G.R. No.

185734               July 3, 2013

ALFREDO C. LIM, JR., PETITIONER,

vs.
SPOUSES TITO S. LAZARO AND CARMEN T. LAZARO, RESPONDENTS.

RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the July 10, 2008 Decision2 and December
18, 2008 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 100270, affirming the
March 29, 2007 Order4 of the Regional Trial Court of Quezon City, Branch 223 (RTC), which
lifted the writ of preliminary attachment issued in favor of petitioner Alfredo C. Lim, Jr. (Lim, Jr.).

The Facts

On August 22, 2005, Lim, Jr. filed a complaint5 for sum of money with prayer for the issuance of
a writ of preliminary attachment before the RTC, seeking to recover from respondents-spouses
Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the sum of ₱2,160,000.00, which
represented the amounts stated in several dishonored checks issued by the latter to the former,
as well as interests, attorney’s fees, and costs. The RTC granted the writ of preliminary
attachment application6 and upon the posting of the required ₱2,160,000.00 bond,7 issued the
corresponding writ on October 14, 2005.8 In this accord, three (3) parcels of land situated in
Bulacan, covered by Transfer Certificates of Title (TCT) Nos. T-64940, T-64939, and T-86369
(subject TCTs), registered in the names of Sps. Lazaro, were levied upon.9

In their Answer with Counterclaim,10 Sps. Lazaro averred, among others, that Lim, Jr. had no
cause of action against them since: (a) Colim Merchandise (Colim), and not Lim, Jr., was the
payee of the fifteen (15) Metrobank checks; and (b) the PNB and Real Bank checks were not
drawn by them, but by Virgilio Arcinas and Elizabeth Ramos, respectively. While they admit their
indebtedness to Colim, Sps. Lazaro alleged that the same had already been substantially
reduced on account of previous payments which were apparently misapplied. In this regard,
they sought for an accounting and reconciliation of records to determine the actual amount due.
They likewise argued that no fraud should be imputed against them as the aforesaid checks
issued to Colim were merely intended as a form of collateral.11 Hinged on the same grounds,
Sps. Lazaro equally opposed the issuance of a writ of preliminary attachment.12

Nonetheless, on September 22, 2006, the parties entered into a Compromise

Agreement13 whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of ₱2,351,064.80 on an
installment basis, following a schedule of payments covering the period from September 2006
until October 2013, under the following terms, among others: (a) that should the financial
condition of Sps. Lazaro improve, the monthly installments shall be increased in order to hasten
the full payment of the entire obligation;14 and (b) that Sps. Lazaro’s failure to pay any
installment due or the dishonor of any of the postdated checks delivered in payment thereof
shall make the whole obligation immediately due and demandable.

The aforesaid compromise agreement was approved by the RTC in its October 31, 2006
Decision15 and January 5, 2007 Amended Decision.16
Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking to lift the writ of preliminary
attachment annotated on the subject TCTs, which the RTC granted on March 29, 2007.18 It
ruled that a writ of preliminary attachment is a mere provisional or ancillary remedy, resorted to
by a litigant to protect and preserve certain rights and interests pending final judgment.
Considering that the case had already been considered closed and terminated by the rendition
of the January 5, 2007 Amended Decision on the basis of the September 22, 2006 compromise
agreement, the writ of preliminary attachment should be lifted and quashed. Consequently, it
ordered the Registry of Deeds of Bulacan to cancel the writ’s annotation on the subject TCTs.

Lim, Jr. filed a motion for reconsideration19 which was, however, denied on July 26,
2007,20 prompting him to file a petition for certiorari21 before the CA.

The CA Ruling

On July 10, 2008, the CA rendered the assailed decision,22 finding no grave abuse of discretion
on the RTC’s part. It observed that a writ of preliminary attachment may only be issued at the
commencement of the action or at any time before entry of judgment. Thus, since the principal
cause of action had already been declared closed and terminated by the RTC, the provisional or
ancillary remedy of preliminary attachment would have no leg to stand on, necessitating its
discharge.23

Aggrieved, Lim, Jr. moved for reconsideration24 which was likewise denied by the CA in its
December 18, 2008 Resolution.25

Hence, the instant petition.

The Issue Before the Court

The sole issue in this case is whether or not the writ of preliminary attachment was properly
lifted.

The Court’s Ruling

The petition is meritorious.

By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule 57), is an
ancillary remedy applied for not for its own sake but to enable the attaching party to realize upon
the relief sought and expected to be granted in the main or principal action; it is a measure
auxiliary or incidental to the main action. As such, it is available during its pendency which may
be resorted to by a litigant to preserve and protect certain rights and interests during the interim,
awaiting the ultimate effects of a final judgment in the case.26 In addition, attachment is also
availed of in order to acquire jurisdiction over the action by actual or constructive seizure of the
property in those instances where personal or substituted service of summons on the defendant
cannot be effected.27

In this relation, while the provisions of Rule 57 are silent on the length of time within which an
attachment lien shall continue to subsist after the rendition of a final judgment, jurisprudence
dictates that the said lien continues until the debt is paid, or the sale is had under execution
issued on the judgment or until the judgment is satisfied, or the attachment discharged or
vacated in the same manner provided by law.28
Applying these principles, the Court finds that the discharge of the writ of preliminary attachment
against the properties of Sps. Lazaro was improper.

Records indicate that while the parties have entered into a compromise agreement which had
already been approved by the RTC in its January 5, 2007 Amended Decision, the obligations
thereunder have yet to be fully complied with – particularly, the payment of the total compromise
amount of ₱2,351,064.80. Hence, given that the foregoing debt remains unpaid, the attachment
of Sps. Lazaro’s properties should have continued to subsist.

In Chemphil Export & Import Corporation v. CA,29 the Court pronounced that a writ of
attachment is not extinguished by the execution of a compromise agreement between the
parties, viz:

Did the compromise agreement between Antonio Garcia and the consortium discharge the
latter’s attachment lien over the disputed shares?

CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the dismissal of
the case, dies a natural death. Thus, when the consortium entered into a compromise
agreement, which resulted in the termination of their case, the disputed shares were released
from garnishment.

We disagree. To subscribe to CEIC’s contentions would be to totally disregard the concept and
purpose of a preliminary attachment.

xxxx

The case at bench admits of peculiar character in the sense that it involves a compromise
agreement. Nonetheless, x x x. The parties to the compromise agreement should not be
deprived of the protection provided by an attachment lien especially in an instance where one
reneges on his obligations under the agreement, as in the case at bench, where Antonio Garcia
failed to hold up his own end of the deal, so to speak.

xxxx

If we were to rule otherwise, we would in effect create a back door by which a debtor can easily
escape his creditors. Consequently, we would be faced with an anomalous situation where a
debtor, in order to buy time to dispose of his properties, would enter into a compromise
agreement he has no intention of honoring in the first place. The purpose of the provisional
remedy of attachment would thus be lost. It would become, in analogy, a declawed and
toothless tiger. (Emphasis and underscoring supplied; citations omitted)

In fine, the Court holds that the writ of preliminary attachment subject of this case should be
restored and its annotation revived in the subject TCTs, re-vesting unto Lim, Jr. his preferential
lien over the properties covered by the same as it were before the cancellation of the said writ.
Lest it be misunderstood, the lien or security obtained by an attachment even before judgment,
is in the nature of a vested interest which affords specific security for the satisfaction of the debt
put in suit.30 Verily, the lifting of the attachment lien would be tantamount to an abdication of
Lim, Jr.’s rights over Sps. Lazaro’s properties which the Court, absent any justifiable ground
therefor, cannot allow.
WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision and the December 18,
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 100270 are REVERSED and SET
ASIDE, and the March 29, 2007 Order of the Regional Trial Court of Quezon City, Branch 223 is
NULLIFIED. Accordingly, the trial court is directed to RESTORE the attachment lien over
Transfer Certificates of Title Nos. T-64940, T-64939, and T-86369, in favor of petitioner Alfredo
C. Lim, Jr.

SO ORDERED.

___________

G.R. No. 190028, February 26, 2014

LETICIA P. LIGON, Petitioner, v. THE REGIONAL TRIAL COURT, BRANCH 56

AT MAKATI CITY AND ITS PRESIDING JUDGE, JUDGE REYNALDO M. LAIGO,
SHERIFF IV LUCITO V. ALEJO, ATTY. SILVERIO GARING, MR. LEONARDO J.
TING, AND MR. BENITO G. TECHICO, Respondents.

DECISION

PERLAS–BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated October 30,
2009 of the Court of Appeals (CA) in CA–G.R. SP No. 106175, finding no grave
abuse of discretion on the part of the Regional Trial Court of Makati City, Branch 56
(Makati City RTC) in issuing the following orders (Assailed Orders) in Civil Case No.
03–186:

(a) the Order3 dated February 9, 2007 which directed the Register of Deeds of
Muntinlupa City, respondent Atty. Silverio Garing (Atty. Garing), to (1) register the
Officer’s Final Deed of Sale issued by respondent Sheriff Lucito V. Alejo (Sheriff
Alejo) on October 27, 2006 in favor of the highest bidder, respondent Leonardo J.
Ting (Ting), (2) cancel Transfer Certificate of Title (TCT) No. 8502/T44 in the name
of Spouses Rosario and Saturnino Baladjay (Sps. Baladjay), and (3) issue a new
certificate of title in favor of Ting, free from any liens and encumbrances;

(b) the Order4 dated March 20, 2007 which directed Atty. Garing to comply with the
February 9, 2007 Order under pain of contempt of court; and

(c) the Order5 dated April 25, 2007 which reiterated the directive to Atty. Garing to
issue a new title in favor of Ting after the latter’s payment of capital gains,
documentary and transfer taxes, as required.

The Facts

On November 20, 2002, petitioner Leticia P. Ligon (Ligon) filed an amended

complaint6 before the Regional Trial Court of Quezon City, Branch 101 (Quezon City
RTC) for collection of sum of money and damages, rescission of contract, and
nullification of title with prayer for the issuance of a writ of preliminary attachment,
docketed as Civil Case No. Q–10–48145 (Quezon City Case), against Sps.
Baladjay, a certain Olivia Marasigan (Marasigan), Polished Arrow Holdings, Inc.
(Polished Arrow), and its incorporators,7 namely, Spouses Julius Gonzalo and
Charaine Doreece Anne Fuentebella (Sps. Fuentebella), Ma. Linda Mendoza
(Mendoza), Barbara C. Clavo (Clavo), Bayani E. Arit, Jr. (Arit, Jr.), and Peter M.
Kairuz (Kairuz), as well as the latter’s spouses (individual defendants).

In her complaint, Ligon alleged, inter alia, that Rosario Baladjay (Rosario) enticed
her to extend a short–term loan in the amount of P3,000,000.00, payable in a
month’s time and secured by an Allied Bank post–dated check for the same
amount.8 Ligon likewise claimed that Rosario, as further enticement for the loan
extension, represented that she and her husband Saturnino were in the process of
selling their property in Ayala Alabang Village, Muntinlupa City (subject property),
covered by a clean title,  i.e., TCT No. 8502[9 in the name of Rosario Baladjay,
married to Saturnino Baladjay, and that the proceeds of the said sale could
easily pay–off the loan.10 Unfortunately, the Allied Bank check was dishonored upon
presentment and, despite assurances to replace it with cash, Rosario failed to do
so. Moreover, Ligon discovered that the subject property had already been
transferred to Polished Arrow, alleged to be a dummy corporation of Sps. Baladjay
and the individual defendants (defendants). As a result, TCT No. 8502 was
cancelled and replaced on October 11, 2002 by TCT No. 9273[11 in the name
of Polished Arrow. Thus, Ligon prayed that all defendants be held solidarily liable
to pay her the amount of P3,000,000.00, with interest due, as well as
P1,000,000.00 as attorney’s fees and another P1,000,000.00 by way of moral and
exemplary damages. Asserting that the transfer of the subject property to Polished
Arrow was made in fraud of Sps. Baladjay’s creditors, Ligon also prayed that the
said transfer be nullified, and that a writ of preliminary attachment be issued in the
interim against defendants’ assets, including the subject property. Subsequently,
an Amended Writ of Preliminary Attachment12 was issued on November 26,
2002, and annotated on the dorsal portion13 of TCT No. 9273 on December
3, 2002 (December 3, 2002 attachment annotation).

On February 18, 2003, a similar complaint for collection of sum of money,

damages, and cancellation of title with prayer for issuance of a writ of preliminary
attachment was lodged before the Makati City RTC, docketed as Civil Case No.
03–186 (Makati City Case), by Spouses Cecilia and Gil Vicente (Sps. Vicente)
against Sps. Baladjay, Polished Arrow, and other corporations.14 In that case, it was
established that Sps. Baladjay solicited millions of pesos in investments from Sps.
Vicente using conduit companies that were controlled by Rosario, as President and
Chairperson. During the proceedings therein, a writ of preliminary
attachment also against the subject property was issued and annotated on
the dorsal portion of TCT No. 9273 on March 12, 2003. Thereafter, but before
the Quezon City Case was concluded, the Makati City RTC rendered a
Decision15 dated December 9, 2004 (December 9, 2004 Decision), rescinding the
transfer of the subject property from Sps. Baladjay to Polished Arrow upon a finding
that the same was made in fraud of creditors.16 Consequently, the Makati City RTC
directed the Register of Deeds of Muntinlupa City to: (a) cancel TCT No. 9273 in the
name of Polished Arrow; and (b) restore TCT No. 8502 “in its previous condition” in
the name of Rosario Baladjay, married to Saturnino Baladjay.

Meanwhile, in the pending Quezon City Case, Polished Arrow and the individual
defendants (with the exception of Marasigan) were successively dropped17 as party–
defendants, after it was established that they, by themselves directly or through
other persons, had no more ownership, interest, title, or claim over the subject
property. The parties stipulated on the existence of the December 9, 2004 Decision
of the Makati City RTC, and the fact that the same was no longer questioned by
defendants Sps. Fuentebella, Arit, Jr., and Polished Arrow were made conditions for
their dropping as party–defendants in the case.18 In view of the foregoing, the
Quezon City Case proceeded only against Sps. Baladjay and Marasigan and, after
due proceedings, the Quezon City RTC rendered a Decision19 dated March 26, 2008
(March 26, 2008 Decision), directing Sps. Baladjay to pay Ligon the amount of
P3,000,000.00 with interest, as well as attorney’s fees and costs of suit.

On September 25, 2008, the March 26, 2008 Decision of the Quezon City RTC
became final and executory.20 However, when Ligon sought its execution, she
discovered that the December 3, 2002 attachment annotation had been deleted
from TCT No. 9273 when the subject property was sold by way of public auction on
September 9, 2005 to the highest bidder, respondent Ting, for the amount of
P9,000,000.00 during the execution proceedings in the Makati City Case, as
evidenced by the Officer’s Final Deed of Sale21 dated October 27, 2006 (Officer’s
Final Deed of Sale) issued by Sheriff Alejo. In this regard, Ligon learned that the
Makati City RTC had issued its first assailed Order22dated February 9, 2007 (First
Assailed Order), directing Atty. Garing, as the Register of Deeds of Muntinlupa City,
to: (a) register the Officer’s Final Deed of Sale on the official Record Book of the
Register of Deeds of Muntinlupa City; and (b) cancel TCT No. 8502 in the name of
Sps. Baladjay and issue a new title in the name of Ting, free from any liens
and encumbrances.

Atty. Garing manifested23 before the Makati City RTC that it submitted the
matter en consulta24 to the Land Registration Authority (LRA) as he was uncertain
whether the annotations on TCT No. 9273 should be carried over to TCT No. 8502.
In response to the manifestation, the Makati City RTC issued its second
assailed Order25 dated March 20, 2007 (Second Assailed Order), directing Atty.
Garing to comply with the First Assailed Order under pain of contempt. It explained
that it could not allow the LRA to carry over all annotations previously annotated on
TCT No. 9273 in the name of Polished Arrow as said course of action would run
counter to its December 9, 2004 Decision which specifically ordered the cancellation
of said TCT and the restoration of TCT No. 8502 in its previous condition. It further
clarified that:26

[I]f there were liens or encumbrances annotated on TCT No. 8502 in the name of
Rosario Baladjay when the same was cancelled and TCT No. 9273 was issued by the
Register of Deeds of Muntinlupa City in favor of Polished Arrow Holdings, Inc. based
on the Deed of Absolute Sale executed between the former and the latter, only
such liens or encumbrances will have to be carried over to the new
Transfer Certificate of Title that he (Atty. Garing) is mandated to
immediately issue in favor of Leonardo J. Ting even as the Order of the
Court dated February 9, 2007 decreed that a new TCT be issued in the
name of Mr. Leonardo J. Ting, free from any encumbrance. On the other
hand, if TCT No. 8502 in the name of Rosario Baladjay was free from any liens or
encumbrances when the same was cancelled and TCT No. 9273 was issued by the
Register of Deeds of Muntinlupa City in favor of Polished Arrow Holdings, Inc. by
virtue of that Deed of Absolute Sale executed between Rosario Baladjay and
Polished Arrow Holdings, Inc., it necessarily follows that the new Transfer of
Certificate of Title that the said Registrar of Deeds is duty bound to issue
immediately in favor of Leonardo Ting will also be freed from any liens and
encumbrances, as simple as that. (Emphases and underscoring supplied)

Based on the foregoing, it pronounced that it was Atty. Garing’s ministerial duty “to
promptly cancel TCT No. 8502/T–44 in the name of defendant–spouses Baladjay
and to issue a new Transfer Certificate of Title in the name of the highest bidder,
Leonardo J. Ting.”27

Separately, Ting filed a motion before the Makati City RTC on account of Atty.
Garing’s letter28 dated March 26, 2006 requiring him to comply with certain
documentary requirements and to pay the appropriate capital gains, documentary
stamp and transfer taxes before a new title could be issued in his name. In its third
assailed Order29 dated April 25, 2007 (Third Assailed Order), the Makati City RTC
directed Ting to pay the aforesaid taxes and ordered Atty. Garing to immediately
cancel TCT No. 8502 and issue a new title in the former’s name.

On June 7, 2007, Atty. Garing issued TCT No. 19756[30 in the name of Ting, free
from any liens and encumbrances. Later, Ting sold31 the subject property to
respondent Benito G. Techico (Techico), resulting in the cancellation of TCT No.
19756 and the issuance of TCT No. 31001[32 in Techico’s name.

In view of the preceding circumstances, Ligon filed, inter alia,

a certiorari petition33 against respondent Presiding Judge Reynaldo Laigo (Judge
Laigo), Sheriff Alejo, Atty. Garing, Ting, and Techico (respondents), alleging,
among others, that the Makati City RTC committed grave abuse of discretion in
issuing the Assailed Orders. In this relation, she prayed that the said orders be
declared null and void for having been issued in violation of her right to due
process, and resulting in (a) the deletion of the December 3, 2002 attachment
annotation on TCT No. 9273 which evidences her prior attachment lien over the
subject property, and (b) the issuance of new titles in the names of Ting and
Techico.

Consolidated with Ligon’s  certiorari petition is a complaint for indirect

contempt34 against respondents, whereby it was alleged that the latter unlawfully
interfered with the court processes of the Quezon City RTC, particularly by deleting
the December 3, 2002 attachment annotation on TCT No. 9273 which thereby
prevented the execution of the Quezon City RTC’s March 26, 2008 Decision.
 The CA Ruling

In a Decision35 dated October 30, 2009, the CA dismissed Ligon’s certiorari  petition,

finding that the Makati City RTC did not gravely abuse its discretion in issuing the
Assailed Orders, adding further that the same was tantamount to a collateral attack
against the titles of both Ting and Techico, which is prohibited under Section 4836 of
Presidential Decree No. (PD) 1529.37 Likewise, it dismissed the indirect contempt
charge for lack of sufficient basis, emphasizing that the Assailed Orders were issued
prior to the Quezon City RTC’s Decision, meaning that the said issuances could not
have been issued in disregard of the latter decision.

Aggrieved, Ligon filed the present petition.

The Issues Before the Court

The Court resolves the following essential issues: (a) whether or not the CA erred in
ruling that the Makati City RTC did not gravely abuse its discretion in issuing the
Assailed Orders; and (b) whether or not Judge Laigo should be cited in contempt
and penalized administratively.

The Court’s Ruling

The petition is partly meritorious.

A. Issuance of the Assailed Orders vis–à–vis Grave Abuse of Discretion.

Attachment is defined as a provisional remedy by which the property of an adverse

party is taken into legal custody, either at the commencement of an action or at
any time thereafter, as a security for the satisfaction of any judgment that may be
recovered by the plaintiff or any proper party.38 Case law instructs that an
attachment is a proceeding  in rem, and, hence, is against the particular property,
enforceable against the whole world. Accordingly, the attaching creditor acquires a
specific lien on the attached property which nothing can subsequently destroy
except the very dissolution of the attachment or levy itself. Such a proceeding, in
effect, means that the property attached is an indebted thing and a virtual
condemnation of it to pay the owner’s debt. The lien continues until the debt is
paid, or sale is had under execution issued on the judgment, or until the judgment
is satisfied, or the attachment discharged or vacated in some manner provided by
law.39 Thus, a prior registration40 of an attachment lien creates a preference,41 such
that when an attachment has been duly levied upon a property, a purchaser thereof
subsequent to the attachment takes the property subject to the said
attachment.42 As provided under PD 1529, said registration operates as a form of
constructive notice to all persons.43

Applying these principles to this case, the Court finds that the CA erred in holding
that the RTC did not gravely abuse its discretion in issuing the Assailed Orders as
these issuances essentially disregarded,  inter alia, Ligon’s prior attachment lien
over the subject property patently anathema to the nature of attachment
proceedings which is well–established in law and jurisprudence.44 In this case,
Ligon, in order to secure the satisfaction of a favorable judgment in the Quezon City
Case, applied for and was eventually able to secure a writ of preliminary
attachment45 over the subject property on November 25, 2002, which was later
annotated on the dorsal portion46 of TCT No. 9273 in the name of Polished Arrow on
December 3, 2002. Notwithstanding the subsequent cancellation of TCT No. 9273
due to the Makati City RTC’s December 9, 2004 Decision rescinding the transfer of
the subject property from Sps. Baladjay to Polished Arrow upon a finding that the
same was made in fraud of creditors, Ligon’s attachment lien over the subject
property continued to subsist since the attachment she had earlier secured binds
the property itself, and, hence, continues until the judgment debt of Sps. Baladjay
to Ligon as adjudged in the Quezon City Case is satisfied, or the attachment
discharged or vacated in some manner provided by law. The grave abuse of
discretion of the Makati City RTC lies with its directive to issue a new certificate of
title in the name of Ting (i.e., TCT No. 19756),47 free from any liens and
encumbrances. This course of action clearly negates the efficacy of Ligon’s
attachment lien and, also, defies the legal characterization of attachment
proceedings. It bears noting that Ligon’s claim, secured by the aforesaid
attachment, is against Sps. Baladjay whose ownership over the subject property
had been effectively restored in view of the RTC’s rescission of the property’s
previous sale to Polished Arrow.48 Thus, Sps. Ligon’s attachment lien against Sps.
Baladjay as well as their successors–in–interest should have been preserved, and
the annotation thereof carried over to any subsequent certificate of title,49 the most
recent of which as it appears on record is TCT No. 31001 in the name of Techico,
without prejudice to the latter’s right to protect his own ownership interest over the
subject property.

