PROV.REM.
- Preliminary Attachment ( Case Digests) |1
Davao Light vs. CA (1991) Suan
Davao Light filed a verified complaint for recovery of a sum of
money and damages against Queensland Hotel and Teodorico
Adarna. The complaint contained an ex parte application for writ of
preliminary attachment.
Judge Nartatez issued an order granting the ex-parte application
and fixed the attachment bond at P4.6M. Davao Light submitted the
bond and subsequently, writ of attachment was issued.
Summons and copy of the complaint, as well as writ of
attachment and copy of attachment bond, were served on
Queensland and Adarna. Pursuant thereto, the sheriff seized
properties belonging to the latter.
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 TC had not yet
acquired jurisdiction over the cause and over the persons of the
defendants. However, TC denied the motion to discharge.
Queensland and Adarna went to the CA in a special civil action
of certiorari. The order was annulled by the CA.
ISSUE: WON a writ of preliminary attachment may issue ex parte
against a defendant before acquisition of jurisdiction of the latter’s
person by service of summons or his voluntary submission to the
Court’s authority
Yes. 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. By that act, the jurisdiction
of the court over the subject matter or nature of the action or
proceeding is invoked or called into activity; and it is thus that the
court acquires jurisdiction over said subject matter or nature of the
action. And it is by that self-same act of the plaintiff (or petitioner)
of filing the complaint (or other appropriate pleading) — by which
he signifies his submission to the court's power and authority — that
jurisdiction is acquired by the court over his person. On the other
hand, jurisdiction over the person of the defendant is obtained, 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.
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.
This, too, is true with regard to the provisional remedies of
preliminary attachment, preliminary injunction, receivership or
replevin. They may be validly and properly applied for and granted
even before the defendant is summoned or is heard from.
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.
Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The phase,
"at the commencement of the action," obviously refers to the date of
the filing of the complaint — which, as above pointed out, is the
date that marks "the commencement of the action;" and the
reference plainly is to a time before summons is served on the
defendant, or even before summons issues. What the rule is saying
quite clearly is that after an action is properly commenced — by the
filing of the complaint and the payment of all requisite docket and
other fees — the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites
laid down by law, and that he may do so at any time, either before
or after service of summons on the defendant.
Two ways of discharging an attachment: (1) by posting of a
counter bond, and (2) by a showing of its improper or irregular
issuance. The submission of a counterbond is an efficacious mode
of lifting an attachment already enforced against property, or even
of preventing its enforcement altogether. When property has already
been seized under attachment, the attachment may be discharged
upon counterbond in accordance with Section 12 of Rule 57. 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. 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.
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.
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
 PROV.REM.- Preliminary Attachment ( Case Digests) |2
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.
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.
Therefore, the writ of attachment was reinstated.
Calo vs. Roldan (1946) Suan
Regino Relova and Teodula Bartolome filed a complaint
against Tranquilino Calo and Doroteo San Jose, alleging that they
are the owners and possessors of parcels of land (unplanted rice land
and coconut land). Also alleged that defendants connived, used
force, stealth, threats and intimidation to enter and work or harvest
the existing fruits found in aforementioned lands. Also alleged that
defendants destroyed and took away the madre-cacao fence and
barbed wires built on the northwestern portion of the coconut land.
Prayed for a writ of preliminary injunction.
Defendants filed an opposition, on the ground that they are the
owners of the land and have been in actual possession since 1925.
Petition for writ of preliminary injunction was denied after hearing.
Plaintiffs filed urgent petition ex-parte, praying that their MR
of the order denying their petition be granted and/or for the
appointment of a receiver of the properties described on the ground
that (a) the plaintiffs have an interest in the properties in question,
and the fruits thereof were in danger of being lost unless a receiver
was appointed; and that (b) the appointment of a receiver was the
most convenient and feasible means of preserving, administering
and or disposing of the properties in litigation which included their
fruits. Judge Roldan considered the MR and granted that
appointment of a receiver.
ISSUE: WON Judge Roldan acted in excess of his jurisdiction
or with GAD in issuind the order appointing a receiver
Yes. Plaintiff's action is one of ordinary injunction, since they
allege that they are the owners of the lands and were in actual
possession, and that the defendants entered, worked or harvested the
existing fruits found on said lands, violating plaintiffs’ proprietary
rights.
This nature of plaintiffs’ action was corroborated by the fact
that they petitioned for a preliminary prohibitory injuction, which
was denied. They moved for MR, reiterating that they were the
actual possessors of the lands.
The fact that plaintiffs, in their reply dated September 4, after
reiterating their claim that they are the owners in fee simple and
possessors in good faith of the properties in question, pray that they
be declared the owners in fee simple, has not changed the nature of
the action alleged in the complaint or added a new cause of action
because the allegations in plaintiffs' reply were in answer to
defendants' defenses, and the nature of plaintiffs' cause of action, as
set forth in their complaint, was not and could not be amended or
changed by the reply, which plaintiffs had the right to present as a
matter of course.
Respondents' contention in paragraph I of their answer that the
action filed by them against petitioners in the case No. 7951 of the
CFI of Laguna is not only for injunction, but also to quiet title over
the two parcels of land described in the complaint, is untenable
because an equitable action to quiet title may be filed in courts only
where no other remedy at law exists or where the legal remedy
invokable would not afford adequate remedy.
The provisional remedies denominated attachment,
preliminary injunction, receivership, and delivery of personal
property, provided in Rules 59, 60, 61, and 62 of the Rules of Court,
respectively, are remedies to which parties litigant may resort
for the preservation or protection of their rights or interest, and
for no other purpose, during the pendency of the principal
action. If an action, by its nature, does not require such protection
or preservation, said remedies can not be applied for and granted.
To each kind of action or actions a proper provisional remedy is
provided for by law. The Rules of Court clearly specify the case in
which they may be properly granted.
Attachment may be issued only in the case or actions
specifically stated in section 1, Rule 59, in order that the defendant
may not dispose of his property attached, and thus secure the
satisfaction of any judgment that may be recovered by plaintiff from
defendant. A property subject of litigation between the parties, or
claimed by plaintiff as his, can not be attached upon motion of the
same plaintiff.
The special remedy of preliminary prohibitory injunction lies
when the plaintiff's principal action is an ordinary action of
injunction, that is, when the relief demanded in the plaintiff's
complaint consists in restraining the commission or continuance of
the act complained of, either perpetually or for a limited period, and
the other conditions required by section 3 of Rule 60 are present.
The purpose of this provisional remedy is to preserve the status quo
of the things subject of the action or the relation between the parties,
in order to protect the rights of the plaintiff respecting the subject of
the action during the pendency of the suit. Because, otherwise or if
no preliminary prohibition injunction were issued, the defendant
may, before final judgment, do or continue the doing of the act
which the plaintiff asks the court to restrain, and thus make
ineffectual the final judgment rendered afterwards granting the
relief sought by the plaintiff. But, as this court has repeatedly held,
a writ of preliminary injunction should not be granted to take the
property out of the possession of one party to place it in the hands
of another whose title has not been clearly established.
A receiver may be appointed to take charge of personal or real
property which is the subject of an ordinary civil action, when it
appears that the party applying for the appointment of a receiver has
an interest in the property or fund which is the subject of the action
or litigation, and that such property or fund is in danger of being
lost, removed or materially injured unless a receiver is appointed to
guard and preserve it (section 1 [b], Rule 61); or when it appears
that the appointment of a receiver is the most convenient and
feasible means of preserving, administering or disposing of the
property in litigation. If the property is not in litigation and is in
actual possession of the plaintiff, the latter can not apply for and
 PROV.REM.- Preliminary Attachment ( Case Digests) |3
obtain the appointment of a receiver thereof, for there would be no
reason for such appointment.
Delivery of personal property as a provisional remedy consists
in the delivery, by order of the court, of a personal property by the
defendant to the plaintiff, who shall give a bond to assure the return
thereof or the payment of damages to the defendant in the plaintiff's
action to recover possession of the same property fails, in order to
protect the plaintiff's right of possession of said property, or prevent
the defendant from damaging, destroying or disposing of the same
during the pendency of the suit.
In the case at bar, the provisional remedy proper to plaintiffs'
action of injunction is a preliminary prohibitory injunction if they
are the owner and in actual possession of said property. However,
the LC found at the hearing that the defendants were in possession
of the lands, the LC denied their petition in accordance with the law,
although in plaintiffs’ pending MR, they insisted that they are in
actual possession of the lands.
Hence, Judge Roldan acted in excess of his jurisdiction in
appointing a receiver. Appointment of a receiver is not proper or
does not lie in an action of injunction such as the one filed by the
plaintiff. The petition for appointment of a receiver filed by the
plaintiffs is based on the ground that it is the most convenient and
feasible means of preserving, administering and disposing of the
properties in litigation; and according to plaintiffs' theory or
allegations in their complaint, neither the lands nor the palay
harvested therein, are in litigation. The litigation or issue raised by
plaintiffs in their complaint is not the ownership or possession of the
lands and their fruits. It is whether or not defendants intend or were
intending to enter or work or harvest whatever existing fruits could
then be found in the lands described in the complaint, alleged to be
the exclusive property and in the actual possession of the plaintiffs.
It is a matter not only of law but of plain common sense that a
plaintiff will not and legally can not ask for the appointment or
receiver of property which he alleges to belong to him and to be
actually in his possession. For the owner and possessor of a property
is more interested than persons in preserving and administering it.
Even if plaintiffs amended their complaint and alleged that the
lands and palay harvested are being claimed by defendants, and
consequently the ownership and possession were in litigation, Judge
Roldan would have acted in excess of jurisdiction or with GAD in
appointing a receiver because relief by way of receivership is
equitable in nature, and a court of equity will not ordinarily appoint
a receiver where the rights of the parties depend on the
determination of adverse claims of legal title to real property and
one party is in possession.
In Mendoza vs. Arellano, appointments of receivers of real
estate in cases of this kind lie largely in the sound discretion of the
court, and where the effect of such an appointment is to take real
estate out of the possession of the defendant before the final
adjudication of the rights of the parties, the appointment should be
made only in extreme cases and on a clear showing of necessity
therefor in order to save the plaintiff from grave and irremediable
loss or damage.
Therefore, the order appointing the receiver is null and void.
KO Glass Construction vs. Valenzuela (1982) Suan
6 Oct ’77: Antonio Pinzon filed an action to recover from
Kenneth Glass the sum of P37,190, alleged to be the 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. He 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.
Judge Valenzuela ordered the issuance of a writ of attachment.
Thereupon, Glass moved to quash the writ on the grounds that there
is no COA 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., that there is no ground for the issuance of
the writ as Glass never intended to leave the Philippines, and even
if he does, plaintiff cannot 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.
By reason thereof, Pinzon amended his complaint to include
KO Glass Const. Co. as co-defendant.
Defendants filed 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
ROC ; (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.
However, Judge Valenzuela denied the motion and ordered
Phil. Geothermal Inc. to deliver the amount to the court which shall
remain deposited to await judgment to be rendered.
Defendants filed a bond in same amount and asked court to
release the same amount deposited with the Clerk but Judge
Valenzuela did not order the release.
ISSUE: WON Judge Valenzuela gravely abused his discretion in
issuing the writ of preliminary attachment and in not ordering the
release of the money deposited with the Clerk
Yes. First, there was no ground for the issuance of the writ of
preliminary attachment. Sec. 1, Rule 57 lists the grounds for such
issuance to be proper. Pinzon, in his complaint, did not allege that
the defendant 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 defendant Glass is a foreigner.
Even in his Amended Complaint, he stated that Glass is “an
American citizen”. 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 Sec. 3, Rule 57, 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
 PROV.REM.- Preliminary Attachment ( Case Digests) |4
is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims.
While Pinzon may have stated in his affidavit that a sufficient
COA exists against the defendant 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.
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,
Judge Valenzuela should have discharged the attachment pursuant
to Section 12, Rule 57. 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.
PCIB vs. Alejandro (2007) (Suan)
PCIB filed against Joseph Anthony Alejandro a complaint for
sum of money with prayer for the issuance of a writ of preliminary
attachment. It alleged that on September 10, 1997, Alejandro, a
resident of Hong Kong, executed in favor of PCIB 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 Alejandro as security for
the loan, PCIB requested the latter to put up additional security for
the loan. Alejandro, however, sought a reconsideration of said
request pointing out PCIB’s alleged mishandling of his account due
to its failure to carry out his instruction to close his account as early
as April 1997, when the prevailing rate of exchange of the US Dollar
to Japanese yen was US$1.00:JPY127.50.
PCIB alleged that (1) Alejandro fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB
Assistant Vice President Nepomuceno not to withdraw the same
prior to their assignment as security for the loan; and (2) that
Alejandro is not a resident of the Philippines.
TC granted the application and issued the writ ex parte after
PCIB posted a bond.
Alejandro filed motion to quash the writ, contending that the
withdrawal of his unassigned deposits was not fraudulent as it was
approved by PCIB. He also alleged that PCIB knew that he
maintains a permanent residence at Calle Victoria, Ciudad Regina,
Batasan Hills, Quezon City, and an office address in Makati City at
the Law Firm Romulo Mabanta Buenaventura Sayoc & De los
Angeles, where he is a partner. In both addresses, PCIB regularly
communicated with him through its representatives. Alejandro
added that he is the managing partner of the Hong Kong branch of
said Law Firm; that his stay in Hong Kong is only temporary; and
that he frequently travels back to the Philippines.
TC quashed the writ, holding that the withdrawal of
Alejandro’s unassigned deposits was not intended to defraud PCIB.
Also found that the representatives of PCIB personally transacted
with Alejandro through his home address in QC and/or his office in
Makati City. It thus concluded that PCIB misrepresented and
suppressed the facts regarding Alejandro’s residence considering
that it has personal and official knowledge that for purposes of
service of summons, Alejandro’s residence and office addresses are
located in the Philippines.
20 May ’98: Alejandro filed a claim for damages in the amount
of P25M on the attachment bond on account of the wrongful
garnishment of his deposits. He presented evidence showing that
hisP150,000.00 RCBC check payable to his counsel as attorney’s
fees, was dishonored by reason of the garnishment of his deposits.
ISSUE: WON PCIB is entitled to a writ of attachment
No. It must be noted that the ruling of the trial court that PCIB
is not entitled to a writ of attachment because Alejandro is a resident
of the Philippines and that his act of withdrawing his deposits with
PCIB was without intent to defraud, can no longer be passed upon
by this Court. More importantly, the conclusions of the court that
PCIB misrepresented that Alejandro was residing out of the
Philippines and suppressed the fact that Alejandro has a permanent
residence in Metro Manila where he may be served with summons,
are now beyond the power of this Court to review having been the
subject of a final and executory order. The rule on conclusiveness
of judgment, which obtains under the premises, precludes the
relitigation of a particular fact or issue in another action between the
same parties even if based on a different claim or cause of action.
The judgment in the prior action operates as estoppel as to those
matters in issue or points controverted, upon the determination of
which the finding or judgment was rendered.
PCIB’s contentions: That it acted in good faith. Even if
Alejandro is considered a resident of the Philippines, attachment is
still proper under Section 1, paragraph (f), Rule 57 since he is a
resident who is temporarily out of the Philippines upon whom
service of summons may be effected by publication.
ISSUE: WON PCIB is liable for damages for the improper issuance
of the writ of attachment against Alejandro
Yes. There was a final judgment holding PCIB is guilty of
misrepresentation and suppression of a material fact. While the final
order of the trial court which quashed the writ did not categorically
use the word "bad faith" in characterizing the representations of
PCIB, the tenor of said order evidently considers the latter to have
acted in bad faith by resorting to a deliberate strategy to mislead the
court.
In the hearings of the motion, and oral arguments of counsels
before the Court, it appears that PCIB through its contracting
officers VP Nepomuceno and Executive VP Revilla, personally
transacted with defendant mainly through Alejandro’s permanent
residence in MM, either in Alejandro’s home address in Quezon
City or his main business address at the Romulo Mabanta
Buenaventura Sayoc & Delos Angeles in Makati and while at times
follow ups were made through his’s temporary home and business
addresses in Hongkong. It is therefore clear that PCIB could not
deny their personal and official knowledge that Alejandro’s
permanent and official residence for purposes of service of
summons is in the Philippines.
As to the second ground of attachment, the amount withdrawn
was not part of Alejandro’s peso deposits assigned with the bank to
secure the loan and as proof that the withdrawal was not intended to
defraud PCIB as creditor is that PCIB approved and allowed said
withdrawals. It is even noted that when the Court granted the prayer
for attachment it was mainly on the first ground under Section 1(f)
 PROV.REM.- Preliminary Attachment ( Case Digests) |5
of Rule 57 of the 1997 Rules of Civil Procedure, that Alejandro
resides out of the Philippines.
On the above findings, it is obvious that PCIB already knew
from the beginning the deficiency of its second ground for
attachment [i.e.,] disposing properties with intent to defraud his
creditors, and therefore PCIB had to resort to this misrepresentation
that Alejandro was residing out of the Philippines and suppressed
the fact that Alejandro’s permanent residence is in MM where he
could be served with summons.
PCIB is therefore barred by the principle of conclusiveness of
judgment from again invoking good faith in the application for the
issuance of the writ.
Finally, there is no merit in PCIB’s contention that Alejandro
can be considered a resident who is temporarily out of the
Philippines upon whom service of summons may be effected by
publication, and therefore qualifies as among those against whom a
writ of attachment may be issued under Section 1(f), Rule 57.
In so arguing, PCIB attempts to give the impression that
although it erroneously invoked the ground that Alejandro does not
reside in the Philippines, it should not be made to pay damages
because it is in fact entitled to a writ of attachment had it invoked
the proper ground under Rule 57. However, even on this alternative
ground, PCIB is still not entitled to the issuance of a writ of
attachment.
The purposes of preliminary attachment are: (1) to seize the
property of the debtor in advance of final judgment and to hold it
for purposes of satisfying said judgment, as in the grounds stated in
paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or
(2) to acquire jurisdiction over the action by actual or constructive
seizure of the property in those instances where personal or
substituted service of summons on the defendant cannot be effected,
as in paragraph (f) of the same provision.
Corollarily, in actions in personam, such as the instant case for
collection of sum of money, summons must be served by personal
or substituted service, otherwise the court will not acquire
jurisdiction over the defendant. In case the defendant does not reside
and is not found in the Philippines (and hence personal and
substituted service cannot be effected), the remedy of the plaintiff
in order for the court to acquire jurisdiction to try the case is to
convert the action into a proceeding in rem or quasi in rem by
attaching the property of the defendant. Thus, in order to acquire
jurisdiction in actions in personam where defendant resides out of
and is not found in the Philippines, it becomes a matter of course for
the court to convert the action into a proceeding in rem or quasi in
rem by attaching the defendant’s property. The service of summons
in this case (which may be by publication coupled with the sending
by registered mail of the copy of the summons and the court order
to the last known address of the defendant), is no longer for the
purpose of acquiring jurisdiction but for compliance with the
requirements of due process.
However, where the defendant is a resident who is temporarily
out of the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case. Substituted service of summons (under
the present Section 7, Rule 14 of the Rules of Court) is the normal
mode of service of summons that will confer jurisdiction on the
court over the person of residents temporarily out of the Philippines.
Meaning, service of summons may be effected by (a) leaving copies
of the summons at the defendant’s residence with some person of
suitable discretion residing therein, or (b) by leaving copies at the
defendant’s office or regular place of business with some competent
person in charge thereof.
Thus, 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.
In the case at bar, the writ was issued by the trial court mainly
on the representation of PCIB that Alejandro is not a resident of the
Philippines. Obviously, the trial court’s issuance of the writ was for
the sole purpose of acquiring jurisdiction to hear and decide the
case. Had the allegations in the complaint disclosed that respondent
has a residence in Quezon City and an office in Makati City, the trial
court, if only for the purpose of acquiring jurisdiction, could have
served summons by substituted service on the said addresses,
instead of attaching the property of Alejandro. The rules on the
application of a writ of attachment must be strictly construed in
favor of the Alejandro.
It is clear from the foregoing that even on the allegation that
Alejandro is a resident temporarily out of the Philippines, PCIB 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 Alejandro. The misrepresentation of
PCIB that Alejandro 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.
Therefore, PCIB is liable for damages for the wrongful
issuance of a writ of attachment against Alejandro.
General vs. De Venecia (1947) (Suan)
4 Jun ’46: Gregorio Ruedas filed a complaint against Luis
General to recover the value of a promissory note. The PN stated
that Ruedas promised to pay General P4K within 6 mos after peace
has been declared and government established in the Philippines.
Ruedas also prayed for a preliminary attachment of defendant’s
property upon the allegation that the latter was about to dispose of
his assets to defraud creditors. Two days later, the writ of attachment
was issued upon the filing of a suitable bond.
General submitted a motion praying for dismissal of the
complaint and dissolution of the attachment, claiming that it was
premature in view of the provisions of the debt moratorium orders
of the President (EO #25 and #32). Said motion was denied, as well
as the MR. General filed a special civil action.
ISSUE: WON the writ of attachment was improvidently issued,
considering the debt are within the terms of the decree of
moratorium
Yes. Upon objection by the debtor, no court may now proceed
to hear a complaint that seeks to compel payment of a monetary
obligation coming within the purview of the moratorium. And the
 PROV.REM.- Preliminary Attachment ( Case Digests) |6
issuance of a writ of attachment upon such complaint may not, of
course, be allowed. Such levy is necessarily one step in the
enforcement of the obligation, enforcement which, as stated in the
order, is suspended temporarily, pending action by the Government.
But the case for petitioner is stronger when we reflect that his
promise is to pay P4K "within six months after peace has been
declared." It being a matter of contemporary history that the peace
treaty between the United States and Japan has not even been
drafted, and that no competent official has formally declared the
advent of peace, it is obvious that the 6-month period has not begun;
and General has at present and in June, 1946, no demandable duty
to make payment to plaintiffs, independently of the moratorium
directive.
As to the question of validity of the attachment, the general
rule is that, unless the statute expressly so provides, the remedy by
attachment is not available in respect to a demand which is not due
and payable, and if an attachment is issued upon such a demand
without statutory authority it is void.
The person seeking a preliminary attachment must show that
"a sufficient cause of action exists" and that the amount due him is
as much as the sum for which the order of attachment is granted".
Inasmuch as the commitment of General has not as yet become
demandable, there existed no cause of action against him, and the
complaint should have been dismissed and the attachment lifted.
And although it is the general principle that certiorari is not
available to correct judicial errors that could be straightened out in
an appeal, we have adopted the course that where an attachment has
been wrongly levied the writ may be applied for, because the
remedy by appeal is either unavailable or inadequate.
Therefore, the writ of attachment is quashed and complaint in
dismissed.
Miailhe vs. De Lencquesaing (1986) (Suan)
William Alain Miailhe, his two sisters and mother Madame
Victoria are co-owners of several registered real properties in MM.
By their common consent, William has been administering said
properties since 1960.
As they failed to secure an out-of-court partition due to the
unwillingness or opposition of sister Elaine, they filed an action for
partition. Among the issues presented in the partition case was the
matter of petitioner's account as administrator of the properties
sought to be partitioned. But while the said administrator's account
was still being examined, Elaine filed a motion praying that the sum
of P203,167.36 which allegedly appeared as a cash balance in her
favor as of December 31, 1982, be ordered delivered to her by
William Alain.
However, Elaine filed a criminal complaint for estafa against
William Alain, alleging that on the face of the very account
submitted by him as Administrator, he had misappropriated
considerable amounts, which should have been turned over to her as
her share in the net rentals of the common properties. Two days after
filing the complaint, Elaine flew back to Paris, the City of her
residence.
William Alain filed a complaint against Elaine for damages,
allegedly sustained by him by reason of the filing by Elaine of a
criminal complaint for estafa, solely for the purpose of embarrassing
him and besmirching his honor and reputation as a private person
and as an Honorary Consul of the Republic of the Philippines in
Bordeaux, France. Also charged her with causing to publish a
libelous news item. He prayed for the issuance of a writ of
preliminary attachment of the properties of Elaine consisting of 1/6
undivided interests in certain real properties in the City of Manila
on the ground that she “is a non-resident of the Philippines",
pursuant to paragraph (f), Section 1, Rule 57, in relation to Section
17, Rule 14 of the Revised Rules of Court.
Judge Barbers granted the application for preliminary
attachment upon a bond to be filed by William in the amount of
P2M. William filed said bond, which was approved, and hence, the
writ of preliminary attachment was issued.
Elaine filed motion to lift or dissolve the writ of attachment on
the ground that the complaint did not comply with the provisions of
Sec. 3 of Rule 57 and that petitioner's claim was for unliquidated
damages. This was denied so respondent filed a special action for
certiorari, alleging that Judge Barbers had acted with grave abuse of
discretion in the premises. The writ was declared null and void.
William filed MR but denied.
ISSUE: WON Sec. 1(f) of Rule 57 applied only in cases where the
claim is for liquidated damages, and not for recovery of unliquidated
damages arising from a crime or tort
Yes. Respondent court had exceeded its jurisdiction in issuing
the writ of attachment on a claim based on an action for damages
arising from delict and quasi delict the amount of which is uncertain
and had not been reduced to judgment just because the defendant is
not a resident of the Philippines. Because of the uncertainty of the
amount of plaintiff's claim it cannot be said that said claim is over
and above all legal counterclaims that defendant may have against
plaintiff, one of the indispensable requirements for the issuance of a
writ of attachment which should be stated in the affidavit of
applicant as required in Sec. 3 of Rule 57 or alleged in the verified
complaint of plaintiff. The attachment issued in the case was
therefore null and void.
While it is true that from Sec. 1, Rule 57, attachment may issue
"in an action against a party who resides out of the Philippines, "
irrespective of the nature of the action or suit, and while it is also
true that in the case of Cu Unjieng, et al vs. Albert, it was held that
"each of the six grounds treated ante is independent of the others,"
still it is imperative that the amount sought be liquidated.
Insular Savings Bank vs. CA (2005) Suan
11 Dec ’91: FEB instituted an arbitration case against Insular
Savings Bank before the Arbitration Committee of PCHC. The
dispute involved 3 unfunded checks with total value of P25.2M.
Checks were drawn against FEB and were presented by Insular for
clearing. FEB returned the checks beyond the reglementary period
but after Insular’s account with PCHC was credited with the
amount, Insular refused to refund the money to FEB.
While dispute was pending arbitration, FEB instituted a civil
case and prayed for issuance of writ of preliminary attachment. RTC
Makati issued an order, granting the application upon posting by
respondent of an attachment bond in amount of P6M. The writ was
issued.
During the hearing before the Arbitration Committee, the 2
banks agreed to temporarily divide between them the disputed
amount of P25.2M while dispute has not yet been resolved. As
result, the sum of P12.6M is in possession of FEB.
 PROV.REM.- Preliminary Attachment ( Case Digests) |7
Insular filed motion to discharge attachment by counter-bond
in the amount of P12.6M. Judge Amin issued an order, denying the
motion. Insular filed MR but was again denied.
Insular filed petition for certiorari. CA denied and dismissed
the petition. According to CA, the RTC’s order may be defended by
the provision of Sec 12 of Rule 57 and assuming that the RTC erred
on the computation, its error does not amount to GAD.
Insular’s contention: the starting point in computing the
amount of counter-bond is the amount of FEB’s demand or claim
only, in this case P25.2M, excluding contingent expenses and
unliquidated amount of damages. And since there was a mutual
agreement between them to temporarily, but equally, divide
between themselves the said amount pending and subject to the final
outcome of the arbitration, the amount of P12.6M should be the
basis for computing the amount of the counter-bond.
ISSUE: WON CA erred in not ruling that the RTC commited GAD
in denying Insular’s motion to discharge attachment by counter-
bond in the amount of P12.6M
Yes. The amount of the counter-attachment bond is, under the
terms of Section 12, to be measured against the value of the attached
property, as determined by the judge to secure the payment of any
judgment that the attaching creditor may recover in the action. The
attached property - and logically the counter-bond necessary to
discharge the lien on such property - should as much as possible
correspond in value to, or approximately match the attaching
creditor’s principal claim. Else, excessive attachment, which ought
to be avoided at all times, shall ensue.
The sheriff is required to attach only so much of the property
of the party against whom the order is issued as may be sufficient to
satisfy the applicant’s demand, the amount of which is stated in the
order, unless a deposit is made or a counter-bond is given equal to
said amount. However, if the value of the property to be attached is
less than the amount of the demand, the amount of the applicant’s
bond may be equal to the value of said property, and the amount of
the adverse party’s deposit or counter-bond may be equal to the
applicant’s bond. The writ of preliminary attachment is issued upon
approval of the requisite bond.
The trial court, therefore, committed GAD when it denied
Insular’s motion to discharge attachment by counter-bond in the
amount of P12.6M, an amount more than double the attachment
bond required of, and given by, FEB.
It bears to stress, as a final consideration, that the certiorari
proceedings before CA and the denial of the motion to discharge
attachment subject of such proceedings, transpired under the old
rules on preliminary attachment which has since been revised. And
unlike the former Section 12 of Rule 57 where the value of the
property attached shall be the defining measure in the computation
of the discharging counter-attachment bond, the present less
stringent Section 12 of Rule 57 provides that the court shall order
the discharge of attachment if the movant "makes a cash deposit, or
files a counter-bond . . . in an amount equal to that fixed by the court
in the order of attachment, exclusive of costs." Not being in the
nature of a penal statute, the Rules of Court cannot be given
retroactive effect.
ISSUE: WON the writ of preliminary attachment was properly
issued
Yes. Records show that the principal claim of Insular is in the
amount of P25.2M representing the 3 unfunded checks drawn
against, and presented for clearing to, FEB. Jurisprudence teaches
that a writ of attachment cannot be issued for moral and exemplary
damages, and other unliquidated or contingent claim.
FEB’s principal claim against Insular immediately prior to the
filing of the motion to discharge attachment has effectively been
pruned down to P12.6M. The trial court was fully aware of this
reality. Accordingly, it should have allowed a total discharge of the
attachment on a counter-bond based on the reduced claim of FEB.
If a portion of the claim is already secured, we see no justifiable
reason why such portion should still be subject of counter-bond. It
may be that a counter-bond is intended to secure the payment of any
judgment that the attaching party may recover in the main action.
Simple common sense, if not consideration of fair play, however,
dictates that a part of a possible judgment that has veritably been
preemptively satisfied or secured need not be covered by the
counter-bond.
With the view we take of this case, the trial court, in requiring
Insular to post a counter-bond in the amount of P27,237,700.00,
obviously glossed over one certain fundamental. We refer to the fact
that the attachment FEB applied for and the corresponding writ
issued was only for the amount of P25.2M. FEB did not pray for
attachment on its other claims, contingent and unliquidated as they
were. Then, too, the attaching writ rightly excluded such claims.
While the records do not indicate, let alone provide a clear answer
as to the actual value of the property levied upon, it may reasonably
be assumed that it is equal to FEB’s principal claim. Be that as it
may, it was simply unjust for the trial court to base the amount of
the counter-bond on a figure beyond the P25.2M threshold, as later
reduced to P12.6M.
Tan vs. Zandueta (1935) Suan
Tiu Chay obtained a writ of preliminary attachment against
Isidro Tan upon filing of bond in the amount of P5K. On 26 Feb ’35,
Judge Zandueta issued the writ, authorizing the attachment of the
properties of Tan to the amount of P22,500.
1 Apr ’35: Upon motion of Tan, Judge issued order lifting the
writ of attachment conditioned on the filing of a counter-bond in the
amount of P5K.
20 Apr: Judge issued another order, requiring Tan to put up the
required counter-bond and immediately thereafter, to withdraw
from PNB the amount P22K which had been attached.
23 Apr: Tiu Chay asked Tan to be required to put up another
counter-bond in the amount of P22,500 instead of P5K already filed.
2 May: Judge ordered Tan to file an additional counter-bond in
the amount of P10k, within 10 days.
6 May: Judge entered another order requiring Tan to put up a
counter bond of P17k instead of P15k, or in default, to deposit anew
in PNB P17k.
For failure to file either the counter-bond of P10k or P17K,
Judge required Tan to appear before him and show cause why he
should not be punished for contempt of court. But Tan was granted
another day to comply with the counter-bond order, reducing the
counter-bond required to P12K. However, Tan did not file any
additional counter-bond nor made the deposit and so, Judge ordered
his arrest.
 PROV.REM.- Preliminary Attachment ( Case Digests) |8
Tan’s contentions: under the provisions of section 440 of Act
No. 190, after filing the counter bond of P5K required of him by the
court in its order of April 20, 1935, he was authorized and had a
perfect right to withdraw from PNB the amount of his deposit which
was attached by virtue of the orders of February 26 and April 20,
1935. In truth, when he withdrew the aforesaid amount, there was
still no order preventing or restraining him from doing so, and
requiring him to file an additional counter bound, because the order
which imposed upon him that obligation was issued very much later,
that is, on May 2, 1935, or twelve days after the said withdrawal.
ISSUE:
When the property released from an attachment cannot be
returned by the party who secured its release upon the filing of a
bond, the bond takes the place of said property, that is, answers
therefor, because the law on the points is couched in the following
language: "the obligation aforesaid standing in place of the property
so released." Moreover, the provision of said section, to the effect
that the defendant and surety will, on demand, pay to the plaintiff
the full value of the property released, proceeds on the assumption
that a judgment has been rendered in favor of the plaintiff. Up to the
present, no judgment has been rendered against Isidro Tan, the
question of whether or not the respondent Tiu Chay is entitled to the
amount claimed by him as plaintiff in the said case, being still
pending resolution.
Tiu Chay's contention that the Judge proceeded according to
law in requiring an additional counter bond of P12K and in later
ordering the confinement of Tan pending the filing of said bond or
the deposit of an equal amount with the bank, because he had not
lost jurisdiction over the property released pursuant to the provisions
of section 440 of Act No. 90, is not only without merit but also
untenable.
From the moment Tiu Chay authorized Tan to put up the
counter bond of P5K and from the moment Tan filed said counter
bond in order to be able to withdraw his deposit in PNB, it can be
said that the Judge lost jurisdiction over the said property, although
he retained jurisdiction to resolve the principal question whether or
not the respondent Tiu Chay was entitled to the relief prayed for in
his complaint, because he permitted and the law likewise permits
that the counter bond of the petitioner stand and answer for the said
property.
In view of the foregoing, we are of the opinion, and so hold,
that Tan is in fact deprived of his liberty by virtue of an illegal order;
wherefore, we order his immediate release.
Walter Olsen vs. Olsen (1925) Suan
Walter Olsen appealed from a judgment of the CFI Manila,
sentencing him to pay Olsen & Co. the sum of P66,207.62 with legal
interest, and dismissing the cross-complaint and counterclaim set up
by him.
He cited the ff. errors: (1) he holding that the Walter Olsen
contracted fraudulently the debt which the plaintiff-appellee seeks
to recover in its complaint; (2) its failure to set aside the writ of
preliminary attachment issued by it ex parte; (3) the fact of it not
having absolved Walter Olsen from the complaint of the Olsen &
Co. and of not having given judgment for Olsen and against the
company for the amount of his counterclaim, after deducing the debt
due from him to the plaintiff corporation in the sum of P66,207.62;
and (4) its action in denying the motion for new trial of the Walter
Olsen.
ISSUE: WON an order denying motion for annulment of
preliminary attachment may be reviewed through appeal
No. The preliminary attachment is an auxiliary remedy the
granting of which lies within the sound discretion of the judge taking
cognizance of the principal case upon whose existence it depends.
The order of the judge denying a motion for the annulment of a writ
of preliminary attachment, being of an incidental or interlocutory
and auxiliary character, cannot be the subject of an appeal
independently from the principal case, because our procedural law
now in force authorizes an appeal only from a final judgment which
gives an end to the litigation. This lack of ordinary remedy through
an appeal does not mean, however, that any excess a lower court
may commit in the exercise of its jurisdiction is without remedy;
because there are the especial remedies, such as certiorari, for the
purpose.
While it is true that an order denying a motion for the annulment
of a preliminary attachment is not subject to review through an
appeal independently from the principal case, it not consisting a
final order, yet when the writ of preliminary attachment becomes
final by virtue of a final judgment rendered in the principal case,
said writ is subject to review jointly with the judgment rendered in
the principal case through an ordinary appeal. The appellate court
has the power to revoke or confirm said order, in like manner as a
judgment on the merits; because it is a ruling to which an exception
may be taken, and therefore is subject to review in an appeal by bill
of exceptions. The fact that section 441 of the Code of Civil
Procedure does not provide any remedy against the granting or
denial of a motion for the annulment of a writ of preliminary
attachment, except in case of excess of jurisdiction, does not confer
upon said order a final and irrevocable character, taking it out from
the general provisions as to appeal and review, for a special
provision is necessary for that purpose.
ISSUE: WON the trial court committed an error in denying the
motion for the annulment of the preliminary attachment
No. Walter Olsen admitted that he is indebted to the company but
denied that he has contracted said debt fraudulently.
The evidence shows that Walter was president-treasurer and
general manager of the corporation and exercised direct and almost
exclusive supervision over its function, funds and books of account
until about the month of August, 1921. During that time, he has been
taking money of the corporation without being duly authorized to
do so either by the board of directors or by the by-laws, the money
taken by him having amounted to the considerable sum of
P66,207.62. Of this sum, P19,000 was invested in the purchase of
the house and lot now under attachment in this case, and P50,000 in
the purchase of 500 shares of stock of Prising at the price of P100
per share for himself and Marker. A few days afterwards, he began
to sell the ordinary shares of the corporation for P430 each. He
attempted to justify his conduct, alleging that the withdrawal of the
funds of the corporation for his personal use was made in his current
account with said corporation, in whose treasury he deposited his
own money and the certificates of title of his shares, as well as of
his estate, and that at the first meeting of the stockholders, which
took place on February 1, 1919, a statement of his account with a
debit balance was submitted and approved.
Having, as he had, absolute and almost exclusive control over the
function of the corporation and its funds by virtue of his triple
capacity as president, treasurer and general manager, Walter Olsen
should have been more scrupulous in the application of the funds of
said corporation to his own use. As a trustee of said corporation, it
was his duty to see by all legal means possible that the interests of
 PROV.REM.- Preliminary Attachment ( Case Digests) |9
the stockholders were protected, and should not abuse the
extraordinary opportunity which his triple position offered him to
dispose of the funds of the corporation. Ordinary delicacy required
that in the disposition of the funds of the corporation for his personal
use, he should be very careful, so as to do it in such a way as would
be compatible with the interest of the stockholders and his fiduciary
character. And let it not also be said that he did everything openly
and with the security of his shares of stock, because as he could
dispose of the funds of the corporation so he could dispose of his
won shares and with greater freedom. And let it not also be said that
other officers of the corporation, such as the vice-president, the
secretary and other chiefs and employees, were doing the same
thing, because that does not show but that his bad example had
spread among his subordinates and all believed themselves with the
same right as their chief to dispose of the funds of the corporation
for their personal use, although it were merely by way of loan,
without any security of whatever kind of course. The approval of his
account at the first meeting of the stockholders cannot be considered
as a justification of his conduct, nor does it remove every suspicion
of bad faith, because the corporation was constituted exclusively by
Walter Olsen himself and his cospeculator, Marker, and nothing else
could be expected from it.
As to the debt he owed to the corporation, Walter E. Olsen was in
effect a lender and a borrower at the same time. His conduct in
connection with the funds of the corporation he represented was
more than an irregularity; and while it is not sufficiently serious to
constitute a criminal fraud, it is undoubtedly a fraud of a civil
character, because it is an abuse of confidence to the damage of the
corporation and its stockholders, and constitutes one of the grounds
enumerated in section 424, in connection with section 412, of the
Code of Civil Procedure for the issuance of a preliminary
attachment.
Santos vs. Bernabe (1929) (Suan)
Urbano Santos deposited in Jose Bernabe’s warehouse 778 cavans
and 38 kilos of palay. Pablo Tiongson also deposited 1,026 cavans
and 9 kilos of the same grain.
Tiongson filed with CFI Bulacan a complaint against Bernabe
to recover from him the 1,026 cavans and 9 kilos of palay deposited
in the latter’s warehouse. At the same time, Tiongson applied for a
writ of attachment, which was granted. The attachable property of
Bernabe, including 924 cavans and 31.5 kilos of palay were
attached, sold at public auction, and proceeds delivered to Tiongson.
Santos interevened in the attachment. But upon Tiongson’s proper
bond, the sheriff proceeded with the attachment. Santos filed
complaint.
It does not appear that the sacks of palay of Urbano Santos and
those of Pablo Tiongson, deposited in Jose C. Bernabe's warehouse,
bore any marks or signs, nor were they separated one from the other.
Santos’ contention: Tiongson cannot claim the 924 cavans
and 31 ½ kilos of palay attached by sheriff as part of those deposited
by him in Bernabe's warehouse, because, in asking for the
attachment thereof, he impliedly acknowledged that the same
belonged to Jose C. Bernabe and not to him.
ISSUE: WON the writ of attachment was properly issued
Yes. The action brought by Tiongson against Bernabe is that
provided in section 262 of the Code of Civil Procedure for the
delivery of personal property. Although it is true that the Santos and
his attorney did not follow strictly the procedure provided in said
section for claiming the delivery of said personal property
nevertheless, the procedure followed by him may be construed as
equivalent thereto, considering the provisions of section 2 of the
Code of Civil Procedure of the effect that "the provisions of this
Code, and the proceedings under it, shall be liberally construed, in
order to promote its object and assist the parties in obtaining speedy
justice."
Liberally construing, therefore, the above cited provisions of
section 262 of the Code of Civil Procedure, the writ of attachment
applied for by Tiongson against the property of Bernabe may be
construed as a claim for the delivery of the sacks of palay deposited
by the former with the latter.
State Investment House vs. CA (1988) Suan
Pedro Valdez and Rudy Sales executed 2 Comprehensive
Surety Agreements to secure any and all loans of PO Valdez, Inc.
not exceeding the sums of P500k and P4.934k from State
Investment House, Inc.
4 yrs later, SIHI and PO Valdez, Inc. entered into an agreement
for discounting with SIHI the receivables of PO Valdez, Inc. When
Valdez’s 2 checks were deposited by SIHI upon maturity, they
bounced for insufficient funds. Despite demands, Valdez failed to
pay the obligation amounting to P6,342,855.
SIHI foreclosed its real estate mortgage on the 2 lots in Benguet
of Valdez and acquired them as highest bidder. SIHI then filed a
collection suit with prayer for preliminary attachment. Judge
Martinez issued a writ of preliminary attachment against Valdez’s
properties.
Tropical Homes, Inc. filed a third-party claim to certain
properties in the name of Pedro Valdez. As sheriff failed to act on
the claim, Tropical Homes filed motion to lift the attachment on
those properties. This was opposed by SIHI. Judge Caneba denied
the motion.
Valdez filed answer, admitting they he obtained loans from
SIHI to finance their construction projects. Valdez filed motion to
discharge the attachment on the ground that there was no fraud in
contracting the loans, and if any fraud existed, it was in the
performance of the obligations. This was denied.
Valdez filed MR. Judge Cañeba granted the MR and
discharged the preliminary attachment on the properties of Pedro O.
Valdez and Remedios Valdez on the ground that their conjugal
properties may not be attached to answer for the debts of the
corporation which has a juridical personality distinct from its
incorporators. Found that there was no fraud.
ISSUE: WON the order lifting the writ of preliminary attachment
was proper
Yes, no fraud. The CA found the ff: (1) With respect to the
shares of stock which Valdez pledged as additional security for the
loan, the decline in their value did not mean that Valdez entered into
the loan transaction in bad faith or with fraudulent intent for Valdez
could not have foreseen how the stocks would fare in the market.
And if SIHI thought they were worthless at the time, it should have
rejected them as collateral. (2) With respect to the two parcels of
land which were mortgaged to SIHI, the latter should also have
declined to accept them as collateral if it believed they were worth
less than their supposed value. (3) With respect to the 2 postdated
checks which bounced, since they were "sold" to SIHI after the loan
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 10
had been granted to Valdez, their issuance did not fraudulently
induce the petitioner to grant the loan applied for. They were "mere
evidence of Valdez’s standing loan obligation to the SIHI" or "mere
collaterals for the loan granted by SIHI to Valdez.”
The main thrust of the prayer for preliminary attachment is the
alleged misrepresentation of the debtor P.O. Valdez, Inc., in the
Agreement for Discounting Receivables and in the deeds of sale of
said receivables; that the two checks or receivables" issued by Pedro
Valdez were payment for "actual sales of its merchandise and/or
personalities made to its customers or otherwise arising from its
other legitimate business transactions" and "that the receivables . . .
were genuine, valid and subsisting and represent bona fide sales of
merchandise and/or personalities made in the ordinary course of
business".
It can hardly be doubted that those representations in SIHI's
printed deeds of sale were false. But false though they were, SIHI
cannot claim to have been deceived or deluded by them because it
knew, or should have known, that the issuer of the checks, Pedro O.
Valdez, was not a "buyer" of the "merchandise and personalities
made in the ordinary course of business" by P.O. Valdez, Inc. of
which he was the president.
Since SIHI failed to prove during the hearing of Valdez’s
motion to lift the preliminary writ of attachment, that P.O. Valdez,
Inc. received from it independent consideration for the "sale" of
Pedro Valdez' checks to it, apart from the loans previously extended
to the corporations, We are constrained to affirm the finding of the
CA that Valdez's checks are "mere evidence of the outstanding
obligation of P.O. Valdez, Inc. to the petitioner." The petition was
not defrauded by their issuance for the loans had been contracted
and released to P.O. Valdez, Inc. long before the checks were issued.
Aboitiz vs. Cotabato Bus Co. (1981) Suan
Aboitiz filed a complaint against Cotabato Bus Co. for
collection of money in the sum of P155,739.41, which the latter
owed Aboitiz. CFI Davao issued a writ of preliminary attachment.
By virtue of the writ, the provincial sheriff attached personal
properties of the Cotabato Bus consisting of some buses, machinery
and equipment. The ground for the issuance of the writ is, as alleged
in the complaint and the affidavit of merit executed by the Assistant
Manager of Aboitiz, that Cotabato Bus "has removed or disposed of
its properties or assets, or is about to do so, with intent to defraud its
creditors."
Cotabato Bus filed in the lower court an "Urgent Motion to
Dissolve or Quash Writ of Attachment" to which was attached an
affidavit executed by its Assistant Manager, Baldovino Lagbao,
alleging among other things that "the Cotabato Bus Company has
not been selling or disposing of its properties, neither does it intend
to do so, much less to defraud its creditors and that it has been
acquiring and buying more assets. This was denied.
MR was filed but again, denied. Cotabato Bus went to CA on
a petition for certiorari. CA issued a restraining order restraining the
trial court from enforcing further the writ of attachment and from
proceeding with the hearing. CA then declared the writ of
attachment as null and void, and ordered the release of the attached
properties.
Aboitiz’s contention: Cotabato Bus has disposed, or is about to
dispose, of its properties, in fraud of its creditors. Also cited the
alleged non-payment of its other creditors, including secured
creditors like the DBP to which all its buses have been mortgaged,
despite its daily income averaging P12k, and the rescue and removal
of five attached buses.
ISSUE: WON the writ of attachment was properly issued
No. The several buses attached are nearly junks. However,
upon permission by the sheriff, five of them were repaired, but they
were substituted with five buses which were also in the same
condition as the five repaired ones before the repair. This cannot be
the removal intended as ground for the issuance of a writ of
attachment under section 1(e), Rule 57. The repair of the five buses
was evidently motivated by a desire to serve the interest of the riding
public, clearly not to defraud its creditors, as there is no showing
that they were not put on the run after their repairs, as was the
obvious purpose of their substitution to be placed in running
condition.
Moreover, as the buses were mortgaged to the DBP, their
removal or disposal as alleged by Aboitiz to provide the basis for its
prayer for the issuance of a writ of attachment should be very
remote, if not nil. If removal of the buses had in fact been
committed, the DBP should not have failed to take proper court
action, both civil and criminal, which apparently has not been done.
The dwindling of Cotabato Bus' bank account despite its daily
income of from P10k to P14k is easily explained by its having to
meet heavy operating expenses, which include salaries and wages
of employees and workers. If, indeed the income of the company
were sufficiently profitable, it should not allow its buses to fall into
disuse by lack of repairs. It should also maintain a good credit
standing with its suppliers of equipment, and other needs of the
company to keep its business a going concern.
It is, indeed, extremely hard to remove the buses, machinery
and other equipments which respondent company have to own and
keep to be able to engage and continue in the operation of its
transportation business. The sale or other form of disposition of any
of this kind of property is not difficult of detection or discovery, and
strangely, Aboitiz, has adduced no proof of any sale or transfer of
any of them, which should have been easily obtainable.
People’s Bank & Trust Co. vs. Syvel’s Inc. (1988) Suan
PBTC filed an action for foreclosure of chattel mortgage
against Syvel’s Inc. on its stocks of goods, personal properties and
other materials owned by it and located at its stores or warehouses.
The chattel mortgage was in connection with a credit commercial
line in the amount of P900k.
20 May ’65: Antonio V. Syyap and Angel Y. Syyap executed
an undertaking in favor of PBTC whereby they both agreed to
guarantee absolutely and unconditionally and without the benefit of
excussion the full and prompt payment of any indebtedness to be
incurred on account of the said credit line.
In view of the failure of Syvel’s Inc. to make payment in
accordance with the terms and conditions agreed upon in the
Commercial Credit Agreement, PBTC started to foreclose
extrajudicially the chattel mortgage. However, because of an
attempt to have the matter settled, the extra-judicial foreclosure was
not pushed thru. As no payment had been paid, this case was
eventually filed in this Court.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 11
On the contention that Syvel’s Inc. is disposing of their
properties with intent to defraud their creditors, a preliminary writ
of attachment was issued.
Syyap proposed to have the case settled amicably and to that
end a conference was held. Syyap requested that PBTC dismiss this
case because he did not want to have the goodwill of Syvel's Inc.
impaired, and offered to execute a real estate mortgage on his real
property located in Bacoor, Cavite.
ISSUE: WON the writ of attachment was properly issued
Yes. The grant or denial of a writ of attachment rests upon the
sound discretion of the court. Records are bereft of any evidence
that grave abuse of discretion was committed by respondent judge
in the issuance of the writ of attachment.
Syvel’s contends that the affidavits of Messrs. Rivera and
Berenguer on which the lower court based the issuance of the writ
of preliminary attachment relied on the reports of credit
investigators sent to the field and not on the personal knowledge of
the affiants. Such contention deserves scant consideration. Evidence
