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PROVISIONAL REMEDIES

based on Atty. Geraldine Tius Outline 2017

Contents

TRANQUILINO CALO and DOROTEO SAN JOSE vs .............................................................................................................................................. 1


HON. ARSENIO C. ROLDAN, REGINO RELOVA and TEODULA BARTOLOME .......................................................................................... 1
K.O. GLASS CONSTRUCTION CO., INC. vs VALENZUELA ................................................................................................................................... 2
GENERAL VS JOSE R. DE VENECIA and PETRA VDA. DE RUEDAS ............................................................................................................... 4
WILLIAM ALAIN MIAILHE and THE HON. FELIX V. BARBERS, VS ELAINE M. DE LENCQUESAING and HERVE DE
LENCQUESAING, ................................................................................................................................................................................................................... 4
INSULAR SAVINGS BANK vs CA & JUDGE AMIN & FEBTC ............................................................................................................................... 5
ISIDRO TAN VS ZANDUETA and TIU CHAY ............................................................................................................................................................ 8
WALTER E. OLSEN & Co. v. WALTER E. OLSEN + ................................................................................................................................................ 8
URBANO SANTOS vs JOSE C. BERNABE, ET AL .................................................................................................................................................. 10
G.R. No. 82446 July 29, 1988 ....................................................................................................................................................................................... 12
STATE INVESTMENT HOUSE, INC., vs CA, HON. DOROTEO N. CANEBA, , and PEDRO 0. VALDEZ, ......................................... 12
ALEJANDRO NG WEE, VS MANUEL TANKIANSEE. ........................................................................................................................................... 13
METRO, INC. and SPOUSES FREDERICK JUAN and LIZA JUAN, VS LARA'S GIFTS AND DECORS, INC., LUIS VILLAFUERTE,
JR. and LARA MARIA R. VILLAFUERTE, ................................................................................................................................................................. 15
ABOITIZ & COMPANY, INC., vs. .................................................................................................................................................................................. 17
COTABATO BUS COMPANY, INC., .............................................................................................................................................................................. 17
PEOPLE'S BANK AND TRUST COMPANY, VS SYVEL'S INCORPORATED, ANTONIO Y. SYYAP and ANGEL Y SYYAP, ...... 18
ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN vs Hon. Judge RAMON AM. TORRES, ABOITIZ & COMPANY, INC. and
THE PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA .................................................................................... 19
CLAUDE NEON LIGHTS vs PHILIPPINE ADVERTISING CORPORATION ............................................................................................... 20
STATE INVESTMENT HOUSE, INC. vs ..................................................................................................................................................................... 22
ROMAN MABANAG, VS JOSEPH M. GALLEMORE, ............................................................................................................................................. 23
PROFESSIONAL VIDEO, INC., vs TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY ................................ 25
PHILIPPINES BANK OF COMMUNICATIONS, VS CA and BERNARDINO VILLANUEVA .................................................................. 10
PCIB VS JOSEPH ANTHONY M. ALEJANDRO, ...................................................................................................................................................... 27
ALBERTO SIEVERT, vs. COURT OF APPEALS, HON. JUDGE ARTEMON D. LUNA and AURELIO CAMPOSANO, ................ 30
DAVAO LIGHT & POWER CO., INC.,, vs. THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND
TOURIST INN, and TEODORICO ADARNA, respondents. .............................................................................................................................. 31
RICARDO CUARTERO, vs. COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA EVANGELISTA, ............................ 34
RICARDO T. SALAS and MARIA SALAS, petitioners, vs. HON. MIDPANTAO L. ADIL, as Judge of Branch II, Court of First
Instance of Iloilo, ROSITA BEDRO and BENITA YU .......................................................................................................................................... 36
LA GRANJA, INC., petitioner, vs. FELIX SAMSON, Judge of First Instance of Cagayan, CHUA BIAN, CHUA YU LEE and CHUA
KI, .............................................................................................................................................................................................................................................. 38
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

PROVISIONAL REMEDIES Writs and processes available during


the pendency of the action which may be resorted to by a litigant RULE 57
to preserve and protect certain rights and interests therein pending Preliminary Attachment
rendition, and for purposes of the ultimate effects, of a final
judgment of a case. Section 1. Grounds upon which attachment may issue. At the
commencement of the action or at any time before entry of
Remedies under the Rules judgment, a plaintiff or any proper party may have the property
1. Preliminary attachment (Rule 57) of the adverse party attached as security for the satisfaction of
2. Preliminary injunction (Rule 58) any judgment that may be recovered in the following cases:
3. Receivership (Rule 59)
4. Replevin (Rule 60) (a) DEPART. In an action for the recovery of a specified
5. Support pendente lite(Rule 61) amount of money or damages, other than moral and
exemplary, on a cause of action arising from law,
What are the Other Provisional Remedies available? contract, quasi-contract, delict or quasi-delict against a
1) Temporary custody over a minor party who is about to depart from the Philippines with
2) Deposit in Actions for Annulment of Sale (Reyes v. Lim) intent to defraud his creditors;
3) Restraining order against the accused in cases of violence
among immediate family members living in the same (b) EMBEZZLEMENT. In an action for money or property
domicile and household embezzled or fraudulently misapplied or converted to
4) Hold departure orders issued by Regional Trial Courts in his own use by a public officer, or an officer of a
criminal cases corporation, or an attorney, factor, broker, agent, or
5) Interim reliefs under Writ of Amparo clerk, in the course of his employment as such, or by
a. Temporary Protection Order any other person in a fiduciary capacity, or for a willful
b. Witness Protection Order violation of duty;
c. Inspection Order
d. Production Order (Riano, Civil Procedure: A (c) RECOVER POSSESSION. In an action to recover the
Restatement for the Bar, p. 534-536, 2009 ed) possession of property unjustly or fraudulently taken,
6. Temporary Protection Order under Anti-Violence Against detained or converted, when the property, or any part
Women and their Children Act of 2004 (RA 9262) thereof, has been concealed, removed, or disposed of
7. Provisional Remedies under the Human Security Act of 1997 to prevent its being found or taken by the applicant or
(RA 9372) an authorized person;
8. Provisional Remedies under the Rule on Corporate
Rehabilitation (AM 00-8-10-SC): (d) FRAUD. In an action against a party who has been guilty
a. Stay order of a fraud in contracting the debt or incurring the
b. Receivership obligation upon which the action is brought, or in the
performance thereof;
Nature of Provisional Remedies
They are temporary measures availed of during the pendency of (e) DEFRAUD CREDITORS. In an action against a party who
the action and ancillary because they are mere incidents and are has removed or disposed of his property, or is about to
dependent upon the result of the main action (Regalado, Remedial do so, with intent to defraud his creditors; or
Law Compendium Vol. I, p. 684, 10th ed.). They are interim,
ancillary and provisional. (f) In an action against a party who does not reside and is
not found in the Philippines, or on whom summons
Purpose may be served by publication. (1a)
1) To preserve or protect rights or interests of a litigant while
main action is pending
2) Secure the judgment
3) Preserve the status quo
PRELIMINARY ATTACHMENT - A writ of preliminary attachment is
4) Preserve the subject matter of the action
defined as a provisional remedy issued upon order of the court
where an action is pending to be levied upon the property or
properties of the defendant therein, the same to be held thereafter
by the sheriff as security for the satisfaction of whatever judgment
that might be secured in the said action by the attaching creditor
against the defendant.1

Purpose of Attachment
The purposes of preliminary attachment are:
(1) to seize the property of the debtor in advance of final
judgment and
(2) to hold it for purposes of satisfying said judgment, as in the
grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of
the Rules of Court; or

1
G.R. No. 102448, August 5, 1992, 212 SCRA 260.

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PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

(3) to acquire jurisdiction over the action by actual or (or) other persons acting for and in their behalf, from
constructive seizure of the property in those instances where entering in, interfering with and/or in any wise taking any
personal or substituted service of summons on the participation in the harvest of the lands belonging to the plaintiffs;
defendant cannot be effected, as in paragraph (f) of the or in any wise working the lands above-described;
same provision.2 (a) That judgment be rendered, after due hearing, declaring
the preliminary injunction final;.
(b) That the defendants be condemned jointly and severally
Classes of Attachment to pay the plaintiffs the sum of P200 as damages; and.
(1) Preliminary Attachment issued at the commencement of (c) That plaintiffs be given such other and further relief just
the action or at anytime before the entry of the judgment as and equitable with costs of suit to the defendants.
a security for the satisfaction of any judgment that may be
recovered in the cases provided for by the rules. Here, the Defendants filed an opposition on the ground that they are
court takes custody of the property of the party vs whom the owners of the lands and have been in actual possession thereof
attachment is directed. since the year 1925 and that the plaintiffs have never been in
possession thereof.
(2) Garnishment kind of attachment in which plaintiff sees to
subject their property of the defendant in the hands of the 3rd CFI denied the petition on the ground that the defendants were in
person called the garnishee, to his claim or the money in actual possession of said lands. MR was undecided til this time.
which said 3rd person owes the defendant. It simply impounds
the property in the possession of the garnishee and maintains plaintiffs filed an urgent petition ex-parte praying that their MR of
the status quo until the main action is finally decided. the order denying their petition for preliminary injunction be
Further, by means of garnishment, the plaintiff reaches granted and or for the appointment of a receiver of the properties
credits belonging to the defendant and owing to him from a described in the complaint, on the ground that (a) the plaintiffs
third perso who is a stranger to the litigation. have an interest in the properties in question, and the fruits
thereof were in danger of being lost unless a receiver was
(3) Levy on Execution - Writ issued by the court after judgment appointed; and that (b) the appointment of a receiver was the
by which the property of the judgment obligor is taken into most convenient and feasible means of preserving, administering
the custody of the court before the sale of the property on and or disposing of the properties in litigation which included their
execution for the satisfaction of a final judgment. It is a fruits.
preliminary step to the sale on execution of the property of
the judgment debtor
Judge Roldan decided to consider the MR and granted the
appointment of a receiver.

ISSUE: Can you ask for a preliminary attachment if the main case is
G.R. No. L-252 March 30, 1946
for injunction? NO.
TRANQUILINO CALO and DOROTEO SAN JOSE vs HELD: It is a truism in legal procedure that what determines the
HON. ARSENIO C. ROLDAN, REGINO RELOVA and nature of an action filed in the courts are the facts alleged in the
TEODULA BARTOLOME complaint as constituting the cause of the action.

Can a preliminary attachment be applied for in a main ACCORDING TO THE COMPLAINT FILED IN THE SAID CASE NO.
action for injunction? NO. The kind of provisional remedy 7951, THE PLAINTIFF'S ACTION IS ONE OF ORDINARY INJUNCTION,
that you will apply for should be consistent with the nature for the plaintiffs allege that they are the owners of the lands
of the main action filed. therein described, and were in actual possession thereof, and that
"the defendants without any legal right whatever and in
This is a petition for writ of certiorari against the respondent Judge connivance with each other, through the use of force, stealth,
Arsenio C. Roldan of the Court First Instance of Laguna, on the threat and intimidation, intend or are intending to enter and work
ground that the latter has exceeded his jurisdiction or acted with or harvest whatever existing fruits may be found in the lands above
grave abuse of discretion in appointing a receiver of certain lands mentioned in violation of plaintiffs' proprietary rights thereto;" and
and their fruits which, according to the complainant filed by the prays "that the defendants, their agents, servants, representatives,
other respondents, as plaintiffs, against petitioners, as defendants, and other persons acting for or in their behalf, be restrained,
in case No. 7951, were in the actual possession of and belong to enjoined and prohibited from entering in, interfering with, or in
said plaintiffs. any way taking any participation in the harvest of the lands above
Relova and Bartolome filed a complaint alleging that they are the describe belonging to the plaintiffs."
owners and the possessors of parcels of land and That the Calo and
San Jose, without any legal right whatsoever and in connivance
The provisional remedies denominated attachment, preliminary
with each other, through the use of force, stealth, threats and
injunction, receivership, and delivery of personal property,
intimidation, intend or are intending to enter and work or harvest
provided in Rules 59, 60, 61, and 62 of the Rules of Court,
whatever existing fruits may now be found in the said lands.
respectively, are remedies to which parties litigant may resort for
the preservation or protection of their rights or interest, and for
They thus pray that a writ of preliminary injunction be issued ex-
no other purpose, during the pendency of the principal action. If
parte immediately restraining, enjoining and prohibiting the
an action, by its nature, does not require such protection or
defendants, their agents, servants, representatives, attorneys, and,
preservation, said remedies can not be applied for and granted. To
each kind of action or actions a proper provisional remedy is
2Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial
Law Compendium, vol. I, ninth revised edition, p. 678.

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PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

provided for by law. The Rules of Court clearly specify the case in the petition, although their motion for reconsideration,
which they may be properly granted. . which was still pending at the time the petition in the
present case was heard in this court, plaintiffs insist that they are in
Attachment may be issued only in the case or actions specifically actual possession of the lands and, therefore, of the fruits thereof.
stated in section 1, Rule 59, in order that the defendant may not
dispose of his property attached, and thus secure the satisfaction
APPOINTMENT OF A RECEIVER IS NOT PROPER OR DOES NOT LIE
of any judgment that may be recovered by plaintiff from
IN AN ACTION OF INJUNCTION. The petition for appointment of a
defendant. For that reason a property subject of litigation between
receiver filed by the plaintiffs (Exhibit I of the petition) is based on
the parties, or claimed by plaintiff as his, can not be attached upon
the ground that it is the most convenient and feasible means of
motion of the same plaintiff..
preserving, administering and disposing of the properties in
litigation; and according to plaintiffs' theory or allegations in their
The special remedy of preliminary prohibitory injunction lies
complaint, neither the lands nor the palay harvested therein, are in
when the plaintiff's principal action is an ordinary action of
litigation. The litigation or issue raised by plaintiffs in their
injunction, that is, when the relief demanded in the plaintiff's
complaint is not the ownership or possession of the lands and their
complaint consists in restraining the commission or continuance of
fruits. It is whether or not defendants intend or were intending to
the act complained of, either perpetually or for a limited period,
enter or work or harvest whatever existing fruits could then be
and the other conditions required by section 3 of Rule 60 are
found in the lands described in the complaint, alleged to be the
present. The purpose of this provisional remedy is to preserve
exclusive property and in the actual possession of the plaintiffs. It is
the status quo of the things subject of the action or the relation
a matter not only of law but of plain common sense that a plaintiff
between the parties, in order to protect the rights of the plaintiff
will not and legally can not ask for the appointment or receiver of
respecting the subject of the action during the pendency of the
property which he alleges to belong to him and to be actually in his
suit. Because, otherwise or if no preliminary prohibition injunction
possession. For the owner and possessor of a property is more
were issued, the defendant may, before final judgment, do or
interested than persons in preserving and administering it.
continue the doing of the act which the plaintiff asks the court to
restrain, and thus make ineffectual the final judgment rendered
afterwards granting the relief sought by the plaintiff. But, as this Because relief by way of receivership is equitable in nature, and a
court has repeatedly held, a writ of preliminary injunction should court of equity will not ordinarily appoint a receiver where the
not be granted to take the property out of the possession of one rights of the parties depend on the determination of adverse
party to place it in the hands of another whose title has not been claims of legal title to real property and one party is in possession
clearly established.. (53 C. J., p. 26). The present case falls within this rule..

A receiver may be appointed to take charge of personal or real A. DEPART. In an action for the recovery of a specified amount
property which is the subject of an ordinary civil action, when it of money or damages, other than moral and exemplary, on
appears that the party applying for the appointment of a receiver a cause of action arising from law, contract, quasi-contract,
has an interest in the property or fund which is the subject of the delict or quasi-delict against a party who is about to depart
action or litigation, and that such property or fund is in danger of from the Philippines with intent to defraud his creditors;
being lost, removed or materially injured unless a receiver is
appointed to guard and preserve it (section 1 [b], Rule 61); or when
it appears that the appointment of a receiver is the most G.R. No. L-48756 September 11, 1982
convenient and feasible means of preserving, administering or K.O. GLASS CONSTRUCTION CO., INC. vs
disposing of the property in litigation (section 1 [e] of said Rule).
The property or fund must, therefore be in litigation according to VALENZUELA
the allegations of the complaint, and the object of appointing a
receiver is to secure and preserve the property or thing in THE MERE FACT THAT DEFENDANT IS A FOREIGNER DOES NOT
controversy pending the litigation. Of course, if it is not in litigation JUSTIFY THE ISSUANCE OF A WOPA. Pinzon did not allege that the
and is in actual possession of the plaintiff, the latter can not apply defendant Kenneth O. Glass "is a foreigner (who) may, at any
for and obtain the appointment of a receiver thereof, for there time, depart from the Philippines with intent to defraud his
would be no reason for such appointment. creditors including the plaintiff." He merely stated that the
defendant Kenneth O. Glass is a foreigner.
Delivery of personal property as a provisional remedy consists in
the delivery, by order of the court, of a personal property by the Antonio D. Pinzon filed an action to recover from Kenneth O.
defendant to the plaintiff, who shall give a bond to assure the Glass the sum of P37,190.00, alleged to be the agreed rentals of
return thereof or the payment of damages to the defendant in the his truck, as well as the value of spare parts which have not been
plaintiff's action to recover possession of the same property fails, in returned to him upon termination of the lease. In his verified
order to protect the plaintiff's right of possession of said property, complaint, the plaintiff asked for an attachment against the
or prevent the defendant from damaging, destroying or disposing property of the defendant consisting of collectibles and payables
of the same during the pendency of the suit. with the Philippine Geothermal, Inc., on the grounds that
a) the defendant is a foreigner;
b) he has sufficient cause of action against the said
Undoubtedly, according to law, the provisional remedy proper to
defendant; and
plaintiffs' action of injunction is a preliminary prohibitory
c) there is no sufficient security for his claim against the
injunction, if plaintiff's theory, as set forth in the complaint, that he
defendant in the event a judgment is rendered in his
is the owner and in actual possession of the premises is correct.
favor. 1
But as the lower court found at the hearing of the said petition for
preliminary injunction that the defendants were in possession of
RTC ordered issuance of a writ of attachment vs the properties of
the lands, the lower court acted in accordance with law in denying
the defendant

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PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

plaintiff." He merely stated that the defendant Kenneth O.


defendant Kenneth O. Glass moved to quash the writ of Glass is a foreigner.
attachment on the grounds that there is no cause of action against
him since the transactions or claims of the plaintiff were entered
Complaint - 15. Plaintiff hereby avers under oath that defendant is
into by and between the plaintiff and the K.O. Glass Construction
a foreigner and that said defendant has a valid and just obligation
Co., Inc., a corporation duly organized and existing under Philippine
to plaintiff in the total sum of P32,290.00 arising out from his
laws; that there is no ground for the issuance of the writ of
failure to pay (i) service charges for the hauling of construction
preliminary attachment as defendant Kenneth O. Glass never
materials; (ii) rentals for the lease of plaintiff's Isuzu Cargo truck,
intended to leave the Philippines, and even if he does, plaintiff can
and (iii) total cost of the missing/destroyed spare parts of said
not be prejudiced thereby because his claims are against a
leased unit; hence, a sufficient cause of action exists against
corporation which has sufficient funds and property to satisfy his
said defendant. Plaintiff also avers under oath that there is no
claim; and that the money being garnished belongs to the K.O.
sufficient security for his claim against the defendant in the event a
Glass Corporation Co., Inc. and not to defendant Kenneth O. Glass.
judgment be rendered in favor of the plaintiff. however, defendant
has sufficient assets in the Philippines in the form of collectible and
defendants filed a supplementary motion to discharge and/or
payables due from the Philippine Geothermal, Inc. with office
dissolve the writ of preliminary attachment upon the ground that
address at Citibank Center, Paseo de Roxas, Makati, Metro Manila,
the affidavit filed in support of the motion for preliminary
but which properties, if not timely attached, may be disposed of
attachment was not sufficient or wanting in law for the reason that
by defendants and would render ineffectual the reliefs prayed for
1) the affidavit did not state that the amount of plaintiff's
by plaintiff in this Complaint. 11
claim was above all legal set-offs or counterclaims, as
required by Sec. 3, Rule 57 of the Revised Rules of
Court; In his Amended Complaint, Pinzon alleged the following: 15.
2) the affidavit did not state that there is no other Plaintiff hereby avers under oath that defendant GLASS is an
sufficient security for the claim sought to be recovered American citizen who controls most, if not all, the affairs of
by the action as also required by said Sec. 3; and defendant CORPORATION. Defendants CORPORATION and GLASS
3) the affidavit did not specify any of the grounds have a valid and just obligation to plaintiff in the total sum of
enumerated in Sec. 1 of Rule 57, 5 P32,290.00 arising out for their failure to pay (i) service charges for
hauling of construction materials, (ii) rentals for the lease of
This was denied, hence this recourse. plaintiff's Isuzu Cargo truck, and (iii) total cost of the
ISSUE: WON the issuance of the WOPA was proper? NO. missing/destroyed spare parts of said leased unit: hence, a
sufficient cause of action exist against said defendants. Plaintiff
HELD: also avers under oath that there is no sufficient security for his
First, there was no ground for the issuance of the writ of claim against the defendants in the event a judgment be rendered
preliminary attachment. Section 1, Rule 57 of the Revised Rules of in favor of the plaintiff. however, defendant CORPORATION has
Court, which enumerates the grounds for the issuance of a writ of sufficient assets in the Philippines in the form of collectibles and
preliminary attachment. payables due from the Philippine Geothermal., Inc. with office
address at Citibank Center, Paseo de Roxas, Makati, Metro Manila,
but which properties, if not timely attached, may be disposed of
In ordering the issuance of the controversial writ of preliminary
by defendants and would render ineffectual the reliefs prayed for
attachment, the respondent Judge said and We quote:
by plaintiff in this Complaint. 12

The plaintiff filed a complaint for a sum of


There being no showing, much less an allegation, that the
money with prayer for Writ of Preliminary
defendants are about to depart from the Philippines with intent
Attachment dated September 14, 1977,
to defraud their creditor, or that they are non-resident aliens, the
alleging that the defendant who is a
attachment of their properties is not justified.
foreigner may, at any time, depart from the
Philippines with intent to defraud his
Second, the affidavit submitted by Pinzon does not comply with the
creditors including the plaintiff herein; that
Rules. Under the Rules, an affidavit for attachment must state that
there is no sufficient security for the claim
(a) sufficient cause of action exists,
sought to be enforced by this action; that the
(b) the case is one of those mentioned in Section I (a) of Rule
amount due the plaintiff is as much as the
57;
sum for which an order of attachment is
(c) there is no other sufficient security 'or the claim sought to
sought to be granted; and that defendant
be enforced by the action, and
has sufficient leviable assets in the
(d) the amount due to the applicant for attachment or the value
Philippines consisting of collectibles and
of the property the possession of which he is entitled to
payables due from Philippine Geothermal,
recover, is as much as the sum for which the order is
Inc., which may be disposed of at any time,
granted above all legal counterclaims. Section 3, Rule 57 of
by defendant if no Writ of Preliminary
the Revised Rules of Court reads. as follows:
Attachment may be issued. Finding said
motion and petition to be sufficient in form
Section 3. Affidavit and bond required.An
and substance. 10
order of attachment shall be granted only
when it is made to appear by the affidavit of
Pinzon however, did not allege that the defendant Kenneth O. the applicant, or of some person who
Glass "is a foreigner (who) may, at any time, depart from the personally knows the facts, that a sufficient
Philippines with intent to defraud his creditors including the cause of action exists that the case is one of

