PROV REM 1

PROVISIONAL REMEDIES

1 AGUSTIN, E.P.

COMMON RULES IN


1. CALO vs. ROLDAN

Facts:

This is a petition for writ of certiorari against Judge Arsenio

Roldan on the ground of exceeding his jurisdiction and

acted with grave abuse of discretion in appointing a

receiver of certain lands and their fruits.

Regino Relova and Teodula Bartolome filed a complaint

against Tranquilino Calo and Doroteo San Jose for

conniving with each other, and through the use of force,

stealth, threats, and intimidation, intend to enter and work

or harvest existing fruits may be found in the lands

allegedly owned and possessed by the plaintiffs.

The plaintiffs prayed for the issuance of the preliminary

injunction (WOPI) to be issued ex parte to immediately

restrain, enjoin, and prohibit the defendants and their

agents from entering and interfering with the harvest of the

lands belonging to the plaintiffs.

The defendants opposed the WOPI on the ground that they

are owners of the lands and have been in actual possession

thereof since 1925.

The CFI Judge denied the petition for the WOPI on the

ground that the defendants were in actual possession of

said lands.

MR was filed but was not decided by the CFI.

Plaintiffs then filed an urgent petition ex-parte praying that

the MR of the order denying their petition for WOPI be

granted and/or for the appointment of the receiver of the

properties on the ground that:

a. Plaintiffs have interest in properties in question

and the fruits were in danger of being lost unless

a receiver is appointed

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

Judge Roldan decided to consider the MR and granted the

appointment of a receiver.

Issue: WON it is proper for the plaintiffs to apply and be

granted of the preliminary attachment.

Held:

According to the complaint filed by the plaintiffs, their

action is one of ordinary injunction, for they alleged that

they are the owners of the lands, and were in actual

possession thereof and that the defendants with any legal

right and through the use of force, stealth, threat, and

intimidation, intend to enter the lands in violation of the

plaintiff’s proprietary rights.

In the present case, the 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 (PRs) denominated

attachment, preliminary injunction, receivership, and

delivery of personal property, provided in Rules 59, 60,

61, and 62 of the ROC, 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 by the nature of such action does not require such

protection or preservation, said remedies cannot be

applied for and granted. To each kind of action, a

proper provisional remedy is provided 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, cannot be attached upon motion

of the same plaintiff.

The special remedy of preliminary prohibitory injunction

(PPI) lies when the plaintiff’s principal action is an ordinary

action of injunction, that is when the relief demanded in

the complaint consists in restraining the commission or

continuance of the act complained of, either perpetually or

for a limited period, or other conditions required by Section

3 of Rule 60 are present.

The purpose of this PR is to preserve the status quo of 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.

If no PPI were issued, the defendant may, before final

judgment, do or continue the doing of the act which the

plaintiff asks the court to restrain, thus make ineffectual

the final judgment granting the relief sought by the

plaintiff.

But, a WOPI 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.


2 AGUSTIN, E.P.

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 subject of the action or litigation.

According to law, the PR proper to plaintiff’s action of

injunction is a PPI, 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 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.

From the foregoing it appears evident that the respondent

judge acted in excess of his jurisdiction in appointing a

receiver.

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 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 cannot ask for the

appointment or receiver of property which he alleges to

belong to him and to be actually in his possession.


3 AGUSTIN, E.P.

RULE 57

PRELIMINARY ATTACHMENT

Definition

1. ADLAWAN vs. TOMOL

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. L-63225 April 3, 1990

ELEAZAR V. ADLAWAN, petitioner,

vs.

HON. JUDGE VALERIANO P. TOMOL, as Presiding Judge

of Branch XI of RTC-Cebu (formerly Branch XI, CFI-

Cebu), Branch XXVII of RTC-Cebu, with Station in

Lapu-Lapu City (formerly Branch XVI, CFI-Cebu,

Presided over by former Judge Ceferino E. Dulay), and

ABOITIZ COMPANY, INC., respondents.

Pablo P. Garcia for petitioner.

Angara, Concepcion, Regala & Cruz for private respondent.

FERNAN, C.J.:

This is a special civil action for certiorari and mandamus

seeking to annul : [a] the Order dated December 20, 1982

of respondent Judge Valeriano P. Tomol, Branch XI of CFI-

Cebu, now Branch XI, RTC-Cebu, in Civil Case No. R-

21761, entitled "Aboitiz and Company, Inc. v. Adlawan, et

al" denying the motion of the defendant to require the

Provincial Sheriff of Cebu to deliver to him the properties

seized by the Sheriff of Davao City and [b] the Order dated

September 4, 1982 of Judge Ceferino F. Dulay, Branch XVI

of the Court of First Instance of Cebu, now Branch XXVII,

RTC-Cebu, Lapu-Lapu City, in Civil Case No. 619-L

between the same parties, denying for lack of merit

petitioner's Omnibus Motion to reconsider, dissolve and set

aside the Writ of seizure and Replevin.

The antecedent facts are as follows:

Petitioner Eleazar A. Adlawan, a private contractor, was

awarded by the National Irrigation Administration (NIA)

and the Bureau of Public Highways (BPH) contracts for the

construction of various infrastructure projects of the

government to perform his obligations thereunder,

petitioner sought financial assistance and support from

private respondent Aboitiz and Company, Inc. For failure of

petitioner to pay the installments and amortizations,

private respondent filed on May 13, 1982 before the Court

of First Instance of Cebu a complaint 1 for the collection of

a sum of money and damages including an ex-parte

application for the issuance of a writ of preliminary

attachment against the property of petitioner as defendant

therein. The Executive Judge without notice and hearing

issued an order 2 on May 14, 1982 directing the issuance

of a writ of preliminary attachment against all the

properties of petitioner, real and personal, upon the filing

of an attachment bond for Four Million Pesos. The case,

docketed as Civil Case No. R21761 was raffled and later

assigned to Branch XI of the Court of First Instance of

Cebu, presided by respondent Judge Valeriano P. Tomol.

On May 26, 1982, writs of preliminary attachment were

issued addressed to the Sheriffs of Cebu, Davao City,

Quezon City, Davao del Sur and Davao del Norte, directing

them to attach the real and personal properties of

petitioner within their respective jurisdictions. On the

strength of the writ of preliminary attachment, the bulk of

petitioner's property in Davao City was attached.

Subsequently, private respondent filed an Urgent Ex-parte

Motions 3 asking the court that it be allowed to take

possession and custody of the attached properties to

protect its interest and to avoid any damage or

deterioration considering that the sheriff has no proper

place to store or deposit said properties. This was granted

by respondent Judge on May 28, 1982 for being

meritorious.

Meanwhile, petitioner before submitting an answer to the

complaint, filed a Motion for a Bill of Particulars 4 and to

Set Aside the Ex-Parte Writ of Preliminary Attachment 5

which was opposed by private respondent. Finding that the

discharge of the writ of attachment is unavoidable on the

ground that it was issued ex-parte, without notice and

hearing, based principally on the alleged removal or

disposition by the defendants of their properties with intent

to defraud the plaintiff, which allegation was limited to a

bare assertion and not persuasively substantial,

respondent Judge issued an Orders 6 dated July 6, 1982,

the dispositive portion of which reads:

Accordingly, the Order of May 14, 1982 granting

the writ of preliminary attachment is lifted and

vacated. The writs issued on 26 May 1982, are

dissolved and recalled and the properties levied

and seized by the Sheriffs of Cebu and Davao City

are discharged and released.

SO ORDERED. (Emphasis supplied)

In view of the foregoing, private respondent Aboitiz and

Company, Inc. filed an Urgent Ex-Parte Motion 7 dated July

7, 1982 praying for a stay of the July 6, 1982 Order

dissolving the writ of preliminary attachment, thus

maintaining the status quo. Private respondent further

prayed for the court to direct the sheriff of Davao City to

desist and/or stop the enforcement or implementation of

the order lifting the attachment and to grant them fifteen

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4 AGUSTIN, E.P.

(15) days to elevate the matter to the Appellate Court.

Consequently, respondent Judge Tomol issued on the same

day an Orders 8 granting the motion prayed for by private

respondent Aboitiz and Company, Inc. Thus, the July 6,

1982 Order was stayed.

In the meantime, three (3) Deputy Sheriffs of Cebu

implemented the Order lifting the Writ of Attachment and

were able to pull out some personal properties of petitioner

Adlawan. They were not able to take out all the attached

properties in view of the subsequent Order of respondent

judge to stay its implementation.

As petitioner's Motion for a Bill of Particulars was not

immediately acted upon, he was not able to file an answer

or interpose any counterclaim. For this reason, petitioner

filed an Application for Award of Damages dated July 9,

1982 asking for a reasonable rental on the attached heavy

construction equipment, machineries and other properties

at the rate of P30,000.00 per day from the date of seizure

until said properties are actually returned to his possession

and control.9

Before the court a quo could act on the motions of

petitioner Adlawan, and before he could file an answer, his

motion for a bill of particulars not having been acted upon,

private respondent Aboitiz and Company, Inc., filed on July

13, 1982 a Notice of Dismissal or Withdrawal of Complaint

10 as a matter of right in accordance with Section 1, Rule

17 of the Rules of Court. Respondent Judge Tomol issued

an Order 11 dated July 15, 1982, the dispositive portion of

which reads:

Accordingly, the termination of this case upon the

notice of dismissal voluntarily filed by the plaintiff

is hereby confirmed. For emphasis, all orders of

this Court issued prior to the filing of said notice

of dismissal are each and all rendered functus

officio. By the same token, all pending incidents,

particularly the defendant's motion for a bill of

particulars and their petition for damages against

the Plaintiffs attachment bond, are now beyond

the competence of this Court to consider for being

moot and academic.

SO ORDERED

Petitioner Adlawan filed a Motion 12 dated July 28, 1982

praying for the issuance of an order to the Provincial

Sheriff of Cebu to implement and enforce the Order of

respondent Judge dated July 6, 1982 dissolving the writ of

preliminary attachment and to secure the delivery of the

attached properties to the petitioner. Respondent Judge

issued an Order 13 dated December 20, 1982 denying the

Motion in view of the institution by private respondent

Aboitiz and Company, Inc. of a civil case (No. 619-L) for

delivery of Personal Properties with Replevin and Damages

before the Court of First Instance of Cebu, Branch XVI in

Lapu-Lapu City on July 13, 1982 and the filing of

petitioner Adlawan of a case for damages (Civil Case No.

22265) before the Court of First Instance of Cebu, Branch

X, in connection with the seizure of his properties under

the writ of preliminary attachment.

With regard to the replevin case filed by private respondent

Aboitiz and Company, Inc., the Court of First Instance of

Cebu, Branch XVI, Lapu-Lapu City, issued an Order 14 for

the seizure and delivery of the properties described therein

to the private respondent. The seized properties were thus

delivered to private respondent by the Clerk of Court and

Ex-officio Provincial Sheriff on July 24, 1982. Petitioner

filed an Omnibus Motion 15 dated July 17, 1982 to

reconsider, dissolve and set aside the Writ of Seizure and

Replevin and to direct that the properties seized be

returned to petitioner as well as to dismiss the complaint.

In support of this motion, petitioner alleged, among others,

that private respondent's office is situated in Cebu City

while petitioner is a resident of mainland Cebu, particularly

Minglanilla therefore the Court of First Instance of Cebu

stationed in Lapu-Lapu should not accept the case.

Furthermore, he alleged that the same personal properties

seized are in custodia legis by virtue of a writ of preliminary

attachment issued by the Court of First Instance of Cebu,

Branch XI, presided by respondent Judge Tomol. The Court

of First Instance of Cebu, Branch XVI in Lapu-Lapu City,

presided by Judge Ceferino E. Dulay denied the Omnibus

Motion for lack of merit on September 4, 1982. Petitioner

Adlawan filed a Motion for Reconsideration but the same

was denied.

Hence, the present petition for certiorari and mandamus

impleading respondent Judge Valeriano P. Tomol as

Presiding Judge of Branch XI of the Court of First Instance

of Cebu (now Branch XI, RTC-Cebu) and Branch XVI, CFI-

Cebu presided by Judge Ceferino E. Dulay in Lapu-Lapu

City (now Branch XXVII of RTC Cebu in Lapu-Lapu) and

private respondent Aboitiz and Company, Inc.

The issues raised by petitioner Adlawan are the following,

to wit:

1) After the attachment of petitioner's properties

was dissolved and discharged because it was

found by respondent Judge to be wrongful and

illegal, does it not constitute grave and manifest

abuse of discretion on the part of the same

respondent judge TO REFUSE to implement his

own order for the return of the attached properties

to petitioner simply because private respondent

suddenly dismissed its complaint?

2) On the other hand, the court, after having

deprived petitioner possession and enjoyment of

his properties, by reason of an attachment which,

subsequently, was dissolved and discharged, was

it not the clear, specific and inescapable duty of










5 AGUSTIN, E.P.

that same court, to order that said properties be

returned and restored to the possession and

enjoyment of petitioner?

3) Are not the attached properties of petitioner

under the custodia legis of the attaching court —

Branch XI, CFI-Cebu (now Branch XI, RTC-Cebu)

and, therefore, subject to its jurisdiction and

control? If so, does it not constitute grave and

manifest abuse of discretion on the part of the

attaching court to literally wash his (sic) hands off

any duty or responsibility by considering himself

(sic) as having been divested of authority to deal

with such properties?

4) Did not the Lapu-Lapu Branch of CFI-Cebu act,

without or in excess of his (sic) jurisdiction or, at

least, with grave abuse of discretion, in taking

cognizance of the replevin case which involves

properties already in custodia legis of Branch XI

of CFI-Cebu?

5) On the other hand, was it not the clear, specific

and inescapable duty of the Lapu-Lapu Branch of

CFI-Cebu, to dismiss the replevin case and

dissolve the writ of replevin, not only because of

the principle of custodia legis but also because it

was in clear violation of Adm. Order No. 6 of this

Honorable Supreme Court, which amends Adm.

Orders No. 147 and 328 of the Department (now

Ministry) of Justice? 16

From the recital of facts may be gleamed a series of

peculiar events and circumstances requiring examination

and looking into in order that justice and equity may be

subserved.

Petitioner's properties were attached on the strength of the

writs of preliminary attachment issued without notice and

hearing by the executive judge. These attached properties

were given to the custody of private respondent, Aboitiz and

Company, Inc. Petitioner then filed a Motion to Dissolve the

Writ of Attachment which was granted by respondent

Judge Tomol. Thus, petitioner was able to recover some of

his properties. But on the following day, this order was

stayed by the same respondent judge leaving the rest of

petitioner's properties with private respondent. Later,

private respondent withdrew its complaint which was

confirmed by respondent Judge Tomol. Petitioner Adlawan

filed a motion to have the rest of his properties returned

but respondent judge refused to act on said motion due to

cases filed by both parties in the different branches of the

Court of First Instance of Cebu relating to the same case.

After a careful examination of the records of the case We

rule in favor of petitioner Adlawan.

There is no question that the order dated July 6, 1982 of

respondent Judge Valeriano P. Tomol, Jr. lifting and

vacating the order granting the writ of preliminary

attachment is a valid order, issued while he had

jurisdiction over the case. The execution of aforesaid order

of July 6, 1982 was stayed for a period of fifteen (15) days

on motion of the plaintiff to enable the latter to question

the propriety or impropriety of the same in the appellate

court. Instead, plaintiff filed a civil case for delivery of

Personal Properties with Replevin and Damages with

another branch of the CFI of Cebu. Accordingly, having

failed to appeal or question the aforementioned order in the

appellate court as originally manifested, the same became

final and executory.

Section 1, Rule 39 of the Revised Rules of Court provides:

Execution upon final judgment or orders. —

Execution shall issue upon a judgment or order

that finally disposes of the action or proceeding.

Such execution shall issue as a matter of right

upon the expiration of the period to appeal

therefrom if no appeal has been perfected.

It is basic that once a judgment becomes final, the

prevailing party is entitled as a matter of right to a Writ of

Execution, and the issuance thereof is the Court's

ministerial duty."17

But as earlier stated, the reasons advanced by respondent

Judge Tomol for denying the enforcement of his order dated

July 6, 1982 which lifted the writ of attachment and the

restoration of the seized properties to the defendant

petitioner herein are: [a] the filing by private respondent of

Civil Case No. 619-L with Branch XVI of CFI-Lapu-Lapu

City for delivery of Personal Properties with Replevin and

Damages which as a consequence, the same properties

involved in this case were seized under a writ of replevin

upon order of aforesaid court and [b] the filing by petitioner

of Civil Case No. 22265 before Branch X of the Court of

First Instance of Cebu, for damages.

Hence, the issues in this case center on the nature and

purpose of the writ of attachment.

A writ of preliminary attachment is a provisional remedy

issued upon order of the court where an action is pending

to be levied upon the property or properties of the

defendant therein, the same to be held thereafter by the

Sheriff as security for the satisfaction of whatever judgment

might be secured in said action by the attaching creditor

against the defendant. 18

The provisional remedy of attachment is available in order

that the defendant may not dispose of his property

attached, and thus secure the satisfaction of any judgment

that may be secured by plaintiff from defendant. 19 The

purpose and function of an attachment or garnishment is






6 AGUSTIN, E.P.

two-fold. First, it seizes upon property of an alleged debtor

in advance of final judgment and holds it subject to

appropriation thus prevents the loss or dissipation of the

property by fraud or otherwise. Second, it subjects to the

payment of a creditor's claim property of the debtor in

those cases where personal service cannot be obtained

upon the debtor. 20 This remedy is to secure a contingent

lien on defendant's property until plaintiff can, by

appropriate proceedings, obtain a judgment and have such

property applied to its satisfaction, or to make some

provision for unsecured debts in cases where the means of

satisfaction thereof are liable to be removed beyond the

jurisdiction, or improperly disposed of or concealed, or

otherwise placed beyond the reach of creditors. 21

Attachment is an ancillary remedy. It is not sought for its

own sake but rather to enable the attaching party to realize

upon relief sought and expected to be granted in the main

or principal pal action. 22

The remedy of attachment is adjunct to the main suit,

therefore, it can have no independent existence apart from

a suit on a claim of the plaintiff against the defendant. In

other words, a attachment or garnishment is generally

ancillary to, and dependent on, a principal proceeding,

either at law or in equity, which has for its purpose a

determination of the justice of creditor's demand. 23

Thus, this Court ruled that upon levy by attachment of the

property in question by order of the Court, said property

fell into custodia legis of that court for purposes of that civil

case only. Any relief against such attachment and the

execution an issuance of a writ of possession that ensued

subsequently could be disposed of only in that case. 24

More specifically, it was held that courts have no

jurisdiction to order the delivery of personal property

(replevin) to the plaintiff if the property is under

attachment. 25 Only courts having supervisory control or

superior jurisdiction in the premises, have the right to

interfere with and change possession of property in

custodia legis. 26

More recently, this Court ruled that the garnishment of

property to satisfy a writ of execution operates as an

attachment and fastens upon the property a lien by which

the property is brought under the jurisdiction of the court

issuing the writ. It is brought into custodia legis under the

sole control of such court. 27

During the life of the attachment, the attached property

continues in the custody of the law, the attaching officer

being entitled to its possession and liability for its safe

keeping. 28

Based on the above-cited principles, it is obvious that the

writ of preliminary attachment issued is already dissolved

and rendered non-existent in view of the withdrawal of the

complaint by Aboitiz and Company, Inc. More importantly,

even if the writ of attachment can be considered

independently of the main case, the same, having been

improperly issued as found by respondent Judge Tomol

himself, is null and void and cannot be a justification for

holding petitioners' properties in custodia legis any longer.

To reiterate, an attachment is but an incident to a suit; and

unless the suit can be maintained, the attachment must

fall.

When Aboitiz and Company, Inc. withdrew its complaint,

the attachment ceased to have a leg to stand on. The

attached properties of petitioner Adlawan which are in the

custody of private respondent Aboitiz should be returned to

petitioner. This is only proper and equitable and in

consonance with the rules and principles of law. The

parties, by the withdrawal of the complaint, should be

placed in the same standing as they were before the filing

of the same.

Petitioner also questions the jurisdiction of the CFI of Cebu

stationed in Lapu-Lapu City to hear the replevin case filed

by private respondent in view of the fact that petitioner is a

resident of Minglanilla, Cebu while private respondent's

principal place of business is in Cebu City. Obviously, the

question posed by petitioner is venue.

A reading of the Omnibus Motion filed by petitioner, then

defendant therein, would reveal that he not only questioned

the jurisdiction of the court but likewise alleged non-

jurisdictional grounds for dismissing the replevin case,

such as the amount of the bond put up by Aboitiz & Co. as

grossly insufficient and that the same properties are

involved both in the replevin case and in the original

collection case with preliminary attachment. Thus, in so

doing, the court acquired jurisdiction over him. In the case

of Wang Laboratories, Inc. vs. Mendoza 29 this Court held:

Even though the defendant objects to the

jurisdiction of the court, if at the same time he

alleges any non-jurisdictional ground for

dismissing the action, the court acquires

jurisdiction over him.

Furthermore, in the case of City of Cebu v. Consolacion, 30

We held that:

. . . any of the branches of the Court of First

Instance of the Province of Cebu, whether

stationed in the city of the same name or in any of

the municipalities of the province would be proper

venue for its trial and determination, it being

admitted that the parties are residents of the

Province of Cebu . . .













7 AGUSTIN, E.P.

Finally, the employment by counsel for private respondent

of dubious procedural maneuvers as what transpired in the

case at bar obviously to continue the wrongful and illegal

possession and custody of petitioner's properties even after

the dissolution of the attachment is to say the least, hardly

commendable if not a form of "forum shopping", to seek the

court where he may possibly obtain favorable judgment. 31

It may therefore be stated that the right to come before the

Courts to redress a grievance or right a wrong should be

exercised with prudence and good faith. In the case of

Indianapolis v. Chase National Bank, Trustee, 314 U.S. 69,

it is opined that "Litigation is the pursuit of practical ends,

not a game of chess."

WHEREFORE, in view of the foregoing, this Court rules

that the attached properties left in the custody of private

respondent Aboitiz and Company, Inc. be returned to

petitioner Eleazar V. Adlawan without prejudice to the

outcome of the cases filed by both parties.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.



8 AGUSTIN, E.P.

Concept and Purpose

1. GUZMAN vs. CATOLICO


SUPREME COURT

Manila

EN BANC

G.R. No. L-45720 December 29, 1937

VENTURA GUZMAN, petitioner,

vs.

ALFREDO CATOLICO and SIMEON RAMOS, Judge of

First Instance of Isabela, respondents.

Arnaldo J. Guzman for the petitioner.

Alfredo Catolico in his own behalf.

No appearance for respondent Judge.

VILLA-REAL, J.:

This is a petition filed by Ventura Guzman, praying this

court, after proper proceedings, to render judgment

declaring illegal and void and setting aside the writ of

preliminary attachment issued by the respondent judge,

Honorable Simeon Ramos, as judge of the Court of First

Instance of Isabela, and ordering the dissolution thereof.

The pertinent facts necessary for the resolution of the legal

question raised in the present case are as follows:

On March 8, 1937, the respondent Alfredo Catolico brought

an action against the herein petitioner Ventura Guzman in

the Court of First Instance of Isabela, for the recovery from

the latter of the amount of his fees for services rendered by

him as attorney, praying, at the same time, for the

issuance of a writ of preliminary attachment against all of

the properties adjudicated to said petitioner in special

proceedings No. 179 of said court. As grounds for the

issuance of said writ of preliminary attachment, he alleged:

"That the herein defendant is trying to sell and dispose of

the properties adjudicated to him, with intention to defraud

his creditors, particularly the herein plaintiff, thereby

rendering illusory the judgment that may be rendered

against him, inasmuch as he has no other properties

outside the same to answer for the fees the court may fix in

favor of the plaintiff, this case being one of those mentioned

by the Code of Civil Procedure warranting the issuance of a

writ of preliminary attachment" (paragraph 8 of the

complaint there appears the following affidavits: "I, Alfredo

Catolico, of age, married and resident of Tuguegarao,

Cagayan, after being duly sworn, declare: That I am the

same plaintiff in this case; that I have prepared and read

the same (complaint) and that all the allegations thereof are

certain and true, to the best of knowledge and belief."

In view of the said complaint and affidavit, the respondent

judge, on March 10, 1937, issued an order granting the

petition and ordering the issuance of a writ of preliminary

attachment, after the filing of the corresponding bond by

the plaintiff.

On April 15, 1937, said defendant Ventura Guzman filed a

motion for the cancellation of said writ of preliminary

attachment on the ground that it had been improperly,

irregularly and illegally issued, there being no allegation,

either in the complaint or in the affidavit solemnizing it,

that there is no other sufficient security for the claim

sought to be enforced by the action; that the amount due

to the plaintiff, above the legal set-off and counterclaim, is

as much as the sum of which the preliminary attachment

has been granted, and that the affidavit of the plaintiff is

base in mere information and belief.

Said motion was denied by the respondent judge in an

order of July 10, 1937.

The only question to be decided in this case is whether or

not the requisites prescribed by law for the issuance of a

writ of preliminary attachment have been complied with.

Section 426 of the Code of the Civil Procedure provides that

"A judge or justice of the peace shall grant an order of

attachment when it is made to appear to the judge or

justice of the peace by the affidavit of the plaintiff, or of

some other person who knows the facts, that a sufficient

cause of action exists, and that the case is one of those

mentioned in section four hundred and twenty-four, and

that there is no other sufficient security for the claim

sought to be enforced by the action, and that the amount

due to the plaintiff above all legal set-offs or counterclaims

is as much as the sum for which the order is granted."

The petitioner, in attacking the legality and validity of the

writ of preliminary attachment, which is the subject matter

of this petition, relies on the alleged lack of an allegation in

the complaint or in the affidavit to the effect "that there is

no sufficient security for the claim sought to be enforced by

the action and that the amount alleged to be due to the

plaintiff above all legal set-offs and counterclaims is as

much as the sum for which the writ has been granted", and

on the fact that the affidavit is based on mere information

and belief of the plaintiff.

With respect to the last requisites just stated above, the

affidavit is not defective because in it the therein plaintiff

and herein respondent Alfredo Catolico states "that all the

allegations thereof are certain and true, to the best of my

knowledge and belief", and not that they are so according

to his information and belief.


9 AGUSTIN, E.P.

As to the other two requisites, there is no allegation, either

in the complaint or in affidavit solemnizing it, to the effect

that there is no other sufficient security for the claim which

the plaintiff seeks to enforce by his action, and that the

amount due him from the defendant, above all legal set-offs

and counterclaims, is as much as the sum for which the

writ of preliminary attachment has been granted. Now

then, does the omission of these two requisites constitute a

defect preventing a judge of the Court of First Instance

from issuing a writ of preliminary attachment?lawphil.net

Attachment is a juridical institution which has for its

purpose to secure the outcome of the trial, that is, the

satisfaction of the pecuniary obligation really contracted by

a person or believed to have been contracted by him, either

by virtue of a civil obligation emanating from contract or

law, or by virtue of some crime or misdemeanor that he

might have committed, and the writ issued, granting it, is

executed by attaching and safely keeping all the movable

property of the defendant, or so much thereof as may be

sufficient to satisfy the plaintiff's demands (sec. 428, Act

No. 190), or by filing a copy of said writ with the register of

deeds for the province in which the real property is

situated, whether standing upon the records in the name of

the defendant or not appearing at all upon the record,

which constitutes a limitation of ownership or the right to

enjoy or dispose of a thing without further limitations than

those established by law (art. 348, Civil Code), since the

owner of the property attached cannot dispose of the same

free of all liens and encumbrances. The law authorizing the

issuance of a writ of preliminary attachment should,

therefore, be construed strictly in favor of 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. If he does so in spite of

noncompliance with said requisites, he acts in excess of his

jurisdiction and with the writ so issued by him will be null

and void.

The jurisdiction of attachment proceedings being

a special one, it cannot be legitimately exercised

unless the attaching creditor pursues

substantially the essential requirements of the

statute, and the court can act only under the

special power limited by the statute and according

to the forms of procedures it prescribes. . . . (6 C.

J., 88, paragraph 121.)

Where the statutes requires the affidavit to show

that defendant is indebted to plaintiff in an

amount specified, or that the latter is entitled to

recover such an amount, over and above all legal

payments, set-offs, or counterclaims, compliance

with this requirement is essential to confer

jurisdiction to issue the writ. (6 C. J., 132,

paragraph 201.)

An affidavit is fatally defective where it fails to

comply, at least substantially, with a statutory

requirement that is shall state that the

indebtedness for which the action is brought has

not been secured by any mortgage or lien upon

real or personal property, or any pledge of

personal property, or, if so secured, that the

security has become valueless. . . . (6 C. J., 146,

paragraph 231.)

For the foregoing consideration, this court is of the opinion

and so holds that failure to allege in a complaint or in the

affidavit solemnizing it, or in a separate one, the requisites

prescribed by section 426 of the Code of Civil Procedure for

the issuance of a writ of preliminary attachment that there

is no other sufficient security for the claim sought to be

enforced by the action, and that the amount due to the

plaintiff above all legal set-offs or counterclaims is as much

as the sum for which the order is sought, renders a writ of

preliminary attachments issued against the property of a

defendant fatally defective, and the judge issuing it acts in

excess of his jurisdiction.

Wherefore, the writ of certiorari applied for is granted, and

the writ of preliminary attachment issued by the

respondent judge in civil case No. 1460 of the Court of First

Instance of Isabela, wherein the herein respondent Alfredo

Catolico is plaintiff and the herein petitioner Ventura

Guzman is defendant, is declared null and void, with costs

to respondent Alfredo Catolico. So ordered.

Abad Santos, Imperial, Diaz, Laurel and Concepcion, JJ.,

concur.


10 AGUSTIN, E.P.

2. SPOUSES SALGADO vs. CA

SECOND DIVISION

[G.R. No. 55381. March 26, 1984.]

SPOUSES JULIETA SALGADO and JOSE SALGADO,

Petitioners, v. HON. COURT OF APPEALS and

PHILIPPINE COMMERCIAL & INDUSTRIAL BANK,

Respondents.

Reyes & Reyes Law Office, for Petitioners.

San Juan Africa, Gonzales & San Agustin Law Office for

Private Respondent.

SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES;

ATTACHMENT; PURPOSE. — The chief purpose of the

remedy of attachment is to secure a contingent lien on

defendant’s property until plaintiff can, by appropriate

proceedings, obtain a judgment and have such property

applied to its satisfaction, or to make some provision for

unsecured debts in cases where the means of satisfaction

thereof are liable to be removed beyond the jurisdiction, or

improperly disposed of or concealed, or otherwise placed

beyond the reach of creditors (7 C.J.S. 190).

2. ID.; ID.; ID.; REQUISITES FOR ISSUANCE SHALL NOT

ISSUE WHERE DEBTS SUFFICIENTLY SECURED;

REASON. — The grounds upon which attachment may

issue are set forth in Section 1, Rule 57 of the Rules of

Court. But quite apart from the grounds stated therein, it

is further provided in Section 3 of Rule 57 that "an order of

attachment shall be granted only when it is made to appear

by the affidavit of the applicant or some other person who

personally knows the facts, that . . . there is no other

sufficient security for the claim sought to be enforced by

the action." The reason for the rule prohibiting attachment

where indebtedness was already secured is to prevent the

secured creditors from attaching additional property and

thus tying up more of the debtor’s property than was

necessary to secure the indebtedness (Blankenship v.

Myers, 54 P. 2d 314, 316; 97 Idaho 356 [1975]). Thus, to

sustain an order of attachment, "it is incumbent upon

plaintiff to establish either of these two facts, to wit: (a) that

the obligation had not been secured originally, or (b) that, if

secured at its beginning, the security later became

valueless." (Giandini v. Ramirez, 54 Pacific Reporter [2d]

91-92).

3. ID.; ID.; ID.; DISCHARGE THEREOF, WHEN PROPER.

— Section 13, Rule 57 of the Rules of Court authorizes the

discharge of an attachment where the same had been

improperly or irregularly issued. In National Coconut

Corporation v. Hon. Potenciano Pecson, 90 Phil. 809, this

Court ruled that when the facts or some of them, stated in

the plaintiff’s affidavit, are shown by the defendant to be

untrue, the writ of attachment may be considered as

improperly or irregularly issued.

4. ID.; ID.; ID.; ISSUANCE THEREOF STRICTLY

CONSTRUED IN FAVOR OF DEFENDANT. — Since

attachment is a harsh and rigorous remedy which exposes

the debtor to humiliation and annoyance, the rule

authorizing its issuance must be strictly construed in favor

of the defendant. It should not be abused as to cause

unnecessary prejudice. It is the duty of the court before

issuing the writ to ensure that all the requisites of the law

has been complied with (Guzman v. Catolico, 65 Phil. 257;

Salas v. Adil, 90 SCRA 125).

AQUINO, J., dissenting:chanrob1es virtual 1aw library

1. REMEDIAL LAW; PROVISIONAL REMEDY;

ATTACHMENT; MAY ISSUE EVEN IF DEBT IS SECURED;

CASE AT BAR. — A writ of attachment may be validly

issued although the debt sued upon is secured by

mortgages where such mortgages covered not only the debt

sued upon but also the debtors’ other obligations; where

the debtors failed to assign to the creditor bank their sugar

proceeds which they had given as security for their loan;

and where the writ is supported by a sufficient bond.

D E C I S I O N

ESCOLIN, J.:

This is a petition for review filed by the spouses Jose

Salgado and Julieta Salgado to set aside the resolution of

the then Court of Appeals in CA-G.R. No. SP-09407-R,

dated September 18, 1980, which authorized the issuance

of a writ of attachment against the property of said

petitioners.

The pertinent facts that gave rise to this petition are as

follows: On May 8, 1978, the Philippine Commercial and

Industrial Bank, hereinafter referred to as the Bank, filed

an action against petitioners, docketed as Civil Case No.

29392 of the then Court of First Instance of Rizal, to

recover on a promissory note in the amount of

P1,510,905.96, inclusive of interest and other bank

charges. In its verified complaint, the Bank further prayed

for the issuance of a writ of attachment. As grounds

therefor it alleged that petitioners had fraudulently

misappropriated and/or converted to their own personal

use and benefit the sugar proceeds given as security for the

payment of the indebtedness; that petitioners are guilty of

fraud in contracting their obligation and have concealed,

removed or disposed of the properties mortgaged or

assigned to the plaintiff, or are concealing, removing or


11 AGUSTIN, E.P.

disposing or about to do so, with intent to defraud their

creditor; that the obligation sought to be enforced is

genuine and, therefore, a sufficient cause of action exists;

and that there is no sufficient security for the claim sought

to be enforced by the action. Attached to the complaint was

the affidavit of Mrs. Helen Osias, Senior Branch Credit

Division Manager of the Bank, wherein she stated, among

others, "that there is no sufficient security for the claim

sought to be enforced by this action."cralaw virtua1aw

library

On May 9, 1978, the trial court issued an order granting

the Bank’s prayer for preliminary attachment upon a bond

in the sum of P1,510,905.96. Upon the filing of said bond,

the Deputy Provincial Sheriff levied upon several parcels of

land of petitioners situated in the province of Negros

Occidental.

