SPOUSES ELISEO F. ESTARES and ROSENDA P.
Yes, but their petition shall not prosper due to
ESTARES, petitioners, v. COURT OF APPEALS, HON.
DAMASO HERRERA as Presiding Judge of the RTC,
Branch 24, Biñan, Laguna PROMINENT LENDING &
CREDIT CORPORATION, PROVINCIAL SHERIFF OF
LAGUNA and Sheriff IV ARNEL G. MAGAT,
respondents
G.R. No. 144755, 8 June 2005
Facts:
The spouses Estares secured a loan of P800k from
Prominent Lending & Credit Corporation (PLCC)
in 1998. To secure the loan, they mortgaged a
parcel of land. They however only received P637k
as testified by Rosenda Estares in court. She did
not however question the discrepancy. At that
time, her husband was in Algeria working. The
loan eventually went due and the spouses were
unable to pay. So PLCC petitioned for an
extrajudicial foreclosure. The property was
eventually foreclosed.
Now, the spouses are questioning the validity of
the loan as they alleged that they agreed to an
18% per annum interest rate but PLCC is now
charging them 3.5% interest rate per month; they
also questioned the terms of the loan.
PLCC argued that the spouses were properly
apprised of the terms of the loan. On the
procedural aspect, PLCC claims that the petition
filed by the spouses is invalid because the
certification of non-forum shopping was only
signed by Rosenda and her husband did not sign.
ISSUE:
Whether or not the petition filed by the spouses
is valid.
HELD:
substantial grounds. The spouses were properly
apprised by the terms of the loan; they did not
question the terms of the loan when they had the
opportunity when it did not yet mature. Rosenda
even acknowledged the terms of the loan in
court.
On the procedural aspect, even though Eliseo did
not sign the certification (because he was in
Algeria), there is still substantial compliance with
the rules. After all they share a common interest
in the property involved since it is conjugal
property, and the petition questioning the
propriety of the decision of the Court of Appeals
originated from an action brought by the
spouses, and is clearly intended for the benefit of
the conjugal partnership. Considering that the
husband was at that time an overseas contract
worker working in Algeria, whereas the petition
was prepared in Sta. Rosa, Laguna, a rigid
application of the rules on forumshopping that
would disauthorize the wife’s signing the
certification in her behalf and that of her husband
is too harsh and clearly uncalled for.
Northern Luzon Island Co. v Garcia, 753 SCRA 603
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.
Luzon Dev. Bank v Krishman, 755 SCRA (2015)
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. The proximate relation of the
word "deposit" and "amount" is unmistakable in
Section 5 of Rule 57. Plainly, in construing said
words, it can be safely concluded that Section 5
requires the deposit of money as the word
"amount" commonly refers to or is regularly
associated with a sum of money. Petitioners
should not give a special or technical
interpretation to a word which is otherwise
construed in its ordinary sense by the law and
broaden the signification of the term "deposit" to
include that of real properties."
Excellent Quality Apparel v Visayan Surety, 761
SCRA 464 Under Section 20, Rule 57, in relation
to Section 4 therein, the surety bond shall answer
for all the costs which may be adjudged to the
adverse party and all damages which he may
sustain by reason of the attachment. In other
words, the damages sought to be enforced
against the surety bond are unliquidated.
Necessarily, a notice and hearing before the
finality of judgment must be undertaken to
properly determine the amount of damages that
was suffered by the defendant due to the
improper attachment. These damages to be
imposed against the attaching party and his
sureties are different from the principal case, and
must be included in the judgment. On the other
hand, under Section 17, Rule 57, in relation to
Section 12 therein, the cash deposit or the
counterbond shall secure the payment of any
judgment that the attaching party may recover in
the action. Stated differently, the damages
sought to be charged against the surety bond are
liquidated. The final judgment had already
determined the amount to be awarded to the
winning litigant on the main action. Thus, there is
nothing left to do but to execute the judgment
against the losing party, or in case of
insufficiency, against its sureties
WATERCRAFT VENTURE CORPORATION VS
ALFRED RAYMOND WOLFEG.R. NO 181721,
SEPTEMBER 09, 2015
DOCTRINE: The rules on the issuance of a writ of
attachment must be construed strictly against the
applicants. This stringency is required because the
remedy of attachment is harsh, extraordinary and
summary in nature. 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.
FACTS:
Petitioner Watercraft, engaged in the business of
building, repairing, storing and maintaining
yachts, boats and other pleasure crafts at the
Subic Bay Freeport Zone, Subic, Zambales, hired
respondent Wolfe as its Shipyard Manager.
During his employment, Wolfe stored the
sailboat, Knotty Gull, within Watercraft's boat
storagefacilities, but never paid for the storage
fees.
After the termination of Wolfe’s employment, he
pulled out his sailboat from
Watercraft’s storage facilities
after signing a Boat Pull-Out Clearance where he
allegedly acknowledged the outstanding
obligation of more than US$16T representing
unpaid boat storage fees. Despite repeated
demands, he failed to pay the said amount. Thus,
petitioner filed a complaint for Collection of sum
of money with Damages with an Application for
the Issuance of a Writ of Preliminary Attachment
against Wolfe. In his answer, Wolfe denied owing
the said amount.
He explained that the sailboat was purchased as
part of an agreement between him
and Watercraft's then General Manager and its
President for it to be repaired and used as
training or fill-in project for the staff, and to be
sold later on. He added that pursuant to a central
Listing Agreement for the sale of the sailboat, he
was appointed as agent, placed in possession
thereof and entitled to a ten percent (10%) sales
commission. He insisted that nowhere in the
agreement was there a stipulation that berthing
and storage fees will be charged during the entire
time that the sailboat was in Watercraft's
dockyard. He also pointed out that the complaint
was an offshoot of an illegal dismissal case he
filed against Watercraft which had been decided
in his favor by the Labor Arbiter.
Meanwhile, the RTC granted the ex-parte
application for the writ of preliminary
attachment upon the filing of attachment
amounting to more than Php 3.2M and the said
writ was served simultaneously with the
summons, copies of the complaint, application
for attachment, applicant's affidavit and bond
upon the defendant. Pursuant to
the writ, Wolfe’s 2 vehicles were levied and his
BPI accounts were garnished. Wolfe filed
a Motion to Discharge the Writ of Attachment,
arguing that Watercraft failed to show the
existence of fraud and that the mere failure to
payor perform an obligation does not amount to
fraud. He also claimed that he is not a flight risk.
The RTC deniedWolfe’s motion. On appeal, the
CA granted Wolfe’s petition ruling that
the act of issuing the writ of preliminary
attachment ex-parte constitutes grave abuse of
discretion on the part of the RTC. In the instant
case, the Affidavit of Merit executed by
Watercraft's VP, failed to show fraudulent intent
on the part of Wolfe to defraud the company. It
merely enumerated the circumstances tending to
show the alleged possibility of Wolfe's flight from
the country. As to the allegation that Wolfe is a
flight 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. As
Wolfe avers, he and his family had been staying
in the Philippines since 1997, with his daughters
studying at . More importantly, Wolfe has a
pending labor case against Watercraft.a fact
which the company glaringly failed to mention in
its complaint which Wolfe claims to want to
prosecute until its very end. Aggrieved by theCA’s
denial of its motion for reconsideration,
petitioner filed this petition.
ISSUE:
WON the CA erred in finding that petitioner’s
application for writ of preliminary attachment is
without
merit.
RULING:
No, the Supreme Court held that since
attachment is harsh, extraordinary,
and summary in nature, the rules on the
application of a writ of attachment must be
strictly construed in favor of the defendant.As to
the requisite affidavit of merit, Section 3, Rule
57of the Rules of Court states that an order of
attachment shall be granted only when it appears
in the affidavit of the applicant, or of some other
person who personally knows the facts:
1. that a sufficient cause of action exists;
2. that the case is one of those mentioned
in Section 117 hereof;
3. that there is no other sufficient security for
the claim sought to be enforced by the action;
and
4. that the amount due to the applicant, or
the value of the property the possession of which
he is entitled to recover, is as much as the sum
for which the order is granted above all legal
counterclaims .The mere filing of an affidavit
reciting the facts required by Section 3, Rule 57,
however, is not enough to compel the judge to
grant the writ of preliminary attachment.
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. 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. The
particulars of such circumstances necessarily
include the time, persons, places and specific acts
of fraud committed.
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.In this case, Watercraft's Affidavit of
Preliminary Attachment does not contain specific
allegations of other factual circumstances to
show that Wolfe, at the time of contracting the
obligation, had a preconceived plan or intention
not to pay. Neither can it be inferred from such
affidavit the particulars of why he was guilty of
fraud in the performance of such obligation
to include that of real properties.
UNITED ALLOY PHILIPINES CORPORATION,
SPOUSES DAVID C. CHUA and LUTEN CHUA,
Petitioners vs. UNITED COCONUT PLANTERS
BANK, Respondent.G.R. No. 175949 January 30,
2017
Facts:
On December 18, 2000, herein petitioner
corporation, United Alloy Philippines Corporation
(UNIALLOY) applied for and was granted a credit
accommodation by herein respondent United
Coconut Planters Bank. (UCPB) in the amount of
PhP50,000,000.00, as evidenced by a Credit
Agreement. Part of UNIALLOY's obligation under
the Credit Agreement was secured by a Surety
Agreement, dated December 18, 2000, executed
by UNIALLOY Chairman, Jakob Van Der Sluis (Van
Der Sluis), UNIALLOY President, David Chua and
his spouse, Luten Chua (Spouses Chua), and one
Yang Kim Eng (Yang). Six (6) Promissory Notes,
were later executed by UNIALLOY in UCPB's
favor. In addition, as part of the consideration for
the credit accommodation, UNIALLOY and UCPB
also entered into a "lease-purchase" contract
wherein the former assured the latter that it will
purchase several real properties which UCPB co-
owns with the Development Bank of the
Philippines.
UNIALLOY failed to pay its loan obligations. As a
result, UCPB filed against UNIALLOY, the spouses
Chua, Yang and Van Der Sluis an action for Sum of
Money with Prayer for Preliminary Attachment.
UNIALLOY filed against UCPB, UCPB Vice-
President Robert Chua and Van Der Sluis claiming
that it holds office and conducts its business
operations in Tagoloan, Misamis Oriental.
UNIALLOY contended that Van Der Sluis, in
cahoots with UCPB Vice-President Robert Chua,
committed fraud, manipulation and
misrepresentation to obtain the subject loan for
their own benefit. UNIALLOY prayed, among
others, that three (3) of the six (6) Promissory
Notes it executed be annulled or reformed or
that it be released from liability thereon
UNIALLOY filed with the RTC of Makati an
omnibus motion praying for the suspension of
the proceedings of the collection case in the said
court on the ground of pendency of the certiorari
petition it filed with this Court. However, the RTC
denied UNIALLOY's motion in its Order dated
August 19, 2002. On September 21, 2006, the CA
rendered its assailed judgment denying
UNIALLOY's appeal and affirming the questioned
RTC Decision.
Issue/s:
1. Whether or not the trial court erred and/or
committed grave abuse of discretion amounting
to lack or in excess of jurisdiction in rendering the
assailed questioned decision when there is a
pending civil action before the regional trial court
of Cagayan de oro, branch 40, involving the same
parties and subject matter which case, is now
pending and assailed by the plaintiff-appellee via warranty on parts and labor. RCJ Lines issued
petition before the honorable supreme court. three post-dated checks in favor of Phil-Air to
partly cover the unpaid balance.

