Davao Light & Power Co. Inc.

v CA (204 SCRA 343)

Facts:
Davao Light and Power Inc, Co. filed a complaint for recovery of sum of money and damages against Queensland Hotel
and Teodorico Adarna. The complaint contained an ex parte application for a writ of preliminary attachment.

Judge Nartatez granted the writ and fixed the attachment bond at around P4Million. The summons, copy of complaint,
writ of attachment, copy of attachment bond were served upon Queensland and Adarna. Pursuant to the writ, the Sheriff
seized the properties of the latter.

Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the
time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11,1989), the Trial
Court had not yet acquired jurisdiction over cause and person of defendants.

Trial Court denied the motion to discharge.

CA annulled the Trial Courts Order. Davao seeks to reverse CAs order.

Issue:
Whether or not preliminary attachment may issue ex parte against a defendant before acquiring jurisdiction over his
person.

Held:
Yes. Rule 57 speaks of the grant of the remedy at the commencement of the action or at any time thereafter What the
rule is saying is that after an action is properly commenced (by filing of the complaint and payment of all requisite docket
and other fees), the plaintiff may apply for and obtain a writ of preliminary attachment. This he may do so, before or after,
the summons to the defendant.
The CA decision is reversed and the writ of attachment issued by Judge Nartatez is reinstated.

**
Preliminary Attachment provisional remedy in virtue of which a plaintiff or other party may, at the commencement of
the action or at any time thereafter, have the property of the adverse party taken into custody of court as security for
satisfaction of judgment to be recovered.

Nature of Attachment: a remedy which is purely statutory in respect of which the law requires a strict of construction of
the provisions granting it. No principle, whether statutory or through jurisprudence, prohibits its issuance by any court
before the acquisition of jurisdiction over the person.
G.R. No. L-48756 September 11, 1982 K.O. GLASS CONSTRUCTION CO., INC., Petitioner, vs. THE HONORABLE
MANUEL VALENZUELA, Judge of the Court of First Instance of Rizal, and ANTONIO D. PINZON, Respondents.

FACTS OF THE CASE: On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by Antonio
D. Pinzon to recover from Kenneth O. Glass the sum of P37,190.00, alleged to be the agreed rentals of his truck, as well
as the value of spare parts which have not been returned to him upon termination of the lease. In his verified complaint,
the plaintiff asked for an attachment against the property of the defendant consisting of collectibles and payables with the
Philippine Geothermal, Inc., on the grounds that : y the defendant is a foreigner; y that he has sufficient cause of action
against the said defendant; y and that there is no sufficient security for his claim against the defendant in the event a
judgment is rendered in his favor. Defendant Kenneth O. Glass moved to quash the writ of attachment on the grounds
that: y there is no cause of action against him since the transactions or claims of the plaintiff were entered into by and
between the plaintiff and the K.O. Glass Construction Co., Inc., a corporation duly organized and existing under
Philippine laws; y that there is no ground for the issuance of the writ of preliminary attachment as defendant Kenneth O.
Glass never intended to leave the Philippines, and even if he does, plaintiff can not be prejudiced thereby because his
claims are against a corporation which has sufficient funds and property to satisfy his claim; and y that the money being
garnished belongs to the K.O. Glass Corporation Co., Inc. and not to defendant Kenneth O. Glass. Judge denied the
motion and ordered the Philippine Geothermal, Inc. to deliver and deposit with the Clerk of Court the amount of
P37,190.00 immediately upon receipt of the order which amount shall remain so deposited to await the judgment to be
rendered in the case. On January 26, 1978, the defendants therein filed a supplementary motion to discharge and/or
dissolve the writ of preliminary attachment upon the ground that the affidavit filed in support of the motion for
preliminary attachment was not sufficient or wanting in law for the reason that: y (1) the affidavit did not state that the
amount of plaintiff's claim was above all legal set-offs or counterclaims, as required by Sec. 3, Rule 57 of the Revised
Rules of Court; y (2) the affidavit did not state that there is no other sufficient security for the claim sought to be
recovered by the action as also required by said Sec. 3; and y (3) the affidavit did not specify any of the grounds
enumerated in Sec. 1 of Rule 57,

ISSUE: WON the issuance of the writ of preliminary attachment proper

HELD: NO The respondent Judge gravely abused his discretion in issuing the writ of preliminary attachment and in not
ordering the release of the money which had been deposited with the Clerk of Court There being no showing, much less
an allegation, that the defendants are about to depart from the Philippines with intent to defraud their creditor, or that they
are non-resident aliens, the attachment of their properties is not justified. Affidavit of plaintiff failed to allege the
requisites prescribed for the issuance of a writ of preliminary attachment, which renders the writ of preliminary
attachment issued against the property of the defendant fatally defective, and the judge issuing it is deemed to have acted
in excess of his jurisdiction.

Sec. 1. Grounds upon which attachment may issue. -A plaintiff or any proper party may, at the commencement of the
action or at any time thereafter, have the property of the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases: chanrobles (a) In an action for the recovery of money or damages
on a cause of action arising from contract, express or implied, against a party who is about to depart from the Philippines
with intent to defraud his creditor; chanrobles virtual law library (b) In an action for money or property embezzled or
fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney,
factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or
for a willful violation of duty; chanrobles virtual law library (c) In an action to recover the possession of personal
property unjustly detained, when the property, or any part thereof, has been concealed, removed, or disposed of to prevent
its being found or taken by the applicant or an officer; chanrobles virtual law library (d) In an action against the party who
has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in
concealing or disposing of the property for the taking, detention or conversion of which the action is brought; chanrobles
virtual law library (e) In an action against a party who has removed or disposed of his property, or is about to do so, with
intent to defraud his creditors; chanrobles virtual law library (f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by publication. Requirements for issuance of writ of preliminary
attachment: 1. Affidavit of the applicant, or some other person who personally knows the facts, showing that: a. sufficient
casue of action exists b. the case is one of those mentioned in Section 1, Rule 57 c. there is no other sufficient security for
the claim sought to be enforced by the action, and that the amount due the applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for which the order is garanted above all legal
counterclaims. 2. Bond
 G. R. No. L-45948 September 10, 1985
MERCEDES GRUENBERG and ALBERT GRUENBERG, petitioners, vs.
HONORABLE COURT OF APPEALS, HONORABLE LINO L. AOVER and ELDA R. FLORES, respondents.

This is a petition to review the decision of the Court of Appeals, now Intermediate Appellate Court, which affirmed the
order for the issuance of a writ of preliminary attachment, and other related orders of the then Court of First Instance of
Rizal in Civil Case No. Q-18444.

The antecedent facts are summarized by the appellate court as follows:

Petitioners are the defendants and private respondent is the plaintiff in Civil Case No. Q-18444, Court of First Instance
of Rizal, Branch XVII-B-Quezon City, for annulment of sale, recovery of ownership and possession of the house and
lot situated at No. 24 Scout Limbaga, Diliman, Quezon City, the same, allegedly, having been sold in fraud of
creditors.

Private respondent filed the complaint in Civil Case No. Q18444, in her capacity as the administratrix of the intestate
estate of the late William Gruenberg.

It is alleged in the complaint in Civil Case No. Q-18444 that the house and lot in question, which were sold to
defendant Albert Gruenberg (one of the petitioners), form part of the conjugal partnership of the Gruenberg spouses,
which must answer for the obligations that deceased William Gruenberg might have incurred during his lifetime in his
capacity as manager and administrator of the conjugal partnership; and that the sale of the house and lot before the
death of William Gruenberg, when at that time two creditors had already filed suits against him for collection of
unpaid obligations, and the latter had unpaid obligation to plaintiff Elda R, Flores (private respondent) in the amount
of P13,000.00, exclusive of interest and collection charges, patently and clearly can no longer be paid or liquidated.

On March 1, 1974, petitioners filed their answer to the complaint.

Under date of February 7, 1976, private respondent filed a 'Motion for Issuance of Writ of Preliminary Attachment'
against the properties of petitioners, alleging, among others, that the latter are indebted to her in the principal amount
of P13,000.00, which, according to her, she seeks to recover in Civil Case No. Q-18444.

On March 1, 1976, petitioners filed their opposition to the motion for the issuance of writ of preliminary attachment,
alleging among others, that Civil Case No. Q-18444 is an action for annulment of sale and recovery of the house and
lot mentioned therein, and not for recovery of sum of money. It is contended that a writ of preliminary attachment is
not the proper remedy for the protection of the rights of the estate. In the same opposition, petitioners refuted the
allegations of private respondent in her motion that the complaint in Civil Case No. Q-18444 is one for collection of a
sum of money allegedly contracted fraudulently by petitioners.

On March 26, 1976, respondent Judge issued an order, granting the motion of private respondent and issuing a writ of
preliminary attachment against the properties of petitioners, respondent Judge stating that no opposition had been filed
to the motion.

In the latter part of July, 1976, respondent Sheriff and/or his deputies served on petitioners and the managers of the
Hollywood Theater, Palace Theater and Illusion Theatre a writ of preliminary attachment and notice of garnishment
against petitioners and personally in favor of respondent Flores.

It is alleged that the order of respondent Judge was not received by petitioners' new counsel but upon being informed
by petitioners of the writ of preliminary attachment and notice of garnishment, petitioners'new counsel promptly went
to the court of respondent Judge and then and there he discovered that petitioners' opposition to the motion was not
attached to the record, because the same was forwarded to Branch XVIII to which Civil Case No. Q-18444 was
originally assigned,

On July 30, 1976, petitioners filed (a) a motion for reconsideration of the order granting the motion for the issuance of
a writ of preliminary attachment, and (b) a motion to recall the writ of preliminary attachment and notice of
garnishment, on the ground that it is not true that petitioners did not oppose the motion of private respondent, and that
there is no valid basis to grant the motion.

On August 16, 1976, respondent Judge issued an order, denying the motions of petitioners.

On October 28, 1976, respondent Judge issued an order, requiring petitioners to appear before his court to explain why
they should not be punished for contempt for denying or disobeying the lawful processes of the court.

The issuance of the "show cause" order prompted the petitioners to file a petition for certiorari with writ of preliminary
injunction in the Court of Appeals. The petition was dismissed. Hence, the instant petition

The issues raised to us are embodied in the petitioners' assignments of errors as follows:
 I. THE COURT OF APPEALS ERRED IN OVERLOOKING THE FACT THAT WRIT OF PRELIMINARY ATTACHMENT
COULD ONLY BE GRANTED TO SECURE THE SATISFACTION OF A JUDGMENT IN A CASE IN WHICH SAID WRIT IS
PRAYED FOR;

II. THE COURT ERRED IN SUSTAINING THE ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT FOR THE
PERSONAL BENEFIT OF PRIVATE RESPONDENT IN CIVIL CASE NO. Q-18444, NOTWITHSTANDING THE FACT
THAT SAID RESPONDENT INSTITUTED SAID ACTION NOT IN HER PERSONAL CAPACITY, BUT AS
ADMINISTRATRIX OF THE ESTATE OF THE LATE WILLIAM GRUENBERG, SR.;

III. THE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS CAN BE CITED FOR CONTEMPT FOR THE
ALLEGED FAILURE TO COMPLY WITH THE NOTICE OF GARNISHMENT ADDRESSED TO THIRD PARTIES.

The issues are interrelated and may be discussed together. They all focus on the proprietary of the writ of attachment and
garnishment against the petitioners' properties issued by the trial court and affirmed by the appellate court.

In her affidavit supporting the motion for a writ of preliminary attachment, the private respondent stated that her case "...
is one of the situations covered by Section 1 (d), Rule 57 of the Rules of Court whereby a writ of preliminary attachment
may issue." Section 1 (d), Rule 57 provides:

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

xxx xxx xxx

(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 concealing or disposing of the property for the taking, detention or conversion of
which the action is brought.

xxx xxx xxx

There are various reasons why this petition should prosper.

Private respondent Elda R. Flores, as a claimant for P13,000.00 against the estate of William Gruenberg, Sr., was
appointed administratrix of the estate of the deceased. In her capacity as administratrix, she filed Civil Case No. Q-18444
against the petitioners. This main case was for the annulment of a deed of sale executed by the late William Gruenberg, Sr., in
favor of Albert Gruenberg and for the recovery of possession and ownership of the house and lot involved in that sale.

The motion for a writ of preliminary attachment filed by Flores, however, states:

1. Defendants are indebted to plaintiff in the amount of P13,000.00 exclusive of accrued interest and collection
charges, which plaintiff seeks to recover in the instant action; and

2. Defendants are guilty of fraud in contracting the debt or incurring the obligation due plaintiff in that they
conspired and confederated with each other as mother End son to defraud other creditors one of whom is plaintiff,
by simulating the sale of house and lot situated at No. 24 Scout Limbaga Street, Quezon City ... .

While the respondent filed the motion in her capacity as administratrix of the Gruenberg estate, the motion for a writ of
attachment and its supporting affidavit show that the attachment was intended to secure only her P13,000.00 claim against
the estate. Obviously, this cannot be done.

