surety because his
DECISION undertaking had been cancelled when the court, in its order of February 15,
1930, permitted him to withdraw therefrom; (4)that the undertaking should in
December 16, 1937 any event be enforced exclusively against the other surety (Severino
G.R. No. L-43461 Magbanua) inasmuch as he did not withdraw therefrom.
J. UY KIMPANG & CO., plaintiff-appellant, After passing upon the question raised by Juan Autajay, the lower court, in its
vs. order of July 18, 1934, denied the plaintiff’s motion for the following reasons:
VICENTE JAVIER, ET AL., defendants; JUAN AUTAJAY and SEVERINO
MAGBANUA, sureties-appellees. (a) That in view of the amount in litigation (P9,352), the justice of the peace of
the capital of antique, even in the absence of the Judge of First Instance of said
Engracio Padilla and Manuel Laserna and Vickers, Ohnick, Opisso and Velilla province, had no power to issue the writ of attachment in question;
for appellant.
Tobias Fornier for appellee Autajay. (b) That the issuance of the said writ by the clerk was illegal, because only the
, J.: justices and the judges of First Instance may issue such writs, and their power
By virtue of a writ of execution issued by the Court of First Instance of Antique cannot in any case be delegated to the clerk;
on August 8, 1933 to enforce the payment to the plaintiff of the sum of
P6,678.84 plus interest and costs, which the defendants Vicente Javier, Ramon (c) That there was no valid attachment because, aside from the fact that the
Majandog, Zenon Javier, Paz Javier with her husband Hugo Mabaquiao and basic writ was not signed by any judge, the obligation executed by the plaintiff
Ramon Maza, in case G. R. No. 36414 1 (civil case No. 1253 of the Court of First was not approved by the court; and
Instance of Antique), were sentenced by this court to pay, the sheriff of the
(d) that, in violation of the provisions of section 440 of Act No. 190, the
aforesaid province levied upon the seven parcels of land belonging to the
discharge of the attachment levied upon the properties of the defendants was
defendant Ramona Majandog and enumerated in the return of said sheriff of
not ordered.
September 9, 1933 for the purpose of selling, as he in fact later sold, them at
public auction to the highest bidder who was found in the person of Uy Cay Ju, The plaintiff duly appealed from the order denying his motion and now
manager of the plaintiff entity, for the sum of only P1,730. In view of the fact contends that the lower court erred:
that this sum was not sufficient to cover the full value of the judgment and
that the defendants failed to deliver to the sheriff the properties which were 1. In holding that the justice of the peace of the capital of Antique could not
released from the attachment by the virtue of the obligation which, on issue the writ of attachment because the amount sued for was in excess of that
December 29, 1925 and the approval of the court, they executed jointly with provided by law in the cases in which justice of the peace of the provincial
their sureties Severino Magbanua and Juan Autajay, the plaintiff in its motion capitals may order an attachment;
of January 23, 1934 moved the court to again order the execution of the
2. In holding that the writ of attachment was illegal because it was issued by
aforesaid judgement, but this time against the properties of two sureties. The
the clerk and not by the judge, and that the order authorizing the clerk to
surety Juan Autajay objected to the plaintiff’s motion on the grounds: (1) That
319 of 501
issue the same was likewise illegal because it conferred powers which under the properties of the said defendants upon the execution by the plaintiff of an
the law could not be delegated; obligation in the sum of P9,500 which will respond for the damages
recoverable by the defendants in case the court decides this case in their favor.
3. In holding that the properties of the defendants were not validly attached,
because the writ of attachment was not signed by the judge; So ordered.
4. In holding that the obligation executed by the plaintiff was not valid, San Jose, Antique, P.I., December 24, 1925.
because it was not approved by the court;
(Sgd.) DELFIN HOFILEÑA
5. In holding that the counterobligation executed by Juan Autajay and Justice of the Peace of the Capital
Severino Magbanua is without any legal effect; of San Jose, Antique, acting in the
Seventeenth District.
6. In holding that the plaintiff has no right to enforce the counterobligation After the plaintiff had executed the obligation in the sum of P9,500 as required
signed by Juan Autajay and Severino Magbanua, and in denying its motion for in this order, issued on December 29,1925 the writ of attachment in question,
the enforcement thereof; and notwithstanding the fact that the aforesaid obligation was not yet approved.
7. In not granting its motion for reconsideration and in denying its motion for The provincial sheriff, upon receipt of the writ, attached the properties
new trial. belonging to defendants and enumerated in the sheriff’s return, the assessed
value of which was noted at the bottom of said return. On the same day,
The background necessary to a better grasp of the facts of the case may be
December 29, 1925, the defendants executed a counterobligation in the sum of
briefly stated as follows: On December 20, 1925 the plaintiff filed in the Court
P9,500 with a view to dissolving the attachment levied upon their properties.
of First Instance of Antique a verified complaint in which it alleged among
Said counterbond, which was approved on the same date by the justice of the
other things that the defendant were indebted to it in the sum of P9,352 plus
peace who issued the order of attachment, was signed by all the defendant and
interest from May, 1918, at the rate of 12 per cent per annum; that the
their sureties Juan Autajay and Severino Magbanua who bound themselves
defendants were disposing or about to dispose of their properties with intent
jointly and severally thereunder.
to defraud their creditors and the plaintiff; that in order to secure plaintiff’s
rights, it was necessary to attach the properties of said defendants, unless they On March 29, Juan Autajay prayed that he be permitted to withdraw from his
were willing to execute an obligation as guaranty for their solvency; and that obligation as surety of the defendant. In view, however, of the opposition
to obtain such remedy, it was ready to execute the requisite obligation. Four registered by the plaintiff in which it was alleged that the purpose of Juan
days later, or on December 24, 1925, the plaintiff filed a motion in which, after Autajay was merely to evade the performance of an obligation voluntarily
reiterating the allegations of its complaint, it was prayed that a writ of contracted and to defeat the judgment which might be entered in plaintiff’s
attachment be issued against the defendant. The justice of the peace of the favor, the trial court denied the motion in its order of April 17, 1926 the
capital of Antique, acting in the place of the Judge of the Court of First dispositive part of which reads as follows:
Instance of said province, ruled favorably on the plaintiff’s motion and stated
the following in his order of December 24, 1925. The court, after hearing the arguments of both parties, sustains the demurrer,
admits the amended complaint, and denies the motion of Juan Autajay, unless
Wherefore the court, being of the opinion that the plaintiff entity is entitled the defendant Vicente Javier should execute a new obligation within the
thereto, hereby orders the clerk of court to issue a writ of attachment against period of thirty days.
320 of 501
Two other similar motions were filed by Autajay and by the surety Magbanua the justice of the peace of the capital acted in full conformity with the law in
on November 21 and December 17, 1927, but they were not acted upon by the issuing the aforesaid order.
court for lack of prosecution. On January 31, 1930, Autajay filed another
motion, the plaintiff objected; but the trial court granted the same under the II. There is no doubt that, under the provisions of sections 425, 426 and 427 of
conditions expressed in the order of February 15, 1930 to wit: Act No. 190, only the justice, judges of First Instance, and justices of the peace
or municipal judges may issue an order of attachment when prayed for,
Considering the motion of the surety Juan Autajay and the statement of the provided the legal requisites are present. In the case at bar all the
Attorney Hon. Segundo C. Moscoso in representation of the defendants requirements of the law were complied with. Inasmuch as the order of
Vicente Javier and other the withdrawal of the movant Juan Autajay is hereby December 24, 1925 under which the questioned writ of attachment was issued,
granted and said defendants are given sixty days within which to submit to the was entered by a competent judge, it cannot be alleged that said writ was a
court for approval another obligation in substitution for the one to be mere capricious act of the clerk. On the contrary, it may and should be
rendered ineffective by the withdrawal of the surety Juan Autajay. inferred that the writ was issue in strict compliance with a perfectly valid order
given to him. The law does not provide or state that the writs of attachment
The fact, however, remains that the defendant did not execute the new must be issued by the very justice or judge who is to authorize it; it simply
obligation required in the foregoing order. determines the judicial authority who shall have the power to grant an
attachment. Even supposing that the writ in dispute is defective because it was
I. The question raised under the first error alleged to have been resolve by this
not signed by the judge who authorized its issuance, it is now too late to raise
court in an analogous case wherein it was held that the justice of the peace of
the question after the same was accepted and believed to be valid not only by
the capital acting “in the absence of the Justice of First Instance” has the power
the defendants but by their sureties. It is noteworthy that in their
to issue an order of attachment in spite of the fact that the amount litigated is
counterobligation they made it understood that they were aware of the
in excess of that fixed by law for his ordinary jurisdiction. (Wise & Co. vs.
issuance of a writ of attachment against the defendants; that the properties of
Larion, 45 Phil. 314.)
the latter had been attached by the sheriff; that all wanted or at least prayed
Section 1, paragraph 4, of act No. 2131 which was in force on December 24, that said attachment be discharged; and that they offered to execute, as in fact
1925, the date of the attachment, provides that the justice of the peace in the they immediately did execute, the counterobligation required. The general
capitals of provinces organized under the Provincial Government Act, in the rule is that “irregularities and defects in attachment or garnishment
absence of the judge of the province, may exercise within the province like proceedings which render the attachment merely voidable and not void, are
interlocutory jurisdiction as that of the said judge, including the appointment deemed to be waived unless promptly taken advantage of by appropriate mode
of receivers and the issuance of all other orders which are final and do not of raising objection thereto.” (4 Am. Jur., par., 616, p. 923.)
involve, as the attachment under consideration, a decision of the case on its
In case of Hammond vs. Starr (79 Cal., 556, 559; 21 Pac., 971), it was held that:
merits.
Irregularities in affidavit and undertaking or in proceedings to procure
The defendants failed to prove that the Judge of the Court of First Instance of
attachment, if waived in attachment suit, cannot be taken advantage of by
Antique was then holding sessions in said province; and, in the absence of
sureties in collateral proceedings on undertaking given to secure release of
proof to the contrary, the legal presumption being that official duty has been
attachment.
regularly performed (sec. 334, No. 14, Act No. 190), it much be held that said
judge was absence from his district on December 24, 1925. It must follow that
321 of 501
In the case of Moffitt vs. Garrett, the supreme Court of Oklahoma (100 Pac. its object and assist the parties in obtaining speedy justice, bearing in mind, in
Rep., 533), construing two legal provisions of said State, 4404 and 4376 (4851 construing and applying them, their spirit and purpose, rather than their strict
and 4821), which are analogous to section 440 of Act No. 190, and adhering to letter (sec. 2, Act No. 190, Garcia vs. Ambler and Sweeney, 4 Phil. 81).
the decisions of the court of Iowa, New York, Illinois, Wisconsin, Michigan,
Minnesota, Texas, Washington, Rhode Island, California, Oregon, North The conditions of the counterobligation executed by the defendants and the
Dakota and South Dakota, held that: sureties-appellees are as follows:
The court in these states have held that the execution of a bond under and in Should the judgment be favorable to the plaintiff, the defendant, upon being
accordance with these statutes estops the defendant from controverting the required, shall redeliver to the officer of the court the property discharge from
attachment, and renders the obligors in the bond absolutely liable for the the attachment, in order that it may be applied to the payment of the
amount of any judgment the plaintiff recovers in the action, without reference judgment, and in case of failure to do so , the defendant and his sureties, when
to the question whether the attachment was rightfully or wrongfully sued out. required, shall pay to the plaintiff the full value of attached property. (Page 16,
And concluded that: Bill of Exceptions.)
The obligors in the bond are precluded and estopped from traversing the truth It must be remembered that the defendants and the sureties-appellees not
of the allegations of the affidavit, or setting up that the defendant in only failed to object to the procedure followed by the clerk but, as already
attachment was not the owner of the property levied on. stated, executed the counterobligation required by law for discharge of the
attachment levied upon the properties of the defendant, and that Autajay and
What has been stated also disposes of the contention advanced by the Magbanua were the ones who signed the counterobligation as sureties and
sureties-appellees to the effect that the defendants were not given a copy of submitted the same to the justice of the peace of the capital for approval. It
the order of attachment, which is an essential requisite prescribed by section must also be remembered that in all the motions which they subsequently
429 of Act No. 190. The Inference must be drawn that they were notified of filed in these proceedings, the said sureties confined themselves to the request
said order; otherwise, they would not have stated in their counterobligation that they be permitted to withdraw from their obligation for the reason that it
that: was against their interest to continue being sureties of the defendants. Under
these circumstances, we believe we should adhere to the rule that:
“The defendant having prayed for the discharge of the attachment levied upon
his properties in an action pending in the Court of First Instance of the All objections to the writ will be waived by moving to set aside the attachment
Province of Antique, Philippines Island, in which J. Uy Kimpang & Co. is on other grounds and failing to make the objections before bond for the
plaintiff and Vicente Javier and Others, defendant, . . . .” The other contention release of the property. (6 C.J., par. 346, p. 190.)
that the plaintiff’s motion praying for the issuance of a attachment was not
sworn to as required by law, is likewise disposed of. It was unnecessary that because,
the same should be under oath because it was merely a repetition or renewal
After issue made and trial begun upon the merits of a case, it is too late for an
of what was already prayed for in the complaint which was verified. In order
objection of the petition or attachment for want of verification. (Id.)
not to nullify the purposes of the law, technicalities should be disregarded,
especially when, as in the case under advisement, there was substantial For the reasons given, we hold that the trial court committed the second error
compliance therewith. On the other hand, the law enjoins that the provisions assigned by the appellant.
of the Code of Civil Procedure shall be liberally construed in order to promote
322 of 501
III. The question whether or not there was valid attachment is impliedly presumed that an order discharging the attachment was made . . . and that the
resolved in the discussion of the appellant’s second assignment of error. The officer regularly performed his duty in releasing the goods.
omission referred to by the trial court could be supplied and was not in any
wise capital, because, as already said, the writ signed by the clerk was issued VI and VII. Inasmuch as the trial court committed the preceding five errors, it
by him in compliance with the order entered on December 24, 1925 by the must follow that it also committed errors 6 and 7 which are a necessary
justice of the peace of the capital who was authorized by law (Act No. 2131) to consequence thereof. The counterobligation executed by the sureties-
do so in the absence of the Judge of First Instance of the District. appellees is enforceable under the provisions of section 440 of Act No. 190
(Bautista vs. Joaquin, 46 Phil. 885), because, when the defendants were
IV Inasmuch as both the defendants and the sureties-appellees, by executing required to deliver to the sheriff the properties released from the attachment,
the counterobligation required by law for the discharge of the attachment, had they could not do so, as at least three of said properties (Exhs. A, B and E of
accepted the obligation filed by the plaintiff with the justice of the peace of the the opposition of the appellee Juan Autajay, dated June 11, 1934) were sold after
capital for the issuance of the writ of attachment against the defendants, it is their release, and the appellees failed to proved that the defendants had other
now too late and futile to allege that the said obligation is invalid for lack of properties susceptible of attachment and execution.
approval by the judge. They are estopped from doing so by their own acts,
inasmuch as their failure to question the said obligation at the proper time It is superfluous to state that there is no basis for the contention of the
constitutes a waiver of their right. One who has any objection to the appellee Juan Autajay that he was released from his obligation as surety of the
sufficiency or validity of an obligation in attachment proceedings, should defendants, because he was never so released in view of the failure of the
record the same before executing the counterobligation required for the defendants to execute the new obligation required by the order of February 15,
discharge of the attachment; otherwise, it will be understood that he does not 1930 which has hereinbefore been referred to.
question, or that he renounces his right to question, the sufficiency or validity
Wherefore, the order of July 18, 1934 is set aside and the lower court is ordered
of the said obligation.
to issue another writ of execution against the properties of the sureties-
V. There is no importance in the fact that it does not appear in the record that appellees, to the extent of the value of their obligation of December 29, 1925,
the court had dissolved, after the approval of the aforesaid counterobligation, with a view to satisfying the unpaid portion of the judgment rendered in civil
the attachment levied upon the properties of the defendants. It must be case No. 1253 of the Court of First Instance of Antique, without prejudice to
assumed that the court discharged it by virtue of the said counterobligation; the right of the said sureties to recover from the defendants the amount that
otherwise, the reason for approving it cannot be explained, and said approval may be paid by virtue of the execution herein ordered. The costs will be
would have no finality. assessed against the appellees. So ordered.
In the case of Rosenthal (123 Cal., 240), where a similar question was involved,
the court said:
Where the goods were in fact released as a consequence of the bond being
given, and the undertaking for the released of the attached property recited
that it was given pursuant to an order of the court requiring it to be given, and
the officer accepted the bond and surrendered the property, it must be
323 of 501
Filinvest Credit v. Relova, 117 S 420 the amount of P99,828.00. To secure the note, Salazar also executed in favor of
RALLYE a deed of chattel mortgage over the above described motor vehicle.
SECOND DIVISION On May 7, 1977, RALLYE, for valuable consideration, assigned all its rights,
title and interest to the aforementioned note and mortgage to FILINVEST.
G.R. No. L-50378 September 30, 1982 Thereafter, FILINVEST came to know that RALLYE had not delivered the
motor vehicle subject of the chattel mortgage to Salazar, "as the said vehicle
FILINVEST CREDIT CORPORATION, petitioner, (had) been the subject of a sales agreement between the codefendants."
vs. Salazar defaulted in complying with the terms and conditions of the aforesaid
THE HONORABLE JUDGE BENJAMIN RELOVA (In his capacity as promissory note and chattel mortgage. RALLYE, as assignor who guaranteed
Presiding Judge of the Court of First Instance of Manila, Branch XI) and the validity of the obligation, also failed and refused to pay FILINVEST despite
ERNESTO SALAZAR, respondents. demand. According to FILINVEST, the defendants intentionally, fraudulently
and with malice concealed from it the fact that there was no vehicle delivered
Labaquis, Loyola & Angara Law Offices for petitioner. under the documents negotiated and assigned to it, otherwise, it would not
have accepted the negotiation and assignment of the rights and interest
Cecilio D. Ignacio for respondents. covered by the promissory note and chattel mortgage. Praying for a writ of
preliminary attachment, FILINVEST submitted with its complaint the affidavit
of one Gil Mananghaya, pertinent portions of which read thus:
GUERRERO, J.: That he is the Collection Manager, Automotive Division of

Filinvest Credit Corporation;
This is a special civil action for certiorari, with prayer for restraining order or
preliminary injunction, filed by petitioner Filinvest Credit Corporation seeking That in the performance of his duties, he came to know of the
to annul the Orders issued by respondent Judge dated February 2, 1979 and account of Ernesto Salazar, which is covered by a Promissory
April 4, 1979 in Civil Case No. 109900. Note and secured by a Chattel Mortgage, which documents
together with all the rights and interest thereto were assigned
As shown by the records, the antecedents of the instant Petition are as follows: by Rallye Motor Co., Inc.;
On August 2, 1977, Filinvest Credit Corporation (hereinafter referred to as That for failure to pay a stipulated installment, and the fact
FILINVEST) filed a complaint in the lower court against defendants Rallye that the principal debtor, Ernesto Salazar, and the assignor,
Motor Co., Inc. (hereinafter referred to as RALLYE) and Emesto Salazar for the Rallye Motor Co., Inc. concealed the fact that there was really
collection of a sum of money with damages and preliminary writ of no motor vehicle mortgaged under the terms of the
1
attachment. From the allegations of the complaint, it appears that in Promissory Note and the Chattel Mortgage, the entire amount
payment of a motor vehicle described as: "One (1) Unit MAZDA DIESEL of the obligation stated in the Promissory Note becomes due
SCHOOL BUS, Model: E4100, Serial No.: EXC43P-02356, Motor No.: Y-13676," and demandable, which Ernesto Salazar and Rallye Motor Co.,
Salazar executed a promissory note dated May 5, 1977 in favor of RALLYE for Inc. failed and refused to pay, so much so that a sufficient
cause of action really exists for Filinvest Credit Corporation to
324 of 501
3
institute the corresponding complaint against said person and In the meantime, let summons issue on the defendants.
entity;
More than a year later, in an Urgent Motion dated December 11,
4
That the case is one of those mentioned in Section 1, Rule 57 1978, defendant Salazar prayed that the writ of preliminary attachment
of his Rules of Court, particularly an action against parties issued ex parte and implemented solely against his property be recalled and/or
who have been guilty of a fraud in contracting the debt or quashed. He argued that when he signed the promissory note and chattel
incurring the obligation upon which the action is brought; mortgage on May 5, 1977 in favor of RALLYE, FILINVEST was hot vet his
creditor or obligee, therefore, he could not be said to have committed fraud
That there is no other sufficient security for the claim sought when he contracted the obligation on May 5, 1977. Salazar added that as the
to be enforced by the action, and that the amount due to the motor vehicle which was the object of the chattel mortgage and the
applicant Filinvest Credit Corporation is as much as the sum consideration for the promissory note had admittedly not been delivered to
for which the order is granted above all legal counterclaims; him by RALLYE, his repudiation of the loan and mortgage is more justifiable.
That this affidavit is executed for the purpose of securing a FILINVEST filed an Opposition, but on February 2, 1979, the court a quo, this
2
writ of attachment from the court. time presided over by herein respondent Judge, ordered the dissolution and
setting aside of the writ of preliminary attachment issued on August 17, 1977
The specific provision adverted to in the above Affidavit is Section 1(d) of Rule and the return to defendant Salazar of all his properties attached by the Sheriff
57 which includes "an action against a party who has been guilty of fraud in by virtue of the said writ. In this Order, respondent Judge explained that:
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 When the incident was called for hearing, the Court
or conversion of which the action is brought" as one of the cases in which a announced that, as a matter of procedure, when a motion to
"plaintiff or any proper party may, at the commencement of the action or at quash a writ of preliminary attachment is filed, it is
any time thereafter, have the property of the adverse party attached as security incumbent upon the plaintiff to prove the truth of the
for the satisfaction of any judgment that may be recovered." allegations which were the basis for the issuance of said writ.
In this hearing, counsel for the plaintiff manifested that he
Judge Jorge R. Coquia (now Justice of the Court of Appeals), then presiding was not going to present evidence in support of the allegation
Judge of the lower court, granted the prayer for a writ of attachment in an of fraud. He maintained that it should be the defendant who
Order dated August 17, 1977 stating that: should prove the truth of his allegation in the motion to
5
dissolve the said writ. The Court disagrees.
Finding the complaint sufficient in form and substance, and
in view of the sworn statement of Gil Mananghaya, Collection FILINVEST filed a Motion for Reconsideration of the above Order, and was
Manager of the plaintiff that defendants have committed subsequently allowed to adduce evidence to prove that Salazar committed
fraud in securing the obligation and are now avoiding fraud as alleged in the affidavit of Gil Mananghaya earlier quoted. This
payment of the same, let a writ of attachment issue upon the notwithstanding, respondent Judge denied the Motion in an Order dated April
plaintiff's filing of a bond in the sum of P97,000.00. 4, 1979 reasoning thus:
325 of 501
The plaintiff's evidence show that the defendant Rallye Motor "enjoining respondent Judge or any person or persons acting in his behalf from
assigned to the former defendant Salazar's promissory note hearing private respondent's motion for contempt in Civil Case No. 109900,
and chattel mortgage by virtue of which plaintiff discounted entitled, 'Filinvest Credit Corporation, Plaintiff, versus The Rallye Motor Co.,
8
the note. Defendant Salazar refused to pay the plaintiff for the Inc., et al., Defendants' of the Court of First Instance of Manila, Branch XI. "
reason that Rallye Motor has not delivered to Salazar the
motor vehicle which he bought from Rallye. It is the position Petitioner FILINVEST in its MEMORANDUM contends that respondent Judge
of plaintiff that defendant Salazar was in conspiracy with erred:
Rallye Motor in defrauding plaintiff.
(1) In dissolving the writ of preliminary attachment already
Ernesto Salazar, on his part complained that he was himself enforced by the Sheriff of Manila without Salazar's posting a
defrauded, because while he signed a promissory note and counter-replevin bond as required by Rule 57, Section 12; and
chattel mortgage over the motor vehicle which he bought
from Rallye Motor, Rallye Motor did not deliver to him the (2) In finding that there was no fraud on the part of Salazar,
personal property he bought; that the address and existence despite evidence in abundance to show the fraud perpetrated
of Rallye Motor can no longer be found. by Salazar at the very inception of the contract.
While it is true that the plaintiff may have been defrauded in It is urged in petitioner's first assignment of error that the writ of preliminary
this transaction, it having paid Rallye Motor the amount of attachment having been validly and properly issued by the lower court on
the promissory note, there is no evidence that Ernesto Salazar August 17, 1977, the same may only be dissolved, quashed or recalled by the
had connived or in any way conspired with Rallye Motor in posting of a counter-replevin bond under Section 12, Rule 57 of the Revised
the assignment of the promissory note to the plaintiff, Rules of Court which provides that:
because of which the plaintiff paid Rallye Motor the amount
of the promissory note. Defendant Ernesto Salazar was Section 12. Discharge of Attachment upon, gluing
himself a victim of fraud. Rallye Motor was the only party counterbond.—At any time after an order of attachment has
6
which committed it. been granted, the party whose property has been attached, or
the person appearing on his behalf, may, upon reasonable
From the above order denying reconsideration and ordering the sheriff to notice to the applicant, apply to the judge who granted the
return to Salazar the personal property attached by virtue of the writ of order, or to the judge of the court, in which the action is
preliminary attachment issued on August 17, 1977, FILINVEST filed the instant pending, for an order discharging the attachment wholly or in
Petition on April 19, 1979. On July 16, 1979, petitioner FILINVEST also filed an part on the security given. The judge shall, after hearing,
7
Urgent Petition for Restraining Order alleging, among others, that pending order the discharge of the attachment if a cash deposit is
this certiorari proceeding in this court, private respondent Salazar filed a made, or a counter-bond executed to the attaching creditor is
Motion for Contempt of Court in the court below directed against FILINVEST filed, on behalf of the adverse party, with the clerk or judge of
and four other persons allegedly for their failure to obey the Order of the court where the application is made, in an amount equal
respondent Judge dated April 4, 1979, which Order is the subject of this to the value of the property attached as determined by the
Petition. On July 23, 1979, this Court issued a temporary restraining order
326 of 501
judge, to secure the payment of any judgment that the or counter-bond required by Section 12, Rule 57, cited by petitioner. The
attaching creditor may recover in the action. ... following provision of the same Rule allows it:
Citing the above provision, petitioner contends that the court below should Sec. 13. Discharge of attachment for improper or irregular
not have issued the Orders dated February 2, 1979 and April 4, 1979 for failure issuance.—The party whose property has been attached may
of private respondent Salazar to make a cash deposit or to file a counter-bond. also, at any time either before or after the release of the
attached property, or before any attachment shall have been
On the other hand, private respondent counters that the subject writ of actually levied, upon reasonable notice to the attaching
preliminary attachment was improperly or irregularly issued in the first place, creditor, apply to the judge who granted the order, or to the
in that it was issued ex parte without notice to him and without hearing. judge of the court in which the action is pending, for an order
todischarge the attachment on the ground that the same was
We do not agree with the contention of private respondent. Nothing in the improperly or irregularly issued. If the motion be made on
Rules of Court makes notice and hearing indispensable and mandatory affidavits on the part of the party whose property has been
requisites for the issuance of a writ of attachment. The statement in the case attached, but not otherwise, the attaching creditor may
9
of Blue Green Waters, Inc. vs. Hon. Sundiam and Tan cited by private oppose the same by counter-affidavits or other evidence in
respondent, to the effect that the order of attachment issued without notice to addition to that on which the attachment was made. After
therein petitioner Blue Green Waters, Inc. and without giving it a chance to hearing, the judge shall order the discharge of the attachment
prove that it was not fraudulently disposing of its properties is irregular, gives if it appears that it was improperly or irregularly issued and
the wrong implication. As clarified in the separate opinion of Mr. Justice the defect is not cured forthwith."(Emphasis supplied)
10
Claudio Teehankee in the same cited case, a writ of attachment may be
issued ex parte. Sections 3 and 4, Rule 57, merely require that an applicant for The foregoing provision grants an aggrieved party relief from baseless and
an order of attachment file an affidavit and a bond: the affidavit to be executed unjustifiable attachments procured, among others, upon false allegations,
by the applicant himself or some other person who personally knows the facts without having to file any cash deposit or counter-bond. In the instant case
and to show that (1) there is a sufficient cause of action, (2) the case is one of the order of attachment was granted upon the allegation of petitioner, as
those mentioned in Section 1 of Rule 57, (3) there is no other sufficient security plaintiff in the court below, that private respondent RALLYE, the defendants,
for the claim sought to be enforced, and (4) the amount claimed in the action had committed "fraud in contracting the debt or incurring the obligation upon
is as much as the sum for which the order is granted above all legal which the action is brought," covered by Section i(d), Rule 57, earlier quoted.
counterclaims; and the bond to be "executed to the adverse party in an amount Subsequent to the issuance of the attachment order on August 17, 1977, private
fixed by the judge, not exceeding the applicant's claim, conditioned that the respondent filed in the lower court an "Urgent Motion for the Recall and
latter will pay all the costs which may be adjudged to the adverse party and all Quashal of the Writ of Preliminary Attachment on (his property)" dated
11
damages which he may sustain by reason of the attachment, if the court shall December 11, 1978 precisely upon the assertion that there was "absolutely no
finally adjudge that the applicant was not entitled thereto." fraud on (his) part" in contracting the obligation sued upon by petitioner.
Private respondent was in effect claiming that petitioner's allegation of fraud
We agree, however, with private respondents contention that a writ of was false, that hence there was no ground for attachment, and that therefore
attachment may be discharged without the necessity of filing the cash deposit the attachment order was "improperly or irregularly issued." This Court was
held that "(i)f the grounds upon which the attachment was issued were not
327 of 501
true ..., the defendant has his remedy by immediately presenting a motion for prove the supposed concealment to defraud creditors. Said
12
the dissolution of the same. We find that private respondent's allegations are affirmative allegations, which plaintiffs had the
17
abovementioned Urgent Motion was filed under option 13, Rule 57. obligation to prove ...
The last sentence of the said provision, however, indicates that a hearing must It appears from the records that both herein private parties did in fact adduce
18
be conducted by the judge for the purpose of determining whether or not evidence to support their respective claims. Attached to the instant Petition
19
there reality was a defect in the issuance of the attachment. The question is: At as its Annex "H" is a Memorandum filed by herein petitioner FILINVEST in
this hearing, on whom does the burden of proof lie? Under the circumstances the court below on March 20, 1979. After private respondent filed his
20 21
of the present case, We sustain the ruling of the court a quo in its questioned Comment to the Petition, petitioner filed a Reply ,attaching another copy
22
Order dated February 2, 1979 that it should be the plaintiff (attaching of the aforesaid Memorandum as Annex "A" In this case on February 28, 1979
creditor), who should prove his allegation of fraud. This pronouncement finds and March 1, 1979, the plaintiff (FILINVEST) presented in evidence
support in the first sentence of Section 1, Rule 131, which states that: "Each documentary exhibits "marked Exhibit A, A- I, B, B-1, B-2, B-3, B-4, C, C-1, D, E,
party must prove his own affirmative allegations." The last part of the same F, G and G-1. The Memorandum goes on to state that FILINVEST presented as
provision also provides that: "The burden of proof lies on the party who would its witness defendant Salazar himself who testified that he signed Exhibits A,
be defeated if no evidence were given on either side." It must be b•rne in mind B, C, D, E and G; that he is a holder of a master's degree in Business
that in this jurisdiction, fraud is never presumed. FRAUS EST IdIOS ET NON Administration and is himself a very careful and prudent person; that he does
13
PRAESUMENDA. Indeed, private transactions are presumed to have been not sign post-dated documents; that he does not sign contracts which do not
14
fair and regular. Likewise, written contracts such as the documents executed reflect the truth or which are irregular on their face, that he intended to
by the parties in the instant case, are presumed to have been entered into for a purchase a school bus from Rallye Motors Co., Inc. from whom he had already
15
sufficient consideration. acquired one unit; that he had been dealing with Abel Sahagun, manager of
RALLYE, whom he had known for a long time that he intended to purchase
16
In a similar case of Villongco, et al., vs. Hon. Panlilio, et al., a writ of the school bus on installment basis so he applied for financing with the
preliminary attachment was issued ex parte in a case for damages on the FILINVEST; that he knew his application was approved; that with his
strength of the affidavit of therein petitioners to the effect that therein experience as a business executive, he knew that under a financing
respondents had concealed, removed or disposed of their properties, credits or arrangement, upon approval of his application, when he signed Exhibits A, B,
accounts collectible to defraud their creditors. Subsequently, the lower court C, D, E and G, the financing company (FILINVEST) would release the proceeds
dissolved the writ of attachment. This was questioned in a certiorari of the loan to RALLYE and that he would be obligated to pay the installments
proceeding wherein this Court held, inter alia, that: to FILINVEST; that he signed Exhibits A, B and C simultaneously; that it was
his wife who was always transacting business with RALLYE and Abel
23
The affidavit supporting the petition for the issuance of the Sahagun.
preliminary attachment may have been sufficient to justify
the issuance of the preliminary writ, but it cannot be Without disputing the above summary of evidence, private respondent Salazar
considered as proof of the allegations contained in the states in his Comment that "the same evidence proferred by (petitioner's)
affidavit. The reason is obvious. The allegations are mere counsel was adopted by (private respondent) Ernesto Salazar during the
24
conclusions of law, not statement of facts. No acts of the proceedings.
defendants are ever mentioned in the affidavit to show or
328 of 501
According to the court a quo in its assailed order of April 4, 1979, Emesto disclose the material fact of non-delivery of the motor vehicle, there being a
Salazar "was himself defrauded because while he signed the promissory note duty on his part to reveal them, constitutes fraud. (Article 1339, New Civil
and the chattel mortgage over the vehicle which he bought from Rallye Code).
Motors, RALLYE did not deliver to him the personal property he bought." And
since no fraud was committed by Salazar, the court accordingly ordered the We hold that the court a quo committed grave abuse of discretion in
sheriff to return to Salazar the properties attached by virtue of the writ of dissolving and setting aside the writ of preliminary attachment issued on
preliminary attachment issued on August 17, 1977. August 17, 1977.
We do not agree. Considering the claim of respondent Salazar that Rallye WHEREFORE, IN VIEW OF THE FOREGOING, the appealed Orders of the
Motors did not deliver the motor vehicle to him, it follows that the Invoice, lower court dated February 2, 1979 and April 4, 1979 are hereby REVERSED
Exhibit "C", for the motor vehicle and the Receipt, Exhibit "G", for its delivery and SET ASIDE. The temporary restraining order issued by Us on July 23, 1979
and both signed by Salazar, Exhibits "C-1 " and "G-1", were fictitious. It also is hereby made permanent. No costs.
follows that the Promissory Note, Exhibit "A", to pay the price of the
undelivered vehicle was without consideration and therefore fake; the Chattel Petition granted.
Mortgage, Exhibit "B", over the non-existent vehicle was likewise a fraud; the
registration of the vehicle in the name of Salazar was a falsity and the SO ORDERED.
assignment of the promissory note by RALLYE with the conforme of
respondent Salazar in favor of petitioner over the undelivered motor vehicle
was fraudulent and a falsification.
Respondent Salazar, knowing that no motor vehicle was delivered to him by

RALLYE, executed and committed all the above acts as shown the exhibits
enumerated above. He agreed and consented to the assignment by RALLYE of
the fictitious promissory note and the fraudulent chattel mortgage, affixing his
signature thereto, in favor of petitioner FILINVEST who, in the ordinary
course of business, relied on the regularity and validity of the transaction.
Respondent had previously applied for financing assistance from petitioner
FILINVEST as shown in Exhibits "E " and "E-1 " and his application was
approved, thus he negotiated for the acquisition of the motor vehicle in
question from Rallye Motors. Since he claimed that the motor vehicle was not
delivered to him, then he was duty-bound to reveal that to FILINVEST, it
being material in inducing the latter to accept the assignment of the
promissory note and the chattel mortgage. More than that, good faith as well
as commercial usages or customs require the disclosure of facts and
circumstances which go into the very object and consideration of the
contractual obligation. We rule that the failure of respondent Salazar to
329 of 501
Miranda v. CA, 178 S 702 In his complaint, the petitioner alleged that the spouses Orlando and
Mercedes Rayos sold him a parcel of land on December 26,1985, for the sum of
FIRST DIVISION P250,000.00 under a Deed of Sale with Assumption of Mortgage prepared by
Orlando Rayos, who is a lawyer. It is not denied that Miranda directly paid
G.R. No. 80030 October 26, 1989 Rayos the sum of P150,000. 00 and thereafter also paid the first three quarterly
amortizations in the total amount of P87,864.94 to the Philippine Savings
ROGELIO A. MIRANDA, petitioner, Bank as the mortgagee on the loan contracted by Rayos. Miranda claims that
vs. the bank at first refused to accept his third quarterly payment but relented
THE COURT OF APPEALS and SPOUSES ORLANDO A. RAYOS and when he showed it the contract he had entered into with Rayos. However,
MERCEDES T. RAYOS, respondents. when he offered to make the fourth and last payment on December 24,1986,
the bank refused to accept it, informing him that Rayos had already made the
Francisco E. Antonio for petitioner. payment and had asked it not to deliver the Torrens certificate of the
mortgaged land to Miranda. This certificate was subsequently recovered by
Orlando A. Rayos for himself and for and in behalf of co-private respondent Rayos, who had since then refused to surrender it to him or to refund him the
Mercedes T. Rayos. total amount of P267,088.61 which he said he had paid on their contract.
On the basis of these allegations, the trial judge issued the writ of attachment
Miranda had also prayed for. Rayos then filed a motion to discharge the
CRUZ, J.: attachment, claiming there was no proof that he had committed fraud in
contracting the debt or incurring the obligation on which the complaint was
Challenged in this case is the decision of the Court of Appeals affirming the based. After considering the arguments of the parties, Judge Liwag granted the
1
order of the trial court lifting a writ of attachment previously issued by it motion in her order dated March 5, 1987, which she subsequently affirmed in
2
under Rule 57, Section 1 (d) of the Rules of Court. This provision authorizes her order dated March 18, 1987 . Miranda then went on certiorari to the
3
the issuance of such writ: respondent court, which dismissed his petition for lack of merit in its
4
decision dated September 9, 1987.
In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which We affirm.
the action is brought.
The petitioner insists that there was a valid ground for the issuance of the writ
The writ was issued in connection with a complaint for damages filed by the of attachment because the Deed of Sale with Assumption of Mortgage
petitioner against the private respondents on January 2,1987. This was prepared by Rayos was attended at the inception with fraud that brought it
docketed as Civil Case No. 15639 in the Regional Trial Court of Makati, Branch under the provision of Rule 57, Section 1(d) of the Rules of Court. That fraud
143, presided by Judge Socorro Tirona Liwag. The writ was later discharged by consisted of the deception employed by Rayos in inveigling him to enter into
her on the finding that the private respondent could not be faulted with fraud the contract of sale without cautioning him that his assumption of mortgage
under the aforecited provision of the Rules. might be disapproved by the Philippine Savings Bank.
330 of 501
The Court cannot accept this contention in the light of the evidence of record. for himself. It does not constitute in any
If at all — and on this we do not rule categorically as the matter is yet to be manner a "warning" or an "instruction" to
litigated in the court a quo — the fraud might have been committed by plaintiff that it was incumbent upon plaintiff
Rayos afterthe conclusion of the contract. However, such fraud is not covered to get an express approval by the bank (PSB)
by the aforesaid rule, let alone the fact that it has yet to be established. for his assumption of Rayos' mortgage,... if by
sending that application form of PSB to
What is clear at this time is that Rayos cannot be said to have deluded plaintiff, defendant Orlando Rayos wanted to
Miranda into entering into the contract by taking advantage of his position as inform plaintiff about the necessity to get or
a lawyer and withholding necessary information from Miranda. Miranda obtain the express approval of the
insists he did not know any better as a layman. He complains that Rayos did assumption of mortgage from PSB, why did
not warn him that the assumption of mortgage would have to be approved by he not say in clear terms to the plaintiff?
the Philippine Savings Bank and that their transaction would be nullified
without such approval. He stresses that had he been properly warned, he The Court finds this argument untenable. The Loan
would not have invested an initial payment of P150,000.00 and later made the Application Form sent by defendant Rayos was actually filled
three amortization payments of P87,864.94, not to mention the last quarterly up and signed by the plaintiff and his wife dated March 4,
payment he also remitted to the Bank. 1986. In said loan application, the amount of the loan appears
as P100,000.00, the same amount as the mortgage to be
The private respondent's position is that he had in fact informed Miranda that assumed, the security offered also appears as TCT No. 100156
the assumption of mortgage was subject to the approval of the mortgagee the same property bought by the plaintiff from the defendants
bank and that he had sent the petitioner the appropriate forms to accomplish. with assumption of the mortgage in favor of the Philippine
Miranda, for his part, maintains that such form was merely an application for Savings Bank (See Deed of Sale with Assumption of Mortgage,
individual loans and did not constitute the sufficient advise or warning that par. 2(6), Annex "D", Complaint). How can the plaintiff now
Rayos should have given him. On this point, the respondent court correctly say that the Application for Loan form sent by the defendant
affirmed the following findings of the trial court: to plaintiff "has no relevance and materiality to the
assumption of the defendant Rayos' loan account with
The plaintiff, in his Comment on Compliance dated March 13, defendant Philippine Savings Bank."
1987 argued as follows:
It appears from the Loan Application and the General
The "Application for Loan" form sent by Information Sheet in connection with said Loan Application
defendant Orlando Rayos to plaintiff has no which the plaintiff and his wife also signed that the plaintiff
relevance and materiality to the assumption and his wife are both degree holders and the plaintiff is the
of defendant Rayos' loan account with Acting Municipal Treasurer of the Municipality of Las Pinas.
defendant Philippine Savings Bank. That There is every reason to believe, therefore, that they
application form of PSB accomplished by understood what the Loan Application Form given to them by
plaintiff is strictly for individual loan the defendant was for and there was no necessity for the
application filed by plaintiff for P100,000.00
331 of 501
defendant to state "in clear terms" that there was a need to

apply to the bank in order for them to assume the mortgage.
Adlawan v. Torres, 233 S 645 (see under Section 1 page 39)
The above findings are entirely logical and belie the petitioner's pretensions
that he was completely duped as if he were a babe in arms. Being a layman did
not excuse him from knowledge of the basic principles involved in this case of
which he feigns total ignorance. Moreover, the evidence shows that he was in
fact informed of the need for the approval of the assumption of mortgage and
actually sought to secure such approval although unsuccessfully. This shows
that no fraud was imposed on him by Rayos when they entered into the Deed
of Sale with Assumption of Mortgage, which also means that there was really
no ground for the issuance of the writ of attachment.
As the writ of attachment was improperly granted, it was only fitting that it be
discharged by the trial court in rectification of its initial error. Hence, there
was no need at all for the private respondent to post a counterbond. Finally,
we also agree with the respondent court that the order lifting the attachment
being merely interlocutory, it should not have been questioned on certiorari.
This extraordinary remedy is available only when there is a clear showing of a
grave abuse of discretion amounting to lack of jurisdiction, and there is no
such showing here.
WHEREFORE, the petition is DENIED with costs against the petitioner. It is

so ordered.
332 of 501
Peroxide Philippines Corp. v. CA, 199 S 882 which was actually done on January 7, 1983 after BPI filed an attachment bond
in the amount of P32,700,000.00. Petitioners' properties were accordingly
SECOND DIVISION attached by the sheriff.
G.R. No. 92813 July 31, 1991 On January 11, 1983, Eastman and the Mapuas moved to lift the attachment,
which motion was set for hearing on January 14, 1983. On said date and on
PEROXIDE PHILIPPINES CORPORATION, EASTMAN CHEMICAL motion of BPI, it was granted up to January 17, 1983 to file a written opposition
INDUSTRIES, INC., EDMUNDO O. MAPUA and ROSE U. to the motion to lift the writ of attachment. BPI also filed a motion to set for
MAPUA, petitioners, hearing the said motion to lift attachment and its opposition thereto.
vs.
HON. COURT OF APPEALS and BANK OF THE PHILIPPINE, However, on January 17, 1983, Judge Pineda issued two (2) orders, the first,
ISLANDS, respondents. denying BPI's motion for a hearing, and, the second, lifting the writ of
attachment as prayed for by Eastman and the Mapuas. BPI filed a motion for
Antonio P. Barredo for petitioners. reconsideration but, consequent to the then judiciary reorganization, the case
was re-raffled and assigned to the sala of Judge Pastor Reyes.
Padilla Law Office for private respondent.
On November 28, 1983, Judge Reyes issued an order with an explicit finding
that the attachment against the properties of Eastman and the Mapuas was
proper on the ground that they had disposed of their properties in fraud of
REGALADO, J.:p BPI. It also directed the sheriff to implement the writ of attachment upon the
finality of said order.
1
Assailed in this petition for review on certiorari are the decision of
respondent Court of Appeals, promulgated on September 4, 1989 in CA-G. R. After a motion for partial reconsideration by BPI and some exchanges between
SP No. 15672, granting the petition for certiorari filed by private respondent, the parties, on December 17, 1984 the trial court, this time with Judge Eficio B.
2
and its resolution of March 29, 1990 denying petitioners' motion for Acosta presiding, issued an order granting BPI's motion for partial
reconsideration. On December 6, 1982, herein private respondent Bank of the reconsideration by finding, inter alia, that "(c)onsidering the lapse of more
Philippine Islands (BPI) sued herein petitioners Peroxide Philippines than a year since the Order of November 28, 1983 and the nature and purpose
Corporation (Peroxide), Eastman Chemical Industries, Inc. (Eastman), and the of attachment, the writ of attachment revived in the Order of November 28,
spouses Edmund O. Mapua and Rose U. Mapua (Mapuas) in Civil Case No. 1983 and hereby re-affirmed may be executed and implemented immediately,"
48849 of the then Court of First Instance of Pasig, Metro Manila for the and directing the sheriff to execute said writ which "is hereby declared
3
collection of an indebtedness of Peroxide wherein Eastman and the Mapuas immediately executory."
bound themselves to be solidarily liable.
Contending that said order of December 17, 1984 was rendered with grave
Upon the filing of said action, the trial court, then presided over by Judge abuse of discretion amounting to lack of jurisdiction, petitioners sought the
Gregorio G. Pineda, ordered the issuance of a writ of preliminary attachment annulment thereof in a petition for certiorari and prohibition in AC-G.R. SP
No. 05043 of the Intermediate Appellate Court, wherein a temporary
333 of 501
restraining order was issued. This restraining order was lifted when said court cash dividends declared on the garnished shares of stock of said petitioners
4
rendered its decision in said case on March 14, 1986 dismissing the petition with said paper company, and to cite for contempt the officers of Bataan for
and holding, among others, that: releasing and/or paying the dividends to petitioners in disregard of the notice
of garnishment.
We find nothing wrong with the attachment of the properties
10
of PEROXIDE. Even were We to assume that the original In an exhaustive order dated December 16, 1987, the trial court, now
petition for attachment was defective for failure to specify the presided over by Judge Fernando L. Gerona, Jr. and wherein Civil Case No.
particular transactions involved in the alleged "alienation" of 48849 was then pending, addressing all the issues raised by the parties,
PEROXIDE's properties, the fact is that the defect, if any, was granted BPI's motion for delivery of the dividends. Judge Gerona sustained the
cured by the other pleadings (like the opposition or virtual position of BPI that dividends are but incidents or mere fruits of the shares of
amendment) filed by BANK With such amendment, the stock and as such the attachment of the stock necessarily included the
5
specific properties concerned were distinctly enumerated. dividends declared thereon if they were declared subsequent to the notice of
garnishment.
Petitioners then sought the review of said decision by this Court in G.R. No.
74558, but no temporary restraining order was granted therein. In the He further held that the preliminary attachment, being a provisional remedy,
6
meantime, on May 29, 1986, Judge Acosta issued an order suspending the must necessarily become effective immediately upon the issuance thereof and
writ of preliminary attachment in the aforesaid Civil Case No. 48849 pursuant must continue to be effective even during the pendency of an appeal from a
to an ex parte motion filed by herein petitioners. judgment of the court which issued the said provisional remedy and will only
cease to have effect when the judgment is satisfied or the attachment is
Thereafter, in its resolution dated October 27, 1986, this Court denied the discharged or vacated in some manner provided by law. The motion to cite the
aforesaid petition for review on certiorari"considering that the writ of officers of Bataan was, however, denied.
preliminary attachment issued was in accordance with law and applicable
7
jurisprudence." Petitioners' motion for reconsideration was denied with Petitioners moved for reconsideration but the same was denied for the reason
8
finality in our resolution of October 6, 1987. that the order of May 29, 1986 of Judge Acosta was based on an ex
parte motion without reasonable notice, hence a patent nullity for lack of due
Dissatisfied, petitioners again filed an urgent motion for clarification process. Accordingly, the aforesaid order of December 16, 1987 held that the
11
submitting that the Court failed to pass upon two issues, namely: (1) whether writ of attachment continued to be effective.
Eastman and the Mapuas were sureties or mere guarantors of Peroxide, and (2)
whether Rose U. Mapua was bound by the "Continuing Guarantee" executed Petitioners thereafter filed a second motion for reconsideration which,
by her husband, Edmund O. Mapua. Acting upon said motion, on November however, remained pending and unresolved when Judge Gerona inhibited
10, 1987 the Court resolved to deny the same for the reason, among others, that himself from further sitting in the case. Said case was then re-raffled to the
the clarification sought regarding the propriety of the attachment of the sala of Judge Jainal D. Rasul who required the parties to re-summarize their
9
properties of Eastman and the Mapuas involves questions of fact. respective positions upon the issue of the attachment.
On July 30, 1987, BPI filed a motion to order Bataan Pulp and Paper Mills, Inc. Then, resolving the pending incidents before it, the court a quo issued the
(Bataan), jointly and severally with petitioners, to deliver to the sheriff the disputed order of August 23, 1988, which states,inter alia that:
334 of 501
THIS Court thru Judge Gerona had arrived at the correct BPI then filed a petition for certiorari in respondent court, docketed therein as
conclusion that the contempt charge against the Officers of CA-G.R. SP No. 15672, invoking the following grounds:
the Garnishee Corporation cannot be sustained, for the
reason that they relied on the Order of the Court thru Judge 1. The trial court acted with grave abuse of discretion in
Acosta under date of May 29, 1986 suspending the Writ of denying BPI's urgent ex parte motion to suspend the order of
Attachment and since said order was not then set aside, there August 23, 1988;
was no order or writ violated by said officers. It follows a
fortiori that the release of the cash dividends was valid, legal 2. The order of September 19, 1988 renders moot and
and not contemptuous. Consequently, there is no reason to academic BPI's pending motion for reconsideration;
justify or deserve the return of cash dividends prayed for by
the plaintiff. 3. The lower court erroneously held that the writ of
attachment secured by BPI had ceased to be valid and
Besides, the propriety of the attachment of the properties of effective or had been suspended by virtue of its orders of
the defendant Eastman Chemical Industries, Inc., and January 17, 1983 and May 29, 1986;
defendant Mapua Spouses should still be determined by this
Court as a question of fact, pursuant to the Supreme Court 4. The trial court committed grave abuse of discretion when it
resolution dated November 23, 1987. Meanwhile, it is only fair nullified the writ of attachment as against Eastman and the
that the properties of the Eastman Chemical Industries, Inc. Mapuas;
and the defendants Mapua spouses should not, pending such
proper determination, be attached as to give life and meaning 5. There is no inconsistency between the resolution of the
to the Supreme Court resolution of November 23, 1987. Supreme Court dated October 27, 1986 and its subsequent
resolution of November 10, 1987;
12
SO ORDERED.
6. The attachment can validly issue against the conjugal
BPI moved for the reconsideration of said order. Thereafter, it learned that properties of the Mapuas; and
Bataan had again declared a cash dividend on its shares payable on or before
September 30, 1988. Furthermore, Bataan informed BPI that it would be 7. The trial court disregarded the clear and unequivocal
releasing to Eastman and Edmund O. Mapua the cash dividends on their records of the case when it issued its order of August 23,
14
shares on September 23, 1988 on the strength of the order of the trial court of 1988.
August 23, 1988.
Ruling on these issues, respondent Court of Appeals declared:
Consequently, BPI filed an urgent ex parte motion on September 19, 1988 for
the suspension of the effects of the trial court's order of August 23, 1988 in WHEREFORE, the petition for certiorari is hereby GRANTED.
view of the pending motion for reconsideration it had filed against said order. Judgment is hereby rendered as follows:
In an order likewise dated September 19, 1988, the trial court denied BPI's
13
motion for suspension of the order of August 23, 1988.
335 of 501
(a) Declaring the writ of preliminary attachment against the BPI asserts that the discharge is illegal and void because the order lifting the
defendants Eastman Chemical Industries, Inc. and the same is violative of Section 13, Rule 57 of the Rules of Court which requires,
spouses, Edmund and Rose Mapua valid and enforceable from among others, a prior hearing before the judge may order the discharge of the
the beginning, without prejudice to determining the solidary attachment upon proof adduced therein of the impropriety or irregularity in
liability of said defendants with defendant Peroxide the issuance of the writ and the defect is not cured forthwith. We may
Philippines Corporation; mention in this regard that if the petition for the discharge of the writ violates
the requirements of the law, the trial judge does not acquire jurisdiction to act
16
(b) Setting aside the Order of August 23, 1988 insofar as it thereon.
decreed that the cash dividends declared or the garnished
shares of stocks (sic) of the defendants with Bataan Pulp and It is true that petitioner's motion to discharge was set for hearing with notice
Paper Mills, Inc. are not subject to attachment; to BPI but it is likewise true that counsel for the latter asked for an
opportunity to file a written opposition and for a hearing to which he asked
(c) Ordering the defendants and the Bataan Pulp and Paper that petitioner Edmund O. Mapua be subpoenaed. Said counsel was allowed to
Mills, Inc., jointly and severally, to deliver to the sheriff the file a written opposition which he seasonably did, but Judge Pineda denied
cash dividends as may hereafter be declared and paid on the both the requested subpoena and hearing and, instead, granted the discharge
garnished shares of stock; of the attachment. These are the bases for BPI's complaint that it was denied
due
17
(d) Setting aside the Order of September 19, 1988. process.
With costs against private respondents. Now, 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
15 18
SO ORDERED. proof to sustain the writ being on the attaching creditor. That hearing
embraces not only the right to present evidence but also a reasonable
Their motion for reconsideration having been denied, petitioners are once opportunity to know the claims of the opposing parties and meet them. The
again before us on this spin-off facet of the same case, contending that right to submit arguments implies that opportunity, otherwise the right would
19
respondent court has departed from the accepted and usual course of judicial be a barren one. It means a fair and open hearing. And, as provided by the
proceedings. aforecited Section 13 of Rule 57, the attaching creditor should be allowed to
oppose the application for the discharge of the attachment by counter-
1. As correctly formulated by respondent court, the threshold issue is the affidavit or other evidence, in addition to that on which the attachment was
validity of the attachment of the properties of Eastman and the Mapuas, from made.
which arises the correlative question of whether or not the disputed cash
dividends on the garnished shares of stock are likewise subject thereto. Respondent court was, therefore, correct in holding that, on the above-stated
Necessarily involved is the matter of the continuing validity of the writ or premises, the attachment of the properties of Eastman and the Mapuas
whether or not the same was validly lifted and suspended by the lower court's remained valid from its issuance since the judgment had not been satisfied,
orders dated January 17, 1983 and May 29, 1986, respectively. nor has the writ been validly discharged either by the filing of a counterbond
or for improper or irregular issuance.
336 of 501
We likewise affirm the findings and conclusion of respondent court that the court denied the motion for reconsideration but, so petitioners insist,
order of Judge Acosta, dated May 29, 1986, suspending the writ of attachment "without, however, stating that it was lifting its restraining order." When the
was in essence a lifting of said writ which order, having likewise been issued ex case went on review to this Court in G.R. No. 74558, no mention was made
parteand without notice and hearing in disregard of Section 13 of Rule 57, regarding said restraining order. Hence, petitioners assert, the said restraining
could not have resulted in the discharge of the attachment. Said attachment order had not been lifted, in effect arguing that the writ of attachment cannot
continued unaffected by the so-called order or suspension and could not have be implemented as a consequence.
been deemed inefficacious until and only by reason of its supposed restoration
in the order of December 16, 1987 of Judge Gerona. Under the facts of this case, This misleading argument is confuted by the records in AC-G.R. SP No. 05043.
the ex parte discharge or suspension of the attachment is a disservice to the In its aforesaid resolution of April 24, 1986, the appellate court stated that "(a)s
orderly administration of justice and nullifies the underlying role and purpose of this date, April 23, 1986, the motion for reconsideration could not be
of preliminary attachment in preserving the rights of the parties pendente considered in view of the absence of the comment of the private respondents."
lite as an ancillary remedy. Hence, the court directed that "(i)n order to maintain the status quo of the
parties, . . . the restraining order issued by us on December 28, 1984 is hereby
20
We, therefore, sustain the position of BPI that the Court of Appeals, in its revived and made effective until further orders."
judgment presently under challenge, did not err in upholding the continuing
and uninterrupted validity and enforceability of the writ of preliminary Thereafter, finding no merit in the motion for reconsideration, the court
attachment issued in Civil Case No. 48849 since the order of discharge and, denied the same, declaring that "(w)ith this resolution, we find no need in
later, the order of suspension of the trial court were void and could not have resolving the Urgent Motion to Reconsider and set aside Resolution of April
created the operational lacuna in its effectivity as claimed by petitioners. 24, 1985 (sic, 1986) filed by the private respondent BPI and the other incidents
21
Further, the cancellation of the annotations regarding the levy on attachment still pending resolution."
of petitioners' properties, procured by the sheriff pursuant to the aforesaid
invalid orders, is likewise a nullity and another levy thereon is not required. All incidents in AC-G.R. SP No. 05043 having been disposed of, it follows that
We observe, however, that the records do not disclose the lifting of the levy on the temporary restraining order which had been expressly lifted in the
the Bataan shares of Eastman and the Mapuas and on their real properties in decision therein, and which was merely temporarily reinstated for purposes of
Caloocan City. the motion for reconsideration that was ultimately denied, was also necessarily
lifted. Parenthetically, said temporary restraining order, not having been
2. Petitioners next call attention to the fact that when the order of Judge supplanted by a writ of preliminary injunction, could not have had an
22
Acosta of December 17, 1984, which directed the immediate execution and effectivity of more than twenty (20) days, and this limitation applies to
23
implementation of the writ of attachment, was brought on a petition temporary restraining orders issued by the Court of Appeals.
for certiorari and prohibition to the Intermediate Appellate Court in AC-G.R.
SP No. 05043, said court issued a temporary restraining order. 3. We reject petitioners' theory that the preliminary attachment is not
applicable to Eastman and the Mapuas. The writ was issued in Civil Case No.
They allege that although the restraining order was lifted by said appellate 48849 against the properties of all the petitioners herein. Eastman and the
court in its decision in the case on March 14, 1986, the same was reinstated by Mapuas moved for the discharge of the attachment on the ground that they
the court "until further orders" in its order of April 24, 1986 in connection with were not disposing of their properties in fraud of creditors, but they did not
petitioners' motion for reconsideration therein. On May 14, 1986, respondent raise the issue of their liabilities as being allegedly those of mere guarantors.
337 of 501
They did so only when this Court resolved on October 27, 1986 that the writ of records will show that they refer to dispositions alleged to
preliminary attachment was issued in accordance with law and applicable have been fraudulently made by Eastman Chemical
24
jurisprudence. Industries, Inc. and Edmund Mapua. Relating this point to the
dispositive portion which in effect sustains the attachment
Also, what was considered in AC-G.R. SP No. 05043 and thereafter in G.R. No. issued by the trial court not only against Peroxide, but also
26
74558 was the matter of the validity of the attachment against Eastman and against Eastman and Mapua spouses.
the Mapuas, considering that, even before the proceedings had reached the
Intermediate Appellate Court in AC-G.R. SP No. 05043, BPI no longer had any 4. As earlier narrated, this Court denied the petition for review on certiorari in
attachment against Peroxide whose only remaining asset in Bulacan had been G.R. No. 74558, and when petitioners persisted in seeking a clarification as to
levied upon and acquired by its other creditors when Judge Pineda lifted the the nature of the liability of Eastman and the Mapuas, the Court denied the
attachment obtained by BPI. same on the ground that the clarification sought involves questions of fact. As
observed by respondent Court of Appeals, the aforesaid ruling was erroneously
Petitioners seek to capitalize on a passage in the decision in AC-G.R. SP No. construed by the lower court when it declared that the properties of Eastman
05043, hereinbefore quoted, where the appellate court stated that "(w)e find and the Mapuas should not, pending proper determination, be attached. In
nothing wrong with the attachment of the properties of PEROXIDE," without doing so, the court below virtually lifted or discharged the attachment even
mentioning Eastman and the Mapuas. This was clearly in the nature of peccata before its propriety had been determined.
minuta, a plain case of harmless oversight, since the properties referred to in
the decision as having been alienated in fraud of BPI were properties of We sustain respondent court's ratiocination in its decision under review that
Eastman and the Mapuas, not of Peroxide. when petitioners sought clarification from us regarding the propriety of the
attachment on the properties of Eastman and the Mapuas, and we said that
In fact, as pointed out by private respondent, petitioners' own motion for this involves a question of fact, what this means is that the court a quo should
reconsideration of March 24, 1986 filed in said case specifically adverted to determine the propriety or regularity thereof, and such determination can
that prefatory statement as being equivocal, with the following observation: only be had in appropriate proceedings conducted for that purpose. However,
"Actually no properties of Peroxide had been attached. What were attached until such attachment has been found to be improper and irregular, the
25
were properties of Eastman and Rose Mapua." Private respondent further attachment is valid and subsisting.
invites attention to the petition for certiorari in G.R. No. 74558, against the
decision in AC-G.R. SP No. 05043, wherein, assailing the aforequoted Thus, as correctly posited by BPI, before the determination of the liability of
statement therein, petitioners aver: Eastman and the Mapuas after trial on the merits, the writ of preliminary
attachment may properly issue. Even assuming that when Eastman and the
As can be seen the paragraph begins with the holding that Mapuas asked for the lifting of the attachment they presented evidence that
there is nothing wrong with the attachment of properties of they were guarantors and not sureties of Peroxide, the trial court could not
Peroxide. This holding on its face is limited only to the have admitted such evidence or ruled upon that issue since the same could be
27
upholding of attachment against the properties of petitioner entertained only after a full-blown trial and not before then. Otherwise, we
Peroxide. And yet the alienations mentioned in the would have the procedural absurdity wherein the trial court would be forced
subsequent sentences do not refer to dispositions of to decide in advance and preempt in an auxiliary proceeding an issue which
properties of Peroxide and by Peroxide. A cursory glance of can and should be determined only in a trial on the merits.
338 of 501
The proceeding in the issuance of a writ of preliminary attachment, as a mere FOR ALL THE FOREGOING CONSIDERATIONS, the petition at bar is
provisional remedy, is ancillary to an action commenced at or before the time DENIED and the judgment of respondent Court of Appeals is hereby
when the attachment is sued out. Accordingly the attachment does not affect AFFIRMED.
the decision of the case on the merits, the right to recover judgment on the
alleged indebtedness and the right to attach the property of the debtor being SO ORDERED.
entirely separate and distinct. As a rule, the judgment in the main action
28
neither changes the nature nor determines the validity of the attachment. At
any rate, whether said petitioners are guarantors or sureties, there exists a
valid cause of action against them and their properties were properly attached
on the basis of that indubitable circumstance.
5. Petitioners bewail the fact that respondent court allegedly handled

the certiorari case, CA-G.R. SP No. 15672 now on appeal before us, as if it were
a petition for review on certiorari by passing upon what they submit should be
considered as errors of judgment and not errors of jurisdiction. From the
foregoing disquisition, however, it is readily apparent that the petition in said
case faults the orders of the trial court as tainted with grave abuse of discretion
equivalent to a jurisdictional flaw. The errors assigned necessarily involved a
discussion of erroneous conclusions and/or lack of factual bases much beyond
the pale of mere errors of judgment or misperception of evidence, and dwelt
on the improvident issuance of orders clearly arbitrary and oppressive for
being in defiance of the rules and devoid of justifying factual moorings. We
cannot, therefore, share the sentiments and stance of petitioners on this score.
Neither do we subscribe to petitioners' charge that respondent court

injudiciously gave due course to the aforesaid petition for certiorari without
requiring the prior filing and resolution of a motion for the reconsideration of
the questioned orders of the trial court. There are, admittedly, settled
exceptions to that requisite and which obtain in the present case. A motion for
reconsideration was correctly dispensed with by respondent court since the
questions raised in the certiorari proceeding had been duly raised and passed
29
upon by the lower court. Also, under the circumstances therein, a motion
for reconsideration would serve no practical purpose since the trial judge had
already had the opportunity to consider and pass upon the questions elevated
30
on certiorari to respondent court.
339 of 501
On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed

a complaint against Sy Yuk Tat for sum of money, damages,
Section 14 with preliminary attachment, docketed as Civil Case No. Q-
34782 ("the first case" for short) in the then Court of First
Instance of Rizal, Branch LII, Quezon City (the case was later
Uy v. CA, 191 S assigned to the Regional Trial Court of Quezon City, Branch
XCVII now presided over by respondent Judge). On the same
SECOND DIVISION day, upon plaintiff filing a bond of P232,780.00 said court
issued a writ of preliminary attachment and appointed
G.R. No. 83897 November 9, 1990 Deputy Sheriff Nilo S. Cabang (co-petitioner herein) as
Special Sheriff to implement the writ. On April 6, 1982, the
ESTEBAN B. UY JR. and NILO S. CABANG, petitioners, same court issued a break-open order upon motion filed by
vs. petitioner Uy.
THE HONORABLE COURT OF APPEALS, WILSON TING, and YU
HON. respondents. On the following day, April 7, 1982, petitioner Cabang began
to implement the writ of preliminary attachment as the
E.P. Mallari & Associates for petitioners. Special Sheriff on the case.
Elpidio G. Navarro for private respondents. On April 19, 1982, petitioner Cabang filed a Partial Sheriffs Return,
stating, inter alia:
xxx xxx xxx