That said, the Court now proceeds to resolve the second and final issue on indirect
contempt.

B. Indirect Contempt Charges.

While the Court agrees with Ligon’s position on the issue of grave abuse of
discretion, it holds an opposite view anent its complaint for indirect contempt
against Judge Laigo and/or the respondents in this case.

Contempt of court has been defined as a willful disregard or disobedience of a

public authority. In its broad sense, contempt is a disregard of, or disobedience
to, the rules or orders of a legislative or judicial body or an interruption of its
proceedings by disorderly behavior or insolent language in its presence or so near
thereto as to disturb its proceedings or to impair the respect due to such a body. In
its restricted and more usual sense, contempt comprehends a despising of the
authority, justice, or dignity of a court.50

Contempt of court is of two (2) kinds, namely: direct and indirect

contempt. Indirect contempt or constructive contempt is that which is committed
out of the presence of the court. Any improper conduct tending, directly or
indirectly, to impede, obstruct, or degrade the administration of justice would
constitute indirect contempt.51

The indirect contempt charges in this case involve an invocation of paragraphs b, c,

and d, Section 3, Rule 71 of the Rules of Court which read as follows:

Section 3. Indirect contempt to be punished after charge and hearing. — After a

charge in writing has been filed, and an opportunity given to the respondent to
comment thereon within such period as may be fixed by the court and to be heard
by himself or counsel, a person guilty of any of the following acts may be punished
for indirect contempt:

xxxx

(b) Disobedience of or resistance to a lawful writ, x x x;

(c) Any abuse of or any unlawful interference with the processes or proceedings of
a court not constituting direct contempt under section 1 of this Rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or

degrade the administration of justice;

Examining the petition, the Court finds that Ligon failed to sufficiently show how the
acts of each of the respondents, or more specifically, Judge Laigo, constituted any
of the acts punishable under the foregoing section tending towards a wilful
disregard or disobedience of a public authority. In issuing the Assailed Orders,
Judge Laigo merely performed his judicial functions pursuant to the December 9,
2004 Decision in the Makati City Case which had already attained finality. Thus,
without Ligon’s proper substantiation, considering too that Judge Laigo’s official acts
are accorded with the presumption of regularity,52 the Court is constrained to
dismiss the indirect contempt charges in this case.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 30,

2009 of the Court of Appeals in CA–G.R. SP No. 106175 is REVERSED and SET
ASIDE. Accordingly, the Assailed Orders subject of this case are hereby
declared NULL and VOID only insofar as they relate to the issuance of Transfer
Certificate of Title No. 19756 in the name of respondent Leonardo J. Ting free from
any liens and encumbrances. The Register of Deeds of Muntinlupa City
is DIRECTED to carry over and annotate on TCT No. 31001 in the name of
respondent Benito G. Techico the original attachment lien of petitioner Leticia P.
Ligon as described in this Decision. The indirect contempt charges are,
however, DISMISSED.

SO ORDERED

______________
 G.R. No. 125027 - August 12, 2002

ANITA MANGILA, Petitioner, vs. COURT OF APPEALS and LORETA

GUINA, Respondents.

CARPIO, J.:

The Case

This is a petition fore review on certiorari under Rule 45 of the Rules of Court,
seeking to set aside the Decision1 of the Court of Appeals affirming the Decision2 of
the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of
attachment and the declaration of default on petitioner while ordering her to pay
private respondent P109,376.95 plus 18 percent interest per annum, 25 percent
attorney's fees and costs of suit.

The Facts

Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and
doing business under the name and style of Seafoods Products. Private respondent
Loreta Guina ("private respondent" for brevity) is the President and General
Manager of Air Swift International, a single registered proprietorship engaged in the
freight forwarding business.

Sometime in January 1988, petitioner contracted the freight forwarding services of

private respondent for shipment of petitioner's products, such as crabs, prawns and
assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner
agreed to pay private respondent cash on delivery. Private respondent's invoice
stipulates a charge of 18 percent interest per annum on all overdue accounts. In
case of suit, the same invoice stipulates attorney's fees equivalent to 25 percent of
the amount due plus costs of suit.3

On the first shipment, petitioner requested for seven days within which to pay
private respondent. However, for the next three shipments, March 17, 24 and 31,
1988, petitioner failed to pay private respondent shipping charges amounting to
P109, 376.95.4

Despite several demands, petitioner never paid private respondent. Thus, on June
10, 1988, private respondent filed Civil Case No. 5875 before the Regional Trial
Court of Pasay City for collection of sum of money.

On August 1, 1988, the sheriff filed his Sheriff's Return showing that summons was
not served on petitioner. A woman found at petitioner's house informed the sheriff
that petitioner transferred her residence to Sto. Niño, Guagua, Pampanga. The
sheriff found out further that petitioner had left the Philippines for Guam.5

Thus, on September 13, 1988, construing petitioner's departure from the

Philippines as done with intent to defraud her creditors, private respondent filed a
Motion for Preliminary Attachment. On September 26, 1988, the trial court issued
an Order of Preliminary Attachment6 against petitioner. The following day, the trial
court issued a Writ of Preliminary Attachment.

The trial court granted the request of its sheriff for assistance from their
counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San
Miguel of RTC Pampanga served on petitioner's household help in San Fernando,
Pampanga, the Notice of Levy with the Order, Affidavit and Bond.7

On November 7, 1988, petitioner filed an Urgent Motion to Discharge

Attachment8 without submitting herself to the jurisdiction of the trial court. She
pointed out that up to then, she had not been served a copy of the Complaint and
the summons. Hence, petitioner claimed the court had not acquired jurisdiction
over her person.9

In the hearing of the Urgent Motion to Discharge Attachment on November 11,

1988, private respondent sought and was granted a re-setting to December 9,
1988. On that date, private respondent's counsel did not appear, so the Urgent
Motion to Discharge Attachment was deemed submitted for resolution.10

The trial court granted the Motion to Discharge Attachment on January 13, 1989
upon filing of petitioner's counter-bond. The trial court, however, did not rule on the
question of jurisdiction and on the validity of the writ of preliminary attachment.

On December 26, 1988, private respondent applied for an alias summons, which
the trial court issued on January 19, 1989.11 It was only on January 26, 1989 that
summons was finally served on petitioner.12

On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the

ground of improper venue. Private respondent's invoice for the freight forwarding
service stipulates that "if court litigation becomes necessary to enforce collection
xxx the agreed venue for such action is Makati, Metro Manila."13 Private respondent
filed an Opposition asserting that although "Makati" appears as the stipulated
venue, the same was merely an inadvertence by the printing press whose general
manager executed an affidavit14 admitting such inadvertence. Moreover, private
respondent claimed that petitioner knew that private respondent was holding office
in Pasay City and not in Makati.15 The lower court, finding credence in private
respondent's assertion, denied the Motion to Dismiss and gave petitioner five days
to file her Answer. Petitioner filed a Motion for Reconsideration but this too was
denied.

Petitioner filed her Answer16 on June 16, 1989, maintaining her contention that the
venue was improperly laid.

On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18,
1989 at 8:30 a.m. and requiring the parties to submit their pre-trial briefs.
Meanwhile, private respondent filed a Motion to Sell Attached Properties but the
trial court denied the motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial from
July 18, 1989 to August 24, 1989 at 8:30 a.m..

On August 24, 1989, the day of the pre-trial, the trial court issued an
Order17 terminating the pre-trial and allowing the private respondent to present
evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that
when the case was called for pre-trial at 8:31 a.m., only the counsel for private
respondent appeared. Upon the trial court's second call 20 minutes later,
petitioner's counsel was still nowhere to be found. Thus, upon motion of private
respondent, the pre-trial was considered terminated.

On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order
terminating the pre-trial. Petitioner explained that her counsel arrived 5 minutes
after the second call, as shown by the transcript of stenographic notes, and was
late because of heavy traffic. Petitioner claims that the lower court erred in allowing
private respondent to present evidence ex-parte  since there was no Order
considering the petitioner as in default. Petitioner contends that the Order of August
24, 1989 did not state that petitioner was declared as in default but still the court
allowed private respondent to present evidence ex-parte.18

On October 6, 1989, the trial court denied the Motion for Reconsideration and
scheduled the presentation of private respondent's evidence ex-parte  on October
10, 1989.

On October 10, 1989, petitioner filed an Omnibus Motion stating that the
presentation of evidence ex-parte  should be suspended because there was no
declaration of petitioner as in default and petitioner's counsel was not absent, but
merely late.

On October 18, 1989, the trial court denied the Omnibus Motion.19

On November 20, 1989, the petitioner received a copy of the Decision of November
10, 1989, ordering petitioner to pay respondent P109,376.95 plus 18 percent
interest per annum, 25 percent attorney's fees and costs of suit. Private respondent
filed a Motion for Execution Pending Appeal but the trial court denied the same.

The Ruling of the Court of Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming the
decision of the trial court. The Court of Appeals upheld the validity of the issuance
of the writ of attachment and sustained the filing of the action in the RTC of Pasay.
The Court of Appeals also affirmed the declaration of default on petitioner and
concluded that the trial court did not commit any reversible error.

Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of
Appeals denied the same in a Resolution dated May 20, 1996.

Hence, this petition.

 The Issues

The issues raised by petitioner may be re-stated as follows:

I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF

ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED;

II.

WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;

III.

WHETHER THERE WAS IMPROPER VENUE.

IV.

WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS

OBLIGED TO PAY P109, 376.95, PLUS ATTORNEY'S FEES.20

The Ruling of the Court

Improper Issuance and Service of Writ of Attachment

Petitioner ascribes several errors to the issuance and implementation of the writ of
attachment. Among petitioner's arguments are: first, there was no ground for the
issuance of the writ since the intent to defraud her creditors had not been
established; second, the value of the properties levied exceeded the value of
private respondent's claim. However, the crux of petitioner's arguments rests on
the question of the validity of the writ of attachment. Because of failure to serve
summons on her before or simultaneously with the writ's implementation, petitioner
claims that the trial court had not acquired jurisdiction over her person and thus the
service of the writ is void.

As a preliminary note, a distinction should be made between issuance and

implementation of the writ of attachment. It is necessary to distinguish between the
two to determine when jurisdiction over the person of the defendant should be
acquired to validly implement the writ. This distinction is crucial in resolving
whether there is merit in petitioner's argument.

This Court has long settled the issue of when jurisdiction over the person of the
defendant should be acquired in cases where a party resorts to provisional
remedies. A party to a suit may, at any time after filing the complaint, avail of the
provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary
attachment speaks of the grant of the remedy "at the commencement of the
action or at any time thereafter."21  This phrase refers to the date of filing of the
complaint which is the moment that marks "the commencement of the action." The
reference plainly is to a time before summons is served on the defendant, or even
before summons issues.

In Davao Light & Power Co., Inc. v. Court of Appeals, 22  this Court clarified the
actual time when jurisdiction should be had:

"It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of defendant - issuance of
summons, order of attachment and writ of attachment - 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 explicitly required by Section 5 of Rule 57, but
also the summons addressed to said defendant as well as a copy of the complaint
xxx." (Emphasis supplied.)

Furthermore, we have held that the grant of the provisional remedy of attachment
involves three stages: first, the court issues the order granting the application;
second, the writ of attachment issues pursuant to the order granting the writ; and
third, the writ is implemented. For the initial two stages, it is not necessary
that jurisdiction over the person of the defendant be first
obtained. However, once the implementation of the writ commences,  the
court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against the
defendant. Any order issuing from the Court will not bind the defendant.23

In the instant case, the Writ of Preliminary Attachment was issued on September
27, 1988 and implemented on October 28, 1988. However, the alias summons
was served only on January  26, 1989 or almost three months after the
implementation of the writ of attachment.

The trial court had the authority to issue the Writ of Attachment on September 27
since a motion for its issuance can be filed "at the commencement of the action."
However, on the day the writ was implemented, the trial court should have,
previously or simultaneously with the implementation of the writ, acquired
jurisdiction over the petitioner. Yet, as was shown in the records of the case, the
summons was actually served on petitioner several months after the writ had been
implemented.

Private respondent, nevertheless, claims that the prior or contemporaneous service

of summons contemplated in Section 5 of Rule 57 provides for exceptions. Among
such exceptions are "where the summons could not be served personally or by
substituted service despite diligent efforts or where the defendant is a resident
temporarily absent therefrom x x x." Private respondent asserts that when she
commenced this action, she tried to serve summons on petitioner but the latter
could not be located at her customary address in Kamuning, Quezon City or at her
new address in Guagua, Pampanga.24 Furthermore, respondent claims that
petitioner was not even in Pampanga; rather, she was in Guam purportedly on a
business trip.

Private respondent never showed that she effected substituted service on petitioner
after her personal service failed. Likewise, if it were true that private respondent
could not ascertain the whereabouts of petitioner after a diligent inquiry, still she
had some other recourse under the Rules of Civil Procedure.

The rules provide for certain remedies in cases where personal service could not be
effected on a party. Section 14, Rule 14 of the Rules of Court provides that
whenever the defendant's "whereabouts are unknown and cannot be ascertained by
diligent inquiry, service may, by leave of court, be effected upon him by publication
in a newspaper of general circulation x x x." Thus, if petitioner's whereabouts could
not be ascertained after the sheriff had served the summons at her given address,
then respondent could have immediately asked the court for service of summons by
publication on petitioner.25

Moreover, as private respondent also claims that petitioner was abroad at the time
of the service of summons, this made petitioner a resident who is temporarily out of
the country. This is the exact situation contemplated in Section 16,26 Rule 14 of the
Rules of Civil Procedure, providing for service of summons by publication.

In conclusion, we hold that the alias summons belatedly served on petitioner

cannot be deemed to have cured the fatal defect in the enforcement of the writ.
The trial court cannot enforce such a coercive process on petitioner without first
obtaining jurisdiction over her person. The preliminary writ of attachment must be
served after or simultaneous with the service of summons on the defendant
whether by personal service, substituted service or by publication as warranted by
the circumstances of the case.27 The subsequent service of summons does not
confer a retroactive acquisition of jurisdiction over her person because the law does
not allow for retroactivity of a belated service.

Improper Venue

Petitioner assails the filing of this case in the RTC of Pasay and points to a provision
in private respondent's invoice which contains the following:

"3. If court litigation becomes necessary to enforce collection, an additional

equivalent (sic) to 25% of the principal amount will be charged. The agreed venue
for such action is Makati, Metro Manila, Philippines."28

Based on this provision, petitioner contends that the action should have been
instituted in the RTC of Makati and to do otherwise would be a ground for the
dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for the
reason stated by petitioner.

The Rules of Court provide that parties to an action may agree in writing on the
venue on which an action should be brought.29 However, a mere stipulation on the
venue of an action is not enough to preclude parties from bringing a case in other
venues.30 The parties must be able to show that such stipulation is exclusive.  Thus,
absent words that show the parties' intention to restrict the filing of a suit in a
particular place, courts will allow the filing of a case in any venue, as long as
jurisdictional requirements are followed. Venue stipulations in a contract, while
considered valid and enforceable, do not as a rule supersede the general rule set
forth in Rule 4 of the Revised Rules of Court.31 In the absence of qualifying or
restrictive words, they should be considered merely as an agreement on additional
forum, not as limiting venue to the specified place.32

In the instant case, the stipulation does not limit the venue exclusively to Makati.
There are no qualifying or restrictive words in the invoice that would evince the
intention of the parties that Makati is the "only or exclusive" venue where the action
could be instituted. We therefore agree with private respondent that Makati is not
the only venue where this case could be filed.

Nevertheless, we hold that Pasay is not the proper venue for this case.

Under the 1997 Rules of Civil Procedure, the general rule is venue in personal
actions is "where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the election of the
plaintiff."33 The exception to this rule is when the parties agree on an exclusive
venue other than the places mentioned in the rules. But, as we have discussed, this
exception is not applicable in this case. Hence, following the general rule, the
instant case may be brought in the place of residence of the plaintiff or defendant,
at the election of the plaintiff (private respondent herein).

In the instant case, the residence of private respondent (plaintiff in the lower court)
was not alleged in the complaint. Rather, what was alleged was the postal address
of her sole proprietorship, Air Swift International. It was only when private
respondent testified in court, after petitioner was declared in default, that she
mentioned her residence to be in Better Living Subdivision, Parañaque City.

In the earlier case of Sy v. Tyson Enterprises, Inc.,34  the reverse happened. The
plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and managed
by Dominador Ti. The complaint, however, did not allege the office or place of
business of the corporation, which was in Binondo, Manila. What was alleged was
the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in
the Court of First Instance of Rizal, Pasig. The Court there held that the evident
purpose of alleging the address of the corporation's president and manager was to
justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled
that there was no question that venue was improperly laid in that case and held
that the place of business of Tyson Enterpises, Inc. is considered as its residence
for purposes of venue. Furthermore, the Court held that the residence of its
president is not the residence of the corporation because a corporation has a
personality separate and distinct from that of its officers and stockholders.

In the instant case, it was established in the lower court that petitioner resides in
San Fernando, Pampanga35 while private respondent resides in Parañaque
City.36 However, this case was brought in Pasay City, where the business of private
respondent is found. This would have been permissible had private respondent's
business been a corporation, just like the case in Sy v. Tyson Enterprises,
Inc. However, as admitted by private respondent in her Complaint37 in the lower
court, her business is a sole proprietorship, and as such, does not have a separate
juridical personality that could enable it to file a suit in court.38 In fact, there is no
law authorizing sole proprietorships to file a suit in court.39

A sole proprietorship does not possess a juridical personality separate and distinct
from the personality of the owner of the enterprise.40 The law merely recognizes the
existence of a sole proprietorship as a form of business organization conducted for
profit by a single individual and requires its proprietor or owner to secure licenses
and permits, register its business name, and pay taxes to the national
government.41 The law does not vest a separate legal personality on the sole
proprietorship or empower it to file or defend an action in court.42

Thus, not being vested with legal personality to file this case, the sole
proprietorship is not the plaintiff in this case but rather Loreta Guina in her personal
capacity. In fact, the complaint in the lower court acknowledges in its caption that
the plaintiff and defendant are Loreta Guina and Anita Mangila, respectively. The
title of the petition before us does not state, and rightly so, Anita Mangila v. Air
Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is
the residence of private respondent Guina, the proprietor with the juridical
personality, which should be considered as one of the proper venues for this case.

All these considered, private respondent should have filed this case either in San
Fernando, Pampanga (petitioner's residence) or Parañaque (private respondent's
residence). Since private respondent (complainant below) filed this case in Pasay,
we hold that the case should be dismissed on the ground of improper venue.

Although petitioner filed an Urgent Motion to Discharge Attachment in the lower

court, petitioner expressly stated that she was filing the motion without submitting
to the jurisdiction of the court. At that time, petitioner had not been served the
summons and a copy of the complaint.43 Thereafter, petitioner timely filed a Motion
to Dismiss44 on the ground of improper venue. Rule 16, Section 1 of the Rules of
Court provides that a motion to dismiss may be filed "[W]ithin the time for but
before filing the answer to the complaint or pleading asserting a claim." Petitioner
even raised the issue of improper venue in his Answer45 as a special and affirmative
defense. Petitioner also continued to raise the issue of improper venue in her
Petition for Review46 before this Court. We thus hold that the dismissal of this case
on the ground of improper venue is warranted.
The rules on venue, like other procedural rules, are designed to insure a just and
orderly administration of justice or the impartial and evenhanded determination of
every action and proceeding. Obviously, this objective will not be attained if the
plaintiff is given unrestricted freedom to choose where to file the complaint or
petition.47

We find no reason to rule on the other issues raised by petitioner.

WHEREFORE, the petition is GRANTED on the grounds of improper venue and

invalidity of the service of the writ of attachment. The decision of the Court of
Appeals and the order of respondent judge denying the motion to dismiss
are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed without
prejudice to refiling it in the proper venue. The attached properties of petitioner are
ordered returned to her immediately.

SO ORDERED.

____________________

G.R. No. 139941       January 19, 2001

VICENTE B. CHUIDIAN, petitioner,

vs.
SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents.

YNARES-SANTIAGO, J.:

The instant petition arises from transactions that were entered into by the government in the
penultimate days of the Marcos administration. Petitioner Vicente B. Chuidian was alleged to be
a dummy or nominee of Ferdinand and Imelda Marcos in several companies said to have been
illegally acquired by the Marcos spouses. As a favored business associate of the Marcoses,
Chuidian allegedly used false pretenses to induce the officers of the Philippine Export and
Foreign Loan Guarantee Corporation (PHILGUARANTEE), the Board of Investments (BOI) and
the Central Bank, to facilitate the procurement and issuance of a loan guarantee in favor of the
Asian Reliability Company, Incorporated (ARCI) sometime in September 1980. ARCI, 98% of
which was allegedly owned by Chuidian, was granted a loan guarantee of Twenty-Five Million
U.S. Dollars (US$25,000,000.00).1âwphi1.nêt

While ARCI represented to Philguarantee that the loan proceeds would be used to establish five
inter-related projects in the Philippines, Chuidian reneged on the approved business plan and
instead invested the proceeds of the loan in corporations operating in the United States, more
particularly Dynetics, Incorporated and Interlek, Incorporated. Although ARCI had received the
proceeds of the loan guaranteed by Philguarantee, the former defaulted in the payments
thereof, compelling Philguarantee to undertake payments for the same. Consequently, in June
1985, Philguarantee sued Chuidian before the Santa Clara County Superior Court,1 charging
that in violation of the terms of the loan, Chuidian not only defaulted in payment, but also
misused the funds by investing them in Silicon Valley corporations and using them for his
personal benefit.
For his part, Chuidian claimed that he himself was a victim of the systematic plunder
perpetrated by the Marcoses as he was the true owner of these companies, and that he had in
fact instituted an action before the Federal Courts of the United States to recover the companies
which the Marcoses had illegally wrested from him.2

On November 27, 1985, or three (3) months before the successful people's revolt that toppled
the Marcos dictatorship, Philguarantee entered into a compromise agreement with Chuidian
whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the
Philippine government. In return, Philguarantee shall absolve Chuidian from all civil and criminal
liability, and in so doing, desist from pursuing any suit against Chuidian concerning the
payments Philguarantee had made on Chuidian's defaulted loans.

