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CHING T. CAMPOSAGRADO CASES NO. 8

SILANGAN TEXTILE VS HON DEMETRIA

FACTS:

LSMI filed before the RTC a complaint for Collection of Sum of Money against STMC (Silangan). LMSI alleged that the
stockholders (Silangans) ordered 111,161.60 kilograms of yarn, valued in the total amount of P9,999,845.00. The yarns
were delivered at the office of STMC as evidenced by delivery receipts. In payment of the yarns, STMC issued 34
postdated checks in the total amount of P9,999,845.00. When presented for payment, the checks were dishonored for
the reason drawn against insufficient fund. LSMI prayed for a writ of preliminary attachment which the RTC granted.
Apparently, LSMI had already previously instituted before the MTC criminal cases against the Silangans for violation of
BP Blg 22. Hence, STMC filed a motion to dismiss the civil complaint before the RTC. The RTC ruled in favor of LSMI. CA
affirmed.

ISSUE:

WON the Honorable Court of Appeals erred in affirming the conclusion of the public respondent Judge Demetria when
it issued the writ of preliminary attachment in favor of the private respondent.


RULING:

The SC granted the petition.

The SC stated that Attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the
attaching party to realize upon relief sought and expected to be granted in the main or principal action. 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. They are provisional because they constitute temporary measures availed of during
the pendency of the action and they are ancillary because they are mere incidents in and are dependent upon the
result of the main action.

A writ of preliminary attachment is a species of provisional remedy. As such, it is a collateral proceeding,
permitted only in connection with a regular action, and as one of its incidents; one of which is provided for present
need, or for the occasion; that is, one adapted to meet a particular exigency.

On the basis of the fact that the SC finds the dismissal of civil case to be in order, the writ of preliminary attachment
issued by the trial court in the said case must perforce be lifted.

BSP VS JUDGE LANZANAS

The BSP is the plaintiff in Civil Case No. 99-95993, entitled Bangko Sentral ng Pilipinas v. Orient Commercial Banking
Corporation. The BSP alleged thatJudge Rosmari D. Carandang (presently Court of Appeals Associate Justice) of the
RTC, Branch 12, Manila, issued a Writ of Attachment against the assets and properties of the defendants, Orient
Commercial Banking Corporation et al. The writ was served, among others, on the various malls owned by the
defendants, resulting in the garnishment of the rentals of the tenants. By order of the court, the corresponding check
payments of the mall tenants were deposited to the LBP account of the RTC, Manila, under the management and
custody of dela Cruz-Buendia.

On May 23, 2003, when the BSPs counsel, Fe B. Macalino, inquired into the status of Civil Case No. 99-95993, she was
allegedly informed by the personnel of the RTC, Branch 12, Manila, that portions of the subject funds had been
withdrawn and released to PBCOM on the basis of a Notice to Deliver Garnished Amount, served by Cachero, based on
the writ of execution issued by Judge Guillermo G. Purganan of the RTC, Branch 42, Manila. Several other
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disbursement vouchers were issued in favor of LBP. The BSP protested that the withdrawals from the garnished rental
payments in Civil Case No. 99-95993 were irregular, as a court has no power to lift a writ of preliminary attachment by
a co-equal court.

ISSUE:

WON the acts of the sheriff in allowing the withdrawal and release from the custody of the court garnished funds to
PBCOM were valid.

RULING:

No. The SC stated that Rule 57, Section 7(e) of the Rules of Court provides:

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.
In Traders Royal Bank v. Intermediate Appellate Court, the SC 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 in custodia legis.

As the OCA noted, the respondent sheriff should have known that the funds he garnished were in custodia legis and
do not belong to the defendants in Civil Case No. 01-101190, considering that Cachero 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.



MUNICIPALITY OF HAGONOY VS HON DUMDUM JR

FACTS:

A complaint was filed by Lim Chao against the Municipality of Hagonoy,
Bulacan for collection of sum of money and damages. The complaint alleged that a contract was entered into by Lim
Chao and the Municipality for the delivery of motor vehicles, which supposedly were needed to carry out certain
developmental undertakings in the municipality. Lim Chao then delivered to the Municipality of Hagonoy 21 motor
vehicles amounting to P5,820,000.00. However, despite having
made several deliveries, the Municipality allegedly did not heed Lim Chaos claim for payment. Thus, she filed a
complaint for full payment of the said amount, with interest and damages and prayed for the issuance of a writ of
preliminary attachment against the Municipality. The trial court issued the Writ of Preliminary Attachment directing
the sheriff "to attach the estate, real and personal properties" of the Municipality.
The Municipality filed a Motion to Dismiss on the ground that the claim on which the action had been brought was
unenforceable under the statute of frauds, pointing out that there was no written contract or document that would
evince the supposed agreement they entered into with respondent. It also filed a Motion to Dissolve and/or Discharge
the Writ of Preliminary Attachment already issued, invoking, among others,
immunity of the state from suit. The Municipality argued that as a municipal corporation, it is immune from suit, and
that its properties are by law exempt from execution and garnishment. Lim Chao on her part, counters that,the
Municipalitys claim of immunity from suit is negated by the Local Government Code, which vests municipal
corporations
with the power to sue and be sued. The Court of Appeals affirmed the trial courts order.