A writ of attachment is a remedy ancillary to the principal proceeding. The well-entrenched principle is that:

Attachment is a juridical institution which has for its purpose to secure the outcome of the trial, that is, the satisfaction of the
pecuniary obligation really contracted by a person or believed to have been contracted by him, either by virtue of a civil
obligation emanating from contract or from law, or by virtue of some crime or misdemeanor that he might have committed,
and the writ issued, granted it, is executed by attaching and safely keeping all the movable property of the defendant, or so
much thereof as may be sufficient to satisfy the plaintiff's demands ... . (Guzman v. Catolico, et al., 65 Phil. 257).

The purpose behind the filing of the complaint was to recover a piece of property allegedly belonging to the intestate estate of
the deceased. Hence, any writ of attachment necessary to secure the judgment must be related to the protection of the estate.
The writ may not issue if only to protect the personal interests of the private respondent as a creditor of that estate.

The records show that the private respondent's interest in the estate is to recover a debt based on a contract with the
deceased Gruenberg, For this reason, she instituted the special proceedings for the settlement of the intestate estate
resulting to her appointment as administratrix. Under these circumstances, the private respondent's remedy to recover the
outstanding debt of the deceased is to follow the procedure in Rule 86 on claims against an estate. As a matter of fact, if
an administrator has a claim against an estate, Section 8 of Rule 86 calls for the appointment of a special administrator to
defend the estate against such claim.
A court order which violates the Rules constitutes grave abuse of discretion as it wrecks the orderly procedure prescribed
for the settlement of claims against deceased persons designed to protect the interests of the creditors of the decedent.
(See Dy v. Enage, 70 SCRA 96). Allowing the private respondent in the annulment case to attach the petitioners'
properties for the benefit of her P13,000.00 claim against the estate would give her an undue advantage over other
creditors against the estate,

Moreover, the P13,000.00 claim of the respondent cannot be settled in the case for annulment of the deed of sale, wherein
the writ of attachment is sought. What she seeks to be secured is not the judgment in the main case but a mere claim
against the estate which is still to be considered and adjudicated by the court.

The rules on the issuance of a writ of attachment must be construed strictly in favor of the defendant. The remedy of
attachment is harsh, extraordinary, and summary in nature. If all the requisites for the issuance of the writ are not present,
the court which issues it acts in excess of its jurisdiction.

In Salas v. Adil (90 SCRA 121), we stated:

A preliminary attachment is a rigorous remedy, which exposes the debtor to humiliation and annoyance, such it
should not be abused as to cause unnecessary prejudice. It is, therefore, the duty of the court, before issuing the writ,
to ensure that all the requisites of the law have been complied with; otherwise the judge acts in excess of his
jurisdiction and the writ so issued shall be null and void. (Guzman v. Catolico, 65 Phil. 257, 261).

Considering the gravity of the allegation that herein petitioners have removed or disposed of their properties or are
about to do so with intent to defraud their creditors, and further considering that the affidavit in support of the
preliminary attachment merely states such ground in general terms, without specific allegations of circumstances to
show the reason why plaintiffs believe that defendants are disposing of their properties in fraud of creditors, it was
incumbent upon respondent Judge to give notice to petitioners and to allow them to present their position at a hearing
wherein evidence is to be received.

Following the principle of strict compliance with all requisites, this Court has also ruled that "when the facts, or some of
them, stated in the plaintiff's affidavit are shown by the defendant to be untrue, the writ may be considered as improperly
or irregularly issued." (National Coconut Corporation V. Pecson, et al., 90 Phil. 809).

The February 7, 1976 motion for issuance of a writ of preliminary attachment and the affidavit of preliminary attachment
are misleading. First, the private respondent states that the "defendants are indebted to plaintiff in the amount of
P13,000.00" exclusive of interests and collection charges. Then, she avers that the "defendants are guilty of fraud in
contracting the debt or incurring the obligation due plaintiff ".

The facts in the motion and the affidavit are deceptively framed. The obligation which the respondent seeks to secure by
an attachment was between her and the late William Gruenberg, Sr. What she seeks to establish as fraudulent was the sale
between the late Mr. Gruenberg and his son. These are two entirely distinct transactions.

One of the reasons for granting the motion for the issuance of a writ of preliminary attachment was the court's finding that
the petitioners' failed to file an opposition thereto. It turns out, however, that the petitioners filed a timely opposition to
the motion but it was filed in another branch of the court where the case had earlier been assigned. Nevertheless, despite
this timely opposition, the motion for reconsideration of the order for the issuance of a writ of preliminary attachment,
was summarily denied for lack of merit.

We also note that the order which directed the issuance of a writ of preliminary attachment merely recited the grounds
alleged in the private respondent's motion without any specific details as to the supposed fraud committed by the
petitioners when they contracted the debt and the alleged disposition or concealment by the petitioners of their properties.
The order of the trial court disregards the rule that attachment being a harsh remedy, it must be issued on concrete and
specific grounds and not on general averments merely quoting the words of the pertinent rules. (Dy v. Enage, supra). The
absence of specific grounds highlights the fact that the petitioners are not indebted to respondent Flores. It was the late
William Gruenberg who incurred the alleged indebtedness and it is his estate which owes Flores. The validity of the claim
of Flores will have to be threshed out in the special proceedings, not in the case for annulment of the deed of sale.

Finally, the transaction sought to be annulled in the main case refers to a questioned sale of a house and lot. It would have been
sufficient to annotate a notice of lis pendens in the title to that property. Assuming the trial court could validly attach the house
and lot involved in the sale, we see no justification why the attachment should reach out to the petitioners' interests in the
Hollywood Theatre, the Palace Theatre, and the Illusion Theatre. The petitioners also point out that there is no showing of any
attempt on their part to conceal or to dispose of the house and lot nor of any change in the title or condition of the property.
Considering all the foregoing, we find the writ of preliminary attachment to have been improvidently issued.

WHEREFORE, the petition is hereby GRANTED. The decision of the former Court of Appeals is SET ASIDE. The writ
of preliminary attachment and the notice of garnishment issued in Civil Case No. Q-18444 are DISSOLVED. The other
related orders issued in connection with the writ of attachment are SET ASIDE.

SO ORDERED.
 G.R. No. 175587 September 21, 2007
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner, vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.

Facts:
Petitioner filed against respondent Alejandro a complaint for sum of money with prayer for the issuance of a writ
of preliminary attachment. Said complaint alleged that respondent, a resident of Hong Kong, executed in favor of
petitioner a promissory note obligating himself to pay P249,828,588.90 plus interest.

In view of the fluctuations in the foreign exchange rates which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to put up additional security for the loan.

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e)and (f) of Rule 57 of the
Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding his
verbal promise to PCIB Assistant Vice-president Corazon B. Nepomuceno not to withdraw the same prior to their
assignment as security for the loan; and (2) that respondent is not a resident of the Philippines.

The trial court granted the application and issued the writ ex parte. Subsequently, respondent filed a motion to
quash he writ contending that the withdrawal of his unassigned deposits was not fraudulent as it was approved by
petitioner.

He also alleged that petitioner knew that he maintains a permanent residence and an office address here in the Philippines.
In both addresses, petitioner regularly communicated with him through its representatives. The trial court issued an order
quashing the writ. With the denialof petitionersmotion for reconsideration, it elevated the case to the CA via a petition for
certiorari. The CA dismissed the case.

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

Held: No. In the instant case, it must be stressed that the writ was issued by the trial court mainly on the representation
of petitioner that respondent is not a resident of the Philippines.

In actions in personam against residents temporarily out of the Philippines, the court need not always attach the
defendants property in order to have authority to try the case. Where the plaintiff seeks to attach the defendants property
and to resort to the concomitant service of summons by publication, the same must be with prior leave, precisely because,
if the sole purpose of the attachment is for the court to acquire jurisdiction, the latter must determine whether from the
allegations in the complaint, substituted service (to persons of suitable discretion at the defendants residence or to a
competent person in charge of his office or regular place of business) will suffice, or whether there is a need to attach the
property of the defendant and resort to service of summons by publication in order for the court to acquire jurisdiction
over the case and to comply with the requirements of due process.

Obviously, the trial courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the
case. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City and an office in
Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have served summons by substituted
service on the said addresses, instead of attaching the property of the defendant. The rules on the application of a writ of
attachment must be strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in
nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance. It should be resorted to only when
necessary and as a last remedy.

It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out of the Philippines,
petitioner is still not entitled to a writ of attachment because the trial court could acquire jurisdiction over the case by
substituted service instead of attaching the property of the defendant.

The misrepresentation of petitioner that respondent does not reside in the Philippines and its omission of his local
addresses was thus a deliberate move to ensure that the application for the writ will be granted.
 G.R. No. L-6572 May 14, 1954
MAX CHAMORRO & CO., petitioner, vs.
PHILIPPINE READY MIX CONCRETE CO., INC. and HON. MANUEL P. BARCELONA, Judge of the Court of First
Instance of Manila, respondents.
The object of this petition for certiorari is to annul an order of the Court of First Instance of Manila dissolving a writ of
preliminary attachment.

The record shows that on December 8, 1951 petitioner filed an action in said court against the respondent Philippine
Ready-Mix Concrete Co., Inc., for the recovery of P4,355.09 due plaintiff for road building materials furnished the
defendant in May and June of that year. Through an ex parte petition filed simultaneously with the complaint and alleging
disposal or property on defendant's part with the intent to defraud its creditors, plaintiff had a writ of preliminary
attachment issue, and, on the authority thereof, garnished funds of an equivalent amount due defendant from the Bureau
of Public Works. Defendant move to have the attachment discharged, alleging that the same had been procured on a false
ground, but the motion was denied. However, this ruling was reconsidered by another Judge after the death of the one in
charge of the case, and the attachment was ordered dissolved, the court having found that the transactions cited to justify
the attachment as constituting dispositions of property in fraud of creditors were effected "to pay legitimate debts or to
comply with legitimate obligations" and not to defraud defendant's creditors.

Alleging that this finding is contrary to law and the evidence, the petition for certiorari seeks annulment of the order
lifting the attachment on the ground that it constitutes a clear abuse of judicial discretion.

The petition is without merit.

The only transactions cited by plaintiff as constituting dispositions of property with intent to defraud creditors are those
specified in the affidavit of its attorney, Maximo Calalang, as follows:

1. On August 7, 1950, the defendant corporation assigned in favor of the Philippine National Bank P461,372.00
worth of its collectible amounts from the Bureau of Public Works;

2. On February 20, 1951, the defendant corporation assigned in favor of the RFC 50 per cent of all payments due
to the defendant corporation until the full amount of P300 and its interest at the rate of 6 per cent per annum is
fully paid, and thereafter 30 per cent of all payments due to the defendant corporation until its either indebtedness
with the RFC is fully paid;

3. On August 21, 1951, the defendant corporation assigned in favor of Mr. Domingo Bautista (Plaintiff in
Domingo Bautista vs. Phil. Ready-Mix, Civil Case No. 1482, Court of First Instance of Rizal) 15 per cent of its
free 503 the first 50 per cent having been assigned to the RFC until the full amount of P58,465 owed by the
defendant corporation in favor of Domingo Bautista is paid, together with the value of other materials which said
Domingo Bautista shall deliver to the Defendant;

4. During the month of September, 1951, the defendant assigned in favor of the Manila Surety and Fidelity 10 per
cent of its collection from the government until the amount of P49,010 is fully paid;

5. In the 10th day of June, 1952 the Phil. Ready-Mix sold by absolute sale of 97 parcels of land located in the
province of Rizal for more than P136,000 to Andres and Jose, both Soriano, the whereabouts of which proceeds
of sale is unknown to the plaintiff.

The above transactions are, however, explained in the rebuttal joint affidavit of the officers of the respondent company,
the pertinent portion of which is reproduced in the Order below, as follows:

(a) The assignment of expected collections up to an amount of P461,372, on April 18, 1950, in favor of the
Philippine National Bank was limited to a specific contracts, to wit: Philippine Rehabilitation Projects PR-69 (11)
and PR-5 (21); that the deed of assignment states plainly that the assignment was made "in consideration of
certain loans, to the assignors; and that said assignment was an advance arrangement required by the PNB for the
payment or liquidation of loans extended to finance road construction projects of the debtor-assignors.

(b) The alleged assignment on February 20, 1951 in favor of the RFC was likewise limited to expected
collections from specific projects until a stipulated amount shall have been paid; that all assignments made in
favor of the RFC were for the sole purpose of paying the obligations incurred by the debtor-assignor by way of
loans, credits, and overdrafts granted by said financing institution; and that said assignment was required by the
RFC in the normal course of business to secure said loans to finance operation of the debtor assignor.

(c) The assignment on August 21, 1951, of a small percentage of collections from specified projects in favor of
Mr. Domingo Bautista, a creditor who filed an action in court, was made precisely to pay a legitimate
indebtedness to the said person and further to guarantee the payment to said person of future deliveries of
materials to the corporation; and that this assignment was necessary to insure a steady supply of road construction
materials at the projects.
 (d) The assignment in September 1951, in favor of the Manila Surety & Fidelity Co. of a percentage collections
from specified contracts, until an amount of P49,010 shall have been collected, was made in order to indemnify
the said surety company against a possible liability under surety bond issued upon the request of the assignor who
was compelled to put up a bond in three pending civil cases; that the amounts collected thereunder by the
surety are mere deposits, not a true assignment; that the deed of assignment clearly provides that the said amount
"shall be kept in trust by the Manila Surety & Fidelity Co., Inc., to the credit of the Philippine Ready-Mix
Concrete Co., Inc., to be refunded upon the cancellation of the bond, and shall not be used for any purpose other
than to secure the bond therein mentioned."

