EN BANC

G.R. No. L-252 March 30, 1946 TRANQUILINO CALO and DOROTEO SAN JOSE, petitioners,

vs.

ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO RELOVA and TEODULA

BARTOLOME,respondents.

FACTS:

This is a petition for writ of certiorari against the respondent Judge Arsenio C. 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

a receiver of certain lands and their fruits, which according to petitioners belong to them and were in their actual possession

(case 7951).

The case arose from the following:

1. Plaintiff spouses, as owners and possessors of certain parcels of land in Laguna, filed against defendants a complaint,

alleging that the latter, through the use of force, stealth, strategy and intimidation, intend or are intending to enter and

work or harvest whatever existing fruits found on the land.

2. Together with the complaint, they prayed for the issuance of a writ of preliminary injunction to be issued ex parte to

restrain, enjoin and prohibit defendants from entering, interfering with or harvesting the lands belonging to

plaintiff spouses and that judgment be rendered, after due hearing, declaring the preliminary injunction final. An

accompanying bond in the amount of P200 was also filed with the CFI.

3. The defendants filed an opposition to the issuance of the writ of preliminary injunction on the ground that they are

owners of the lands and have been in actual possession thereof since the year 1925; and their answer to the complaint

reiterated that they are the owners and were then in actual possession of said property, and that the plaintiffs have never

been in possession thereof.

CFI’s decision on the writ:

CFI of Laguna (Judge Rillozara) denied the petition on the ground that the defendants were in actual possession of

said lands. An MR was filed but had not yet been decided by the judge as he was assigned to another court.

On Dec 17, plaintiffs filed plaintiffs filed an urgent petition ex-parte praying that plaintiffs' motion for

reconsideration of the order denying their petition for preliminary injunction be granted and or for the appointment of a

receiver of the properties described in the complaint, on the ground that

a. the plaintiffs 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 appointment of a receiver was the most convenient and feasible means of preserving, administering and or

disposing of the properties in litigation which included their fruits.

Judge Roldan, now the judge, on the same date, granted the petition for appointment of and appointed a receiver in the case.

Hence, this petition.

ISSUE:

WON the respondent judge acted in excess of his jurisdiction or with grave abuse of discretion in issuing the order

appointing a receiver in the case No. 7951 of the CFI of Laguna; for it is evident that there is no appeal or any other plain,

speedy, and adequate remedy in the ordinary course of the law against the said order, which is an incidental or interlocutory

one

HELD:

As to the issue of grave abuse of discretion

SC holds that Judge Arsenio C. Roldan of the CFI 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.

(a) Based on the complaint filed in case 7951, action is one of ordinary injunction, for the plaintiffs allege that they

are the owners of the lands therein described, and were in actual possession thereof

(b) That this is the nature of plaintiffs' action corroborated by the fact that they petitioned in the same complaint

for a preliminary prohibitory injunction, which was denied by the court, and that the plaintiffs, in their motion

for reconsideration of said order filed on same year, and in their urgent petition dated December 17, moving

the court to grant said motion for reconsideration, reiterated that they were actual possessors of the land in

question

(c) The fact that plaintiffs after reiterating their allegation or claim that they are the owners in fee simple and

possessors in good faith of the properties in question, pray that they be declared the owners in fee simple, has

not changed the nature of the action alleged in the complaint or added a new cause of action thereto; because

the allegations in plaintiffs' reply were in answer to defendants' defenses, and the nature of plaintiffs' cause of

action, as set forth in their complaint, was not and could not be amended or changed by the reply, which

plaintiffs had the right to present as a matter of course

As to the nature of provisional remedies

The provisional remedies (attachment, preliminary injunction, receivership, delivery of personal property

provided in Rules 59-62) are remedies to which parties litigant may resort for the preservation or protection of

their rights or interest, and for no other purpose, during the pendency of the principal action. If an action, by its

nature, does not require such protection or preservation, said remedies cannot be applied for and granted. To each kind of

action/s a proper provisional remedy is provided for by law.

(a) Attachment: issued only in the cases specifically states in section 1, Rule 59, in order that the defendant may not

dispose of his attached property and thus secure the satisfaction of any judgment that may be recovered by plaintiff

from defendant. For that reason, a property subject of litigation between the parties, or claimed by plaintiff as his,

cannot be attached upon a motion of the same plaintiff.

(b) Preliminary prohibitory injunction: lies when the relief demanded in the complaint consists in restraining

the commission/continuance of the act complained of, either perpetually or for a limited period, and the

other conditions required by sec 3 of Rule 60. Purpose is to preserve the status quo of the things subject

of the action or the relation between the parties, in order to protect the rights of plaintiff respecting the subject

of the action during the pendency of the suit.

(c) Receiver: may be appointed to take charge of personal/real property which is the subject of an ordinary civil action,

when it appears that the party applying for the appointment of a receiver has an interest in the property

or fund which is the subject of the action or litigation, and that such property or fund is in danger of being lost,

removed or materially injured unless a receiver is appointed to guard and preserve it. The property or fund

must be in litigation according to the allegations of the complaint, and the object of appointing a receiver

is to secure and preserve the property or thing in controversy pending the litigation.

(d) Delivery of personal property: consists in the delivery, by order of court, of a personal property by the defendant

to the plaintiff, who shall give a bond to assure its return or payment of damages to the defendant in the

plaintiff’s action to recover possession of the same property fails, in order to protect the plaintiff’s right of

possession over said property, or prevent the defendant from damaging, destroying or disposing of the same during

the pendency of the suit.

Considering these, the provisional remedy proper to plaintiff’s action of injunction is a PRELIMINARY

PROHIBITORY INJUNCTION, if plaintiff’s theory, as set forth in the complaint, that he is the owner and in actual

possession of the land is correct. However, as the lower court found during the hearing that the defendants were in

possession of the lands, the lower court acted in accordance with law in denying the petition, although their MR, which

was still pending at the time of the petition in this case was heard in this court, plaintiffs insist that they are in actual

possession of the lands and of its fruits.

From the foregoing it appears evident that the respondent judge acted in excess of his jurisdiction in appointing a

receiver in case No. 7951 of the CFI of Laguna. Appointment of a receiver is not proper or does not lie in an action of

injunction such as the one filed by the plaintiff. The litigation or issue raised by plaintiffs in their complaint is not the

ownership or possession of the lands and their fruits. It is whether or not defendants intend or were intending to enter

or work or harvest whatever existing fruits could then be found in the lands described in the complaint, alleged to be

the exclusive property and in the actual possession of the plaintiffs. It is a matter not only of law but of plain common

sense that a plaintiff will not and legally cannot ask for the appointment or receiver of property which he alleges to

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 administering it.

SECOND DIVISION

[A.M. No. RTJ-05-1898. January 31, 2005]

CHARLTON TAN, complainant, vs. JUDGE ABEDNEGO O. ADRE, respondent.

FACTS:

This is an administrative complaint arose from the affidavit-complaint of Charlton Tan, charging Judge Abednego

O. Adre, RTC of Quezon City, Branch 88, with grave abuse of authority and gross ignorance of the law filed before the

Office of the Court Administrator (OCA).

The case stemmed from the following:

1. Rosana Reyes Tan, Charlton’s wife, filed with the RTC a habeas corpus case. On March 24, 2004, the respondent judge

issued the writ prayed for and ordered complainant to bring before the court the body of their daughter, Charlene.

2. On the scheduled date of hearing, the court provisionally turned over the custody of the child to the mother. A motion

for reconsideration praying for the return of the child to complainant or a shared custody be given to the parents was

filed on April 20, 2004. When the motion was heard, the case was rescheduled to August 3, 2004, as Mrs. Tan was

indisposed.

3. Allegedly sensing the partiality of respondent judge, complainant on May 25, 2004 filed a motion to inhibit him, but

the same was denied in an Order dated June 15, 2004.

Charlton’s contention:

He questions the issuance of the Order, re-setting the hearing of the case on August 3, 2004 or an interval of four

(4) months after respondent judge awarded provisional custody in favor of his wife to the detriment of his daughter and that

the judge would be retiring on July 4, so this would unduly delay the case before appointing a new judge. Charlton alleged

that respondent judge acted with grave abuse of authority under the following circumstances:

1) that respondent judge acted with grave abuse of authority when he ordered the issuance of the writ, commanding

him to appear before the court and bring with him the subject minor, without first conducting a hearing

2) when he hurriedly turned over the custody of their daughter to his wife Rosana on the day of the hearing on April

12, 2004, immediately after their respective lawyers entered their appearances, without first hearing his side; and

3) respondent judge should have considered the fitness of Rosana as a mother, as the latter is not qualified because she

is working in Japan and only comes to the Philippines for a five (5) to ten (10) days vacation; that she is now

involved with another man, a Canadian named Marc Beauclair; and she does not possess the financial capacity to

support Charlene

According to the complainant, the actuations of respondent judge showed abuse of authority and ignorance of the

law.

OCA’s report:

The OCA submitted its report recommending the dismissal of the complaint for lack of merit.

Hence, this petition.

ISSUES:

1) WON the order of respondent judge issuing the writ constitutes abuse of authority

2) WON the order of respondent judge ordering the provisional custody of the four-year old child to her mother

constitutes ignorance of the law

HELD:

1) As to the issue of abuse of authority

The contention is without merit. Section 5, Rule 102 of the Rules of Civil Procedure on Habeas Corpus, shows that

a court may grant the writ if it appears upon presentation of the petition that the writ ought to be issued. Thus, Section

5 states:

SEC. 5. When the writ must be granted and issued. –A court or judge authorized to grant the writ must, when a

petition therefor is presented and it appears that the writ ought to issue, grant the same forthwith, and immediately

thereupon the clerk of court shall issue the writ under the seal of the court; or in case of emergency, the judge may

issue the writ under his own hand, and may depute any officer or person to serve it.

Clearly therefore, respondent judge was well within his authority when he issued the writ as no hearing is required

before a writ may be issued.

2) As to the issue of ignorance of the law

The Court finds the granting of the provisional custody proper. The law grants the mother the custody of a child

under seven (7) years of age. In the case at bar, it is uncontroverted that the child subject of the habeas corpus case is

only four years old, thus, the custody should be given to the mother.

The acts of a judge which pertain to his judicial functions are not subject to disciplinary power unless they are

committed with fraud, dishonesty, corruption or bad faith. As a matter of policy, in the absence of fraud, dishonesty or

corruption, the acts of a judge in his judicial capacity are not subject to disciplinary action even though such acts are

erroneous.

He cannot be subjected to liability - civil, criminal, or administrative - for any of his official acts, no matter how

erroneous, as long as he acts in good faith. In such a case, the remedy of the aggrieved party is not to file an

administrative complaint against the judge but to elevate the error to the higher court for review and correction, because

an administrative complaint is not an appropriate remedy where judicial recourse is still available

For liability to attach for ignorance of the law, the assailed order of a judge must not only be erroneous;

more importantly, it must be motivated by bad faith, dishonesty, hatred or some other similar motive. In the case

at bar, the questioned orders were issued after considering the pleadings filed by the parties. The orders were not issued

without rhyme and reason. Respondent judge issued the questioned orders in apparent good faith without any proof or

showing of malice, corrupt motives or improper consideration. There is not a scintilla of evidence, not even a remote

indication, that the respondent judge, in issuing the questioned orders, was impelled by ill-will, malice, revenge,

personal animosity, impulse to do injustice, greed, corrupt consideration or other similar motive. As a matter of public

policy then, the acts of the judge in the case at bar in his official capacity are not subject to disciplinary action since

good faith and absence of malice, corrupt motives or improper considerations, are sufficient defenses in which a judge

charged with ignorance of the law can find refuge

As to the meaning of “provisional”

Be it noted also that the questioned order was only provisional. As the term implies, "provisional" means

temporary, preliminary or tentative*. The provisional custody granted to the mother of the child does not preclude

complainant from proving the "compelling reasons" cited by him which can be properly ventilated in a full-blown

hearing scheduled by the court for that purpose. The Court finds the judge’s actuation in conformity with existing law

and jurisprudence.

*Note: The SC has taken the definition from Blacks Law Dictionary, Fifth Edition, 1102 (footnote #15).

Buyco VS Baraquia

Facts:

Respondent, Nelson Baraquia, filed before the RTC a complaint against Dominico Buyco and Clemente Buyco for the

establishment of a permanent right of way, injunction and damages with preliminary injunction and temporary restraining

order, to enjoin the Buycos from closing off a private road within their property which he has been using to go to and from

the public highway to access his poultry farm.

The Buycos died during the pendency of the case and were substituted by herein Petitioner. RTC granted respondent’s

application for preliminary injunction.

By decision of February 14, 2007, the trial court dismissed respondent’s complaint for failure to establish the concurrence

of the essential requisites for the establishment of an easement of right of way. It accordingly lifted the writ of preliminary

injunction. Respondent filed a notice of appeal of the trial court’s decision. Petitioner filed too a notice of partial appeal bearing on to

the non-award of prayer for damages.

Respondent later filed with the trial court a motion to cite petitioner and his brother Gonzalo in contempt, alleging that they

had closed off the subject road, thus violating the writ of preliminary injunction.

The trial court, by Resolution of March 13, 2007, noting that respondent received on March 5, 2007 his copy of its decision

while petitioner received his on February 21, 2007, held that the February 14, 2007 decision had not yet become final and

executory, hence, the writ of preliminary injunction remained to be valid, efficacious and obligatory, rendering petitioner’s

act of closing the road on March 1, 2007 an indirect contempt of court. It thus declared petitioner and his brother in contempt

of court.

Petitioner moved for reconsideration of the trial court’s March 13, 2007 Resolution, contending that a preliminary

injunction, once quashed, ceases to exist, and that he and his brother cannot be held guilty of indirect contempt by mere

motion.

Issue:

Whether or not the lifting of a writ of preliminary injunction due to the dismissal of the complaint is immediately executory,

even if the dismissal of the complaint is pending appeal.

Ruling :

Yes. A writ of preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or

final order, requiring a party or a court, agency or a person to refrain from a particular act or acts.It is merely a provisional

remedy, adjunct to the main case subject to the latters outcome.It is not a cause of action in itself. Being an ancillary or

auxiliary remedy, it is available during the pendency of the action which may be resorted to by a litigant to preserve and

protect certain rights and interests therein pending rendition, and for purposes of the ultimate effects, of a final judgment in

the case.

The writ is provisional because it constitutes a temporary measure availed of during the pendency of the action and it is

ancillary because it is a mere incident in and is dependent upon the result of the main action

It is well-settled that the sole object of a preliminary injunction, whether prohibitory or mandatory, is to preserve the status

quo until the merits of the case can be heard. It is usually granted when it is made to appear that there is a substantial

controversy between the parties and one of them is committing an act or threatening the immediate commission of an act

that will cause irreparable injury or destroy the status quo of the controversy before a full hearing can be had on the merits

of the case.

Indubitably, in the case at bar, the writ of preliminary injunction was granted by the lower court upon respondents showing

that he and his poultry business would be injured by the closure of the subject road. After trial, however, the lower court

found that respondent was not entitled to the easement of right of way prayed for, having failed to prove the essential

requisites for such entitlement, hence, the writ was lifted.

The present case having been heard and found dismissible as it was in fact dismissed, the writ of preliminary injunction is

deemed lifted, its purpose as a provisional remedy having been served, the appeal therefrom notwithstanding.

