PROVISONAL REMEDIES

reconsidered its previous order and granted the ABCs application for a writ of preliminary attachment on a
bond of P12,700,000. The order, in relevant part, stated:

FULLCASES
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision 1 of the Court of
Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution 2 on April 2, 1996
denying the petitioners motion for reconsideration. The impugned decision granted the private respondents
petition for certiorari and set aside the Orders of the trial court dated December 15, 1993 3 and February 17,
19944 nullifying the attachment of 100,000 shares of stocks of the Citycorp Investment Philippines under the
name of petitioner Alfredo Ching.
The following facts are undisputed:
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. 5 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 P38,000,000.00.6 The loan was subsequently renewed on various dates, the
last renewal having been made on December 4, 1980. 7
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. 8 This was
renewed once for a period of one month. 9
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 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.
The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII. 10 In its
application for a writ of preliminary attachment, the ABC averred that the "defendants are guilty of fraud in
incurring the obligations upon which the present action is brought 11 in that they falsely represented themselves
to be in a financial position to pay their obligation upon maturity thereof." 12 Its supporting affidavit stated, inter
alia, that the "[d]efendants have removed or disposed of their properties, or [are] ABOUT to do so, with intent
to defraud their creditors."13
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.14 On motion for reconsideration, however, the trial court, in an Order dated September 14, 1981,

With respect to the second ground relied upon for the grant of the writ of preliminary attachment ex-parte,
which is the alleged disposal of properties by the defendants with intent to defraud creditors as provided in
Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can only barely justify the issuance of said writ as
against the defendant Alfredo Ching who has allegedly bound himself jointly and severally to pay plaintiff the
defendant corporations obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring the
sheriff of this Court to attach all the properties of said Alfredo Ching not exceeding P12,612,972.82 in value,
which are within the jurisdiction of this Court and not exempt from execution upon, the filing by plaintiff of a
bond duly approved by this Court in the sum of Twelve Million Seven Hundred Thousand Pesos
(P12,700,000.00) executed in favor of the defendant Alfredo Ching to secure the payment by plaintiff to him of
all the costs which may be adjudged in his favor and all damages he may sustain by reason of the attachment
if the court shall finally adjudge that the plaintiff was not entitled thereto.
SO ORDERED.15
Upon the ABCs posting of the requisite bond, the trial court issued a writ of preliminary attachment.
Subsequently, summonses were served on the defendants, 16 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.17
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."18 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. 19
On February 4, 1983, the ABC filed its Opposition thereto. 20
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.21
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. 22
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. 23
On January 20, 1984, Taedo filed his Answer with counterclaim and cross-claim. 24 Ching eventually filed his
Answer on July 12, 1984.25

On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion, 26 again praying for
the dismissal of the complaint or suspension of the proceedings on the ground of the July 9, 1982 Injunctive
Order issued in SEC Case No. 2250. He averred that as a surety of the PBMCI, he must also necessarily
benefit from the defenses of his principal. The ABC opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion 27 praying for the dismissal of the complaint, arguing
that the ABC had "abandoned and waived" its right to proceed against the continuing guaranty by its act of
resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond from
P12,700,000 to P6,350,000.28 Alfredo Ching opposed the motion, 29 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. 30
On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment
bond of P6,350,000.31
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. 32 She attached
therewith a copy of her marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records,
contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has
no personality to file any motion before this Honorable Court;

Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order 37 lifting the writ of
preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks to the
petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby
granted. Let the writ of preliminary attachment subject matter of said motion, be quashed and lifted with
respect to the attached 100,000 common shares of stock of Citycorp Investment Philippines in the name of the
defendant Alfredo Ching, the said shares of stock to be returned to him and his movant-spouse by Deputy
Sheriff Apolonio A. Golfo who effected the levy thereon on July 26, 1983, or by whoever may be presently in
possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied the same
on February 17, 1994. The petitioner bank forthwith filed a petition for certiorari with the CA, docketed as CAG.R. SP No. 33585, for the nullification of the said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking
cognizance of, and granting a "Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary
attachment without any basis in fact and in law, and contrary to established jurisprudence on the
matter.39
On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed orders
of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders
(dated December 15, 1993 and February 17, 1994) for being null and void.
SO ORDERED.40

2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of
the Rules of Court;
2.3 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.
3. 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. 34
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; 35 the articles of incorporation of Citycorp
Investment Philippines dated May 14, 1979;36 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.

