Assignment No.

1
Case Digests in SCARP AND SPECPRO
Submitted by Christopher G. Halnin
To Atty. Christian Kit Villasis

1. Silangang Textile (STMC) vs. Hon. Demetria and Luzon Spinning (LSMI)
G.R. No. 166719
March 12, 2007
FACTS:
Sometime in the year 1998, petitioner, SMTC, represented by Anita, Jimmy and Benito in
their capacity as stockholders and officers of petitioner, entered a contract of agreement with
the private respondent, LSMI, for the delivery of 111,161.60 kilograms of yarn, valued in the
total amount of P9,999,845.00 from November 1998 to June 1999. Petitioner received the
yarn as evidenced by a delivery receipt. In payment, petitioner issued 34 postdated checks
covering said amount. When presented for payment, the checks were dishonored for
"Insufficient Fund". LSMI demanded from STMC the immediate payment of the
obligation. STMC failed and refused to heed the demand of LSMI, hence, the latter filed the
Complaint before the RTC for collection of sum of money with prayer for a writ of
preliminary attachment against STMCs properties which was granted. Apparently, LSMI had
already previously instituted before the Municipal Trial Court (MTC) of Lipa City, Branch 1,
criminal cases against the Silangans for violation of Batas Pambansa Blg. 22. Thus, STMC
was prompted to file a Motion, praying to dismiss the civil complaint before the RTC to
discharge the writ of preliminary attachment issued by the trial court.
ISSUE:
Whether or not the writ of preliminary attachment can be a separate action in an action for
BP 22?
HELD:
The Court held in the negative. The Court said 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.

In the case at bar, the Court applied and interpreted Supreme Court Circular No. 57-97
effective 16 September 1997, which reads: (1.) The criminal action for violation of Batas
PambansaBlg. 22 shall be deemed to necessarily include the corresponding civil action, and
no reservation to file such action separately shall be allowed or recognized. From this
Supreme Court Circular was adopted Rule 111(b) of the 2000 Revised Rules of Criminal
Procedure which reads: (b) The criminal action for violation of Batas PambansaBlg. 22 shall
be deemed to include the corresponding civil action. No reservation to file such civil action
separately shall be allowed.

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.

Based on the facts and discussions, the SC finds the dismissal of the civil case to be in order,
the writ of preliminary attachment issued by the trial court in the said case must be lifted.

2. Bangko Sentral ng Pilipinas vs. Exec. Judge Lanzanas

A.M. No. RTJ-06-1999 (formerly OCA IPI No. 03-1903-RTJ)
December 8, 2010

FACTS:
Complainant, BSP, alleged that, on January 19, 2000, Judge Rosmari D. Carandang of the
RTC, Branch 12, Manila, issued a Writ of Attachment against the assets and properties of
Orient Commercial Banking Corporation, Jose C. Go, Vicente C. Go, Gotesco Properties,
Inc. and Go Tong Electrical Supply, Inc. The writ was served, among others, on the various
malls owned by the defendants, resulting in the garnishment of the rentals of the tenants.

Hence, payments by mall tenants were deposited to Land Bank of the Philippines by order of
the court in the account of the RTC, Manila.

Defendant Jose C. Go and his wife Elvy T. Go are also the defendants in Civil Case filed by
PBCOM, which was pending before the RTC, Branch 42, Manila.

On May 23, 2003, when the BSPs counsel, Fe B. Macalino, inquired into the status of their
Civil Case, she was allegedly informed by the personnel of the RTC, Branch 12, Manila, that
portions of the subject funds (P85,631,690.38) had been withdrawn and released to PBCOM
on the basis of a Notice to Deliver Garnished Amount, dated May 12, 2003, served by
Cachero, based on the writ of execution issued by Judge Guillermo G. Purganan of the RTC,
Branch 42, Manila, in Civil Case No. 01-101190, Philippine Bank of Communications v.
Spouses Jose C. Go and Elvy T. Go.
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. It stressed that the RTC, Manila, Branch 42, no longer had jurisdiction over
the case involving PBCOM and the Spouses Go because the case records were transmitted to
the Court of Appeals on March 7, 2003.
ISSUE:
Whether or not the property that is subject of attachment in custodia legis in another court
may be ordered by another court for garnishment?
HELD:
The Court held in the negative. 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, 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 in custodia legis."

3. Mun. of Hagonoy, Bulacan vs. Hon. Dumdum Jr.

G.R. No. 168289
March 22, 2010
FACTS:
Case stems from a complaint filed by private Emily Rose Go Ko Lim Chao against
petitioners, the Mun. of Hagonoy, Bulacan and its Mayor Felix V. Ople for collection of sum
of money and damages.
Respondent Lim Chao is engaged in buying and selling surplus trucks, heavy equipment,
machinery, spare parts and related supplies. She entered into an agreement with petitioner
Mun. of Hagonoy through its Mayor Ople for the delivery of motor vehicles needed to carry
out developmental undertakings in the Mun. Because of Oples earnest representation that
funds had already been allocated for the project, Lim Chao agreed to deliver twenty-one
motor vehicles whose value totaled P5,820,000.00. Lim Chao attached to the complaint
copies of the bills of lading showing that the items were consigned, delivered to and received
by the Mun.
Despite the deliveries, Ople failed to make the necessary payment. Thus respondent prayed
for the payment of the full amount with interest, plus damages, and costs of the suit.
RTC granted respondents Lim Chao prayer for a writ of preliminary attachment upon
posting a bond equivalent to the amount of the claim. The Writ of Preliminary Attachment
was issued directing the sheriff to attach the estate, real and personal properties of the
Municipality.
Mun. filed motion to dismiss on the ground that claim on which 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 aggreement wih the respondent. Mun. also stated that no
contact was ever entered into by the Mun. due to non compliance of public bidding. Motion
were denied by the RTC. Appeal was filed in CA alleging that RTC made an error for
dismissing the complaint despite that the alleged contract with respondent Lim Chao is
unenforceable under the Statute Of Frauds and disregarding the rule that the Mun. is immune
from suit. CA denied the appeal and affirm RTCs order.
ISSUE:
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Whether or not the property of the LGUs can be subjected to a writ of preliminary
attachment?
HELD:
The Court held in the negative. The universal rule 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.
With this in mind, the Court holds 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.
SC holds that the writ of preliminary attachment must be dissolved and, indeed, it must not
have been issued in the very first place.

4. Pablo Pua vs. Lourdes Deyto

G.R. No. 173336
November 26, 2012

FACTS:
Pua is engaged in the business of wholesale rice trading. Among his clients was respondent
Jennelita Ang, allegedly operating under the business and trade name of JD Grains Center. In
October 2000, Pua delivered to Ang truckloads of rice worth P766,800.00. Ang paid Pua
through two (2) postdated checks dated November 4, 2000 and November 6, 2000. When the
checks fell due, Pua tried to encash them, but they were dishonored because they were drawn
from a closed account. Pua immediately went to Angs residence to complain. Unfortunately,
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he was only able to talk to Angs mother and co-respondent, Lourdes Deyto, who told him
that Ang had been missing. Unable to locate Ang, Pua demanded payment from Deyto, but
she refused to pay.
On November 24, 2000, Pua filed a complaint5 with the RTC for collection of sum of
money with preliminary attachment against Ang and Deyto, as co-owners of JD Grains
Center. The complaint alleged that the respondents were guilty of fraud in contracting the
obligation, as they
persuaded Pua to conduct business with them and presented documents regarding their
financial capacity to fund the postdated checks.
On November 28, 2000, the RTC issued an order for the issuance of a writ of preliminary
attachment upon an attachment bond of P766,800.00. Since Ang could not be found and had
no available properties to satisfy the lien, the properties of Deyto were levied upon.
Summons was duly served on Deyto, but not on Ang who had absconded.
Since service of summons could not be effected on Ang, Pua moved for leave of court to
serve summons by publication on Ang on January 8, 2002. The RTC granted the motion in an
order dated January 11, 2002.
ISSUE:
Whether or not summons by publication grants jurisdiction by the court to the person for the
proper issuance of writ attachment?
HELD:
The Court held in the affirmative. In Santos, Jr. v. PNOC Exploration Corporation, the Court
authorized resort to service of summons by publication even in actions in personam,
considering that the provision itself allow this mode in any action, i.e., whether the action is
in personam, in rem, or quasi in rem. The ruling, notwithstanding, there must be prior resort
to service in person on the defendant21 and substituted service, and proof that service by
these modes were ineffective before service by publication may be allowed for defendants
whose whereabouts are unknown, considering that Section 14, Rule 14 of the Rules of Court
requires a diligent inquiry of the defendants
whereabouts.

