PROVISONAL REMEDIES

SET 1 | FULLCASES
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision1
of the Court of Appeals (CA) dated November 27, 1995 in CA-G.R. SP No. 33585, as well
as the Resolution2 on April 2, 1996 denying the petitioners motion for reconsideration.
The impugned decision granted the private respondents petition for certiorari and set
aside the Orders of the trial court dated December 15, 19933 and February 17, 19944
nullifying the attachment of 100,000 shares of stocks of the Citycorp Investment
Philippines under the name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a
loan of P9,000,000.00 from the Allied Banking Corporation (ABC). By virtue of this loan,
the PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory
note for the said amount promising to pay on December 22, 1978 at an interest rate of
14% per annum.5 As added security for the said loan, on September 28, 1978, Alfredo
Ching, together with Emilio Taedo and Chung Kiat Hua, executed a continuing guaranty
with the ABC binding themselves to jointly and severally guarantee the payment of all
the PBMCI obligations owing the ABC to the extent of P38,000,000.00.6 The loan was
subsequently renewed on various dates, the last renewal having been made on
December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the
amount of P13,000,000.00 payable in eighteen months at 16% interest per annum. As in
the previous loan, the PBMCI, through Alfredo Ching, executed a promissory note to
evidence the loan maturing on June 29, 1981.8 This was renewed once for a period of one
month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC
filed a complaint for sum of money with prayer for a writ of preliminary attachment
against the PBMCI to collect the P12,612,972.88 exclusive of interests, penalties and
other bank charges. Impleaded as co-defendants in the complaint were Alfredo Ching,
Emilio Taedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.

The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila,
Branch XVIII.10 In its application for a writ of preliminary attachment, the ABC averred
that the "defendants are guilty of fraud in incurring the obligations upon which the
present action is brought11 in that they falsely represented themselves to be in a
financial position to pay their obligation upon maturity thereof."12 Its supporting affidavit
stated, inter alia, that the "[d]efendants have removed or disposed of their properties, or
[are] ABOUT to do so, with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying
the ABCs application for a writ of preliminary attachment. The trial court decreed that
the grounds alleged in the application and that of its supporting affidavit "are all
conclusions of fact and of law" which do not warrant the issuance of the writ prayed for. 14
On motion for reconsideration, however, the trial court, in an Order dated September 14,
1981, reconsidered its previous order and granted the ABCs application for a writ of
preliminary attachment on a bond of P12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the grant of the writ of preliminary
attachment ex-parte, which is the alleged disposal of properties by the defendants with
intent to defraud creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court, the
affidavits can only barely justify the issuance of said writ as against the defendant
Alfredo Ching who has allegedly bound himself jointly and severally to pay plaintiff the
defendant corporations obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo
Ching requiring the sheriff of this Court to attach all the properties of said Alfredo Ching
not exceeding P12,612,972.82 in value, which are within the jurisdiction of this Court and
not exempt from execution upon, the filing by plaintiff of a bond duly approved by this
Court in the sum of Twelve Million Seven Hundred Thousand Pesos (P12,700,000.00)
executed in favor of the defendant Alfredo Ching to secure the payment by plaintiff to
him of all the costs which may be adjudged in his favor and all damages he may sustain
by reason of the attachment if the court shall finally adjudge that the plaintiff was not
entitled thereto.
SO ORDERED.15
Upon the ABCs posting of the requisite bond, the trial court issued a writ of preliminary
attachment. Subsequently, summonses were served on the defendants,16 save Chung
Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for
suspension of payments with the Securities and Exchange Commission (SEC), docketed
as SEC Case No. 2250, at the same time seeking the PBMCIs rehabilitation. 17
On July 9, 1982, the SEC issued an Order placing the PBMCIs business, including its
assets and liabilities, under rehabilitation receivership, and ordered that "all actions for

claims listed in Schedule "A" of the petition pending before any court or tribunal are
hereby suspended in whatever stage the same may be until further orders from the
Commission."18 The ABC was among the PBMCIs creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to
Dismiss and/or motion to suspend the proceedings in Civil Case No. 142729 invoking the
PBMCIs pending application for suspension of payments (which Ching co-signed) and
over which the SEC had already assumed jurisdiction.19 On February 4, 1983, the ABC
filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on
attachment the 100,000 common shares of Citycorp stocks in the name of Alfredo
Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court partially granted the
aforementioned motion by suspending the proceedings only with respect to the PBMCI. It
denied Chings motion to dismiss the complaint/or suspend the proceedings and pointed
out that P.D. No. 1758 only concerns the activities of corporations, partnerships and
associations and was never intended to regulate and/or control activities of individuals.
Thus, it directed the individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the pendency of SEC Case No. 2250. This motion met
the opposition from the ABC.23
On January 20, 1984, Taedo filed his Answer with counterclaim and cross-claim.24 Ching
eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an Omnibus
Motion,26 again praying for the dismissal of the complaint or suspension of the
proceedings on the ground of the July 9, 1982 Injunctive Order issued in SEC Case No.
2250. He averred that as a surety of the PBMCI, he must also necessarily benefit from
the defenses of his principal. The ABC opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion27 praying for the dismissal of
the complaint, arguing that the ABC had "abandoned and waived" its right to proceed
against the continuing guaranty by its act of resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary
attachment bond from P12,700,000 to P6,350,000.28 Alfredo Ching opposed the motion,29
but on April 2, 1987, the court issued an Order setting the incident for further hearing on
May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the
properties of Alfredo Ching levied on by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of the ABC and
rendered the attachment bond of P6,350,000.31

