PROVISIONAL REMEDIES CASE LAWS

1. Davao Light and Power, Inc. vs. CA, 204 SCRA 343;

Davao Light v. Court of Appeals

Facts
The Davao Light and Power Co., Inc. ("Davao Light") filed a collection suit against Queensland Hotel
("Queensland") and Teodorico Adarna ("Adarna") with an ex parte application for a writ of
preliminary attachment. On 3 May 1989, the trial court issued an Order of Attachment, and the
corresponding Writ of Attachment on 11 May 1989. On 12 May 1989, the summons, a copy of the
complaint, and the writ of attachment was served upon Queensland and Adarna. Queensland and
Adarna filed a motion to discharge the attachment on the ground that at the time the Order of
Attachment and Writ of Attachment were issued, the trial court has yet to acquire
jurisdiction over the cause of action and over the persons of the defendants.

Issue
Whether or not the writ of preliminary attachment was validly issued.

Held
Yes. A writ of preliminary attachment may be issued before the court acquires jurisdiction
over the person of the defendant.

RatioDecidendi
The court may validly issue a writ of preliminary injunction prior to the acquisition
of jurisdiction over the person of the defendant. There is an appreciable period of time between
the commencement of the action (takes place upon the filing of an initiatory pleading) and the
service of summons to the defendant. In the meanwhile, there are a number of actions which the
plaintiff or the court may validly take, including the application for and grant of the provisional
remedy of preliminary attachment. There is nothing in the law which prohibits the court from
granting the remedy prior to the acquisition of jurisdiction over the person of the defendant. In fact,
Rule 57 of the Rules of Court allows the granting of a writ of preliminary injunction at the
commencement of the suit. In the cases of Toledo v. Burgos and Filinvest Credit Corporation v.
Relova, it was held that notice and hearing are not prerequisites to the issuance of a writ of
preliminary attachment. Further, in the case of Mindanao Savings & Loan Association, Inc. v. Court of
Appeals, it was ruled that giving notice to the defendant would defeat the purpose of the remedy by
affording him or her the opportunity to dispose of his properties before the writ can be issued.

A preliminary attachment may be discharged with the same ease as obtaining it. In any case, the ease
of availing the provisional remedy of preliminary attachment is matched by the ease with which it
can be remedied by either the posting of a counterbond, or by a showing of its improper or
irregular issuance. The second means of defeating a preliminary attachement, however, may not be
availed of if the writ was issued upon a ground which is at the same time the applicant's cause of
action.
Preliminary attachment not binding until jurisdiction over the person of the defendant is
acquired. The writ of preliminary attachment, however, even though validly issued, is not
binding upon the defendant until jurisdiction over his person is first acquired.
2. Villareal vs. CA, 295 SCRA 511;

When availed of and is granted in an action purely in personam, it converts the action to one that
is quasi in rem. In an action in rem or quasi in rem, jurisdiction over the res is sufficient. Jurisdiction
over the person of the defendant is not required (Villareal vs. CA, 295 SCRA 511).

3. Insular Bank of Asia and America vs. CA, 190 SCRA 629

Facts: Petitioner Insular Bank of Asia and America (IBAA) made a money market placement
with respondent Commercial Credit Corporation (CCC) on 12 December 1980 in the amount of
P1,877,053.03. In consideration of such placement, Commercial Credit Corporation executed a
Non Negotiable Repurchase Agreement whereby it conveyed to IBAA securities issued by
International Corporate Bank (Interbank) with a face value of P2,000,000.00 and with a maturity
date of 22 April 1981. The parties (IBAA and CCC) also executed a resale agreement which bound
IBAA to re-sell to CCC the Interbank securities for P2,000,000.00 on 22 April 1981. On due date (22
April 1981), CCC caused to be issued to IBAA a Commercial Bank and Trust Co. (CBTC) cashier's
check for P2,000,000.00 which was, however, dishonored upon presentment for being drawn
against uncollected deposits.

