THIRD DIVISION

[G.R. No. 125027. August 12, 2002]

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.

DECISION
CARPIO, J.:

The Case

This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision [1] of the Court of Appeals
affirming the Decision[2] of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the declaration of
default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs
of suit.

The Facts

Petitioner Anita Mangila (petitioner for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods Products.
Private respondent Loreta Guina (private respondent for brevity) is the President and General Manager of Air Swift International, a single registered
proprietorship engaged in the freight forwarding business.
Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners products,
such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on
delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In case of suit, the same invoice
stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit. [3]
On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three shipments,
March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95. [4]
Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No. 5875 before
the Regional Trial Court of Pasay City for collection of sum of money.
On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at petitioners
house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that petitioner had
left the Philippines for Guam. [5]
Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors, private
respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary Attachment [6] against
petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff
Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of Levy with the Order,
Affidavit and Bond.[7]
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment [8] without submitting herself to the jurisdiction of the trial
court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the court had not
acquired jurisdiction over her person.[9]
In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a re-setting to
December 9, 1988. On that date, private respondents counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed submitted
for resolution.[10]
The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial court,
however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989. [11] It was only on
January 26, 1989 that summons was finally served on petitioner.[12]
 On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents invoice for the
freight forwarding service stipulates that if court litigation becomes necessary to enforce collection xxx the agreed venue for such action is Makati,
Metro Manila.[13] Private respondent filed an Opposition asserting that although Makati appears as the stipulated venue, the same was merely an
inadvertence by the printing press whose general manager executed an affidavit [14] admitting such inadvertence. Moreover, private respondent
claimed that petitioner knew that private respondent was holding office in Pasay City and not in Makati. [15] The lower court, finding credence in
private respondents assertion, denied the Motion to Dismiss and gave petitioner five days to file her Answer. Petitioner filed a Motion for
Reconsideration but this too was denied.
Petitioner filed her Answer [16] on June 16, 1989, maintaining her contention that the venue was improperly laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-
trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..
On August 24, 1989, the day of the pre-trial, the trial court issued an Order [17] terminating the pre-trial and allowing the private respondent to
present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the
counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel was still nowhere to be found. Thus,
upon motion of private respondent, the pre-trial was considered terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her
counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy traffic. Petitioner
claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering the petitioner as in
default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but still the court allowed private
respondent to present evidence ex-parte.[18]
On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents evidence ex-
parte on October 10, 1989.
On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended because there
was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late.
On October 18, 1989, the trial court denied the Omnibus Motion. [19]
On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent
P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for Execution Pending
Appeal but the trial court denied the same.

The Ruling of the Court of Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals upheld the
validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the
declaration of default on petitioner and concluded that the trial court did not commit any reversible error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated May 20, 1996.
Hence, this petition.

The Issues

The issues raised by petitioner may be re-stated as follows:

I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND
SERVED;

II.

WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;

III.

WHETHER THERE WAS IMPROPER VENUE.

 IV.

WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS
FEES.[20]

The Ruling of the Court

Improper Issuance and Service of Writ of Attachment

Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are: first, there
was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the properties levied
exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question of the validity of the writ of
attachment. Because of failure to serve summons on her before or simultaneously with the writs implementation, petitioner claims that the trial court
had not acquired jurisdiction over her person and thus the service of the writ is void.
As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to
distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the writ. This
distinction is crucial in resolving whether there is merit in petitioners argument.
This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to
provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court.
Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy at the commencement of the action or at any time thereafter.
[21]
This phrase refers to the date of filing of the complaint which is the moment that marks the commencement of the action. The reference plainly is
to a time before summons is served on the defendant, or even before summons issues.
In Davao Light & Power Co., Inc. v. Court of Appeals,[22] this Court clarified the actual time when jurisdiction should be had:

It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of
summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until and unless jurisdiction over
his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the
courts authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on
the defendant not only a copy of the applicants affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of
Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx. (Emphasis supplied.)

Furthermore, we have held that the grant of the provisional remedy of attachment 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 be first obtained. However, once the implementation of the writ
commences, 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. [23]
In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However, the
alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of attachment.
The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed at the
commencement of the action. However, on the day the writ was implemented, the trial court should have, previously or simultaneously with the
implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was actually served
on petitioner several months after the writ had been implemented.
Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57 provides
for exceptions. Among such exceptions are where the summons could not be served personally or by substituted service despite diligent efforts or
where the defendant is a resident temporarily absent therefrom x x x. Private respondent asserts that when she commenced this action, she tried to
serve summons on petitioner but the latter could not be located at her customary address in Kamuning, Quezon City or at her new address in Guagua,
Pampanga.[24] Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true
that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules of
Civil Procedure.
The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of
Court provides that whenever the defendants whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court,
be effected upon him by publication in a newspaper of general circulation x x x. Thus, if petitioners whereabouts could not be ascertained after the
sheriff had served the summons at her given address, then respondent could have immediately asked the court for service of summons by publication
on petitioner.[25]
Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident
who is temporarily out of the country. This is the exact situation contemplated in Section 16, [26] Rule 14 of the Rules of Civil Procedure, providing for
service of summons by publication.
 In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the
enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her person. The
preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service,
substituted service or by publication as warranted by the circumstances of the case. [27] The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service.

Improper Venue

Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains the
following:

3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The
agreed venue for such action is Makati, Metro Manila, Philippines. [28]

Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a
ground for the dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.
The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought. [29] However, a
mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. [30] The parties must be able to show
that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a suit in a particular place, courts will
allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid
and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. [31] In the absence of qualifying or
restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place. [32]
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice that
would evince the intention of the parties that Makati is the only or exclusive venue where the action could be instituted. We therefore agree with
private respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is where the defendant or any of the defendants resides
or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. [33] The exception to this rule is when the parties
agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in this case.
Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff
(private respondent herein).
In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged
was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after petitioner was
declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc.,[34] the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation
owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in
Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First
Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporations president and manager was to
justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly laid in
that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore, the Court
held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and distinct from that of
its officers and stockholders.
In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga [35] while private respondent resides in
Paraaque City.[36] However, this case was brought in Pasay City, where the business of private respondent is found. This would have been permissible
had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in
her Complaint[37] in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable
it to file a suit in court.[38] In fact, there is no law authorizing sole proprietorships to file a suit in court. [39]
A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. [40] The
law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and
requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government. [41] The law does
not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court. [42]
Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in
her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita
Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift International, but rather Anita
Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical personality, which should be
considered as one of the proper venues for this case.
 All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or Paraaque
(private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed on
the ground of improper venue.
Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the
motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the complaint.
[43]
Thereafter, petitioner timely filed a Motion to Dismiss [44] on the ground of improper venue. Rule 16, Section 1 of the Rules of Court provides that
a motion to dismiss may be filed [W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim. Petitioner even
raised the issue of improper venue in his Answer [45] as a special and affirmative defense. Petitioner also continued to raise the issue of improper venue
in her Petition for Review[46] before this Court. We thus hold that the dismissal of this case on the ground of improper venue is warranted.
The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and
evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom
to choose where to file the complaint or petition. [47]
We find no reason to rule on the other issues raised by petitioner.
WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The
decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No.
5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered returned to her
immediately.
SO ORDERED.
Puno, (Chairman), and Panganiban, JJ., concur.
Sandoval-Gutierrez, J., on leave.
 FIRST DIVISION

[G.R. No. 139941. January 19, 2001]

VICENTE B. CHUIDIAN, petitioner, vs. SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents.