On September 15, 1978, petitioners Salgado moved to

quash the writ of attachment on the ground that

respondent Bank made fraudulent misrepresentation in

securing the writ by deleting the words "R E M" or "Real

Estate Mortgage" from the xerox copy of the promissory

note attached to the complaint, thereby "making it appear

that the note was unsecured when in truth and in fact it

was fully secured by a series of valid and existing real

estate mortgages duly registered and annotated in the titles

of the affected real properties in favor of the plaintiff Bank."

In the same motion, petitioners stressed the lack of factual

basis of the Bank’s claim as to their alleged fraudulent

misappropriation or conversion of the sugar proceeds given

as security for their obligation.

After due hearing, the trial court issued an order dated

January 31, 1979 granting petitioners’ motion and lifting

the writ of attachment previously issued.

Upon denial of its motion for reconsideration the Bank

went to the Court of Appeals on a petition for certiorari to

annul the order of the trial court lifting the writ of

attachment.c

On November 29, 1979, the respondent Court of Appeals,

finding that the order of the trial court was not arbitrarily

issued, dismissed the petition for lack of merit.

However, on motion of the Bank, the respondent Court

reconsidered its decision of November 29, 1979 and issued

the questioned resolution dated September 18, 1980,

which authorized the issuance of a writ of attachment.

Hence, the present recourse.

We find the petition impressed with merit, The chief

purpose of the remedy of attachment is to secure a

contingent lien on defendant’s property until plaintiff can,

by appropriate proceedings, obtain a judgment and have

such property applied to its satisfaction, or to make some

provision for unsecured debts in cases where the means of

satisfaction thereof are liable to be removed beyond the

jurisdiction, or improperly disposed of or concealed, or

otherwise placed beyond the reach of creditors. 1

The grounds upon which attachment may issue are set

forth in Section 1, Rule 57 of the Rules of Court. But quite

apart from the grounds stated therein, it is further

provided in Section 3 of Rule 57 that "an order of

attachment shall be granted only when it is made to appear

by the affidavit of the applicant or some other person who

personally knows the facts, that . . . there is no other

sufficient security for the claim sought to be enforced by

the action."

The reason for the rule prohibiting attachment where

indebtedness was already secured is to prevent the secured

creditors from attaching additional property and thus tying

up more of the debtor’s property than was necessary to

secure the indebtedness. 2 Thus, to sustain an order of

attachment, "it is incumbent upon plaintiff to establish

either of these two facts, to wit: (a) that the obligation had

not been secured originally, or (b) that, if secured at its

beginning, the security later became valueless." 3

In the instant case, the allegation in the affidavit of the

Bank’s Credit Division Manager, Mrs. Helen Osias, to the

effect that "there is no sufficient security for the claim

sought to be enforced by this action" has been shown to be

false. It is undisputed that the note sued upon "is fully

secured by a series of valid and existing real estate

mortgages duly registered and annotated in the titles of the

affected real property in favor of the plaintiff Bank."

virtua1aw library

Section 13, Rule 57 of the Rules of Court authorizes the

discharge of an attachment where the same had been

improperly or irregularly issued. In National Coconut

Corporation v. Hon. Potenciano Pecson, 4 this Court ruled

that when the facts or some of them, stated in the

plaintiff’s affidavit, are shown by the defendant to be

untrue, the writ of attachment may be considered as

improperly or irregularly issued.

Since attachment is a harsh and rigorous remedy which

exposes the debtor to humiliation and annoyance, the rule

authorizing its issuance must be strictly construed in favor

of the defendant. It should not be abused as to cause

unnecessary prejudice. It is the duty of the court before

issuing the writ to ensure that all the requisites of the law

has been complied with.

Accordingly, the resolution of the respondent Court of

Appeals, now the Intermediate Appellate Court, dated

September 18, 1980, is hereby set aside. No costs.

SO ORDERED.

Concepcion, Jr., Guerrero, Abad Santos and De Castro,

JJ., concur.


12 AGUSTIN, E.P.

Separate Opinions

AQUINO, J., dissenting:chanrob1es virtual 1aw library

I dissent with deference to Justice Escolin’s opinion. On

May 8, 1978, the Philippine Commercial & Industrial Bank

filed an ordinary action against the Salgado spouses

(residents of Kabankalan, Negros Occidental) in the Court

of First Instance of Pasig, Rizal for the collection of the sum

of P1,510.905.96 as the debt due from the Salgado spouses

on their loan for the crop-year 1975-76, with a prayer for a

writ of attachment, considering that there was allegedly no

sufficient security for the debt.

The attachment was granted by Judge Nelly L. Romero

Valdellon on the following day, May 9, subject to the filing

of a bond in the amount of the obligation, P1,510,905.96.

The Salgados moved to quash it on the ground that there

was misrepresentation on the part of the bank that there

was no security for the loan. They charged that the bank

tampered with the promissory note by erasing the acronym

"REM" (meaning real estate mortgages), thus giving the

false impression that there was no security.

The bank countered that it did not resort to foreclosure

because the mortgages (Exh. 6 to 10) covered not only the

debt of the Salgados for the crop-year 1975-76 but also

their obligations for the crop-years 1976-77 and 1977-78

and an additional commercial loan. The Salgados admitted

that they did not assign to the bank their sugar for the

1975-76 crop-year. That was why the loan was not paid.

On January 31, 1979, Judge Valdellon dissolved the

attachment. About a month later, Julieta Chua Salgado

transferred four pieces of real property covered by the

attachment to her sisters Jimema Chua Ang and Soledad

Chua Montilla, her brother Romeo G. Chua and her

daughter, Mary Jane Salgado.

The bank assailed the dissolution order by certiorari in the

Court of Appeals. In a decision dated November 29, 1979,

Justices Nocon, Samuel F. Reyes and Victoriano upheld the

dissolution order because the bank allegedly acted

fraudulently in tampering with the note, making it appear

that the loan was unsecured when in fact it was secured by

mortgages.

The bank filed a motion for reconsideration. In the

resolution of September 18, 1980, the same three Justices

set aside their decision and sustained the attachment.

They held that the dissolution was made on grounds not

mentioned in section 13 of Rule 57.c

The Salgados appealed to this Court or December 3, 1980.

The instant appeal was dismissed for lack of merit in this

Court’s resolution of June 26, 1981. The Salgados filed a

motion for reconsideration wherein they stated that Judge

Valdellon in a decision dated July 16, 1981 dismissed the

bank’s complaint and ordered it to pay the Salgados one

million two hundred fifty thousand pesos as moral and

exemplary damages and attorney’s fees.

The bank opposed the motion. In a manifestation dated

June 10, 1982, it apprised this Court that Judge Pineda

issued an order dated January 4, 1982 wherein he set

aside Judge Valdellon’s decision and ordered the Salgados

to pay the bank P1,300,000 plus interest and penalties,

bank charges and attorney’s fees as stipulated in the

promissory note, Exhibit A. Judge Pineda denied the

Salgados’ motion for reconsideration. (The Salgados

appealed to the Intermediate Appellate Court, AC-G.R. No.

00119.)

I am of the opinion that the writ of attachment was

properly issued. It is supported by a sufficient bond. The

bank posted a bond of P1,510,905.96. The 1981 resolution

dismissing the instant appeal should be reaffirmed.

Makasiar, J., dissents.


13 AGUSTIN, E.P.

Nature and Scope: Attachment Purely Statutory

1. US vs. NAMIT

EN BANC

[G.R. No. 12957. October 29, 1918. ]

THE UNITED STATES, Plaintiff-Appellee, v. PONCIANO

NAMIT, Defendant-Appellant.

Ramon Maza, for Appellant.

Acting Attorney-General Paredes, for Appellee.

SYLLABUS

1. CRIMINAL LAW; SURPRISE AS CONSTITUTIVE

ELEMENT OF "ALEVOSIA." — The circumstance that an

attack is sudden and unexpected to the person assaulted

does not constitute the element of alevosia necessary to

raise homicide to murder, where it does not appear that the

aggressor adopted such mode of attack to facilitate the

perpetration of the homicide without risk to himself.

2. CRIMINAL PROCEDURE; ATTACHMENT AS REMEDY

TO ENFORCE CIVIL LIABILITY. — The remedy of

attachment which was available under the Spanish system

of criminal procedure was abrogated upon the adoption of

General Orders No. 58, and was not perpetuated by the

reservation contained in section 107 of this law.

3. ATTACHMENT, CIVIL LIABILITY INCIDENT TO

CRIME. — In the prosecution of a person accused of

murder the heirs of the person slain intervened

immediately before the judgment of condemnation was

entered and obtained from the court an order for the

attachment of the property of the accused on the ground

that he was fraudulently disposing of his property to evade

the civil liability to which he would be subject in case of

conviction. Held: That the attachment could not be

sustained, either under article 589 of the Spanish Law of

Criminal Procedure or under sections 424 and 412 of the

Code of Civil Procedure.

D E C I S I O N

STREET, J. :

This appeal is brought to this Court to reverse a judgment

of the Court of First Instance of the Province of Antique,

adjudging the defendant guilty of the crime of murder and

sentencing him to cadena perpetua, with the accessories

provided by law, and requiring him to indemnify the heirs

of the deceased in the sum of P1,000, and to pay the costs.

It appears in evidence that between 6 and 7 o’clock in the

evening of February 24, 1917, the deceased, Damiano

Jordan, and a neighbor, one Fernando Martinez, were

talking with each other while standing in the street

immediately in front of Jordan’s house in the municipality

of Sibalom, Province of Antique. While they were so

engaged in conversation they were approached by the

accused, Ponciano Namit. The latter was at the time

apparently entering upon duty as a guard of the round in

the capacity of substitute for a son whose turn fell upon

this night.

As Ponciano Namit came up he stopped and asked

Fernando Martinez if he was on guard that night. Upon

receiving an affirmative reply, he asked Damiano Jordan if

he too was on guard, and Damiano replied that he was not

as it was not his turn. Ponciano thereupon at once ordered

Damiano to go up into his house, and as Damiano did not

instantly obey, Ponciano in a few moments repeated the

command. Damiano then replied that he was going, and

suiting his actions to his words, turned to start for his

house. As he was turning, Ponciano struck him a blow on

the left frontal part of the head with a heavy stick.

The end of this stick was supplied with a hatchet-shaped

object, possibly of metal, and the knob of this instrument

crushed into the head of Damiano and, penetrating into the

brain, there momentarily remained. Ponciano by giving the

stick a jerk succeeded in freeing it and immediately left the

scene of the crime. When he pulled the stick out, Damiano

fell to the ground. Damiano’s wife who was sitting in the

door of their house only a short distance away, saw what

had happened and immediately ran down to her husband

and told Fernando to aid her in carrying him to the house,

which he did. The injured person lived for about six days

and died as a result of the wound. It was shown by an

autopsy performed on the body that a hole was made in the

skull about as large as a half peso coin. No motive

sufficient to account for this unjustifiable attack was

proved, though there is a suggestion in the evidence that

Ponciano may have been drinking.

After a careful review of the evidence we see no reason for

discrediting the testimony of the two eyewitnesses for the

prosecution. We find no material contradiction in their

statements made either at the trial of this case or at the

time of the commission of the crime. The story told by the

wife of the deceased, Bonifacia Tubigon, appears to be a

simple and truthful narrative. The same may be said with

regard to the testimony of Fernando Martinez. Both

witnesses apparently evince a desire to tell what happened

without exaggeration or distortion. Another witness for the

prosecution, Aurelio Sildo, testified that on the night in


14 AGUSTIN, E.P.

question the accused admitted that he had the misfortune

to strike Damiano Jordan.

At the trial the accused did not directly admit having

struck the fatal blow to Damiano; but he claimed that on

the night in question he was passing the place of this

occurrence and was there assaulted by some unknown

person with a stick. He says that he and the assailant

struggled for the possession of the stick and that finally he,

Ponciano, kicked his adversary, who fell down, whereupon

Ponciano departed. We consider this story unlikely; and the

judge of the trial court was, we think, fully justified in

finding, as he did, that the accused is the person who

caused the death of Damiano Jordan.

Although the complaint charges alevosia (treachery) as a

qualifying circumstance in the commission of the crime,

thus elevating the offense to the degree of murder, and

although the judge of the trial court found that this

element was present in the commission of the offense, we

are not satisfied with his conclusion on this point. It is true

the two principal witnesses testify that the blow was given

after Damiano Jordan had turned his back to the accused;

but the blow was struck, evidently with great force, upon

the left frontal side of the head of Damiano, and it is

manifest that this could have been done only if the accused

is a left-handed person, supposing him to be standing

behind his victim. There is no evidence, however, that

Ponciano Namit is left-handed; and inasmuch as

righthandedness prevails among the great majority, it is to

be presumed, in the absence of evidence to the contrary,

that the accused is right-handed.

This circumstance raises in our mind a reasonable doubt

as to whether the parties may not have been facing each

other when the blow was delivered. If such were the case, it

would be improper to find that the offense was qualified by

alevosia. It must be admitted that the attack was sudden

and unexpected to Damiano Jordan, and it would perhaps

be possible to found upon this the conclusion that the

attack was characterized by surprise in such sense as to

constitute alevosia. However, in considering a question of

this kind, every case must be judged by its particular facts;

and we find nothing in the evidence to show with certainty

that the aggressor consciously adopted a mode of attack

intended to facilitate the perpetration of a homicide without

risk to himself. A more reasonable, though still doubtful,

inference would possibly be that he did not in fact intend to

kill Damiano at all.

In this connection it is worth while to note that Bonifacia

Tubigon declares that immediately after the blow was

struck Ponciano Namit exclaimed "I have long desired to

strike some one and I have done so." ("Yo desde antes tenia

ganas de pegar a alguien, y he pegado.") This would seem

to indicate, in the absence of proof of other motive, that the

accused was moved by a sudden desire to use his stick and

that he struck in obedience to this unreasoning impulse,

without thinking of the conditions under which he was

acting. Upon the whole we incline to the opinion that the

fatal blow was the result of a casual encounter under

conditions not sufficiently defined to enable us to say that

alevosia was certainly present in the case.

The offense committed is, in our opinion, to be qualified as

homicide, under article 404 of the Penal Code, in the

estimation of which no generic circumstance either of an

aggravating or attenuating nature should be taken into

consideration; and the proper penalty is reclusion temporal

in its medium degree. The accused should accordingly be

sentenced to 14 years 8 months and 1 day, reclusion

temporal, with the accessories prescribed in article 59 of

the Penal Code.

Another feature of the case of some importance is

presented in connection with an attachment levied upon

the property of the accused to secure the satisfaction of the

civil liability incident to the commission of the homicide. It

appears that while the cause was pending in the Court of

First Instance an attorney appeared in the capacity of

private prosecutor, representing the widow of the deceased.

and presented an affidavit showing that the accused was

selling his property in order to elude the payment of any

indemnity to which he would be liable in case of conviction.

It was accordingly requested that an attachment should be

issued against his property. An order was thereupon made

by the court upon April 25, 1917, authorizing an

attachment of property to the value of P1,500, unless he

should give bond to answer in that amount. The clerk of

the court issued the order of attachment upon the same

date, and three days later the court rendered its decision

finding the accused guilty and ordering him to indemnify

the widow and children of the deceased in the sum of

P1,000. The attachment was not immediately levied; but

after an appeal had been taken, the sheriff, on November

28, 1917, levied the same upon five parcels of land and a

house belonging to the accused. It does not appear from

the record in this case whether the accused has ever given

the bond necessary to procure the dissolution of this

attachment, although upon December 19, 1917, after the

cause had been brought to this Court by appeal, an order

was here entered authorizing the Court of First Instance to

act in the matter of dissolving the attachment, if bond

should be given.

It is argued that the attachment granted in this case is

sustainable under article 589 of the Law of Criminal

Procedure of Spain, which is to the following

effect:jgc:chanrobles.com.ph

"ART. 589. When from the record of a cause appear

circumstances tending to establish the guilt of a person,

the judge shall require him to give a bond sufficient to

secure the pecuniary liabilities which may be finally

adjudged, ordering in the same decree the attachment of

sufficient property to cover such liabilities, should he fail to

give bond.

"The amount of the bond shall be fixed in the same decree


15 AGUSTIN, E.P.

and it shall not be less than one third of the probable

amount of the pecuniary liabilities."

We are of the opinion that this provision and those related

to it in the Spanish Code of Criminal Procedure were

abrogated by necessary implication upon the enactment of

General Orders No. 58. It is true that section 107 of this

law recognizes the existence of the civil liability connected

with the commission of crime and reserves "the privileges"

previously secured by law to the person injured by the

commission of an offense to take part in the prosecution

and to recover damages. Nevertheless, we think that the

word "privilege," as here used, cannot be understood as

referring to the procedure contained in the Spanish Code of

Criminal Procedure relating to the attachment of property

and giving of bond.

Upon reading the entire section 107 of General Orders No.

58, it appears obvious that the right which was intended to

be saved by the reservation therein made was the right of

the party injured to appear and to be heard in all states of

the case with reference to such liability and to obtain a

judgment for the damages occasioned by the wrongful act,

as well as the further right to appeal from any decision of

the court denying any legal right connected therewith.

It is to be noted that while the "sumario" of Spanish

criminal procedure is in many respects similar to the

preliminary hearing before a committing magistrate

conducted pursuant to sections 13 and 14 of General

Orders No. 58, there is nevertheless an important

difference, which is that the "sumario" constitutes a

preliminary stage in the criminal prosecution, and is not

merely a step preparatory to the initiation of the

proceedings. The evidence taken in the "sumario" was,

therefore, capable of being used in the plenary stage of the

prosecution; and if ratification was not required, served as

the basis of judgment. (Ley de 18 de junio de 1870 — Law

of June 18, 1870.) On the contrary, the proceedings in the

preliminary hearing never constitute a basis for a

subsequent judicial declaration of guilt. The "sumario" has

been abrogated by the enactment of General Orders No. 58,

above referred to; and the ground expressed in article 589

of the Spanish Code of Criminal Procedure for the

attachment of the property of the accused therefore no

longer here exists.

With the adoption of General Orders No. 58, there was

necessarily introduced into these Islands a system of

criminal procedure embodying the principles recognized in

the system of criminal procedure generally in vogue in the

United States; and any characteristic or rule of the former

system inconsistent with these principles must be held to

have been abrogated. Attachment in American law is a

purely statutory remedy. It does not exist unless expressly

given by statute and as it is an extraordinary and summary

remedy, it is unavailable except in those cases where the

statute expressly permits its issuance.

It remains to consider whether or not the attachment can

be sustained under the provisions of section 424, in

connection with subsection 5 of section 412 of the Code of

Civil Procedure. The affidavit made in this case states

substantially, we think, that the accused was selling his

property with the intent to defraud the persons interested

in the enforcement of the civil liability; but considered as

an application for an attachment under the provisions

above cited, in connection with section 426 of the same

Code, the affidavit was in several respects defective.

Disregarding these informalities, however, we are of the

opinion that the remedy of attachment there provided is

not available as an aid to the enforcement of the civil

liability incident to prosecution for crime. These provisions

contemplate the pendency of a civil action, and the remedy

of attachment is merely an auxiliary to such action. Section

795 of the Code of Civil Procedure, in its first paragraph,

declares that the procedure in all civil actions shall be in

accordance with the provisions of said Code; and it is quite

evident that the Legislature in adopting this Code could not

have intended to make its provisions in any respect

applicable to the proceedings in a criminal prosecution.

The mere circumstance that a civil liability can be made

the subject of recovery in a criminal prosecution is in our

opinion no sufficient reason for holding that the remedy of

attachment as designated for use in a civil action is

available in the criminal proceeding.

From what has been said it results that the attachment

effected under the order of the Court of First Instance

dated April 25, 1917, must be considered to have been

improvidently granted. The same is hereby declared to be of

no effect, but this declaration will of course in no wise

prejudice the right of the widow and children of the

deceased to enforce the payment of the indemnity for which

judgment was rendered against the accused. The judgment

of the trial court, in respect to the penalty imposed upon

the accused, is modified by substituting 14 years 8 months

and 1 day, reclusion temporal, with the accessories

prescribed in article 59 of the Penal Code for so much

thereof as imposes the penalty of cadena perpetua, with the

accessories prescribed in article 54 of the same Code. As

thus modified the judgment of the lower court is affirmed,

with costs against the appellant. So ordered.

Torres, Johnson, Avanceña and Fisher, JJ., concur.

Separate Opinions

MALCOLM, J., dissenting:chanrob1es virtual 1aw library

I agree with the main decision in its discussion of the facts

and its qualification of the crime. I agree again that article

589 of the law of Criminal Procedure of Spain was

necessarily abrogated upon the promulgation of General

Orders No. 58. I do not agree with the proposition that

attachment cannot be levied upon the property of the

accused to secure the satisfaction of the civil liability


16 AGUSTIN, E.P.

incident to the commission of the homicide. In my

judgment such action is both legal and proper.

The law of the Philippine Islands is made up of certain

parts which we call statutes or codes. Yet this law is, if we

interpret it understandingly, a harmonious and

symmetrical system. To give unity to the whole, it is

essential to visualize the law in its entirety and not as

isolated segments. Even as to the codes, none is sufficient

unto itself. For convenience each code is given a title which

it treats of fully, but never completely. Each code

necessarily must and should blend into every other code.

To borrow a phrase of statutory construction, codes are in

a sense in pari materia. For one to enumerate examples

would be to demonstrate the obvious.

There is no doubt as to the civil liability of a person for his

criminal acts. To follow the doctrine laid down by Justice

Torres in the United States v. Bernardo ([1911], 19 Phil.,

265):jgc:chanrobles.c

"Every crime or misdemeanor gives rise to a penal or

criminal action for the punishment of the guilty party, and

also to a civil action for the restitution of the thing, repair

of the damage, and indemnification for the losses;

wherefore, after the prosecution of the criminal action, it

shall be understood that the civil action has been utilized.

for the reason that every person criminally liable for a

crime or misdemeanor is also civilly liable (art. 17, Penal

Code), unless the aggrieved party should expressly waive

his right (art. 23)." (Syllabus.)

When, therefore, in a criminal action the courts are

permitted to give judgment for a civil indemnity, they

necessarily must have the power to make this remedy

effective. This can only be done by going to the Code of Civil

Procedure, which contains the appropriate provisions

governing the subject of attachment. It would seem to be

self-evident that the property of the accused should be kept

intact to satisfy the civil judgment. Any other hypothesis

would permit the accused to dispose of his property in

order to escape the fulfillment of the entire judgment and

to defeat the purposes of the law.

With the exception above noted, the judgment is correct.


17 AGUSTIN, E.P.

2. GENERAL vs. DE VENECIA

Facts:

This is a petition for certiorari to annul the order of the

lower court denying the motion to dismiss the complaint

filed by Ruedas against General.

The plaintiff prayed for preliminary attachment of the

defendant’s property upon the allegation that the latter was

about to dispose his assets to defraud his creditors.

Two days later, the writ of attachment was issued upon the

filing of a suitable bond.

General submitted a motion praying for the dismissal of the

complaint and dissolution of the attachment. He claimed it

was premature in view of the debt moratorium of the

President of RP.

It was denied, prompting for the institution of the special

civil action.

Issue: WON it was proper for the court to issue the writ of

attachment in view of the debt moratorium.

Held:

No. SC held that no court may proceed to hear a complaint

that seeks to compel payment of monetary obligation

coming within the purview of the moratorium. And the

issuance of a writ or attachment upon such complaint may

not, of course, be allowed.

Such levy is necessarily one step in the enforcement of the

obligation, enforcement of which, as stated in the order, in

suspended temporarily, pending action by the Government.

But the PM signed by the petitioner provides that he

promised to pay Php 4,000 within 6 months after peace

has been declared. As of the time the case was heard, there

was yet any peace treaty drafted between the US and

Japan. It is obvious that the 6-month period has not

begun, and that the debt of General is not yet demandable.

General Rule provides that, unless the stature expressly so

provides, the remedy by attachment is not available in

respect to a demand which is not due and payable, and if

an attachment is issued upon such a demand without

statutory authority is void.

Inasmuch as the commitment of General has not as yet

become demandable, there existed no cause of action

against him, and the complaint should have been

dismissed and the attachment lifted.


SUPREME COURT Manila

EN BANC

G.R. No. L-894 July 30, 1947

LUIS F. GENERAL, petitioner,

vs. JOSE R. DE VENECIA, Judge of First Instance of Camarines Sur, and PETRA VDA. DE RUEDAS, also representing Ernesto, Armando and Gracia (minors), respondents.

Cea, Blancaflor and Cea for petitioner. Jose M. Peñas for respondents Ruedas. No appearance for the respondent judge.

BENGZON, J.:

Petition for certiorari to annul the order of the Court of First

Instance of Camarines Sur denying the motion to dismiss

the complaint, and to vacate the attachment issued, in civil

case No. 364 therein entitled, "Ruedas vs. Luis F. General."

That complaint was filed on June 4, 1946, to recover the

value of a promissory note, worded as follows:

For value received, I promise to pay Mr. Gregorio

Ruedas the amount of four thousand pesos

(P4,000), in Philippine currency within six (6)

months after peace has been declared and

government established in the Philippines.

Naga, Camarines Sur, September 25, 1944.

(Sgd.) LUIS F. GENERAL

It prayed additionally for preliminary attachment of

defendant's property, upon the allegation that the latter

was about to dispose of his assets to defraud creditors. Two

days later, the writ of attachment was issued upon the

filing of a suitable bond.

Having been served with summons, the defendant therein,

Luis F. General, submitted, on June 11, 1946, a motion

praying for dismissal of the complaint and dissolution of

the attachment. He claimed it was premature, in view of

the provisions of the debt moratorium orders of the

President of the Philippines (Executive Orders Nos. 25 and

32 of 1945). Denial of this motion and of the subsequent

plea for reconsideration, prompted the institution of this

special civil action, which we find to be meritorious, for the

reason that the attachment was improvidently permitted,


18 AGUSTIN, E.P.

the debt being within the terms of the decree of

moratorium (Executive Order No. 32).

It is our view that, upon objection by the debtor, no court

may now proceed to hear a complaint that seeks to compel

payment of a monetary obligation coming within the

purview of the moratorium. And the issuance of a writ of

attachment upon such complaint may not, of course, be

allowed. Such levy is necessarily one step in the

enforcement of the obligation, enforcement which, as stated

in the order, is suspended temporarily, pending action by

the Government.

But the case for petitioner is stronger when we reflect that

his promise is to pay P4,000 "within six months after peace

has been declared." It being a matter of contemporary

history that the peace treaty between the United States and

Japan has not even been drafted, and that no competent

official has formally declared the advent of peace (see

Raquiza vs. Bardford, 75 Phil., 50), it is obvious that the

six-month period has not begun; and Luis F. General has

at present and in June, 1946, no demandable duty to make

payment to plaintiffs, independently of the moratorium

directive.

On the question of validity of the attachment, "the general

rule is that, unless the statute expressly so provides, the

remedy by attachment is not available in respect to a

demand which is not due and payable, and if an

attachment is issued upon such a demand without

statutory authority it is void." (7 C.J.S., p. 204.)

It must be observed that under our rules governing the

matter the person seeking a preliminary attachment must

show that "a sufficient cause of action exists" and that the

amount due him is as much as the sum for which the

order of attachment is granted" (sec. 3, Rule 59). Inasmuch

as the commitment of Luis F. General has not as yet

become demandable, there existed no cause of action

against him, and the complaint should have been

dismissed and the attachment lifted. (Orbeta vs. Sotto, 58

Phil., 505.)

And although it is the general principle that certiorari is not

available to correct judicial errors that could be

straightened out in an appeal, we have adopted the course

that where an attachment has been wrongly levied the writ

may be applied for, because the remedy by appeal is either

unavailable or inadequate. (Leung Ben vs. O'Brien, 38

Phil., 182; Director of Commerce and Industry vs.

Concepcion, 43 Phil., 384; Orbeta vs. Sotto, supra.)

Wherefore, the writ of attachment is quashed and the

complaint is dismissed. Costs for petitioner. So ordered.

Moran, C.J., Paras, Feria, Pablo, Hilado, Padilla, and

Tuason, JJ., concur.

Perfecto, J., concurs in the result.


19 AGUSTIN, E.P.

Strict Compliance with the Rule

1. GRUENBERG vs. CA



FIRST DIVISION

G. R. No. L-45948 September 10, 1985

MERCEDES GRUENBERG and ALBERT GRUENBERG, petitioners, vs.

HONORABLE COURT OF APPEALS, HONORABLE LINO L. AÑOVER and ELDA R. FLORES, respondents.

Perlas, Joven & Associate Law Office for private respondent.

GUTIERREZ, JR., J.:

This is a petition to review the decision of the Court of Appeals, now Intermediate Appellate Court, which affirmed the order for the issuance of a writ of preliminary attachment, and other related orders of the then Court of First Instance of Rizal in Civil Case No. Q-18444.

The antecedent facts are summarized by the appellate court as follows:

Petitioners are the defendants and private respondent is the plaintiff in Civil Case No. Q-18444, Court of First

Instance of Rizal, Branch XVII-B-Quezon City, for annulment of sale, recovery of ownership and possession of the house and lot situated at No. 24 Scout

Limbaga, Diliman, Quezon City, the same, allegedly, having been sold in fraud of creditors.

Private respondent filed the complaint in Civil Case No. Q18444, in her capacity

as the administratrix of the intestate estate of the late William Gruenberg.

It is alleged in the complaint in Civil Case No. Q-18444 that the house and lot in question, which were sold to

defendant Albert Gruenberg (one of the petitioners), form part of the conjugal partnership of the Gruenberg spouses, which must answer for the obligations

that deceased William Gruenberg might have incurred during his lifetime in his capacity as manager and administrator of the conjugal partnership; and that the

sale of the house and lot before the death of William Gruenberg, when at that time two creditors had already filed

suits against him for collection of unpaid obligations, and the latter had unpaid

obligation to plaintiff Elda R, Flores (private respondent) in the amount of P13,000.00, exclusive of interest and collection charges, patently and clearly can no longer be paid or liquidated.

On March 1, 1974, petitioners filed their answer to the complaint.

Under date of February 7, 1976, private respondent filed a 'Motion for Issuance of Writ of Preliminary Attachment' against the properties of petitioners, alleging,

among others, that the latter are indebted to her in the principal amount of P13,000.00, which, according to her, she seeks to recover in Civil Case No. Q-18444.

On March 1, 1976, petitioners filed their opposition to the motion for the issuance of writ of preliminary attachment, alleging among others, that Civil Case

No. Q-18444 is an action for annulment of sale and recovery of the house and lot mentioned therein, and not for recovery of sum of money. It is contended that a

writ of preliminary attachment is not the proper remedy for the protection of the rights of the estate. In the same opposition, petitioners refuted the

allegations of private respondent in her motion that the complaint in Civil Case No. Q-18444 is one for collection of a sum of money allegedly contracted fraudulently by petitioners.

On March 26, 1976, respondent Judge issued an order, granting the motion of private respondent and issuing a writ of preliminary attachment against the

properties of petitioners, respondent Judge stating that no opposition had been filed to the motion.

In the latter part of July, 1976, respondent Sheriff and/or his deputies

served on petitioners and the managers of the Hollywood Theater, Palace Theater and Illusion Theatre a writ of preliminary attachment and notice of garnishment

against petitioners and personally in favor of respondent Flores.

It is alleged that the order of respondent Judge was not received by petitioners' new counsel but upon being informed by

petitioners of the writ of preliminary attachment and notice of garnishment, petitioners'new counsel promptly went to the court of respondent Judge and then

and there he discovered that petitioners' opposition to the motion was not attached to the record, because the same


20 AGUSTIN, E.P.

was forwarded to Branch XVIII to which Civil Case No. Q-18444 was originally assigned,

On July 30, 1976, petitioners filed (a) a

motion for reconsideration of the order granting the motion for the issuance of a writ of preliminary attachment, and (b) a motion to recall the writ of preliminary

attachment and notice of garnishment, on the ground that it is not true that petitioners did not oppose the motion of private respondent, and that there is no valid basis to grant the motion.

On August 16, 1976, respondent Judge issued an order, denying the motions of petitioners.

On October 28, 1976, respondent Judge issued an order, requiring petitioners to

appear before his court to explain why they should not be punished for contempt for denying or disobeying the lawful processes of the court.

The issuance of the "show cause" order prompted the

petitioners to file a petition for certiorari with writ of preliminary injunction in the Court of Appeals. The petition was dismissed. Hence, the instant petition

The issues raised to us are embodied in the petitioners' assignments of errors as follows:

I. THE COURT OF APPEALS ERRED IN OVERLOOKING THE FACT THAT WRIT

OF PRELIMINARY ATTACHMENT COULD ONLY BE GRANTED TO SECURE THE SATISFACTION OF A JUDGMENT IN A CASE IN WHICH SAID WRIT IS PRAYED FOR;

II. THE COURT ERRED IN SUSTAINING THE ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT FOR THE PERSONAL BENEFIT OF PRIVATE

RESPONDENT IN CIVIL CASE NO. Q-18444, NOTWITHSTANDING THE FACT THAT SAID RESPONDENT INSTITUTED SAID ACTION NOT IN HER PERSONAL

CAPACITY, BUT AS ADMINISTRATRIX OF THE ESTATE OF THE LATE WILLIAM GRUENBERG, SR.;

III. THE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS CAN BE

CITED FOR CONTEMPT FOR THE ALLEGED FAILURE TO COMPLY WITH THE NOTICE OF GARNISHMENT ADDRESSED TO THIRD PARTIES.

The issues are interrelated and may be discussed together.

They all focus on the proprietary of the writ of attachment

and garnishment against the petitioners' properties issued by the trial court and affirmed by the appellate court.

In her affidavit supporting the motion for a writ of preliminary attachment, the private respondent stated that

her case "... is one of the situations covered by Section 1 (d), Rule 57 of the Rules of Court whereby a writ of preliminary attachment may issue." Section 1 (d), Rule 57 provides:

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:

xxx xxx xxx

(d) In an action against a party who has been guilty of a fraud in contracting the

debt or incurring the obligation upon which the action is brought, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought.

xxx xxx xxx

There are various reasons why this petition should prosper.

Private respondent Elda R. Flores, as a claimant for

P13,000.00 against the estate of William Gruenberg, Sr., was appointed administratrix of the estate of the deceased. In her capacity as administratrix, she filed Civil Case No. Q-18444 against the petitioners. This main case was for

the annulment of a deed of sale executed by the late William Gruenberg, Sr., in favor of Albert Gruenberg and for the recovery of possession and ownership of the house and lot involved in that sale.

The motion for a writ of preliminary attachment filed by Flores, however, states:

1. Defendants are indebted to plaintiff in the amount of P13,000.00 exclusive of accrued interest and collection charges, which plaintiff seeks to recover in the instant action; and

2. Defendants are guilty of fraud in

contracting the debt or incurring the obligation due plaintiff in that they conspired and confederated with each other as mother End son to defraud

other creditors one of whom is plaintiff, by simulating the sale of house and lot situated at No. 24 Scout Limbaga Street, Quezon City ... .