adduced during the trial strongly shows that the witnesses have
personal knowledge of the facts stated in their affidavits in support
of the application for the writ. They testified that Syvel's Inc. had
disposed of all the articles covered by the chattel mortgage but had
not remitted the proceeds to PBTC; that the Syvel's Stores at the
Escolta, Rizal Avenue and Morayta Street were no longer operated
by Syvel’s and that the latter were disposing of their properties to
defraud PBTC.
Hence, the attachment sought on the ground of actual removal
of property is justified where there is physical removal thereof by
the debtor.
Besides, the actuations of Syvel’s were clearly seen by the
witnesses who "saw a Fiat Bantam Car-Fiat Car, a small car and
about three or four persons hurrying; they were carrying goods
coming from the back portion of this store of Syvels at the Escolta,
between 5:30 and 6:00 o'clock in the evening.”
In any case, intent to defraud may be and usually is inferred
from the facts and circumstances of the case; it can rarely be proved
by direct evidence. It may be gleaned also from the statements and
conduct of the debtor, and in this connection, the principle may be
applied that every person is presumed to intend the natural
consequences of his acts.
Not only has PBTC acted in perfect good faith but also on facts
sufficient in themselves to convince an ordinary man that the
defendants were obviously trying to spirit away a portion of the
stocks of Syvel's Inc. in order to render ineffectual at least partially
any judgment that may be rendered in favor of the PBTC."
Syvel’s having failed to adduce evidence of bad faith or malice
on the part of PBTC in the procurement of the writ of preliminary
attachment, the claim of the former for damages is evidently
negated. In fact, the allegations in the PBTC's complaint more than
justify the issuance of the writ of attachment.
Adlawan vs. Torres (1994) Suan
Aboitiz filed a complaint against Eleazar and Elena Adlawan
to collect a sum of money representing payments for: (1) the unpaid
amortizations of a loan; (2) technical and managerial services
rendered; and (3) the unpaid installments of the equipment provided
by Aboitiz to petitioners.
Judge issued an order directing the issuance of a writ of
preliminary attachment against the property of petitioners upon the
filing by Aboitiz of an attachment bond.
The writ was issued. Sheriff enforced the writ, resulting in the
seizure of heavy construction equipment, motor vehicle spare parts,
and other personal property with the aggregate value of P15M. The
said court also granted the motion of Aboitiz to take possession and
custody of the attached property of petitioners and ordered the
Provincial Sheriff of Davao to deliver the property to Aboitiz.
Adlawan moved for bill of particulars and to set aside the ex-
parte writ of attachment. The writ was lifted and the properties
levied were discharged. Aboitiz filed motion, praying for the stay of
the order for it to be able to appeal. However, Aboitiz subsequently
filed a notice of dismissal of its complaint, which was granted.
Adlawan filed motion praying that the order lifting the writ be
implemented and enforced. This was denied on account of the filing
by Aboitiz of an action for delivery of personal property and the
filing of Adlawan of an action for damages in connection with the
seizure of his property.
In the replevin suit, Court ordered the seizure and delivery of
the property described in the complaint. Alleging that while his
office was situated in Cebu City, Adlawan was a resident of
Minglanilla, and therefore, the Lapu-lapu City court should not
entertain the action for replevin, Adlawan filed an omnibus motion
praying for the reconsideration and dissolution of the writ of seizure,
the retrieval of the property seized, and the dismissal of the
complaint. Also averred that the property seized were in custodia
legis by virtue of the writ of attachment. Again, denied.
Adlawan filed petition for certiorari and mandamus, which was
considered by CA. CA ordered the attached properties in the custody
of Aboitiz be returned to Adlawan.
Aboitiz filed MR, contending that the replevin case was
distinct and separate from the case where the writ of attachment was
issued. Denied.
Aboitiz filed second MR, asserting that because the writ of
preliminary attachment was different from the writ of replevin,
Court should rule that the property subject of the latter writ should
remain in custodia legis of the court issuing the said writ. Court
resolved and stated that "the properties to be returned to petitioner
are only those held by Aboitiz by virtue of the writ of attachment
which has been declared non-existent." This became final and
executory.
9 Sep ’83: Aboitiz filed against Adlawan 2 complaints for
collection of sums of money with prayers for issuance of writs of
attachment, alleging that Adlawan was awarded a contract for the
construction of the Tago Diversion Works for the Tago River
Irrigation Project by the National Irrigation Administration and that
Aboitiz loaned him money and equipment.
Judge ordered the issuance of a writ of attachment upon filing
of bond of P5M by Aboitiz. In the other case the Judge also ordered
the issuance of a writ of attachment upon filing of bond of P2.5M.
However, no writ was issued for the second case.
Adlawan filed urgent motions to hold in abeyance the
enforcement of the writs of attachments, alleging in the main that
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 12
since their property had been previously attached and said
attachment was being questioned before the SC, the filing of the two
cases, as well as the issuance of the writs of attachment, constituted
undue interference with the processes of this court in the then
pending petition involving the same property.
Aboitiz alleged that issuance of the writ of attachment was
justified because petitioners were intending to defraud Aboitiz by
mortgaging 11 parcels of land to the PCIB in consideration of the
loan of P1.1M, thereby making PCIB a preferred creditor to the
prejudice of Aboitiz.
Adlawan contended that since the property subject of the writ
of attachment have earlier been attached or replevied, the same
property were under custodia legis and therefore could not be the
subject of other writs of attachment.
Judge issued order finding no merit in Adlawan’s MR and
directed sheriffs to proceed with the enforcement and
implementation of the writs. Judge ruled that the writs of attachment
were issued on the basis of the supporting affidavits alleging that
petitioner had removed or disposed of their property with intent to
defraud Aboitiz.
Adlawan filed petition for certiorari and mandamus, alleging
that Judge Torres gravely abused his discretion in ordering the
issuance of the writs of preliminary attachment inasmuch as the real
estate mortgage executed by them in favor of PCIB did not
constitute fraudulent removal, concealment or disposition of
property. Argued that granting the mortgage constituted removal or
disposition of property, it was not per se a ground for attachment
lacking proof of intent to defraud the creditors of the defendant.
ISSUE: WON the writ of attachment was properly issued
No. The affidavit submitted by Aboitiz in support of its prayer
for the writ of attachment does not meet the requirements of Rule
57 regarding the allegations on impending fraudulent removal,
concealment and disposition of defendant's property.
To justify a preliminary attachment, the removal or disposal
must have been made with intent to defraud defendant's creditors.
Proof of fraud is mandated by paragraphs (d) and (e) of Section 1,
Rule 57 on the grounds upon which attachment may issue. Thus, the
factual basis on Adlawan’s intent to defraud must be clearly alleged
in the affidavit in support of the prayer for the writ of attachment if
not so specifically alleged in the verified complaint.
From the affidavit of Aboitiz, it is evident that the prayer for
attachment rests on the mortgage by petitioners of 11 parcels of land
in Cebu, which encumbrance Aboitiz considered as fraudulent
concealment of property to its prejudice. We find, however, that
there is no factual allegation which may constitute as a valid basis
for the contention that the mortgage was in fraud of Aboitiz. The
general rule is that the affidavit is the foundation of the writ, and if
none be filed or one be filed which wholly fails to set out some facts
required by law to be stated therein, there is no jurisdiction and the
proceedings are null and void.
Bare allegation that an encumbrance of a property is in fraud
of the creditor does not suffice. Factual bases for such conclusion
must be clearly averred.
The execution of a mortgage in favor of another creditor is not
conceived by the Rules as one of the means of fraudulently
disposing of one's property. By mortgaging a piece of property, a
debtor merely subjects it to a lien but ownership thereof is not parted
with.
Furthermore, the inability to pay one's creditors is not
necessarily synonymous with fraudulent intent not to honor an
obligation.
Consequently, when petitioners filed a motion for the
reconsideration of the order directing the issuance of the writ of
attachment, Judge should have considered it as a motion for the
discharge of the attachment and should have conducted a hearing or
required submission of counter-affidavits from the petitioners, if
only to gather facts in support of the allegation of fraud. This is what
Sec 13, Rule 57 mandates.
This procedure should be followed because, as the Court has
time and again said, attachment is a harsh, extraordinary and
summary remedy and the rules governing its issuance must be
construed strictly against the applicant. Verily, a writ of attachment
can only be granted on concrete and specific grounds and not on
general averments quoting perfunctorily the words of the Rules.
The judge before whom the application is made exercises full
discretion in considering the supporting evidence proffered by the
applicant. One overriding consideration is that a writ of attachment
is substantially a writ of execution except that it emanates at the
beginning, instead of at the termination of the suit.
Claude Neon Lights vs. Phil. Advertising Corp. (1932) (Suan)
Phil. Advertising Corp. filed a suit against Claude Neon Lights,
claiming P300k as damages for alleged breach of the agency
contract existing between them. PAC filed an application for writ of
attachment duly verified, stating that Claude is a foreign corporation
having its principal place of business in the City of Washington,
District of Columbia. It is not alleged that Claude was about to
depart from the Philippine Islands with intent to defraud its creditors
or that it was insolvent or had removed or disposed of its property
or was about to do so with intent to defraud its creditors. The only
statutory ground relied upon in the court below and in this court for
the issuance of the writ of attachment against Claude is paragraph 2
of section 424 of the Code of Civil Procedure, which provides that
Claude may have the property of PAC attached "in an action against
a defendant not residing in the Philippine Islands".
Judge issued the writ of attachment. Sheriff attached all the
properties of Claude in the PH. A receiver was likewise appointed.
Claude filed motion to dissolve writ of attachment and
receivership, contending that Claude is not indebted to PAC in any
sum whatever nor has it in any way breached any contracts with
PAC or at any time interfered in the management of its business in
the Philippine Islands as carried on by its agent, PAC, and it has
faithfully complied with every condition of said contract; that the
attachment of the machinery and plants of the Claude, as well as its
other assets, is highly prejudicial to it as it is unable to proceed with
its business in the Philippine Islands and irreparable loss will result
to it unless such attachment be raised; that the filing of said suit was
malicious, without foundation, and intended only to injure Claude
and to depreciate the value of its holdings in the Philippine Islands.
ISSUE: WON the writ of attachment was properly issued
Claude Neon Lights is a corporation duly organized under the
laws of the District of Columbia; it had complied with all the
requirements of the Philippine laws and the was duly licensed to do
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 13
business in the Philippine Islands on the date said writ of attachment
was issues. It was actively engaged in doing business in the
Philippine Islands and had considerable property therein, which
consisted to its manufacturing plant, machinery, merchandise and a
large income under valuable contracts, all of which property was in
the possession and under the control and management of Philippine
Advertising Corporation, as agent, on the date said attachment was
levied.
The words of Sec. 424 taken in their literal sense seem to refer
to a physical defendant who is capable of being "arrested" or who is
"not residing in the Philippine Islands". It is only by a fiction that it
can be held that a corporation is "not residing in the Philippine
Islands". A corporation has no home or residence in the sense in
which those terms are applied to natural persons. For practical
purposes, a corporation is sometimes said, in a metaphorical sense,
to be "a resident" of a certain state or a "citizen" of a certain country,
which is usually the state or country by which or under the laws of
which it was created.
There is not the same reason for subjecting a duly licensed
foreign corporation to the attachment of its property by a plaintiff
under section 424, paragraph 2, as may exist in the case of a natural
person not residing in the Philippine Islands. The law does not
require the latter, as it does the former, to appoint a resident agent
for service of process; nor to prove to the satisfaction of the
Government before he does business here, as the foreign corporation
must prove, that he "is solvent and in sound financial condition". He
pays no license fee nor is his business subject at any time to
investigation by the Secretary of Finance and the Governor-General;
nor is his right to continue to do business revocable by the
Government.
Corporations, as a rule, are less mobile than individuals. This
is a specially true of foreign corporations that are carrying on
business by proper authority in these Islands.
If, as we believe, section 424, paragraph 2, should not be held
applicable to foreign corporations duly licensed to do business in
the Philippine Islands both because the language and the reason of
the statute limit it to natural persons, we sustain and reinforce the
provisions of section 71 of the Corporation Law, Act No. 1459,
which provides in substance that if the Secretary of Finance or the
Secretary of Commerce and Communications and the Governor-
General find a duly licensed foreign corporation to be insolvent or
that its continuance in business will involve probable loss to its
creditors, they may revoke its license and "the Attorney-General
shall take such proceedings as may be proper to protect creditors
and the public".
Obviously, the benefit of that section will be minimized, if not
entirely defeated, if a creditor or a few creditors can obtain
privileged liens by writs of attachment based on the sole allegation,
which is easily and safely made, that the corporation is "not residing
in the Philippine Islands".
Paragraph 2 of section 424, supra does not apply to a domestic
corporation. We think it would be entirely out of line with this policy
should we make a discrimination against a foreign corporation, like
Claude, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement
of law made especially of foreign corporations, but in addition with
every requirement of law made of domestic corporations.
As the Claude's business was a going concern, which the
sheriff, who levied the writ, obviously could not manage, it became
necessary on the same day for the court to appoint a receiver. This
receiver, as the demurrer admits, "was and is an employee working
under the president of PAC, so that to all intents and purposes, all
the property of PAC in the Philippine Islands was seized and
delivered into the hands of PAC.
The prayer of the Claude is granted. The order and writ of
attachment complained of are annulled and set aside.
State Investment House, Inc. vs. Citibank, N.A. (1991) (Suan)
Foreign banks – Bank of America NT & SA, Citibank NA, and
HSBC jointly filed a petition for involuntary insolvency of
Consolidated Mines, Inc.
The petition alleged that CMI had obtained loans from Bank of
America, Citibank, HSBC. In Nov ’81, SIHI and State Financing
Center, Inc. had separately instituted actions for collection of sums
of money and damages in the CFI Rizal against CMI and that on
application of SIHI and SFCI, writs of preliminary attachment had
been issued which were executed on "the royalty/profit sharing
payments due CMI from Benguet CMI.”
This petition was opposed by SIHI and SFCI, alleging that the
foreign banks had come to court with unclean hands in that they
filed the petition when it fact, a few days earlier, they had received
substantial payments aggregating P10.8M. Also that Court has no
jurisdiction because the alleged acts of insolvency were false, and
that the banks are not resident creditors of CMI in contemplation of
the Insolvency Law, and that the Court has no power to set aside the
attachment issued in favor of SIHI and SCFI.
CMI filed its Answer, asserting that it was not insolvent.
SIHI and SFCI filed Motion for Summary Judgment on the
ground that the TC had no jurisdiction to adjudicate CMI as
insolvent since the foreign banks are not “resident creditors” of CMI
as required under the Insolvency Law.
RTC found merit in the motion, ruling that if the creditors
petitioning for adjudication of insolvency are not "residents" of the
Philippines, court could not acquire jurisdiction to adjudicate the
debtor CMI as insolvent. Also declared that since SIHI and SFCI
had been merely licensed to do business in the PH, they could not
be deemed residents thereof.
ISSUE:
The concept of a foreign corporation under Section 123 of the
Corporation Code is of "one formed, organized or existing under
laws other than those of the Philippines and . . . (which) laws allow
Filipino citizens and corporations to do business . . . ."
There is no question that the three banks are foreign
corporations in this sense, with principal offices situated outside of
the Philippines. There is no question either that said banks have been
licensed to do business in this country and have in fact been doing
business here for many years, through branch offices or agencies,
including "foreign currency deposit units”.
The National Internal Revenue Code declares that the term
"'resident foreign corporation' applies to a foreign corporation
engaged in trade or business within the Philippines," as
distinguished from a " "non-resident foreign corporation" . . . (which
is one) not engaged in trade or business within the Philippines."
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 14
The Offshore Banking Law, Presidential Decree No. 1034,
states "that branches, subsidiaries, affiliation, extension offices or
any other units of corporation or juridical person organized under
the laws of any foreign country operating in the Philippines shall be
considered residents of the Philippines."
The General Banking Act, Republic Act No. 337, places
"branches and agencies in the Philippines of foreign banks . . .
(which are) called Philippine branches," in the same category as
"commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan
associations" (which have been formed and organized under
Philippine laws), making no distinction between the former and the
later in so far, as the terms "banking institutions" and "bank" are
used in the Act.
A foreign corporation licitly doing business in the Philippines,
which is a defendant in a civil suit, may not be considered a non-
resident within the scope of the legal provision authorizing
attachment against a defendant not residing in the Philippine
Islands. In other words, a preliminary attachment may not be applied
for and granted solely on the asserted fact that Citibank is a foreign
corporation authorized to do business in the Philippines — and is
consequently and necessarily, "a party who resides out of the
Philippines." Parenthetically, if it may not be considered as a party
not residing in the Philippines, or as a party who resides out of the
country, then, logically, it must be considered a party who does
reside in the Philippines, who is a resident of the country.
It would be entirely out of line with this policy should we make
a discrimination against a foreign corporation and subject its
property to the harsh writ of seizure by attachment when it has
complied not only with every requirement of law made specially of
foreign corporations, but in addition with every requirement of law
made of domestic corporations.
Obviously, the assimilation of foreign corporations authorized
to do business in the Philippines "to the status of domestic
corporations," subsumes their being found and operating as
corporations, hence, residing, in the country.
The Court cannot thus accept the SIHI's theory that
corporations may not have a residence (i.e., the place where they
operate and transact business) separate from their domicile (i.e., the
state of their formation or organization), and that they may be
considered by other states as residents only for limited and exclusive
purposes. Of course, it is not really the grant of a license to a foreign
corporation to do business in this country that makes it a resident;
the license merely gives legitimacy to its doing business here. What
effectively makes such a foreign corporation a resident corporation
in the Philippines is its actually being in the Philippines and licitly
doing business here.
Neither can the Court accept the theory that the omission by
the banks in their petition for involuntary insolvency of an explicit
and categorical statement that they are "residents of the Philippine
Islands," is fatal to their cause. In truth, in light of the concept of
resident foreign corporations just expounded, when they alleged in
that petition that they are foreign banking corporations, licensed to
do business in the Philippines, and actually doing business in this
Country through branch offices or agencies, they were in effect
stating that they are resident foreign corporations in the Philippines.
There is, of course, as petitioners argue, no substantive law
explicitly granting foreign banks the power to petition for the
adjudication of a Philippine corporation as a bankrupt. This is
inconsequential, for neither is there any legal provision expressly
giving domestic banks the same power, although their capacity to
petition for insolvency can scarcely be disputed and is not in truth
disputed by petitioners. The law plainly grants to a juridical person,
whether it be a bank or not or it be a foreign or domestic corporation,
as to natural persons as well, such a power to petition for the
adjudication of bankruptcy of any person, natural or juridical,
provided that it is a resident corporation and joins at least two other
residents in presenting the petition to the Bankruptcy Court.
The petitioners allege that three days before respondent banks
filed their petition for involuntary insolvency against CMI, they
received from the latter substantial payments on account in the
aggregate amount of P6,010,800.00, with the result that they were
"preferred in the distribution of CMI's assets thereby defrauding
other creditors of CMI." Non sequitur. It is in any case a
circumstance that the Bankruptcy Court may well take into
consideration in determining the manner and proportion by which
the assets of the insolvent company shall be distributed among its
creditors; but it should not be considered a ground for giving the
petition for insolvency short shrift.
Hence, the petition for insolvency was denied.
Sievert vs. CA (1988) Suan
Alberto Sievert, a citizen and resident of the PH, received by mail
a petition for issuance of a preliminary attachment filed with RTC
Manila. He had not previously received any summons and copy of
a complaint against him.
On day set for hearing of the petition, Sievert’s counsel went
before the TC and entered a special appearance for the purpose of
objecting to the jurisdiction of the court. Prayed for denial of that
Petition for lack of jurisdiction over the person of Sievert upon the
ground that since no summons had been served upon him in the
main case, no jurisdiction over the person of Sievert had been
acquired by the court.
However, court denied his objection. Sievert filed petition for
certiorari, which the CA dismissed.
ISSUE: WON judge may issue a writ of preliminary attachment
against Sievert before summons is served on him / WON a court
which has not acquired jurisdiction over the person of the defendant
in the main case, may bind such defendant or his property by issuing
a writ of preliminary attachment
No. RTC and CA erred when it held that the defendant may be
bound by a writ of preliminary attachment even before summons
together with a copy of the complaint in the main case has been
validly served upon him.
There is no question that a writ of preliminary attachment may be
applied for a plaintiff "at the commencement of the action or at any
time thereafter" in the cases enumerated in Section 1 of Rule 57 of
the Revised Rules of Court. The issue posed in this case, however,
is not to be resolved by determining when an action may be regarded
as having been commenced, a point in time which, in any case, is
not necessarily fixed and Identical regardless of the specific purpose
for which the deter. nation is to be made. The critical time which
must be Identified is, rather, when the trial court acquires authority
under law to act coercively against the defendant or his property in
a proceeding in attachment. We believe and so hold that critical time
is the time of the vesting of jurisdiction in the court over the person
of the defendant in the main case.
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Attachment is an ancillary remedy. It is not sought for its own
sake but rather to enable the attaching party to realize upon relief
sought and expected to be granted in the main or principal action. A
court which has not acquired jurisdiction over the person of
defendant, cannot bind that defendant whether in the main case or
in any ancillary proceeding such as attachment proceedings. The
service of a petition for preliminary attachment without the prior or
simultaneous service of summons and a copy of the complaint in the
main case — and that is what happened in this case — does not of
course confer jurisdiction upon the issuing court over the person of
the defendant.
Ordinarily, the prayer in a petition for a writ of preliminary
attachment is embodied or incorporated in the main complaint itself
as one of the forms of relief sought in such complaint. Thus, valid
service of summons and a copy of the complaint will in such case
vest jurisdiction in the court over the defendant both for purposes of
the main case and for purposes of the ancillary remedy of
attachment. In such case, notice of the main case is at the same time
notice of the auxiliary proceeding in attachment. Where, however,
the petition for a writ of preliminary attachment is embodied in a
discrete pleading, such petition must be served either
simultaneously with service of summons and a copy of the main
complaint, or after jurisdiction over the defendant has already been
acquired by such service of summons. Notice of the separate
attachment petition is not notice of the main action. If a court has no
jurisdiction over the subject matter or over the person of the
defendant in the principal action, it simply has no jurisdiction to
issue a writ of preliminary attachment against the defendant or his
property.
It is basic that the requirements of the Rules of Court for issuance
of preliminary attachment must be strictly and faithfully complied
with in view of the nature of this provisional remedy.
In the case at bar, the want of jurisdiction of the trial court to
proceed in the main case against the defendant is quite clear. It is
not disputed that neither service of summons with a copy of the
complaint nor voluntary appearance of Sievert was had in this case.
Cuartero vs. CA (1992) Suan
Cuartero filed complaint before RTC Quezon City against Sps.
Roberto and Felicia Evangelista for a sum of money plus damages
with prayer for issuance of writ of preliminary attachment.
RTC issued an order granting ex parte the prayer for the writ.
19 Sep ’90: the writ was issued. And on the same day, summons
for Sps. Evangelista was prepared.
Following day, a copy of the writ, summons and complaint were
all simultaneously served upon the Sps. at their residence.
Immediately, the sheriff levied, attached and pulled out the
properties in compliance with the court’s order, for so much as to
satisfy the claim of P2.171M.
Subsequently, Sps. Evangelista filed motion to set aside the order
and discharge the writ of preliminary attachment for having been
irregularly and improperly issued. This was denied for lack of merit.
Sps. Evangelista then filed a SCA for certiorari with the CA. This
was granted.
Sps. Evangelista’s contention: no proper ground also existed for
the issuance of the writ of preliminary attachment. The fraud in
contracting the debt or incurring the obligation upon which the
action is brought which comprises a ground for attachment must
have already been intended at the inception of the contract. No intent
to defraud Cuartero when the postdated checks were issued
inasmuch as the latter was aware that the same were not yet funded
and that they were issued only for purposes of creating an evidence
to prove a pre-existing obligation. Also, there was violation of right
to due process when the writ was issued without notice and hearing.
ISSUE: WON RTC could validly issue the writ of preliminary
attachment which is an ancillary remedy
Yes. The CA decision is grounded on its finding that the trial
court did not acquire any jurisdiction over the person of Sps.
Evangelista.
A writ of preliminary attachment is defined as a provisional
remedy issued upon order of the court where an action is pending to
be levied upon the property or properties of the defendant therein,
the same to be held thereafter by the sheriff as security for the
satisfaction of whatever judgment might be secured in said action
by the attaching creditor against the defendant.
Under section 3, Rule 57 of the Rules of Court, the only requisites
for the issuance of the writ are the affidavit and bond of the
applicant. No notice to the adverse party or hearing of the
application is required inasmuch as the time which the hearing will
take could be enough to enable the defendant to abscond or dispose
of his property before a writ of attachment issues. In such a case, a
hearing would render nugatory the purpose of this provisional
remedy. The ruling remains good law. There is, thus, no merit in the
Evangelista’s claim of violation of their constitutionally guaranteed
right to due process.
The writ of preliminary attachment can be applied for and granted
at the commencement of the action or at any time thereafter. Cited
Davao Light and Power as to phrase “at the commencement of the
action”.
It is clear from our pronouncements that a writ of preliminary
attachment may issue even before summons is served upon the
defendant. However, we have likewise ruled that the writ cannot
bind and affect the defendant. However, we have likewise ruled that
the writ cannot bind and affect the defendant until jurisdiction over
his person is eventually obtained. Therefore, it is required that when
the proper officer commences implementation of the writ of
attachment, service of summons should be simultaneously made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues
the order granting the application; second, the writ of attachment
issues pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant should first be
obtained. However, once the implementation commences, it is
required that the court must have acquired jurisdiction over the
defendant for without such jurisdiction, the court has no power and
authority to act in any manner against the defendant. Any order
issuing from the Court will not bind the defendant.
As to ruling in Sievert. The circumstances in Sievert are
different from those in the case at bar. In Sievert, the writ of
attachment issued ex-parte was struck down because when the writ
of attachment was being implemented, no jurisdiction over the
person of the defendant had as yet been obtained. The court had
failed to serve the summons to the defendant. However, in the case
at bar, when the writ of attachment was served on the spouses
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 16
Evangelista, the summons and copy of the complaint were also
simultaneously served.
Again, writs of attachment may properly issue ex-parte provided
that the Court is satisfied that the relevant requisites therefore 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.
It must be noted that the spouses Evangelista's motion to
discharge the writ of preliminary attachment was denied by the
lower court for lack of merit. There is no showing that there was an
abuse of discretion on the part of the lower court in denying the
motion.
Moreover, an attachment may not be dissolved by a showing of
its irregular or improper issuance if it is upon a ground which is at
the same time the applicant's cause of action in the main case since
an anomalous situation would result if the issues of the main case
would be ventilated and resolved in a mere hearing of a motion
In the present case, one of the allegations in petitioner's complaint
below is that the defendant spouses induced the plaintiff to grant the
loan by issuing postdated checks to cover the installment payments
and a separate set of postdated cheeks for payment of the stipulated
interest. The issue of fraud, then, is clearly within the competence
of the lower court in the main action.
NORTHWEST ORIENT AIRLINES vs. CA
DOCTRINE:
● A foreign judgment is presumed to be valid and binding
in the country from which it comes, until the contrary is
shown.
● A court, whether of the Philippines or elsewhere, enjoys
the presumption that it was acting in the lawful exercise
of jurisdiction and has regularly performed its official
duty.
● The CA added that "the process of the court has no extraterritorial
FACTS: Northwest Orient Airlines, Inc. is a corporation organized
under the laws of the state of Minnesota, USA. It sought for the
enforcement of a civil case in the RTC of Manila. The judgment was
rendered in its favor by a Japanese Court against C.F. Sharp &
Company, Inc., a corporation incorporated under Philippine laws.
The facts of the said case are as follows: Northwest Airlines and
defendant C.F. Sharp & Company, through its Japan branch, entered
into an International Passenger Sales Agency Agreement, where the
former authorized the latter to sell its air transportation tickets. C.F
Sharp and Company (it’s Japan branch) was unable to remit the
proceeds of ticket sales made in behalf of Northweses which
prompted the latter to sue CF Sharp in Tokyo, Japan for the
collection of the unremitted proceeds of the ticket sales with claim
for damages.
Writ of summons were issued by the District Court of Japan at the
defendant’s office, then to the head of office in Manila and even
through diplomatic channels to the defendant’s head office in
Manila. However, despite receipt of such summons, the defendant
failed to appear on the scheduled hearings. Thus, the Tokyo Court
proceeded to hear the complaint and rendered judgment ordering the
defendants to pay the amount of unremitted proceeds plus damages
for delay.
The defendant received a copy of the judgment and since it was not
appealed, it became final and executory. But Northwest Orient
Airlines was unable to execute the decision in Japan, hence, it filed
a suit for enforcement of judgment before the RTC of Manila.
The defendants filed an answer averring that judgment on a
Japanese Court sought to be enforced is null and void and
unenforceable in this jurisdiction having been rendered without due
and proper notice to the defendant and/or with collusion or fraud
and/or upon a clear mistake of law and fact.
Both the trial court and the court of appeals rendered a decision that:
"The foreign judgment in the Japanese Court sought in this action
is null and void for want of jurisdiction over the person of the
defendant considering that this is an action in personam; the
Japanese Court did not acquire jurisdiction over the person of the
defendant because jurisprudence requires that the defendant be
served with summons in Japan in order for the Japanese Court to
acquire jurisdiction over it, the process of the Court in Japan sent
to the Philippines which is outside Japanese jurisdiction cannot
confer jurisdiction over the defendant in the case before the
Japanese Court of the case at bar. xxx
This Court agrees that if the defendant in a foreign court is a
resident in the court of that foreign court such court could acquire
jurisdiction over the person of the defendant but it must be served
upon the defendant in the territorial jurisdiction of the foreign court.
Such is not the case here because the defendant was served with
summons in the Philippines and not in Japan."
effect and no jurisdiction is acquired over the person of the
defendant by serving him beyond the boundaries of the state." And
that to confer jurisdiction on the court, personal or substituted
service of summons on the defendant not extraterritorial service is
necessary.
ISSUE: Whether a Japanese Court can acquire jurisdiction over a
Philippine Corporation doing business in Japan by serving summons
through diplomatic channels on the Philippine corporation at its
principal office in Manila after prior attempts to serve summons in
Japan had failed
HELD: Yes, a foreign judgment is presumed to be valid and binding
in the country from which it comes, until the contrary is shown. It is
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 17
also proper to presume the regularity of the proceedings and the
giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judgment in an
action in personam of a tribunal of a foreign country having
jurisdiction to pronounce the same is presumptive evidence of a
right as between the parties and their successors-in-interest by a
subsequent title. The judgment may, however, be assailed by
evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. Also, under Section
3 of Rule 131, a court, whether of the Philippines or elsewhere,
enjoys the presumption that it was acting in the lawful exercise of
jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden
of overcoming the presumption of its validity. Being the party
challenging the judgment rendered by the Japanese court, SHARP
had the duty to demonstrate the invalidity of such judgment. In an
attempt to discharge that burden, it contends that the extraterritorial
service of summons effected at its home office in the Philippines
was not only ineffectual but also void, and the Japanese Court did
not, therefore, acquire jurisdiction over it.
It is settled that matters of remedy and procedure such as those
relating to the service of process upon a defendant are governed by
the lex fori or the internal law of the forum. In this case, it is the
procedural law of Japan where the judgment was rendered that
determines the validity of the extraterritorial service of process on
SHARP. As to what this law is a question of fact, not of law. It may
not be taken judicial notice of and must be pleaded and proved like
any other fact. Sections 24 and 25, Rule 132 of the Rules of Court
provide that it may be evidenced by an official publication or by a
duly attested or authenticated copy thereof. It was then incumbent
upon SHARP to present evidence as to what that Japanese
procedural law is and to show that under it, the assailed
extraterritorial service is invalid. It did not. Accordingly, the
presumption of validity and regularity of the service of
summons and the decision thereafter rendered by the Japanese
court must stand.
Alternatively, in the light of the absence of proof regarding Japanese
law, the presumption of identity or similarity or the socalled
processual presumption may be invoked. Applying it, the Japanese
law on the matter is presumed to be similar with the Philippine law
on service of summons on a private foreign corporation doing
business in the Philippines. Section 14, Rule 14 of the Rules of
Court provides that if the defendant is a foreign corporation doing
business in the Philippines, service may be made: (1) on its resident
agent designated in accordance with law for that purpose, or, (2) if
there is no such resident agent, on the government official
designated by law to that effect, or (3) on any of its officers or agents
within the Philippines.
Nowhere in its pleadings did SHARP profess to having had a
resident agent authorized to receive court processes in Japan. This
silence could only mean, or at least create an impression, that it had
none. Hence, service on the designated government official or on
any of SHARP's officers or agents in Japan could be availed of.
As found by the Court of Appeals, it was the Tokyo District Court
which ordered that summons for SHARP be served at its head office
in the Philippines after the two attempts of service had failed. The
Tokyo District Court requested the Supreme Court of Japan to cause
the delivery of the summons and other legal documents to the
Philippines. Acting on that request, the Supreme Court of Japan sent
the summons together with the other legal documents to the
Ministry of Foreign Affairs of Japan which, in turn, forwarded the
same to the Japanese Embassy in Manila. Thereafter, the court
processes were delivered to the Ministry (now Department) of
Foreign Affairs of the Philippines, then to the Executive Judge of
the Court of First Instance (now Regional Trial Court) of Manila,
who forthwith ordered Deputy Sheriff Rolando Balingit to serve the
same on SHARP at its principal office in Manila. This service is
equivalent to service on the proper government official under
Section 14, Rule 14 of the Rules of Court, in relation to Section 128
of the Corporation Code. Hence, SHARP's contention that such
manner of service is not valid under Philippine laws holds no water.
Moreover, the domicile of a corporation belongs to the state where
it was incorporated. In a strict technical sense, such domicile as a
corporation may have is single in its essence and a corporation can
have only one domicile which is the state of its creation.
Nonetheless, a corporation formed in one state may, for certain
purposes, be regarded a resident in another state in which it has
offices and transacts business. This is the rule in our jurisdiction and
apropos thereto as stated in State Investment House, Inc. vs.
Citibank.
Inasmuch as SHARP was admittedly doing business in Japan
through its four duly registered branches at the time the
collection suit against it was filed, then in the light of the
processual presumption, SHARP may be deemed a resident of
Japan, and, as such, was amenable to the jurisdiction of the
courts therein and may be deemed to have assented to the said
courts' lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by the
Japanese Court was valid not only under the processual
presumption but also because of the presumption of regularity
of performance of official duty.
Salas vs. Adil (1979) Suan
10 Sep ’76: Rosita Bedro and Benita Yu filed civil action with
CFI Iloilo against Ricardo Salas and Maria Salas, Philippine
Commercial & Industrial Bank, and Avelina Magno to annul the
DOS of Lot No. 5 executed by administrators of the Hodges Estate
in favor of the Sps. Ricardo Salas and Maria Salas and for damages.
The action for annulment was predicated upon the averment that Lot
No. 5, being a subdivision road, is intend for public use and cannot
be sold or disposed of by the Hodges Estate. The claim for damages
was based on the assertion that after Sps. Salas purchased Lots Nos.
2 and 3, they also purchased Lot No. 5 and thereafter "erected
wooden posts, laid and plastered at the door of the house on Lot No.
3, with braces of hardwood, lumber and plywood nailed to the post",
thereby preventing Rosita Bedro and Benita Yu from using the road
on Lot No. 5, and that as a result of such obstruction, Rosita Bedro
and Benita Yu sustained actual damages in the amount of P114k as
well as moral damages of P200k.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 18
Sps. Salas’ contention: denied the material allegations. Lot No.
5 had been registered in the name of the C. N. Hodges as their
exclusive private property and was never subjected to any servitude
or easement of right of way in favor of any person…
12 May ’77: Bedro and Yu filed Motion for Attachment, alleging
that the case was "for annulment of a DOS and recovery of
damages" and that Sps. Salas have removed or disposed of their
properties or are about to do so with intent to defraud their creditors
especially Bedro and Yu.
Judge issued ex parte a writ of attachment against the properties
of Sps. Salas, particularly Lot Nos. 1 and 4. The writ was then issued
and the sheriff proceeded to attach the properties mentioned.
Sps. Salas filed for certiorari.
ISSUE: WON the writ of attachment was properly issued
No. In certiorari proceedings, the cardinal rule is that the court
must be given the opportunity to correct itself, Thus, for the special
civil action of certiorari to prosper, there must be no appeal nor any
plain, speedy and adequate remedy in the ordinary course of law.
Salas, therefore, must exhaust all available remedies in the lower
court before filing a petition for certiorari, otherwise the petition
shall be held to be premature. In the instant case, it appears that Sps.
Salas have adequate remedy under the law. They could have filed
an application with the court a quo for the discharge of the
attachment for improper or irregular issuance under Sec. 13, Rule
57, of the Revised ROC.
Considering that Sps. Salas have not availed of this remedy, the
instant petition is premature.
Nevertheless, the Court ruled as to the issue.
A preliminary attachment is a rigorous remedy, which exposes
the debtor to humiliation and annoyance, such it should not be
abused as to cause unnecessary prejudice. It is, therefore, the duty
of the court, before issuing the writ, to ensure that all the requisites
of the law have been complied with; otherwise the judge acts in
excess of his jurisdiction and the so issued shall be null and void.
Considering the gravity of the allegation that Sps. Salas have
removed or disposed of their properties or are about to do so with
intent to defraud their creditors, and further considering that the
affidavit in support of the pre-attachment merely states such ground
in general terms, without specific allegations of instances to show
the reason why Bedro and Yu believe that Sps. Salas are disposing
of their properties in fraud of creditors, it was incumbent upon
respondent Judge to give notice to Sps. Salas and to allow wherein
evidence is them to present their position. Moreover, it appears from
the records that Bedro and Yu are claiming unliquidated damages,
including moral damages, from Sps. Salas. The authorities agree
that the writ of attachment is not available in a suit for damages
where the amount claimed is contingent or unliquidated.
The general rule is, that unliquidated damages cannot be
recovered by attachment, unless the contract affords a certain
measure or standard for ascertaining the amount of the damages.
The statute authorizing the issuance of the writ of garnishment and
that relating to the issuance of the writ of attachment ... have not
been construed as authorizing the writs to be issued when the
plaintiff's suit is technically an action for debt. Neither of the writs
may be issued when the suit is for damages for tort, but they may be
issued when the plaintiff's claim arises out of contract either express
or implied, and the demand is liquidated, that is, the amount of the
claim is not contingent, is capable of being definitely ascertained by
the usual means of evidence, and does not rest in the discretion of
the jury.
La Granja, Inc. vs. Samson (1933) Suan
Facts: 5 Jul ’32: La Granja filed complaint in CFI Cagayan
against Chua Bian, Chua Yu Lee and Chua Ki, for recovery of sum
of P2,418.18 with interest. Also prayed for the issuance of an order
of attachment against the defendants’ property and accompanied
said complaint with an affidavit of the manager of La Granja, Inc.,
wherein it was alleged among other essential things, that the said
defendants have disposed or are disposing of their properties in
favor of the Asiatic Petroleum Co., with intent to defraud their
creditors.
The respondent judge, wishing to ascertain or convince himself
of the truth of the alleged disposal, required La Granja to present
evidence to substantiate its allegation, before granting its petition.
Inasmuch as La Granja refused to comply with the court's
requirement, alleging as its ground that was not obliged to do so, the
respondent judge dismissed said petition for an order of attachment.
La Granja then filed a petition for mandamus against Judge
Samson, to compel him to issue a writ of attachment against the
properties of the defendants.
ISSUE: WON the mere filing of an affidavit in due form is
sufficient to compel a judge to issue an order of attachment
No. The law applicable is Sec. 426 of the Code of Civil
Procedure, which provides: “A judge or justice of the peace shall
grant an order of attachment when it is made to appear to the judge
or justice of the peace by the affidavit of the plaintiff, or of some
other person who knows the facts, that a sufficient cause of action
exists, and that the case is one of those mentioned in section four
hundred and twenty-four, and that there is no other sufficient
security for the claim sought to be enforced by the action, and that
the amount due to the plaintiff above all legal set-offs or
counterclaims is as much as the sum for which the order is granted.”
Although the law requires nothing more than the affidavit as a
means of establishing the existence of such facts, nevertheless, such
affidavit must be sufficient to convince the court of their existence,
the court being justified in rejecting the affidavit if it does not serve
this purpose and in denying the petition for an order of attachment.
The affidavit filed by La Granja, Inc. must not have satisfied
the Judge Samson inasmuch as he desired to ascertain or convince
himself of the truth of the facts alleged therein by requiring evidence
to substantiate them. The sufficiency or insufficiency of an affidavit
depends upon the amount of credit given it by the judge, and its
acceptance or rejection, upon his sound discretion.
Hence, Judge Samson in requiring the presentation of evidence
to establish the truth of the allegation of the affidavit that the
defendants had disposed or were disposing of their property to
defraud their creditors, has done nothing more than exercise his
sound discretion in determining the sufficiency of the affidavit.
Hence, the mere filing of an affidavit executed in due form is
not sufficient to compel a judge to issue an order of attachment, but
it is necessary that by such affidavit it be made to appear to the court
that there exists sufficient cause for the issuance thereof, the
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 19
determination of such sufficiency being discretionary on the part of
the court.
Therefore, the writ of mandamus was denied.
Jardine-Manila Finance vs. CA (1989) Suan
Jardine-Manila Finance, Inc. filed a complaint against Impact
Corp., Ricardo de Leon and Eduardo de Leon to collect various
sums of money allegedly due from Impact under a credit
accommodation by way of a discounting line agreement.
It was alleged that Impact assigned its receivables to Jardine on
the condition that Impact was to collect them on their due dates from
their issuers and remit the collected amounts to Jardine and/or
repurchase the assigned receivables but despite the fact that Impact
had collected the amounts due on said receivables, it failed or
refused to turn over the amounts so collected to Jardine.
Jardine thus demanded payment of P 1,000,212.64, the total
amount due under said various deeds of assignment, plus interest.
Likewise contained in said complaint is Jardine’s application for a
writ of preliminary attachment against respondents. The application
contains the pertinent allegation: “Defendant corporation, Ricardo
de Leon and Eduardo de Leon have no visible other sufficient
security for the claim sought to be enforced by this action of plaintiff
other than their real and personal properties which are located in
Metro Manila and in the province of Rizal, Province of Nueva Ecija
or elsewhere.”
The lower court granted the application. Respondents,
subsequently, filed a motion to set aside the writ of preliminary
attachment.
Respondents’ contentions: the grounds alleged by Jardine in its
application for the writ are not among the grounds specified under
Section 1 of Rule 57; that the defendants have other sufficient
security; that there was no affidavit of merit to support the
application for attachment as required by Section 3 of Rule 57 and
that the verification of the complaint was defective as it did not state
that the amount due to the plaintiff above all legal set-ups or
counterclaims is as much as the sum for which the order is sought.
Jardine’s contentions: the mental reservation of defendants at
the time of the execution of the deeds of assignment constituted
fraud; that such fraud was further confirmed by the fact that
defendants actually failed to remit the proceeds of the collection of
receivables assigned by them; that defendants failed to disclose to
Jardine the fact that they had already collected the receivables
assigned by them…
Motion to annul the writ of preliminary attachment was denied.
ISSUE: WON the writ of preliminary attachment was properly
issued
No. Jardine admits not having used the exact words of the Rules
in making the requisite allegations, but nonetheless it alleged that it
presented ultimate and specific facts, first in showing that there is
indeed no other sufficient security for the claim sought to be
enforced; and second, while it did not specifically state that the sum
due is above all legal counterclaims, such conclusion of fact is no
longer necessary in the face of actual proof in the answer which did
not carry any counterclaim. In fine, Jardine stresses that mere forms
must not be given more weight than substance.
It has been held that the failure to allege in the affidavit the
requisites prescribed for the issuance of the writ of preliminary
attachment, renders the writ of preliminary attachment issued
against the property of the defendant fatally defective, and the judge
issuing it is deemed to have acted in excess of his jurisdiction. In
fact, in such cases, the defect cannot even be cured by amendment.
Since the attachment is a harsh and rigorous remedy which
exposes the debtor to humiliation and annoyance, the rule
authorizing its issuance must be strictly construed in favor of
defendant. It is the duty of the court before issuing the writ to ensure
that all the requisites of the law have been complied with.
The general rule is that the affidavit is the foundation of the writ,
and if none be filed or one be filed which wholly fails to set out
some facts required by law to be stated therein, there is no
jurisdiction and the proceedings are null and void. Thus, while not
unmindful of the fact that the property seized under the writ and
brought into court is what the court finally exercises jurisdiction
over, the court cannot subscribe to the proposition that the steps
pointed out by statutes to obtain such writ are inconsequential, and
in no sense jurisdictional.
Ting vs. Villarin (1989) Suan
Consolidated Bank and Trust Co. filed a complaint for sum of
money with prayer for writ of preliminary attachment against Perlon
Textile Mills and its directors. Ting, a director, was impleaded with
his wife Dolores Lim Ting, in order to bind their conjugal
partnership of gains which allegedly benefited from the
transactions.
Consolidated Bank sued on 2 COAs. The first was targeted at
recovering on several P/Ns the amount of P2,972,955.51, allegedly
obtained for Perlon by its duly authorized officers Lu Cheng Peng,
Teng See, and Roberto Ting. These officers allegedly signed the
P/Ns in their personal and official capacities thereby binding
themselves jointly and severally to Consolidated Bank for the
payment of the P/Ns.
The second COA dwells on several violations of trust receipt
agreements which Perlon executed in favor of Consolidated Bank.
Perlon’s faithful compliance with the trust receipt agreements
appears to have been secured by the continuing guaranty of
defendants Liu Suy Lin Angelo Leonar, and Lu Cheng Peng.
In support of the application for preliminary attachment,
Consolidated Bank averred the ground of “fraud in contracting an
obligation,” iluustrated by their violation of the trust receipt
agreement.
The writ was granted. A motion to quash was filed but was
denied.
ISSUE: WON the writ of preliminary attachment was properly
issued
No. The complaint did not provide for a sufficient basis for the
issuance of a writ of preliminary attachment. It is not enough for the
complaint to ritualistically cite, as here, that the defendants are
"guilty of fraud in contracting an obligation." An order of
attachment cannot be issued on a general averment. The need for a
recitation of factual circumstances that support the application
becomes more compelling here considering that the ground relied
upon is "fraud in contracting an obligation." The complaint utterly
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 20
failed to even give a hint about what constituted the fraud and how
it was perpetrated. Fraud cannot be presumed.
The respondent judge thus failed in this duty to ensure that, before
issuing the writ of preliminary attachment, all the requisites of the
law have been complied with. He acted in excess of his jurisdiction
and the writ he so issued is thus null and void.
What is more, the respondent judge plainly ignored that the
application for preliminary attachment rests on "fraud in
contracting" the trust receipt agreements. The complaint alleged that
only Consolidated Bank, as principals, and Liu Suy Lin Angelo
Leonar, and Lu Cheng Peng, as guarantors, were privy to the trust
receipt agreements under the second cause of action. Roberto Ting's
involvement is limited only to the P/Ns under the first COA.
The sweeping nature of the attachment order probably stemmed
from the respondent judge's failure to detect that the 2 COAs had
been misproperly joined. The 2 COAs arose from different
transactions. There was no series of transactions to speak of.
Also, that the attachment ordered by the respondent judge called
for the sheriffs to attach the estate, real and personal of Sps. Ting
likewise gives cause for this Court to strike it down for being null
and void. The attached property of the spouses Ting are conjugal,
the same cannot be validly brought under the painful process of
attachment.
Carlos vs. Sandoval (2005) Suan
Juan de Dios Carlos filed a complaint, asserting that he was the
sole surviving compulsory heir of his parents, Felix B. Carlos and
Felipa Elemia, who had acquired during their marriage, six parcels
of land. His brother Teofilo died intestate. At the time of his death,
Teofilo was apparently married to Sandoval, and cohabiting with
her and their child, Teofilo II. Nonetheless, Carlos alleged that
Teofilo and Sandoval were not validly married as they had not
obtained any marriage license. Furthermore, Carlos also asserted
that Teofilo II could not be considered as Teofilo’s child. As a result,
Carlos concluded that he was also the sole heir of his brother
Teofilo, since the latter had died without leaving any heirs.
Carlos also claimed that Teofilo, prior to their father Felix’s death
in 1963, developed a scheme to save the elder Carlos’s estate from
inheritance taxes. Under the scheme, the properties of the father
would be transferred to Teofilo who would, in turn, see to it that the
shares of the legal heirs are protected and delivered to them. Felix
assented to the plan, and the subject properties were transferred in
the name of Teofilo. After Teofilo’s death, Carlos entered into
certain agreements with Sandoval in connection with the subject
properties. Carlos did so, believing that the latter was the lawful wife
of his brother Teofilo. Subsequently though, Carlos discovered that
Sandoval and his brother were never validly married, as their
marriage was contracted without a marriage license.
Carlos sought to nullify these agreements with Sandoval for want
of consideration, the premise for these contracts being non-existent.
Thus, Carlos prayed of the RTC to declare the alleged marriage
between Teofilo and Sandoval void ab initio, provided that Teofilo
died without issue, order that new titles covering the subject
properties be issued in the name of Carlos, and require Sandoval to
restitute Carlos in the amount of P18,924,800. Carlos likewise
prayed for the issuance of the provisional relief of preliminary
attachment. The court granted the writ.
Sandoval filed an Urgent Motion to Discharge the Writ of
Attachment. RTC denied the motion.
CA ordered the discharge and dissolution of the writ. There was
no sufficient cause of action to warrant the preliminary attachment,
since Carlos had merely alleged general averments in order to
support his prayer.
ISSUE: WON the affidavit was valid
No. There was no sufficient cause of action and only general
averments were stated. The Court of Appeals found that there was
no sufficient cause of action to warrant the preliminary attachment,
since Carlos had merely alleged general averments in order to
support his prayer.
Arellano vs. Flojo (1994) Suan
Teresita Arellano filed a verified complaint for neglect of duty,
misconduct, bias and partiality against Judge Flojo for having
irregularly issued an order for the issuance of a writ of attachment
in the said case on the same date despite lack of legal basis therefor,
and against Felino Bangalan for issuing the writ in said case despite
failure of the plaintiffs therein to post the required attachment bond
of P100k.
Justice Barcelona of CA found Judge Bangalan (then Clerk of
