112 PCIB v. Alejandro (2007)
112 PCIB v. Alejandro (2007)
112 PCIB v. Alejandro (2007)
DECISION
YNARES-SANTIAGO , J : p
This petition for review assails the May 31, 2006 Decision 1 of the Court of
Appeals in CA-G.R. CV No. 78200 a rming the August 30, 2000 Decision 2 of the
Regional Trial Court of Makati, which granted respondent Joseph Anthony M.
Alejandro's claim for damages arising from petitioner Philippine Commercial
International Bank's (PCIB) invalid garnishment of respondent's deposits.
On October 23, 1997, petitioner filed against respondent a complaint 3 for sum of
money with prayer for the issuance of a writ of preliminary attachment. Said complaint
alleged that on September 10, 1997, respondent, a resident of Hong Kong, executed in
favor of petitioner a promissory note obligating himself to pay P249,828,588.90 plus
interest. In view of the uctuations in the foreign exchange rates which resulted in the
insu ciency of the deposits assigned by respondent as security for the loan, petitioner
requested the latter to put up additional security for the loan. Respondent, however,
sought a reconsideration of said request pointing out petitioner's alleged mishandling
of his account due to its failure to carry out his instruction to close his account as early
as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen
was US$1.00:JPY127.50. 4 It appears that the amount of P249,828,588.90 was the
consolidated amount of a series of yen loans granted by petitioner to respondent
during the months of February and April 1997. 5
In praying for the issuance of a writ of preliminary attachment under Section 1
paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1)
respondent fraudulently withdrew his unassigned deposits notwithstanding his verbal
promise to PCIB Assistant Vice President Corazon B. Nepomuceno not to withdraw the
same prior to their assignment as security for the loan; and (2) that respondent is not a
resident of the Philippines. The application for the issuance of a writ was supported
with the affidavit of Nepomuceno. 6
On October 24, 1997, the trial court granted the application and issued the writ
ex parte 7 after petitioner posted a bond in the amount of P18,798,734.69, issued by
Prudential Guarantee & Assurance Inc., under Bond No. HO-46764-97. On the same
date, the bank deposits of respondent with Rizal Commercial Banking Corporation
(RCBC) were garnished. On October 27, 1997, respondent, through counsel, led a
manifestation informing the court that he is voluntarily submitting to its jurisdiction. 8
Subsequently, respondent led a motion to quash 9 the writ contending that the
withdrawal of his unassigned deposits was not fraudulent as it was approved by
petitioner. He also alleged that petitioner knew that he maintains a permanent
residence at Calle Victoria, Ciudad Regina, Batasan Hills, Quezon City, and an o ce
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address in Makati City at the Law Firm Romulo Mabanta Buenaventura Sayoc & De los
Angeles, 1 0 where he is a partner. In both addresses, petitioner regularly communicated
with him through its representatives. Respondent added that he is the managing
partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back to the Philippines.
On December 24, 1997, the trial court issued an order quashing the writ and
holding that the withdrawal of respondent's unassigned deposits was not intended to
defraud petitioner. It also found that the representatives of petitioner personally
transacted with respondent through his home address in Quezon City and/or his o ce
in Makati City. It thus concluded that petitioner misrepresented and suppressed the
facts regarding respondent's residence considering that it has personal and o cial
knowledge that for purposes of service of summons, respondent's residence and
o ce addresses are located in the Philippines. The dispositive portion of the court's
decision is as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is
hereby GRANTED, and the ORDER of 24 October 1997 is hereby RECONSIDERED
and SET ASIDE and the WRIT OF attachment of the same is hereby DISCHARGED.