Unionbank v. Court of Appeals enlightens:

x x x a dismissal, discontinuance or non-suit of an action in which a restraining order or temporary injunction has been

granted operates as a dissolution of the restraining order or temporary injunction, regardless of whether the period

for filing a motion for reconsideration of the order dismissing the case or appeal therefrom has expired. The rationale

therefor is that even in cases where an appeal is taken from a judgment dismissing an action on the merits, the appeal

does not suspend the judgment, hence the general rule applies that a temporary injunction terminates automatically

on the dismissal of the action.

Petition granted. Trial court decision is reversed. The writ of preliminary injunction which Branch 39 of the Iloilo Regional

Trial Court issued on December 1, 1999 was automatically dissolved upon its dismissal by Decision of February 14, 2007

of Civil Case No. 26015.

Reyes VS Lim

Facts:

Petitioner filed before the RTC a complaint for the annulment of contract and damages against respondents.

In the complaint, it alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into a contract to sell a

parcel of land located along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the Property as lessee.

Reyes had informed Harrison Lumber to vacate the property before the end of January 1995.

Respondent and Harrison Lumber alleged that Reyes approved their request for an extension of time to vacate the Property

due to their difficulty in finding a new location for their business. Harrison Lumber claimed that as of March 1995, it had

already started transferring some of its merchandise to its new business location in Malabon

On 31 May 1995, Lim stated that he was ready and willing to pay the balance of the purchase price on or before 8 March

1995.

On 9 March 1995, Reyes offered to return the P10 million down payment to Lim because Reyes was having problems in

removing the lessee from the Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes title to the

Property. Lim learned that Reyes had already sold the Property to Line One Foods Corporation (Line One) on 1 March 1995

for P16,782,840.

Lim prayed for the cancellation of the Contract to Sell and for the issuance of a writ of preliminary attachment against

Reyes. The trial court denied the prayer for a writ of preliminary attachment in an Order dated 7 October 1996. Lim requested

in open court that Reyes be ordered to deposit the P10 million down payment with the cashier of the Regional Trial Court

of Paranaque. The trial court granted this motion.

The trial court directed Reyes to deposit the P10 million down payment with the Clerk of Court on or before 30 October

1997. Reyes filed a Petition for Certiorari with the Court of Appeals

CA:

The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise of its equity jurisdiction.

The court may grant equitable reliefs to breathe life and force to substantive law such as Article 1385 of the Civil Code

since the provisional remedies under the Rules of Court do not apply to this case.

The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million to the custody of the trial

court to protect the interest of Lim who paid the amount to Reyes as down payment.

Issue:

Whether the Court of Appeals erred in finding the trial court could issue the questioned Orders on grounds of equity when

there is an applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules on Civil Procedure

Ruling:

No.

The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of Court. If left alone, the

hiatus will result in unjust enrichment to Reyes at the expense of Lim. The hiatus may also imperil restitution, which is a

precondition to the rescission of the Contract to Sell that Reyes himself seeks. This is not a case of equity overruling a

positive provision of law or judicial rule for there is none that governs this particular case. This is a case of silence or

insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil Code expressly mandates the courts to

make a ruling despite the silence, obscurity or insufficiency of the laws. This calls for the application of equity, which fills

the open spaces in the law.

Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the P10 million down payment

in court. The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure

restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to

the special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction.Equity is the principle by

which substantial justice may be attained in cases where the prescribed or customary forms of ordinary law are inadequate.

DAVAO LIGHT & POWER CO., INC., vs. THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or

QUEENSLAND TOURIST INN, and TEODORICO ADARNA, G.R. No. 93262 December 29, 1991

FACTS OF THE CASE:

• Davao Light & Power Co., Inc. filed a verified complaint for recovery of a sum of money and damages against

Queensland Hotel, etc. and Teodorico Adarna. The complaint contained an ex parte application for a writ of preliminary

attachment.

• Judge Nartatez, to whose branch the case was assigned by raffle, issued an Order granting the ex parte application

and fixing the attachment bond at P4,600,513.37. The attachment bond having been submitted by Davao Light, the writ of

attachment issued.

• The summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond,

were served on defendants Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the

latter.

• Defendants Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the

same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11,

1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants.

• Davao Light filed an opposition to the motion to discharge attachment.

• Trial Court issued an Order denying the motion to discharge.

• The Court of Appeals in a special civil action of certiorari instituted by the respondents, declared the issuance of a

writ of preliminary attachment, as well as all other orders emanating therefrom, specially the Writ of Attachment and Notice

of Levy on Preliminary Attachment as null and void.

• Hence, this appeal filed by the petitioner.

ISSUE: Whether or not a writ of preliminary attachment may issue ex parte against a defendant before acquisition of

jurisdiction of the latter's person by service of summons or his voluntary submission to the Court's authority. YES

RULING:

• The Court ruled that with regard to the provisional remedies of preliminary attachment, preliminary injunction,

receivership or replevin, they may be validly and properly applied for and granted even before the defendant is summoned

or is heard from.

• The Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided

that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its

discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the

writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the

defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if any), the application for

attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's

attachment bond.

• A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of

which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the property of the

adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. It is

a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it.

Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over

the person of the defendant.

• Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter."

The phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint — which, as

above pointed out, is the date that marks "the commencement of the action;" and the reference plainly is to a time before

summons is served on the defendant, or even before summons issues.

• What the rule is saying quite clearly is that after an action is properly commenced — by the filing of the complaint

and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary

attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or

after service of summons on the defendant.

JOSE DE BORJA vs SERVILLANO PLATON and FRANCISCO DE BORJA, G.R. No. L-48080, August 31, 1942

FACTS OF THE CASE:

• Petitioner brought a civil action in the Court of First Instance of Rizal against Hermogena Romero, Francisco de

Borja, Josefa Tangco and Crisanto de Borja to annul a second sale by Francisco de Borja to Hermogena Romero, of a large

estate known as the Hacienda Jalajala, and to recover damages in the amount of P25,000.

• Defendants Francisco de Borja and his wife Josefa Tangco filed an answer with three counterclaims, and another

two more counterclaims. Trial began September 30, 1936.

• Defendants Francisco de Borja, Josefa Tangco and Crisanto de Borja submitted their amended answer, consisting

of a general denial, special defenses, and five counterclaims and cross-complaints. In these causes for counter-claim and

cross-complaint, it was alleged that plaintiff, being a son of defendants Francisco de Borja and Josefa Tangco, had been

entrusted with the administration of the extensive interests of his parents, but had been unfaithful to his trust.

• Said defendants, therefore, prayed that the spouses Borja and Tangco be declared owners of the Hacienda Jalajala

in question. Defendants also demanded the following: (1) plaintiff be required to render an accounting of the products of

said hacienda that he had received and to pay said spouses at least P100,000 illegally retained by him; (2) plaintiff be ordered

to account for the proceed of rice and bran and to pay at least P700,000 unlawfully retained by him; (3) plaintiff be made to

deliver P20,000 which he had collected from a debtor of said spouses; (4) plaintiff be likewise ordered to pay another sum

of P9,034 collected by him from the same debtor; (5) plaintiff be required to turn over to defendants Francisco de Borja and

Josefa Tangco the amount of P40,000 collected by him as indemnity of an insurance policy on property belonging to said

spouses.

• Francisco de Borja and his wife filed their petition for preliminary attachment to cover their third, fourth, and fifth,

grounds for cross-complaint, involving a total of P69,035 and did not include the first and second causes for cross-complaint

because the visible property of plaintiff that could then be attached was only worth about P2,000. plaintiff presented an

amended answer setting up a counterclaim against defendants Borja and wife in the sum of P99,175.46.

• Plaintiff presented an amended answer setting up a counterclaim against defendants Borja and wife in the sum of

P99,175.46.

ISSUE: 1. Whether or not writ of attachment can be issued in favor of a defendant who presents a counterclaim. YES

2. Whether or not the affidavit attached to the petition for a writ of preliminary attachment was fatally defective because it

failed to allege that "the amount due to the plaintiff is as much as the sum for which the order is granted above all legal

counterclaims" as required in section 426, Code of Civil Procedure and section 3, Rule 59, Rules of Court. NO

RULING:

• We believe a writ of preliminary attachment may be issued in favor of a defendant who sets up a counterclaim. For

the purpose of the protection afforded by such attachment, it is immaterial whether the defendants Borja and wife simply

presented a counterclaim or brought a separate civil action against Jose de Borja, plaintiff in the previous case and petitioner

herein. To lay down a subtle distinction would be to sanction that formalism and that technicality which are discountenanced

by the modern laws of procedure for the sake of speedy and substantial justice. In the present case we see no reason why

the order of the trial court should be disturbed, this question being a matter within its discretion and we find no grave abuse

of that discretion.

• The trial court found, however, that the counterclaim of Francisco de Borja and wife exceed those of the petitioner

Jose de Borja. It should be borne in mind that the aggregate counterclaims of Francisco de Borja and wife amounted to

P869,000, which exceeds petitioner's counterclaim by P769,000 in round figures. Moreover, as the trial court had before it

the evidence adduce by both sides, the petition for a writ of preliminary attachment having been filed four years after the

trial had begun, we presume that the lower court, having in mind such evidence, ordered the attachment accordingly.

G.R. No. L-61011 October 18, 1990

INSULAR BANK OF ASIA & AMERICA, INCORPORATED, petitioner,

vs.

HONORABLE COURT OF APPEALS, and COMMERCIAL CREDIT CORPORATION, respondents.

FACTS:

Petitioner Insular Bank of Asia and America (IBAA) made a money market placement with respondent Commercial Credit

Corporation (CCC) on 12 December 1980 in the amount of P1,877,053.03.

In consideration of such placement, Commercial Credit Corporation executed a Non Negotiable Repurchase Agreement

whereby it conveyed to IBAA securities issued by International Corporate Bank (Interbank) with a face value of

P2,000,000.00 and with a maturity date of 22 April 1981.

On due date (22 April 1981), CCC caused to be issued to IBAA a Commercial Bank and Trust Co. (CBTC) cashier's check

for P2,000,000.00 which was, however, dishonored upon presentment for being drawn against uncollected deposits.

On 18 May 1981, IBAA advised CCC of the dishonor and demanded cash payment.

Due to CCC's failure to meet its obligation despite demands, IBAA filed an action for recovery of sum of money with a

prayer for the issuance of a writ of preliminary attachment.

On 20 October 1981, the CFI of Rizal issued an order granting the preliminary attachment against real and personal

properties of CCC.

On 19 November 1981, CCC filed a petition for certiorari with the Court of Appeals alleging grave abuse of discretion

amounting to lack of jurisdiction on the part of the RTC of Rizal in the issuance of the attachment order.

IBAA claimed, it (CCC) never had any serious intention to pay at the inception of the money market placement transaction

such that the intention to defraud the bank (IBAA) was very apparent. According to IBAA, the circumstances in the case at

bar fall under Rule 57, Section 1 (d), of the Rules of Court.

In setting aside the RTC order of attachment, the Court of Appeals, in its decision, held:

We find no reason to uphold the order of attachment issued by the respondent judge on October 20, 1981

where there is no showing that the petitioner was performing acts to defraud its creditors or by disposing

its assets to the prejudice of its creditors or persons who may have a claim to its assets.

Hence, this instant petition.

ISSUE: Whether or not the Court of Appeals decision setting aside the order of the CFI of Rizal, is in accordance with law.

HELD: YES.

Respondent CCC has not denied that it was undergoing financial difficulties and had in fact called a creditor's meeting to

make full disclosure of its business condition and negotiate for payment of its outstanding obligations.

The Court of Appeals found, on the other hand, that there was no dissipation of assets, in fact, respondent's withdrawal of

money from Far East Bank and Trust Co. was intended to finance its operations. Inability to pay, we rule, is not necessarily

synonymous with fraudulent intent not to honor an admitted obligation.

RATIO:

The purpose of attachment is to secure a contingent lien on defendant's property until plaintiff can obtain a judgment and

have such property applied to its satisfaction or to make provision for unsecured debts in such cases where the means of

satisfaction thereof are liable to be removed beyond the jurisdiction or improperly disposed of (by fraud or otherwise) or

concealed or placed beyond the reach of creditors .

G.R. No. 175587 September 21, 2007 PHILIPPINE COMMERCIAL INTERNATIONAL BANK vs.

JOSEPH ANTHONY M. ALEJANDRO

On October 23, 1997, petitioner(PCIB) filed against respondent(Alejandro) a complaint for sum of money with prayer for

the issuance of a writ of preliminary attachment.

Petitioner prayed for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of

the Rules of Court. He alleged that (1) respondent fraudulently withdrew his unassigned deposits; and (2) that respondent

is not a resident of the Philippines.

On October 24, 1997, the trial court granted the application and issued the writ ex parte.

On the same date, the bank deposits of respondent with Rizal Commercial Banking Corporation (RCBC) were garnished.

Subsequently, respondent filed a motion to quash the writ.

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 office in Makati City. It thus concluded that

petitioner misrepresented and suppressed the facts regarding respondent’s residence considering that it has personal and

official knowledge that for purposes of service of summons, respondent’s residence and office addresses are located in the

Philippines.

With the denial of petitioner’s motion for reconsideration, it elevated the case to the Court of Appeals. The said case was

dismissed. Petitioner filed a motion for reconsideration but was likewise denied with finality on March 6, 2000.

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25 Million on the attachment bond

on account of the wrongful garnishment of his deposits.

On August 30, 2000, the trial court awarded damages to respondent in the amount of P25 Million.

The trial court denied petitioner’s motion for reconsideration on October 24, 2000.

Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial court.

It held that in claiming that respondent was not a resident of the Philippines, petitioner cannot be said to have been in good

faith considering that its knowledge of respondent’s Philippine residence and office address.

Court of Appeals denied petitioner’s motion for reconsideration.

Hence, the instant petition.

ISSUE: The core issue for resolution is whether PCIB is liable for damages for the improper issuance of the writ of

attachment against respondent.

HELD: YES.

On the above findings, it is obvious that plaintiff already knew from the beginning the deficiency of its second ground for

attachment 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.

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

Rules of Court, to wit:

SEC. 1. Grounds upon which attachment may issue. — At the commencement of the action or at any time before entry of

judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction

of any judgment that may be recovered in the following cases:

x x x

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

The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance of final judgment and to hold

it for purposes of satisfying said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of the

Rules of Court; or (2) to acquire jurisdiction over the action by actual or constructive seizure of the property in those

instances where personal or substituted service of summons on the defendant cannot be effected, as in paragraph (f)

of the same provision.

Corollarily, in actions in personam, such as the instant case for collection of sum of money, summons must be served by

personal or substituted service, otherwise the court will not acquire jurisdiction over the defendant.

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.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on the representation of petitioner

that respondent is not a resident of the Philippines. Obviously, the trial court’s issuance of the writ was for the sole purpose

of acquiring jurisdiction to hear and decide the case. Had the allegations in the complaint disclosed that respondent has a

residence in Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could

have served summons by substituted service on the said addresses, instead of attaching the property of the defendant.

The misrepresentation of petitioner that respondent does not reside in the Philippines and its omission of his local addresses

was thus a deliberate move to ensure that the application for the writ will be granted.

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court that petitioner is liable for

damages for the wrongful issuance of a writ of attachment against respondent.