Due to CCC's failure to meet its obligation despite demands, on 24 August 1981, IBAA filed an action
for recovery of sum of money with a prayer for the issuance of a writ of preliminary attachment
before the CFI of Rizal, Pasig, Branch X (docketed as Civil Case No. L-42585), claiming that:

14. This is an action for money or property embezzled or fraudulently misapplied or

converted to his own use by defendant in a fiduciary capacity, or for a willful
violation of duty; this is an action against defendant who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the action is brought, or
in concealing or disposing of the property for the taking, detention or conversion of
which the action is brought; this is an action against defendant who has removed or
disposed of his property, or is about to do so, with intent to defraud his creditors. 1

Issue: Whether or not the questioned Court of Appeals decision setting aside the order of the CFI of
Rizal, Branch X, Pasig granting a writ of preliminary attachment upon a complaint for collection of a
sum of money which the respondent CCC allegedly fraudulently contracted and now has difficulty
paying, is in accordance with law or a reversible error.

Held: No. The purpose of attachment is to secure a contingent lien on defendant's property until
plaintiff can obtain a judgment and have such property applied to its satisfaction or to make
provision for unsecured debts in such cases where the means of satisfaction thereof are liable to be
removed beyond the jurisdiction or improperly disposed of (by fraud or otherwise) or concealed or
placed beyond the reach of creditors .

Petitioner claims that at the time the obligation was incurred by respondent CCC the latter already
had the fraudulent intent not to pay the obligation or indebtedness. This contention is not borne
out by the records. Upon the other hand, respondent CCC has not denied that it was undergoing
financial difficulties and had in fact called a creditor's meeting 5 to make full disclosure of its
business condition and negotiate for payment of its outstanding obligations. Petitioner also claims
there was an incipient misrepresentation regarding respondent's capacity to pay. The Court of
Appeals found, on the other hand, that there was no dissipation of assets, in fact, respondent's
withdrawal of money from Far East Bank and Trust Co. was intended to finance its operations.
Inability to pay, we rule, is not necessarily synonymous with fraudulent intent not to honor
an admitted obligation.

There is thus no reversible error in the questioned Court of Appeals decision which we find to be in
accordance with law.

4. Northern Islands Co., Inc., vs. Sps. Dennis and Cherylin Garcia, GR No. 203240,
03/18/2015.

Facts : On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed a
Complaint[4] with application for a writ of preliminary attachment, before the RTC against
respondents, docketed as Civil Case No. Q-05-53699 (Main Case), which was subsequently
amended[5] on October 25, 2005.[6] It alleged that: (a) from March to July 2004, petitioner caused the
delivery to respondents of various appliances in the aggregate amount of P8,040,825.17; [7] (b) the
goods were transported, shipped, and delivered by Sulpicio Lines, Inc., and were accepted in good
order and condition by respondents' representatives; [8] (c)  the parties agreed that the goods
delivered were payable within 120 days, and that the unpaid amounts would earn interest at a rate
of eighteen percent (18%) per annum; [9] (d) however, the value of the goods were not paid by
respondents despite repeated demands;[10] and (e) respondents fraudulently asserted that
petitioner had no proof that they  had indeed received the quantity of the subject goods. [11]

In connection with the application for a writ of preliminary attachment, petitioner posted a bond,
through Visayan Surety and Insurance Corporation, in the amount of ?8,040,825.17.  On
November 7, 2005, the RTC issued the writ sought for. [12]

Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge Excess Attachment,
[15]
 alleging that the attachment previously ordered by the RTC exceeded by P9,232,564.56 given
that the estimated value of the attached properties, including the garnished bank accounts, as
assessed by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted to P17,273,409.73, while the
attachment bond is only in the amount of P8,040,825.17.

Issues:

(a) whether the RTC had lost jurisdiction over the matter of the preliminary attachment
after petitioner appealed the decision in the Main Case, and thereafter ordered the
transmittal of the records to the CA; and

(b) whether the CA erred in ordering the appointment of a commissioner and the subsequent
discharge of any excess attachment found by said commissioner.

Held: a. Yes . With the RTC's loss of jurisdiction over the Main Case necessarily comes its loss of
jurisdiction over all matters merely ancillary thereto. Thus, the propriety of conducting a trial by
commissioners in order to determine the excessiveness of the subject preliminary attachment,
being a mere ancillary matter to the Main Case, is now mooted by its supervening appeal in CA-G.R.
CV No. 98237.

The consequence is that where the main action is appealed, the attachment which may have
been issued as an incident of that action, is also considered appealed and so also removed
from the jurisdiction of the court a quo. The attachment itself cannot be the subject of a
separate action independent of the principal action because the attachment was only an
incident of such action.