SO ORDERED. 1 1
With the denial 1 2 of petitioner's motion for reconsideration, it elevated the case
to the Court of Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10,
1999, the petition was dismissed for failure to prove that the trial court abused its
discretion in issuing the aforesaid order. 1 3 Petitioner led a motion for reconsideration
but was denied on October 28, 1999. 1 4 On petition with this Court, the case was
dismissed for late ling in a minute resolution (G.R. No. 140605) dated January 19,
2000. 1 5 Petitioner led a motion for reconsideration but was likewise denied with
finality on March 6, 2000 . 1 6
Meanwhile, on May 20, 1998, respondent led a claim for damages in the amount
of P25 Million 1 7 on the attachment bond (posted by Prudential Guarantee & Assurance,
Inc., under JCL (4) No. 01081, Bond No. HO-46764-97) on account of the wrongful
garnishment of his deposits. He presented evidence showing that his P150,000.00
RCBC check payable to his counsel as attorney's fees, was dishonored by reason of the
garnishment of his deposits. He also testi ed that he is a graduate of the Ateneo de
Manila University in 1982 with a double degree of Economics and Management
Engineering and of the University of the Philippines in 1987 with the degree of Bachelor
of Laws. Respondent likewise presented witnesses to prove that he is a well known
lawyer in the business community both in the Philippines and in Hong Kong. 1 8 For its
part, the lone witness presented by petitioner was Nepomuceno who claimed that she
acted in good faith in alleging that respondent is a resident of Hong Kong. 1 9
On August 30, 2000, the trial court awarded damages to respondent in the
amount of P25 Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly
established his claim in the amount of P25,000,000.00, judgment is hereby
rendered ordering Prudential Guarantee & [Assurance] Co., which is solidarily
liable with plaintiff to pay defendant the full amount of bond under Prudential
Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated 24
October 1997 in the amount of P18,798,734.69. And, considering that the amount
of the bond is insu cient to fully satisfy the award for damages, plaintiff is
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hereby ordered to pay defendant the amount of P6,201,265.31.
SO ORDERED. 2 0
The trial court denied petitioner's motion for reconsideration on October 24,
2000. 2 1
Petitioner elevated the case to the Court of Appeals which a rmed the ndings
of the trial court. It held that in claiming that respondent was not a resident of the
Philippines, petitioner cannot be said to have been in good faith considering that its
knowledge of respondent's Philippine residence and o ce address goes into the very
issue of the trial court's jurisdiction which would have been defective had respondent
not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages awarded to
petitioner and speci ed their basis. The dispositive portion of the decision of the Court
of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision
appealed from is hereby MODIFIED. The award of damages in the amount of
P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee & [Assurance, Inc.],
which is solidarily liable with appellant [herein petitioner], is ORDERED to pay
appellee [herein respondent] P2,000,000.00 as nominal damages; P5,000,000.00
as moral damages; and P1,000,000.00 as attorney's fees, to be satis ed against
the attachment bond under Prudential Guarantee & Assurance, Inc. JCL (4) No.
01081.
SO ORDERED. 2 2
Both parties moved for reconsideration. On November 21, 2006, the Court of
Appeals denied petitioner's motion for reconsideration but granted that of
respondent's by ordering petitioner to pay additional P5 Million as exemplary damages.
23
[Anent the] second ground of attachment . . . [t]he Court nds that the
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 to
defraud plaintiff as creditor is that plaintiff approved and allowed said
withdrawals. It is even noted that when the Court granted the prayer for
attachment it was mainly on the rst ground under Section 1(f) of Rule 57 of the
1997 Rules of Civil Procedure, that defendant resides out of the Philippines.
On the above ndings, it is obvious that plaintiff already knew from the
beginning the de ciency of its second ground for attachment [ i.e.,] disposing
properties with intent to defraud his creditors, and therefore plaintiff had to resort
to this misrepresentation that defendant was residing out of the Philippines and
suppressed the fact that defendant's permanent residence is in METRO MANILA
where he could be served with summons.
On the above ndings, and mainly on the misrepresentations made by
plaintiff on the grounds for the issuance of the attachment in the veri ed
complaint, the Court concludes that defendant has duly proven its grounds in the
MOTION and that plaintiff is not entitled to the attachment. 2 5
Even assuming that the trial court did not make a categorical pronouncement of
misrepresentation and suppression of material facts on the part of petitioner, the
factual backdrop of this case does not support petitioner's claim of good faith. The
facts and circumstances omitted are highly material and relevant to the grant or denial
of writ of attachment applied for.
Finally, there is no merit in petitioner's contention that respondent can be
considered a resident who is temporarily out of the Philippines upon whom service of
summons may be effected by publication, and therefore quali es as among those
against whom a writ of attachment may be issued under Section 1, paragraph (f), Rule
57 of the Rules of Court which provides:
(f)In an action against a party . . . on whom summons may be
served by publication.
