DIVISION

[ GR No. 197802, Nov 11, 2015 ]

ZUNECA PHARMACEUTICAL v. NATRAPHARM +

RESOLUTION

VILLARAMA, JR., J.:

This is a petition for review[1] under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the April 18, 2011 Decision[2] and July 21, 2011 Resolution[3] of the Court of Appeals
(CA) in the petition for certiorari docketed as CA-G.R. SP No. 103333 granting a permanent
injunction in favor of respondent Natrapharm, Inc. and against petitioner Zuneca Pharmaceutical.

The facts follow:

Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine

bearing the generic name "CITICOLINE," which is indicated for heart and stroke patients. The
said medicine is marketed by respondent under its registered trademark "ZYNAPSE," which
respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under
Certificate of Trademark Registration No. 4-2007-005596. With its registration, the trademark
"ZYNAPSE" enjoys protection for a term of 10 years from September 24, 2007.[4]

In addition, respondent obtained from the Bureau of Food and Drugs (BFAD) all necessary permits
and licenses to register, list and sell its "ZYNAPSE" medicine in its various forms and dosages.[5]

Allegedly unknown to respondent, since 2003 or even as early as 2001, petitioners have been
selling a medicine imported from Lahore, Pakistan bearing the generic name
"CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name
"ZYNAPS," which trademark is however not registered with the IPO. "ZYNAPS" is pronounced
exactly like "ZYNAPSE."[6]

Respondent further alleged that petitioners are selling their product "ZYNAPS"
CARBAMAZEPINE in numerous drugstores in the country where its own product "ZYNAPSE"
CITICOLINE is also being sold.[7]

Moreover, respondent claimed that the drug CARBAMAZEPINE has one documented serious and
disfiguring side-effect called "Stevens-Johnson Syndrome," and that the sale of the medicines
"ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to medicine switching.[8]

On October 30, 2007, respondent sent petitioners a cease-and-desist demand letter, pointing out
that:
"ZYNAPSE" is the registered trademark of [respondent], and that as such owner, it has exclusive
trademark right under the law to the use thereof and prevent others from using identical or
confusingly similar marks, and that [petitioners] must stop the use of "ZYNAPS" for being nearly
identical to "ZYNAPSE"; and

Because there is confusing similarity between "ZYNAPSE" and "ZYNAPS," there is a danger of
medicine switching, with the patient on "ZYNAPSE" medication placed in a more injurious
situation given the Steven-Johnson Syndrome side effect of the "ZYNAPS"
CARBAMAZEPINE.[9]

Petitioners refused to heed the above demand, claiming that they had prior use of the name
"ZYNAPS" since year 2003, having been issued by the BFAD a Certificate of Product Registration
(CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under the brand name
"ZYNAPS."[10]

On November 29, 2007, respondent filed a complaint against petitioners for trademark
infringement for violation of Republic Act (R.A.) No. 8293, or the Intellectual Property Code of
the Philippines (IPC), with prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. To justify the TRO/writ of preliminary injunction, respondent cited Section
122[11] of R.A. No. 8293, under which the registration of "ZYNAPSE" gives it the exclusive right
to use the said name as well as to exclude others from using the same.[12] In addition, respondent
argued that under Sections 138[13] and 147.1[14] of the IPC, certificates of registration are prima
facie evidence of the registrant's ownership of the mark and of the registrant's exclusive right to
use the same.[15] Respondent also invoked the case of Conrad and Company, Inc. v. Court of
Appeals[16] where it was ruled that an invasion of a registered mark entitles the holder of a
certificate of registration thereof to injunctive relief.[17]

In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name
"ZYNAPS," having submitted their application for CPR with the BFAD on October 2, 2001, with
the name "ZYNAPS" expressly indicated thereon. The CPR was issued to them on April 15,
2003.[18] Moreover, petitioners averred that under Section 159[19] of the IPC their right to use
the said mark is protected.[20]

In its December 21, 2007 Order,[21] the Regional Trial Court (RTC) denied respondent's
application for a TRO, ruling that even if respondent was able to first register its mark
"ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by petitioners
of "ZYNAPS" in 2003.

In its March 12, 2008 Order,[22] the RTC denied the application for a writ of preliminary
injunction, reiterating the reasons stated in the order denying the application for a TRO:
In this Court's objective evaluation, neither party is, at this point, entitled to any injunctive solace.
Plaintiff, while admittedly the holder of a registered trademark under the IPC, may not invoke
ascendancy or superiority of its CTR [certificate of trademark registration] over the CPR
[certificate of product registration of the BFAD] of the defendants, as the latter certificate is, in the
Court's opinion, evidence of its "prior use". Parenthetically, the plaintiff would have been entitled
to an injunction as against any or all third persons in respect of its registered mark under normal
conditions, that is, in the event wherein Section 159.1 would not be invoked by such third person.
Such is the case however in this litigation. Section 159 of the IPC explicitly curtails the registrant's
rights by providing for limitations on those rights as against a "prior user" under Section 159.1
xxx.[23]

Via a petition for certiorari with an application for a TRO and/or a writ of preliminary injunction,
respondent questioned before the CA the RTC's denial of the application for a writ of preliminary
injunction.

On June 17, 2008, the CA issued a Resolution[24] denying respondent's application for TRO
and/or preliminary injunction for lack of merit. The CA found no compelling reason to grant the
application for TRO and/or preliminary injunction because there was no showing that respondent
had a clear and existing right that will be violated by petitioners. Respondent moved for
reconsideration but was denied by the CA in its July 31, 2008 Resolution.[25]

However, contrary to its earlier resolutions denying the application for a TRO/preliminary
injunction, the CA, in its April 18, 2011 Decision, upheld the allegations of respondent that it is
entitled to injunctive relief on the basis of its IPO registration and permanently enjoined petitioners
from the commercial use of "ZYNAPS." The fallo of the CA Decision reads:

WHEREFORE, premises considered, the Petition for Certiorari is GRANTED. The assailed
Omnibus Order dated 12 March 2008 of the Regional Trial Court, Branch 93 of Quezon City in
Civil Case No. Q-07-61561 is REVERSED and SET ASIDE, and a new one is entered permanently
ENJOINING defendants-respondents, their employees, agents, representatives, dealers, retailers,
and/or assigns, and any and all persons acting in their behalf, from manufacturing, importing,
distributing, selling and/or advertising for sale, or otherwise using in commerce, the anti-
convulsant drug CARBAMAZEPINE under the brand name and mark "ZYNAPS," or using any
other name which is similar or confusingly similar to petitioner's registered trademark
"ZYNAPSE," including filing of application for permits, license, or certificate of product
registration with the Food and Drug Administration and other government agencies.

SO ORDERED.[26] (Underscoring and additional emphasis supplied)

Petitioners' motion for reconsideration was denied by the CA in its Resolution dated July 21, 2011.
Hence, this petition for review.

On December 2, 2011, the RTC rendered a Decision[27] on the merits of the case. It found
petitioners liable to respondent for damages. Moreover, it enjoined the petitioners from using
"ZYNAPS" and ordered all materials related to it be disposed outside the channel of commerce or
destroyed without compensation.[28]

Respondent moved to dismiss the present petition in view of the December 2, 2011 RTC Decision
which functions as a full adjudication on the merits of the main issue of trademark infringement.
Respondent contended that the present petition is moot and academic, it only involving an ancillary
writ.[29]

Petitioners, on the other hand, opposed the motion to dismiss arguing that the December 2, 2011
RTC Decision had not yet attained finality, thus, the present petition had not yet been rendered
moot.

The two issues which need to be addressed are:

1) Whether the decision on the merits rendered the issues in this case moot and academic? and

2) Whether the CA may order a permanent injunction in deciding a petition for certiorari against
the denial of an application for a preliminary injunction issued by the RTC?

We hold that the issues raised in the instant petition have been rendered moot and academic given
the RTC's December 2, 2011 Decision on the merits of the case.

Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section 1,
Rule 58 provides for the definition of preliminary injunction:

SECTION 1. Preliminary injunction defined; classes. — A preliminary injunction is an order

granted at any stage of an action or proceeding prior to the judgment or final order, requiring a
party or a court, agency or a person to refrain from a particular act or acts. It may also require the
performance of a particular act or acts, in which case it shall be known as a preliminary mandatory
injunction. (Emphasis supplied)

On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:

SEC. 9. When final injunction granted. — If after the trial of the action it appears that the applicant
is entitled to have the act or acts complained of permanently enjoined, the court shall grant a final
injunction perpetually restraining the party or person enjoined from the commission or continuance
of the act or acts or confirming the preliminary mandatory injunction. (Emphasis supplied)

A writ of preliminary injunction is generally based solely on initial and incomplete evidence.[30]
The evidence submitted during the hearing on an application for a writ of preliminary injunction
is not conclusive or complete for only a sampling is needed to give the trial court an idea of the
justification for the preliminary injunction pending the decision of the case on the merits.[31] As
such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction
are interlocutory in nature and made even before the trial on the merits is commenced or
terminated.[32]

By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms part
of the judgment on the merits and it can only be properly ordered only on final judgment. A
permanent injunction may thus be granted after a trial or hearing on the merits of the case and a
decree granting or refusing an injunction should not be entered until after a hearing on the merits
where a verified answer containing denials is filed or where no answer is required, or a rule to
show cause is equivalent to an answer.[33]

As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot
survive the main case of which it is an incident; because an ancillary writ of preliminary injunction
loses its force and effect after the decision in the main petition.34

In Casilan v. Ybañez,[35] this Court stated:

As things stand now, this Court can no longer interfere with the preliminary injunctions issued by
the Leyte court in its cases Nos. 2985 and 2990, because such preliminary writs have already been
vacated, being superseded and replaced by the permanent injunction ordered in the decision on the
merits rendered on 21 March 1962. And as to the permanent injunction, no action can be taken
thereon without reviewing the judgment on the merits, such injunction being but a consequence of
the pronouncement that the credits of Tiongson and Montilla are entitled to priority over that of
Casilan. Since the court below had the power and right to determine such question of preference,
its judgment is not without, nor in excess of, jurisdiction; and even assuming that its findings are
not correct, they would, at most, constitute errors of law, and not abuses of discretion, correctible
by certiorari. The obvious remedy for petitioner Casilan was a timely appeal from the judgment
on the merits to the Court of Appeals, the amount involved being less than P200,000. But the
judgment has become final and unappealable and can not be set aside through certiorari
proceedings. (Emphasis supplied)

Here, this Court is being asked to determine whether the CA erred by issuing a permanent
injunction in a case which questioned the propriety of the denial of an ancillary writ. But with the
RTC's December 2, 2011 Decision on the case for "Injunction, Trademark Infringement, Damages
and Destruction," the issues raised in the instant petition have been rendered moot and academic.
We note that the case brought to the CA on a petition for certiorari merely involved the RTC's
denial of respondent's application for a writ of preliminary injunction, a mere ancillary writ. Since
a decision on the merits has already been rendered and which includes in its disposition a
permanent injunction, the proper remedy is an appeal36 from the decision in the main case.
WHEREFORE, in light of all the foregoing, the petition is hereby DENIED for being moot and
academic.

SO ORDERED.

BF HOMES, INC. and THE PHILIPPINE WATERWORKS AND CONSTRUCTION

CORP.,

Petitioners,

- versus -

MANILA ELECTRIC COMPANY

Respondent

G.R. No. 17162

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision[1]
dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826, nullifying and setting
aside (1) the Order[2] dated November 21, 2003 of the Regional Trial Court (RTC), Branch 202
of Las Pias City, in Civil Case No. 03-0151, thereby dissolving the writ of injunction against
respondent Manila Electric Company (MERALCO); and (2) the Resolution[3] dated February 7,
2006 of the Court of Appeals denying the Motion for Reconsideration of petitioners BF Homes,
Inc. (BF Homes) and Philippine Waterworks and Construction Corporation (PWCC).

MERALCO is a corporation duly organized and existing under Philippine laws engaged in the
distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and PWCC
are owners and operators of waterworks systems delivering water to over 12,000 households and
commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City, Caloocan City,
and Quezon City. The water distributed in the waterworks systems owned and operated by BF
Homes and PWCC is drawn from deep wells using pumps run by electricity supplied by
MERALCO.

On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of Writ of
Preliminary Injunction and for the Immediate Issuance of Restraining Order] against MERALCO
before the RTC, docketed as Civil Case No. 03-0151.
In their Petition before the RTC, BF Homes and PWCC invoked their right to refund based on the
ruling of this Court in Republic v. Manila Electric Company[4]:

7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314, entitled Republic of the
Philippines vs. Manila Electric Company, and G.R. No. 141369, entitled Lawyers Against
Monopoly and Poverty (LAMP) et al. vs. Manila Electric Compnay (MERALCO), (both cases
shall hereafter be referred to as MERALCO Refund cases, for brevity), the Supreme Court ordered
MERALCO to refund its customers, which shall be credited against the customers future
consumption, the excess average amount of P0.167 per kilowatt hour starting with the customers
billing cycles beginning February 1998. The dispositive portion of the Supreme Court Decision in
the MERALCO Refund cases reads:

WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the decision of
the Court of Appeals in C.A. G.R. SP No. 46888 is REVERSED. Respondent MERALCO is
authorized to adopt a rate adjustment in the amount of P0.017 kilowatthour, effective with respect
to MERALCOs billing cycles beginning February 1994. Further, in accordance with the decision
of the ERB dated February 16, 1998, the excess average amount of P0.167 per kilowatt hour
starting with the applicants billing cycles beginning February 1998 is ordered to be refunded to
MERALCOs customers or correspondingly credited in their favor for future consumption.

8. The Motion for Reconsideration filed by MERALCO in the MERALCO Refund cases was
DENIED WITH FINALITY (the uppercase letters were used by the Supreme Court) in the
Resolution of the Supreme Court dated April 9, 2003.

9. The amount that MERALCO was mandated to refund to [BF Homes and PWCC] pursuant to
the MERALCO Refund cases is in the amount of P11,834,570.91.[5]

BF Homes and PWCC then alleged in their RTC Petition that:

10. On May 20, 2003, without giving any notice whatsoever, MERALCO disconnected electric
supply to [BF Homes and PWCCs] sixteen (16) water pumps located in BF Homes in Paraaque,
Caloocan, and Quezon City, which thus disrupted water supply in those areas.

11. On June 4, 2003, [BF Homes and PWCC] received by facsimile transmission a letter from
MERALCO, x x x, in which MERALCO demanded to [BF Homes and PWCC] the payment of
electric bills amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting MERALCO to apply
the P4,717,768.15 electric bill against the P11,834,570.91 that MERALCO was ordered to refund
to [BF Homes and PWCC] pursuant to the MERALCO Refund cases. x x x

13. Displaying the arrogance that has become its distinction, MERALCO, in its letter dated June
16, 2003, x x x, denied [BF Homes and PWCCs] request alleging that it has not yet come up with
the schedule for the refund of large amounts, such as those of [BF Homes and PWCC].

14. Even while MERALCO was serving its reply-letter to [BF Homes and PWCC], MERALCO,
again, without giving any notice, cut off power supply to [BF Homes and PWCCs] five (5) water
pumps located in BF Homes Paraaque and BF Resort Village, in Pamplona, Las Pias City.

15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to cut off electric power
connections to all of [BF Homes and PWCCs] water pumps if [BF Homes and PWCC] failed to
pay their bills demanded by MERALCO by June 20, 2003.[6]

BF Homes and PWCC thus cited the following causes of action for their RTC Petition

16. In refusing to apply [MERALCOs] electric bills against the amounts that it was ordered to
refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases and in making the
implementation of the refund ordered by the Supreme Court dependent upon its own will and
caprice, MERALCO acted with utmost bad faith.

17. [BF Homes and PWCC] are clearly entitled to the remedies under the law to compel
MERALCO to consider [BF Homes and PWCCs] electric bills fully paid by the amounts which
MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund
cases, to enjoin MERALCO to reconnect electric power to all of [BF Homes and PWCCs] water
pumps, and to order MERALCO to desist from further cutting off power connection to [BF Homes
and PWCCs] water pumps.

18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF Homes and PWCCs]
good name and besmirched their reputation for which [BF Homes and PWCC] should be
indemnified by way of moral damages in the amount of not less than P1,000,000.00.

19. As an example for the public good, to dissuade others from emulating MERALCOs unjust,
oppressive and mercenary conduct, MERALCO should be directed to pay [BF Homes and PWCC]
exemplary damages of at least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF Homes and PWCC] to engage the
services of counsel to defend their rights and thereby incur litigation expenses in the amount of at
least P500,000.00 for which [BF Homes and PWCC] should be indemnified.[7]

BF Homes and PWCC additionally prayed that the RTC issue a writ of preliminary injunction and
restraining order considering that:

21. As indicated in its letter dated June 4, 2003 (Annex A), unless seasonably restrained,
MERALCO will cut off electric power connections to all of [BF Homes and PWCCs] water pumps
on June 20, 2003.

22. Part of the reliefs herein prayed for is to restrain MERALCO from cutting off electric power
connections to [BF Homes and PWCCs] water pumps.

23. Unless MERALCOS announced intention to cut off electric power connections to [BF Homes
and PWCCs] water pumps is restrained, [BF Homes and PWCC] will suffer great and irreparable
injury because they would not [be] able to supply water to their customers.
24. [BF Homes and PWCC] therefore pray that a writ for preliminary injunction be issued upon
posting of a bond in an amount as will be determined by this Honorable Court.

