PROVREM CASE DIGEST (1-10)

CASE NO. 1
G.R. No. 181789, February 03, 2016
GMA NETWORK, INC., Petitioner, v. NATIONAL TELECOMMUNICATIONS COMMISSION,
CENTRAL CATV, INC., PHILIPPINE HOME CABLE HOLDINGS, INC., AND PILIPINO CABLE
CORPORATION, Respondents.

FACTS: Petitioner filed a complaint before the NTC against Skycable, Home Cable and PCC.
Petitioner alleged that the respondents had entered into several transactions that created prohibited
monopolies and combinations of trade in commercial mass media.5 These transactions allegedly
violated the Constitution, Executive Order No. 205, and its implementing rules and regulations.
According to the petitioner, Lopez, Inc. and its affiliate, ABS-CBN Broadcasting Corporation and its
officers, own the majority stocks of Sky Vision. Sky Vision wholly owns Skycable, which operates
cable TV in Metro Manila. Sky Vision and Telemondial Holdings, Inc. (THI) established PCC, which
operates cable TV in the provinces. Sky Vision and THI entered into several transactions, resulting in
Sky Vision's ownership of PCC. Consequently, Sky Vision holds indirect equity interests in the cable
companies owned by Skycable and PCC. On the other hand, Home Cable is a wholly owned
subsidiary of Unilink Communications Corporation (Unilink). 

Lopez, Inc. and its affiliates, Benpres Holdings Corporation and ABS-CBN Broadcasting Corporation
(Benpres Group), executed a Master Consolidation Agreement (MCA) with PLDT and Mediaquest
Holdings, Inc. (PLDT Group) to consolidate their respective ownerships, rights, and interests in Sky
Vision and Unilink under a holding company.

The petitioner prayed for the following reliefs in its complaint:

1. declaring unlawful, and therefore null and void: (a) the mergers, consolidation, and
common control of the respondents Skycable and Home Cable under Beyond
Cable; (b) the mergers and consolidation of the cable companies under
respondents PCC; (c) the acquisition of the assets, permits and controlling shares
of stock of the cable companies by the respondents Sky Cable, Home Cable and
PCC; and (d) the "functional convergence" of the Bayantel and the Skycable/PCC
cable companies, for being contrary to law; and consequently, ordering the
respondents to cease and desist permanently from implementing such mergers,
consolidation, common control and functional convergence; and

(2) Ordering respondents and their component cable companies to maintain the
quality of complainant GMA's signal, free from signal distortion and/or degradation,
in their respective systems under pain of cancellation or revocation of their
licenses or permits to operate should they continue to fail to do so.

The petitioner filed with the NTC a motion for the issuance of a cease and desist order based on
Section 20(g) of the Public Service Law. The petitioner asked the NTC to order the respondents to
cease and desist from continuing the implementation of their operational merger and from
implementing any further merger or consolidation of respondents' ownership, property, privileges,
and right or any part thereof without the approval of the NTC.
The NTC's Ruling

The NTC denied the petitioner's motion for the issuance of a cease and desist order. The NTC also
denied the petitioner's motion for reconsideration, prompting the petitioner to file a petition
for certiorari before the CA, imputing grave abuse of discretion on the NTC.
The CA's Ruling

The CA dismissed the petition and found no grave abuse of discretion on the part of the NTC.
The CA ruled that the NTC has the discretionary power to issue a cease and desist order and,
therefore, cannot be compelled to do so.
ISSUE: WHETHER OR NOT THE CA ERRED IN DENYING THE PETITIONER’S MOTION FOR
THE ISSUANCE OF THE CEASE-AND-DESIST ORDER ON THE MERGER  AND
CONSOLIDATION

RULING: As to the main issue in the present case, we rule that the CA committed grave abuse of
discretion for its use of the wrong considerations in denying the petitioner's motion for the issuance of
a cease and desist order on the ground that its resolution would resolve the main case without trial.
We nevertheless join the CA's conclusion of denial based on the nature of the petitioner's motion as
a provisional remedy.

Section 3, Part VI of the NTC Rules of Procedure and Practices grants the NTC the power to
issue provisional reliefs upon the filing of a complaint or at any subsequent stage. For this reason,
the NTC has the authority to determine the propriety of the issuance of a cease and desist order,
which is a provisional relief.

These remedies are provisional because they are temporary measures availed of during the
pendency of the action; they are ancillary because they are mere incidents in and are
dependent on the result of the main action.42 chanroblesvirtuallawlibrary

In these lights, we reverse the CA's findings and rule that the NTC gravely abused its discretion in
denying the motion for the issuance of a cease and desist order based only on the ground that it
would necessarily resolve the main action.

Be that as it may, we cannot grant the petitioner's prayer asking the Court to issue the cease and
desist order. The petitioner failed to comply with the requirements for its issuance.

In the present case, the petitioner prayed that the NTC order the respondents to cease and desist
from continuing the implementation of their operational merger and from implementing any further
merger or consolidation of respondents' ownership, property, privileges, and rights or any part thereof
without the approval of the NTC.

The above allegations confirm that the petitioner's prayer for the issuance of a cease and desist order
is actually a prayer for the issuance of a preliminary injunction. Thus, the petitioner's entitlement to
the issuance of a cease and desist order depends on its compliance with the requisites for the
issuance of a preliminary injunction.

To be entitled to the injunctive writ, the petitioner must show that (1) there exists a clear and
unmistakable right to be protected; (2) this right is directly threatened by an act sought to be
enjoined; (3) the invasion of the right is material and substantial; and (4) there is an urgent and
paramount necessity for the writ to prevent serious and irreparable damage. 55

The petitioner failed to comply with the above requirements.

A writ of preliminary injunction may be issued only upon clear showing of an actual existing right to
be protected during the pendency of the principal action. When the complainant's right or title is
doubtful or disputed, it does not have a clear legal right and, therefore, the issuance of injunctive
relief is improper.

Resolving the propriety of the issuance of a cease and desist order based on the petitioner's factual
allegations and legal basis, we find that the petitioner failed to clearly establish its right to be
protected under Section 20(g) of the Public Service Act. The petitioner alleged that the respondents
have consolidated their operations without the requisite approval from the NTC.

Section 20(g) of the Public Service Act provides as follows:

Acts requiring the approval of the Commission. - Subject to established limitations

 and exceptions and saving provisions to the contrary, it shall be unlawful for any public
service or for the owner, lessee or operator thereof, without the approval and
authorization of the Commission previously had:
xxxx

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates,
privileges, or rights or any part thereof; or merge or consolidate its property, franchises
privileges or rights, or any part thereof, with those of any other public service. The
approval herein required shall be given, after notice to the public and hearing the
persons interested at a public hearing, if it be shown that there are just and reasonable
grounds for making the mortgaged or encumbrance, for liabilities of more than one year
maturity, or the sale, alienation, lease, merger, or consolidation to be approved, and that the
same are not detrimental to the public interest, and in case of a sale, the date on which the
same is to be consummated shall be fixed in the order of approval: Provided, however, that
nothing herein contained shall be construed to prevent the transaction from being
negotiated or completed before its approval or to prevent the sale, alienation, or lease by
any public service of any of its property in the ordinary course of its business. (Emphasis
supplied)

Clearly, the above provision expressly permits the negotiation or completion of transactions

involving merger or consolidation of property, franchises, privileges or rights even prior to the
required NTC approval.