ISSUE:

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WON the issuance of the Writ of Preliminary Attachment against the Municipalityof Hagonoy is valid.

RULING:

No. The universal rule is that where the State gives its consent to be sued by private parties either by general or
special law, it may limit claimants action "only up to the completion of proceedings anterior to the stage of execution"
and that the power of the Courts ends when the judgment is rendered. Since government funds and properties may
not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of
public policy. Disbursements of public funds must be covered by the corresponding appropriations as required by law.
The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and specific objects. The Court declared that the writ of preliminary
attachment must be dissolved and, indeed, it must not have been issued in the very first place. While there is merit in
private respondents position that she, by affidavit, was able to substantiate the allegation of fraud in the same way
that the fraud attributable to petitioners was sufficiently alleged in the complaint and, hence, the issuance of the writ
would have been justified. Still, the writ of attachment in this case would only prove to be useless and unnecessary
under the premises, since the property of the municipality may not, in the event that respondents claim is validated,
be subjected to writs of execution and garnishment unless, of course, there has been a corresponding
appropriation provided by law.

Anent the other issues raised by petitioners relative to the denial of their motion to dissolve the writ of attachment,
unenforceability of the contract and the veracity of private respondents allegation of fraud, suffice it to say that these
pertain to the merits of the main action. Hence, these issues are not to be taken up in resolving the motion to
discharge, lest we run the risk of deciding or prejudging the main case and force a trial on the merits at this stage of
the proceedings.


PUA VS DEYTO

FACTS:

Pua is engaged in the business of wholesale rice trading. One of his clients was respondent Ang. Pua delivered
truckloads of rice worth P766,800. Ang paid Pua through 2 postdated checks. Pua tried to encash them but were
dishonored because they were drawn from a closed account. Pua then went to Angs residence to complain but it was
only Deyto who was present since Ang had been missing. Consequently, Pua demanded Ang to pay but she refused.
Pua then filed a complaint with the RTC for collection of sum of money with preliminary attachment against Ang and
Deyto More than 6 months after the publication of summons for Ang, the case was archived for inactivity. RTC
dismissed the case for plaintiffs lack of interest to prosecute.

ISSUE:

WON the plaintiff incurred unreasonable delay in prosecution the case.

RULING:

The SC found that Pua committed delay in prosecuting his case against the respondents. After the summons for Ang
was published on May 31, 2002 and the Affidavit of Service was issued by Manila Standards Advertising Manager on
June 3, 2002, no further action was taken on the case by Pua.

Section 3, Rule 17 of the Revised Rules of Court authorizes the dismissal of a case when the plaintiff fails to prosecute
his action for an unreasonable length of time:

SEC. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time,
or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the
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defendant or upon the courts own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court.

That Pua renewed the attachment bond is not an indication of his intention to prosecute. The payment of an
attachment bond is not the appropriate procedure to settle a legal dispute in court; it could not be considered as a
substitute for the submission of necessary pleadings or motions that would lead to prompt action on the case.

THUNDER SECURITY AND INVESTIGATION AGENCY VS NFA

FACTS:

Petitioner entered into a Contract for Security Services with respondent NFA to provide 132 security guards to
safeguard NFAs personnel, offices, facilities and properties for a period of one year. Subsequently, RA 9184 was
enacted. Said law expressly repealed EO No. 40 which governed the bidding procedure of service contracts in the
Government. Since petitioners contract with the NFA was about to expire, the NFA caused the publication of an
Invitation to Apply for Eligibility and to Bid intended for all private security agencies. Petitioner paid the bidding fee of
P 1,000.00 on to signify its intention to participate in the bidding process. However, on June 9, 2003, the NFA, notified
petitioner to submit the required documents not later than June 19, 2003 in order to qualify for the bidding. On June
26, 2003, the NFA-RBAC informed petitioner that its application to bid had been rejected due to its failure to submit
the required documents. Unfazed, petitioner filed before the RTC a Petition for Prohibition and Preliminary Injunction,
with a prayer for the issuance of a TRO plus Damages, seeking, among others, to enjoin respondents from awarding
the contract to another security agency. RTC ruled in favor of plaintiff, CA reversed. Hence, the appeal.

ISSUE:

WON the CA committed a reversible error when it reversed the Orders of the RTC granting injunctive relief to herein
petitioner.

RULING:

The SC denied the petition.

The SC stated that Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, provides the grounds for the
issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;

(b) That the commission, continuance or nonperformance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to
be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.


For the writ to issue, two requisites must be present, namely, the existence of the right to be protected, and that the
facts against which the injunction is to be directed are violative of said right. It is necessary that one must show an
unquestionable right over the premises.[31]

Thus, the following requisites must be proved before a writ of preliminary injunction, be it mandatory or prohibitory,
will issue:
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(1) The applicant must have a clear and unmistakable right to be protected, that is a right in esse;

(2) There is a material and substantial invasion of such right;
(3) There is an urgent need for the writ to prevent irreparable injury to the applicant; and
(4) No other ordinary, speedy, and adequate remedy exists to prevent the infliction of irreparable injury.