5. Security Bank Corporation Vs. Great Wall Commercial Press Company, Inc., et al.
G.R. No. 219345
January 30, 2017

Facts:

May 12, 2013, Security Bank Corporation, the petitioner, filed a complaint (with application for
Issuance of a Writ of Preliminary Attachment) against the respondents, before the Regional Trial
Court, Branch 59 of Makati City. The complaint sought to recover from respondents their
unpaid obligations under a credit facility covered by several trust receipts and surety
agreements, as well as interests, attorney’s fee and cost. The petitioner argued that in spite of
the lapse of the maturity date of the obligation from December 11, 2012 to May 7, 2013,
respondents failed to pay their obligations. The total principal amount sought was
P10,000,000.00.

After due hearing, the RTC granted the application for a Writ of Preliminary Attachment of Security
Bank, which then posted a bond in the amount of P10,000,000.00. Then respondent filed to lift
Writ of Preliminary Attachment but denied by RTC. The respondent filed a motion for
reconsideration but denied by RTC.

Dissatisfied respondents filed a petition for certiorari before CA, December 12, 2014, the CA lifted
the Writ of Preliminary Attachment. The petitioner moved for reconsideration but its motion
was denied by the CA in its assailed resolution, dated June 26, 2015.

Issue:

Whether or not the court of appeals erred in nullifying the Writ of Preliminary Attachment issued
by the Regional Trial Court.

Held:

Yes, the CA erred in nullifying the Writ of Preliminary Attachment issued by the Regional Trial
Court.