It was further stipulated that instead of Chuidian reimbursing the payments made by
Philguarantee arising from Chuidian's default, the Philippine government shall pay Chuidian the
amount of Five Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of
Five Hundred Thousand Dollars (US$500,000.00) was actually received by Chuidian, as well as
succeeding payment of Two Hundred Thousand Dollars (US$200,000.00). The remaining
balance of Four Million Six Hundred Thousand Dollars (US$4,600,000.00) was to be paid
through an irrevocable Letter of Credit (L/C) from which Chuidian would draw One Hundred
Thousand Dollars (US$100,000.00) monthly.3 Accordingly, on December 12, 1985, L/C No.
SSD-005-85 was issued for the said amount by the Philippine National Bank (PNB).
Subsequently, Chuidian was able to make two (2) monthly drawings from said L/C at the Los
Angeles branch of the PNB.4

With the advent of the Aquino administration, the newly-established Presidential Commission on
Good Government (PCGG) exerted earnest efforts to search and recover money, gold,
properties, stocks and other assets suspected as having been illegally acquired by the
Marcoses, their relatives and cronies.

Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May
30, 1986, the PCGG issued a Sequestration Order5 directing the PNB to place under its
custody, for and in behalf of the PCGG, the irrevocable L/C (No. SSD-005-85). Although
Chuidian was then residing in the United States, his name was placed in the Department of
Foreign Affairs' Hold Order list.6

In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County
of California in Civil Case Nos. 575867 and 577697 seeking to vacate the stipulated judgment
containing the settlement between Philguarantee and Chuidian on the grounds that: (a)
Philguarantee was compelled by the Marcos administration to agree to the terms of the
settlement which was highly unfavorable to Philguarantee and grossly disadvantageous to the
government; (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement
agreement by threatening to expose the fact that the Marcoses made investments in Chuidian's
American enterprises; and (c) the Aquino administration had ordered Philguarantee not to make
further payments on the L/C to Chuidian. After considering the factual matters before it, the said
court concluded that Philguarantee "had not carried its burden of showing that the settlement
between the parties should be set aside."7 On appeal, the Sixth Appellate District of the Court of
Appeal of the State of California affirmed the judgment of the Superior Court of Sta. Clara
County denying Philguarantee's motion to vacate the stipulated judgment based on the
settlement agreement.8
After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States
District Court, Central District of California, an action against PNB seeking, among others, to
compel PNB to pay the proceeds of the L/C. PNB countered that it cannot be held liable for a
breach of contract under principles of illegality, international comity and act of state, and thus it
is excused from payment of the L/C. Philguarantee intervened in said action, raising the same
issues and arguments it had earlier raised in the action before the Santa Clara Superior Court,
alleging that PNB was excused from making payments on the L/C since the settlement was void
due to illegality, duress and fraud.9

The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from
making payment on the L/C; and (2) in Chuidian's favor by denying intervenor Philguarantee's
action to set aside the settlement agreement.10

Meanwhile, on February 27, 1987, a Deed of Transfer11 was executed between then Secretary
of Finance Jaime V. Ongpin and then PNB President Edgardo B. Espiritu, to facilitate the
rehabilitation of PNB, among others, as part of the government's economic recovery program.
The said Deed of Transfer provided for the transfer to the government of certain assets of PNB
in exchange for which the government would assume certain liabilities of PNB.12 Among those
liabilities which the government assumed were unused commercial L/C's and Deferred L/C's,
including SSD-005-85 listed under Dynetics, Incorporated in favor of Chuidian in the amount of
Four Million Four Hundred Thousand Dollars (US$4,400,000.00).13

On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against
the Marcos spouses, several government officials who served under the Marcos administration,
and a number of individuals known to be cronies of the Marcoses, including Chuidian. The
complaint sought the reconveyance, reversion, accounting and restitution of all forms of wealth
allegedly procured illegally and stashed away by the defendants.

In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the
Marcos spouses, engaged in "devices, schemes and stratagems" by: (1) forming corporations
for the purpose of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the
coffers of government financial institutions such as the Philguarantee; and (3) executing the
court settlement between Philguarantee and Chuidian which was grossly disadvantageous to
the government and the Filipino people.

In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert
with the other defendants constituted "gross abuse of official position of authority, flagrant
breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust
enrichment, violation of the Constitution and laws" of the land.14

While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion
for issuance of a writ of attachment15 over the L/C, citing as grounds therefor the following:

(1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary
capacity, justifying issuance of the writ under Section 1(b), Rule 57 of the Rules of Court;

(2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud
in contracting the debt or incurring the obligation upon which the action was brought, or
that he concealed or disposed of the property that is the subject of the action;
 (3) Chuidian has removed or disposed of his property with the intent of defrauding the
plaintiff as justified under Section 1(c) of Rule 57; and

(4) Chuidian is residing out of the country or one on whom summons may be served by
publication, which justifies the writ of attachment prayed for under Section 1(e) of the
same rule.

The Republic also averred that should the action brought by Chuidian before the U.S. District
Court of California to compel payment of the L/C prosper, inspite of the sequestration of the said
L/C, Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the
proceeds of the L/C. Eventually, Philguarantee will be made to shoulder the expense resulting in
further damage to the government. Thus, there was an urgent need for the writ of attachment to
place the L/C under the custody of the Sandiganbayan so the same may be preserved as
security for the satisfaction of judgment in the case before said court.

Chuidian opposed the motion for issuance of the writ of attachment, contending that:

(1) The plaintiff's affidavit appended to the motion was in form and substance fatally
defective;

(2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship
between the plaintiff and Chuidian;

(3) While Chuidian does not admit fraud on his part, if ever there was breach of contract,
such fraud must be present at the time the contract is entered into;

(4) Chuidian has not removed or disposed of his property in the absence of any intent to
defraud plaintiff;

(5) Chuidian's absence from the country does not necessarily make him a non-resident;
and

(6) Service of summons by publication cannot be used to justify the issuance of the writ
since Chuidian had already submitted to the jurisdiction of the Court by way of a motion
to lift the freeze order filed through his counsel.

On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of
attachment against L/C No. SSD-005-85 as security for the satisfaction of judgment.16 The
Sandiganbayan's ruling was based on its disquisition of the five points of contention raised by
the parties. On the first issue, the Sandiganbayan found that although no separate affidavit was
attached to the motion, the motion itself contained all the requisites of an affidavit, and the
verification thereof is deemed a substantial compliance of Rule 57, Section 3 of the Rules of
Court.

Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship
existing between Chuidian and the Republic, but only between Chuidian and ARCI. Since the
Republic is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke
Section 1(b) of Rule 57.
On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or
disposing of the subject property, the Sandiganbayan held that there was a prima facie case of
fraud committed by Chuidian, justifying the issuance of the writ of attachment. The
Sandiganbayan also adopted the Republic's position that since it was compelled to pay, through
Philguarantee, the bank loans taken out by Chuidian, the proceeds of which were fraudulently
diverted, it is entitled to the issuance of the writ of attachment to protect its rights as creditor.

Assuming that there is truth to the government's allegation that Chuidian has removed or
disposed of his property with the intent to defraud, the Sandiganbayan held that the writ of
attachment is warranted, applying Section 1(e) of Rule 57. Besides, the Rules provide for
sufficient security should the owner of the property attached suffer damage or prejudice caused
by the attachment.17

Chuidian's absence from the country was considered by the Sandiganbayan to be "the most
potent insofar as the relief being sought is concerned."18 Taking judicial notice of the admitted
fact that Chuidian was residing outside of the country, the Sandiganbayan observed that:

"x x x no explanation whatsoever was given by him as to his absence from the country, or as to
his homecoming plans in the future. It may be added, moreover, that he has no definite or
clearcut plan to return to the country at this juncture – given the manner by which he has
submitted himself to the jurisdiction of the court."19

Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the
Philippines, but is temporarily living outside, he is still subject to the provisional remedy of
attachment.

Accordingly, an order of attachment20 was issued by the Sandiganbayan on July 19, 1993,

ordering the Sandiganbayan Sheriff to attach PNB L/C No. SSD-005-85 for safekeeping
pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan
Civil Case No. 0027.

On August 11, 1997, or almost four (4) years after the issuance of the order of attachment,
Chuidian filed a motion to lift the attachment based on the following grounds:

First, he had returned to the Philippines; hence, the Sandiganbayan's "most potent ground" for
the issuance of the writ of preliminary attachment no longer existed. Since his absence in the
past was the very foundation of the Sandiganbayan's writ of preliminary attachment, his
presence in the country warrants the immediate lifting thereof.

Second, there was no evidence at all of initial fraud or subsequent concealment except for the
affidavit submitted by the PCGG Chairman citing mere "belief and information" and "not on
knowledge of the facts." Moreover, this statement is hearsay since the PCGG Chairman was not
a witness to the litigated incidents, was never presented as a witness by the Republic and thus
was not subject to cross-examination.

Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is
nothing in the records that support the Sandiganbayan's erroneous conclusion on the
matter. Fourth, Chuidian belied the allegation that he was also a defendant in "other related
criminal action," for in fact, he had "never been a defendant in any prosecution of any sort in the
Philippines."21 Moreover, he could not have personally appeared in any other action because he
had been deprived of his right to a travel document by the government.

Fifth, the preliminary attachment was, in the first place, unwarranted because he was not "guilty
of fraud in contracting the debt or incurring the obligation". In fact, the L/C was not a product of
fraudulent transactions, but was the result of a US Court-approved settlement. Although he was
accused of employing blackmail tactics to procure the settlement, the California Supreme Court
ruled otherwise. And in relation thereto, he cites as a sixth ground the fact that all these
allegations of fraud and wrongdoing had already been dealt with in actions before the State and
Federal Courts of California. While it cannot technically be considered as forum shopping, it is
nevertheless a "form of suit multiplicity over the same issues, parties and subject
matter." 22 These foreign judgments constitute res judicata which warrant the dismissal of the
case itself.

Chuidian further contends that should the attachment be allowed to continue, he will be
deprived of his property without due process. The L/C was payment to Chuidian in exchange for
the assets he turned over to the Republic pursuant to the terms of the settlement in Case No.
575867. Said assets, however, had already been sold by the Republic and cannot be returned
to Chuidian should the government succeed in depriving him of the proceeds of the L/C. Since
said assets were disposed of without his or the Sandiganbayan's consent, it is the Republic who
is fraudulently disposing of assets.

Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had
been in effect, the government had not set the case for hearing. Under Rule 17, Section 3, the
case itself should be dismissed for laches owing to the Republic's failure to prosecute its action
for an unreasonable length of time. Accordingly, the preliminary attachment, being only a
temporary or ancillary remedy, must be lifted and the PNB ordered to immediately pay the
proceeds of the L/C to Chuidian.

Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit
the L/C in an interest bearing account.23 Annex "D"; Rollo, pp. 77-79.23 He pointed out to the
Sandiganbayan that the face amount of the L/C had, since its attachment, become fully
demandable and payable. However, since the amount is just lying dormant in the PNB, without
earning any interest, he proposed that it would be to the benefit of all if the Sandiganbayan
requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order
to earn interest while awaiting judgment of the action.

The Republic opposed Chuidian's motion to lift attachment, alleging that Chuidian's absence
was not the only ground for the attachment and, therefore, his belated appearance before the
Sandiganbayan is not a sufficient reason to lift the attachment. Moreover, allowing the foreign
judgment as a basis for the lifting of the attachment would essentially amount to an abdication of
the jurisdiction of the Sandiganbayan to hear and decide the ill gotten wealth cases lodged
before it in deference to the judgment of foreign courts.

In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidian's

motion to lift attachment.24

On the same day, the Sandiganbayan issued another Resolution denying Chuidian's motion to
require deposit of the attached L/C in an interest bearing account.25
In a motion seeking a reconsideration of the first resolution, Chuidian assailed the
Sandiganbayan's finding that the issues raised in his motion to lift attachment had already been
dealt with in the earlier resolution dated July 14, 1993 granting the application for the writ of
preliminary attachment based on the following grounds:

First, Chuidian was out of the country in 1993, but is now presently residing in the country.

Second, the Sandiganbayan could not have known then that his absence was due to the non-
renewal of his passport at the instance of the PCGG. Neither was it revealed that the Republic
had already disposed of Chuidian's assets ceded to the Republic in exchange for the L/C. The
foreign judgment was not an issue then because at that time, said judgment had not yet been
issued and much less final. Furthermore, the authority of the PCGG Commissioner to subscribe
as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was
raised for the first time in the motion to lift the attachment. Finally, the issue of laches could not
have been raised then because it was the Republic's subsequent neglect or failure to prosecute
despite the passing of the years that gave rise to laches.26

Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion
to require deposit of the L/C into an interest bearing account. He argued that contrary to the
Sandiganbayan's pronouncement, allowing the deposit would not amount to a virtual recognition
of his right over the L/C, for he is not asking for payment but simply requesting that it be
deposited in an account under the control of the Sandiganbayan. He further stressed that the
Sandiganbayan abdicated its bounden duty to rule on an issue when it found "that his motion
will render nugatory the purpose of sequestration and freeze orders over the L/C." Considering
that his assets had already been sold by the Republic, he claimed that the Sandiganbayan's
refusal to exercise its fiduciary duty over attached assets will cause him irreparable injury.
Lastly, the Sandiganbayan's position that Chuidian was not the owner but a mere payee-
beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the Negotiable
Instruments Law, while at the same time obliterating his rights of ownership under the Civil
Code.27

On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for the attached L/C
to be deposited in an interest-bearing account, on the ground that it will redound to the benefit of
both parties.

The Sandiganbayan declared the national government as the principal obligor of the L/C even
though the liability remained in the books of the PNB for accounting and monitoring purposes.

The Sandiganbayan, however, denied Chuidian's motion for reconsideration of the denial of his
motion to lift attachment, agreeing in full with the government's apriorisms that:

x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon
grounds other than defendant's absence in the Philippine territory. In its Resolution dated July
14, 1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and
that defendant has recovered or disposed of his property with the intent of defrauding plaintiff;
(2) Chuidian's belated presence in the Philippines cannot be invoked to secure the lifting of
attachment. The rule is specific that it applies to a party who is about to depart from the
Philippines with intent to defraud his creditors. Chuidian's stay in the country is uncertain and he
may leave at will because he holds a foreign passport; and (3) Chuidian's other ground,
sufficiency of former PCGG Chairman Gunigundo's verification of the complaint, has been met
fairly and squarely in the Resolution of July 14, 1993.28

Hence, the instant petition for certiorari contending that the respondent Sandiganbayan
committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled
that:

1) Most of the issues raised in the motion to lift attachment had been substantially
addressed in the previous resolutions dated July 14, 1993 and August 26, 1998, while
the rest were of no imperative relevance as to affect the Sandiganbayan's disposition;
and

2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential
Proclamation No. 50.

The Rules of Court specifically provide for the remedies of a defendant whose property or asset
has been attached. As has been consistently ruled by this Court, the determination of the
existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower
courts.29

The question in this case is: What can the herein petitioner do to quash the attachment of the
L/C? There are two courses of action available to the petitioner:

First. To file a counterbond in accordance with Rule 57, Section 12, which provides:

SEC. 12. Discharge of attachment upon giving counterbond. – At anytime after an order of
attachment has been granted, the party whose property has been attached, or the person
appearing on 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. The judge shall, after hearing,
order the discharge of the attachment if a cash deposit is made, or a counterbond executed to
the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of the court
where the application is made, 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. Upon the filing of such counter-bond, copy thereof shall forthwith be
served on the attaching creditor or his lawyer. Upon the discharge of an attachment in
accordance with the provisions of this section the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or giving the counter-bond, or the
person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the
property so released. Should such counterbond for any reason be found to be, or become,
insufficient, and the party furnishing the same fail to file an additional counter-bond, the
attaching creditor may apply for a new order of attachment.1âwphi1.nêt

or

Second. To quash the attachment on the ground that it was irregularly or improvidently issued,
as provided for in Section 13 of the same Rule:

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. After hearing, the judge shall order the discharge of the attachment if it
appears that it was improperly or irregularly issued and the defect is not cured forthwith.

It would appear that petitioner chose the latter because the grounds he raised assail the
propriety of the issuance of the writ of attachment. By his own admission, however, he
repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts
or events that came to light or took place after the writ of attachment had already been
implemented.

More particularly, petitioner emphasized that four (4) years after the writ was issued, he had
returned to the Philippines. Yet while he noted that he would have returned earlier but for the
cancellation of his passport by the PCGG, he was not barred from returning to the Philippines.
Then he informed the Sandiganbayan that while the case against him was pending, but after the
attachment had already been executed, the government lost two (2) cases for fraud lodged
against him before the U.S. Courts, thus invoking res judicata. Next, he also pointed out that the
government is estopped from pursuing the case against him for failing to prosecute for the
number of years that it had been pending litigation.

It is clear that these grounds have nothing to do with the issuance of the writ of attachment.
Much less do they attack the issuance of the writ at that time as improper or irregular. And yet,
the rule contemplates that the defect must be in the very issuance of the attachment writ. For
instance, the attachment may be discharged under Section 13 of Rule 57 when it is proven that
the allegations of the complaint were deceptively framed,30 or when the complaint fails to state a
cause of action.31 Supervening events which may or may not justify the discharge of the writ are
not within the purview of this particular rule.

In the instant case, there is no showing that the issuance of the writ of attachment was attended
by impropriety or irregularity. Apart from seeking a reconsideration of the resolution granting the
application for the writ, petitioner no longer questioned the writ itself. For four (4) long years he
kept silent and did not exercise any of the remedies available to a defendant whose property or
asset has been attached. It is rather too late in the day for petitioner to question the propriety of
the issuance of the writ.

Petitioner also makes capital of the two foreign judgments which he claims warrant the
application of the principle of res judicata. The first judgment, in Civil Case Nos. 575867 and
577697 brought by Philguarantee before the Santa Clara Country Superior Court, denied
Philguarantee's prayer to set aside the stipulated judgment wherein Philguarantee and Chuidian
agreed on the subject attached L/C. On March 14, 1990, the Court of Appeal of the State of
California affirmed the Superior Court's judgment. The said judgment became the subject of a
petition for review by the California Supreme Court. There is no showing, however, of any final
judgment by the California Supreme Court. The records, including petitioner's pleadings, are
bereft of any evidence to show that there is a final foreign judgment which the Philippine courts
must defer to. Hence, res judicata finds no application in this instance because it is a requisite
that the former judgment or order must be final.32
Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255
RSWL brought by petitioner Chuidian against PNB to compel the latter to pay the L/C. The said
Court's judgment, while it ruled in favor of petitioner on the matter of Philguarantee's action-in-
intervention to set aside the settlement agreement, also ruled in favor of PNB, to wit:

Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to
enforce its directives and orders by contempt proceedings. Under Executive Order No. 2, the
PCGG is empowered to freeze any, and all assets, funds and property illegally acquired by
former President Marcos or his close friends and business associates.

On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any
further drawings on the L/C. The freeze order has remained in effect and was followed by a
sequestration order issued by the PCGG. Subsequently, Chuidian's Philippine counsel filed a
series of challenges to the freeze and sequestration orders, which challenges were
unsuccessful as the orders were found valid by the Philippine Supreme Court. The freeze and
sequestration orders are presently in effect. Thus, under the PCGG order and Executive Orders
Nos. 1 and 2, performance by PNB would be illegal under Philippine Law. Therefore PNB is
excused from performance of the L/C agreement as long as the freeze and sequestration orders
remain in effect. (Underscoring ours)

x x x       x x x       x x x

Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that
the negotiations for which occurred in California, and that two of the payments were made at
PNB/LA, compels the conclusion that the act of prohibiting payment of the L/C occurred in Los
Angeles. However, the majority of the evidence and Tchacosh and Sabbatino compel the
opposite conclusion. The L/C was issued in Manila, such was done at the request of a
Philippine government instrumentality for the benefit of a Philippine citizen, the L/C was to be
performed in the Philippines, all significant events relating to the issuance and implementation
of the L/C occurred in the Philippines, the L/C agreement provided that the L/C was to be
construed according to laws of the Philippines, and the Philippine government certainly has an
interest in preventing the L/C from being remitted in that it would be the release of funds that are
potentially illgotten gains. Accordingly, the Court finds that the PCGG orders are acts of state
that must be respected by this Court, and thus PNB is excused from making payment on the
L/C as long as the freeze and sequestration orders remain in effect.33 (Underscoring ours)

Petitioner's own evidence strengthens the government's position that the L/C is under the
jurisdiction of the Philippine government and that the U.S. Courts recognize the authority of the
Republic to sequester and freeze said L/C. Hence, the foreign judgments relied upon by
petitioner do not constitute a bar to the Republic's action to recover whatever alleged ill-gotten
wealth petitioner may have acquired.

Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence
of fraud on record other than the affidavit of PCGG Chairman Gunigundo. This issue of fraud,
however, touches on the very merits of the main case which accuses petitioner of committing
fraudulent acts in his dealings with the government. Moreover, this alleged fraud was one of the
grounds for the application of the writ, and the Sandiganbayan granted said application after it
found a prima facie case of fraud committed by petitioner.
In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it
was at the same time the government's cause of action in the main case.

We have uniformly held that:

x x x when the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any
other person in a fiduciary capacity, or for a willful violation of duty," or "an action against a party
who has been guilty of fraud in contracting the debt or incurring the obligation upon which the
action is brought," the defendant is not allowed to file a motion to dissolve the attachment under
Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's
application and affidavits on which the writ was based – and consequently that the writ based
thereon had been improperly or irregularly issued – the reason being that the hearing on such a
motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In
other words, the merits of the action would be ventilated at a mere hearing of a motion, instead
of at the regular trial.34 (Underscoring ours)

Thus, this Court has time and again ruled that the merits of the action in which a writ of
preliminary attachment has been issued are not triable on a motion for dissolution of the
attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the
case on a mere motion.35

It is not the Republic's fault that the litigation has been protracted. There is as yet no evidence
of fraud on the part of petitioner. Petitioner is only one of the twenty-three (23) defendants in the
main action. As such, the litigation would take longer than most cases. Petitioner cannot invoke
this delay in the proceedings as an excuse for not seeking the proper recourse in having the writ
of attachment lifted in due time. If ever laches set in, it was petitioner, not the government, who
failed to take action within a reasonable time period. Challenging the issuance of the writ of
attachment four (4) years after its implementation showed petitioner's apparent indifference
towards the proceedings before the Sandiganbayan.

In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its
discretion in a whimsical, capricious and arbitrary manner. There are no compelling reasons to
warrant the immediate lifting of the attachment even as the main case is still pending. On the
other hand, allowing the discharge of the attachment at this stage of the proceedings would put
in jeopardy the right of the attaching party to realize upon the relief sought and expected to be
granted in the main or principal action. It would have the effect of prejudging the main case.