25. [BF Homes and PWCC] further pray that, in the meantime and immediately upon the filing of
the above captioned Petition, a restraining order be issued before the matter of preliminary
injunction can be heard.[8]

On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and
Opposition to the Application for Writ of Preliminary Injunction[9] of BF Homes and PWCC.

According to MERALCO:

2.2. Both petitioners BF Homes, Incorporated and Philippine Waterworks Corporation are
admittedly the registered customers of [MERALCO] by virtue of the service contracts executed
between them under which the latter undertook to supply electric energy to the former for a fee.
The following twenty-three (23) Service Identification Nos. (SINs) are registered under the name
of BF Homes, Incorporated: x x x. While the following twenty-one (21) Service Identification
Nos. (SINs) are registered under the name of Philippine Waterworks Construction Corporation: x
xx
xxxx

2.4. The service contracts as well as the terms and conditions of [MERALCOs] service as approved
by BOE [Board of Energy], now ERC [Energy Regulatory Commission], provide in relevant parts,
that [BF Homes and PWCC] agree as follows:

DISCONTINUANCE OF SERVICE:

The Company reserves the right to discontinue service in case the customer is in arrears in the
payment of bills or for failure to pay the adjusted bills in those cases where the meter stopped or
failed to register the correct amount of energy consumed, or for failure to comply with any of these
terms and conditions, or in case of or to prevent fraud upon the Company. Before disconnection is
made in the case of, or to prevent fraud, the Company may adjust the bill of said customer
accordingly and if the adjusted bill is not paid, the Company may disconnect the same. (Emphasis
supplied)

2.5. This contractual right of [MERALCO] to discontinue electric service for default in the
payment of its regular bills is sanctioned and approved by the rules and regulations of ERB (now
the ERC). This right is necessary and reasonable means to properly protect and enable
[MERALCO] to perform and discharge its legal and contractual obligation under its legislative
franchise and the law. Cutting off service for non-payment by the customers of the regular monthly
electric bills is the only practical way a public utility, such as [MERALCO], can ensure and
maintain efficient service in accordance with the terms and conditions of its legislative franchise
and the law.

xxxx

2.14. Instead of paying their unpaid electric bills and before [MERALCO] could effect its legal
and contractual right to disconnect [BF Homes and PWCCs] electric services, [BF Homes and
PWCC] filed the instant petition to avoid payment of [MERALCOs] valid and legal claim for
regular monthly electric bills.

2.15. [BF Homes and PWCCs] unpaid regular bills totaled P6,551,969.55 covering the May and
June 2003 electric bills. x x x

xxxx

2.17. [BF Homes and PWCC] knew that [MERALCO] is already in the process of implementing
the decision of the Supreme Court as to the refund case. But this refund has to be implemented in
accordance with the guidelines and schedule to be approved by the ERC. Thus [BF Homes and
PWCCs] filing of the instant petition is merely to evade payment of their unpaid electric bills to
[MERALCO].[10]

Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on the
following grounds:

3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF Homes and
PWCC] because:

a) The petition is in effect preempting or defeating the power of the ERC to implement the
decision of the Supreme Court.

b) [MERALCO] is a utility company whose business activity is wholly regulated by the ERC.
The latter, being the regulatory agency of the government having the authority over the respondent,
is the one tasked to approve the guidelines, schedules and details of the refund.

c) The decision of the Supreme Court, dated November 15, 2002, clearly states that respondent
is directed to make the refund to its customers in accordance with the decision of the ERC
(formerly ERB) dated February 16, 1998. Hence, [MERALCO] has to wait for the schedule and
details of the refund to be approved by the ERC before it can comply with the Supreme Court
decision.

3.2. [MERALCO] has the right to disconnect the electric service to [BF Homes and PWCC]
in that:

a) The service contracts between [MERALCO] and [BF Homes and PWCC] expressly authorize
the former to discontinue and disconnect electric services of the latter for their failure to pay the
regular electric bills rendered.

b) It is [MERALCOs] legal duty as a public utility to furnish its service to the general public
without arbitrary discrimination and, consequently, [MERALCO] is obligated to discontinue and
disconnect electric services to [BF Homes and PWCC] for their refusal or failure to pay the electric
energy actually used by them.[11]

For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and PWCC
to pay MERALCO P6,551,969.55 as actual damages (representing the unpaid electric bills of BF
Homes and PWCC for May and June 2003), P1,500,000.00 as exemplary damages, P1,500,000.00
as moral damages, and P1,000,000.00 as attorneys fees.
Lastly, MERALCO opposed the application for writ of preliminary injunction of BF Homes and
PWCC because:

[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND PAYMENT

OF THE ELECTRIC BILLS AND, IN CASE OF NON-PAYMENT, TO DISCONTINUE THE
ELECTRIC SERVICES OF [BF HOMES and PWCC]

II

[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS PROTECTION
BY INJUNCTIVE PROCESS
After hearing,[12] the RTC issued an Order on November 21, 2003 granting the application of BF
Homes and PWCC for the issuance of a writ of preliminary injunction. The RTC found that the
records showed that all requisites for the issuance of said writ were sufficiently satisfied by BF
Homes and PWCC. The RTC stated in its Order:

Albeit, this Court respects the right of a public utility company like MERALCO, being a grantee
of a legislative franchise under Republic Act No. 9029, to collect overdue payments from its
subscribers or customers for their respective consumption of electric energy, such right must,
however, succumb to the paramount substantial and constitutional rights of the public to the usage
and enjoyment of waters in their community. Thus, there is an urgent need for the issuance of a
writ of preliminary injunction in order to prevent social unrest in the community for having been
deprived of the use and enjoyment of waters flowing through [BF Homes and PWCCs] water
pumps.[13]

The RTC decreed in the end:

WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for the issuance of
a writ of preliminary injunction is hereby GRANTED. Respondent Manila Electric Company is
permanently restrained from proceeding with its announced intention to cut-off electric power
connection to [BF Homes and PWCCs] water pumps unless otherwise ordered by this Court.
Further, [BF Homes and PWCC] are hereby ordered to post a bond in the amount of P500,000 to
answer for whatever injury or damage that may be caused by reason of the preliminary
injunction.[14]
The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the
RTC in another Order issued on January 9, 2004.[15] The RTC reiterated its earlier finding that
all the requisites for the proper issuance of an injunction had been fully complied with by BF
Homes and PWCC, thus:

Records indubitably show that all the requisites for the proper issuance of an injunction have been
fully complied with in the instant case.

It should be noted that a disconnection of power supply would obviously cause irreparable injury
because the pumps that supply water to the BF community will be without electricity, thereby
rendering said community without water. Water is a basic and endemic necessity of life. This is
why its enjoyment and use has been constitutionally safeguarded and protected. Likewise, a
community without water might create social unrest, which situation this Court has the mandate
to prevent. There is an urgent and paramount necessity for the issuance of the injunctive writ to
prevent serious damage to the guaranteed rights of [BF Homes and PWCC] and the residents of
the community to use and enjoy water.[16]

The RTC resolved the issue on jurisdiction raised by MERALCO, as follows:

As to the jurisdictional issue raised by respondent MERALCO, it can be gleaned from a re-
evaluation and re-assessment of the records that this Court has jurisdiction to delve into the case.
This Court gave both parties the opportunity to be heard as they introduced evidence on the
propriety of the issuance of the injunctive writ. It is well-settled that no grave abuse of discretion
could be attributed to its issuance where a party was not deprived of its day in court as it was heard
and had exhaustively presented all its arguments and defenses. (National Mines and Allied
Workers Union vs. Valero, 132 SCRA 578, 1984.)[17]

Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of
the Rules of Court, docketed as CA-G.R. SP No. 82826. MERALCO sought the reversal of the
RTC Orders dated November 21, 2003 and January 9, 2004 granting a writ of preliminary
injunction in favor of BF Homes and PWCC. MERALCO asserted that the RTC had no jurisdiction
over the application of BF Homes and PWCC for issuance of such a writ.

In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the
RTC had no jurisdiction to issue a writ of preliminary injunction in Civil Case No. 03-0151, as
said trial court had no jurisdiction over the subject matter of the case to begin with. It ratiocinated
in this wise:

For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction over the case.
Explicitly, Section 43(u) of Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act, (RA 9136), states that the ERC shall have the original and exclusive
jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities and over all cases involving disputes between
and among participants or players in the energy sector. Section 4(o) of Rule 3 of the Implementing
Rules and Regulations of RA 9136 likewise provides that the ERC shall also be empowered to
issue such other rules that are essential in the discharge of its functions as an independent quasi-
judicial body.

For another, the respondent judge, instead of presiding over the case, should have dismissed the
same and yielded jurisdiction to the ERC pursuant to the doctrine of primary jurisdiction. It is plain
error on the part of the respondent judge to determine, preliminary or otherwise, a controversy
involving a question which is within the jurisdiction of an administrative tribunal, especially so
where the question demands the exercise of sound administrative discretion.

