G.R. No. L-252 March 30, 1946TRANQUILINO CALO and DOROTEO SAN JOSE,petitioners,vs.ARSENIO C. ROLDAN, Judge of First Instance of Laguna, REGINO RELOVA and TEODULA BARTOLOME,respondents.Zosimo D. Tanalega for petitioners.Estanislao A. Fernandez for respondents Relova and Bartolome.No appearance for respondent Judge.FERIA,J.:This is a petition for writ ofcertiorariagainst the respondent Judge Arsenio C. Roldan of the Court First Instance of Laguna, on the ground that the latter has exceeded his jurisdiction or acted with grave abuse of discretion in appointing a receiver of certain lands and their fruits which, according to the complainant filed by the other respondents, as plaintiffs, against petitioners, as defendants, in case No. 7951, were in the actual possession of and belong to said plaintiffs.The complaint filed by plaintiffs and respondents against defendants and petitioners in the Court of First Instance of Laguna reads as follows:1. That the plaintiffs and the defendants are all of legal age, Filipino citizens, and residents of Pila, Laguna; the plaintiffs are husband and wife..2. That the plaintiff spouses are the owners and the possessors of the following described parcels of land, to wit:.x x x x x x x x x3. That parcel No. (a) described above is now an unplanted rice land and parcel No. (b) described in the complaint is a coconut land, both under the possession of the plaintiffs..4. That the defendants, without any legal right whatsoever and in connivance with each other, through the use of force, stealth, threats and intimidation, intend or are intending to enter and work or harvest whatever existing fruits may now be found in the lands above-mentioned in violation of plaintiff's in this case ineffectual..5. That unless defendants are barred, restrained, enjoined, and prohibited from entering or harvesting the lands or working therein through ex-parte injunction, the plaintiffs will suffer injustice, damages and irreparable injury to their great prejudice..6. That the plaintiffs are offering a bond in their application for ex-parte injunction in the amount of P2,000, subject to the approval of this Hon. Court, which bond is attached hereto marked as Annex A and made an integral part of this complaint..7. That on or about June 26, 1945, the defendants, through force, destroyed and took away the madre-cacao fencer, and barbed wires built on the northwestern portion of the land designated as parcel No. (b) of this complaint to the damage and prejudice of the plaintiffs in the amount of at least P200..Wherefore, it is respectfully prayed:.(a) That the accompanying bond in the amount of P2,000 be approved;(b) That a writ of preliminary injunction be issuedex-parteimmediately restraining, enjoining and prohibiting the defendants, their agents, servants, representatives, attorneys, and, (or) other persons acting for and in their behalf, from entering in, interfering with and/or in any wise taking any participation in the harvest of the lands belonging to the plaintiffs; or in any wise working the lands above-described;(c) That judgment be rendered, after due hearing, declaring the preliminary injunction final;.(d) That the defendants be condemned jointly and severally to pay the plaintiffs the sum of P200 as damages; and.(e) That plaintiffs be given such other and further relief just and equitable with costs of suit to the defendants.The defendants filed an opposition dated August 8, 1945, to the issuance of the writ of preliminary injunction prayed for in the above-quoted complaint, on the ground that they are owners of the lands and have been in actual possession thereof since the year 1925; and their answer to the complaint filed on August 14, 1945, they reiterate that they are the owners and were then in actual possession of said property, and that the plaintiffs have never been in possession thereof.The hearing of the petition for preliminary injunction was held on August 9, 1945, at which evidence was introduced by both parties. After the hearing, Judge Rilloraza, then presiding over the Court of First Instance of Laguna, denied the petition on the ground that the defendants were in actual possession of said lands. A motion for reconsideration was filed by plaintiffs on August 20, 1945, but said motion had not yet, up to the hearing of the present case, been decided either by Judge Rilloraza, who was assigned to another court, or by the respondent judge.The plaintiffs (respondents) filed on September 4, 1945, a reply to defendants' answer in which, among others, they reiterate their allegation in the complaint that they are possessors in good faith of the properties in question.And on December 17, plaintiffs filed an urgent petitionex-partepraying that plaintiffs' motion for reconsideration of the order denying their petition for preliminary injunction be granted and or for the appointment of a receiver of the properties described in the complaint, on the ground that (a) the plaintiffs have an interest in the properties in question, and the fruits thereof were in danger of being lost unless a receiver was appointed; and that (b) the appointment of a receiver was the most convenient and feasible means of preserving, administering and or disposing of the properties in litigation which included their fruits. Respondents Judge Roldan, on the same date, December 17, 1945, decided that the court would consider the motion for reconsideration in due time, and granted the petition for appointment of and appointed a receiver in the case.The question to be determined in the present special civil action ofcertiorariis, whether or not the respondent judge acted in excess of his jurisdiction or with grave abuse of discretion in issuing the order appointing a receiver in the case No. 7951 of the Court of First Instance of Laguna; for it is evident that there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of the law against the said order, which is an incidental or interlocutory one.It is a truism in legal procedure that what determines the nature of an action filed in the courts are the facts alleged in the complaint as constituting the cause of the action. The facts averred as a defense in the defendant's answer do not and can not determine or change the nature of the plaintiff's action. The theory adopted by the plaintiff in his complaint is one thing, and that of the defendant in his answer is another. The plaintiff has to establish or prove his theory or cause of action in order to obtain the remedy he prays for; and the defendant his theory, if necessary, in order to defeat the claim or action of the plaintiff..According to the complaint filed in the said case No. 7951, the plaintiff's action is one of ordinary injunction, for the plaintiffs allege that they are the owners of the lands therein described, and were in actual possession thereof, and that "the defendants without any legal right whatever and in connivance with each other, through the use of force, stealth, threat and intimidation, intend or are intending to enter and work or harvest whatever existing fruits may be found in the lands above mentioned in violation of plaintiffs' proprietary rights thereto;" and prays "that the defendants, their agents, servants, representatives, and other persons acting for or in their behalf, be restrained, enjoined and prohibited from entering in, interfering with, or in any way taking any participation in the harvest of the lands above describe belonging to the plaintiffs."That this is the nature of plaintiffs' action corroborated by the fact that they petitioned in the same complaint for a preliminary prohibitory injunction, which was denied by the court in its order dated August 17, 1945, and that the plaintiffs, in their motion for reconsideration of said order filed on August 20 of the same year, and in their urgent petition dated December 17, moving the court to grant said motion for reconsideration, reiterated that they were actual possessors of the land in question.The fact that plaintiffs, in their reply dated September 4, after reiterating their allegation or claim that they are the owners in fee simple and possessors in good faith of the properties in question, pray that they be declared the owners in fee simple, has not changed the nature of the action alleged in the complaint or added a new cause of action thereto; because the allegations in plaintiffs' reply were in answer to defendants' defenses, and the nature of plaintiffs' cause of action, as set forth in their complaint, was not and could not be amended or changed by the reply, which plaintiffs had the right to present as a matter of course. A plaintiff can not, after defendant's answer, amend his complaint by changing the cause of action or adding a new one without previously obtaining leave of court (section 2, Rule 17)..Respondents' contention in paragraph I of their answer that the action filed by them against petitioners in the case No. 7951 of the Court of First Instance of Laguna is not only for injunction, but also to quiet title over the two parcels of land described in the complaint, is untenable for the reasons stated in the previous paragraph. Besides, an equitable action to quiet title, in order to prevent harrassment by continued assertion of adverse title, or to protect the plaintiff's legal title and possession, may be filed in courts of equity (and our courts are also of equity), only where no other remedy at law exists or where the legal remedy invokable would not afford adequate remedy (32 Cyc., 1306, 1307). In the present case wherein plaintiffs alleged that they are the owners and were in actual possession of the lands described in the complaint and their fruits, the action of injunction filed by them is the proper and adequate remedy in law, for a judgment in favor of plaintiffs would quiet their title to said lands..The provisional remedies denominated attachment, preliminary injunction, receivership, and delivery of personal property, provided in Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are remedies to which parties litigant may resort for the preservation or protection of their rights or interest, and for no other purpose, during the pendency of the principal action. If an action, by its nature, does not require such protection or preservation, said remedies can not be applied for and granted. To each kind of action or actions a proper provisional remedy is provided for by law. The Rules of Court clearly specify the case in which