The attachment is a mere provisional remedy to ensure the safety and preservation of the thing
attached until the plaintiff can, by appropriate proceedings, obtain a judgment and have such
property applied to its satisfaction.36 To discharge the attachment at this stage of the
proceedings would render inutile any favorable judgment should the government prevail in the
principal action against petitioner. Thus, the Sandiganbayan, in issuing the questioned
resolutions, which are interlocutory in nature, committed no grave abuse of discretion amounting
to lack or excess of jurisdiction. As long as the Sandiganbayan acted within its jurisdiction, any
alleged errors committed in the exercise of its jurisdiction will amount to nothing more than
errors of judgment which are reviewable by timely appeal and not by special civil action of
certiorari.37
Moreover, we have held that when the writ of attachment is issued upon a ground which is at
the same time the applicant's cause of action, the only other way the writ can be lifted or
dissolved is by a counterbond, in accordance with Section 12 of the same rule.38 This recourse,
however, was not availed of by petitioner, as noted by the Solicitor General in his comment.39

To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a
counterbond immediately; or (b) by moving to quash on the ground of improper and irregular
issuance.40 These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules
of Court and the power of the Court to dissolve an attachment is circumscribed by the grounds
specified therein.41 Petitioner's motion to lift attachment failed to demonstrate any infirmity or
defect in the issuance of the writ of attachment; neither did he file a counterbond.

Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account.
We agree with the Sandiganbayan that any interest that the proceeds of the L/C may earn while
the case is being litigated would redound to the benefit of whichever party will prevail, the
Philippine government included. Thus, we affirm the Sandiganbayan's ruling that the proceeds
of the L/C should be deposited in an interest bearing account with the Land Bank of the
Philippines for the account of the Sandiganbayan in escrow until ordered released by the said
Court.

We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of
Transfer, whereby certain liabilities of PNB were transferred to the national government, cannot
affect the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil
Code provides:

Novation which consists in substituting a new debtor in the place of the original one, may be
made without the knowledge or against the will of the latter, but not without the consent of the
creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.

Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent
thereto cannot just be presumed. Even though Presidential Proclamation No. 50 can be
considered an "insuperable cause", it does not necessarily make the contracts and obligations
affected thereby exceptions to the above-quoted law, such that the substitution of debtor can be
validly made even without the consent of the creditor. Presidential Proclamation No. 50 was not
intended to set aside laws that govern the very lifeblood of the nation's commerce and
economy. In fact, the Deed of Transfer that was executed between PNB and the government
pursuant to the said Presidential Proclamation specifically stated that it shall be deemed
effective only upon compliance with several conditions, one of which requires that:

(b) the BANK shall have secured such governmental and creditors' approvals as may be
necessary to establish the consummation, legality and enforceability of the transactions
contemplated hereby."

The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its
liability thereunder considering that neither the PNB nor the government bothered to secure
petitioner's consent to the substitution of debtors. We are not unmindful that any effort to secure
petitioner's consent at that time would, in effect, be deemed an admission that the L/C is valid
and binding. Even the Sandiganbayan found that: 36 Sta. Ines Melale Forest Products Corp. v.
Macaraig, Jr., 299 SCRA 491, 515 (1998).
x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is
presumed to be the lawful payee-beneficiary of the L/C until such time that the plaintiff
successfully proves that said L/C is ill-gotten and he has no right over the same.42

In Republic v. Sandiganbayan,43 we held that the provisional remedies, such as freeze orders
and sequestration, were not "meant to deprive the owner or possessor of his title or any right to
the property sequestered, frozen or taken over and vest it in the sequestering agency, the
Government or other person."

Thus, until such time that the government is able to successfully prove that petitioner has no
right to claim the proceeds of the L/C, he is deemed to be the lawful payee-beneficiary of said
L/C, for which any substitution of debtor requires his consent. The Sandiganbayan thus erred in
relieving PNB of its liability as the original debtor.

WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the
Sandiganbayan dated November 6, 1998 and July 2, 1999 are AFFIRMED. The PNB is
DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in
the amount of U.S. $4.4 million within fifteen (15) days from notice hereof, the same to be
placed under special time deposit with the Land Bank of the Philippines, for the account of
Sandiganbayan in escrow for the person or persons, natural or juridical, who shall eventually be
adjudged lawfully entitled thereto, the same to earn interest at the current legal bank rates. The
principal and its interest shall remain in said account until ordered released by the Court in
accordance with law.1âwphi1.nêt

No costs.

SO ORDERED.

______________

[G.R. NO. 171124 : February 13, 2008]

ALEJANDRO NG WEE, Petitioner, v. MANUEL TANKIANSEE, Respondent.

DECISION

NACHURA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the September 14, 2005 Decision1 of the Court of Appeals (CA) in
CA-G.R. SP No. 90130 and its January 6, 2006 Resolution2 denying the motion for
reconsideration thereof.

The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont
Bank (now United Overseas Bank), made several money placements
totaling P210,595,991.62 with the bank's affiliate, Westmont Investment
Corporation (Wincorp), a domestic entity engaged in the business of an investment
house with the authority and license to extend credit.3
Sometime in February 2000, petitioner received disturbing news on Wincorp's
financial condition prompting him to inquire about and investigate the company's
operations and transactions with its borrowers. He then discovered that the
company extended a loan equal to his total money placement to a corporation
[Power Merge] with a subscribed capital of only P37.5M. This credit facility
originated from another loan of about P1.5B extended by Wincorp to another
corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp
instituted a case against it and its surety. Settlement was, however, reached in
which Hottick's president, Luis Juan L. Virata (Virata), assumed the obligation of the
surety.4

Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's
money placements were transferred without his knowledge and consent to the loan
account of Power Merge through an agreement that virtually freed the latter of any
liability. Allegedly, through the false representations of Wincorp and its officers and
directors, petitioner was enticed to roll over his placements so that Wincorp could
loan the same to Virata/Power Merge.5

Finding that Virata purportedly used Power Merge as a conduit and connived with
Wincorp's officers and directors to fraudulently obtain for his benefit without any
intention of paying the said placements, petitioner instituted, on October 19, 2000,
Civil Case No. 00-99006 for damages with the Regional Trial Court (RTC) of
Manila.6 One of the defendants impleaded in the complaint is herein respondent
Manuel Tankiansee, Vice-Chairman and Director of Wincorp.7

On October 26, 2000, on the basis of the allegations in the complaint and the
October 12, 2000 Affidavit8 of petitioner, the trial court ordered the issuance of a
writ of preliminary attachment against the properties not exempt from execution of
all the defendants in the civil case subject, among others, to petitioner's filing of
a P50M-bond.9 The writ was, consequently, issued on November 6, 2000.10

Arguing that the writ was improperly issued and that the bond furnished was
grossly insufficient, respondent, on December 22, 2000, moved for the discharge of
the attachment.11 The other defendants likewise filed similar motions.12 On October
23, 2001, the RTC, in an Omnibus Order,13 denied all the motions for the discharge
of the attachment. The defendants, including respondent herein, filed their
respective motions for reconsideration14 but the trial court denied the same on
October 14, 2002.15

Incidentally, while respondent opted not to question anymore the said orders, his
co-defendants, Virata and UEM-MARA Philippines Corporation (UEM-MARA), assailed
the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No.
74610]. The appellate court, however, denied the certiorari petition on August 21,
2003,16 and the motion for reconsideration thereof on March 16, 2004.17 In a
Petition for Review on Certiorari before this Court, in G.R. No. 162928, we denied
the petition and affirmed the CA rulings on May 19, 2004 for Virata's and UEM-
MARA's failure to sufficiently show that the appellate court committed any
reversible error.18 We subsequently denied the petition with finality on August 23,
2004.19

On September 30, 2004, respondent filed before the trial court another Motion to
Discharge Attachment,20 re-pleading the grounds he raised in his first motion but
raising the following additional grounds: (1) that he was not present in Wincorp's
board meetings approving the questionable transactions;21 and (2) that he could
not have connived with Wincorp and the other defendants because he and
Pearlbank Securities, Inc., in which he is a major stockholder, filed cases against
the company as they were also victimized by its fraudulent schemes.22

Ruling that the grounds raised were already passed upon by it in the previous
orders affirmed by the CA and this Court, and that the additional grounds were
respondent's affirmative defenses that properly pertained to the merits of the case,
the trial court denied the motion in its January 6, 2005 Order.23

With the denial of its motion for reconsideration,24 respondent filed

a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On
September 14, 2005, the appellate court rendered the assailed Decision25 reversing
and setting aside the aforementioned orders of the trial court and lifting the
November 6, 2000 Writ of Preliminary Attachment26 to the extent that it concerned
respondent's properties. Petitioner moved for the reconsideration of the said ruling,
but the CA denied the same in its January 6, 2006 Resolution.27

Thus, petitioner filed the instant petition on the following grounds:

A.

IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT

HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY
RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT, WHICH, UNDER
PREVAILING JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF
CERTIORARI.

B.

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS

COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE GROUNDS
ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF
PRELIMINARY ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO THE
MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING
JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT
OF PRELIMINARY ATTACHMENT.

C.

LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED

IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY RESPONDENT, NOT ONLY
BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF
OF SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED
WITH FINALITY BY THE LOWER COURT.28

For his part, respondent counters, among others, that the general and sweeping
allegation of fraud against respondent in petitioner's affidavit-respondent as an
officer and director of Wincorp allegedly connived with the other defendants to
defraud petitioner-is not sufficient basis for the trial court to order the attachment
of respondent's properties. Nowhere in the said affidavit does petitioner mention
the name of respondent and any specific act committed by the latter to defraud the
former. A writ of attachment can only be granted on concrete and specific grounds
and not on general averments quoting perfunctorily the words of the Rules.
Connivance cannot also be based on mere association but must be particularly
alleged and established as a fact. Respondent further contends that the trial court,
in resolving the Motion to Discharge Attachment, need not actually delve into the
merits of the case. All that the court has to examine are the allegations in the
complaint and the supporting affidavit. Petitioner cannot also rely on the decisions
of the appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928
to support his claim because respondent is not a party to the said cases.29

We agree with respondent's contentions and deny the petition.

In the case at bench, the basis of petitioner's application for the issuance of the writ
of preliminary attachment against the properties of respondent is Section 1(d) of
Rule 57 of the Rules of Court which pertinently reads:

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:

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 attachment to issue under this rule, the applicant 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.30 The applicant must then be able to demonstrate that
the debtor has intended to defraud the creditor.31 In Liberty Insurance Corporation
v. Court of Appeals,32 we explained as follows:

To sustain an attachment on this ground, it must be shown that the debtor in

contracting the debt or incurring the obligation intended to defraud the creditor.
The fraud must relate to the execution of the agreement and must have been the
reason which induced the other party into giving consent which he would not have
otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of
the Rules of Court, fraud should be committed upon contracting the obligation sued
upon. A debt is fraudulently contracted if at the time of contracting it the debtor
has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state
of mind and need not be proved by direct evidence but may be inferred from the
circumstances attendant in each case.33

In the instant case, petitioner's October 12, 2000 Affidavit34 is bereft of any factual
statement that respondent committed a fraud. The affidavit narrated only the
alleged fraudulent transaction between Wincorp and Virata and/or Power Merge,
which, by the way, explains why this Court, in G.R. No. 162928, affirmed the writ of
attachment issued against the latter. As to the participation of respondent in the
said transaction, the affidavit merely states that respondent, an officer and director
of Wincorp, connived with the other defendants in the civil case to defraud
petitioner of his money placements. No other factual averment or circumstance
details how respondent committed a fraud or how he connived with the other
defendants to commit a fraud in the transaction sued upon. In other words,
petitioner has not shown any specific act or deed to support the allegation that
respondent is guilty of fraud.

The affidavit, being the foundation of the writ,35 must contain such particulars as to
how the fraud imputed to respondent was committed for the court to decide
whether or not to issue the writ.36 Absent any statement of other factual
circumstances to show that respondent, at the time of contracting the obligation,
had a preconceived plan or intention not to pay, or without any showing of how
respondent committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who allegedly connived with the
other defendants to commit a fraud, is insufficient to support the issuance of a writ
of preliminary attachment.37 In the application for the writ under the said ground,
compelling is the need to give a hint about what constituted the fraud and how it
was perpetrated38 because established is the rule that fraud is never
presumed.39 Verily, the mere fact that respondent is an officer and director of the
company does not necessarily give rise to the inference that he committed a fraud
or that he connived with the other defendants to commit a fraud. While under
certain circumstances, courts may treat a corporation as a mere aggroupment of
persons, to whom liability will directly attach, this is only done when the
wrongdoing has been clearly and convincingly established.40

Let it be stressed that the provisional remedy of preliminary attachment is harsh

and rigorous for it exposes the debtor to humiliation and annoyance.41 The rules
governing its issuance are, therefore, strictly construed against the
applicant,42 such that if the requisites for its grant are not shown to be all present,
the court shall refrain from issuing it, for, otherwise, the court which issues it acts
in excess of its jurisdiction.43 Likewise, the writ should not be abused to cause
unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient
allegations, it should at once be corrected.44
Considering, therefore, that, in this case, petitioner has not fully satisfied the legal
obligation to show the specific acts constitutive of the alleged fraud committed by
respondent, the trial court acted in excess of its jurisdiction when it issued the writ
of preliminary attachment against the properties of respondent.

We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et
al.,45 that

[t]he merits of the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could force a trial of the
merits of the case on his motion.46

However, the principle finds no application here because petitioner has not yet
fulfilled the requirements set by the Rules of Court for the issuance of the writ
against the properties of respondent.47 The evil sought to be prevented by the said
ruling will not arise, because the propriety or impropriety of the issuance of the writ
in this case can be determined by simply reading the complaint and the affidavit in
support of the application.

Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of
attachment is properly issued insofar as it concerns the properties of Virata and
UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA,
respondent is "never a party thereto."48 Also, he is not in the same situation as
Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the
alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a
general allegation of fraud was made against respondent.

We state, in closing, that our ruling herein deals only with the writ of preliminary
attachment issued against the properties of respondent-it does not concern the
other parties in the civil case, nor affect the trial court's resolution on the merits of
the aforesaid civil case.

WHEREFORE, premises considered, the petition is DENIED. The September 14,

2005 Decision and the January 6, 2006 Resolution of the Court of Appeals in CA-
G.R. SP No. 90130 are AFFIRMED.

SO ORDERED.

_____________

G.R. No. 166759               November 25, 2009

SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF MARIO TORRES and SOLAR

RESOURCES, INC., Petitioners,
vs.
NICANOR SATSATIN, EMILINDA AUSTRIA SATSATIN, NIKKI NORMEL SATSATIN and
NIKKI NORLIN SATSATIN, Respondents.
 DECISION

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision1 dated November 23, 2004 of the
Court of Appeals (CA) in CA-G.R. SP No. 83595, and its Resolution2 dated January 18, 2005,
denying petitioners’ motion for reconsideration.

The factual and procedural antecedents are as follows:

The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa), and Mario Torres (Mario) each
own adjacent 20,000 square meters track of land situated at Barrio Lankaan, Dasmariñas,
Cavite, covered by Transfer Certificate of Title (TCT) Nos. 251267,3 251266,4 and
251265,5 respectively.

Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners’ mother, Agripina Aledia, if she
wanted to sell their lands. After consultation with her daughters, daughter-in-law, and
grandchildren, Agripina agreed to sell the properties. Petitioners, thus, authorized Nicanor,
through a Special Power of Attorney, to negotiate for the sale of the properties.6

Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. (Solar). Solar
allegedly agreed to purchase the three parcels of land, together with the 10,000-square-meter
property owned by a certain Rustica Aledia, for ₱35,000,000.00. Petitioners alleged that Nicanor
was supposed to remit to them the total amount of ₱28,000,000.00 or ₱9,333,333.00 each to
Sofia, Fructosa, and the heirs of Mario.

Petitioners claimed that Solar has already paid the entire purchase price of ₱35,000,000.00 to
Nicanor in Thirty-Two (32) post-dated checks which the latter encashed/deposited on their
respective due dates. Petitioners added that they also learned that during the period from
January 2000 to April 2002, Nicanor allegedly acquired a house and lot at Vista Grande BF
Resort Village, Las Piñas City and a car, which he registered in the names of his unemployed
children, Nikki Normel Satsatin and Nikki Norlin Satsatin. However, notwithstanding the receipt
of the entire payment for the subject property, Nicanor only remitted the total amount of
₱9,000,000.00, leaving an unremitted balance of ₱19,000,000.00. Despite repeated verbal and
written demands, Nicanor failed to remit to them the balance of ₱19,000,000.00.

Consequently, on October 25, 2002, petitioners filed before the regional trial court (RTC) a
Complaint7 for sum of money and damages, against Nicanor, Ermilinda Satsatin, Nikki Normel
Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02, and
raffled to RTC, Branch 90, Dasmariñas, Cavite.

On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of
Attachment,8 alleging among other things: that respondents are about to depart the Philippines;
that they have properties, real and personal in Metro Manila and in the nearby provinces; that
the amount due them is P19,000,000.00 above all other claims; that there is no other sufficient
security for the claim sought to be enforced; and that they are willing to post a bond fixed by the
court to answer for all costs which may be adjudged to the respondents and all damages which
respondents may sustain by reason of the attachment prayed for, if it shall be finally adjudged
that petitioners are not entitled thereto.
On October 30, 2002, the trial court issued an Order9 directing the petitioners to post a bond in
the amount of ₱7,000,000.00 before the court issues the writ of attachment, the dispositive
portion of which reads as follows:

WHEREFORE, premises considered, and finding the present complaint and motion sufficient in
form and substance, this Court hereby directs the herein plaintiffs to post a bond, pursuant to
Section 3, Rule 57 of the 1997 Rules of Civil Procedure, in the amount of Seven Million Pesos
(P7,000,000.00), before the Writ of Attachment issues.10

On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff,11 informing the court
that they have already filed an attachment bond. They also prayed that a sheriff be deputized to
serve the writ of attachment that would be issued by the court.

In the Order12 dated November 15, 2002, the RTC granted the above motion and deputized the
sheriff, together with police security assistance, to serve the writ of attachment.

Thereafter, the RTC issued a Writ of Attachment13 dated November 15, 2002, directing the
sheriff to attach the estate, real or personal, of the respondents, the decretal portion of which
reads:

WE, THEREFORE, command you to attach the estate, real or personal, not exempt from
execution, of the said defendants, in your province, to the value of said demands, and that you
safely keep the same according to the said Rule, unless the defendants give security to pay
such judgment as may be recovered on the said action, in the manner provided by the said
Rule, provided that your legal fees and all necessary expenses are fully paid.

You shall return this writ with your proceedings indorsed hereon within twenty (20) days from
the date of receipt hereof.

GIVEN UNDER MY HAND AND SEAL of this Court, this 15th day of November, 2002, at Imus
for Dasmariñas, Cavite, Philippines.14

On November 19, 2002, a copy of the writ of attachment was served upon the respondents. On
the same date, the sheriff levied the real and personal properties of the respondent, including
household appliances, cars, and a parcel of land located at Las Piñas, Manila.15

On November 21, 2002, summons, together with a copy of the complaint, was served upon the
respondents.16

On November 29, 2002, respondents filed their Answer.17

On the same day respondents filed their answer, they also filed a Motion to Discharge Writ of
Attachment18 anchored on the following grounds: the bond was issued before the issuance of
the writ of attachment; the writ of attachment was issued before the summons was received by
the respondents; the sheriff did not serve copies of the application for attachment, order of
attachment, plaintiffs’ affidavit, and attachment bond, to the respondents; the sheriff did not
submit a sheriff’s return in violation of the Rules; and the grounds cited for the issuance of the
writ are baseless and devoid of merit. In the alternative, respondents offered to post a counter-
bond for the lifting of the writ of attachment.19
On March 11, 2003, after the parties filed their respective pleadings, the RTC issued an
Order20 denying the motion, but at the same time, directing the respondents to file a counter-
bond, to wit:

WHEREFORE, premises considered, after the pertinent pleadings of the parties have been
taken into account, the herein defendants are hereby directed to file a counter-bond executed to
the attaching party, in the amount of Seven Million Pesos (₱7,000,000.00), to secure the
payment of any judgment that the attaching party may recover in the action, with notice on the
attaching party, whereas, the Motion to Discharge Writ of Attachment is DENIED.

SO ORDERED.21

Thereafter, respondents filed a motion for reconsideration and/or motion for clarification of the
above order. On April 3, 2003, the RTC issued another Order22 which reads:

In view of the Urgent Motion For Reconsideration And/Or Motion For Clarification of the Order of
this Court dated March 11, 2003, denying their Motion to Discharge Writ of Attachment filed by
the defendants through counsel Atty. Franco L. Loyola, the Motion to Discharge Writ of
Attachment is denied until after the defendants have posted the counter-bond in the amount of
Seven Million Pesos (₱7,000,000.00).

The defendants, once again, is directed to file their counter-bond of Seven Million Pesos
(₱7,000,000.00), if it so desires, in order to discharge the Writ of Attachment.

SO ORDERED.

On December 15, 2003, respondents filed an Urgent Motion to Lift/Set Aside Order Dated
March [11], 2003,23 which the RTC denied in an Order24 of even date, the dispositive portion of
which reads:

WHEREFORE, premises considered, defendants’ Urgent Motion to Lift/Set Aside Order Dated
March 23, 2003 (With Manifestation to Dissolve Writ of Attachment) is hereby DENIED for lack
of Merit.

SO ORDERED.

Respondents filed an Urgent Motion for Reconsideration,25 but it was denied in the

Order26 dated March 3, 2004.

Aggrieved, respondents filed before the CA a Petition for Certiorari, Mandamus and Prohibition
with Preliminary Injunction and Temporary Restraining Order27 under Rule 65 of the Rules of
Court, docketed as CA-G.R. SP No. 83595, anchored on the following grounds:

(1) public respondents committed grave abuse of discretion amounting to lack of or in

excess of jurisdiction in failing to notice that the lower court has no jurisdiction over the
person and subject matter of the complaint when the subject Writ of Attachment was
issued;
 (2) public respondents committed grave abuse of discretion amounting to lack of or in
excess of jurisdiction in granting the issuance of the Writ of Attachment despite non-
compliance with the formal requisites for the issuance of the bond and the Writ of
Attachment.28

Respondents argued that the subject writ was improper and irregular having been issued and
enforced without the lower court acquiring jurisdiction over the persons of the respondents.
They maintained that the writ of attachment was implemented without serving upon them the
summons together with the complaint. They also argued that the bond issued in favor of the
petitioners was defective, because the bonding company failed to obtain the proper clearance
that it can transact business with the RTC of Dasmariñas, Cavite. They added that the various
clearances which were issued in favor of the bonding company were applicable only in the
courts of the cities of Pasay, Pasig, Manila, and Makati, but not in the RTC, Imus, Cavite.29

On November 23, 2003, the CA rendered the assailed Decision in favor of the respondents,
finding grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of
the RTC in issuing the Orders dated December 15, 2003 and March 3, 2004. The decretal
portion of the Decision reads:

WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders are
hereby nullified and set aside. The levy on the properties of the petitioners pursuant to the Writ
of Attachment issued by the lower court is hereby LIFTED.

SO ORDERED.30

Petitioners filed a Motion for Reconsideration,31 but it was denied in the Resolution32 dated

January 18, 2005.

Hence, this petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE LIFTING OF THE

WRIT OF ATTACHMENT PURSUANT TO SECTION 13, RULE 57 OF THE REVISED RULES
OF CIVIL PROCEDURE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PUBLIC

RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
OR IN EXCESS OF JURISDICTION IN GRANTING THE WRIT OF ATTACHMENT DESPITE
THE BOND BEING INSUFFICIENT AND HAVING BEEN IMPROPERLY ISSUED.