Ruling:
All the post-dated checks were dishonored when
The honorable court of appeals committed a
Phil-Air subsequently presented them for
serious, reversible error if not grave abuse of
payment. Check No. 479759 was returned
discretion, in denying petitioners' urgent motion
because it was drawn against insufficient funds,
for reconsideration without stating clearly and
while Check Nos. 479760 and 479761 were
distinctly the factual and legal basis thereof.
returned because payments were stopped.
Considering that the promissory notes subject of
G.R. No. 179257 are among the promissory notes
which are also involved in the present case,
Before presenting the third check for payment,
petitioner contends that a judgment by this Court
Phil-Air sent a demand letter to Rolando Abadilla,
in G.R. No. 179257 that reverses the Decision of
Sr. asking him to fund the post-dated checks. In
the RTC of Cagayan de Oro City, which in effect
view of the failure of RCJ Lines to pay the balance
would declare the nullity of the subject
despite demand, Phil-Air filed on April 1, 1998 the
promissory notes, may conflict with the Decision
complaint for sum of money with prayer for the
of this Court in the present petition, which
issuance of a writ of preliminary attachment.
involves the collection of the sum being
represented in the same promissory notes.

In its answer with compulsory counterclaim, RCJ

Phil-Air Conditioning Center vs RCJ Lines and
Rolando Abadilla, Jr.
G.R. No. 193821, November 23, 2015
Lines admitted that it purchased the units in the
total amount of P1,240,000.00 and that it had
only paid P400,000.00. It refused to pay the
balance because Phil-Air allegedly breached its
warranty.

Phil-Air Conditioning Center (Phil-Air) filed this

petition for review on certiorari
On various dates between March 5, 1990, and
August 29, 1990, petitioner Phil-Air sold to
respondent RCJ Lines four Carrier Paris 240 air
conditioning units for buses (units). The units
included compressors, condensers, evaporators,
switches, wiring, circuit boards, brackets, and
fittings.
RCJ Lines averred that the units did not
sufficiently cool the buses despite repeated
repairs. Phil-Air purportedly represented that the
units were in accord with RCJ Lines’ cooling
requirements as shown in Phil-Air’s price
quotation. The price quotation provided that full
payment should be made upon the units’
complete installation. Complete installation,
according to RCJ Lines, is equivalent to being in
operational condition.