they may be properly granted. .Attachment may be issued only in the case or actions specifically stated in section 1, Rule 59, in order that the defendant may not dispose of his property attached, and thus secure the satisfaction of any judgment that may be recovered by plaintiff from defendant. For that reason a property subject of litigation between the parties, or claimed by plaintiff as his, can not be attached upon motion of the same plaintiff..The special remedy of preliminary prohibitory injunction lies when the plaintiff's principal action is an ordinary action of injunction, that is, when the relief demanded in the plaintiff's complaint consists in restraining the commission or continuance of the act complained of, either perpetually or for a limited period, and the other conditions required by section 3 of Rule 60 are present. The purpose of this provisional remedy is to preserve thestatus quoof the things subject of the action or the relation between the parties, in order to protect the rights of the plaintiff respecting the subject of the action during the pendency of the suit. Because, otherwise or if no preliminary prohibition injunction were issued, the defendant may, before final judgment, do or continue the doing of the act which the plaintiff asks the court to restrain, and thus make ineffectual the final judgment rendered afterwards granting the relief sought by the plaintiff. But, as this court has repeatedly held, a writ of preliminary injunction should not be granted to take the property out of the possession of one party to place it in the hands of another whose title has not been clearly established..A receiver may be appointed to take charge of personal or real property which is the subject of an ordinary civil action, when it appears that the party applying for the appointment of a receiver has an interest in the property or fund which is the subject of the action or litigation, and that such property or fund is in danger of being lost, removed or materially injured unless a receiver is appointed to guard and preserve it (section 1 [b], Rule 61); or when it appears that the appointment of a receiver is the most convenient and feasible means of preserving, administering or disposing of the property in litigation (section 1 [e] of said Rule). The property or fund must, therefore be in litigation according to the allegations of the complaint, and the object of appointing a receiver is to secure and preserve the property or thing in controversy pending the litigation. Of course, if it is not in litigation and is in actual possession of the plaintiff, the latter can not apply for and obtain the appointment of a receiver thereof, for there would be no reason for such appointment.Delivery of personal property as a provisional remedy consists in the delivery, by order of the court, of a personal property by the defendant to the plaintiff, who shall give a bond to assure the return thereof or the payment of damages to the defendant in the plaintiff's action to recover possession of the same property fails, in order to protect the plaintiff's right of possession of said property, or prevent the defendant from damaging, destroying or disposing of the same during the pendency of the suit.Undoubtedly, according to law, the provisional remedy proper to plaintiffs' action of injunction is a preliminary prohibitory injunction, if plaintiff's theory, as set forth in the complaint, that he is the owner and in actual possession of the premises is correct. But as the lower court found at the hearing of the said petition for preliminary injunction that the defendants were in possession of the lands, the lower court acted in accordance with law in denying the petition, although their motion for reconsideration, which was still pending at the time the petition in the present case was heard in this court, plaintiffs insist that they are in actual possession of the lands and, therefore, of the fruits thereof.From the foregoing it appears evident that the respondent judge acted in excess of his jurisdiction in appointing a receiver in case No. 7951 of the Court of First Instance of Laguna. Appointment of a receiver is not proper or does not lie in an action of injunction such as the one filed by the plaintiff. The petition for appointment of a receiver filed by the plaintiffs (Exhibit I of the petition) is based on the ground that it is the most convenient and feasible means of preserving, administering and disposing of the properties in litigation; and according to plaintiffs' theory or allegations in their complaint, neither the lands nor the palay harvested therein, are in litigation. The litigation or issue raised by plaintiffs in their complaint is not the ownership or possession of the lands and their fruits. It is whether or not defendants intend or were intending to enter or work or harvest whatever existing fruits could then be found in the lands described in the complaint, alleged to be the exclusive property and in the actual possession of the plaintiffs. It is a matter not only of law but of plain common sense that a plaintiff will not and legally can not ask for the appointment or receiver of property which he alleges to belong to him and to be actually in his possession. For the owner and possessor of a property is more interested than persons in preserving and administering it.Besides, even if the plaintiffs had amended their complaint and alleged that the lands and palay harvested therein are being claimed by the defendants, and consequently the ownership and possession thereof were in litigation, it appearing that the defendants (now petitioners) were in possession of the lands and had planted the crop or palay harvested therein, as alleged in paragraph 6 (a) and (b) of the petition filed in this court and not denied by the respondent in paragraph 2 of his answer, the respondent judge would have acted in excess of his jurisdiction or with a grave abuse of discretion in appointing a receiver thereof. Because relief by way of receivership is equitable in nature, and a court of equity will not ordinarily appoint a receiver where the rights of the parties depend on the determination of adverse claims of legal title to real property and one party is in possession (53 C. J., p. 26). The present case falls within this rule..In the case ofMendoza vs. Arellano and B. de Arellano, this court said:Appointments of receivers of real estate in cases of this kind lie largely in the sound discretion of the court, and where the effect of such an appointment is to take real estate out of the possession of the defendant before the final adjudication of the rights of the parties, the appointment should be made only in extreme cases and on a clear showing of necessity therefor in order to save the plaintiff from grave and irremediable loss or damage. (34 Cyc., 51, and cases there cited.) No such showing has been made in this case as would justify us in interfering with the exercise by trial judge of his discretion in denying the application for receiver. (36 Phil., 59, 63, 64.).Although the petition is silent on the matter, as the respondents in their answer allege that the Court of First Instance of Laguna has appointed a receiver in another case No. 7989 of said court, instituted by the respondents Relova against Roberto Calo and his brothers and sisters, children of Sofia de Oca and Tranquilino Calo (petitioner in this case), and submitted copy of the complaint filed by the plaintiffs (now respondents) in case No. 7989 (Exhibit 9 of the respondents' answer), we may properly express and do hereby express here our opinion, in order to avoid multiplicity of suits, that as the cause of action alleged in the in the complaint filed by the respondents Relova in the other case is substantially the same as the cause of action averred in the complaint filed in the present case, the order of the Court of First Instance of Laguna appointing a receiver in said case No. 7989 was issued in excess of its jurisdiction, and is therefore null and void.In view of all the foregoing, we hold that the respondent Judge Arsenio C. Roldan of the Court of First Instance of Laguna has exceeded his jurisdiction in appointing a receiver in the present case, and therefore the order of said respondent judge appointing the receiver, as well as all other orders and proceedings of the court presided over by said judge in connection with the receivership, are null and void.As to the petitioners' petition that respondents Relova be punished for contempt of court for having disobeyed the injunction issued by this court against the respondents requiring them to desist and refrain from enforcing the order of receivership and entering the palay therein, it appearing from the evidence in the record that the palay was harvested by the receiver and not by said respondents, the petition for contempt of court is denied. So ordered, with costs against the respondents.G.R. No. 185734, July 03, 2013ALFREDO C. LIM, JR.,Petitioner,v.SPOUSES TITO S. LAZARO AND CARMEN T. LAZARO,Respondents.

R E S O L U T I O NPERLAS-BERNABE,J.:Assailed in this petition for review oncertiorari1are the July 10, 2008 Decision2and December 18, 2008 Resolution3of the Court of Appeals (CA) in CA-G.R. SP No. 100270, affirming the March 29, 2007 Order4of 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 complaint5for 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 P2,160,000.00, which represented the amounts stated in several dishonored checks issued by the latter to the former, as well as interests, attorneys fees, and costs. The RTC granted the writ of preliminary attachment application6and upon the posting of the required P2,160,000.00 bond,7issued the corresponding writ on October 14, 2005.8In 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,10Sps. 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.11Hinged 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 Agreement13whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of P2,351,064.80 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;14and (b) that Sps. Lazaros 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 Decision15and January 5, 2007 Amended Decision.16

Subsequently, Sps. Lazaro filed an Omnibus Motion,17seeking to lift the writ of preliminary attachment annotated on the subject TCTs, which the RTC granted on March 29, 2007.18It 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 writs annotation on the subject TCTs.