Applying Section 20(g) of the Public Service Act to the present case, the respondents' negotiation
and even completion of transactions constituting the alleged consolidation of property, franchises,
privileges, or rights - by themselves - are permitted and do not violate the provision. What the
provision prohibits is the implementation or consummation of the transaction without the NTC's
approval.

Under these evidentiary facts, the motion for a cease and desist order is clearly still premature.

CASE NO. 2

G.R. No. 219345, January 30, 2017

SECURITY BANK CORPORATION, Petitioner, v. GREAT WALL COMMERCIAL PRESS
COMPANY, INC., ALFREDO BURIEL ATIENZA, FREDINO CHENG ATIENZA AND SPS.
FREDERICK CHENG ATIENZA AND MONICA CU ATIENZA, Respondents.

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

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

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

ISSUE: WHETHER OR NOT THE COURT OF APPEALS ERRED IN NULLIFYING THE WRIT OF
PRELIMINARY ATTACHMENT ISSUED BY THE REGIONAL TRIAL COURT.
RULING:The Court finds merit in the petition.
Preliminary Attachment
A writ of preliminary attachment is a provisional remedy issued upon the order of the court where an
action is pending. Through the writ, the property or properties of the defendant may be levied upon
and held thereafter by the sheriff as security for the satisfaction of whatever judgment might be
secured by the attaching creditor against the defendant. The provisional remedy of attachment is
available in order that the defendant may not dispose of the property attached, and thus prevent the
satisfaction of any judgment that may be secured by the plaintiff from the former.17
In this case, Security Bank relied on Section 1 (d), Rule 57 of the Rules of Court as basis of its
application for a writ of preliminary attachment. It reads:

RULE 57
Preliminary Attachment
Section 1. Grounds upon which attachment may issue. — At the commencement of
the action or at any time before entry of judgment, a plaintiff or any proper party may
have the property of the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases:
xxx
(d) In an action against a party who has been guilty of a fraud in contracting the debt
or incurring the obligation upon which the action is brought, or in the performance
thereof;
xxx
For a writ of preliminary attachment to issue under the rule, the applicant must sufficiently show the
factual circumstances of the alleged fraud. It is settled that fraudulent intent cannot be inferred from
the debtor's mere non-payment of the debt or failure to comply with his obligation.18
While fraud cannot be presumed, it need not be proved by direct evidence and can well be inferred
from attendant circumstances. Fraud by its nature is not a thing susceptible of ocular observation or
readily demonstrable physically; it must of necessity be proved in many cases by inferences from
circumstances shown to have been involved in the transaction in question.19
To support its allegation of fraud, Security Bank attached the Affidavit 21 of German Vincent Pulgar IV
(Pulgar), the Manager of the Remedial Management Division of the said bank. He detailed how
respondents represented to Security Bank that they would pay the loans upon their maturity date.
Pulgar added that respondents signed the Credit Agreement which contained the Warranty of
Solvency and several Trust Receipt Agreements in favor of Security Bank. The said trust receipts
were attached to the complaint which stated that respondents were obligated to turn over to Security
Bank the proceeds of the sale of the good or to return the goods. The several demand letters sent by
Security Bank to respondents, which were unheeded, were likewise attached to the complaint. These
pieces of evidence were presented by Security Bank during the hearing of the application for the
issuance of a writ of preliminary attachment in the RTC.
After a judicious study of the records, the Court finds that Security Bank was able to substantiate its
factual allegation of fraud, particularly, the violation of the trust receipt agreements, to warrant the
issuance of the writ of preliminary attachment.

CASE NO. 3

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

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

FACTS: On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to
respondent RCJ Lines four Carrier Paris 240 air conditioning units for buses (units). The units
included compressors, condensers, evaporators, switches, wiring, circuit boards, brackets, and
fittings.
Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year
warranty on parts and labor. RCJ Lines issued three post-dated checks in favor of Phil-Air to partly
cover the unpaid balance.

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

Before presenting the third check for payment, Phil-Air sent a demand letter to Rolando Abadilla, Sr.
asking him to fund the post-dated checks. In view of the failure of RCJ Lines to pay the balance
despite demand, Phil-Air filed on April 1, 1998 the complaint  for sum of money with prayer for the
issuance of a writ of preliminary attachment.

In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the
total amount of P1,240,000.00 and that it had only paid P400,000.00. It refused to pay the balance
because Phil-Air allegedly breached its warranty.

RCJ Lines averred that the units did not sufficiently cool the buses despite repeated repairs. Phil-Air
purportedly represented that the units were in accord with RCJ Lines’ cooling requirements as shown
in Phil-Air’s price quotation. The price quotation provided that full payment should be made upon the
units’ complete installation. Complete installation, according to RCJ Lines, is equivalent to being in
operational condition.

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

ISSUES:

1. WHETHER THE CLAIM OF PHIL-AIR WAS BARRED BY LACHES;

(2) WHETHER PHIL-AIR SHOULD REIMBURSE RCJ LINES FOR THE COUNTERBOND
PREMIUM AND ITS ALLEGED UNREALIZED PROFITS;

(3) WHETHER RCJ LINES PROVED ITS ALLEGED UNREALIZED PROFITS ARISING FROM THE
ENFORCEMENT OF THE PRELIMINARY WRIT OF ATTACHMENT.

HELD:

1. Phil-Air’s claim is not barred by laches. In general, there is no room to apply the concept of laches
when the law provides the period within which to enforce a claim or file an action in court. Phil-Air’s
complaint for sum of money is based on a written contract of sale. The ten-year prescriptive period
under Article 1144 of the Civil Code thus applies.

In the present case, both parties admit the existence and validity of the contract of sale. They
recognize that the price quotation dated August 4, 1989, contained the terms and conditions of the
sale contract. They also agree that the price and description of the units were indicated on the sales
invoice.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do
that which by exercising due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.

While the CA correctly held that prescription and estoppel by laches are two different concepts, it
failed to appreciate the marked distinctions between the two concepts.
The court resolves whether the claimant asserted its claim within a reasonable time and whether its
failure to do so warrants the presumption that it either has abandoned it or declined to assert it. The
court determines the claimant’s intent to assert its claim based on its past actions or lack of action.
After all, what is invoked in instances where a party raises laches as a defense is the equity
jurisdiction of the court.

On the other hand, if the law gives the period within which to enforce a claim or file an action in court,
the court confirms whether the claim is asserted or the action is filed in court within the prescriptive
period. The court determines the claimant’s intent to assert its claim by simply measuring the time
elapsed from the proper reckoning point (e.g., the date of the written contract) to the filing of the
action or assertion of the claim.

In sum, where the law provides the period within which to assert a claim or file an action in court, the
assertion of the claim or the filing of the action in court at any time within the prescriptive period is
generally deemed reasonable, and thus, does not call for the application of laches. As we held in one
case, unless reasons of inequitable proportions are adduced, any imputed delay within the
prescriptive period is not delay in law that would bar relief.