Phil-Air allegedly performed regular maintenance

checks on the units pursuant to the one-year
RCJ Lines claimed that it was also entitled to be
reimbursed for costs and damages occasioned by
the enforcement of the writ of attachment.
Issues:
(1) Whether the claim of Phil-Air was barred by
laches;
(2) Whether Phil-Air should reimburse RCJ Lines
for the counterbond premium and its alleged
unrealized profits;
(3) Whether RCJ Lines proved its alleged
unrealized profits arising from the enforcement
of the preliminary writ of attachment.
Held:
1. Phil-Air’s claim is not barred by laches. In
general, there is no room to apply the concept of
laches when the law provides the period within
which to enforce a claim or file an action in court.
Phil-Air’s complaint for sum of money is based on
a written contract of sale. The ten-year
prescriptive period under Article 1144 of the Civil
Code thus applies.
In the present case, both parties admit the
existence and validity of the contract of sale. They
recognize that the price quotation dated August
4, 1989, contained the terms and conditions of
the sale contract. They also agree that the price
and description of the units were indicated on
the sales invoice.
Laches is defined as the failure or neglect for an
unreasonable and unexplained length of time, to
do that which by exercising due diligence, could
or should have been done earlier; it is negligence
or omission to assert a right within a reasonable
time, warranting a presumption that the party
entitled to assert it either has abandoned it or
declined to assert it.
While the CA correctly held that prescription and
estoppel by laches are two different concepts, it
failed to appreciate the marked distinctions
between the two concepts.
The court resolves whether the claimant asserted
its claim within a reasonable time and whether its
failure to do so warrants the presumption that it
either has abandoned it or declined to assert it.
The court determines the claimant’s intent to
assert its claim based on its past actions or lack of
action. After all, what is invoked in instances
where a party raises laches as a defense is the
equity jurisdiction of the court.
On the other hand, if the law gives the period
within which to enforce a claim or file an action
in court, the court confirms whether the claim is
asserted or the action is filed in court within the
prescriptive period. The court determines the
claimant’s intent to assert its claim by simply
measuring the time elapsed from the proper
reckoning point (e.g., the date of the written
contract) to the filing of the action or assertion of
the claim.
In sum, where the law provides the period within
which to assert a claim or file an action in court,
the assertion of the claim or the filing of the
action in court at any time within the prescriptive
period is generally deemed reasonable, and thus,
does not call for the application of laches. As we
held in one case, unless reasons of inequitable
proportions are adduced, any imputed delay
within the prescriptive period is not delay in law
that would bar relief.
 adverse party and all damages that he may
sustain by reason of the attachment, if the court
Not all the elements of laches are present. To
shall finally adjudge that the applicant was not
repeat, Phil-Air filed the complaint with the RTC
entitled thereto.”
on April 1, 1998. The time elapsed from August 4,
1989 (the date of the price quotation, which is
the earliest possible reckoning point), is eight
The enforcement of the writ notwithstanding,
years and eight months, well within the ten-year
the party whose property is attached is afforded
prescriptive period. There was simply no delay
relief to have the attachment lifted. There are
(second element of laches) where Phil-Air can be
various modes of discharging an attachment
said to have negligently slept on its rights. there
under Rule 57, viz.:
is no basis for laches as the facts of the present
case do not give rise to an inequitable situation (1) by depositing cash or posting a counter-bond
that calls for the application of equity and the under Section 12;
principle of laches.
(2) by proving that the attachment bond was
improperly or irregularly issued or enforced, or
that the bond is insufficient under Section 13;
2. Phil-Air is not directly liable for the counter-
bond premium and RCJ Lines’ alleged unrealized (3) by showing that the attachment is excessive
profits. under Section 13; and (4) by claiming that the
property is exempt from execution under Section
2.
A writ of preliminary attachment is a provisional
remedy issued by the court where an action is
pending to be levied upon the property or RCJ Lines availed of the first mode by posting a
properties of the defendant. The property is held counter-bond.
by the sheriff as security for the satisfaction of
whatever judgment that might be secured by the
attaching party against the defendant. Under the first mode, the court will order the
discharge of the attachment after (1) the movant
makes a cash deposit or posts a counterbond and
The grant of the writ is conditioned not only on (2) the court hears the motion to discharge the
the finding of the court that there exists a valid attachment with due notice to the adverse party.
ground for its issuance. The Rules also require the
applicant to post a bond.
The amount of the cash deposit or counter-bond
must be equal to that fixed by the court in the
Section 4 of Rule 57 of the Rules of Civil order of attachment, exclusive of costs. The cash
Procedure (Rules) provides that “the party deposit or counter-bond shall secure the
applying for the order must…give a bond payment of any judgment that the attaching
executed to the adverse party in the amount party may recover in the action.
fixed by the court in its order granting the
issuance of the writ, conditioned that the latter
will pay all the costs that may be adjudged to the
The discharge under Section 12 takes effect upon
posting of a counter-bond or depositing cash, and
after hearing to determine the sufficiency of the
cash deposit or counter-bond. On the other hand,
the discharge under Section 13 takes effect only
upon showing that the plaintiff’s attachment
bond was improperly or irregularly issued, or that
the bond is insufficient. The discharge of the
attachment under Section 13 must be made only
after hearing.
As discussed above, it is patent that under the
Rules, the attachment bond answers for all
damages incurred by the party against whom the
attachment was issued. Thus, Phil-Air cannot be
held directly liable for the costs adjudged to and
the damages sustained by RCJ Lines because of
the attachment. Section 4 of Rule 57 positively
lays down the rule that the attachment bond will
pay “all the costs which may be adjudged to the
adverse party and all damages which he may
sustain by reason of the attachment, if the court
shall finally adjudge that the applicant was not
entitled thereto.”
The RTC, instead of declaring Phil-Air liable for
the alleged unrealized profits and counter-bond
premium, should have ordered the execution of
the judgment award on the attachment bond. To
impose direct liability to Phil-Air would defeat the
purpose of the attachment bond, which was not
dissolved despite the lifting of the writ of
preliminary attachment.
The order to refund the counter-bond premium
is likewise erroneous. The premium payment
may be deemed a cost incurred by RCJ Lines to
lift the attachment. Such cost may be charged
against the attachment bond.
3. RCJ Lines failed to prove its alleged unrealized
profits.
In Spouses Yu v. Ngo Yet Te, we held that if the
claim for actual damages covers unrealized