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching,
filed a Motion to Set Aside the levy on attachment. She alleged inter alia that the
100,000 shares of stocks levied on by the sheriff were acquired by her and her husband
during their marriage out of conjugal funds after the Citycorp Investment Philippines was
established in 1974. Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the
account of PBMCI did not redound to the benefit of the conjugal partnership. She,
likewise, alleged that being the wife of Alfredo Ching, she was a third-party claimant
entitled to file a motion for the release of the properties.32 She attached therewith a copy
of her marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment and/or motion
to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case;
thus, she has no personality to file any motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention pursuant to
Section 2, Rule 12 of the Rules of Court;
2.3 Said Motion cannot even be construed to be in the nature of a Third-Party
Claim conformably with Sec. 14, Rule 57 of the Rules of Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant has the
required personality, her Motion cannot be acted upon by this Honorable Court as the
above-entitled case is still in the archives and the proceedings thereon still remains
suspended. And there is no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by laches because
the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence her
marriage contract to Alfredo Ching to prove that they were married on January 8, 1960;35
the articles of incorporation of Citycorp Investment Philippines dated May 14, 1979; 36
and, the General Information Sheet of the corporation showing that petitioner Alfredo
Ching was a member of the Board of Directors of the said corporation and was one of its
top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to
expunge records.
Acting on the aforementioned motion, the trial court issued on December 15, 1993 an
Order37 lifting the writ of preliminary attachment on the shares of stocks and ordering the
sheriff to return the said stocks to the petitioners. The dispositive portion reads:

WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9,

1993, is hereby granted. Let the writ of preliminary attachment subject matter of said
motion, be quashed and lifted with respect to the attached 100,000 common shares of
stock of Citycorp Investment Philippines in the name of the defendant Alfredo Ching, the
said shares of stock to be returned to him and his movant-spouse by Deputy Sheriff
Apolonio A. Golfo who effected the levy thereon on July 26, 1983, or by whoever may be
presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order
but denied the same on February 17, 1994. The petitioner bank forthwith filed a petition
for certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the nullification of the
said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted without jurisdiction
in taking cognizance of, and granting a "Motion" filed by a complete stranger to
the case.
2. The respondent Judge committed a grave abuse of discretion in lifting the writ of
preliminary attachment without any basis in fact and in law, and contrary to
established jurisprudence on the matter.39
On November 27, 1995, the CA rendered judgment granting the petition and setting
aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the
questioned orders (dated December 15, 1993 and February 17, 1994) for being null and
void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside the assailed
orders. According to the CA, the RTC deprived the private respondent of its right to file a
bond under Section 14, Rule 57 of the Rules of Court. The petitioner Encarnacion T. Ching
was not a party in the trial court; hence, she had no right of action to have the levy
annulled with a motion for that purpose. Her remedy in such case was to file a separate
action against the private respondent to nullify the levy on the 100,000 Citycorp shares
of stocks. The court stated that even assuming that Encarnacion T. Ching had the right to
file the said motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the presumption in
Article 160 of the New Civil Code shall not apply where, as in this case, the petitionerspouses failed to prove the source of the money used to acquire the shares of stock. It
held that the levied shares of stocks belonged to Alfredo Ching, as evidenced by the fact
that the said shares were registered in the corporate books of Citycorp solely under his

name. Thus, according to the appellate court, the RTC committed a grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. The
petitioners motion for reconsideration was denied by the CA in a Resolution dated April
2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari, asserting that
the RTC did not commit any grave abuse of discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders in their favor; hence, the CA erred in reversing
the same. They aver that the source of funds in the acquisition of the levied shares of
stocks is not the controlling factor when invoking the presumption of the conjugal nature
of stocks under Art. 160,42 and that such presumption subsists even if the property is
registered only in the name of one of the spouses, in this case, petitioner Alfredo Ching. 43
According to the petitioners, the suretyship obligation was not contracted in the pursuit
of the petitioner-husbands profession or business.44 And, contrary to the ruling of the CA,
where conjugal assets are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main case and not file a
separate suit.45 Furthermore, the petitioners contend that under Art. 125 of the Family
Code, the petitioner-husbands gratuitous suretyship is null and void ab initio,46 and that
the share of one of the spouses in the conjugal partnership remains inchoate until the
dissolution and liquidation of the partnership.47
In its comment on the petition, the private respondent asserts that the CA correctly
granted its petition for certiorari nullifying the assailed order. It contends that the CA
correctly relied on the ruling of this Court in Wong v. Intermediate Appellate Court. Citing
Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private respondent
alleges that the continuing guaranty and suretyship executed by petitioner Alfredo Ching
in pursuit of his profession or business. Furthermore, according to the private
respondent, the right of the petitioner-wife to a share in the conjugal partnership
property is merely inchoate before the dissolution of the partnership; as such, she had no
right to file the said motion to quash the levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has the right to
file the motion to quash the levy on attachment on the 100,000 shares of stocks in the
Citycorp Investment Philippines; (b) whether or not the RTC committed a grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had the right to
file the said motion, although she was not a party in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those properties of the
defendant against whom a writ of attachment has been issued by the court. When the
sheriff erroneously levies on attachment and seizes the property of a third person in
which the said defendant holds no right or interest, the superior authority of the court
which has authorized the execution may be invoked by the aggrieved third person in the
same case. Upon application of the third person, the court shall order a summary hearing

