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Table of Contents

1 Reyes vs Lim Caballero

2 Davao Light vs CA Camasura

3 Calo vs Roldan Clark

4 Ko Glass vs Valenzuela Dalisay

5 PCIB vs Alejandro Inok 

6 General vs De Venecia Macatol

7 Mialhe vs De Lencquesaing Misterio 

8 Insular Savings Bank vs CA Nalla

9 Tan vs Zandueta Janine

1 Olsen & Co vs Olsen Pacquiao


0

1 Santos vs Bernabe Pendatun


1

1 State Investment House vs CA Plaza


2

1 Aboitiz vs Cotabato Bus Company Tacder


3

1 People's Bank and Trust Company vs Syvel Vosotros


4

1 Adlawan vs Torres Pelaez


5

1 Claude Neon Lights vs Phil Advertising  Caballero


6

1 State Investment vs Citibank Camasura


7

1 Sievert vs CA Clark
8

1 Cuartero vs CA Dalisay
9

2 Northwest Airline vs CA Inok 


0

2 Salas vs Adil Macatol


1
2 La Granja vs Samson Misterio 
2

2 Jardine Manila vs CA Nalla


3

2 Ting vs Villarin Janine


4

2 Carlos vs Sandoval Pacquiao


5

2 HB Zachry vs CA Pendatun
6

2 Siari Valley vs Lucasan Pelaez


7

2 Ravanera vs Imperial Plaza


8

2 Obana vs CA Tacder
9

3 Du vs Stronghold Vosotros
0

3 Valdevieso vs Damalerio Caballero


1

3 Walker vs McMicking Camasura


2

3 NBI vs Tuliao Clark


3

3 Villanueva-Fabella vs Lee Dalisay


4

3 Sebastian vs Valino Inok 


5

3 Villareal vs Rarama Macatol


6

3 Balantes vs Ocampo Misterio 


7

3 Elipe vs Fabre Nalla


8

3 Roque vs CA Janine
9

4 Summit Trading vs Avendano Pacquiao


0
4 Chemphil vs CA Pendatun
1

4 Gotauco vs Registry of Deeds Plaza


2

4 Engineering vs NPC Tacder


3

4 RCBC vs Castro Vosotros


4

4 Abinujar vs CA Caballero
5

4 BF Homes vs CA Camasura
6

4 Republic vs Saludares Clark


7

4 Manila Remnant vs CA Dalisay


8

4 Insular Savings Bank vs CA Inok 


9

5 Calderon vs CA Macatol
0

5 Security Pacific vs Infante Misterio 


1

5 Benitez vs IAC Nalla


2

5 Peroxide vs CA Janine
3

5 Filinvest vs Relova Pacquiao


4

5 Uy Kimpang vs Javier Pendatun


5

5 Ching vs CA Plaza
6

5 Uy vs CA Tacder
7

5 PAL vs CA Vosotros
8

5 Luzon Steel vs SIA Caballero


9
6 Spouses Gregorio and Josefa Yu vs Ngo Yet Te Camasura
0

6 Stronghold vs CA CLARK
1

6 Calderon vs Intermediate Appellate Court BALUCANAG


2

6 Spouses Gregorio and Josefa Yu vs Ngo Yet Te Inok 


3

6 Zenith Insurance Corporation vs CA Inok 


4

6 Paramount vs CA BALUCANAG
5

6 Malayan Insurance vs Salas BALUCANAG


6

6 Zaragoza vs Fidelino BALUCANAG


7

6 Spouses Gregorio and Josefa Yu vs Ngo Yet Te - same with no. 63 case Pacquiao
8

6 Phil-Air Conditioning Center vs RCJ Lines BALUCANAG


9

7 Watercarft Venture Corp vs Wolfe PELAEZ


0

7 Excellent Quality Apparel vs Visayan Surety PELAEZ


1

7 Ligon vs RTC of Makati PELAEZ


2

1. DAVID REYES (Substituted by Victoria R. Fabella), petitioner, vs. JOSE LIM, CHUY
CHENG KENG and HARRISON LUMBER, INC., respondents.

G.R. No. 134241            August 11, 2003

Facts:

Reyes as seller and Lim as buyer entered into a contract to sell a parcel of land located at Pasay
City. Harrison Lumber occupied the Property as lessee with a monthly rental of P35,000. The total
consideration for the purchase of land is P28,000,000.00 payable as P10,000,000.00 upon signing
of the Contract to Sell and the balance of P18,000,000.00 shall be paid on or before March 8, 1995
at 9:30 A.M. at a bank to be designated by the Buyer but upon the complete vacation of all the
tenants or occupants of the property and execution of the Deed of Absolute Sale. However, if the
tenants or occupants have vacated the premises earlier than March 8, 1995, the VENDOR shall
give the VENDEE at least one week advance notice for the payment of the balance and execution
of the Deed of Absolute Sale. In the event the tenants or occupants of the premises subject of this
sale shall not vacate the premises on March 8, 1995, the VENDEE shall withhold the payment of
the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of 4% per month to the
VENDEE based on the amount of the downpayment of P10,000,000.00. 

Reyes filed a complaint stating that Reyes had informed Harrison Lumber to vacate the Property
before the end of January 1995. Reyes also informed Keng and Harrison Lumber that if they failed
to vacate by 8 March 1995, he would hold them liable for the penalty of P400,000 a month as
provided in the Contract to Sell. The complaint further alleged that Lim connived with Harrison
Lumber not to vacate the Property until the P400,000 monthly penalty would have accumulated
and equaled the unpaid purchase price of P18,000,000. Lim filed his Answer stating that he was
ready and willing to pay the balance of the purchase price. Reyes offered to return the P10 million
down payment to Lim because Reyes was having problems in removing the lessee from the
Property. Lim rejected Reyes’ offer and proceeded to verify the status of Reyes’ title to the
Property. Lim learned that Reyes had already sold the Property to Line One Foods Corporation on
1 March 1995 for P16,782,840. After the registration of the Deed of Absolute Sale, the Register of
Deeds issued to Line One TCT No. 134767 covering the Property. Lim denied conniving with Keng
and Harrison Lumber to defraud Reyes.

Lim prayed for the cancellation of the Contract to Sell and for the issuance of a writ of preliminary
attachmentagainst Reyes. The RTC denied the prayer for a writ of preliminary attachment. Lim
requested in open court that Reyes be ordered to depositthe P10 million down payment with the
cashier of the RTC of Parañaque. The RTC granted this motion. The RTC directed Reyes to
deposit the P10 million down payment with the Clerk of Court on or before 30 October 1997. The
CA ruled the RTC could validly issue the assailed orders in the exercise of its equity jurisdiction.
The court may grant equitable reliefs to breathe life and force to substantive law such as Article
1385 of the Civil Code since the provisional remedies under the Rules of Court do not apply to this
case. The CA held the assailed orders merely directed Reyes to deposit the P10 million to the
custody of the RTC to protect the interest of Lim who paid the amount to Reyes as downpayment.
This did not mean the money would be returned automatically to Lim.

Issue:

WON the CA erred in holding that the RTC can issue the assailed Order requiring Reyes to
depositthe amount of P10 million during the pendency of the action, when deposit is not among
the provisional remedies enumerated in Rule 57 to 61 of the 1997 Rules on Civil Procedure. 

Ruling:

No. The instant case, however, is precisely one where there is a hiatus in the law and in the Rules
of Court. If left alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim.
The hiatus may also imperil restitution, which is a precondition to the rescission of the Contract to
Sell that Reyes himself seeks. This is not a case of equity overruling a positive provision of law or
judicial rule for there is none that governs this particular case. This is a case of silence or
insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil Code expressly
mandates the courts to make a ruling despite the "silence, obscurity or insufficiency of the laws."
This calls for the application of equity, which "fills the open spaces in the law."
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking
cancellation of the Contract to Sell. The RTC then ordered Reyes to deposit in court the P10
million down payment that Lim made under the Contract to Sell. Reyes admits receipt of the P10
million down payment but opposes the order to deposit the amount in court. Reyes contends that
prior to a judgment annulling the Contract to Sell, he has the "right to use, possess and enjoy" the
P10 million as its "owner" unless the court orders its preliminary attachment. To subscribe to
Reyes’ contention will unjustly enrich Reyes at the expense of Lim. Reyes sold to Line One the
Property even before the balance of P18 million under the Contract to Sell with Lim became due.
Reyes cannot claim ownership of the P10 million down payment because Reyes had already sold
to another buyer the Property for which Lim made the down payment. On balance, it is
unreasonable and unjust for Reyes to object to the deposit of the P10 million down payment. The
application of equity always involves a balancing of the equities in a particular case, a matter
addressed to the sound discretion of the court. Here, we find the equities weigh heavily in favor of
Lim, who paid the P10 million down payment in good faith only to discover later that Reyes had
subsequently sold the Property to another buyer.

2. Davao Light v. Court of Appeals


GR No. 93262  December 29, 1991
 
FACTS:
The Davao Light and Power Co., Inc. ("Davao Light") filed a collection suit against Queensland Hotel
("Queensland") and Teodorico Adarna ("Adarna") with an ex parte application for a writ of preliminary
attachment. On 3 May 1989, the trial court issued an Order of Attachment, and the corresponding Writ of
Attachment on 11 May 1989. On 12 May 1989, the summons, a copy of the complaint, and the writ of
attachment was served upon Queensland and Adarna. Queensland and Adarna filed a motion to
discharge the attachment on the ground that at the time the Order of Attachment and Writ of Attachment
were issued, the trial court has yet to acquire jurisdiction over the cause of action and over the persons of
the defendants.
 
ISSUE:
Whether or not the writ of preliminary attachment was validly issued.
 
RULING:
Yes. A writ of preliminary attachment may be issued before the court acquires jurisdiction over the person
of the defendant.
 
The court may validly issue a writ of preliminary injunction prior to the acquisition of jurisdiction over the
person of the defendant. There is an appreciable period of time between the commencement of the action
(takes place upon the filing of an initiatory pleading) and the service of summons to the defendant. In the
meanwhile, there are a number of actions which the plaintiff or the court may validly take, including the
application for and grant of the provisional remedy of preliminary attachment. There is nothing in the law
which prohibits the court from granting the remedy prior to the acquisition of jurisdiction over the person of
the defendant. In fact, Rule 57 of the Rules of Court allows the granting of a writ of preliminary injunction
at the commencement of the suit. In the cases of Toledo v. Burgos and Filinvest Credit Corporation v.
Relova, it was held that notice and hearing are not prerequisites to the issuance of a writ of preliminary
attachment. Further, in the case of Mindanao Savings & Loan Association, Inc. v. Court of Appeals, it was
ruled that giving notice to the defendant would defeat the purpose of the remedy by affording him or her
the opportunity to dispose of his properties before the writ can be issued.
 
A preliminary attachment may be discharged with the same ease as obtaining it. In any case, the ease of
availing the provisional remedy of preliminary attachment is matched by the ease with which it can be
remedied by either the posting of a counterbond, or by a showing of its improper or irregular issuance.
The second means of defeating a preliminary attachement, however, may not be availed of if the writ was
issued upon a ground which is at the same time the applicant's cause of action.
 
Preliminary attachment not binding until jurisdiction over the person of the defendant is acquired. The writ
of preliminary attachment, however, even though validly issued, is not binding upon the defendant until
jurisdiction over his person is first acquired.

3. G.R. No. L-252         March 30, 1946


 
TRANQUILINO CALO and DOROTEO SAN JOSE, petitioners,
vs.
ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO RELOVA and TEODULA
BARTOLOME, respondents.

FACTS:

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

RULING:

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
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.

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


K.O. GLASS CONSTRUCTION CO., INC., petitioner, 
vs.
THE HONORABLE MANUEL VALENZUELA
 
Facts:
On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio D. Pinzon
to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed rentals of his truck, as
well as the value of spare parts which have not been returned to him upon termination of the lease. In his
verified complaint, the plaintiff asked for an attachment against the property of the defendant consisting of
collectibles and payables with the Philippine Geothermal, Inc., on the grounds that the defendant is a
foreigner; that he has sufficient cause of action against the said defendant; and that there is no sufficient
security for his claim against the defendant in the event a judgment is rendered in his favor.
 
Finding the petition to be sufficient in form and substance, the respondent Judge ordered the issuance of
a writ of attachment against the properties of the defendant upon the plaintiff's filing of a bond in the
amount of P37,190.00.
 
On June 19, 1978, the defendants therein filed a bond in the amount of P37,190.00 and asked the court
for the release of the same amount deposited with the Clerk of Court, but, the respondent Judge did not
7

order the release of the money deposited.


 
Issue:
Whether or not the respondent judge committed grave abuse of discretion in issuing the writ of
preliminary attachment and in not ordering the release of the money deposited with the Clerk of Court.
 
Ruling:
Yes, the respondent judge committed grave abuse of discretion.
 
First, there was no ground for the issuance of the writ of preliminary attachment. Section 1, Rule 57 of the
Revised Rules of Court, which enumerates the grounds for the issuance of a writ of preliminary
attachment.
 
Sec. 1. Grounds upon which attachment may issue. —A plaintiff or any proper party may,
at the commencement of the action or at any time thereafter, have the property of the
adverse party attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
(a) In an action for the recovery of money or damages on a cause of action arising from
contract, express or implied, against a party who is about to depart from the Philippines
with intent to defraud his creditor;
(f) In an action against a party who resides out of the Philippines, or on whom summons
may be served by publication.
 
Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at any
time, depart from the Philippines with intent to defraud his creditors including the plaintiff." He merely
stated that the defendant Kenneth O. Glass is a foreigner.
There being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are non-resident aliens, the attachment of their
properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an affidavit
for attachment must state that (a) sufficient cause of action exists, (b) the case is one of those mentioned
in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the claim sought to be enforced by
the action, and (d) the amount due to the applicant for attachment or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which the order is granted above
all legal counterclaims. Section 3, Rule 57 of the Revised Rules of Court reads. as follows:
 
While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the defendant
Kenneth O. Glass, he did not state therein that "the case is one of those mentioned in Section 1 hereof;
that there is no other sufficient security for the claim sought to be enforced by the action; and that the
amount due to the applicant is as much as the sum for which the order granted above all legal counter-
claims." It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance
of a writ of preliminary attachment, renders the writ of preliminary attachment issued against the property
of the defendant fatally defective, and the judge issuing it is deemed to have acted in excess of his
jurisdiction. 
 
Finally, it appears that the petitioner has filed a counterbond in the amount of P37,190.00 to answer for
any judgment that may be rendered against the defendant. Upon receipt of the counter-bond the
respondent Judge should have discharged the attachment pursuant to Section 12, Rule 57 of the Revised
Rules of Court
Section 12. Discharge of attachment upon giving counterbond.—At any time after an order of attachment
has been granted, the party whose property has been attached….. Upon the filing of such counter-
bond…. Upon the discharge of an attachment….. shall be delivered to the party making the deposit.

5. PCIB vs ALEJANDRO G.R No 175587 September 21, 2007

FACTS:
 
Petitioner PCIB filed against respondent Alejandro a complaint for a sum of money with prayer for the issuance of a
writ of preliminary attachment.  Said complaint 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 of Alejandro as
security for the loan, PCIB requested the latter to put up additional security.  Alejandro sought a reconsideration of
said request pointing out petitioner’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.  The amount of P249,828,588.90 was the consolidated amount of a series of yen loans granted
by PCIB to Alejandro during the months of February and April 1997.
 
In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of the
Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding
his verbal promise to PCIB not to withdraw the same prior to their assignment as security for the loan; and (2) that
respondent is not a resident of the Philippines.  
 
The trial court granted the application and issued the writ ex parte after PCIB posted a Php 18.7M bond, issued by
Prudential Guarantee & Assurance Inc.  Also, the bank deposits of Alejandro with RCBC were garnished. Alejandro,
through counsel, voluntarily submitted to the jurisdiction of the court.
 
Subsequently, Alejandro filed a 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 petitioner 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,
petitioner regularly communicated with him through its representatives. Respondent 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.
 
The trial court issued an order quashing the writ and holding that the withdrawal of respondent’s unassigned deposits
was not intended to defraud petitioner.  It also found that the representatives of petitioner personally transacted with
respondent through his home address in Quezon City and/or his office in Makati City.  It thus concluded that
petitioner misrepresented and suppressed the facts regarding respondent’s residence considering that it has personal
and official knowledge that for purposes of service of summons, respondent’s residence and office addresses are
located in the Philippines.  
 
With the denial of PCIB’s motion for reconsideration, it elevated the case to the CA via a petition for certiorari. The
petition was dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid order.  
PCIB filed a motion for reconsideration but was denied. On petition with the SC, the case was dismissed for late
filing. PCIB filed a motion for reconsideration but was likewise denied with finality on March 6, 2000.
 
 
 
 
ISSUE :  WON THE COURT CAN PASS UPON THE ISSUES OF PROPRIETY OF THE ISSUANCE OF A WRIT OF
ATTACHMENT, MISREPRESENTATION BY PCIB AND RESIDENCE OF ALEJANDRO
 
DECISION:  No.
 
RATIO:
            
The ruling of the trial court that PCIB is not entitled to a writ of attachment because Alejandro is a resident of the
Philippines, that his act of withdrawing his deposits with petitioner was without intent to defraud, and that PCIB
misrepresented that Alejandro was residing out of the Philippines, is 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 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. Hence, the issues of
misrepresentation by petitioner and the residence of respondent for purposes of service of summons can no longer
be questioned by petitioner in this case.

6. GENERAL VS. DEVENECIA


 
G.R. No. L-894 July 30, 1947
LUIS F. GENERAL, petitioner, vs. JOSE R. DE VENECIA, Judge of First Instance of Camarines Sur, and
PETRA VDA. DE RUEDAS, also representing Ernesto, Armando and Gracia (minors), respondents.
 
 
Facts:
A complaint was filed by Ruedas against Luis General. That complaint was filed on June 4, 1946, to
recover the value of a promissory note.
 
It prayed additionally for 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.
 
Having been served with summons, the defendant therein, Luis F. General, submitted, on June 11, 1946,
a motion praying for dismissal of the complaint and dissolution of the attachment. He claimed it was
premature, in view of the provisions of the debt moratorium orders of the President of the Philippines
(Executive Orders Nos. 25 and 32 of 1945). Denial of this motion and of the subsequent plea for
reconsideration, prompted the institution of this special civil action, which we find to be meritorious, for the
reason that the attachment was improvidently permitted, the debt being within the terms of the decree of
moratorium (Executive Order No. 32).
 
Issue: Can an attachment issue when the demand is not yet due and demandable? NO.
 
Held:
It is our view that, 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
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 P4,000 "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 (see Raquiza vs. Bardford, 75 Phil., 50), it is obvious that the six-month
period has not begun; and Luis F. General has at present and in June, 1946, no demandable duty to
make payment to plaintiffs, independently of the moratorium directive.
 
On 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." (7 C.J.S., p.
204.)
 
It must be observed that under our rules governing the matter 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" (sec. 3, Rule 59). Inasmuch as the commitment
of Luis F. 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. 

7. Miailhe vs. Lencquesaing


GR No. L-67715
July 11, 1986
 
FACTS:
 
Petitioners William Miailhe, sisters Monique Miailhe and Elaine Miailhe de Lencquesaing and their mother
Victoria Miailhe are co-owners of a property located in Metro Manila. After failing to secure an out-of-court
partition due to unwillingness of respondent Elaine, petitioners filed an action for Partition in RTC Manila.
 
Respondent filed a criminal complaint for estafa against William for allegedly misappropriating the funds
which should have been turned over to her as her share in the rentals of the property. She then flew back
in Paris, her country of residence.
 
Petitioner then filed a complaint for damages against respondent for embarrassing his honor and
reputation as a private person. He also prayed for the issuance of a writ of preliminary attachment of the
properties of respondent consisting of 1/6 undivided interests in certain real properties in Manila, on the
ground that respondent is a non-resident of the Philippines, pursuant to par. (f), section 1 of Rule 57. RTC
Manila Judge Barbers granted the petition for preliminary attachment. Respondent, after denying their
motion to lift the writ of attachment for being non-compliant with Section 1 of Rule 57, and for that said
claim was for unliquidated damages, filed an appeal with the IAC on the grounds of grave abuse of
discretion.
 
ISSUE:
 
Whether or not RTC Judge Barbers exceeded his jurisdiction in granting the writ of preliminary of
attachment in favor of petitioner William.
 
HELD:
 
Yes. RTC Judge Barbers exceeded his 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.
 
While it is true that Section 1(f) of Rule 57 provides that attachment may issue in an
action against a party who resides out of the Philippines, " irrespective of the nature of
the action or suit, still it is imperative that the amount sought be liquidated.

Insular Savings Bank vs. CA


GR. No. 123638, June 15, 2005

Facts:
On Dec. 11, 1991, private respondent Far East Bank and Trust Company instituted Arbitration
case against herein petitioner before the Arbitration Committee of the Philippine Clearing House
Corporation (PCHC). The dispute involved three unfunded checks, amounting to P 25, 200,000.00, drawn
against private respondent bank and presented by petitioner for clearing. Private respondent returned the
checks however its total value was already credited to petitioner’s account. Petitioner refused to return the
same. Pending the arbitration case, respondent bank filed a Civil case in the RTC of Makati and prayed
for the issuance of a writ of preliminary attachment for the amount of P 25, 200,000.00, which said court
granted. While the arbitration case was still pending, the parties agreed to temporarily divide the amount
where each party have P 12, 600,000.00. Petitioner then filed a motion to discharge attachment by
counter –bond in the amount of P 12, 600,000.00, which was denied by the RTC. On appeal, CA found no
merit in the petitioner’s case. Hence this review.
Issue: WON the trial court committed grave abuse of discretion in denying petitioner’s motion to discharge
attachment by counter-bond in the amount of P 12, 600, 000.00.

Ruling:
Yes. Under the old Sec. 12 of the Rules of Court; 
‘At any time after an order of attachment has been granted, the party whose property has been
attached, may upon reasonable notice to the applicant, apply to the judge who granted the order
or to the judge of the court which the action is pending, for an order, discharging the attachment
wholly or in part on the security given. The judge shall, after hearing, order the discharge of the
attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is
filed on behalf of the adverse party, with the clerk or judge of the court where the application is
made in an amount equal to the value of the property attached as determined by the judge, to
secure the payment of any judgment that the attaching creditor may recover in the action. ’

As things stood, respondent’s principal claim against petitioner immediately prior to the filing of
the motion to discharge attachment has effectively been pruned down to P 12, 600, 000.00. Accordingly,
the trial court should have allowed a total discharge of the attachment on a counter-bond on the reduce
claim of respondent. The trial court, therefore, committed grave abuse of discretion when it denied
petitioner’s motion to discharge attachment by counter-bond in the amount of P12, 600, 000.00.   In the
Revised Rules of Court, Sec. 12 of Rule 57 provides that 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.’