III.

THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION BY

REASON OF ESTOPPEL, LACHES AND PRESCRIPTION AND IN HOLDING THAT THE
WRIT OF ATTACHMENT WAS IMPROPERLY AND IRREGULARLY ENFORCED IN
VIOLATION OF SECTION 5, RULE 57 OF THE REVISED RULES OF COURT.
 IV.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRINCIPLE OF

ESTOPPEL WILL NOT LIE AGAINST RESPONDENTS.

Petitioners maintain that in the case at bar, as in the case of FCY Construction Group, Inc. v.
Court of Appeals,33 the only way the subject writ of attachment can be dissolved is by a counter-
bond. They claim that the respondents are not allowed to file a motion to dissolve the
attachment under Section 13, Rule 57 of the Rules of Court. Otherwise, the hearing on the
motion for the dissolution of the writ would be tantamount to a trial on the merits, considering
that the writ of preliminary attachment was issued upon a ground which is, at the same time, the
applicant’s cause of action.

Petitioners insist that the determination of the existence of grounds to discharge a writ of
attachment rests in the sound discretion of the lower court. They argue that the
Certification34 issued by the Office of the Administrator and the Certifications35 issued by the
clerks of court of the RTCs of Dasmariñas and Imus, Cavite, would show that the bonds offered
by Western Guaranty Corporation, the bonding company which issued the bond, may be
accepted by the RTCs of Dasmariñas and Imus, Cavite, and that the said bonding company has
no pending liability with the government.

Petitioners contend that respondents are barred by estoppel, laches, and prescription from
questioning the orders of the RTC issuing the writ of attachment. They also maintain that the
issue whether there was impropriety or irregularity in the issuance of the orders is moot and
academic, considering that the attachment bond questioned by the respondent had already
expired on November 14, 2003 and petitioners have renewed the attachment bond covering the
period from November 14, 2003 to November 14, 2004, and further renewed to cover the period
of November 14, 2004 to November 14, 2005.

The petition is bereft of merit.

A writ of preliminary attachment is defined as a provisional remedy issued upon order of the
court where an action is pending to be levied upon the property or properties of the defendant
therein, the same to be held thereafter by the sheriff as security for the satisfaction of whatever
judgment that might be secured in the said action by the attaching creditor against the
defendant.36

In the case at bar, the CA correctly found that there was grave abuse of discretion amounting to
lack of or in excess of jurisdiction on the part of the trial court in approving the bond posted by
petitioners despite the fact that not all the requisites for its approval were complied with. In
accepting a surety bond, it is necessary that all the requisites for its approval are met;
otherwise, the bond should be rejected.37

Every bond should be accompanied by a clearance from the Supreme Court showing that the
company concerned is qualified to transact business which is valid only for thirty (30) days from
the date of its issuance.38 However, it is apparent that the Certification39 issued by the Office of
the Court Administrator (OCA) at the time the bond was issued would clearly show that the
bonds offered by Western Guaranty Corporation may be accepted only in the RTCs of the cities
of Makati, Pasay, and Pasig. Therefore, the surety bond issued by the bonding company should
not have been accepted by the RTC of Dasmariñas, Branch 90, since the certification secured
by the bonding company from the OCA at the time of the issuance of the bond certified that it
may only be accepted in the above-mentioned cities. Thus, the trial court acted with grave
abuse of discretion amounting to lack of or in excess of jurisdiction when it issued the writ of
attachment founded on the said bond.

Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction

between the issuance and the implementation of the writ of attachment is of utmost importance
to the validity of the writ. The distinction is indispensably necessary to determine when
jurisdiction over the person of the defendant should be acquired in order to validly implement
the writ of attachment upon his person.

This Court has long put to rest the issue of when jurisdiction over the person of the defendant
should be acquired in cases where a party resorts to provisional remedies. A party to a suit
may, at any time after filing the complaint, avail of the provisional remedies under the Rules of
Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the
commencement of the action or at any time before entry of judgment."40 This phrase refers to
the date of the filing of the complaint, which is the moment that marks "the commencement of
the action." The reference plainly is to a time before summons is served on the defendant, or
even before summons issues.41

In Davao Light & Power Co., Inc. v. Court of Appeals,42 this Court clarified the actual time when
jurisdiction should be had:

It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant x x x issuance of summons, order of attachment and
writ of attachment x x x 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 explicitly required by Section 5
of Rule 57, but also the summons addressed to said defendant as well as a copy of the
complaint x x x. (Emphasis supplied.)

In Cuartero v. Court of Appeals,43 this Court held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting the application;
second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ
is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of
the defendant be first obtained. However, once the implementation of the writ commences, the
court must have acquired jurisdiction over the defendant, for without such jurisdiction, the court
has no power and authority to act in any manner against the defendant. Any order issuing from
the Court will not bind the defendant.44

Thus, it is indispensable not only for the acquisition of jurisdiction over the person of the
defendant, but also upon consideration of fairness, to apprise the defendant of the complaint
against him and the issuance of a writ of preliminary attachment and the grounds therefor that
prior or contemporaneously to the serving of the writ of attachment, service of summons,
together with a copy of the complaint, the application for attachment, the applicant’s affidavit
and bond, and the order must be served upon him.
In the instant case, assuming arguendo that the trial court validly issued the writ of attachment
on November 15, 2002, which was implemented on November 19, 2002, it is to be noted that
the summons, together with a copy of the complaint, was served only on November 21, 2002.

At the time the trial court issued the writ of attachment on November 15, 2002, it can validly to
do so since the motion for its issuance can be filed "at the commencement of the action or at
any time before entry of judgment." However, at the time the writ was implemented, the trial
court has not acquired jurisdiction over the persons of the respondent since no summons was
yet served upon them. The proper officer should have previously or simultaneously with the
implementation of the writ of attachment, served a copy of the summons upon the respondents
in order for the trial court to have acquired jurisdiction upon them and for the writ to have binding
effect. Consequently, even if the writ of attachment was validly issued, it was improperly or
irregularly enforced and, therefore, cannot bind and affect the respondents.

Moreover, although there is truth in the petitioners’ contention that an attachment may not be
dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the
same time the applicant’s cause of action in the main case, since an anomalous situation would
result if the issues of the main case would be ventilated and resolved in a mere hearing of a
motion. However, the same is not applicable in the case bar. It is clear from the respondents’
pleadings that the grounds on which they base the lifting of the writ of attachment are the
irregularities in its issuance and in the service of the writ; not petitioners’ cause of
action.1avvphi1

Further, petitioners’ contention that respondents are barred by estoppel, laches, and
prescription from questioning the orders of the RTC issuing the writ of attachment and that the
issue has become moot and academic by the renewal of the attachment bond covering after its
expiration, is devoid of merit. As correctly held by the CA:

There are two ways of discharging the attachment. First, to file a counter-bond in accordance
with Section 12 of Rule 57. Second[,] [t]o quash the attachment on the ground that it was
irregularly or improvidently issued, as provided for in Section 13 of the same rule. Whether the
attachment was discharged by either of the two ways indicated in the law, 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. The filing of
a counter-bond is merely a speedier way of discharging the attachment writ instead of the other
way.45

Moreover, again assuming arguendo that the writ of attachment was validly issued, although the
trial court later acquired jurisdiction over the respondents by service of the summons upon
them, such belated service of summons on respondents cannot be deemed to have cured the
fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive
process on respondents without first obtaining jurisdiction over their person. The preliminary writ
of attachment must be served after or simultaneous with the service of summons on the
defendant whether by personal service, substituted service or by publication as warranted by
the circumstances of the case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law does not allow for
retroactivity of a belated service.46
WHEREFORE, premises considered, the petition is DENIED. The Decision and Resolution of
the Court of Appeals dated November 23, 2004 and January 18, 2005, respectively, in CA-G.R.
SP No. 83595 are AFFIRMED.

SO ORDERED.

_________________

G.R. No. 203530, April 13, 2015

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., AND OSCAR

RAMIREZ, Petitioners, v. ERLINDA KRISHNAN, Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure praying for the annulment of the Decision1 dated March 27, 2012 and
Resolution2 dated September 11, 2012 of the Court of Appeals (CA) in CA-G.R. SP
No. 120664, which affirmed the Orders dated September 24, 2010 and May 26,
2011, respectively, of Branch 30, Regional Trial Court (RTC) - Manila.

The factual antecedents, as found by the CA, are as

follows:chanroblesvirtuallawlibrary

Petitioners Luzon Development Bank, Tomas Clemente, and Oscar Ramirez

(hereafter petitioners) are the respondents in the complaint for Collection of Sum of
Money and Damages filed by respondent Erlinda Khrishnan (hereafter respondent
Erlinda) on February 7, 2001. Respondent Erlinda claimed that she is a client of
respondent bank wherein she maintained several accounts including time deposits.
On several occasions, when respondent Erlinda presented her Time Deposits
Certificates amounting to P28,597,472.70 for payment because they have become
due, petitioners refused to honor them for the reason that they were fraudulent.
Respondent Erlinda likewise applied for a Preliminary Writ of Attachment which the
RTC granted on February 27, 2001.

By virtue of the writ, petitioner bank's accounts in BPI Family Bank, Calamba,
Laguna in the amount of P28,597,472.70 and its account amounting to
P49,000,000.00 in the Central Bank were garnished.

On March 9, 2001, petitioners filed an urgent ex-parte Motion to Recall Quash

and/or Lift Attachment or Garnishment (in excess of amounts in the writ).
Respondent Erlinda opposed the motion.

On August 15, 2001, petitioners filed an Omnibus Motion seeking the substitution of
their garnished account with government securities and the immediate resolution of
their motion to discharge attachment and setting the motion for hearing, which
respondent Erlinda opposed.

On May 22, 2002, the RTC resolved the pending incidents and required the
petitioners to justify their motion to discharge the attachment. During pre-trial on
May 23, 2002, respondents requested additional time to file a supplemental motion
to justify their earlier motions which was granted and gave petitioners ten (10)
days from receipt within which to comment or opposed (sic) it.

On September 8, 2003, the RTC issued an order lifting the attachment to which
respondent Erlinda filed a motion for reconsideration. Respondent Erlinda also filed
a Motion for Inhibition. On December 18, 2003, the RTC denied the motion for
reconsideration but granted the motion for inhibition. The said Order was
questioned by respondent Erlinda by way of Petition for Certiorari before the
7th Division which rendered a decision on November 15, 2006, the dispositive
portion of which reads as follows:chanroblesvirtuallawlibrary
"WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.

THE ORDERS dated September 8, 2003, and December 18, 2003 are NULLIFIED
and SET ASIDE.

The private respondents, as defendants in Civil Case No. 01-100046 entitled Erlinda

C. Krishnan v. Luzon Development Bank, et al., are ORDERED to file a counterbond
in accordance with Sec. 12, Rule 57, 1997 Rules of Civil Procedure, within 10 days
from the finality of this decision; otherwise, the REGIONAL TRIAL COURT, BRANCH
36, in Manila shall immediately reinstate the writ of attachment issued and
implemented in Civil Case No. 01-100046.

Costs of suit to be paid by the respondents. SO ORDERED.

Petitioners' subsequent motion for reconsideration was denied. Thereafter, their
petition and motion for reconsideration before the Supreme Court were likewise
denied.

On May 09, 2008, respondent judge issued an Order directing respondent Erlinda to
file a new attachment bond in the amount of P35,000,000.00 and petitioners to file
a counterbond within ten days from notice of the filing and approval of the bond of
respondent Erlinda. Petitioners moved for the reconsideration of the said Order
which respondent judge denied and granted a period of fifteen days for respondent
Erlinda to file an attachment bond.

Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of
P35,000,000.00 through Visayan Surety and Insurance Corporation which was
approved by respondent on July 7, 2009.

Meanwhile, on July 3, 2009, petitioners filed an Omnibus Motion praying that a

hearing be held to determine the sufficiency of the attachment bond and they be
allowed to deposit Certificates of Title of real property, and the issuance of the writ
of attachment be held in abeyance.
On July 20, 2009, petitioners filed a motion for extension of time to comply and/or
file the appropriate pleading and to hold in abeyance the reinstatement of the writ
of attachment.

On January 28, 2010, petitioners filed a motion to admit bank property in lieu of
counterbond which was opposed by respondent Erlinda.

On September 24, 2010, respondent judge denied petitioners' motion in the

assailed Order. Their subsequent motion for reconsideration was denied on May 26,
2011.

On June 27, 2011, respondent judge issued an Order reinstating the Writ of
Attachment dated March 1, 2001 for failure of petitioners to file the required
counterbond. Respondent judge also issued an amended Reinstated Writ of
Attachment directing respondent Sheriff Oscar L. Rojas (hereafter respondent
Sheriff) to attach the real estate or personal properties of petitioners in the amount
of P28,597,472.70. On June 30, 2011, the sheriff served the Notice of Garnishment
and the Amended Reinstated Writ of Attachment.

On July 4, 2011, petitioners filed an urgent motion to recall, suspend or hold in

abeyance and re-examination of the amended reinstated writ of preliminary
attachment of June 27, 2011 which was opposed by respondent Erlinda.

On July 19, 2011, respondent Sheriff issued a Sheriffs Partial Report. Thereafter,
petitioners filed this petition for certiorari x x x.
In a Decision dated March 27, 2012, the CA dismissed petitioners' certiorari petition
and affirmed the Orders of the RTC reinstating the Writ of Attachment for failure of
petitioners to file the required counter-bond. The CA ruled that the RTC judge
committed no grave abuse of discretion in denying petitioners' motion to admit
bank property in lieu of counter-bond, thus, it held:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the petition is DISMISSED and accordingly,
DENIED DUE COURSE. The Orders dated September 24, 2010 and May 26, 2011
are hereby AFFIRMED.

SO ORDERED.3cralawlawlibrary
Petitioners filed a motion for reconsideration against said decision, but the same
was denied in a Resolution dated September 11, 2012.

Hence, petitioners filed this present petition raising the following

grounds:chanroblesvirtuallawlibrary
IN THE FIRST ASSAILED ORDER THE HONORABLE COURT OF APPEALS ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN IT MISCONSTRUED AND FAILED TO
RULE ON THE CORRECT LEGAL ISSUE PRESENTED IN THE PETITION FOR
CERTIORARI.4

IN THE SECOND ASSAILED ORDER THE FIONORABLE COURT OF APPEALS AGAIN

ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO PRESENT ANY
LEGAL BASIS FOR STATING THAT RULE 39 OF THE REVISED RULES OF COURT
DOES NOT APPLY.5cralawlawlibrary

Simply stated, the issue for our resolution is whether the CA erred in affirming the
RTC's decision which denied petitioners' motion praying that bank property be
deposited in lieu of cash or a counter-bond.

In their petition, petitioners contend that it has the option to deposit real property,
in lieu of cash or a counter-bond, to secure any contingent lien on its property in
the event respondent wins the case. They argue that Section 2 of Rule 57 only
mentions the term "deposit," thus, it cannot only be confined or construed to refer
to cash.

We rule in the negative.

Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of
attachment may be issued either ex parte or upon motion with notice and hearing
by the court in which the action is pending, or by the Court of Appeals or the
Supreme Court, and must require the sheriff of the court to attach so much of the
property in the Philippines of the party against whom it is issued, not exempt from
execution, as may be sufficient to satisfy the applicant's demand, unless such
party makes deposit or gives a bond as hereinafter provided in an amount
equal to that fixed in the order, which may be the amount sufficient to satisfy
the applicant's demand or the value of the property to be attached as stated by the
applicant, exclusive of costs."

Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall
without delay and with all reasonable diligence attach, to await judgment and
execution in the action, only so much of the property in the Philippines of the party
against whom the writ is issued, not exempt from execution, as may be sufficient to
satisfy the applicant's demand, unless the former makes a deposit with the
court from which the writ is issued, or gives a counter-bond executed to
the applicant, in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached,
exclusive of costs."

From the foregoing, it is evidently clear that once the writ of attachment has been
issued, the only remedy of the petitioners in lifting the same is through a cash
deposit or the filing of the counter-bond. Thus, the Court holds that petitioner's
argument that it has the option to deposit real property instead of depositing cash
or filing a counter-bond to discharge the attachment or stay the implementation
thereof is unmeritorious.

In fact, in Security Pacific Assurance Corporation v. Tria-Infante,6 we held that one

of the ways to secure the discharge of an attachment is for the party whose
property has been attached or a person appearing on his behalf, to post a
counterbond or make the requisite cash deposit in an amount equal to that fixed by
the court in the order of attachment.7
Apropos, the trial court aptly ruled that while it is true that the word deposit cannot
only be confined or construed to refer to cash, a broader interpretation thereof is
not justified in the present case for the reason that a party seeking a stay of the
attachment under Section 5 is required to make a deposit in an amount equal to
the bond fixed by the court in the order of attachment or to the value of the
property to be attached. 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.

In Alcazar v. Arante,8 we held that in construing words and phrases used in a

statute, the general rule is that, in the absence of legislative intent to the contrary,
they should be given their plain, ordinary and common usage meaning. The words
should be read and considered in their natural, ordinary, commonly-accepted and
most obvious signification, according to good and approved usage and without
resorting to forced or subtle construction. Words are presumed to have been
employed by the lawmaker in their ordinary and common use and
acceptation.9 Thus, 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.cralawred

WHEREFORE, premises considered, the instant petition is DENIED. The Decision

dated March 27, 2012 and Resolution dated September 11, 2012 of the Court of
Appeals are hereby AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary

___________

G.R. No. 203530, April 13, 2015

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., AND OSCAR

RAMIREZ, Petitioners, v. ERLINDA KRISHNAN, Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure praying for the annulment of the Decision1 dated March 27, 2012 and
Resolution2 dated September 11, 2012 of the Court of Appeals (CA) in CA-G.R. SP
No. 120664, which affirmed the Orders dated September 24, 2010 and May 26,
2011, respectively, of Branch 30, Regional Trial Court (RTC) - Manila.

The factual antecedents, as found by the CA, are as

follows:chanroblesvirtuallawlibrary
Petitioners Luzon Development Bank, Tomas Clemente, and Oscar Ramirez
(hereafter petitioners) are the respondents in the complaint for Collection of Sum of
Money and Damages filed by respondent Erlinda Khrishnan (hereafter respondent
Erlinda) on February 7, 2001. Respondent Erlinda claimed that she is a client of
respondent bank wherein she maintained several accounts including time deposits.
On several occasions, when respondent Erlinda presented her Time Deposits
Certificates amounting to P28,597,472.70 for payment because they have become
due, petitioners refused to honor them for the reason that they were fraudulent.
Respondent Erlinda likewise applied for a Preliminary Writ of Attachment which the
RTC granted on February 27, 2001.

By virtue of the writ, petitioner bank's accounts in BPI Family Bank, Calamba,
Laguna in the amount of P28,597,472.70 and its account amounting to
P49,000,000.00 in the Central Bank were garnished.

On March 9, 2001, petitioners filed an urgent ex-parte Motion to Recall Quash

and/or Lift Attachment or Garnishment (in excess of amounts in the writ).
Respondent Erlinda opposed the motion.

On August 15, 2001, petitioners filed an Omnibus Motion seeking the substitution of
their garnished account with government securities and the immediate resolution of
their motion to discharge attachment and setting the motion for hearing, which
respondent Erlinda opposed.

On May 22, 2002, the RTC resolved the pending incidents and required the
petitioners to justify their motion to discharge the attachment. During pre-trial on
May 23, 2002, respondents requested additional time to file a supplemental motion
to justify their earlier motions which was granted and gave petitioners ten (10)
days from receipt within which to comment or opposed (sic) it.

On September 8, 2003, the RTC issued an order lifting the attachment to which
respondent Erlinda filed a motion for reconsideration. Respondent Erlinda also filed
a Motion for Inhibition. On December 18, 2003, the RTC denied the motion for
reconsideration but granted the motion for inhibition. The said Order was
questioned by respondent Erlinda by way of Petition for Certiorari before the
7th Division which rendered a decision on November 15, 2006, the dispositive
portion of which reads as follows:chanroblesvirtuallawlibrary
"WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.

THE ORDERS dated September 8, 2003, and December 18, 2003 are NULLIFIED
and SET ASIDE.

The private respondents, as defendants in Civil Case No. 01-100046 entitled Erlinda

C. Krishnan v. Luzon Development Bank, et al., are ORDERED to file a counterbond
in accordance with Sec. 12, Rule 57, 1997 Rules of Civil Procedure, within 10 days
from the finality of this decision; otherwise, the REGIONAL TRIAL COURT, BRANCH
36, in Manila shall immediately reinstate the writ of attachment issued and
implemented in Civil Case No. 01-100046.
Costs of suit to be paid by the respondents. SO ORDERED.
Petitioners' subsequent motion for reconsideration was denied. Thereafter, their
petition and motion for reconsideration before the Supreme Court were likewise
denied.

On May 09, 2008, respondent judge issued an Order directing respondent Erlinda to
file a new attachment bond in the amount of P35,000,000.00 and petitioners to file
a counterbond within ten days from notice of the filing and approval of the bond of
respondent Erlinda. Petitioners moved for the reconsideration of the said Order
which respondent judge denied and granted a period of fifteen days for respondent
Erlinda to file an attachment bond.

Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of
P35,000,000.00 through Visayan Surety and Insurance Corporation which was
approved by respondent on July 7, 2009.

Meanwhile, on July 3, 2009, petitioners filed an Omnibus Motion praying that a

hearing be held to determine the sufficiency of the attachment bond and they be
allowed to deposit Certificates of Title of real property, and the issuance of the writ
of attachment be held in abeyance.

On July 20, 2009, petitioners filed a motion for extension of time to comply and/or
file the appropriate pleading and to hold in abeyance the reinstatement of the writ
of attachment.

On January 28, 2010, petitioners filed a motion to admit bank property in lieu of
counterbond which was opposed by respondent Erlinda.

On September 24, 2010, respondent judge denied petitioners' motion in the

assailed Order. Their subsequent motion for reconsideration was denied on May 26,
2011.

On June 27, 2011, respondent judge issued an Order reinstating the Writ of
Attachment dated March 1, 2001 for failure of petitioners to file the required
counterbond. Respondent judge also issued an amended Reinstated Writ of
Attachment directing respondent Sheriff Oscar L. Rojas (hereafter respondent
Sheriff) to attach the real estate or personal properties of petitioners in the amount
of P28,597,472.70. On June 30, 2011, the sheriff served the Notice of Garnishment
and the Amended Reinstated Writ of Attachment.

On July 4, 2011, petitioners filed an urgent motion to recall, suspend or hold in

abeyance and re-examination of the amended reinstated writ of preliminary
attachment of June 27, 2011 which was opposed by respondent Erlinda.