21 AGUSTIN, E.P.

While the respondent filed the motion in her capacity as administratrix of the Gruenberg estate, the motion for a

writ of attachment and its supporting affidavit show that the attachment was intended to secure only her P13,000.00 claim against the estate. Obviously, this cannot be done.

A writ of attachment is a remedy ancillary to the principal proceeding. The well-entrenched principle is that:

Attachment is a juridical institution

which has for its purpose to secure the outcome of the trial, that is, the satisfaction of the pecuniary obligation really contracted by a person or believed

to have been contracted by him, either by virtue of a civil obligation emanating from contract or from law, or by virtue of some crime or misdemeanor that he

might have committed, and the writ issued, granted it, is executed by attaching and safely keeping all the movable property of the defendant, or so

much thereof as may be sufficient to satisfy the plaintiff's demands ... . (Guzman v. Catolico, et al., 65 Phil. 257).

The purpose behind the filing of the complaint was to recover a piece of property allegedly belonging to the

intestate estate of the deceased. Hence, any writ of attachment necessary to secure the judgment must be related to the protection of the estate. The writ may not issue if only to protect the personal interests of the private respondent as a creditor of that estate.

The records show that the private respondent's interest in the estate is to recover a debt based on a contract with the deceased Gruenberg, For this reason, she instituted the special proceedings for the settlement of the intestate

estate resulting to her appointment as administratrix. Under these circumstances, the private respondent's remedy to recover the outstanding debt of the deceased is to follow the procedure in Rule 86 on claims against an

estate. As a matter of fact, if an administrator has a claim against an estate, Section 8 of Rule 86 calls for the appointment of a special administrator to defend the estate against such claim.

A court order which violates the Rules constitutes grave

abuse of discretion as it wrecks the orderly procedure prescribed for the settlement of claims against deceased persons designed to protect the interests of the creditors of the decedent. (See Dy v. Enage, 70 SCRA 96). Allowing the

private respondent in the annulment case to attach the petitioners' properties for the benefit of her P13,000.00 claim against the estate would give her an undue advantage over other creditors against the estate,

Moreover, the P13,000.00 claim of the respondent cannot

be settled in the case for annulment of the deed of sale, wherein the writ of attachment is sought. What she seeks to be secured is not the judgment in the main case but a mere claim against the estate which is still to be considered and adjudicated by the court.

The rules on the issuance of a writ of attachment must be construed strictly in favor of the defendant. The remedy of

attachment is harsh, extraordinary, and summary in nature. If all the requisites for the issuance of the writ are not present, the court which issues it acts in excess of its jurisdiction.

In Salas v. Adil (90 SCRA 121), we stated:

A preliminary attachment is a rigorous remedy, which exposes the debtor to

humiliation and annoyance, such it should not be abused as to cause unnecessary prejudice. It is, therefore, the duty of the court, before issuing the

writ, to ensure that all the requisites of the law have been complied with; otherwise the judge acts in excess of his jurisdiction and the writ so issued shall

be null and void. (Guzman v. Catolico, 65 Phil. 257, 261).

xxx xxx xxx

Considering the gravity of the allegation that herein petitioners have removed or disposed of their properties or are about

to do so with intent to defraud their creditors, and further considering that the affidavit in support of the preliminary attachment merely states

such ground in general terms, without specific allegations of circumstances to show the reason why plaintiffs believe that defendants are disposing of their

properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to petitioners and to allow them to present their position at a

hearing wherein evidence is to be received.

Following the principle of strict compliance with all requisites, this Court has also ruled that "when the facts, or some of them, stated in the plaintiff's affidavit are shown

by the defendant to be untrue, the writ may be considered as improperly or irregularly issued." (National Coconut Corporation V. Pecson, et al., 90 Phil. 809).

The February 7, 1976 motion for issuance of a writ of preliminary attachment and the affidavit of preliminary

attachment are misleading. First, the private respondent states that the "defendants are indebted to plaintiff in the amount of P13,000.00" exclusive of interests and collection charges. Then, she avers that the "defendants are guilty of

fraud in contracting the debt or incurring the obligation due plaintiff ".

The facts in the motion and the affidavit are deceptively framed. The obligation which the respondent seeks to secure by an attachment was between her and the late

William Gruenberg, Sr. What she seeks to establish as fraudulent was the sale between the late Mr. Gruenberg and his son. These are two entirely distinct transactions.


22 AGUSTIN, E.P.

One of the reasons for granting the motion for the issuance of a writ of preliminary attachment was the court's finding

that the petitioners' failed to file an opposition thereto. It turns out, however, that the petitioners filed a timely opposition to the motion but it was filed in another branch of the court where the case had earlier been assigned.

Nevertheless, despite this timely opposition, the motion for reconsideration of the order for the issuance of a writ of preliminary attachment, was summarily denied for lack of merit.

We also note that the order which directed the issuance of a writ of preliminary attachment merely recited the

grounds alleged in the private respondent's motion without any specific details as to the supposed fraud committed by the petitioners when they contracted the debt and the alleged disposition or concealment by the petitioners of

their properties. The order of the trial court disregards the rule that attachment being a harsh remedy, it must be issued on concrete and specific grounds and not on general

averments merely quoting the words of the pertinent rules. (Dy v. Enage, supra). The absence of specific grounds highlights the fact that the petitioners are not indebted to respondent Flores. It was the late William Gruenberg who

incurred the alleged indebtedness and it is his estate which owes Flores. The validity of the claim of Flores will have to be threshed out in the special proceedings, not in the case for annulment of the deed of sale.

Finally, the transaction sought to be annulled in the main case refers to a questioned sale of a house and lot. It would

have been sufficient to annotate a notice of lis pendens in the title to that property. Assuming the trial court could validly attach the house and lot involved in the sale, we see

no justification why the attachment should reach out to the petitioners' interests in the Hollywood Theatre, the Palace Theatre, and the Illusion Theatre. The petitioners also point out that there is no showing of any attempt on their part to

conceal or to dispose of the house and lot nor of any change in the title or condition of the property. Considering all the foregoing, we find the writ of preliminary attachment to have been improvidently issued.

WHEREFORE, the petition is hereby GRANTED. The decision of the former Court of Appeals is SET ASIDE. The

writ of preliminary attachment and the notice of garnishment issued in Civil Case No. Q-18444 are DISSOLVED. The other related orders issued in connection with the writ of attachment are SET ASIDE.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Relova, De la Fuente and Alampay, JJ., concur.


23 AGUSTIN, E.P.

2. DY vs. ENAGE



SECOND DIVISION

G.R. No. L-35351 March 17, 1976

ROGELIO DY, SY JIAN AND DY CHING ENG, petitioners, vs. THE HONORABLE JUDGE MANUEL LOPEZ ENAGE AND

HEIRS OF EMMANUEL O. TOLENTINO, represented by MARIA DUGOS VDA. DE TOLENTINO, respondents.

Elias Q. Tan for petitioners.

Arturo M. de Castro & Soledad Cagampang-de Castro for respondent Maria Dugos Vda. de Tolentino.

Cataluña, Buñol & Yebes also for respondents.

BARREDO, J.:

Petition for "certiorari, prohibition and mandamus, with

preliminary injunction" asking the Court to declare null and void the orders of respondent judge of July 18, 1972 and July 25, 1972 in Civil Case No. 1251 of the Court of

First Instance of Agusan del Norte and Butuan City and to enjoin said respondent from further taking cognizance of the case except to dismiss the same by command of this Court, which prayer was enlarged in a supplemental

petition to include the order of attachment of September 28, 1972 and the decision of September 20, 1972, and all implementing orders thereof, among the actuations sought

to be annulled. Later, a second supplemental petition was filed to impugn other subsequent orders of respondent judge to be specifically referred to later in this decision. After issues were joined, a special motion dated February

10, 1973 was filed by private respondents praying that the Court of First Instance of Cebu, Branch XIV, be enjoined to dismiss Civil Case No. R-13062 therein filed by Atty. Elias Q. Tan, counsel of herein petitioners in the above-

mentioned case in Agusan del Norte, against said respondents, for damages, and that the writ of preliminary attachment issued therein be quashed, and after comment thereon was filed by petitioners, the Court issued the following' resolution on May 4, 1973:

L-35351 (Rogelio Dy, et al. vs. Hon. Manuel Lopez Enage, etc., et al.). — Considering the urgent motion of the

respondents for the issuance of a temporary restraining order to enjoin the Court of First Instance of Cebu from taking

further proceedings in Civil Case No. R13062 during the pendency in this Court of respondents' motion to dismiss

said civil case or for the

issuance of injunction or restraining order with quashal

of preliminary attachment, the Court Resolved: (a) to issue a TEMPORARY RESTRAINING ORDER effective immediately

and until further orders from this Court, and (b) to require both the petitioners and private respondents within ten (10)

days from notice hereof, to file such pleadings as may be necessary so as to properly implead the Court of First

Instance of Cebu City taking cognizance of Civil Case No. R-13062. (Page 562, Record.)

Voluminous representations have been filed by the parties relative to this resolution but none of them adequately

amounts to any of the pleadings called for by the situation and required by the resolution. And considering that the matters treated in said motion of February 10, 1973 are not procedurally related to the petition in this case, the

Court will not resolve the merits of said motion, without prejudice to the private respondents filing the proper separate petition so that issues may be regularly joined and resolved albeit the restraining order issued by the

Court shall continue in force until the court in which respondents might file their action acts one way or the other in the premises, but if no such separate action is filed by respondents within ten (10) days from notice hereof, the

said restraining order shall be deemed automatically lifted. In other words, this decision will deal exclusively on the original and supplemental petitions herein.

It appears that on October 10, 1968, petitioners filed with respondent court Civil Case No. 1251 against one

Emmanuel O. Tolentino, predecessor in interest of private respondents. Pertinently, the complaint alleged as follows:

FOR FIRST CAUSE OF ACTION

1 — That plaintiffs are of legal ages and residents of the municipality of Cabadbaran, province of Agusan, Philippines and the defendant is likewise of legal age and

a resident of sgd municipality and province where he may be served with summons.

2 — That after the liberation plaintiffs spouses Dy Ching Eng and Sy Jean resumed their general merchandise and

copra business in the municipality of Cabadbaran, province of Agusan, continued their aforesaid general merchandise business until the present time and closed their copra

business in the year 1966, will their son, plaintiff Rogelio Dy engaged in the copra business in said municipality and province beginning 1966 and continues it until the present time.

3 —That the defendant who is the younger brother of plaintiff Sy Jean is likewise engaged in the general merchandise


24 AGUSTIN, E.P.

and copra business in said municipality and province and during the period from 1960 or

thereabouts until 1964 bought from plaintiffs Dy Ching Eng and Sy Jean copra on credit basis and the said plaintiffs Dy Ching Eng and Sy Jian delivered on credit basis to the

defendant on July 24, 1964, 288 sacks of copra weighing 11,679 kilos net at P48.00 per 100 kilos worth P5,605-92; on July 26, 1964, 146 sacks of copra weighing 5,749 kilos net

at P48.00 per 100 kilos, worth P2,759.52; on July 31, 1964, 144 sacks of copra weighing 5,716 kilos net at P48.00 per 100 kilos worth P2,858.00; on August 6, 1964, 343 sacks of

copra weighing 14,187 kilos net at P48.00 per 100 kilos worth P5,296.00; on August 14, 1964, 126 SACKS OF COPRA WEIGHING 5,296 KILOS net at P46.00 per 100 kilos

worth P5,296.00; on August 14, 1964, 75 sacks of copra weighing 2,867 kilos net at P46.00 per 100 kilos worth P1,318.82; on August 20, 1964, 225 sacks of copra

weighing 8,659 kilos net at P44.00 per 100 kilos worth P3,809.96; and on August 27, 1964 303 sacks of copra wishing 12,514 Idlos net at P44-00 per 100 kilos worth P5,506.16,

as shown by corresponding Statements of deliveries, copies of which are hereto attached, marked as annex "A", "B", "C", "D", "E", "P", "G", and "H" and made integral parts hereof, valued in all at P31,104.30.

4 — That the defendant made partial payments for said plaintiffs' copra in checks drawn against the Philippine Bank of Communications, Cebu Branch, Cebu in the

total sum of P10,000.00, among which was check No. T-W253 dated November 13, 1967 for P2,000.00 which check could not be collected and cashed by plaintiffs spouse for

the reason that defendant stopped payment of the same, n shown on the face and reverse sides of said check No. T-445253, photostat copies of which face and reverse sides are

hereto attached, marked as Annexes "I" and "A" and made integral parts hereof, and also in cash for P6,000.00 as shown by a "vale" dated November 18, 1967 signed by plaintiff

Sy Jean, copy of which is hereto attached as Annex "J" and made an integral part hereof, all which partial payments amounted to P16,000.00, thereby leaving an unpaid

balance of P15,104.30, and despite earnest efforts exerted by plaintiffs spouses towards a compromise and extra-judicial amicable settlement of said defendant's indebtedness,

the same have failed and despite repeated demands made by said plaintiffs upon the defendant to pay said unpaid balance, the latter failed and refused and still continues to

do so without valid and justifiable cause therefore, thereby committing breach of contract in evident bad faith and fraudulently for which defendant should be held liable to

said plaintiffs for actual damages in the amount of P3,3562.03 until the present time and for moral damages in the amount of P5,000.00

FOR SECOND CAUSE OF ACTION

Plaintiffs respectfully allege:

1 — That the plaintiffs hereby reproduce and incorporate as part hereof the

averments contained in paragraphs 1, 2, 3, and 4 under the first cause of action hereof.

2 — That in 1966 to 1967 defendant used to buy from plaintiff Rogelio Dy copra at most at P68.00 per kilo, but

considering that the current market price of copra at that time was much higher than the price per kilo paid by the defendant for said plaintiffs copra, the said plaintiff Rogelio Dy

stopped in 1967 to sell his copra to the defendant.

3 — That by reason of plaintiff Rogelio Dy's refused to continue selling his copra to the defendant, the defendant on or

about November 22, 1967 after plaintiff Sy Jean had received from him the amount of P6,000.00 shown in the receipt, Annex 'J' sent for plaintiffs Sy Jean and Rogelio Dy to

go his store at Cabadbaran, Agusan; that while plaintiff Sy Jian was in the said store ahead of Rogelio Dy, the defendant scolded her on account of their failure to sell copra to

him; that when Sy Jean explained that she could not interfere and control her son Rogelio Dy in connection with the management of his business, the defendant

threated to cause bodily harm to her and sent for plaintiff Rogelio Dy to go to his store; that once the said plaintiff Rogelio Dy was in defendant's store and saw his mother being

treated by the defendant, the defendant began to scold plaintiff Rogelio Dy for not having continued to sell copra to him, threatened to kill him and under threats and

intimidation with a pistol compelled without any lawful authority the said plaintiff Rogelio Dy to sign a blank form on said date, the printed recitals of which blank form tend to

show that plaintiff Rogelio Dy supposedly received from the defendant on the date stated therein the amount of P16,000.00 in trust for the purpose of buying copra with the

supposed obligation of delivering to him the copra and or of returning the said amount, when in truth and in fact, the said plaintiff Rogelio Dy never at all prior to the date

mentioned in said defendants printed form received from the defendant the sum of P16,000.00 nor did said plaintiff Rogelio Dy ever act as supposed purchasing agent for

copra for the defendant; that by reason of the threats and intimidation made by the defendant to kill not only Sy Jean but also him, the plaintiff Rogelio Dy by reason of fear

was compelled to affix against his will his signature on the said printed form.


25 AGUSTIN, E.P.

4 — That the supposed contract of agency prepared by the defendant without

the intervention, consent or authority of any one of herein plaintiffs, mentioned the sum of P16,000.00 which was the partial payments made by the defendant for the said deliveries

of copra belonging to the plaintiffs spouses; that, as a matter of fact and in truth, after the defendant had succeeded through threats and intimidation to make plaintiff Rogelio Dy

sign the said supposed contract of agency, the defendant delivered to Sy Jean the receipt for P6,000.00 annex X hereof.

5 — That the said supposes contract of agency is null and void, illegal and invalid, is fraudulent and constitutes a falcification of a private document.

6 — That by reason of the unlawful, malicious, wrongful, and fraudulent acts of the defendant, the plaintiffs have suffered actual damages in the

amount of P16,000.00 and moral damages for mental anguish, serious anxiety, social humiliation and wounded feelings in the amount that the court may fix.

7 — That despite earnest efforts

exerted by the plaintiffs towards a compromise, the same have failed and despite repeated demands made by plaintiff Rogelio Dy to cancel the supposed contract of

agency and to desist from enforcing it in any manner, the defendant refused to do so and continues to threaten to to prosecute plaintiff Rogelio Dy for supposed estafa for the

purpose of harrassing, oppressing and humiliating the said plaintiff Rogelio Dy in particular and his parents in general. (Pages 137-141, Record.)

In his answer, the defendant made specific denials and

alleged affirmative defenses and in addition interposed counterclaims as follows:

COMES NOW the defendant in the above-entitled case, thru counsel, and in answer to the complaint, to this Honorable Court most respectfully alleges:

1. That defendant admits the allegation contained

in paragraph 1 for the fust cause of action in the complaint.

2. That defendant has no infomation as to the truth of the allegations contained in paragraph 2 of the complaint (first cause of action). But

whether plaintiffs had license to engage in the copra business or not the fact is that plaintiffs were acting only as copra purchasing agents for the defendant.

3. That defendant admits that he is engaged in

the general merchandise and copra business in

the municipality of Cabadbaran and province of Agusan; but specifically denies the information

that he is a younger brother of plaintiff Sy Jean; the truth of the matter is Sy Jean was an adopted daughter of defendant's father and coincidentally when they happened to reside together in Agusan

they considered themselves as brother and sister, and 0 they were known as such in the community of Agusan. Defendant further denies that he had business relation on credit basis with plaintiffs'

son. The truth being that all the plaintiffs were merely copra purchasing agents of the defendant. And the defendant has no knowledge or information to form a belief as to the truth of the

matter alleged in the remaining Portion of paragraph 3 of the fust cause of action of the complaint, and, therefore denies the same, and further denies under oath the selfserving annexes

attached to the complaint and marked as annexes "A", "B", "C", "D", "E", "F", "G", and "H" which apparently are tally saheets for being manufactured documents and inadmissible evidence.

4. That the allegation contained in paragraph 4 are hereby denied. The truth of the matter is hereinafter alleged in the special and affirmative defenses.

5. That the allegations contained in paragraph 5 are hereby denied. The truth of the matter is

hereinafter alleged in the special and affirmative defenses, and that further defendant is not obligated in anyway to pay any amount of actual

damages, much less is defendant liable for moral damages.

6. That Paragraph 1 of the second cause of action, being a mere reproduction of the previous allegations, is also hereby denied and the allegations contained in the previous paragraph i of this answer are hereby reproduced and replead.

7. That the allegations contained in paragraph 2 of the sand cause of action are hereby denied. The truth of the matter being that in no time as far as defendants recollection is concerned the

exagerated price of P68 per kilo of copra has ever been obtaining in Agusan or elsewhere. And further it is denied that defendant has ever purchased copra from the plaintiff Rogelio Dy. The

truth being that plaintiff Rogelio Dy has been a copra purchasing agent for the defendant.

8. That the allegations contained in paragraphs 3 and 4 of the second cause of action of the complaint are hereby denied. It is specifically

denied that plaintiffs Sy Jean and Rogelio Dy were ever threatened of bodily harm much less threatening Rogelio Dy to be killed. It is further specifically denied that Rogelio Dy was compelled

to sign a blank form. The truth of the matter further is hereinafter alleged in the special and affirmative defeses With respect to the receipt for P6,000.00 marked in the complaint at Annex "J"

is admitted that it was returned to Sy Jean


26 AGUSTIN, E.P.

together with another receipt for P10,000.00 after the receipt for P16,000.00 was signed by plaintiff

Rogelio Dy who appeared to have in his ion the P16,000.00 and who was the licensed copra dealer. And the truth of the matter further is hereinafter alleged in the special and affirmative defenses.

9. That the allegations contained in paragraph 5

am conclusions of law. But it is denied that the contract agency is null and void, illegal and invalid, much less, fraudulent and constitutes a falsification of private document. The trust of the

matter is that said contract of agency is legal and valid, not fraudulent nor falsification, it having been executed in due course and for value.

10. That the allegations contained in paragraph 6 of the second cause of action are again

conclusions of fact and consclusions of law. But if plaintiffs have suffered actual damages in the amount of P16,000.00 and undetermined moral damages plaintiffs alone are responsible therefor and defendant is not liable of the same.

11. That the allegations contained in paragraph 7 of the second cause of action are hereby denied. The truth of the matter is that it was the defendant who exerted earnest efforts to secure

payment of plaintiffs' obligations, but despite such efforts exerted by defendant plaintiffs have remained adamant and entirely disregarded the repeated request of the defendant, and due to this

refusal of the plaintiff Rogelio Dy to pay his obligation to the defendant the latter was compelled to seek the intervention of the Office of the Provincial Fiscal in order to legally enforce the

agency contract sometime in August 18, 1968. But until now no payment was effected by said plaintiff. And the truth of the matter further is that in sinking the intervention of the Provincial

Fiscal of Agusan it was not the purpose of defendant to harass, oppress and humiliate plaintiff Rogelio Dy but merely in the legitimate exercise of legal rights of the defendant.

12. That as to the allegations common to first and

sand causes of action, particularly paragraph 7 and 8 affecting petition for injunction, said allegations are untenable. because merits of the criminal action involved are to be determined by

proper authorities vested with powers and jurisdiction to act on the matter. If criminal action has merits and at least PRIMA FACIE evidence shown, the exercise of such power is vested with

the Provincial Fiscal in this particular case; and with respect to the civil action involved the same is hereinafter incorporated in a counterclaim. Both criminal and civil action cannot be prevented by injunction.

SPECIAL AND AFFIRMATIVEE DEFENSES

defendant respectfully alleges:

13. That prior to August 26, 1964, Mr. and Mrs. Dy Ching Eng of Cabadbaran,

Agusan had been copra purchasing agents of the defendant, by virtue of which agency they were accorded by the defendant cash advances.

14. That the liquidation of cash advances and value of copra delivered were effected at the end of every month.

15. That on August 26, 1964 a liquidation of cash advances and value of copra delivered was made, and plaintiffs spouses Dy Ching Eng and Sy Jean had

an outstanding balance payable to the defendant in the amount of P10,386.69.

16. That sometime on September 1, 1964 a big fire occured in Cabadbaran, Agusan in which the spouses Dy Ching Eng and Sy Jean suffered heavy losses.

17. That due to the losses suffered by said spouses Dy Ching Eng and Sy Jean both spouses were not required to liquidate immediately their account of

P10,368.69, and on the contrary they were further given Pl,000.00 on September 3, 1964 covered by mere vales signed in chinese characters by Sy

Jean, and in order to further help them rehabilitate themselves from the fire losses both spouses were not pressed for payment of their total outstanding

account in the sum of P12,368.69 leaving the matter for future liquidation at their own request.

18. That sometime in 1966 plaintiff Dy Ching Eng transferred his copra

business to his son Rogelio Dy who eventually took over the business of his parents from that time on until now, although plaintiffs Dy Ching Eng and Sy

Jean continued to help their son Rogelio Dy in running the copra business.

19. That on two (2) occasions, particularly November 13 and 17, 967 plaintiff Sy Jean came to defendant's store and requested for advance amount

of P10,000.00, and P6,000.00 respectively. She specifically requested and so the defendant accommodated

that the amounts be covered by checks of P2,000.00 each to facilitate her and her son Rogelio Dy's purchases of copra as agent of defendant. The November 13

checks were five (5) in number for the total amount of P10,000.00 and the November 17 checks were three (3) in number for a total of P6,000,00.


27 AGUSTIN, E.P.

20. That the above eight (8) checks were covered by two (2) provincial receipts or

values, one dated November 13, 1967 and the other dated November 18, 1967. The latter value is now Annex "J" of the complaint.

21. That late in the afternoon of November 18, 1967 plaintiff Rogelio Dy

came to the store and after confirming the values of plaintiff Sy Jean he prepared in his own handwriting a cash advance receipt which is partly printed

and partly handwritten receipt for P16,000.00. This is a requisite which had to be effected in view of the fat, that it was plaintiff Rogelio Dy who was and still is the licensed copra dealer

22. That after preparing the partly printed and partly handwritten cash advance receipt for P16,000.00, and after the same was handed over by Rogelio Dy

to the defendant and in turn defendant returned to Sy Jian thru Rogelio Dy two previous values signed by Sy Jean.

23. That during that period of time between November 13 up to and

including November 18, 1967 defendant noticed that there were accumulations of the stock of copra in the bodega of the plaintiffs, which bodega incidentally is

located just across the street where defendant's store is situated.

24. That on the 19th of November 1967 defendant came to Cebu and had only returned to Cabadbaran on the 22nd day of November 1967.

25. That upon his return to Cabadbaran, Agusan he noticed that the bodega of plaintiffs was already empty. So, he went to confront Plaintiff Rogelio Dy and his

mother Sy Jean why was it that their bodega was empty. They replied to the defendant that the copra was sold to a purchaser in Surigao because according

to them said purchaser paid a better price for the copra.

26. That defendant told plaintiffs Rogelio Dy and Sy Jean that at least they should have advised the defendant because

defendant was also willing to pay an increased price. But both plaintiffs answered that the matter is already closed and there was nothing they could

do about it. So, defendant asked for the return of his money. But plaintiffs could not readily do it. So, defendant wired the Philippine Bank of Communications of

Cebu City to stop payment of the eight (8) checks above-mentioned, but unfortunately four (4) checks were

already cashed and stopping paying was only effected on the other four (4) checks.

27. That in view of the fact that no

payment of the amount was made, much less a delivery of copra effected . despite the lapse of considerable length of time and notwithstanding repeated demands,

defendant was compelled to seek the intervention of the Provincial Fiscal, but still no payment was effected until now.

28. That the filing of the present case is a plain harassment and a clear

retaliation for what defendant has done in seeking the intervention of the Provincial Fiscal.

As

FIRST COUNTER-CLAIM

Defendant respectfully alleges:

29. That for the sake of brevity defendant hereby reproduces and repleads all the allegations contained in the previous

paragraphs of this answer and special and affirmative defense.

30. That defendant has ascertained that out of the eight (8) checks at the rate of P2,000.00 each, four (4) checks were

already cashed, particularly cheeks Nos. T-445251, T-445255 and T-445269 or a total amount of P8,000.00, and the other four (4) cheeks totalling P8,000.00 were

not effectively cashed because payment of the same was accordingly stopped.

31. That the cash advance receipt of P16,000.00 is therefore reduced to only P8,000.00 if and when the four (4) other

checks shall be returned by the plaintiffs to the defendant.

As

SECOND COUNTER-CLAIM


32. That for the sake of brevity defendant

hereby reproduces and repleads all the allegations contained in the previous paragraphs of this answer and special and affirmative defenses, including the

allegations contained in the first counterclaim.


28 AGUSTIN, E.P.

33. That plaintiffs are indebted to the defendant in the total sum of P12,368.69

as acknowledged by Sy Jean, particularly in her cash advance of August 26, 1964 and values of September 2 and September 3, 1964

respectively, which account totalling P12,868.69 remains unpaid and outstanding until now, despite repeated demands subsequently made by the defendant for its payment.

As

THIRD COUNTER-CLAIM


34. That for the sake of brevity defendant hereby reproduces and repleads all the

allegations contained in the previous paragraphs of this answer and special and affirmative defenses including the

allegations contained in the first and second counterclaims.

35. That defendant is a businessman of good standing in the Municipality of Cabadbaran and Province of Agusan with quite a considerable gross negotiations every year.

36. That defendant also enjoys good standing in the community of Cabadbaran, Agusan having been President since 1966 and he is still

President of the Cabadbaran Lions Club until now.

37. That defendant has been maligned by the plaintiffs by 'bringing this clearly unfounded civil action against him in

gross and bad faith, and as a consequence defendant suffered actual losses in his business and also suffered moral damages, and in view of the fact

that plaintiffs have acted in gross bad faith and evident malice in filing the complaint they should be made to pay actual, moral and exemplary damages in

such amount as to this Honorable court may determine in the exercise of its sound discretion.

38. That plaintiffs, by maliciously filing the instant complaint against the

defendant, have compelled the latter, for the protection of his interest, to incur litigation expenses, and engage the services of undersigned counsel with

whom he has agrhe time the orders of attachment complained of were issued, respondent court acted with grave abuse of discretion, and the writs issued

thereunder and all subsequent

proceedings related thereto must consequently be as they are hereby set aside.

On November 14, 1971, the defendant Tolentino died. This

was before he had completed the formal presentation of his evidence in support of his counterclaims. Whereupon, Atty. Vicentey Jayme for the respondents, after their proper Vicente Jayme for the respondents, after their proper

substitution as heris of defendant Tolentino, filed a so-called "Jurisdictional Motion for Dismissal of Plaintiffs' Complaint" on December 13, 1971, asking however that notwithstanding the dismissal of the complaint prayed for,

the court proceed with the trial and final disposition of the cournterclaims. The motin was based on the ground that inasmuch as the plaintiff's case was a claimfor money, under Section 21 of Rule 3, it should be dismissed as an

action and filed as a claim inthe special proceedings for the settlement of the estate of the deceased defendant. Petitioners opposed said motion contending that the

second cause of action was for damages and that their defense to the counterclaims of the defendant was in the complaint and citing the case of Javier vs. Araneta, L-4369, August 31, 1953, in support of their opposition. On

January 5, 1972, respondent judge denied the motion to dismiss thus:

"For not being well-founded, the motion filed by Atty. Vicente Jayme, counsel for the defendants, dated Decembr 13, 1971 based onthe grounds threin stated (See: pp. 470-471, Recods) is hreby ordered DENIED.

SO ORDERED." (Page 9, Record.)

Threeafter, the court porceeded with the trial and on May 4

1972 ordered the admission of the documentary evidence of defendants listed inthe order of even date, and upon manifestationof plaintiffs that they have rebuttal evidence to present, set the case for hearing for the purpose of

receiving the same, but instead of agreeing to thedats porposed by them: July 11, 12 and 13, 1972, the court, in its order of May 22, 1972, set the reception of said evidence on July 3, 1972, only to change this later or on June 28,

1972, to July 5, 1972 for fear that July 3, 1972 might be declared a public holiday, and still later to July 25, 1972 might be declared a public holiday, and still later to July 25, 1972 upon motion of plaintiffs' counsel.

In the meanwhile, on June 27, 1972, plaintiffs filed the

following motion, which they set for hearing on July 3, 1972, albeit no hearing appears to have beenheld onsaid date:

"COME NOW the plaintiffs, thorugh counsels, and to this Honorable Court respectully allege:

1. That the reception of plaintiffs' rebuttal evidence inthe above-entitled case has been set for July 3rd, 1972, at 8:30 A.M.

2. That as defendant Emmanuel O. Tolentino died before completion of plaintiffs' cross-examination and before finality of judgment on plaintiffs' respective money claims against him, and as the substituted defendants have filed

jurisdictional motion for dismissal of this case, the ;laintiffs


29 AGUSTIN, E.P.

hreby withdreaw their opposition to said jurisdictional motion by reason of the fact that, as pointed out therein,

this Honorable Court is divested of jurisdiction to continuetaking cognizance of plaintiffs' money claim and said money claim should be filed with the proper probate court.

3. That in the interest of justice and in order not to render judgment on said money claim null and void for lack of

jurisdiction, the plaintiffs desire to present completely competent, relevant and material evidence before the proper probate court to substantiate their aforesaid money claims and for this reason they are constrained to move

this Honorable Court to dismiss provisionally this case to move this Honorable Court to dismiss provisionally this case without prejudice of refiling same with the proper probate court and of reproducing therein the evidence and

presenting rebuttal evidence according as the nature of defendants' evidence may demand.

4. That in view of the foregoing considerations, the plaintiffs hereby manifest that they no longer will present rebuttal evidence resrving same to be adduced instead in the proper probate court.

WHEREFORE, this Honorable Court is most respectfully prayed to dismiss provisionally the above-entitled case without prejudice of refiing same with the proper probate court and of presenting and reproducing therein plaintiffs'

evidence for final determination and decision by said probate court."

On Juy 13, 1972, defendants filed the following:

DEFENDANTS COUNTER-MANIDFESTATION AND OPPOSITION TO THE MOTION DATED JUNE 27, 1972

COME the defendants in the above-entitled case, thru the undersigned counsel, and to this Honorable Court most respectfully manifest and submit an opposition to the

dismissal of defendants' counterclaim on the following grounds:

1. That copy of plaintiffs' Manifestation and Motion dated June 27, 1972 appears to have been mailed from Butuan City on June 28, 1972, and received by us after July 3, 1972.

2. That as far back as December 13, 1971 we have

submitted to this Honorable Court a pleading entitled "JURISDICTIONAL MOTION FOR DISMISSAL OF PLAINTIFFS' COMPLAINT (PRIVILEGED AND URGENT)'.

3. What our grounds therein alleged are hereto replead and reproduced IN TOTO.

4. That said motionhas beenopposed by the plaintiffs under

a pleaing entitled 'OPPOSITION TO JURISDICTIONAL MOTION FOR DISMISSAL OF PLAINTIFFS' COMPLAINT' dated December 29, 1971.

5. That an order dated January 5, 1972 was issued by this Honorable Court denying our motion.

6. That in the meantime and in due course continuation of the trial was held and the formal offer in evidence of all the

exhibits of the defendants was effected under date of February 19, 1972, which exhibits were admited by the Court inits order of May 4, 1972.

7. That as it is the case of the defendants is completed with their counterclaim duly substantiated.

8. That the counterclaim is in itself an independent action,

not subject to suspension or dismissal because it survives the deceased Don Emmanuel O. Tolentino.

9. That as a matter of fact is is now deemed submitted to the decision of the Honorable Court without any strings attached to said counterclaim.

WHEREFORE, in reiteration, this Honorable Court is most respectfully prayed to grant the motion to dismiss plaintiffs'

complaint, and to declare the case of the defendants as far as their counterclaim is concerned, submitted for the decisionof this Honorable Court." (Pp. 12-13, Recod.)

And on July 18, 1972, the court issued the following order:

"For lack of merit, the manifestation and motion filed by Atty. Cipriano C. Alvizo, Sr. for the plaintiffs (See: pp. 543-

544, Records), and the counter-manifestation and opposition filed by Atty. Vicente Jayme for the defendants (See: pp. 547-548 Records) are hereby ordered DENIED.

ASprayed of (for) by Atty. Alvizo, Sr., set this case for the reception of the rebuttal and surrebuttal evidence on July 25, 1972 from 8:30 A.M. to P.M. with due notice to all counsel." (Page 14, Record.)