9. ISIDRO TAN v. FRANCISCO ZANDUETA


G.R. No. L-43721 June 15, 1935
Diaz, J.

Facts: The respondent Tiu Chay sued the petitioner Isidro Tan, to recover from him the amount of
P22,500 which he alleged to be the half corresponding to him of the P45,000 which they won as a prize in
the last drawing of the sweepstakes which they purchased with a part of the capital invested in a sari-sari
store. 

Simultaneously with his complaint, Tiu Chay asked and obtained from the respondent judge the
attachment of the property of the petitioner Isidro Tan upon filing a bond in the amount of P5,000. Isidro
Tan succeeded in dissolving the attachment by filing, a counter bond in the same amount to secure said
attachment. As soon as he obtained the order and filed the required counter bond, he withdrew from the
Philippine National Bank his deposit. 

When the time given by the respondent judge to file said counter expired, he was required to appear
before the respondent judge and show cause why he should not be found in contempt of court, however
the judge was not satisfied. Thereafter, he was declared guilty of contempt and immediately ordered his
confinement.

Issue: Whether the writ of preliminary attachment issued by the respondent judge at the instance of Tiu
Chay was irregular and illegal?

Held: No, the writ of preliminary attachment was issued in strict conformity to the law, because the
complaint wherein the said attachment was issued alleged that the petitioner, after collecting the prize of a
ticket in the sweepstakes, appropriated the entire prize exclusively for himself, in complete disregard of
said Tiu Chay. He was merely a depository or agent of the latter as to said half, he was required to turn
over to the respondent the part of the prize won corresponding to the latter. 
Petitioner's contention that, in view of his motion to dissolve the writ of preliminary attachment, on the
ground that the allegations of the complaint of the respondent Tiu Chay were not true, said attachment
should have been dissolved without any condition, is without force. The respondent judge had
discretionary power, according to section 441 of Act No. 190, to dissolve or to leave in force the said
attachment, and it was precisely in the exercise of this power, that he decided to dissolve the attachment
but conditioned on petitioner's filing a counter bond for P5,000. 

10. Olsen & Co. vs. Olsen


GR No. L-23237 November 14, 1925
FACTS: This is an appeal taken by the defendant from a judgment of the Court of First Instance of
Manila, sentencing him to pay plaintiff corporation the sum of P66,207.62 with legal interest thereon at the
rate of 6 per cent per annum from February 1, 1923, the date of the filing of the complaint, until full
payment and the costs, and dismissing the cross-complaint and counterclaim set up by him.

As ground of his appeal, the defendant assigns four errors committed by the trial court, to wit: (1) The
holding that the defendant-appellant 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 the defendant from the complaint of the plaintiff corporation and of
not having given judgment for the defendant and against the plaintiff 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 defendant.

ISSUES: (1) whether or not an order denying a motion for the annulment of a preliminary attachment may
be reviewed through an appeal
(2) whether or not the trial court committed error in denying the motion for the annulment of the
preliminary attachment levied upon the property of the defendant-appellant.

RULING: (1) 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
judgement 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 special 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.

(2) It is admitted by the defendant-appellant that he is indebted to the plaintiff-appellee corporation in the
sum of P66,207.62, but denies that he has contracted said debt fraudulently.

The evidence shows that the defendant-appellant was president-treasurer and general manager of the
plaintiff-appellee 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. The
defendant-appellant 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.

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, the defendant-appellant
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 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. 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 the defendant-appellant
himself and his co-speculator, 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. The conduct
of the defendant-appellant 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, and the order of the
Court of First Instance of Manila, denying the motion for the annulment of the injunction in
question, is in accordance with law. 
 

11. Santos vs Bernabe


G.R. No. L-31163
November 6, 1929
 
FACTS: On March 20, 1928, Urbano Santos deposited 778 cavans and 38 kilos of palay in the
warehouse of Jose Bernabe. At the same time, Pablo Tiongson also deposited 1,026 cavans and 9 kilos
of palay. The share of Tiongson and Santos were mixed together and cannot be separated.
 
Later on, Pablo Tiongson files a case against Jose Bernabe to recover the 1,026 cavans and 9
kilos of palay deposited in Bernabe’s warehouse. Tiongson then files for a petition for a writ of
attachment and the Court granted it. Bernabe’s properties were attached, including only 924 cavans of
rice and 31 ½ kilos of palay which was found by the sheriff in Bernabe’s warehouse. These were sold at a
public auction and the proceeds were delivered to Tiongson.

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 tried to intervene in the attachment of the palay. However, the sheriff had already
proceeded with the attachment, so Santos files a complaint. 
 
Santos says that Tiongson cannot claim the 924 cavans and 31 ½ kilos of palay. Santos says that
by asking for the attachment of the properties, Tiongson is claiming that the cavans of rice all belonged to
Bernabe and not to him.
 
ISSUE: WON the issuance of the preliminary attachment was proper.
 
HELD: Yes. The issuance of the preliminary attachment was proper. The  action brought by Pablo
Tiongson against Jose 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 plaintiff  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 Pablo Tiongson against the property of Jose 
Bernabe may be construed as a claim for the delivery of the sacks of palay deposited by the
former with the latter.
 
 12. State Investment House vs CA
GR No. 82446, July 29, 1988 

Facts: P. O. Valdez Inc. entered a loan contract with State Investment House Inc. The said loan was
secured by 2 parcels of land, stock certificate and Postdated checks. The Postdated checks were
deposited by State Investment House upon maturity, but the same were bounced for insufficient funds.
Despite of demands P.O Valdez failed to pay its obligation.
 
State Investment House filed a collection suit with a prayer for preliminary attachment. The trial court
granted the writ of preliminary attachment but lifted by the same court upon motion by the P.O Valdez Inc.
The preliminary attachment was grounded upon fraud when it was alleged that P. O Valdez
misrepresented the State Investment House in issuing a checks without funds.
 
Issue: W/N the lifting of writ preliminary attachment was correct?
 
Ruling: Yes. The SC said that the main thrust of the prayer for preliminary attachment is the alleged
misrepresentation of the debtor P.O. Valdez Inc. The two checks given by P.O Valdez Inc. served as a
collateral for the loans granted by State Investment House, such checks are mere evidence of
outstanding obligation of P.O Valdez Inc. to State Investment House. It could have refused accepting the
checks as collateral, the loans had been contracted and released to P.O Valdez Inc. long before the
checks were issued. Thus the State Investment House cannot assail that loan was granted because of
misrepresentation by P.O Valdez Inc. hence it would be proper the lifting of writ of preliminary attachment.

13. ABOITIZ & COMPANY, INC and N. CUSI, JR. vs COTABATO BUS COMPANY,
 
Summary:
Insolvency cannot be a ground for the issuance of a writ of attachment.
The following instances of “removal” alleged by petitioner do not contemplate the intent to defraud creditors, hence,
they cannot be grounds for the issuance of a writ of attachment:
 
a) Removal of dilapidated buses to undergo repair – Repair was undertaken on 5 of respondent’s buses in line with
the company’s desire to place them under running condition. It was a desire to serve the interest of the public
not to defraud creditors.
b) Dwindling bank account despite daily income of 10-14 thousand pesos. This was due to the heavy operating
expenses which include salaries and wages of employees and workers.
c) Mortgage of buses to DBP - The bank should not have failed to take proper court action had it been true that
their disposal or removal was true.  Buses and machineries are hard to remove. Sale and other forms of
disposition of this kind of properties is not difficult of detection or discovery. Besides, no proof of sale or
transfer of any of them was not adduced which should been easily obtainable.

Attachment; Insolvency is not a proper ground for issuance of a writ of attachment.—Going


forthwith to this question of whether insolvency, which petitioners in effect claims to have been proven
by the evidence, particularly by company’s bank account which has been reduced to nil, may be a
ground for the issuance of a writ of attachment, the respondent Court of Appeals correctly took its
position in the negative on the strength of the explicit ruling of this Court in Max Chamorro & Co. vs.
Philippine Ready Mix Concrete Company, Inc. and Hon. Manuel P. Barcelona.
 
Same; Facts of this case do not warrant issuance of the writ of attachment.—It is an undisputed fact
that, as averred by petitioner itself, 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, of the Rules of
Court. 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.
 
Same; Same.—Moreover, as the buses were mortgaged to the DPB, their removal or disposal as
alleged by petitioner 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, which seems to exist only in
petitioner’s apprehensive imagination, the DBP should not have failed to take proper court action,
both civil and criminal, which apparently has not been done.
 
Same; Same.—The dwindling of respondent’s bank account despite its daily income of from
P10,000.00 to P14,000.00 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. Petitioner is only one of the suppliers.
 
Same; Same.—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, petitioner has adduced no proof of any sale or transfer of any of
them, which should have been easily obtainable.
 
Action; Judges; Judge Cusi was improperly joined as a co-petitioner.—In the result. Judge Cusi was
improperly joined as a co-petitioner.
 
FACTS: The instant petition is a collection of P155,739.41 filed by petitioner herein, Aboitiz agaibnst
Cotabato Bus Co.
 
Through a writ of preliminary attachment, the sheriff attached personal properties of the Cotabato Bus
consisting of some buses, machinery and equipment because petitioner alleged that the defendant “has
removed or disposed of its properties or assets, or is about to do so, with intent to defraud its creditors.”
 
Cotabato Bus filed an “Urgent Motion to Dissolve or Quash Writ of Attachment” alleging 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; that also the Cotabato Bus Company, Inc. has been acquiring and
buying more assets”. The lower court denied the motion including the appeal.
 
CA restrained the court from enforcing the writ of attachment. Hence this appeal.
 
ISSUE: Was the writ of attachment properly issued upon showing that Cotabato Bus’ removal its
properties constitute an act in fraud of its creditors?
 
HELD: NO. This cannot be the removal intended as ground for the issuance of a writ of attachment under
section 1 (e), Rule 57, of the Rules of Court. 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 petitioner 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, which seems to exist only in petitioner’s apprehensive
imagination, the DBP should not have failed to take proper court action, both civil and criminal, which
apparently has not been done.
 
The dwindling of respondent’s bank account despite its daily income 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. Petitioner Aboitiz is only one of the suppliers.
 
The sale or other form of disposition of any of this kind of property is not difficult of detection or discovery,
and strangely, petitioner, has adduced no proof of any sale or transfer of any of them, which should have
been easily obtainable.
 
Decision: Petition is denied.
 
 

14.) PEOPLE'S BANK AND TRUST COMPANY vs. SYVEL'S INCORPORATED, ANTONIO Y. SYYAP
and ANGEL Y SYYAP

G.R. No. L-29280 August 11, 1988

Facts:

This is an action for foreclosure of chattel mortgage executed in favor of the plaintiff by the defendant
Syvel's Incorporated on its stocks of goods, personal properties and other materials owned by it and
located at its stores or warehouses

The chattel mortgage was duly registered in the corresponding registry of deeds of Manila and Pasay
City. The chattel mortgage was in connection with a credit commercial line in the amount of P900,000.00
granted the said defendant corporation, the expiry date of which was May 20, 1966. 

On May 20, 1965, defendants Antonio V. Syyap and Angel Y. Syyap executed an undertaking in favor of
the plaintiff 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. Against the credit line granted the defendant Syvel's Incorporated the latter drew advances in the
form of promissory notes which are attached to the complaint as Annexes "C" to "l." 

In view of the failure of the defendant corporation to make payment in accordance with the terms and
conditions agreed upon in the Commercial Credit Agreement the plaintiff 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.

On petition of the plaintiff based on the affidavits executed by Mr. Leopoldo R. Rivera, Assistant Vice
President of the plaintiff bank and Atty. Eduardo J. Berenguer on January 12, 1967, to the effecleet,
among others, that the defendants are disposing of their properties with intent to defraud their creditors,
particularly the plaintiff herein, a preliminary writ of attachment was issued. As a consequence of the
issuance of the writ of attachment, the defendants, in their answer to the complaint set up a compulsory
counterclaim for damages.

Appellants contend 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. 

Issue:

Whether or not the lower court erred in not holding that the writ of preliminary attachment is devoid of any
legal and factual basis whatsoever. (NO)

Held:

No. The writ of preliminary attachment has legal and factual basis.

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 appellee
bank; that the Syvel's Stores at the Escolta, Rizal Avenue and Morayta Street were no longer operated by
appellants and that the latter were disposing of their properties to defraud appellee bank. Such
testimonies and circumstances were given full credit by the trial court in its decision (Brief for Appellee, p.
14). 

Hence, the attachment sought on the ground of actual removal of property is justified where there is
physical removal thereof by the debtor, as shown by the records.

Besides, the actuations of appellants 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." (Record
on Appeal, pp. 45-46). 

Therefore, "the act of debtor (appellant) in taking his stock of goods from the rear of his store at night, is
sufficient to support an attachment upon the ground of the fraudulent concealment of property for the
purpose of delaying and defrauding creditors." 

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 (Francisco, Revised Rules of Court, supra, pp. 24-25), In fact the
trial court is impressed "that not only has the plaintiff 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
port;.on of the stocks of Syvel's Incorporated in order to render ineffectual at least partially anyjudgment
that may be rendered in favor of the plaintiff."

Appellants having failed to adduce evidence of bad faith or malice on the part of appellee 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 appellee's complaint more than justify the issuance of the writ of
attachment.
15. Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE
PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA, Respectively,
respondents.
G.R. Nos. 65957-58; July 5, 1994
Quiason, J.
 
Facts:
Eleazar Adlawan was awarded a contract for two irrigation projects by the National Irrigation
Administration (NIA). Consequently, Aboitiz and Company, Inc. (Aboitiz) loaned Adlawan money and
equipment for the said projects. For its inability to pay, Aboitiz filed a collection for sum of money against
Eleazar V. Adlawan in the Court of First Instance of Cebu City. An ex parteapplication for attachment was
also filed by Aboitiz against the property of Adlawan which was subsequently granted and enforced after
Aboitiz paid the attachment bond. However, Aboitiz filed a notice of dismissal of its complaint which
resulted to all orders of the court issued prior to the filing of said notice of dismissal be considered as
functus oficio and all pending incidents thereto as moot and academic. Adlawan filed a motion to
implement the order of dismissal of the case but it was dismissed on the ground that Aboitiz filed an
action for delivery of personal property as well as Adlawan’s action for damages in connection with the
seizure of his property under the writ of attachment. The dismissal of the motion led to the ruling of the
Supreme Court to order Aboitiz to return the property of Adlawan without prejudice to the outcome of the
cases filed by both parties.
 
Then, Aboitiz filed for collection of sums of money with prayers for the issuance of writs of attachment
against Eleazar V. Adlawan and Elena S. Adlawan in the Regional Trail Court of Cebu City. The
Adlawans alleged that 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, on the other hand, averred that the issuance of the writ of attachment was justified
because the Adlawans were intending to defraud Aboitiz by mortgaging 11 parcels of land to the
Philippine Commercial and Industrial Bank (PCIB) in consideration of a loan, thereby making PCIB a
preferred creditor to the prejudice of respondent Aboitiz
 
Issue:
Whether the issuance of writs of attachment is proper.
 
Held:
No. The affidavit submitted by Aboitiz in support of its prayer for the writ of attachment does not meet the
requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent
removal, concealment and disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA
552 (1963), 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 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual
basis on defendant'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.
 
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 (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]

16. CLAUDE NEON LIGHTS, FEDERAL INC., U. S. A., petitioner, vs. PHILIPPINE ADVERTISING
CORPORATION and FRANCISCO SANTAMARIA, Judge of First Instance of Manila, respondents
G.R. No. L-37682             November 26, 1932
 
Facts:
Philippine Advertising Corporation (PAC) filed suit against Claude Neon Lights, Federal Inc., USA
(Claude) in the CFI Manila, claiming P300,000 as damages for alleged breach of the agency contract
existing between them. At the same time, PAC filed in said court an application for writ of
attachmentduly verified in which it is stated that Claude is a foreign corporation having its principal place
of business in the City of Washington, District of Columbia. It is not alleged in said application 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 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 plaintiff may have
the property of the defendant attached "in an action against a defendant not residing in the
Philippine Islands".
 
Claude 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 business in the Philippine Islands
on the date said writ of attachment was issues. Claude 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 PAC, as the agent of Claude, on the date said
attachment was levied. Considered from a practical and economic viewpoint, its position in the business
community was indistinguishable from that of a domestic corporation.
 
Issue:
WON paragraph 2 of section 424 of the Code of Civil Procedure is applicable to Claude.
 
Ruling:
No. Section 242 of the Code of Civil Procedure under which the petitioner's property was attached, reads
as follows:
Attachment. — A plaintiff may, at the commencement of his action, or at any time afterwards,
have the property of the defendant attached as security for the satisfaction of any judgment that
may be recovered, unless the defendant gives security to pay such judgment, in the manner
hereinafter provided, in the following cases.
1. In all the cases mentioned in section four hundred and twelve, providing for the arrest
of a defendant. But the plaintiff must make an election as to whether he will ask for an
order of arrest or an order of attachment; he shall not be entitled to both orders;
2. In an action against a defendant not residing in the Philippine Islands.
It may be observed at the outset that the words of section 424, supra, 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. But that fiction or analogy between corporations and
natural persons by no means extends so far that it can be said that every statute applicable to
natural persons is applicable to corporations.Indeed, within the same jurisdiction a corporation has
been held to be a "citizen" of the state of its creation for the purpose of determining the jurisdiction of the
Federal courts (Wisconsin vs. Pelican Insurance Co., 127 U. S., 265) but not a "citizen" within the
meaning of section 2 of article 4 of the Constitution of the United States which provides that the citizens of
each state shall be entitled to all the privileges and immunities of citizens of the several states (Paul vs.
Virginia, 8 Wall., 169).
There is no 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"
(section 68, Act No. 1459, as amended, the Corporation Law), or to produce evidence of "fair dealing"
(ibid.). 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 (Cf. section 71, Act No. 1459 of the Corporation Law). His books and papers are not liable to
examination "at any time" by the Attorney-General, the Insular Auditor, the Insular Treasurer, "or any
other officer of the Government" on the order of the Governor-General (section 54, ibid.). He is not, like a
foreign corporation "bound by all laws, rules and regulations applicable to domestic corporations" . . .
(section 73, ibid.), which are designed to protect creditors and the public. He can evade service of
summons and other legal process, the foreign corporation never.
 
Paragraph 2 of section 424, supra does not apply to a domestic corporation. Our laws and jurisprudence
indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to the status of
domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser & Co.,
46 Phil., 70, 76; Yu Cong Eng vs.Trinidad, 47 Phil., 385, 411.) 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. 

17. STATE INVESTMENT v. CITIBANK


GR No.79926-27, October 17, 1991

FACTS:
The chief question in the appeal at bar is whether or not foreign banks licensed to do business in the
Philippines, may be considered "residents of the Philippine Islands" within the meaning of Section 20 of
the Insolvency Law.

The petition for involuntary insolvency (filed by BA, Citibank and HSBC) alleged that CMI had obtained
loans from the three petitioning banks (Bank of America, Citibank, HSBC) ; that in November, 1981, State
Investment House, Inc. (SIHI) and State Financing Center, Inc. (SFCI) had separately instituted actions
for collection of sums of money and damages in the Court of First Instance of Rizal against CMI; and that
on application of said plaintiffs, writs of preliminary attachment had been issued which were executed on
"the royalty/profit sharing payments due CMI from Benguet Consolidated Mining, Inc.; and that he (CMI)
has suffered his (CMI's) property to remain under attachment or legal process for three days for the
purpose of hindering or delaying or defrauding his (CMI's) creditors.

The petition was opposed by State Investment House, Inc. (SIHI) and State Financing Center, Inc.
(SFCI). 3 It claimed that the Court had no jurisdiction because the alleged acts of insolvency were false:
the writs of attachment against CMI had remained in force because there were "just, valid and lawful
grounds for the(ir) issuance; the Court had no jurisdiction to take cognizance of the petition for
insolvency because petitioners are not resident creditors of CMI in contemplation of the Insolvency Law;
and the Court has no power to set aside the attachment issued in favor of intervenors-oppositors SIHI and
SFCI.

SIHI and SFCI then filed a Motion for Summary Judgment dated May 23, 1983 "on the ground that, based
on the pleadings and admissions on record, the trial court had no jurisdiction to adjudicate CMI insolvent
since the petitioners (respondent foreign banks) are not "resident creditors" of CMI as required under the
Insolvency Law. 

The Regional Trial Court 13 found merit in the motion for summary judgment. By Order datedOctober 10,
1983, it rendered "summary judgment dismissing the . . . petition for lack of jurisdiction over the subject
matter. The Appellate Court reversed the Trial Court's Order of October 10, 1983 and remanded the case
to it for further proceedings.

ISSUE:
Whether or not the writs of attachment against CMI were based on "just, valid and lawful grounds”.

RULING:

No. The Supreme Court itself has already had occasion to hold  that 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 the defendant 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. Be this as it may, this Court pointed out that:

. . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do
business here, to the status of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells
Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu; Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it
would be entirely out of line with this policy should we make a discrimination against a foreign corporation,
like the petitioner, 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.

18. G.R. No. 84034  December 22, 1988


ALBERTO SIEVERT, petitioner, vs.
COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and AURELIO CAMPOSANO,
respondents.
 
FACTS: 
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

RULING: 
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.
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.

19. RICARDO CUARTERO, petitioner, 


vs.
COURT OF APPEALS
 
Facts:
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before the Regional Trial Court of
Quezon City against the private respondents, Evangelista spouses, for a sum of money plus damages
with a prayer for the issuance of a writ of preliminary attachment.
 
On September 19, 1990, the writ of preliminary attachment was issued pursuant to the trial court's order
dated August 24, 1990. On the same day, the summons for the spouses Evangelista was likewise
prepared.
 
The following day, that is, on September 20, 1990, a copy of the writ of preliminary attachment, the order
dated August 24, 1990, the summons and the complaint were all simultaneously served upon the private
respondents at their residence. Immediately thereafter, Deputy Sheriff Ernesto L. Sula levied, attached
and pulled out the properties in compliance with the court's directive to attach all the properties of private
respondents not exempt from execution, or so much thereof as may be sufficient to satisfy the petitioner's
principal claim in the amount of P2,171,794.91.
 
Private respondents, then, filed a special civil action for certiorari with the Court of Appeals questioning
the orders of the lower court dated August 24, 1990 and October 4, 1990 with a prayer for a restraining
order or writ of preliminary injunction to enjoin the judge from taking further proceedings below.
 