Needless to state, the doctrine of primary jurisdiction applies where the administrative agency, as
in the case of ERC, exercises its quasi-judicial and adjudicatory function. Thus, in cases involving
specialized disputes, the practice has been to refer the same to an administrative agency of special
competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a
controversy involving a question which is within the jurisdiction of the administrative tribunal
prior to the resolution of that question by the administrative tribunal, where the question demands
the exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the regulatory statute administered.

Verily, the cause of action of [BF Homes and PWCC] against [MERALCO] originates from the
Meralco Refund Decision as it involves the perceived right of the former to compel the latter to
set-off or apply their refund to their present electric bill. The issue delves into the right of the
private respondents to collect their refund without submitting to the approved schedule of the ERC,
and in effect give unto themselves preferential right over other equally situated consumers of
[MERALCO]. Perforce, the ERC, as can be gleaned from the afore-stated legal provisions, has
primary, original and exclusive jurisdiction over the said controversy.

Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO] to disconnect
its services to [BF Homes and PWCC] on the premise that the court has jurisdiction to apply the
provisions on compensation or set-off in this case. Although [MERALCO] recognizes the right of
[BF Homes and PWCC] to the refund as provided in the Meralco Refund Decision, it is the ERC
which has the authority to implement the same according to its approved schedule, it being a
dispute arising from the exercise of its jurisdiction.

Moreover, it bears to stress that the Meralco Refund Decision was brought into fore by the
Decision dated 16 February 1998 of the ERC (then Energy Regulatory Board) granting refund to
[MERALCOs] consumers. Being the agency of origin, the ERC has the jurisdiction to execute the
same. Besides, as stated, it is empowered to promulgate rules that are essential in the discharge of
its functions as an independent quasi-judicial body.[18]

The dispositive portion of the judgment of the appellate court reads:

WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the
assailed Orders REVERSED and SET ASIDE. Accordingly, the writ of injunction against
[MERALCO] is hereby DISSOLVED. No costs.[19]

In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion for
Reconsideration of BF Homes and PWCC for failing to raise new and persuasive and meritorious
arguments.

Now, BF Homes and PWCC come before this Court via the instant Petition, raising the following
assignment of errors:

1. The Court of Appeals ERRED in saying that the respondent judge committed grave abuse of
discretion by issuing the disputed writ of injunction pending the merits of the case including the
issue of subject matter jurisdiction.

2. The Court of Appeals ERRED in saying that the ERC under the doctrine of primary
jurisdiction has the original and EXCLUSIVE jurisdiction to take cognizance of a petition for
injunction to prevent electrical disconnection to a customer entitled to a refund.
3. The Court of Appeals ERRED in NOT SAYING that the ERC as a quasi-judicial body under
RA 9136 has no power to issue any injunctive relief or remedy to prevent disconnection.

4. The Court of Appeals ERRED in not resolving the issue as to the violation of MERALCO of a
standing injunction order while the case remains undecided.[20]

At the core of the Petition is the issue of whether jurisdiction over the subject matter of Civil Case
No. 03-0151 lies with the RTC or the Energy Regulatory Commission (ERC). If it is with the RTC,
then the said trial court also has jurisdiction to issue the writ of preliminary injunction against
MERALCO. If it is with the ERC, then the RTC also has no jurisdiction to act on any incidents in
Civil Case No. 03-0151, including the application for issuance of a writ of preliminary injunction
of BF Homes and PWCC therein.

BF Homes and PWCC argued that due to the threat of MERALCO to disconnect electric services,
BF Homes and PWCC had no other recourse but to seek an injunctive remedy from the RTC under
its general jurisdiction. The merits of Civil Case No. 03-0151 was not yet in issue, only the
propriety of issuing a writ of preliminary injunction to prevent an irreparable injury. Even granting
that the RTC has no jurisdiction over the subject matter of Civil Case No. 03-0151, the ERC by
enabling law has no injunctive power to prevent the disconnection by MERALCO of electric
services to BF Homes and PWCC.
The Petition has no merit.

Settled is the rule that jurisdiction is conferred only by the Constitution or the law.[21] Republic
v. Court of Appeals[22] also enunciated that only a statute can confer jurisdiction on courts and
administrative agencies.

Related to the foregoing and equally well-settled is the rule that the nature of an action and the
subject matter thereof, as well as which court or agency of the government has jurisdiction over
the same, are determined by the material allegations of the complaint in relation to the law involved
and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to
any or all of such reliefs. A prayer or demand for relief is not part of the petition of the cause of
action; nor does it enlarge the cause of action stated or change the legal effect of what is alleged.
In determining which body has jurisdiction over a case, the better policy is to consider not only
the status or relationship of the parties but also the nature of the action that is the subject of their
controversy.[23]

In Manila Electric Company v. Energy Regulatory Board,[24] the Court traced the legislative
history of the regulatory agencies which preceded the ERC, presenting a summary of these
agencies, the statutes or issuances that created them, and the extent of the jurisdiction conferred
upon them, viz:
1. The first regulatory body, the Board of Rate Regulation (BRR), was created by virtue of Act
No. 1779. Its regulatory mandate under Section 5 of the law was limited to fixing or regulating
rates of every public service corporation.

2. In 1913, Act No. 2307 created the Board of Public Utility Commissioners (BPUC) to take over
the functions of the BRR. By express provision of Act No. 2307, the BPUC was vested with
jurisdiction, supervision and control over all public utilities and their properties and franchises.

3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the Public Service Act (PSA),
was passed creating the Public Service Commission (PSC) to replace the BPUC. Like the BPUC,
the PSC was expressly granted jurisdiction, supervision and control over public services, with the
concomitant authority of calling on the public force to exercise its power, to wit:

SEC. 13. Except as otherwise provided herein, the Commission shall have general supervision and
regulation of, jurisdiction and control over, all public utilities, and also over their property,
property rights, equipment, facilities and franchises so far as may be necessary for the purpose of
carrying out the provisions of this Act, and in the exercise of its authority it shall have the necessary
powers and the aid of the public force x x x.

Section 14 of C.A. No. 146 defines the term public service or public utility as including every
individual, copartnership, association, corporation or joint-stock company, . . . that now or
hereafter may own, operate, manage or control within the Philippines, for hire or compensation,
any common carrier, x x x, electric light, heat, power, x x x, when owned, operated and managed
for public use or service within the Philippines x x x. Under the succeeding Section 17(a), the PSC
has the power even without prior hearing

(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning
any public service as regards matters under its jurisdiction; to require any public service to furnish
safe, adequate and proper service as the public interest may require and warrant, to enforce
compliance with any standard, rule, regulation, order or other requirement of this Act or of the
Commission, x x x.

4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national government and
implementing the Integrated Reorganization Plan. Under the reorganization plan, jurisdiction,
supervision and control over public services related to electric light, and power heretofore vested
in the PSC were transferred to the Board of Power and Waterworks (BOPW).

Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to power utilities,
including its authority to grant provisional relief, were transferred to the newly-created Board of
Energy (BOE).

5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172 reconstituting the BOE
into the ERB, transferring the formers functions and powers under P.D. No. 1206 to the latter and
consolidating in and entrusting on the ERB all the regulatory and adjudicatory functions covering
the energy sector. Section 14 of E.O. No. 172 states that (T)he applicable provisions of [C.A.] No.
146, as amended, otherwise known as the Public Service Act; x x x and [P.D.] No. 1206, as
amended, creating the Department of Energy, shall continue to have full force and effect, except
insofar as inconsistent with this Order.[25]

Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry Reform
Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the electric power
industry. One of the avowed purposes of the EPIRA is to establish a strong and purely independent
regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers and functions
not inconsistent with the provision of the EPIRA were expressly transferred to the ERC.[26]

The powers and functions of the ERB not inconsistent with the EPIRA were transferred to the
ERC by virtue of Sections 44 and 80 of the EPIRA, which read:

Sec. 44. Transfer of Powers and Functions. The powers and functions of the Energy Regulatory
Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The
foregoing transfer of powers and functions shall include all applicable funds and appropriations,
records, equipment, property and personnel as may be necessary.

Sec. 80. Applicability and Repealing Clause. The applicability provisions of Commonwealth Act
No. 146, as amended, otherwise known as the Public Service Act. Republic Act 6395, as amended,
revising the charter of NPC; Presidential Decree 269, as amended, referred to as the National
Electrification Decree; Republic Act 7638, otherwise known as the Department of Energy Act of
1992; Executive Order 172, as amended, creating the ERB; Republic Act 7832 otherwise known
as the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994; shall
continue to have full force and effect except insofar as they are inconsistent with this Act.

The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as amended,
and Section 5(f) of Republic Act 7227, are hereby repealed or modified accordingly.

Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof,
inconsistent with this Act are hereby repealed or modified accordingly.