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.
Citing Wong v. Intermediate Appellate Court, 41 the CA ruled that the presumption in Article 160 of the New Civil
Code shall not apply where, as in this case, the petitioner-spouses failed to prove the source of the money
used to acquire the shares of stock. It held that the levied shares of stocks belonged to Alfredo Ching, as
evidenced by the fact that the said shares were registered in the corporate books of Citycorp solely under his
name. Thus, according to the appellate court, the RTC committed a grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the assailed orders. The petitioners motion for reconsideration was
denied by the CA in a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not commit
any grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed orders in their
favor; hence, the CA erred in reversing the same. They aver that the source of funds in the acquisition of the
levied shares of stocks is not the controlling factor when invoking the presumption of the conjugal nature of

stocks under Art. 160,42 and that such presumption subsists even if the property is registered only in the name
of one of the spouses, in this case, petitioner Alfredo Ching. 43 According to the petitioners, the suretyship
obligation was not contracted in the pursuit of the petitioner-husbands profession or business. 44 And, contrary
to the ruling of the CA, where conjugal assets are attached in a collection suit on an obligation contracted by
the husband, the wife should exhaust her motion to quash in the main case and not file a separate suit. 45
Furthermore, the petitioners contend that under Art. 125 of the Family Code, the petitioner-husbands
gratuitous suretyship is null and void ab initio, 46 and that the share of one of the spouses in the conjugal
partnership remains inchoate until the dissolution and liquidation of the partnership. 47
In its comment on the petition, the private respondent asserts that the CA correctly granted its petition for
certiorari nullifying the assailed order. It contends that the CA correctly relied on the ruling of this Court in
Wong v. Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals,
the private respondent alleges that the continuing guaranty and suretyship executed by petitioner Alfredo
Ching in pursuit of his profession or business. Furthermore, according to the private respondent, the right of
the petitioner-wife to a share in the conjugal partnership property is merely inchoate before the dissolution of
the partnership; as such, she had no right to file the said motion to quash the levy on attachment of the shares
of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion to quash
the levy on attachment on the 100,000 shares of stocks in the Citycorp Investment Philippines; (b) whether or
not the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said motion,
although she was not a party in Civil Case No. 142729. 48
In Ong v. Tating,49 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. 50
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.
On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of the
RTC. The private respondent, the petitioner in the CA, was burdened to prove that the RTC committed a grave
abuse of its discretion amounting to excess or lack of jurisdiction. The tribunal acts without jurisdiction if it does
not have the legal purpose to determine the case; there is excess of jurisdiction where the tribunal, being
clothed with the power to determine the case, oversteps its authority as determined by law. There is grave