(e) The sale of 97 parcels of land on June 10, 1952 for P136,000 was dictated by business necessity. These 97
parcels of land were originally mortgaged to the RFC. To pay the indebtedness to the RFC and to meet other
urgent obligations, these lands were sold; of the proceeds of the sale, P120,892 was turned over to the RFC in
part payment of the outstanding balance; the balance of P15,111.50 was also turned over to the RFC which
amount was "to be released in favor of the mortgagor against invoices of raw materials to be purchased by the
mortgagor"; that these terms were imposed by the RFC as mortgagee of the property sold, for the protection of its
credit and to insure that the balance will be used only in road construction projects of the corporation.

As the lower court says in its order, the above explanations have not been contradicted, much less refuted, by plaintiff and
they really clearly show that the transactions were effected to pay legitimate debts or to comply with legitimate
obligations and to enable defendant to conduct its business operations. They may as the lower court observes, have the
effect of giving preference to certain creditors; but such preference is not a legal ground for attachment.

The disposal of most of defendant's property for the purpose of paying his debts, and the use of the proceeds
thereof for that purpose only, were insufficient to sustain an attachment on the ground that he had disposed of his
property with intent to hinder and delay his creditors. (Syll., Blakemore vs. Eagle, 73 Ark. 477; S.W. 637.)

The fact that a debtor n good faith sells all his property to pay certain of his creditors to the exclusion of others is
not a ground for attachment. (See Campbell vs. Warner, 22 Kan. 604)

A preferential transfer or payment without actual fraud does not constitute a disposition of property with intent to
delay and defraud creditors, so as to authorize an attachment. (Syll., Crookston State Bank vs. Lee, Minn. 112;
144 N.W. 433.)

The transfer by a creditor of all his property does not warrant the issuance of attachment, though the transfer
results in a preference of their claims where there is no element of intentional fraud. (See Moeller vs. Van Loo,
180 Ill. App. 435.)

It should also be noted that, as observed by the court below, the first and second transactions mentioned above took place
long before the accrual of plaintiff's action. And the objection that the respondent is on the verge of insolvency does not
necessarily strengthen petitioner's case, since insolvency is not a ground for attachment, especially when defendant has
not been shown to have committed any act intended to defraud its creditors.

To authorize an attachment, at least one of the causes mentioned in the statute must exist. Mere insolvency ... is
not a ground of attachment. A man may be unable to pay his debts in full, and still be doing all in his power to
pay them, and, so long as he furnishes no statutory cause of attachment against him, no attachment will be against
his property." (Federal Farm Mortg. Corp. vs. Mulder, 280 N. W. 454, 455; Walker vs. Hagerty, 20 Neb. 482, 30
N.W. 556.)

Where a merchant, in failing circumstances, caused by poor business management, gave a chattel mortgage to a
creditor to whom be was heavily indebted, and turned over to him all his property not exempt from execution,
and gave other mortgages thereon to other creditors, in the order they applied for them, such acts do not establish
a fraudulent disposition of his property warranting an attachment on that ground. (See Burnham vs. Patmor, 3
Kan. App. 257; 45 Pac. 115.)

Petitioner alleges that there are other cases pending against the respondent company with preliminary attachment issued
in some of them, so that there is probability that, with all those accumulated claims against it, the company would not be
in a position to pay petitioner. These are bare allegations which may or may not be true. What we have to decide in the
present case is whether the lower court, on the basis of the proof adduced at the hearing, which consists of the affidavits
set forth above, has abused its discretion in lifting the attachment secured on an ex partemotion. Upon examination of said
affidavits, we do not find that the court below has been guilty of such abuse of discretion. On the contrary, we find that its
conclusion as to law and fact are correct, for the transactions entered into by the respondent company with the RFC and
others do not show intent the defraud its creditors and are therefore n ground for the issuance of a writ of preliminary
attachment under section 1 of Rule 59. Convinced that the writ had been improperly issued, the lower court only acted as
directed in section 13 of the same Rule when it ordered the attachment discharged.

The petition for certiorari is, therefore, denied with costs against petitioner.
 G.R. No. 141818 June 22, 2006
INSULAR SAVINGS BANK, Petitioner, vs.
FAR EAST BANK AND TRUST COMPANY, Respondent.
This petition for review on certiorari 1 assails the November 9, 1999 Order 2 of the Regional Trial Court of Makati City,
Branch 135, in Civil Case No. 92-145 which dismissed the petition for review for lack of jurisdiction and its February 1,
2000 Order3 denying reconsideration thereof.

The antecedent facts are as follows:

On December 11, 1991, Far East Bank and Trust Company (Respondent) filed a complaint against Home Bankers Trust
and Company (HBTC)4 with the Philippine Clearing House Corporations (PCHC) Arbitration Committee docketed as
Arbicom Case No. 91-069.5 Respondent sought to recover from the petitioner, the sum of P25,200,000.00 representing the
total amount of the three checks drawn and debited against its clearing account. HBTC sent these checks to respondent
for clearing by operation of the PCHC clearing system. Thereafter, respondent dishonored the checks for insufficiency of
funds and returned the checks to HBTC. However, the latter refused to accept them since the checks were returned by
respondent after the reglementary regional clearing period. 6

Meanwhile, on January 17, 1992, before the termination of the arbitration proceedings, respondent filed another
complaint but this time with the Regional Trial Court (RTC) in Makati City docketed as Civil Case No. 92-145 for Sum
of Money and Damages with Preliminary Attachment. The complaint was filed not only against HBTC but also against
Robert Young, Eugene Arriesgado and Victor Tancuan (collectively known as Defendants), who were the president and
depositors of HBTC respectively.7 Aware of the arbitration proceedings between respondent and petitioner, the RTC, in an
Omnibus Order dated April 30, 1992, 8 suspended the proceedings in the case against all the defendants pending the
decision of the Arbitration Committee, to wit:

WHEREFORE, the Court hereby orders:

(a) Home Bankers & Trust Co. to produce and permit plaintiff to inspect, copy and/or photograph the checking
account deposit ledger of Victor Tancuans Account No. 1803-00605-3;

(b) The Motions to Dismiss filed by all defendants denied, for lack of merit; and

(c) Proceedings in this case against all defendants be suspended pending award/decision in the arbitration
proceedings against Home Bankers and Trust Co.

SO ORDERED.9 (Emphasis supplied)

The above Omnibus Order was amended by the trial court in its October 1, 1992 Order, 10 the dispositive portion of which
reads as follows:

WHEREFORE, the Omnibus Order dated 30 April 1992 is hereby reconsidered by deleting the phrase "since the
complaint also seeks exemplary damages, attorneys fees, litigation expenses and costs of suit against HBT," on page 4
thereof and par. C of its dispositive portion is amended to read:

(c) "Procedings against Home Bankers and Trust Co. are suspended pending award/decision in the arbitration proceedings
while those against individual defendants be immediately reinstated and continued."

HBT and Tancuans separate Motions for Reconsiderations are hereby denied, for lack of merit.

SO ORDERED.11

On February 2, 1998, the PCHC Arbitration Committee rendered its decision in favor of respondent, 12 thus:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendant
sentencing the latter to pay the plaintiff the sum of P25.2 million as principal. In view of the fact, however, that this
amount was split between the plaintiff and the defendant in the course of the proceedings, the amount to be paid by the
defendant to the plaintiff should only be P12,600,000.00 plus interest on this latter amount at the rate of 12% per annum
from February 11, 1992, the date when the total amount of P25.2 Million was split between plaintiff and defendant up to
the date of payment.

In view of the facts found by the committee, no attorneys fees nor other damages are awarded.

SO ORDERED.13

The motion for reconsideration filed by petitioner was denied by the Arbitration Committee. 14 Consequently, to appeal the
decision of the Arbitration Committee in Arbicom Case No. 91-069, petitioner filed a petition for review in the earlier
case filed by respondent in Branch 135 of the RTC of Makati and docketed as Civil Case No. 92-145. 15 In an order dated
January 20, 1999, the RTC directed both petitioner and respondent to file their respective memoranda, after which, said
petition would be deemed submitted for resolution.16
Both parties filed several pleadings. On February 8, 1999, respondent filed a Motion to Dismiss Petition for Review for
Lack of Jurisdiction,17 which was opposed by the petitioner.18 Respondent then filed its Reply to the opposition,19 to which
petitioner filed a Rejoinder.20 On August 16, 1999, respondent submitted its Surrejoinder.21

On November 9, 1999, the RTC rendered the assailed Order which held, thus:

Acting on plaintiff Far East Bank and Trust Companys "Motion To Dismiss Petition For Review For Lack Of
Jurisdiction", considering that the petition for review is a separate and distinct case, the same must comply with all the
requirements for filing initiatory pleadings for civil actions before this Court so that since the commencement of the
subject petition lacks the mandatory requirements provided for, except the payment of docket fees, for lack of
jurisdiction, the petition for review is hereby dismissed.

SO ORDERED.22

The RTC denied petitioners motion for reconsideration, 23 hence, this petition on the sole ground, to wit:

THE REGIONAL TRIAL COURT ERRED IN DISMISSING THE PETITION OF PETITIONER FOR LACK OF
JURISDICTION ON THE GROUND THAT IT SHOULD HAVE BEEN DOCKETED AS A SEPARATE CASE.24

Petitioner contends that Civil Case No. 92-145 was merely suspended to await the outcome of the arbitration case
pending before the PCHC. Thus, any petition questioning the decision of the Arbitration Committee must be filed in Civil
Case No. 92-145 and should not be docketed as a separate action. Likewise, petitioner avers that had it filed a separate
action, "this would have resulted in a multiplicity of suits, which is abhorred in procedure."

Meanwhile respondent avers that the RTC correctly dismissed the appeal from the award of private arbitrators since there
is no statutory basis for such appeal. Respondent argues that petitioners claim that the parties by agreement had conferred
on the RTC appellate jurisdiction over decisions of private arbitrators is erroneous because they cannot confer a non-
existent jurisdiction on the RTC or any court. Furthermore, the petition for review filed by petitioner violated the rule on
commencing an original action under Section 5, Rule 1, and the raffle of cases under Section 2, Rule 20 of the Rules of
Court, when it filed the same in Branch 135 of the RTC of Makati where there was already a pending original action, i.e.,
Civil Case No. 92-145.

The petition lacks merit.

The Philippine Clearing House Corporation was created to facilitate the clearing of checks of member banks. Among
these member banks exists a compromissoire,25 or an arbitration agreement embedded in their contract wherein they
consent that any future dispute or controversy between its PCHC participants involving any check would be submitted to
the Arbitration Committee for arbitration. Petitioner and respondent are members of PCHC, thus they underwent
arbitration proceedings.

The PCHC has its own Rules of Procedure for Arbitration (PCHC Rules). However, this is governed by Republic Act No.
876, also known as The Arbitration Law26 and supplemented by the Rules of Court.27 Thus, we first thresh out the remedy
of petition for review availed of by the petitioner to appeal the order of the Arbitration Committee.

Sections 23, 24 and 29 of The Arbitration Law, and Section 13 of the PCHC Rules, provide:

SEC. 23. Confirmation of award. At any time within one month after the award is made, any party to the controversy
which was arbitrated may apply to the court having jurisdiction, as provided in Section 28, for an order confirming
the award; and thereupon the court must grant such order unless the award is vacated, modified or corrected, as
prescribed herein. Notice of such motion must be served upon the adverse party or his attorney as prescribed by law for
the service of such notice upon an attorney in action in the same court.

SEC. 24. Grounds for vacating award. In any one of the following cases, the court must make an order vacating the
award upon the petition of any party to the controversy when such party proves affirmatively that in the arbitration
proceedings:

(a) The award was procured by corruption, fraud or other undue means; or

(b) That there was evident partiality or corruption in the arbitrators or any of them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the
arbitrators was disqualified to act as such under section nine hereof, and willfully refrained from disclosing such
disqualification or of any other misbehavior by which the rights of any party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite
award upon the subject matter submitted to them was not made.

xxxx
SEC. 25. Grounds for modifying or correcting award. In any one of the following cases, the court must make an order
modifying or correcting the award, upon the application of any party to the controversy which was arbitrated:

(a) Where there was an evident miscalculation of figures, or an evident mistake in the description of any person,
thing or property referred to in the award; or

(b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the
decision upon the matter submitted; or

(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been
a commissioners report, the defect could have been amended or disregarded by the court.

The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties.

SEC. 29. Appeals. An appeal may be taken from an order made in a proceeding under this Act, or from judgment
entered upon an award through certiorari proceedings, but such appeals shall be limited to questions of law. The
proceedings upon such an appeal, including the judgment thereon shall be governed by the Rules of Court insofar as they
are applicable.