for the purpose of determining whether the sheriff has acted rightly or wrongly in the
performance of his duties in the execution of the writ of attachment, more specifically if
he has indeed levied on attachment and taken hold of property not belonging to the
plaintiff. If so, the court may then order the sheriff to release the property from the
erroneous levy and to return the same to the third person. In resolving the motion of the
third party, the court does not and cannot pass upon the question of the title to the
property with any character of finality. It can treat the matter only insofar as may be
necessary to decide if the sheriff has acted correctly or not. If the claimants proof does
not persuade the court of the validity of the title, or right of possession thereto, the claim
will be denied by the court. The aggrieved third party may also avail himself of the
remedy of "terceria" by executing an affidavit of his title or right of possession over the
property levied on attachment and serving the same to the office making the levy and
the adverse party. Such party may also file an action to nullify the levy with damages
resulting from the unlawful levy and seizure, which should be a totally separate and
distinct action from the former case. The above-mentioned remedies are cumulative and
any one of them may be resorted to by one third-party claimant without availing of the
other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on attachment of
the 100,000 shares of stocks in the name of petitioner-husband claiming that the said
shares of stocks were conjugal in nature; hence, not liable for the account of her
husband under his continuing guaranty and suretyship agreement with the PBMCI. The
petitioner-wife had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in setting aside and reversing
the orders of the RTC. The private respondent, the petitioner in the CA, was burdened to
prove that the RTC committed a grave abuse of its discretion amounting to excess or lack
of jurisdiction. The tribunal acts without jurisdiction if it does not have the legal purpose
to determine the case; there is excess of jurisdiction where the tribunal, being clothed
with the power to determine the case, oversteps its authority as determined by law.
There is grave abuse of discretion where the tribunal acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its judgment and is equivalent to lack of
jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently strong
demonstration that the RTC acted whimsically in total disregard of evidence material to,
and even decide of, the controversy before certiorari will lie. A special civil action for
certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of
judgment. When a court exercises its jurisdiction, an error committed while so engaged
does not deprive it of its jurisdiction being exercised when the error is committed. 52
After a comprehensive review of the records of the RTC and of the CA, we find and so
hold that the RTC did not commit any grave abuse of its discretion amounting to excess
or lack of jurisdiction in issuing the assailed orders.

Article 160 of the New Civil Code provides that all the properties acquired during the
marriage are presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband, or to the wife. In Tan v. Court of Appeals,53 we held
that it is not even necessary to prove that the properties were acquired with funds of the
partnership. As long as the properties were acquired by the parties during the marriage,
they are presumed to be conjugal in nature. In fact, even when the manner in which the
properties were acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the conjugal nature of the
properties acquired during the marriage subsists in the absence of clear, satisfactory and
convincing evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000
shares of stocks in the Citycorp Investment Philippines were issued to and registered in
its corporate books in the name of the petitioner-husband when the said corporation was
incorporated on May 14, 1979. This was done during the subsistence of the marriage of
the petitioner-spouses. The shares of stocks are, thus, presumed to be the conjugal
partnership property of the petitioners. The private respondent failed to adduce evidence
that the petitioner-husband acquired the stocks with his exclusive money.55 The
barefaced fact that the shares of stocks were registered in the corporate books of
Citycorp Investment Philippines solely in the name of the petitioner-husband does not
constitute proof that the petitioner-husband, not the conjugal partnership, owned the
same.56 The private respondents reliance on the rulings of this Court in Maramba v.
Lozano57 and Associated Insurance & Surety Co., Inc. v. Banzon58 is misplaced. In the
Maramba case, we held that where there is no showing as to when the property was
acquired, the fact that the title is in the wifes name alone is determinative of the
ownership of the property. The principle was reiterated in the Associated Insurance case
where the uncontroverted evidence showed that the shares of stocks were acquired
during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v.
Intermediate Appellate Court59 buttresses the case for the petitioners. In that case, we
ruled that he who claims that property acquired by the spouses during their marriage is
not conjugal partnership property but belongs to one of them as his personal property is
burdened to prove the source of the money utilized to purchase the same. In this case,
the private respondent claimed that the petitioner-husband acquired the shares of stocks
from the Citycorp Investment Philippines in his own name as the owner thereof. It was,
thus, the burden of the private respondent to prove that the source of the money utilized
in the acquisition of the shares of stocks was that of the petitioner-husband alone. As
held by the trial court, the private respondent failed to adduce evidence to prove this
assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship
agreement with the private respondent for the payment of the PBMCI loans, the
petitioner-husband was in the exercise of his profession, pursuing a legitimate business.