RCBC vs. Castro

GR L-34548

November 29, 1988

Facts:

In Civil Case No. Q-12785 of the Court of First Instance entitled "Badoc Planters, Inc. vs. Philippine Virginia Tobacco

Administration, et al.," which was an action for recovery of unpaid tobacco deliveries, an order (partial judgment) was

issued on January 15, 1970 ordering the defendants therein to pay jointly and severally, the plaintiff Badoc Planters, Inc.

within 48 hours the aggregate amount of Php 206,916.76 with legal interests thereon. On January 26, 1970, Badoc filed an

Urgent Ex-Parte Motion for a Writ of Execution of the said partial judgment which was granted on the same day.

Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of Execution addressed to Special Sheriff

Faustina Rigor, who then issued a Notice of Garnishment addressed to the General Manager and/or Cashier of RCBC

requesting a reply within 5 days to said garnishment as to any property which the 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 interest.

Upon an Urgent Ex-Parte Motion dated January 27, 1970 filed by Badoc, the respondent Judge issued an order granting the

Ex-Parte Motion and directing the herein petitioner "to deliver in check the amount garnished to Sheriff Faustino Rigor and

Sheriff Rigor in turn is ordered to cash the check and deliver the amount to the plaintiff's representative and/or counsel on

record." In compliance with said order, petitioner delivered to Sheriff Rigor a certified check in the sum of Php 206,916.76.

Respondent PVTA filed a Motion for Reconsideration dated February 26, 1970 which was granted in an order dated April

6, 1970, setting aside the Orders of Execution and of Payment and the Writ of Execution and ordering petitioner and Badoc

"to restor, jointly and severally, the account of PVTA with the said bank in the same condition and state it was before the

issuance of the aforesaid Orders by reimbursing the PVTA of the amount of Php 206,916.76 with interests from January 27,

1970 until fully paid to the account of the PVTA. The Motion for Reconsideration of the said Order of April 6, 1970 filed

by herein petitioner was denied. The herein petitioner filed a Notice of Appeal to the Court of Appeals from the said Orders.

This case was then certified by the Court of Appeals to this Honorable Court, involving as it does purely questions of law.

Issue:

Whether or not the respondent Judge correctly ordered the herein petitioner to reimburse the amount paid to the Special

Sheriff by virtue of the execution?

Ruling:

No. The questioned Order of April 6, 1970 must be set aside insofar as it ordered the petitioner RCBC, jointly and severally

with Badoc, to reimburse PVTA.

The petitioner merely obeyed a mandatory directive from the respondent Judge ordering petitioner to "deliver in check the

amount garnished to Sheriff Faustino Rigor and Sheriff Rigor is in turn ordered to cash the check and deliver the amount to

the plaintiff's representative and/or counsel on record."

PVTA instantly urges that the premature delivery of the garnished amount by RCBC to the special sheriff even in the

absence of a demand to deliver made by the latter, before the expiration of the five-day period given to reply to the Notice

of Garnishment, without any reply having been given thereto nor any prior 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 constitutes

such lack of prudence as to make it answerable jointly and severally with the plaintiff for the wrongful release of the money

from the deposit of the PVTA.

Such allegations must be rejected for lack of merit. In the first place, it should be pointed out that RCBC did not deliver the

amount on the strength solely of a Notice of Garnishment; rather, the release of the funds was made pursuant to the aforesaid

Order of January 27, 1970. In the second place, the bank had already filed a reply to the Notice of Garnishment stating that

it had in its custody funds belonging to the PVTA, which, in fact was the basis of the plaintiff in filing a motion to secure

delivery of the garnished amount to the sheriff. Lastly, the bank, upon the receipt of the Notice of Garnishment, duly

informed PVTA thereof to enable the latter to take the necessary steps for the protection of its own interest.

It is important to stress that there was nothing irregular in the delivery of the funds of PVTA by check to the sheriff, whose

custody is equivalent to the custody of the court, he being a court officer. It must be noted that in delivering the garnished

amount in check to the sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a check

does not produce the effect of payment until it has been cashed.

Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on,

RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by

RCBC encashed it and turned over the proceeds thereof to the 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 duty can be attributed

to RCBC in delivering its depositor's funds pursuant to a court order which was merely in the exercise of its power of control

over such funds.

The order directing the bank to deliver the amount to the sheriff was distinct and separate from the order directing the sheriff

to encash the said check. The bank had no choice but to comply with the order demanding delivery of the garnished amount

in check. The very tenor of the order called for immediate compliance therewith. On the other hand, the bank cannot be held

liable for the subsequent encashment of the check as this was upon order of the court in the exercise of its power of control

over the funds placed in custodia legis by virtue of the garnishment.

The aforequoted ruling in Engineering Construction Inc. vs National Power Corporation thus bolsters RCBC's stand that its

immediate compliance with the lower court's order should not have been met with the harsh penalty of joint and several

liability. Nor can its liability to reimburse PVTA of the amount delivered in check be premised upon the subsequent

declaration of nullity of the order of delivery.

From the foregoing, it may be concluded that the charge of breach of trust and/or dereliction of duty as well as lack of

prudence in effecting the immediate payment of the garnished amount is totally unfounded. Upon receipt of the Notice of

Garnishment, RCBC duly informed PVTA thereof to enable the latter to take the necessary steps for its protection. However,

right on the very next day after its receipt of such notice, RCBC was already served with the Order requiring delivery of the

garnished amount. Confronted as it was with a mandatory directive, disobedience to which exposed it to a contempt order,

it had no choice but to comply.

Are the PVTA funds public funds exempt from garnishment? The Court holds that they are not. It is clear that PVTA has

been endowed with a personality distinct and separate from the government which owns and controls it. Accordingly, this

Court has heretofore declared that the funds of the PVTA can be garnished since "funds of public corporation which can

sue and be sued were not exempt from garnishment. If such funds cannot be executed upon or garnished pursuant to a

judgment sustaining the liability of the PVTA to answer for its obligations, then the purpose of the law in creating the PVTA

would be defeated.

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.

Bernardo Valdevieso vs Candelario Damalerio and Aurea C. Damalerio

February 17, 2005

Facts:

On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and Elenita Uy a parcel of land. The

deed of sale was not registered, nor was the title of the land transferred to petitioner. It came to pass that on 19 April 1996,

spouses Candelario and Aurea Damalerio (respondents) filed with the Regional Trial Court (RTC) a complaint for a sum of

money against spouses Lorenzo and Elenita Uy with application for the issuance of a Writ of Preliminary Attachment. On

23 April 1996, the trial court issued a Writ of Preliminary Attachment by 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 the Register of

Deeds. On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu thereof, TCT No. T-

74439 was issued in the name of petitioner. This new TCT carried with it the attachment in favor of respondents. On 14

August 1996, petitioner filed a third-party claim to discharge or annul the attachment levied on the property covered by

TCT No. T-74439 on the ground that the said property belongs to him and no longer to Lorenzo and Elenita Uy. The trial

court ruled for the petitioner. Respondents sought reconsideration thereof which was denied by the trial court. From the

unfavorable resolution of the trial court in the third-party claim, respondents appealed to the Court of Appeals. The appellate

court reversed the resolution. Petitioner moved for reconsideration but this was denied by the Court of Appeals. Hence, this

Petition for Review on Certiorari.

Issue:

Whether or not a registered writ of attachment on the land is a superior lien over that of an earlier unregistered deed of sale?

Ruling:

We agree with the respondents.

The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said Section provides:

Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey, mortgage, lease,

charge, or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages,

leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument,

except a will 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 as evidence of authority to the Register of Deeds to make registration.

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 registration shall be made in the office of the Register of Deeds for the province or city

where the land lies.

It should also be observed that, at the time of the attachment of the property on 23 April 1996, the spouses Uy were still the

registered owners of said property. Under the cited law, the execution of the deed of sale in favor of petitioner was not

enough as a succeeding step had to be taken, which was the registration of the sale from the spouses Uy to him. Insofar as

third persons are concerned, what validly transfers or conveys a persons interest in real property is the registration of the

deed. Thus, when petitioner bought the property on 05 December 1995, it was, at that point, no more than a private

transaction between him and the spouses Uy. It needed to be registered before it could bind third parties, including

respondents. When the registration finally took place on 06 June 1996, it was already too late because, by then, the levy in

favor of respondents, pursuant to the preliminary attachment ordered by the General Santos City RTC, had already been

annotated on the title.

The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a

necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under

the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the

land.

The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale.

This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole

world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy

except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is

an indebted thing and a virtual condemnation of it to pay the owners debt. The lien continues until the debt is paid, or sale

is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in

some manner provided by law.

Thus, 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 the date of the recording of his title in the register, and the

right of ownership which he inscribed was not absolute but a limited right, subject to a prior registered lien of respondents,

a right which is preferred and superior to that of petitioner.

The appealed Decision of the Court of Appeals and its Resolution are hereby affirmed.

BIACO VS PHILIPPINE COUNTRYSIDE RURAL BANK (as cited by in Riano’s Civil Procedure Volume II, page 13)

Facts:

In this case, petitioner seeks a review for the decision of the Court of Appeals which denied her petition for

annulment of judgment.

Petitioner, Ma. Teresa Biaco, was married to Ernesto Biaco, who worked as branch manager in Philippine

Countryside Rural Bank (PCRB). While employed, Ernesto obtained several loans from the bank and as security

for the payment of said loans, he executed a real estate mortgage in favor of the bank covering a parcel of land

(OCT No. P-14423). The real estate mortgage bore the signature of both Ernesto and herein petitioner.

When Ernesto failed to settle his loans on due date, the bank sent him a written demand, which however proved

futile. Thus on February 22, 2000, PCRB files a complaint for foreclosure of mortgage against Spouses Biaco before

the RTS. Upon failure of the spouses to file an answer, they were declared in default. Based on the report of the

Commissioner, the respondent judge ordered Biaco spouses to pay the bank P1,260,304.33 plus litigation expenses

and attorney’s fees.

Subsequent to the motion for execution filed by the bank, which was later on granted by the trial court, a copy of

said writ was served to the spouses Biaco in their residence in Cagayan de Oro. The same was personally received

by Ernesto and the mortgaged property was sold at public auction in favor of respondent bank for P150,000.00. The

amount of the property being insufficient, the bank filed an ex parte motion for judgment praying for the issuance

of a writ of execution for full settlement of the remaining obligation. The court granted the motion and issued a writ

of execution against spouses Biaco to satisfy balance of P1,369,974.70. The two notices of levy executed by the

sheriff were however denied registration as petitioner had already sold the two properties to her daughters.

Petitioner sought for the annulment of RTC decision contending: 1) that extrinsic fraud prevented her from

participating in the judicial foreclosure proceedings and that the bank failed to verify the authenticity of her

signature on the real estate mortgage; and 2) the RTC failed to acquire jurisdiction because summons were served

on her through her husband without any explanation as to why personal service could not be made.

As to the validity of the service of summons, the appellate court ruled that judicial foreclosure proceedings are

actions quasi in rem. As such, jurisdiction over the person of the defendant is not essential as long as the court

acquires jurisdiction over the res. Moreover, nothing that spouses Biaco were not opposing parties in the case, the

Court of Appeals further ruled that the fraud committed by one against the other cannot be considered extrinsic

fraud.

Having her motion for reconsideration denied, petitioner now submits before the Court the instant for Review.

Case for Petitioner:

According to petitioner, that even if the action is quasi in rem, personal service of summons is essential in order to

afford her due process. The substituted service made by the sheriff at her husband’s office cannot be deemed proper

service absent any explanation that efforts had been made to personally serve summons upon her but that such

efforts failed. Petitioner likewise contends that extrinsic fraud was perpetrated not so much by her husband, who

did not inform her of the judicial foreclosure proceedings, but by the sheriff who allegedly connived with her

husband to just leave a copy of the summons intended for her at the latter’s office.

Case for Respondent:

Respondent bank avers that service of summons upon the defendant is not necessary in actions quasi in rem it being

sufficient that the court acquire jurisdiction over the res. As regards the alleged conspiracy between petitioner’s

husband and the sheriff, respondent counters that this is a new argument which cannot be raised for the first time in

the instant petition.

Issue: Whether or not RTCs decision should be annulled by lack of jurisdiction on petitioner.

Ruling: The Supreme Court ruled in the affirmative.

The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the action

is in personam, in rem, or quasi in rem. The rules on service of summons under Rule 14 of the Rules of Court

likewise apply according to the nature of the action.

In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial court

with jurisdiction over the res. A judicial foreclosure proceeding is an action quasi in rem. As such, jurisdiction over

the person of petitioner is not required, it being sufficient that the trial court is vested with jurisdiction over the

subject matter.

There is a dimension to this case though that needs to be delved into. Petitioner avers that she was not personally

served summons. Instead, summons was served to her through her husband at his office without any explanation as

to why the particular surrogate service was resorted to.

Without ruling on petitioner’s allegation that her husband and the sheriff connived to prevent summons from being

served upon her personally, we can see that petitioner was denied due process and was not able to participate in the

judicial foreclosure proceedings as a consequence. The violation of petitioner’s constitutional right to due process

arising from want of valid service of summons on her warrants the annulment of the judgment of the trial court.

There is more, the trial court granted respondent PCRB’s ex-parte motion for deficiency judgment and ordered the

issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of the award. In short, the

trial court went beyond its jurisdiction over the res and rendered a personal judgment against the spouses Biaco.

The Court explained, citing El Banco Español-Filipino v. Palanca, that foreclosure and attachment proceedings are

both actions quasi in rem. As such, jurisdiction over the person of the (non-resident) defendant is not essential.

Service of summons on a non-resident defendant who is not found in the country is required, not for purposes of

physically acquiring jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he

may be informed of the pendency of the action against him and the possibility that property belonging to him or in

which he has an interest may be subjected to a judgment in favor of a resident, and that he may thereby be accorded

an opportunity to defend in the action, should he be so minded.

Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al. and Perkins v. Dizon, et al. that in a

proceeding in rem or quasi in rem, the only relief that may be granted by the court against a defendant over whose

person it has not acquired jurisdiction either by valid service of summons or by voluntary submission to its

jurisdiction, is limited to the res.

Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a rendition

of judgment on the res. It cannot extend its jurisdiction beyond the res and issue a judgment enforcing petitioner’s

personal liability. In doing so without first having acquired jurisdiction over the person of petitioner, as it did, the

trial court violated her constitutional right to due process, warranting the annulment of the judgment rendered in the

case

SPOUSES YU vs NGO YET TE

Facts:

Spouses Gregorio and Josefa Yu purchased from Ngo Yet Te bars of detergent soap worth P594,240.00 and issued

to the latter three postdated checks as payment. However, upon presentment of the checks at maturity, said checks

were returned dishonored and stamped “ACCOUNT CLOSED”. Respondent demanded payment from petitioners,

but they did not heed her demands. Respondent, through her daughter, filed with RTC for Collection of Sum of

Money and Damages with Prayer for Preliminary Attachment. She also attached to her complaint an affidavit

executed by Sy that petitioners were guilty of fraud in entering into the purchase agreement for they never intended

to pay the contract price, and that, based on reliable information, they were about to move or dispose of their

properties to defraud their creditors.