Until the summons has been served on Ang, the case cannot proceed since Ang is an
indispensable party to the case; Pua alleged in his complaint that the respondents are coowners of JD Grains Center.25 An indispensable party is one who must be included in an
action before it may properly go forward. A court must acquire jurisdiction over the person of
indispensable
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parties before it can validly pronounce judgments personal to the parties. The absence of an
indispensable party renders all subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even as to those present.

5. Thunder Security vs. National Food Authority

G.R. No. 182042
July 27, 2011

FACTS:
Sometime in September 2002, petitioner, owned and operated by petitioner Lourdes M.
Lasala as sole proprietor, entered into a Contract for Security Services with respondent
National Food Authority (NFA), Region I. The contract provided that Thunder Security will
provide 132 security guards to safeguard the NFAs personnel, offices, facilities and
properties in Region I for a period of one year from September 15, 2002 to September 15,
2003.

Subsequently, Republic Act (R.A.) No. 9184 was enacted on January 10, 2003, and took
effect on January 26, 2003. Said law expressly repealed, among others, Executive Order
(E.O.) No. 40, Series of 2001 which governed the bidding procedure of service contracts in
the Government.

Since petitioners contract with the NFA was about to expire on September 15, 2003, the
NFA caused the publication of an Invitation to Apply for Eligibility and to Bid on May 11
and 18, 2003, intended for all private security agencies. Petitioner signified its intention to
participate in the bidding process. However, on June 9, 2003, the NFA, through Assistant
Regional Director Victoriano Molina, chairman of respondent NFA-Regional Bids and
Awards Committee (NFA-RBAC), 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 NFARBAC informed petitioner that its application to bid had been rejected due to its failure to
submit the required documents. Aggrieved, petitioner sent a letter of protest to the NFA
contending that until the Implementing Rules and Regulations (IRR) of R.A. No. 9184 can be
promulgated, no bidding should take place. Notwithstanding, respondents rejected
petitioners application. Respondents defended their position, citing an instruction coming
from then NFA Administrator Arthur C. Yap which directed that in the absence of the said
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IRR and due to the exigency of the service, respondents projects would be temporarily
guided by the provisions of E.O. No. 40, among others, provided the same are consistent with
R.A. No. 9184.

Unfazed, petitioner filed before the RTC a Petition for Prohibition and Preliminary
Injunction, with a prayer for the issuance of a Temporary Restraining Order (TRO) plus
Damages, seeking, among others, to enjoin respondents from awarding the contract to
another security agency. On August 8, 2003, the RTC issued a TRO against respondents.
Correlatively, in its Order dated August 27, 2003, the RTC granted the writ of preliminary
injunction in favor of petitioner and directed respondents to desist from terminating
petitioners services until further orders from the RTC.
ISSUE:
Whether or not Petitioner is entitled to injunctive relief?
HELD:
The Court held in the negative. A preliminary injunction is an order granted at any stage of
an action prior to judgment of final order, requiring a party, court, agency, or person to refrain
from a particular act or acts. It is a preservative remedy to ensure the protection of a partys
substantive rights or interests pending the final judgment in the principal action. A plea for an
injunctive writ lies upon the existence of a claimed emergency or extraordinary situation
which should be avoided for otherwise, the outcome of a litigation would be useless as far as
the party applying for the writ is concerned.

At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is
no power the exercise of which is more delicate and which calls for greater circumspection
than the issuance of an injunction. It should only be extended in cases of great injury where
courts of law cannot afford an adequate or commensurate remedy in damages; "in cases of
extreme urgency; where the right is very clear; where considerations of relative
inconvenience bear strongly in complainants favor; where there is a willful and unlawful
invasion of plaintiffs right against his protest and remonstrance, the injury being a
continuing one, and where the effect of the mandatory injunction is rather to reestablish and
maintain a preexisting continuing relation between the parties, recently and arbitrarily
interrupted by the defendant, than to establish a new relation."

For the writ to issue, two requisites must be present, namely, (1) the existence of the right
to be protected, and (2) that the facts against which the injunction is to be directed are
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violative of said right. It is necessary that one must show an unquestionable right over the
premises.
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. 33 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.

6. Roman Catholic Archbishop vs. Eduardo Soriano, Jr., et. al.

G.R. No. 153829
August 17, 2011
FACTS:
The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B. Aniceto, D.D.,
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 case. The defendants countered that the RCA has no
cause of action against them because its title is spurious. They contended that the subject land
belonged to the State, but they have already acquired the same by acquisitive prescription as
they and their predecessors-in-interest have been in continuous possession of the land for
more than thirty (30) years. The MCTC rendered decision on September 28, 2001 in favor of
the RCA remains valid and binding against the whole world until it is declared void by a
court of competent jurisdiction. Thus, defendants were ordered to vacate the premises and to
pay reasonable monthly rentals from August 15, 2000 until they shall have finally vacated the
premises.
Seeking to enjoin the implementation of the writ of execution and the notice to vacate,
Guinto filed the instant Petition for Injunction with Prayer for Issuance of a Temporary
Restraining Order (TRO)
ISSUE:
Whether or not respondents are entitled to an injunctive writ?
HELD:
The Court held in the negative. To be entitled to the injunctive writ, the applicant must show
that there exists a right to be protected which is directly threatened by an act sought to be
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enjoined. Furthermore, there must be a showing that the invasion of the right is material and
substantial and that there is an urgent and paramount necessity for the writ to prevent serious
damage. The applicants right must be clear and unmistakable. In the absence of a clear legal
right, the issuance of the writ constitutes grave abuse of discretion. Where the applicants
right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable
damage without proof of an actual existing right is not a ground for injunction.

A clear and positive right especially calling for judicial protection must be shown. 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. There must be a patent
showing by the applicant that there exists a right to be protected and that the acts against
which the writ is to be directed are violative of said right.