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PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

those mentioned in Section 1 hereof; that monetary obligation coming within the purview of the
there is no other sufficient security for the moratorium. And the issuance of a writ of attachment upon
claim sought to be enforced by the action, such complaint may not, of course, be allowed. Such levy is
and that the amount due to the applicant, or necessarily one step in the enforcement of the obligation,
the value of the property the possession of enforcement which, as stated in the order, is suspended
which he is entitled to recover, is as much as temporarily, pending action by the Government.
the sum for which the order is granted above
all legal counterclaims. The affidavit, and the But the case for petitioner is stronger when we reflect that his
bond required by the next succeeding promise is to pay P4,000 "within six months after peace has been
section, must be duly filed with the clerk or declared." It being a matter of contemporary history that the peace
judge of the court before the order issues. treaty between the United States and Japan has not even been
drafted, and that no competent official has formally declared the
While Pinzon may have stated in his affidavit that a sufficient cause advent of peace (see Raquiza vs. Bardford, 75 Phil., 50), it is
of action exists against the defendant Kenneth O. Glass, he did not obvious that the six-month period has not begun; and Luis F.
state therein that "the case is one of those mentioned in Section 1 General has at present and in June, 1946, no demandable duty to
hereof; that there is no other sufficient security for the claim make payment to plaintiffs, independently of the moratorium
sought to be enforced by the action; and that the amount due to directive.
the applicant is as much as the sum for which the order granted
above all legal counter-claims." It has been held that the failure to On the question of validity of the attachment, "the general rule is
allege in the affidavit the requisites prescribed for the issuance of that, unless the statute expressly so provides, the remedy by
a writ of preliminary attachment, renders the writ of preliminary attachment is not available in respect to a demand which is not
attachment issued against the property of the defendant fatally due and payable, and if an attachment is issued upon such a
defective, and the judge issuing it is deemed to have acted in demand without statutory authority it is void." (7 C.J.S., p. 204.)
excess of his jurisdiction. 14
IT MUST BE OBSERVED THAT UNDER OUR RULES GOVERNING THE
MATTER THE PERSON SEEKING A PRELIMINARY ATTACHMENT
G.R. No. L-894 July 30, 1947 MUST SHOW THAT "A SUFFICIENT CAUSE OF ACTION EXISTS" and
GENERAL VS JOSE R. DE VENECIA and PETRA VDA. DE that the amount due him is as much as the sum for which the order
RUEDAS of attachment is granted" (sec. 3, Rule 59). Inasmuch as the
commitment of Luis F. General has not as yet become demandable,
unless the statute expressly so provides, the remedy by
there existed no cause of action against him, and the complaint
attachment is not available in respect to a demand which is not
should have been dismissed and the attachment lifted.
due and payable, and if an attachment is issued upon such a
(Orbeta vs. Sotto, 58 Phil., 505.)
demand without statutory authority it is void.
And although it is the general principle that certiorari is not
available to correct judicial errors that could be straightened out in
Ruedas filed an action on June 4, 1946, to recover the value of a
an appeal, we have adopted the course that where an attachment
PN:
has been wrongly levied the writ may be applied for, because the
For value received, I promise to pay Mr. Gregorio
remedy by appeal is either unavailable or inadequate. Wherefore,
Ruedas the amount of (P4,000), in Philippine currency
the writ of attachment is quashed and the complaint is dismissed.
within six (6) months after peace has been declared and
government established in the Philippines.
Naga, Camarines Sur, September 25, 1944.
G.R. No. L-67715 July 11, 1986
(Sgd.) LUIS F. GENERAL WILLIAM ALAIN MIAILHE and THE HON. FELIX V.
BARBERS, VS ELAINE M. DE LENCQUESAING and
It prayed additionally for preliminary attachment of defendant's HERVE DE LENCQUESAING,
property, upon the allegation that the latter was about to dispose
ACTION: claim for moral and exemplary damages arising out of
of his assets to defraud creditors. Two days later, the writ of
the criminal case of Estafa. section 1 par. (f) is applicable only in
attachment was issued upon the filing of a suitable bond.
case the claim of the plaintiff is for liquidated damages (and
therefore not where he seeks to recover unliquidated damages
Having been served with summons, the defendant therein, Luis F.
arising from a crime or a tort)
General, submitted, on June 11, 1946, a motion praying for
dismissal of the complaint and dissolution of the attachment. He
FACTS: T
claimed it was premature, in view of the provisions of the debt
Petitioner William Alain Miailhe, his sisters Monique, Elaine and
moratorium orders of the President of the Philippines (Executive
their mother, Madame Victoria are co-owners of several registered
Orders Nos. 25 and 32 of 1945). Denial of this motion and of the
real properties located in Metro Manila. By common consent of the
subsequent plea for reconsideration, prompted the institution of
said co-owners, petitioner William Alain has been administering
this special civil action.
said properties since 1960. As Madame Victoria D. Miailhe, her
daughter Monique and son William Alain (herein petitioner) failed
ISSUE: WON the WOPA was properly issued? NO.
to secure an out-of court partition thereof due to the unwillingness
HELD:
or opposition of respondent Elaine, they filed an action for
attachment was improvidently permitted, the debt being within
Partition. Among the issues presented in the partition case was the
the terms of the decree of moratorium (Executive Order No. 32).
matter of petitioner's account as administrator of the properties
sought to be partitioned. But while the said administrator's
It is our view that, upon objection by the debtor, no court may now
account was still being examined, respondent Elaine filed a motion
proceed to hear a complaint that seeks to compel payment of a

4
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

praying that the sum of P203,167.36 which allegedly appeared as a defendant is not a resident of the Philippines. Because of the
cash balance in her favor as of December 31, 1982, be ordered uncertainty of the amount of plaintiff's claim it cannot be
delivered to her by petitioner William Alain. Against the opposition said that said claim is over and above all legal counterclaims that
of petitioner and the other co-owners, Judge Pedro Ramirez defendant may have against plaintiff, one of the indispensable
granted the motion in his Order dated December 19, 1983 which requirements for the issuance of a writ of attachment which should
order is now the subject of a certiorari proceeding in the be stated in the affidavit of applicant as required in Sec. 3 of Rule
Intermediate Appellate Court under AC-G.R. No. SP-03070. 57 or alleged in the verified complaint of plaintiff. The attachment
issued in the case was therefore null and void.
Meanwhile, Elaine filed a criminal complaint for estafa against
petitioner William Alain, alleging in her supporting affidavit that on We agree. While it is true that from the aforequoted provision
the face of the very account submitted by him as Administrator, he attachment may issue "in an action against a party who resides out
had misappropriated considerable amounts, which should have of the Philippines, " irrespective of the nature of the action or suit,
been turned over to her as her share in the net rentals of the and while it is also true that in the case of Cu Unjieng, et al vs.
common properties. Two days after filing the complaint, Albert, 58 Phil. 495, it was held that "EACH OF THE SIX GROUNDS
respondent flew back to Paris, the City of her residence. Likewise, a TREATED ANTE IS INDEPENDENT OF THE OTHERS," STILL IT IS
few days after the filing of the criminal complaint, an extensive IMPERATIVE THAT THE AMOUNT SOUGHT BE LIQUIDATED.
news item about it appeared prominently in the Bulletin Today,
March 4, 1983 issue, stating substantially that Alain Miailhe, a
consul of the Philippines in the Republic of France, had been B. EMBEZZLEMENT. In an action for money or property
charged with Estafa of several million pesos by his own sister with embezzled or fraudulently misapplied or converted to his
the office of the City Fiscal of Manila. 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
Alain filed a verified complaint against respondent Elaine, for
fiduciary capacity, or for a willful violation of duty;
Damages in the amount of P2,000,000.00 and attorney's fees of
P250,000.00 allegedly sustained by him by reason of the filing by
respondent (then defendant) of a criminal complaint for estafa, Sec. 1 (A) Sec. 1 (B)
solely for the purpose of embarrassing petitioner (then plaintiff) Actions Specified amount of Recovery of sum of
and besmirching his honor and reputation as a private person and money or damages money that was
as an Honorary Consul of the Republic of the Philippine's in the City other than moral and embezzled or fraudulently
of Bordeaux, France. Petitioner further charged respondent with exemplary misapplied or converted
having caused the publication in the March 4, 1983 issue of the Basis of Law. Contract, QC, Fraud, embezzlement,
Bulletin Today, of a libelous news item. the COA delict, QD misappropriation of
money held in trust by a
Public officer, or an officer
In his verified complaint, petitioner prayed for the issuance of a of a corporation, or an
writ of preliminary attachment of the properties of respondent
atty, broker agent, factor,
consisting of 1/6 undivided interests in certain real properties in
or clerk, in the course of
the City of Manila on the ground that "respondent-defendant is a his employment as such
non-resident of the Philippines", pursuant to paragraph (f),
or by other person in a
Section 1, Rule 57, in relation to Section 17, Rule 14 of the fiduciary capacity, or for a
Revised Rules of Court. willful violation of duty
Allegation That the party is about Must prove the fiduciary
Judge Barbers granted petitioner's application for preliminary
to depart from the relation of the parties
attachment
Philippines with intent therein and that there
to defraud his creditors was fraud, embezzlement,
Respondent filed a motion to lift or dissolve the writ of
or misappropriation or
attachment on the ground that the complaint did not comply with
conversion of funds held
the provisions of Sec. 3 of Rule 57, Rules of Court and that
in trust to him
petitioner's claim was for unliquidated damages. This was denied,
Fraud Fraudulent intent to Obligation to return arises
hence Judge Barbers is imputed with GAOD.
evade obligation by from the fraudulent acts
departing of the defendant which in
CA declared WOPA as null and void. Petitioners MR denied.
itself gave rise to the
obligation
ISSUE whether Section 1 par. (f) Rule 57 of the Rules of Court is
applicable only in case the claim of the plaintiff is for liquidated
damages (and therefore not where he seeks to recover
G.R. NO. 123638 June 15, 2005
unliquidated damages arising from a crime or tort)? YES, applies
only to liquidated damages. INSULAR SAVINGS BANK vs CA & JUDGE AMIN &
FEBTC
HELD: A writ of attachment cannot be issued for moral and
In its now assailed decision, the IAC stated We find, therefore, exemplary damages, and other unliquidated or contingent
and so hold that respondent court had exceeded its jurisdiction in claim
issuing the writ of attachment on a claim based on an action for
damages arising from delict and quasi delict the amount of which is FACTS:
uncertain and had not been reduced to judgment just because the

5
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

FEBTC instituted an arbitration case vs [Insular Savings Bank] "III. THE COURT OF APPEALS ERRED IN RULING
before the Arbitration Committee of the Philippine Clearing House THAT THE AMOUNT OF THE COUNTER-BOND
Corporation [PCHC]. The dispute between the parties involved SHOULD BE BASED ON THE VALUE OF THE PROPERTY
three [unfunded] checks with a total value of P25,200,000.00. ATTACHED EVEN IF IT WILL RESULT IN MAKING THE
AMOUNT OF THE COUNTER-BOND EXCEED THE
The checks were drawn vs FEBTC and were presented by ISB for AMOUNT FOR WHICH PRELIMINARY ATTACHMENT WAS
clearing. As FEBTC returned the checks beyond the reglementary ISSUED."
period, [but after ISBs account with PCHC was credited with the
amount of P25,200,000.00] ISB refused to refund the money to
ISSUE: whether or not the CA erred in not ruling that the trial court
FEBTC Bank.
committed grave abuse of discretion in denying petitioners motion
to discharge attachment by counter-bond in the amount
While the dispute was pending arbitration, FEBTC instituted a civil
of P12,600,000.00.
case praying for the issuance of a writ of preliminary attachment.
RTC issued an Order granting the application for HELD:
preliminary attachment upon posting by FEBTC of an TRIAL COURT
attachment bond in the amount of P6,000,000.00. "xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank
RTC issued a writ of preliminary attachment for the should include the unsecured portion of [respondents] claim
amount of P25,200,000.00. of P12,600,000.00 as agreed by means of arbitration between
[respondent] and [petitioner];
During the hearing on February 11, 1992 before the Arbitration o Actual damages at 25% percent per annum of unsecured
Committee of PCHC, both banks agreed to temporarily divide amount of claim from October 21, 1991 in the amount
between them the disputed amount of P25,200,000.00 while the of P7,827,500.00; Legal interest of 12% percent per annum
dispute has not yet been resolved. As a result, the sum from October 21, 1991 in the amount of P3,805,200.00;
of P12,600,000.00 is in the possession of FEBTC. o Exemplary damages in the amount of P2,000,000.00; and
o attorneys fees and expenses of litigation in the amount
ISB filed a motion to discharge attachment by counter-bond in the of P1,000,000.00 with a total amount of P27,237,700.00
amount of P12,600,000.00. [denied]. [2nd MR denied] (Adlawan vs. Tomol, 184 SCRA 31 (1990)".

From the order denying its motion to discharge attachment by Petitioner, on the other hand, argues that the starting point in
counter-bond, petitioner went to the Court of Appeals on a computing the amount of counter-bond is the amount of the
petition for certiorari thereat docketed as CA-G.R. SP No. 34876, respondents demand or claim only, in this case P25,200,000.00,
ascribing on the trial court the commission of grave abuse of excluding contingent expenses and unliquidated amount of
discretion amounting to lack of jurisdiction. damages. And since there was a mutual agreement between the
parties to temporarily, but equally, divide between themselves the
While acknowledging that "[R]espondent Judge may have erred in said amount pending and subject to the final outcome of the
his Order of June 13, 1994 that the counter-bond should be in arbitration, the amount of P12,600,000.00 should, so petitioner
the amount of P27,237,700.00", in that he erroneously factored in, argues, be the basis for computing the amount of the counter-
in arriving at such amount, unliquidated claim items, such as actual bond.
and exemplary damages, legal interest, attorneys fees and
expenses of litigation, the CA, in the herein assailed decision dated The then pertinent provision of Rule 57 (Preliminary Attachment)
October 9, 1995, nonetheless denied due course to and dismissed of the Rules of Court under which the appellate court issued its
the petition. For, according to the appellate court, the RTCs order assailed decision and resolution, provides as follows:
may be defended by, among others, the provision of Section 12 of "SEC. 12. Discharge of attachment upon giving counter-
Rule 57 of the Rules of Court, infra. The CA added that, assuming bond. At any time after an order of attachment has
that the RTC erred on the matter of computing the amount of the been granted, the party whose property has been
discharging counter-bond, its error does not amount to grave attached, . . . may upon reasonable notice to the
abuse of discretion. applicant, apply to the judge who granted the order or
to the judge of the court which the action is pending, for
an order discharging the attachment wholly or in part
With its motion for reconsideration having been similarly denied,
on the security given. The judge shall, after hearing,
petitioner is now with us, faulting the appellate court, as follows:
order the discharge of the attachment if a cash deposit
is made, or a counter-bond executed to the attaching
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT creditor is filed, on behalf of the adverse party, with the
THE PRINCIPAL AMOUNT CLAIMED BY RESPONDENT clerk or judge of the court where the application is
BANK SHOULD BE THE BASIS FOR COMPUTING THE made in an amount equal to the value of the property
AMOUNT OF THE COUNTER-BOND, FOR THE attached as determined by the judge, to secure the
PRELIMINARY ATTACHMENT WAS ISSUED FOR THE SAID payment of any judgment that the attaching creditor
AMOUNT ONLY. may recover in the action. x x x . Should such counter-
bond for any reason be found to be, or become
"II. THE COURT OF APPEALS ERRED IN NOT RULING insufficient, and the party furnishing the same fail to file
THAT THE ARGUMENT THAT THE AMOUNT OF THE an additional counter-bond, the attaching party may
COUNTER-BOND SHOULD BE BASED ON THE VALUE OF apply for a new order of attachment"4 (Emphasis
THE PROPERTY ATTACHED CANNOT BE RAISED FOR THE supplied).4
FIRST TIME IN THE COURT OF APPEALS.

6
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

As may be noted, the amount of the counter-attachment bond is, in the amount of P12,600,000.009 which, to petitioner, is the
under the terms of the aforequoted Section 12, to be measured extent that respondent may actually be prejudiced in the
against the value of the attached property, as determined by the event its basic complaint for recovery of money against petitioner
judge to secure the payment of any judgment that the attaching prospers.
creditor may recover in the action. Albeit not explicitly stated in the
same section and without necessarily diminishing the sound As things stood, therefore, respondents principal claim against
discretion of the issuing judge on matters of bond approval, there petitioner immediately prior to the filing of the motion to discharge
can be no serious objection, in turn, to the proposition that the attachment has effectively been pruned down to P12,600,000.00.
attached property - and logically the counter-bond necessary to The trial court was fully aware of this reality. Accordingly, IT
discharge the lien on such property - should as much as possible SHOULD HAVE ALLOWED A TOTAL DISCHARGE OF THE
correspond in value to, or approximately match the attaching ATTACHMENT ON A COUNTER-BOND BASED ON THE REDUCED
creditors principal claim. Else, excessive attachment, which ought CLAIM OF RESPONDENT. If a portion of the claim is already
to be avoided at all times, shall ensue. As we held in Asuncion vs. secured, we see no justifiable reason why such portion should still
Court of Appeals:5 be subject of counter-bond. It may be that a counter-bond is
"We, however, find the counter-attachment bond in the intended to secure the payment of any judgment that the
amount of P301,935.41 required of the private attaching party may recover in the main action. Simple common
respondent by the trial court as rather excessive under sense, if not consideration of fair play, however, dictates that A
the circumstances. Considering that the principal PART OF A POSSIBLE JUDGMENT THAT HAS VERITABLY BEEN
amounts claimed by the petitioner . . . total only PREEMPTIVELY SATISFIED OR SECURED NEED NOT BE COVERED
P185,685.00, and that he had posted a bond of only BY THE COUNTER-BOND.
P80,000.00 for the issuance of the writ of preliminary
attachment, we deem it reasonable to lower the With the view we take of this case, the trial court, in requiring
amount of the counter-attachment bond to be posted petitioner to post a counter-bond in the amount
by the private respondent . . . to the sum of of P27,237,700.00, obviously glossed over one certain
P185,685.00." fundamental. We refer to the fact that the attachment respondent
applied for and the corresponding writ issued was only for the
amount of P25.2 Million. Respondent, it bears to stress, did not
pray for attachment on its other claims, contingent and
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII, 1997
unliquidated as they were. Then, too, the attaching writ rightly
ed., p. 61, citing retired Justice Jose Y. Feria, drive home the same
excluded such claims. While the records do not indicate, let alone
point articulated in Asuncion:
provide a clear answer as to the actual value of the property levied
upon, it may reasonably be assumed that it is equal to
"The sheriff is required to attach only so much of the respondents principal claim. Be that as it may, it was simply unjust
property of the party against whom the order is issued for the trial court to base the amount of the counter-bond on a
as may be sufficient to satisfy the applicants demand, figure beyond the P25,200,000.00 threshold, as later reduced
the amount of which is stated in the order, unless a to P12,600,200.00.
deposit is made or a counter-bond is given equal to
said amount. However, if the value of the property to The trial court, therefore, committed grave abuse of discretion
be attached is less than the amount of the demand, the when it denied petitioners motion to discharge attachment by
amount of the applicants bond may be equal to the counter-bond in the amount of P12,600,000.00, an amount more
value of said property, and the amount of the adverse than double the attachment bond required of, and given by,
partys deposit or counter-bond may be equal to the respondent
applicants bond. The writ of preliminary attachment is
issued upon approval of the requisite bond". (Emphasis
It bears to stress, as a final consideration, that the certiorari
supplied)
proceedings before the appellate court and the denial of the
motion to discharge attachment subject of such proceedings,
Turning to the case at bar, the records show that the principal
transpired under the old rules on preliminary attachment which
claim of respondent, as plaintiff a quo, is in the amount
has since been revised.10 And unlike the former Section 12 of Rule
of P25,200,000.00,6 representing the three (3) unfunded checks
57 of the Rules of Court where the value of the property attached
drawn against, and presented for clearing to, respondent bank.
shall be the defining measure in the computation of the
JURISPRUDENCE TEACHES THAT A WRIT OF ATTACHMENT
discharging counter-attachment bond, the present less stringent
CANNOT BE ISSUED FOR MORAL AND EXEMPLARY DAMAGES,
Section 12 of Rule 57 provides that the court shall order the
AND OTHER UNLIQUIDATED OR CONTINGENT CLAIM.7
discharge of attachment if the movant "makes a cash deposit, or
files a counter-bond . . . in an amount equal to that fixed by the
The order of attachment dated January 22, 1992 fixed the bond to
court in the order of attachment, exclusive of costs." Not being in
be posted by respondent, as applicant, at P6,000,000.00. The writ
the nature of a penal statute, the Rules of Court cannot be given
of attachment issued on January 27, 1992, in turn, expressly
retroactive effect.11
indicated that petitioner is justly indebted to respondent in the
amount of P25,200,000.00.8 On February 11, 1992, before the
Arbitration Committee of the Philippine Clearing House This disposition should be taken in the light of then Section 12,
Corporation, petitioner and respondent, however, agreed to Rule 57 of the Rules of Court.
equally divide between themselves, albeit on a temporary basis,
the disputed amount of P25,200,000.00, subject to the outcome of
the arbitration proceedings. Thus, the release by petitioner of the
amount of P12,600,000.00 to respondent. On March 7, 1994,
petitioner filed a motion to discharge attachment by counter-bond

7
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

G.R. No. L-43721 June 15, 1935 prize won corresponding to the latter. The allegations to this
effect are found in paragraphs 6, 7, 8, and 9 of the complaint
of said Tiu Chay (alias Tan Kia).
ISIDRO TAN VS ZANDUETA and TIU CHAY
May attachment lie vs a trustee or depository regarding a
property or money converted or misappropriated by him? YES
Petitioner's contention that, in view of his motion to dissolve the
FACTS: writ of preliminary attachment, on the ground that the allegations
Tiu Chay sued the petitioner Isidro Tan to recover from him the of the complaint of the respondent Tiu Chay (alias Tan Kia) were
amount of P22,500 which he alleged to be the half corresponding not true, said attachment should have been dissolved without any
to him of the P45,000 which they won as a prize in the last drawing condition, is without force, because the respondent judge had
of the sweepstakes which they purchased with a part of the capital discretionary power, according to section 441 of Act No. 190, to
invested in a sari-sari store. dissolve or to leave in force the said attachment, and it was
precisely in the exercise of this power, after hearing the parties, as
Simultaneously with his complaint, said Tiu Chay asked and may be deduced from the orders issued and now of record, that he
obtained from the respondent judge the attachment of the decided to dissolve the attachment but conditioned on petitioner's
property of the petitioner Isidro Tan. filing a counter bond for P5,000; and this was voluntarily done by
the petitioner, thereby enabling him to withdraw, as in fact he did
Isidro Tan succeeded in dissolving the attachment by filing, in withdraw, the amount he had on deposit in the Philippine National
turn, a counter bond. Later, he withdrew from the PNB his deposit Bank which was a part of the money won in the last sweepstakes.
in the amount of P23,500 the greater part of which was attached On this sole ground, therefore, the writ of certiorari will not lie.
days before pursuant to the attachment order. Three days after
petitioner's withdrawal of the aforesaid amount from the As to the second ground we understand that the adequate remedy
Philippine National Bank, the respondent Tiu Chay (alias Tan Kia) is not certiorari but habeas corpus, and the petitioner himself,
asked and obtained an order from the respondent judge requiring learning of this afterwards, instituted motu proprio a habeas
the petitioner to file an additional counter bond at first P10,000, corpus proceeding herein mentioned in the beginning.
later P15,000 in lieu of P10,000, and still later P17,000,
subsequently reduced to P12,000.
[ GR No. 23237, Nov 14, 1925 ]
When the time given the petitioner by the respondent judge to file
said counter bond or to deposit in the Philippine National Bank the WALTER E. OLSEN & Co. v. WALTER E. OLSEN +
amount of P12,000 of the P23,500 which he withdrew therefrom,
expired without having done either the one or the other, he was Can the officers of the corporation be held liable for spending
required to appear before the respondent judge and show cause, if money of the corporation without the authority of the Board of
any, why he should not be found in contempt of court for Directors and in which case will this fall? YES
disobeying an order given him to that effect. And inasmuch as the VILLA-REAL, J.:
explanations given by him were not deemed satisfactory by the
respondent judge, the latter declared him guilty of contempt and By virtue of a judgment vs him, Walter Olsen was ordered to pay
immediately ordered his confinement, clearly advising him that he plaintiff corporation the sum of P66,207.62 with legal interest
would continue so confined until he puts up the said counter bond thereon at the rate of 6 per cent per annum from February 1, 1923,
of P12,000 or deposits the same amount in the bank. the date of the filing of the complaint, until full payment, and the
costs, and dismissing the cross-complaint and counterclaim set up
From its allegations, we gather that the petitioner of Isidro Tan is by him.
based upon the following grounds: In appealing said decision, Olsen assigns the ff errors
(1) That the writ of preliminary attachment issued was irregular (1) The holding that the defendant-appellant contracted
and illegal, fraudulently the debt which the plaintiff-appellee seeks
(2) that the order of the respondent judge directed the to recover in its complaint;
confinement of the petitioner until he complies with the (2) its failure to set aside the writ of preliminary
order requiring him to file a counter bond in the amount of attachment issued by it ex parte;
P12,000 or to deposit the identical amount in the bank, is (3) the fact of it not having absolved the defendant from
likewise illegal because it is a sequel to another, also illegal, the complaint of the plaintiff corporation and of not
which directed the attachment of his property. having given judgment for the defendant and against
the plaintiff for the amount of his counterclaim, after
ISSUE: deducting the debt due from him to the plaintiff
HELD: corporation in the sum of P66,207.62; and
writ of preliminary attachment was issued in strict conformity to (4) its action in denying the motion for new trial of the
the law, because the complaint wherein the said attachment was defendant.
issued alleged that the petitioner, after collecting the prize of a
ticket in the last sweepstakes, consisting of the amount of P50,000, ISSUE: Can an officer of the corporation be held liable for
belonging to the two, that is the petitioner and the respondent Tiu spending money of the corporation without authority of the
Chay, appropriated the entire prize exclusively for himself, in Board of Directors? YES.
complete disregard of said Tiu Chay, knowing that one-half
thereof did not belong to him to said respondent; that he was HELD:
merely a depository or agent of the latter as to said half, and that The first question that arises is whether or not an order denying a
the petitioner acted in the manner stated notwithstanding the fact motion for the annulment of a preliminary attachment may be
that he was required to turn over to the respondent the part of the reviewed through an appeal.