The RTC ordered for the properties of petitioners to be levied and attached consisting of one parcel of land and four

units of motor vehicle. Petitioners filed an Answer with counterclaim, Urgent Motion to Dissolve writ of

Preliminary Attachment, and Claim against Surety Bond. The RTC, then, discharged from attachment the Toyota

Ford Fierra, jeep, and delivery van on humanitarian grounds. The CA later on lifted the RTC Order of Attachment

on the ground that the complaint and affidavit only contain general averments and failed to states particularly how

fraud was committed by petitioners. The Motion for Reconsideration was likewise denied. The SC also denied Te’s

Petition for Review on Certiorari for having been filed late and for failure to show that a reversible error was

committed by the CA.

The RTC, however, apparently not informed of SCs decision, ruled in favor of herein respondents. On their appeal

with CA, Spouses Yu questioned only that portion of the July 20, 1994 Decision where the RTC declined to rule

on their counterclaim for damages. However, Spouses Yu did not dispute the specific monetary awards granted to

respondent Te; and therefore, the same have become final and executory. The CA, while affirming RTCs decision

in toto, made a ruling on the counterclaim of Spouses Yu by declaring that the latter had failed to adduce sufficient

evidence of their entitlement to damages. Hence, this petition.

Issue: Whether or not the appellate court erred in refusing to award actual, moral and exemplary damages after it was

established by final judgment that the writ of attachment was procured with no true ground for its issuance.

Ruling:

NO.

The SC also made mention on the contention of respondent Te that regardless of the evidence presented by Spouses

Yu, their counterclaim was correctly dismissed for failure to comply with the procedure laid down in Section 20 of

Rule 57. Te contends that as Visayan Surety was not notified of the counterclaim, no judgment thereon could be

validly rendered. The Court said that such argument was not only flawed as it is also specious. The Visayan Surety,

which issued the attachment bond, was notified of the pre-trial conference to apprise it of a pending claim against

its attachment bond. Visayan Surety received the notice on July 12, 1993 as shown by a registry return receipt

attached to the records. Moreover, even if it were true that Visayan Surety was left in the proceedings a quo, such

omission is not fatal to the cause of Spouses Yu. In Malayan Insurance Company, Inc. v. Salas, we held that "x x x

if the surety was not given notice when the claim for damages against the principal in the replevin bond was heard,

then as a matter of procedural due process the surety is entitled to be heard when the judgment for damages against

the principal is sought to be enforced against the surety’s replevin bond." This remedy is applicable for the

procedures governing claims for damages on an attachment bond and on a replevin bond are the same.

Spouses Yu contended that they are entitled to their counterclaim for damages as a matter of right after Te

wrongfully caused the attachment of the properties as it suggested that Te acted with malice. The SC ruled that the

counterclaim disputed therein was not for moral damages and therefore, there was no need to prove malice. In

Lazatin v. Twaño, the Court laid down the rule that where there is wrongful attachment, the attachment defendant

may recover actual damages even without proof that the attachment plaintiff acted in bad faith in obtaining the

attachment. However, if it is alleged and established that the attachment was not merely wrongful but also malicious,

the attachment defendant may recover moral damages and exemplary damages as well. Either way, the

wrongfulness of the attachment does not warrant the 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 incurred by reason of the

wrongful attachment.

The Court also held that petitioners are not relieved of the burden of proving the basis of their counterclaim for

damages. To merit an award of actual damages arising from a wrongful attachment, the attachment defendant must

prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. Such loss or

injury must be of the kind which is not only capable of proof but must actually be proved with a reasonable degree

of certainty. As to its amount, the same must be measurable based on specific facts, and not on guesswork or

speculation. In particular, if the claim for actual damages covers unrealized profits, the amount of unrealized profits

must be established and supported by independent evidence of the mean income of the business undertaking

interrupted by the illegal seizure.

The SC also affirmed CAs finding that spouses Yu failed to prove their counterclaim of actual damages by relying

mainly on submission of used and unused ticket stubs and ticket sales for five (5) days. Thus, Spouses Yu cannot

complain that they were unreasonably deprived of the use of the passenger bus by reason of the subsequent wrongful

attachment issued in Civil Case No. 4061-V-93. Nor can they also attribute to the wrongful attachment their failure

to earn income or profit from the operation of the passenger bus. The submitted basis is too speculative and

conjectural. No reports regarding the average actual profits and other evidence of profitability necessary to prove

the amount of actual damages were presented.

As to moral and exemplary damages, to merit an award thereof, it must be shown that the wrongful attachment

was obtained by the attachment plaintiff with malice or bad faith, such as by appending a false affidavit to his

application. The SC did not grant moral and exemplary damages. 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.

Petitioners were, however, awarded temperate or moderate damages of P50,000 for pecuniary loss when their

properties were wrongfully seized.

MINDANAO SAVINGS AND LOAN ASSOCIATION, INC ( formerly Davao Savings and Loan Association

) & FRANCISCO VILLAMOR vs CA , Poly Mercado and Juan MERCADO 172 scra 480

Ponente: Grino-Aquino, J.:

Facts: Private respondents filed in the RTC of Davao a complaint against defendants D.S. Homes and its directors

for “Rescission of contract and damages” with a prayer for the issuance of writ of preliminary attachment. The court

issued an order granting ex parte the application for a writ of preliminary attachment. Petitioners herein filed

motions to quash the writ but it was denied by the court. D.S. Homes et.al therefore offered a counterbond of

P1,752,861.41 per certificate issued by Land Bank of the Philippines which the trial court accepted. Thus, the writ

was lifted. Petitioners then filed in the CA a petition for certiorari to annul the order of attachment and the denial

of their motion to quash the same. CA dismissed it and remanded the records in RTC for expeditious proceedings.

CA held that “objections against the writ may no longer be invoked once a counterbond is filed for its lifting or

dissolution”. Hence, a petition for review was filed in SC which denied it finding no reversible error in CA’s

decision.

Issue: WON a motion to discharge an attachment writ is proper once a counterbond has been filed.

Ruling: The CA did not err in holding that objections to the impropriety 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 core

of the complaint.

Indeed, after the defendant has obtained the discharge of the writ by filing a counterbond under Sec12 Rule 57 he

may not file another motion under Sec13, Rule 57 to quash the writ for impropriety or irregularity in issuing it.

The reason is simple. The writ had already been quashed by filing a counterbond hence another motion would be

pointless. As the CA correctly observed, the question as to whether the plaintiff was entitled to the writ can only be

determined after, not before, a full-blown trial on the merits of the case. The merits of a main action are not triable

in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial on the merits

of the case on his motion. The liability of the surety on the counterbond subsists until the Court shall have finally

absolved the defendant from the plaintiffs claim. Only then may the counterbond be released. The same rule applies

to plaintiffs’ attachment bond.

EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, petitioners,

vs.

HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN

LIFE ASSURANCE COMPANY OF CANADA, respondents.

BRUNNER DEVELOPMENT CORPORATION, petitioner,

vs.

HON. ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN

LIFE ASSURANCE COMPANY OF CAN

Ponente: MENDOZA, J.:

FACTS: On December 23, 1991, respondent Sun Life filed a complaint for a sum of money with a prayer for the immediate

issuance of a writ of attachment against petitioners. The writ was actually issued on December 27, 1991. On January 3,

1992, Sheriff, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the amended writ

of attachment upon petitioners at their known office address at 108 Aguirre St., Makati but was not able to do so since there

was no responsible officer to receive the same. Nonetheless, Sheriff Flores proceeded, over a period of several days, to

serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a

condominium unit and a real property belonging to petitioner Oñate. Summons was eventually served upon petitioners on

January 9, 1992, while defendant Diño was served with summons on January 16, 1992.

Petitioner argues that the attachment is improper because the RTC has not yet acquired jurisdiction over their persons. The

SC said that whatever defects attended the attachment, these were cured when the sheriff was finally able to serve them the

summons later on. Hence, this motion for reconsideration.

ISSUE: Whether or not the attachment is valid for having been cured by a subsequent service of summons

HELD: No. It must be emphasized that the grant of the provisional remedy of attachment practically involves three stages;

first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting

the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of

the defendant should first be obtained. However, once the implementation commences, it is required that the court must

have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in

any manner against the defendant. Any order issuing from the Court will not bind the defendant.

The Court states: While the petition for a writ of preliminary attachment may be granted and the writ itself issued before

the defendant is summoned, the writ of attachment cannot be implemented until jurisdiction over the person of the defendant

is obtained. At the very least, then, the writ of attachment must be served simultaneously with the service of summons

before the writ may be enforced. As the properties of the petitioners were attached by the sheriff before he had served the

summons on them, the levies made must be considered void. Nor can the attachment of petitioners' properties before the

service of summons on them was made can be justified an the ground that unless the writ was then enforced, petitioners

would be alerted and might dispose of their properties before summons could be served on them.

The Rules of Court do not require that issuance of the writ be kept a secret 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 allows the

defendant to move to discharge the attachment even before any attachment is actually levied upon, thus negating any

inference that before its enforcement, the issuance of the writ must be kept secret. Rule 57, § 13 provides:

Sec. 13. Discharge of attachment for improper or irregular issuance. — The party whose property has been

attached may also, at any time either before or after the release of the attached property, or before any

attachment shall have been actually levied, upon reasonable notice to the attaching creditor, apply to the

judge who granted the order, or to the judge of the court in which the action is pending, for an order to

discharge the attachment on the ground that the same was improperly or irregularly issued. . . . (Emphasis

added).

To authorize the attachment of property even before jurisdiction over the person of the defendant is acquired through the

service of summons or his voluntary appearance could lead to abuse. It is entirely possible that the defendant may not know

of the filing of a case against him and consequently may not be able to take steps to protect his interests.

The examination of bank books and records cannot be justified under Rule 57, § 10. This provision states:

Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his

property; delivery of property to officer. — Any person owing debts to the party 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 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.

SECOND DIVISION

D E C I S I O N

CHICO-

NAZARIO, J.:

Before Us is a petition for review on certiorari, assailing the Decision and Resolution of the Court of Appeals in CA-G.R.

SP No. 58147, dated 16 June 2000 and 22 August 2000, respectively.

The said Decision and Resolution declared that there was no grave abuse of discretion on the part of respondent Judge in

issuing the assailed order dated 31 March 2000, which was the subject in CA-G.R. SP No. 58147.

THE FACTS

On 26 August 1988, Reynaldo Anzures instituted a complaint against Teresita Villaluz (Villaluz) for violation of Batas

Pambansa Blg. 22. Anzures filed an n Ex-Parte Motion for Preliminary Attachment dated 06 March 1989 praying that

pending the hearing on the merits of the case, a Writ of Preliminary Attachment be issued ordering the sheriff to attach the

properties of Villaluz in accordance with the Rules.

The trial court issued an Order for the issuance of a writ of preliminary attachment upon complainants posting of a bond

which is hereby fixed at P2,123,400.00 and the Courts approval of the same under the condition prescribed by Sec. 4 of

Rule 57 of the Rules of Court.

The RTC acquitted Villaluz of the crime charged BUT held her civilly liable. Villaluz appealed but the decision was

affirmed.

SECURITY PACIFIC ASSURANCE

CORPORATION,

Petitioner,

- versus -

THE HON. AMELIA TRIA-INFANTE, In

her official capacity as Presiding Judge,

Regional Trial Court, Branch 9, Manila;

THE PEOPLE OF THE PHILIPPINES,

represented by Spouses REYNALDO and

ZENAIDA ANZURES; and REYNALDO

R. BUAZON, In his official capacity as

Sheriff IV, Regional Trial Court, Branch 9,

Manila,

Respondents.

G.R. No. 144740

Present:

PUNO,

Chairman,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,

TINGA, and

CHICO-NAZARIO, JJ.

Promulgated:

August 31, 2005

The case was elevated to the Supreme Court (G.R. No. 106214), and during its pendency, Villaluz posted a counter-bond

in the amount of P2,500,000.00 issued by petitioner Security Pacific Assurance Corporation. Villaluz, on the same date of

the counter-bond, filed an Urgent Motion to Discharge Attachment.

On 05 September 1997, the SC promulgated their decision in G.R. No. 106214, affirming in toto the decision of the

Court of Appeals. Hence, Anzures moved for the execution of judgment.

Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, 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 City, by virtue

of the counter-bond posted by Villaluz with said insurance corporation in the amount of P2,500,000.00 but refused to assume

its obligation on the counterbond it posted for the discharge of the attachment made by Villaluz on the ground that the bond

was not approved by the Supreme Court and that the condition by which the bond was issued did not happen.

Issue:

WON the CA is correct in holding that the mere act of posting the counterbond was sufficient to discharge the attachment

on the property (attachment on the property of Villaluz was discharged without need of court approval or counterbond).

YES.

Held:

Under the Rules, there are two (2) ways to secure the discharge of an 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 the order of attachment was improperly or irregularly issued.

On this score, we hew to the pertinent ratiocination of the Court of Appeals as regards the heretofore cited provision

of Section 12, Rule 57 of the 1997 Rules of Civil Procedure, on the discharge of attachment upon giving counter-bond:

. . . The filing of the counter-attachment bond by petitioner Villaluz has discharged the attachment on the

properties and made the petitioner corporation liable on the counter-attachment bond. This can be gleaned

from the DEFENDANTS BOND FOR THE DISSOLUTION OF ATTACHMENT, which states that

Security Pacific Assurance Corporation, as surety, in consideration of the dissolution of the said attachment

jointly and severally, binds itself with petitioner Villaluz for any judgment that may be recovered by private

respondent Anzures against petitioner Villaluz.

The contract of surety is only between petitioner Villaluz and petitioner corporation. The petitioner

corporation cannot escape liability by stating that a court approval is needed before it can be made liable.

This defense can only be availed by petitioner corporation against petitioner Villaluz but not against third

persons who are not parties to the contract of surety. The petitioners hold themselves out as jointly and

severally liable without any conditions in the counter-attachment bond. The petitioner corporation cannot

impose requisites before it can be made liable when the law clearly does not require such requisites

to be fulfilled.

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.

THIRD DIVISION

G.R. No. 181721, September 09, 2015

WATERCRAFT VENTURE CORPORATION, REPRESENTED BY ITS VICE-PRESIDENT, ROSARIO E.

RAÑOA, Petitioner, v. ALFRED RAYMOND WOLFE, Respondent.

D E C I S I O N

PERALTA, J.:

FACTS:

Petitioner Watercraft Venture Corporation (Watercraft) is engaged in the business of building, repairing, storing and

maintaining yachts, boats and other pleasure crafts at the Subic Bay Freeport Zone, Subic, Zambales.

In connection with its operations and maintenance of boat storage facilities, it charges a boat storage fee of Two Hundred

Seventy-Two US Dollars (US$272.00) per month with interest of 4% per month for unpaid charges.

Watercraft hired respondent Alfred Raymond Wolfe (Wolfe), a British national and resident of Subic Bay Freeport Zone,

Zambales, as its Shipyard Manager.

During his empolyment, Wolfe stored the sailboat, Knotty Gull, within Watercraft1 s boat storage facilities, but never paid

for the storage fees.

On March 7, 2002, Watercraft terminated the employment of Wolfe.

June 2002, Wolfe pulled out his sailboat from Watercraft's storage facilities after signing a Boat Pull-Out Clearance dated

June 29, 2002 where he allegedly acknowledged the outstanding obligation of Sixteen Thousand Three Hundred and

Twenty-Four and 82/100 US Dollars (US$16,324.82) representing unpaid boat storage fees for the period of June 1997 to

June 2002. Despite repeated demands, he failed to pay the said amount.