abuse of discretion where the tribunal acts in a capricious, whimsical, arbitrary or despotic manner in the
exercise of its judgment and is equivalent to lack of jurisdiction. 51
It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the RTC
acted whimsically in total disregard of evidence material to, and even decide of, the controversy before
certiorari will lie. A special civil action for certiorari is a remedy designed for the correction of errors of
jurisdiction and not errors of judgment. When a court exercises its jurisdiction, an error committed while so
engaged does not deprive it of its jurisdiction being exercised when the error is committed. 52
After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC did
not commit any grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed
orders.
Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed
to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband, or to the
wife. In Tan v. Court of Appeals,53 we held that it is not even necessary to prove that the properties were
acquired with funds of the partnership. As long as the properties were acquired by the parties during the
marriage, they are presumed to be conjugal in nature. In fact, even when the manner in which the properties
were acquired does not appear, the presumption will still apply, and the properties will still be considered
conjugal. The presumption of the conjugal nature of the properties acquired during the marriage subsists in the
absence of clear, satisfactory and convincing evidence to overcome the same. 54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the
Citycorp Investment Philippines were issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses. The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The private respondent failed to adduce evidence that the
petitioner-husband acquired the stocks with his exclusive money.55 The barefaced fact that the shares of
stocks were registered in the corporate books of Citycorp Investment Philippines solely in the name of the
petitioner-husband does not constitute proof that the petitioner-husband, not the conjugal partnership, owned
the same.56 The private respondents reliance on the rulings of this Court in Maramba v. Lozano 57 and
Associated Insurance & Surety Co., Inc. v. Banzon 58 is misplaced. In the Maramba case, we held that where
there is no showing as to when the property was acquired, the fact that the title is in the wifes name alone is
determinative of the ownership of the property. The principle was reiterated in the Associated Insurance case
where the uncontroverted evidence showed that the shares of stocks were acquired during the marriage of the
petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate
Appellate Court59 buttresses the case for the petitioners. In that case, we ruled that he who claims that
property acquired by the spouses during their marriage is not conjugal partnership property but belongs to one
of them as his personal property is burdened to prove the source of the money utilized to purchase the same.
In this case, the private respondent claimed that the petitioner-husband acquired the shares of stocks from the
Citycorp Investment Philippines in his own name as the owner thereof. It was, thus, the burden of the private
respondent to prove that the source of the money utilized in the acquisition of the shares of stocks was that of
the petitioner-husband alone. As held by the trial court, the private respondent failed to adduce evidence to
prove this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement with the
private respondent for the payment of the PBMCI loans, the petitioner-husband was in the exercise of his
profession, pursuing a legitimate business. The appellate court erred in concluding that the conjugal
partnership is liable for the said account of PBMCI under Article 161(1) of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3] 60 of the Family Code of the Philippines)
provides:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those
contracted by the wife, also for the same purpose, in the cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment
of the loan obtained by the PBMCI from the private respondent in the amount of P38,000,000. In Ayala
Investment and Development Corp. v. Court of Appeals,61 this Court ruled "that the signing as surety is
certainly not an exercise of an industry or profession. It is not embarking in a business. No matter how often
an executive acted on or was persuaded to act as surety for his own employer, this should not be taken to
mean that he thereby embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must
be a showing that some advantages accrued to the spouses. Certainly, to make a conjugal partnership
responsible for a liability that should appertain alone to one of the spouses is to frustrate the objective of the
New Civil Code to show the utmost concern for the solidarity and well being of the family as a unit. The
husband, therefore, is denied the power to assume unnecessary and unwarranted risks to the financial
stability of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was
benefited by the petitioner-husbands act of executing a continuing guaranty and suretyship agreement with
the private respondent for and in behalf of PBMCI. The contract of loan was between the private respondent
and the PBMCI, solely for the benefit of the latter. No presumption can be inferred from the fact that when the
petitioner-husband entered into an accommodation agreement or a contract of surety, the conjugal partnership
would thereby be benefited. The private respondent was burdened to establish that such benefit redounded to
the conjugal partnership.63
It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one
of its top twenty stockholders, and that the shares of stocks of the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated through the loans obtained; that the petitioner-husbands career
would be enhanced should PBMCI survive because of the infusion of fresh capital. However, these are not the
benefits contemplated by Article 161 of the New Civil Code. The benefits must be those directly resulting from
the loan. They cannot merely be a by-product or a spin-off of the loan itself. 64
This is different from the situation where the husband borrows money or receives services to be used for his
own business or profession. In the Ayala case, we ruled that it is such a contract that is one within the term
"obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and
services to be used in or for his own business or his own profession, that contract falls within the term "
obligations for the benefit of the conjugal partnership." Here, no actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the
contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does
not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership. 65
The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not
controlling because the husband, in those cases, contracted the obligation for his own business. In this case,
the petitioner-husband acted merely as a surety for the loan contracted by the PBMCI from the private
respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals are SET ASIDE AND REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and
TEODORICO ADARNA, respondents.
Breva & Breva Law Offices for petitioner.
Goc-Ong & Associates for private respondents.

NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CA-G.R. Sp. No. 1967
entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.," promulgated on May 4,
1990. 1 That decision nullified and set aside the writ of preliminary attachment issued by the Regional Trial
Court of Davao City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.),
before the service of summons on the defendants (herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate Tribunal's judgment of
May 4, 1990.
1. 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 (docketed as
Civil Case No. 19513-89). The complaint contained an ex parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle, issued an Order
granting the ex parte application and fixing the attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment
issued.
4. 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.
5. 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.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge attachment.
7. 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. The Appellate Court's decision closed with the following
disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary
attachment, dated September 19, 1989 denying the motion to discharge attachment;
dated November 7, 1989 denying petitioner's motion for reconsideration; as well as all
other orders emanating therefrom, specially the Writ of Attachment dated May 11, 1989
and Notice of Levy on Preliminary Attachment dated May 11, 1989, are hereby
declared null and void and the attachment hereby ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary attachment
may be included m 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."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light seeks in the present
appellate proceedings.
The question is 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.
The Court rules that the question must be answered in the affirmative and that consequently, the petition for
review will have to be granted.
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 defendant 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. 4 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; 5 and it is thus that the court acquires jurisdiction over said subject matter or nature of the action.
6 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. 7 On the other hand, jurisdiction over the person of the defendant is
obtained, as above stated, by the service of summons or other coercive process upon him or by his voluntary
submission to the authority of the court. 8