In this case, it is apparent that when the RTC issued its December 1, 2005 Order, petitioner has no more legal rights
under the service contract which already expired on September 15, 2003. Therefore, it has not met the first vital
requisite that it must have material and substantial rights that have to be protected by the courts. It bears stressing
that an injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to
protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of
action. There must exist an actual right. Verily, petitioner cannot lay claim to an actual, clear and positive right based
on an expired service contract.



RCA OF SAN FERNANDO PAMPANGA VS SORIANO JR

FACTS:

The RCA of San Fernando, Pampanga, claimed that it is the owner of a vast tract of land located near the Catholic
Church at Poblacion, Macabebe, Pampanga . The RCA alleged that several individuals unlawfully occupied the subject
land and refused to vacate despite repeated demands. Having no other recourse, the RCA filed an ejectment against
the alleged intruders. Meanwhile, during the pendency of the ejectment case at the MCTC, some of the defendants
therein, Filed Civil Case No. 01-1046(M) against theRCA for Quieting of Title and Declaration of Nullity of Title before
the RTC of Macabebe, Pampanga. They claimed that they are in actual possession of the land in the concept of owners
and alleged that OCT No. 17629 in the name of RCA is spurious and fake. Before filing its Answer, the RCA moved to
dismiss the case on grounds of noncompliance with a condition precedent, laches, and for being a collateral attack on
its title. The RCA likewise later filed a supplement to its motion to dismiss. The RTC denied the motion to dismiss. CA
affirmed.

ISSUE:

WON civil case no. 01-1046(m) for quieting of title and declaration of nullity of title is legally dismissible for violation of
the various provisions of the rules of court.

RULING:

The SC denied the petition and stated that well-entrenched in our jurisdiction is the rule that the trial courts denial of
a motion to dismiss cannot be questioned in a certiorari proceeding under Rule 65 of the 1997 Rules of Civil
Procedure, as amended. This is because a certiorari writ is a remedy designed to correct errors of jurisdiction and not
errors of judgment. The appropriate course of action of the movant in such event is to file an answer and interpose as
affirmative defenses the objections raised in the motion to dismiss. If, later, the decision of the trial judge is adverse,
the movant may then elevate on appeal the same issues raised in the motion. The only exception to this rule is when
the trial court gravely abused its discretion in denying the motion. This exception is, nevertheless, applied sparingly,
and only in instances when there is a clear showing that the trial court exercised its judicial power in an arbitrary or
despotic manner by reason of passion or personal hostility. Further, the abuse of the court's discretion must be so
patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined by, or
to act at all in contemplation of, law.
Here, in dismissing the petition for certiorari, the CA did not find grave abuse of discretion on the part of the RTC. The
appellate court was not convinced with the RCAs argument that plaintiffs failed to comply with the condition
precedent provided in Article 477 of the Civil Code because they allegedly did not have legal or equitable title to, or
interest in the real property. The CA explained that the requirement stated in Article 477 is not a condition precedent
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before one can file an action for quieting of title. Rather, it is a requisite for an action to quiet title to prosper and the
existence or nonexistence of the requisite should be determined only after trial on the merits. The CA also agreed
with the trial court in ruling that the RCA cannot raise in a motion to dismiss the ground that the complaint is already
barred by laches for it still remains to be established during trial how long the plaintiffs have slept on their rights, if
such be the case. Evidently, the CA is correct in finding that the denial by the RTC of the RCAs motion to dismiss is not
tainted with grave abuse of discretion.

PEREZ VS MADRONA

FACTS:

Spouses Madrona and Pante are the registered owners of a residential property and enclosed it with a concrete fence
and gate. The respondents then received a letter from petitioner stating that the structure that they built encroached
on the sidewalk and is a violation of PD 1096 and RA 917. The petitioner stated further that the respondents have 7
days to remove such structure. The respondents assailed the order of petitioner and filed a complaint for injunction
before the RTC and sought for the issuance of a TRO and a writ of preliminary injunction to enjoin petitioner from
demolishing the fence and gate of the respondents. RTC ruled in favor of the respondents. CA affirmed. Hence, the
appeal.

ISSUE:

WON the issuance of injunction was proper.

RULING:

The SC affirmed CAs decision. The SC stated that For injunction to issue, two requisites must concur: first, there must
be a right to be protected and second, the acts against which the injunction is to be directed are violative of said right.
Here, the two requisites are clearly present: there is a right to be protected, that is, respondents right over their
concrete fence which cannot be removed without due process; and the act, the summary demolition of the concrete
fence, against which the injunction is directed, would violate said right.
If petitioner indeed found respondents fence to have encroached on the sidewalk, his remedy is not to demolish the
same summarily after respondents failed to heed his request to remove it. Instead, he should go to court and prove
respondents supposed violations in the construction of the concrete fence. Indeed, unless a thing is a nuisance per se,
it may not be abated summarily without judicial intervention. Our ruling in Lucena Grand Central Terminal, Inc. v. JAC
Liner, Inc., on the need for judicial intervention when the nuisance is not a nuisance per se, is well worth mentioning.
In said case, we ruled:
Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without
judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and
property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123
[1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be
injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so
proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without
judicial intervention.
Respondents fence is not a nuisance per se. By its nature, it is not injurious to the health or comfort of the
community. It was built primarily to secure the property of respondents and prevent intruders from entering it. And as
correctly pointed out by respondents, the sidewalk still exists. If petitioner believes that respondents fence indeed
encroaches on the sidewalk, it may be so proven in a hearing conducted for that purpose. Not being a nuisance per se,
but at most a nuisance per accidens, its summary abatement without judicial intervention is unwarranted.

