Provisional Remedies/Cases Full Text/Rule 57│1
G.R. No. 197802, November 11, 2015
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN,
M.D. DBA ZUNECA PHARMACEUTICAL, vs. NATRAPHARM, INC.,
VILLARAMA, JR., J.:
Rule 58 of the Rules of Court provides for both preliminary and
permanent injunction. Section 1, Rule 58 provides for the definition of
preliminary injunction:
SECTION 1. Preliminary injunction defined; classes. — A preliminary
injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court,
agency or a person to refrain from a particular act or acts. It may also
require the performance of a particular act or acts, in which case it shall
be known as a preliminary mandatory injunction. (Emphasis supplied)
On the other hand, Section 9 of the same Rule defines a permanent
injunction in this wise:
SEC. 9. When final injunction granted. — If after the trial of the action it
appears that the applicant is entitled to have the act or acts complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or
continuance of the act or acts or confirming the preliminary mandatory
injunction. (Emphasis supplied)
A writ of preliminary injunction is generally based solely on initial and
incomplete evidence.30 The evidence submitted during the hearing on an
application for a writ of preliminary injunction is not conclusive or
complete for only a sampling is needed to give the trial court an idea of
the justification for the preliminary injunction pending the decision of the
case on the merits.31 As such, the findings of fact and opinion of a court
when issuing the writ of preliminary injunction are interlocutory in
nature and made even before the trial on the merits is commenced or
terminated.32
By contrast a permanent injunction, based on Section 9, Rule 58 of the
Rules of Court, forms part of the judgment on the merits and it can only
be properly ordered only on final judgment. A permanent injunction may
thus be granted after a trial or hearing on the merits of the case and a
decree granting or refusing an injunction should not be entered until after
a hearing on the merits where a verified answer containing denials is filed
or where no answer is required, or a rule to show cause is equivalent to
an answer.33
As such a preliminary injunction, like any preliminary writ and any
interlocutory order, cannot survive the main case of which it is an
incident; because an ancillary writ of preliminary injunction loses its
force and effect after the decision in the main petition.34
In Casilan v. Ybañez,35 this Court stated:
As things stand now, this Court can no longer interfere with the
preliminary injunctions issued by the Leyte court in its cases Nos. 2985
and 2990, because such preliminary writs have already been vacated,
being superseded and replaced by the permanent injunction ordered in
the decision on the merits rendered on 21 March 1962. And as to the
permanent injunction, no action can be taken thereon without
reviewing the judgment on the merits, such injunction being but a
consequence of the pronouncement that the credits of Tiongson and
Montilla are entitled to priority over that of Casilan. Since the court
below had the power and right to determine such question of
preference, its judgment is not without, nor in excess of, jurisdiction;
and even assuming that its findings are not correct, they would, at
most, constitute errors of law, and not abuses of discretion,
correctible bycertiorari . The obvious remedy for petitioner Casilan
was a timely appeal from the judgment on the merits to the Court of
Appeals, the amount involved being less than P200,000. But the judgment
has become final and unappealable and can not be set aside
through certiorari proceedings. (Emphasis supplied)
Here, this Court is being asked to determine whether the CA erred by
issuing a permanent injunction in a case which questioned the propriety
of the denial of an ancillary writ. But with the RTC's December 2, 2011
Decision on the case for "Injunction, Trademark Infringement, Damages
and Destruction," the issues raised in the instant petition have been
rendered moot and academic. We note that the case brought to the CA on
a petition for certiorari merely involved the RTC's denial of respondent's
application for a writ of preliminary injunction, a mere ancillary writ.
Since a decision on the merits has already been rendered and which
includes in its disposition a permanent injunction, the proper remedy is
an appeal36 from the decision in the main case.
G.R. No. L-252 March 30, 1946
TRANQUILINO CALO and DOROTEO SAN JOSE, vs.
ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO
RELOVA and TEODULA BARTOLOME
FERIA, J.:
The provisional remedies denominated attachment, preliminary
injunction, receivership, and delivery of personal property, provided in
Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are remedies
to which parties litigant may resort for the preservation or protection of
their rights or interest, and for no other purpose, during the pendency of
the principal action. If an action, by its nature, does not require such
protection or preservation, said remedies can not be applied for and
granted. To each kind of action or actions a proper provisional remedy is
provided for by law. The Rules of Court clearly specify the case in which
they may be properly granted.
Attachment may be issued only in the case or actions specifically stated in
section 1, Rule 59, in order that the defendant may not dispose of his
property attached, and thus secure the satisfaction of any judgment that
may be recovered by plaintiff from defendant. For that reason a property
subject of litigation between the parties, or claimed by plaintiff as his, can
not be attached upon motion of the same plaintiff.
The special remedy of preliminary prohibitory injunction lies when the
plaintiff's principal action is an ordinary action of injunction, that is,
when the relief demanded in the plaintiff's complaint consists in
restraining the commission or continuance of the act complained of,
either perpetually or for a limited period, and the other conditions
required by section 3 of Rule 60 are present. The purpose of this
provisional remedy is to preserve the status quo of the things subject of
the action or the relation between the parties, in order to protect the
rights of the plaintiff respecting the subject of the action during the
pendency of the suit. Because, otherwise or if no preliminary prohibition
injunction were issued, the defendant may, before final judgment, do or
continue the doing of the act which the plaintiff asks the court to restrain,
and thus make ineffectual the final judgment rendered afterwards
granting the relief sought by the plaintiff. But, as this court has repeatedly
held, a writ of preliminary injunction should not be granted to take the
property out of the possession of one party to place it in the hands of
another whose title has not been clearly established.
A receiver may be appointed to take charge of personal or real property
which is the subject of an ordinary civil action, when it appears that the
party applying for the appointment of a receiver has an interest in the
property or fund which is the subject of the action or litigation, and that
such property or fund is in danger of being lost, removed or materially
injured unless a receiver is appointed to guard and preserve it (section 1
[b], Rule 61); or when it appears that the appointment of a receiver is the
most convenient and feasible means of preserving, administering or
disposing of the property in litigation (section 1 [e] of said Rule). The
property or fund must, therefore be in litigation according to the
allegations of the complaint, and the object of appointing a receiver is to
secure and preserve the property or thing in controversy pending the
litigation. Of course, if it is not in litigation and is in actual possession of
the plaintiff, the latter can not apply for and obtain the appointment of a
receiver thereof, for there would be no reason for such appointment.
Delivery of personal property as a provisional remedy consists in the
delivery, by order of the court, of a personal property by the defendant to
the plaintiff, who shall give a bond to assure the return thereof or the
payment of damages to the defendant in the plaintiff's action to recover
possession of the same property fails, in order to protect the plaintiff's
right of possession of said property, or prevent the defendant from
damaging, destroying or disposing of the same during the pendency of the
suit.
Undoubtedly, according to law, the provisional remedy proper to
plaintiffs' action of injunction is a preliminary prohibitory injunction, if
plaintiff's theory, as set forth in the complaint, that he is the owner and in
actual possession of the premises is correct. But as the lower court found
at the hearing of the said petition for preliminary injunction that the
defendants were in possession of the lands, the lower court acted in
accordance with law in denying the petition, although their motion for
reconsideration, which was still pending at the time the petition in the
present case was heard in this court, plaintiffs insist that they are in
actual possession of the lands and, therefore, of the fruits thereof.
SECOND DIVISION
[G.R. No. 144755. June 8, 2005]
SPOUSES ELISEO F. ESTARES and ROSENDA P. ESTARES, vs. COURT OF
APPEALS
AUSTRIA-MARTINEZ, J.:
Generally, injunction is a preservative remedy for the protection of
substantive rights or interests. It is not a cause of action in itself but
merely a provisional remedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial power to issue the writ is that the
court may thereby prevent a threatened or continuous irremediable
injury to some of the parties before their claims can be thoroughly
investigated and advisedly adjudicated. It is to be resorted to only when
there is a pressing necessity to avoid injurious consequences which
cannot be remedied under any standard of compensation. The application

of the writ rests upon an alleged existence of an emergency or of a special
reason for such an order before the case can be regularly heard, and the
essential conditions for granting such temporary injunctive relief are that
the complaint alleges facts which appear to be sufficient to constitute a
cause of action for injunction and that on the entire showing from both
sides, it appears, in view of all the circumstances, that the injunction is
reasonably necessary to protect the legal rights of plaintiff pending the
litigation.[32]
The Estares spouses had the burden in the trial court to establish
the following requirements for them to be entitled to injunctive relief: (a)
the existence of their right to be protected; and (b) that the acts against
which the injunction is to be directed are violative of such right. [33]To be
entitled to an injunctive writ, the petitioner must show, inter alia, the
existence of a clear and unmistakable right and an urgent and paramount
necessity for the writ to prevent serious damage.[34] Thus, an injunctive
remedy may only be resorted to when there is a pressing necessity to
avoid injurious consequences which cannot be remedied under any
standard compensation.[35]
In the present case, the Estares spouses failed to establish their
right to injunctive relief. They do not deny that they are indebted to PLCC
but only question the amount thereof. Their property is by their own
choice encumbered by a real estate mortgage. Upon the nonpayment of
the loan, which was secured by the mortgage, the mortgaged property is
properly subject to a foreclosure sale.
G.R. No. 134241 August 11, 2003
DAVID REYES (Substituted by Victoria R. Fabella), vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER,
CARPIO, J.:
Reyes points out that deposit is not among the provisional remedies
enumerated in the 1997 Rules of Civil Procedure. Reyes stresses the
enumeration in the Rules is exclusive. Not one of the provisional remedies
in Rules 57 to 6118 applies to this case. Reyes argues that a court cannot
apply equity and require deposit if the law already prescribes the specific
provisional remedies which do not include deposit. Reyes invokes the
principle that equity is "applied only in the absence of, and never against,
statutory law or x x x judicial rules of procedure." 19 Reyes adds the fact
that the provisional remedies do not include deposit is a matter of dura
lex sed lex.20
The instant case, however, is precisely one where there is a hiatus in the
law and in the Rules of Court. If left alone, the hiatus will result in unjust
enrichment to Reyes at the expense of Lim. The hiatus may also imperil
restitution, which is a precondition to the rescission of the Contract to Sell
that Reyes himself seeks. This is not a case of equity overruling a positive
provision of law or judicial rule for there is none that governs this
particular case. This is a case of silence or insufficiency of the law and the
Rules of Court. In this case, Article 9 of the Civil Code expressly mandates
the courts to make a ruling despite the "silence, obscurity or insufficiency
of the laws." 21 This calls for the application of equity, 22 which "fills the
open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly
order the deposit of the P10 million down payment in court. The purpose
of the exercise of equity jurisdiction in this case is to prevent unjust
enrichment and to ensure restitution. Equity jurisdiction aims to do
complete justice in cases where a court of law is unable to adapt its
judgments to the special circumstances of a case because of the
inflexibility of its statutory or legal jurisdiction. 24
The principle that no person may unjustly enrich himself at the expense
of another is embodied in Article 22 38 of the Civil Code. This principle
applies not only to substantive rights but also to procedural remedies.
One condition for invoking this principle is that the aggrieved party has
no other action based on contract, quasi-contract, crime, quasi-delict or
any other provision of law.39 Courts can extend this condition to the hiatus
in the Rules of Court where the aggrieved party, during the pendency of
the case, has no other recourse based on the provisional remedies of the
Rules of Court.
RULE 57: PRELIMINARY ATTACHMENT
G.R. No. 203240, March 18, 2015
NORTHERN ISLANDS, CO., INC., v. SPOUSES DENNIS AND
CHERYLIN* GARCIA, DOING BUSINESS UNDER THE NAME AND STYLE
“ECOLAMP MULTI RESOURCES,”
PERLAS-BERNABE, J.:
With the RTC’s loss of jurisdiction over the Main Case necessarily comes
its loss of jurisdiction over all matters merely ancillary thereto. Thus, the
propriety of conducting a trial by commissioners in order to determine
the excessiveness of the subject preliminary attachment, being a mere
ancillary matter to the Main Case, is now mooted by its supervening
appeal in CA-G.R. CV No. 98237.
Note that in Sps. Olib v. Judge Pastoral,40 the Court, in view of the nature of
Provisional Remedies/Cases Full Text/Rule 57│2
a preliminary attachment, definitively ruled that the attachment itself
cannot be the subject of a separate action independent of the principal
action because the attachment was only an incident of such action, viz.:
Attachment is defined as a provisional remedy by which the property of
an adverse party is taken into legal custody, either at the commencement
of an action or at any time thereafter, as a security for the satisfaction of
any judgment that may be recovered by the plaintiff or any proper party.