Not all the elements of laches are present. To repeat, Phil-Air filed the complaint with the RTC on
April 1, 1998. The time elapsed from August 4, 1989 (the date of the price quotation, which is the
earliest possible reckoning point), is eight years and eight months, well within the ten-year
prescriptive period. There was simply no delay (second element of laches) where Phil-Air can be said
to have negligently slept on its rights. there is no basis for laches as the facts of the present case do
not give rise to an inequitable situation that calls for the application of equity and the principle of
laches.

2. Phil-Air is not directly liable for the counter-bond premium and RCJ Lines’ alleged unrealized
profits.

A writ of preliminary attachment is a provisional remedy issued by the court where an action is
pending to be levied upon the property or properties of the defendant. The property is held by the
sheriff as security for the satisfaction of whatever judgment that might be secured by the attaching
party against the defendant.

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

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

The enforcement of the writ notwithstanding, the party whose property is attached is afforded relief to
have the attachment lifted. There are various modes of discharging an attachment under Rule 57,
viz.:

(1) by depositing cash or posting a counter-bond under Section 12;

(2) by proving that the attachment bond was improperly or irregularly issued or enforced, or that the
bond is insufficient under Section 13;
(3) by showing that the attachment is excessive under Section 13; and (4) by claiming that the
property is exempt from execution under Section 2.

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

Under the first mode, the court will order the discharge of the attachment after (1) the movant makes
a cash deposit or posts a counterbond and (2) the court hears the motion to discharge the
attachment with due notice to the adverse party.
The amount of the cash deposit or counter-bond must be equal to that fixed by the court in the order
of attachment, exclusive of costs. The cash deposit or counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action.

The discharge under Section 12 takes effect upon posting of a counter-bond or depositing cash, and
after hearing to determine the sufficiency of the cash deposit or counter-bond. On the other hand, the
discharge under Section 13 takes effect only upon showing that the plaintiff’s attachment bond was
improperly or irregularly issued, or that the bond is insufficient. The discharge of the attachment
under Section 13 must be made only after hearing.

As discussed above, it is patent that under the Rules, the attachment bond answers for all damages
incurred by the party against whom the attachment was issued. Thus, Phil-Air cannot be held directly
liable for the costs adjudged to and the damages sustained by RCJ Lines because of the attachment.
Section 4 of Rule 57 positively lays down the rule that the attachment bond will pay “all the costs
which may be adjudged to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto.”

The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and counter-bond
premium, should have ordered the execution of the judgment award on the attachment bond. To
impose direct liability to Phil-Air would defeat the purpose of the attachment bond, which was not
dissolved despite the lifting of the writ of preliminary attachment.

The order to refund the counter-bond premium is likewise erroneous. The premium payment may be
deemed a cost incurred by RCJ Lines to lift the attachment. Such cost may be charged against the
attachment bond.

3. RCJ Lines failed to prove its alleged unrealized profits.

In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers unrealized profits,
the amount of unrealized profits must be established and supported by independent evidence of the
mean income of the business undertaking interrupted by the illegal seizure.

We explained in Spouses Yu that to merit an award of actual damages arising from a wrongful
attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss
or injury suffered and the amount thereof. Such loss or injury must be of the kind which is not only
capable of proof but must actually be proved with a reasonable degree of certainty. As to its amount,
the same must be measurable based on specific facts, and not on guesswork or speculation.

Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of the required
proof. Its average daily income cannot be derived from the summary of daily cash collections from
only two separate occasions, i.e., August 22-23 and September 2-3, 2000. The data submitted is too
meager and insignificant to conclude that the buses were indeed earning an average daily income of
P12,000.00.

More significant, the person who prepared the unsigned summary of daily cash collections was not
presented before the RTC to verify and explain how she arrived at the computation. The dispatchers
who prepared the collection reports were likewise not presented; some of the reports were also
unsigned. While the summary was approved by Rolando Abadilla, Jr., in his testimony on the alleged
unrealized profits was uncorroborated and self-serving.

Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss when two of its
buses were wrongfully seized, although the amount cannot be determined with certainty.

We note that in its prayer for the issuance of the writ of preliminary attachment, Phil-Air alleged that
RCJ Lines was guilty of fraud in entering into the sale transaction. A perusal of the record, however,
would show that Phil-Air failed to prove this bare assertion. This justifies an award of temperate or
moderate damages in the amount of Php 50,000.00.
CASE NO. 4

WATERCRAFT VENTURE CORPORATION v. ALFRED RAYMOND WOLFE, GR No. 181721,

2015-09-09

Facts:
Sometime in June 1997, Watercraft hired respondent Alfred Raymond Wolfe (Wolfe), a British
national and resident of Subic Bay Freeport Zone, Zambales, as its Shipyard Manager.
During his empolyment, Wolfe stored the sailboat, Knotty Gull, within Watercraft1 s boat storage
facilities, but never paid for the storage fees.

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

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

Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for Collection of Sum of Money with
Damages with an Application for the Issuance of a Writ of Preliminary Attachment.

In his Answer, Wolfe... denied owing Watercraft the amount of US$16,324.82 representing storage
fees for the sailboat. He explained that the sailboat was purchased in February 1998 as part of an...
agreement between him and Watercraft1 s then General Manager, Barry Bailey, and its President,
Ricky Sandoval, for it to be repaired and used as training or fill-in project for the staff, and to be sold
later on. He added that pursuant to a central Listing Agreement for the sale... of the sailboat, he was
appointed as agent, placed in possession thereof and entitled to a ten percent (10%) sales
commission. He insisted that nowhere in the agreement was there a stipulation that berthing and
storage fees will be charged during the entire time that the... sailboat was in Watercraft's dockyard.
Fie pointed out that the complaint was an offshoot of an illegal dismissal case he... filed against
Watercraft which had been decided in his favor by the Labor Arbiter.

Meanwhile, finding Watercraft's ex-parte application for writ of preliminary attachment sufficient in
form and in substance pursuant to Section 1 of Rule 57 of the Rules of Court, the RTC granted the
same in the Order dated July 15, 2005. Pursuant to the Order dated July 15, 2005, the Writ of
Attachment dated August 3, 2005 and the Notice of Attachment dated August 5, 2005 were issued,
and Wolfe's two vehicles, a gray Mercedes Benz with plate number XGJ 819 and a maroon Toyota
Corolla with plate number TFW 110,... were levied upon.

On August 12, 2005, Wolfe's accounts at the Bank of the Philippine Islands were also garnished.
On November 8, 2005, Wolfe filed a Motion to Discharge the Writ of Attachment, arguing that
Watercraft failed to show the existence of fraud and that the mere failure to pay or perform an
obligation does not amount to fraud. Me also claimed that he is not a flight risk for the... following
reasons: (1) contrary to the claim that his Special Working Visa expired in April 2005, his Special
Subic Working Visa and Alien Certificate of Registration are valid until April 25, 2007 and May 11,
2006, respectively; (2) he and his family have been residing in the Philippines since 1997; (3) he is
an existing stockholder and officer of Wolfe Marine Corporation which is registered with the
Securities and Exchange Commission, and a consultant of "Sudeco/Ayala" projects in Subic, a
member of the Multipartite Committee for the new port... development in Subic, and the Subic
Chamber of Commerce; and (4) he intends to finish prosecuting his pending labor case against
Watercraft.