In this case, Security Bank relied on Section 1 (d), Rule 57 of the Rules of Court as basis of its
application for a writ of preliminary attachment. It reads:
(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof;
For a writ of preliminary attachment to issue under the above-quoted rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud. It is settled that fraudulent
intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply
with his obligation.
While fraud cannot be presumed, it need not be proved by direct evidence and can well be
inferred from attendant circumstances. Fraud by its nature is not a thing susceptible of ocular
observation or readily demonstrable physically; it must of necessity be proved in many cases by
inferences from circumstances shown to have been involved in the transaction in question.
The allegations of Security Bank in support of its application for a writ of preliminary attachment
are as follow:
15. During the negotiation for the approval of the loan application/ renewal of Respondents the
latter through Alfredo Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Cheng Atienza and
Monica Cu Atienza, assured SBC that the loan obligation covered by the several Trust Receipts
shall be paid in full on or before its maturity date pursuant to the terms and conditions of the
aforesaid trust receipts. However, Respondents as well as the sureties failed to pay the
aforesaid obligation.
16. In addition, the assurance to pay in full the obligation is further solidified by the warranty of
solvency provisions of the Credit Agreement, the pertinent portion of which states that: "5.
Representations at Warranties. - The Borrower further represents and warrants that xxxe) The
maintenance of the Credit Facility is premised on the Borrower's continued ability to service its
obligations to its creditors. Accordingly, the Borrower hereby warrants that while any of the Credit
Obligations remain unpaid, the Borrower shall at all times have sufficient liquid assets to meet
operating requirements and pay all its/his debts as they fall due. Failure of the Borrower to pay any
maturing interest, principal or other charges under the Credit Facility shall be conclusive evidence
of violation of this warranty."
17. To allay whatever fear or apprehension of herein plaintiff on the commitment of Respondents to
honor its obligations, defendants-sureties likewise executed a "Continuing Suretyship Agreement.
18. Under paragraph 3 of the said Suretyship Agreement, it is provided that: "3. Liability of the
Surety - The liability of the Surety is solidary, direct and immediate and not contingent upon the
pursuit by SBC of whatever remedies it may have against the Borrower or the collateral/liens it
may possess. If any of the Guaranteed Obligations is not paid or performed on due date (at stated
maturity or by acceleration), or upon the occurrence of any of the events of default under Section 5
hereof and/or under the Credit Instruments, the Surety shall without need for any notice, demand
or any other act or deed, immediately and automatically become liable therefor and the Surety shall
pay and perform the same."
19. Thus, in the light of the representation made by Respondents Commercial Press Co, Inc., Alfredo
Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Cheng Atienza and Monica Cu Atienza that
the loan shall be paid in full on or before maturity, coupled by the warranty of solvency embodied
in the Credit Agreement as well as the execution of the Continuing Suretyship Agreement, the loan
application was eventually approved.
20. Needless to say that without said representations and warranties, including the Continuing
Suretyship Agreement, the plaintiff would not have approved and granted the credit facility to
Respondents. It is thus clear that Respondents, Alfredo Buriel Atienza, Fredino Cheng Atienza and
Sps. Frederick Cheng Atienza and Monica Cu Atienza, misled SBC and employed fraud in
contracting said obligation.
21. Respondents, through its Vice President Fredino Cheng Atienza, likewise executed various Trust
Receipt Agreements with the plaintiff whereby it bound itself under the following provision: "2. In
consideration of the delivery to the Entrustee of the possession of the Goods/Documents, the
Entrustee hereby agrees and undertakes, in accordance with the provisions of the Presidential
Decree No. 115; (i) to hold in trust for the Bank the Goods/Documents; (ii) to sell the Goods for cash
only for the account and benefit of the Bank, and without authority to make any other disposition of
the Goods/Documents or any part thereof, or to create a lien thereon; (iii) to turn over to the Bank,
without need of demand, the proceeds of the sale of the Goods to the extent of the amount of
obligation specified above (the "Obligation"), including the interest thereon, and other amounts
owing by the Entrustee to the Bank under this Trust Receipt, on or before the maturity date above-
mentioned (the "Maturity Date"); or (iv) to return, on or before Maturity Date, without need of
demand and at the Entrustee's expense, the Goods/Documents to the Bank, in the event of non-sale
of the Goods." Despite the above covenants, defendants failed to pay nor return the goods subject of
the Trust Receipt Agreements.
22. Knowing fully well that they are already in default, Respondents and defendants sureties
submitted a repayment proposal through their letter dated January 23, 2013. Through their lawyer,
they likewise requested the bank for a meeting to discuss their proposal. However, as it turned
out, the proposed repayment proposal for their loan was only intended to delay legal action
against them. They failed to meet with the Bank's representative and neither did they submit
supporting documents to back up their repayment proposal.[20] To support its allegation of fraud,
Security Bank attached the Affidavit[21] of German Vincent Pulgar IV (Pulgar), the Manager of the
Remedial Management Division of the said bank. He detailed how respondents represented to
Security Bank that they would pay the loans upon their maturity date. Pulgar added that
respondents signed the Credit Agreement which contained the Warranty of Solvency and several
Trust Receipt Agreements in favor of Security Bank. The said trust receipts were attached to the
complaint which stated that respondents were obligated to turn over to Security Bank the proceeds
of the sale of the good or to return the goods. The several demand letters sent by Security Bank to
respondents, which were unheeded, were likewise attached to the complaint. These pieces of
evidence were presented by Security Bank during the hearing of the application for the issuance of
a writ of preliminary attachment in the RTC. After a judicious study of the records, the Court finds
that Security Bank was able to substantiate its factual allegation of fraud, particularly, the violation
of the trust receipt agreements, to warrant the issuance of the writ of preliminary attachment.
Fraud in the performance of the obligation must be considered The CA stated in the assailed
decision that under Section 1(d) of Rule 57, fraud must only be present at the time of
contracting the obligation, and not thereafter. Hence, the CA did not consider the allegation of
fraud - that respondents offered a repayment proposal but questionably failed to attend the
meeting with Security Bank regarding the said proposal - because these acts were done after
contracting the obligation. In this regard, the CA erred. Previously, Section 1(d), Rule 57 of the 1964
Rules of Court provided that a writ of preliminary attachment may be issued "[i]n 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 xxx" Thus, the fraud that justified the issuance of a writ of preliminary
attachment then was only fraud committed in contracting an obligation (dolo casuante).[28] When
the 1997 Rules of Civil Procedure was issued by the Court, Section 1(d) of Rule 57 conspicuously
included the phrase "in the performance thereof." Hence, the fraud committed in the
performance of the obligation (dolo incidente) was included as a ground for the issuance of a
writ of preliminary attachment.[29] This significant change in Section 1(d) of Rule 57 was
recognized recently in Republic v. Mega Pacific eSolutions, Inc.[30] The Court stated therein that
"[a]n amendment to the Rules of Court added the phrase "in the performance thereof to include
within the scope of the grounds for issuance of a writ of preliminary attachment those instances
relating to fraud in the performance of the obligation." Accordingly, the alleged fraud committed by
respondents in the performance of their obligation should have been considered by the CA. Security
Bank detailed in its complaint that respondents, knowing fully well that they were in default,
submitted a Repayment Proposal.[31] Then, they requested for a meeting with the bank to discuss
their proposal. For unknown reasons, they did not meet the representatives of the Security Bank.
Respondents even attached to its Motion to Lift Writ of Preliminary Attachment Ad Cautelam[32]
the correspondence they had with Security Bank, which revealed that they did not meet the
representatives of the latter despite providing a specific date to discuss the proposed repayment
scheme. Respondents merely offered lame excuses to justify their absence in the arranged meeting
and, ultimately, they failed to clarify the non-compliance with their commitments. Such acts bared
that respondents were not sincere in paying their obligation despite their maturity, substantiating
the allegations of fraud in the performance thereof. These circumstances of the fraud committed
by respondents in the performance of their obligation undoubtedly support the issuance of a
writ of preliminary attachment in favor of Security Bank. Final Note While the Court finds that
Security Bank has substantiated its allegation of fraud against respondents to warrant the issuance
of writ or preliminary attachment, this finding should not in any manner affect the merits of the
principal case. The writ of preliminary attachment is only a provisional remedy, which is not a
cause of action in itself but is merely adjunct to a main suit.