PARAS, J.:
That in the afternoon of April 12, 1982, the undersigned
This is a petition for review on certiorari seeking to reverse the together with Atty. Lupino Lazaro, plaintiff's counsel and the
decision ** which dismissed CA-G.R. No. SP-05659 forcertiorari and members of the same team proceeded to No. 65 Speaker
Prohibition with Preliminary Injunction and/or Restraining Order filed by Perez St., Quezon City, and effected a physical and actual
petitioner seeking to annul and set aside the two Orders dated August 24, 1982 count of the items and merchandise pointed to by the Ting
and October 10, 1983 issued by the then Court of First Instance of Rizal Branch family as having been taken from the Mansion Emporium and
LII *** (now Regional Trial Court of Quezon City Branch XCLVll ****) in Civil nearby bodega which are as follows:
Case No. Q-35128, granting a writ of preliminary attachment and directing the
sheriff assigned therein to attach the properties of defendants Uy and Cabang a) 329 boxes of "GE" Flat Iron, each box containing 6 pcs.
(herein petitioners); and denying defendants' motion to dismiss. each;
The antecedent facts of the case as found by the Court of Appeals are as b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;
follows:
340 of 501
c) 239 boxes of floor polishers marked "Sanyo" 35128 ('the second case' for short). The complaint alleged inter
alia that the plaintiffs are the owners of the personal
d) 54 boxes of floor polishers marked "Ronson" properties reflected in the Partial Sheriffs Return dated April
13, 1983 which have been attached and seized by defendant
xxx xxx xxx Cabang. In this second civil case, the court a quo (then
presided over by CFI Judge Concepcion B. Buencamino)
On April 12, 1982, a third party claim was filed by Wilson Ting issued an order on May 5, 1982, stating among other things,
and Yu Hon (private respondents herein) in the same Civil the following:
Case No. Q-34782, addressed to petitioner Cabang asserting
ownership over the properties attached at No. 65 Speaker Considering that it will take time before this
Perez St., Quezon City (other than those attached at No. 296 Court could act upon said prayers for the
Palanca St., Manila). The third party claim specifically issuance of a Writ of Preliminary Injunction,
enumerated the properties, as reflected in the Partial Sheriffs the parties are hereby ordered to maintain
Return dated April 1 3, 1 982, belonging to the plaintiffs the STATUS QUO in this case with respect to
(private respondents herein). the properties attached and subject of this
action alleged to belong to the plaintiffs"
On the same day that petitioner Cabang filed his Partial (Rollo, p. 133)
Sheriffs Return (April 19, 1982) the third party claimants and
Yu filed a motion to dissolve the aforementioned writ of Meanwhile, in the first case, where a
preliminary attachment in the same Civil Case No. Q-34782; judgment by default had been rendered, the
alleging among others, that being the absolute owners of the first court issued an order striking off from
personal properties listed in their third party claim which the records all pleadings filed by the third
were illegally seized from them they were willing to file a party claimants.
counterbond for the return thereof; which motion was
opposed by plaintiff Uy. With respect to the case in the court a quo,
defendants Uy and Cabang filed their answer
On April 29, 1982, then CFI Judge Jose P. Castro rendered with counterclaim.
judgment by default in said Civil Case No. Q-34782 in favor of
plaintiff Uy. Meanwhile, in the first case, plaintiff Uy on
June 7, 1982, filed an ex-parte motion for writ
Meanwhile, on May 5, 1982, third party claimants Wilson Ting of execution which was granted the following
and Yu Hon filed a complaint for Damages with application day, June 8, 1982.
for preliminary injunction against Esteban Uy and Nilo
Cabang (co-petitioners herein) in the then Court of First On the same day (June 7, 1982) that plaintiff
Instance of Rizal, Branch 52, Quezon City ('the court a Uy filed his exparte motion for writ of
quo' for short) which case was docketed as Civil Case No. Q- execution he and Cabang filed a motion to
341 of 501
quash or dissolve status quo order in the case Back to the case a quo, on August 23, 1982,
a quo as defendants therein on the ground plaintiffs Ting and Yu Hon filed a motion for
that the court "has no jurisdiction to interfere preliminary attachment alleging this ground:
with properties under custodia legis on "In the case at bar, which, is one 'to recover
orders of a court of co-equal and co-ordinate possession of personal properties unjustly
jurisdiction" and that plaintiffs' complaint is detained, ... the property... has been ...
not for recovery of properties in question. removed ... (and) disposed of to prevent its
being found or taken by the applicant or an
On June 24, 1982, plaintiff Uy in the first case officer" and/or said defendants are guilty of
filed his ex parte motion to authorize Sheriff fraud in disposing of the property for the
to sell the attached properties enumerated in taking, (or) detention ... of which the action
Sheriff Cabang's partial return filed on April is brought (Sec. 1(c) and (d), Rule 57, Rules of
19, 1982, on the ground that the properties Court)
under custodia legis were perishable
especially those taken from No. 65 Speaker Acting on such motion the court a quo, on
Perez, Quezon City. August 24, 1 982, issued the disputed order
granting the writ of preliminary attachment
Subsequently, on July 2, 1982, in the case a prayed for by the plaintiffs (Wilson Ting and
quo the court denied defendants', Uy and Yu Hon), stating that:
Cabang, motion to quash or dissolve the
status quo order. Let a writ of preliminary attachment issue
upon the plaintiffs putting up a bond in the
Meanwhile, the first case on July 12, 1982, amount of P1,430,070.00, which shall be
Cabang filed another partial sheriffs return furnished to each of the defendants with
this time stating among others that the copies of the verified application therewith,
judgment in that case had been partially and the sheriff assigned to this court, Danilo
satisfied, and that in the public auction sale Del Mundo, shall forthwith attach such
held on July 6, 1982, certain personal properties of the defendants not exempt from
properties had been sold to plaintiff Esteban execution, sufficient to satisfy the applicants'
Uy, Jr., the winning bidder for P15,000.00 demand. (Rollo, p. 247)
while the other properties were sold in the
amount of P200,000.00 in cash with Bernabe On August 31, 1982, in the same case a
Ortiz of No. 97 Industrial Avenue, Northern quo, defendant Uy filed an urgent motion to
Hill, Malabon Manila as the highest bidder. quash and/or dissolve preliminary
attachment which motion was opposed by
plaintiffs Ting and Yu Hon.
342 of 501
About half a year later, on February 21, 1982, In the resolution of October 16, 1989, the Court gave due course to the petition
in the case a quo, defendant Uy filed a and required both parties to submit simultaneous memoranda within thirty
motion for preliminary hearing on days from notice (Rollo, p. 190). Private respondents filed their memorandum
affirmative defenses as motion to dismiss. on December 6, 1989 (Ibid., p. 192) while petitioners filed their memorandum
Following an exchange of subsequent papers on January 5, 1990 (Ibid., p. 208)
between the parties, the court a quo issued
the other disputed order which denied The main issue in this case is whether or not properties levied and seized by
defendant Uy's motion to dismiss on October virtue of a writ of attachment and later by a writ of execution, were
10, 1983. The motion to quash was also under custodia legis and therefore not subject to the jurisdiction of another co-
denied by the court a quo on December 9, equal court where a third party claimant claimed ownership of the same
1983. Defendant Uy filed a motion for properties.
reconsideration on both Orders. Finally, on
February 15, 1985, respondent Judge issued The issue has long been laid to rest in the case of Manila Herald Publishing Co.
two Orders denying both motions for Inc. v. Ramos (88 Phil. 94 [1951]) where the Court filed that while it is true that
reconsideration. (CA decision, Rollo, p. 109- property in custody of the law may not be interfered with, without the
122) permission of the proper court, this rule is confined to cases where the
property belongs to the defendant or one in which the defendant has
Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the Court of proprietary interests. But when the Sheriff, acting beyond the bounds of his
Appeals a petition for Certiorari and Prohibition with prayer for a Writ of office seizes a stranger's property, the rule does not apply and interference
Preliminary Injunction or a Restraining Order to annul and set aside the two with his custody is not interference with another court's order of attachment.
orders issued by the then CFI of Rizal Branch 52.
Under the circumstances, this Court categorically stated:
In its decision, the Court of Appeals dismissed the petition, the dispositive
portion of which reads: It has been seen that a separate action by the third party who
claims to be the owner of the property attached is
WHEREFORE, finding respondent Judge not to have appropriate. If this is so, it must be admitted that the judge
committed a grave abuse of discretion amounting to lack or trying such action may render judgment ordering the sheriff
excess of jurisdiction in issuing the order dated August 24, or whoever has in possession of the attached property to
1982, denying petitioners' motion to quash the writ of deliver it to the plaintiff claimant or desist from seizing it. It
preliminary attachment, and the order dated October 10, 1983, follows further that the court may make an interlocutory
denying petitioners' motion to dismiss the complaint a quo, order, upon the filing of such bond as may be necessary, to
we hereby deny the instant petition, and therefore dismiss the release the property pending final adjudication of the title.
same. No pronouncement as to cost. (Rollo, pp. 132-133) Jurisdiction over an action includes jurisdiction on
interlocutory matter incidental to the cause and deemed
Hence, the instant petition. necessary to preserve the subject matter of the suit or protect
343 of 501
the parties' interests. This is self-evident. (Manila Herald Estoppel is likewise unavailing in the case at bar by the mere fact that private
Publishing Co. Inc. v. Ramos, supra). respondent Ting (complainant in the court a quo) pointed the items and
merchandise taken from the Mansion House and nearby Bodega which were
The foregoing ruling was reiterated in the later case of Traders Royal Bank v. levied and hauled by Special Sheriff Cabang, where in the report of said Sheriff
IAC (133 SCRA 141 [1984]) and even more recently in the case of Escovilla v. made earlier on April 6, 1982, he stated that on the same occasion referred to
C.A. G.R. No. 84497, November 6, 1989, where this Court stressed: in his Partial Return, private respondents denied Sy Yuk Tat's ownership over
the goods in question. (Rollo, pp. 203-204).
The power of the court in the execution of judgments extends
only over properties unquestionably belonging to the In like manner, the sale of the disputed properties at the public auction, in
judgment debtor. The levy by the sheriff of a property by satisfaction of a judgment of a co-equal court does not render the case moot
virtue of a writ of attachment may be considered as made and academic. The undeviating ruling of this Court in such cases is that
under the authority of the court only when the property attachment and sale of properties belonging to a third person is void because
levied upon belongs to the defendant. If he attaches such properties cannot be attached and sold at public auction for the purpose
properties other than those of the defendant, he acts beyond of enforcing a judgment against the judgment debtor. (Orosco v.
the limits of this authority. The court issuing a writ of Nepomuceno, 57 Phil. 1007 [1932-33]).
execution is supposed to enforce its authority only over
properties of the judgment debtor. Should a third party The other issues in this case deserve scant consideration.
appear to claim the property levied upon by the sheriff, the
procedure laid down by the Rules is that such claim should be On the issue of the expiration of the restraining order, there is no argument
the subject of a separate and independent action. that the life span of the status quo order automatically expires on the 20th day
and no judicial declaration to that effect is necessary (Paras v. Roura, 163 SCRA
Neither can petitioner complain that they were denied their day in court when 1 [1988]). But such fact is of no consequence in so far as the propriety of the
the Regional Trial Court issued a writ of preliminary attachment without questioned attachment is concerned. As found by the Court of Appeals, the
hearing as it is well settled that its issuance may be made by the court ex parte. grounds invoked by respondents for said attachment did not depend at all
As clearly explained by this Court, no grave abuse of discretion can be ascribed upon the continuing efficacy of the restraining order.
to respondent Judge in the issuance of a writ of attachment without notice to
petitioners as there is nothing in the Rules of Court which makes notice and As to petitioner's contention that the complaint filed by private respondent in
hearing indispensable and mandatory requisites in its issuance. (Filinvest the lower court is merely seeking an ancillary remedy of injunction which is
Credit Corp. v. Relova, 117 SCRA 420 [1982]; Belisle Investment & Finance Co. not a cause of action itself, the Court of Appeals correctly observed that the
Inc. v. State Investment House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 object of private respondents' complaint is injunction although the ancillary
SCRA 513 [1988]). remedy of preliminary injunction was also prayed for during the pendency of
the proceeding.
In addition, petitioner's motion to quash or discharge the questioned
attachment in the court a quo is in effect a motion for reconsideration which Finally, the non-joinder of the husband of private respondent, Yu Hon as well
cured any defect of absence of notice. (Dormitorio v. Fernandez, 72 SCRA 388 as her failure to verify the complaint does not warrant dismissal of the
[1976]). complaint for they are mere formal requirements which could be immediately
344 of 501
cured without prejudice to the rights of the petitioners. This Court frowns on
the resort to technicalities to defeat substantial justice. Thus, the Court states
that the rules of procedure are intended to promote not to defeat substantial
justice, and therefore, they should not be applied in a very rigid and technical
sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989). Again on another
occasion where an appeal should have been dismissed for non-compliance
with the Rules, the Court relaxed the rigid interpretation of the Rules holding
that a straight-jacket application will do more injustice. (Pan-Am Airways v.
Espiritu, 69 SCRA 45 [1976]).
PREMISES CONSIDERED, the petition is hereby DENIED and the assailed

decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
345 of 501
amounts, upon Quirino’s motion filed under Section 13, Rule 59, of the Rules
Manila Herald Publishing v. Ramos, 88 Phil. 94 of Court, were reduced by the court to P11,000 and P10,000 respectively.
EN BANC Unsuccessful in their attempt to quash the attachment, on October 7, 1950, the
Manila Herald Publishing Co., Inc. and Printers, Inc. commenced a joint suit
DECISION against the sheriff, Quirino and Alto Surety and Insurance Co. Inc., in which
the former sought (1) to enjoin the defendants from proceeding with the
January 18, 1951 attachment of the properties above mentioned and (2) P45,000 damages. This
suit was docketed as civil case No. 12263.
G.R. No. L-4268
MANILA HERALD PUBLISHING CO., INC., doing business under the Whereas case No. 11531 was being handled by Judge Sanchez or pending in the
name of Evening Herald Publishing Co., Inc., and Printers, Inc., branch of the Court presided by him, case No. 12263 fell in the branch of Judge
petitioner, Pecson. On the same date, in virtue of anex parte motion in case No. 12263 by
vs. the Manila Herald Publishing Co. Inc., and Printers, Inc., Judge Pecson issued
SIMEON RAMOS, Judge of the Court of First Instance of Manila, a writ of preliminary injunction to the sheriff directing him to desist from
MACARIO A. OFILADA, Sheriff of City of Manila, ANTONIO QUIRINO proceeding with the attachment of the said properties.
and ALTO SURETY AND INSURANCE CO., INC., respondents. After the issuance of that preliminary injunction, Antonio Quirino filed an ex
parte petition for its dissolution, and Judge Simeon Ramos, to whom case No.
Edmundo M. Reyes and Antonio Barredo for petitioners.
12263 had in the meanwhile been transferred, granted the petition on a bond
Bausa and Ampil for respondents.
of P21,000. However Judge Ramos soon set aside the order just mentioned on a
, J.:
motion for reconsideration by the Manila Herald Publishing Co. Inc. and
This is a petition for “certiorari with preliminary injunction” arising upon the
Printer, Inc. and set the matter for hearing for October 14, then continued to
following antecedents:
October 16.
Respondent Antonio Quirino filed a libel suit, docketed as civil case No. 11531,
Upon the conclusion of that hearing, Judge Ramos required the parties to
against Aproniano G. Borres, Pedro Padilla and Loreto Pastor, editor,
submit memoranda on the question whether “the subject matter of civil case
managing editor and reporter, respectively, of the Daily Record, a daily
No. 12263 should be ventilated in an independent action or by means of a
newspaper published in Manila, asking damages aggregating P90,000. With
complaint in intervention in civil case No. 11531.” Memoranda having been
the filing of this suit, the plaintiff secureda writ of preliminary attachment
filed, His Honor declared that the suit, in case No. 12263, was “unnecessary,
upon putting up a P50,000 bond, and the Sheriff of the City of Manila levied
superfluous and illegal” and so dismissed the same. He held that what Manila
an attachment upon certain office and printing equipment found in the
Herald Publishing Co., Inc., and Printers, Inc., should do was intervene in Case
premises of the Daily Record.
No. 11531.
Thereafter the Manila Herald Publishing Co. Inc. and Printers, Inc., filed with
The questions that emerge from these facts and the arguments are: Did Judge
the sheriff separate third-party claims, alleging that they were the owners of
Ramos have authority to dismiss case No. 12263 at the stage when it was
the property attached. Whereupon, the sheriff required of Quirino a counter
thrown out of court? Should the Manila Herald Publishing Co., Inc., and
bound of P41,500 to meet the claim of the Manila Herald Publishing Co., Inc.,
Printers, Inc., come as intervernors into the case for libel instead of bringing
and another bond of P59,500 to meet the claim of Printers, Inc. These
346 of 501
an independent action? And did Judge Pecson or Judge Ramos have The foregoing conclusions should suffice to dispose of this proceeding
jurisdiction in case No. 12263 to quash the attachment levied in case No. 11531? for certiorari, but the parties have discussed the second question and we
propose to rule upon it if only to put out of the way a probable cause for future
In case No. 12263, it should be recalled, neither a motion to dismiss nor an controversy and consequent delay in the disposal of the main cause.
answer had been made when the decision under consideration was handed Section 14 of rule 59, which treats of the steps to betaken when property
down. The matter then before the court was a motion seeking a provisional or attached is claimed by the other person than that defendant or his agent,
collateral remedy, connected with and incidental to the principal action. It was contains the proviso that “Nothing herein contained shall prevent such third
a motion to dissolve the preliminary injunction granted by Judge Pecson person from vindicating his claim to the property by any proper action.” What
restraining the sheriff from proceeding with the attachment in case No. 11531. is “proper action”? Section 1 of Rule 2 defines action as “an ordinary suit in
The question of dismissal was suggested by Judge Ramos on a ground court of justice, by which one party prosecutes another for the enforcement or
perceived by His Honor. To all intents and purposes, the dismissal was protection of a right, or the prevention or redress of a wrong,” while section 2,
decreed by the court on its own initiative. entitled “Commencement of Action,” says that “civil action may be
commenced by filing a complaint with the court.”
Section 1 Rule 8 enumerates the grounds upon which an action may be
dismissed, and it specifically ordains that a motion to this end be filed. In the “Action” has acquired a well-define, technical meaning, and it is in this
light of this express requirement we do not believe that the court had power to restricted sense that the word “action” is used in the above rule. In employing
dismiss the case without the requisite motion duly presented. The fact that the the word “commencement” the rule clearly indicates an action which
parties filed memoranda upon the court’s indication or order in which they originates an entire proceeding and puts in motion the instruments of the
discussed the proposition that the action was unnecessary and was improperly court calling for summons, answer, etc, and not any intermediary step taken in
brought outside and independently of the case for libel did not supply the course of the proceeding whether by the parties themselves or by a
deficiency. Rule 30 of the Rules of Court provides for the cases in which an stranger. It would be strange indeed if the framers of the Rules of Court or the
action may be dismissed, and the inclusion of those therein provided excludes Legislature should have employed the term “proper action” instead of
any other, under the familiar maxim, inclusio unius est exclusio alterius. The “intervention” or equivalent expression if the intention had been just that. It
only instance in which, according to said Rules, the court may dismiss upon was all the easier, simplier and the more natural to say intervention if that had
the court’s own motion an action is, when the “plaintiff fails to appear at the been the purpose, since the asserted right of the third-party claimant
time of the trial or to prosecute his action for an unreasonable length of time necessarily grows out of the pending suit, the suit in which the order of
or to comply with the Rules or any order of the court.” attachment was issued.
The Rules of Court are devised as a matter of necessity, intended to be The most liberal view that can be taken in favor of the respondents’ position is
observed with diligence by the courts as well as by the parties for the orderly that intervention as a means of protecting the third-party claimants’ right is
conduct of litigation and judicial business. In general, it is compliance with not exclusive but cumulative and suppletory to the right to bring a new,
these rules which gives the court jurisdiction to act. independent suit. It is significant that there are courts which go so far as to
take the view that even where the statute expressly grants the right of
We are the opinion that the court acted with grave abuse of discretion if not in
intervention is such cases as this, the statute does not extend to owners of
excess of its jurisdiction in dismissing the case without any formal motion to
property attached, for, under this view, “it is considered that the ownership is
dismiss.
not one of the essential questions to be determined in the litigation between
347 of 501
plaintiff and defendant;” that “whether the property belongs to defendant or The same reasons which impelled us to decide the second question, just
claimant, if determined, is considered as shedding no light upon the question discussed, urge us to take cognizance of and express an opinion on the third.
in controversy, namely, that defendant is indebted to plaintiff.”
The objection that at once suggests itself entertaining in Case No. 12263 the
(See 7 C. J. S., 545 and footnote No. 89 where extracts from the decision in motion to discharge the preliminary attachment levied in case No. 11531 is that
Lewis vs. Lewis, 10 N. W., 586, a leading case, are printed.) by so doing one judge would intefere with another judge’s actuations. The
objection is superficial and will not bear analysis.
Separate action was indeed said to be the correct and only procedure
contemplated by Act No. 190, intervention addition to, but not in substitution It has been seen that a separate action by the third party who claims to be the
of, the old process. The new Rules adopted section 121 of Act No. 190 and owner of the property attached is appropriate. If this is so, it must be admitted
added thereto Rule 24 (a) of the Federal Rules of Procedure. Combined, the that the judge trying such action may render judgment ordering the sheriff of
two modes of redress are now section 1 of Rule 13,1 the last clause of which is whoever has in possession the attached property to deliver it to the plaintiff-
the newly added provision. The result is that, whereas, “under the old claimant or desist from seizing it. It follows further that the court may make
procedure, the third person could not intervene, he having no interest in the an interlocutory order, upon the filing of such bond as may be necessary, to
debt (or damages) sued upon by the plaintiff,” under the present Rules, “a release the property pending final adjudication of the title. Jurisdiction over an
third person claiming to be the owner of such property may, not only file a action includes jurisdiction over a interlocutory matter incidental to the cause
third-party claim with the sheriff, but also intervene in the action to ask that and deemed necessary to preserve the subject matter of the suit or protect the
the writ of attachment be quashed.” (I Moran’s Comments on the Rules of parties’ interests. This is self-evident.
Court, 3rd Ed., 238, 239.) Yet, the right to inetervene, unlike the right to bring
a new action, is not absolute but left to the sound discretion of the court to The fault with the respondents’ argument is that it assumes that the Sheriff is
allow. This qualification makes intervention less preferable to an independent holding the property in question by order of the court handling the case for
action from the standpoint of the claimants, at least. Because availability of libel. In reality this is true only to limited extent. That court did not direct the
intervention depends upon the court in which Case No. 11531 is pending, there sheriff to attach the particular property in dispute. The order was for the
would be assurance for the herein petitioners that they would be permitted to sheriff to attach Borres’, Padilla’s and Pastor’s property. He was not supposed
come into that case. to touch any property other than that of these defendants’, and if he did, he
acted beyond the limits of his authority and upon his personal responsibility.
Little reflection should disabuse the mind from the assumption that an
independent action creates a multiplicity of suits. There can be no multiplicity It is true of course that property in custody of the law can not be interferred
of suits when the parties in the suit where the attachment was levied are with without the permission of the proper court, and property legally attached
different from the parties in the new action, and so are the issues in the two is property in custodia legis. But for the reason just stated, this rule is confined
cases entirely different. In the circumstances, separate action might, indeed, to cases where the property belongs to the defendant or one in which the
be the more convenient of the two competing modes of redress, in that defendant has proprietary interest. When the sheriff acting beyond the bounds
intervention is more likely to inject confusion into the issues between the of his office seizes a stranger’s property, the rule does not apply and
parties in the case for debt or damages with which the third-party claimant interference with his custody is not interference with another court’s order of
has nothing to do and thereby retard instead of facilitate the prompt dispatch attachment.
of the controversy which is underlying objective of the rules of pleading and It may be argued that the third-party claim may be unfounded; but so may it
practice. That is why intervention is subject to the court’s discretion. be meritorious, for the matter. Speculations are however beside the point. The
348 of 501
title is the very issue in the case for the recovery of property or the dissolution
of the attachment, and pending final decision, the court may enter any
interlocutory order calculated to preserve the property in litigation and
protect the parties’ rights and interests.
None of what has been said is to be construed as implying that the setting
aside of the attachment prayed for by the plaintiffs in Case No. 12263 should be
granted. The preceding discussion is intended merely to point out that the
court has jurisdiction to act in the premises, not the way the jurisdiction
should be exercised. The granting or denial, as the case may be, of the prayer
for the dissolution of the attachment would be a proper subject of a new
proceeding if the party adversely affected should be dissatisfied.
The petition for certiorari is granted with costs against the respondents except
the respondent Judge.
Moran, C.J., Paras, Feria, Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo
and Bautista Angelo, JJ., concur.
Footnotes
1 SECTION 1. When proper. – A person may, at any period of a trial, be

permitted by the court, in its discretion, to intervene in an action, if he has
legal interest in the matter in litigation, or in the success of either of the
parties, or an interest against both, or when he is so situated as to be adversely
affected by a distribution of other disposition of property in the custody of the
court or of an officer thereof.
349 of 501
Pursuant to said writ of attachment issued in Civil Case No.

Traders Royal Bank v. IAC, 133 S 141 9894-P, Deputy Sheriff Edilberto Santiago levied among
others about 4,600 barrels of aged or rectified alcohol found
SECOND DIVISION within the premises of said Remco Distillery Inc. A third party
claim was filed with the Deputy Sheriff by herein respondent
G.R. No. L-66321 October 31 1984 La Tondeña, Inc. on April 1, 1982 claiming ownership over said
attached property (Complaint, p. 17, Rollo).
TRADERS ROYAL BANK, petitioner,
vs. On May 12, 1982, private respondent La Tondeña, Inc. filed a
THE HON INTERMEDIATE APPELATE COURT, HON., JESUS R. DE complaint-in- intervention in said Civil Case No. 9894,
VEGA, AS PRESIDING JUDGE OF THE RETIONAL TRIA COURT, THIRD alleging among others, that 'it had made advances to Remco
JUDICIAL REGION, BRANCH IX, MALOLOS, Bulacan, LA TONDEÑA, Distillery Inc. which totalled P3M and which remains
INC., VICTORINO P. EVANGELISTA IN HIS CAPACITY AS Ex-Officio outstanding as of date' and that the 'attached properties are
Provincial Sheriff of Bulacan, and/or any and all his owned by La Tondeña, Inc.' (Annex '3' to petitioner's Motion
deputies, respondents. to Dismiss dated July 27, 1983 — Annex "C" to the petition).
Subsequently, private respondent La Tondeña, Inc., without

the foregoing complaint-in- intervention having been passed
ESCOLIN, J.:ñé+.£ªwph!1 upon by the Regional Trial Court, Branch CX, (Pasay City),
filed in Civil Case No. 9894-P a "Motion to Withdraw" dated
The issue posed for resolution in this petition involves the authority of a October 8, 1983, praying that it be allowed to withdraw
Regional Trial Court to issue, at the instance of a third-party claimant, an alcohol and molasses from the Remco Distillery Plant (Annex
injunction enjoining the sale of property previously levied upon by the sheriff 4 to Petitioner's Motion to Dismiss-Annex C, Petition) and
pursuant to a writ of attachment issued by another Regional Trial Court. which motion was granted per order of the Pasay Court dated
January 27, 1983, authorizing respondent La Tondeña, Inc. to
The antecedent facts, undisputed by the parties, are set forth in the decision of withdraw alcohol and molasses from the Remco Distillery
the respondent Intermediate Appellate Court thus: têñ.£îhqwâ£ Plant at Calumpit, Bulacan (Annex "I" to Reply to Plaintiff's
Opposition dated August 2, 1983 — Annex E to the Petition).
Sometime on March 18, 1983 herein petitioner Traders Royal
Bank instituted a suit against the Remco Alcohol Distillery, The foregoing order dated January 27, 1983 was however
Inc. REMCO before the Regional Trial Court, Branch CX, reconsidered by the Pasay Court by virtue of its order dated
Pasay City, in Civil Case No. 9894-P, for the recovery of the February 18, 1983 (Annex A — Petition, p. 15) declaring that
sum of Two Million Three Hundred Eighty Two Thousand the alcohol "which has not been withdrawn remains in the
Two Hundred Fifty Eight & 71/100 Pesos (P2,382,258.71) ownership of defendant Remco Alcohol Distillery
obtaining therein a writ of pre attachment directed against Corporation" and which order likewise denied La Tondeña's
the assets and properties of Remco Alcohol Distillery, Inc. motion to intervene.
350 of 501
A motion for reconsideration of the foregoing order of Thereafter, the parties filed their respective memoranda
February 18, 1983 was filed by respondent La Tondeña, Inc., on (Annex F, p. 104; Annex G, p. 113, Rollo).
March 8, 1983 reiterating its request for leave to withdraw
alcohol from the Remco Distillery Plant, and praying further Subsequently, the questioned order dated September 28, 1983
that the "portion of the order dated February 18, 1983" was issued by the respondent Judge declaring respondent La
declaring Remco to be the owner of subject alcohol, "be Tondeña Inc. to be the owner of the disputed alcohol, and
reconsidered and striken off said order". This motion has not granting the latter's application for injunctive relief (Annex
been resolved (p. 4, Petition) up to July 18, 1983 when a H-1, Id.).
manifestation that it was withdrawing its motion for
reconsideration was filed by respondent La Tondeña Inc. On October 6, 1983, respondent Sheriff Victorino Evangelista
issued on Edilberto A. Santiago Deputy Sheriff of Pasay City
On July 19, 1983, private respondent La Tondeña Inc. the corresponding writ of preliminary injunction (Annex N, p.
instituted before the Regional Trial Court, Branch IX, Malolos, 127, Id.).
Bulacan presided over by Respondent Judge, Civil Case No.
7003-M, in which it asserted its claim of ownership over the This was followed by an order issued by the Pasay Court dated
properties attached in Civil Case No. 9894-P, and likewise October 11, 1983 in Civil Case No. 9894-P requiring Deputy
prayed for the issuance of a writ of Preliminary Mandatory Sheriff Edilberto A. Santiago to enforce the writ of
and Prohibitory Injunction (Annex B,id ). preliminary attachment previously issued by said court, by
preventing respondent sheriff and respondent La Tondeña,
A Motion to Dismiss and/or Opposition to the application for Inc. from withdrawing or removing the disputed alcohol from
a writ of Preliminary Injunction by herein respondent La the Remco ageing warehouse at Calumpit, Bulacan, and
Tondeña Inc. was filed by petitioner on July 27, 1983 (Annex requiring the aforenamed respondents to explain and show
C, p. 42, Id.) cause why they should not be cited for contempt for
withdrawing or removing said attached alcohol belonging to
This was followed by respondent La Tondeña's opposition to Remco, from the latter's ageing warehouse at Calumpit,
petitioner's Motion to Dismiss on August 1, 1983 (Annex D, p. Bulacan (Annex F, p. 141, Petition).
67, Id.).
Thereafter, petitioner Traders Royal Bank filed with the Intermediate
A reply on the part of petitioner was made on the foregoing Appellate Court a petition for certiorari and prohibition, with application for a
opposition on August 3, 1983 (p. 92, Id.). writ of preliminary injunction, to annul and set aside the Order dated
September 28, 1983 of the respondent Regional Trial Court of Malolos,
Hearings were held on respondent La Tondeña's application Bulacan, Branch IX, issued in Civil Case No. 7003-M; to dissolve the writ of
for injunctive relief and on petitioner's motion to dismiss on preliminary injunction dated October 6, 1983 issued pursuant to said order; to
August 8, 19 & 23, 1983 (p. 5, Id.). prohibit respondent Judge from taking cognizance of and assuming
jurisdiction over Civil Case No. 7003-M, and to compel private respondent La
Tondeña, Inc., and Ex- Oficio Provincial Sheriff of Bulacan to return the
351 of 501
disputed alcohol to their original location at Remco's ageing warehouse at to the possession thereof, stating the grounds of such right or
Calumpit, Bulacan. title, and serves such affidavit upon the officer while the latter
has possession of the property, and a copy thereof upon the
In its decision, the Intermediate Appellate Court dismissed the petition for attaching creditor, the officer shall not be bound to keep the
lack of legal and factual basis, holding that the respondent Judge did not abuse property under the attachment, unless the attaching creditor
his discretion in issuing the Order of September 28, 1983 and the writ of or his agent, on demand of said officer, secures aim against
preliminary injunction dated October 3, 1983. citing the decision in Detective such claim by a bond in a sum not greater than the value of
and Protective Bureau vs. Cloribel (26 SCRA 255). Petitioner moved for the property attached. In case of disagreement as to such
reconsideration, but the respondent court denied the same in its resolution value, the same shall be decided by the court issuing the writ
dated February 2, 1984. of attachment. The officer shall not be liable for damages, for
the taking or keeping of such property, to any such third-
Hence, this petition. party claimant, unless such a claim is so made and the action
upon the bond brought within one hundred and twenty (120)
Petitioner contends that respondent Judge of the Regional T- trial Court of days from the date of the filing of said bond. But nothing
Bulacan acted without jurisdiction in entertaining Civil Case No. 7003-M, in herein contained shall prevent such third person from
authorizing the issuance of a writ of preliminary mandatory and prohibitory vindicating his claim to the property by proper action ...
injunction, which enjoined the sheriff of Pasay City from interferring with La
Tondeña's right to enter and withdraw the barrels of alcohol and molasses The foregoing rule explicitly sets forth the remedy that may be availed of by a
from Remco's ageing warehouse and from conducting the sale thereof, said person who claims to be the owner of property levied upon by attachment, viz:
merchandise having been previously levied upon pursuant to the attachment to lodge a third- party claim with the sheriff, and if the attaching creditor
writ issued by the Regional Trial Court of Pasay City in Civil Case No. 9894-P. posts an indemnity bond in favor of the sheriff, to file a separate and
It is submitted that such order of the Bulacan Court constitutes undue and independent action to vindicate his claim (Abiera vs. Court of Appeals, 45
illegal interference with the exercise by the Pasay Court of its coordinate and SCRA 314). And this precisely was the remedy resorted to by private
co-equal authority on matters properly brought before it. respondent La Tondeña when it filed the vindicatory action before the Bulacan
Court.
We find the petition devoid of merit.
The case before us does not really present an issue of first impression.
There is no question that the action filed by private respondent La Tondeña, In Manila Herald Publishing Co., Inc. vs. Ramos, 1this Court resolved a similar
Inc., as third-party claimant, before the Regional Trial Court of Bulacan in question in this wise: têñ.£îhqwâ£
Civil Case No. 7003-M wherein it claimed ownership over the property levied
upon by Pasay City Deputy Sheriff Edilberto Santiago is sanctioned by Section The objection that at once suggests itself to entertaining in
14, Rule 57 of the Rules of Court. Thus — têñ.£îhqwâ£ Case No. 12263 the motion to discharge the preliminary
attachment levied in Case No. 11531 is that by so doing one
If property taken be claimed by any person other than the judge would interfere with another judge's actuations. The
party against whom attachment had been issued or his agent, objection is superficial and will not bear analysis.
and such person makes an affidavit of his title thereto or right
352 of 501
It has been seen that a separate action by the third party who Generally, the rule that no court has the power to interfere by injunction with
claims to be the owner of the property attached is the judgments or decrees of a concurrent or coordinate jurisdiction having
appropriate. If this is so, it must be admitted that the judge equal power to grant the injunctive relief sought by injunction, is applied in
trying such action may render judgment ordering the sheriff cases where no third-party claimant is involved, in order to prevent one court
of whoever has in possession the attached property to deliver from nullifying the judgment or process of another court of the same rank or
2
it to the plaintiff-claimant or desist from seizing it. It follows category, a power which devolves upon the proper appellate court . The
further that the court may make an interlocutory order, upon purpose of the rule is to avoid conflict of power between different courts of
the filing of such bond as may be necessary, to release the coordinate jurisdiction and to bring about a harmonious and smooth
property pending final adjudication of the title. Jurisdiction functioning of their proceedings.
over an action includes jurisdiction over an interlocutory
matter incidental to the cause and deemed necessary to It is further argued that since private respondent La Tondeña, Inc., had
preserve the subject matter of the suit or protect the parties' voluntarily submitted itself to the jurisdiction of the Pasay Court by filing a
interests. This is self-evident. motion to intervene in Civil Case No. 9894-P, the denial or dismissal thereof
constitutes a bar to the present action filed before the Bulacan Court.
xxx xxx xxx
We cannot sustain the petitioner's view. Suffice it to state that intervention as
It is true of course that property in custody of the law can not a means of protecting the third-party claimant's right in an attachment
be interfered without the permission of the proper court, and proceeding is not exclusive but cumulative and suppletory to the right to bring
3
property legally attached is property in custodia legis. But for an independent suit. The denial or dismissal of a third-party claim to
the reason just stated, this rule is confined to cases where the property levied upon cannot operate to bar a subsequent independent action
property belongs to the defendant or one in which the by the claimant to establish his right to the property even if he failed to appeal
4
defendant has proprietary interest. When the sheriff acting from the order denying his original third-party claim.
beyond the bounds of his office seizes a stranger's property,
the rule does not apply and interference with his custody is WHEREFORE, the instant petition is hereby dismissed and the decision of the
not interference with another court's order of attachment. Intermediate Appellate Court in AC-G.R. No. SP-01860 is affirmed, with costs
against petitioner Traders Royal Bank.
It may be argued that the third-party claim may be
unfounded; but so may it be meritorious, for that matter. SO ORDERED.1äwphï1.ñët
Speculations are however beside the point. The title is the
very issue in the case for the recovery of property or the
dissolution of the attachment, and pending final decision, the
court may enter any interlocutory order calculated to preserve
the property in litigation and protect the parties' rights and
interests.
353 of 501
was subsequently renewed on various dates, the last renewal having been
7
Ching v. CA, 423 S 356 made on December 4, 1980.
SECOND DIVISION Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI
in the amount of P13,000,000.00 payable in eighteen months at 16% interest
G.R. No. 124642 February 23, 2004 per annum. As in the previous loan, the PBMCI, through Alfredo Ching,
executed a promissory note to evidence the loan maturing on June 29,
8 9
ALFREDO CHING and ENCARNACION CHING, petitioners 1981. This was renewed once for a period of one month.
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981,
CORPORATION, respondents. the ABC filed a complaint for sum of money with prayer for a writ of
preliminary attachment against the PBMCI to collect the P12,612,972.88
DECISION exclusive of interests, penalties and other bank charges. Impleaded as co-
defendants in the complaint were Alfredo Ching, Emilio Tañedo and Chung
CALLEJO, SR., J.: Kiat Hua in their capacity as sureties of the PBMCI.
This petition for review, under Rule 45 of the Revised Rules of Court, assails The case was docketed as Civil Case No. 142729 in the Regional Trial Court of
1 10
the Decision of the Court of Appeals (CA) dated November 27, 1995 in CA- Manila, Branch XVIII. In its application for a writ of preliminary attachment,
2
G.R. SP No. 33585, as well as the Resolution on April 2, 1996 denying the the ABC averred that the "defendants are guilty of fraud in incurring the
11
petitioners’ motion for reconsideration. The impugned decision granted the obligations upon which the present action is brought in that they falsely
private respondent’s petition for certiorari and set aside the Orders of the trial represented themselves to be in a financial position to pay their obligation
3 4 12
court dated December 15, 1993 and February 17, 1994 nullifying the upon maturity thereof." Its supporting affidavit stated, inter alia, that the
attachment of 100,000 shares of stocks of the Citycorp Investment Philippines "[d]efendants have removed or disposed of their properties, or [are] ABOUT to
13
under the name of petitioner Alfredo Ching. do so, with intent to defraud their creditors."
The following facts are undisputed: On August 26, 1981, after an ex-parte hearing, the trial court issued an Order
denying the ABC’s application for a writ of preliminary attachment. The trial
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) court decreed that the grounds alleged in the application and that of its
obtained a loan of P9,000,000.00 from the Allied Banking Corporation (ABC). supporting affidavit "are all conclusions of fact and of law" which do not
14
By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo warrant the issuance of the writ prayed for. On motion for reconsideration,
Ching, executed a promissory note for the said amount promising to pay on however, the trial court, in an Order dated September 14, 1981, reconsidered its
5
December 22, 1978 at an interest rate of 14% per annum. As added security for previous order and granted the ABC’s application for a writ of preliminary
the said loan, on September 28, 1978, Alfredo Ching, together with Emilio attachment on a bond of P12,700,000. The order, in relevant part, stated:
Tañedo and Chung Kiat Hua, executed a continuing guaranty with the ABC
binding themselves to jointly and severally guarantee the payment of all the With respect to the second ground relied upon for the grant of the writ of
6
PBMCI obligations owing the ABC to the extent of P38,000,000.00. The loan preliminary attachment ex-parte, which is the alleged disposal of properties by
354 of 501
the defendants with intent to defraud creditors as provided in Sec. 1(e) of Rule Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a
57 of the Rules of Court, the affidavits can only barely justify the issuance of Motion to Dismiss and/or motion to suspend the proceedings in Civil Case No.
said writ as against the defendant Alfredo Ching who has allegedly bound 142729 invoking the PBMCI’s pending application for suspension of payments
himself jointly and severally to pay plaintiff the defendant corporation’s (which Ching co-signed) and over which the SEC had already assumed
19 20
obligation to the plaintiff as a surety thereof. jurisdiction. On February 4, 1983, the ABC filed its Opposition thereto.
WHEREFORE, let a writ of preliminary attachment issue as against the In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on
defendant Alfredo Ching requiring the sheriff of this Court to attach all the attachment the 100,000 common shares of Citycorp stocks in the name of
21
properties of said Alfredo Ching not exceeding P12,612,972.82 in value, which Alfredo Ching.
are within the jurisdiction of this Court and not exempt from execution upon,
the filing by plaintiff of a bond duly approved by this Court in the sum of Thereafter, in an Order dated September 16, 1983, the trial court partially
Twelve Million Seven Hundred Thousand Pesos (P12,700,000.00) executed in granted the aforementioned motion by suspending the proceedings only with
favor of the defendant Alfredo Ching to secure the payment by plaintiff to him respect to the PBMCI. It denied Ching’s motion to dismiss the complaint/or
of all the costs which may be adjudged in his favor and all damages he may suspend the proceedings and pointed out that P.D. No. 1758 only concerns the
sustain by reason of the attachment if the court shall finally adjudge that the activities of corporations, partnerships and associations and was never
plaintiff was not entitled thereto. intended to regulate and/or control activities of individuals. Thus, it directed
22
the individual defendants to file their answers.
15
SO ORDERED.
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to
Upon the ABC’s posting of the requisite bond, the trial court issued a writ of Suspend Proceedings on the same ground of the pendency of SEC Case No.
23
preliminary attachment. Subsequently, summonses were served on the 2250. This motion met the opposition from the ABC.
16
defendants, save Chung Kiat Hua who could not be found.
On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-
24 25
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a claim. Ching eventually filed his Answer on July 12, 1984.
petition for suspension of payments with the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking On October 25, 1984, long after submitting their answers, Ching filed an
17 26
the PBMCI’s rehabilitation. Omnibus Motion, again praying for the dismissal of the complaint or
suspension of the proceedings on the ground of the July 9, 1982 Injunctive
On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI,
including its assets and liabilities, under rehabilitation receivership, and he must also necessarily benefit from the defenses of his principal. The ABC
ordered that "all actions for claims listed in Schedule "A" of the petition opposed Ching’s omnibus motion.
pending before any court or tribunal are hereby suspended in whatever stage
18 27
the same may be until further orders from the Commission." The ABC was Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion praying for the
among the PBMCI’s creditors named in the said schedule. dismissal of the complaint, arguing that the ABC had "abandoned and waived"
its right to proceed against the continuing guaranty by its act of resorting to
preliminary attachment.
355 of 501
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his 3. Furthermore, assuming in gracia argumenti that the supposed movant has
28
preliminary attachment bond fromP12,700,000 to P6,350,000. Alfredo Ching the required personality, her Motion cannot be acted upon by this Honorable
29
opposed the motion, but on April 2, 1987, the court issued an Order setting Court as the above-entitled case is still in the archives and the proceedings
the incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to thereon still remains suspended. And there is no previous Motion to revive the
34
adduce evidence on the actual value of the properties of Alfredo Ching levied same.
30
on by the sheriff.
The ABC also alleged that the motion was barred by prescription or by laches
On March 2, 1988, the trial court issued an Order granting the motion of the because the shares of stocks were in custodia legis.
31
ABC and rendered the attachment bond ofP6,350,000.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo her marriage contract to Alfredo Ching to prove that they were married on
35
Ching, filed a Motion to Set Aside the levy on attachment. She alleged inter January 8, 1960; the articles of incorporation of Citycorp Investment
36
alia that the 100,000 shares of stocks levied on by the sheriff were acquired by Philippines dated May 14, 1979; and, the General Information Sheet of the
her and her husband during their marriage out of conjugal funds after the corporation showing that petitioner Alfredo Ching was a member of the Board
Citycorp Investment Philippines was established in 1974. Furthermore, the of Directors of the said corporation and was one of its top twenty
indebtedness covered by the continuing guaranty/comprehensive suretyship stockholders.
contract executed by petitioner Alfredo Ching for the account of PBMCI did
not redound to the benefit of the conjugal partnership. She, likewise, alleged On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the
that being the wife of Alfredo Ching, she was a third-party claimant entitled to motion to expunge records.
32
file a motion for the release of the properties. She attached therewith a copy
33
of her marriage contract with Alfredo Ching. Acting on the aforementioned motion, the trial court issued on December 15,
37
1993 an Order lifting the writ of preliminary attachment on the shares of
The ABC filed a comment on the motion to quash preliminary attachment stocks and ordering the sheriff to return the said stocks to the petitioners. The
and/or motion to expunge records, contending that: dispositive portion reads:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated
present case; thus, she has no personality to file any motion before November 9, 1993, is hereby granted. Let the writ of preliminary attachment
this Honorable Court; subject matter of said motion, be quashed and lifted with respect to the
attached 100,000 common shares of stock of Citycorp Investment Philippines
2.2 Said supposed movant did not file any Motion for Intervention in the name of the defendant Alfredo Ching, the said shares of stock to be
pursuant to Section 2, Rule 12 of the Rules of Court; returned to him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo
who effected the levy thereon on July 26, 1983, or by whoever may be presently
2.3 Said Motion cannot even be construed to be in the nature of a in possession thereof.
Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of
38
Court. SO ORDERED.
356 of 501
The plaintiff Allied Banking Corporation filed a motion for the reconsideration to Alfredo Ching, as evidenced by the fact that the said shares were registered
of the order but denied the same on February 17, 1994. The petitioner bank in the corporate books of Citycorp solely under his name. Thus, according to
forthwith filed a petition for certiorari with the CA, docketed as CA-G.R. SP the appellate court, the RTC committed a grave abuse of its discretion
No. 33585, for the nullification of the said order of the court, contending that: amounting to excess or lack of jurisdiction in issuing the assailed orders. The
petitioners’ motion for reconsideration was denied by the CA in a Resolution
1. The respondent Judge exceeded his authority thereby acted without dated April 2, 1996.
jurisdiction in taking cognizance of, and granting a "Motion" filed by a
complete stranger to the case. The petitioner-spouses filed the instant petition for review on certiorari,
asserting that the RTC did not commit any grave abuse of discretion
2. The respondent Judge committed a grave abuse of discretion in amounting to excess or lack of jurisdiction in issuing the assailed orders in
lifting the writ of preliminary attachment without any basis in fact their favor; hence, the CA erred in reversing the same. They aver that the
39
and in law, and contrary to established jurisprudence on the matter. source of funds in the acquisition of the levied shares of stocks is not the
controlling factor when invoking the presumption of the conjugal nature of
42
On November 27, 1995, the CA rendered judgment granting the petition and stocks under Art. 160, and that such presumption subsists even if the
setting aside the assailed orders of the trial court, thus: property is registered only in the name of one of the spouses, in this case,
43
petitioner Alfredo Ching. According to the petitioners, the suretyship
WHEREFORE, premises considered, the petition is GRANTED, hereby setting obligation was not contracted in the pursuit of the petitioner-husband’s
44
aside the questioned orders (dated December 15, 1993 and February 17, 1994) profession or business. And, contrary to the ruling of the CA, where conjugal
for being null and void. assets are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main case and
40 45
SO ORDERED. not file a separate suit. Furthermore, the petitioners contend that under Art.
125 of the Family Code, the petitioner-husband’s gratuitous suretyship is null
46
The CA sustained the contention of the private respondent and set aside the and void ab initio, and that the share of one of the spouses in the conjugal
assailed orders. According to the CA, the RTC deprived the private respondent partnership remains inchoate until the dissolution and liquidation of the
47
of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The partnership.
petitioner Encarnacion T. Ching was not a party in the trial court; hence, she
had no right of action to have the levy annulled with a motion for that In its comment on the petition, the private respondent asserts that the CA
purpose. Her remedy in such case was to file a separate action against the correctly granted its petition for certiorari nullifying the assailed order. It
private respondent to nullify the levy on the 100,000 Citycorp shares of stocks. contends that the CA correctly relied on the ruling of this Court in Wong v.
The court stated that even assuming that Encarnacion T. Ching had the right Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors,
to file the said motion, the same was barred by laches. Inc. v. Court of Appeals, the private respondent alleges that the continuing
guaranty and suretyship executed by petitioner Alfredo Ching in pursuit of his
41
Citing Wong v. Intermediate Appellate Court, the CA ruled that the profession or business. Furthermore, according to the private respondent, the
presumption in Article 160 of the New Civil Code shall not apply where, as in right of the petitioner-wife to a share in the conjugal partnership property is
this case, the petitioner-spouses failed to prove the source of the money used merely inchoate before the dissolution of the partnership; as such, she had no
to acquire the shares of stock. It held that the levied shares of stocks belonged
357 of 501
right to file the said motion to quash the levy on attachment of the shares of separate and distinct action from the former case. The above-mentioned
stocks. remedies are cumulative and any one of them may be resorted to by one third-
50
party claimant without availing of the other remedies.
The issues for resolution are as follows: (a) whether the petitioner-wife has the
right to file the motion to quash the levy on attachment on the 100,000 shares In this case, the petitioner-wife filed her motion to set aside the levy on
of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC attachment of the 100,000 shares of stocks in the name of petitioner-husband
committed a grave abuse of its discretion amounting to excess or lack of claiming that the said shares of stocks were conjugal in nature; hence, not
jurisdiction in issuing the assailed orders. liable for the account of her husband under his continuing guaranty and
suretyship agreement with the PBMCI. The petitioner-wife had the right to file
On the first issue, we agree with the petitioners that the petitioner-wife had the motion for said relief.
the right to file the said motion, although she was not a party in Civil Case No.
48
142729. On the second issue, we find and so hold that the CA erred in setting aside
and reversing the orders of the RTC. The private respondent, the petitioner in
49
In Ong v. Tating, we held that the sheriff may attach only those properties of the CA, was burdened to prove that the RTC committed a grave abuse of its
the defendant against whom a writ of attachment has been issued by the discretion amounting to excess or lack of jurisdiction. The tribunal acts
court. When the sheriff erroneously levies on attachment and seizes the without jurisdiction if it does not have the legal purpose to determine the case;
property of a third person in which the said defendant holds no right or there is excess of jurisdiction where the tribunal, being clothed with the power
interest, the superior authority of the court which has authorized the to determine the case, oversteps its authority as determined by law. There is
execution may be invoked by the aggrieved third person in the same case. grave abuse of discretion where the tribunal acts in a capricious, whimsical,
Upon application of the third person, the court shall order a summary hearing arbitrary or despotic manner in the exercise of its judgment and is equivalent
51
for the purpose of determining whether the sheriff has acted rightly or to lack of jurisdiction.
wrongly in the performance of his duties in the execution of the writ of
attachment, more specifically if he has indeed levied on attachment and taken It was incumbent upon the private respondent to adduce a sufficiently strong
hold of property not belonging to the plaintiff. If so, the court may then order demonstration that the RTC acted whimsically in total disregard of evidence
the sheriff to release the property from the erroneous levy and to return the material to, and even decide of, the controversy before certiorari will lie. A
same to the third person. In resolving the motion of the third party, the court special civil action for certiorari is a remedy designed for the correction of
does not and cannot pass upon the question of the title to the property with errors of jurisdiction and not errors of judgment. When a court exercises its
any character of finality. It can treat the matter only insofar as may be jurisdiction, an error committed while so engaged does not deprive it of its
52
necessary to decide if the sheriff has acted correctly or not. If the claimant’s jurisdiction being exercised when the error is committed.
proof does not persuade the court of the validity of the title, or right of
possession thereto, the claim will be denied by the court. The aggrieved third After a comprehensive review of the records of the RTC and of the CA, we find
party may also avail himself of the remedy of "terceria" by executing an and so hold that the RTC did not commit any grave abuse of its discretion
affidavit of his title or right of possession over the property levied on amounting to excess or lack of jurisdiction in issuing the assailed orders.
attachment and serving the same to the office making the levy and the adverse
party. Such party may also file an action to nullify the levy with damages Article 160 of the New Civil Code provides that all the properties acquired
resulting from the unlawful levy and seizure, which should be a totally during the marriage are presumed to belong to the conjugal partnership,
358 of 501
unless it be proved that it pertains exclusively to the husband, or to the wife. respondent claimed that the petitioner-husband acquired the shares of stocks
53
In Tan v. Court of Appeals, we held that it is not even necessary to prove that from the Citycorp Investment Philippines in his own name as the owner
the properties were acquired with funds of the partnership. As long as the thereof. It was, thus, the burden of the private respondent to prove that the
properties were acquired by the parties during the marriage, they are source of the money utilized in the acquisition of the shares of stocks was that
presumed to be conjugal in nature. In fact, even when the manner in which of the petitioner-husband alone. As held by the trial court, the private
the properties were acquired does not appear, the presumption will still apply, respondent failed to adduce evidence to prove this assertion.
and the properties will still be considered conjugal. The presumption of the
conjugal nature of the properties acquired during the marriage subsists in the The CA, likewise, erred in holding that by executing a continuing guaranty and
54
absence of clear, satisfactory and convincing evidence to overcome the same. suretyship agreement with the private respondent for the payment of the
PBMCI loans, the petitioner-husband was in the exercise of his profession,
In this case, the evidence adduced by the petitioners in the RTC is that the pursuing a legitimate business. The appellate court erred in concluding that
100,000 shares of stocks in the Citycorp Investment Philippines were issued to the conjugal partnership is liable for the said account of PBMCI under Article
and registered in its corporate books in the name of the petitioner-husband 161(1) of the New Civil Code.
when the said corporation was incorporated on May 14, 1979. This was done
60
during the subsistence of the marriage of the petitioner-spouses. The shares of Article 161(1) of the New Civil Code (now Article 121[2 and 3] of the Family
stocks are, thus, presumed to be the conjugal partnership property of the Code of the Philippines) provides:
petitioners. The private respondent failed to adduce evidence that the
55
petitioner-husband acquired the stocks with his exclusive money. The Art. 161. The conjugal partnership shall be liable for:
barefaced fact that the shares of stocks were registered in the corporate books
of Citycorp Investment Philippines solely in the name of the petitioner- (1) All debts and obligations contracted by the husband for the benefit of the
husband does not constitute proof that the petitioner-husband, not the conjugal partnership, and those contracted by the wife, also for the same
56
conjugal partnership, owned the same. The private respondent’s reliance on purpose, in the cases where she may legally bind the partnership.
57
the rulings of this Court in Maramba v. Lozano and Associated Insurance &
58
Surety Co., Inc. v. Banzon is misplaced. In the Maramba case, we held that The petitioner-husband signed the continuing guaranty and suretyship
where there is no showing as to when the property was acquired, the fact that agreement as security for the payment of the loan obtained by the PBMCI
the title is in the wife’s name alone is determinative of the ownership of the from the private respondent in the amount of P38,000,000. In Ayala
61
property. The principle was reiterated in the Associated Insurance case where Investment and Development Corp. v. Court of Appeals, this Court ruled
the uncontroverted evidence showed that the shares of stocks were acquired "that the signing as surety is certainly not an exercise of an industry or
during the marriage of the petitioners. profession. It is not embarking in a business. No matter how often an
executive acted on or was persuaded to act as surety for his own employer, this
Instead of fortifying the contention of the respondents, the ruling of this Court should not be taken to mean that he thereby embarked in the business of
59
in Wong v. Intermediate Appellate Court buttresses the case for the suretyship or guaranty."
petitioners. In that case, we ruled that he who claims that property acquired
by the spouses during their marriage is not conjugal partnership property but For the conjugal partnership to be liable for a liability that should appertain to
belongs to one of them as his personal property is burdened to prove the the husband alone, there must be a showing that some advantages accrued to
source of the money utilized to purchase the same. In this case, the private the spouses. Certainly, to make a conjugal partnership responsible for a
359 of 501
liability that should appertain alone to one of the spouses is to frustrate the is enough that the benefit to the family is apparent at the time of the signing
objective of the New Civil Code to show the utmost concern for the solidarity of the contract. From the very nature of the contract of loan or services, the
and well being of the family as a unit. The husband, therefore, is denied the family stands to benefit from the loan facility or services to be rendered to the
power to assume unnecessary and unwarranted risks to the financial stability business or profession of the husband. It is immaterial, if in the end, his
62
of the conjugal partnership. business or profession fails or does not succeed. Simply stated, where the
husband contracts obligations on behalf of the family business, the law
In this case, the private respondent failed to prove that the conjugal presumes, and rightly so, that such obligation will redound to the benefit of
65
partnership of the petitioners was benefited by the petitioner-husband’s act of the conjugal partnership.
executing a continuing guaranty and suretyship agreement with the private
respondent for and in behalf of PBMCI. The contract of loan was between the The Court held in the same case that the rulings of the Court in Cobb-Perez
private respondent and the PBMCI, solely for the benefit of the latter. No and G-Tractors, Inc. are not controlling because the husband, in those cases,
presumption can be inferred from the fact that when the petitioner-husband contracted the obligation for his own business. In this case, the petitioner-
entered into an accommodation agreement or a contract of surety, the husband acted merely as a surety for the loan contracted by the PBMCI from
conjugal partnership would thereby be benefited. The private respondent was the private respondent.
burdened to establish that such benefit redounded to the conjugal
63
partnership. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision
and Resolution of the Court of Appeals are SET ASIDE AND REVERSED. The
It could be argued that the petitioner-husband was a member of the Board of assailed orders of the RTC are AFFIRMED.
Directors of PBMCI and was one of its top twenty stockholders, and that the
shares of stocks of the petitioner-husband and his family would appreciate if SO ORDERED.
the PBMCI could be rehabilitated through the loans obtained; that the
petitioner-husband’s career would be enhanced should PBMCI survive because
of the infusion of fresh capital. However, these are not the benefits
contemplated by Article 161 of the New Civil Code. The benefits must be those
directly resulting from the loan. They cannot merely be a by-product or a spin-
64
off of the loan itself.
This is different from the situation where the husband borrows money or
receives services to be used for his own business or profession. In the Ayala
case, we ruled that it is such a contract that is one within the term "obligation
for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own business
or his own profession, that contract falls within the term "… obligations for the
benefit of the conjugal partnership." Here, no actual benefit may be proved. It
360 of 501
of a Deed of Absolute Sale which she obtained from PANDA on the same date.
On 23 March 1992, Tacay registered the vehicle in her name with the Land
Section 15 Transportation Office (LTO) in Lingayen. On 10 May 1992, Tacay tendered a
check for P100,000.00 to cover part of the P120,000.00 balance still due
PANDA. Upon presentment by PANDA with the drawee bank, the check for
Tayabas Land v. Sharruf, 41 Phil. 382 (See under Section 7 page 235) P100,000.00 was dishonored as the same was allegedly forged. When
confronted by PANDA about the check's dishonor, Tacay promised to pay the
Bilag-Rivera v. Flora, July 6, 1995 balance of P120,000.00 on or before 23 June 1992.
FIRST DIVISION On 8 July 1992, however, Tacay sold the Isuzu jitney to complainant Florentina
Bilag-Rivera for the amount of P250,000.00, covered by an Absolute Deed of
2
Sale. Hence, possession of the vehicle and its LTO registration papers were
turned over to complainant.
A.M. P-94-1008 July 6, 1995
It appears that Tacay failed to fulfill her promise to pay the P120,000 balance
FLORENTINA BILAG-RIVERA, petitioner, on the vehicle due PANDA Corporation, prompting the latter to verify the
vs. whereabouts of the said vehicle. PANDA later learned of the deed of sale
CRISANTO FLORA, respondent. between Tacay and complainant and obtained information that the alleged
deed of sale was not registered or even annotated on the Certificate of
Registration of the motor vehicle.
PADILLA, J.: In September 1992, with Tacay still in default on her outstanding obligation to
Panda Corporation, the latter, thru its manager Charlie Carlos, filed a
1
In an affidavit-complaint filed with the Office of the Court Administrator, complaint for specific performance, replevin, and damages with the RTC of
complainant Florentina Bilag-Rivera charged respondent Crisanto Flora, Dagupan City, Branch 40 [docketed as Civil Case No. D-10205] with prayer for
deputy sheriff, RTC of Baguio City, with grave misconduct and dishonesty, the issuance of a writ of preliminary attachment against Elsie Tacay, with
when he released a motor vehicle subject of a writ of attachment to a complainant (Rivera) impleaded as co-defendant.
representative of the plaintiff in a civil case, without authority from the court
which issued the writ, thereby enabling said plaintiff to sell the motor vehicle On 18 September 1992, the, RTC of Dagupan issued a writ of preliminary
to a third person, to the damage and prejudice of complainant who claims attachment against Tacay and complainant. Since the subject motor vehicle
ownership over said motor vehicle. was believed to be in the City of Baguio, the writ was addressed to the RTC,
City Sheriff, Baguio City.
On 5 August 1990, Elsie V. Tacay bought an Isuzu Jitney on installment basis
from Panda Automotive Corporation (PANDA), Dagupan City, represented by Complainant alleges that being a buyer in good faith, she should not have
Charlie Q. Carlos, for the amount of P256,000.00. On 17 March 1992, when the been impleaded in the complaint of Panda Corporation. Instead of proceeding
installment payments reached P145,000.00, Tacay demanded for the execution against the principal defendant Elsie V. Tacay, the respondent Deputy Sheriff
361 of 501
proceeded to attach the subject motor vehicle in complainant's possession. At The following day, complainant accompanied by her lawyer, went to the office
that time, respondent Sheriff was accompanied by Charlie Carlos, PANDA's of respondent to inquire about the motor vehicle and to request for a receipt.
Manager. Respondent issued to the complainant a handwritten receipt on the According to complainant, respondent told her not to worry and that the
same day (18 September 1992) which indicated that he took possession of the issuance of a receipt was no longer necessary because the vehicle and its tools
3
vehicle pursuant to the writ of attachment. were being kept in a safe place. Complainant then informed respondent that
she would be posting a counterbond as soon as she had the money.
Complainant requested the City Sheriff of the RTC, Baguio City to hold the
vehicle for a few days as she would prepare the amount of P20,000.00 as Complainant further alleges that on several occasions, she came to the office
counterbond to discharge the attachment. Since there was no bonded of respondent to inspect the vehicle but respondent did not allow her to see
warehouse in the City of Baguio, the office of the City Sheriff requested the vehicle nor was she informed of its whereabouts. Respondent, however,
complainant to pay P1,000.00 to justify their holding on to said vehicle until gave complainant repeated assurances that the vehicle was being kept in a safe
she could post the counterbond. Complainant paid the amount of P1,000.00 place.
4
and was duly receipted for said payment.
On 17 May 1993, complainant attended the hearing in Civil Case No.D-10285 to
On 23 December 1992, however, the RTC of Dagupan City issued an order in argue her Motion to Dismiss and Motion to Quash the Writ of Preliminary
Civil Case No. D-10285 for the issuance of an alias writ of attachment as prayed Attachment. To her surprise, she was informed by the lawyer of Panda
for by Panda Motors. The writ was again addressed to the office of the City Corporation that a certain Elsie Tacay had voluntarily surrendered the vehicle
Sheriff, RTC of Baguio City with an order to attach the same motor vehicle in together with its documents to Panda Corporation and that Panda's manager,
possession of complainant. Respondent received thealias writ on 23 February Charlie Carlos, had already sold the vehicle to a person named Leonardo
1993. Sarmiento for P175,000.00.
The alias writ was not served immediately by respondent because the Complainant manifested before the court that the subject motor vehicle was
whereabouts of the said vehicle could not be ascertained. It was only on 15 in custodia legis and that the above-mentioned transactions were anomalous
March 1993 when Charlie Carlos, the manager of Panda Motors, came and contrary to law. Thereafter, the court directed complainant's lawyer to
personally to the office of respondent and informed him; that the vehicle to be investigate the matter and to report his findings to the court.
attached was in the possession of Carlos Camiwet, a cousin of complainant.
Complainant's lawyer then sent a letter of inquiry to the Clerk of Court of
Forthwith, respondent together with Charlie Carlos, proceeded to the Baguio City, asking why respondent did not issue a receipt when he executed
residence of Carlos Camiwet and served the aliaswrit of attachment on the the alias writ of attachment; why there was no sheriff's return on the writ of
latter with an attachment bond of P120,000.00. Complainant avers that this attachment filed in court; why the vehicle was no longer seen again after 15
time, respondent sheriff did not issue any receipt to cover for his re-possession March 1993; and whether it was true that Elsie Tacay took the vehicle together
of the said vehicle. Worse, complainant maintains that at the time of the levy, with the tools from respondent and returned it to Panda
5
various tools worth P50,000.00, which were not integral to the motor vehicle, Corporation. Complainant also sent a letter of inquiry to the LTO office in
6
were also taken by respondent sheriff. Lingayen to check on the current registration of the said vehicle.
362 of 501
Meanwhile, the Clerk of Court and the Ex-Officio Sheriff of RTC, Baguio issued On 10 June 1993, complainant's lawyer received a reply from the LTO in
a memo to respondent requiring him to explain the proceedings he conducted Lingayen with certified photocopies of the vehicle's registration indicating that
in enforcing the alias writ of attachment in Civil Case No. D-10285. on 1 April 1993, Elsie V. Tacay re-sold the subject vehicle for P175,000.00 to
9
Charlie Carlos and that on 10 April 1993, Charlie Carlos sold the same unit for
10
In his compliance dated 18 June 1993, respondent stated that he: P175,000.00 to Leonardo Sarmiento of Bautista, Pangasinan and that the
same had been registered in Sarmiento's name for LTO registration year 1993-
. . . served and took the subject vehicle into "custodia 1994.
legis", and a receipt was duly issued. The receipt not however
received nor signed by the defendants as they refused to do so, Complainant now argues that the foregoing facts and circumstances clearly
thereafter, said motor vehicle was surrendered to the Plaintiff demonstrate that respondent sheriff adopted an irregular procedure and
in the above-captioned case for safekeeping and custody for entered into an anomalous transaction in not issuing a receipt to complainant
the reason that this office has no bonded warehouse to keep when he served the alias writ of attachment and on the very same day turned
the said motor vehicle. An acknowledgment receipt was duly over possession of the vehicle to the attaching creditor which simply issued an
signed by the manager of said Plaintiff (Panda Motors) in the acknowledgment receipt for the vehicle, instead of securing the permission of
7
person of Mr. Charlie Marcos. (Emphases supplied) the trial court, knowing fully well that the vehicle was in custodia legis.
Compared to the service of the first writ of attachment when respondent
In addition, respondent denied the existence of the tools when he levied requested the amount of P1,000.00 from complainant as storage fees for the
the alias writ of attachment on the said vehicle. vehicle, respondent in serving the alias writ of attachment in effect made
Charlie Carlos his agent when he turned over the said vehicle to the latter for
In respondent's return of the alias writ of attachment dated 7 June 1993, he alleged "safekeeping and custody."
similarly stated that:
11
In his comment filed with this Court, respondent contends that the Office of
xxx xxx xxx the City Sheriff of Baguio has no bonded warehouse to store the vehicle for the
disposition of the (trial) court, hence, the vehicle was turned over to the
On March 15, 1993, the said (alias) writ of attachment was attaching-creditor's representative, Charlie Carlos, who immediately asked
enforced together with the manager of Panda Corporation, respondent that the motor vehicle be kept in his custody for which Carlos
12
Mr. Charlie Carlos from Mrs. Florentina Rivera, but refused to signed a receipt acknowledging that the vehicle was under custody of the
acknowledge the receipt of the said motor vehicle for the Court but shall be temporarily deposited in the company's (Panda's) premises
reason that she will just file(d) the necessary counterbond. (in Dagupan City).
And on the said date said motor vehicle was taken by the Respondent explains that after the due enforcement of the alias writ of
plaintiff thru Mr. Charlie Carlos for safekeeping and custody attachment, he awaited for further disposition of the same by the trial court,
for the reason that this officer has no bonded warehouse to and for all intents and purposes, his (ministerial) function had been fully
8
place the said motor vehicle. served. Thus, he no longer had any knowledge, consent nor participation with
respect to the subsequent deed of sale between Elsie Tacay and Charlie
363 of 501
13 14
Carlos and between Charlie Carlos and Leonardo Sarmiento . Neither did concerned court to allow him to turn over the subject vehicle
15
he receive nor enjoy any benefit in any form out of these transactions. to Charlie Carlos. This he failed to do.
In a resolution dated 27 July 1994, this Court, as recommended by the Office of The Court agrees with the findings of Judge Villanueva and concludes that
the Court Administrator, referred this case to Executive Judge Clarence J. while the evidence may be insufficient to prove that respondent conspired
Villanueva of the Regional Trial Court of Baguio City, Branch 7 for with Charlie Carlos and Elsie Tacay in eventually alienating the vehicle to a
investigation, report and recommendation within sixty (60) days from receipt third person, his particular zeal and precipitate decision to give possession of
of the records. the vehicle to a party litigant (plaintiff) and treat the same as "in custodia
legis" effectively destroys the presumption of regularity in the performance of
In a six (6) page report dated 15 November 1994, Judge Villanueva made the his official duties.
following findings and recommendations:
As deputy sheriff, respondent could not be unaware of Rule 57, section 6 of the
. . . there is clear evidence on record that respondent sheriff rules of Court which provides that:
Crisanto Flora was remiss of [sic] his duties as an officer of the
court in releasing the subject motor vehicle to Charlie Carlos, Immediately after executing the order of the officer must
a representative of the plaintiff in the case where the writ of make a return thereon to the clerk or judge of the court from
attachment emanated, without seeking an order or which the order issued, with a full statement of his
permission from the court concerned. It was incumbent of proceeding under the order and a complete inventory of the
Sheriff Flora to take into his custody the motor vehicle subject property attached, together with any counter-bond given by
of attachment and protect it. A sheriff who takes possession of the party against whom attachment is issued, and serve a
the property under a writ of attachment is duty bound to copy of any such counter-bond on the applicant or his lawyer.
protect the property from damage or loss and to exercise
ordinary and reasonable care for the preservation of the Section (7) (c) of the same Rule also mandates that:
property (Adm. Matter p. 128, 81 SCRA 599). The fact that
respondent Flora failed to immediately make a return of his Properties shall be attached by the officer executing the order
proceedings on the second writ of attachment is something to in the following manner:
consider. He enforced the second writ of attachment on
March 15, 1993 but he waited until June 18, 1993 to do so at the xxx xxx xxx
direction of the Clerk of Court Atty. Delilah Gonzales-Muñoz
as contained in the memorandum issued to respondent (see (c) Personal property capable of manual delivery, by taking
Exh. "B" page 45 record; see also Exhs. "C" and "C-1"). While it and safely keeping it in his capacity, after issuing the
is true that there are no bonded warehouse(s) where sheriffs corresponding receipt therefor.
could deposit attached properties for safe keeping, herein
respondent is not exempt from exercising reasonable Chapter VIII (e) (4) of the Manual for Clerks of Court similarly states that:
diligence in performing his duties as an officer of the court.
The least that he could have done is to ask permission for the
364 of 501
All sheriffs and deputy sheriffs shall submit a report to the Thus, the return he executed more than two (2) months after the enforcement
judge concerned on the action taken on all writs and of the alias writ was more of an afterthought rather than the fulfillment of a
processes assigned to them within (10) days from receipt of positive duty, because by then he had been ordered by the clerk of court to
said process or writ. Said report shall form part of the records. explain his proceedings under the alias writ of attachment.
Respondent could not evade the positive duty of serving the attaching Time and again, the Court has reiterated the rule that the conduct of every
creditor's affidavit, bond, and the order of attachment on complainant's employee of the judiciary must be at all time characterized with propriety and
18
representative (Camiwet) by now alleging that it was the fault of complainant decorum and above all else, it must be above and beyond suspicion. In the
and her representative in refusing to sign the receipt that he allegedly issued case at bench, respondent cannot successfully defend his negligent omission
on 15 March 1993. to secure a court order before disposing of the property by simply alleging that
a party litigant had agreed to be his agent. In the same vein, a sheriff or deputy
The records of the investigation reveal otherwise-that complainant could not sheriff cannot act as special deputy sheriff of any party litigant.
have signed the acknowledgment receipt because she was not present when
the vehicle was attached. In the same vein, her cousin Camiwet refused to sign The Court takes notice that on 18 July 1994, the RTC of Dagupan City rendered
19
the receipt because, as he testified, the same was misleading as he was being a decision in Civil Case No. D-102805 awarding damages in favor of
forced to sign a receipt which indicated that complainant and Elsie Tacay complainant Rivera. Said decision became final and executory as Panda and
surrendered the vehicle to respondent by virtue of the said alias writ of Elsie Tacay did not interpose any appeal therefrom. This circumstance adds
attachment. more credence to complainant's claim that she would not have been defrauded
in the first place had respondent sheriff performed his duty in accordance with
The Court is more inclined to believe the testimony of Camiwet during the the rules instead of unduly accommodating the request of a party litigant.
investigation to the effect that he only surrendered the vehicle to respondent
because he was repeatedly assured by respondent that everything was all right In his report, Judge Villanueva recommends that respondent be suspended for
and that Charlie Carlos was really after Elsie Tacay, that as soon as Mr. Carlos six (6) months without pay. The Court considers said penalty to be too harsh
returned to Dagupan, he (Camiwet) or complainant could retrieve the vehicle in the absence of direct evidence showing that respondent has pecuniarily
16
in his (respondent's) possession. received any financial gain from the anomalous transactions.
Respondent himself virtually admitted his nonfeasance when he testified that But for his failure to exercise reasonable diligence in the performance of his
it had been their practice to give possession of properties subject of writs of duties as an officer of the court, the Court hereby imposes a fine of P5,000 on
attachment to party litigants because they have no bonded warehouse in their respondent Flora with STERN WARNING that any repetition of the same act
jurisdiction. However, he could not explain why, in this particular case, in the in the future will be dealt with more severely. Let a copy of this decision be
first writ of attachment, he even demanded P1,000.00 from complainant for entered in respondent's personal record.
alleged storage fees while complainant bought time to find the amount for her
counterbond, and yet, in the execution of the alias writ, he usurped the court's SO ORDERED.
function and released the vehicle to the custody of Mr. Carlos. Equally
reprehensible is his attempt to cover up his misdeed by concealing it from
17
complainant when the latter confronted him thereafter in his office.
365 of 501
Total advances against 1925-26 crop loan P19,521.09

PNB v. Vasquez, 71 Phil. 433
Total proceeds of sugar sales
Caveat! I’m not sure if this is the right case. 7,636.59
EN BANC Deficit (principal) 11,884.50
Interest at 9 per cent to March 31, 1927

G.R. No. L-47578 April 8, 1941
7,984.97
PHILIPPINE NATIONAL BANK, plaintiff-appellant,
Total deficit to March 31, 1937 19,869.47
vs.
ESTEBAN I. VAZQUEZ, defendant-appellee. Daily interest on P11,884.50 at 9 per cent 2.97
Ramon Diokno for appellant. (Bill of Exceptions, pp. 9-10.)