In addition to the foregoing, the EPIRA also conferred new powers upon the ERC under Section
43, among which are:

SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the restructured
electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after
due notice and hearing. Towards this end, it shall be responsible for the following key functions
in the restructured industry:
xxxx

(f) In the public interest, establish and enforce a methodology for setting transmission and
distribution wheeling rates and retail rates for the captive market of a distribution utility, taking
into account all relevant considerations, including the efficiency or inefficiency of the regulated
entities. The rates must be such as to allow the recovery of just and reasonable costs and a
reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt
alternative forms of internationally-accepted rate-setting methodology as it may deem appropriate.
The rate-setting methodology so adopted and applied must ensure a reasonable price of electricity.
The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the
complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed
in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced by caps which
shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage
and other technical considerations it may promulgate. The ERC shall determine such form of rate-
setting methodology, which shall promote efficiency. x x x.

xxxx

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees,
fines and penalties imposed by the ERC in the exercise of the abovementioned powers, functions
and responsibilities and over all cases involving disputes between and among participants or
players in the energy sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be
published at least twice for two successive weeks in two (2) newspapers of nationwide circulation.

A careful review of the material allegations of BF Homes and PWCC in their Petition before the
RTC reveals that the very subject matter thereof is the off-setting of the amount of refund they are
supposed to receive from MERALCO against the electric bills they are to pay to the same
company. This is squarely within the primary jurisdiction of the ERC.

The right of BF Homes and PWCC to refund, on which their claim for off-setting depends,
originated from the MERALCO Refund cases. In said cases, the Court (1) authorized MERALCO
to adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with respect to its
billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its customers or
credit in said customers favor for future consumption P0.167 per kilowatthour, starting with the
customers billing cycles that begin February 1998, in accordance with the ERB Decision dated
February 16, 1998.

It bears to stress that in the MERALCO Refund cases, this Court only affirmed the February 16,
1998 Decision of the ERB (predecessor of the ERC) fixing the just and reasonable rate for the
electric services of MERALCO and granting refund to MERALCO consumers of the amount they
overpaid. Said Decision was rendered by the ERB in the exercise of its jurisdiction to determine
and fix the just and reasonable rate of power utilities such as MERALCO.
Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all
cases contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its powers,
functions and responsibilities, and over all cases involving disputes between and among
participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules and
Regulation provides that the ERC shall also be empowered to issue such other rules that are
essential in the discharge of its functions as in independent quasi-judicial body.

Indubitably, the ERC is the regulatory agency of the government having the authority and
supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details of
the refund by MERALCO to its consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF
Homes and PWCC intend to collect their refund without submitting to the approved schedule of
the ERC, and in effect, enjoy preferential right over the other equally situated MERALCO
consumers.

Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such, could
wield only such as are specifically granted to them by the enabling statutes. In relation thereto is
the doctrine of primary jurisdiction involving matters that demand the special competence of
administrative agencies even if the question involved is also judicial in nature. Courts cannot and
will not resolve a controversy involving a question within the jurisdiction of an administrative
tribunal, especially when the question demands the sound exercise of administrative discretion
requiring special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact. The court cannot arrogate into itself the authority to resolve
a controversy, the jurisdiction of which is initially lodged with the administrative body of special
competence.[27]
Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case No.
03-0151, then it was also devoid of any authority to act on the application of BF Homes and PWCC
for the issuance of a writ of preliminary injunction contained in the same Petition. The ancillary
and provisional remedy of preliminary injunction cannot exist except only as an incident of an
independent action or proceeding.[28]

Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of Executive Order No.
172 which explicitly vested on the ERB, as an incident of its principal function, the authority to
grant provisional relief, thus:

Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing of an application,
petition or complaint or at any stage thereafter and without prior hearing, on the basis of supporting
papers duly verified or authenticated, grant provisional relief on motion of a party in the case or
on its own initiative, without prejudice to a final decision after hearing, should the Board find that
the pleadings, together with such affidavits, documents and other evidence which may be
submitted in support of the motion, substantially support the provisional order: Provided, That the
Board shall immediately schedule and conduct a hearing thereon within thirty (30) days thereafter,
upon publication and notice to all affected parties.

The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by virtue of
Section 80 of the EPIRA. A writ of preliminary injunction is one such provisional relief which a
party in a case before the ERC may move for.
Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction to issue the
writ of preliminary injunction against MERALCO, but that the RTC actually had no jurisdiction
at all over the subject matter of the Petition of BF Homes and PWCC in Civil Case No. 03-0151.
Therefore, in addition to the dissolution of the writ of preliminary injunction issued by the RTC,
the Court also deems it appropriate to already order the dismissal of the Petition of BF Homes and
PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the subject matter of
the same. Although only the matter of the writ of preliminary injunction was brought before this
Court in the instant Petition, the Court is already taking cognizance of the issue on the jurisdiction
of the RTC over the subject matter of the Petition. The Court may motu proprio consider the issue
of jurisdiction. The Court has discretion to determine whether the RTC validly acquired
jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the subject matter is
conferred only by law. Jurisdiction over the subject matter cannot be acquired through, or waived
by, any act or omission of the parties. Neither would the active participation of the parties nor
estoppel operate to confer jurisdiction on the RTC where the latter has none over a cause of
action.[29] Indeed, when a court has no jurisdiction over the subject matter, the only power it has
is to dismiss the action.[30]

WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October 27, 2005
of the Court of Appeals in CA-G.R. SP No. 82826 is AFFIRMED with the MODIFICATION that
the Regional Trial Court, Branch 202 of Las Pias City, is ORDERED to dismiss the Petition [With
Prayer for the Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of
Restraining Order] of BF Homes, Inc. and Philippine Waterworks and Construction Corporation
in Civil Case No. 03-0151. Costs against BF Homes, Inc. and Philippine Waterworks and
Construction Corporation.

SO ORDERED.
PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari[1] are the Decision[2] dated January 19, 2012 and
the Resolution[3] dated August 24, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 97448,
ordering the Regional Trial Court of Quezon City, Branch 215 (RTC) to appoint a commissioner
to determine the value of the attached properties of respondents Spouses Dennis and Cherylin
Garcia (respondents), and to discharge any excessive attachment found thereby.

The Facts

On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed a Complaint[4] with
application for a writ of preliminary attachment, before the RTC against respondents, docketed as
Civil Case No. Q-05-53699 (Main Case), which was subsequently amended[5] on October 25,
2005.[6] It alleged that: (a) from March to July 2004, petitioner caused the delivery to respondents
of various appliances in the aggregate amount of P8,040,825.17;[7] (b) the goods were transported,
shipped, and delivered by Sulpicio Lines, Inc., and were accepted in good order and condition by
respondents' representatives;[8] (c) the parties agreed that the goods delivered were payable within
120 days, and that the unpaid amounts would earn interest at a rate of eighteen percent (18%) per
annum;[9] (d) however, the value of the goods were not paid by respondents despite repeated
demands;[10] and (e) respondents fraudulently asserted that petitioner had no proof that they had
indeed received the quantity of the subject goods.[11]

In connection with the application for a writ of preliminary attachment, petitioner posted a bond,
through Visayan Surety and Insurance Corporation, in the amount of ?8,040,825.17. On
November 7, 2005, the RTC issued the writ sought for.[12]

Instead of filing an answer, respondents filed on November 11, 2001, an Urgent Motion for
Extension of Time to File Proper Pleading and Motion for Discovery (Production and
Inspection)[13] (November 11, 2001 Motion), asking the RTC to allow them to photocopy and
personally examine the original invoices, delivery cargo receipts, and bills of lading attached to
the Amended Complaint, claiming that they could not "come up with an intelligent answer"
without being presented with the originals of such documents.[14]

Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge Excess

Attachment,[15] alleging that the attachment previously ordered by the RTC exceeded by
P9,232,564.56 given that the estimated value of the attached properties, including the garnished
bank accounts, as assessed by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted to
P17,273,409.73, while the attachment bond is only in the amount of P8,040,825.17.[16]

In an Order[17] dated February 28, 2006, the RTC denied the November 11, 2001 Motion, and,
instead, directed respondents to file their answer, which the latter complied with through the filing
of their Answer Ad Cautelam Ex Abudante with Compulsory Counterclaim[18] on April 3, 2006.
Despite this, respondents again filed a Motion for Leave of Court to File Motion for Discovery
(Production and Inspection)[19] (Motion for Discovery) on April 7, 2006.[20]

The RTC Ruling

In an Order[21] dated June 21, 2006, the RTC, among others, denied the Motion to Discharge
Excess Attachment, finding that the appraisal made by Lapaz was not reflective of the true
valuation of the properties, adding too that the bond posted by petitioner stands as sufficient
security for whatever damages respondents may sustain by reason of the attachment.[22]

On the other hand, the RTC granted the Motion for Discovery in accordance with Rule 27 of the
Rules of Court, despite petitioner's claim that it did not have the originals of the documents being
sought.[23]

However, no production or inspection was conducted on July 10, 2006 as the RTC directed since
respondents received the copy of the above order only on July 11, 2006.[24]

On July 25, 2006, respondents filed a Motion for Partial Reconsideration of the Order dated June
21, 2006, specifically assailing the denial of their Motion to Discharge Excess Attachment. In this
relation, they prayed that the RTC refer to a commissioner, pursuant to Rule 32 of the Rules of
Court, the factual determination of the total aggregate amount of respondents' attached properties
so as to ascertain if the attachment was excessive. Also, they prayed that the order for production
and inspection be modified and that petitioner be ordered to produce the original documents anew
for their inspection and copying. [25]

The foregoing motion was, however, denied by the RTC in an Order[26] dated August 23, 2006
for lack of merit. Thus, respondents elevated the matter to the CA via petition for certiorari and
mandamus,[27] docketed as CA-G.R. SP No. 97448 (Certiorari Case).