profits, the amount of unrealized profits must be
established and supported by independent
evidence of the mean income of the business
undertaking interrupted by the illegal seizure.
We explained in Spouses Yu that 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.
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.
Similarly, the evidence adduced by RCJ Lines to
show actual damages fell short of the required
proof. Its average daily income cannot be derived
from the summary of daily cash collections from
only two separate occasions, i.e., August 22-23
and September 2-3, 2000. The data submitted is
too meager and insignificant to conclude that the
buses were indeed earning an average daily
income of P12,000.00.
More significant, the person who prepared the
unsigned summary of daily cash collections was
not presented before the RTC to verify and
explain how she arrived at the computation. The
dispatchers who prepared the collection reports
were likewise not presented; some of the reports
were also unsigned. While the summary was
approved by Rolando Abadilla, Jr., in his
testimony on the alleged unrealized profits was
uncorroborated and self-serving.
Nonetheless, we recognize that RCJ Lines
suffered some form of pecuniary loss when two
of its buses were wrongfully seized, although the
amount cannot be determined with certainty.
We note that in its prayer for the issuance of the
writ of preliminary attachment, Phil-Air alleged
that RCJ Lines was guilty of fraud in entering into
the sale transaction. A perusal of the record,
however, would show that Phil-Air failed to prove
this bare assertion. This justifies an award of
temperate or moderate damages in the amount
of Php 50,000.00.
Republic Of The Philippines, Petitioner, V. Mega
Pacific Esolutions, Inc
FACTS:
Republic Act No. 8436 authorized the COMELEC
to use an automated election system for the May
1998 elections. However, the automated system
failed to materialize and votes were canvassed
manually during the 1998 and the 2001 elections
For the 2004 elections, the COMELEC again
attempted to implement the automated election
system. For this purpose, it invited bidders to
apply for the procurement of supplies,
equipment, and services.
Respondent MPEI, as lead company, purportedly
formed a joint venture - known as the Mega
Pacific Consortium (MPC) - together with We
Solv, SK C & C, ePLDT, Election.com and Oracle.
Subsequently, MPEI, on behalf of MPC, submitted
its bid proposal to COMELEC.
After due assessment, the Bids and Awards
Committee (BAC) recommended that the project
be awarded to MPC. The COMELEC favorably
acted on the recommendation and issued
Resolution No. 6074, which awarded the
automation project to MPC.
Despite the award to MPC, the COMELEC and
MPEI executed on 2 June 2003 the Automated
Counting and Canvassing Project Contract
(automation contract)5 for the aggregate
amount of P1,248,949,088.
MPEI agreed to supply and deliver 1,991 units of
ACMs and such other equipment and materials
necessary for the computerized electoral system
in the 2004 elections. Pursuant to the automation
contract, MPEI delivered 1,991 ACMs to the
COMELEC. The latter, for its part, made partial
payments to MPEI in the aggregate amount of
P1.05 billion.
This Court in its 2004 Decision declared the
contract null and void.6 We held that the
COMELEC committed a clear violation of law and
jurisprudence, as well as a reckless disregard of
its own bidding rules and procedure.
All in all, Comelec subverted the essence of public
bidding: to give the public an opportunity for fair
competition and a clear basis for a precise
comparison of bids.
Complaint for Damages filed by respondents with
the RTC Makati and petitioner's Answer with
Counterclaim, with an application for a writ of
preliminary attachment, from which the instant
case arose
Upon the finality of the declaration of nullity of
the automation contract, respondent MPEI filed
a Complaint for Damages before the RTC Makati,
arguing that, notwithstanding the nullification of
the automation contract, the COMELEC was still
bound to pay the amount of P200,165,681.89.
This amount represented the difference between
the value of the ACMs and the support services
delivered on one hand, and on the other, the
payment previously made by the COMELEC.
By way of a counterclaim, petitioner demanded
from respondents the return of the payments
made pursuant to the automation contract.26 It
argued that individual respondents, being the
incorporators of MPEI, likewise ought to be
impleaded and held accountable for MPEI's
liabilities. The creation of MPC was, after all,
merely an ingenious scheme to feign eligibility to
bid.
Pursuant to Section 1(d) of Rule 57 of the Rules
of Court, petitioner prayed for the issuance of a
writ of preliminary attachment against the
properties of MPEI and individual respondents.
The application was grounded upon the
fraudulent misrepresentation of respondents as
to their eligibility to participate in the bidding for
the COMELEC automation project and the failure
of the ACMs to comply with mandatory technical
requirements.
The trial court denied the prayer for the issuance
of a writ of preliminary attachment,29 ruling that
there was an absence of factual allegations as to
how the fraud was actually committed.
The trial court further ruled that the allegations
of fraud on the part of MPEI were not supported
by the COMELEC, the office in charge of
conducting the bidding for the election
automation contract. It was likewise held that
there was no evidence that respondents
harbored a preconceived plan not to comply with
the obligation; neither was there any evidence
that MPEI's corporate fiction was used to
perpetrate fraud. Thus, it found no sufficient
basis to pierce the veil of corporate fiction or to
cause the attachment of the properties owned by
individual respondents.
Petitioner moved to set aside the trial court's
Order denying the writ of attachment,30 but its
motion was denied.
Aggrieved, petitioner filed an appeal with the CA.
The CA in its First Decision32 reversed and set
aside the trial court's Orders and ruled that there
was sufficient basis for the issuance of a writ of
attachment in favor of petitioner.
The appellate court explained that the averments
of petitioner in support of the latter's application
actually reflected pertinent conclusions reached
by this Court in its 2004 Decision. It held that the
trial court erred in disregarding the following
findings of fact, which remained unaltered and
unreversed: (1) COMELEC bidding rules provided
that the eligibility and capacity of a bidder may be
proved through financial documents including,
among others, audited financial statements for
the last three years; (2) MPEI was incorporated
only on 27 February 2003, or 11 days prior to the
bidding itself; (3) in an attempt to disguise its
ineligibility, MPEI participated in the bidding as
lead company of MPC, a putative consortium,
and submitted the incorporation papers and
financial statements of the members of the
consortium; and (4) no proof of the joint venture
agreement, consortium agreement,
memorandum of agreement, or business plan
executed among the members of the purported
consortium was ever submitted to the COMELEC.
According to the CA, the foregoing were glaring
indicia or badges of fraud, which entitled
petitioner to the issuance of the writ.
Respondents moved for reconsideration36 of the
First Decision of the CA.
The CA reconsidered its First Decision37 and
directed the remand of the case to the RTC
Makati for the reception of evidence of
allegations of fraud and to determine whether
attachment should necessarily issue.

