Prov Rem Rule 57

[G.R. No. 185734. July 3, 2013.
]
ALFREDO C. LIM, JR., petitioner, vs. SPOUSES TITO S. LAZARO and
CARMEN T. LAZARO, respondents.
RESOLUTION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 are the July 10, 2008
Decision 2 and December 18, 2008 Resolution 3 of the Court of Appeals (CA) in CAG.R. SP No. 100270, affirming the March 29, 2007 Order 4 of the Regional Trial
Court of Quezon City, Branch 223 (RTC), which lifted the writ of preliminary
attachment issued in favor of petitioner Alfredo C. Lim, Jr. (Lim, Jr.).
The Facts
On August 22, 2005, Lim, Jr. filed a complaint 5 for sum of money with prayer for
the issuance of a writ of preliminary attachment before the RTC, seeking to recover
from respondents-spouses Tito S. Lazaro and Carmen T. Lazaro (Sps. Lazaro) the
sum of P2,160,000.00, which represented the amounts stated in several dishonored
checks issued by the latter to the former, as well as interests, attorney's fees, and
costs. The RTC granted the writ of preliminary attachment application 6 and upon
the posting of the required P2,160,000.00 bond, 7 issued the corresponding writ on
October 14, 2005. 8 In this accord, three (3) parcels of land situated in Bulacan,
covered by Transfer Certificates of Title (TCT) Nos. T-64940, T-64939, and T-86369
(subject TCTs), registered in the names of Sps. Lazaro, were levied upon. 9
In their Answer with Counterclaim, 10 Sps. Lazaro averred, among others, that Lim,
Jr. had no cause of action against them since: (a) Colim Merchandise (Colim), and
not Lim, Jr., was the payee of the fifteen (15) Metrobank checks; and (b) the PNB
and Real Bank checks were not drawn by them, but by Virgilio Arcinas and Elizabeth
Ramos, respectively. While they admit their indebtedness to Colim, Sps. Lazaro
alleged that the same had already been substantially reduced on account of
previous payments which were apparently misapplied. In this regard, they sought
for an accounting and reconciliation of records to determine the actual amount due.
They likewise argued that no fraud should be imputed against them as the aforesaid
checks issued to Colim were merely intended as a form of collateral. 11 Hinged on
the same grounds, Sps. Lazaro equally opposed the issuance of a writ of preliminary
attachment. 12 CEDScA
Nonetheless, on September 22, 2006, the parties entered into a Compromise
Agreement 13 whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of
P2,351,064.80 on an installment basis, following a schedule of payments covering
the period from September 2006 until October 2013, under the following terms,
among others: (a) that should the financial condition of Sps. Lazaro improve, the
monthly installments shall be increased in order to hasten the full payment of the
entire obligation; 14 and (b) that Sps. Lazaro's failure to pay any installment due or
the dishonor of any of the postdated checks delivered in payment thereof shall
make the whole obligation immediately due and demandable.
PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS
The aforesaid compromise agreement was approved by the RTC in its October 31,
2006 Decision 15 and January 5, 2007 Amended Decision. 16
Subsequently, Sps. Lazaro filed an Omnibus Motion, 17 seeking to lift the writ of
preliminary attachment annotated on the subject TCTs, which the RTC granted on
March 29, 2007. 18 It ruled that a writ of preliminary attachment is a mere
provisional or ancillary remedy, resorted to by a litigant to protect and preserve
certain rights and interests pending final judgment. Considering that the case had
already been considered closed and terminated by the rendition of the January 5,
2007 Amended Decision on the basis of the September 22, 2006 compromise
agreement, the writ of preliminary attachment should be lifted and quashed.
Consequently, it ordered the Registry of Deeds of Bulacan to cancel the writ's
annotation on the subject TCTs.
Lim, Jr. filed a motion for reconsideration 19 which was, however, denied on July
26, 2007, 20 prompting him to file a petition for certiorari 21 before the CA.
The CA Ruling
On July 10, 2008, the CA rendered the assailed decision, 22 finding no grave abuse
of discretion on the RTC's part. It observed that a writ of preliminary attachment
may only be issued at the commencement of the action or at any time before entry
of judgment. Thus, since the principal cause of action had already been declared
closed and terminated by the RTC, the provisional or ancillary remedy of preliminary
attachment would have no leg to stand on, necessitating its discharge. 23
Aggrieved, Lim, Jr. moved for reconsideration 24 which was likewise denied by the
CA in its December 18, 2008 Resolution. 25
Hence, the instant petition.
The Issue Before the Court
The sole issue in this case is whether or not the writ of preliminary attachment was
properly lifted.
The Court's Ruling
The petition is meritorious.
By its nature, preliminary attachment, under Rule 57 of the Rules of Court (Rule
57), is an ancillary remedy applied for not for its own sake but to enable the
attaching party to realize upon the relief sought and expected to be granted in the
main or principal action; it is a measure auxiliary or incidental to the main action.
As such, it is available during its pendency which may be resorted to by a litigant to
preserve and protect certain rights and interests during the interim, awaiting the
ultimate effects of a final judgment in the case. 26 In addition, attachment is also
availed of in order to acquire jurisdiction over the action by actual or constructive
seizure of the property in those instances where personal or substituted service of
summons on the defendant cannot be effected. 27
In this relation, while the provisions of Rule 57 are silent on the length of time
within which an attachment lien shall continue to subsist after the rendition of a
final judgment, jurisprudence dictates that the said lien continues until the debt
is paid, or the sale is had under execution issued on the judgment or until
the judgment is satisfied, or the attachment discharged or vacated in the
same manner provided by law. 28 aCcSDT
Page 1
Applying these principles, the Court finds that the discharge of the writ of
preliminary attachment against the properties of Sps. Lazaro was improper.
Records indicate that while the parties have entered into a compromise agreement
which had already been approved by the RTC in its January 5, 2007 Amended
Decision, the obligations thereunder have yet to be fully complied with
particularly, the payment of the total compromise amount of P2,351,064.80. Hence,
given that the foregoing debt remains unpaid, the attachment of Sps. Lazaro's
properties should have continued to subsist.
In Chemphil Export & Import Corporation v. CA, 29 the Court pronounced that a
writ of attachment is not extinguished by the execution of a compromise agreement
between the parties, viz.:
Did the compromise agreement between Antonio Garcia and the
consortium discharge the latter's attachment lien over the
disputed shares?
suit. 30 Verily, the lifting of the attachment lien would be tantamount to an

abdication of Lim, Jr.'s rights over Sps. Lazaro's properties which the Court, absent
any justifiable ground therefor, cannot allow.
WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision and the
December 18, 2008 Resolution of the Court of Appeals in CA-G.R. SPNo. 100270
are REVERSED and SET ASIDE, and the March 29, 2007 Order of the Regional
Trial Court of Quezon City, Branch 223 is NULLIFIED.Accordingly, the trial court is
directed to RESTORE the attachment lien over Transfer Certificates of Title Nos. T64940, T-64939, and T-86369, in favor of petitioner Alfredo C. Lim, Jr.
SO ORDERED. cSITDa
||| (Lim, Jr. v. Spouses Lazaro, G.R. No. 185734, [July 3, 2013])
x-x-x
CEIC argues that a writ of attachment is a mere auxiliary