In a Resolution dated October 31, 1990, the Court of Appeals resolved not to grant the prayer for
restraining order or writ of preliminary injunction, there being no clear showing that the spouses
Evangelista were entitled thereto.

On June 27, 1991, the Court of Appeals granted the petition for certiorari and rendered the questioned
decision. The motion for reconsideration filed by herein petitioner Cuartero was denied for lack of merit in
a resolution dated October 22, 1991.
 
Issue:
Whether or not CA erred when it held that RTC could not validly issue the subject writ of preliminary
attachments.

Ruling:
No, the CA did not err in holding that RTC did not validly issue the subject writ of preliminary attachments.
The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168 SCRA 692 (1988) in arriving
at the foregoing conclusion. It stated that:

Valid service of summons and a copy of the complaint vest jurisdiction in the court over the defendant
both for the purpose of the main case and for purposes of the ancillary remedy of attachment and a court
which has not acquired jurisdiction over the person of defendant, cannot bind the defendant whether in
the main case or in any ancillary proceeding such as attachment proceedings
 
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 (Adlawan v. Tomol)
 
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.
 
As has been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190 SCRA 262 (1990), citing
Mindanao Savings and Loan Association, Inc. v. Court of Appeals, 172 SCRA 480 (1989), 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 writ of preliminary attachment can be applied for and granted at the commencement of the action or
at any time thereafter (Section 1, Rule 57, Rules of Court).
 
In Davao Light and Power, Co., Inc. v. Court of Appeals, supra, the phrase "at the commencement of the
action" is interpreted as referring to the date of the filing of the complaint which is a time before summons
is served on the defendant or even before summons issues.
 
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.
 
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its questioned decision, 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.

 
The circumstances in Sievert are different from those in the case at bar. When the writ of attachment was
served on the spouses Evangelista, the summons and copy of the complaint were also simultaneously
served.
 
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 (Annex "B"). The issue of fraud,
then, is clearly within the competence of the lower court in the main action.

20. Northwest Airline vs CA

Facts:
Petitioner NORTHWEST, a corporation organized under the laws of the State of Minnesota, U.S.A.,
sought to enforce in the RTC a judgment rendered in its favor by a Japanese court against private
respondent SHARP, a corporation incorporated under Philippine laws.
 
Plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its Japan branch, entered into
an International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its
air transportation tickets. Unable to remit the proceeds of the ticket sales made by defendant on
behalf of the plaintiff under the said agreement, plaintiff sued defendant in Tokyo, Japan, for
collection of the unremitted proceeds of the ticket sales, with claim for damages.
 
A writ of summons was issued by the Tokyo District Court against defendant at its office. The attempt to
serve the summons was unsuccessful because the bailiff was advised by a person in the office that Mr.
Dinozo, the person believed to be authorized to receive court processes was in Manila and would be back
on April 24, 1980.
 
On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr. Dinozo refused to
accept the same claiming that he was no longer an employee of the defendant.
 
After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided
to have the complaint and the writs of summons served at the head office of the defendant in
Manila. The Director of the Tokyo District Court requested the Supreme Court of Japan to serve the
summons through diplomatic channels upon the defendant's head office in Manila.
 
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of summons.
Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court
proceeded to hear the plaintiff's complaint and rendered judgment. The same became final and
executory.
 
The judgment was enforced, defendant filed its answer averring that the judgment of the 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.

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 also proper to presume the regularity of the proceedings and the giving of due
notice therein.
6

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 so-called 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.
 
It was the Tokyo District Court which ordered that summons for SHARP be served at its head office in the
Philippine's 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.
In deciding against the petitioner, the respondent court sustained the trial court's reliance on Boudard vs.
Tait where this Court held:
 
The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a money
judgment, must be based upon personal service within the state which renders the judgment.
 
xxx xxx xxx
The process of a court, has no extraterritorial effect, and no jurisdiction is acquired over the person of the
defendant by serving him beyond the boundaries of the state. Nor has a judgment of a court of a foreign
country against a resident of this country having no property in such foreign country based on process
served here, any effect here against either the defendant personally or his property situated here.
 
Process issuing from the courts of one state or country cannot run into another, and although a
nonresident defendant may have been personally served with such process in the state or country of his
domicile, it will not give such jurisdiction as to authorize a personal judgment against him.

This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs. Philippine
Advertising Corp., 57 Phil. 607] that 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;
[Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of
the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary attachment
may not be applied for and granted solely on the asserted fact that the defendant 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. Be this as it may, this Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed
to do business here, to the status of domestic corporations. (Cf. Section 73, Act No. 1459, and
Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil.
385, 411) We think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, 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. . . .
21. SALAS VS. ADIL
 
G.R. No. L-46009 May 14, 1979
RICARDO T. SALAS and MARIA SALAS, Petitioners, vs. HON. MIDPANTAO L. ADIL, as Judge of
Branch II, Court of First Instance of Iloilo, ROSITA BEDRO and BENITA YU, Respondents.

Facts:
On September 10, 1976, respondents Rosita Bedro and Benita Yu filed the afore-mentioned civil action
with the Court of First Instance of Iloilo against herein petitioners Ricardo T. Salas and Maria Salas, the
Philippine Commercial & Industrial Bank, in its capacity as Administrator of the Testate Estate of the
deceased Charles Newton Hodges, and Avelina A. Magno, in her capacity as Administratrix of the
Testate Estate of the deceased Linnie Jane Hodge to annul the deed of sale of Lot No. 5 executed by
administrators of the Hodges Estate in favor of the Spouses Ricardo T. Salas and Maria Salas and for
damages.
 
In a motion dated May 12, 1977, private respondents filed a motion for attachment, alleging, among
others, that the case was “for annulment of a deed of sale and recovery of damages” and that the
defendants have removed or disposed of their properties or are about to do so with intent to defraud their
creditors especially the plaintiffs in this case.
 
On May 13, 1977, respondent Judge issued ex-parte a Writ of Attachment "against the properties of the
defendants particularly Lots Nos. 1 and 4 of Psc-2157 less the building standing thereon upon the
plaintiffs filing a bond in the amount of P200,000.00 subject to the approval of this Court." After a surety
bond in the amount of P200,000.00, executed on May 11, 1977 by the Central Surety and Insurance
Company as surety was filed, the writ itself was issued by respondent Judge on May 16, 1977, directing
the Sheriff to attach the properties above-mentioned. On May 17, 1977, the Deputy Sheriff of Iloilo levied
upon the aforesaid properties of petitioners.

Issue: In what instance is the hearing of writ required?

Held:
Considering the gravity of the allegation that herein petitioners 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 lances to show the reason why plaintiffs believe that defendants are disposing of their
properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to petitioners and
to allow wherein evidence is them to present their position at a to be received. Moreover, it appears from
the records that private respondents are claiming unliquidated damages, including moral damages, from
petitioners. The authorities agree that the writ of attachment is not available 'm a suit for damages where
the amount claimed is contingent or unliquidated.

22. La Granja, Inc. vs. Felix Samson


G.R. No. 40054, September 14, 1933
 
FACTS:
Petitioner La Granja, Inc. filed a complaint for a recovery of sum of money in the CFI of Cagayan against
Chua Bian, Chua Yu Lee and Chua Ki. Petitioner also prayed for the issuance of an order of attachment
against the aforementioned defendants' property and accompanied said complaint with an affidavit of the
manager of the aforesaid petitioner, 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.  
 
Felix Samson, judge of the CFI of Cagayan, required petitioners to present evidence to substantiate the
allegation before granting its petition.
 
Petitioner refused to comply with the court’s requirement alleging that it was not obliged to do so. Hence,
respondent judge dismissed the petition for an order of attachment.
 
ISSUE:
 
Whether or not the mere filing of an affidavit in due form is sufficient to compel a judge to issue an order
of attachment.
 
HELD:
 
No. 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 determination of such sufficiency being discretionary
on the part of the court.
 
Section 426 of the Code of Civil Procedure provides that 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 the petitioner, La Granja, Inc., must not have satisfied the
respondent judge 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

23. Jardine vs. CA


G.R.. No. 55272, April 10, 1989.
 
Facts:
On Sept. 28, 1979, petitioner Jardine filed a complaint in the CFI against private respondent Impact Corp.,
to collect various sums of money. Allegedly, 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. However, IMPACT failed to remit to Jardine the
amounts collected by the former which gave rise to the complaint. In the same complaint, petitioner,
alleging, among others, its willingness to post a bond, applied for a writ of preliminary attachment against
private respondent. The lower court granted Jardine’s petition for the issuance of a writ of attachment. 3
days after the lower court’s grant, defendant filed a motion to set aside the writ of preliminary attachment
contending that the grounds upon which plaintiff based its application are not specified under section 1 of
Rule 57 and that there was no affidavit of merit to support the application for attachment as required by
Sec. 3 of Rule 57. The Trial court denied defendant’s motion. On appeal, CA annulled the writ of
attachment for having been issued improperly and irregularly on the ground that there is no sufficient
security for the claim sought to be enforced by the action; and that the amount due to the applicant or the
value of the property on the basis of which he is entitled to recover,  is as much as the sum for which the
order is granted above all legal counterclaims. Hence this review.
 
Issue: WON non-compliance with the formal requirements invalidate the writ of attachment.
 
Ruling: Yes. The authority to issue an attachment rests on express statutory provisions and unless there
is authority in the statute, there is no power to issue the writ and such authority as the statute confers
must be strictly construed. Petitioner’s application for a writ of preliminary attachment must therefore be
scrutinized and assessed by the requisites and conditions specifically prescribed by law for the issuance
of such writ.
Section 3, Rule 57 of the Revised Rules of Court governs the issuance of a writ of attachment, to wit:
Sec. 3. Affidavit and bond required.-An order of attachment shall be granted only when it
is made to appear by the affidavit of the applicant or some other person who personally knows of
the facts, that a sufficient cause of action exists, that the case is one of those mentioned in
section 1 hereof, that there is no sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant or the value of the property the possession of which
he is entitled to recover is as much as the sum for which the order is granted above all legal
counterclaims.
More specifically, 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.

24. ROBERTO TING and DOLORES TING v. HON. AUGUSTO E. VILLARIN


G.R. No. L-61754 August 17, 1989
Sarmiento, J.

Facts: Private respondent Consolidated Bank and Trust Company filed a complaint for a sum of money
with prayer for a writ of preliminary attachment against Perlon Textile Mills and its directors. The
complaint recites that, Roberto Ting, a director and his wife Dolores Lim Ting was impleaded as a party
defendant in order to bind their conjugal partnership of gains which allegedly benefitted from the
transactions subject of the complaint. 

In support of the application for preliminary attachment, Consolidated Bank averred the ground of "fraud
in contracting an obligation, for the defendants’ in violation of the trust receipt agreement under Sec. 1,
Rule 57 of the Rules of Court. 

Acting on the application for a writ of attachment by Consolidated Bank, the respondent judge issued the
orders to attach the estate of the spouses. The petitioners, thereafter questioned the order of writ of
preliminary attachment on the ground that the application hinges on "fraud in contracting" the trust receipt
agreements.

Issue: Whether the order of writ of preliminary attachment and the attachment of the petitioner’s
conjugal partnership property valid?

Held: 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 that the defendants are "guilty of fraud
in contracting an obligation." An order of attachment cannot be issued on a general averment, such as
one ceremoniously quoting from a pertinent rule. 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." 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. 

Further, the attachment ordered by the respondent judge for the attachment of the estate of Spouses Ting
is likewise null and void. The attached property of the spouses Ting are conjugal, the same cannot be
validly brought under the painful process of attachment because:

(a) First, the wife Dolores was impleaded merely because of the fact that she is the spouse of
Roberto;

(b) Second, the conjugal partnership cannot possibly be benefitted. Consolidated Bank's allegation
that the act of the husband redounded to the benefit of the conjugal partnership is mere "book form" when
the husband binds himself, as guarantor, because this act does not conserve or augment conjugal funds
but instead threatens to dissipate them by unnecessary and unwarranted risks to the partnership's
financial stability. When the husband assumes the obligation of a guarantor, the presumption that he acts,
as administrator, for the benefit of the conjugal partnership, is lost.

25. Carlos vs. Sandoval


GR No. 135830, September 30, 2005
FACTS: These consolidated petitions emanated from a civil case filed by Juan de Dios Carlos ("Carlos") against
respondents Felicidad Sandoval ("Sandoval") and Teofilo Carlos II (Teofilo II)

Carlos asserted 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 (subject properties). His brother, Teofilo, died intestate in
1992. At the time of his death, Teofilo was apparently married to Sandoval, and cohabiting with her and their child,
respondent Teofilo II. Nonetheless, Carlos alleged in his Complaint 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 now 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 ₱18,924,800.00.

Carlos likewise prayed for the issuance of the provisional relief of preliminary attachment. 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.

ISSUES: (1) whether the "proper hearing" requirement under Section 20, Rule 57 had been satisfied prior to the
award by the Court of Appeals of damages on the attachment bond.
(2) whether or not the award of damages shall be included in the judgment on the main case, and that it should not
be rendered prior to the adjudication of the main case.

RULING: (1) Yes. Such Damages May Be Awarded Only After Proper Hearing. Section 20 of Rule 57 requires that
there be a "proper hearing" before the application for damages on the attachment bond may be granted. The hearing
requirement ties with the indispensable demand of procedural due process. Due notice to the adverse party and its
surety setting forth the facts supporting the applicant's right to damages and the amount thereof under the bond is
essential. No judgment for damages may be entered and executed against the surety without giving it an opportunity
to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the writ.

In this case, both Carlos and SIDDCOR were duly notified by the appellate court of the Motion for Judgment on the
Attachment Bond and were required to file their respective comments thereto. Carlos and SIDDCOR filed their
respective comments in opposition to private respondents’ motion. Clearly, all the relevant parties had been afforded
the bare right to be heard on the matter.  "Proper hearing" contemplated would not merely encompass the right of the
parties to submit their respective positions, but also to present evidence in support of their claims, and to rebut the
submissions and evidence of the adverse party. This is especially crucial considering that the necessary elements to
be established in an application for damages are essentially factual: namely, the fact of damage or injury, and the
quantifiable amount of damages sustained. 
In this case, we rule that the demands of a "proper hearing" were satisfied as of the time the Court of Appeals
rendered its assailed judgment on the attachment bond. The circumstances in this case that we consider particularly
telling are the settled premises that the judicial finding on the wrongfulness of the attachment was then already
conclusive and beyond review, and that the amount of actual damages sustained was likewise indubitable as it
indeed could be found in the official case record in CA-G.R. CV No. 53229. As a result, petitioners would have been
precluded from either raising the defenses that the preliminary attachment was valid or disputing the amount of actual
damages sustained by reason of the garnishment. The only matter of controversy that could be litigable through the
traditional hearing would be the matter of moral and exemplary damages, but the Court of Appeals appropriately
chose not to award such damages.Moreover, petitioners were afforded the opportunity to counter the arguments
extended by the respondents. They fully availed of that right by submitting their respective comments/oppositions. In
fine, the due process guarantee has been satisfied in this case.

(2) Section 20, Rule 57 does state that the award of damages shall be included in the judgment on the main case,
and seemingly indicates that it should not be rendered prior to the adjudication of the main case. The rule, which
guarantees a right to damages incurred by reason of wrongful attachment, has long been recognized in this
jurisdiction. Under Section 20, Rule 57 of the 1964 Rules of Court, it was provided that there must be first a judgment
on the action in favor of the party against whom attachment was issued before damages can be claimed by such
party. The Court however subsequently clarified that under the rule, "recovery for damages may be had by the party
thus prejudiced by the wrongful attachment, even if the judgment be adverse to him." Nevertheless, Section 20, Rule
57 explicitly provides that the award for damages be included in the judgment on the main case. It is clear that under
Section 20, Rule 57, the application for damages on the attachment bond cannot be independently set up, but must
be filed in the main case,
 
26. H.B. ZACHRY COMPANY INTERNATIONAL, petitioner, vs. HON. COURT OF APPEALS and
VINNEL-BELVOIR CORPORATION, respondents
G.R. No. 106989 May 10, 1994
 
FACTS
On 17 July 1987, 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. Under the agreement, specifically under Section
3 on Payment, VBC was to perform all the construction work on the housing project and would be paid
"for the performance of the work the sum of Six Million Four Hundred Sixty-eight Thousand U.S. Dollars
(U.S. $6,468,000.00), subject to additions and deductions for changes as hereinafter provided." This
"lump sum price is based on CONTRACTOR'S proposal, dated 21 May 1987 (including drawings),
submitted to OWNER for Alternate Design-Apartments." It was also provided "that substantial differences
between the proposal and the final drawings and Specification approved by the OWNER may be grounds
for an equitable adjustment in price and/or time of performance if requested by either party in accordance
with Section 6 on Changes.
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.
Hence, on 20 March 1990, VBC filed a Complaint with the Regional Trial Court (RTC) of Makati
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 thirty-one undelivered housing units
which were to be turned over to the US Navy by Zachry on 30 March 1990. Paragraph 2 of the 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. On 6 April 1990, 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.
 
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
VBC takes refuge in the ruling in Davao Light & Power Co. vs. Court of Appeals 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 is not affected
by any defect in the implementation which may be corrected. Moreover, assuming arguendo that 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.
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. 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.
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 Zachry'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.
 
 

27. SIARI VALLEY ESTATES, INC. vs.FILEMON LUCASAN, ET AL.


G.R. No. L-1328; August 31, 1960
Bautista Angelo, J.
 
Facts:
The Court of First Instance of Zamboanga del Norte rendered a decision ordering Filemon Lucasan to
deliver to Siari Valley Estates, Inc. the cattle inside the former's pasture or pay its value. The decision was
affirmed by the Supreme Court and became final and executory. In carrying out with the judgement, the
sheriff proceeded to levy on certain parcels of lands belonging to Lucasan which was sold in a public
bidding where Siari Valley became the highest bidder. The property levied on execution by the sheriff to
satisfy the judgment 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. Lucasan filed an opposition alleging that he was in
possession of one of the parcels of land sold which he has erected a house and which he has extra
judicially constituted as a family home. The Court allowed 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. 
 
Issue:
Whether or not the levy made by the sheriff on parcel 1 is valid.
 
Held:
No. 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 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).
 
Since the notice of levy made by the sheriff as regards parcel number 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.
 

28. Ravanera vs. Imperial

GR no. L-34657, October 23, 1979

Facts:

 Archbishop of Nueva Caceres filed an action for rescission of contract and recovery of possession of real
properties against respondent Imperial. While respondent Imperial perfected his appeal the CA ordered
the filing of a Motion for Execution of the decision and respondent Imperial was given 15 days from
receipt of the order to put up supersedeas bond for the rental of the property, moral damages and for the
expenses of suit to stay the execution. This order became the subject of Special Civil Action for certiorari
and prohibition before the Supreme Court (SC) but the SC dismissed the petition on the ground that the
order of execution being incidental to the appeal.

Archbishop of Nueva posted a bond for the issuance of writ of execution but the said writ of execution
was not enforced because of amicable settlement proposed between the parties however the amicable
settlement was not materialized thus the writ of execution has been effected and as a result of which
notice of Levy was issued by which certain properties of the respondent Imperial were attached.  Public
auction of the properties was followed after the required publication and herein petitioner Ravanera
became the highest bidder and a Provisional Deed of Sale was issued in her favor. Although within the
period of 1 year respondent Imperial was able to redeem some of the properties bought at auction but
some were not thus the Sheriff executed a Definite Deed of Sale.

 
Petitoner Ravanera filed a motion for a writ of possession of the properties covered by the Definite Deed
of Sale which was opposed by respondent Imperial alleging that the notice of Levy was null and void
hence the provisional and definite deed of sale were likewise void. The respondent court suspended the
writ of possession.

It was averred by respondent Imperial that the writ of possession has no legal basis because the order or
writ of execution was in the first place null and void because the action filed was rescission of contract
while in fact there is no more contract of lease to rescind since it had already been expired. With this
contention the Court of Appeal set aside the writ of possession and made the preliminary injunction
previously issued permanent.

Issue:

W/N there was a valid levy upon the properties of respondent Imperial?

Ruling:

YES. The CA declared the levy null and void because there was no notice of levy given to the owner or
occupant, however the SC reiterates that such ruling has already been modified by the case of Pamintuan
vs Munuz which states that the levy is validly effected by the service of notice of sale upon the judgment
debtor prior to the sale. What is required is that the judgment debtor must be notified of the auction sale
before the actual date of sale.

In this case it shows that the notice of levy and the notice of auction sale were delivered through
registered mail to herein respondent Imperial on October 15, 1969 and the auction sale was conducted
November 3, 1969. Hence respondent Imperial had been notified of the auction sale long before the
actual date of sale, which is a requirement for the validity of the levy.

It was also assailed by respondent Imperial that there is substantial defect in the notice of levy on all the
properties levied upon and sold to petitioner Ravanera for it does not contain the reference such as the
number of the certificate of title, the volume and page in the registration book. The SC said that the
purpose of these requirements is to inform the debtor as well as the third person what particular land or
property is brought to the custody of the court.

 
In this case the respondent Imperial was able to exercise his right of redemption with reference to the
registered parcels of land it can be inferred in so far as respondent Imperial is concerned the purpose of
the requirement has been fully served or attained.

29.  
LEONORA OBAÑA vs. CA, SUNTAY et. Al
 
Remedial Law; Civil Procedure; Summons; Actions for collection of sum of money is an action in
personam which requires personal service of summons on defendant.–—In Venturanza v. Court of
Appeals (156 SCRA 305, 312 [1987]), this Court ruled: “There is no question that the case at bar which is
an action for collection of a sum of money is an action in personam thereby requiring personal service of
summons on the defendants.”
 
Same; Same; Same; Same; 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 situations in Rule 14 of the Rules of Court; Action in case at bar being in
personam, service was void and of no effect.–—In Baltazar v. Court of Appeals (G.R. No. 78728,
December 8, 1988) we stated that 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.
 
Same; Same; Same; An order which is based on irregular proceedings cannot assume finality and
cannot be a basis for res judicata.—–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
Obana’s transfer certificate of title cannot assume finality. The respondent court committed
reversible error in using it as a basis for res judicata.
 
Extrinsic Fraud: Fraudulent acts which keep a person from obtaining information about his/her rights to
enforce a contract or getting evidence to defend against a lawsuit. This could include destroying evidence
or misleading an ignorant person about the right to sue.
 
Res Judicata: A matter that has been adjudicated by a competent court and may not be pursued further
by the same parties.
 