Lim, Jr. filed a motion for reconsideration19which was, however, denied on July 26, 2007,20prompting him to file a petition forcertiorari21before the CA.The CA Ruling

On July 10, 2008, the CA rendered the assailed decision,22finding no grave abuse of discretion on the RTCs 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 reconsideration24which 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 Courts 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 liencontinues 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 P2,351,064.80. Hence, given that the foregoing debt remains unpaid, the attachment of Sps. Lazaros properties should have continued to subsist.

InChemphil Export & Import Corporation v. CA,29the Court pronounced that a writ of attachment is not extinguished by the execution of a compromise agreement between the parties,viz:cralavvonlinelawlibraryDid the compromise agreement between Antonio Garcia and the consortium discharge the latters 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 CEICs contentions would be to totally disregard the concept and purpose of a preliminary attachment.

x x x x

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.

x x x x

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.30Verily, the lifting of the attachment lien would be tantamount to an abdication of Lim, Jr.s rights over Sps. Lazaros properties which the Court, absent any justifiable ground therefor, cannot allow.

WHEREFORE, the petition isGRANTED. The July 10, 2008 Decision and the December 18, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 100270 areREVERSEDandSET ASIDE, and the March 29, 2007 Order of the Regional Trial Court of Quezon City, Branch 223 isNULLIFIED. Accordingly, the trial court is directed toRESTOREthe 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. 48080, De Borja v. Platon and De Borja, 73 Phil. 659Republic of the PhilippinesSUPREME COURTManilaEN BANCAugust 31, 1942G.R. No. 48080JOSE DE BORJA,petitioner,vs.SERVILLANO PLATON and FRANCISCO DE BORJA,respondents.Vicente J. Francisco for petitioner.E. V. Filamor for respondents.No appearance for respondent judgeBOCOBO,J.:Petitioner seeks the setting aside of an order of preliminary attachment issued on November 6, 1940, and reiterated on January 13, 1941, by the respondent Judge of the Court of First Instance against petitioner's properties.On August 12, 1936, petitioner brought a civil action in the Court of First Instance of Rizal against Hermogena Romero, Francisco de Borja, Josefa Tangco and Crisanto de Borja to annul a second sale by Francisco de Borja to Hermogena Romero, of a large estate known as the Hacienda Jalajala, and to recover damages in the amount of P25,000. On August 29, 1936, Francisco de Borja and his wife Josefa Tangco filed an answer with three counterclaims, and on September 29, 1936, they presented two more counterclaims. Trial began September 30, 1936. Under date of August 4, 1937, defendants Francisco de Borja, Josefa Tangco and Crisanto de Borja submitted their amended answer, consisting of a general denial, special defenses, and five counterclaims and cross-complaints. In these causes for counter-claim and cross-complaint, it was alleged that plaintiff, being a son of defendants Francisco de Borja and Josefa Tangco, had been entrusted with the administration of the extensive interests of his parents, but had been unfaithful to his trust. Said defendants, therefore, prayed,inter alia, that the spouses Borja and Tangco be declared owners of the Hacienda Jalajala in question; that plaintiff be required to render an accounting of the products of said hacienda that he had received and to pay said spouses at least P100,000 illegally retained by him; that plaintiff be ordered to account for the proceed of rice and bran and to pay at least P700,000 unlawfully retained by him; that plaintiff be made to deliver P20,000 which he had collected from a debtor of said spouses; that plaintiff be likewise ordered to pay another sum of P9,034 collected by him from the same debtor; and that plaintiff be required to turn over to defendants Francisco de Borja and Josefa Tangco the amount of P40,000 collected by him as indemnity of an insurance policy on property belonging to said spouses.On July 27, 1940, Francisco de Borja and his wife filed their petition for preliminary attachment to cover their third, fourth, and fifth, grounds for cross-complaint, involving a total of P69,035. In said motion, the defendants Borja and wife stated that they did not include the first and second causes for cross-complaint because the visible property of plaintiff that could then be attached was only worth about P2,000. On August 21, 1940, plaintiff presented an amended answer setting up a counterclaim against defendants Borja and wife in the sum of P99,175.46.The order for preliminary attachment is questioned upon several grounds, among which are: (1) that no writ of attachment can be issued in favor of a defendant who presents a counterclaim; (2) and the defendants' affidavit was fatally defective.On the first point, we believe a writ of preliminary attachment may be issued in favor of a defendant who sets up a counterclaim. For the purpose of the protection afforded by such attachment, it is immaterial whether the defendants Borja and wife simply presented a counterclaim or brought a separate civil action against Jose de Borja, plaintiff in the previous case and petitioner herein. To lay down a subtle distinction would be to sanction that formalism and that technicality which are discountenanced by the modern laws of procedure for the sake of speedy and substantial justice. In the present case we see no reason why the order of the trial court should be disturbed, this question being a matter within its discretion and we find no grave abuse of that discretion.As to be the second objection of petitioner, his counsel strenuously advances the theory that the affidavit attached to the petition for a writ of preliminary attachment was fatally defective because it failed to allege that "the amount due to the plaintiff is as much as the sum for which the order is granted above all legal counterclaims" as required in section 426,Code of Civil Procedureand section 3, Rule 59, Rules of Court. Petitioner contends that his counterclaim against that of Francisco de Borja and wife being P99,175.46 whereas the latter's counterclaim totalled only P69,035, the omission of the allegation referred to is a serious defect. The trial court found, however, that the counterclaim of Francisco de Borja and wife exceed those of the petitioner Jose de Borja. It should be borne in mind that the aggregate counterclaims of Francisco de Borja and wife amounted to P869,000, which exceeds petitioner's counterclaim by P769,000 in round figures. Moreover, as the trial court had before it the evidence adduce by both sides, the petition for a writ of preliminary attachment having been filed four years after the trial had begun, we presume that the lower court, having in mind such evidence, ordered the attachment accordingly.The order appealed from is hereby affirmed, with costs against the petitioner. So ordered.SECOND DIVISIONPROFESSIONAL VIDEO, INC.,Petitioner,- versus -TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, Respondent.G.R. No. 155504Present:QUISUMBING,J.,Chairperson,*YNARES-SANTIAGO,**CHICO-NAZARIO,***LEONARDO-DE CASTRO, andBRION,JJ. Promulgated:June 26, 2009

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D E C I S I O N

BRION,J.:We resolve the petition filed by Professional Video, Inc. (PROVI)[1]to annul and set aside the Decision[2]of the Court of Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent Order denying PROVIs motion for reconsideration.[3]The assailed CA decision nullified:a.the Order[4]dated July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in Civil Case No. 68527, directing the attachment/garnishment of the properties of respondent Technical Education and SkillsDevelopment Authority(TESDA) amounting to Thirty Five Million Pesos (P35,000,000.00); andb.the RTCsAugust 24, 2001Order[5]denying respondent TESDAsmotion to discharge/quash writ of attachment.THE FACTUAL BACKGROUNDPROVI is an entity engaged in the sale of high technology equipment, information technology products and broadcast devices, including the supply of plastic card printing and security facilities.TESDA is an instrumentality of the government established under Republic Act (R.A.) No. 7796 (the TESDA Act of 1994) and attached to the Department of Labor and Employment (DOLE) to develop and establish a national system of skills standardization, testing, and certification in the country.[6]To fulfill this mandate, it sought to issue security-printed certification and/or identification polyvinyl (PVC) cards to trainees who have passed the certification process.TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings onJune 25, 1999andJuly 22, 1999for the printing and encoding of PVC cards. A failure of bidding resulted in both instances since only two (2) bidders PROVI and Sirex Phils. Corp. submitted proposals.Due to the failed bidding, the PBAC recommended that TESDA enter into a negotiated contract with PROVI. OnDecember 29, 1999, TESDA and PROVI signed and executed their Contract Agreement Project: PVC ID Card Issuance (the Contract Agreement)for the provision of goods and services in the printing and encoding of PVC cards.