Watercraft filed against Wolfe a Complaint for Collection of Sum of Money with Damages with an Application for the

Issuance of a Writ of Preliminary Attachment.

Wolfe claimed he was hired as Service and Repair Manager, instead of Shipyard Manager. He denied owing Watercraft the

amount of US$16,324.82 representing storage fees for the sailboat.

Meanwhile, finding Watercraft's ex-parte application for writ of preliminary attachment sufficient in form and in substance

pursuant to Section 1 of Rule 57 of the Rules of Court, the RTC granted the same bond in the amount of Three Million

Two Hundred Thirty-One Thousand Five Hundred and Eighty-Nine and 25/100 Pesos (Php3,231,589.25)

Wolfe's two vehicles, a gray Mercedes Benz with plate number XGJ 819 and a maroon Toyota Corolla with plate number

TFW 110, were levied upon.

By virtue of the Notice of Attachment and Levy dated September 5, 2005, a white Dodge pick-up truck with plate number

XXL 111 was also levied upon. However, a certain Jeremy Simpson filed a Motion for Leave of Court to Intervene, claiming

that he is the owner of the truck as shown by a duly-notarized Deed of Sale.

Wolfe filed a Motion to Discharge the Writ of Attachment but the RTC denied for lack of merit.

Wolfe filed a motion for reconsideration, but the RTC also denied it for lack of merit.

Aggrieved, Wolfe filed a petition for certiorari before the CA.

The CA granted Wolfe's petition in a Decision dated September 2007, the dispositive portion of which reads:

WHEREFORE, the Order dated March 20, 2006 and the Order dated November 10, 2006 of respondent

Judge are hereby ANNULLED and SET ASIDE. Accordingly, the Writ of Attachment issued on August 3, 2005,

the Notice of Attachment dated August 5, 2005 and the Notice of Attachment and Levy dated September 5, 2005

are hereby also declared NULL and VOID, and private respondent is DIRECTED to return to their owners the

vehicles that were attached pursuant to the Writ.

The CA ruled that the act of issuing the writ of preliminary attachment ex-parte constitutes grave abuse of discretion on the

part of the RTC, thus:

x x x In Cosiquien [v. Court of Appeals], the Supreme Court held that:

"Where a judge issues a fatally defective writ of preliminary attachment based on an affidavit

which failed to allege 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. The judge issuing it is deemed to have acted in excess of jurisdiction. In fact, the defect

cannot even be cured by amendment. Since the attachment is a harsh and rigorous remedy which exposed

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 Avrit to ensure that all the requisites of the

law have been complied with. Otherwise, a judge acquires no jurisdiction to issue the writ." (emphasis

supplied)

In the instant case, the Affidavit of Merit executed by Rosario E. Rañoa, Watercraft's Vice-President, failed to show

fraudulent intent on the part of Wolfe to defraud the company. It merely enumerated the circumstances tending to show the

alleged possibility of Wolfe's flight from the country. And upon Wolfe's filing of the Motion to Discharge the Writ, what

the respondent Judge should have done was to determine, through a hearing, whether the allegations of fraud were true.

As correctly noted by Wolfe, although Sec. 1 of Rule 57 allows a party to invoke fraud as a ground for the issuance of a

writ of attachment, the Rules require that in all averments of fraud, the circumstances constituting fraud must be

stated with particularity, pursuant to Rule 8, Section 5.

In this instance, Wolfe's mere failure to pay the boat storage fees does not necessarily amount to fraud, absent any showing

that such failure was due to [insidious] machinations and intent on his part to defraud Watercraft of the amount due it.

Based on the foregoing, it is therefore clear that the writ was improvidently issued. It is well to emphasize that "[T]he rules

on the issuance of a writ of attachment must be construed strictly against the applicants. This stringency is required because

the remedy of attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting of the writ

are not present, then the court which issues it acts in excess of its jurisdiction. Thus, in this case, Watercraft failed to

meet all the requisites for the issuance of the writ. Thus, in granting the same, respondent Judge acted with grave abuse of

discretion.

January 24, 2008, the CA denied Watercraft's motion for reconsideration of its Decision.

ISSUE

WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE TRIAL COURT IN

FAVOR OF THE PETITIONER IS VALID.

HELD

The petition lacks merit.

A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court where an action is

pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the sheriff

as security for the satisfaction of whatever judgment that might be secured in the said action by the attaching creditor against

the defendant.10 However, it should be resorted to only when necessary and as a last remedy because it exposes the debtor

to humiliation and annoyance.11 It must be granted only on concrete and specific grounds and not merely on general

averments quoting the words of the rules.12 Since attachment is harsh, extraordinary, and summary in nature,13 the rules

on the application of a writ of attachment must be strictly construed in favor of the defendant.

For the issuance of an ex-parte issuance of the preliminary attachment to be valid, an affidavit of merit and an applicant's

bond must be filed with the court14 in which the action is pending.

In this case, Watercraft's Affidavit of Preliminary Attachment does not contain specific allegations of other factual

circumstances to show that Wolfe, at the time of contracting the obligation, had a preconceived plan or intention not

to pay. Neither can it be inferred from such affidavit the particulars of why he was guilty of fraud in the performance

of such obligation. To be specific, Watercraft's following allegation is unsupported by any particular averment of

circumstances that will show why or how such inference or conclusion was arrived at, to wit: "16. For failing to pay for the

use [of] facilities and services - in the form of boat storage facilities - duly enjoyed by him and for failing and refusing to

fulfill his promise to pay for the said boat storage fees, the Defendant is clearly guilty of fraud x x x."31 It is not an allegation

of essential facts constituting Watercraft's causes of action, but a mere conclusion of law.

Furthermore, the other ground upon which the writ of preliminary attachment was issued by the RTC is not at the same time

the applicant's cause of action. Assuming arguendo that the RTC was correct in issuing such writ on the ground that

Watercraft's complaint involves an action for the recovery of a specified amount of money or damages against a party, like

Wolfe, who is about to depart from the Philippines with intent to defraud his creditors, the Court stresses that the

circumstances36 cited in support thereof are merely allegations in support of its application for such writ.37 Such

circumstances, however, are neither the core of Watercraft's complaint for collection of sum of money and damages, nor

one of its three (3) causes of action therein.38

All told, the CA correctly ruled that Watercraft failed to meet one of the requisites for the issuance of a writ of

preliminary attachment, i.e., that the case is one of those mentioned in Section 1 of Rule 57, and that the RTC gravely

abused its discretion in improvidently issuing such writ. Watercraft failed to particularly state in its affidavit of merit the

circumstances constituting intent to defraud creditors on the part of Wolfe in contracting or in the performance of his

purported obligation to pay boat storage fees, as well as to establish that he is a flight risk. Indeed, if all the requisites for

granting such writ are not present, then the court which issues it acts in excess of its jurisdiction.

D.M. WENSCESLAO and ASSOCIATES, INC., and /or DOMINADOR S. DAYRIT, petitioners,

vs.

READYCON TRADING AND CONSTRUCTION CORP., respondent.

FACTS:

The petitioners herein had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway

in the R-1 Toll Project along Coastal Road in Paranaque. To finish the said project, the petitioners entered into a contract

with the respondent for the selling of Asphalt materials. As stipulated in the said contract, after securing the downpayment,

the petitioners will pay the remaining balance within 15 days thereof.

However, the petitioners failed to pay the remaining balance amidst the countless demands. This prompted the respondent

to file a complaint with the Regional Trial Court of Pasig City for the collection of a sum of money and damages with prayer

for writ of preliminary attachment against the petitioners.

The writ of preliminary attachment was granted which was countered by the petitioners with a motion for the release of the

property attached together with the posting of a counter-bond. The motion prayed by the petitioners was granted.

As a defense, the petitioner alleged that their contract was merely of service and not of sale. At the same time, by way of

counterclaim, the petitioners prayed for the payment of damages caused by the filing of the respondent’s complaint and the

issuance of the writ of attachment despite lack of cause.

The RTC ruled in favor of the respondent. Dissatisfied with the decision, the petitioners appealed to the Court of Appeals.

The appellate court, however, affirmed in toto the decision of the lower court. Hence, the present petition.

ISSUE:

Whether or not the respondent is liable to the petitioners for damages caused by the issuance and enforcement of the writ of

attachment.

RULING:

No. The respondent is not liable to the petitioners for damages caused by the issuance and enforcement of the writ of

attachment.

Indeed, actual and compensatory damages may be recovered for wrongful, though not malicious attachment. At the same

time, it was held by the court in the previous cases that the mere existence of malice and bad faith would not per se warrant

the award of actual or compensatory damages. To grant such damages, sufficient proof thereon is required.

However, both the RTC and the CA held that the complaint had merit and that the respondent is entitled to a writ of

preliminary attachment as a provisional remedy by which the property of the petitioners is taken into custody of the law as

a security for the satisfaction of any judgement which the respondent may recover.

Aside from that, if the petitioners suffered damages as a result, it is merely because it did not heed the demand letter of the

respondent in the first place. The petitioners could have averted such damage if it immediately filed a counter-bond or a

deposit in order to lift the writ at once. It did not, and must bear its own loss, if any, on that account.

INSULAR SAVINGS BANK, Petitioner,

vs.

COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity as Presiding Judge of Branch 135 of the

Regional Trial Court of Makati, and FAR EAST BANK AND TRUST COMPANY, Respondents.

FACTS:

The case involved two checks that were drawn against the Respondent and were presented by the Petitioner for clearing. As

respondent Bank returned the checks beyond the reglementary period, the petitioner refused to refund the money to the

Respondent Bank. With this, the Respondent Bank instituted an Arbitration case before the Arbitration Committee of the

Philippine Clearing House Corporation (PCHC). While the dispute was pending Arbitration, respondent bank instituted a

civil case in the Regional Trial Court and prayed for the issuance of a writ of preliminary attachment.

During the hearing of the civil case, petitioner and respondent bank agreed to temporarily divide between them the disputed

amount of 25,200,000.00 while the dispute has not yet been resolved. With this, the petitioner filed a motion to discharge

attachment by counter-bond in the amount of 12,600,000.00. However, the respondent Judge denied the motion. The

petitioner went to the Court of Appeals and filed a petition for certiorari ascribing on the trial court the commission of grave

abuse of discretion amounting to lack of jurisdiction. The Court of Appeals affirmed the Trial Court’s ruling. Hence, the

present petition.

ISSUE:

Whether or not the Court of Appeals erred in not ruling that the Trial Court committed grave abuse of discretion in denying

petitioner’s motion to discharge attachment by counter-bond in the amount of 12,600,000.00.

RULING:

Yes. The Court of Appeals erred in not ruling that the Trial Court committed grave abuse of discretion in denying petitioner’s

motion to discharge attachment by counter-bond in the amount of 12,600,000.00.

It is a well-settled rule that the amount of the counter-attachment bond is to be measured against the value of the attached

property, as determined by the judge to secure the payment of any judgement that the attaching creditor may recover in the

action.

As things stood, therefore, respondent’s principal claim against petitioner immediately prior to the filing of the motion to

discharge attachment has effectively been pruned down to 12,600,000.00. The trial court was fully aware of this reality.

Accordingly, it should have allowed a total discharge of the attachment on a counter-bond based on the reduced claim of

respondent. If a portion of the claim is already secured, the court sees no justifiable reason why such portion should still be

subject of counter-bond.

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

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

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

D. PINZON, respondents.

THE CASE:

Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the respondent Judge and

for the release of the amount of P37,190.00, which had been deposited with the Clerk of Court, to the petitioner.

FACTS

An action was instituted in the Court of First Instance of Rizal by Antonio D. Pinzon to recover from Kenneth O. Glass

the sum of P37,190.00, alleged to be the agreed rentals of his truck, as well as the value of spare parts which have not been

returned to him upon termination of the lease.

The plaintiff asked for an attachment against the property of the defendant consisting of collectibles and payables with the

Philippine Geothermal, Inc., on the grounds that the defendant is a foreigner; that he has sufficient cause of action against

the said defendant; and that there is no sufficient security for his claim against the defendant in the event a judgment is

rendered in his favor.

Respondent Judge ordered the issuance of a writ of attachment against the properties of the defendant upon the plaintiff's

filing of a bond in the amount of P37,190.00.

Defendant Kenneth O. Glass moved to quash the writ of attachment on the grounds that there is no cause of action against

him since the transactions or claims of the plaintiff were entered into by and between the plaintiff and the K.O. Glass

Construction Co., Inc.,

that there is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O. Glass never intended

to leave the Philippines, and even if he does, plaintiff can not be prejudiced thereby because his claims are against a

corporation which has sufficient funds and property to satisfy his claim; and

that the money being garnished belongs to the K.O. Glass Corporation Co., Inc. and not to defendant Kenneth O. Glass.

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

In his Amended Complaint, Pinzon alleged that defendant GLASS is an American citizen who controls most, if not all, the

affairs of defendant CORPORATION. Defendants CORPORATION and GLASS have a valid and just obligation to plaintiff

arising out for their failure to pay (i) service charges for hauling of construction materials, (ii) rentals for the lease of

plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said leased unit: hence, a sufficient

cause of action exist against said defendants.

Plaintiff also avers that there is no sufficient security for his claim against the defendants in the event a judgment be

rendered in favor of the plaintiff. However, defendant CORPORATION has sufficient assets in the Philippines in the form

of collectibles and payables due from the Philippine Geothermal., Inc. but which properties, if not timely attached, may be

disposed of by defendants and would render ineffectual the reliefs prayed for by plaintiff in this Complaint.

Defendants filed a supplementary motion to discharge and/or dissolve the writ of preliminary attachment upon the ground

that the affidavit filed in support of the motion for preliminary attachment was not sufficient or wanting in law for the reason

that: (1) the affidavit did not state that the amount of plaintiff's claim was above all legal set-offs or counterclaims, as

required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the affidavit did not state that there is no other sufficient

security for the claim sought to be recovered by the action as also required by said Sec. 3; and (3) the affidavit did not

specify any of the grounds enumerated in Sec. 1 of Rule 57,

Respondent Judge denied the motion and ordered the Philippine Geothermal, Inc. to deliver and deposit with the Clerk of

Court the amount of P37,190.00 immediately upon receipt of the order which amount shall remain so deposited to await the

judgment to be rendered in the case.

The defendants therein filed a bond in the amount of P37,190.00 and asked the court for the release of the same amount

deposited with the Clerk of Court, but, the respondent Judge did not order the release of the money deposited.

ISSUE: WON The issuance of Preliminary Attachment is proper. = NOT PROPER.

HELD:

The respondent Judge gravely abused his discretion in issuing the writ of preliminary attachment and in not ordering the

release of the money which had been deposited with the Clerk of Court for the following reasons:

First, there was no ground for the issuance of the writ of preliminary attachment as enumerated in Section 1, Rule 57 of

the Revised Rules of Court.

Xx xxx xxx see Rule 57, Sec 1 for the grounds..xxxxXxx

Likewise, Pinzon did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at any

time, depart from the Philippines with intent to defraud his creditors including the plaintiff." He merely

stated that the defendant Kenneth O. Glass is a foreigner.

There being no showing, much less an allegation, that the defendants are about to depart from the

Philippines with intent to defraud their creditor, or that they are non-resident aliens, the attachment of their

properties is not justified.

Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an affidavit for

attachment must state that

(a) sufficient cause of action exists; (b) the case is one of those mentioned in Section I (a) of Rule 57; (c)

there is no other sufficient security 'or the claim sought to be enforced by the action, and (d) the amount due

to the applicant for attachment or the value of the property the possession of which he is entitled to recover,

is as much as the sum for which the order is granted above all legal counterclaims.

Pinzon did not state in his Affidavit that "the case is one of those mentioned in Section 1 hereof; that there

is no other sufficient security for the claim sought to be enforced by the action; and that the amount due to

the applicant is as much as the sum for which the order granted above all legal counter-claims."

It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance of a writ

of preliminary attachment, renders the writ of preliminary attachment issued against the property of the

defendant fatally defective, and the judge issuing it is deemed to have acted in excess of his jurisdiction.

Finally, the petitioner has filed a counterbond to answer for any judgment that may be rendered against the

defendant. Upon receipt of the counter-bond the respondent Judge should have discharged the attachment pursuant

to Section 12, Rule 57 of the Revised Rules of Court.

The filing of the counter-bond will serve the purpose of preserving the defendant's property and at the

same time give the plaintiff security for any judgment that may be obtained against the defendant.

DISPOSITION: The petition is GRANTED and the writ prayed for is issued.

G.R. No. 115678 February 23, 2001

PHILIPPINES BANK OF COMMUNICATIONS, petitioner, vs.HON. COURT OF APPEALS and BERNARDINO

VILLANUEVA, respondents.

THE CASE

Consolidated petitions for review filed by Philippine Bank of Communications against the Decisions of respondent

Court of Appeals seting aside and nullifying the Order of the Regional Trial Court of Manila, Branch 7, granting the

issuance of a writ of preliminary attachment in Civil Case No. 91-56711.

FACTS

Petitioner filed in 1991 a Complaint against private respondent Bernardino Villanueva, Filipinas Textile Mills and one

Sochi Villanueva (now deceased) before the Regional Trial Court of Manila.

Petitioner sought the payment of P2,244,926.30 representing the proceeds or value of various textile goods, the purchase

of which was covered by irrevocable letters of credit and trust receipts executed by petitioner with private respondent

Filipinas Textile Mills as obligor; which, in turn, were covered by surety agreements executed by private respondent

Bernardino Villanueva and Sochi Villanueva.

Private respondents admitted the existence of the surety agreements and trust receipts but countered that they had already

made payments on the amount demanded and that the interest and other charges imposed by petitioner were onerous.

On May 31, 1993, petitioner filed a Motion for Attachment, contending that violation of the trust receipts law constitutes

estafa, thus providing ground for the issuance of a writ of preliminary attachment; specifically under paragraphs "b" and

"d," Section 1, Rule 57 of the Revised Rules of Court.

Petitioner further claimed that attachment was necessary since private respondents were 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.

The Motion was duly opposed by private respondents and, after the filing of a Reply thereto by petitioner, the lower court

issued its Order for the issuance of a writ of preliminary attachment, conditioned upon the filing of an attachment bond.

Private respondents filed separate petitions for certiorari before respondent Court assailing the order.

Both petitions were granted, albeit on different grounds.

In CA-G.R. SP No. 32762, respondent Court of Appeals ruled that the lower court was guilty of grave abuse of discretion

in not conducting a hearing on the application for a writ of preliminary attachment and not requiring petitioner to substantiate

its allegations of fraud, embezzlement or misappropriation.

On the other hand, in CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds cited by petitioner in

its Motion do not provide sufficient basis for the issuance of a writ of preliminary attachment, they being mere general

averments.

Respondent Court of appeals held that neither embezzlement, misappropriation nor incipient fraud may be presumed; they

must be established in order for a writ of preliminary attachment to issue.

ISSUE : WON The issuance of Preliminary Attachment has sufficient basis in spite of the allegations of fraud,

embezzlement and misappropriation of the proceeds or goods entrusted to the private respondents = NO

SUFFICIENT BASIS

HELD

We find no merit in the instant petitions.

The Motion for Attachment filed by petitioner and its supporting affidavit did not sufficiently establish the grounds relied

upon in applying for the writ of preliminary attachment.

Section 1 (b) and (d), Rule 57 of the then controlling Revised Rules of Court, provides the Grounds upon which

attachment may issue.

(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 corporation, or an attorney, factor, broker, agent or clerk, in the course of

his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty;

(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the

obligation upon which the action is brought, or in concealing or disposing of the property for the taking,

detention or conversion of which the action is brought;

While the Motion refers to the transaction complained of as involving trust 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

automatically issue.

The lower court should have conducted a hearing and required private petitioner to substantiate its allegations of

fraud, embezzlement and misappropriation. 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. There is a 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.

Further, petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of the sale

of the entrusted goods nor to return the same is sufficient for attachment to issue.

Petitioner anchors its application upon Section 1(d), Rule 57. This particular provision was adequately explained

in Liberty Insurance Corporation v. Court of Appeals, as follows –

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 creditor.

The fraud must relate to the execution of the agreement and must have been the reason which induced the

other party into giving consent which he would not have otherwise given. To constitute a ground for

attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the

obligation sued upon. A debt is fraudulently contracted if at the time 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

proved by direct evidence but may be inferred from the circumstances attendant in each case (Republic v.

Gonzales, 13 SCRA 633). (Emphasis ours)

The fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor's inability to pay or

to comply with the obligations. On the other hand, fraud may be gleaned from a preconceived plan or intention not

to pay. This does not appear to be so in the case at bar. In fact, it is alleged by private respondents that out of the

total P419,613.96 covered by the subject trust receipts, the amount of P400,000.00 had already been paid, leaving

only P19,613.96 as balance. Hence, regardless of the arguments regarding penalty and interest, it can hardly be said

that private respondents harbored a preconceived plan or intention not to pay petitioner.

Respondent Court of Appeals was correct in setting aside the issued writ of preliminary attachment.

Time and again, we have held that the rules on the issuance of a writ of attachment must be construed strictly against

the applicants. This stringency is required because the remedy of attachment is harsh, extraordinary and summary in

nature. If all the requisites for the granting of the writ are not present, then the court which issues it acts in excess of

its jurisdiction.

DISPOSITION: The instant petitions are DENIED.

G.R. No. L-28297 March 30, 1970

ELPIDIO JAVELLANA, plaintiff-appellant,

vs.

D. O. PLAZA ENTERPRISES, INC., defendant-appellee.

D. O. Plaza Enterprises, Inc. (defendant) made purchases of wire ropes, tractors and diesel parts amounting to P43,017.32

from Elpidio Javellana (plaintiff). As payment, the plaintiff issued several checks which, when presented to the bank, were

dishonored for lack of funds. So, the defendant substituted these checks with another set of checks for the same amount, but

again, the same were dishonored for lack of funds except for one check in the amount of P3,900.00.

Hence, the plaintiff filed for collection of sum of money and also prayed for a writ of preliminary attachment.

Upon plaintiff's putting up a bond, the trial court issued a writ of attachment, which the defendant moved to discharge but

was denied. After some years, the defendant moved for the dissolution of the preliminary attachment. Consequently, the

court dissolved the attachment.

On the part of the defendant, he averred that there were other transactions which he had no intention not to pay the checks

it issued upon presentment. Thus, he filed a counterclaim for damages in the amount by reason of the attachment, which the

trial court dismissed since he was manifestly in bad faith when it issued two sets of bouncing checks. Hence, the attachment

was not improper, contrary to defendant's claim.

Hence, this case.

ISSUE: Whether or not there was a valid ground for the preliminary attachment sought for by the plaintiff.

RULING: NO.

Although the defendant was found to be in bad faith in issuing two (2) sets of bouncing checks in payment for its

indebtedness, such bad faith was not related to his having incurred the obligation in favor of the plaintiff but to defendant's

failure to perform said obligation. There was, therefore, no ground for the plaintiff to attach the defendant's properties on

the ground of fraud. That the plaintiff acted in good faith in securing attachment does not relieve him from the damages that

the defendant sustained by reason of the attachment because he, the plaintiff, was, in the first place, not entitled to

attachments, the element of malice was unnecessary (3 Moran, Rules of Court, 19).

JUAN DE DIOS CARLOS vs. FELICIDAD SANDOVAL

G.R. NO. 135830

SEPTEMBER 30, 2005

TINGA, J.

FACTS:

Carlos filed a Complaint in the RTC against Sandoval. He claimed that he was the sole compulsory heir of his parents

and he has survived his brother Teofilo who died intestate in 1992.

Carlos claimed that prior to their father’s death in 1963, Teofilo developed a scheme to save the elder Carlos’s estate from

inheritance taxes. Felix assented to the plan and Carlos entered into certain agreements with Sandoval in connection with

the subject properties. Subsequently, Carlos discovered that Sandoval and his brother were never validly married (no

marriage license).

Carlos sought to nullify the agreements with Sandoval for want of consideration. Carlos prayed of the RTC to declare the

alleged marriage between Teofilo and Sandoval void ab initio, provided that Teofilo died without issue, order that new

titles covering the subject properties be issued in the name of Carlos and require Sandoval to restitute Carlos in the amount

of P18,924,800.00.

Carlos likewise prayed for the issuance of the provisional relief of PRELIMINARY ATTACHMENT which the

RTC granted. Carlos posted a bond for P20M issued by SIDDCOR Insurance Corporation (SIDDCOR). Shortly

thereafter, a Notice of Garnishment was served upon the PNB over the deposit accounts maintained by respondents.

Respondents filed an URGENT MOTION TO DISCHARGE THE WRIT OF ATTACHMENT. The RTC denied the

motion. Thus, respondents filed a Petition for Certiorari.

o CA ordered the discharge and dissolution of the Writ of Attachment and Notice of Garnishment. The CA found that

there was no sufficient cause of action to warrant the preliminary attachment. Carlos elevated the said Decision to this

Court by way of Petition for Review on Certiorari, but the Court denied Carlos’s Petition and thus the CA

Decision ordering the dissolution of the Writ of Attachment and Notice of Garnishment became final.

Meanwhile, the hearing on Carlos’s Complaint ensued before the RTC. Respondents duly filed their Answer and thereafter

filed a Motion for Summary Judgment. The RTC rendered a summary judgment in favor of Carlos. Upon

promulgation of the Summary Judgment, Carlos moved before the RTC for execution pending appeal, which was

granted upon the filing of a bond.

Respondents ––

o Filed a Motion for Reconsideration of the Summary Judgment – Denied

o Appealed the RTC Decision to the CA, docketed as CA-G.R. CV No. 53229

o In CA-G.R. CV No. 53229, respondents filed a Motion for Judgment On the Attachment Bond. They noted that the

CA had already ruled that the Writ of Preliminary Attachment issued by the RTC was improperly granted and that

its Decision, as affirmed by the SC, had attained finality. Accordingly, they were entitled to damages under Section 20,

Rule 57 of the then Rules of Civil Procedure, which governed claims for damages on account of unlawful attachment.

Resolution (3/2301998): The Court of Appeals deemed that the case may be already be referred to the Raffle Committee

for assignment to a ponente for study and report; denied without elaboration Carlos’ MTD.

o Carlos filed a MR.

o Sandoval also filed a Motion for Partial Reconsideration, arguing that under the Revised Internal Rules of the CA

(RIRCA), the case may be re-raffled for assignment for study and report only after there is a resolution that the case is

deemed submitted for decision. They pointed out that re-raffle could not yet be effected, as there were still pending

incidents, particularly the motions for reconsideration of Carlos and themselves, as well as the Motion for Judgment on

Attachment Bond.

CA promulgated two resolutions:

o FIRST: Denied Carlos’s Motion to Dismiss the Appeal and Motion for Suspension, but explained the reasons for such

denial.

o SECOND (THE assailed Resolution): CA resolved the Motion for Judgment on Attachment Bond and ruled that

it was not necessary for the determination of damages on the injunction bond to await the decision on appeal. CA did

not award moral and exemplary damages, but rendered against the attachment bond, ordered SIDDCOR and Carlos to

pay Sandoval. CA granted respondent’s Motion for Immediate Execution.

G.R. No. 135830: Carlos argues that the CA could not have resolved the Motion for Judgment on the Attachment

Bond since the case had not yet been re-raffled under the two-raffle system for study and report; that the CA erred in

resolving the motion without conducting any hearing; that the CA had no jurisdiction over the motion as the docketing

fees had not yet been filed.

G.R. No. 136035: CA erred in ruling on the motion for damages without awaiting judgment in the main case; granting

that damages may be awarded, these should encompass only such damages incurred during the pendency of the appeal;

and that a hearing was necessary to prove the claim for damages and the appellate court erred in granting the award for

damages despite lack of hearing.

G.R. No. 137743: Assails the allowance by the CA of the immediate execution of the award of damages. SIDDCOR

points out that no hearing was conducted on the Motion for Immediate Execution despite the requirement in Section 2,

Rule 39 that “discretionary execution may only issue upon good reasons to be stated in a special order after due hearing.”

ISSUES: Whether or not –

(1) The assailed judgment on the attachment bond could have been rendered, as it was, prior to the adjudication of the main

case;

(2) The CA properly complied with the hearing requirement under Section 20, Rule 57 prior to its judgment on the

attachment bond;

(3) The CA properly ascertained the amount of damages it awarded in the judgment on the attachment bond.

RULING:

Scope and Import of Section 20, Rule 57 of the 1997 Rules of Civil Procedure

Section 20 allows the application to be filed at any time before the judgment becomes executory. It should be filed in

the same case that is the main action and cannot be instituted separately. It should be filed with the court having

jurisdiction over the case at the time of the application. The remedy provided by law is exclusive and by failing to file a

motion for the determination of the damages on time and while the judgment is still under the control of the court,

the claimant loses his right to damages.

The Motion for Judgment on the Attachment Bond filed by respondents was properly filed since it was filed with the CA

during the pendency of the appeal in the main case and also as an incident thereto. The core questions though lie in the

proper interpretation of the condition under Section 20, Rule 57 that reads: “Such damages may be awarded only

after proper hearing and shall be included in the judgment on the main case.” Petitioners assert that there was no

proper hearing on the application for damages and that the CA had wrongfully acted on the application in that it resolved it

prior to the rendition of the main judgment.

“Such Damages May Be Awarded Only After Proper Hearing”

Both Carlos and SIDDCOR were duly notified of the Motion for Judgment on the Attachment Bond and were required to

file their respective comments. Carlos and SIDDCOR filed their respective comments in opposition to private respondents’

motion. All the relevant parties had been afforded the bare right to be heard on the matter.

In this case, there were no open court hearings conducted by the CA and it is precisely this absence that the petitioners

assert as fatal. HOWEVER, there is no express requirement under the rule that the hearing be done in open court,

or that the parties be allowed to confront adverse witnesses to the claim of damages on the bond.

The “PROPER HEARING” contemplated would not merely encompass the right of the parties to submit their respective

positions, but also to present evidence in support of their claims, and to rebut the submissions and evidence of the adverse

party. The necessary elements to be established in an application for damages are essentially factual: the fact of damage

or injury and the quantifiable amount of damages sustained. HOWEVER, there is no requirement under the rule

that a full-blown hearing on the merits should be had.