Zoilo Hilario for appellee.
Subsequently, in an action filed by the bank for the recovery of the total
LAUREL, J.: amount due and owing, defendant Vazquez was ordered by the court to settle
his obligation in full. (Civil Case No. 4031, Court of First Instance of Occidental
Plaintiff appeals to this court from a decision of the Court of First Instance of Negros.) No appeal was interposed by any of the parties to the decision of
Occidental Negros, promulgated January 18, 1938, the dispositive part reading: October 31, 1931, and the same became final and executory. But the said
judgment not having years enforced by writ of execution and the period of five
Wherefore, the court hereby renders judgment in favor of the plaintiff years having elapsed, the plaintiff bank, on July 22, 1937, filed a complaint (Bill
and against the defendant, reviving the judgment in the aforesaid civil of Executions, pp. 2-6) for the August 12, 1937, filed his answer and set up the
case No. 4031 of this same court, but deducting from the amount following counterclaim:
thereof the sum of P5,250.13, the deduction to be computed as of the
date the judgment in said civil case had become final and executory. Que, como se puede ver en el expediente de la causa civil No. 4031
mencionada en el parrafo II de la demanda, a peticion del
It appears that on or about the 27th day of May, 1925, Esteban I. Vazquez demandante, previa fianza prestada por el mismo actor y en virtud de
succeeded in negotiating with the Philippine National Bank a loan for P24,000, ordenes judiciales, fueron embargados preventivamente del
on the 1925-26 sugar-cane harvest of his hacienda. "Mandalagan"; that the demandado 500 picos de azucar de la propiedad de este, y vendidos
money advanced him by the plaintiff bank totalled P19,521.09, at an agreed 9 por el Sheriff Provincial de Negros Occidental a razon de P10.75 cada
per cent interest per annum and a mortgage executed on his sugar-cane uno, habiendose tambien ordenado por el mismo Hon. Juzgado, a
harvest; that additional guaranty was put up by one Cristeta Ibañez; and that peticion igualmente del demandante, el deposito en el Banco Nacional
after liquidation of the debt as of March 31, 1927, the following was the result: Filipino del producto neto de dicha venta montante a P5,250.13,
cantidad que debe ser descontada de la suma de P19,869.47 expresada
en el parrafo IV de la demanda, con la consiguiente reduccion de los
366 of 501
intereses referidos en dicho mismo parrafo IV, por no haberse plaintiff and defendant, and persons claiming under defendant, be treated as
levantado ni anulado nunca dicho embargo y por haberse dictado though it had been levied upon under execution as well as under attachment,
contra el demandado sentencia condenatoria, que ha sido firme, en and therefore as satisfying the judgment to the extent of its value." (Freeman
dicho asunto civil No. 4031. on Judgments, pp. 2366-2367, citing Yourt v. Hopkins, 24 Ill. 326 and
Kenrickv. Ruff, 71 Mo. 570.)
The plaintiff's appeal is limited to the portion of the decision which orders the
deduction of the sum mentioned therein from the amount adjudicated to the And whether or not the Provincial Sheriff was negligent in the performance of
plaintiff. In the aforementioned civil case No. 4031, the plaintiff bank prayed his official duties by not turning the money over the plaintiff, is a question
for and obtained an order of preliminary attachment, by virtue of which 500 which could only be determined in a separate case and hence, immaterial in
piculs of sugar belonging to the defendant Vazquez was levied upon by the the present controversy.
sheriff and sold at public auction at the rate of P10.75 per picul, the proceeds
therefrom amounting to P5,250.13. This amount was deposited with the It should be observed that affirmative acts of the plaintiff Bank have resulted
plaintiff bank, upon its own petition, in the name of one Andres Covacha in the attachment and subsequent sale of the property of the defendant. It
personally, then a deputy of the Provincial Sheriff of Occidental Negros. On seems fair that plaintiff having put defendant's property into the hands of the
August 14, 1928, a deposit of P5,250.13, was made in the name of the Provincial sheriff, the loss should fall on him and not on defendant. When a sheriff takes
Sheriff of Occidental Negros with the bank, by virtue of another petition of the property or goods in execution or by attachment, he becomes the bailee for
plaintiff approved by the court to transfer the deposit in the name of the the benefit of all parties interested, and certainly for the party who set him in
provincial sheriff proper. It appears, however, that the Provincial Sheriff made motion. After obtaining the judgment, plaintiff at once was entitled to have
other deposits on this current account, and that he has been making the proceeds of the sale applied to the satisfaction of his judgment and it was
withdrawals therefrom until it was closed on January 6, 1932. the duty of the sheriff to pay the proceeds over. The money collected or paid
the sheriff on the sale of the goods or property may be regarded just like
The plaintiff Bank contends that the amount of P5,250.13 should not have been money in the hands of a sheriff collected on execution. If the sheriff collects
deducted from the judgment awarded to it, for the reason that the defendant, money from a judgment debtor, and then fails to pay it over, the debtor
despite the attachment, is still the owner of the 500 piculs of sugar and of its cannot be compelled to pay it again.
proceeds after the public auction sale, and loss or misappropriation thereof
should be for his account. The reason invoked is not applicable here. As We find defendant Esteban I. Vazquez liable to the plaintiff Philippine
correctly observed by the trial judge, "once the decision in the aforesaid civil National Bank for the principal sum of P19,869.47, with interest on the sum of
case had become final, the proceed of the sugar attached in connection P11,884.50 at 9 per cent per annum from April 1, 1927, but deducting the sum of
therewith should be considered as partial satisfaction of the amount of the P5,250.13, the deduction to be computed as of the date the judgment in civil
judgment." "Personal property may have levied upon under attachment and case No. 4031 had become final and executory. The appealed decision is
left in the possession of the sheriff or other officer levying the writ to secure therefore affirmed, with costs against the appellant. So ordered.
the payment of such judgment as may be recovered in the action. Where
execution issues, it is the duty of such officer to apply towards its satisfaction
the property so attached and left in his hands; but he may have embezzled or
otherwise misappropriated it, or allowed it to be lost by his negligence. When
such is the case, we think the better opinion is, that it must, as between the
367 of 501
After trial, the Court of First Instance of Manila, Branch 13, then presided over
PAL v. CA, 181 S 557 by the late Judge Jesus P. Morfe rendered judgment on June 29, 1972, in favor
of private respondent Amelia Tan and against petitioner Philippine Airlines,
EN BANC Inc. (PAL) as follows:
G.R. No. L-49188 January 30, 1990 WHEREFORE, judgment is hereby rendered, ordering the
defendant Philippine Air Lines:
PHILIPPINE AIRLINES, INC., petitioner,
vs. 1. On the first cause of action, to pay to the plaintiff the
HON. COURT OF APPEALS, HON. JUDGE RICARDO D. GALANO, Court amount of P75,000.00 as actual damages, with legal interest
of First Instance of Manila, Branch XIII, JAIME K. DEL ROSARIO, thereon from plaintiffs extra-judicial demand made by the
Deputy Sheriff, Court of First Instance, Manila, and AMELIA letter of July 20, 1967;
TAN, respondents.
2. On the third cause of action, to pay to the plaintiff the
amount of P18,200.00, representing the unrealized profit of
10% included in the contract price of P200,000.00 plus legal
GUTIERREZ, JR., J.: interest thereon from July 20,1967;
Behind the simple issue of validity of an alias writ of execution in this case is a 3. On the fourth cause of action, to pay to the plaintiff the
more fundamental question. Should the Court allow a too literal interpretation amount of P20,000.00 as and for moral damages, with legal
of the Rules with an open invitation to knavery to prevail over a more interest thereon from July 20, 1 967;
discerning and just approach? Should we not apply the ancient rule of
statutory construction that laws are to be interpreted by the spirit which 4. On the sixth cause of action, to pay to the plaintiff the
vivifies and not by the letter which killeth? amount of P5,000.00 damages as and for attorney's fee.
This is a petition to review on certiorari the decision of the Court of Appeals in Plaintiffs second and fifth causes of action, and defendant's
CA-G.R. No. 07695 entitled "Philippine Airlines, Inc. v. Hon. Judge Ricardo D. counterclaim, are dismissed.
Galano, et al.", dismissing the petition for certiorari against the order of the
Court of First Instance of Manila which issued an alias writ of execution With costs against the defendant. (CA Rollo, p. 18)
against the petitioner.
On July 28, 1972, the petitioner filed its appeal with the Court of Appeals. The
The petition involving the alias writ of execution had its beginnings on case was docketed as CA-G.R. No. 51079-R.
November 8, 1967, when respondent Amelia Tan, under the name and style of
Able Printing Press commenced a complaint for damages before the Court of On February 3, 1977, the appellate court rendered its decision, the dispositive
First Instance of Manila. The case was docketed as Civil Case No. 71307, portion of which reads:
entitled Amelia Tan, et al. v. Philippine Airlines, Inc.
368 of 501
IN VIEW WHEREOF, with the modification that PAL is On March 3,1978, the Court of Appeals denied the issuance of the alias writ for
condemned to pay plaintiff the sum of P25,000.00 as damages being premature, ordering the executing sheriff Emilio Z. Reyes to appear with
and P5,000.00 as attorney's fee, judgment is affirmed, with his return and explain the reason for his failure to surrender the amounts paid
costs. (CA Rollo, p. 29) to him by petitioner PAL. However, the order could not be served upon
Deputy Sheriff Reyes who had absconded or disappeared.
Notice of judgment was sent by the Court of Appeals to the trial court and on
dates subsequent thereto, a motion for reconsideration was filed by On March 28, 1978, motion for the issuance of a partial alias writ of execution
respondent Amelia Tan, duly opposed by petitioner PAL. was filed by respondent Amelia Tan.
On May 23,1977, the Court of Appeals rendered its resolution denying the On April 19, 1978, respondent Amelia Tan filed a motion to withdraw "Motion
respondent's motion for reconsideration for lack of merit. for Partial Alias Writ of Execution" with Substitute Motion for Alias Writ of
Execution. On May 1, 1978, the respondent Judge issued an order which reads:
No further appeal having been taken by the parties, the judgment became final
and executory and on May 31, 1977, judgment was correspondingly entered in As prayed for by counsel for the plaintiff, the Motion to
the case. Withdraw 'Motion for Partial Alias Writ of Execution with
Substitute Motion for Alias Writ of Execution is hereby
The case was remanded to the trial court for execution and on September granted, and the motion for partial alias writ of execution is
2,1977, respondent Amelia Tan filed a motion praying for the issuance of a writ considered withdrawn.
of execution of the judgment rendered by the Court of Appeals. On October 11,
1977, the trial court, presided over by Judge Galano, issued its order of Let an Alias Writ of Execution issue against the defendant for
execution with the corresponding writ in favor of the respondent. The writ was the fall satisfaction of the judgment rendered. Deputy Sheriff
duly referred to Deputy Sheriff Emilio Z. Reyes of Branch 13 of the Court of Jaime K. del Rosario is hereby appointed Special Sheriff for
First Instance of Manila for enforcement. the enforcement thereof. (CA Rollo, p. 34)
Four months later, on February 11, 1978, respondent Amelia Tan moved for the On May 18, 1978, the petitioner received a copy of the first alias writ of
issuance of an alias writ of execution stating that the judgment rendered by execution issued on the same day directing Special Sheriff Jaime K. del Rosario
the lower court, and affirmed with modification by the Court of Appeals, to levy on execution in the sum of P25,000.00 with legal interest thereon from
remained unsatisfied. July 20,1967 when respondent Amelia Tan made an extra-judicial demand
through a letter. Levy was also ordered for the further sum of P5,000.00
On March 1, 1978, the petitioner filed an opposition to the motion for the awarded as attorney's fees.
issuance of an alias writ of execution stating that it had already fully paid its
obligation to plaintiff through the deputy sheriff of the respondent court, On May 23, 1978, the petitioner filed an urgent motion to quash the alias writ
Emilio Z. Reyes, as evidenced by cash vouchers properly signed and receipted of execution stating that no return of the writ had as yet been made by Deputy
by said Emilio Z. Reyes. Sheriff Emilio Z. Reyes and that the judgment debt had already been fully
satisfied by the petitioner as evidenced by the cash vouchers signed and
receipted by the server of the writ of execution, Deputy Sheriff Emilio Z. Reyes.
369 of 501
On May 26,1978, the respondent Jaime K. del Rosario served a notice of The issuance of the questioned alias writ of execution under
garnishment on the depository bank of petitioner, Far East Bank and Trust the circumstances here obtaining is justified because even
Company, Rosario Branch, Binondo, Manila, through its manager and with the absence of a Sheriffs return on the original writ, the
garnished the petitioner's deposit in the said bank in the total amount of unalterable fact remains that such a return is incapable of
P64,408.00 as of May 16, 1978. Hence, this petition for certiorari filed by the being obtained (sic) because the officer who is to make the
Philippine Airlines, Inc., on the grounds that: said return has absconded and cannot be brought to the
Court despite the earlier order of the court for him to appear
I for this purpose. (Order of Feb. 21, 1978, Annex C, Petition).
Obviously, taking cognizance of this circumstance, the order
AN ALIAS WRIT OF EXECUTION CANNOT BE ISSUED of May 11, 1978 directing the issuance of an alias writ was
WITHOUT PRIOR RETURN OF THE ORIGINAL WRIT BY therefore issued. (Annex D. Petition). The need for such a
THE IMPLEMENTING OFFICER. return as a condition precedent for the issuance of an alias
writ was justifiably dispensed with by the court below and its
II action in this regard meets with our concurrence. A contrary
view will produce an abhorent situation whereby the mischief
PAYMENT OF JUDGMENT TO THE IMPLEMENTING of an erring officer of the court could be utilized to impede
OFFICER AS DIRECTED IN THE WRIT OF EXECUTION indefinitely the undisputed and awarded rights which a
CONSTITUTES SATISFACTION OF JUDGMENT. prevailing party rightfully deserves to obtain and with
dispatch. The final judgment in this case should not indeed be
III permitted to become illusory or incapable of execution for an
indefinite and over extended period, as had already
INTEREST IS NOT PAYABLE WHEN THE DECISION IS transpired. (Rollo, pp. 35-36)
SILENT AS TO THE PAYMENT THEREOF.
Judicium non debet esse illusorium; suum effectum habere debet (A judgment
IV ought not to be illusory it ought to have its proper effect).
SECTION 5, RULE 39, PARTICULARLY REFERS TO LEVY OF Indeed, technicality cannot be countenanced to defeat the execution of a
PROPERTY OF JUDGMENT DEBTOR AND DISPOSAL OR judgment for execution is the fruit and end of the suit and is very aptly called
SALE THEREOF TO SATISFY JUDGMENT. the life of the law (Ipekdjian Merchandising Co. v. Court of Tax Appeals, 8
SCRA 59 [1963]; Commissioner of Internal Revenue v. Visayan Electric Co., 19
Can an alias writ of execution be issued without a prior return of the original SCRA 697, 698 [1967]). A judgment cannot be rendered nugatory by the
writ by the implementing officer? unreasonable application of a strict rule of procedure. Vested rights were never
intended to rest on the requirement of a return, the office of which is merely
We rule in the affirmative and we quote the respondent court's decision with to inform the court and the parties, of any and all actions taken under the writ
approval: of execution. Where such information can be established in some other
manner, the absence of an executing officer's return will not preclude a
370 of 501
judgment from being treated as discharged or being executed through an alias Under the peculiar circumstances of this case, the payment to the absconding
writ of execution as the case may be. More so, as in the case at bar. Where the sheriff by check in his name did not operate as a satisfaction of the judgment
return cannot be expected to be forthcoming, to require the same would be to debt.
compel the enforcement of rights under a judgment to rest on an
impossibility, thereby allowing the total avoidance of judgment debts. So long In general, a payment, in order to be effective to discharge an obligation, must
as a judgment is not satisfied, a plaintiff is entitled to other writs of execution be made to the proper person. Article 1240 of the Civil Code provides:
(Government of the Philippines v. Echaus and Gonzales, 71 Phil. 318). It is a
well known legal maxim that he who cannot prosecute his judgment with Payment shall be made to the person in whose favor the
effect, sues his case vainly. obligation has been constituted, or his successor in interest,
or any person authorized to receive it. (Emphasis supplied)
More important in the determination of the propriety of the trial court's
issuance of an alias writ of execution is the issue of satisfaction of judgment. Thus, payment must be made to the obligee himself or to an agent having
authority, express or implied, to receive the particular payment (Ulen v.
Under the peculiar circumstances surrounding this case, did the payment Knecttle 50 Wyo 94, 58 [2d] 446, 111 ALR 65). Payment made to one having
made to the absconding sheriff by check in his name operate to satisfy the apparent authority to receive the money will, as a rule, be treated as though
judgment debt? The Court rules that the plaintiff who has won her case should actual authority had been given for its receipt. Likewise, if payment is made to
not be adjudged as having sued in vain. To decide otherwise would not only one who by law is authorized to act for the creditor, it will work a discharge
give her an empty but a pyrrhic victory. (Hendry v. Benlisa 37 Fla. 609, 20 SO 800,34 LRA 283). The receipt of money
due on ajudgment by an officer authorized by law to accept it will, therefore,
It should be emphasized that under the initial judgment, Amelia Tan was satisfy the debt (See 40 Am Jm 729, 25; Hendry v. Benlisa supra; Seattle v.
found to have been wronged by PAL. Stirrat 55 Wash. 104 p. 834,24 LRA [NS] 1275).
She filed her complaint in 1967. The theory is where payment is made to a person authorized and recognized
by the creditor, the payment to such a person so authorized is deemed
After ten (10) years of protracted litigation in the Court of First Instance and payment to the creditor. Under ordinary circumstances, payment by the
the Court of Appeals, Ms. Tan won her case. judgment debtor in the case at bar, to the sheriff should be valid payment to
extinguish the judgment debt.
It is now 1990.
There are circumstances in this case, however, which compel a different
Almost twenty-two (22) years later, Ms. Tan has not seen a centavo of what the conclusion.
courts have solemnly declared as rightfully hers. Through absolutely no fault
of her own, Ms. Tan has been deprived of what, technically, she should have The payment made by the petitioner to the absconding sheriff was not in cash
been paid from the start, before 1967, without need of her going to court to or legal tender but in checks. The checks were not payable to Amelia Tan or
enforce her rights. And all because PAL did not issue the checks intended for Able Printing Press but to the absconding sheriff.
her, in her name.
Did such payments extinguish the judgment debt?
371 of 501
Article 1249 of the Civil Code provides: If bouncing checks had been issued in the name of Amelia Tan and not the
Sheriff's, there would have been no payment. After dishonor of the checks, Ms.
The payment of debts in money shall be made in the currency Tan could have run after other properties of PAL. The theory is that she has
stipulated, and if it is not possible to deliver such currency, received no value for what had been awarded her. Because the checks were
then in the currency which is legal tender in the Philippines. drawn in the name of Emilio Z. Reyes, neither has she received anything. The
same rule should apply.
The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the It is argued that if PAL had paid in cash to Sheriff Reyes, there would have
effect of payment only when they have been cashed, or when been payment in full legal contemplation. The reasoning is logical but is it
through the fault of the creditor they have been impaired. valid and proper? Logic has its limits in decision making. We should not
follow rulings to their logical extremes if in doing so we arrive at unjust or
In the meantime, the action derived from the original absurd results.
obligation shall be held in abeyance.
In the first place, PAL did not pay in cash. It paid in cheeks.
In the absence of an agreement, either express or implied, payment means the
discharge of a debt or obligation in money (US v. Robertson, 5 Pet. [US] 641, 8 And second, payment in cash always carries with it certain cautions. Nobody
L. ed. 257) and unless the parties so agree, a debtor has no rights, except at his hands over big amounts of cash in a careless and inane manner. Mature
own peril, to substitute something in lieu of cash as medium of payment of his thought is given to the possibility of the cash being lost, of the bearer being
debt (Anderson v. Gill, 79 Md.. 312, 29 A 527, 25 LRA 200,47 Am. St. Rep. 402). waylaid or running off with what he is carrying for another. Payment in checks
Consequently, unless authorized to do so by law or by consent of the obligee a is precisely intended to avoid the possibility of the money going to the wrong
public officer has no authority to accept anything other than money in party. The situation is entirely different where a Sheriff seizes a car, a tractor,
payment of an obligation under a judgment being executed. Strictly speaking, or a piece of land. Logic often has to give way to experience and to reality.
the acceptance by the sheriff of the petitioner's checks, in the case at bar, does Having paid with checks, PAL should have done so properly.
not, per se, operate as a discharge of the judgment debt.
Payment in money or cash to the implementing officer may be deemed
Since a negotiable instrument is only a substitute for money and not money, absolute payment of the judgment debt but the Court has never, in the least
the delivery of such an instrument does not, by itself, operate as payment (See. bit, suggested that judgment debtors should settle their obligations by turning
189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. over huge amounts of cash or legal tender to sheriffs and other executing
American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A officers. Payment in cash would result in damage or interminable litigations
check, whether a manager's check or ordinary cheek, is not legal tender, and each time a sheriff with huge amounts of cash in his hands decides to abscond.
an offer of a check in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. Mere delivery of checks does As a protective measure, therefore, the courts encourage the practice of
not discharge the obligation under a judgment. The obligation is not payments by cheek provided adequate controls are instituted to prevent
extinguished and remains suspended until the payment by commercial wrongful payment and illegal withdrawal or disbursement of funds. If
document is actually realized (Art. 1249, Civil Code, par. 3). particularly big amounts are involved, escrow arrangements with a bank and
carefully supervised by the court would be the safer procedure. Actual transfer
372 of 501
of funds takes place within the safety of bank premises. These practices are Having failed to employ the proper safeguards to protect itself, the judgment
perfectly legal. The object is always the safe and incorrupt execution of the debtor whose act made possible the loss had but itself to blame.
judgment.
The attention of this Court has been called to the bad practice of a number of
It is, indeed, out of the ordinary that checks intended for a particular payee are executing officers, of requiring checks in satisfaction of judgment debts to be
made out in the name of another. Making the checks payable to the judgment made out in their own names. If a sheriff directs a judgment debtor to issue
creditor would have prevented the encashment or the taking of undue the checks in the sheriff's name, claiming he must get his commission or fees,
advantage by the sheriff, or any person into whose hands the checks may have the debtor must report the sheriff immediately to the court which ordered the
fallen, whether wrongfully or in behalf of the creditor. The issuance of the execution or to the Supreme Court for appropriate disciplinary action. Fees,
checks in the name of the sheriff clearly made possible the misappropriation of commissions, and salaries are paid through regular channels. This improper
the funds that were withdrawn. procedure also allows such officers, who have sixty (60) days within which to
make a return, to treat the moneys as their personal finds and to deposit the
As explained and held by the respondent court: same in their private accounts to earn sixty (60) days interest, before said finds
are turned over to the court or judgment creditor (See Balgos v. Velasco, 108
... [K]nowing as it does that the intended payment was for the SCRA 525 [1981]). Quite as easily, such officers could put up the defense that
private party respondent Amelia Tan, the petitioner said checks had been issued to them in their private or personal capacity.
corporation, utilizing the services of its personnel who are or Without a receipt evidencing payment of the judgment debt, the
should be knowledgeable about the accepted procedures and misappropriation of finds by such officers becomes clean and complete. The
resulting consequences of the checks drawn, nevertheless, in practice is ingenious but evil as it unjustly enriches court personnel at the
this instance, without prudence, departed from what is expense of litigants and the proper administration of justice. The temptation
generally observed and done, and placed as payee in the could be far greater, as proved to be in this case of the absconding sheriff. The
checks the name of the errant Sheriff and not the name of the correct and prudent thing for the petitioner was to have issued the checks in
rightful payee. Petitioner thereby created a situation which the intended payee's name.
permitted the said Sheriff to personally encash said checks
and misappropriate the proceeds thereof to his exclusive The pernicious effects of issuing checks in the name of a person other than the
personal benefit. For the prejudice that resulted, the intended payee, without the latter's agreement or consent, are as many as the
petitioner himself must bear the fault. The judicial guideline ways that an artful mind could concoct to get around the safeguards provided
which we take note of states as follows: by the law on negotiable instruments. An angry litigant who loses a case, as a
rule, would not want the winning party to get what he won in the judgment.
As between two innocent persons, one of whom must suffer He would think of ways to delay the winning party's getting what has been
the consequence of a breach of trust, the one who made it adjudged in his favor. We cannot condone that practice especially in cases
possible by his act of confidence must bear the loss. where the courts and their officers are involved. We rule against the
(Blondeau, et al. v. Nano, et al., L-41377, July 26, 1935, 61 Phil. petitioner.
625)
Anent the applicability of Section 15, Rule 39, as follows:
373 of 501
Section 15. Execution of money judgments. — The officer must satisfaction of a judgment is the payment of the amount of the writ, or a lawful
enforce an execution of a money judgment by levying on all tender thereof, or the conversion by sale of the debtor's property into an
the property, real and personal of every name and nature amount equal to that due, and, it may be done otherwise than upon an
whatsoever, and which may be disposed of for value, of the execution (Section 47, Rule 39). Levy and delivery by an execution officer are
judgment debtor not exempt from execution, or on a not prerequisites to the satisfaction of a judgment when the same has already
sufficient amount of such property, if they be sufficient, and been realized in fact (Section 47, Rule 39). Execution is for the sheriff to
selling the same, and paying to the judgment creditor, or his accomplish while satisfaction of the judgment is for the creditor to achieve.
attorney, so much of the proceeds as will satisfy the Section 15, Rule 39 merely provides the sheriff with his duties as executing
judgment. ... officer including delivery of the proceeds of his levy on the debtor's property
to satisfy the judgment debt. It is but to stress that the implementing officer's
the respondent court held: duty should not stop at his receipt of payments but must continue until
payment is delivered to the obligor or creditor.
We are obliged to rule that the judgment debt cannot be
considered satisfied and therefore the orders of the Finally, we find no error in the respondent court's pronouncement on the
respondent judge granting the alias writ of execution may not inclusion of interests to be recovered under the alias writ of execution. This
be pronounced as a nullity. logically follows from our ruling that PAL is liable for both the lost checks and
interest. The respondent court's decision in CA-G.R. No. 51079-R does not
xxx xxx xxx totally supersede the trial court's judgment in Civil Case No. 71307. It merely
modified the same as to the principal amount awarded as actual damages.
It is clear and manifest that after levy or garnishment, for a
judgment to be executed there is the requisite of payment by WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby
the officer to the judgment creditor, or his attorney, so much DISMISSED. The judgment of the respondent Court of Appeals is AFFIRMED
of the proceeds as will satisfy the judgment and none such and the trial court's issuance of the alias writ of execution against the
payment had been concededly made yet by the absconding petitioner is upheld without prejudice to any action it should take against the
Sheriff to the private respondent Amelia Tan. The ultimate errant sheriff Emilio Z. Reyes. The Court Administrator is ordered to follow up
and essential step to complete the execution of the judgment the actions taken against Emilio Z. Reyes.
not having been performed by the City Sheriff, the judgment
debt legally and factually remains unsatisfied. SO ORDERED.
Strictly speaking execution cannot be equated with satisfaction of a judgment. Fernan, C.J., Cruz, Paras, Bidin, Griño-Aquino, Medialdea and Regalado, JJ.,
Under unusual circumstances as those obtaining in this petition, the concur.
distinction comes out clearly.
Execution is the process which carries into effect a decree or judgment

(Painter v. Berglund, 31 Cal. App. 2d. 63, 87 P 2d 360, 363; Miller v. London,
294 Mass 300, 1 NE 2d 198, 200; Black's Law Dictionary), whereas the
374 of 501
Separate Opinions was the special representative of the legal or central authority,
and as such usually nominated by the King. .. Since the
earliest times, both in England and the United States, a sheriff
has continued his status as an adjunct of the court .. . As it
NARVASA, J., dissenting: was there, so it has been in the Philippines from the time of
the organization of the judiciary .. . (J. Fernando's concurring
The execution of final judgments and orders is a function of the sheriff, an opinion in Bagatsing v. Herrera, 65 SCRA 434)
officer of the court whose authority is by and large statutorily determined to
meet the particular exigencies arising from or connected with the performance One of a sheriff s principal functions is to execute final judgments and orders.
of the multifarious duties of the office. It is the acknowledgment of the many The Rules of Court require the writs of execution to issue to him, directing
dimensions of this authority, defined by statute and chiselled by practice, him to enforce such judgments and orders in the manner therein provided
which compels me to disagree with the decision reached by the majority. (Rule 39). The mode of enforcement varies according to the nature of the
judgment to be carried out: whether it be against property of the judgment
A consideration of the wide latitude of discretion allowed the sheriff as the debtor in his hands or in the hands of a third person i e. money judgment), or
officer of the court most directly involved with the implementation and for the sale of property, real or personal (i.e. foreclosure of mortgage) or the
execution of final judgments and orders persuades me that PAL's payment to delivery thereof, etc. (sec. 8, Rule 39).
the sheriff of its judgment debt to Amelia Tan, though made by check issued
in said officer's name, lawfully satisfied said obligation and foreclosed further Under sec. 15 of the same Rule, the sheriff is empowered to levy on so much of
recourse therefor against PAL, notwithstanding the sheriffs failure to deliver to the judgment debtor's property as may be sufficient to enforce the money
Tan the proceeds of the check. judgment and sell these properties at public auction after due notice to satisfy
the adjudged amount. It is the sheriff who, after the auction sale, conveys to
It is a matter of history that the judiciary .. is an inherit or of the purchaser the property thus sold (secs. 25, 26, 27, Rule 39), and pays the
the Anglo-American tradition. While the common law as such judgment creditor so much of the proceeds as will satisfy the judgment. When
.. "is not in force" in this jurisdiction, "to breathe the breath of the property sold by him on execution is an immovable which consequently
life into many of the institutions, introduced [here] under gives rise to a light of redemption on the part of the judgment debtor and
American sovereignty, recourse must be had to the rules, others (secs. 29, 30, Rule 39), it is to him (or to the purchaser or redemptioner
principles and doctrines of the common law under whose that the payments may be made by those declared by law as entitled to redeem
protecting aegis the prototypes of these institutions had their (sec. 31, Rule 39); and in this situation, it becomes his duty to accept payment
birth" A sheriff is "an officer of great antiquity," and was also and execute the certificate of redemption (Enage v. Vda. y Hijos de Escano, 38
called the shire reeve. A shire in English law is a Saxon word Phil. 657, cited in Moran, Comments on the Rules of Court, 1979 ed., vol. 2, pp.
signifying a division later called a county. A reeve is an 326-327). It is also to the sheriff that "written notice of any redemption must
ancient English officer of justice inferior in rank to an be given and a duplicate filed with the registrar of deeds of the province, and if
alderman .. appointed to process, keep the King's peace, and any assessments or taxes are paid by the redemptioner or if he has or acquires
put the laws in execution. From a very remote period in any lien other than that upon which the redemption was made, notice thereof
English constitutional history .. the shire had another officer, must in like manner be given to the officer and filed with the registrar of
namely the shire reeve or as we say, the sheriff. .. The Sheriff
375 of 501
deeds," the effect of failure to file such notice being that redemption may be 761). The validity of the payment made by the judgment debtor, however, is in
made without paying such assessments, taxes, or liens (sec. 30, Rule 39). no wise affected and the latter is discharged from his obligation to the
judgment creditor as of the moment the check issued to the sheriff is encashed
The sheriff may likewise be appointed a receiver of the property of the and the proceeds are received by Id. office. The issuance of the check to a
judgment debtor where the appointment of the receiver is deemed necessary person authorized to receive it (Art. 1240, Civil Code; See. 46 of the Code of
for the execution of the judgment (sec. 32, Rule 39). Civil Procedure; Enage v. Vda y Hijos de Escano, 38 Phil. 657, cited in Javellana
v. Mirasol, 40 Phil. 761) operates to release the judgment debtor from any
At any time before the sale of property on execution, the judgment debtor may further obligations on the judgment.
prevent the sale by paying the sheriff the amount required by the execution
and the costs that have been incurred therein (sec. 20, Rule 39). The sheriff is an adjunct of the court; a court functionary whose competence
involves both discretion and personal liability (concurring opinion of J.
The sheriff is also authorized to receive payments on account of the judgment Fernando, citing Uy Piaoco v. Osmena, 9 Phil. 299, in Bagatsing v. Herrera, 65
debt tendered by "a person indebted to the judgment debtor," and his "receipt SCRA 434). Being an officer of the court and acting within the scope of his
shall be a sufficient discharge for the amount so paid or directed to be credited authorized functions, the sheriff s receipt of the checks in payment of the
by the judgment creditor on the execution" (sec. 41, Rule 39). judgment execution, may be deemed, in legal contemplation, as received by
the court itself (Lara v. Bayona, 10 May 1955, No. L- 10919).
Now, obviously, the sheriff s sale extinguishes the liability of the judgment
debtor either in fun, if the price paid by the highest bidder is equal to, or more That the sheriff functions as a conduit of the court is further underscored by
than the amount of the judgment or pro tanto if the price fetched at the sale the fact that one of the requisites for appointment to the office is the
be less. Such extinction is not in any way dependent upon the judgment execution of a bond, "conditioned (upon) the faithful performance of his (the
creditor's receiving the amount realized, so that the conversion or appointee's) duties .. for the delivery or payment to Government, or the person
embezzlement of the proceeds of the sale by the sheriff does not revive the entitled thereto, of all properties or sums of money that shall officially come
judgment debt or render the judgment creditor liable anew therefor. into his hands" (sec. 330, Revised Administrative Code).
So, also, the taking by the sheriff of, say, personal property from the judgment There is no question that the checks came into the sheriffs possession in his
debtor for delivery to the judgment creditor, in fulfillment of the verdict official capacity. The court may require of the judgment debtor, in complying
against him, extinguishes the debtor's liability; and the conversion of said with the judgment, no further burden than his vigilance in ensuring that the
property by the sheriff, does not make said debtor responsible for replacing person he is paying money or delivering property to is a person authorized by
the property or paying the value thereof. the court to receive it. Beyond this, further expectations become unreasonable.
To my mind, a proposal that would make the judgment debtor unqualifiedly
In the instances where the Rules allow or direct payments to be made to the the insurer of the judgment creditor's entitlement to the judgment amount
sheriff, the payments may be made by check, but it goes without saying that if which is really what this case is all about begs the question.
the sheriff so desires, he may require payment to be made in lawful money. If
he accepts the check, he places himself in a position where he would be liable That the checks were made out in the sheriffs name (a practice, by the way, of
to the judgment creditor if any damages are suffered by the latter as a result of long and common acceptance) is of little consequence if juxtaposed with the
the medium in which payment was made (Javellana v. Mirasol, et al., 40 Phil. extent of the authority explicitly granted him by law as the officer entrusted
376 of 501
with the power to execute and implement court judgments. The sheriffs either legal tender or checks from the judgment debtor in
requirement that the checks in payment of the judgment debt be issued in his satisfaction of the judgment debt. In addition, Padilla, J. has
name was simply an assertion of that authority; and PAL's compliance cannot underscored the obligation of the sheriff, imposed upon him
in the premises be faulted merely because of the sheriffs subsequent by the nature of his office and the law, to turn over such legal
malfeasance in absconding with the payment instead of turning it over to the tender, checks and proceeds of execution sales to the
judgment creditor. judgment creditor. The failure of a sheriff to effect such
turnover and his conversion of the funds (or goods) held by
If payment had been in cash, no question about its validity or of the authority him to his own uses, do not have the effect of frustrating
and duty of the sheriff to accept it in settlement of PAL's judgment obligation payment by and consequent discharge of the judgment
would even have arisen. Simply because it was made by checks issued in the debtor.
sheriff s name does not warrant reaching any different conclusion.
To hold otherwise would be to throw the risk of the sheriff
As payment to the court discharges the judgment debtor from his faithfully performing his duty as a public officer upon those
responsibility on the judgment, so too must payment to the person designated members of the general public who are compelled to deal
by such court and authorized to act in its behalf, operate to produce the same with him. It seems to me that a judgment debtor who turns
effect. over funds or property to the sheriff can not reasonably be
made an insurer of the honesty and integrity of the sheriff and
It is unfortunate and deserving of commiseration that Amelia Tan was that the risk of the sheriff carrying out his duties honestly and
deprived of what was adjudged to her when the sheriff misappropriated the faithfully is properly lodged in the State itself The sheriff, like
payment made to him by PAL in dereliction of his sworn duties. But I submit all other officers of the court, is appointed and paid and
that her remedy lies, not here and in reviving liability under a judgment controlled and disciplined by the Government, more
already lawfully satisfied, but elsewhere. specifically by this Court. The public surely has a duty to
report possible wrongdoing by a sheriff or similar officer to
ACCORDINGLY, I vote to grant the petition. the proper authorities and, if necessary, to testify in the
appropriate judicial and administrative disciplinary
Melencio-Herrera, Gancayco, J., concurs. proceedings. But to make the individual members of the
general community insurers of the honest performance of
duty of a sheriff, or other officer of the court, over whom they
have no control, is not only deeply unfair to the former. It is
FELICIANO, J., dissenting: also a confession of comprehensive failure and comes too
close to an abdication of duty on the part of the Court itself.
I concur in the able dissenting opinions of Narvasa and Padilla, JJ. and would This Court should have no part in that.
merely wish to add a few footnotes to their lucid opinions.
2. I also feel compelled to comment on the majority opinion
1. Narvasa, J. has demonstrated in detail that a sheriff written by Gutierrez, J. with all his customary and special way
is authorized by the Rules of Court and our case law to receive with words. My learned and eloquent brother in the Court
377 of 501
apparently accepts the proposition that payment by a Payment in money or cash to the implementing officer may
judgment debtor of cash to a sheriff produces the legal effects be deemed absolute payment of the judgment debt but the
of payment, the sheriff being authorized to accept such court has never, in the least bit, suggested that judgment
payment. Thus, in page 10 of his ponencia, Gutierrez, J. writes: debtors should settle their obligations by turning over huge
amounts of cash or legal tender to sheriffs and other
The receipt of money due on a judgment by an officer executing officers. ... (Emphasis in the original) (Majority
authorized by law to accept it will satisfy the debt. (Citations opinion, pp. 12-13)
omitted)
There is no dispute with the suggestion apparently made that maximum safety
The theory is where payment is made to a person authorized is secured where the judgment debtor delivers to the sheriff not cash but
and recognized by the creditor, the payment to such a person a check made out, not in the name of the sheriff, but in the judgment creditor's
so authorized is deemed payment to the creditor. Under name. The fundamental point that must be made, however, is that under our
ordinary circumstances, payment by the judgment debtor in law only cash is legal tender and that the sheriff can be compelled to
the case at bar, to the sheriff would be valid payment to accept only cash and not checks, even if made out to the name of the judgment
1
extinguish the judgment debt. creditor. The sheriff could have quite lawfully required PAL to deliver to him
only cash, i.e., Philippine currency. If the sheriff had done so, and if PAL had
Shortly thereafter, however, Gutierrez, J. backs off from the complied with such a requirement, as it would have had to, one would have to
above position and strongly implies that payment in cash to agree that legal payment must be deemed to have been effected. It requires no
the sheriff is sheer imprudence on the part of the judgment particularly acute mind to note that a dishonest sheriff could easily convert
debtor and that therefore, should the sheriff abscond with the the money and abscond. The fact that the sheriff in the instant case required,
cash, the judgment debtor has not validly discharged the not cash to be delivered to him, but rather a check made out in his name,
judgment debt: does not change the legal situation. PAL did not thereby become negligent; it
did not make the loss anymore possible or probable than if it had instead
It is argued that if PAL had paid in cash to Sheriff Reyes, there delivered plain cash to the sheriffs.
would have been payment in full legal contemplation. The
reasoning is logical but is it valid and proper? It seems to me that the majority opinion's real premise is the unspoken one
that the judgment debtor should bear the risk of the fragility of the sheriff s
In the first place, PAL did not pay in cash. It paid in checks. virtue until the money or property parted with by the judgment debtor
actually reaches the hands of the judgment creditor. This brings me back to
And second, payment in cash always carries with it certain my earlier point that risk is most appropriately borne not by the judgment
cautions. Nobody hands over big amounts of cash in a debtor, nor indeed by the judgment creditor, but by the State itself. The Court
careless and inane manner. Mature thought is given to the requires all sheriffs to post good and adequate fidelity bonds before entering
possibility of the cash being lost, of the bearer being waylaid upon the performance of their duties and, presumably, to maintain such
2
or running off with what he is carrying for another. Payment bonds in force and effect throughout their stay in office. The judgment
in checks is precisely intended to avoid the possibility of the creditor, in circumstances like those of the instant case, could be allowed to
3
money going to the wrong party.... execute upon the absconding sheriff s bond.
378 of 501
I believe the Petition should be granted and I vote accordingly. the property, real and personal of every name and nature
whatsoever, and which may be disposed of for value, of the
judgment debtor not exempt from execution, or on a
sufficient amount of such property, if there be sufficient, and
PADILLA, J., Dissenting Opinion selling the same, and paying to the judgment creditor, or his
attorney, so much of the proceeds as will satisfy the judgment.
From the facts that appear to be undisputed, I reach a conclusion different ... .(emphasis supplied)
from that of the majority. Sheriff Emilio Z. Reyes, the trial court's authorized
sheriff, armed with a writ of execution to enforce a final money judgment it would be the duty of Sheriff Reyes to pay to the judgment creditor the
against the petitioner Philippine Airlines (PAL) in favor of private respondent proceeds of the execution i.e., the cash received from PAL (under the above
Amelia Tan, proceeded to petitioner PAL's office to implement the writ. assumption). But, the duty of the sheriff to pay the cash to the judgment
creditor would be a matter separate the distinct from the fact that PAL would
There is no question that Sheriff Reyes, in enforcing the writ of execution, was have satisfied its judgment obligation to Amelia Tan, the judgment creditor,
acting with full authority as an officer of the law and not in his personal by delivering the cash amount due under the judgment to Sheriff Reyes.
capacity. Stated differently, PAL had every right to assume that, as an officer of
the law, Sheriff Reyes would perform his duties as enjoined by law. It would be Did the situation change by PAL's delivery of its two (2) checks totalling
grossly unfair to now charge PAL with advanced or constructive notice that P30,000.00 drawn against its bank account, payable to Sheriff Reyes, for
Mr. Reyes would abscond and not deliver to the judgment creditor the account of the judgment rendered against PAL? I do not think so, because
proceeds of the writ of execution. If a judgment debtor cannot rely on and when Sheriff Reyes encashed the checks, the encashment was in fact a
trust an officer of the law, as the Sheriff, whom else can he trust? payment by PAL to Amelia Tan through Sheriff Reyes, an officer of the law
authorized to receive payment, and such payment discharged PAL'S obligation
Pursued to its logical extreme, if PAL had delivered to Sheriff Reyes the under the executed judgment.
amount of the judgment in CASH, i.e. Philippine currency, with the
corresponding receipt signed by Sheriff Reyes, this would have been payment If the PAL cheeks in question had not been encashed by Sheriff Reyes, there
by PAL in full legal contemplation, because under Article 1240 of the Civil would be no payment by PAL and, consequently no discharge or satisfaction of
Code, "payment shall be made to the person in whose favor the obligation has its judgment obligation. But the checks had been encashed by Sheriff Reyes
been constituted or his successor in interest or any person authorized to receive giving rise to a situation as if PAL had paid Sheriff Reyes in cash, i.e.,
it." And said payment if made by PAL in cash, i.e., Philippine currency, to Philippine currency. This, we repeat, is payment, in legal contemplation, on
Sheriff Reyes would have satisfied PAL's judgment obligation, as payment is a the part of PAL and this payment legally discharged PAL from its judgment
legally recognized mode for extinguishing one's obligation. (Article 1231, Civil obligation to the judgment creditor. To be sure, the same encashment by
Code). Sheriff Reyes of PAL's checks delivered to him in his official capacity as Sheriff,
imposed an obligation on Sheriff Reyes to pay and deliver the proceeds of the
Under Sec. 15, Rule 39, Rules of Court which provides that- encashment to Amelia Tan who is deemed to have acquired a cause of action
against Sheriff Reyes for his failure to deliver to her the proceeds of the
Sec. 15. Execution of money judgments. — The officer must encashment. As held:
enforce an execution of a money judgment by levying on all
379 of 501
Payment of a judgment, to operate as a release or satisfaction,

even pro tanto must be made to the plaintiff or to some
person authorized by him, or by law, to receive it. The NARVASA, J., dissenting:
payment of money to the sheriff having an execution satisfies
it, and, if the plaintiff fails to receive it, his only remedy is The execution of final judgments and orders is a function of the sheriff, an
against the officer (Henderson v. Planters' and Merchants officer of the court whose authority is by and large statutorily determined to
Bank, 59 SO 493, 178 Ala. 420). meet the particular exigencies arising from or connected with the performance
of the multifarious duties of the office. It is the acknowledgment of the many
Payment of an execution satisfies it without regard to whether dimensions of this authority, defined by statute and chiselled by practice,
the officer pays it over to the creditor or misapplies it (340, 33 which compels me to disagree with the decision reached by the majority.
C.J.S. 644, citing Elliot v. Higgins, 83 N.C. 459). If defendant
consents to the Sheriff s misapplication of the money, A consideration of the wide latitude of discretion allowed the sheriff as the
however, defendant is estopped to claim that the debt is officer of the court most directly involved with the implementation and
satisfied (340, 33 C.J.S. 644, citing Heptinstall v. Medlin 83 execution of final judgments and orders persuades me that PAL's payment to
N.C. 16). the sheriff of its judgment debt to Amelia Tan, though made by check issued
in said officer's name, lawfully satisfied said obligation and foreclosed further
The above rulings find even more cogent application in the case at bar recourse therefor against PAL, notwithstanding the sheriffs failure to deliver to
because, as contended by petitioner PAL (not denied by private respondent), Tan the proceeds of the check.
when Sheriff Reyes served the writ of execution on PAL, he (Reyes) was
accompanied by private respondent's counsel. Prudence dictated that when It is a matter of history that the judiciary .. is an inherit or of
PAL delivered to Sheriff Reyes the two (2) questioned checks (payable to the Anglo-American tradition. While the common law as such
Sheriff Reyes), private respondent's counsel should have insisted on their .. "is not in force" in this jurisdiction, "to breathe the breath of
immediate encashment by the Sheriff with the drawee bank in order to life into many of the institutions, introduced [here] under
promptly get hold of the amount belonging to his client, the judgment American sovereignty, recourse must be had to the rules,
creditor. principles and doctrines of the common law under whose
protecting aegis the prototypes of these institutions had their
ACCORDINGLY, I vote to grant the petition and to quash the court a quo's birth" A sheriff is "an officer of great antiquity," and was also
alias writ of execution. called the shire reeve. A shire in English law is a Saxon word
signifying a division later called a county. A reeve is an
Melencio-Herrera, Gancayco, Sarmiento, Cortes, JJ., concurs. ancient English officer of justice inferior in rank to an
alderman .. appointed to process, keep the King's peace, and
put the laws in execution. From a very remote period in
English constitutional history .. the shire had another officer,
namely the shire reeve or as we say, the sheriff. .. The Sheriff
was the special representative of the legal or central authority,
Separate Opinions and as such usually nominated by the King. .. Since the
380 of 501
earliest times, both in England and the United States, a sheriff The sheriff may likewise be appointed a receiver of the property of the
has continued his status as an adjunct of the court .. . As it judgment debtor where the appointment of the receiver is deemed necessary
was there, so it has been in the Philippines from the time of for the execution of the judgment (sec. 32, Rule 39).
the organization of the judiciary .. . (J. Fernando's concurring
opinion in Bagatsing v. Herrera, 65 SCRA 434) At any time before the sale of property on execution, the judgment debtor may
prevent the sale by paying the sheriff the amount required by the execution
One of a sheriff s principal functions is to execute final judgments and orders. and the costs that have been incurred therein (sec. 20, Rule 39).
The Rules of Court require the writs of execution to issue to him, directing
him to enforce such judgments and orders in the manner therein provided The sheriff is also authorized to receive payments on account of the judgment
(Rule 39). The mode of enforcement varies according to the nature of the debt tendered by "a person indebted to the judgment debtor," and his "receipt
judgment to be carried out: whether it be against property of the judgment shall be a sufficient discharge for the amount so paid or directed to be credited
debtor in his hands or in the hands of a third person i e. money judgment), or by the judgment creditor on the execution" (sec. 41, Rule 39).
for the sale of property, real or personal (i.e. foreclosure of mortgage) or the
delivery thereof, etc. (sec. 8, Rule 39). Now, obviously, the sheriff s sale extinguishes the liability of the judgment
debtor either in fun, if the price paid by the highest bidder is equal to, or more
Under sec. 15 of the same Rule, the sheriff is empowered to levy on so much of than the amount of the judgment or pro tanto if the price fetched at the sale
the judgment debtor's property as may be sufficient to enforce the money be less. Such extinction is not in any way dependent upon the judgment
judgment and sell these properties at public auction after due notice to satisfy creditor's receiving the amount realized, so that the conversion or
the adjudged amount. It is the sheriff who, after the auction sale, conveys to embezzlement of the proceeds of the sale by the sheriff does not revive the
the purchaser the property thus sold (secs. 25, 26, 27, Rule 39), and pays the judgment debt or render the judgment creditor liable anew therefor.
judgment creditor so much of the proceeds as will satisfy the judgment. When
the property sold by him on execution is an immovable which consequently So, also, the taking by the sheriff of, say, personal property from the judgment
gives rise to a light of redemption on the part of the judgment debtor and debtor for delivery to the judgment creditor, in fulfillment of the verdict
others (secs. 29, 30, Rule 39), it is to him (or to the purchaser or redemptioner against him, extinguishes the debtor's liability; and the conversion of said
that the payments may be made by those declared by law as entitled to redeem property by the sheriff, does not make said debtor responsible for replacing
(sec. 31, Rule 39); and in this situation, it becomes his duty to accept payment the property or paying the value thereof.
and execute the certificate of redemption (Enage v. Vda. y Hijos de Escano, 38
Phil. 657, cited in Moran, Comments on the Rules of Court, 1979 ed., vol. 2, pp. In the instances where the Rules allow or direct payments to be made to the
326-327). It is also to the sheriff that "written notice of any redemption must sheriff, the payments may be made by check, but it goes without saying that if
be given and a duplicate filed with the registrar of deeds of the province, and if the sheriff so desires, he may require payment to be made in lawful money. If
any assessments or taxes are paid by the redemptioner or if he has or acquires he accepts the check, he places himself in a position where he would be liable
any lien other than that upon which the redemption was made, notice thereof to the judgment creditor if any damages are suffered by the latter as a result of
must in like manner be given to the officer and filed with the registrar of the medium in which payment was made (Javellana v. Mirasol, et al., 40 Phil.
deeds," the effect of failure to file such notice being that redemption may be 761). The validity of the payment made by the judgment debtor, however, is in
made without paying such assessments, taxes, or liens (sec. 30, Rule 39). no wise affected and the latter is discharged from his obligation to the
judgment creditor as of the moment the check issued to the sheriff is encashed
381 of 501
and the proceeds are received by Id. office. The issuance of the check to a in the premises be faulted merely because of the sheriffs subsequent
person authorized to receive it (Art. 1240, Civil Code; See. 46 of the Code of malfeasance in absconding with the payment instead of turning it over to the
Civil Procedure; Enage v. Vda y Hijos de Escano, 38 Phil. 657, cited in Javellana judgment creditor.
v. Mirasol, 40 Phil. 761) operates to release the judgment debtor from any
further obligations on the judgment. If payment had been in cash, no question about its validity or of the authority
and duty of the sheriff to accept it in settlement of PAL's judgment obligation
The sheriff is an adjunct of the court; a court functionary whose competence would even have arisen. Simply because it was made by checks issued in the
involves both discretion and personal liability (concurring opinion of J. sheriff s name does not warrant reaching any different conclusion.
Fernando, citing Uy Piaoco v. Osmena, 9 Phil. 299, in Bagatsing v. Herrera, 65
SCRA 434). Being an officer of the court and acting within the scope of his As payment to the court discharges the judgment debtor from his
authorized functions, the sheriff s receipt of the checks in payment of the responsibility on the judgment, so too must payment to the person designated
judgment execution, may be deemed, in legal contemplation, as received by by such court and authorized to act in its behalf, operate to produce the same
the court itself (Lara v. Bayona, 10 May 1955, No. L- 10919). effect.
That the sheriff functions as a conduit of the court is further underscored by It is unfortunate and deserving of commiseration that Amelia Tan was
the fact that one of the requisites for appointment to the office is the deprived of what was adjudged to her when the sheriff misappropriated the
execution of a bond, "conditioned (upon) the faithful performance of his (the payment made to him by PAL in dereliction of his sworn duties. But I submit
appointee's) duties .. for the delivery or payment to Government, or the person that her remedy lies, not here and in reviving liability under a judgment
entitled thereto, of all properties or sums of money that shall officially come already lawfully satisfied, but elsewhere.
into his hands" (sec. 330, Revised Administrative Code).
ACCORDINGLY, I vote to grant the petition.
There is no question that the checks came into the sheriffs possession in his
official capacity. The court may require of the judgment debtor, in complying Melencio-Herrera, Gancayco, J., concurs.
with the judgment, no further burden than his vigilance in ensuring that the
person he is paying money or delivering property to is a person authorized by
the court to receive it. Beyond this, further expectations become unreasonable.
To my mind, a proposal that would make the judgment debtor unqualifiedly FELICIANO, J., dissenting:
the insurer of the judgment creditor's entitlement to the judgment amount
which is really what this case is all about-begs the question. I concur in the able dissenting opinions of Narvasa and Padilla, JJ. and would
merely wish to add a few footnotes to their lucid opinions.
That the checks were made out in the sheriffs name (a practice, by the way, of
long and common acceptance) is of little consequence if juxtaposed with the 1. Narvasa, J. has demonstrated in detail that a sheriff
extent of the authority explicitly granted him by law as the officer entrusted is authorized by the Rules of Court and our case law to receive
with the power to execute and implement court judgments. The sheriffs either legal tender or checks from the judgment debtor in
requirement that the checks in payment of the judgment debt be issued in his satisfaction of the judgment debt. In addition, Padilla, J. has
name was simply an assertion of that authority; and PAL's compliance cannot underscored the obligation of the sheriff, imposed upon him
382 of 501
by the nature of his office and the law, to turn over such legal of payment, the sheriff being authorized to accept such
tender, checks and proceeds of execution sales to the payment. Thus, in page 10 of his ponencia, Gutierrez, J. writes:
judgment creditor. The failure of a sheriff to effect such
turnover and his conversion of the funds (or goods) held by The receipt of money due on a judgment by an officer
him to his own uses, do not have the effect of frustrating authorized by law to accept it will satisfy the debt. (Citations
payment by and consequent discharge of the judgment omitted)
debtor.
The theory is where payment is made to a person authorized
To hold otherwise would be to throw the risk of the sheriff and recognized by the creditor, the payment to such a person
faithfully performing his duty as a public officer upon those so authorized is deemed payment to the creditor. Under
members of the general public who are compelled to deal ordinary circumstances, payment by the judgment debtor in
with him. It seems to me that a judgment debtor who turns the case at bar, to the sheriff would be valid payment to
over funds or property to the sheriff can not reasonably be extinguish the judgment debt.
made an insurer of the honesty and integrity of the sheriff and
that the risk of the sheriff carrying out his duties honestly and Shortly thereafter, however, Gutierrez, J. backs off from the
faithfully is properly lodged in the State itself The sheriff, like above position and strongly implies that payment in cash to
all other officers of the court, is appointed and paid and the sheriff is sheer imprudence on the part of the judgment
controlled and disciplined by the Government, more debtor and that therefore, should the sheriff abscond with the
specifically by this Court. The public surely has a duty to cash, the judgment debtor has not validly discharged the
report possible wrongdoing by a sheriff or similar officer to judgment debt:
the proper authorities and, if necessary, to testify in the
appropriate judicial and administrative disciplinary It is argued that if PAL had paid in cash to Sheriff Reyes, there
proceedings. But to make the individual members of the would have been payment in full legal contemplation. The
general community insurers of the honest performance of reasoning is logical but is it valid and proper?
duty of a sheriff, or other officer of the court, over whom they
have no control, is not only deeply unfair to the former. It is In the first place, PAL did not pay in cash. It paid in checks.
also a confession of comprehensive failure and comes too
close to an abdication of duty on the part of the Court itself. And second, payment in cash always carries with it certain
This Court should have no part in that. cautions. Nobody hands over big amounts of cash in a
careless and inane manner. Mature thought is given to the
2. I also feel compelled to comment on the majority opinion possibility of the cash being lost, of the bearer being waylaid
written by Gutierrez, J. with all his customary and special way or running off with what he is carrying for another. Payment
with words. My learned and eloquent brother in the Court in checks is precisely intended to avoid the possibility of the
apparently accepts the proposition that payment by a money going to the wrong party....
judgment debtor of cash to a sheriff produces the legal effects
383 of 501
Payment in money or cash to the implementing officer may I believe the Petition should be granted and I vote accordingly.
be deemed absolute payment of the judgment debt but the
court has never, in the least bit, suggested that judgment
debtors should settle their obligations by turning over huge
amounts of cash or legal tender to sheriffs and other PADILLA, J., Dissenting Opinion
executing officers. ... (Emphasis in the original) (Majority
opinion, pp. 12-13) From the facts that appear to be undisputed, I reach a conclusion different
from that of the majority. Sheriff Emilio Z. Reyes, the trial court's authorized
There is no dispute with the suggestion apparently made that maximum safety sheriff, armed with a writ of execution to enforce a final money judgment
is secured where the judgment debtor delivers to the sheriff not cash but against the petitioner Philippine Airlines (PAL) in favor of private respondent
a check made out, not in the name of the sheriff, but in the judgment creditor's Amelia Tan, proceeded to petitioner PAL's office to implement the writ.
name. The fundamental point that must be made, however, is that under our
law only cash is legal tender and that the sheriff can be compelled to There is no question that Sheriff Reyes, in enforcing the writ of execution, was
accept only cash and not checks, even if made out to the name of the judgment acting with full authority as an officer of the law and not in his personal
1
creditor. The sheriff could have quite lawfully required PAL to deliver to him capacity. Stated differently, PAL had every right to assume that, as an officer of
only cash, i.e., Philippine currency. If the sheriff had done so, and if PAL had the law, Sheriff Reyes would perform his duties as enjoined by law. It would be
complied with such a requirement, as it would have had to, one would have to grossly unfair to now charge PAL with advanced or constructive notice that
agree that legal payment must be deemed to have been effected. It requires no Mr. Reyes would abscond and not deliver to the judgment creditor the
particularly acute mind to note that a dishonest sheriff could easily convert proceeds of the writ of execution. If a judgment debtor cannot rely on and
the money and abscond. The fact that the sheriff in the instant case required, trust an officer of the law, as the Sheriff, whom else can he trust?
not cash to be delivered to him, but rather a check made out in his name,
does not change the legal situation. PAL did not thereby become negligent; it Pursued to its logical extreme, if PAL had delivered to Sheriff Reyes the
did not make the loss anymore possible or probable than if it had instead amount of the judgment in CASH, i.e. Philippine currency, with the
delivered plain cash to the sheriffs. corresponding receipt signed by Sheriff Reyes, this would have been payment
by PAL in full legal contemplation, because under Article 1240 of the Civil
It seems to me that the majority opinion's real premise is the unspoken one Code, "payment shall be made to the person in whose favor the obligation has
that the judgment debtor should bear the risk of the fragility of the sheriff s been constituted or his successor in interest or any person authorized to receive
virtue until the money or property parted with by the judgment debtor it." And said payment if made by PAL in cash, i.e., Philippine currency, to
actually reaches the hands of the judgment creditor. This brings me back to Sheriff Reyes would have satisfied PAL's judgment obligation, as payment is a
my earlier point that risk is most appropriately borne not by the judgment legally recognized mode for extinguishing one's obligation. (Article 1231, Civil
debtor, nor indeed by the judgment creditor, but by the State itself. The Court Code).
requires all sheriffs to post good and adequate fidelity bonds before entering
upon the performance of their duties and, presumably, to maintain such Under Sec. 15, Rule 39, Rules of Court which provides that-
2
bonds in force and effect throughout their stay in office. The judgment
creditor, in circumstances like those of the instant case, could be allowed to Sec. 15. Execution of money judgments.-The officer must
3
execute upon the absconding sheriff s bond. enforce an execution of a money judgment by levying on all
384 of 501
the property, real and personal of every name and nature Payment of a judgment, to operate as a release or satisfaction,
whatsoever, and which may be disposed of for value, of the even pro tanto must be made to the plaintiff or to some
judgment debtor not exempt from execution, or on a person authorized by him, or by law, to receive it. The
sufficient amount of such property, if there be sufficient, and payment of money to the sheriff having an execution satisfies
selling the same, and paying to the judgment creditor, or his it, and, if the plaintiff fails to receive it, his only remedy is
attorney, so much of the proceeds as will satisfy the judgment. against the officer (Henderson v. Planters' and Merchants
... .(emphasis supplied) Bank, 59 SO 493, 178 Ala. 420).
it would be the duty of Sheriff Reyes to pay to the judgment creditor the Payment of an execution satisfies it without regard to whether
proceeds of the execution i.e., the cash received from PAL (under the above the officer pays it over to the creditor or misapplies it (340, 33
assumption). But, the duty of the sheriff to pay the cash to the judgment C.J.S. 644, citing Elliot v. Higgins, 83 N.C. 459). If defendant
creditor would be a matter separate the distinct from the fact that PAL would consents to the Sheriff s misapplication of the money,
have satisfied its judgment obligation to Amelia Tan, the judgment creditor, however, defendant is estopped to claim that the debt is
by delivering the cash amount due under the judgment to Sheriff Reyes. satisfied (340, 33 C.J.S. 644, citing Heptinstall v. Medlin 83
N.C. 16).
Did the situation change by PAL's delivery of its two (2) checks totalling
P30,000.00 drawn against its bank account, payable to Sheriff Reyes, for The above rulings find even more cogent application in the case at bar
account of the judgment rendered against PAL? I do not think so, because because, as contended by petitioner PAL (not denied by private respondent),
when Sheriff Reyes encashed the checks, the encashment was in fact a when Sheriff Reyes served the writ of execution on PAL, he (Reyes) was
payment by PAL to Amelia Tan through Sheriff Reyes, an officer of the law accompanied by private respondent's counsel. Prudence dictated that when
authorized to receive payment, and such payment discharged PAL'S obligation PAL delivered to Sheriff Reyes the two (2) questioned checks (payable to
under the executed judgment. Sheriff Reyes), private respondent's counsel should have insisted on their
immediate encashment by the Sheriff with the drawee bank in order to
If the PAL cheeks in question had not been encashed by Sheriff Reyes, there promptly get hold of the amount belonging to his client, the judgment
would be no payment by PAL and, consequently no discharge or satisfaction of creditor.
its judgment obligation. But the checks had been encashed by Sheriff Reyes
giving rise to a situation as if PAL had paid Sheriff Reyes in cash, i.e., ACCORDINGLY, I vote to grant the petition and to quash the court a quo's
Philippine currency. This, we repeat, is payment, in legal contemplation, on alias writ of execution.
the part of PAL and this payment legally discharged PAL from its judgment
obligation to the judgment creditor. To be sure, the same encashment by
Sheriff Reyes of PAL's checks delivered to him in his official capacity as Sheriff,
imposed an obligation on Sheriff Reyes to pay and deliver the proceeds of the
encashment to Amelia Tan who is deemed to have acquired a cause of action
against Sheriff Reyes for his failure to deliver to her the proceeds of the
encashment. As held:
385 of 501
Section 17 Luzon Steel Corporation has sued Metal Manufacturing of the