[7]Under this Contract Agreement, PROVI was to provide TESDA with the system and equipment compliant with the specifications defined in the Technical Proposal. In return, TESDA would pay PROVI the amount of Thirty-Nine Million Four Hundred and Seventy-Five Thousand Pesos (P39,475,000) within fifteen (15) days after TESDAs acceptance of the contracted goods and services.On August 24, 2000, TESDA and PROVI executed an Addendum to the Contract Agreement Project: PVC ID Card Issuance (Addendum),[8]whose terms bound PROVI to deliver one hundred percent (100%) of the enumerated supplies to TESDA consisting of five hundred thousand (500,000) pieces of security foil; five (5) pieces of security die with TESDA seal; five hundred thousand (500,000) pieces of pre-printed and customized identification cards; one hundred thousand (100,000) pieces of scannable answer sheets; and five hundred thousand (500,000) customized TESDA holographic laminate. In addition, PROVI would install and maintain the following equipment: one (1) unit of Micropoise, two (2) units of card printer, three (3) units of flatbed scanner, one (1) unit of OMR scanner, one (1) unit of Server, and seven (7) units of personal computer.TESDA in turn undertook to pay PROVI thirty percent (30%) of the total cost of the supplies within thirty (30) days after receipt and acceptance of the contracted supplies, with the balance payable within thirty (30) days after the initial payment.According to PROVI, it delivered the following items to TESDA on the dates indicated:DateParticularsAmount26 April 200048,500 pre-printed cardsP2,764,500.0007 June 2000330,000 pre-printed cards18,810,000.0007 August 2000121,500 pre-printed cards6,925,500.0026 April 2000100,000 scannable answer sheets600,000.0006 June 20005 Micro-Poise customized die375,000.0013 June 200035 boxes @ 15,000 imp/box10,000,000.00Custom hologram FoilTotalP39,475,000.00PROVI further alleged that out of TESDAs liability ofP39,475,000.00, TESDA paid PROVI onlyP3,739,500.00, leaving an outstanding balance ofP35,735,500.00, as evidenced by PROVIs Statement of Account.[9]Despite the two demand letters dated March 8 andApril 27, 2001that PROVI sent TESDA,[10]the outstanding balance remained unpaid.OnJuly 11, 2001, PROVI filed with the RTC a complaint for sum of money with damages against TESDA. PROVI additionally prayed for the issuance of a writ of preliminary attachment/garnishment against TESDA. The case was docketed as Civil Case No. 68527.In an Order datedJuly 16, 2001, the RTC granted PROVIs prayer and issued a writ of preliminary attachment against the properties of TESDA not exempt from execution in the amount ofP35,000,000.00.[11]TESDA responded onJuly 24, 2001by filing a Motion to Discharge/Quash the Writ of Attachment, arguing mainly that public funds cannot be the subject of garnishment.[12]The RTC denied TESDAs motion, and subsequently ordered the manager of the Land Bank of thePhilippinesto produce TESDAs bank statement for the garnishment of the covered amount.[13]Faced with these rulings, TESDA filed a Petition forCertiorariwith the CA to question the RTC orders, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the trial court for issuing a writ of preliminary attachment against TESDAs public funds.[14]The CA set aside the RTCs orders after finding that: (a) TESDAs funds are public in nature and, therefore, exempt from garnishment; and(b) TESDAs purchase of the PVC cards was a necessary incident of its governmental function; consequently, it ruled that there was no legal basis for the issuance of a writ of preliminary attachment/garnishment.[15]The CA subsequently denied PROVIs motion for reconsideration;[16]hence, the present petition.THE PETITIONThe petition submits to this Court the single issue of whether or not the writ of attachment against TESDA and its funds, to cover PROVIs claim against TESDA, is valid. The issue involves a pure question of law and requires us to determine whether the CA was correct in ruling that the RTC gravely abused its discretion in issuing a writ of attachment against TESDA.PROVI argues that the CA should have dismissed TESDAs petition forcertiorarias the RTC did not commit any grave abuse of discretion when it issued the Orders datedJuly 16, 2001andAugust 24, 2001. According to PROVI, the RTC correctly found that when TESDA entered into a purely commercial contract with PROVI, TESDA went to the level of an ordinary private citizen and could no longer use the defense of state immunity from suit.PROVI further contends that it has alleged sufficient ultimate facts in the affidavit it submitted to support its application for a writ of preliminary attachment.Lastly, PROVI maintains that sufficient basis existed for the RTCs grant of the writ of preliminary attachment, since TESDA fraudulently misapplied or embezzled the money earmarked for the payment of the contracted supplies and services, as evidenced by the Certification as to Availability of Funds.TESDA claims that it entered the Contract Agreement and Addendum in the performance of its governmental function to develop and establish a national system of skills standardization, testing, and certification; in the performance of this governmental function, TESDA is immune from suit. Even assuming that it had impliedly consented to be sued by entering into a contract with PROVI, TESDA posits that the RTC still did not have the power to garnish or attach its funds since these are public funds. Lastly, TESDA points out that PROVI failed to comply with the elements for the valid issuance of a writ of preliminary attachment, as set forth in Section 1, Rule 57 of the 1997 Rules of Civil Procedure.THE COURTS RULINGWe find, as the CA did, that the RTCs questioned order involved a gross misreading of the law and jurisprudence amounting to action in excess of its jurisdiction.Hence, we resolve to DENY PROVIs petition for lack of merit.TESDA is aninstrumentalityof the government undertaking governmental functions.R.A. No. 7796 created theTechnical Education and Skills Development AuthorityorTESDAunder the declared policy of the State to provide relevant, accessible, high quality and efficient technical education and skills development in support of the development of high quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities.[17]TESDA replaced and absorbed the National Manpower and Youth Council, the Bureau of Technical and Vocational Education and the personnel and functions pertaining to technical-vocational education in the regional offices of the Department of Education, Culture and Sports and the apprenticeship program of the Bureau of Local Employment of the DOLE.[18]Thus, TESDA is an unincorporated instrumentality of the government operating under its own charter.Among others, TESDA is empowered to: approve trade skills standards and trade tests as established and conducted by private industries; establish and administer a system of accreditation of both public and private institutions; establish, develop and support the institutions' trainors' training and/or programs; exact reasonable fees and charges for such tests and trainings conducted, and retain such earnings for its own use, subject to guidelines promulgated by the Authority; andperform such other duties and functions necessary to carry out the provisions of the Act, consistent with the purposes of the creation of TESDA.[19]Within TESDAs structure, as provided by R.A. No. 7769, is a Skills Standards and Certification Office expressly tasked, among others, to develop and establish a national system of skills standardization, testing and certification in the country; and to conduct research and development on various occupational areas in order to recommend policies, rules and regulations for effective and efficient skills standardization, testing and certification system in the country.[20]The law likewise mandates that [T]here shall be national occupational skills standards to be established by TESDA-accredited industry committees. The TESDA shall develop and implement a certification and accreditation program in which private groups and trade associations are accredited to conduct approved trade tests, and the local government units to promote such trade testing activities in their respective areas in accordance with the guidelines to be set by the TESDA. The Secretary of Labor and Employment shall determine the occupational trades for mandatory certification.All certificates relating to the national trade skills testing and certification system shall be issued by the TESDA through its Secretariat.[21]All these measures are undertaken pursuant to the constitutional command that [T]he State affirms labor as a primary social economic force, and shall protect the rights of workers and promote their welfare;[22]that [T]he State shall protect and promote the right of all citizens to quality education at all levels, and shall take appropriate steps to make such education accessible to all;[23]in order to afford protection to labor and promote full employment and equality of employment opportunities for all.[24]Under these terms, both constitutional and statutory, we do not believe that the role and status of TESDA can seriously be contested: it is an unincorporated instrumentality of the government, directly attached to the DOLE through the participation of the Secretary of Labor as its Chairman, for the performance of governmental functions i.e.,the handling of formal and non-formal education and training, and skills development.As an unincorporated instrumentality operating under a specific charter, it is equipped with both express and implied powers,[25]and all State immunities fully apply to it.