8
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

his shares, as well as of his estate, and that at the first


The preliminary attachment is an auxiliary remedy the granting of meeting of the stockholders, which took place on February 1,
which lies within the sound discretion of the judge taking 1919, a statement of his account with a debit balance was
cognizance of the principal case upon whose existence it depends. submitted and approved.
The order of the judge denying a motion for the annulment of a
writ of preliminary attachment, being of an incidental or Having, as he had, absolute and almost exclusive control over the
interlocutory and auxiliary character, cannot be the subject of an function of the corporation and its funds by virtue of his triple
appeal independently from the principal case, because our capacity as president, treasurer and general manager, the
procedural law now in force authorizes an appeal only from a final defendant-appellant should have been more scrupulous in the
judgment which gives an end to the litigation. (Section 143, Act No. application of the funds of said corporation to his own use. As a
190; 3 C. J., 549, par. 389.) This lack of ordinary remedy through an trustee of said corporation, it was his duty to see by all legal
appeal does not mean, however, that any excess a lower court may means possible that the interests of the stockholders were
commit in the exercise of its jurisdiction is without remedy; protected, and should not abuse the extraordinary opportunity
because there are the especial remedies, such as certiorari, for the which his triple position offered him to dispose of the funds of the
purpose. (Leung Ben vs. O'Brien, 38 Phil., 182.) corporation. Ordinary delicacy required that in the disposition of
the funds of the corporation for his personal use, he should be very
careful, so as to do it in such a way as would be compatible with
While it is true that an order denying a motion for the annulment the interests of the stockholders and his fiduciary character. And
of a preliminary attachment is not subject to review through an let it not be said that he did every thing openly and with the
appeal independently from the principal case, it not constituting a security of his shares of stock, because as he could dispose of the
final order, yet when the writ of preliminary attachment becomes funds of the corporation so he could dispose of his own shares and
final by virtue of a final judgment rendered in the principal case, with greater freedom. And let it not also be said that other officers
said writ is subject to review jointly with the judgment rendered in of the corporation, such as the vice-president, the secretary and
the principal case through an ordinary appeal. The appellate court other chiefs and employees, were doing the same thing, because
has the power to revoke or confirm said order, in like manner as a that does not show but that his bad example had spread among his
judgment on the merits; because it is a ruling to which an subordinates and all believed themselves with the same right as
exception may be taken, and therefore is subject to review in an their chief to dispose of the funds of the corporation for their
appeal by bill of exceptions. (Secs. 141-143, Act No. 190.) The fact personal use, although it were merely by way of loan, without any
that section 441 of the Code of Civil Procedure does not provide security of whatever kind of course. The approval of his account at
any remedy against the granting or denial of a motion for the the first meeting of the stockholders cannot be considered as a
annulment of a writ of preliminary attachment, except in case of justification of his conduct, nor does it remove every suspicion of
excess of jurisdiction, does not confer upon said order a final and bad faith, because the corporation was constituted exclusively by
irrevocable character, taking it out from the general provisions as the defendant-appellant himself and his cospeculator, Marker, and
to appeal and review, for a special provision is necessary for that nothing else could be expected from it.
purpose.
As to the debt he owed to the corporation, Walter E. Olsen was in
Having arrived at the conclusion that an order denying a motion for effect a lender and a borrower at the same time. The conduct of
the annulment of a preliminary attachment may be reviewed in an the defendant-appellant in connection with the funds of the
appeal taken from a final judgment rendered in the principal case, corporation he represented was more than an irregularity; and
in which said order was entered as an auxiliary remedy, we will while it is not sufficiently serious to constitute a criminal fraud, it,
now turn to consider the question whether or not the trial court is undoubtedly a fraud of a civil character, because it is an abuse
committed error in denying the motion for the annulment of the of confidence to the damage of the corporation and its
preliminary attachment levied upon the property of the defendant- stockholders, and constitutes one of the grounds enumerated in
appellant. section 424, in connection with section 412, of the Code of Civil
Procedure for the issuance of a preliminary attachment, and the
It is admitted by the defendant-appellant that he is indebted to the order of the Court of First Instance of Manila, denying the motion
plaintiff-appellee corporation in the sum of P66,207.62, but denies for the annulment of the injunction in question, is in accordance
that he has contracted said debt fraudulently. with law.
DEFENDANT-APPELLANT WAS PRESIDENT-TREASURER AND
GENERAL MANAGER OF THE PLAINTIFF-APPELLEE CORPORATION C. RECOVER POSSESSION. In an action to recover the
and exercised direct and almost exclusive supervision over its possession of property unjustly or fraudulently taken,
function, funds and books of account until about the month of detained or converted, when the property, or any part
August, 1921. During that time he has been taking money of the thereof, has been concealed, removed, or disposed of to
corporation without being duly authorized to do so either by the prevent its being found or taken by the applicant or an
board of directors or by the by-laws, the money taken by him authorized person;
having amounted to the considerable sum of P66,207.62. Of this
sum, P19,000 was invested in the purchase of the house and lot Sec. 1 (c) Replevin
now under attachment in this case, and P50,000 in the purchase of Personal property belongs to Plaintiff seeks to recover
500 shares of stock of Prising at the price of P100 per share for the defendant and the plaintiff possession of a personal
himself and Marker. A few days afterwards he began to sell the seeks to attach it to secure the property belonging to him
ordinary shares of the corporation for P430 each. The defendant- satisfaction of any judgment
appellant attempted to justify his conduct, alleging that the that he may recover from the
withdrawal of the funds of the corporation for his personal use was defendant
made in his current account with said corporation, in whose
treasury he deposited his own money and the certificates of title of

9
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

Concealment physical hiding or secreting of property Although it is true that the plaintiff and his attorney did not
so that it cannot be seized to satisfy creditors claims. follow strictly the procedure provided in said section for
Removal is the actual or physical removal of the thing claiming the delivery of said personal property nevertheless, the
by the debtor. procedure followed by him may be construed as equivalent
Fraud employed: merely as to the manner of thereto, considering the provisions of section 2 of the Code of Civil
dispossessing the property which gives rise to the action Procedure of the effect that "the provisions of this Code, and the
of recovery of possession. It is not indispensable as the proceedings under it, shall be liberally construed, in order to
taking may be done unjustly or fraudulently. promote its object and assist the parties in obtaining speedy
justice."
G.R. No. L-31163 November 6, 1929
URBANO SANTOS vs JOSE C. BERNABE, ET AL Liberally construing, therefore, the above cited provisions of
There was a valid ground for attachment by the fact that there section 262 of the Code of Civil Procedure, the writ of attachment
was an intervenor claiming that he also has a deposit in that applied for by Pablo Tiongson against the property of Jose C.
warehouse. If your add all the total volume of all their palay Bernabe may be construed as a claim for the delivery of the sacks
inside, it does not coincide with the actual volume of palay of palay deposited by the former with the latter.
there. It is already proof that there was disposition or removal
of property. Since it was a deposit made in the warehouse, The 778 cavans and 38 kilos of palay belonging to the plaintiff
there was an obligation to return exactly the same volume Urbano Santos, having been mixed with the 1,026 cavans and 9
deposited on that ground, the action to recover possession has kilos of palay belonging to the defendant Pablo Tiongson in Jose C.
basis and the issuance of the writ of attachment also has a Bernabe's warehouse; the sheriff having found only 924 cavans and
basis. 31 1/2 kilos of palay in said warehouse at the time of the
attachment thereof; and there being no means of separating form
FACTS: said 924 cavans and 31 1/2 of palay belonging to Urbano Santos
Deposit in Jose Bernabes warehouse and those belonging to Pablo Tiongson, the following rule
1) Urbano Santos deposited 778 cavans and 38 kilos of palay prescribed in article 381 of the Civil Code for cases of this nature, is
2) Pablo Tiongson deposited 1, 026 cavans and 9 kilos of palay applicable:
Art. 381. If, by the will of their owners, two things of
Pablo Tiongson filed a complaint vs Jose C. Bernabe, to recover identical or dissimilar nature are mixed, or if the mixture
from the latter the palay deposited in the latters warehouse. At occurs accidentally, if in the latter case the things
the same time, he applied for and was granted, the issuance of a cannot be separated without injury, each owner shall
writ of attachment. The attachable property of Bernabe, including acquire a right in the mixture proportionate to the part
924 cavans and 31 1/2 kilos of palay found by the sheriff in his belonging to him, according to the value of the things
warehouse, were attached, sold at public auction, and the mixed or commingled.
proceeds thereof delivered to said defendant Pablo Tiongson, who
obtained judgment in said case. Solomonic Decision. The number of kilos in a cavan not having
been determined, we will take the proportion only of the 924
The attachment proceeded giving rise to the present complaint by cavans of palay which were attached and sold, thereby giving
Santos. It does not appear that the sacks of palay of Urbano Santos Urbano Santos, who deposited 778 cavans, 398.49 thereof, and
and those of Pablo Tiongson, deposited in Jose C. Bernabe's Pablo Tiongson, who deposited 1,026 cavans, 525.51, or the value
warehouse, bore any marks or signs, nor were they separated one thereof at the rate of P3 per cavan.
from the other.
Wherefore, the judgment appealed from is hereby modified, and
Santos contends that Pablo Tiongson cannot claim the 924 cavans
Pablo Tiongson is hereby ordered to pay the plaintiff Urbano
and 31 kilos of palay as part of those deposited by him in Jose C.
Santos the value of 398.49 cavans of palay at the rate of P3 a
Bernabe's warehouse, because, in asking for the attachment
cavan, without special pronouncement as to costs. So ordered.
thereof, he impliedly acknowledged that the same belonged to
Jose C. Bernabe and not to him.

In the complaint filed by Pablo Tiongson against Jose C. Bernabe, D. FRAUD. In an action against a party who has been guilty of a
civil case No. 3665 , it is alleged that said plaintiff deposited in the fraud in contracting the debt or incurring the obligation upon
defendant's warehouse 1,026 cavans and 9 kilos of palay, the which the action is brought, or in the performance thereof;
return of which, or the value thereof, at the rate of P3 per cavan
was claimed therein. Upon filing said complaint, the plaintiff
applied for a preliminary writ of attachment of the defendant's PHILIPPINES BANK OF COMMUNICATIONS, VS CA
property, which was accordingly issued, and the defendant's and BERNARDINO VILLANUEVA
property, including the 924 cavans and 31 kilos of palay found by
the sheriff in his warehouse, were attached.
When is there fraud in contracting debt or incurring obligation?
ISSUE: WON the attachment was properly issued? YES
The case commenced with the filing by petitioner, on April 8, 1991,
HELD: of a Complaint against private respondent Bernardino Villanueva,
It will be seen that the action brought by Pablo Tiongson against private respondent Filipinas Textile Mills and one Sochi Villanueva
Jose C. Bernabe is that provided in section 262 of the Code of Civil (now deceased) before the Regional Trial Court of Manila. In the
Procedure for the delivery of personal property. said Complaint, petitioner sought the payment of P2,244,926.30
representing the proceeds or value of various textile goods, the
purchase of which was covered by irrevocable letters of credit and

10
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

trust receipts executed by petitioner with private respondent receipts (Annexes "B", "C" and "D" of the complaint),
Filipinas Textile Mills as obligor; which, in turn, were covered by nor to return the goods entrusted thereto, in violation
surety agreements executed by private respondent Bernardino of their fiduciary duty as agent or entrustee;
Villanueva and Sochi Villanueva. In their Answer, private 2. Under Section 13 of P.D. 115, as amended, violation of the
respondents admitted the existence of the surety agreements and trust receipt law constitute(s) estafa (fraud and/or deceit)
trust receipts but countered that they had already made payments punishable under Article 315 par. 1[b] of the Revised Penal
on the amount demanded and that the interest and other charges Code;
imposed by petitioner were onerous. 3. On account of the foregoing, there exist(s) valid ground for
the issuance of a writ of preliminary attachment under
On May 31, 1993, petitioner filed a Motion for Section 1 of Rule 57 of the Revised Rules of Court particularly
Attachment,4 contending that violation of the trust receipts law under sub-paragraphs "b" and "d", i.e. for embezzlement or
constitutes estafa, thus providing ground for the issuance of a writ fraudulent misapplication or conversion of money (proceeds)
of preliminary attachment; specifically under paragraphs "b" and or property (goods entrusted) by an agent (entrustee) in
"d," Section 1, Rule 57 of the Revised Rules of Court. Petitioner violation of his fiduciary duty as such, and against a party who
further claimed that attachment was necessary since private has been guilty of fraud in contracting or incurring the debt or
respondents were disposing of their properties to its detriment as obligation;
a creditor. Finally, petitioner offered to post a bond for the 4. The issuance of a writ of preliminary attachment is likewise
issuance of such writ of attachment. urgently necessary as there exist(s) no sufficient security for
the satisfaction of any judgment that may be rendered
against the defendants as the latter appears to have disposed
LC issued its August 11, 1993 Order for the issuance of a writ of
of their properties to the detriment of the creditors like the
preliminary attachment, conditioned upon the filing of an
herein plaintiff;
attachment bond. Following the denial of the Motion for
5. Herein plaintiff is willing to post a bond in the amount fixed
Reconsideration filed by private respondent Filipinas Textile Mills,
by this Honorable Court as a condition to the issuance of a
both private respondents filed separate petitions for certiorari
writ of preliminary attachment against the properties of the
before respondent Court assailing the order granting the writ of
defendants.
preliminary attachment.1wphi1.nt
Section 1 (b) and (d), Rule 57 of the then controlling Revised Rules
Both petitions were granted, albeit on different grounds. In CA-G.R.
of Court, provides, to wit
SP No. 32762, respondent CA ruled that the lower court was guilty
SECTION 1. Grounds upon which attachment may issue. A plaintiff
of GAOD in not conducting a hearing on the application for a writ
or any proper party may, at the commencement of the action or at
of preliminary attachment and not requiring petitioner to
any time thereafter, have the property of the adverse party
substantiate its allegations of fraud, embezzlement or
attached as security for the satisfaction of any judgment that may
misappropriation. On the other hand, in CA-G.R. SP No. 32863,
be recovered in the following cases:
respondent CA found that the grounds cited by petitioner in its
xxx xxx xxx
Motion do not provide sufficient basis for the issuance of a writ of
(b) In an action for money or property embezzled or
preliminary attachment, they being mere general averments.
fraudulently misapplied or converted to his us by a
public officer, or an officer of a corporation, or an
CA held that neither embezzlement, misappropriation nor incipient attorney, factor, broker, agent or clerk, in the course of
fraud may be presumed; they must be established in order for a his employment as such, or by any other person in a
writ of preliminary attachment to issue. Hence, the instant fiduciary capacity, or for a willful violation of duty;
consolidated5 petitions charging that respondent Court of Appeals xxx xxx xxx
erred in (d) In an action against a party who has been guilty of
(1) "1. Holding that there was no sufficient basis for the fraud in contracting the debt or incurring the obligation
issuance of the writ of preliminary attachment in spite of upon which the action is brought, or in concealing or
the allegations of fraud, embezzlement and disposing of the property for the taking, detention or
misappropriation of the proceeds or goods entrusted to conversion of which the action is brought;
the private respondents; xxx xxx xxx
(2) 2. Disregarding the fact that the failure of FTMI and
Villanueva to remit the proceeds or return the goods While the Motion refers to the transaction complained of as
entrusted, in violation of private respondents' fiduciary involving trust receipts, the violation of the terms of which is
duty as entrustee, constitute embezzlement or qualified by law as constituting estafa, it does not follow that a writ
misappropriation which is a valid ground for the issuance of attachment can and should automatically issue.
of a writ of preliminary attachment."6
Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of the
Revised Rules of Court, as mere reproduction of the rules, without
ISSUE: WON there is sufficient ground under sec. 1? None more, cannot serve as good ground for issuing a writ of
attachment. AN ORDER OF ATTACHMENT CANNOT BE ISSUED ON
HELD: A GENERAL AVERMENT, SUCH AS ONE CEREMONIOUSLY
Motion for Attachment filed by petitioner and its supporting QUOTING FROM A PERTINENT RULE.7
affidavit did not sufficiently establish the grounds relied upon in
applying for the writ of preliminary attachment. The supporting Affidavit is even less instructive. It merely states, as
The Motion for Attachment of petitioner states that follows
1. The instant case is based on the failure of defendants as I, DOMINGO S. AURE, of legal age, married, with address
entrustee to pay or remit the proceeds of the goods at No. 214-216 Juan Luna Street, Binondo, Manila, after
entrusted by plaintiff to defendant as evidenced by the trust

11
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

having been sworn in accordance with law, do hereby lower court should have conducted a hearing and required
depose and say, THAT: private petitioner to substantiate its allegations of fraud,
1. I am the Assistant Manager for Central Collection embezzlement and misappropriation.
Units Acquired Assets Section of the plaintiff,
Philippine Bank of Communications, and as such I To reiterate, petitioner's Motion for Attachment fails to meet the
have caused the preparation of the above motion standard set in D.P. Lub Oil Marketing Center, Inc. v. Nicolas,10 in
for issuance of a writ of preliminary attachment; applications for attachment. In the said case, this Court cautioned
2. I have read and understood its contents which are The petitioner's prayer for a writ of preliminary
true and correct of my own knowledge; attachment hinges on the allegations in paragraph 16 of
3. There exist(s) sufficient cause of action against the the complaint and paragraph 4 of the affidavit of Daniel
defendants in the instant case; Pe which are couched in general terms devoid of
4. The instant case is one of those mentioned in particulars of time, persons and places to support
Section 1 of Rule 57 of the Revised Rules of Court support such a serious assertion that "defendants are
wherein a writ of preliminary attachment may be disposing of their properties in fraud of creditors."
issued against the defendants, particularly There is thus the necessity of giving to the private
subparagraphs "b" and "d" of said section; respondents an opportunity to ventilate their side in a
5. There is no other sufficient security for the claim hearing, in accordance with due process, in order to
sought to be enforced by the instant case and the determine the truthfulness of the allegations. But no
amount due to herein plaintiff or the value of the hearing was afforded to the private respondents the
property sought to be recovered is as much as the writ having been issued ex parte. A writ of attachment
sum for which the order for attachment is can only be granted on concrete and specific grounds
granted, above all legal counterclaims. and not on general averments merely quoting the
words of the rules.
Again, it lacks particulars upon which the court can discern
whether or not a writ of attachment should issue.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,11 not
PETITIONER CANNOT INSIST THAT ITS ALLEGATION THAT PRIVATE
only was petitioner's application defective for having merely given
RESPONDENTS FAILED TO REMIT THE PROCEEDS OF THE SALE OF
general averments; what is worse, there was no hearing to afford
THE ENTRUSTED GOODS NOR TO RETURN THE SAME IS
private respondents an opportunity to ventilate their side, in
SUFFICIENT FOR ATTACHMENT TO ISSUE. We note that petitioner
accordance with due process, in order to determine the
anchors its application upon Section 1(d), Rule 57. This particular
truthfulness of the allegations of petitioner. As already mentioned,
provision was adequately explained in Liberty Insurance
private respondents claimed that substantial payments were made
Corporation v. Court of Appeals,8 as follows
on the proceeds of the trust receipts sued upon. They also refuted
To sustain an attachment on this ground, it must be
the allegations of fraud, embezzlement and misappropriation by
shown that the debtor in contracting the debt or
averring that private respondent Filipinas Textile Mills could not
incurring the obligation intended to defraud the
have done these as it had ceased its operations starting in June of
creditor. The fraud must relate to the execution of the
1984 due to workers' strike. These are matters which should have
agreement and must have been the reason which
been addressed in a preliminary hearing to guide the lower court
induced the other party into giving consent which he
to a judicious exercise of its discretion regarding the attachment
would not have otherwise given. To constitute a ground
prayed for. On this score, respondent Court of Appeals was correct
for attachment in Section 1 (d), Rule 57 of the Rules of
in setting aside the issued writ of preliminary attachment.
Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted
if at the time of contracting it the debtor has a Time and again, we have held that the rules on the issuance of a
preconceived plan or intention not to pay, as it is in this writ of attachment must be construed strictly against the
case. Fraud is a state of mind and need not be proved applicants. This stringency is required because the remedy of
by direct evidence but may be inferred from the attachment is harsh, extraordinary and summary in nature. If all
circumstances attendant in each case (Republic v. the requisites for the granting of the writ are not present, then the
Gonzales, 13 SCRA 633). (Emphasis ours) court which issues it acts in excess of its jurisdiction.12
WHEREFORE, for the foregoing reasons, the instant petitions
are DENIED. The decision of the Court of Appeals in CA-G.R. SP No.
We find an absence of factual allegations as to how the fraud
32863 and CA-G.R. SP No. 32762 are AFFIRMED. No
alleged by petitioner was committed. As correctly held by CA, such
pronouncement as to costs.
fraudulent intent not to honor the admitted obligation cannot be
SO ORDERED.
inferred from the debtor's inability to pay or to comply with the
obligations.9 On the other hand, as stressed, above, fraud may be
gleaned from a preconceived plan or intention not to pay. This G.R. No. 82446 July 29, 1988
does not appear to be so in the case at bar. In fact, it is alleged by STATE INVESTMENT HOUSE, INC., vs CA, HON.
private respondents that out of the total P419,613.96 covered by DOROTEO N. CANEBA, , and PEDRO 0. VALDEZ,
the subject trust receipts, the amount of P400,000.00 had already
been paid, leaving only P19,613.96 as balance. Hence, regardless of Can you ask for attachment on the basis of the fraud in the
the arguments regarding penalty and interest, it can hardly be said security given for the obligation [collaterals: check was
that private respondents harbored a preconceived plan or unfunded and values of the property depreciated]? NO. there
intention not to pay petitioner. was no fraud in contracting the debt. The fraud contemplated
under sec 1 (d) refers to the main contract or the main debt
itself and NOT the accessory contract.

12
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

2. With respect to the two parcels of land which were


FACTS: mortgaged to the petitioner, the latter should also
Pedro 0. Valdez and Rudy H. Sales executed two Comprehensive have declined to accept them as collateral if it believed they
Surety Agreements to secure any and all loans of P.O. Valdez, Inc. were worth less than their supposed value.
not exceeding the sums of P500,000 and P4,934,000 from the 3. With respect to the two postdated checks which bounced,
petitioner State Investment House, Inc., a domestic corporation the Court of Appeals observed that since they were "sold" to
engaged in quasi banking. the petitioner after the loan had been granted to private
respondents, their issuance did not fraudulently induce the
Four years later, petitioner and P.O. Valdez, Inc. entered into an petitioner to grant the loan applied for. They were "mere
agreement for discounting with the petitioner the receivables of evidence of the private respondents" standing loan obligation
P.O. Valdez, Inc. At the time the basic loan agreement (which is the to the petitioner" or "mere collaterals for the loan granted by
Agreement dated July 30, 1981) was entered into, respondent P.O. the petitioner to the private respondents"
Valdez, Inc. was required to provide collateral security for the loan.
They were various
ISSUE: Is the fraud of the collaterals a ground for the issuance of
1. Certificates of stock of several corporations
preliminary attachment? NO.
2. Real Estate Mortgage in favor of the petitioner
covering two (2) parcels of land
HELD:
3. Deed of Sale covering the proceeds of a postdated
The main thrust of the prayer for preliminary attachment is the
check for P4,066,410.20, another Deed of Sale dated
alleged misrepresentation of the debtor P.O. Valdez, Inc., in the
January 4, 1983, covering the proceeds as a postdated
Agreement for Discounting Receivables and in the deeds of sale of
check for P197,010.31 and a Deed of Assignment dated
said receivables.; that the two checks or receivables" issued by
January 4, 1983, covering P.O. Valdez, Inc.'s
Pedro Valdez were payment for "actual sales of its merchandise
construction receivables to the extent of P100,000.00.
and/or personalities made to its customers or otherwise arising
from its other legitimate business transactions" (par. a) and "that
When Pedro Valdez' two checks were deposited by the petitioner
the receivables . . . were genuine, valid and subsisting and
upon maturity, they bounced for insufficient funds. Despite
represent bona fide sales of merchandise and/or personalities
demands, respondent corporation failed to pay its obligations to
made in the ordinary course of business" (par. c).
petitioner amounting to P6,342,855.70 as of April 11, 1985.
It can hardly be doubted that those representations in petitioner's
Petitioner foreclosed its real estate mortgage and acquired the
printed deeds of sale were false. But false though they were, the
properties as the highest bidder in the foreclosure sale. Presumably
petitioners cannot claim to have been deceived or deluded by
because the proceeds of the foreclosure were insufficient to satisfy
them because it knew, or should have known , that the issuer of
the debt, petitioner also filed a collection suit, with a prayer for
the checks, Pedro O. Valdez, was not a "buyer" of the
preliminary attachment which was granted. Pursuant thereto,
"merchandise and personalities made in the ordinary course of
certain real and personal properties of the defendants were
business" by P.O. Valdez, Inc. of which he was the president
attached.

Tropical Homes, Inc. filed a third-party claim to certain properties


titled in the name of Pedro Valdez. As the sheriff failed to act on Since the petitioner failed to prove during the hearing of private
the third-party claim, the claimant filed a motion to lift the respondents' motion to lift the preliminary writ of attachment, that
attachment on those properties. It was opposed by the petitioner. P.O. Valdez, Inc. received from it independent consideration for the
RTC denied the motion. "sale" of Pedro Valdez' checks to it, apart from the loans previously
extended to the corporations, We are constrained to affirm the
finding of the court of Appeals that Valdez's checks are "mere
Valdez, Inc. and Pedro Valdez filed a motion to discharge the
evidence of the outstanding obligation of P.O. Valdez, Inc. to the
attachment on the ground that there was no fraud in contracting
petitioner." The petition was not defrauded by their issuance for
the loans, and if any fraud existed, it was in the performance of the
the loans had been contracted and released to P.O. Valdez, Inc.
obligations. [DENIED]
long before the checks were issued.
RTC: [MR GRANTED, RTC lifted the preliminary attachment] on the
properties on the ground that their conjugal properties may not be ALEJANDRO NG WEE, VS MANUEL TANKIANSEE.
attached to answer for the debts of the corporation which has a TO CONSTITUTE A GROUND FOR ATTACHMENT IN SECTION 1 (D),
juridical personality distinct from its incorporators. It held that RULE 57 OF THE RULES OF COURT, FRAUD SHOULD BE
"neither P.O. Valdez, Inc. and (sic) Pedro O. Valdez can be faulted COMMITTED UPON CONTRACTING THE OBLIGATION SUED UPON.
nor could they be charged of incurring fraudulent acts in obtaining A debt is fraudulently contracted if at the time of contracting it the
the loan agreement." debtor has a preconceived plan or intention not to pay, as it is in
this case. Fraud is a state of mind and need not be proved by direct
CA: no fraud in contracting the debt. It observed that: evidence but may be inferred from the circumstances attendant in
1. With respect to the shares of stock which the respondents each case.
pledged as additional security for the loan, the decline in
their value did not mean that the private respondents
entered into the loan transaction in bad faith or with FACTS:
fraudulent intent. For the private respondents could not have Petitioner Alejandro Ng Wee, a valued client of Westmont Bank
foreseen how the stocks would fare in the market. And if the (now United Overseas Bank), made several money placements
petitioner thought they were worthless at the time, it should totaling P210,595,991.62 with the bank's affiliate, Westmont
have rejected them as collateral. Investment Corporation (Wincorp), a domestic entity engaged in

13
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

the business of an investment house with the authority and license HELD:
to extend credit.3 In the case at bench, the basis of petitioner's application for
the issuance of the writ of preliminary attachment against the
Sometime in February 2000, petitioner received disturbing news on properties of respondent is Section 1(d) of Rule 57 of the Rules of
Wincorp's financial condition prompting him to inquire about and Court which pertinently reads:
investigate the company's operations and transactions with its Section 1. Grounds upon which attachment may issue.-
borrowers. He then discovered that the company extended a loan At the commencement of the action or at any time
equal to his total money placement to a corporation [Power before entry of judgment, a plaintiff or any proper party
Merge] with a subscribed capital of only P37.5M. This credit may have the property of the adverse party attached as
facility originated from another loan of about P1.5B extended by security for the satisfaction of any judgment that may
Wincorp to another corporation [Hottick Holdings]. When the be recovered in the following cases: (d) In an action
latter defaulted in its obligation, Wincorp instituted a case against against a party who has been guilty of a fraud in
it and its surety. Settlement was, however, reached in which contracting the debt or incurring the obligation upon
Hottick's president, Luis Juan L. Virata (Virata), assumed the which the action is brought, or in the performance
obligation of the surety.4 thereof.