Court) guilty of negligence for having issued the writ of attachment
in spite of failure to post the acceptable bond as required, for what
appears in the record is only a P/N in the form of an affidavit was
executed. Recommended that Bangalan be suspended for 1 month
without pay.
ISSUE: WON the penalty imposed was proper
No, fine of P5k is the commensurate penalty for the irregularity
that attended the civil case. Indeed, Bangalan issued the Writ of
Attachment although the plaintiffs have not yet posted the required
attachment bond. It is explicitly stated in his Comment that what
was filed was merely an undertaking. The fact that the
"Undertaking" was subscribed by the branch clerk of court does not
necessarily follow that it carried the imprimatur of the presiding
judge thereof. As a lawyer, Bangalan, who is now a Judge should
have known the glaring distinctions between a plain undertaking and
a real attachment bond.
As ruled by Judge Talamayan, no bond can be confiscated to
answer for the damages sustained by defendants. He discovered that
only a promissory note in the form of an affidavit executed by the
bondsmen denominated as an attachment bond appears on the
record. Had Bangalan carefully examined the undertaking filed
before he issued the writ of attachment, such a situation could have
been obviated.
Where a statute authorizing attachment requires, as a condition to
the issuance of the writ, that a bond shall be given by plaintiff to
indemnify defendant for any loss or injury resulting from the
attachment in case it proves to be wrongful, a failure to give such
bond is fatal, and an attachment issued without the necessary bond
is invalid.
G.R. No. 106989 May 10, 1994 H.B. ZACHRY COMPANY
INTERNATIONAL, vs. HON. COURT OF and VINNEL-
BELVOIR CORPORATION (Rizada)
Doctrine: a distinction should be made between the issuance and the
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 21
enforcement of the writ. The trial court has unlimited power to issue
the writ upon commencement of the action even before it acquires
jurisdiction over the person of the defendant, but enforcement
thereof
can only be validly done after it shall have acquired jurisdiction.‖
FACTS:
Ground for dissolution of the writ of preliminary attachment: it was
issued prior to the service of summons and a copy of the complaint
on petitioner.
VBC entered into a written Subcontract Agreement with Zachry, a
foreign corporation. The latter had been engaged by the United
States Navy to design and construct 264 Family Housing Units at
the US Naval Base at Subic, Zambales.
VBC was to perform all the construction work on the
housing project.
When VBC had almost completed the project, Zachry complained
of the quality of work, making it a reason for its decision to take
over the management of the project, which paragraph c, Section 7
of the Subcontract Agreement authorized.
However, prior to such take-over, the parties executed on a
Supplemental Agreement, In accordance with the conditions in the
supplemental agreement, VBC submitted to Zachry on a detailed
computation of the cost to complete the subcontract on the housing
project. According to VBC's
computation, there remains a balance of $1,103,000.00 due in its
favor as of 18 January 1990. This amount includes the sum of
$200,000.00 allegedly withheld by Zachry and the labor escalation
adjustment granted earlier by the US Navy in the amount of
$282,000.00 due VBC.
Zachry, however, not only refused to acknowledge the
indebtedness but continually failed to submit to VBC a statement of
accumulated costs, as a result of which VBC was prevented from
checking the accuracy of the said costs.
VBC wrote Zachry a letter demanding compliance with its
obligations. Zachry still failed to do so. VBC made representations
to pursue its claim, including a formal claim with the Officer-in-
Charge of Construction, NAVFAC Contracts, Southwest Pacific, 10
which also failed.
Hence, on 20 March 1990, VBC filed a Complaint against Zachry
for the collection of the payments due it with a prayer for a writ of
preliminary attachment over Zachry's bank account in Subic Base
and over the remaining thirtyone undelivered housing units which
were to be turned over to the US Navy by Zachry on 30 March 1990.
FIRST COMPLAINT: Complaint alleges that defendant Zachry "is
a foreign corporation with address at 527 Longwood Street, San
Antonio, Texas, U.S.A. and has some of its officers working at U.S.
Naval Base, Subic Bay,
Zambales where it may be served with summons."
RTC: order to issue WPA made and attachment bond fixed
March 26  WPA issued
March 27  WPA served, together with the summons, a copy of the
complaint with annexes, the bond, and a copy of the order of
attachment,
SHERIFF’S RETURN: upon defendant H.B. Zachry Company
(International) at its field office in U.S. Naval Base, Subic Bay,
Zambales thru Ruby Apostol who acknowledged receipt thereof.
Mr. James M. Cupit, defendant's authorized officer was in their
Manila office at the time of service.
MARCH 27  VBC filed an Amended Complaint to implead as
additional defendants the US Navy Treasury Office-Subic Naval
Base and Captain A.L. Wynn, an officer of the US Navy, against
whom VBC prayed for a restraining order or preliminary injunction
to restrain the latter from preparing the treasury warrant checks to
be paid to Zachry and the former from signing the said checks and
to restrain both from making any further payments to Zachry. It also
amended paragraph 2 on the status and circumstances of
Zachry as follows:
Defendant, H.B. Zachry Co. (International) . . . is a foreign
corporation with address at 527 Longwood Street, San Antonio,
Texas, U.S.A. and may be
served with summons and all other legal processes at the following
addresses: a) H.B. Zachry Company (International), U.S. Naval
Base, Subic Bay, Zambales; and b) H.B. Zachry Company
(International) c/o A.M. Oreta & Co., 5th Floor Ermita Building,
Arquiza corner Alhambra Streets, Ermita, Manila, through its
authorized officer
James C. Cupit.
APRIL 6  Zachry filed a motion to dismiss the
complaint on the ground of lack of jurisdiction over its person
because the summons was not validly served on it. It alleges that it
is a foreign corporation duly licensed by the Securities and
Exchange Commission to do business in the Philippines18 and,
pursuant to Section 128 of the Corporation Code of the Philippines,
had appointed Atty. Lucas Nunag19 as its resident agent on whom
any summons and legal processes against it may be served. Atty.
Nunag's address is at the 10th Floor, Shell House, 156 Valero St.,
Makati, Metro Manila.
APRIL 24  Summons and a copy of the Amended Complaint were
served on Zachry through Atty. Nunag as shown in the sheriff's
return dated 24 April 1990.
ZACHARY: filed an Omnibus Motion to dissolve the writ of
attachment of 26 March 1990 "for having been issued without
jurisdiction, having been issued prior to the service of summons."
RTC: upheld validity of WPA. CA: dissolved WPA; CA held that
summons was served on Zachry only on 24 April 1990; hence,
applying Sievert vs Court of Appeals, the trial court "had no
authority yet to act coercively against the defendant" when it issued
the writ of attachment on 21 March 1990
ISSUE: WHETHER THE ISSUANCE OF THE WRIT OF
PRELIMINARY ATTACHMENT PRIOR TO THE SERVICE
OF THE SUMMONS AND A COPY OF THE AMENDED
COMPLAINT ON THE RESPONDENT IS VALID. HELD:
YES IT IS VALID.
CONTENTION OF VBC: As to the first issue, VBC takes refuge in
the ruling in Davao Light & Power Co. vs. Court of Appeals38 and
argues that the issuance of the writ of attachment on 21 March 1990,
although before the service of the summons, was valid. Its issuance
and implementation are two different and separate things; the first
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 22
is not affected by any defect in the implementation which may be
corrected. Moreover, assuming arguendothat the initial service of
summons was defective, it was cured by the numerous pleadings
thereafter filed. Finally, whatever doubts existed on the
effectiveness of the implementation of the writ was erased by its re-
service on the resident agent of Zachry.
CONTENTION OF ZACHARY: Zachry, in its Comment, contends
that pursuant to the Sievert and Davao Light rulings, the issuance of
the writ of attachment before the service of summons on Zachry's
resident agent was invalid and that the various pleadings filed by the
parties did not cure its invalidity.
SUPREME COURT: It was error for the Court of Appeals to
declare, on the ground of grave abuse of discretion, the nullity of the
writ of attachment issued by the trial court on 21 March 1990. In the
first place, the writ was in fact issued only on 26 March 1990 and
served, together with the summons, copy of the complaint, the Order
of 21 March 1990, and the bond, on 27 March 1990 on Zachry at its
field office in Subic Bay, Zambales, through one Ruby Apostol.
What the Court of Appeals referred to as having been issued on 21
March 1990 is the order granting the application for the issuance of
a writ of preliminary attachment upon the posting of a bond of
P24,266,000.00.
In the second place, even granting arguendo that the Court of
Appeals had indeed in mind the 26 March 1990 writ of attachment,
its issuance, as well as the issuance of the 21 March 1990 Order, did
not suffer from any procedural or jurisdictional defect; the trial court
could validly issue both.
However, the writ of attachment cannot be validly enforced through
the levy of Zachry's property before the court had acquired
jurisdiction over Zachry's person either through its voluntary
appearance or the valid service of summons upon it. To put it in
another way, a distinction should be made between the issuance and
the enforcement of the writ. The trial court has unlimited power to
issue the writ upon the commencement of the action even before it
acquires jurisdiction over the person of the defendant, but
enforcement thereof can only be validly done after it shall have
acquired such jurisdiction.
This is the rule enunciated in Davao Light & Power Co. vs. Court
of
Appeals. In that case, this Court stated: The validity then of the order
granting the application for a writ of preliminary attachment on 21
March 1990 and of the issuance of the writ of preliminary
attachment on 26 March 1990 is beyond dispute. However, the
enforcement of the preliminary attachment on 27 March 1990,
although simultaneous with the service of the summons and a copy
of the complaint, did not bind Zachry because the service of the
summons was not validly made. When a foreign corporation has
designated a person to receive service of summons pursuant to the
Corporation Code, that designation is exclusive and service of
summons on any other person is inefficacious. The valid service of
summons and a copy of the amended complaint was only made upon
it on 24 April 1990, and it was only then that the trial court acquired
jurisdiction over Zachary's person. Accordingly, the levy on
attachment made by the sheriff on 27 April 1990 was invalid.
However, the writ of preliminary attachment may be validly served
anew.
Siari Valley Estates vs. Lucasan (1960)
30 Jan ’52: CFI Zamboanga del Norte rendered a decision
ordering Filemon Lucasan to deliver to Siari Valley Estates the
cattle inside Lucasan’s pasture or pay its value amounting to P40k
and damages of P40k. This was affirmed by SC. When it became
final and executory, a writ of execution was issued.
Sheriff proceeded to levy on certain parcels of lands belonging to
Lucasan. Lands were sold at public auction to Siari Valley as the
highest bidder.
Lucasan failed to redeem the land within 1 year. Hence, the
sheriff issued in favor of Siari Valley the final certificate of sale.
16 Feb ’57: Upon petition of Siary Valley, a writ of possession
was issued directing the sheriff to place it in possession thereof.
However, it failed to take possession of the lands. So it filed a
motion reiterating its petition.
Lucasan filed an opposition, alleging that he was in possession of
one of the parcels of land sold at public auction on which he has
erected a house and which he has extra judicially constituted as a
family home.
The court overruled the opposition. Lucasan filed MR. Denied.
But later on, the court issued another order allowing Siari Valley to
take possession of all lands sold, with the exception of parcel 1 on
which the family home was constituted, holding that the levy and
sale made by the sheriff with regard to said parcel were not made in
accordance with law and so are null and void.
Lucasan’s contention: Said lot and house having been
constituted as a family home are beyond the reach of judicial
execution. Contended that the levy made by the sheriff on said
property is legally ineffective because it was not effected in
accordance with what is prescribed in Section 14, Rule 39, in
relation to Section 7, Rule 59, of the Rules of Court.
ISSUE: WON the levy and sale by the sheriff is valid
No. True that it appears that parcel 1 is a registered land,
registered in the ROD in the name of Filemon Lucasan. It appears
that Lucasan and his wife constituted this house and lot on which it
stands into a family home.
However, the evidence shows that when this property was levied
on execution by the sheriff to satisfy the judgment rendered against
Filemon Lucasan in favor of Siari Valley the notice of levy merely
described the property as unregistered land and the same was
registered under Act 3344 in the office of the register of deeds. It
also appears that in the notice of sale the property was merely
described according to the boundaries and area appearing in the tax
declaration and not according to what appears in the certificate of
title.
On the other hand, the rule provides that real property shall "be
levied on in like manner and with like effect as under an order of
attachment" (Section 14, Rule 39), and the provision regarding
attachment of real property postulates that the attachment shall be
made "by filing with the register of deeds a copy of the order,
together with the description of the property attached, and a notice
that it is attached, and by leaving a copy of said order, description,
and notice with the occupant of the property, if any there be," and
that "Where the property has been brought under the operation of
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 23
the Land Registration Act, the notice shall contain a reference to the
number of the certificate of title and the volume and page in the
registration book where the certificate is registered" (Section 7 [a],
Rule 59).
These provisions should be strictly construed if their purpose has
to be accomplished. The requirement that the notice of levy should
contain a reference to the number of the certificate of title and the
volume and page in the registration book where the certificate is
registered is made in order that the debtor as well as a third person
may be properly informed of the particular land or property that is
under the custody of the court. This can only be accomplished by
making a reference to the certificate of title covering the property.
The situation differs if the land is unregistered in which case it is
enough that the notice be registered under Act 3344.
An attachment levied on real estate not duly recorded in the
registry of property is not an encumbrance on the attached property,
nor can such attachment, unrecorded in the registry, serve as a
ground for decreeing the annulment of the sale of the property, at
the request of another creditor.
Since the notice of levy made by the sheriff as regards parcel 1
which is a registered land contains no reference to the number of its
certificate of title and the volume and page in the registry book
where the title is registered, it follows that said notice is legally
ineffective and as such did not have the effect of binding the
property for purposes of execution. Consequently, the sale carried
out by virtue of said levy is also invalid and of no legal effect.
ISSUE: WON the family home is exempt from execution
No. Article 243(2) of CC provides "The family home extra
judicially formed shall be exempt from execution" except "for debts
incurred before the declaration was recorded in the Registry of
Property."
The reason why a family home constituted after a debt had been
incurred is not exempt from execution is to protect the creditor
against a debtor who may act in bad faith by resorting to such
declaration just to defeat the claim against him. If the purpose is to
protect the creditor from fraud it would be immaterial if the debt
incurred be undisputed or inchoate, for a debtor acting in good faith
would prefer to wait until his case is definitely decided before
constituting the family home. Indeed, it may result, as in this case,
that the Supreme Court may affirm the judgment of the lower court.
If the contention of respondent be sustained a debtor may be allowed
to circumvent this provision of the law to the prejudice of the
creditor. This the Court cannot countenance.
Hence, we are persuaded to conclude that the money judgment in
question comes within the purview of the word debt used in Article
243 (2) of the new CC.
Ravanera vs. Imperial (1979)
17 Oct ’61: Roman Catholic Archiboshop of Caceres filed an
action for Rescission of Contract and Recovery of Possession
against Felipe Imperial. Court decided in favor of Roman Catholic.
17 Feb ’66: Archbishop of Nueva Caceres filed a Motion for
Execution of the decision or to order Imperial to file a supersedeas
bond and to deposit P500 every month as rentals. Court granted the
motion pending appeal and ordered that to stay the execution,
Imperial should put up a supersedeas bond of P40k as rents due as
of Feb ’66 for the amount of moral damages, and for the expenses
of suit and to deposit P500 as monthly rental of the property. This
order became the subject of a SCA for certiorari and prohibition.
SC dismissed the petition for certiorari on the ground that the
order of execution being incidental to the appeal, the same should
be addressed to CA.
21 Jun ’68: Roman Catholic filed another motion for execution.
Court ordered the issuance of a writ of execution, but Imperial was
given 15 days from receipt of the order to put up the P40,000.00
supersedeas bond and to deposit the monthly rental of P500.00 in
order to stay the execution.
However, Imperial failed to post the required supersedeas bond
and to deposit the monthly rental. Thus, Archbishop filed a motion
for the issuance of a writ of execution. Court granted the motion,
requiring Archbishop to put up a bond of P20k to answer for any
judgment that may be awarded to Imperial should the decision be
reversed on appeal.
Archbishop posted the required bond and a writ of execution was
issued. Said writ was not enforced upon instance of the counsel for
Archbishop as an amicable settlement was proposed and after the 60
days period had lapsed the Sheriff made a return of the writ.
However, the amicable settlement failed to materialize so the
Clerk of Court issued an alias writ of execution. Sheriff issued a
notice of Levy by which certain properties of Imperial were attached
or levied upon.
25 Sep ’69: the alias writ was personally served by the Sheriff
upon the petitioner.
7 Oct ’69: Sheriff issued a Notice of Public Auction sale of the
properties levied upon which was published in the "Bicol Star" a
weekly newspaper of general circulation
Public auction sale was held and Erlinda Ravanera was the
highest bidder. A Provisional DOS was issued in her favor. Within
the one-year period of redemption, Imperial redeemed some of the
properties bought at auction sale, but he failed to redeem some
others on account of which at the end of the redemption period or
on Dec 8, 1970. The Sheriff executed a Definite DOS of said
unredeemed properties in the name of Erlinda Ravanera.
9 Feb ’71: Ravanera filed a motion for writ of possession of the
properties. Granted. Imperial filed MR on the ground that there was
no formal hearing and reception of evidence on the motion and that
the order did not state the finding of facts which could be the basis
for the grant of the motion. Motion was denied.
Imperial’s contentions: Notice of levy was null and void and
hence the provisional as well as the definite deed of sale were
likewise void, and that Ravanera had no personality in the case, she
not being a party thereto. Also alleges that copies of the Notice of
Levy and the Notice of Sale were sent by Registered Mail which
according to the certificate of the Postmaster was received on Oct
15, 1969. Receipt of the Notice of Levy is denied by Imperial.
CA ruled in favor of Imperial. Ravanera filed MR. Denied.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 24
ISSUE: WON there was a valid levy upon the properties of Imperial
Yes. It appears in this case that the notice of levy was registered
with the ROD on Sep 29, 1969. From a certification of the
Postmaster at Naga City, it also appears that registered letter No.
13681 containing the notice of levy and the notice of auction sale
addressed to Imperial was delivered on Oct 15, 1969 to Pelaguia
Comba, member of the household of the addressee. Imperial was,
therefore, notified by registered mail of the levy and the auction sale
long before Nov 3, 1969, the date of the auction sale. What is
required is that the judgment debtor must be notified of the auction
sale before the actual date of sale which was done in the case at bar.
It cannot be gainsaid that if it were only to afford an opportunity
to Imperial to avoid the auction sale, he had ample opportunity to
file his objection to such sale because the auction sale took place on
Nov 3, 1969. Imperial had nineteen days after he received the notice
of levy and the notice of auction sale on Oct 15, 1969 and 39 days
from Sep 25, 1969 when he was served personally by the Sheriff a
copy of the writ of execution to avoid the sale had he wanted to.
Moreover, he had exactly one year from Nov 27, 1969 when the
provisional DOS executed in favor of Ravanera was registered with
the Register of Deeds to redeem the property.
Contention: CA erred in applying to one unregistered parcel of
land and the one unregistered residential house described in the
Notice of Levy the formal requirements of the ROC which are
applicable only to registered properties.
No merit. Section 7 (a) of Rule 57 is so explicit that only as to
property which has been brought under the operation of the Land
Registration Act should the notice of levy contain the volume and
page in the registration book where the certificate is registered,
impliedly, the requirement does not apply to property not registered
under the said Act. It is enough that the notice of levy upon
unregistered land be registered under Act 3344, as was done in this
case.
From the records of the case, the notice of levy made by the
sheriff as regards the registered land contains reference to the
number of its certificate of title but not to the volume and page in
the registry book where the title is registered. Nevertheless from
what was stated in the case of Siari Valley Estate vs. Lucasan, it
would seem that the purpose of the requirement of Section 7(a),
Rule 39 of the Revised Rules of Court is substantially complied
with. This is more so where as in this case, there appears in the
notice of levy the following certification: “It is hereby certified that
this instrument has been duly registered proper memorandum
hereof made on transfer Certificate of Title No. 257 & 258 and on
its owner's duplicate Reg. Book No. 3; File No. 1-248.”
Reference to the number of the certificate of title of every
registered land in the notice of levy, together with the technical
description thereof, would certainly suffice to inform the debtor, as
well as third persons what particular land or property is brought to
the custody of the court, as is the purpose of the aforecited provision
of the Rules of Court. Incidentally, no third person appears, to be
interested in the matter now before this Court. From the fact that
Imperial was able to exercise his right of redemption with reference
to three registered parcels of land, it can be easily deduced that
insofar as Imperial is concerned, the purpose of the requirement of
reference having to be made to the number of the certificate of title,
and also the volume and page in the registration book where the
certificate is registered, has been fully served or attained.
We, therefore, find no substantial defect in the notice of levy on
all the properties levied upon and sold to Ravanera in the auction
sale, that should be a basis, as the respondent court deemed it to be,
for annulling the sale made pursuant to the levy.
Imperial’s contention: Brands the levy as irregular for failure of
the occupants of the attached or levied properties to be left with copy
of the order, notice of levy and description of the properties.
The finding of facts of the CA which was quoted in full above,
fails to disclose the existence of occupants of the properties levied
upon other than the owner, Imperial. It was incumbent on said
Imperial to prove by evidence duly submitted to the Court a fact that
would tend to support his claim that the levy is void or otherwise
illegal. The levy being an official act of a government functionary
its regularity is presumed.
In any event, Imperial as judgment debtor is in estoppel by his
failure to seasonably make an objection to the allegedly defective
notice of levy and notice of sale before the actual sale, or before
redeeming some of his properties despite the supposed defect of the
notice of levy. He should have interposed objection to the levy and
the sale from the very beginning, from Oct 15, 1969 when he
received notice of levy and notice of sale. A waiver on his part to
question the validity of the auction sale may also be said to arise
from his failure to pay the arrears in real estate taxes, or to redeem
the mortgage of one of the properties sold at public auction, during
the period of redemption. These are omissions which are clearly an
indication of acquiescence in the sale, or his awareness that the
execution sale was valid and legally unassailable. To allow him to
turn back on his manifest conformity to the levy and sale on
execution of his properties, after petitioners have bought the
property as the highest bidder during the auction sale, would be
patently unjust to the said Ravanera, who had every reason to rely
on the presumed regularity of the proceedings as official acts of both
the judge and his own court officer, the sheriff.
Obaña vs. CA (1989)
Rafael Suntay was the former counsel of Liberty Dizon and her
minor children, Nicolas and Noel Patrick Torio, in an intestate
proceeding and in the petition for guardianship over said minors.
Suntay filed an Explanation and Motion for the approval of
attorney’s fees. Court ordered the counsel to collect P5k from the
ward’s guardianship estate.
Suntay filed in the same proceedings a 'Motion to Order the
Guardian To Pay The Attorney's Fees,' with prayer that the guardian
be ordered to pay immediately the amount of P5k out of the ward's
guardianship estate. Acting upon said motion, the JDRC of Quezon
City issued an order dated Sep 14, 1972, requiring Liberty B. Dizon
to show proof of payment of attorney's fees and submit a new bond
releasing her former counsel as surety.
However, such order was not complied with by Dizon because
Suntay apparently filed an action for sum of money against her,
Nicolas and Noel Patrick Torio. Suntay averred that his attorney’s
fees were not paid despite repeated demands. In connection with
this, Suntay moved for the issuance of an order of attachment upon
a certain parcel of land together with improvements belonging to
Dizon and her wards.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 25
1 Dec ’72: By virtue of said writ, a levy was made on said
property in Balintawak, QC. Levy was annotated at the back of the
TCT.
Sheriff failed to serve the summons for the reason that Mrs. Dizon
and her wards no longer resided at the last known address at 34-H
Road, Cypress Village, QC, and that their present address cannot be
ascertained. Suntay filed a Motion for Service of Summons by
Publication which was granted by the court in its Order dated Feb
12, 1973. Accordingly, summons were served upon Mrs. Dizon and
her wards through publication.
Meanwhile, pursuant to a DOAS dated May 16, 1973 executed
by and between Dizon, et al., and Leonora Obaña involving the
attached property, the ROD of Quezon City cancelled TCT in the
name of Liberty H. Dizon and her wards, and, in lieu thereof,
executed in favor of Leonora Obaña a new TCT necessarily
transferring in the process the encumbrance consisting of notice of
levy in favor of Suntay.
10 Aug ’73: After summons by publication had been effected,
upon motion of Atty. Suntay, the court declared Liberty H. Dizon
and her wards, in default and allowed Suntay’s evidence to be
presented ex-parte. Consequently, a decision was rendered,
awarding to Atty. Suntay the amount of P10k representing his claim
for attorney's fees relative to the prosecution of said case. Pursuant
to said decision, a writ of execution was issued per order of the
court, and then followed by a Notice of Levy on Execution dated
Aug 7, 1974, issued by the sheriff of QC. Thereafter, a certificate of
sale over the subject property (now covered by TCT in the name of
Leonora Obaña) was issued in favor of Suntay, being the highest
bidder.
Dizon failed to redeem the property hence, the Sheriff issued final
DOS. Annotated at the back of the TCT in the name of Obaña.
Suntay then filed a petition for the cancellation of the TCT in
favor of Obaña. CFI of QC directed the ROD of QC to issue a new
title covering the subject land in the name of Suntay.
Obaña’s contention: decision rendered in Civil Case No. 4238-
M by the then CFI of Bulacan is null and void for the reason that
said court did not acquire jurisdiction over Liberty H. Dizon and her
wards, since they were not properly served with summons. Also
claimed that the proceedings before the sheriff were defective in that
the sheriff failed to comply with the jurisdictional requirements on
the manner of service of notice in the New Rules of Court thus
rendering the proceedings void ab initio.
Civil Case No. 4238-M was an action for sum of money filed by
Atty. Suntay against liberty Dizon and her minor children in an
effort to collect attorney's fees in the guardianship case he handled
for them. The judgment in Civil Case No. 4238-M, while against
Dizon and her children was executed against property belonging to
Obaña. The house and lot in QC which Dizon sold to Obaña for
P150k was executed upon by the Sheriff to satisfy the P10k
attorney's fees in the Dizon guardianship case and another P5k
awarded to Suntay for his fees in prosecuting his own collection
case. The sheriff’s sale was affected without any personal notice to
Liberty H. Dizon on the ground that she had moved out of her old
address and her "present address" was unknown. No notice was
served on Obaña because she was not a party in the collection case.
All notices and summonses in the collection case filed on Nov 9,
1972 including the copy of the complaint, the original summons, the
alias summons, the notice of levy on attachment of the disputed
property, the notice of levy on execution and the notice of sheriffs
sale were served through mail to Dizon. Because the Sheriff could
not serve the complaint and the summons on Dizon who had moved
out of the above address, service by publication upon Dizon was
authorized by the court in the collection case.
ISSUE: WON there was a valid levy
Ruling: No. Section 7 of Rule 57 requires that in attaching real
property a copy of the order, description, and notice must be served
on the occupant, in this case the occupant at 48 Damortiz Street,
Damar Village, Quezon City. The trial court in the annulment case
ruled that the attachment was void from the beginning. The action
in personam which required personal service was never converted
into an action in rem where service by publication would have been
valid.
The propriety of service of summons by publication is not
dependent upon the technical characterization of the action as one
in rem or quasi in rem but upon compliance with the requirements
for the situations found in Sections 16, 17, and 18 of Rule 14 of the
Rules of Court. We declared the service of summons by publication
as "legally and constitutionally vitiated." In the present case,
however, the action was one in personam. The service was equally
void and of no effect.
The CA reversed the trial court principally on the ground that
Leonora Obaña was neither a defendant nor a party-in-interest in the
collection case. It ignored the fact that property already sold to her
was attached and then bedded out to Atty. Suntay without any notice
to her. And because the notice of lis pendens in the collection case
was secured ex-parte without Dizon and Obaña who were never
brought to court, having any inkling about it, the notice was not
annotated on the owner's duplicate copy on the TCT.
Suntay cannot claim ignorance of the sale to Obaña as a ground
for not bringing her into the picture. As stressed by Obaña, Liberty
Dizon filed her motion for the approval of the sale of the disputed
house and lot in the guardianship case SP-C-00565 through her
counsel, Suntay. He could not have been unaware that the house and
lot he was attaching had been sold to Obaña because the sale of the
Dalmar property was authorized by the guardianship court in the
case where he was counsel for the guardian.
Considering all the foregoing circumstances, the order in LRC
750 which is based on irregular proceedings in the prior case and
which directed the cancellation of Obaña's transfer certificate of title
cannot assume finality. There is the added factor that a land
registration court in a cancellation of title case could not possibly
inquire into the controversial matters raised in the annulment of
judgment case.
The respondent court ruled that Dizon and her wards should have
been joined as plaintiffs by Obaña in the action to annul the
judgment in the collection case. This ruling ignores the fact that
Dizon could not even be summoned in the collection case; her
whereabouts are unknown: the judgment against her was a default
judgment; she has apparently no more interest whatsoever in the
house and lot she sold to Obaña and she still owes Atty. Suntay
P10k.
Du vs. Stronghold Insurance (2004)
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Aurora Olarte de Leon was the registered owner of Lot 10-A. in
Jan ’89, De Leon sold the property to Luz Du under a Conditional
DOS. Again, on 28 Apr ’89, De Leon sold the same property to Sps.
Caliwag without prior notice to Luz Du. As a result, TCT in favor
of De Leon was cancelled and new TCT was issued in favor of Sps.
Caliwag.
Meanwhile, Stronghold Insurance filed a case against Sps.
Caliwag for allegedly defrauding Stronghold and misappropriating
the company’s fund by falsifying and simulating purchases of
documentary stamps. The action was accompanied by a prayer for a
writ of preliminary attachment duly annotated at the back of the
TCT on 7 Aug ’90.
21 Dec ’90: Luz Du filed a case against De Leon and Sps. Caliwag
for the annulment of sale by De Leon in favor of Sps. Caliwag.
3 Jan ’91: Luz Du caused the annotation of a Notice of Lis
Pendens at the back of the TCT now in the name of Sps. Caliwag.
A decision was rendered in favor of Stronghold, ordering Sps.
Caliwag jointly and severally to pay Stronghold. When the decision
became final, on 12 Mar ’91, a notice of levy on execution was
annotated on the TCT and the attached property was sold in public
auction. Stronghold was the highest bidder. New TCT was issued in
the name of Stronghold.
5 Aug ’91: Luz Du was able to secure a favorable judgment in her
civil case against De Leon and Sps. Caliwag. This became final and
executory.
Hence, Luz Du filed a case to cancel the TCT in the name of
Stronghold with damages, claiming priority rights over the property
by virtue of her notice of lis pendens.
Du’s contention: Her unregistered right over the property by way
of a prior conditional sale in 1989 enjoys preference over the lien of
Stronghold -- a lien that was created by the registration of
respondent’s levy on attachment in 1990.
ISSUE: WON a Notice of Levy on Attachment on the property is a
superior lien over that of the unregistered right of a buyer of a
property in possession pursuant to a Deed of Conditional Sale
Yes, lien created in favor of Du is not superior to the lien in
favor of Stronghold. Preference is given to a duly registered
attachment over a subsequent notice of lis pendens, even if the
beneficiary of the notice acquired the subject property before the
registration of the attachment. Under the torrens system, the auction
sale of an attached realty retroacts to the date the levy was
registered.
The doctrine is well-settled that a levy on execution duly
registered takes preference over a prior unregistered sale; and that
even if the prior sale is subsequently registered before the sale in
execution but after the levy was duly made, the validity of the
execution sale should be maintained, because it retroacts to the date
of the levy; otherwise, the preference created by the levy would be
meaningless and illusory.
The Court has steadfastly adhered to the governing principle set
forth in Sections 51 and 52 of Presidential Decree No. 1529: "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 Registry 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 the city where the land
lies.
"SEC. 52. Constructive notice upon registration. - Every
conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land shall, if registered,
filed or entered in the office of the Register of Deeds for the province
or city where the land to which it relates lies, be constructive notice
to all persons from the time of such registering, filing or entering."
As the property in this case was covered by the torrens system,
the registration of Stronghold’s attachment was the operative act
that gave validity to the transfer and created a lien upon the land in
favor of Stronghold.
The preference created by the levy on attachment is not
diminished even by the subsequent registration of the prior sale. If
either the third-party claim or the subsequent registration of the prior
sale was insufficient to defeat the previously registered attachment
lien, as ruled by the Court in Capistrano, it follows that a notice of
lis pendens is likewise insufficient for the same purpose. Such notice
does not establish a lien or an encumbrance on the property affected.
As the name suggests, a notice of lis pendens with respect to a
disputed property is intended merely to inform third persons that any
of their transactions in connection therewith -- if entered into
subsequent to the notation -- would be subject to the result of the
suit.
Moreover, it is only after the notice of lis pendens is inscribed in
the Office of the Register of Deeds that purchasers of the property
become bound by the judgment in the case. As Stronghold is
deemed to have acquired the property -- not at the time of actual
purchase but at the time of the attachment -- it was an innocent
purchaser for value and in good faith.
Valdevieso vs. Damalerio (2005)
5 Dec ’95: Bernardo Valdevieso bought from Sps. Uy a parcel of
land located at Bo. Tambler, GenSan City. DOS was not registered
nor was the title of the land transferred to Valdevieso.
19 Apr ’96: Sps. Damalerio filed with RTC of GenSan City, a
complaint for a sum of money against Sps. Uy with application for
the issuance of a writ of preliminary attachment.
23 Apr: TC issued a Writ of Preliminary Attachment by virtue of
which the property, then still in the name of Uy but which had
already been sold to Valdevieso, was levied.
6 Jun ’96: TCT in the name of Uy was cancelled and a new TCT
was issued in favor of Valdevieso. This new TCT carried with it the
attachment in favor of Damalerio.
14 Aug: Valdevieso filed a 3rd-party claim to discharge or annul
the attachment levied on the property, on the ground that the said
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 27
property belongs to him and no longer to Uy. TC ruled in favor of
Valdevieso, holding that the levy of the property by virtue of
attachment is lawful only when the levied property indubitably
belongs to the defendant.
Valdevieso’s contention: He has a superior right over the
questioned property because when the same was attached on 23 Apr
1996, this property was no longer owned by Sps. Uy against whom
attachment was issued as it was already sold to him on 05 Dec 1995.
The ownership thereof was already transferred to Valdevieso
pursuant to Article 1477 in relation to Article 1498 of the Civil
Code.
Damalerio’s contention: 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
Damalerio was registered earlier than the DOS to Valdevieso, Sps.
Damalerio were of the belief that their registered writ of attachment
on the subject property enjoys preference and priority over
Valdevieso’s earlier unregistered DOS over the same property.
ISSUE: WON a registered writ of attachment on the land is a
superior lien than that of an earlier unregistered DOS
Yes. The law applicable to the facts of this case is Section 51 of
PD No. 1529.
It is to be noted that though the subject land was deeded to
Valdevieso as early as 05 Dec 1995, it was not until 06 Jun 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
Apr 1996, the Sps. Uy were still the registered owners of said
property.
Under the cited law, the execution of the DOS in favor of
Valdevieso was not enough as a succeeding step had to be taken,
which was the registration of the sale from the Sps. Uy to him.
Insofar as third persons are concerned, what validly transfers or
conveys a person’s interest in real property is the registration of the
deed. Thus, when Valdevieso bought the property on 05 Dec 1995,
it was, at that point, no more than a private transaction between him
and the Sps. Uy. It needed to be registered before it could bind third
parties, including Damalerio. When the registration finally took
place on 06 Jun 1996, it was already too late because, by then, the
levy in favor of Damalerio, pursuant to the preliminary attachment
ordered by the General Santos City RTC, had already been
annotated on the title.
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale. This result is a necessary
consequence of the fact that the property involved was duly covered
by the Torrens system which works under the fundamental principle
that registration is the operative act which gives validity to the
transfer or creates a lien upon the land.
The preference created by the levy on attachment is not
diminished even by the subsequent registration of the prior sale.
This is so because an attachment is a proceeding in rem. It is against
the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property
which nothing can subsequently destroy except the very dissolution
of the attachment or levy itself. Such a proceeding, in effect, means
that the property attached is an indebted thing and a virtual
condemnation of it to pay the owner’s debt. The lien continues until
the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment
discharged or vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of Damalerio’s
appeared in the nature of a real lien when Valdevieso had his
purchase recorded. The effect of the notation of said lien was to
subject and subordinate the right of Valdevieso, as purchaser, to the
lien. Valdevieso 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 Damalerio, a right which is preferred and
superior to that of Valdevieso.
Walker vs. McMicking (1909)
Herbert Walker was the owner of a Filipino carriage factory. The
building in which the factory was operated and its contents were
sold to a partnership known as Arenas & Co. The contract was
evidenced by a writing. However, said company failed to pay the
installments due.
Having failed to pay installments, Walker rescinded the sale and
took possession of said factory with its contents, by virtue of a
provision in their contract. Said company had failed for some
months to pay the rent for the land. Rohde, acting for himself and
for Walker, took possession of said factory and its contents. Rohde
alleged that at the time he took possession of said factory,
representing himself and Walker, there was no one in possession of
said property except Arenas & Co., and that Arenas & Co. turned
said property over to him without any objection.
However, on 16 Dec ’08, Jose McMicking, acting as sheriff of
Manila, levied an attachment upon said factory and its contents, by
virtue of a judgment rendered against Arenas & Co.
Rohde testified that he had never heard of said attachment until
about the 29th of Jan 1909; that he continued in possession from the
time (about Jan 1); that Arenas & Co. was only permitted to enter
the premises thereafter for the purpose of preparing the contents of
said factory for sale.
5 Feb 1909: Herbert Walker commenced an action in CFI Manila
to recover the possession of certain personal property, or in default
thereof the sum of P1,500, its value and costs.
After hearing, the lower court rendered a judgment adjudging
Herbert Walker, the right to recover the articles mentioned in his
complaint, or in default the sum of P539, with interest at the rate of
5% per annum. McMicking appealed.
Walker’s contention: the attachment was void for the reason that
McMicking, as sheriff, did not comply with the law in levying the
said attachment.
ISSUE: WON there was a valid levy
No. He did not attach and safely keep the movable property
attached. A verbal declaration of seizure or service of a writ of
attachment is not sufficient. There must be an actual taking of
possession and placing the attached property under the control of
the officer or someone representing him.
To constitute a valid levy of an attachment, the officer levying it
must take actual possession of the property attached as far as under
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 28
the circumstances is practicable. He must put himself in position to,
and must assert and, in fact, enforce a dominion over the property
adverse to and exclusive of the attachment debtor, and such property
must be in his substantial presence and possession. This does not
mean that the attaching officer may not, under an arrangement
satisfactory to himself, put anyone in possession of the property for
the purpose of guarding it, but he can not in this way relieve himself
from liability to the parties interested in said attachment.
The attachment was not properly made in accordance with the
provisions of the Code of Procedure in Civil Actions. There is no
pretension, however, in the record, on the part of McMicking, that
he attached said property and held the same by virtue of such
attachment.
NBI vs. Tuliao (1997)
Santiago Salvador bought a passenger jeep from Lito Ignacio to
be paid in monthly installments. After remitting the down payment,
Salvador diligently paid all monthly amortizations until March 1994
when, in the absence of Ignacio, he was forced to pay to an unnamed
brother of the seller the amounts due for the months of April and
May 1994. However, the brother failed to remit said amount to the
seller. Because of this, Ignacio filed a suit for collection against
Salvador.
Subsequently, an order was issued by the RTC directing Sheriff
Tuliao to attach the passenger jeep. Salvador, through counsel, filed
a motion to discharge attachment upon filing of a counterbond for
the release of the vehicle in his favor.
TC issued an order, directing Sheriff Tuliao to release to Salvador
the attached vehicle. However, Tulaio refused to comply with said
order. Instead, he released the passenger jeep to Ignacio after the
latter had executed a receipt therefor together with an undertaking
that he would produce the jeep whenever required by the court.
Tuliao justified such release by saying that the court had no storage
building that would protect the jeep from damage or loss.
A complaint against Deputy Provincial Sheriff Rodolfo Tuliao of
RTC Cauayan, Isabela was filed by Santiago Salvador.
Tuliao’s contention: His act of not taking into his official
custody the attached property was not unlawful but was in fact
reasonable because the court had no facility for its storage. That it
could no longer be returned to Salvador's possession in accordance
with the court's order was not his fault but that of the attaching
creditor who had violated his obligation to produce the same
whenever required by the court.
ISSUE: WON Tuliao is administratively liable for failing to release
the property uner custodia legis to Salvador in accordance with the
order of the RTC
Yes. Tuliao’s manner of attachment irregular and his reason
therefor totally unacceptable, under Sec. 5 and Sec. 7(c) of Rule 57,
“(c) Personal property capable of manual delivery, by taking and
safely keeping it in his capacity, after issuing the corresponding
receipt therefor”.
Clearly, Tuliao’s act of leaving the passenger jeep in the
possession and control of the creditor did not satisfy the foregoing
requirements of the Rules; neither did it conform to the plainly
worded RTC order. The note in the receipt that imposed on Ignacio
the obligation to produce the same whenever required by the court
was no compliance either, because it did not establish that the
property was in respondent sheriff's substantial presence and
possession. Tuliao fell short of his obligation to take and safely keep
the attached property "in his capacity." He cannot feign ignorance
of this duty.
Again, a verbal declaration of seizure or service of a writ of
attachment is not sufficient. There must be an actual taking of
possession and placing of the attached property under the control of
the officer or someone representing him. To constitute a valid levy
of an attachment, the officer levying it must take actual possession
of the property attached as far as . . . practicable (under the
circumstances). He must put himself in a position to, and must assert
and, in fact, enforce a dominion over the property adverse to and
exclusive of the attachment debtor, and such property must be in his
substantial presence and possession.
That Ignacio was able to move the passenger jeep to an unknown
location is further proof that Tuliao had not taken and safely kept it
in his substantial presence, possession and control. His claim that
the RTC did not have any storage facility to house said property is
no justification. He could have deposited it in a bonded warehouse.
Contrary to Tuliao’s contention, compelling the attaching creditor
to release the property in question was not in order, because the
proper remedy provided by the Rules of Court was for the party
whose property had been attached to apply for the discharge of the
attachment by filing a counterbond. The effect of this remedy is the
delivery of possession of the attached property to the party giving
the counterbond. The attaching creditor was not authorized to have
possession of the attached property, contrary to the insistence of
respondent sheriff.
Leaving the attached property in the possession of the attaching
creditor makes a farce of the attachment. This is not compliance
with the issuing court's order. When a writ is placed in the hands of
a sheriff, it is his duty, in the absence of any instructions to the
contrary, to proceed with reasonable celerity and promptness to
execute it according to its mandate. He is supposed to execute the
order of the court strictly to the letter. If he fails to comply, he is
liable to the person in whose favor the process or writ runs.
Tuliao's pretense of having acted in utmost good faith for the
preservation of the attached property is hardly credible because
there was no reason for his having acted thus. In sum, he is unable
to satisfactorily explain why he failed to take such movable in his
control.
By acceding to the request of Ignacio, Tuliao actually extended
an undue favor which prejudiced Ignacio as well as the orderly
administration of justice. He exceeded his powers which were
limited to the faithful execution of the court's orders and service of
its processes. His prerogatives did not give him any discretion to
determine who among the parties was entitled to possession of the
attacked property.
That he exerted efforts in going to the creditor's residence in
Tuguegarao, Cagayan to obtain possession of the attached property
was an act of compliance with the writ of attachment. This action,
belated as it was, did not mitigate his liability. Much less did it
exculpate him from penalty.
Hence, Tuliao is suspended for 6 months.
Villanueva-Fabella vs. Lee (2004)
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In an administrative complaint, Attys. Vilma Hilda D.
Villanueva-Fabella and Wilmar T. Arugay charged Judge Ralph S.
Lee of MeTC of QC with manifest partiality, incompetence and
gross ignorance of the law; and Sheriff Justiniano C. de la Cruz Jr.
of the same MeTC, with unjust, oppressive, irregular and excessive
enforcement of a writ of attachment.
Attys. Villanueva-Fabella and Arugay are counsels for the
defendants in a civil case entitled ‘Star Paper Corporation vs.
Society of St. Paul and Fr. Leonardo Eleazar’ for Sum of Money
with Prayer for Preliminary Attachment. They narrated that on 19
June 2002, their clients were served a copy of the complaint and a
Writ of Attachment by Sheriff Dela Cruz based on the plaintiff’s
allegation that the defendants contracted a debt in bad faith with no
intention of paying the same.
On the aforementioned day, a printing machine was levied and
delivered to Star Paper’s warehouse, although there was an offer by
the defendants to pay right there and then P223,457.75, the amount
fixed in the order of attachment, but Star Paper denied the
defendants’ plea not to attach the machine, saying that it] had
already set its mind on attaching the same.
Atty. Fabella, together with 3 priests, asked the sheriff to levy on
a less expensive machine but to no avail. She then told the sheriff
that he would unnecessarily levy on the machinery because a cash
deposit to discharge the attachment could be filed that same
afternoon but he just dismissed the same, saying that it takes time
before the court could approve the counterbond.
3 Jul 2002: Judge Lee granted defendants’ Urgent Motion to
Discharge Attachment. And thereafter, an Urgent Ex-Parte motion
to withdraw cash deposit was filed, without notice to the defendants
and despite failure of Star Paper to set such litigious motion for
hearing and contrary to existing laws and jurisprudence. Judge Lee
granted the same in his Order of 17 July 2002. Defendants only
learned of the withdrawal when they received a copy of the said
Order.
Judge Lee rendered decision, that as to what had allegedly
transpired during the implementation of the subject Writ of
Attachment, he adopted the averments in Sheriff Dela Cruz’s
Comment alleging the presumption of regularity in the discharge of
official functions.
Sheriff Dela Cruz’s contention: Denied that there was abuse in
the levy, claiming that the machine was an old 1970 model.
Moreover, he said that, contrary to complainants’ allegation that the
machine was valuable, no receipt to prove its true value was ever
shown. Added that it was in his own belief and best judgment to
temporarily place the delicate printing machine in the warehouse of
the plaintiff for safekeeping. The machine was eventually returned
to the defendants by virtue of the Order discharging the Writ. In fact,
one of the complainants personally acknowledged receipt of the
machine.
ISSUE: WON Judge Lee may be held administratively liable
Attachment is a juridical institution intended to secure the
outcome of a trial -- specifically, the satisfaction of a pecuniary
obligation. Such order is enforced through a writ that may be issued
at the commencement of an action, commanding the sheriff to attach
property, rights, credits or effects of a defendant to satisfy the
plaintiff’s demand. Hence, the property of a defendant, when taken,
is put in custodia legis.
In order to prevent the sheriff from levying an attachment on
property, the defendant (also called the adverse party) may make a
deposit or give a counter-bond in an amount equal to that fixed in
the order of attachment. Such deposit or counter-bound is intended
to secure the payment of any judgment that the plaintiff (also called
the attaching party or the applicant to the writ) may recover in the
action. After a writ has been enforced, however, the adverse party
may still move for the discharge of the attachment, wholly or in part,
by also making a deposit or giving a counter-bond to secure the
payment of any judgment the attaching party may recover in the
action. The property attached shall then be released and delivered to
the adverse party; and the money deposited shall be applied under
the direction of the court to the satisfaction of any judgment that
may be rendered in favor of the prevailing party.
No. In the instant case, Judge Lee had ordered the withdrawal of
the cash deposit of the defendant and released it in favor of the
plaintiff, even before judgment was rendered. This action was
clearly in violation of the Rules mandating that after the discharge
of an attachment, the money deposited shall stand in place of the
property released. However, the inadvertence of respondent judge
was not gross enough to merit sanction. First, he rectified himself
within the period given for deciding motions. Second, respondent
judge owned up to his mistake in his Comment.
We have already ruled that as long as the judgment remains
unsatisfied, it would be erroneous to order the cancellation of a bond
filed for the discharge of a writ of attachment. In like manner, it
would be erroneous to order the withdrawal of a cash deposit before
judgment is rendered. Be that as it may, "a judge may not be held
administratively accountable for every erroneous order x x x he
renders." Otherwise, a judicial office would be untenable, for "no
one called upon to try the facts or interpret the law in the
administration of justice can be infallible." For liability to attach for
ignorance of the law, the assailed order of a judge must not only be
erroneous; more important, it must be motivated by bad faith,
dishonesty, hatred or some other similar motive. Certainly, mere
error of judgment is not a ground for disciplinary proceedings.
Villanueva-Fabella’s contention: Judge Lee committed another
violation of the ROC when he granted the plaintiff’s Urgent Ex-
Parte Motion to Withdraw Cash Deposit.
Indeed, the plaintiff’s Motion to withdraw the cash deposit lacked
notice of hearing and proof of service. Judge Lee should not have
acted upon it. However, because he had erroneously thought that the
rights of the defendants would not be prejudiced thereby, he took
action. His poor judgment obviously resulted in his issuance of the
erroneous Order that granted the release of the deposit.
Similarly, the verified Motion for Reconsideration of the Order
declaring plaintiff as non-suited and allowing the ex-parte
presentation of evidence by the defense should have been heard in
open court, not granted in chamber. Judge Lee must have thought
that this Motion, which had been filed by the plaintiff, required
immediate action; and so the former granted it by ordering --
through a handwritten note which we do not approve of -- the
deferment of the scheduled presentation. This Order should not have
been issued, because the Motion had been filed only a day before
the scheduled hearing. The rules on notice of hearing and proof of
service should have been observed by both the plaintiff’s counsel
and respondent judge. Unfortunately, the latter’s poor judgment
likewise prevailed, but still fell short of gross ignorance of the law
or procedure.
ISSUE: WON Sheriff Dela Cruz may be held administratively liable
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 30
Yes. Verily, he blatantly violated Section 7(b) of Rule 57 of the
Rules of Court when he deposited the machine in the warehouse of
the plaintiff. In enforcing a writ of attachment, a sheriff who takes
personal property capable of manual delivery shall safely keep it in
custody after issuing the corresponding receipt therefor. Sheriff
failed to do so.
To constitute a valid levy of attachment, the officer levying it
must have "actual possession of the property attached.” He must put
himself in a position to, and must assert and, in fact, enforce a
dominion over the property adverse to and exclusive of the
attachment debtor. To this rule we add that the officer cannot even
deliver the property to the attachment creditor, as the parties must
await the judgment in the action. The levied property must be in the
"substantial presence and possession" of the levying officer, who
"cannot act as special deputy sheriff of any party litigant." The
officer may put someone "in possession of the property for the
purpose of guarding it," but the former cannot be "relieved x x x
from liability to the parties interested in said attachment."
The duty of sheriffs to execute a writ issued by a court is purely
ministerial, not discretionary. Clearly, they must keep the levied
property safely in their custody, not in that of any of the parties.
They exercise no discretion in this regard, for attachment is harsh,
extraordinary and summary in nature -- a "rigorous remedy which
exposes the debtor to humiliation and annoyance." Contrary to the
claim of sheriff, his unusual zeal and precipitate decision to give
possession of the machine to the plaintiff effectively destroys, the
presumption of regularity in his performance of official duties. "Any
method of execution falling short of the requirement of the law
deserves reproach and should not be countenanced."
In implementing the Writ, Sheriff cannot afford to err without
adversely affecting the proper dispensation of justice. They play an
important role in the administration of justice. As agents of the law,
high standards are expected of them. His conduct, at all times, must
not only be characterized by propriety and decorum but must, and
above all else, be above suspicion.
As a public officer who is a repository of public trust, respondent
sheriff has the obligation to perform the duties of his office
"honestly, faithfully and to the best of his ability." He must be
"circumspect and proper in his behavior." Reasonable skill and
diligence he must use in the performance of official duties,
especially when the rights of individuals may be jeopardized by
neglect.
At the grassroots of our judicial machinery, sheriffs are
indispensably in close contact with the litigants, hence, their conduct
should be geared towards maintaining the prestige and integrity of