remedy which, upon the dismissal of the case, dies a natural
death. Thus, when the consortium entered into a compromise
agreement, which resulted in the termination of their case, the
disputed shares were released from garnishment.
We disagree. To subscribe to CEIC's contentions would be to
totally disregard the concept and purpose of a preliminary
attachment.
xxx xxx xxx
The case at bench admits of peculiar character in the sense that
it involves a compromise agreement. Nonetheless, . . . . The
parties to the compromise agreement should not be
deprived of the protection provided by an attachment lien
especially in an instance where one reneges on his
obligations under the agreement, as in the case at bench,
where Antonio Garcia failed to hold up his own end of the deal,
so to speak.
xxx xxx xxx
If we were to rule otherwise, we would in effect create a back
door by which a debtor can easily escape his creditors.
Consequently, we would be faced with an anomalous situation
where a debtor, in order to buy time to dispose of his
properties, would enter into a compromise agreement he
has no intention of honoring in the first place. The purpose of
the provisional remedy of attachment would thus be lost. It
would become, in analogy, a declawed and toothless tiger.
(Emphasis and underscoring supplied; citations omitted)
In fine, the Court holds that the writ of preliminary attachment subject of this case
should be restored and its annotation revived in the subject TCTs, re-vesting unto
Lim, Jr. his preferential lien over the properties covered by the same as it were
before the cancellation of the said writ. Lest it be misunderstood, the lien or security
obtained by an attachment even before judgment, is in the nature of a vested
interest which affords specific security for the satisfaction of the debt put in
Page 2
G.R. No. 190028
February 26, 2014
LETICIA
P.
LIGON, Petitioner,
vs.
THE REGIONAL TRIAL COURT, BRANCH 56 AT MAKATI CITY AND ITS
PRESIDING JUDGE, JUDGE REYNALDO M. LAIGO, SHERIFF IV LUCITO V.
ALEJO, ATTY. SILVERIO GARING, MR. LEONARDO J. TING, AND MR. BENITO
G. TECHICO, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 is the Decision2 dated October 30,
2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106175, finding no grave
abuse of discretion on the part of the Regional Trial Court of Makati City, Branch 56
(Makati City RTC) in issuing the following orders (Assailed Orders) in Civil Case No.
03-186:
(a) the Order3 dated February 9, 2007 which directed the Register of Deeds
of Muntinlupa City, respondent Atty. Silverio Garing (Atty. Garing), to (1)
register the Officer's
Final Deed of Sale issued by respondent SheriffLucito V. Alejo (Sheriff
Alejo) on October 27, 2006 in favor of the highest bidder, respondent
Leonardo J. Ting (Ting), (2) cancel Transfer Certificate of Title (TCT) No.
8502/T44 in the name of Spouses Rosario and Saturnino Baladjay (Sps.
Baladjay), and (3) issue a new certificate of title in favor of Ting, free from
any liens and encumbrances;
(b) the Order4 dated March 20, 2007 which directed Atty. Garing to comply
with the February 9, 2007 Order under pain of contempt of court; and
(c) the Order5 dated April 25, 2007 which reiterated the directive to Atty.
Garing to issue a new title in favor of Ting after the latters payment of
capital gains, documentary and transfer taxes, as required.
The Facts
On November 20, 2002, petitioner Leticia P. Ligon (Ligon) filed an amended
complaint6 before the Regional Trial Court of Quezon City, Branch 101 (Quezon City
RTC) for collection of sum of money and damages, rescission of contract, and
nullification of title with prayer for the issuance of a writ of preliminary attachment,
docketed as Civil Case No. Q-10-48145 (Quezon City Case), against Sps. Baladjay, a
certain Olivia Marasigan (Marasigan), Polished Arrow Holdings, Inc. (Polished
Arrow), and its incorporators,7 namely, Spouses Julius Gonzalo and Charaine
Doreece Anne Fuentebella (Sps. Fuentebella), Ma. Linda Mendoza (Mendoza),
Barbara C. Clavo (Clavo), Bayani E. Arit, Jr. (Arit, Jr.), and Peter M. Kairuz (Kairuz),
as well as the latters spouses (individual defendants).
In her complaint, Ligon alleged, inter alia, that Rosario Baladjay (Rosario) enticed
her to extend a short-term loan in the amount of P3,000,000.00, payable in a
months time and secured by an Allied Bank post-dated check for the same
amount.8 Ligon likewise claimed that Rosario, as further enticement for the loan
extension, represented that she and her husband Saturnino were in the process of
selling their property in Ayala Alabang Village, Muntinlupa City (subject property),
covered by a clean title, i.e., TCT No. 85029 in the name of Rosario Baladjay,
married to Saturnino Baladjay, and that the proceeds of the said sale could easily
pay-off the loan.10Unfortunately, the Allied Bank check was dishonored upon
presentment and, despite assurances to replace it with cash, Rosario failed to do so.
Moreover, Ligon discovered that the subject property had already been transferred
to Polished Arrow, alleged to be a dummy corporation of Sps. Baladjay and the
individual defendants (defendants). As a result, TCT No. 8502 was cancelled and
replaced on October 11, 2002 by TCT No. 9273 11 in the name of Polished Arrow.
Thus, Ligon prayed that all defendants be held solidarily liable to pay her the
amount of P3,000,000.00, with interest due, as well as P1,000,000.00 as attorneys
fees and another P1,000,000.00 by way of moral and exemplary damages.
Asserting that the transfer of the subject property to Polished Arrow was made in
fraud of Sps. Baladjays creditors, Ligon also prayed that the said transfer be
nullified, and that a writ of preliminary attachment be issued in the interim against
defendants assets, including the subject property. Subsequently, an Amended Writ
of Preliminary Attachment12 was issued on November 26, 2002, and annotated on
the dorsal portion13 of TCT No. 9273 on December 3, 2002 (December 3, 2002
attachment annotation).
On February 18, 2003, a similar complaint for collection of sum of money, damages,
and cancellation of title with prayer for issuance of a writ of preliminary attachment
was lodged before the Makati City RTC, docketed as Civil Case No. 03-186 (Makati
City Case), by Spouses Cecilia and Gil Vicente (Sps. Vicente) against Sps. Baladjay,
Polished Arrow, and other corporations. 14 In that case, it was established that Sps.
Baladjay solicited millions of pesos in investments from Sps. Vicente using conduit
companies that were controlled by Rosario, as President and Chairperson. 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 on March
12, 2003. Thereafter, but before the Quezon City Case was concluded, the Makati
City RTC rendered a Decision 15 dated December 9, 2004 (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.16 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,
married to Saturnino Baladjay.
Meanwhile, in the pending Quezon City Case, Polished Arrow and the individual
defendants (with the exception of Marasigan) were successively dropped 17 as partydefendants, after it was established that they, by themselves directly or through
other persons, had no more ownership, interest, title, or claim over the subject
property. The parties stipulated on the existence of the December 9, 2004 Decision
of the Makati City RTC, and the fact that the same was no longer questioned by
defendants Sps. Fuentebella, Arit, Jr., and Polished Arrow were made conditions for
their dropping as party-defendants in the case.18 In view of the foregoing, the
Quezon City Case proceeded only against Sps. Baladjay and Marasigan and, after
due proceedings, the Quezon City RTC rendered a Decision 19 dated March 26, 2008
Page 3
(March 26, 2008 Decision), directing Sps. Baladjay to pay Ligon the amount
ofP3,000,000.00 with interest, as well as attorneys fees and costs of suit.
On September 25, 2008, the March 26, 2008 Decision of the Quezon City RTC
became final and executory.20However, when Ligon sought its execution, she
discovered that the December 3, 2002 attachment annotation had been deleted
from TCT No. 9273 when the subject property was sold by way of public auction on
September 9, 2005 to the highest bidder, respondent Ting, for the amount
of P9,000,000.00 during the execution proceedings in the Makati City Case, as
evidenced by the Officers Final Deed of Sale 21 dated October 27, 2006 (Officers
Final Deed of Sale) issued by Sheriff Alejo. In this regard, Ligon learned that the
Makati City RTC had issued its first assailed Order 22 dated February 9, 2007 (First
Assailed Order), directing Atty. Garing, as the Register of Deeds of Muntinlupa City,
to: (a) register the Officers Final Deed of Sale on the official Record Book of the
Register of Deeds of Muntinlupa City; and (b) cancel TCT No. 8502 in the name of
Sps. Baladjay and issue a new title in the name of Ting, free from any liens and
encumbrances.
Atty. Garing manifested23 before the Makati City RTC that it submitted the matter en
consulta24 to the Land Registration Authority (LRA) as he was uncertain whether the
annotations on TCT No. 9273 should be carried over to TCT No. 8502. In response
to the manifestation, the Makati City RTC issued its second assailed Order 25dated
March 20, 2007 (Second Assailed Order), directing Atty. Garing to comply with the
First Assailed Order under pain of contempt. It explained that it could not allow the
LRA to carry over all annotations previously annotated on TCT No. 9273 in the name
of Polished Arrow as said course of action would run counter to its December 9,
2004 Decision which specifically ordered the cancellation of said TCT and the
restoration of TCT No. 8502 in its previous condition. It further clarified that: 26
[I]f there were liens or encumbrances annotated on TCT No. 8502 in the name of
Rosario Baladjay when the same was cancelled and TCT No. 9273 was issued by the
Register of Deeds of Muntinlupa City in favor of Polished Arrow Holdings, Inc. based
on the Deed of Absolute Sale executed between the former and the latter, only such
liens or encumbrances will have to be carried over to the new Transfer Certificate of
Title that he (Atty. Garing) is mandated to immediately issue in favor of Leonardo J.
Ting even as the Order of the Court dated February 9, 2007 decreed that a new TCT
be issued in the name of Mr. Leonardo J. Ting, free from any encumbrance. On the
other hand, if TCT No. 8502 in the name of Rosario Baladjay was free from any liens
or encumbrances when the same was cancelled and TCT No. 9273 was issued by the
Register of Deeds of Muntinlupa City in favor of Polished Arrow Holdings, Inc. by
virtue of that Deed of Absolute Sale executed between Rosario Baladjay and
Polished Arrow Holdings, Inc., it necessarily follows that the new Transfer of
Certificate of Title that the said Registrar of Deeds is duty bound to issue
immediately in favor of Leonardo Ting will also be freed from any liens and
encumbrances, as simple as that. (Emphases and underscoring supplied)
Based on the foregoing, it pronounced that it was Atty. Garings ministerial duty "to
promptly cancel TCT No. 8502/T-44 in the name of defendant-spouses Baladjay and
to issue a new Transfer Certificate of Title in the name of the highest bidder,
Leonardo J. Ting."27
Separately, Ting filed a motion before the Makati City RTC on account of Atty.
Garings letter28 dated March 26, 2006 requiring him to comply with certain
documentary requirements and to pay the appropriate capital gains, documentary
stamp and transfer taxes before a new title could be issued in his name. In its third
assailed Order29dated April 25, 2007 (Third Assailed Order), the Makati City RTC
directed Ting to pay the aforesaid taxes and ordered Atty. Garing to immediately
cancel TCT No. 8502 and issue a new title in the formers name.
On June 7, 2007, Atty. Garing issued TCT No. 1975630 in the name of Ting, free from
any liens and encumbrances. Later, Ting sold 31 the subject property to respondent
Benito G. Techico (Techico), resulting in the cancellation of TCT No. 19756 and the
issuance of TCT No. 3100132 in Techicos name.
In view of the preceding circumstances, Ligon filed, inter alia, a certiorari
petition33 against respondent Presiding Judge Reynaldo Laigo (Judge Laigo), Sheriff
Alejo, Atty. Garing, Ting, and Techico (respondents), alleging, among others, that
the Makati City RTC committed grave abuse of discretion in issuing the Assailed
Orders. In this relation, she prayed that the said orders be declared null and void for
having been issued in violation of her right to due process, and resulting in (a) the
deletion of the December 3, 2002 attachment annotation on TCT No. 9273 which
evidences her prior attachment lien over the subject property, and (b) the issuance
of new titles in the names of Ting and Techico.
Consolidated with Ligons certiorari petition is a complaint for indirect
contempt34 against respondents, whereby it was alleged that the latter unlawfully
interfered with the court processes of the Quezon City RTC, particularly by deleting
the December 3, 2002 attachment annotation on TCT No. 9273 which thereby
prevented the execution of the Quezon City RTCs March 26, 2008 Decision.
The CA Ruling
In a Decision35 dated October 30, 2009, the CA dismissed Ligons certiorari petition,
finding that the Makati City RTC did not gravely abuse its discretion in issuing the
Assailed Orders, adding further that the same was tantamount to a collateral attack
against the titles of both Ting and Techico, which is prohibited under Section 48 36of
Presidential Decree No. (PD) 1529. 37 Likewise, it dismissed the indirect contempt
charge for lack of sufficient basis, emphasizing that the Assailed Orders were issued
prior to the Quezon City RTCs Decision, meaning that the said issuances could not
have been issued in disregard of the latter decision.
Aggrieved, Ligon filed the present petition.
The Issues Before the Court
The Court resolves the following essential issues: (a) whether or not the CA erred in
ruling that the Makati City RTC did not gravely abuse its discretion in issuing the
Assailed Orders; and (b) whether or not Judge Laigo should be cited in contempt
and penalized administratively.
The Courts Ruling
Page 4
The petition is partly meritorious.
That said, the Court now proceeds to resolve the second and final issue on indirect
contempt.
A. Issuance of the Assailed Orders vis--vis

B. Indirect Contempt Charges.
Grave Abuse of Discretion.
Attachment is defined as a provisional remedy by which the property of an adverse
party is taken into legal custody, either at the commencement of an action or at any
time thereafter, as a security for the satisfaction of any judgment that may be
recovered by the plaintiff or any proper party.38 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 owners 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.39 Thus, a prior registration40 of an attachment lien creates a preference,41 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 persons.43
Applying these principles to this case, the Court finds that the CA erred in holding
that the RTC did not gravely abuse its discretion in issuing the Assailed Orders as
these issuances essentially disregarded, inter alia, Ligons prior attachment lien over
the subject property patently anathema to the nature of attachment proceedings
which is well-established in law and jurisprudence.44 In this case, Ligon, in order to
secure the satisfaction of a favorable judgment in the Quezon City Case, applied for
and was eventually able to secure a writ of preliminary attachment 45 over the
subject property on November 25, 2002, which was later annotated on the dorsal
portion46of TCT No. 9273 in the name of Polished Arrow on December 3, 2002.
Notwithstanding the subsequent cancellation of TCT No. 9273 due to the Makati City
RTCs 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, Ligons 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 Ligons attachment lien and, also, defies the legal
characterization of attachment proceedings. It bears noting that Ligons claim,
secured by the aforesaid attachment, is against Sps. Baladjay whose ownership
over the subject property had been effectively restored in view of the RTCs
rescission of the propertys previous sale to Polished Arrow.48 Thus, Sps. Ligons
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 latters right to protect his
own ownership interest over the subject property.
While the Court agrees with Ligons position on the issue of grave abuse of
discretion, it holds an opposite view anent its complaint for indirect contempt
against Judge Laigo and/or the respondents in this case.
Contempt of court has been defined as a willful disregard or disobedience of a public
authority. In its broad sense, contempt is a disregard of, or disobedience to, the
rules or orders of a legislative or judicial body or an interruption of its proceedings
by disorderly behavior or insolent language in its presence or so near thereto as to
disturb its proceedings or to impair the respect due to such a body. In its restricted
and more usual sense, contempt comprehends a despising of the authority, justice,
or dignity of a court.50
Contempt of court is of two (2) kinds, namely: direct and indirect
contempt.1wphi1 Indirect contempt or constructive contempt is that which is
committed out of the presence of the court. Any improper conduct tending, directly
or indirectly, to impede, obstruct, or degrade the administration of justice would
constitute indirect contempt.51
The indirect contempt charges in this case involve an invocation of paragraphs b, c,
and d, Section 3, Rule 71 of the Rules of Court which read as follows:
Section 3. Indirect contempt to be punished after charge and hearing. After a
charge in writing has been filed, and an opportunity given to the respondent to
comment thereon within such period as may be fixed by the court and to be heard
by himself or counsel, a person guilty of any of the following acts may be punished
for indirect contempt:
xxxx
(b) Disobedience of or resistance to a lawful writ, x x x;
(c) Any abuse of or any unlawful interference with the processes or
proceedings of a court not constituting direct contempt under section 1 of
this Rule;
(d) Any improper conduct tending, directly or indirectly, to impede,
obstruct, or degrade the administration of justice;
Examining the petition, the Court finds that Ligon failed to sufficiently show how the
acts of each of the respondents, or more specifically, Judge Laigo, constituted any of
the acts punishable under the foregoing section tending towards a wilful disregard
or disobedience of a public authority. In issuing the Assailed Orders, Judge Laigo
merely performed his judicial functions pursuant to the December 9, 2004 Decision
in the Makati City Case which had already attained finality. Thus, without Ligon's
proper substantiation, considering too that Judge Laigo's official acts are accorded
Page 5
with the presumption of regularity,52 the Court is constrained to dismiss the indirect
contempt charges in this case.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 30, 2009
of the Court of Appeals in CA-G.R. SP No. 106175 is REVERSED and SET ASIDE.
Accordingly, the Assailed Orders subject of this case are hereby declared NULL and
VOID only insofar as they relate to the issuance of Transfer Certificate of Title No.
19756 in the name of respondent Leonardo J. Ting free from any liens and
encumbrances. The Register of Deeds of Muntinlupa City is DIRECTED to carry over
and annotate on TCT No. 31001 in the name of respondent Benito G. Techico the
original attachment lien of petitioner Leticia P. Ligon as described in this Decision.
The indirect contempt charges are, however, DISMISSED.
Page 6
G.R. No. 192669
April 21, 2014
RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON, Petitioners,