TML GASKET INDUSTRIES VS BPI

FACTS:

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Petitioner obtained a loan from respondent and as a security for the loan, petitioner executed a real estate mortgage
over several commercial and industrial lots owned by it. For additional security, respondent required TML to execute a
promissory note for each availment from the credit facility. TML defaulted in the payment of its loan leading BPI to
extrajudicially foreclose the mortgaged properties. Consequently, TML filed for the issuance of a preliminary
injunction against respondent. RTC ruled in favor of petitioner. CA reversed. Thus, the appeal.

ISSUE:

WON petitioner is entitled to the issuance of preliminary injuction.

RULING:

The SC ruled in favor of respondent. The SC stated that Section 3, Rule 58 of the Rules of Court lists the grounds for
the issuance of a writ of preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person doing, threatening, or is attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
As such, a writ of preliminary injunction may be issued only upon clear showing of an actual existing right to be
protected during the pendency of the principal action. The requisites of a valid injunction are the existence of a right
and its actual or threatened violations. Thus, to be entitled to an injunctive writ, the right to be protected and the
violation against that right must be shown.
Under the factual setting of this case, TML has no right to be protected from the impending foreclosure of its
properties. Certainly, the said foreclosure is authorized under the real estate mortgage and the promissory notes
voluntarily executed by TML in favor of BPI. Needless to say, BPIs exercise of its right to foreclose the subject
properties does not, in any way, constitute a violation of TMLs property rights. On the contrary, the foreclosure of the
mortgage is to enforce the contractual obligation of BPI.

CHINA BANKING VS SPS CIRIACO
FACTS:

Respondent spouses obtained loan from petitioner secured by a real estate mortgage over their land. When the
respondents defaulted in the payment of their loan, the petitioner extrajudicially foreclosed the mortgaged property
and sold it at public auction where the petitioner emerged as the highest bidder. A day before the expiration of the
redemption period, the respondents filed a complaint with the Regional Trial Court Injunction to enjoin the
consolidation of title in the petitioners favor, assailing the redemption price of the foreclosed property. The RTC
dismissed the complaint for being moot due to the consolidation of title in the petitioners favor without prejudice to
the filing of an appropriate action. The respondents filed an amended complaint alleging fraud on the part of
petitioner. RTC then ruled in favor of respondents. CA affirmed. Thus, the appeal.

ISSUE:
WON the CA erred in finding that the RTC did not commit any grave abuse of discretion in granting the respondents
application for the issuance of a writ of preliminary injunction and/or TRO.

RULING:
The SC reversed CAs ruling. The SC stated that Sections 3 and 5, Rule 58 of the 1997 Rules of Civil Procedure on
preliminary injunction, pertinent to this case, provide the requirements for the issuance of a writ of preliminary
injunction or a TRO:
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SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to
be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
SEC. 5. Preliminary injunction not granted without notice; exception. - No preliminary injunction shall be granted
without hearing and prior notice to the party or persons sought to be enjoined. If it shall appear from facts shown by
affidavits or by the verified application that great or irreparable injury would result to the applicant before the matter
can be heard on notice, the court to which the application for preliminary injunction was made, may issue ex parte a
temporary restraining order to be effective only for a period of twenty (20) days from service on the party or person
sought to be enjoined, except as herein provided. Within the twenty-day period, the court must order said party or
person to show cause at a specified time and place, why the injunction should not be granted. The court shall also
determine, within the same period, whether or not the preliminary injunction shall be granted, and accordingly issue
the corresponding order.
Going now to the application for a writ of preliminary injunction and/or temporary restraining order, the plaintiffs aver
that a writ should issue forbidding the defendant bank from taking possession of the subject property and disposing of
the same beyond recovery by them tending to make any favorable judgment in their favor ineffective.
The Complaint alleges that had defendant bank not committed fraud, plaintiffs could have redeemed the property
subject matter hereof. Furthermore, considering that the redemption price of the property foreclosed appears to have
been bloated, thereby making it difficult for plaintiffs to redeem their property, to deny the application would in effect
be condoning the act of the defendant bank in imposing interests and penalty charges which plaintiffs claim as not
having been agreed upon by them.
In view of the foregoing, plaintiffs are entitled to prove their claim of fraud and their claim that the interests and
penalty charges imposed by the bank have no factual basis.

EL BANCO ESPANOL VS PALANCA

FACTS:

Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in Manila to El Banco Espanol-
Filipino. Afterwards, Engracio returned to China and there he died on January 29, 1810 without returning again to the
Philippines. The mortgagor then instituted foreclosure proceeding but since defendant is a non-resident, it was
necessary to give notice by publication. The Clerk of Court was also directed to send copy of the summons to the
defendants last known address, which is in Amoy, China. It is not shown whether the Clerk complied with this
requirement. Nevertheless, after publication in a newspaper of the City of Manila, the cause proceeded and judgment
by default was rendered. The decision was likewise published and afterwards sale by public auction was held with the
bank as the highest bidder. On August 7, 1908, this sale was confirmed by the court. However, about seven years after
the confirmation of this sale, a motion was made by Vicente Palanca, as administrator of the estate of the original
defendant, wherein the applicant requested the court to set aside the order of default and the judgment, and to
vacate all the proceedings subsequent thereto. The basis of this application was that the order of default and the
judgment rendered thereon were void because the court had never acquired jurisdiction over the defendant or over
the subject of the action.