In this case, the defendants in the ejectment case possess no such legal rights that merit the
protection of the courts through the writ of preliminary injunction. The MCTC has already
rendered a decision in favor of the RCA and ordered the defendants therein to vacate the
premises.
7. Jaime S. Perez vs. Sps. Madrona
G.R. No. 184478
March 21, 2012
FACTS:
Respondent-spouses FortunitoMadrona and Yolanda B. Pante are registered owners of a
residential property located in Lot 22, Block 5, France Street corner Italy Street,
Greenheights Subdivision, Phase II, Marikina City and in 1989, respondents built their house
thereon and enclosed it with a concrete fence and steel gate. In 1999, respondents received a
letter dated May 25, 1999 from petitioner Jaime S. Perez, Chief of the Marikina Demolition
Office, stating that the perimeter fence built by respondents are encroaching on the sidewalk
and is a violation of existing laws and demands that said structure be demolished. In answer,
respondent sent a letter stating that the petitioners letter (1) contained an accusation libelous
in nature as it is condemning him and his property without due process; (2) has no basis and
authority since there is no court order authorizing him to demolish their structure; (3) cited
legal bases which do not expressly give petitioner authority to demolish; and (4) contained a
false accusation since their fence did not in fact extend to the sidewalk. After a year the same
letter was sent by the petitioner to respondent hence prompted the respondent to file a
complaint for injunction before the Marikina City RTC. The RTC held that respondents,
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being lawful owners of the subject property, are entitled to the peaceful and open possession
of every inch of their property and petitioners threat to demolish the concrete fence around
their property is tantamount to a violation of their rights as property owners who are entitled
to protection under the Constitution and laws. The RTC also ruled that there is no showing
that respondents fence is a nuisance per se and presents an immediate danger to the
communitys welfare, nor is there basis for petitioners claim that the fence has encroached
on the sidewalk as to justify its summary demolition.

Petitioner contends that the requisites for the issuance of writ of injunction are not present in
the instant case.

ISSUE:
Whether or not respondents are entitled to the issuance of writ of injunction?

HELD:
The Court held in the affirmative. 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.

8. TML Gasket Industries Inc. vs. BPI Family Savings Bank, Inc.
G.R. No. 188768
January 7, 2013
FACTS:
TML obtained a loan from the Bank of Southeast Asia, Inc. (BSA), which TML can avail via
a credit facility of 85,000,000.00. As security for the loan, TML executed a real estate
mortgage over commercial and industrial lots. For additional security, BSA required TML to
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execute a promissory note for each availment from the credit facility. During the period of
the loan, BSA changed its corporate name to DBS Bank Phils. (DBS), which eventually
merged with BPI under the latters corporate name. TML defaulted in the payment of its loan
leading BPI to extrajudicially foreclose the mortgaged properties. TMLs indebtedness to BPI
amounted to 71,877,930.56, excluding penalties, charges, attorneys fees and other expenses
of foreclosure. Because of the imminent foreclosure sale of its mortgaged properties, TML,
on 21 November 2002, filed a Complaint for Declaratory Relief, Accounting, Declaration of
Nullity of Notice of Extra-Judicial Sale, Increased in Interest Rates, Penalty Charges Plus,
Damages, with Prayer for the Issuance of Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction against BPI and DBS before the RTC on the ground that the loan
would be subject to only a 16% interest rate per annum but

BSA unreasonably,

unconscionably and unilaterally imposed a 33% interest rate per annum, and ultimately, a
penalty of 36% interest on past due principal and corresponding interest thereon. TML
likewise pointed out that it had demanded an independent accounting and liquidation of its
loan account, which went unheeded. Ultimately, for TML, it cannot be considered in default
of an obligation with an undetermined and unascertained amount. In that regard, TML argued
that the intended foreclosure of TMLs mortgaged properties is unwarranted for being illegal;
thus, the foreclosure ought to be enjoined to prevent TML from suffering grave and
irreparable damage, especially since TMLs office and factory are located at the mortgaged
properties. Refuting TMLs allegations, BPI maintained that the interest rates on TMLs loan
obligation were mutually and voluntarily agreed upon. On TMLs application for the issuance
of a writ of preliminary injunction, BPI countered that it has the absolute right to foreclose
the mortgage constituted over TMLs properties given that TML defaulted on its loan
obligation, which had already become due and demandable.
The trial court denied TMLs application for the issuance of a preliminary injunction but on
motion for reconsideration, ordered the issuance of the writ in favor of TML, subject to the
posting of a bond in the amount of 300,000.00.
Court of Appeals reversed and set aside the twin Orders of the trial court, thus this petition
for certiorari.
ISSUE:
Whether or not the issuance of a writ of preliminary injunction is proper?
HELD:
The Court held in the negative. The issuance of a preliminary injunction rests entirely within
the discretion of the court taking cognizance of the case and is generally not interfered with
except in cases of manifest abuse. For the issuance of the writ of preliminary injunction to be
proper, it must be shown that the invasion of the right sought to be protected is material and
substantial, that the right of complainant is clear and unmistakable and that there is an urgent
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and paramount necessity for the writ to prevent serious damage. In the absence of a clear
legal right, the issuance of a writ of injunction constitutes grave abuse of discretion. The
possibility of irreparable damage without proof of actual existing right is no ground for an
injunction.

9. China Banking Corporation vs. Sps. Ciriaco

G.R. No. 170038
July 11, 2012
FACTS:
In 1996, Spouses Harry and Esther Ciriaco obtained a loanfrom the petitioner, secured by a
real estate mortgageover their land in La Trinidad, Benguet. When the respondents defaulted
in the payment of their loan, the petitioner extra-judicially foreclosedthe mortgaged property
and sold it at public auction where the petitioner emerged as the highest bidder. The Sheriff
executed a Certificate of Salein the petitioners favor and the Register of Deeds annotated the
Certificate of Sale on the TCT.
A day before the expiration of the redemption period, the respondents filed a complaint with
the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch, for 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 previous consolidation of title in
the petitioners favor, without prejudice to the filing of an appropriate action.
The respondents then filed another complaint with the RTC of La Trinidad, Benguet for
Cancellation of Consolidation of Ownership over a Real Property, Specific Performance, and
Damages. They again questioned the redemption price of the foreclosed property.
The petitioner filed its Answer with Compulsory Counterclaim, denying the allegations of the
respondents complaint.
Respondents filed an Omnibus Motion for Leave to Amend Complaint and to Admit
Attached Amended Complaint as well as Motion for Hearing on the Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order (TRO). They sought to amend
the complaint to allege further that fraud attended the consolidation of title in the petitioners
favor and to include a prayer for the issuance of a writ of preliminary injunction and/or TRO
to enjoin the petitioner from disposing of the foreclosed property or taking possession
thereof.
The petitioner subsequently filed its Opposition to the omnibus motion,arguing that the
respondents further allegation of fraud changes the theory of the case which is not allowed,
and that the respondents failed to show that they have a clear right in esse that should be
protected by an injunctive relief.cr

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The RTC admitted the amended complaint and directed the petitioner to file an answer. It
noted that the 1997 Rules of Civil Procedure relaxed the rule on amendments to pleadings,
subject only to the limitation that they are not dilatory. It also granted the respondents
application for the issuance of a writ of preliminary injunction and/or TRO, since the
respondents were entitled to prove their claim of fraud, and their claim that the interests and
penalty charges imposed by the bank had no factual basis.
The RTC denied the petitioners subsequent motion for reconsideration and issued a writ of
preliminary injunction, restraining the petitioner from disposing of the foreclosed property or
taking possession thereof.
The petitioner then filed a Rule 65 petition for certiorari with the CA, arguing that the RTC
gravely abused its discretion in precipitately granting the respondents application for the
issuance of a writ of preliminary injunction without any hearing.
library
The CA denied the petition for lack of merit. It found that the RTC did not commit any grave
abuse of discretion since it gave the parties ample opportunity to present their respective
positions on the propriety of an injunctive writ during the hearings and that the petitioner was
also heard on its motion for reconsideration.
Petitioner then filed a petition for review on certiorariarguing that the RTC granted the
respondents application for the issuance of a writ of preliminary injunction and/or TRO,
despite the lack of a hearing thereon and that the RTC conducted hearings on the
respondents omnibus motion only, not on the respondents application for the issuance of a
writ of preliminary injunction and/or TRO, which has not yet been set for hearing.cra
ISSUE:
Whether 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?
HELD:
The Court held in the affirmative. The court found merit in the petition. A preliminary
injunction is an order granted at any stage of an action 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 the
strong arm of equity,an extraordinary peremptory remedy that must be used with extreme
caution, affecting as it does the respective rights of the parties.
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) 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 a
(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.
However, subject to the provisions of the preceding sections, if the matter is of extreme
urgency and the applicant will suffer grave injustice and irreparable injury, the executive
judge of a multiple-sala court or the presiding judge of a single-sala court may issue ex parte
a temporary restraining order effective for only seventy-two (72) hours from issuance but
shall immediately comply with the provisions of the next preceding section as to service of
summons and the documents to be served therewith. Thereafter, within the aforesaid seventytwo (72) hours, the judge before whom the case is pending shall conduct a summary hearing
to determine whether the temporary restraining order shall be extended until the application
for preliminary injunction can be heard. In no case shall the total period of effectivity of the
temporary restraining order exceed twenty (20) days, including the original seventy-two
hours provided herein.
From the provisions, it appears clearly that before a writ of preliminary injunction may be
issued, a clear showing must be made that there exists a right to be protected and that the acts
against which the writ is to be directed are violative of an established right. The holding of a