The appellate court erred in concluding that the conjugal partnership is liable for the said
account of PBMCI under Article 161(1) of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family Code of the
Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit of the conjugal
partnership, and those contracted by the wife, also for the same purpose, in the cases
where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship agreement as
security for the payment of the loan obtained by the PBMCI from the private respondent
in the amount of P38,000,000. In Ayala Investment and Development Corp. v. Court of
Appeals,61 this Court ruled "that the signing as surety is certainly not an exercise of an
industry or profession. It is not embarking in a business. No matter how often an
executive acted on or was persuaded to act as surety for his own employer, this should
not be taken to mean that he thereby embarked in the business of suretyship or
guaranty."
For the conjugal partnership to be liable for a liability that should appertain to the
husband alone, there must be a showing that some advantages accrued to the spouses.
Certainly, to make a conjugal partnership responsible for a liability that should appertain
alone to one of the spouses is to frustrate the objective of the New Civil Code to show
the utmost concern for the solidarity and well being of the family as a unit. The husband,
therefore, is denied the power to assume unnecessary and unwarranted risks to the
financial stability of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal partnership of the
petitioners was benefited by the petitioner-husbands act of executing a continuing
guaranty and suretyship agreement with the private respondent for and in behalf of
PBMCI. The contract of loan was between the private respondent and the PBMCI, solely
for the benefit of the latter. No presumption can be inferred from the fact that when the
petitioner-husband entered into an accommodation agreement or a contract of surety,
the conjugal partnership would thereby be benefited. The private respondent was
burdened to establish that such benefit redounded to the conjugal partnership. 63
It could be argued that the petitioner-husband was a member of the Board of Directors of
PBMCI and was one of its top twenty stockholders, and that the shares of stocks of the
petitioner-husband and his family would appreciate if the PBMCI could be rehabilitated
through the loans obtained; that the petitioner-husbands career would be enhanced
should PBMCI survive because of the infusion of fresh capital. However, these are not the
benefits contemplated by Article 161 of the New Civil Code. The benefits must be those

directly resulting from the loan. They cannot merely be a by-product or a spin-off of the
loan itself.64
This is different from the situation where the husband borrows money or receives
services to be used for his own business or profession. In the Ayala case, we ruled that it
is such a contract that is one within the term "obligation for the benefit of the conjugal
partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he directly received
the money and services to be used in or for his own business or his own profession, that
contract falls within the term " obligations for the benefit of the conjugal partnership."
Here, no actual benefit may be proved. It is enough that the benefit to the family is
apparent at the time of the signing of the contract. From the very nature of the contract
of loan or services, the family stands to benefit from the loan facility or services to be
rendered to the business or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where the husband
contracts obligations on behalf of the family business, the law presumes, and rightly so,
that such obligation will redound to the benefit of the conjugal partnership.65
The Court held in the same case that the rulings of the Court in Cobb-Perez and GTractors, Inc. are not controlling because the husband, in those cases, contracted the
obligation for his own business. In this case, the petitioner-husband acted merely as a
surety for the loan contracted by the PBMCI from the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution
of the Court of Appeals are SET ASIDE AND REVERSED. The assailed orders of the RTC
are AFFIRMED.
SO ORDERED.

DAVAO LIGHT & POWER CO., INC., petitioner,

vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND
TOURIST INN, and TEODORICO ADARNA, respondents.
Breva & Breva Law Offices for petitioner.

Goc-Ong & Associates for private respondents.

NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CAG.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light &
Power Co., Inc.," promulgated on May 4, 1990. 1 That decision nullified and set aside the
writ of preliminary attachment issued by the Regional Trial Court of Davao City 2 in Civil
Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.), before the
service of summons on the defendants (herein respondents Queensland Co., Inc. and
Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate
Tribunal's judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a
verified complaint for recovery of a sum of money and damages against Queensland
Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint
contained an ex parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle,
issued an Order granting the ex parte application and fixing the attachment bond at
P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the
writ of attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of
attachment and a copy of the attachment bond, were served on defendants Queensland
and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the
latter.
5. On September 6, 1989, defendants Queensland and Adarna filed a motion to
discharge the attachment for lack of jurisdiction to issue the same because at the time
the order of attachment was promulgated (May 3, 1989) and the attachment writ issued
(May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over
the persons of the defendants.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.
7. On September 19, 1989, the Trial Court issued an Order denying the motion to
discharge.

This Order of September 19, 1989 was successfully challenged by Queensland and
Adarna in a special civil action of certiorari instituted by them in the Court of Appeals.
The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May 4,
1990. The Appellate Court's decision closed with the following disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a writ of
preliminary attachment, dated September 19, 1989 denying the motion to
discharge attachment; dated November 7, 1989 denying petitioner's motion
for reconsideration; as well as all other orders emanating therefrom, specially
the Writ of Attachment dated May 11, 1989 and Notice of Levy on Preliminary
Attachment dated May 11, 1989, are hereby declared null and void and the
attachment hereby ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary
attachment may be included m the complaint, as is usually done, it is
likewise true that the Court does not acquire jurisdiction over the person of
the defendant until he is duly summoned or voluntarily appears, and adding
the phrase that it be issued "ex parte" does not confer said jurisdiction
before actual summons had been made, nor retroact jurisdiction upon
summons being made. . . .
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court
acquires authority under law to act coercively against the defendant or his
property . . .;" and that "the critical time is the of the vesting of jurisdiction in the
court over the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light
seeks in the present appellate proceedings.
The question is whether or not a writ of preliminary attachment may issue ex parte
against a defendant before acquisition of jurisdiction of the latter's person by service of
summons or his voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the court, but before the
acquisition of jurisdiction over the person of the defendant (either by service of
summons or his voluntary submission to the court's authority), nothing can be validly
done by the plaintiff or the court. It is wrong to assume that the validity of acts done
during this period should be defendant on, or held in suspension until, the actual