On July 19, 2011, respondent Sheriff issued a Sheriffs Partial Report. Thereafter,
petitioners filed this petition for certiorari x x x.
In a Decision dated March 27, 2012, the CA dismissed petitioners' certiorari petition
and affirmed the Orders of the RTC reinstating the Writ of Attachment for failure of
petitioners to file the required counter-bond. The CA ruled that the RTC judge
committed no grave abuse of discretion in denying petitioners' motion to admit
bank property in lieu of counter-bond, thus, it held:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the petition is DISMISSED and accordingly,
DENIED DUE COURSE. The Orders dated September 24, 2010 and May 26, 2011
are hereby AFFIRMED.

SO ORDERED.3cralawlawlibrary
Petitioners filed a motion for reconsideration against said decision, but the same
was denied in a Resolution dated September 11, 2012.

Hence, petitioners filed this present petition raising the following

grounds:chanroblesvirtuallawlibrary
IN THE FIRST ASSAILED ORDER THE HONORABLE COURT OF APPEALS ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN IT MISCONSTRUED AND FAILED TO
RULE ON THE CORRECT LEGAL ISSUE PRESENTED IN THE PETITION FOR
CERTIORARI.4

IN THE SECOND ASSAILED ORDER THE FIONORABLE COURT OF APPEALS AGAIN

ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO PRESENT ANY
LEGAL BASIS FOR STATING THAT RULE 39 OF THE REVISED RULES OF COURT
DOES NOT APPLY.5cralawlawlibrary

Simply stated, the issue for our resolution is whether the CA erred in affirming the
RTC's decision which denied petitioners' motion praying that bank property be
deposited in lieu of cash or a counter-bond.

In their petition, petitioners contend that it has the option to deposit real property,
in lieu of cash or a counter-bond, to secure any contingent lien on its property in
the event respondent wins the case. They argue that Section 2 of Rule 57 only
mentions the term "deposit," thus, it cannot only be confined or construed to refer
to cash.

We rule in the negative.

Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of
attachment may be issued either ex parte or upon motion with notice and hearing
by the court in which the action is pending, or by the Court of Appeals or the
Supreme Court, and must require the sheriff of the court to attach so much of the
property in the Philippines of the party against whom it is issued, not exempt from
execution, as may be sufficient to satisfy the applicant's demand, unless such
party makes deposit or gives a bond as hereinafter provided in an amount
equal to that fixed in the order, which may be the amount sufficient to satisfy
the applicant's demand or the value of the property to be attached as stated by the
applicant, exclusive of costs."
Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall
without delay and with all reasonable diligence attach, to await judgment and
execution in the action, only so much of the property in the Philippines of the party
against whom the writ is issued, not exempt from execution, as may be sufficient to
satisfy the applicant's demand, unless the former makes a deposit with the
court from which the writ is issued, or gives a counter-bond executed to
the applicant, in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached,
exclusive of costs."

From the foregoing, it is evidently clear that once the writ of attachment has been
issued, the only remedy of the petitioners in lifting the same is through a cash
deposit or the filing of the counter-bond. Thus, the Court holds that petitioner's
argument that it has the option to deposit real property instead of depositing cash
or filing a counter-bond to discharge the attachment or stay the implementation
thereof is unmeritorious.

In fact, in Security Pacific Assurance Corporation v. Tria-Infante,6 we held that one

of the ways to secure the discharge of an attachment is for the party whose
property has been attached or a person appearing on his behalf, to post a
counterbond or make the requisite cash deposit in an amount equal to that fixed by
the court in the order of attachment.7

Apropos, the trial court aptly ruled that while it is true that the word deposit cannot
only be confined or construed to refer to cash, a broader interpretation thereof is
not justified in the present case for the reason that a party seeking a stay of the
attachment under Section 5 is required to make a deposit in an amount equal to
the bond fixed by the court in the order of attachment or to the value of the
property to be attached. 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.

In Alcazar v. Arante,8 we held that in construing words and phrases used in a

statute, the general rule is that, in the absence of legislative intent to the contrary,
they should be given their plain, ordinary and common usage meaning. The words
should be read and considered in their natural, ordinary, commonly-accepted and
most obvious signification, according to good and approved usage and without
resorting to forced or subtle construction. Words are presumed to have been
employed by the lawmaker in their ordinary and common use and
acceptation.9 Thus, 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.cralawred

WHEREFORE, premises considered, the instant petition is DENIED. The Decision

dated March 27, 2012 and Resolution dated September 11, 2012 of the Court of
Appeals are hereby AFFIRMED.
SO ORDERED.chanroblesvirtuallawlibrary

___________

G.R. No. 203530, April 13, 2015

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., AND OSCAR

RAMIREZ, Petitioners, v. ERLINDA KRISHNAN, Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure praying for the annulment of the Decision1 dated March 27, 2012 and
Resolution2 dated September 11, 2012 of the Court of Appeals (CA) in CA-G.R. SP
No. 120664, which affirmed the Orders dated September 24, 2010 and May 26,
2011, respectively, of Branch 30, Regional Trial Court (RTC) - Manila.

The factual antecedents, as found by the CA, are as

follows:chanroblesvirtuallawlibrary

Petitioners Luzon Development Bank, Tomas Clemente, and Oscar Ramirez

(hereafter petitioners) are the respondents in the complaint for Collection of Sum of
Money and Damages filed by respondent Erlinda Khrishnan (hereafter respondent
Erlinda) on February 7, 2001. Respondent Erlinda claimed that she is a client of
respondent bank wherein she maintained several accounts including time deposits.
On several occasions, when respondent Erlinda presented her Time Deposits
Certificates amounting to P28,597,472.70 for payment because they have become
due, petitioners refused to honor them for the reason that they were fraudulent.
Respondent Erlinda likewise applied for a Preliminary Writ of Attachment which the
RTC granted on February 27, 2001.

By virtue of the writ, petitioner bank's accounts in BPI Family Bank, Calamba,
Laguna in the amount of P28,597,472.70 and its account amounting to
P49,000,000.00 in the Central Bank were garnished.

On March 9, 2001, petitioners filed an urgent ex-parte Motion to Recall Quash

and/or Lift Attachment or Garnishment (in excess of amounts in the writ).
Respondent Erlinda opposed the motion.

On August 15, 2001, petitioners filed an Omnibus Motion seeking the substitution of
their garnished account with government securities and the immediate resolution of
their motion to discharge attachment and setting the motion for hearing, which
respondent Erlinda opposed.
On May 22, 2002, the RTC resolved the pending incidents and required the
petitioners to justify their motion to discharge the attachment. During pre-trial on
May 23, 2002, respondents requested additional time to file a supplemental motion
to justify their earlier motions which was granted and gave petitioners ten (10)
days from receipt within which to comment or opposed (sic) it.

On September 8, 2003, the RTC issued an order lifting the attachment to which
respondent Erlinda filed a motion for reconsideration. Respondent Erlinda also filed
a Motion for Inhibition. On December 18, 2003, the RTC denied the motion for
reconsideration but granted the motion for inhibition. The said Order was
questioned by respondent Erlinda by way of Petition for Certiorari before the
7th Division which rendered a decision on November 15, 2006, the dispositive
portion of which reads as follows:chanroblesvirtuallawlibrary
"WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.

THE ORDERS dated September 8, 2003, and December 18, 2003 are NULLIFIED
and SET ASIDE.

The private respondents, as defendants in Civil Case No. 01-100046 entitled Erlinda

C. Krishnan v. Luzon Development Bank, et al., are ORDERED to file a counterbond
in accordance with Sec. 12, Rule 57, 1997 Rules of Civil Procedure, within 10 days
from the finality of this decision; otherwise, the REGIONAL TRIAL COURT, BRANCH
36, in Manila shall immediately reinstate the writ of attachment issued and
implemented in Civil Case No. 01-100046.

Costs of suit to be paid by the respondents. SO ORDERED.

Petitioners' subsequent motion for reconsideration was denied. Thereafter, their
petition and motion for reconsideration before the Supreme Court were likewise
denied.

On May 09, 2008, respondent judge issued an Order directing respondent Erlinda to
file a new attachment bond in the amount of P35,000,000.00 and petitioners to file
a counterbond within ten days from notice of the filing and approval of the bond of
respondent Erlinda. Petitioners moved for the reconsideration of the said Order
which respondent judge denied and granted a period of fifteen days for respondent
Erlinda to file an attachment bond.

Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of
P35,000,000.00 through Visayan Surety and Insurance Corporation which was
approved by respondent on July 7, 2009.

Meanwhile, on July 3, 2009, petitioners filed an Omnibus Motion praying that a

hearing be held to determine the sufficiency of the attachment bond and they be
allowed to deposit Certificates of Title of real property, and the issuance of the writ
of attachment be held in abeyance.

On July 20, 2009, petitioners filed a motion for extension of time to comply and/or
file the appropriate pleading and to hold in abeyance the reinstatement of the writ
of attachment.

On January 28, 2010, petitioners filed a motion to admit bank property in lieu of
counterbond which was opposed by respondent Erlinda.

On September 24, 2010, respondent judge denied petitioners' motion in the

assailed Order. Their subsequent motion for reconsideration was denied on May 26,
2011.

On June 27, 2011, respondent judge issued an Order reinstating the Writ of
Attachment dated March 1, 2001 for failure of petitioners to file the required
counterbond. Respondent judge also issued an amended Reinstated Writ of
Attachment directing respondent Sheriff Oscar L. Rojas (hereafter respondent
Sheriff) to attach the real estate or personal properties of petitioners in the amount
of P28,597,472.70. On June 30, 2011, the sheriff served the Notice of Garnishment
and the Amended Reinstated Writ of Attachment.

On July 4, 2011, petitioners filed an urgent motion to recall, suspend or hold in

abeyance and re-examination of the amended reinstated writ of preliminary
attachment of June 27, 2011 which was opposed by respondent Erlinda.

On July 19, 2011, respondent Sheriff issued a Sheriffs Partial Report. Thereafter,
petitioners filed this petition for certiorari x x x.
In a Decision dated March 27, 2012, the CA dismissed petitioners' certiorari petition
and affirmed the Orders of the RTC reinstating the Writ of Attachment for failure of
petitioners to file the required counter-bond. The CA ruled that the RTC judge
committed no grave abuse of discretion in denying petitioners' motion to admit
bank property in lieu of counter-bond, thus, it held:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the petition is DISMISSED and accordingly,
DENIED DUE COURSE. The Orders dated September 24, 2010 and May 26, 2011
are hereby AFFIRMED.

SO ORDERED.3cralawlawlibrary
Petitioners filed a motion for reconsideration against said decision, but the same
was denied in a Resolution dated September 11, 2012.

Hence, petitioners filed this present petition raising the following

grounds:chanroblesvirtuallawlibrary
IN THE FIRST ASSAILED ORDER THE HONORABLE COURT OF APPEALS ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN IT MISCONSTRUED AND FAILED TO
RULE ON THE CORRECT LEGAL ISSUE PRESENTED IN THE PETITION FOR
CERTIORARI.4

IN THE SECOND ASSAILED ORDER THE FIONORABLE COURT OF APPEALS AGAIN

ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO PRESENT ANY
LEGAL BASIS FOR STATING THAT RULE 39 OF THE REVISED RULES OF COURT
DOES NOT APPLY.5cralawlawlibrary
Simply stated, the issue for our resolution is whether the CA erred in affirming the
RTC's decision which denied petitioners' motion praying that bank property be
deposited in lieu of cash or a counter-bond.

In their petition, petitioners contend that it has the option to deposit real property,
in lieu of cash or a counter-bond, to secure any contingent lien on its property in
the event respondent wins the case. They argue that Section 2 of Rule 57 only
mentions the term "deposit," thus, it cannot only be confined or construed to refer
to cash.

We rule in the negative.

Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of
attachment may be issued either ex parte or upon motion with notice and hearing
by the court in which the action is pending, or by the Court of Appeals or the
Supreme Court, and must require the sheriff of the court to attach so much of the
property in the Philippines of the party against whom it is issued, not exempt from
execution, as may be sufficient to satisfy the applicant's demand, unless such
party makes deposit or gives a bond as hereinafter provided in an amount
equal to that fixed in the order, which may be the amount sufficient to satisfy
the applicant's demand or the value of the property to be attached as stated by the
applicant, exclusive of costs."

Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall
without delay and with all reasonable diligence attach, to await judgment and
execution in the action, only so much of the property in the Philippines of the party
against whom the writ is issued, not exempt from execution, as may be sufficient to
satisfy the applicant's demand, unless the former makes a deposit with the
court from which the writ is issued, or gives a counter-bond executed to
the applicant, in an amount equal to the bond fixed by the court in the
order of attachment or to the value of the property to be attached,
exclusive of costs."

From the foregoing, it is evidently clear that once the writ of attachment has been
issued, the only remedy of the petitioners in lifting the same is through a cash
deposit or the filing of the counter-bond. Thus, the Court holds that petitioner's
argument that it has the option to deposit real property instead of depositing cash
or filing a counter-bond to discharge the attachment or stay the implementation
thereof is unmeritorious.

In fact, in Security Pacific Assurance Corporation v. Tria-Infante,6 we held that one

of the ways to secure the discharge of an attachment is for the party whose
property has been attached or a person appearing on his behalf, to post a
counterbond or make the requisite cash deposit in an amount equal to that fixed by
the court in the order of attachment.7

Apropos, the trial court aptly ruled that while it is true that the word deposit cannot
only be confined or construed to refer to cash, a broader interpretation thereof is
not justified in the present case for the reason that a party seeking a stay of the
attachment under Section 5 is required to make a deposit in an amount equal to
the bond fixed by the court in the order of attachment or to the value of the
property to be attached. 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.

In Alcazar v. Arante,8 we held that in construing words and phrases used in a

statute, the general rule is that, in the absence of legislative intent to the contrary,
they should be given their plain, ordinary and common usage meaning. The words
should be read and considered in their natural, ordinary, commonly-accepted and
most obvious signification, according to good and approved usage and without
resorting to forced or subtle construction. Words are presumed to have been
employed by the lawmaker in their ordinary and common use and
acceptation.9 Thus, 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.cralawred

WHEREFORE, premises considered, the instant petition is DENIED. The Decision

dated March 27, 2012 and Resolution dated September 11, 2012 of the Court of
Appeals are hereby AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary

_______________

G.R. No. 181721, September 09, 2015

WATERCRAFT VENTURE CORPORATION, REPRESENTED BY ITS VICE-

PRESIDENT, ROSARIO E. RAÑOA, Petitioner, v. ALFRED RAYMOND
WOLFE, Respondent.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court,

seeking to reverse and set aside the Court of Appeals (CA) Resolution1 dated
January 24, 2008 denying the motion for reconsideration of its Decision2 dated
September 27, 2007 in CA-G.R. SP No. 97804.

The facts are as follows:chanRoblesvirtualLawlibrary

Petitioner Watercraft Venture Corporation (Watercraft) is engaged in the business

of building, repairing, storing and maintaining yachts, boats and other pleasure
crafts at the Subic Bay Freeport Zone, Subic, Zambales. In connection with its
operations and maintenance of boat storage facilities, it charges a boat storage fee
of Two Hundred Seventy-Two US Dollars (US$272.00) per month with interest of
4% per month for unpaid charges.

Sometime in June 1997, Watercraft hired respondent Alfred Raymond Wolfe

(Wolfe), a British national and resident of Subic Bay Freeport Zone, Zambales, as
its Shipyard Manager.

During his empolyment, Wolfe stored the sailboat, Knotty Gull, within Watercraft1 s
boat storage facilities, but never paid for the storage fees.

On March 7, 2002, Watercraft terminated the employment of Wolfe.

Sometime in June 2002, Wolfe pulled out his sailboat from Watercraft's storage
facilities after signing a Boat Pull-Out Clearance dated June 29, 2002 where he
allegedly acknowledged the outstanding obligation of Sixteen Thousand Three
Hundred and Twenty-Four and 82/100 US Dollars (US$16,324.82) representing
unpaid boat storage fees for the period of June 1997 to June 2002. Despite
repeated demands, he failed to pay the said amount.

Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for Collection of
Sum of Money with Damages with an Application for the Issuance of a Writ of
Preliminary Attachment. The case was docketed as Civil Case No. 4534-MN, and
raffled to Branch 1703 of the Regional Trial Court (RTC) of Malabon City.

In his Answer, Wolfe claimed he was hired as Service and Repair Manager, instead
of Shipyard Manager. He denied owing Watercraft the amount of US$16,324.82
representing storage fees for the sailboat. He explained that the sailboat was
purchased in February 1998 as part of an agreement between him and Watercraft1
s then General Manager, Barry Bailey, and its President, Ricky Sandoval, 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. Thus, he claimed to have been
surprised when he received five (5) invoices billing him for the said fees two (2)
months after his services were terminated. Fie 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, finding Watercraft's ex-parte  application for writ of preliminary

attachment sufficient in form and in substance pursuant to Section 1 of Rule 57 of
the Rules of Court, the RTC granted the same in the Order dated July 15, 2005,
thus:

WHEREFORE, let a Writ of Preliminary Attachment be issued accordingly in favor of

the plaintiff, Watercraft Ventures Corporation conditioned upon the filing of
attachment bond in the amount of  Three Million Two Hundred Thirty-One
Thousand Five Hundred and Eighty-Nine and 25/100 Pesos
(Php3,231,589.25)  and the said writ be served simultaneously with the
summons, copies of the complaint, application for attachment, applicant's affidavit
and bond, and this Order upon the defendant.

SO ORDERED.4
Pursuant to the Order dated July 15, 2005, the Writ of Attachment dated August 3,
2005 and the Notice of Attachment dated August 5, 2005 were issued, and Wolfe's
two vehicles, a gray Mercedes Benz with plate number XGJ 819 and a maroon
Toyota Corolla with plate number TFW 110, were levied upon.

On August 12, 2005, Wolfe's accounts at the Bank of the Philippine Islands were
also garnished.

By virtue of the Notice of Attachment and Levy dated September 5, 2005, a white
Dodge pick-up truck with plate number XXL 111 was also levied upon. However, a
certain Jeremy Simpson filed a Motion for Leave of Court to Intervene, claiming
that he is the owner of the truck as shown by a duly-notarized Deed of Sale
executed on August 4, 2005, the Certificate of Registration No. 3628665-1 and the
Official Receipt No. 271839105.

On November 8, 2005, 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 pay or perform an obligation does not amount to fraud. Me also claimed
that he is not a flight risk for the following reasons: (1) contrary to the claim that
his Special Working Visa expired in April 2005, his Special Subic Working Visa and
Alien Certificate of Registration are valid until April 25, 2007 and May 11, 2006,
respectively; (2) he and his family have been residing in the Philippines since 1997;
(3) he is an existing stockholder and officer of Wolfe Marine Corporation which is
registered with the Securities and Exchange Commission, and a consultant of
"Sudeco/Ayala" projects in Subic, a member of the Multipartite Committee for the
new port development in Subic, and the Subic Chamber of Commerce; and (4) he
intends to finish prosecuting his pending labor case against Watercraft. On even
date, Watercraft also filed a Motion for Preliminary Hearing of its affirmative
defenses of forum shopping,  litis pendentia, and laches.

In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to Discharge
Writ of Attachment and Motion for Preliminary Hearing for lack of merit.

Wolfe filed a motion for reconsideration, but the RTC also denied it for lack of merit
in an Order dated November 10, 2006. Aggrieved, Wolfe filed a petition
for certiorari  before the CA.

The CA granted Wolfe's petition in a Decision dated September 2007, the

dispositive portion of which reads:
WHEREFORE, the Order dated March 20, 2006 and the Order dated November 10,
2006 of respondent Judge are hereby ANNULLED  and SET ASIDE. Accordingly,
the Writ of Attachment issued on August 3, 2005, the Notice of Attachment dated
August 5, 2005 and the  Notice of Attachment and Levy  dated September 5, 2005
are hereby also declared NULL and  VOID, and private respondent
is DIRECTED  to return to their owners the vehicles that were attached pursuant to
the Writ.

SO ORDERED.5
The CA ruled that the act of issuing the writ of preliminary attachment ex-
parte constitutes grave abuse of discretion on the part of the RTC, thus:
x x x In  Cosiquien  [v. Court of Appeals], the Supreme Court held that:
"Where a judge issues a fatally defective writ of preliminary attachment
based on an affidavit which failed to allege the requisites prescribed for
the issuance of the writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant
fatally defective. The judge issuing it is deemed to have acted in excess of
jurisdiction. In fact, the defect cannot even be cured by amendment. Since the
attachment is a harsh and rigorous remedy which exposed the debtor to humiliation
and annoyance, the rule authorizing its issuance must be strictly construed in favor
of defendant. It is the duty of the court before issuing the Avrit to ensure
that all the requisites of the law have been complied with. Otherwise, a
judge acquires no jurisdiction to issue the writ." (emphasis supplied)
In the instant case, the Affidavit of Merit executed by Rosario E. Rañoa,
Watercraft's Vice-President, 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. And upon Wolfe's filing of the
Motion to Discharge the Writ, what the respondent Judge should have done was to
determine, through a hearing, whether the allegations of fraud were true. As
further held in Cosiquien:
"When a judge issues a writ of preliminary attachment ex-parte, it is
incumbent on him, upon proper challenge of his order to determine
whether or not the same was improvidently issued. If the party against
whom the writ is prayed for squarely controverts the allegation of fraud, it
is incumbent on the applicant to prove his allegation. The burden of
proving that there indeed was fraud lies with the party making such
allegation. This finds support in Section 1, Rule 131 Rules of Court. In this
jurisdiction, fraud is never presumed." (Emphasis supplied)
As correctly noted by Wolfe, although Sec. 1 of Rule 57 allows a party to invoke
fraud as a ground for the issuance of a writ of attachment, the Rules require that in
all averments of fraud, the circumstances constituting fraud must be stated with
particularity, pursuant to Rule 8, Section 5. The Complaint merely stated, in
paragraph 23 thereof that "For failing to pay the use [of] facilities and services in
the form of boat storage fees, the Defendant is clearly guilty of fraud which entitles
the Plaintiff to a Writ of Preliminary Attachment upon the property of the Defendant
as security for the satisfaction of any judgment herein." This allegation does not
constitute fraud as contemplated by law, fraud being the "generic term embracing
all multifarious means which human ingenuity can devise, and which are resorted
to by one individual to secure an advantage over another by false suggestions or by
suppression of truth and includes all surprise, trick, cunning, dissembling and any
unfair way by which another is cheated." In this instance, Wolfe's mere failure to
pay the boat storage fees does not necessarily amount to fraud, absent any
showing that such failure was due to [insidious] machinations and intent on his part
to defraud Watercraft of the amount due it.

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 a local school. He also claims to be an existing stockholder and officer
of Wolfe Marine Corporation, a SEC-registered corporation, as well as a consultant
of projects in the Subic Area, a member of the Multipartite Committee for the new
port development in Subic, and a member of the Subic Chamber of Commerce.
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. The said circumstances, as well as the
existence of said labor case where Wolfe stands not only to be vindicated for his
alleged illegal dismissal, but also to receive recompense, should have convinced the
trial court that Wolfe would not want to leave the country at will just because a suit
for the collection of the alleged unpaid boat storage fees has been filed against him
by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead
automatically to the conclusion that he would leave the country. It is worth noting
that all visas issued by the government to foreigners staying in the Philippines have
expiration periods. These visas, however, may be renewed, subject to the
requirements of the law. In Wolfe's case, he indeed renewed his visa, as shown
by Special Working Visa No. 05-WV-0124P  issued by the Subic Bay Metropolitan
Authority Visa Processing Office on April 25, 2005, and with validity of two (2)
years therefrom. Moreover, his  Alien Certificate of Registration was valid up to May
11, 2006.