In the interim, the RTC rendered a Decision[28] dated September 21, 2011 in the Main Case.
Essentially, it dismissed petitioner's Amended Complaint due to the absence of any evidence to
prove that respondents had agreed to the pricing of the subject goods.[29]

The RTC's September 21, 2011 Decision was later appealed[30] by petitioner before the CA on
October 27, 2011. Finding that the Notice of Appeal was seasonably filed, with the payment of the
appropriate docket fees, the RTC, in an Order[31] dated January 25, 2012, ordered the elevation
of the entire records of the Main Case to the CA. The appeal was then raffled to the CA's Eighth
Division, and docketed as CA-G.R. CV No. 98237. On the other hand, records do not show that
respondents filed any appeal.[32]

The CA Ruling in the Certiorari Case

Meanwhile, the CA, in a Decision[33] dated January 19, 2012, partly granted the certiorari petition
of respondents, ordering the RTC to appoint a commissioner as provided under Rule 32 of the
Rules of Court as well as the subsequent discharge of any excess attachment if so found therein,
and, on the other hand, denying respondents' Motion for Discovery.[34]

It held that: (a) on the issue of attachment, trial by commissioners under Rule 32 of the Rules of
Court was proper so that the parties may finally settle their conflicting valuations;[35] and (b) on
the matter of discovery, petitioner could not be compelled to produce the originals sought by
respondents for inspection since they were not in the former's possession.[36]

Aggrieved, petitioner filed a Motion for Partial Reconsideration[37] on February 13, 2012 but was,
however, denied in a Resolution[38] dated August 24, 2012, hence, the present petition.
The Issues Before the Court

The issues presented for the Court's resolution are: (a) whether the RTC had lost jurisdiction over
the matter of the preliminary attachment after petitioner appealed the decision in the Main Case,
and thereafter ordered the transmittal of the records to the CA; and (b) whether the CA erred in
ordering the appointment of a commissioner and the subsequent discharge of any excess
attachment found by said commissioner.

The Court's Ruling

The petition is meritorious.

Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of appeal, the court
loses jurisdiction over the case upon the perfection of the appeals filed in due time and the
expiration of the time to appeal of the other parties.

In this case, petitioner had duly perfected its appeal of the RTC's September 21, 2011 Decision
resolving the Main Case through the timely filing of its Notice of Appeal dated October 27, 2011,
together with the payment of the appropriate docket fees. The RTC, in an Order[39] dated January
25, 2012, had actually confirmed this fact, and thereby ordered the elevation of the entire records
to the CA. Meanwhile, records do not show that respondents filed any appeal, resulting in the lapse
of its own period to appeal therefrom. Thus, based on Section 9, Rule 41, it cannot be seriously
doubted that the RTC had already lost jurisdiction over the Main Case.

With the RTC's loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction
over all matters merely ancillary thereto. Thus, the propriety of conducting a trial by
commissioners in order to determine the excessiveness of the subject preliminary attachment,
being a mere ancillary matter to the Main Case, is now mooted by its supervening appeal in CA-
G.R. CV No. 98237.
Note that in Sps. Olib v. Judge Pastoral,[40] the Court, in view of the nature of a preliminary
attachment, definitively ruled that the attachment itself cannot be the subject of a separate action
independent of the principal action because the attachment was only an incident of such action,
viz.:

Attachment is defined as a provisional remedy by which the property of an adverse party is taken
into legal custody, either at the commencement of an action or at any time thereafter, as a security
for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party.

It is an auxiliary remedy and cannot have an independent existence apart from the main suit or
claim instituted by the plaintiff against the defendant. Being merely ancillary to a principal
proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of the
writ can no longer be justified.

The consequence is that where the main action is appealed, the attachment which may have been
issued as an incident of that action, is also considered appealed and so also removed from the
jurisdiction of the court a quo. The attachment itself cannot be the subject of a separate action
independent of the principal action because the attachment was only an incident of such action.[41]
(Emphases supplied)

That being said, it is now unnecessary to discuss the other issues raised herein. In fine, the petition
is granted and the assailed CA rulings are set aside.

WHEREFORE, the petition is GRANTED. The Decision dated January 19, 2012 and the
Resolution dated August 24, 2012 of the Court of Appeals in CA-G.R. SP No. 97448 are hereby
SET ASIDE.

SO ORDERED.

[G.R. No. 133303. February 17, 2005]

BERNARDO VALDEVIESO, petitioner, vs. CANDELARIO DAMALERIO AND AUREA C.

DAMALERIO, respondents.
DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside
the 25 September 1997 Decision and the 10 February 1998 Resolution of the Court of Appeals in
CA-G.R. SP No. 43082 entitled, Candelario Damalerio and Aurea Damalerio v. Honorable
Antonio S. Alano, et al.[1]

There is no dispute as to the following facts:

On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and Elenita
Uy a parcel of land consisting of 10,000 square meters, more or less, located at Bo. Tambler,
General Santos City, and covered by Transfer Certificate of Title (TCT) No. T-30586.[2]

The deed of sale was not registered, nor was the title of the land transferred to petitioner.[3]

On 07 December 1995, the said property was immediately declared by petitioner for taxation
purposes as Tax Declaration No. l6205 with the City Assessors Office.[4]

It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio (respondents) filed
with the Regional Trial Court (RTC) of General Santos City, a complaint for a sum of money
against spouses Lorenzo and Elenita Uy docketed as Civil Case No. 5748 with application for the
issuance of a Writ of Preliminary Attachment.[5]

On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by virtue of which the
property, then still in the name of Lorenzo Uy but which had already been sold to petitioner, was
levied. The levy was duly recorded in the Register of Deeds of General Santos City and annotated
upon TCT No. T-30586.[6]
On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu thereof,
TCT No. T-74439 was issued in the name of petitioner.[7] This new TCT carried with it the
attachment in favor of respondents.

On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to discharge or
annul the attachment levied on the property covered by TCT No. T-74439 on the ground that the
said property belongs to him and no longer to Lorenzo and Elenita Uy.[8]

In a resolution dated 21 October 1996, the trial court ruled for the petitioner.[9] Citing Manliguez
v. Court of Appeals[10] and Santos v. Bayhon,[11] it held that the levy of the property by virtue
of attachment is lawful only when the levied property indubitably belongs to the defendant.
Applying the rulings in the cited cases, it opined that although defendant Lorenzo Uy remained
the registered owner of the property attached, yet the fact was that he was no longer the owner
thereof as it was already sold earlier to petitioner, hence, the writ of attachment was unlawful.

Respondents sought reconsideration thereof which was denied by the trial court in a resolution
dated 03 January 1997.[12]

From the unfavorable resolution of the trial court in the third-party claim, respondents appealed to
the Court of Appeals. The appellate court reversed the resolution and by judgment promulgated
on 25 September 1997, it declared that an attachment or levy of execution, though posterior to the
sale, but if registered before the sale is registered, takes precedence over the sale.[13] The writ of
attachment in favor of the respondents, being recorded ahead of the sale to petitioner, will therefore
take precedence.

Petitioner moved for reconsideration but this was denied by the Court of Appeals in its Resolution
of 10 February 1998.[14]

Hence, this Petition for Review on Certiorari.

The sole issue in this case is whether or not a registered writ of attachment on the land is a superior
lien over that of an earlier unregistered deed of sale.
Petitioner maintains that he has a superior right over the questioned property because when the
same was attached on 23 April 1996, this property was no longer owned by spouses Uy against
whom attachment was issued as it was already sold to petitioner on 05 December 1995. The
ownership thereof was already transferred to petitioner pursuant to Article 1477[15] in relation to
Article 1498[16] of the Civil Code.

Dismissing the allegation that he slept on his rights by not immediately registering at least an
adverse claim based on his deed of sale, petitioner avers that he promptly worked out for the
transfer of registration in his name. The slight delay in the registration, he claims was not due to
his fault but attributable to the process involved in the registration of property such as the issuance
of the Department of Agrarian Reform clearance which was effected only after compliance with
several requirements.