Philippines and Jose O. Sia, the former's manager, for breach of contract and
damages. It obtained a writ of preliminary attachment of the properties of the
Luzon Steel v. Sia, 28 S 58 defendants, but the attachment was lifted upon a P25,000.00 counterbond
executed by the defendant Sia, as principal, and the Times Surety & Insurance
Republic of the Philippines Co., Inc. (hereinafter designated as the surety), as solidary guarantor, in the
SUPREME COURT following terms:
Manila
WHEREFORE, we JOSE O. SIA, as principal and the TIMES
EN BANC SURETY & INSURANCE CO., INC., as Surety, in consideration of the
dissolution of attachment, hereby jointly and severally bind ourselves
G.R. No. L-26449 May 15, 1969 in the sum of Twenty Five Thousand Pesos (P25,000.00), Philippine
Currency, to answer for the payment to the plaintiff of any judgment
LUZON STEEL CORPORATION, represented by TOMAS AQUINO it may recover in the action in accordance with Section 12, Rule 59, of
CU, plaintiff-appellant, the Rules of Court. (pp. 32, 45, Rec. on Appeal.)
vs.
JOSE O. SIA, defendant, Issues having been joined, plaintiff and defendant (without intervention
TIMES SURETY & INSURANCE CO. INC., surety-appellee. of the surety) entered into a compromise whereby defendant Sia agreed to
settle the plaintiff's claim in the following manner:
German A. Sipin for plaintiff-appellant.
Galicano S. Calapatia for surety-appellee. 1. That the defendant shall settle with the Plaintiff the amount of
TWENTY FIVE THOUSAND (P25,000.00) PESOS, in the following
REYES, J.B.L., J.: manner: FIVE HUNDRED (P500.00) PESOS, monthly for the first six
(6) months to be paid at the end of every month and to commence in
Direct appeal from two orders, dated 19 May and 5 June 1965, issued by January, 1965, and within one month after paying the last installment
the Court of First Instance of Manila (Judge Francisco Arca presiding), in its of P500.00, the balance of P22,000.00 shall be paid in lump sum,
Civil Case No. 54913, entitled Luzon Steel Corporation, plaintiff vs. Metal without interest. It is understood that failure of the Defendant to pay
Manufacturing of the Philippines, Inc., and Jose O. Sia, defendants, whereby one or any installment will make the whole obligation immediately
the court aforesaid quashed a writ of execution issued against the Times due and demandable and that a writ of execution will be issued
Surety & Insurance Co., Inc., and cancelled the undertaking of said surety immediately against Defendants bond.lawphi1.ñet
company.
The compromise was submitted to the court and the latter approved it,
The essential and uncontroverted facts of the case may be summarized rendered judgment in conformity therewith, and directed the parties to
as follows: comply with the same (Record on Appeal, page 22).
386 of 501
Defendant having failed to comply, plaintiff moved for and obtained a Under section 12, Rule 59, of the Rules of Court, the bond filed,
writ of execution against defendant and the joint and several counterbond. as in this case, for the discharge of an attachment is "to secure the
The surety, however, moved to quash the writ of execution against it, averring payment to the plaintiff of any judgment he may recover in the
that it was not a party to the compromise, and that the writ was issued action," and stands "in place of the property so released". It follows
without giving the surety notice and hearing. The court, overruling the that the order of cancellation issued by the respondent judge is
plaintiff's opposition, set aside the writ of execution, and later cancelled the erroneous. Indeed, judgment had already been rendered by the Court
counterbond, and denied the motion for reconsideration. Hence this appeal. of First Instance of Manila in civil case No. 11748, sentencing Benjamin
Aguilar to pay the sum of P3,500.00 to the petitioner; and it is not
Main issues posed are (1) whether the judgment upon the compromise pretended that said judgment is a nullity. There is no point in the
discharged the surety from its obligation under its attachment counterbond contention of the respondent Surety Company that the compromise
and (2) whether the writ of execution could be issued against the surety was entered into without its knowledge and consent, thus becoming
without previous exhaustion of the debtor's properties. as to it essentially fraudulent. The Surety is not a party to civil case
No. 11748 and, therefore, need not be served with notice of the
Both questions can be solved by bearing in mind that we are dealing petition for judgment. As against the conjecture of said respondent
with a counterbond filed to discharge a levy on attachment. Rule 57, section 12, that the parties may easily connive by means of a compromise to
specifies that an attachment may be discharged upon the making of a cash prejudice it, there is also the likelihood that the same end may be
deposit or filing a counterbond "in an amount equal to the value of the attained by parties acting in bad faith through a simulated trial. At any
property attached as determined by the judge"; that upon the filing of the rate, it is within the power of the Surety Company to protect itself
counterbond "the property attached ... shall be delivered to the party making against a risk of the kind.
the deposit or giving the counterbond, or the person appearing on his
behalf, the deposit or counterbond aforesaid standing in place of the property so Wherefore, the order of the respondent Judge cancelling the
released". bond in question is set aside. So ordered with costs against the
respondent Alto Surety & Insurance Co., Inc.
The italicized expressions constitute the key to the entire problem.
Whether the judgment be rendered after trial on the merits or upon The lower court and the appellee herein appear to have relied on
compromise, such judgment undoubtedly may be made effective upon the doctrines of this Court concerning the liability of sureties in bonds filed by a
property released; and since the counterbond merely stands in the place of plaintiff for the issuance of writs of attachment, without discriminating
such property, there is no reason why the judgment should not be made between such bonds and those filed by a defendant for the lifting of writs of
effective against the counterbond regardless of the manner how the judgment attachment already issued and levied. This confusion is hardly excusable
was obtained. considering that this Court has already called attention to the difference
between these kinds of bonds. Thus, in Cajefe vs. Judge Fernandez, et al., L-
Squarely on the point, and rebutting the appellee's apprehension that 15709, 19 October 1960, this Court pointed out that —
the compromise could be the result of a collusion between the parties to injure
the surety, is our decision in Anzures vs. Alto Surety & Insurance Co., Inc., et The diverse rule in section 17 of Rule 59 for counterbonds posted
al., 92 Phil. 742, where this Court, through former Chief Justice Paras, ruled as to obtain the lifting of a writ of attachment is due to these bonds
follows: being security for the payment of any judgment that the attaching
387 of 501
party may obtain; they are thus mere replacements of the property become charged on such counter-bond, and bound to pay to the
formerly attached, and just as the latter may be levied upon after final judgment creditor upon demand, the amount due under the
judgment in the case in order to realize the amount adjudged, so is judgment, which amount may be recovered from such surety or
the liability of the countersureties ascertainable after the judgment sureties after notice and summary hearing in the same action.
has become final. This situation does not obtain in the case of
injunction counterbonds, since the sureties in the latter case merely The surety's contention is untenable. The counterbond contemplated in
undertake "to pay all damages that the plaintiff may suffer by reason the rule is evidently an ordinary guaranty where the sureties assume a
of the continuance ... of the acts complained of" (Rule 60, section 6) subsidiary liability. This is not the case here, because the surety in the present
1
and not to secure payment of the judgment recovered. case bound itself "jointly and severally" (in solidum) with the defendant; and it
is prescribed in Article 2059, paragraph 2, of the Civil Code of the Philippines
It was, therefore, error on the part of the court below to have ordered the that excusion (previous exhaustion of the property of the debtor) shall not take
surety bond cancelled, on the theory that the parties' compromise discharged place "if he (the guarantor) has bound himself solidarily with the debtor". The
the obligation of the surety. rule heretofore quoted cannot be construed as requiring that an execution
against the debtor be first returned unsatisfied even if the bond were a solidary
As declared by us in Mercado vs. Macapayag, 69 Phil. 403, 405-406, in one; for a procedural rule may not amend the substantive law expressed in the
passing upon the liability of counter sureties in replevin who bound Civil Code, and further would nullify the express stipulation of the parties that
themselves to answer solidarily for the obligations of the defendants to the the surety's obligation should be solidary with that of the defendant.
plaintiffs in a fixed amount of P912.04, to secure payment of the amount that
2
said plaintiff be adjudged to recover from the defendants, A second reason against the stand of the surety and of the court below is
that even if the surety's undertaking were not solidary with that of the
the liability of the sureties was fixed and conditioned on the finality of principal debtor, still he may not demand exhaustion of the property of the
the judgment rendered regardless of whether the decision was based latter, unless he can point out sufficient leviable property of the debtor within
on the consent of the parties or on the merits. A judgment entered on Philippine territory. There is no record that the appellee surety has done so.
a stipulation is nonetheless a judgment of the court because Says Article 2060 of the Civil Code of the Philippines:
consented to by the parties.
ART. 2060. In order that the guarantor may make use of the
But the surety in the present case insists (and the court below so ruled) benefit of excussion, he must set it up against the creditor upon the
that the execution issued against it was invalid because the writ issued against latter's demand for payment from him, and point out to the creditor
its principal, Jose O. Sia, et al., defendants below, had not been returned available property of the debtor within Philippine territory, sufficient
unsatisfied; and the surety invoked in its favor Section 17 of Rule 57 of the to cover the amount of the debt.
Revised Rules of Court (old Rule 59), couched in the following terms:
A third reason against the thesis of appellee is that, under the rule and
SEC. 17. When execution returned unsatisfied, recovery had upon its own terms, the counter-bond is only conditioned upon the rendition of the
bond. — If the execution be returned unsatisfied in whole or in part, judgment. Payment under the bond is not made to depend upon the delivery
the surety or sureties on any counterbond given pursuant to the or availability of the property previously attached, as it was under Section 440
provisions of this rule to secure the payment of the judgment shall of the old Code of Civil Procedure. Where under the rule and the bond the
388 of 501
undertaking is to pay the judgment, the liability of the surety or sureties

attaches upon the rendition of the judgment, and the issue of an execution
and its return nulla bona is not, and should not be, a condition to the right to
3
resort to the bond.
It is true that under Section 17 recovery from the surety or sureties

should be "after notice and summary hearing in the same action". But this
requirement has been substantially complied with from the time the surety
was allowed to move for the quashal of the writ of execution and for the
cancellation of their obligation.
WHEREFORE, the orders appealed from are reversed, and the court of
origin is ordered to proceed with the execution against the surety appellee,
Times Surety & Insurance Co., Inc. Costs against said appellee.
Dizon, Makalintal, Zaldivar, Sanchez, Fernando, Capistrano and Barredo, JJ.,

concur.
Teehankee, J., took no part.
Concepcion, C.J., and Castro, J., are on leave.
389 of 501
properties of Varian Industrial Corporation upon the posting of a supersedeas

3
Phil. British Assurance Co. v. IAC, 150 S 520 bond. The latter in turn posted a counterbond in the sum of P1,400,
4
000.00 thru petitioner Philippine British Assurance Co., Inc., so the attached
Republic of the Philippines properties were released.
SUPREME COURT
Manila On December 28, 1984, the trial court rendered a Decision, the dispositive
portion of which reads:
FIRST DIVISION
WHEREFORE, plaintiff's Motion for Summary Judgment is
G.R. No. 72005 May 29, 1987 hereby GRANTED, and judgment is rendered in favor of the
plaintiff and against the defendant Varian Industrial
PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner, Corporation, and the latter is hereby ordered:
vs.
HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING 1. To pay plaintiff the amount of P1,401,468.00, the principal
& WIRES, INC., and DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF obligation with 12% interest per annum from the date of
MANILA, respondents. default until fully paid;
2. To pay plaintiff 5% of the principal obligation as liquidated

damages;
GANCAYCO, J.:
3. To pay plaintiff P30,000.00 as exemplary damages;
This is a Petition for Review on certiorari of the Resolution dated September
12, 1985 of the Intermediate Appellate Court in AC-G.R. No. CR- 4. To pay plaintiff 15% of P1,401,468.00, the principal
05409 1 granting private respondent's motion for execution pending appeal obligation, as and for attorney's fees; and
and ordering the issuance of the corresponding writ of execution on the
counterbond to lift attachment filed by petitioner. The focal issue that 5. To pay the costs of suit.
emerges is whether an order of execution pending appeal of a judgment maybe
2
enforced on the said bond. In the Resolution of September 25, 1985 this Court Accordingly, the counterclaim of the defendant is hereby
as prayed for, without necessarily giving due course to the petition, issued a DISMISSED for lack of merit.
temporary restraining order enjoining the respondents from enforcing the
5
order complaint of. SO ORDERED.
The records disclose that private respondent Sycwin Coating & Wires, Inc., Varian Industrial Corporation appealed the decision to the respondent Court.
filed a complaint for collection of a sum of money against Varian Industrial Sycwin then filed a petition for execution pending appeal against the
Corporation before the Regional Trial Court of Quezon City. During the properties of Varian in respondent Court. Varian was required to file its
pendency of the suit, private respondent succeeded in attaching some of the comment but none was filed. In the Resolution of July 5, 1985, respondent
390 of 501
6
Court ordered the execution pending appeal as prayed for. However, the writ and existing under and by virtue of the laws of the
of execution was returned unsatisfied as Varian failed to deliver the previously Philippines, as Surety, in consideration of the above and of
attached personal properties upon demand. In a Petition dated August 13, 1985 the lifting or dissolution of the order of attachment, hereby
filed with respondent Court Sycwin prayed that the surety (herein petitioner) jointly and severally, bind ourselves in favor of the above
7
be ordered to pay the value of its bond. In compliance with the Resolution of Plaintiff in the sum of PESOS ONE MILLION FOUR
August 23, 1985 of the respondent Court herein petitioner filed its HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine
8 9
comment. In the Resolution of September 12, 1985, the respondent Court Currency, under the condition that in case the Plaintiff
granted the petition. Hence this action. recovers judgment in the action, and Defendant will, on
demand, re-deliver the attached property so released to the
It is the submission of private respondent Sycwin that without a previous Officer of the Court and the same shall be applied to the
motion for reconsideration of the questioned resolution, certiorari would not payment of the judgment, or in default thereof, the defendant
lie. While as a general rule a motion for reconsideration has been considered a and Surety will, on demand, pay to the Plaintiff the full value
condition sine qua non for the granting of a writ of certiorari, this rule does not of the property released.
apply when special circumstances warrant immediate or more direct
action. 10 It has been held further that a motion for reconsideration may be EXECUTED at Manila, Philippines, this 28th day of June,
dispensed with in cases like this where execution had been ordered and the 1984. 12
need for relief was extremely urgent. 11
Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:
The counterbond provides:
SEC. 5. Manner of attaching property. — The officer executing
WHEREAS, in the above-entitled case pending in the the order shall without delay attach, to await judgment and
Regional Trial Court, National Capital Judicial Region, Branch execution in the action, all the properties of the party against
LXXXV, Quezon City, an order of Attachment was issued whom the order is issued in the province, not exempt from
against abovenamed Defendant; execution, or so much thereof as may be sufficient to satisfy
the applicant's demand, unless the former makes a deposit
WHEREAS, the Defendant, for the purpose of lifting and/or with the clerk or judge of the court from which the order
dissolving the order of attachment issued against them in the issued, or gives a counter-bond executed to the applicant, in
above-en-titled case, have offered to file a counterbond in the an amount sufficient to satisfy such demand besides costs, or
sum of PESOS ONE MILLION FOUR HUNDRED in an amount equal to the value of the property which is
THOUSAND ONLY (P1,400,000.00), Philippine Currency, as about to be attached, to secure payment to the applicant of
provided for in Section 5, Rule 57 of the Revised Rules of any judgement ment which he may recover in the action. The
Court. officer shall also forthwith serve a copy of the applicant's
affidavit and bond, and of the order of attachment, on the
NOW, THEREFORE, we, VARIAN INDUSTRIAL adverse party, if he be found within the province.
CORPORATION, as Principal and the PHILIPPINE BRITISH
ASSURANCE COMPANY, INC., a corporation duly organized
391 of 501
SEC. 12. Discharge of attachment upon giving counterbond. — Under Sections 5 and 12, Rule 57 above reproduced it is provided that the
At any time after an order of attachment has been granted, counterbond is intended to secure the payment of "any judgment" that the
the party whose property has been attached, or the person attaching creditor may recover in the action. Under Section 17 of same rule it
appearing on his behalf, may, upon reasonable notice to the provides that when "the execution be returned unsatisfied in whole or in part"
applicant, apply to the judge who granted the order, or to the it is only then that "payment of thejudgment shall become charged on such
judge of the court in which the action is pending, for an order counterbond."
discharging the attachment wholly or in part on the security
given. The judge shall, after hearing, order the discharge of The counterbond was issued in accordance with the provisions of Section 5,
the attachment if a cash deposit is made, or a counter-bond Rule 57 of the Rules of Court as provided in the second paragraph aforecited
executed to the attaching creditor is filed, on behalf of the which is deemed reproduced as part of the counterbond. In the third
adverse party, with the clerk or judge of the court where the paragraph it is also stipulated that the counterbond is to be "applied for the
application is made, in an amount equal to the value of the payment of the judgment." Neither the rules nor the provisions of the
property attached as determined by the judge, to secure the counterbond limited its application to a final and executory judgment. Indeed,
payment of any judgment that the attaching creditor may it is specified that it applies to the payment of any judgment that maybe
recover in the action. Upon the filing of such counter-bond, recovered by plaintiff. Thus, the only logical conclusion is that an execution of
copy thereof shall forthwith be served on the attaching any judgment including one pending appeal if returned unsatisfied maybe
creditor or his lawyer. Upon the discharge of an attachment in charged against such a counterbond.
accordance with the provisions of this section the property
attached, or the proceeds of any sale thereof, shall be It is well recognized rule that where the law does not distinguish, courts
delivered to the party making the deposit or giving the should not distinguish. Ubi lex non distinguish nec nos distinguere
counterbond aforesaid standing in place of the property so debemos. 13 "The rule, founded on logic, is a corollary of the principle that
released. Should such counterbond for any reason be found to general words and phrases in a statute should ordinarily be accorded their
be, or become, insufficient, and the party furnishing the same natural and general significance. 14 The rule requires that a general term or
fail to file an additional counterbond, the attaching creditor phrase should not be reduced into parts and one part distinguished from the
may apply for a new order of attachment. other so as to justify its exclusion from the operation of the law. 15 In other
words, there should be no distinction in the application of a statute where
SEC. 17. When execution returned unsatisfied, recovery had none is indicated.16 For courts are not authorized to distinguish where the law
upon bond. — If the execution be returned unsatisfied in makes no distinction. They should instead administer the law not as they
whole or in part, the surety or sureties on any counter-bond think it ought to be but as they find it and without regard to consequences. 17
given pursuant to the provisions of this rule to secure the
payment of the judgment shall become charged on such A corollary of the principle is the rule that where the law does not make any
counter- bond, and bound to pay to the judgement creditor exception, courts may not except something therefrom, unless there is
upon demand, the amount due under the judgment, which compelling reason apparent in the law to justify it.18 Thus where a statute
amount may be recovered from such surety or sureties after grants a person against whom possession of "any land" is unlawfully withheld
notice and summary hearing in the same action. (Emphasis the right to bring an action for unlawful detainer, this Court held that the
supplied.) phrase "any land" includes all kinds of land, whether agricultural, residential,
392 of 501
or mineral.19 Since the law in this case does not make any distinction nor
intended to make any exception, when it speaks of "any judgment" which
maybe charged against the counterbond, it should be interpreted to refer not
only to a final and executory judgment in the case but also a judgment
pending appeal.
All that is required is that the conditions provided for by law are complied
with, as outlined in the case of Towers Assurance Corporation v. Ororama
20
Supermart,
Under Section 17, in order that the judgment creditor might

recover from the surety on the counterbond, it is necessary (1)
that the execution be first issued against the principal debtor
and that such execution was returned unsatisfied in whole or
in part; (2) that the creditor make a demand upon the surety
for the satisfaction of the judgment, and (3) that the surety be
given notice and a summary hearing on the same action as to
his liability for the judgment under his counterbond.
The rule therefore, is that the counterbond to lift attachment that is issued in
accordance with the provisions of Section 5, Rule 57, of the Rules of Court,
shall be charged with the payment of any judgment that is returned
unsatisfied. It covers not only a final and executory judgement but also the
execution of a judgment pending appeal.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the
restraining order issued on September 25, 1985 is hereby dissolved with costs
against petitioner.
SO ORDERED.
393 of 501
properties of the defendant, Felicisimo V. Reyes, in said case.

The Imperial Insurance v. de los Angeles, 111 S 25 The other two herein private respondents, namely, Pedro V.
Reyes and Consolacion V. Reyes, are the plaintiffs in Civil
FIRST DIVISION Case No. Q-5214 of the same court entitled, 'Pedro V. Reyes,
etc.,' and likewise, obtained a writ of preliminary attachment
G.R. No. L-28030 January 18, 1982 and, accordingly, levied upon all the properties of the
defendant, Felicisimo V. Reyes, in said case.
THE IMPERIAL INSURANCE, INC., petitioner,
vs. For the dissolution of the attachments referred to above, the
HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance herein petitioner, The Imperial Insurance, Inc., as surety, and
of Rizal, Quezon City Branch IV, ROSA V. REYES, PEDRO V. REYES and Felicisimo V. Reyes, as principal, posted a 'defendant's bond
CONSOLACION V. REYES, respondents. for dissolution of attachment' in the amount of P60,000.00 in
Civil Case No. Q-5213 and another bond of the same nature in
the amount of P40,000.00 in Civil Case No. Q-5214.
FERNANDEZ, J.: Civil Cases Nos. Q-5213 and 5214 were jointly tried and the
decision therein rendered was in favor of the plaintiffs. This
This is a petition for certiorari to review the decision of the Court of Appeals in decision was affirmed by this Court on appeal in cases CA-
CA-G.R. No. 38824-R promulgated on July 19, 1967 entitled "The Imperial G.R. NOS. 33783-R and 33784-R. The decision of this Court,
Insurance, Inc., petitioner vs. Hon. Walfrido de los Angeles, Judge of the Court having become final, the records of the cases were remanded
of First Instance of Rizal, Branch IV, Quezon City, et al, respondents," the to the Court of First Instance of Rizal, Quezon City Branch,
dispositive part of which reads: for execution of judgment.
WHEREFORE, the instant petition is dismissed and the writ Accordingly, on June 24, 1966, the Court below, presided by
of preliminary injunction issued by the Court on January 31, the herein respondent Judge, Hon. Walfrido de los Angeles,
1967, is hereby dissolved, with costs against petitioner. issued the writs of execution of judgment in said cases.
However, on August 20, 1966, the Provincial Sheriff of
1
SO ORDERED. Bulacan returned the writs of execution' unsatisfied in whole
or in part'.
As found by the Court of Appeals, the uncontroverted facts are:
On September 9, 1966, private respondents filed a 'motion for
It appears that herein private respondent Rosa V. Reyes is the recovery on the surety bonds'. Thereafter, said private
plaintiff in Civil Case N. Q-8213 of the Court of First Instance respondents, thru counsel, sent a letter of demand upon
of Rizal, Branch IV, Quezon City, entitled, 'Rosa V. Reyes vs, petitioner asking the latter to pay them the accounts on the
Felicisimo V. Reyes, etc.,' where she obtained a writ of counter-bonds. On September 24, 1966, petitioner filed its
preliminary attachment and, accordingly, levied upon all the 'opposition' to the private respondents "Motion for recovery
394 of 501
on the surety bonds'. Respondent Judge, in his order, dated I

November 10, 1966, rendered judgment against the counter-
bonds. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT THE RESPONDENT JUDGE COULD LEGALLY ISSUE
On November 15, 1966, private respondents filed an ex parte THE WRIT OF EXECUTION AGAINST THE PETITIONER AS
motion for writ of execution' without serving copy thereof on SURETY IN A COUNTERBOND (BOND TO DISSOLVE
petitioner. ATTACHMENT) ON THE BASIS OF AN EX-PARTE MOTION
FOR EXECUTION WHICH WAS NEITHER SERVED UPON
In the meantime, on or about November 23 1966, petitioner THE SURETY NOR SET FOR HEARING.
filed a 'motion for reconsideration' of the order, dated
November 10, 1966. This motion was, however, denied by the II
respondent Judge on January 9, 1967.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING
On or about January 11, 1967, petitioner filed its 'notice of THAT THE PLAINTIFF WHO OBTAINED A JUDGMENT
intention to appeal' from the final orders of the respondent AGAINST THE DEFENDANT MAY LEGALLY CHOOSE 'TO
Judge, dated November 10, 1966 and January 9. 1967. GO DIRECTLY' AFTER THE SURETY IN A COUNTERBOND
WITHOUT PRIOR EXHAUSTION OF THE DEFENDANTS
On January 19, 1967, the respondent Judge issued an order PROPERTIES.
granting the issuance of the writ of execution against the
2
bonds riled by the petitioner (Exhibit J, petition). III
On January 25, 1967, the petitioner filed a petition for certiorari with prayer for THE COURT OF APPEALS GRAVELY ERRED IN NOT
for preliminary injunction with the Court of Appeals to restrain the HOLDING THAT THE 'JUDGMENT' RENDERED AGAINST
3
enforcement of the writ of execution. THE MENTIONED COUNTERBONDS IS A 'FINAL ORDER'
IN THE CONTEMPLATION OF SECTION 2, RULE 41 OF THE
The petition was given due course and on January 30, 1967 a writ of REVISED RULES OF COURT AND, THEREFORE,
4
preliminary injunction was issued. After the parties had submitted their APPEALABLE.
respective pleadings and memoranda in lieu of oral argument, the Court of
Appeals rendered the decision now under review. IV
The defendant, Felicisimo V. Reyes, in the abovementioned cases died during THE COURT OF APPEALS GRAVELY ERRED IN NOT
the pendency of the trial. He was duly substituted by his surviving spouse, HOLDING THAT IN THE ABSENCE OF AN EXPRESS
5
Emilia T. David, an administratrix of his intestate estate. PROVISION OF THE REVISED RULES OF COURT, THE
PROCEDURE FOLLOWED BY THE SHERIFF IN THE
The petitioner assigns as errors allegedly committed by the Court of Appeals EXECUTION OF THE JUDGMENT ON THE 'SURVIVING
the following: CLAIMS', WHEN THE DEFENDANT DIED DURING THE
395 of 501
PENDENCY OF THE TRIAL OF HIS CASE AND BEFORE The records show that the notice and hearing requirement was substantially
JUDGMENT WAS DULY SUBSTITUTED BY THE COURT complied with in the instant case.
APPOINTED ADMINISTRATRIX OF HIS ESTATE, SHOULD
HAVE BEEN THE SAME AS THE PROCEDURE SET OUT IN Prior to the filing of the ex parte motion for a writ of execution, the
SECTION (f), RULE 57 RESPECTING THE EXECUTION OF A respondents filed a motion for recovery on the surety bonds where the
WRIT OF PRELIMINARY ATTACHMENT OF PROPERTIES petitioner was duly notified and the said motion was heard on September 24,
6 7
IN CUSTODIALEGIS. 1966. Moreover, on November 23, 1966 the petitioner filed a motion for
reconsideration of the order dated November 10, 1966 rendering judgment
Anent the first error, the petitioner contends that the Court of Appeals erred against the petitioner on its counter-bonds in the amount of P60,000.00 in
8
in holding that the respondent judge could legally issue the writ of execution Civil Case No. Q-5213 and P40,000.00 in Civil Case No. Q-5214. The
against the petitioner as surety in a counterbond (bond to dissolve respondent judge set the hearing of the ex parte motion for writ of execution
attachment) on the basis of an ex parte motion for execution which was together with the motion for reconsideration of the order dated November 10,
9
allegedly never served upon the surety nor set for hearing. This contention is 1966 on December 17, 1966 at 8:30 o'clock in the morning. The petitioner
devoid of merit. received the notice of the said hearing on December 9, 1966 as evidenced by
10
Registry Return Receipt No. 40122. On January 9, 1967, the respondent Judge
The counterbonds filed to lift the writs of attachment executed by the herein issued an order denying the motion for reconsideration dated November 23,
11
petitioner, The Imperial Insurance, Inc., for and in behalf of the deceased 1966 for lack of merit. in an order dated January 19, 1967, the motion for writ
12
defendant Felicisimo V. Reyes in favor of the plaintiffs, private respondents of execution was granted by the respondent judge.
herein Rosa V. Reyes and Consolacion V. Reyes in Civil Case No. Q-5214
docketed with the Court of First Instance of Rizal, Branch IV, Quezon City, are It is thus clear from indubitable documents on record that the requirements of
clearly the bonds contemplated under Sec. 17, Rule 57 of the Rules of Court notice and hearing had been satisfactorily complied with by the respondents.
which provides: The first error assigned is overruled.
Sec. 17. When execution returned unsatisfied, recovery had The petitioner asserts that the Court of Appeals gravely erred in holding that
upon bond. If the execution be returned unsatisfied in whole the plaintiff who obtained judgment against the defendant may legally choose
or in part, the surety or sureties on any counterbond given "to go directly" after the surety in a counterbond without prior exhaustion of
pursuant to the provisions of this rule to secure the payment the defendant's properties. This contention is likewise not meritorious.
of the judgment shall become charged on such counter-bond,
and bound to pay to the judgment creditor upon demand, the Although the counterbond contemplated in the aforequoted Sec. 17, Rule 57, of
amount due under the judgment, which amount may be the Rules of Court is an ordinary guaranty where the sureties assume a
recovered from such surety or sureties after notice and subsidiary liability, the rule cannot apply to a counterbond where the surety
summary hearing in the same action. bound itself "jointly and severally" (in solidum) with the defendant as in the
present case. The counterbond executed by the deceased defendant Felicisimo
This section allows the counterbond filed to lift an attachment to be charged V. Reyes, as principal, and the petitioner, The Imperial Insurance, Inc., as
only after notice and summary hearing in the same action. solidary quarantor to lift the attachment in Civil Case No. Q-5213 is in the
following terms:
396 of 501
WHEREFORE, WE, FELICISIMO V. REYES, of legal age, pay to the plaintiffs said amount of FORTY THOUSAND
Filipino, and with postal address at San Jose, San Miguel, PESOS ONLY (P40,000.00), Philippine Currency. (Emphasis
Bulacan and/or 1480 Batangas Street, Sta. Cruz, Manila, as supplied).
PRINCIPAL and THE IMPERIAL INSURANCE, INC., a
14
corporation duly organized and existing under the laws of the Manila, Philippines, June 30th, 1960.
Philippines, as SURETY, in consideration of the dissolution of
said attachment, hereby JOINTLY AND SEVERALLY, bind Clearly, the petitioner, the Imperial Insurance, Inc., had bound itself solidarily
ourselves in the sum of SIXTY THOUSAND PESOS ONLY with the principal, the deceased defendant Felicisimo V. Reyes. In accordance
15
(P60,000.00), Philippine Currency, under the condition that with Article 2059, par. 2 of the Civil Code of the Philippines, excussion
in case the plaintiff recovers judgment in the action, the (previous exhaustion of the property of the debtor) shall not take place "if he
defendant shall pay the sum of SIXTY THOUSAND PESOS (the guarantor) has bound himself solidarily with the debtor." Section 17, Rule
(P60,000.00), Philippine Currency, being the amount release 57 of the Rules of Court cannot be construed that an "execution against the
for attachment, to be applied to the payment of the judgment, debtor be first returned unsatisfied even if the bond were a solidary one, for a
or in default thereof, the Surety will, on demand, pay to the procedural rule may not amend the substantive law expressed in the Civil
plaintiff said amount of SIXTY THOUSAND PESOS ONLY Code, and further would nullify the express stipulation of the parties that the
16
(P60,000.00), Philippine Currency. (Capitalizations supplied). surety's obligation should be solidary with that of the defendant."
13
Manila, Philippines, June 30,1960. Hence the petitioner cannot escape liability on its counter-bonds based on the
second error assigned.
The counterbond executed by the same parties in Civil Case No. Q-5214,
likewise states. As regards the third error, the petitioner submits that the Court of Appeals
erred in not holding that the order dated November 10, 1966 rendering
WHEREFORE, we, FELICISIMO V. REYES, of legal age, judgment against the counter-bonds, as well as the order dated January 9,
Filipino, and with postal address at San Jose, San Miguel, 1967, denying the motion for reconsideration thereof, and the order of the writ
Bulacan, and/or 1480 Batangas Street, Sta. Cruz, Manila, as of execution dated January 19, 1967 are final and appealable in accordance with
PRINCIPAL and THE IMPERIAL INSURANCE, INC., a Sec. 2, Rule 41 of the Rec. Rules of Court. This submission is also without
corporation duly organized and existing under the laws of the merit.
Philippines, as SURETY, in consideration of the dissolution of
said attachment, hereby JOINTLY and SEVERALLY, bind To recover against the petitioner surety on its counter-bonds it is not
ourselves in the sum of FORTY THOUSAND PESOS ONLY necessary to file a separate action. Recovery and execution may be had in the
(P40,000.00), Philippine Currency, under the condition that same Civil Cases Nos. Q-5213 and Q-5214, as sanctioned by Sec. 17, Rule 57, of
in case the plaintiff recover judgment in the action the the Revised Rules of Court.
defendant shall pay the sum of FORTY THOUSAND PESOS
ONLY (P40,000.00), Philippine Currency, being the amount The decision in Civil Cases Nos. Q-5213 and Q-5214, having become final, the
released for attachment, to be applied to the payment of the respondent judo issued the writs of execution in said cases. On August 20,
judgment, or in default thereof, the Surety will, on demand,
397 of 501
1966, the Provincial Sheriff of Bulacan returned the writs of execution In effect, the order dated November 10, 1966 rendering judgment against the
17
"unsatisfied in whole or in part." counter-bonds was a superfluity. The respondent judge could have issued
immediately a writ of execution against the petitioner surety upon demand.
18
Sec. 12, Rule 57 of the Revised Rules of Court specifies that an attachment
may be discharged upon the making of a cash deposit or filing a counterbond As correctly held by the Court of Appeals:
"in an amount equal to the value of the property attached as determined by
the judge"; and that upon filing the counterbond "the property attached shall In fact, respondent Judge could have even issued a writ of
be delivered to the party making the deposit or giving the counterbond or the execution against petitioner on its bond immediately after its
person appearing in his behalf, the deposit or counterbond standing in place failure to satisfy the judgment against the defendant upon
of the property so released." demand, since liability on the bond automatically attaches
after the writ of execution against the defendant was returned
The counter-bonds merely stand in place of the properties so released. They unsatisfied as held in the case of Tijan vs. Sibonghanoy, CA-
22
are mere replacements of the properties formerly attached, and just as the G.R. No. 23669-R, December 11, 1927.
latter may be levied upon after final judgment in the case in order to realize
the amount adjudged so is the liability of the counter sureties ascertainable Moreover, the finality and non-appealability of the order dated November 10,
19
after the judgment has become final. 1966 is made certain and absolute with the issuance of the order of execution
23
dated January 19, 1967 upon the filing of the ex parte motion for writ of
24
The judgment having been rendered against the defendant, Felicisimo V. execution of which the petitioner was duly notified by the respondent Judge
25
Reyes, the counter-bonds given by him and the surety, The Imperial and which was duly heard. The general rule is that an order of execution is
26
Insurance, Inc., under Sec. 12, Rule 57 are made liable after execution was not appealable, otherwise a case would never end. The two exceptions to
returned unsatisfied. Under the said rule, a demand shall be made upon the this rule are: (1) where the order of execution varies the tenor of the judgment;
surety to pay the plaintiff the amount due on the judgment, and if no payment and (2) when the terms of the judgment are not very clear, and there is room
is so made, the amount may be recovered from such surety after notice and for interpretation. The case at bar does not fall under either exception. There
hearing in the same action. A separate action against the sureties is not is no showing that the order of execution varies the tenor of the judgment in
20
necessary. Civil Cases Nos. Q-5213 and Q-5214, nor of the order dated November 10, 1966,
but is in fact, in consonance therewith and the terms of the judgment are clear
In the present case, the demand upon the petitioner surety was made with due and definite, therefore, the general rule of non-appealability applies.
notice and hearing thereon when the private respondents filed the motion for
recovery on the surety bonds dated September 9, 1966 and to which the It is no longer necessary to discuss the fourth error assigned because of this
21
petitioner filed their opposition dated September 24, 1966. Court's finding that the liability expressly assumed by the petitioner on the
counter-bonds is solidary with the principal debtor, the deceased defendant,
Therefore, all the requisites under Sec. 17, Rule 57, being present, namely: (1) Felicisimo V. Reyes. As a solidary guarantor, the petitioner, the Imperial
the writ of execution must be returned unsatisfied, in whole or in part; (2) the Insurance, Inc., is liable to pay the amount due on such counter-bonds should
27
plaintiff must demand the amount due under the judgment from the surety or the creditors, private respondents herein, choose to go directly after it.
sureties, and (3) notice and hearing of such demand although in a summary
manner, complied with, the liability of the petitioner automatically attaches.
398 of 501
Under the law and under their own terms, the counter-bonds are only
conditioned upon the rendition of the judgment. As held by this Court in the
28
aforecited case of Luzon Steel Corporation vs. Sia "where under the rule and
the bond the undertaking is to pay the judgment, the liability of the surety or
sureties attaches upon the rendition of the judgment, and the issue of an
execution and its return nulla bona is not, and should not be a condition to the
right to resort to the bond." Thus, it matters not whether the Provincial Sheriff
of Bulacan, in making the return of the writ of execution served or did not
serve a copy thereof with notice of attachment on the administratrix of the
intestate estate of Felicisimo V. Reyes and filed a copy of said writ with the
office of the clerk of court with notice in accordance with See. 7 (f), Rule 57 of
the Revised Rules of Court. The petitioner surety as solidary obligor is liable
just the same.
WHEREFORE, the decision of the Court of Appeals promulgated on July

19,1967 in CA-G.R. NO. 38824-R is affirmed and the order of the respondent
judge dated January 19, 1967 and all writs or orders issued in consequence or in
pursuance thereof are also affirmed. The court of origin is hereby ordered to
proceed with the execution against the petitioner surety, the Imperial
Insurance Inc., with costs against said petitioner.
SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero, Melenc

399 of 501
counterbond within 5 days from the receipt of this order, in the amount of
Vadil v. de Venecia, 9 S 374 P9,360.00 to secure the payment to the plaintiff of any judgment he may
recover in the present case."
Republic of the Philippines
SUPREME COURT Guinsatao filed a bond entitled "Defendant's Bond" which reads:
Manila
Whereas, in an action now pending in the Court of First Instance of
EN BANC the Province of Nueva Vizcaya, First Judicial District, wherein PABLO
ESPAÑOLA ESTATE, INC., is plaintiff, and RAYMUNDO
G.R. No. L-16113 October 31, 1963 GUINSATAO defendant, the above-named plaintiff has applied for an
order of a Writ of Preliminary Attachment against RAYMUNDO
VICTOR VADIL, JOAQUIN VADIL, VICENTE VADIL, ESTEBAN VADIL, GUINSATAO.
EUGENIO VADIL and JUAN GALIBOSO,petitioners,
vs. And whereas, the Law allows the plaintiff certain securities:
HON. JOSE R. DE VENECIA, Judge of the Court of First Instance of
NUEVA VIZCAYA, MIGUEL M. GUEVARA, Provincial Sheriff Ex-Oficio for Know all men by these presents: That RAYMUNDO GUINSATAO of
Nueva Vizcaya, and PABLO ESPAÑOLA ESTATE, INC.,respondents. Mabasa, Dupax, Nueva Vizcaya as principal and ESTEBAN VADIL,
EUGENIO VADIL, JUAN GALIBOSO, JOAQUIN VADIL, VICTOR
Primicias and Del Castillo for petitioners. VADIL and VICENTE VADIL all of Mabasa, Dupax, Nueva Vizcaya as
F. S. Galutera for respondents. sureties, are hereby held and in the sum of NINE THOUSAND THREE
HUNDRED SIXTY (P9,360.000) PESOS, for which payment well and
REGALA, J.: truly to be made we bind ourselves, our heirs, and legal
representatives jointly and severally, firmly by these presents.
This is a petition for certiorari to review the order dated August 5, 1959 of the
Court of First Instance of Nueva Vizcaya, directing the execution of The condition of this obligation is as follows:
petitioners' bond.
To pay all the costs which may be awarded to the defendant, and all
On April 13, 1953, Pablo Española Estate, Inc. filed in the Court of First damages that the defendant may suffer by reason of the Writ of
Instance of Nueva Vizcaya an action against Raymundo Guinsatao for the Preliminary Attachment should it be finally adjudged that the same
recovery of the sum of P9,360. It applied for a writ of preliminary attachment was done without legitimate cause.
on the ground that Guinsatao had removed or was about to remove his
properties with intent to defraud his creditors. Then this obligation shall be null and void, otherwise of full force and
virtue.
Guinsatao denied the allegations of the complaint and expressed willingness to
file a counterbond to discharge the writ of preliminary attachment applied for
(Sgd.) JOAQUIN VADIL (Sgd.) RAYMUNDO GUINSATAO
by Pablo Española Estate, Inc. Whereupon, the court ordered him "to file a
400 of 501
Preliminary Attachment should it be finally a judged that the same

(Sgd.) VICTOR VADIL (Sgd.) ESTEBAN VADIL
was done without legitimate cause.
(Sgd.) VICENTE VADIL (Sgd.) EUGENIO VADIL
thus raising doubt as to whether the petitioners, as sureties, understood the
(Sgd.) JUAN GALIBOSO import of the order of the court.
The case was then tried, after which the trial court rendered judgment This doubt, as to whether petitioners understood the court order, is further
ordering Guinsatao to pay respondent Pablo Española Estate, Inc. the sum of shown by the fact that under Section 2 of Rule 59 of the Rules of Court, the
P9,360 plus legal interest. After the decision became final, execution followed issuance an order of attachment may be prevented if the defend "makes
but Guinsatao had no sufficient property. And so, on motion of Pablo Española deposit or gives bond ... in an amount sufficient to satisfy such demand,
Estate, Inc., the lower court ordered the execution of the bond. Hence, this besides costs, or in an amount equal to the value of the property which is to be
petition. attached. Now, if, as alleged in the motion of Pablo Española Estate Inc., only
P150 was realized from the sale of Guinsatao's property, it is not likely that
While this case was pending in this Court, petitioner Joaquin Vadil moved for petitioners would agree to stand surety for P9,360 for the defendant, whose
the dismissal of the case as him on the ground that he had not engaged the properties (worth only P150) stood in imminent danger of attachment.
services of Attorneys Primicias & Del Castillo. While joining the motion to
dismiss the case as to Joaquin Vadil, Atty. Teodoro Regino of the law firm of We are inclined to resolve the doubt in favor of petitioners. As this Court held
Primicias & Del Castillo denied Joaquin's allegation and asked that Joaquin in People v. De la Cruz, 49 O.G. No. 8, 3389, sureties are favorites of the law.
Vadil be cited for contempt for allegedly telling falsehood. Assuming an obligation without any thought of material gain, except in some
instances, all presumptions are indulged in their favor. And in Pacific Tobacco
As prayed for by Joaquin Vadil, this case is dismiss as to him. There is no Co. v. Lorenzana, et al., G.R. No. L-8088, October 31, 1957, this Court said in
ground in the motion to cite Joaquin Vadil for contempt. amplification:
We now come to the merits of this case. Petition contend that they are not ... The rationale of this doctrine is reasonable; an accommodation
liable to the plaintiff in the trial court because their undertaking under the surety acts without motive of pecuniary gain and, hence, should be
bond was to pay "all the costs which may be awarded to the defendant, and 23 protected against unjust pecuniary impoverishment by imposing on
all damages that the defendant may suffer by reason of the Writ of Preliminary the principal duties akin to those of a fiduciary. This cannot be said of
Attachment should it be finally adjudicated that the same was done without compensated corporate surety which is a business association
legitimate cause" rather than to pay the judgment that plaintiff might recover. organized for the purpose of assuming classified risks in large
numbers, for profit and on an impersonal basis, through the medium
This is a case where, instead of a bond conditioned the payment to the of standardized written contractual forms drawn by its own
plaintiff of any judgment which may recover in an action, as the trial court representatives with the primary aim of protecting its own interests
directed, the bond filed provides that the sureties will pay — (See Stearn's The Law of Suretyship, 4th ed. 402-403).
... all the costs which may be awarded to the defendant, and all We hold therefore that petitioners are not liable to Pablo Española Estate, Inc.
damages that the defendant may suffer by reason the Writ of on their bond.
401 of 501
Another reason in support of the conclusion reached herein is that actually

there was no writ of attachment issued by the Court. It is to be noted that the
obligation to be assumed by the bondsmen is premised upon the issuance of
such a writ.
We feel it unnecessary to pass upon the other assignments of error.
WHEREFORE, the petition is granted; the writ of preliminary injunction is

made permanent and the order dated August 5, 1959 and the writ of execution
dated September 4, 1959 are hereby set aside, without pronouncement as to
costs.
402 of 501
Zaragoza v. Fidelino, 163 S 443 thereon, collection charges, notarial fees and sheriffs fees and
expenses in conn with the recovery of the vehicle sold; to pay
FIRST DIVISION liquidated damage in the amount of P6,471.84 equivalent to 33
1/3 % of the balance outstanding and to pay the costs of this
G.R. No. L-29723 July 14, 1988 suit.
ANTONIO ZARAGOZA, plaintiff-appellee, Within the reglementary period for taking an appeal, Zaragoza moved for the
vs. amendment of the decision so as to include the surety, Mabini Insurance &
MARIA ANGELA FIDELINO and/or "JOHN DOE," defendants MABINI Fidelity Co., Inc., as a party solidarily liable with the defendant for the
5
INSURANCE & FIDELITY CO., INC.,surety-appellant. payment of the sums awarded in the judgment. Despite having been duly
furnished with copies of the motion and the notice of hearing, neither Fidelino
nor the surety company filed any opposition to the motion, nor did either of
6
them appear at the hearing thereof. The Trial Court deemed the motion
7
NARVASA, J.: meritorious and granted it. Its Order of April 16, 1968 decreed the following:
Involved in this appeal is no more than the procedure to hold a surety hable WHEREFORE, the motion is hereby granted, and the
upon a counter-bond posted by it for the release of an automobile seized from dispositive portion of the decision in this case is hereby
a defendant in a replevin action under a writ issued by the Trial Court at the amended to read as follows:
plaintiffs instance.
WHEREFORE, judgment is hereby rendered
The suit for the replevy of the car was brought by Antonio Zaragoza in the in favor of the plaintiff and against the
1
Court of First Instance at Quezon City against Ma. Angela Fidelino and/or defendant, ordering defendant Maria Angela
John Doe. His complaint alleged that the car had been sold to Fidelino but the Fidelino and her surety, the Mabini Insurance
latter had failed to pay the price in the manner stipulated in their agreement. & Fidelity Co., Inc., to pay jointly and
The car was taken from Fidelino's possession by the sheriff on the strength of a severally to the plaintiff the sum of
2
writ of delivery but was promptly returned to her on orders of the Court P19,417.46, representing the balance of the
3
when a surety bond for the car's releases was posted in her behalf "by Mabini purchase price of the car sold, including
Insurance & Fidelity Co., Inc. interests thereon, collection charges, notarial
fees and sheriffs fees and expenses in
4
The action resulted in a judgment for the plaintiff the dispositive part of connection with the recovery of the vehicle
which reads as follows: sold, liquidated damages in the amount of
P6,471.84 equivalent to 33 1/3% of the balance
WHEREFORE, judgment is hereby rendered in favor of the outstanding and to pay the costs of this suit.
plaintiff and against the defendant, ordering the latter to pay
to the plaintiff the sum of P19,417.46, representing the balance No motion for reconsideration was filed or appeal taken by the defendant
of the purchase price of the car sold including interest Fidelino as regards either the original or the amended decision. It was the
403 of 501
surety which presented a motion for reconsideration, and upon its denial, the facts showing his right to damages and the amount
8
appealed to this Court. It ascribes to the Court a quo, as might be expected, thereof
reversible error in amending the judgment in the manner just described. It
10
argues that the Lower Court never acquired jurisdiction over it since no xxx xxx xxx
summons was ever served on it, its filing of a counter-bond not being
equivalent to voluntary submission to the Court's jurisdiction; Zaragoza failed It would seem at first blush that Section 20, Rule 57 above quoted is not
to make a proper application with notice before finality of the decision as relevant. Its title and first sentence speak [1] of an illegal attachment, and [2] of
provided by Section 20, Rule 57 of the Rules of Court; and when the order a judgment "in favor of the party against whom (said illegal) attachment was
amending the judgment was promulgated, the judgment had already become issued." In the case at bar, the writ of delivery was not illegal; and the
final, the running of the period of appeal not having been suspended by judgment was for, not against, the party in whose favor the writ of delivery was
9
Zaragoza's motion to amend decision, and so, the Court no longer had issued. In other words, it would appear that for Section 20, Rule 57 to apply to
11
authority to amend it on April 16, 1968. the instant action," the judgment should have been "in favor of" defendant
Fidelino (the party "against whom"the writ of delivery was issued). This
The appellant surety deposits quite correctly, that the situation at bar is however was not the case. The judgment was in fact against, NOT in favor of
governed by Section 10, Rule 60, in relation to Section 20, Rule 57, of the Rules Fidelino.
of Court. Section 10, Rule 60, provides as follows:
It thus sums indeed that the first sentence of Section 20 precludes recovery of
SEC. 10. Judgment to include recovery against sureties. — The damages by a party against whom an attachment is issued and enforced if the
amount, if any, to be awarded to either party upon any bond judgment be adverse to him. This is not however correct. Although a party be
filed by the other in accordance with the provisions of this adjudged liable to another, ff it be established that the attachment issued at
rule, shag be claimed, ascertained, and granted under the the latter's instance was wrongful and the former had suffered injury thereby,
same procedure as prescribed in section 20 of Rule 57. recovery for damages may be had by the party thus prejudiced by the wrongful
attachment, even if the judgment be adverse to him. Slight reflection will show
And Section 20, Rule 57 reads as follows: the validity of this proposition. For it is entirely possible for a plaintiff to have
a meritorious cause of action against a defendant but have no proper ground
SEC. 20. Claim for damages on account of illegal attachment. for a preliminary attachment. In such a case, if the plaintiff nevertheless
— If the judgment on the action be in favor of the party applies for and somehow succeeds in obtaining an attachment, but is
against whom attachment was issued, he may recover, upon subsequently declared by final judgment as not entitled thereto, and the
the bond given or deposit made by the attaching creditor, any defendant shows that he has suffered damages by reason of the attachment,
damages resulting from the attachment. Such damages may there can be no gainsaying that indemnification is justly due the latter. So has
be awarded only upon application and after proper hearing, this Court already had occasion to rule, inBaron v. David, 51 Phil. 1,
and shall be included in the final judgment. The application and Javellana v. D.O. Plaza Enterprises, 32 SCRA 26].
must be filed before the trial or before appeal is perfected or
before the judgment becomes executory, with due notice to Be all this as it may, the second and third sentences of Section 20, Rule 57, in
the attaching creditor and his surety or sureties, setting forth relation to Section 10, Rule 60, are unquestionably relevant to the matter of
the surety's liability upon a counter-bond for the discharge of a writ of delivery
404 of 501
12
in a replevin suit. Under Section 10, Rule 60 (which makes reference "to amount may be recovered from such surety or sureties after
either party upon any bond filed by the other in accordance with the notice and summary hearing in the same action."
provisions of this rule" [60]), the surety's liability for damages upon its
counter-bond should "W claimed, ascertained, and granted under the same The record shows that the appellant surety company bound itself "jointly and
13
procedure as prescribed in section 20 of Rule 57; and andd section 20 severally" with the defendant Fidelino"in the sum of PESOS FORTY EIGHT
pertinently decrees that '(s)uch damages may be awarded only upon THOUSAND ONLY (P48,000.00), Philippine Currency, which is double the
application and after proper hearing, and shall be included in the final value of the property stated in the affidavit of the plaintiff, for the delivery
judgment .. (which means that the (application must be filed before the trial thereof if such delivery is adjudged, or for the payment of such sum to him as
16
or before appeal is perfected or before the judgment becomes executory, with due may be recovered against the defendant and the costs of the action.
notice to the attaching creditor and his surety or sureties, setting forth the facts
showing his right to damages and the amount thereof." Stated otherwise, to This being so, the appellant surety's liability attached upon the promulgation
hold a surety on a counter-bond liable, what is entailed is (1) the filing of an of the verdict against Fidelino. All that was necessary to enforce the judgment
application therefor with the Court having jurisdiction of the action; (2) the against it was, as aforestated, an application therefor with the Court, with due
presentation thereof before the judgment becomes executory (or before the notice to the surety, and a proper hearing, i.e., that it be formally notified that
trial or before appeal is perfected); (3) the statement in said application of the it was in truth being made responsible for its co-principal's adjudicated
facts showing the applicant's right to damages and the amount thereof, (4) the prestation (in this case, the payment of the balance of the purchase price of
giving of due notice of the application to the attaching creditor and his surety the automobile which could no longer be found and therefore could not be
17
or sureties; and (5) the holding of a proper hearing at which the attaching ordered returned), and an opportunity, at a hearing called for the purpose,
creditor and the sureties may be heard on the application. These requisites to show to the Court why it should not be adjudged so responsible. A separate
18
apply not only in cases of seizure or delivery under Rule 60, but also in cases action was not necessary; it was in fact proscribed. And again, the record
14 15
of preliminary injunctions under Rule 58, and receiverships under Rule 59. shows substantial compliance with these basic requirements, obviously
imposed in deference to due process.
It should be stressed, however, that enforcement of a surety's liability on a
counter-bond given for the release of property seized under a writ Appellant surety undoubtedly received copy of Zaragoza's Motion to Amend
19
of preliminary attachment is governed, not by said Section 20, but by another Decision. That motion made clear its purpose—that the decision "be
specifically and specially dealing with the matter; Section 17 of Rule 57, which amended, or an appropriate order be issued, to include .. (the surety) as a
reads as follows: party jointly and severally liable with the defendant to the extent of the sums
awarded in the decision to be paid to plaintiff'-as well as the basis thereof-the
SEC. 17. When execution returned unsatiated, recovery had counter-bond filed by it by the explicit terms of which it bound itself "jointly
upon bond. — If the execution be returned unsatisfied in and severally (with the defendant) .. for the payment of such sum to him
whole or in part, the surety or sureties on any counter-bond (plaintiff) as may be recovered against the defendant and the cost of the
given pursuant to the provisions of this rule to secure the action." The motion contained, at the foot thereof, a "notice that on Saturday,
payment of the judgment shall become charged on such March 23, 1968, at 8:30 a.m., or as soon thereafter as the matter may be heard,
counter-bond, and bound to pay to the judgment creditor the .. (plaintiffs counsel would) submit the foregoing motion for the
upon demand, the amount due under the judgment, which consideration of the Court." And likewise indubitable is the fact that, as the
Court a quo has observed, "neither .. Fidelinos counsel nor the surety company
405 of 501
filed any opposition to said motion, nor did they appear in the hearing of the bond that it was not a party to the case and never made a party therein and
motion on March 23, 1968 .. (for which reason) the motion was deemed was not notified of the trial of the case, and that the appellees were guilty of
20
submitted for resolution." The surety's omission to appear at the hearing laches, the requirement of hearing was fully satisfied or complied with; .. (in
despite notice of course constituted a waiver of the right to be heard on the any case,) appellant surety company never prayed for an opportunity to
matter. present evidence in its behalf."
The surety's theory that never having been served with summons, it never The appellant surety's last argument that by the time the Court amended its
came under the Lower Court's jurisdiction, is untenable. The terms of the decision, the decision had already become final, and therefore unalterable, is
counter-bond voluntarily filed by it in defendant's behalf leave no doubt of its also untenable. The motion for amendment of the decision was
assent to be bound by the Court's adjudgment of the defendant's liability, i.e., unquestionably in the nature of a motion for reconsideration under Section 1
its acceptance of the Court's jurisdiction. For in that counterbond, it implicitly (c), Rule 37 of the Rules of Court which, having been filed within "the period
23
prayed for affirmative relief; the release of the seized car, in consideration of for perfecting an appeal," had the effect of interrupting said period of appeal.
which it explicitly bound itself solidarily with said defendant to answer for the
delivery of the car subject of the action "if such delivery is adjudged," i.e., WHEREFORE, judgment is hereby rendered AFFIRMING in toto the Decision
commanded by the Court's judgment, or "for the payment of such sum as may of the Court a quo dated February 12, 1968, as amended by the Order of April
be recovered against the defendant and the costs of the action," the reference 16, 1968. Costs against the appellant surety.
to a possible future judgment against the defendant, and necessarily against
itself, being certain and unmistakable. The filing of that bond was clearly an Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., c
act of voluntary submission to the Court's authority, which is one of the modes
21
for the acquisition of jurisdiction over a party.
The same theory as that espoused by appellant surety in this case was, in
substance, passed upon and declared to be without merit in a 1962 decision of
22
this Court, Dee v. Masloff. There, a surety on a counter-bond given to release
property from receivership, also sought to avoid liability by asserting that it
was not a party to the case, had never been made a party, and had not been
notified of the trial. The Court overruled the contention, and upheld the
propriety of the amendment of the judgment which ordered the appellant
surety company to pay — to the extent of its bond and jointly and severally
with defendant — the judgment obligation. The Court ruled that since such
"amended judgment .. (had been) rendered after the appellant surety company
as party jointly and severally liable with the defendant .. for the damages
already awarded to the appellees, to which the appellant surety company filed
its "Opposition" and "Rejoinder" to the "Reply to Opposition filed by the
appellees, without putting in issue the reasonableness of the amount awarded
for damages but confining itself to the defense in avoidance of liability on its
406 of 501
Pursuant thereto, garnishment notices were served by the Manila Sheriff on

Dizon v. Valdez, 23 S 200 one Restituto Sibal and the Philippine Guaranty Co.
EN BANC On February 9, 1961, the judgment debtors moved to dissolve the writ of
attachment, upon an P11,730-counterbond subscribed by the Capital Insurance
G.R. No. L-23920 April 25, 1968 & Surety Co., Inc. The following day, February 10, 1961, the trial court dissolved
the writ.
RAMON R. DIZON, plaintiff-appellant,
vs. On February 24, 1961, plaintiff registered a motion to admit its "Claim for
LORENZO J. VALDES, VALLESON, INC., and AUGUSTO J. Damages" attached thereto. Plaintiff's claim was that the dissolution of the
VALDES, defendants-appellees. attachment "put out of the reach of the plaintiff the properties and assets
which may be held to answer for the adjudged claim"; and that, by reason
Jose Agbulos for plaintiff-appellant. thereof, "plaintiff suffered and will suffer damages in the amount of P11,730.00
Felix Law Office for defendants-appellees. plus the corresponding 12% interest thereon and attorney's fees and costs." He
then prayed that "defendants and the Capital Insurance & Surety Co., Inc. be
SANCHEZ, J.: ordered to pay the plaintiff, jointly and severally, the amount of P11,730.00 plus
interests, expenses, and attorney's fees."
The case before us is an incident in a suit for a sum of money (Civil Case Q-
2618, Court of First Instance of Rizal, Quezon City Branch), entitled "Ramon R. On March 1, 1961, the surety, Capitol Insurance & Surety Co., Inc., opposed.
Dizon, Plaintiff, vs. Lorenzo J. Valdes, Valleson, Inc., and Augusto J. Valdes, Assertion was made that pursuant to the Rules of Court (then, Section 17, Rule
Defendants." Judgment was, on December 2, 1960, there rendered directing 59; now Section 17, Rule 57), the surety on any counter-bond shall only
defendants Valleson, Inc. and Augusto J. Valdes (Lorenzo J. Valdes excluded) become charged and bound to pay plaintiff upon demand, the amount due
"to pay jointly and severally to the plaintiff the amount of P6,260.00 with under the judgment; and that such amount may be recovered from the surety
interest at the rate of 12% per annum from September 1, 1954 until fully paid after notice and summary hearing in the same action — only if execution be
and to pay attorney's fees in the amount of P600.00 with costs." The returned unsatisfied in whole or in part.
counterclaim of defendants Lorenzo J. Valdes and Valleson, Inc. was
dismissed. On April 25, 1961, at the hearing fixed by the court, plaintiff presented
evidence on the merits of its claim for damages, in the absence of defendants
On January 11, 1961, Valleson, Inc. filed its notice of appeal. Its appeal was and surety, who made no appearance thereat.
perfected on February 11, 1961.
The trial court, in its order of May 16, 1961, ruled that plaintiff's claim for
Meanwhile, on January 10, 1961, one day before Valleson's notice of appeal, damages was premature, since the main case was then still pending appeal.
plaintiff petitioned for and the trial court directed the issuance of a writ of
preliminary attachment against the properties, real and personal, of Plaintiff's motion for reconsideration, filed on July 10, 1961, was thwarted by
defendants Augusto J. Valdes and Valleson, Inc. upon an P11,730-bond. On the court below on September 16, 1961.1äwphï1.ñët
January 11, said bond having been filed, the corresponding writ was issued.
407 of 501
Under the environmental facts, can plaintiff's claim for damages on It is therefore not to be doubted that, upon the applicable rules, the counter-
defendants' counter-bond prosper? The answer must be in the negative. bond does not answer for damages on account of the lifting of the attachment,
but for the payment of the amount due under the judgment that may be
1 6
1. By the terms of the counter-bond itself, liability thereunder attaches only "in recovered by an attaching creditor.
case the plaintiff recovers judgment in the action." Indeed, by Section 12 of
2
Rule 59 of the old Rules, the law in force at the time the counterbond was 3. Nor is importance to be attached to plaintiff's argument that the dissolution
executed, the statutory counter-bond was made "to secure the payment to the of the attachments put out of his reach the properties and assets answerable
plaintiff of any judgment he may recover in the action." Complementary to for his claim. The counter-bond, it should be emphasized, precisely stands "in
3 7
this legal precept is Section 17 of the same Rule 59 of the old Rules — which place of the properties so released." Thus, the release of such property cannot
8
should be deemed as read into the bond — viz: really "prejudice the rights of the attaching party."
Sec. 17. When execution returned unsatisfied, recovery had upon bond. We accordingly affirm the lower court's order of May 16, 1961 under review.
— If the execution be returned unsatisfied in whole or in part, the
surety or sureties on any bond given pursuant to the provisions of this Costs against plaintiff-appellant. So ordered.
rule to secure the payment of the judgment shall become finally
charged on such bond, and bound to pay to the plaintiff upon demand
the amount due under the judgment, which amount may be recovered
from such surety or sureties after notice and summary hearing in the
same action.
Since at the time the claim for damages was registered, the case was still
pending appeal, it is quite obvious that the motion for the claim for damages
was premature. And the lower court thus correctly ruled out plaintiff's motion.
For, Section 17 contemplates of proceedings on execution after judgment. And,
it is only thereafter that liability upon the surety's bond may be determined.
The key term in Section 17 is the phrase "[i]f the execution be returned
unsatisfied in whole or in part." Until such proceeding shall have taken place
and unless unsatisfied liability under the judgment still exists, no action upon
4
the counter-bond may be taken against the surety.
2. We do not follow plaintiff when he says that what controls here is Section
5
20 of Rule 57 (then Rule 59). By its very terms, this obviously refers to the
recovery of damages by a party against whom attachment was issued. This is a
remedy available to the defendants here, not the plaintiff.
408 of 501
ordered to pay, jointly with the other partners, the balance of

Pioneer Insurance v. Camilon, 116 S 190 the obligation to the plaintiff
SECOND DIVISION The counterclaim filed by the defendants is hereby dismissed.