the court, for the image of a court of justice is necessarily mirrored
in the conduct, official or otherwise, of the men and women who
work thereat, from the judge to the least and lowest of its personnel;
hence, it becomes the imperative sacred duty of each and everyone
in the court to maintain its good name and standing as a temple of
justice.
Applying Section 8 of Rule 140 of the Rules of Court, Judge Lee
is found wanting in the exercise of good discretion only. His errors
of judgment fall short of gross ignorance of the law or procedure,
yet reflect poorly on his esteemed position as a public officer in a
court of justice. Judges must be conscientious, studious and
thorough, observing utmost diligence in the performance of their
judicial functions.
We find Sheriff guilty of simple neglect of duty for violating
Section 7(b) of Rule 57 of the Rules of Court. Simple neglect of duty
is the "failure to give proper attention to a task expected" of an
employee, thus signifying a "disregard of a duty resulting from
carelessness or indifference." Classified as a less grave offense, it is
punishable by a suspension of one month and one day to six months.
Considering that the failure of sheriff to fulfill his duty seems to be
his first infraction during his stint in the judiciary, the Court
considers the recommended sanction appropriate.
Sheriff Dela Cruz is found guilty of simple neglect of duty and is
suspended for 1 month and a day without pay.
Sebastian vs. Valino (1993)
3 Mar ’89: Private Devt Corp of the Philippines filed a replevin
suit against Marblecraft, Inc. in order to foreclose the chattels
mortgaged by Marblecraft.
30 Mar: RTC Makati issued a writ of seizure directed against
Marblecraft covering the chattels sought to be replevined.
However, the enforcement of the writ of seizure was delayed
because of the writ of preliminary injunction enjoining PDCP from
proceeding with the foreclosure sale issued by RTC Pasig in a civil
case. It was only on October 31, 1990, when the RTC Pasig
dissolved the writ of preliminary injunction.
9 Nov ’90: Sheriff Valino accompanied by several policemen and
PDCP employees went to the office of Marblecraft to implement the
writ of seizure. Valino and his companions forcibly opened the
lockers and desk drawers of the employees of Marblecraft and took
their personal belongings, as well as some office equipment issued
to them. The employees filed with the Office of the Provincial
Prosecutor of Rizal two criminal complaints for robbery against
respondent and his companions.
Valino only showed to Marblecraft’s counsel a copy of the writ
but did not furnish him with a copy of the application for the writ,
the supporting affidavit and the bond. In the course of the
implementation of the writ, which lasted for four days, several
pieces of machinery and equipment were destroyed or taken away
by Valino.
Valino turned over the seized articles to the counsel of PDCP and
allowed these items to be stored in PDCP's warehouse in Taguig,
Metro Manila.
14 Nov ’90: Marblecraft posted a counterbond in the RTC
Makati, which approved the bond and directed the immediate return
of the seized items. However, Valino did not implement the order.
Marblecraft filed an administrative complaint against Sheriff
Alberto Valino for gorss abuse of authority and refusal to enforce
the TC’s order for the return of the seized items.
Valino’s contention: Administrative complaint against him as
pure harassment filed by Marblecraft after he had refused to defer
the implementation of the writ of seizure. If he did not implement
the writ, he would have been accused by PDCP of non-performance
of his duties as a sheriff. Pointed out that the criminal complaints
for theft filed against him by the employees of complainant were
dismissed by the Provincial Prosecutor of Rizal.
ISSUE: WON Sheriff Valino is administratively liable
Yes. Under the Revised Rules of Court, the property seized under
a writ of replevin is not to be delivered immediately to the plaintiff.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 31
The sheriff must retain it in his custody for five days and shall return
it to the defendant, If the latter, as in the case, requires its return and
files a counterbond (Sec. 4, Rule 60, Revised Rules of Court).
In violation of said Rule, Valino immediately turned over the
seized articles to PDCP. His claim that the Office of the Regional
Sheriff did not have a place to store the seized items, cannot justify
his violation of the Rule. As aptly noted by the Investigating Judge,
the articles could have been deposited in a bonded warehouse.
Valino must serve on Marblecraft not only a copy of the order of
seizure but also a copy of the application, affidavit and bond (Sec.
4, Rule 60, Revised Rules of Court). He did not furnish Marblecraft
with a copy of the application, affidavit and bond. By his own
admission, he only served it with a copy of the order of seizure.
The more serious infraction of Valino is his refusal to implement
the order of the RTC Makati for him to return to Marblecraft the
articles seized pursuant to the writ of seizure dated March 30, 1990.
The only action taken by Valino to implement the Order dated
December 11, 1990 was to write a letter on December 12, 1990,
addressed to the counsel of PDCP, requesting the turnover of seized
articles. As expected, PDCP's counsel refused to part with the
possession of the seized articles and to issue a letter of authorization
to withdraw the same from the warehouse. Instead of taking
possession of the articles, Valino merely reported to the RTC that
"it is now clear that the undersigned cannot implement the Court
order dated December 11, 1990 by reason of the refusal of PDCP to
accept or to honor said Court order".
Valino could have avoided getting into his present predicament
had he not turned over the possession of the seized goods
prematurely to the PDCP.
Marblecraft cannot be blamed if it harbored the suspicion that
Valino was beholden to PDCP. The zeal with which Valino enforced
the order of seizure in favor of PDCP was in sharp contrast with his
inaction in enforcing the three orders of the trial court directing him
to return the seized items to complainant.
It is not for Valino to question the validity of the orders of the trial
court. It is for him to execute them. As observed by the Investigating
Judge, "there is therefore no excuse for respondent's wilfull refusal
to implement the Order of the Court". Disobedience by court
employees of orders of the court is not conducive to the orderly
administration of justice. The display of partially in favor of a party
as against the other party erodes public confidence in the integrity
of the courts.
Therefore, Valino is guilty of serious misconduct and is
suspended for 4 months without pay, with a warning that a repetition
of the same or of acts calling for disciplinary action will be dealt
with more severely.
Villareal vs. Rarama (1995)
Marianette Villareal filed a sworn complaint against Rolando
Rarama, Restituto Madrazo, Fidel Casuyon, and Aguinaldo del
Campo who are all serving as Sheriff III in Branches V, VII, II, and
III, respectively, of the MTCCs of Davao City, for allegedly
"conniving and confederating in maliciously serving a writ of
execution intended for another person who is living in another
place”.
It appears that Cooperative Rural Bank of Davao filed an action
for collection of sum of money against Sps. Villareal, Lito Lacorda
and Felimon Cangrejo. Summons were served upon Cangrelo, who
was declared in default for failure to file an answer.
19 Apr ’89: Judgment was rendered against Cangrejo in favor of
Coop Rural Bank without prejudice to his right to proceed against
his co-debtors. Subsequently, an alias writ of execution was issued
by the TC against Cangrejo.
25 Apr ’94, around 1:30pm: Rarama arrived at Sps. Villareal’s
house in Digos, Davao del Sur, together with the other respondents
and three employees of the Cooperative Rural Bank, including one
Vic Belo who is a collector of the bank. Rarama introduced himself
as a sheriff of Davao City and informed her that they were going to
attach her properties because she lost in a case. Villareal denied
having been charged in court, much more of having lost in a case,
and that she did not owe anything to the bank. When Rarama
persisted in getting her properties, she demanded and was shown the
writ of execution. She objected thereto, claiming that the same was
not addressed to her but to Felimon Cangrejo and that the writ was
being served after more than five years from the date the decision
was rendered. The reply given her was that she is the principal
borrower and the only one who is solvent.
Despite the pleas of Villareal and a neighbor for the
postponement of the implementation of the writ until she shall have
consulted her lawyer, the sheriffs immediately proceeded to pull out
from her house the following items, viz.: one VHS player, one
Singer sewing machine, one Chinese cabinet, and another Chinese
cabinet with glass shelves. Allegedly, she was forced to sign an
inventory receipt because she would otherwise not be able to get
back her things. She hastened to add that when she signed the
receipt, the words "with my conformity" were not written thereon.
Next day, Sps. Villareal went to the bank to inquire about the
status of her loan and she was informed that, unless she settled her
account, her properties would not be released. Villareal avers that
because of this she was constrained to pay P10k despite earlier
representations made with the bank that she had fully paid her loan
to the bank collector. She further asserts that she was thereafter
forced to write a P/N as dictated by the assistant manager of the
bank, Gerry Alag, and the bank's lawyer, Atty. Herbert Arteg.
Eventually, after she presented the receipt of payment and the
promissory note to Rarama, the attached properties were released to
her.
Rarama’s contentions: He went to Digos together with Vic Belo
and Bading dela Fuente, employees of the bank, to coordinate with
Provincial Sheriff Andres regarding the implementation of the alias
writ of execution issued in a civil case. However, he was informed
that he would have to implement the writ on his own because the
other sheriffs were not available. On their way out of the Hall of
Justice, they met respondents Madrazo, Casuyon and del Campo
who, upon learning that Rarama's group was going to Digos where
they all lived, decided to join the group so they could get a free ride.
Upon the suggestion of Vic Belo, the bank collector, the group first
went to the house of Villareal purportedly to ask for the exact
address of Felimon Cangrejo against whom the writ was issued.
When they reached the house of Villareal, Rarama introduced
himself and his other companions, and then inquired from the
former about the address of Cangrejo. When Villareal asked why
they were asking her, Rarama showed her the writ of execution and
the court decision. It was then that Villareal stated that she was the
principal defendant in the case. Further allege that Villareal
requested Rarama not to implement the writ against Cangrejo
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 32
because he was merely her co-maker who never benefited from the
loan extended to her by the Rural Bank of Davao. Rarama did not
agree to the proposal since he was not authorized to enter into that
compromise but, at the same time, he suggested that Villareal
deposit some of her personal properties as security for the settlement
of her obligation, and the latter allegedly agreed. Much later, the
properties mentioned were released to complainant by virtue of a
letter from the creditor bank.
ISSUE: WON there was a valid levy on the properties of Villareal
notwithstanding that the writ of execution was directed against
Cangrejo
No. While there is evidence to show that indeed Marianette
Villareal is the principal debtor while Felimon Cangrejo is merely a
co-maker, the fact remains that Cangrejo was the sole debtor
adjuged liable for the loan obtained from the Cooperative Rural
Bank of Davao City, Inc. and the alias writ of execution was directed
only against him. Hence, Rarama had no authority to implement the
same against Villareal considering that, although she was named as
a defendant in the collection case, there was no judgment against her
as of the date of the incident.
The sheriff, as an officer of the court upon whom the execution
of a final judgment depends, must necessarily be circumspect and
proper in his behavior. Execution is the fruit and end of the suit and
is the life of the law. Thus, when a writ is placed in the hands of a
sheriff it is his duty, in the absence of any instructions to the
contrary, to proceed with reasonable celerity and promptness to
execute it according to its mandate. He is to execute the directives
of the court therein strictly in accordance with the letter thereof and
without any deviation therefrom.
Hence, a sheriff has no authority to levy on execution upon the
property of any person other than that of the judgment debtor. If he
does so, the writ of execution affords him no justification, for such
act is not in obedience to the mandate of the writ. As long as the
sheriff confines his acts to the authority of the process, he is not
liable, but all of his acts which are not justified by the writ are
without authority of law. This is so because if an execution against
one man would excuse the sheriff for taking the property of another,
every citizen would be at his mercy and none could call his estate
his own.
Rarama's improvidence in enforcing a judgment against
complainant who is not the judgment debtor in the case calls for
disciplinary action. Considering the ministerial nature of his duty in
enforcing writs of execution, it is incumbent upon him to ensure that
only that part of a decision ordained or decreed in the dispositive
portion should be the subject of execution, no more and no less. That
the title of the case specifically names complainant as one of the
defendants is of no moment as execution must conform to that which
is directed in the dispositive portion and not what appears in the title
of the case.
Therefore, Sheriff Rarama is declared guilty of serious
misconduct. He is ordered to pay a fine of P10k and warned that the
commission of the same or similar offense will be punished with a
more severe sanction.
Balantes vs. Ocampo III (1995)
Domingo Balantes is the defendant in an ejectment case filed by
Roberto Roco but which was decided by Judge Ocampo against
Balantes.
23 Oct ’89: On motion of Roco, RTC issued a Writ of Execution
and Demolition pending appeal, ordering removal of ½ portion of
Balantes’ residential house found to be built inside the titled
property of Roco.
Subsequently, the decision on appeal was affirmed by the same
RTC and the records of the case were remanded to Judge Ocampo’s
sala for execution.
25 Nov ’91: Judge Ocampo issued a writ ordering the demolition
of the remaining half portion of Balantes’ residential house found
standing on a public property. Balantes filed MR but was denied.
19 Aug ’92: A second writ of demolition was issued by Judge
Ocampo, followed by a third one.
Balantes’ contention: Judge Ocampo issued the orders granting
Roco’s motion for issuance of writ of demolition with precipitate
haste, hence, he was deprived of his right to oppose the same, that
the effect of these writs of demolition is to demolish his entire house,
notwithstanding that the appellate court's writ of execution and
demolition issued pending appeal ordered the demolition only of the
half portion of his house found standing on Roco’s land.
Judge Ocampo’s contention: A writ of demolition, being merely
incidental to the execution of a final judgment, is immediately
enforceable after hearing the arguments of both parties; that though
the writ of demolition was issued on the same day the court issued
its order of Aug 19, 1992, the writ was implemented only on Sep 2,
1992. Further argues that the restraining order issued on Sep 2, 1992
cannot be complied with because by the time it was received by the
City Sheriff, the writ of demolition had already been effected and
the premises delivered to Roco.
ISSUE: WON Judge Ocampo may be held administratively liable
Yes. Judge Ocampo grossly abused his authority in issuing the
questioned writs of demolition.
Records show that previous to the issuance of the writ of
execution and demolition pending appeal, said judge ordered the
deputy sheriff with the assistance of a geodetic engineer to
determine the metes and bounds of Roco’s property. The Sheriff's
Return clearly showed that 2 meters of Roco’s property had been
more or less encroached upon by Balantes’ house while it occupied
3 meters, more or less, of the legal easement formed by accretion.
The writ of demolition thus issued by the CA contained
specifications in accordance with such findings and was returned
fully satisfied on Jan 20, 1990.
Judge Ocampo, therefore, was fully aware of the previous
delineation of the property of Roco. Nevertheless, when the records
were remanded to him and upon motion of the plaintiff's counsel, he
issued another writ of demolition which sought to demolish the
remaining portion of the defendant's house which, as already found
by the appellate court(s), was standing upon a public property.
The order of demolition was the subject of a petition for certiorari
where Judge Manio declared said order of demolition and the writ
issued pursuant thereto as null and void, having been issued with
grave abuse of discretion and enjoined Judge Ocampo from issuing
any further writs of demolition. Despite this directive, Judge
Ocampo exhibited a defiant attitude by issuing another writ of
demolition.
ISSUE: WON Sheriff Buena may be held administratively liable
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 33
No. Buena was not aware of the existing TRO which she received
within the hour after the demolition had taken place, thus rendering
said restraining order a fait accompli. The rule is that when a writ is
placed in the hands of a sheriff, it is his duty, in the absence of
instructions, to proceed with reasonable celerity and promptness to
execute it according to its mandate. He may not apply his discretion
as to whether to execute it or not.
Therefore, Judge Ocampo III is ordered to pay a fine of P5k with
warning. Complaint against Sheriff Buena is dismissed.
Elipe vs. Fabre (1995)
An administrative complaint was filed against Honesto Fabre,
charging him with nonfeasance and incompetence in the
performance of his duties as Deputy Sheriff of Branch 3, MTCC
Cagayan De Oro.
It appears that on 19 Jun ’92, MTCC Branch 3 issued a writ of
execution for the enforcement of a barangay agreement in a civil
case for collection of unpaid rentals and construction materials
amounting to P100k.
Victor Elipe testified that on Jun 25, 1992, at 9AM, Fabre served
the writ on judgment debtors Michael dela Cerna and his wife but
was able to levy only upon a dilapidated vehicle and an old piano.
At 10PM of the same day, the judgment debtors surreptitiously
removed several pieces of furniture from the house which they
rented.
On Jun 26 and 30 and again on Jul 4, 11, 18 and 19, 1992, they
removed appliances and other personal properties and destroyed
building fixtures on the property owned by Elipe. On these
occasions, Fabre did not make any effort to prevent the judgment
debtors from removing leviable properties to implement the writ,
despite the fact that he had been told by Elipe of said activities.
10 Jul ’92: Fabre sold to Elipe, as the highest bidder at public
auction, personal properties of the judgment debtors for 10k. Also
levied on a parcel of land owned by the judgment debtors which was
also sold to Elipe. Personal properties of the judgment debtors which
had been levied upon were sold, also to Elipe as highest bidder. The
result is that the judgment debt of P100k was only partially satisfied
to the extent of P27,007.
Fabre’s contention: Denied the allegations. He levied on several
properties of the judgment debtors, but unfortunately the bid price
paid for them at the public auction was only P10k. He justified his
action in levying only on the personal properties which he found at
the business establishment and in desisting from enforcing the writ
with respect to properties on the second floor of the residence of the
judgment debtors on two grounds: (1) the judgment debtors refused
to let him in; and (2) he did not have any order from the MTCC to
force open the door which had been locked.
Memorandum report of Deputy Court Administrator
Bernad: Because of Fabre’s inaction and lack of diligence in
enforcing the writ of execution, the judgment debtors were able to
cart away properties which he could have levied upon execution.
Deputy Sheriff correctly argued that he was not directed by any
Judge by court orders to stop the carting away of properties or the
demolition of the fixtures. But Sheriff should understand that by
virtue of the writ of execution issued in favor of Elipe, Sheriff was
mandated to levy upon properties of judgment debtor to satisfy an
obligation amounting to P100k. However, in disregard of this Order,
Sheriff chose to levy the properties of the judgment debtor which
amounted only to P27k. If indeed Sheriff is dedicated in his work,
Sheriff could have chosen to stop the carting away of the valuable
properties of judgment debtor for the very purpose of levying it and
for the purpose of complying with the Order. If the arguments of
Sheriff will be sustained, all judgment debtors can easily circumvent
the orders of the court by carting away their properties thinking that
sheriffs have no authority to stop them. This line of thinking and
reasoning will create chaos and instability in the administration of
justice. Furthermore, Sheriff exhibited an utter disregard of what is
incumbent upon him when he failed to inform Elipe that in order to
levy properties of the defendant on the second floor of the
establishment, a special order of the court is necessary to force or
break-open the closed door in accordance with Section 14, Rule 39
of the Rules of Court. The Sheriff's duty was apparent but he did not
comply with it as he should have.
ISSUE: WON Sheriff Fabre may be held administratively liable
Yes. In the Manual of Clerk of Courts, a sheriff, to whom a valid
writ or process is delivered to be levied upon a property within his
jurisdiction, is liable to the person in whose favor the process or writ
runs if he fails to make a levy upon property owned by the judgment
debtor within his jurisdiction and by reason thereof the judgment
creditor is injured. It is omission not dependent upon intentional
wrong or negligent omission to seize property of judgment debtor.
He is bound to discharge his duties with prudence, caution and
attention which careful men usually exercise in the management of
their affairs. The sheriff, an officer of the court upon whom the
execution of a final judgment depends, must be circumspect and
proper in his behavior. Execution is the fruit and end of the suit and
is the life of the law.
In the case at bar, it is not that Sheriff Fabre did not know what
he should do, given the problem that he was confronted with. In his
answer, he tried to excuse himself from what was his duty, claiming
that he did not force his way into the second floor where the
judgment debtors resided because a special court order was needed
to enable him to do this. Knowing this to be the case, it was his duty
to see to it that such an order was secured from the court.
The fact is that he has shown himself to be less than energetic and
zealous in the performance of his duty. His lackadaisical attitude
betrays his inefficiency and incompetence.
Therefore, he is liable for a fine of P2k with a stern warning that
a repetition of the same or of any act calling for disciplinary action
will be dealt with more severely.
Roque vs. CA (1979)
31 Jan ’73: Associated Banking Corp. instituted an action against
Fil-Eastern Wood Industries, Inc., a domestic corporation, for
recovery of a sum of money.
Upon ex-parte application by the Bank for a Writ of Preliminary
Attachment, Judge Sundiam, after the filing and approval of the
required bond of P220k, issued, on February 4, 1974, an Order of
Attachment commanding the Sheriff to attach the estate, real and
personal, of Fil-Eastern.
7 Feb ’74: The Sheriff's "Notice of Levy Pursuant to the Writ of
Attachment" was registered in the Office of the Commander of the
First Coast Guard, District of Manila. The said notice read, "levy is
hereby made upon all the rights, titles, interest, shares and
participation which Fil-Eastern Wood Industries, Inc. has or might
have over a sea vessel or barge named Fil-Eastern V.”
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 34
It appears that prior to the issuance of said Writ of Attachment,
Fil-Eastern had delivered the barge to the Cotabato Visayan
Development Corporation sometime in April, 1973, for repair. The
job was completed in June 1973, but Fil-Eastern failed to pay the
cost of repairs of P261,190.59. In the public auction sale conducted
by said Notary Public on April 24, 1974, Eligio Roque acquired the
barge as the highest bidder and was accordingly issued a Certificate
of Sale by the Notary Public.
29 Aug ’74: Bank filed a "Motion for the Issuance of Another
Writ of Attachment" stating that at the time of the issuance of the
Writ on February 4, 1974, the barge in question could not be located
within the jurisdiction of the Court, having been anchored
somewhere in the Visayas, and that actual levy on the barge could
not be made as "the original Order of attachment is allegedly in the
possession of the Branch Deputy Sheriff appointed by the
Honorable Court, who has not reported to the office since August
26, 1974, and, therefore, could not implement the writ."
On the same date, the Court denied the issuance of another Writ
because it was deemed unnecessary, but instead ordered the Deputy
Sheriff of Branch XXVIII to coordinate with the City Sheriff of
Manila in the implementation of the Writ previously issued.
30 Aug ‘74, Deputy Sheriff Garvida actually seized and levied
upon the vessel.
7 Oct: Bank and Fil-Eastern submitted a Compromise Agreement
whereby Fil-Eastern bound itself to pay to the Bank the principal
amount of P200,000.00, with 1417, interest, plus other amounts
stated therein. Judge approved the agreement.
6 Nov: Bank moved for the issuance of a Writ of Execution for
failure of Fil-Eastern to make payments within the period agreed
upon.
Meanwhile, without prior authority from Deputy Sheriff Garvida
the barge in question was "spirited away" to Bacolod City by a
certain Captain Marcelino Agito, who claimed to have been given
the right to use the same by Fil-Eastern.
6 Jan ’75: Judge issued an Order requiring Capt. Marcelino Agito,
in coordination with Deputy Sheriff Benjamin E. Garvida to bring
back to Manila the barge in question. Judge subsequently issued a
Writ of Execution and ordered the sale of the barge at public auction.
Capt. Marcelino Aguito and Deputy Sheriff Benjamin Garvida
filed a Manifestation stating that petitioner Rodrigo Malonjao,
acting for and in behalf of his co-petitioner Eligio Roque, refused
to-surrender the barge on the ground that Eligio Roque is now the
new owner.
24 Apr: Petitioners filed before the Court an Urgent Manifestation
and Motion seeking to set aside the Order of April 14, 1975,
claiming that Roque is now the new owner of the barge having
acquired the same at a public auction sale arising from a mechanic's
lien. The Motion was denied by Judge on the ground that the records
belied petitioners' claim that the auction sale occurred very much
ahead of the notice of levy.
Petitioners sought relief from the CA by filing a "Petition for
certiorari and Prohibition with Preliminary Injunction and
Preliminary Mandatory Injunction" assailing and asking to vacate
the Orders issued in Civil Case No. 89692 by Judge as well as the
Writs, notices and other processes emanating therefrom.
Roque filed the present petition, claiming that he is a purchaser in
good faith and for valuable consideration, having actually paid the
total amount of P354,689 to the Cotabato Visayan Dev’t Corp for 3
barges.
Roque’s contention: The levy was illegal because the Writ was
implemented more than 60 days after its issuance so that they need
not have complied with Section 14, Rule 57.
ISSUE: WON the levy was illegal because the writ was
implemented more than 60 days after its issuance
The Rules do not provide any lifetime for a Writ of Attachment
unlike a Writ of Execution. But even granting that a Writ of
Attachment is valid for only sixty days, yet, since there was
constructive levy within that period the fact that actual seizure was
effected only thereafter cannot affect the validity of that levy.
Neither can it be said that Judge committed GAD in issuing the
challenged Order of April 14, 1975, supra, whereby it commanded
the immediate implementation of the Order of execution of March
7, 1975 and ordered petitioners to surrender possession of the barge
to the Sheriff under pain of contempt. A trial Court is enjoined by
law to bring about a prompt dispatch of the controversy pending
before it. As it was, it took the trial Court more than a year to cause
the enforcement of its Writs and processes. Moreover, its Decision
of October 9, 1974 had become final and executory, and execution
then became purely a ministerial phase of adjudication. It had no
jurisdiction to pass upon petitioners' claim of ownership not only
because trial in that, case had already been terminated but also
considering that petitioners were not parties in the case below nor
had they filed any third-party claim for the enforcement of their
rights.
Verily, petitioners' remedy was to ventilate their claims of
ownership in a separate and independent reivindicatory action, as
even then suggested by the Court of Appeals. That was the arena
where the question of preferential rights, if any, impliedly raised in
the first assigned error, could have been fully threshed out. In the
interest of justice, petitioners can still file an independent civil
action to establish their ownership over the barge, if they have not
yet done so.
Roque’s contention: he could not avail of the remedy under Sec.
17, Rule 39 inasmuch as the vessel was not in the actual custody of
the Sheriff nor of the Court, since the supposed levy by the Sheriff
on February 7, 1974 was a mere paper levy which, in legal
contemplation, is no levy at all.
It is a fact that Sheriff could not effect seizure immediately, first,
because the barge could nowhere be found in this vicinity, and
subsequently when found, because petitioners would not deliver
possession to the Sheriff. It was not until the trial Court granted the
Sheriff's Motion praying for an Order directing petitioners or their
agents to surrender the barge to the custody of the Court, that the
Sheriff was able to take physical custody. As a general rule,
however, a levy of an attachment upon personal property may be
either actual or constructive.
In this case, levy had been constructively made by the registration
of the same with the Philippine Coast Guard on February 7, 1974.
Constructive possession should be held sufficient where actual
possession is not feasible, particularly when it was followed up by
the actual seizure of the property as soon as that could possibly be
effected.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 35
Roque vs. CA (1979) ~supra~
Roque’s contention: he could not avail of the remedy under Sec.
17, Rule 39 inasmuch as the vessel was not in the actual custody of
the Sheriff nor of the Court, since the supposed levy by the Sheriff
on February 7, 1974 was a mere paper levy which, in legal
contemplation, is no levy at all.
It is a fact that Sheriff could not effect seizure immediately, first,
because the barge could nowhere be found in this vicinity, and
subsequently when found, because petitioners would not deliver
possession to the Sheriff. It was not until the trial Court granted the
Sheriff's Motion praying for an Order directing petitioners or their
agents to surrender the barge to the custody of the Court, that the
Sheriff was able to take physical custody. As a general rule,
however, a levy of an attachment upon personal property may be
either actual or constructive.
In this case, levy had been constructively made by the registration
of the same with the Philippine Coast Guard on February 7, 1974.
Constructive possession should be held sufficient where actual
possession is not feasible, particularly when it was followed up by
the actual seizure of the property as soon as that could possibly be
effected.
Roque’s contention: levy was illegal because the Writ was
implemented more than sixty days after its issuance so that they
need not have complied with Section 14, Rule 57, supra.
No merit. The Rules do not provide any lifetime for a Writ of
Attachment unlike a Writ of Execution. But even granting that a
Writ of Attachment is valid for only sixty days, yet, since there was
constructive levy within that period the fact that actual seizure was
effected only thereafter cannot affect the validity of that levy.
Summit Trading & Development Corp. vs. Avendano (1985)
1973: Segundo Pilipinia and Edgardo Mindo acquired under Land
Authority Administrative Order No. 4 two registered lots with a total
area of 2 ½ hectares located at Barrio San Vicente, San Pedro,
Laguna. The titles of the lots contain the annotation that should
Pilipinia and Mindo sell the same, they have the right to redeem the
lots within five years from the date of the sale.
Pilipinia and Mindo sold the lots for P16k and P12k to Gavino
Ortega on February 14 and April 19, 1977. They have retained
possession of the lots which are ricelands. They became tenants.
At the instance of Ortega, Judge Avendaño cancelled the
annotation on the titles because the lots would be converted into
commercial, industrial or residential sites. That conversion has not
taken place. At present the two lots are still ricelands.
16 Oct ’79: Ortega advised Ernesto Pilipinia (attorney-in-fact of
Segundo and Mindo) that he and his father would have the right of
first refusal in case the lots were sold.
Ortega resold the 2 lots to Summit Trading through President
Balaguer.
10 Aug ’81, within the 5 yr period: Pilipinia and Mindo filed a
complaint against Ortega and Summit Trading for the redemption
or repurchase of the lots. They deposited P100k for that purpose.
Ortega was duly summoned but failed to answer, so he was
declared in default. Summit Trading was also declared in default.
29 Oct ’81: Judge Avendano gave Pilipinia and Mindo 15 days
from notice within which to redeem the lots for P16k and P12k and
ordered Summit Trading to execute the corresponding deeds of sale
and surrender the Torrens titles. If it failed to do so, the clerk of
court was directed to perform that task. The register of deeds was
ordered to issue new titles to Pilipinia and Mindo.
Default judgment was rendered on the assumption that Summit
Trading was duly summoned through Marina Saquilayan as its
secretary. She received the summons on 28 Aug ’81. A copy of the
judgment was also served on her on 13 Nov ’81. Actually,
Saquilayan received the summons as secretary of Balaguer, already
mentioned as the president of Summit Trading which purchased the
lots from Ortega. Bonifacio Tiongson was the corporate secretary.
Summit Trading filed MR on the ground that the trial court did
not acquire jurisdiction over it because summons was not served
upon it in accordance with Sec 13, Rule 14 of the Rules of Court:
“Service upon private domestic corporation or partnership.-If the
defendant is a corporation organized under the laws of the
Philippines or a partnership duly registered, service may be made
on the president, manager, secretary, cashier, agent, or any of its
directors.”
ISSUE: WON summons was validly served upon Summit Trading
Yes. It is true that Saquilayan is not among the persons mentioned
in section 13. However, she, being under the control of Summit
Trading, has not explained what she has done with the summons and
complaint. The logical assumption is that she delivered it to her
boss, the president of Summit Trading. As already stated, she
received a copy of the decision and Summit Trading became aware
of it. Summit Trading's motion for reconsideration was denied.
While Summit Trading is technically correct in contending that
there was no strict compliance with section 13, we cannot close our
eyes to the realities of the situation. Under the facts of this case,
Saquilayan, being the secretary of the president (whose contact with
the outside world is normally through his secretary), may be
regarded as an "agent" within the meaning of section 13.
Hence summons was validly served upon Summit Trading. Its
negligence in not answering the complaint was inexcusable. In fact,
up to this time, Summit Trading has not bothered to state its defenses
to the action nor stated whether it has a meritorious case warranting
the setting aside of the default judgment.
In the instant case, service was made on the president's secretary
who could have easily notified the president that an action was filed
against the corporation just as she had apprised him of the judgment
in this case.
We are not saying that service on such a secretary is always
proper. Generally, it is improper. The president himself must be
served personally with the summons if it is desired to effect the
service on that particular officer. But, as already stated, under the
facts of this case, the president's secretary may be regarded as the
"agent" within the meaning of section 13 since service upon her of
the judgment itself came to the notice of Summit Trading.
Chemphil Export vs. CA (1995)
25 Sep ’84: Dynetics, Inc. and Antonio M. Garcia filed a
complaint for declaratory relief and/or injunction against the PISO,
BPI, LBP, PCIB and RCBC or the consortium with RTC Makati,
Branch 45, seeking judicial declaration, construction and
interpretation of the validity of the surety agreement that Dynetics
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 36
and Garcia had entered into with the consortium and to perpetually
enjoin the latter from claiming, collecting and enforcing any
purported obligations which Dynetics and Garcia might have
undertaken in said agreement.
The consortium filed their respective answers with counterclaims
alleging that the surety agreement in question was valid and binding
and that Dynetics and Garcia were liable under the terms of the said
agreement. It likewise applied for the issuance of a writ of
preliminary attachment against Dynetics and Garcia.
23 Apr ’85: Dynetics, Garcia and Matrix filed a complaint for
declaratory relief and/or injunction against Security Bank & Trust
Co.
2 Jul: TC granted SBTC’s prayer for issuance of writ of
preliminary attachment and on 9 Jul, a notice of garnishment
covering Garcia’s shares in CIP/Chemphil was erved on Chemphil
through its then President. Notice of garnishment was duly
annotated in the stock and transfer books of Chemphil.
6 Sep ’85: Writ of attachment in favor of SBTC was lifted. But
was reinstated.
Meantime, 12 Jul ’85: RTC denied the application of Dynetics
and Garcia for preliminary injunction and instead granted the
consortium's prayer for a consolidated writ of preliminary
attachment. Hence, on 19 Jul 1985, after the consortium had filed
the required bond, a writ of attachment was issued and various real
and personal properties of Dynetics and Garcia were garnished,
including the disputed shares. This garnishment, however, was not
annotated in Chemphil's stock and transfer book.
8 Sep ’87: PCIB filed a motion to dismiss the complaint of
Dynetics and Garcia for lack of interest to prosecute and to submit
its counterclaims for decision, adopting the evidence it had adduced
at the hearing of its application for preliminary attachment.
25 Mar ’88: RTC dismissed the complaint of Dynetics and
Garcia. Also, the MR filed by the consortium were denied by the
TC. The consortium appealed.
During pendency of appeal, Garcia and the consortium entered
into a Compromise Agreement which the CA approved and became
the basis of its judgment of compromise. Garcia was dropped as a
party to the appeal leaving the consortium to proceed solely against
Dynetics, Inc.
It appears that on 15 Jul ’88, Garcia under a DOS transferred to
Ferro Chemicals Inc. the disputed shares and other properties. It was
agreed upon that part of the purchase price shall be paid by FCI
directly to SBTC for whatever judgment credits that may be
adjudged in the latter's favor and against Antonio Garcia in the
aforementioned SBTC case.
6 Mar ’89: FCI, through its President Garcia, issued a Bank of
America Check No. 860114 in favor of SBTC in the amount of
P35,462,869.62. SBTC refused to accept the check claiming that the
amount was not sufficient to discharge the debt. The check was thus
consigned by Antonio Garcia and Dynetics with the RTC as
payment of their judgment debt in the SBTC case.
26 Jun ’89: FCI assigned its 4,119,614 shares in Chemphil, which
included the disputed shares, to CEIC. The shares were registered
and recorded in the corporate books of Chemphil in CEIC's name
and the corresponding stock certificates were issued to it.
Meanwhile, Antonio Garcia, in the consortium case, failed to
comply with the terms of the compromise agreement he entered into
with the consortium on 17 Jan 1989. As a result, on 18 July 1989,
the consortium filed a motion for execution which was granted by
the trial court on 11 August 1989. Among Garcia's properties that
were levied upon on execution were his 1,717,678 shares in
Chemphil (the disputed shares) previously garnished on 19 July
1985.
On 22 Aug 1989, the consortium acquired the disputed shares of
stock at the public auction sale conducted by the sheriff for P85M.
On same day, a Certificate of Sale covering the disputed shares was
issued to it.
On 30 Aug 1989, the consortium filed a motion (dated 29 Aug
1989) to order the corporate secretary of Chemphil to enter in its
stock and transfer books the sheriff's certificate of sale dated 22 Aug
1989, and to issue new certificates of stock in the name of the banks
concerned. The trial court granted said motion.
26 Sep: CEIC filed a motion to intervene in the consortium case
seeking the recall of the abovementioned order on grounds that it is
the rightful owner of the disputed shares. It further alleged that the
disputed shares were previously owned by Garcia but subsequently
sold by him on 15 July 1988 to FCI which in turn assigned the same
to CEIC in an agreement dated 26 June 1989. Granted.
2 Oct 1989: The consortium filed their opposition to CEIC's
motion for intervention alleging that their attachment lien over the
disputed shares of stocks must prevail over the private sale in favor
of the CEIC considering that said shares of stock were garnished in
the consortium's favor as early as 19 July 1985.
4 Oct 1989: The consortium filed their opposition to CEIC's
motion to set aside the 4 September 1989 order and moved to lift the
27 Sep 1989 order.
12 Oct 1989: The consortium filed a manifestation and motion to
lift the 27 Sep 1989 order, to reinstate the 4 Sep 1989 order and to
direct CEIC to surrender the disputed stock certificates of Chemphil
in its possession within 24 hours, failing in which the President,
Corporate Secretary and stock and transfer agent of Chemphil be
directed to register the names of the banks making up the consortium
as owners of said shares, sign the new certificates of stocks
evidencing their ownership over said shares and to immediately
deliver the stock certificates to them.
CEIC’s contention: the consortium's attachment lien over the
disputed Chemphil shares is null and void and not binding on third
parties due to the latter's failure to register said lien in the stock and
transfer books of Chemphil.
ISSUE: WON the attachment of shares of stock, in order to bind 3rd
persons, must be recorded in the stock and transfer book of the
corporation
No. The attachment lien acquired by the consortium is valid and
effective. Both the Revised Rules of Court and the Corporation
Code do not require annotation in the corporation's stock and
transfer books for the attachment of shares of stock to be valid and
binding on the corporation and third party.
Section 74 of the Corporation Code which enumerates the
instances where registration in the stock and transfer books of a
corporation provides: “Stock corporations must also keep a book to
be known as the stock and transfer book, in which must be kept a
record of all stocks in the names of the stockholders alphabetically
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 37
arranged; the installments paid and unpaid on all stock for which
subscription has been made, and the date of payment of any
settlement; a statement of every alienation, sale or transfer of stock
made, the date thereof, and by and to whom made; and such other
entries as the by-laws may prescribe. The stock and transfer book
shall be kept in the principal office of the corporation or in the office
of its stock transfer agent and shall be open for inspection by any
director or stockholder of the corporation at reasonable hours on
business days.”
Also, Sec 63 of the same Code states: “The capital stock of stock
corporations shall be divided into shares for which certificates
signed by the president or vice-president, countersigned by the
secretary or assistant secretary, and sealed with the seal of the
corporation shall be issued in accordance with the by-laws. Shares
of stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner or
his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation
so as to show the names of the parties to the transaction, the date of
the transfer, the number of the certificate or certificates and the
number of shares transferred. xxx"
Attachments of shares of stock are not included in the term
“transfer” provided in Sec. 63 of the Corporation Code. As held in
the Monserrat case, chattel mortgage over shares of stock need not
be registered in the corporation's stock and transfer book inasmuch
as chattel mortgage over shares of stock does not involve a "transfer
of shares," and that only absolute transfers of shares of stock are
required to be recorded in the corporation's stock and transfer book
in order to have "force and effect as against third persons.
"Transfer" means any act by which property of one person is
vested in another, and "transfer of shares", as used in Uniform Stock
Transfer Act, implies any means whereby one may be divested of
and another acquire ownership of stock. A "transfer" is the act by
which the owner of a thing delivers it to another with the intent of
passing the rights which he has in it to the latter, and a chattel
mortgage is not within the meaning of such term.
Although the Monserrat case refers to a chattel mortgage over
shares of stock, the same may be applied to the attachment of the
disputed shares of stock in the present controversy since an
attachment does not constitute an absolute conveyance of property
but is primarily used as a means "to seize the debtor's property in
order to secure the debt or claim of the creditor in the event that a
judgment is rendered.
Shares of stock being personal property, may be the subject
matter of pledge and chattel mortgage. Such collateral transfers are
however not covered by the registration requirement of Section 63,
since our Supreme Court has held that such provision applies only
to absolute transfers thus, the registration in the corporate books of
pledges and chattel mortgages of shares cannot have any legal
effect.
The requirement that the transfer shall be recorded in the books
of the corporation to be valid as against third persons has reference
only to absolute transfers or absolute conveyance of the ownership
or title to a share.
Consequently, the entry or notation on the books of the
corporation of pledges and chattel mortgages on shares is not
necessary to their validity (although it is advisable to do so) since
they do not involve absolute alienation of ownership of stock. To
affect third persons, it is enough that the date and description of the
shares pledged appear in a public instrument. (Art. 2096, Civil
Code.) With respect to a chattel mortgage constituted on shares of
stock, what is necessary is its registration in the Chattel Mortgage
Registry.
ISSUE: WON the consortium’s attachment lien over the disputed
shares is valid
CEIC’s contention: the consortium's writ of attachment over the
disputed shares of Chemphil is null and void, insisting as it does,
that the notice of garnishment was not validly served on the
designated officers on 19 July 1985. CEIC presented the sheriff's
notice of garnishment dated 19 July 1985 which showed on its face
that said notice was received by one Thelly Ruiz who was neither
the president nor managing agent of Chemphil. It makes no
difference, CEIC further avers, that Thelly Ruiz was the secretary
of the President of Chemphil, for under the above-quoted provision
she is not among the officers so authorized or designated to be
served with the notice of garnishment.
No merit. A secretary's major function is to assist his or her
superior. He/she is in effect an extension of the latter. Obviously, as
such, one of her duties is to receive letters and notices for and in
behalf of her superior, as in the case at bench. The notice of
garnishment was addressed to and was actually received by
Chemphil's president through his secretary who formally received it
for him. Thus, in one case, we ruled that the secretary of the
president may be considered an "agent" of the corporation and held
that service of summons on him is binding on the corporation.
Moreover, the service and receipt of the notice of garnishment on
19 July 1985 was duly acknowledged and confirmed by the
corporate secretary of Chemphil, Rolando Navarro and his
successor Avelino Cruz through their respective certifications dated
15 August 1989 and 21 August 1989.
We rule, therefore, that there was substantial compliance with
Sec. 7(d), Rule 57 of the Rules of Court.
ISSUE: WON the Compromise Agreement between Garcia and the
consortium discharge the latter’s attachment lien over the disputed
shares?
CEIC’s contention: A writ of attachment is a mere auxiliary
remedy which, upon the dismissal of the case, dies a natural death.
Thus, when the consortium entered into a compromise agreement,
which resulted in the termination of their case, the disputed shares
were released from garnishment.
No merit. To subscribe to CEIC's contentions would be to totally
disregard the concept and purpose of a preliminary attachment.
A writ of preliminary attachment is a provisional remedy issued
upon order of the court where an action is pending to be levied upon
the property or properties of the defendant therein, the same to be
held thereafter by the Sheriff as security for the satisfaction of
whatever judgment might be secured in said action by the attaching
creditor against the defendant. Attachment is a juridical
institution which has for its purpose to secure the outcome of the
trial, that is, the satisfaction of the pecuniary obligation really
contracted by a person or believed to have been contracted by him,
either by virtue of a civil obligation emanating from contract or from
law, or by virtue of some crime or misdemeanor that he might have
committed, and the writ issued, granted it, is executed by attaching
and safely keeping all the movable property of the defendant, or so
much thereof may be sufficient to satisfy the plaintiff's demands.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 38
An attachment lien continues until the debt is paid, or sale is had
under execution issued on the judgment or until judgment is
satisfied, or the attachment discharged or vacated in the same
manner provided by law.
The case at bench admits of a peculiar character in the sense that
it involves a compromise agreement. Nonetheless, the rule
established in the aforequoted cases still applies, even more so since
the terms of the agreement have to be complied with in full by the
parties thereto. The parties to the compromise agreement should not
be deprived of the protection provided by an attachment lien
especially in an instance where one reneges on his obligations under
the agreement, as in the case at bench, where Antonio Garcia failed
to hold up his own end of the deal, so to speak.
Moreover, a violation of the terms and conditions of a
compromise agreement entitles the aggrieved party to a writ of
execution.
If we were to rule otherwise, we would in effect create a back
door by which a debtor can easily escape his creditors.
Consequently, we would be faced with an anomalous situation
where a debtor, in order to buy time to dispose of his properties,
would enter into a compromise agreement he has no intention of
honoring in the first place. The purpose of the provisional remedy
of attachment would thus be lost. It would become, in analogy, a
declawed and toothless tiger.
From the foregoing, it is clear that the consortium and/or its
assignee Jaime Gonzales have the better right over the disputed
shares. When CEIC purchased the disputed shares from Antonio
Garcia on 15 July 1988, it took the shares subject to the prior, valid
and existing attachment lien in favor of and obtained by the
consortium.
Gotauco vs. ROD (1934)
12 Aug ’32: when Exhibits A and B were presented to the register,
by which a levy of execution against the judgment debtor, Rafael
Vilar was made on fifteen contracts of land described in Exhibit B
and registered in the name of Florentino Vilar, the register properly
denied the inscription of said levy of execution because the title to
the lands was in the name of Florentino Vilar and no evidence was
submitted that Rafael Vilar had any present or possible future
interest in the land.
17 Sept: there was presented to him a copy of a petition filed in
the CFI entitled, "Intestado del Finado Florentino Vilar", from
which he could properly infer that Florentino Vilar was dead and
that the judgment debtor Rafael Vilar is one of the heirs of the
deceased Florentino Vilar. Although the value of the participation
of Rafael Vilar in the estate of Florentino Vilar was indeterminable
before the final liquidation of the estate, nevertheless, the right of
participation in the estate and the lands thereof may be attached and
sold.
This is an appeal from a judgment of the Fourth Branch of the
Court of First Instance of Manila in a consulta submitted by the
ROD of Tayabas.
ISSUE:
The real test was laid down by this court in the case of Reyes vs.
Grey, namely: Does the judgment debtor hold such a beneficial
interest in the property that he can sell or otherwise dispose of it for
value? Nothing appears in this record to indicate that Rafael Vilar
being sui juris could not dispose of his interest or share as heir in the
estate of Florentina Vilar. Having this right, he could by a
conveyance defeat pro tanto the provisions of section 450 of the
Code of Civil Procedure and thus deprive the judgment creditor of
the benefit of a lawful execution.
On October 12, 1932, with the knowledge which he them had, the
register should have accepted and inscribed Exhibit A, B and D.
The judgment in this consulta is reversed without special
pronouncement as to costs.
Engineering Construction vs. NPC (1988)
29 Aug ’68: Engineering Construction Inc. filed a complaint for
damages against NPC, alleging that it suffered damages to its
facilities and equipment due to the inundation of its campsite in Ipo,
Norzagaray, Bulacan, as a direct result of the improper and careless
opening by NPC of the spillway gates of Angat Dam at the height
of typhoon "Welming".
TC found NPC guilty of gross negligence. NPC filed a notice of
appeal from that decision but before it could perfect its appeal, ECI
moved for and was granted execution pending appeal upon posting
a covering bond of P200k which it later increased to P1.109M to
fully answer for whatever damages NPC might incur by reason of
the premature execution of the lower court's decision. Court granted
said motion for the exceptional writ.
Subsequently, Deputy Sheriff Restituto R. Quemada who was
assigned to enforce the writ of execution, garnished in favor of ECI
all amounts due and payable to NPC which were then in possession
of MERALCO and sufficient to cover the judgment sum of
P1,108,985.31.
NPC filed a petition for certiorari with CA. CA granted the
petition and nullified the execution pending appeal of the judgment
rendered by the trial court, as well as all issued writs and processes
in connection with the execution.
MERALCO sought from the CA a clarification and
reconsideration of the aforesaid decision on the ground, among
others, that the decision was being used by NPC to compel
MERALCO to return the amount of P1,114,545.23 (inclusive of
sheriff's fees) in two checks which it had already entrusted to the
deputy sheriff on February 23, 1971, who then indorsed and
delivered the same to ECI. CA held the sheriff, MERALCO and ECI
liable to restore to NPC the amount due to NPC which MERALCO
had earlier turned over to the sheriff for payment to ECI.
ISSUE: WON the garnishee (MERALCO) is liable when the notice
of garnishment was lifted for having been proved futile
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 39
No. We are sanctioning in this particular instance the execution
pending appeal of actual but not consequential and exemplary
damages and attorney's fees which must necessarily depend on the
final resolution of the main cases, the direct consequence would be
to authorize NPC to proceed against the covering bond filed by ECI
but only to the extent of the difference between the amount finally
adjudicated by this Court in the main cases [P724,985.31] and the
amount originally decreed by the trial court relating to the
consequential and exemplary damages and attorney's fees
[P1,108.985.31]. In other words, ECIs bond is held answerable to
NPC for P384,000.
But while partial restitution is warranted in favor of NPC, we find
that the CA erred in not absolving MERALCO, the garnishee, from
its obligations to NPC with respect to the payment to ECI of
P1,114,543.23, thus in effect subjecting MERALCO to double
liability. MERALCO should not have been faulted for its prompt
obedience to a writ of garnishment. Unless there are compelling
reasons such as: a defect on the face of the writ or actual knowledge
on the part of the garnishee of lack of entitlement on the part of the
garnisher, it is not incumbent upon the garnishee to inquire or to
judge for itself whether or not the order for the advance execution
of a judgment is valid.
Garnishment is considered as a specie of attachment for reaching
credits belonging to the judgment debtor and owing to him from a
stranger to the litigation. Under the above-cited rule, the garnishee
[the third person] is obliged to deliver the credits, etc. to the proper
officer issuing the writ and "the law exempts from liability the
person having in his possession or under his control any credits or
other personal property be, longing to the defendant, ..., if such
property be delivered or transferred, ..., to the clerk, sheriff, or other
officer of the court in which the action is pending."
Applying the foregoing to the case at bar, MERALCO, as
garnishee, after having been judicially compelled to pay the amount
of the judgment represented by funds in its possession belonging to
the judgment debtor or NPC, should be released from all
responsibilities over such amount after delivery thereof to the
sheriff. The reason for the rule is self-evident. To expose garnishees
to risks for obeying court orders and processes would only
undermine the administration of justice.
RCBC vs. Judge Castro (1988)
15 Jan '70: In an action for recovery of unpaid tobacco deliveries,
an Order was issued, ordering Phil. Virginia Tobacco
Administration (PVTA) to pay jointly and severally Badoc Planters
Inc within 48 hrs the aggregate amount of P206,916.76 with legal
interests.
26 Jan: Badoc filed an Urgent Ex-Parte Motion for a writ of
execution of said partial judgment which was granted. Branch Clerk
of Court issued a Writ of Execution addressed to Special Sheriff
Faustino Rigor, who then issued a Notice of Garnishment addressed
to the General Manager and/or Cashier of RCBC, requesting a reply
within 5 days to said garnishment as to any property which the
PVTA might have in the possession or control of RCBC or of any
debts owing by RCBC to PVTA. Upon receipt of such Notice,
RCBC notified PVTA thereof to enable the PVTA to take the
necessary steps for the protection of its own interest.
27 Jan: Judge issued an Order granting the Ex-Parte Motion field
by Badoc and directing RCBC "to deliver in check the amount
garnished to Sheriff Rigor and Sheriff Rigor in turn is ordered to
cash the check and deliver the amount to the Badoc’s representative
and/or counsel.”
RCBC delivered to Sheriff Rigor a certified check of
P206,916.76.
PVTA filed MR. Granted. Set aside the Orders of Execution and
of Payment and the Writ of Execution and ordering RCBC and
Badoc "to restore, jointly and severally, the account of PVTA with
the said bank in the same condition and state it was before the
issuance of the aforesaid Orders by reimbursing the PVTA with
interests at the legal rate from January 27, 1970 until fully paid to
the account of the PVTA This is without prejudice to the right of
plaintiff to move for the execution of the partial judgment pending
appeal in case the motion for reconsideration is denied and appeal
is taken from the said partial judgment. This became final.
PVTA’s contention: Manner in which the bank complied with
the Sheriff’s Notice of Garnishment indicated breach of trust and
dereliction of duty on the part of the bank as custodian of
government funds. Urged that the premature delivery of the
garnished amount by RCBC to the special sheriff even in the
absence of a demand to deliver made by the latter, before the
expiration of the 5-day period given to reply to the Notice of
Garnishment, without any reply having been given thereto nor any
prior authorization from its depositor, PVTA and even if the court's
order of January 27, 1970 did not require the bank to immediately
deliver the garnished amount constitutes such lack of prudence as to
make it answerable jointly and severally with the plaintiff for the
wrongful release of the money from the deposit of the PVTA.
ISSUE: WON the bank should be held liable with the judgment
creditor for reimbursement of the garnished funds, when it merely
complied with the court ordered and delivered the garnished amount
to the sheriff, who in turn delivered it to the judgment creditor, but