15

hearing, where both parties can introduce evidence and present their side, is also required
before the courts may issue a TRO or an injunctive writ.
Generally, an RTC's decision to grant or to deny injunctive relief will not be set aside on
appeal, unless the trial court abused its discretion. In granting or denying injunctive relief, a
court abuses its discretion when it lacks jurisdiction; fails to consider and make a record of
the factors relevant to its determination; relies on clearly erroneous factual findings;
considers clearly irrelevant or improper factors; clearly gives too much weight to one factor;
relies on erroneous conclusions of law or equity; or misapplies its factual or legal
conclusions.
In this case, the Court found that the RTC abbreviated the proceedings and precipitately
granted the respondents application for injunctive relief. The RTC did not conduct a hearing
for reception of a sampling of the parties respective evidence to give it an idea of the
justification for its issuance pending the decision of the case on the merits. It failed to make
any factual finding to support the issuance of the writ of preliminary injunction since it did
not conduct any hearing on the application for the issuance of the writ of preliminary
injunction or TRO. The RTC conducted the hearings on the respondents omnibus motion
only - whether to admit the amended complaint and whether to hold a hearing on the
respondents application for a writ of preliminary injunction.crIn fact the RTC granted the
respondents application for a writ of preliminary injunction based only on the respondents
unsubstantiated allegations. Clearly, the respondents right to injunctive relief has not been
clearly and unmistakably demonstrated. The respondents have not presented evidence,
testimonial or documentary, other than the bare allegations contained in their pleadings, to
support their claim of fraud that brings about the irreparable injury sought to he avoided by
their application for injunctive relief. Thus, the RTC's grant of the writ of preliminary
injunction in favor of the respondents, despite the lack of any evidence of a clear and
unmistakable right on their part, constitutes grave abuse of discretion amounting to lack of
jurisdiction.
Every court should remember that an injunction is a limitation upon the freedom of the
defendant's action and should not be granted lightly or precipitately. It should be granted
only when the court is fully satisfied that the law permits it and the emergency demands it;no
power exists whose exercise is more delicate, which requires greater caution and
deliberation, or is more dangerous in a doubtful case, than the issuance of an injunction.
10. EL BANCO ESPAOL-FILIPINO vs. VICENTE PALANCA
G.R. No. L-11390
March 26, 1918
FACTS:
A mortagage was executed by original defendant Engracion Palanca Tanguinyen y
16

Limquingcoupon various real property situated in Manila as security for a debt owing by him
to Plaintiff El Banco Espaol-Filipino. Afterwhich, he returned to his native country China,
and died there without returning to the Philippines.
As the Defendant was a non-resident at the time of the institution of the foreclosure of said
mortgage, it was necessary for the Plaintiff therein to give notice to the former by publication
pursuant to Section 399 of the Code of Civil Procedure. An Order for Publication was
accordingly obtained from the court, and publication was made in due form in a newspaper
of the City of Manila. At the same time that the order of the court should deposit in the post
office in a stamped envelope a copy of the Summons and Complaint directed to the
Defendant at his last place of residence, to wit, the City of Amoy, in the Empire of China.
It does not affirmatively appear whether the clerk complied with this order. However,
Bernardo Chan y Garcia, the banks attorney, signed an affidavit showing that he had
deposited

in

the

Manila

post-office

registered

letter,

addressed

to

EngracioPalancaTanquinyeng, at Manila, containing copies of the Complaint, the Plaintiffs

Affidavit, the Summons, and the aforesaid Order for Publication. It appears from the
postmasters receipt that Bernardo probably used an envelope obtained from the clerks
office, as the receipt purports to show that the letter emanated from the office.
The Defendant did not appear. Thus, Judgment by Default was then taken against him before
the trial court and a Decision rendered in favor of Plaintiff. In this Decision, it was recited
that publication had been properly made in a periodical, but nothing was said about
notice having been given by mail. Foreclosure of the subject property proceeded and sale
was confirmed by the court thereafter.
Seven years after the confirmation sale, Vicente Palanca, as administrator of the Defendants
estate, moved that the Order of Default and the above Judgment rendered thereon be declared
void. Said Motion to Vacate Judgment was denied; hence, this Appeal.
Defendant-Appellant Vicente Palanca argues that the Order of Default and the Judgment
rendered thereon were void because the court had never acquired jurisdiction over the person
of the Defendant or over the subject of the action.
ISSUE:
Whether the trial court acquired the necessary jurisdiction over the property to proceed with
the foreclosure proceeding?
HELD:
The Court held in the affirmative. The action to foreclose a mortgage is quasi in rem. The
property itself is the sole thing which is impleaded and which is the subject of the exercise of
judicial power. The jurisdiction of the court is derived from the power which it possesses
over the property. The jurisdiction over the person is non-essential. The Judgment appealed
from is without error, and the same is accordingly affirmed, with costs against Defendant17

Appellant.
Here the property itself is in fact the sole thing which is impleaded and is the responsible
object which is the subject of the exercise of judicial power. It follows that the jurisdiction of
the court in such case is based exclusively on the power which, under the law, it possesses
over the property; and any discussion relative to the jurisdiction of the court over the person
of the defendant is entirely apart from the case. The jurisdiction of the court over the
property, considered as the exclusive object of such action, is evidently based upon the
following conditions and considerations, namely: (1) that the property is located within the
district; (2) that the purpose of the litigation is to subject the property by sale to an obligation
fixed upon it by the mortgage; and (3) that the court at a proper stage of the proceedings
takes the property into custody, if necessary, and expose it to sale for the purpose of
satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in
this proceeding than such as can be enforced against the property.
We may then, from what has been stated, formulate the following proposition relative to the
foreclosure proceeding against the property of a non-resident mortgagor who fails to come in
and submit himself personally to the jurisdiction of the court: (I) that the jurisdiction of the
court is derived from the power which it possesses over the property; (II) that jurisdiction
over the person is not acquired and is non-essential; (III) that the relief granted by the court
must be limited to such as can be enforced against the property itself.
Involved in this decision is the principle that in proceedings in rem or quasi in rem against a
non-resident who is not served personally within the state, and who does not appear, the
relief must be confined to the res, and the court cannot lawfully render a personal judgment
against him (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth
Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.).
Therefore in an action to foreclose a mortgage against a non-resident, upon whom service has
been effected exclusively by publication, no personal judgment for the deficiency can be
entered (Latta vs. Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.).