6. Carlos vs. Sandoval, 471 SCRA 266) (Carlos vs. Sandoval, 471 SCRA 266

The applicant must post a bond executed to the adverse party. This is called an attachment bond,
which answers for all damages incurred by the party against whom the attachment was issued and
sustained by him by reason of the attachment (Carlos vs. Sandoval, 471 SCRA 266)

7. Ong v. Tating, 149 SCRA 265) (Ong v. Tating, 149 SCRA 265)

2000 Bar: JFK’s real property is being attached by the sheriff in a civil action for damages against
LM. JK claims that he is not involved in said case; and that he is the sole registered owner of said
property.

Under the Rules of Court, what must JK do to prevent the sheriff from attaching his property?

Answer: If the real property has been attached, the remedy is to file a third party claim. The third-
party claimant should make an affidavit of his title to the property attached, stating the grounds of
his title thereto, and serve such affidavit upon the sheriff while the latter has possession of the
attached property, and a copy thereof upon the attaching party (Rule 57, Section 1). The third-
party claimant may also intervene or file a separate civil action to vindicate his claim to the
property involved and secure the necessary reliefs, such as preliminary injunction, which will not
be considered as interference with a court of coordinate jurisdiction (Ong v. Tating, 149 SCRA 265)

8. Communication Information Corporation v. Mark Sensing Australia

Communication Information Corporation Vs. Mark Sensing Australia Pty. Ltd, et al.
G.R. No. 192159
January 25, 2017
FACTS:

MS APL and CISC entered into a MOA where CISC was appointed as the exclusive agent of MS APL
to PCSO. MS APL agreed to pay CISC a commission of 24.5% of future sales to PCSO. Initially,
MS APL was complying with its obligation until it stopped due to some irregularities. Litigations
between parties involved in PCSO transactions surfaced until eventually settled by a compromised
agreement. MS APL felt short changed by CISC’s efforts and, then, decided to withhold payment of
commissions.

Due to MS APL’s refusal to pay, CISC filed a complaint before the RTC. It reached the court of
Appeals. Thus, the present case faced the SC.

ISSUE:

Whether or not the RTC committed grave abuse of discretion by approving the attachment bond
whose face amount exceeded the retention limit of the surety.

RULING:

The Supreme Court ruled that RTC did not only correctly applied the law but also acted judiciously
when it required Plaridel to submit proof of its re-insurance contracts after MSAPL questioned
Plaridel’s capacity to under-write the attachment bond. With this, SC granted the petition.

9. PTY. Ltd., GR No. 192159, 01/25/2017;

10. Ching vs. CA, 423 SCRA 356

Ching v. CA, 423 SCRA 356, February 23, 2004

FACTS: Philippine Blooming Mills Company, Inc. (PBMCI) obtained two loans from the Allied
Banking Corporation (ABC). (PBMCI) Executive Vice-President Alfredo Ching executed a
continuing guaranty with the ABC for the payment of the said loan. The PBMCI defaulted in the
payment of all its loans so ABC filed a complaint for sum of money against the PBMCI. Trial court
issued a writ of preliminary attachment against Alfredo Ching requiring the sheriff of to attach all
the properties of said Alfredo Ching to answer for the payment of the loans. Encarnacion T. Ching,
wife of Alfredo Ching, filed a Motion to Set Aside the levy on attachment allegeing inter alia that the
100,000 shares of stocks levied on by the sheriff were acquired by her and her husband during
their marriage out of conjugal funds. Petitioner spouses aver that the source of funds in the
acquisition of the levied shares of stocks is not the controlling factor when invoking the
presumption of the conjugal nature of stocks under Art. !21 and that such presumption subsists
even if the property is registered only in the name of one of the spouses, in this case, petitioner
Alfredo Ching. According to the petitioners, the suretyship obligation was not contracted in the
pursuit of the petitioner-husband’s profession or business.44