ISSUE:

WON the lower court acquired jurisdiction over the defendant and the subject matter of the action.

WON due process of law was observed.

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RULING:

The SC stated that jurisdiction over the person is acquired by the voluntary appearance of a party in court and his
submission to its authority, or it is acquired by the coercive power of legal process exerted over the person.

Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property
under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of
legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and
made effective. In the latter case the property, though at all times within the potential power of the court, may never
be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment
proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress,
and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is
found in the proceeding to register the title of land under our system for the registration of land. Here the court,
without taking actual physical control over the property assumes, at the instance of some person claiming to be
owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against
all the world.

In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by
which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is
substantially such. The expression "action in rem" is, in its narrow application, used only with reference to certain
proceedings in courts of admiralty wherein the property alone is treated as responsible for the claim or obligation
upon which the proceedings are based. The action quasi rem differs from the true action in rem in the circumstance
that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest
therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a
general way thus designated. The judgment entered in these proceedings is conclusive only between the parties.


It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action
becomes as to him a personal action and is conducted as such. This, however, does not affect the proposition that
where the defendant fails to appear the action is quasi in rem; and it should therefore be considered with reference to
the principles governing actions in rem.



DAVAO LIGHT & POWER CO., INC. vs. CA

FACTS:

Davao Light & Power Co., Inc. filed a verified complaint for recovery of a sum of money and damages together with an
ex parte application for a writ of preliminary attachment against Queensland Hotel, etc. and Teodorico Adarna. The ex
parte application was granted. The writ of attachment was issued after the attachment bond has been submitted by
Davao Light. 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. Pursuant to the writ, the sheriff seized properties
belonging to the latter. Defendants Queensland and Adarna alleged 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
RTC had not yet acquired jurisdiction over the cause and over the persons of the defendants. Thus, they filed their
motion to discharge the attachment. However, such motion was denied by the RTC. On special civil action of certiorari
before the CA, the RTC order was annulled by the CA in its Decision of May 4, 1990. Hence, this petition.

ISSUE:

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WON 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.

RULING:

The SC stated that it goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant issuance of summons, order of attachment and writ of attachment and/or
appointments of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper litigant, or
amendment of the complaint by the plaintiff as a matter of right without leave of court and however valid and
proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction
over his person is eventually obtained by the court, either by service on him of summons or other coercive process or
his voluntary submission to the court's authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the
applicant's affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule
57, but also the summons addressed to said defendant as well as a copy of the complaint and order for appointment
of guardian ad litem, if any, as also explicitly directed by Section 3, Rule 14 of the Rules of Court. Service of all such
documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon
considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of
preliminary attachment and the grounds therefore and thus accord him the opportunity to prevent attachment of his
property by the posting of a counter bond in an amount equal to the plaintiff's claim in the complaint pursuant to
Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set
forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section 13,
Rule 57.

PHILIPPINE COMMERCIAL INTERNATIONAL BANK VS ALEJANDRO

FACTS:

PCIB filed a complaint for sum of money with prayer for the issuance of a writ of preliminary attachment. Petitioner
alleged that Alejandro is a resident of Hong Kong and he executed in favor of petitioner a promissory note obligating
himself to pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign exchange rates which resulted
in the insufficiency of the deposits assigned by respondent as security for the loan, petitioner requested the latter to
put up additional security for the loan. Furthermore, petitioner alleged that (1) respondent fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice President Corazon B. Nepomuceno not
to withdraw the same prior to their assignment as security for the loan; and (2) that respondent is not a resident of
the Philippines. The trial court granted the application and issued the writ ex parte. Subsequently, respondent filed a
motion to quash he writ contending that the withdrawal of his unassigned deposits was not fraudulent as it was
approved by petitioner. He also alleged that petitioner knew that he maintains a permanent residence and an office
address here in the Philippines. In both addresses, petitioner regularly communicated with him through its
representatives. The trial court issued an order quashing the writ. With the denial of petitioners motion for
reconsideration, it elevated the case to the CA via a petition for certiorari. The CA dismissed the case. Hence, this
petition.

Issue:

WON the issuance of the writ of attachment was proper.

RULING:

The SC stated that 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 courts 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,
Page 11 of 16

instead of attaching the property of the defendant. The rules on the application of a writ of attachment must be
strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to humiliation and annoyance. It is clear from the foregoing that even on
the allegation that respondent is a resident temporarily out of the Philippines, petitioner is still not entitled to a writ of
attachment because the trial court could acquire jurisdiction over the case by substituted service instead of attaching
the property of the defendant.