Under the scheme agreed upon by Wincorp and Hottick's FOR A WRIT OF ATTACHMENT TO ISSUE UNDER THIS RULE, THE
president, petitioner's money placements were transferred APPLICANT MUST SUFFICIENTLY SHOW THE FACTUAL
without his knowledge and consent to the loan account of Power CIRCUMSTANCES OF THE ALLEGED FRAUD because fraudulent
Merge through an agreement that virtually freed the latter of any intent cannot be inferred from the debtor's mere non-payment of
liability. Allegedly, through the false representations of Wincorp the debt or failure to comply with his obligation.30 The applicant
and its officers and directors, petitioner was enticed to roll over must then be able to demonstrate that the debtor has intended to
his placements so that Wincorp could loan the same to defraud the creditor.31 In Liberty Insurance Corporation v. Court of
Virata/Power Merge.5 Appeals,32 we explained as follows:

Finding that Virata purportedly used Power Merge as a conduit and To sustain an attachment on this ground, it must be shown that the
connived with Wincorp's officers and directors to fraudulently debtor in contracting the debt or incurring the obligation intended
obtain for his benefit without any intention of paying the said to defraud the creditor. The fraud must relate to the execution of
placements, petitioner instituted, a civil case for damages the agreement and must have been the reason which induced the
impleading herein respondent Manuel Tankiansee, Vice-Chairman other party into giving consent which he would not have
and Director of Wincorp.7 otherwise given.

TC ordered the issuance of a writ of preliminary attachment against TO CONSTITUTE A GROUND FOR ATTACHMENT IN SECTION 1 (D),
the properties not exempt from execution of all the defendants in RULE 57 OF THE RULES OF COURT, FRAUD SHOULD BE
the civil case subject, among others, to petitioner's filing of COMMITTED UPON CONTRACTING THE OBLIGATION SUED UPON.
a P50M-bond.9 A debt is fraudulently contracted if at the time of contracting it the
debtor has a preconceived plan or intention not to pay, as it is in
CA reversed and set aside lifting the Writ of Preliminary this case. Fraud is a state of mind and need not be proved by direct
Attachment26 to the extent that it concerned respondent's evidence but may be inferred from the circumstances attendant in
properties. each case.

In the instant case, petitioner's October 12, 2000 Affidavit34 is


Respondent counters, among others, that the general and
bereft of any factual statement that respondent committed a
sweeping allegation of fraud against respondent in petitioner's
fraud. The affidavit narrated only the alleged fraudulent
affidavit-respondent as an officer and director of Wincorp allegedly
transaction between Wincorp and Virata and/or Power Merge,
connived with the other defendants to defraud petitioner-is not
which, by the way, explains why this Court, in G.R. No. 162928,
sufficient basis for the trial court to order the attachment of
affirmed the writ of attachment issued against the latter. As to the
respondent's properties. Nowhere in the said affidavit does
participation of respondent in the said transaction, the affidavit
petitioner mention the name of respondent and any specific act
merely states that respondent, an officer and director of Wincorp,
committed by the latter to defraud the former.
connived with the other defendants in the civil case to defraud
petitioner of his money placements. No other factual averment or
A WRIT OF ATTACHMENT CAN ONLY BE GRANTED ON CONCRETE
circumstance details how respondent committed a fraud or how he
AND SPECIFIC GROUNDS and not on general averments quoting
connived with the other defendants to commit a fraud in the
perfunctorily the words of the Rules. CONNIVANCE cannot also be
transaction sued upon. In other words, petitioner has not shown
based on mere association but must be particularly alleged and
any specific act or deed to support the allegation that respondent
established as a fact.
is guilty of fraud.
Respondent further contends that the trial court, in resolving the
Motion to Discharge Attachment, need not actually delve into the The affidavit, being the foundation of the writ,35 must contain such
merits of the case. All that the court has to examine are the particulars as to how the fraud imputed to respondent was
allegations in the complaint and the supporting affidavit. Petitioner committed for the court to decide whether or not to issue the
cannot also rely on the decisions of the appellate court in CA-G.R. writ.36 Absent any statement of other factual circumstances to
SP No. 74610 and this Court in G.R. No. 162928 to support his claim show that respondent, at the time of contracting the obligation,
because respondent is not a party to the said cases.29 had a preconceived plan or intention not to pay, or without any
showing of how respondent committed the alleged fraud, the
ISSUE: WON there is sufficient ground to grant the WOPA? NO general averment in the affidavit that respondent is an officer and

14
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

director of Wincorp who allegedly connived with the other


defendants to commit a fraud, is insufficient to support the
issuance of a writ of preliminary attachment.37 In the application
for the writ under the said ground, compelling is the need to give a METRO, INC. and SPOUSES FREDERICK JUAN and
hint about what constituted the fraud and how it was LIZA JUAN, VS LARA'S GIFTS AND DECORS, INC., LUIS
perpetrated38 because established is the rule that fraud is never VILLAFUERTE, JR. and LARA MARIA R. VILLAFUERTE,
presumed.39 Verily, the mere fact that respondent is an officer and Respondents allegation that petitioners undertook to sell
director of the company does not necessarily give rise to the exclusively and only through jrp/lgd for target stores corporation
inference that he committed a fraud or that he connived with the but that petitioners transacted directly with respondents
other defendants to commit a fraud. While under certain foreign buyer is sufficient allegation of fraud
circumstances, courts may treat a corporation as a mere
aggroupment of persons, to whom liability will directly attach, this FACTS:
is only done when the wrongdoing has been clearly and Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations
convincingly established.40 engaged in the business of manufacturing, producing, selling and
exporting handicrafts.
Let it be stressed that the provisional remedy of preliminary Luis Villafuerte, Jr. and Lara Maria R. Villafuerte are the
attachment is harsh and rigorous for it exposes the debtor to president and vice-president of LGD respectively.
humiliation and annoyance.41 The rules governing its issuance are,
Frederick Juan and Liza Juan are the principal officers of
therefore, strictly construed against the applicant,42 such that if the
Metro, Inc.
requisites for its grant are not shown to be all present, the court
shall refrain from issuing it, for, otherwise, the court which issues it
Sometime in 2001, LGD and Metro Inc agreed that LGD would
acts in excess of its jurisdiction.43 Likewise, the writ should not be
endorse to Metro purchase orders received by respondents from
abused to cause unnecessary prejudice. If it is wrongfully issued on
their buyers in the USA in exchange for a 15% commission, to be
the basis of false or insufficient allegations, it should at once be
shared equally by respondents and James R. Paddon (JRP), LGDs
corrected.44
agent. The terms of the agreement were later embodied in an e-
mail labeled as the "2001 Agreement."4
Considering, therefore, that, in this case, petitioner has not fully
satisfied the legal obligation to show the specific acts constitutive
In May 2003, LGD filed a complaint against Metro for sum of
of the alleged fraud committed by respondent, the trial court acted
money and damages with a prayer for the issuance of a writ of
in excess of its jurisdiction when it issued the writ of preliminary
preliminary attachment. Subsequently, LGD also filed an amended
attachment against the properties of respondent.
complaint5 and alleged that, as of July 2002, petitioners defrauded
We are not unmindful of the rule enunciated in G.B. Inc., etc. v.
them in the amount of $521,841.62. Respondents also prayed
Sanchez, et al.,45 that
for P1,000,000 as moral damages, P1,000,000 as exemplary
damages and 10% of the judgment award as attorneys fees.
[t]he merits of the main action are not triable in a Respondents also prayed for the issuance of a writ of preliminary
motion to discharge an attachment otherwise an attachment.
applicant for the dissolution could force a trial of the
merits of the case on his motion.46 RTC granted respondents prayer and issued the writ of attachment
against the properties and assets of petitioners. The 23 June 2003
Order provides:
However, the principle finds no application here because petitioner
WHEREFORE, let a Writ of Preliminary Attachment issue
has not yet fulfilled the requirements set by the Rules of Court for
against the properties and assets of Defendant METRO,
the issuance of the writ against the properties of respondent.47 The
INC. and against the properties and assets of Defendant
evil sought to be prevented by the said ruling will not arise,
SPOUSES FREDERICK AND LIZA JUAN not exempt from
because the propriety or impropriety of the issuance of the writ in
execution, as may be sufficient to satisfy the applicants
this case can be determined by simply reading the complaint and
demand of US$521,841.62 US Dollars or its equivalent in
the affidavit in support of the application.
Pesos upon actual attachment, which is about P27
Million, unless such Defendants make a deposit or give a
Furthermore, our ruling in G.R. No. 162928, to the effect that the bond in an amount equal to P27 Million to satisfy the
writ of attachment is properly issued insofar as it concerns the applicants demand exclusive of costs, upon posting by
properties of Virata and UEM-MARA, does not affect respondent the Plaintiffs of a Bond for Preliminary Attachment in
herein, for, as correctly ruled by the CA, respondent is "never a the amount of twenty five million pesos
party thereto."48 Also, he is not in the same situation as Virata and (P25,000,000.00), subject to the approval of this Court.
UEM-MARA since, as aforesaid, while petitioner's affidavit detailed SO ORDERED.7
the alleged fraudulent scheme perpetrated by Virata and/or Power
Merge, only a general allegation of fraud was made against Metro filed a motion to discharge the writ of attachment arguing
respondent. on the following grounds:
(1) that the 2001 agreement was not a valid contract because it
We state, in closing, that our ruling herein deals only with the writ did not show that there was a meeting of the minds between
of preliminary attachment issued against the properties of the parties;
respondent-it does not concern the other parties in the civil case, (2) assuming that the 2001 agreement was a valid contract, the
nor affect the trial court's resolution on the merits of the aforesaid same was inadmissible because respondents failed to
civil case. authenticate it in accordance with the Rules on Electronic
Evidence;

15
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

(3) that respondents failed to substantiate their allegations of In Liberty Insurance Corporation v. CA we explained:
fraud with specific acts or deeds showing how petitioners TO SUSTAIN AN ATTACHMENT ON THIS GROUND, IT MUST
defrauded them; and BE SHOWN THAT THE DEBTOR IN CONTRACTING THE DEBT OR
(4) that respondents failed to establish that the unpaid INCURRING THE OBLIGATION INTENDED TO DEFRAUD THE
commissions were already due and demandable. CREDITOR. The fraud must relate to the execution of the
agreement and must have been the reason which induced the
TC granted and lifted the writ of attachment holding that the other party into giving consent which he would not have otherwise
issuance of a writ of preliminary attachment in this case is not given. To constitute a ground for attachment in Section 1(d), Rule
justified. 57 of the Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A DEBT IS FRAUDULENTLY
RTC decision 08/12/03 According to the trial court, respondents CONTRACTED if at the time of contracting it the debtor has a
failed to sufficiently show that petitioners were guilty of fraud preconceived plan or intention not to pay, as it is in this case.15
either in incurring the obligation upon which the action was
brought, or in the performance thereof. It found no proof that The applicant for a writ of preliminary attachment must sufficiently
petitioners were motivated by malice in entering into the 2001 show the factual circumstances of the alleged fraud because
agreement. It also declared that petitioners failure to fully comply fraudulent intent cannot be inferred from the debtors mere non-
with their obligation, absent other facts or circumstances to payment of the debt or failure to comply with his obligation.16
indicate evil intent, does not automatically amount to fraud.
Consequently, the trial court ordered the discharge of the writ of In their amended complaint, respondents alleged the following in
attachment for lack of evidence of fraud. support of their prayer for a writ of preliminary attachment:
5. Sometime in early 2001, defendant Frederick Juan approached
CA decision 09/29/2004 plaintiff spouses and asked them to help defendants export
TC is in GAOD when it ordered the discharge of the writ of business. Defendants enticed plaintiffs to enter into a business
attachment without requiring petitioners to post a counter-bond. It deal. He proposed to plaintiff spouses the following:
said that when the writ of attachment is issued upon a ground a. That plaintiffs transfer and endorse to defendant
which is at the same time also the applicants cause of action, Metro some of the Purchase Orders (POs) they will
courts are precluded from hearing the motion for dissolution of the receive from their US buyers;
writ when such hearing would necessarily force a trial on the b. That defendants will sell exclusively and "only thru"
merits of a case on a mere motion.11 It pointed out that, in this plaintiffs for their US buyer;
case, fraud was not only alleged as the ground for the issuance of xxx
the writ of attachment, but was actually the core of respondents 6. After several discussions on the matter and further
complaint. CA declared that the only way that the writ of inducement on the part of defendant spouses, plaintiff
attachment can be discharged is by posting a counter-bond in spouses agreed. Thus, on April 21, 2001, defendant
accordance with Section 12,12 Rule 57 of the Rules of Court. spouses confirmed and finalized the agreement in a
letter-document entitled "2001 Agreement" they
emailed to plaintiff spouses, a copy of which is hereto
ISSUE: whether the writ of attachment was issued on proper
attached as Annex "A".
grounds? YES
xxx
20. Defendants are guilty of fraud committed both at
HELD:
the inception of the agreement and in the performance
Petitioners contend that the writ of attachment was improperly
of the obligation. Through machinations and schemes,
issued because respondents amended complaint failed to allege
defendants successfully enticed plaintiffs to enter into
specific acts or circumstances constitutive of fraud. Petitioners
the 2001 Agreement. In order to secure plaintiffs full
insist that the improperly issued writ of attachment may be
trust in them and lure plaintiffs to endorse more POs
discharged without the necessity of filing a counter-bond.
and increase the volume of the orders, defendants
Petitioners also argue that respondents failed to show that the writ
during the early part, remitted to plaintiffs shares under
of attachment was issued upon a ground which is at the same time
the Agreement.
also respondents cause of action. Petitioners maintain that
respondents amended complaint was not an action based on
21. However, soon thereafter, just when the orders
fraud but was a simple case for collection of sum of money plus
increased and the amount involved likewise increased,
damages.
defendants suddenly, without any justifiable reasons
and in pure bad faith and fraud, abandoned their
respondents argue that petitioners cannot avail of Section
contractual obligations to remit to plaintiffs their
13,13 Rule 57 of the Rules of Court to have the attachment set aside
shares. And worse, defendants transacted directly with
because the ground for the issuance of the writ of attachment is
plaintiffs foreign buyer to the latters exclusion and
also the basis of respondents amended complaint. Respondents
damage. Clearly, defendants planned everything from
assert that the amended complaint is a complaint for damages for
the beginning, employed ploy and machinations to
the breach of obligation and acts of fraud committed by petitioners
defraud plaintiffs, and consequently take from them a
valuable client.
In this case, the basis of respondents application for the issuance 22. Defendants are likewise guilty of fraud by violating
of a writ of preliminary attachment is Section 1(d), Rule 57 of the the trust and confidence reposed upon them by
Rules of Court which provides: xxx (d) In an action against a party plaintiffs. Defendants received the proceeds of
who has been guilty of fraud in contracting the debt or incurring plaintiffs LCs with the clear obligation of remitting 15%
the obligation upon which the action is brought, or in the thereof to the plaintiffs. Their refusal and failure to
performance thereof; x x x remit the said amount despite demand constitutes a
breach of trust amounting to malice and

16
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

fraud.17 (Emphasis and underscoring in the original) Cotabato bus filed an "Urgent Motion to Dissolve or Quash
(Boldfacing and italicization supplied) Writ of Attachment" to which was attached an affidavit
executed by its Assistant Manager, Baldovino Lagbao, alleging
WE RULE THAT RESPONDENTS ALLEGATION THAT PETITIONERS among other things that "the Cotabato Bus Company has not been
UNDERTOOK TO SELL EXCLUSIVELY AND ONLY THROUGH JRP/LGD selling or disposing of its properties, neither does it intend to do so,
FOR TARGET STORES CORPORATION BUT THAT PETITIONERS much less to defraud its creditors; that also the Cotabato Bus
TRANSACTED DIRECTLY WITH RESPONDENTS FOREIGN BUYER IS Company, Inc. has been acquiring and buying more assets.
SUFFICIENT ALLEGATION OF FRAUD to support their application [DENIED]
for a writ of preliminary attachment. Since the writ of preliminary
attachment was properly issued, the only way it can be dissolved is
CA declared "null and void the order/writ of attachment; ordered
by filing a counter-bond in accordance with Section 12, Rule 57 of
the release of the attached properties, and made the restraining
the Rules of Court.
order originally issued permanent.

Moreover, the reliance of the Court of Appeals in the cases of


ISSUES: whether the writ of attachment was properly issued upon
Chuidian v. Sandiganbayan,18 FCY Construction Group, Inc. v. Court
a showing that defendant is on the verge of insolvency and may
of Appeals,19 and Liberty Insurance Corporation v. Court of
no longer satisfy its just debts without issuing the writ? NO.
Appeals20 is proper. The rule that "when the writ of attachment is
issued upon a ground which is at the same time the applicants
HELD: This may be inferred from the emphasis laid by petitioner on
cause of action, the only other way the writ can be lifted or
the fact that even for the measly amount of P 634.00 payment
dissolved is by a counter-bond"21 is applicable in this case. It is clear
thereof was made with a personal check of the respondent
that in respondents amended complaint of fraud is not only
company's president and majority stockholder, and its debts to
alleged as a ground for the issuance of the writ of preliminary
several creditors, including secured ones like the DBP, have
attachment, but it is also the core of respondents complaint. The
remained unpaid, despite its supposed daily income of an average
fear of the Court of Appeals that petitioners could force a trial on
of P 12,000.00, as declared by its assistant manager, Baldovino
the merits of the case on the strength of a mere motion to dissolve
Lagbao. 1
the attachment has a basis.
Going forthwith to this question of whether insolvency, which
E. DEFRAUD CREDITORS. In an action against a party who has petitioners in effect claims to have been proven by the evidence,
removed or disposed of his property, or is about to do so, particularly by company's bank account which has been reduced to
with intent to defraud his creditors; or nil, may be a ground for the issuance of a writ of attachment, the
respondent Court of Appeals correctly took its position in the
Sec. 1 (A) Sec. 1 (E) negative on the strength of the explicit ruling of this Court in Max
There is intent to defraud creditors Chamorro & Co. vs. Philippine Ready Mix Concrete Company, Inc.
Defendant seeks to depart Defendant removed or and Hon. Manuel P. Barcelona. 2
from the PH in order to disposed of his property with
defraud his creditors intent to defraud his creditors Petitioner, however, disclaims any intention of advancing the
Defendant himself will remove Properties which will be theory that insolvency is a ground for the issuance of a writ of
from PH removed or disposed attachment , 3 and insists that its evidence -is intended to prove his
assertion that respondent company has disposed, or is about to
Merely physical removal of the property is not enough dispose, of its properties, in fraud of its creditors. Aside from the
to justify the issuance of the WOPA. It must have been reference petitioner had made to respondent company's "nil" bank
made with intent to defraud the creditors. Actual account, as if to show removal of company's funds, petitioner also
transfer is not even necessary as a mere design to cited the alleged non-payment of its other creditors, including
dispose of the property and intent to carry it out is secured creditors like the DBP to which all its buses have been
already sufficient. mortgaged, despite its daily income averaging P12,000.00, and the
rescue and removal of five attached buses.
G.R. No. L-35990 June 17, 1981
ABOITIZ & COMPANY, INC., vs. It is an undisputed fact that, as averred by petitioner itself, the
COTABATO BUS COMPANY, INC., several buses attached are nearly junks. However, upon permission
by the sheriff, five of them were repaired, but they were
Is the defendants insolvency a sufficient ground for the substituted with five buses which were also in the same condition
issuance of WOPA? NO. The disposition or removal of the as the five repaired ones before the repair.
property must be one that is difficult of detection or discovery.
THIS CANNOT BE THE REMOVAL INTENDED AS GROUND FOR THE
FACTS:
ISSUANCE OF A WRIT OF ATTACHMENT UNDER SECTION 1 (E),
By virtue of the writ of preliminary attachment, the provincial
RULE 57, OF THE RULES OF COURT. The repair of the five buses
sheriff attached personal properties of the defendant Cotabato bus
was evidently motivated by a desire to serve the interest of the
consisting of some buses, machinery and equipment. The ground
riding public, clearly not to defraud its creditors, as there is no
for the issuance of the writ is, as alleged in the complaint and the
showing that they were not put on the run after their repairs, as
affidavit of merit executed by the Assistant Manager of petitioner,
was the obvious purpose of their substitution to be placed in
that the defendant "has removed or disposed of its properties or
running condition.
assets, or is about to do so, with intent to defraud its creditors."

17
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

Moreover, as the buses were mortgaged to the DBP, their removal herein, a preliminary writ of attachment was issued. As a
or disposal as alleged by petitioner to provide the basis for its consequence of the issuance of the writ of attachment, the
prayer for the issuance of a writ of attachment should be very defendants, in their answer to the complaint set up a compulsory
remote, if not nil. If removal of the buses had in fact been counterclaim for damages.
committed, which seems to exist only in petitioner's apprehensive
imagination, the DBP should not have failed to take proper court Appellants contend that the affidavits of Messrs. Rivera and
action, both civil and criminal, which apparently has not been Berenguer on which the lower court based the issuance of the writ
done. of preliminary attachment relied on the reports of credit
investigators sent to the field and not on the personal knowledge
of the affiants.
The dwindling of respondent's bank account despite its daily
income of from P10,000.00 to P14,000.00 is easily explained by its
having to meet heavy operating expenses, which include salaries
ISSUE: WON the WOPA was properly issued? YES, there was
and wages of employees and workers. If, indeed the income of the
intent to defraud.
company were sufficiently profitable, it should not allow its buses
to fall into disuse by lack of repairs. It should also maintain a good
HELD:
credit standing with its suppliers of equipment, and other needs of
In the determination of the legality of the writ of attachment by
the company to keep its business a going concern. Petitioner is only
the Court of First Instance of Manila, it is a well established rule
one of the suppliers.
that the grant or denial of a writ of attachment rests upon the
sound discretion of the court. Records are bereft of any evidence
It is, indeed, extremely hard to remove the buses, machinery and that grave abuse of discretion was committed by respondent judge
other equipments which respondent company have to own and in the issuance of the writ of attachment.
keep to be able to engage and continue in the operation of its
transportation business. The sale or other form of disposition of
Appellants contend that the affidavits of Messrs. Rivera and
any of this kind of property is not difficult of detection or discovery,
Berenguer on which the lower court based the issuance of the writ
and strangely, petitioner, has adduced no proof of any sale or
of preliminary attachment relied on the reports of credit
transfer of any of them, which should have been easily obtainable.
investigators sent to the field and not on the personal knowledge
G.R. No. L-29280 August 11, 1988 of the affiants. Such contention deserves scant consideration.
Evidence adduced during the trial strongly shows that the
PEOPLE'S BANK AND TRUST COMPANY, VS SYVEL'S witnesses have personal knowledge of the facts stated in their
INCORPORATED, ANTONIO Y. SYYAP and ANGEL Y affidavits in support of the application for the writ. They testified
SYYAP, that Syvel's Inc. had disposed of all the articles covered by the
IN ANY CASE, INTENT TO DEFRAUD MAY BE AND USUALLY IS chattel mortgage but had not remitted the proceeds to appellee
INFERRED FROM THE FACTS AND CIRCUMSTANCES OF THE bank; that the Syvel's Stores at the Escolta, Rizal Avenue and
CASE; IT CAN RARELY BE PROVED BY DIRECT EVIDENCE. It may Morayta Street were no longer operated by appellants and that the
be gleaned also from the statements and conduct of the debtor, latter were disposing of their properties to defraud appellee bank.
and in this connection, the principle may be applied that every Such testimonies and circumstances were given full credit by the
person is presumed to intend the natural consequences of his trial court in its decision (Brief for Appellee, p. 14). Hence, the
acts attachment sought on the ground of actual removal of property is
justified where there is physical removal thereof by the debtor, as
shown by the records (McTaggert v. Putnam Corset Co., 8 N.Y. S
FACTS: 800 cited in Moran, Comments on the Rules of Court, 1970 Ed., Vol.
Peoples Bank and Trust Co (PBTC) extrajudicially foreclosed the 3, p. 7).
chattel mortgage executed by Syvel Inc on its stocks of goods,
personal properties and other materials owned by it. The chattel Besides, the actuations of appellants were clearly seen by the
mortgage was in connection with a credit commercial line in the witnesses who "saw a Fiat Bantam Car-Fiat Car, a small car and
amount of P900,000.00 granted by PBTC to Syvel Inc. about three or four persons hurrying; they were carrying goods
coming from the back portion of this store of Syvels at the Escolta,
Antonio V. Syyap and Angel Y. Syyap executed an undertaking in between 5:30 and 6:00 o'clock in the evening." (Record on Appeal,
favor of the PBTC whereby they both agreed to guarantee pp. 45-46). Therefore, "the act of debtor (appellant) in taking his
absolutely and unconditionally and without the benefit of stock of goods from the rear of his store at night, is sufficient to
excussion the full and prompt payment of any indebtedness to be support an attachment upon the ground of the fraudulent
incurred on account of the said credit line. In view of the failure of concealment of property for the purpose of delaying and
the defendant corporation to make payment in accordance with defrauding creditors." (4 Am. Jur., 841 cited in Francisco, Revised
the terms and conditions agreed upon in the Commercial Credit Rules of Court, Second Edition, 1985, p. 24).
Agreement the PBTC started to foreclose extrajudicially the chattel
mortgage. However, because of an attempt to have the matter
settled, the extra-judicial foreclosure was not pushed thru. As no IN ANY CASE, INTENT TO DEFRAUD MAY BE AND USUALLY IS
payment had been paid, this case was eventually filed in this Court. INFERRED FROM THE FACTS AND CIRCUMSTANCES OF THE CASE;
IT CAN RARELY BE PROVED BY DIRECT EVIDENCE. It may be
On petition of the plaintiff based on the affidavits executed by Mr. gleaned also from the statements and conduct of the debtor, and
Leopoldo R. Rivera, Assistant Vice President of the plaintiff bank in this connection, the principle may be applied that every person
and Atty. Eduardo J. Berenguer on January 12, 1967, to the effect, is presumed to intend the natural consequences of his acts
among others, that the defendants are disposing of their properties (Francisco, Revised Rules of Court, supra, pp. 24-25), In fact the
with intent to defraud their creditors, particularly the plaintiff trial court is impressed "that not only has the plaintiff acted in