In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to Discharge Writ of Attachment
and Motion for Preliminary Hearing for lack of merit.
Wolfe filed a petition for certiorari before the CA.
The CA granted Wolfe's petition in a Decision dated September 2007

The CA ruled that the act of issuing the writ of preliminary attachment ex-parte constitutes grave
abuse of discretion on the part of the RTC

In the instant case, the Affidavit of Merit executed by Rosario E. Rañoa, Watercraft's Vice-President,
failed to show fraudulent intent on the part of Wolfe to defraud the company. It merely enumerated
the circumstances tending to show the alleged possibility of Wolfe's flight... from the country. And
upon Wolfe's filing of the Motion to Discharge the Writ, what the respondent Judge should have done
was to determine, through a hearing, whether the allegations of fraud were true.

As correctly noted by Wolfe, although Sec. 1 of Rule 57 allows a party to invoke fraud as a ground for
the issuance of a writ of attachment, the Rules require that in all averments of fraud, the
circumstances constituting fraud must be stated with particularity, pursuant to Rule
8, Section 5.

Wolfe's mere failure to pay the boat... storage fees does not necessarily amount to fraud, absent any
showing that such failure was due to [insidious] machinations and intent on his part to defraud
Watercraft of the amount due it.

As to the allegation that Wolfe is a flight risk, thereby warranting the issuance of the writ, the same
lacks merit.

circumstances... should have convinced the trial court that Wolfe would not want to... leave the
country at will just because a suit for the collection of the alleged unpaid boat storage fees has been
filed against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead automatically to
the conclusion that he would leave the country. It is worth noting that all visas issued by the
government to foreigners staying in the Philippines have expiration periods.
These visas, however, may be renewed, subject to the requirements of the law. In Wolfe's case, he
indeed renewed his visa

Issues:
WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE TRIAL
COURT IN FAVOR OF THE PETITIONER IS VALID.
WHETHER THE ALLEGATIONS IN THE AFFIDAVIT OF MERIT CONCERNING FRAUD ARE
SUFFICIENT TO WARRANT THE ISSUANCE OF A PRELIMINARY WRIT OF ATTACHMENT BY
THE TRIAL COURT IN FAVOR OF THE PETITIONER.[7]

Ruling:
The petition lacks merit.

No, the Court agrees with the CA that Watercraft failed to state with particularity the circumstances
constituting fraud, as required by Section 5,[24] Rule 8 of the Rules of Court, and that Wolfe's mere...
failure to pay the boat storage fees does not necessarily amount to fraud, absent any showing that
such failure was due to insidious machinations and intent on his part to defraud Watercraft of the
amount due it.

In Liberty Insurance Corporation v. Court of Appeals,[25] the Court explained that to constitute a
ground for attachment in Section 1(d), Rule 57 of the Rules of Court, it must be shown that the debtor
in contracting the debt or incurring the... obligation intended to defraud the creditor. A debt is
fraudulently contracted if at the time of contracting it, the debtor has a preconceived plan or intention
not to pay. "The fraud must relate to the execution of the agreement and must have been the reason
which induced the... other party into giving consent which he would not have otherwise given."[26]

Fraudulent intent is not a physical entity, but a condition of the mind beyond the reach of the senses,
usually kept secret, very unlikely to be confessed, and therefore, can only be proved by unguarded
expressions, conduct and circumstances.[27] Thus, the... applicant for a writ of preliminary
attachment must sufficiently show the factual circumstances of the alleged fraud because fraudulent
intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his
obligation.[28]

The particulars of such circumstances necessarily include the time, persons, places and specific acts
of fraud committed.[29] An affidavit which does not contain concrete and specific grounds is
inadequate to sustain the issuance of such writ. In fact, mere... general averments render the writ
defective and the court that ordered its issuance acted with grave abuse of discretion amounting to
excess of jurisdiction.[30]

In this case, Watercraft's Affidavit of Preliminary Attachment does not contain specific allegations of
other factual circumstances to show that Wolfe, at the time of contracting the obligation, had a
preconceived plan or intention not to pay. Neither can it be inferred from... such affidavit the
particulars of why he was guilty of fraud in the performance of such obligation. To be specific,
Watercraft's following allegation is unsupported by any particular averment of circumstances that will
show why or how such inference or conclusion was arrived at,... to wit: "16. For failing to pay for the
use [of] facilities and services - in the form of boat storage facilities - duly enjoyed by him and for
failing and refusing to fulfill his promise to pay for the said boat storage fees, the Defendant is clearly
guilty of fraud x x... x."[31] It is not an allegation of essential facts constituting Watercraft's causes of
action, but a mere conclusion of law.

With respect to Section 1 (a),[32] Rule 57, the other ground invoked by Watercraft for the issuance of
the writ of preliminary attachment, the Court finds no compelling reason to depart from the CA's
exhaustive ruling to the effect that such writ is... unnecessary because Wolfe is not a flight risk
Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan[34] is displaced. It is well settled
that:... when the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action... the defendant is not allowed to file a motion to dissolve the attachment
under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs
application and affidavits on... which the writ was based - and consequently that the writ based
thereon had been improperly or irregularly issued - the reason being that the hearing on such a
motion for dissolution of the writ would be tantamount to a trial of the merits of the action.

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

Furthermore, the other ground upon which the writ of preliminary attachment was issued by the RTC
is not at the same time the applicant's cause of action. Assuming arguendo that the RTC was correct
in issuing such writ on the ground that Watercraft's complaint involves an... action for the recovery of
a specified amount of money or damages against a party, like Wolfe, who is about to depart from the
Philippines with intent to defraud his creditors, the Court stresses that the circumstances[36] cited in
support thereof are... merely allegations in support of its application for such writ.[37] Such
circumstances, however, are neither the core of Watercraft's complaint for collection of sum of money
and damages, nor one of its three (3) causes of action therein.

CASE NO. 5

EXCELLENT QUALITY APPAREL v. VISAYAN SURETY, GR No. 212025, 2015-07-01

Facts:
On March 26, 1996, petitioner Excellent Quality Apparel, Inc. (petitioner)
, then represented by Max L.F. Ying (Ying), Vice-President for Productions,... entered into a contract
with Multi-Rich Builders (Multi-Rich), a single... proprietorship,... for the construction of a
garment factory within the Cavite Philippine Economic Zone Authority (CPEZA). The duration
of the project was for a maximum period of five (5) monthsg
Included in the contract was an Arbitration Clause in case of dispute.
On November 27, 1996, the construction of the factory building was completed.
On January 26, 2004, Win Multi-Rich filed a complaint for sum of money and damages against
petitioner and Ying before the RTC.[5] It also prayed for the issuance of a writ of attachment, claiming
that Ying was about to abscond and that petitioner had an... impending closure.
Win Multi-Rich then secured the necessary bond in the amount of P8,634,448.20 from respondent
Visayan Surety and Insurance Corporation (Visayan Surety)[6] In the Order,[7] dated February 2,
2004, the RTC issued a writ of... preliminary attachment in favor of Win Multi-Rich.
To prevent the enforcement of the writ of preliminary attachment on its equipment and machinery,
petitioner issued Equitable PCI Bank Check No. 160149,[8] dated February 16, 2004, in the amount
of P8,634,448.20 payable to the Clerk of Court of the RTC.