It is an auxiliary remedy and cannot have an independent existence apart
from the main suit or claim instituted by the plaintiff against the
defendant. Being merely ancillary to a principal proceeding, the
attachment must fail if the suit itself cannot be maintained as the
purpose of the writ can no longer be justified.
The consequence is that where the main action is appealed, the
attachment which may have been issued as an incident of that action, is
also considered appealed and so also removed from the jurisdiction of the
court a quo. The attachment itself cannot be the subject of a separate
action independent of the principal action because the attachment
was only an incident of such action.41 (Emphases supplied)
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC., vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or
QUEENSLAND TOURIST INN, and TEODORICO ADARNA,
NARVASA, J.:p
This, too, is true with regard to the provisional remedies of preliminary
attachment, preliminary injunction, receivership or replevin. 14 They
may be validly and properly applied for and granted even before the
defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of
Court, as the provisional remedy in virtue of which a plaintiff or other
party may, at the commencement of the action or at any time thereafter,
have the property of the adverse party taken into the custody of the court
as security for the satisfaction of any judgment that may be
recovered. 15 It is a remedy which is purely statutory in respect of which
the law requires a strict construction of the provisions granting
it. 16 Withal no principle, statutory or jurisprudential, prohibits its
issuance by any court before acquisition of jurisdiction over the person of
the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement
of the action or at any time thereafter." 17The phase, "at the
commencement of the action," obviously refers to the date of the filing of
the complaint — which, as above pointed out, is the date that marks "the
commencement of the action;" 18 and the reference plainly is to a time
before summons is served on the defendant, or even before summons
issues. What the rule is saying quite clearly is that after an action is
properly commenced — by the filing of the complaint and the payment of
all requisite docket and other fees — the plaintiff may apply for and
obtain a writ of preliminary attachment upon fulfillment of the pertinent
requisites laid down by law, and that he may do so at any time, either
before or after service of summons on the defendant. And this indeed, has
been the immemorial practice sanctioned by the courts: for the plaintiff
or other proper party to incorporate the application for attachment in the
complaint or other appropriate pleading (counter-claim, cross-claim,
third-party claim) and for the Trial Court to issue the writ ex-parte at the
commencement of the action if it finds the application otherwise
sufficient in form and substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or
application for preliminary attachment is not generally necessary unless
otherwise directed by the Trial Court in its discretion. 20 And in Filinvest
Credit Corporation v. Relova, 21 the Court declared that "(n)othing in the
Rules of Court makes notice and hearing indispensable and mandatory
requisites for the issuance of a writ of attachment." The only pre-requisite
is that the Court be satisfied, upon consideration of "the affidavit of the
applicant or of some other person who personally knows the facts, that a
sufficient cause of action exists, that the case is one of those mentioned in
Section 1 . . . (Rule 57), that there is no other sufficient security for the
claim sought to be enforced by the action, and that the amount due to the
applicant, or the value of the property the possession of which he is
entitled to recover, is as much as the sum for which the order (of
attachment) is granted above all legal counterclaims." 22 If the court be so
satisfied, the "order of attachment shall be granted," 23 and the writ shall
issue upon the applicant's posting of "a bond executed to the adverse
party in an amount to be fixed by the judge, not exceeding the plaintiffs
claim, conditioned that the latter will pay all the costs which may be
adjudged to the adverse party and all damages which he may sustain by
reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto." 24
It goes without saying that whatever be the acts done by the Court prior
to the acquisition of jurisdiction over the person of defendant, as above
indicated — issuance of summons, order of attachment and writ of
attachment (and/or appointments of guardian ad litem, or grant of

authority to the plaintiff to prosecute the suit as a pauper litigant, or
amendment of the complaint by the plaintiff as a matter of right without
leave of court 30 — and however valid and proper they might otherwise
be, these do not and cannot bind and affect the defendant until and unless
jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary
submission to the court's authority. Hence, when the sheriff or other
proper officer commences implementation of the writ of attachment, it is
essential that he serve on the defendant not only a copy of the applicant's
affidavit and attachment bond, and of the order of attachment, as explicity
required by Section 5 of Rule 57, but also the summons addressed to said
defendant as well as a copy of the complaint and order for appointment of
guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of
the Rules of Court. Service of all such documents is indispensable not only
for the acquisition of jurisdiction over the person of the defendant, but
also upon considerations of fairness, to apprise the defendant of the
complaint against him, of the 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 amount
equal to the plaintiff's claim in the complaint pursuant to Section 5 (or
Section 12), Rule 57, or dissolving it by causing dismissal of the complaint
itself on any of the grounds set forth in Rule 16, or demonstrating the
insufficiency of the applicant's affidavit or bond in accordance with
Section 13, Rule 57.
For the guidance of all concerned, the Court reiterates and reaffirms the
proposition that writs of attachment may properly issue ex
parte provided that the Court is satisfied that the relevant requisites
therefor have been fulfilled by the applicant, although it may, in its
discretion, require prior hearing on the application with notice to the
defendant; but that levy on property pursuant to the writ thus issued may
not be validly effected unless preceded, or contemporaneously
accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in but submitted
separately from the complaint), the order of attachment, and the
plaintiff's attachment bond.
G.R. No. L-48080 August 31, 1942
JOSE DE BORJA vs. SERVILLANO PLATON and FRANCISCO DE BORJA
BOCOBO, J.:
The order for preliminary attachment is questioned upon several
grounds, among which are: (1) that no writ of attachment can be issued in
favor of a defendant who presents a counterclaim; (2) and the defendants'
affidavit was fatally defective.
On the first point, we believe a writ of preliminary attachment may be
issued in favor of a defendant who sets up a counterclaim. For the
purpose of the protection afforded by such attachment, it is immaterial
whether the defendants Borja and wife simply presented a counterclaim
or brought a separate civil action against Jose de Borja, plaintiff in the
previous case and petitioner herein. To lay down a subtle distinction
would be to sanction that formalism and that technicality which are
discountenanced by the modern laws of procedure for the sake of speedy
and substantial justice.
As to be the second objection of petitioner, his counsel strenuously
advances the theory that the affidavit attached to the petition for a writ of
preliminary attachment was fatally defective because it failed to allege
that "the amount due to the plaintiff is as much as the sum for which the
order is granted above all legal counterclaims" as required in section 426,
Code of Civil Procedure and section 3, Rule 59, Rules of Court. The trial
court found, however, that the counterclaim of Francisco de Borja and
wife exceed those of the petitioner Jose de Borja. It should be borne in
mind that the aggregate counterclaims of Francisco de Borja and wife
amounted to P869,000, which exceeds petitioner's counterclaim by
P769,000 in round figures. Moreover, as the trial court had before it the
evidence adduce by both sides, the petition for a writ of preliminary
attachment having been filed four years after the trial had begun, we
presume that the lower court, having in mind such evidence, ordered the
attachment accordingly.
G.R. No. L-61011 October 18, 1990
INSULAR BANK OF ASIA & AMERICA, INCORPORATED, vs.
HONORABLE COURT OF APPEALS, and COMMERCIAL CREDIT
CORPORATION,
PADILLA, J.:
The purpose of attachment is to secure a contingent lien on defendant's
property until plaintiff can obtain a judgment and have such property
applied to its satisfaction or to make provision for unsecured debts in
such cases where the means of satisfaction thereof are liable to be
removed beyond the jurisdiction or improperly disposed of (by fraud or
otherwise) or concealed or placed beyond the reach of creditors.
Petitioner claims that at the time the obligation was incurred by
respondent, the latter already had the fraudulent intent not to pay the
Provisional Remedies/Cases Full Text/Rule 57│3
obligation or indebtedness. This contention is not borne out by the
records. Respondent has not denied that it was undergoing financial
difficulties and had in fact called a creditor's meeting 5 to make full
disclosure of its business condition and negotiate for payment of its
outstanding obligations. Inability to pay, we rule, is not necessarily
synonymous with fraudulent intent not to honor an admitted obligation.
G.R. No. 175587 September 21, 2007
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, vs. JOSEPH
ANTHONY M. ALEJANDRO,
YNARES-SANTIAGO, J.:
For attachment is harsh, extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to humiliation and annoyance.
It should be resorted to only when necessary and as a last remedy.
Petitioner contends that even if respondent is considered a resident of the
Philippines, attachment is still proper under Section 1, paragraph (f), Rule
57 of the Rules of Court since he (respondent) is a resident who is
temporarily out of the Philippines upon whom service of summons may
be effected by publication.
There is no merit in petitioner's contention. The circumstances under
which a writ of preliminary attachment may be issued are set forth in
Section 1, Par. (f), Rule 57 of the Rules of Court, to wit:
(f) In an action against a party who resides out of the Philippines, or on
whom summons may be served by publication.
The purposes of preliminary attachment are: (1) to seize the property of
the debtor in advance of final judgment and to hold it for purposes of
satisfying said judgment, as in the grounds stated in paragraphs (a) to (e)
of Section 1, Rule 57 of the Rules of Court; or (2) to acquire jurisdiction
over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the
defendant cannot be effected, as in paragraph (f) of the same provision.
Corollarily, in actions in personam, such as the instant case for collection
of sum of money, summons must be served by personal or substituted
service, otherwise the court will not acquire jurisdiction over the
defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be
effected), the remedy of the plaintiff in order for the court to acquire
jurisdiction to try the case is to convert the action into a proceeding in
rem or quasi in rem by attaching the property of the defendant.
However, where the defendant is a resident who is temporarily out of the
Philippines, attachment of his/her property in an action in personam, is
not always necessary in order for the court to acquire jurisdiction to hear
the case.
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. Obviously, the trial courts issuance of the writ
was for the sole purpose of acquiring jurisdiction to hear and decide the
case. Had the allegations in the complaint disclosed that respondent has a
residence in Quezon City and an office in Makati City, the trial court, if
only for the purpose of acquiring jurisdiction, could have served
summons by substituted service on the said addresses, instead of
attaching the property of the defendant. The rules on the application of a
writ of attachment must be strictly construed in favor of the defendant.
For attachment is harsh, extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to humiliation and annoyance.
It should be resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that respondent
is a resident temporarily out of the Philippines, petitioner is still not
entitled to a writ of attachment because the trial court could acquire
jurisdiction over the case by substituted service instead of attaching the
property of the defendant. The misrepresentation of petitioner that
respondent does not reside in the Philippines and its omission of his local
addresses was thus a deliberate move to ensure that the application for
the writ will be granted.
G.R. No. L-34548 November 29, 1988
RIZAL COMMERCIAL BANKING CORPORATION, vs. THE HONORABLE
PACIFICO P. DE CASTRO and PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION,r
CORTES, J.:
The government funds and properties may not be seized under writs of
execution or garnishment to satisfy judgement. However, in this case, the
Philippine Virginia Tobacco Administration (PVTA) has been endowed
with a personality distinct and separate from the government which owns
and controls it. RA 2265 created PVTA as an ordinary corporation with all
the attributes of a corporate entity subject to the provisions of the
Corporation Law. Thus, it possesses the power "to sue and be sued" and

"to acquire and hold such assets and incur such liabilites resulting directly
from operations authorized by the provisions of this Act or as essential to
the proper conduct of such operations." Here, the Court declared that the
funds of PVTA can be garnished since "funds of public corporation which
can sue and be sued were not exempt from garnishment" (PNB vs.
Pabalan).
Garnishment is considered as a specie of attachment for reaching credits
belonging to the judgment debtor and owing to him from a stranger to the
litigation. Under the above-cited rule, the garnishee [the third person] is
obliged to deliver the credits, etc. to the proper officer issuing the writ
and "the law exempts from liability the person having in his possession or
under his control any credits or other personal property belonging to the
defendant, ..., if such property be delivered or transferred, ..., to the clerk,
sheriff, or other officer of the court in which the action is pending. [3
Moran, Comments on the Rules of Court 34 (1970 ed.)]
The aforequoted ruling thus bolsters RCBC's stand that its immediate
compliance with the lower court's order should not have been met with
the harsh penalty of joint and several liability. Nor can its liability to
reimburse PVTA of the amount delivered in check be premised upon the
subsequent declaration of nullity of the order of delivery.
G.R. No. 133303 February 17, 2005
BERNARDOVALDEVIESO, vs.