vs.
OSCAR
VENTANILLA,
JR.,
and
CARMEN
GLORIA
D.
VENTANILLA, Respondents.
RESOLUTION
MENDOZA, J.:
For resolution of the Court is a motion for reconsideration of the Court's January 19,
2011 Resolution1 which denied the petition of Raul F. Saberon, Jr., Joan F. Saberon
and Jacqueline F. Saberon (Saberons). In effect, it affirmed the March 12, 2010
Decision2 and the June 18, 2010 Resolution 3 of the Court of Appeals (CA) in CA-G.R.
CV No. 85520, holding that the June 21, 2005 Decision of the Regional Trial Court,
Branch 80, Quezon City (RTC) in Civil Case No. 96-26486, was correct in, among
others, ordering the cancellation of Transfer Certificate of Title (TCT) Nos. 55396
and 55397 in the name of the Saberons and Samuel Marquez (Marquez).
This case is an offshoot of two (2) cases involving the same property, docketed as
G.R. No. 82978 and G.R. No. 107282, which had been decided by the Court with
finality on November 22, 1990 and March 16, 1994, respectively.
Antecedent Facts
In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the petitioner, being the
owner of several parcels of land situated in Quezon City, constituting the subdivision
known as Capitol Homes Subdivision Nos. I and II. On July 25, 1972, MRCI entered
into a contract with A.U. Valencia & Co. Inc. (AUVC) entitled "Confirmation of Land
Development and Sales Contract," whereby for a consideration, including sales
commission and management fee, the latter was to develop the aforesaid
subdivision with authority to manage the sales thereof; execute contracts to sell to
lot buyers; and issue official receipts. At that time, the president of AUVC, was
Artemio U. Valencia (Valencia).
On March 3, 1970, MRCI and AUVC executed two (2) contracts to sell covering Lots
1 and 2 of Block 17, in favor of Oscar C. Ventanilla, Jr. and Carmen Gloria D.
Ventanilla (Ventanillas), for the combined contract price ofP66,571.00 payable
monthly for ten (10) years. The Ventanillas paid the down payment as stipulated in
the two (2) contracts.
On March 13, 1970, Valencia, holding out himself as president of MRCI, and without
the knowledge of the Ventanillas, resold the same property to Carlos Crisostomo
(Crisostomo), without any consideration. Valencia transmitted the fictitious contract
with Crisostomo to MRCI while he kept the contracts to sell with the Ventanillas in
his private office files. All the amounts paid by the latter were deposited in
Valencias bank account and remitted to MRCI as payments of Crisostomo. The
Ventanillas continued to pay the monthly installment.
Thereafter, MRCI terminated its business relationship with AUVC on account of

irregularities discovered in its collection and remittances. Consequently, Valencia
was removed as president by the Board of Directors of MRCI. He then stopped
transmitting the Ventanillas monthly installments which at that time, already
amounted toP17,925.40 for Lot 1 and P18,141.95 for Lot 2 (appearing in MRCIs
records as credited under the name of Crisostomo).
On June 8, 1973, AUVC sued MRCI to impugn the abrogation of their agency
agreement before the Court of First Instance, Branch 19, Manila (CFI Manila), which
eventually ordered all lot buyers to deposit their monthly amortizations with the
court. On July 17, 1973, AUVC informed the Ventanillas that it was still authorized
by the trial court to collect the monthly amortizations and requested them to
continue remitting their payment, with the assurance that said payments would be
deposited later in court.
For AUVCs failure to forward its collections to the trial court as ordered, MRCI
caused the publication of a notice cancelling the contracts to sell of some lot buyers
including those of Crisostomo in whose name the payments of the Ventanillas had
been credited.
It was not until March 1978 when the Ventanillas discovered Valencias deception.
Believing that they had already remitted the total amount of P73,122.35 for the two
lots, the Ventanillas offered to pay the balance to MRCI. To their shock, their names
as lot buyers did not appear in MRCIs records. Instead, MRCI showed them a copy
of the contract to sell signed by Valencia, in favor of Crisostomo. MRCI refused the
Ventanillas offer to pay for the remainder of the contract price.
Aggrieved, the Ventanillas commenced an action for specific performance,
annulment of deeds and damages against MRCI, AUVC, and Crisostomo with the
Court of First Instance, Branch 17-B, Quezon City (CFI Quezon City) docketed as
Civil Case No. 26411, where Crisostomo was declared in default for his failure to file
an answer.
On November 17, 1980, the CFI Quezon City rendered a decision declaring the
contracts to sell in favor of the Ventanillas as valid and subsisting, and annulling the
contract to sell in favor of Crisostomo. It ordered the MRCI to execute an absolute
deed of sale in favor of the Ventanillas, free from all liens and encumbrances.
Damages and attorney's fees in the total amount of P210,000.00 were also awarded
to the Ventanillas for which the MRCI, AUVC, and Crisostomo were held solidarily
liable. The CFI Quezon City ruled further that if for any reason the transfer of the
lots could not be effected, MRCI, AUVC and Crisostomo would be solidarily liable to
the Ventanillas for the reimbursement of the sum of P73,122.35, representing the
amount they paid for the two (2) lots, and the legal interest thereon from March
1970, plus the decreed damages and attorney's fees. Valencia was also held liable
to MRCI for moral and exemplary damages and attorney's fees.
On separate appeals filed by AUVC and MRCI, the CA sustained the CFI Quezon
Citys decision in toto.
The 1990 Case
Page 7
MRCI then filed before this Court a petition for certiorari docketed as G.R. No.
82978, to review the decision of the CA upholding the solidary liability of MRCI,
AUVC and Crisostomo for the payment of moral and exemplary damages and
attorney's fees to the Ventanillas.
On November 22, 1990, this Court affirmed the decision of the CA and declared the
judgment of the CFI Quezon City immediately executory.
Encouraged by the seeming triumph of their cause, the Ventanillas moved for the
issuance of a writ of execution in Civil Case No. 26411. The writ was issued on May
3, 1991, and served upon MRCI on May 9, 1991. A notice of levy was annotated in
the titles of MRCI on May 31, 1991.
In a manifestation and motion, however, MRCI alleged that the subject properties
could not longer be delivered to the Ventanillas because they had already been sold
to Samuel Marquez (Marquez) on February 7, 1990, while its petition was pending
before this Court. Nevertheless, MRCI offered to reimburse the amount paid by the
Ventanillas, including legal interest plus damages. MRCI also prayed that its tender
of payment be accepted and that all garnishments on their accounts lifted.
The Ventanillas accepted the amount of P210,000.00 as damages and attorneys
fees but rejected the reimbursement offered by MRCI in lieu of the execution of the
absolute deed of sale. They contended that the alleged sale to Marquez was void,
fraudulent, and in contempt of court and that no claim of ownership over the
properties in question had ever been made by Marquez.
On July 19, 1991, the CFI Quezon City ordered that the garnishment made by the
Sheriff upon the bank account of MRCI could be lifted only upon the deposit to the
Court of the amount of P500,000.00 in cash.
MRCI then moved for reconsideration praying that it be ordered to reimburse the
Ventanillas in the amount ofP263,074.10 and that the garnishment of its bank
deposit be lifted. This plea was denied twice by the trial court prompting MRCI to file
another petition for certiorari with the CA, which ruled that the contract to sell in
favor of Marquez did not constitute a legal impediment to the immediate execution
of the judgment. Furthermore, it held that the cash bond fixed by the trial court for
the lifting of the garnishment was fair and reasonable because the value of the lot in
question had considerably increased.
The Ventanillas countered that the validity of the sale to them had already been
established even while the previous petition was still awaiting resolution. The
petition only questioned the solidary liability of MRCI to the Ventanillas. Hence, the
portion of the decision ordering MRCI to execute an absolute deed of sale in their
favor had already become final and executory when MRCI failed to appeal it to the
Court. Thus, an order enjoining MRCI from reselling the property in litigation was
unnecessary. Besides, the unusual lack of interest, on the part of Marquez, to
protect and assert his right over the disputed property was, to the Ventanillas, a
clear indication that the alleged sale to him was merely a ploy of MRCI to evade the
execution of the absolute deed of sale in their favor.
On March 16, 1994, the Court settled the controversy in this wise:
The validity of the contract to sell in favor of the Ventanilla spouses is not disputed
by the parties. Even in the previous petition, the recognition of that contract was
not assigned as error of either the trial court or appellate court. The fact that the
MRCI did not question the legality of the award for damages to the Ventanillas also
shows that it even then already acknowledged the validity of the contract to sell in
favor of the private respondents.
On top of all this, there are other circumstances that cast suspicion on the validity,
not to say the very existence, of the contract with Marquez.
First, the contract to sell in favor of Marquez was entered into after the lapse of
almost ten years from the rendition of the judgment of the trial court upholding the
sale to the Ventanillas.
Second, the petitioner did not invoke the contract with Marquez during the hearing
on the motion for the issuance of the writ of execution filed by the private
respondents. It disclosed the contract only after the writ of execution had been
served upon it.
Third, in its manifestation and motion dated December 21, 1990, the petitioner said
it was ready to deliver the titles to the Ventanillas provided that their counterclaims
against private respondents were paid or offset first. There was no mention of the
contract to sell with Marquez on February 7, 1990.
Fourth, Marquez has not intervened in any of these proceedings to assert and
protect his rights to the subject property as an alleged purchaser in good faith.
The 1994 Case

From the CA, the case was elevated to this Court as G.R. No. 107282 where MRCI
argued that the sale of the properties to Marquez was valid because at the time of
the sale, the issue of the validity of the sale to the Ventanillas had not yet been
resolved. Further, there was no specific injunction against it re-selling the property.
As a buyer in good faith, Marquez had a right to rely on the recitals in the certificate
of title. The subject matter of the controversy having been passed to an innocent
purchaser for value, the execution of the absolute deed of sale in favor of the
Ventanillas could not be ordered by the trial court.
At any rate, even if it be assumed that the contract to sell in favor of Marquez is
valid, it cannot prevail over the final and executory judgment ordering MRCI to
execute an absolute deed of sale in favor of the Ventanillas. No less importantly, the
records do not show that Marquez has already paid the supposed balance
amounting toP616,000.00 of the original price of over P800,000.00. (Emphasis
supplied)
As it turned out, the execution of the judgment in favor of the Ventanillas was yet
far from fruition. Samuel Cleofe, Register of Deeds for Quezon City (ROD Cleofe)
revealed to them, that on March 11, 1992, MRCI registered a deed of absolute sale
Page 8
to Marquez who eventually sold the same property to the Saberons, which
conveyance was registered in July 1992. ROD Cleofe opined that a judicial order for
the cancellation of the titles in the name of the Saberons was essential before he
complied with the writ of execution in Civil Case No. 26411. Apparently, the notice
of levy, through inadvertence, was not carried over to the title issued to Marquez,
the same being a junior encumbrance which was entered after the contract to sell to
Marquez had already been annotated.
Civil Case No. Q-96-26486
Once again, the Ventanillas were constrained to go to court to seek the annulment
of the deed of sale executed between MRCI and Marquez as well as the deed of sale
between Marquez and the Saberons, as the fruits of void conveyances. The case
was docketed as Civil Case No. Q-96-26486 with the Regional Trial Court, Branch
80, Quezon City (RTC).
During the trial, all the defendants, including Edgar Krohn Jr. (Krohn) as President of
MRCI, and Bede Tabalingcos (Tabalingcos) as its legal counsel, filed their respective
answers, except Marquez who was declared in default.
On June 21, 2005, the RTC rendered its decision, the dispositive portion of which
reads:
Wherefore, premises considered, judgment is hereby rendered in favour of plaintiffs,
the spouses Oscar and Carmen Ventanilla, and against defendants MRCI, Krohn,
Tabalingcos, Marquez and Saberon, as follows:
(1) Declaring the Transfer Certificated of Title Nos. 55396 and 55397 in the
name of Samuel Marquez, and Transfer Certificates of Title Nos. 63140 and
63141 in the names of Raul, Jr., Joan and Jacqueline Saberon as null and
void;
(2) Ordering defendant MRCI to receive payment of the balance of the
purchase price to be paid by the plaintiffs and to execute a Deed of
Absolute Sale in favour of the plaintiffs, and in case of failure thereof,
ordering plaintiffs to consign the amount with this Court;
(3) Ordering the Register of Deeds to cancel the titles in the name of
Marquez and the Saberons, and to issue new certificates of title in the
name of the spouses Ventanillas upon registration of the Deed of Absolute
Sale in favour of the plaintiffs or proof of their consignment;
(4) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay
plaintiffs, jointly and severally, the sums of:
a. P100,000.00, as moral damages; and
b. P50,000.00, as attorneys fees.
(5) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay

defendants Saberon, jointly and severally, the sum of P7,118,155.88
representing the value of the properties in dispute and the value of the
improvements introduced by defendants Saberon; and
(6) Ordering the defendants to pay the costs of the suit.
Defendants counterclaims are hereby dismissed for lack of merit.
Separate appeals were instituted by MRCI and Tabalingcos, on one hand, and the
Saberons, on the other. The former contended that no fraudulent act could be
attributed to them for the sale of the property to the title of Marquez, considering
that ROD Cleofe was the one who inadvertently omitted the carrying over of the
notice of levy to Marquez who consequently secured a clean title to the lot. MRCI
Tabalingcos further claimed that the sale to Marquez was effected while the previous
case was still pending, at a time when they had every liberty to believe in the
legality of their position.
Meanwhile, the Saberons relied on one central argumentthat they were
purchasers in good faith, having relied on the correctness of the certificates of title
covering the lots in question; and therefore, holders of a valid and indefeasible title.
In the assailed decision, the CA made its conclusion hinged on the following
findings:
When MRCI executed a Contract to Sell in favor of Marquez in February 1990, it was
in the throes of an appeal from the Decision in Civil Case No. 26411 where its very
first Contracts to Sell to the Ventanillas were upheld over those of Crisostomo. The
Marquez Contract to Sell was in fact the third in a row, and registered a year later,
on May 21, 1991, appears as the first recorded entry in MRCIs titles. The notice of
levy in Civil Case No. 26411 came ten days later, on May 31, 1991. Then, in
February 1992, MRCI executed a deed of absolute sale to Marquez and when the
new titles were issued in Marquez name, the notice of levy was not carried over. A
few months later, these titles were cancelled by virtue of a deed of sale to the
Saberons and, on the same day, TCT 63140 and 63141 were issued clean to them.
According to the CA, the arguments espoused by MRCI and Tabalingcos were
untenable. The said parties were found guilty of bad faith for selling the lots to
Marquez at a time when litigation as to the validity of the first sale to the Ventanillas
was still pending. In other words, MRCI was sufficiently aware of the Court decision
confirming its failure to supervise and control the affairs of its authorized agent,
AUVC, which led to the explicit pronouncement that the first sale to the Ventanillas
was valid. This should have served as a warning to MRCI that it could no longer deal
with the property in deference to the Courts ruling and affirmation of the trial
courts order to execute the deed of sale in favor of the Ventanillas. Obviously, MRCI
took no heed of this caveat. The titles had been transferred yet again to the
Saberons, who claimed to be purchasers in good faith. Unfortunately, there was an
exception to the general rule. The CA cited AFP Mutual Benefit Association Inc. v.
Santiago,4 where the Court ruled that with respect to involuntary liens, an entry of a
notice of levy and attachment in the primary entry or day book of the Registry of
Deeds was considered as sufficient notice to all persons that the land was already
Page 9
subject to attachment. Resultantly, attachment was duly perfected and bound the
land.
The Present Petition
Aggrieved by this CA ruling, the Saberons filed the present petition. They claimed
that in 1992, a certain Tiks Bautista offered the lots to Raul Saberon, who, after
being given photocopies of the titles to the land, inquired with the Registry of Deeds
for Quezon City (ROD-QC) to verify the authenticity of the same. He found no
encumbrances or annotations on the said titles, other than restrictions for
construction and negotiation. As agreed upon, he paid Marquez the amount of Two
Million One Hundred Thousand Pesos (P2,100,000.00) as purchase price for the lots.
Upon payment of the real property taxes, a certification was issued by the Office of
the City Treasurer for the purpose of transferring the title over the property.
Thereafter, Marquez executed the Deed of Absolute Sale in favor of the Saberons.
The ROD-QC then issued TCT Nos. 63140 and 63141 in their names.
Unknown to the Saberons, the former owner of the properties had entered into
contracts to sell with the Ventanillas, way back in 1970. It was only upon receipt of
the summons in the case filed by the Ventanillas with the RTC that they learned of
the present controversy.
With the RTC and the CA rulings against their title over the properties, the Saberons
now come to the Court with their vehement insistence that they were purchasers in
good faith and for value. Before purchasing the lots, they exercised due diligence
and found no encumbrance or annotations on the titles. At the same time, the
Ventanillas also failed to rebut the presumption of their good faith as there was no
showing that they confederated with MRCI and its officers to deprive the Ventanillas
of their right over the subject properties.
According to the Saberons, the CA likewise erred in ruling that there was no
constructive notice of the levy made upon the subject lands. They claimed that the
appellate court could not solely rely on AFP Mutual Benefit Association Inc. v.
Santiago.5 Instead, they urged the Court to interpret
Sections 52 and 42 of Presidential Decree (P.D.) No. 1529 which cover the effects of
registration and the manner thereof; and to examine Section 54 which shows that,
in addition to the filing of the instrument creating, transferring or claiming interest
in registered land less than ownership, a brief memorandum of such shall be made
by the Register of Deeds on the certificate of title and signed by him. Hence, the
ruling in AFP, that an entry of a notice of levy and attachment in the primary entry
or day book of the Registry of Deeds was sufficient notice to all persons that the
land was already subject to such attachment, would be rendered as a superfluity in
light of the mandatory character of the said provision.
The Saberons further pointed that the claim of the Ventanillas over the subject
properties never ripened into ownership as they failed to consign the balance on the
purchase price stipulated on the contracts to sell, thus preventing the obligatory
force of the contract from taking effect.
On October 4, 2010, the Court required the Ventanillas to file their comment to the
petition.6 On January 19, 2011, the Court resolved to deny the Saberons petition
for failure to sufficiently show any reversible error in the assailed judgment by the
CA.7 In its June 15, 2011 Resolution, 8 the Court required the Ventanillas to comment
on the motion for reconsideration filed by the Saberons.
Resolution of the Court
At first glance, it would seem that the case involves convoluted issues brought
about by the number of times the Ventanillas were impelled by circumstances to
seek judicial action. Nonetheless, the antecedents would readily reveal that the
essential facts are not disputed: 1) that the subject properties have indeed been the
objects of various transfers effected by MRCI leading to the current controversy
between the Saberons and the Ventanillas; and 2) that prior to the sale to the
Saberons, a notice of levy as an encumbrance was already in existence.
Sections 51 and 52 of P.D. No. 1529 explain the purpose and effects of registering
both voluntary and involuntary instruments, to wit:
Section 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds,
mortgages, leases or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument, except a will purporting to
convey or affect registered land shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where
the land lies.
Section 52. Constructive notice upon registration. Every conveyance, mortgage,
lease, lien, attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the office of the Register of Deeds for the
province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing or entering.
These provisions encapsulate the rule that documents, like the certificates of title do
not effect a conveyance of or encumbrances on a parcel of land. Registration is the
operative act that conveys ownership or affects the land insofar as third persons are
concerned. By virtue of registration, a constructive notice to the whole world of such
voluntary or involuntary instrument or court writ or processes, is thereby created.
The question of utmost relevance to this case, then, is this: whether or not the
registration of the notice of levy had produced constructive notice that would bind
third persons despite the failure of the ROD-QC to annotate the same in the
certificates of title?
Page 10
In answering these questions, the Court is beckoned to rule on two conflicting rights
over the subject properties: the right of the Ventanillas to acquire the title to the
registered land from the moment of inscription of the notice of levy on the day book
(or entry book), on one hand; and the right of the Saberons to rely on what appears
on the certificate of title for purposes of voluntary dealings with the same parcel of
land, on the other.
and a notice of levy was then entered, albeit on the primary entry book only. The
contract to sell to Marquez was registered on May 21, 1991, while the notice of levy
was issued ten (10) days later, or on May 31, 1991. In February 1992, MRCI
executed the Deed of Sale with Marquez, under whose name the clean titles, sans
the notice of levy, were issued. A year later, or on March 11, 1992, MRCI registered
the deed of sale to Marquez who later sold the same property to the Saberons.
The Saberons maintain that they had no notice of any defect, irregularity or
encumbrance in the titles of the property they purchased. In its decision, however,
the RTC pointed out that their suspicion should have been aroused by the
circumstance that Marquez, who was not engaged in the buy-and-sell business and
had the property for only a few months, would offer the same for sale. Although the
RTC found that the Saberons may not be considered as innocent purchasers for
value because of this circumstance, it, nonetheless, ruled that they, who might well
be unwilling victims of the fraudulent scheme employed by MRCI and Marquez, were
entitled to actual and compensatory damages.
This complex situation could have been avoided if it were not for the failure of ROD
Cleofe to carry over the notice of levy to Marquezs title, serving as a senior
encumbrance that might have dissuaded the Saberons from purchasing the
properties.
To this latter finding, the Court agrees. The Saberons could not be said to have
authored the entanglement they found themselves in. No fault can be attributed to
them for relying on the face of the title presented by Marquez. This is bolstered by
the fact that the RTC decision shows no categorical finding that the Saberons
purchase of the lots from Marquez was tainted with bad faith. That the Saberons
should have harbored doubts against Marquez is too high a standard to impose on a
buyer of titled land. This is in consonance to the rule that the one who deals with
property registered under the Torrens system is charged with notice only of such
burdens and claims as are annotated on the title. 9 "All persons dealing with property
covered by Torrens certificate of title are not required to explore further than what
the Torrens title upon its face indicates in quest for any hidden defect or inchoate
right that may subsequently defeat his right thereto." 10 These rules remain as
essential features of the Torrens system. The present case does not entail a
modification or overturning of these principles.
Be that as it may, no fault can likewise be imputed to the Ventanillas.
In ultimately ruling for the Ventanillas, the courts a quo focused on the superiority
of their notice of levy and the constructive notice against the whole world which it
had produced and which effectively bound third persons including the Saberons.
It has already been established in the two previous cases decided by the Court that
the contracts to sell executed in favor of the Ventanillas are valid and subsisting.
Clearly, it has been acknowledged, even by MRCI, as can be seen in the latters own
choice to only question their solidary liability in the 1990 case and its failure to
assign the same as an error in the 1994 case. In the same vein, the issue on
Marquezs title had already been passed upon and settled in the 1994 case. That he
purchased the lots prior to the annotation of the notice of levy in MRCIs title was of
no moment. In fact, the Court explicitly declared that MRCIs transaction with
Marquez "cannot prevail over the final and executory judgment ordering MRCI to
execute an absolute deed of sale in favor of the Ventanillas."
These favorable findings prompted the Ventanillas to register the notice of levy on
the properties. The records show that on the strength of a final and executory
decision by the Court, they successfully obtained a writ of execution from the RTC
The Court agrees with the position of the RTC in rejecting ROD Cleofes theory.
Distinctions between a contract to sell and a contract of sale are well-established in
urisprudence.1wphi1 In a contract of sale, the title to the property passes to the
vendee upon the delivery of the thing sold; in a contract to sell, ownership is, by
agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price. Otherwise stated, in a contract of sale, the vendor
loses ownership over the property and cannot recover it until and unless the
contract is resolved or rescinded; whereas, in a contract to sell, title is retained by
the vendor until full payment of the price. In the latter contract, payment of the
price is a positive suspensive condition, failure of which is not a breach but an event
that prevents the obligation of the vendor to convey title from becoming effective. 11
It is undeniable, therefore, that no title was transferred to Marquez upon the
annotation of the contract to sell on MRCIs title. As correctly found by the trial
court, the contract to sell cannot be substituted by the Deed of Absolute Sale as a
"mere conclusion" of the previous contract since the owners of the properties under
the two instruments are different.12
Considering that the deed of sale in favor of Marquez was of later registration, the
notice of levy should have been carried over to the title as a senior encumbrance.
Corollary to this is the rule that a levy of a judgment debtor creates a lien, which
nothing can subsequently destroy except the very dissolution of the attachment of
the levy itself.13 Prior registration of the lien creates a preference, since the act of
registration is the operative act to convey and affect the land. 14 Jurisprudence
dictates that the said lien continues until the debt is paid, or the sale is had under
an execution issued on the judgment or until the judgment is satisfied, or the
attachment is discharged or vacated in the same manner provided by law. Under no
law, not even P.D. No. 1529, is it stated that an attachment shall be discharged
upon sale of the property other than under execution.15
Additionally, Section 59 of P.D. No. 1529 provides that, "[i]f, at the time of the
transfer, subsisting encumbrances or annotations appear in the registration book,
they shall be carried over and stated in the new certificate or certificates, except so
far as they may be simultaneously released or discharged." This provision
undoubtedly speaks of the ministerial duty on the part of the Register of Deeds to
carry over existing encumbrances to the certificates of title.
Page 11
From the foregoing, ROD Cleofes theory that a deed of sale, as a mere conclusion
of a contract to sell, turns into a senior encumbrance which may surpass a notice of
levy, has no leg to stand on. It was, in fact, properly rejected by the courts a quo.
Verily, the controversy at hand arose not from the Ventanillas fault, but from ROD
Cleofes misplaced understanding of his duty under the law.
Surely, the Ventanillas had every right to presume that the Register of Deeds would
carry over the notice of levy to subsequent titles covering the subject properties.
The notice was registered precisely to bind the properties and to serve as caution to
third persons who might potentially deal with the property under the custody of the
law. In DBP v. Acting Register of Deeds of Nueva Ecija, 16 the Court ruled that entry
alone produced the effect of registration, whether the transaction entered was a
voluntary or involuntary one, so long as the registrant had complied with all that
was required of him for purposes of entry and annotation, and nothing more
remained to be done but a duty incumbent solely on the Register of Deeds.
While the Court is not unmindful that a buyer is charged with notice only of such
burdens and claims as are annotated on the title, the RTC and the CA are both
correct in applying the rule as to the effects of involuntary registration. In cases of
voluntary registration of documents, an innocent purchaser for value of registered
land becomes the registered owner, and, in contemplation of law the holder of a
certificate of title, the moment he presents and files a duly notarized and valid deed
of sale and the same is entered in the day book and at the same time he surrenders
or presents the owner's duplicate certificate of title covering the land sold and pays
the registration fees, because what remains to be done lies not within his power to
perform. The Register of Deeds is duty bound to perform it. 17 In cases of involuntary
registration, an entry thereof in the day book is a sufficient notice to all persons
even if the owner's duplicate certificate of title is not presented to the register of
deeds. Therefore, in the registration of an attachment, levy upon execution, notice
of lis pendens, and the like, the entry thereof in the day book is a sufficient notice
to all persons of such adverse claim.18
This rule was reiterated in the more recent case of Armed Forces and Police Mutual
Benefit Association, Inc., v. Santiago,19 as relied upon by the CA. In AFP, the Notice
of Levy was presented for registration in the Registry of Deeds of Pasig City. The
Notice was entered in the Primary Entry Book, but was not annotated on the TCT
because the original copy of the said title on file in the Registry of Deeds was not
available at that time. Six (6) days after the presentation of the Notice of Levy, the
Deed of Absolute Sale involving the same parcel of land was presented for
registration and likewise entered. The deed of sale was examined by the same
employee who examined the notice of levy, but she failed to notice that the title
subject of the sale was the same title which was the subject of the notice of levy
earlier presented. Unaware of the previous presentation of the notice of levy, the
Register of Deeds issued a certificate of title in the name of the vendee on the basis
of the deed of sale. The Register of Deeds in AFP immediately requested the vendee
to surrender the documents in light of the mistake discovered so that he could take
appropriate rectification or correction. Settling the issue on whether the notice of
levy could be annotated in the certificate of title, the Court ruled in the affirmative
on the ground that the preference created by the levy on attachment was not
diminished by the subsequent registration of the prior sale. Superiority and
preference in rights were given to the registration of the levy on attachment;
although the notice of attachment had not been noted on the certificate of title, its
notation in the book of entry of the Register of Deeds produced all the effects which
the law gave to its registration or inscription, to wit:
Under the rule of notice, it is presumed that the purchaser has examined every
instrument of record affecting the title. Such presumption is irrebuttable. He is
charged with notice of every fact shown by the record and is presumed to know
every fact shown by the record and to know every fact which an examination of the
record would have disclosed. This presumption cannot be overcome by proof of
innocence or good faith. Otherwise, the very purpose and object of the law requiring
a record would be destroyed. Such presumption cannot be defeated by proof of
want of knowledge of what the record contains any more than one may be
permitted to show that he was ignorant of the provisions of the law. The rule that all
persons must take notice of the facts which the public record contains is a rule of
law. The rule must be absolute; any variation would lead to endless confusion and
useless litigation. For these reasons, a declaration from the court that respondent
was in bad faith is not necessary in order that the notice of levy on attachment may
be annotated on TCT No. PT-94912.
The fact that the notice of levy on attachment was not annotated on the original
title on file in the Registry of Deeds, which resulted in its non-annotation on the title
TCT No. PT-94912, should not prejudice petitioner. As long as the requisites required
by law in order to effect attachment are complied with and the appropriate fees duly
paid, attachment is duly perfected. The attachment already binds the land. This is
because what remains to be done lies not within the petitioners power to perform
but is a duty incumbent solely on the Register of Deeds. (Emphasis supplied)
In the case at bench, the notice of levy covering the subject property was annotated
in the entry book of the ROD QC prior to the issuance of a TCT in the name of the
Saberons. Clearly, the Ventanillas levy was placed on record prior to the sale. This
shows the superiority and preference in rights of the Ventanillas over the property
as against the Saberons. In AFP, the Court upheld the registration of the levy on
attachment in the primary entry book as a senior encumbrance despite the mistake
of the ROD, the Court must, a fortiori, sustain the notice of levy registered by the
Ventanillas notwithstanding the nonfeasance of ROD Cleofe. Again, the prevailing
rule is that there is effective registration once the registrant has fulfilled all that is
needed of him for purposes of entry and annotation, so that what is left to be
accomplished lies solely on the Register of Deeds.20
Suffice it to say, no bad faith can be ascribed to the parties alike. Nevertheless, the
equal footing of the parties necessarily tilts in favor of the superiority of the
Ventanillas notice of levy, as discussed.
The Court also sees no reason to dwell in the contention that the rights or interests
of the Ventanillas in the subject properties never ripened into ownership. It bears
stressing that the previous decisions discussed herein already sealed the validity of
the contract to sell issued to the Ventanillas decades ago. As found by the RTC, it
was MRCIs obstinate refusal to accept their tender of payment, not to mention the
devious transfer of the property, which caused the decade-long delay of the
execution of the deed of sale in their favor. This is a finding that the Court, which is
not a trier of facts, will have to respect.
Page 12
In the same vein, the attribution of laches against the Ventanillas is flawed. Their
failure to learn about the structures being built on the subject lands and the
payment of real property taxes by the Saberons is not sufficient justification to
withhold the declaration of their ownership over it. Against a different factual milieu,
laches may be said to have set it but not so in this case. While the Ventanillas may
have been unaware that improvements were being erected over the lots, this
obliviousness can, by no means, be treated as a lack of vigilance on their part. It
bears stressing that the Ventanillas are now of advanced age and retired as
university professors. Considering the length of litigation which they had to endure
in order to assert their right over the property which they have painstakingly paid
for decades ago, to hold now that they have been remiss in the protection of their
rights would be the height of impropriety, if not injustice. To exact from them an
obligation to visit the land in litigation every so often, lest they be held to have slept
on their rights, is iniquitous and unreasonable. All told, the Ventanillas remain as
innocent victims of deception.
The Court deems it significant to note that the amount of P7,118,115.88 awarded to
the Saberons by the RTC is to be satisfied by MRCI, Krohn, Tabalingcos, and
Marquez, who have not been impleaded as parties to the present petition, thus,
rendering the said award final and executory. The said amount, however, is separate
and distinct from those provided under Article 448 21 in relation to Article 546 22 of the
Civil Code. In the petition, the Saberons invoked the said provisions, claiming that
they are entitled to reimbursement of all the expenses incurred in the introduction
of improvements on the subject lands amounting to P23,058,822.79.
case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case disagreement, the court shall fix the terms
thereof.
Article 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefore.
Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof.
Thus, the two options available to the Ventanillas: 1) they may exercise the right to
appropriate after payment of indemnity representing the value of the improvements
introduced and the necessary and useful expenses defrayed on the subject lots; or
2) they may forego payment of the said indemnity and instead, oblige the Saberons
to pay the price of the land.
Should the Ventanillas elect to appropriate the improvements, the trial court is
ordered to determine the value of the improvements and the necessary and useful
expenses after hearing and reception of evidence. Should the Ventanillas, however,
pursue the option to oblige the Saberons to pay the "price of the land," the trial
court is ordered to determine said price to be paid to the V entanillas.
The Court finds the Saberons to be builders in good faith.