he CA explained in its Amended Decision that
respondents could not be considered to have
fostered a fraudulent intent to dishonor their
obligation, since they had delivered 1,991 units of
ACMs.
Petitioner filed the instant Rule 45 Petition,45
arguing that the CA erred in ordering the remand
of the case to the trial court for the reception of
evidence to determine the presence of fraud.
ISSUE(S)
: WON a writ of preliminary attachment may be
issued against the properties of individual
respondents, considering that they were not
parties to the 2004 case.
HELD
: Yes. Petition is meritorious.
RATIO:
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:
Fraud on the part of respondent MPEI was
sufficiently established by the factual findings of
this Court in its 2004 Decision and subsequent
pronouncements.
A writ of preliminary attachment may issue over
the properties of the individual respondents
using the doctrine of piercing the corporate veil.
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. The delivery of 1,991 units of ACMs
does not negate fraud on the part of respondents
MPEI and Willy. Estoppel does not lie against the
state when it acts to rectify mistakes, errors or
illegal acts of its officials and agents.
The findings of the Ombudsman are not
controlling in the instant case.
A writ of preliminary attachment is a provisional
remedy issued upon the order of the court where
an action is pending. Through the writ, the
property or properties of the defendant may be
levied upon and held thereafter by the sheriff as
security for the satisfaction of whatever
judgment might be secured by the attaching
creditor against the defendant.61 The provisional
remedy of attachment is available in order that
the defendant may not dispose of the property
attached, and thus prevent the satisfaction of any
judgment that may be secured by the plaintiff
from the former.
The purpose and function of an attachment or
garnishment is twofold. First, it seizes upon
property of an alleged debtor in advance of final
judgment and holds it subject to appropriation,
thereby preventing the loss or dissipation of the
property through fraud or other means. Second,
it subjects the property of the debtor to the
payment of a creditor's claim, in those cases in
which personal service upon the debtor cannot
be obtained.63 This remedy is meant to secure a
contingent lien on the defendant's property until
the plaintiff can, by appropriate proceedings,
obtain a judgment and have the property applied
to its satisfaction, or to make some provision for
unsecured debts in cases in which the means of
satisfaction thereof are liable to be removed
beyond the jurisdiction, or improperly disposed
of or concealed, or otherwise placed beyond the
reach of creditors.
Section 1(d), Rule 57 of the Rules of Court
Section 1. Grounds upon which attachment may
issue. At the commencement of the action or at
any time before entry of judgment, a plaintiff or
any proper party may have the property of the
adverse party attached as security for the
satisfaction of any judgment that may be
recovered in the following cases: x xxx (d) In an
action against a party who has been guilty of a
fraud in contracting the debt or incurring the
obligation upon which the action is brought, or in
the performance thereof.
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.
Metro, Inc. v. Lara's Gift and Decors, Inc., 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 xx.
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.
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:
Respondent MPEI had perpetrated a scheme
against petitioner to secure the automation
contract by using MPC as supposed bidder and
eventually succeeding in signing the automation
contract as MPEI alone, an entity which was
ineligible to bid in the first place.
Fraud on the part of respondent MPEI was
further shown by the fact that despite the failure
of its ACMs to pass the tests conducted by the
DOST, respondent still acceded to being awarded
the automation contract
Davao Light v. Court of Appeals
Facts
The Davao Light and Power Co., Inc. ("Davao
Light") filed a collection suit against Queensland
Hotel ("Queensland") and Teodorico Adarna
("Adarna") with an ex parte application for a writ
of preliminary attachment. On 3 May 1989, the
trial court issued an Order of Attachment, and
the corresponding Writ of Attachment on 11 May
1989. On 12 May 1989, the summons, a copy of
the complaint, and the writ of attachment was
served upon Queensland and Adarna.
Queensland and Adarna filed a motion to
discharge the attachment on the ground that at
the time the Order of Attachment and Writ of
Attachment were issued, the trial court has yet to
acquire jurisdiction over the cause of action and
over the persons of the defendants.
Issue
Whether or not the writ of preliminary
attachment was validly issued.