subsequently the order of the court directing payment was set aside
No. RCBC did not deliver the amount on the strength solely of a
Notice of Garnishment; rather, the release of the funds was made
pursuant to the Order of January 27, 1970. While the Notice of
Garnishment dated January 26, 1970 contained no demand of
payment as it was a mere request for RCBC to withhold any funds
of the PVTA then in its possession, the Order of January 27, 1970
categorically required the delivery in check of the amount garnished
to the special sheriff, Faustino Rigor.
In the second place, RCBC had already filed a reply to the Notice
of Garnishment stating that it had in its custody funds belonging to
the PVTA, which, in fact was the basis of Badoc in filing a motion
to secure delivery of the garnished amount to the sheriff.
Lastly, RCBC, upon the receipt of the Notice of Garnishment,
duly informed PVTA thereof to enable the latter to take the
necessary steps for the protection of its own interest.
There was nothing irregular in the delivery of the funds of PVTA
by check to the sheriff, whose custody is equivalent to the custody
of the court, he being a court officer. The order of the court dated
January 27, 1970 was composed of two parts, requiring: 1) RCBC
to deliver in check the amount garnished to the designated sheriff
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 40
and 2) the sheriff in turn to cash the check and deliver the amount
to Badoc’s representative and/or counsel on record. It must be noted
that in delivering the garnished amount in check to the sheriff, the
RCBC did not thereby make any payment, for the law mandates that
delivery of a check does not produce the effect of payment until it
has been cashed.
Moreover, by virtue of the order of garnishment, the same was
placed in custodia legis and therefore, from that time on, RCBC was
holding the funds subject to the orders of the court a quo. That the
sheriff, upon delivery of the check to him by RCBC encashed it and
turned over the proceeds thereof to Badoc was no longer the concern
of RCBC as the responsibility over the garnished funds passed to
the court. Thus, no breach of trust or dereliction of duty can be
attributed to RCBC in delivering its depositor's funds pursuant to a
court order which was merely in the exercise of its power of control
over such funds.
As stated earlier, the order directing the bank to deliver the
amount to the sheriff was distinct and separate from the order
directing the sheriff to encash the said check. The bank had no
choice but to comply with the order demanding delivery of the
garnished amount in check. The very tenor of the order called for
immediate compliance therewith. On the other hand, the bank
cannot be held liable for the subsequent encashment of the check as
this was upon order of the court in the exercise of its power of
control over the funds placed in custodia legis by virtue of the
garnishment.
RCBC's immediate compliance with the lower court's order
should not have been met with the harsh penalty of joint and several
liability. Nor can its liability to reimburse PVTA of the amount
delivered in check be premised upon the subsequent declaration of
nullity of the order of delivery.
It may be concluded that the charge of breach of trust and/or
dereliction of duty as well as lack of prudence in effecting the
immediate payment of the garnished amount is totally unfounded.
Upon receipt of the Notice of Garnishment, RCBC duly informed
PVTA thereof to enable the latter to take the necessary steps for its
protection. However, right on the very next day after its receipt of
such notice, RCBC was already served with the Order requiring
delivery of the garnished amount. Confronted as it was with a
mandatory directive, disobedience to which exposed it to a contempt
order, it had no choice but to comply.
ISSUE: WON PVTA funds are public funds exempt from
garnishment
No. Republic Act No. 2265 created the PVTA as an ordinary
corporation with all the attributes of a corporate entity subject to the
provisions of the Corporation Law. Hence, it possesses the power
"to sue and be sued" and "to acquire and hold such assets and incur
such liabilities resulting directly from operations authorized by the
provisions of this Act or as essential to the proper conduct of such
operations.” It is clear that PVTA has been endowed with a
personality distinct and separate from the government which owns
and controls it. Accordingly, this Court has heretofore declared that
the funds of the PVTA can be garnished since "funds of public
corporation which can sue and be sued were not exempt from
garnishment"
ISSUE: WON RCBC was bound to inquire into the legality and
propriety of the Writ of Execution and Notice of Garnishment issued
against the funds of PVTA
No. It had neither the personality nor the interest to assail or
controvert the orders of respondent Judge. It had no choice but to
obey the same inasmuch as it had no standing at all to impugn the
validity of the partial judgment rendered in favor of Badoc or of the
processes issued in execution of such judgment.
RCBC cannot therefore be compelled to make restitution
solidarily with Badoc. Badoc alone was responsible for the issuance
of the Writ of Execution and Order of Payment and so, Badoc alone
should bear the consequences of a subsequent annulment of such
court orders; hence, only Badoc can be ordered to restore the
account of the PVTA.
Abinujar vs. CA (1995)
FACTS
Petitioners Sps. Abinujar executed a Deed of Sale with Right to
Repurchase in favor of private respondents Sps. Ramiro, involving
a residential house located at Sampaloc, Manila. Due to serious
financial and business reverses, petitioners were not able to redeem
the property within four months as agreed upon which prompted sps.
Ramiro filing a complaint for ejectment in the Metropolitan Trial
Court of the City of Manila against sps Abinujar. However, the
parties, settled on a compromise agreement. The MTC approved the
compromise agreement which states that the sps. Abinujar agree to
pay sps. Ramiro in the amounts and on the dates specifically
indicated in the agreement and that the failure on the part of the sps.
Abinujar to pay three (3) consecutive payments, sps. Ramiro will be
entitled to a writ of execution, unless the parties agree to extend the
period of entitlement to a writ of execution in writing to be
submitted and/or approved by this Honorable Court.
Thereafter, sps. Ramiro filed a motion for execution on the ground
that petitioners failed to pay the first three installments stipulated in
the compromise agreement. Sps. Abinujar filed an "Urgent Ex-Parte
Motion for Reconsideration and/or Correct Order of this Court"
calling attention to a typographical error in the Order dated March
15, 1990, and asking that the amount of P10.000.00 payable on
September 30, 1990 be corrected and changed to the agreed amount
of P50,000 which was granted by the MTC.
Sps Ramiro opposed the ex-parte motion and stated that they would
not renew the compromise agreement with petitioners. However it
was denied by the MTC
This promted the sps Ramiro to file a petition for mandamus and in
turn, referred the case to the Executive Judge of the RTC, Manila.
The RTC issued the assailed resolution commanding the MTC to
issue a writ of execution of the decision approving the compromise
agreement. The Metropolitan Trial Court complied by issuing a
writ of execution to enforce the compromise agreement entered into
by the parties. A "Sheriffs' Notice to Voluntarily Vacate the
Premises" was served on sps. Abinujar.
Sps. Abinujar then filed a petition for certiorari with a prayer for the
issuance of a temporary restraining order and a writ of injunction
with the Court of Appeals, however, it dismissed the petition.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 41
The sps. Abinujar assails the validity of the issuance by the Deputy
Sheriff of the notice to voluntarily vacate the premises by way of
enforcing the decision approving the compromise agreement. They
maintain that their obligation is monetary in nature and the
applicable rule should have been Section 15, Rule 39 and not
Section 13, Rule 39 of the Revised Rules of Court.
ISSUE
Whether the sps Abinujar’s obligation in the compromise agreement
was monetary in nature.
RULING
Yes. When the parties entered into a compromise agreement, the
original action for ejectment was set aside and the action was
changed to a monetary obligation.
A perusal of the compromise agreement signed by the parties and
approved by the inferior court merely provided that in case the
defendants (petitioners herein) failed to pay three monthly
installments, the plaintiffs (private respondents herein) would be
entitled to a writ of execution, without specifying what the subject
of execution would be. Said agreement did not state that petitioners
would be evicted from the premises subject of the suit in case of any
default in complying with their obligation thereunder. This was the
result of the careless drafting thereof for which only private
respondents were to be blamed.
A judgment is the foundation of a writ of execution which draws its
vitality therefrom. An officer issuing a writ of execution is required
to look to the judgment for his immediate authority. An execution
must conform to and be warranted by the judgment on which it was
issued. There should not be a substantial variance between the
judgment and the writ of execution. Thus, an execution is fatally
defective if the judgment was for a sum of money and the writ of
execution was for the sale of mortgaged property.
As petitioners' obligation under the compromise agreement as
approved by the court was monetary in nature, private respondents
can avail only of the writ of execution provided in Section 15, Rule
39 of the Revised Rules of Court, and not that provided in Section
13.
Section 15, Rule 39 provides:
Execution of money judgments. — The officer must enforce an
execution of a money judgment by levying on all the property, real
and personal of every name and nature whatsoever, and which may
be disposed of for value, of the judgment debtor not exempt from
execution, or on a sufficient amount of such property, if there be
sufficient, and selling the same, and paying to the judgment creditor,
or his attorney, so much of the proceeds as will satisfy the judgment.
Any excess in the proceeds over the judgment and accruing costs
must be delivered to the judgment debtor, unless otherwise directed
by the judgment or order of the court. When there is more property
of the judgment debtor than is sufficient to satisfy the judgment and
accruing costs, within the view of the officer, he must levy only on
such part of the property as is amply sufficient to satisfy the
judgment and costs.
Real property, stocks, shares, debts, credits, and other personal
property, or any interest in either real or personal property, may be
levied on in like manner and with like effect as under a writ of
attachment.
On the other hand, Section 13, Rule 39 provides:
How execution for the delivery or restitution of property enforced.
— The officer must enforce an execution for the delivery or
restitution of property by ousting therefrom the person against
whom the judgment is rendered and placing the judgment creditor
in possession of such property, and by levying as hereinafter
provided upon so much of the property of the judgment debtor as
will satisfy the amount of the judgment and costs included in the writ
of execution.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with the MODIFICATION that the Sheriff is directed to enforce the
execution only of the money judgment in accordance with Section
15, Rule 39 of the Revised Rules of Court.
BF Homes, Inc. vs. CA (1990)
19 Jul ’84: BF Homes contracted a loan from Rosalinda Roa and
Vicente Mendoza in the amount of P250k. The obligation was
embodied in a P/N and secured by 2 post-dated checks issued by BF
in favor of the lenders.
25 Sep: BF filed a Petition for Rehabilitation and for a
Declaration in a State of Suspension of Payments under Sec. 5(d) of
PD 902-A with a prayer that upon the filing of the petition and in
the meantime, all claims against it for any and all accounts or
indebtedness be suspended, but allowing BF Homes to continue
with its normal operations. It also asked for the approval of the
proposed rehabilitation plan.
17 Oct: Roa and Mendoza filed a complaint against BF Homes
for the recovery of the loan of P250k. Also prayed for the issuance
of a writ of preliminary attachment against properties of BF.
22 Oct: TC issued the writ against BF Homes. BF moved for
dismissal, which was denied. BF filed for certiorari.
18 Mar ’85: SEC, finding an urgent need to rehabilitate BF, issued
an order creating a management committee and suspending all
actions for claims against BF pending before any court, tribunal or
board.
6 Jun ’86: CA rendered decision dismissing the complaint and
declaring the writ of preliminary attachment null and void. Roa and
Mendoza filed MR. Writ still dissolved. At the same time, however,
it suspended the proceedings therein until after the management
committee shall have been impleaded as party defendant.
BF Homes’ contention: Action should be resumed only until
after SEC Case No. 002693 shall have been adjudicated on the
merits but now agrees with Roa and Mendoza, in line with the
"assessment" of the Solicitor General, that the action should be
suspended pending the outcome of the rehabilitation proceedings.
ISSUE: WON the appointment of a rehabilitation receiver defeat a
prior attachment which was made on record
No. Coming now to the writ of preliminary attachment, we find
that it must stand despite the suspension of the proceedings in the
RTC of Quezon City. The writ was issued prior to the creation of
the management committee and so should not be regarded as an
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undue advantage of Mendoza and Roa over the other creditors of
BF.
The respondent court did not rule on whether the issuance of the
writ was improper or irregular. It simply said that the writ was no
longer proper or necessary at that time because the properties of BF
were in the hands of the receiver. We do not think so.
The appointment of a rehabilitation receiver who took control and
custody of BF has not necessarily secured the claims of Roa and
Mendoza. In the event that the receivership is terminated with such
claims not having been satisfied, the creditors may also find
themselves without security therefor in the civil action because of
the dissolution of the attachment. This should not be permitted.
Having previously obtained the issuance of the writ in good faith,
they should not be deprived of its protection if the rehabilitation plan
does not succeed and the civil action is resumed.
If there is an attachment or sequestration of the goods or estate of
the defendant in an action which is removed to a bankruptcy court,
such an attachment or sequestration will continue in existence and
hold the goods or estate to answer the final judgment or decree in
the same manner as they would have been held to answer the final
judgment or decree rendered by the Court from which the action was
removed, unless the attachment or sequestration is invalidated under
applicable law.
Under the Rules of Court, a writ of attachment may be dissolved
only upon the filing of a counter-bond or upon proof of its improper
or irregular issuance. Neither ground has been established in the
case at bar to warrant the discharge of the writ. No counter-bond has
been given.
In sum, the Court holds that the substitution of the management
committee/rehabilitation receiver in Civil Case No. Q-43104 in the
RTC of Quezon City is not necessary because the proceedings
therein shall be suspended anyway pending implementation of the
revised rehabilitation plan, during which the writ of preliminary
attachment shall remain in force.
Republic vs. Saludares (2000)
2 Apr ’86: PCGG issued a writ of sequestration, based on the
ground that the shares of stocks in LBLC owned by Peter A. Sabido
formed part of "illegally acquired wealth."
27 July ’87: The Republic of the Philippines through the PCGG
and the Office of the Solicitor General filed before the
Sandiganbayan a complaint for reconveyance, reversion,
accounting, restitution and damages against, among others, Peter A.
Sabido.
12 Aug: Sabido filed a motion to lift the writs of sequestration.
Granted. PCGG filed MR.
11 Feb ’93: Hung Ming Kuk filed a complaint for sum of money
against LBLC, with a prayer for a writ of preliminary attachment.
The PCGG was not impleaded by Hung Ming Kuk as party-
defendant nor was the sequestration case referred to the RTC's
proceedings. Thus, the Republic of the Philippines filed a special
civil action for certiorari.
Sandiganbayan denied the MR of PCGG.
17 Feb ’93: TC granted the writ of preliminary attachment in
favor of Hung Ming Kuk.
Thereafter, Hung Ming Kuk filed a motion to declare LBLC in
default for failure to file responsive pleadings. RTC of Lianga issued
an order, declaring LBLC in default.
Republic’s contention: RTC of Lianga has no jurisdiction over
the subject matter of the case inasmuch as the same are under
sequestration by the PCGG. The sequestered assets have been
placed under custodia legis of the PCGG pending the final
determination by the Sandiganbayan that said assets are in fact ill-
gotten. Hence, the RTC has no jurisdiction to order the attachment
of said sequestered properties.
Hung Ming Kuk’s contention: His original complaint was for a
sum of money. It was a demand for payment of a valid obligation
owed to him by LBLC. He adds that it would be unfair and unjust
to declare the entire RTC proceedings regarding his claim for sum
of money null and void. Further claimed that the attachment order
of the trial court was issued after the Sandiganbayan had lifted the
writ of sequestration against LBLC.
ISSUE: WON the provisional remedy of attachment issued by the
TC in favor of Hung Ming Kuk was valid
No. It bears recalling that when the Sandiganbayan ordered that
the writ of sequestration be lifted, PCGG filed a special civil action
for certiorari to contest that order. The Supreme Court ruled in favor
of PCGG when it granted the latter'spetition to declare the lifting of
the writ of sequestration by the Sandiganbayan null and void.
Sequestration is defined as the process, which may be employed
as a conservatory writ whenever the right of the property is
involved, to preserve, pending litigation, specific property subject
to conflicting claims of ownership or liens and privileges.
The Court also noted the relationship between attachment and
receivership, on one hand, and sequestration, freeze order and
provisional takeover on the other. The latter there are ancillary
remedies in prosecuting the ill-gotten wealth of the previous Marcos
regime. The Court observed that sequestration, freezing and
provisional takeover are akin to the provisional remedy of
preliminary attachment or receivership.
By an order of attachment, a sheriff seizes property of a defendant
in a civil suit so that it may stand as security for the satisfaction of
any judgment that may be obtained, and not disposed of, or
dissipated, or lost intentionally, or otherwise, pending the action.
When a writ of attachment has been levied on real property or any
interest therein belonging to the judgment debtor, the levy creates a
lien which nothing can destroy but its dissolution. This well-settled
rule is likewise applicable to a writ of sequestration.
In our view, the disputed properties of LBLC were already under
custodia legis by virtue of a valid writ of sequestration issued by the
PCGG on April 2, 1986, when Judge Saludares issued the assailed
writ of attachment in favor of Hung Ming Kuk. At that time the writ
of sequestration issued by PCGG against LBLC was subsisting. Said
writ of the PCGG could not be interfered with by the RTC of Lianga,
because the PCGG is a coordinate and co-equal body. The PCGG
had acquired by operation of law the right of redemption over the
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property until after the final determination of the case or until its
dissolution.
Manila Remnant vs. CA (1994)
Case involved parcels of land in QC which were owned by Manila
Remnant Co. Inc. and became the subject of its agreement with A.U.
Valencia and Co., Inc., (AUVCI) by virtue of which the latter was
to act as the MRCI's agent in the development and sale of the
property. For a stipulated fee, AUVCI was to convert the lands into
a subdivision, manage the sale of the lots, execute contracts and
issue official receipts to the lot buyers.
Pursuant to the above agreement, AUVCI executed two contracts
to sell dated March 3, 1970, covering Lots 1 and 2, Block 17, in
favor of Sps. Oscar C. Ventanilla and Carmen Gloria Diaz for the
combined contract price of P66,571. After 10 days and without the
knowledge of the Ventanilla couple, Valencia, as president of
MRCI, resold the same parcels to Carlos Crisostomo, one of his
sales agents, without any consideration. Upon orders of Valencia,
the monthly payments of the Ventanillas were remitted to the MRCI
as payments of Crisostomo, for which receipts were issued in his
name. The receipts were kept by Valencia without the knowledge of
the Ventanillas and Crisostomo. The Ventanillas continued paying
their monthly installments.
On May 30, 1973, MRCI informed AUVCI that it was
terminating their agreement because of discrepancies discovered in
the latter's collections and remittances. On June 6, 1973, Valencia
was removed by the board of directors of MRCI as its president.
On November 21, 1978, Sps. Ventanilla, having learned of the
supposed sale of their lots to Crisostomo, filed an action for specific
performance, annulment of deeds, and damages against MRCI,
AUVCI and Carlos Crisostomo.
TC declared the contracts to sell in favor of Sps. Ventanilla valid,
and annulled the contract to sell in favor of Crisostomo. Ordered
MRCI to executed an absolute DOS in favor of Ventanillas.
25 Jan ’91: Sps. Ventanilla filed a motion for issuance of writ of
execution. Writ was issued on 3 May ’91 and served upon MRCI on
9 May ’91.
MRCI alleged that the subject properties could not be delivered
to the Ventanillas because they had already been sold to Samuel
Marquez on February 7, 1990, while their petition was pending in
this Court. Nevertheless, MRCI offered to reimburse the amount
paid by the respondents, including legal interest plus the aforestated
damages. MRCI also prayed that its tender of payment be accepted
and all garnishments on their accounts lifted.
Ventanilla’s contention: Opposed the reimbursement offered by
MRCI in lieu of the execution of the absolute deed of sale.
Contended that the alleged sale to Samuel Marquez was void,
fraudulent, and in contempt of court and that no claim of ownership
over the properties in question had ever been made by Marquez.
MRCI filed manifestation and MR, praying it be ordered to
reimburse Sps. Ventanilla the amount of P263,074.10 and the
garnishment of its bank deposit be lifted. Denied. Filed second
manifestation and MR but denied again.
MRCI’s contention: TC may not enforce it garnishment order
after the monetary judgment for damages had already been satisfied
and the amount for reimbursement had already been deposited with
the sheriff. Garnishment as a remedy is intended to secure the
payment of a judgment debt when a well-founded belief exists that
the erring party will abscond or deliberately render the execution of
the judgment nugatory. As there is no such situation in this case,
there is no need for a garnishment order. Also that TC gravely
abused its discretion when it arbitrarily fixed the amount of the cash
bond for the lifting of the garnishment order at P500k. Questions the
propriety of this order on the ground that it has already partially
complied with the judgment and that it has always expressed its
willingness to reimburse the amount paid by the respondents. It says
that there is no need for a garnishment order because it is willing to
reimburse the Ventanillas in lieu of execution of the absolute deed
of sale.
Ventanilla’s contention: Validity of the sale to them had already
been established even while the previous petition was still pending
resolution. That petition only questioned the solidary liability of
MRCI to the Ventanillas. The portion of the decision ordering the
MRCI to execute an absolute deed of sale in favor of the Ventanillas
became final and executory when the petitioner failed to appeal it to
the Supreme Court. There was no need then for an order enjoining
the petitioner from re-selling the property in litigation.
ISSUE: WON partial execution by MRCI is a ground for the
discharge of the writ of attachment
No. While MRCI have readily complied with the order of the TC
for the payment of damages to the Ventanillas, they have, however,
refused to execute the absolute deed of sale. It was for the purpose
of ensuring their compliance with this portion of the judgment that
the trial court issued the garnishment order which by its term could
be lifted only upon the filling of a cash bond of P500k.
The alternative judgment of reimbursement is applicable only if
the conveyance of the lots is not possible, but it has not been shown
that there is an obstacle to such conveyance. As the main obligation
of MRCI is to execute the absolute deed of sale in favor of the
Ventanillas, its unjustified refusal to do so warranted the issuance
of the garnishment order.
Garnishment is a species of attachment for reaching credits
belonging to the judgment debtor and owing to him from a stranger
to the litigation. It is an attachment by means of which the plaintiff
seeks to subject to his claim property of the defendant in the hands
of a third person or money owed by such third person or garnishee
to the defendant. The rules on attachment also apply to garnishment
proceedings.
A garnishment order shall be lifted if it established that: (a) the
party whose accounts have been garnished has posted a counterbond
or has made the requisite cash deposit; (b) the order was improperly
or irregularly issued as where there is no ground for garnishment or
the affidavit and/or bond filed therefor are defective or insufficient;
(c) the property attached is exempt from execution, hence exempt
from preliminary attachment, or (d) the judgment is rendered against
the attaching or garnishing creditor.
Partial execution of the judgment is not included in the above
enumeration of the legal grounds for the discharge of a garnishment
order. Neither does MRCI's willingness to reimburse render the
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 44
garnishment order unnecessary. As for the counterbond, the lower
court did not err when it fixed the same at P500k. As correctly
pointed out by the respondent court, that amount corresponds to the
current fair market value of the property in litigation and was a
reasonable basis for determining the amount of the counterbond.
Insular Savings Bank vs. CA (2005) Suan
11 Dec ’91: FEB instituted an arbitration case against Insular
Savings Bank before the Arbitration Committee of PCHC. The
dispute involved 3 unfunded checks with total value of P25.2M.
Checks were drawn against FEB and were presented by Insular for
clearing. FEB returned the checks beyond the reglementary period
but after Insular’s account with PCHC was credited with the
amount, Insular refused to refund the money to FEB.
While dispute was pending arbitration, FEB instituted a civil
case and prayed for issuance of writ of preliminary attachment. RTC
Makati issued an order, granting the application upon posting by
respondent of an attachment bond in amount of P6M. The writ was
issued.
During the hearing before the Arbitration Committee, the 2
banks agreed to temporarily divide between them the disputed
amount of P25.2M while dispute has not yet been resolved. As
result, the sum of P12.6M is in possession of FEB.
Insular filed motion to discharge attachment by counter-bond
in the amount of P12.6M. Judge Amin issued an order, denying the
motion. Insular filed MR but was again denied.
Insular filed petition for certiorari. CA denied and dismissed
the petition. According to CA, the RTC’s order may be defended by
the provision of Sec 12 of Rule 57 and assuming that the RTC erred
on the computation, its error does not amount to GAD.
Insular’s contention: the starting point in computing the
amount of counter-bond is the amount of FEB’s demand or claim
only, in this case P25.2M, excluding contingent expenses and
unliquidated amount of damages. And since there was a mutual
agreement between them to temporarily, but equally, divide
between themselves the said amount pending and subject to the final
outcome of the arbitration, the amount of P12.6M should be the
basis for computing the amount of the counter-bond.
ISSUE: WON CA erred in not ruling that the RTC commited GAD
in denying Insular’s motion to discharge attachment by counter-
bond in the amount of P12.6M
Yes. The amount of the counter-attachment bond is, under the
terms of Section 12, to be measured against the value of the attached
property, as determined by the judge to secure the payment of any
judgment that the attaching creditor may recover in the action. The
attached property - and logically the counter-bond necessary to
discharge the lien on such property - should as much as possible
correspond in value to, or approximately match the attaching
creditor’s principal claim. Else, excessive attachment, which ought
to be avoided at all times, shall ensue.
The sheriff is required to attach only so much of the property
of the party against whom the order is issued as may be sufficient to
satisfy the applicant’s demand, the amount of which is stated in the
order, unless a deposit is made or a counter-bond is given equal to
said amount. However, if the value of the property to be attached is
less than the amount of the demand, the amount of the applicant’s
bond may be equal to the value of said property, and the amount of
the adverse party’s deposit or counter-bond may be equal to the
applicant’s bond. The writ of preliminary attachment is issued upon
approval of the requisite bond.
The trial court, therefore, committed GAD when it denied
Insular’s motion to discharge attachment by counter-bond in the
amount of P12.6M, an amount more than double the attachment
bond required of, and given by, FEB.
It bears to stress, as a final consideration, that the certiorari
proceedings before CA and the denial of the motion to discharge
attachment subject of such proceedings, transpired under the old
rules on preliminary attachment which has since been revised. And
unlike the former Section 12 of Rule 57 where the value of the
property attached shall be the defining measure in the computation
of the discharging counter-attachment bond, the present less
stringent Section 12 of Rule 57 provides that the court shall order
the discharge of attachment if the movant "makes a cash deposit, or
files a counter-bond . . . in an amount equal to that fixed by the court
in the order of attachment, exclusive of costs." Not being in the
nature of a penal statute, the Rules of Court cannot be given
retroactive effect.
ISSUE: WON the writ of preliminary attachment was properly
issued
Yes. Records show that the principal claim of Insular is in the
amount of P25.2M representing the 3 unfunded checks drawn
against, and presented for clearing to, FEB. Jurisprudence teaches
that a writ of attachment cannot be issued for moral and exemplary
damages, and other unliquidated or contingent claim.
FEB’s principal claim against Insular immediately prior to the
filing of the motion to discharge attachment has effectively been
pruned down to P12.6M. The trial court was fully aware of this
reality. Accordingly, it should have allowed a total discharge of the
attachment on a counter-bond based on the reduced claim of FEB.
If a portion of the claim is already secured, we see no justifiable
reason why such portion should still be subject of counter-bond. It
may be that a counter-bond is intended to secure the payment of any
judgment that the attaching party may recover in the main action.
Simple common sense, if not consideration of fair play, however,
dictates that a part of a possible judgment that has veritably been
preemptively satisfied or secured need not be covered by the
counter-bond.
With the view we take of this case, the trial court, in requiring
Insular to post a counter-bond in the amount of P27,237,700.00,
obviously glossed over one certain fundamental. We refer to the fact
that the attachment FEB applied for and the corresponding writ
issued was only for the amount of P25.2M. FEB did not pray for
attachment on its other claims, contingent and unliquidated as they
were. Then, too, the attaching writ rightly excluded such claims.
While the records do not indicate, let alone provide a clear answer
as to the actual value of the property levied upon, it may reasonably
be assumed that it is equal to FEB’s principal claim. Be that as it
may, it was simply unjust for the trial court to base the amount of
the counter-bond on a figure beyond the P25.2M threshold, as later
reduced to P12.6M.
Calderon vs. IAC (1987) Suan
Jose Calderon purchased Luzon Brokerage Corp. and its 5
affiliate companies from George Schulze, et. al. 21 days after,
Bureau of Customs suspended the operations of LBC for failure to
pay customs taxes and duties incurred prior to the sale.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 45
Calderon filed complaint against private respondents to recover
amount of P1,475,840 with damages by reason of breach of
warranty. Also prayed for preliminary attachment alleging that
private respondents had deliberately and willfully concealed from
his knowledge such staggering liability of LBC for the purpose of
misleading him into buying the 6 companies; and that Schulze is
about to depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, Calderon
posted a surety bond of P1,475,840. Trial Court issued a writ of
preliminary attachment, whereupon properties of the private
respondents were attached and their bank deposits were garnished.
Subsequently, Calderon filed an amended complaint, alleging that
while the liabilities of LBC are reflected in its books, the aforesaid
amount was fraudulently withdrawn and misappropriated by
Schulze.
Private respondents filed a counterbond, whereupon the trial
court issued an order directing the sheriff to return all real and
personal properties already levied upon and to lift the notices of
garnishment issued in connection with the said attachment.
After trial, court dismissed the complaint, holding Calderon and
his surety jointly and severally liable to pay damages.
ISSUE: WON the writ of attachment was validly issued
No. That Calderon was clearly in bad faith when he asked for the
attachment is indicated by the fact that he failed to appear in court
to support his charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on the charges
was presented by him. Indeed, the CA found that Calderon failed to
produce any evidence in support of his sworn charge that Schulze
had deliberately and willfully concealed the liabilities of LBC. But
even though Calderon failed to prove his serious charges of fraud,
malice and bad faith, Schulze et. al. took it upon themselves to show
that they did not conceal or withhold from Calderon’s knowledge
the deposits made by Philippine Refining Co., Inc. with LBC and
that they did not withdraw and misappropriate the deposits made by
Philippine Refining Co., Inc. with LBC.
It is evident from the foregoing that the attachment was
maliciously sued out and that as already pointed out, Schulze was
not in bad faith.
While as a general rule, the liability on the attachment bond is
limited to actual damages, moral and exemplary damages may be
recovered where the attachment was alleged to be maliciously sued
out and established to be so.
Calderon’s contention: the dissolution of the attachment
extinguishes its obligation under the bond, for the basis of its
liability, which is wrongful attachment no longer exists, the
attachment bond having been rendered void & ineffective, by virtue
of Sec. 12, Rule 57.
Untenable. While Section 12, Rule 57 of the Rules of Court
provides that upon the filing of a counterbond, the attachment is
discharged or dissolved, nowhere is it provided that the attachment
bond is rendered void and ineffective upon the filing of
counterbond.
The liability of the attachment bond is defined in Section 4, Rule
57. It is clear from Sec. 4 that the responsibility of the surety arises
"if the court shall finally adjudge that the plaintiff was not entitled
thereto."
Liability attaches if the plaintiff is not entitled to the attachment
because the requirements entitling him to the writ are wanting, or if
the plaintiff has no right to the attachment because the facts stated
in his affidavit, or some of them, are untrue. It is, therefore, evident
that upon the dismissal of an attachment wrongfully issued, the
surety is liable for damages as a direct result of said attachment.
Surety’s contention: by filing a counterbond, private
respondents waived any defect or flaw in the issuance of the
attachment writ, for they could have sought, without need of filing
any counterbond, the discharge of the attachment if the same was
improperly or irregularly issued.
Untenable. Whether the attachment was discharged by either of
the 2 ways indicated in the law, i.e., by filing a counterbond or by
showing that the order of attachment was improperly or irregularly
issued, the liability of the surety on the attachment bond subsists
because the final reckoning is when "the Court shall finally adjudge
that the attaching creditor was not entitled" to the issuance of the
attachment writ in the first place.
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
like in the present case, would require presentation of evidence in a
full-blown trial on the merits and cannot easily be settled in a
pending incident of the case.
Security Pacific vs. Tria-Infante (2005)
26 Aug ’88: Reynaldo Anzures instituted a complaint against
Teresita Villaluz for violation of BP 22. An ex-parte motion for
preliminary attachment dated 6 Mar ’89 was filed by Anzures.
3 Jul ’89: TC issued order for the issuance of a writ of preliminary
attachment upon Anzures’ posting of a bond fixed at P2,123,400.
An attachment bond was thereafter posted by Anzures and
approved by the court. Thereafter, the sheriff attached certain
properties of Villaluz, which were duly annotated on the
corresponding certificates of title.
25 May ’90: TC rendered a Decision on the case acquitting
Villaluz of the crime charged, but held her civilly liable. Villaluz
appealed but CA affirmed the TC.
During pendency of the case with the SC, Villaluz posted a
counterbond of P2.5M issued by Security Pacific Assurance Corp.
Villaluz filed an Urgent Motion to Discharge Attachment.
SC affirmed in toto the decision of the CA. The decision became
final. Anzures moved for execution of judgment before the TC.
7 May ’99: TC issued a Writ of Execution.
Sheriff Buazon tried to serve the writ of execution upon Villaluz,
but the latter no longer resided in her given address. So the sheriff
sent a Notice of Garnishment upon Security Pacific at its office in
Makati City, by virtue of the counter-bond posted by Villaluz with
said insurance corporation in the amount of P2.5M. As reported by
the sheriff, Security Pacific refused to assume its obligation on the
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 46
counter-bond it posted for the discharge of the attachment made by
Villaluz.
Anzures filed a Motion to Proceed with Garnishment, which was
opposed by Security Pacific, contending that it should not be held
liable on the counter-attachment bond.
31 Mar 2000: TC granted the Motion to Proceed with
Garnishment. The sheriff issued a Follow-Up of Garnishment
addressed to the President/General Manager of Security Pacific
dated 3 Apr 2000.
7 Apr: Security Assurance filed a Petition for Certiorari with
Preliminary Injunction and/or Temporary Restraining Order with
CA, seeking the nullification of the TC’s order granting the
garnishment.
Security Pacific’s contention: Writ of attachment which was
earlier issued against the real properties of Villaluz was not
discharged. Since the writ was not discharged, then its liability did
not accrue. The alleged failure of this Court to approve the counter-
bond and to cause the discharge of the attachment against Villaluz
prevented the happening of a condition upon which the counter-
bond’s issuance was premised, such that petitioner should not be
held liable thereon. The mere filing of a counter-bond cannot
automatically discharge the attachment without first an order of
discharge and approval of the bond.
Anzures’ contention: The filing of the counter-bond by Villaluz
had already ipso facto discharged the attachment on the properties
and made Security Pacific liable on the bond. Upon acceptance of
the premium, there was already an express contract for surety
between Villaluz and Security Pacific in the amount of P2.5M to
answer for any adverse judgment/decision against Villaluz.
ISSUE: WON the attachment on the property of Villaluz was
discharged by the mere act of posting the counter-bond
Yes. Under the Rules, there are two (2) ways to secure the
discharge of an attachment. First, the party whose property has been
attached or a person appearing on his behalf may post a security.
Second, said party may show that the order of attachment was
improperly or irregularly issued. The first applies in the instant case.
It should be noted that we permitted Villaluz to file a counter-
attachment bond. On 17 February 1997, we required the Anzures to
comment on the sufficiency of the counter-bond posted by Villaluz.
It is quite palpable that the necessary steps in the discharge of an
attachment upon giving counter-bond have been taken. To require a
specific order for the discharge of the attachment when this Court,
in our decision, had already declared that Security Pacific is
solidarily bound with Villaluz would be mere surplusage.
During the pendency of this petition, a counter-attachment bond
was filed by Villaluz before this Court to discharge the attachment
earlier issued by the trial court. Said bond amounting to P2.5M was
furnished by Security Pacific Assurance, Corp. which agreed to bind
itself "jointly and severally" with Villaluz for "any judgment" that
may be recovered by Anzures against the former.
The filing of the counter-attachment bond by Villaluz has
discharged the attachment on the properties and made Security
Pacific liable on the counter-attachment bond. This can be gleaned
from the "Defendant’s Bond for The Dissolution Of Attachment",
which states that Security Pacific, as surety, in consideration of the
dissolution of the said attachment jointly and severally, binds itself
with Villaluz for any judgment that may be recovered by Anzures
against Villaluz.
The contract of surety is only between Villaluz and Security
Pacific. Security Pacific cannot escape liability by stating that a
court approval is needed before it can be made liable. This defense
can only be availed by Security Pacific against Villaluz but not
against third persons who are not parties to the contract of surety.
The petitioners hold themselves out as jointly and severally liable
without any conditions in the counter-attachment bond. Security
Pacific cannot impose requisites before it can be made liable when
the law clearly does not require such requisites to be fulfilled.
Benitez vs. IAC (1987)
6 Dec ’84: Casa Filipina Dev’t Corp. filed a complaint against
Helena Benitez for rescission of contract, plus damages, with prayer
for preliminary attachment. Complaint alleged:
Sometime 16 Apr ’83, Casa Filipina, a real estate corporation,
represented by Renato P. Dragon, and Benitez entered into a verbal
contract whereby Benitez allegedly agreed to undertake to
purchase/convey land for Casa Filipina in the total value of P1M
within the period of 4 months from receipt of the total amount.
On the same date, Casa Filipina tendered a check payment in the
amount of P500k in the name of Benitez.
26 Aug ’83: To complete the amount of P1M as allegedly agreed
upon, Casa Filipina issued again another check in the amount of
P500k. Both checks were deposited and credited in Benitez's bank
account. The 4-month period allegedly elapsed without Benitez
having purchased nor conveyed any real estate in the total value of
P1M in favor of Casa Filipina, but instead Benitez converted the
entrusted money for her own personal use in violation of her
fiduciary relationship with Casa Filipina and that despite repeated
demands for the refund or return of the aforementioned amount,
Benitez chose to ignore the same.
11 Dec ’85: Writ of attachment was granted by the court ex parte.
27 Dec: Clerk of Court issued a writ of preliminary attachment,
by virtue of which the Sheriff served notices of garnishment to the
Philippine Women's University, Taft Avenue, Manila, the Unlad
Development Resources Corporation and Bank of the Philippine
Islands, Unlad Condominium, Taft Avenue, Manila, thereby
garnishing the deposits, shares of stocks, salaries and other personal
property of Benitez.
30 Jan ’84: Benitez was advised by the Acting ROD of Quezon
City that a notice of levy was filed with the Registrar's Office
affecting two parcels of prime land at Mariposa Street.
21 Jan ’85: Benitez filed an answer with counterclaim and
opposition to the petition for issuance of a writ of preliminary
attachment. Benitez also filed an Urgent Motion to Discharge Writ
of Preliminary Attachment under Section 13, Rule 57, on the ground
that the same was improperly or irregularly issued.
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Benitez’s contention: Sometime in March 1983, Mr. Dragon,
acting for himself and Casa Filipina agreed to buy 10 hectares of
Benitez’s land in Dasmarinas, Cavite, for a price of P15/sqm or for
a total consideration of P1.5M; that it was agreed upon by the parties
that it is only upon full payment of the amount that delivery of the
property will be made; that Casa Filipina was not able to comply
with the obligation to pay the balance of P500k despite repeated
demands and instead filed the present action for rescission.
Benitez attached thereto the affidavit of her technical assistant
and attorney-in-fact Virginia Real, who alleged, among other things,
that she knows for a fact that the transaction between Benitez and
Dragon for Casa Filipina, was one of purchase and sale; that a copy
of TCT No. 9833 covering the land to be purchased was furnished
the office of Mr. Dragon on February 28, 1984; that Benitez is
willing and able to execute a DOAS in favor of Casa Filipina upon
full payment of the balance of P5k.
Motion was set for hearing on 25 Jan ’85. However, Casa Filipina
and its counsel failed to appear despite notice. Motion was deemed
submitted for resolution.
31 Jan ’85: Court denied Benitez’s motion to discharge the writ.
The court ruled: “the issue cannot be determined without adducing
evidence at the same time going into the merits of the case which in
the opinion of the Court could not be done at this stage of the
proceedings. Considering that the writ of preliminary attachment
was issued after having satisfied the requirements of the rules, the
same may not be lifted or discharged without the defendant filing a
counterbond.”
ISSUE: WON a counterbond is necessary and indispensable under
the circumstances before the subject writ may be recalled, quashed
and/or discharged
No. The attachment was granted by the lower court ex-parte under
Section 1(b), Rule 57, upon the allegation of Casa Filipina, that
Benitez, the defendant, had violated their alleged fiduciary
relationship and had unlawfully converted the amount of P1M for
her own use. Benitez promptly filed an urgent motion to discharge
writ of preliminary attachment for improper or irregular issuance,
supported by the affidavit of Virginia Real, who alleged that there
was no fiduciary relationship between Benitez and Casa Filipina
inasmuch as the transaction between them was one of sale of real
property.
As held in Villongco, the affidavit supporting the petition for the
issuance of the preliminary attachment may have been sufficient to
justify the issuance of the preliminary writ, but it cannot be
considered as proof of the allegations contained in the affidavit,
which are mere conclusions of law, not statement of facts.
Benitez’s Urgent Motion to Discharge Writ of Preliminary
Attachment was filed under Section 13, Rule 57. The last sentence
of said provision indicates that a hearing must be conducted by the
judge for the purpose of determining whether or not there really was
a defect in the issuance of the attachment.
It appears from the records that no hearing was conducted by the
lower court. Indeed, when the case was called for hearing, Casa
Filipina failed to appear and Benitez’s motion was considered
submitted for resolution.
Casa Filipina’s contention: Benitez did not file an affidavit in
support of her Urgent Motion to Discharge Attachment, as required
under Section 13 of Rule 57, hence, it was not necessary or
imperative that a hearing be held.
No merit. Attached to Benitez’s motion was the supporting
affidavit of Virginia L. Real, the technical assistant of Benitez. In
her affidavit, she stated that she had personal knowledge of the
transaction between Casa Filipina and Benitez; that Mr. Renato
Dragon, for himself and/or Casa Filipina, agreed to buy a portion
consisting of 10 hectares of a parcel of land belonging to Benitez in
Dasmarinas, Cavite, for the total price of P1.5M of which Casa
Filipina made a downpayment of P500k on April 16, 1983; and a
second payment of P500k on August 27, 1983; that Casa Filipina
having failed to pay the balance of P500k, the deed of sale could not
be executed.
The record amply supports Benitez’s version, as against Casa
Filipina’s allegation that Benitez had acted as agent in receiving the
money and converted the same for her own use in violation of the
fiduciary relationship existing between her and Casa Filipina. Casa
Filipina acknowledged the receipt of a xerox copy of TCT No. 9833
covering Benitez’s land in Dasmarinas, Cavite, and the check
voucher issued by Casa Filipina on April 16, 1983 showed that the
check for P500k was for "Payment for downpayment of lot to be
purchased" and the check voucher dated August 27, 1983 for P500k
was for "Second payment for lot to be purchased."
It was GAD on the part of Judge Rosario Veloso to deny
Benitez’s Urgent Motion to Discharge Writ of Preliminary
Attachment, without conducting a hearing and requiring Benitez to
substantiate its allegation of fraud. Neither can Judge avoid deciding
the issue raised in Benitez’s urgent motion by ruling that "the issue
cannot be determined without adducing evidence at the same time
going into the merits of the case." Having issued the writ of
preliminary attachment ex parte, it was incumbent on the respondent
court, upon proper challenge of its order, to determine whether or
not the same was improvidently issued. A preliminary attachment is
a rigorous remedy which exposes the debtor to humiliation and
annoyance, such that it should not be abused to cause unnecessary
prejudice and, if wrongfully issued on the basis of false allegation,
should at once be corrected.
A writ of attachment may be discharged pursuant to Section 13,
Rule 57, without the necessity of filing a cash deposit or
counterbond. The provisions of the aforesaid section grants an
aggrieved party relief from baseless and unjustifiable attachments
procured, among others, upon false allegations, without having to
file any cash deposit or counterbond.
Peroxide Phils. Corp. vs. CA (1991)
6 Dec ’82: BPI sued Peroxide Phils. Corp., Eastman Chemical
Industries, Inc., and the Sps. Mapuas for the collection of an
indebtedness of Peroxide wherein Eastman and the Mapuas bound
themselves to be solidarily liable.
Judge Pineda ordered the issuance of a writ of preliminary
attachment which was done on 7 Jan ’83, after BPI filed an
attachment bond in the amount of P32.7M. Peroxide’s proeprties
were then attached by the sheriff.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 48
11 Jan ’83: Eastman and the Mapuas moved to lift the attachment.
Motion was set for hearing on 14 Jan ’83. BPI was also granted up
to Jan 17 to file a written opposition and filed motion to set for
hearing.
17 Jan: Judge Pineda issued 2 orders. The first, denying BPI’s
motion for hearing. The second, lifting the writ of attachment as
prayed by Eastman and the Mapuas. BPI filed MR.
28 Nov: Judge Reyes issued an order with an explicit finding that
the attachment against the properties of Eastman and the Mapuas
was proper on the ground that they had disposed of their properties
in fraud of BPI. It also directed the sheriff to implement the writ of
attachment upon the finality of said order.
17 Dec ’84: TC issued an order granting BPI's motion for partial
reconsideration by finding, inter alia, that "considering the lapse of
more than a year since the Order of November 28, 1983 and the
nature and purpose of attachment, the writ of attachment revived in
the Order of November 28, 1983 and hereby re-affirmed may be
executed and implemented immediately," and directing the sheriff to
execute said writ which "is hereby declared immediately executory."
Peroxide sought the annulment of the above order.
29 May ’86: Judge Acosta issued an order suspending the writ of
attachment pursuant to an ex parte motion filed by Peroxide.
Thereafter, the SC ruled that the writ of preliminary attachment
issued was in accordance with law and jurisprudence.
30 Jul ’87: BPI filed a motion to order Bataan Pulp and Paper
Mills, Inc., jointly and severally with Peroxide, to deliver to the
sheriff the cash dividends declared on the garnished shares of stock
of Peroxide with said paper company, and to cite for contempt the
officers of Bataan for releasing and/or paying the dividends to
Peroxide in disregard of the notice of garnishment. This was
granted.
23 Aug ‘88: By virtue of the MR of Peroxide, the TC ruled that
the properties of Eastman and the Mapuas should not, pending
proper determination, be attached.
BPI’s contention: The discharge is illegal and void because the
order lifting the same is violative of Section 13, Rule 57 of the Rules
of Court which requires, among others, a prior hearing before the
judge may order the discharge of the attachment upon proof adduced
therein of the impropriety or irregularity in the issuance of the writ
and the defect is not cured forthwith
ISSUE: WON the discharge of the writ was proper
No. It is true that Peroxide's motion to discharge was set for
hearing with notice to BPI but it is likewise true that counsel for the
latter asked for an opportunity to file a written opposition and for a
hearing to which he asked that Edmund O. Mapua be subpoenaed.
Said counsel was allowed to file a written opposition which he
seasonably did, but Judge Pineda denied both the requested
subpoena and hearing and, instead, granted the discharge of the
attachment. These are the bases for BPI's complaint that it was
denied due process.
Now, it is undeniable that when the attachment is challenged for
having been illegally or improperly issued, there must be a hearing
with the burden of proof to sustain the writ being on the attaching
creditor. That hearing embraces not only the right to present
evidence but also a reasonable opportunity to know the claims of the
opposing parties and meet them. The right to submit arguments
implies that opportunity, otherwise the right would be a barren one.
It means a fair and open hearing. And, as provided by Section 13 of
Rule 57, the attaching creditor should be allowed to oppose the
application for the discharge of the attachment by counter-affidavit
or other evidence, in addition to that on which the attachment was
made.
Respondent court was, therefore, correct in holding that the
attachment of the properties of Eastman and the Mapuas remained
valid from its issuance since the judgment had not been satisfied,
nor has the writ been validly discharged either by the filing of a
counterbond or for improper or irregular issuance.
We likewise affirm the findings and conclusion of respondent
court that the order of Judge Acosta, dated May 29, 1986,
suspending the writ of attachment was in essence a lifting of said
writ which order, having likewise been issued ex parte and without
notice and hearing in disregard of Section 13 of Rule 57, could not
have resulted in the discharge of the attachment. Said attachment
continued unaffected by the so-called order or suspension and could
not have been deemed inefficacious until and only by reason of its
supposed restoration in the order of December 16, 1987 of Judge
Gerona. Under the facts of this case, the ex parte discharge or
suspension of the attachment is a disservice to the orderly
administration of justice and nullifies the underlying role and
purpose of preliminary attachment in preserving the rights of the
parties pendente lite as an ancillary remedy.
We, therefore, sustain the position of BPI that the CA, in its
judgment presently under challenge, did not err in upholding the
continuing and uninterrupted validity and enforceability of the writ
of preliminary attachment issued since the order of discharge and,
later, the order of suspension of the trial court were void and could
not have created the operational lacuna in its effectivity as claimed
by Peroxide. Further, the cancellation of the annotations regarding
the levy on attachment of Peroxide's properties, procured by the
sheriff pursuant to the aforesaid invalid orders, is likewise a nullity
and another levy thereon is not required. We observe, however, that
the records do not disclose the lifting of the levy on the Bataan
shares of Eastman and the Mapuas and on their real properties in
Caloocan City.
We reject Peroxide's theory that the preliminary attachment is not
applicable to Eastman and the Mapuas. The writ was issued in Civil
Case No. 48849 against the properties of all the petitioners herein.
Eastman and the Mapuas moved for the discharge of the attachment
on the ground that they were not disposing of their properties in
fraud of creditors, but they did not raise the issue of their liabilities
as being allegedly those of mere guarantors. They did so only when
this Court resolved on October 27, 1986 that the writ of preliminary
attachment was issued in accordance with law and applicable
jurisprudence.
Also, what was considered in AC-G.R. SP No. 05043 and
thereafter in G.R. No. 74558 was the matter of the validity of the
attachment against Eastman and the Mapuas, considering that, even
before the proceedings had reached the IAC in AC-G.R. SP No.
05043, BPI no longer had any attachment against Peroxide whose
only remaining asset in Bulacan had been levied upon and acquired
by its other creditors when Judge Pineda lifted the attachment
obtained by BPI.
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Thus, as correctly posited by BPI, before the determination of the
liability of Eastman and the Mapuas after trial on the merits, the writ
of preliminary attachment may properly issue. Even assuming that
when Eastman and the Mapuas asked for the lifting of the
attachment they presented evidence that they were guarantors and
not sureties of Peroxide, the trial court could not have admitted such
evidence or ruled upon that issue since the same could be entertained
only after a full-blown trial and not before then. Otherwise, we
would have the procedural absurdity wherein the trial court would
be forced to decide in advance and preempt in an auxiliary
proceeding an issue which can and should be determined only in a
trial on the merits.
The proceeding in the issuance of a writ of preliminary
attachment, as a mere provisional remedy, is ancillary to an action
commenced at or before the time when the attachment is sued out.
Accordingly, the attachment does not affect the decision of the case
on the merits, the right to recover judgment on the alleged
indebtedness and the right to attach the property of the debtor being
entirely separate and distinct. As a rule, the judgment in the main
action neither changes the nature nor determines the validity of the
attachment. At any rate, whether said petitioners are guarantors or
sureties, there exists a valid cause of action against them and their
properties were properly attached on the basis of that indubitable
circumstance.
Filinvest Credit Corp. vs. Relova (1982)
2 Aug ’77: Filinvest Credit Corp. filed a complaint against Rallye
Motor Co. and Ernesto Salazar for collection of sum of money with
damages and preliminary writ of attachment.
It appears that in payment of a motor vehicle, Mazda Diesel
School Bus, Salazar executed a P/N dated May 5, 1977 in favor of
Rallye for the amount of P99,828. To secure the note, Salazar also
executed in favor of Rallye a deed of chattel mortgage over the
above described motor vehicle.
7 May ’77: Rallye, for valuable consideration, assigned all its
rights, title and interest to the aforementioned note and mortgage to
Filinvest. Thereafter, Filinvest came to know that Rallye had not
delivered the motor vehicle subject of the chattel mortgage to
Salazar, "as the said vehicle had been the subject of a sales
agreement between the codefendants." Salazar defaulted in
complying with the terms and conditions of the aforesaid P/N and
chattel mortgage. Rallye, as assignor who guaranteed the validity of
the obligation, also failed and refused to pay Filinvest despite
demand.
According to Filinvest, the defendants intentionally, fraudulently
and with malice concealed from it the fact that there was no vehicle
delivered under the documents negotiated and assigned to it,
otherwise, it would not have accepted the negotiation and
assignment of the rights and interest covered by the promissory note
and chattel mortgage.
Praying for a writ of preliminary attachment, Filinvest submitted
with its complaint the affidavit of one Gil Mananghaya, which
states: “That for failure to pay a stipulated installment, and the fact
that the principal debtor, Ernesto Salazar, and the assignor, Rallye
Motor Co., Inc. concealed the fact that there was really no motor
vehicle mortgaged under the terms of the Promissory Note and the
Chattel Mortgage, the entire amount of the obligation stated in the
Promissory Note becomes due and demandable, which Ernesto
Salazar and Rallye Motor Co., Inc. failed and refused to pay, so
much so that a sufficient cause of action really exists for Filinvest
Credit Corporation to institute the corresponding complaint against
said person and entity…” (under Sec. 1(d), Rule 57, ROC)