A motion dated July 23, 1972 for reconsideration of thir order was filed by plaintiffs but on July 25, 1972, what happened is narrated in the order of the court of said date as follows:

"When this case was called for the reception of plaintiffs'

rebuttal evidence for the second time at exactly 11:23 A.M. today, Atty. Cipriano C. Alvizo, Sr., counsel for the plaintiffs, together with all the plaintiffs themeslves, failed to appear in court despite due notice to them in open court

the first time this case was called at 8:30 A.M., and in spite of the two personal notices given to said Atty. Alvizo, Sr., who was by then withinthe sala of Branch 1 of this court sitting, whre no sessions were yet had, first by Court

Proces Server Rodrigo T. Macion and second, by CIC Raymundo C. Morgadez minutes before the second call as above said.

The reception of plantiffs reguttal evidence was previously set by the court, upon previous prayer of plaintiffs, thru

counsel, in their Manifestaion and Motion dated May 15, 1972 (See: p. 537, Records), on July 3, 1972 in anorder dated May 22, 1972 (See: p. 541, Records). Later, plaintiffs,


30 AGUSTIN, E.P.

thru counsel, prayed the court again in their Urgent Ex Parte Motion dated June 30, 1972 —

'to reset for July 25, 1972 the hearing of this case.' (See: p. 545, Records.)

Again plaintiffs' above said motion was granted by the

court as prayed for by them in an Order dated July 18, 1972 resetting the reception of plaintiffs' rebuttal evidence today, July 25, 1972 from 8:30 A.M. to 7:00 P.M., with due notice to said Atty. Cipriano C. Alvizo, Sr. by personal service on July 22, 1972 (See: p. 550, Records).

First call of the case was had Atty. Alvizo, Sr. appeared and presented plaintiffs' Urgent Motion for Reconsideratio dated July 23, 1972 but only filed today 25 minutes before the first call. The court intimated to said Atty. Alvizo, Sr. that it

could not entertain the said motion on grounds which the court would give in an Order to be issued later and insisted on plaintiffs' presentationof their promised rebuttal evidence. The court, however, in fairness to plaintifs who

were absent in court, gave said Atty. Alvizo, Sr. until 11:00 A.M. to present his rebuttal witnesses. The the second call came at exactly 11:23 A.M. as above said and what happened was what was already narrated by the court at the opening of this Order.

By reason of all the foregoing, it is the sense of the court that plaintiffs have elected to waive their right to present rebuttal evidence, prompting the cort to consider, as it hereby HOLDS that this case is now considered

reglementarily submitted fo rdecisonon the merits. There being no rebuttal evidence to sur-rebt, a Atty. Lydio J. Cataluna, counsel for the defendants, presented no objection to the foregoing.

Plaintiffs' Urgent Motion for Reconsideration filed only

today, 25, minutes before 8:30 A.M. (See: p. 553, Recods) when this case was caled for the reception of their promised rebuttall evidence as prayed for them thru said Atty. Alvizo, Sr. as above said (See: pp. 553-555, Records),

is hreby ordered, for bieng unreglementary and dilatory in nature andtiming, DENIED, pursuant to Section 4, Rule 15 of the Revised Rules of Court." (Pp. 18-20, Record.)

On July 29, 1972, plaintiffs

PREMISES CONSIDERED, judgment is hereby rendered granting the instant petition. The trial court's decision of September 20, 1972 as well as its orders of July 18 and 25,

1972, together with all its orders of preliminary attachment against the properties of the petitioners are hereby set aside and rendered without force and effect. Respondent court is enjoined to dismiss the subject case before it (Civil

Case No. 1251) in so far as petitioners' first cause of action is concerned, without prejudice to its being filed as a money claim in special proceedings for the settlement of the estate of the deceased Emmanuel O. Tolentino.

Respondent court is further ordered to proceed with the trial of respondents' counter-claims by allowing the petitioners to present their evidence in defense thereto, after which another decision should be rendered as the facts and the law may warrant.

The incident of contempt shall be continued upon appropriate motion of the interested parties. With respect

to the matter of alleged irregular and illegal attachment secured by Atty. Elias Q. Tan from the Court of First Instance of Cebu, the Court rules that it should be made the subject of a separate action, albeit the restraining order

issued by this Court on May 4, 1973 is hereby maintained until such appropriate action is filed, in which event, the court taking cognizance thereof may act as it may deem proper in regard to said restraining order which was issued only to maintain the status quo, for the purpose of avoiding

that the controversy between the parties should be more complicated in the instant proceeding.

Costs against respondents.

Antonio, Aquino, Concepcion, Jr., and Martin, JJ, concur.

Note: Mr Justice Enrique M. Fernando is on leave.

Mr. Justice Ruperto G. Martin was designated to sit in the Second Division.


31 AGUSTIN, E.P.

Attachment to Acquire Jurisdiction Over the RES

1. MABANAG vs. GALLERMORE

FIRST DIVISION

[G.R. No. L-825. July 20, 1948.]

ROMAN MABANAG, Plaintiff-Appellant, v. JOSEPH M. GALLEMORE, Defendant-Appellee.

Santiago Catane for Appellant.

No appearance for Appellee.

SYLLABUS

COURTS; JURISDICTION; NON-RESIDENT DEFENDANT; EFFECT OF ATTACHMENT OR GARNISHMENT. —

Attachment or garnishment of property of a non-resident defendant located in the Philippines confers jurisdiction on the court in an otherwise personal action. In other words, though no jurisdiction is obtained over the debtor’s person,

the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.

D E C I S I O N

TUASON, J.:

This case, here on appeal from an order of dismissal by the Court of First Instance of Occidental Misamis, raises the question of the court’s jurisdiction. More specifically, the

question is whether the action is in personam or one in rem. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant, Joseph M. Gallemore for

being a non-resident." The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for

two parcels of land whose sale was afterward annulled. The defendant is said to be residing in Los Angeles, California, U. S. A. He has no property in the Philippines except an alleged debt owing him by a resident of the municipality of

Occidental Misamis. This debt, upon petition of the plaintiff, after the filing of the complaint and before the suit was dismissed, was attached to the extent of plaintiff’s claim for the payment of which the action was brought. But

the attachment was dissolved in the same order dismissing the case. It was Atty. Valeriano S. Kaamiño who as amicus curiae

filed the motion to dismiss and to set aside the attachment. There is no appearance before this Court to oppose the appeal.

Section 2, Rule 5, of the Rules of Court provides: "If any of the defendants does not reside and is not found in the Philippines, and the action affects the personal

status of the plaintiff, or any property of the defendant located in the Philippines, the action may be commenced

and tried in the province where the plaintiff resides or the property, or any portion thereof, is situated or found." virtua1aw library The Philippine leading cases in which this Rule, or its

counterpart in the former Code of Civil Procedure, sections 377 and 395, were cited and applied, are Banco Español-Filipino v. Palanca, 37 Phil. 921, and Slade Perkins v. Dizon, 40 Off. Gaz., [3d Suppl. ], No. 7, p. 216. The gist of

this Court’s ruling in these cases, in so far as it is relevant to the present issues, is given in I Moran’s Comments on the Rules of Court, 2d Ed., 105:jgc:chanrobles.com.ph

"As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person,

unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the

Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i. e., the personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the

non-resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose personal status is in question resides, or where the property of the defendant or a part thereof involved in the

litigation is located." virtua1aw library Literally this Court said:

"Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of

legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be

taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its

progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of

land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the

property and to adjudicate the title in favor of the petitioner against all the world." (Banco Español-Filipino v. Palanca, supra, 927-928.)

"In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired

by the seizure; and the purpose of the proceedings is to subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court

proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller v. Holly, 176 U. S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance that in an


32 AGUSTIN, E.P.

attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken

into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed

essentially in rem. (Id., 929-930.) "When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the

case, upon the principle that a ’State, through its tribunals, may subject property situated within its limits owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this

jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled. Every State owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority

to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State’s jurisdiction over the property of the non-resident situated within its limits that its tribunals can

inquire into the non-resident’s obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the non-resident has no property in the State, there is

nothing upon which the tribunals can adjudicate.’" (Slade Perkins v. Dizon, 40 Off. Gaz. [3d Supplement], No. 7, p. 216.)

A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant confers jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative

works:chanrob1es virtual 1aw library The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured.

Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by dissolution of the attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purely in personam .

. . a proceeding against property without jurisdiction of the person of the defendant is in substance a proceeding in rem; and where there is jurisdiction of the defendant, but the proceeding against the property continues, that

proceeding is none the less necessarily in rem, although in form there is but a single proceeding. (4 Am. Jur., 556-557.)

As the remedy is administered in some states, the theory of an attachment, whether it is by process against or to subject the property or effects of a resident or non-resident

of the state, is that it partakes essentially of the nature and character of a proceeding in personam and not of a proceeding in rem. And if the defendant appears the action proceeds in accordance with the practice governing

proceedings in personam. But where the defendant fails to appear in the action, the proceeding is to be considered as one in the nature of a proceeding in rem. And where the court acts directly on the property, the title thereof being

charged by the court without the intervention of the party, the proceeding unquestionably is one in rem in the fullest meaning of the term.

"In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to

acquire jurisdiction of the defendant’s person, and he has not appeared and answered or otherwise submitted himself

to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the court." (2 R. C. L., 800-804.)

Tested by the foregoing decisions and authorities, the Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant’s credit. Those

authorities and decisions, so plain and comprehensive as to make any discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor’s person, the case may proceed to judgment if there is property in

the custody of the court that can be applied to its satisfaction. It is our judgment that the court below erred in dismissing

the case and dissolving the attachment; and it is ordered that, upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this appeal will be charged to defendant and appellee.

Paras, Actg. C.J., Feria, Pablo, Perfecto, Bengzon, Briones, and Padilla, JJ., concur.


33 AGUSTIN, E.P.

Stages in the Issuance of the Writ

1. CUARTERO vs. CA

Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 102448 August 5, 1992

RICARDO CUARTERO, petitioner, vs.

COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA EVANGELISTA, respondents.

Abesamis, Medialdea & Abesamis for petitioner.

Eufemio Law Offices for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari seeking to annul

the decision of the Court of Appeals promulgated on June 27, 1991 as well as the subsequent resolution dated October 22, 1991 denying the motion for reconsideration in

CA-G.R. SP No. 23199 entitled "Spouses Roberto and Felicia Evangelista v. Honorable Cezar C. Peralejo, Presiding Judge Regional Trial Court of Quezon City, Branch 98, and Ricardo Cuartero," which nullified the

orders of the trial court dated August 24, 1990 and October 4, 1990 and cancelled the writ of preliminary attachment issued on September 19, 1990.

Following are the series of events giving rise to the present controversy.

On August 20, 1990, petitioner Ricardo Cuartero filed a

complaint before the Regional Trial Court of Quezon City against the private respondents, Evangelista spouses, for a sum of money plus damages with a prayer for the issuance of a writ of preliminary attachment. The complaint was docketed as Civil Case No. Q-90-6471.

On August 24, 1990, the lower court issued an order granting ex-parte the petitioner's prayer for the issuance of a writ of preliminary attachment.

On September 19, 1990, the writ of preliminary attachment was issued pursuant to the trial court's order dated August

24, 1990. On the same day, the summons for the spouses Evangelista was likewise prepared.

The following day, that is, on September 20, 1990, a copy of the writ of preliminary attachment, the order dated August 24, 1990, the summons and the complaint were all

simultaneously served upon the private respondents at their residence. Immediately thereafter, Deputy Sheriff Ernesto L. Sula levied, attached and pulled out the properties in compliance with the court's directive to attach

all the properties of private respondents not exempt from execution, or so much thereof as may be sufficient to

satisfy the petitioner's principal claim in the amount of P2,171,794.91.

Subsequently, the spouses Evangelista filed motion to set aside the order dated August 24, 1990 and discharge the writ of preliminary attachment for having been irregularly and improperly issued. On October 4, 1990, the lower court denied the motion for lack of merit.

Private respondents, then, filed a special civil action for certiorari with the Court of Appeals questioning the orders

of the lower court dated August 24, 1990 and October 4, 1990 with a prayer for a restraining order or writ of

preliminary injunction to enjoin the judge from taking further proceedings below.

In a Resolution dated October 31, 1990, the Court of Appeals resolved not to grant the prayer for restraining order or writ of preliminary injunction, there being no clear showing that the spouses Evangelista were entitled thereto.

On June 27, 1991, the Court of Appeals granted the petition for certiorari and rendered the questioned decision.

The motion for reconsideration filed by herein petitioner Cuartero was denied for lack of merit in a resolution dated

October 22, 1991. Hence, the present recourse to this Court.

The petitioner raises the following assignment of errors:

I

THE COURT OF APPEALS ERRED AND COMMITTED A GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF JURISDICTION WHEN IT HELD THAT

THE REGIONAL TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER RESPONDENT SPOUSES.

II

THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF

DISCRETION WHEN IT HELD THAT THE REGIONAL TRIAL COURT COULD NOT VALIDLY ISSUE THE SUBJECT WRIT OF PRELIMINARY ATTACHMENT WHICH IS AN ANCILLARY REMEDY. (Rollo, p. 13)

The Court of Appeals' decision is grounded on its finding that the trial court did not acquire any jurisdiction over the person of the defendants (private respondents herein). It declared that:

. . . the want of jurisdiction of the trial

court to proceed in the main case as well as the ancillary remedy of attachment is quite clear. It is not disputed that neither service of summons with a copy

of the complaint nor voluntary


34 AGUSTIN, E.P.

appearance of petitioners was had in this case before the trial court issued the

assailed order dated August 24, 1990, as well as the writ of preliminary attachment dated September 19, 1990. This is reversible error and must be corrected on certiorari. (Rollo, p. 24)

The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168 SCRA 692 (1988) in arriving at the foregoing conclusion. It stated that:

Valid service of summons and a copy of the complaint vest jurisdiction in the

court over the defendant both for the purpose of the main case and for purposes of the ancillary remedy of attachment and a court which has not

acquired jurisdiction over the person of defendant, cannot bind the defendant whether in the main case or in any ancillary proceeding such as attachment

proceedings (Sievert v. Court of Appeals, 168 SCRA 692). (Rollo, p. 24)

The private respondents, in their comment, adopted and reiterated the aforementioned ruling of the Court of Appeals. They added that aside from the want of

jurisdiction, no proper ground also existed for the issuance of the writ of preliminary attachment. They stress that the fraud in contracting the debt or incurring the obligation upon which the action is brought which comprises a

ground for attachment must have already been intended at the inception of the contract. According to them, there was no intent to defraud the petitioner when the postdated checks were issued inasmuch as the latter was aware that

the same were not yet funded and that they were issued only for purposes of creating an evidence to prove a pre-existing obligation.

Another point which the private respondents raised in their comment is the alleged violation of their constitutionally

guaranteed right to due process when the writ was issued without notice and hearing.

In the later case of Davao Light and Power Co., Inc. v. Court of Appeals, G.R. No. 93262, November 29, 1991, we had

occasion to deal with certain misconceptions which may have arisen from our Sievert ruling. The question which was resolved in the Davao Light case is whether or not a writ of preliminary attachment may issue ex-parte against a

defendant before the court acquires jurisdiction over the latter's person by service of summons or his voluntary submission to the court's authority. The Court answered in the affirmative. This should have clarified the matter but apparently another ruling is necessary.

A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court where an action is pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the

sheriff as security for the satisfaction of whatever judgment might be secured in said action by the attaching creditor against the defendant (Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v. Aquino, 53 SCRA 30-31 [1973]).

Under section 3, Rule 57 of the Rules of Court, the only requisites for the issuance of the writ are the affidavit and bond of the applicant. As has been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190 SCRA 262 (1990), citing Mindanao Savings and Loan Association, Inc. v. Court of Appeals, 172 SCRA 480 (1989), no notice to the adverse

party or hearing of the application is required inasmuch as the time which the hearing will take could be enough to enable the defendant to abscond or dispose of his property

before a writ of attachment issues. In such a case, a hearing would render nugatory the purpose of this provisional remedy. The ruling remains good law. There is, thus, no merit in the private respondents' claim of violation of their constitutionally guaranteed right to due process.

The writ of preliminary attachment can be applied for and granted at the commencement of the action or at any time thereafter (Section 1, Rule 57, Rules of Court). In Davao Light and Power, Co., Inc. v. Court of Appeals, supra, the

phrase "at the commencement of the action" is interpreted as referring to the date of the filing of the complaint which is a time before summons is served on the defendant or even before summons issues. The Court added that —

. . . after an action is properly

commenced — by filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply and obtain a writ of preliminary

attachment upon the fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons

on the defendant. And this, indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the

application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-party-claim) and for the Trial Court to issue the writ ex-parte at the commencement

of the action if it finds the application otherwise sufficient in form and substance.

The Court also pointed out that:

. . . It is incorrect to theorize that after

an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in the Court, but before acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the Court's authority), nothing can be validly done by

the plaintiff or the Court. It is wrong to assume that the validity of acts done during the period should be dependent

on, or held in suspension until, the actual obtention of jurisdiction over the defendants person. The obtention by the court of jurisdiction over the person of

the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject


35 AGUSTIN, E.P.

matter or nature of the action, or the res or object thereof.

It is clear from our pronouncements that a writ of preliminary attachment may issue even before summons is

served upon the defendant. However, we have likewise ruled that the writ cannot bind and affect the defendant. However, we have likewise ruled that the writ cannot bind and affect the defendant until jurisdiction over his person

is eventually obtained. Therefore, it is required that when the proper officer commences implementation of the writ of attachment, service of summons should be simultaneously made.

It must be emphasized that the grant of the provisional

remedy of attachment practically involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For

the initial two stages, it is not necessary that jurisdiction over the person of the defendant should first be obtained. However, once the implementation commences, it is required that the court must have acquired jurisdiction

over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.

In Sievert v. Court of Appeals, supra, cited by the Court of

Appeals in its questioned decision, the writ of attachment issued ex-parte was struck down because when the writ of

attachment was being implemented, no jurisdiction over

the person of the defendant had as yet been obtained. The court had failed to serve the summons to the defendant.

The circumstances in Sievert are different from those in the

case at bar. When the writ of attachment was served on the spouses Evangelista, the summons and copy of the complaint were also simultaneously served.

It is appropriate to reiterate this Court's exposition in the Davao Light and Power case cited earlier, to wit:

. . . writs of attachment may properly issue ex-parte provided that the Court is

satisfied that the relevant requisites

therefore have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant,

but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied by

service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if

any), the application for attachment (if

not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond.

The question as to whether a proper ground existed for the

issuance of the writ is a question of fact the determination

of which can only be had in appropriate proceedings conducted for the purpose (Peroxide Philippines

Corporation V. Court of Appeals, 199 SCRA 882 [1991]). It must be noted that the spouses Evangelista's motion to discharge the writ of preliminary attachment was denied by the lower court for lack of merit. There is no showing that

there was an abuse of discretion on the part of the lower court in denying the motion.

Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicant's cause of action in the main case since an anomalous situation

would result if the issues of the main case would be ventilated and resolved in a mere hearing of a motion (Davao Light and Power Co., Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank)

v. Court of Appeals, 197 SCRA 663 [1991]).

In the present case, one of the allegations in petitioner's complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to

cover the installment payments and a separate set of postdated cheeks for payment of the stipulated interest (Annex "B"). The issue of fraud, then, is clearly within the competence of the lower court in the main action.

WHEREFORE, premises considered, the Court hereby GRANTS the petition. The challenged decision of the Court

of Appeals is REVERSED, and the order and writ of attachment issued by Hon. Cezar C. Peralejo, Presiding Judge of Branch 98, Regional Trial Court of Quezon City against spouses Evangelista are hereby REINSTATED. No pronouncement as to costs.

SO ORDERED.

Feliciano, Bidin and Davide, Jr., JJ., concur.

Romero, J., took no part.


36 AGUSTIN, E.P.

2. SALAS vs. ADIL



SECOND DIVISION

G.R. No. L-46009 May 14, 1979

RICARDO T. SALAS and MARIA SALAS, petitioners, vs. HON. MIDPANTAO L. ADIL, as Judge of Branch II, Court

of First Instance of Iloilo, ROSITA BEDRO and BENITA YU, respondents.

Castro Law Office for petitioners.

Tirso Espelete and Fortunato A. Padilla for private respondents.

ANTONIO, J.:

Certiorari to nullify the Order of Attachment of May 13, 1977, as well as the Writ of Attachment dated May 16, 1977, issued by respondent Judge in Civil Case No. 10770 of the Court of First Instance of Iloilo, entitled "Rosita Bedro and Benita Yu v. Spouses Ricardo T. Salas and Maria Salas, et al.

On September 10, 1976, respondents Rosita Bedro and Benita Yu filed the afore-mentioned civil action with the Court of First Instance of Iloilo against herein petitioners

Ricardo T. Salas and Maria Salas, the Philippine Commercial & Industrial Bank, in its capacity as Administrator of the Testate Estate of the deceased Charles

Newton Hodges, and Avelina A. Magno, in her capacity as Administratrix of the Testate Estate of the deceased Linnie Jane Hodge to annul the deed of sale of Lot No. 5 executed by administrators of the Hodges Estate in favor of the

Spouses Ricardo T. Salas and Maria Salas and for damages. The action for annulment was predicated upon the averment that Lot No. 5, being a subdivision road, is intend for public use and cannot be sold or disposed of by

the Hodges Estate. The claim for damages was based on the assertion that after defendant spouses purchased Lots Nos. 2 and 3, they also purchased Lot No. 5 and thereafter "erected wooden posts, laid and plastered at the door of the

house on Lot No. 3, with braces of hardwood, lumber and plywood nailed to the post", thereby preventing Rosita Bedro and Benita Yu from using the road on the afore-mentioned lot, Lot No. 5, and that as a result of such

obstruction, private respondents Rosita Bedro and Benita Yu sustained actual damages in the amount of P114,000.00, plus the sum of Pl,000.00 as damages daily from June 30, 1976 due to the stoppage in the

construction of their commercial buildings on Lot No. 3, and moral damages in the amount of P200,000.00.

In their answer to the complaint, the Salas spouses, after specifically denying the material allegations in the complaint, stated that Lot No. 5 had been registered in the

name of the C. N. Hodges as their exclusive private

property and was never subjected to any servitude or easement of right of way in favor of any person; that any

occupants of Lots Nos. 2 and 3 have direct access to Bonifacio Drive, a National Highway, hence, Lot No. 5 is neither needed nor required for the egress or ingress of the occupants thereof; and that private respondents, as a

matter of fact, since 1964 had excluded and separated completely their property (Lots Nos. 2 and 3) from Lot No. 5 by building a concrete wall on the boundary thereon without providing any gate as entrance or exit towards Lot

No. 5; and that private respondents have no personality to question the validity of the deed of sale over Lot No. 5 since they were not parties to the same and the sale was duly approved by the probate court.

In a motion dated May 12, 1977, private respondents filed a Motion for Attachment, alleging, among others, that the

case was "for annulment of a deed of sale and recovery of damages" and that the defendants have removed or disposed of their properties or are about to do so with

intent to defraud their creditors especially the plaintiffs in this case.

On May 13, 1977, respondent Judge issued ex-parte a Writ

of Attachment "against the properties of the defendants particularly Lots Nos. 1 and 4 of Psc-2157 less the building

standing thereon upon the plaintiffs filing a bond in the amount of P200,000.00 subject to the approval of this Court." After a surety bond in the amount of P200,000.00, executed on May 11, 1977 by the Central Surety and

Insurance Company as surety was filed, the writ itself was issued by respondent Judge on May 16, 1977, directing the Sheriff to attach the properties above-mentioned. On May 17, 1977, the Deputy Sheriff of Iloilo levied upon the aforesaid properties of petitioners.

Contending that respondent Judge gravely abused his

discretion in issuing the said Writ of Attachment, petitioners filed the present petition.

In certiorari proceedings, the cardinal rule is that the court must be given the opportunity to correct itself, Thus, for the special civil action of certiorari to prosper, there must

be no appeal nor any plain, speedy and adequate remedy in the ordinary course of law. Petitioners, therefore, must exhaust all available remedies in the lower court before filing a petition for certiorari, otherwise the petition shall be held to be premature.

In the instant case, it appears that petitioners have adequate remedy under the law. They could have filed an application with the court a quo for the discharge of the

attachment for improper or irregular issuance under

section 13, Rule 57, of the Revised Rules of Court, which provides the following

SEC. 13. Discharge of attachment for improper or irregular issuance. — The

party whose property has been attached may also, at any time either before or after the release of the attached property, or before any attachment shall have been

actually levied, upon reasonable notice to the attaching creditor, apply to the judge who Salas vs. Adil granted the

order, or to the judge of the court in


37 AGUSTIN, E.P.

which the action is pending, for an order to discharge the attachment on the

ground that the same was improperly or irregularly issued. If the motion be made on affidavits on the part of the party whose property has been attached, but

not otherwise, the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that on which the attachment was made. After

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

Considering that petitioners have not availed of this remedy, the instant petition is premature.

We deem it necessary, however, for the guidance of respondent Court and of the parties, to stress herein the nature of attachment as an extraordinary provisional remedy.

A preliminary attachment is a rigorous remedy, which

exposes the debtor to humiliation and annoyance, such it should not be abused as to cause unnecessary prejudice. It is, therefore, the duty of the court, before issuing the writ, to ensure that all the requisites of the law have been

complied with; otherwise the judge acts in excess of his jurisdiction and the so issued shall be null and void . 1

In Carpio v. Macadaeg, 2 this Court said:

Respondent Judge should not have issued the two writs of preliminary attachment (Annexes C and C-1) on

Abaya's simple allegation that the petitioner was about to dispose of his property, thereby leaving no security for the satisfaction of any judgment. Mere

removal or disposal of property, by itself, is not ground for issuance of preliminary attachment, notwithstanding absence of any security for the satisfaction of any

judgment against the defendant. The removal or disposal, to justify preliminary attachment, must have been made with intent to defraud defendant's creditors.

Respondent Judge in fact corrected himself. Acting on petitioner's motion to discharge attachment and apparently believing the correctness of the grounds

alleged therein, he set aside the orders of attachment (Order of March 11, 1960, Annex F)

But reversing himself again, he set aside his order of March 11, 1960 (Annex K,

dated March 29, 1960). This he did apparently on Abaya's contention that petitioner was about to remove or dispose of his property in order to

defraud his creditors, as examples of which disposals he pointed to the alleged

sale of the horses and of petitioner's office furniture. ... These averments of fraudulent disposals were controverted by petitioner who ... reiterated the

defenses against preliminary attachment which he had previously enumerated in his petition to discharge the two orders of attachment. Thus the question of

fraudulent disposal was put in issue; and respondent Judge, before issuing the pre attachment anew, should have given the parties opportunity to prove

their respective claims or, at the very least should have provided petitioner with the chance to show that he had not been disposing of his property in fraud of creditors. (citing National Coconut Corporation v. Pecson L-4296, Feb. 25, 1952, Villongco v. Panlilio, 6214, Nov. 20,

1953).

And in Garcia v. Reyes, 3 considering the allegation that the

debtors were removing or disposing of some of their properties with intent to defraud their creditors, 'this Court said that "(a)ll in all due process would seem to require that

both parties further ventilate their respective contentions in a hearing that could indeed reveal the truth. Fairness would be served thereby, the demand of reason satisfied."

Considering the gravity of the allegation that herein petitioners have removed or disposed of their properties or

are about to do so with intent to defraud their creditors, and further considering that the affidavit in support of the pre attachment merely states such ground in general terms, without specific allegations of lances to show the

reason why plaintiffs believe that defendants are disposing of their properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to petitioners and to allow wherein evidence is them to present their position at

a to be received. Moreover, it appears from the records that private respondents are claiming unliquidated damages, including moral damages, from petitioners. The authorities agree that the writ of attachment is not available 'm a suit

for damages where the amount claimed is contingent or unliquidated.

We think, however, that a rule sufficient for the determination of this case has been suggested and acted upon, and

that the remedy does not exist where unliquidated damages were demanded. ... In Warwick v. Chase, 23 Md 161, it is

said: 'It is necessary that the standard

for ascertaining the amount of damages claimed should not only appear, but that it should be fixed and certain, and in no degree dependent on facts either

speculative or Uncertain ... The general rule is, that unliquidated damages, ... cannot be recovered by attachment, unless the contract affords a certain

measure or standard for ascertaining the amount of the damages ... 4

Further.


38 AGUSTIN, E.P.

The statute authorizing the issuance of the writ of garnishment and that relating

to the issuance of the writ of attachment ... have not been construed as authorizing the writs to be issued when the plaintiff's suit is technically an action

for debt. Neither of the writs may be issued when the suit is for damages for tort, but they may be issued when the plaintiff's claim arises out of contract

either express or implied, and the demand is liquidated, that is, the amount of the claim is not contingent, is capable of being definitely ascertained by

the usual means of evidence, and does not rest in the discretion of the jury. 5

WHEREFORE, the instant petition is hereby DENIED, in order to enable petitioners to move before respondent Court for the discharge of the attachment on the ground of its

improper and irregular issuance, pursuant to section 13, Rule 57, of the Revised Rules of Court, and for the aforesaid Court to act thereon in accordance with the foregoing.

Fernando, Aquino, Concepcion, Jr., and Santos JJ., concur.

Abad Santos J., took no part.

Barredo, J., is on leave.


39 AGUSTIN, E.P.

3. JARDINE MANILA FINANCE vs. CA



THIRD DIVISION

G.R. No. 55272 April 10, 1989

JARDINE-MANILA FINANCE, INC., petitioner, vs. COURT OF APPEALS, IMPACT CORPORATION,

RICARDO DE LEON and EDUARDO DE LEON, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Ramon Quisumbing, Jr. & Associates for private respondents.

FERNAN, C.J.:

This is a petition for review on certiorari seeking to reverse

and set aside: (a) the August 29, 1980 decision of the Court of Appeals 1 in Special Proceedings CA-G.R. No. SP-09972-R entitled "Impact Corporation, et al. v. Hon. Buenaventura Guerrero, etc., et al." annulling the order and the writ of

attachment issued by the Court of First Instance of Rizal in Civil Case No. 34617 entitled "Jardine-Manila Finance, Inc. v. Impact Corporation, et al." 2 and (b) the Resolution dated

October 7, 1980 denying herein petitioners motion for reconsideration. 3

On September 28, 1979, petitioner Jardine-Manila Finance, Inc. (JARDINE) filed a complaint in the then Court

of First Instance (CFI) of Rizal, docketed as Civil Case No. 34617, against private respondents Impact Corporation (IMPACT), Ricardo de Leon and Eduardo de Leon, to collect various sums of money allegedly due from therein

defendant IMPACT under a credit accomodation by way of a discounting line agreement. 4 Herein private respondents Ricardo de Leon and Eduardo de Leon were included as defendants by virtue of their undertaking covered by a

Surety Agreement under which they bound themselves jointly and severally with defendant IMPACT to pay herein petitioner all of IMPACT's obligations under the aforesaid agreement. 5

It was alleged that in April and May 1979, IMPACT

assigned its receivables to JARDINE on the condition that IMPACT was to collect them on their due dates from their issuers and remit the collected amounts to JARDINE and/or repurchase the assigned receivables; 6 but despite

the fact that IMPACT had collected the amounts due on said receivables, it failed or refused to turn over the amounts so collected to JARDINE.

JARDINE thus demanded payment of P 1,000,212.64, the total amount due under said various deeds of assignment,

plus interest of P 16,614.64 as of September 6, 1979 and 25 % of the aforesaid amount as attorney's fees, exemplary damages and other expenses of litigation.

Likewise contained in said complaint is petitioner's

application for a writ of preliminary attachment against private respondents. The allegations in support of said petition for a writ of preliminary attachment are quoted in full:

Special Allegations for Preliminary Attachment

A. The foregoing allegations are

hereby repleaded and made integral parts hereof.

B. The defendant corporation at the time of the execution of the aforesaid deeds of assignment had reservation not to remit to plaintiff

the proceeds of the receivables assigned to plaintiff as confirmed by their refusal to remit the same to

plaintiff although the issuers of the receivables assigned to plaintiff had already paid to defendant corporation their obligations on said receivables to the latter.

C. Defendants Ricardo de Leon and

Eduardo de Leon who are likewise officers of defendant corporation in order to elicit plaintiffs approval to enter into said deeds of assignment

with defendant corporation, executed the aforesaid surety agreement (Annex L), likewise, with

reservation in their minds not to honor their obligations under the same as what they actually did when they refused to pay the

obligations of defendant corporation to plaintiff pursuant to the provisions of said surety agreement. (Annex L)

D. Defendant corporation, Ricardo de Leon and Eduardo de Leon have

no visible other sufficient security for the claim sought to be enforced by this action of plaintiff other than their real and personal properties which are located in Metro Manila and in the province of Rizal, Province of Nueva Ecija or elsewhere.

(Emphasis supplied)

E. Plaintiffs action against defendant corporation is based upon documents and therefrom a sufficient cause of action exists.

F. Plaintiff is willing to post a bond

in an amount to be fixed by the Honorable Court, not exceeding


40 AGUSTIN, E.P.

plaintiffs claim which will be conditioned to the effect that

plaintiff will pay all the costs which may be adjudged to the adverse party and all damages which they may sustain by reason of

attachment, if the Honorable Court should finally adjudge that the applicant plaintiff is not entitled thereto.7

On the basis of the foregoing allegations, the lower court granted JARDINE's petition for the issuance of a writ of preliminary attachment on October 16, 1979. 8

On October 19, 1979, therein defendants filed a motion to set aside the writ of preliminary attachment. They also submitted to the court a quo a memorandum in support of

their motion to dissolve the attachment contending that the

grounds alleged by the plaintiff in its application for a writ of attachment are not among the grounds specified under Section 1 of Rule 57; that the defendants have other

sufficient security; that there was no affidavit of merit to support the application for attachment as required by Section 3 of Rule 57 and that the verification of the complaint was defective as it did not state that the amount

due to the plaintiff above all legal set-ups or counterclaims is as much as the sum for which the order is sought. 9

JARDINE opposed the motion arguing that the mental reservation of defendants at the time of the execution of the deeds of assignment constituted fraud; that such fraud was further confirmed by the fact that defendants actually

failed to remit the proceeds of the collection of receivables assigned by them; that defendants failed to disclose to the plaintiff the fact that they had already collected the receivables assigned by them; that the amounts collected

by defendant corporation were received by defendants in trust for plaintiff and defendant corporation appropriated for itself said collection. 10

On November 7, 1979, the trial court denied defendant's motion to annul the writ of preliminary attachment.

Thereupon, defendant Impact Corporation went to the appellate court on a petition for certiorari seeking to annul said writ. 11

The findings of the Court of Appeals are as follows:

To our mind there is no question that the allegations of the complaint proper

which were repleaded and made integral part of the application for preliminary attachment (paragraph A) made out a case of conversion or misappropriation of

property held in trust which is the subject of the complaint for the allegations stated that IMPACT had assigned to JARDINE certain receivables

with the understanding that it was to collect the same from the issuers of said receivables and deliver the amounts collected to JARDINE, but in spite of the

fact that IMPACT had actually collected said amounts, it failed to turn over said receivables to JARDINE. There was,

therefore, in the allegations of said complaint true conversion of the

amounts received by defendant in trust for plaintiff. Defendants in their motion to discharge the attachment and the memorandum filed by them in support of

said motion had in effect, admitted the conversion of the amounts collected by defendant IMPACT, but justified the use of said amounts to meet its operational

expenses to prevent a complete shutdown of its operations.