ISSUE: WON 100,000 shares of stocks may be levied on by the sheriff to answer for the loans
guaranteed by petitioner Alfredo Ching.
HELD: No.
RATIO: The CA erred in holding that by executing a continuing guaranty and suretyship agreement
with the private respondent for the payment of the PBMCI loans, the petitioner-husband was in the
exercise of his profession, pursuing a legitimate business.

The shares of stocks are, thus, presumed to be the conjugal partnership property of the
petitioners. The private respondent failed to adduce evidence that the petitioner-husband
acquired the stocks with his exclusive money.

The appellate court erred in concluding that the conjugal partnership is liable for the said account
of PBMCI.
Article 121 provides: The conjugal partnership shall be liable for: (1) All debts and obligations
contracted by the husband for the benefit of the conjugal partnership, and those contracted by the
wife, also for the same purpose, in the cases where she may legally bind the partnership.

For the conjugal partnership to be liable for a liability that should appertain to the husband alone,
there must be a showing that some advantages accrued to the spouses.

In this case, the private respondent failed to prove that the conjugal partnership of the
petitioners was benefited by the petitioner-husband’s act of executing a continuing guaranty
and suretyship agreement with the private respondent for and in behalf of PBMCI. The
contract of loan was between the private respondent and the PBMCI, solely for the benefit of the
latter. No presumption can be inferred from the fact that when the petitioner-husband entered into
an accommodation agreement or a contract of surety, the conjugal partnership would thereby be
benefited. The private respondent was burdened to establish that such benefit redounded to the
conjugal partnership.

11. Javellana v. D.O. Plaza Enterprises, Inc., 32 SCRA 281

1999 Bar: May damages be claimed by a party prejudiced by a wrongful attachment even if the
judgment was adverse to him? Explain. (2%)

Answer: Yes, damages may be claimed by a party prejudiced by a wrongful attachment even if the
judgment is adverse to him. This is authorized by the Rules. A claim for damages may be made on
account of improper, irregular, excessive attachment, which shall be heard with notice to the
adverse party and his surety or sureties.

12. Savings and Loan Assn. v. Court of Appeals, 172 SCRA 480).
2001 Bar: May a preliminary attachment be issued ex parte? Briefly state the reason(s) for your
answer. (3%)

May a writ of preliminary injunction be issued ex parte? (2%) Answer: Yes, an order of attachment
may be issued ex parte or upon motion with notice and hearing (Section 2). The reason why the
order may be issued ex parte is that requiring notice to the adverse party and hearing would defeat
the purpose of the provisional remedy and enable the adverse party to abscond or dispose of his
property before a writ of attachment or dispose of his property before a writ of attachment issues
(Mindanao Savings and Loan Assn. v. Court of Appeals, 172 SCRA 480).

13. Golez vs. Leonidas, 107 SCRA 187 [1981]

2002 Bar: A default judgment was rendered by the RTC ordering D to pay P a sum of money. The
judgment became final, but D filed a petition for relief and obtained a writ of preliminary injunction
staying the enforcement of the judgment. After hearing, the RTC dismissed D’s petition, whereupon
P immediately moved for the execution of the judgment in his favor. Should P’s motion be granted?
Why (3%)
Answer: P’s immediate motion for execution of the judgment in his favor should be granted
because the dismissal of D’s petition for relief also dissolves the writ of preliminary injunction
staying the enforcement of the judgment, even if the dismissal is not yet final (Golez vs. Leonidas,
107 SCRA 187 [1981])).

14. Onate v. Abrogar, 241 SCRA 659 [1985]

The fact that the writ of attachment was served ahead of the summons did not affect the jurisdiction
of the court over the defendant. The effect is that the writ is not enforceable (Rule 57, Sec. 5).
But, as pointed out by jurisprudence, all that is needed to be done is to re-serve the writ (Onate v.
Abrogar, 241 SCRA 659 [1985]).