AMENDED ARBITRATION RULES OF PROCEDURE OF PCHC

Sec. 13. The findings of facts of the decision or award rendered by the Arbitration Committee or by the sole
Arbitrator as the case may be shall be final and conclusive upon all the parties in said arbitration dispute. The
decision or award of the Arbitration Committee or of the Sole Arbitrator or of the Board of Directors, as the case may be,
shall be appealable only on questions of law to any of the Regional Trial Courts in the National Capital Region
where the Head Office of any of the parties is located. The appellant shall perfect his appeal by filing a notice of
appeal to the Arbitration Secretariat and filing a Petition with the Regional Trial Court of the National Capital Region for
the review of the decision or award of the committee or sole arbitrator or of the Board of Directors, as the case may be,
within a non-extendible period of fifteen (15) days from and after its receipt of the order denying or granting said motion
for reconsideration or new trial had been filed, within a non-extendible period of fifteen (15) days from and after its
receipt of the order denying or granting said motion for reconsideration or of the decision rendered after the new trial if
one had been granted.

x x x x. (Emphasis supplied)

As provided in the PCHC Rules, the findings of facts of the decision or award rendered by the Arbitration Committee
shall be final and conclusive upon all the parties in said arbitration dispute. 28 Under Article 204429 of the New Civil Code,
the validity of any stipulation on the finality of the arbitrators award or decision is recognized. However, where the
conditions described in Articles 2038, 30 203931 and 204032 applicable to both compromises and arbitrations are obtaining,
the arbitrators award may be annulled or rescinded. 33 Consequently, the decision of the Arbitration Committee is subject
to judicial review.

Furthermore, petitioner had several judicial remedies available at its disposal after the Arbitration Committee denied its
Motion for Reconsideration. It may petition the proper RTC to issue an order vacating the award on the grounds provided
for under Section 24 of the Arbitration Law.34 Petitioner likewise has the option to file a petition for review under Rule 43
of the Rules of Court with the Court of Appeals on questions of fact, of law, or mixed questions of fact and law. 35 Lastly,
petitioner may file a petition for certiorari under Rule 65 of the Rules of Court on the ground that the Arbitrator
Committee acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction. Since this case involves acts or omissions of a quasi-judicial agency, the petition should be filed in and
cognizable only by the Court of Appeals.36

In this instance, petitioner did not avail of any of the abovementioned remedies available to it. Instead it filed a petition
for review with the RTC where Civil Case No. 92-145 is pending pursuant to Section 13 of the PCHC Rules to sustain its
action. Clearly, it erred in the procedure it chose for judicial review of the arbitral award.

Having established that petitioner failed to avail of the abovementioned remedies, we now discuss the issue of the
jurisdiction of the trial court with respect to the petition for review filed by petitioner.

Jurisdiction is the authority to hear and determine a cause - the right to act in a case. 37 Jurisdiction over the subject matter
is the power to hear and determine the general class to which the proceedings in question belong. Jurisdiction over the
subject matter is conferred by law and not by the consent or acquiescence of any or all of the parties or by erroneous
belief of the court that it exists.38

In the instant case, petitioner and respondent have agreed that the PCHC Rules would govern in case of controversy.
However, since the PCHC Rules came about only as a result of an agreement between and among member banks of
PCHC and not by law, it cannot confer jurisdiction to the RTC. Thus, the portion of the PCHC Rules granting jurisdiction
to the RTC to review arbitral awards, only on questions of law, cannot be given effect.
Consequently, the proper recourse of petitioner from the denial of its motion for reconsideration by the Arbitration
Committee is to file either a motion to vacate the arbitral award with the RTC, a petition for review with the Court of
Appeals under Rule 43 of the Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court. In the case at
bar, petitioner filed a petition for review with the RTC when the same should have been filed with the Court of Appeals
under Rule 43 of the Rules of Court. Thus, the RTC of Makati did not err in dismissing the petition for review for lack of
jurisdiction but not on the ground that petitioner should have filed a separate case from Civil Case No. 92-145 but on the
necessity of filing the correct petition in the proper court. It is immaterial whether petitioner filed the petition for review
in Civil Case No. 92-145 as an appeal of the arbitral award or whether it filed a separate case in the RTC, considering that
the RTC will only have jurisdiction over an arbitral award in cases of motions to vacate the same. Otherwise, as
elucidated herein, the Court of Appeals retains jurisdiction in petitions for review or in petitions for certiorari.
Consequently, petitioners arguments, with respect to the filing of separate action from Civil Case No. 92-145 resulting in
a multiplicity of suits, cannot be given due course.

Alternative dispute resolution methods or ADRs like arbitration, mediation, negotiation and conciliation are
encouraged by the Supreme Court. By enabling parties to resolve their disputes amicably, they provide solutions that are
less time-consuming, less tedious, less confrontational, and more productive of goodwill and lasting relationships. 39 It
must be borne in mind that arbitration proceedings are mainly governed by the Arbitration Law and suppletorily by the
Rules of Court.

WHEREFORE, in light of the foregoing, the petition is DENIED. The November 9, 1999 Order of the Regional Trial
Court of Makati City, Branch 135, in Civil Case No. 92-145 which dismissed the petition for review for lack of
jurisdiction and the February 1, 2000 Order denying its reconsideration, are AFFIRMED.

SO ORDERED.
 G.R. No. L-825 July 20, 1948
ROMAN MABANAG, plaintiff-appellant, vs.
JOSEPH M. GALLEMORE, defendant-appellee.
This case, here on appeal from an order dismissal by the Court of First Instance of Occidental Misamis, raises the
question of the court's jurisdiction. More specifically, the question is whether the action is in personam or one in rem. The
trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein
defendant, Joseph M. Gallemore for being a non-resident.

The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for two
parcels of land whose sale was afterward annulled. The defendant is said to be residing in Los Angeles, California, U. S.
A. He has no property in the Philippine except an alleged debt owing him by a resident of the municipality of Occidental
Misamis. This debt, upon petition of the plaintiff, after the filing of the complaint and before the suit was dismissed, was
attached to the extent of plaintiff's claim for the payment of which the action was brought. But the attachment was
dissolved in the same order dismissing the case.

It was Atty. Valeriano S. Kaamino who has amicus curi filed the motion to dismiss and to set aside the attachment.
There is no appearance before this Court to oppose the appeal.

Section 2, Rule 5, of the Rules of Court provides:

If any of the defendants does not reside and is not found in the Philippines, and the action effects the personal
status of the plaintiff, or any property of the defendant located in the Philippines, the action may be commenced
and tried in the province where the plaintiff resides or the property, or any portion thereof, is situated or found.

The Philippine leading cases in which this Rule, or its counterpart in the former Code of Civil Procedure, section 377 and
395, were cited and applied, are Banco Espaol-Filipino vs. Palanca, 37 Phil. 921, and Slade Perkins vs. Dizon, 40 Off.
Gaz., [3d Suppl.], No. 7, p. 216. The gist of this Court's ruling in these cases, in so far as it is relevant to the present
issues, is given in I Moran's Comments on the Rules of Court, 2d Ed., 105:

As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts
cannot try any case against him because of the impossibility of acquiring jurisdiction over his person, unless he
voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the
Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the
Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i.e., the
personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the non-
resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose
personal status is in question resides, or where the property of the defendant or a part thereof involved in the
litigation is located.

Literally this Court said:

Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property
under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution
of legal proceedings wherein, under special provisions of law, the power of the court over the property is
recognized and made effective. In the latter case the property, though at all times within the potential power of the
court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is
found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent
stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential
jurisdiction over the res, is found in the proceeding to register the title of land under our system for the
registration of land. Here the court, without taking actual physical control over the property assumes, at the
instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate
the title in favor of the petitioner against all the world. (Banco Espaol-Filipino vs. Palanca, supra, 927-928.).

In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be
considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is
acquired by the seizure; and the purpose of the proceeding is to subject the property to that lien. If a lien already
exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court
proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized
upon attachment. (Roller vs. Holly, 176 U.S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance
that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit
it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental
principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a
proceeding directed essentially in rem. (Id., 929-930.).

When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the
case, upon the principles that a "State, through its tribunals, may subject property situated within its limit owned
by non-residents to the payment of the demand of its own citizens against them; and the exercise of this
jurisdiction in no respect infringes upon the sovereignty of the State were the owners are domiciled. Every State
owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of
authority to hold any appropriate any property owned by such non-residents to satisfy the claims of its citizens. It
 is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its
tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried
only to the extent necessary to control disposition of the property. If the non-resident has no property in the State,
there is nothing upon which the tribunals can adjudicate. (Slade Perkins vs. Dizon, 40 Off. Gaz. [3d Supplement],
No. 7, p. 216.).

A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant confers
jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative works:

The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured.
Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by dissolution of the
attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purely in
personam. . . a proceeding against property without jurisdiction of the person of the defendant is in substance a
proceeding in rem; and where there is jurisdiction of the defendant, but the proceedings against the property
continues, that proceedings is none the less necessarily in rem, although in form there is but a single proceeding.
(4 Am. Jur., 556-557.)

As the remedy is administered in some states, the theory of an attachment, whether it is by process against or to
subject the property or effects of a resident or non-resident of the state, is that it partakes essentially of the nature
and character of the proceeding in personam and not of a proceeding in rem. And if the defendant appears the
action proceeds in accordance with the practice governing proceedings in personam. But were the defendant fails
to appear in the action, the proceeding is to be considered as one in the nature of a proceeding in rem. And where
the court acts directly on the property, the title thereof being charged by the court without the intervention of the
party, the proceeding unquestionably is one in rem in the fullest meaning of the term.

In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is
elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to
acquire jurisdiction of the defendant's person, and he has not appeared and answered or otherwise submitted
himself to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a
lawful seizure of property owned by him within the jurisdiction of the court. (2 R. C. L., 800-804.).

Tested by the foregoing decisions and authorities, the Court has acquired jurisdiction of the case at bar by virtue of the
attachment of the defendant's credit. Those authorities and decisions, so plain and comprehensive as to make any
discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor's person, the case may
proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.

It is our judgment that the court below erred in dismissing the case and dissolving the attachment; and it is ordered that,
upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this appeal will be
charged to defendant and appellee.
 G.R. No. 173036 : September 26, 2012 AGOO RICE MILL CORPORATION (represented by its President, Kam
Biak Y. Chan, Jr.), Petitioner, v. LAND BANK OF THE PHILIPPINES, Respondent.

FACTS: - From October 1993 to October 1996, the ARMC obtained from the LBP a Term Loan amounting to a total of P
15,000,000.00, evidenced by promissory notes. These loans were secured by a Real and Chattel Mortgage over the
ARMCs four (4) commercial lots, including their improvements, and its rice mill machineries and generator. ARMC
made several partial payments to cover the loans interests, but found it difficult to fully settle its loan obligations on time
due to the companys financial liquidity problems. In a letter through its President Mr. Kam Biak Y. Chan, Jr., requested
the LBP for an extension of time to pay its obligations; he asked for a period ending on February 28, 1997. The LBP,
through a letter reminded ARMC of its commitment to pay on February 28, 1997. On February 27, 1997, still foreseeing
its inability to pay its obligations on the requested date, the ARMC wrote the LBP for the renewal of its loans.14 The LBP
allegedly replied with the advice to have the loans restructured instead of renewed. Accordingly, in a letter, 16ARMC
requested the LBP to restructure its loan. The LBP deferred the ARMCs proposal and advised it to first secure a waiver of
its penalty charges prior to the loans restructuring. In a letter the LBP informed the ARMC that the banks Domestic
Banking Loan Committee has agreed to require an additional collateral from the ARMC, otherwise the LBP would be
forced to pursue legal action. In another letter the LBP informed ARMC that its existing collateral was short of P
3,400,000.00, based on its outstanding P 15,000,000.00 loan, and reiterated that ARMC needed to offer additional
collateral and to submit the necessary documents; ARMC was given up to November 14, 1997 to comply, but this was
extended to November 25, 1997. ARMC responded by asking for a reappraisal of its properties, but the LBP denied the
request, insisting that the valuation made by its Property Assessors was fair and reasonable. The LBP wrote to the ARMC
regarding the latters failure to comply with the LBPs required offer of an additional collateral or to pay its due
obligations. The LBP informed the ARMC that noncompliance would result in the referral of the matter to the banks
Legal Office for appropriate action. In its application for extrajudicial foreclosure, the LBP alleged, among others, that:
(1) despite repeated demands, the ARMC failed to pay its overdue obligations. The extrajudicial foreclosure was set for
August 26, 1998 at nine oclock in the morning. Complaint for Injunction On August 24, 1998, ARMC, through its
President, filed with the RTC, Branch 30, San Fernando City, La Union, a complaint for injunction with application for a
writ of preliminary injunction and temporary restraining order, and for recovery of damages. ARMC mainly alleged that
LBPs proposed extrajudicial foreclosure should be enjoined for being premature, improper and in violation of ARMCs
contractual and property rights since negotiations for the restructuring of its loans were still ongoing. Temporary
Restraining Order and Writ of Preliminary Injunction On September 8, 1998, the RTC ordered the proceedings suspended
in view of the parties manifestation to have the case amicably settled. The contemplated settlement, however, failed.
Thus, the RTC proceeded with the hearing on the issuance of the writ of preliminary injunction.34 In an
order35rll dated March 18, 1999, Judge Adolfo Alagar, RTC, Branch 30, San Fernando City, La Union,
issued a writ of preliminary injunction upon the ARMCs filing of a bond of P 4,000,000.00. The RTCs Ruling In a
decision dated August 5, 2004, the RTC found no merit in the ARMCs complaint for injunction. The RTC denied the
ARMCs complaint on the ground that injunction cannot issue against the exercise of a valid right, the right of the
creditormortgagee to foreclose on the mortgage where the debtor-mortgagor has defaulted in the payment of its
obligations. The RTC likewise ruled that the LBPs foreclosure was not merely an exercise of its right, but also the
performance of its legal obligation under Presidential Decree No. (P.D.) 385. The ARMC moved to reconsider the RTCs
decision, but the trial court denied the motion. The ARMC filed a notice of appeal to the In its appeal to the CA, the
ARMC insisted that the restructuring of its loan was still under negotiation when the LBP filed its application for
extrajudicial foreclosure and contended that the LBP was in bad faith and guilty of promissory estoppel when it led the
ARMC to believe that it would restructure its loans, yet refused to have the mortgaged properties reappraised by an
independent appraiser. The ARMC further contended that the charges imposed by the LBP were unwarranted and that the
stipulated interest on the promissory notes was excessive and unconscionable and should be voided. On May 12, 2005,
the Sheriff of the RTC of San Fernando City, La Union issued a Notice of Extrajudicial Sale that set the auction sale of
the mortgaged properties. The ARMC sought to enjoin the foreclosure sale by filing with the CA an application for the
issuance of a writ of preliminary injunction and temporary restraining order, which the CA denied in a resolution. The
LBP emerged as the winning bidder in the auction sale. The CAs Ruling In a decision the CA found no merit in the
ARMCs appeal. The CA affirmed the RTC in ruling that, under P.D. 385, an injunction, whether permanent or temporary,
could not be issued to enjoin the foreclosure proceedings instituted by the LBP. The CA likewise found that the LBP did
not approve, or even promised to approve, the ARMCs proposed loan restructuring. The CA did not also find the LBP in
bad faith for refusing to have the ARMCs mortgaged properties reappraised by an independent appraiser; the LBPs low
valuation on the reappraised properties would even be more beneficial to ARMC in case of redemption. Neither did the
CA find the stipulated interest rates on the promissory notes and the imposed penalty charges excessive, unconscionable
and unwarranted. The CA denied the motion for reconsideration that the ARMC subsequently filed, paving the way for
the present petition for review on certiorari.