DECISION
YNARES-SANTIAGO, J.:

The instant petition arises from transactions that were entered into by the government in the penultimate days of the Marcos
administration. Petitioner Vicente B. Chuidian was alleged to be a dummy or nominee of Ferdinand and Imelda Marcos in several companies said to
have been illegally acquired by the Marcos spouses. As a favored business associate of the Marcoses, Chuidian allegedly used false pretenses to
induce the officers of the Philippine Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE), the Board of Investments (BOI) and the
Central Bank, to facilitate the procurement and issuance of a loan guarantee in favor of the Asian Reliability Company, Incorporated (ARCI)
sometime in September 1980. ARCI, 98% of which was allegedly owned by Chuidian, was granted a loan guarantee of Twenty-Five Million U.S.
Dollars (US$25,000,000.00).
While ARCI represented to Philguarantee that the loan proceeds would be used to establish five inter-related projects in the Philippines,
Chuidian reneged on the approved business plan and instead invested the proceeds of the loan in corporations operating in the United States, more
particularly Dynetics, Incorporated and Interlek, Incorporated. Although ARCI had received the proceeds of the loan guaranteed by Philguarantee,
the former defaulted in the payments thereof, compelling Philguarantee to undertake payments for the same. Consequently, in June 1985,
Philguarantee sued Chuidian before the Santa Clara County Superior Court, [1] charging that in violation of the terms of the loan, Chuidian not only
defaulted in payment, but also misused the funds by investing them in Silicon Valley corporations and using them for his personal benefit.
For his part, Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by the Marcoses as he was the true owner of
these companies, and that he had in fact instituted an action before the Federal Courts of the United States to recover the companies which the
Marcoses had illegally wrested from him. [2]
On November 27, 1985, or three (3) months before the successful peoples revolt that toppled the Marcos dictatorship, Philguarantee entered
into a compromise agreement with Chuidian whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the
Philippine government. In return, Philguarantee shall absolve Chuidian from all civil and criminal liability, and in so doing, desist from pursuing any
suit against Chuidian concerning the payments Philguarantee had made on Chuidians defaulted loans.
It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee arising from Chuidians default, the
Philippine government shall pay Chuidian the amount of Five Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five
Hundred Thousand Dollars (US$500,000.00) was actually received by Chuidian, as well as succeeding payment of Two Hundred Thousand Dollars
(US$200,000.00). The remaining balance of Four Million Six Hundred Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable
Letter of Credit (L/C) from which Chuidian would draw One Hundred Thousand Dollars (US$100,000.00) monthly. [3] Accordingly, on December 12,
1985, L/C No. SSD-005-85 was issued for the said amount by the Philippine National Bank (PNB). Subsequently, Chuidian was able to make two (2)
monthly drawings from said L/C at the Los Angeles branch of the PNB. [4]
With the advent of the Aquino administration, the newly-established Presidential Commission on Good Government (PCGG) exerted earnest
efforts to search and recover money, gold, properties, stocks and other assets suspected as having been illegally acquired by the Marcoses, their
relatives and cronies.
Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May 30, 1986, the PCGG issued a Sequestration
Order[5] directing the PNB to place under its custody, for and in behalf of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Chuidian was
then residing in the United States, his name was placed in the Department of Foreign Affairs Hold Order list. [6]
In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County of California in Civil Case Nos. 575867 and
577697 seeking to vacate the stipulated judgment containing the settlement between Philguarantee and Chuidian on the grounds that: (a)
Philguarantee was compelled by the Marcos administration to agree to the terms of the settlement which was highly unfavorable to Philguarantee and
grossly disadvantageous to the government; (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement agreement by threatening
to expose the fact that the Marcoses made investments in Chuidians American enterprises; and (c) the Aquino administration had ordered
Philguarantee not to make further payments on the L/C to Chuidian. After considering the factual matters before it, the said court concluded that
Philguarantee had not carried its burden of showing that the settlement between the parties should be set aside. [7] On appeal, the Sixth Appellate
District of the Court of Appeal of the State of California affirmed the judgment of the Superior Court of Sta. Clara County denying Philguarantees
motion to vacate the stipulated judgment based on the settlement agreement. [8]
After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States District Court, Central District of California, an
action against PNB seeking, among others, to compel PNB to pay the proceeds of the L/C. PNB countered that it cannot be held liable for a breach of
contract under principles of illegality, international comity and act of state, and thus it is excused from payment of the L/C. Philguarantee intervened
in said action, raising the same issues and arguments it had earlier raised in the action before the Santa Clara Superior Court, alleging that PNB was
excused from making payments on the L/C since the settlement was void due to illegality, duress and fraud. [9]
The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making payment on the L/C; and (2) in
Chuidians favor by denying intervenor Philguarantees action to set aside the settlement agreement. [10]
Meanwhile, on February 27, 1987, a Deed of Transfer [11] was executed between then Secretary of Finance Jaime V. Ongpin and then PNB
President Edgardo B. Espiritu, to facilitate the rehabilitation of PNB, among others, as part of the governments economic recovery program. The said
Deed of Transfer provided for the transfer to the government of certain assets of PNB in exchange for which the government would assume certain
liabilities of PNB.[12] Among those liabilities which the government assumed were unused commercial L/Cs and Deferred L/Cs, including SSD-005-
85 listed under Dynetics, Incorporated in favor of Chuidian in the amount of Four Million Four Hundred Thousand Dollars (US$4,400,000.00). [13]
On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against the Marcos spouses, several government
officials who served under the Marcos administration, and a number of individuals known to be cronies of the Marcoses, including Chuidian. The
complaint sought the reconveyance, reversion, accounting and restitution of all forms of wealth allegedly procured illegally and stashed away by the
defendants.
In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the Marcos spouses, engaged in devices, schemes and
stratagems by: (1) forming corporations for the purpose of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the coffers of
government financial institutions such as the Philguarantee; and (3) executing the court settlement between Philguarantee and Chuidian which was
grossly disadvantageous to the government and the Filipino people.
In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with the other defendants constituted gross
abuse of official position of authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment,
violation of the Constitution and laws of the land. [14]
While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion for issuance of a writ of attachment [15] over the
L/C, citing as grounds therefor the following:
(1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary capacity, justifying issuance of the writ under
Section 1(b), Rule 57 of the Rules of Court;
(2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in contracting the debt or incurring the
obligation upon which the action was brought, or that he concealed or disposed of the property that is the subject of the action;
(3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff as justified under Section 1(c) of Rule 57;
and
(4) Chuidian is residing out of the country or one on whom summons may be served by publication, which justifies the writ of attachment
prayed for under Section 1(e) of the same rule.
The Republic also averred that should the action brought by Chuidian before the U.S. District Court of California to compel payment of the
L/C prosper, inspite of the sequestration of the said L/C, Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the
proceeds of the L/C. Eventually, Philguarantee will be made to shoulder the expense resulting in further damage to the government. Thus, there was
an urgent need for the writ of attachment to place the L/C under the custody of the Sandiganbayan so the same may be preserved as security for the
satisfaction of judgment in the case before said court.
Chuidian opposed the motion for issuance of the writ of attachment, contending that:
(1) The plaintiffs affidavit appended to the motion was in form and substance fatally defective;
(2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between the plaintiff and Chuidian;
(3) While Chuidian does not admit fraud on his part, if ever there was breach of contract, such fraud must be present at the time the
contract is entered into;
(4) Chuidian has not removed or disposed of his property in the absence of any intent to defraud plaintiff;
(5) Chuidians absence from the country does not necessarily make him a non-resident; and
(6) Service of summons by publication cannot be used to justify the issuance of the writ since Chuidian had already submitted to the
jurisdiction of the Court by way of a motion to lift the freeze order filed through his counsel.
On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of attachment against L/C No. SSD-005-85 as security
for the satisfaction of judgment. [16] The Sandiganbayans ruling was based on its disquisition of the five points of contention raised by the parties. On
the first issue, the Sandiganbayan found that although no separate affidavit was attached to the motion, the motion itself contained all the requisites of
an affidavit, and the verification thereof is deemed a substantial compliance of Rule 57, Section 3 of the Rules of Court.
Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship existing between Chuidian and the Republic, but
only between Chuidian and ARCI. Since the Republic is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke Section
1(b) of Rule 57.
On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or disposing of the subject property, the
Sandiganbayan held that there was a prima facie case of fraud committed by Chuidian, justifying the issuance of the writ of attachment. The
Sandiganbayan also adopted the Republics position that since it was compelled to pay, through Philguarantee, the bank loans taken out by Chuidian,
the proceeds of which were fraudulently diverted, it is entitled to the issuance of the writ of attachment to protect its rights as creditor.
Assuming that there is truth to the governments allegation that Chuidian has removed or disposed of his property with the intent to defraud, the
Sandiganbayan held that the writ of attachment is warranted, applying Section 1(e) of Rule 57.Besides, the Rules provide for sufficient security
should the owner of the property attached suffer damage or prejudice caused by the attachment. [17]
Chuidians absence from the country was considered by the Sandiganbayan to be the most potent insofar as the relief being sought is concerned.
[18]
Taking judicial notice of the admitted fact that Chuidian was residing outside of the country, the Sandiganbayan observed that:

x x x no explanation whatsoever was given by him as to his absence from the country, or as to his homecoming plans in the future. It may be added,
moreover, that he has no definite or clearcut plan to return to the country at this juncture given the manner by which he has submitted himself to the
jurisdiction of the court.[19]

Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines, but is temporarily living outside, he is still
subject to the provisional remedy of attachment.
Accordingly, an order of attachment [20] was issued by the Sandiganbayan on July 19, 1993, ordering the Sandiganbayan Sheriff to attach PNB
L/C No. SSD-005-85 for safekeeping pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No.
0027.
On August 11, 1997, or almost four (4) years after the issuance of the order of attachment, Chuidian filed a motion to lift the attachment based
on the following grounds: First, he had returned to the Philippines; hence, the Sandiganbayans most potent ground for the issuance of the writ of
preliminary attachment no longer existed. Since his absence in the past was the very foundation of the Sandiganbayans writ of preliminary
attachment, his presence in the country warrants the immediate lifting thereof. Second, there was no evidence at all of initial fraud or subsequent
concealment except for the affidavit submitted by the PCGG Chairman citing mere belief and information and not on knowledge of the facts.
Moreover, this statement is hearsay since the PCGG Chairman was not a witness to the litigated incidents, was never presented as a witness by the
Republic and thus was not subject to cross-examination.
Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is nothing in the records that support the
Sandiganbayans erroneous conclusion on the matter. Fourth, Chuidian belied the allegation that he was also a defendant in other related criminal
action, for in fact, he had never been a defendant in any prosecution of any sort in the Philippines. [21] Moreover, he could not have personally
appeared in any other action because he had been deprived of his right to a travel document by the government.
Fifth, the preliminary attachment was, in the first place, unwarranted because he was not guilty of fraud in contracting the debt or incurring the
obligation. In fact, the L/C was not a product of fraudulent transactions, but was the result of a US Court-approved settlement. Although he was
accused of employing blackmail tactics to procure the settlement, the California Supreme Court ruled otherwise. And in relation thereto, he cites as a
sixth ground the fact that all these allegations of fraud and wrongdoing had already been dealt with in actions before the State and Federal Courts of
California. While it cannot technically be considered as forum shopping, it is nevertheless a form of suit multiplicity over the same issues, parties and
subject matter.[22] These foreign judgments constitute res judicata which warrant the dismissal of the case itself.
Chuidian further contends that should the attachment be allowed to continue, he will be deprived of his property without due process. The L/C
was payment to Chuidian in exchange for the assets he turned over to the Republic pursuant to the terms of the settlement in Case No. 575867. Said
assets, however, had already been sold by the Republic and cannot be returned to Chuidian should the government succeed in depriving him of the
proceeds of the L/C. Since said assets were disposed of without his or the Sandiganbayans consent, it is the Republic who is fraudulently disposing of
assets.
Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had been in effect, the government had not set the
case for hearing. Under Rule 17, Section 3, the case itself should be dismissed for laches owing to the Republics failure to prosecute its action for an
unreasonable length of time. Accordingly, the preliminary attachment, being only a temporary or ancillary remedy, must be lifted and the PNB
ordered to immediately pay the proceeds of the L/C to Chuidian.
Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit the L/C in an interest bearing account. [23] He
pointed out to the Sandiganbayan that the face amount of the L/C had, since its attachment, become fully demandable and payable. However, since
the amount is just lying dormant in the PNB, without earning any interest, he proposed that it would be to the benefit of all if the Sandiganbayan
requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the action.
The Republic opposed Chuidians motion to lift attachment, alleging that Chuidians absence was not the only ground for the attachment and,
therefore, his belated appearance before the Sandiganbayan is not a sufficient reason to lift the attachment. Moreover, allowing the foreign judgment
as a basis for the lifting of the attachment would essentially amount to an abdication of the jurisdiction of the Sandiganbayan to hear and decide the
ill gotten wealth cases lodged before it in deference to the judgment of foreign courts.
In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidians motion to lift attachment. [24]
On the same day, the Sandiganbayan issued another Resolution denying Chuidians motion to require deposit of the attached L/C in an interest
bearing account.[25]
In a motion seeking a reconsideration of the first resolution, Chuidian assailed the Sandiganbayans finding that the issues raised in his motion
to lift attachment had already been dealt with in the earlier resolution dated July 14, 1993 granting the application for the writ of preliminary
attachment based on the following grounds: First, Chuidian was out of the country in 1993, but is now presently residing in the country. Second, the
Sandiganbayan could not have known then that his absence was due to the non-renewal of his passport at the instance of the PCGG. Neither was it
revealed that the Republic had already disposed of Chuidians assets ceded to the Republic in exchange for the L/C. The foreign judgment was not an
issue then because at that time, said judgment had not yet been issued and much less final. Furthermore, the authority of the PCGG Commissioner to
subscribe as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was raised for the first time in the motion to lift
the attachment. Finally, the issue of laches could not have been raised then because it was the Republics subsequent neglect or failure to prosecute
despite the passing of the years that gave rise to laches. [26]
Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to require deposit of the L/C into an interest
bearing account. He argued that contrary to the Sandiganbayans pronouncement, allowing the deposit would not amount to a virtual recognition of
his right over the L/C, for he is not asking for payment but simply requesting that it be deposited in an account under the control of the
Sandiganbayan. He further stressed that the Sandiganbayan abdicated its bounden duty to rule on an issue when it found that his motion will render
nugatory the purpose of sequestration and freeze orders over the L/C. Considering that his assets had already been sold by the Republic, he claimed
that the Sandiganbayans refusal to exercise its fiduciary duty over attached assets will cause him irreparable injury. Lastly, the Sandiganbayans
position that Chuidian was not the owner but a mere payee-beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the
Negotiable Instruments Law, while at the same time obliterating his rights of ownership under the Civil Code. [27]
On July 13, 1999, the Sandiganbayan gave due course to Chuidians plea for the attached L/C to be deposited in an interest-bearing account, on
the ground that it will redound to the benefit of both parties.
The Sandiganbayan declared the national government as the principal obligor of the L/C even though the liability remained in the books of the
PNB for accounting and monitoring purposes.
The Sandiganbayan, however, denied Chuidians motion for reconsideration of the denial of his motion to lift attachment, agreeing in full with
the governments apriorisms that:

x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon grounds other than defendants absence in the
Philippine territory. In its Resolution dated July 14, 1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and that
defendant has recovered or disposed of his property with the intent of defrauding plaintiff; (2) Chuidians belated presence in the Philippines cannot
be invoked to secure the lifting of attachment. The rule is specific that it applies to a party who is about to depart from the Philippines with intent to
defraud his creditors. Chuidians stay in the country is uncertain and he may leave at will because he holds a foreign passport; and (3) Chuidians other
ground, sufficiency of former PCGG Chairman Gunigundos verification of the complaint, has been met fairly and squarely in the Resolution of July
14, 1993.[28]

Hence, the instant petition for certiorari contending that the respondent Sandiganbayan committed grave abuse of discretion amounting to lack
or excess of jurisdiction when it ruled that:
1) Most of the issues raised in the motion to lift attachment had been substantially addressed in the previous resolutions dated July 14,
1993 and August 26, 1998, while the rest were of no imperative relevance as to affect the Sandiganbayans disposition; and
2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential Proclamation No. 50.
The Rules of Court specifically provide for the remedies of a defendant whose property or asset has been attached. As has been consistently
ruled by this Court, the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower courts. [29]
The question in this case is: What can the herein petitioner do to quash the attachment of the L/C? There are two courses of action available to
the petitioner:
First. To file a counterbond in accordance with Rule 57, Section 12, which provides:

SEC. 12. Discharge of attachment upon giving counterbond. At anytime after an order of attachment has been granted, the party whose property has
been attached, or the person appearing on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given. The judge shall,
after hearing, order the discharge of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of
the adverse party, with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as
determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-
bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the
provisions of this section the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the
counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such
counterbond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an additional counter-bond, the
attaching creditor may apply for a new order of attachment.

or
Second. To quash the attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same Rule:

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.
 It would appear that petitioner chose the latter because the grounds he raised assail the propriety of the issuance of the writ of attachment. By
his own admission, however, he repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts or events that came
to light or took place after the writ of attachment had already been implemented.
More particularly, petitioner emphasized that four (4) years after the writ was issued, he had returned to the Philippines. Yet while he noted that
he would have returned earlier but for the cancellation of his passport by the PCGG, he was not barred from returning to the Philippines. Then he
informed the Sandiganbayan that while the case against him was pending, but after the attachment had already been executed, the government lost
two (2) cases for fraud lodged against him before the U.S. Courts, thus invoking res judicata. Next, he also pointed out that the government is
estopped from pursuing the case against him for failing to prosecute for the number of years that it had been pending litigation.
It is clear that these grounds have nothing to do with the issuance of the writ of attachment. Much less do they attack the issuance of the writ at
that time as improper or irregular. And yet, the rule contemplates that the defect must be in the very issuance of the attachment writ. For instance, the
attachment may be discharged under Section 13 of Rule 57 when it is proven that the allegations of the complaint were deceptively framed, [30] or
when the complaint fails to state a cause of action. [31] Supervening events which may or may not justify the discharge of the writ are not within the
purview of this particular rule.
In the instant case, there is no showing that the issuance of the writ of attachment was attended by impropriety or irregularity. Apart from
seeking a reconsideration of the resolution granting the application for the writ, petitioner no longer questioned the writ itself. For four (4) long years
he kept silent and did not exercise any of the remedies available to a defendant whose property or asset has been attached. It is rather too late in the
day for petitioner to question the propriety of the issuance of the writ.
Petitioner also makes capital of the two foreign judgments which he claims warrant the application of the principle of res judicata. The first
judgment, in Civil Case Nos. 575867 and 577697 brought by Philguarantee before the Santa Clara Country Superior Court, denied Philguarantees
prayer to set aside the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached L/C. On March 14, 1990, the Court of
Appeal of the State of California affirmed the Superior Courts judgment. The said judgment became the subject of a petition for review by the
California Supreme Court. There is no showing, however, of any final judgment by the California Supreme Court. The records, including petitioners
pleadings, are bereft of any evidence to show that there is a final foreign judgment which the Philippine courts must defer to. Hence, res
judicata finds no application in this instance because it is a requisite that the former judgment or order must be final. [32]
Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian against
PNB to compel the latter to pay the L/C. The said Courts judgment, while it ruled in favor of petitioner on the matter of Philguarantees action-in-
intervention to set aside the settlement agreement, also ruled in favor of PNB, to wit:

Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to enforce its directives and orders by contempt
proceedings. Under Executive Order No. 2, the PCGG is empowered to freeze any, and all assets, funds and property illegally acquired by former
President Marcos or his close friends and business associates.

On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any further drawings on the L/C. The freeze order has
remained in effect and was followed by a sequestration order issued by the PCGG. Subsequently, Chuidians Philippine counsel filed a series of
challenges to the freeze and sequestration orders, which challenges were unsuccessful as the orders were found valid by the Philippine Supreme
Court. The freeze and sequestration orders are presently in effect. Thus, under the PCGG order and Executive Orders Nos. 1 and 2, performance by
PNB would be illegal under Philippine Law. Therefore PNB is excused from performance of the L/C agreement as long as the freeze and
sequestration orders remain in effect. (Underscoring ours)

xxxxxxxxx

Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that the negotiations for which occurred in California, and
that two of the payments were made at PNB/LA, compels the conclusion that the act of prohibiting payment of the L/C occurred in Los
Angeles. However, the majority of the evidence and Tchacosh and Sabbatino compel the opposite conclusion. The L/C was issued in Manila, such
was done at the request of a Philippine government instrumentality for the benefit of a Philippine citizen, the L/C was to be performed in the
Philippines, all significant events relating to the issuance and implementation of the L/C occurred in the Philippines, the L/C agreement provided that
the L/C was to be construed according to laws of the Philippines, and the Philippine government certainly has an interest in preventing the L/C from
being remitted in that it would be the release of funds that are potentially illgotten gains. Accordingly, the Court finds that the PCGG orders are acts
of state that must be respected by this Court, and thus PNB is excused from making payment on the L/C as long as the freeze and sequestration orders
remain in effect.[33](Underscoring ours)

Petitioners own evidence strengthens the governments position that the L/C is under the jurisdiction of the Philippine government and that the
U.S. Courts recognize the authority of the Republic to sequester and freeze said L/C. Hence, the foreign judgments relied upon by petitioner do not
constitute a bar to the Republics action to recover whatever alleged ill-gotten wealth petitioner may have acquired.
Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence of fraud on record other than the affidavit of
PCGG Chairman Gunigundo. This issue of fraud, however, touches on the very merits of the main case which accuses petitioner of committing
fraudulent acts in his dealings with the government. Moreover, this alleged fraud was one of the grounds for the application of the writ, and the
Sandiganbayan granted said application after it found aprima facie case of fraud committed by petitioner.
In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it was at the same time the governments cause of
action in the main case.
We have uniformly held that:
x x x when the preliminary attachment is issued upon a ground which is at the same time the applicants cause of action; e.g., an action for money or
property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor,
broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty, or an
action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, the defendant
is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the
plaintiffs application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly
issued the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other
words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial.[34] (Underscoring ours)

Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable
on a motion for dissolution of the attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere
motion.[35]
It is not the Republics fault that the litigation has been protracted. There is as yet no evidence of fraud on the part of petitioner. Petitioner is
only one of the twenty-three (23) defendants in the main action. As such, the litigation would take longer than most cases. Petitioner cannot invoke
this delay in the proceedings as an excuse for not seeking the proper recourse in having the writ of attachment lifted in due time. If ever laches set in,
it was petitioner, not the government, who failed to take action within a reasonable time period. Challenging the issuance of the writ of attachment
four (4) years after its implementation showed petitioners apparent indifference towards the proceedings before the Sandiganbayan.
In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its discretion in a whimsical, capricious and
arbitrary manner. There are no compelling reasons to warrant the immediate lifting of the attachment even as the main case is still pending. On the
other hand, allowing the discharge of the attachment at this stage of the proceedings would put in jeopardy the right of the attaching party to realize
upon the relief sought and expected to be granted in the main or principal action. It would have the effect of prejudging the main case.
The attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate
proceedings, obtain a judgment and have such property applied to its satisfaction. [36] To discharge the attachment at this stage of the proceedings
would render inutile any favorable judgment should the government prevail in the principal action against petitioner. Thus, the Sandiganbayan, in
issuing the questioned resolutions, which are interlocutory in nature, committed no grave abuse of discretion amounting to lack or excess of
jurisdiction. As long as the Sandiganbayan acted within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to
nothing more than errors of judgment which are reviewable by timely appeal and not by special civil action of certiorari.[37]
Moreover, we have held that when the writ of attachment is issued upon a ground which is at the same time the applicants cause of action, the
only other way the writ can be lifted or dissolved is by a counterbond, in accordance with Section 12 of the same rule. [38] This recourse, however, was
not availed of by petitioner, as noted by the Solicitor General in his comment. [39]
To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately; or (b) by moving to quash on
the ground of improper and irregular issuance.[40] These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and
the power of the Court to dissolve an attachment is circumscribed by the grounds specified therein. [41] Petitioners motion to lift attachment failed to
demonstrate any infirmity or defect in the issuance of the writ of attachment; neither did he file a counterbond.
Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account. We agree with the Sandiganbayan that any
interest that the proceeds of the L/C may earn while the case is being litigated would redound to the benefit of whichever party will prevail, the
Philippine government included. Thus, we affirm the Sandiganbayans ruling that the proceeds of the L/C should be deposited in an interest bearing
account with the Land Bank of the Philippines for the account of the Sandiganbayan in escrow until ordered released by the said Court.
We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of Transfer, whereby certain liabilities of PNB
were transferred to the national government, cannot affect the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil
Code provides:

Novation which consists in substituting a new debtor in the place of the original one, may be made without the knowledge or against the will of the
latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.

Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent thereto cannot just be presumed. Even though
Presidential Proclamation No. 50 can be considered an insuperable cause, it does not necessarily make the contracts and obligations affected thereby
exceptions to the above-quoted law, such that the substitution of debtor can be validly made even without the consent of the creditor. Presidential
Proclamation No. 50 was not intended to set aside laws that govern the very lifeblood of the nations commerce and economy. In fact, the Deed of
Transfer that was executed between PNB and the government pursuant to the said Presidential Proclamation specifically stated that it shall be deemed
effective only upon compliance with several conditions, one of which requires that:

(b) the BANK shall have secured such governmental and creditors approvals as may be necessary to establish the consummation, legality and
enforceability of the transactions contemplated hereby.