The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is
filed, summons issues to the defendant, the summons is then transmitted to the sheriff, and finally, service of
the summons is effected on the defendant in any of the ways authorized by the Rules of Court. There is thus
ordinarily some appreciable interval of time between the day of the filing of the complaint and the day of
service of summons of the defendant. During this period, different acts may be done by the plaintiff or by the
Court, which are unquestionable validity and propriety. Among these, for example, are the appointment of a
guardian ad litem, 9 the grant of authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the
amendment of the complaint by the plaintiff as a matter of right without leave of court, 11 authorization by the
Court of service of summons by publication, 12 the dismissal of the action by the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary injunction,
receivership or replevin. 14 They may be validly and properly applied for and granted even before the
defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue
of which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the
property of the adverse party taken into the custody of the court as security for the satisfaction of any
judgment that may be recovered. 15 It is a remedy which is purely statutory in respect of which the law
requires a strict construction of the provisions granting it. 16 Withal no principle, statutory or jurisprudential,
prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time
thereafter." 17 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, thirdparty 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.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for preliminary attachment is
not generally necessary unless otherwise directed by the Trial Court in its discretion. 20 And in Filinvest Credit
Corporation v. Relova, 21 the Court declared that "(n)othing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of attachment." The only pre-requisite is that
the Court be satisfied, upon consideration of "the affidavit of the applicant or of some other person who
personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in
Section 1 . . . (Rule 57), that there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the applicant, or the value of the property the possession of which he is
entitled to recover, is as much as the sum for which the order (of attachment) is granted above all legal
counterclaims." 22 If the court be so satisfied, the "order of attachment shall be granted," 23 and the writ shall
issue upon the applicant's posting of "a bond executed to the adverse party in an amount to be fixed by the
judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all the costs which may be
adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court
shall finally adjudge that the applicant was not entitled thereto." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25 this Court
had occasion to emphasize the postulate that no hearing is required on an application for preliminary
attachment, with notice to the defendant, for the reason that this "would defeat the objective of the remedy . . .
(since the) time which such a hearing would take, could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues." As observed by a former member of this Court, 26
such a procedure would warn absconding debtors-defendants of the commencement of the suit against them

and the probable seizure of their properties, and thus give them the advantage of time to hide their assets,
leaving the creditor-plaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger of
losing any security for a favorable judgment and thus give him only an illusory victory.
Withal, ample modes of recourse against a preliminary attachment are secured by law to the defendant. The
relative ease with which a preliminary attachment may be obtained is matched and paralleled by the relative
facility with which the attachment may legitimately be prevented or frustrated. These modes of recourse
against preliminary attachments granted by Rule 57 were discussed at some length by the separate opinion in
Mindanao Savings & Loans Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an attachment: first, by the posting
of a counterbond; and second, by a showing of its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already enforced against
property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be discharged upon
counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond. At any time after an
order of attachment has been granted, the party whose property has been attached or
the person appearing in his behalf, may, upon reasonable notice to the applicant, apply
to the judge who granted the order, or to the judge of the court in which the action is
pending, for an order discharging the attachment wholly or in part on the security
given . . . in an amount equal to the value of the property attached as determined by
the judge to secure the payment of any judgment that the attaching creditor may
recover in the action. . . .
1.2. But even before actual levy on property, seizure under attachment may be prevented also upon
counterbond. The defendant need not wait until his property is seized before seeking the discharge of the
attachment by a counterbond. This is made possible by Section 5 of Rule 57.
Sec. 5. Manner of attaching property. The officer executing the order shall without
delay attach, to await judgment and execution in the action, all the properties of the
party against whom the order is issued in the province, not exempt from execution, or
so much thereof as may be sufficient to satisfy the applicant's demand, unless the
former makes a deposit with the clerk or judge of the court from which the order
issued, or gives a counter-bond executed to the applicant, in an amount sufficient to
satisfy such demand besides costs, or in an amount equal to the value of the property
which is about to be attached, to secure payment to the applicant of any judgment
which he may recover in the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or discharged on the
ground that it has been irregularly or improperly issued, in accordance with Section 13 of Rule 57. Like the
first, this second mode of lifting an attachment may be resorted to even before any property has been levied
on. Indeed, it may be availed of after property has been released from a levy on attachment, as is made clear
by said Section 13, viz.:
Sec. 13. Discharge of attachment for improper or irregular issuance. The party
whose property has been attached may also, at any time either BEFORE or AFTER
the release of the attached property, or before any attachment shall have been actually
levied, upon reasonable notice to the attaching creditor, apply to the judge who granted
the order, or to the judge of the court in which the action is pending, for an order to