obtention of jurisdiction over the defendant's person. The obtention by the court of
jurisdiction over the person of the defendant is one thing; quite another is the acquisition
of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the
action, or the res or object hereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of
the action or proceeding is invoked or called into activity; 5 and it is thus that the court
acquires jurisdiction over said subject matter or nature of the action. 6 And it is by that
self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate
pleading) by which he signifies his submission to the court's power and authority
that jurisdiction is acquired by the court over his person. 7 On the other hand,
jurisdiction over the person of the defendant is obtained, as above stated, by the service
of summons or other coercive process upon him or by his voluntary submission to the
authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well known.
After the complaint is filed, summons issues to the defendant, the summons is then
transmitted to the sheriff, and finally, service of the summons is effected on the
defendant in any of the ways authorized by the Rules of Court. There is thus ordinarily
some appreciable interval of time between the day of the filing of the complaint and the
day of service of summons of the defendant. During this period, different acts may be
done by the plaintiff or by the Court, which are unquestionable validity and propriety.
Among these, for example, are the appointment of a guardian ad litem, 9 the grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the amendment of
the complaint by the plaintiff as a matter of right without leave of court, 11 authorization
by the Court of service of summons by publication, 12 the dismissal of the action by the
plaintiff on mere notice. 13
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." 17 The 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 (counterclaim, 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 prerequisite 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
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18,
1989, 25 this Court had occasion to emphasize the postulate that no hearing is required
on an application for preliminary attachment, with notice to the defendant, for the
reason that this "would defeat the objective of the remedy . . . (since 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." As observed by a former
member of this Court, 26 such a procedure would warn absconding debtors-defendants
of the commencement of the suit against them and the probable seizure of their
properties, and thus give them the advantage of time to hide their assets, leaving the
creditor-plaintiff holding the proverbial empty bag; it would place the creditor-applicant in
danger of losing any security for a favorable judgment and thus give him only an illusory
victory.

Withal, ample modes of recourse against a preliminary attachment are secured by law to
the defendant. The relative ease with which a preliminary attachment may be obtained
is matched and paralleled by the relative facility with which the attachment may
legitimately be prevented or frustrated. These modes of recourse against preliminary
attachments granted by Rule 57 were discussed at some length by the separate opinion
in Mindanao Savings & Loans Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an attachment:
first, by the posting of a counterbond; and second, by a showing of its improper or
irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment
already enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond. At any time
after an order of attachment has been granted, the party whose property has
been attached or the person appearing in his behalf, may, upon reasonable
notice to the applicant, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order discharging the
attachment wholly or in part on the security given . . . in an amount equal to
the value of the property attached as determined by the judge to secure the
payment of any judgment that the attaching creditor may recover in the
action. . . .
1.2. But even before actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not wait until his property is
seized before seeking the discharge of the attachment by a counterbond. This is made
possible by Section 5 of Rule 57.
Sec. 5. Manner of attaching property. The officer executing the order shall
without delay attach, to await judgment and execution in the action, all the
properties of the party against whom the order is issued in the province, not
exempt from execution, or so much thereof as may be sufficient to satisfy
the applicant's demand, unless the former makes a deposit with the clerk or
judge of the court from which the order issued, or gives a counter-bond
executed to the applicant, in an amount sufficient to satisfy such demand
besides costs, or in an amount equal to the value of the property which is
about to be attached, to secure payment to the applicant of any judgment
which he may recover in the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted
or discharged on the ground that it has been irregularly or improperly issued, in

accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an
attachment may be resorted to even before any property has been levied on. Indeed, it
may be availed of after property has been released from a levy on attachment, as is
made clear by said Section 13, viz.:
Sec. 13. Discharge of attachment for improper or irregular issuance. The
party whose property has been attached may also, at any time either
BEFORE or AFTER the release of the attached property, or before any
attachment shall have been actually levied, upon reasonable notice to the
attaching creditor, apply to the judge who granted the order, or to the judge
of the court in which the action is pending, for an order to discharge the
attachment on the ground that the same was improperly or irregularly
issued. If the motion be made on affidavits on the part of the party whose
property has been attached, but not otherwise, the attaching creditor may
oppose the same by counter-affidavits or other evidence in addition to that
on which the attachment was made. . . . (Emphasis supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The
attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment
writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of
discharging the attachment writ maliciously sought out by the attaching creditor instead
of the other way, which, in most instances . . . would require presentation of evidence in
a fullblown trial on the merits, and cannot easily be settled in a pending incident of the
case." 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao
Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of its irregular
or improper issuance:
. . . (W)hen 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." (Sec. 1
[b], Rule 57), or "an action against a party who has been guilty of fraud m
contracting the debt or incurring the obligation upon which the action is
brought" (Sec. 1 [d], Rule 57), 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 plaintiff's application and affidavits on
which the writ was based and consequently that the writ based thereon
had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41)