11. Davao Light vs. Court of Appeals

G.R. No. 93262
December 29, 1991

FACTS:

18

On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a
verified complaint for recovery of a sum of money and damages against Queensland Hotel,
etc. and Teodorico Adarna. The complaint contained an ex parte application for a writ of
preliminary attachment which was subsequently granted and fixed the attachment bond at
P4,600,513.37 on May 3, 1989. On May 11, 1989 the attachment bond having been
submitted by Davao Light, the writ of attachment issued. On May 12, 1989, the summons
and a copy of the complaint, as well as the writ of attachment and a copy of the attachment
bond, were served on defendants Queensland and Adarna; and pursuant to the writ, the
sheriff seized properties belonging to the latter.

On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the
attachment for lack of jurisdiction to issue the same because at the time the order of
attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989),
the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the
defendants.

On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.
On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.

This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in
a special civil action of certiorari instituted by them in the Court of Appeals. The Order was,
as aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990 CA:
While it is true that a prayer for the issuance of a writ of preliminary attachment may be
included in the complaint, as is usually done, it is likewise true that the Court does not
acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily
appears, and adding the phrase that it be issued "ex parte" does not confer said jurisdiction
before actual summons had been made, nor retroact jurisdiction upon summons being made. .
..

It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment,"
the "critical time which must be identified is . . . when the trial court acquires authority under
law to act coercively against the defendant or his property . . .;" and that "the critical time is
the of the vesting of jurisdiction in the court over the person of the defendant in the main
case."
19

Hence, this petition.

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?

HELD:
The Court held in the affirmative. It is incorrect to theorize that after an action or proceeding
has been commenced and jurisdiction over the person of the plaintiff has been vested in the
court, but before the acquisition of jurisdiction over the person of the defendant (either by
service of summons or his voluntary submission to the court's authority), nothing can be
validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done
during this period should be dependent on, or held in suspension until, the actual obtention of
jurisdiction over the defendant's person. The obtention by the court of jurisdiction over the
person of the defendant is one thing; quite another is the acquisition of jurisdiction over the
person of the plaintiff or over the subject-matter or nature of the action, or the res or object
hereof.

An action or proceeding is commenced by the filing of the complaint or other initiatory

pleading. By that act, the jurisdiction of the court over the subject matter or nature of the
action or proceeding is invoked or called into activity; and it is thus that the court acquires
jurisdiction over said subject matter or nature of the action. And it is by that self-same act of
the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by which
he signifies his submission to the court's power and authority that jurisdiction is acquired
by the court over his person. On the other hand, jurisdiction over the person of the defendant
is obtained by the service of summons or other coercive process upon him or by his voluntary
submission to the authority of the court.

A preliminary attachment may be defined 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
20

in respect of which the law requires a strict construction of the provisions granting it. With
that 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;" 18 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.
And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff
or other proper party to incorporate the application for attachment in the complaint or other
appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to
issue the writ ex-parte at the commencement of the action if it finds the application otherwise
sufficient in form and substance.

12. PCI Bank vs. Joseph Anthony M. Alejandro

G.R. No. 175587 (533 SCRA 738)
September 21, 2007
FACTS:
On October 23, 1997, Philippine Commercial International Bank (petitioner) filed against
Joseph Anthony M. Alejandrino (respondent) a complaint for sum of money with prayer for
the issuance of a writ of preliminary attachment. Said complaint alleged that on September
10, 1997, respondent, a resident of Hong Kong, executed in favor of petitioner a promissory
note obligating himself to pay P249,828,588.90 plus interest. In view of the 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. Respondent, however, sought a reconsideration of said request pointing out
petitioners alleged mishandling of his account due to its failure to carry out his instruction to
close his account as early as April 1997, when the prevailing rate of exchange of the US
Dollar

to

Japanese

yen

was

US$1.00:JPY127.50. It

appears

that

the

amount

of P249,828,588.90 was the consolidated amount of a series of yen loans granted by

petitioner to respondent during the months of February and April 1997.

21

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e)
and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently
withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice
President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as
security for the loan; and (2) that respondent is not a resident of the Philippines. The
application for the issuance of a writ was supported with the affidavit of Nepomuceno.
On October 24, 1997, the trial court granted the application and issued the writ ex parte after
petitioner posted a bond in the amount of P18,798,734.69, issued by Prudential Guarantee &
Assurance Inc. 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 contending that the withdrawal of
his unassigned deposits was not fraudulent as it was approved by petitioner.
On December 24, 1997, the trial court issued an order quashing the writ and holding that the
withdrawal of respondents 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 respondents residence
considering that it has personal and official knowledge that for purposes of service of
summons, respondents residence and office addresses are located in the Philippines.
With the denial of petitioners motion for reconsideration, it elevated the case to the Court of
Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the petition
was dismissed for failure to prove that the trial court abused its discretion in issuing the
aforesaid order. Petitioner filed a motion for reconsideration but was denied on October 28,
1999. On petition with this Court, the case was dismissed for late filing in a minute resolution
(G.R. No. 140605) dated January 19, 2000. 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 (posted by Prudential Guarantee & Assurance, Inc.) 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 without specifying the basis
thereof.
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 respondents
Philippine residence and office address goes into the very issue of the trial courts jurisdiction
which would have been defective had respondent not voluntarily appeared before it.
22

Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals denied
petitioners motion for reconsideration but granted that of respondents by ordering petitioner
to pay additional P5Million as exemplary damages.
Hence, the instant petition.
ISSUE:
Whether or not petitioner is liable for damages for the improper issuance of the writ of
attachment against respondent?
HELD:
The Court held in the affirmative. Notwithstanding the final judgment that petitioner is guilty
of misrepresentation and suppression of a material fact, the latter contends that it acted in
good faith. Petitioner also contends that even if respondent is considered a resident of
the Philippines, attachment is still proper under Section 1, paragraph (f), Rule 57 of the Rules
of Court since he (respondent) is a resident who is temporarily out of the Philippines upon
whom service of summons may be effected by publication.
Petitioners contentions are without merit. While the final order of the trial court which
quashed the writ did not categorically use the word bad faith in characterizing the
representations of petitioner, the tenor of said order evidently considers the latter to have
acted in bad faith by resorting to a deliberate strategy to mislead the court.
Finally, there is no merit in petitioners contention that respondent can be considered a
resident who is temporarily out of the Philippines upon whom service of summons may be
effected by publication, and therefore qualifies as among those against whom a writ of
attachment may be issued under Section 1, paragraph (f), Rule 57 of the Rules of Court
which provides: (f) In an action against a party x xx on whom summons may be served by
publication.
In so arguing, petitioner attempts to give the impression that although it erroneously invoked
the ground that respondent does not reside in the Philippines, it should not be made to pay
damages because it is in fact entitled to a writ of attachment had it invoked the proper ground
under Rule 57. However, even on this alternative ground, petitioner is still not entitled to the
issuance of a writ of attachment.
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.
23

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. In case the defendant does not reside and is not
found in the Philippines (and hence personal and substituted service cannot be effected), the
remedy of the plaintiff in order for the court to acquire jurisdiction to try the case is to
convert the action into a proceeding in rem or quasi in rem by attaching the property of the
defendant.
In actions in personam against residents temporarily out of the Philippines, the court need not
always attach the defendants property in order to have authority to try the case. Where the
plaintiff seeks to attach the defendants property and to resort to the concomitant service of
summons by publication, the same must be with prior leave, precisely because, if the sole
purpose of the attachment is for the court to acquire jurisdiction, the latter must determine
whether from the allegations in the complaint, substituted service (to persons of suitable
discretion at the defendants residence or to a competent person in charge of his office or
regular place of business) will suffice, or whether there is a need to attach the property of the
defendant and resort to service of summons by publication in order for the court to acquire
jurisdiction over the case and to comply with the requirements of due process.
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, 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 should be resorted to only when necessary and as a
last remedy.
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. 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.
Contrary to the claim of petitioner, the instant case for damages by reason of the invalid
issuance of the writ, survives the dismissal of the main case for sum of money. Suffice it to