BAC MANUFACTURING AND SALES CORPORATION vs CA

FACTS:

Petitioner, as assignee of certain rights of one BOFTEX Limited under various contracts for ladies shorts, denim pants
and men's trousers which the latter entered into with the private respondent, filed a complaint against the latter with
the RTC of Makati. Embodied in the complaint is an application for the issuance of a writ of preliminary attachment.
Supporting it is an affidavit of its general manager which is attached to the complaint. A writ of preliminary
attachment was issue. No summons and a copy of the complaint were, however, served upon private respondent. A
levy on attachment was made upon the machineries of private respondent by Deputy Sheriff Ruben S. Nequinto.
Private respondent filed a motion to dismiss the complaint and to dissolve the attachment for failure of petitioner to
prosecute its case for an unreasonable length of time and that no copies of the summons and order of attachment
were served upon it. Petitioner then filed its opposition thereto alleging therein that it could not, inspite of its diligent
efforts, locate private respondent's principal office address.

ISSUE:

WON the attachment was proper.

RULING:

No. The SC stated that attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the
attaching party to realize upon relief sought and expected to be granted in the main or principal action. A court which
has not acquired jurisdiction over the person of the defendant, cannot bind that defendant whether in the main case
or in any ancillary proceeding such as attachment proceedings. The service of a petition for preliminary attachment
without the prior or simultaneous service of summons and a copy of the complaint in the main case - and that is what
happened in this case - does not of course confer jurisdiction upon the issuing court over the person of the defendant.

Ordinarily, the prayer in a petition for a writ of preliminary attachment is embodied or incorporated in the main
complaint itself as one of the forms of relief sought in such complaint. Thus, valid service of summons and a copy of
the complaint will in such case vest jurisdiction in the court over the defendant both for purposes of the main case and
for purposes of the ancillary remedy of attachment. In such case, notice of the main case is at the same time notice of
the auxiliary proceeding in attachment. Where, however, the petition for a writ of preliminary attachment is
embodied in a discrete pleading, such petition must be served either simultaneously with service of summons and a
copy of the main complaint, or after jurisdiction over the defendant has already been acquired by such service of
summons. Notice of the separate attachment petition is not notice of the main action. Put a little differently,
jurisdiction whether ratione personae or ratione materiae in an attachment proceeding is ancillary to jurisdiction
whether ratione personae or ratione materiae in the main action against the defendant. If a court has no jurisdiction
over the subject matter or over the person of the defendant in the principal action, it simply has no jurisdiction to
issue a writ of preliminary attachment against the defendant or his property.

YU vs NGO YET TE

FACTS:

Page 12 of 16

Spouses Yu purchased from Ngo Yet Te bars of detergent soap worth P594,240.00, and issued to the latter three
postdated checks as payment of the purchase price. When Te presented the checks at maturity for encashment, said
checks were returned dishonored and stamped "ACCOUNT CLOSED". Te demanded payment from Spouses Yu but the
latter did not heed her demands. Acting through her son and attorney-in-fact, Charry Sy (Sy), Te filed with the RTC a
Collection of Sum of Money and Damages with Prayer for Preliminary Attachment. Upon posting of an attachment
bond, the RTC issued an Order of Attachment/Levy on the basis of which, Sheriff Constancio of RTC, levied and
attached Spouses Yus properties in Cebu City consisting of one parcel of land (known as Lot No. 11) and four units of
motor vehicle, specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus. Spouses Yu, on the
other hand, filed an Urgent Motion to Dissolve Writ of Preliminary Attachment. RTC discharged from attachment the
Toyota Ford Fierra, jeep, and Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and
the passenger bus. Spouses Yu filed a Motion for Reconsideration which the RTC denied. Hence, hey filed with the CA
a Petition for Certiorari, in which a decision was rendered lifting the RTC Order of Attachment on their remaining
properties and ordering payment of damages.

ISSUE:

WON the payment for damages is proper.

RULING:

Yes. The SC stated that spouses Yu contend that they are entitled to their counterclaim for damages as a matter of
right in view of the finality REsolution which affirmed the finding of the CA that respondent Te had wrongfully caused
the attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Inc., they argue that they should be
awarded damages based solely on the CA finding that the attachment was illegal for it already suggests that Te acted
with malice when she applied for attachment. And even if we were to assume that Te did not act with malice, still she
should be held liable for the aggravation she inflicted when she applied for attachment even when she was clearly not
entitled to it. That is a rather limited understanding of Javellana. The counterclaim disputed therein was not for moral
damages and therefore, there was no need to prove malice. As early as in Lazatin v. Twao, we 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.
In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful did not relieve
Spouses Yu of the burden of proving the factual basis of their counterclaim for damages.


CHING VS CA
FACTS:

PBMCI obtained a loan of P9,000,000.00 from the Allied Banking Corporation through its Executive Vice-President
Alfredo Ching by executed a promissory note for the said amount promising to pay on December 22, 1978 at an
interest rate of 14% per annum. As added security for the said loan, on September 28, 1978, Alfredo Ching, together
with Emilio Taedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding themselves to jointly
and severally guarantee the payment of all the PBMCI obligations owing the ABC to the extent of P38,000,000.00. The
loan was subsequently renewed on various dates, the last renewal having been made on December 4, 1980. The
PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filedwith RTC of Manila a
complaint for sum of money with prayer for a writ of preliminary attachment against the PBMCI to collect the
P12,612,972.88 exclusive of interests, penalties and other bank charges. In its application for a writ of preliminary
attachment, the ABC averred that the "defendants are guilty of fraud in incurring the obligations upon which the
present action is brought11 in that they falsely represented themselves to be in a financial position to pay their
obligation upon maturity thereof. The court ruled in favor of ABC. After posting a bond, a writ of preliminary
attachment was issued against the Alfredo Ching requiring the sheriff of this Court to attach all the properties of said
Page 13 of 16