 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. Therefore, when the writ of attachment
is of this nature, the only way it can be dissolved is by a counterbond (G.B.
Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment
bond:
. . . The dissolution of the preliminary attachment upon security given, or a
showing of its irregular or improper issuance, does not of course operate to
discharge the sureties on plaintiff's own attachment bond. The reason is
simple. That bond is "executed to the adverse party, . . . 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"
(SEC. 4, Rule 57). Hence, until that determination is made, as to the
applicant's entitlement to the attachment, his bond must stand and cannot
be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the
same: they may also issue ex parte.
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.
It was on account of the failure to comply with this fundamental requirement of service
of summons and the other documents above indicated that writs of attachment issued
by the Trial Court ex parte were struck down by this Court's Third Division in two (2)
cases, namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and Sales
Corporation v. Court of Appeals, et al. 32 In contrast to the case at bar where the
summons and a copy of the complaint, as well as the order and writ of attachment and
the attachment bond were served on the defendant in Sievert, levy on attachment
was attempted notwithstanding that only the petition for issuance of the writ of
preliminary attachment was served on the defendant, without any prior or accompanying
summons and copy of the complaint; and in BAC Manufacturing and Sales Corporation,
neither the summons nor the order granting the preliminary attachment or the writ of
attachment itself was served on the defendant "before or at the time the levy was
made."
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.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of Appeals is
hereby REVERSED, and the order and writ of attachment issued by Hon. Milagros C.
Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City in Civil Case No.
19513-89 against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico
Adarna are hereby REINSTATED. Costs against private respondents.
SO ORDERED.
BANK OF THE PHILIPPINE ISLANDS, Petitioner,
vs.
CARLITO LEE, Respondent.
DECISION
PERLAS-BERNABE, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, petitioner
Bank of the Philippine Islands (BPI) seeks to reverse and set aside the February 11, 2009
Decision2 and October 29, 2009 Resolution3 of the Court of Appeals (CA) in CA-G.R. No.
87911 which annulled the March 1, 20043 and September 16, 20044 Orders of the
Regional Trial Court (RTC) of Makati City, Branch 61 and instead, entered a new one
directing the RTC to issue a writ of execution and/or enforce garnishment against the
bank deposit of Trendline Resources & Commodities Exponent, Inc. (Trendline) and
Leonarda Buelva (Buelva) with the defunct Citytrust Banking Corporation (Citytrust), now
merged with BPI.
The Facts
On April 26, 1988, respondent Carlito Lee (Lee) filed a complaint for sum of money with
damages and application for the issuance of a writ of attachment against Trendline and
Buelva (collectively called "defendants") before the RTC, docketed as Civil Case No. 88702, seeking to recover his total investment in the amount of P5.8 million. Lee alleged
that he was enticed to invest his money with Trendline upon Buelvas misrepresentation
that she was its duly licensed investment consultant or commodity saleswoman. His
investments, however, were lost without any explanation from the defendants.
On May 4, 1988, the RTC issued a writ of preliminary attachment whereby the Check-OMatic Savings Accounts of Trendline with Citytrust Banking Corporation, Ayala Branch, in
the total amount of P700,962.10 were garnished. Subsequently, the RTC rendered a
decision on August 8, 1989 finding defendants jointly and severally liable to Lee for the
full amount of his investment plus legal interest, attorneys fees and costs of suit. The
defendants appealed the RTC decision to the CA, docketed as CA-G.R. CV No. 23166.
Meanwhile, on April 13, 1994, Citytrust filed before the RTC an Urgent Motion and
Manifestation5 seeking a ruling on defendants' request to release the amount of
P591,748.99 out of the garnished amount for the purpose of paying Trendlines tax
obligations. Having been denied for lack of jurisdiction, Trendline filed a similar motion 6
with the CA which the latter denied for failure to prove that defendants had no other
assets to answer for its tax obligations.
On October 4, 1996, Citytrust and BPI merged, with the latter as the surviving
corporation. The Articles of Merger provide, among others, that "all liabilities and
obligations of Citytrust shall be transferred to and become the liabilities and obligations
of BPI in the same manner as if the BPI had itself incurred such liabilities or obligations."7
On December 22, 1998, the CA denied the appeal in CA-G.R. CV No. 23166 and affirmed
in toto the decision of the RTC, which had become final and executory on January 24,
1999.
Hence, Lee filed a Motion for Execution8 before the RTC on July 29, 1999, which was
granted. Upon issuance of the corresponding writ, he sought the release of the garnished

deposits of Trendline. When the writ was implemented, however, BPI Manager Samuel
Mendoza, Jr. denied having possession, control and custody of any deposits or properties
belonging to defendants, prompting Lee to seek the production of their records of
accounts with BPI. However, on the manifestation of BPI that it cannot locate the
defendants' bank records with Citytrust, the RTC denied the motion on September 6,
2002.
On December 16, 2002, Lee filed a Motion for Execution and/or Enforcement of
Garnishment9 before the RTC seeking to enforce against BPI the garnishment of
Trendlines deposit in the amount of P700,962.10 and other deposits it may have had
with Citytrust. The RTC denied the motion for dearth of evidence showing that BPI took
over the subject accounts from Citytrust and the fact that BPI was not a party to the
case. Lees motion for reconsideration was likewise denied.10
Lee elevated the matter to the CA on a petition for certiorari. In its February 11, 2009
Decision, the CA annulled the questioned orders, finding grave abuse of discretion on the
part of the RTC in denying Lees motion to enforce the garnishment against Trendlines
attached bank deposits with Citytrust, which have been transferred to BPI by virtue of
their merger. It found BPI liable to deliver to the RTC the garnished bank deposit of
Trendline in the amount of P700,962.10, which Citytrust withheld pursuant to the RTC's
previously-issued writ of attachment.
The CA refused to give credence to BPIs defense that it can no longer locate Trendlines
bank records with the defunct Citytrust, as its existence was supported by evidence and
by the latter's admission. Neither did it consider BPI a stranger to the case, holding it to
have become a party in-interest upon the approval by the Securities and Exchange
Commission (SEC) of the parties Articles of Merger. BPIs Motion for Reconsideration 11
was denied in the CA's October 29, 2009 Resolution.
The Issues
In this petition, BPI ascribes the following errors to the CA:
A.
THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R. SP No.
87911, THE PETITION FOR CERTIORARI UNDER RULE 65 OF THE REVISED RULES OF
COURT, FILED BY RESPONDENT CARLITO LEE BEING AN IMPROPER REMEDY.
B.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI
BECAME PARTY-IN-INTEREST IN THE CASE FILED BY RESPONDENT CARLITO LEE
UPON THE APPROVAL BY THE SECURITIES AND EXCHANGE COMMISSION OF ITS
MERGER WITH CITYTRUST BANKING CORPORATION.