24

state that the claim for damages arising from such wrongful attachment may arise and be
decided separately from the merits of the main action.
13. BAC Manufacturing and Sales Corporation vs. Court of Appeals
G.R. No. 96784
August 2, 1991
FACTS:
BAC Manufacturing and Sales Corporation, 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 on various dates in 1985 with the Wynner Garments Manufacturing,
Inc., filed a complaint against the latter with the Regional Trial Court of Makati (Branch
145), National Capital Judicial Region. 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 issued on
10 October 1986. No summons and a copy of the complaint were, however, served upon
private respondent.
The trial court issued an Order directing petitioner, as plaintiff, to take the necessary steps
towards the active prosecution of the case, otherwise it would be dismissed for failure to
prosecute. Petitioner filed a Request for Alias Summons, and the Clerk of Court of the trial
court issued an Alias Summons.
Then a levy on attachment was made upon the machineries of private respondent by Deputy
Sheriff Ruben S. Nequinto of the aforesaid Branch 145 of the trial court a quo. Neither the
Alias Summons nor the order granting the issuance of the writ of preliminary attachment or
the writ of attachment itself was served on the private respondent before or at the time the
levy was made.
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 filed its
opposition thereto alleging therein that it could not, inspite of its diligent efforts, locate
private respondent's principal office address.
The trial court denied the motion to dismiss and ordered private respondent to file its answer.
The latter filed a motion for the reconsideration of the Order, but the trial court denied it.
Private respondent filed an Answer With Counterclaims wherein it prays that the complaint
be dismissed for lack of merit, the writ of attachment be discharged and the attached
properties be returned to it. On its counterclaim, private respondent prays that petitioner be
ordered to pay moral and exemplary damages as may be determined by the court, attorney's
fees in the sum of P50,000.00 and the litigation expenses and costs in an amount to be proved
at the trial.

25

The trial court set the pre-trial of the case. However, private respondent filed with the
Supreme Court a petition to annul the aforesaid Orders.
The Supreme Court referred the petition to the respondent Court of Appeals. In said petition,
the private respondent herein contends that the trial court: (a) has not acquired jurisdiction
over it as it has not been duly served with summons, and (b) petitioner's failure to cause
summons to be served upon private respondent for an unreasonable length of time warrants
the dismissal of the complaint for failure to prosecute.
In its challenged decision, the respondent Court sustains the private respondent, ruling that:
Since private respondent was not validly or properly served with summons, the court below
did not acquire jurisdiction over it.
ISSUE:
Whether or not the trial court acquired jurisdiction over the case for the writ of attachment to
lie?
HELD:
The motion to dismiss the complaint and to dissolve the writ of attachment filed by private
respondent on 16 February 1987 was precisely based on failure to prosecute for an
unreasonable length of time because summons has not been served even up to that point in
time and on the nullity of the attachment for failure to serve summons on private respondent
and to furnish it with copies of the writ of attachment and the notice thereof. It claims that
failure to serve the summons is sufficient to vacate or annul the writ.
The appearance of private respondent was not, contrary to the claim of petitioner, a general
appearance, and did not operate as waiver of service of summons.
The filing of the Answer by private respondent does not appear to have been squarely raised
in the proceedings before the respondent court.
Petitioner makes no direct and specific allegation in its petition in the instant case that it had
initially raised and pursued with vigor this matter in any of the pleadings it filed before the
promulgation of the challenged decision. The latter does not mention it. Not having been
properly and seasonably raised, the respondent Court could not have considered the legal
effects of the filing of the Answer in its decision of 7 December 1989. Moreover, as
impliedly ruled by respondent Court in its resolution of 4 January 1991, the filing of the
Answer did not affect the issue of failure to prosecute for an unreasonable length of time. We
agree with the respondent Court in this regard for to rule otherwise is to reward petitioner for
its inaction and to punish private respondent for complying with the trial court's order of 20
May 1988 which denied the motion to reconsider the Order of 17 March 1988 and required it
to file its Answer. That its answer was filed solely for that purpose is made manifest by its
filing of a petition for certiorari precisely to annul said Order and the previous Order of 17
26

March 1988 denying the motion to dismiss and to dissolve the writ of attachment. A
dismissal for failure to prosecute for an unreasonable length of time puts an end to the case
and it would be unjust and unfair to compel a defendant to abort such a result by filing an
answer. As a matter of fact, the trial court committed grave abuse of discretion when it
ordered private respondent to file the Answer despite the fact that it was not yet served with
summons and a copy of the complaint.
The trial court then did not validly acquire jurisdiction over the person of private respondent.
and the implementation of the writ of attachment against the property of private respondent is
null and void. Nil it is true that under Section 1 of Rule 57 of the Rules of Court the property
of the defendant may be attached, as security for the satisfaction of any judgment that may be
recovered in the cases therein enumerated, upon application by the plaintiff at the
commencement of the action or at any time thereafter, a court which has not acquired
jurisdiction over the person of the defendant cannot bind the defendant, whether in the main
case or in the proceedings for the ancillary remedy of attachment.

14. Sps. Gregorio and Josefa Yu vs. Ngo Yet Te

G.R. No. 155868
February 6, 2007
FACTS:
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (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-infact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela,
Metro Manila, a Complaint, docketed as Civil Case No. 4061-V-93, for Collection of Sum of
Money and Damages with Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te attached to her Complaint an
Affidavit executed by Sy that Spouses Yu were guilty of fraud in 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.
Upon

Tes

posting

of

an

attachment

bond, the RTC

issued

an

Order

of

Attachment/Levy[ dated March 29, 1993 on the basis of which Sheriff Constancio Alimurung
(Sheriff Alimurung) of RTC, Branch 19, Cebu City levied and attached Spouses Yus
properties in Cebu City consisting of one parcel of land (known as Lot No. 11) and four units

27

of motor vehicle, specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a
passenger bus.
On April 21, 1993, Spouses Yu filed an Answer with counterclaim for damages arising from
the wrongful attachment of their properties, specifically, actual damages amounting
to P1,500.00 per day; moral damages, P1,000,000.00; and exemplary damages, P50,000.00.
They also sought payment of P120,000.00 as attorneys fees and P80,000.00 as litigation
expenses. On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment. They also filed a Claim Against Surety Bond in which they
demanded payment from Visayan Surety and Insurance Corporation (Visayan Surety), the
surety which issued the attachment bond, of the sum of P594,240.00, representing the
damages they allegedly sustained as a consequence of the wrongful attachment of their
properties.
While the RTC did not resolve the Claim Against Surety Bond, it issued an Orderdated May
3, 1993, discharging 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 Reconsiderationwhich the RTC denied.
Dissatisfied, they filed with the CA a Petition for Certiorari, a decision was rendered lifting
the RTC Order of Attachment on their remaining properties the court stated that Insolvency is
not a ground for attachment especially when defendant has not been shown to have
committed any act intended to defraud its creditors
Te filed a Motion for Reconsideration but was later on denied by the CA, he then filed with
SC a Petition for Review on Certiorari but the same were denied for having been filed late
and for failure to show that a reversible error was committed by the CA in a resolution dated
June 8, 1994. Thus, the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP
No. 31230 on the wrongfulness of the attachment/levy of the properties of Spouses Yu
became conclusive and binding.
However, on July 20, 1994, the RTC, apparently not informed of the SC Decision, rendered a
Decision ordering spouses YU to pay the plaintiff the sum of P549,404.00, with interest from
the date of the filing of this case and attorneys fee. On the counterclaim, the Court declines
to rule on this, considering that the question of the attachment which allegedly gave rise to
the damages incurred by the defendants is being determined by the Supreme Court.
Spouses Yu filed with the CA an appeal questioning only that portion of the July 20, 1994
Decision where the RTC declined to rule on their counterclaim for damages the CA affirmed
in toto the RTC Decision, it nonetheless 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. Spouses Yu filed a Motion for Reconsideration but the CA denied the motion.