CANDELARIO DAMALERIO AND AUREA C. DAMALERIO,
CHICO-NAZARIO, J.:
The settled rule is that levy on attachment, duly registered, takes
preference over a prior unregistered sale.17 This result is a necessary
consequence of the fact that the property involved was duly covered by
the Torrens system which works under the fundamental principle that
registration is the operative act which gives validity to the transfer or
creates a lien upon the land.18
The preference created by the levy on attachment is not diminished even
by the subsequent registration of the prior sale. This is so because an
attachment is a proceeding in rem.19 It is against the particular property,
enforceable against the whole world. The attaching creditor acquires a
specific lien on the attached property which nothing can subsequently
destroy except the very dissolution of the attachment or levy itself. 20 Such
a proceeding, in effect, means that the property attached is an indebted
thing and a virtual condemnation of it to pay the owner’s debt. 21 The lien
continues until the debt is paid, or sale is had under execution issued on
the judgment, or until the judgment is satisfied, or the attachment
discharged or vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of respondents appeared in
the nature of a real lien when petitioner had his purchase recorded. The
effect of the notation of said lien was to subject and subordinate the right
of petitioner, as purchaser, to the lien. Petitioner acquired ownership of
the land only from the date of the recording of his title in the register, and
the right of ownership which he inscribed was not absolute but a limited
right, subject to a prior registered lien of respondents, a right which is
preferred and superior to that of petitioner. 22
G.R. No. 161417 February 8, 2007
MA. TERESA CHAVES BIACO, Petitioner, vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
TINGA, J.:
In this case, the judicial foreclosure proceeding instituted by respondent
PCRB undoubtedly vested the trial court with jurisdiction over the res. A
judicial foreclosure proceeding is an action quasi in rem. As such,
jurisdiction over the person of petitioner is not required, it being
sufficient that the trial court is vested with jurisdiction over the subject
matter.
There is a dimension to this case though that needs to be delved into.
Petitioner avers that she was not personally served summons. Instead,
summons was served to her through her husband at his office without
any explanation as to why the particular surrogate service was resorted
to.
Without ruling on petitioner’s allegation that her husband and the sheriff
connived to prevent summons from being served upon her personally, we
can see that petitioner was denied due process and was not able to
participate in the judicial foreclosure proceedings as a consequence. The
violation of petitioner’s constitutional right to due process arising from
want of valid service of summons on her warrants the annulment of the
judgment of the trial court.
There is more, the trial court granted respondent PCRB’s ex-parte motion
for deficiency judgment and ordered the issuance of a writ of execution
against the spouses Biaco to satisfy the remaining balance of the award. In
short, the trial court went beyond its jurisdiction over the res and
rendered a personal judgment against the spouses Biaco. This cannot be
countenanced.
Provisional Remedies/Cases Full Text/Rule 57│4
The Court explained, citing El Banco Español-Filipino v. Palanca, 19 that
foreclosure and attachment proceedings are both actions quasi in rem. As
such, jurisdiction over the person of the (non-resident) defendant is not
essential. Service of summons on a non-resident defendant who is not
found in the country is required, not for purposes of physically acquiring
jurisdiction over his person but simply in pursuance of the requirements
of fair play, so that he may be informed of the pendency of the action
against him and the possibility that property belonging to him or in which
he has an interest may be subjected to a judgment in favor of a resident,
and that he may thereby be accorded an opportunity to defend in the
action, should he be so minded.
Similarly, in this case, while the trial court acquired jurisdiction over
the res, its jurisdiction is limited to a rendition of judgment on the res. It
cannot extend its jurisdiction beyond the res and issue a judgment
enforcing petitioner’s personal liability. In doing so without first having
acquired jurisdiction over the person of petitioner, as it did, the trial court
violated her constitutional right to due process, warranting the
annulment of the judgment rendered in the case.
G.R. No. 155868 February 6, 2007
SPOUSES GREGORIO and JOSEFA YU, Petitioners, vs.
NGO YET TE, doing business under the name and style, ESSENTIAL
MANUFACTURING, Respondent.
AUSTRIA-MARTINEZ, J.:
To merit an award of actual damages arising from a wrongful attachment,
the attachment defendant must prove, with the best evidence obtainable,
the fact of loss or injury suffered and the amount thereof. 58 Such loss or
injury must be of the kind which is not only capable of proof but must
actually be proved with a reasonable degree of certainty. As to its amount,
the same must be measurable based on specific facts, and not on
guesswork or speculation. 59 In particular, if the claim for actual damages
covers unrealized profits, the amount of unrealized profits must be
estalished and supported by independent evidence of the mean income of
the business undertaking interrupted by the illegal seizure. 60
In this case, the actual damages cannot be determined. Defendant-
appellant Josefa Yu testified on supposed lost profits without clear and
appreciable explanation. Despite her submission of the used and unused
ticket stubs, there was no evidence on the daily net income, the routes
plied by the bus and the average fares for each route. The submitted basis
is too speculative and conjectural.
Nonetheless, we recognize that Spouses Yu suffered some form of
pecuniary loss when their properties were wrongfully seized, although
the amount thereof cannot be definitively ascertained. Hence, an award of
temperate or moderate damages in the amount of P50,000.00 is in
order.70
As to moral and exemplary damages, to merit an award thereof, it must be
shown that the wrongful attachment was obtained by the attachment
plaintiff with malice or bad faith, such as by appending a false affidavit to
his application.71
It is not difficult to understand why Te concluded that Spouses Yu never
intended to pay their obligation for they had available funds in their bank
but chose to transfer said funds instead of cover the checks they issued.
Thus, we cannot attribute malice nor bad faith to Te in applying for the
attachment writ. We cannot hold her liable for moral and exemplary
damages.
G.R. No. 84481 April 18, 1989
MINDANAO SAVINGS & LOAN ASSOCIATION, INC. & FRANCISCO
VILLAMOR, vs. HON. COURT OF APPEALS, POLY R. MERCADO, and
JUAN P. MERCADO,
GRIÑO-AQUINO, J.:
The only requisites for the issuance of a writ of preliminary attachment
under Section 3, Rule 57 of the Rules of Court are the affidavit and bond of
the applicant.
No notice to the adverse party or hearing of the application is required. As
a matter of fact a hearing would defeat the purpose of this provisional
remedy. The time which such a hearing would take, could be enough to
enable the defendant to abscond or dispose of his property before a writ
of attachment issues. Nevertheless, while no hearing is required by the
Rules of Court for the issuance of an attachment (Belisle Investment &
Finance Co., Inc. vs. State Investment House, Inc., 72927, June 30, 1987;
Filinvest Credit Corp. vs. Relova, 11 7 SCRA 420), a motion to quash the
writ may not be granted without "reasonable notice to the applicant" and
only "after hearing" (Secs. 12 and 13, Rule 57, Rules of Court).
The Court of Appeals did not err in holding that objections to the
impropriety or irregularity of the writ of attachment "may no longer be
invoked once a counterbond is filed," when the ground for the issuance of
the writ forms the core of the complaint.

Indeed, after the defendant has obtained the discharge of the writ of
attachment by filing a counterbond under Section 12, Rule 57 of the Rules
of Court, he may not file another motion under Section 13, Rule 57 to
quash the writ for impropriety or irregularity in issuing it.
The reason is simple. The writ had already been quashed by filing a
counterbond, hence, another motion to quash it would be pointless.
Moreover, as the Court of Appeals correctly observed, when the ground
for the issuance of the writ is also the core of the complaint, the question
of whether the plaintiff was entitled to the writ can only be
determined after, not before, a full-blown trial on the merits of the case.
This accords with our ruling G.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The
merits of a main action are not triable in a motion to discharge an
attachment, otherwise an applicant for the dissolution could force a trial
on the merits of the case on this motion."
May the defendant, after procuring the dissolution of the attachment by
filing a counterbond, ask for the cancellation of the counterbond on the
ground that the order of attachment was improperly issued? That
question was answered by this Court when it ruled in Uy Kimpang vs.
Javier, 65 Phil. 170, that "the obligors in the bond are absolutely liable for
the amount of any judgment that the plaintiff may recover in the
action without reference to the question of whether the attachment was
rightfully or wrongfully issued."
The liability of the surety on the counterbond subsists until the Court
shall have finally absolved the defendant from the plaintiff s claims. Only
then may the counterbond be released. The same rule applies to the
plaintiffs attachment bond. "The liability of the surety on the
bond subsists because the final reckoning is when the Court
shall finally adjudge that the attaching creditor was not entitled to the
issuance of the attachment writ," (Calderon vs. Intermediate Appellate
Court, 155 SCRA 531.)
G.R. No. 144740 August 31, 2005
SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners, vs. THE
HON. AMELIA TRIA-INFANTE, In her official capacity as Presiding
Judge, Regional Trial Court, Branch 9, Manila
CHICO-NAZARIO, J.:
Petitioner seeks to escape liability by contending, in the main, that the
writ of attachment which was earlier issued against the real properties of
Villaluz was not discharged. Since the writ was not discharged, then its
liability did not accrue.
Over the years, in a number of cases, we have made certain
pronouncements about counter-bonds.
In Tijam v. Sibonghanoy,35 as reiterated in Vanguard Assurance Corp. v.
Court of Appeals,36 we held: [A]fter the judgment for the plaintiff has
become executory and the execution is ‘returned unsatisfied,’ as in this
case, the liability of the bond automatically attaches and, in failure of the
surety to satisfy the judgment against the defendant despite demand
therefore, writ of execution may issue against the surety to enforce the
obligation of the bond.
In Luzon Steel Coporation v. Sia, et al.: . [C]ounterbonds posted to obtain
the lifting of a writ of attachment is due to these bonds being security for
the payment of any judgment that the attaching party may obtain; they
are thus mere replacements of the property formerly attached, and just as
the latter may be levied upon after final judgment in the case in order to
realize the amount adjudged, so is the liability of the countersureties
ascertainable after the judgment has become final. . . .
In Imperial Insurance, Inc. v. De Los Angeles,38 we ruled: Section 17, Rule
57 of the Rules of Court cannot be construed that an "execution against
the debtor be first returned unsatisfied even if the bond were a solidary
one, for a procedural may not amend the substantive law expressed in the
Civil Code, and further would nullify the express stipulation of the parties
that the surety’s obligation should be solidary with that of the defendant.
In Philippine British Assurance Co., Inc. v. Intermediate Appellate
Court,39 we further held that "the counterbond is intended to secure the
payment of ‘any judgment’ that the attaching creditor may recover in the
action."
In view of the nature and purpose of a surety agreement, petitioner, thus,
is barred from disclaiming liability.
Petitioner’s argument that the mere filing of a counter-bond in this case
cannot automatically discharge the attachment without first an order of
discharge and approval of the bond, is lame.
Under the Rules, there are two (2) ways to secure the discharge of an
attachment. First, the party whose property has been attached or a
person appearing on his behalf may post a security. Second, said party
may show that the order of attachment was improperly or irregularly
Provisional Remedies/Cases Full Text/Rule 57│5
issued.42 The first applies in the instant case. Section 12, Rule
57,43 provides:
It is quite palpable that the necessary steps in the discharge of an
attachment upon giving counter-bond have been taken. To require a
specific order for the discharge of the attachment when this Court, in our
decision in G.R. No. 106214, had already declared that the petitioner is
solidarily bound with Villaluz would be mere surplusage.
We are not unmindful of our ruling in the case of Belisle Investment and
Finance Co., Inc. v. State Investment House, Inc., 47 where we held: . . . [T]he
Court of Appeals correctly ruled that the mere posting of a counterbond
does not automatically discharge the writ of attachment. It is only after
hearing and after the judge has ordered the discharge of the attachment if
a cash deposit is made or a counterbond is executed to the attaching
creditor is filed, that the writ of attachment is properly discharged under
Section 12, Rule 57 of the Rules of Court.
The ruling in Belisle, at first glance, would suggest an error in the assailed
ruling of the Court of Appeals because there was no specific resolution
discharging the attachment and approving the counter-bond. As above-
explained, however, consideration of our decision in G.R. No. 106214 in its
entirety will readily show that this Court has virtually discharged the
attachment after all the parties therein have been heard on the matter.
On this score, we hew to the pertinent ratiocination of the Court of
Appeals as regards the heretofore cited provision of Section 12, Rule 57 of
the 1997 Rules of Civil Procedure, on the discharge of attachment upon
giving counter-bond:
. . . The filing of the counter-attachment bond by petitioner Villaluz has
discharged the attachment on the properties and made the petitioner
corporation liable on the counter-attachment bond. This can be gleaned
from the "DEFENDANT’S BOND FOR THE DISSOLUTION OF
ATTACHMENT", which states that Security Pacific Assurance Corporation,
as surety, in consideration of the dissolution of the said attachment jointly
and severally, binds itself with petitioner Villaluz for any judgment that
may be recovered by private respondent Anzures against petitioner
Villaluz.