While we find that the grounds alleged by plaintiff, the herein private respondent, to support its application for preliminary attachment are among those

enumerated in Section 1 of Rule 57 as grounds upon which an attachment may be issued, we are constrained

nonetheless to rule against the regularity or legality of the attachment issued by respondent Court because there was no allegation made by plaintiff in its

application for the issuance of a writ of attachment to the effect 'that there is no sufficient security for the claim sought to be enforced, by the action, and the

amount due to the applicant or the value of the property on the basis of which is entitled to recover, is as much as the sum for which the order is granted above

all legal counterclaims, a requirement for the granting of an order of attachment under Section 3 of Rule 57. 12

Thus, on August 29, 1980, the Court of Appeals annulled the assailed writ of attachment for having been issued

improperly and irregularly, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, the petition to annul the order and the writ of attachment issued by respondent Court is hereby GRANTED and judgment

is rendered declaring said order and writ of attachment null and void for having been issued improperly and regularly. The restraining order issued by this

Court on November 9, 1979 restraining respondents from enforcing the writ of attachment issued by respondent Judge

on October 16, 1979 is hereby made PERMANENT. With costs against private respondents. 13

Hence this recourse.

Reduced to bare essentials, the records show that in the exercise of its discretion, the lower court found justification in the issuance of the attachment. On the other hand, the

Court of Appeals while in accord with the lower court that a sufficient cause of action exists for petitioner and that the ground for its application for attachment is one of those mentioned in Section 1, Rule 57 of the Rules of Court,

found the issuance of the attachment irregular or illegal in


41 AGUSTIN, E.P.

the absence of the following allegations in the application for attachment: (1) that "there is no sufficient security for

the claim sought to be enforced by the action; and (2) that the amount due to the applicant or the value of the property on the basis of which he is entitled to recover, is as much as the sum for which the order is granted above all legal counterclaims."

Ultimately, the issue therefore, is whether or not non-

compliance with the formal requirements invalidate the writ of attachment.

On both counts, petitioner admits not having used the exact words of the Rules in making the requisite allegations, but nonetheless it alleged that it presented

ultimate and specific facts, first-in showing that there is indeed no other sufficient security for the claim sought to be enforced as shown in paragraph D of the Complaint earlier quoted; and second-while it did not specifically state

that the sum due is above all legal counterclaims, such conclusion of fact is no longer necessary in the face of actual proof in the answer which did not carry any counterclaim. In fine, petitioner stresses that mere forms must not be given more weight than substance. 14

In excusing the deficiencies of its application for a writ of preliminary attachment, petitioner relies heavily on the case of De Borja v. Platon, 15 where this Court sustained

the writ of attachment issued by the lower court in favor of

the defendants based on the counterclaim of the latter despite the lack of allegations in the affidavit attached to the petition for the issuance of the writ of attachment that the amount due the counterclaim was as much as the sum

for which the order is granted above all legal counterclaims.

It will be noted however, that the trial court found that the counterclaim of the defendants exceeded the claims of the plaintiff. Thus, this Court held that "as the trial court had

before it the evidence adduced by both sides, the petition for a writ of preliminary attachment having been filed four years after the trial court had begun, we presume that the lower court having in mind such evidence, ordered the attachment accordingly." 16

In sharp contrast, in the case at bar, where the records undeniably reveal that: (1) the complaint was filed on September 28, 1979; 17 (2) the writ of preliminary attachment was issued on October 16, 1979; 18 (3) the

motion to annul preliminary attachment dated October 19, 1979 was filed on the same day; 19 (4) the answer of defendant IMPACT dated October 30, 1979 20 was received by the RTC Pasig only on November 5, 1979, 21 it is

evident that the questioned writ was issued ex parte; and at a time when the Court a quo had yet no basis for

concluding that the amount due to petitioner is as much as the sum for which the order is granted above all legal counterclaims.

It is therefore, readily apparent that the conclusions in the De Borja case cannot be applied to the case at bar. In fact

even petitioner's plea for liberality as it vigorously invokes the doctrine on said case which refused "to sanction that

formalism and that technicality which are discountenanced by the modern laws of procedure" is an obvious misreading of the ruling of this Court which states:

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. . . . 22

as a liberal approach to the required allegations in the application for a writ of preliminary attachment when what this Court actually allowed was the presentation of a

counterclaim by the defendant instead of a separate civil action in compliance with one of the basic requirements for the issuance of said writ.

The authority to issue an attachment, like the jurisdiction of the court over such proceedings rests on express statutory provisions and unless there is authority in the

statute, there is no power to issue the writ, and such authority as the statute confers must be strictly construed.23 In fact, "(E)ven where liberal construction is the rule, the statute or the right to attachment thereby

granted may not be extended by judicial interpretation beyond the meaning conveyed by the words of the statute." 24 Petitioner's application for a writ of preliminary

attachment must therefore be scrutinized and assessed by the requisites and conditions specifically prescribed by law for the issuance of such writ.

Section 3, Rule 57 of the Revised Rules of Court governs the issuance of a writ of attachment, to wit:

Sec. 3. Affidavit and bond required.-An

order of attachment shall be granted

only when it is made to appear by the affidavit of the applicant or some other person who personally knows of the facts, that a sufficient cause of action

exists, that the case is one of those mentioned in section 1 hereof, that there is no sufficient security for the claim sought to be enforced by the action, and

that the amount due to applicant or the value of the property the possession of which he is entitled to recover is as much as the sum for which the order is granted above all legal counterclaims.

The stringent conditions for the issuance of the writ have been echoed in all subsequent cases, even as late as K.O. Glass Construction Co. Inc. vs. Valenzuela, 25 wherein the

writ of preliminary attachment issued was annulled and set aside on the findings that while the plaintiff "may have stated in his affidavit that a sufficient cause of action exists against the defendant Kenneth O. Glass, he did not state

therein that the case is one of those mentioned in Section 1 hereof; that there is no other sufficient security for the


42 AGUSTIN, E.P.

claim sought to be enforced by the action; and that the amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims."

More specifically, it has been held that the failure to allege

in the affidavit the requisites prescribed for the issuance of the writ of preliminary attachment, renders the writ of preliminary attachment issued against the property of the defendant fatally defective, and the judge issuing it is

deemed to have acted in excess of his jurisdiction. 26 In fact, in such cases, the defect cannot even be cured by amendment. 27

Since the attachment is a harsh and rigorous remedy which exposes the debtor to humiliation and annoyance,

the rule authorizing its issuance must be strictly construed in favor of defendant. It is the duty of the court before issuing the writ to ensure that all the requisites of the law have been complied with. 28 Otherwise, a judge acquires no jurisdiction to issue the writ.

The general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are

null and void. Thus, while not unmindful of the fact that the property seized under the writ and brought into court is what the court finally exercises jurisdiction over, the court cannot subscribe to the proposition that the steps

pointed out by statutes to obtain such writ are inconsequential, and in no sense jurisdictional. 29

Considering that petitioner's application for the subject writ of preliminary attachment did not fully comply with the requisites prescribed by law, said writ is, as it is hereby declared null and void and of no effect whatsoever.

This conclusion renders a discussion of petitioner's other argument unnecessary.

WHEREFORE, the decision of the Court of Appeals dated August 29, 1980 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.


43 AGUSTIN, E.P.

4. LA GRANJA vs. SAMSON



EN BANC

G.R. No. 40054 September 14, 1933

LA GRANJA, INC., petitioner, vs. FELIX SAMSON, Judge of First Instance of Cagayan, CHUA BIAN, CHUA YU LEE and CHUA KI, respondents.

Miguel P. Pio for petitioner. The Respondent Judge in his own behalf. No appearance for other respondents.

VILLA-REAL, J.:

In this original petition for mandamus filed by the

corporate entity, La Granja, Inc., against Felix Samson, as Judge of the Court of First Instance of Cagayan, Chua

Bian, Chua Yu Lee and Chua Ki, the petitioner herein, for the reasons stated in its petition, prays that a writ of mandamus be issued against the respondent Judge

compelling him to issue a writ of attachment against the

properties of the other respondents herein, who are defendants in civil case No. 1888 of the Court of First Instance of Cagayan. The pertinent facts necessary for the solution of the questions raised in the present case are as follows:

On July 5, 1932, the petitioner herein, La Granja, Inc., filed a complaint in the Court of First Instance of Cagayan, against Chua Bian, Chua Yu Lee and Chua Ki, for the recovery of the sum of P2,418.18 with interest thereon at

the rate of 12 per cent per annum, which case was docketed as civil case No. 1888. The plaintiff at the same time, also prayed for the issuance of an order of attachment against the aforementioned defendants'

property and accompanied said complaint with an affidavit of the manager of the aforesaid petitioner, La Granja, Inc., wherein it was alleged among other essential things, that the said defendants have disposed or are disposing of their

properties in favor of the Asiatic Petroleum Co., with intent to defraud their creditors. The respondent judge, wishing to ascertain or convince himself of the truth of the alleged disposal, required the petitioner herein to present evidence

to substantiate its allegation, before granting its petition. Inasmuch as the petitioner refused to comply with the court's requirement, alleging as its ground that was not

obliged to do so, the respondent judge dismissed said petition for an order of attachment.

The only question to decide in the present case is whether or not the mere filing of an affidavit executed in due form is sufficient to compel a judge to issue an order of attachment.

Section 426 of the Code of Civil procedure provides the following:

SEC. 426. Granting order of attachment. — A

judge or justice of the peace shall grant an order

of attachment when it is made to appear to the judge or justice of the peace by the affidavit of the plaintiff, or of some other person who knows the facts, that a sufficient cause of action exists, and

that the case is one of those mentioned in section four hundred and twenty-four, and that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount

due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the order is granted.

It will be seen that the legal provision just cited orders the granting of a writ of attachment when it has been made to

appear by affidavit that the facts mentioned by law as sufficient to warrant the issuance thereof, exist. Although the law requires nothing more than the affidavit as a means of establishing the existence of such facts,

nevertheless, such affidavit must be sufficient to convince the court of their existence, the court being justified in rejecting the affidavit if it does not serve this purpose and in denying the petition for an order of attachment. The

affidavit filed by the petitioner, La Granja, Inc., must not have satisfied the respondent judge inasmuch as he desired to ascertain or convince himself of the truth of the facts alleged therein by requiring evidence to substantiate

them. The sufficiency or insufficiency of an affidavit depends upon the amount of credit given it by the judge, and its acceptance or rejection, upon his sound discretion.

Hence, the respondent judge, in requiring the presentation of evidence to establish the truth of the allegation of the

affidavit that the defendants had disposed or were disposing of their property to defraud their creditors, has done nothing more than exercise his sound discretion in determining the sufficiency of the affidavit.

In view of the foregoing considerations, we are of the

opinion and so hold that the mere filing of an affidavit executed in due form is not sufficient to compel a judge to issue an order of attachment, but it is necessary that by such affidavit it be made to appear to the court that there

exists sufficient cause for the issuance thereof, the determination of such sufficiency being discretionary on the part of the court.

Wherefore, the petition for a writ of mandamus is hereby

denied and the same is dismissed, with costs against the petitioner. So ordered.

Malcolm, Abad Santos, Hull, and Imperial, JJ., concur.


44 AGUSTIN, E.P.

Important Jurisprudential Rules

1. MABANAG vs. GALLEMORE

FIRST DIVISION

[G.R. No. L-825. July 20, 1948.]

ROMAN MABANAG, Plaintiff-Appellant, v. JOSEPH M.

GALLEMORE, Defendant-Appellee.

Santiago Catane for Appellant.

No appearance for Appellee.

SYLLABUS

COURTS; JURISDICTION; NON-RESIDENT DEFENDANT; EFFECT OF ATTACHMENT OR GARNISHMENT. — Attachment or garnishment of property of a non-resident

defendant located in the Philippines confers jurisdiction on the court in an otherwise personal action. In other words, though no jurisdiction is obtained over the debtor’s person,

the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.

D E C I S I O N

TUASON, J.:

This case, here on appeal from an order of dismissal by the Court of First Instance of Occidental Misamis, raises the question of the court’s jurisdiction. More specifically, the question is whether the action is in personam or one in

rem. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant, Joseph M. Gallemore for being a non-resident."

The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for two parcels of land whose sale was afterward annulled. The

defendant is said to be residing in Los Angeles, California, U. S. A. He has no property in the Philippines except an alleged debt owing him by a resident of the municipality of Occidental Misamis. This debt, upon petition of the

plaintiff, after the filing of the complaint and before the suit was dismissed, was attached to the extent of plaintiff’s claim for the payment of which the action was brought. But the attachment was dissolved in the same order dismissing

the case. It was Atty. Valeriano S. Kaamiño who as amicus curiae filed the motion to dismiss and to set aside the attachment.

There is no appearance before this Court to oppose the appeal. Section 2, Rule 5, of the Rules of Court provides:

"If any of the defendants does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff, or any property of the defendant

located in the Philippines, the action may be commenced

and tried in the province where the plaintiff resides or the property, or any portion thereof, is situated or found."

virtua1aw library The Philippine leading cases in which this Rule, or its counterpart in the former Code of Civil Procedure, sections 377 and 395, were cited and applied, are Banco Español-

Filipino v. Palanca, 37 Phil. 921, and Slade Perkins v. Dizon, 40 Off. Gaz., [3d Suppl. ], No. 7, p. 216. The gist of this Court’s ruling in these cases, in so far as it is relevant to the present issues, is given in I Moran’s Comments on

the Rules of Court, 2d Ed., 105:jgc:chanrobles.com.ph "As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts

cannot try any case against him because of the impossibility of acquiring jurisdiction over his person, unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in

the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i. e., the

personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose

personal status is in question resides, or where the property of the defendant or a part thereof involved in the litigation is located." virtua1aw library

Literally this Court said: "Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property

under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and

made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in

attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over

the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the

property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world." (Banco Español-Filipino v. Palanca,

supra, 927-928.) "In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be

considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceedings is to subject the property to that lien. If a lien already exists,

whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon

attachment. (Roller v. Holly, 176 U. S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken


45 AGUSTIN, E.P.

into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in

both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem. (Id., 929-930.)

"When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principle that a ’State, through its tribunals, may subject property situated within its limits

owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled. Every State owes

protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue

of the State’s jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident’s obligations to its own citizens, and the inquiry can then be carried only to the

extent necessary to control the disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate.’" (Slade Perkins v. Dizon, 40 Off. Gaz. [3d Supplement], No. 7, p.

216.) A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant

confers jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative works:chanrob1es virtual 1aw library

The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured. Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by dissolution of the

attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purely in personam . . . a proceeding against property without jurisdiction of the person of the defendant is in substance a proceeding in

rem; and where there is jurisdiction of the defendant, but the proceeding against the property continues, that proceeding is none the less necessarily in rem, although in form there is but a single proceeding. (4 Am. Jur., 556-

557.) As the remedy is administered in some states, the theory of

an attachment, whether it is by process against or to subject the property or effects of a resident or non-resident of the state, is that it partakes essentially of the nature and character of a proceeding in personam and not of a

proceeding in rem. And if the defendant appears the action proceeds in accordance with the practice governing proceedings in personam. But where the defendant fails to appear in the action, the proceeding is to be considered as

one in the nature of a proceeding in rem. And where the court acts directly on the property, the title thereof being charged by the court without the intervention of the party, the proceeding unquestionably is one in rem in the fullest

meaning of the term. "In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is

elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to acquire jurisdiction of the defendant’s person, and he has not appeared and answered or otherwise submitted himself

to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a

lawful seizure of property owned by him within the jurisdiction of the court." (2 R. C. L., 800-804.)

Tested by the foregoing decisions and authorities, the

Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant’s credit. Those

authorities and decisions, so plain and comprehensive as to make any discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor’s person, the case may proceed to judgment if there is property in

the custody of the court that can be applied to its satisfaction. It is our judgment that the court below erred in dismissing

the case and dissolving the attachment; and it is ordered that, upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this

appeal will be charged to defendant and appellee. Paras, Actg. C.J., Feria, Pablo, Perfecto, Bengzon, Briones, and Padilla, JJ., concur.


46 AGUSTIN, E.P.

2. BANCO ESPANOL-FILIPINO vs. PANCA

Judicial Due Process Requisites

Engracio Palanca was indebted to El Banco and he had his

parcel of land as security to his debt. His debt amounted to P218,294.10. His property is worth 75k more than what he owe. Due to the failure of Engracio to make his payments, El Banco executed an instrument to mortgage Engracio’s

property. Engracio however left for China and he never returned til he died. Since Engracio is a non resident El Banco has to notify Engracio about their intent to sue him by means of publication using a newspaper. The lower

court further orderdd the clerk of court to furnish Engracio a copy and that it’d be sent to Amoy, China. The court eventually granted El Banco petition to execute Engracio’s property. 7 years thereafter, Vicente surfaced on behalf of

Engracio as his administrator to petition for the annulment of the ruling. Vicente averred that there had been no due process as Engracio never received the summons.

ISSUE: Whether or not due process was not observed.

HELD: The SC ruled against Palanca. The SC ruled that the requisites for judicial due process had been met. The requisites are;

1. There must be an impartial court or tribunal clothed with judicial power to hear and decide the matter before it.

2. Jurisdiction must be lawfully acquired over the

person of the defendant or over the property subject of the proceedings.

3. The defendant must be given the opportunity to be heard.

4. Judgment must be rendered only after lawful hearing.


Manila

EN BANC

G.R. No. L-11390 March 26, 1918

EL BANCO ESPAÑOL-FILIPINO, plaintiff-appellant,

vs. VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng, defendant-appellant.

Aitken and DeSelms for appellant. Hartigan and Welch for appellee.

STREET, J.:

This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a mortgage upon

various parcels of real property situated in the city of Manila. The mortgage in question is dated June 16, 1906, and was executed by the original defendant herein, Engracio Palanca Tanquinyeng y Limquingco, as security

for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the rate of 8 per centum per annum, payable at the end of each quarter. It appears that the parties to this

mortgage at that time estimated the value of the property in question at P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this instrument by the mortgagor, he returned to China which appears to

have been his native country; and he there died, upon January 29, 1810, without again returning to the Philippine Islands.

As the defendant was a nonresident at the time of the institution of the present action, it was necessary for the

plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to section 399 of the Code of Civil Procedure. An order for publication was accordingly obtained from the court, and publication was

made in due form in a newspaper of the city of Manila. At the same time that the order of the court should deposit in the post office in a stamped envelope a copy of the summons and complaint directed to the defendant at his

last place of residence, to wit, the city of Amoy, in the Empire of China. This order was made pursuant to the following provision contained in section 399 of the Code of Civil Procedure:

In case of publication, where the residence of a

nonresident or absent defendant is known, the judge must direct a copy of the summons and complaint to be forthwith deposited by the clerk in the post-office, postage prepaid, directed to the person to be served, at his place of residence

Whether the clerk complied with this order does not affirmatively appear. There is, however, among the papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo Chan y Garcia, an employee of the

attorneys of the bank, showing that upon that date he had deposited in the Manila post-office a registered letter,


47 AGUSTIN, E.P.

addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit,

the summons, and the order of the court directing publication as aforesaid. It appears from the postmaster's receipt that Bernardo probably used an envelope obtained from the clerk's office, as the receipt purports to show that the letter emanated from the office.

The cause proceeded in usual course in the Court of First

Instance; and the defendant not having appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision was rendered in favor of the plaintiff. In this decision it was recited that

publication had been properly made in a periodical, but nothing was said about this notice having been given mail. The court, upon this occasion, found that the indebtedness of the defendant amounted to P249,355. 32, with interest

from March 31, 1908. Accordingly it was ordered that the defendant should, on or before July 6, 1908, deliver said amount to the clerk of the court to be applied to the

satisfaction of the judgment, and it was declared that in case of the failure of the defendant to satisfy the judgment within such period, the mortgage property located in the city of Manila should be exposed to public sale. The

payment contemplated in said order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale took place upon July 30, 1908, and the property was bought in by the bank for the sum of

P110,200. Upon August 7, 1908, this sale was confirmed by the court.

About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was made in this cause by Vicente Palanca, as administrator of the

estate of the original defendant, Engracio Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set aside the order of default of July 2, 1908, and the judgment rendered upon July 3, 1908,

and to vacate all the proceedings subsequent thereto. The basis of this application, as set forth in the motion itself, was that the order of default and the judgment rendered thereon were void because the court had never acquired

jurisdiction over the defendant or over the subject of the action.

At the hearing in the court below the application to vacate the judgment was denied, and from this action of the court Vicente Planca, as administrator of the estate of the original defendant, has appealed. No other feature of the

case is here under consideration than such as related to the action of the court upon said motion.

The case presents several questions of importance, which will be discussed in what appears to be the sequence of most convenient development. In the first part of this

opinion we shall, for the purpose of argument, assume that the clerk of the Court of First Instance did not obey the order of the court in the matter of mailing the papers which he was directed to send to the defendant in Amoy; and in

this connection we shall consider, first, whether the court acquired the necessary jurisdiction to enable it to proceed with the foreclosure of the mortgage and, secondly, whether those proceedings were conducted in such manner as to constitute due process of law.

The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different,

though related, senses since it may have reference (1) to the authority of the court to entertain a particular kind of action or to administer a particular kind of relief, or it may refer to the power of the court over the parties, or (2) over the property which is the subject to the litigation.

The sovereign authority which organizes a court determines

the nature and extent of its powers in general and thus fixes its competency or jurisdiction with reference to the actions which it may entertain and the relief it may grant.

Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission to its

authority, or it is acquired by the coercive power of legal process exerted over the person.

Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual

custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all

times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the

beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of

land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the

property and to adjudicate the title in favor of the petitioner against all the world.

In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is

substantially such. The expression "action in rem" is, in its narrow application, used only with reference to certain proceedings in courts of admiralty wherein the property

alone is treated as responsible for the claim or obligation upon which the proceedings are based. The action quasi rem differs from the true action in rem in the circumstance that in the former an individual is named as defendant,

and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the defendant, whether by

attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties.

In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has said:

Though nominally against person, such suits are

to vindicate liens; they proceed upon seizure; they treat property as primarily indebted; and, with the qualification above-mentioned, they are


48 AGUSTIN, E.P.

substantially property actions. In the civil law, they are styled hypothecary actions, and their sole

object is the enforcement of the lien against the res; in the common law, they would be different in

chancery did not treat the conditional conveyance as a mere hypothecation, and the creditor's right

ass an equitable lien; so, in both, the suit is real action so far as it is against property, and seeks the judicial recognition of a property debt, and an order for the sale of the res. (Waples, Proceedings

In Rem. sec. 607.)

It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action becomes as to him a personal action and is conducted as such. This, however, does not affect the

proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be

considered with reference to the principles governing actions in rem.

There is an instructive analogy between the foreclosure

proceeding and an action of attachment, concerning which the Supreme Court of the United States has used the following language:

If the defendant appears, the cause becomes mainly a suit in personam, with the added

incident, that the property attached remains liable, under the control of the court, to answer to any demand which may be established against the defendant by the final judgment of the court. But,

if there is no appearance of the defendant, and no service of process on him, the case becomes, in its essential nature, a proceeding in rem, the only

effect of which is to subject the property attached to the payment of the defendant which the court may find to be due to the plaintiff. (Cooper vs. Reynolds, 10 Wall., 308.)

In an ordinary attachment proceeding, if the defendant is

not personally served, the preliminary seizure is to, be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceedings is to

subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by

law precisely as though the property had been seized upon attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of

the proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a

jurisdiction over the property in a proceeding directed essentially in rem.

Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage foreclosure, it is evident that the court derives its authority to entertain the

action primarily from the statutes organizing the court. The jurisdiction of the court, in this most general sense, over the cause of action is obvious and requires no comment.

Jurisdiction over the person of the defendant, if acquired at all in such an action, is obtained by the voluntary

submission of the defendant or by the personal service of process upon him within the territory where the process is valid. If, however, the defendant is a nonresident and, remaining beyond the range of the personal process of the

court, refuses to come in voluntarily, the court never acquires jurisdiction over the person at all. Here the property itself is in fact the sole thing which is impleaded and is the responsible object which is the subject of the

exercise of judicial power. It follows that the jurisdiction of the court in such case is based exclusively on the power which, under the law, it possesses over the property; and any discussion relative to the jurisdiction of the court over

the person of the defendant is entirely apart from the case. The jurisdiction of the court over the property, considered as the exclusive object of such action, is evidently based upon the following conditions and considerations, namely:

(1) that the property is located within the district; (2) that the purpose of the litigation is to subject the property by sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the proceedings takes

the property into custody, if necessary, and expose it to sale for the purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in this proceeding than such as can be enforced against the property.

We may then, from what has been stated, formulated the following proposition relative to the foreclosure proceeding against the property of a nonresident mortgagor who fails to come in and submit himself personally to the

jurisdiction of the court: (I) That the jurisdiction of the court is derived from the power which it possesses over the property; (II) that jurisdiction over the person is not acquired and is nonessential; (III) that the relief granted by

the court must be limited to such as can be enforced against the property itself.

It is important that the bearing of these propositions be clearly apprehended, for there are many expressions in the American reports from which it might be inferred that the

court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication

and notice was never clearly understood even in the American courts until after the decision had been rendered by the Supreme Court of the United States in the leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L. ed., 565). In

the light of that decision, and of other decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by publication and notice is no longer open

to question; and it is now fully established that a personal judgment upon constructive or substituted service against a nonresident who does not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted

process, including service by publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the nonresident defendant has expressly or

impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585; 35 L. R. A. [N. S.], 312


49 AGUSTIN, E.P.

The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from the tribunals of

one State cannot run into other States or countries and that due process of law requires that the defendant shall be brought under the power of the court by service of process within the State, or by his voluntary appearance, in order

to authorize the court to pass upon the question of his personal liability. The doctrine established by the Supreme Court of the United States on this point, being based upon the constitutional conception of due process of law, is

binding upon the courts of the Philippine Islands. Involved in this decision is the principle that in proceedings in rem or quasi in rem against a nonresident who is not served personally within the state, and who does not appear, the

relief must be confined to the res, and the court cannot lawfully render a personal judgment against him. (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.)

Therefore in an action to foreclose a mortgage against a nonresident, upon whom service has been effected exclusively by publication, no personal judgment for the deficiency can be entered. (Latta vs. Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)

It is suggested in the brief of the appellant that the judgment entered in the court below offends against the principle just stated and that this judgment is void because the court in fact entered a personal judgment against the

absent debtor for the full amount of the indebtedness secured by the mortgage. We do not so interpret the judgment.

In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all cases of foreclosure, to

ascertain the amount due, as prescribed in section 256 of the Code of Civil Procedure, and to make an order requiring the defendant to pay the money into court. This step is a necessary precursor of the order of sale. In the present

case the judgment which was entered contains the following words:

Because it is declared that the said defendant Engracio Palanca Tanquinyeng y Limquingco, is indebted in the amount of P249,355.32, plus the interest, to the 'Banco Espanol-Filipino' . . .

therefore said appellant is ordered to deliver the above amount etc., etc.

This is not the language of a personal judgment. Instead it is clearly intended merely as a compliance with the requirement that the amount due shall be ascertained and

that the evidence of this it may be observed that according to the Code of Civil Procedure a personal judgment against the debtor for the deficiency is not to be rendered until after the property has been sold and the proceeds applied to the mortgage debt. (sec. 260).

The conclusion upon this phase of the case is that whatever may be the effect in other respects of the failure of the clerk of the Court of First Instance to mail the proper papers to the defendant in Amoy, China, such irregularity

could in no wise impair or defeat the jurisdiction of the court, for in our opinion that jurisdiction rest upon a basis much more secure than would be supplied by any form of notice that could be given to a resident of a foreign country.

Before leaving this branch of the case, we wish to observe that we are fully aware that many reported cases can be

cited in which it is assumed that the question of the sufficiency of publication or notice in a case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of

the publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by the publication and personal service of process upon the defendant; and, as has already been

suggested, prior to the decision of Pennoyer vs. Neff (supra) the difference between the legal effects of the two forms of service was obscure. It is accordingly not surprising that the modes of expression which had already been molded

into legal tradition before that case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not effected by the peculiar language in which the courts have expounded their ideas.

We now proceed to a discussion of the question whether

the supposed irregularity in the proceedings was of such gravity as to amount to a denial of that "due process of law" which was secured by the Act of Congress in force in these Islands at the time this mortgage was foreclosed. (Act of

July 1, 1902, sec. 5.) In dealing with questions involving the application of the constitutional provisions relating to due process of law the Supreme Court of the United States has refrained from attempting to define with precision the

meaning of that expression, the reason being that the idea expressed therein is applicable under so many diverse conditions as to make any attempt ay precise definition hazardous and unprofitable. As applied to a judicial

proceeding, however, it may be laid down with certainty that the requirement of due process is satisfied if the following conditions are present, namely; (1) There must be a court or tribunal clothed with judicial power to hear and

determine the matter before it; (2) jurisdiction must be lawfully acquired over the person of the defendant or over the property which is the subject of the proceeding; (3) the defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.

Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that in a foreclosure case some notification of the proceedings to the nonresident owner, prescribing the time within which

appearance must be made, is everywhere recognized as essential. To answer this necessity the statutes generally provide for publication, and usually in addition thereto, for the mailing of notice to the defendant, if his residence is

known. Though commonly called constructive, or substituted service of process in any true sense. It is merely a means provided by law whereby the owner may be admonished that his property is the subject of judicial

proceedings and that it is incumbent upon him to take such steps as he sees fit to protect it. In speaking of notice of this character a distinguish master of constitutional law has used the following language:

. . . if the owners are named in the proceedings,

and personal notice is provided for, it is rather from tenderness to their interests, and in order to make sure that the opportunity for a hearing shall not be lost to them, than from any necessity that

the case shall assume that form. (Cooley on Taxation [2d. ed.], 527, quoted in Leigh vs. Green, 193 U. S., 79, 80.)


50 AGUSTIN, E.P.

It will be observed that this mode of notification does not involve any absolute assurance that the absent owner shall

thereby receive actual notice. The periodical containing the publication may never in fact come to his hands, and the chances that he should discover the notice may often be very slight. Even where notice is sent by mail the

probability of his receiving it, though much increased, is dependent upon the correctness of the address to which it is forwarded as well as upon the regularity and security of the mail service. It will be noted, furthermore, that the

provision of our law relative to the mailing of notice does not absolutely require the mailing of notice unconditionally and in every event, but only in the case where the defendant's residence is known. In the light of all these

facts, it is evident that actual notice to the defendant in cases of this kind is not, under the law, to be considered absolutely necessary.

The idea upon which the law proceeds in recognizing the efficacy of a means of notification which may fall short of

actual notice is apparently this: Property is always assumed to be in the possession of its owner, in person or by agent; and he may be safely held, under certain conditions, to be affected with knowledge that proceedings have been instituted for its condemnation and sale.

It is the duty of the owner of real estate, who is a

nonresident, to take measures that in some way he shall be represented when his property is called into requisition, and if he fails to do this, and fails to get notice by the ordinary publications

which have usually been required in such cases, it is his misfortune, and he must abide the consequences. (6 R. C. L., sec. 445 [p. 450]).

It has been well said by an American court:

If property of a nonresident cannot be reached by legal process upon the constructive notice, then

our statutes were passed in vain, and are mere empty legislative declarations, without either force, or meaning; for if the person is not within the jurisdiction of the court, no personal

judgment can be rendered, and if the judgment cannot operate upon the property, then no effective judgment at all can be rendered, so that the result would be that the courts would be

powerless to assist a citizen against a nonresident. Such a result would be a deplorable one. (Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.)

It is, of course universally recognized that the statutory

provisions relative to publication or other form of notice against a nonresident owner should be complied with; and in respect to the publication of notice in the newspaper it may be stated that strict compliance with the requirements

of the law has been held to be essential. In Guaranty Trust etc. Co. vs. Green Cove etc., Railroad Co. (139 U. S., 137, 138), it was held that where newspaper publication was made for 19 weeks, when the statute required 20, the publication was insufficient.

With respect to the provisions of our own statute, relative to the sending of notice by mail, the requirement is that the judge shall direct that the notice be deposited in the mail

by the clerk of the court, and it is not in terms declared that the notice must be deposited in the mail. We consider

this to be of some significance; and it seems to us that, having due regard to the principles upon which the giving of such notice is required, the absent owner of the mortgaged property must, so far as the due process of law

is concerned, take the risk incident to the possible failure of the clerk to perform his duty, somewhat as he takes the risk that the mail clerk or the mail carrier might possibly lose or destroy the parcel or envelope containing the notice

before it should reach its destination and be delivered to him. This idea seems to be strengthened by the consideration that placing upon the clerk the duty of sending notice by mail, the performance of that act is put

effectually beyond the control of the plaintiff in the litigation. At any rate it is obvious that so much of section 399 of the Code of Civil Procedure as relates to the sending of notice by mail was complied with when the court made

the order. The question as to what may be the consequences of the failure of the record to show the proof of compliance with that requirement will be discussed by us further on.

The observations which have just been made lead to the

conclusion that the failure of the clerk to mail the notice, if in fact he did so fail in his duty, is not such an irregularity, as amounts to a denial of due process of law; and hence in our opinion that irregularity, if proved, would not avoid the

judgment in this case. Notice was given by publication in a newspaper and this is the only form of notice which the law unconditionally requires. This in our opinion is all that was absolutely necessary to sustain the proceedings.

It will be observed that in considering the effect of this

irregularity, it makes a difference whether it be viewed as a question involving jurisdiction or as a question involving due process of law. In the matter of jurisdiction there can be no distinction between the much and the little. The

court either has jurisdiction or it has not; and if the requirement as to the mailing of notice should be considered as a step antecedent to the acquiring of jurisdiction, there could be no escape from the conclusion

that the failure to take that step was fatal to the validity of the judgment. In the application of the idea of due process of law, on the other hand, it is clearly unnecessary to be so rigorous. The jurisdiction being once established, all that

due process of law thereafter requires is an opportunity for the defendant to be heard; and as publication was duly made in the newspaper, it would seem highly unreasonable to hold that failure to mail the notice was fatal. We think

that in applying the requirement of due process of law, it is permissible to reflect upon the purposes of the provision which is supposed to have been violated and the principle underlying the exercise of judicial power in these

proceedings. Judge in the light of these conceptions, we think that the provision of Act of Congress declaring that no person shall be deprived of his property without due process of law has not been infringed.