On February 19, 2004, petitioner filed its Omnibus Motion,[9] seeking to discharge the attachment.
Petitioner also questioned the jurisdiction of the RTC due to the presence of the Arbitration Clause in
the contract. It asserted that the case should have... been referred first to the Construction Industry
Arbitration Commission (CIAC) pursuant to Executive Order (E.O.) No. 1008.

The motion, however, was denied by the RTC... in its Order,[10] dated April 12, 2004
On April 29, 2004, the RTC issued another order[12] directing the deposit of the garnished funds of
petitioner to the cashier of the Clerk of Court of the RTC.

Win Multi-Rich then filed a motion,[13] dated April 29, 2004, to release petitioner's cash deposit to it.
Notably, the motion was granted by the RTC in the Order,[14] dated May 3, 2004. Subsequently, on
May 7, 2004, Win Multi-Rich... posted Surety Bond No. 10198[15] issued by respondent Far Eastern
Surety and Insurance Co., Inc. (FESICO) for the amount of P9,000,000.00, to secure the withdrawal
of the cash deposited by petitioner. Thus, Win Multi-Rich was able to receive the... funds of petitioner
even before the trial began.

On June 18, 2004, petitioner filed a petition for certiorari

The petition sought to. annul and set aside the April 12, 2004 and April 29, 2004 Orders of the RTC.
Petitioner then... filed its Supplemental Manifestation and Motion,[17] asserting that its cash deposit
with the RTC was turned over to Win Multi-Rich.

On March 14, 2006, the CA rendered a decision,[18] annulling the April 12 2004 and April 29, 2004
Orders of the RTC. It ruled, however, that the RTC had jurisdiction over the case inspite of the
arbitration clause because it was a suit for collection... of sum of money.

Aggrieved, petitioner elevated the matter to the Court by way of a petition for review on certiorari
under Rule 45, docketed as G.R. No. 175048.

On February 10, 2009, in G.R. No. 175048, the Court promulgated a decision[21] in favor of
petitioner and held: first, that Win Multi-Rich was not a real party in interest; second, that the RTC
should not have taken cognizance of the... collection suit because the presence of the arbitration
clause vested jurisdiction on the CIAC over all construction disputes between petitioner and Multi-
Rich; and lastly, that Win Multi-Rich could not retain the garnished amount, as the RTC did not have
jurisdiction to... issue the questioned writ of attachment and to order the release of the funds.
the Court's decision became final and executory on June 2, 2009.

On June 26, 2009, petitioner moved for execution thereof, praying for the return of its cash deposit
and, in the event of refusal of Win Multi-Rich to comply, to hold Visayan Surety and FESICO liable
under their respective bonds.[25]

Win Multi-Rich, Visayan Surety and FESICO were served with copies of the motion for execution.
On October 15, 2009, Win Multi-Rich opposed the motion for execution[29] because the cash deposit
awarded to it by the RTC had been paid to suppliers and the said amount was long overdue and
demandable.

The RTC granted the motion for execution in an Order,[30] dated October 19, 2009, and issued a writ
of execution.

On January 15, 2010, the RTC issued the order,[32] granting the surety respondents' motion for
reconsideration and lifting its October 19, 2009 Order insofar as it granted the motion for execution
against Visayan Surety and FESICO. The RTC absolved the... surety respondents because petitioner
did not file a motion for judgment on the attachment bond before the finality of judgment, thus,
violating the surety respondents' right to due process. It further held that the execution against the
surety respondents would go beyond the... terms of the judgment sought to be executed considering
that the Court decision pertained to Win Multi-Rich only.

In the assailed decision, dated October 21, 2013, the CA found petitioner's appeal without merit.
Citing Section 20, Rule 57 of the 1997 Rules of Civil Procedure (Section 20, Rule 57), the CA held
that petitioner failed to timely claim damages against the surety before... the decision of the Court
became final and executory. It further stated that a court judgment could not bind persons who were
not parties to the action as the records showed that Visayan Surety and FESICO were neither
impleaded nor informed of the proceedings before the Court in G.R. No. 175048. It was the view of
the CA that "[hjaving failed to observe very elementary rules of procedure which are mandatory,
[petitioner] caused its own predicament."

Issues:
I
THE ASSAILED DECISION AND THE ASSAILED RESOLUTION OF THE COURT OF APPEALS
SHOULD BE REVERSED AND SET ASIDE FOR BEING CONTRARY TO LAW AND
JURISPRUDENCE CONSIDERING THAT THE RIGHT TO DUE PROCESS OF THE TWO SURETY
COMPANIES WILL NOT BE VIOLATED IF EXECUTION OF THE JUDGMENT
AGAINST THEM IS ALLOWED.
II
THE ASSAILED DECISION AND THE ASSAILED RESOLUTION OF THE COURT OF APPEALS
SHOULD BE REVERSED AND SET ASIDE FOR BEING CONTRARY TO LAW AND
JURISPRUDENCE CONSIDERING THAT TO ALLOW THE EXECUTION AGAINST THE TWO
SURETY COMPANIES WOULD GIVE FULL EFFECT TO THE TERMS OF THE
JUDGMENT.[34]

Ruling:

The petition is partly meritorious.

There was an application for damages; but there was no notice given to Visayan Surety... the
attachment bond was issued by Visayan Surety in order for Win Multi-Rich to secure the issuance of
the writ of attachment. Hence, any application for damages arising from the improper, irregular or
excessive attachment shall be governed by Section 20, Rule 57... the current provision of Section 20,
Rule 57 of the 1997 Rules of Civil Procedure covers application for damages against improper
attachment, preliminary injunction, receivership, and replevin.[43] Consequently, jurisprudence
concerning application... for damages against preliminary injunction, receivership and replevin bonds
can be equally applied in the present case.

In a catena of cases,[44] the Court has cited the requisites under Section 20, Rule 57 in order to
claim damages against the bond, as follows:

The application for damages must be filed in the same case where the bond was issued;
Such application for damages must be filed before the entry of judgment; and
After hearing with notice to the surety.
The first and second requisites, as stated above, relate to the application for damages against the
bond. An application for damages must be filed in the same case where the bond was issued, either
(a) before the trial or (b) before the appeal is perfected or (c) before the... judgment becomes
executory.[45] The usual procedure is to file an application for damages with due notice to the other
party and his sureties. The other method would be to incorporate the application in the answer with
compulsory counterclaim.[46]

The purpose of requiring the application for damages to be filed in the same proceeding is to avoid
the multiplicity of suit and forum shopping. It is also required to file the application against the bond
before the finality of the decision to prevent the alteration of the... immutable judgment.[47]

In the present petition, the Court holds that petitioner sufficiently incorporated an application for
damages against the wrongful attachment in its answer with compulsory counterclaim filed before the
RTC. Petitioner alleged that the issuance of the improper writ of attachment... caused it actual
damages in the amount of at least P3,000,000.00. It added that the Equitable PCI Bank Check No.
160149 it issued to the RTC Clerk of Court, to lift the improper writ of attachment, should be returned
to it.[50] Evidently, these allegations... constitute petitioner's application for damages arising from the
wrongful attachment, and the said application was timely filed as it was filed before the finality of
judgment.