Considering the peculiar facts and circumstances obtaining in this case, petitioner submits it would
be in accord with justice and equity to declare him as having a superior right to the disputed
property than the respondents.

Respondents maintain the contrary view. They aver that registration of a deed of sale is the
operative act which binds the land and creates a lien thereon. Before the registration of the deed,
the property is not bound insofar as third persons are concerned. Since the writ of attachment in
favor of respondents was registered earlier than the deed of sale to petitioner, respondents were of
the belief that their registered writ of attachment on the subject property enjoys preference and
priority over petitioners earlier unregistered deed of sale over the same property. They also contend
that Articles 1477 and 1498 of the Civil Code as cited by petitioner are not applicable to the case
because said provisions apply only as between the parties to the deed of sale. These provisions do
not apply to, nor bind, third parties, like respondents, because what affects or binds third parties is
the registration of the instrument in the Register of Deeds. Furthermore, respondents argue that
petitioner cannot invoke equity in his favor unless the following conditions are met: (a) the absence
of specific provision of a law on the matter; and (b) if the person who invokes it is not guilty of
delay. Both conditions have not been met, however, since there is a law on the subject matter, i.e.,
Section 51 of Presidential Decree No. 1529, and that petitioner allegedly slept on his rights by not
immediately registering an adverse claim based on his deed of sale.

We agree with the respondents.

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

Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may
convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing laws.
He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient
in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to
convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate
only as a contract between the parties and as evidence of authority to the Register of Deeds to
make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons
are concerned, and in all cases under this Decree, the registration shall be made in the office of the
Register of Deeds for the province or city where the land lies.

It is to be noted that though the subject land was deeded to petitioner as early as 05 December
1995, it was not until 06 June 1996 that the conveyance was registered, and, during that
interregnum, the land was subjected to a levy on attachment. It should also be observed that, at the
time of the attachment of the property on 23 April 1996, the spouses Uy were still the registered
owners of said property. Under the cited law, the execution of the deed of sale in favor of petitioner
was not enough as a succeeding step had to be taken, which was the registration of the sale from
the spouses Uy to him. Insofar as third persons are concerned, what validly transfers or conveys a
persons interest in real property is the registration of the deed. Thus, when petitioner bought the
property on 05 December 1995, it was, at that point, no more than a private transaction between
him and the spouses Uy. It needed to be registered before it could bind third parties, including
respondents. When the registration finally took place on 06 June 1996, it was already too late
because, by then, the levy in favor of respondents, pursuant to the preliminary attachment ordered
by the General Santos City RTC, had already been annotated on the title.

The settled rule is that levy on attachment, duly registered, takes preference over a prior
unregistered sale.[17] This result is a necessary consequence of the fact that the property involved
was duly covered by the Torrens system which works under the fundamental principle that
registration is the operative act which gives validity to the transfer or creates a lien upon the
land.[18]
The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale. This is so because an attachment is a proceeding in rem.[19] It is
against the particular property, enforceable against the whole world. The attaching creditor
acquires a specific lien on the attached property which nothing can subsequently destroy except
the very dissolution of the attachment or levy itself.[20] Such a proceeding, in effect, means that
the property attached is an indebted thing and a virtual condemnation of it to pay the owners
debt.[21] The lien continues until the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some
manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien
when petitioner had his purchase recorded. The effect of the notation of said lien was to subject
and subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of
the land only from the date of the recording of his title in the register, and the right of ownership
which he inscribed was not absolute but a limited right, subject to a prior registered lien of
respondents, a right which is preferred and superior to that of petitioner.[22]

Anent petitioners reliance on the rulings laid down in Manliguez v. Court of Appeals and Santos
v. Bayhon, we find the same to be misplaced. These cases did not deal at all with the dilemma at
hand, i.e. the question of whether or not a registered writ of attachment on land is superior to that
of an earlier unregistered deed of sale. In Santos, what was involved were machinery and pieces
of equipment which were executed upon pursuant to the favorable ruling of the National Labor
Relations Commission. A third party claimed that the machinery were already sold to her, but it
does not appear in the facts of the case if such sale was ever registered. Manliguez is similar to
Santos, except that the former involved buildings and improvements on a piece of land. To stress,
in both cited cases, the registration of the sale, if any, of the subject properties was never in issue.

As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in the
presence of a law clearly applicable to the case. We reiterate that this Court, while aware of its
equity jurisdiction, is first and foremost, a court of law.[23] While equity might tilt on the side of
one party, the same cannot be enforced so as to overrule positive provisions of law in favor of the
other.[24] Equity cannot supplant or contravene the law.[25] The rule must stand no matter how
harsh it may seem. Dura lex sed lex.
WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No. 43082 dated
25 September 1997, and its Resolution dated 10 February 1998, are hereby AFFIRMED. No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

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

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

vs.

THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal,
and ANTONIO D. PINZON, respondents.

Guillermo E. Aragones for petitioner.

Ruben V. Lopez for respondent Antonio D. Pinzon.

CONCEPCION, JR., J.:

Petition for certiorari to annul and set aside the writ of preliminary attachment issued by the
respondent Judge in Civil Case No. 5902-P of the Court of First Instance of Rizal, entitled: Antonio
D. Pinzon plaintiff, versus K.O. Glass Construction Co., Inc., and Kenneth O. Glass, defendants,
and for the release of the amount of P37,190.00, which had been deposited with the Clerk of Court,
to the petitioner.
On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio D.
Pinzon to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed rentals
of his truck, as well as the value of spare parts which have not been returned to him upon
termination of the lease. In his verified complaint, the plaintiff asked for an attachment against the
property of the defendant consisting of collectibles and payables with the Philippine Geothermal,
Inc., on the grounds that the defendant is a foreigner; that he has sufficient cause of action against
the said defendant; and that there is no sufficient security for his claim against the defendant in the
event a judgment is rendered in his favor. 1

Finding the petition to be sufficient in form and substance, the respondent Judge ordered the
issuance of a writ of attachment against the properties of the defendant upon the plaintiff's filing
of a bond in the amount of P37,190.00. 2

Thereupon, on November 22, 1977, the defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that there is no cause of action against him since the transactions or
claims of the plaintiff were entered into by and between the plaintiff and the K.O. Glass
Construction Co., Inc., a corporation duly organized and existing under Philippine laws; that there
is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O. Glass
never intended to leave the Philippines, and even if he does, plaintiff can not be prejudiced thereby
because his claims are against a corporation which has sufficient funds and property to satisfy his
claim; and that the money being garnished belongs to the K.O. Glass Corporation Co., Inc. and not
to defendant Kenneth O. Glass. 3

By reason thereof, Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as
co-defendant of Kenneth O. Glass. 4

On January 26, 1978, the defendants therein filed a supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the affidavit filed in support of
the motion for preliminary attachment was not sufficient or wanting in law for the reason that: (1)
the affidavit did not state that the amount of plaintiff's claim was above all legal set-offs or
counterclaims, as required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the affidavit did
not state that there is no other sufficient security for the claim sought to be recovered by the action
as also required by said Sec. 3; and (3) the affidavit did not specify any of the grounds enumerated
in Sec. 1 of Rule 57, 5 but, the respondent Judge denied the motion and ordered the Philippine
Geothermal, Inc. to deliver and deposit with the Clerk of Court the amount of P37,190.00
immediately upon receipt of the order which amount shall remain so deposited to await the
judgment to be rendered in the case. 6

On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked the
court for the release of the same amount deposited with the Clerk of Court, 7 but, the respondent
Judge did not order the release of the money deposited. 8

Hence, the present recourse. As prayed for, the Court issued a temporary restraining order,
restraining the respondent Judge from further proceeding with the trial of the case. 9

We find merit in the petition. The respondent Judge gravely abused his discretion in issuing the
writ of preliminary attachment and in not ordering the release of the money which had been
deposited with the Clerk of Court for the following reasons:

First, there was no ground for the issuance of the writ of preliminary attachment. Section 1, Rule
57 of the Revised Rules of Court, which enumerates the grounds for the issuance of a writ of
preliminary attachment, reads, as follows:

Sec. 1. Grounds upon which attachment may issue. —A plaintiff or any proper party may, at the
commencement of the action or at any time thereafter, have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered in the following
cases:

(a) In an action for the recovery of money or damages on a cause of action arising from contract,
express or implied, against a party who is about to depart from the Philippines with intent to
defraud his creditor;

(b) In 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;
(c) In an action to recover the possession of personal property unjustly detained, when the property,
or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken
by the applicant or an officer;

(d) In an action against the party who has been guilty of a fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in concealing or disposing of the property for
the taking, detention or conversion of which the action is brought;