 
FACTS: Appellant Suntay was the former counsel of Liberty H. Dizon and her minor children, in an
intestate proceeding and in the petition for guardianship. Atty. Suntay filed an “Explanation and Motion”
for the approval of attorney’s fees amounting to P5,000.00, from the ward’s guardianship estate. Dizon
was ordered to pay immediately but failed to comply despite repeated demands.
 
Thus, in 1972, Atty Suntay moved for the issuance of an order of attachment upon a land together with
the improvements belonging to Dizon and her wards. By virtue of the Writ of Attachment, a levy was
made on said property, annotated at the back of TCT.
 
Due to the failure of the sheriff to serve the summonses because Mrs. Dizon and her wards no longer
resided at their last known address and that their present address cannot be ascertained, Atty Suntay
filed a ‘Motion for Service of Summons by Publication (Exh. H) which was granted by the court.
Accordingly, summons were served upon Mrs. Dizon and her wards through publication.
 
The Deed of Absolute Sale dated May 16, 1973 between Dizon, and Obaña involving the attached
property, cancelled TCT in the name of Liberty H. Dizon transferring the encumbrance consisting of notice
of levy in favor of appellant Obana.
 
After summons by publication had been effected, the court declared Liberty H. Dizon and her wards, in
default and allowed Atty Suntay’s evidence to be presented ex-parte.
 
A decision was made awarding Atty. Suntay the amount of P10,000.00 representing his claim for
attorney’s fees and a writ of execution was issued per order of the court, and then followed by a Notice of
Levy on Execution dated August 7, 1974, issued by the sheriff of Quezon City.
 
Thereafter, the TCT in the name of Leonora Obaña was issued in favor of Atty Suntay, being the highest
bidder. For failure of Mrs. Dizon and her wards or by appellee Leonora Obaña to redeem the property a
‘Sheriff’s Final Deed of Sale’ was issued in favor of Suntay. Both certificates of sale were registered in the
Register of Deeds of Quezon City and was annotated at the back of TCT.
 
When Atty Suntay filed a petition in the then CFI of Rizal, the CFI of Quezon City directed the Register of
Deeds to issue a new title covering the subject land in the name of Rafael G. Suntay married to Victoria J.
Suntay.
 
Obana filed an action for annulment of judgment contending that the decision rendered was null and void
because the said court did not acquire jurisdiction over Liberty H. Dizon and her wards, since they were
not properly served with summons. Obana also claimed that the proceedings before 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.
 
Atty Suntay countered that there is res judicata and the recourse under Rule 38 has long prescribed. He
added that when Obana bought the property in question and title was transferred to her on July 2, 1973,
she is charged with knowledge of the pendency of the Case thru the annotation at the back of TCT.
 
Court held that no jurisdiction was acquired over the persons of Dizons, the action being strictly in
personam and summons by publication is insufficient; and that no valid attachment and levy were made
by the sheriff as no personal service of the copy of the notice to the occupant of the property was made.
 
On appeal CA dismissed petitioner Obaña’s complaint on the grounds of lack of cause of action and res
judicata.
 
ISSUE:
 
 
 
Did the  Bulacan Court of First Instance acquire jurisdiction over the defendants thru summons by
publication?
 
NO.  In an action strictly in personam personal service of summons within the forum is essential to the
acquisition of jurisdiction over the person of the defendant who does not voluntarily submit himself to the
authority of the court. In other words, summons by publication cannot—–consistently with the due process
clause in the Bill of Rights—–confer upon the court jurisdiction over said defendants
 
 
The creditor, however, in an action in personam can take the recourse to locate properties, real or
personal of the resident defendant-debtor with unknown address and causing said properties to be
attached under Rule 57 of Section 1(f) in which case the attachment converts the action into a proceeding
in rem or quasi-in-rem and the summons by publication may then be deemed valid and effective.
 
In Venturanza v. Court of Appeals (156 SCRA 305, 312 [1987]), this Court ruled:
 
“There is no question that the case at bar which is an action for collection of a sum of money is an action
in personam thereby requiring personal service of summons on the defendants.”
 
Was there a valid attachment of the real property?
 
NO. It should be noted that 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. 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 Court of Appeals ignored the fact that property already sold to Obana was attached and then bidded
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 the defendant Dizon and petitioner Obaña, who were never brought to
court, having any inkling about it, the notice was not annotated on the owner’s duplicate copy of Transfer
Certificate of Title No. 173792.
 
Respondent Suntay cannot claim ignorance of the sale to petitioner Obaña as a ground for not bringing
her into the picture. As stressed by the petitioner, Liberty Dizon filed her motion for the approval of the
sale of the disputed house and lot in the guardianship case through her counsel, herein private
respondent 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. The respondent court committed reversible error in using it as a basis for res
judicata. 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.
 
 
And finally, in our capacity as a court of equity in addition to being a court of law, we cannot close our
eyes to the rank injustice whereby the owner of a million peso house and lot is compelled to give up her
property to answer for a P10,000.00 attorney’s fee incurred by its former owner and which the lawyer
cannot apparently collect from his own client.
 
Decision: Orders and notices issued therein including the writ of attachment, levy and execution sale are
hereby declared null and void. The Register of Deeds is therefore permanently restrained from effecting
the cancellation of title in the name of Obana. 

33.) LUZ DU vs.STRONGHOLD INSURANCE 

G.R. No. 156580             June 14, 2004

Facts:

Aurora Olarte de Leon was the registered owner of Lot No. 10-A (LRC Psd 336366) per Transfer
Certificate of Title No. 582/T-3. 
Sometime in January 1989, De Leon sold the property to Luz Du under a ‘Conditional Deed of Sale’
wherein said vendee paid a down payment of ₱75,000.00 leaving a balance of ₱95,000.00.

"Then again, on April 28, 1989, Aurora de Leon sold [the] same property to spouses Enrique and Rosita
Caliwag without prior notice to Luz Du. As a result, Transfer Certificate of Title No. 582/T-3 was cancelled
and Transfer Certificate of Title No. 2200 was issued in favor of the Caliwag spouses.

"Meanwhile, Stronghold Insurance Corp., Inc. commenced Civil Case No. 90-1848 against spouses
Rosita and Enrique Caliwag et al., 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 Transfer
Certificate of Title No. 2200 on August 7, 1990.

"On her part, on December 21, 1990, Luz Du initiated Civil Case No. 60319 against Aurora de Leon and
the spouses Caliwag for the annulment of the sale by De Leon in favor of the Caliwags, anchored on the
earlier mentioned Deed of Conditional Sale.

"On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the back of Transfer
Certificate of Title No. 2200.

"On February 11, 1991, the decision was handed down in Civil Case No. 90-1848 in favor of Stronghold,
ordering the spouses Caliwag jointly and severally to pay the plaintiff ₱8,691,681.60, among others.
When the decision became final and executory, on March 12, 1991, a notice of levy on execution was
annotated on Transfer Certificate of Title No. 2200 and the attached property was sold in a public
auction. 

On [August] 5, 1991,5 the certificate of sale and the final Deed of Sale in favor of Stronghold were
inscribed and annotated leading to the cancellation of Transfer Certificate of Title No. 2200 and in lieu
thereof, Transfer Certificate of Title No. 6444 was issued in the name of Stronghold.

"It came to pass that on August 5, 1992, Luz Du too was able to secure a favorable judgment in Civil
Case No. 60319 and which became final and executory sometime in 1993, as well.

"Under the above historical backdrop, Luz Du commenced the present case (docketed as Civil Case No.
64645) to cancel Transfer Certificate of Title No. 6444 in the name of Stronghold with damages claiming
priority rights over the property by virtue of her Notice Of Lis Pendens under Entry No. 13305 and
inscribed on January 3, 1991, and the final and executory decision in Civil Case No. 60319 she filed
against spouses Enrique and Rosita Caliwag. According to Luz Du, despite her said notice of lis pendens
annotated, Stronghold still proceeded with the execution of the decision in Civil Case No. 90-1848 against
the subject lot and ultimately the issuance of Transfer Certificate of Title No. 6444 in its (Stronghold’s)
name."

The trial court ruled that Stronghold had superior rights over the property because of the prior registration
of the latter’s notice of levy on attachment on Transfer Certificate of Title (TCT) No. 2200. 

For this reason, it found no basis to nullify TCT No. 6444, which was issued in the name of respondent
after the latter had purchased the property in a public auction.

The CA held that Stronghold’s notice of levy on attachment had been registered almost five (5) months
before petitioner’s notice of lis pendens. Hence, respondent enjoyed priority in time. Such registration, the
appellate court added, constituted constructive notice to petitioner and all third persons from the time of
Stronghold’s entry, as provided under the Land Registration Act -- now the Property Registration Decree.
The CA also held that respondent was a purchaser in good faith. The necessary sequels of execution and
sale retroacted to the time when Stronghold registered its notice of levy on attachment, at a time when
there was nothing on TCT No. 2200 that would show any defect in the title or any adverse claim over the
property.

Petitioner submits that 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. Maintaining that the ruling in Capistrano v. PNB was improperly applied by
the Court of Appeals, petitioner avers that unlike the circumstances in that case, the property herein had
been sold to her before the levy.

Issue:

Whether or not 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)

Held:

YES. The preference given to a duly registered levy on attachment or execution over a prior unregistered
sale is well-settled in our jurisdiction.

As early as Gomez v. Levy Hermanos, this Court has held that an attachment that is duly annotated on a
certificate of title is superior to the right of a prior but unregistered buyer. In that case, the Court explained
as follows:

"x x x. The legal effect of the notation of said lien was to subject and subordinate the right of the
purchaser (Apolonia Gomez), to the lien.  She acquired the ownership of the said parcels only from the
date of the recording of her title in the register, which took place on November 21, 1932, and the right of
ownership which she inscribed was not an absolute but a limited right, subject to a prior registered lien, by
virtue of which Levy Hermanos, Inc. was entitled to the execution of the judgment credit over the lands in
question, a right which is preferred and superior to that of the plaintiff (sec, 51, Act No. 496 and decisions
cited above). x x x"

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 respondent.

Capistrano Ruling as Correctly Applied by the CA

The preference created by the levy on attachment is not diminished even by the subsequent registration
of the prior sale. That was the import of Capistrano v. PNB,17 which held that precedence should be
given to a levy on attachment or execution, whose registration was before that of the prior sale.

In Capistrano, the sale of the land in question -- though made as far back as 1946 -- was registered only
in 1953, after the property had already been subjected to a levy on execution by the Philippine National
Bank. The present case is not much different. The stipulation of facts shows that Stronghold had already
registered its levy on attachment before petitioner annotated her notice of lis pendens. As in Capistrano,
she invokes the alleged superior right of a prior unregistered buyer to overcome respondent’s lien.

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.

In view of the foregoing, the CA correctly applied Capistrano, as follows:


"x x x the rule now followed is that if the attachment or levy of execution, though posterior to the sale, is
registered before the sale is registered, it takes precedence over the latter.

31. BERNARDO VALDEVIESO, petitioner,vs. CANDELARIO DAMALERIO


G.R. No. 133303             February 17, 2005
 
Facts:
Valdevieso bought from Spouses Uy a parcel of land consisting of 10,000 square meters, more or less,
located at General Santos City with TCT No. T-30586. The deed of sale was not registered, nor was the
title of the land transferred to Valdevieso. Later on, the said property was immediately declared by
Valdevieso for taxation purposes as Tax Declaration No. l6205 with the City Assessor’s Office. Later on,
Spouses Damalerio filed with the RTC of General Santos City a complaint for a sum of money against
spouses Uy with application for the issuance of a Writ of Preliminary Attachment. The RTC issued a
Writ of Preliminary Attachment by virtue of which the property, then still in the name of Lorenzo Uy but
which had already been sold to Valdevieso, was levied. The levy was duly recorded in the Register of
Deeds of General Santos City and annotated upon TCT No. T-30586. Later on, TCT No. T-30586 in the
name of Lorenzo Uy was cancelled and, in lieu thereof, TCT No. T-74439 was issued in the name of
Valdevieso. This new TCT carried with it the attachment in favor of Spouses Damalerio. Valdevieso
filed a third-party claim to discharge or annul the attachmentlevied on the property covered by TCT No.
T-74439 on the ground that the said property belongs to him and no longer to Spouses Uy. 
 
RTC ruled in favor of Valdevieso. Citing Manliguez v. Court of Appealsand Santos v. Bayhon, it held that
the levy of the property by virtue of attachment is lawful only when the levied property indubitably belongs
to the defendant. Applying the rulings in the cited cases, it opined that although Lorenzo Uy remained the
registered owner of the property attached, yet the fact was that he was no longer the owner thereof as it
was already sold earlier to petitioner, hence, the writ of attachment was unlawful. CA reversed the
resolution and declared that an attachment or levy of execution, though posterior to the sale, but if
registered before the sale is registered, takes precedence over the sale. The writ of attachment in favor of
the Spouses Damalerio, being recorded ahead of the sale to Valdevieso, will therefore take precedence.
 
Issue:
WON a registered writ of attachment on the land is a superior lien over that of an earlier unregistered
deed of sale.
 
Ruling:
Yes. The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said Section provides:
Sec. 51. Conveyance and other dealings by registered owner. - An owner of registered land may
convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing
laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are
sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will
purporting to convey or affect registered land, shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of authority to the
Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or city where the land lies.
It is to be noted that though the subject land was deeded to Valdevieso as early as 05 December 1995, it
was not until 06 June 1996 that the conveyance was registered, and, during that interregnum, the land
was subjected to a levy on attachment.It should also be observed that, at the time of the attachment
of the property on 23 April 1996, the spouses Uy were still the registered owners of said property.
Under the cited law, the execution of the deed of sale in favor of Valdevieso was not enough as a
succeeding step had to be taken, which was the registration of the sale from the spouses Uy to him.
Insofar as third persons are concerned, what validly transfers or conveys a person’s interest in real
property is the registration of the deed. Thus, when Valdevieso bought the property on 05 December
1995, it was, at that point, no more than a private transaction between him and the spouses Uy. It needed
to be registered before it could bind third parties, including Spouses Damalerio. When the registration
finally took place on 06 June 1996, it was already too late because, by then, the levy in favor of Spouses
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.

32. WALKER v. MCMICKING  


GR No.L-5534, December 23, 1909 

FACTS:On June 30, 1908, the plaintiff, 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.,"
by Walker, whose ownership, at the time of the sale. The contract was evidenced by a writing from which
it appears that the said company was to pay for the said factory and its contents the sum of P3,200, P600
of which was paid at the time of the sale (June 30, 1908) and the balance was to be paid in three
installments, due, respectively, P600 on the 15th of July, 1908, P1,000 due on the 15th of September,
1908, and P1,000 due on the 31st of December, 1908. The said company paid the installment due on the
15th of July, 1908, but failed to pay said installments due in September and December.

Walker, early in the month of January, 1909, by virtue of the said provision of the contract, rescinded said
sale and took possession of said factory with its contents. The plaintiff Rohde, acting for himself and for
the plaintiff Walker, took possession of said factory and its contents, on or about the first of January, 1909.

It appears, however, that on or about the 16th of December, 1908, the defendant-appellant McMicking,
acting as sheriff of the city of Manila, levied an attachment upon the said factory and its contents, by
virtue of a judgment theretofore rendered against the said Arenas & Co. The record does not disclose fully
just what was done in effecting said attachment. It appears, however, by an indorsement upon said
alleged writ of attachment, or perhaps by a stipulation between the parties (to the attachment), that the
goods attached "shall remain in the possession of the same defendants, relieving the sheriff of all
responsibility as regards the care and custody thereof."

The lower court, basing his conclusions upon the provisions of section 428 of the Code of Procedure in
Civil Actions, held that the attachment was null for the reason that the defendant did not comply with said
section. Section 428 provides that:
“The order of attachment shall be served by the officer of the court by attaching and safely keeping all the
movable property of the defendant in the Philippine Islands, or so much thereof as may be sufficient to
satisfy the plaintiff's demands, unless the defendants gives security by obligation to the plaintiff, with
sufficient surety, to be approved by the judge who granted the order of attachment, in an amount
sufficient to satisfy such demands besides costs, . . . . The property so attached shall be held to await
final judgment in execution, unless released as provided in this section or section four hundred and forty.”

ISSUE:

Whether or not the preliminary attachment issued on December 17, 1908 was null and void. 

RULING:

Yes. It will be noted, even admitting that the defendant is here sued as sheriff, and that his responsibility
in this action is as sheriff, that he did not comply with said section 428, in making said attachment. He did
not attach and safely keep the movable property attached. A verbal declaration of seizure of 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. (Hollister vs. Goodale, 8 Conn.,
332, 21 Am. Dec., 674; Jones vs. Howard, 99 Ga., 451, 59 Am. St. Rep., 231.)

The SC believed that under said section 428 to constitute a valid levy of an attachment, the officer levying
it must take actual possession of the property attached as far as under 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 substantial presence
and possession. (Corniff vs. Cook, 95 Ga., 61, 51 Am. St. Rep., 55, 61.) Of course, 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. 

Thus, the defendant attached certain property under a writ of execution issued by one of the courts of the
city of Manila, which attachment, however, was levied upon the property in question. This attachment,
however, was rendered invalid and of no effect for the reason that the defendant did not maintain his
control over the same, either personally or by his representatives. The attachment became invalid the
moment the sheriff lost either his actual or constructive control over the property.

33. A.M. No. P-96-1184     March 24, 1997


NATIONAL BUREAU OF INVESTIGATION and SANTIAGO N. SALVADOR, complainants,
vs.RODOLFO G. TULIAO, Sheriff IV of the RTC of Cauayan, Isabela, Branch 20, respondent

FACTS: 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
 
RULING:
 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.

34. A.M. No. MTJ-04-1518               January 15, 2004


Attys. VILMA HILDA D. VILLANUEVA-FABELLA and WILMAR T. ARUGAY, complainants, 
vs.
Judge RALPH S. LEE
 
Facts:
The complainants are counsels for the defendants in Civil Case No. [38]-28457 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 the plaintiff’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 the plaintiff denied the defendants’ plea not to attach the machine, saying
that [it] had already set [its] mind on attaching the same.
 
"The complainants claim[ed] that Sheriff Dela Cruz violated x x x Rule 57, Section 7, 1997 Rules of Civil
Procedure which provide[d] that in the attachment of personal property capable of manual delivery, [the
property should] be taken and safely kept in the sheriff’s custody. The machinery, according to
complainants, [was] brought to [the] plaintiff’s warehouse in San Francisco del Monte, Quezon City.
 
"On 3 July 2002, Judge Lee granted the defendants’ Urgent Motion to Discharge Attachment filed 19
June 2002. Thereafter, on 9 July 2002, an Urgent Ex-Parte Motion to Withdraw Cash Deposit was filed,
without notice to the defendants and despite failure of the plaintiff to set such litigious motion for hearing
and contrary to existing laws and jurisprudence.
 
"A Motion for reconsideration of the 17 July 2002 Order was filed on 30 August 2002. Defendants
stressed that the Motion to Withdraw Cash Deposit has no basis, shows no urgency, lacks notice and
hearing, and is already a prejudgment of the case even before the pre-trial stage which is tantamount to
the taking of property without due process of law.
 
"The plaintiff then filed a Verified Motion for Reconsideration of the Order declaring it as non-suited[,]
which was set for hearing in the morning of 24 October 2002, the same day the aforementioned ex parte
presentation of evidence was supposed to commence.
 
"According to complainants, the Clerk of Court could not explain the irregularity in the granting of the
plaintiff’s Motion for Reconsideration and the fact that the same was swiftly resolved[,] while the
defendants’ similar motion [had] not been resolved for more than two (2) months already.
 
Respondent judge admitted that he had committed a procedural error when he released the counter-bond
to the plaintiff in the said civil case. However, when the defendants therein, through their Motion for
Reconsideration, called his attention to the mistake, he immediately ordered the return of the counter-bond
to the custody of the Office of the Clerk of Court.
 
Issue:
Whether or not the respondent Judge erred in its order granting Motion to Withdraw Cash Deposit.
 
Ruling:
No.
Attachment is a juridical institution intended to secure the outcome of a trial -- specifically, the satisfaction
of a pecuniary obligation.
In the instant case, respondent judge 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. Section 15(1) of Article VIII of the
Constitution mandates all trial courts to resolve all matters filed within three months from date of
submission.The Motion for Reconsideration of the July 17, 2002 Order granting the withdrawal of the
deposit was filed on August 30, 2002, and submitted for resolution on September 5, 2002, the date of
hearing.The Order granting this Motion was then issued on November 4, 2002, well within the three-month
period. The money was returned, and no prejudice was suffered by any of the parties.
 
Second, respondent judge owned up to his mistake in his Comment. This is an admirable act. Under the
Code of Judicial Conduct, judges should be the embodiment of competence and should so behave at all
times as to promote public confidence in the integrity of the judiciary.
 
The Rules mandate that, except for motions that the court may act upon without prejudicing the rights of
the adverse party, every written motion shall be set for hearing by the applicant.The notice of hearing
shall be addressed to the defendants therein and shall specify the time and date of the hearing, which
must not be later than ten (10) days after the filing of the motion.
 
Indeed, the plaintiff’s Motion to withdraw the cash deposit lacked notice of hearing and proof of service.
Respondent judge 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.
 
Applying Section 8 of Rule 140 of the Rules of Court, respondent judge 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.
 
Applying the Uniform Rules on Administrative Cases in the Civil Service, we find respondent 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 x x x to give proper attention to a task expected" of an employee, thus signifying a "disregard
of a duty resulting from carelessness or indifference."
 

35. Sebastian vs Valino 


FACTS: On March 3, 1989, Private Development Corporation of the Philippines (PDCP) filed a
replevin suit against Marblecraft, Inc., in Civil Case No. 89-3368, in order to foreclose the
chattels mortgaged by Marblecraft. On March 30, 1989, the Regional Trial Court, Makati, issued
a writ of seizure directed against Marblecraft covering the chattels sought to be replevied. On
November 9, 1990, at around 10:37 A.M., respondent, accompanied by several policemen and
PDCP employees, went to the office of Marblecraft at Barrio Santolan, Pasig, to implement the
writ of seizure. Respondent and his companions forcibly opened the lockers and desk drawers
of the employees of complainant and took their personal belongings, as well as some office
equipment issued to them. Respondent only showed to complainant'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 respondent. Respondent 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.

ISSUE: WON the implementation was proper 

HELD: NO. Under the Revised Rules of Court, the property seized under a writ of replevin is not
to be delivered immediately to the plaintiff. 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, respondent
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. Respondent 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).
Respondent did not furnish defendant 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.

36. VILLAREAL VS. RARAMA


 
A.M. No. P-94-1108 August 23, 1995
MARIANETTE VILLAREAL, complainant, vs. ROLANDO T. RARAMA, RESTITUTO MADRAZO, FIDEL
CASUYON, and AGUINALDO DEL CAMPO, respondents.
 