The purposes of preliminary attachment are: (1) to seize the property of the
debtor in advance of nal judgment and to hold it for purposes of satisfying said
judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of the
Rules of Court; or (2) to acquire jurisdiction over the action by actual or constructive
seizure of the property in those instances where personal or substituted service
of summons on the defendant cannot be effected , as in paragraph (f) of the
same provision. 2 7
Corollarily, in actions in personam, such as the instant case for collection of sum
of money, 2 8 summons must be served by personal or substituted service, otherwise
the court will not acquire jurisdiction over the defendant. In case the defendant does
not reside and is not found in the Philippines (and hence personal and substituted
service cannot be effected), the remedy of the plaintiff in order for the court to acquire
jurisdiction to try the case is to convert the action into a proceeding in rem or quasi in
rem by attaching the property of the defendant. 2 9 Thus, in order to acquire jurisdiction
in actions in personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the action into a
proceeding in rem or quasi in rem by attaching the defendant's property. The service of
summons in this case (which may be by publication coupled with the sending by
registered mail of the copy of the summons and the court order to the last known
address of the defendant), is no longer for the purpose of acquiring jurisdiction but for
compliance with the requirements of due process. 3 0
However, where the defendant is a resident who is temporarily out of the
Philippines, attachment of his/her property in an action in personam, is not always
necessary in order for the court to acquire jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. — When an
action is commenced against a defendant who ordinarily resides within the
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Philippines, but who is temporarily out of it, service may, by leave of court, be also
effected out of the Philippines, as under the preceding section.
4.Id. at 40.
5.Id. at 34-35.
6.Id. at 17.
14.Id. at 335-336.
15.Id. at 337.
16.Id. at 338.
17.Record on appeal, vol. I, pp. 73-78.
18.Id. at 359-361.
19.Id. at 362.
20.Id. at 365. Penned by Judge Fernando V. Gorospe, Jr.
21.Id. at 392-394.
22.Rollo, p. 220.
23.Id. at 223-225.
24.Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001, 363 SCRA 444, 445 and 449-450.
25.Record on appeal, Vol. II, pp. 67-68.
26.G.R. Nos. 113176 & 113342, July 30, 2001, 362 SCRA 1, 15.
27.Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial Law Compendium, vol. I,
ninth revised edition, p. 678.
28.Obaña v. Court of Appeals, G.R. No. 78635, April 27, 1989, 172 SCRA 866, 874.
29.Consolidated Plywood Industries, Inc. v. Breva , G.R. No. L-82811, October 18, 1988, 166
SCRA 589, 593-594; Obaña v. Court of Appeals, supra at 874.
30.Sahagun v. Court of Appeals, G.R. No. 78328, June 3, 1991, 198 SCRA 44, 54.
31.131 Phil. 154, 165-166 (1968).
32.The pronouncement of the Court in Castillo v. Court of First Instance of Bulacan, Branch IV
(G.R. No. L-55869, February 20, 1984, 127 SCRA 632) that with respect to residents
temporarily out of the Philippines, non-compliance with the modes of service under
Section 17 (now Section 15, i.e., service of summons out of the Philippines by personal
service, or by publication in a newspaper of general circulation), is a denial of due
process and renders the proceedings void, does not mean that said modes of service are
exclusive. Substituted service of summons is still the normal mode of service for
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residents temporarily out of the Philippines. The declaration of nullity of the proceedings
in the said case was by reason of the defective substituted service of summons to a
person not authorized to receive the same being a mere overseer of the lessee in the
conjugal property of the defendant, and not because substituted service of summons per
se is not among the valid modes of service upon a resident temporarily out of the
country.
33.Supra at 164-165.
34.The pertinent portion of the December 24, 1997 Order of the trial court, provides:
"It is even noted that when the Court granted the prayer for attachment it was mainly on the first
ground under Section 1 (f) of Rule 57 of the 1997 Rules of Civil Procedure, that
defendant resides out of the Philippines."
35.Jardine-Manila Finance, Inc. v. Court of Appeals , G.R. No. 55272, April 10, 1989, 171 SCRA
636, 645.
36.Philippine Commercial International Bank v. Intermediate Appellate Court , G.R. No. 73610,
April 19, 1991, 196 SCRA 29, 36-37.
37.Almeda v. Cariño, G.R. No. 152143, January 13, 2003, 395 SCRA 144, 149-150.
40.Prudential Bank v. Court of Appeals, G.R. No. 125536, March 16, 2000, 328 SCRA 264, 272.
41.Philippine Commercial International Bank v. Intermediate Appellate Court, supra at 38-39.
42.Filinvest Credit Corporation v. Intermediate Appellate Court , G.R. No. L-65935, September 30,
1988, 166 SCRA 155, 165-166.
43.Hanil Development Co., Ltd. v. Court of Appeals, supra note 26 at 16.
45The surety, Prudential Guarantee & Assurance, Inc., was duly noti ed of respondent's
application for damages (Record on appeal, p. 78) pursuant to Section 20, Rule 57 of the
Rules of Court.