(e) In an action against a party who has removed or disposed of his property, or is about to do
so, with intent to defraud his creditors;

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

In ordering the issuance of the controversial writ of preliminary attachment, the respondent Judge
said and We quote:

The plaintiff filed a complaint for a sum of money with prayer for Writ of Preliminary Attachment
dated September 14, 1977, alleging that the defendant who is a foreigner may, at any time, depart
from the Philippines with intent to defraud his creditors including the plaintiff herein; that there is
no sufficient security for the claim sought to be enforced by this action; that the amount due the
plaintiff is as much as the sum for which an order of attachment is sought to be granted; and that
defendant has sufficient leviable assets in the Philippines consisting of collectibles and payables
due from Philippine Geothermal, Inc., which may be disposed of at any time, by defendant if no
Writ of Preliminary Attachment may be issued. Finding said motion and petition to be sufficient
in form and substance. 10

Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at
any time, depart from the Philippines with intent to defraud his creditors including the plaintiff."
He merely stated that the defendant Kenneth O. Glass is a foreigner. The pertinent portion of the
complaint reads, as follows:
15. Plaintiff hereby avers under oath that defendant is a foreigner and that said defendant has
a valid and just obligation to plaintiff in the total sum of P32,290.00 arising out from his failure to
pay (i) service charges for the hauling of construction materials; (ii) rentals for the lease of
plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of said leased
unit; hence, a sufficient cause of action exists against said defendant. Plaintiff also avers under
oath that there is no sufficient security for his claim against the defendant in the event a judgment
be rendered in favor of the plaintiff. however, defendant has sufficient assets in the Philippines in
the form of collectible and payables due from the Philippine Geothermal, Inc. with office address
at Citibank Center, Paseo de Roxas, Makati, Metro Manila, but which properties, if not timely
attached, may be disposed of by defendants and would render ineffectual the reliefs prayed for by
plaintiff in this Complaint. 11

In his Amended Complaint, Pinzon alleged the following:

15. Plaintiff hereby avers under oath that defendant GLASS is an American citizen who
controls most, if not all, the affairs of defendant CORPORATION. Defendants CORPORATION
and GLASS have a valid and just obligation to plaintiff in the total sum of P32,290.00 arising out
for their failure to pay (i) service charges for hauling of construction materials, (ii) rentals for the
lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the missing/destroyed spare parts of
said leased unit: hence, a sufficient cause of action exist against said defendants. Plaintiff also
avers under oath that there is no sufficient security for his claim against the defendants in the event
a judgment be rendered in favor of the plaintiff. however, defendant CORPORATION has
sufficient assets in the Philippines in the form of collectibles and payables due from the Philippine
Geothermal., Inc. with office address at Citibank Center, Paseo de Roxas, Makati, Metro Manila,
but which properties, if not timely attached, may be disposed of by defendants and would render
ineffectual the reliefs prayed for by plaintiff in this Complaint. 12

There being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are non-resident aliens, the attachment
of their properties is not justified.

Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the claim
sought to be enforced by the action, and (d) the amount due to the applicant for attachment or the
value of the property the possession of which he is entitled to recover, is as much as the sum for
which the order is granted above all legal counterclaims. Section 3, Rule 57 of the Revised Rules
of Court reads. as follows:

Section 3. Affidavit and bond required.—An order of attachment shall be granted only when it is
made to appear by the affidavit of the applicant, or of some person who personally knows the facts,
that a sufficient cause of action exists that the case is one of those mentioned in Section 1 hereof;
that there is no other sufficient security for the claim sought to be enforced by the action, and that
the amount due to the applicant, or the value of the property the possession of which he is entitled
to recover, is as much as the sum for which the order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding section, must be duly filed with the clerk
or judge of the court before the order issues.

In his affidavit, Pinzon stated the following:

I, ANTONIO D. PINZON Filipino, of legal age, married and with residence and postal address at
1422 A. Mabini Street, Ermita, Manila, subscribing under oath, depose and states that.

1. On October 6,1977,I filed with the Court of First Instance of Rizal, Pasay City Branch, a
case against Kenneth O. Glass entitled 'ANTONIO D. PINZON vs. KENNETH O. GLASS',
docketed as Civil Case No. 5902-P;

2. My Complaint against Kenneth O. Glass is based on several causes of action, namely:

(i) On February 15, 1977, we mutually agreed that I undertake to haul his construction
materials from Manila to his construction project in Bulalo, Bay, Laguna and vice-versa, for a
consideration of P50.00 per hour;

(ii) Also, on June 18, 1977, we entered into a separate agreement whereby my Isuzu cargo truck
will be leased to him for a consideration of P4,000.00 a month payable on the 15th day of each
month;
(iii) On September 7, 1977, after making use of my Isuzu truck, he surrendered the same without
paying the monthly rentals for the leased Isuzu truck and the peso equivalent of the spare parts that
were either destroyed or misappropriated by him;

3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still owes me the total sum of
P32,290.00 representing his obligation arising from the hauling of his construction materials,
monthly rentals for the lease Isuzu truck and the peso equivalent of the spare parts that were either
destroyed or misappropriated by him;

4. I am executing this Affidavit to attest to the truthfulness of the foregoing and in compliance
with the provisions of Rule 57 of the Revised Rules of Court. 13

While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein that "the case is one of those mentioned in
Section 1 hereof; that there is no other sufficient security for the claim sought to be enforced by
the action; and that the amount due to the applicant is as much as the sum for which the order
granted above all legal counter-claims." It has been held that the failure to allege in the affidavit
the requisites prescribed for the issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant fatally defective, and the judge
issuing it is deemed to have acted in excess of his jurisdiction. 14

Finally, it appears that the petitioner has filed a counterbond in the amount of P37,190.00 to answer
for any judgment that may be rendered against the defendant. Upon receipt of the counter-bond
the respondent Judge should have discharged the attachment pursuant to Section 12, Rule 57 of
the Revised Rules of Court which reads, as follows:

Section 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
on 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. The judge shall, after hearing, order the
discharge of the attachment if a cash deposit is made or a counterbond executed to the attaching
creditor is filed, on behalf of the adverse party, with the clerk or judge of the court where the
application is made, 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.
Upon the filing of such counter-bond, copy thereof shall forthwith be served on the attaching
creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of
this section the property attached, or the proceeds of any sale thereof, shall be delivered to the
party making the deposit or giving the counter-bond, or the person appearing on his behalf, the
deposit or counter-bond aforesaid standing in the place of the property so released. Should such
counter-bond for any reason be found to be, or become, insufficient, and the party furnishing the
same fail to file an additional counter-bond the attaching creditor may apply for a new order of
attachment.

The filing of the counter-bond will serve the purpose of preserving the defendant's property and at
the same time give the plaintiff security for any judgment that may be obtained against the
defendant. 15

WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The orders issued by
the respondent Judge on October 11, 19719, January 26, 1978, and February 3, 1978 in Civil Case
No. 5902-P of the Court of First Instance of Rizal, insofar as they relate to the issuance of the writ
of preliminary attachment, should be as they are hereby ANNULLED and SET ASIDE and the
respondents are hereby ordered to forthwith release the garnished amount of P37,190.00 to the
petitioner. The temporary restraining order, heretofore issued, is hereby lifted and set aside. Costs
against the private respondent Antonio D. Pinzon.

SO ORDERED

G.R. No. 175587 September 21, 2007

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

vs.

JOSEPH ANTHONY M. ALEJANDRO, Respondent.

YNARES-SANTIAGO, J.:

Facts:
 Petitioner filed against respondent Alejandro a complaint for sum of money with prayer
for the issuance of a writ of preliminary attachment. Said complaint alleged that 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.

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 trial court granted the application and issued the writ ex parte. Subsequently,
respondent filed a motion to quash he writ contending that the withdrawal of his unassigned
deposits was not fraudulent as it was approved by petitioner. He also alleged that petitioner knew
that he maintains a permanent residence and an office address here in thePhilippines. In both
addresses, petitioner regularly communicated with him through its representatives. The trial court
issued an order quashing the writ. With the denialof petitioner’smotion for reconsideration, it
elevated the case to the CA via a petition for certiorari. The CA dismissed the case.

Issue: Whether the issuance of the writ of attachment was proper.

Held: No. 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.

In actions in personam against residents temporarily out of the Philippines, the court need
not always attach the defendant’s property in order to have authority to try the case. Where the
plaintiff seeks to attach the defendant’s 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
defendant’s 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.

Obviously, the trial court’s issuance of the writ was for the sole purpose of acquiring
jurisdiction to hear and decide the case. Had the allegations in the complaint disclosed that
respondent has a residence in Quezon City and an office in Makati City, the trial court, if only for
the purpose of acquiring jurisdiction, could have served summons by substituted service on the
said addresses, instead of attaching the property of the defendant. The 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.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 93262 December 29, 1991

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.:

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, 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.

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 with-drawn.

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.