[26]TESDA, as an agency of the State, cannot be sued without its consent.The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the 1987 Constitution and has been an established principle that antedates this Constitution.[27]It is as well a universally recognized principle of international law that exempts a state and its organs from the jurisdiction of another state.[28]The principle is based on the very essence of sovereignty, and on the practical ground that there can be no legal right as against the authority that makes the law on which the right depends.[29]It also rests on reasons of public policy that public service would be hindered, and the public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and, consequently, controlled in the uses and dispositions of the means required for the proper administration of the government.[30]The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit against the Republic by name; a suit against an unincorporated government agency; a suit against a government agency covered by a charter with respect to the agencys performance of governmental functions; and a suit that on its face is against a government officer, but where the ultimate liability will fall on the government.In the present case, the writ of attachment was issued against a government agency covered by its own charter.As discussed above, TESDA performs governmental functions, and the issuance of certifications is a task within its function of developing and establishing a system of skills standardization, testing, and certification in the country.From the perspective of this function, the core reason for the existence of state immunity applies i.e., the public policy reason that the performance of governmental function cannot be hindered or delayed by suits, nor can these suits control the use and disposition of the means for the performance of governmental functions. InProvidence Washington Insurance Co. v. Republic of the Philippines,[31]we said:[A] continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could very well be imagined.PROVI argues that TESDA can be sued because it has effectively waived its immunity when it entered into a contract with PROVI for a commercial purpose. According to PROVI, since the purpose of its contract with TESDA is to provide identification PVC cards with security seal which TESDA will thereafter sell to TESDA trainees, TESDA thereby engages in commercial transactions not incidental to its governmental functions.TESDAs response to this position is to point out that it is not engaged in business, and there is nothing in the records to show that its purchase of the PVC cards from PROVI is for a business purpose. While TESDA admits that it will charge the trainees with a fee for the PVC cards, it claims that this fee is only to recover their costs and is not intended for profit.We agree with TESDA.As the appellate court found, the PVC cards purchased by TESDA from PROVI are meant to properly identify the trainees who passed TESDAs National Skills Certification Program the program that immediately serves TESDAs mandated function of developing and establishing a national system of skills standardization, testing, and certification in the country.[32]Aside from the express mention of this function in R.A. No. 7796, the details of this function are provided under DOLE Administrative Order No. 157, S. 1992, as supplemented by Department Order Nos. 3 thru 3-F, S. 1994 and Department Order No. 13, S. 1994.[33]Admittedly, the certification and classification of trainees may be undertaken in ways other than the issuance of identification cards, as the RTC stated in its assailed Order.[34]How the mandated certification is to be done, however, lies within the discretion of TESDA as an incident of its mandated function, and is a properly delegated authority that this Court cannot inquire into, unless its exercise is attended by grave abuse of discretion.That TESDA sells the PVC cards to its trainees for a fee does not characterize the transaction as industrial or business; the sale, expressly authorized by the TESDA Act,[35]cannot be considered separately from TESDAs general governmental functions, as they are undertaken in the discharge of these functions. Along this line of reasoning, we held inMobilPhilippinesv. Customs Arrastre Services:[36]Now, the fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity.TESDAs funds are public in character, hence exempt from attachment or garnishment.Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its implied consent to be sued, TESDAs funds are still public in nature and, thus, cannot be the valid subject of a writ of garnishment or attachment.Under Section 33 of the TESDA Act, the TESDA budget for the implementation of the Act shall be included in the annual General Appropriation Act; hence, TESDA funds, being sourced from the Treasury, are moneys belonging to the government, or any of its departments, in the hands of public officials.[37]We specifically spoke of the limits in dealing with this fund inRepublic v. Villasor[38]when we said:This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided, The State may not be sued without its consent. A corollary, both dictated by logic and sound sense, from such a basic concept, is thatpublic funds cannot be the object of garnishment proceedings even if the consent to be sued had been previously granted and the state liability adjudged.Thus in the recent case ofCommissioner of Public Highwaysvs.San Diego, such a well-settled doctrine was restated in the opinion of Justice Teehankee:The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of execution' and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy.Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.[Emphasis supplied.]We reiterated this doctrine inTraders Royal Bank v. Intermediate Appellate Court,[39]where we said:The NMPCs implied consent to be sued notwithstanding, the trial court did not have the power to garnish NMPC deposits to answer for any eventual judgment against it.Being public funds, the deposits are not within the reach of any garnishment or attachment proceedings.[Emphasis supplied.]As pointed out by TESDA in its Memorandum,[40]the garnished funds constitute TESDAs lifeblood in government parlance, its MOOE[41] whose withholdingviaa writ of attachment, even on a temporary basis, would paralyze TESDAs functions and services. As well, these funds also include TESDAs Personal Services funds from which salaries of TESDA personnel are sourced.Again and for obvious reasons, the release of these funds cannot be delayed.PROVI has not shown that it is entitled to the writ of attachment.Even without the benefit of any immunity from suit, the attachment of TESDA funds should not have been granted, as PROVI failed to prove that TESDA fraudulently misapplied or convertedfunds allocated under the Certificate as to Availability of Funds. Section 1, Rule 57 of the Rules of Court sets forth the grounds for issuance of a writ of preliminary attachment, as follows:SECTION 1.Grounds upon which attachment may issue. A plaintiff or any proper party may, at the commencement of the action or at any time thereafter, have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:(a)In an action for recovery of a specified amount of money or damages, other than moral and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors;(b)In an action for money or property embezzled or fraudulently misapplied or converted to his 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;(c)In an action to recover the possession of property unjustly or fraudulently taken, detained or converted, when the property or any part thereof, has been concealed, removed or disposed of to prevent its being found or taken by the applicant or an authorized person;(d)In 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, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought;(e)In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors;(f)In an action against a party who does not reside and is not found in thePhilippines, or on whom summons may be served by publication. [Emphasis supplied.]Jurisprudence teaches us that the rule on the issuance of a writ of attachment must be construed strictly in favor of the defendant. Attachment, a harsh remedy, must be issued only on concrete and specific grounds and not on general averments merely quoting the words of the pertinent rules.[42]Thus, the applicants affidavit must contain statements clearly showing that the ground relied upon for the attachment exists.Section 1(b), Rule 57 of the Rules of Court,that PROVI relied upon, applies only where money or property has been embezzled or converted by a public officer, an officer of a corporation, or some other person who took advantage of his fiduciary position or who willfully violated his duty.PROVI, in this case, never entrusted any money or property to TESDA. While the Contract Agreement is supported by a Certificate as to Availability of Funds (Certificate) issued by the Chief of TESDAs Accounting Division, this Certificate does not automatically confer ownership over the funds to PROVI.Absent any actual disbursement, these funds form part of TESDAs public funds, and TESDAs failure to pay PROVI the amount stated in the Certificate cannot be construed as an act of fraudulent misapplication or embezzlement.In this regard, Section 86 of Presidential Decree No. 1445 (The Accounting Code) provides:Section 86.Certificate showing appropriation to meet contract. Except in a case of a contract for personal service, for supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three months, or banking transactions of government-owned or controlled banks, no contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting official or the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor concerned.The certification signed by the proper accounting official and the auditor who verified it, shall be attached to and become an integral part of the proposed contract, andthe sum so certified shall not thereafter be available for expenditure for any other purpose until the obligation of the government agency concerned under the contract is fully extinguished.