The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its liability thereunder considering that neither the
PNB nor the government bothered to secure petitioners consent to the substitution of debtors. We are not unmindful that any effort to secure
petitioners consent at that time would, in effect, be deemed an admission that the L/C is valid and binding. Even the Sandiganbayan found that:

x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is presumed to be the lawful payee-beneficiary of the L/C
until such time that the plaintiff successfully proves that said L/C is ill-gotten and he has no right over the same. [42]
 In Republic v. Sandiganbayan,[43] we held that the provisional remedies, such as freeze orders and sequestration, were not meant to deprive the
owner or possessor of his title or any right to the property sequestered, frozen or taken over and vest it in the sequestering agency, the Government or
other person.
Thus, until such time that the government is able to successfully prove that petitioner has no right to claim the proceeds of the L/C, he is
deemed to be the lawful payee-beneficiary of said L/C, for which any substitution of debtor requires his consent. The Sandiganbayan thus erred in
relieving PNB of its liability as the original debtor.
WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the Sandiganbayan dated November 6, 1998 and
July 2, 1999 are AFFIRMED. The PNB is DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in the amount
of U.S. $4.4 million within fifteen (15) days from notice hereof, the same to be placed under special time deposit with the Land Bank of the
Philippines, for the account of Sandiganbayan in escrow for the person or persons, natural or juridical, who shall eventually be adjudged lawfully
entitled thereto, the same to earn interest at the current legal bank rates. The principal and its interest shall remain in said account until ordered
released by the Court in accordance with law.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.
 THIRD DIVISION

ALEJANDRO NG WEE, G.R. No. 171124

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.

Promulgated:
MANUEL TANKIANSEE,
Respondent. February 13, 2008

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14, 2005 Decision [1] of the Court
of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 Resolution[2] denying the motion for reconsideration thereof.

The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont Bank (now United Overseas Bank), made several money
placements totaling P210,595,991.62 with the banks affiliate, Westmont Investment Corporation (Wincorp), a domestic entity engaged in the business
of an investment house with the authority and license to extend credit. [3]

Sometime in February 2000, petitioner received disturbing news on Wincorps financial condition prompting him to inquire about and
investigate the companys operations and transactions with its borrowers. He then discovered that the company extended a loan equal to his total
money placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit facility originated from another loan of
about P1.5B extended by Wincorp to another corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp instituted a case
against it and its surety. Settlement was, however, reached in which Hotticks president, Luis Juan L. Virata (Virata), assumed the obligation of the
surety.[4]

Under the scheme agreed upon by Wincorp and Hotticks president, petitioners money placements were transferred without his knowledge and
consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was enticed to roll over his placements so that Wincorp could loan the same to
Virata/Power Merge.[5]

Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorps officers and directors to fraudulently obtain for
his benefit without any intention of paying the said placements, petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for damages with
the Regional Trial Court (RTC) of Manila.[6] One of the defendants impleaded in the complaint is herein respondent Manuel Tankiansee, Vice-
Chairman and Director of Wincorp.[7]
 On October 26, 2000, on the basis of the allegations in the complaint and the October 12, 2000 Affidavit [8] of petitioner, the trial court
ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case
subject, among others, to petitioners filing of a P50M-bond.[9] The writ was, consequently, issued on November 6, 2000.[10]

Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient, respondent, on December 22, 2000,
moved for the discharge of the attachment. [11] The other defendants likewise filed similar motions. [12] On October 23, 2001, the RTC, in an Omnibus
Order,[13] denied all the motions for the discharge of the attachment. The defendants, including respondent herein, filed their respective motions for
reconsideration[14] but the trial court denied the same on October 14, 2002.[15]

Incidentally, while respondent opted not to question anymore the said orders, his co-defendants, Virata and UEM-MARA Philippines
Corporation (UEM-MARA), assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate court,
however, denied the certiorari petition on August 21, 2003,[16] and the motion for reconsideration thereof on March 16, 2004.[17] In a petition for
review on certiorari before this Court, in G.R. No. 162928, we denied the petition and affirmed the CA rulings on May 19, 2004 for Viratas and
UEM-MARAs failure to sufficiently show that the appellate court committed any reversible error. [18] We subsequently denied the petition with
finality on August 23, 2004.[19]

On September 30, 2004, respondent filed before the trial court another Motion to Discharge Attachment, [20] re-pleading the grounds he
raised in his first motion but raising the following additional grounds: (1) that he was not present in Wincorps board meetings approving the
questionable transactions;[21] and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank Securities,
Inc., in which he is a major stockholder, filed cases against the company as they were also victimized by its fraudulent schemes. [22]

Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court, and that the
additional grounds were respondents affirmative defenses that properly pertained to the merits of the case, the trial court denied the motion in its
January 6, 2005 Order.[23]

With the denial of its motion for reconsideration, [24] respondent filed a certiorari petition before the CA docketed as CA-G.R. SP No.
90130. On September 14, 2005, the appellate court rendered the assailed Decision [25] reversing and setting aside the aforementioned orders of the trial
court and lifting the November 6, 2000 Writ of Preliminary Attachment [26] to the extent that it concerned respondents properties. Petitioner moved for
the reconsideration of the said ruling, but the CA denied the same in its January 6, 2006 Resolution.[27]

Thus, petitioner filed the instant petition on the following grounds:

A.

IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO
THE PETITION FOR CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT,
WHICH, UNDER PREVAILING JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI.

B.

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL
ERROR IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC)
LIFTING THE WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO THE
MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING JURISPRUDENCE, CANNOT BE USED AS
BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.

C.

LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE
ERRORS IN JUDGMENT ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY
DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN
RESOLVED WITH FINALITY BY THE LOWER COURT.[28]
 For his part, respondent counters, among others, that the general and sweeping allegation of fraud against respondent in petitioners
affidavitrespondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioneris not sufficient basis for
the trial court to order the attachment of respondents properties. Nowhere in the said affidavit does petitioner mention the name of respondent and
any specific act committed by the latter to defraud the former. A writ of attachment can only be granted on concrete and specific grounds and not on
general averments quoting perfunctorily the words of the Rules. Connivance cannot also be based on mere association but must be particularly
alleged and established as a fact. Respondent further contends that the trial court, in resolving the Motion to Discharge Attachment, need not actually
delve into the merits of the case. All that the court has to examine are the allegations in the complaint and the supporting affidavit. Petitioner cannot
also rely on the decisions of the appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to support his claim because respondent
is not a party to the said cases.[29]

We agree with respondents contentions and deny the petition.

In the case at bench, the basis of petitioners application for the issuance of the writ of preliminary attachment against the properties of
respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:

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

xxxx

(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof.

For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from the debtors mere non-payment of the debt or failure to comply with his obligation. [30] The applicant must
then be able to demonstrate that the debtor has intended to defraud the creditor. [31] In Liberty Insurance Corporation v. Court of Appeals,[32] we
explained as follows:

To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the
obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the
reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for
attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon.
A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is
in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances
attendant in each case.[33]

In the instant case, petitioners October 12, 2000 Affidavit [34] is bereft of any factual statement that respondent committed a fraud. The
affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this
Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the participation of respondent in the said transaction, the
affidavit merely states that respondent, an officer and director of Wincorp, connived with the other defendants in the civil case to defraud petitioner of
his money placements. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other
defendants to commit a fraud in the transaction sued upon. In other words, petitioner has not shown any specific act or deed to support the allegation
that respondent is guilty of fraud.

The affidavit, being the foundation of the writ, [35] must contain such particulars as to how the fraud imputed to respondent was committed
for the court to decide whether or not to issue the writ. [36]Absent any statement of other factual circumstances to show that respondent, at the time of
contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the alleged fraud,
the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to
commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment. [37] In the application for the writ under the said ground,
compelling is the need to give a hint about what constituted the fraud and how it was perpetrated [38] because established is the rule that fraud is never
presumed.[39] Verily, the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he
committed a fraud or that he connived with the other defendants to commit a fraud. While under certain circumstances, courts may treat a corporation
as a mere aggroupment of persons, to whom liability will directly attach, this is only done when the wrongdoing has been clearly and convincingly
established.[40]

Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and
annoyance.[41] The rules governing its issuance are, therefore, strictly construed against the applicant, [42] such that if the requisites for its grant are not
shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction. [43] Likewise,
the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it should at
once be corrected.[44]

Considering, therefore, that, in this case, petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the
alleged fraud committed by respondent, the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the
properties of respondent.

We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al.,[45] that

[t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution
could force a trial of the merits of the case on his motion. [46]

However, the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of
the writ against the properties of respondent. [47] The evil sought to be prevented by the said ruling will not arise, because the propriety or impropriety
of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application.

Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata
and UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA, respondent is never a party thereto. [48] Also, he is not in the
same situation as Virata and UEM-MARA since, as aforesaid, while petitioners affidavit detailed the alleged fraudulent scheme perpetrated by Virata
and/or Power Merge, only a general allegation of fraud was made against respondent.

We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondentit
does not concern the other parties in the civil case, nor affect the trial courts resolution on the merits of the aforesaid civil case.