G.R. No. 181721, September 09, 2015
WATERCRAFT VENTURE CORPORATION, REPRESENTED BY ITS VICE-
PRESIDENT, ROSARIO E. RAÑOA, v. ALFRED RAYMOND WOLFE,
PERALTA, J.:
For the issuance of an ex-parte issuance of the preliminary attachment to
be valid, an affidavit of merit and an applicant's bond must be filed with
the court14 in which the action is pending. Such bond executed to the
adverse party in the amount fixed by the court is subject to the conditions
that the applicant will pay: (1) all costs which may be adjudged to the
adverse party; and (2) all damages which such party may sustain by
reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto. 15 As to the requisite affidavit of merit,
Section 3,16
Rule 57 of the Rules of Court states that an order of attachment shall be
granted only when it appears in the affidavit of the applicant, or of some
other person who personally knows the facts: that a sufficient cause of
action exists; that the case is one of those mentioned in Section 1 17 hereof;
that there is no other sufficient security for the claim sought to be
enforced by the action; and that the amount due to the applicant, or the
value of the property the possession of which he is entitled to recover, is
as much as the sum for which the order is granted above all legal
counterclaims.
The mere filing of an affidavit reciting the facts required by Section 3, Rule
57, however, is not enough to compel the judge to grant the writ of
preliminary attachment. Whether or not the affidavit sufficiently
established facts therein stated is a question to be determined by the
court in the exercise of its discretion. 18 "The sufficiency or insufficiency of
an affidavit depends upon the amount of credit given it by the judge, and
its acceptance or rejection, upon his sound discretion." 19
After a careful perusal of the allegations, the Court agrees with the CA
that Watercraft failed to state with particularity the circumstances
constituting fraud, as required by Section 5, 24 Rule 8 of the Rules of Court,
and that Wolfe's mere failure to pay the boat storage fees does not
necessarily amount to fraud, absent any showing that such failure was
due to insidious machinations and intent on his part to defraud
Watercraft of the amount due it.
In Liberty Insurance Corporation v. Court of Appeals, 25 the Court
explained that to constitute a ground for attachment in Section 1(d), Rule
57 of the Rules of Court, it must be shown that the debtor in contracting
the debt or incurring the obligation intended to defraud the creditor. A
debt is fraudulently contracted if at the time of contracting it, the debtor
has a preconceived plan or intention not to pay. "The fraud must relate to
the execution of the agreement and must have been the reason which
induced the other party into giving consent which he would not have

otherwise given."26
Fraudulent intent is not a physical entity, but a condition of the mind
beyond the reach of the senses, usually kept secret, very unlikely to be
confessed, and therefore, can only be proved by unguarded expressions,
conduct and circumstances.27 Thus, the applicant for a writ of preliminary
attachment must sufficiently show the factual circumstances of the
alleged fraud because fraudulent intent cannot be inferred from the
debtor's mere non-payment of the debt or failure to comply with his
obligation.28The particulars of such circumstances necessarily include the
time, persons, places and specific acts of fraud committed. 29 An affidavit
which does not contain concrete and specific grounds is inadequate to
sustain the issuance of such writ. In fact, mere general averments render
the writ defective and the court that ordered its issuance acted with grave
abuse of discretion amounting to excess of jurisdiction.30
With respect to Section 1 (a),32 Rule 57, the other ground invoked by
Watercraft for the issuance of the writ of preliminary attachment, the
Court finds no compelling reason to depart from the CA's exhaustive
ruling to the effect that such writ is unnecessary because Wolfe is not a
flight risk, thus:
As to the allegation that Wolfe is a (light risk, thereby warranting the
issuance of the writ, the same lacks merit. The mere fact that Wolfe is a
British national does not automatically mean that he would leave the
country at will. Neither should the fact that Wolfe's Special Working Visa
expired in April 2005 lead automatically to the conclusion that he would
leave the country. It is worth noting that all visas issued by the
government to foreigner staying in the Philippines have expiration
periods. These visas, however, may be renewed, subject to the
requirements of the law. In Wolfe's case, he indeed renewed his visa, as
shown by Special Working Visa No. 05-WV-0124P issued by the Subic Bay
Metropolitan Authority Visa Processing Office on April 25, 2005, and with
validity of two (2) years therefrom. Moreover, his Alien Certificate of
Registration was valid up to May 11, 2006.33
Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan34 is
displaced. It is well settled that:
x x x when the preliminary attachment is issued upon a ground which
is at the same time the applicant's cause of action; e.g., "an action for
money or property embezzled or fraudulently misapplied or converted to
his own use by a public officer, or an officer of a corporation, or an attorney,
factor, broker, agent, or clerk, in the course of his employment as such, or by
any other person in a fiduciary capacity, or for a willful violation of duty,"
or "an action against a party who has been guilty of fraud in contracting
the debt or incurring the obligation upon which the action is brought," the
defendant is not allowed to file a motion to dissolve the attachment
under Section 13 of Rule 57 by offering to show the falsity of the
factual averments in the plaintiffs application and affidavits on which
the writ was based - and consequently that the writ based thereon
had been improperly or irregularly issued - the reason being that the
hearing on such a motion for dissolution of the writ would be
tantamount to a trial of the merits of the action. In other words, the
merits of the action would be ventilated at a mere hearing of a motion,
instead of at the regular trial.35
Be that as it may, the foregoing rule is not applicable in this case because
when Wolfe filed a motion to dissolve the writ of preliminary attachment,
he did not offer to show the falsity of the factual averments in Watercraft's
application and affidavit on which the writ was based. Instead, he sought
the discharge of the writ on the ground that Watercraft failed to
particularly allege any circumstance amounting to fraud. No trial on the
merits of the action at a mere hearing of such motion will be had since
only the sufficiency of the factual averments in the application and
affidavit of merit will be examined in order to find out whether or not
Wolfe was guilty of fraud in contracting the debt or incurring the
obligation upon which the action is brought, or in the performance
thereof.
G.R. No. 154106 June 29, 2004
D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S.
DAYRIT vs. READYCON TRADING AND CONSTRUCTION CORP.,
QUISUMBING, J.:
It is to be stressed that the posting of a counter-bond is not tantamount to
a waiver of the right to damages arising from a wrongful attachment.
The point in Mindanao Savings, alluded to by respondent, pertained to the
propriety of questioning the writ of attachment by filing a motion to
quash said writ, after a counter-bond had been posted by the movant. But
nowhere in Mindanao Savings did we rule that filing a counter-bond is
tantamount to a waiver of the right to seek damages on account of the
impropriety or illegality of the writ.
We note that the appellate court, citing Philippine Commercial & Industrial
Bank, 196 SCRA 29 (1991), stressed that bad faith or malice must first be
proven as a condition sine qua non to the award of damages. The appellate
court appears to have misread our ruling.
Provisional Remedies/Cases Full Text/Rule 57│6
Plainly, we laid no hard and fast rule that bad faith or malice must be
proved to recover any form of damages. InPhilippine Commercial &
Industrial Bank, we found bad faith and malice to be present, thereby
warranting the award of moral and exemplary damages. But we denied
the award of actual damages for want of evidence to show said damages.
For the mere existence of malice and bad faith would not per se warrant
the award of actual or compensatory damages. To grant such damages,
sufficient proof thereon is required.
Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith
and malice as prerequisite to the claim of actual damages is dispensed
with. Otherwise stated, in the present case, proof of malice and bad faith
are unnecessary because, just like in Lazatin and MC Engineering, what is
involved here is the issue of actual and compensatory damages.
Nonetheless, we find that petitioner is not entitled to an award of actual
or compensatory damages. Unlike Lazatin and MC Engineering, wherein
the respective complaints were dismissed for being unmeritorious, the
writs of attachment were found to be wrongfully issued, in the present
case, both the trial and the appellate courts held that the complaint had
merit. Stated differently, the two courts found READYCON entitled to a
writ of preliminary attachment as a provisional remedy by which the
property of the defendant is taken into custody of the law as a security for
the satisfaction of any judgment which the plaintiff may recover. 25
Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:
SEC. 4. Condition of applicant’s bond. - The party applying for
the order must thereafter give a bond executed to the adverse
party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if
the court shall finally adjudge that the applicant was not entitled
thereto (italics for emphasis).
In this case, both the RTC and the Court of Appeals found no reason to
rule that READYCON was not entitled to issuance of the writ. Neither do
we find now that the writ is improper or illegal. If WENCESLAO suffered
damages as a result, it is merely because it did not heed the demand letter
of the respondent in the first place. WENCESLAO could have averted such
damage if it immediately filed a counter-bond or a deposit in order to lift
the writ at once. It did not, and must bear its own loss, if any, on that
account.
G.R. NO. 123638 June 15, 2005
INSULAR SAVINGS BANK vs. COURT OF APPEALS, COMPANY,
GARCIA, J.:
Simply put, the issue is whether or not the CA erred in not ruling that the
trial court committed grave abuse of discretion in denying petitioner’s
motion to discharge attachment by counter-bond in the amount
ofP12,600,000.00.
As may be noted, the amount of the counter-attachment bond is, under
the terms of the aforequoted Section 12, to be measured against the value
of the attached property, as determined by the judge to secure the
payment of any judgment that the attaching creditor may recover in the
action. Albeit not explicitly stated in the same section and without
necessarily diminishing the sound discretion of the issuing judge on
matters of bond approval, there can be no serious objection, in turn, to the
proposition that the attached property - and logically the counter-bond
necessary to discharge the lien on such property - should as much as
possible correspond in value to, or approximately match the attaching
creditor’s principal claim. Else, excessive attachment, which ought to be
avoided at all times, shall ensue.
"The sheriff is required to attach only so much of the property of the party
against whom the order is issued as may be sufficient to satisfy
the applicant’s demand, the amount of which is stated in the
order, unless a deposit is made or a counter-bond is given equal to
said amount. However, if the value of the property to be attached is less
than the amount of the demand, the amount of the applicant’s bond may
be equal to the value of said property, and the amount of the adverse
party’s deposit or counter-bond may be equal to the applicant’s
bond. The writ of preliminary attachment is issued upon approval of the
requisite bond". (Emphasis supplied).
Turning to the case at bar, the records show that the principal claim of
respondent, as plaintiff a quo, is in the amount of P25,200,000.00. On
February 11, 1992, before the Arbitration Committee of the Philippine
Clearing House Corporation, petitioner and respondent, however, agreed
to equally divide between themselves. Thus, the release by petitioner of
the amount of P12,600,000.00 to respondent.
As things stood, therefore, respondent’s principal claim against petitioner
immediately prior to the filing of the motion to discharge attachment has
effectively been pruned down to P12,600,000.00. The trial court was fully
aware of this reality. Accordingly, it should have allowed a total discharge
of the attachment on a counter-bond based on the reduced claim of

respondent. If a portion of the claim is already secured, we see no
justifiable reason why such portion should still be subject of counter-
bond. It may be that a counter-bond is intended to secure the payment of
any judgment that the attaching party may recover in the main action.
Simple common sense, if not consideration of fair play, however, dictates
that a part of a possible judgment that has veritably been preemptively
satisfied or secured need not be covered by the counter-bond.
It bears to stress, as a final consideration, that the certiorari proceedings
before the appellate court and the denial of the motion to discharge
attachment subject of such proceedings, transpired under the old rules on
preliminary attachment which has since been revised. 10 And unlike the
former Section 12 of Rule 57 of the Rules of Court where the value of the
property attached shall be the defining measure in the computation of the
discharging counter-attachment bond, the present less stringent Section
12 of Rule 57 provides that the court shall order the discharge of
attachment if the movant "makes a cash deposit, or files a counter-bond . . .
in an amount equal to that fixed by the court in the order of attachment,
exclusive of costs." Not being in the nature of a penal statute, the Rules of
Court cannot be given retroactive effect.11
This disposition should be taken in the light of then Section 12, Rule 57 of
the Rules of Court.
G.R. No. L-48756 September 11, 1982
K.O. GLASS CONSTRUCTION CO., INC., petitioner, vs.
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First
Instance of Rizal, and ANTONIO D. PINZON, respondents.