[Emphasis supplied.]By law, therefore, the amount stated in the Certification should be intact and remains devoted to its purpose since its original appropriation.PROVI can rebut the presumption that necessarily arises from the cited provision only by evidence to the contrary.No such evidence has been adduced.Section 1 (d), Rule 57 of the Rules of Courtapplies where a party is guilty of fraud in contracting a debt or incurring an obligation, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought.InWee v. Tankiansee,[43]we held that 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 debtors mere non-payment of the debt or failure to comply with his obligation.The affidavit, being the foundation of the writ, must contain particulars showing how the imputed fraud was committed for the court to decide whether or not to issue the writ. To reiterate, a writ of attachment can only be granted on concrete and specific grounds and not on general averments merely quoting the words of the rules.[44]Theaffidavit filed by PROVI through Elmer Ramiro, its President and Chief Executive Officer, only contained a general allegation that TESDA had fraudulent misapplied or converted the amount ofP10,975,000.00that was allotted to it. Clearly, we cannot infer any finding of fraud from PROVIs vague assertion, and the CA correctly ruled that the lower court acted with grave abuse of discretion in granting the writ of attachment despite want of any valid ground for its issuance.For all these reasons, we support the appellate courts conclusion that no valid ground exists to support the grant of the writ of attachment against TESDA.The CAs annulment and setting aside of the Orders of the RTC were therefore fully in order.WHEREFORE, premises considered, we herebyDENYthe petition filed by petitioner Professional Video, Inc., andAFFIRMthe Court of Appeals Decision datedJuly 23, 2002, and Resolution ofSeptember 27, 2002, in CA-G.R. SP No. 67599.Costs against the petitioner.SO ORDERED.G.R. No. 104405 May 13, 1993LIBERTY INSURANCE CORPORATION,petitioner,vs.THE HONORABLE COURT OF APPEALS, HON. NAPOLEON K. FLOJO, Presiding Judge of Branch II, RTC Manila; ATILLA ARKIN, the CITY SHERIFF OF MANILA, the REGISTER OF DEEDS OF MANILA and the REGISTER OF DEEDS OF MAKATI, METRO MANILA,respondents.Cochico, Lopez, Delgado , Aquino & De la Merced for petitioner.Edgar Dennis A. Padernal for private respondent.BIDIN,J.:This is a petition for review oncertiorariseeking to set aside and to declare null and void the decision dated September 17, 1991 of the respondent Court of Appeals dismissing petitioner's petition for review and its resolution dated February 7, 1992 denying petitioner's Motion for Reconsideration.On May 4, 1988 Jose H. Imperial Organizations, Pty., thru Atty. Jose H. Imperial entered into an agreement with Coca-Cola Bottlers Philippines to promote two concerts featuring a group known as "Earth, Wind and Fire" on June 12 and 13, 1988 with Coca-Cola sponsoring the concerts and the former promoting the same.To ensure compliance with the terms of the agreement, Coca-Cola required Imperial Organizations to put up a performance bond. Petitioner Liberty Insurance, upon application of Imperial Organization put up the performance bond in the amount of Three Million Pesos (P3,000,000.00), the principal condition of which was to "fully and faithfully guarantee the terms and conditions" of the agreement dated May 24, 1988 entered into between Coca-Cola and Imperial Organizations. More particularly, the bond was to guarantee the return to Coca-Cola of "whatever portion of the cash sponsorship and cash advances to be made by Coca-Cola to finance the holding of the concerts on the dates aforesaid . . . ." (Rollo, pp. 37)In turn, and as a condition for the issuance of said performance bond, petitioner required Imperial Organizations, Jose H. Imperial, Atilla Arkin, and Carmen Madlangbayan to execute an indemnity agreement in its favor to indemnify it for any and all damages including attorney's fees which the petitioner may incur by reason of the issuance of the bond.It appears that while the concerts took place, Imperial Organizations and private respondents failed to comply with their obligations to Coca Cola, as a result of which petitioner became liable upon its performance bond paying Coca-Cola Three Million Pesos. Petitioner, demanded reimbursement from Imperial, Arkin And Madlangbayan based on their indemnity bond but to no avail.On August 7, 1988 petitioner filed with the Regional Trial Court, National Capital Region, Branch 2, Manila a complaint for damages with application for the issuance of a writ of preliminary attachment against private respondents.On September 20, 1988, the Trial Court thru the Hon. Rosario A. de Leon, issued an order allowing the issuance of the writ, stating that.:. . . There could have been fraud committed by the defendants Arkin and Madlangbayan in promising to give as security or collateral to their Indemnity Agreement, which caused the plaintiff to release the security bond, when as it turned out, the Transfer Certificate of Title of a parcel of land supposedly issued by the Register of Deeds of Rizal turned out to be fake, as the true land title number was issued over a different parcel of land issued in the name of a person other than defendant Madlangbayan, while defendant Atilla Arkin delivered an official receipt in the name of a third party but which vehicle was allegedly sold to him free from lien and encumbrance, when it turned out that the car was heavily mortgaged to a third party, . . . .The conclusion of fraud is inevitable in view of the above circumstances, for any (sic) rate fraud is a state of mind that maybe inferred from the circumstances extant in the case (Republicvs.Gonzales, 13 SCRA 633).In addition to the fact that these representations/promises of Arkin and Madlangbayan were made prior to the release of the bond (the bond by then had already been executed), it can still be said that this fraud existed when the obligation was contracted in line with Sec. 1, par (d), Rule 57, which reads: An attachment may issue in an action against a party who has been guilty of fraud in contracting or incurring the obligation upon which the action is brought.A debt is fraudulently contracted if at the time of contracting it, the debtor entertained an intention not to pay, or an intention not to keep a collateral agreement regarding the disposition of a property purchased on credit. (Francisco, Rules of Court, Second [1985] Edition, p. 21) . . . (Rollo, pp. 38-39)On May 10, 1989 respondent Arkin filed a motion to Quash/ Recall Writ of Attachment. On October 19, 1989, the trial court, this time presided by respondent judge Napoleon K. Flojo, denied the motion, reasoning out as follows:Defendant Atilla Arkin posits that no ground existed for the issuance of the preliminary attachment because he was not guilty of fraud in incurring the obligation under the indemnity agreement.The Court granted the prayer for a writ of preliminary attachment after a finding of fraud from the evidence adduced by the parties. This conclusion was supported by substantial evidence.There is no cogent reason from the arguments posed by the movant to warrant and/or recall of the writ.Furthermore, the complaint invokes another ground for the grant of the writ and that is, "in an action against a party who has removed be (sic) disposed of his property, or is about to do so, with the intent to defraud his creditors," . . .,evidenced by three conveyances or disposals of properties by defendant Atilla Arkin though made before the institution of the action, is a circumstance tending to show fraudulent conveyance with intent to defraud his creditors. Especially so, when the payment of herein claim which the action is brought is not secured by any mortgage or pledge of real (sic) personal property and plaintiff had no other sufficient security for the enforcement of the claim.