The next requisite that must be satisfied by petitioner to hold Visayan Surety liable would be that the
judgment against the wrongful attachment was promulgated after the hearing with notice to the
surety. Certainly, the surety must be given prior notice and an opportunity to be... heard with respect
to the application for damages before the finality of the judgment. The Court rules that petitioner did
not satisfy this crucial element.

Section 20, Rule 57 specifically requires that the application for damages against the wrongful
attachment, whether filed before the trial court or appellate court, must be with due notice to the
attaching party and his surety or sureties. Such damages may be awarded only after... proper
hearing and shall be included in the judgment on the main case.

Due notice to the adverse party and its surety setting forth the facts supporting the applicant's right to
damages and the amount thereof under the bond is indispensable. The surety should be given an
opportunity to be heard as to the reality or reasonableness of the damages... resulting from the
wrongful issuance of the writ. In the absence of due notice to the surety, therefore, no judgment for
damages may be entered and executed against it.[51]

In the present case, petitioner's answer with compulsory counterclaim, which contained the
application for damages, was not served on Visayan Surety.[59] Also, a perusal of the records[60]
revealed that Visayan Surety was not furnished... any copies of the pleadings, motions, processes,
and judgments concerned with the application for damages against the surety bond. Visayan Surety
was only notified of the application when the motion for execution was filed by petitioner on June 29,
2009, after the judgment in G.R. No. 175048 had become final and executory on June 2, 2009.
FESICO's bond is not covered by Section 20, Rule 57

While Visayan Surety could not be held liable under Section 20, Rule 57, the same cannot be said of
FESICO. In the case at bench, to forestall the enforcement of the writ of preliminary attachment,
petitioner issued Equitable PCI Bank Check No. 160149, dated February 16, 2004,... in the amount
of P8,634,448.20 payable to the Clerk of Court of the RTC. Pursuant to the RTC Order, dated April
29, 2004, the garnished funds of petitioner were deposited to the cashier of the Clerk of Court of the
RTC. The procedure to discharge the writ of preliminary... attachment is stated in Section 12, Rule
57, to wit:

The court shall, after due notice and hearing,... order the discharge of the attachment if the movant
makes a cash deposit, or files a counter-bond executed to the attaching party with the clerk of the
court where the application is made, in an amount equal to that fixed by the court in the order of
attachment, exclusive of... costs.
Win Multi-Rich, however, took a step further and filed a motion to release petitioner's cash deposit to
it. Immediately, the RTC granted the motion and directed Win Multi-Rich to post a bond in favor of
petitioner in the amount of P9,000,000.00 to answer for the damages which... the latter may sustain
should the court decide that Win Multi-Rich was not entitled to the relief sought. Subsequently, Win
Multi-Rich filed a surety bond of FESICO before the RTC and was able to obtain the P8,634,448.20
cash deposit of petitioner, even before the trial... commenced.

Strictly speaking, the surety bond of FESICO is not covered by any of the provisions in Rule 57 of the
Rules of Court because, in the first place, Win Multi-Rich should not have filed its motion to release
the cash deposit of petitioner and the RTC should not have granted the... same. The release of the
cash deposit to the attaching party is anathema to the basic tenets of a preliminary attachment.
The garnished funds or attached properties could only be released... to the attaching party after a
judgment in his favor is obtained. Under no circumstance, whatsoever, can the garnished funds or
attached properties, under the custody of the sheriff or the clerk of court, be released to the attaching
party before the promulgation of... judgment.

Cash deposits and counterbonds posted by the defendant to lift the writ of attachment is a security
for the payment of any judgment that the attaching party may obtain; they are, thus, mere
replacements of the property previously attached.[62] Accordingly,... the P8,634,448.20 cash deposit
of petitioner, as replacement of the properties to be attached, should never have been released to
Win Multi-Rich.

Nevertheless, the Court must determine the nature of the surety bond of FESICO. The cash deposit
or the counter-bond was supposed to secure the payment of any judgment that the attaching party
may recover in the action.[63] In this case, however, Win Multi-Rich was able to withdraw the cash
deposit and, in exchange, it posted a surety bond of FESICO in favor of petitioner to answer for the
damages that the latter may sustain. Corollarily, the surety bond of FESICO substituted the cash
deposit of petitioner as a security for... the judgment. Thus, to claim damages from the surety bond of
FESICO, Section 17, Rule 57 could be applied.

A surety on a counter-bond given to secure the payment of a judgment becomes liable for the
payment of the amount due upon: (1) demand made upon the surety; and (2) notice and summary
hearing on the same... action.[64] Noticeably, unlike Section 20, Rule 57, which requires notice and
hearing before the finality of the judgment in an application for damages, Section 17, Rule 57 allows
a party to claim damages on the surety bond after the judgment has become... executory.

Under Section 20, Rule 57, in relation to Section 4 therein,[66] the surety bond shall answer for all
the costs which may be adjudged to the adverse party and all damages which he may sustain by
reason of the attachment. In other words, the damages sought... to be enforced against the surety
bond are unliquidated. Necessarily, a notice and hearing before the finality of judgment must be
undertaken to properly determine the amount of damages that was suffered by the defendant due to
the improper attachment. These damages to be... imposed against the attaching party and his
sureties are different from the principal case, and must be included in the judgment.

On the other hand, under Section 17, Rule 57, in relation to Section 12 therein, the cash deposit or
the counter-bond shall secure the payment of any judgment that the attaching party may recover in
the action. Stated differently, the damages sought to be charged against the... surety bond are
liquidated. The final judgment had already determined the amount to be awarded to the winning
litigant on the main action. Thus, there is nothing left to do but to execute the judgment against the
losing party, or in case of insufficiency, against its... sureties.

Here, the Court is convinced that a demand against FESICO had been made, and that it was given
due notice and an opportunity to be heard on its defense.

First, petitioner filed a motion for execution on June 29, 2009, a copy of which was furnished to
FESICO;[67] second, petitioner filed a manifestation,[68] dated July 13, 2009, that FESICO was duly
served with the said motion and notified of the hearing on August 7, 2009; third, during the August 7,
2009 hearing on the motion for... execution, the counsels for petitioner, Win Multi-Rich and FESICO
were all present;[69] fourth, in an Order, dated September 16, 2009, FESICO was given fifteen (15)
days to submit its comment or opposition to the motion for execution;[70] and lastly, FESICO filed its
comment[71] on the motion on October 1, 2009. Based on the foregoing, the requirements under
Section 17, Rule 57 have been more than satisfied.

Indeed, FESICO cannot escape liability on its surety bond issued in favor of petitioner. The purpose
of FESICO's bond was to secure the withdrawal of the cash deposit and to answer any damages that
would be inflicted against petitioner in the course of the... proceedings.[72] Also, the undertaking[73]
signed by FESICO stated that the duration of the effeetivity of the bond shall be from its approval by
the court until the action is fully decided, resolved or terminated.

FESICO cannot simply escape liability by invoking that it was not a party in G.R. No. 175048. From
the moment that FESICO issued Surety Bond No. 10198 to Win Multi-Rich and the same was posted
before the RTC, the court has acquired jurisdiction over the surety, and the... provisions of Sections
12 and 17 of Rule 57 became operational. Thus, the Court holds that FESICO is solidarity liable
under its surety bond with its principal Win Multi-Rich.