Facts:
It appears that an action for collection of a sum of money was filed by the Cooperative Rural Bank of
Davao City against the spouses Marianette (herein complainant) and Roy Villareal, Lito Lacorda and
Felimon Cangrejo before the MTCC. The records show that summons was served upon respondent
Cangrejo who, however, failed to file his answer, as a consequence of which he was declared in default.
On April 19, 1989, judgment 6 was rendered against him in favor of the plaintiff bank without prejudice to
his right to proceed against his co- debtors. On March 29, 1994, an alias writ of execution 7 was issued
by the trial court against Cangrejo.
 
According to complainant, at around 1:30 P.M. of April 25, 1994, respondent Rarama arrived at her house
in Digos, Davao del Sur, together with the other respondents and three employees of the Cooperative
Rural Bank of Davao City, Inc., including one Vic Belo who is a collector of the bank. Respondent 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. Complainant 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 respondent 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.
 
Issue: Can you levy on a property that does not belong to the defendant? Can the sheriff exercise
discretion in the levy of the properties? NO
 
Held:
While there is evidence to show that indeed complainant 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, respondent Rarama had no authority to implement the same
against herein complainant 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.
 
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.

37. Balantes vs Ocampo


A.M No. MTJ-93-853
March 14, 1995
 
FACTS:
 
This case disposes of two related complaints of Domingo Balantes against respondent Judge Julian
Ocampo III and Clerk of Court Lilia S. Buena. Complainant Domingo Balantes is the defendant in an
ejectment case (Civil Case No. 8339) filed by plaintiff Roberto Roco and decided by respondent judge
Ocampo.
 
Respondent Judge issued a Writ of Execution and Demolition pending an appeal on October 23, 1989,
orderding the removal of one-half (1/2) portion of complainant's residential house found to be built inside
the titled property of the plaintiff. Another Writ was issued by respondent judge on November 25, 1991
ordering the demolition of the remaining half portion of complainant’s residential house. A motion for
reconsideration was then filed by complainant but was denied by the court.
 
It further appears that on August 19, 1992, a second writ of demolition was issued by the respondent
Judge, followed by a third one dated February 3, 1993.
 
Complainant alleges that respondent judge issued the orders granting the issuance of writ of demolition
with precipitate haste, hence he was deprived of his right to oppose the same.
 
Respondent Judge argues that a writ of demolition, being merely incidental to the execution of a final
judgment, is immediately enforceable after hearing the arguments of both parties. Respondent Judge
further argues that the restraining order issued on September 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 the plaintiff.
 
With respect to the complaint filed against respondent Clerk of Court, complainant alleges that she
immediately proceeded to implement the writs of demolition without giving him a chance to move for a
reconsideration of the order granting issuance thereof.
 
ISSUE:
 
WON the Clerk of Court and Ex-Officio Sheriff Lilia S. Buena be he held liable for the execution of the
subject Writ of Demolition.
 
HELD:
 
No. 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.
 
As regards the charge against respondent Clerk of Court and Ex-Officio Sheriff Lilia S. Buena, the same
is dismissed, it appearing from the certification she issued that the Temporary Restraining Order issued
by the RTC, Branch 27, Naga City was received by her on September 2, 1992 at 2:15 p.m., after the
demolition had been completely effected and the premises delivered to the plaintiff at 1:30 p.m. of same
date. It appears that respondent 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.
 

38. Elipe vs. Fabre


A.M. No. P-94-1068, February 13, 1995
 
Facts:
An administrative complaint was filed against respondent Honesto Fabre for nonfeasance and
incompetence in the performance of his duties as Deputy Sheriff of MTCC at Cagayan de Oro City.
Accordingly, the MTCC issued a writ of execution for the enforcement of a barangay agreement for
collection of unpaid rentals and construction material amounting to P 100, 000.00. Complainant testified
that when respondent served the writ to judgment debtors, he was able to levy only upon a dilapidated
vehicle and an old piano and that the debtors was able to surreptitiously removed several furniture and
appliances from the rented house. Respondent did not prevent the debtors from removing leviable
properties.  
 
Issue: WON the sheriff liable for his inaction and lack of diligence in enforcing the writ of execution.
 
Ruling: Yes. 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.

39. ELIGIO ROQUE v. HON. COURT OF APPEALS


G.R. No. L-42594 October 18, 1979
Melencio-Herrera, J.

Facts: Respondent Associated Banking Corporation instituted an action against private respondent Fil-
Eastern Wood Industries, Inc., a domestic corporation for recovery of a sum of money. Upon the
application by the Bank for a Writ of Preliminary Attachment and the filing and approval of the required
bond of P220,000.00, respondent Judge, issued an Order of Attachment commanding the Sheriff to
attach the estate of Fil-Eastern.

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 pursuant to Sec. 805 of the Tariff and Customs Code, as amended
by Presidential Decree No. 34, requiring the registration of documents affecting titles of vessels with that
entity. 
It appears that prior to the issuance of said Writ of Attachment, Fil-Eastern had delivered the barge to the
Cotabato Visayan Development Corporation for repair. However, Fil-Eastern failed to pay the cost of
repairs. A public auction was conducted wherein, petitioner Eligio Roque acquired the barge and was
issued a Certificate of Sale by the Notary Public. 

On the same date, the Cotabato Visayan Development Corporation issued an Affidavit of Release of
mechanic's lien against Fil-Eastern. The Certificate of Sale was received in the office of the Philippine
Coast Guard on May 3, 1974. It was not until December 24, 1974, however, that Certificate of Ownership
was issued to Roque by the Philippine Coast Guard. 

These monuments of title were issued only after counsel for Eligio Roque had assured the Philippine
Coast Guard, that "without touching on the merit of the preference of our client's claim in relation to the
levy registered by other claimants, such levy is not in any manner a legal obstacle to the registration of
the vessels in our client's name." Acting thereon, the Acting Commandant of the Philippine Coast Guard
authorized the issuance of a new certificate of registration. However, neither the Certificate of Ownership
nor the Certificate of Philippine Register carries that annotation.

On August 29, 1974, the 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 trial Court. 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." 

On the same date, the trial Court Judge Rafael S. Sison 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. 

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. 

On January 6, 1975, respondent 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. 

On April 7, 1975, 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, having acquired the same
by purchase at public auction.

On April 14, 1975, respondent Judge issued an order declaring Rodrigo Malonjao and Eulogio Roque, in
contempt of Court to forthwith surrender possession of the said. Petitioners filed a Motion seeking to set
aside the Order of April 14, 1975, claiming that Roque is now the new owner of the barge. Which was
denied by respondent Judge on the ground that the records belied petitioners' claim that the auction sale
occurred very much ahead of the notice of levy. 

On August 28, 1975, petitioners sought relief from the Court of Appeals by filing a "Petition for certiorari
and Prohibition with Preliminary Injunction and Preliminary Mandatory Injunction" asking to vacate the
Orders by respondent Judge. The Court of Appeals, denied the Petition in its Decision. Ruled that
certiorari did not lie as petitioner was not without sufficient and adequate remedy to obtain relief from the
damaging effects of the Orders complained of.

Issues: 
(1) Whether the levy and/or attachment by the sheriff of the barge in question are illegal?
(2) Whether petitioner can avail of Section 14, Rule 57 and/or Section 17, Rule 39 of the Revised
Rules of Court?

Held: 
(1) No, petitioners further argue that the 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.
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 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 respondent Judge committed grave abuse of discretion in issuing the Order of
April 14, 1975 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. Its Decision of October 9, 1974 had become final and executory, and execution then became
purely a ministerial phase of adjudication. 

Petitioners’ remedy was to ventilate their claims of ownership in a separate and independent
reivindicatory action. ". . . a third person claiming to be the owner of the property attached or levied upon
is required to file a separate or independent action to determine whether the property should answer for
the claim of the attaching or judgment creditor instead of being allowed to raise that issue in the case
where the writ of attachment or execution was issued (Sec. 17, Rule 39 and sec. 14, Rule 57, Rules of
Court; Bayer Philippines, Inc. v. Agana, L-38701, April 8, 1975, 63 SCRA 355).
(2) Yes, upon the issuance of the Order, dated August 29, 1974, commanding the implementation of
the Writ of Attachment, petitioners could have availed themselves of the remedy provided for in Section
14, Rule 57 of the Rules of Court, which reads:

If the property taken be claimed by any person other than the party against whom attachment had been
issued or his agent, and such person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves such affidavit upon the officer while the latter
has possession of the property, and a copy thereof upon the attaching creditor, the officer shall not be
bound to keep the property under attachment, unless the attaching creditor or his agent, on demand of
the said officer, secures him against such claim by a bond in a sum not greater than the value of the
property attached. ...

For another, when respondent Sheriff seized the vessel in question to be sold at public auction in
accordance with the Order of execution of March 7, 1975, petitioner could have availed of the remedy
under Section 17, Rule 39 of the Rules of Court which provides:

If the property levied on be claimed by any other person than the Judgment debtor or his agent, and such
person make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such
right or title, and serve the same upon the officer making the levy, and a copy thereof upon the judgment
creditor, the officer shall not be bound to keep the property, unless such judgment creditor or his agent,
on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the
value of the property levied on. 

Petitioner Eligio Roque argues, however, that he could not avail of the foregoing Rules 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. 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.

40. Summit Trading vs. Avendano


Gr No. L-60038, March 18, 1985
FACTS: This case is about the summons intended for defendant Summit Trading and Development
Corporation. As background, it should be stated that Segundo Pilipinia and Edgardo Mindo acquired
under Land Authority Administrative Order No. 4 two registered lots 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. They sold the lots for P16,000 and
P12,000 to Gavino Ortega but have retained possession of the lots which are ricelands. They became
tenants thereof.

At the instance of Ortega, the said annotation was cancelled by Judge Avendaño 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.

In a letter, 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. He then resold the two lots to Summit
Trading through its president, Virgilio P. Balaguer.

Pilipinia and Mindo filed a complaint against Ortega and Summit Trading for the redemption or
repurchase of the two lots. Ortega was duly summoned but was declared in default. Summit Trading was
also declared in default. In his judgment by default, Judge Avendano gave plaintiffs Pilipinia and Mindo 15
days from notice within which to redeem the lots and ordered Summit Trading to execute the
corresponding deeds of sale and surrender the Torrens titles.

The default judgment was rendered on the assumption that Summit Trading was duly summoned through
Marina Saquilayan as secretary of Summit Trading. She received the summons on August 28, 1981.
Actually, Saquilayan received the summons as secretary of Balaguer, already mentioned as the president
of Summit Trading which purchased the lots from Ortega.

Nineteen days after Saquilayan received a copy of the decision, Summit Trading filed a motion for
reconsideration on the ground that the trial court did not acquire jurisdiction over it because summons
was not served upon it in accordance with Rule 14 of the Rules of Court which provides:
SEC. 13. 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: Whether or not the service to the secretary is binding and valid

RULING: 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.

The instant petition for certiorari, treated as an appeal under Republic Act No. 5440, was filed out of time.
Considered as a special civil action under Rule 65 of the Rules of Court, it is baseless because the trial
court had acquired jurisdiction over Summit Trading. As already shown, summons was properly served on
the president's secretary.

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.
 
41. CHEMPHIL EXPORT & IMPORT CORPORATION vs. Court of Appeals, December 12, 1995G.R.
Nos. 112438-39 

Facts: 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 the Regional Trial Court seeking
judicial declaration, construction and interpretation of the validity of the surety agreement that Dynetics
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. 
A notice of garnishment covering Garcia's shares in CIP/Chemphil (including the disputed shares)
was served on Chemphil through its then President. The notice of garnishment was duly annotated in the
stock and transfer books of Chemphil on the same date.
The trial court 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, 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.
The Court holds that the CONSORTIUM has admitted that the writ of attachment/garnishment
issued on the shares of stock belonging to plaintiff Antonio M. Garcia was not annotated and registered in
the stock and transfer books of CHEMPHIL. On the other hand, the prior attachment issued in favor of
SBTC against the same CHEMPHIL shares of Antonio M. Garcia, was duly registered and annotated in
the stock and transfer books of CHEMPHIL.
Issue: Whether or not the attachment of shares of stock, in order to bind third persons, must be recorded
in the stock and transfer book of the corporation.
Held: The Court of Appeals agreed with the consortium's position that the attachment of shares of stock
in a corporation need not be recorded in the corporation's stock and transfer book in order to bind third
persons.Section 7(d), Rule 57 of the Rules of Court was complied with by the consortium (through the
Sheriff of the trial court) when the notice of garnishment over the Chemphil shares of Garcia was served
on the president of Chemphil. Indeed, to bind third persons, no law requires that an attachment of shares
of stock be recorded in the stock and transfer book of a corporation.
Therefore, ruled the Court of Appeals, the attachment made over the Chemphil shares in the
name of Garcia was made in accordance with law and the lien created thereby remained valid and
subsisting at the time Garcia sold those shares to FCI (predecessor-in-interest of appellee CEIC) in 1988.
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 on 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 was duly acknowledged and
confirmed by the corporate secretary of Chemphil, Rolando Navarro and his successor Avelino Cruz
through their respective certifications.We rule, therefore, that there was substantial compliance with Sec.
7 (d), Rule 57 of the Rules of Court.

42) Gotauco vs. Registry of Deeds


       GR no. L-39596, March 23, 1934

Facts:
(1)    A levy of execution against judgment debtor Rafael Vilar was presented to the Registry of Deeds, but
the latter denied the inscription of said levy of execution because the tile to the lands was in the name of
Florentino Vilar.
 
(2)    The fact shows that Florentino Vilar was dead and Rafael Vilar is one of the heirs.
 
Issue:
Can the property named under the deceased Florentino Vilar be a subject of attachment in favor of the
judgment creditor of Rafael Vilar?
 
Ruling:
YES. The Supreme Court (SC) held that pending liquidation of the estate of Florentino Vilar, his heir has
already a right of participation and interest over the property left by the deceased. The judgment debtor
holds such beneficial interest in the property that he can sell and dispose it but only as to his share.
 
Since the judgment debtor has this right of conveyance, the judgment creditor may also run against these
properties to which the judgment debtor acquires beneficial interest. Thus, the Registry of Deeds should
not deny the inscription of levy of execution presented against Rafael Vilar.
 

43. Engineering vs CA

 
Same; Same; Same; Garnishment; Meralco should not have been faulted for its prompt obedience
to a writ of garnishment; Reasons.—But while partial restitution is warranted in favor of NPC , we
find the Appellate Court erred in not absolving MERALCO, the garnishee, from its obligations to NPC
with respect to the payment to ECI of P 1, 114,543. 23, thus in effect subjecting MERALCO 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.
 
Same; Same; Same; Garnishment, defined as a specie of ament; Obligation of the garnishee.—
Section 8, Rule 57 of th e Court provides: "Effect of attachment of debts and credits.—All persons
having in their possession or under their control any credits or other similar personal property
belonging to the party against whom attachment is issued, or owing any debts to the same, at the
time of service upon them of a copy of the order of attachment and notice as provided in the last
preceding section, shall be liable to the applicant for the amount of such credits, debts or other
property, until the attachment be discharged, or any judgment recovered by him be satisfied, unless
such property be delivered or transferred, or such debts be paid, to the clerk, sheriff or other proper
officer of the court issuing the attachment." 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 belonging to the defendant, x
x x x x x, 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.
 
FACTS: On August 29, 1968, ECI filed a complaint for damages against the NPC  alleging that it
suffered damages to its facilities and equipment due to the inundation of its campsite in Bulacan,
due to the improper and careless opening by NPC of the spillway gates of Angat Dam at the height
of typhoon "Welming" on November 4,1967. 
Court found NPC guilty of gross negligence ordering them to pay plaintiff actual or compensatory
damages, consequential damages, exemplary damages; and for attorney's fees ... 
NPC filed a notice of appeal but before it could perfect its appeal, ECI moved for and was granted
execution pending appeal upon posting a covering bond of P200,000 which it later increased to
P1,109,000 to fully answer for whatever damages NPC might incur by reason of the premature
execution of the lower court's decision. 3

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 with the Appellate Court a petition for certiorari. 
CA granted NPCs 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 Appellate Court a clarification and reconsideration on the ground, 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 who
then indorsed and delivered the same to ECI. Whereupon, in its resolution of January 7, 1972, the
Appellate Court 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. 
Their two motions for reconsideration having been denied, ECI and MERALCO filed separate
petitions for review .
 
 
Were the petitioners, including the sheriff, bound to restore to NPC the judgment amount which has
been delivered to ECI in compliance with the writ of garnishment?
NO. In line with our pronouncement that 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, i.e., Nos. L-47379 and 47481, 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 Appellate Court 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.
Section 8, Rule 57 of the Rules of Court provides,
Effect of attachment of debts and credits.-All persons having in their possession or
under their control any credits or other similar personal property belonging to the
party against whom attachment is issued, or owing any debts to the same, at the
time of service upon them of a copy of the order of attachment and notice as
provided in the last preceding section, shall be liable to the applicant for the amount
of such credits, debts or other property, until the attachment be discharged, or any
judgment recovered by him be satisfied, unless such property be delivered or
transferred, or such debts be paid, to the clerk, sheriff or other proper officer of the
court issuing the attachment.
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."
12

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.
 

44.) RCBC v Pacifico de Castro and Philippine Virginia Tobacco Administration (PVTA)

G.R. No. L-34548 November 29, 1988

Facts: 

Badoc Planters, Inc. filed an action for recovery of unpaid tobacco deliveries against PVTA. Hon. Lourdes
P. San Diego, then Presiding Judge, ordering the defendants therein to pay jointly and severally, the
plaintiff Badoc Planters, Inc. (hereinafter referred to as “BADOC”) within 48 hours the aggregate amount
of P206,916.76, with legal interests thereon. 

Accordingly, the Branch Clerk of Court on the very same day, 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 Rizal Commercial Banking Corporation (hereinafter referred to as RCBC), the
petitioner in this case, requesting a reply within five (5) days to said garnishment as to any property which
the Philippine Virginia Tobacco Administration (hereinafter referred to as "PVTA") might have in the
possession or control of petitioner or of any debts owing by the petitioner to said defendant. 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. 

However, Philippine Virginia Tobacco Administration filed a Motion for Reconsideration. 

The Judge set aside the Orders of Execution and of Payment and the Writ of Execution and ordering
petitioner and BADOC “to restore, jointly and severally, the account of PVTA with the said bank in the
same condition and state it was before.

Issues:

1) Whether or not PVTA funds are public funds not subject to garnishment;

2) Whether or not the respondent Judge correctly ordered the herein petitioner to reimburse the amount
paid to the Special Sheriff by virtue of the execution issued pursuant to the Order/Partial Judgment dated
January 15, 1970.

Held:

 1) Yes. PVTA funds are subject to garnishment;

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.” 

Among the specific powers vested in the PVTA are: 

1) to buy Virginia tobacco grown in the Philippines for resale to local bona fide tobacco manufacturers and
leaf tobacco dealers [Section 4(b), R.A. No. 2265]; 

2) to contracts of any kind as may be necessary or incidental to the attainment of its purpose with any
person, firm or corporation, with the Government of the Philippines or with any foreign government,
subject to existing laws [Section 4(h), R.A. No. 22651; and 

3) generally, to exercise all the powers of a corporation under the Corporation Law, insofar as they are
not inconsistent with the provisions of this Act [Section 4(k), R.A. No. 2265.]

From the foregoing, 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.  

Inasmuch as the Tobacco Fund, a special fund, was by law, earmarked specifically to answer obligations
incurred by PVTA in connection with its proprietary and commercial operations authorized under the law,
it follows that said funds may be proceeded against by ordinary judicial processes such as execution and
garnishment.  
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 belonging 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.

2)  No. The bank was in no position to question the legality of the garnishment since it was not even a
party to the case. 

As correctly pointed out by the petitioner, 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 the plaintiff or of the
processes issued in execution of such judgment. 

The 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 [Record on Appeal, p. 36]

It is important to stress, at this juncture, that 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 and 

2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs 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. [Article 1249, Civil Code.]

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 the
plaintiff 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.

... The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon
the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is
brought into custodia legis, under the sole control of such court [De Leon v. Salvador, G.R. Nos. L-30871
and L-31603, December 28,1970, 36 SCRA 567, 574.]

RCBC cannot therefore be compelled to make restitution solidarily with the plaintiff BADOC. Plaintiff
BADOC alone was responsible for the issuance of the Writ of Execution and Order of Payment and so,
the plaintiff alone should bear the consequences of a subsequent annulment of such court orders; hence,
only the plaintiff can be ordered to restore the account of the PVTA.
45. SPOUSES EMILIO ABINUJAR and MILAGROS M. LANA, petitioners,  vs. THE COURT OF
APPEALS and SPOUSES SANTIAGO RAMIRO and FLORENTINA RAMIRO, respondents. 
G.R. No. 104133 April 18, 1995
 
Facts:
Spouses Lana executed a Deed of Sale with Right to Repurchase in favor of Spouses Ramiro, involving a
residential house located at Manila. Due to serious financial and business reverses, Spouses Lana were
not able to redeem the property within four months as agreed upon. Spouses Ramiro filed a complaint for
ejectment in the MTC of Manila against Spouses Lana. The parties, assisted by their counsels, executed
a compromise agreement, which was approved by the MTC, contained an agreement that Spouses Lana
shall pay Spouses Ramiro with P50,000.00 on Jan. 31, 1990 and P10,000.00 per month thereafter
Starting February 28 to September 30, 1990 and that if Spouses Lana shall fail to pay 3 consecutive
payments, Spouses 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 the Court. 
 
On April 15, 1990, Spouses Ramiro filed a motion for execution on the ground that petitioners failed to
pay the first three installments stipulated in the compromise agreement. Spouses Lana filed an "Urgent
Ex-Parte Motion for Reconsideration and/or Correct Order of this Court" calling attention to a
typographical error in the Order 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. Spouses Ramiro opposed the Ex-
Parte Motion and stated that they would not renew the compromise agreement with Lana. The MTC
issued an order directing the issuance of 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 Spouses Lana. 
 
Issue:
WON the issuance of notice to voluntarily vacate the premises by way of enforcing the decision approving
the compromise agreement is valid. 
 