Held
Yes. A writ of preliminary attachment may be
issued before the court acquires jurisdiction over
the person of the defendant.
Ratio Decidendi
The court may validly issue a writ of preliminary
injunction prior to the acquisition of jurisdiction
over the person of the defendant. There is an
appreciable period of time between the
commencement of the action (takes place upon
the filing of an initiatory pleading) and the service
of summons to the defendant. In the meanwhile,
there are a number of actions which the plaintiff
or the court may validly take, including the
application for and grant of the provisional
remedy of preliminary attachment. There is
nothing in the law which prohibits the court from
granting the remedy prior to the acquisition of
jurisdiction over the person of the defendant. In
fact, Rule 57 of the Rules of Court allows the
granting of a writ of preliminary injunction at the
commencement of the suit. In the cases of
Toledo v. Burgos and Filinvest Credit Corporation
v. Relova, it was held that notice and hearing are
not prerequisites to the issuance of a writ of
preliminary attachment. Further, in the case of
Mindanao Savings & Loan Association, Inc. v.
Court of Appeals, it was ruled that giving notice
to the defendant would defeat the purpose of the
remedy by affording him or her the opportunity
to dispose of his properties before the writ can
be issued.
A preliminary attachment may be discharged
with the same ease as obtaining it. In any case,
the ease of availing the provisional remedy of
preliminary attachment is matched by the ease
with which it can be remedied by either the
posting of a counterbond, or by a showing of its
improper or irregular issuance. The second
means of defeating a preliminary attachement,
however, may not be availed of if the writ was
issued upon a ground which is at the same time
the applicant's cause of action.
Preliminary attachment not binding until
jurisdiction over the person of the defendant is
acquired. The writ of preliminary attachment,
however, even though validly issued, is not
binding upon the defendant until jurisdiction
over his person is first acquired.
Equitable Banking Corporation, Inc vs Special Steel
Products
G.R. No. 175350 June 13, 2012
Facts: Augusto L. Pardo (Pardo) is SSPI’s President
and majority stockholder. International Copra
Export Corporation (Interco) is its regular
customer. Jose Isidoro Uy, alias Jolly Uy (Uy), is an
Interco employee, in charge of the purchasing
department, and the son-in-law of its majority
stockholder. Petitioner Equitable Banking
Corporation (Equitable or bank) is a private
domestic corporation engaged in banking and is
the depository bank of Interco and of Uy. In 1991,
SSPI sold welding electrodes to Interco, as
evidenced by the following sales invoices: Sales
Invoice No. 65042 dated February 14, 1991 for P
325,976.34 Sales Invoice No. 65842 dated April
11, 1991 for P 345,412.80 Sales Invoice No.
65843 dated April 11, 1991 for P 313,845.84 The
due dates for these invoices were March 16, 1991
(for the first sales invoice) and May 11, 1991 (for
the others). The invoices provided that Interco
would pay interest at the rate of 36% per annum
in case of delay. and July 29, 1991. In payment for
the above welding electrodes, Interco issued
three checks payable to the order of SSPI on July
10, 1991, July 16, 1991, Each check was crossed
with the notation “account payee only” and was
drawn against Equitable. The records do not
identify the signatory for these three checks, or
explain how Uy, Interco’s purchasing officer,
came into possession of these checks. The
records only disclose that Uy presented each
crossed check to Equitable on the day of its
issuance and claimed that he had good title
thereto. He demanded the deposit of the checks
in his personal accounts in Equitable, Account No.
188412 and Account No. 03474-0.
Issue: Whether or not the payment made by
Equitable is proper.
Held: No. The checks that Interco issued in favor
of SSPI were all crossed, made payable to SSPI’s
order, and contained the notation “account
payee only.” This creates a reasonable
expectation that the payee alone would receive
the proceeds of the checks and that diversion of
the checks would be averted. This expectation
arises from the accepted banking practice that
crossed checks are intended for deposit in the
named payee’s account only and no other. At the
very least, the nature of crossed checks should
place a bank on notice that it should exercise
more caution or expend more than a cursory
inquiry, to ascertain whether the payee on the
check has authorized the holder to deposit the
same in a different account. It is well to
remember that “[t]he banking system has
become an indispensable institution in the
modern world and plays a vital role in the
economic life of every civilized society. Whether
as mere passive entities for the safe-keeping and
saving of money or as active instruments of
business and commerce, banks have attained an
[sic] ubiquitous presence among the people, who
have come to regard them with respect and even
gratitude and, above all, trust and confidence. In
this connection, it is important that banks should
guard against injury attributable to negligence or
bad faith on its part. As repeatedly emphasized,
since the banking business is impressed with
public interest, the trust and confidence of the
public in it is of paramount importance.
Consequently, the highest degree of diligence is
expected, and high standards of integrity and
performance are required of it.”
Equitable did not observe the required degree of
diligence expected of a banking institution under
the existing factual circumstances.
Equitable’s pretension that there is nothing
under the circumstances that rendered Uy’s title
to the checks questionable is outrageous. These
are crossed checks, whose manner of discharge,
in banking practice, is restrictive and specific.
Uy’s name does not appear anywhere on the
crossed checks. Equitable, not knowing the
named payee on the check, had no way of
verifying for itself the alleged genuineness of the
indorsement to Uy. The checks bear nothing on
their face that supports the belief that the drawer
gave the checks to Uy. Uy’s relationship to
Interco’s majority stockholder will not justify
disregarding what is clearly ordered on the
checks.
ADLAWAN vs. TOMOL (1990)
FACTS:
Adlawan, a private contractor, was awarded by
the NIA and the BPH (DPWH) contracts for the
construction of various infrastructure projects of
the government.
Adlawan sought financial assistance and support
from Aboitiz.
For failure of Adlawan to pay the installments and
amortizations, Aboitiz filed before the CFI of Cebu
a complaint for the collection of a sum of money
and damages including an ex-parte application
for the issuance of a writ of preliminary
attachment against the property of Adlawan.