Based on the foregoing, it is therefore clear that the writ was improvidently issued.
It is well to emphasize that "[T]he 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.
If all the requisites for the granting of the writ are not present, then the court
which issues it acts in excess of its jurisdiction. Thus, in this case, Watercraft failed
to meet all the requisites for the issuance of the writ. Thus, in granting the same,
respondent Judge acted with grave abuse of discretion.6
In a Resolution dated January 24, 2008, the CA denied Watercraft's motion for
reconsideration of its Decision, there being no new or significant issues raised in
the motion.

Dissatisfied with the CA Decision and Resolution, Watercraft filed this petition for
review on  certiorari, raising these two issues:
I.
WHETHER THE EX-PARTE  ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE
TRIAL COURT IN FAVOR OF THE PETITIONER IS VALID.

II.

WHETHER THE ALLEGATIONS IN THE AFFIDAVIT OF MERIT CONCERNING FRAUD

ARE SUFFICIENT TO WARRANT THE ISSUANCE OF A PRELIMINARY WRIT OF
ATTACHMENT BY THE TRIAL COURT IN FAVOR OF THE PETITIONER.7
Watercraft argues that the CA erred in holding that the RTC committed grave abuse
of discretion in issuing the writ of preliminary attachment, and in finding that the
affidavit of merit only enumerated circumstances tending to show the possibility of
Wolfe's flight from the country, but failed to show fraudulent intent on his part to
defraud the company.

Stressing that its application for such writ was anchored on two (2) grounds under
Section 1,8  Rule 57, Watercraft insists that, contrary to the CA ruling, its affidavit of
merit sufficiently averred with particularity the circumstances constituting fraud as
a common element of said grounds.

Watercraft points out that its affidavit of merit shows that from 1997, soon after
Wolfe's employment as Shipyard Manager, up to 2002, when his employment was
terminated, or for a period of five (5) years, not once did he pay the cost for the
use of the company's boat storage facilities, despite knowledge of obligation and
obvious ability to pay by reason of his position.

Watercraft adds that its affidavit clearly stated that Wolfe, in an attempt to avoid
settling of his outstanding obligations to the company, signed a Boat Pull-Out
Clearance where he merely acknowledged but did not pay Sixteen Thousand Three
Hundred and Twenty-Four and 82/100 US Dollars (US$16,324.82) representing
unpaid boat storage fees for the period commencing June 1997 to June 2002. It
avers that the execution of such clearance enabled Wolfe to pull out his boat from
the company storage facilities without payment of storage fees.

Watercraft also faults the CA in finding no merit in its allegation that Wolfe is a
flight risk. It avers that he was supposed to stay and work in the country for a
limited period, and will eventually leave; that despite the fact that his wife and
children reside in the country, he can still leave with them anytime; and that his
work in the country will not prevent him from leaving, thereby defeating the
purpose of the action, especially since he had denied responsibility for his
outstanding obligations. It submits that the CA overlooked paragraph 28 of its
Complaint which alleged that "[i]n support of the foregoing allegations and the
prayer for the issuance of a Writ of Preliminary Attachment in the instant case, the
Plaintiff has attached hereto the Affidavit of the Vice-President of the Plaintiff, MS.
ROSARIO E. RANOA x x x."9

Watercraft asserts that it has sufficiently complied with the only requisites for the
issuance of the writ of preliminary attachment under Section 3, Rule 57 of the
Rules of Court, i.e., affidavit of merit and bond of the applicant. It posits that
contrary to the CA ruling, there is no requirement that evidence must first be
offered before a court can grant such writ on the basis of Section 1 (d) of Rule 57,
and that the rules only require an affidavit showing that the case is one of those
mentioned in Section 1, Rule 57. It notes that although a party is entitled to oppose
an application for the issuance of the writ or to move for the discharge thereof by
controverting the allegations of fraud, such rule does not apply when the same
allegations constituting fraud are the very facts disputed in the main action, as in
this case.

Watercraft also points out the inconsistent stance of Wolfe with regard to the
ownership and possession of the sailboat. Contrary to Wolfe's Answer that the
purchase of the sailboat was made pursuant to a three (3)-way partnership
agreement between him and its General Manager and Executive Vice-President,
Barry Bailey, and its President, Ricky Sandoval, Watercraft claims that he made a
complete turnaround and exhibited acts of sole-ownership by signing the Boat Pull-
Out Clearance in order to retrieve the sailboat. It argues that common sense and
logic would dictate that he should have invoked the existence of the partnership to
answer the demand for payment of the storage fees.

Watercraft contends that in order to pre-empt whatever action it may decide to

take with respect to the sailboat in relation to his liabilities, Wolfe accomplished in
no time the clearance that paved the way for its removal from the company's
premises without paying his outstanding obligations. It claims that such act reveals
a fraudulent intent to use the company storage facilities without payment of
storage fees, and constitutes unjust enrichment.

The petition lacks merit.

A writ of preliminary attachment is defined as a provisional remedy issued upon

order of the court where an action is pending to be levied upon the property or
properties of the defendant therein, the same to be held thereafter by the sheriff as
security for the satisfaction of whatever judgment that might be secured in the said
action by the attaching creditor against the defendant.10  However, it should be
resorted to only when necessary and as a last remedy because it exposes the
debtor to humiliation and annoyance.11  It must be granted only on concrete and
specific grounds and not merely on general averments quoting the words of the
rules.12  Since attachment is harsh, extraordinary, and summary in nature,13  the
rules on the application of a writ of attachment must be strictly construed in favor
of the defendant.

For the issuance of an  ex-parte issuance of the preliminary attachment to be valid,

an affidavit of merit and an applicant's bond must be filed with the court14 in which
the action is pending. Such bond executed to the adverse party in the amount fixed
by the court is subject to the conditions that the applicant will pay: (1) all costs
which may be adjudged to the adverse party; and (2) all damages which such party
may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.15  As to the requisite affidavit of merit, Section
3,16 Rule 57 of the Rules of Court states that an order of attachment shall be
granted only when it appears in the affidavit of the applicant, or of some other
person who personally knows the facts:
that a sufficient cause of action exists;ChanRoblesVirtualawlibrary

that the case is one of those mentioned in Section

117 hereof;ChanRoblesVirtualawlibrary

that there is no other sufficient security for the claim sought to be enforced by the
action; and

that the amount due to the applicant, or the value of the property the possession of
which he is entitled to recover, is as much as the sum for which the order is
granted above all legal counterclaims.
The mere filing of an affidavit reciting the facts required by Section 3, Rule 57,
however, is not enough to compel the judge to grant the writ of preliminary
attachment. Whether or not the affidavit sufficiently established facts therein stated
is a question to be determined by the court in the exercise of its discretion.18  "The
sufficiency or insufficiency of an affidavit depends upon the amount of credit given
it by the judge, and its acceptance or rejection, upon his sound discretion."19  Thus,
in reviewing the conflicting findings of the CA and the RTC on the pivotal issue of
whether or not Watercraft's affidavit of merit sufficiently established facts which
constitute as grounds upon which attachment may be issued under Section 1
(a)20 and (d),21 Rule 57, the Court will examine the Affidavit of Preliminary
Attachment22  of Rosario E. Rañoa, its Vice-President, which reiterated the following
allegations in its complaint to substantiate the application for a writ of preliminary
attachment:
xxxx

4. Sometime in June 1997, the Defendant was hired as Watercraft's Shipyard

Manager.

5. Soon thereafter, the Defendant placed his sailboat, the Knotty Gull, within the
boat storage facilities of Watercraft for purposes of storage and safekeeping.

6. Despite having been employed by Watercraft, the Defendant was not exempted
from paying Watercraft boat storage fees for the use of the said storage facilities.

7. By virtue of his then position and employment with Watercraft, the Defendant
was very much knowledgeable of the foregoing fact.

8. All throughout his employment with Watercraft, the Defendant used the boat
storage facilities of Watercraft for his Knotty Gull.

9. However, all throughout the said period of his employment, the Defendant never
paid the boat storage fees in favor of the Plaintiff.

10. The Defendant's contract of employment with Watercraft was terminated on 07

March 2002.

11. [Sometime] thereafter, that is, in or about June 2002, the Defendant pulled out
the Knotty Gull  from the boat storage facilities of Watercraft.

12. Instead of settling in full his outstanding obligations concerning unpaid storage
fees before pulling our the Knotty Gull, the Defendant signed a Boat Pull-Out
Clearance dated 29 June 2002 wherein he merely acknowledged the then
outstanding balance of Sixteen Thousand Three Hundred and Twenty-four and
82/100 US Dollars (US$16,324.82), representing unpaid boat storage fees for the
period commencing June 1997 to June 2002, that he owed Watercraft.

13. By reason of Defendant's mere accomplishment of the said Boat Pull-Out

Clearance with acknowledgment of his outstanding obligation to Watercraft in
unpaid boat storage fees, Mr. Franz Urbanek, then the Shipyard Manager who
replaced the Defendant, contrary to company policy, rules and regulations,
permitted the latter to physically pull out his boat from the storage facilities of the
Plaintiff without paying any portion of his outstanding obligation in storage fees.

14. Several demands were then made upon the Defendant for him to settle his
outstanding obligations to the Plaintiff in unpaid storage fees but the same went
unheeded.

15. As of 02 April 2005, the outstanding obligation of the Defendant to the Plaintiff
in unpaid boat storage fees stands at Three Million Two Hundred Thirty-One
Thousand Five Hundred and Eighty-Nine and 25/100 Pesos (Php3,231,589.25)
inclusive of interest charges.

16. For failing to pay for the use [of] facilities and services—in the form of boat
storage facilities—duly enjoyed by him and for failing and refusing to fulfill his
promise to pay for the said boat storage fees, the Defendant is clearly guilty
of fraud  which entitles the Plaintiff to a  Writ of Preliminary Attachment upon the
property of the Defendant as security for the satisfaction of any judgment in its
favor in accordance with the provisions of Paragraph (d), Section 1, Rule 57 of the
Rules of Court.

17. The instant case clearly falls under the said provision of law.

18. Furthermore, lawful factual and legal grounds exist which show that
the Defendant may have departed or is about to depart the country to
defraud his creditors thus rendering it imperative that a Writ of Preliminary
Attachment be issued in favor of the Plaintiff in the instant case.

19. The possibility of flight on the part of the Defendant is heightened by the
existence of the following circumstances:
a. The Special Working Visa issued in favor of the Defendant expired in April
2005;ChanRoblesVirtualawlibrary
b. The Defendant is a British national who may easily leave the country at
will;ChanRoblesVirtualawlibrary

c. The Defendant has no real properties and visible, permanent business or

employment in the Philippines; and

e. The house last known to have been occupied by the Defendant is merely being
rented by him.
20. All told, the Defendant is a very serious flight risk which fact will certainly
render for naught the capacity of the Plaintiff to recover in the instant case.23
After a careful perusal of the foregoing; allegations, the Court agrees with the CA
that Watercraft failed to state with particularity the circumstances constituting
fraud, as required by Section 5,24  Rule 8 of the Rules of Court, and that Wolfe's
mere failure to pay the boat storage fees does not necessarily amount to fraud,
absent any showing that such failure was due to insidious machinations and intent
on his part to defraud Watercraft of the amount due it.

In  Liberty Insurance Corporation v. Court of Appeals,25 the Court explained that to

constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, it
must be shown that the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. A debt is fraudulently contracted if at the time of
contracting it, the debtor has a preconceived plan or intention not to pay. "The
fraud must relate to the execution of the agreement and must have been the
reason which induced the other party into giving consent which he would not have
otherwise given."26

Fraudulent intent is not a physical entity, but a condition of the mind beyond the
reach of the senses, usually kept secret, very unlikely to be confessed, and
therefore, can only be proved by unguarded expressions, conduct and
circumstances.27 Thus, the applicant for a writ of preliminary attachment must
sufficiently show the factual circumstances of the alleged fraud because fraudulent
intent cannot be inferred from the debtor's mere non-payment of the debt or failure
to comply with his obligation.28  The particulars of such circumstances necessarily
include the time, persons, places and specific acts of fraud committed.29  An
affidavit which does not contain concrete and specific grounds is inadequate to
sustain the issuance of such writ. In fact, mere general averments render the writ
defective and the court that ordered its issuance acted with grave abuse of
discretion amounting to excess of jurisdiction.30

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 be specific, Watercraft's following allegation
is unsupported by any particular averment of circumstances that will show why or
how such inference or conclusion was arrived at, to wit: "16. For failing to pay for
the use [of] facilities and services - in the form of boat storage facilities - duly
enjoyed by him and for failing and refusing to fulfill his promise to pay for the said
boat storage fees, the Defendant is clearly guilty of fraud x x x."31  It is not an
allegation of essential facts constituting Watercraft's causes of action, but a mere
conclusion of law.

With respect to Section 1 (a),32  Rule 57, the other ground invoked by Watercraft for
the issuance of the writ of preliminary attachment, the Court finds no compelling
reason to depart from the CA's exhaustive ruling to the effect that such writ is
unnecessary because Wolfe is not a flight risk, thus:
As to the allegation that Wolfe is a (light risk, thereby warranting the issuance of
the writ, the same lacks merit. The mere fact that Wolfe is a British national does
not automatically mean that he would leave the country at will. As Wolfe avers, he
and his family had been staying in the Philippines since 1997, with his daughters
studying at a local school. He also claims to be an existing stockholder and officer
of Wolfe Marine Corporation, a SEC - registered corporation, as well as a consultant
of projects in the Subic Area, a member of the Multipartite Committee for the new
port development in Subic, and a member of the Subic Chamber of Commerce.
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. The said circumstances, as well as the
existence of said labor case where Wolfe stands not only to be vindicated for his
alleged illegal dismissal, but also to receive recompense, should have convinced the
trial court that Wolfe would not want to leave the country at will just because a suit
for the collection of the alleged unpaid boat storage fees has been filed against him
by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead
automatically to the conclusion that he would leave the country. It is worth noting
that all visas issued by the government to foreigner staying in the Philippines have
expiration periods. These visas, however, may be renewed, subject to the
requirements of the law. In Wolfe's case, he indeed renewed his visa, as shown
by Special Working Visa No. 05-WV-0124P  issued by the Subic Bay Metropolitan
Authority Visa Processing Office on April 25, 2005, and with validity of two (2)
years therefrom. Moreover, his  Alien Certificate of Registration was valid up to May
11, 2006.33
Meanwhile, Watercraft's reliance on  Chuidian v. Sandiganbayan34 is displaced. It is
well settled that:
x x x when the preliminary attachment is issued upon a ground which is at
the same time the applicant's cause of action;  e.g., "an action for money or
property embezzled or fraudulently misapplied or converted to his own use by a
public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or
clerk, in the course of his employment as such, or by any other person in a
fiduciary capacity, or for a willful violation of duty," or "an action against a party
who has been guilty of fraud in contracting the debt or incurring the obligation
upon which the action is brought,"  the defendant is not allowed to file a
motion to dissolve the attachment under Section 13 of Rule 57 by offering
to show the falsity of the factual averments in the plaintiffs application and
affidavits on which the writ was based - and consequently that the writ
based thereon had been improperly or irregularly issued - the reason being
that the hearing on such a motion for dissolution of the writ would be
tantamount to a trial of the merits of the action.  In other words, the merits of
the action would be ventilated at a mere hearing of a motion, instead of at the
regular trial.35

Be that as it may, the foregoing rule is not applicable in this case because when
Wolfe filed a motion to dissolve the writ of preliminary attachment, he did not offer
to show the falsity of the factual averments in Watercraft's application and affidavit
on which the writ was based. Instead, he sought the discharge of the writ on the
ground that Watercraft failed to particularly allege any circumstance amounting to
fraud. No trial on the merits of the action at a mere hearing of such motion will be
had since only the sufficiency of the factual averments in the application and
affidavit of merit will be examined in order to find out whether or not Wolfe was
guilty of fraud in contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof.

Furthermore, the other ground upon which the writ of preliminary attachment was
issued by the RTC is not at the same time the applicant's cause of action.
Assuming arguendo that the RTC was correct in issuing such writ on the ground
that Watercraft's complaint involves an action for the recovery of a specified
amount of money or damages against a party, like Wolfe, who is about to depart
from the Philippines with intent to defraud his creditors, the Court stresses that the
circumstances36 cited in support thereof are merely allegations in support of its
application for such writ.37 Such circumstances, however, are neither the core of
Watercraft's complaint for collection of sum of money and damages, nor one of its
three (3) causes of action therein.38

All told, the CA correctly ruled that Watercraft failed to meet one of the requisites
for the issuance of a writ of preliminary attachment, i.e., that the case is one of
those mentioned in Section 1 of Rule 57, and that the RTC gravely abused its
discretion in improvidently issuing such writ. Watercraft failed to particularly state
in its affidavit of merit the circumstances constituting intent to defraud creditors on
the part of Wolfe in contracting or in the performance of his purported obligation to
pay boat storage fees, as well as to establish that he is a flight risk. Indeed, if all
the requisites for granting such writ are not present, then the court which issues it
acts in excess of its jurisdiction.39chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals

Decision dated September 27, 2007 and its Resolution dated January 24, 2008 in
CA-G.R. SP No. 97804, are AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary

______________

SECOND DIVISION

G.R. No. 193821, November 23, 2015

 PHIL-AIR CONDITIONING CENTER, Petitioner, v. RCJ LINES AND ROLANDO
ABADILLA, JR., Respondent.

DECISION

BRION, J.:

Phil-Air Conditioning Center (Phil-Air) filed this petition for review on certiorari1 to
assail the September 15, 2010 decision2 of the Court of Appeals (CA) in CA-G.R. CV
No. 85866.

The CA affirmed the September 8, 2004 decision of the Regional Trial Court (RTC),
Branch 119 of Pasay City, dismissing Phil-Air's complaint for sum of money with
prayer for a writ of preliminary attachment.3

Designated as Acting Member in lieu of Associate Justice Antonio T. Carpio, per

Special Order No. 2282 dated November 13, 2015.

Designated as Acting Chairperson in lieu of Associate Justice Antonio T. Carpio, per

Special Order No. 2281 dated November 13, 2015.

Antecedents

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.4

The total purchases amounted to P1,240,000.00 as shown on a sales invoice dated

November 5, 1990.5 RCJ Lines paid P400,000.00, leaving a balance of
P840,000.00.6

RCJ Lines accepted the delivery of the units, which Phil-Air then installed after they
were inspected by RCJ Lines president Rolando Abadilla, Sr.7

Phil-Air allegedly performed regular maintenance checks on the units pursuant to

the one-year warranty on parts and labor. After some months from installation,
Phil-Air supposedly boosted the capacity of the units by upgrading them to the
Carrier Paris 280 model.8 It also purportedly repaired the control switch panel of
one of the units for an additional cost of P60,000.00.9

RCJ Lines issued three post-dated checks in favor of Phil-Air to partly cover the
unpaid balance:chanRoblesvirtualLawlibrary

Check No. Amount Post-dated

479759 Php 244,998.00 February 28, 1992
 479760 Php 244,998.00 March 31, 1992
479761 Php 244,998.00 April 30, 1992
TOTAL Php 734,994.00
cralawlawlibrary

All the post-dated checks were dishonored when Phil-Air subsequently presented
them for payment. Check No. 479759 was returned because it was drawn against
insufficient funds, while Check Nos. 479760 and 479761 were returned because
payments were stopped.10

Before presenting the third check for payment, Phil-Air sent a demand letter11 to
Rolando Abadilla, Sr. on April 7, 1992, asking him to fund the post-dated checks.

On July 17, 1996, Phil-Air demanded payment from Rolando Abadilla, Jr., for the
total amount of P734,994.00 plus interest, and attorney's fees equivalent to 25% of
the amount due. Phil-Air warned that it would take court action if payment is not
made within five days from demand.12

In view of the failure of RCJ Lines to pay the balance despite demand, Phil-Air filed
on April 1, 1998 the complaint13 for sum of money with prayer for the issuance of a
writ of preliminary attachment.14 Phil-Air sought to recover from RCJ
Lines:chanRoblesvirtualLawlibrary

a) The total amount of P840,000.00 exclusive of interest for the unpaid delivered air-conditioning units;
b) The amount of P60,000.00 for the unpaid repair services;
c) The total interest in the amount of P756,000.00 (P840,000.00 x 12% x 7 years + P60,000.00 x 12% x
7 years);
d) The sum equivalent to 25% of the total amount due as attorney's fees, plus P3,000.00 per court
appearance; and
e) Costs of the suit.

In its answer with compulsory counterclaim,15RCJ Lines admitted that it purchased

the units in the total amount of PI,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.16

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 quotation17 dated August 4,
1989. 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.

As it turned out, the Carrier Paris 240 model was not suited to the 45 to 49-seater
buses operated by RCJ Lines. The units, according to RCJ Lines, were defective and
did not attain full operational condition.18

Further, RCJ Lines claimed that it was also entitled to be reimbursed for costs and
damages occasioned by the enforcement of the writ of attachment.

RCJ Lines thus urged the RTC to order Phil-Air to pay (1) the replacement costs of
the units; (2) lost profits for nine days from April 22 to April 30, 1999, resulting
from the attachment of its two buses amounting to P207,000.00;19 and (3)
P64,390.00 for the counter-bond premium, moral damages, exemplary damages
and attorney's fees.

The RTC Ruling

The RTC granted the application for the issuance of a writ of preliminary attachment
after Phil-Air posted an attachment bond in the amount of P1,656,000.00.20 Two
buses of RCJ Lines were attached pursuant to the writ dated December 18,
1998.21 The writ was executed on April 21, 1999.22 The attachment, however, was
later lifted when the RTC granted RCJ Lines' urgent motion to discharge the writ of
attachment.23 RCJ Lines posted a counter-bond in the same amount as the
attachment bond.24

Ruling on the merits after trial, the RTC found that Phil-Air was guilty of laches and
estopped from pursuing its claim. It also sustained the allegation that Phil-Air had
breached its warranty.

The dispositive portion of the RTC judgment reads:chanRoblesvirtualLawlibrary

WHEREFORE, judgment is hereby rendered as follows:

A. Dismissing the complaint of plaintiff for lack of merit.

B. Directing the plaintiff to pay the defendants the amount of PI00,000.00 as

attorney's fees as they were forced to spend and hire a lawyer to litigate for
seven (7) years in this Court the unfounded and invalid cause of action of
plaintiff.

C. Directing the plaintiff to pay P82,274.00 as refund of the premium xxx for
defendant's counter-bond for the release of the two buses which were
attached per Writ of Attachment of this Court.