18
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

perfect good faith but also on facts sufficient in themselves to and Industrial Bank (PCIB) in consideration of the loan of
convince an ordinary man that the defendants were obviously P1,100,000.00, thereby making PCIB a preferred creditor to
trying to spirit away a port;.on of the stocks of Syvel's Incorporated the prejudice of respondent Aboitiz, which had an exposure
in order to render ineffectual at least partially anyjudgment that amounting to P13,430,259.14.
may be rendered in favor of the plaintiff." (Decision; Civil Case No.
68095; Record on Appeal, pp. 88- 89).
Judge ruled that the writs of attachment were issued on the basis
of the supporting affidavits alleging that petitioner had removed or
disposed of their property with intent to defraud respondent
G.R. Nos. 65957-58 July 5, 1994 Aboitiz (Rollo, pp. 109-113).
ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN vs
Hon. Judge RAMON AM. TORRES, ABOITIZ & Adlawan: real estate mortgage executed by them in favor of PCIB
COMPANY, INC. and THE PROVINCIAL SHERIFFS OF did not constitute fraudulent removal, concealment or disposition
CEBU, DAVAO, RIZAL and METRO MANILA of property. They argued that granting the mortgage constituted
removal or disposition of property, it was not per se a ground for
attachment lacking proof of intent to defraud the creditors of the
Can you infer intent to defraud creditors by a mere
defendant. They pray that a TRO be issued "enjoining the
encumbrance of properties? Bare allegation that an
respondents from enforcing or implementing the writs of
encumbrance of a property is in fraud of the creditor does not
preliminary attachment against the property of petitioners
suffice. Factual bases for such conclusion must be clearly
averred. The execution of a mortgage in favor of another
creditor is not conceived by the Rules as one of the means of ISSUE: WON encumbrance of the properties constitute intent to
fraudulently disposing of ones property. By mortgaging a piece defraud creditors as to justify issuance of a WOPA? NO.
of property, a debtor merely subjects it to a lien but ownership
thereof is not parted with. HELD:
THE AFFIDAVIT SUBMITTED BY RESPONDENT ABOITIZ IN SUPPORT
OF ITS PRAYER FOR THE WRIT OF ATTACHMENT DOES NOT MEET
Aboitiz filed against petitioners two complaints for collection of THE REQUIREMENTS OF RULE 57 OF THE REVISED RULES OF
sums of money with prayers for the issuance of writs of COURT REGARDING THE ALLEGATIONS ON IMPENDING
attachment. It alleged that Eleazar Adlawan was awarded a FRAUDULENT REMOVAL, CONCEALMENT AND DISPOSITION OF
contract for the construction of the Tago Diversion Works for the DEFENDANT'S PROPERTY. As held in Carpio v. Macadaeg, 9 SCRA
Tago River Irrigation Project by the National Irrigation 552 (1963), to justify a preliminary attachment, the removal or
Administration and that respondent Aboitiz (plaintiff therein) disposal must have been made with intent to defraud defendant's
loaned him money and equipment, which indebtedness as of June creditors. Proof of fraud is mandated by paragraphs (d) and (e) of
30, 1983 totaled P13,430,259.14. Section 1, Rule 57 of the Revised Rules of Court on the grounds
upon which attachment may issue. Thus, the factual basis on
In view of the enormous liabilities which the defendants have with defendant's intent to defraud must be clearly alleged in the
the plaintiff, defendants executed a REM covering eleven (11) affidavit in support of the prayer for the writ of attachment if not
parcels of land in favor of (PCIB) to secure a P1,000,000.00 loan so specifically alleged in the verified complaint. The affidavit
with said bank and was able to remove, conceal and dispose of submitted by respondent Aboitiz states:
their properties, obviously to defraud the plaintiff, . . . 1) xxx
2) That a sufficient cause of action because defendants are
The complaint in Civil Case No. CEB-1186 alleged that petitioner indebted
Eleazar Adlawan (defendant therein) was awarded a contract for 3) defendants have removed or disposed of their
the construction of the Lasang River Irrigation Project by the properties with intent to defraud the plaintiff, their
National Irrigation Administration and that respondent Aboitiz creditor, because they executed a real estate mortgage
(plaintiff therein) loaned him money and equipment, which in favor of (PCIB) covering eleven (11) of their fifteen
indebtedness as of June 30, 1983 totalled P5,370,672.08. (15) parcels of land in Cebu to secure a P1,000,000.00
Paragraph 15 of the complaint is similarly worded as paragraph 16 loan with the same bank;
of the complaint in Civil Case No. CEB-1185. 4) That this action is one of those specifically mentioned in
Section 1, Rule 57 of the Rules of Court, whereby a writ
RTCs ordered the issuance of a writ of attachment upon preliminary attachment may lawfully issue because the
respondent Aboitiz' filing of a bond. action therein is one against parties who have removed
or disposed of their properties with intent to defraud
Adlawan then filed in both civil cases urgent motions to hold in their creditor, plaintiff herein; xxx
abeyance the enforcement of the writs of attachments. They
alleged in the main that since their property had been previously It is evident from said affidavit that the prayer for attachment rests
attached and said attachment was being questioned before the on the mortgage by petitioners of 11 parcels of land in Cebu, which
Supreme Court in G.R. No. 63225, the filing of the two cases, as encumbrance respondent Aboitiz considered as fraudulent
well as the issuance of the writs of attachment, constituted undue concealment of property to its prejudice.
interference with the processes of this court in the then pending
petition involving the same property. THERE IS NO FACTUAL ALLEGATION WHICH MAY CONSTITUTE AS
A VALID BASIS FOR THE CONTENTION THAT THE MORTGAGE WAS
Aboitiz: the issuance of the writ of attachment was justified IN FRAUD OF RESPONDENT ABOITIZ. As this Court said in Jardine-
because petitioners were intending to defraud respondent Aboitiz Manila Finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989),
by mortgaging 11 parcels of land to the Philippine Commercial "[T]he general rule is that the affidavit is the foundation of the writ,

19
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

and if none be filed or one be filed which wholly fails to set out islands. As far as corporations are concerned, you
some facts required by law to be stated therein, there is no know where to locate them as they are registered
jurisdiction and the proceedings are null and void." with SEC.

BARE ALLEGATION THAT AN ENCUMBRANCE OF A PROPERTY IS IN


FRAUD OF THE CREDITOR DOES NOT SUFFICE. Factual bases for G.R. No. L-37682 November 26, 1932
such conclusion must be clearly averred.The execution of a CLAUDE NEON LIGHTS vs PHILIPPINE ADVERTISING
mortgage in favor of another creditor is not conceived by the Rules
as one of the means of fraudulently disposing of one's property. By
CORPORATION
mortgaging a piece of property, a debtor merely subjects it to a lien
but ownership thereof is not parted with. Justification given by SC in excluding foreign corporations
under Sec. 1 (f)
FURTHERMORE, THE INABILITY TO PAY ONE'S CREDITORS IS NOT
NECESSARILY SYNONYMOUS WITH FRAUDULENT INTENT NOT TO FACTS:
HONOR AN OBLIGATION. Consequently, when petitioners filed MR Philippine Advertising Corporation filed suit vs Claude claiming
of the order directing the issuance of the writ of attachment, P300,000 as damages for alleged breach of the agency contract
respondent Judge should have considered it as a motion for the existing between them. At the same time, applied for issuance of
discharge of the attachment and should have conducted a hearing WOPA alleging that defendant (petitioner herein) is a foreign
or required submission of counter-affidavits from the petitioners, if corporation having its principal place of business in the City of
only to gather facts in support of the allegation of fraud (Jopillo, Jr. Washington, District of Columbia. It is not alleged in said
v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 application that the defendant, Claude Neon Lights, Inc. (the
of Rule 57 mandates. petitioner herein) was about to depart from the Philippine Islands
with intent to defraud its creditors or that it was insolvent or had
This procedure should be followed because, as the Court has time removed or disposed of its property or was about to do so with
and again said, attachment is a harsh, extraordinary and summary intent to defraud its creditors.
remedy and the rules governing its issuance must be construed
strictly against the applicant. Verily, a writ of attachment can only The only statutory ground relied upon in the court below and in
be granted on concrete and specific grounds and not on general this court for the issuance of the writ of attachment against the
averments quoting perfunctorily the words of the Rules (D.P. Lub petitioner is paragraph 2 of section 424 of the Code of Civil
Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]). Procedure, which provides that plaintiff may have the property of
the defendant attached "in an action against a defendant not
The judge before whom the application is made exercises full residing in the Philippine Islands".
discretion in considering the supporting evidence proffered by the
applicant. One overriding consideration is that a writ of attachment
is substantially a writ of execution except that it emanates at the RTC granted and issued WOPA on the strength of which the sheriff
beginning, instead of at the termination of the suit has attached all the properties of the petitioner in the Philippine
Islands. It also appointed a receiver of said properties

F. In an action against a party who does not reside and is not Claude filed a motion to dissolve the writ of attachment and
found in the Philippines, or on whom summons may be receivership supported by affidavits stating that it is NOT indebted
served by publication. (1a) to the respondent in any sum whatever nor has it in any way
breached any contracts with the respondent or at any time
a) A non-resident defendant NOT found in the Ph this is interfered in the management of its business in the Philippine
regardless of what kind of action. For so long as he does Islands as carried on by its agent, the respondent, and it has
not reside in the Ph faithfully complied with every condition of said contract; that the
b) Defendant not found in the Ph attachment of the machinery and plants of the petitioner, as well
a. he could be a resident defendant, but as its other assets, is highly prejudicial to it as it is unable to
temporarily out of the Ph or proceed with its business in the Philippine Islands and irreparable
b. those whom summons may be served by loss will result to it unless such attachment be raised; XXX [DENIED,
publication RTC declared the writ of attachment conforms to section 424 of
the Code of Civil Procedure]

mere allegation that a defendant is a non-resident is not KEYFACTS:


enough for the attachment to issue. In MIAILHE VS DE The petitioner is a corporation duly organized under the laws of the
LENCQUENSAING, although there was an allegation that District of Columbia; it had complied with all the requirements of
the defendant was a non-resident, still there was a the Philippine laws and the was duly licensed to do business in the
requirement on the amount of damages that must be Philippine Islands on the date said writ of attachment was issues.
specified and that was not made in that case. So there The petitioner was actively engaged in doing business in the
was no valid ground for attachment as claims must be Philippine Islands and had considerable property therein, which
liquidated as well. consisted to its manufacturing plant, machinery, merchandise and
The kind of defendant we are talking about here is a large income under valuable contracts, all of which property was
NATURAL PERSONs not residing in the Ph. It does not in the possession and under the control and management of the
cover foreign or domestic corporations for corporations respondent Philippine Advertising Corporation, as the agent of the
as a rule, are less mobile than individuals. This is petitioner, on the date said attachment was levied. Considered
especially true with foreign corporations that are from a practical and economic viewpoint, its position in the
carrying on business by proper authority in these

20
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

business community was indistinguishable from that of a for service of process; nor to prove to the satisfaction of the
domestic corporation. Government before he does business here, as the foreign
corporation must prove, that he "is solvent and in sound financial
Section 242 of the Code of Civil Procedure under which the condition" (section 68, Act No. 1459, as amended, the Corporation
petitioner's property was attached, reads as follows: Law), or to produce evidence of "fair dealing" (ibid.). He pays no
Attachment. A plaintiff may, at the commencement license fee nor is his business subject at any time to investigation
of his action, or at any time afterwards, have the by the Secretary of Finance and the Governor-General; nor is his
property of the defendant attached as security for the right to continue to do business revocable by the Government (Cf.
satisfaction of any judgment that may be recovered, section 71, Act No. 1459 of the Corporation Law). His books and
unless the defendant gives security to pay such papers are not liable to examination "at any time" by the Attorney-
judgment, in the manner hereinafter provided, in the General, the Insular Auditor, the Insular Treasurer, "or any other
following cases. officer of the Government" on the order of the Governor-General
(section 54, ibid.). He is not, like a foreign corporation "bound by all
laws, rules and regulations applicable to domestic corporations" . .
1. In all the cases mentioned in section four hundred
. (section 73, ibid.), which are designed to protect creditors and the
and twelve, providing for the arrest of a defendant. But
public. He can evade service of summons and other legal process,
the plaintiff must make an election as to whether he will
the foreign corporation never. (Section 72, ibid.)
ask for an order of arrest or an order of attachment; he
shall not be entitled to both orders;

CORPORATIONS, AS A RULE, ARE LESS MOBILE THAN


2. In an action against a defendant not residing in the
INDIVIDUALS. THIS IS A SPECIALLY TRUE OF FOREIGN
Philippine Islands.
CORPORATIONS THAT ARE CARRYING ON BUSINESS BY PROPER
AUTHORITY IN THESE ISLANDS. They possess, as a rule, great
ISSUE: whether or not paragraph 2 of section 424 of the Code of capital which is seeking lucrative and more or less permanent
Civil Procedure is applicable to this petitioner investment in young and developing countries like our Philippines.
Some of them came here as far back as the Spanish regime and are
HELD: still important factors in our financial and industrial life. They are
It may be observed at the outset that the words of section anything but "fly-by-night" concerns. The latter, we believe, are
424, supra, taken in their literal sense seem to refer to a physical effectually excluded from our Islands both by our laws and by our
defendant who is capable of being "arrested" or who is "not geographical and economic situation.
residing in the Philippine Islands". It is only by a fiction that it can
be held that a corporation is "not residing in the Philippine Islands".
IF, AS WE BELIEVE, SECTION 424, PARAGRAPH 2, SHOULD NOT BE
HELD APPLICABLE TO FOREIGN CORPORATIONS DULY LICENSED
A corporation has no home or residence in the sense in which
TO DO BUSINESS IN THE PHILIPPINE ISLANDs both because the
those terms are applied to natural persons. For practical purposes,
language and the reason of the statute limit it to natural persons,
a corporation is sometimes said, in a metaphorical sense, to be "a
we sustain and reinforce the provisions of section 71 of the
resident" of a certain state or a "citizen" of a certain country, which
Corporation Law, Act No. 1459, which provides in substance that if
is usually the state or country by which or under the laws of which
the Secretary of Finance or the Secretary of Commerce and
it was created. But that fiction or analogy between corporations
Communications and the Governor-General find a duly licensed
and natural persons by no means extends so far that it can be said
foreign corporation to be insolvent or that its continuance in
that every statute applicable to natural persons is applicable to
business will involve probable loss to its creditors, they may revoke
corporations. Indeed, within the same jurisdiction a corporation
its license and "the Attorney-General shall take such proceedings
has been held to be a "citizen" of the state of its creation for the
as may be proper to protect creditors and the public". Section
purpose of determining the jurisdiction of the Federal courts
71, supra, contemplates that the proceedings instituted by the
(Wisconsin vs. Pelican Insurance Co., 127 U. S., 265) but not a
Attorney-General shall effect the protection of all creditors and the
"citizen" within the meaning of section 2 of article 4 of the
public equally. Obviously, the benefit of that section will be
Constitution of the United States which provides that the citizens
minimized, if not entirely defeated, if a creditor or a few creditors
of each state shall be entitled to all the privileges and immunities
can obtain privileged liens by writs of attachment based on the sole
of citizens of the several states (Paul vs. Virginia, 8 Wall., 169).
allegation, which is easily and safely made, that the corporation is
"not residing in the Philippine Islands". (Cf. Kuenzle &
Streiff vs. Villanueva, 41 Phil., 611.)lawphil.net
ISSUE: W/N a foreign corporation, shall, in a metaphorical sense,
be deemed as "not residing in the Philippine Islands" in the sense in
PARAGRAPH 2 OF SECTION 424, SUPRA DOES NOT APPLY TO A
which that expression would apply to a natural person? NO.
DOMESTIC CORPORATION. Our laws and jurisprudence indicate a
purpose to assimilate foreign corporations, duly licensed to do
HELD: business here, to the status of domestic corporations. We think it
NATURAL PERSON VS CORPORATION would be entirely out of line with this policy should we make a
Having regard to the reason for the statute which is the protection discrimination against a foreign corporation, like the petitioner,
of the creditors of a non-resident, we are of the opinion that there and subject its property to the harsh writ of seizure by attachment
is not the same reason for subjecting a duly licensed foreign when it has complied not only with every requirement of law made
corporation to the attachment of its property by a plaintiff under especially of foreign corporations, but in addition with every
section 424, paragraph 2, as may exist in the case of a natural requirement of law made of domestic corporations. (Section
person not residing in the Philippine Islands. The law does not 73, supra.)
require the latter, as it does the former, to appoint a resident agent

21
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

It is true that the majority of the states in the American Union hold had separately instituted actions for collection of sums of
the contrary rule. But our situation is obviously very dissimilar from money and damages vs CMI and that on application of said
that of a state in the American Union. There forty-eight states and plaintiffs, writs of preliminary attachment had been issued which
the central government, all creating corporations which do a were executed on "the royalty/profit sharing payments due CMI
tremendous interstate business, are contiguous and separated by from Benguet Consolidated Mining, Inc;"
imaginary lines. A higher degree of protection against irresponsible
corporations may be more necessary there than here. We have no State Investment House, Inc. (SIHI) and State Financing Center,
interstate business. Only the central government grants charters Inc. (SFCI) opposed the petition, alleging that the
to corporations. But even in the American Union there is a 1) banks had come to court with unclean hands in that
minority rule which we regard as the better reasoned and the they filed the petition for insolvency alleging the CMI
better suited to our conditions, both geographical and economical, was defrauding its creditors, and they wished all
and more nearly in harmony with the policy of our law both under creditors to share in its assets although a few days
the Spanish regime and since the American occupation. earlier, they had "received for the account of CMI
substantial payments aggregating P10,800,000.00;"
In the present instance, a particularly monstrous result has 2) the Court had no jurisdiction to take cognizance of the
followed as s consequence of the granting of the writ attaching all petition for insolvency because petitioners
of the property of the petitioner on the sole allegation that it "is are not resident creditors of CMI in contemplation of the
not residing in the Philippine Islands". As the petitioner's business Insolvency Law; and
was a going concern, which the sheriff, who levied the writ, 3) the Court has no power to set aside the attachment
obviously could not manage, it became necessary on the same day issued in favor of intervenors-oppositors SIHI and SFCI.
for the court to appoint a receiver. This receiver, as the demurrer
admits, "was and is an employee working under the president of CMI filed its Answer to the petition for insolvency, asserting in the
the respondent Philippine Advertising Corporation, so that to all main that it was not insolvent.
intents and purposes, all the property of the petitioner in the SIHI and SFCI then filed a Motion for Summary Judgment "on the
Philippine Islands was seized and delivered into the hands of the ground that, based on the pleadings and admissions on record, the
respondent Philippine Advertising Corporation." [Both prayers trial court had no jurisdiction to adjudicate CMI insolvent since the
granted] petitioners (respondent foreign banks) are not "resident creditors"
of CMI as required under the Insolvency Law."

G.R. Nos. 79926-27 October 17, 1991 RTC ruled that, an insolvency court could "not acquire jurisdiction
STATE INVESTMENT HOUSE, INC. vs to adjudicate the debtor as insolvent if the creditors petitioning for
1. CITIBANK, N.A., adjudication of insolvency are not "residents" of the Philippines"
2. BANK OF AMERICA, NT & SA, citing a decision of the California Supreme Court " And it declared
3. HONGKONG & SHANGHAI BANKING CORPORATION that since petitioners had been merely licensed to do business in
the Philippines, they could not be deemed residents thereof.
A FOREIGN CORPORATION LICITLY DOING BUSINESS IN THE
PHILIPPINES, WHICH IS A DEFENDANT IN A CIVIL SUIT, MAY
NOT BE CONSIDERED A NON-RESIDENT WITHIN THE SCOPE OF CA: TC has placed "a very strained and restrictive interpretation of
THE LEGAL PROVISION AUTHORIZING ATTACHMENT AGAINST A the term "resident," as to exclude foreign banks which have been
DEFENDANT NOT RESIDING IN THE PHILIPPINE ISLANDS;" in operating in this country since the early part of the century," and
other words, a preliminary attachment may not be applied for "the better approach . . . would have been to harmonize the
and granted solely on the asserted fact that the defendant is a provisions . . . (of the Insolvency Law) with similar provisions of
foreign corporation authorized to do business in the Philippines other succeeding laws, like the Corporation Code of the Philippines,
and is consequently and necessarily, "a party who resides out the General Banking Act, the Offshore Banking Law and the
of the Philippines." National Internal Revenue Code in connection with or related to
their doing business in the Philippines;"
Section 20 of the Insolvency Law (Act No. 1956, as amended, eff.
May 20, 1909) reading in part as follows: In light of said statutes, the three banks "are in truth and in fact
considered as "residents" of the Philippines for purposes of doing
An adjudication of insolvency may be made on the business in the Philippines and even for taxation matters;" the
petition of three or more creditors, residents of the banks had "complied with all the laws, rules and regulations (for
Philippine Islands, whose credits or demands accrued in doing business in the country) and have been doing business in the
the Philippine Islands, and the amount of which credits Philippines for many years now;" that the authority granted to
or demands are in the aggregate not less than one them by the Securities and Exchange Commission upon orders of
thousand pesos: Provided, that none of said creditors the Monetary Board "covers not only transacting banking business .
has become a creditor by assignment, however made, . . but likewise maintaining suits "for recovery of any debt, claims or
within thirty days prior to the filing of said petition. Such demand whatsoever," and that their petition for involuntary
petition must be filed in the Court of First Instance of insolvency was "nothing more than a suit aimed at recovering a
the province or city in which the debtor resides or has debt granted by them to Consolidated Mines, Inc., or at least a
his principal place of business, and must be verified by portion thereof;"
at least three (3) of the petitioners. . . .
To deprive the foreign banks of their right to proceed against their
Foreign banks filed a petition for involuntary insolvency of debtors through insolvency proceedings would "contravene the
Consolidated Mines, Inc. (CMI). On November, 1981, State basic standards of equity and fair play, . . . would discourage their
Investment House, Inc. (SIHI) and State Financing Center, Inc. (SFCI) operations in economic development projects that create not only

22
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

jobs for our people but also opportunities for advancement as a "banking institutions" and "bank" are used in the
nation;" and Act, 23 declaring on the contrary that in "all matters
the terms "residence" and "domicile" do not mean the same thing, not specifically covered by special provisions applicable only
and that as regards a corporation, it is generally deemed an to foreign banks, or their branches and agencies in the
"inhabitant" of the state under whose law it is incorporated, and Philippines, said foreign banks or their branches and
has a "residence" wherever it conducts its ordinary business, and agencies lawfully doing business in the Philippines "shall be
may have its legal "domicile" in one place and "residence" in bound by all laws, rules, and regulations applicable to
another. domestic banking corporations of the same class, except
such laws, rules and regulations as provided for the
SIHI and SFCI moved for reconsideration contending that in fact creation, formation, organization, or dissolution of
and in law, the three banks are not Philippine residents because: corporations or as fix the relation, liabilities, responsibilities,
the license granted to the banks to do business in the Philippines or duties of members, stockholders or officers or
does not make them residents; corporations." 24

ISSUE: WON a foreign corporation licitly doing business in the


Philippines, which is a defendant in a civil suit, may be considered A FOREIGN CORPORATION LICITLY DOING BUSINESS IN THE
a non-resident for the purpose of attachment? NO PHILIPPINES, WHICH IS A DEFENDANT IN A CIVIL SUIT, MAY NOT
BE CONSIDERED A NON-RESIDENT within the scope of the legal
HELD: provision authorizing attachment against a defendant not residing
The concept of a foreign corporation under Section 123 of the in the Philippine Islands;" 26 in other words, a preliminary
Corporation Code is of "one formed, organized or existing under attachment may not be applied for and granted solely on the
laws other than those of the Philippines and . . . (which) laws allow asserted fact that the defendant is a foreign corporation
Filipino citizens and corporations to do business . . . ." There is no authorized to do business in the Philippines and is
question that the three banks are foreign corporations in this consequently and necessarily, "a party who resides out of the
sence, with principal offices situated outside of the Philippines. Philippines." Parenthetically, if it may not be considered as a party
There is no question either that said banks have been licensed to not residing in the Philippines, or as a party who resides out of the
do business in this country and have in fact been doing business country, then, logically, it must be considered a party who does
here for many years, through branch offices or agencies, including reside in the Philippines, who is a resident of the country.
"foreign currency deposit units;" in fact, one of them, Hongkong &
Shanghai Bank has been doing business in the Philippines since as
. . . OUR LAWS AND JURISPRUDENCE INDICATE A PURPOSE TO
early as 1875.
ASSIMILATE FOREIGN CORPORATIONS, DULY LICENSED TO DO
BUSINESS HERE, TO THE STATUS OF DOMESTIC CORPORATIONS.
We think it would be entirely out of line with this policy should we
The issue is whether these Philippine branches or units may be make a discrimination against a foreign corporation, like the
considered "residents of the Philippine Islands" as that term is used petitioner, and subject its property to the harsh writ of seizure by
in Section 20 of the Insolvency Law, supra, 20 or residents of the attachment when it has complied not only with every requirement
state under the laws of which they were respectively incorporated. of law made specially of foreign corporations, but in addition with
The answer cannot be found in the Insolvency Law itself, which every requirement of law made of domestic corporations. . . . .
contains no definition of the term, resident, or any clear indication Obviously, the assimilation of foreign corporations authorized to
of its meaning. There are however other statutes, albeit of do business in the Philippines "to the status
subsequent enactment and effectivity, from which enlightening of domestic corporations," subsumes their being found and
notions of the term may be derived. operating as corporations, hence, residing, in the country.