28

ISSUE:
Whether 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?
HELD:
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.
In the case at bar, the actual damages cannot be determined. Defendant-appellant Josefa Yu
testified on supposed lost profits without clear and appreciable explanation. Despite her
submission of the used and unused ticket stubs, there was no evidence on the daily net
income, the routes plied by the bus and the average fares for each route. 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.
Besides, based on the August 29, 1994 Manifestation, it would appear that long before the
passenger bus was placed under preliminary attachment in Civil Case No. 4061-V-93,the
same had been previously attached by the Sheriff of Mandaue City in connection with
another case and that it was placed in the Cebu Bonded Warehousing Corporation, Cebu City.
Thus, Spouses Yu cannot complain that they were unreasonably deprived of the use of the
passenger bus by reason of the subsequent wrongful 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. Moreover, petitioners did not
present evidence as to the damages they suffered by reason of the wrongful attachment of Lot
No. 11.
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.
In the case, Te concluded that Spouses Yu never intended to pay their obligation for they had
available funds in their bank but chose to transfer said funds instead of cover the checks they
issued. Thus, we cannot attribute malice nor bad faith to Te in applying for the attachment
writ. We cannot hold her liable for moral and exemplary damages.

29

Temperate or Moderate Damages and Attorneys fees

As a rule, attorneys fees cannot be awarded when moral and exemplary damages are not
granted, the exception however is when a party incurred expenses to lift a wrongfully issued
writ of attachment.
In the case, Spouses Yu waged a protracted legal battle to fight off the illegal attachment of
their properties and pursue their claims for damages. It is only just and equitable that they be
awarded reasonable attorneys fees in the amount of P30,000.00.
Further, we recognize that Spouses Yu suffered some form of pecuniary loss when their
properties were wrongfully seized, although the amount thereof cannot be definitively
ascertained. Hence, an award of temperate or moderate damages in the amount of P50,000.00
is in order.

15. Alfredo Ching vs. Court of Appeals

G.R. No. 124642
February 23, 2004
FACTS:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a
loan of P9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan,
the PBMCI, through its Executive Vice-President Alfredo Ching, 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.

Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount
of P13,000,000.00 payable in eighteen months at 16% interest per annum. As in the previous
loan, the PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan
maturing on June 29, 1981. This was renewed once for a period of one month.

The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC
filed a complaint for sum of money with prayer for a writ of preliminary attachment against
the PBMCI to collect the P12,612,972.88 exclusive of interests, penalties and other bank
30

charges. Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio Taedo and
Chung Kiat Hua in their capacity as sureties of the PBMCI.

On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the
ABCs application for a writ of preliminary attachment. The trial court decreed that the
grounds alleged in the application and that of its supporting affidavit are all conclusions of
fact and of law which do not warrant the issuance of the writ prayed for. On motion for
reconsideration, however, the trial court, in an Order dated September 14, 1981, reconsidered
its previous order and granted the ABCs application for a writ of preliminary attachment on a
bond of P12,700,000.

Upon the ABCs posting of the requisite bond, the trial court issued a writ of preliminary
attachment. Subsequently, summonses were served on the defendants, save Chung Kiat Hua
who could not be found.

Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for
suspension of payments with the Securities and Exchange Commission (SEC), docketed as
SEC Case No. 2250, at the same time seeking the PBMCIs rehabilitation.

On July 9, 1982, the SEC issued an Order placing the PBMCIs business, including its assets
and liabilities, under rehabilitation receivership, and ordered that all actions for claims listed
in Schedule A of the petition pending before any court or tribunal are hereby suspended in
whatever stage the same may be until further orders from the Commission. The ABC was
among the PBMCIs creditors named in the said schedule.

Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to
Dismiss and/or motion to suspend the proceedings in Civil Case No. 142729 invoking the
PBMCIs pending application for suspension of payments (which Ching co-signed) and over
which the SEC had already assumed jurisdiction. On February 4, 1983, the ABC filed its
Opposition thereto.

In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment
the 100,000 common shares of Citycorp stocks in the name of Alfredo Ching.

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Thereafter, in an Order dated September 16, 1983, the trial court partially granted the
aforementioned motion by suspending the proceedings only with respect to the PBMCI. It
denied Chings motion to dismiss the complaint/or suspend the proceedings and pointed out
that P.D. No. 1758 only concerns the activities of corporations, partnerships and associations
and was never intended to regulate and/or control activities of individuals. Thus, it directed
the individual defendants to file their answers.

Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the pendency of SEC Case No. 2250. This motion met
the opposition from the ABC.

On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary
attachment bond from P12,700,000 to P6,350,000. Alfredo Ching opposed the motion, but
on April 2, 1987, the court issued an Order setting the incident for further hearing on May 28,
1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the properties of
Alfredo Ching levied on by the sheriff.

On March 2, 1988, the trial court issued an Order granting the motion of the ABC and
rendered the attachment bond of P6,350,000.

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, 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. She attached therewith a copy of her marriage contract with Alfredo Ching.

The ABC filed a comment on the motion to quash preliminary attachment and/or motion to
expunge records, contending that: (1) The supposed movant, Encarnacion T. Ching, is not a

32

party to this present case; thus, she has no personality to file any motion before this
Honorable Court;
(2) Said supposed movant did not file any Motion for Intervention pursuant to Section 2,
Rule 12 of the Rules of Court; (3) Said Motion cannot even be construed to be in the nature
of a Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of Court.

Furthermore, assuming in gracia argumenti that the supposed movant has the required
personality, her Motion cannot be acted upon by this Honorable Court as the above-entitled
case is still in the archives and the proceedings thereon still remains suspended. And there is
no previous Motion to revive the same.

The ABC also alleged that the motion was barred by prescription or by laches because the
shares of stocks were in custodia legis.

During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage
contract to Alfredo Ching to prove that they were married on January 8, 1960; the articles of
incorporation of Citycorp Investment Philippines dated May 14, 1979; and, the General
Information Sheet of the corporation showing that petitioner Alfredo Ching was a member of
the Board of Directors of the said corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to
expunge records.

Acting on the aforementioned motion, the trial court issued on December 15, 1993 an
Order lifting the writ of preliminary attachment on the shares of stocks and ordering the
sheriff to return the said stocks to the petitioners. The CA sustained the contention of the
private respondent and set aside the assailed orders. According to the CA, the RTC deprived
the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of
Court. The petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had
no right of action to have the levy annulled with a motion for that purpose. Her remedy in
such case was to file a separate action against the private respondent to nullify the levy on the
100,000 Citycorp shares of stocks. The court stated that even assuming that Encarnacion T.
Ching had the right to file the said motion, the same was barred by laches.

ISSUE:
33

Whether or not the petitioner wife has the right to file the motion to quash the levy on
attachment on the 100,000 shares of stocks in Citycorp Investment Philippines?