C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE MOTION
FOR EXECUTION AND/OR ENFORCEMENT OF GARNISHMENT IS NOT THE
APPROPRIATE REMEDY IN THE EVENT THERE IS A THIRD PARTY INVOLVED DURING
THE EXECUTION PROCESS OF A FINAL AND EXECUTORY JUDGMENT.
D.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER BPI
SHOULD BE HELD ACCOUNTABLE FOR THE AMOUNT OF PHP700,962.10.12
The Ruling of the Court
Section 1, Rule 41 of the Revised Rules of Court provides:
SECTION 1. Subject of appeal. - x x x
No appeal may be taken from:
xxx
(b) An interlocutory order;
xxx
In any of the foregoing circumstances, the aggrieved party may file an appropriate
special civil action as provided in Rule 65.13
A punctilious examination of the records will reveal that Lee had previously sought the
execution of the final and executory decision of the RTC dated August 8, 1989 which was
granted and had resulted in the issuance of the corresponding writ of execution.
However, having garnished the deposits of Trendline with Citytrust in the amount of P
700,962.10 by virtue of a writ of preliminary attachment, Lee filed anew a Motion for
Execution and/or Enforcement of Garnishment before the RTC on December 16, 2002.
While the RTC denied the motion in its March 1, 2004 Order, the denial was clearly with
respect only to the enforcement of the garnishment, to wit:
Acting on the Motion for Execution and/or Enforcement of Garnishment filed by plaintiff
Carlito Lee, and there being no evidence shown that the accounts subject of the motion
were taken over by the Bank of the Philippine Islands from Citytrust Bank and
considering further that Bank of Philippine Islands is not a party to this case, the instant
Motion is DENIED for lack of merit.
SO ORDERED.14

Consequently, the foregoing Order merely involved the implementation of a writ of

execution, hence, interlocutory in nature. An interlocutory order is one that does not
finally dispose of the case, and does not end the court's task of adjudicating the parties
contentions and determining their rights and liabilities as regards each other, but
obviously indicates that other things remain to be done.15
Conformably with the provisions of Section 1, Rule 41 of the Revised Rules of Court
above-quoted, the remedy from such interlocutory order is certiorari under Rule 65.
Thus, contrary to the contention of BPI, the CA did not err in assuming jurisdiction over
the petition for certiorari.
BPI likewise insists that the CA erred in considering it a party to the case by virtue of its
merger with Citytrust, the garnishee of defendants' deposits.
The Court is not convinced.
Section 5, Rule 65 of the Revised Rules of Court requires that persons interested in
sustaining the proceedings in court must be impleaded as private respondents. Upon the
merger of Citytrust and BPI, with the latter as the surviving corporation, and with all the
liabilities and obligations of Citytrust transferred to BPI as if it had incurred the same, BPI
undoubtedly became a party interested in sustaining the proceedings, as it stands to be
prejudiced by the outcome of the case.
It is a settled rule that upon service of the writ of garnishment, the garnishee becomes a
"virtual party" or "forced intervenor" to the case and the trial court thereby acquires
jurisdiction to bind the garnishee to comply with its orders and processes. In Perla
Compania de Seguros, Inc. v. Ramolete,16 the Court ruled:
In order that the trial court may validly acquire jurisdiction to bind the person of the
garnishee, it is not necessary that summons be served upon him. The garnishee need
not be impleaded as a party to the case. All that is necessary for the trial court lawfully
to bind the person of the garnishee or any person who has in his possession credits
belonging to the judgment debtor is service upon him of the writ of garnishment.
The Rules of Court themselves do not require that the garnishee be served with
summons or impleaded in the case in order to make him liable.
xxxx
Through the service of the writ of garnishment, the garnishee becomes a "virtual party"
to, or a "forced intervenor" in, the case and the trial court thereby acquires jurisdiction to
bind him to compliance with all orders and processes of the trial court with a view to the
complete satisfaction of the judgment of the court.17
Citytrust, therefore, upon service of the notice of garnishment and its acknowledgment
that it was in possession of defendants' deposit accounts in its letter-reply dated June 28,