The Court cannot thus accept the petitioners' theory that


NIRC declares that the term "'resident foreign corporation'
corporations may not have a residence (i.e., the place where they
applies to a foreign corporation engaged in trade or
operate and transact business) separate from their domicile (i.e.,
business within the Philippines," as distinguished from a "
the state of their formation or organization), and that they may be
"non-resident foreign corporation" . . . (which is one) not
considered by other states as residents only for limited and
engaged in trade or business within the Philippines."
exclusive purposes. Of course, as petitioners correctly aver, IT IS
NOT REALLY THE GRANT OF A LICENSE TO A FOREIGN
The Offshore Banking Law, Presidential Decree No. 1034,
CORPORATION TO DO BUSINESS IN THIS COUNTRY THAT MAKES
states "that branches, subsidiaries, affiliation, extension
IT A RESIDENT; THE LICENSE MERELY GIVES LEGITIMACY TO ITS
offices or any other units of corporation or juridical person
DOING BUSINESS HERE. What effectively makes such a foreign
organized under the laws of any foreign country operating in
corporation a resident corporation in the Philippines is its actually
the Philippines shall be considered residents of the
being in the Philippines and licitly doing business here, "locality of
Philippines."
existence" being, to repeat, the "necessary element in . . . (the)
signification" of the term, resident corporation.
The General Banking Act, Republic Act No. 337, places
"branches and agencies in the Philippines of foreign banks . .
. (which are) called Philippine branches," in the same
G.R. No. L-825 July 20, 1948
category as "commercial banks, savings associations,
mortgage banks, development banks, rural banks, stock ROMAN MABANAG, VS JOSEPH M. GALLEMORE,
savings and loan associations" (which have been formed and May the court render judgment in a case where it failed to
organized under Philippine laws), making no distinction obtain personal jurisdiction over a non-resident defendant?
between the former and the later in so far, as the terms Yes, if it was able to acquire jurisdiction over the res, the case
may proceed to judgment if there is property in the custody of

23
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

the court that can be applied to its satisfaction. In attachment status is in question resides, or where the
proceedings vs a non-resident defendant where personal service property of the defendant or a part thereof
on him is lacking, it is elementary that the court must obtain involved in the litigation is located.
jurisdiction over the property of the defendant. If no steps have
been taken to acquire jurisdiction over the defendants person, Literally this Court said:
and he has not appeared and answered or otherwise submitted Jurisdiction over the property which is the subject of litigation may
himself to the jurisdiction of the court, the court is without result either
jurisdiction to render judgment until there has been lawful 1. from a SEIZURE of the property under legal process,
seizure of the property owned by him within the jurisdiction of whereby it is brought into the actual custody of the law,
the court. or it may result
2. from the INSTITUTION OF LEGAL PROCEEDINGS
wherein, under special provisions of law, the power of
the court over the property is recognized and made
Service of Summons to Non-resident defendant may be effected
effective.
by
a) Personal service out of the country w/ leave of court
In the latter case the property, though at all times within the
b) Publication w/ leave of court
potential power of the court, may never be taken into actual
c) Any other manner the court may deem sufficient
custody at all.
ISSUE: whether the action is in personam or one in rem.
1. An illustration of the jurisdiction acquired by actual
FACTS:
seizure is found in attachment proceedings, where the
Roman Mabanag filed an action to recover P735.18, an amount
property is seized at the beginning of the action, or
said to have been paid by him to Joseph Gallemore for the sale of
some subsequent stage of its progress, and held to abide
the two parcels of land which was afterwards annulled. Joseph is
the final event of the litigation.
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
2. An illustration of what we term potential jurisdiction
resident of the municipality of Misamis Occidental. This debt, upon
over the res, is found in the proceeding to register the
petition of the plaintiff, after the filing of the complaint and before
title of land under our system for the registration of
the suit was dismissed, was attached to the extent of plaintiff's
land. Here the court, without taking actual physical
claim for the payment of which the action was brought. But the
control over the property assumes, at the instance of
attachment was dissolved in the same order dismissing the case.
some person claiming to be owner, to exercise a
jurisdiction in rem over the property and to adjudicate
The trial court opined that it "has no authority nor jurisdiction to
the title in favor of the petitioner against all the world.
render judgment against the herein defendant, Joseph M.
(Banco Espaol-Filipino vs. Palanca, supra, 927-928.).
Gallemore for being a non-resident.
In an ordinary attachment proceeding, if the defendant is not
It was Atty. Valeriano S. Kaamino who has amicus curi filed the
personally served, the preliminary seizure is to be considered
motion to dismiss and to set aside the attachment. There is no
necessary in order to confer jurisdiction upon the court. In this case
appearance before this Court to oppose the appeal.
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
ISSUE: WON the dissolution of the attachment was proper? NO.
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
HELD:
though the property had been seized upon attachment. (Roller vs.
Section 2, Rule 5, of the Rules of Court provides: If any of the
Holly, 176 U.S., 398, 405; 44 Law. ed., 520.) It results that the mere
defendants does not reside and is not found in the Philippines, and
circumstance that in an attachment the property may be seized at
the action effects the personal status of the plaintiff, or any
the inception of the proceedings, while in the foreclosure suit it is
property of the defendant located in the Philippines, the action may
not taken into legal custody until the time comes for the sale, does
be commenced and tried in the province where the plaintiff resides
not materially affect the fundamental principle involved in both
or the property, or any portion thereof, is situated or found.
cases, which is that the court is here exercising
a jurisdiction over the property in a proceeding directed
AS A GENERAL RULE, WHEN THE DEFENDANT IS NOT RESIDING
essentially in rem. (Id., 929-930.).
AND IS NOT FOUND IN THE PHILIPPINES, THE PHILIPPINE COURTS
CANNOT TRY ANY CASE AGAINST HIM because of the impossibility
When, however, the action relates to property located in the
of acquiring jurisdiction over his person, unless he voluntarily
Philippines, the Philippine courts may validly try the case, upon the
appears in court.
principles that a "State, through its tribunals, may subject property
But, when the action affects the personal status of the
situated within its limit owned by non-residents to the payment of
plaintiff residing in the Philippines, or is intended to
the demand of its own citizens against them; and the exercise of
seize or dispose of any property, real or personal, of
this jurisdiction in no respect infringes upon the sovereignty of the
the defendant, located in the Philippines, it may be
State were the owners are domiciled. Every State owes protection
validly tried by the Philippine courts, for then, they have
to its own citizens; and, when non-residents deal with them, it is a
jurisdiction over the res, i.e., the personal status of the
legitimate and just exercise of authority to hold any appropriate
plaintiff or the property of the defendant, and their
any property owned by such non-residents to satisfy the claims of
jurisdiction over the person of the non-resident
its citizens. It is in virtue of the State's jurisdiction over the
defendant is not essential. Venue in such cases may be
property of the non-resident situated within its limits that its
laid in the province where the plaintiff whose personal
tribunals can inquire into the non-resident's obligations to its own

24
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

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 PROFESSIONAL VIDEO, INC., vs TECHNICAL
Supplement], No. 7, p. 216.). EDUCATION AND SKILLS DEVELOPMENT
A fuller statement of the principle whereunder attachment or AUTHORITY
garnishment of property of a non-resident defendant confers
jurisdiction on the court in an otherwise personal action, appears The affidavit filed by PROVI through Elmer Ramiro, its President
in two well known and authoritative works: and Chief Executive Officer, only contained a general allegation
The main action in an attachment or garnishment suit that TESDA had fraudulent misapplied or converted the amount
is in rem until jurisdiction of the defendant is secured. of P10,975,000.00 that was allotted to it.
Thereafter, it is in personam and also in rem, unless
jurisdiction of the res is lost as by dissolution of the FACTS:
attachment. If jurisdiction of the defendant is acquired PROVI is an entity engaged in the sale of high technology
but jurisdiction of the res is lost, it is then purely in equipment, information technology products and broadcast
personam. . . a proceeding against property without devices, including the supply of plastic card printing and security
jurisdiction of the person of the defendant is in facilities.
substance a proceeding in rem; and where there is
jurisdiction of the defendant, but the proceedings TESDA is an instrumentality of the government established under
against the property continues, that proceedings is none Republic Act (R.A.) No. 7796 (the TESDA Act of 1994) and attached
the less necessarily in rem, although in form there is but to the (DOLE) to "develop and establish a national system of skills
a single proceeding. (4 Am. Jur., 556-557.) standardization, testing, and certification in the country."6 To fulfill
this mandate, it sought to issue security-printed certification
As the remedy is administered in some states, the and/or identification polyvinyl (PVC) cards to trainees who have
theory of an attachment, whether it is by process passed the certification process.
against or to subject the property or effects of a
resident or non-resident of the state, is that it partakes TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted
essentially of the nature and character of the two (2) public biddings on June 25, 1999 and July 22, 1999 for the
proceeding in personam and not of a proceeding in rem. printing and encoding of PVC cards. A failure of bidding resulted in
And if the defendant appears the action proceeds in both instances since only two (2) bidders PROVI and Sirex Phils.
accordance with the practice governing proceedings in Corp. submitted proposals.
personam. But were the defendant fails to appear in the
action, the proceeding is to be considered as one in the Due to the failed bidding, the PBAC recommended that TESDA
nature of a proceeding in rem. And where the court acts enter into a negotiated contract with PROVI. On December 29,
directly on the property, the title thereof being charged 1999, TESDA and PROVI signed and executed their "Contract
by the court without the intervention of the party, the Agreement Project: PVC ID Card Issuance" (the Contract
proceeding unquestionably is one in rem in the fullest Agreement) for the provision of goods and services in the printing
meaning of the term. and encoding of PVC cards.7 Under this Contract Agreement, PROVI
was to provide TESDA with the system and equipment compliant
In attachment proceedings against a non-resident with the specifications defined in the Technical Proposal. In return,
defendant where personal service on him is lacking, it is TESDA would pay PROVI the amount of (P39,475,000) within
elementary that the court must obtain jurisdiction of fifteen (15) days after TESDAs acceptance of the contracted goods
the property of the defendant. If no steps have been and services.
taken to acquire jurisdiction of the defendant's person,
and he has not appeared and answered or otherwise On August 24, 2000, TESDA and PROVI executed an "Addendum to
submitted himself to the jurisdiction of the court, the the Contract Agreement Project: PVC ID Card Issuance"
court is without jurisdiction to render judgment until (Addendum),8 whose terms bound PROVI to deliver one hundred
there has been a lawful seizure of property owned by percent (100%) of the enumerated supplies to TESDA consisting of
him within the jurisdiction of the court. (2 R. C. L., 800- five hundred thousand (500,000) pieces of security foil; five (5)
804.). pieces of security die with TESDA seal; five hundred thousand
(500,000) pieces of pre-printed and customized identification
Tested by the foregoing decisions and authorities, the Court has cards; one hundred thousand (100,000) pieces of scannable answer
acquired jurisdiction of the case at bar by virtue of the attachment sheets; and five hundred thousand (500,000) customized TESDA
of the defendant's credit. though no jurisdiction is obtained over holographic laminate. In addition, PROVI would install and maintain
the debtor's person, the case may proceed to judgment if there is the following equipment: one (1) unit of Micropoise, two (2) units
property in the custody of the court that can be applied to its of card printer, three (3) units of flatbed scanner, one (1) unit of
satisfaction. It is our judgment that the court below erred in OMR scanner, one (1) unit of Server, and seven (7) units of
dismissing the case and dissolving the attachment. personal computer.

TESDA in turn undertook to pay PROVI thirty percent (30%) of the


total cost of the supplies within thirty (30) days after receipt and
acceptance of the contracted supplies, with the balance payable
within thirty (30) days after the initial payment.

25
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

According to PROVI, it delivered the following items to TESDA on for the payment of the contracted supplies and services, as
the dates indicated: evidenced by the Certification as to Availability of Funds.
Date Particulars Amount
TESDA claims that it entered the Contract Agreement and
Addendum in the performance of its governmental function to
26 April 48,500 pre-printed
P 2,764,500.00 develop and establish a national system of skills standardization,
2000 cards
testing, and certification; in the performance of this governmental
07 June 330,000 pre-printed function, TESDA is immune from suit. Even assuming that it had
18,810,000.00 impliedly consented to be sued by entering into a contract with
2000 cards
PROVI, TESDA posits that the RTC still did not have the power to
07 August 121,500 pre-printed garnish or attach its funds since these are public funds. Lastly,
6,925,500.00 TESDA points out that PROVI failed to comply with the elements for
2000 cards
the valid issuance of a writ of preliminary attachment, as set forth
26 April 100,000 scannable in Section 1, Rule 57 of the 1997 Rules of Civil Procedure.
600,000.00
2000 answer sheets

06 June 5 Micro-Poise ISSUE: WON the writ of attachment vs TESDA and its funds, is
375,000.00
2000 customized die valid? NO.
13 June 35 boxes @ 15,000 10,000,000.00 HELD:
2000 imp/box PROVI has not shown that it is entitled to the writ of attachment.
Custom hologram Foil Even without the benefit of any immunity from suit, the
attachment of TESDA funds should not have been granted, as
Total P 39,475,000.00
PROVI failed to prove that TESDA "fraudulently misapplied or
PROVI further alleged that out of TESDAs liability converted funds allocated under the Certificate as to Availability of
of P39,475,000.00, TESDA paid PROVI only P3,739,500.00, leaving Funds." Section 1, Rule 57 of the Rules of Court sets forth the
an outstanding balance of P35,735,500.00, as evidenced by PROVIs grounds for issuance of a writ of preliminary attachment,
Statement of Account.9 Despite the two demand letters dated
March 8 and April 27, 2001 that PROVI sent TESDA,10 the Jurisprudence teaches us that the rule on the issuance of a writ of
outstanding balance remained unpaid. attachment must be construed strictly in favor of the defendant.
Attachment, a harsh remedy, must be issued only on concrete and
PROVI filed with the RTC a complaint for sum of money with specific grounds and not on general averments merely quoting the
damages against TESDA. PROVI additionally prayed for the issuance words of the pertinent rules.42 Thus, the applicants affidavit must
of a writ of preliminary attachment/garnishment against TESDA. contain statements clearly showing that the ground relied upon for
RTC granted PROVIs prayer and issued a writ of preliminary the attachment exists.
attachment against the properties of TESDA not exempt from
execution in the amount of P35,000,000.00.11 Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon,
applies only where money or property has been embezzled or
TESDA filed a Motion to Discharge/Quash the Writ of Attachment, converted by a public officer, an officer of a corporation, or some
arguing mainly that public funds cannot be the subject of other person who took advantage of his fiduciary position or who
garnishment.12 The RTC denied TESDAs motion, and subsequently willfully violated his duty.
ordered the manager of the Land Bank of the Philippines to
produce TESDAs bank statement for the garnishment of the PROVI, in this case, never entrusted any money or property to
covered amount.13 TESDA. While the Contract Agreement is supported by a Certificate
as to Availability of Funds (Certificate) issued by the Chief of
The CA set aside the RTCs orders after finding that: (a) TESDAs TESDAs Accounting Division, this Certificate does not automatically
funds are public in nature and, therefore, exempt from confer ownership over the funds to PROVI. Absent any actual
garnishment; and (b) TESDAs purchase of the PVC cards was a disbursement, these funds form part of TESDAs public funds, and
necessary incident of its governmental function; consequently, it TESDAs failure to pay PROVI the amount stated in the Certificate
ruled that there was no legal basis for the issuance of a writ of cannot be construed as an act of fraudulent misapplication or
preliminary attachment/garnishment.15 The CA subsequently embezzlement. In this regard, Section 86 of Presidential Decree No.
denied PROVIs motion for reconsideration;16 1445 (The Accounting Code) provides:
Section 86. Certificate showing appropriation to meet
contract. Except in a case of a contract for personal
ISSUE: whether or not the writ of attachment against TESDA and its
service, for supplies for current consumption or to be
funds, to cover PROVIs claim against TESDA, is valid.
carried in stock not exceeding the estimated
consumption for three months, or banking transactions
PROVI argues that the RTC correctly found that when TESDA
of government-owned or controlled banks, no contract
entered into a purely commercial contract with PROVI, TESDA went
involving the expenditure of public funds by any
to the level of an ordinary private citizen and could no longer use
government agency shall be entered into or authorized
the defense of state immunity from suit. PROVI further contends
unless the proper accounting official or the agency
that it has alleged sufficient ultimate facts in the affidavit it
concerned shall have certified to the officer entering
submitted to support its application for a writ of preliminary
into the obligation that funds have been duly
attachment. Lastly, PROVI maintains that sufficient basis existed
appropriated for the purpose and that the amount
for the RTCs grant of the writ of preliminary attachment, since
necessary to cover the proposed contract for the
TESDA fraudulently misapplied or embezzled the money earmarked

26
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

current fiscal year is available for expenditure on necessary in order for the court to acquire
account thereof, subject to verification by the auditor jurisdiction to hear the case.
concerned. The certification signed by the proper
accounting official and the auditor who verified it, shall RULE 14, SEC. 16 RESIDENTS TEMPORARILY OUT OF THE
be attached to and become an integral part of the PH
proposed contract, and the sum so certified shall not Extraterritorial Service
thereafter be available for expenditure for any other 1) Personal service out of the Ph w/ leave of court
purpose until the obligation of the government agency 2) Publication coupled with sending by registered
concerned under the contract is fully extinguished. mail of the copy of the summons and the court
[Emphasis supplied.] order to the last known address of the defendant
3) In any other manner which the court may deem
By law, therefore, the amount stated in the Certification should be sufficient
intact and remains devoted to its purpose since its original
appropriation. PROVI can rebut the presumption that necessarily RULE 14, SEC. 7 - SUBSTITUTED SERVICE is the Normal mode
arises from the cited provision only by evidence to the contrary. No of service of summons that will confer jurisdiction on the
such evidence has been adduced. court over the person of the defendant.
1) Leaving copies of the summons at the
Section 1 (d), Rule 57 of the Rules of Court applies where a party is defendants residence w/ some person of
guilty of fraud in contracting a debt or incurring an obligation, or in suitable discretion residing therein
concealing or disposing of the property for the taking, detention or 2) Leaving copies at the defendants office or
conversion of which the action is brought. regular place of business w/ some
competent person in charge thereof
In Wee v. Tankiansee,43 we held that for a writ of attachment to Hence, the court may acquire jurisdiction over an action in
issue under this Rule, the applicant must sufficiently show the personam by mere substituted service w/o need of attaching
factual circumstances of the alleged fraud because fraudulent the property of the defendant.
intent cannot be inferred from the debtors mere non-payment of
the debt or failure to comply with his obligation. The affidavit,
being the foundation of the writ, must contain particulars showing FACTS:
how the imputed fraud was committed for the court to decide PCIB filed vs Atty. Alejandro a complaint3 for sum of money with
whether or not to issue the writ. To reiterate, a writ of attachment prayer for the issuance of a writ of preliminary attachment. It
can only be granted on concrete and specific grounds and not on alleged that respondent, a resident of Hong Kong, executed in its
general averments merely quoting the words of the rules.44 favor a promissory note obligating himself to pay P249,828,588.90
plus interest. In view of the fluctuations in the foreign exchange
The affidavit filed by PROVI through Elmer Ramiro, its President rates, it requested the respondent to put up additional security for
and Chief Executive Officer, only contained a general allegation the loan. Respondent, however, sought a reconsideration of said
that TESDA had fraudulent misapplied or converted the amount request.
of P10,975,000.00 that was allotted to it. Clearly, we cannot infer
any finding of fraud from PROVIs vague assertion, and the CA In praying for the issuance of a writ of preliminary attachment
correctly ruled that the lower court acted with grave abuse of under Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of
discretion in granting the writ of attachment despite want of any Court, petitioner alleged that
valid ground for its issuance.1avvphi1 i. respondent fraudulently withdrew his unassigned deposits
notwithstanding his verbal promise to PCIB Assistant Vice
President Corazon B. Nepomuceno not to withdraw the
For all these reasons, we support the appellate courts conclusion same prior to their assignment as security for the loan;
that no valid ground exists to support the grant of the writ of ii. that respondent is not a resident of the Philippines. The
attachment against TESDA. The CAs annulment and setting aside application for the issuance of a writ was supported with the
of the Orders of the RTC were therefore fully in order. affidavit of Nepomuceno.6

TC granted the application and issued the writ ex parte [based on


sec. 1 (f) ] causing the bank deposits of respondent with (RCBC) to
be garnished. On October 27, 1997, respondent, through counsel,
filed a manifestation informing the court that he is voluntarily
PCIB VS JOSEPH ANTHONY M. ALEJANDRO, submitting to its jurisdiction.8

The purpose of the attachment was to enable the court to acquire Respondents motion to quash the writ contending that the
jurisdiction over the action by the actual or constructive seizure of withdrawal of his unassigned deposits was not fraudulent as it was
the property in those instances where personal service of approved by petitioner. He also alleged that petitioner knew that
summons on the defendant cannot be effected [the court may he maintains a permanent residence at Calle Victoria, Ciudad
acquire jurisdiction over an action in personam by mere Regina, Batasan Hills, Quezon City, and an office address in Makati
substituted service without need of attaching the property of the City at the Law Firm Romulo Mabanta Buenaventura Sayoc & De
defendant.] los Angeles, 10 where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives.
Respondent added that he is the managing partner of the Hong
RULE WITH RESPECT TO ATTACHMENT WHEN DEFENDANT IS Kong branch of said Law Firm; that his stay in Hong Kong is only
TEMPORARILY OUT OF THE PH temporary; and that he frequently travels back to the Philippines.
- Attachment in an action in personam is not always

27
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

TC granted the motion to quash holding that the withdrawal of (f) In an action against a party x x x on whom
respondents unassigned deposits was not intended to defraud summons may be
petitioner. It also concluded that petitioner misrepresented and served by publication.
suppressed the facts regarding respondents residence considering
that it has personal and official knowledge that for purposes of THE PURPOSES OF PRELIMINARY ATTACHMENT ARE:
service of summons, respondents residence and office addresses 1) to seize the property of the debtor in advance of final
are located in the Philippines. judgment and to hold it for purposes of satisfying said
judgment, as in the grounds stated in paragraphs (a) to (e) of
Section 1, Rule 57 of the Rules of Court; or
Alejandos claim for damages in the amount of P25 Million17 on
2) to acquire jurisdiction over the action by actual or
the attachment bond on account of the wrongful garnishment of
constructive seizure of the property in those instances where
his deposits. TC awarded damages to respondent in the amount of
personal or substituted service of summons on the defendant
P25 Million.
cannot be effected, as in paragraph (f) of the same
provision.27
CA affirmed: in claiming that respondent was not a resident of the
Philippines, petitioner cannot be said to have been in good faith Corollarily, in actions in personam, such as the instant case for
considering that its knowledge of respondents Philippine collection of sum of money,28 summons must be served by
residence and office address goes into the very issue of the trial personal or substituted service, otherwise the court will not
courts jurisdiction which would have been defective had acquire jurisdiction over the defendant.
respondent not voluntarily appeared before it.
In case the defendant does not reside and is not found in the
ISSUE: Was the ground invoked by PCIB [that Alejandro is a non- Philippines (and hence personal and substituted service cannot be
resident], correct? YES effected), the remedy of the plaintiff in order for the court to
acquire jurisdiction to try the case is to convert the action into a
HELD: proceeding in rem or quasi in rem by attaching the property of the
Petitioners contention defendant.29
Even if respondent is considered a resident of the Philippines,
attachment is still proper under Section 1, paragraph (f), Rule 57 of Thus, in order to acquire jurisdiction in actions in personam where
the Rules of Court since he (respondent) is a resident who is defendant resides out of and is not found in the Philippines, it
temporarily out of the Philippines upon whom service of summons becomes a matter of course for the court to convert the action into
may be effected by publication. a proceeding in rem or quasi in rem by attaching the defendants
property. The service of summons in this case (which may be by
PCIB COULD NOT DENY THEIR PERSONAL AND OFFICIAL publication coupled with the sending by registered mail of the copy
KNOWLEDGE THAT DEFENDANTS PERMANENT AND OFFICIAL of the summons and the court order to the last known address of
RESIDENCE FOR PURPOSES OF SERVICE OF SUMMONS IS IN THE the defendant), is no longer for the purpose of acquiring
PHILIPPINES. BANK through its contracting officers Vice President jurisdiction but for compliance with the requirements of due
Corazon B. Nepomuceno and Executive Vice President Jose Ramon process.30
F. Revilla, personally transacted with defendant mainly through
defendants permanent residence in METRO-MANILA, either in However, where the defendant is a resident who is temporarily
defendants home address in Quezon City or his main business out of the Philippines, attachment of his/her property in an action
address in MAKATI and while at times follow ups were made in personam, is not always necessary in order for the court to
through defendants temporary home and business addresses in acquire jurisdiction to hear the case.
Hongkong..
SUBSTITUTED SERVICE OF SUMMONS (under the present Section
DISPOSING PROPERTIES WITH INTENT TO DEFRAUD HIS 7, Rule 14 of the Rules of Court) is the normal mode of service of
CREDITORS, INSUFFICIENT GROUND. THE AMOUNT WITHDRAWN summons that will confer jurisdiction on the court over the person
WAS NOT PART OF DEFENDANTS PESO DEPOSITS ASSIGNED of residents temporarily out of the Philippines. Meaning, service of
WITH THE BANK to secure the loan and as proof that the summons may be effected by
withdrawal was not intended to defraud plaintiff as creditor is that (e) leaving copies of the summons at the defendants residence
plaintiff approved and allowed said withdrawals. It is even noted with some person of suitable discretion residing therein, or
that when the Court granted the prayer for attachment it was (f) by leaving copies at the defendants office or regular place of
mainly on the first ground under Section 1(f) of Rule 57 of the 1997 business with some competent person in charge thereof.32
Rules of Civil Procedure, that defendant resides out of the
Philippines. Hence, the court may acquire jurisdiction over an action in
personam by mere substituted service without need of attaching
plaintiff had to resort to this misrepresentation that defendant was the property of the defendant.
residing out of the Philippines and suppressed the fact that
defendants permanent residence is in METRO MANILA where he RATIONALE:
could be served with summons. Montalban v. Maximo,33 in this wise:
A man temporarily absent from this country leaves a definite place
PCIB: respondent can be considered a resident who is temporarily of residence, a dwelling where he lives, a local base, so to speak, to
out of the Philippines upon whom service of summons may be which any inquiry about him may be directed and where he is
effected by publication, and therefore qualifies as among those bound to return. Where one temporarily absents himself, he leaves
against whom a writ of attachment may be issued under Section 1, his affairs in the hands of one who may be reasonably expected to
paragraph (f), Rule 57 of the Rules of Court which provides: act in his place and stead; to do all that is necessary to protect his
interests; and to communicate with him from time to time any

28
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

incident of importance that may affect him or his business or his


affairs. It is usual for such a man to leave at his home or with his
business associates information as to where he may be contacted
in the event a question that affects him crops up.