HELD:
The Court held in the affirmative. The Court agree with the petitioners that the petitionerwife had the right to file the said motion, although she was not a party in the Civil
Case. In Ong v. Tating, we held that the sheriff may attach only those properties of the
defendant against whom a writ of attachment has been issued by the court. When the sheriff
erroneously levies on attachment and seizes the property of a third person in which the said
defendant holds no right or interest, the superior authority of the court which has authorized
the execution may be invoked by the aggrieved third person in the same case. Upon
application of the third person, the court shall order a summary hearing for the purpose of
determining whether the sheriff has acted rightly or wrongly in the performance of his duties
in the execution of the writ of attachment, more specifically if he has indeed levied on
attachment and taken hold of property not belonging to the plaintiff. If so, the court may then
order the sheriff to release the property from the erroneous levy and to return the same to the
third person. In resolving the motion of the third party, the court does not and cannot pass
upon the question of the title to the property with any character of finality. It can treat the
matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If
the claimants proof does not persuade the court of the validity of the title, or right of
possession thereto, the claim will be denied by the court. The aggrieved third party may also
avail himself of the remedy of terceria by executing an affidavit of his title or right of
possession over the property levied on attachment and serving the same to the office making
the levy and the adverse party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should be a totally separate and
distinct action from the former case. The above-mentioned remedies are cumulative and any
one of them may be resorted to by one third-party claimant without availing of the other
remedies.

In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the
100,000 shares of stocks in the name of petitioner-husband claiming that the said shares of
stocks were conjugal in nature; hence, not liable for the account of her husband under his
continuing guaranty and suretyship agreement with the PBMCI. The petitioner-wife had the
right to file the motion for said relief.

16. Fort Bonifacio Development Corp. vs. Yllas Lending Corp.

34

G.R. No. 158997

October 6, 2008

FACTS:
On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno) over a
unit at the Entertainment Center - Phase 1 of 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.
Two provisions in the lease contract are pertinent to the present case: Section 20, which is
about the consequences in case of default of the lessee, and Section 22, which is about the
lien on the properties of the lease. The pertinent portion of Section 20 reads:
Section 20. Default of the Lessee
20.1 The LESSEE shall be deemed to be in default within the meaning of this
Contract in case:
(i) The LESSEE fails to fully pay on time any rental, utility and service charge or
other financial obligation of the LESSEE under this Contract;
20.2 Without prejudice to any of the rights of the LESSOR under this Contract, in
case of default of the LESSEE, the lessor shall have the right to:
(i) Terminate this Contract immediately upon written notice to the LESSEE, without
need of any judicial action or declaration;
Section 22, on the other hand, reads:
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.

35

Tirreno began to default in its lease payments in 1999. By July 2000, Tirreno was already in
arrears byP5,027,337.91. FBDC and Tirreno entered into a settlement agreement on 8 August
2000. Despite the execution of the settlement agreement, FBDC found need to send Tirreno a
written notice of termination dated 19 September 2000 due to Tirreno's alleged failure to
settle its outstanding obligations. On 29 September 2000, 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.

On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in his official capacity as
President, (respondents) caused the sheriff of Branch 59 of the trial court to serve an alias
writ of seizure against FBDC. 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 Tirrenos restaurant and bar. On
the same day, FBDC served on the sheriff an affidavit of title and third party claim. Despite
FBDCs service upon him an affidavit of title and third party claim, the sheriff proceeded
with the seizure of certain items from FBDCs premises. The sheriff delivered the seized
properties to Yllas.

ISSUE:
Whether or not the trial court should have required respondents to file indemnity bond for
FBDCs protection?

HELD :
The petition has merit. 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
36

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.

17. China Banking Corporation vs. Asian Corporation and Development Corporation
G.R. No. 158271
April 8, 2008
FACTS:
On July 24, 1996, China Bank granted respondent Asian Construction and Development
Corporation (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, Branch 138, docketed as Civil Case No. 99-796. In the
Complaint, 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 Sheriffs 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.

37

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.
ISSUE:
Whether or not an attached property may be sold prior to final judgment?
HELD:
Section 11, Rule 57 of the Rules of Court provides: 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.
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.
The issue hinges on the determination whether the vehicles, office machines and fixtures are
"perishable property" under Section 11, Rules 57 of the Rules of Court, which is actually one
of first impression. 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 States where 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.

38

18. Allied Banking Corp. vs. South Pacific Sugar Corp.

GR No. 163692
February 4, 2008
FACTS:
South Pacific issued three promissory notes totaling P96,000,000 to petitioner Allied Bank to
secure payment of loans. 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. Allied Bank testified that South Pacific's representation that
it was in good fiscal condition was false and was suffering losses and incurring debts in the
millions.

Thereafter, 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, grounded upon the arguments that (1) the evidence of
fraud was insufficient and self-serving; and (2) there was no evidence that South Pacific used
the loan for other purposes. The court granted the motion to discharge and denied the motion
for reconsideration. The Court of Appeals affirmed the trial court's order. The Court of
Appeals stated that Allied Bank failed to justify the grant of a writ of attachment. Essentially,
it found wanting such evidence as would establish fraud as required before a writ of
attachment may be granted under Section 1, Rule 57 of the 1997 Rules of Civil Procedure.
ISSUE:
WON there was fraud committed by respondents against petitioner bank such that a writ of
attachment may be issued against respondents?

HELD:
In our considered view, without presenting the documents adverted to by petitioners lone
witness, Allied Banks allegations of fraud amount to no more than mere conjectures. Yet
there is no showing why Allied Bank, being in the business of loans, could not obtain and
present the necessary documents in support of its allegations. Thus, we are in agreement that
the Court of Appeals was correct in finding that the testimony of Allied Banks witness failed
to show that respondents indebtedness was incurred fraudulently.
Moreover, even a cursory examination of the banks complaint will reveal that it cited no
factual circumstance to show fraud on the part of respondents. The complaint only had a
general statement in the Prayer for the Issuance of a Writ of Preliminary Attachment. Such

39

general averment will not suffice to support the issuance of the writ of preliminary
attachment. It is necessary to recite in what particular manner an applicant for the writ of
attachment was defrauded.
We take this opportunity to reiterate that 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.

19. Technogas Philippines vs. Philippine National Bank

G.R. No. 161004
April 14, 2008

FACTS:
Tecnogas obtained from PNB an Omnibus Line of P35 million and a 5-year Term Loan
of P14 million. To secure the loan, Tecnogas 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. It also provided that the mortgage
will stand as a security for any and all other obligations of Tecnogas to PNB, for whatever
kind or nature, and regardless of whether the obligations had been contracted before, during
or after the constitution of the mortgage. When the loan matured, PNB sent collection letters
to Tecnogas, but the latter only proposed to pay its obligations by way of dacion
enpago conveying the land under REM. PNB filed a petition for extrajudicial foreclosure of
the REM. A day before the auction sale, Tecnogas filed with the Paraaque City RTC a
complaint for annulment of extrajudicial foreclosure sale, with application for the issuance of
a TRO and writ of preliminary injunction. RTC granted the same. PNB sought for
reconsideration but was denied. On appeal, CA reversed the decision.

ISSUE:
Whether or not the CA erred in its ruling that Tecnogas has no clear legal right to an
injunctive relief?

40

HELD:
The Court held in the negative. The Court of Appeals did not err in ruling that Tecnogas has
no clear legal right to an injunctive relief. 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.

Dacion enpago is a special mode of payment whereby the debtor offers another thing to the
creditor who accepts it as equivalent of payment of an outstanding obligation. The
undertaking is really one of sale, that is, the creditor is really buying the thing or property of
the debtor, payment for which is to be charged against the debtors debt.

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 enpago did not extinguish its
obligation. Tecnogas proposal to pay by way of dacion enpago 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 enpago. 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.

41