Ruling:
No. A compromise agreement is a contract between the parties, which if not contrary to law, morals or
public policy, is valid and enforceable between them. There are two kinds of compromise agreements, the
judicial, which puts an end to a pending litigation, and the extrajudicial, which is to avoid a litigation. As a
contract, a compromise agreement is perfected by mutual consent. A judicial compromise, however, while
binding between the parties upon its execution, is not executory until it is approved by the court and
reduced to a judgment. Inasmuch as a judicial compromise becomes binding between the parties upon its
execution, Spouses Lana should have paid the installments falling due even before the approval thereof
by the trial court. But assuming that a judicial compromise is not perfected until it is approved by the court,
still Spouses Lana should have paid the compromise agreement installments due on March 31, 1990,
together with the installments due on January 31 and February 28, 1990 on or before March 31, 1990.
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. As Spouses Lana’s 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. In this case, the Sheriff was directed by the SC to enforce the
execution only of the money judgment in accordance with Section 15, Rule 39 of the Revised Rules of
Court. 

46. BF HOMES v. CA  


GR No.76879, October 3, 1990
 
FACTS:
BF Homes, Inc. is a domestic corporation previously engaged in the business of developing and selling
residential lots and houses and other related realty matters. On July 19, 1984, BF contracted a loan from
Rosalinda R. Roa and Vicente Mendoza in the amount of P250,000.00 with interest at the rate of 33% per
annum payable after 32 days.
 
On September 25, 1984, BF filed a Petition for Rehabilitation and for a Declaration in a State of
Suspension of Payments 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.
 
On October 17, 1984, Roa and Mendoza filed a complaint against BF with the RTC of Quezon City for the
recovery of the loan of P250,000.00, with interest and attorney's fees, with a prayer for the issuance of a
writ of preliminary attachment against the properties of BF. The prayer for the issuance of a writ was
granted
 
On February 13, 1985, BF filed with the CA an original action for certiorari with prayer for a writ of
preliminary injunction against the regional trial court, Roa and Mendoza. On February 14, 1985, the Court
of Appeals issued an order temporarily restraining proceedings in Civil Case No. Q-43104.
 
On March 18, 1985, the 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.
 
On June 6, 1986, the Court of Appeals rendered a decision dismissing the complaint in Civil Case No. Q-
43104 and declaring the writ of preliminary attachment null and void. But upon a motion for
reconsideration filed by Roa and Mendoza, the decision was set aside and a new one was entered
upholding the jurisdiction of the regional trial court over the case. At the same time, however, it
suspended the proceedings therein until after the management committee shall have been impleaded as
party defendant. The dissolution of the writ of preliminary attachment was maintained.
Roa and Mendoza faulted the Court of Appeals for ordering BF to be substituted by the management
committee and for dissolving the writ of preliminary attachment without the filing of the necessary counter-
bond by the defendant.
In sustaining the dissolution of the writ of preliminary attachment, the respondent court said that Roa and
Mendoza were secured in the satisfaction of any judgment they might obtain against BF since all the
properties of the latter were already in the custody of the management committee.
 
ISSUE:
Whether or not the writ of preliminary attachment was properly dissolved.
 
RULING:
NO. The SC found that the writ must stand despite the suspension of the proceedings in the Regional
Trial Court of Quezon City. The writ was issued prior to the creation of the management committee and
so should not be regarded as an undue advantage of Mendoza and Roa over the other creditors of BF.
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.
 
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. As for the contention that the writ was
improperly issued for lack of notice to BF on the application for the writ, it suffices to cite Mindanao
Savings & Loan Association, Inc. v. Court of Appeals, where we held:
 
The only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of the
Rules of Court are the affidavit and bond of the applicant.
 
No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing
would defeat the purpose of this provisional remedy. The time which such a hearing would take, could be
enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues.
Nevertheless, while no hearing is required by the Rules of Court for the issuance of an attachment, a
motion to quash the writ may not be granted without "reasonable notice to the applicant" and only "after
hearing".

47. G.R. No. 111174             March 9, 2000


REPUBLIC OF THE PHILIPPINES, petitioner, 
vs.
HON. BERNARDO V. SALUDARES, Presiding Judge, RTC, Br. 28, Lianga, Surigao del Sur,
and HUNG MING KUK, respondents.

FACTS:
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
 
RULING:
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 property until after the final determination of the case or until its dissolution.

48. [G.R. No. 82978. November 22, 1990.]

THE MANILA REMNANT CO., INC., Petitioner, v. THE HONORABLE COURT OF APPEALS
 
Facts:
 
Petitioner Manila Remnant Co., Inc. is the owner of the parcels of land situated in Quezon City covered by
Transfer Certificates of Title Nos. 26400, 26401, 30783 and 31986 and constituting the subdivision known
as Capital Homes Subdivision Nos. I and II. On July 25, 1972, Manila Remnant and A.U. Valencia & Co.
Inc. entered into a written agreement entitled "Confirmation of Land Development and Sales Contract" to
formalize an earlier verbal agreement whereby for a consideration of 17 and 1/2% fee, including sales
commission and management fee, A.U. Valencia and Co., Inc. was to develop the aforesaid subdivision
with authority to manage the sales thereof, execute contracts to sell to lot buyers and issue official
receipts.
 
On March 3, 1970, Manila Remnant thru A.U. Valencia and Co. executed two "contracts to sell" covering
Lots 1 and 2 of Block 17 in favor of Oscar C. Ventanilla and Carmen Gloria Diaz for the combined
contract price of P66,571.00 payable monthly for ten years.
 
Ten (10) days after the signing of the contracts with the Ventanillas or on March 13, 1970, Artemio U.
Valencia, as President of Manila Remnant, and without the knowledge of the Ventanilla couple, sold Lots
1 and 2 of Block 17 again, this time in favor of Carlos Crisostomo, one of his sales agents without any
consideration.
 
Beginning March 13, 1970, upon orders of Artemio Valencia, the monthly payments of the Ventanillas
were remitted to Manila Remnant as payments of Crisostomo for which the former issued receipts in favor
of Crisostomo.
 

Subsequently, the harmonious business relationship between Artemio Valencia and Manila Remnant
ended.
 
On June 8, 1973, A.U. Valencia and Co. sued Manila Remnant before Branch 19 of the then Court of First
Instance of Manila 6 to impugn the abrogation of their agency agreement.
 
Since A.U. Valencia and Co. failed to forward its collections after May 1973, Manila Remnant caused on
August 20, 1976 the publication in the Times Journal of a notice cancelling the contracts to sell of some
lot buyers including that of Carlos Crisostomo in whose name the payments of the Ventanillas had been
credited.
 
To prevent the effective cancellation of their contracts, Artemio Valencia instigated on September 22,
1976 the filing by Carlos Crisostomo and seventeen (17) other lot vendees of a complaint for specific
performance with damages against Manila Remnant before the Court of First Instance of Quezon City.
 
The Ventanillas thereby leaving a balance of P13,531.58 for Lot 1 and P13,540.22 for Lot 2, went directly
to Manila Remnant and offered to pay the entire outstanding balance of the purchase price.
To their shock and utter consternation, they discovered from Gloria Caballes, an accountant of Manila
Remnant, that their names did not appear in the records of A.U. Valencia and Co. as lot buyers. Caballes
showed the Ventanillas copies of the contracts to sell in favor of Carlos Crisostomo, duly signed by
Artemio U. Valencia as President of Manila Remnant.
 
Issue:
Whether or not petitioner Manila Remnant should be held solidarily liable together with A.U. Valencia and
Co. and Carlos Crisostomo for the payment of moral, exemplary damages and attorney’s fees in favor of
the Ventanillas
 
Ruling:
Yes. In the case at bar, the Valencia realty firm had clearly overstepped the bounds of its authority as
agent — and for that matter, even the law — when it undertook the double sale of the disputed lots.
 
Article 1897 of the Civil Code which states that" (t)he agent who acts as such is not personally liable to
that party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority
without giving such party sufficient notice of his powers."
 
However, the unique relationship existing between the principal and the agent at the time of the dual sale
must be underscored. Bear in mind that the president then of both firms was Artemio U. Valencia, the
individual directly responsible for the sale scam. Hence, despite the fact that the double sale was beyond
the power of the agent, Manila Remnant as principal was chargeable with the knowledge or constructive
notice of that fact and not having done anything to correct such an irregularity was deemed to have
ratified the same.
 
More in point, we find that by the principle of estoppel, Manila Remnant is deemed to have allowed its
agent to act as though it had plenary powers. Article 1911 of the Civil Code
provides:jgc:chanrobles.com.ph

"Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the
former allowed the latter to act as though he had full powers."
 
Firstly, Manila Remnant literally gave carte blanche to its agent A.U. Valencia and Co. in the sale and
disposition of the subdivision lots.
 
Indeed, once Manila Remnant had been furnished with the usual copies of the contracts to sell, its only
participation then was to accept the collections and pay the commissions to the agent. The latter had
complete control of the business arrangement.
 
Secondly, it is evident from the records that Manila Remnant was less than prudent in the conduct of its
business as a subdivision owner. For instance, Manila Remnant failed to take immediate steps to avert
any damage that might be incurred by the lot buyers as a result of its unilateral abrogation of the agency
contract.
 
Moreover, Manila Remnant also failed to check the records of its agent immediately after the revocation
of the agency contract despite the fact that such revocation was due to reported anomalies in Valencia’s
collections.
 
Even assuming that Manila Remnant was as much a victim as the other innocent lot buyers, it cannot be
gainsaid that it was precisely its negligence and laxity in the day to day operations of the real estate
business which made it possible for the agent to deceive unsuspecting vendees like the Ventanillas.
 
In essence, therefore, the basis for Manila Remnant’s solidary liability is estoppel which, in turn, is rooted
in the principal’s neglectfulness in failing to properly supervise and control the affairs of its agent and to
adopt the needed measures to prevent further misrepresentation.

49. Insular Savings Bank vs CA   

51. Security Pacific Assurance Corporation vs. Judge Amelia Tria-Infante


GR No. 144740, August 31, 2005
 
FACTS:
 
In 1988, Reynaldo Anzures instituted a complaint against Teresita Villaluz for violation of BP Blg. 22.   In
1989, the trial court issued an order for the issuance of a writ of preliminary attachment and the sheriff
attached certain properties of Villaluz. In 1990, the court acquitted Villaluz but she was ordered to pay
Anzures P2,123,400.00 with legal rate of interest. Villaluz appealed and posted a counter-bond in the
amount of P2,500,000.00 issued by petitioner Security Pacific Assurance Corporation. She also filed an
Urgent Motion to Discharge Attachment. Sheriff Reynaldo R. Buazon tried to serve the writ of execution,
issued by respondent judge Infante, upon Villaluz, but the latter no longer resided in her given address.
The sheriff sent a Notice of Garnishment upon petitioner insurance corporation; however, the petitioner
refused to assume its obligation on the counter-bond it posted for the discharge of the attachment made
by Villaluz. The petitioner contends that the failure of the 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. On the
other hand, the respondents assert that the filing of the counter-bond by Villaluz had already ipso facto
discharged the attachment on the properties and made the petitioner liable on the bond. Upon
acceptance of the premium, there was already an express contract for surety between Villaluz and
petitioner in the amount of P2,500,000.00 to answer for any adverse judgment/decision against Villaluz.
 
ISSUE:
 
Whether or not mere posting of counterbond automatically discharge the writ of attachment.
 
HELD:
 
No. A mere posting of a counterbond does not automatically discharge the writ of attachment. it is
only after the hearing and after the judge has ordered the discharge of attachment that the same
is properly discharged. Judgment must be construed as a whole so as to bring all of its parts into
harmony as far as this can be done by fair and reasonable interpretation and so as to give effect
to every word and part.
 
The Court is not unmindful in Its ruling in the case of Belisle Investment and Finance Co.   where it held t
that the mere posting of a counter-bond does not automatically discharge the writ of attachment. It is only
after hearing and after the judge has ordered the discharge of the attachment if a cash deposit is made or
a counterbond is executed to the attaching creditor is filed, that the writ of attachment is properly
discharged under Section 12, Rule 57 of the Rules of Court. The ruling in Belisle, at first glance, would
suggest an error in the assailed ruling of the Court of Appeals because there was no specific resolution
discharging the attachment and approving the counter-bond. As above-explained, however, consideration
of our decision in G.R. No. 106214 in its entirety will readily show that this Court has virtually discharged
the attachment after all the parties therein have been heard on the matter.
 
Verily, a judgment must be read in its entirety, and it must be construed as a whole so as to bring all of its
parts into harmony as far as this can be done by fair and reasonable interpretation and so as to give
effect to every word and part, if possible, and to effectuate the intention and purpose of the Court,
consistent with the provisions of the organic law.

52. Benitez vs. IAC


G.R. No. 71535, Sept. 15, 1987
 
Facts: Private respondent Casa Filipina Development Corp., filed a complaint against herein petitioner
Helena Benitez for recission of contract, plus damages, with a prayer for preliminary attachment. As
alleged, Casa Filipina and Benitez entered into a verbal contract whereby the latter agreed to undertake
to purchase/convey land for Casa Filipina in the total value of P 1, 000, 000.00 within the period of 4
months from receipt of the total amount. Casa Filipina, in 2 instances, issued checks covering the total
value for the land. However, 4 months elapsed, Benitez failed to purchase and convey any real estate.
Accordingly, Benitez converted the entrusted money for her own use. Repeated demands for refund went
unheeded, which gives rise to the complaint with preliminary attachment. Respondent court granted the
writ of attachment ex parte. Benitez filed an answer with counterclaim and a motion to discharge writ of
preliminary attachment under sec. 13 Rule 57 of the ROC on the ground that the same was improperly or
irregularly issued. Respondent court denied the motion. Hence this petition.
 
Issue: WON the issue of propriety of the issuance of the writ may be resolved without going into the
merits of the principal action.
 
Ruling:
         No. As the Court found merits in the petition, It was grave abuse of discretion on the part of
respondent Judge Rosario Veloso to deny petitioner's Urgent Motion to Discharge Writ of Preliminary
Attachment, without conducting a hearing and requiring the plaintiff to substantiate its allegation of fraud.
Neither can respondent Judge avoid deciding the issue raised in petitioner'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.
We agree with petitioner that 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

53. PEROXIDE PHILIPPINES CORPORATION v. HON. COURT OF APPEALS


G.R. No. 92813 July 31, 1991
Regalado, J.

Facts: Private respondent Bank of the Philippine Islands sued herein petitioners Peroxide Philippines
Corporation, Eastman Chemical Industries, Inc., and the spouses Edmund O. Mapua and Rose U. Mapua
for the collection of an indebtedness of Peroxide wherein Eastman and the Mapuas bound themselves to
be solidarily liable.
The trial court presided over by Judge Gregorio G. Pineda, ordered the issuance of a writ of preliminary
attachment after BPI filed an attachment bond in the amount of P32,700,000.00. Petitioners' properties
were accordingly attached by the sheriff. 

Thereafter, Eastman and the Mapuas moved to lift the attachment which was granted by Judge Pineda.
BPI filed a motion for reconsideration but the case was re-raffled and assigned to the sala of Judge
Pastor Reyes. 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. 

After a motion for partial reconsideration by BPI and some exchanges between the parties, the trial court,
this time with Judge Eficio B. Acosta presiding, issued an order granting BPI's motion on the ground 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 immediately”.

Contending that said order was rendered with grave abuse of discretion, petitioners sought the annulment
thereof. The court rendered its decision dismissing the petition and holding that there is nothing wrong
with the attachment of the properties of Peroxide. 

Issue: Whether the writ of attachment was validly lifted and suspended by the lower court's orders?

Held: 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. As provided by the aforecited 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 counter bond or for improper or irregular issuance.  

The writ of attachment is continuing and uninterrupted, valid and enforceable since the order of discharge
and the order of suspension of the trial court were void. The cancellation of the annotations regarding the
levy on attachment of petitioners' properties, procured by the sheriff pursuant to the aforesaid invalid
orders, is likewise a nullity and another levy thereon is not required. 

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.

54. Filinvest vs. Relova


G.R. No. L-50378 September 30, 1982
FACTS: On August 2, 1977, Filinvest Credit Corporation filed a complaint in the lower court against
defendants Rallye Motor Co., Inc. and Emesto Salazar for the collection of a sum of money with damages
and preliminary writ of attachment. From the allegations of the complaint, it appears that in payment of a
motor vehicle, Salazar executed a promissory note in favor of RALLYE for the amount of P99,828.00. To
secure the note, Salazar also executed in favor of RALLYE a deed of chattel mortgage over the above
described motor vehicle. On May 7, 1977, 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 co defendants." Salazar defaulted
in complying with the terms and conditions of the aforesaid promissory note 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,

Judge Jorge R. Coquia, then presiding Judge of the lower court, granted the prayer for a writ of
attachment. More than a year later, in an Urgent Motion dated December 11, 1978,  defendant Salazar
prayed that the writ of preliminary attachment issued ex parte and implemented solely against his
property be recalled and/or quashed.

Respondent Judge, ordered the dissolution and setting aside of the writ of preliminary attachment issued
on August 17, 1977 and the return to defendant Salazar of all his properties attached by the Sheriff by
virtue of the said writ.

FILINVEST filed a Motion for Reconsideration of the above Order.

From the above order denying reconsideration, petitioner FILINVEST also filed an Urgent Petition for
Restraining Order.

ISSUES: (1) Whether or not writ of preliminary attachment was improperly or irregularly issued, in that it
was issued ex parte without notice to him and without hearing.
(2) Whether or not a writ of attachment may be discharged without the necessity of filing the cash deposit
or counter-bond
(3) 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?

RULING: (1) 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) 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."

(2) 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 petitioner. The following provision of the same Rule allows
it:
Sec. 13. Discharge of attachment for improper or irregular issuance.—The party whose
property has been attached may also, at any time either before or after the release of the
attached property, or before any attachment shall have been actually levied, upon
reasonable notice to the attaching creditor, apply to the judge who granted the order, or
to the judge of the court in which the action is pending, for an order to discharge the
attachment on the ground that the same was improperly or irregularly issued. If the
motion be made on affidavits on the part of the party whose property has been attached,
but not otherwise, the attaching creditor may oppose the same by counter-affidavits or
other evidence in addition to that on which the attachment was made. After hearing, the
judge shall order the discharge of the attachment if it appears that it was improperly or
irregularly issued and the defect is not cured forthwith."

In the instant case the order of attachment was granted upon the allegation of petitioner, as plaintiff in the
court below, that private respondent RALLYE, the defendants, had committed "fraud in contracting the
debt or incurring the obligation upon which the action is brought," covered by Section i(d), Rule 57, earlier
quoted. Subsequent to the issuance of the attachment order on August 17, 1977, private respondent 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. Private respondent was in effect
claiming that petitioner'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
"(i)f 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 private respondent's
abovementioned Urgent Motion was filed under option 13, Rule 57.

(3) Under the circumstances of the present case, we sustain the ruling of the court a quo in its questioned
Order dated February 2, 1979 that it should be the plaintiff (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 brne 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. 
 
55. J. UY KIMPANG vs. VICENTE JAVIER, JUAN AUTAJAY and SEVERINO MAGBANUA, sureties-
appellees. G.R. No. L-43461 December 16, 1937

Facts: A writ of execution was issued by the Court of First Instance of Antique on August 8, 1933 to
enforce the payment to the plaintiff of the sum of P6,678.84 plus interest and costs against Javier, et al. 
However, in view of the fact that the proceeds of the public auction was not sufficient to cover the full
value of the judgment and that the defendants failed to deliver to the sheriff the properties which were
released from the attachment, the plaintiff moved the court to again order the execution of the aforesaid
judgement, but this time against the properties of two sureties. 

The surety Juan Autajay objected to the plaintiff's motion on the ground (as applied   in our topic)
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.

Issue: W/N the writ was improperly issued because they were not given a copy of the order of
attachment  and that the motion was not sworn to as required by law.

Held:  No, it was rather properly issued. The Inference must be drawn that they were notified of said
order; otherwise, they would not have stated in their counter obligation that:

"The defendant having prayed for the discharge of the attachment levied upon his properties in an
action pending in the Court of First Instance of the Province of Antique, Philippines Island, in which J. Uy
Kimpang & Co. is plaintiff and Vicente Javier and Others, defendant, . . . ." 
The other contention that the plaintiff's motion praying for the issuance of a attachment was not
sworn to as required by law, is likewise disposed of. It was unnecessary that the same should be under
oath because it was merely a repetition or renewal of what was already prayed for in the complaint which
was verified. In order not to nullify the purposes of the law, technicalities should be disregarded,
especially when, as in the case under advisement, there was substantial compliance therewith. On the
other hand, the law enjoins that the provisions of the Code of Civil Procedure shall be liberally construed
in order to promote its object and assist the parties in obtaining speedy justice, bearing in mind, in
construing and applying them, their spirit and purpose, rather than their strict .

What is the effect of filing a motion to set aside the attachment on other grounds? Under these
circumstances, we believe we should adhere to the rule that: All objections to the writ will be waived by
moving to set aside the attachment on other grounds and failing to make the objections before bond for
the release of the property because, After issue made and trial begun upon the merits of a case, it is too
late for an objection of the petition or attachment for want of verification. 

 56. Ching vs. CA, GR no. 124642 February 23, 2004

Facts:
(1)    PBMCI obtained a loan from private respondent Allied Bank. The said loan was secured by a
continuing guaranty and suretyship agreement with Alfredo Ching.
 
(2)    The PBMCI defaulted in the payment of the loan, so Allied Bank filed an action for collection of
money with prayer for writ of preliminary attachment.
 

(3)    One of the properties attached is the 100,000 shares of stock in Citycorp under the name of Alfredo
Ching.
 

(4)    Encarnacion Ching wife of Alfredo Ching filed a motion to quash the writ of preliminary attachment
contending that the 100,000 shares of stock in Citycorp belong to conjugal partenership.
 

(5)    The RTC granted the motion filed by Encarnacion Ching but reversed by Court of Appeal (CA) on the
ground that there is no proof that the money used to buy the subject shares of stock coming from conjugal
partnership.
 

(6)    It was also raised by Allied Bank that Encarnacion Ching is not a real party in the civil suit filed by the
former hence it has no right to file a motion to quash the writ of preliminary attachment.
 

Issue:
W/N the petitioner wife has the right to file a motion to quash the levy on attachment on the 100,000
shares of stock in the Citycorp?
 
Ruling:
YES. The Supreme Court held that the petitioner-wife had a right to file the said motion even though she
is not a party to a case. The court which issued the writ of preliminary attachment may revoke the same if
it found that the properties levied by the sheriff do not belong to the defendant-debtor and order for the
return of the said properties to the aggrieved third party.
 
The aggrieved third party may also file an action to annul the writ of preliminary attachment separate from
the main action. Any of these remedies may be resorted to by the third party claimant without availing of
the other remedies.
 
The conjugal property is not responsible to answer for the debt of any of the spouses unless such debt
redounded to the benefit of the conjugal partnership. It is also provided in Article 160 of the New Civil
Code (NCC), the properties acquired during the marriage are presumed belong to the conjugal
partnership unless it is proved that it pertains exclusively to the husband or the wife.
 