ISSUE: WON ARMC is entitled to an injunctive remedy.

HELD: The court ruled in negative. "Injunction is a judicial writ, process or proceeding whereby a party is ordered to do
or refrain from doing a certain act. It may be the main action or merely a provisional remedy for and as an incident in the
main action. For an injunction to issue, the following essential requisites must be present: (1) there must be a right in esse
or the existence of a right to be protected; and (2) the act against which the injunction is directed to constitute a violation
of such right. The ARMC filed a complaint for injunction against the LBP on the ground that the latters then impending
foreclosure of its mortgaged properties was in violation of its contractual and property rights, particularly the right of the
ARMC to have its outstanding loan restructured by the LBP. The ARMC alleged that the LBP acted in bad faith and in
wanton disregard of its commitment to restructure the formers loans when it hastily filed for extrajudicial foreclosure
while negotiations for the loan restructuring were still ongoing. The existence of the ARMCs claimed right to the loan
restructuring, however, was not clearly established by the ARMC. A party seeking to avail of an injunctive relief must
prove that he or she possesses a right in esse or one that is actual or existing. Such right must be clear and unmistakable,
and not contingent, abstract or future rights, or one that may never arise. In the present case, both the RTC and the CA
found that no agreement was forged between the ARMC and the LBP on the restructuring of the ARMCs loans ,the
proposed loan restructuring was not approved by the LBP because the ARMC failed to offer an additional collateral
sufficient enough to cover its outstanding loan with the bank. Thus, the ARMC, then, had no actual right to protect or to
enforce against the LBP. It failed to satisfy the first requisite, i.e., the existence of a clear and unmistakable right for the
issuance of an injunction. On the other hand, the LBP had every right to foreclose on the Real and Chattel Mortgage since
the ARMC had defaulted in the payment of its overdue loan obligation with the bank. The foreclosure is supported by the
express mandate of P.D. 385. Under these terms, the ARMC cannot secure an injunction against the LBP, a government
financial institution. Injunction Became Moot and Academic The present petition must also be denied because the act
sought to be enjoined by the ARMC is already a consummated act. The records show that the foreclosure sale on the
ARMC's JTIOligaged properties was held sometime in June 2005 and the LBP emerged as the winning bidder. An
injunction suit becomes moot and academic after the act sought to be enjoined had already been consummated.
WHEREFORE, we DENY the present petition for review on certiorari for lack of merit and for being moot and academic.
Costs against petitioner Agoo Rice Mill Corporation. SO ORDERED.
 Nerwin v PNOC, G.R. No. 167057, April 11, 2012

Facts: 1. In 1999, the National Electrification Administration ( NEA ) published an invitation to pre-qualify and to bid for
a contract, otherwise known as IPB No. 80, for t he supply and delivery of about sixty thousand (60,000) pieces of wood
poles and twenty thousand (20,000) pieces of cross arms needed in the country s Rural Electrification Project. 2.
Thereafter, the qualified bidders submitted their financial bids where private respondent [Nerwin] emerged as the lowest
bidder for all schedules/components of the contract. NEA then conducted a pre-award inspection of private respondent s
[N erwin s] manufacturing plants and facilities, including its identified supplier in Malaysia, to determine its capability to
supply and deliver NEA s requirements. 3. Upon learning of the issuance of Requisition No. FGJ 30904R1 for the O-
ILAW P roject, Nerwin filed a civil action in the RTC in Manila, docketed as Civil Case No. 03106921 entitled Nerwin
Industries Corporation v. PNOC-Energy Development Corpo ration and Ester R. Guerzon, as Chairman, Bids and Awards
Committee, alleging th at Requisition No. FGJ 30904R1 was an attempt to subject a portion of the items covered by IPB
No. 80 to another bidding; and praying that a TRO issue to enjoin respondents proposed bidding for the wooden poles. 4.
Respondents sought the dismissal of Civil Case No. 03106921, stating that the c omplaint averred no cause of action,
violated the rule that government infrastru cture projects were not to be subjected to TROs, contravened the mandatory
prohi bition against non-forum shopping, and the corporate president had no authority to sign and file the complaint. 5.
Thence, respondents commenced in the Court of Appeals (CA) a special civil ac tion for certiorari (CA-GR SP No.
83144), alleging that the RTC had thereby committe d grave abuse of discretion amounting to lack or excess of
jurisdiction in holdi ng that Nerwin had been entitled to the issuance of the writ of preliminary inju nction despite the
express prohibition from the law and from the Supreme Court; in issuing the TRO in blatant violation of the Rules of
Court and established jurisp rudence; in declaring respondents in default; and in disqualifying respondents co unsel from
representing them.

Issues/s 1. Whether or not the CA erred in dismissing the case on the basis of Rep. Act 8 975 prohibiting the issuance of
temporary restraining orders and preliminary inj unctions, except if issued by the Supreme Court, on government projects.

Ruling 1. The petition fails. In its decision of October 22, 2004, the CA explained why it annulled and se t aside the
assailed orders of the RTC issued on July 20, 2003 and December 29, 2003, and why it altogether dismissed Civil Case
No. 03106921, as follows: a. It is beyond dispute that the crux of the instant case is the propriety of respond
Judge s issuance of a preliminary injunction, or the earlier TRO, for that matter . b. Respondent Judge gravely
abused his discretion in entertaining an application for /preliminary injunction, and worse, in issuing a preliminary
injunction through the assailed order enjoining petitioners sought bidding for its O-ILAW Project. The sa me is a
palpable violation of RA 8975 which was approved on November 7, 2000, thus, al ready existing at the time respondent
Judge issued the assailed Orders dated Jul y 20 and December 29, 2003.

2. The said proscription is not entirely new. RA 8975 merely supersedes PD 1818 whic underscored the prohibition
to courts from issuing restraining orders or prelim inary injunctions in cases involving infrastructure or National
Resources Develo pment projects of, and public utilities operated by, the government. This law wa s, in fact, earlier
upheld to have such a mandatory nature by the Supreme Court in an administrative case against a Judge.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petiti oner to pay the costs of
suit.
Phil. Pharmawealth, Inc. v. Pfizer, Inc. & Pfizer (Phil.), Inc. G.R. No. 167715, 17 November 2010

Facts: Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is marketed under the brand name
Unasyn. Sometime in January and February 2003, Pfizer discovered that Pharmawealth submitted bids for the supply of
Sulbactam Ampicillin to several hospitals without the Pfizers consent. Pfizer then demanded that the hospitals cease and
desist from accepting such bids. Pfizer also demanded that Pharmawealth immediately withdraw its bids to supply
Sulbactam Ampicillin. Pharmawealth and the hospitals ignored the demands.

Pfizer then filed a complaint for patent infringement with a prayer for permanent injunction and forfeiture of the
infringing products. A preliminary injunction effective for 90 days was granted by the IPOs Bureau of Legal Affairs
(IPO-BLA). Upon expiration, a motion for extension filed by Pfizer was denied. Pfizer filed a Special Civil Action for
Certiorari in the Court of Appeals (CA) assailing the denial.

While the case was pending in the CA, Pfizer filed with the Regional Trial Court of Makati (RTC) a complaint for
infringement and unfair competition, with a prayer for injunction. The RTC issued a temporary restraining order, and then
a preliminary injunction.

Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum shopping. Nevertheless, the CA issued
a temporary restraining order. Pharmawealth again filed a motion to dismiss, alleging that the patent, the main basis of the
case, had already lapsed, thus making the case moot, and that the CA had no jurisdiction to review the order of the IPO-
BLA because this was granted to the Director General. The CA denied all the motions. Pharmawealth filed a petition for
review on Certiorari with the Supreme Court.

Issues:
a) Can an injunctive relief be issued based on an action of patent infringement when the patent allegedly infringed has
already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the Intellectual Property
Office?
c) Is there forum shopping when a party files two actions with two seemingly different causes of action and yet pray for
the same relief?

Held:
a) No. The provision of R.A. 165, from which the Pfizers patent was based, clearly states that "[the] patentee shall have
the exclusive right to make, use and sell the patented machine, article or product, and to use the patented process for the
purpose of industry or commerce, throughout the territory of the Philippines for the term of the patent; and such making,
using, or selling by any person without the authorization of the patentee constitutes infringement of the patent."

Clearly, the patentees exclusive rights exist only during the term of the patent. Since the patent was registered on 16 July
1987, it expired, in accordance with the provisions of R.A. 165, after 17 years, or 16 July 2004. Thus, after 16 July 2004,
Pfizer no longer possessed the exclusive right to make, use, and sell the products covered by their patent. The CA was
wrong in issuing a temporary restraining order after the cut-off date.

b) According to IP Code, the Director General of the IPO exercises exclusive jurisdiction over decisions of the IPO-BLA.
The question in the CA concerns an interlocutory order, and not a decision. Since the IP Code and the Rules and
Regulations are bereft of any remedy regarding interlocutory orders of the IPO-BLA, the only remedy available to Pfizer
is to apply the Rules and Regulations suppletorily. Under the Rules, a petition for certiorari to the CA is the proper
remedy. This is consistent with the Rules of Court. Thus, the CA had jurisdiction.

c) Yes. Forum shopping is defined as the act of a party against whom an adverse judgment has been rendered in one
forum, of seeking another (and possibly favorable) opinion in another forum (other than by appeal or the special civil
action of certiorari), or the institution of two (2) or more actions or proceedings grounded on the same cause on the
supposition that one or the other court would make a favorable disposition.

The elements of forum shopping are: (a) identity of parties, or at least such parties that represent the same interests in
both actions; (b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; (c) identity
of the two preceding particulars, such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration. This instance meets these elements.

The parties are clearly identical. In both the complaints in the BLA-IPO and RTC, the rights allegedly violated and the
acts allegedly violative of such rights are identical, regardless of whether the patents on which the complaints were based
are different. In both cases, the ultimate objective of Pfizer was to ask for damages and to permanently prevent
Pharmawealth from selling the contested products. Relevantly, the Supreme Court has decided that the filing of two
actions with the same objective, as in this instance, constitutes forum shopping.

Owing to the substantial identity of parties, reliefs and issues in the IPO and RTC cases, a decision in one case will
necessarily amount to res judicata in the other action.

[A.M. No. RTJ-05-1904. February 18, 2005]

 BAGONG WEST KABULUSAN 1 NEIGHBORHOOD ASSOCIATION, INC. REPRESENTED BY ITS ACTING
PRESIDENT WENEFREDO S. QUEDOR complainant, vs. JUDGE ALBERTO L. LERMA respondent.

Judge Alberto L. Lerma, Presiding Judge of Branch 256 of the Regional Trial Court (RTC) of Muntinlupa, stands
charged in a complaint[1] dated September 21, 2001 filed by the Bagong West Kabulusan Neighborhood Association, Inc.
(the Association) for falsification of court records, gross violation of the Code of Judicial Conduct, gross neglect of duty,
and gross ignorance of the law with manifest bias and partiality.