CASE NO. 6

Ligon vs. RTC Branch 56, Makati, City

FACTS: 
Petitioner Ligon filed before the QC RTC a complaint for the collection of a sum of money with prayer
for the issuance of a writ of preliminary attachment against the Sps. Baladjay, a certain Olivia
Marasigan (Marasigan), Polished Arrow Holdings, Inc. (Polished Arrow), and its incorporators. The
complaint alleges among others that the spouses Baladjay enticed her to extend a short-term loan
secured by a check which bounced upon presentment, and that the subject property was transferred
to respondent Polished Arrow allegedly defendants’ dummy corporation to defraud creditors. The
application for the writ was granted so the subject property was levied upon by annotating the writ on
the dorsal portion of TCT No. 9273.

While the case was pending, a similar complaint for the sum of money damages, and cancellation of
title with prayer for issuance of a writ of preliminary attachment was lodged before the RTC Makati by
the Sps. Vicente against the same respondents. During the proceedings therein, a writ of preliminary
attachment also against the subject property was issued and annotated on the dorsal portion of TCT
No. 9273.

While the case is still pending in QC, the Makati RTC rendered a decision rescinding the transfer of
the subject property to Polished Arrow upon a finding that the same was made in fraud of creditors.
Consequently, the Makati City RTC directed the Register of Deeds of Muntinlupa City to: (a) cancel
TCT No. 9273 in the name of Polished Arrow; and (b) restore TCT No. 8502 “in its previous
condition” in the name of Rosario Baladjay. In the subsequent execution proceedings, the property
was sold at a public auction to respondent Ting.

The RTC Makati then ordered the RDeeds to issue a new certificate in favor of Ting free from any
liens and encumbrances.

Meanwhile the QC RTC ruled in favor of Ligon who sought its execution and discovered the earlier
attachment annotation in her favor has been deleted.

ISSUE: 
W/N the Makati RTC gravely abused its discretion when it ordered the deletion of Ligon’s attachment
lien.

HELD: YES. Case law instructs that an attachment is a proceeding in rem, and, hence, is against the
particular property, enforceable against the whole world. Accordingly, the attaching creditor acquires
a specific lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien
continues until the debt is paid, or sale is had under execution issued on the judgment, or until the
judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.
Thus, a prior registration of an attachment lien creates a preference, such that when an attachment
has been duly levied upon a property, a purchaser thereof subsequent to the attachment takes the
property subject to the said attachment.42 As provided under PD 1529, said registration operates as
a form of constructive notice to all.

Notwithstanding the subsequent cancellation of TCT No. 9273 due to the Makati City RTC’s
December 9, 2004 Decision rescinding the transfer of the subject property from Sps. Baladjay to
Polished Arrow upon a finding that the same was made in fraud of creditors, Ligon’s attachment lien
over the subject property continued to subsist since the attachment she had earlier secured binds the
property itself, and, hence, continues until the judgment debt of Sps. Baladjay to Ligon as adjudged
in the Quezon City Case is satisfied, or the attachment discharged or vacated in some manner
provided by law. The grave abuse of discretion of the Makati City RTC lies with its directive to issue a
new certificate of title in the name of Ting (i.e., TCT No. 19756),47 free from any liens and
encumbrances. This course of action clearly negates the efficacy of Ligon’s attachment lien and,
also, defies the legal characterization of attachment proceedings. It bears noting that Ligon’s claim,
secured by the aforesaid attachment, is against Sps. Baladjay whose ownership over the subject
property had been effectively restored in view of the RTC’s rescission of the property’s previous sale
to Polished Arrow.48Thus, Sps. Ligon’s attachment lien against Sps. Baladjay as well as their
successors-in-interest should have been preserved, and the annotation thereof carried over to any
subsequent certificate of title,49 the most recent of which as it appears on record is TCT No. 31001
in the name of Techico, without prejudice to the latter’s right to protect his own ownership interest
over the subject property.

CASE NO. 7

Davao Light v. CA
FACTS: 
Davao Light filed a complaint for sum of money against Queensland Hotel and Teodorico Adarna.
The complaint contained an ex parte application for a writ of preliminary attachment. The Judge
granted and issued the writ of attachment and the sheriff served the summon against Queensland
Hotel. The respondents contend that the preliminary attachment should not have been issued
because the court has not yet acquired jurisdiction over the person of the defendants. 

ISSUE: 
Whether the writ of preliminary attachment may issue ex parte against a defendant before acquisition
of jurisdiction of the latter’s person by service of summons or his voluntary submission to the court’s
authority?

HELD: 
Yes. The plaintiff may apply for and obtain a writ of preliminary attachment upon fulfilment 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. The court declared that nothing in the Rules of Court makes notice
and hearing indispensable and mandatory requisites for the issuance of the writ of attachment, the
only pre requisite is that the court be satisfied, upon consideration of the affidavit of the applicant or
of some other person who personally knows the facts that a sufficient cause of actions exists, that the
case is one of those mentioned in sec 1 rule 57, that there is no other sufficient security for the claim
sought to be enforced by the action, and that the amount due to the applicant, or the value of the
property the possession of which he is entitled to recover, is as much as the sum for which the order
of attachment is granted above all legal counterclaims. If the court be so satisfied, the order of
attachment shall be granted, and the writ shall issue upon the applicant’s posting of bond executed to
the adverse party in an amount to be fixed by the judge not exceeding the plaintiff’s claim,
conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.

2 ways of discharging the attachment: 1. By posting of a counterbond; 2. By showing of its improper

or irregular issuance. With respect to other provisional remedies; preliminary injunction rule 58;
receivership rule 59; replevin or delivery of personal property rule 60; the rule is the same they may
also be issued ex parte.

CASE NO. 8

PERLA COMPANIA DE SEGUROS, INC V RAMOLETE 

FACTS: 
A PUJ owned by Nelia Enriquez which was insured with TPL to Petitioner, collided with a private jeep
owned and driven by Calixto Palmes (husband of Primitiva Palmes) who died due to said accident.
Primitiva sued Nelia and her driver before the CFI of Cebu. The CFI ruled in favor of Primitiva which
became final and executory. A writ of execution was issued, which however, returned unsatisfied.
Palmes then filed a motion for garnishment praying that an order of garnishment be issued against
the insurance policy issued by petitioner in favor of the judgment debtor. Respondent Judge then
issued an Order directing the Provincial Sheriff to garnish the TPL insurance policy. Petitioner filed
for MR and quashal of the writ of garnishment on the ground that Perla was not a party to the case.
The trial court denied petitioner’s motion. 

ISSUE: 
Whether or not TPL insurance policy may be subject to garnishment? 

HELD: 
Yes. Garnishment has been defined as a species of attachment for reaching any property or credits
pertaining or payable to a judgment debtor. In legal contemplation, it is a forced novation by the
substitution of creditors: the judgment debtor, who is the original creditor of the garnishee is, through
service of the writ of garnishment, substituted by the judgment creditor who thereby becomes creditor
of the garnishee. Garnishment has also been described as a warning to a person having in his
possession property or credits of the judgment debtor, not to pay the money or deliver the property to
the latter, but rather to appear and answer the plaintiff’s suit. In order that the trial court may validly
acquire jurisdiction to bind the person of the garnishee, it is not necessary that summons be served
upon him. The garnishee need not be impleaded as a party to the case. All that is necessary for the
trial court lawfully to bind the person of the garnishee or any person who has in his possession
credits belonging to the judgment debtor is service upon him of the writ of garnishment.