17 Aug ’77: Judge Coquia granted the prayer for a writ and
allowing issuance upon Filinvest’s filing of a bond in the sum of
P97k. In the meantime, summons were issued to the defendants.
11 Dec ’78: Salazar prayed that the writ of preliminary
attachment issued ex parte and implemented solely against his
property be recalled and/or quashed.
Salazar’s contention: When he signed the promissory note and
chattel mortgage on May 5, 1977 in favor of Rallye, Filinvest was
not yet his creditor or obligee, therefore, he could not be said to have
committed fraud when he contracted the obligation on May 5, 1977.
Added that as the motor vehicle which was the object of the chattel
mortgage and the consideration for the P/N had admittedly not been
delivered to him by Rallye, his repudiation of the loan and mortgage
is more justifiable.
2 Feb ’79: Judge Relova ordered the dissolution and setting aside
of the writ and the return to Salazar of all his properties attached by
the Sheriff, ruling that: “When the incident was called for hearing,
the Court announced that, as a matter of procedure, when a motion
to quash a writ of preliminary attachment is filed, it is incumbent
upon the plaintiff to prove the truth of the allegations which were
the basis for the issuance of said writ. In this hearing, counsel for
the plaintiff manifested that he was not going to present evidence in
support of the allegation of fraud. He maintained that it should be
the defendant who should prove the truth of his allegation in the
motion to dissolve the said writ. The Court disagrees.”
Filinvest filed MR and was allowed to adduce evidence to prove
that Salazar committed fraud as alleged in the affidavit of
Mananghaya. However, Judge Relova denied the motion, ruling
that: “While it is true that the plaintiff may have been defrauded in
this transaction, it having paid Rallye Motor the amount of the
promissory note, there is no evidence that Ernesto Salazar had
connived or in any way conspired with Rallye Motor in the
assignment of the promissory note to the plaintiff, because of which
the plaintiff paid Rallye Motor the amount of the promissory note.
Defendant Ernesto Salazar was himself a victim of fraud. Rallye
Motor was the only party which committed it.”
Filinvest’s contention: Court should not have dissolved the writ
for failure of Salazar to make a cash deposit or to file a counterbond.
Salazar’s contention: the subject writ of preliminary attachment
was improperly or irregularly issued in the first place, in that it was
issued ex parte without notice to him and without hearing.
ISSUE: WON the issuance of the writ was improper for being
issued ex parte without notice to Salazar and without hearing
No. Nothing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of
attachment. A writ of attachment may be issued ex parte. Sections 3
and 4, Rule 57, merely require that an applicant for an order of
attachment file an affidavit and a bond: the affidavit to be executed
by the applicant himself or some other person who personally knows
the facts and to show that (1) there is a sufficient cause of action, (2)
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 50
the case is one of those mentioned in Section 1 of Rule 57, (3) there
is no other sufficient security for the claim sought to be enforced,
and (4) the amount claimed in the action is as much as the sum for
which the order is granted above all legal counterclaims; and the
bond to be "executed to the adverse party in an amount fixed by the
judge, not exceeding the applicant's 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.
We agree, however, with Salazar’s contention that a writ of
attachment may be discharged without the necessity of filing the
cash deposit or counter-bond required by Section 12, Rule 57, cited
by Filinvest. Sec. 13 grants an aggrieved party relief from baseless
and unjustifiable attachments procured, among others, upon false
allegations, without having to file any cash deposit or counter-bond.
In the instant case, the order of attachment was granted upon the
allegation of Filinvest that Rallye, the defendants, had committed
"fraud in contracting the debt or incurring the obligation upon which
the action is brought," covered by Section 1(d), Rule 57. Subsequent
to the issuance of the attachment order on August 17, 1977, Salazar
filed in the lower court an "Urgent Motion for the Recall and
Quashal of the Writ of Preliminary Attachment on (his property)"
dated December 11, 1978 precisely upon the assertion that there was
"absolutely no fraud on his part" in contracting the obligation sued
upon by petitioner. Salazar was in effect claiming that Filinvest’s
allegation of fraud was false, that hence there was no ground for
attachment, and that therefore the attachment order was "improperly
or irregularly issued."
This Court was held that "if the grounds upon which the
attachment was issued were not true, the defendant has his remedy
by immediately presenting a motion for the dissolution of the same.
We find that Salazar’s abovementioned Urgent Motion was filed
under Section 13, Rule 57.
The last sentence of the said provision, however, indicates that a
hearing must be conducted by the judge for the purpose of
determining whether or not there reality was a defect in the issuance
of the attachment. The question is: At this hearing, on whom does
the burden of proof lie?
Under the circumstances of the present case, it should be Filinvest
(attaching creditor), who should prove his allegation of fraud. This
pronouncement finds support in the first sentence of Section 1, Rule
131, which states that: "Each party must prove his own affirmative
allegations." The last part of the same provision also provides that:
"The burden of proof lies on the party who would be defeated if no
evidence were given on either side."
It must be borne in mind that in this jurisdiction, fraud is never
presumed. Fraus est idios et non praesumenda. Indeed, private
transactions are presumed to have been fair and regular. Likewise,
written contracts such as the documents executed by the parties in
the instant case, are presumed to have been entered into for a
sufficient consideration.
It appears from the records that both parties did in fact adduce
evidence to support their respective claims. Filinvest attached a
Memorandum in its Petition. After Salazar filed his Comment to the
Petition, Filinvest filed a Reply, attaching another copy of the
Memorandum. The Memorandum goes on to state that Filinvest
presented as its witness defendant Salazar himself who testified that
he signed Exhibits A, B, C, D, E and G; that he is a holder of a
master's degree in Business Administration and is himself a very
careful and prudent person; that he does not sign post-dated
documents; that he does not sign contracts which do not reflect the
truth or which are irregular on their face, that he intended to
purchase a school bus from Rallye Motors Co., Inc. from whom he
had already acquired one unit; that he had been dealing with Abel
Sahagun, manager of Rallye, whom he had known for a long time
that he intended to purchase the school bus on installment basis so
he applied for financing with the Filinvest; that he knew his
application was approved; that with his experience as a business
executive, he knew that under a financing arrangement, upon
approval of his application, when he signed Exhibits A, B, C, D, E
and G, the financing company (Filinvest) would release the
proceeds of the loan to Rallye and that he would be obligated to pay
the installments to Filinvest; that he signed Exhibits A, B and C
simultaneously; that it was his wife who was always transacting
business with Rallye and Abel Sahagun.
Considering the claim of Salazar that Rallye Motors did not
deliver the motor vehicle to him, it follows that the Invoice for the
motor vehicle and the Receipt for its delivery and both signed by
Salazar were fictitious. It also follows that the P/N to pay the price
of the undelivered vehicle was without consideration and therefore
fake; the Chattel Mortgage over the non-existent vehicle was
likewise a fraud; the registration of the vehicle in the name of
Salazar was a falsity and the assignment of the promissory note by
Rallye with the conforme of Salazar in favor of Filinvest over the
undelivered motor vehicle was fraudulent and a falsification.
Salazar, knowing that no motor vehicle was delivered to him by
Rallye, executed and committed all the above acts as shown the
exhibits enumerated above. He agreed and consented to the
assignment by Rallye of the fictitious promissory note and the
fraudulent chattel mortgage, affixing his signature thereto, in favor
of Filinvest who, in the ordinary course of business, relied on the
regularity and validity of the transaction. Salazar had previously
applied for financing assistance from Filinvest and his application
was approved, thus he negotiated for the acquisition of the motor
vehicle in question from Rallye Motors. Since he claimed that the
motor vehicle was not delivered to him, then he was duty-bound to
reveal that to Filinvest, it being material in inducing the latter to
accept the assignment of the promissory note and the chattel
mortgage.
The failure of Salazar to disclose the material fact of non-delivery
of the motor vehicle, there being a duty on his part to reveal them,
constitutes fraud. Therefore, the lower court committed GAD in
dissolving and setting aside the writ.
Uy Kimpang vs. Javier (1937)
8 Aug ’33: A writ of execution was issued by CFI Antique to
enforce payment to Uy Kimpang of the sum of P6,678.84 plus
interests and costs, which Vicente Javier, et.al. were sentenced to
pay.
The sheriff levied upon the seven parcels of land belonging to the
Ramona Majandog and enumerated in the return of said sheriff of
September 9, 1933 for the purpose of selling, as he in fact later sold,
them at public auction to the highest bidder who was found in the
person of Uy Cay Ju, manager of the Uy Kimpang & Co., for the
sum of only P1,730.
In view of the fact that this sum was not sufficient to cover the
full value of the judgment and that the defendants failed to deliver
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 51
to the sheriff the properties which were released from the attachment
by the virtue of the obligation which, on December 29, 1925 and the
approval of the court, they executed jointly with their sureties
Severino Magbanua and Juan Autajay. Uy Kimpang in its motion of
January 23, 1934 moved the court to again order the execution of
the aforesaid judgment, but this time against the properties of two
sureties.
Surety Autajay’s contentions: (1) That the attachment of the
properties of the defendants was null and void because it does not
appear that they were served with a copy of the writ ordering the
same; (2) that said attachment was not inscribed in the registry of
properties; (3) that Autajay was released from his obligation as
surety because his undertaking had been cancelled when the court,
in its order of February 15, 1930, permitted him to withdraw
therefrom; (4) that the undertaking should in any event be enforced
exclusively against the other surety Magbanua inasmuch as he did
not withdraw therefrom.
18 Jul ’34: Lower court denied Uy Kimpang’s motion, ruling that
the justice of the peace of Antique had no power to issue the writ,
that the issuance of the writ by the clerk was illegal because only
justices and judges of the CFI may issue such writs, no valid
attachment because the writ was not signed by any judge and the
obligation executed by Uy Kimpang was not approved by the court,
etc.
ISSUE: WON the defects of the writ is sufficient to release the
attachment
No. It should be noted that the sheriff, upon receipt of the writ,
attached the properties belonging to defendants and enumerated in
the sheriff's return, the assessed value of which was noted at the
bottom of said return. On the same day, December 29, 1925, the
defendants executed a counter-obligation in the sum of P9,500 with
a view to dissolving the attachment levied upon their properties.
Said counterbond, which was approved on the same date by the
justice of the peace who issued the order of attachment, was signed
by all the defendant and their sureties Autajay and Magbanua who
bound themselves jointly and severally thereunder.
There is no doubt that, under the provisions of sections 425, 426
and 427 of Act No. 190, only the justice, judges of First Instance,
and justices of the peace or municipal judges may issue an order of
attachment when prayed for, provided the legal requisites are
present.
In the case at bar, all the requirements of the law were complied
with. Inasmuch as the order of December 24, 1925 under which the
questioned writ of attachment was issued, was entered by a
competent judge, it cannot be alleged that said writ was a mere
capricious act of the clerk. On the contrary, it may and should be
inferred that the writ was issued in strict compliance with a perfectly
valid order given to him. The law does not provide or state that the
writs of attachment must be issued by the very justice or judge who
is to authorize it; it simply determines the judicial authority who
shall have the power to grant an attachment.
Even supposing that the writ in dispute is defective because it was
not signed by the judge who authorized its issuance, it is now too
late to raise the question after the same was accepted and believed
to be valid not only by the defendants but by their sureties. It is
noteworthy that in their counter-obligation, they made it understood
that they were aware of the issuance of a writ of attachment against
the defendants; that the properties of the latter had been attached by
the sheriff; that all wanted or at least prayed that said attachment be
discharged; and that they offered to execute, as in fact they
immediately did execute, the counter-obligation required.
The general rule is that "irregularities and defects in attachment
or garnishment proceedings which render the attachment merely
voidable and not void, are deemed to be waived unless promptly
taken advantage of by appropriate mode of raising objection
thereto." Irregularities in affidavit and undertaking or in proceedings
to procure attachment, if waived in attachment suit, cannot be taken
advantage of by sureties in collateral proceedings on undertaking
given to secure release of attachment.
It must be remembered that the defendants and the sureties not
only failed to object to the procedure followed by the clerk but, as
already stated, executed the counterobligation required by law for
discharge of the attachment levied upon the properties of the
defendant, and that Autajay and Magbanua were the ones who
signed the counterobligation as sureties and submitted the same to
the justice of the peace of the capital for approval. It must also be
remembered that in all the motions which they subsequently filed in
these proceedings, the said sureties confined themselves to the
request that they be permitted to withdraw from their obligation for
the reason that it was against their interest to continue being sureties
of the defendants.
Inasmuch as both the defendants and the sureties, by executing
the counterobligation required by law for the discharge of the
attachment, had accepted the obligation filed by the plaintiff with
the justice of the peace of the capital for the issuance of the writ of
attachment against the defendants, it is now too late and futile to
allege that the said obligation is invalid for lack of approval by the
judge. They are estopped from doing so by their own acts, inasmuch
as their failure to question the said obligation at the proper time
constitutes a waiver of their right. One who has any objection to the
sufficiency or validity of an obligation in attachment proceedings,
should record the same before executing the counterobligation
required for the discharge of the attachment; otherwise, it will be
understood that he does not question, or that he renounces his right
to question, the sufficiency or validity of the said obligation.
There is no importance in the fact that it does not appear in the
record that the court had dissolved, after the approval of the
aforesaid counterobligation, the attachment levied upon the
properties of the defendants. It must be assumed that the court
discharged it by virtue of the said counterobligation; otherwise, the
reason for approving it cannot be explained, and said approval
would have no finality.
Ching vs. CA
Facts:
The Philippine Blooming Mills Company, Inc. (PBMCI) PBMCI
defaulted in the payment of all its loans. Hence, on August 21, 1981,
the ABC filed a complaint for sum of money with prayer for a writ
of preliminary attachment against the PBMCI to collect the
₱12,612,972.88 exclusive of interests, penalties and other bank
charges. Impleaded as co-defendants in the complaint were Alfredo
Ching, Emilio Tañedo and Chung Kiat Hua in their capacity as
sureties of the PBMCI.
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In its application for a writ of preliminary attachment, the ABC
averred that the "defendants are guilty of fraud in incurring the
obligations upon which the present action is brought in that they
falsely represented themselves to be in a financial position to pay
their obligation upon maturity thereof." Its supporting affidavit
stated, inter alia, that the "[d]efendants have removed or disposed of
their properties, or [are] ABOUT to do so, with intent to defraud
their creditors."
On July 26, 1983, the deputy sheriff of the trial court levied on
attachment the 100,000 common shares of Citycorp stocks in the
name of Alfredo Ching.
On November 16, 1993, Encarnacion T. Ching, assisted by her
husband Alfredo Ching, filed a Motion to Set Aside the levy on
attachment. She alleged inter alia that the 100,000 shares of stocks
levied on by the sheriff were acquired by her and her husband during
their marriage out of conjugal funds after the Citycorp Investment
Philippines was established in 1974.
Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner
Alfredo Ching for the account of PBMCI did not redound to the
benefit of the conjugal partnership. She, likewise, alleged that being
the wife of Alfredo Ching, she was a third-party claimant entitled to
file a motion for the release of the properties.
RTC: Lifting the writ of preliminary attachment on the shares of
stocks and ordering the sheriff to return the said stocks to the
petitioners.
CA: rendered judgment granting the petition and setting aside the
assailed orders of the trial court contending that the petitioner
Encarnacion T. Ching was not a party in the trial court; hence, she
had no right of action to have the levy annulled with a motion for
that purpose.
Legal Issue: Whether or not third parties can file motion to quash
the writ of preliminary attachment.
Held:
YES. ENCARNACION CHING had the (1) right to file the
motion to set aside the writ, although she was not a party in the
Civil Case.
In Ong v. Tating, the SC held that the sheriff may attach only those
properties of the defendant against whom a writ of attachment has
been issued by the court. When the sheriff erroneously levies on
attachment and seizes the property of a third person in which the
said defendant holds no right or interest, the superior authority of
the court which has authorized the execution may be invoked by the
aggrieved third person in the same case.
Upon application of the third person, the court shall order a
summary hearing for the purpose of determining whether the sheriff
has acted rightly or wrongly in the performance of his duties in the
execution of the writ of attachment, more specifically if he has
indeed levied on attachment and taken hold of property not
belonging to the plaintiff.
The aggrieved third party may also avail himself of the (2) remedy
of "terceria" by executing an affidavit of his title or right of
possession over the property levied on attachment and serving the
same to the office making the levy and the adverse party.
Such party may also file (3) an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which
should be a totally separate and distinct action from the former case.
The above-mentioned remedies (Motion to Set Aside, “Terceria”,
and Action to nullify the levy with Damages) are cumulative and
any one of them may be resorted to by one third-party claimant
without availing of the other remedies.
In this case, the petitioner-wife filed her motion to set aside the levy
on attachment of the 100,000 shares of stocks in the name of
petitioner-husband claiming that the said shares of stocks were
conjugal in nature; hence, not liable for the account of her husband
under his continuing guaranty and suretyship agreement with the
PBMCI. The petitioner-wife had the right to file the motion for said
relief.
Uy vs. CA
FACTS:
On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed a
complaint against Sy Yuk Tat for sum of money, damages, with
preliminary attachment. On the same day, upon plaintiff filing a
bond of P232,780.00 said court issued a writ of preliminary
attachment and appointed Deputy Sheriff Nilo S. Cabang (co-
petitioner herein) as Special Sheriff to implement the writ. On the
following day, April 7, 1982, petitioner Cabang began to implement
the writ of preliminary attachment .
On April 12, 1982, a third party claim was filed by Wilson Ting and
Yu Hon (private respondents herein) in the same Civil Case,
addressed to petitioner Cabang asserting ownership over the
properties attached. The third party claimants and Yu filed a motion
to dissolve the aforementioned writ of preliminary attachment in the
same Civil Case No. Q-34782, alleging among others, that being the
absolute owners of the personal properties listed in their third party
claim which were illegally seized from them they were willing to
file a counterbond for the return thereof. Such motion was opposed
by plaintiff Uy.
Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an
ex-parte motion for writ of execution which was granted the
following day, June 8, 1982.
On the same day (June 7, 1982) plaintiff Uy filed his exparte motion
for writ of execution he and Cabang filed a motion to quash or
dissolve status quo order in the case a quo as defendants therein on
the ground that the court "has no jurisdiction to interfere with
properties under custodia legis on orders of a court of co-equal and
co-ordinate jurisdiction" and that plaintiffs' complaint is not for
recovery of properties in question.
On August 23, 1982, plaintiffs Ting and Yu Hon filed a motion for
preliminary attachment. Acting on such motion the court a quo, on
August 24, 1982, issued the disputed order granting the writ of
preliminary attachment prayed for by the plaintiffs. Defendant Uy
filed an urgent motion to quash and/or dissolve preliminary
attachment which motion was opposed by plaintiffs Ting and Yu
Hon.
ISSUE:
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W/N the properties levied and seized by virtue of a writ of
attachment and later by a writ of execution, were under custodia
legis and therefore not subject to the jurisdiction of another co-equal
court where a third party claimant claimed ownership of the same
properties.
RULING:
The issue has long been laid to rest in the case of Manila Herald
Publishing Co. Inc. v. Ramos where the Court filed that while it is
true that property in custody of the law may not be interfered with,
without the permission of the proper court, this rule is confined to
cases where the property belongs to the defendant or one in which
the defendant has proprietary interests. But when the Sheriff, acting
beyond the bounds of his office seizes a stranger's property, the rule
does not apply and interference with his custody is not interference
with another court's order of attachment.
The power of the court in the execution of judgments extends only
over properties unquestionably belonging to the judgment debtor.
The levy by the sheriff of a property by virtue of a writ of attachment
may be considered as made under the authority of the court only
when the property levied upon belongs to the defendant. If he
attaches properties other than those of the defendant, he acts beyond
the limits of this authority. The court issuing a writ of execution is
supposed to enforce its authority only over properties of the
judgment debtor. Should a third party appear to claim the property
levied upon by the sheriff, the procedure laid down by the Rules is
that such claim should be the subject of a separate and independent
action.
The sale of the disputed properties at the public auction, in
satisfaction of a judgment of a co-equal court does not render the
case moot and academic. The undeviating ruling of this Court in
such cases is that attachment and sale of properties belonging to a
third person is void because such properties cannot be attached and
sold at public auction for the purpose of enforcing a judgment
against the judgment debtor.
PAL vs. CA (1990)
8 Nov ’67: Amelia Tan filed a complaint for damages against
PAL. Judge Morfe rendered judgment on 1972 in favor of Tan and
against PAL. PAL filed its appeal but CA ruled against it,
condemning it to pay Tan the sum of P25k as damages and P5k as
attorney’s fee.
31 May ’77: Judgment became final and executory.
2 Sep: re Tan filed a motion praying for the issuance of a writ of
execution of the judgment rendered by CA.
11 Oct: TC issued its order of execution with the corresponding
writ in favor of Tan. The writ was duly referred to Deputy Sheriff
Emilio Z. Reyes of Branch 13 of CFI Manila for enforcement.
11 Feb ’78: Tan moved for issuance of an alias writ of execution.
1 Mar: PAL filed an opposition to the motion for the issuance of
an alias writ of execution, stating that it had already fully paid its
obligation to Tan through the deputy sheriff of the respondent court,
Emilio Z. Reyes, as evidenced by cash vouchers properly signed and
receipted by said Emilio Z. Reyes.
3 Mar: CA denied the issuance of the alias writ for being
premature, ordering the executing sheriff Reyes to appear with his
return and explain the reason for his failure to surrender the amounts
paid to him by PAL. However, the order could not be served upon
Deputy Sheriff Reyes who had absconded or disappeared.
28 Mar: A motion for the issuance of a partial alias writ of
execution was filed by Tan.
19 Apr: Tan filed a motion to withdraw "Motion for Partial Alias
Writ of Execution" with Substitute Motion for Alias Writ of
Execution.
18 May: PAL received a copy of the first alias writ of execution
issued on the same day directing Special Sheriff del Rosario to levy
on execution in the sum of P25k with legal interest thereon from
July 20, 1967 when Tan made an extra-judicial demand through a
letter. Levy was also ordered for the further sum of P5k awarded as
attorney's fees.
23 May: PAL filed an urgent motion to quash the alias writ of
execution, stating that no return of the writ had as yet been made by
Deputy Sheriff Reyes and that the judgment debt had already been
fully satisfied by PAL.
26 May: Del Rosario served a notice of garnishment on the
depository bank of PAL, Far East Bank and Trust Company,
Rosario Branch, Binondo, Manila, through its manager and
garnished the PAL’s deposit in the said bank in the total amount of
P64,408.00 as of May 16, 1978.
ISSUE: Can an alias writ of execution be issued without prior return
of the original writ by the implementing officer?
Yes. A judgment cannot be rendered nugatory by the
unreasonable application of a strict rule of procedure. Vested rights
were never intended to rest on the requirement of a return, the office
of which is merely to inform the court and the parties, of any and all
actions taken under the writ of execution. Where such information
can be established in some other manner, the absence of an
executing officer's return will not preclude a judgment from being
treated as discharged or being executed through an alias writ of
execution as the case may be. More so, as in the case at bar. Where
the return cannot be expected to be forthcoming, to require the same
would be to compel the enforcement of rights under a judgment to
rest on an impossibility, thereby allowing the total avoidance of
judgment debts. So long as a judgment is not satisfied, a plaintiff is
entitled to other writs of execution.
ISSUE: WON the judgment has been fully satisfied / Did the
payment made to the absconding sheriff by check in his name
operate to satisfy the judgment debt?
No. Tan who has won her case should not be adjudged as having
sued in vain. To decide otherwise would not only give her an empty
but a pyrrhic victory. It should be emphasized that under the initial
judgment, Amelia Tan was found to have been wronged by PAL.
She filed her complaint in 1967. After 10 years of protracted
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 54
litigation in the CFI and the CA, Ms. Tan won her case. It is now
1990.
Almost 22 years later, Ms. Tan has not seen a centavo of what the
courts have solemnly declared as rightfully hers. Through
absolutely no fault of her own, Ms. Tan has been deprived of what,
technically, she should have been paid from the start, before 1967,
without need of her going to court to enforce her rights. And all
because PAL did not issue the checks intended for her, in her name.
Under the peculiar circumstances of this case, the payment to the
absconding sheriff by check in his name did not operate as a
satisfaction of the judgment debt. In general, a payment, in order to
be effective to discharge an obligation, must be made to the proper
person. Article 1240 states: “Payment shall be made to the person
in whose favor the obligation has been constituted, or his successor
in interest, or any person authorized to receive it.”
Thus, payment must be made to the obligee himself or to an agent
having authority, express or implied, to receive the particular
payment Payment made to one having apparent authority to receive
the money will, as a rule, be treated as though actual authority had
been given for its receipt. Likewise, if payment is made to one who
by law is authorized to act for the creditor, it will work a discharge.
The receipt of money due on a judgment by an officer authorized by
law to accept it will, therefore, satisfy the debt.
The theory is where payment is made to a person authorized and
recognized by the creditor, the payment to such a person so
authorized is deemed payment to the creditor. Under ordinary
circumstances, payment by the judgment debtor in the case at bar,
to the sheriff should be valid payment to extinguish the judgment
debt.
There are circumstances in this case, however, which compel a
different conclusion. The payment made by PAL to the absconding
sheriff was not in cash or legal tender but in checks. The checks
were not payable to Amelia Tan or Able Printing Press but to the
absconding sheriff.
In the absence of an agreement, either express or implied,
payment means the discharge of a debt or obligation in money and
unless the parties so agree, a debtor has no rights, except at his own
peril, to substitute something in lieu of cash as medium of payment
of his debt. Consequently, unless authorized to do so by law or by
consent of the obligee a public officer has no authority to accept
anything other than money in payment of an obligation under a
judgment being executed. Strictly speaking, the acceptance by the
sheriff of PAL’s checks, in the case at bar, does not, per se, operate
as a discharge of the judgment debt.
Since a negotiable instrument is only a substitute for money and
not money, the delivery of such an instrument does not, by itself,
operate as payment. A check, whether a manager's check or ordinary
cheek, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt by
the obligee or creditor. Mere delivery of checks does not discharge
the obligation under a judgment. The obligation is not extinguished
and remains suspended until the payment by commercial document
is actually realized.
If bouncing checks had been issued in the name of Amelia Tan
and not the Sheriff's, there would have been no payment. After
dishonor of the checks, Ms. Tan could have run after other
properties of PAL. The theory is that she has received no value for
what had been awarded her. Because the checks were drawn in the
name of Emilio Z. Reyes, neither has she received anything. The
same rule should apply.
PAL’s contention: If it had paid cash to Sheriff Reyes, there
would have been payment in full legal contemplation.
In the first place, PAL did not pay in cash. It paid in cheeks. And
second, payment in cash always carries with it certain cautions.
Nobody hands over big amounts of cash in a careless and inane
manner. Mature thought is given to the possibility of the cash being
lost, of the bearer being waylaid or running off with what he is
carrying for another. Payment in checks is precisely intended to
avoid the possibility of the money going to the wrong party. The
situation is entirely different where a Sheriff seizes a car, a tractor,
or a piece of land. Logic often has to give way to experience and to
reality. Having paid with checks, PAL should have done so
properly.
Payment in money or cash to the implementing officer may be
deemed absolute payment of the judgment debt but the Court has
never, in the least bit, suggested that judgment debtors should settle
their obligations by turning over huge amounts of cash or legal
tender to sheriffs and other executing officers. Payment in cash
would result in damage or interminable litigations each time a
sheriff with huge amounts of cash in his hands decides to abscond.
As a protective measure, therefore, the courts encourage the
practice of payments by cheek provided adequate controls are
instituted to prevent wrongful payment and illegal withdrawal or
disbursement of funds. If particularly big amounts are involved,
escrow arrangements with a bank and carefully supervised by the
court would be the safer procedure. Actual transfer of funds takes
place within the safety of bank premises. These practices are
perfectly legal. The object is always the safe and incorrupt execution
of the judgment.
It is, indeed, out of the ordinary that checks intended for a
particular payee are made out in the name of another. Making the
checks payable to the judgment creditor would have prevented the
encashment or the taking of undue advantage by the sheriff, or any
person into whose hands the checks may have fallen, whether
wrongfully or in behalf of the creditor. The issuance of the checks
in the name of the sheriff clearly made possible the misappropriation
of the funds that were withdrawn.
Having failed to employ the proper safeguards to protect itself,
the judgment debtor whose act made possible the loss had but itself
to blame.
The attention of this Court has been called to the bad practice of
a number of executing officers, of requiring checks in satisfaction
of judgment debts to be made out in their own names. If a sheriff
directs a judgment debtor to issue the checks in the sheriff's name,
claiming he must get his commission or fees, the debtor must report
the sheriff immediately to the court which ordered the execution or
to the Supreme Court for appropriate disciplinary action. Fees,
commissions, and salaries are paid through regular channels. This
improper procedure also allows such officers, who have 60 days
within which to make a return, to treat the moneys as their personal
finds and to deposit the same in their private accounts to earn 60
days interest, before said finds are turned over to the court or
judgment creditor. Quite as easily, such officers could put up the
defense that said checks had been issued to them in their private or
personal capacity. Without a receipt evidencing payment of the
judgment debt, the misappropriation of finds by such officers
becomes clean and complete. The practice is ingenious but evil as it
unjustly enriches court personnel at the expense of litigants and the
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 55
proper administration of justice. The temptation could be far greater,
as proved to be in this case of the absconding sheriff. The correct
and prudent thing for the petitioner was to have issued the checks in
the intended payee's name.
The pernicious effects of issuing checks in the name of a person
other than the intended payee, without the latter's agreement or
consent, are as many as the ways that an artful mind could concoct
to get around the safeguards provided by the law on negotiable
instruments. An angry litigant who loses a case, as a rule, would not
want the winning party to get what he won in the judgment. He
would think of ways to delay the winning party's getting what has
been adjudged in his favor. We cannot condone that practice
especially in cases where the courts and their officers are involved.
Luzon Steel vs. Sia (1969)
Luzon Steel Corp. sued Metal Manufacturing and Jose Sia,
manager, for breach of contract and damages. It obtained a writ of
preliminary attachment of the properties of the defendants, but the
attachment was lifted upon a P25k counterbond executed by Sia, as
principal, and the Times Surety & Insurance Co., Inc. as solidary
guarantor.
Luzon Steel and Sia entered into a compromise agreement
whereby Sia agreed to settle Luzon Steel’s claim by paying P500
monthly for 6 mos and within 1 mo after paying the last installment
of P500, the balance of P22k shall be paid in lump sum. It was also
agreed that the failure of Sia to pay one or any installment will make
the whole obligation immediately due and demandable and that a
writ of execution will be issued immediately against Sia’s bond. The
compromise was submitted to court and approved.
Sia failed to comply. Luzon Steel obtained a writ of execution
against Sia and the joint and several counterbond. Surety moved to
quash.
Surety’s contention: It was not a party to the compromise, and
that the writ was issued without giving the surety notice and hearing.
ISSUE: WON the judgment upon the compromise discharged the
surety from its obligation under its attachment counterbond
Ruling: No. We are dealing with a counterbond filed to discharge
a levy on attachment. Rule 57, section 12, specifies that an
attachment may be discharged upon the making of a cash deposit or
filing a counterbond "in an amount equal to the value of the property
attached as determined by the judge"; that upon the filing of the
counterbond "the property attached ... shall be delivered to the party
making the deposit or giving the counterbond, or the person
appearing on his behalf, the deposit or counterbond aforesaid
standing in place of the property so released".
Whether the judgment be rendered after trial on the merits or upon
compromise, such judgment undoubtedly may be made effective
upon the property released; and since the counterbond merely stands
in the place of such property, there is no reason why the judgment
should not be made effective against the counterbond regardless of
the manner how the judgment was obtained.
The diverse rule in section 17 of Rule 59 for counterbonds posted
to obtain the lifting of a writ of attachment is due to these bonds
being security for the payment of any judgment that the attaching
party may obtain; they are thus mere replacements of the property
formerly attached, and just as the latter may be levied upon after
final judgment in the case in order to realize the amount adjudged,
so is the liability of the counter-sureties ascertainable after the
judgment has become final. This situation does not obtain in the case
of injunction counterbonds, since the sureties in the latter case
merely undertake "to pay all damages that the plaintiff may suffer
by reason of the continuance ... of the acts complained of" (Rule 60,
section 6) and not to secure payment of the judgment recovered.
It was error on the part of the court below to have ordered the
surety bond cancelled, on the theory that the parties' compromise
discharged the obligation of the surety.
Surety’s contention: The execution issued against it was invalid
because the writ issued against its principal, Jose O. Sia had not been
returned unsatisfied; and the surety invoked in its favor Section 17
of Rule 57.
No merit. The counterbond contemplated in the rule is evidently
an ordinary guaranty where the sureties assume a subsidiary
liability. This is not the case here, because the surety in the present
case bound itself "jointly and severally" with the Sia; and it is
prescribed in Article 2059, paragraph 2, of the Civil Code that
excusion (previous exhaustion of the property of the debtor) shall
not take place "if he (the guarantor) has bound himself solidarily
with the debtor". The rule heretofore quoted cannot be construed as
requiring that an execution against the debtor be first returned
unsatisfied even if the bond were a solidary one; for a procedural
rule may not amend the substantive law expressed in the Civil Code,
and further would nullify the express stipulation of the parties that
the surety's obligation should be solidary with that of Sia.
A second reason against the stand of the surety and of the court
below is that even if the surety's undertaking were not solidary with
that of the principal debtor, still he may not demand exhaustion of
the property of the latter, unless he can point out sufficient leviable
property of the debtor within Philippine territory. There is no record
that the surety has done so.
A third reason against the thesis of appellee is that, under the rule
and its own terms, the counter-bond is only conditioned upon the
rendition of the judgment. Payment under the bond is not made to
depend upon the delivery or availability of the property previously
attached, as it was under Section 440 of the old Code of Civil
Procedure. Where under the rule and the bond the undertaking is to
pay the judgment, the liability of the surety or sureties attaches upon
the rendition of the judgment, and the issue of an execution and its
return nulla bona is not, and should not be, a condition to the right
to resort to the bond.
It is true that under Section 17 recovery from the surety or sureties
should be "after notice and summary hearing in the same action".
But this requirement has been substantially complied with from the
time the surety was allowed to move for the quashal of the writ of
execution and for the cancellation of their obligation.
Spouses Yu vs. Ngo Yet Te
Facts:
Spouses Yu purchased from Te bars of detergent soap
worth ₱594,240.00, and issued to the latter three postdated checks as
payment of the purchase price. When Te presented the checks at
maturity for encashment, said checks were returned dishonored and
stamped "ACCOUNT CLOSED". Te demanded payment from
Spouses Yu but the latter did not heed her demands. Acting through
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 56
her son and attorney-in-fact, Charry Sy (Sy), Te filed with the
Regional Trial Court (RTC), Valenzuela, Metro manila, a
Complaint for Collection of Sum of Money and Damages with
Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te
attached to her Complaint an Affidavit executed by Sy that Spouses
Yu were guilty of fraud in entering into the purchase agreement for
they never intended to pay the contract price, and that, based on
reliable information, they were about to move or dispose of their
properties to defraud their creditors.
Upon Te’s posting of an attachment bond, the RTC issued
an Order of Attachment/Levydated March 29, 1993 on the basis of
which Sheriff Alimurung of RTC, Cebu City levied and attached
Spouses Yu’s properties in Cebu City consisting of one parcel of
land (known as Lot No. 11)and four units of motor vehicle.
Spouses Yu: filed an answer with counterclaimfor damages arising
from the wrongful attachment of their properties, They also filed an
Urgent Motion to Dissolve Writ of Preliminary Attachment.
The RTC discharge from attachment the Toyota Ford Fierra, jeep,
and Canter delivery van on humanitarian grounds, but maintained
custody of Lot No. 11 and the passenger bus. Spouses Yu filed a
Motion for Reconsideration which the RTC denied.
Dissatisfied, they filed with the CA a Petition for Certiorari, which
rendered decision lifting the RTC Order of Attachment on their
remaining properties, on the ground that the Complaint and
Affidavit only contains general averments and failed to state
particularly how fraud was committed by petitioners.
It appears that the order of attachment was upheld because of the
admitted financial reverses the petitioner is undergoing. Insolvency
is not a ground for attachment especially when defendant has not
been shown to have committed any act intended to defraud its
creditors x x
For lack of factual basis to justify its issuance, the writ of
preliminary attachment issued by the respondent court was
improvidently issued and should be discharged.
Te filed with us a Petition for Review on Certiorari before the SC,
but was denied for having been filed late and failure to show that
CA committed error. Thus, the finding of the CA on the
wrongfulness of the attachment/levy of the properties of Spouses Yu
became conclusive and binding.
The RTC, however, apparently not informed of SCs
decision, ruled in favor of herein respondents. On their appeal with
CA, Spouses Yu questioned only that portion of the July 20, 1994
Decision where the RTC declined to rule on their counterclaim for
damages. However, Spouses Yu did not dispute the specific
monetary awards granted to respondent Te; and therefore, the same
have become final and executory. The CA, while affirming RTCs
decision in toto, made a ruling on the counterclaim of Spouses Yu
by declaring that the latter had failed to adduce sufficient evidence
of their entitlement to damages. Hence, this petition.
Issue: Whether or not damages for wrongful attachment is proper.
Held: NO
Spouses Yu contended that they are entitled to their
counterclaim for damages as a matter of right after Te wrongfully
caused the attachment of the properties as it suggested that Te acted
with malice.
The SC ruled that the counterclaim disputed therein was not for
moral damages and therefore, there was no need to prove malice. In
Lazatin v. Twaño, the Court laid down the rule that where there is
wrongful attachment, the attachment defendant may recover actual
damages even without proof that the attachment plaintiff acted in
bad faith in obtaining the attachment. However, if it is alleged and
established that the attachment was not merely wrongful but also
malicious, the attachment defendant may recover moral damages
and exemplary damages as well. Either way, the wrongfulness of
the attachment does not warrant the automatic award of damages to
the attachment defendant; the latter must first discharge the burden
of proving the nature and extent of the loss or injury incurred by
reason of the wrongful attachment.
The Court also held that petitioners are not relieved of the
burden of proving the basis of their counterclaim for damages. To
merit an award of actual damages arising from a wrongful
attachment, the attachment defendant must prove, with the best
evidence obtainable, the fact of loss or injury suffered and the
amount thereof. Such loss or injury must be of the kind which is not
only capable of proof but must actually be proved with a reasonable
degree of certainty. As to its amount, the same must be measurable
based on specific facts, and not on guesswork or speculation. In
particular, if the claim for actual damages covers unrealized profits,
the amount of unrealized profits must be established and supported
by independent evidence of the mean income of the business
undertaking interrupted by the illegal seizure.
The SC also affirmed CAs finding that spouses Yu failed to
prove their counterclaim of actual damages by relying mainly on
submission of used and unused ticket stubs and ticket sales for five
(5) days. Thus, Spouses Yu cannot complain that they were
unreasonably deprived of the use of the passenger bus by reason of
the subsequent wrongful attachment. Nor can they also attribute to
the wrongful attachment their failure to earn income or profit from
the operation of the passenger bus. The submitted basis is too
speculative and conjectural. No reports regarding the average actual
profits and other evidence of profitability necessary to prove the
amount of actual damages were presented.
As to moral and exemplary damages, to merit an award
thereof, it must be shown that the wrongful attachment was obtained
by the attachment plaintiff with malice or bad faith, such as by
appending a false affidavit to his application. The SC did not grant
moral and exemplary damages. Based on the foregoing testimony,
it is not difficult to understand why Te concluded that Spouses Yu
never intended to pay their obligation for they had available funds
in their bank but chose to transfer said funds instead of cover the
checks they issued.
Petitioners were, however, awarded temperate or moderate
damages of P50,000 for pecuniary loss when their properties were
wrongfully seized.
Stronghold Insurance vs. CA (1989)
FCP Credit Corp. filed a complaint against Jose Orosa, praying
that a writ of replevin be issued against Orosa. The Court ordered
the seizure of the motor vehicle covered by a chattel mortgage
executed in favor of FCP. A replevin bond put up by Stronghold
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 57
Insurance in the amount of P210k was filed. A writ of replevin was
issued.
Complaint was dismissed for lack of merit. As to Orosa’s
counterclaim, Court ordered FCP to pay him P400k moral damages,
P100k exemplary damages, and P50k attorney’s fees. Copy of the
decision was received by Orosa on April 11, 1988 while FCP
received a copy thereof on April 13, 1988.
14 Apr ’88: Orosa filed a motion for execution of the judgment
pending appeal, alleging that the judgment in the case may be
rendered ineffective because FCP Credit Corporation was already
liquidating its business affairs. He expressed his willingness to file
a bond for such purpose. FCP opposed said motion through a
"Motion for Partial Reconsideration of the Decision and Opposition
to the Motion for Execution" filed on April 26, 1988
26 Apr ’88: Orosa filed an application for judgment on the bond.
Opposition was filed by FCP, alleging that appeal had been
perfected hence the TC had already lost jurisdiction to hear Orosa’s
motion; that the application for damages does not set forth the facts
showing his right thereto and the amount thereof; and that the
motion is fatally defective for lack of the requisite 3 days notice.
Hearing on the application was scheduled on 29 Apr 1988 but
Orosa and counsel failed to appear.
In the meantime, action on FCP’s notice of appeal and motion to
elevate the records to CA, which were earlier filed on April 14,
1988, was held in abeyance by the court.
In a special order, the TC ordered the issuance of a writ of
execution pending appeal upon Orosa's filing of a bond in the
amount of P500k, reasoning "Orosa's willingness to file a required
bond to answer for damages in the case of reversal of the judgment"
and (2) "FCP is in imminent danger of insolvency or dissolution."
6 Jun ’88: Court upheld Orosa’s right to recover damages on the
replevin bond and the liability of FCP for said damages and for all
the sums of money recovered in the case in the lower court.
Following day, Court designated a supplemental decision, ordering
Stronghold to be jointly and severally liable with FCP, and to pay
Orosa the damages specified in the decision which is P210k.
Deputy Sheriff Jaime Del Rosario, by virtue of the order of
execution pending appeal, levied upon the properties of Stronghold
and garnished its funds with Far East Bank and United Coconut
Planters Bank on June 17, 1988. A few days thereafter, on June 22,
1988, Stronghold filed a petition for certiorari, with a prayer for
preliminary injunction and/or restraining order.
On the same day of the filing of said petition, an order was issued
by the trial court supplementing its order of execution pending
appeal dated June 3, 1988 by ordering Orosa to file an additional
bond in the amount of P200k.
An "Urgent Omnibus Motion for Reconsideration with Prayer for
Restraining Order," dated June 24, 1988, was filed by Stronghold
with, alleging that "there exists no good and valid reasons to justify
execution pending appeal against SICI considering that it is very
solvent and any final judgment against it would surely be satisfied."
Denied.
11 Jul ’88: Upon an ex parte motion, TC directed the enforcement
of the writ of execution pending appeal against FCP alone. Later,
on 5 Aug ‘88, another order was issued this time directing its
enforcement against Stronghold. Stronghold moved for the
reconsideration of said order and in the hearing of said motion, its
counsel adduced additional arguments in support thereof. The court
was informed that its application for a writ of injunction was already
submitted for resolution by the Court of Appeals.
Eventually, the application for a writ of injunction referred to by
Stronghold was granted by the CA on August 26, 1988.
Nevertheless, the same writ was lifted and set aside when the
petition for certiorari was dismissed.
ISSUE: WON the decision should be set aside and annulled
The rule is clear that where the judgment in an action is in favor
of the party against whom the writ of replevin was issued, he may
recover damages resulting therefrom and the replevin bond required
under Section 2, Rule 60 may be held to answer for this purpose.
The procedure to hold the surety liable upon the replevin bond is
provided for under Section 10 of the same rule in relation to Section
20 of Rule 57. Compliance with the following requisites is essential:
(1) the filing of an application therefor with the Court having
jurisdiction of the action; (2) the presentation thereof before the
judgment becomes executory (or before the trial or before appeal is
perfected); (3) the statement in said application of the facts showing
the applicant's right to damages and the amount thereof; (4) the
giving of due notice of the application to the attaching creditor and
his surety or sureties and (5) the holding of a proper hearing at which
the attaching creditor and sureties may be heard on the application.
These requisites apply not only in cases of seizure or delivery
under Rule 60, but also in cases of preliminary injunctions under
Rule 58, and receiverships under Rule 59.
To avoid multiplicity of suits, all incidents arising from the same
controversy must be settled in the same court having jurisdiction of
the main action. Thus, the application for damages must be filed in
the court which took cognizance of the case, with due notice to the
other parties.
The timeliness of the application for judgment on the bond in this
case, as well as the motion for immediate execution, is apparent
because it was filed before the appeal was perfected. The fact that
one of the parties had filed a notice of appeal does not perfect such
appeal. An appeal is perfected upon the lapse of the last day for all
parties to appeal.
It should also be noted that the filing of the application for
judgment on the bond by Orosa was in the nature of a motion for
reconsideration under Section 1(c), Rule 37, which consequently
had the effect of interrupting the period to appeal. This being so, the
order holding in abeyance FCP's notice of appeal was not even
necessary and was an apparent superfluity.
Stronghold’s contention: There was a failure to hold a proper
hearing.
Such requirement, however, has been held to mean that the
hearing will be summary and will be limited to such new defenses,
not previously set up by the principal, as the surety may allege and
offer to prove. The oral proof of damages already adduced by the
claimant may be reproduced without the necessity of retaking the
testimony, but the surety should be given an opportunity to cross-
examine the witness or witnesses if he so desires.
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In the present case, Stronghold did not allege and offer to prove
any new defense not previously set up by the principal. Furthermore,
the grounds relied upon in its opposition to the application requires
no hearing for their proper consideration by the court a quo, aside
from the fact that the trial court adequately and particularly resolved
them in its order of June 6, 1988.
If Stronghold really had additional defenses, if should have asked
for the opportunity to present the same when the motion to dismiss
the application for judgment on the bond was denied. This is also
true with respect to the cross-examination of the witnesses which
Stronghold is now belatedly asking for. While there was no one to
cross-examine during the hearing of the application for judgment on
the bond because of Orosa’s absence. Stronghold could have
invoked and insisted on such right. Further, even if Orosa had
appeared during the hearing, it could reasonably be expected that no
witnesses would be presented since the application for judgment on
the bond relied mainly on the same grounds that were already
presented in court and were subject of the trial on the merits, or were
at least already of record. To repeat, had Stronghold been sincere in
the stance that it now takes to create an issue, it should have
demanded its right to cross-examine such witnesses as it was
minded to. As it turned out, the opportunity to so demand was
present but Stronghold did not care to do so. Instead, it preferred to
stick to its stand that the application should be denied for failure of
Orosa to appear during the hearing. Stronghold should, therefore,
suffer the consequences of its inexplicable inaction and conscious
omission.
The application for judgment on the bond was in the nature of a
motion for reconsideration, hence the resolution thereof constitutes
a final and appealable order. Appeal being the proper and then
available remedy, the original action for certiorari does not lie and
cannot substitute for the remedy of appeal that was thereafter lost.
We cannot, however, sanction the execution pending appeal
which was authorized in this case. The order for advance execution
must be struck down for lack of the requisite good reasons therefor.
It is already settled that the mere filing of a bond does not warrant
execution pending appeal. To consider the mere filing of a bond a
good reason would precisely make immediate execution of a
judgment pending appeal routinary, the rule rather than the
exception.
The alleged imminent danger of insolvency of FCP Credit Corp.
does not also constitute a good reason for immediate execution. The
obligation of FCP and Stronghold in the case at bar is in solidum.
Their agreement states that the principal and the surety therein
jointly and severally bound themselves "in the sum of P210k for the
prosecution of the action, for the return of the property to defendant,
if the return thereof be adjudged, and for the payment ... of such sum
as may in the cause be recovered against the plaintiff, and costs of
the action."
Calderon vs. IAC (1987) Suan
Jose Calderon purchased Luzon Brokerage Corp. and its 5
affiliate companies from George Schulze, et. al. 21 days after,
Bureau of Customs suspended the operations of LBC for failure to
pay customs taxes and duties incurred prior to the sale.
Calderon filed complaint against private respondents to recover
amount of P1,475,840 with damages by reason of breach of
warranty. Also prayed for preliminary attachment alleging that
private respondents had deliberately and willfully concealed from
his knowledge such staggering liability of LBC for the purpose of
misleading him into buying the 6 companies; and that Schulze is
about to depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, Calderon
posted a surety bond of P1,475,840. Trial Court issued a writ of
preliminary attachment, whereupon properties of the private
respondents were attached and their bank deposits were garnished.
Subsequently, Calderon filed an amended complaint, alleging that
while the liabilities of LBC are reflected in its books, the aforesaid
amount was fraudulently withdrawn and misappropriated by
Schulze.
Private respondents filed a counterbond, whereupon the trial
court issued an order directing the sheriff to return all real and
personal properties already levied upon and to lift the notices of
garnishment issued in connection with the said attachment.
After trial, court dismissed the complaint, holding Calderon and
his surety jointly and severally liable to pay damages.
ISSUE: WON the writ of attachment was validly issued
No. That Calderon was clearly in bad faith when he asked for the
attachment is indicated by the fact that he failed to appear in court
to support his charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on the charges
was presented by him. Indeed, the CA found that Calderon failed to
produce any evidence in support of his sworn charge that Schulze
had deliberately and willfully concealed the liabilities of LBC. But
even though Calderon failed to prove his serious charges of fraud,
malice and bad faith, Schulze et. al. took it upon themselves to show
that they did not conceal or withhold from Calderon’s knowledge
the deposits made by Philippine Refining Co., Inc. with LBC and
that they did not withdraw and misappropriate the deposits made by
Philippine Refining Co., Inc. with LBC.
It is evident from the foregoing that the attachment was
maliciously sued out and that as already pointed out, Schulze was
not in bad faith.
While as a general rule, the liability on the attachment bond is
limited to actual damages, moral and exemplary damages may be
recovered where the attachment was alleged to be maliciously sued
out and established to be so.
Calderon’s contention: the dissolution of the attachment
extinguishes its obligation under the bond, for the basis of its
liability, which is wrongful attachment no longer exists, the
attachment bond having been rendered void & ineffective, by virtue
of Sec. 12, Rule 57.
Untenable. While Section 12, Rule 57 of the Rules of Court
provides that upon the filing of a counterbond, the attachment is
discharged or dissolved, nowhere is it provided that the attachment
bond is rendered void and ineffective upon the filing of
counterbond.
The liability of the attachment bond is defined in Section 4, Rule
57. It is clear from Sec. 4 that the responsibility of the surety arises
"if the court shall finally adjudge that the plaintiff was not entitled
thereto."
Liability attaches if the plaintiff is not entitled to the attachment
because the requirements entitling him to the writ are wanting, or if
the plaintiff has no right to the attachment because the facts stated
in his affidavit, or some of them, are untrue. It is, therefore, evident
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 59