(Rollo, p. 58; emphasis supplied).After more than a year, or on December 14, 1990, Arkin filed a Motion for Reconsideration of the aforementioned order of denial.On March 6, 1991, respondent judge reversed his earlier ruling and instead issued two orders, (1) granting Arkin's Motion for Reconsideration and directing the lifting of the writ of preliminary attachment earlier issued, and (2) ordering the deputy sheriff assigned to said court to immediately discharge or lift said writ. The first order, among other things, states:xxx xxx xxxThe Court, presided at the time by Judge Rosalio De Leon, found that the defendant has been guilty of fraud in inveigling the plaintiff to issue the surety bond by offering false collaterals. The ground relied upon by the Court to issue the attachment was based on Section 1 (d) of Rule 57 of the Rules of Court , which states:"Sec. 1. Grounds upon which attachment may issue. A plaintiff or any party may, at the commencement of the action or at anytime thereafter, 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 xxx xxx(d) In action (sic) against a party who has been guilty of fraud in contracting the obligation upon which the action is brought, . . . ."To constitute a ground for attachment, fraud should be committed prior to or simultaneous with the birth of the obligation sued upon, which in this case is the May 30, 1988 surety bond.xxx xxx xxxA close examination of the evidence on record shows that the delivery of the fake collaterals were made to Eduardo Cunanan on June 1, 1988, or two (2) days after the issuance by the plaintiff of the surety bond. Thus, the offering of the fake Transfer Certificate of Title and encumbered Mercedes Benz car was not prior to or simultaneous with the execution of the Surety Bond. Such being the case, the offer of the collaterals were not the cause which induced the plaintiff to issue the surety bond. It is therefore clear that the issuance of the surety bond on May 30, 1988 was not based on the alleged fraud of the defendant Arkin offering the fake collaterals.xxx xxx xxxWith regards (sic) to the allegations that the defendant Arkin has removed or disposed of his property, with intent to defraud his creditors, suffice it to say that (when) the law authorizes the issuance of a writ preliminary attachment (it) should be construed in favor of the defendant and before issuing an Order to that effect, the judge should require that all the requisites prescribed by law be complied (with), without which a judge acquires no jurisdiction to issue the writ.xxx xxx xxxFurthermore, allegations that debtors were removing or disposing some of the properties with intent to defraud creditors must be specific.xxx xxx xxxIn the present case the plaintiff did not prove the intent of defendant Arkin to defraud creditors. Aside From the fact that the alleged dispositions were made long prior to the filing of the case, the alleged dispositions were made of conjugal partnership property which were then the subjects of partition between Arkin and his estranged wife. . . . (Rollo, pp. 42-43).Aggrieved, petitioner filed a special civil action forcertiorariwith respondent Court of Appeals to set aside the above orders of respondent judge.Respondent court dismissed the petition on the ground that the filing of the said petition was premature considering that there was yet a remedy available in the ordinary course of law, i.e., filing a motion for reconsideration of the challenged orders. Hence, this petition with the following assignment of errors:I. A MOTION FOR RECONSIDERATION IS NOT ALWAYS A CONDITION PRECEDENT TO THE FILING OF A SPECIAL CIVIL ACTION FORCERTIORARI, AS THERE IS NO APPEAL OR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW AVAILABLE TO HEREIN PETITIONER;II. RESPONDENT HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT ON THE BASIS OF SECTION 13, RULE 57, OF THE RULES OF THE COURT SUPPORTED (SIC) BY ANY EVIDENCE;III. RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN CONCLUDING THAT HEREIN PETITIONER FAILED TO RAISE AS AN ISSUE THE DELAYED FILING OF PRIVATE RESPONDENT'S MOTION FOR RECONSIDERATION DATED DECEMBER 14, 1990, IN PETITIONER'S OPPOSITION THERETO.IV. THE APPREHENSION OF THE HEREIN PETITIONER REGARDING THE PROPENSITY OF PRIVATE RESPONDENT TO DISPOSE OF HIS PROPERTIES IN FRAUD OF HIS CREDITORS TURNED OUT TO BE TRUE AND CORRECT. (Rollo, pp. 24-26, 30).In brief, the questions posited by the instant petition may be consolidated into two issues, namely:1) Whether or not the writ of preliminary attachment in question was properly or regularly issued and 2) Whether or not petitioner's failure to file a motion for reconsideration of the questioned orders of the courta quobars the filing of a special civil action forcertioraribefore the respondent court.In 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, Section 1 (d) of Rule 57 authorizes the plaintiff or any proper party to have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered therein. Thus:Rule 57, Sec. 1. Grounds upon which attachment mayissue. (d): In an action against a party who has been guilty of a fraud of 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;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 (Republic v. Gonzales, 13 SCRA 633 [1965]).Here, it has been established that all the collaterals given by the respondent Arkin as security for the bond were either fraudulent or heavily encumbered. Records show that Transfer Certificate of Title No. 300011 supposedly issued by the Register of Deeds of Rizal covering a parcel of land with an area of 25,750 square meters located at Muntinlupa, Las Pias, M.M. and registered in the name of Carmen Madlangbayan, used as one of the collaterals, turned out to be fake and spurious as the genuine TCT No. 300011 of the Office of the Register of Deeds of Rizal covers a parcel of land located inAngono, Rizal with an area of 514 square meters registered in the name of persons other than respondents Imperial, Arkin, and Madlangbayan. Likewise, the supposed lien-free motor vehicle offered as collateral turned out to be heavily mortgaged and was even disposed of without informing petitioner. Furthermore, it has also been proven that subsequent to the issuance of the May 30, 1988 surety bond, respondent Arkin started disposing of his other properties. Prior to the filing of the complaint, respondent not only had sold the motor vehicle given as collateral but that his two other condominium units were also alienated in favor of a company of which respondent Arkin is the president. All these circumstances unerringly point to the devious scheme of respondent Arkin to defraud petitioner.It is therefore clear that fraud was present when private respondent, among others, entered into an indemnity agreement with petitioner. The actuations of respondent Arkin indubitably lead to the conclusion that he never entertained the idea of fulfilling his obligations under the agreement and was bent on defrauding petitioner from the very beginning.Under the circumstances, we perceive no impropriety or irregularity in the issuance of the writ of attachment especially so where petitioner has fully complied with the requirements for the issuance thereof.On the contrary, what we see as having been attended by irregularity is the assailed order of respondent judge lifting the writ of attachment based on grounds which are contradicted by the evidence on record. It is a fact that respondent Arkin gave fake land titles as collaterals and even disposed of real properties in his obvious attempt to defraud petitioner. And yet, respondent judge concluded that petitioner's allegation that respondent Arkin's fraudulent alienation of his properties has no foundation in fact. This is plain absurdity. As respondent judge himself noted in his earlier order denying respondent Arkin's motion to quash writ of attachment, the latter's three (3) conveyances, "though made before the institution of the action, is a circumstance tending to show fraudulent conveyance with intent to defraud his creditors. Especially so, when the payment of herein claim upon which the action is brought is not secured by any mortgage or pledge of real (or) personal property and plaintiff had no other sufficient security for the enforcement of the claim" (Rollo,p. 58). Such being the case, respondent Arkin's claim that the writ of attachment has been irregularly issued should not have merited serious consideration by respondent judge.Be that as it may, the instant case being "an action against a party who has been guilty of fraud in contracting the obligation upon which the action is brought", respondent Arkin is not allowed to file a motion to dissolve the attachment on the ground that the writ has been improperly or irregularly issued. As we held inMindanao Savings and Loan Assoc. vs. Court of Appeals(172 SCRA 480 [1989]):. . ., 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 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 therein had been improperly, or irregularly, issued the reason being that the hearing on such motion for dissolution of the writ would be tantamount to a trial on the merits. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond.Petitioner next contends that motion for reconsideration need not at all times be resorted to before a special civil action forcertiorarimay be instituted before respondent court.Ordinarily,certiorariwill not lie unless an inferior court, through a motion for reconsideration, had been given an opportunity to correct the imputed errors. However, this rule admits of exceptions such as 1) when the issue raised is one purely, of law; 2) where public interest is involved; 3) in cases of urgency (Quirino vs. Grospe, 169 SCRA 702 [1989]); or 4) where special circumstances warrant immediate or more direct action (People vs. Dacudao, 170 SCRA 489 [1989]).In the case at bar, petitioner's failure to file a motion for reconsideration in the trial court before commencingcertiorariproceedings in the Court of Appeals is not fatal considering the existence of special circumstances that warrant immediate and more direct action (Saldaa vs. CA, 190 SCRA 396 [1990]).The indecent haste with which respondent Arkin had been disposing of his properties demonstrates the imperative need for a more adequate relief requiring an immediate and more direct action. There was an urgency which caused the present case to fall under one of the exceptions thereby allowing petitioner to file a petition forcertiorariwithout the need of first filing a motion for reconsideration.Filing a motion for reconsideration would have served no useful purpose nor can it be considered a plain, speedy and adequate remedy since the order directing the sheriff to discharge or lift the writ of attachment was issued on the same day the order granting the quashal was made. It would not have automatically forestalled Arkin from further disposing of his properties. It is rather disturbing how respondent judge, after ruling in his order of October 19, 1989, denying respondent's motion to quash, that the trial court's finding of fraud in incurring the obligation under the indemnity agreement was supported by substantial evidence, would, in his order of March 6, 1991 granting the motion for reconsideration, based on the same substantial evidence supporting a finding of fraud, later reverse himself and declare that "the plaintiff (petitioner herein) did not prove the intent of defendant Arkin to defraud creditors."Through the order for the "immediate" lifting of the writ, respondent Judge, in one swift stroke, completely subverted the valid order of attachment issued after a finding of fraud, which finding he himself has declared as supported by substantial evidence. We hold that respondent judge in issuing the contested orders has acted capriciously, whimsically and arbitrarily and with grave abuse of discretion amounting to lack or in excess of jurisdiction correctible by the special writ ofcertiorari.WHEREFORE, the petition is GRANTED. The assailed order of respondent judge dated March 6, 1991 is SET ASIDE and the order dated October 19, 1989 is hereby REINSTATED. Costs against private respondent.SO ORDERED.G.R. No. 23237, Walter E. Olsen & Co. v. Olsen, 48 Phil. 238Republic of the PhilippinesSUPREME COURTManilaEN BANCNovember 14, 1925G.R. No. 23237WALTER E. OLSEN & CO.,plaintiff-appellee,vs.WALTER E. OLSEN,defendant-appellant.Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr., for appellant.Gibbs and McDonough for appellee.VILLA-REAL,J.:This is an appeal taken by the defendant from a judgment of the Court of First Instance of Manila, sentencing him to pay plaintiff corporation the sum of P66,207.62 with legal interest thereon at the rate of 6 per cent per annum from February 1, 1923, the date of the filing of the complaint, until full payment and the costs, and dismissing the cross-complaint and counterclaim set up by him.As ground of his appeal, the defendant assigns four errors as committed by the trial court, to wit: (1) The holding that the defendant-appellant contracted fraudulently the debt which the plaintiff-appellee seeks to recover in its complaint; (2) its failure to set aside the writ of preliminary attachment issued by itex parte; (3) the fact of it not having absolved the defendant from the complaint of the plaintiff corporation and of not having given judgment for the defendant and against the plaintiff for the amount of his counterclaim, after deducing the debt due from him to the plaintiff corporation in the sum of P66,207.62; and (4) its action in denying the motion for new trial of the defendant.As the first two supposed errors are intimately connected with each other, we will discuss them jointly.The first question that arises is whether or not an order denying a motion for the annulment of a preliminary attachment may be reviewed through an appeal.The preliminary attachment is an auxiliary remedy the granting of which lies within the sound discretion of the judge taking cognizance of the principal case upon whose existence it depends. The order of the judge denying a motion for the annulment of a writ of preliminary attachment, being of an incidental or interlocutory and auxiliary character, cannot be the subject of an appeal independently from the principal case, because our procedural law now in force authorizes an appeal only from a final judgement which gives an end to the litigation. (Section 143,Act No. 190: 3 C. J., 549 par. 389.) This lack of ordinary remedy through an appeal does not mean, however, that any excess a lower court may commit in the exercise of its jurisdiction is without remedy; because there are the especial remedies, such as certiorari, for the purpose. (Leung Ben vs. O'Brien,38 Phil., 182.)While it is true that an order denying a motion for the annulment of a preliminary attachment is not subject to review through an appeal independently from the principal case, it not consisting a final order, yet when the writ of preliminary attachment becomes final by virtue of a final judgment rendered in the principal case, said writ is subject to review jointly with the judgment rendered in the principal case through an ordinary appeal. The appellate court has the power to revoke or confirm said order, in like manner as a judgment on the merits; because it is a ruling to which an exception may be taken, and therefore is subject to review in an appeal by bill of exceptions. (Secs. 141-143,Act No. 190.) The fact that section 441 of theCode of Civil Proceduredoes not provide any remedy against the granting or denial of a motion for the annulment of a writ of preliminary attachment, except in case of excess of jurisdiction, does not confer upon said order a final and irrevocable character, taking it out from the general provisions as to appeal and review, for a special provision is necessary for that purpose.Having arrived at the conclusion that an order denying a motion for the annulment of a preliminary attachment may be reviewed in an appeal taken from a final judgment rendered in the principal case, in which said order was entered as an auxiliary remedy, we will now turn to consider the question whether or not the trial court committed error in denying the motion for the annulment of the preliminary attachment levied upon the property of the defendant-appellant.It is admitted by the defendant-appellant that he is indebted to the plaintiff-appellee corporation in the sum of P66,207.62, but denies that he has contracted said debt fraudulently.The evidence shows that the defendant-appellant was president-treasurer and general manager of the plaintiff-appellee corporation and exercised direct and almost exclusive supervision over its function, funds and books of account until about the month of August, 1921. During that time he has been taking money of the corporation without being duly authorized to do so either by the board of directors or by the by-laws, the money taken by him having amounted to the considerable sum of P66,207.62. Of this sum, P19,000 was invested in the purchase of the house and lot now under attachment in this case, and P50,000 in the purchase of 500 shares of stock of Prising at the price of P100 per share for himself and Marker. A few days afterwards he began to sell the ordinary shares of the corporation for P430 each. The defendant-appellant attempted to justify his conduct, alleging that the withdrawal of the funds of the corporation for his personal use was made in his current account with said corporation, in whose treasury he deposited his own money and the certificates of title of his shares, as well as of his estate, and that at the first meeting of the stockholders, which took place on February 1, 1919, a statement of his account with a debit balance was submitted and approved.Having, as he had, absolute and almost exclusive control over the function of the corporation and its funds by virtue of his triple capacity as president, treasurer and general manager, the defendant-appellant should have been more scrupulous in the application of the funds of said corporation to his own use. As a trustee of said corporation, it was his duty to see by all legal means possible that the interests of the stockholders were protected, and should not abuse the extraordinary opportunity which his triple position offered him to dispose of the funds of the corporation. Ordinary delicacy required that in the disposition of the funds of the corporation for his personal use, he should be very careful, so as to do it in such a way as would be compatible with the interest of the stockholders and his fiduciary character. And let it not also be said that he did every thing openly and with the security of his shares of stock, because as he could dispose of the funds of the corporation so he could dispose of his won shares and with greater freedom. And let it not also be said that other officers of the corporation, such as the vice-president, the secretary and other chiefs and employees, were doing the same thing, because that does not show but that his bad example had spread among his subordinates and all believed themselves with the same right as their chief to dispose of the funds of the corporation for their personal use, although it were merely by way of loan, without any security of whatever kind of course. The approval of his account at the first meeting of the stockholders cannot be considered as a justification of his conduct, nor does it remove every suspicion of bad faith, because the corporation was constituted exclusively by the defendant-appellant himself and his cospeculator, Marker, and nothing else could be expected from it. As to the debt he owed to the corporation, Walter E. Olsen was in effect a lender and a borrower at the same time. The conduct of the defendant-appellant in connection with the funds of the corporation he represented was more than an irregularity; and while it is not sufficiently serious to constitute a criminal fraud, it is undoubtedly a fraud of a civil character, because it is an abuse of confidence to the damage of the corporation and