G.R. No. L-42447 August 30, 1982 (Pp. 14-15, Record.)
PIONEER INSURANCE AND SURETY CORPORATION, petitioner, vs.
HON. SERAFIN E. CAMILON, in his capacity as Judge of the Court of and upon appeal to the Court of Appeals, the appellate court decided
First Instance of Rizal, Branch VIII; THE CITY SHERIFF OF MANILA; and thus: 1äwphï1.ñët
STEEL DISTRIBUTORS, INC., respondents.
Jose T.M. Mayo for petitioner. WHEREFORE, except with the modification that the liability
Eugenio T. Estavillo for respondents. of appellant Co Chin Leng in the questioned transaction at
RESOLUTION bar is only joint, or pro rata and subsidiary, the decision
& under review is hereby affirmed in all other respects, at
appellants costs. (Page 23, Record.)
BARREDO, J.:1äwphï1.ñët
(2) upon motion of the judgment creditors, the respondent judge ordered the
It appearing from the allegations of the petition and the comment of issuance of a writ of execution wherein petitioner herein was included as
respondents, that, as reiterated in their respective memoranda, (1) in Civil object also thereof; (3) a motion to quash the said writ of execution insofar as
Case No. 9205 of the Court of First Instance of Rizal, entitled Steel petitioner is concerned was denied by respondent judge this wise: 1äwphï1.ñët
Distributors, Inc. vs. Co Ban Ling & Sons, et al. a judgment was rendered on
August 24, 1968, worded as follows: 1äwphï1.ñët There is no merit in the Motion to Quash Writ of Execution
filed by Pioneer Insurance and Surety Corporation since
WHEREFORE, judgment is hereby rendered ordering the under the decision affirmed by the Court of Appeals its
defendants Co Ban Ling and Sons, Co Chin Leng and the liability was adjudged to be jointly and severally with
Pioneer Insurance and Surety Corporation, to pay, jointly and defendant Co Ban Ling & Sons Co.
severally, the plaintiff, Steel Distributors, Inc. the sum of
P35,760.00 with interest of 12% per annum from March 31, On the other hand, non-inclusion of the other defendants in
1966, the date of the filing of the complaint, until fully paid, the writ is of no consequence at this stage since their liability
the further sum of P3,000.00 as attorney's fees, and the costs is not primary but will accrue only in the event the judgment
of this suit. cannot be satisfied by defendant partnership and Pioneer
Insurance and Surety Corporation.
In the event that the properties of the defendants Co Ban Ling
and Sons, Co Chin Leng and the Pioneer Insurance and Surety In view thereof, the Motion to Quash is denied.
Corporation are not sufficient to satisfy the judgment,
defendant Co Chin Tong and Macario Co Ling are hereby SO ORDERED. (Page 31, Record.)
409 of 501
and, the Court being of the view that the rule of excussion claimed by
petitioner under Section 17 of Rule 17, which petitioner invokes considering it
was only the bondsman to secure the lifting of the writ of preliminary
attachment, is not applicable in the instant case where there is already a final
and executory judgment sentencing the bondsman as joint and solidarily
liable, as in the case of Luzon Steel Corporation vs. Sia, 28 SCRA, 58-63, the
Court resolved to DISMISS the petition, without prejudice to petitioner
recovering from its co-judgment debtor whatever it has to pay under the writ
of execution herein questioned. The restraining order issued by this Court on
January 22, 1976 is hereby lifted effective immediately.
410 of 501
On October 10, 2002, Unibox and Ortega filed their Motion for the Discharge
7
UPPC v. Acropolis, January 25, 2012 of Attachment, praying that they be allowed to file a counter-bond in the
amount of P42,844,353.14 and that the writ of preliminary attachment be
THIRD DIVISION discharged after the filing of such bond. Although this was opposed by UPPC,
the RTC, in its Order dated October 25, 2002, granted the said motion for the
G.R. No. 171750 January 25, 2012 discharge of the writ of attachment subject to the condition that Unibox and
8
Ortega file a counter-bond. Thus, on November 21, 2002, respondent
UNITED PULP AND PAPER CO., INC., Petitioner, Acropolis Central Guaranty Corporation (Acropolis) issued the Defendant’s
9
vs. Bond for Dissolution of Attachment in the amount ofP42,844,353.14 in favor
ACROPOLIS CENTRAL GUARANTY CORPORATION, Respondent. of Unibox.
DECISION Not satisfied with the counter-bond issued by Acropolis, UPPC filed its
10
Manifestation and Motion to Discharge the Counter-Bond dated November
MENDOZA, J.: 27, 2002, claiming that Acropolis was among those insurance companies
whose licenses were set to be cancelled due to their failure to put up the
This is a petition for review under Rule 45 praying for the annulment of the minimum amount of capitalization required by law. For that reason, UPPC
1 2
November 17, 2005 Decision and the March 2, 2006 Resolution of the Court of prayed for the discharge of the counter-bond and the reinstatement of the
11
Appeals (CA) in CA-G.R. SP No. 89135 entitled Acropolis Central Guaranty attachment. In its December 10, 2002 Order, the RTC denied UPPC’s Motion
Corporation (formerly known as the Philippine Pryce Assurance Corp.) v. Hon. to Discharge Counter-Bond and, instead, approved and admitted the counter-
Oscar B. Pimentel, as Presiding Judge, RTC of Makati City, Branch 148 (RTC), bond posted by Acropolis. Accordingly, it ordered the sheriff to cause the
and United Pulp and Paper Co., Inc. lifting of the attachment on the properties of Unibox and Ortega.
The Facts On September 29, 2003, Unibox, Ortega and UPPC executed a compromise
12
agreement, wherein Unibox and Ortega acknowledged their obligation to
On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil case for UPPC in the amount of P35,089,544.00 as of August 31, 2003, inclusive of the
collection of the amount ofP42,844,353.14 against Unibox Packaging principal and the accrued interest, and bound themselves to pay the said
Corporation (Unibox) and Vicente Ortega (Ortega) before the Regional Trial amount in accordance with a schedule of payments agreed upon by the
3 13
Court of Makati, Branch 148 (RTC). UPPC also prayed for a Writ of parties. Consequently, the RTC promulgated its Judgment dated October 2,
Preliminary Attachment against the properties of Unibox and Ortega for the 2003 approving the compromise agreement.
reason that the latter were on the verge of insolvency and were transferring
4
assets in fraud of creditors. On August 29, 2002, the RTC issued the Writ of For failure of Unibox and Ortega to pay the required amounts for the months
5
Attachment after UPPC posted a bond in the same amount of its claim. By of May and June 2004 despite demand by UPPC, the latter filed its Motion for
14
virtue of the said writ, several properties and assets of Unibox and Ortega were Execution to satisfy the remaining unpaid balance. In the July 30, 2004
6 15
attached. Order, the RTC acted favorably on the said motion and, on August 4, 2004, it
16
issued the requested Writ of Execution.
411 of 501
25
The sheriff then proceeded to enforce the Writ of Execution. It was discovered, prior to the hearing set for December 17, 2004; secondly, UPPC failed to
however, that Unibox had already ceased its business operation and all of its comply with the following requirements for recovery of a judgment creditor
assets had been foreclosed by its creditor bank. Moreover, the responses of the from the surety on the counter-bond in accordance with Section 17, Rule 57 of
selected banks which were served with notices of garnishment indicated that the Rules of Court, to wit: (1) demand made by creditor on the surety, (2)
Unibox and Ortega no longer had funds available for garnishment. The sheriff notice to surety and (3) summary hearing as to his liability for the judgment
26
also proceeded to the residence of Ortega to serve the writ but he was denied under the counter-bond; and, thirdly, the failure of UPPC to include
27
entry to the premises. Despite his efforts, the sheriff reported in his November Acropolis in the compromise agreement was fatal to its case.
17
4, 2008 Partial Return that there was no satisfaction of the remaining unpaid
balance by Unibox and Ortega. UPPC then filed a motion for reconsideration but it was denied by the CA in
28
its Resolution dated March 1, 2006.
On the basis of the said return, UPPC filed its Motion to Order Surety to Pay
18
Amount of Counter-Bond directed at Acropolis. On November 30, 2004, the Hence, this petition.
19
RTC issued its Order granting the motion and ordering Acropolis to comply
with the terms of its counter-bond and pay UPPC the unpaid balance of the The Issues
judgment in the amount ofP27,048,568.78 with interest of 12% per annum
from default. For the allowance of its petition, UPPC raises the following
Thereafter, on December 13, 2004, Acropolis filed its Manifestation and Very GROUNDS
20
Urgent Motion for Reconsideration, arguing that it could not be made to pay
the amount of the counter-bond because it did not receive a demand for I.
payment from UPPC. Furthermore, it reasoned that its obligation had been
discharged by virtue of the novation of its obligation pursuant to the The Court of Appeals erred in not holding respondent liable on its counter-
compromise agreement executed by UPPC, Unibox and Ortega. The motion, attachment bond which it posted before the trial court inasmuch as:
which was set for hearing on December 17, 2004, was received by the RTC and
21
UPPC only on December 20, 2004. In the Order dated February 22, 2005, the A. The requisites for recovering upon the respondent-surety were clearly
RTC denied the motion for reconsideration for lack of merit and for having complied with by petitioner and the trial court, inasmuch as prior demand and
22
been filed three days after the date set for the hearing on the said motion. notice in writing was made upon respondent, by personal service, of
petitioner’s motion to order respondent surety to pay the amount of its
Aggrieved, Acropolis filed a petition for certiorari before the CA with a prayer counter-attachment bond, and a hearing thereon was held for the purpose of
for the issuance of a Temporary Restraining Order and Writ of Preliminary determining the liability of the respondent-surety.
23 24
Injunction. On November 17, 2005, the CA rendered its Decision granting
the petition, reversing the February 22, 2005 Order of the RTC, and absolving B. The terms of respondent’s counter-attachment bond are clear, and
and relieving Acropolis of its liability to honor and pay the amount of its unequivocally provide that respondent as surety shall jointly and solidarily
counter-attachment bond. In arriving at said disposition, the CA stated that, bind itself with defendants to secure and pay any judgment that petitioner
firstly, Acropolis was able to comply with the three-day notice rule because the may recover in the action. Hence, such being the terms of the bond, in
motion it filed was sent by registered mail on December 13, 2004, four days accordance with fair insurance practices, respondent cannot, and should not
412 of 501
be allowed to, evade its liability to pay on its counter-attachment bond posted Section 17, Rule 57 of the Rules of Court sets forth the procedure for the
by it before the trial court. recovery from a surety on a counter-bond:
II. Sec. 17. Recovery upon the counter-bond. – When the judgment has become
executory, the surety or sureties on any counter-bond given pursuant to the
The Court of Appeals erred in holding that the trial court gravely abused its provisions of this Rule to secure the payment of the judgment shall become
discretion in denying respondent’s manifestation and motion for charged on such counter-bond and bound to pay the judgment obligee upon
reconsideration considering that the said motion failed to comply with the demand the amount due under the judgment, which amount may be
three (3)-day notice rule under Section 4, Rule 15 of the Rules of Court, and recovered from such surety or sureties after notice and summary hearing on
that it had lacked substantial merit to warrant a reversal of the trial court’s the same action.
29
previous order.
From a reading of the abovequoted provision, it is evident that a surety on a
Simply put, the issues to be dealt with in this case are as follows: counter-bond given to secure the payment of a judgment becomes liable for
the payment of the amount due upon: (1) demand made upon the surety; and
(1) Whether UPPC failed to make the required demand and notice upon (2) notice and summary hearing on the same action. After a careful scrutiny of
Acropolis; and the records of the case, the Court is of the view that UPPC indeed complied
with these twin requirements.
(2) Whether the execution of the compromise agreement between UPPC and
Unibox and Ortega was tantamount to a novation which had the effect of This Court has consistently held that the filing of a complaint constitutes a
32
releasing Acropolis from its obligation under the counter-attachment bond. judicial demand. Accordingly, the filing by UPPC of the Motion to Order
Surety to Pay Amount of Counter-Bond was already a demand upon Acropolis,
The Court’s Ruling as surety, for the payment of the amount due, pursuant to the terms of the
bond. In said bond, Acropolis bound itself in the sum of P 42,844,353.14 to
UPPC complied with the twin requirements of notice and demand secure the payment of any judgment that UPPC might recover against Unibox
33
and Ortega.
On the recovery upon the counter-bond, the Court finds merit in the
arguments of the petitioner. Furthermore, an examination of the records reveals that the motion was filed
by UPPC on November 11, 2004 and was set for hearing on November 19,
34
UPPC argues that it complied with the requirement of demanding payment 2004. Acropolis was duly notified of the hearing and it was personally served
35
from Acropolis by notifying it, in writing and by personal service, of the a copy of the motion on November 11, 2004, contrary to its claim that it did
hearing held on UPPC’s Motion to Order Respondent-Surety to Pay the not receive a copy of the motion.
30
Bond. Moreover, it points out that the terms of the counter-attachment bond
are clear in that Acropolis, as surety, shall jointly and solidarily bind itself with On November 19, 2004, the case was reset for hearing on November 30, 2004.
Unibox and Ortega to secure the payment of any judgment that UPPC may The minutes of the hearing on both dates show that only the counsel for UPPC
31
recover in the action. was present. Thus, Acropolis was given the opportunity to defend itself. That it
chose to ignore its day in court is no longer the fault of the RTC and of UPPC.
413 of 501
It cannot now invoke the alleged lack of notice and hearing when, undeniably, FORTY FOUR THOUSAND THREE HUNDRED FIFTY THREE AND 14/100
both requirements were met by UPPC. ONLY (P 42,844,353.14) Philippine Currency.
No novation despite compromise agreement; Acropolis still liable under the NOW, THEREFORE, we UNIBOX PACKAGING CORP. as Principal and
terms of the counter-bond PHILIPPINE PRYCE ASSURANCE CORP., a corporation duly organized and
existing under and by virtue of the laws of the Philippines, as Surety, in
UPPC argues that the undertaking of Acropolis is to secure any judgment consideration of the dissolution of said attachment, hereby jointly and
rendered by the RTC in its favor. It points out that because of the posting of severally bind ourselves in the sum of FORTY TWO MILLION EIGHT
the counter-bond by Acropolis and the dissolution of the writ of preliminary HUNDRED FORTY FOUR THOUSAND THREE HUNDRED FIFTY THREE
attachment against Unibox and Ortega, UPPC lost its security against the AND 14/100 ONLY (P 42,844,353.14) Philippine Currency, in favor of the
36
latter two who had gone bankrupt. It cites the cases of Guerrero v. Court of plaintiff to secure the payment of any judgment that the plaintiff may
37 38 42
Appeals and Martinez v. Cavives to support its position that the execution of recover against the defendants in this action. [Emphasis and
a compromise agreement between the parties and the subsequent rendition of underscoring supplied]
a judgment based on the said compromise agreement does not release the
39
surety from its obligation nor does it novate the obligation. Based on the foregoing, Acropolis voluntarily bound itself with Unibox to be
solidarily liable to answer for ANY judgment which UPPC may recover from
Acropolis, on the other hand, contends that it was not a party to the Unibox in its civil case for collection. Its counter-bond was issued in
compromise agreement. Neither was it aware of the execution of such an consideration of the dissolution of the writ of attachment on the properties of
agreement which contains an acknowledgment of liability on the part of Unibox and Ortega. The counter-bond then replaced the properties to ensure
Unibox and Ortega that was prejudicial to it as the surety. Accordingly, it recovery by UPPC from Unibox and Ortega. It would be the height of injustice
cannot be bound by the judgment issued based on the said to allow Acropolis to evade its obligation to UPPC, especially after the latter
40
agreement. Acropolis also questions the applicability of Guerrero and draws has already secured a favorable judgment.
attention to the fact that in said case, the compromise agreement specifically
43
stipulated that the surety shall continue to be liable, unlike in the case at This issue is not novel. In the case of Luzon Steel Corporation v. Sia, Luzon
bench where the compromise agreement made no mention of its obligation to Steel Corporation sued Metal Manufacturing of the Philippines and Jose Sia for
41
UPPC. breach of contract and damages. A writ of preliminary attachment was issued
against the properties of the defendants therein but the attachment was lifted
On this issue, the Court finds for UPPC also. upon the filing of a counter-bond issued by Sia, as principal, and Times Surety
& Insurance Co., as surety. Later, the plaintiff and the defendants entered into
The terms of the Bond for Dissolution of Attachment issued by Unibox and a compromise agreement whereby Sia agreed to settle the plaintiff’s claim. The
Acropolis in favor of UPPC are clear and leave no room for ambiguity: lower court rendered a judgment in accordance with the terms of the
compromise. Because the defendants failed to comply with the same, the
WHEREAS, the Honorable Court in the above-entitled case issued on _____ an plaintiff obtained a writ of execution against Sia and the surety on the counter-
Order dissolving / lifting partially the writ of attachment levied upon the bond. The surety moved to quash the writ of execution on the ground that it
defendant/s personal property, upon the filing of a counterbond by the was not a party to the compromise and that the writ was issued without giving
defendants in the sun of PESOS FORTY TWO MILLION EIGHT HUNDRED the surety notice and hearing. Thus, the court set aside the writ of execution
414 of 501
and cancelled the counter-bond. On appeal, this Court, speaking through the consent of the parties or on the merits. A judgment entered on a stipulation is
44
learned Justice J.B.L. Reyes, discussed the nature of the liability of a surety on a nonetheless a judgment of the court because consented to by the parties.
counter-bond:
[Emphases and underscoring supplied]
Main issues posed are (1) whether the judgment upon the compromise
discharged the surety from its obligation under its attachment counterbond The argument of Acropolis that its obligation under the counter-bond was
and (2) whether the writ of execution could be issued against the surety novated by the compromise agreement is, thus, untenable. In order for
without previous exhaustion of the debtor's properties. novation to extinguish its obligation, Acropolis must be able to show that
there is an incompatibility between the compromise agreement and the terms
Both questions can be solved by bearing in mind that we are dealing with a of the counter-bond, as required by Article 1292 of the Civil Code, which
counterbond filed to discharge a levy on attachment. Rule 57, section 12, provides that:
specifies that an attachment may be discharged upon the making of a cash
deposit or filing a counterbond "in an amount equal to the value of the Art. 1292. In order that an obligation may be extinguished by another which
property attached as determined by the judge"; that upon the filing of the substitute the same, it is imperative that it be so declared in unequivocal
counterbond "the property attached ... shall be delivered to the party making terms, or that the old and the new obligations be on every point incompatible
the deposit or giving the counterbond, or the person appearing on his behalf, with each other. (1204)
the deposit or counterbond aforesaid standing in place of the property so
released." Nothing in the compromise agreement indicates, or even hints at, releasing
Acropolis from its obligation to pay UPPC after the latter has obtained a
The italicized expressions constitute the key to the entire problem. Whether favorable judgment. Clearly, there is no incompatibility between the
the judgment be rendered after trial on the merits or upon compromise, such compromise agreement and the counter-bond. Neither can novation be
45
judgment undoubtedly may be made effective upon the property released; and presumed in this case. As explained inDuñgo v. Lopena:
since the counterbond merely stands in the place of such property, there is no
reason why the judgment should not be made effective against the Novation by presumption has never been favored. To be sustained, it need be
counterbond regardless of the manner how the judgment was obtained. established that the old and new contracts are incompatible in all points, or
that the will to novate appears by express agreement of the parties or in acts of
46
xxx similar import.
As declared by us in Mercado v. Macapayag, 69 Phil. 403, 405-406, in passing All things considered, Acropolis, as surety under the terms of the counter-
upon the liability of counter sureties in replevin who bound themselves to bond it issued, should be held liable for the payment of the unpaid balance
answer solidarily for the obligations of the defendants to the plaintiffs in a due to UPPC.
fixed amount of P 912.04, to secure payment of the amount that said plaintiff
be adjudged to recover from the defendants, Three-day notice rule, not a hard and fast rule
the liability of the sureties was fixed and conditioned on the finality of the
judgment rendered regardless of whether the decision was based on the
415 of 501
Although this issue has been obviated by our disposition of the two main motion, which is rendered defective by failure to comply with the
issues, the Court would like to point out that the three-day notice requirement requirement. As a rule, a motion without a notice of hearing is considered pro
is not a hard and fast rule and substantial compliance is allowed. forma and does not affect the reglementary period for the appeal or the filing
of the requisite pleading.
Pertinently, Section 4, Rule 15 of the Rules of Court reads:
As an integral component of procedural due process, the three-day notice
Sec. 4. Hearing of motion. – Except for motions which the court may act upon required by the Rules is not intended for the benefit of the movant. Rather, the
without prejudicing the rights of the adverse party, every written motion shall requirement is for the purpose of avoiding surprises that may be sprung upon
be set for hearing by the applicant. the adverse party, who must be given time to study and meet the arguments in
the motion before a resolution by the court. Principles of natural justice
Every written motion required to be heard and the notice of the hearing demand that the right of a party should not be affected without giving it an
thereof shall be served in such a manner as to insure its receipt by the opportunity to be heard.
other party at least three (3) days before the date of hearing, unless the
court for good cause sets the hearing on shorter notice. [Emphasis The test is the presence of the opportunity to be heard, as well as to
supplied]1âwphi1 have time to study the motion and meaningfully oppose or controvert
the grounds upon which it is based. Considering the circumstances of the
The law is clear that it intends for the other party to receive a copy of the present case, we believe that the requirements of procedural due process were
written motion at least three days before the date set for its hearing. The substantially complied with, and that the compliance justified a departure
50
purpose of the three (3)-day notice requirement, which was established not for from a literal application of the rule on notice of hearing. [Emphasis
the benefit of the movant but rather for the adverse party, is to avoid surprises supplied]
upon the latter and to grant it sufficient time to study the motion and to
47
enable it to meet the arguments interposed therein. In Preysler, Jr. v. Manila In the case at bench, the RTC gave UPPC sufficient time to file its comment on
48
Southcoast Development Corporation, the Court restated the ruling that "the the motion. On January 14, 2005, UPPC filed its Opposition to the motion,
date of the hearing should be at least three days after receipt of the notice of discussing the issues raised by Acropolis in its motion. Thus, UPPC’s right to
hearing by the other parties." due process was not violated because it was afforded the chance to argue its
position. WHEREFORE, the petition is GRANTED. The November 17, 2005
It is not, however, a hard and fast rule. Where a party has been given the Decision and the March 1, 2006 Resolution of the Court of Appeals, in CA-G.R.
opportunity to be heard, the time to study the motion and oppose it, there is SP No. 89135, are hereby REVERSED and SET ASIDE. The November 30, 2004
compliance with the rule. This was the ruling in the case of Jehan Shipping Order of the Regional Trial Court, Branch 148, Makati City, ordering Acropolis
49
Corporation v. National Food Authority, where it was written: to comply with the terms of its counter-bond and pay UPPC the unpaid
balance of the judgment in the amount of P27,048,568.78 with interest of 12%
Purpose Behind the per annum from default is REINSTATED.
Notice Requirement
This Court has indeed held time and time again that, under Sections 4 and 5 of
Rule 15 of the Rules of Court, mandatory is the notice requirement in a
416 of 501
Commercial Co., et al." issued by the respondent Presiding Judge of the Court
of First Instance of Cebu.
Section 20
The case commenced on October 12, 1970 when Allied Overseas Commercial
Co., Ltd., a foreign corporation domiciled in Hongkong, filed in the Court of
Calderon v. IAC, 155 S 531 (See under Section 4 page 134) First Instance of Manila a complaint against the respondent-appellee Ben Uy
Rodriguez for the collection of a sum of money arising out of a transaction
Pioneer Insurance and Surety Corp. v. Hontanosas, 78 S 447 between them in the amount of P450,533.00, the agreed peso equivalent of the
HK$418,279.60 balance unpaid. Plaintiff therein having prayed for the issuance
FIRST DIVISION of a writ of preliminary attachment, the game was granted by the Court
against Rodriguez upon the filing by said plaintiff of a bond in the amount of
G.R. No. L-35951 August 31, 1977 P450,000.00, which petitioner-appellant Pioneer Insurance & Surety Corp.
duly posted. The corresponding levy in attachment was made by annotation
PIONEER INSURANCE & SURETY CORP. AND HADJI ESMAYATEN on the properties of Rodriguez which consisted of 4 pieces of lots; notices of
LUCMAN, petitioners-appellants, garnishment on different Cebu banks turned out negative, while personal
vs. properties found at the Rodriguez residence, although attached, were,
THE HON. AGAPITO HONTANOSAS, JUDGE OF THE COURT OF FIRST however, not removed therefrom.
INSTANCE OF CEBU, BRANCH XI AND THE SPOUSES BEN UY
RODRIGUEZ, respondents-appellees. A motion to dismiss the complaint was thereupon filed by Rodriguez, followed
by an application for damages against the bond, praying that he be permitted
Eriberto D. Ignacio for appellant. to present evidence of damages he sustained by reason of the wrongful
attachment, and to enforce said claim against the surety on its bond, alleging
Francisco E.F. Remotigue & Hilario G. Davide, Jr. for private respondent. further that otherwise his claim against the bond will forever be barred as said
claim cannot be the subject of an independent civil action under Sec. 20, Rule
57 of the Rules of Court. The court iii its order of December 22, 1970 dismissed
the complaint on the ground of improper venue since defendant Rodriguez
GUERRERO, J: was a resident of Cebu, and lifted the writ of preliminary attachment setting.
the hearing on the claim for damages against the bond on January 14, 1971.
1
We reverse the decision of the Court of Appeals promulgated, on October 30,
1972 in CA-G.R. No. 00951-R entitled "Pioneer Insurance & Surety Corp., et al., With the intention of filing a separate civil action in the Court t T of Firs
petitioners, vs. Hon Judge Agapito Hontanosas, et al., respondents," which instance of Cebu, respondent-appellee Rodriguez withdrew his claim for
decision had denied for lack of merit the petition filed therein for certiorari. damages against Pioneer Insurance and Surety Corp., which motion for
prohibition and/or mandamus with preliminary injunction seeking to nullify withdrawal was granted by the Court Thereafter, the respondents-appellees
the order of default of February 29, 1972 and the decision of March 9, 1972 in Rodriguez spouses filed a complaint for damages on February 15, 1971 against
Civil Case No. R-12069, entitled "Ben Rodriguez, et al. vs. Allied Overseas Pioneer Insurance & Surety Corp. and Allied Overseas (the Hongkong-based
corporation), docketed as Civil Case No. R-12069, Court of First Instance of
417 of 501
Cebu presided by respondent judge lion Agapito Hontanosas, the complaint An amended complaint was now submitted to ad admitted by the Court on
praying that Rodriguez be declared as not in any manner indebted to the August 14, 1971 by impleading left petitioner-appellant Hadji Esmayaten
defendant Allied Overseas Commercial Co. and that Pioneer Insurance & Lucman as additional, defendant., making allegations tending show
Surety Corp. be held liable for damages, attorneys foes and expenses of confabulation between the new defendant, and the foreign-based corporation
litigation by reason of the and malicious attachment issued by the Manila to collect a non-existing debt. To the amended complaint, Pioneer Insurance &
Court. Surety Corp filed its answer.
Defendant Pioneer Insurance and Surety Corp. filed its manner to the Lucman having been impleaded as assignee defendant Allied Overseas
complaint (Civil Case No. R-12069) alleging affirmative and special defenses. Commercial filed a motion to dismiss on the ground of auter action
With respect to the other defendant Allied Overseas Commercial Co., pendant, that is an action pending in the Court of First Instance of Rizal, Civil
summons was (coursed thru the Philippine Consulate General in Honkong Case No. 14351 between the same parties with the same allegation and defences
which turned it down as it had no authority to serve the process under the of counterclaims. On November 25, 1971, respondent Judge denied the motion
Rules of Court. to dismiss, whereupon Lucman filed his answer to the amended complaint.
On April 27, 1971, defendant Pioneer Insurance & Surety Corp. filed a motion Upon an ex parte motion of Rodriguez, the Court declared Lucman in default
for a preliminary hearing of its affirmative defenses of lack of cause of action in its Order of January 10, 1972 and thereafter promulgated a decision dated
and bar by prior judgment and/or abandonment, which are grounds for a January 28, 1972 against Lucman only, ordering him to pay damage,- in the
motion to dismiss. This was denied by the respondent Judge in his Order amount of P150,000.00; declaring that Rodriguez was no in any manner
dated May 15, 1971, so also was the motion for reconsideration per its Order of indebted to Lucman or to Allied Overseas Commercial Co and that the
June 2, 1971. Metropolitan Bank & Trust Co. (Cebu Branch) Check No. CB2169 (xerox copy
marked Exhibit M issued iv Rodriguez to pay the indebtedness was a forgery.
On May 5, 1971, the case was called for pre-trial. Plaintiffs with counsel
attended; defendant Pioneer Insurance & Surety Corp. thru counsel was Lucman moved on February 11, 1972 to set aside the order of default and to
present The other defendant, Allied Overseas Commercial Co was not yet admit the answer earlier filed by him to the amended complaint. On February
summoned, hence absent. The parties manifested failure to settle the case 21. 1972, respondent Judge set aside the order of default against Lucman
amicably, thus the Court set the trial of the case on the merits for June 11, 1971. including the decision against him, the dispositive portion of which order
reads as follows:
A petition for certiorari and prohibition was then filed by Pioneer Insurance
and Surety Corp. on August 3, 1971 in the Court of Appeals, CA-G.R. No. WHEREFORE, the Order of Default dated January 10, 1972 as
00369-R (Record on Appeal, p. 133) with prayer to enjoin a hearing scheduled well as the decision (Re: Hadji Esmayaten Lucman) dated
on August 7, 1971, alleging that respondent Judge committed grave abuse of January 28, 1972, are hereby reconsidered and set aside. Let
discretion amounting to lack and/or excess of jurisdiction in lending the the hearing of this case on the merits be scheduled as
motion for preliminary hearing. The Court of Appeals In its Resolution dated previously set for February 28, 1972 at 8:30 o'clock in the
August 7, 1971 distributed this petition for certiorari. Record on Appeal, pp. morning.
133-137)
418 of 501
The parties thru their respective counsels are to be Apparently, the above urgent motion for postponement although sent through
immediately notified of this order. The Clerk of Court is registered airmail special delivery and received by the Dispatching Section of
directed to notify defendant Hadji Esmayaten Lucman thru the Post Office of Cebu on February 28, 1972 (Resolution, Court of Appeals,
counsel Atty. Eriberto D. Ignacio At Rm. 414, Madrigal Bldg., Recrod on Appeal, pp. 365-366) was not received by the Court for on February
Escolta, Manila by telegram. 28, 1972 when the case was called, an order was issued by the Court
postponing the pre-trial of the case to March 20, 1972 in ivew of the absence of
SO ORDERED. the defendants and counsel notwithstanding notices of hearing and telegrams
sent to them, on the condition that should defendants be found that as to
Cebu City, Philippines, February 21, 1972. (SGD.) AGAPITO plaintiffs will be allowed to present their evidence and the defendants will be
HONTANOSAS JUDGE (Record on Appeal, pp. 297-298) declared in default for failure to appear at the pre-trial. (Record on Appeal, pp.
304-305)
Forthwith, the clerk of court sent the telegram notices in the following wise:
Upon verification from the radio Communications of the Philippines that the
YOUR MOTION SET ASIDE ORDER, DEFAULT AND telegrams mentioned above were delivered and received by the addresses on
DECLARE PROCEEDINGS NULL AND VOID RE CIVIL CASE February 21, 1972, the Court on February 29, 1972 declared the defendants in
BEN RODGIGUEZ ET AL VERSUS HADJI ESMAYATEN default and allowed the plaintiffs to present their evidence in support of their
LUCMAN GRANTED STOP PRETRIAL SHALL PROCEED AS complaint before the Clerk of Court. (Record on Appeal, pp. 306-307). The
PREVIOUSLY SCHEDULED FEBRARY 28 1972 MORNING evidence was thereupon presented and on March 9, 1977 the respondent Judge
(Record on Appeal, p. 298) promulgated his Decision declaring that the plaintiff Rodriguez is not in any
manner indebted to defendant Lucman or to Allied Overseas Commercial Co.,
Counsel for the petitioners received the telegram notices on February 21, 1972; declaring the personal check of the plaintiff to be a forgery; that the
and on February 23, 1972 counsel filed an urgent motion for postponement of attachment of the properties of plaintiff in the Manila case was wrongfu; amd
the pre-trial, claiming that he was not aware of any such pre-trial having been malicious, and ordering defendant Pioneer Insurance and Surety Co. to pay
previously set for February 28, 1972 in the morning, as indeed no such pre-trial P350,000.00 as moral damages, P50,000.00 as exemplary damages and
can as yet be set as the issues with respect to the amended complaint are not P50,000.00 for expenses of litigation in Manila. Defendant Lucman was also
yet fully joined since plaintiffs have not answered the compulsory conterclaims ordered to pay plaintiffs the sum of P50,000,00 as exemplary damages and
separately set up by the defendants in said summons to theforeign P30,000.00 as attorney's fees.
corporations Allied Overseas Commercial Co. Ltd. of Hongkong, nor have
plaintiffs asked that said foreign corporation be dropped from the amended Within 30 days reglementary period to perfect the appeal, defendants Pioneer
complaint; that counsel has a hearing in Manila of a criminal case which is of Insurance & Surety Corp. and Hadji Esmayaten Lucman filed the Notice of
intransferable character, and prayed that the pre-trial be set at some other Appeal and the Original record on Appeal, the latter ordered corrected and
date in March preferably either March 22 or 23, 1972 at 9:00 a.m. which were amended but finally approved by the Court on July 31, 1972.
the only free dates for the month of March 1972 in the calendar of the counsel.
(Record on Appeal, pp. 301-303) Meanwhile, petitioner's filed on April 4, 1972 before the Court of Appeals a
petition for certiorari, prohibition and/or mandamus with preliminary
injunction CA-G.R. No. 00951-R) seeking to nullify the order of default of
419 of 501
February 29, 1972 and the Decision of March 9, 1972 of respondent Judge, to The petition having been given due course, the respondents herein answered
command said Judge to elevate the records of the case for review and to the same, and on October 30, 1972, the Court of Appeals rendered its Decision
prohibit him from enforcing his decision and from taking further action in the denying the petition for lack of merit, and held among others, thus —
case, No. 12069.
Finally we are not also convinced that the remedy of appeal is
On April 13, 1972, the Court of Appeals promulgated its resolution dismissing inadequate under the circumstances obtaining in the
the petition aforestated and ruled among others as follows: principal cue Whatever errors respondent Judge might have
committed in his order or judgment may be assigned as
Furthermore, petitioners instant remedy is not proper specific errors in their appeal. This Court can review any all
because of their own admission that appeal is available from such errors of fact and law in the appeal. (Rollo, p. 138)
the decision of respondent Judge (Discussion, pp. 12-13 of
their Petition). This is shown by the handwriting at the upper Petitioners filed a motion for reconsideration which was denied, hence this
right hand corner of Annex R (Decision) when they received appeal by certiorari from the decision of the Court of Appeals and is now
the decision on March 25, 1972 and the period to appeal will before Us being assailed and faulted on three principal issues: 1. the illegality
expire on April 24, 1972. of th order of the default and the decision arising therefrom; 2. the inadequacy
of the remedy of appeal; and 3. the lack of jurisdiction of the Court in the
We are not, therefore, convinced that the remedy of appeal is principal case.
inadequate, considering that whatever errors respondent
Judge might have committed can be assigned as specific The petitioner's main thrust in this legal attack is directed to the other dated
errors on appeal. It has been consistently held that certiorari February 29, 1972 declaring defendants (now the petitioners) in default at the
is not available where the remedy of appeal is present . eal, p. second pre-trial hearing and allowing the plaintiffs (the present private
373) respondents) to present evidence ex parte before the Clerk of Court, which
evidence uncotradicted and unrebutted was lifted almost en toto as the basis
On a motion for reconsideration, the Court of Appeals reconsidered the of the decision granting damages so enormous and so huge in amount as to
resolution cited above, and issued another resolution dated July 25, 1972 giving exceed the bounds of reason and fairness.
due course to the petition and required the respondents to answer the petition
(not a motion to dismiss), and among others, stated, to wit: The procedure for the pre-trial of a case is laid down by Rule 20, Revised Rules
of court, which provides, to wit:
Upon this fact alone, we believe as petitioners contend that
although appeal is available, such remedy is not sufficiently Sec. 1. Pre-trial mandatory. — In any action, after the last
speedy and adequate to cure the defects in the proceedings pleading has been filed, the ourt shall direct the parties and
therein or to remedy the disadvantageous position of their attorneys to appear before it for a conference to
Petitioners because, since they were deprived of raising any consider':
issue or defense that they have in the respondent court by
reason of the order of default, they cannot raise said issues or (a) The possibility of an amicable settlement or of a
defenses for the first time on appeal. 8) submission to arbitration;
420 of 501
(b) The simplification of the issues; trial court for a pre-trial conference to to consider inter alia the possibility of
an amicable settlement, the rule wa sby no means intended as an implacable
(c) The necessity or desirability of amendments to the bludgeon but as a tool to assist the trial court in the orderly and expeditious
pleadings; conduct of trial. The rule is addressed to the sound discretion of the trial court
(Rice and Corn Administration vs. Ong Ante, et. al., G.R. No. L-30558, Oct. 4,
(d) The possibility of obtaining stipulations or admissions of 1971).
facts and of documents to avoid unnecessary proofs;
Both client and counsel must appear at the pre-trial. this is mandatory. Failure
(e) The limitation of the number of witnesses; of the client to appear is a ground for dismissal. (American Ins. Co. vs.
Republic 1967D Phil. 63; Home Ins. Co. vs. United States Lines Co., 1967D Phil.
(f) The advisability of a preliminary reference of isues to a 401, cited in Saulog vs. Custombuilt Manufacturing Corp. No. L-29612, Nov. 15,
commissioner, 1968; Taroma v. Sayo, L-37296, Oct. 30, 1975 (67 SCRA 508).
(g) Such other matters as may aid in the prompt disposition In the case of Insurance Co. of the North America vs. Republic, et. al., G.R.
of the action. No.L-26794, Nov. 15, 1967, 21 SCRA 887, the Supreme Court, speaking thru
Justice Bengzon, held that Sec. 1, Rule 20 of the Rules requries the court to
Sec. 2. Failure to appear at pre-trial conference. — A party hold a pre-trial before the case is heard and since in this case, a pre-trial has
who fails to appear at a pre-trial conference may be non- already been had, the fact that an amended complaint was later filed, did not
suited or considered as in default. necessitate another pre-trial. it would have been impractical, useless and time-
consuming to call another pre-trial.
Sec. 3. Allows the ocurt to render judgment on the pleading or
summary judgment as justice require. Sec. 4 directs that a Under the rules of pleading and practice, the answer ordinarily is the last
reocrd of the pre-trial results be made; and Sec. 5 requires the pleading, but when the defendant's answer contrains a counterclaim, plaintiff's
court to prepare a pre-trial calendar of cases for consideration answer to it is the last pleading. When the defendant's answer has a cross-
as above provided, and that upon the submission of the last claim, the answer or the cross-defendant to it sit he last pleading. Where the
pleading in a particular case, it shall be the duty of the clerk of plaintiff's answer to a counterclaim contains a counterclaim constains a
court to place case in the pre-trial calendar. counter-claim agains the opposing party or a cross-claim against a co-
defendant, the answer of the opposing party to the counterclaim or the answer
Unquestionably, the present Rules make pre-trial mandatory. And the reason of the co-defendant to the cross-claim is the last pleading. And where the
for making pre-trial mandatory is that pre-trial conferences bring the parteis plaintiff files a reply alleging facts in denial or avoidance of new matter by way
together, thus making possible an amicable settlement or doing away with at of defense in the answer, such reply constitutes the last pleading. (Francisco,
least the non-essentials of a case from the beginning. (Borja vs. Roxas, 73 Phil. the Revised Rules of Court, Vo. II, pp. 2-3).
647).
The above citations and authorites are the ground rules upon which the
Philippine jurisprudence has laid down the legal doctrine that while it is true conflictings claims of the opposing partie's may be resolved and decided.
that it is mandatory for the parties and their attorneys to appear before the
421 of 501
First, the legality of the order of default dated February 29, 1971 and the objection thereto. and thereafter his incident will be resolved
decision dated March 9, 1972. there is spread out in the Record on Appeal, pp. by the Court.
92-93 that on May 5, 1971, a pre-trial. was conducted by the court between the
plaintiff Ben Uy Rodriguez spouses and the defendant Pioneer Insurance & Following agreement of the partiesm, the trial on the the
Surety Corp. The record or results of said pre-trial is found in the ordr of the merits of this case is set for June 11, 1971 at 8:30 o'clock in the
court dated May 5, 1971, which states: moring.
When this case was called for pre-trial today, the plaintiffs The parties thru their respective counsels are notified in open
and their counsel, Atty. Hilario Davide Jr. appeared. On the court of this order.
other hand, the defendant Pioneer Insurance & Surety Corp.
represented by its counsel, Atty. Amando Ignacio also SO ORDERED.
appeared.
Cebu City, Philippines, May 5, 1971. SGD.) AGAPITO
When asked by the court if there is any possibility of settling HONTANOSAS
this case amicably, the counsel for the defendant answered in
the negative. Both counsels agreed that the only issue to the
resolved bu the Court is whether the bonding company is
laible or not, and if so, how much?
Atty. Hilario Davide, Jr. caused the markings of the following

exhibit.
(
Exhibit "A-pre-trial", the finanacial report of Ben Rodriguez as R
of December 31, 1969; and e
c
Exhibit "B-pre-trial", the affidavit of handwriting expert o
Perfecto Espina, and thereafter he reserved his right to mark r
additinal exhibits during the trial on the merits. d
The counsel for the defendant also reserved his right to object o
to the Exhibits of the plaintiffs and mark his exhibits during n
the trial on the merits of the case.
A
Both counsels are given ten (10) days from today within which p
to file their simulatteneous memoranda or authorities in p
support of the motion for preliminary hearing and its e
422 of 501
a on May 5, 1971, set he trial of the case on its merits for June 11, 1971. Indeed, a
l second pre-trial is impractical, useless and time-consuming.
,
We have not lost sight of the fact that when the first pre-trial was called and
p conducted, the party litigants were the Ben Uy Rodriguez spouses as plaintiffs,
. while Pioneer Insurance & Surety Corp. and Allied Overseas Commercial Co.
(although not yet summoned) were the defendants, whereas at the time the
9 second pre-trial was called, the original complaint had been amended to
3 implead Hadji Esmayaten Lucman as additional defendant. The amendment of
) the complaint to implead Lucman did not, however, alter the impracticability,
the uselessness and the absence of authority to call a second pretrial hearing
The defendant Pioneer Insurance & Surety Corp. having complied with the since the amended complaint merely impleaded Lucman as the assignee of the
order of the Court to appear and attend this pre-trial, and had manifested its original defendant Allied Overseas Commercial Co. and no additional cause of
opposition to settling the case amicably, said party may no longer be action was alleged; the prayer was the same and the amount of damages
compelled to attend a second pre-trial hearing, and neither may it be punished sought was the same as that in the original complaint.
by the court by its orde declaring said defendant as in default. The mandatory
character of a pre-trial nad the serious consequences confronting the parties in Second, the prematureness of the pre-trial called on February 28, 1972,
the event that each party fails to attend the same must impose a strict assuming that there was need to have another pre-trial. The records (Record
application of the Rule such that where we find no authority for the the Court on Appeal, p. 293) show that the notice of the clerk of court setting the case
to call another pre-trial hearing, as in fact there is none in said Rule, the for pre-trial on February 28, 1972 was issued and dated February 7, 1972. As of
conclusion is inescapable that the respondent Judge committed a grave and this date, February 7,1972, the complaint had been amended on August 27, 1971
serious abuse of discretion and acted in excess of jurisdiction in declaring by impleading the defendant Hadji Esmayaten Lucman who filed his answer
defedant Pioneer Insurance & Surety Corp. "as in default" for failure to attend on December 24, 1971, interposing therein a compulsory counterclaim. (Record
the second pre-trial called by the Judge on February 29, 1972. In other words, on Appeal, pp. 239-240). Before this date of February 7, 1972, the court had
there is nothing in the Rules that empowers or has called a first pre-trial duly already promulgated the Decision dated January 28, 1972 as against Lucman
attended by tha prties, and lacking such authority, the court perforce lack the only.
autority to declare a failure to prosecute on the part of the plaintiff for failing
to attend such second pre-trial; it also lack the authority to declare the Likewise, as of February 7, 1972, defendant Pioneer Insurance & Surety Corp.
defendant "as in default" by reason of the latter's failure to be present at the had also filed its answer to the amended complaint, interposing too a
said second pre-trial. compulsory counterclaim. But as of February 7, 1972, the plaintiffs have not yet
filed their answer to the compulsory counterclaims of the defendants (which is
It serves no purpose for the court to call again another pre-trial where the necessarily the last pleading to be filed in order that the case is ready and ripe
parties had previously agreed to disagree, where the issues had been joined for the pre-trial). It was only on February 22, 1972 that plaintiffs made their
and where the court itself had been satisfied that a hearing on the merits is the reply to the answer, and their answer to the compulsory, counterclaim of
next step to conduct as int he instant case where the court, after the pre-trial defendant Lucman 'Record on Appeal, pp. 299- 301).
423 of 501
The records do not disclose any reply of the plaintiffs to the answer of Pioneer telegraphic messages were sent by the clerk of court, thus — (1) the message
Insurance & Surety Corp., nor any answer to the compulsory counterclaim of addressed to Atty. Eriberto Ignacio delivered to the given address at 3:45 P.M.
the Corp. The above state of the case as far as the pleadings are concerned the same day it was filed but the signature of he recipient was unreadable; (2)
clearly and manifestly show that the case was not yet ready for pre-trial, that it the other message addressed to Hadji Esmayaten Lucman per RCPI San Juan
was as yet premature because the last pleading had not yet been filed by the also delivered on the same day, February 21, 1972 and personally 4eceived by
plaintiffs. the addressee himself. This was the offficial advice received by the Court from
the Radio Communications of the Philippines thru which the telegrams were
Even the state of the pleadings as of February 21, 1972 when the telegrams were wired.
sent notifying the parties of the pre-trial for February 28, 1972 reveals the
prematureness of calendaring the case pre-trial. As of February 21, 1972, the This is also confirmed by the Order of the Court dated April 11, 1972 denying
complaint was already amended to implead Lucman who submitted his the defendant's Urgent Motion for Reconsideration. The other states.
answer with compulsory counterclaim. but plaintiffs had not yet filed their
reply and their answer to the counterclaim, because the records indicate that Per advice from the Radio Communications of the
the plaintiffs' answer to the counterclaim, because the records indicate that Philippines, Inc. these two messages were received by the
the plaintiffs' answer to the counterclaim is dated February 22, 1972. (Record addressees, Atty. Eriberto Ignacio and Hadji Esmayaten
on Appeal, pp. 299-301). And to the compulsory counterclaim of defendant Lucman on the same day it was filed, that is on February 21,
Pioneer Insurance & Surety Corp., plaintiffs made no answer whatsoever. 1972. (Record on Appeal, p. 357)
Third, the notices given by the clerk of court thru telegrams on February 21, Decidedly, there was no telegram sent to party defendant Pioneer Insurance &
1972 notifying the parties of the pre-trial on February 28, 1972 were Surety Corp., informing it of the February 28 pre-trial hearng. The reason for
insufficient, in law and jurisprudence. requiring the presence of the party who must be notified is explained in the
case of Home Insurance Co. vs. United Lines Co. (L-25593, November 15, 1967,
We have careffully noted the telegraphic notices sent by the clerk of court and 21 SCRA 863), where the Court, speaking thru Justice Bengzon, said that:
we find this omission which is fatal to the respondents' cause: no telegram was
sent to the defendant Pioneer Insurance & Surety Corp. The telegram was sent A party who fails to appear at a pre-trial conference may be
to the counsel of this defendant, but none to the defendant itself. non-suited or considered as in default. This shows the
purpose of the Rules to compel the parties to appear
The Court had directed the clerk of court to send notice by telegram to the personally before the court to reach, if possible, a
parties for the February 28 pre-trial. The clerk did send the telegram to Atty. compromise. Accordingly the court is given the discretion to
Eriberto Ignacio, counsel for Pioneer Insurance & Surety Corp., but omitted dismiss the case should plaintiff not appear at the pre-trial.
and failed to send telegram to the party itself, the corporation, as required
strictly by law. Notice to the counsel is not enough. We reiterate — that this Fourth, the denial of the motion for postponement was a grave abuse of
failure is a jurisdictional defect. discretion. We grant the court the discretion to postpone any hearing, pre-trial
or on the merits of the case, but the exercise of discretion must be based on
Reading the order of the court dated february 29, it appears in black and white reasonable grounds. The motion (Record on Appeal, pp. 301-303) had alleged
(Record on Appeal, pp. 306-307, Annex W, Rollo, p. 194) that only two grounds which are meritorious and not frivolous nor intended for delay, which
424 of 501
are — 1. no formal order of the court scheduling the February 28 pre-trial had At this juncture, it is necessary to emphasize once more the pronouncement of
been received; 2. pre-trial cannot be had as yet be set as the issues are not yet this Court speaking through Justice Teehankee in Taroma vs. sayo, 67 SCRA
fully joined; 3. counsel has a hearing previously set in Manila in a criminal case 509, pp. 512-513, that:
which was of an intransferable character. We are also concede that counsel
may not presume nor take for granted that his motion for postponement and For the guidelines of the bench and bar, therefore, the Court
the proposed setting to March 22 or 23, 1972 will be granted by the court but in reaffirminf the ruling that notice of pre-trial must be served
where the court had actually postponed the hearing on February 28, 1972 due separately upon the party and his counsel of record, retates
to the absence of the defendants and their counsel, and scheduled the pre-trial that while service of such notice to party may be made
to March 20, 1972 at 8:30 o'clock in the morning (Record on Appeal, pp. 304- directly to the party, it is best that the trial courts uniformly
306), we find no reason nor fairness in the court's order of February 29, 1972 serve such notice to party through or care of his counsel of
finding defendants as in default since the pre-trial was moved to a later date in the obligation of notifying the party of the date, time and
March as prayed in the motion. palce of the pre-trial conference and assuring that the party
either appear thereat or deliver to counsel a written authority
The motion for postponement was received on February 28, 1972 at the Cebu to represent the party with power to compromise the case,
Post Office, as shown in the postmarks on the envelope (photographed on p. with the warning that a party who fails to do so may be non-
322, record on Appeal) but was not immediately delivered to the court suited or declared in default.
although the envelope bore the words, "registered Air Mail/Special Delivery
with Return Card." If the letter containing the moton was not yet delivered to The second point at issue is whether the remedy of ordinary appeal in the case
the Court the next day, February 29, 1972 when the court made the order is palin, speedy and adequate such that the writ of certiorari will not lie. We
declaring defendants in default, this was clearly a postal neglect and omission have adverted to previously that the Court of Appeals in its extended
to perform its duty, not attributable to defendants, The Court, in the exercise Resolution dated July 25, 1972 ruled that although appeal was available, such
of wise discretion, could have restored their standing in court and given them remedy is not sufficiently speedy and adequate to cure the defects in the
an even chance to face their opponents. proceedings therein or to remedy the disadvantageous position of petitioners
because, since they were deprived of raising any issue or defense that they
For refusing to set aside said order of default and the decision, we hold the have in the respondent court by reason of the order of default, they cannot
Court of Appeals in reversible error therefor. The respondent Court of Appeals raise said issue or defense for the first time on appeal. Yet, on October 30, 1972,
has ignored established rulings of the Supreme Court in Pineda vs. Court of the Court in its decision held that the remedy of appeal is not inadequate in
Appeals, 67 SCRA 228, that a party may not be declared in default for future to that whatever errors respondent Judge might have committed in his order or
attend the pre-trial where only his counsel was notified of the pre-trial judgment may be assigned as specific errors in their appeal before said
schedule; in Sta. Maria, Jr. vs. Court of Appeals, 45 SCRA 596 that a pre-trial is tribunal, and that it can review any errors of fact and of law in the appeal.
unnecessary where the case could not be settled and that the fact that an
amended complaint was later filed with leave of court did not, undue the This conflicting stand of the Court of Appeals issuing from the same case is as
circumstances, necessitate another pre-trial; and in Pineda vs. Court of difficult to resolve as it is to reconcile them. We have but to rule on them. hold
Appeals, 67 SCRA 288 that Courys should be liberal in setting asiode default one to be correct and dislodge the other as an error.
judgment.
425 of 501
On general principles, the writ of certiorari will lie where there is no appeal, with such force to induce Us to grant the writ in order to prevent a total or
nor any plain, speedy and adequate remedy in the ordinary course of law. The partial failure of justice, to redress or prevent the wrong done. We are satisfied
existence of an appeal is a bar to writ of certiorari where such appeal is in itself that petitioners are cornered into a desperate position where they have been
a sufficient and adequate remedy, in that it will promptly relieve the petitioner ordered to pay damages over and above the amount of the bond posted for the
from the injurious effects of the order or judgment complained of. (Silvestre v. attachment of private respondents' properties as ordered by the decision of the
Torres, 57 Philippines 885, 890; Pachoco v. Tumangday L-14500, May 25, 1960; court based on evidence presented ex parte by reason of the order of default,
Lopez et al. v. Alvendia, et al. L-20697, Dec. 24, 1964). Courts ordinarily do not and more than that, plaintiff Rodriguez is relieved from civil liability on an
deny the writ if the result would be to deprive a party of his substantial rights inexplicable and unprecedented finding that the plaintiffs' check was a forgery,
and leave him without remedy, and in those instances wherein the lower court (when the check exhibited was only a xerox copy of the original, which
has acted without jurisdiction over the subject matter, or where the order or original was in the records of the case filed in the court of First instance of
judgment complained of is a patent nullity, courts have gone even as far as to Rizal, Civil Case No. 14499 entitled "Hadji Esmayaten Lucman vs. Benjamin
disregard completely the question of petitioner's fault, the reason being, Rodriguez, et al.," (Record on Appeal, pp. 49-55). Again, the conflicting notices
undoubtedly, that acts performed with absolute want of jurisdiction over the as to the hearing ordered, pre-trial in one and on the merits in the other, is not
subject matter are void ab initio and cannot be validated by consent, express the doing of the petitioners of their standing in court was in effect a failure of
or implied, of the parties. (Moran, Comments on the Rules of Court, Vol. 3, justice. Petitioners can no longer present their evidence to rebut the claim of
1970 ed., pp. 169-170). damages, or reduce the unconscionable and excessive damages or question the
release of plaintiff's debt, for the same may not be submitted nor raised for the
There are numerous cases where the Supreme Court has granted the writ first time on appeal. We, therefore, hold that the Court of Appeals erred in
notwithstanding the existence of an appeal. Thus, the Supreme Court to avoid holding that the appeal is adequate. The court erred in ignoring the doctrine
future litigations, passed upon a petition for certiorari though the proper laid down in Omico v. Villegas, 63 SCRA 285, that appeal is not an adequate
remedy was appeal. Writs have been granted despite the existence of the remedy where party is illegally declared in default.
remedy of appeal where public welfare and the advancement of public policy
so dictate, the broader interests of justice so require, or where the orders Petitioners assail the jurisdiction of the court of First Instance of Cebu in Civil
complained of were found to be completely null and void, or that the appeal Case No. 12069-R filed by the Rodriguez spouses, seeking damages for the
was not considered the appropriate remedy. (Fernando v. Varquez, No. L- alleged malicious and unlawful is2suance of the writ of preliminary
26417, Jan. 30, 1970) attachment against the latter's properties granted by the Court of First
Instance of Manila upon the posting of a security bond in the amount of
As to what is an adequate remedy, it has been defined as "a remedy which is P450,000.00 given by the petitioner Pioneer Insurance & Surety Corp. The
equally beneficial, speedy and sufficient, not merely a remedy which at some petitioners contend that under See. 20, Rule 57 of the Revised Rules of Court,
time in the future will bring about a revival of the judgment of the lower court the claim for damages against a bond in an alleged wrongful attachment can
complained of in the certiorari proceeding, but a remedy which will promptly only be prosecuted in the same court where the bond was filed and the
relieve the petitioner from the injurious effects of that judgment and the acts attachment issued.
of the inferior court or tribunal." (Silvestre v. Torres, 57 Phil. 885, 11 CJ., p. 113)
Rule 57, Sec. 20 of the Revised Rules of Court provides, to wit:
Now to the case at bar, We find here a number of special facts and
circumstances which addresses themselves to the wise discretion of this court
426 of 501
Claim for damages on account of illegal attachment. If the attachment can only be prosecuted in the same court where the bond was filed
judgment on the action be in favor of the party against whom and the attachment issued.
attachment was issued, he may recover, upon the bond given
or deposit made by the attaching creditor, any damages Moreover, the records show that private respondent Rodriguez filed an
resulting from the attachment. Such damages may be Application for Damages Against Bond dated December 3, 1970 (Record on
awarded only upon application and after proper hearing, and Appeal, pp. 77-81) praying that —
shall be included in the final judgment. The application must
be filed before the trial or before appeal is perfected or before Wherefore, it is respectfully prayed that in the event the
the judgment becomes executory, with due notice to the motion to dismiss and the motion to discharge attachment
attaching creditor and his surety or sureties, setting forth the were granted, the defendant be allowed to present evidence to
facts shaking his right if damages and the amount thereof. prove damages sustained by him by reason of the attachment
against the Pioneer Insurance & Surety Corp. in a hearing that
xxx xxx xxx may be conducted for the purpose with due notice to the
plaintiff and the surety, and that after due notice and hearing
On the other hand, the private respondents argue that the above rule is not judgment be rendered against the Pioneer Insurance and
applicable to the case at bar, citing Moran, Vol. Rules of Court, 1963 pp. 51-52, Surety Corp. for such amount of damages as may be proved
to wit: and established for defendant.
... the rule that a claim for damages arising from the issuance The defendant further prays for such other reliefs and
of a wit of attachment, injunction, receivership and replevin remedies consistent with law, justice and equity.
should be presented in the same action is not applicable
where the principal case has been dismissed for lack of Cebu City, December 3, 1970.
Jurisdiction and no claim for damages could therefore have
beer presented in said case. The Court of First Instance of Manila in its order dated Dcember 22, 1970, after
dismissing the complaint and lifting the writ of preliminary attachment,
The position of the petitioners is correct. The ruling in the case of Santos vs. ordered that the hearing of the application for damages against the bond be
Court of Appeals, et al., 95 Phil. 360 advanced by respondents to support their set aside on January 14, 1971 at 8:30 a.m. (Record on Appeal, pp. 82-86)
stand, is not controlling here, or We find that no claim for damages against
the surety bond in support of a preliminary. attachment was ever presented or In other words, defendant Rodriguez sought that judgment be rendered
filed. The latest decisions of this Court in Ty Tion et al., vs. Marsman & Co., et against the surety for such amount of damages as may be proved or
al., L-17229, July 31, 1962, 5 SCRA 761 reiterating the rulings in Del Rosario vs. established by him, and was granted by the court the opportunity to prove
Nava, 50 O.G. 4189; Estioco vs. Hamada, L- 11079, May 21, 1958; Neva Españ;a damages against the bond of the surety company. He even cited the very
vs. Montelibano, 58 Phil, 807; Tan Suyco vs. Javier, 21 Phil. 82; Raymundo vs. provision of the Revised Rules of Court, Rule 57, Sec. 20 to justify his
Carpio, 33 Phil. 894; Santos v. Moir,36 Phil. 350; lay down the proper and application, and the cases supporting his application, for otherwise his claim
pertinent rule that the claim for damages against a bond in an aleged wrongful will forever be barred. In effect, at this point in time, defendant Rodriguez
427 of 501
waived the lack of jurisdiction on his person, be seeking an affirmative relief

from the court, which he cannot now complain before this Court.
Thus, Francisco, in his Revised Rules of Court, Vol. 1, p. 130 citing 21 C.J.S.
writes that:
Objections to lack of jurisdiction of the person, and other

objections to jurisdiction not based on the contention that
there is an absolute want of jurisdiction of the subject matter,
are waived by invoking the court's jurisdiction, as by a
counterclaim, consent, or voluntary submission, to
jurisdiction, or conduct amounting to a general appearance.
In Soriano v. Palacio, 12 SCRA 557, this Court held that even if jurisdiction was
not originally acquired by the Court over the defendant due to allegedly
defective services of summons, still when the latter filed a motion for
reconsideration of the judgment by default, he is considered to have submitted
to said court's jurisdiction.
We agree with the petitioners that the Court of Appeals erred in not
dismissing the complaint with respect to the petitioner Pioneer Insurance &
Surety Corp., over which respondent-appellee Judge had not acquired
jurisdiction pursuant to Sec. 20, Rule 57 of the Revised Rules of the Court.
IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is

reversed and another one is entered declaring the order of default dated
February 29, 1972 and the decision rendered by the respondent Judge on
March 9, 1972 null and void, holding that the Court of First Instance of Cebu
lacks jurisdiction to hear and determine the claim for damages arising from
the alleged wrongful attachment issued by the Court of First Instance of
Manila and ordering the dismissal of that case (Civil Case No. 12069 of the
Court of First Instance of Cebu), as well as the pending of the judgment herein
annuled in the Court of Appeals which has been rendered moot.
Petition granted.
428 of 501
1) Dismissing the complaint for lack of merit;

Stronghold Insurance v. CA, November 6, 1989
2) Declaring that the plaintiff was not
SECOND DIVISION entitled to the Writ of Replevin, issued on
January 7, 1985, and is now liable to the
G.R. No. 84979 November 6, 1989 defendant for actual damages under the
Replevin bond it filed;
STRONGHOLD INSURANCE CO. INC., petitioner,
vs. 3) On defendant's counterclaim, ordering the
HON. COURT OF APPEALS, HON. CLEMENTE M. SORIANO, Presiding plaintiff to pay the defendant the sum of
Judge of Branch 3, Regional Trial Court of Manila, Sheriff JAIME K. DEL P400,000.00 as moral damages; P100,000.00
ROSARIO, Deputy Sheriff of Branch 3, Regional Trial Court of Manila, as exemplary damages, and P50,000.00 as,
and JOSE OROSA, respondents. and for, attorney's fees;
Santos, Gascon, Cuartero & Associates for petitioner. 4) Ordering the plaintiff to return to the
defendant the subject 1983 Ford Laser Sedan,
Aladdin F. Trinidad for respondent Orosa. with Motor or Serial No. SUNKBT 14584, or
its equivalent, in kind or value, in cash as of
this date and to pay the costs.
REGALADO, J.: Copy of the decision was received by private respondent on April 11, 1988 while
petitioner received a copy thereof on April 13, 1988. On the following day, April
In a complaint filed against private respondent Jose Orosa, dated November 13, 14, 1988, private respondent Orosa filed a motion for execution of the
1984 and docketed as Civil Case No. 8428188 in Branch 3 of the Regional Trial judgment pending appeal, alleging that the judgment in the case may be
Court of Manila, therein plaintiff FCP Credit Corporation prayed that a writ of rendered ineffective because FCP Credit Corporation was already liquidating
replevin be issued against private respondent Jose Orosa ordering the seizure its business affairs. He expressed his willingness to file a bond for such
4
of the motor vehicle covered by a chattel mortgage executed in favor of said purpose. Petitioner opposed said motion through a "Motion for Partial
1
plaintiff. Upon the filing of an affidavit of merit and a replevin bond put up by Reconsideration of the Decision and Opposition to the Motion for
2 5
petitioner Stronghold Insurance Co., Inc. in the amount of P210,000.00, a Execution" filed on April 26, 1988, on the following grounds, as summarized
writ of replevin was issued by the court a quo. by the respondent court, to wit:
3
On March 25, 1988, judgment was rendered by the trial court with the 1. The petitioner was adjudged liable in the
following dispositive portion: decision without the benefit of hearing in
violation of Rule 57, Section 20 in relation to
WHEREFORE, judgment is rendered for the defendant, and Section 10, Rule 60, Rules of Court;
against the plaintiff:
429 of 501
11
2. The petitioner being not a party to the plaintiff is in imminent danger of insolvency or dissolution." The motion for
proceedings, judgment against it could not partial reconsideration of the decision and opposition to the motion for
be rendered without violating the elementary execution filed on April 26, 1988 by petitioner was likewise denied for lack of
12
rules of procedure; merit in another order on the same date.
3. The allegations in private respondent's Respondent Orosa's right to recover damages on the replevin bond and the
motion for execution pending appeal are liability of herein petitioner for said damages and for all the sums of money
purely speculative, self-serving conclusions recovered in the case in the lower court by therein defendant against the
and without factual basis; plaintiff, jointly and severally with the plaintiff to the extent of the value of the
bond, was held to be unquestionable in an order of the court a quo dated June
13
4. The exact liability of the bondsman is not 6, 1988.
6
specified.
The following day, June 7, 1988, the trial court issued what was designated as a
An application for judgment on the bond was thereafter filed by private "supplemental decision," which reads:
respondent Orosa on April 26, 1988, adopting by reference his motion for
7
execution of judgment pending appeal and the findings of the trial court. An Pursuant to the order of June 6, 1988 and Sec. 10, Rule 60 of
opposition thereto was filed by petitioner on the contentions that the appeal the Rules of Court, and by way of supplement to the decision,
had been perfected hence the trial court had already lost jurisdiction to hear dated March 25, 1988, judgment is hereby rendered, for the
therein defendant's motion; that the application for damages does not set defendant, ordering the Surety, Stronghold Insurance Co.,
forth the facts showing his right thereto and the amount thereof; and that the Inc., jointly and severally with the plaintiff, to return to the
8
motion is fatally defective for lack of the requisite three (3) days notice. defendant, the 1983 Ford Laser 1.5 Sedan involved, or its
equivalent in kind or in cash, as of the date of the said
The hearing on the application was scheduled on April 29, 1988, but the herein decision (March 25, 1988), to pay him the damages specified
private respondent Orosa and his counsel failed to appear therein. in the said decision, to the extent of the value of the replevin
Consequently, petitioner's counsel orally moved for the denial of said bond which is P210,000.00, with costs against the said
14
application for judgment on the bond, but the court below denied said motion Surety."
9
and declared all incidents submitted for resolution. In the meantime, action
on therein plaintiff 's notice of appeal and motion to elevate the records to the Respondent Deputy Sheriff Jaime Del Rosario, by virtue of the order of
Court of Appeals, which were earlier filed on April 14, 1988, was held in execution pending appeal, levied upon the properties of petitioner and
10
abeyance by the court. garnished its funds with Far East Bank and United Coconut Planters Bank on
June 17, 1988. A few days thereafter, on June 22, 1988, petitioner filed a petition
In a special order dated June 3, 1988, the trial court ordered the issuance of a for certiorari, with a prayer for preliminary injunction and/or restraining
writ of execution pending appeal upon respondent Orosa's filing of a bond in order, in respondent court where it was docketed as CA-G.R. SP No. 14938.
the amount of P500,000.00. The special reasons cited by the court for said Petitioner sought therein the annulment of the orders of the trial court dated
immediate execution are (1) "defendant's willingness to file a required bond to June 3 and 6, 1988, the supplemental decision of June 7, 1988 and the writ of
answer for damages in the case of reversal of the judgment" and (2) "the execution issued in Civil Case No. 84-28188.
430 of 501
Significantly, even after the filing of the petition for certiorari with the The rule is clear that where the judgment in an action is in favor of the party
appellate court, the trial court acted on several motions filed either before or against whom the writ of replevin was issued, he may recover damages
after said petition was instituted. On the same day of the filing of said petition, resulting therefrom and the replevin bond required under Section 2, Rule 60 of
an order was issued by the trial court supplementing its order of execution the Rules of Court may be held to answer for this purpose. The procedure to
pending appeal dated June 3, 1988 by ordering private respondent Orosa to file hold the surety liable upon the replevin bond is provided for under Section 10
15
an additional bond in the amount of P200,000.00. of the same rule in relation to Section 20 of Rule 57. Compliance with the
following requisites is essential:
An "Urgent Omnibus Motion for Reconsideration with Prayer for Restraining
Order," dated June 24, 1988, was filed by the petitioner with the trial court, ... (1) the filing of an application therefor with the Court
alleging that "there exists no good and valid reasons to justify execution having jurisdiction of the action; (2) the presentation thereof
pending appeal against SICI considering that it is very solvent and any final before the judgement becomes executory (or before the trial
16
judgment against it would surely be satisfied." The motion was denied for or before appeal is perfected); (3) the statement in said
lack of merit on June 27, 1988. application of the facts showing the applicant's right to
damages and the amount thereof; (4) the giving of due notice
Likewise, the trial court denied on July 6, 1988 the motion of therein plaintiff, of the application to the attaching creditor and his surety or
dated June 20, 1988, for the reconsideration of the special order of the court sureties and (5) the holding of a proper hearing at which the
17
issued on June 3, 1988. attaching creditor and sureties may be heard on the
application. These requisites apply not only in cases of seizure
On July 11, 1988, upon an ex parte motion, the trial court directed the or delivery under Rule 60, but also in cases of preliminary
22
enforcement of the writ of execution pending appeal against therein plaintiff injunctions under Rule 58, and receiverships under Rule 59.
18
FCP Credit Corporation alone. Later, on August 5, 1988, another order was
19
issued this time directing its enforcement against petitioner. Petitioner To avoid multiplicity of suits, all incidents arising from the same controversy
moved for the reconsideration of said order and in the hearing of said motion, must be settled in the same court having jurisdiction of the main action. Thus,
its counsel adduced additional arguments in support thereof. The court was the application for damages must be filed in the court which took cognizance
informed that its application for a writ of injunction was already submitted for of the case, with due notice to the other parties.
20
resolution by the Court of Appeals.
The timeliness of the application for judgment on the bond in this case, as well
Eventually, the application for a writ of injunction referred to by petitioner as the motion for immediate execution, is apparent because it was filed before
was granted by the Court of Appeals on August 26, 1988. Nevertheless, the the appeal was perfected. The fact that one of the parties had filed a notice of
same writ was lifted and set aside when the petition for certiorari was appeal does not perfect such appeal. An appeal is perfected upon the lapse of
23
dismissed in a decision promulgated by respondent court on September 9, the last day for all parties to appeal.
21
1988 in CA-G.R. SP No. 14938. No grave abuse of discretion was found to
have been committed by the trial court in issuing the questioned orders. It should also be noted that the filing of the application for judgment on the
bond by private respondent Orosa was in the nature of a motion for
Hence, this petition to set aside and annul the aforesaid decision of reconsideration under Section l(c), Rule 37 of the Rules of Court, which
24
respondent court. consequently had the effect of interrupting the period to appeal. This being
431 of 501
so, the order holding in abeyance plaintiff 's notice of appeal was not even Independent of the foregoing considerations, neither does the petitioner have
necessary and was an apparent superfluity. the right to question the "supplemental judgment" of the trial court. As
already stated, the application for judgment on the bond was in the nature of a
Petitioner nevertheless claims that there was failure to hold a proper hearing. motion for reconsideration, hence the resolution thereof constitutes a final
Such requirement, however, has been held to mean that "the hearing will be and appealable order. Appeal being the proper and then available remedy, the
summary and will be limited to such new defenses, not previously set up by original action for certiorari does not lie and cannot substitute for the remedy
the principal, as the surety may allege and offer to prove. The oral proof of of appeal that was thereafter lost.
damages already adduced by the claimant may be reproduced without the
necessity of retaking the testimony, but the surety should be given an We cannot, however, sanction the execution pending appeal which was
25
opportunity to cross-examine the witness or witnesses if he so desires. In the authorized in this case. The order for advance execution must be struck down
present case, as respondent court correctly pointed out, petitioner did not for lack of the requisite good reasons therefor. It is already settled that the
allege and offer to prove any new defense not previously set up by the mere filing of a bond does not warrant execution pending appeal. To consider
principal. Furthermore, the grounds relied upon in its opposition to the the mere filing of a bond a good reason would precisely make immediate
application requires no hearing for their proper consideration by the court a execution of a judgment pending appeal routinary, the rule rather than the
26
quo, aside from the fact that the trial court adequately and particularly exception.
resolved them in its order of June 6, 1988.
The alleged imminent danger of insolvency of plaintiff FCP Credit Corporation
If petitioner really had additional defenses, if should have asked for the does not also constitute a good reason for immediate execution. In the
opportunity to present the same when the motion to dismiss the application aforecited Philippine National Bank case, we ruled that where there are two or
for judgment on the bond was denied. This is also true with respect to the more parties who are held to be solidarily or subsidiarily liable for the
cross-examination of the witnesses which petitioner is now belatedly asking judgment account, the insolvency of one will not justify immediate execution
for.While there was no one to cross-examine during the hearing of the where the others are capable of paying the obligation. The obligation of
application for judgment on the bond because of private respondent's absence. petitioner surety company and the plaintiff corporation in the case at bar
Petitioner could have invoked and insisted on such right. Further, even if is in solidum. Their agreement states that the principal and the surety therein
private respondent had appeared during the hearing, it could reasonably be jointly and severally bound themselves "in the sum of TWO HUNDRED TEN
expected that no witnesses would be presented since the application for THOUSAND PESOS ONLY (P210,000.00) Philippine Currency for the
judgment on the bond relied mainly on the same grounds that were already prosecution of the action, for the return of the property to defendant, if the
presented in court and were subject of the trial on the merits, or were at least return thereof be adjudged, and for the payment ... of such sum as may in the
27
already of record. To repeat, had petitioner been sincere in the stance that it cause be recovered against the plaintiff, and costs of the action."
now takes to create an issue, it should have demanded its right to cross-
examine such witnesses as it was minded to. As it turned out, the opportunity IN VIEW OF THE FOREGOING, the order of the trial court, dated June 3,
to so demand was present but petitioner did not care to do so. Instead, it 1988, ordering the issuance of a writ of execution pending appeal, as well as
preferred to stick to its stand that the application should be denied for failure the other orders for its implementation, are hereby ANNULLED and SET
of respondent Orosa to appear during the hearing. The petitioner should, ASIDE. In all other respects, the decision of respondent Court of Appeals is
therefore, suffer the consequences of its inexplicable inaction and conscious AFFIRMED.
omission.
432 of 501
SO ORDERED.
Melencio-Herrera, (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.
Carlos v. Sandoval, 471 S 266 (See under Section 3 page 112)

433 of 501
On November 16, 1979, Neville Lamis Enterprises through its proprietor