In this case, the 100,000 shares of stock in Citycorp acquired during the marriage of the petitioner
spouses and private respondent Allied Bank failed to prove that it belongs exclusively to Alfred Ching.
The presumption cited in NCC will still apply in the absence of clear satisfactory and convincing evidence
to overcome the same.

57. Uy va CA

Uy vs. CA G.R. No. 83897 November 9, 1990

Remedial Law; Attachment; Execution; 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.—The issue
has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951]
where the Court ruled 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.

Same; Same; Same; 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
defendent.—“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 his 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.”

Same; Same; Same; Same; 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.—In like manner, 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.

Same; Same; Notice; It is well-settled that issuance of a writ of preliminary attachment may be made by
the court ex-parte.—Neither can petitioner complain that they were denied their day in court when the
Regional Trial Court issued a writ of preliminary attachment without hearing as it is well settled that its
issuance may be made by the court ex parte. As clearly explained by this Court, no grave abuse of
discretion can be ascribed to respondent Judge in the issuance of a writ of attachment without notice to
petitioners as there is nothing in the Rules of Court which makes notice and hearing indispensable and
mandatory requisites in its issuance.
 

Facts:

A writ of preliminary attachment was implemented by sheriff Cabang for the satisfaction of the debt
of Sy Yuk Tat from Uy. However, there were third party claimants over the property attached. Thus,
these third party claimants filed a writ of preliminary injunction in a different CFI branch against Uy
and Sheriff Cabang alleging that the properties attached by the sheriff belong to them. Since
according to the CFI it would take a while before such writ of prelim injunction can be issued, the
judge ordered the parties to maintain the status quo of the subject properties. Hence, Uy and
Cabang filed a motion to dissolve the status quo order on the ground that the court had no
jurisdiction to interfere with properties under custodio legis on orders of a court of co-equal
jurisdiction. Subsequently, third party claimants filed a motion for prelim attachment which was
granted. 

Issue: WON 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.

Held: 

Yes, 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.

However, 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.

58. 

PHILIPPINE AIRLINES, INC.

vs.

HON. COURT OF APPEALS, HON. JUDGE RICARDO D. GALANO, Court of First Instance of Manila,
Branch XIII, JAIME K. DEL ROSARIO, Deputy Sheriff, Court of First Instance, Manila, and AMELIA
TAN, 

G.R. No. L-49188               January 30, 1990

Facts:

Respondent Amelia Tan, under the name and style of Able Printing Press commenced a complaint for
damages before the Court of First Instance of Manila.
The CFI of Manila decided in favor of private respondent Amelia Tan and against petitioner Philippine
Airlines, Inc. (PAL)

On July 28, 1972, the petitioner filed its appeal with the Court of Appeals.

The CA rendered a judgment with the modification that PAL is condemned to pay plaintiff the sum of
P25,000.00 as damages and P5,000.00 as attorney's fee, judgment is affirmed, with costs. (CA Rollo, p.
29)

Notice of judgment was sent by the Court of Appeals to the trial court and on dates subsequent thereto, a
motion for reconsideration was filed by respondent Amelia Tan, duly opposed by petitioner PAL, however
the Court of Appeals rendered its resolution denying the respondent's motion for reconsideration for lack
of merit.

The case was remanded to the trial court for execution and respondent Amelia Tan filed a motion praying
for the issuance of a writ of execution of the judgment rendered by the Court of Appeals. 

On October 11, 1977, the trial court, presided over by Judge Galano, issued its order of execution with
the corresponding writ in favor of the respondent. The writ was duly referred to Deputy Sheriff Emilio Z.
Reyes of Branch 13 of the Court of First Instance of Manila for enforcement.

Four months later, on February 11, 1978, respondent Amelia Tan moved for the issuance of an alias writ
of execution stating that the judgment rendered by the lower court, and affirmed with modification by the
Court of Appeals, remained unsatisfied.

On March 1, 1978, the petitioner 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 plaintiff 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.

The Court of Appeals denied the issuance of the alias writ for being premature, ordering the executing
sheriff Emilio Z. Reyes to appear with his return and explain the reason for his failure to surrender the
amounts paid to him by petitioner PAL. However, the order could not be served upon Deputy Sheriff
Reyes who had absconded or disappeared.

On May 18, 1978, the petitioner received a copy of the first alias writ of execution issued on the same day
directing Special Sheriff Jaime K. del Rosario to levy on execution in the sum of P25,000.00 with legal
interest thereon from July 20,1967 when respondent Amelia Tan made an extra-judicial demand through
a letter. Levy was also ordered for the further sum of P5,000.00 awarded as attorney's fees.

On May 23, 1978, the petitioner 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 Emilio Z. Reyes and that the judgment debt had
already been fully satisfied by the petitioner as evidenced by the cash vouchers signed and receipted by
the server of the writ of execution, Deputy Sheriff Emilio Z. Reyes.

Issue:

Can an alias writ of execution be issued without a prior return of the original writ by the implementing
officer? (YES)

Held:
Yes.  An alias writ of execution be issued without a prior return of the original writ by the implementing
officer.

The Court held that The issuance of the questioned alias writ of execution under the circumstances here
obtaining is justified because even with the absence of a Sheriffs return on the original writ, the
unalterable fact remains that such a return is incapable of being obtained (sic) because the officer who is
to make the said return has absconded and cannot be brought to the Court despite the earlier order of the
court for him to appear for this purpose. (Order of Feb. 21, 1978, Annex C, Petition). Obviously, taking
cognizance of this circumstance, the order of May 11, 1978 directing the issuance of an alias writ was
therefore issued. (Annex D. Petition). 

The need for such a return as a condition precedent for the issuance of an alias writ was justifiably
dispensed with by the court below and its action in this regard meets with our concurrence. A contrary
view will produce an abhorent situation whereby the mischief of an erring officer of the court could be
utilized to impede indefinitely the undisputed and awarded rights which a prevailing party rightfully
deserves to obtain and with dispatch. The final judgment in this case should not indeed be permitted to
become illusory or incapable of execution for an indefinite and over extended period, as had already
transpired. (Rollo, pp. 35-36)

Judicium non debet esse illusorium; suum effectum habere debet (A judgment ought not to be illusory it
ought to have its proper effect).

Indeed, technicality cannot be countenanced to defeat the execution of a judgment for execution is the
fruit and end of the suit and is very aptly called the life of the law (Ipekdjian Merchandising Co. v. Court of
Tax Appeals, 8 SCRA 59 [1963]; Commissioner of Internal Revenue v. Visayan Electric Co., 19 SCRA
697, 698 [1967]). 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 (Government of the Philippines v. Echaus and Gonzales, 71 Phil. 318). It is a
well known legal maxim that he who cannot prosecute his judgment with effect, sues his case vainly.

Execution is the process which carries into effect a decree or judgment (Painter v. Berglund, 31 Cal. App.
2d. 63, 87 P 2d 360, 363; Miller v. London, 294 Mass 300, 1 NE 2d 198, 200; Black's Law Dictionary),
whereas the satisfaction of a judgment is the payment of the amount of the writ, or a lawful tender thereof,
or the conversion by sale of the debtor's property into an amount equal to that due, and, it may be done
otherwise than upon an execution (Section 47, Rule 39). Levy and delivery by an execution officer are not
prerequisites to the satisfaction of a judgment when the same has already been realized in fact (Section
47, Rule 39). Execution is for the sheriff to accomplish while satisfaction of the judgment is for the creditor
to achieve. Section 15, Rule 39 merely provides the sheriff with his duties as executing officer including
delivery of the proceeds of his levy on the debtor's property to satisfy the judgment debt. It is but to stress
that the implementing officer's duty should not stop at his receipt of payments but must continue until
payment is delivered to the obligor or creditor.

59. LUZON STEEL CORPORATION, represented by TOMAS AQUINO CU, plaintiff-appellant,  vs.
JOSE O. SIA, defendant, TIMES SURETY & INSURANCE CO. INC., surety-appellee.
G.R. No. L-26449               May 15, 1969
 
Facts:
Luzon Steel Corporation has sued Metal Manufacturing of the Philippines and Jose O. Sia, the
former's manager, for breach of contract and damages. It obtained a writ of preliminary
attachment of the properties of Sia and Times Surety, but the attachment was lifted upon a
P25,000.00 counterbond executed by Sia, as principal, and the Times Surety & Insurance Co., Inc.
as solidary guarantor. Luzon Steel entered into a compromise whereby Sia agreed to settle the
former’s claim by paying P500 monthly for the first 6 months to be paid at the end of every month
and to commence in January, 1965, and within one month after paying the last installment of
P500.00, the balance of P22,000.00 shall be paid in lump sum, without interest. It is understood
that 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 immediatelyagainst Sia’s bond. 
 
For Sia’s failure to comply, moved for and obtained a writ of execution against Sia. Times
Suretyhowever, moved to quash the writ of execution against it, averring that it was not a party to
the compromise, and that the writ was issued without giving the surety notice and hearing. 
 
Issues: 
1. WON the judgment upon the compromise discharged the surety from its obligation under its
attachment counterbond. 
2. WON the writ of execution could be issued against the surety without previous exhaustion of
the debtor's properties.
 
Rulings:
Both questions can be solved by bearing in mind that we are dealing with a counterbond filed to
discharge a levy on attachment. Rule 57, section 12, specifies that an attachment may be
dischargedupon 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".
The italicized expressions constitute the key to the entire problem. 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.
1. No. It was, therefore, 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. The
counterbond contemplated in the rule (R57S17) 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" (in solidum) with Sia; and it is prescribed in Article 2059,
paragraph 2, of the Civil Code of the Philippines 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 the defendant. 
2. Yes. 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 Times Surety has done so. Says Article
2060 of the Civil Code of the Philippines:
ART. 2060. In order that the guarantor may make use of the benefit of excussion, he must
set it up against the creditor upon the latter's demand for payment from him, and point out
to the creditor available property of the debtor within Philippine territory, sufficient to
cover the amount of the debt.
A third reason against the thesis of Times Surety 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 bonais 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.

60. SPOUSES GREGORIO AND JOSEFA YU v. NGO YET TE


GR No. 155868, February 6, 2007
 
FACTS:
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent soap
worth P594,240.00, and issued to the latter three postdated checks  as payment of the purchase price.
When Te presented the checks at maturity for encashment, said checks were returned dishonored and
stamped "ACCOUNT CLOSED".
 
Te demanded payment from Spouses Yu but the latter did not heed her demands. Acting through her son
and attorney-in-fact, Charry Sy, Te filed with the RTC, for Collection of Sum of Money and Damages with
Prayer for Preliminary Attachment. Upon Tes posting of an attachment bond, the RTC issued an Order of
Attachment/Levy dated March 29, 1993 on the basis of which Sheriff Alimurung of RTC, Branch 19, Cebu
City levied and attached Spouses Yus properties in Cebu City consisting of one parcel of land and four
units of motor vehicle.
 
On April 21, 1993, Spouses Yu filed an Answer with counterclaim for damages arising from the wrongful
attachment of their properties. On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment.
 
The RTC issued an Order dated May 3, 1993, discharging from attachment the Toyota Ford Fierra, jeep,
and Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and the
passenger bus. Spouses Yu filed a Motion for Reconsideration which the RTC denied.
 
Dissatisfied, they filed with the CA a Petition for Certiorari, in which a Decision was rendered lifting the
RTC Order of Attachment on their remaining properties. The CA held that insolvency is not a ground for
attachment especially when defendant has not been shown to have committed any act intended to
defraud its creditors.
 
Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of right in view of
the finality of SC June 8, 1994 Resolution in G.R. No. 114700 which affirmed the finding of the CA in its
September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te had wrongfully caused the
attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Inc., they argue that they
should be awarded damages based solely on the CA finding that the attachment was illegal for it already
suggests that Te acted with malice when she applied for attachment, and that even if we were to assume
that Te did not act with malice, still she should be held liable for the aggravation she inflicted when she
applied for attachment even when she was clearly not entitled to it.
 
ISSUE:
Whether or not the appellate court erred in not holding that the writ of attachment was procured in bad
faith, after it was established by final judgment that there was no true ground therefor.
 
RULING:
No. As early as in Lazatin v. Twaño, the SC 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.
 
Here, 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. Thus, we cannot attribute malice nor bad faith to Te in applying for the attachment
writ. We cannot hold her liable for moral and exemplary damages.
 
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of Appeals is
AFFIRMED with the MODIFICATION that petitioners’ counterclaim is PARTLY GRANTED. Gregorio Yu
and Josefa Yu are awarded ₱50,000.00 temperate damages and ₱30,000.00 attorney’s fees.

61. G.R. No. 89020  May 5, 1992


 STRONGHOLD INSURANCE CO., INC., petitioner,
Vs. COURT OF APPEALS, respondent.
 
FACTS:
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 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
 
RULING:
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.
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."

62. JOSE D. CALDERON, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, GEORGE
SCHULZE, GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO, and VICTOR M.
NALUZ, respondents. 
G.R. No. 74696           November 11, 1987
 
FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., petitioner, vs. THE
INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, ANTONIO C. AMOR, MANUEL A. MOZO
and VICTOR M. NALUZ, respondents. 
G. R. No. 73916          November 11, 1987 
 
Facts:
Calderon purchased from the Schulze et. al the Luzon Brokerage Corporation (LBC) and its 5 affiliate
companies. Twenty one days thereafter, the Bureau of Customs suspended the operations of LBC for
failure to pay the amount of P1,475,840.00 representing customs taxes and duties incurred prior to the
execution of the sale. In order to lift the suspension Calderon paid the sum of P606,430.00 to the Bureau
of Customs. 
 
Calderon filed a complaint against Schulze et. al to recover said amount of P1,475,840.00, with damages
by reason of breach of warranty. In the same complaint, Calderon prayed for a preliminary
attachment, alleging: that Schulze et. al had deliberately and willfully concealed from his knowledge such
staggering liability of the Calderon for the purpose of misleading him into buying the six aforesaid
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 P1,475,840.00.
 
The RTC issued a writ of preliminary attachment, whereupon properties of Schulze et. al were attached
and their bank deposits were garnished. 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. On the other hand, Schulze et. al claimed that the amount of P1,475,840.00
due to the Bureau of Customs represents the duties and taxes payable out of the advanced payments
made by LBC's client, Philippine Refining Company (PRC); that these deposit payments were properly
recorded in the books of the corporation and existing as part of the corporate funds; Schulze fully disclose
and explained to Calderon that these customer's advanced deposit payments (including those of the
PRC) are to be paid to the Bureau of Customs when their corresponding customs taxes and duties
become due; that during this phase of the negotiation, Calderon and his representatives inspected and
studied the corporate books and records at will and learned the daily operations and management of
LBC.
 
Schulze et. al filed a counterbond, whereupon the RTC 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, the trial court dismissed the complaint, holding Calderon
and his surety First integrated Bonding and Insurance Co., Inc., jointly and severally liable to pay the
damages prayed for by Schulze et. al. CA affirmed the decision. 
 
Issue:
1. WON the Preliminary Attachment had been wrongfully sued out. 
2. WON the dissolution of the attachment extinguishes the surety’s obligation under the bond, for the
basis of its liability, which is wrongful attachment, no longer exists, the attachment bond having been
rendered void and ineffective.
 
Ruling:
1. Yes. Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of LBC
or was misappropriated by Schulze is purely a factual issue. 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. The record shows that appellant Calderon failed to
produce any evidence in support of his sworn charge that appellee Schulze had deliberately and willfully
concealed the liabilities of 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.
 
2. No. 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 of the Rules of Court, as follows: 
 
Sec. 4. Condition of applicant's bond. The party applying for the order must give a bond executed
to the adverse party in an amount to be 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.
 
It is clear from the above provision that the responsibility of the surety arises "if the court shall finally
adjudge that the plaintiff was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we held that
the 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. 

63.  Spouses Gregorio and Josefa Yu vs Ngo Yet Te

FACTS:
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent soap
worth P594,240.00, and issued to the latter three postdated checks  as payment of the purchase price.
When Te presented the checks at maturity for encashment, said checks were returned dishonored and
stamped "ACCOUNT CLOSED".
 
Te demanded payment from Spouses Yu but the latter did not heed her demands. Acting through her son
and attorney-in-fact, Charry Sy, Te filed with the RTC, for Collection of Sum of Money and Damages with
Prayer for Preliminary Attachment. Upon Tes posting of an attachment bond, the RTC issued an Order of
Attachment/Levy dated March 29, 1993 on the basis of which Sheriff Alimurung of RTC, Branch 19, Cebu
City levied and attached Spouses Yus properties in Cebu City consisting of one parcel of land and four
units of motor vehicle.
 
On April 21, 1993, Spouses Yu filed an Answer with counterclaim for damages arising from the wrongful
attachment of their properties. On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of
Preliminary Attachment.
 
The RTC issued an Order dated May 3, 1993, discharging from attachment the Toyota Ford Fierra, jeep,
and Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and the
passenger bus. Spouses Yu filed a Motion for Reconsideration which the RTC denied.
 
Dissatisfied, they filed with the CA a Petition for Certiorari, in which a Decision was rendered lifting the
RTC Order of Attachment on their remaining properties. The CA held that insolvency is not a ground for
attachment especially when defendant has not been shown to have committed any act intended to
defraud its creditors.
 
Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of right in view of
the finality of SC June 8, 1994 Resolution in G.R. No. 114700 which affirmed the finding of the CA in its
September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te had wrongfully caused the
attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Inc., they argue that they
should be awarded damages based solely on the CA finding that the attachment was illegal for it already
suggests that Te acted with malice when she applied for attachment, and that even if we were to assume
that Te did not act with malice, still she should be held liable for the aggravation she inflicted when she
applied for attachment even when she was clearly not entitled to it.
 
ISSUE:
Whether or not the appellate court erred in not holding that the writ of attachment was procured in bad
faith, after it was established by final judgment that there was no true ground therefor.
 
RULING:
No. As early as in Lazatin v. Twaño, the SC 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.
 
Here, 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. Thus, we cannot attribute malice nor bad faith to Te in applying for the attachment
writ. We cannot hold her liable for moral and exemplary damages.
 
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of Appeals is
AFFIRMED with the MODIFICATION that petitioners’ counterclaim is PARTLY GRANTED. Gregorio Yu
and Josefa Yu are awarded ₱50,000.00 temperate damages and ₱30,000.00 attorney’s fees.

64. Zenith Insurance vs CA (1982)

FACTS:
William B. Murphy filed a case for collection of a sum of money, accounting and damages, in the
Court of First Instance of Rizal, Branch VI, Pasig, against private respondent Pedro Mejorada .
Murphy likewise prayed for a Writ of Preliminary Attachment, which the Trial Court granted upon a
bond of P250,000.00 issued by petitioner Zenith Insurance Corporation in favor of Murphy.
RTC :   
1. Dismissing the plaintiff's Complaint dated September 3, 1966 and filed on
September 5, 1966;
2. Declaring the Agreement dated July 20, 1966 null and void and without any legal
effect whatsoever.
3. On the action of defendant against the attachment bond ordering the plaintiff
and the respondent Zenith Insurance Corporation to pay the defendant, jointly
and severally against the attachment bond but not exceeding the amount
secured thereby in the sum of P250,000.00, the following amounts:
a. P67,822.65 as actual damages plus interest of 6o/o per annum on
the yearly premiums paid by the defendant on the two counterbounds
posted, from their dates of payment until satisfied by the plaintiff
and/or his surety;
b. Actual damages representing the simple legal interest of 6% per
annum on 93,336.85, posted by the defendant in securing his initial
counterbond for the same amount, from September 12, 1966 when
the writ of preliminary attachment was served on the defendant's
bank until January 8, 1970 when said writ was dissolved;
From the said Decision, Murphy and petitioner, as surety, appealed to the Court of Appeals (CA-
G.R. No. 53497-R). Pending appeal, and upon motion of respondent, judgment was partially
executed in the amount of P115 ,680.55
CA: rendered judgment affirming in toto the Decision of the Trial Court . Murphy moved for
reconsideration. This was denied by the Court of Appeals. Murphy then appealed by way of certiorari
to this Court (G.R. No. 53536). The petition was denied for late filing in this Court's Resolution
of June 13, 1980.
Thereafter, private respondent proceeded against the balance of petitioner's attachment bond
coverage, and collected P80,000.00 on July 24, 1980 and P54,319.45 on August 15, 1980, adding
up to the full value of the bond of P250,000.00, including the amount of P115,680.55 already
partially executed. Private respondent acknowledged the last payment on August 15, 1980 to be "in
full satisfaction of the writ of execution issued."
Private respondent filed a Motion for the Issuance of an Alias Writ of Execution to enforce the
judgment award. The Trial Court initially denied alias execution as against petitioner on January 26,
1981, reasoning that, in executing the judgment, only the dispositive portion is to be looked into in
the absence of such ambiguity as would justify resort to the body of the Decision, and that as the
judgment is clear, the liability of petitioner is confined to the amount of the bond.
Private respondent moved for reconsideration. On April 9, 1981, the Trial Court issued the
questioned Order reconsidering its Order of January 26, 1981, and granting the Motion for the
issuance of an Alias Writ of Execution, petitioner's liability "not (being) limited to the amount of the
bond it has put up but includes all the actual and consequential damages suffered by private
respondent, there having intervened malice and bad faith" on petitioner's part. Alias Writ was issued
and served upon petitioner. The latter's cash deposit at the Commercial Bank and Trust Company,
Escolta Branch, and at the Philippine Bank of Communications, Juan Luna Branch, were garnished.
Petitioner filed with the Court of Appeals, a Petition for "Certiorari and Prohibition with
Preliminary Mandatory Injunction" (CA-G.R. No. SP-12295) imputing grave abuse of
discretion to respondent Judge in the issuance of the Order of April 9, 1981 granting the
Alias Writ.
On May 21, 1981, respondent Court of Appeals upheld the Alias Writ of Execution, petitioner's
"solidary liability (having) been clearly pronounced by this Court in case CA-G.R. No. 53497-R"
when it held that petitioner is equally liable for all the damages that resulted from the wrongful
issuance of the writ (of attachment)." Petitioner moved for reconsideration arguing that liability on the
attachment bond is not to be confounded with liability on the judgment, and that its liability cannot
exceed the amount of the attachment bond. Reconsideration was denied for lack of merit.
Petitioner filed the present Petition stating that respondent Judge acted without or in excess of
jurisdiction in issuing the Order for the issuance of the Alias Writ of Execution for the further
enforcement of the judgment against petitioner; and that respondent Court of Appeals acted with
grave abuse of discretion or erred in sustaining the said Order
 ISSUE : WON respondent Court committed grave abuse of discretion in ordering the issuance of
the Alias Writ of Execution making petitioner solidarily liable for all costs and damages, or, for more
than the amount of its bond.
HELD : YES..
Paragraph " 6 " of the dispositive portion of the Trial Court's Decision, which states:
6. On the action of the defendant against the attachment bond, ordering the plaintiff
and the respondent Zenith Insurance Corporation to pay defendant, jointly and
severally against the attachment bond but not exceeding the amount secured
thereby in the sum of P250,000.00 the following amounts:
xxx xxx xxx
is clear and correct. There is no ambiguity that would "justify resort to the entire contents of the
decision in order to determine the extent of the liability of a party litigant".  The liability of petitioner is
expressly limited to P250,000.00, the amount of the attachment bond. "A guaranty is not presumed, it
must be express and cannot extend to more than what is stipulated therein." 2
It is true that in CA-G.R. No. 53497-R (the appeal from the Trial Court's Decision), petitioner was
pronounced "equally liable with its principal for all damages sustained resulting from the wrongful
issuance of the Writ (of Preliminary Attachment)". The phrase "all damages" 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 over the above what is
adjudged against it in the dispositive portion of the Decision, as it would be unreasonable to
expand 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
its principal in case the action fails. The extent of a surety's liability is determined only by the clause
of the contract of suretyship.  It cannot be extended by implication, beyond the terms of the contract. 5

65. Paramount vs. CA


G.R. No. 110086, July 19, 1999
 
Facts:
McAdore Finance and Investment, Inc. (McADORE) was the owner and operator of the McAdore
International Palace Hotel in Dagupan City. Private respondent Dagupan Electric Corporation (DECORP),
on the other hand, was the grantee of a franchise to operate and maintain electric services in the province
of Pangasinan, including Dagupan City.
 