No less than the court a quo observed that "no actual evidence that the Saberons
connived with the MRCI and Marquez to have the titles registered in their names to
the prejudice of the (Ventanillas)" and that what was obvious was that "the
Saberons dealt with clean certificates of titles." Also quite telling on this point is the
finding that MRCI, Krohn, Tabalingcos, and Marquez are liable to the Saberons. The
RTC reasoned out in the following wise:
This Court is not convinced, however that defendants Saberon took part in the
fraudulent scheme employed by the other defendants against the plaintiffs.
Although they may not be considered as innocent purchasers for value shown in the
discussion above, this Court is not ready to conclude that the Saberons joined the
other defendants in their efforts to frustrate plaintiffs rights over the disputed
properties. On the contrary, they may be considered victims of the same fraudulent
employed by defendants MRCI and Marquez, and thus can rightfully claim damages
from the same.23
WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The appealed

March 12, 2010 Decision and the June 18, 2010 Resolution of the Court of Appeals
in CA-G.R. CV No. 85520 are AFFIRMED with modification in that the Ventanillas are
given a period of sixty ( 60) days from finality of this Resolution to decide whether
to pay the Saberons the value of the improvements and the necessary and useful
expenses defrayed on the 2 lots or to oblige the Saberons to pay them the "price" of
said lots. Depending on the option exercised by the Ventanillas, the case is hereby
remanded to the court of origin for further proceedings as to the determination of
reimbursement due to the petitioners or of the "price" of the subject lots due to the
Ventanillas.
SO ORDERED.
Consequently, Article 448 in relation to Article 546 of the Civil Code will
apply.1wphi1 The provisions respectively read:
Article 448. The owner of the land on which anything has been built, sow or planted
in good faith, shall have the right to appropriate, as his own the works, sowing, or
planting, after payment of the indemnity provided for in Article 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land and if its value is considerably more than that of the building or trees. In such
Page 13
[G.R. No. 124642. February 23, 2004.]