In a case for sum of money, the trial court granted ex-parte the prayer for issuance of a writ of
preliminary attachment. The writ was immediately implemented by the sheriff. The defendant filed
a motion to discharge the writ of preliminary attachment on the ground that it was issued and
implemented prior to service of summons. Plaintiffs opposed arguing that under the Rules of Court,
the writ can be applied for and granted at the commencement of the action or at any time
thereafter. In any event, plaintiff argues that the summons which was eventually served cured
whatever irregularities that might have attended the enforcement of the writ. How would you rule
on the conflicting contentions of the parties?

SUGGESTED ANSWER: The issuance of the writ of preliminary attachment ex-parte was valid but
the implementation thereof was not effective without the service of summons. The subsequent
service of summons did not cure the irregularities that attended the enforcement of the writ. The
writ of attachment should be re-served after the service of summons (Davao Light and Power Co.
Inc v. Court of Appeals, 204 SCRA 343; Onate v Abrogar, 241 SCRA 659).

15. Wenceslao& Associates, Inc. vs. Readycon Trading & Construction 16. Corp., GR No. 154106,
06/29/2004);

2008 Bar: After his properties were attached, defendant Porfirio filed a sufficient counterbond. The
trial court discharged the attachment. Nonetheless, Porfirio suffered substantial prejudice due to
the unwarranted attachment. In the end, the trial court rendered a judgment in Porfirio’s favor by
ordering the plaintiff to pay damages because the plaintiff was not entitled to the attachment.
Profirio moved to charge the plaintiff’s attachment bond. The plaintiff and his sureties opposed the
motion, claiming that the filing of the counterbond had relieved the plaintiff’s attachment bond
from all liability for the damages. Rule on Porfirio’s motion. (4%)

Answer: Porfirio’s motion to charge the plaintiff’s attachment bond is proper. The filing of the
counterbond by the defendant does not mean that he has waived his right to proceed against the
attachment bond for damages. The attachment bond is posted to answer for any damage that a
party may suffer if the attachment is wrongful or improper (DM Wenceslao & Associates, Inc.
vs. Readycon Trading & Construction Corp., GR No. 154106, 06/29/2004)

16. Republic vs. Sandiganbayan, Fourth Division, GR No. 195295, 10/05/2016);

The Sandiganbayan held that "the allegations in support of the grounds for the issuance of a writ of
preliminary attachment [were] couched in general terms and devoid of particulars upon which [to]
discern whether The Sandiganbayan is mistaken. The allegations in the admitted Complaint fall
within Section 1(b) and (c) of Rule 57. Given the peculiarities of the Marcos cases, the allegations of
Former President Marcos taking advantage of his powers as President, gravely abusing his powers
under martial law, and embarking on a systematic plan to accumulate illgotten wealth suffice to
constitute the case as one under Rule 57. The allegation that the Cabuyao property was registered
under the names of respondents-minors at the time of registration-is sufficient to allege that the
Cabuyao property was concealed, thus satisfying Rule 57, Section 1(c) of the Rules of Court.

The Sandiganbayan should have issued an order of preliminary attachment considering that
the requisites of the law-including that of Executive Order No. 14-have been substantially
met, and that there is factual basis for the issuance of the preliminary attachment . The
Sandiganbayan committed grave abuse of discretion in denying petitioner's Motion for issuance of a
writ of preliminary attachment (Republic vs. Sandiganbayan, Fourth Division, GR No. 195295,
10/05/2016)

17. Uy v. CA, 191 SCRA 275); or Uy v. CA, 191 SCRA 275)

18. Far East Bank & Trust Co. vs. Shemberg

19. . BuycoVs. Baraquia, 2009;

20. Watercraft vs Wolfe G.R. No. 181721

Facts:
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.
In his Answer, Wolfe... 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.
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
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.
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.
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 petition for certiorari before the CA.
The CA granted Wolfe's petition in a Decision dated September 2007
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
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 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.
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.
circumstances... 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
Issues:
WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE TRIAL COURT IN
FAVOR OF THE PETITIONER IS VALID.
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]
Ruling:
The petition lacks merit.
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
Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan[34] is displaced. It is well settled that:... when
the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action...
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.
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 circumstances[36] 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.

22. PCIB vs. Alejandro, 533 SCRA 738.

 
 
 
Attachment in Special Proceedings
1. Tan vs. Adre 450 SCRA 145