WHEREFORE, premises considered, the petition is DENIED. The September 14, 2005 Decision and the January 6, 2006 Resolution of the Court of
Appeals in CA-G.R. SP No. 90130 are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 166759 November 25, 2009

SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF MARIO TORRES and SOLAR RESOURCES, INC.,Petitioners,
vs.
NICANOR SATSATIN, EMILINDA AUSTRIA SATSATIN, NIKKI NORMEL SATSATIN and NIKKI NORLIN SATSATIN, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision 1 dated November 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 83595,
and its Resolution2 dated January 18, 2005, denying petitioners motion for reconsideration.

The factual and procedural antecedents are as follows:

The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa), and Mario Torres (Mario) each own adjacent 20,000 square meters track of land situated
at Barrio Lankaan, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) Nos. 251267, 3 251266,4 and 251265,5 respectively.

Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners mother, Agripina Aledia, if she wanted to sell their lands. After consultation with her
daughters, daughter-in-law, and grandchildren, Agripina agreed to sell the properties. Petitioners, thus, authorized Nicanor, through a Special Power
of Attorney, to negotiate for the sale of the properties. 6

Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. (Solar). Solar allegedly agreed to purchase the three parcels of land,
together with the 10,000-square-meter property owned by a certain Rustica Aledia, for P35,000,000.00. Petitioners alleged that Nicanor was
supposed to remit to them the total amount ofP28,000,000.00 or P9,333,333.00 each to Sofia, Fructosa, and the heirs of Mario.

Petitioners claimed that Solar has already paid the entire purchase price of P35,000,000.00 to Nicanor in Thirty-Two (32) post-dated checks which
the latter encashed/deposited on their respective due dates. Petitioners added that they also learned that during the period from January 2000 to April
2002, Nicanor allegedly acquired a house and lot at Vista Grande BF Resort Village, Las Pias City and a car, which he registered in the names of his
unemployed children, Nikki Normel Satsatin and Nikki Norlin Satsatin. However, notwithstanding the receipt of the entire payment for the subject
property, Nicanor only remitted the total amount of P9,000,000.00, leaving an unremitted balance of P19,000,000.00. Despite repeated verbal and
written demands, Nicanor failed to remit to them the balance of P19,000,000.00.

Consequently, on October 25, 2002, petitioners filed before the regional trial court (RTC) a Complaint 7 for sum of money and damages, against
Nicanor, Ermilinda Satsatin, Nikki Normel Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02, and raffled to
RTC, Branch 90, Dasmarias, Cavite.

On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of Attachment, 8 alleging among other things: that respondents
are about to depart the Philippines; that they have properties, real and personal in Metro Manila and in the nearby provinces; that the amount due
them is P19,000,000.00 above all other claims; that there is no other sufficient security for the claim sought to be enforced; and that they are willing
to post a bond fixed by the court to answer for all costs which may be adjudged to the respondents and all damages which respondents may sustain by
reason of the attachment prayed for, if it shall be finally adjudged that petitioners are not entitled thereto.

On October 30, 2002, the trial court issued an Order9 directing the petitioners to post a bond in the amount ofP7,000,000.00 before the court issues
the writ of attachment, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, and finding the present complaint and motion sufficient in form and substance, this Court hereby directs the
herein plaintiffs to post a bond, pursuant to Section 3, Rule 57 of the 1997 Rules of Civil Procedure, in the amount of Seven Million Pesos
(P7,000,000.00), before the Writ of Attachment issues.10

On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff, 11 informing the court that they have already filed an attachment bond.
They also prayed that a sheriff be deputized to serve the writ of attachment that would be issued by the court.
In the Order12 dated November 15, 2002, the RTC granted the above motion and deputized the sheriff, together with police security assistance, to
serve the writ of attachment.

Thereafter, the RTC issued a Writ of Attachment 13 dated November 15, 2002, directing the sheriff to attach the estate, real or personal, of the
respondents, the decretal portion of which reads:

WE, THEREFORE, command you to attach the estate, real or personal, not exempt from execution, of the said defendants, in your province, to the
value of said demands, and that you safely keep the same according to the said Rule, unless the defendants give security to pay such judgment as may
be recovered on the said action, in the manner provided by the said Rule, provided that your legal fees and all necessary expenses are fully paid.

You shall return this writ with your proceedings indorsed hereon within twenty (20) days from the date of receipt hereof.

GIVEN UNDER MY HAND AND SEAL of this Court, this 15th day of November, 2002, at Imus for Dasmarias, Cavite, Philippines. 14

On November 19, 2002, a copy of the writ of attachment was served upon the respondents. On the same date, the sheriff levied the real and personal
properties of the respondent, including household appliances, cars, and a parcel of land located at Las Pias, Manila. 15

On November 21, 2002, summons, together with a copy of the complaint, was served upon the respondents. 16

On November 29, 2002, respondents filed their Answer.17

On the same day respondents filed their answer, they also filed a Motion to Discharge Writ of Attachment 18anchored on the following grounds: the
bond was issued before the issuance of the writ of attachment; the writ of attachment was issued before the summons was received by the
respondents; the sheriff did not serve copies of the application for attachment, order of attachment, plaintiffs affidavit, and attachment bond, to the
respondents; the sheriff did not submit a sheriffs return in violation of the Rules; and the grounds cited for the issuance of the writ are baseless and
devoid of merit. In the alternative, respondents offered to post a counter-bond for the lifting of the writ of attachment. 19

On March 11, 2003, after the parties filed their respective pleadings, the RTC issued an Order 20 denying the motion, but at the same time, directing
the respondents to file a counter-bond, to wit:

WHEREFORE, premises considered, after the pertinent pleadings of the parties have been taken into account, the herein defendants are hereby
directed to file a counter-bond executed to the attaching party, in the amount of Seven Million Pesos (P7,000,000.00), to secure the payment of any
judgment that the attaching party may recover in the action, with notice on the attaching party, whereas, the Motion to Discharge Writ of Attachment
is DENIED.

SO ORDERED.21

Thereafter, respondents filed a motion for reconsideration and/or motion for clarification of the above order. On April 3, 2003, the RTC issued
another Order22 which reads:

In view of the Urgent Motion For Reconsideration And/Or Motion For Clarification of the Order of this Court dated March 11, 2003, denying their
Motion to Discharge Writ of Attachment filed by the defendants through counsel Atty. Franco L. Loyola, the Motion to Discharge Writ of Attachment
is denied until after the defendants have posted the counter-bond in the amount of Seven Million Pesos (P7,000,000.00).

The defendants, once again, is directed to file their counter-bond of Seven Million Pesos (P7,000,000.00), if it so desires, in order to discharge the
Writ of Attachment.

SO ORDERED.

On December 15, 2003, respondents filed an Urgent Motion to Lift/Set Aside Order Dated March [11], 2003, 23which the RTC denied in an Order24 of
even date, the dispositive portion of which reads:

WHEREFORE, premises considered, defendants Urgent Motion to Lift/Set Aside Order Dated March 23, 2003 (With Manifestation to Dissolve Writ
of Attachment) is hereby DENIED for lack of Merit.

SO ORDERED.

Respondents filed an Urgent Motion for Reconsideration, 25 but it was denied in the Order26 dated March 3, 2004.

Aggrieved, respondents filed before the CA a Petition for Certiorari, Mandamus and Prohibition with Preliminary Injunction and Temporary
Restraining Order27 under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 83595, anchored on the following grounds:
 (1) public respondents committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in failing to notice that the
lower court has no jurisdiction over the person and subject matter of the complaint when the subject Writ of Attachment was issued;

(2) public respondents committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in granting the issuance of the
Writ of Attachment despite non-compliance with the formal requisites for the issuance of the bond and the Writ of Attachment. 28

Respondents argued that the subject writ was improper and irregular having been issued and enforced without the lower court acquiring jurisdiction
over the persons of the respondents. They maintained that the writ of attachment was implemented without serving upon them the summons together
with the complaint. They also argued that the bond issued in favor of the petitioners was defective, because the bonding company failed to obtain the
proper clearance that it can transact business with the RTC of Dasmarias, Cavite. They added that the various clearances which were issued in favor
of the bonding company were applicable only in the courts of the cities of Pasay, Pasig, Manila, and Makati, but not in the RTC, Imus, Cavite. 29

On November 23, 2003, the CA rendered the assailed Decision in favor of the respondents, finding grave abuse of discretion amounting to lack of or
in excess of jurisdiction on the part of the RTC in issuing the Orders dated December 15, 2003 and March 3, 2004. The decretal portion of the
Decision reads:

WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders are hereby nullified and set aside. The levy on the
properties of the petitioners pursuant to the Writ of Attachment issued by the lower court is hereby LIFTED.