Maningo v. IAC, 183 S 691 Neville Lamis, filed a complaint for specific performance with damages against
Santiago Maningo before the Court of First Instance (now Regional Trial
G.R. No. 73559-62 March 26, 1990 Court) of Pasig, Rizal, docketed as Civil Case No. 35199, to enforce a
Memorandum Agreement entered into by them.
THE HEIRS OF THE LATE SANTIAGO MANINGO NAMELY: PIOGUITA C.
VDA. DE MANINGO, JANNILDA C. MANINGO, MARY LOU C. MANINGO, During the pendency of the case, on December 8, 1979, Maningo instituted a
and MINORS: SANTIAGO C. MANINGO JR., CORAZON C. MANINGO, complaint against Lamis for collection of a sum of money with preliminary
CHRISTINE C. MANINGO, ENGELBERT C. MANINGO (ALL attachment before the RTC-Tagum, Davao, docketed as Civil Case No. 1395.
REPRESENTED IN THIS PETITION BY THEIR MOTHER, PIOGUITA C. The following day, on December 9, 1980, the court issued a writ of preliminary
VDS. DE MANINONGO), petitioners, attachment upon a bond of P100,000.00 issued by Paramount Insurance
vs. Corporation. As a consequence thereof, the Deputy Provincial Sheriff levied
INTERMEDIATE APPELLATE COURT, NEVILLE V. LAMIS ENTERPRISES upon certain personal properties of Lamis. The latter filed an ex-
and NEVILLE V. LAMIS, respondents. parte manifestation with the Provincial Sheriff for the suspension of the levy
on the ground that Civil Case No. 1395 was merely a duplicity of Civil Case No.
35199 which was pending in the CFI (now RTC) of Pasig. Lamis further moved
for the dismissal of Civil Case No. 1395 based on lis pendens and for improper
MEDIALDEA, J: venue. The court denied the motion in an order dated April 2, 1981.
This is a petition for review on certiorari seeking the reversal of the decision Lamis went on certiorari to this Court in a petition filed on July 1, 1981
rendered by the Intermediate Appellate Court (now Court of Appeals) on docketed as G.R. No. 57250. On October 30,1981, We rendered a decision
November 18, 1985, dismissing the following cases: 1) AC G.R. SP No. 03725, granting the petition and ordering the dismissal of Civil Case No. 1395. Said
entitled, "The Heirs of the late Santiago Maningo, et al. vs. Hon. Adolfo Alba, as decision became final on April 8, 1982.
Presiding Judge of RTC Davao, et al., 2) AC-G.R. SP No. 04480 entitled,
Pioquita Vda. de Maningo as Administratrix of the Estate of Santiago Maningo Four months later, on August 2, 1982, Lamis filed an urgent ex-parte motion in
vs. Judge Jose R. Nolasco of the RTC, Tagum, Davao, et al., 3) AC-G.R. SP No. Civil Case No. 1395 for the confiscation of Maningo's attachment bond. The
04517 entitled, "Paramount Insurance Corporation vs. Hon. Jose R. Nolasco, et lower court, on October 18, 1982, issued an order setting for hearing the issue
I al., and 4) AC-G.R. SP No. 04377 entitled, "Pioquita Vda. de Maningo vs. Hon. of damages.
Judge Adolfo Alba, et al."
At the said hearing for the reception of evidence on damages suffered by
The antecedent facts in the aforestated cases as found by the I respondent Lamis, both the surety, Paramount Insurance Corp. and Maningo objected to
appellate court are as follows: the hearing.
AC-G.R. SP No. 03725 On December 22, 1 982, Maningo filed a petition for certiorari and prohibition
with this Court, docketed as G.R. No. 62733, alleging the following: That Lamis
failed to comply with Section 20, Rule 57, which provides that the application
434 of 501
for damages must be made before entry of judgment in the subject case; that orders of th lower court. Upon dismissal thereof, the present petition was filed
Lamis filed his application for damages only after final judgment; that Lamis' by the heirs of Santiago Manigno.
claim for damages could not by law, exceed the attachment bond; and that in
G.R. No. 57250, Lamis is not entitled to the possession of the tractor unit, AC-G.R. No. 04480
which is one of properties attached. The petition was dismissed by this Court
in a resolution dated February 28, 1983, for lack of merit. This became final on On December 11, 1981, the late Santiago Maningo filed with the Regional Trial
May 4, 1983. Court of Tagum, Branch I, Davao City, a complaint for Foreclosure of Chattel
Mortgage, interest, damages and attorney's fees with prayer for attachment
In view of the dismissal, Lamis filed a motion for the execution of this Court's against Neville Lamis Enterprises, Neville Lamis and others, docketed as Civil
resolution in G.R. No. 62733 and a motion in Civil Case No. 1395 to be allowed Case No. 147 (Santiago Maningo (deceased), as substituted by his heirs thru
to present evidence for the confiscation of Maningo's attachment bond and for Special Administratrix, Mrs. Pioquita Vda. de Maningo v. Neville Y. Lamis
damages. Enterprises and Neville Lamis). The complaint was later amended to Replevin,
damages and attorney's fees.
However, on August 14, 1983, Santiago Maningo died intestate and his counsel
moved for the dismissal of Case No. 1395 on the ground that the heirs are no On December 21, 1981, the court issued an order for the seizure of a bulldozer,
longer interested in the prosecution of the case. upon a replevin bond of P340,000 by Paramount Insurance Corporation.
The lower court, on December 28, 1983, denied the above motion and set the On May 25,1982, Lamis moved for the dismissal of the aforesaid Civil Case No.
case for hearing. 147 and to cite Maningo for contempt on the ground of litis pendencia or
multiplicity of suits; that the said case is barred by the pendency of his Civil
In the meantime, on March 6,1984, the court issued an order requiring the Case No. 35199 then pending with Regional Trial Court of Pasig and also by the
sheriffs to take into custody in favor of Lamis1 all attached properties still prior judgment of this Court in G.R. No. 57250 dismissing Civil Case
unreleased by Maningo.
No. 1395 filed by Maningo.
On March 13, 1984, the intestate proceedings of the late Santiago Maningo
began in the RTC of Davao, docketed as Sp. Proc. 248. On July 2, 1982, Lamis filed with this Court a petition for certiorari and
prohibition, docketed as G.R. No. 61419, to dismiss Civil Case No. 147
On May 24, 1984, the lower court issued two orders: 1) an order requiring the
surety to pay Lamis the sum of P100,000.00 as the total claim for damages by One and a half years later, on June 11, 1984, Lamis filed a motion in Civil Case
reason of the unlawful attachment; and 2) another order for the issuance of a No. 147 for the reception of evidence on the damages he sustained by reason of
writ of execution against the surety. The hearing for the reception of evidence the issuance of the writ of replevin. Despite objections by the surety,
against the heirs was reset to another date. Paramount Insurance Corporation, the lower court granted the said motion,
and in an - order dated September 20, 1 984, it required the Estate of Maningo
Hence, on July 10, 1984, the heirs of Manigno filed with the Intermediate to pay to Lamis, compensatory damages by reason of the unlawful issuance of
Appellate Court, a petition for certiorari, mandamus, with preliminary replevin.
injunction dockected was AC-G.R. SP No. 03725, seeking to set asice all the
435 of 501
The Administratrix of Maningo's estate filed a petition for certiorari with Nolasco of the Regional Trial Court of Tagum, Davao and against Lamis. We
preliminary injunction with this Court seeking the dismissal of Lamis' action referred the case to the Intermediate Appellate Court (now Court of Appeals)
for damages in the lower court. We, however, referred the case to the on October 8, 1984. On November 18, 1985, the Intermediate Appellate Court
Intermediate Appellate Court for proper determination docketed as AC-G.R. (now Court of Appeals) rendered judgment on the above four cases, namely,
SP No. 04480. SP-03725, SP-04480, SP-04517 and SP-04377, the dispositive portion of which
states:
SP-04377
WHEREFORE, premises considered, the petitions in SP-
In the meantime, in an order dated September 20, 1984, the Regional Trial 03725, SP-04480 and SP-04517 are all dismissed with costs
Court in Civil Case No. 147 awarded Lamis, et al. the amount of P7,677,177.00 against the qqqw petitioners, while in SP-04377 including the
as compensatory damages by reason of the issuance of the writ of replevin. On PNB's intervention thereon, the petition is also dismissed
September 21, 1984, writs of execution were issued by the court and the cash insofar as the orders of Judge Adolfo Alba dated September 25
deposits of Santiago Maningo, now deceased, with the Philippine National and 26,1984 in SP Proc. No. 248 are concerned. However, his
Bank, Davao Branch and the Bank of the Philippine Islands, Davao Branch, (Judge Alba) orders dated September 29, 1984, October 1,
were ordered garnished. On September 25,1984, Lamis filed an ex-parte 1984, October 2,1984 and October 3,1984 are hereby annulled
application in Special Proceedings No. 248, for the release of Maningo estate's and set aside. No costs.
garnished deposits which was granted, and an order was issued directing the
banks concerned to release to the sheriff the cash deposits of Maningo. Prior SO ORDERED.(p. 88, Rollo)
to the issuance of the above-stated order, however, the court had authorized
the Special Administratrix of Maningo's estate to withdraw in cash from the Hence, the present petition, which was filed on February 19, 1986. We issued a
Philippine National Bank, Davao Branch, the amounts of P654,963.03 and temporary restraining order on February 20, 1986, against the implementation
P90,829.45. On a motion for clarification, the court issued an order on of the orders of the trial court on the award of damages, and the decision of
September 26, 1984, setting aside its previous order allowing the special the Intermediate Appellate Court (now Court of Appeals).
administratrix to withdraw the amount from the bank, and declared the
branch manager and branch attorney of PNB in contempt of court. Aggrieved, For Us to consider is the following error assigned by petitioners:
Pioquita Vda. de Maningo, special administratrix
THE RESPONDENT HONORABLE INTERMEDIATE
SP-04517 APPELLATE COURT, WITH ALL DUE RESPECT, HAS
DEPARTED FROM THE ACCEPTED AND USUAL COURSE
On the other hand, on September 21, 1984, the surety, Paramount mount OF JUDICIAL PROCEEDINGS AND/OR SANCTIONED SUCH
Insurance Corporation, appealed to the respondent appellate court from the DEPARTURE OF THE LOWER COURT WHEN IT AFFIRMED
order of the trial court making it liable for the sum of P340,000.00. On the THE PROCEEDINGS CONDUCTED BY THE LOWER
same date, the trial court issued a writ of execution of Civil Case No. 147. COURTS (RTC-TAGUM, DAVAO, BRANCH II IN CIVIL CASE
NO. 1395 AND RTC-TAGUM, DAVAO BRANCH I IN SP.
The surety, Paramount Insurance Corporation, filed with this Court a petition CIVIL CASE NO. 147), IN ALLOWING RESPONDENT LAMIS
for certiorari, prohibition with preliminary injunction against Judge Jose R. TO PRESENT EVIDENCE ON ALLEGED DAMAGES
436 of 501
SUSTAINED AND IN AWARDING DAMAGES, EVEN LONG Rule 57, Sec. 20 insofar as the application for damages must be made before
AFTER THE ABOVEMENTIONED CASES HAS BEEN entry of judgment in the subject case; and that Lamis made such application
ORDERED DISMISSED BY THIS HONORABLE SUPREME only after final judgment. These are the very same issues and contentions
COURT WITHOUT AWARD OF DAMAGES. (pp. 33-34, raised by the heirs in the present petition with respect to AC-G.R. SP No.
Rollo) 03725.
Petitioners contend that Civil Case No. 1395 was ordered dismissed by Us in It is worthy to note that G.R. No. 62733 was dismissed with finality by this
G.R. No. 57250 upon petition of private respondent Lamis; and that said Court on February 28, 1983 and entry of final judgment was made on May 4,
decision became final on April 8, 1982 long before the latter applied for 1983. While contained in a minute resolution, the dismissal was an
damages sustained by reason of the unlawful attachment. Anent Civil Case No. adjudication on the merits of the case and constituted a bar to a relitigation of
1395, the respondent appellate court, in AC-G.R. SP No. 03725, made the the issues raised therein under the rules of resjudicata (Commercial Union
following findings: Assurance Company Limited v. Lepanto Consolidated Mining Company, L-
43342, October 30,1978,86 SCRA 79; Sy v. Tuvera, No. 76639, July 16, 1987, 152
Actually, this matter had already been threshed out by the SCRA 103). A final judgment on the merits is conclusive as to matters put in
deceased Santiago Maningo to the Supreme Court when (he) issue and actually determined by the court, when they are raised in again in a
filed a petition for certiorari and prohibition on December 22, subsequent litigation between the same parties, even though it is irregular or
1982 which was docketed therein as G.R. L-62733. erroneous. Hence, whether Our resolution in petition in G.R. No. 62733 is
Unfortunately, the Supreme Court, in a minute resolution right or wrong, is of no importance; herein. As long as the judgment in that
dated February 28,1983 dismissed the aforesaid petition, (see case had become final, the issues that were litigated therein cannot be
p. 103, Annex L 03725) which resolution became final on May reopened by the parties in this subsequent petition, whether erroneously
4,1983. (p. 77, Rollo) decided or not.
We agree with the aforequoted findings of the appellate court. The principle of With respect to AC-G.R. SP No. 04480, petitioners allege that Civil Case No.
resjudicata is applicable herein. Its requisites are present in the instant case, 147 was also ordered dismissed on December 15, 1982 by this Court upon
namely: 1) the presence of a final former judgment; 2) the former judgment petition of private respondent Lamis in G.R. No. 61419; and that the said
was rendered by a court having jurisdiction over the subject matter and the dismissal became final on March 3,1983 long before Lamis applied for damages
parties; 3) the former judgment is a judgment on the merits; and 4) there is sustained by reason of unlawful replevin.
between the first and second actions, Identity of parties, of subject matter and
of cause of action (Pantranco North Express, Inc. v. NLRC, No. 64152, The respondent appellate court, on this matter, ruled, interalia:
December 29, 1983, 126 SCRA 526).
Thus, after the Supreme Court in a decision rendered on
We find that Our Resolution in G.R. No. 62733 on February 28, 1983 is a bar to December 15, 1982 in G.R. L-61419, has ordered for (sic) the
SP No. 03725 subject of this petition for review. G.R. No. 62733 is a petition for dismissal of Civil Case No. 147, the discharge of the writ of
certiorari filed by Maningo, who is now succeeded by petitioners herein, replevin issued in the aforesaid civil case is likewise
questioning the order of the lower court granting the application for damages necessarily included therein. Hence, the respondent judge has
of Lamis in Civil Case No. 1395, and alleging: that Lamis failed to comply with all the reason to order the return of the property subject of
437 of 501
the replevin order and to proceed in hearing and adjudicating bar' red (Tan Suyco v. Javier, 21 Phil. 82; Nueva-España v. Montelibano, 58 Phil.
whatever damages the defendants (Lamises) may have 807). It may be presented, before trial in the answer by way of counterclaim
suffered by reasons thereof. (p. 79, Rollo) (Medina v. Maderera del Norte de Catanduanes 51 Phil. 240). In the discretion
of the court, it may also be made at any other time even after the rendition of
We find the latter portion of the ruling of the appellate court as aforequoted, final judgment if the court has still jurisdiction over the case (Visayan Surety &
incorrect. Insurance Corp. v. Pascual, 85 Phil. 779). Hence, if the application for damages
is not made in compliance with the procedure laid down in the rules, even the
Section 1 0 of Rule 60 of the Rules of Court provides that in the recovery of surety on the bond is relieved from liability therefor. The remedy provided by
damages against the bond posted by the applicant in replevin cases, the law isexclusive and by failing to file a motion for the determination of 1 the
procedure shall follow that what is laid down in Section 20 of Rule 57, which damages on time and whilejudment is still under the control of the court, the
reads: claimant loses his right to damages (Santos v. Mair, 36 phil. 350; Japco v. The
City of Manila, 48 Phil. 851; Cruz v. Manila Surety & Fidelity Co., Inc., et al., 92
Sec. 20. Claim for damages on account of illegal attachment. If Phil. 699).
the judgment on the action be in favor of the party against
who attachment was issued, he may recover upon the bond In the case at bar, there is no showing that respondent Lamis had timely filed
given or deposit made by the attaching creditor, any damages his claim for damages arising from the wrongful issuance of the writ of
resulting from the attachment. Such damages may be replevin in Civil Case No. 147, or prior to dismissal on December 15, 1982, of
awarded only upon application and after proper hearing, and the replevin case, upon Lamis' petition for certiorari. It was only years later on
shall be included in the final judgment. The application must June 11, 1984 that Lamis applied for damages on the replevin bond, after the
be filed before the tirial or before appeal is perfected or before case had long been dismissed. The trial court no longer had jurisdiction and
the judgment becomes executory, with due notice to the control over the case when it awarded damages after it was dismissed and
attaching creditor and his surety or sureties, setting forth the thrown out of court in the certiorari case filed by Lamis himself. Thus, the
facts showing his right to damages and the amount thereof judgment of the y trial court awarding damages against the estate of Maningo
in the amount of P7,677,177.00 in the replevin case is null and void. Logically,
If the judgment of the appellate court be favorable to the the petitioners' surety, Paramount Insurance Corporation, should be released
party against whom the attachment was issued, he must claim from its liability under the bond. Notwithstanding, Our dismissal of the
damages sustained during the pendency of the appeal by an latter's petitionseeking review on certiorari of the same decision of the
application by, with notice to the party in whose favor the respondent dent appellate court on July 2, 1986, upholding the award of
attachement was issued or his surety or sureties, before the damages to Lamis, We release said surety from liability based on the same
judment of the appellate court becomes executory. The principles We have pronounced in the foregoing discussion.
appellate court may allow the application to be heard and
decided by the trial court. ACCORDINGLY, the petition is hereby GRANTED in part, and the judgment
of the Intermediate Appellate Court (now Court of Appeals) dated November
As may be gathered from Section 20, Rule 57, the claim for damages resulting 18, 1985 with respect to ACCUSED G.R. SP No. 04480, which upheld the award
from wrongful seizure of personalty property must be filed in the same action of damages by the trial court in Civil Case No. 147, is REVERSED and SET
in which the writ attachment or the writ of replevin was issued; otherwise, it is ASIDE. In all other respects, the petition is DENIED and the judgment of the
438 of 501
respondent appellate court is AFFIRMED. The temporary restraining order

issued on February 20, 1986, is lifted.
SO ORDERED.
439 of 501
Paragraphs III and VII of the respondent’s complaint in Civil Case No. 13778
Santos v. CA, 95 Phil. 360 read as follows:
EN BANC III
DECISION That on or about the month of September, 1950 and in connection with the
execution of a preliminary writ of attachment secured by the herein defendant
June 30, 1954 Ofrecino T. Santos in Civil Case No. 241 of the Court of First Instance of
Cotabato entitled Ofrecino T. Santos, plaintiff vs. Teodulo M. Cruz and
G.R. No. L-6436 Valentin C. Garcia, defendants, the above-named defendants conspiring,
OFRECINO T. SANTOS, petitioner, confabulating and conniving with one another procured and caused to be
vs. attached a certain Caterpillar D-8 tractor of herein plaintiff who was not a
THE COURT OF APPEALS, ET AL., respondents. party in said case and that defendants herein fully knowing that the said
tractor does not belong to any of the defendants Teodulo M. Cruz and
Amado A. Mundo for petitioner.
Valentin C. Garcia in said Civil Case No. 241 of the Court of First Instance of
Teodulo M. Cruz for respondent Philippine Reconstruction Corporation, Inc.
Cotabato;
Paras (Edgardo), J.:
On May 20, 1950, Ofrecino T. Santos (hereinafter to be referred to as VII
petitioner) filed in the Court of First Instance of Cotabato an action for the
recovery of the sum of P1,628 against Teodulo M. Cruz and Valentin C. Garcia That due to the said wrongful and malicious attachment levied by the herein
(Civil Case No. 241). The petitioner secured a writ of preliminary attachment defendants on plaintiffs’ tractor and their subsequent refusal to release the
which was levied upon a tractor which, though believed by the petitioner to same from attachment as above stated plaintiff was consequently forced to
belong to the defendants in Civil Case No. 241, in fact was owned by the violate its contractual undertaking with a certain Mr. Tomas Gonzales as
Philippine Reconstruction Corporation Inc. (hereinafter to be referred to as stated in the sworn third party claim so that it was compelled to pay a
respondent), which in due time filed a third party claim. The petitioner filed liquidated damages in the sum of Three Thousand Pesos (P3,000) aside from
an amended complaint including the respondent as a defendant, but upon having lost a sure income from rent on said tractor in the sum of One
motion filed by Teodulo M. Cruz and Valentin C. Garcia, Civil Case No. 241 Thousand Five Hundred Pesos (P1,500);
was dismissed by the Court of First Instance of Cotabato for lack of
jurisdiction, the amount involved being less than P2,000. The petitioner filed a The other necessary details are recited as follows in the decision of the Court
similar action in the Justice of the Peace Court of Buayan, Cotabato, against of Appeals1 promulgated on October 30, 1952 in CA-G.R. No 9925-R, Ofrecino
the respondent as sole defendant, wherein the petitioner was awarded the sum T. Santos, petitioner, vs. Philippine Reconstruction Corporation, Inc., and the
of P1,638.10, with interest and costs, but this decision is still the subject matter Honorable Demetrio B. Encarnacion, Judge, Branch I, Court of First Instance
of a pending certiorari proceeding in the Court of First Instance of Cotabato of Manila, respondents:
instituted by the respondent.
On June 10, 1951, petitioner (defendant in Civil Case No. 13778 of Manila) was
On May 9, 1951, the respondent filed in the Court of First Instance of Manila
duly summoned to answer the complaint filed in said Civil Case. A motion to
Civil Case No. 13778 against the petitioner, for damages resulting from the levy
dismiss, filed by defendant’s counsel, was received on June 23, 1951, in the
of its tractor under the writ of attachment issued in Civil Case No. 241.
Court of First Instance of Manila. On the other hand, counsel for plaintiff
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Philippine Reconstruction Corporation (now respondent) filed on July 12, 1951, processes are wrongful or not; and even granting that the Court of First
an ex-parte motion, praying that defendant Ofrecino T. Santos was declared in Instance of Manila had proper jurisdiction, the particular cause of action in
default on the ground that his motion to dismiss does not contain a notice for said Civil Case No. 13778 is banned by the decision of the Justice of the Peace
hearing as provided in Rule 26 of the Rules of Court, and therefore not a valid Court of Buayan, Cotabato.
one. Copy of said order was received by defendant’s counsel on August 2, 1951.
On August 26th, plaintiffs counsel moved that the aforesaid Civil Case No. From the decision of the Court of Appeals dismissing his petition for certiorari,
13778 be set for hearing. In his turn, counsel for defendant Ofrecino T. Santos the petitioner has interposed the present appeal by way of certiorari, assigning
filed on September 1st a petition praying that the order of default dated July the following alleged errors:
23rd be set aside; that his motion to dismiss be given due course, either by 1. The Court of Appeals erred in finding the motion to dismiss dated June 19,
sustaining or denying the same; and that if denied, defendant be allowed to 1951 in Civil Case No. 13778 of Manila as no motion at all.
file his answer.
2. The Court of Appeals erred in sustaining the ruling of the Court of First
By virtue of an order dated February 12, 1952, the case was set for hearing on Instance of Manila that Ofrecino T. Santos was in default in Civil Case No.
February 28th, and on the following day decision was rendered in favor of the 13778.
plaintiff and against the defendants, ordering the later to pay the sum of
3. The Court of Appeals erred in finding that the petition for relief from order
P4,500 with legal rate of interest from the date of the filing of the complaint
dated August 28, 1951 was “impliedly overruled when the respondent court set
and to further pay the sum of P1,000.00 as attorney’s fees and costs of the suit.
Civil Case No. 13778 for hearing, received plaintiff’s evidence and finally
A copy of this decision was on March 7, 1952, sent by registered mail to
rendered decision therein.”
Ofrecino T. Santos’ counsel who received the same in March 17th.
Consequently, on April 5, 1952, defendant Ofrecino T. Santos, thru his counsel, 4. The Court of Appeals erred in holding Ofrecino T. Santos under estoppel to
moved for the reconsideration of the aforesaid decision, to which motion raise the “issue of jurisdiction.”
counsel for the plaintiff filed his opposition on April 20, 1952. On June 11, 1952,
said motion for reconsideration was denied. 5. The Court of Appeals erred in sustaining a decision that was null and void,
emanating as it did from a court which had no jurisdiction to try Civil Case
Ofrecino T. Santos now comes before us as petitioner, alleging that the No. 13778.
respondent court committed a grave abuse of discretion when, as defendant in
the aforesaid Civil Case No. 13778, he was arbitrarily declared in default; and Without deciding whether the petitioner’s motion to dismiss filed in Civil Case
when it declared his motion to dismiss not a valid one. Petitioner further No. 13778 was a mere scrap of paper for lack of notice of hearing, it is clear that
claims that the respondent court again committed a grave abuse of discretion he could and should have appealed from the decision on the merits rendered
when, instead of acting upon his petition (Annex “A”) for relief from the order therein by the Court of First Instance of Manila, of which he was duly notified,
of default, it set the case for hearing a proceeded to hear plaintiff’s evidence raising in said appeal the propriety of the ruling of default against him, the
and rendered a decision. It is also alleged by petitioner that the Court of First failure of the trial court to expressly dispose of his petition for relief, and the
Instance of Manila acted without jurisdiction, the cause of action in Civil Case principal question of jurisdiction. It is elementary that certiorari will not lie
No. 13778 having arisen from a supposed wrongful attachment ordered by the where the remedy of appeal is available.
Court of First Instance of Cotabato in Civil Case No. 241, and for that reason, On the issue of jurisdiction, it is to be recalled that, when respondent’s tractor
that the latter court has exclusive jurisdiction to determine whether its legal was levied upon, it was not a party in Civil Case No. 241, and although an
amended complaint was filed, no new writ of attachment was issued so as to
441 of 501
cover respondent’s properties. It is also significant that Civil Case No. 241 was Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo,
dismissed by the Court of First Instance of Cotabato for lack of jurisdiction. Labrador and Concepcion, JJ., concur.
We have no hesitancy in declaring that the Court of First Instance of Manila
correctly took cognizance of Civil Case No. 13778, because the respondent Footnotes
sought damages, not on the allegation that the writ of attachment was illegally
1 After the Court of First Instance of Manila rendered a decision in Civil Case
or wrongfully issued by the Court of First Instance of Cotabato in Civil Case
No. 13778, sentencing the petitioner to pay to the defendant the sum of P4,500,
No. 241, but on theory that said writ was caused by the petitioner to be levied
with legal interest, attorney’s fees in the sum of P1,000, and costs, the
upon the tractor of the respondent which was not a party defendant. The filing
petitioner, instead of appealing, instituted in the Court of Appeals a special
of the amended complaint did not cure the defect, since the seizure continued
civil action for certiorari.
to be in virtue of the original writ, none having been issued under the
amended complaint.
The petitioner is invoking the following pronouncement in our decision in

Cruz vs. Manila Surety and Fidelity Co., Inc., et al., 49 O.G. (3) 964; 92 Phil.
699:
The procedure for recovery of damages on account of the issuance of a writ of

attachment, injunction, receivership, and replevin proceedings, as interpreted
in the cases adverted to, requires that the claim for damages should be
presented in the same action which gave rise to the special proceeding in
order that it may be included in the final judgment of the case, and it cannot
be the subject of a separate action. The philosophy of the ruling seems to be
that the court that had acted on the special proceeding which occasioned the
damages has the exclusive jurisdiction to assess them because of its control of
the case. This ruling is sound and tends to avoid multiplicity of action.
The citation is not controlling, for the reason that, apart from the
circumstance that, as already stated, the respondent has never claimed that
the writ of attachment was wrongfully issued in Civil Case No. 241, it appears
that the latter case was dismissed for lack of jurisdiction, and no claim for
damages could therefore properly have been presented in said case, because
the Court of First Instance of Cotabato, thus lacking jurisdiction, was in fact
prevented from rendering any final judgment therein which could include
such damages. Avoidance of multiplicity of suite presupposes the competence
of the court in the first or earlier case. Wherefore, the appealed decision is
affirmed, and it is so ordered with costs againsts the petitioner.
442 of 501
writ of preliminary injunction. The appellate court denied Aquino's claim, for
Aquino v. Socorro, 35 S 373 want of bad faith and malice on the part of Socorro in filing his petition and
securing the issuance of the writ of preliminary injunction. Aquino's
EN BANC subsequent motion for reconsideration was denied.
G.R. No. L-23868 October 22, 1970 Hence, the present petition for certiorari to review the resolution of the Court
of Appeals denying his claim for damages.
ZACARIAS C. AQUINO, petitioner,
vs. Aquino contends that the respondent appellate court erred in denying his
FRANCISCO SOCORRO and COURT OF APPEALS, respondents. claim for damages on the ground of want of bad faith and malice on the part of
the respondent Socorro in filing the petition for certiorari re the main case and
Tranquilino O. Calo, Jr. for petitioner. securing the issuance of the writ of preliminary injunction. He invokes the
provisions of Section 9, Rule 58 in relation to Section 20, Rule 57, of the Rules
Alfaro and Associates for respondent Francisco Socorro. of Court. Section 9, Rule 58 recites:.
Judgement to include damages against party and surities. —

Upon the trial the amount of damages to be awarded to the
CASTRO, J.:. plaintiff, or to the defendant, as the case may be, upon the
bond of the other party, shall be claimed, ascertained, and
On February 14, 1964 the Court of Appeals, upon petition of Francisco Socorro awarded under the same procedure as prescribed in Section
1
in CA-G.R. 33560-R, issued a writ of preliminary injunction in his favor upon 20 of Rule 57.
his posting a P1,000 bond. The writ of preliminary injunction, among others,
restrained Zacarias Aquino "from entering, cutting, hauling, selling and/or Section 20, Rule 57 reads:.
exporting logs or other forest products from the forest area" subject of
litigation. Aquino, however, filed a counterbond in the amount of P2,000, Claim for damages on account of illegal attachment. — If the
effecting the immediate dissolution of the writ. judgment on the action be in favor of the party against whom
attachment was issued, be may recover, upon the bond given
The Court of Appeals, on June 29, 1964, dismissed Socorro's petition re the or deposit made by the attaching creditor, any damages
main action, for lack of jurisdiction to entertain the same. Socorro resulting from the attachment. Such damages may be
subsequently appealed the decision of the appellate court to this Court. We awarded only upon application and after proper hearing, and
affirmed the appellate court's decision in a resolution dated December 24, 1964 shall be included in the final judgment. The application must
in case G.R. L-23608. be filed before the trial or before appeal is perfected or before
the judgment becomes executory, with due notice to the
On July 15, 1964, before the appellate court's decision dismissing Socorro's attaching creditor and his surety or sureties, setting forth the
petition became final, Aquino filed with the appellate court his claim for facts showing his right to damages and the amount thereof.
damages in the amount of P199,000 on account of the wrongful issuance of the
443 of 501
If the judgment of the appellate court be favorable to the failed to show or prove bad faith and malice on the part of the respondent
party against whom the attachment was issued, he must claim Socorro in obtaining the issuance of the writ of preliminary injunction.
damages sustained during the pendency of the appeal by
3
filing an application with notice to the party in whose favor In Pacis vs. The Commission on Elections, this Court made an extensive
the attachment was issued or his surety or sureties, before the discussion of the principles applicable to the recovery of damages caused
judgment of the appellate court becomes executory. The through the improvident issuance of a writ of preliminary injunction. This
appellate court may allow the application to be heard and Court said that "damages sustained as a result of a wrongfully obtained
decided by the trial court. injunction may be recovered upon the injunction bond required to be filed
with the court." The same provisions permitting the issuance of the writ of
Aquino points out that the said provisions do not require a claimant who seeks preliminary injunction require the filing of a bond before the grant of the writ.
to recover damages on account of the wrongful issuance of a writ of "The statutory undertaking of the bond is that it shall answer for all damages
preliminary injunction, to prove bad faith and malice on the part of the party which the party to be restrained may sustain by reason of the injunction if the
who obtained the issuance of the writ. To reinforce his contention, he invokes court should finally decide that the plaintiff was not entitled thereto. Malice or
the provisions of Section 4 (b) of Rule 58 of the Rules of Court. This rule, lack of good faith is not an element of recovery on the bond. This must be so,
Aquino avers, makes the party applying for an injunction liable for all damages because to require malice as a prerequisite would make the filing of the bond a
sustained by the other party if the court finally decides the party applicant as useless formality."
not entitled thereto. He maintains that, in the case at bar, the dissolution of
the writ of preliminary injunction by the respondent appellate court clearly Continuing, this Court said that "the dissolution of the injunction, even if the
demonstrates that the respondent Socorro was not entitled thereto. injunction was obtained in good faith, amounts to a determination that the
injunction was wrongfully obtained and a right of action on the injunction
Socorro, on the other hand, plays for the dismissal of the present petition on bond immediately accrues." Thus, for the purpose of recovery upon the
the following grounds: (1) The petitioner "refused to prosecute his claim for injunction bond, "the dissolution of the injunction because of the failure of
damages ... in the main action then already on appeal to this Court;" (2) The petitioner's main cause of action" provides the "actionable wrong" for the
petitioner "failed to state in his motion claiming for damages the facts upon purpose of recovery upon the bond.
which his rights thereto are based;" (3) The petitioner, if "suing on the bond ...
has no more cause of action as the said bond had already been This Court also stressed, in the same case, that "there is nothing in the Rules of
dissolved 2 upon motion by the petitioner Aquino;" and (4) The petitioner, if Court which allows recovery of damages other than upon the bond pledged by
"suing beyond the bond ... failed to show, or there is no showing that the the party suing for an injunction. Section 9, Rule 58, limits recovery only upon
respondent Socorro," in filing his petition for certiorari and securing the the bond, and it specifically states that ... 'the amount of damages to be
issuance of the writ of preliminary injunction, "was motivated by malice or bad awarded to the plaintiff, or to the defendant, as the case may be, upon the
faith." bond of the other party, shall be claimed, ascertained, and awarded under the
same procedure as prescribed in Section 20 of Rule 57.' " Under this provision,
The present case raises the question of whether Aquino's claim for damages on the party restrained, if he can recover anything, can recover only by reason of
account of the improvident issuance by the respondent appellate court of the and upon the bond — the only security and protection conceded to him by the
writ of preliminary injunction should be dismissed on the ground that he has rules. Consequently, the rule limits the amount of recovery in a suit on an
444 of 501
injunction bond to the sum thus fixed, the amount measuring the extent of the vs. Somes, supra, that an application for damages on account of the
assumed liability. improvident issuance of a preliminary injunction writ must be governed by the
same principles applicable to an action for the wrongful bringing of action.
4
This Court also finds it necessary to restate the rule in Molina vs. Somes that Before the respondent's liability can attach, it must appear that he filed his
"an action for damages for the improper suing out of an injunction must be petition for certiorari re the main action and obtained the issuance of the writ
maintained upon the same principles which govern an action for the wrongful of preliminary injunction maliciously and without probable cause. These two
bringing of an action." This rule, however, applies only when the party essential requisites, malicious prosecution and lack of probable cause, are
restrained pursues his claim for damages not upon the injunction bond. In neither alleged nor proved in this case before us. Nothing in the record tends
such a case where the party restrained sues not on the injunction bond, the to establish the liability of the respondent Socorro.
rules accord him no relief by way of a claim for damages unless he can
establish that the party applicant secured the issuance of the writ maliciously ACCORDINGLY, the present petition for certiorari is hereby denied. No cost.
and without probable cause. This Court stated that "... when the process has
been sued out maliciously there may be a right of action in favor of the
defendant. But this right depends upon the law governing malicious
prosecutions, and has no relation to the claim for damages urged by the
5
defendant in this case. ..."
Additionally, this Court, citing Palmer vs. Foley (71 N.Y. 106, 108), said:.
It seems that, without some security given before the granting

of an injunction order, or without some order of the court or a
judge, requiring some act on the part of the plaintiff, which is
equivalent to the giving of security — such as a deposit of
money in court — the defendant has no remedy for any
damages which he may sustain from the issuing of the
injunction, unless the conduct of the plaintiff has been such
as to give ground for an action for malicious prosecution.
In the case at bar, the record reveals that the petitioner Aquino, in the
proceedings before the respondent appellate court filed a counterbond in the
amount of P2,000 and opposed the injunction bond filed by the respondent
Socorro on the ground of its insufficiency. In effect, those brought about the
immediate dissolution of the writ of preliminary injunction. Thus Aquino
pursues his claim for damages in the amount of P199,000 no longer upon the
injunction bond in the amount of P1,000 filed by Socorro with the respondent
appellate court. This being the case, applicable here is the holding in Molina
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Hanil Development v. IAC, 144 S 557 Ministry of Public Highways to construct the 200 Km. Oro-Butuan Road
Project in Mindanao.
SECOND DIVISION
The trial court, on April 16, 1983, rendered a decision in favor of the private
G.R. No. 71229 September 30, 1986 respondent. The petitioner was ordered to pay the private respondent the sum
of P1,341,727.40 corresponding to the value of the rocks blasted by the private
HANIL DEVELOPMENT CO., LTD., petitioner, respondent; ten percent (10%) of said amount as attorney's fees and costs.
vs.
HON. INTERMEDIATE APPELLATE COURT and M. R. ESCOBAR On May 6, 1982, the private respondent filed a petition for the issuance of a
EXPLOSIVES ENGINEERS, INC., represented by its General Manager, preliminary attachment. The motion was set for hearing.
MANUEL R. ESCOBAR, respondents.
On May 13, 1982, the petitioner filed its notice of appeal and cash appeal bond
M.A. Aguinaldo & Associates for petitioner. with the trial court.
Ponciano H. Gupit for private respondent. On May 24, 1982, the trial court issued an order granting the petition for the
issuance of preliminary attachment.
On May 26, 1982, the private respondent moved for the appointment of
GUTIERREZ, JR., J.: Deputy Sheriff Felix Honoracion as special sheriff to serve the writ of
attachment/garnishment.
This is a petition for certiorari, mandamus, and prohibition, with prayer for
mandatory injunction and restraining order from the resolutions of the then Consequently, the order dated May 24, 1982 and the writ of attachment dated
Intermediate Appellate Court dated April 30, 1985 and June 20, 1985 in AC-G.R. May 27, 1982 were enforced by the respondents and the bank accounts of the
No. 05055 entitled "Hanil Development Co., Ltd. v. M.R. Escobar Explosives petitioner were garnished and its equipment attached.
Engineers, Inc., represented by its General Manager, Manuel R. Escobar."
The petitioner then filed a motion for reconsideration of the May 24, 1982
The present controversy has its origins in a complaint for recovery of a sum of order. While this motion was pending, the private respondent filed another
money with damages filed by private respondent Escobar Explosives motion, this time an "Ex-Parte Motion to Deposit Cash" praying that an order
Engineers, Inc., against petitioner Hanil Development Co., Ltd., before the be issued directing the Finance Manager of the National Power Corporation
then Court of First Instance of Rizal, Branch XXXI, Pasig, Metro Manila. The (NAPOCOR) to withdraw available funds of the petitioner from the
petitioner is a foreign corporation organized under the laws of the Republic of NAPOCOR and deposit them with the clerk of court of the Court of First
Korea and doing business in the Philippines pursuant to the Corporation Code Instance of Rizal. This motion was granted in an order dated June 29, 1982.
and the Foreign Investment Act. The complaint docketed as Civil Case No.
35966 sought to compel the petitioner to pay for the blasting services rendered In view of this development, the petitioner filed with the then Intermediate
by the private respondent in connection with the former's contract with the Appellate Court a petition for certiorari with prayer for prohibition, injunction
and preliminary restraining order challenging the orders dated May 24, 1982
446 of 501
and June 29, 1982 of the trial court. The case was docketed as CA-G.R. No. A petition for review of the decision in AC-G.R. No. 15050 was filed by the
14512. private respondent before this Court, but was denied for lack of merit.
The appellate court temporarily restrained the enforcement of the challenged After transmittal of the records, the appellate court on February 11, 1985, sent a
orders and after a hearing issued a preliminary injunction enjoining the notice to the petitioner to file appellant's brief within forty-five (45) days from
implementation of said orders upon the filing of a P50,000.00 cash bond by receipt. The petitioner received the notice on February 25, 1985.
the petitioner.
On March 13, 1985, and within the reglementary period to file appellant's brief,
In a decision dated February 3, 1983, the appellate court granted the petition the petitioner filed an "Application for Judgment against Attachment Bond"
and declared the challenged orders null and void, having been issued with and "Motion to Defer Filing of Appellant's Brief" praying for a hearing before
grave abuse of discretion. the appellate court so it could prove the damages it sustained as a result of the
illegal writ of attachment issued by the trial court. It wanted a judgment
While the above-mentioned petition was pending before the appellate court against the attachment bond posted by the private respondent and its insurer
and despite the writ of injunction issued by it, other developments continued Sanpiro Insurance Corporation to be included in the final decision in the main
to unfold in the trial court. case, Civil Case No. 35966, now pending before the appellate court.
In an order dated August 23, 1982, the trial court disapproved the petitioner's Acting on the petitioner's motions, the appellate court issued a resolution
amended record on appeal on the ground that it was "filed beyond the directing the private respondent to comment on these motions.
reglementary period and the extension granted." The appeal was dismissed.
The petitioner filed a motion for reconsideration of the dismissal while the The private respondent filed its "Comment" with a "Motion to Dismiss Appeal"
private respondent filed a motion for execution of judgment. for the petitioner's alleged failure to file its appellant's brief.
On October 19, 1982, the trial court issued an order denying the petitioner's In a resolution dated April 30, 1985, the appellate court denied the petitioner's
motion for reconsideration and at the same time granting the private application for judgment against the attachment bond and the motion to defer
respondent's motion for execution of judgment. filing of appellant's brief, granted the private respondent's motion to dismiss
the appeal, and dismissed the appeal. The petitioner filed a motion for
The petitioner filed a petition for certiorari and mandamus with prayer for reconsideration but this was denied in a resolution dated June 20, 1985.
prohibition with the Intermediate Appellate Court assailing the trial court's
orders dated August 23, 1982 and October 19, 1982. The case was docketed as Hence, this petition.
AC-G.R. No. 15050.
In a resolution dated July 17, 1985, we issued a temporary restraining order to
The appellate court granted the petition. The challenged orders were set aside enjoin the respondents from proceeding with the execution of the decision in
and declared null and void. Hence, the petitioner's appeal in Civil Case No. Civil Case No. 35966.
35966 was reinstated and the trial court was ordered to elevate the entire
records of the case to the appellate court. The petitioner now asserts that the April 30, 1985 and June 20, 1985 resolutions
were issued by the appellate court with grave abuse of discretion.
447 of 501
The questioned April 30, 1985 minute resolution of the appellate court states: If the judgment of the appellate court be favorable to the
party against whom the attachment was issued, he must claim
Acting upon (1) the application for judgment against damages sustained during the pendency of the appeal by
attachment bond, etc. filed by counsel for defendant- filing an application with notice to the party in whose favor
appellant on March 13, 1985; (2) the comment thereto; (3) the the attachment was issued or his surety or sureties, before the
motion to dismiss appeal filed by counsel for plaintiff- judgment of the appellate court becomes executory. The
appellee on April 24, 1985; and the docket report dated April appellate court may allow the application to be heard and
25, 1985, the COURT RESOLVED: (a) to DENY the application decided by the trial court.
for judgment against attachment bond and the motion to
defer filing of appellant's brief; and (b) to GRANT the motion In the instant case, the initial writ of attachment issued by the trial court in
to dismiss appeal and to dismiss the instant appeal. the main case — Civil Case No. 35966 which is the subject of appeal was
declared null and void by the appellate court in CA-G.R. No. 14512. This
The issues to be resolved in the instant petition are: (1) whether or not the present writ of attachment was issued and subsequently enforced after the
petitioner's application for judgment against the attachment bond and its trial court's decision in Civil Case No. 35966 had been rendered and after the
motion to defer filing of appellant's brief were correctly denied by the petitioner had already perfected its appeal. The petitioner, therefore, argues
appellate court and (2) whether or not the same court rightly dismissed the that the application for judgment against the attachment bond was properly
petitioner's appeal. lodged with the appellate court pursuant to Section 9, of the Judiciary
Reorganization Act of 1980 (Batas Pambansa Blg. 129) which grants the
Anent the first issue, the petitioner contends that its application for judgment Intermediate Appellate Court "power to try cases and conduct hearings,
against the attachment bond was pursuant to Section 20, Rule 57 of the receive evidence and perform any and all acts necessary to resolve factual
Revised Rules of Court. issues ... ." It contends that it is only in the appellate court that these damages
could well be ventilated because they occurred during the pendency of the
Section 20, Rule 57 of the Revised Rules of Court provides for the claim of appeal in AC-G.R. No. 15050.
damages on account of illegal attachment, to wit:
The petitioner's arguments are well-taken.
Claim for damages on account of illegal attachment. — If the
judgment on the motion be in favor of the party against The application for judgment against attachment bond was filed to prove the
whom attachment was issued, he may recover, upon the bond damages sustained by the petitioner as a result of the illegal writ of attachment
given or deposit made by the attaching creditor, any damages issued by the trial court so that the judgment against the attachment bond
resulting from the attachment. Such damages may be posted by the private respondent and its insurer could be included in the final
awarded only upon application and after proper hearing, and judgment of the main case. The assessment and award of such damages could
shall be included in the final judgment. The application must not have been made in CA-G.R. No. 14512 as alleged by the private respondent
be filed before the trial or before appeal is perfected or before because the question therein was whether or not the writ of attachment in
the judgment becomes executory, with notice to the attaching Civil Case No. 35966 should have been issued.
creditor and his surety or sureties, setting forth the facts
showing his right to damages and the amount thereof.
448 of 501
The object was to set aside the preliminary attachment immediately. It was a Malayan Insurance Co., Inc. v. Salas (90 SCRA 252), lays down the procedure
preventive measure. regarding claims for damages against an illegal attachment. It states:
The private respondent, in its petition for writ of attachment filed with the Under section 20, in order to recover damages on a replevin
trial court, posted an attachment bond issued by the Sanpiro Insurance bond (or on a bond for preliminary attachment, injunction or
Corporation in the amount of P1,341,727.40, the relevant portion of which receivership) it is necessary (1) that the defendant-claimant
reads: has secured a favorable judgment in the main action, meaning
that the plaintiff has no cause of action and was not,
WHEREFORE, WE, M.R. ESCOBAR EXPLOSIVE ENGINEERS therefore, entitled to the provisional remedy of replevin; (2)
as PRINCIPAL, and the SANPIRO INSURANCE that the application for damages, showing claimant's right
CORPORATION, a corporation duly organized and existing thereto and the amount thereof, be filed in the same action
under and by virtue of the laws of the Philippines, as SURETY, before trial or before appeal is perfected or before the
in consideration of the above and of the levying of said judgment becomes executory; (3) that due notice be given to
attachment, hereby jointly and severally bind ourselves in the the other party and his surety or sureties, notice to the
sum of PESOS: ONE MILLION THREE HUNDRED FORTY principal not being sufficient and (4) that there should be a
ONE THOUSAND SEVEN HUNDRED TWENTY SEVEN & proper hearing and the award for damages should be included
40/100 (P1,341,727.40), Philippine Currency, under the in the final judgment (Luneta Motor Co. v. Menendez, 117
condition that we will pay all the costs which may be Phil. 970, 974; 3 Moran's Comments on the Rules of Court,
adjudged to said defendant/s and all damages which said 1970 Ed., pp. 54-56. See Cruz v. Manila Surety & Fidelity Co.,
defendant/s may sustain by reason of the attachment, if the Inc., 92 Phil. 699).
Court shall finally adjudge that plaintiff/s was/were not
entitled thereto. xxx xxx xxx
Contrary to the claim of the private respondent, this writ of attachment issued As may be gathered from section 20 of Rule 57, the
by the trial court was executed. The petitioner's equipment and bank accounts application for damages against the surety must be filed (with
were garnished pursuant to the writ. In fact, the private respondent's notice to the surety) in the Court of First Instance before the
opposition to the petitioner's motion for reconsideration of the trial court's trial or before appeal is perfected or before the judgment
order which issued the writ of attachment stated that the same should be becomes executory.
denied for being moot and academic "because the writ of attachment and/or
garnishment have already been executed." If an appeal is taken, the application must be filed in the
appellate court but always before the judgment of that court
Considering that the writ of attachment was declared null and void, the becomes executory so that the award may be included in its
petitioner had the right to ask for whatever damages it may have incurred as a judgment (Luneta Motor Co. v. Menendez, supra).
result of its issuance pursuant to Section 20, Rule 57 of the Revised Rules of
Court. But it is not always mandatory that the appellate court should
include in its judgment the award of damages against the
449 of 501
surety. Thus, it was held that where the application for amount of damages, if any, suffered by the petitioner as a result of the issuance
damages against the surety is seasonably made in the of the illegal attachment during the pendency of the appeal is a factual issue.
appellate court, 'the latter must either proceed to hear and
decide the application or refer 'it' to the trial court and allow it Moreover, the application for judgment against the bond seasonably filed by
to hear and decide the same' (Rivera v. Talavera, 112 Phil. 209, the petitioner in the appellate court would avoid multiplicity of suits. We have
219). earlier ruled that "the explicit provision of Section 20 of Rule 57, Revised Rules
of Court that the judgment against the surety should be included in the final
xxx xxx xxx judgment is to avoid additional proceedings. (Cruz v. Manila Surety & Fidelity
Co., Inc. et al., 92 Phil. 699; (Japco v. City of Manila, 48 Phil. 851, 855 cited in
Note that under the second paragraph of section 20, Rule 57 Malayan insurance Corporation v. Salas, supra).
of the present Rules of Court, the damages suffered during the
pendency of an appeal in a case where the writs of Consequently, the appellate court also committed a grave abuse of discretion
attachment, injunction and replevin or an order of in denying the motion to defer filing of appellant's brief. The petitioner filed
receivership were issued should be claimed in the appellate this motion for the purpose of first settling the issue on damages against the
court. attachment bond so that such issue would be discussed and included in the
appellant's brief and ultimately in the final judgment thereby avoiding
xxx xxx xxx multiplicity of suits.
In the instant case, the application for judgment against the attachment bond Needless to say, the appellate court should not have dismissed the petitioner's
was filed under the following circumstances: (1) the writ of attachment was appeal.
issued by the trial court after it had rendered its decision and after the
petitioner had already perfected its appeal; (2) the private respondent posted a We take notice of the circumstances under which the appellate court
surety bond to answer for any damages that may be adjudged to the petitioner dismissed the appeal. Granting that the petitioner's application for judgment
if the writ is later found to be illegal; (3) the writ of attachment was declared against attachment bond was not meritorious, the appellate court's dismissal
illegal; and (4) the application for judgment against the attachment bond was of the appeal would still be unwarranted.
made with notice to the insurer, Sanpiro Insurance Corporation.
The record shows that in response to the petitioner's application for judgment
Applying the principles laid down in the Malayan case to the circumstances against the attachment bond and motion to defer filing of the appellant's brief
surrounding the application for judgment against attachment bond in this which was filed on March 13, 1985 and within the 45-day reglementary period
case, the appellate court committed grave abuse of discretion in denying the to fife appellant's brief, the appellate court issued a resolution directing the
application for judgment against attachment bond. The appellate court's error private respondent to comment on the motion within ten (10) days from
in this case is more pronounced considering that under Section 9 of the notice. Upon motion ' of the private respondent, the appellate court issued
Judiciary Reorganization Act of 1980 (Batas Pambansa Blg. 129) the another resolution granting an extension of ten (10) days from April 13, 1985 to
Intermediate Appellate Court is now empowered to try cases and conduct file comment on the said motions of the petitioner. The extension granted
hearings, receive evidence and perform acts necessary to resolve factual issues meant that the private respondent had until April 24, 1985 to file its comment.
in cases falling within its original and appellate jurisdiction. Certainly, the In addition to the comment, the private respondent filed on April 24, 1985 a
450 of 501
motion to dismiss appeal contending that the petitioner had not filed its for the filing of an appellant's brief. Considering the amount involved in this
appellant's brief within the 45-day reglementary period. Upon verification litigation and the nature of the defenses raised by the petitioner, the appellate
from its docket decision that no appellant's brief was filed as of April 25, 1985, court was unduly severe when it peremptorily dismissed the appeal.
the appellate court dismissed the appeal.
Therefore, we have to set aside the appellate court's action in simultaneously
Under these circumstances, the dismissal of the appeal by the appellate court denying the application for judgment against the attachment bond and the
due to the failure to file the appellant's brief within the 45-day reglementary motion to defer the filing of appellant's brief and in dismissing the appeal.
period counted from February 25, 1985 to April 25, 1985 without allowing any Since the petitioner's two motions were denied on April 30, 1985, the
interruption gave undue advantage to the private respondent. This is so, petitioner still had 16 days from notice of the denial to file its appellant's brief.
because the private respondent after having been given ten (10) days from In short, the petitioner's 45-day period within which to file its appellant's brief
receipt of notice to comment on the twin motions of the petitioner was again had not yet lapsed when the appellate court dismissed the appeal. The brief
granted a ten-day extension or until April 24, 1985 to file its comment thereto. could have been filed or a motion for extension of time requested.
This, in effect, removed a substantial number of days from the 45-day period
of the petitioner to file its brief, through no fault of its own. WHEREFORE, the instant petition is GRANTED. The questioned resolutions
dated April 30, 1985 and June 20, 1985 of the then Intermediate Appellate
The procedure adopted by the appellate court in interpreting the 45-day Court are hereby REVERSED and SET ASIDE. The Court of Appeals is directed
reglementary period to file appellant's brief was unfair. When the appellate to conduct hearings on the application for judgment against attachment bond
court issued the resolution requiring the private respondent to comment on filed by the petitioner and to reinstate the appeal. The temporary restraining
the petitioner's application for judgment against the attachment bond and order dated July 17, 1985 is made PERMANENT.
motion to defer appellant's brief the 45-day period should be deemed to have
stopped, and the period to commence again after denial of the motions. SO ORDERED.
The notice to "file appellant's brief within 45 days from receipt" was received
by the petitioner on February 25, 1985. The petitioner filed the application for
judgment against the attachment bond and motion to defer filing of
appellant's brief on March 13, 1985. Thus, the petitioner filed its motions on
the 16th day after receipt of the notice to file appellant's brief and within the
45-day reglementary period. On March 26, 1985, the appellate court issued its
resolution directing the private respondent to file its comment on the motions
of the petitioner. At this point, counting from February 25, 1985 to March 26,
1985, a total number of 29 days had lapsed. Hence, the petitioner still had 16
days within the 45-day reglementary period to file its appellant's brief in the
event that its motions were denied.
It is likewise the practise in the Court of Appeals, after granting an initial

period of 45 days, to routinely grant a motion for extension of another 45 days
451 of 501
b) To the plaintiff Moises Ocampo —

BA Finance v. CA, 161 S 608 P298,500.00
THIRD DIVISION c) To the plaintiff Nicolas Cruz —

P154,740.00
d) To the plaintiff Inocencio Turla, Sr. —

G.R. No. 98275 November 13, 1992 48,000.00
BA FINANCE CORPORATION, petitioner, 2. Dismissing the case against Lino Castro

vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF ANGELES 3. Dismissing the third-party complaint against
CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO TURLA, SPOUSES STRONGHOLD
MOISES AGAPITO and SOCORRO M. AGAPITO and NICOLAS
CRUZ,respondents. 4. Dismissing all the counterclaim of the defendants and
third-party defendants.
5. Ordering ROCK to reimburse B.A. the total amount of

MELO, J.: P622,890.00 which the latter is adjudged to pay to the
plaintiffs. (p. 46, Rollo)
The question of petitioner's responsibility for damages when on March 6, 1983,
an accident occurred involving petitioner's Isuzu ten-wheeler truck then Respondent Court of Appeals affirmed the appealed disposition in
driven by an employee of Lino Castro is the thrust of the petition for review toto through Justice Rasul, with Justices De Pano, Jr. and Imperial concurring,
on certiorari now before Us considering that neither the driver nor Lino Castro on practically the same grounds arrived at by the court a quo (p. 28, Rollo).
appears to be connected with petitioner. Efforts exerted towards re-evaluation of the adverse were futile (p. 37, Rollo).
Hence, the instant petition.
On October 13, 1988, the disputed decision in the suit below was rendered by
the court of origin in this manner: The lower court ascertained after due trial that Rogelio Villar y Amare, the
driver of the Isuzu truck, was at fault when the mishap occurred in as much as
1. Ordering Rock B.A. and Rogelio Villar y Amare jointly and he was found guilty beyond reasonable doubt of reckless imprudence resulting
severally to pay the plaintiffs as follows: in triple homicide with multiple physical injuries with damage to property in a
decision rendered on February 16, 1984 by the Presiding Judge of Branch 6 of
a) To the plaintiff Carlos Ocampo — the Regional Trial Court stationed at Malolos, Bulacan. Petitioner was
P121,650.00; adjudged liable for damages in as much as the truck was registered in its name
during the incident in question, following the doctrine laid down by this Court
in Perez vs. Gutierrez (53 SCRA 149 [1973]) and Erezo, et al. vs. Jepte (102 Phil.
452 of 501
103 [1957]). In the same breadth, Rock Component Philippines, Inc. was Contrary to petitioner's expectations, the recourse instituted from the rebuffs
ordered to reimburse petitioner for any amount that the latter may be it encountered may not constitute a sufficient foundation for reversal of the
adjudged liable to pay herein private respondents as expressly stipulated in the impugned judgment of respondent court. Petitioner is of the impression that
contract of lease between petitioner and Rock Component Philippines, Inc. the Perez and Erezo cases are inapplicable due to the variance of the
Moreover, the trial court applied Article 2194 of the new Civil Code on solidary generative facts in said cases as against those obtaining in the controversy at
accountability of join tortfeasors insofar as the liability of the driver, herein bar. A contrario, the lesson imparted by Justice Labrador in Erezo is still good
petitioner and Rock Component Philippines was concerned (pp. 6-7, Decision; law, thus:
pp. 44-45, Rollo).
. . . In previous decisions, We already have held that the
To the question of whether petitioner can be held responsible to the victim registered owner of a certificate of public convenience is liable
albeit the truck was leased to Rock Component Philippines when the incident to the public for the injuries or damages suffered by
occurred, the appellate court answered in the affirmative on the basis of the passengers or third persons caused by the operation of said
jurisprudential dogmas which, as aforesaid, were relied upon by the trial court vehicle, even though the same had been transferred to a third
although respondent court was quick to add the caveat embodied in the lease person. (Montoya vs. Ignacio, 94 Phil., 182 50 Off. Gaz., 108;
covenant between petitioner and Rock Component Philippines relative to the Roque vs. Malibay Transit, Inc., G.R. No. L-8561, November 18,
latter's duty to reimburse any amount which may be adjudged against 1955; Vda. de Medina vs. Cresencia, 99 Phil., 506, 52 Off. Gaz.,
petitioner (pp. 32-33, Rollo). [10], 4606.) The principle upon which this doctrine is based is
that in dealing with vehicles registered under the Public
Petitioner asseverates that it should not have been haled to court and ordered Service Law, the public has the right to assume or presumed
to respond for the damage in the manner arrived at by both the trial and that the registered owner is the actual owner thereof, for it
appellate courts since paragraph 5 of the complaint lodged by the plaintiffs would be difficult with the public to enforce the actions that
below would indicate that petitioner was not the employer of the negligent they may have for injuries caused to them by the vehicles
driver who was under the control an supervision of Lino Castro at the time of being negligently operated if the public should be required to
the accident, apart from the fact that the Isuzu truck was in the physical prove who actual the owner is. How would the public or third
possession of Rock Component Philippines by virtue of the lease agreement. persons know against whom to enforce their rights in case of
subsequent transfer of the vehicles? We do not imply by this
Aside from casting clouds of doubt on the propriety of invoking doctrine, however, that the registered owner may not recover
the Perez and Erezo doctrines, petitioner continue to persist with the idea that whatever amount he had paid by virtue of his liability to third
the pronouncements of this Court in Duavit vs. Court of Appeals (173 SCRA persons from the person to whom he had actually sold,
490 [1989]) and Duquillo vs. Bayot (67 Phil 131 [1939]) dovetail with the factual assigned or conveyed the vehicle.
and legal scenario of the case at hand. Furthermore, petitioner assumes, given
the so-called hiatus on the basis for the award of damages as decreed by the Under the same principle the registered owner of any vehicle,
lower and appellate courts, that Article 2180 of the new Civil Code on vicarious even if not used for a public service, should primarily
liability will divest petitioner of any responsibility absent as there is any responsible to the public or to the third persons for injuries
employer-employee relationship between petitioner and the driver. caused the latter while the vehicle is being driven on the
highways or streets. The members of the Court are in
453 of 501
agreement that the defendant-appellant should be held liable to in land registration cases, because the administrative
plaintiff-appellee for the injuries occasioned to the latter proceeding of registration does not bear any essential relation
because of the negligence of the driver, even if the defendant- to the contract of sale between the parties (Chinchilla vs.
appellant was no longer an owner of the vehicle at the time of Rafael and Verdaguer, 39 Phil. 888), but to permit the use and
the damage because he had previously sold it to another. What operation of the vehicle upon any public highway (section
is the legal basis for his (defendants-appellant's) liability? 5[a], Act No. 3992, as amended). the main aim of motor
vehicle registration is to identify the owner so that if any
There is a presumption that the owner of the guilty vehicle is accident happens, or that any damage or injury is caused by
the defendant-appellant as he is the registered owner in the the vehicle on the public highways, responsibility therefor can
Motor Vehicle Office. Should he not be allowed to prove the be fixed on a definite individual, the registered owner.
truth, that he had sold it to another and thus shift the Instances are numerous where vehicles running on public
responsibility for the injury to the real and the actual owner? highways caused accidents or injuries to pedestrians or other
The defendants hold the affirmative of this proposition; the vehicles without positive identification of the owner or
trial court hold the negative. drivers, or with very scant means of identification. It is to
forestall these circumstances, so inconvenient or prejudicial
The Revised Motor Vehicle Law (Act No. 3992, as amended) to the public, that the motor vehicle registration is primarily
provides that the vehicle may be used or operated upon any obtained, in the interest of the determinations of persons
public highway unless the same is properly registered. It has responsible for damages or injuries caused on public
been stated that the system of licensing and the requirement highways.
that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to One of the principle purposes of motor
reduce the danger of injury of pedestrians and other travelers vehicles legislation is identification of the
from the careless management of automobiles, and to furnish vehicle and of the operator, in case of
a means of ascertaining the identity of persons violating the accident; and another is that the knowledge
laws and ordinances, regulating the speed and operation of that means of detection are always available
machines upon the highways (2 R. C. L. 1176). Not only are my act as a deterrent from lax observance of
vehicles to be registered and that no motor vehicles are to be the law and of the rules of conservative and
used or operated without being properly registered from the safe operation. Whatever purpose there may
current year, furnish the Motor Vehicle Office a report be in these statutes, it is subordinate at the
showing the name and address of each purchaser of motor last to the primary purpose of rendering it
vehicle during the previous month and the manufacturer's certain that the violator of the law or of the
serial number and motor number. (Section 5[c], Act No. 3992, rules of safety shall not escape because of
as amended.) lack of means to discover him. The purpose
of the statute is thwarted, and the displayed
Registration is required not to make said registration the number becomes a "share and delusion," if
operative act by which ownership in vehicles is transferred, as courts would entertain such defenses as that
454 of 501
put forward by appellee in this case. No may thereby be relieved of the responsibility to the injured
responsible person or corporation could be person.
held liable for the most outrageous acts of
negligence, if they should be allowed to pace The above policy and application of the law may appear quite
a "middleman" between them and the public, harsh and would seem to conflict with truth and justice. We
and escape liability by the manner in which do not think it is so. A registered owner who has already sold
they recompense their servants. (King vs. or transferred a vehicle has the recourse to a third-party
Breham Automobile Co., Inc. 145 S. W. 278, complaint, in the same action brought against him to recover
279.) for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no
With the above policy in mind, the question that defendant- justification for relieving him of liability; said inconvenience is
appellant poses is: should not the registered owner be allowed the price he pays for failure to comply with the registration
at the trial to prove who the actual and real owner is, and in that the law demands and requires.
accordance with such proof escape or evade responsibility and
lay the same on the person actually owning the vehicle? We In synthesis, we hold that the registered owner, the
hold with the trial court that the law does not allow him to do defendant-appellant herein, is primarily responsible for the
so; the law, with its aim and policy in mind, does not relieve damage caused to the vehicle of the plaintiff-appellee, but he
him directly of the responsibility that the law fixes and places (defendant-appellant) has a right to be indemnified by the
upon him as an incident or consequence of registration. Were real or actual owner of the amount that he may be required to
a registered owner allowed to evade responsibility by proving pay as damage for the injury caused to the plaintiff-appellant.
who the supposed transferee or owner is, it would be easy for
him, by collusion with others or otherwise, to escape said If the foregoing words of wisdom were applied in solving the circumstance
responsibility and transfer the same to an indefinite person, whereof the vehicle had been alienated or sold to another, there certainly can
or to one who possesses no property with which to respond be no serious exception against utilizing the same rationale to the antecedents
financially for the damage or injury done. A victim of of this case where the subject vehicle was merely leased by petitioner to Rock
recklessness on the public highways is usually without means Component Philippines, Inc., with petitioner retaining ownership over the
to discover or Identify the person actually causing the injury vehicle.
or damage. He has no means other then by a recourse to the
registration in the Motor Vehicles Office to determine who is Petitioner's reliance on the ruling of this Court in Duavit vs. Court of
the owner. The protection that the law aims to extend to him Appeals and in Duquillo vs. Bayot (supra) is legally unpalatable for the purpose
would become illusory were the registered owner given the of the present discourse. The vehicles adverted to in the two cases shared a
opportunity to escape liability by disproving his ownership. If common thread, so to speak, in that the jeep and the truck were driven in
the policy of the law is to be enforced and carried out, the reckless fashion without the consent or knowledge of the respective owners.
registered owner should not be allowed to prove the contrary Cognizant of the inculpatory testimony spewed by defendant Sabiniano when
to the prejudice of the person injured, that is, to prove that a he admitted that he took the jeep from the garage of defendant Dauvit without
third person or another has become the owner, so that he the consent or authority of the latter, Justice Gutierrez, Jr. in Duavit remarked;
455 of 501
. . . Herein petitioner does not deny ownership of the vehicle

involved in the mishap but completely denies having
employed the driver Sabiniano or even having authorized the
latter to drive his jeep. The jeep was virtually stolen from the
petitioner's garage. To hold, therefore, the petitioner liable for
the accident caused by the negligence of Sabiniano who was
neither his driver nor employee would be absurd as it would
be like holding liable the owner of a stolen vehicle for an
accident caused by the person who stole such vehicle. In this
regard, we cannot ignore the many cases of vehicles forcibly
taken from their owners at gunpoint or stolen from garages
and parking areas and the instances of service station
attendants or mechanics of auto repair shops using, without
the owner's consent, vehicles entrusted to them for servicing
or repair.(at p. 496.)
In the Duquillo case, the defendant therein cannot, according to Justice Diaz,
be held liable for anything because of circumstances which indicated that the
truck was driven without the consent or knowledge of the owner thereof.
Consequently, there is no need for Us to discuss the matter of imputed

negligence because petitioner merely presumed, erroneously, however, that
judgment was rendered against it on the basis of such doctrine embodied
under Article 2180 of the new Civil Code.
WHEREFORE, the petition is hereby DISMISSED and decision under review