CONCEPCION, JR., J.:
We find merit in the petition. The respondent Judge gravely abused his
discretion in issuing the writ of preliminary attachment and in not
ordering the release of the money which had been deposited with the
Clerk of Court for the following reasons:
First, there was no ground for the issuance of the writ of preliminary
attachment. Section 1, Rule 57 of the Revised Rules of Court, which
enumerates the grounds for the issuance of a writ of preliminary
attachment.
Pinzon did not allege that the defendant Kenneth O. Glass "is a foreigner
(who) may, at any time, depart from the Philippines with intent to defraud
his creditors including the plaintiff." He merely stated that the defendant
Kenneth O. Glass is a foreigner.
There being no showing, much less an allegation, that the defendants are
about to depart from the Philippines with intent to defraud their creditor,
or that they are non-resident aliens, the attachment of their properties is
not justified.
Second, the affidavit submitted by Pinzon does not comply with the Rules.
Under the Rules, an affidavit for attachment must state that (a) sufficient
cause of action exists, (b) the case is one of those mentioned in Section I
(a) of Rule 57; (c) there is no other sufficient security 'or the claim sought
to be enforced by the action, and (d) the amount due to the applicant for
attachment or the value of the property the possession of which he is
entitled to recover, is as much as the sum for which the order is granted
above all legal counterclaims.
While Pinzon may have stated in his affidavit that a sufficient cause of
action exists against the defendant Kenneth O. Glass, he did not state
therein that "the case is one of those mentioned in Section 1 hereof; that
there is no other sufficient security for the claim sought to be enforced by
the action; and that the amount due to the applicant is as much as the sum
for which the order granted above all legal counter-claims." It has been
held that the failure to allege in the affidavit the requisites prescribed for
the issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant
fatally defective, and the judge issuing it is deemed to have acted in excess
of his jurisdiction. 14
Finally, it appears that the petitioner has filed a counterbond in the
amount of P37,190.00 to answer for any judgment that may be rendered
against the defendant. Upon receipt of the counter-bond the respondent
Judge should have discharged the attachment pursuant to Section 12,
Rule 57 of the Revised Rules of Court. The filing of the counter-bond will
serve the purpose of preserving the defendant's property and at the same
time give the plaintiff security for any judgment that may be obtained
against the defendant.
G.R. No. 115678 February 23, 2001
PHILIPPINES BANK OF COMMUNICATIONS, petitioner, vs.
HON. COURT OF APPEALS and BERNARDINO
VILLANUEVA, respondents.
To begin with, we are in accord with respondent Court of Appeals in CA-
G.R. SP No. 32863 that the Motion for Attachment filed by petitioner and
Provisional Remedies/Cases Full Text/Rule 57│7
its supporting affidavit did not sufficiently establish the grounds relied
upon in applying for the writ of preliminary attachment.
While the Motion refers to the transaction complained of as involving
trust receipts, the violation of the terms of which is qualified by law as
constituting estafa, it does not follow that a writ of attachment can and
should automatically issue. Petitioner cannot merely cite Section 1(b) and
(d), Rule 57, of the Revised Rules of Court, as mere reproduction of the
rules, without more, cannot serve as good ground for issuing a writ of
attachment. An order of attachment cannot be issued on a general
averment, such as one ceremoniously quoting from a pertinent rule.7
The supporting Affidavit is even less instructive. Again, it lacks
particulars upon which the court can discern whether or not a writ of
attachment should issue.
Petitioner cannot insist that its allegation that private respondents failed
to remit the proceeds of the sale of the entrusted goods nor to return the
same is sufficient for attachment to issue. We note that petitioner anchors
its application upon Section 1(d), Rule 57. This particular provision was
adequately explained in Liberty Insurance Corporation v. Court of
Appeals,8 as follows –
To sustain an attachment on this ground, it must be shown that the
debtor in contracting the debt or incurring the obligation intended to
defraud the creditor. The fraud must relate to the execution of the
agreement and must have been the reason which induced the other
party into giving consent which he would not have otherwise given.
To constitute a ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted if at the
time of contracting it the debtor has a preconceived plan or
intention not to pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be inferred from the
circumstances attendant in each case (Republic v. Gonzales, 13 SCRA
633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by
petitioner was committed. As correctly held by respondent Court of
Appeals, such fraudulent intent not to honor the admitted obligation
cannot be 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 does not appear to
be so in the case at bar.
G.R. No. L-28297 March 30, 1970
ELPIDIO JAVELLANA, plaintiff-appellant, vs. D. O. PLAZA ENTERPRISES,
INC., defendant-appellee.
REYES, J.B.L., J.:
The appellant's last assigned error is without merit. Although the
defendant was found to be in bad faith in issuing two (2) sets of bouncing
checks in payment for its indebtedness, such bad faith was not related to
his having incurred the obligation in favor of the plaintiff but to
defendant's failure to perform said obligation. There was, therefore, no
ground for the plaintiff to attach the defendant's properties on the ground
of fraud. That the plaintiff acted in good faith in securing attachment does
not relieve him from the damages that the defendant sustained by reason
of the attachment because he, the plaintiff, was, in the first place, not
entitled to attachments, the element of malice was unnecessary (3 Moran,
Rules of Court, 19).
G.R. No. 135830 September 30, 2005
JUAN DE DIOS CARLOS, Petitioners, vs.
FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE CARLOS
or FELICIDAD S. CARLOS or FELICIDAD SANDOVAL DE CARLOS, and
TEOFILO CARLOS II, Respondent.
Tinga, J.:
We first discuss whether the "proper hearing" requirement under Section
20, Rule 57 had been satisfied prior to the award by the Court of Appeals
of damages on the attachment bond.
Section 20 of Rule 57 requires that there be a "proper hearing" before the
application for damages on the attachment bond may be granted. The
hearing requirement ties with the indispensable demand of procedural
due process. Due notice to the adverse party and its surety setting forth
the facts supporting the applicant's right to damages and the amount
thereof under the bond is essential. No judgment for damages may be
entered and executed against the surety without giving it an opportunity
to be heard as to the reality or reasonableness of the damages resulting
from the wrongful issuance of the writ.37
In Paramount Insurance v. Court of Appeals,38 the Court held that under the
rule, it was neither mandatory nor fatal that there should be a separate
hearing in order that damages upon the bond can be claimed, ascertained
and awarded.39 What is necessary only is for the attaching party and his
surety or sureties to be duly notified and given the opportunity to be
heard.40

In this case, both Carlos and SIDDCOR were duly notified by the appellate
court of the Motion for Judgment on the Attachment Bond and were
required to file their respective comments thereto. 41 Carlos and SIDDCOR
filed their respective comments in opposition to private respondents’
motion.42 Clearly, all the relevant parties had been afforded the bare right
to be heard on the matter.
Concededly, the facts of this case differ from that in Paramount, wherein
the award of damages was predicated under Section 8, Rule 58, and the
trial on the merits included the claim for damages on the attachment
bond. The Court did note therein that the counsel of the surety was
present during the hearings.43 In this case, unlike in Paramount, there
were no open court hearings conducted by the Court of Appeals, and it is
precisely this absence that the petitioners assert as fatal.
Plainly, there is no express requirement under the rule that the hearing be
done in open court, or that the parties be allowed to confront adverse
witnesses to the claim of damages on the bond. The proper scope of the
hearing requirement was explained before Paramount in Peroxide
Philippines Corp. v. Court of Appeals,44 thus:
. . . [It] is undeniable that when the attachment is challenged for having
been illegally or improperly issued, there must be a hearing with the
burden of proof to sustain the writ being on the attaching creditor. That
hearing embraces not only the right to present evidence but also a
reasonable opportunity to know the claims of the opposing parties and
meet them. The right to submit arguments implies that opportunity,
otherwise the right would be a barren one. It means a fair and open
hearing.
From this pronouncement, we can discern that the "proper hearing"
contemplated would not merely encompass the right of the parties to
submit their respective positions, but also to present evidence in support
of their claims, and to rebut the submissions and evidence of the adverse
party. This is especially crucial considering that the necessary elements to
be established in an application for damages are essentially factual:
namely, the fact of damage or injury, and the quantifiable amount of
damages sustained. Such matters cannot be established on the mere say-
so of the applicant, but require evidentiary support. At the same time,
there was no equivocal statement from the Court in Peroxide that the
hearing required under the rule should be a full-blown hearing on the
merits
In this case, we rule that the demands of a "proper hearing" were satisfied
as of the time the Court of Appeals rendered its assailed judgment on the
attachment bond
However, a different situation applies if it is the Court of Appeals or the
Supreme Court before which the application for damages is filed. Both
these courts, which are capacitated to receive and act on such actions, are
generally not triers of facts, and do not, in the course of daily routine,
conduct hearings. It is partly for such reason that Section 20, Rule 57
authorizes these appellate courts to refer the application for damages to
the trial court for hearing and decision.
The trial courts are functionally attuned to ascertain and evaluate at the
first instance the necessary factual premises that would establish the
right to damages. Still, reference of the application for damages to the trial
court is discretionary on the part of the appellate courts. The latter,
despite their traditional appellate jurisdiction and review function, are
still empowered under Section 20 to rule on the application for damages,
notwithstanding the factual dimension such question presents.
To impose as mandatory on the Court of Appeals or the Supreme Court to
hear the application for damages through full-blown hearings in open
court is supremely unwise and beyond the demands of Section 20, Rule
57.
"…And Shall be Included in the Judgment on the Main Case"
Section 20, Rule 57 does state that the award of damages shall
be included in the judgment on the main case, and seemingly indicates
that it should not be rendered prior to the adjudication of the main case.
The rule, which guarantees a right to damages incurred by reason of
wrongful attachment, has long been recognized in this
jurisdiction.49 Under Section 20, Rule 57 of the 1964 Rules of Court, it was
provided that there must be first a judgment on the action in favor of the
party against whom attachment was issued before damages can be
claimed by such party.50 The Court however subsequently clarified that
under the rule, "recovery for damages may be had by the party thus
prejudiced by the wrongful attachment, even if the judgment be adverse
to him."51
The surety does not, to be sure, become liable on its bond simply because
judgment is subsequently rendered against the party who obtained the
preliminary attachment. The surety becomes liable only when and if
"the court shall finally adjudge that the applicant was not entitled to
the attachment." This is so regardless of the nature and character of
the judgment on the merits of the principal claims, counterclaims or
Provisional Remedies/Cases Full Text/Rule 57│8
cross-claims, etc. asserted by the parties against each other. Indeed,
since an applicant's cause of action may be entirely different from
the ground relied upon by him for a preliminary attachment, it may
well be that although the evidence warrants judgment in favor of
said applicant, the proofs may nevertheless also establish that said
applicant's proferred ground for attachment was inexistent or
specious and hence, the writ should not have issued at all; i.e., he was
not entitled thereto in the first place. In that event, the final verdict should
logically award to the applicant the relief sought in his basic pleading, but
at the same time sentence him—usually on the basis of a counterclaim—
to pay damages caused to his adversary by the wrongful attachment.
[Emphasis supplied.]
Moreover, a separate rule—Section 8, Rule 58— covers instances when it
is the trial court that awards damages upon the bond for preliminary
injunction of the adverse party. Tellingly, it requires that the amount of
damages to be awarded be claimed, ascertained, and awarded under the
same procedure prescribed in Section 20 of Rule 57.
In this case, we are confronted with a situation wherein the
determination that the attachment was wrongful did not come from the
trial court, or any court having jurisdiction over the main action. It was
rendered by the Court of Appeals in the exercise of its certiorari
jurisdiction in the original action reviewing the propriety of the issuance
of the Writ of Preliminary Attachment against the private respondents.
Said ruling attained finality when it was affirmed by this Court.
The courts are thus bound to respect the conclusiveness of this final
judgment, deeming as it does the allowance by the RTC of preliminary
attachment as improper. This conclusion is no longer subject to review,
even by the court called upon to resolve the application for damages on
the attachment bond. The only matter left for adjudication is the proper
amount of damages.
Nevertheless, Section 20, Rule 57 explicitly provides that the award for
damages be included in the judgment on the main case. This point was
apparently not lost on the Court of Appeals when it rendered
its Resolution dated 23 March 1998, certifying that the case may now be
referred to the Raffle Committee for assignment to a ponente. The
appellate court stated therein: "The Resolution of defendants-appellants’
motion for judgment on the attachment may be incorporated in the
decision by the ponente for study and report,"53 and such observation is in
conformity with Section 20.
