SECOND DIVISION

G.R. No. 185734, July 03, 2013

ALFREDO C. LIM, JR., Petitioner, v. SPOUSES TITO S. LAZARO AND CARMEN T.

RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the July 10, 2008 Decision2 and
December 18, 2008 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 100270,
affirming the March 29, 2007 Order4of the Regional Trial Court of Quezon City, Branch
223 (RTC), which lifted the writ of preliminary attachment issued in favor of petitioner
Alfredo C. Lim, Jr. (Lim, Jr.).

The Facts

On August 22, 2005, Lim, Jr. filed a complaint5 for sum of money with prayer for the
issuance of a writ of preliminary attachment before the RTC, seeking to recover from
respondents-spouses Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the sum of
P2,160,000.00, which represented the amounts stated in several dishonored checks
issued by the latter to the former, as well as interests, attorney’s fees, and costs. The
RTC granted the writ of preliminary attachment application6 and upon the posting of
the required P2,160,000.00 bond,7 issued the corresponding writ on October 14, 2005.8 In
this accord, three (3) parcels of land situated in Bulacan, covered by Transfer
Certificates of Title (TCT) Nos. T-64940, T-64939, and T-86369 (subject TCTs), registered
in the names of Sps. Lazaro, were levied upon.9

In their Answer with Counterclaim,10 Sps. Lazaro averred, among others, that Lim, Jr.
had no cause of action against them since: (a) Colim Merchandise (Colim), and not Lim,
Jr., was the payee of the fifteen (15) Metrobank checks; and (b) the PNB and Real Bank
checks were not drawn by them, but by Virgilio Arcinas and Elizabeth Ramos,
respectively. While they admit their indebtedness to Colim, Sps. Lazaro alleged that the
same had already been substantially reduced on account of previous payments which
were apparently misapplied. In this regard, they sought for an accounting and
reconciliation of records to determine the actual amount due. They likewise argued that
no fraud should be imputed against them as the aforesaid checks issued to Colim were
merely intended as a form of collateral.11 Hinged on the same grounds, Sps. Lazaro
equally opposed the issuance of a writ of preliminary attachment. 12
Nonetheless, on September 22, 2006, the parties entered into a Compromise
Agreement13 whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of P2,351,064.80 on
an installment basis, following a schedule of payments covering the period from
September 2006 until October 2013, under the following terms, among others: (a) that
should the financial condition of Sps. Lazaro improve, the monthly installments shall be
increased in order to hasten the full payment of the entire obligation; 14 and (b) that Sps.
Lazaro’s failure to pay any installment due or the dishonor of any of the postdated
checks delivered in payment thereof shall make the whole obligation immediately due
and demandable.

The aforesaid compromise agreement was approved by the RTC in its October 31, 2006
Decision15 and January 5, 2007 Amended Decision.16

Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking to lift the writ of
preliminary attachment annotated on the subject TCTs, which the RTC granted on
March 29, 2007.18 It ruled that a writ of preliminary attachment is a mere provisional or
ancillary remedy, resorted to by a litigant to protect and preserve certain rights and
interests pending final judgment. Considering that the case had already been
considered closed and terminated by the rendition of the January 5, 2007 Amended
Decision on the basis of the September 22, 2006 compromise agreement, the writ of
preliminary attachment should be lifted and quashed. Consequently, it ordered the
Registry of Deeds of Bulacan to cancel the writ’s annotation on the subject TCTs.

Lim, Jr. filed a motion for reconsideration19 which was, however, denied on July 26,
2007,20 prompting him to file a petition for certiorari21 before the CA.

The CA Ruling

On July 10, 2008, the CA rendered the assailed decision,22 finding no grave abuse of
discretion on the RTC’s part. It observed that a writ of preliminary attachment may only
be issued at the commencement of the action or at any time before entry of judgment.
Thus, since the principal cause of action had already been declared closed and
terminated by the RTC, the provisional or ancillary remedy of preliminary attachment
would have no leg to stand on, necessitating its discharge.23

Aggrieved, Lim, Jr. moved for reconsideration24 which was likewise denied by the CA
in its December 18, 2008 Resolution.25

Hence, the instant petition.

The Issue Before the Court

The Court’s Ruling

The petition is meritorious.

By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is
an ancillary remedy applied for not for its own sake but to enable the attaching party to
realize upon the relief sought and expected to be granted in the main or principal
action; it is a measure auxiliary or incidental to the main action. As such, it is available
during its pendency which may be resorted to by a litigant to preserve and protect
certain rights and interests during the interim, awaiting the ultimate effects of a final
judgment in the case.26 In addition, attachment is also availed of in order to acquire
jurisdiction over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the defendant cannot be
effected.27

In this relation, while the provisions of Rule 57 are silent on the length of time within
which an attachment lien shall continue to subsist after the rendition of a final
judgment, jurisprudence dictates that the said lien continues until the debt is paid, or
the sale is had under execution issued on the judgment or until the judgment is
satisfied, or the attachment discharged or vacated in the same manner provided by
law.28

Applying these principles, the Court finds that the discharge of the writ of preliminary
attachment against the properties of Sps. Lazaro was improper.

Records indicate that while the parties have entered into a compromise agreement
which had already been approved by the RTC in its January 5, 2007 Amended Decision,
the obligations thereunder have yet to be fully complied with – particularly, the
payment of the total compromise amount of P2,351,064.80. Hence, given that the
foregoing debt remains unpaid, the attachment of Sps. Lazaro’s properties should have
continued to subsist.

In Chemphil Export & Import Corporation v. CA,29 the Court pronounced that a writ of
attachment is not extinguished by the execution of a compromise agreement between
the parties, viz:cralavvonlinelawlibrary

Did the compromise agreement between Antonio Garcia and the consortium discharge
the latter’s attachment lien over the disputed shares?
CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the
dismissal of the case, dies a natural death. Thus, when the consortium entered into a
compromise agreement, which resulted in the termination of their case, the disputed
shares were released from garnishment.

We disagree. To subscribe to CEIC’s contentions would be to totally disregard the

x x x x

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

x x x x

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

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

WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision and the December
18, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 100270
are REVERSED and SET ASIDE, and the March 29, 2007 Order of the Regional Trial
Court of Quezon City, Branch 223 is NULLIFIED. Accordingly, the trial court is
directed to RESTORE the attachment lien over Transfer Certificates of Title Nos. T-
64940, T-64939, and T-86369, in favor of petitioner Alfredo C. Lim, Jr.
SO ORDERED.

Carpio, (Chairperson), Brion, Del Castillo, Perez, and Perlas-Bernabe, JJ., concur.