discharge the attachment on the ground that the same was improperly or irregularly
issued. If the motion be made on affidavits on the part of the party whose property has
been attached, but not otherwise, the attaching creditor may oppose the same by
counter-affidavits or other evidence in addition to that on which the attachment was
made. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The attachment debtor
cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself
of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a
speedier way of discharging the attachment writ maliciously sought out by the attaching creditor instead of the
other way, which, in most instances . . . would require presentation of evidence in a fullblown trial on the
merits, and cannot easily be settled in a pending incident of the case." 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings & Loans Asso.
Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of its irregular or improper
issuance:
. . . (W)hen the preliminary attachment is issued upon a ground which is at the same
time the applicant's cause of action; e.g., "an action for money or property embezzled
or fraudulently misapplied or converted to his own use by a public officer, or an officer
of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary capacity, or for a willful
violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been
guilty of fraud m contracting the debt or incurring the obligation upon which the action
is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to
dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of
the factual averments in the plaintiff's application and affidavits on which the writ was
based and consequently that the writ based thereon had been improperly or
irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being that the
hearing on such a motion for dissolution of the writ would be tantamount to a trial of the
merits of the action. In other words, the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can be dissolved is by a counterbond (G.B.
Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment upon security given, or a showing of
its irregular or improper issuance, does not of course operate to discharge the sureties
on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the
adverse party, . . . conditioned that the . . . (applicant) will pay all the costs which may
be adjudged to the adverse party and all damages which he may sustain by reason of
the attachment, if the court shall finally adjudge that the applicant was not entitled
thereto" (SEC. 4, Rule 57). Hence, until that determination is made, as to the
applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership (Rule 59),
replevin or delivery of personal property (Rule 60), the rule is the same: they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over
the person of defendant, as above indicated issuance of summons, order of attachment and writ of

attachment (and/or appointments of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit
as a pauper litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court
30 and however valid and proper they might otherwise be, these do not and cannot bind and affect the
defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on
him of summons or other coercive process or his voluntary submission to the court's authority. Hence, when
the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he
serve on the defendant not only a copy of the applicant's affidavit and attachment bond, and of the order of
attachment, as explicity required by Section 5 of Rule 57, but also the summons addressed to said defendant
as well as a copy of the complaint and order for appointment of guardian ad litem, if any, as also explicity
directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only
for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness, to
apprise the defendant of the complaint against him, of the issuance of a writ of preliminary attachment and the
grounds therefor and thus accord him the opportunity to prevent attachment of his property by the posting of a
counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12),
Rule 57, or dissolving it by causing dismissal of the complaint itself on any of the grounds set forth in Rule 16,
or demonstrating the insufficiency of the applicant's affidavit or bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of service of summons and the
other documents above indicated that writs of attachment issued by the Trial Court ex parte were struck down
by this Court's Third Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing
and Sales Corporation v. Court of Appeals, et al. 32 In contrast to the case at bar where the summons and
a copy of the complaint, as well as the order and writ of attachment and the attachment bond were served on
the defendant in Sievert, levy on attachment was attempted notwithstanding that only the petition for
issuance of the writ of preliminary attachment was served on the defendant, without any prior or
accompanying summons and copy of the complaint; and in BAC Manufacturing and Sales Corporation, neither
the summons nor the order granting the preliminary attachment or the writ of attachment itself was served on
the defendant "before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment
may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been
fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to
the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not
incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's
attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is hereby
REVERSED, and the order and writ of attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of
Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-89 against Queensland Hotel or Motel or
Queensland Tourist Inn and Teodorico Adarna are hereby REINSTATED. Costs against private respondents.
SO ORDERED.
BANK OF THE PHILIPPINE ISLANDS, Petitioner,
vs.
CARLITO LEE, Respondent.