The facts which spawned the filing of the complaint are as follows:

CST Enterprises, Inc. filed before the Muntinlupa Metropolitan Trial Court (MeTC) thirty eight (38)
complaints for ejectment against 39 individuals[2] (the defendants) who were occupying lots located at West Kabulusan,
Barangay Cupang, Muntinlupa City and covered by TCT Nos. 124275 and 157581 (the lots). The cases, which were
raffled to Branch 80 of the MeTC, were docketed as Civil Case Nos. 4678-4715.

Branch 80 of the Muntinlupa MeTC, by decision of March 17, 2000, rendered judgment in favor of CST Enterprises,
Inc., ordering the defendants to vacate the lots and surrender possession thereof to CST Enterprises, Inc. [3] The judgment
became final and executory following which writs of execution were issued and served on the defendants on June 14,
2000.[4]

It appears that the defendants refused to vacate the lots. Thus, by Order of November 8, 2000, the MeTC directed the
defendants to demolish their respective structures within 5 days from notice thereof. [5] A writ of demolition[6] dated
November 9, 2000 was accordingly issued directing the sheriff to remove and demolish the houses and improvements
introduced by the defendants on the lots.

On December 11, 2000, the Association, claiming to represent the underprivileged and homeless residents of the
lots, but without naming the defendants in Civil Case Nos. 4678-4715, filed a Complaint against MeTC Sheriff Armando
M. Camacho, for Injunction with Very Urgent Petition for the Issuance of Restraining Order to Preserve and Maintain the
Status Quo, docketed as Civil Case No. 00-233. [7]

The Complaint for injunction alleged that under R.A. No. 7279 (URBAN DEVELOPMENT AND HOUSING ACT
OF 1992), it is mandatory that before demolition or eviction can be effected, adequate relocation, whether temporary or
permanent, be undertaken by the City of Muntinlupa and the National Housing Authority with the assistance of other
concerned government agencies. [8] It thus prayed that service of the notice to vacate and demolish be held in abeyance
until the provisions of R.A. 7279 have been complied with and that, in the meantime, a Temporary Restraining Order
(TRO) be issued to preserve and maintain the status quo. [9]

On motion of the Association, a special raffle of Civil Case No. 00-233 was set on December 15, 2000. [10]

Meanwhile, in a petition filed by the defendants before the Court of Appeals, docketed as CA-G.R. SP No.
61991, assailing among other things, the MeTC judgment in the ejectment cases which was sought to be annulled, the
appellate court, by Resolution of December 12, 2000, issued a TRO enjoining the enforcement of the writ of demolition.
[11]

The Associations complaint for injunction in Civil Case No. 00-233 was raffled to Branch 256 of the Muntinlupa
RTC presided by respondent, Judge Alberto Lerma. Summons dated January 2, 2001 was thereafter issued to Sheriff
Camacho requiring him to enter his appearance and answer the Associations petition within 15 days from service thereof,
which summons was served on him on January 15, 2001.[12]

Notice dated January 8, 2001 setting for hearing on January 17, 2001 the Associations prayer for a TRO was issued.
[13]
The notice addressed to Sheriff Camacho was, however, served on him the day after the hearing or on January 18,
2001.[14] As he was not present during the hearing, respondent, on motion of the Association, considered the matter of the
issuance of TRO submitted for resolution.[15]

By Order[16] of February 5, 2001, respondent denied the Associations prayer for a TRO, he finding that no great or
irreparable injury would result if a TRO is not issued immediately. Copies of this order were sent to the parties by
registered mail on February 16, 2001. [17] In the meantime, notice of hearing of the application for Preliminary Injunction
on March 9, 2001 was issued.

On February 21, 2001, the Association filed a Motion to Resolve the Pending Incident of Temporary Restraining
Order with Motion to Declare the Defendant in Default which was set by the movant for hearing on February 28, 2001.
[18]
By Order of February 28, 2001, upon motion of the Association, the Motion to Resolve Temporary Restraining Order
and to Declare Defendant in default was submitted for resolution. [19]

During the hearing of the application for the issuance of a Writ of Preliminary Injunction on March 9, 2001,
respondent noted Sheriff Camachos absence.

The Association later filed a Motion for Reconsideration of respondents Order of February 5, 2001 (denying the
Motion for the issuance of a TRO) which was denied by Order of March 13, 2001. [20]
 Meanwhile, due to procedural infirmities and for lack of merit, the Court of Appeals, by Resolution of March 19,
2001, dismissed CA-G.R. SP No. 61991.[21]

On motion of the Association, the hearing of the main case for injunction in Civil Case No. 00-233 was set for
hearing on April 19, 2001 [22] during which the defendant sheriff again failed to show up. The hearing was thus reset [23] to
June 22, 2001 during which respondent, on motion of the Association, declared its Motion to Declare Defendant in
Default submitted for resolution.[24]

On September 14, 2001, the Association filed a Very Urgent Motion to Resolve Complaint for Injunction, setting the
motion for hearing on September 17, 2001. [25] The Association was later to allege in its present complaint that the staff of
respondent refused to set the said motion for hearing. [26]

Alleging that respondent, with manifest bias and partiality and with gross ignorance of R.A. 7279 and gross neglect
of duty, deliberately delayed the resolution of [Civil Case No. 00-233] in order for . . . [Sheriff] Camacho [to] EFFECT
THE DEMOLITION before the resolution of [said] case so that [it] will be rendered moot and academic, [27] the
Association, through its Acting President, Wenefredo S. Quedor, filed on September 24, 2001 the present complaint
against respondent before the Office of the Court Administrator.

In the affidavit of the Acting President of the Association (hereinafter referred to as complainant), it is averred that
respondent violated Supreme Court Administrative Circular No. 20-95 requiring him to act on the application for a TRO
after all parties are heard in a summary hearing conducted within 24 hours after the records are transmitted to the branch
selected by raffle, he having set for hearing the prayer for TRO only on January 17, 2001 or 33 days after the complaint
was raffled to his sala.[28]

It is further averred in the said affidavit that respondent maliciously and unlawfully falsified court records by making
it appear that he already resolved the pending incident re the application for the issuance of a TRO by issuing the Order of
February 5, 2001 when in fact the Motion to Resolve the application was not yet resolved when it was heard on February
28, 2001.[29]

Respondent, in his Comments[30] dated November 29, 2001, claimed that several actions were instituted by
complainant and/or the defendants to stop at all cost the enforcement and implementation of the decision rendered by the
MeTC in Civil Case Nos. 4678-4715; [31] that on August 23, 2000, before the filing of Civil Case No. 00-233, he dismissed
a petition of the defendants against the MeTC Branch 80 judge, for Certiorari and Prohibition or Annulment of Judgment
in Civil Case Nos. 4678-4715 with prayer for Writ of Preliminary Injunction, docketed as SP Civil Case No. 00-085, and
denied their motion for reconsideration of the dismissal; [32] that the defendants elevated the case on December 4, 2000 to
the Court of Appeals via petition for annulment of judgment with injunction and very urgent motion for the issuance of a
restraining order (CA-G.R. SP No. 61991) [33] challenging (1) the MeTC Decision dated March 17, 2000 in Civil Case
Nos. 4678-4715; (2) the RTC Order dated August 23, 2000 dismissing on motion of CST Enterprises, Inc. the petition for
certiorari in S.P. Civil Case No. 00-085; (3) the RTC Order dated October 18, 2000 in S.P. Civil Case No. 00-
085 denying the motion for reconsideration filed by the defendants; (4) the MeTC Order dated November 8, 2000
in Civil Case Nos. 4678-4715 granting the motion for the issuance of a writ of demolition; (5) the MeTC Writ of
Demolition dated November 9, 2000 in Civil Case Nos. 4678-4715; and (6) the Notice to Vacate and Demolish dated
November 20, 2000 issued by MeTC Sheriff Camacho in Civil Case Nos. 4678-4715.

Respondent further claimed

that a week after the defendants filed their petition before the appellate court or on December 11, 2000, complainant again
filed the Complaint forInjunction with Very Urgent Petition for the Issuance of Restraining Order to Preserve and
Maintain the Status Quo (Civil Case No. 00-233); that on December 12, 2000, the Court of Appeals issued in CA-G.R. SP
No. 61991 a Resolution enjoining the enforcement of the writ of demolition for a period of 60 days from the date of its
issuance, or until February 10, 2001 [34] on account of which the Notice to Vacate and Demolish dated November 20, 2000,
all addressed to the defendants, was temporarily suspended. [35]

Respondent furthermore alleged that on August 27, 2001, five months after the Court of Appeals dismissed CA-
G.R. SP No. 61991, complainant filed a motion to suspendproceedings in Civil Case Nos. 4678-4715 before Branch 80 of
the MeTC for the same purpose, that is, to hold in abeyance the enforcement of the notice to vacate and demolish dated
November 20, 2000;[36] that
again, on September 24, 2001, the same day complainant filed the present administrative case against him and while the
motion to suspend proceedings inCivil Case Nos. 4678-4715 remained pending, the defendants filed before the RTC a co
mplaint, docketed as Civil Case No. 01-268, for illegal eviction/demolition, loss of property anddamages, injunction and t
emporary restraining order, relocation/restitution/benefits with prayer for lis pendens, which was raffled and assigned to
Branch 276, presided by Judge N.C. Parello, again praying, among other things, to restrain Sheriff Camacho from
enforcing the notice to vacate and demolish; [37] and that the motion to suspend proceedings in Civil Case Nos. 4678-4715
was denied on November 9, 2001.[38]

In the main, respondent stressed that all these cases filed after a
writ of demolition was issued by the MeTC were filed for the purpose of restraining the sheriff from enforcing thenotices
to vacate and demolish, in violation of the rule against forum-shopping under Rule 7, Section 5 of the 1997 Rules of Civil
Procedure, they involving the same parties, causes of action, and reliefs. [39]
 Respondent went on to stress that all his actions and findings in Civil Case No. 00-233 were in accordance with the
Rules and the Canons on Judicial Ethics, with cold judicial impartiality, and with no other objective but to uphold the rule
and majesty of the law.[40]

In its memorandum[41] of August 18, 2003, the OCA opines that respondent should not have deferred the resolution of
the pending incidents lest he be accused of delay. And it finds that respondent offered no explanation why the order
denying complainants application for a TRO is dated February 5, 2001 when the hearing thereon occurred on February
28, 2001.[42]

To recall, the Court of Appeals in CA-G.R. SP No. 61991, issued a Resolution on December 12, 2000 a day after
Civil Case No. 00-233 (which also prayed for a TRO) was filed on December 11, 2000, enjoining the enforcement of the
writ of demolition against the defendants for a period of 60 days or until February 10, 2001. As respondent was one of the
respondents in said CA-G.R. SP No. 61991, his Order dismissing SP Civil Case No. 00-085 being among those
challenged in said case, it is assumed that he was served a copy of said Resolution.

Consequently, when Civil Case No. 00-233 was raffled to respondents sala on December 15, 2000, complainants
prayer for a TRO had been rendered moot, such relief having been already afforded the defendants by the appellate court
in its Resolution of December 12, 2000. To further act on the therein petitioners prayer for a TRO would thus serve no
useful purpose, that is, if respondent was actually notified of the TRO issued by the appellate court.

Assuming arguendo that, as respondent alleged, complainant was guilty of forum shopping, respondent should have
dismissed Civil Case No. 00-233 in accordance with Rule 7, Section 5 of the Rules of Court. [43]

It would appear though that, to avert the possibility of complainants Complaint in Civil Case No. 00-233 being
dismissed on the ground of forum shopping, it made it appear that the parties therein and in CA-G.R. SP No. 61991 are
not one and the same.

A perusal of the allegations embodied in the complaint in Civil Case No. 00-233 shows, however, that the
Association-herein complainant actually represented the defendants- petitioners in CA-G.R. SP No. 61991:

Under date of November 17, 1999, CST Enterprises Inc. filed with the Metropolitan Trial Court of Muntinlupa City
presided by Hon. Noli C. Diaz 39 (sic) ejectment cases against herein plaintiffs and docketed as Civil Case Nos. 4678 to
4715 xxx.[44]

If indeed the Association-herein complainant represented the underprivileged and homeless citizens of West
Kabulusan, Brgy. Cupang in Civil Case No. 00-233, it failed to comply with the requirements set forth under Rule 3,
Section 3 of the Rules of Court [45] that when an action is prosecuted by a representative, the beneficiaries shall be included
in the title of the case and shall be deemed as the real parties in interest. On that score alone, the complaint could have
been dismissed for lack of cause[46] under Sec. 1(d) of Rule 16.

More. In the complaint in Civil Case No. 00-233, complainant did not implead the Presiding Judge of Branch 80 of
the MeTC who issued the writ of demolition dated November 9, 2000 and CST Enterprises Inc. which stood to be
adversely affected in case a TRO was issued by respondent. On the other hand, the duty of Sheriff Camacho, who was the
sole defendant in the said case, to execute the writ of demolition was purely ministerial. In the absence of a directive to
the contrary, he was expected to proceed with reasonable promptness to implement the writ according to its mandate.