that upon the dismissal of an attachment wrongfully issued, the

surety is liable for damages as a direct result of said attachment.
Surety’s contention: by filing a counterbond, private
respondents waived any defect or flaw in the issuance of the
attachment writ, for they could have sought, without need of filing
any counterbond, the discharge of the attachment if the same was
improperly or irregularly issued.
Untenable. Whether the attachment was discharged by either of
the 2 ways indicated in the law, i.e., by filing a counterbond or by
showing that the order of attachment was improperly or irregularly
issued, the liability of the surety on the attachment bond subsists
because the final reckoning is when "the Court shall finally adjudge
that the attaching creditor was not entitled" to the issuance of the
attachment writ in the first place.
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
like in the present case, would require presentation of evidence in a
full-blown trial on the merits and cannot easily be settled in a
pending incident of the case.
G.R. No. L-57957, 29 December 29 1982
ZENITH INSURANCE CORPORATION
v.
HON. COURT OF APPEALS, HON. RICARDO J.
FRANCISCO, as Presiding Judge of Branch VI, Court of First
Instance of Rizal, PROVINCIAL SHERIFF OF RIZAL,
JEZZER BOTE, Deputy Sheriff of Rizal and PEDRO F.
MEJORADA
MELENCIO-HERRERA, J.
ZIC’s liability is limited only to the amount of the bond
(P250,000.00) because a guaranty is not presumed, it must be
express and cannot extend to more than what is stipulated therein
(Art. 2055 Civil Code). When a surety executes a bond, it does not
guarantee that the plaintiff’s cause of action is meritorious, and that
it will be responsible for all the costs that may be adjudicated against
Its principal in case the action fails (Rocco v. Meads, 96 Phil. 884
[1955]). The extent of a surety’s liability is determined only by the
clause of the contract of suretyship (Republic v. Umali, 22 SCRA
922 [1968]). It cannot be extended by implication, beyond the terms
of the contract (Magdalena Estate, Inc. v. Rodriguez, 18 SCRA 967
[1966]; Jao v. Royal Financing Corporation, 4 SCRA 1210 [1962]).
The phrase “all damages” in the pronouncement that ZIC is "equally
liable with its principal for all damages sustained resulting from the
wrongful issuance of the Writ (of Preliminary Attachment)" refers
to those resulting from the undertaking itself. It does not mean that
the surety is answerable for all costs and damages that may be
adjudged against its principal, as it would be unreasonable to expand
ZIC’s liability for any and all amounts arising from the case as if it
were a "solidary judgment debtor." When a surety executes a bond,
it does not guarantee that the plaintiff’s cause of action is
meritorious, and that it will be responsible for all the costs that may
be adjudicated against principal in case the action fails. The extent
of a surety’s liability is determined only by the clause of the contract
suretyship. It cannot be extended by implication, beyond the terms
of the contract.

FACTS:

William Murphy filed a suit for collection of a sum of money against

Mejorada. He likewise prayed for a Writ of Preliminary Attachment
which was granted by the Trial Court upon a bond of P250,000.00
issued by Zenith Insurance Corp (ZIC, for brevity) in favor of
Murphy. The Court decided in favor of Mejorada and ordered
Murphy and ZIC to pay the former jointly and severally damages
against the attachment bond. The Court of Appeals affirmed the
decision subject to partial execution in the sum of P115,680.55
granted pending appeal. Mejorada proceeded against and collected
the balance of the bond. Later on, Mejorada moved for the issuance
of an Alias Writ of Execution to enforce the judgment award beyond
the amount of the attachment bond, which the Trial Court initially
denied. But subsequently, upon Motion for Reconsideration holding
that the surety’s liability is not limited to the amount of the bond but
includes all the actual and consequential damages suffered by
Mejorada because of ZIC’s malice and bad faith. CA upheld the
Alias Writ of Execution. Reconsideration having been denied, ZIC
filed the instant petition claiming that its liability cannot exceed the
amount of the attachment bond.

ISSUE: Whether or not CA committed grave abuse of discretion in

ordering the issuance of the Alias Writ of Execution making ZIC
solidarily liable for all costs and damages, or, for more than the
amount of its bond.