In the progress of this discussion we have stated the two

conclusions; (1) that the failure of the clerk to send the notice to the defendant by mail did not destroy the jurisdiction of the court and (2) that such irregularity did not infringe the requirement of due process of law. As a

consequence of these conclusions the irregularity in question is in some measure shorn of its potency. It is still necessary, however, to consider its effect considered as a


51 AGUSTIN, E.P.

simple irregularity of procedure; and it would be idle to pretend that even in this aspect the irregularity is not grave

enough. From this point of view, however, it is obvious that any motion to vacate the judgment on the ground of the irregularity in question must fail unless it shows that the defendant was prejudiced by that irregularity. The least,

therefore, that can be required of the proponent of such a motion is to show that he had a good defense against the action to foreclose the mortgage. Nothing of the kind is, however, shown either in the motion or in the affidavit which accompanies the motion.

An application to open or vacate a judgment because of an

irregularity or defect in the proceedings is usually required to be supported by an affidavit showing the grounds on which the relief is sought, and in addition to this showing also a meritorious defense to the action. It is held that a

general statement that a party has a good defense to the action is insufficient. The necessary facts must be averred. Of course if a judgment is void upon its face a showing of

the existence of a meritorious defense is not necessary. (10 R. C. L., 718.)

The lapse of time is also a circumstance deeply affecting this aspect of the case. In this connection we quote the following passage from the encyclopedic treatise now in course of publication:

Where, however, the judgment is not void on its

face, and may therefore be enforced if permitted to stand on the record, courts in many instances refuse to exercise their quasi equitable powers to vacate a judgement after the lapse of the term ay

which it was entered, except in clear cases, to promote the ends of justice, and where it appears that the party making the application is himself without fault and has acted in good faith and with

ordinary diligence. Laches on the part of the applicant, if unexplained, is deemed sufficient ground for refusing the relief to which he might otherwise be entitled. Something is due to the

finality of judgments, and acquiescence or unnecessary delay is fatal to motions of this character, since courts are always reluctant to interfere with judgments, and especially where

they have been executed or satisfied. The moving party has the burden of showing diligence, and unless it is shown affirmatively the court will not ordinarily exercise its discretion in his favor. (15 R. C. L., 694, 695.)

It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died January 29, 1910. The mortgage under which the property was sold was executed far back in 1906; and the proceedings in the

foreclosure were closed by the order of court confirming the sale dated August 7, 1908. It passes the rational bounds of human credulity to suppose that a man who had placed a mortgage upon property worth nearly P300,000 and had

then gone away from the scene of his life activities to end his days in the city of Amoy, China, should have long remained in ignorance of the fact that the mortgage had been foreclosed and the property sold, even supposing that

he had no knowledge of those proceedings while they were being conducted. It is more in keeping with the ordinary course of things that he should have acquired information as to what was transpiring in his affairs at Manila; and

upon the basis of this rational assumption we are authorized, in the absence of proof to the contrary, to

presume that he did have, or soon acquired, information as to the sale of his property.

The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things have happened according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive of a situation more appropriate than

this for applying the presumption thus defined by the lawgiver. In support of this presumption, as applied to the present case, it is permissible to consider the probability that the defendant may have received actual notice of these

proceedings from the unofficial notice addressed to him in Manila which was mailed by an employee of the bank's attorneys. Adopting almost the exact words used by the Supreme Court of the United States in Grannis vs. Ordeans

(234 U. S., 385; 58 L. ed., 1363), we may say that in view of the well-known skill of postal officials and employees in making proper delivery of letters defectively addressed, we

think the presumption is clear and strong that this notice reached the defendant, there being no proof that it was ever returned by the postal officials as undelivered. And if it was delivered in Manila, instead of being forwarded to

Amoy, China, there is a probability that the recipient was a person sufficiently interested in his affairs to send it or communicate its contents to him.

Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon the mailing of the notice by the clerk, the reflections in which we are now

indulging would be idle and frivolous; but the considerations mentioned are introduced in order to show the propriety of applying to this situation the legal

presumption to which allusion has been made. Upon that presumption, supported by the circumstances of this case, ,we do not hesitate to found the conclusion that the defendant voluntarily abandoned all thought of saving his

property from the obligation which he had placed upon it; that knowledge of the proceedings should be imputed to him; and that he acquiesced in the consequences of those proceedings after they had been accomplished. Under these

circumstances it is clear that the merit of this motion is, as we have already stated, adversely affected in a high degree by the delay in asking for relief. Nor is it an adequate reply to say that the proponent of this motion is an

administrator who only qualified a few months before this motion was made. No disability on the part of the defendant himself existed from the time when the foreclosure was effected until his death; and we believe that

the delay in the appointment of the administrator and institution of this action is a circumstance which is imputable to the parties in interest whoever they may have been. Of course if the minor heirs had instituted an action

in their own right to recover the property, it would have been different.

It is, however, argued that the defendant has suffered prejudice by reason of the fact that the bank became the purchaser of the property at the foreclosure sale for a price

greatly below that which had been agreed upon in the mortgage as the upset price of the property. In this connection, it appears that in article nine of the mortgage which was the subject of this foreclosure, as amended by

the notarial document of July 19, 1906, the parties to this mortgage made a stipulation to the effect that the value therein placed upon the mortgaged properties should serve


52 AGUSTIN, E.P.

as a basis of sale in case the debt should remain unpaid and the bank should proceed to a foreclosure. The upset

price stated in that stipulation for all the parcels involved in this foreclosure was P286,000. It is said in behalf of the appellant that when the bank bought in the property for the sum of P110,200 it violated that stipulation.

It has been held by this court that a clause in a mortgage providing for a tipo, or upset price, does not prevent a

foreclosure, nor affect the validity of a sale made in the foreclosure proceedings. (Yangco vs. Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Español Filipino vs. Donaldson, Sim and Co., 5 Phil. Rep., 418.) In both the

cases here cited the property was purchased at the foreclosure sale, not by the creditor or mortgagee, but by a third party. Whether the same rule should be applied in a case where the mortgagee himself becomes the purchaser

has apparently not been decided by this court in any reported decision, and this question need not here be considered, since it is evident that if any liability was

incurred by the bank by purchasing for a price below that fixed in the stipulation, its liability was a personal liability derived from the contract of mortgage; and as we have already demonstrated such a liability could not be the

subject of adjudication in an action where the court had no jurisdiction over the person of the defendant. If the plaintiff bank became liable to account for the difference between the upset price and the price at which in bought in the

property, that liability remains unaffected by the disposition which the court made of this case; and the fact that the bank may have violated such an obligation can in no wise affect the validity of the judgment entered in the Court of First Instance.

In connection with the entire failure of the motion to show either a meritorious defense to the action or that the defendant had suffered any prejudice of which the law can take notice, we may be permitted to add that in our opinion

a motion of this kind, which proposes to unsettle judicial proceedings long ago closed, can not be considered with favor, unless based upon grounds which appeal to the conscience of the court. Public policy requires that judicial

proceedings be upheld. The maximum here applicable is non quieta movere. As was once said by Judge Brewer, afterwards a member of the Supreme Court of the United States:

Public policy requires that judicial proceedings be upheld, and that titles obtained in those

proceedings be safe from the ruthless hand of collateral attack. If technical defects are adjudged potent to destroy such titles, a judicial sale will

never realize that value of the property, for no prudent man will risk his money in bidding for and buying that title which he has reason to fear may years thereafter be swept away through some

occult and not readily discoverable defect. (Martin vs. Pond, 30 Fed., 15.)

In the case where that language was used an attempt was made to annul certain foreclosure proceedings on the ground that the affidavit upon which the order of publication was based erroneously stated that the State of

Kansas, when he was in fact residing in another State. It was held that this mistake did not affect the validity of the proceedings.

In the preceding discussion we have assumed that the clerk failed to send the notice by post as required by the

order of the court. We now proceed to consider whether this is a proper assumption; and the proposition which we propose to establish is that there is a legal presumption that the clerk performed his duty as the ministerial officer

of the court, which presumption is not overcome by any other facts appearing in the cause.

In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a presumption "that official duty has been regularly performed;" and in subsection 18 it is declared that there is a presumption

"that the ordinary course of business has been followed." These presumptions are of course in no sense novelties, as they express ideas which have always been recognized. Omnia presumuntur rite et solemniter esse acta donec

probetur in contrarium. There is therefore clearly a legal presumption that the clerk performed his duty about mailing this notice; and we think that strong

considerations of policy require that this presumption should be allowed to operate with full force under the circumstances of this case. A party to an action has no control over the clerk of the court; and has no right to

meddle unduly with the business of the clerk in the performance of his duties. Having no control over this officer, the litigant must depend upon the court to see that the duties imposed on the clerk are performed.

Other considerations no less potent contribute to strengthen the conclusion just stated. There is no principle

of law better settled than that after jurisdiction has once been required, every act of a court of general jurisdiction shall be presumed to have been rightly done. This rule is

applied to every judgment or decree rendered in the various stages of the proceedings from their initiation to their completion (Voorhees vs. United States Bank, 10 Pet., 314; 35 U. S., 449); and if the record is silent with respect to

any fact which must have been established before the court could have rightly acted, it will be presumed that such fact was properly brought to its knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed., 283.)

In making the order of sale [of the real state of a decedent] the court are presumed to have

adjudged every question necessary to justify such order or decree, viz: The death of the owners; that the petitioners were his administrators; that the personal estate was insufficient to pay the debts

of the deceased; that the private acts of Assembly, as to the manner of sale, were within the constitutional power of the Legislature, and that

all the provisions of the law as to notices which are directory to the administrators have been complied with. . . . The court is not bound to enter upon the record the evidence on which any fact

was decided. (Florentine vs. Barton, 2 Wall., 210; 17 L. ed., 785.) Especially does all this apply after long lapse of time.

Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive discussion in a case analogous to that which is now before us. It there appeared

that in order to foreclose a mortgage in the State of Kentucky against a nonresident debtor it was necessary that publication should be made in a newspaper for a specified period of time, also be posted at the front door of


53 AGUSTIN, E.P.

the court house and be published on some Sunday, immediately after divine service, in such church as the

court should direct. In a certain action judgment had been entered against a nonresident, after publication in pursuance of these provisions. Many years later the validity of the proceedings was called in question in another action.

It was proved from the files of an ancient periodical that publication had been made in its columns as required by law; but no proof was offered to show the publication of the order at the church, or the posting of it at the front door of

the court-house. It was insisted by one of the parties that the judgment of the court was void for lack of jurisdiction. But the Supreme Court of the United States said:

The court which made the decree . . . was a court of general jurisdiction. Therefore every presumption not inconsistent with the record is to

be indulged in favor of its jurisdiction. . . . It is to be presumed that the court before making its decree took care of to see that its order for

constructive service, on which its right to make the decree depended, had been obeyed.

It is true that in this case the former judgment was the subject of collateral , or indirect attack, while in the case at bar the motion to vacate the judgment is direct proceeding for relief against it. The same general presumption,

however, is indulged in favor of the judgment of a court of general jurisdiction, whether it is the subject of direct or indirect attack the only difference being that in case of indirect attack the judgment is conclusively presumed to

be valid unless the record affirmatively shows it to be void, while in case of direct attack the presumption in favor of its validity may in certain cases be overcome by proof extrinsic to the record.

The presumption that the clerk performed his duty and

that the court made its decree with the knowledge that the requirements of law had been complied with appear to be amply sufficient to support the conclusion that the notice was sent by the clerk as required by the order. It is true

that there ought to be found among the papers on file in this cause an affidavit, as required by section 400 of the Code of Civil Procedure, showing that the order was in fact so sent by the clerk; and no such affidavit appears. The

record is therefore silent where it ought to speak. But the very purpose of the law in recognizing these presumptions is to enable the court to sustain a prior judgment in the face of such an omission. If we were to hold that the

judgment in this case is void because the proper affidavit is not present in the file of papers which we call the record, the result would be that in the future every title in the

Islands resting upon a judgment like that now before us would depend, for its continued security, upon the presence of such affidavit among the papers and would be liable at any moment to be destroyed by the disappearance

of that piece of paper. We think that no court, with a proper regard for the security of judicial proceedings and for the interests which have by law been confided to the courts, would incline to favor such a conclusion. In our

opinion the proper course in a case of this kind is to hold that the legal presumption that the clerk performed his duty still maintains notwithstanding the absence from the record of the proper proof of that fact.

In this connection it is important to bear in mind that under the practice prevailing in the Philippine Islands the

word "record" is used in a loose and broad sense, as indicating the collective mass of papers which contain the

history of all the successive steps taken in a case and which are finally deposited in the archives of the clerk's office as a memorial of the litigation. It is a matter of general information that no judgment roll, or book of final

record, is commonly kept in our courts for the purpose of recording the pleadings and principal proceedings in actions which have been terminated; and in particular, no such record is kept in the Court of First Instance of the city

of Manila. There is, indeed, a section of the Code of Civil Procedure which directs that such a book of final record shall be kept; but this provision has, as a matter of common knowledge, been generally ignored. The result is

that in the present case we do not have the assistance of the recitals of such a record to enable us to pass upon the validity of this judgment and as already stated the question must be determined by examining the papers contained in the entire file.

But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing that upon April 4, 1908, he sent a notification through the mail addressed to the defendant at Manila, Philippine Islands,

should be accepted as affirmative proof that the clerk of the court failed in his duty and that, instead of himself sending the requisite notice through the mail, he relied upon Bernardo to send it for him. We do not think that this is by

any means a necessary inference. Of course if it had affirmatively appeared that the clerk himself had attempted to comply with this order and had directed the notification to Manila when he should have directed it to Amoy, this

would be conclusive that he had failed to comply with the exact terms of the order; but such is not this case. That the clerk of the attorneys for the plaintiff erroneously sent a notification to the defendant at a mistaken address affords

in our opinion very slight basis for supposing that the clerk may not have sent notice to the right address.

There is undoubtedly good authority to support the position that when the record states the evidence or makes an averment with reference to a jurisdictional fact, it will

not be presumed that there was other or different evidence respecting the fact, or that the fact was otherwise than stated. If, to give an illustration, it appears from the return of the officer that the summons was served at a particular

place or in a particular manner, it will not be presumed that service was also made at another place or in a different manner; or if it appears that service was made upon a person other than the defendant, it will not be

presumed, in the silence of the record, that it was made upon the defendant also (Galpin vs. Page, 18 Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that these propositions are entirely correct as

applied to the case where the person making the return is the officer who is by law required to make the return, we do not think that it is properly applicable where, as in the present case, the affidavit was made by a person who, so

far as the provisions of law are concerned, was a mere intermeddler.

The last question of importance which we propose to consider is whether a motion in the cause is admissible as a proceeding to obtain relief in such a case as this. If the

motion prevails the judgment of July 2, 1908, and all subsequent proceedings will be set aside, and the litigation will be renewed, proceeding again from the date mentioned


54 AGUSTIN, E.P.

as if the progress of the action had not been interrupted. The proponent of the motion does not ask the favor of being

permitted to interpose a defense. His purpose is merely to annul the effective judgment of the court, to the end that the litigation may again resume its regular course.

There is only one section of the Code of Civil Procedure which expressly recognizes the authority of a Court of First Instance to set aside a final judgment and permit a renewal of the litigation in the same cause. This is as follows:

SEC. 113. Upon such terms as may be just the court may relieve a party or legal representative from the judgment, order, or other proceeding taken against him through his mistake,

inadvertence, surprise, or excusable neglect; Provided, That application thereof be made within a reasonable time, but in no case exceeding six months after such judgment, order, or proceeding was taken.

An additional remedy by petition to the Supreme Court is supplied by section 513 of the same Code. The first paragraph of this section, in so far as pertinent to this discussion, provides as follows:

When a judgment is rendered by a Court of First

Instance upon default, and a party thereto is unjustly deprived of a hearing by fraud, accident, mistake or excusable negligence, and the Court of First Instance which rendered the judgment has

finally adjourned so that no adequate remedy exists in that court, the party so deprived of a hearing may present his petition to the Supreme Court within sixty days after he first learns of the

rendition of such judgment, and not thereafter, setting forth the facts and praying to have judgment set aside. . . .

It is evident that the proceeding contemplated in this section is intended to supplement the remedy provided by

section 113; and we believe the conclusion irresistible that there is no other means recognized by law whereby a defeated party can, by a proceeding in the same cause, procure a judgment to be set aside, with a view to the renewal of the litigation.

The Code of Civil Procedure purports to be a complete

system of practice in civil causes, and it contains provisions describing with much fullness the various steps to be taken in the conduct of such proceedings. To this end it defines with precision the method of beginning,

conducting, and concluding the civil action of whatever species; and by section 795 of the same Code it is declared that the procedure in all civil action shall be in accordance

with the provisions of this Code. We are therefore of the opinion that the remedies prescribed in sections 113 and 513 are exclusive of all others, so far as relates to the opening and continuation of a litigation which has been once concluded.

The motion in the present case does not conform to the

requirements of either of these provisions; and the consequence is that in our opinion the action of the Court of First Instance in dismissing the motion was proper.

If the question were admittedly one relating merely to an irregularity of procedure, we cannot suppose that this

proceeding would have taken the form of a motion in the cause, since it is clear that, if based on such an error, the came to late for relief in the Court of First Instance. But as we have already seen, the motion attacks the judgment of

the court as void for want of jurisdiction over the defendant. The idea underlying the motion therefore is that inasmuch as the judgment is a nullity it can be attacked in any way and at any time. If the judgment were in fact void

upon its face, that is, if it were shown to be a nullity by virtue of its own recitals, there might possibly be something in this. Where a judgment or judicial order is void in this sense it may be said to be a lawless thing, which can be

treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.

But the judgment in question is not void in any such sense. It is entirely regular in form, and the alleged defect is one which is not apparent upon its face. It follows that

even if the judgment could be shown to be void for want of jurisdiction, or for lack of due process of law, the party aggrieved thereby is bound to resort to some appropriate proceeding to obtain relief. Under accepted principles of

law and practice, long recognized in American courts, a proper remedy in such case, after the time for appeal or review has passed, is for the aggrieved party to bring an action to enjoin the judgment, if not already carried into

effect; or if the property has already been disposed of he may institute suit to recover it. In every situation of this character an appropriate remedy is at hand; and if property has been taken without due process, the law concedes due

process to recover it. We accordingly old that, assuming the judgment to have been void as alleged by the proponent of this motion, the proper remedy was by an original proceeding and not by motion in the cause. As we have

already seen our Code of Civil Procedure defines the conditions under which relief against a judgment may be productive of conclusion for this court to recognize such a proceeding as proper under conditions different from those

defined by law. Upon the point of procedure here involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held that a motion will not lie to vacate a judgment after the lapse of the time limited by statute if the

judgment is not void on its face; and in all cases, after the lapse of the time limited by statute if the judgment is not void on its face; and all cases, after the lapse of such time, when an attempt is made to vacate the judgment by a

proceeding in court for that purpose an action regularly brought is preferable, and should be required. It will be noted taken verbatim from the California Code (sec. 473).

The conclusions stated in this opinion indicate that the judgment appealed from is without error, and the same is accordingly affirmed, with costs. So ordered.

Arellano, C.J., Torres, Carson, and Avanceña, JJ., concur.

Separate Opinions

MALCOLM, J., dissenting:


55 AGUSTIN, E.P.

I dissent. It will not make me long to state my reasons. An immutable attribute — the fundamental idea — of due

process of law is that no man shall be condemned in his person or property without notice and an opportunity of being heard in his defense. Protection of the parties demands a strict and an exact compliance with this

constitutional provision in our organic law and of the statutory provisions in amplification. Literally hundreds of precedents could be cited in support of these axiomatic principles. Where as in the instant case the defendant

received no notice and had no opportunity to be heard, certainly we cannot say that there is due process of law. Resultantly, "A judgment which is void upon its face, and which requires only an inspection of the judgment roll to

demonstrate its want of vitality is a dead limb upon the judicial tree, which should be lopped off, if the power so to do exists. It can bear no fruit to the plaintiff, but is a constant menace to the defendant." (Mills vs. Dickons, 6 Rich [S. C.], 487.)


56 AGUSTIN, E.P.

3. QUASHA vs. JUAN



SECOND DIVISION

G.R. No. L-49140 November 19, 1982 QUASHA ASPERILLA ANCHETA VALMONTE PEÑA & MARCOS, petitioner,

vs. THE HONORABLE CELESTINO P. JUAN, FILIPINAS CARRIERS, INC., represented by its President, FEDERICO TABORA, JR., APOLLO KOKIN TRADING CO., LTD., et al., respondents.

Quasha, Asperilla, Ancheta, Valmonte, Peña and Marcos Law Offices for petitioner.

Antonio V. Raquiza & Assoc. for respondent Eugene A. Tan.

DE CASTRO, J.:

In this petition for certiorari and prohibition with

preliminary injunction, petitioner seeks the annulment of the order of respondent Judge of the Court of First Instance of Manila in Civil Case No. 105048 dated August

25, 1978 which approved the sale of the subject cargo and prays instead that the writ of preliminary attachment over the same property issued by Hon. Gregorio Pineda of the Court of First Instance of Rizal in Civil Case No. 28710 be allowed to remain in force.

It appears that on October 22, 1976, respondent Filipinas

Carriers, hereinafter referred to as Filcar, filed a complaint for sum of money, enforcement of lien and damages with the Court of First Instance of Manila, and the same was assigned to Branch X, which was presided by respondent

Judge, against AB Charles Thorburn & Co., through its receiver Sjoegren and Winstrand; Estero Shipping and Trading; Bank of Melli of Iran, Jeddah Branch; Perstorp AB; Skogshgarnas Industries; Ekman and Company AB;

and Abdullah Baroom. In the complaint which was docketed as Civil Case No. 105048, Filcar alleged that it is the disponent owner of a vessel, MV San Vicente, which

was duly registered with the Republic of the Philippines; that on April 2, 1976, defendant Carles Thorburn & Co. chartered said vessel by time charter for two or three months for a voyage from Sweden to Jeddah, Saudi Arabia

at three thousand two hundred US dollars (US $3,200.00) a day, that Abdullah Baroom was impleaded as defendant for being the agent of Charles Thorburn & Co. at Jeddah and Sjoegren and Winstrand of Sweden for being the

receiver of Charles Thorburn & Co.; that the vessel left Sweden with construction materials as cargoes belonging to the following shippers and consignees, namely, defendants Bank of Melli of Iran, Jeddah Branch; the

National Commercial Bank, Jeddah Branch; Perstorp AB of Perstorp, Sweden; Skogshgarnas Industries of Sweden; Ekman and Company of Sweden; that after the second month, Charles Thorburn failed to pay the daily hire, that

the vessel has been in Jeddah since May 19, 1976 and is now in international waters; that in view of Thorburn's

failure to pay the charter hire, it had struck a lien through the vessel's captain; that the charter party has expired but the vessel has not yet discharged the cargoes due to inadequate port facilities and failure of the shippers,

consignees and charterer to pay the charter hire; that Filcar demanded from Charles Thorburn the payment of the charter hire but Thorburn failed to pay and instead declared bankruptcy and is now under receivership in

Sweden; that on demand, Baroom, the agent of Thorburn in Jeddah, and the consignees and shippers refused to pay; that consequently, Filcar was forced to exercise its lien on the cargoes consistent with Clause 18 of the Charter Party,

notice of which was sent to defendants. The plaintiff thus prayed, among others, that the defendants pay the daily charter hire from the time they were in arrears until payment is made and that the Court allow the sale of the cargoes to satisfy its claims.

On November 25, 1976, Sierra Madre Wood Industries, Inc., hereinafter called Sierra Madre, the alleged owner, end-user and operator of MV San Vicente filed a motion to intervene in the Court of First Instance of Manila (Civil

Case No. 105048) for the purpose of enforcing its lien over the cargo, claiming that it had chartered the vessel to Filcar for six months renewable every six months at agreed charter hire fee (US $825,000.00 per year). Respondent

Judge allowed the intervention of Sierra Madre as plaintiff-intervenor.

On December 2, 1976, Filcar filed an extra-parte motion to sell the goods subject of lien, alleging among others, that the MV San Vicente had arrived in the Philippines, and was

due for dry-docking and needed urgent repairs; and that the goods subject of its lien were in danger of deteriorating and losing their market value and if the goods were not sold immediately, the plaintiff would have to pay a

staggering amount for warehousing so that the value of the goods would not even be enough to pay for warehousing expenses.

Thereafter, respondent Judge conducted hearings in Civil Case No. 105048 and an ocular inspection of the vessel. On April 18, 1977, respondent Judge, convinced that the

vessel as well as the cargoes were in a very bad condition, issued an order, the dispositive portion of which reads:

WHEREFORE, in view of all the above and due to the condition of the vessel and/or its cargo, while we are not

convinced as asserted that Section 17, Rule 14 and 15 of the Rules of Court, do not apply, for we still believe that one of the four modes of service must at least

be observed, yet on the ground of extreme necessity, this Court believes that somehow, somebody must act boldly in order to protect the interest of

parties and of the owner of the vessel which is believed to be the government of the Philippines. On the ground of extreme necessity and partly by virtue of

the provisions of Rule 57, Section 1 1, the cargo on board the MV San Vicente, is ordered sold privately, so that the vessel may immediately be sent for


57 AGUSTIN, E.P.

drydock, subject to the following conditions:

l. That the negotiations for the sale of the cargo shall be the sole responsibility of

plaintiff Filcar subject to the supervision by this Court and the intervention of plaintiff-intervenor, the Sierra Madre Wood Industries, Inc.;

2. That the Court and the plaintiff-

intervenor be fully informed regarding the progress of the negotiations and that the sale shall not be finalized without first securing the approval of this Court is to the selling price;

3. The proceeds of the sale shall be deposited with a banking institution as approved by this Court and shall be disposed of only upon order of this

Court, subject to the first lien of plaintiff-intervenor; and

4. Defendant AB Charles Thorburn & Co., etc. shall be notified of the Order of this Court together with a copy of the

amended complaint and the complaint in intervention, thru the Department of Foreign Affairs, and the Philippine Embassy at Jeddah, Saudi Arabia. Proof

of Service shall be submitted to this Court. After such time afforded the defendant, in order to enable them to answer or appear in this Court or make

any claim whatsoever, and still they fail to make any manifestation, hearing of this case shall resume regarding the final disposition of the proceeds to all concerned.

On June 27, 1977, respondent Judge approved tentatively the sale of the cargo to Bengzon's Industries. This Order was followed by another dated July 19, 1977, approving the Deed of Absolute Sale of the cargo. 1

On August 15, 1977, petitioner law firm filed with respondent Judge a special appearance for defendant

Ahmed Baroom contesting the Court's jurisdiction over Baroom's person and property and a Motion to Dismiss on the ground that the Court had not acquired jurisdiction over Baroom's 'person or property aboard the MV San Vicente. 2

On August 29, 1977, respondent Judge issued an Order directing petitioner law firm to show on or before September 20, 1977 a written authorization signed by its client, Baroom, "since the latter is a foreigner". 3

On November 15, 1977, petitioner, as Baroom's counsel,

filed an answer with compulsory counterclaim, claiming that defendant Baroom is not an agent of Charles Thorburn since the cargoes belong to him, and denying the validity of plaintiff's lien over the cargo. Petitioner reiterates the

defense that plaintiff's action being in personam involving

defendant who is not a resident within the territorial jurisdiction of the Court, and there is no showing in the

records that the provisions of Section 17, Rule 14 in relation to Section 1, Rule 57, of the Rules of Court have been complied with to convert the action in rem, the Court

had no jurisdiction over the case. Baroom, through

petitioner, prayed that plaintiff be directed to deliver the cargoes to Jeddah, pay damages corresponding to the full value of the goods and to the lost income and profits he could have realized had plaintiff delivered the cargo to him.

Baroom, likewise, filed a cross-claim against Sierra Madre, plaintiff-intervenor.

On January 23, 1978, petitioner filed with respondent Judge a manifestation and motion that it be "allowed to withdraw from this case and charging lien be recorded

against the properties of Mr. Baroom now aboard MV San Vicente for unpaid professional fees and reimbursement expenses. " 4

Thereafter, on February 17, 1978, petitioner filed before the Court of First Instance of Rizal a complaint with a prayer

for a writ of preliminary attachment for the recovery of professional fees and reimbursement of expenses against Baroom whom it alleged to have represented in Civil Case No. 105048, CFI, Manila. The case was docketed as Civil

Case No. 28710 and the same was assigned to Branch XXI presided over by Judge Gregorio C. Pineda.

By virtue of the order dated February 28, 1978 issued by Judge Pineda in the new case, petitioner obtained a writ of preliminary attachment against Baroom's alleged cargoes which is the subject matter in Civil Case No. 105048.

Meanwhile, in Civil Case No. 105048, on August 2, 1978,

respondent Judge gave Attys. Quasha and Valmonte ten (10) days from receipt of order within which to explain why they should not be held in contempt of court for filing a case entitled "Quasha Asperilla Ancheta Valmonte Peña

and Marcos vs. AlSayed Abdullah Mohammed Baroom" docketed as Civil Case No. 28710 in the Court of First Instance of Rizal, Branch XXI, where they obtained a writ of preliminary attachment over the cargoes, which they

knew to be subject matter of Civil Case No. 105048 pending before his sala." 5 A compliance with said order was filed on August 24, 1978, with petitioner alleging that their cause of action against Baroom was for payment of

professional fees and reimbursement of expenses while Case No. 105048 before Judge Juan was for alleged unpaid charter hire fees.

On August 25, 1978, respondent Judge issued an order approving the sale of the cargo in question to Apollo Kokin

Trading Co., Ltd. In accordance with the earlier order of April 28, 1977, respondent Judge directed the deposit of the sale proceeds with a banking institution to be approved by the Court and its disposition only on orders of the Court. 6

On September 8, 1978, Filcar filed with the Court of First Instance of Rizal an urgent omnibus motion to be allowed to appear and to dismiss the case and to lift the writ of preliminary attachment and set aside the order to auction

the cargo, attaching thereto the order of respondent Judge dated August 25, 1978, approving the sale in favor of Apollo Kokin Trading Co., Ltd. of the subject cargo, the


58 AGUSTIN, E.P.

proceeds of which after deducting all expenses shall be deposited with the court.

Thus, petitioner, on October 23, 1978, filed before this Court the instant petition. Petitioner assails the order of

August 25, 1978, not the earlier order of April 28, 1977 approving the sale in favor of Apollo Kokin Trading Co., Ltd. of the questioned cargo for having been issued in grave abuse of discretion considering that subject cargo was

allegedly earlier attached by the Court of First Instance of Rizal.

Without giving due course to the petition and pending the filing of comments by respondents, this Court issued on October 24, 1978 a temporary restraining order,

enjoining respondents to immediately

cease and desist from taking, unloading, transferring, conveying, transporting or disposing of the cargoes or any part thereof aboard the MC San Vicente and

Dong Myung, * or from taking the cargoes away, subject matter of Civil Case No. 105048 entitled 'Filipinas Carriers, Inc. vs. AB Charles Thorburn &

Co., et al.' of the Court of First Instance of Manila, Branch X." 7

On October 30, 1978, petitioner filed a manifestation and motion informing this Court that notwithstanding the restraining order, the MV Don Myung, with the cargo

aboard left surreptitiously at midnight of October 24, 1978 without the assistance of any pilot in violation of Harbor rules. The goods were then allegedly sold for US $220,200.43 under irrevocable letters of credit issued by

the Fuji Bank of Osaka, Japan. Petitioner, thus, prayed that several persons, namely, Mr. Federico Tabora, Jr., President of Filipinas Carriers, Inc., Mr. Gregorio Gatchalian, allegedly operations manager of the American

Steamship Agencies, Inc. being the agent representing the MV Dong Myung, Lt. JG Godofredo Orcullo of the Operations Center and Seaman 1st Class Avelino Lontoc of the Philippine Coast Guard be cited for contempt.

In the meanwhile, a compromise agreement dated October

16, 1978 and filed on November 2, 1978 wherein Filcar assigned its interests and rights in the proceeds of the sale of the subject cargoes to Sierra Madre which the latter accepted was approved by the respondent court in its

decision of November 3, 1978. An amended petition was thus filed in this Court impleading Sierra Madre as partly respondent in his case with prayer that a writ of garnishment be issued on the proceeds of the sale of the

cargoes which are in the possession of Sierra Madre, and an order be issued directing Sierra Madre and all those to whom such proceeds may subsequently be reassigned to deliver to petitioner such portion of the proceeds of the sale as would satisfy the attorney's lien in the interest of justice.

Coming back to the omnibus motion of Filcar for the lifting of the preliminary attachment issued by the Court of First Instance of Rizal, the said court on December 7, 1978 dismissed petitioner's case and lifted the preliminary

attachment issued therein. Upon motion for reconsideration dated April 7, 1979, the said preliminary

attachment was reinstated by the Court of First Instance of Rizal in its order dated July 5, 1979. 8

After several pleading were filed in this Court, We gave due course to the petition. 9

Petitioner contends that respondent court did not acquire

jurisdiction neither over any of the defendants as they have not voluntarily submitted themselves to the jurisdiction of respondent court, nor over the res, since there had been no seizure of the property under a legal process, as by a writ of

attachment or other process of similar effect. The instant case is allegedly neither a proceeding in rem as would place the property under its potential power citing the leading case of Banco Español v. Palanca 10 which held:

Jurisdiction over the property which is

the subject of litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may

result from the institution of legal proceedings wherein under special provisions of law, the power of the court over the property is recognized and made

effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration

of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some

subsequent stage of its progress and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res is

found in the proceeding to register the title of land under our system for the registration of land. Here the court,

without taking actual physical control over the property assumes, at the instance of some person claiming to be the owner, to exercise a jurisdiction in

rem over the property and to adjudicate the title in favor of the petitioner against all the world.

Claiming that it was the Court of First Instance of Pasig that first acquired jurisdiction over the res to the exclusion

of respondent court, petitioner insists that the latter court's act is undue interference which cannot be countenanced.

There is no pretense that respondent court has jurisdiction over the cause of action. It is much too obvious to merit a fuller discussion. Suffice it to say that an action based upon an oral contract of transportation of goods by water is

an action in admiralty which comes under the original and exclusive jurisdiction of the Court of First Instance irrespective of the value of the cargo. 11

As to the person of Baroom, it is to be conceded that at the initial stage of the proceeding in the Court of First Instance

of Manila prior to the issuance of the order of April 28, 1977 directing the sale of the property and petitioner's firing of various pleadings, said court did not have


59 AGUSTIN, E.P.

jurisdiction over Baroom. Baroom was a non-resident alien and he was beyond the reach of the court's legal processes.

But since the action is brought principally for the enforcement of maritime lien against the property of defendants who failed to pay the charter hire fee, and therefore the same is in the nature and character of a proceeding quasi in rem, jurisdiction over defendant Baroom is not essential. An action quasi in rem has been

defined as "an action between parties where the direct object is to reach and dispose of property owned by them or

of some interest therein." As such the properties allegedly owned by him are primarily made liable. In elucidating the characteristic of a proceeding where a non-resident defendant fails to appear, this Court in the aforecited leading case of Banco Español Filipino v. Palanca said:

If however, the defendant is a non-resident and, remaining beyond the range of the personal process of the court, refuses to come in voluntarily, the

court never acquires jurisdiction over the person at all. Here the property itself is in fact the sole thing which is impleaded and is the responsible object which is

the subject of the exercise of judicial power. It follows that the jurisdiction of the court in such case is based exclusively on the power which, under

the law, it possesses over the property; and any discussion relative to the jurisdiction of the court over the person

of the defendant is entirely apart from the case.

