G.R. No.

154106 June 29, 2004

D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S. DAYRIT, petitioners,

vs.
READYCON TRADING AND CONSTRUCTION CORP., respondent.

QUISUMBING, J.

Facts:

WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the
main expressway in the R-1 Toll Project along the Coastal Road in Parañaque City. To fulfill its
obligations to the PEA, WENCESLAO entered into a contract with READYCON for the purchase
asphalt materials valued at ₱1,178,308.75. Under the contract, WENCESLAO was bound to pay
respondent a twenty percent (20%) downpayment, or ₱235,661.75, upon delivery of the
materials contracted for. The balance of the contract price, amounting to ₱942,647, was to be
paid within fifteen (15) days thereof. It was further stipulated by the parties that respondent was
to furnish, deliver, lay, roll the asphalt, and if necessary, make the needed corrections on a
prepared base at the jobsite.

Fifteen (15) days after READYCON performed the said work, it demanded that WENCESLAO
pay the balance of the contract price. WENCESLAO, however, ignored said demand.

The counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good
on the balance it owed. Again, WENCESLAO failed to heed the demand. It did not even bother
to reply to the demand letter.

In view of this development, READYCON filed a complaint for collection of a sum of money and
damages, with prayer for writ of preliminary attachment against D.M. Wenceslao and/or
Dominador Dayrit. READYCON demanded payment of ₱1,014,110.45 from petitioners herein
with ₱914,870.75 as the balance of contract price, as well as payment of ₱99,239.70,
representing another unpaid account.

As READYCON timely posted the required bond of ₱1,150,000, its application for the writ of
preliminary attachment was granted.

The RTC Sheriff attached certain assets of WENCESLAO, particularly, the following heavy
equipments: One (1) asphalt paver, one (1) bulldozer, one (1) dozer and one (1) grader.

WENCESLAO then moved for the release of the attached equipments and posted its counter-
bond. The trial court granted the motion and directed the RTC Sheriff to return the attached
equipments.

Contention of the Parties:

Petitioners rely mainly on Lazatin v. Twano and Castro, 112 Phil. 733 (1961), reiterated in MC
Engineering v. Court of Appeals, 380 SCRA 116 (2002). In Lazatin, we held that actual or
compensatory damages may be recovered for wrongful, though not malicious, attachment. Lazatin
also held that attorney’s fees may be recovered under Article 2208 of the Civil Code. Petitioners
contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAO’s
equipment resulted in a paralysis of its operations, causing it to sustain a loss of ₱100,000 per day in
terms of accomplishment of work. Since the attachment lasted 19 days it suffered a total loss of ₱1.9
million. Aside from that, it had to spend ₱50,000 on the pullout of the equipment and another
₱100,000 to repair and restore them to their former working condition.

Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy

under the rules, a penalty cannot be meted out for the enforcement of a right, such as in this case
when it sought such relief. It stresses that the writ was legally issued by the RTC, upon a finding that
READYCON sought the relief without malice or bad faith. Furthermore, WENCESLAO failed to show
concrete and credible proof of the damages it suffered. The issuance of a writ and its enforcement
entail a rigorous process where the court found that it was not attended by malice or bad faith. It
cites Mindanao Savings and Loan Association v. Court of Appeals, 172 SCRA 480 (1989), to the
effect where a counter-bond is filed, the right to question the irregularity and propriety of the writ of
attachment must be deemed waived since the ground for the issuance of the writ forms the core of
the complaint.

Issue:

Is respondent READYCON liable to petitioner WENCESLAO for damages caused by the

issuance and enforcement of the writ of preliminary attachment?

Ruling:

It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to
damages arising from a wrongful attachment. This we have made clear in previous cases, e.g.,
Calderon v. Intermediate Appellate Court,22 where we ruled that:

Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e.,
by filing a counterbond or by showing that the order of attachment was improperly or irregularly
issued, the liability of the surety on the attachment bond subsists because the final reckoning is
when "the Court shall finally adjudge that the attaching creditor was not entitled" to the issuance
of the attachment writ in the first place. The attachment debtor cannot be deemed to have
waived any defect in the issuance of the attachment writ by simply availing himself of one way
of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is
a speedier way of discharging the attachment writ maliciously sought out by the attaching party
creditor instead of the other way, which in most instances like in the present case, would require
presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a
pending incident of the case.

Moreover, we laid no hard and fast rule that bad faith or malice must be proved to recover any
form of damages. In Philippine Commercial & Industrial Bank, we found bad faith and malice to
be present, thereby warranting the award of moral and exemplary damages. But we denied the
award of actual damages for want of evidence to show said damages. For the mere existence of
malice and bad faith would not per se warrant the award of actual or compensatory damages.
To grant such damages, sufficient proof thereon is required.

Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as
prerequisite to the claim of actual damages is dispensed with. Otherwise stated, in the present
case, proof of malice and bad faith are unnecessary because, just like in Lazatin and MC
Engineering, what is involved here is the issue of actual and compensatory damages.
Nonetheless, we find that petitioner is not entitled to an award of actual or compensatory
damages. Unlike Lazatin and MC Engineering, wherein the respective complaints were
dismissed for being unmeritorious, the writs of attachment were found to be wrongfully issued,
in the present case, both the trial and the appellate courts held that the complaint had merit.
Stated differently, the two courts found READYCON entitled to a writ of preliminary attachment
as a provisional remedy by which the property of the defendant is taken into custody of the law
as a security for the satisfaction of any judgment which the plaintiff may recover.

Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:

SEC. 4. Condition of applicant’s bond. - The party applying for the order must thereafter give a
bond executed to the adverse party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was not entitled thereto (italics for emphasis).

In this case, both the RTC and the Court of Appeals found no reason to rule that READYCON
was not entitled to issuance of the writ. Neither do we find now that the writ is improper or
illegal. If WENCESLAO suffered damages as a result, it is merely because it did not heed the
demand letter of the respondent in the first place. WENCESLAO could have averted such
damage if it immediately filed a counter-bond or a deposit in order to lift the writ at once. It did
not, and must bear its own loss, if any, on that account.