Resolution3 of the Court of Appeals (CA) in CA-G.R. No. 87911 which annulled the March 1, 2004 3 and
September 16, 20044 Orders of the Regional Trial Court (RTC) of Makati City, Branch 61 and instead, entered
a new one directing the RTC to issue a writ of execution and/or enforce garnishment against the bank deposit
of Trendline Resources & Commodities Exponent, Inc. (Trendline) and Leonarda Buelva (Buelva) with the
defunct Citytrust Banking Corporation (Citytrust), now merged with BPI.
The Facts
On April 26, 1988, respondent Carlito Lee (Lee) filed a complaint for sum of money with damages and
application for the issuance of a writ of attachment against Trendline and Buelva (collectively called
"defendants") before the RTC, docketed as Civil Case No. 88-702, seeking to recover his total investment in
the amount of P5.8 million. Lee alleged that he was enticed to invest his money with Trendline upon Buelvas
misrepresentation that she was its duly licensed investment consultant or commodity saleswoman. His
investments, however, were lost without any explanation from the defendants.
On May 4, 1988, the RTC issued a writ of preliminary attachment whereby the Check-O-Matic Savings
Accounts of Trendline with Citytrust Banking Corporation, Ayala Branch, in the total amount of P700,962.10
were garnished. Subsequently, the RTC rendered a decision on August 8, 1989 finding defendants jointly and
severally liable to Lee for the full amount of his investment plus legal interest, attorneys fees and costs of suit.
The defendants appealed the RTC decision to the CA, docketed as CA-G.R. CV No. 23166.
Meanwhile, on April 13, 1994, Citytrust filed before the RTC an Urgent Motion and Manifestation 5 seeking a
ruling on defendants' request to release the amount of P591,748.99 out of the garnished amount for the
purpose of paying Trendlines tax obligations. Having been denied for lack of jurisdiction, Trendline filed a
similar motion6 with the CA which the latter denied for failure to prove that defendants had no other assets to
answer for its tax obligations.
On October 4, 1996, Citytrust and BPI merged, with the latter as the surviving corporation. The Articles of
Merger provide, among others, that "all liabilities and obligations of Citytrust shall be transferred to and
become the liabilities and obligations of BPI in the same manner as if the BPI had itself incurred such liabilities
or obligations."7
On December 22, 1998, the CA denied the appeal in CA-G.R. CV No. 23166 and affirmed in toto the decision
of the RTC, which had become final and executory on January 24, 1999.
Hence, Lee filed a Motion for Execution8 before the RTC on July 29, 1999, which was granted. Upon issuance
of the corresponding writ, he sought the release of the garnished deposits of Trendline. When the writ was
implemented, however, BPI Manager Samuel Mendoza, Jr. denied having possession, control and custody of
any deposits or properties belonging to defendants, prompting Lee to seek the production of their records of
accounts with BPI. However, on the manifestation of BPI that it cannot locate the defendants' bank records
with Citytrust, the RTC denied the motion on September 6, 2002.
On December 16, 2002, Lee filed a Motion for Execution and/or Enforcement of Garnishment 9 before the RTC
seeking to enforce against BPI the garnishment of Trendlines deposit in the amount of P700,962.10 and other
deposits it may have had with Citytrust. The RTC denied the motion for dearth of evidence showing that BPI
took over the subject accounts from Citytrust and the fact that BPI was not a party to the case. Lees motion
for reconsideration was likewise denied. 10

DECISION
PERLAS-BERNABE, J.:
In this Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court, petitioner Bank of the Philippine
Islands (BPI) seeks to reverse and set aside the February 11, 2009 Decision 2 and October 29, 2009

Lee elevated the matter to the CA on a petition for certiorari. In its February 11, 2009 Decision, the CA
annulled the questioned orders, finding grave abuse of discretion on the part of the RTC in denying Lees
motion to enforce the garnishment against Trendlines attached bank deposits with Citytrust, which have been
transferred to BPI by virtue of their merger. It found BPI liable to deliver to the RTC the garnished bank deposit

of Trendline in the amount of P700,962.10, which Citytrust withheld pursuant to the RTC's previously-issued
writ of attachment.
The CA refused to give credence to BPIs defense that it can no longer locate Trendlines bank records with
the defunct Citytrust, as its existence was supported by evidence and by the latter's admission. Neither did it
consider BPI a stranger to the case, holding it to have become a party in-interest upon the approval by the
Securities and Exchange Commission (SEC) of the parties Articles of Merger. BPIs Motion for
Reconsideration11 was denied in the CA's October 29, 2009 Resolution.
The Issues
In this petition, BPI ascribes the following errors to the CA:
A.
THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R. SP No. 87911,
THE PETITION FOR CERTIORARI UNDER RULE 65 OF THE REVISED RULES OF COURT,
FILED BY RESPONDENT CARLITO LEE BEING AN IMPROPER REMEDY.
B.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI BECAME
PARTY-IN-INTEREST IN THE CASE FILED BY RESPONDENT CARLITO LEE UPON THE
APPROVAL BY THE SECURITIES AND EXCHANGE COMMISSION OF ITS MERGER WITH
CITYTRUST BANKING CORPORATION.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE MOTION FOR
EXECUTION AND/OR ENFORCEMENT OF GARNISHMENT IS NOT THE APPROPRIATE
REMEDY IN THE EVENT THERE IS A THIRD PARTY INVOLVED DURING THE EXECUTION
PROCESS OF A FINAL AND EXECUTORY JUDGMENT.
D.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI SHOULD
BE HELD ACCOUNTABLE FOR THE AMOUNT OF PHP700,962.10. 12