However, this reasoning was assailed by respondents, who argued that
the motion for judgment on the attachment bond was a pending incident
that should be decided before the case can be re-raffled to a ponente for
decision. Respondents may be generally correct on the point that a case
can only be deemed submitted for decision only after all pending
incidents are resolved. Yet since Section 20, Rule 57 provides that their
application for damages on the attachment bond "shall be included in the
judgment on the main case," it is clear that the award for damages need
not be resolved before the case is submitted for decision, but should
instead be resolved and included in the judgment on the main case, or the
decision on the Appeal by Certiorari filed by the respondents.
Thus, the action of the Court of Appeals in resolving the application for
damages even before the main judgment was issued does not conform to
Section 20, Rule 57. However, the special particular circumstances of this
case lead us to rule that such error is not mortal to the award of damages.
As noted earlier, the award of damages was made after a proper hearing
had occurred wherein all the concerned parties had been given the
opportunity to present their arguments and evidence in support and in
rebuttal of the application for damages. The premature award of damages
does not negate the fact that the parties were accorded due process, and
indeed availed of their right to be heard.
Moreover, we are compelled to appreciate the particular circumstance in
this case that the right of private respondents to acquire relief through the
award of damages on account of the wrongful preliminary attachment has
been conclusively affirmed by the highest court of the land. This differs
from the normal situation under Section 20, Rule 57 wherein the court
having jurisdiction over the main action is still required to ascertain
whether the applicant actually has a right to damages. To mandatorily
require that the award of damages be included in the judgment in the
main case makes all the sense if the right to damages would be
ascertained at the same time the main judgment is made. However, when
the said right is already made viable by reason of a final judgment which
is no longer subject to review, there should be no unnecessary
impediments to its immediate implementation.
And finally, any ruling on our part voiding the award of damages solely for
the reason that it was not included in the judgment on the main case, and
remanding the motion to the Court of Appeals for proper adjudication
together with the main case may exhibit fealty to the letter of the
procedural rule, but not its avowed aims of promoting a just and speedy
disposition of every action and proceeding. After all, if we were to compel
the Court of Appeals to decide again on the application for damages and
incorporate its ruling in the judgment on the main action, the appellate
court will be examining exactly the same evidence and applying exactly
the same rules as it already did when it issued the assailed resolution
awarding damages on the bond. This would be unnecessarily redundant
especially considering that the Supreme Court had already affirmed that
there was wrongful attachment in this case.
There is also the fact that remanding the question of damages, singly for
the purpose of adhering to the letter of the procedural rule, would further

prolong the resolution of the main case, which has been with the Court of
Appeals for more than nine years now. 54 Our Rules of Court precisely
requires liberal construction of the procedural rules to promote the
objective of securing a just, speedy and inexpensive disposition of every
action and proceeding.55 With this precept, all the more justification is
supplied for allowing the award for damages despite its apparent
prematurity, if it is in all other respects proper.
The same reasons apply in resolving the question of whether the Court of
Appeals could have decided the Motion for Judgment on the Attachment
Bond considering that the case had not yet been re-raffled under the two-
raffle system for study and report. Under Section 5, Rule 3 of the RIRCA, a
case filed with the Court of Appeals undergoes two raffles for assignment
to a particular Justice. The first raffle is made for completion of
records.56Afterwards, "all raffled appealed cases, the records of which
have been completed and submitted for decision, shall be re-raffled for
assignment to a Justice for study and report." 57
The fact that Section 20, Rule 57 provides that the award of damages on
the attachment bond "shall be included in the judgment on the main case"
necessarily implies that it is to be made only after the case has been re-
raffled for study and report, and concurrently decided with the judgment
of the ponente in the main case. Again, the Court of Appeals failed to
consider Section 20, Rule 57 when it acted upon the application even
before the second raffle was made.
Had Section 20, Rule 57 been faithfully complied with, a different Justice
of the Court of Appeals would have penned the ruling on the application
for damages, in accordance with the RIRCA. Yet this circumstance does
not outweigh the other considerations earlier mentioned that would
warrant a liberal interpretation of the procedural rules in favor of
respondents. The parties had adduced all their arguments and evidence
before the Court of Appeals, and indeed, these were appreciated on first
instance by Justice Demetria, who eventually penned the assailed
resolutions. There was already a final determination that the attachment
was wrongful. And any delay brought about by requiring that it be
the ponencia, determined after the second raffle, who decides the
application for damages may bear pro forma adherence to the letter of the
rule, but would only cause the delay of the resolution of this long-pending
case. Procedural rules are designed, and must therefore be so interpreted
as, to give effect to lawful and valid claims and not to frustrate them.58
Even SIDDCOR acknowledges that there are recognized instances where
the award of damages or judgment on the attachment bond may not be
included in the decision on the main case, such as if the main case was
dismissed for lack of jurisdiction and no claim for damages could have
been presented in the main case.59
Scope of Damages
Properly Awardable
Next, we examine the particular award of damages made in this case,
consisting of P15,384,509.98, plus interest, as well as P1,000,000.00 as
attorney’s fees. There seems to be no dispute that the former amount
constituted the amount drawn against the account of Sandoval by reason
of the writ of execution issued by the trial court on 27 May 1996. This fact
was confirmed by the PNB, in its Manifestation dated 19 July 1996,
confirming the garnishment.
Respondents’ burden in proving damages in this case was considerably
lessened by the fact that there was already a final judgment, no longer
subject to review, that the preliminary attachment allowed by the trial
court was indeed wrongful. Hence, all that was necessary to be proved
was the amount of damage actually sustained by respondents by reason
of the wrongful attachment. It is unquestioned that by virtue of the writ of
preliminary attachment, a Notice of Garnishment was served upon the
PNB over deposit accounts maintained by respondents. Said Notice of
Garnishment placed under the control of the RTC all the accounts
maintained by respondents, and prevented the transfer or disposition of
these accounts.60 Then the subsequent Writ of Execution dated 27 May
1996 ordered the delivery to Carlos of these accounts earlier subjected to
garnishment.61
Clearly, the amount of actual pecuniary loss sustained by respondents has
been well established. TheManifestation submitted by the PNB further
affirmed the actual amount seized by Carlos, an amount which could not
have been acquired had it not been for the writ of preliminary attachment
which was wrongfully issued.
Carlos lamely argues in his petition that there was no concrete or
supporting evidence to justify the amount of actual damages, a claim that
is belied by the official case records. The more substantive argument is
presented by SIDDCOR, which submits that any damages that may be
awarded to respondents can include only those that were incurred, if any,
during the pendency of the appeal. But this contention is belied by Section
4, Rule 57 of the 1997 Rules of Civil Procedure, which provides that the
bond issued for preliminary attachment is conditioned that the applicant
"will pay all the costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was not entitled
thereto."62
The case Paramount Insurance Corp. v. Court of Appeals 63 is instructive. It
discusses the scope of the bond executed by upon an application for
preliminary injunction,64 which similarly covers "all damages which [may
be] sustain[ed] by reason of the injunction or temporary restraining order
if the court should finally decide that the applicant was not entitled
thereto."65 The surety in that case claimed that it could be liable "only to
the amount of damages accruing from the time the injunction bond was
Provisional Remedies/Cases Full Text/Rule 57│9
issued until the termination of the case, and not from the time the suit
was commenced."66 In rebutting this claim, the Court ruled:
. . . . Rule 58, Section 4(b), provides that a bond is executed in favor of the
party enjoined to answer for all damages which he may sustain by reason
of the injunction. This Court already had occasion to rule on this matter in
Mendoza v. Cruz, where it held that "(t)he injunction bond is intended as a
security for damages in case it is finally decided that the injunction ought
not to have been granted. It is designed to cover all damages which the
party enjoined can possibly suffer. Its principal purpose is to protect
the enjoined party against loss or damage by reason of an
injunction." No distinction was made as to when the damages should
have been incurred.67
Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals, relied
upon by the Court of Appeals, squarely applies to this case:
Under the circumstances, too, there can be no gainsaying the surety’s full
awareness of its undertakings under its bond: that, as the law puts it: "the
plaintiff will pay all costs which may be adjudged to the defendant(s), and
all damages which may be sustained by reason of the attachment, if the
same shall finally be adjudged to have been wrongful and without cause,"
and that those damages plainly comprehended not only those sustained
during the trial of the action but also those during the pendency of the
appeal. This is the law, and this is how the surety's liability should be
understood. The surety's liability may be enforced whether the
application for damages for wrongful attachment be submitted in the
original proceedings before the Trial Court, or on appeal, so long as the
judgment has not become executory. The surety's liability is not and
cannot be limited to the damages caused by the improper
attachment only during the pendency of the appeal. That would be
absurd. The plain and patent intendment of the law is that the surety
shall answer for all damages that the party may suffer as a result of
the illicit attachment, for all the time that the attachment was in
force; from levy to dissolution. . . .
The fact that the second paragraph of the rule speaks only of
"damages sustained during the pendency of the appeal" is of no
moment; it obviously proceeds from the assumption in the first
paragraph that the award for the damages suffered during the
pendency of the case in the trial court was in fact "included in the
final judgment" (or applied for therein before the appeal was perfected
or the judgment became executory); hence, it states that the damages
additionally suffered thereafter, i.e., during the pendency of the appeal,
should be claimed before the judgment of the appellate tribunal becomes
executory. It however bears repeating that where. as in the case at
bar, the judgment of the Trial Court has expressly or impliedly
sustained the attachment and thus has given rise to no occasion to
speak of, much less, file an application for damages for wrongful
attachment, and it is only in the decision of the Court of Appeals that
the attachment is declared wrongful and that the applicant "was not
entitled thereto," the rule is, as it should be, that it is entirely proper
at this time for the application for damages for such wrongful
attachment to be filed—i.e., for all the damages sustained thereby,
during all the time that it was in force, not only during the pendency
of the appeal. . . .68
The rule is thus well-settled that the bond issued upon an application for
preliminary attachment answers for all damages, incurred at whatever
stage, which are sustained by reason of the attachment. The award of
actual damages by the Court of Appeals is thus proper in amount.
However, we disagree that the rate of legal interest be counted from the
date of the "unlawful garnishment," or on 27 June 1996. Properly, interest
should start to accrue only from the moment it had been finally
determined that the attachment was unlawful, since it is on that basis that
the right to damages comes to existence. In this case, legal interest
commences from the date the Court of Appeals decision in CA-G.R. SP No.
39267 became final, by reason of its affirmation by this Court.
The award of attorney’s fees in the amount of P1,000,000.00 is also
questioned before this Court, considering that the Court of Appeals did
not award moral or exemplary damages. The general rule may be that an
award of attorney’s fees should be deleted where the award of moral and
exemplary damages are eliminated.69Nonetheless, attorney’s fees may be
awarded under the Civil Code where the court deems it just and equitable
that attorney’s fees and expenses of litigation should be recovered, 70 even
if moral and exemplary damages are unavailing.71
Particularly, the Court has recognized as just and equitable that attorney's
fees be awarded when a party is compelled to incur expenses to lift a
wrongfully issued writ of attachment. 72 The amount of money garnished,
and the length of time respondents have been deprived from use of their
money by reason of the wrongful attachment, all militate towards a
finding that attorney’s fees are just and equitable under the
circumstances. However, we deem the amount of P1,000,000.00 as
excessive, and modify the award of attorney’s fees to P500,000.00 which
represents merely approximately three percent of the actual damages
suffered by and awarded to respondents. We also delete the imposition of
legal interest made by the Court of Appeals on the awarded attorney’s
fees.
Other Issues Raised in G.R. No. 135830
The issues raised in G.R. No. 136035 have been dispensed with, and the
remaining issues in G.R. No. 135830 are relatively minor. There is no need
to dwell at length on them.
Carlos insists that respondents were liable to have paid docket fees upon
filing of their Motion for Judgment on Attachment Bond, on the theory that

they claimed therein for the first time the alleged damages resulting from
the dissolved attachment. The said motion is characterized as an
initiatory proceeding because it is claimed therein for the first time, the
damages arising from the attachment. In the same vein, Carlos argues that
the absence of a certification against forum-shopping attached to the
motion renders the said motion as fatal. Again, it is pointed out that
initiatory pleadings must contain the said certification against forum-
shopping.
Our ruling in Santo Tomas University Hospital v. Surla 73 is instructive. It
was argued therein that the requirement of the certification against
forum-shopping, as contained in Administrative Circular No. 04-
94,74 covered compulsory counterclaims. The Court ruled otherwise:
It bears stressing, once again, that the real office of Administrative
Circular No. 04-94, made effective on 01 April 1994, is to curb the
malpractice commonly referred to also as forum-shopping. . . . The
language of the circular distinctly suggests that it is primarily intended to
cover an initiatory pleading or an incipient application of a party
asserting a claim for relief.