ALFREDO
CHING
and
ENCARNACION
CHING, petitioners, vs. THE HON. COURT OF APPEALS and
ALLIED BANKING CORPORATION, respondents.
DECISION
CALLEJO, SR., J p:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the
Decision 1 of the Court of Appeals (CA) dated November 27, 1995 in CAG.R. SP No. 33585, as well as the Resolution 2 on April 2, 1996 denying the
petitioners' motion for reconsideration. The impugned decision granted the private
respondent's petition for certiorari and set aside the Orders of the trial court dated
December 15, 1993 3 and February 17, 1994 4 nullifying the attachment of
100,000 shares of stocks of the Citycorp Investment Philippines under the name of
petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI)
obtained a loan of P9,000,000.00 from the Allied Banking Corporation (ABC). By
virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching,
executed a promissory note for the said amount promising to pay on December 22,
1978 at an interest rate of 14%per annum. 5 As added security for the said loan, on
September 28, 1978, Alfredo Ching, together with Emilio Taedo and Chung Kiat
Hua, executed a continuing guaranty with the ABC binding themselves to jointly and
severally guarantee the payment of all the PBMCI obligations owing the ABC to the
extent of P38,000,000.00. 6 The loan was subsequently renewed on various dates,
the last renewal having been made on December 4, 1980. 7
Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the
amount of P13,000,000.00 payable in eighteen months at 16% interest per annum.
As in the previous loan, the PBMCI, through Alfredo Ching, executed a promissory
note to evidence the loan maturing on June 29, 1981. 8 This was renewed once for
a period of one month. 9
The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the
ABC filed a complaint for sum of money with prayer for a writ of preliminary
attachment against the PBMCI to collect the P12,612,972.88 exclusive of interests,
penalties and other bank charges. Impleaded as co-defendants in the complaint
were Alfredo Ching, Emilio Taedo and Chung Kiat Hua in their capacity as sureties
of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial Court of
Manila, Branch XVIII. 10 In its application for a writ of preliminary attachment, the
ABC averred that the "defendants are guilty of fraud in incurring the obligations
upon which the present action is brought 11 in that they falsely represented
themselves to be in a financial position to pay their obligation upon maturity
thereof." 12 Its supporting affidavit stated, inter alia, that the "[d]efendants have
removed or disposed of their properties, or [are] ABOUT to do so, with intent to
defraud their creditors." 13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order
denying the ABC's application for a writ of preliminary attachment. The trial court
decreed that the grounds alleged in the application and that of its supporting
affidavit "are all conclusions of fact and of law" which do not warrant the issuance of
the writ prayed for. 14 On motion for reconsideration, however, the trial court, in an
Order dated September 14, 1981, reconsidered its previous order and granted the
ABC's application for a writ of preliminary attachment on a bond of P12,700,000.
The order, in relevant part, stated:
With respect to the second ground relied upon for the grant of
the writ of preliminary attachment ex-parte, which is the alleged
disposal of properties by the defendants with intent to defraud
creditors as provided in Sec. 1(e) of Rule 57 of the Rules of
Court, the affidavits can only barely justify the issuance of said
writ as against the defendant Alfredo Ching who has allegedly
bound himself jointly and severally to pay plaintiff the defendant
corporation's obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as
against the defendant Alfredo Ching requiring the sheriff of this
Court to attach all the properties of said Alfredo Ching not
exceeding P12,612,972.82 in value, which are within the
jurisdiction of this Court and not exempt from execution upon,
the filing by plaintiff of a bond duly approved by this Court in
the sum of Twelve Million Seven Hundred Thousand Pesos
(P12,700,000.00) executed in favor of the defendant Alfredo
Ching to secure the payment by plaintiff to him of all the costs
which may be adjudged in his favor and all damages he may
sustain by reason of the attachment if the court shall finally
adjudge that the plaintiff was not entitled thereto.
SO ORDERED. 15
Upon the ABC's posting of the requisite bond, the trial court issued a writ of
preliminary attachment. Subsequently, summonses were served on the
defendants, 16 save Chung Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for
suspension of payments with the Securities and Exchange Commission (SEC),
docketed as SEC Case No. 2250, at the same time seeking the PBMCI's
rehabilitation. 17
On July 9, 1982, the SEC issued an Order placing the PBMCI's business, including its
assets and liabilities, under rehabilitation receivership, and ordered that "all actions
for claims listed in Schedule "A" of the petition pending before any court or tribunal
are hereby suspended in whatever stage the same may be until further orders from
the Commission." 18 The ABC was among the PBMCI's creditors named in the said
schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a
Motion to Dismiss and/or motion to suspend the proceedings in Civil Case No.
142729 invoking the PBMCI's pending application for suspension of payments
Page 14
(which Ching co-signed) and over which the SEC had already assumed
jurisdiction. 19 On February 4, 1983, the ABC filed its Opposition thereto. 20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on
attachment the 100,000 common shares of Citycorp stocks in the name of Alfredo
Ching. 21
Thereafter, in an Order dated September 16, 1983, the trial court partially granted
the aforementioned motion by suspending the proceedings only with respect to the
PBMCI. It denied Ching's motion to dismiss the complaint/or suspend the
proceedings and pointed out that P.D. No. 1758 only concerns the activities of
corporations, partnerships and associations and was never intended to regulate
and/or control activities of individuals. Thus, it directed the individual defendants to
file their answers. 22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the pendency of SEC CaseNo. 2250. This motion
met the opposition from the ABC. 23
On January 20, 1984, Taedo filed his Answer with counterclaim and crossclaim. 24 Ching eventually filed his Answer on July 12, 1984. 25
On October 25, 1984, long after submitting their answers, Ching filed an Omnibus
Motion, 26 again praying for the dismissal of the complaint or suspension of the
proceedings on the ground of the July 9, 1982 Injunctive Order issued in SEC
Case No. 2250. He averred that as a surety of the PBMCI, he must also necessarily
benefit from the defenses of his principal. The ABC opposed Ching's omnibus
motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion 27 praying for the
dismissal of the complaint, arguing that the ABC had "abandoned and waived" its
right to proceed against the continuing guaranty by its act of resorting to
preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his
preliminary attachment bond from P12,700,000 to P6,350,000. 28Alfredo Ching
opposed the motion, 29 but on April 2, 1987, the court issued an Order setting the
incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to adduce
evidence on the actual value of the properties of Alfredo Ching levied on by the
sheriff. 30
On March 2, 1988, the trial court issued an Order granting the motion of the ABC
and rendered the attachment bond of P6,350,000. 31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo
Ching, filed a Motion to Set Aside the levy on attachment. She alleged inter alia that
the 100,000 shares of stocks levied on by the sheriff were acquired by her and her
husband during their marriage out of conjugal funds after the Citycorp Investment
Philippines was established in 1974. Furthermore, the indebtedness covered by the
continuing guaranty/comprehensive suretyship contract executed by petitioner
Alfredo Ching for the account of PBMCI did not redound to the benefit of the
conjugal partnership. She, likewise, alleged that being the wife of Alfredo Ching, she
was a third-party claimant entitled to file a motion for the release of the
properties. 32 She attached therewith a copy of her marriage contract with Alfredo
Ching. 33
The ABC filed a comment on the motion to quash preliminary attachment and/or
motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not
a
party
to
this
present
case;
thus,
she
has no personality to file any motion before this
Honorable Court;
2.2 Said supposed movant did not file any Motion for
Intervention pursuant to Section 2, Rule 12 of the
Rules of Court;
2.3 Said Motion cannot even be construed to be in the
nature of a Third-Party Claim conformably with Sec.
14, Rule 57 of the Rules of Court.
3. Furthermore, assuming in gratia argumenti that the supposed
movant has the required personality, her Motion cannot be
acted upon by this Honorable Court as the above-entitled case
is still in the archives and the proceedings thereon still remains
suspended. And there is noprevious Motion to revive the
same. 34
The ABC also alleged that the motion was barred by prescription or by laches
because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence her
marriage contract to Alfredo Ching to prove that they were married on January 8,
1960; 35 the articles of incorporation of Citycorp Investment Philippines dated May
14, 1979; 36 and, the General Information Sheet of the corporation showing that
petitioner Alfredo Ching was a member of the Board of Directors of the said
corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the
motion to expunge records.
Acting on the aforementioned motion, the trial court issued on December 15, 1993
an Order 37 lifting the writ of preliminary attachment on the shares of stocks and
ordering the sheriff to return the said stocks to the petitioners. The dispositive
portion reads:
WHEREFORE, the instant Motion to Quash Preliminary
Attachment, dated November 9, 1993, is hereby granted. Let
the writ of preliminary attachment subject matter of said
motion, be quashed and lifted with respect to the attached
100,000 common shares of stock of Citycorp Investment
Philippines in the name of the defendant Alfredo Ching, the said
shares of stock to be returned to him and his movant-spouse by
Deputy Sheriff Apolonio A. Golfo who effected the levy thereon
on July 26, 1983, or by whoever may be presently in possession
thereof.
SO ORDERED. 38
Page 15
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the
order but denied the same on February 17, 1994. The petitioner bank forthwith filed
a petition for certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the
nullification of the said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted
without jurisdiction in taking cognizance of, and
granting a "Motion" filed by a complete stranger to the
case.
2. The respondent Judge committed a grave abuse of discretion
in lifting the writ of preliminary attachment without any
basis in fact and in law, and contrary to established
jurisprudence on the matter. 39
On November 27, 1995, the CA rendered judgment granting the petition and setting
aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED,
hereby setting aside the questioned orders (dated December
15, 1993 and February 17, 1994) for being null and void.
SO ORDERED. 40
The CA sustained the contention of the private respondent and set aside the
assailed orders. According to the CA, the RTC deprived the private respondent of its
right to file a bond under Section 14, Rule 57 of the Rules of Court. The petitioner
Encarnacion T. Ching was not a party in the trial court; hence, she had no right of
action to have the levy annulled with a motion for that purpose. Her remedy in such
case was to file a separate action against the private respondent to nullify the levy
on the 100,000 Citycorp shares of stocks. The court stated that even assuming that
Encarnacion T. Ching had the right to file the said motion, the same was barred by
laches.
Citing Wong v. Intermediate Appellate Court, 41 the CA ruled that the presumption
in Article 160 of the New Civil Code shall not apply where, as in this case, the
petitioner-spouses failed to prove the source of the money used to acquire the
shares of stock. It held that the levied shares of stocks belonged to Alfredo Ching,
as evidenced by the fact that the said shares were registered in the corporate books
of Citycorp solely under his name. Thus, according to the appellate court, the RTC
committed a grave abuse of its discretion amounting to excess or lack of jurisdiction
in issuing the assailed orders. The petitioners' motion for reconsideration was
denied by the CA in a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari, asserting
that the RTC did not commit any grave abuse of discretion amounting to excess or
lack of jurisdiction in issuing the assailed orders in their favor; hence, the CA erred
in reversing the same. They aver that the source of funds in the acquisition of the
levied shares of stocks is not the controlling factor when invoking the presumption
of the conjugal nature of stocks under Art. 160, 42 and that such presumption
subsists even if the property is registered only in the name of one of the spouses, in
this case, petitioner Alfredo Ching. 43 According to the petitioners, the suretyship
obligation was not contracted in the pursuit of the petitioner-husband's profession
or business. 44 And, contrary to the ruling of the CA, where conjugal assets are
attached in a collection suit on an obligation contracted by the husband, the wife
should exhaust her motion to quash in the main case and not file a separate
suit. 45 Furthermore, the petitioners contend that under Art. 125 of the Family
Code, the petitioner-husband's gratuitous suretyship, is null and void ab
initio, 46 and that the share of one of the spouses in the conjugal partnership
remains inchoate until the dissolution and liquidation of the partnership. 47
In its comment on the petition, the private respondent asserts that the CA correctly
granted its petition for certiorari nullifying the assailed order. It contends that the
CA correctly relied on the ruling of this Court in Wong v. Intermediate Appellate
Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the
private respondent alleges that the continuing guaranty and suretyship executed by
petitioner Alfredo Ching in pursuit of his profession or business. Furthermore,
according to the private respondent, the right of the petitioner-wife to a share in the
conjugal partnership property is merely inchoate before the dissolution of the
partnership; as such, she had no right to file the said motion to quash the levy on
attachment of the shares of stocks. HSTCcD
The issues for resolution are as follows: (a) whether the petitioner-wife has the right
to file the motion to quash the levy on attachment on the 100,000 shares of stocks
in the Citycorp Investment Philippines; (b) whether or not the RTC committed a
grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing
the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had the
right to file the said motion, although she was not a party in Civil Case No.
142729. 48
In Ong v. Tating, 49 we held that the sheriff may attach only those properties of
the defendant against whom a writ of attachment has been issued by the court.
When the sheriff erroneously levies on attachment and seizes the property of a third
person in which the said defendant holds noright or interest, the superior authority
of the court which has authorized the execution may be invoked by the aggrieved
third person in the same case. Upon application of the third person, the court shall
order a summary hearing for the purpose of determining whether the sheriff has
acted rightly or wrongly in the performance of his duties in the execution of the writ
of attachment, more specifically if he has indeed levied on attachment and taken
hold of property not belonging to the plaintiff. If so, the court may then order the
sheriff to release the property from the erroneous levy and to return the same to
the third person. In resolving the motion of the third party, the court does not and
cannot pass upon the question of the title to the property with any character of
finality. It can treat the matter only insofar as may be necessary to decide if the
sheriff has acted correctly or not. If the claimant's proof does not persuade the
court of the validity of the title, or right of possession thereto, the claim will be
denied by the court. The aggrieved third party may also avail himself of the remedy
of "terceria" by executing an affidavit of his title or right of possession over the
property levied on attachment and serving the same to the office making the levy
and the adverse party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should be a totally
separate and distinct action from the former case. The abovementioned remedies
are cumulative and any one of them may be resorted to by one third-party claimant
without availing of the other remedies. 50
In this case, the petitioner-wife filed her motion to set aside the levy on attachment
of the 100,000 shares of stocks in the name of petitioner-husband claiming that the
said shares of stocks were conjugal in nature; hence, not liable for the account of
her husband under his continuing guaranty and suretyship agreement with the
PBMCI. The petitioner-wife had the right to file the motion for said relief.
Page 16
On the second issue, we find and so hold that the CA erred in setting aside and
reversing the orders of the RTC. The private respondent, the petitioner in the CA,
was burdened to prove that the RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction. The tribunal acts without jurisdiction if it
does not have the legal purpose to determine the case; there is excess of
jurisdiction where the tribunal, being clothed with the power to determine the case,
oversteps its authority as determined by law, There is grave abuse of discretion
where the tribunal acts in a capricious, whimsical, arbitrary or despotic manner in
the exercise of its judgment and is equivalent to lack of jurisdiction. 51
It was incumbent upon the private respondent to adduce a sufficiently strong
demonstration that the RTC acted whimsically in total disregard of evidence material
to, and even decide of, the controversy before certiorari will lie. A special civil action
for certiorari is a remedy designed for the correction of errors of jurisdiction and not
errors of judgment. When a court exercises its jurisdiction, an error committed
while so engaged does not deprive it of its jurisdiction being exercised when the
error is committed. 52
After a comprehensive review of the records of the RTC and of the CA, we find and
so hold that the RTC did not commit any grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired during the
marriage are presumed to belong to the conjugal partnership, unless it be proved
that it pertains exclusively to the husband, or to the wife. In Tan v. Court of
Appeals, 53 we held that it is not even necessary to prove that the properties were
acquired with funds of the partnership. As long as the properties were acquired by
the parties during the marriage, they are presumed to be conjugal in nature. In
fact, even when the manner in which the properties were acquired does not appear,
the presumption will still apply, and the properties will still be considered conjugal.
The presumption of the conjugal nature of the properties acquired during the
marriage subsists in the absence of clear, satisfactory and convincing evidence to
overcome the same. 54
In this case, the evidence adduced by the petitioners in the RTC is that the 100,000
shares of stocks in the Citycorp Investment Philippines were issued to and
registered in its corporate books in the name of the petitioner-husband when the
said corporation was incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses. The shares of stocks are,
thus, presumed to be the conjugal partnership property of the petitioners. The
private respondent failed to adduce evidence that the petitioner-husband acquired
the stocks with his exclusive money. 55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines solely in
the name of the petitioner-husband does not constitute proof that the petitionerhusband, not the conjugal partnership, owned the same. 56 The private
respondent's
reliance
on
the
rulings
of
this
Court
in Maramba
v.
Lozano 57 and Associated Insurance & Surety Co., Inc. v. Banzon, 58 is misplaced.
In the Maramba case, we held that where there is no showing as to when the
property was acquired, the fact that the title is in the wife's name alone is
determinative of the ownership of the property. The principle was reiterated in
the Associated Insurance case where the uncontroverted evidence showed that the
shares of stocks were acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court
in Wong v. Intermediate Appellate Court 59 buttresses the case for the petitioners.
In that case, we ruled that he who claims that property acquired by the spouses
during their marriage is not conjugal partnership property but belongs to one of
them as his personal property is burdened to prove the source of the money utilized
to purchase the same. In this case, the private respondent claimed that the
petitioner-husband acquired the shares of stocks from the Citycorp Investment
Philippines in his own name as the owner thereof. It was, thus, the burden of the
private respondent to prove that the source of the money utilized in the acquisition
of the shares of stocks was that of the petitioner-husband alone. As held by the trial
court, the private respondent failed to adduce evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and
suretyship agreement with the private respondent for the payment of the PBMCI
loans, the petitioner-husband was in the exercise of his profession, pursuing a
legitimate business. The appellate court erred in concluding that the conjugal
partnership is liable for the said account of PBMCI under Article 161(1) of the New
Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3] 60 of the Family
Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband
for the benefit of the conjugal partnership,
and those contracted by the wife, also for the
same purpose, in the cases where she may
legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship agreement
as security for the payment of the loan obtained by the PBMCI from the private
respondent in the amount of P38,000,000. In Ayala Investment and Development
Corp. v. Court of Appeals, 61 this Court ruled "that the signing as surety is certainly
not an exercise of an industry or profession. It is not embarking in a
business. No matter how often an executive acted on or was persuaded to act as
surety for his own employer, this should not be taken to mean that he thereby
embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should appertain to the
husband alone, there must be a showing that some advantages accrued to the
spouses. Certainly, to make a conjugal partnership responsible for a liability that
should appertain alone to one of the spouses is to frustrate the objective of the New
Civil Code to show the utmost concern for the solidarity and well being of the family
as a unit. The husband, therefore, is denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal partnership. 62
In this case, the private respondent failed to prove that the conjugal partnership of
the petitioners was benefited by the petitioner-husband's act of executing a
continuing guaranty and suretyship agreement with the private respondent for and
in behalf of PBMCI. The contract of loan was between the private respondent and
the PBMCI, solely for the benefit of the latter. No presumption can be inferred from
the fact that when the petitioner-husband entered into an accommodation
agreement or a contract of surety, the conjugal partnership would thereby be
benefited. The private respondent was burdened to establish that such benefit
redounded to the conjugal partnership. 63
Page 17
It could be argued that the petitioner-husband was a member of the Board of