SO ORDERED.30

Petitioners filed a Motion for Reconsideration, 31 but it was denied in the Resolution32 dated January 18, 2005.

Hence, this petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE LIFTING OF THE WRIT OF ATTACHMENT PURSUANT TO
SECTION 13, RULE 57 OF THE REVISED RULES OF CIVIL PROCEDURE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN GRANTING THE WRIT OF ATTACHMENT DESPITE
THE BOND BEING INSUFFICIENT AND HAVING BEEN IMPROPERLY ISSUED.

III.

THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION BY REASON OF ESTOPPEL, LACHES AND
PRESCRIPTION AND IN HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY AND IRREGULARLY ENFORCED IN
VIOLATION OF SECTION 5, RULE 57 OF THE REVISED RULES OF COURT.

IV.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRINCIPLE OF ESTOPPEL WILL NOT LIE AGAINST
RESPONDENTS.

Petitioners maintain that in the case at bar, as in the case of FCY Construction Group, Inc. v. Court of Appeals, 33the only way the subject writ of
attachment can be dissolved is by a counter-bond. They claim that the respondents are not allowed to file a motion to dissolve the attachment under
Section 13, Rule 57 of the Rules of Court. Otherwise, the hearing on the motion for the dissolution of the writ would be tantamount to a trial on the
merits, considering that the writ of preliminary attachment was issued upon a ground which is, at the same time, the applicants cause of action.

Petitioners insist that the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower court.
They argue that the Certification 34 issued by the Office of the Administrator and the Certifications 35 issued by the clerks of court of the RTCs of
Dasmarias and Imus, Cavite, would show that the bonds offered by Western Guaranty Corporation, the bonding company which issued the bond,
may be accepted by the RTCs of Dasmarias and Imus, Cavite, and that the said bonding company has no pending liability with the government.

Petitioners contend that respondents are barred by estoppel, laches, and prescription from questioning the orders of the RTC issuing the writ of
attachment. They also maintain that the issue whether there was impropriety or irregularity in the issuance of the orders is moot and academic,
considering that the attachment bond questioned by the respondent had already expired on November 14, 2003 and petitioners have renewed the
attachment bond covering the period from November 14, 2003 to November 14, 2004, and further renewed to cover the period of November 14, 2004
to November 14, 2005.
The petition is bereft of merit.

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. 36

In the case at bar, the CA correctly found that there was grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of the
trial court in approving the bond posted by petitioners despite the fact that not all the requisites for its approval were complied with. In accepting a
surety bond, it is necessary that all the requisites for its approval are met; otherwise, the bond should be rejected. 37

Every bond should be accompanied by a clearance from the Supreme Court showing that the company concerned is qualified to transact business
which is valid only for thirty (30) days from the date of its issuance. 38However, it is apparent that the Certification 39 issued by the Office of the Court
Administrator (OCA) at the time the bond was issued would clearly show that the bonds offered by Western Guaranty Corporation may be accepted
only in the RTCs of the cities of Makati, Pasay, and Pasig. Therefore, the surety bond issued by the bonding company should not have been accepted
by the RTC of Dasmarias, Branch 90, since the certification secured by the bonding company from the OCA at the time of the issuance of the bond
certified that it may only be accepted in the above-mentioned cities. Thus, the trial court acted with grave abuse of discretion amounting to lack of or
in excess of jurisdiction when it issued the writ of attachment founded on the said bond.

Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction between the issuance and the implementation of the
writ of attachment is of utmost importance to the validity of the writ. The distinction is indispensably necessary to determine when jurisdiction over
the person of the defendant should be acquired in order to validly implement the writ of attachment upon his person.

This Court has long put to rest the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to
provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court.
Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time before entry of
judgment."40 This phrase refers to the date of the filing of the complaint, which is the moment that marks "the commencement of the action." The
reference plainly is to a time before summons is served on the defendant, or even before summons issues. 41

In Davao Light & Power Co., Inc. v. Court of Appeals,42 this Court clarified the actual time when jurisdiction should be had:

It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant x x x issuance
of summons, order of attachment and writ of attachment x x x these do not and cannot bind and affect the defendant until and unless
jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary
submission to the courts authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is
essential that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and of the order of attachment, as explicitly
required by Section 5 of Rule 57, but also thesummons addressed to said defendant as well as a copy of the complaint x x x. (Emphasis supplied.)

In Cuartero v. Court of Appeals,43 this Court held that the grant of the provisional remedy of attachment 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 be first obtained. However, once the
implementation of the writ commences, 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. 44

Thus, it is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon consideration of fairness, to
apprise the defendant of the complaint against him and the issuance of a writ of preliminary attachment and the grounds therefor that prior or
contemporaneously to the serving of the writ of attachment, service of summons, together with a copy of the complaint, the application for
attachment, the applicants affidavit and bond, and the order must be served upon him.

In the instant case, assuming arguendo that the trial court validly issued the writ of attachment on November 15, 2002, which was implemented on
November 19, 2002, it is to be noted that the summons, together with a copy of the complaint, was served only on November 21, 2002.

At the time the trial court issued the writ of attachment on November 15, 2002, it can validly to do so since the motion for its issuance can be filed "at
the commencement of the action or at any time before entry of judgment." However, at the time the writ was implemented, the trial court has not
acquired jurisdiction over the persons of the respondent since no summons was yet served upon them. The proper officer should have previously or
simultaneously with the implementation of the writ of attachment, served a copy of the summons upon the respondents in order for the trial court to
have acquired jurisdiction upon them and for the writ to have binding effect. Consequently, even if the writ of attachment was validly issued, it was
improperly or irregularly enforced and, therefore, cannot bind and affect the respondents.

Moreover, although there is truth in the petitioners contention that an attachment may not be dissolved by a showing of its irregular or improper
issuance if it is upon a ground which is at the same time the applicants cause of action in the main case, since an anomalous situation would result if
the issues of the main case would be ventilated and resolved in a mere hearing of a motion. However, the same is not applicable in the case bar. It is
clear from the respondents pleadings that the grounds on which they base the lifting of the writ of attachment are the irregularities in its issuance and
in the service of the writ; not petitioners cause of action.1avvphi1
Further, petitioners contention that respondents are barred by estoppel, laches, and prescription from questioning the orders of the RTC issuing the
writ of attachment and that the issue has become moot and academic by the renewal of the attachment bond covering after its expiration, is devoid of
merit. As correctly held by the CA:

There are two ways of discharging the attachment. First, to file a counter-bond in accordance with Section 12 of Rule 57. Second[,] [t]o quash the
attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same rule. Whether the attachment was
discharged by either of the two ways indicated in the law, the attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. The filing of a counter-bond is merely
a speedier way of discharging the attachment writ instead of the other way. 45

Moreover, again assuming arguendo that the writ of attachment was validly issued, although the trial court later acquired jurisdiction over the
respondents by service of the summons upon them, such belated service of summons on respondents cannot be deemed to have cured the fatal defect
in the enforcement of the writ. The trial court cannot enforce such a coercive process on respondents without first obtaining jurisdiction over their
person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal
service, substituted service or by publication as warranted by the circumstances of the case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service. 46

WHEREFORE, premises considered, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated November 23, 2004 and
January 18, 2005, respectively, in CA-G.R. SP No. 83595 are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 203530 April 13, 2015

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., and OSCAR RAMIREZ, Petitioners,
vs.
ERLINDA KRISHNAN, Respondent.

DECISION

PERALTA J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure praying for the annulment of the Decision 1 dated
March 27, 2012 and Resolution2 dated September 11, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 120664, which affirmed the Orders
dated September 24, 2010 and May 26, 2011, respectively, of Branch 30, Regional Trial Court (RTC) -Manila.

The factual antecedents, as found by the CA, are as follows:

Petitioners Luzon Development Bank, Tomas Clemente, and Oscar Ramirez (hereafter petitioners) are the respondents in the complaint for Collection
of Sum of Money and Damages filed by respondent Erlinda Khrishnan (hereafter respondent Erlinda) on February 7, 2001. Respondent Erlinda
claimed that she is a client of respondent bank wherein she maintained several accounts including time deposits. On several occasions, when
respondent Erlinda presented her Time Deposits Certificates amounting to P28,597,472.70 for payment because they have become due, petitioners
refused to honor them for the reason that they were fraudulent. Respondent Erlinda likewise applied for a Preliminary Writ of Attachment which the
RTC granted on February 27, 2001.