It should not be too difficult, the foregoing rationale of the circular
aptly taken, to sustain the view that the circular in question has not,
in fact, been contemplated to include a kind of claim which, by its
very nature as being auxiliary to the proceeding in the suit and as
deriving its substantive and jurisdictional support therefrom, can
only be appropriately pleaded in the answer and not remain
outstanding for independent resolution except by the court where
the main case pends. Prescinding from the foregoing, the proviso in the
second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil
Procedure, i.e., that the violation of the anti-forum shopping rule "shall
not be curable by mere amendment . . . but shall be cause for the dismissal
of the case without prejudice," being predicated on the applicability of the
need for a certification against forum shopping,obviously does not
include a claim which cannot be independently set up.75 (Emphasis
supplied.)
It is clear that under Section 20, Rule 57, the application for damages on
the attachment bond cannot be independently set up, but must be filed in
the main case, before the judgment therein becomes final and
executory. Santo Tomas squarely applies in determining that no
certification against forum-shopping was required in the Motion for
Judgment on the Attachment Bond. The same reasoning also sustains a
ruling that neither legal fees were required for the filing of the said
motion. Section 1, Rule 141 of the Rules of Court provides that legal fees
are prescribed upon the filing of the pleading or other application which
initiates an action or proceeding. 76Since the said application for judgment
on the attachment bond cannot be considered as an initiatory pleading, as
it cannot be independently set up from the main action, it is not likewise
chargeable with legal fees.
As to the issue relating to the other Resolution dated 26 June 1998
denying the motion to dismiss appeal on the ground of forum-shopping,
we find Carlos’s arguments as unmeritorious. Forum-shopping allegedly
existed because petitioners had filed two cases before the Court of
Appeals, CA-G.R. CV No. 53229, and the Petition for Certiorari with
Temporary Restraining Order dated 2 June 1996 attacking the allowance
of execution pending appeal. Evidently, the two causes of action in these
two petitions are different, CA-G.R. CV No. 53229 being an appeal from
the Summary Judgment rendered by the RTC, and the second petition
assailing the subsequent allowance by the RTC of execution pending
appeal. There is no identity between these two causes of action that
would warrant a finding of forum-shopping.
Issues Raised in G.R. No. 137743
To recount, respondents, having obtained a favorable decision on
their Motion for Judgment on the Attachment Bond, filed a Motion for
Immediate Execution of the award of damages. This was granted by the
Court of Appeals in its Resolution dated 16 October 1998, said resolution
now specifically assailed by SIDDCOR in G.R. No. 137743.
In their Motion for Immediate Execution, respondents’ theory in seeking
the immediate execution of the award of damages was that said award
was not subject to appeal, the ruling thereupon being an interlocutory
order.77 This position was not adopted by the Court of Appeals in its 16
October 1998 Resolution, which was otherwise favorably disposed to
respondents. Instead, the Court of Appeals predicated the immediate
execution on the following grounds: (1) that the judicial finding that the
writ of preliminary attachment was wrongful was already final and
beyond review; (2) there were no material and substantial defenses
against the motion for the issuance of the judgment bond; (3) Sandoval
was elderly and sickly, without means of livelihood and may not be able to
enjoy the fruits of the judgment on the attachment bond; (4) that
immediate execution would end her suffering caused by the arbitrary
garnishment of her PNB account.
There is no doubt that a judgment on the attachment bond is a final and
appealable order. As stated earlier, it is, under normal course, included in
the main judgment, which in turn is final and appealable. Respondents
admit that they had erred in earlier characterizing the said judgment as
an interlocutory order. Still, SIDDCOR argues that such earlier error is
fatal, and that the Court of Appeals abused its discretion in ruling on the
motion on a theory different from that urged on by respondents.
By no means could respondents be deemed as estopped from changing
their legal theory, since the rule on estoppel applies to questions of fact
and not questions of law.78 Moreover, courts are empowered to decide
cases even if the parties raise legal rationales other than that which would
Provisional Remedies/Cases Full Text/Rule 57│10
actually apply in the case. The basis of whether respondents are entitled
to immediate execution arises from law, particularly Section 2(a), Rule 39
of the Rules of Court, and not solely on whatever allegations may be
raised by the movant.
Thus, we find no grave abuse of discretion on the part of the Court of
Appeals, even though it allowed execution pending appeal on a legal basis
different from that originally adduced by respondents. After all, the
reasoning ultimately employed by the appellate court is correct, and it
hardly would be judicious to require the lower court to adhere to the
movant’s erroneous ratiocination and preclude the proper application of
the law.
We need not review in length the justification of the Court of Appeals in
allowing execution pending appeal. The standard set under Section 2(a),
Rule 39 merely requires "good reasons," a "special order," and "due
hearing." Due hearing would not require a hearing in open court, but
simply the right to be heard, which SIDDCOR availed of when it filed its
opposition to the motion for immediate execution. The Resolution dated
16 October 1998 satisfies the "special order" requirement, and it does
enumerate at length the "good reasons" for allowing execution pending
appeal. As to the appreciation of "good reasons," we simply note that the
advanced age alone of Sandoval would have sufficiently justified
execution pending appeal, pursuant to the well-settled jurisprudential
rule.79 The wrongfulness of the attachment, and the length of time
respondents have been deprived of their money by reason of the wrongful
attachment further justifies execution pending appeal under these
circumstances.
WHEREFORE, the petitions are DISMISSED. The Temporary Restraining
Order issued in the Resolution dated 9 June 1999 is hereby LIFTED. The
assailed Resolution of the Court of Appeals Special Fourth Division dated
26 June 1998 is AFFIRMED with the MODIFICATIONS that the legal
interest on the award of actual damages should commence from the date
of the finality of the Decision of the Court of Appeals in CA G.R. SP No.
39267 and that the award of attorney’s fees is in the amount of P500,000.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
G.R. No. 184666, June 27, 2016
REPUBLIC OF THE PHILIPPINES, , v. MEGA PACIFIC ESOLUTIONS, INC.,
SERENO, C.J.:
The Petition is meritorious. A writ of preliminary attachment should issue
in favor of petitioner over the properties of respondents MPEI, Willy Yu
(Willy) and the remaining individual respondents, namely: Bonnie S. Yu
(Bonnie), Enrique T. Tansipek (Enrique), Rosita Y. Tansipek (Rosita),
Pedro O. Tan (Pedro), Johnson W. Fong (Johnson), Bernard I. Fong
(Bernard), and Lauriano Barrios (Lauriano). The bases for the writ are
the following:
1. Fraud on the part of respondent MPEI was sufficiently
established by the factual findings of this Court in its 2004
Decision and subsequent pronouncements.
2. A writ of preliminary attachment may issue over the properties
of the individual respondents using the doctrine of piercing the
corporate veil.
3. The factual findings of this Court that have become final cannot
be modified or altered, much less reversed, and are controlling
in the instant case.
4. The delivery of 1,991 units of ACMs does not negate fraud on
the part of respondents MPEI and Willy.
5. Estoppel does not lie against the state when it acts to rectify
mistakes, errors or illegal acts of its officials and agents.
6. The findings of the Ombudsman are not controlling in the
instant case.
DISCUSSION
I.
Fraud on the part of respondent MPEI was sufficiently established by
the factual findings of this Court in the latter's 2004 Decision and
subsequent pronouncements.
Petitioner relied upon Section 1(d), Rule 57 of the Rules of Court as basis
for its application for a writ of preliminary attachment.
For a writ of preliminary attachment to issue under the above-quoted
rule, the applicant must sufficiently show the factual circumstances of the
alleged fraud.65 In Metro, Inc. v. Lara's Gift and Decors, Inc.,66 We
explained:ChanRoblesVirtualawlibrary
To sustain an attachment on this ground, it must be shown that the debtor
in contracting the debt or incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the agreement and
must have been the reason which induced the other party into giving
consent which he would not have otherwise given. To constitute a
ground for attachment in Section 1(d), Rule 57 of the Rules of Court, fraud
should be committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this case. x x x.

The applicant for a writ of preliminary attachment must sufficiently show
the factual circumstances of the alleged fraud because fraudulent intent
cannot be inferred from the debtor's mere non-payment of the debt or
failure to comply with his obligation. (Emphasis supplied)
An amendment to the Rules of Court added the phrase "in the
performance thereof" to include within the scope of the grounds for
issuance of a writ of preliminary attachment those instances relating to
fraud in the performance of the obligation. 67chanrobleslaw
Fraud is a generic term that is used in various senses and assumes so
many different degrees and forms that courts are compelled to content
themselves with comparatively few general rules for its discovery and
defeat. For the same reason, the facts and circumstances peculiar to each
case are allowed to bear heavily on the conscience and judgment of the
court or jury in determining the presence or absence of fraud. In fact, the
fertility of man's invention in devising new schemes of fraud is so great
that courts have always declined to define it, thus, reserving for
themselves the liberty to deal with it in whatever form it may present
itself.68chanrobleslaw
Fraud may be characterized as the voluntary execution of a wrongful act
or a wilful omission, while knowing and intending the effects that
naturally and necessarily arise from that act or omission. 69 In its general
sense, fraud is deemed to comprise anything calculated to deceive—
including all acts and omission and concealment involving a breach of
legal or equitable duty, trust, or confidence justly reposed—resulting in
damage to or in undue advantage over another. 70 Fraud is also described
as embracing all multifarious means that human ingenuity can device,
and is resorted to for the purpose of securing an advantage over another
by false suggestions or by suppression of truth; and it includes all
surprise, trick, cunning, dissembling, and any other unfair way by which
another is cheated.71chanrobleslaw
While fraud cannot be presumed, it need not be proved by direct evidence
and can well be inferred from attendant circumstances. 72 Fraud by its
nature is not a thing susceptible of ocular observation or readily
demonstrable physically; it must of necessity be proved in many cases by
inferences from circumstances shown to have been involved in the
transaction in question.
In the case at bar, petitioner has sufficiently discharged the burden of
demonstrating the commission of fraud by respondent MPEI in the
execution of the automation contract in the two ways that were
enumerated earlier.
II. Application of the piercing doctrine justifies the issuance of a writ
of preliminary attachment over the properties of the individual
respondents.
Petitioner seeks the issuance of a writ of preliminary attachment over the
personal assets of the individual respondents, notwithstanding the
doctrine of separate juridical personality. 99It invokes the use of the
doctrine of piercing the corporate veil, to which the canon of separate
juridical personality is vulnerable, as a way to reach the personal
properties of the individual respondents. Petitioner paints a picture of a
sham corporation set up by all the individual respondents for the purpose
of securing the automation contract. We agree with petitioner.
Veil-piercing in fraud cases requires that the legal fiction of separate
juridical personality is used for fraudulent or wrongful ends. 100 For
reasons discussed below, We see red flags of fraudulent schemes in public
procurement, all of which were established in the 2004 Decision, the
totality of which strongly indicate that MPEI was a sham corporation
formed merely for the purpose of perpetrating a fraudulent scheme.
The red flags are as follows: (1) overly narrow specifications; (2)
unjustified recommendations and unjustified winning bidders; (3) failure
to meet the terms of the contract; and (4) shell or fictitious company.
Because all the individual respondents actively participated in the
perpetration of the fraud against petitioner, their personal assets
may be subject to a writ of preliminary attachment by piercing the
corporate veil.
G.R. No. 158271 April 8, 2008
CHINA BANKING CORPORATION, vs. ASIAN CONSTRUCTION and
DEVELOPMENT CORPORATION,
AUSTRIA-MARTINEZ, J.:
Section 11, Rule 57 of the Rules of Court provides:
Sec. 11. When attached property may be sold after levy on attachment and
before entry of judgment.-Whenever it shall be made to appear to the
court in which the action is pending, upon hearing with notice to both
parties, that the property attached is perishable, or that the interests of
Provisional Remedies/Cases Full Text/Rule 57│11
all the parties to the actionwill be subserved by the sale thereof, the
court may order such property to be sold at public auction in such
manner as it may direct, and the proceeds of such sale to be deposited in
court to abide the judgment in the action. (Emphasis supplied)
Thus, an attached property may be sold after levy on attachment and
before entry of judgment whenever it shall be made to appear to the court
in which the action is pending, upon hearing with notice to both parties,
that the attached property is perishable or that the interests of all
the parties to the action will be subserved by the sale of the attached
property.