On February 2, 1978, 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, rendered judgment in favor of
DECORP and that Paramount is jointly and severally liable with McAdore to the extent of the value of the
bond, to pay the damages adjudged to Decorp.
 
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.
 
Issue:
 Whether or not the mandatory procedure in Sec. 20, Rule 57, in relation to Sec 9, rule 58, rules of court
was not observed in this case.
 
Ruling:
No. 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. 9 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
 
The above rule comes into play when the plaintiff-applicant for injunction fails to sustain his action, and
the defendant is thereby granted the right to proceed against the bond posted by the former. 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.
 
The records of the case disclose that during the trial of the case, PARAMOUNT was present and
represented by its counsel Atty. Nonito Q. Cordero as shown in the trial court's order dated March 22,
1985. In the said order, PARAMOUNT was duly notified of the next hearing which was scheduled on April
26, 1985. Evidently, PARAMOUNT was well-apprised of the next hearing and it cannot feign lack of
notice. Having been given an opportunity to be heard during the main hearing for the matter of damages,
PARAMOUNT therefore, cannot bewail that it was not given an opportunity to be heard upon denial of its
motion to cancel its injunction bond. Of what use, therefore, is there to conduct another hearing when the
issue of damages has been the subject of the main action of which PARAMOUNT had been duly notified?
A new notice and hearing prescribed by Sec. 20, Rule 57, is therefore a repetition and a superfluity.

 
66. Malayan Insurance vs. Salas 
 
FACTS: 
This case is about Malayan Insurance’s liability on its replevin bond which was not included in the final judgment against the principal in the bond. It
is undisputed that in 1970, Makati Motor Sales,  as vendor mortgagee, sued Rosendo Fernando for the recovery of four diesel trucks and the
connection of the balance of his obligation plus damages.
Makati Motors Sales posted a replevin bond executed by the Malayan Insurance. 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.
2 Mar ’73: After trial, the lower court rendered judgment, ordering Makati Motor to return to Fernando the other 2 trucks and to pay him for the
seizure of each of them in the sum of 300 daily from Sep 25 and 26, 1970 until return plus P26k as actual and moral damages. In turn, Fernando was
ordered to pay Makati Motor the sum of P66,998.34 as the balance of the price of the 2 trucks.
Makati Motor appealed. Affirmed.
Meanwhile, 11 May ’73: Before elevation of the record to the CA, Fernando filed in the TC an application for damages against the replevin bond.
Malayan Insurance opposed on the ground that the TC had lost jurisdiction over the case because of the perfection of the appeal. Application was
denied.
27 May: Fernando filed in the CA his claim for damages against the replevin bond and prayed that the same be included in the judgment.
CA did not act immediately on that claim but in its 1977 decision, it observed that Fernando's motion or claim "was correct" and it ordered that his
claim against Malayan Insurance "be heard before the trial court". That decision affirming the lower court's judgment became final and executory on
March 18, 1977.
6 Apr ’77: After remand of the record to the TC, Fernando filed motion to set for hearing his application for damages against the surety on its
replevin bond. Malayan Insurance moved to quash the proceeding regarding the claim for damages, contending that TC has no jurisdiction to alter or
modify the final judgment of the CA.
14 Jul ’78: TC denied the motion to quash and directed Malayan Insurance to pay Fernando the damages which it had adjudged.
Malayan Insurance’s contention: TC’s judgment against it is not warranted under section 20 of Rule 57. Assailed the TC’s competence to render
judgment against the surety after the decision of the CA against the surety's principal had become final and executory.
 
ISSUES: 
1. WON the TC has jurisdiction to hear the Fernando’s application
2. WON Malayan Insurance was afforded the hearing requirement
 
RULING: 

1. Yes. The TC 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 CA. It was not his fault that the damages claimed by him against the
surety were not included in the judgment of the CA 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 CFI
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".
In the case at bar, Fernando in 1974 made a timely claim in the CA for an award of damages against Malayan Insurance enforceable against its
replevin bond. The surety was notified of that application. It registered an opposition to the claim. The CA did not resolve the claim immediately but in
its 1977 decision it directed TC to hear that claim.
Obviously, the lower court has no choice but to implement that directive which is the law of the case.
 

2. No. 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 TC has no jurisdiction to allow the claim in view of the finality of the decision of the CA.
It was 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. Again, hearing is summary and is limited to such new defense, not previously set up by the principal, as the surety may allege
and offer to prove.
Inasmuch as in this case, Malayan Insurance 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.

67. Antonio Zaragoza vs. Makia Angela Fidelino and Mabini Insurance & Fidelity Co., Inc.
GR No. L-29723, July 14, 1988
 
FACTS:
 
Petitioner Antonio Zaragosa filed an action for replevin in the CFI at Quezon City for the car he sold to
respondent Maria Fidelino since the latter failed to pay the price in the manner stipulated in the contract.
The car was taken from Fidelino’s possession by the sheriff on the strength of a writ of delivery but was
promptly returned when a surety bond for the car’s release was posted in her behalf by Mabini Insurance
& Fidelity Co., Inc. (herein referred as surety).
 
The lower court ruled in favor of Zaragoza ordering Fidelino and her surety to pay jointly and severally the
balance of the car sold.
 
The surety filed a motion for reconsideration arguing that the lower court never acquired jurisdiction over it
since no summons was ever served on it, its filing of a counter-bond not being equivalent to voluntary
submission to the Court's jurisdiction.
 
ISSUE:
 
Whether or not the lower court acquires jurisdiction over the person of the surety making liable to pay the
balance of the car sold.
HELD:
 
Yes. The terms of the counter-bond voluntarily filed by a surety in defendant's behalf leave no doubt of its
assent to be bound by the court's adjudgment of the defendant's liability, i.e., its acceptance of the court's
jurisdiction. . For in that counter bond, it implicitly prayed for affirmative relief; the release of the seized
car, in consideration of which it explicitly bound itself solidarily with said defendant to answer for the
delivery of the car subject of the action "if such delivery is adjudged," i.e., commanded by the Court's
judgment, or "for the payment of such sum as may be recovered against the defendant and the costs of
the action," the reference to a possible future judgment against the defendant, and necessarily against
itself, being certain and unmistakable. The filing of that bond was clearly an act of voluntary
submission to the Court's authority, which is one of the modes for the acquisition of jurisdiction
over a party.
 
Further, the enforcement of a surety's liability on a counter-bond given for the release of property seized
under a writ of preliminary attachment is governed by Section 17, Rule 57 of the Rules of Court, which
reads as follows:
 
SEC. 17. When execution returned unsatiated, 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 amount may be
recovered from such surety or sureties after notice and summary hearing in the same action."
 
In this case, the record shows that the surety bounds itself to “jointly and severally” with the defendant.
This being so, the appellant surety's liability attached upon the promulgation of the verdict against
Fidelino. All that was necessary to enforce the judgment against it was, as aforestated, an application
therefor with the Court, with due notice to the surety, and a proper hearing.
 
 
 

69. PHIL-AIR CONDITIONING CENTERvs. RCJ LINES AND ROLANDO ABADILLA, JR.
G.R. No. 193821; November 23, 2015
Brion, J.
 
Facts:
For failure of RCJ Lines to pay the balance for the purchase of four Carrier Paris 240 air-conditioning units for
buses to Phil-Air despite its demand, the latter filed a complaint for sum of money with prayer for the issuance of a
writ of preliminary attachment. The RTC granted the application for the issuance of a writ of preliminary attachment
after Phil-Air posted an attachment bond. Two buses of RCJ Lines were attached pursuant to the writ. However, the
attachment was later lifted when the RTC granted RCJ Lines' urgent motion to discharge the writ of attachment and
upon posting of a counter-bond in the same amount as the attachment bond.
 
In its answer to the complaint, RCJ Lines 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. Further, RCJ
Lines claimed that it was also entitled to be reimbursed on the lost profits for nine days resulting from the
attachment of its two buses.
 
The RTC ruled in favor of RCJ Lines. The CA affirmed the RTC decision in toto. It ordered Phil-Air to reimburse  
the premium payment for the counter-bond and the alleged losses suffered by RCJ Lines.
 
Issue:
Whether or not Phil-Air should reimburse RCJ Lines for the counter- bond premium and its alleged unrealized
profits.
 
Held:
No. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines' alleged unrealized profits.
 
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 coststhat may be adjudged to the adverse party and all
damagesthat he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant
was not entitled thereto."
 
The discharge of the attachment by depositing cash or posting a counter-bond under Section 12 should not be
confused with the discharge sanctioned under Section 13. Section 13 speaks of discharge on the ground that the writ
was improperly or irregularly issued or enforced, or that the attachment bond is insufficient, or that the attachment is
excessive. The discharge of the preliminary attachment either through Section 12 or Section 13 has no effect on and
does not discharge the attachment bond. The dissolution of the preliminary attachment does not result in the
dissolution of the attachment bond.
 
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.

70. WATERCRAFT VENTURE CORPORATION, represented by its Vice-President, ROSARIO E.


RANOA vs.ALFRED RAYMOND WOLFE
G.R. No. 181721; September 9, 2015
Peralta, J.
 
Facts:
For failure to pay an unpaid boat storage fees despite repeated demands, Watercraft Venture Corporation
(Watercraft) filed against Alfred Raymond Wolfe (Wolfe) a Complaint for Collection of Sum of Money with
Damages with an Application for the Issuance of a Writ of Preliminary Attachment. Finding Watercraft's
ex-parte application for writ of preliminary attachment sufficient in form and in substance, the RTC
granted the same. Wolfe filed a Motion to Discharge the Writ of Attachment, arguing that Watercraft failed
to show the existence of fraud and that the mere failure to pay or perform an obligation does not amount
to fraud. The motion was denied by the RTC. However, the CA ruled that the act of issuing the writ of
preliminary attachment ex-parte constitutes grave abuse of discretion on the part of the RTC because the
affidavit submitted by Watercraft failed to show fraudulent intent on the part of Wolfe to defraud the
company. It merely enumerated the circumstances tending to show the alleged possibility of Wolfe's flight
from the country. 
 
Stressing that its application for such writ was anchored on two (2) grounds under Section 1, Rule 57,
Watercraft insists that, contrary to the CA ruling, its affidavit of merit sufficiently averred with particularity
the circumstances constituting fraud as a common element of said grounds.
 
Issue:
Whether the ex-parte issuance of the preliminary attachment in favor of Watercraft Venture Corporation is
valid.
 
Held:
No. 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 that might be
secured in the said action by the attaching creditor against the defendant. However, it should be resorted
to only when necessary and as a last remedy because it exposes the debtor to humiliation and
annoyance. It must be granted only on concrete and specific grounds and not merely on general
averments quoting the words of the rules. Since attachment is harsh, extraordinary, and summary in
nature, the rules on the application of a writ of attachment must be strictly construed in favor of the
defendant. the court in which the action is pending. Such bond executed to the adverse party in the
amount fixed by the court is subject to the conditions that the applicant will pay: (1) all costs which may be
adjudged to the adverse party; and (2) all damages which such party may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto. As to the requisite
affidavit of merit, Section 3, Rule 57of the Rules of Court states that an order of attachment shall be
granted only when it appears in the affidavit of the applicant, or of some other person who personally
knows the facts:
 
1. that a sufficient cause of action exists;
 
2. that the case is one of those mentioned in Section 1 hereof;
 
3. that there is no other sufficient security for the claim sought to be enforced by the action; and
 
4. that the amount due to the applicant, or the value of the property the possession of which he is entitled
to recover, is as much as the sum for which the order is granted above all legal counterclaims.
 
The mere filing of an affidavit reciting the facts required by Section 3, Rule 57, however, is not enough to
compel the judge to grant the writ of preliminary attachment. Whether or not the affidavit sufficiently
established facts therein stated is a question to be determined by the court in the exercise of its
discretion.
 

71. EXCELLENT QUALITY APPAREL, INC. vs.VISAYAN SURETY & INSURANCE CORPORATION,
and FAR EASTERN SURETY & INSURANCE CO., INC.
G.R. No. 212025; July 1, 2015
Mendoza, J.
 
Facts:
Win Multi-Rich filed a complaint for sum of money and damages with prayer for the issuance of writ of
attachment against Excellent Quality Apparel, Inc. (petitioner) and Max L.F. Ying (Ying), Vice-President
for Productions, before the RTC in relation to the construction of a garment factory. It claimed that Ying
was about to abscond and that petitioner had an impending closure.
 
Win Multi-Rich secured the necessary bond from Visayan Surety and Insurance Corporation (Visayan
Surety) and the RTC then issued a writ of preliminary attachment. To prevent the enforcement of the writ,
petitioner issued a check payable to the Clerk of Court of the RTC. Win Multi-Rich then filed a motion to
release petitioner’s cash deposit to it which was granted by the RTC after posting a Surety Bond issued
by Far Eastern Surety and Insurance Co., Inc. (FESICO). However, when the case was elevated to the
Supreme Court, in G.R. No. 175048, it ordered Win Multi-Rich to return the garnished amount. 
 
Petitioner moved for execution thereof, praying for the return of its cash deposit and, in the event of
refusal of Win Multi-Rich to comply, to hold Visayan Surety and FESICO liable under their respective
bonds because the Supreme Court ruled that it cannot allow Win Multi-Rich to retain the garnished
amount turned over by the RTC. Also, petitioner claims that the surety bond of FESICO is not covered by
Section 20, Rule 57 because it did not pertain to the writ of attachment itself, but on the withdrawal of the
cash deposit.
 
Visayan Surety asserted that no application for damages was filed before the Court to hear and decide in
G.R. No. 175048. Thus, there is a violation of its right to due process. Also, Visayan Surety contended
that Section 20, Rule 57 provided a mandatory rule that an application for damages must be filed before
the judgment becomes final and executory. FESICO, on the other hand, averred that petitioner failed to
comply with Section 20, Rule 57 of the Rules of Court because the hearing on the motion for execution
was conducted after the decision in G.R. No. 175048 had already become final and executory. It also
stated that petitioner failed to implead the surety Visayan Surety and FESICO as parties in G.R. No.
175048. Petitioner stressed that because the highest court of the land had directed the return of the
wrongfully garnished amount, proceedings on the application under Section 20, Rule 57, became no
longer necessary. 
 
Issues:
1. Whether or not Visayan Surety can be held liable under Section 20, Rule 57 of the Rules of Court
2. Whether or not FESICO’s bond is covered by Section 20, Rule 57 of the Rules of Court
 
Held:
1. No. By its nature, preliminary attachment, under Rule 57 of the Rules of Court, "is an ancillary remedy
applied for not for its own sake but to enable the attaching party to realize upon relief sought and
expected to be granted in the main or principal action; it is a measure auxiliary or incidental to the main
action. As such, it is available during the pendency of the action which may be resorted to by a litigant to
preserve and protect certain rights and interests therein pending rendition and for purposes of the ultimate
effects, of a final judgment in the case. In addition, attachment is also availed of in order 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."
 
The party applying for the order of attachment must thereafter give a bond executed to the adverse party
in the amount fixed by the court in its order granting the issuance of the writ. The purpose of an
attachment bond is to answer for all costs and damages which the adverse party may sustain by reason
of the attachment if the court finally rules that the applicant is not entitled to the writ. In this case, the
attachment bond was issued by Visayan Surety in order for Win Multi-Rich to secure the issuance of the
writ of attachment.
 
Section 20, Rule 57 of the 1997 Rules of Civil Procedure covers application for damages against
improper attachment, preliminary injunction, receivership, and replevin. The Court has cited the requisites
under Section 20, Rule 57 in order to claim damages against the bond, as follows:
 
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 purpose of requiring the application for damages to be filed in the same proceeding is to avoid the
multiplicity of suit and forum shopping. It is also required to file the application against the bond before the
finality of the decision to prevent the alteration of the immutable judgment. 
 
Petitioner failed to comply with the requisites under Section 20, Rule 57 because Visayan Surety was not
given due notice on the application for damages before the finality of judgment. The subsequent motion
for execution, which sought to implicate Visayan Surety, cannot alter the immutable judgment anymore.
 
2. No. Strictly speaking, the surety bond of FESICO is not covered by any of the provisions in Rule 57 of
the Rules of Court because, in the first place, Win Multi-Rich should not have filed its motion to release
the cash deposit of petitioner and the RTC should not have granted the same. The release of the cash
deposit to the attaching party is anathema to the basic tenets of a preliminary attachment.
 
The chief purpose of the remedy of attachment is to secure a contingent lien on defendant’s property until
plaintiff can, by appropriate proceedings, obtain a judgmentand have such property applied to its
satisfaction, or to make some provision for unsecured debts in cases where the means of satisfaction
thereof are liable to be removed beyond the jurisdiction, or improperly disposed of or concealed, or
otherwise placed beyond the reach of creditors. The garnished funds or attached properties could only be
released to the attaching party after a judgment in his favor is obtained.Under no circumstance,
whatsoever, can the garnished funds or attached properties, under the custody of the sheriff or
the clerk of court, be released to the attaching party before the promulgation of judgment.
 
Cash deposits and counterbonds posted by the defendant to lift the writ of attachment is a security for the
payment of any judgment that the attaching party may obtain; they are, thus, mere replacements of the
property previously attached. Nevertheless, the Court must determine the nature of the surety bond of
FESICO. The cash deposit or the counter-bond was supposed to secure the payment of any judgment
that the attaching party may recover in the action. In this case, however, Win Multi-Rich was able to
withdraw the cash deposit and, in exchange, it posted a surety bond of FESICO in favor of petitioner to
answer for the damages that the latter may sustain. Corollarily, the surety bond of FESICO substituted the
cash deposit of petitioner as a security for the judgment. Thus, to claim damages from the surety bond of
FESICO, Section 17, Rule 57 could be applied. FESICO cannot simply escape liability by invoking that it
was not a party in G.R. No. 175048. From the moment that FESICO issued Surety Bond No. 10198 to
Win Multi-Rich and the same was posted before the RTC, the court has acquired jurisdiction over the
surety, and the provisions of Sections 12 and 17 of Rule 57 became operational. Thus, the Court holds
that FESICO is solidarily liable under its surety bond with its principal Win Multi-Rich.
 
Note: The question remains, in contrast to Section 20, why does Section 17 sanction the notice and hearing to the
surety after the finality of judgment? The answer lies in the kind of damages sought to be enforced against the bond.
 
Under Section 20, Rule 57, in relation to Section 4 therein, the surety bond shall answer for all the costs which may
be adjudged to the adverse party and all damages which he may sustain by reason of the attachment. In other words,
the damages sought to be enforced against the surety bond are unliquidated. Necessarily, a notice and hearing
before the finality of judgment must be undertaken to properly determine the amount of damages that was suffered by
the defendant due to the improper attachment. These damages to be imposed against the attaching party and his
sureties are different from the principal case, and must be included in the judgment.
 
On the other hand, under Section 17, Rule 57, in relation to Section 12 therein, the cash deposit or the counter-bond
shall secure the payment of any judgment that the attaching party may recover in the action. Stated differently, the
damages sought to be charged against the surety bond are liquidated. The final judgment had already determined
the amount to be awarded to the winning litigant on the main action. Thus, there is nothing left to do but to execute
the judgment against the losing party, or in case of insufficiency, against its sureties.
 

72. LETICIA P. LIGON vs.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
G.R. No. 190028; February 26, 2014
Perlas-Bernabe, J.
 
Facts:
In order to secure the satisfaction of a favorable judgment in the Quezon City Case against Spouses
Rosario and Saturnino Baladjay (Sps. Baladjay), et al., Leticia P. Ligon (Ligon) applied for and was
eventually able to secure a writ of preliminary attachment over TCT No. 9273 in the name of Polished
Arrow, which was later annotated on the dorsal portion of the said title. On the other hand, Makati City
RTC issued a 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 which resulted to the cancellation of
TCT No. 9273 and the restoration of TCT No. 8502 in its previous condition.
 
A decision in favor Ligon has been rendered but when the latter sought its execution, it was discovered
that the attachment annotation had been deleted from TCT No. 9273 when the subject property was sold
by way of public auction to the highest bidder, Leonardo J. Ting, during the execution proceedings in the
Makati City Case. Ligon filed a certiorari petition alleging that the Makati City RTC committed grave abuse
of discretion. The RTC of Makati explained that it could not allow the LRA to carry over all annotations
previously annotated on TCT No. 9273 as said course of action would run counter to its decision which
specifically cancels the said title.
 
Issue:
Whether or not the deletion of attachment annotation from TCT No. 9273 is proper.
 
Held:
No. 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. 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. Thus, a prior registration of an attachment lien creates a
preference, 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. As provided under PD
1529, said registration operates as a form of constructive notice to all persons.
 
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. The grave abuse of discretion of the Makati City RTC lies with its directive to
issue a new certificate of title in the name of Ting (i.e., TCT No. 19756), free from any liens and
encumbrances. This course of action clearly negates the efficacy of Ligon’s attachment lien and, also,
defies the legal characterization of attachment proceedings. 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.