Directors of PBMCI and was one of its top twenty stockholders, and that the shares
of stocks of the petitioner-husband and his family would appreciate if the PBMCI
could be rehabilitated through the loans obtained; that the petitioner-husband's
career would be enhanced should PBMCI survive because of the infusion of fresh
capital. However, these are not the benefits contemplated by Article 161 of the New
Civil Code. The benefits must be those directly resulting from the loan. They cannot
merely be a by-product or a spin-off of the loan itself. 64
This is different from the situation where the husband borrows money or receives
services to be used for his own business or profession. In theAyala case, we ruled
that it is such a contract that is one within the term "obligation for the benefit of the
conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the
contract, i.e., he directly received the money and services to be
used in or for his own business or his own profession, that
contract falls within the term ". . . obligations for the benefit of
the conjugal partnership." Here, noactual benefit may be
proved. It is enough that the benefit to the family is apparent at
the time of the signing of the contract. From the very nature of
the contract of loan or services, the family stands to benefit
from the loan facility or services to be rendered to the business
or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated,
where the husband contracts obligations on behalf of the family
business, the law presumes, and rightly so, that such obligation
will redound to the benefit of the conjugal partnership. 65
The Court held in the same case that the rulings of the Court in Cobb-Perez and GTractors, Inc. are not controlling because the husband, in those cases, contracted
the obligation for his own business. In this case, the petitioner-husband acted
merely as a surety for the loan contracted by the PBMCI from the private
respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals are SET ASIDE AND REVERSED. The assailed
orders of the RTC are AFFIRMED.
SO ORDERED.
||| (Ching v. Court of Appeals, G.R. No. 124642, [February 23, 2004], 467 PHIL
830-851)
x-x-x
THIRD DIVISION
Page 18
[G.R. No. 168289. March 22, 2010.]

THE MUNICIPALITY OF HAGONOY, BULACAN, represented
by the HON. FELIX V. OPLE, Municipal Mayor, and FELIX
V. OPLE, in his personal capacity, petitioners, vs. HON.
SIMEON P. DUMDUM, JR., in his capacity as the Presiding
Judge of the REGIONAL TRIAL COURT, BRANCH 7, CEBU
CITY; HON. CLERK OF COURT & EX-OFFICIO SHERIFF of
the REGIONAL TRIAL COURT of CEBU CITY; HON. CLERK
OF COURT & EX-OFFICIO SHERIFF of the REGIONAL
TRIAL COURT of BULACAN and his DEPUTIES; and EMILY
ROSE GO KO LIM CHAO, doing business under the name
and style KD SURPLUS, respondents.
DECISION
PERALTA, J p:
This is a Joint Petition 1 under Rule 45 of the Rules of Court brought by the
Municipality of Hagonoy, Bulacan and its former chief executive, Mayor Felix V. Ople
in his official and personal capacity, from the January 31, 2005 Decision 2 and the
May 23, 2005 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 81888. The
assailed decision affirmed the October 20, 2003 Order 4 issued by the Regional Trial
Court of Cebu City, Branch 7 in Civil Case No. CEB-28587 denying petitioners'
motion to dismiss and motion to discharge/dissolve the writ of preliminary
attachment previously issued in the case. The assailed resolution denied
reconsideration. DEIHSa
The case stems from a Complaint 5 filed by herein private respondent Emily Rose
Go Ko Lim Chao against herein petitioners, the Municipality of Hagonoy, Bulacan and
its chief executive, Felix V. Ople (Ople) for collection of a sum of money and
damages. It was alleged that sometime in the middle of the year 2000, respondent,
doing business as KD Surplus and as such engaged in buying and selling surplus
trucks, heavy equipment, machinery, spare parts and related supplies, was
contacted by petitioner Ople. Respondent had entered into an agreement with
petitioner municipality through Ople for the delivery of motor vehicles, which
supposedly were needed to carry out certain developmental undertakings in the
municipality. Respondent claimed that because of Ople's earnest representation that
funds had already been allocated for the project, she agreed to deliver from her
principal place of business in Cebu City twenty-one motor vehicles whose value
totaled P5,820,000.00. To prove this, she attached to the complaint copies of the
bills of lading showing that the items were consigned, delivered to and received by
petitioner municipality on different dates. 6 However, despite having made several
deliveries, Ople allegedly did not heed respondent's claim for payment. As of the
filing of the complaint, the total obligation of petitioner had already totaled
P10,026,060.13 exclusive of penalties and damages. Thus, respondent prayed for
full payment of the said amount, with interest at not less than 2% per month, plus
P500,000.00 as damages for business losses, P500,000.00 as exemplary damages,
attorney's fees of P100,000.00 and the costs of the suit.
On February 13, 2003, the trial court issued an Order 7 granting respondent's
prayer for a writ of preliminary attachment conditioned upon the posting of a bond
equivalent to the amount of the claim. On March 20, 2003, the trial court issued the
Writ of Preliminary Attachment 8 directing the sheriff "to attach the estate, real and
personal properties" of petitioners.
Instead of addressing private respondent's allegations, petitioners filed a Motion to
Dismiss 9 on the ground that the claim on which the action had been brought was
unenforceable under the statute of frauds, pointing out that there was no written
contract or document that would evince the supposed agreement they entered into
with respondent. They averred that contracts of this nature, before being
undertaken by the municipality, would ordinarily be subject to several preconditions
such as a public bidding and prior approval of the municipal council which, in this
case, did not obtain. From this, petitioners impress upon us the notion
that no contract was ever entered into by the local government with
respondent. 10 To address the claim that respondent had made the deliveries under
the agreement, they advanced that the bills of lading attached to the complaint
were hardly probative, inasmuch as these documents had been accomplished and
handled exclusively by respondent herself as well as by her employees and
agents. 11
Petitioners also filed a Motion to Dissolve and/or Discharge the Writ of Preliminary
Attachment Already Issued, 12 invoking immunity of the state from suit,
unenforceability of the contract, and failure to substantiate the allegation of
fraud. 13
On October 20, 2003, the trial court issued an Order 14 denying the two motions.
Petitioners moved for reconsideration, but they were denied in an Order 15 dated
December 29, 2003.
Believing that the trial court had committed grave abuse of discretion in issuing the
two orders, petitioners elevated the matter to the Court of Appeals via a petition
for certiorari under Rule 65. In it, they faulted the trial court for not dismissing the
complaint despite the fact that the alleged contract was unenforceable under the
statute of frauds, as well as for ordering the filing of an answer and in effect
allowing private respondent to prove that she did make several deliveries of the
subject motor vehicles. Additionally, it was likewise asserted that the trial court
committed grave abuse of discretion in not discharging/dissolving the writ of
preliminary attachment, as prayed for in the motion, and in effect disregarding the
rule that the local government is immune from suit.
On January 31, 2005, following assessment of the parties' arguments, the Court of
Appeals, finding no merit in the petition, upheld private respondent's claim and
affirmed the trial court's order. 16 Petitioners moved for reconsideration, but the
same was likewise denied for lack of merit and for being a mere scrap of paper for
having been filed by an unauthorized counsel. 17 Hence, this petition. ECaTAI
In their present recourse, which raises no matter different from those passed upon
by the Court of Appeals, petitioners ascribe error to the Court of Appeals for
dismissing their challenge against the trial court's October 20 and December 29,
2003 Orders. Again, they reason that the complaint should have been dismissed at
the first instance based on unenforceability and that the motion to
dissolve/discharge the preliminary attachment should have been granted. 18
Commenting on the petition, private respondent notes that with respect to the Court
of Appeals' denial of the certiorari petition, the same was rightly done, as the fact of
Page 19
delivery may be properly and adequately addressed at the trial of the case on the
merits; and that the dissolution of the writ of preliminary attachment was not
proper under the premises inasmuch as the application for the writ sufficiently
alleged fraud on the part of petitioners. In the same breath, respondent laments
that the denial of petitioners' motion for reconsideration was rightly done by the
Court of Appeals, because it raised no new matter that had not yet been
addressed. 19
After the filing of the parties' respective memoranda, the case was deemed
submitted for decision.
We now rule on the petition.
To begin with, the Statute of Frauds found in paragraph (2), Article 1403 of the Civil
Code, 20 requires for enforceability certain contracts enumerated therein to be
evidenced by some note or memorandum. The term "Statute of Frauds" is
descriptive of statutes that require certain classes of contracts to be in writing; and
that do not deprive the parties of the right to contract with respect to the matters
therein involved, but merely regulate the formalities of the contract necessary to
render it enforceable. 21
In other words, the Statute of Frauds only lays down the method by which the
enumerated contracts may be proved. But it does not declare them invalid because
they are not reduced to writing inasmuch as, by law, contracts are obligatory in
whatever form they may have been entered into, provided all the essential
requisites for their validity are present. 22 The object is to prevent fraud and
perjury in the enforcement of obligations depending, for evidence thereof, on the
unassisted memory of witnesses by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed by the party to be charged. 23 The
effect of noncompliance with this requirement is simply that no action can be
enforced under the given contracts. 24 If an action is nevertheless filed in court, it
shall warrant a dismissal under Section 1 (i), 25 Rule 16 of the Rules of Court,
unless there has been, among others, total or partial performance of the obligation
on the part of either party. 26
It has been private respondent's consistent stand, since the inception of the instant
case that she has entered into a contract with petitioners. As far as she is
concerned, she has already performed her part of the obligation under the
agreement by undertaking the delivery of the 21 motor vehicles contracted for by
Ople in the name of petitioner municipality. This claim is well substantiated at
least for the initial purpose of setting out a valid cause of action against petitioners
by copies of the bills of lading attached to the complaint, naming petitioner
municipality as consignee of the shipment. Petitioners have not at any time
expressly denied this allegation and, hence, the same is binding on the trial court
for the purpose of ruling on the motion to dismiss. In other words, since there exists
an indication by way of allegation that there has been performance of the obligation
on the part of respondent, the case is excluded from the coverage of the rule on
dismissals based on unenforceability under the statute of frauds, and either party
may then enforce its claims against the other. cIETHa
No other principle in remedial law is more settled than that when a motion to
dismiss is filed, the material allegations of the complaint are deemed to be
hypothetically admitted. 27 This hypothetical admission, according to Viewmaster
Construction Corporation v. Roxas 28 and Navoa v. Court of Appeals, 29 extends
not only to the relevant and material facts well pleaded in the complaint, but also to
inferences that may be fairly deduced from them. Thus, where it appears that the
allegations in the complaint furnish sufficient basis on which the complaint can be
maintained, the same should not be dismissed regardless of the defenses that may
be raised by the defendants. 30 Stated differently, where the motion to dismiss is
predicated on grounds that are not indubitable, the better policy is to deny the
motion without prejudice to taking such measures as may be proper to assure that
the ends of justice may be served. 31
It is interesting to note at this point that in their bid to have the case dismissed,
petitioners theorize that there could not have been a contract by which the
municipality agreed to be bound, because it was not shown that there had been
compliance with the required bidding or that the municipal council had approved the
contract. The argument is flawed. By invoking unenforceability under the Statute of
Frauds, petitioners are in effect acknowledging the existence of a contract between
them and private respondent only, the said contract cannot be enforced by action
for being non-compliant with the legal requisite that it be reduced into writing.
Suffice it to say that while this assertion might be a viable defense against
respondent's claim, it is principally a matter of evidence that may be properly
ventilated at the trial of the case on the merits.
Verily, no grave abuse of discretion has been committed by the trial court in denying
petitioners' motion to dismiss this case. The Court of Appeals is thus correct in
affirming the same.
We now address the question of whether there is a valid reason to deny petitioners'
motion to discharge the writ of preliminary attachment.
Petitioners, advocating a negative stance on this issue, posit that as a municipal
corporation, the Municipality of Hagonoy is immune from suit, and that its
properties are by law exempt from execution and garnishment. Hence, they submit
that not only was there an error committed by the trial court in denying their
motion to dissolve the writ of preliminary attachment; they also advance that it
should not have been issued in the first place. Nevertheless, they believe that
respondent has not been able to substantiate her allegations of fraud necessary for
the issuance of the writ.32
Private respondent, for her part, counters that, contrary to petitioners' claim, she
has amply discussed the basis for the issuance of the writ of preliminary attachment
in her affidavit; and that petitioners' claim of immunity from suit is negated by
Section 22 of the Local Government Code, which vests municipal corporations with
the power to sue and be sued. Further, she contends that the arguments offered by
petitioners against the writ of preliminary attachment clearly touch on matters that
when ruled upon in the hearing for the motion to discharge, would amount to a trial
of the case on the merits. 33
The general rule spelled out in Section 3, Article XVI of the Constitution is that the
state and its political subdivisions may not be sued without their consent. Otherwise
put, they are open to suit but only when they consent to it. Consent is implied when
the government enters into a business contract, as it then descends to the level of
the other contracting party; or it may be embodied in a general or special
law 34 such as that found in Book I, Title I, Chapter 2, Section 22 of the Local
Government Code of 1991, which vests local government units with certain
corporate powers one of them is the power to sue and be sued.
Be that as it may, a difference lies between suability and liability. As held in City of
Caloocan v. Allarde, 35 where the suability of the state is conceded and by which
liability is ascertained judicially, the state is at liberty to determine for itself whether
Page 20
to satisfy the judgment or not. Execution may not issue upon such judgment,
because statutes waiving non-suability do not authorize the seizure of property to
satisfy judgments recovered from the action. These statutes only convey an
implication that the legislature will recognize such judgment as final and make
provisions for its full satisfaction. Thus, where consent to be sued is given by
general or special law, the implication thereof is limited only to the resultant verdict
on the action before execution of the judgment. 36
It can be derived from the records that petitioner Ople, in his personal capacity, filed
his Rule 65 petition with the Court of Appeals through the representation of the law
firm Chan Robles & Associates. Later on, municipal legal officer Joselito Reyes,
counsel for petitioner Ople, in his official capacity and for petitioner municipality,
filed with the Court of Appeals a Manifestation with Entry of Appearance 43 to the
effect that he, as counsel, was "adopting all the pleadings filed for and in behalf of
[Ople's personal representation] relative to this case." 44 ESCDHA
Traders Royal Bank v. Intermediate Appellate Court, 37 citing Commissioner of