Alfredo Ching not exceeding P12,612,972.82 in value. On the other hand, Encarnacion T. Ching, wife of Alfredo, filed a
Motion to Set Aside the levy on attachment. She alleged inter alia that the 100,000 shares of stocks levied on by the
sheriff were acquired by her and her husband during their marriage out of conjugal funds after the Citycorp
Investment Philippines was established in 1974. Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the account of PBMCI did not
redound to the benefit of the conjugal partnership. She, likewise, alleged that being the wife of Alfredo Ching, she was
a third-party claimant entitled to file a motion for the release of the properties.

ISSUE:

WON the conjugal property is liable for attachment.


RULING:

No. The SC stated that Article 161(1) of the New Civil Code provides that the conjugal partnership shall be liable for all
debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by
the wife, also for the same purpose, in the cases where she may legally bind the partnership. In this case, the private
respondent failed to prove that the conjugal partnership of the petitioners was benefited by the petitioner-husbands
act of executing a continuing guaranty and suretyship agreement with the private respondent for and in behalf of
PBMCI. The contract of loan was between the private respondent and the PBMCI, solely for the benefit of the latter.
No presumption can be inferred from the fact that when the petitioner-husband entered into an accommodation
agreement or a contract of surety, the conjugal partnership would thereby be benefited. The private respondent was
burdened to establish that such benefit redounded to the conjugal partnership.


FORT BONIFACIO DEVELOPMENT CORPORATION vs YLLAS LENDING CORPORATION

FACTS:

FBDC executed a lease contract in favor of Tirreno, Inc. Section 22 of which states that 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. Subsequently, Tirreno default in its lease payments and so
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 Tirrenos outstanding obligations. Tirreno filed
an action for forcible entry against FBDC before the MTC of Taguig. Tirreno also filed a complaint for specific
performance with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction
against FBDC before the RTC of Pasig City. The RTC of Pasig City dismissed Tirreno's complaint for forum-shopping.

Yllas Lending Corporation caused the sheriff of the trial court to serve an alias writ of seizure against FBDC. On the
same day, FBDC served on the sheriff an affidavit of title and third party claim. FBDC found out later on that the
respondents filed a complaint for Foreclosure of Chattel Mortgage with Replevin against Tirreno. Despite FBDC's
service upon the sheriff of an affidavit of title and third party claim, the he still proceeded with the seizure of certain
items from FBDC's premises. FBCD also filed a Complaint-in-Intervention which was also dismissed on the ground that
FBCD should have filed a separate action.

ISSUE:

WON a Complaint-in-Intervention is proper.

RULING:

Page 14 of 16

Yes. Under Section 1, Rule 19 of the 1997 Rules of Civil Procedure, 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. The ruling in Bayer Phils. v. Agana is not applicable in this case
since the third party in Bayer 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 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. A third party claimant under Section 14 of Rule 57 of the 1997 Rules of Civil Procedure, on
the other hand, may vindicate his claim to the property by intervention because he has a legal interest in the matter in
litigation.

CHINA BANKING CORPORATION vs ASIAN CONSTRUCTION and
DEVELOPMENT CORPORATION

FACTS:

ACDC was granted a credit line by China Bank. However, ACDC failed to comply with its obligation. China Bank file a
complaint for recovery of sum of money and damages with prayer for the issuance of writ of preliminary attachment
before the RTC alleging that ACDC misappropriated, converted, and used the funds for its own purpose and benefit.
RTC issued an Order granting China Banks prayer for writ of preliminary attachment and the personal properties of
ACDC was levied. ACDC filed its Notice of Appeal and 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. ACDC opposed on the grounds
that there can be no sale of the latters attached properties in the absence of a final and executory judgment against
them. 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. CA denied the authority to sell the attached property on the ground that
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: (1) the records reveal that the attached properties
subject of the motion are not perishable in nature; and (2) 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. Hence, China Bank filed a Petition
for Review on Certiorari.

ISSUE:

WON Petition for Review on Certiorari is proper.

RULING:

No. Considering that the herein assailed CA Resolutions are interlocutory in nature as they do not dispose of the case
completely but leave something to be done upon the merits, the proper remedy should have been by way of petition
for certiorari under Rule 65 which provides that an appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.
No appeal may be taken from an interlocutory order. In such a case, the aggrieved party may file an appropriate
special civil action as provided in Rule 65.
The present petition for review on certiorari should have been dismissed outright. However, in many instances, the
Court has treated a petition for review on certiorari under Rule 45 as a petition for certiorari under Rule 65 of the
Rules of Court, such as in cases where the subject of the recourse was one of jurisdiction, or the act complained of was
perpetrated by a court with grave abuse of discretion amounting to lack or excess of jurisdiction. The present petition
Page 15 of 16

does not involve any issue on jurisdiction, neither does it show that the CA committed grave abuse of discretion in
denying the motion to sell the attached property.
\
ALLIED BANKING CORPORATION vs SOUTH PACIFIC SUGAR CORPORATION, MARGARITA CHUA SIA, AGOSTO SIA, LIN
FAR CHUA, GERRY CHUA, SIU DY CHUA, AND ANTONIO CHUA