The Executive Judge without notice and hearing
issued an order directing the issuance of a writ of
preliminary attachment against all the properties
of Adlawan, real and personal, upon the filing of
an attachment bond for P4M.
The case was raffled to Judge Tomol. Writs of
preliminary attachment were issued addressed
to the Sheriffs of Cebu, Davao City, Quezon City,
Davao del Sur and Davao del Norte, directing
them to attach the real and personal properties
of Adlawan within their respective jurisdictions.
Subsequently, Aboitiz filed an Urgent Ex-parte
Motions asking the court that it be allowed to
take possession and custody of the attached
properties to protect its interest and to avoid any
damage or deterioration considering that the
sheriff has no proper place to store or deposit
said properties. This was granted by respondent
Judge.
Meanwhile, Adlawan before submitting an
answer to the complaint, filed a Motion for a Bill
of Particulars and to Set Aside the Ex-Parte Writ
of Preliminary Attachment which was opposed by
Aboitz.
Finding that the discharge of the writ of
attachment is unavoidable on the ground that it
was issue ex-parte, without notice and hearing,
based principally on the alleged removal or
disposition by the defendants of their properties
with intent to defraud the plaintiff, which
allegation was limited to a bare assertion and not
persuasively substantial, Judge issued an Order
lifting and vacating the Order of attachment
Aboitiz filed an Urgent Ex-Parte Motion praying
for a stay of the Order dissolving the writ of
preliminary attachment, thus maintaining the
status quo
.Aboitiz further prayed for the court to direct the
sheriff of Davao City to desist and/or stop the
enforcement or implementation of the order
lifting the attachment and to grant them 15 days
to elevate the matter to the Appellate Court.
Judge Tomol issued on the same day an Order
granting the motion prayed for by Aboitiz.
In the meantime, 3 Deputy Sheriffs of Cebu
implemented the Order lifting the Writ of
Attachment and were able to pull out some
personal properties of Adlawan. They were not
able to take out all the attached properties in
view of the subsequent Order of judge to stay its
implementation.
As Adlawan’ s Motion for a Bill of Particulars was
not immediately acted upon, he was not able to
file an answer or interpose any counterclaim. For
this reason, Adlawan filed an Application for
Award of Damages asking for a reasonable rental
on the attached heavy construction equipment,
machineries and other properties at the rate of
P30k per day from the date of seizure until said
properties are actually returned to his possession
and control.
Before the court a quocould act on the motions
of Adlawan, and before he could file an answer,
his motion for a bill of particulars not having been
acted upon, Aboitiz filed a Notice of Dismissal or
Withdrawal of Complaint. Judge Tomol issued an
Order confirming the dismissal of the case.
Adlawan filed a Motion praying for the issuance
of an order to the Provincial Sheriff of Cebu to
implement and enforce the Order of respondent
Judge dissolving the writ of preliminary
attachment and to secure the delivery of the
attached properties to Adlawan. Judge issued an
Order denying the Motion in view of the
institution by Aboitiz of a civil case for delivery of
Personal Properties with Replevin and Damages
before the CFI of Cebu, and the filing of petitioner
Adlawan of a case for damages before the CFI of
Cebu, in connection with the seizure of his
properties under the writ of preliminary
attachment.
With regard to the replevin case filed by Aboitiz,
the CFI of Cebu, issued an Order for the seizure
and delivery of the properties described to
Aboitiz. The seized properties were thus
delivered to Aboitiz by the Clerk of Court and Ex-
officio Provincial Sheriff
Adlawan filed an Omnibus Motion to reconsider,
dissolve and set aside the Writ of Seizure and
Replevin and to direct that the properties seized
bereturned as well as to dismiss the complaint. In
support of this motion, Adlawan alleged, among
others, that Aboitiz's office is in Cebu City while
Adlawan isa resident of mainland Cebu,
particularly Minglanilla therefore the CFI of Cebu
stationed in Lapu-Lapu should not accept the
case.
Furthermore, he alleged that the same personal
properties seized are in custodia legis by virtue of
a writ of preliminary attachment issued by the CFI
of Cebu, presided by Judge Tomol.
Judge Dulay of the CFI Lapu-Lapu denied the
Omnibus Motion for lack of merit.
Hence, the present petition for Certiorari and
mandamus impleading Judge Tomol and Judge
Dulay in Lapu-Lapu City and Aboitiz.
ISSUE: WON after the attachment of Adlawan's
properties was dissolved and discharged because
it was found by Judge to be wrongful and illegal,
it constitutes graveand manifest abuse of
discretion on the part of the same judge TO
REFUSE to implement his own order for the
return of the attached properties to Adlawan
simplybecause Aboitiz suddenly dismissed its
complaint
DECISION: YES. Adlawan wins.
HELD:
Adlawan's properties were attached on the
strength of the writs of preliminary attachment
issued without notice and hearing by the
executive judge.These attached properties were
given to the custody of Aboitiz. Adlawan then
filed a Motion to Dissolve the Writ of Attachment
which was granted by Judge Tomol. Thus,
Adlawan was able to recover some of his
properties. But on the following day, this order
was stayed by the same judge leaving the rest the
properties with Aboitiz. Later, Aboitiz withdrew
its complaint which was confirmed by Judge
Tomol. Adlawan filed a motion to have the rest of
his properties returned but judge refused to act
on said motion due to cases filed by both parties
in the different branches of the Court of First
Instance of Cebu relating to the same case.
There is no question that Judge Tomol lifting and
vacating the order granting the writ of
preliminary attachment is a valid order. The
execution of aforesaid order was stayed for a
period of 15 days on motion of the plaintiff to
enable the latter to question the propriety or
impropriety of the same in the appellate court.
Instead, plaintiff filed a civil case for delivery of
Personal Properties with Replevin and Damages
with another branch of the CFI of Cebu.
Accordingly, having failed to appeal or question
the aforementioned order in the appellate court
as originally manifested, the same became final
and executory.
Section 1, Rule 39 of the Revised Rules of Court
provides:
Execution upon final judgment or orders
—
Execution shall issue upon a judgment or order
that finally disposes of the action or proceeding.
Such execution shall issue as a matter of right
upon the expiration of the period to appeal legisof that court for purposes of that civil case
therefrom if no appeal has been perfected. only