Complainant faults respondent for violating Supreme Court Administrative Circular 20-95 for failure to call for a
hearing on its application for a TRO within 24 hours after the case had been raffled to his sala on December 15, 2001, he
having set the same for hearing only on January 17, 2000. Upon the assumption that the appellate courts Resolution
granting a TRO had not yet come to the notice of respondent at the time Civil Case No. 00-233 was raffled to him,
what is mandatory in the circular is the giving of notice and opportunity for the adverse party to be heard and interpose
objections in a summary hearing, before a prayer for a TRO is acted upon. The period within which to conduct a
summary hearing is not 24 hours after the case has been raffled but 24 hours after the records are transmitted to the
branch to which it is raffled.

Pertinent paragraphs of Supreme Court Administrative Circular No. 20-95 are quoted hereunder:

1. Where an application for temporary restraining order (TRO) or writ of preliminary injunction is included in a
complaint or any initiatory pleading filed with the trial court, such complaint or initiatory pleading shall
be raffled only after notice to the adverse party and in the presence of such party or counsel.

2. The application for a TRO shall be acted upon only after all parties are heard in a summary hearing
conducted within twenty-four (24) hours after the records are transmitted to the branch selected by
raffle. The records shall be transmitted immediately after raffle.

xxx (Emphasis and underscoring supplied)

This circular is now incorporated in the present Rules of Court as Rule 58, Section 4 as follows:
SEC. 4. Verified application and bond for preliminary injunction or restraining order. - A preliminary injunction
or temporary restraining order may be granted only when:

xxx

(c) When an application for a writ of preliminary injunction or a temporary restraining order is included in a complaint or
any initiatory pleading, the case, if filed in a multi-sala court, shall be raffled only after notice to and in the presence of
the adverse party or the person sought to be enjoined. In any event, such notice shall be preceded, or contemporaneously
accompanied, by service of summons, together with a copy of the complaint or initiatory pleading and the applicants
affidavit and bond, upon the adverse party in the Philippines.

xxx

(d) The application for a temporary restraining order shall thereafter be acted upon only after all parties are heard in a
summary hearing which shall be conducted within twenty four (24) hours after the sheriffs return of service and/or
records are received by the branch selected by raffle and to which the records shall be transmitted immediately.
(Underscoring supplied)

Clearly, the circular and the Rules of Court seek to minimize the ex-parte,[47] precipitate and improvident issuance of
TROs.[48]

Again, granting arguendo that respondent may have erred in not taking a more suitable course of action, given the
circumstances surrounding the case, not to mention the palpable intent of the defendants to trifle with judicial processes,
any lapse on his part can be seen as mere error of judgment, of which he may not be held administratively liable in the
absence of a showing of bad faith, malice, or corrupt purpose. [49]

As for complainants imputation to respondent of falsification of court records by making it appear that he already
resolved the application for the issuance of a TRO as early as February 5, 2001 when the application was yet to be heard
on February 28, 2001: The records before this Court disclose that the February 5, 2001 Order denying complainants
prayer for a TRO was sent to the parties by registered mail on February 16, 2001. [50]

It is thus possible that when complainant filed on February 21, 2001, its Motion to Resolve the Pending Incident of
Temporary Restraining Order with Motion to Declare Defendant in Default, the hearing of which motion was set by
complainant-movant on February 28, 2001, complainant had not yet received the February 5, 2001 Order of the Court.

Respecting the charge that respondent exhibited gross ignorance of the provisions of R.A. 7279 with manifest bias
and partiality, such allegation remains unsubstantiated.

IN LIGHT OF THE FOREGOING, for insufficiency of evidence, the administrative complaint against respondent
is hereby DISMISSED.
 BACOLOD CITY WATER DISTRICT vs. LABAYEN

G.R. No. 157494 December 10, 2004

Respondent City opposed the Schedule of Automatic Water Rates Adjustments for the years 1999, 2000 and
2001published by the petitioner. It alleged that the proposed water rates would violate due process as they were to be
imposed without the public hearing. Hence, it prayed that before the hearing of the main case, a temporary restraining
order or a preliminary injunction be issued.

On February 24, 2000. On the same date requested, respondent court heard respondents application for temporary
restraining order and issued an Order commanding petitioner to stop, desist and refrain from implementing the proposed
water rates.

On December 21, 2000, respondent court issued the assailed Decision granting the final injunction which allegedly
confirmed the previous preliminary injunction.

Petitioner filed its Motion for Reconsideration of the assailed Decision on January 11, 2001 asserting, among others,
that the case was not yet ripe for decision when the court granted the final injunction, the petitioner having had no
opportunity to file its answer, avail of the mandatory pre-trial conference and have the case tried on the merits.

Issue:

A. Whether or not preliminary injunction had been issued

Ruling:

No. The sequence of events and the proceedings that transpired in the trial court make a clear conclusion that the Order
issued was a temporary restraining order and not a preliminary injunction.

Given the previous undeviating references to it as a temporary restraining order, respondents cannot now consider it
as a preliminary injunction to justify the validity of the assailed Decision. The attendant facts and circumstances clearly
show that the respondent trial court issued a temporary restraining order.

Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain
act. It may be the main action or merely a provisional remedy for and as an incident in the main action. ]

The main action for injunction is distinct from the provisional or ancillary remedy of preliminary injunction which
cannot exist except only as part or an incident of an independent action or proceeding. As a matter of course, in an action
for injunction, the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory, may issue. Under the
law, the main action for injunction seeks a judgment embodying a final injunction which is distinct from, and should not
be confused with, the provisional remedy of preliminary injunction, the sole object of which is to preserve the status
quo until the merits can be heard. A preliminary injunction is granted at any stage of an action or proceeding prior to the
judgment or final order. It persists until it is dissolved or until the termination of the action without the court issuing a
final injunction.

A restraining order, on the other hand, is issued to preserve the status quo until the hearing of the application for
preliminary injunction which cannot be issued ex parte. Under Rule 58 of the Rules of Court, a judge may issue a
temporary restraining order with a limited life of twenty (20) days from date of issue. If before the expiration of the
twenty (20)-day period the application for preliminary injunction is denied, the temporary restraining order would be
deemed automatically vacated. If no action is taken by the judge on the application for preliminary injunction within the
said twenty (20) days, the temporary restraining order would automatically expire on the 20th day by the sheer force of
law, no judicial declaration to that effect being necessary.[47]

Hence, in the case at bar, since no preliminary injunction was issued, the temporary restraining order granted
automatically expired after twenty (20) days under the Rules. The fact that respondent court merely ordered the
respondent[,] its agents, representatives or any person acting in his behalf to stop, desist and refrain from implementing in
their billings the new water rate increase which will start on March 1, 2000 [48] without stating the period for the restraint
does not convert the temporary restraining order to a preliminary injunction.

The rule against the non-extendibility of the twenty (20)-day limited period of effectivity of a temporary restraining
order is absolute if issued by a regional trial court. The failure of respondent court to fix a period for the ordered restraint
did not lend the temporary restraining order a breath of semi-permanence which can only be characteristic of a
preliminary injunction. The twenty (20)-day period provided by the Rules of Court should be deemed incorporated in the
Order where there is an omission to do so. It is because of this rule on non-extendibility that respondent City was
prompted to move that hearings be set for its application of a preliminary injunction. Respondent City cannot take
advantage of this omission by respondent trial court.
 [G.R. No. 125008. June 19, 1997]
COMMODITIES STORAGE & ICE PLANT CORPORATION, SPOUSES VICTOR & JOHANNAH
TRINIDAD, petitioners, vs. COURT OF APPEALS, JUSTICE PEDRO A. RAMIREZ, CHAIRMAN and FAR EAST BANK &
TRUST COMPANY, respondents.
In this petition for certiorari, petitioner seeks to annul and set aside the decision and resolution of the Court of
Appeals[1] in CA-G.R. SP No. 36032 dismissing the complaint in Civil Case No. 94-72076 before the Regional Trial
Court, Branch 9, Manila.
The facts show that in 1990, petitioner spouses Victor and Johannah Trinidad obtained a loan of P31,000,000.00
from respondent Far East Bank & Trust Company to finance the purchase of the Sta. Maria Ice Plant & Cold Storage in
Sta. Maria, Bulacan. The loan was secured by a mortgage over the ice plant and the land on which the ice plant
stands.Petitioner spouses failed to pay their loan. The bank extrajudicially foreclosed the mortgage and the ice plant was
sold by public bidding on March 22, 1993. Respondent bank was the highest bidder. It registered the certificate of sale on
September 22, 1993 and later took possession of the property.
On November 22, 1993, petitioner spouses filed Civil Case No. 956-M-93 against respondent bank before the
Regional Trial Court, Malolos, Bulacan for reformation of the loan agreement, annulment of the foreclosure sale and
damages.[2] The trial court dismissed the complaint for petitioners' failure to pay the docket fees. The dismissal was
without prejudice to refiling of the complaint. [3]
On October 28, 1994, petitioners filed Civil Case No. 94-72076 against respondent bank before the Regional Trial
Court, Branch 9, Manila for damages, accounting and fixing of redemption period. [4] As a provisional remedy, petitioners
filed on November 16, 1994 an "Urgent Petition for Receivership." They alleged that respondent bank took possession of
the ice plant forcibly and without notice to them; that their occupation resulted in the destruction of petitioners' financial
and accounting records making it impossible for them to pay their employees and creditors; the bank has failed to take
care of the ice plant with due diligence such that the plant has started emitting ammonia and other toxic refrigerant
chemicals into the atmosphere and was posing a hazard to the health of the people in the community; the spouses'
attention had been called by several people in the barangay who threatened to inform the Department of Environment and
Natural Resources should they fail to take action. Petitioners thus prayed for the appointment of a receiver to save the ice
plant, conduct its affairs and safeguard its records during the pendency of the case. [5]
Instead of an answer, respondent bank filed on November 25, 1994 a "Motion to Dismiss and Opposition to
Plaintiff's Petition for Receivership." It alleged that the complaint states no cause of action and that venue had been
improperly laid. It also alleged that petitioners failed to pay the proper docket fees and violated the rule on forum-
shopping.[6]
In an order dated December 13, 1994, the trial court granted the petition for receivership and appointed petitioners'
nominee, Ricardo Pesquera, as receiver. The order disposed as follows:

"WHEREFORE, premises considered the Urgent Petition for Receivership is GRANTED and Mr. Ricardo Pesquera to
whose appointment no opposition was raised by the defendant and who is an ice plant contractor, maintainer and installer
is appointed receiver. Accordingly, upon the filing and approval of the bond of TWO MILLION (P2,000,000.00) pesos
which shall answer for all damages defendant may sustain by reason of the receivership, said Ricardo Pesquera is
authorized to assume the powers of a receiver as well as the obligation as provided for in Rule 59 of the Rules of Court
after taking his oath as such receiver.

SO ORDERED."[7]

Respondent bank assailed this order before the Court of Appeals on a petition for certiorari. On January 11, 1996,
the Court of Appeals annulled the order for receivership and dismissed petitioners' complaint for improper venue and lack
of cause of action. The dispositive portion of the decision reads:

"WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the assailed order dated December 13, 1994
(Annex A, petition) is ANNULLED and SET ASIDE and respondent's complaint in Civil Case No. 94-72076 in the
respondent court (Annexes F, petition; 4, comment), is DISMISSED. Costs against respondents except the court.

SO ORDERED."

Reconsideration was denied on May 23, 1996.[8] Hence, this petition.

Section 1 of Rule 59 of the Revised Rules of Court provides that:

"Sec. 1. When and by whom receiver appointed.-- One or more receivers of the property, real or personal, which is the
subject of the action, may be appointed by the judge of the Court of First Instance in which the action is pending, or by a
Justice of the Court of Appeals or of the Supreme Court, in the following cases:

(a) When the corporation has been dissolved, or is insolvent, or is in imminent danger of insolvency, or has forfeited its
corporate rights;

(b) When it appears from the complaint or answer, and such other proof as the judge may require, that the party applying
for the appointment of receiver has an interest in the property or fund which is the subject of the action, and that such
property or fund is in danger of being lost, removed or materially injured unless a receiver be appointed to guard and
preserve it;

(c) When it appears in an action by the mortgagee for the foreclosure of a mortgage that the property is in danger of being
wasted or materially injured, and that its value is probably insufficient to discharge the mortgage debt, or that the parties
have so stipulated in the contract of mortgage;

(d) After judgment, to preserve the property during the pendency of the appeal, or to dispose of it according to the
judgment, or to aid execution when the execution has been returned unsatisfied or the judgment debtor refuses to apply
his property in satisfaction of the judgment, or otherwise carry the judgment into effect;

(e) Whenever in other cases it appears that the appointment of a receiver is the most convenient and feasible means of
preserving, administering, or disposing of the property in litigation."