AFFIRMED without special pronouncement as to costs.
SO ORDERED.
456 of 501
After trial, or on March 2, 1973, the lower court rendered judgment ordering
Malayan Insurance v. Salas, 90 S 252 Makati Motor Sales, Inc. to return to Fernando the other two trucks and to pay
him for the seizure of each of them, damages in the sum of three hundred
SECOND DIVISION pesos daily from September 25 and 26, 1970 (or six hundred pesos for the two
trucks from the latter date) until their return to Fernando plus P26,000 as
G.R. No. L-48820 May 25, 1979 actual and moral damages.
MALAYAN INSURANCE CO., INC., petitioner, In turn, Fernando was ordered to pay Makati Motor Sales, Inc. the sum of
vs. P66,998.34, as the balance of the price of the two trucks, with twelve percent
HON. EMILIO V. SALAS, as Presiding Judge, Court of First Instance of interest from February 28, 1969 until fully paid and the further sum of
Rizal, Branch I, Pasig, Metro Manila, ROSENDO FERNANDO and JOHN P15,730.20 as the cost of the repair with six percent interest from September 11,
DOE, respondents. 1970 until fully paid.
Angara, Abello, Concepcion, Regata & Cruz for petitioner. Makati Motor Sales, Inc. appealed to the Court of Appeals. It affirmed the
lower court's judgment in its decision of March 1, 1977 in CA-G. R. No. 54196-R.
Lazaro, Abinoja & Associates for private respondents.
Meanwhile, on May 11, 1973, or before the elevation of the record to the Court
of Appeals, Fernando filed in the trial court an application for damages against
the replevin bond. It was opposed by the surety on the ground that the trial
AQUINO, J.: court had lost jurisdiction over the case because of the perfection of the
appeal. The trial court denied the application on June 28, 1973.
This case is about the surety company's liability on its replevin bond which
was not included in the final judgment against the principal in the bond. It is On May 27, 1974 Fernando filed in the Court of Appeals his claim for damages
undisputed that in 1970 Makati Motor Sales, Inc., as vendor mortgagee, sued against the replevin bond. He prayed that the same be included in the
Rosendo Fernando for the recovery of four diesel trucks and the connection of judgment. The surety, which was furnished with a copy of the claim, filed an
the balance of his obligation plus damages (Civil Case No. 13874, Court of First opposition to it.
Instance of Rizal, Pasig Branch 1).
The Court of Appeals did not act immediately on that claim but in its 1977
To obtain immediate possession of the trucks pending trial, Makati Motors decision it observed that Fernando's motion or claim "was correct" and it
Sales, Inc. posted a replevin bond executed by the Malayan Insurance Co., Inc. ordered that his claim against Malayan Insurance Co., Inc. "be heard before
In that bond the surety bound itself to pay P362,775.92 "for the return of the the trial court". That decision affirming the lower court's judgment became
property to the defendant, if the return thereof be adjudged, and for the final and executory on March 18, 1977.
payment of such sum as may in the cause be recovered against the plaintiff ".
Pursuant to the order of the court, the sheriff seized the four trucks. Later, two On April 6, 1977, or after the remand of the record to the trial court, Fernando
of the trucks were returned to Fernando. filed a motion to set for hearing his application for damages against the surety
on its replevin bond. The application was heard with notice to Makati Motor
457 of 501
Sales, Inc. and Malayan Insurance Co., Inc. Fernando submitted documentary appellate court may allow the application to be heard and
evidence. On December 15, 1977 Malayan Insurance Co., Inc. moved to quash decided by the trial court.
the proceeding regarding the claim for damages. It contended that the trial
court has no jurisdiction to alter or modify the final judgment of the Court of Under section 20, in order to recover damages on a replevin bond (or on a
Appeals. bond for preliminary attachment, injunction or receivership) it is necessary (1)
that the defendant-claimant has secured a favorable judgment in the main
The trial court in its order of July 14, 1978 denied the motion to quash. It action, meaning that the plaintiff has no cause of action and was not,
directed Malayan Insurance Co., Inc. to pay Fernando the damages which it therefore, entitled to the provisional remedy of replevin; (2) that the
had adjudged against Makati Motor Sales, Inc. The surety company appealed application for damages, showing claimant's right thereto and the amount
from that order to this Court pursuant to Republic Act No. 5440. thereof, be filed in the same action before trial or before appeal is perfected or
before the judgment becomes executory; (3) that due notice be given to the
Section 10, Rule 60 of the Rules of Court provides that in replevin cases, as in other party and his surety or sureties, notice to the principal not being
receivership and injunction cases, the damages "to be awarded to either party sufficient and (4) that there should be a proper hearing and the award for
upon any bond filed by the other" "shall be claimed, ascertained, and granted" damages should be included in the final judgment (Luneta Motor Co. vs.
in accordance with section 20 of Rule 57 which reads: Menendez 117 Phil. 970, 974; 3 Moran's Comments on the Rules of Court, 1970
Ed., pp. 54-56. See Cruz vs. Manila Surety & Fidelity Co., Inc., 92 Phil. 699).
SEC. 20. Claim for damages on account of illegal attachment.
— If the judgment on the action be in favor of the party In this appeal, Malayan Insurance Co., Inc. contends that the trial court's
against whom attachment was issued, he may recover, upon judgment against it is not warranted under section 20 of Rule 57. It assails the
the bond given or deposit made by the attaching creditor, any trial court's competence to render judgment against the surety after the
damages resulting from the attachment. Such damages may decision of the Court of Appeals against the surety's principal had become
be awarded only upon application and after proper hearing, final and executory.
and shall be included in the final judgment. The application
must be filed before the trial or before appeal is perfected or We hold that the trial court has jurisdiction to pass upon Fernando's
before the judgment becomes executory, with due notice to application for the recovery of damages on the surety's replevin bond. The
the attaching creditor and his surety or sureties, setting forth reason is that Fernando seasonably filed his application for damages in the
the facts showing his right to damages and the amount Court of Appeals. It was not his fault that the damages claimed by him against
thereof. the surety were not included in the judgment of the Court of Appeals
affirming the trial court's award of damages to Fernando payable by the
If the judgment of the appellate court be favorable to the principal in the replevin bond. The peculiar factual situation of this case
party against whom the attachment was issued, he must claim makes it an exception to the settled rule that the surety's liability for damages
damages sustained during the pendency of the appeal by should be included in the final judgment to prevent duplicity of suits or
filing an application with notice to the party in whose favor proceedings.
the attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The As may be gathered from section 20 of Rule 57, the application for damages
against the surety must be filed (with notice to the surety) in the Court of First
458 of 501
Instance before the trial or before appeal is perfected or before the judgment judgment for damages against the principal is sought to be enforced against
becomes executory. the surety's replevin bond.
If an appeal is taken, the application must be filed in the appellate court but The hearing win be summary and win be limited to such new defense, not
always before the judgment of that court becomes executory so that the award previously set up by the principal, as the surety may allege and offer to prove.
may be included in its judgment (Luneta Motor Co. vs. Menendez 117 Phil. 970, The oral proof of damages already adduced by the claimant may be
976). reproduced without the necessity of retaking the testimony, but the surety
should be given an opportunity to cross-examine the witness or witnesses if it
But it is not always mandatory that the appellate court should include in its so desires." That procedure would forestall the perpetration of fraud or
judgment the award of damages against the surety. Thus, it was held that collusion against the surety (Visayan Surety and Insurance Corporation vs.
where the application for damages against the surety is seasonably made in the Pascual, 85 Phil. 779, 785-786).
appellate court, "the latter must either proceed to hear and decide the
application or refer "it" to the trial court and allow it to hear and decide the Inasmuch as in this case appellant Malayan Insurance Co., Inc. was not given
same"(Rivera vs. Talavera, 112 Phil. 209, 219). the summary hearing during which it could contest the reality or
reasonableness of Fernando's claim for damages, we have to set aside the trial
We have stated earlier that in the instant case Fernando in 1974 made a timely court's order awarding damages against it and, in the interest of justice, give it
claim in the Court of Appeals for an award of damages against Malayan another opportunity to be heard on the merits of Fernando's claim for
Insurance Co., Inc. enforceable against its replevin bond. The surety was damages.
notified of that application. It registered an opposition to the claim. The Court
of Appeals did not resolve the claim immediately but in its 1977 decision it Before closing, it may be useful to make a review and synthesis of the copious
directed the trial court to hear that claim. jurisprudence on the surety's liability in attachment, injunction, replevin and
receivership bonds. It was observed in one case that once upon a time the
Obviously, the lower court has no choice but to implement that directive rulings on that point were in a muddled state.
which is the law of the case (See Compagnie Franco Indochinoise vs. Deutsch,
etc., 39 Phil. 474, 476). Section 20 of Rule 57 is a revised version of section 20, Rule 59 of the 1940
Rules of Court which earlier section 20 is a restatement of this Court's rulings
However, the trial court's implementation of that directive was incorrect. It set under sections 170, 177, 223, 272 and 439 of the Code of Civil Procedure
the claim for hearing but the surety assailed its jurisdiction and did not regarding the damages recoverable in case of the wrongful issuance of the
consider itself bound by the mandate of the appellate court. The merits of the writs of preliminary injunction, attachment, mandamus and replevin and the
claim for damages were not threshed out at the hearing because the surety appointment of a receiver.
stood pat on its contention that the trial court has no jurisdiction to allow the
claim in view of the finality of the decision of the Court of Appeals. Section 170 contains the provision that the damages suffered in connection
with the issuance of a preliminary injunction shall be ascertained by the court
This Court has held that, if the surety was not given notice when the claim for trying the action (meaning the court where the action is pending) and shall be
damages against the principal in the replevin bond was heard, then as a matter included in the final judgment "against the plaintiff and against the sureties".
of procedural due process the surety is entitled to be heard when the
459 of 501
As to damages in case of wrongful attachment, see section 439 of the Code of may cross-examine the witnesses presented by the defendant (Visayan Surety
Civil Procedure and Belzunce vs. Fernandez, 10 Phil. 452. & Insurance Corporation vs. Pascual, 85 Phil 779).
So, as held under the Code of Civil Procedure, if the preliminary injunction Insofar as those rulings in the Florentino and Visayan Surety cases allowed a
was issued by this Court, the specification of damages should be filed in this claim for damages against the surety to be ventilated in a separate proceeding
Court. The petitioner and his bondsmen should be served with copies of the or after the finality of the judgment for damages against the principal in the
specification (Somes vs. Crossfield, 9 Phil. 13 and Macatangay vs. Municipality bond, those rulings were jettisoned and abandoned in several subsequent cases
of San Juan de Bocboc, 9 Phil. 19). because they are contrary to the explicit provision of section 20 of Rule 59,
now Rule 57, that the judgment for damages against the surety should be
On the other hand, under section 439 of the Code of Civil Procedure, the included in the final judgment to avoid additional proceedings (Cruz vs.
damages caused by a wrongful attachment may be adjudicated in a summary Manila Surety & Fidelity Co., Inc., 92 Phil. 699; Japco vs. City of Manila, 48
hearing but the better practice would be to claim the damages in the answer Phil. 851, 855).
and to offer evidence in support thereof during the trial (Gasataya vs. Fallon 32
Phil. 245 and Raymundo vs. Carpio, 33 Phil. 395). The damages are recoverable on the theory that an actionable wrong was
committed by the losing party. The recovery is limited to the amount of the
Note that under the second paragraph of section 20, Rule 57 of the present bond (Pacis vs. Commission on Elections, L-29026, August 22, 1969, 29 SCRA
Rules of Court, the damages suffered during the pendency of an appeal in a 24, 29).
case where the writs of attachment, injunction and replevin or an order of
receivership were issued should be claimed in the appellate court. The usual procedure is to file an application for damages with due notice to
the other party and his sureties. The other part may answer the application.
There is an old ruling that the sureties in an injunction bond are bound by a Upon the issues thus being Joined, the matter will be tried and determined. A
judgment for damages against their principal even if the sureties were not court order declaring the bond confiscated without adhering to that procedure
heard at the time the claim for damages was tried. The reason for that ruling is is void ( Fabella vs. Tancinco 86 Phil. 543; Luzon Sureo Inc. Guerrero, L-20705,
that the sureties in an injunction bond "assume such a connection with the June 20, 1966. 17 SCRA 100).
suit that they are included by a judgment in it in a suit at law upon the bond,
so far as the same issues are involved; and that, upon the entry of a judgment The claim for damages against the surety should be made it notice to the
against the principal, their liability is absolute" (Florentino vs. Domadag, 45 surety and before the judgment against the principal becomes executory. The
O.G. 4937, 81 Phil. 882). liability of the surety should be included in the final judgment. That remedy is
exclusive. If riot assailed of, the surety is released (Curilan vs. Court of
Also, it was held that if damages were awarded against the principal in a Appeals, 105 Phil. 1160 and De la Rama vs. Villarosa, 118 Phil. 42-1. 430: Jesswani
replevin bond without notice to the surety, that final judgment may be vs. Dialdas 91 Phil. 915: Estioco vs. Hamada, 103 Phil. 1145).
enforced against the surety after it has been given an opportunity to be heard
as to the reality or reasonableness of the alleged damages. In such a case, the Therefore, the prevailing settled rule is that a court has no jurisdiction to
trial court must order the surety to show cause why the bond should not entertain any proceeding seeking to hold a surety upon its bond if such surety
answer for the judgment for damages. The hearing is summary and the surety has not been given notice the claim for damages against the principal and the
judgment holding the latter liable has already become executor (People's
460 of 501
Surety & Insurance Co., Inc. vs. Court of Appeals, L-21627. June 29, 1961, 20 thirty pesos daily from January 6, 1947 up to the date of the return of the truck
SCRA 481). or until its value was fully paid. The Court of Appeals affirmed that judgment.
If the judgment awarding damages against the principal in a bond for the After the return of the record to the trial court, Victoria Pascual filed a
lifting of a preliminary injunction had already become executory, that claim "petition for execution of the surety bond" wherein she prayed for a writ of
cannot be pressed against the surety by setting it for hearing with notice to the execution against the surety to satisfy the judgment out of its replevin bond.
surety. The failure to notify the surety of the claim for damages against the The surety opposed that petition. It contended that it was never notified by
principal relieves the surety from any liability on his bond (Sy vs. Ceniza, 115 Victoria Pascual regarding her presentation of evidence covering the damages
Phil. 396; Pacis vs. Commission on Elections, L-29026, August 22, 1969, 29 which she had suffered. The trial court granted the petition and ordered the
SCRA 24; Dee vs. Masloff, 116 Phil. 412). issuance of a writ of execution against the surety. That order was assailed in a
certiorari in this Court.
To entertain the belated claim against the surety after the judgment for
damages against the principal has become executory would result in the It was held that the writ of execution should be set aside and that the surety
alteration of that judgment. That should not be done (De Guia vs. Alto Surety should be given a chance to be heard in a summary proceeding. That
& Insurance Co., Inc., 117 Phil. 434; Visayan Surety & Insurance Co., Inc. vs. De proceeding was conducted after the judgment against Yu Sip, the principal in
Aquino, 96 P1. 900; Port Motors, Inc. vs. Raposas and Alto Surety & Insurance the replevin bond, had become final and executory.
Co., Inc., 100 Phil. 732; Gerardo vs. Plaridel Surety & Insurance Co., Inc., 100
Phil. 178; Luneta Motor Co. vs. Lopez, 105 Phil. 327; Curilan vs. Court of What was done in the Visayan Surety case, as recounted above, was not
Appeals, 105 Phil. 1160; Riel vs. Lacson, 104 Phil. 1055). allowed in subsequent cases. Thus, inManila Underwriters Insurance Co., Inc.
vs. Tan, 107 Phil. 911, the trial court rendered in 1954 a judgment dissolving the
Moreover, the damages claimed by the defendant should be pleaded as a preliminary attachment and ordering the plaintiff to pay the defendant the
compulsory counterclaim in his answer. Hence, a separate action to claim damages which the latter suffered by reason of the wrongful attachment. The
those damages is unwarranted (Ty Tion and Yu vs. Marsman & Co. and Alpha surety in the attachment bond was not notified of the hearing but it was
Insurance & Surety Co., Inc., 115 Phil. 746, 749; Medina vs. Maderera del Norte furnished with a copy of the decision.
de Catanduanes, Inc., 51 Phil. 240; Nueva-España vs. Montelibano, 58 Phil. 807;
Tan Suyco vs. Javier, 21 Phil. 82). In 1957 the Court of Appeals affirmed that judgment. After it became final, the
defendant filed in the trial court against the surety a motion for execution
It may be noted that in the Visayan Surety case, 85 Phil 779, Visayan Surety & winch the latter opposed. At the hearing of the motion, the defendant offered
Insurance Corporation filed a replevin bond for one Yu Sip who sued Victoria to reproduce the evidence which he had presented at the trial. The offer was
Pascual for the recovery of a truck. The trial court found that the writ of accepted by the trial court. It issued the writ of execution against the surety.
replevin was wrongfully procured, that Victoria Pascual was the lawful owner
of the truck and that she suffered damages on account of its wrongful seizure It was held that, because the surety was not notified of the hearing on the
by the sheriff at the instance of plaintiff Yu Sip. damages suffered by the defendant in the manner prescribed in section 20 of
Rule 59, now Rule 57, it was not liable for damages under its attachment bond.
The trial court ordered Yu Sip to return the truck to Victoria Pascual or to pay
its value of P2,300 in case of his inability to return it and, in either case, to pay
461 of 501
The surety is notified so that he may cross-examine the witnesses testifying as the principal was returned unsatisfied, the claimant filed a motion praying
to the damages and question the evidence presented by the claimant and that the surety company be required to show cause why it should not answer
interpose any appropriate defense (Riel vs. Lacson, 104 Phil. 1055; Liberty for the judgment against the principal.
Construction Supply Co. vs. Pecson, 89 Phil. 50).
It was held that, while the prevailing party may apply for an award of damages
So, if plaintiff's claim for damages resulting from the wrongful lifting of the against the surety even after the award has already been obtained against the
writ of preliminary injunction was awarded in the main decision without principal, nevertheless, in order that all awards for damages may be included
notice to the surety and the decision had become executory, the failure to in the final judgment, the application and notice to the surety must be made
notify the surety on time relieves him from liability under the bond (Alliance before the judgment against the principal becomes final and executory.
Insurance & Surety Co., Inc. vs. Piccio, 105 Phil. 1192).
In another case, it was held that as the winning party sought to hold the surety
The surety may be held liable only if before the judgment for damages against liable on its replevin bond almost a year after the judgment of the Court of
the principal becomes executory, an order is entered against him after a Appeals became final, the trial court erred in enforcing its judgment against
hearing with notice to him. After the judgment becomes executory, it is too the surety. "The surety may only be held liable if, before judgment becomes
late to file such claim for damages with notice to the surety (Abelow vs. Riva final, an order against the surety is entered after a hearing with notice to the
105 Phil. 159; Visayan Surety & Insurance Corp. vs. Lacson, 96 Phil. 878). surety". The claim against the surety should be included in the final judgment.
It is not sufficient that the surety be afforded an opportunity to oppose the
Where the Court of Appeals dismissed a mandamus action originally filed in writ of execution. (Plaridel Surety & Insurance Company vs. De los Angeles, L-
that court and dissolved the preliminary injunction which it had issued and 25550, July 31, 1968, 24 SCRA 487).
after entry of judgment was made the record was remanded to the trial court,
it was error for the Court of Appeals to allow the respondent in that case to file After this Court's judgment dissolving a preliminary injunction had become
a claim for damages against the principal and surety in the injunction bond. final and executory, it would be too late to entertain in the trial court the
The claim should have been filed before the judgment of dismissal became defendant's application for damages allegedly caused by the injunction (Santos
final (Luzon Surety Co. Inc. vs. Court of Appeals, 108 Phil. 157). vs. Moir 36 Phil. 350).
Section 20 of Rule 57 contemplates one judgment for damages against the The defendant in a replevin case cannot file a separate action for damages due
principal and the surety in the injunction, replevin, attachment and to the wrongful issuance of the writ. He should have claimed the damages as a
receivership bonds. Since the judicial bondsman has no right to demand the counterclaim in the original replevin suit (Pascua vs. Sideco 24 Phil. 26, Ty
exhaustion of the property of the principal debtor, there is no justification for Tion and Yu vs. Marsman & Co. and Alpha Ins. & Surety Co. Inc., 115 Phil. 746).
entering separate judgments against them. The claim for damages against the
surety should be made before entry of judgment (Del Rosario vs. Nava, 95 Phil. A final judgment for damages against the principal in a replevin bond cannot
637). be enforced against the surety company which was not notified of the claim
for damages and was not afforded a chance to be heard (People's Surety and
In the Del Rosario case a judgment for damages was rendered against the Ins. Co., Inc. vs. Aragon, 117 Phil, 257).
principal in an attachment bond but there was no notice to the surety of the
claim for damages. That judgment became final. After the execution against
462 of 501
Where an injunction was dissolved and only attorney's fees and costs were defendant filed a counterbond. But this bond provided that the defendant and
adjudged against the principal, and the procedure for claiming damages his sureties would pay "all damages that the defendant (sic) may suffer by
against the surety was not followed, no recourse could be had against the reason of" the attachment. In other words, the defendant executed a bond in
injunction bond in case the writ of execution against the principal was not favor of himself.
satisfied. Moreover, the attorney's fees and costs could be recovered from the
principal even without the filing of the bond (People's Surety & Insurance Co., Judgment was rendered for the plaintiff. As the execution was returned
Inc. vs. Bayona, 103 Phil. 1109). unsatisfied, the trial court on plaintiff's motion ordered execution against
defendant's bond. It was held that the execution was wrongfully issued.
Where after the dismissal of a petition for relief from the judgment of a
municipal court, the Court of First Instance ordered ex parte the issuance of a However, where an injunction was issued in a forcible entry case but on
writ of execution against the petitioner's injunction bond, that order is void certiorari to the Court of First Instance, the justice of the peace court was held
because there was no formal claim for damages and there was no hearing with to be without jurisdiction to entertain the ejectment case, that ejectment suit
notice to the petitioner and his surety. The court should hold a hearing. is not considered dismissed and it may still be regarded as pending in the
(Luzon Surety Co., Inc. vs. Guerrero, L-20705, June 20, 1966, 17 SCRA 400). justice of the peace court for the purpose of allowing the defendant's claim for
damages on the injunction bond (Cruz vs. Manila Surety & Fidelity Co., 92
Where on June 11, 1959 an action to stop the foreclosure of a chattel mortgage Phil. 699).
was dismissed, without prejudice, for failure to prosecute and, before that
dismissal became final, the defendant did not prove any damages resulting Section 10 of Rule 60 makes section 20 of Rule 57 applicable not only to the
from the issuance of the preliminary injunction, defendant's motion of replevin bond but also to theredelivery bond posted by the defendant for the
September 7, 1959 praying that judgment be rendered against the surety's lifting of the order of seizure. The requisites for holding the surety liable on
bond could no longer be entertained. The claim for damages should have been the replevin bond are also the requisites for holding the surety hable on the
made before entry of final judgment. It must be duly substantiated at the redelivery bond. So, if the surety on the redelivery bond was not notified of the
proper hearing with notice to the surety (Jao and Sia vs. Royal Financing plaintiff's claim for damages, the surety cannot be held liable on its redelivery
Corporation, 114 Phil. 1152; Visayan Surety & Insurance Corp. vs. Lacson, 96 bond for the damages adjudged against the principal. It is necessary that the
Phil. 878). surety be notified and that its liability be included in the final judgment
against the principal (Luneta Motor Co. vs. Menendez 117 Phil. 970).
If the case wherein the injunction was issued was dismissed for failure to
prosecute and no damages were awarded to the defendant by reason of the The writ of execution issued against the counterbond for the dissolution of an
issuance of the injunction, it was error for the trial court to issue a writ of injunction is void if it was issued without notice to the surety and after the
execution against the surety since there was no claim nor evidence of damages judgment on the merits had become executory. The surety's liability should
suffered the defendant. The order of dismissal did not include in final of have been included in the final judgment (Cajefe vs. Fernandez, 109 Phil. 743).
damages. (Vet Bros. and Co., Inc. vs. Movido 11 4 Phil, 211).
If the judgment awarding damages against the principals in the counterbonds
The case of Vadil vs. De Venecia, 118 Phil. 1217, involves a queer situation. filed for the lifting of the receivership was appealed to the Court of Appeals
Plaintiff corporation in that case filed an action to recover a sum of money. It and the plaintiff-appellee filed in the trial court (not in the appellate court) his
asked for a writ of attachment. Before any attachment could be issued, the application for damages against the sureties in the counterbonds, the trial
463 of 501
court cannot hear the said application after the record is remanded to it Co., Inc., 112 Phil. 44. See Cosme de Mendoza vs. Pacheco and Cordero, 64
because, by then, the decision of the appellate court had become final and the Phil. 34).
damages to be awarded against the sureties could no longer be included in
that judgment. The application for damages against the sureties should have It should be underscored that in the instant case, although the surety's liability
been filed in the Court of Appeals (Luneta Motor Co. vs. Menendez 117 Phil. was not included in the final judgment, which became executory, nevertheless,
970, 976). there was a timely application for damages in the Court of Appeals which in its
decision ordered the trial court to hear defendant-appellee Fernando's claim
The procedure in section 20 of Rule 57 should not be confounded with the for damages against the surety. That feature of the case removes it from the
procedure in section 17 of the same rule regarding the surety's liability on coverage of the rule that the surety should be heard before the judgment
the counterbond for the lifting of the preliminary attachment. Under section 17, becomes executory and that his liability should be included in the final
the surety may be held liable after notice and summary hearing conducted judgment.
after the judgment had become executory and the execution was returned
unsatisfied (Towers Assurance Corporation vs. Ororama Supermart, L-45848, WHEREFORE, we hold that the trial court has jurisdiction to comply with the
November 9, 1977, 80 SCRA 262; Vanguard Assurance Corporation vs. Court of directive of the Court of Appeals but we reverse and set aside its order of July
Appeals, L-25921, May 27, 1975, 64 SCRA 148). 14, 1978, requiring petitioner-appellant Malayan Insurance Co., Inc. to pay the
damages which it had adjudged against Makati Motor Sales, Inc.
The case contemplated in section 17 of Rule 57 is different from the case
envisaged in section 20 of that rule (Dizon vs. Valdes, L-23920, April 25, 1968, The trial court is required to hold a summary hearing wherein appellant surety
23 SCRA 200; Visayan Surety & Insurance Corp. vs. De Aquino, 96 Phil. 900). should be given a chance to contest the reality or reasonableness of
respondent-appellee Rosendo Fernando's claim for damages. After such
Nor does section 20 of Rule 57 apply to cases where the surety bound himself hearing, or if the surety should waive it, the trial court should render the
to abide by the judgment against his principal and thereby renounced his right proper judgment. No costs.
to be sued or cited, or where the surety guaranteed the return of certain goods
and he did not raise the issue of lack of notice, or where the sureties bound SO ORDERED.
themselves to pay the plaintiff a definite amount (Aguasin vs. Velasquez, 88
Phil. 357; Lawyers Cooperative Publishing Co. vs. Periquet, 71 Phil. 204;
Mercado vs. Macapayag and Pineda, 69 Phil. 403 cited in Alliance Insurance
case, 105 Phil. 1201).
Note that a different rule also obtains with respect to the surety in the bond of
an administrator or executor The nature of a surety's obligation on an
administrator's bond, which makes him privy to the proceeding against his
principal, is such that he is bound and concluded, in the absence of fraud or
collusion, by a judgment against his principal, even though the surety was not
a party to the proceedings (Laurente vs. Rizal Surety & Insurance Co., Inc., L-
21250, March 31, 1966, 16 SCRA 551, citing Philippine Trust Co. vs. Luzon Surety
464 of 501
WHEREFORE, the decision appealed from is hereby

Philippine Charter Insurance v. CA, 179 S 468 REVERSED and SET ASIDE, and Civil Case No. 43874 of the
Regional Trial Court of Pasig is DISMISSED for lack of merit.
FIRST DIVISION For the wrongful attachment of Learjet aircraft 35A-44 owned
by defendant-appellant Gates Learjet Corporation, plaintiff-
G.R. No. 88379 November 15, 1989 appellee Learjet Philippines, Inc. is hereby ordered to pay to
the former by way of actual damages the amount of $73,179-
PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner, 36, P50,000.00 as exemplary damages, and the costs of the
vs. suit.
COURT OF APPEALS, GATES LEARJET CORPORATION and GATES
LEARJET EXPORT CORPORATION,respondents. On December 16, 1986 four days after notice of the judgment was served on
the defendants, they filed with the Court of Appeals an "Urgent Petition to
T.J. Sumawang & Associates for petitioner. have Damages Awarded on Account of Illegal Attachment Executed Against
Attachment Bond Issued by the T.J. Philippine American Assurance Co., Inc.,
Quasha, Asperilla, Ancheta, Peña & Nolasco for private respondents. Now Pan-Philippines General Insurance Corporation." The petition adverted to
the attachment bond posted by the surety firm in the amount of
P2,000,000.00, and asked that the "damages awarded defendants- appellants
by reason of the wrongful attachment be enforced, after proper notice to
NARVASA, J.: plaintiff and its bondsman and hearing of ... (the) application, jointly and
severally against both the plaintiff and the bonds-man-surety ... ." A copy of
In December, 1981, Learjet Phil. Inc. commenced suit in the Regional Trial the petition was furnished the surety. The plaintiff, in its turn, filed a motion
Court at Pasig against Gates Learjet Corporation and Gates Learjet Export for reconsideration of the decision of December 10, 1986.
1
Corporation. On said plaintiffs application, and upon the posting of an
3
attachment bond in its behalf by Philippine Charter Insurance Corporation By Resolution dated March 10, 1987, the Court of Appeals: (1) denied the
(then known as Phil-Am Assurance Co., Inc.), the Court issued a writ of plaintiffs motion for reconsideration for lack of merit; and (2) NOTED
preliminary attachment directed against the defendants' properties. On the "defendants-appellants' application or claim for damages against the surety"
strength of the writ, the sheriff seized a twin engine airplane, a Learjet 35-A- and RESOLVED "to refer the Said claim or application to the trial court and
3799, belonging to the defendants. allow the latter to hear and decide the same pursuant to Section 20, Rule 57 of
the Rules of Court."
After due proceedings, judgment was rendered by the Trial Court in plaintiffs'
favor, sentencing the defendants to pay US$2,250,000.00 as actual damages, The plaintiff tried to have the Appellate Court's decision reviewed and
4
P200,000.00 as moral damages, P100,000.00 as exemplary damages, as well as reversed by us, but failed. We denied its petition for review by resolution
attorney's fees and costs. On appeal to the Court of Appeals by the dated August 10, 1987; and entry of the resolution was made on February 26,
2
defendants, however, this judgment was reversed. The decision of the 1988.
Appellate Tribunal, promulgated on December 10, 1986, disposed as follows:
465 of 501
On remand of the case to the Trial Court, the defendants filed an "Urgent hearing of said application before the trial court. In fact, said
Petition to Have Damages Awarded on Account of Illegal Attachment Executed application was duly noted by the Honorable Court of
Against Attachment Bond Issued by the Surety Philippine American Assurance Appeals in its resolution. Hence, an application for damages
Co., Inc., now Pan-Philippines General Insurance Corporation" dated December was filed in time.
16, 1986. The Court ordered execution of the judgment "against the plaintiff at
Suite 10 Prescon Strata 100 Emerald Avenue, Pasig, Metro Manila" in Considering the foregoing, and in order to determine the
accordance with the Rules. The writ issued on April 8, 1988. extent of the liability of both principal and surety on the
attachment bond, a hearing is necessary.
Evidently, the sheriff sought to enforce the writ also against the surety,
"Philippine Charter Insurance Corporation ... (formerly Pan-Philippines The Court also resolved to issue, upon a bond of Pl,000,000.00, a writ of
General Insurance Corporation)." Said surety thereupon filed with the Trial preliminary injunction restraining the sheriffs from enforcing the writ of
Court an "Urgent Motion to Recall against Nullify Sheriffs Notice of execution or otherwise executing the judgment against the surety "until the
Enforcement of Writ of Execution, and for Issuance of Restraining Order/Writ application for damages on the attachment bond is heard and decided;" and
of Restraining Injunction." It contended that there was in truth no judgment set the hearing on the matter on August 9, 1988.
against it "due to the wrongful attachment of ... (the defendants') Learjet
Aircraft 35A-44," that since neither Section 20, Rule 57 of the Rules of Court The surety moved for reconsideration, but its motion was denied by Order
nor the Resolution of the Court of Appeals of March 10, 1987 had been handed down on October 13, 1988. The surety then went to the Court of
complied with, there existed no award of damages against it under its Appeals again, where it sought annulment of the Trial Court's Orders of June
attachment bond, and enforcement of execution against said bond would be 14, 1988 and October 13, 1988. Its petition for certiorari, prohibition and
contrary to due process. preliminary injunction, filed on November 3, 1988, was docketed as CA-G.R.
No. SP No. 15987. In it the surety argued that it had been denied its day in
The Trial Court forthwith restrained enforcement of the writ of execution court when, without its being present at the trial, the defendants had
against the surety and set the surety's motion for hearing in the morning of "adduced evidence in support of ... (the) damages" eventually awarded by the
May 27, 1988. After receiving the parties' arguments, the Court promulgated an Court of Appeals; that said defendants had "fatally failed to file an application
Order on June 14, 1988 overruling the movant surety's argument that it (the for damages on account of the wrongful attachment," and consequently, the
Court) had lost competence to hear and determine the application or damages Court had "no more jurisdiction to set for hearing ... (the) urgent petition" (to
against the attachment bond because the judgment of the Court of Appeals have damages awarded on account of illegal attachment executed against
had become final and executory. The Court observed that: attachment bond, etc.).
What is contemplated under Section 20, Rule 57, is that if no The Appellate Court's verdict however again went against the surety. By
5
application for damages is made before the entry of the final Decision promulgated on March 8, 1 989, the petition was "DENIED DUE
judgment the surety on the bond is relieved from liability COURSE." According to the Court, (1) the "general prayer" in the petition (to
therefor. (Visayan Surety and Insurance Corporation v. hold surety liable on its bond) dated December 16,1986 "for such further reliefs
Pascual [85 Phil. 779], citing Facundo vs. Tan and Facundo vs. justified in the premises" was "broad enough to include and embrace an
Lim). In the case at bar, an application was made before the application or claim for whatever damages movants sustained during the
entry of final judgment ... . What was merely deferred was the pendency of the appeal, by reason of ... "the wrongful attachment ...", (2) such
466 of 501
a finding was consistent with "Supreme Court rulings' and the earlier The surety does not, to be sure, become liable on its bond simply because
"Resolution of March 10, 1987" noting "defendants-appellants' application or judgment is subsequently rendered against the party who obtained the
claim for damages against the surety" and referring it "to the, trial court ... preliminary attachment. The surety becomes liable only when and if "the court
pursuant to Section 20, Rule 57 of the Rules of Court;" and (3) "what must have shall finally adjudge that the applicant was not entitled to the attachment." This
been contemplated ... (in said application or claim for damages) were not the is so regardless of the nature and character of the judgment on the merits of
6
damages awarded in CA-G.R. CV No. 08585, but the damages which the principal claims, counterclaims or cross-claims, etc. asserted by the parties
applicants or claimants could have suffered during the pendency of said against each other. Indeed, since an applicant's cause of action may be entirely
appeal, as a consequence of the wrongful attachment found by final different from the ground relied upon by him for a preliminary
10
judgment," for otherwise "there would have been no need for this Court to attachment, it may well be that although the evidence warrants judgment in
allow and, in effect, direct the trial court a quo 'to hear and decide' subject favor of said applicant, the proofs may nevertheless also establish that said
post-judgment petition in CA-G.R. CV No. 08585." The surety's motion for applicant's proferred ground for attachment was inexistent or specious and
reconsideration dated March 28, 1989 was denied by Resolution dated May 17, hence, the writ should not have issued at all; i.e., he was not entitled thereto in
1989. 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
7
The surety is once again before us, this time praying for reversal of the him — usually on the basis of a counterclaim — to pay damages caused to his
11
Appellate Tribunal's aforesaid judgment of March 8, 1989. Once again it will adversary by the wronful attachment.
fail, no merit being discerned in its petition for review on certiorari.
When the final judgment declares that the party at whose instance an
By settled rule a writ of preliminary attachment may issue once the Court is attachment had issued was not entitled thereto, there is no question about the
satisfied, on consideration ex parte of the application and its supporting eminent propriety of condemning that party to the payment of all the damages
8
affidavits and documents, or after healing, as the court may in its discretion that the wrongful attachment had caused to the party whose property had
consider proper, that any of the grounds specified by law exists, and an been seized under the attachment writ.
9
acceptable bond is given by the applicant —
But what of the surety's liability? The surety on an attachment bond, as
... executed to the adverse party in an amount ... fixed by the already pointed out, assures that the applicant "will pay all the costs which
judge, not exceeding the applicant's claim, conditioned that may be adjudged to the adverse party and all damages which he may sustain
the latter will pay all the costs which may be adjudged to the by reason of the attachment, if the court shall finally adjudge that the applicant
12
adverse party and all damages which he may sustain by was not entitled thereto." In other words the surety, by submitting its
reason of the attachment, if the court shall finally adjudge attachment bond, binds itself solidarily to make the same payments which its
that the applicant was not entitled thereto. — principal the party at whose instance the attachment issues — may be
condemned to make, to compensate for the damages resulting from the
The filing of the attachment bond by a surety undoubtedly connotes and wrongful attachment, although unlike its principal, its liability is limited to the
operates as a voluntary submission by it to the Court's jurisdiction, and of amount stated in its bond.
course binds it to faithfully comply with its specific obligations under its bond.
The final adjudication "that the applicant was not entitled" to the attachment,
standing alone, does not suffice to make the surety liable. It is necessary, in
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addition, that the surety be accorded due process, i.e., that it be given an Certain principles are derived from this provision of the Rules. A party against
opportunity to be heard on the question of its solidarily liability for damages whom a writ of preliminary attachment issues may impugn the writ by
arising from wrongful attachment. This, by established rule and practice, is alleging and proving inter alia that the applicant was not entitled thereto, i.e.,
accorded to the surety at a summary hearing, scheduled after, judgment on that the asserted ground for attachment was inexistent, or the amount for
presentation of an application to hold it answerable on its bond. Evidently, which the writ was sought was excessive, etc., this, by appropriate motion. He
such a summary hearing is not rendered unnecessary or superfluous by the may also claim damages on account of the wrongful attachment through an
fact that the matter of damages was among the issues tried during the appropriate pleading, such as a counterclaim, or other form of application.
hearings on the merits, unless of course, the surety had previously been duly What is important is that the "application must be filed before the trial or before
impleaded as a party, or otherwise earlier notified and given opportunity to be appeal is perfected or before the judgment becomes executory, with due notice to
present and ventilate its side on the matter during the trial. The procedure for the attaching creditor and his surety or sureties, setting forth the facts showing
the rendition of a binding directive on the surety upon its solidarily liability for his right to damages and the amount thereof."
damages for wrongful attachment is indicated in Section 20, Rule 5'7 of the
Rules of Court. The section reads as follows: In the case at bar, since the Trial Court's decision had gone against the
defendants, and no irregularity had been adjudged as regards the preliminary
Sec. 20. Claim for damages on account of illegal attachment. — attachment, the latter obviously had no occasion to apply for damages from
If the judgment on the action be in favor of the party against wrongful attachment — although they could have so applied therefor because,
whom attachment was issued, he may recover upon the bond as already pointed out, it is entirely possible under the law that an applicant
given or deposit made by the attaching creditor,, any damages for preliminary attachment be adjudged entitled to relief on his basic claimand
resulting from the attachment. Such damages may be at the same time pronounced as not entitled to the attachment.
awarded only upon application and after proper hearing, and
shall be included in the final judgment. The application must As things turned out, the Trial Court's judgment was reversed by the Court of
be filed before the trial or before appeal is perfected or before Appeals; the latter dismissed the complaint, declared the plaintiff not entitled
the judgment becomes executory, with due notice to the to the attachment and sentenced it to pay to the defendants damages on
attaching creditor and his surety or sureties, setting forth the account thereof And it was only at this time that the defendants could have
facts showing his right to damages and the amount thereof. presented and did actually present their petition to enforce the surety's
liability on its bond. This petition, as aforestated, the Court of Appeals (a)
If the judgment of the appellate court be favorable to the noted and (b) referred to the Trial Court with instructions "to hear and decide
party against whom the attachment was issued, he must claim ... pursuant to Section 20, Rule 57 of the Rules of Court." Under the
damages sustained during the pendency of the appeal by circumstances, and in the light of the explicit provisions of said Section 20,
filing an application with notice to the party in whose favor Rule 57, there can be no debate about the seasonablenes of the defendants'
the attachment was issued or his surety or sureties. before the application for damages and the correctness of the referral by the Court of
judgment of the appellate court becomes executory. The Appeals of the application for damages to the Trial Court for hearing and
appellate court may allow the application to be heard and determination.
decided by the trial court.
Under the circumstances, too, there can be no gainsaying the surety's full
awareness of its undertakings under its bond: that, as the law puts it: "the
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plaintiff will pay all costs which may be adjudged to the defendant(s), and all bar, the judgment of the Trial Court has expressly or impliedly sustained the
damages which may be sustained by reason of the attachment, if the same shall attachment and thus has given rise to no occasion to speak of, much less, file
finally be adjudged to have been wrongful and without cause," and that those an application for damages for wrongful attachment, and it is only in the
damages plainly comprehended not only those sustained during the trial of decision of the Court of Appeals that the attachment is declared wrongful and
the action but also those during the pendency of the appeal. This is the that the applicant "was not entitled thereto," the rule is, as it should be, that it
13
law, and this is how the surety's liability should be understood. The surety's is entirely proper at this time for the application for damages for such
liability may be enforced whether the application for damages for wrongful wrongful attachment to be filed — i.e., for all the damages sustained thereby,
attachment be submitted in the original proceedings before the Trial Court, or during all the time that it was in force, not only during the pendency of the
on appeal, so long as the judgment has not become executory. The surety's appeal. And the application must be filed "with notice to the party in whose
liability is not and cannot be limited to the damages caused by the improper favor the attachment was issued or his surety or sureties, before the judgment
attachment only during the pendency of the appeal. That would be absurb. of the appellate court becomes executory." In such a situation, the appellate
The plain and patent intendment of the law is that the surety shall answer for court may resolve the application itself or allow it "to be heard and decided by
all damages that the party may suffer as a result of the illicit attachment, for all the trial court."
the time that the attachment was in force; from levy to dissolution. The fact
that the attachment was initially (and erroneously) deemed correct by the WHEREFORE, the petition is DISMISSED for lack of merit, the costs against
Trial Court, and it was only on appeal that it was pronounced improper, the petitioner.
cannot restrict recovery on the bond only to such damages as might have been
sustained during the appeal. The declaration by the appellate court that the SO ORDERED.
applicant for attachment "was not entitled thereto," signifies that the
attachment should not have issued in the first place, that somehow the Trial
Court had been misled into issuing the writ although no proper ground existed
therefor. The logical and inevitable conclusion is that the applicant for
attachment and the surety on the attachment bond are solidarily liable
for all the damages suffered by the party against whom the writ is enforced,
except only that the surety's liability is limited to the amount set forth in its
bond.
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
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with the Regional Trial Court of Cebu for sum of money and damages resulting
Zaragoza v. Fidelino, 163 S 443 (See under Section 17 page 402) from the refusal of Zenith to pay the amount claimed. The complaint was
docketed as Civil Case No. CEB-1215. Aside from actual damages and interests,
Zenith Insurance v. CA, 119 S 485 Fernandez also prayed for moral damages in the amount of P10,000.00,
exemplary damages of P5,000.00, attorney's fees of P3,000.00 and litigation
FIRST DIVISION expenses of P3,000.00.
On September 28, 1983, Zenith filed an answer alleging that it offered to pay
the claim of Fernandez pursuant to the terms and conditions of the contract
G.R. No. 85296 May 14, 1990 which, the private respondent rejected. After the issues had been joined, the
pre-trial was scheduled on October 17, 1983 but the same was moved to
ZENITH INSURANCE CORPORATION, petitioner, November 4, 1983 upon petitioner's motion, allegedly to explore ways to settle
vs. the case although at an amount lower than private respondent's claim. On
COURT OF APPEALS and LAWRENCE FERNANDEZ, respondents. November 14, 1983, the trial court terminated the pre-trial. Subsequently,
Fernandez presented his evidence. Petitioner Zenith, however, failed to
Vicente R. Layawen for petitioner. present its evidence in view of its failure to appear in court, without justifiable
reason, on the day scheduled for the purpose. The trial court issued an order
Lawrence L. Fernandez & Associates for private respondent. on August 23, 1984 submitting the case for decision without Zenith's evidence
(pp. 10-11, Rollo). Petitioner filed a petition for certiorari with the Court of
Appeals assailing the order of the trial court submitting the case for decision
without petitioner's evidence. The petition was docketed as C.A.-G.R. No.
MEDIALDEA, J.: 04644. However, the petition was denied due course on April 29, 1986 (p.
56, Rollo).
Assailed in this petition is the decision of the Court of Appeals in CA-G.R. C.V.
No. 13498 entitled, "Lawrence L. Fernandez, plaintiff-appellee v. Zenith On June 4, 1986, a decision was rendered by the trial court in favor of private
Insurance Corp., defendant-appellant" which affirmed in toto the decision of respondent Fernandez. The dispositive portion of the trial court's decision
the Regional Trial Court of Cebu, Branch XX in Civil Case No. CEB-1215 and provides:
the denial of petitioner's Motion for Reconsideration.
WHEREFORE, defendant is hereby ordered to pay to the
The antecedent facts are as follows: plaintiff:
On January 25, 1983, private respondent Lawrence Fernandez insured his car 1. The amount of P3,640.00 representing the damage incurred
for "own damage" under private car Policy No. 50459 with petitioner Zenith plus interest at the rate of twice the prevailing interest rates;
Insurance Corporation. On July 6, 1983, the car figured in an accident and
suffered actual damages in the amount of P3,640.00. After allegedly being 2. The amount of P20,000.00 by way of moral damages;
given a run around by Zenith for two (2) months, Fernandez filed a complaint
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3. The amount of P20,000.00 by way of exemplary damages; The Motion for Reconsideration of the decision of the Court of Appeals dated
August 17, 1988 was denied on September 29, 1988, for lack of merit. Hence,
4. The amount of P5,000.00 as attorney's fees; the instant petition was filed by Zenith on October 18, 1988 on the allegation
that respondent Court of Appeals' decision and resolution ran counter to
5. The amount of P3,000.00 as litigation expenses; and applicable decisions of this Court and that they were rendered without or in
excess of jurisdiction. The issues raised by petitioners in this petition are:
6. Costs. (p. 9, Rollo)
a) The legal basis of respondent Court of Appeals in awarding
Upon motion of Fernandez and before the expiration of the period to appeal, moral damages, exemplary damages and attomey's fees in an
the trial court, on June 20, 1986, ordered the execution of the decision pending amount more than that prayed for in the complaint.
appeal. The order was assailed by petitioner in a petition forcertiorari with the
Court of Appeals on October 23, 1986 in C.A. G.R. No. 10420 but which petition b) The award of actual damages of P3,460.00 instead of only
was also dismissed on December 24, 1986 (p. 69, Rollo). P1,927.50 which was arrived at after deducting P250.00 and
P274.00 as deductible franchise and 20% depreciation on
On June 10, 1986, petitioner filed a notice of appeal before the trial court. The parts as agreed upon in the contract of insurance.
notice of appeal was granted in the same order granting private respondent's
motion for execution pending appeal. The appeal to respondent court assigned Petitioner contends that while the complaint of private respondent prayed for
the following errors: P10,000.00 moral damages, the lower court awarded twice the amount, or
P20,000.00 without factual or legal basis; while private respondent prayed for
I. The lower court erred in denying defendant appellant to P5,000.00 exemplary damages, the trial court awarded P20,000.00; and while
adduce evidence in its behalf. private respondent prayed for P3,000.00 attorney's fees, the trial court
awarded P5,000.00.
II. The lower court erred in ordering Zenith Insurance
Corporation to pay the amount of P3,640.00 in its decision. The propriety of the award of moral damages, exemplary damages and
attorney's fees is the main issue raised herein by petitioner.
III. The lower court erred in awarding moral damages,
attorneys fees and exemplary damages, the worst is that, the The award of damages in case of unreasonable delay in the payment of
court awarded damages more than what are prayed for in the insurance claims is governed by the Philippine Insurance Code, which
complaint. (p. 12,Rollo) provides:
On August 17, 1988, the Court of Appeals rendered its decision affirming in Sec. 244. In case of any litigation for the enforcement of any
toto the decision of the trial court. It also ruled that the matter of the trial policy or contract of insurance, it shall be the duty of the
court's denial of Fernandez's right to adduce evidence is a closed matter in Commissioner or the Court, as the case may be, to make a
view of its (CA) ruling in AC-G.R. 04644 wherein Zenith's petition questioning finding as to whether the payment of the claim of the insured
the trial court's order submitting the case for decision without Zenith's has been unreasonably denied or withheld; and in the
evidence, was dismissed. affirmative case, the insurance company shall be adjudged to
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pay damages which shall consist of attomey's fees and other Court of Appeals, G.R. No. L-20238, January 30,1965; 13 SCRA 137; Solis v.
expenses incurred by the insured person by reason of such Salvador, G.R. No. L-17022, August 14, 1965; 14 SCRA 887). In the instant case,
unreasonable denial or withholding of payment plus interest there was a finding that private respondent was given a "run-around" for two
of twice the ceiling prescribed by the Monetary Board of the months, which is the basis for the award of the damages granted under the
amount of the claim due the insured, from the date following Insurance Code for unreasonable delay in the payment of the claim. However,
the time prescribed in section two hundred forty-two or in the act of petitioner of delaying payment for two months cannot be considered
section two hundred forty-three, as the case may be, until the as so wanton or malevolent to justify an award of P20,000.00 as moral
claim is fully satisfied; Provided, That the failure to pay any damages, taking into consideration also the fact that the actual damage on the
such claim within the time prescribed in said sections shall be car was only P3,460. In the pre-trial of the case, it was shown that there was no
considered prima facie evidence of unreasonable delay in total disclaimer by respondent. The reason for petitioner's failure to indemnify
payment. private respondent within the two-month period was that the parties could
not come to an agreement as regards the amount of the actual damage on the
It is clear that under the Insurance Code, in case of unreasonable delay in the car. The amount of P10,000.00 prayed for by private respondent as moral
payment of the proceeds of an insurance policy, the damages that may be damages is equitable.
awarded are: 1) attorney's fees; 2) other expenses incurred by the insured
person by reason of such unreasonable denial or withholding of payment; 3) On the other hand, exemplary or corrective damages are imposed by way of
interest at twice the ceiling prescribed by the Monetary Board of the amount example or correction for the public good (Art. 2229, New Civil Code of the
of the claim due the injured; and 4) the amount of the claim. Philippines). In the case of Noda v. Cruz-Arnaldo, G.R. No. 57322, June 22,1987;
151 SCRA 227, exemplary damages were not awarded as the insurance company
As regards the award of moral and exemplary damages, the rules under the had not acted in wanton, oppressive or malevolent manner. The same is true
Civil Code of the Philippines shall govern. in the case at bar.
"The purpose of moral damages is essentially indemnity or reparation, not The amount of P5,000.00 awarded as attomey's fees is justified under the
punishment or correction. Moral damages are emphatically not intended to circumstances of this case considering that there were other petitions filed and
enrich a complainant at the expense of a defendant, they are awarded only to defended by private respondent in connection with this case.
enable the injured party to obtain means, diversions or amusements that will
serve to alleviate the moral suffering he has undergone by reason of the As regards the actual damages incurred by private respondent, the amount of
defendant's culpable action." (J. Cezar S. Sangco, Philippine Law on Torts and P3,640.00 had been established before the trial court and affirmed by the
Damages, Revised Edition, p. 539) (See also R and B Surety & Insurance Co., appellate court. Respondent appellate court correctly ruled that the
Inc. v. IAC, G.R. No. 64515, June 22, 1984; 129 SCRA 745). While it is true that deductions of P250.00 and P274.00 as deductible franchise and 20%
no proof of pecuniary loss is necessary in order that moral damages may be depreciation on parts, respectively claimed by petitioners as agreed upon in
adjudicated, the assessment of which is left to the discretion of the court the contract, had no basis. Respondent court ruled:
according to the circumstances of each case (Art. 2216, New Civil Code), it is
equally true that in awarding moral damages in case of breach of contract, Under its second assigned error, defendant-appellant puts
there must be a showing that the breach was wanton and deliberately forward two arguments, both of which are entirely without
injurious or the one responsible acted fraudently or in bad faith (Perez v. merit. It is contented that the amount recoverable under the
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insurance policy defendant-appellant issued over the car of

plaintiff-appellee is subject to deductible franchise, and . . . .
The policy (Exhibit G, pp. 4-9, Record), does not mntion any
deductible franchise, . . . (p. 13, Rollo)
Therefore, the award of moral damages is reduced to P10,000.00 and the award
of exemplary damages is hereby deleted. The awards due to private respondent
Fernandez are as follows:
1) P3,640.00 as actual claim plus interest of twice the ceiling

prescribed by the Monetary Board computed from the time of
submission of proof of loss;
2) P10,000.00 as moral damages;
3) P5,000.00 as attorney's fees;
4) P3,000.00 as litigation expenses; and
5) Costs.
ACCORDINGLY, the appealed decision is MODIFIED as above stated.
SO ORDERED.
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same date, plaintiff Lazatin, alleging that "there is no security whatsoever for
Lazatin v. Twano, 2 S 842 the payment of the amount claimed in the complaint and that the defendant
defendants are removing or are about to remove or dispose of their property
EN BANC with intent to defraud their creditors, particularly the plaintiff," secured a writ
of attachment on the amount he deposited, and pursuant thereto, the Sheriff
G.R. No. L-12736 July 31, 1961 of Pampanga refused to deliver the sum of P13,849.88, which should have been
paid to the herein defendants.
FRANCISCO L. LAZATIN, plaintiff-appellant,
vs. On August 12, 1952, the herein defendants filed an Urgent Motion to Dissolve
ANGEL C. TWAÑO and GREGORIO T. CASTRO, defendants-appellees. the Writ of Preliminary Attachment on the following grounds:
Leonardo Abola for plaintiff-appellant. 1. That the plaintiff has no cause of action because (a) the right of
Manuel O. Chan for defendants-appellees. action, if any, has prescribed, and (b) the cause of action is barred by a
prior judgment; and
PAREDES, J.:
2. That the allegations in the petition for the issuance of the writ and
The case at bar had its genesis in Civil Case No. 213, CFI, Manila, entitled in the affidavit in support thereof are false.
"Angel C. Twaño and Gregorio T. Castro, plaintiffs, versus F. L. Lazatin, et al.,
defendants, Dionisio P. Tanglao, Intervenor," for the recovery of P35,000.00, On September 10, 1952, the lower court, after due hearing, dissolved the writ.
plus interest, realized in connection with the purchase by them (plaintiffs and
defendants) from the U.S. government, and the subsequent sale, of some 225 Subsequently, the defendants filed their answer and after the customary
auto-trucks. After trial, the CFI of Manila dismissed the complaint as well as admissions and denials, interposed as special defenses, the same grounds
the intervention. The order of dismissal was taken to the Court of Appeals averred in the motion to lift the writ and counterclaimed:
(CA-G.R. No. 4533-R), which, on November 3, 1950, rendered judgment
reversing the said order and declaring that plaintiffs and defendants were co- 1. That the plaintiff herein has filed a clearly unfounded civil action
owners in the business of buying and selling surplus auto-trucks, and ordered against the herein defendants as a result of which the latter had
the defendants (one of them Lazatin) to pay to the plaintiff s therein, the sum suffered actual or compensatory damages by way of attorney's fees in
of P10,000.00, with legal interest from the filing of the complaint. The said the sum of P3,000.00
decision became final; it was executed, with the levy of the properties of
defendant Lazatin and their subsequent sale at public auction, wherein the 2. That as a result of the wrongful attachment and the false statements
plaintiffs Twaño and Castro were the purchasers. Before the expiration of the made by the plaintiffs, under oath, in support of his Ex-Parte Petition
redemption period, on August 2, 1952, defendant Lazatin, deposited with the for the Writ, the herein defendants have suffered moral damages to
Sheriff of Pampanga the sum of P13,849.88, redemption price. On August 9, the amount of P10,000.00
1952, the same Francisco Lazatin, filed the present action, to recover from the
same Twaño and Castro the sum of P19,676.09, supposedly a balance of the
proceeds of auto-trucks, sold directly to purchasers by said defendants. On the
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3. That the wrongful attachment against the properties and the sum of The law on damages is found on Title XVII of the Civil Code (Arts. 2195 to
P13,849.88 had caused actual damages to the herein defendants, 2235). The rules governing damages laid down in other laws, and the principles
represented by the legal interest on such amount. of the general law on damages are adopted in so far as they are not in
consistent with the Code (Arts. 2196 and 2198). Article 2197 mentions the kind
On May 9, 1953, plaintiff Lazatin died and on March 10, 1954, Gil Gotiangco of damages recoverable, among which are (1) actual or compensatory and (2)
was appointed and qualified as administrator of plaintiff's estate. moral Article 2219 provides that moral damages may be recovered in
the following and analogous cases . . . (3) malicious prosecution. There is an
On the date set for hearing, the defendants herein were granted, a preliminary abundance of case holding that the action to recover damages from the
hearing on their special defenses (Sec. 5, Rule 8). The lower court on attachment plaintiff, for the wrongful issuance and levy of an attachment
November 12, 1954, entered an order, dismissing the complaint on the ground (malicious attachment) is identical or is analogous to the ordinary action
that it was barred by a prior judgment and by the statute of limitations. At the for malicious prosecution (Eastern v. Bank of Stockton, 66 Cal. 123, 56 Am. Rep.
same time, the Court set the case for hearing on defendants' counterclaim. On 77, 4 Pac. 1106; Robinson v. Kellum 6 Cal. 399; Grant v. Moore, 29 Cal. 644;
October 28, 1955, the trial court rendered judgment, ordering the estate of King v. Montgomery 50 Cal. 115; Gonzales v. Cobliner 68 Cal 151, 8 Pac. 697;
Lazatin to pay the defendants therein the following sums: — Asevado v. Orr 100 Cal. 293, 34 Pac. 777). It may logically be inferred,
therefore, that in order hat moral damages may be recovered in connection
(1) P3,000.00 for the fees of Attorney Manuel O. Chan; with he writ of attachment under consideration, malice is an essential
ingredient thereof. In Songco v. Sellner, 37 Phil. 154, where the evidence
(2) P,500.00 for moral damages to each of the defendants; showed that defendant offered damages to his credit, as a result of writ of
attachment wrongfully issued, the Court declared that such damages were
(3) Six percent (6%) interest on the amount of P13,849.88 from August remote and speculative and that there was no 'ending that the attachment was
6, 1952 until said amount is actually delivered to and receipted by the maliciously sued out. In Aboitiz v. Da Silva, 45 Phil. 883, the Court refused to
defendants; and grant damages for loss of reputation by reason of an improper attachment, on
the ground that there was no evidence from which malice on the part of the
(4) To pay the costs. plaintiff or loss of credit to the defendant, may be inferred or presumed. In
Masterson v. Smith Navigation, 60 Phil. 366 ' damages to good name, allegedly
Judgment is also rendered against the Central Surety and Insurance suffered by the defendant as a result f a writ of attachment wrongfully issued,
Co., which is solidarily liable with the Estate of the deceased plaintiff were disallowed in the ground that such damages were very problematical. In
Francisco L. Lazatin on its bond for the sum of P20,000.00, filed by American jurisdictions where the principles of the general laws on damages in
said Company for the issuance on the writ of attachment for the common law (adopted by Art. 198 of the new Civil Code), are in force, only
amounts mentioned in Nos. (2) and (3) of the dispositive part of this actual or compensatory damages are recoverable for wrongful but not
decision. malicious attachment. An allowance may be made r injury to feeling if the
attachment was sued out maliciously and without probable cause; but in the
Upon appellant's request, the appeal was certified by the Court of Appeals to absence of his element there can be no recovery (6 C.J. 533- 534; 541). "The
this Court, as the issues involved therein are purely legal in character. authorities are quite uniform in holding that, in the absence of malice, injuries
to credit, reputation and business are too remote and speculative to be
recovered" (Union Nat. Bank v. Cross, 100 Wis. 174, 75 NW 992). There is no
475 of 501
issue of malice, damages must be compensatory merely, and confined to the for every injury to his credit, business or feelings (Tyler v. Mahoney 168 NC
actual loss from deprivation of the property attached or injury to it, or in case 237, 84 SE 362; Pittsburg etc. C 73, 47 SE 234). And considering the fact that
of closing business, to the probable profits of the business, during the time of the rules of court are of older vintage than the new Civil Code, the matter of
its stoppage (Holiday Bros. Cohen 34 Ark. 707). All of which go to show that damages in the said rules should be encompassed within the framework Of the
the attachment defendant is not entitled to moral damages, unless it is alleged Civil Code (Art. 2196 Civil Code). It is quite true that said section 4 employs
and established that the writ was maliciously sued out. the expression "all damages", but this should be understood to refer to the
damages resulting from the undertaking itself, the recovery of which is subject
This notwithstanding the defendants-appellees invoke the following rule, in to "the principles of the general law on damages", earlier discussed. (Art. 2198,
support of their thesis. Civil Code, supra).
SEC. 4. Bond required from plaintiff. — The party applying for the A cursory perusal of the decision would show that the trial court did not make
order must give a bond executed to the defendant in amount to be any express ruling that the writ of attachment was maliciously sued out by the
fixed by the judge, not exceeding the plaintiff claim that the plaintiff plaintiff or any finding of facts or circumstances from which it may be
will pay all the costs which it may be adjudged to the defendant and necessarily inferred that the attachment was thus obtained. The decision does
all damages which he may sustain by reason of the attachment, if the not make any finding that the defendants-appellees did in fact suffer mental
court shall finally adjudge that the plaintiff was not entitled thereto. anguish or injury to their credit or reputation. The decision simply states:
(Rule 59, R.C.) "Coming now to the moral damages which defendants have suffered consisting
of mental anguish, serious anxiety and besmirched reputation, it is believed
They claim that under the above section, malice and want of probable cause that sing businessmen of good commercial standing and reputation, each of
are not essential (II Moran's Rules of Court , 2nd Ed. pp. 19-20); that the them should be awarded at least P2,500.00." Moreover the dissolution of the
language used therein is clear and its intent and purpose are obvious; its writ was due to a technicality No moral damages can be inferred from the
provision cannot be given a broader scope than what it imports; and the mere act that the redemption price to which defendants were entitled, had
element of malice cannot be implied from the terms thereof. It is finally been retained by the provincial sheriff for a period of 38 days. The trial court
argued that as the attachment-plaintiff, according to the rule, should pay "all held that the present action was already investigated and adjudged in CA-G.R.
the damages" which the attachment defendant might sustain by reason of the To 4533-R and the right of action was barred by the state of limitations, and
attachment, if the court shall finally adjudge that the plaintiff was not entitled that since the writ of attachment was only a remedy adjunct to the main suit,
thereto, the ruling of the trial court that the appellant should pay the appellees plaintiff-appellant was not entitled to the writ. While the lower court declared
moral damages, is correct. We do not share this view. It should be observed that the defendants-appellees had an outstanding balance of P171,947.80, in
that Sec. 4 of Rule 59, does not prescribe the remedies available to the the bank and that they were not disposing their property in fraud of creditors
attachment defendant in case of a wrongful attachment, but merely provides or of the plaintiff, as alleged in the petition for the issuance of the writ still the
an action for recovery upon the bond, based on the undertaking therein made said court did not make any finding that the said petition was maliciously sued
and not upon the ability arising from a tortious act, like the malicious suing of out. We are, therefore, the opinion that the defendants-appellants are not
an attachment. Under the first, where malice is not essential, the attachment entitled to moral damages.
defendant, is entitled to recover only the actual damages sustained by him by
reason of the attachment. Under the second, where the attachment is In the absence of stipulation, attorney's fees and expenses of litigation, other
maliciously sued out, the damages recoverable may include a compensation than judicial costs, cannot be covered, except: . . .
476 of 501
(4) In case of a clearly unfounded civil action or proceeding against It appears that plaintiffs-appellants have abandoned their appeal with respect
the plaintiff. to the payment of 6% interest in the amount of P13,849.88.
xxx xxx xxx Modified, with the elimination of moral damages, the decision appealed from
is affirmed in all other respects. Costs against plaintiff-appellant.
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered." (Art. Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon, De
2208, Civil Code). Leon and Natividad, JJ., concur.
Bautista Angelo, J., is on leave.
Defendants' counterclaim for the recovery of attorney's fees is based on
paragraph 4 of the cited provision, for legal services rendered in defending the
main suit. There is no showing in the decision appealed from that plaintiffs'
action is "clearly unfounded". Plaintiffs-appellants' complaint was not
dismissed because the facts alleged therein were found untrue, but on purely
technical grounds; the special defenses of prescription of the action andres
adjudicata. While it may be hard to believe that the plaintiff had labored
under the impression that the matters involved in his complaint had not been
adjudicated in the previous litigation between the same parties (Civil Case No.
213 CFI Manila), because plaintiff himself was a lawyer such error of judgment
on his part would not justify the inference that the action was "clearly
unfounded". As aptly observed by appellants' counsel, defenses as the one
interposed by appellee in their counterclaim "raise questions of law not always
of obvious and easy solution." While it may appear also that the move was a
scheme to prevent the defendants-appellees from reaping the benefits of the
final judgment rendered in their favor in said case CA- G.R. No. 5433-R, still
one cannot nullify, without cause, the good and honest motive, which should
be presumed, when a litigant goes to court for the determination of his alleged
right.
Withal, and considering the fact that defendants-appellant lees were drawn
into this litigation by plaintiff-appellant and were compelled to hire an
attorney to protect and defend them, and taking into account the work done
by said attorney, as reflected in the record, throughout the proceedings, we
deem it just and equitable to award at attorney's fees for defendants-appellees.
The sum of P3,000.00 adjudicated by the trial court, is reasonable under the
circumstances (par. 11 Art. 2208, Civil Code).
477 of 501
improvement, electrical, and mechanical equipment located at Lipata,