The foregoing ruling was applied in Mabanag vs. Ganimore: 12

As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot

try any case against him because of impossibility of acquiring jurisdiction over his person, unless he voluntarily appears in court. But when the action ...

is intended to seize or dispose of any property, real or personal, of the defendant, located in the Philippines, it may validly be tried by the Philippine

courts, for then, they have jurisdiction over the res, i.e. ... the property of the defendant, and their jurisdiction over the

person of the non-resident is not essential ... . (Citing I Moran's Comments on the Rules of Court, 2d Ed., 105).

At any rate, defendant Baroom filed later, aside from a motion to dismiss, an answer with counterclaim praying that plaintiff be directed to deliver the cargoes of defendant

Baroom to Jeddah and to pay damages, etc. and a cross-claim against Sierra Madre, thereby abandoning any question on jurisdiction over the person and submitting himself to the jurisdiction of the court. In Tenchavez vs. Escaño, 13 this Court quoted with approval the ruling in Merchant's Heat and Light Co. vs. Clow & Sons, 204 U. S. 286, 51 Law Ed. 488:

We assume that the defendant lost no rights by pleading to the merits, as

required, after saving its rights. Harkness vs. Hyde, 98 U.S. 476, 25 L. ed. 237; Southern P. Co. vs. Denton, 146 U.S. 202, 36 L. ed. 943, 13 Sup. Ct. Rep.

44. But by setting up its counterclaim the defendant became a plaintiff in its turn, invoked the jurisdiction of the court in same action, and, by invoking

submitted to it. It is true that the counterclaim seems to have arisen wholly out of the same transaction that the plaintiff sued upon, and so to have

been in recoupment rather than in set-off proper. But, even at common law, since the doctrine has been developed, as demand in recoupment is recognized

as a cross demand, as distinguished from a defense. Therefore, although there has been a difference of opinion as to whether a defendant, by pleading it, is

concluded by the judgment from bringing a subsequent suit for the residue of his claim, a judgment in his favor being impossible at common law,

the authorities agree that he is not concluded by the judgment if he does not plead his cross demand, and that whether he shall do so or not is left

wholly to his choice. Davis vs. Hedges, L.R. 6 Q.B. 687; Mondel vs. Steel, 8 Mees & W. 858, 872; O'Connor vs. Varney, 10 Gray, 231. This single fact shows that

the defendant, if he elects to sue upon his claim in the action against him, assumes the position of an actor and must take the consequence. The right to

do so is of modern growth, and is merely a convenience that saves bringing another suit, not a necessity of the defense.

In the aforecited case, the Court explains that the rule is

such because "it cannot look with favor upon a party adopting not merely inconsistent, but actually contradictory; positions in one and the same suit, claiming that a court has no jurisdiction to render judgment against it, but has such jurisdiction to give a decision its favor. 14

It may be noted that if the defendant voluntarily appears, the action becomes as to him a personal action and is conducted as such. Even then, the court does not lose its jurisdiction over the res, assuming that it has indeed

jurisdiction over the res. The res still remains under its control and disposition.

As regards jurisdiction over the res, We hold that

respondent acquires jurisdiction over it. Where a property is burdened by a lien, a writ of attachment is no longer

necessary in order that jurisdiction over the property may be obtained by the court. In the same cited case by petitioner, in the Banco Español case, it was clarified:

In an ordinary attachment proceeding, if the defendant is not personally served,

the preliminary seizure is to be


60 AGUSTIN, E.P.

considered necessary in order to confer jurisdiction upon the court. In this case

the lien on the property is acquired by seizure; and the purpose of the proceeding is to subject the property to that lien. If a lien already exists, whether

created by mortgage, contract, or statute, the preliminary seizure is not necessary, and the court proceeds to enforce such lien in the manner provided

by law precisely as though the property had been seized upon attachment. (Roller v. Holly, 176 U.S. 398, 405; 44 L. ed. 520).

The reason for the rule is obvious. An attachment proceeding is for the purpose of creating a lien on the

property to serve as security for the payment of the creditors' claim. Hence, where a lien already exists, as in this case a maritime lien, the same is already equivalent to

an attachment. Moreover, since the property subject of the action for the enforcement of the maritime liens was already in the possession of private respondent, there is no need for seizure for the court to obtain jurisdiction over the rest.

Where a party in actual possession of the

res subject to the lien is before the court, the res is within the jurisdiction of the court for the enforcement of the lien A suit may be maintained to foreclose a

lien on property within the jurisdiction of the court, although some interest or claim therein is held by a non-resident. 15

The other argument posed by petitioner to challenge

respondents' right over the property is that there is no privity of contract between Baroom and respondents. It avers that Baroom is not merely the agent of Thorburn but himself the owner of some of the cargoes and whose

contract to ship the same is with sub-charterer Thorburn. It avers further that neither Thorburn could attach a lien on the property since Baroom had allegedly paid fully for the shipment even before the vessel sailed, as evidenced by the clean freight pre-paid bills of lading.

Claiming right over the cargo to answer for the unpaid professional fees, petitioner submits to this Court the required written authority from Baroom claiming that due to snag in communication and unreliability of the mailing

system it did not receive the documents from its client on time.

The foregoing entails determination of facts. It would be highly irregular if this Court would have to resolve those questions, this Court not being a trier of facts. The several

documents mentioned by petitioner and attached to its pleadings before this Court were never presented before the lower court. After Baroom had abandoned his defense which created the presumption that he had no defense,

that he is not the owner of the cargo, petitioner should have pursued the same argument before respondent court in claiming the alleged professional fee. This is in accordance with Article 1177 of the New Civil Code which provides:

Art. 1177. The creditors having pursued the property in possession of the debtor

to satisfy their claims may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person, they

may also impugn the acts which the debtor may have done to defraud them.

Indeed, petitioner should have maintained its action in respondent's court. After all, a court which has in its possession, control or equivalent dominion, property or funds involved in litigation may exercise exclusive

jurisdiction over such property or funds to determine the rights therein, such as questions respecting the title, possession or control, management and disposition thereof and another court of concurrent or coordinate jurisdiction

cannot interfere with such possession or control. 16 The rights to be determined by said court necessarily include the attorney's fees due to the lawyers who represented the

parties. Significantly, the lower court which undoubtedly has in its favor the presumption of regularity and which was never restrained by this Court from proceeding with the ease issued an order dated January 25, 1979 17 making the following findings of fact:

1. Thorburn fails to pay the freight so

that respondent Filcar had the right to impose its lien on the cargo including sub-freights.

Paragraph 16 of the time charter contract provides:

That the owners shall have a lien

upon all cargoes and all sub-freights for any amounts due under this Charter including General Average contributions

and the charterers to have a lien on the ship for all monies paid in advance and not earned, and any'overpaid hire or excess

deposit to be returned at once. Charterers will not suffer nor permit to be continued, any lien or encumbrance incurred by

them or their agents, which might have priority over the title and interest of the owners of the vessel.

2. Thorburn executed a liner term

contract with Baroom who was playing the double role of agent of said Thorburn and agent of three consignee banks in Jeddah.

3. Baroom appealed to Filcar to be its

agent, but when it was discovered that he was the agent of Charles Thorburn and the three (3) consignee banks, the application was rejected due to conflict of interest.


61 AGUSTIN, E.P.

4. The pre-paid freight representation of Baroom is false because the condition of

the L/C issued by the 3 consignee banks provides a C/F arrangement which means payment of the goods, insurance and freight can only be made upon physical delivery of the goods in Jeddah.

5. Baroom intervened in the case (before

respondent court) using the Quasha law office. He later withdrew upon knowing he has no defense. In fact, he did not even give Quasha written authority to appear for him as his lawyer.

6. The court of respondent Judge "has jurisdiction over the person of defendant and subject cargo of the vessel.

7. The Quasha law office is not entitled to any claim for attorney's lien

Prescinding from the foregoing, We find no abuse of

discretion in issuing the questioned order of August 25, 1978, and therefore the instant petition should be dismissed. It could not be claimed that the act of respondent Judge in issuing the said order amounts to

interference with the writ of attachment dated February 28, 1978 issued by Judge Pineda, for by the time the said writ was issued, respondent Judge had already control and disposition of the case. The order of August 25, 1978 was

but an implementation of the earlier order of April 28, 1977 directing the sale of the cargoes on the ground of extreme necessity as the cargoes as found by respondent Judge upon ocular inspection were in danger of deteriorating and

losing their market value and the vessel was also in danger of sinking. By then, respondent Judge had also issued the order dated July 19, 1977 approving a Deed of Sale of subject cargoes.

It should be noted that at the time petitioner filed the

action before Judge Pineda, it has already submitted itself to the jurisdiction of respondent court and in fact its "charging lien" which is the same cause of action before Judge Pineda was still pending before respondent court.

Pending also before respondent Judge were petitioner's answer with counterclaim, cross claim, motion to dismiss and motion to withdraw from the case.

Petitioner may not enforce its attorney's lien, which accordingly is based on Section 37 of Rule 138 which provides:

Sec. 37. Attorney's lien.— An attorney

shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession

and may retain the same until his lawful fees and disbursements have been paid and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured

in a litigation of his client, from and after the time when he shall have caused a

statement's of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shad have caused

written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as

his client would have to enforce his lien and secure the payment of his just fees and disbursements.

Based on the foregoing provision, the liens for attorney's fees and expenses apply only on the funds or documents of clients which lawfully come to the possession of the

counsel (called retaining lien) and to all judgments secured by the counsel (called charging lien). In his manifestation and motion before respondent Judge, petitioner is claiming

for his charging lien But it should be noted that at the time of its filing, the orders of April 27, 1977 ordering the sale of the cargoes and July 19, 1977 approving the Deed of Sale of cargoes were already in existence and both were in fact

in favor of private respondent. It is curious to note that petitioner never questioned said orders on appeal or by a special civil action. Petitioner's client in fact even abandoned its case. Hence, having no favorable judgment

that could be anticipated, the charging lien has no leg to stand on. Perhaps because it was aware of its predicament that petitioner filed an independent action for recovery of its professional fees and for reimbursement of expenses

which would have been proper, except that the ownership of the property sought to be attached was questionable and the same was already sold by respondent court. But just as We had said before, petitioner should have filed its claim

for professional fees in respondent's court for said court has the exclusive jurisdiction to determine the real owner of the cargoes. We hasten to add, however, that the action should not be for a charging lien, but a simple complaint in

intervention for recovery of professional services and reimbursement of expenses, thus avoiding multiplicity of suits.

On October 24, 1978, We issued a temporary restraining order enjoining the disposition or unloading of the cargoes.

It turned out, however, that before the said order could be served upon the private respondents, all the cargoes subject of the petition had been loaded into the M.V. Dong Myung, of which this Court has no jurisdiction being a

foreign vessel. When the vessel sailed and the cargoes eventually sold, everything became fait accompli and the case before Us moot and academic.

Petitioner prays for the garnishment of the proceeds, but to allow the same, there must first be a determination of the

ownership of the cargo. Again, We say We are not in a position to do so. Petitioner failed to file motion for reconsideration of the order of August 25, 1978 approving the sale of the cargo, and it abandoned its own case before

respondent Judge. The result of its negligence in allowing considerable period to lapse before claiming right over the cargo, and resorting to injunctive relief must be borne by it. Petitioner is not entitled to any relief and the instant

petition must be dismissed. We shall also dismiss petitioner's charge of contempt against respondent since as


62 AGUSTIN, E.P.

We said before, before the temporary restraining or order could be served everything was already fait accompli .

Likewise, We also dismiss the respondents' charge against petitioner for direct contempt for allegedly omitting material

facts vital to the fun appreciation of this Court. In De Midgely vs. Ferandos, 18 this Court ruled that such tactic is generally tolerated because understandably lawyers are apt

to slant the presentation of their clients' case so that they would have favorable judgments. "Courts are not deceived by the exaggerations and distortions in a counsel's lopsided submission of his client's case especially where, as in this

case, the alert opposing counsel calls the court's attention to that fact. "

Indeed, "contempt of court presupposes a contumacious attitude, a flouting of arrogant belligerence, a defiance of the court. 19 It is an offense against the authority and dignity of the court.

WHEREFORE, the petition is hereby dismissed.

SO ORDERED.

Makasiar (Chairman), Aquino, Concepcion, Jr. and Guerrero, JJ., concur.

Abad Santos and Escolin, JJ., concur in the result.


63 AGUSTIN, E.P.

Rules on Prior Contemporaneous Jurisdiction

1. ADLAWAN vs. TORRES

Facts: Petitioner Adlawan was indebted to Respondent

company Aboitiz for construction projects the former was

awarded with. However, due to inability to pay, Aboitiz filed

for collection of sum of money against petitioner in the CFI

of Cebu. It also moved for preliminary attachment on some

of Adlawan’s properties after filing a bond.

Aboitiz filed a notice of dismissal for the above mention

case. When Adlawan moved for the enforcement of the

dismissal, it was denied by the court on account of the

filing by respondent Aboitiz an action or delivery of

personal property before the CFI of Lapu-Lapu and

petitioner Adlawans’ filing for damages in the same court

for the seizure of his property by virtue of the preliminary

attachment.

Respondent Aboitiz alleged that the voluntary dismissal of

the previous case was without prejudice to the institution

of another action based on the same subject matter and

that the issuance of the writ was justified because the

petitioners were intending to defraud Aboitiz by mortgaging

11 parcels of land to PCIB thereby making PCIB a preferred

creditor to the prejudice of Aboitiz.

Issue: Was the writ of attachment legal or valid?

Held: Negative. The affidavit submitted by Aboitiz in

support of its prayer for the writ of attachment does NOT

meet the requirements of Rule 57 of the Rules of Court

regarding allegations on impending fraudulent removal,

concealment and disposition of defendant’s property. To

justify a preliminary attachment, the removal or disposal

must have been made with intent to defraud defendant’s

creditors.

The factual basis must be alleged in the affidavit in support

of the prayer for the writ of attachment if not so specifically

alleged in the verified complaint. (See full text for the copy

of the affidavit)

The Supreme Court have found that there is no factual

allegation which may constitute as a valid basis for the

contention that the mortgage was in fraud of Aboitiz.

The affidavit is the foundation of the writ and if none be

filed or one be filed which wholly fails to set out some facts

required by law to be stated therein, there is no jurisdiction

and the proceedings are null and void.

Bare allegation that an encumbrance of a property is in

fraud of the creditor does NOT suffice. Factual bases for

such conclusion must be clearly averred.

By mortgaging a piece of property, a debtor merely subjects

it to a lien but ownership thereof is not parted with.

The Inability to pay one’s creditors is no necessarily

synonymous with fraudulent intent not to honor an

obligation.

When petitioners filed for reconsideration of the order

directing the issuance of the writ, the respondent Judge

Torres should have conducted a hearing or required a

submission of counter-affidavit from the petitioners, if only

to gather the facts in support of the alleged fraud.


64 AGUSTIN, E.P.


Manila

FIRST DIVISION

G.R. Nos. 65957-58 July 5, 1994

ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners,

vs. Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE PROVINCIAL SHERIFFS OF

CEBU, DAVAO, RIZAL and METRO MANILA, Respectively, respondents.

Pablo P. Garcia for petitioners.

Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for Aboitiz & Co., Inc.

QUIASON, J.:

This is a petitioner for certiorari and mandamus with

preliminary injunction or restraining order to nullify: (1)

the Order dated September 14, 1983 of respondent Judge Ramon Am. Torres of the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185 and the Order dated September 26, 1983 of Judge Emilio A. Jacinto of Branch

23 of the same court in Civil Case No. CEB-1186, which granted the motion for the issuance of writs of preliminary attachment for the seizure of the property of petitioners by respondent Provincial Sheriffs; and (2) the Order dated

December 12, 1983 of respondent Judge Ramon Am. Torres in the consolidated cases, Civil Case No. CEB-1185 and Civil Case No. CEB-1186.

I

In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu, now Regional Trial Court, (Civil Case No. R-21761), respondent Aboitiz and Company, Inc.

(Aboitiz) sought to collect from petitioners a sum of money representing payments for: (1) the unpaid amortizations of a loan; (2) technical and managerial services rendered; and (3) the unpaid installments of the equipment provided by respondent Aboitiz to petitioners (Rollo, p. 37).

Acting on the ex parte application for attachment, the

Executive Judge of the Court of First Instance of Cebu, issued on May 14, 1982, an order directing the issuance of

the writ of preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz of an attachment bond.

Subsequently, the case was raffled to Branch 11 of the Court of First Instance of Cebu, which issued a writ of attachment addressed to the Provincial Sheriffs of Cebu

and the City Sheriff of Davao City. It was the Sheriff of Davao City who enforced the writ of attachment, resulting

in the seizure of heavy construction equipment, motor vehicle spare parts, and other personal property with the

aggregate value of P15,000,000.00. The said court also granted the motion of respondent Aboitiz to take possession and custody of the attached property of petitioners and ordered the Provincial Sheriff of Davao to deliver the property to respondent Aboitiz.

Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment. Finding merit in the motion

to set aside the writ, Branch 11 ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge of the property levied upon.

Respondent Aboitiz filed an urgent ex parte motion, praying

for the stay of the July 6, 1982 Order for a period of 15 days for it to be able to appeal the order. The motion was favorably acted upon.

However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its complaint in accordance with

Section 1, Rule 17 of the Revised Rules of Court. Consequently, Branch 11 issued an order confirming the notice of dismissal, emphasizing that all orders of the court issued prior to the filing of said notice of dismissal had been rendered functus oficio, and considering all pending incidents in the case as moot and academic.

Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be implemented and enforced. On December 20, however, Branch 11 denied the motion on

account of the filing by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu City of an action for delivery of personal property (Civil Case No.

619-L), and the filing by petitioner Eleazar Adlawan before Branch 10 of the same court of an action for damages in connection with the seizure of his property under the writ of attachment.

In the replevin suit, Branch 16 ordered the seizure and delivery of the property described in the complaint. Said

property were later delivered by the provincial sheriff to respondent Aboitiz. Alleging that while his office was situated in Cebu City, Adlawan was a resident of Minglanilla, and therefore, the Lapu-lapu City court should

not entertain the action for replevin. Petitioner Eleazar Adlawan filed an omnibus motion praying for the reconsideration and dissolution of the writ of seizure, the

retrieval of the property seized, and the dismissal of the complaint. He also averred that the property seized were in custodia legis by virtue of the writ of attachment issued by

Branch 11. His omnibus motion was denied. Subsequently,

he filed a motion for reconsideration which was not granted.

The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari and mandamus in

the Supreme Court (G.R. No. 63225). The Third Division of

this Court ruled on April 3, 1990 that since attachment is an ancillary remedy, the withdrawal of the complaint left it with no leg to stand on. Thus, the Court disposed of the case as follows:

WHEREFORE, in view of the foregoing,

this Court rules that the attached


65 AGUSTIN, E.P.

properties left in the custody of private respondent Aboitiz and Company, Inc. be

returned to petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by both parties (Rollo, p. 324).

Respondent Aboitiz filed a motion for reconsideration of the

decision, contending that the replevin case was distinct and separate from the case where the writ of attachment was issued. It argued that the writ of replevin, therefore, remained in force as the Third Division of the Supreme

Court had not found it illegal. The motion was, however, denied with finality in the Resolution of July 11, 1990.

Undaunted, respondent Aboitiz filed a second motion for reconsideration with a prayer that the dispositive portion of the decision be clarified. It asserted that because the writ of preliminary attachment was different from the writ of

replevin, we should rule that the property subject of the latter writ should remain in custodia legis of the court issuing the said writ.

In the Resolution dated September 10, 1990, the Third Division stated that "the properties to be returned to

petitioner are only those held by private respondent (Aboitiz) by virtue of the writ of attachment which has been declared non-existent." Accordingly, the dispositive portion

of the April 3, 1990 decision of the Third Division of this Court was modified to read as follows:

WHEREFORE, in view of the foregoing, this Court rules that the properties in the custody of the private respondent Aboitiz & Company by virtue of the writ

of attachment issued in Civil Case No. R-21761 be returned to the petitioner, but properties in the custody of the private respondent by virtue of the writ of

replevin issued in Civil Case No. 619-L be continued in custodia legis of said court pending litigation therein.

The Decision in G.R. No. 63225 having become final and executory, entry of judgment was made on November 15,

1990. This should have terminated the controversy between petitioners and respondent Aboitiz insofar as the Supreme Court was concerned, but that was not to be. On

September 9, 1983 respondent Aboitiz filed against petitioners two complaints for collection of sums of money with prayers for the issuance of writs of attachment in the Regional Trail Court, Branch 23, Cebu City, docketed as

Civil Cases Nos. CEB-1185 and CEB-1186. The complaint in Civil Case No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Tago Diversion Works for the Tago River

Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the complaint states:

16. That, in view of the enormous

liabilities which the defendants have with the plaintiff, defendants executed a real estate mortgage covering eleven (11)

parcels of land in favor of Philippine Commercial and Industrial Bank (PCIB)

to secure a P1,000,000.00 loan with said bank and was able to remove, conceal and dispose of their properties, obviously to defraud the plaintiff, . . . (Rollo, pp.

65-66).

The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Lasang River Irrigation Project by the National Irrigation Administration

and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly worded as paragraph 16 of the complaint in Civil Case No. CEB-1185.

Civil Case No. CEB-1185 was raffled to the Regional Trial

Court, Branch 6, presided by respondent Judge Ramon Am. Torres. On September 14, 1983, respondent Judge ordered the issuance of a writ of attachment upon

respondent Aboitiz' filing of a bond of P5,000,000.00. Similarly, in Civil Case No. CEB-1186, which was raffled to Branch 23, presiding Judge Emilio A. Jacinto ordered the issuance of a writ of attachment upon the filing of a bond

of P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu issued separate writs dated September 26, 1983 addressed to the Sheriffs of Cebu, Davao and Metro Manila. No writ of preliminary

attachment was, however, issued in Civil Case No. CEB-1186.

Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent motions to hold in abeyance the enforcement of the writs of attachments. They alleged in the main that since their property had been previously

attached and said attachment was being questioned before the Supreme Court in G.R. No. 63225, the filing of the two cases, as well as the issuance of the writs of attachment,

constituted undue interference with the processes of this court in the then pending petition involving the same property.

Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order directing the transfer to Branch 6 of Civil Case No. CEB-1186 for consolidation with Civil Case No. CEB-1185.

Meanwhile, in its comment on petitioners' motion to withhold the enforcement of the writs of attachment, respondent Aboitiz alleged that the voluntary dismissal of Civil Case No. R-21761 under Section 1, Rule 17 of the

Revised Rules of Court was without prejudice to the institution of another action based on the same subject matter. It averred that the issuance of the writ of attachment was justified because petitioners were

intending to defraud respondent Aboitiz by mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of the loan of P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice

of respondent Aboitiz, which had an exposure amounting to P13,430,259.14.

Petitioners then filed a rejoinder to said comment, contending that since the property subject of the writ of


66 AGUSTIN, E.P.

attachment have earlier been attached or replevied, the same property were under custodia legis and therefore

could not be the subject of other writs of attachment.

On December 12, 1983, respondent Judge issued an order

finding no merit in petitioners' motion for reconsideration and directing the sheriffs of Cebu, Davao and Metro Manila "to proceed with the enforcement and implementation of

the writs of preliminary attachment." Respondent Judge ruled that the writs of attachment were issued on the basis of the supporting affidavits alleging that petitioner had removed or disposed of their property with intent to defraud respondent Aboitiz (Rollo, pp. 109-113).

On December 15, petitioners filed an ex parte motion

praying: (1) that the December 12, 1983 Order be set for hearing; (2) that they be given 15 days within which to either file a motion for reconsideration or elevate the matter

to this Court or the then Intermediate Appellate Court; and (3) that within the same 15-day period the implementation or enforcement of the writs of attachment be held in abeyance.

On the same day, respondent Judge issued an order

holding in abeyance the enforcement of the writs of preliminary attachment in order to afford petitioners an opportunity to seek their other remedies (Rollo, p. 116).

On December 27, petitioners filed the instant petition for certiorari and mandamus. They alleged that respondent

Judge gravely abused his discretion in ordering the issuance of the writs of preliminary attachment inasmuch as the real estate mortgage executed by them in favor of PCIB did not constitute fraudulent removal, concealment or

disposition of property. They argued that granting the mortgage constituted removal or disposition of property, it was not per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant.

Petitioners contended that in Civil Case No. 21761, Branch

11 had ruled that the loan for which the mortgage was executed was contracted in good faith, as it was necessary for them to continue their business operations even after respondent Aboitiz had stopped giving them financial aid.

Petitioners also contended that respondent Judge exceeded

his jurisdiction when he issued the Order of December 12, 1983, without first hearing the parties on the motion for attachment and the motion to dissolve the attachment. Moreover, they argued that respondent Judge gravely

abused his discretion in proceeding with the case, notwithstanding that his attention had been called with regard to the pendency of G.R. No. 63225 in this Court.

As prayed for by petitioners, we issued a temporary restraining order on January 6, 1984 "enjoining the

respondents from enforcing or implementing the writs of preliminary attachment against the property of petitioners, all dated September 26, 1983 and issued in Civil Cases Nos. CEB 1185 and 1186" (Rollo, p. 118).

II

The resolution of this case centers on the issue of the legality of the writ of attachment issued by respondent

Judge in the consolidated cases for collection of sums of money.

The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent removal,

concealment and disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a

preliminary attachment, the removal or disposal must have

been made with intent to defraud defendant's creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the

factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. The affidavit submitted by respondent Aboitiz states:

REPUBLIC OF THE PHILIPPINES CITY OF CEBU ...............) S.S.

I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after being sworn in accordance with law, hereby depose and say:

That I am the Vice-President of the

plaintiff corporation in the above-entitled case;

That a sufficient cause of action exists against the defendants named therein because the said defendants are

indebted to the plaintiffs in the amount of P13,430,259.14 exclusive of interests thereon and damages claimed;

That the defendants have removed or disposed of their properties with intent

to defraud the plaintiff, their creditor, because on May 27, 1982 they executed a real estate mortgage in favor of Philippine Commercial and Industrial

Bank (PCIB) covering eleven (11) of their fifteen (15) parcels of land in Cebu to secure a P1,000,000.00 loan with the same bank;

That this action is one of those specifically mentioned in Section 1, Rule

57 of the Rules of Court, whereby a writ preliminary attachment may lawfully issue because the action therein is one against parties who have removed or

disposed of their properties with intent to defraud their creditor, plaintiff herein;

That there is no sufficient security for the claims sought to be enforced by the present action;


67 AGUSTIN, E.P.

That the total amount due to the plaintiff in the above-entitled case is

P13,430,259.14, excluding interests and claim for damages and is as much the sum for which an order of attachment is herein sought to be granted; above all

legal counter-claims on the part of the defendants.

IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu City, Philippines.

(S

gd.)

RAM

ON S

. RO

NQU

ILLO

Aff

iant

(Rollo, pp. 171-172)

It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11

parcels of land in Cebu, which encumbrance respondent Aboitiz considered as fraudulent concealment of property to its prejudice. We find, however, that there is no factual allegation which may constitute as a valid basis for the

contention that the mortgage was in fraud of respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he general rule

is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void."

Bare allegation that an encumbrance of a property is in

fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly averred.

The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of

fraudulently disposing of one's property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with.

Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]).

Consequently, when petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge should have considered it as a motion for the discharge of the

attachment and should have conducted a hearing or required submission of counter-affidavits from the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167

SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates.

This procedure should be followed because, as the Court has time and again said, attachment is a harsh, extraordinary and summary remedy and the rules

governing its issuance must be construed strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the

Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]).

The judge before whom the application is made exercises full discretion in considering the supporting evidence proffered by the applicant. One overriding consideration is

that a writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the termination of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun Suy v. Court of Appeals, 212 SCRA 713 [1992]).

We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in G.R. No. 63225 in view of the entry of judgment in the latter case.

WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued on January 6, 1984 is made

PERMANENT. Respondent Judge or whoever is the presiding judge of the Regional Trial Court, Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos. CEB-1185 and CEB-1186 with deliberate dispatch.

SO ORDERED.

Cruz, Davide, Jr., Bellosillo and Kapunan, JJ., concur.


68 AGUSTIN, E.P.

2. CONSOLIDATED BANK vs. IAC



SECOND DIVISION

G.R. No. 73976 May 29, 1987

THE CONSOLIDATED BANK and TRUST CORPORATION (SOLIDBANK), petitioner, vs.

HON. INTERMEDIATE APPELLATE COURT, GOLDEN STAR INDUSTRIAL CORPORATION, NICOS INDUSTRIAL CORPORATION and THE PROVINCIAL SHERIFF OF BULACAN, respondents.

C.M. Delos Reyes and Associates for petitioner.

Magtanggol C. Gunigundo and Fajardo Law office for respondents.

GUTIERREZ, JR., J.:

The basic issue for resolution in this petition for review of the December 13, 1985 decision of the Intermediate

Appellate Court, now the Court of Appeals, as well as the resolution of March 13, 1986 denying the motion for reconsideration, is whether or not an attaching creditor acquires the right of redemption of a debtor over the

attached properties of the latter which are subsequently extrajudicially foreclosed by third parties.

Briefly, the facts are as follows: Originally, petitioner Consolidated Bank and Trust Corporation (SOLIDBANK) loaned private respondent NICOS Industrial Corporation

(NICOS) sums of money in the total amount of FOUR MILLION SEVENTY SIX THOUSAND FIVE HUNDRED EIGHTEEN AND 64/100 PESOS (P4,076,518.64).

Subsequently, NICOS failed to pay back the loan prompting SOLIDBANK to file a collection case before the Court of

First Instance of Manila, Branch XXIX. The case was docketed as Civil Case No. 82-11611.

On August 30, 1982, the court in the aforecited case issued an order of attachment " ... upon the rights, interests and participation of which defendants NICOS Industrial

Corporation ... may have in Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T-10580 (T-32.504 M) (Annexes "B", "B-1", "B-2" and "B-3" of petition).

On September 1, 1982, pursuant to the writ of attachment issued by the Court and upon petitioner's posting of

sufficient bond, the Sheriff of Manila levied and attached the two real properties described by the foregoing order of attachment, including the buildings and other improvements thereon. Afterwards, the Sheriff sent

separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos, Bulacan, dated September 1, 1982

requesting him "to make the proper annotation in the books of your office" by virtue of the order of attachment dated August 30,1982 issued by the Manila Court in Civil Case No. 82-11611.

Accordingly, on September 7, 1982, the Registrar of Deeds of Malolos, Bulacan, pursuant to the request of the Manila

Sheriff, inscribed and annotated the Notices of Levy Upon Real Property at the back of Transfer Certificates of Title Nos. T-210581 (T-32.505 M) and T-210580 (T-32.504 M).

Pursuant to the foregoing ng inscription and annotations, guards were deputized by the Manila Sheriff to secure the premises of the two attached realties.

A year later, however, on July 11, 1983, the attached properties which had been mortgaged by NICOS to the United Coconut Planters Bank (UCPB) on March 11, 1982, were extrajudicially foreclosed by the latter. As the highest

bidder therein, a certificate of sale was issued to it by the Sheriff of Bulacan over the subject realties including the buildings and improvements thereon.

Surprisingly, two transactions occurred soon thereafter, both on August 29, 1983. First, UCPB sold all of its rights,

interests, and participation over the properties in question to a certain Manuel Go; Second, Manuel Go sold all the rights he acquired from UCPB over the same lots on that very same day to private respondent Golden Star Industrial Corporation (GOLDEN STAR).

Barely a month later, on October 5, 1983, respondent

NICOS, though fully aware that it still had the right to redeem the auctioned properties within the one year period of redemption from July 11, 1983, suddenly executed a

document entitled "Waiver of Right of Redemption" in favor of respondent GOLDEN STAR.

On September 15, 1983, GOLDEN STAR filed a petition for the issuance of a writ of possession over the subject realties before the Regional Trial Court, Branch VI of Malolos, Bulacan.

On November 4, 1983, the Malolos Court granted GOLDEN

STAR's petition for a writ of possession and issued the writ. In accordance with these orders, armed men of GOLDEN STAR forcibly took over the possession of the properties in dispute from the guards deputized by the Sheriff of Manila to secure the premises.

Thus on November 21, 1983, petitioner SOLIDBANK, on the strength of its prior attachment over the lands in question filed with the Malolos court an omnibus motion to annul the writ of possession issued to GOLDEN STAR and

to punish for contempt of court the persons who implemented the writ of possession with the use of force and intimidation.

The respondents NICOS and GOLDEN STAR, filed oppositions to the foregoing omnibus motion, the former on

the basis of the waiver of its right of redemption to GOLDEN STAR, and the latter on its alleged ignorance that


69 AGUSTIN, E.P.

the lands in question were under custodia legis, having been attached by the Sheriff of Manila.

On June 9, 1984, the Malolos Court issued an order denying the omnibus motion, the decretal portion of which is as follows:

WHEREFORE, the Omnibus Motion of movant Consolidated Bank and Trust Corporation to annul the writ of possession issued by this Court in favor

of Golden Star Industrial Corporation and to cite for contempt those who fraudulently secured and unlawfully implemented the writ of possession is

hereby DENIED for lack of merit. (p. 8 of the Brief for the Complainant-Oppositor-Appellant in AC-G.R. CV No. 04398 [p.118, Rollo])

The petitioner SOLIDBANK forthwith interposed an appeal before the Intermediate Appellate Court arguing inter alia that the properties were under custodia legis, hence the

extrajudicial foreclosure and the writ of possession were

null and void, and that the right of NICOS to redeem the auctioned properties had been acquired by SOLIDBANK.

On December 13, 1985, the Intermediate Appellate Court rendered its assailed decision "finding no merit in this appeal and affirming in toto the appealed order of June 9,

1984, ruling that "the properties in issue ... were not in custodia legis at the time of the extrajudicial foreclosure."

The petitioner moved for reconsideration, arguing that its writ of attachment over the properties in question was duly registered in the Register of Deeds of Malolos, Bulacan, and

that the right to redeem said properties should be retained or given back to SOLIDBANK as attaching creditor.

On March 13, 1986, the Intermediate Appellate Court promulgated its resolution denying the motion for reconsideration for lack of merit.

Hence this petition for review, on the grounds that respondent appellate court decided the case contrary to law

and applicable decisions of the Supreme Court, and has departed from the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision of this Court.

The fundamental question herein, which is determinative of

the other issues, is whether or not the subject properties were under custodia legis by virtue of the prior annotation

of a writ of attachment in petitioner's favor at the time the properties were extrajudicially foreclosed.