The issue hinges on the determination whether the vehicles, office
machines and fixtures are "perishable property" under Section 11, Rules
57 of the Rules of Court, which is actually one of first impression. No local
jurisprudence or authoritative work has touched upon this matter. This
being so, an examination of foreign laws and jurisprudence, particularly
those of the United States where some of our laws and rules were
patterned after, is in order.29
In Mossler Acceptance Co. v. Denmark, 30 an order of the lower court in
directing the sale of attached properties, consisting of 20 automobiles and
2 airplanes, was reversed by the Supreme Court of Louisiana. In support
of its contention that automobiles are perishable, Mossler offered
testimony to the effect that automobile tires tend to dry-rot in storage,
batteries to deteriorate, crankcases to become damaged, paint and
upholstery to fade, that generally automobiles tend to depreciate while in
storage.31 Rejecting these arguments, the Supreme Court of Louisiana held
that while there might be a depreciation in the value of a car during
storage, depending largely on existing economic conditions, there would
be no material deterioration of the car itself or any of its appurtenances if
the car was properly cared for, and therefore it could not be said that
automobiles were of a perishable nature within the intendment of the
statute, which could only be invoked when the property attached and
seized was of a perishable nature. 32
With respect to the determination of the question on whether the
attached office furniture, office equipment, accessories and supplies are
perishable properties, the Supreme Court of Alabama in McCreery v.
Berney National Bank33 discussed the "perishable" nature of the attached
properties, consisting of shelving, stock of drygoods and a complete set of
store fixtures, consisting of counters iron safe, desk and showcases, to be
within the meaning of "perishable" property under the Alabama Code
which authorizes a court, on motion of either party, to order the sale, in
advance of judgment, of perishable property which had been levied on by
a writ of attachment.34
In McCreery, the Supreme Court of Alabama rejected the argument that
the sale of the attached property was void because the term "perishable"
property, as used in the statute, meant only such property as contained in
itself the elements of speedy decay, such as fruits, fish, fresh
meats, etc.35 The Supreme Court of Alabama held that whatever may be
the character of the property, if the court is satisfied that, either by reason
of its perishable nature, or because of the expense of keeping it until the
termination of the litigation, it will prove, or be likely to prove, fruitless to
the creditor, and that the purpose of its original seizure will probably be
frustrated, the sale of the attached property is justified.
McCreery applied the doctrine in Millard’s Admrs. v. Hall36 where the
Supreme Court of Alabama held that an attached property is perishable "if
it is shown that, by keeping the article, it will necessarily become, or is
likely to become, worthless to the creditor, and by consequence to the
debtor, then it is embraced by the statute. It matters not, in our opinion,
what the subject matter is. It may be cotton bales, live stock, hardware
provisions or dry goods." Although the statute under which Millard’s was
decided used the words "likely to waste or be destroyed by keeping,"
instead of the word "perishable," the reasons given for the construction
placed on the statute apply equally to the Alabama Code which uses the
term "perishable."37
In the Motion for Leave for Grant of Authority to Sell Attached
Properties38 filed before the CA, China Bank alleged that the attached
properties are placed in locations where they are totally exposed to the
natural elements and adverse weather conditions since their attachment
in 1999;39 that as a result, the attached properties have gravely
deteriorated with corrosions eating them up, with weeds germinating and
growing thereon and their engines and motors stock up; 40 and that the
same holds true to the office furniture, office equipment, accessories and
supplies.41 No evidence, however, were submitted by China Bank to
support and substantiate these claims before the CA.
Notably, in the Petition filed before the Court, China Bank, for the first
time, included as annexes,42 photographs of the attached properties which
were alleged to be recently taken, in an attempt to convince the Court of
the deteriorated condition of the attached properties. However, the
photographs of the attached properties presented before the Court, for
the first time on appeal, cannot be considered by the Court. As a rule, only
jurisdictional questions may be raised in a petition for certiorari,
including matters of grave abuse of discretion which are equivalent to
lack of jurisdiction.44 The office of the writ of certiorari has been reduced

to the correction of defects of jurisdiction solely and cannot legally be
used for any other purpose.45
G.R. No. 203530 April 13, 2015
LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., and OSCAR
RAMIREZ, vs. ERLINDA KRISHNAN
PERALTA J.:
Simply stated, the issue for our resolution is whether the CA erred in
affirming the RTC’s decision which denied petitioners’ motion praying
that bank property be deposited in lieu of cash or a counter-bond.
We rule in the negative.
Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of
attachment may be issued either ex parte or upon motion with notice and
hearing by the court in which the action is pending, or by the Court of
Appeals or the Supreme Court, and must require the sheriff of the court to
attach so much of the property in the Philippines of the party against
whom it is issued, not exempt from execution, as may be sufficient to
satisfy the applicant’s demand, unless such party makes deposit or gives a
bond as hereinafter provided in an amount equal to that fixed in the
order, which may be the amount sufficient to satisfy the applicant’s
demand or the value of the property to be attached as stated by the
applicant, exclusive of costs."
Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the
writ shall without delay and with all reasonable diligence attach, to await
judgment and execution in the action, only so much of the property in the
Philippines of the party against whom the writ is issued, not exempt from
execution, as may be sufficient to satisfy the applicant’s demand, unless
the former makes a deposit with the court from which the writ is issued,
or gives a counter-bond executed to the applicant, in an amount equal to
the bond fixed by the court in the order of attachment or to the value of
the property to be attached, exclusive of costs."
From the foregoing, it is evidently clear that once the writ of attachment
has been issued, the only remedy of the petitioners in lifting the same is
through a cash deposit or the filing of the counter-bond. Thus, the Court
holds that petitioner’s argument that it has the option to deposit real
property instead of depositing cash or filing a counter-bond to discharge
the attachment or stay the implementation thereof is unmeritorious.
A.M. No. RTJ-06-1999 December 8, 2010
(Formerly OCA IPI No. 03-1903-RTJ)
BANGKO SENTRAL NG PILIPINAS, vs.
Executive Judge ENRICO A. LANZANAS,
BRION, J.:
Rule 57, Section 7(e) of the Rules of Court provides:
xxxx
If the property sought to be attached is in custodia legis, a copy of the writ
of attachment shall be filed with the proper court or quasi-judicial agency,
and notice of the attachment served upon the custodian of such property.
No evidence or record in the present case exists showing that the above
provision had been complied with when Cachero asked for the release of
the garnished funds. No copy of the writ of attachment was filed with the
proper court, the RTC, Branch 12, Manila, in Civil Case No. 99-95993. The
disputed funds were clearly under the custody of Branch 12, not Branch
42.
As the OCA noted, the respondent sheriff should have known that the
funds he garnished were in custodia legisand do not belong to the
defendants in Civil Case No. 01-101190, considering that he (Cachero)
himself was among a group of sheriffs deputized to implement the writ of
garnishment issued by the RTC, Branch 12, Manila, in Civil Case No. 99-
95993.
Without doubt, the funds that were released by the OCC, at the time the
Notices to Deliver Garnished Amount were filed by Cachero, were
in custodia legis, by virtue of the Writ of Attachment issued by Judge
Carandang, RTC, Branch 12, Manila, against the defendants in Civil Case
No. 99-95993.
In Traders Royal Bank v. Intermediate Appellate Court, 33 we declared that
"property in the custody of the law cannot be interfered with without the
custody of the proper court and properly legally attached is property
incustodia legis."
G.R. No. 158997 October 6, 2008
FORT BONIFACIO DEVELOPMENT CORPORATION , vs. YLLAS LENDING
CORPORATION and JOSE S. LAURAYA, in his official capacity as
President,
CARPIO, J.:
Provisional Remedies/Cases Full Text/Rule 57│12
Sheriff's Indemnity Bond
FBDC laments the failure of the trial court to require respondents to file
an indemnity bond for FBDC's protection. The trial court, on the other
hand, did not mention the indemnity bond in its Orders dated 7 March
2003 and 3 July 2003.
Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over
to respondents the properties subject of this case in view of respondents'
failure to file a bond. The bond in Section 14 of Rule 57 (proceedings
where property is claimed by third person) is different from the bond in
Section 3 of the same rule (affidavit and bond). Under Section 14 of Rule
57, the purpose of the bond is to indemnify the sheriff against any claim
by the intervenor to the property seized or for damages arising from such
seizure, which the sheriff was making and for which the sheriff was
directly responsible to the third party. Section 3, Rule 57, on the other
hand, refers to the attachment bond to assure the return of defendant's
personal property or the payment of damages to the defendant if the
plaintiff's action to recover possession of the same property fails, in order
to protect the plaintiff's right of possession of said property, or prevent
the defendant from destroying the same during the pendency of the suit.
Because of the absence of the indemnity bond in the present case, FBDC
may also hold the sheriff for damages for the taking or keeping of the
properties seized from FBDC.
G.R. No. 174462, February 10, 2016
PHILIPPINE OVERSEAS TELECOMMUNICATIONS CORPORATION
(POTC), PHILIPPINE COMMUNICATIONS v. SANDIGANBAYAN
(3rd DIVISION), REPUBLIC OF THE PHILIPPINES REPRESENTED BY
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG),
PEREZ, J.:
For one more reason should this Petition be granted. This concerns the
shares in petitioner corporations of Potenciano Ilusorio covered by the
Compromise Agreement entered into between Ilusorio and PCGG, which
was upheld by the Court in Republic of the Phils, v. Sandiganbayan, the
decision in which is now final and executory.
a. Sequestration is merely provisional
To effectively recover all ill-gotten wealth amassed by former President
Marcos and his cronies, the President granted the PCGG, among others,
power and authority to sequester, provisionally take over or freeze
suspected ill-gotten wealth. The subject of the present case is the extent
of PCGG's power to sequester.
Sequestration is- the means to place or cause to be placed under the
PCGG's possession or control properties, building or office, including
business enterprises and entities, for the purpose of preventing the
destruction, concealment or dissipation of, and otherwise conserving and
preserving the same until it can be determined through appropriate
judicial proceedings, whether the property was in truth "ill-gotten." 28
However, the power of the PCGG to sequester is merely
provisional.29 None other than Executive Order No. 1, Section 3(c)
expressly provides for the provisional nature of sequestration.
In the notable case of Bataan Shipyard & Engineering Co., Inc. (BASECO) v.
PCGG,31 the Court clearly pronounced that sequestration is provisional,
that such sequestration shall last "until the transactions leading to such
acquisition xxx can be disposed of by the appropriate authorities." 32
Sequestration is akin to the provisional remedy of preliminary
attachment, or receivership.33Similarly, in attachment, the property of the
defendant is seized as a security for the satisfaction of any judgment that
may be obtained, and not disposed of, or dissipated, or lost intentionally
or otherwise, pending litigation.34 In a receivership, the property is placed
in the possession and control of a receiver appointed by the court, who
shall conserve the property pending final determination of ownership or
right of possession of the parties. 35 In sequestration, the same principle
holds true. The sequestered properties are placed under the control of the
PCGG, subject to the final determination of whether the property was in
truth ill-gotten. We reiterate the disquisition of this Court in BASECO:
By the clear terms of the law, the power of the PCGG to sequester
property claimed to be "ill-gotten" means to place or cause to be placed
under its possession or control said property, or any building or office
wherein any such property and any records pertaining thereto may be
found, including "business enterprises and entities," — for the purpose of
preventing the destruction, concealment or dissipation of, and otherwise
conserving and preserving, the same — until it can be determined,
through appropriate judicial proceedings, whether the property was
in truth "ill- gotten," i.e., acquired through or as a result of improper or
illegal use of or the conversion of funds belonging to the Government or
any of its branches, instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of official position, authority
relationship, connection or influence, resulting in unjust enrichment of
the ostensible owner and grave damage and prejudice to the State,
xxx.36(Emphasis supplied, citations omitted)
 Provisional Remedies/Cases Full Text/Rule 57│13

Sequestration is a conservatory writ,37 which purpose is to preserve

properties in custodia legis, lest the dissipation and concealment of the
"ill-gotten" wealth the former President Marcos and his allies may resort
to, pending the final disposition of the properties. 38 It is to prevent the
disappearance or dissipation pending adjudgment of whether the
acquisition thereof by the apparent owner was attended by some vitiating
anomaly or attended by some illegal means. 39 Thus by no means is it
permanent in character. Upon the final disposition of the sequestered
properties, the sequestration is rendered functus officio.