D. Directing the plaintiff to pay P216,000.00 for the lost profits of defendants for
the attachment of their two buses as there was no fraud in the transaction of
the parties and plaintiff had no sufficient cause of action for the issuance of
the writ of attachment.

E. Dismissing all other claims of defendants as stated in their counter-claims.

 F. Costs against plaintiff. SO ORDERED.25

cralawlawlibrary

The CA Ruling

The CA affirmed the RTC decision in toto.26

First, the CA held that Phil-Air's cause of action was barred by laches.27

The CA concluded that "Phil-Air's inaction on RCJ Lines' repeated demands and
inexplicable failure to comply with its obligations had certainly led the latter to
believe [Phil-Air] was no longer interested in pursuing any claim" and that "[Phil-
Air] had been conspicuously silent for so long a time which is disturbingly unusual
for one claiming to have been aggrieved by another."28

Second, the CA held that Phil-Air breached its warranty. The price quotation
supposedly warranted that the Carrier Paris 240 model was suitable for 50-60-
passenger coaches and especially recommended for operation in the tropics.29

The CA gave credence to the testimony of the country manager of Carrier

Refrigeration Philippines Inc. (Carrier Philippines) who testified that the Carrier
Paris 240 model is suited for buses with a maximum seating capacity of up to 35
persons; beyond that, the units would not function properly.30 The CA also found
convincing the testimonies of two RCJ Lines employees who testified that they
experienced firsthand the inefficient cooling of the Carrier Paris 240.31

Relying on these testimonies, the CA found that the four units did not meet the
cooling requirements of RCJ Lines.32

Third, the CA ordered Phil-Air to reimburse the premium on the counter-bond

amounting to P82,274.00 since the writ was improvidently issued.

Fourth, the CA affirmed the finding of the RTC that RCJ Lines suffered losses when
the RTC attached two of its buses.

The RTC and the CA relied on the testimony of Rolando Abadilla, Jr., who claimed to
be in charge of the daily operations of RCJ Lines. He testified that they suffered
losses for nine days as a result of the enforcement of the writ of preliminary
attachment. The lost profits purportedly amounted to P227,280.00. To support this
claim, RCJ Lines adduced as evidence the summary of the daily cash
collections33 from the buses that were not attached, on various dates in August and
September 2000.34

Finally, the CA sustained the award of attorney's fees for PI 00,000.00 in favor of
RCJ lines for having been compelled to litigate.

The Petition
First, Phil-Air argues that the doctrine of laches is not applicable when the action is
filed within the prescriptive period. Laches, being a doctrine of equity, should only
be applied to fill a void in the law.35

Phil-Air asserts that it filed the complaint on April 1, 1998, or less than eight years
from the execution of the sales invoice dated November 5, 1990. The complaint
was thus filed within the ten-year prescriptive period for actions based upon a
written contract.

Second, Phil-Air denies that it breached its warranty.

It maintains that all the units were brand new and were accepted by RCJ Lines in
good, working, and operational condition. The units were inspected, tested, and
approved by then RCJ Lines president, Rolando Abadilla, Sr., as proved by the
delivery receipts in which he affixed his signature.36

Phil-Air further avers that it was not notified of the alleged breach of warranty.
Assuming it breached its warranty, Phil-Air submits that the action to enforce the
warranty had already prescribed.

Third, Phil-Air rejects the CA's order that it must reimburse the premium payment
for the counter-bond and the alleged losses suffered by RCJ Lines. The attachment
bond should be answerable for damages, if any.

Respondent's Comment

RCJ Lines reiterates all the arguments it raised in its counterclaim. It admits that it
did not pay the balance of the purchase price.37 It maintains, however, that it was
justified in doing so because Phil-Air breached its warranty. It insists that Phil-Air
was guilty of laches because it waited for eight years to file the collection case.38

Issues

Based on the foregoing, the Court resolves the following

issues:chanRoblesvirtualLawlibrary

(1 Whether the claim of Phil-Air was barred by laches;

)
(2 Whether Phil-Air should reimburse RCJ Lines for the counter- bond 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; and
(4 Whether RCJ Lines proved that Phil-Air breached its warranty.
)

Our Ruling
We grant the petition.

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.39

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 dated November 5,
1990. The sales were in fact consummated on various dates between March 5,
1990 and August 29, 1990, as proved by several delivery receipts.

The Court therefore can resolve whether Phil-Air's action to enforce the contract
was timely filed even in the apparent absence of a formal or notarized deed of
sale.40 More significantly, Rolando Abadilla, Jr., admitted under oath that the sale
was in writing.41

We note that Phil-Air filed the complaint with the RTC on April 1, 1998. Counting
from the date of the sales invoice, or from the date of the delivery receipts, or even
from the date of the price quotation, it is clear that the complaint was filed within
the ten-year prescriptive period. Contrary to the CA's ruling, laches does not apply.

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.42

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.

On the one hand, the question of laches is addressed to the sound discretion of the
court.43 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.44

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.45

In Agra, et al. v. Philippine National Bank,46 we held that "[l]aches is a recourse in

equity [and] is applied only in the absence, never in contravention, of statutory
law. Thus, laches cannot, as a rule, abate a collection suit filed within the
prescriptive period mandated by the Civil Code."

Agra involved an action for collection of a sum of money arising from an unpaid

loan. In resisting payment, the sureties invoked laches and maintained that the
creditor-bank with full knowledge of the deteriorating financial condition of the
principal debtor did not take steps to collect from the latter while still solvent. The
sureties thus argued that the creditor-bank's action was barred by laches.

We found that the sureties failed to prove all the elements of laches, namely:
(1) conduct on the part of the defendant or one under whom he claims, giving rise to the situation of
which complaint is made and for which the complainant seeks a remedy;
(2) delay in asserting the complainant's right, the complainant having had knowledge or notice of
defendant's conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right
on which he bases his claim; and
(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not
held barred.47
cralawlawlibrary

Examining these elements, we found that only the first element was present. There
was no delay (second element) because the creditor-bank filed the action within the
ten-year prescriptive period. Since the claim was timely filed, the defendants did
not lack notice that the creditor-bank would assert its claim (third element). Nor
was the assertion of the right deemed injurious to the defendants (fourth element);
the creditor-bank could assert its claim at any time within the prescriptive period.

The same conclusion holds true in the present case; not all the elements of laches
are present. To repeat, Phil-Air filed the complaint with the RTC 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 years and eight months, well within the
ten-year prescriptive period. There was simply no delay (second element of laches)
where Phil-Air can be said to have negligently slept on its rights.

More significantly, there is no basis for laches as the facts of the present case do
not give rise to an inequitable situation that calls for the application of equity and
the principle of laches.48

Phil-Air is not directly liable

for the counter-bond premium and
RCJ Lines' alleged unrealized profits.

The CA and the RTC erred when it held Phil-Air directly liable for the counter-bond
premium and RCJ Lines' alleged unrealized profits. Granting that RCJ Lines suffered
losses, the judgment award should have been first executed on the attachment
bond. Only if the attachment bond is insufficient to cover the judgment award can
Phil-Air be held liable.49

We explain below the purpose of a preliminary attachment, the procedure in

obtaining it, and the manner of having it lifted.

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 properties of the defendant.
The property is held by the sheriff as security for the satisfaction of whatever
judgment that might be secured by the attaching party against the defendant.50

The grant of the writ is conditioned not only on the finding of the court that there
exists a valid ground for its issuance.51 The Rules also require the applicant to post
a bond.

Section 4 of Rule 57 of the Rules of Civil Procedure (Rules) provides that "the party
applying for the order must...give a bond executed to the adverse party in the
amount fixed by the court, in its order granting the issuance of the
writ, conditioned that the latter will pay all the costs that may be adjudged
to the adverse party and all damages that he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not
entitled thereto."

The enforcement of the writ notwithstanding, the party whose property is attached
is afforded relief to have the attachment lifted.

There are various modes of discharging an attachment under Rule 57, viz.: (1) by
depositing cash or posting a counter-bond under Section 12;52 (2) by proving that
the attachment bond was improperly or irregularly issued or enforced, or that the
bond is insufficient under Section 13;53 (3) by showing that the attachment is
excessive under Section 13; and (4) by claiming that the property is exempt from
execution under Section 2.54

RCJ Lines availed of the first mode by posting a counter-bond.

Under the first mode, the court will order the discharge of the attachment after (1)
the movant makes a cash deposit or posts a counter-bond and (2) the court hears
the motion to discharge the attachment with due notice to the adverse party.55

The amount of the cash deposit or counter-bond must be equal to that fixed by the
court in the order of attachment, exclusive of costs. The cash deposit or counter-
bond shall secure the payment of any judgment that the attaching party may
recover in the action.56

The filing of a counter-bond to discharge the attachment applies when there has
already been a seizure of property by the sheriff and all that is entailed is the
presentation of a motion to the proper court, seeking approval of a cash or surety
bond in an amount equivalent to the value of the property seized and the lifting of
the attachment on the basis thereof. The counter-bond stands in place of the
property so released.57

To be clear, the discharge of the attachment by depositing cash or posting a

counter-bond under Section 12 should not be confused with the discharge
sanctioned under Section 13. Section 13 speaks of discharge on the ground that the
writ was improperly or irregularly issued or enforced, or that the attachment bond
is insufficient, or that the attachment is excessive.

To reiterate, 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 plaintiffs 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.58

These differences notwithstanding, the discharge of the preliminary attachment

either through Section 12 or Section 13 has no effect on and does not discharge the
attachment bond. The dissolution of the preliminary attachment does not
result in the dissolution of the attachment bond. Justice Narvasa, writing his
separate opinion in one case, explained:chanRoblesvirtualLawlibrary

The dissolution of the preliminary attachment upon security given [Section

12], or a showing of its irregular or improper issuance [Section 13], does not of
course operate to discharge the sureties on plaintiffs 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." Hence, until that determination is made, as to the applicant's entitlement
to the attachment, his bond must stand and cannot be withdrawn.59 [emphasis
and underscoring supplied, citations omitted]cralawlawlibrary

In the present case, the RTC lifted the preliminary attachment after it heard RCJ
Lines' urgent motion to discharge attachment and the latter posted a counter-bond.
The RTC found that there was no fraud and Phil-Air had no sufficient cause of action
for the issuance of the writ of the attachment. As a consequence, it ordered Phil-Air
to refund the premium payment for the counter-bond and the losses suffered by
RCJ Lines resulting from the enforcement of the writ. The CA affirmed the RTC
ruling in toto.

We reverse the CA and RTC rulings.

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.60

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.

RCJ Lines failed to prove its

alleged unrealized profits.

In finding that RCJ Lines suffered damages because of the attachment, the RTC and
the CA gave complete credence to the testimony of Rolando Abadilla, Jr. He claimed
that RCJ Lines lost P216,000.00 in unrealized profits for nine days when the buses
were wrongfully seized.

To arrive at this amount, RCJ Lines alleged that a bus travelling from Manila to
Ilocos and vice versa earned an average daily income of P12,000.00. To back this
claim, RCJ Lines prepared a summary of the daily cash collections of its nine buses
on certain days of August and September 2000.

The summary of daily cash collections apparently prepared by one RCJ Lines
employee was in turn based on the reports of the dispatchers indicating the number
of passengers and the amount of fare collected on a particular trip. Except for one
bus which travelled round-trip on August 22-23, 2000, the daily cash collections all
pertained to the round-trip of eight buses on September 2-3, 2000.

These documents are insufficient to prove actual damages.

In Spouses Yu v. Ngo Yet Te,61 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.62

Spouses Yu is on all fours with the present dispute because it also involved a claim
for actual damages arising from the illegal attachment of the claimant's properties,
one of which was a passenger bus.

The claimants in that case attempted to prove actual damages by computing the
daily average income of its bus operation based on the value of three ticket stubs
sold over five separate days. The claimants likewise cited unused ticket stubs as
proof of income foregone when the bus was wrongfully seized.

We found the claimant's evidence insufficient to prove actual damages. While we

recognized that they suffered some damages, we held that "[b]y no stretch of the
imagination can we consider ticket sales for five days sufficient evidence of the
average daily income of the passenger bus, much less its mean income. Not even
the unrebutted testimony of [the claimant] can add credence to such evidence for
the testimony itself lacks corroboration."63

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., 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 50,000.00.64

The allegation of breach

of express warranty was
notproved.

We are not convinced that Phil-Air breached its express warranty. RCJ Lines had no
right to recoupment in diminution of the price.65

The Civil Code defines an express warranty as any affirmation of fact or any
promise by the seller relating to the thing if the natural tendency of such
affirmation or promise is to induce the buyer to purchase the same, and if the
buyer purchases the thing relying thereon.66

The question whether there was a breach of warranty is factual. Consequently, the
Court should rely on the factual findings of the CA and RTC, which
are generally deemed binding and conclusive to the Court. More so in a Rule 45
petition where only questions of law can be raised. Further, factual findings of the
RTC, when affirmed by the CA, are conclusive on the Court when supported by the
evidence on record.67

The evidence on record does not support the findings of the CA and RTC.

We emphasize that there are recognized cases where the Court can disregard the
factual findings of the RTC and CA. In these cases, the Court draws its own
conclusion based on the evidence on record.68

In this case, Phil-Air denies that it breached its express warranty and strongly
argues that the CA and RTC completely ignored its evidence while it sustained the
bare allegations of Rolando Abadilla, Jr.

We agree with Phil-Air. Our examination of the record reveals that the RTC and CA
manifestly overlooked certain relevant facts not disputed by the parties which, if
properly considered, would justify a different conclusion.

To prove that Phil-Air breached its express warranty, RCJ Lines presented the
following testimonial and documentary evidence:chanRoblesvirtualLawlibrary

1) Rolando Abadilla, Jr. who claimed that their employees reported the defect of the units to him and to
his late father. His late father allegedly demanded Phil-Air to repair the defects. But despite repeated
verbal demands, Phil-Air purportedly failed to comply with its one-year warranty on parts and labor.
2) Two RCJ Lines employees who claimed that they experienced firsthand the inefficient cooling of the
units.
3) The general manager of Carrier Philippines who testified that the Carrier 240 model was not suitable
for buses with a capacity of more than 35 passengers, like those operated by RCJ Lines.
4) Summary of expenses, sales invoices, provisional receipts, and statements of accounts issued by other
suppliers and shops (Car Cool Philippines, Inc. and Sta. Rosa Motor Works, Inc.) engaged by RCJ
Lines during the period of warranty to repair the defective units, amounting to P208,132.00
5) Commercial invoice for the $68,780.00 US Dollars worth of new units bought from another supplier
after the lapse of warranty to replace the units supplied by Phil-Air. 69

In defense, Phil-Air claimed that it regularly checked the units and that during the
effectivity of the one-year warranty, RCJ Lines never once complained of defects; if
there were defects, the latter should have demanded Phil-Air to perform its
warranty in writing; the reason it had no proof it made repairs and delivered spare
parts was precisely because it was not apprised of any defect; and that the
testimonies of the RCJ Lines witnesses were self-serving.70

The RTC noted that Phil-Air did not present evidence to rebut the allegation of
breach.71 Phil-Air instead opposed the admission of the documentary evidence of
RCJ Lines for failing to comply with the best evidence rule.72

We hold that the evidence that RCJ Lines submitted failed to prove breach of
express warranty.

As to the testimonial evidence

The testimonies of the RCJ Lines witnesses were self-serving and uncorroborated.

The claim of Rolando Abadilla, Jr. that his late father verbally communicated the
defects of the units to Phil-Air was hearsay and not admissible.73 He admitted that
he was not around when his father phoned Phil-Air to demand the repair of the
units. He likewise admitted that they did not attempt to personally meet with nor
send a letter to Phil-Air to demand the repairs.74

More tellingly, Rolando Abadilla, Jr. admitted that they issued the post-dated
checks to Phil-Air to cover the balance of the purchase price sometime in 1992, viz-

Q. Mr. Witness is it not in this case that you personally issued three (3) checks draws against the name
Rolando Abadilla and Susan or Rolando Abadilla, and this was some time in 1992?
A. Yes, Sir.
Q. And you confirm that these were all dated March 31, April 30 and February 29, 1992?
A. Yes, Sir.
Q. Despite your claim that these air-conditioning units were defective and despite your claim that these
air-conditioning units were not repaired by plaintiff, hence you referred them for repair to other
companies who are not authorized, do you still affirm the fact that you issued the postdated checks,
the total of which is exactly the balance of the purchase price as quoted in the price quotation, yes or
 no? [Emphasis supplied]
A. Yes, Sir.75
xxx
cralawlawlibrary

We note that the alleged repairs made by Car Cool Philippines, Inc. and Sta. Rosa
Motor Works, Inc. started in 1991.76 If RCJ Lines knew as early as 1991 that the
units were defective and that Phil-Air refused to perform its warranty despite
repeated demands, we wonder why RCJ Lines still issued the post-dated checks in
1992 to cover the balance of the purchase price.

The record also reveals that Car Cool Philippines, Inc. and Sta. Rosa Motor Works,
Inc. were not authorized by the Carrier brand to repair the units, a fact not denied
by Rolando Abadilla, Jr.77 It was likewise established that some of the parts/items
purportedly provided by the other suppliers were expressly excluded from the list of
parts/items that Phil-Air was supposed to supply, again, a fact admitted by Rolando
Abadilla, Jr.78 It was likewise unclear that the repairs made by the other service
providers were done on the same buses on which the subject units were installed.79

We also find glaring the fact that RCJ Lines did not respond to the April 7, 1992
demand letter sent by Phil-Air, viz. -

Dear Mr. Abadilla,

I have been trying to get in touch with you and Junjun the past several weeks but
have been unsuccessful xxx The two checks that you used to partly pay for the four
units bus air conditions [sic] were all dishonored by the bank [because they were
drawn against insufficient funds].

We are but a small company and our cash flow was adversely affected by the return
of the checks, xxx It would mean so much if you could somehow help us
replenished these checks, xxx We look forward to hearing from you Respectfully,
we remain.

Yours truly,
Ricardo Cokieng
cralawlawlibrary

If RCJ Lines was aware all along that the units were defective and that Phil-Air
refused to heed its verbal demands to make repairs, we do not understand why it
ignored Phil-Air's written demand to replenish the returned checks. We also find it
unthinkable that RCJ Lines would spend for parts and services from other suppliers
and providers, during the period of warranty, without demanding first in writing
that Phil-Air make good its express warranty.

In this regard, we note that the right of the buyer to the recoupment in the
diminution of the price under Article 1599 (1) should be read together with Article
1586 of the Civil Code,80 which provides that:chanRoblesvirtualLawlibrary

Art. 1586. In the absence of express or implied agreement of the parties,

acceptance of the goods by the buyer shall not discharge the seller from liability in
damages or other legal remedy for breach of any promise or warranty in the
contract of sale. But, if, after acceptance of the goods, the buyer fails to give
notice to the seller of the breach in any promise of warranty within a
reasonable time after the buyer knows, or ought to know of such breach,
the seller shall not be liable therefor.cralawlawlibrary

The obvious purpose of the notice is to protect the seller against belated claims. If
the seller is not duly notified, he is prevented from making prompt investigation to
determine the cause and extent of his liability.81 Consequently, he is barred from
repairing or rectifying whatever defects the goods sold had.

RCJ Lines failed to convince us that it notified Phil-Air of the breach of warranty
within a reasonable time. In truth, we are not convinced at all that it had even
notified Phil-Air. Although Article 1586 does not require that the notice to the seller
be in writing, we cannot accept the claim of Rolando Abadilla, Jr. that his late father
verbally notified Phil-Air of the defects, without violating the rule on hearsay.

Also, the testimonies of the two RCJ Lines employees that they experienced
firsthand the insufficient cooling of the units were self-serving and uncorroborated
by a disinterested party.

Further, the reliance of the CA and the RTC on the testimony82 of the general
manager of Carrier Philippines was misplaced and unwarranted. It appears that the
computation of the cooling efficiency of the Carrier 240 model was merely
theoretical, based only on the specifications of the model and not on actual
test, viz. —

Q: Have you seen RCJ Bus?

A: I did see.
xxx
Q: With respect to car aircon Paris 240 installed, have you seen this bus?
A: No, I did not.
Q: Mr. Witness, this case involves a particular product a brand of the product that you did not try [sic]
but specifically Paris 240. Have you seen it personally, the four units installed?
A: No I did not.
Q: Even one unit?
A: No Sir.
cralawlawlibrary
The meat of his testimony centered not on the subject units but on the cooling
capacity of the product that Carrier Philippines was then selling in the market. In
fact, he admitted that his role in the company had nothing to do with repairs of air-
conditioning units.

On this basis, we do not find his testimony conclusive as to the alleged breach of
express warranty. It was too tangential and speculative. We note that he was not
even presented as an expert witness. Even if we assume that the computation of
the cooling capacity of the Carrier 240 was accurate, RCJ Lines still failed to prove
that it duly and promptly informed Phil-Air of the alleged breach.

On the documentary evidence

The pieces of documentary evidence submitted by RCJ Lines to prove breach of

express warranty failed to comply with the best evidence rule. It is established on
record that the sales invoices and provisional receipts issued by the other suppliers
and service providers were mere photocopies.83 The counsel of Phil-Air objected to
the admission of the secondary evidence without proof that the originals were
indeed lost. The counsel for RCJ Lines requested that the evidence be conditionally
accepted and marked, which the trial court granted.

Nowhere on record, however, was it ever established that the originals were later
submitted. It was also not shown that the originals were indeed lost, which could
have justified the submission of secondary evidence.84 The RTC simply ignored this
fact when it finally decided the case.

Conclusion

Based on the foregoing analysis, we find- that RCJ Lines failed to prove its
allegation that Phil-Air breached its express warranty. RCJ Lines is thus held liable
to pay the balance of the purchase price plus interest and attorney's fees.85 RCJ
Lines, however, is entitled to temperate damages as a result of the wrongful
attachment of its buses and to the refund of the premium payment for the counter-
bond.

WHEREFORE, in view of the foregoing, we hereby GRANT the petition. The

September 15, 2010 decision of the Court of Appeals in CA-G.R. CV No. 85866
is REVERSED and SET ASIDE.

ACCORDINGLY, RCJ Lines is DIRECTED to pay:

1. Eight Hundred Forty Thousand Pesos (P840,000.00) representing the unpaid

balance of the purchase price;

2. Interest of twelve percent (12%) per annum on the unpaid balance to be

computed from November 5, 199086 until June 30, 2013;
 3. Interest of six percent (6%) per annum on the unpaid balance to be
computed from July 1, 2013,87 until fully paid;

4. Attorney's fees in the fixed amount of P30,000.00.88

The total amount to be recovered shall further be subject to the legal interest rate
of six percent (6 %) per annum from the finality of this decision until fully paid.89

The attachment bond posted by Phil-Air shall be levied upon to satisfy the
P50,000.00 temperate damages awarded to RCJ Lines and the P82,274.00 refund
of the counter-bond premium.

SO ORDERED.chanroblesvirtuallawlibrary