Thus, 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.

PA SHOULD BE RESORTED TO ONLY WHEN NECESSARY AND AS A


LAST REMEDY. 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.34 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.35 I

29
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

entered a special appearance for the limited purpose of


Section 2. Issuance and contents of order. An order of objecting to the jurisdiction of the court. He simultaneously
attachment may be issued either ex parte or upon motion with filed a written objection to the jurisdiction of the trial court to hear
notice and hearing by the court in which the action is pending, or or act upon the Petition for Issuance of a Preliminary Writ of
by the Court of Appeals or the Supreme Court, and must require Attachment. In this written objection, petitioner prayed for denial
the sheriff of the court to attach so much of the property in the of that Petition for lack of jurisdiction over the person of the
Philippines of the party against whom it is issued, not exempt from petitioner (defendant therein) upon the ground that since no
execution, as may be sufficient to satisfy the applicant's demand, summons had been served upon him in the main case, no
unless such party makes deposit or gives a bond as hereinafter jurisdiction over the person of the petitioner had been acquired by
provided in an amount equal to that fixed in the order, which may the trial court.
be the amount sufficient to satisfy the applicant's demand or the
value of the property to be attached as stated by the applicant, TC: denied the petitioner's objection and issued in open court an
exclusive of costs. Several writs may be issued at the same time to order which, in relevant part, read as follows:
the sheriffs of the courts of different judicial regions. (2a) Under Section 1, Rule 57, Rules of Court, it is clear that a
plaintiff or any proper party may "... at the
How is the writ of attachment issued? commencement of the action or at any time thereafter,
1) Ex parte [from one sided / partisan point of view] have the property of the adverse party attached as the
2) Upon motion with notice and hearing security for the satisfaction of any judgment ..." This
rule would overrule the contention that this Court has
Who can issue? no jurisdiction to act on the application, although if
1) By the court in which the action is pending counsel for defendant so desire, she is given five (5)
2) CA days from today within which to submit her further
3) SC position why the writ should not be issued, upon the
receipt of which or expiration of the period, the pending
Can you attach properties outside of the Ph? NO. because our incident shall be considered submitted for resolution.
courts do not have jurisdiction over properties outside of its (Underscoring in the original) 1
territorial jurisdiction. It is beyond the reach of our courts.
CA denied, decision reads:
How can you defeat a writ? The grounds raised in this petition state that the court a
1) By deposit or quo had not acquired jurisdiction over defendant (now
2) a bond in an amount equal to that fixed in the order, petitioner) since no summons had been served on him,
which may be the amount sufficient to satisfy the ISSUE: whether respondent Judge may issue a writ of
applicant's demand or the value of the property to be preliminary attachment against petitioner before
attached as stated by the applicant, exclusive of costs. summons is served on the latter? NO.

May the court issue several writs? HELD: Under Sec. 1, Rule 57, it is clear that, at the
Several writs may be issued at the same time to the sheriffs of the commencement of the action, a party may have the
courts of different judicial regions. (2a) property of the adverse party attached as security. The
resolution of this issue depends, therefore, on what is
G.R. No. 84034 December 22, 1988 meant by "Commencement of the action." Moran, citing
American jurisprudence on this point, stated thus:
"Commencement of action. Action is commenced by
ALBERTO SIEVERT, vs. COURT OF APPEALS, HON. filing of the complaint, even though summons is not
JUDGE ARTEMON D. LUNA and AURELIO issued until a later date." (Comment on the Rules of
CAMPOSANO, Court, Vol. I, p. 150, 1979). Thus, a writ of preliminary
attachment may issue upon filing of the complaint even
A COURT WHICH HAS NOT ACQUIRED JURISDICTION OVER THE before issuance of the summons.
PERSON OF DEFENDANT, CANNOT BIND THAT DEFENDANT WHEREFORE, for lack of merit, the petition is hereby
WHETHER IN THE MAIN CASE OR IN ANY ANCILLARY PROCEEDING denied and, accordingly, dismissed. (Emphasis
SUCH AS ATTACHMENT PROCEEDINGS. The service of a petition supplied) 2
for preliminary attachment without the prior or simultaneous
service of summons and a copy of the complaint in the main case ISSUE: May a writ of preliminary attachment issue upon filing of
and that is what happened in this case does not of course the complaint even prior to issuance of the summons? NO.
confer jurisdiction upon the issuing court over the person of the
defendant. HELD:
The two (2) assignments of error relate to the single issue which we
FACTS: Alberto Sievert a citizen and resident of the Philippines perceive to be at stake here, that is, whether a court which has not
received by mail a Petition for Issuance of a Preliminary acquired jurisdiction over the person of the defendant in the main
Attachment filed with the Regional Trial Court of Manila Branch 32 case, may bind such defendant or his property by issuing a writ of
in Civil Case No. 88-44346. He had not previously received any preliminary attachment.
summons and any copy of a complaint against him in Civil Case No.
88-44346. Both the trial court and the Court of Appeals held that the
defendant may be bound by a writ of preliminary attachment even
On the day set for hearing of the Petition for a Preliminary Writ of before summons together with a copy of the complaint in the main
Attachment, petitioner's counsel went before the trial court and case has been validly served upon him.

30
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

We are unable to agree with the respondent courts. The above words apply with greater force in respect of that
There is no question that a writ of preliminary attachment may be most fundamental of requisites, the jurisdiction of the court
applied for a plaintiff "at the commencement of the action or at issuing attachment over the person of the defendant.
any time thereafter" in the cases enumerated in Section 1 of Rule In the case at bar, the want of jurisdiction of the trial court to
57 of the Revised Rules of Court. The issue posed in this case, proceed in the main case against the defendant is quite clear. It is
however, is not to be resolved by determining when an action may not disputed that neither service of summons with a copy of the
be regarded as having been commenced, a point in time which, in complaint nor voluntary appearance of petitioner Sievert was had
any case, is not necessarily fixed and Identical regardless of the in this case. Yet, the trial court proceeded to hear the petition for
specific purpose for which the deter. nation is to be made. The issuance of the writ. This is reversible error and must be corrected
critical time which must be Identified is, rather, when the trial on certiorari.
court acquires authority under law to act coercively against the WHEREFORE, the Petition for Review on certiorari is GRANTED due
defendant or his property in a proceeding in attachment. We course and the Order of the trial court dated 20 May 1988 and the
believe and so hold THAT CRITICAL TIME IS THE TIME OF THE Decision of the Court of Appeals dated 13 July 1988 are hereby SET
VESTING OF JURISDICTION IN THE COURT OVER THE PERSON OF ASIDE and ANNULLED. No pronouncement as to costs.
THE DEFENDANT IN THE MAIN CASE. SO ORDERED.
Attachment is an ancillary remedy. It is not sought for its own sake
G.R. No. 93262 December 29, 1991
but rather to enable the attaching party to realize upon relief
sought and expected to be granted in the main or principal action . DAVAO LIGHT & POWER CO., INC.,, vs. THE COURT
OF APPEALS, QUEENSLAND HOTEL or MOTEL or
A COURT WHICH HAS NOT ACQUIRED JURISDICTION OVER THE QUEENSLAND TOURIST INN, and TEODORICO
PERSON OF DEFENDANT, CANNOT BIND THAT DEFENDANT ADARNA, respondents.
WHETHER IN THE MAIN CASE OR IN ANY ANCILLARY
PROCEEDING SUCH AS ATTACHMENT PROCEEDINGS. The service
of a petition for preliminary attachment without the prior or
Subject of the appellate proceedings at bar is the decision of the
simultaneous service of summons and a copy of the complaint in
Court of Appeals in CA-G.R. Sp. No. 1967 entitled "Queensland
the main case and that is what happened in this case does
Hotel, Inc., etc. and Adarna v. Davao Light & Power Co., Inc.,"
not of course confer jurisdiction upon the issuing court over the
promulgated on May 4, 1990. 1 That decision nullified and set
person of the defendant.
aside the writ of preliminary attachment issued by the Regional
Ordinarily, the prayer in a petition for a writ of preliminary Trial Court of Davao City 2 in Civil Case No. 19513-89 on application
attachment is embodied or incorporated in the main complaint of the plaintiff (Davao Light & Power Co.), before the service of
itself as one of the forms of relief sought in such complaint. Thus, summons on the defendants (herein respondents Queensland Co.,
valid service of summons and a copy of the complaint will in such Inc. and Adarna).
case vest jurisdiction in the court over the defendant both for
purposes of the main case and for purposes of the ancillary remedy Following is the chronology of the undisputed material facts culled
of attachment. In such case, notice of the main case is at the same from the Appellate Tribunal's judgment of May 4, 1990.
time notice of the auxiliary proceeding in attachment. 1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter,
simply Davao Light) filed a verified complaint for recovery of a
Where, however, the petition for a writ of preliminary attachment sum of money and damages against Queensland Hotel, etc.
is embodied in a discrete pleading, such petition must be served and Teodorico Adarna (docketed as Civil Case No. 19513-89).
either simultaneously with service of summons and a copy of the The complaint contained an ex parte application for a writ of
main complaint, or after jurisdiction over the defendant has already preliminary attachment.
been acquired by such service of summons. Notice of the separate 2. On May 3, 1989 Judge Nartatez, to whose branch the case
attachment petition is not notice of the main action. Put a little was assigned by raffle, issued an Order granting the ex
differently, jurisdiction whether ratione personae or ratione parte application and fixing the attachment bond at
materiae in an attachment proceeding is ancillary to jurisdiction P4,600,513.37.
ratione personae or ratione materiae in the main action against the 3. On May 11, 1989 the attachment bond having been
defendant. If a court has no jurisdiction over the subject matter or submitted by Davao Light, the writ of attachment issued.
over the person of the defendant in the principal action, it simply 4. On May 12, 1989, the summons and a copy of the complaint,
has no jurisdiction to issue a writ of preliminary attachment against as well as the writ of attachment and a copy of the
the defendant or his property. attachment bond, were served on defendants Queensland
and Adarna; and pursuant to the writ, the sheriff seized
It is basic that the requirements of the Rules of Court for issuance properties belonging to the latter.
of preliminary attachment must be strictly and faithfully complied 5. On September 6, 1989, defendants Queensland and Adarna
with in view of the nature of this provisional remedy. In Salas v. filed a motion to discharge the attachment for lack of
Adil, 5 this Court described preliminary attachment as jurisdiction to issue the same because at the time the order
a rigorous remedy which exposes the debtor to humiliation and of attachment was promulgated (May 3, 1989) and the
annoyance, such [that] it should not be abused as to cause attachment writ issued (May 11, 1989), the Trial Court had
unnecessary prejudice. It is, therefore; the duty of the court, before not yet acquired jurisdiction over the cause and over the
issuing the writ, to ensure that all the requisites of the law have persons of the defendants.
been complied with; otherwise the judge acts in excess of his 6. On September 14, 1989, Davao Light filed an opposition to
jurisdiction and the writ so issued shall be null and void. (Emphasis the motion to discharge attachment.
supplied ) 6 7. On September 19, 1989, the Trial Court issued an Order
denying the motion to discharge.

31
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

This Order of September 19, 1989 was successfully challenged by action. And it is by that self-same act of the plaintiff (or
Queensland and Adarna in a special civil action petitioner) of filing the complaint (or other appropriate
of certiorari instituted by them in the Court of Appeals. The Order pleading) by which he signifies his submission to the court's
was, as aforestated, annulled by the Court of Appeals in its power and authority that jurisdiction is acquired by the court
Decision of May 4, 1990. The Appellate Court's decision closed with over his person. On the other hand, jurisdiction over the person of
the following disposition: the defendant is obtained, as above stated, by the service of
. . . the Orders dated May 3, 1989 granting the issuance summons or other coercive process upon him or by his voluntary
of a writ of preliminary attachment, dated September submission to the authority of the court.
19, 1989 denying the motion to discharge attachment;
dated November 7, 1989 denying petitioner's motion The events that follow the filing of the complaint as a matter of
for reconsideration; as well as all other orders routine are well known. After the complaint is filed, summons
emanating therefrom, specially the Writ of Attachment issues to the defendant, the summons is then transmitted to the
dated May 11, 1989 and Notice of Levy on Preliminary sheriff, and finally, service of the summons is effected on the
Attachment dated May 11, 1989, are hereby declared defendant in any of the ways authorized by the Rules of Court.
null and void and the attachment hereby ordered There is thus ordinarily some appreciable interval of time between
DISCHARGED. the day of the filing of the complaint and the day of service of
summons of the defendant. During this period, different acts may
The Appellate Tribunal declared that be done by the plaintiff or by the Court, which are unquestionable
. . . While it is true that a prayer for the issuance of a validity and propriety. Among these, for example, are the
writ of preliminary attachment may be included m the appointment of a guardian ad litem, 9 the grant of authority to the
complaint, as is usually done, it is likewise true that the plaintiff to prosecute the suit as a pauper litigant, 10 the
Court does not acquire jurisdiction over the person of amendment of the complaint by the plaintiff as a matter of right
the defendant until he is duly summoned or voluntarily without leave of court, 11 authorization by the Court of service of
appears, and adding the phrase that it be issued "ex summons by publication, 12 the dismissal of the action by the
parte" does not confer said jurisdiction before actual plaintiff on mere notice. 13
summons had been made, nor retroact jurisdiction
upon summons being made. . . . This, too, is true with regard to the provisional remedies of
preliminary attachment, preliminary injunction, receivership or
It went on to say, citing Sievert v. Court of replevin. 14 They may be validly and properly applied for and
Appeals, 3 that "in a proceedings in attachment," the granted even before the defendant is summoned or is heard from.
"critical time which must be identified is . . . when the A preliminary attachment may be defined, paraphrasing the Rules
trial court acquires authority under law to act of Court, as the provisional remedy in virtue of which a plaintiff or
coercively against the defendant or his property . . .;" other party may, at the commencement of the action or at any
and that "the critical time is the of the vesting of time thereafter, have the property of the adverse party taken into
jurisdiction in the court over the person of the the custody of the court as security for the satisfaction of any
defendant in the main case." judgment that may be recovered. 15 It is a remedy which is purely
statutory in respect of which the law requires a strict construction
Reversal of this Decision of the Court of Appeals of May 4, 1990 is of the provisions granting it. 16 Withal no principle, statutory or
what Davao Light seeks in the present appellate proceedings. jurisprudential, prohibits its issuance by any court before
acquisition of jurisdiction over the person of the defendant.
ISSUE: whether or not a writ of preliminary attachment may
issue ex parte against a defendant before acquisition of jurisdiction Rule 57 in fact speaks of the grant of the remedy "at the
of the latter's person by service of summons or his voluntary commencement of the action or at any time thereafter." 17 The
submission to the Court's authority? YES, SIEVERT ABANDONED. phase, "at the commencement of the action," obviously refers to
the date of the filing of the complaint which, as above pointed
HELD: out, is the date that marks "the commencement of the
It is incorrect to theorize that after an action or proceeding has action;" 18 and the reference plainly is to a time before summons
been commenced and jurisdiction over the person of the plaintiff is served on the defendant, or even before summons issues. What
has been vested in the court, but before the acquisition of the rule is saying quite clearly is that after an action is properly
jurisdiction over the person of the defendant (either by service of commenced by the filing of the complaint and the payment of
summons or his voluntary submission to the court's all requisite docket and other fees the plaintiff may apply for
authority), nothing can be validly done by the plaintiff or the court. and obtain a writ of preliminary attachment upon fulfillment of the
It is wrong to assume that the validity of acts done during this pertinent requisites laid down by law, and that he may do so at any
period should be defendant on, or held in suspension until, the time, either before or after service of summons on the defendant.
actual obtention of jurisdiction over the defendant's person. THE And this indeed, has been the immemorial practice sanctioned by
OBTENTION BY THE COURT OF JURISDICTION OVER THE PERSON the courts: for the plaintiff or other proper party to incorporate the
OF THE DEFENDANT IS ONE THING; QUITE ANOTHER IS THE application for attachment in the complaint or other appropriate
ACQUISITION OF JURISDICTION OVER THE PERSON OF THE pleading (counter-claim, cross-claim, third-party claim) and for the
PLAINTIFF OR OVER THE SUBJECT-MATTER OR NATURE OF THE Trial Court to issue the writ ex-parte at the commencement of the
ACTION, OR THE RES OR OBJECT HEREOF. action if it finds the application otherwise sufficient in form and
substance.
An action or proceeding is commenced by the filing of the
complaint or other initiatory pleading. By that act, the jurisdiction In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion
of the court over the subject matter or nature of the action or or application for preliminary attachment is not generally
proceeding is invoked or called into activity; and it is thus that the necessary unless otherwise directed by the Trial Court in its
court acquires jurisdiction over said subject matter or nature of the discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the

32
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

Court declared that "(n)othing in the Rules of Court makes notice judge who granted the order, or to the judge of the court in
and hearing indispensable and mandatory requisites for the which the action is pending, for an order discharging the
issuance of a writ of attachment." attachment wholly or in part on the security given . . . in an amount
equal to the value of the property attached as determined by the
THE ONLY PRE-REQUISITE IS THAT THE COURT BE SATISFIED, judge to secure the payment of any judgment that the attaching
UPON CONSIDERATION OF "THE AFFIDAVIT OF THE APPLICANT creditor may recover in the action. . . .
OR OF SOME OTHER PERSON WHO PERSONALLY KNOWS THE
FACTS, THAT A SUFFICIENT CAUSE OF ACTION EXISTS, THAT THE 1.2. But even before actual levy on property, seizure under
CASE IS ONE OF THOSE MENTIONED IN SECTION 1 . . . (Rule 57), attachment may be prevented also upon counterbond. The
that there is no other sufficient security for the claim sought to be defendant need not wait until his property is seized before seeking
enforced by the action, and that the amount due to the applicant, the discharge of the attachment by a counterbond. This is made
or the value of the property the possession of which he is entitled possible by Section 5 of Rule 57.
to recover, is as much as the sum for which the order (of
attachment) is granted above all legal counterclaims." 22 If the Sec. 5. Manner of attaching property. The officer executing the
court be so satisfied, the "order of attachment shall be order shall without delay attach, to await judgment and execution
granted," 23 and the writ shall issue upon the applicant's posting of in the action, all the properties of the party against whom the
"a bond executed to the adverse party in an amount to be fixed by order is issued in the province, not exempt from execution, or so
the judge, not exceeding the plaintiffs claim, conditioned that the much thereof as may be sufficient to satisfy the applicant's
latter will pay all the costs which may be adjudged to the adverse demand, unless the former makes a deposit with the clerk or judge
party and all damages which he may sustain by reason of the of the court from which the order issued, or gives a counter-bond
attachment, if the court shall finally adjudge that the applicant was executed to the applicant, in an amount sufficient to satisfy such
not entitled thereto." 24 demand besides costs, or in an amount equal to the value of the
property which is about to be attached, to secure payment to the
In Mindanao Savings & Loan Association, Inc. v. Court of applicant of any judgment which he may recover in the action. . . .
Appeals, decided on April 18, 1989, 25 this Court had occasion to (Emphasis supplied)
emphasize the postulate that no hearing is required on an
application for preliminary attachment, with notice to the 2.0. Aside from the filing of a counterbond, a preliminary
defendant, for the reason that this "would defeat the objective of attachment may also be lifted or discharged on the ground that it
the remedy . . . (since the) time which such a hearing would take, has been irregularly or improperly issued, in accordance with
could be enough to enable the defendant to abscond or dispose Section 13 of Rule 57. Like the first, this second mode of lifting an
of his property before a writ of attachment issues." As observed attachment may be resorted to even before any property has been
by a former member of this Court, 26 such a procedure would warn levied on. Indeed, it may be availed of after property has been
absconding debtors-defendants of the commencement of the suit released from a levy on attachment, as is made clear by said
against them and the probable seizure of their properties, and thus Section 13, viz.:
give them the advantage of time to hide their assets, leaving the Sec. 13. Discharge of attachment for improper or irregular
creditor-plaintiff holding the proverbial empty bag; it would place issuance. The party whose property has been attached may also,
the creditor-applicant in danger of losing any security for a at any time either BEFORE or AFTER the release of the attached
favorable judgment and thus give him only an illusory victory. property, or before any attachment shall have been actually levied,
upon reasonable notice to the attaching creditor, apply to the
Withal, ample modes of recourse against a preliminary attachment judge who granted the order, or to the judge of the court in which
are secured by law to the defendant. The relative ease with which the action is pending, for an order to discharge the attachment on
a preliminary attachment may be obtained is matched and the ground that the same was improperly or irregularly issued. If
paralleled by the relative facility with which the attachment may the motion be made on affidavits on the part of the party whose
legitimately be prevented or frustrated. These modes of recourse property has been attached, but not otherwise, the attaching
against preliminary attachments granted by Rule 57 were discussed creditor may oppose the same by counter-affidavits or other
at some length by the separate opinion in Mindanao Savings & evidence in addition to that on which the attachment was made. . .
Loans Asso. Inc. v. CA., supra. . (Emphasis supplied)

That separate opinion stressed that there are two (2) ways of This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA
discharging an attachment: 531 (1987), The attachment debtor cannot be deemed to have
1. first, by the posting of a counterbond; and waived any defect in the issuance of the attachment writ by simply
2. second, by a showing of its improper or availing himself of one way of discharging the attachment writ,
irregular issuance. instead of the other. Moreover, the filing of a counterbond is a
speedier way of discharging the attachment writ maliciously sought
1.0. The submission of a counterbond is an efficacious mode of out by the attaching creditor instead of the other way, which, in
lifting an attachment already enforced against property, or even most instances . . . would require presentation of evidence in a
of preventing its enforcement altogether. fullblown trial on the merits, and cannot easily be settled in a
pending incident of the case." 27
1.1. When property has already been seized under attachment, the
attachment may be discharged upon counterbond in accordance It may not be amiss to here reiterate other related principles dealt
with Section 12 of Rule 57. with in Mindanao Savings & Loans Asso. Inc. v. C.A., supra., 28 to
wit:
Sec. 12. Discharge of attachment upon giving counterbond. At (a) When an attachment may not be dissolved by a showing of its
any time after an order of attachment has been granted, the party irregular or improper issuance:
whose property has been attached or the person appearing in his . . . (W)hen the preliminary attachment is issued upon a ground
behalf, may, upon reasonable notice to the applicant, apply to the which is at the same time the applicant's cause of action; e.g., "an