It must be noted that the judicial finding on the wrongfulness of the attachment was then already CONCLUSIVE

AND BEYOND REVIEW and that the amount of actual damages sustained was likewise indubitable as it could be

found in the official case record in CA-G.R. CV No. 53229. The only matter of controversy that could be litigable through

the traditional hearing would be the matter of moral and exemplary damages, but the CA appropriately chose not to award

such damages.

It should be noted that this case poses a situation different from what is normally contemplated under Section 20, Rule 57—

wherein the very wrongfulness of the attachment remains one of the issues in contention in the main case. In such a case,

there would be a greater demand for a more extensive hearing on the application of damages.

“…And Shall be Included in the Judgment on the Main Case”

Section 20, Rule 57 does state that the award of damages shall be included in the judgment on the main case, and

seemingly indicates that it should not be rendered prior to the adjudication of the main case.

However, the determination that the attachment was wrongful did not come from the trial court or any court having

jurisdiction over the main action. It was rendered by the Court of Appeals in the exercise of its certiorari jurisdiction

in the original action reviewing the propriety of the issuance of the Writ of Preliminary Attachment against the private

respondents. Said ruling attained finality when it was affirmed by this Court.

The courts are bound to respect the conclusiveness of this final judgment, deeming as it does the allowance by the RTC

of preliminary attachment as improper. This conclusion is no longer subject to review, even by the court called upon to

resolve the application for damages on the attachment bond. The only matter left for adjudication is the proper amount of

damages.

Respondents are generally correct on the point that a case can only be deemed submitted for decision only after all pending

incidents are resolved. It is clear that the award for damages need not be resolved before the case is submitted for decision,

but should instead be resolved and included in the judgment on the main case, or the decision on the Appeal by

Certiorari filed by the respondents.

Thus, the action of the Court of Appeals in resolving the application for damages even before the main judgment

was issued does not conform to Section 20, Rule 57. However, the special particular circumstances of this case lead

us to rule that such error is not mortal to the award of damages.

The award of damages was made after a proper hearing had occurred wherein all the concerned parties had been given the

opportunity to present their arguments and evidence in support and in rebuttal of the application for damages. The

premature award of damages DOES NOT NEGATE the fact that the parties were accorded due process, and indeed

availed of their right to be heard.

Even SIDDCOR acknowledges that there are recognized instances where the award of damages or judgment on the

attachment bond may not be included in the decision on the main case, such as if the main case was dismissed for lack of

jurisdiction and no claim for damages could have been presented in the main case.

Scope of Damages Properly Awardable

The rule is thus well-settled that the bond issued upon an application for preliminary attachment answers for all damages,

incurred at whatever stage, which are sustained by reason of the attachment. The award of actual damages by the Court of

Appeals is thus proper in amount. However, we disagree that the rate of legal interest be counted from the date of the

“unlawful garnishment,” or on 27 June 1996. Properly, interest should start to accrue only from the moment it had been

finally determined that the attachment was unlawful, since it is on that basis that the right to damages comes to existence.

In this case, legal interest commences from the date the Court of Appeals decision in CA-G.R. SP No. 39267 became final,

by reason of its affirmation by this Court.

WHEREFORE, the petitions are DISMISSED.

CHINA BANKING CORPORATION vs. ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION

G.R. No. 158271 April 8, 2008

FACTS:

On July 24, 1996, China Bank granted respondent ACDC an Omnibus Credit Line in the amount of P90,000,000.00.

On April 12, 1999, alleging that ACDC failed to comply with its obligations under the Omnibus Credit Line, China Bank filed a Complaint

for recovery of sum of money and damages with prayer for the issuance of writ of preliminary attachment before the Regional Trial Court

(RTC) of Makati, China Bank claimed that ACDC, after collecting and receiving the proceeds or receivables from the various construction

contracts and purportedly holding them in trust for China Bank under several Deeds of Assignment, misappropriated, converted, and used

the funds for its own purpose and benefit, instead of remitting or delivering them to China Bank.

On April 22, 1999, the RTC issued an Order granting China Banks prayer for writ of preliminary attachment. Consequently, as shown in

the Sheriff’s Report dated June 14, 1999, the writ of preliminary attachment was implemented levying personal properties of ACDC, i.e.,

vans, dump trucks, cement mixers, cargo trucks, utility vehicles, machinery, equipment and office machines and fixtures.

On March 27, 2000, upon motion of China Bank, the RTC issued a Summary Judgment in favor of China Bank. ACDC filed its Notice of

Appeal dated April 24, 2000.

On June 15, 2000, China Bank filed a Motion to Take Custody of Attached Properties with Motion for Grant of Authority to Sell to the

Branch Sheriff with the RTC, praying that it be allowed to take custody of ACDCs properties for the purpose of selling them in an auction.

On June 20, 2000, ACDC filed its Opposition to the June 15, 2000 Motion arguing that there can be no sale of the latters attached properties

in the absence of a final and executory judgment against ACDC.

On August 25, 2000, China Bank partially appealed the Summary Judgment for not awarding interest on one of its promissory

notes. Records of the case were elevated to the CA.

On April 18, 2002, China Bank filed a Motion for Leave for Grant of Authority to Sell Attached Properties which the CA denied in the

herein assailed Resolution dated October 14, 2002.

According to the CA, selling the attached properties prior to final judgment of the appealed case is premature and contrary to the intent and

purpose of preliminary attachment for the following reasons: first, the records reveal that the attached properties subject of the motion are

not perishable in nature; and second, while the sale of the attached properties may serve the interest of China Bank, it will not be so for

ACDC. The CA recognized China Banks apprehension that by the time a final judgment is rendered, the attached properties would be

worthless. However, the CA also acknowledged that since ACDC is a corporation engaged in a construction business, the preservation of

the properties is of paramount importance; and that in the event that the decision of the lower court is reversed and a final judgment rendered

in favor ACDC, great prejudice will result if the attached properties were already sold.

China Bank filed a Motion for Reconsideration which was denied in the herein assailed CA Resolution dated May 16, 2003. Hence, the

present petition for review on certiorari

ISSUE: WON the vehicles, office machines and fixtures are perishable property under Section 11, Rules 57 of the Rules of Court.

HELD:

Section 11, Rule 57 of the Rules of Court provides:

Sec. 11. When attached property may be sold after levy on attachment and before entry of judgment.- Whenever it shall be made to appear

to the court in which the action is pending, upon hearing with notice to both parties, that the property attached is perishable, or that the

interests of all the parties to the action will be subserved by the sale thereof, the court may order such property to be sold at public auction

in such manner as it may direct, and the proceeds of such sale to be deposited in court to abide the judgment in the action. (Emphasis

supplied)

Thus, an attached property may be sold after levy on attachment and before entry of judgment whenever it shall be made to appear to the

court in which the action is pending, upon hearing with notice to both parties, that the attached property is perishable or that the interests of

all the parties to the action will be subserved by the sale of the attached property.

No local jurisprudence or authoritative work has touched upon this matter. This being so, an examination of foreign laws and jurisprudence,

particularly those of the United Stateswhere some of our laws and rules were patterned after, is in order

In Mossler Acceptance Co. v. Denmark, an order of the lower court in directing the sale of attached properties, consisting of 20 automobiles

and 2 airplanes, was reversed by the Supreme Court of Louisiana. In support of its contention that automobiles are

perishable, Mossler offered testimony to the effect that automobile tires tend to dry-rot in storage, batteries to deteriorate, crankcases to

become damaged, paint and upholstery to fade, that generally automobiles tend to depreciate while in storage. Rejecting these arguments,

the Supreme Court of Louisiana held that while there might be a depreciation in the value of a car during storage, depending largely on

existing economic conditions, there would be no material deterioration of the car itself or any of its appurtenances if the car was properly

cared for, and therefore it could not be said that automobiles were of a perishable nature within the intendment of the statute, which could

only be invoked when the property attached and seized was of a perishable nature.[

With respect to the determination of the question on whether the attached office furniture, office equipment, accessories and supplies are

perishable properties, the Supreme Court of Alabama inMcCreery v. Berney National Bank discussed the perishable nature of the attached

properties, consisting of shelving, stock of drygoods and a complete set of store fixtures, consisting of counters iron safe, desk and

showcases, to be within the meaning of perishable property under the Alabama Code which authorizes a court, on motion of either party,

to order the sale, in advance of judgment, of perishable property which had been levied on by a writ of attachment.

In McCreery, the Supreme Court of Alabama rejected the argument that the sale of the attached property was void because the term

perishable property, as used in the statute, meant only such property as contained in itself the elements of speedy decay, such as fruits, fish,

fresh meats, etc. The Supreme Court of Alabama held that whatever may be the character of the property, if the court is satisfied that, either

by reason of its perishable nature, or because of the expense of keeping it until the termination of the litigation, it will prove, or be likely to

prove, fruitless to the creditor, and that the purpose of its original seizure will probably be frustrated, the sale of the attached property is

justified.

McCreery applied the doctrine in Millards Admrs. v. Hall where the Supreme Court of Alabama held that an attached property is perishable

if it is shown that, by keeping the article, it will necessarily become, or is likely to become, worthless to the creditor, and by consequence to

the debtor, then it is embraced by the statute. It matters not, in our opinion, what the subject matter is. It may be cotton bales, live stock,

hardware provisions or dry goods. Although the statute under which Millards was decided used the words likely to waste or be destroyed

by keeping, instead of the word perishable, the reasons given for the construction placed on the statute apply equally to the Alabama Code

which uses the term perishable.[

In the Motion for Leave for Grant of Authority to Sell Attached Properties filed before the CA, China Bank alleged that the attached

properties are placed in locations where they are totally exposed to the natural elements and adverse weather conditions since their

attachment in 1999; that as a result, the attached properties have gravely deteriorated with corrosions eating them up, with weeds

germinating and growing thereon and their engines and motors stock up; and that the same holds true to the office furniture, office

equipment, accessories and supplies. No evidence, however, were submitted by China Bank to support and substantiate these claims before

the CA.

The determination on whether the attached vehicles are properly cared for, and the burden to show that, by keeping the attached office

furniture, office equipment and supplies, it will necessarily become, or is likely to become, worthless to China Bank, and by consequence

to ACDC, are factual issues requiring reception of evidence which the Court cannot do in a petition forcertiorari. Factual issues

are beyond the scope of certiorari because they do not involve any jurisdictional issue

As a rule, only jurisdictional questions may be raised in a petition for certiorari, including matters of grave abuse of discretion which are

equivalent to lack of jurisdiction.

Sale of attached property before final judgment is an equitable remedy provided for the convenience of the parties and preservation of the

property. To repeat, the Court finds that the issue of whether the sale of attached properties is for the convenience of the parties and that the

interests of all the parties will be subserved by the said sale is a question of fact. Again, the foregoing issue can only be resolved upon

examination of the evidence presented by both parties which the Court cannot do in a petition for certiorari under Rule 65 of the Rules of

Court.

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., and OSCAR RAMIREZ vs. ERLINDA KRISHNAN

G.R. No. 203530 April 13, 2015

A Party Seeking A Stay Of The Attachment Under Section 5 Rule 57 Is Required To Deposit An “Amount” Of Money Or Cash Equal

To The Attachment Bond, “Amount” Being A Term Plainly Associated With Money

The Facts:

Erlinda in her Complaint for Collection of Sum of Money and Damages against petitioners Luzon Development Bank, Tomas

Clemente Jr., and Oscar Ramirez alleged that she is a client of the bank and maintained several deposits including time deposits. When

she presented her Certificates of Time Deposits for payment because they have become due, the petitioners refused to honor it for the

reason they were fraudulent. She likewise applied for a Writ of Preliminary Attachment which the trial court granted. Thus, the

petitioner bank’s accounts in BPI ( P28,597,472.70 ) and Central Bank (P49,000,000.00) were garnished. The petitioners then filed

an urgent Motion To Recall Quash And/Or Lift Attachment or Garnishment, which the respondent opposed. They filed on March 9,

2001 an urgent motion to substitute their garnished accounts with government securities. Again respondent opposed the motion. The

RTC then required the petitioners to justify their motion to discharge. On September 8, 2003, the RTC lifted the garnishment; Erlinda

moved to reconsider and for the judge to inhibit. The judge denied the motion for reconsideration but granted the motion for

inhibition. Erlinda then elevated the matter to the Court of Appeals thru a petition for certiorari, which the appellate court granted. It

directed the petitioners to file a counter bond in accordance with Sec. 12 Rule 57 of the Rules of Civil Procedure within 10 days from

finality of the decision otherwise, the RTC shall immediately reinstate the writ of attachment previously issued. Since their appeal to

the Supreme Court was denied, the case was remanded to the RTC which required Erlinda to post a new attachment bond in the

amount of P35,000,000.00, and for petitioners to file a counter bond within 10 days from notice of the filing and approval of Erlinda’s

bond. Erlinda filed her attachment bond on June 25, 2009, and the same was approved by the RTC on July 7, 2009. Petitioners then

filed an Omnibus Motion to determine the sufficiency of the bond and for them to be allowed to deposit Certificates of Titles of real

property, and that the issuance of the writ of attachment be held in abeyance. The RTC denied the motion and the subsequent motion

for reconsideration; petitioners assailed the denial of their motions thru a petition for certiorari with the CA, which also denied

them. Thus, they appealed to the Supreme Court.

The Issue:

Whether or not real property may be posted, in lieu of cash or counter bond, to secure any continent lien on the petitioners’ property,

since Section 2 of Rule 57 only mentions “deposit”, thus it cannot be confined or construed to refer to cash.

The Ruling:

We rule in the negative.

Section 2, Rule 57 of the Rules of Court explicitly states that “[a]n order of attachment may be issued either ex parte or upon motion

with notice and hearing by the court in which the action is pending, or by the Court of Appeals or the Supreme Court, and must require

the sheriff of the court to attach so much of the property in the Philippines of the party against whom it is issued, not exempt from

execution, as may be sufficient to satisfy the applicant’s demand, unless such party makes deposit or gives a bond as hereinafter

provided in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant’s demand or the

value of the property to be attached as stated by the applicant, exclusive of costs.”

Section 5 of the same Rule likewise states that “[t]he sheriff enforcing the writ shall without delay and with all reasonable diligence

attach, to await judgment and execution in the action, only so much of the property in the Philippines of the party against whom the

writ is issued, not exempt from execution, as may be sufficient to satisfy the applicant’s demand, unless the former makes a deposit

with the court from which the writ is issued, or gives a counter-bond executed to the applicant, in an amount equal to the bond fixed

by the court in the order of attachment or to the value of the property to be attached, exclusive of costs.”

From the foregoing, it is evidently clear that once the writ of attachment has been issued, the only remedy of the petitioners in lifting

the same is through a cash deposit or the filing of the counter-bond. Thus, the Court holds that petitioner’s argument that it has the

option to deposit real property instead of depositing cash or filing a counter-bond to discharge the attachment or stay the

implementation thereof is unmeritorious.

In fact, in Security Pacific Assurance Corporation v. Tria-Infante, 1 we held that one of the ways to secure the discharge of an

attachment is for the party whose property has been attached or a person appearing on his behalf, to post a counterbond or make the

requisite cash deposit in an amount equal to that fixed by the court in the order of attachment. 2

Apropos, the trial court aptly ruled that while it is true that the word deposit cannot only be confined or construed to refer to cash, a

broader interpretation thereof is not justified in the present case for the reason that a party seeking a stay of the attachment under

Section 5 is required to make a deposit in an amount equal to the bond fixed by the court in the order of attachment or to the value of

the property to be attached. The proximate relation of the word “deposit” and “amount” is unmistakable in Section 5 of Rule 57.