CASE NO. 9

K.O. GLASS CONSTRUCTION v. VALENZUELA

G.R. No. L-48756, September 11, 1982

FACTS: 

An action was instituted by Pinzon to recover from Kenneth O. Glass the agreed rentals of his truck,
as well as the value of spare parts which have not been returned to him upon termination of the
lease. In his verified complaint, Pinzon asked for an attachment against the property of the defendant
consisting of collectibles and payables with the Philippine Geothermal, Inc., on the grounds that the
defendant is a foreigner; that he has sufficient cause of action against the said defendant; and that
there is no sufficient security for his claim against the defendant in the event a judgment is rendered
in his favor.

Kenneth O. Glass moved to quash the writ of attachment on the grounds that there is no cause of
action against him since the transactions or claims of the plaintiff were entered into by and between
the plaintiff and the K.O. Glass Construction Co., Inc., a corporation duly organized and existing
under Philippine laws; that there is no ground for the issuance of the writ of preliminary attachment as
defendant Kenneth O. Glass never intended to leave the Philippines, and even if he does, plaintiff
can not be prejudiced thereby because his claims are against a corporation which has sufficient
funds and property to satisfy his claim; and that the money being garnished belongs to the K.O.
Glass Corporation Co., Inc. and not to defendant Kenneth O. Glass. 

Pinzon amended his complaint to include K.O. Glass Construction Co., Inc. as co-defendant of
Kenneth O. Glass. 

The defendants filed a supplementary motion to discharge and/or dissolve the writ of preliminary
attachment upon the ground that the affidavit filed in support of the motion for preliminary attachment
was not sufficient or wanting in law. 

ISSUE: 

WON the issuance of the writ of preliminary attachment was proper. 

RULING: 

NO.

First, there was no ground for the issuance of the writ of preliminary attachment as provided under
Section 1, Rule 57 of the Revised Rules of Court. 

Pinzon however, did not allege that the defendant Kenneth O. Glass "is a foreigner (who) may, at any
time, depart from the Philippines with intent to defraud his creditors including the plaintiff." He merely
stated that the defendant Kenneth O. Glass is a foreigner. 

There being no showing, much less an allegation, that the defendants are about to depart from the
Philippines with intent to defraud their creditor, or that they are nonresident aliens, the attachment of
their properties is not justified. 

Second, the affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an
affidavit for attachment must state that (a) sufficient cause of action exists, (b) the case is one of
those mentioned in Section I (a) of Rule 57; (c) there is no other sufficient security 'or the claim
sought to be enforced by the action, and (d) the amount due to the applicant for attachment 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. 

While Pinzon 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 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 granted
above all legal counter-claims." It has been held that the failure to allege in the affidavit the requisites
prescribed for the issuance of a writ of preliminary attachment, renders the writ of preliminary
attachment issued against the property of the defendant fatally defective.

CASE NO. 10

PHILIPPINE COMMERCIAL INTERNATIONAL BANK V. ALEJANDRO

GR NO. 175587, SEPTEMBER 21, 2007

Even on the allegation that respondent is a resident temporarily out of the Philippines, petitioner is
still not entitled to a writ of attachment because the trial court could acquire jurisdiction over the case
by substituted service instead of attaching the property of the defendant. 

FACTS: 
Petitioner filed against respondent a complaint for sum of money with prayer for the issuance of a writ
of preliminary attachment. Said complaint alleged that respondent, a resident of Hong Kong,
executed in favor of petitioner a promissory note obligating himself to pay P249,828,588.90 plus
interest. 

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f)
of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice President Corazon B.
Nepomuceno not to withdraw the same prior to their assignment as security for the loan; and (2) that
respondent is not a resident of the Philippines. The trial court granted the application and issued the
writ ex parte. The bank deposits of respondent with Rizal Commercial Banking Corporation (RCBC)
were garnished. Respondent filed a motion to quash the writ contending that the withdrawal of his
unassigned deposits was not fraudulent as it was approved by petitioner. He also alleged that
petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad Regina, Batasan
Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles, where he is a partner. Respondent added that he is the
managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary. 

The trial court issued an order quashing the writ and holding that the withdrawal of respondent’s
unassigned deposits was not intended to defraud petitioner. It concluded that petitioner
misrepresented and suppressed the facts regarding respondent’s residence considering that it has
personal and official knowledge that for purposes of service of summons, respondent’s residence
and office addresses are located in the Philippines. 

Meanwhile, respondent filed a claim for damages in the amount of P25 Million on the attachment
bond. The trial court awarded damages to respondent in the amount of P25 Million without specifying
the basis thereof. Petitioner elevated the case to the Court of Appeals which affirmed the findings of
the trial court. It held that in claiming that respondent was not a resident of the Philippines, petitioner
cannot be said to have been in good faith considering that its knowledge of respondent’s Philippine
residence and office address goes into the very issue of the trial court’s jurisdiction which would have
been defective had respondent not voluntarily appeared before it. 

ISSUE: 

Whether or not issuance of writ of preliminary attachment is the proper remedy.

RULING: 

No. Where the defendant is a resident who is temporarily out of the Philippines, attachment of his/her
property in an action in personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case. Section 16, Rule 14 of the Rules of Court reads: 

Sec. 16. Residents temporarily out of the Philippines. – When an action is commenced against a
defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may,
by leave of court, be also effected out of the Philippines, as under the preceding section.

The preceding section referred to in the above provision is Section 15 which provides for
extraterritorial service – (a) personal service out of the Philippines, (b) publication coupled with the
sending by registered mail of the copy of the summons and the court order to the last known address
of the defendant; or (c) in any other manner which the court may deem sufficient. 

In Montalban v. Maximo, however, the Court held that substituted service of summons (under the
present Section 7, Rule 14 of the Rules of Court) is the normal mode of service of summons that will
confer jurisdiction on the court over the person of residents temporarily out of the Philippines.
Meaning, service of summons may be effected by (a) leaving copies of the summons at the
defendant’s residence with some person of suitable discretion residing therein, or (b) by leaving
copies at the defendant’s office or regular place of business with some competent person in charge
thereof. Hence, the court may acquire jurisdiction over an action in personam by mere substituted
service without need of attaching the property of the defendant. 
In the instant case, it must be stressed that the writ was issued by the trial court mainly on the
representation of petitioner that respondent is not a resident of the Philippines. Obviously, the trial
court’s issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the
case. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City
and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have
served summons by substituted service on the said addresses, instead of attaching the property of
the defendant. The rules on the application of a writ of attachment must be strictly construed in favor
of the defendant. It should be resorted to only when necessary and as a last remedy. 

It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out
of the Philippines, petitioner is still not entitled to a writ of attachment because the trial court could
acquire jurisdiction over the case by substituted service instead of attaching the property of the
defendant. The misrepresentation of petitioner that respondent does not reside in the Philippines and
its omission of his local addresses was thus a deliberate move to ensure that the application for the
writ will be granted.