1988, became a "virtual party" to or a "forced intervenor" in the civil case. As such, it
became bound by the orders and processes issued by the trial court despite not having
been properly impleaded therein. Consequently, by virtue of its merger with BPI on
October 4, 1996, BPI, as the surviving corporation, effectively became the garnishee,
thus the "virtual party" to the civil case.
Corollarily, it should be emphasized that a merger of two corporations produces, among
others, the following effects:
1. The constituent corporations shall become a single corporation which, in case of
merger, shall be the surviving corporation designated in the plan of merger; and in case
of consolidation, shall be the consolidated corporation designated in the plan of
consolidation;
2. The separate existence of the constituent corporation shall cease, except that of the
surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of a
corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all receivables due on whatever
account, including subscriptions to shares and other choses in action, and all and every
other interest of, or belonging to, or due to each constituent corporation, shall be
deemed transferred to and vested in such surviving or consolidated corporation without
further act or deed; and
5. The surviving or consolidated corporation shall be responsible and liable for all the
liabilities and obligations of each of the constituent corporations in the same manner as
if such surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any pending claim, action or proceeding brought by or against any of
such constituent corporations may be prosecuted by or against the surviving or
consolidated corporation. The rights of creditors or liens upon the property of any of such
constituent corporations shall not be impaired by such merger or consolidation.18
(Underscoring supplied)
In sum, although Citytrust was dissolved, no winding up of its affairs or liquidation of its
assets, privileges, powers and liabilities took place. As the surviving corporation, BPI
simply continued the combined businesses of the two banks and absorbed all the rights,
privileges, assets, liabilities and obligations of Citytrust, including the latters obligation
over the garnished deposits of the defendants.

Adopting another tack, BPI claims that Lee should have instead availed himself of the
remedy provided under Section 43, Rule 39 of the Revised Rules of Court because he is a
third party to the case who denies possession of the property.
The argument is specious.
Section 43, Rule 39 of the Revised Rules of Court states:
SECTION 43. Proceedings when indebtedness denied or another person claims the
property. If it appears that a person or corporation, alleged to have property of
the judgment obligor or to be indebted to him, claims an interest in the property
adverse to him or denies the debt, the court may authorize, by an order made to
that effect, the judgment oblige to institute an action against such person or
corporation for the recovery of such interest or debt, forbid a transfer or other
disposition of such interest or debt within one hundred twenty (120) days from
notice of the order, and may punish disobedience of such order as for contempt.
Such order may be modified or vacated at any time by the court which issued it, or
by the court in which the action is brought, upon such terms as may be just.
(Underscoring supplied).
The institution of a separate action against a garnishee contemplates a situation where
the garnishee (third person) "claims an interest in the property adverse to him (judgment
debtor) or denies the debt."19 Neither of these situations exists in this case. The
garnishee does not claim any interest in the deposit accounts of the defendants, nor
does it deny the existence of the deposit accounts. In fact, Citytrust admitted in its letter
dated June 28, 1988 that it is in possession of the deposit accounts.
Considering the foregoing disquisitions, BPI's liability for the garnished deposits of
defendants has been clearly established.
Garnishment has been defined as a specie of attachment for reaching credits belonging
to the judgment debtor and owing to him from a stranger to the litigation.20 A writ of
attachment is substantially a writ of execution except that it emanates at the beginning,
instead of at the termination, of a suit. It places the attached properties in custodia legis,
obtaining pendente lite a lien until the judgment of the proper tribunal on the plaintiffs
claim is established, when the lien becomes effective as of the date of the levy.21
By virtue of the writ of garnishment, the deposits of the defendants with Citytrust were
placed in custodia legis of the court. From that time onwards, their deposits were under
the sole control of the RTC and Citytrust holds them subject to its orders until such time
that the attachment or garnishment is discharged, or the judgment in favor of Lee is
satisfied or the credit or deposit is delivered to the proper officer of the court. 22 Thus,
Citytrust, and thereafter BPI, which automatically assumed the formers liabilities and
obligations upon the approval of their Articles of Merger, is obliged to keep the deposit
intact and to deliver the same to the proper officer upon order of the court.

However, the RTC is not permitted to dissolve or discharge a preliminary attachment or

garnishment except on grounds specifically provided23 in the Revised Rules of Court,
namely,24 (a) the debtor has posted a counter-bond or has made the requisite cash
deposit;25 (b) the attachment was improperly or irregularly issued26 as where there is no
ground for attachment, or the affidavit and/or bond filed therefor are defective or
insufficient; (c) the attachment is excessive, but the discharge shall be limited to the
excess;27 (d) the property attachment is exempt from preliminary attachment;28 or (e) the
judgment is rendered against the attaching creditor.29
Evidently, the loss of bank records of a garnished deposit is not a ground for the
dissolution of garnishment. Consequently, the obligation to satisfy the writ stands.
Moreover, BPI cannot avoid the obligation attached to the writ of garnishment by
claiming that the fund was not transferred to it, in light of the Articles of Merger which
provides that "all liabilities and obligations of Citytrust shall be transferred to and
become the liabilities and obligations of BPI in the same manner as if the BPI had itself
incurred such liabilities or obligations, and in order that the rights and interest of
creditors of Citytrust or liens upon the property of Citytrust shall not be impaired by
merger."30
Indubitably, BPI IS liable to deliver the fund subject of the writ of garnishment.
With regard to the amount of the garnished fund, the Court concurs with the finding of
the CA that the total amount of garnished deposit of Trendline as of January 27, 1994 is
P700,962.10,31 extant in its motion for partial lifting of the writ of preliminary
attachment32 and which amount, as correctly observed by the CA, remains undisputed33
throughout the proceedings relative to this case.
WHEREFORE, the instant petition is DENIED and the assailed February 11, 2009
Decision and October 29, 2009 Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.