33
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

action for money or property embezzled or fraudulently misapplied amount equal to the plaintiff's claim in the complaint
or converted to his own use by a public officer, or an officer of a pursuant to Section 5 (or Section 12), Rule 57, or dissolving it
corporation, or an attorney, factor, broker, agent, or clerk, in the by causing dismissal of the complaint itself on any of the grounds
course of his employment as such, or by any other person in a set forth in Rule 16, or demonstrating the insufficiency of the
fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule applicant's affidavit or bond in accordance with Section 13, Rule 57.
57), or "an action against a party who has been guilty of fraud m It was on account of the failure to comply with this fundamental
contracting the debt or incurring the obligation upon which the requirement of service of summons and the other documents
action is brought" (Sec. 1 [d], Rule 57), the defendant is not above indicated that writs of attachment issued by the Trial
allowed to file a motion to dissolve the attachment under Section Court ex parte were struck down by this Court's Third Division in
13 of Rule 57 by offering to show the falsity of the factual two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC
averments in the plaintiff's application and affidavits on which the Manufacturing and Sales Corporation v. Court of Appeals, et
writ was based and consequently that the writ based thereon al. 32 In contrast to the case at bar where the summons and a
had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 copy of the complaint, as well as the order and writ of attachment
SCRA 41) the reason being that the hearing on such a motion for and the attachment bond were served on the defendant
dissolution of the writ would be tantamount to a trial of the merits in Sievert, levy on attachment was attempted notwithstanding that
of the action. In other words, the merits of the action would be only the petition for issuance of the writ of preliminary attachment
ventilated at a mere hearing of a motion, instead of at the regular was served on the defendant, without any prior or accompanying
trial. Therefore, when the writ of attachment is of this nature, the summons and copy of the complaint; and in BAC Manufacturing
only way it can be dissolved is by a counterbond (G.B. Inc. v. and Sales Corporation, neither the summons nor the order granting
Sanchez, 98 Phil. 886). the preliminary attachment or the writ of attachment itself was
served on the defendant "before or at the time the levy was
(b) Effect of the dissolution of a preliminary attachment on the made."
plaintiffs attachment bond: For the guidance of all concerned, the Court reiterates and
. . . The dissolution of the preliminary attachment upon security reaffirms the proposition that writs of attachment may properly
given, or a showing of its irregular or improper issuance, does not issue ex parte provided that the Court is satisfied that the relevant
of course operate to discharge the sureties on plaintiff's own requisites therefor have been fulfilled by the applicant, although it
attachment bond. The reason is simple. That bond is "executed to may, in its discretion, require prior hearing on the application with
the adverse party, . . . conditioned that the . . . (applicant) will pay notice to the defendant; but that levy on property pursuant to the
all the costs which may be adjudged to the adverse party and all writ thus issued may not be validly effected unless preceded, or
damages which he may sustain by reason of the attachment, if the contemporaneously accompanied, by service on the defendant of
court shall finally adjudge that the applicant was not entitled summons, a copy of the complaint (and of the appointment of
thereto" (SEC. 4, Rule 57). Hence, until that determination is made, guardian ad litem, if any), the application for attachment (if not
as to the applicant's entitlement to the attachment, his bond must incorporated in but submitted separately from the complaint), the
stand and cannot be with-drawn. order of attachment, and the plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of
With respect to the other provisional remedies, i.e., preliminary the Court of Appeals is hereby REVERSED, and the order and writ of
injunction (Rule 58), receivership (Rule 59), replevin or delivery of attachment issued by Hon. Milagros C. Nartatez, Presiding Judge of
personal property (Rule 60), the rule is the same: they may also Branch 8, Regional Trial Court of Davao City in Civil Case No. 19513-
issue ex parte. 29 89 against Queensland Hotel or Motel or Queensland Tourist Inn
and Teodorico Adarna are hereby REINSTATED. Costs against
It goes without saying that whatever be the acts done by the Court private respondents.
prior to the acquisition of jurisdiction over the person of SO ORDERED.
defendant, as above indicated issuance of summons, order of Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla,
attachment and writ of attachment (and/or appointments of Bidin, Grio-Aquino, Medialdea, Regalado and Romero, JJ., concur.
guardian ad litem, or grant of authority to the plaintiff to prosecute Fernan, C.J., is on leave.
the suit as a pauper litigant, or amendment of the complaint by the Davide, Jr., J., took no part.
plaintiff as a matter of right without leave of court 30 and
however valid and proper they might otherwise be, these do not
and cannot bind and affect the defendant until and unless G.R. No. 102448 August 5, 1992
jurisdiction over his person is eventually obtained by the court, RICARDO CUARTERO, vs. COURT OF APPEALS,
either by service on him of summons or other coercive process or
ROBERTO EVANGELISTA and FELICIA EVANGELISTA,
his voluntary submission to the court's authority. Hence, when the
sheriff or other proper officer commences implementation of the
FACTS:
writ of attachment, it is essential that he serve on the defendant
Ricardo Cuartero filed a complaint VS Evangelista spouses, for a
not only a copy of the applicant's affidavit and attachment bond,
sum of money plus damages with a prayer for the issuance of a
and of the order of attachment, as explicity required by Section 5
writ of preliminary attachment. The lower court issued an order
of Rule 57, but also the summons addressed to said defendant as
granting ex-parte the petitioner's prayer for the issuance of a writ
well as a copy of the complaint and order for appointment of
of preliminary attachment.
guardian ad litem, if any, as also explicity directed by Section 3,
Rule 14 of the Rules of Court. Service of all such documents is
On September 19, 1990, the writ of preliminary attachment was
indispensable not only for the acquisition of jurisdiction over the
issued pursuant to the trial court's order dated August 24, 1990.
person of the defendant, but also upon considerations of fairness,
On the same day, the summons for the spouses Evangelista was
to apprise the defendant of the complaint against him, of the
likewise prepared.
issuance of a writ of preliminary attachment and the grounds
therefor and thus accord him the opportunity to prevent
attachment of his property by the posting of a counterbond in an

34
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

The following day, that is, on September 20, 1990, a copy of the issue ex-parte against a defendant before the court acquires
writ of preliminary attachment, the order dated August 24, 1990, jurisdiction over the latter's person by service of summons or
the summons and the complaint were all simultaneously served his voluntary submission to the court's authority. The Court
upon the private respondents at their residence. Immediately answered in the affirmative. This should have clarified the matter
thereafter, Deputy Sheriff Ernesto L. Sula levied, attached and but apparently another ruling is necessary.
pulled out the properties in compliance with the court's directive A WRIT OF PRELIMINARY ATTACHMENT is defined as a provisional
to attach all the properties of private respondents not exempt from remedy issued upon order of the court where an action is pending
execution, or so much thereof as may be sufficient to satisfy the to be levied upon the property or properties of the defendant
petitioner's principal claim in the amount of P2,171,794.91. therein, the same to be held thereafter by the sheriff as security for
the satisfaction of whatever judgment might be secured in said
Sps Evangelista filed motion to set aside the order dated August action by the attaching creditor against the defendant (Adlawan v.
24, 1990 and discharge the writ of preliminary attachment for Tomol, 184 SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31
having been irregularly and improperly issued. [denied] [1973]).

ISSUE: WON the writ of attachment was properly served on the Under section 3, Rule 57 of the Rules of Court, the only requisites
spouses Evangelista, when the summons and copy of the for the issuance of the writ are the affidavit and bond of the
complaint were also simultaneously served? YES. applicant. As has been expressly ruled in BF Homes, Inc. v. Court of
Appeals, 190 SCRA 262 (1990), citing Mindanao Savings and Loan
HELD: Association, Inc. v. Court of Appeals, 172 SCRA 480 (1989), no
The Court of Appeals' decision is grounded on its finding that the notice to the adverse party or hearing of the application is required
trial court did not acquire any jurisdiction over the person of the inasmuch as the time which the hearing will take could be enough
defendants (private respondents herein). It declared that: to enable the defendant to abscond or dispose of his property
. . . the want of jurisdiction of the trial court to proceed in the main before a writ of attachment issues. In such a case, a hearing would
case as well as the ancillary remedy of attachment is quite clear. It render nugatory the purpose of this provisional remedy. The ruling
is not disputed that neither service of summons with a copy of the remains good law. There is, thus, no merit in the private
complaint nor voluntary appearance of petitioners was had in this respondents' claim of violation of their constitutionally guaranteed
case before the trial court issued the assailed order dated August right to due process.
24, 1990, as well as the writ of preliminary attachment dated
September 19, 1990. This is reversible error and must be corrected The writ of preliminary attachment can be applied for and granted
on certiorari. (Rollo, p. 24) at the commencement of the action or at any time thereafter
(Section 1, Rule 57, Rules of Court). In Davao Light and Power, Co.,
The appellate tribunal relied on the case of Sievert v. Court of Inc. v. Court of Appeals, supra, the phrase "at the commencement
Appeals, 168 SCRA 692 (1988) in arriving at the foregoing of the action" is interpreted as referring to the date of the filing of
conclusion. It stated that: the complaint which is a time before summons is served on the
Valid service of summons and a copy of the complaint vest defendant or even before summons issues. The Court added that
jurisdiction in the court over the defendant both for the purpose of
the main case and for purposes of the ancillary remedy of . . . after an action is properly commenced by filing of the
attachment and a court which has not acquired jurisdiction over complaint and the payment of all requisite docket and other fees
the person of defendant, cannot bind the defendant whether in the plaintiff may apply and obtain a writ of preliminary
the main case or in any ancillary proceeding such as attachment attachment upon the fulfillment of the pertinent requisites laid
proceedings (Sievert v. Court of Appeals, 168 SCRA 692). (Rollo, p. down by law, and that he may do so at any time, either before or
24) after service of summons on the defendant. And this, indeed, has
been the immemorial practice sanctioned by the courts: for the
The private respondents, in their comment, adopted and reiterated plaintiff or other proper party to incorporate the application for
the aforementioned ruling of the Court of Appeals. They added attachment in the complaint or other appropriate pleading
that aside from the want of jurisdiction, no proper ground also (counter-claim, cross-claim, third-party-claim) and for the Trial
existed for the issuance of the writ of preliminary attachment. They Court to issue the writ ex-parte at the commencement of the
stress that the fraud in contracting the debt or incurring the action if it finds the application otherwise sufficient in form and
obligation upon which the action is brought which comprises a substance.
ground for attachment must have already been intended at the
inception of the contract. According to them, there was no intent The Court also pointed out that:
to defraud the petitioner when the postdated checks were issued . . . It is incorrect to theorize that after an action or proceeding has
inasmuch as the latter was aware that the same were not yet been commenced and jurisdiction over the person of the plaintiff
funded and that they were issued only for purposes of creating an has been vested in the Court, but before acquisition of jurisdiction
evidence to prove a pre-existing obligation. over the person of the defendant (either by service of summons or
his voluntary submission to the Court's authority), nothing can be
Another point which the private respondents raised in their validly done by the plaintiff or the Court. It is wrong to assume that
comment is the alleged violation of their constitutionally the validity of acts done during the period should be dependent on,
guaranteed right to due process when the writ was issued without or held in suspension until, the actual obtention of jurisdiction over
notice and hearing. the defendants person. The obtention by the court of jurisdiction
over the person of the defendant is one thing; quite another is the
In the later case of Davao Light and Power Co., Inc. v. Court of acquisition of jurisdiction over the person of the plaintiff or over
Appeals, G.R. No. 93262, November 29, 1991, we had occasion to the subject matter or nature of the action, or the res or object
deal with certain misconceptions which may have arisen from thereof.
our Sievert ruling. The question which was resolved in the Davao
Light case is whether or not a writ of preliminary attachment may

35
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

IT IS CLEAR FROM OUR PRONOUNCEMENTS THAT A WRIT OF anomalous situation would result if the issues of the main
PRELIMINARY ATTACHMENT MAY ISSUE EVEN BEFORE case would be ventilated and resolved in a mere hearing of a
SUMMONS IS SERVED UPON THE DEFENDANT. However, we have motion (Davao Light and Power Co., Inc. v. Court of Appeals, supra,
likewise ruled that the writ cannot bind and affect the defendant. The Consolidated Bank and Trust Corp. (Solidbank) v. Court of
However, we have likewise ruled that the writ cannot bind and Appeals, 197 SCRA 663 [1991]).
affect the defendant until jurisdiction over his person is eventually
obtained. Therefore, it is required that when the proper officer In the present case, one of the allegations in petitioner's complaint
commences implementation of the writ of attachment, service of below is that the defendant spouses induced the plaintiff to grant
summons should be simultaneously made. the loan by issuing postdated checks to cover the installment
payments and a separate set of postdated cheeks for payment of
IT MUST BE EMPHASIZED THAT THE GRANT OF THE PROVISIONAL the stipulated interest (Annex "B"). The issue of fraud, then, is
REMEDY OF ATTACHMENT PRACTICALLY INVOLVES THREE clearly within the competence of the lower court in the main
STAGES: action.
1) first, the court issues the order granting the application; WHEREFORE, premises considered, the Court hereby GRANTS the
2) second, the writ of attachment issues pursuant to the petition. The challenged decision of the Court of Appeals is
order granting the writ; and REVERSED, and the order and writ of attachment issued by Hon.
3) third, the writ is implemented. Cezar C. Peralejo, Presiding Judge of Branch 98, Regional Trial Court
of Quezon City against spouses Evangelista are hereby
For the initial two stages, it is not necessary that jurisdiction over REINSTATED. No pronouncement as to costs.
the person of the defendant should first be obtained. However, SO ORDERED.
once the implementation commences, it is required that the court
must have acquired jurisdiction over the defendant for without G.R. No. L-46009 May 14, 1979
such jurisdiction, the court has no power and authority to act in RICARDO T. SALAS and MARIA
any manner against the defendant. Any order issuing from the
SALAS, petitioners, vs. HON. MIDPANTAO L. ADIL, as
Court will not bind the defendant.
Judge of Branch II, Court of First Instance of Iloilo,
COMPARISON WITH OTHER CASES ROSITA BEDRO and BENITA YU
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals
in its questioned decision, the writ of attachment issued ex- FACTS:
parte was struck down because when the writ of attachment was On September 10, 1976, respondents Rosita Bedro and Benita Yu
being implemented, no jurisdiction over the person of the filed the afore-mentioned civil action VS herein petitioners Ricardo
defendant had as yet been obtained. The court had failed to serve T. Salas and Maria Salas, the Philippine Commercial & Industrial
the summons to the defendant. Bank, in its capacity as Administrator of the Testate Estate of the
deceased Charles Newton Hodges, and Avelina A. Magno, in her
The circumstances in Sievert are different from those in the case at capacity as Administratrix of the Testate Estate of the deceased
bar. When the writ of attachment was served on the spouses Linnie Jane Hodge to annul the deed of sale of Lot No. 5 executed
Evangelista, the summons and copy of the complaint were also by administrators of the Hodges Estate in favor of the Spouses
simultaneously served. Ricardo T. Salas and Maria Salas and for damages. The action for
annulment was predicated upon the averment that Lot No. 5, being
It is appropriate to reiterate this Court's exposition in the Davao a subdivision road, is intend for public use and cannot be sold or
Light and Power case cited earlier, to wit: disposed of by the Hodges Estate. The claim for damages was
. . . writs of attachment may properly issue ex-parte provided that based on the assertion that after defendant spouses purchased
the Court is satisfied that the relevant requisites therefore have Lots Nos. 2 and 3, they also purchased Lot No. 5 and thereafter
been fulfilled by the applicant, although it may, in its discretion, "erected wooden posts, laid and plastered at the door of the house
require prior hearing on the application with notice to the on Lot No. 3, with braces of hardwood, lumber and plywood nailed
defendant, but that levy on property pursuant to the writ thus to the post", thereby preventing Rosita Bedro and Benita Yu from
issued may not be validly effected unless preceded, or using the road on the afore-mentioned lot, Lot No. 5, and that as a
contemporaneously accompanied by service on the defendant of result of such obstruction, private respondents Rosita Bedro and
summons, a copy of the complaint (and of the appointment of Benita Yu sustained actual damages in the amount of P114,000.00,
guardian ad litem, if any), the application for attachment (if not plus the sum of Pl,000.00 as damages daily from June 30, 1976 due
incorporated in but submitted separately from the complaint), the to the stoppage in the construction of their commercial buildings
order of attachment, and the plaintiff's attachment bond. on Lot No. 3, and moral damages in the amount of P200,000.00.

The question as to whether a proper ground existed for the In their answer to the complaint, the Salas spouses, after
issuance of the writ is a question of fact the determination of specifically denying the material allegations in the complaint,
which can only be had in appropriate proceedings conducted for stated that Lot No. 5 had been registered in the name of the C. N.
the purpose (Peroxide Philippines Corporation V. Court of Appeals, Hodges as their exclusive private property and was never subjected
199 SCRA 882 [1991]). It must be noted that the spouses to any servitude or easement of right of way in favor of any person;
Evangelista's motion to discharge the writ of preliminary that any occupants of Lots Nos. 2 and 3 have direct access to
attachment was denied by the lower court for lack of merit. There Bonifacio Drive, a National Highway, hence, Lot No. 5 is neither
is no showing that there was an abuse of discretion on the part of needed nor required for the egress or ingress of the occupants
the lower court in denying the motion. thereof; and that private respondents, as a matter of fact, since
1964 had excluded and separated completely their property (Lots
Moreover, an attachment may not be dissolved by a showing of its Nos. 2 and 3) from Lot No. 5 by building a concrete wall on the
irregular or improper issuance if it is upon a ground which is at the boundary thereon without providing any gate as entrance or exit
same time the applicant's cause of action in the main case since an towards Lot No. 5; and that private respondents have no

36
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

personality to question the validity of the deed of sale over Lot No. A preliminary attachment is a rigorous remedy, which
5 since they were not parties to the same and the sale was duly exposes the debtor to humiliation and annoyance, such it
approved by the probate court. should not be abused as to cause unnecessary prejudice. It is,
therefore, the duty of the court, before issuing the writ, to ensure
In a motion dated May 12, 1977, private respondents filed a that all the requisites of the law have been complied with;
Motion for Attachment, alleging, among others, that the case was otherwise the judge acts in excess of his jurisdiction and the so
"for annulment of a deed of sale and recovery of damages" and issued shall be null and void . 1
that the defendants have removed or disposed of their properties
or are about to do so with intent to defraud their creditors In Carpio v. Macadaeg, 2 this Court said:
especially the plaintiffs in this case. Respondent Judge should not have issued the two writs of
preliminary attachment (Annexes C and C-1) on Abaya's simple
On May 13, 1977, respondent Judge issued ex-parte a Writ of allegation that the petitioner was about to dispose of his property,
Attachment "against the properties of the defendants particularly thereby leaving no security for the satisfaction of any judgment.
Lots Nos. 1 and 4 of Psc-2157 less the building standing thereon Mere removal or disposal of property, by itself, is not ground for
upon the plaintiffs filing a bond in the amount of P200,000.00 issuance of preliminary attachment, notwithstanding absence of
subject to the approval of this Court." After a surety bond in the any security for the satisfaction of any judgment against the
amount of P200,000.00, executed on May 11, 1977 by the Central defendant. The removal or disposal, to justify preliminary
Surety and Insurance Company as surety was filed, the writ itself attachment, must have been made with intent to defraud
was issued by respondent Judge on May 16, 1977, directing the defendant's creditors.
Sheriff to attach the properties above-mentioned. On May 17,
1977, the Deputy Sheriff of Iloilo levied upon the aforesaid Respondent Judge in fact corrected himself. Acting on petitioner's
properties of petitioners. motion to discharge attachment and apparently believing the
correctness of the grounds alleged therein, he set aside the orders
Contending that respondent Judge gravely abused his discretion in of attachment (Order of March 11, 1960, Annex F)
issuing the said Writ of Attachment, petitioners filed the present
petition. But reversing himself again, he set aside his order of March 11,
1960 (Annex K, dated March 29, 1960). This he did apparently on
HELD: Abaya's contention that petitioner was about to remove or dispose
In certiorari proceedings, the cardinal rule is that the court must be of his property in order to defraud his creditors, as examples of
given the opportunity to correct itself, Thus, for the special civil which disposals he pointed to the alleged sale of the horses and of
action of certiorari to prosper, there must be no appeal nor any petitioner's office furniture. ... These averments of fraudulent
plain, speedy and adequate remedy in the ordinary course of law. disposals were controverted by petitioner who ... reiterated the
Petitioners, therefore, must exhaust all available remedies in the defenses against preliminary attachment which he had previously
lower court before filing a petition for certiorari, otherwise the enumerated in his petition to discharge the two orders of
petition shall be held to be premature. attachment. Thus the question of fraudulent disposal was put in
issue; and respondent Judge, before issuing the pre attachment
In the instant case, it appears that petitioners have adequate anew, should have given the parties opportunity to prove their
remedy under the law. They could have filed an application with respective claims or, at the very least should have provided
the court a quo for the discharge of the attachment for improper petitioner with the chance to show that he had not been disposing
or irregular issuance under section 13, Rule 57, of the Revised of his property in fraud of creditors. (citing National Coconut
Rules of Court, which provides the following Corporation v. Pecson L-4296, Feb. 25, 1952, Villongco v. Panlilio,
SEC. 13. Discharge of attachment for improper or 6214, Nov. 20, 1953).
irregular issuance. The party whose property has
been attached may also, at any time either before or And in Garcia v. Reyes, 3 considering the allegation that the debtors
after the release of the attached property, or before any were removing or disposing of some of their properties with intent
attachment shall have been actually levied, upon to defraud their creditors, 'this Court said that "(a)ll in all due
reasonable notice to the attaching creditor, apply to the process would seem to require that both parties further ventilate
judge who Salas vs. Adil granted the order, or to the their respective contentions in a hearing that could indeed reveal
judge of the court in which the action is pending, for an the truth. Fairness would be served thereby, the demand of reason
order to discharge the attachment on the ground that satisfied."
the same was improperly or irregularly issued. If the
motion be made on affidavits on the part of the party Considering the gravity of the allegation that herein petitioners
whose property has been attached, but not otherwise, have removed or disposed of their properties or are about to do so
the attaching creditor may oppose the same by counter- with intent to defraud their creditors, and further considering that
affidavits or other evidence in addition to that on which the affidavit in support of the pre attachment merely states such
the attachment was made. After hearing, the judge shall ground in general terms, without specific allegations of lances to
order the discharge of the attachment if it appears that show the reason why plaintiffs believe that defendants are
it was improperly or irregularly issued and the defect is disposing of their properties in fraud of creditors, it was incumbent
not cured forthwith. upon respondent Judge to give notice to petitioners and to allow
wherein evidence is them to present their position at a to be
Considering that petitioners have not availed of this remedy, the received. Moreover, it appears from the records that private
instant petition is premature. respondents are claiming unliquidated damages, including moral
damages, from petitioners. The authorities agree that the writ of
We deem it necessary, however, for the guidance of respondent attachment is not available 'm a suit for damages where the
Court and of the parties, to stress herein the nature of attachment amount claimed is contingent or unliquidated.
as an extraordinary provisional remedy.

37
PROVISIONAL REMEDIES
based on Atty. Geraldine Tius Outline 2017

We think, however, that a rule sufficient for the determination of The respondent judge, wishing to ascertain or convince
this case has been suggested and acted upon, and that the remedy himself of the truth of the alleged disposal, required the
does not exist where unliquidated damages were demanded. ... petitioner herein to present evidence to substantiate its allegation,
In Warwick v. Chase, 23 Md 161, it is said: 'It is necessary that the before granting its petition. Inasmuch as the petitioner refused to
standard for ascertaining the amount of damages claimed should comply with the court's requirement, alleging as its ground that
not only appear, but that it should be fixed and certain, and in no was not obliged to do so, the respondent judge dismissed said
degree dependent on facts either speculative or Uncertain ... The petition for an order of attachment.
general rule is, that unliquidated damages, ... cannot be recovered
by attachment, unless the contract affords a certain measure or ISSUE: whether or not the mere filing of an affidavit executed in
standard for ascertaining the amount of the damages ... 4 due form is sufficient to compel a judge to issue an order of
Further. attachment? NO.

The statute authorizing the issuance of the writ of garnishment and HELD:
that relating to the issuance of the writ of attachment ... have not Section 426 of the Code of Civil procedure provides the following:
been construed as authorizing the writs to be issued when the SEC. 426. Granting order of attachment. A judge or justice of the
plaintiff's suit is technically an action for debt. Neither of the writs peace shall grant an order of attachment when it is made to appear
may be issued when the suit is for damages for tort, but they may to the judge or justice of the peace by the affidavit of the plaintiff,
be issued when the plaintiff's claim arises out of contract either or of some other person who knows the facts, that a sufficient
express or implied, and the demand is liquidated, that is, the cause of action exists, and that the case is one of those mentioned
amount of the claim is not contingent, is capable of being definitely in section four hundred and twenty-four, and that there is no other
ascertained by the usual means of evidence, and does not rest in sufficient security for the claim sought to be enforced by the
the discretion of the jury. 5 action, and that the amount due to the plaintiff above all legal set-
WHEREFORE, the instant petition is hereby DENIED, in order to offs or counterclaims is as much as the sum for which the order is
enable petitioners to move before respondent Court for the granted.
discharge of the attachment on the ground of its improper and
irregular issuance, pursuant to section 13, Rule 57, of the Revised It will be seen that the legal provision just cited orders the granting
Rules of Court, and for the aforesaid Court to act thereon in of a writ of attachment when it has been made to appear by
accordance with the foregoing. affidavit that the facts mentioned by law as sufficient to warrant
the issuance thereof, exist. Although the law requires nothing more
G.R. No. 40054 September 14, 1933 than the affidavit as a means of establishing the existence of such
LA GRANJA, INC., petitioner, vs. FELIX SAMSON, facts, nevertheless, such affidavit must be sufficient to convince
the court of their existence, the court being justified in rejecting
Judge of First Instance of Cagayan, CHUA BIAN,
the affidavit if it does not serve this purpose and in denying the
CHUA YU LEE and CHUA KI, petition for an order of attachment.
MERE FILING OF AN AFFIDAVIT EXECUTED IN DUE FORM IS NOT
SUFFICIENT TO COMPEL A JUDGE TO ISSUE AN ORDER OF The affidavit filed by the petitioner, La Granja, Inc., must not have
ATTACHMENT, but it is necessary that by such affidavit it be made satisfied the respondent judge inasmuch as he desired to ascertain
to appear to the court that there exists sufficient cause for the or convince himself of the truth of the facts alleged therein by
issuance thereof, the determination of such sufficiency being requiring evidence to substantiate them. The sufficiency or
discretionary on the part of the court. insufficiency of an affidavit depends upon the amount of credit
given it by the judge, and its acceptance or rejection, upon his
sound discretion.
FACTS: In this original petition for mandamus filed by the corporate
entity, La Granja, Inc., against Felix Samson, as Judge of the Court Hence, the respondent judge, in requiring the presentation of
of First Instance of Cagayan, Chua Bian, Chua Yu Lee and Chua Ki, evidence to establish the truth of the allegation of the affidavit that
the petitioner herein, for the reasons stated in its petition, prays the defendants had disposed or were disposing of their property to
that a writ of mandamus be issued against the respondent Judge defraud their creditors, has done nothing more than exercise his
compelling him to issue a writ of attachment against the properties sound discretion in determining the sufficiency of the affidavit.
of the other respondents herein, who are defendants in civil case
No. 1888 of the Court of First Instance of Cagayan. The pertinent MERE FILING OF AN AFFIDAVIT EXECUTED IN DUE FORM IS NOT
facts necessary for the solution of the questions raised in the SUFFICIENT TO COMPEL A JUDGE TO ISSUE AN ORDER OF
present case are as follows: ATTACHMENT, but it is necessary that by such affidavit it be made
to appear to the court that there exists sufficient cause for the
On July 5, 1932, the petitioner herein, La Granja, Inc., filed a issuance thereof, the determination of such sufficiency being
complaint vs Chua Bian, Chua Yu Lee and Chua Ki, for the recovery discretionary on the part of the court.
of the sum of P2,418.18 with interest thereon at the rate of 12 per Wherefore, the petition for a writ of mandamus is hereby denied
cent per annum. The plaintiff at the same time, also prayed for the and the same is dismissed, with costs against the petitioner. So
issuance of an order of attachment against the aforementioned ordered.
defendants' property and accompanied said complaint with an
affidavit of the manager of the aforesaid petitioner, La Granja, Inc.,
wherein it was alleged among other essential things, that the said
defendants have disposed or are disposing of their properties in
favor of the Asiatic Petroleum Co., with intent to defraud their
creditors.

38

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