RULING: Yes
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 60
G.R. No. 110086 July 19, 1999
PARAMOUNT INSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS and DAGUPAN ELECTRIC
CORPORATION, respondents.
FACTS:
McADORE and DECORP entered into a contract whereby
DECORP shall provide electric power to McADORE's Hotel.
During the term of their contract for power service, DECORP
noticed discrepancies between the actual monthly billings and the
estimated monthly billings of McADORE. Upon inspection, it was
discovered that the terminal in the transformers connected to the
meter had been interchanged resulting in the slow rotation of the
meter. Consequently, DECORP issued a corrected bill but
McADORE refused to pay. As a result of McADORE's failure and
continued refusal to pay the corrected electric bills, DECORP
disconnected power supply to the hotel on November 27, 1978.
Aggrieved, McADORE commenced a suit against DECORP for
damages with prayer for a writ of preliminary injunction.
McADORE posted injunction bonds from several sureties, one of
which was herein petitioner PARAMOUNT, which issued an
injunction bond on July 7, 1980 with a face amount of P500,000.00.
Accordingly, a writ of preliminary injunction was issued wherein
DECORP was ordered to continue supplying electric power to the
hotel and restrained from further disconnecting it.
After due hearing, the Regional Trial Court of Quezon City, Branch
106, renderedjudgment in favor of DECORP, rescinding the service
contract between the parties, and ordering McAdore to pay.
McADORE did not appeal the decision. PARAMOUNT, however,
appealed to the Court of Appeals.
PARAMOUNT contended that it was not given its day in court
because it was not notified by DECORP of its intention to present
evidence of damages against its injunction bond, as mandated by
Sec. 9 of Rule 58, in relation to Sec. 20 of Rule 57 of the Revised
Rules of Court.
The Court of Appeals was not convinced with petitioner's
contentions. On April 30, 1993, it affirmed the decision of the trial
court.
ISSUE:
Whether or not petitioner Paramount Insurance Corporation was
denied due process when the trial court found the injunction bond it
issued in favor of McADORE liable to DECORP.
RULING:
NO. Injunction is an extraordinary remedy calculated to preserve
the status quo of things and to prevent actual or threatened acts
violative of the rules of equity and good conscience as would
consequently afford an injured party a cause of action resulting from
the failure of the law to provide for an adequate or complete relief. 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. 7 Its sole purpose is not to correct a wrong of the past, in
the sense of redress for injury already sustained, but to prevent
further injury. 8
A preliminary injunction or temporary restraining order may be
granted only when, among others, the applicant, unless exempted by
the court, files with the court where the action or proceeding is
pending, a bond executed to the party or person enjoined, in an
amount to be fixed by the court, to the effect that the applicant will
pay such party or person all damages which he may sustain by
reason of the injunction or temporary restraining order if the court
should finally decide that the applicant was not entitled thereto.
Upon approval of the requisite bond, a writ of preliminary injunction
shall be issued. At the trial, the amount of damages to be awarded
to either party, upon the bond of the adverse party, shall be claimed,
ascertained, and awarded under the same procedure prescribed in
Section 20 of Rule 57.
Rule 57, Section 20, of the 1997 Rules of Civil Procedure, which is
similarly applicable to preliminary injunction, pertinently provides:
Sec. 20. Claim for damages on account of improper, irregular or
excessive attachment. — An application for damages on account of
improper, irregular or excessive attachment must be filed before the
trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching obligee or his surety or
sureties, setting forth the facts showing his right to damages and the
amount thereof. Such damages may be awarded only after proper
hearing and shall be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party
against whom the attachment was issued, he must claim damages
sustained during the pendency of the appeal by filing an application
in the appellate court with notice to the party in whose favor the
attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the
damages awarded to him from any property of the attaching obligee
not exempt from execution should the bond or deposit given by the
latter be insufficient or fail to fully satisfy the award. ( mutatis
mutandis ).
In the case at bench, the trial court dismissed McADORE's action
for damages with prayer for writ of preliminary injunction and
eventually adjudged the payment of actual, moral, and exemplary
damages against plaintiff-applicant. Consequently, private
respondent DECORP can proceed against the injunction bond
posted by plaintiff-applicant to recover the damages occasioned by
the issuance by the trial court of the writ of injunction.
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 61
In order for the injunction bond to become answerable for the above-
described damages, the following requisites must concur: 11
1. The application for damages must be filed in the same case where
the bond was issued;
2. Such application for damages must be filed before the entry of
judgment; and
3. After hearing with notice to the surety.
The records of this case reveal thatAtty. Nonito Cordero appeared as
counsel for petitioner. PARAMOUNT as well as the other sureties
were properly notified of the hearing and given their day in court.
Specifically, notice was sent to Atty. Cordero of the hearing on April
27, 1985, which was set for the purpose of determining the liability
of the sureties. The counterclaims for damages of DECORP were
proven at the trial and yet PARAMOUNT did not exert any effort
to controvert the evidence presented by DECORP. Given these
circumstances, PARAMOUNT cannot hide under the cloak of non-
liability on its injunction bond on the mere expediency that it was
deprived of due process.
As aptly held by the Court of Appeals:
PARAMOUNT has only itself to blame when it did not make any
opposition or objection during the hearing for the reception of
DECORP's evidence. Having manifested its desire to cancel its
bond, it should have asked for a deferment of hearing on
DECORP's evidence but PARAMOUNT did not do anything of
this sort. Only when an adverse judgment was rendered by the trial
court against its principal McAdore did it whimper a denial of
procedural due process.
Contrary to petitioner's thesis, it is neither mandatory nor fatal that
there should be a separate hearing in order that damages upon the
bond can be claimed, ascertained and awarded, as can be gleaned
from a cursory reading of the provisions of Rule 57, Section 20.
Jurisprudential findings laid down the doctrine that a final
adjudication that the applicant is not entitled to the injunction does
not suffice to make the surety liable. It is necessary, in addition, that
the surety be accorded due process, that is, that it be given an
opportunity to be heard on the question of its solidary liability for
damages arising from a wrongful injunction order. Withal, the fact
that the matter of damages was among the issues tried during the
hearings on the merits will not render unnecessary or superfluous a
summary hearing to determine the extent of a surety's liability
unless of course, the surety had been impleaded as a party, or
otherwise earlier notified and given opportunity to be present and
ventilate its side on the matter during the trial.
The exception under the doctrinal ruling above noted is extant in the
case at bar.
PARAMOUNT also argues that assuming it is liable on its
injunction bond, its liability should be limited only to the amount of
damages accruing from the time the injunction bond was issued until
the termination of the case, and not from the time the suit was
commenced. In short, it claims that the injunction bond is
prospective and not retroactive in application.
This Court does not agree. Rule 58, Section 4(b), provides that a
bond is executed in favor of the party enjoined to answer for all
damages which he may sustain by reason of the injunction.
PARAMOUNT further maintains that it is liable to pay actual
damages only. However, Rule 58, Section 4(b), clearly provides that
the injunction bond is answerable for all damages. "The bond
insures with all practicable certainty that the defendant may sustain
no ultimate loss in the event that the injunction could finally be
dissolved. Consequently, the bond may obligate the bondsmen to
account to the defendant in the injunction suit for all: (1) such
damages; (2) costs and damages; (3) costs, damages and reasonable
attorney's fees as shall be incurred or sustained by the person
enjoined in case it is determined that the injunction was wrongfully
issued."Thus, PARAMOUNT is liable, jointly and severally, for
actual damages, moral damages, exemplary damages, attorney's fees
and costs of the suit, to the extent of the amount of the bond.
The posting of a bond in connection with a preliminary injunction
(or attachment under Rule 57, or receivership under Rule 59, or
seizure or delivery of personal property under Rule 60) does not
operate to relieve the party obtaining an injunction from any and all
responsibility for the damages that the writ may thereby cause. It
merely gives additional protection to the party against whom the
injunction is directed. It gives the latter a right of recourse against
either the applicant or his surety, or against both.
In the same manner, when petitioner PARAMOUNT issued the
bond in favor of its principal, it undertook to assume all the damages
that may be suffered after finding that the principal is not entitled to
the relief being sought.
G.R. No. L-48820 May 25, 1979
MALAYAN INSURANCE CO., INC., petitioner,
vs. HON. EMILIO V. SALAS, as Presiding Judge, Court of
First Instance of Rizal, Branch I, Pasig, Metro Manila,
ROSENDO FERNANDO and JOHN DOE, respondents.
FACTS:
This case is about the surety company's liability on its replevin bond
which was not included in the final judgment against the principal
in the bond. In 1970 Makati Motor Sales, Inc., as vendor mortgagee,
sued Rosendo Fernando for the recovery of four diesel trucks and
the connection of the balance of his obligation plus damages.
To obtain immediate possession of the trucks pending trial, Makati
Motors Sales, Inc. posted a replevin bond executed by the Malayan
Insurance Co., Inc. In that bond the surety bound itself to pay
P362,775.92 "for the return of the property to the defendant, if the
return thereof be adjudged, and for the payment of such sum as may
in the cause be recovered against the plaintiff ". Pursuant to the order
of the court, the sheriff seized the four trucks. Later, two of the
trucks were returned to Fernando.
RTC: Rendered judgment ordering Makati Motor Sales, Inc. to
return to Fernando the other two trucks and to pay him for the
seizure of each of them, damages in the sum of three hundred pesos
daily from September 25 and 26, 1970 (or six hundred pesos for the
two trucks from the latter date) until their return to Fernando plus
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 62
P26,000 as actual and moral damages. In turn, Fernando was
ordered to pay Makati Motor Sales, Inc. the sum of P66,998.34, as
the balance of the price of the two trucks, with twelve percent
interest from February 28, 1969 until fully paid and the further sum
of P15,730.20 as the cost of the repair with six percent interest from
September 11, 1970 until fully paid.
CA: Makati Motor Sales, Inc. appealed but CA affirmed the lower
court's judgment.
Before the elevation of the record to the Court of Appeals, Fernando
filed in the trial court an application for damages against the replevin
bond. It was opposed by the surety on the ground that the trial court
had lost jurisdiction over the case because of the perfection of the
appeal.
RTC: Denied the application.
Fernando filed in the Court of Appeals his claim for damages against
the replevin bond. He prayed that the same be included in the
judgment. The surety, which was furnished with a copy of the claim,
filed an opposition to it.
CA: Ordered that his claim against Malayan Insurance Co., Inc. "be
heard before the trial court".
After the remand of the record to the trial court, Fernando filed a
motion to set for hearing his application for damages against the
surety on its replevin bond. The application was heard with notice
to Makati Motor Sales, Inc. and Malayan Insurance Co., Inc
RTC: It directed Malayan Insurance Co., Inc. to pay Fernando the
damages which it had adjudged against Makati Motor Sales, Inc.
The surety company appealed from that order to this Court pursuant
to Republic Act No. 5440.
ISSUE: W/N the RTC has jurisdiction for claim for damages on
account of illegal attachment.
RULING: YES.
Section 10, Rule 60 of the Rules of Court provides that in replevin
cases, as in receivership and injunction cases, the damages "to be
awarded to either party upon any bond filed by the other" "shall be
claimed, ascertained, and granted" in accordance with section 20 of
Rule 57 which reads:
SEC. 20. Claim for damages on account of
illegal attachment. — If the judgment on the
action be in favor of the party against whom
attachment was issued, he may recover, upon
the bond given or deposit made by the attaching
creditor, any damages resulting from the
attachment. Such damages may be awarded
only upon application and after proper hearing,
and shall be included in the final judgment. The
application must be filed before the trial or
before appeal is perfected or before the
judgment becomes executory, with due notice
to the attaching creditor and his surety or
sureties, setting forth the facts showing his right
to damages and the amount thereof.
If the judgment of the appellate court be
favorable to the party against whom the
attachment was issued, he must claim damages
sustained during the pendency of the appeal by
filing an application with notice to the party in
whose favor the attachment was issued or his
surety or sureties, before the judgment of the
appellate court becomes executory. The
appellate court may allow the application to be
heard and decided by the trial court.
Under section 20, in order to recover damages on a replevin bond
(or on a bond for preliminary attachment, injunction or receivership)
it is necessary (1) that the defendant-claimant has secured a
favorable judgment in the main action, meaning that the plaintiff has
no cause of action and was not, therefore, entitled to the provisional
remedy of replevin; (2) that the application for damages, showing
claimant's right thereto and the amount thereof, be filed in the same
action before trial or before appeal is perfected or before the
judgment becomes executory; (3) that due notice be given to the
other party and his surety or sureties, notice to the principal not
being sufficient and (4) that there should be a proper hearing and the
award for damages should be included in the final judgment.
In this appeal, Malayan Insurance Co., Inc. contends that the trial
court's judgment against it is not warranted under section 20 of Rule
57. It assails the trial court's competence to render judgment against
the surety after the decision of the Court of Appeals against the
surety's principal had become final and executory.
We hold that the trial court has jurisdiction to pass upon Fernando's
application for the recovery of damages on the surety's replevin
bond. The reason is that Fernando seasonably filed his application
for damages in the Court of Appeals. It was not his fault that the
damages claimed by him against the surety were not included in the
judgment of the Court of Appeals affirming the trial court's award
of damages to Fernando payable by the principal in the replevin
bond. The peculiar factual situation of this case makes it an
exception to the settled rule that the surety's liability for damages
should be included in the final judgment to prevent duplicity of suits
or proceedings.
As may be gathered from section 20 of Rule 57, the application for
damages against the surety must be filed (with notice to the surety)
in the Court of First Instance before the trial or before appeal is
perfected or before the judgment becomes executory.
If an appeal is taken, the application must be filed in the appellate
court but always before the judgment of that court becomes
executory so that the award may be included in its judgment.
But it is not always mandatory that the appellate court should
include in its judgment the award of damages against the surety.
Thus, it was held that where the application for damages against the
surety is seasonably made in the appellate court, "the latter must
either proceed to hear and decide the application or refer "it" to the
trial court and allow it to hear and decide the same".
We have stated earlier that in the instant case Fernando in 1974
made a timely claim in the Court of Appeals for an award of
damages against Malayan Insurance Co., Inc. enforceable against its
replevin bond. The surety was notified of that application. It
registered an opposition to the claim. The Court of Appeals did not
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 63
resolve the claim immediately but in its 1977 decision it directed the
trial court to hear that claim.
Obviously, the lower court has no choice but to implement that
directive which is the law of the case.
However, the trial court's implementation of that directive was
incorrect. It set the claim for hearing but the surety assailed its
jurisdiction and did not consider itself bound by the mandate of the
appellate court. The merits of the claim for damages were not
threshed out at the hearing because the surety stood pat on its
contention that the trial court has no jurisdiction to allow the claim
in view of the finality of the decision of the Court of Appeals.
This Court has held that, if the surety was not given notice when the
claim for damages against the principal in the replevin bond was
heard, then as a matter of procedural due process the surety is
entitled to be heard when the judgment for damages against the
principal is sought to be enforced against the surety's replevin bond.
The hearing will be summary and will be limited to such new
defense, not previously set up by the principal, as the surety may
allege and offer to prove. The oral proof of damages already
adduced by the claimant may be reproduced without the necessity
of retaking the testimony, but the surety should be given an
opportunity to cross-examine the witness or witnesses if it so
desires." That procedure would forestall the perpetration of fraud or
collusion against the surety.
Inasmuch as in this case appellant Malayan Insurance Co., Inc. was
not given the summary hearing during which it could contest the
reality or reasonableness of Fernando's claim for damages, we have
to set aside the trial court's order awarding damages against it and,
in the interest of justice, give it another opportunity to be heard on
the merits of Fernando's claim for damages.
Note that under the second paragraph of section 20, Rule 57 of the
present Rules of Court, the damages suffered during the pendency
of an appeal in a case where the writs of attachment, injunction and
replevin or an order of receivership were issued should be claimed
in the appellate court.
The damages are recoverable on the theory that an actionable wrong
was committed by the losing party. The recovery is limited to the
amount of the bond.
The usual procedure is to file an application for damages with due
notice to the other party and his sureties. The other part may answer
the application. Upon the issues thus being Joined, the matter will
be tried and determined. A court order declaring the bond
confiscated without adhering to that procedure is void.
Section 20 of Rule 57 contemplates one judgment for damages
against the principal and the surety in the injunction, replevin,
attachment and receivership bonds. Since the judicial bondsman has
no right to demand the exhaustion of the property of the principal
debtor, there is no justification for entering separate judgments
against them. The claim for damages against the surety should be
made before entry of judgment.
The procedure in section 20 of Rule 57 should not be confounded
with the procedure in section 17 of the same rule regarding the
surety's liability on the counterbond for the lifting of the preliminary
attachment. Under section 17, the surety may be held liable after
notice and summary hearing conducted after the judgment had
become executory and the execution was returned unsatisfied.
It should be underscored that in the instant case, although the
surety's liability was not included in the final judgment, which
became executory, nevertheless, there was a timely application for
damages in the Court of Appeals which in its decision ordered the
trial court to hear defendant-appellee Fernando's claim for damages
against the surety. That feature of the case removes it from the
coverage of the rule that the surety should be heard before the
judgment becomes executory and that his liability should be
included in the final judgment.
Summary: The trial court has jurisdiction to comply with the
directive of the Court of Appeals but we reverse and set aside its
order of July 14, 1978, requiring petitioner-appellant Malayan
Insurance Co., Inc. to pay the damages which it had adjudged
against Makati Motor Sales, Inc. The trial court is required to hold
a summary hearing wherein appellant surety should be given a
chance to contest the reality or reasonableness of respondent-
appellee Rosendo Fernando's claim for damages. After such
hearing, or if the surety should waive it, the trial court should render
the proper judgment.
Zaragoza v. Fidelino and Mabini Insurance & Fidelity Co., Inc.
G.R. No. L-27923
July 14, 1988
Facts:
Fidelino failed to pay the sum of the purchase price of the car that
she bought from Antonio Zaragoza. For failure to pay, Zaragoza
filed an action for replevin for the car. A surety bond was posted by
Mabini Insurance & Fidelity Co., Inc. (Mabini) with the Court of
First Instance of Quezon City for the release of the car of Fidelino.
The court ruled in favour of Zaragoza. Within the reglementary
period, Zaragoza moved for the amendment of the decision to
include Mabini as party solidarily liable with Fidelino for the
payment of the sums awarded in the judgment. Copies of the motion
and notice of hearing was duly furnished to Fidelino and Mabini but
both failed to file any opposition or appeared at the hearing. Thus,
the court ruled, again, in favour of Zaragoza.
Mabini filed a motion for reconsideration with the CFI of Quezon
City contending, among others, that the court did not acquire
jurisdiction over it since no summons was ever served on it and the
filing of a counter-bond is not equivalent to voluntary submission to
the court’s jurisdiction. CFI of Quezon City denied the motion, thus
the present appeal.
Issue:
WON the CFI of Quezon City acquired jurisdiction over Mabini.
Held:
Yes, jurisdiction was acquired over Mabini.
The Court held that the terms of the counter-bond voluntarily filed
by it in Fidelino’s behalf levae no doubt of its assent to be bound by
the Court’s judgment of defendant’s liability, ie, its acceptance of
 P R O V . R E M . - P r e l i m i n a r y A t t a c h m e n t ( C a s e D i g e s t s ) | 64
the Court’s jurisdiction. It implicitly prayed for affirmative relief;
the release of the seized car, in consideration of which it explicitly
bound itself solidarily with Fidelino to answer for the delivery of the
car if such delivery is adjudged, ie commanded by the Court’s
judgment, or for the payment of such sum as may be recovered
against Fidelino and the cost of the action, he reference to a possible
future judgment against Fidelino, and necessarily against itself.
The enforcement of a surety’s liability is governed by Sec. 17, Rule
57 and not by Sec. 10, Rule 60, in relation to Sec. 20, Rule 57. Sec.
17, Rule 57 reads as follows:
“Sec. 17. Where execution returned unsatisfied, recovery
had upon bond.-If the execution be returned unsatisfied in whole or
in part, the surety or sureties on any counter-bond given pursuant to
the provisions of this rule to secure the payment of the judgment
shall become charged on such counter-bond, and bound to pay to
the judgment creditor upon demand, the amount due under the
judgment, which amont may be recovered from such surety or
sureties after notice and summary hearing in the same action.”
Notice and hearing was substantially complied with and that neither
Fidelino nor Mabini filed their opposition nor appeared on the date
of the hearing.
Thus, the Court acquired jurisdiction over Mabini and that it is
jointly and severally liable with Fidelino.
SPOUSES GREGORIO AND JOSEFA YU vs. NGO YET TE,
doing business under the name and style, ESSENTIAL
MANUFACTURING
G.R. NO. 155868. February 6, 2007
FACTS:
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo
Yet Te (Te) bars of detergent soap worth P594,240.00, and issued
to the latter three postdated checks as payment of the purchase price.
The said checks were returned dishonored and stamped ACCOUNT
CLOSED. Te demanded payment from Spouses Yu but the latter
did not heed her demands. Acting through her son and attorney-in-
fact, Charry Sy (Sy), Te filed with the Regional Trial Court a
Complaint for Collection of Sum of Money and Damages with
Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te attached to
her Complaint an Affidavit executed by Sy that Spouses Yu were
guilty of fraud in entering into the purchase agreement for they
never intended to pay the contract price, and that, based on reliable
information, they were about to move or dispose of their properties
to defraud their creditors. Upon Te’s posting of an attachment bond,
the RTC issued an Order of Attachment/Levy on the basis of which
Sheriff Constancio Alimurung levied and attached Spouses Yus
properties in Cebu City. Spouses Yu filed an Answer with
counterclaim for damages arising from the wrongful attachment of
their properties.
ISSUE: Whether or not the appellate court erred in refusing to
award actual, moral and exemplary damages after it was established
by final judgment that the writ of attachment was procured with no
true ground for its issuance.
RULING:NO.
Spouses Yu contended that they are entitled to their counterclaim
for damages as a matter of right after Te wrongfully caused the
attachment of the properties as it suggested that Te acted with
malice. The SC ruled that the counterclaim disputed therein was not
for moral damages and therefore, there was no need to prove malice.
In Lazatin v. Twaño, the Court laid down the rule that where there
is wrongful attachment, the attachment defendant may recover
actual damages even without proof that the attachment plaintiff
acted in bad faith in obtaining the attachment. However, if it is
alleged and established that the attachment was not merely wrongful
but also malicious, the attachment defendant may recover moral
damages and exemplary damages as well. Either way, the
wrongfulness of the attachment does not warrant the automatic
award of damages to the attachment defendant; the latter must first
discharge the burden of proving the nature and extent of the loss or
injury incurred by reason of the wrongful attachment.
In fine, the CA finding that the attachment of the properties of
Spouses Yu was wrongful did not relieve Spouses Yu of the burden
of proving the factual basis of their counterclaim for damages.
The SC also affirmed CAs finding that spouses Yu failed to prove
their counterclaim of actual damages by relying mainly on
submission of used and unused ticket stubs and ticket sales for five
(5) days. Thus, Spouses Yu cannot complain that they were
unreasonably deprived of the use of the passenger bus by reason of
the subsequent wrongful attachment issued in Civil Case No. 4061-
V-93. Nor can they also attribute to the wrongful attachment their
failure to earn income or profit from the operation of the passenger
bus. The submitted basis is too speculative and conjectural. No
reports regarding the average actual profits and other evidence of
profitability necessary to prove the amount of actual damages were
presented.
To merit an award of actual damages arising from a wrongful
attachment, the attachment defendant must prove, with the best
evidence obtainable, the fact of loss or injury suffered and the
amount thereof. Such loss or injury must be of the kind which is not
only capable of proof but must actually be proved with a reasonable
degree of certainty. As to its amount, the same must be measurable
based on specific facts, and not on guesswork or speculation. In
particular, if the claim for actual damages covers unrealized profits,
the amount of unrealized profits must be estalished and supported
by independent evidence of the mean income of the business
undertaking interrupted by the illegal seizure.
As to moral and exemplary damages, to merit an award thereof, it
must be shown that the wrongful attachment was obtained by the
attachment plaintiff with malice or bad faith, such as by appending
a false affidavit to his application. The SC did not grant moral and
exemplary damages. Based on the foregoing testimony, it is not
difficult to understand why Te concluded that Spouses Yu never
intended to pay their obligation for they had available funds in their
bank but chose to transfer said funds instead of cover the checks
they issued.
Petitioners were, however, awarded temperate or moderate
damages of P50,000 for pecuniary loss when their properties were
wrongfully seized.
Phil-Air Conditioning Center vs RCJ Lines and Rolando
Abadilla, Jr.
G.R. No. 193821, November 23, 2015
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Phil-Air Conditioning Center (Phil-Air) filed this petition for
review on certiorari
On various dates between March 5, 1990, and August 29, 1990,
petitioner Phil-Air sold to respondent RCJ Lines four Carrier Paris
240 air conditioning units for buses (units). The units included
compressors, condensers, evaporators, switches, wiring, circuit
boards, brackets, and fittings.
Phil-Air allegedly performed regular maintenance checks on the
units pursuant to the one-year warranty on parts and labor. RCJ
Lines issued three post-dated checks in favor of Phil-Air to partly
cover the unpaid balance.
All the post-dated checks were dishonored when Phil-Air
subsequently presented them for payment. Check No. 479759 was
returned because it was drawn against insufficient funds, while
Check Nos. 479760 and 479761 were returned because payments
were stopped.
Before presenting the third check for payment, Phil-Air sent a
demand letter to Rolando Abadilla, Sr. asking him to fund the post-
dated checks. In view of the failure of RCJ Lines to pay the balance
despite demand, Phil-Air filed on April 1, 1998 the complaint for
sum of money with prayer for the issuance of a writ of preliminary
attachment.
In its answer with compulsory counterclaim, RCJ Lines admitted
that it purchased the units in the total amount of P1,240,000.00 and
that it had only paid P400,000.00. It refused to pay the balance
because Phil-Air allegedly breached its warranty.
RCJ Lines averred that the units did not sufficiently cool the buses
despite repeated repairs. Phil-Air purportedly represented that the
units were in accord with RCJ Lines’ cooling requirements as shown
in Phil-Air’s price quotation. The price quotation provided that full
payment should be made upon the units’ complete installation.
Complete installation, according to RCJ Lines, is equivalent to
being in operational condition.
RCJ Lines claimed that it was also entitled to be reimbursed for
costs and damages occasioned by the enforcement of the writ of
attachment.
Issues:
(1) Whether the claim of Phil-Air was barred by laches;
(2) Whether Phil-Air should reimburse RCJ Lines for the
counterbond premium and its alleged unrealized profits;
(3) Whether RCJ Lines proved its alleged unrealized profits arising
from the enforcement of the preliminary writ of attachment.
Held:
1. Phil-Air’s claim is not barred by laches. In general, there is no
room to apply the concept of laches when the law provides the
period within which to enforce a claim or file an action in court.
Phil-Air’s complaint for sum of money is based on a written contract
of sale. The ten-year prescriptive period under Article 1144 of the
Civil Code thus applies.
In the present case, both parties admit the existence and validity of
the contract of sale. They recognize that the price quotation dated
August 4, 1989, contained the terms and conditions of the sale
contract. They also agree that the price and description of the units
were indicated on the sales invoice.
Laches is defined as the failure or neglect for an unreasonable and
unexplained length of time, to do that which by exercising due
diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
it or declined to assert it.
While the CA correctly held that prescription and estoppel by laches
are two different concepts, it failed to appreciate the marked
distinctions between the two concepts.
The court resolves whether the claimant asserted its claim within a
reasonable time and whether its failure to do so warrants the
presumption that it either has abandoned it or declined to assert it.
The court determines the claimant’s intent to assert its claim based
on its past actions or lack of action. After all, what is invoked in
instances where a party raises laches as a defense is the equity
jurisdiction of the court.
On the other hand, if the law gives the period within which to
enforce a claim or file an action in court, the court confirms whether
the claim is asserted or the action is filed in court within the
prescriptive period. The court determines the claimant’s intent to
assert its claim by simply measuring the time elapsed from the
proper reckoning point (e.g., the date of the written contract) to the
filing of the action or assertion of the claim.
In sum, where the law provides the period within which to assert a
claim or file an action in court, the assertion of the claim or the
filing of the action in court at any time within the prescriptive
period is generally deemed reasonable, and thus, does not call for
the application of laches. As we held in one case, unless reasons of
inequitable proportions are adduced, any imputed delay within the
prescriptive period is not delay in law that would bar relief.
Not all the elements of laches are present. To repeat, Phil-Air filed
the complaint with the RTC on April 1, 1998. The time elapsed from
August 4, 1989 (the date of the price quotation, which is the earliest
possible reckoning point), is eight years and eight months, well
within the ten-year prescriptive period. There was simply no delay
(second element of laches) where Phil-Air can be said to have
negligently slept on its rights. there is no basis for laches as the facts
of the present case do not give rise to an inequitable situation that
calls for the application of equity and the principle of laches.
2. Phil-Air is not directly liable for the counter-bond premium and
RCJ Lines’ alleged unrealized profits.
A writ of preliminary attachment is a provisional remedy issued by
the court where an action is pending to be levied upon the property
or properties of the defendant. The property is held by the sheriff as
security for the satisfaction of whatever judgment that might be
secured by the attaching party against the defendant.
The grant of the writ is conditioned not only on the finding of the
court that there exists a valid ground for its issuance. The Rules also
require the applicant to post a bond.
Section 4 of Rule 57 of the Rules of Civil Procedure (Rules)
provides that “the party applying for the order must…give a bond
executed to the adverse party in the amount fixed by the court in its
order granting the issuance of the writ, conditioned that the latter
will pay all the costs that may be adjudged to the adverse party
and all damages that he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant
was not entitled thereto.”
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The enforcement of the writ notwithstanding, the party whose
property is attached is afforded relief to have the attachment lifted.
There are various modes of discharging an attachment under Rule
57, viz.:
(1) by depositing cash or posting a counter-bond under Section 12;
(2) by proving that the attachment bond was improperly or
irregularly issued or enforced, or that the bond is insufficient under
Section 13;
(3) by showing that the attachment is excessive under Section 13;
and (4) by claiming that the property is exempt from execution
under Section 2.
RCJ Lines availed of the first mode by posting a counter-bond.
Under the first mode, the court will order the discharge of the
attachment after (1) the movant makes a cash deposit or posts a
counterbond and (2) the court hears the motion to discharge the
attachment with due notice to the adverse party.
The amount of the cash deposit or counter-bond must be equal to
that fixed by the court in the order of attachment, exclusive of costs.
The cash deposit or counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action.
The discharge under Section 12 takes effect upon posting of a
counter-bond or depositing cash, and after hearing to determine the
sufficiency of the cash deposit or counter-bond. On the other hand,
the discharge under Section 13 takes effect only upon showing that
the plaintiff’s attachment bond was improperly or irregularly issued,
or that the bond is insufficient. The discharge of the attachment
under Section 13 must be made only after hearing.
As discussed above, it is patent that under the Rules, the attachment
bond answers for all damages incurred by the party against whom
the attachment was issued. Thus, Phil-Air cannot be held directly
liable for the costs adjudged to and the damages sustained by RCJ
Lines because of the attachment. Section 4 of Rule 57 positively lays
down the rule that the attachment bond 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.”
The RTC, instead of declaring Phil-Air liable for the alleged
unrealized profits and counter-bond premium, should have ordered
the execution of the judgment award on the attachment bond. To
impose direct liability to Phil-Air would defeat the purpose of the
attachment bond, which was not dissolved despite the lifting of the
writ of preliminary attachment.
The order to refund the counter-bond premium is likewise
erroneous. The premium payment may be deemed a cost incurred
by RCJ Lines to lift the attachment. Such cost may be charged
against the attachment bond.
3. RCJ Lines failed to prove its alleged unrealized profits.
In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual
damages covers unrealized profits, the amount of unrealized profits
must be established and supported by independent evidence of the
mean income of the business undertaking interrupted by the illegal
seizure.
We explained in Spouses Yu that to merit an award of actual
damages arising from a wrongful attachment, the attachment
defendant must prove, with the best evidence obtainable, the fact of
loss or injury suffered and the amount thereof. Such loss or injury
must be of the kind which is not only capable of proof but must
actually be proved with a reasonable degree of certainty. As to its
amount, the same must be measurable based on specific facts, and
not on guesswork or speculation.
Similarly, the evidence adduced by RCJ Lines to show actual
damages fell short of the required proof. Its average daily income
cannot be derived from the summary of daily cash collections from
only two separate occasions, i.e., August 22-23 and September 2-3,
2000. The data submitted is too meager and insignificant to
conclude that the buses were indeed earning an average daily
income of P12,000.00.
More significant, the person who prepared the unsigned summary
of daily cash collections was not presented before the RTC to verify
and explain how she arrived at the computation. The dispatchers
who prepared the collection reports were likewise not presented;
some of the reports were also unsigned. While the summary was
approved by Rolando Abadilla, Jr., in his testimony on the alleged
unrealized profits was uncorroborated and self-serving.
Nonetheless, we recognize that RCJ Lines suffered some form of
pecuniary loss when two of its buses were wrongfully seized,
although the amount cannot be determined with certainty.
We note that in its prayer for the issuance of the writ of preliminary
attachment, Phil-Air alleged that RCJ Lines was guilty of fraud in
entering into the sale transaction. A perusal of the record, however,
would show that Phil-Air failed to prove this bare assertion. This
justifies an award of temperate or moderate damages in the amount
of Php 50,000.00.
G.R. No. 190028, February 26, 2014
LETICIA P. LIGON, Petitioner, v. THE REGIONAL TRIAL
COURT, BRANCH 56 AT MAKATI CITY AND ITS
PRESIDING JUDGE, JUDGE REYNALDO M. LAIGO,
SHERIFF IV LUCITO V. ALEJO, ATTY. SILVERIO
GARING, MR. LEONARDO J. TING, AND MR. BENITO G.
TECHICO, Respondents.
DECISION
PERLAS–BERNABE, J.:
Assailed in this petition for review on certiorari1 is the
Decision2 dated October 30, 2009 of the Court of Appeals (CA) in
CA–G.R. SP No. 106175, finding no grave abuse of discretion on
the part of the Regional Trial Court of Makati City, Branch 56
(Makati City RTC) in issuing the following orders (Assailed Orders)
in Civil Case No. 03–186:
(a) the Order3 dated February 9, 2007 which directed the Register
of Deeds of Muntinlupa City, respondent Atty. Silverio Garing
(Atty. Garing), to (1) register the Officer’s Final Deed of Sale issued
by respondent Sheriff Lucito V. Alejo (Sheriff Alejo) on October
27, 2006 in favor of the highest bidder, respondent Leonardo J. Ting
(Ting), (2) cancel Transfer Certificate of Title (TCT) No. 8502/T44
in the name of Spouses Rosario and Saturnino Baladjay (Sps.
Baladjay), and (3) issue a new certificate of title in favor of Ting,
free from any liens and encumbrances;
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(b) the Order4 dated March 20, 2007 which directed Atty. Garing to
comply with the February 9, 2007 Order under pain of contempt of
court; and
(c) the Order5 dated April 25, 2007 which reiterated the directive to
Atty. Garing to issue a new title in favor of Ting after the latter’s
payment of capital gains, documentary and transfer taxes, as
required.
The Facts
QUEZON CITY CASE
On November 20, 2002, petitioner Leticia P. Ligon (Ligon) filed an
amended complaint6 before the Regional Trial Court of Quezon
City, Branch 101 (Quezon City RTC) for collection of sum of
money and damages, rescission of contract, and nullification of title
with prayer for the issuance of a writ of preliminary attachment,
against Sps. Baladjay, a certain Olivia Marasigan (Marasigan),
Polished Arrow Holdings, Inc. (Polished Arrow), and its
incorporators,7 namely, Spouses Julius Gonzalo and Charaine
Doreece Anne Fuentebella (Sps. Fuentebella), Ma. Linda Mendoza
(Mendoza), Barbara C. Clavo (Clavo), Bayani E. Arit, Jr. (Arit, Jr.),
and Peter M. Kairuz (Kairuz), as well as the latter’s spouses
(individual defendants).
In her complaint, Ligon alleged, inter alia, that Rosario Baladjay
(Rosario) enticed her to extend a short–term loan in the amount of
P3,000,000.00, payable in a month’s time and secured by an Allied
Bank post–dated check for the same amount.8 Ligon likewise
claimed that Rosario, as further enticement for the loan extension,
represented that she and her husband Saturnino were in the process
of selling their property in Ayala Alabang Village, Muntinlupa City
(subject property),in the name of Rosario Baladjay, married to
Saturnino Baladjay, and that the proceeds of the said sale could
easily pay–off the loan.10 Unfortunately, the Allied Bank check was
dishonored upon presentment and, despite assurances to replace it
with cash, Rosario failed to do so.
Moreover, Ligon discovered that the subject property had already
been transferred to Polished Arrow, alleged to be a dummy
corporation of Sps. Baladjay and the individual defendants
(defendants). As a result, TCT No. 8502 was cancelled and replaced
on October 11, 2002 by TCT No. 9273[11 in the name of Polished
Arrow. Thus, Ligon prayed that all defendants be held solidarily
liable to pay her the amount of P3,000,000.00, with interest due, as
well as P1,000,000.00 as attorney’s fees and another P1,000,000.00
by way of moral and exemplary damages. Asserting that the transfer
of the subject property to Polished Arrow was made in fraud of Sps.
Baladjay’s creditors, Ligon also prayed that the said transfer be
nullified, and that a writ of preliminary attachment be issued in the
interim against defendants’ assets, including the subject property.
Subsequently, an Amended Writ of Preliminary
Attachment12 was issued on November 26, 2002, and annotated
on the dorsal portion13 of TCT No. 9273 on December 3,
2002 (December 3, 2002 attachment annotation).
MAKATI CASE
On February 18, 2003, a similar complaint for collection of sum of
money, damages, and cancellation of title with prayer for issuance
of a writ of preliminary attachment was lodged before the Makati
City RTC, docketed as Civil Case No. 03–186 (Makati City Case),
by Spouses Cecilia and Gil Vicente (Sps. Vicente) against Sps.
Baladjay, Polished Arrow, and other corporations.14 In that case, it
was established that Sps. Baladjay solicited millions of pesos in
investments from Sps. Vicente using conduit companies that were
controlled by Rosario, as President and Chairperson. During the
proceedings therein, a writ of preliminary attachment also
against the subject property was issued and annotated on the
dorsal portion of TCT No. 9273 on March 12, 2003.
Thereafter, but before the Quezon City Case was concluded, the
Makati City RTC rendered a Decision15 dated December 9, 2004
(December 9, 2004 Decision), rescinding the transfer of the subject
property from Sps. Baladjay to Polished Arrow upon a finding that
the same was made in fraud of creditors.16
In view of the foregoing, the Quezon City Case proceeded only
against Sps. Baladjay and Marasigan and, after due proceedings, the
Quezon City RTC rendered a Decision19 dated March 26, 2008
(March 26, 2008 Decision), directing Sps. Baladjay to pay Ligon the
amount of P3,000,000.00 with interest, as well as attorney’s fees and
costs of suit.
On September 25, 2008, the March 26, 2008 Decision of the
Quezon City RTC became final and executory.20
However, when Ligon sought its execution, she discovered that the
December 3, 2002 attachment annotation had been deleted from
TCT No. 9273 when the subject property was sold by way of public
auction on September 9, 2005 to the highest bidder, respondent
Ting, for the amount of P9,000,000.00 during the execution
proceedings in the Makati City Case,
Ligon learned that the Makati City RTC had issued its first
assailed Order22dated February 9, 2007 (First Assailed Order),
directing Atty. Garing, as the Register of Deeds of Muntinlupa City,
to: (a) register the Officer’s Final Deed of Sale on the official
Record Book of the Register of Deeds of Muntinlupa City; and (b)
cancel TCT No. 8502 in the name of Sps. Baladjay and issue a new
title in the name of Ting, free from any liens and encumbrances.
Makati City RTC issued its second assailed Order25 dated March
20, 2007 (Second Assailed Order), directing Atty. Garing to comply
with the First Assailed Order under pain of contempt.
[I]f there were liens or encumbrances annotated on TCT No. 8502
in the name of Rosario Baladjay when the same was cancelled and
TCT No. 9273 was issued by the Register of Deeds of Muntinlupa
City in favor of Polished Arrow Holdings, Inc. based on the Deed
of Absolute Sale executed between the former and the latter, only
such liens or encumbrances will have to be carried over to the
new Transfer Certificate of Title that he (Atty. Garing) is
mandated to immediately issue in favor of Leonardo J. Ting
even as the Order of the Court dated February 9, 2007 decreed
that a new TCT be issued in the name of Mr. Leonardo J. Ting,
free from any encumbrance.
Based on the foregoing, it pronounced that it was Atty. Garing’s
ministerial duty “to promptly cancel TCT No. 8502/T–44 in the
name of defendant–spouses Baladjay and to issue a new Transfer
Certificate of Title in the name of the highest bidder, Leonardo J.
Ting.”27
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Separately, Ting filed a motion before the Makati City RTC on
account of Atty. Garing’s letter28 dated March 26, 2006 requiring
him to comply with certain documentary requirements and to pay
the appropriate capital gains, documentary stamp and transfer taxes
before a new title could be issued in his name. In its third
assailed Order29 dated April 25, 2007 (Third Assailed Order), the
Makati City RTC directed Ting to pay the aforesaid taxes and
ordered Atty. Garing to immediately cancel TCT No. 8502 and
issue a new title in the former’s name.
On June 7, 2007, Atty. Garing issued TCT No. 19756[30 in the name
of Ting, free from any liens and encumbrances. Later, Ting
sold31 the subject property to respondent Benito G. Techico
(Techico), resulting in the cancellation of TCT No. 19756 and the
issuance of TCT No. 31001[32 in Techico’s name.
In view of the preceding circumstances, Ligon filed, inter alia,
a certiorari petition33 against respondent Presiding Judge Reynaldo
Laigo (Judge Laigo), Sheriff Alejo, Atty. Garing, Ting, and Techico
(respondents), alleging, among others, that the Makati City RTC
committed grave abuse of discretion in issuing the Assailed Orders
CA – DISMISSED
Thus, a prior registration40 of an attachment lien creates a
preference,41 such that when an attachment has been duly levied
upon a property, a purchaser thereof subsequent to the attachment
takes the property subject to the said attachment.42 As provided
under PD 1529, said registration operates as a form of constructive
notice to all persons.43
In this case, Ligon, in order to secure the satisfaction of a favorable
judgment in the Quezon City Case, applied for and was eventually
able to secure a writ of preliminary attachment45 over the subject
property on November 25, 2002, which was later annotated on the
dorsal portion46 of TCT No. 9273 in the name of Polished Arrow on
December 3, 2002.
Notwithstanding the subsequent cancellation of TCT No. 9273 due
to the Makati City RTC’s December 9, 2004 Decision rescinding
the transfer of the subject property from Sps. Baladjay to Polished
Arrow upon a finding that the same was made in fraud of creditors,
Ligon’s attachment lien over the subject property continued to
subsist since the attachment she had earlier secured binds the
property itself, and, hence, continues until the judgment debt of Sps.
Baladjay to Ligon as adjudged in the Quezon City Case is satisfied,
or the attachment discharged or vacated in some manner provided
by law.

ISSUE: W/N it was proper for the RTC Makati to issue the
assailed issuances?
The Court resolves the following essential issues: (a) whether or not
the CA erred in ruling that the Makati City RTC did not gravely
abuse its discretion in issuing the Assailed Orders; and (b) whether
or not Judge Laigo should be cited in contempt and penalized
administratively.
The Court’s Ruling
It bears noting that Ligon’s claim, secured by the aforesaid
attachment, is against Sps. Baladjay whose ownership over the
subject property had been effectively restored in view of the RTC’s
rescission of the property’s previous sale to Polished Arrow.48 Thus,
Sps. Ligon’s attachment lien against Sps. Baladjay as well as their
successors–in–interest should have been preserved, and the
annotation thereof carried over to any subsequent certificate of
title,49 the most recent of which as it appears on record is TCT No.
31001 in the name of Techico, without prejudice to the latter’s right
to protect his own ownership interest over the subject property.

The petition is partly meritorious.

A. Issuance of the Assailed Orders vis–à–vis Grave Abuse of

Discretion.

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.38

Case law instructs that an attachment is a proceeding in rem, and,

hence, is against the particular property, enforceable against the
whole world.

Accordingly, the attaching creditor acquires a specific lien on the

attached property which nothing can subsequently destroy except
the very dissolution of the attachment or levy itself.

Such a proceeding, in effect, means that the property attached is an

indebted thing and a virtual condemnation of it to pay the owner’s
debt. The lien continues until the debt is paid, or sale is had under
execution issued on the judgment, or until the judgment is satisfied,
or the attachment discharged or vacated in some manner provided
by law.39
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