xxx
In any of the foregoing circumstances, the aggrieved party may file an appropriate special civil
action as provided in Rule 65.13
A punctilious examination of the records will reveal that Lee had previously sought the execution of the final
and executory decision of the RTC dated August 8, 1989 which was granted and had resulted in the issuance
of the corresponding writ of execution. However, having garnished the deposits of Trendline with Citytrust in
the amount of P 700,962.10 by virtue of a writ of preliminary attachment, Lee filed anew a Motion for
Execution and/or Enforcement of Garnishment before the RTC on December 16, 2002. While the RTC denied
the motion in its March 1, 2004 Order, the denial was clearly with respect only to the enforcement of the
garnishment, to wit:
Acting on the Motion for Execution and/or Enforcement of Garnishment filed by plaintiff Carlito Lee, and there
being no evidence shown that the accounts subject of the motion were taken over by the Bank of the
Philippine Islands from Citytrust Bank and considering further that Bank of Philippine Islands is not a party to
this case, the instant Motion is DENIED for lack of merit.
SO ORDERED.14
Consequently, the foregoing Order merely involved the implementation of a writ of execution, hence,
interlocutory in nature. An interlocutory order is one that does not finally dispose of the case, and does not end
the court's task of adjudicating the parties contentions and determining their rights and liabilities as regards
each other, but obviously indicates that other things remain to be done. 15
Conformably with the provisions of Section 1, Rule 41 of the Revised Rules of Court above-quoted, the
remedy from such interlocutory order is certiorari under Rule 65. Thus, contrary to the contention of BPI, the
CA did not err in assuming jurisdiction over the petition for certiorari.
BPI likewise insists that the CA erred in considering it a party to the case by virtue of its merger with Citytrust,
the garnishee of defendants' deposits.
The Court is not convinced.
Section 5, Rule 65 of the Revised Rules of Court requires that persons interested in sustaining the
proceedings in court must be impleaded as private respondents. Upon the merger of Citytrust and BPI, with
the latter as the surviving corporation, and with all the liabilities and obligations of Citytrust transferred to BPI
as if it had incurred the same, BPI undoubtedly became a party interested in sustaining the proceedings, as it
stands to be prejudiced by the outcome of the case.

The Ruling of the Court

Section 1, Rule 41 of the Revised Rules of Court provides:
SECTION 1. Subject of appeal. - x x x
No appeal may be taken from:

It is a settled rule that upon service of the writ of garnishment, the garnishee becomes a "virtual party" or
"forced intervenor" to the case and the trial court thereby acquires jurisdiction to bind the garnishee to comply
with its orders and processes. In Perla Compania de Seguros, Inc. v. Ramolete, 16 the Court ruled:
In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not
necessary that summons be served upon him. The garnishee need not be impleaded as a party to the case.
All that is necessary for the trial court lawfully to bind the person of the garnishee or any person who has in his
possession credits belonging to the judgment debtor is service upon him of the writ of garnishment.

xxx
(b) An interlocutory order;

The Rules of Court themselves do not require that the garnishee be served with summons or impleaded in the
case in order to make him liable.

xxxx
Through the service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a "forced
intervenor" in, the case and the trial court thereby acquires jurisdiction to bind him to compliance with all
orders and processes of the trial court with a view to the complete satisfaction of the judgment of the court. 17
Citytrust, therefore, upon service of the notice of garnishment and its acknowledgment that it was in
possession of defendants' deposit accounts in its letter-reply dated June 28, 1988, became a "virtual party" to
or a "forced intervenor" in the civil case. As such, it became bound by the orders and processes issued by the
trial court despite not having been properly impleaded therein. Consequently, by virtue of its merger with BPI
on October 4, 1996, BPI, as the surviving corporation, effectively became the garnishee, thus the "virtual
party" to the civil case.
Corollarily, it should be emphasized that a merger of two corporations produces, among others, the following
effects:
1. The constituent corporations shall become a single corporation which, in case of merger, shall be the
surviving corporation designated in the plan of merger; and in case of consolidation, shall be the consolidated
corporation designated in the plan of consolidation;
2. The separate existence of the constituent corporation shall cease, except that of the surviving or the
consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers
and shall be subject to all the duties and liabilities of a corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of each of the constituent corporations; and all property, real or personal,
and all receivables due on whatever account, including subscriptions to shares and other choses in action,
and all and every other interest of, or belonging to, or due to each constituent corporation, shall be deemed
transferred to and vested in such surviving or consolidated corporation without further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations
of each of the constituent corporations in the same manner as if such surviving or consolidated corporation
had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or
against any of such constituent corporations may be prosecuted by or against the surviving or consolidated
corporation. The rights of creditors or liens upon the property of any of such constituent corporations shall not
be impaired by such merger or consolidation.18 (Underscoring supplied)
In sum, although Citytrust was dissolved, no winding up of its affairs or liquidation of its assets, privileges,
powers and liabilities took place. As the surviving corporation, BPI simply continued the combined businesses
of the two banks and absorbed all the rights, privileges, assets, liabilities and obligations of Citytrust, including
the latters obligation over the garnished deposits of the defendants.
Adopting another tack, BPI claims that Lee should have instead availed himself of the remedy provided under
Section 43, Rule 39 of the Revised Rules of Court because he is a third party to the case who denies
possession of the property.
The argument is specious.
Section 43, Rule 39 of the Revised Rules of Court states:

SECTION 43. Proceedings when indebtedness denied or another person claims the property. If it
appears that a person or corporation, alleged to have property of the judgment obligor or to be
indebted to him, claims an interest in the property adverse to him or denies the debt, the court may
authorize, by an order made to that effect, the judgment oblige to institute an action against such
person or corporation for the recovery of such interest or debt, forbid a transfer or other disposition
of such interest or debt within one hundred twenty (120) days from notice of the order, and may
punish disobedience of such order as for contempt. Such order may be modified or vacated at any
time by the court which issued it, or by the court in which the action is brought, upon such terms as
may be just. (Underscoring supplied).
The institution of a separate action against a garnishee contemplates a situation where the garnishee (third
person) "claims an interest in the property adverse to him (judgment debtor) or denies the debt." 19 Neither of
these situations exists in this case. The garnishee does not claim any interest in the deposit accounts of the
defendants, nor does it deny the existence of the deposit accounts. In fact, Citytrust admitted in its letter dated
June 28, 1988 that it is in possession of the deposit accounts.
Considering the foregoing disquisitions, BPI's liability for the garnished deposits of defendants has been
clearly established.
Garnishment has been defined as a specie of attachment for reaching credits belonging to the judgment
debtor and owing to him from a stranger to the litigation. 20 A writ of attachment is substantially a writ of
execution except that it emanates at the beginning, instead of at the termination, of a suit. It places the
attached properties in custodia legis, obtaining pendente lite a lien until the judgment of the proper tribunal on
the plaintiffs claim is established, when the lien becomes effective as of the date of the levy.21
By virtue of the writ of garnishment, the deposits of the defendants with Citytrust were placed in custodia legis
of the court. From that time onwards, their deposits were under the sole control of the RTC and Citytrust holds
them subject to its orders until such time that the attachment or garnishment is discharged, or the judgment in
favor of Lee is satisfied or the credit or deposit is delivered to the proper officer of the court. 22 Thus, Citytrust,
and thereafter BPI, which automatically assumed the formers liabilities and obligations upon the approval of
their Articles of Merger, is obliged to keep the deposit intact and to deliver the same to the proper officer upon
order of the court.
However, the RTC is not permitted to dissolve or discharge a preliminary attachment or garnishment except on
grounds specifically provided23 in the Revised Rules of Court, namely,24 (a) the debtor has posted a counterbond or has made the requisite cash deposit; 25 (b) the attachment was improperly or irregularly issued 26 as
where there is no ground for attachment, or the affidavit and/or bond filed therefor are defective or insufficient;
(c) the attachment is excessive, but the discharge shall be limited to the excess; 27 (d) the property attachment
is exempt from preliminary attachment;28 or (e) the judgment is rendered against the attaching creditor.29
Evidently, the loss of bank records of a garnished deposit is not a ground for the dissolution of garnishment.
Consequently, the obligation to satisfy the writ stands.
Moreover, BPI cannot avoid the obligation attached to the writ of garnishment by claiming that the fund was
not transferred to it, in light of the Articles of Merger which provides that "all liabilities and obligations of
Citytrust shall be transferred to and become the liabilities and obligations of BPI in the same manner as if the
BPI had itself incurred such liabilities or obligations, and in order that the rights and interest of creditors of
Citytrust or liens upon the property of Citytrust shall not be impaired by merger." 30
Indubitably, BPI IS liable to deliver the fund subject of the writ of garnishment.

With regard to the amount of the garnished fund, the Court concurs with the finding of the CA that the total
amount of garnished deposit of Trendline as of January 27, 1994 is P700,962.10, 31 extant in its motion for
partial lifting of the writ of preliminary attachment32 and which amount, as correctly observed by the CA,
remains undisputed33 throughout the proceedings relative to this case.
WHEREFORE, the instant petition is DENIED and the assailed February 11, 2009 Decision and October 29,
2009 Resolution of the Court of Appeals are AFFIRMED.

SO ORDERED.