Courts have no jurisdiction to order the delivery

of personal property (replevin) to the plaintiff if
It is basic that once a judgment becomes final, the
the property is under attachment. Only courts
prevailing party is entitled as a matter of right to
having supervisory control or superior
a Writ of Execution, and the issuance thereof is
jurisdiction in the premises, have the right to
the Court's ministerial duty.
interfere with and change possession of property
In custodia legis

A writ of preliminary attachment is a provisional

remedy issued upon order of the court where an
The garnishment of property to satisfy a writ of
action is pending to be levied upon the property
execution operates as an attachment and fastens
or properties of the defendant therein, the same
upon the property a lien by which the property is
to be held thereafter by the Sheriff as security for
brought under the jurisdiction of the court issuing
the satisfaction of whatever judgment might be
the writ. It is brought into custodia legis
secured in said action by the attaching creditor
against the defendant. under the sole control of such court.

The purpose and function of an attachment or That the writ of preliminary attachment issued is
garnishment is two-fold. already dissolved and rendered non-existent in
view of the withdrawal of the complaint by
First, it seizes upon property of an alleged debtor
Aboitiz. More importantly, even if the writ of
in advance of final judgment and holds it subject
attachment can be considered independently of
to appropriation thus prevents the loss of the
the main case, the same, having been improperly
property by fraud or otherwise.
issued as found by Judge Tomol himself, is null
Second, it subjects to the payment of a creditor's and void and cannot be a justification for holding
claim property of the debtor in those cases where properties in custodia legis any longer.
personal service cannot be obtained upon the
When Aboitiz withdrew its complaint, the
debtor.
attachment ceased to have a leg to stand on. The
Attachment is an ancillary remedy. It is not attached properties of Adlawan which are in the
sought for its own sake but rather to enable the custody of Aboitiz should be returned.
attaching party to realize upon relief sought and
expected to be granted in the main or principal
action.

The remedy of attachment is adjunct to the main

suit, therefore, it can have no independent
existence apart from a suit on a claim of the
plaintiff against the defendant.

Thus, this Court ruled that upon levy by

attachment of the property in question by order
of the Court, said property fell into custodia