FACTS:

South Pacific Sugar Corporation issued three promissory notes to Allied Banking Corporation to secure payment of
loans contracted during the same period. Respondents executed continuing guaranty/comprehensive surety
agreements binding themselves solidarily with the corporation. On maturity, South Pacific and its guarantors failed to
honor their respective covenants. Allied Bank filed a complaint for collection of a sum of money with a prayer for the
issuance of a writ of preliminary attachment against respondents. The trial court granted the attachment and Allied
Bank posted the requisite bond. The respondents filed a motion to discharge the attachment with an urgent motion to
defer further the implementation of the writ. The trial court granted the respondents motion to defer the
implementation of the writ of attachment. Allied Bank opposed the motion. After hearing, the court granted the
motion to discharge and denied the motion for reconsideration.
On certiorari, Allied Bank averred that the trial court acted with precipitate haste in deciding the motion to discharge
the attachment without its written opposition, and with grave abuse of discretion in dissolving the writ without
requiring the guarantors to post a counter-bond. Finally, it asserted that the trial court failed to appreciate evidence of
respondents fraud. The Court of Appeals, however, affirmed the trial courts order. Hence, this petition.

ISSUE:

WON there was a grave abuse of discretion.

RULING:

No. The SC stated that Allied Bank was not denied its day in court since it was allowed to argue its position during the
hearing on the motion and was given ample opportunity to file its opposition. However, Allied Bank failed to take
advantage of the period given to it. Instead of filing its opposition within the time allowed by the Court, Allied Bank
filed a motion for extension of time by registered mail. Then, it filed its opposition also only by registered mail
notwithstanding that it was forewarned that the motion to discharge the attachment would be considered submitted
for resolution with or without the parties respective position papers.
On the issue of fraud, the inability to pay ones creditors is not necessarily synonymous with fraudulent intent not to
honor an obligation. There must be factual allegations as to how fraud was committed. Fraud may be gleaned from a
preconceived plan or intention not to pay. Unfortunately, this does not appear to be so in the case at bench.
An application for a writ of attachment, being a harsh remedy, is to be construed strictly in favor of the defendant. For
by it, the reputation of the debtor may be seriously prejudiced. Thus, caution must be exercised in granting the writ.
There must be more compelling reasons to justify attachment beyond a mere general assertion of fraud. Hence, the
trial court did not act with grave abuse of discretion.



TECNOGAS PHILIPPINES MANUFACTURING CORPORATION vs PHILIPPINE NATIONAL BANK

FACTS:

Tecnogas obtained from PNB an Omnibus Line of P35 million and a 5-year Term Loan of P14 million. To secure the
loan, the former executed a Real Estate Mortgage (REM) over its parcel of land in Paraaque City. The REM authorized
PNB to extrajudicially foreclose the mortgage in case Tecnogas defaults on its obligations. Finally, when the loan
matured, PNB sent collection letters to Tecnogas, but the latter only proposed to pay its obligations by way of dacion
en pago. Then, PNB filed a petition for extrajudicial foreclosure of the REM. A day before the auction sale, Tecnogas
filed with RTC a complaint for annulment of extrajudicial foreclosure sale, with application for the issuance of a TRO
Page 16 of 16

and writ of preliminary injunction. The RTC granted Tecnogas application and issued a writ of preliminary injunction
enjoining the extrajudicial foreclosure sale of the mortgaged property. PNB sought reconsideration with a motion to
dissolve the writ. But its motions were denied. Hence, PNB filed a petition for certiorari with the Court of Appeals,
seeking the annulment of the Orders of the RTC. The Court of Appeals issued the assailed decision and ruled that the
trial court committed grave abuse of discretion in enjoining the extrajudicial foreclosure sale. It held that Tecnogas
proposal to pay through dacion en pago did not constitute payment as it was not accepted by PNB. Thus, injunction
was not proper as the extrajudicial foreclosure of the REM was a necessary consequence of Tecnogas default in its
loan obligations. Tecnogas sought reconsideration, but it was denied. Hence, this petition.

ISSUE:

WON there was a grave abuse of discretion.

RULING:

Yes. A writ of preliminary injunction may be issued only upon clear showing by the applicant of the existence of the
following: (1) a right in esse or a clear and unmistakable right to be protected; (2) a violation of that right; and (3) an
urgent and paramount necessity for the writ to prevent serious damage. In the absence of a clear legal right, the
issuance of the injunctive writ constitutes grave abuse of discretion.
The Court of Appeals did not err in ruling that Tecnogas has no clear legal right to an injunctive relief because its
proposal to pay by way of dacion en pago did not extinguish its obligation since it was not accepted by PNB. Thus, the
unaccepted proposal neither novates the parties mortgage contract nor suspends its execution as there was no
meeting of the minds between the parties on whether the loan will be extinguished by way of dacion en pago.
Necessarily, upon Tecnogas default in its obligations, the foreclosure of the REM becomes a matter of right on the
part of PNB, for such is the purpose of requiring security for the loans.