A receiver of real or personal property, which is the subject of the action, may be appointed by the court when it appears
from the pleadings or such other proof as the judge may require, that the party applying for such appointment has (1) an
actual interest in it; and (2) that (a) such property is in danger of being lost, removed or materially injured; or (b)
whenever it appears to be the most convenient and feasible means of preserving or administering the property in
litigation.[9]
A receiver is a person appointed by the court in behalf of all the parties to the action for the purpose of preserving
and conserving the property in litigation and prevent its possible destruction or dissipation, if it were left in the possession
of any of the parties.[10] The appointment of a receiver is not a matter of absolute right. It depends upon the sound
discretion of the court[11] and is based on facts and circumstances of each particular case. [12]
Petitioners claim that the appointment of a receiver is justified under Section 1 (b) of Rule 59. They argue that the
ice plant which is the subject of the action was in danger of being lost, removed and materially injured because of the
following "imminent perils":

"6.1 Danger to the lives, health and peace of mind of the inhabitants living near the Sta. Maria Ice Plant;

6.2 Drastic action or sanctions that could be brought against the plaintiff by affected third persons, including workers who
have claims against the plaintiff but could not be paid due to the numbing manner by which the defendant took the Sta.
Maria Ice Plant;

6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident incompetence, neglect and vandalism." [13]

A petition for receivership under Section 1 (b) of Rule 59 requires that the property or fund which is the subject of
the action must be in danger of loss, removal or material injury which necessitates protection or preservation. The guiding
principle is the prevention of imminent danger to the property. If an action by its nature, does not require such protection
or preservation, said remedy cannot be applied for and granted. [14]
In the instant case, we do not find the necessity for the appointment of a receiver. Petitioners have not sufficiently
shown that the Sta. Maria Ice Plant is in danger of disappearing or being wasted and reduced to a "scrap heap." Neither
have they proven that the property has been materially injured which necessitates its protection and preservation. [15] In
fact, at the hearing on respondent bank's motion to dismiss, respondent bank, through counsel, manifested in open court
that the leak in the ice plant had already been remedied and that no other leakages had been reported since. [16] This
statement has not been disputed by petitioners.
At the time the trial court issued the order for receivership of the property, the problem had been remedied and there
was no imminent danger of another leakage. Whatever danger there was to the community and the environment had
already been contained.
The "drastic sanctions" that may be brought against petitioners due to their inability to pay their employees and
creditors as a result of "the numbing manner by which [respondent bank] took the ice plant" does not concern the ice
plant itself. These claims are the personal liabilities of petitioners themselves. They do not constitute "material injury" to
the ice plant.
Moreover, the receiver appointed by the court appears to be a representative of petitioners. Respondent bank alleges
that it was not aware that petitioners nominated one Mr. Pesquera as receiver. [17] The general rule is that neither party to a
litigation should be appointed as receiver without the consent of the other because a receiver should be a person
indifferent to the parties and should be impartial and disinterested. [18] The receiver is not the representative of any of the
parties but of all of them to the end that their interests may be equally protected with the least possible inconvenience and
expense.[19]
The power to appoint a receiver must be exercised with extreme caution. There must be a clear showing of necessity
therefor in order to save the plaintiff from grave and irremediable loss or damage. [20] It is only when the circumstances so
demand, either because there is imminent danger that the property sought to be placed in the hands of a receiver be lost or
because they run the risk of being impaired, endeavouring to avoid that the injury thereby caused be greater than the one
sought to be avoided.[21]
The Court of Appeals correctly found that the trial court gravely abused its discretion in issuing the order for
receivership. The respondent court, however, went further and took cognizance of respondent bank's motion to
dismiss. And finding merit in the motion, it dismissed the complaint. Petitioners now claim that the respondent court
should have refrained from ruling on the motion to dismiss because the motion itself was not before it. [22]
Again, we reject petitioners' contention. The motion to dismiss is anchored on improper venue, lack of cause of
action and forum-shopping. We agree with the respondent court that the question of venue relates to the principal action
and is prejudicial to the ancillary issue of receivership. Although the grounds for dismissal were not specifically raised
before the appellate court, the said court may consider the same since the petition for receivership depends upon a
determination thereof.[23]
In their complaint, petitioners prayed for the following:

"WHEREFORE, in view of the foregoing, it is respectfully prayed that after trial on the merits judgment be rendered:

1. Ordering the Defendant to pay COMMODITIES actual and compensatory damages in the amount of PESOS: TWO
MILLION FIVE HUNDRED THOUSAND and 00/100 (P2,500,000.00);

2. Ordering the Defendant to pay Plaintiffs moral damages in the amount of PESOS: TWO MILLION and 00/100
(P2,000,000.00) to compensate the Plaintiffs for the anxiety and besmirched reputation caused by the unjust actuations of
the Defendant;

3. Ordering the Defendant to pay Plaintiffs nominal and exemplary damages in the amount of PESOS: FIVE HUNDRED
THOUSAND and 00/100 (P500,000.00) to deter the repetition of such unjust and malicious actuations of the Defendant;

4. In order to restore the legal right of the Plaintiff COMMODITIES to redeem its foreclosed property, a right
which COMMODITIES has been unjustly deprived of by the malicious and bad faith machinations of the
Defendant, compelling the Defendant to produce the correct, lawful, official and honest statements of account and
application of payment. Concomitantly, ordering the Defendant to accept the redemption of the foreclosed
properties pursuant to Rule 39 of the Revised Rules of Court in conjunction with Act 3135, within the prescribed
period for redemption, said period to commence from the date of receipt by the Plaintiff COMMODITIES of the
correct, lawful, official and honest statements of account and application of payments;

5. Ordering the Defendant to pay attorney's fees in the amount of PESOS: THREE HUNDRED THOUSAND
(P300,000.00); and costs of litigation.

Other reliefs and remedies just and equitable under the circumstances are likewise prayed for." [24]

Petitioners pray for two remedies: damages and redemption. The prayer for damages is based on respondent bank's
forcible occupation of the ice plant and its malicious failure to furnish them their statements of account and application of
payments which prevented them from making a timely redemption. [25] Petitioners also pray that respondent bank be
compelled to furnish them said documents, and upon receipt thereof, allow redemption of the property. They ultimately
seek redemption of the mortgaged property. This is explicit in paragraph 4 of their prayer.
An action to redeem by the mortgage debtor affects his title to the foreclosed property. If the action is seasonably
made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by registration of the mortgage
and sale.[26] If not made seasonably, it may seek to recover ownership to the land since the purchaser's inchoate title to the
property becomes consolidated after expiration of the redemption period. [27] Either way, redemption involves the title to
the foreclosed property. It is a real action.
Section 2 of Rule 4 of the Revised Rules of Court provides:

"Sec. 2. Venue in Courts of First Instance.-- (a) Real actions.-- Actions affecting title to, or for recovery of possession, or
for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the
province where the property or any part thereof lies." [28]

Where the action affects title to the property, it should be instituted in the Regional Trial Court where the property is
situated. The Sta. Maria Ice Plant & Cold Storage is located in Sta. Maria, Bulacan. The venue in Civil Case No. 94-
72076 was therefore laid improperly.
Finally, there is no merit in petitioners' claim that the respondent bank is no longer the real party in interest after
selling the ice plant to a third person during the pendency of the case. Section 20 of Rule 3 of the Revised Rules of Court
provides that in a transfer of interest pending litigation, the action may be continued by or against the original party,
unless the court, upon motion, directs the transferee to be substituted in the action or joined with the original party. The
court has not ordered the substitution of respondent bank.
IN VIEW WHEREOF, the decision dated January 11, 1996 and resolution dated May 23, 1996 of the Court of
Appeals in CA-G.R. SP No. 36032 are affirmed. Costs against petitioners.
SO ORDERED
 G.R. No. L-14890 September 30, 1963
CONRADO ALCANTARA, petitioner, vs. HON. MACAPANTON ABBAS, Presiding Judge, Branch II of the
Court of First Instance of Davao and MARTIN T. BACARON, respondents.
The Case. Petitioner seeks to annul the order of the respondent judge removing him as receiver, and appointing Martin
T. Bacaron in his place.

Material Facts. In March, 1957, Alcantara sued Bacaron partly to foreclose the chattel mortgage executed by the latter
on a caterpillar tractor with its accessories (Civil Case No. 2282 of Davao). Pursuant to a clause in the mortgage contract,
the Davao court designated Alcantara as receiver of the tractor; and he duly qualified as such. Thereafter, with the court's
approval, he leased the machine to Serapio Sablada. Upon the expiration of the lease, and after Sablada's failure to return
the machine, said court at the instance of Alcantara, 1 declared Sablada to be in contempt of court and fined him in the
amount of P100.00 on October 6, 1958.

Meanwhile, on October 2, 1958, alleging that Alcantara had neglected his duties as receiver, because he did not get the tractor,
Bacaron petitioned the court to relieve such receiver, and to appoint him (Bacaron) as the receiver instead. 2 Opposing the
petition, Alcantara made the following manifestations, in a pleading to the court dated November 26, 1958.

2. That in fact the herein plaintiff-receiver has exerted all efforts to secure the possession of the tractor will
question, and has come to court time and again to compel the lessee, Serapio Sablada, to deliver the tractor to the
receiver, but it seems that even Honorable Court is at mercy of said Serapio Sablada;.

3. That in fact, until and unless the tractor is delivered to the receiver as ordered by the Honorable Court, the said
Serapio Sablada is liable to the Honorable Court for continues contempt in as much as the subject of the contempt
is non-compliance with the order of the Honorable Court; ....

6. That in the view of the attendant circumstances related to the tractor in this case, it most respectfully prayed
that the plaintiff-receiver be immediately authorized to file a case of replevin with damages against the person of
Serapio Sablada, holding his surety bond liable therefor, if proper, as most legal and expedient procedure to
retake the tractor in question. .

However, despite the above representations, the respondent dent judge of the Davao court, in an order dated December
10, 1958, relieved Alcantara and appointed Bacaron as receiver of the tractor, without bond, with authority to receive the
sum of P2,000.00 in Alcantara's hands as rentals of the tractor, and to the end the same for repairs if necessary.

His motion to reconsider having been denied, Alcantara filed with this Court the instant special civil action. And his
request a preliminary injunction was issued to restrain enforcement of His Honor's aforesaid order of December 10, 1958.

The questions are: (a) the propriety of Alcantara's removal; and (b) the legality of Bacaron's appointment and qualifications.

Discussion. It appears that acting on the complaint of Alcantara on September 11, 1958, 3 the court required Sablada
under pain of contempt, to deliver the tractor on or before September 30, 1958, at the junction of the Davao Penal Colony
Road and the National Road going to Agusan in Panabo, Agusan. It also appears that upon Sablada's failure, he was
declared to be contempt on October 6, 1958, and fined P100.00 as previously stated. The order further said that upon
failure to pay in one week, he will be imprisoned for ten days. Lastly, the order directed Alcantara to take steps to recover
possession of the tractor, with the admonition that "should he fail to take possession of the tractor within fifteen (15) days
after notice thereof, he may relieved as receiver and the defendant who is willing to be the receiver may be appointed in
his place".1awphl.nt

Then on December 10, 1958, the court overlooking or overruling Alcantara's pleading issued the order now in
question, which for convenience is quoted below:.

It appearing that plaintiff-receiver failed to take steps to take possession of the tractor leased to Sablada and bring
it to Davao City as directed in the Order of the Court dated October 6, 1958, the plaintiff is hereby relieved as
receiver, and in his stead the defendant is hereby appointed as receiver without bond. Upon his qualification as
such receiver, the defendant is hereby authorized to receive from the plaintiff the sum of P2,000.00 representing
the rentals received by the latter from Sablada for the use of the tractor, and to spend said sum or so much thereof
as may be necessary for bringing the tractor to Davao City and for payment of necessary repairs; and the plaintiff
is hereby ordered to turn over to the defendant the said sum of P2,000.00 on demand.

It is not clear what steps the court had in mind when it declared that "plaintiff-receiver failed to take steps to take
possession of the tractor leased to Sablada". It could have meant that Alcantara failed to take the tractor directly from the
hands of Sablada from the place where it was, without resorting to official help. If the court meant as it must have
meant that Alcantara failed to exhaust judicial remedies to compel Sablada to comply with the order to place the
tractor at the "junction" previously mentioned, then it fell into error, because Alcantara had in effect, suggested that
Sablada be held in "continuous contempt" (Annex J) i.e., imprisoned until he placed the tractor at the "junction"; and the
court instead of acting accordingly under Rule 64, sec. 7 4 held Alcantara to be negligent, and removed him.

In this connection, it should be observed that in his aforesaid pleading of November 26, 1958, Alcantara even asked
for permission to sue Sablada for replevin.
If it was error to remove Alcantara, a clearer error occurred when Bacaron the defendant was appointed, as receiver
without bond, over the objection of Alcantara the plaintiff. The general rule is that neither to a litigation should be
appointed receiver without the other's consent 5 because "a receiver ought to be an indifferent person between the
parties"6 and "should be impartial and disinterested" 7. Note that Bacaron was the defendant, and his personal interest
would conflict with his duties to the court and the plaintiff. 8 Furthermore, under the Rules of Court, the receiver must file a
bond; and yet Bacaron was exempted from such obligation. The effect of the whole proceeding was to discharge the receiver
ship at the request of the defendant, without so much a bond contrary to sec. 4, Rule 61, of the Rules of Court. 9

Conclusion. Such mistakes causing prejudice to petitioner, call for interference with that discretion which usually vests
in trial courts in the matter of receivership Consequently, the order of December 10, 1958, should be, and is hereby
annulled. Costs against respondent Bacaron. So ordered.