Plainly, in construing said words, it can be safely concluded that Section 5 requires the deposit of money as the word “amount”

commonly refers to or is regularly associated with a sum of money.

In Alcazar v. Arante, 3 we held that in construing words and phrases used in a statute, the general rule is that, in the absence of

legislative intent to the contrary, they should be given their plain, ordinary and common usage meaning. The words should be read

and considered in their natural, ordinary, commonly-accepted and most obvious signification, according to good and approved usage

and without resorting to forced or subtle construction. Words are presumed to have been employed by the lawmaker in their ordinary

and common use and acceptation. 4 Thus, petitioners should not give a special or technical interpretation to a word which is otherwise

construed in its ordinary sense by the law and broaden the signification of the term “deposit” to include that of real properties.

THIRD DIVISION

A.M. No. RTJ-06-1999 December 8, 2010

(Formerly OCA IPI No. 03-1903-RTJ)

BANGKO SENTRAL NG PILIPINAS, Complainant,

vs.

Executive Judge ENRICO A. LANZANAS, Regional Trial Court, Branch 7, Manila, Clerk of Court JENNIFER

DELA CRUZ-BUENDIA and Deputy Sheriff CARMELO V. CACHERO, Regional Trial Court, Office of the

Clerk of Court, Manila, Respondents.

BRION, J.:

FACTS:

(1) the present administrative matter involves the alleged irregular withdrawals of funds in custodia legis;

(2) the funds consist of the garnished amounts representing rental payments from lessees of defendants Orient Commercial

Banking Corporation, et al. in Civil Case No. 99-95993 (Bangko Sentral ng Pilipinas v. Orient Commercial Banking

Corporation, et al.) held incustodia legis by the RTC, Branch 12, Manila, by virtue of a writ of attachment;

(3) said garnished amounts, totaling about P85M, were subsequently released in favor of the PBCOM in Civil Case No. 01-

101190 (PBCOM v. Jose C. Go, et al.), pursuant to a writ of execution pending appeal issued by Judge Guillermo

Purganan, RTC, Branch 42, Manila; (

(4) The release was irregular as the garnished amounts were under the custody of the RTC, Branch 12, Manila, pursuant to

the writ of attachment earlier issued by Judge Carandang of the same court against the defendants in Civil Case No. 99-

95993, which cannot be interfered with without the permission of the proper court (Branch 12);

(5) The Office of the Court Administrator (OCA) conducted an investigation and recommended that:

1. The complaint be re-docketed as a regular administrative matter;

2. The charges against Judge Enrico Lanzanas be dismissed for insufficiency of evidence;

3. Respondent Deputy Sheriff Carmelo V. Cachero be suspended for six (6) months for simple misconduct;

4. Respondent Clerk of Court Jennifer H. dela Cruz-Buendia be penalized with a fine of P10,000.00 for simple

neglect of duty; and

5. Both Cachero and dela Cruz-Buendia be sternly warned against the commission of a similar offense.

(6) The Court resolved to: (1) re-docket the complaint as a regular administrative matter; (2) dismiss the charge against

Judge Lanzanas for insufficiency of evidence; and (3) require the parties to manifest whether they were willing to submit

the case for decision.

(7) Cachero filed Manifestation stated that the amount released to PBCOM was returned to RTC Branch 12 and prayed that

the present case be dismissed. While dela Cruz-Buendia filed Manifestation, Supplemental Comment and Partial Motion

for Reconsideration reiterating that the acts complained of were ministerial.

The Court’s Ruling

In our Resolution of June 7, 2006, the Court made the observation that the respondent Judge Lanzanas’ inadvertence was

not gross enough to merit sanction as he had no participation in the preparation of the checks; he merely signed them in a

ministerial capacity as executive judge, but the same conclusion cannot be said of his co-respondents who are claiming

good faith and compliance with the procedure, set forth in the Rules of Court, in the withdrawal and subsequent release of

the subject funds.

Rule 57, Section 7(e) of the Rules of Court provides:

x x x x

If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall be filed with the proper

court or quasi-judicial agency, and notice of the attachment served upon the custodian of such property.

No evidence or record in the present case exists showing that the above provision had been complied with when Cachero

asked for the release of the garnished funds. No copy of the writ of attachment was filed with the proper court, the RTC,

Branch 12, Manila, in Civil Case No. 99-95993. The disputed funds were clearly under the custody of Branch 12, not Branch

42.

As the OCA noted, the respondent sheriff should have known that the funds he garnished were in custodia legisand do not

belong to the defendants in Civil Case No. 01-101190, considering that he (Cachero) himself was among a group of sheriffs

deputized to implement the writ of garnishment issued by the RTC, Branch 12, Manila, in Civil Case No. 99-95993.

Dela Cruz-Buendia, on the other hand, cannot claim that she was not aware that the garnished amounts do not belong to

Spouses Jose C. Go and Elvy T. Go. The notice of garnishment, dated July 23, 2001,30 issued by Cachero was

addressed to the Clerk of Court, RTC, Manila. The notice covered the goods, effects, money and other properties

belonging to Spouses Jose C. Go and Elvy T. Go in her possession or control that were deposited under Civil Case No. 99-

95993.

Judge Carandang’s order, dated February 7, 2000,32 mentioned in the above reply states:

The Clerk of Court, acting as ex-officio Sheriff of Regional Trial Court of Manila, is hereby directed that before any rental

payment from the lessees of any one or all of the above-named defendants shall be received in accordance with the Notice

of Garnishment pursuant to the Writ of Attachment issued by this Court on January 19, 2000 x x x the said payment should

be referred first to this Court for the issuance of appropriate Order to Receive Payment for the Court’s proper control and

accounting of the amount garnished; payments shall be turned over by the Branch Sheriff of this Court to your office for

issuance of appropriate official receipt.

Without doubt, the funds that were released by the OCC, at the time the Notices to Deliver Garnished Amount were filed

by Cachero, were in custodia legis, by virtue of the Writ of Attachment issued by Judge Carandang, RTC, Branch 12,

Manila, against the defendants in Civil Case No. 99-95993.

In Traders Royal Bank v. Intermediate Appellate Court,33 we declared that "property in the custody of the law cannot

be interfered with without the custody of the proper court and properly legally attached is property incustodia legis."

WHEREFORE, premises considered, Deputy Sheriff Carmelo V. Cachero is found GUILTY OF INEFFICIENCY AND

INCOMPETENCE IN THE PERFORMANCE OF OFFICIAL DUTIES, and is SUSPENDED for nine (9) months

without pay. Clerk of Court Jennifer H. dela Cruz-Buendia is declared GUILTY OF SIMPLE NEGLECT OF DUTYand

is SUSPENDED for three (3) months without pay.

Both of them are STERNLY WARNED against the commission of a similar offense.

The other charges against Cachero and dela Cruz-Buendia are DISMISSED for lack of evidence.

SO ORDERED.

FBDC vs. YLLAS LENDING CORP

G.R. No. 158997

October 6, 2008

FACTS: FORT BONIFACIO DEVELOPMENT CORP. ( FBDC) executed a lease contract in favor of Tirreno, Inc. over

a unit at the Bonifacio Global City in Taguig, Metro Manila. The parties had the lease contract notarized on the day of its

execution. Tirreno used the leased premises for Savoia Ristorante and La Strega Bar.

Due to Tirreno’s alleged failure to settle its outstanding obligations, FBDC entered and occupied the leased premises. FBDC

also appropriated the equipment and properties left by Tirreno pursuant to Section 22 of their Contract of Lease as partial

payment for Tirreno’s outstanding obligations.

In 2002, Yllas Lending Corporation caused the sheriff of the trial court to serve an alias writ of seizure against FBDC.

FBDC found out that in 2001, respondents filed a complaint for Foreclosure of Chattel Mortgage with Replevin, against

Tirreno, et al. In their complaint, Yllas alleged that they lent a sum of money to Tirreno et al and in 2000 executed a Deed

of Chattel Mortgage in favor of Yllas as security for the loan. The Chattel Mortgage covered properties of the Tirreno’s

restaurant and bar.

On the same day, FBDC served on the sheriff an affidavit of title and third party claim.

Despite FBDC’s service upon him of an affidavit of title and third party claim, the sheriff proceeded with the seizure of

certain items from FBDC’s premises. The sheriff delivered the seized properties to Yllas.

FBDC questioned the propriety of the seizure and delivery of the properties to respondents without an indemnity bond

before the trial court, which decided against FBDC. It stated that:

1. Section 22 of the lease contract between FBDC and Tirreno is void under Article 2088 of the Civil Code.

2. FBDC should have filed a separate complaint against respondents instead of filing a motion to intervene. (The trial court

quoted Bayer Phils. v. Agana )

FBDC filed a MR, which was denied. Hence this petition to review pure questions of law.

ISSUE: 1. WON FBDC has no right of ownership over the subject properties because Section 22 of the contract of lease is void for

being a pledge and a pactum commissorium;

2. WON the proper remedy of FBDC as third party claimant over the subject properties is to file a separate action; and

3. WON the trial court is should have required respondents to file an indemnity bond for FBDC’s protection

4. WON FBDC can terminate the lease contract without judicial intervention

HELD: Petition granted

1.NO. Respondents, as well as the trial court, contend that Section 22 constitutes a pactum commissorium, a void stipulation

in a pledge contract. FBDC, on the other hand, states that Section 22 is merely a dacion en pago.

Section 22 of the Lease Contract between FBDC and Terrano states:

Section 22. Lien on the Properties of the Lessee

Upon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if

any, being fully paid or settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used

or situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as

appraised by the LESSOR against any unpaid rentals, charges and/or damages. If the LESSOR does not want to use said

properties, it may instead sell the same to third parties and apply the proceeds thereof against any unpaid rentals, charges

and/or damages.

Articles 2085 and 2093 of the Civil Code enumerate the requisites essential to a contract of pledge:

(1) the pledge is constituted to secure the fulfillment of a principal obligation;

(2) the pledgor is the absolute owner of the thing pledged;

(3) the persons constituting the pledge have the free disposal of their property or have legal authorization for the purpose;

and

(4) the thing pledged is placed in the possession of the creditor, or of a third person by common agreement. Article 2088 of

the Civil Code prohibits the creditor from appropriating or disposing the things pledged, and any contrary stipulation is

void.

Section 22, as worded, gives FBDC a means to collect payment from Tirreno in case of termination of the lease contract or

the expiration of the lease period and there are unpaid rentals, charges, or damages. The existence of a contract of pledge,

however, does not arise just because FBDC has means of collecting past due rent from Tirreno other than direct payment.

The fourth requisite, that the thing pledged is placed in the possession of the creditor, is absent. There is non-

compliance with the fourth requisite even if Tirreno’s personal properties are found in FBDC’s real property. Tirreno’s

personal properties are in FBDC’s real property because of the Contract of Lease, which gives Tirreno possession of the

personal properties. Since Section 22 is not a contract of pledge, there is no pactum commissorium.

On the other hand, Article 1245 of the Civil Code defines dacion en pago, or dation in payment, as the alienation of property

to the creditor in satisfaction of a debt in money. Philippine National Bank v. Pineda held that dation in payment requires

delivery and transmission of ownership of a thing owned by the debtor to the creditor as an accepted equivalent of the

performance of the obligation. There is no dation in payment when there is no transfer of ownership in the creditor’s favor,

as when the possession of the thing is merely given to the creditor by way of security.

2. NO. The Bayer ruling is inapplicable to the present case. The third party inBayer filed his claim during execution; in the

present case, FBDC filed for intervention during the trial.

The timing of the filing of the third party claim is important because the timing determines the remedies that a third party

is allowed to file. A third party claimant under Section 16 of Rule 39 (Execution, Satisfaction and Effect of Judgments)17 of

the 1997 Rules of Civil Procedure may vindicate his claim to the property in a separate action, because intervention is no

longer allowed as judgment has already been rendered. We allow FBDC’s intervention in the present case because FBDC

satisfied the requirements of Section 1, Rule 19 (Intervention) of the 1997 Rules of Civil Procedure, which reads as follows:

Section 1. Who may intervene. — A person who has a legal interest in the matter in litigation, or in the success of either of

the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of

property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action.

The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the

original parties, and whether or not the intervenor’s rights may be fully protected in a separate proceeding.

Although intervention is not mandatory, nothing in the Rules proscribes intervention.

3. YES. Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the properties subject of

this case in view of respondents’ failure to file a bond.

The bond in Section 14 of Rule 57 (proceedings where property is claimed by third person) is different from the bond in

Section 3 of the same rule (affidavit and bond).

Under Section 14 of Rule 57, the purpose of the bond is to indemnify the sheriff against any claim by the intervenor to the

property seized or for damages arising from such seizure, which the sheriff was making and for which the sheriff was

directly responsible to the third party.

Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of defendant’s personal property or

the payment of damages to the defendant if the plaintiff’s action to recover possession of the same property fails, in order

to protect the plaintiff’s right of possession of said property, or prevent the defendant from destroying the same during the

pendency of the suit.

Because of the absence of the indemnity bond in the present case, FBDC may also hold the sheriff for damages for the

taking or keeping of the properties seized from FBDC.

4. YES. A lease contract may be terminated without judicial intervention.Consing v. Jamandre upheld the validity of a

contractually-stipulated termination clause:

This stipulation is in the nature of a resolutory condition, for upon the exercise by the [lessor] of his right to take possession

of the leased property, the contract is deemed terminated. This kind of contractual stipulation is not illegal, there being

nothing in the law proscribing such kind of agreement.

x x x

Judicial permission to cancel the agreement was not, therefore necessary because of the express stipulation in the contract

of [lease] that the [lessor], in case of failure of the [lessee] to comply with the terms and conditions thereof, can take-over

the possession of the leased premises, thereby cancelling the contract of sub-lease. Resort to judicial action is necessary

only in the absence of a special provision granting the power of cancellation.14

A lease contract may contain a forfeiture clause. In the same manner, we allow FBDC’s forfeiture of Tirreno’s properties

in the leased premises. By agreement between FBDC and Tirreno, the properties are answerable for any unpaid rent or

charges at any termination of the lease. Such agreement is not contrary to law, morals, good customs, or public policy.

Forfeiture of the properties is the only security that FBDC may apply in case of Tirreno’s default in its obligations.

NOTES: 1. A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession of the property, unless and until the

mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee’s right of possession is

conditioned upon the actual default which itself may be controverted, the inclusion of other parties, like the debtor or the

mortgagor himself, may be required in order to allow a full and conclusive determination of the case. When the mortgagee

seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the

mortgagor’s default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property.

The burden to establish a valid justification for that action lies with the plaintiff [-mortgagee]. An adverse possessor, who

is not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel

mortgage contract, simply because the mortgagee brings up an action for replevin.

FBDC exercised its lien to Tirreno’s properties even before respondents and Tirreno executed their Deed of Chattel

Mortgage. FBDC is adversely affected by the disposition of the properties seized by the sheriff. Moreover, FBDC’s

intervention in the present case will result in a complete adjudication of the issues brought about by Tirreno’s creation of

multiple liens on the same properties and subsequent default in its obligations.