We rule in the affirmative on the following grounds:

First of all, the records show (specifically Annexes "B," "B-

1" to "B-3" of the petition) that on September 1, 1982, the Sheriff of Branch XXIX of the Court of First Instance of Manila, sent separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos Bulacan, requesting him "to

make the proper annotation in the books of your office," "by

virtue of an order of attachment issued in Civil Case No. 82-11611 dated August 30, 1982, ... upon the rights,

interests, and participation of which defendant NICOS Industrial Corporation in this case may have in ... ."Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T-210580 (T-32,505 M).

Secondly, and more significant, the records clearly show (page 4, Annex "D" of petition) that the Registrar of Deeds

of Malolos, Bulacan, on September 7, 1982, inscribed and annotated the foregoing Notices of Levy at the back of Transfer Certificate of Title Nos. 210580 and 210581, to wit:

TRANSFER CERTIFICATE OF TITLE

No. T-210580 (T-32.504 M)

Entry No. 79524 (M): Kind; NOTICE OF LEVY UPON REALTY, Executed in favor

of the CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK);-Plaintiff; Conditions: Notice is hereby

given that by virtue of an Order of Attachment issued by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights, interest and

participation of NICOS INDUSTRIAL CORPORATION-Defendant over the herein described lot is hereby levied upon attached.; Date of Instrument:

September 1, 1982; Date of Inscription: September 7, 1982 at 2:35.

Meycauayan, Bulacan.

(SGD

.) V

IOLE

TA R

. L

INCA

LLO

GAR


70 AGUSTIN, E.P.

CI

A of

Dee

ds

TRANSFER CERTIFICATE OF TITLE

No. T-210581 (T-32.505 M)

Entry No. 79524 (M); Kind: NOTICE OF LEVY UPON REALTY, Executed in favor of THE CONSOLIDATED BANK AND

TRUST CORPORATION (SOLIDBANK) — Plaintiff; Conditions: Notice is hereby given that by virtue of an Order of Attachment issued by the C.F.I. of

Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights, interest and participation of NICOS INDUSTRIAL CORPORATION — Defendants over the

herein described lot is hereby levied upon attached.; Date of Instrument; September 1, 1982; Date of Inscription: September 7, 1982 at 2:35.

Meycauayan, Bulacan.

(

SGD.

) VI

OLET

A R.

LIN

CALL

O GA

R

CI

A

Bran

ch R

egis

ter

of

Deed

s

(pp

. 91

-92,

Rol

lo)

Based on the foregoing evidence on record, the conclusion

is clear that the disputed real properties were under custodia legis by virtue of a valid attachment at the time

the same were extrajudicially foreclosed by a third party mortgagee.

The rule is well settled that when a writ of attachment has

been levied on real property or any interest therein belonging to the judgment debtor, the levy thus effected creates a lien which nothing can destroy but its dissolution (Chua Pua Hermanos v. Register of Deeds of Batangas, 50 Phil. 670; Government, et. al. v. Mercado, 67 Phil. 409).

The foregoing conclusion has two necessary consequences.


71 AGUSTIN, E.P.

Firstly, it follows that the writ of possession issued by the Malolos court in favor of respondent GOLDEN STAR is nun and void ab initio because it interfered with the jurisdiction

of a co-ordinate and co-equal court (See De Leon v. Salvador, 36 SCRA 567):

While property or money is in custodia legis, the officer holding it is the mere

hand of the court, his possession is the possession of the court, and to interfere with it is to invade the jurisdiction of the court itself (Gende v. Fleming, 371 N.E.

2d. 191; Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. 27, 7 CJS 320).

Of equal importance is the fact that the transactions on which respondent GOLDEN STAR's right to a writ of possession are based are highly irregular and questionable, to say the least, considering the following circumstances:

On July 11, 1983, the Sheriff of Bulacan executed a certificate of sale over the two lots in question in favor of UCPB.

On August 29, 1983, or about a month and a half later, UCPB sold its rights, interests and participation over the lands to Manuel Go.

On that very same day, August 29, 1983, Manuel Go sold the same properties to respondent GOLDEN STAR.

On October 5, 1983, respondent NICOS which had a one year right of redemption over the lands in question executed a "Waiver of Right of Redemption in favor of respondent GOLDEN STAR." The attempts to bring the

disputed properties out of the petitioner's reach, inspite of the attachment, are plain and apparent.

Based on the foregoing facts, we find that respondents NICOS and GOLDEN STAR conspired to defeat petitioner's lien on the attached properties and to deny the latter its right of redemption.

It appears that in issuing the writ of possession, the

Malolos court relied on copies of documents (which did not show the memorandum of encumbrance) submitted to it by GOLDEN STAR. It was thus led into the error of ruling that the petitioner's attachment was not properly annotated.

Secondly, it likewise follows that the petitioner has

acquired by operation of law the right of redemption over the foreclosed properties pursuant to Sec. 6 of Act No. 3135, to wit:

In all such cases in which an extrajudicial sale is made ... any person

having a lien on the property subsequent to the mortgage ... may redeem the same at any time within the term of one year from and after the date of sale.

It has been held that "an attaching creditor may succeed to

the incidental rights to which the debtor was entitled by

reason of his ownership of the property, as for example, a right to redeem from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7 SJS 505).

The fact that respondent NICOS executed a waiver of right

of redemption in favor of respondent GOLDEN STAR on October 5, 1983 is of no moment as by that time it had no more right which it may waive in favor of another,

Finally, GOLDEN STAR argues that even if the attachment in issue was duly registered and the petitioner has a right

of redemption, the certificate of sale of the lands in question was registered on September 6, 1983. It claims that the period to redeem therefore lapsed on September 6, 1984 without the petitioner bank ever exercising any right of redemption.

This argument is untenable. Well settled is the rule that the pendency of an action tolls the term of the right of redemption. Specifically, tills Court in Ong Chua v. Carr, (53 Phil. 975, 983) categorically ruled that:

xxx xxx xxx

... Neither was it error on the part of the

court to hold that the pendency of the action tolled the term for the right of redemption; that is an old and well established rule.

This was reiterated in Fernandez v. Suplido (96 Phil. 541,

543), as follows:

xxx xxx xxx

... As pointed out in Ong Chua v. Carr,

53 Phil. 975, the pendency of an action brought in good faith and relating to the validity of a sale with pacto de retro tolls the term for the right of redemption. ...

Not only that. It has been held that "under a statute

limiting the time for redemption ... the right of redemption continues after perfection of an appeal ... until the decision of the appeal (Philadelphia Mortgage Co. v. Gustus, 75 N.W. 1107).

In the case at bar, the petitioner commenced the instant

action by way of an omnibus motion before the Bulacan Court on November 21, 1983 or barely two months after the certificate of sale was registered on September 6, 1983, well within the one year period of redemption.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is granted and judgment is hereby rendered:

1) declaring as valid and binding the levy and attachment

by the Manila Sheriff on the two realties in question including the buildings and improvements thereon;

2) declaring that petitioner has acquired the right of redemption over the aforesaid properties which it may


72 AGUSTIN, E.P.

exercise within one year from notice of entry of judgment in this case; and

3) declaring as null and void (a) the order of the Bulacan Court dated November 4, 1983 granting the writ of

possession to respondent GOLDEN STAR, (b) its order of June 9, 1984 denying the petitioner's omnibus motion, and (c) the Waiver of Right of Redemption executed by respondent NICOS in favor of respondent GOLDEN STAR.

SO ORDERED.

Fernan (Chairman), Paras, Padilla, Bidin and Cortes, JJ., concur.


73 AGUSTIN, E.P.

3. CLAUDE NEON LIGHTS vs. PHIL

ADVERTISING CORP

EN BANC

[G.R. No. 37682. November 26, 1932.]

CLAUDE NEON LIGHTS, FEDERAL INC.,

U.S.A., Petitioner, v. PHILIPPINE

ADVERTISING CORPORATION and

FRANCISCO SANTAMARIA, Judge of

First Instance of Manila, Respondents.

Gibbs & McDonough for Petitioner.

Courtney Whitney for Respondents.

SYLLABUS

1. CORPORATIONS; FOREIGN AND DOMESTIC CORPORATIONS. — The words of section 424 of the Code

of Civil Procedure refer to a physical defendant who is capable of being "arrested" or who is "not residing in the Philippine Islands." Only by fiction can it be held that a corporation is "not residing in the Philippine Islands." A

corporation has no home or residence in the sense in which those terms are applied to natural persons. It can not be said that every statute applicable to natural persons is applicable to corporations.

2. ID.; ID.; ATTACHMENT OF PROPERTY. — There is not the same reason for subjecting a duly licensed foreign corporation to the attachment of its property by a plaintiff,

under said section 424, paragraph 2, as may exist in the case of a natural person not residing in the Philippine Islands. Corporations, as a rule, are less mobile than individuals. This is specially true of foreign corporations

that are carrying on business by proper authority in these Islands.

3. ID.; ID.; ID. — Said section 424, paragraph 2, should not be held applicable to foreign corporations duly licensed to do business in the Philippine Islands both because the language and the reason of the statute limit it to natural

persons.

D E C I S I O N

BUTTE, J.:

This case is to be determined upon the petition for writ of certiorari and the demurrer thereto filed by the

respondents. The petition sets up two causes of action: one attacking the validity of a writ of attachment issued by the respondent judge on the petition and affidavit of the respondent Philippine Advertising Corporation, on April 6,

1932; the second, attacking the validity of the order of the respondent judge issued the same day on the petition of

the respondent Philippine Advertising Corporation, appointing a receiver of the property which was seized by the sheriff under said writ of attachment.

On April 5, 1932, the respondent Philippine Advertising Corporation filed suit against the petitioner in the Court of First Instance of Manila, claiming P300,000 as damages for alleged breach of the agency contract existing between the

said respondent and the petitioner. At the same time, said respondent filed in said court an application for writ of attachment duly verified in which it is stated that the defendant (petitioner herein) is a foreign corporation having

its principal place of business in the City of Washington, District of Columbia. It is not alleged in said application that the defendant, Claude Neon Lights, Inc. (the petitioner herein) was about to depart from the Philippine Islands

with intent to defraud its creditors or that it was insolvent or had removed or disposed of its property or was about to do so with intent to defraud its creditors. The only statutory ground relied upon in the court below and in this

court for the issuance of the writ of attachment against the petitioner is paragraph 2 of section 424 of the Code of Civil Procedure, which provides that a plaintiff may have the property of the defendant attached "in an action against a

defendant not residing in the Philippine Islands." On April 6, 1932, the respondent judge issued the writ of attachment as prayed for, and the sheriff has attached all

the properties of the petitioner in the Philippine Islands. On the same date, on the ex parte petition and nomination of the respondent, the respondent judge appointed Manuel C. Grey receiver of said properties of the petitioner, fixing his

bond at P3,000. Motions to dissolve said writ of attachment and receivership were filed in the court below, supported by

affidavits of the attorney in fact for the petitioner in which it is recited, among other things, that the petitioner is not indebted to the respondent in any sum whatever nor has it in any way breached any contracts with the respondent or

at any time interfered in the management of its business in the Philippine Islands as carried on by its agent, the respondent, and it has faithfully complied with every condition of said contract; that the attachment of the

machinery and plants of the petitioner, as well as its other assets, is highly prejudicial to it as it is unable to proceed with its business in the Philippine Islands and irreparable

loss will result to it unless such attachment be raised; that the filing of said suit was malicious, without foundation, and intended only to injure the petitioner and to depreciate the value of its holdings in the Philippine Islands. It does

not appear that any answer was made to said motion in which said allegation were denied or that any refuting evidence was offered.

On June 20, 1932, the court denied said motions to vacate the attachment and receivership, declaring that the writ of attachment conforms to section 424 of the Code of Civil Procedure.

The petitioner for certiorari prays that the writ of

attachment issued by the respondent judge on April 6, 1932, as well as the order of the same date, appointing

Manuel C. Grey receiver of the property of the petitioner, be annulled. The sufficiency of the application for the writ of attachment


74 AGUSTIN, E.P.

is assailed by the petitioner upon several grounds but we shall confine ourselves to the consideration of the question

whether or not paragraph 2 of section 424 of the Code of Civil Procedure is applicable to this petitioner. The petitioner is a corporation duly organized under the

laws of the District of Columbia; it had complied with all the requirements of the Philippine laws and was duly licensed to do business in the Philippine Islands on the date said writ of attachment was issued. The petitioner was

actively engaged in doing business in the Philippine Islands and had considerable property therein, which consisted of its manufacturing plant, machinery, merchandise and a large income under valuable contracts, all of which

property was in the possession and under the control and management of the respondent Philippine Advertising Corporation, as the agent of the petitioner, on the date said attachment was levied. Considered from a practical and

economic viewpoint, its position in the business community was indistinguishable from that of a domestic corporation.

Section 424 of the Code of Civil Procedure under which the petitioner’s property was attached, read as follows:jgc:chanrobles.com.ph

"Attachment. — A plaintiff may, at the commencement of his action, or at any time afterwards, have the property of the defendant attached as security for the satisfaction of any judgment that may be recovered, unless the defendant

gives security to pay such judgment, in the manner hereinafter provided, in the following cases:jgc:chanrobles.com.ph

"1. In all the case mentioned in section four hundred and twelve, providing for the arrest of a defendant. But the plaintiff must make an election as to whether he will ask for an order of arrest or an order of attachment; he shall

not be entitled to both orders; "2. In an action against a defendant not residing in the Philippine Islands."cralaw virtua1aw library

It may be observed at the outset that the words of section 424, supra, taken in their literal sense seem to refer to a physical defendant who is capable of being "arrested" or

who is "not residing in the Philippine Islands." It is only by a fiction that it can be held that a corporation is "not residing in the Philippine Islands." A corporation has no

home or residence in the sense in which those terms are applied to natural persons. For practical purposes, a corporation is sometimes said, in a metaphorical sense, to be "a resident" for a certain state or a "citizen" of a certain

country, which is usually the state or country by which or under the laws of which it was created. But that fiction or analogy between corporations and natural persons by no means extends so far that it can be said that every statute

applicable to natural persons is applicable to corporations. Indeed, within the same jurisdiction a corporation has been held to be a "citizen" of the state of its creation for the purpose of determining the jurisdiction of the Federal

courts (Wisconsin v. Pelican Insurance Co., 127 U.S., 265) but not a "citizen" within the meaning of section 2 of article 4 of the Constitution of the United States which provides that the citizens of each state shall be entitled to all the

privileges and immunities of citizens of the several states (Paul v. Virginia, 8 Wall., 169). The question arises whether this petitioner, a foreign

corporation, shall, in a metaphorical sense, be deemed as "not residing in the Philippine Islands" in the sense in

which that expression would apply to a natural person. Having regard to the reason for the statute which is the protection of the creditors of a non-resident, we are of the

opinion that there is not the same reason for subjecting a duly licensed foreign corporation to the attachment of its property by a plaintiff under section 424, paragraph 2, as may exist in the case of a natural person not residing in

the Philippine Islands. The law does not require the latter, as it does the former, to appoint a resident agent for service of process; nor to prove to the satisfaction of the Government before he does business here, as the foreign

corporation must prove, that he "is solvent and in sound financial condition" (section 68, Act No. 1459, as amended, the Corporation Law), or to produce evidence of "fair dealing" (ibid.) . He pays no license fee nor is his business

subject at any time to investigation by the Secretary of Finance and the Governor-General; nor is his right to continue to do business revocable by the Government (Cf. section 71, Act No. 1459 of the Corporation Law). His

books and papers are not liable to examination "at any time" by the Attorney-General, the Insular Auditor, the Insular Treasurer, "or any other officer of the Government" on the order of the Governor-General (section 54, ibid.) . He

is not, like a foreign corporation "bound by all laws, rules and regulations applicable to domestic corporations." . . (section 73, ibid.) , which are designed to protect creditors and the public. He can evade service of summons and

other legal process, the foreign corporation never. (Section 72, ibid.) Corporations, as a rule, are less mobile than individuals.

This is specially true of foreign corporations that are carrying on business by proper authority in these Islands. They possess, as a rule, great capital which is seeking lucrative and more or less permanent investment in young

and developing countries like our Philippines. Some of them came here as far back as the Spanish regime and are still important factors in our financial and industrial life. They are anything but "fly-by-night" concerns. The latter,

we believe, are effectually excluded from our Islands both by our laws and by our geographical and economic situation.

If, as we believe, section 424, paragraph 2, should not be held applicable to foreign corporations duly licensed to do business in the Philippine Islands both because the

language and the reason of the statute limit it to natural persons, we sustain and reinforce the provisions of section 71 of the Corporation Law, Act No. 1459, which provides in substance that if the Secretary of Finance or the Secretary

of Commerce and Communications and the Governor-General find a duly licensed foreign corporation to be insolvent or that its continuance in business will involve probable loss to its creditors, they may revoke its license

and "the Attorney-General shall take such proceedings as may be proper to protect creditors and the public." Section 71, supra, contemplates that the proceedings instituted by the Attorney-General shall effect the protection of all

creditors and the public equally. Obviously, the benefit of that section will be minimized, if not entirely defeated, if a creditor or a few creditors can obtain privileged liens by writs of attachment based on the sole allegation, which is

easily and safely made, that the corporation is "not residing in the Philippine Islands." (Cf. Kuenzle & Streiff v. Villanueva, 41 Phil., 611.)


75 AGUSTIN, E.P.

Paragraph 2 of section 424, supra, does not apply to a

domestic corporation. Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to the status of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall-Wells Co. v.

Henry W. Elser & Co., 46 Phil., 70, 76; Yu Cong Eng v. Trinidad, 47 Phil., 385, 411.) We think it would be entirely out of line with this policy should we make a discrimination against a foreign corporation, like the

petitioner, and subject its property to the harsh writ of seizure by attachment when it has complied not only with every requirement of law made specially of foreign corporations, but in addition with every requirement of law

made of domestic corporations. (Section 73, supra.) It is true that the majority of the states in the American Union hold the contrary rule. But our situation is obviously

very dissimilar from that of a state in the American Union. There forty-eight states and the central government, all creating corporations which do a tremendous interstate business, are contiguous and separated by imaginary lines.

A higher degree of protection against irresponsible corporations may be more necessary there than here. We have no interstate business. Only the central government grants charters to corporations. But even in the American

Union there is a minority rule which we regard as the better reasoned and the better suited to our conditions, both geographical and economical, and more nearly in harmony with the policy of our law both under the Spanish

regime and since the American occupation. This minority rule is supported by the following authorities: Brand v. Auto Service Co. (New Jersey, 1907), 67 Atl., 19, 20; Mellor v. Edward V. Hartford, Inc. (New Jersey, 1929), 146 Atl.,

206; Charles Friend & Co. v. Goldsmith & Co. (Illinois, 1923), 138 N.E., 185; Fullilove v. Central State Bank (Louisiana, 1926), 107 So., 590.

In the present instance, a particularly monstrous result has followed as a consequence of the granting of the writ attaching all of the property of the petitioner on the sole allegation that it "is not residing in the Philippine Islands."

As the petitioner’s business was a going concern, which the sheriff, who levied the writ, obviously could not manage, it became necessary on the same day for the court to appoint a receiver. This receiver, as the demurrer admits, "was and

is an employee working under the president of the respondent Philippine Advertising Corporation, so that to all intents and purposes, all the property of the petitioner

in the Philippine Islands was seized and delivered into the hands of the respondent Philippine Advertising Corporation."cralaw virtua1aw library

The prayer of the petitioner is granted. The order and writ of attachment complained of are annulled and set aside and the court below is directed to vacate the order appointing Manuel C. Grey receiver of the property of the

petitioner and to require said Manuel C. Grey to submit his final report at the earliest practicable date. Costs in both instances to be borne by the respondent, Philippine Advertising Corporation. So ordered.

Avanceña, C.J., Street, Malcolm, Villamor, Ostrand, Villa-Real, Abad Santos, Vickers and Imperial, JJ., concur.


76 AGUSTIN, E.P.

4. ABOITIZ vs. PROVINCIAL SHERIFF



SECOND DIVISION

G.R. No. L-35990 June 17, 1981

ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge of the Court of First Instance of Davao, and the PROVINCIAL SHERIFF OF DAVAO DEL

SUR, petitioners, vs. COTABATO BUS COMPANY, INC., respondent.

DE CASTRO, J.:

The instant petition stemmed from Civil Case No. 7329 of the Court of First Instance of Davao (Branch 1) in which a writ of preliminary attachment was issued ex-parte by the

Court on the strength of an affidavit of merit attached to the verified complaint filed by petitioner herein, Aboitiz & Co., Inc., on November 2, 1971, as plaintiff in said case, for the collection of money in the sum of P 155,739.41, which

defendant therein, the respondent in the instant case, Cotabato Bus Co., owed the said petitioner.

By virtue of the writ of preliminary attachment, the provincial sheriff attached personal properties of the defendant bus company consisting of some buses,

machinery and equipment. The ground for the issuance of the writ is, as alleged in the complaint and the affidavit of merit executed by the Assistant Manager of petitioner, that the defendant "has removed or disposed of its properties or

assets, or is about to do so, with intent to defraud its creditors."

Respondent company filed in the lower court an "Urgent Motion to Dissolve or Quash Writ of Attachment" to which was attached an affidavit executed by its Assistant

Manager, Baldovino Lagbao, alleging among other things that "the Cotabato Bus Company has not been selling or disposing of its properties, neither does it intend to do so, much less to defraud its creditors; that also the Cotabato

Bus Company, Inc. has been acquiring and buying more assets". An opposition and a supplemental opposition were filed to the urgent motion. The lower court denied the motion stating in its Order that "the testimony of Baldovino

Lagbao, witness for the defendant, corroborates the facts in the plaintiff's affidavit instead of disproving or showing them to be untrue."

A motion for reconsideration was filed by the defendant bus company but the lower court denied it. Hence, the

defendant went to the Court of Appeals on a petition for certiorari alleging grave abuse of discretion on the part of herein respondent Judge, Hon. Vicente R. Cusi Jr. On giving due course to the petition, the Court of Appeals

issued a restraining order restraining the trial court from enforcing further the writ of attachment and from proceeding with the hearing of Civil Case No. 7329. In its decision promulgated on October 3, 1971, the Court of

Appeals declared "null and void the order/writ of attachment dated November 3, 1971 and the orders of

December 2, 1971, as well as that of December 11, 1971, ordered the release of the attached properties, and made the restraining order originally issued permanent.

The present recourse is an appeal by certiorari from the decision of the Court of Appeals reversing the assailed orders of the Court of First Instance of Davao, (Branch I),

petitioner assigning against the lower court the following errors:

ERROR I

THE COURT OF APPEALS ERRED IN HASTILY AND PERFUNCTORILY RENDERING, ON OCTOBER 3, 1971, A

DECISION WITHOUT CONSIDERING MOST OF THE EVIDENCE SUCH THAT —

l) EVEN AN IMPORTANT FACT, ESTABLISHED BY DOCUMENTARY

EVIDENCE AND NOT DENIED BY RESPONDENT, IS MENTIONED ONLY AS A "CLAIM" OF PETITIONER COMPANY;

2) THE DECISION CONTAINS NO DISCUSSION AND APPRECIATION OF

THE FACTS AS PROVED, ASSEMBLED AND PRESENTED BY PETITIONER COMPANY SHOWING IN — THEIR TOTALITY — THAT RESPONDENT HAS

REMOVED, DIVERTED OR DISPOSED OF ITS BANK DEPOSITS, INCOME AND OTHER LIQUID ASSETS WITH INTENT

TO DEFRAUD ITS CREDITORS, ESPECIALLY ITS UNSECURED SUPPLIERS;

3) THE DECISION IGNORES THE SIGNIFICANCE OF THE REFUSAL OF RESPONDENT TO PERMIT, UNDER REP.

ACT NO. 1405, THE METROPOLITAN BANK & TRUST CO. TO BRING, IN COMPLIANCE WITH A subpoena DUCES TECUM TO THE TRIAL COURT ALL THE

RECORDS OF RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR

EXAMINATION BY PETITIONER COMPANY FOR THE PURPOSE OF SHOWING DIRECTLY THE REMOVAL,

DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS AND INCOME WITH INTENT TO DEFRAUD ITS CREDITORS.

ERROR II

THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACTS THAT

RESPONDENT'S BANK DEPOSITS ARE


77 AGUSTIN, E.P.

NIL AS PROOF WHICH - TOGETHER WITH RESPONDENT'S ADMISSION OF

AN INCOME OF FROM P10,000.00 to P 14,000.00 A DAY AND THE EVIDENCE THAT IT CANNOT PRODUCE P 634.00 WITHOUT USING A PERSONAL CHECK

OF ITS PRESIDENT AND MAJORITY STOCKHOLDER, AND OTHER EVIDENCE — SHOWS THE REMOVAL OR CHANNELING OF ITS INCOME TO THE LATTER.

ERROR III

THE COURT OF APPEALS ERRED IN

NOT APPRECIATING THE RESCUE AND REMOVAL BY RESPONDENT OF FIVE ATTACHED BUSES, DURING THE DEPENDENCY OF ITS MOTION TO

DISSOLVE THE ATTACHMENT IN THE, TRIAL COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES BY RESPONDENT WITH INTENT TO

DEFRAUD PETITIONER COMPANY, FOR WHOSE BENEFIT SAID BUSES HAD BEEN ATTACHED.

The questions raised are mainly, if not solely, factual revolving on whether respondent bus company has in fact

removed its properties, or is about to do so, in fraud of its creditors. This being so, the findings of the Court of Appeals on said issues of facts are generally considered conclusive and final, and should no longer be disturbed.

However, We gave due course to the petition because it raises also a legal question of whether the writ of attachment was properly issued upon a showing that defendant is on the verge of insolvency and may no longer

satisfy its just debts without issuing the writ. This may be inferred from the emphasis laid by petitioner on the fact that even for the measly amount of P 634.00 payment thereof was made with a personal check of the respondent

company's president and majority stockholder, and its debts to several creditors, including secured ones like the DBP, have remained unpaid, despite its supposed daily income of an average of P 12,000.00, as declared by its assistant manager, Baldovino Lagbao. 1

Going forthwith to this question of whether insolvency, which petitioners in effect claims to have been proven by the evidence, particularly by company's bank account which has been reduced to nil, may be a ground for the

issuance of a writ of attachment, the respondent Court of Appeals correctly took its position in the negative on the strength of the explicit ruling of this Court in Max Chamorro & Co. vs. Philippine Ready Mix Concrete Company, Inc. and Hon. Manuel P. Barcelona. 2

Petitioner, however, disclaims any intention of advancing the theory that insolvency is a ground for the issuance of a writ of attachment , 3 and insists that its evidence -is

intended to prove his assertion that respondent company has disposed, or is about to dispose, of its properties, in fraud of its creditors. Aside from the reference petitioner had made to respondent company's "nil" bank account, as

if to show removal of company's funds, petitioner also cited the alleged non-payment of its other creditors, including

secured creditors like the DBP to which all its buses have been mortgaged, despite its daily income averaging

P12,000.00, and the rescue and removal of five attached buses.

It is an undisputed fact that, as averred by petitioner itself, the several buses attached are nearly junks. However, upon permission by the sheriff, five of them were repaired, but they were substituted with five buses which were also

in the same condition as the five repaired ones before the repair. This cannot be the removal intended as ground for the issuance of a writ of attachment under section 1 (e), Rule 57, of the Rules of Court. The repair of the five buses

was evidently motivated by a desire to serve the interest of the riding public, clearly not to defraud its creditors, as there is no showing that they were not put on the run after their repairs, as was the obvious purpose of their substitution to be placed in running condition.

Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be very remote, if not nil. If removal of the buses

had in fact been committed, which seems to exist only in petitioner's apprehensive imagination, the DBP should not have failed to take proper court action, both civil and criminal, which apparently has not been done.

The dwindling of respondent's bank account despite its

daily income of from P10,000.00 to P14,000.00 is easily explained by its having to meet heavy operating expenses, which include salaries and wages of employees and workers. If, indeed the income of the company were

sufficiently profitable, it should not allow its buses to fall into disuse by lack of repairs. It should also maintain a good credit standing with its suppliers of equipment, and other needs of the company to keep its business a going concern. Petitioner is only one of the suppliers.

It is, indeed, extremely hard to remove the buses, machinery and other equipments which respondent company have to own and keep to be able to engage and continue in the operation of its transportation business.

The sale or other form of disposition of any of this kind of property is not difficult of detection or discovery, and strangely, petitioner, has adduced no proof of any sale or transfer of any of them, which should have been easily obtainable.

In the main, therefore, We find that the respondent Court of Appeals has not committed any reversible error, much less grave abuse of discretion, except that the restraining order issued by it should not have included restraining the

trial court from hearing the case, altogether. Accordingly, the instant petition is hereby denied, but the trial court is hereby ordered to immediately proceed with the hearing of Civil Case No. 7329 and decide it in accordance with the

law and the evidence. No special pronouncement as to costs.

SO ORDERED.


78 AGUSTIN, E.P.

5. PNB vs. PABALAN

Issue:

The petitioner is requesting for certiorari against the writ of execution authorized by the Hon Judge Pabalan regarding

the transfer of funds amounting to P12,724.66 belonging to Philippine Virginia Tobacco Administration.

Facts: Philippine National Bank invoked the doctrine of non-suability in behalf of PVTA. It is to be admitted that under

the present Constitution, what was formerly implicit as a fundamental doctrine in constitutional law has been set forth in express terms: "The State may not be sued without its consent." In addition, the amount held by said bank is subject to garnishment.

Held: The certiorari was dismissed without cost by the Supreme Court saying that the funds held by PNB is subject for

garnishment, thus, the writ of execution be imposed immediately. The non-suability clause raised by PVTA being a government owned corporation was also denied citing previous decisions held by the Supreme Court

specifically citing that of Manila Hotel Employees Association vs Manila Hotel Company and to quote 'it is well-settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation.


Manila

SECOND DIVISION

G.R. No. L-33112 June 15, 1978

PHILIPPINE NATIONAL BANK, petitioner,

vs. HON. JUDGE JAVIER PABALAN, Judge of the Court of First Instance, Branch III, La Union, AGOO TOBACCO PLANTERS ASSOCIATION, INC., PHILIPPINE VIRGINIA

TOBACCO ADMINISTRATION, and PANFILO P. JIMENEZ, Deputy Sheriff, La Union, respondents.

Conrado E. Medina, Edgardo M. Magtalas & Walfrido Climaco for petitioner.

Felimon A. Aspirin fit respondent Agoo 'Tobacco Planters Association, Inc.

Virgilio C. Abejo for respondent Phil. Virginia Tobacco Administration.

FERNANDO, Acting C.J.:

The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding against respondent

Judge Javier Pabalan who issued a writ of execution, 1 followed thereafter by a notice of garnishment of the funds of respondent Philippine Virginia Tobacco Administration, 2 deposited with it, is on the fundamental constitutional law

doctrine of non-suability of a state, it being alleged that such funds are public in character. This is not the first time petitioner raised that issue. It did so before in Philippine National Bank v. Court of industrial Relations, 3

decided only last January. It did not meet with success, this Court ruling in accordance with the two previous cases of National Shipyard and Steel Corporation 4 and Manila

Hotel Employees Association v. Manila Hotel Company, 5 that funds of public corporations which can sue and be sued were not exempt from garnishment. As respondent Philippine Virginia Tobacco Administration is likewise a

public corporation possessed of the same attributes, 6 a similar outcome is indicated. This petition must be dismissed.

It is undisputed that the judgment against respondent Philippine Virginia Tobacco Administration had reached the stage of finality. A writ of execution was, therefore, in order.

It was accordingly issued on December 17, 1970. 7 There was a notice of garnishment for the full amount mentioned in such writ of execution in the sum of P12,724,66. 8 In view of the objection, however, by petitioner Philippine

National Bank on the above ground, coupled with an inquiry as to whether or not respondent Philippine Virginia Tobacco Administration had funds deposited with

petitioner's La Union branch, it was not until January 25, 1971 that the order sought to be set aside in this certiorari proceeding was issued by respondent Judge. 9 Its dispositive portion reads as follows: Conformably with the

foregoing, it is now ordered, in accordance with law, that sufficient funds of the Philippine Virginia Tobacco


79 AGUSTIN, E.P.

Administration now deposited with the Philippine National Bank, La Union Branch, shall be garnished and delivered

to the plaintiff immediately to satisfy the Writ of Execution for one-half of the amount awarded in the decision of November 16, 1970." 10 Hence this certiorari and prohibition proceeding.

As noted at the outset, petitioner Philippine National Bank would invoke the doctrine of non-suability. It is to be

admitted that under the present Constitution, what was formerly implicit as a fundamental doctrine in constitutional law has been set forth in express terms: "The State may not be sued without its consent." 11 If the funds

appertained to one of the regular departments or offices in the government, then, certainly, such a provision would be a bar to garnishment. Such is not the case here. Garnishment would lie. Only last January, as noted in the

opening paragraph of this decision, this Court, in a case brought by the same petitioner precisely invoking such a doctrine, left no doubt that the funds of public corporations

could properly be made the object of a notice of garnishment. Accordingly, this petition must fail.

1. The alleged grave abuse of discretion, the basis of this certiorari proceeding, was sought to be justified on the failure of respondent Judge to set aside the notice of garnishment of funds belonging to respondent Philippine

Virginia Tobacco Administration. This excerpt from the aforecited decision of Philippine National Bank v. Court of Industrial Relations makes manifest why such an argument

is far from persuasive. "The premise that the funds could be spoken as public character may be accepted in the sense that the People Homesite and Housing Corporation was a government-owned entity. It does not follow though

that they were exempt. from garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice,

Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the government, and that, as such, the same may not be garnished, attached or levied upon, is untenable for, as a government owned and

controlled corporation, the NASSCO has a personality of its own. distinct and separate from that of the Government. It has — pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 ... , pursuant to which The

NASSCO has been established — all the powers of a corporation under the Corporation Law ... ." Accordingly, it may be sue and be sued and may be subjected to court processes just like any other corporation (Section 13, Act

No. 1459, as amended.)" ... To repeat, the ruling was the appropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by the government." 12

2. The National Shipyard and Steel Corporation decision

was not the first of its kind. The ruling therein could be inferred from the judgment announced in Manila Hotel Employees Association v. Manila Hotel Company, decided as far back as 1941. 13 In the language of its ponente

Justice Ozaeta "On the other hand, it is well-settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like

any other corporation. (Bank of the United States v. Planters' Bank, 9 Wheat. 904, 6 L.ed. 244). By engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac vice of its

sovereign character, so as to render the corporation subject to the rules of law governing private corporations." 14 It is

worth mentioning that Justice Ozaeta could find support for such a pronouncement from the leading American Supreme Court case of united States v. Planters' Bank, 15

with the opinion coming from the illustrious Chief Justice

Marshall. It was handed down more than one hundred fifty years ago, 1824 to be exact. It is apparent, therefore, that petitioner Bank could it legally set forth as a bar or impediment to a notice of garnishment the doctrine of non-suability.

WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.

Barredo, Antonio, Aquino, and Santos, JJ., concur.

Concepcion, Jr., J., is on leave.

Documents

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