MC Engineering v. CA, 380 S 116 Surigao City, which was damaged by typhoon Nitang. The agreed
** ***
consideration was P5,150,000.00 of which P2,500,000.00 was for
THIRD DIVISION the restoration of the damaged buildings and land improvement,
while the P3,000,000.00 was for the restoration of the electrical and
G.R. No. 104047 April 3, 2002 mechanical works.
MC ENGINEERING, INC., petitioner, The next day, on October 30, 1984 defendant Mc Engineering and
vs. plaintiff Gerent Builders, Inc. entered into an agreement wherein
THE COURT OF APPEALS, GERENT BUILDERS, INC. and STRONGHOLD defendant subcontracted to plaintiff the restoration of the buildings
INSURANCE CO., INC., respondents. and land improvement phase of its contract with Sucodeco but
defendant retained for itself the restoration of the electrical and
CARPIO, J.: mechanical works. The subcontracted work covered the restoration of
the buildings and improvement for P1,665,000.00 (Exh. C, also Exh. 6).
The Case
Two (2) months later, on December 3, 1984, Sucodeco and defendant
This is a petition for review on certiorari under Rule 45 of the Rules of Court, Mc Engineering entered into an agreement amending provision No.
seeking the reversal of the decision of the Court of Appeals dated November VII, par 1 of their contract dated October 29, 1984, by increasing the
1 2
14, 1991 and its resolution dated February 5, 1992. The Court of Appeals price of the civil works from P2,250,000.00 to P3,104,851.51, or an
reversed the decision dated July 15, 1989 of the Regional Trial Court, Branch increase of P854,851.51, with the express proviso that ‘except for the
3
85, Quezon City, in Civil Case No. Q-44392 dismissing the Complaint for Sum amendment above specified, all the other provisions of the original
of Money With Preliminary Attachment and Damages filed by respondent contract shall remain the same’ (Exh. L).
Gerent Builders, Inc. ("respondent Gerent" for brevity) against petitioner MC
Engineering, Inc., ("petitioner" for brevity). The trial court ordered The civil work aspect consisting of the building restoration and land
respondents Gerent and Stronghold Surety and Insurance Company improvement from which plaintiff would get P1,665,000.00 was
("respondent Surety" for brevity) to pay petitioner, jointly and severally, completed (TSN., p. 14, July 30, 1986) and the corresponding
damages and attorney’s fees. certificate of acceptance was executed (Exh. F), but the electrical
works were cancelled (Tsn., p. 8, July 30, 1986; Tsn., p. 19, Feb. 11,
The Facts 1987). On January 2, 1985, plaintiff received from defendant the
****
amount of P1,339,720.00 as full payment of the sub-contract price,
The undisputed facts in this case as found by the trial court and quoted by the after deducting earlier payments made by defendant to plaintiff, as
Court of Appeals in its assailed decision are as follows: evidenced by the affidavit executed by plaintiff’s president, Mr.
Narciso C. Roque (Exh. 1), wherein the latter acknowledged complete
"x x x On October 29, 1984, Mc Engineering, Inc. and Surigao Coconut satisfaction for such payment on the basis of the Statement of
Development Corporation (Sucodeco, for short) signed a contract Account (Exh. 2, 2-a & 2-b) which plaintiff had earlier forwarded to
(Exh. B, also Exh. 5), for the restoration of the latter’s building, land defendant.
478 of 501
Nevertheless, plaintiff is still claiming from defendant the sum of In its Answer, petitioner vigorously denied respondent Gerent’s causes of
P632,590.13 as its share in the adjusted contract cost in the amount of action. Petitioner counterclaimed for damages and attorney’s fees due to the
P854,851.51, alleging that the sub-contract is subject to the improper issuance of the writ of attachment.
readjustment provided for in Section VII of the agreement, and also
the sum of P166,252.00 in payment for additional electrical and civil On July 15, 1989, after trial on the merits, the trial court rendered its decision,
4
works outside the scope of the sub-contract." the dispositive portion of which reads:
Petitioner refused to pay respondent Gerent. Thus, on March 21, 1985, "WHEREFORE, judgment is hereby rendered against the plaintiff and
respondent Gerent filed the complaint against petitioner. On March 28, 1985, in favor of the defendant, as follows:
the trial court issued the corresponding writ of preliminary attachment upon
the filing by respondent Gerent of a P632,590.13 bond issued by respondent 1. Dismissing the instant case;
5
Surety. On April 24, 1985, petitioner moved to quash the writ on the ground
that it was improperly issued. The trial court denied the motion. 2. Ordering the plaintiff and Stronghold Surety And Insurance
Company to pay defendant M.C. Engineering, Inc., jointly and
6
Petitioner assailed the denial in a petition for certiorari filed with the Court of severally, the sum of P70,000.00 as moral damages; P30,000.00 as
Appeals. In a resolution dated October 17, 1986, the Court of exemplary damages; and P50,000.00 as attorney’s fees, plus costs.
7
Appeals rendered a decision granting the petition, as follows:
9
SO ORDERED."
"Wherefore, finding merit to the petition, the writ of attachment
dated March 28, 1985, and the order dated August 14, 1985, denying From the foregoing decision, respondents filed separate notices of appeal on
10
the motion to quash writ of attachment should be as it is hereby September 5, 1989 and November 2, 1989, respectively.
declared null and void, and the execution made by respondent Deputy
Sheriff Cristobal C. Florendo, under the writ of attachment issued The Court of Appeals rendered the assailed Decision on November 14,
11
should be as it is hereby nullified. The respondent Sheriff is hereby 1991. On February 5, 1992, the Court of Appeals denied petitioner’s motion for
12
directed to restore ownership of the properties heretofore seized and reconsideration.
8
attached to petitioner. No pronouncement as to costs."
The Ruling of the Court of Appeals
On July 13, 1987, the trial court ordered the return of petitioner’s properties
that deputy sheriff Cristobal C. Florendo attached and seized. The sheriff The Court of Appeals ruled respondent Gerent’s claim meritorious, declaring
reported to the court that he never seized a single property of petitioner but that Gerent is entitled to share 74% of the price increase in the civil works
merely conducted a "paper levy". portion of the main contract.
On January 5, 1988, petitioner filed an application against the attachment First, the Court of Appeals found that the price increase arose from a second
bond to recover damages it suffered due to the wrongful issuance of the writ of detailed estimate of the costs of civil works allegedly submitted by respondent
attachment. Respondent Surety opposed the application. Gerent to petitioner. Thus, the Court of Appeals stated:
479 of 501
"xxx. To obtain an adjustment in the contract price, it appears that "From the foregoing, it is apparent that the adjustment in the price of
plaintiff-appellant, as sub-contractor, submitted a second detailed civil works preceded the cancellation of the electro-mechanical works.
estimate of the costs of civil works (Exh. D) to appellee which, after If it is indeed true that the adjustment was for the sole benefit of
marking up the figures therein to reflect its share, attached the same appellee for its preparatory expenses and lost profits, the increase
to its letter of proposal for an increase in the contract price eventually would have been effected simultaneously with or after the
submitted to SUCODECO. On the basis of the estimates, the latter cancellation of the electrical and mechanical works. The fact that the
agreed to increase the cost for the full restoration of its typhoon amendment in the contract was made before the cancellation could
damaged buildings and land improvement (civil works) from only mean that SUCODECO agreed to increase the cost of the civil
P2,250,000.00 to P3,104,851.51 (Exh. L). Payment of this adjustment works not to compensate appellee for the then still subsisting original
was made by SUCODECO on December 27, 1984 (Exh. N). It is from agreement but as a result of the higher estimates submitted by the
16
this increase of P854,851.51 that plaintiff-appellant sought to recover contractor and subcontractor on the expenses for the civil works."
13
its share from the appellee."
Third, the Court of Appeals did not consider the absence of an itemized listing
"Appellee denies the submission of the second detailed estimates by of material and labor costs relevant to respondent Gerent’s right to a share in
plaintiff-appellant. It must be observed, however, that appellee is an the price increase.
electro-mechanical engineering firm which becomes an accredited
civil contractor only for as long as it has civil engineers to do the civil The Court of Appeals ruled that it is Sucodeco, the project owner, and not
works. Thus, in the SUCODECO project, appellee hired plaintiff- petitioner who can question the true value of the material and labor costs.
appellant, an undisputed civil contractor, to furnish civil engineering Since Sucodeco did not raise any question, it must have agreed to the price
services. Taking into account the technical expertise required to draw increase even without the submission of the true value. Consequently, the
up such a detailed estimate of civil works as Exh. D and the absence of Court of Appeals held that it was petitioner’s obligation to pay respondent
17
proof that other civil contractors apart from plaintiff-appellant was Gerent its share of the price increase in accordance with the subcontract.
ever engaged by appellee, it is undoubtedly plausible that plaintiff-
appellant made the estimates which appellee submitted to Fourth, the Court of Appeals found no evidence that petitioner spent
14
SUCODECO, with the corresponding adjustments in the costs." substantial amounts on the electrical and mechanical portion of the main
contract to justify petitioner’s claim to the entire price increase.
Second, the Court of Appeals noted that the price increase preceded the
cancellation of petitioner’s electrical and mechanical works portion of the The Court of Appeals rejected petitioner’s claim that the price increase was
main contract. intended to compensate petitioner for the losses it suffered due to the
cancellation of the electrical and mechanical portion of the main contract. The
Petitioner’s president, Mario Cruel, testified that on December 3, 1984, Court of Appeals stated that:
Sucodeco approved the price increase for the civil works portion of the main
contract. A week later, or on December 14, 1984, Sucodeco wrote to petitioner "It is important to note that despite appellee’s posturing that it
canceling the electrical and mechanical works portion of the main incurred expenses prior to the cancellation of its contract, thus
15
contract. The Court of Appeals thus reasoned: entitling it to the whole adjustment price, the records are bereft of
proof showing substantial amounts expended by appellee. To justify
480 of 501
its entitlement to the whole amount, it could have presented receipts and the surety-appellant are hereby adjudged to solidarily pay
reflecting purchases of materials, drawing plans of engineering appellee the sum of P5,000.00 as attorney’s fees, in connection with
designs, detailed estimates of electrical and mechanical works and the wrongful obtention of the writ of attachment. With costs against
testimonies of engineers allegedly mobilized to start the planning. As defendant-appellee.
it is, the most that appellee could produce were three (3) purchase
18
invoices totaling P110,000.00. xxx." SO ORDERED."
Fifth, the Court of Appeals found the quitclaim executed by respondent Gerent Hence, this petition.
on January 2, 1985 vitiated with fraud since petitioner intentionally withheld
from Gerent the information that on December 3, 1984 Sucodeco had already The Issues
agreed to the price increase. The Court of Appeals ruled:
In its Memorandum, petitioner raises the following issues:
"xxx. The mere fact that an affidavit or quitclaim was executed by Mr.
Roque on behalf of his company does not preclude or estop plaintiff- 1. WHETHER OR NOT THE COURT OF APPEALS COMMITTED
appellant from recovering its just share for it appears that appellee GRAVE ABUSE OF DISCRETION AND GROSSLY ERRED IN
intentionally withheld from Mr. Roque a vital information. Had he HOLDING THAT RESPONDENT GERENT IS ENTITLED TO
known, it is highly unlikely that he will sign the quitclaim. We are P632,590.13 OR 74% OF THE PRICE INCREASE IN THE CIVIL
more apt to believe Mr. Roque’s protestations that he did not know WORKS PORTION OF THE MAIN CONTRACT BETWEEN
about the adjustment. His testimony is straightforward, consistent PETITIONER AND SUCODECO.
and unwavering. Moreover, a prudent man engaged in the business of
construction for decades and whose interests are amply protected by a 2. WHETHER OR NOT THE QUITCLAIM EXECUTED BY GERENT
written instrument will not be easily convinced to acquiesce to have WAS VITIATED WITH FRAUD.
appellee get P1.4M of the whole contractual price. Appellee apparently
led Mr. Roque to believe that no adjustment was made to hide its big 3. WHETHER OR NOT PETITIONER IS ENTITLED TO ACTUAL,
share in the contract. Considering the fraud employed against MORAL, AND EXEMPLARY DAMAGES DUE TO THE WRONGFUL
19
plaintiff-appellant, the quitclaim is not binding at all." ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT.
Thus, in the dispositive portion of the assailed decision the Court of Appeals 4. WHETHER OR NOT THE AMOUNT OF P5,000.00 AS
decreed: ATTORNEY’S FEES IS SUFFICIENT.
"WHEREFORE, premises considered, judgment is hereby rendered 5. WHETHER OR NOT RESPONDENT GERENT IS ENTITLED TO
setting aside the appealed decision of the lower court, and in lieu ATTORNEY’S FEES IN THE AMOUNT EQUIVALENT TO TWENTY
thereof defendant-appellee is ordered to pay plaintiff-appellant the FIVE PERCENT (25%) OF P632,590.13.
sum of P632,590.13 representing the increased contract price in the
sub-contract agreement, with the civil works by SUCODECO, and The Ruling of the Court
attorney’s fees equivalent to 25% of P632,590.13. Plaintiff-appellant
481 of 501
The Court finds for petitioner MC Engineering, Inc. not constitute fraud, unless there is a special duty to disclose certain
facts. Moreover, the bare existence of confidential relation between
The Quitclaim of Respondent Gerent the parties, standing alone, does not raise the presumption of
23
fraud." (Emphasis supplied)
We begin with the issue of whether the so-called quitclaim executed by
respondent Gerent is valid. If the quitclaim is valid, then the quitclaim settles There was no proof of fraud presented by respondent Gerent other than its
with finality all the claims of respondent Gerent, rendering its complaint bare and unsubstantiated allegations. On the contrary, respondent Gerent’s
against petitioner without any legal basis. If fraud vitiated the quitclaim, then president, Roque, admitted that he was fully aware and certain of the
it becomes necessary to determine if petitioner still owes respondent Gerent impending price increase. Thus, Roque testified:
any amount under their subcontract.
"Q: Is it really true that you knew that there will be an increase
The quitclaim is embodied in the Affidavit executed on January 2, 1985 by because you were discussing that already?
respondent Gerent’s president, Narciso Roque. The Affidavit is not the usual
quitclaim which expressly discharges and releases a party from any and all A: I know that there will be an increase.
liabilities. The Affidavit does not contain such express language. However, the
Affidavit expressly acknowledges receipt by Gerent of "full payment" of the Q: Because you were discussing it?
20
subcontract price from petitioner. The effect, nevertheless, is the same
because a creditor who receives and acknowledges full payment from his A: Yes. I know that there will be an increase, that is why I am
21
debtor causes the extinguishment of his claim against the debtor. Roque, always inquiring from Mr. Cruel whether there was already an increase
however, now claims that had petitioner informed him of the price increase made and adjustment of the contract.
granted by Sucodeco on December 3, 1984, he would not have signed the
Affidavit of January 2, 1985. Q: When was the increase being discussed?
The primary question to resolve is whether petitioner misled, deceived or A: Even during the time of the initial start of the project it was
coerced respondent Gerent into signing the Affidavit. We rule petitioner did already discussed.
not. The Court of Appeals erred in declaring that fraud vitiated the Affidavit.
Q: What particular month?
Fraud is never presumed but must be established by clear and convincing
evidence. There is no evidence that petitioner misled, deceived or coerced A: About November.
respondent Gerent’s president into signing the Affidavit. A mere
preponderance of evidence is not even adequate to prove fraud. Thus, Q: And the contract was signed by Mario Cruel and Sucodeco in
22
in Maestrado vs. Court of Appeals, the Court ruled that: October? October 29, 1984?
24
"The deceit employed must be serious. It must be sufficient to impress A: Yes, sir." (Emphasis supplied)
or lead an ordinarily prudent person into error, taking into account
the circumstances of each case. Silence or concealment, by itself, does
482 of 501
Despite his certainty that a price increase was imminent, Roque still signed the
Affidavit without any reservation. Since respondent Gerent was fully aware of STATEMENT OF ACCOUNT
the impending price increase, it cannot claim that it was misled or deceived
CONTRACT AMOUNT……………………… P1,665,000.00
into signing the Affidavit. The non-disclosure by petitioner of the price
increase did not mislead or deceive respondent Gerent because Roque fully Less: Previous Payments:
knew that the price increase would in any event happen. Based on his own October 30 - 50% downpayment - P832,500.00
testimony, Roque voluntarily, willingly and freely signed the Affidavit without December 4 – 2nd partial payments. - 400,000.00
any compulsion or coercion from anyone. Thus, Roque testified:
December 13- 3rd partial payments. - 200,000.00
"Q: But you know before hand that what you signed is supposed P1432,500.00
to be an affidavit? Deduction for cost of materials taken
from Sucodeco. 92,779.70 1,525,279.70
A: Yes, sir.
BALANCE DUE & COLLECTIBLE P139,720.30
Q: Did you make any complaint to MC Engineering? Petitioner was under no obligation to disclose to respondent Gerent, a
subcontractor, any price increase in petitioner’s main contract with Sucodeco.
A: No, sir. Respondent Gerent is not a party to the main contract. The subcontract
between petitioner and respondent Gerent does not require petitioner to
xxx. disclose to Gerent any price increase in the main contract. The non-disclosure
by petitioner of the price increase cannot constitute fraud or breach of any
Q: When you signed that affidavit Exh. "1", did you not make any obligation on the part of petitioner.
protests?
Moreover, the record shows that the P139,720.30 representing final and full
A: No, I did not make any protest."
25 payment of the subcontract price was paid by petitioner to respondent Gerent
based on the statement of account Gerent itself prepared and submitted to
petitioner. This can be gleaned from the testimony of Roque, to wit:
"Q: You have submitted likewise a statement of account?
A: Yes, sir.
Q: And this statement of account is this Annex "1" of the Answer?
A: Yes, sir.
ATTY. AGUINALDO
483 of 501
May we request that this statement of account be marked as "MC ENGINEERING, INC.
Exh. "2". Quezon City
And the signature above the typewritten name Narciso Roque CHECK VOUCHER NO. 21324
including the words submitted by, be marked as Exh. 2-A and
Date January 2, 1985
the figure P139,720.30 be encircled and be marked as Exh. 2-
26
B."
TO: GERENT BUILDERS INCORPORATED
The Statement of Account signed and submitted by respondent Gerent’s
president Roque to petitioner provides as follows: Full payment for subcontracted work at Sucodeco
Project………..................................………………… 139,720.30
"January 2, 1985 Less: 3% of 15% withholding tax……………… 628.74

P139,091.56
MC ENGINEERING, INC. Amount paid by Check No. RCBC # 479476 P139,091.56

98 Sgt. J. Catolos St.,
Cubao, Quezon City Received the sum of PESOS one hundred thirty nine thousand ninety
one pesos & 56/100 only from MC ENGINEERING, INC.
Subject: Breakdown for sub-contracted work at Sucodeco Proj. in full payment of account.
Submitted by: By:

_____________________
NARCISO C. ROQUE Payee
Chairman
Checked and recommended by: APPROVED BY:
Conforme: _______________________ _______________________

28
Office Assistant President"
27
__________________" (Emphasis supplied)
(Emphasis supplied)
Again, nothing in the Statement of Account indicates any reservation

This voucher, stating that the amount of P139,091.56 was in "full payment" for
relating to the impending price increase. Thus, respondent Gerent was
the subcontract work, was signed by Roque at the same time he received the
paid what it actually believed, estimated and demanded should be its
check payment for the same amount.
fair compensation for its subcontract work. The voucher issued by
petitioner to respondent Gerent in full payment of the subcontract
Finally, the Affidavit that Roque signed provides as follows:
price states as follows:
484 of 501
"A F F I D A V I T 7. That affiant, further sayeth none.
I, NARCISO C. ROQUE, of legal age, Filipino, married with residence NARCISO C. ROQUE
and postal address at No. 58 Lanzones Street, Quezon City, Metro 29
Affiant"
Manila, Philippines, after being sworn to in accordance with law, do
hereby depose and say: (Emphasis supplied)
1. That I am the CHAIRMAN/PRESIDENT of GERENT The inescapable conclusion is that the Affidavit was meant to be a total
BUILDERS, INC.; quitclaim by respondent Gerent, fully discharging petitioner from whatever
amounts it may have owed Gerent under the subcontract. There is nothing in
2. That my Company, GERENT BUILDERS, INC., has sub- the Affidavit that reserves respondent Gerent’s right to collect a portion of any
contracted with MC ENGINEERING, INC. for the restoration price increase in the main contract. On the other hand, the Affidavit is clear,
works of building and land improvement of SUCODECO OIL unequivocal and absolute that respondent Gerent had received "full payment"
HILLS, INC. located at Bo. Lipata, Surigao City; under the subcontract. Respondent Gerent is now estopped from impugning
the validity of the Affidavit simply because petitioner secured a higher price
3. That in the prosecution of restoration works and land for the main contract.
improvement of SUCODECO OIL MILLS, INC. Buildings,
GERENT BUILDERS, INC. had fully paid the wages of 30
Thus, in Maestrado vs. Court of Appeals we stated that:
laborers, rentals of equipment and machineries used; and
fully paid materials used in the fabrication, delivery and "The freedom to enter into contracts, such as the quitclaims, is
erection of same, and that no supplier, laborer, equipment protected by law and the courts are not quick to interfere with such
and machinery owner has standing claim against my freedom unless the contract is contrary to law, morals, good customs,
company; public policy or public order. Quitclaims, being contracts of waiver,
involve the relinquishment of rights, with knowledge of their
4. That all taxes due in accordance with the project have been existence and intent to relinquish them. xxx.
fully paid as of date;
Quitclaims being duly notarized and acknowledged before a notary
5. That the ONE HUNDRED THIRTY NINE THOUSAND public, deserve full credence and are valid and enforceable in the
SEVEN HUNDRED TWENTY PESOS AND 30/100 absence of overwhelming evidence to the contrary."
(P139,720.30) ONLY, released on January 2, 1985 REPRESENTS
FULL PAYMENT OF MY CONTRACT WITH MC In the instant case, the Affidavit is indisputably intended to document the fact
ENGINEERING, INC.; (Emphasis supplied) that petitioner had fully paid respondent Gerent for the subcontract work.
Roque’s signature thereon attests to the truth of the contents of the Affidavit.
6. That this affidavit is being executed for purpose of Thus, Roque again testified:
collecting from MC ENGINEERING, INC.;
485 of 501
"Q: But you read the contents of the affidavit? estimate. Under the circumstances, the parties had clearly intended to
split the cost award to 74%-26% in plaintiff-appellant’s favor. This
A: Yes, sir. entitles plaintiff-appellant to the sum of P632,590.13 as its share in the
32
adjusted price."
Q: You understand the contents of the affidavit when you signed?
Again, we do not agree. A perusal of the subcontract reveals the following
31
A: Yes, sir." stipulations:
The execution of the Affidavit by Roque, president of respondent Gerent, "ARTICLE II

finally puts to rest all the claims of Gerent against petitioner under the
subcontract. The very purpose of the Affidavit, just like a quitclaim, is SUB-CONTRACT PRICE
precisely to finally settle all the claims of respondent Gerent, regardless of the
merits of the claims. The Affidavit can be annulled only if it was procured 2.1. In consideration of the full and satisfactory performance of the
through fraud. There is no convincing evidence to establish that fraud vitiated works by the SUB-CONTRACTOR the CONTRACTOR shall pay the
the Affidavit. The fact that petitioner received a windfall because of the price SUB-CONTRACTOR the Lump Sum amount of ONE MILLION SIX
increase is not a reason to annul the Affidavit. Consequently, the Affidavit HUNDRED SIXTY FIVE THOUSAND (P1,665,000.00) PESOS.
renders moot and academic all the other issues raised in this petition.
Nevertheless, the Court will still painstakingly discuss and resolve the 2.2. The SUB-CONTRACT PRICE above is subject to section VIII of
remaining issues raised by petitioner. MAIN CONTRACT. By reason thereof, parties hereby declare and
understand that the SUB-CONTRACT PRICE of P1.665 is subject to
The 74%-26% Sharing. change and verification pending the final submission of the true
value as maybe determined by evaluation and inspection by
The Court of Appeals upheld respondent Gerent’s theory that the subcontract representatives of OWNER, CONTRACTOR and SUB-
33
provides for a 74%-26% sharing between Gerent and petitioner in any price CONTRACTOR." (Emphasis supplied)
increase for the civil woks portion of the main contract. Ruled the Court of
Appeals: On the other hand, the main contract between petitioner and Sucodeco
provides as follows:
"The question left to be determined is the amount of appellant’s share
in the adjusted price. The record reveals that out of the P2,250,000.00 "VIII. SPECIAL SIDE AGREEMENT. – It is hereby declared and
originally earmarked for civil works, plaintiff-appellant, as sub- understood that Contract Price of P5.25M is subject to changes and
contractor, was awarded P1,665,000.00 which is 74% of the first verification pending the final submission of the true value as maybe
amount. Moreover, in the second detailed estimate submitted by determined by evaluation and inspection by representatives of both
plaintiff-appellant to appellee, the total cost of P2,297,590.00 was parties, SURIGAO COCONUT DEVELOPMENT CORPORATION and
34
charged for civil works. This amount was subsequently increased by MC ENGINEERING, INC."
*****
appellee to P3,104,851.00 when it submitted the estimates to
SUCODECO. Again, the mark-up was 26% of plaintiff-appellant’s (Emphasis supplied)
486 of 501
The Court of Appeals was correct in holding that: Q: Where is that agreement?
"The above-cited stipulations are very clear and need no extraneous A: It was a verbal agreement between us. Among contractors there
interpretation. The lump sum amount of P1,665,000.00 due to is such a thing as gentleman’s agreement.
plaintiff-appellant in payment of the civil works subcontracted to it is
subject to change depending on the true value to be submitted and Q: Are you referring to…you mean to say that that agreement is
35
evaluated by the parties to the contracts." (Emphasis supplied) not in writing?
However, the Court of Appeals erred in upholding respondent Gerent’s claim A: It is not in writing but it was verbally agreed between the
that it was entitled to a 74% share in the price increase of the main contract. defendant and myself.
Respondent Gerent alleges that as a customary business practice petitioner xxx.

and respondent Gerent agreed to a 74%-26% sharing in the main contract
price for the civil works portion. The alleged 74%-26% sharing can be upheld "Q: Why was that 74%-26% sharing not placed in the agreement
only if such specific sharing was agreed upon in the subcontract, or if the with MC Engineering by your company?
subcontract is a joint venture. A textual examination of the terms of the
subcontract shows no provision regarding any 74%-26% sharing between xxx.
petitioner and respondent Gerent. Instead, the subcontract specifically
provides for a fixed price for the civil works in the amount of P1,665,000.00, A: Prior to entering into our proposal we have already an
subject to change only upon submission of the "true value" of the work agreement with Mr. Cruel that whatever contract we will get, the civil
undertaken by the subcontractor. work will be awarded to me on subcontract wherein 26% will be for
MC Engineering and 74% will be for us.
Neither is there any stipulation in the subcontract indicating a joint venture
between petitioner and respondent Gerent. That the subcontract price Q: That is verbal agreement?
corresponds to 74% of the main contract price cannot by itself be interpreted
to mean that the parties agreed to a 74%-26% sharing of any price increase in A: Verbal prior to the execution of the subcontract agreement.
petitioner’s main contract with Sucodeco. Roque, respondent Gerent’s
president, testified that the 74%-26% arrangement was not incorporated in the Q: That was the verbal agreement prior to the execution and
subcontract and was a mere gentleman’s agreement. This can be gleaned from signing of the subcontract agreement?
the testimony of Roque, to wit:
A: It was.
"Q: Mr. Witness, you mentioned under page 5 of the transcript
when you gave your direct testimony that the agreement between you xxx.
and the defendant was a joint venture, is that correct?
"Q: This agreement, to reiterate your testimony for the alleged 74%
A: Yes, sir. and 26% sharing, this has never been reduced into writing?
487 of 501
36
A: It is not, sir." (Emphasis supplied) remains fully compensated according to the terms of its own subcontract. The
profit derived by petitioner is neither unjust, nor made at the expense of
The terms of the subcontract are clear and explicit. There is no need to read respondent Gerent.
into them any alleged intention of the parties. If the true intention of the
parties was a 74%-26% sharing in any price increase in the main contract, the That a main contractor is able to secure a price increase from the project
parties could have easily incorporated such sharing in the subcontract, being a owner does not automatically result in a corresponding price increase to the
very important matter. They did not because that was not their agreement. subcontractor in the absence of an agreement to the contrary. In this case,
there is no stipulation in the subcontract that respondent Gerent will
Section 9, Rule 130 of the Revised Rules of Court provides that "[w]hen the automatically receive 74% of whatever price increase petitioner may obtain in
terms of an agreement have been reduced to writing, it is to be considered as the civil works portion of the main contract. Neither has the subcontract been
containing all the terms agreed upon and there can be, between the parties changed to reflect a higher subcontract price.
and their successors in interest, no evidence of such terms other than the
contents of the written agreement." Simply put, evidence of a prior or In a subcontract transaction, the benefit of a main contractor is not unjust
contemporaneous verbal agreement is generally not admissible to vary, even if it does less work, and earns more profit, than the subcontractor. The
37
contradict, or defeat the operation of a valid contract. While parol evidence subcontractor should be satisfied with its own profit, even though less than
is admissible to explain the meaning of written contracts, it cannot serve the the main contractor’s, because that is what it bargained for and contracted
purpose of incorporating into the contract additional contemporaneous with the main contractor. Article 22 of the Civil Code is not intended to insure
conditions which are not mentioned at all in writing, unless there has been that every party to a commercial transaction receives a profit corresponding to
38
fraud or mistake. It is basic that parties are bound by the terms of their its effort and contribution. If a subcontractor knowingly agrees to receive a
39
contract which is the law between them. profit less than its proportionate contribution, that is its own lookout. The fact
that a subcontractor accepts less does not make it dumb for that may be the
Respondent Gerent claims that petitioner cannot be allowed to evade its only way to beat its competitors. The winning subcontractor cannot be
lawful obligation arising from the subcontract, citing the well-known principle allowed to later on demand a higher price after bagging the contract and
of law against unjust enrichment. Article 22 of the Civil Code provides that beating competitors who asked for higher prices. Even if the subcontractor
"[e]very person who through an act or performance by another, or by any incurs a loss because of its low price, it cannot invoke Article 22 of the Civil
other means, acquires or comes into possession of something at the expense of Code to save it from financial loss. Article 22 is not a safety net against bad or
the latter without just or legal ground, shall return the same to him." Two overly bold business decisions.
conditions must generally concur before the rule on unjust enrichment can
apply, namely: (a) a person is unjustly benefited, and (b) such benefit is Under the foregoing circumstances, we hold that Gerent is not entitled to any
40
derived at another’s expense or damage. share in the price increase in the main contract. Whatever price increase
petitioner obtained in the main contract, whether for the civil works portion
Such a situation does not exist in this case. The benefit or profit derived by or otherwise, was solely for the benefit of petitioner.
petitioner neither comes from respondent Gerent nor makes the Gerent any
poorer. The profit derived by petitioner comes from Sucodeco by virtue of the The First and Second Detailed Estimates
main contract to which respondent Gerent is not a party. Respondent Gerent’s
rights under the subcontract are not diminished in any way, and Gerent There is no true valuation of the civil works.
488 of 501
The main contract clearly provides that as a condition precedent for any Q: And it is not based on the actual determination of the true value
upward or downward adjustment in the contract price, there must first be a of the materials and labor spent and utilized in the project?
true valuation of the materials and labor costs to be determined through
41
evaluation and inspection by representatives of petitioner and Sucodeco. A A: In the same manner as MC Engineering.…it is not based on the
similar provision is found in the subcontract requiring, before any change in true value.
the subcontract price, for a true valuation to be determined by Sucodeco,
petitioner and respondent Gerent. The records establish that respondent Q: It is not based on the true value?
Gerent was responsible for making the estimates of the actual cost of the civil
43
works which served as basis for the original price of the main contract. A: Yes sir." (Underscoring Supplied)
However, the Court of Appeals erred in finding that the price increase in the Clearly, the price increase did not result from a true valuation of materials and
main contract was based on a second detailed estimate supplied by respondent labor, which is the only valid ground for any adjustment in the subcontract
42
Gerent. The evidence adduced reveals that the parties did not undertake any price.
true valuation of the cost of the civil works. The price increase could not have
been based on a true valuation because no true valuation was ever made as The second estimate is lower than the first estimate.
required by the main contract and subcontract. There is no substantial
evidence to support respondent Gerent’s assertion that the price increase was A further perusal of the testimony of Narciso Roque clearly shows that the
based on a second estimate that Gerent allegedly supplied petitioner. alleged second estimate, assuming it was agreed to by petitioner and
Sucodeco, was actually even lower than the first estimate which was the basis
The true valuation of the works must be based on the true value or estimates of the original contract price for the civil works. Thus, respondent Gerent’s
of the actual materials and labor required for the work. An examination of the Roque testified as follows:
alleged second detailed estimate reveals nothing but a plain summary of
computation. Not only is it undated but there is also nothing in the said "Q: Now, you made a second estimate?
estimate which indicates that it was indeed received, evaluated and marked-up
by petitioner as claimed by respondent Gerent. Neither was it clearly A: Yes, sir, I made a second estimate on November 5."
established by convincing evidence that the same was the true and final
valuation of the civil works pursuant to the terms of the subcontract and main xxx.
contract. This is evident from the testimony of Roque, the president of
respondent Gerent, to wit: "Q: How much was that?
"Q: So your conclusion is that based on the payment of A: P2,297,590.00, for the restoration of the civil works and land
SUCODECO to MC Engineering, you are now entitled to your claim of development."
alleged 74%?
xxx.
A: Yes, sir.
"Q: How much again was the total of the first estimate?
489 of 501
A: In the first estimate the total… The inevitable conclusion is that the price increase in the civil works portion
of the main contract was based on other factors and not on the alleged second
Q: The breakdown first. estimate submitted by respondent Gerent.
A: For building is P2,257,351.20 and the land improvement is Third Issue: Award of actual, moral and exemplary damages.
P247,361.40.
We come to the issue of whether or not petitioner is entitled to its
Q: And this is the first estimate, am I correct? counterclaim for actual, moral and exemplary damages due to the wrongful
issuance of the writ of attachment. The Court of Appeals held that:
A: Yes, sir.
"xxx. In the instant suit, appellee failed to establish bad faith and
Q: When was this made? malice against plaintiff-appellant when it sought to attach the
former’s properties. The lower court itself in its decision did not make
A: That was October 15. any express pronouncement as to the existence of malice and bad faith
in the procurement of the writ of attachment. Instead the trial court
Q: Then there was a second estimate? concluded that ‘as a result of such attachment, the defendant’s
business operation and credit standing have been prejudiced and
A: The second estimate is the final adjusted cost submitted to MC damaged’ and ‘the defendant is entitled to recover moral and
Engineering by Gerent Builders. The total for building and land exemplary damages by reason of the irregular issuance of the writ of
44
improvement is P2,297,590.00." (Underscoring supplied) attachment.’ Such conclusions do not immediately warrant the award
of moral damages. It is true that the attachment was wrongful. But in
If indeed the price increase in the main contract were based on the absence of proof of bad faith or malice, plaintiff-appellant’s
the lower second estimate, then the actual price adjustment would have application cannot be said to be harassing or oppressing but merely an
been downward and not upward. The fact that the main contract price went up act done to assert and protect a legal right. (Emphasis supplied)
from the original P2,250,000.00 to P3,104,851.51 shows that the price increase
was not made on the basis of the second estimate. The grant of exemplary damages is likewise improper. Since no moral
damages is due to appellee and it appearing that no actual damages
There was no itemized listing of material and labor costs. was awarded by the lower court, the grant of exemplary damages has
no leg on which to stand (Art. 2234, Civil Code).
Moreover, the record is bereft of proof of an itemized listing of the costs of
materials and labor to be used upon which respondent Gerent could have If at all, the wrongful issuance of the writ of attachment, as ruled out
based its second estimate. This negates further respondent Gerent’s claim that by this Court, merely resulted in actual damages to appellee. But such
the price increase was based on its second estimate. is not automatically awarded for it is subject to proof. Appellee’s claim
that it lost major contracts after a credit investigation revealed that its
accounts were garnished is a bare allegation not merely unsupported
by solid evidence but is also speculative. The alleged $35,000.00
490 of 501
remittance refused by the Hongkong and Shanghai Bank does not fees be awarded when a party is compelled to incur expenses to lift a
52
inspire belief for failure of appellee to produce documentary proof to wrongfully issued writ of attachment.
45
buttress its claim."
WHEREFORE, the petition is GRANTED and the assailed Decision of the
We agree with the Court of Appeals that the trial court erred in awarding Court of Appeals is SET ASIDE. The decision of the trial court is AFFIRMED
moral and exemplary damages to petitioner. The mere fact that a complaint is WITH MODIFICATION. The complaint against petitioner is dismissed with
dismissed for lack of legal basis will not justify an award of moral damages to prejudice. Respondents Gerent Builders, Inc. and Stronghold Surety and
46
the prevailing party. Even the dismissal of a "clearly unfounded civil action or Insurance Company are ordered to pay petitioner MC Engineering, Inc., jointly
47
proceeding" will not entitle the winning party to moral damages. For moral and severally, the sum of P21,250.00 as attorney’s fees. Costs against
damages to be awarded, the case must fall within the instances enumerated in respondents.
48
Article 2219, or under Article 2220, of the Civil Code. Moreover, in the
absence of fraud, malice, wanton recklessness or oppressiveness, exemplary SO ORDERED.
49
damages cannot be awarded.
Fourth and Fifth Issues : Award of Attorney’s Fees
The last matter to be determined is the reasonableness of the attorney’s fees

awarded to both parties. The Court of Appeals held that:
"xxx, the award of attorney’s fees must vary. Considering the wrongful
attachment made against appellee’s accounts, it is understandable
that it incurred attorney’s fees in procuring the discharge of the
attachment for which reason the amount of P5,000.00 may reasonably
be awarded. However, inasmuch as plaintiff-appellant was constrained
to file this suit to protect its legal interest, and pursuant to the terms
of the sub-contract, appellee is adjudged to pay appellant 25% of
50
P632,590.13, the amount involved in this suit."
The award must be modified. The Court of Appeals was partly correct in
holding that the award of attorney’s fees to petitioner is justified considering
that petitioner was constrained to engage the services of counsel at an agreed
attorney’s fees. To secure the lifting of the writ of attachment, petitioner’s
counsel, Atty. Mario Aguinaldo testified that he was paid P1,250.00 on January
1985, P10,000.00 on April 10, 1985 and another P10,000.00 on June 30, 1985 for
51
his legal services, totaling P21,500.00. Accordingly, the award of P5,000.00 is
hereby increased to P21,250.00. We deem it just and equitable that attorney’s
491 of 501
WENCESLAO had a contract with the Public Estates Authority (PEA) for the
DM Wenceslao v. Readycon Trading & Const. Corp., 433 S 251 improvement of the main expressway in the R-1 Toll Project along the Coastal
Road in Parañaque City. To fulfill its obligations to the PEA, WENCESLAO
SECOND DIVISION entered into a contract with READYCON on April 16, 1991. READYCON agreed
to sell to WENCESLAO asphalt materials valued at P1,178,308.75. The contract
G.R. No. 154106 June 29, 2004 bore the signature of co-petitioner Dominador Dayrit, as signatory officer for
WENCESLAO in this agreement. Under the contract, WENCESLAO was
D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S. bound to pay respondent a twenty percent (20%) downpayment,
DAYRIT, petitioners, or P235,661.75, upon delivery of the materials contracted for. The balance of
vs. the contract price, amounting to P942,647, was to be paid within fifteen (15)
READYCON TRADING AND CONSTRUCTION CORP., respondent. days thereof. It was further stipulated by the parties that respondent was to
furnish, deliver, lay, roll the asphalt, and if necessary, make the needed
6
DECISION corrections on a prepared base at the jobsite.
QUISUMBING, J.: On April 22, 1991, READYCON delivered the assorted asphalt materials
worth P1,150,531.75. Accordingly, WENCESLAO paid the downpayment
1
This petition for review assails the decision of the Court of Appeals, dated of P235,661.75 to READYCON. Thereafter, READYCON performed its
2 7
January 30, 2002, as well as its resolution dated June 20, 2002 in CA-GR CV obligation to lay and roll the asphalt materials on the jobsite.
No. 49101, denying petitioners’ motion for reconsideration. The appellate court
3
affirmed the decision of the Regional Trial Court of Pasig City, Branch 165, in Fifteen (15) days after performance of said work, READYCON demanded that
Civil Case No. 61159, ordering petitioners to pay the sum of P1,014,110.45 with WENCESLAO pay the balance of the contract price. WENCESLAO, however,
interest rate of 12% per annum (compounded annually) from August 9, 1991, ignored said demand.
the date of filing of the complaint, until fully paid to Readycon Trading and
Construction Corp., plus damages. On May 30, 1991, the counsel for READYCON wrote a demand letter to
WENCESLAO asking that it make good on the balance it owed. Again,
Petitioner D.M. Wenceslao and Associates, Inc. (WENCESLAO, for brevity) is WENCESLAO failed to heed the demand. It did not even bother to reply to the
8
a domestic corporation, organized under and existing pursuant to Philippine demand letter.
laws, engaged in the construction business, primarily infrastructure,
foundation works, and subdivision development. Its co-petitioner, Dominador In view of this development, on July 19, 1991, READYCON filed a complaint
4
Dayrit, is the vice-president of said company. Respondent Readycon Trading with the Regional Trial Court of Pasig City for collection of a sum of money
and Construction Corporation (READYCON, for brevity) is likewise a and damages, with prayer for writ of preliminary attachment against D.M.
corporate entity organized in accordance with Philippine laws. Its primary Wenceslao and/or Dominador Dayrit, docketed as Civil Case No. 61159.
5
business is the manufacture and sale of asphalt materials. READYCON demanded payment ofP1,014,110.45 from petitioners herein
with P914,870.75 as the balance of contract price, as well as payment
9
The facts of this case are not in dispute. ofP99,239.70, representing another unpaid account.
492 of 501
As READYCON timely posted the required bond of P1,150,000, its application 2. The amount of P35,000.00 as and for attorney’s fees and
for the writ of preliminary attachment was granted. expenses of litigation.
On September 5, 1991, the RTC Sheriff attached certain assets of 3. Costs of suit.
WENCESLAO, particularly, the following heavy equipments: One (1) asphalt
10 14
paver, one (1) bulldozer, one (1) dozer and one (1) grader. The counterclaim of the defendants is dismissed for lack of merit.
On September 16, 1991, WENCESLAO moved for the release of the attached Dissatisfied with the decision, the petitioners appealed to the Court of
equipments and posted its counter-bond. The trial court granted the motion Appeals. The appellate court, however, affirmed in toto the decision of the
15
and directed the RTC Sheriff to return the attached equipments. lower court.
On September 25, 1991, the Sheriff released the attached heavy machineries to In denying the appeal, the appellate court found that contrary to
11
WENCESLAO. WENCESLAO’s assertion, malice and bad faith in obtaining a writ of
attachment must be proved before a claim for damages on account of wrongful
In the proceedings below, WENCESLAO admitted that it owed attachment will prosper, citing Philippine Commercial International Bank v.
READYCON P1,014,110.45 indeed. However, it alleged that their contract was Intermediate Appellate Court, 196 SCRA 29 (1991). The CA stressed that the
not merely one of sale but also of service, namely, that respondent shall lay the trial court found neither malice nor bad faith relative to the filing of the
asphalt in accordance with the specifications and standards imposed by and complaint and the obtaining of the writ of attachment. Also, according to the
acceptable to the government. WENCESLAO also alleged that since the CA, petitioners did not adduce evidence to show that the attachment caused
16
contract did not indicate this condition with respect to the period within damage to the cited pieces of heavy equipment.
which the balance must be paid, the contract failed to reflect the true
12
intention of the parties. It alleged READYCON agreed that the balance in the The appellate court also found that the trial court correctly interpreted the
payments would be settled only after the government had accepted period for payment of the balance. It held that the text of the stipulation that
READYCON’s work as to its quality in laying the asphalt. By way of the balance shall be paid within fifteen days is clear and unmistakable.
counterclaim, WENCESLAO prayed for the payment of damages caused by the Granting that the sales contract was not merely for supply and delivery but
filing of READYCON’s complaint and the issuance of the writ of attachment also for service, the balance was already due and demandable when demand
13
despite lack of cause. was made on May 30, 1991, which was a month after READYCON performed its
17
obligation.
On December 26, 1994, the RTC rendered judgment in this wise:
Hence, the instant petition, wherein petitioners raise the following issues:
WHEREFORE, judgment is hereby rendered ordering the defendant
D.M. Wenceslao & Associates, Inc. to pay plaintiff as follows: 1. WHETHER OR NOT QUESTIONS OF FACTS ARE RAISED IN THE
APPEAL BY CERTIORARI;
1. The amount of P1,014,110.45 with interest at the rate of 12%
per annum (compounded annually) from August 9, 1991, date 2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
of filing of the complaint, until fully paid. ERRED IN NOT HOLDING RESPONDENT LIABLE FOR
493 of 501
COMPENSATORY DAMAGES FOR THE WRONGFUL ISSUANCE OF irregularity and propriety of the writ of attachment must be deemed waived
21
THE WRIT OF PRELIMINARY ATTACHMENT; since the ground for the issuance of the writ forms the core of the complaint.
3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS We find for the respondent on this issue. However, its reliance upon Mindanao
ERRED IN NOT HOLDING THE OBLIGATION [AS] NOT YET DUE Savings and Loan Association is misplaced.
18
AND DEMANDABLE.
It is to be stressed that the posting of a counter-bond is not tantamount to a
We find proper for resolution two issues: (1) Is respondent READYCON liable waiver of the right to damages arising from a wrongful attachment. This we
to petitioner WENCESLAO for damages caused by the issuance and have made clear in previous cases, e.g., Calderon v. Intermediate Appellate
22
enforcement of the writ of preliminary attachment? (2) Was the obligation of Court, where we ruled that:
WENCESLAO to pay READYCON already due and demandable as of May 30,
1991? Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that
On the first issue, petitioners rely mainly on Lazatin v. Twano and Castro, 112 the order of attachment was improperly or irregularly issued, the
Phil. 733 (1961), reiterated in MC Engineering v. Court of Appeals, 380 SCRA 116 liability of the surety on the attachment bond subsists because the
(2002). In Lazatin, we held that actual or compensatory damages may be final reckoning is when "the Court shall finally adjudge that the
recovered for wrongful, though not malicious, attachment. Lazatin also held attaching creditor was not entitled" to the issuance of the attachment
that attorney’s fees may be recovered under Article 2208 of the Civil writ in the first place. The attachment debtor cannot be deemed to
19
Code. Petitioners contend that Lazatin applies in the instant case because the have waived any defect in the issuance of the attachment writ by
wrongful attachment of WENCESLAO’s equipment resulted in a paralysis of simply availing himself of one way of discharging the attachment writ,
its operations, causing it to sustain a loss of P100,000 per day in terms of instead of the other. Moreover, the filing of a counterbond is a
accomplishment of work. Since the attachment lasted 19 days it suffered a speedier way of discharging the attachment writ maliciously sought
total loss of P1.9 million. Aside from that, it had to spend P50,000 on the out by the attaching party creditor instead of the other way, which in
pullout of the equipment and another P100,000 to repair and restore them to most instances like in the present case, would require presentation of
20
their former working condition. evidence in a fullblown trial on the merits and cannot easily be settled
23
in a pending incident of the case.
Respondent counters that inasmuch as a preliminary attachment is an
available ancillary remedy under the rules, a penalty cannot be meted out for The point in Mindanao Savings, alluded to by respondent, pertained to the
the enforcement of a right, such as in this case when it sought such relief. It propriety of questioning the writ of attachment by filing a motion to quash
stresses that the writ was legally issued by the RTC, upon a finding that said writ, after a counter-bond had been posted by the movant. But nowhere
READYCON sought the relief without malice or bad faith. Furthermore, in Mindanao Savings did we rule that filing a counter-bond is tantamount to a
WENCESLAO failed to show concrete and credible proof of the damages it waiver of the right to seek damages on account of the impropriety or illegality
suffered. The issuance of a writ and its enforcement entail a rigorous process of the writ.
where the court found that it was not attended by malice or bad faith. It
cites Mindanao Savings and Loan Association v. Court of Appeals, 172 SCRA 480 We note that the appellate court, citing Philippine Commercial & Industrial
(1989), to the effect where a counter-bond is filed, the right to question the Bank, 196 SCRA 29 (1991), stressed that bad faith or malice must first be proven
494 of 501
as a condition sine qua non to the award of damages. The appellate court law as a security for the satisfaction of any judgment which the plaintiff may
25
appears to have misread our ruling, for pertinently what this Court stated was recover.
as follows:
Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:
The silence of the decision in GR No. 55381 on whether there was bad
faith or malice on the part of the petitioner in securing the writ of SEC. 4. Condition of applicant’s bond. - The party applying for the
attachment does not mean the absence thereof. Only the legality of order must thereafter give a bond executed to the adverse party in the
the issuance of the writ of attachment was brought in issue in that amount fixed by the court in its order granting the issuance of the
case. Hence, this Court ruled on that issue without a pronouncement writ, conditioned that the latter will pay all the costs which may be
that procurement of the writ was attended by bad faith. Proof of bad adjudged to the adverse party and all damages which he may sustain
faith or malice in obtaining a writ of attachment need be proved only by reason of the attachment, if the court shall finally adjudge that the
in the claim for damages on account of the issuance of the writ. We applicant was not entitled thereto (italics for emphasis).
affirm the finding of the respondent appellate court that malice and
24
bad faith attended the application by PCIB of a writ of attachment. In this case, both the RTC and the Court of Appeals found no reason to rule
that READYCON was not entitled to issuance of the writ. Neither do we find
Plainly, we laid no hard and fast rule that bad faith or malice must be proved now that the writ is improper or illegal. If WENCESLAO suffered damages as a
to recover any form of damages. InPhilippine Commercial & Industrial Bank, result, it is merely because it did not heed the demand letter of the respondent
we found bad faith and malice to be present, thereby warranting the award of in the first place. WENCESLAO could have averted such damage if it
moral and exemplary damages. But we denied the award of actual damages for immediately filed a counter-bond or a deposit in order to lift the writ at once.
want of evidence to show said damages. For the mere existence of malice and It did not, and must bear its own loss, if any, on that account.
bad faith would not per se warrant the award of actual or compensatory
damages. To grant such damages, sufficient proof thereon is required. On the second issue, WENCESLAO admits that it indeed owed READYCON
the amount being claimed by the latter. However, it contends that while the
Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and contract provided that the balance was payable within fifteen (15) days, said
malice as prerequisite to the claim of actual damages is dispensed with. agreement did not specify when the period begins to run. Therefore, according
Otherwise stated, in the present case, proof of malice and bad faith are to petitioner, the appellate court erred when it held the contract clear enough
unnecessary because, just like in Lazatin and MC Engineering, what is involved to be understood on its face. WENCESLAO insists that the balance of the
here is the issue of actual and compensatory damages. Nonetheless, we find purchase price was payable only "upon acceptance of the work by the
that petitioner is not entitled to an award of actual or compensatory damages. government." In other words, the real intent of the parties was that it shall be
Unlike Lazatin and MC Engineering, wherein the respective complaints were due and demandable only fifteen days after acceptance by the government of
dismissed for being unmeritorious, the writs of attachment were found to be the work. This is common practice, according to petitioner.
wrongfully issued, in the present case, both the trial and the appellate courts
held that the complaint had merit. Stated differently, the two courts found Respondent argues that the stipulation in the sales contract is very clear that it
READYCON entitled to a writ of preliminary attachment as a provisional should be paid within fifteen (15) days without any qualifications and
remedy by which the property of the defendant is taken into custody of the conditions. When the terms of a contract are clear and readily understandable,
there is no room for construction. Even so, the contention was mooted and
495 of 501
rendered academic when, a few days after institution of the complaint, the with interest rate of 12% per annum (compounded annually) from August 9,
government accepted the work but WENCESLAO still failed to pay 1991, the date of filing of the complaint, until fully paid, plus damages.
respondent.
WHEREFORE, the petition is DENIED. The assailed decision and resolution
Under Article 1582 of the Civil Code, the buyer is obliged to pay the price of of the Court of Appeals in CA-G.R. CV No. 49101, affirming the judgment of the
the thing sold at the time stipulated in the contract. Both the RTC and the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159,
appellate court found that the parties’ contract stated that the buyer shall pay are AFFIRMED. No pronouncement as to costs.
the manufacturer the amount of P1,178,308.75 in the following manner:
SO ORDERED.
20% downpayment - P235,661.75
Balance – payable within fifteen (15) days – P942,647.00
Following the rule on interpretation of contracts, no other evidence shall be

26
admissible other than the original document itself, except when a party puts
in issue in his pleading the failure of the written agreement to express the true
27
intent of the parties. This was what the petitioners wanted done.
However, to rule on whether the written agreement failed to express the true
intent of the parties would entail having this Court reexamine the facts. The
findings of the trial court as affirmed by the appellate court on this issue,
however, bind us now. For in a petition for certiorari under Rule 45 of the 1997
Rules of Civil Procedure, this Court may not review the findings of fact all over
again. Suffice it to say, however, that the findings by the RTC, then affirmed by
the CA, that the extra condition being insisted upon by the petitioners is not
found in the sales contract between the parties. Hence it cannot be used to
qualify the reckoning of the period for payment. Besides, telling against
petitioner WENCESLAO is its failure still to pay the unpaid account, despite
the fact of the work’s acceptance by the government already.
With submissions of the parties carefully considered, we find no reason to

warrant a reversal of the decisions of the lower courts. But since Dominador
Dayrit merely acted as representative of D.M. Wenceslao and Associates, Inc.,
in signing the contract, he could not be made personally liable for the
corporation’s failure to comply with its obligation thereunder. Petitioner
WENCESLAO is properly held liable to pay respondent the sum of P1,014,110.45
496 of 501
contract price, and that, based on reliable information, they were about to
8
Sps Yu v. Ngo Yet Te, February 6, 2007 move or dispose of their properties to defraud their creditors.
9
THIRD DIVISION Upon Te’s posting of an attachment bond, the RTC issued an Order of
10
Attachment/Levy dated March 29, 1993 on the basis of which Sheriff
G.R. No. 155868 February 6, 2007 Constancio Alimurung (Sheriff Alimurung) of RTC, Branch 19, Cebu City
levied and attached Spouses Yu’s properties in Cebu City consisting of one
11
SPOUSES GREGORIO and JOSEFA YU, Petitioners, parcel of land (known as Lot No. 11) and four units of motor vehicle,
vs. specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger
12
NGO YET TE, doing business under the name and style, ESSENTIAL bus.
MANUFACTURING, Respondent.
13
On April 21, 1993, Spouses Yu filed an Answer with counterclaim for damages
DECISION arising from the wrongful attachment of their properties, specifically, actual
damages amounting to P1,500.00 per day; moral damages,P1,000,000.00; and
AUSTRIA-MARTINEZ, J.: exemplary damages, P50,000.00. They also sought payment of P120,000.00 as
14
attorney’s fees and P80,000.00 as litigation expenses. On the same date,
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Spouses Yu filed an Urgent Motion to Dissolve Writ of Preliminary
1 15 16
Court assailing the March 21, 2001 Decision of the Court of Appeals (CA) in Attachment. They also filed a Claim Against Surety Bond in which they
2 3
CA-G.R. CV No. 52246 and its October 14, 2002 Resolution. demanded payment from Visayan Surety and Insurance Corporation (Visayan
Surety), the surety which issued the attachment bond, of the sum
The antecedent facts are not disputed. of P594,240.00, representing the damages they allegedly sustained as a
consequence of the wrongful attachment of their properties.
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te)
bars of detergent soap worthP594,240.00, and issued to the latter three While the RTC did not resolve the Claim Against Surety Bond, it issued an
4 17
postdated checks as payment of the purchase price. When Te presented the Order dated May 3, 1993, discharging from attachment the Toyota Ford
checks at maturity for encashment, said checks were returned dishonored and Fierra, jeep, and Canter delivery van on humanitarian grounds, but
5 6
stamped "ACCOUNT CLOSED". Te demanded payment from Spouses Yu but maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed a
18 19
the latter did not heed her demands. Acting through her son and attorney-in- Motion for Reconsideration which the RTC denied.
fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75,
7 20
Valenzuela, Metro Manila, a Complaint, docketed as Civil Case No. 4061-V-93, Dissatisfied, they filed with the CA a Petition for Certiorari, docketed as CA-
21
for Collection of Sum of Money and Damages with Prayer for Preliminary G.R. SP No. 31230, in which a Decision was rendered on September 14, 1993,
Attachment. lifting the RTC Order of Attachment on their remaining properties. It reads in
part:
In support of her prayer for preliminary attachment, Te attached to her
Complaint an Affidavit executed by Sy that Spouses Yu were guilty of fraud in In the case before Us, the complaint and the accompanying affidavit in
entering into the purchase agreement for they never intended to pay the support of the application for the writ only contains general averments.
497 of 501
Neither pleading states in particular how the fraud was committed or the However, on July 20, 1994, the RTC, apparently not informed of the SC
badges of fraud purportedly committed by the petitioners to establish that the Decision, rendered a Decision, the dispositive portion of which reads:
latter never had an intention to pay the obligation; neither is there a statement
of the particular acts committed to show that the petitioners are in fact WHEREFORE, premises considered, the Court finds that the plaintiff has
disposing of their properties to defraud creditors. x x x. established a valid civil cause of action against the defendants, and therefore,
renders this judgment in favor of the plaintiff and against the defendants, and
xxxx hereby orders the following:
Moreover, at the hearing on the motion to discharge the order of attachment x 1) Defendants are hereby ordered or directed to pay the plaintiff the
x x petitioners presented evidence showing that private respondent has been sum of P549,404.00, with interest from the date of the filing of this
extending multi-million peso credit facilities to the petitioners for the past case (March 3, 1993);
seven years and that the latter have consistently settled their obligations. This
was not denied by private respondent. Neither does the private respondent 2) The Court, for reasons aforestated, hereby denies the grant of
contest the petitioners’ allegations that they have been recently robbed of damages to the plaintiff;
properties of substantial value, hence their inability to pay on time. By the
respondent court’s own pronouncements, it appears that the order of 3) The Court hereby adjudicates a reasonable attorney’s fees and
attachment was upheld because of the admitted financial reverses the litigation expenses of P10,000.00 in favor of the plaintiff;
petitioner is undergoing.
4) On the counterclaim, this Court declines to rule on this,
This is reversible error. Insolvency is not a ground for attachment especially considering that the question of the attachment which allegedly gave
when defendant has not been shown to have committed any act intended to rise to the damages incurred by the defendants is being determined by
defraud its creditors x x x. the Supreme Court.
27
For lack of factual basis to justify its issuance, the writ of preliminary SO ORDERED. (Emphasis ours)
attachment issued by the respondent court was improvidently issued and
22 28
should be discharged. Spouses Yu filed with the RTC a Motion for Reconsideration questioning the
29
disposition of their counterclaim. They also filed a Manifestation informing
23
From said CA Decision, Te filed a Motion for Reconsideration but to no avail. the RTC of our June 8, 1994 Resolution in G.R. No. 114700.
24
Te filed with us a Petition for Review on Certiorari but we denied the same in The RTC issued an Order dated August 9, 1994, which read:
a Resolution dated June 8, 1994 for having been filed late and for failure to
25
show that a reversible error was committed by the CA. Entry of Judgment of xxxx
26
our June 8, 1994 Resolution was made on July 22, 1994. Thus, the finding of
the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 on the (2) With regard the counter claim filed by the defendants against the
wrongfulness of the attachment/levy of the properties of Spouses Yu became plaintiff for the alleged improvident issuance of this Court thru its
conclusive and binding. former Presiding Judge (Honorable Emilio Leachon, Jr.), the same has
498 of 501
39
been ruled with definiteness by the Supreme Court that, indeed, the Hence, Spouses Yu filed with the CA an appeal docketed as CA-G.R. CV No.
issuance by the Court of the writ of preliminary attachment appears to 52246, questioning only that portion of the July 20, 1994 Decision where the
40
have been improvidently done, but nowhere in the decision of the RTC declined to rule on their counterclaim for damages. However, Spouses
Supreme Court and for that matter, the Court of Appeal’s Yu did not dispute the specific monetary awards granted to respondent Te;
decision which was in effect sustained by the High Court, and therefore, the same have become final and executory.
contains any ruling or directive or imposition, of any damages
41
to be paid by the plaintiff to the defendants, in other words, both Although in the herein assailed Decision dated March 21, 2001, the CA
the High Court and the CA, merely declared the previous issuance of affirmed in toto the RTC Decision, it nonetheless made a ruling on the
the writ of attachment by this Court thru its former presiding judge to counterclaim of Spouses Yu by declaring that the latter had failed to adduce
be improvidently issued, but it did not award any damages of any kind sufficient evidence of their entitlement to damages.
to the defendants, hence, unless the High Court or the CA rules on
42
this, this Court coud not grant any damages by virtue of the Spouses Yu filed a Motion for Reconsideration but the CA denied it in the
43
improvident attachment made by this Court thru its former presiding herein assailed Resolution dated October 14, 2002.
judge, which was claimed by the defendants in their counter claim.
Spouses Yu filed the present Petition raising the following issues:
(3) This Court hereby reiterates in toto its Decision in this case dated
30
July 20, 1994. (Emphasis ours) I. Whether or not the appellate court erred in not holding that the
writ of attachment was procured in bad faith, after it was established
31
The RTC also issued an Order dated December 2, 1994, denying the Motion by final judgment that there was no true ground therefor.
32
for Reconsideration of Spouses Yu.
II. Whether or not the appellate court erred in refusing to award
In the same December 2, 1994 Order, the RTC granted two motions filed by actual, moral and exemplary damages after it was established by final
Te, a Motion to Correct and to Include Specific Amount for Interest and a judgment that the writ of attachment was procured with no true
33 44
Motion for Execution Pending Appeal. The RTC also denied Spouses Yu’s ground for its issuance.
34
Notice of Appeal from the July 20, 1994 Decision and August 9, 1994 Order of
the RTC. There is one preliminary matter to set straight before we resolve the foregoing
issues.
From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of
35 36 45
Appeal which the RTC also denied in an Order dated January 5, 1995. According to respondent Te, regardless of the evidence presented by Spouses
Yu, their counterclaim was correctly dismissed for failure to comply with the
37
Spouses Yu filed with the CA a Petition for Certiorari, Prohibition procedure laid down in Section 20 of Rule 57. Te contends that as Visayan
and Mandamus, docketed as CA-G.R. SP No. 36205, questioning the denial of Surety was not notified of the counterclaim, no judgment thereon could be
their Notices of Appeal; and seeking the modification of the July 20, 1994 validly rendered.
Decision and the issuance of a Writ of Execution. The CA granted the Petition
38
in a Decision dated June 22, 1995. Such argument is not only flawed, it is also specious.
499 of 501
55
As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same malice. As early as in Lazatin v. Twaño, we laid down the rule that where
day they filed their Answer and Urgent Motion to Dissolve Writ of Preliminary there is wrongful attachment, the attachment defendant may recover actual
46
Attachment. Further, the records reveal that on June 18, 1993, Spouses Yu damages even without proof that the attachment plaintiff acted in bad faith in
47
filed with the RTC a Motion to Give Notice to Surety. The RTC granted the obtaining the attachment. However, if it is alleged and established that the
48
Motion in an Order dated June 23, 1993. Accordingly, Visayan Surety was attachment was not merely wrongful but also malicious, the attachment
notified of the pre-trial conference to apprise it of a pending claim against its defendant may recover moral damages and exemplary damages as
56
attachment bond. Visayan Surety received the notice on July 12, 1993 as shown well. Either way, the wrongfulness of the attachment does not warrant the
49
by a registry return receipt attached to the records. automatic award of damages to the attachment defendant; the latter must first
discharge the burden of proving the nature and extent of the loss or injury
57
Moreover, even if it were true that Visayan Surety was left in the proceedings a incurred by reason of the wrongful attachment.
quo, such omission is not fatal to the cause of Spouses Yu. In Malayan
50
Insurance Company, Inc. v. Salas, we held that "x x x if the surety was not In fine, the CA finding that the attachment of the properties of Spouses Yu was
given notice when the claim for damages against the principal in the replevin wrongful did not relieve Spouses Yu of the burden of proving the factual basis
bond was heard, then as a matter of procedural due process the surety is of their counterclaim for damages.
entitled to be heard when the judgment for damages against the principal is
51
sought to be enforced against the surety’s replevin bond." This remedy is To merit an award of actual damages arising from a wrongful attachment, the
applicable for the procedures governing claims for damages attachment defendant must prove, with the best evidence obtainable, the fact
58
of loss or injury suffered and the amount thereof. Such loss or injury must be
52
on an attachment bond and on a replevin bond are the same. 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
59
We now proceed to resolve the issues jointly. measurable based on specific facts, and not on guesswork or speculation. In
particular, if the claim for actual damages covers unrealized profits, the
Spouses Yu contend that they are entitled to their counterclaim for damages amount of unrealized profits must be estalished and supported by
as a matter of right in view of the finality of our June 8, 1994 Resolution in G.R. independent evidence of the mean income of the business undertaking
60
No. 114700 which affirmed the finding of the CA in its September 14, 1993 interrupted by the illegal seizure.
Decision in CA-G.R. SP No. 31230 that respondent Te had wrongfully caused
the attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Spouses Yu insist that the evidence they presented met the foregoing
53
Inc., they argue that they should be awarded damages based solely on the CA standards. They point to the lists of their daily net income from the operation
61
finding that the attachment was illegal for it already suggests that Te acted of said passenger bus based on used ticket stubs issued to their passengers.
with malice when she applied for attachment. And even if we were to assume They also cite unused ticket stubs as proof of income foregone when the bus
62
that Te did not act with malice, still she should be held liable for the was wrongfully seized. They further cite the unrebutted testimony of Josefa
aggravation she inflicted when she applied for attachment even when she was Yu that, in the day-to-day operation of their passenger bus, they use up at least
54 63
clearly not entitled to it. three ticket stubs and earn a minimum daily income of P1,500.00.
That is a rather limited understanding of Javellana. The counterclaim disputed In ruling that Spouses Yu failed to adduce sufficient evidence to support their
therein was not for moral damages and therefore, there was no need to prove counterclaim for actual damages, the CA stated, thus:
500 of 501
In this case, the actual damages cannot be determined. Defendant-appellant of Josefa Yu can add credence to such evidence for the testimony itself lacks
68
Josefa Yu testified on supposed lost profits without clear and appreciable corroboration.
explanation. Despite her submission of the used and unused ticket stubs, there
69
was no evidence on the daily net income, the routes plied by the bus and the Besides, based on the August 29, 1994 Manifestation filed by Sheriff
average fares for each route. The submitted basis is too speculative and Alimurung, it would appear that long before the passenger bus was placed
conjectural. No reports regarding the average actual profits and other evidence under preliminary attachment in Civil Case No. 4061-V-93, the same had been
of profitability necessary to prove the amount of actual damages were previously attached by the Sheriff of Mandaue City in connection with another
presented. Thus, the Court a quodid not err in not awarding damages in favor case and that it was placed in the Cebu Bonded Warehousing Corporation,
64
of defendants-appellants. Cebu City. Thus, Spouses Yu cannot complain that they were unreasonably
deprived of the use of the passenger bus by reason of the subsequent wrongful
We usually defer to the expertise of the CA, especially when it concurs with attachment issued in Civil Case No. 4061-V-93. Nor can they also attribute to
65
the factual findings of the RTC. Indeed, findings of fact may be passed upon the wrongful attachment their failure to earn income or profit from the
and reviewed by the Supreme Court in the following instances: (1) when the operation of the passenger bus.
conclusion is a finding grounded entirely on speculations, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or Moreover, petitioners did not present evidence as to the damages they
impossible; (3) where there is a grave abuse of discretion in the appreciation of suffered by reason of the wrongful attachment of Lot No. 11.
facts; (4) when judgment is based on a misapprehension of facts; (5) when the
lower court, in making its findings, went beyond the issues of the case and Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary
such findings are contrary to the admissions of both appellant and appellee; loss when their properties were wrongfully seized, although the amount
(6) when the factual findings of the CA are contrary to those of the trial court; thereof cannot be definitively ascertained. Hence, an award of temperate or
70
(7) when the findings of fact are themselves conflicting; (8) when the findings moderate damages in the amount of P50,000.00 is in order.
of fact are conclusions made without a citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the As to moral and exemplary damages, to merit an award thereof, it must be
petitioner’s main and reply briefs are not disputed by the respondents; (10) shown that the wrongful attachment was obtained by the attachment plaintiff
when the findings of fact of the lower court are premised on the supposed with malice or bad faith, such as by appending a false affidavit to his
71
absence of evidence and are contradicted by the evidence on application.
66
record. However, the present case does not fall under any of the exceptions.
We are in full accord with the CA that Spouses Yu failed to prove their Spouses Yu argue that malice attended the issuance of the attachment bond as
counterclaim. shown by the fact that Te deliberately appended to her application for
preliminary attachment an Affidavit where Sy perjured himself by stating that
Spouses Yu’s claim for unrealized income of P1,500.00 per day was based on they had no intention to pay their obligations even when he knew this to be
their computation of their average daily income for the year 1992. Said untrue given that they had always paid their obligations; and by accusing them
computation in turn is based on the value of three ticket stubs sold over only of disposing of their properties to defraud their creditors even when he knew
67
five separate days in 1992. By no stretch of the imagination can we consider this to be false, considering that the location of said properties was known to
72
ticket sales for five days sufficient evidence of the average daily income of the him.
passenger bus, much less its mean income. Not even the unrebutted testimony
501 of 501
The testimony of petitioner Josefa Yu herself negates their claim for moral and As a rule, attorney’s fees cannot be awarded when moral and exemplary
exemplary damages. On cross-examination she testified, thus: damages are not granted, the exception however is when a party incurred
74
expenses to lift a wrongfully issued writ of attachment.1awphi1.net Without a
Q: Did you ever deposit any amount at that time to fund the check? doubt, Spouses Yu waged a protracted legal battle to fight off the illegal
attachment of their properties and pursue their claims for damages. It is only
A: We requested that it be replaced and staggered into smaller amounts. just and equitable that they be awarded reasonable attorney’s fees in the
amount ofP30,000.00.
COURT: Did you fund it or not?
In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu
Atty. Ferrer: The three checks involved? for actual, moral, and exemplary damages. However, we grant them temperate
damages and attorney’s fees.
Atty. Florido: Already answered. She said that they were not able to fund it.
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision
Atty. Ferrer: And as a matter of fact, you went to the bank to close your of the Court of Appeals isAFFIRMED with the MODIFICATION that
account? petitioners’ counterclaim is PARTLY GRANTED. Gregorio Yu and Josefa Yu
are awarded P50,000.00 temperate damages and P30,000.00 attorney’s fees.
A: We closed account with the bank because we transferred the account to
another bank. No costs.
Q: How much money did you transfer from that bank to which the three SO ORDERED.
checks were drawn to this new bank?
A: I don’t know how much was there but we transferred already to the Solid
Bank.
Q: Who transferred?
73
A: My daughter, sir. (Emphasis ours)
Based on the foregoing testimony, it is not difficult to understand why Te

concluded that Spouses Yu never intended to pay their obligation for they had
available funds in their bank but chose to transfer said funds instead of cover
the checks they issued. Thus, we cannot attribute malice nor bad faith to Te in
applying for the attachment writ. We cannot hold her liable for moral and
exemplary damages.

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PROVISIONAL REMEDIES

Rule 57: Preliminary Attachment

Section 2 ................................................................................................... 76 Roque v. CA, 93 S 540 ........................................................................................ 159

Sievert v. CA, 168 S 692 ....................................................................................... 76 Section 7 .................................................................................................. 164

Valdevieso v. Damalerio, 451 S 664................................................................... 186 Section 12 ................................................................................................. 297

Luzon Steel v. Sia, 28 S 58 .................................................................................385

Although the petition is silent on the matter, as the respondents in their

As to the petitioners' petition that respondents Relova be punished for

Finding the petition to be sufficient in form and substance, the respondent

filed, on behalf of the adverse party, with the clerk or judge of

And although it is the general principle that certiorari is not available to

Perfecto, J., concurs in the result.

examined, respondent Elaine filed a motion praying that the sum of

(d) In an action against a party who has been guilty of a fraud

(e) In an action against a party who has removed or disposed

(f) In an action against a party who resides out of the

In view of the foregoing, the Decision appealed from is hereby AFFIRMED.

It bears to stress, as a final consideration, that the certiorari proceedings

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed

reconsideration presented by the defendant, asking that the writ referred to be

Respondents’ contention that the respondent judge proceeded according to

The preliminary attachment is an auxiliary remedy the granting of which lies

3. The court erred in denying the defendants' motion for a new

Liberally construing, therefore, the above cited provisions of section 262

At the time the basic loan agreement (which is the Agreement

It can hardly be doubted that those representations in petitioner's printed

WHEREFORE, the petition for certiorari is denied for lack of merit.

and in the light of the authorities above cited, is dismissed for

and Company, Inc. (Aboitiz) sought to collect from petitioners a sum of

WHEREFORE, the petition is GRANTED and the Temporary Restraining

aggregate not less than one thousand pesos: Provided, that

(as of December 10, 1981) US$ 4,175,831.88

NARVASA, J.:p (b) In favor of Citibank US$ 4,920,548.85

3) "maintain a "net due to" head office account which shall

The less said about this argument then, the better.

Section 2, Rule 5, of the Rules of Court provides:

In praying for the issuance of a writ of preliminary attachment under Section 1

Hence, the instant petition. Petitioner’s contentions are without merit.

Under the scheme agreed upon by Wincorp and Hottick's president,

Sometime in 2001, petitioners and respondents agreed that respondents would

It is basic that the requirements of the Rules of Court for issuance of

a rigorous remedy which exposes the debtor to humiliation and

It was on account of the failure to comply with this fundamental requirement

issuance of a writ of preliminary attachment. The complaint was docketed as

Hence, the respondent judge, in requiring the presentation of evidence to

On March 8, 1937, the respondent Alfredo Catolico brought an action against

essential to confer jurisdiction to issue the writ. (6 C. J., 132,

An affidavit is fatally defective where it fails to comply, at least

IMPACT to pay herein petitioner all of IMPACT's obligations under the

Costs against the private respondent.

VIII Book III Until December 31, 1932

FELICIDAD SANDOVAL CARLOS OR FELICIDAD SANDOVAL VDA. DE

On October 29, 2004, the Sandiganbayan issued a resolution ordering the

does not belong to the judgment debtor but to her father,

(pp. 132-133. Rollo)

WHEREFORE, premises considered, Judge Felino Bangalan and Sheriff Lucinio

On November 2, 1976, petitioner Calderon purchased from the private

On November 17, 1977, private respondents filed a counterbond, whereupon I

to discharge the attachment on the ground that the same was II