By virtue of the writ, petitioner banks accounts in BPI Family Bank, Calamba, Laguna in the amount ofP28,597,472.70 and its account amounting
to P49,000,000.00 in the Central Bank were garnished.

On March 9, 2001, petitioners filed an urgent ex-parte Motion to Recall Quash and/or Lift Attachment or Garnishment (in excess of amounts in the
writ). Respondent Erlinda opposed the motion.

On August 15, 2001, petitioners filed an Omnibus Motion seeking the substitution of their garnished account with government securities and the
immediate resolution of their motion to discharge attachment and setting the motion for hearing, which respondent Erlinda opposed.

On May 22, 2002, the RTC resolved the pending incidents and required the petitioners to justify their motion to discharge the attachment. During pre-
trial on May 23, 2002, respondents requested additional time to file a supplemental motion to justify their earlier motions which was granted and
gave petitioners ten (10) days from receipt within which to comment or opposed (sic) it.

On September 8, 2003, the RTC issued an order lifting the attachment to which respondent Erlinda filed a motion for reconsideration. Respondent
Erlinda also filed a Motion for Inhibition. On December 18, 2003, the RTC denied the motion for reconsideration but granted the motion for
inhibition. The said Order was questioned by respondent Erlinda by way of Petition for Certiorari before the 7th Division which rendered a decision
on November 15, 2006, the dispositive portion of which reads as follows:

"WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.

THE ORDERS dated September 8, 2003, and December 18, 2003 are NULLIFIED and SET ASIDE.

The private respondents, as defendants in Civil Case No. 01-100046 entitled Erlinda C. Krishnan v. Luzon Development Bank, et al., are ORDERED
to file a counter bond in accordance with Sec. 12, Rule 57, 1997 Rules of Civil Procedure, within 10 days from the finality of this decision;
otherwise, the REGIONAL TRIAL COURT, BRANCH 36, in Manila shall immediately reinstate the writ of attachment issued and implemented in
Civil Case No. 01-100046.

Costs of suit to be paid by the respondents.

SO ORDERED.
Petitioners subsequent motion for reconsideration was denied. Thereafter, their petition and motion for reconsideration before the Supreme Court
were likewise denied.

On May 09, 2008, respondent judge issued an Order directing respondent Erlinda to file a new attachment bond in the amount of P35,000,000.00 and
petitioners to file a counterbond within ten days from notice of the filing and approval of the bond of respondent Erlinda. Petitioners moved for the
reconsideration of the said Order which respondent judge denied and granted a period of fifteen days for respondent Erlinda to file an attachment
bond.

Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of P35,000,000.00 through Visayan Surety and Insurance Corporation
which was approved by respondent on July 7, 2009.

Meanwhile, on July 3, 2009, petitioners filed an Omnibus Motion praying that a hearing be held to determine the sufficiency of the attachment bond
and they be allowed to deposit Certificates of Title of real property, and the issuance of the writ of attachment be held in abeyance.

On July 20, 2009, petitioners filed a motion for extension of time to comply and/or file the appropriate pleading and to hold in abeyance the
reinstatement of the writ of attachment.

On January 28, 2010, petitioners filed a motion to admit bank property in lieu of counter bond which was opposed by respondent Erlinda.1avvphi1

On September 24, 2010, respondent judge denied petitioners motion in the assailed Order. Their subsequent motion for reconsideration was denied
on May 26, 2011.

On June 27, 2011, respondent judge issued an Order reinstating the Writ of Attachment dated March 1, 2001 for failure of petitioners to file the
required counter bond. Respondent judge also issued an amended Reinstated Writ of Attachment directing respondent Sheriff Oscar L. Rojas
(hereafter respondent Sheriff) to attach the real estate or personal properties of petitioners in the amount of P28,597,472.70. On June 30, 2011, the
sheriff served the Notice of Garnishment and the Amended Reinstated Writ of Attachment.

On July 4, 2011, petitioners filed an urgent motion to recall, suspend or hold in abeyance and re-examination of the amended reinstated writ of
preliminary attachment of June 27, 2011 which was opposed by respondent Erlinda.

On July 19, 2011, respondent Sheriff issued a Sheriffs Partial Report. Thereafter, petitioners filed this petition for certiorari x x x.

In a Decision dated March 27, 2012,the CA dismissed petitioners certiorari petition and affirmed the Orders of the RTC reinstating the Writ of
Attachment for failure of petitioners to file the required counter-bond. The CA ruled that the RTC judge committed no grave abuse of discretion in
denying petitioners motion to admit bank property in lieu of counter-bond, thus, it held: WHEREFORE, premises considered, the petition is
DISMISSED and accordingly, DENIED DUE COURSE. The Orders dated September 24, 2010 and May 26, 2011 are hereby AFFIRMED. SO
ORDERED.3

Petitioners filed a motion for reconsideration against said decision, but the same was denied in a Resolution dated September 11, 2012.

Hence, petitioners filed this present petition raising the following grounds:

IN THE FIRST ASSAILED ORDER THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
MISCONSTRUED AND FAILED TO RULE ON THE CORRECT LEGAL ISSUE PRESENTED IN THE PETITION FOR CERTIORARI. 4

IN THE SECOND ASSAILED ORDER THE HONORABLE COURT OF APPEALS AGAIN ACTED WITH GRAVE ABUSE OF DISCRETION
WHEN IT FAILED TO PRESENT ANY LEGAL BASIS FOR STATING THAT RULE 39 OF THE REVISED RULES OF COURT DOES NOT
APPLY.5

Simply stated, the issue for our resolution is whether the CA erred in affirming the RTCs decision which denied petitioners motion praying that bank
property be deposited in lieu of cash or a counter-bond.

In their petition, petitioners contend that it has the option to deposit real property, in lieu of cash or a counter-bond, to secure any contingent lien on
its property in the event respondent wins the case. They argue that Section 2 of Rule 57 only mentions the term "deposit," thus, it cannot only be
confined or construed to refer to cash.

We rule in the negative.

Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of attachment may be issued either ex parte or upon motion with notice and
hearing by the court in which the action is pending, or by the Court of Appeals or the Supreme Court, and must require the sheriff of the court to
attach so much of the property in the Philippines of the party against whom it is issued, not exempt from execution, as may be sufficient to satisfy the
applicants demand, unless such party makes deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order, which may
be the amount sufficient to satisfy the applicants demand or the value of the property to be attached as stated by the applicant, exclusive of costs."
Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall without delay and with all reasonable diligence attach, to await
judgment and execution in the action, only so much of the property in the Philippines of the party against whom the writ is issued, not exempt from
execution, as may be sufficient to satisfy the applicants demand, unless the former makes a deposit with the court from which the writ is issued, or
gives a counter-bond executed to the applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the value of the
property to be attached, exclusive of costs."

From the foregoing, it is evidently clear that once the writ of attachment has been issued, the only remedy of the petitioners in lifting the same is
through a cash deposit or the filing of the counter-bond. Thus, the Court holds that petitioners argument that it has the option to deposit real property
instead of depositing cash or filing a counter-bond to discharge the attachment or stay the implementation thereof is unmeritorious.

In fact, in Security Pacific Assurance Corporation v. Tria-Infante, 6 we held that one of the ways to secure the discharge of an attachment is for the
party whose property has been attached or a person appearing on his behalf, to post a counter bond or make the requisite cash deposit in an amount
equal to that fixed by the court in the order of attachment. 7

Apropos, the trial court aptly ruled that while it is true that the word deposit cannot only be confined or construed to refer to cash, a broader
interpretation thereof is not justified in the present case for the reason that a party seeking a stay of the attachment under Section 5 is required to
make a deposit in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be attached. The
proximate relation of the word "deposit" and "amount" is unmistakable in Section 5 of Rule 57. Plainly, in construing said words, it can be safely
concluded that Section 5 requires the deposit of money as the word "amount" commonly refers to or is regularly associated with a sum of money.

In Alcazar v. Arante,8 we held that in construing words and phrases used in a statute, the general rule is that, in the absence of legislative intent to the
contrary, they should be given their plain, ordinary and common usage meaning. The words should be read and considered in their natural, ordinary,
commonly-accepted and most obvious signification, according to good and approved usage and without resorting to forced or subtle construction.
Words are presumed to have been employed by the lawmaker in their ordinary and common use and acceptation. 9 Thus, petitioners should not give a
special or technical interpretation to a word which is otherwise construed in its ordinary sense by the law and broaden the signification of the term
"deposit" to include that of real properties.

WHEREFORE, premises considered, the instant petit10n is DENIED. The Decision dated March 27, 2012 and Resolution dated September 11, 2012
of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.