Public Highways v. San Diego, 38 is instructive on this point. In that case which
involved a suit on a contract entered into by an entity supervised by the Office of
the President, the Court held that while the said entity opened itself to suit by
entering into the subject contract with a private entity; still, the trial court was in
error in ordering the garnishment of its funds, which were public in nature and,
hence, beyond the reach of garnishment and attachment proceedings. Accordingly,
the Court ordered that the writ of preliminary attachment issued in that case be
lifted, and that the parties be allowed to prove their respective claims at the trial on
the merits. There, the Court highlighted the reason for the rule, to wit: DTEIaC
It appears, however, that after the issuance of the Court of Appeals' decision, only
Ople's personal representation signed the motion for reconsideration. There
is no showing that the municipal legal officer made the same manifestation, as he
previously did upon the filing of the petition. 45 From this, the Court of Appeals
concluded that it was as if petitioner municipality and petitioner Ople, in his official
capacity, had never moved for reconsideration of the assailed decision, and adverts
to the ruling in Ramos v. Court of Appeals 46 and Municipality of Pililla, Rizal v.
Court of Appeals 47 that only under well-defined exceptions may a private counsel
be engaged in lawsuits involving a municipality, none of which exceptions obtains in
this case. 48
The universal rule that where the State gives its consent to be
sued by private parties either by general or special law, it may
limit claimant's action "only up to the completion of proceedings
anterior to the stage of execution" and that the power of the
Courts ends when the judgment is rendered, since government
funds and properties may not be seized under writs of execution
or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds
must be covered by the corresponding appropriations as
required by law. The functions and public services rendered by
the State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and specific
object. . . . 39
With this in mind, the Court holds that the writ of preliminary attachment must be
dissolved and, indeed, it must not have been issued in the very first place. While
there is merit in private respondent's position that she, by affidavit, was able to
substantiate the allegation of fraud in the same way that the fraud attributable to
petitioners was sufficiently alleged in the complaint and, hence, the issuance of the
writ would have been justified. Still, the writ of attachment in this case would only
prove to be useless and unnecessary under the premises, since the property of the
municipality may not, in the event that respondent's claim is validated, be subjected
to writs of execution and garnishment unless, of course, there has been a
corresponding appropriation provided by law. 40
Anent the other issues raised by petitioners relative to the denial of their motion to
dissolve the writ of attachment, i.e., unenforceability of the contract and the
veracity of private respondent's allegation of fraud, suffice it to say that these
pertain to the merits of the main action. Hence, these issues are not to be taken up
in resolving the motion to discharge, lest we run the risk of deciding or prejudging
the main case and force a trial on the merits at this stage of the proceedings. 41
The Court of Appeals is mistaken. As can be seen from the manner in which the
Manifestation with Entry of Appearance is worded, it is clear that petitioner
municipality's legal officer was intent on adopting, for both the municipality and
Mayor Ople, not only the certiorari petition filed with the Court of Appeals, but also
all other pleadings that may be filed thereafter by Ople's personal representation,
including the motion for reconsideration subject of this case. In any event, however,
the said motion for reconsideration would warrant a denial, because there seems to
be no matter raised therein that has not yet been previously addressed in the
assailed decision of the Court of Appeals as well as in the proceedings below, and
that would have otherwise warranted a different treatment of the issues involved.
WHEREFORE, the Petition is GRANTED IN PART. The January 31, 2005 Decision
of the Court of Appeals in CA-G.R. SP No. 81888 is AFFIRMEDinsofar as it affirmed
the October 20, 2003 Decision of the Regional Trial Court of Cebu City, Branch 7
denying petitioners' motion to dismiss in Civil Case No. CEB-28587. The assailed
decision is REVERSED insofar as it affirmed the said trial court's denial of
petitioners' motion to discharge the writ of preliminary attachment issued in that
case. Accordingly, the August 4, 2003 Writ of Preliminary Attachment issued in Civil
Case No. CEB-28587 is ordered lifted.
SO ORDERED.
||| (Municipality of Hagonoy, Bulacan v. Dumdum, Jr., G.R. No. 168289, [March 22,
2010], 630 PHIL 305-323)
x-x-x
There is one final concern raised by petitioners relative to the denial of their motion
for reconsideration. They complain that it was an error for the Court of Appeals to
have denied the motion on the ground that the same was filed by an unauthorized
counsel and, hence, must be treated as a mere scrap of paper. 42
Page 21
[A.M. No. P-11-2986. June 13, 2012.]

[Formerly A.M. OCA IPI No. 10-3460-P]
SPOUSES
RAINER
TIU
and
JENNIFER
TIU, complainants, vs. VIRGILIO F. VILLAR, Sheriff IV,
Regional Trial Court, Office of the Clerk of Court, Pasay
City, respondent.
DECISION
MENDOZA, J p:
This is an administrative matter for Grave Misconduct, Grave Abuse of Authority and
Conduct Prejudicial to the Best Interest of the Service filed against respondent
Virgilio F. Villar, Sheriff IV, Office of the Clerk of Court, Regional Trial Court, Pasay
City (Sheriff Villar), relating to the implementation of the Writ of Preliminary
Attachment in Civil Case No. R-PSY-10-02698-CV, a case for Sum of Money and
Damages, captioned as "Henry Sia and Hankook Industrial Sales Co. v. Spouses
Rainer Tiu and Jennifer Calacday Tiu, et al." 1
The factual antecedents are as follows:
On February 17, 2010, Henry Sia (Sia) and Hankook Industrial Sales Co. filed a
Complaint for Sum of Money and Damages with prayer for Preliminary Attachment
against Classique Concept International Corporation (Classique), First Global
Ventures, Inc. (First Global) and herein complainants, spouses Rainer and Jennifer
Tiu (Spouses Tiu), before the Regional Trial Court, Pasay City, Branch 115 (RTC). In
its Order 2 dated February 25, 2010, the RTC granted the prayer for the issuance of
a writ of preliminary attachment. Accordingly, on March 8, 2010, the Writ of
Preliminary Attachment addressed to Sheriff Carlos G. Tadeo and Sheriff Virgilio
Villar was issued. Preliminarily, on March 17, 2010, Sheriff Villar served copies of
the summons, complaint and the writ of preliminary attachment to Spouses Tiu in
the office of First Global at Unit 1905 Raffles Corporate Center, Emerald Avenue,
Ortigas Center, Pasig City. The copies were received by Grace Tan Bauco (Bauco),
who introduced herself as the company's General Manager and Caretaker, after
efforts to personally serve them to Spouses Tiu failed. Thereafter, Sheriff Villar
attached the personal properties found in said address. SADECI
Unperturbed, Spouses Tiu moved to have the case against them dismissed on the
ground of improper venue. 3
In its Order 4 dated July 8, 2010, the RTC granted the motion and ordered the
release of the attached properties in favor of Spouses Tiu. The decretal portion of
the order reads:
WHEREFORE, under Rule 4, Sec. 2, in relation to Rule 16, Sec. 1

(c), because of improper venue, the defendants' Motion to
Dismiss and Supplemental Motion to Dismiss are GRANTED, and
this case is DISMISSED.
The writ of preliminary attachment dated March 8, 2010
previously issued by this Court is set aside, and everything
seized thereby be immediately returned by the sheriff
responsible to the defendants. [Emphasis ours]
SO ORDERED. 5
The motion for reconsideration filed by the group of Sia was denied by the RTC in a
subsequent order 6 dated July 16, 2010. The RTC reiterated its previous order to
return the attached items to Spouses Tiu. The fallo reads:
WHEREFORE, finding no cogent or legal reason to reverse or
modify the Order dated July 8, 2010, the plaintiffs' Motion for
Reconsideration with Motion to Conduct Ocular Inspection is
DENIED.
Sheriff Virgilio Villar is directed to immediately return to
defendants the seized items. 7
Acting on the RTC's directive, Sheriff Villar submitted his Sheriff's Report with
Urgent Prayer for Issuance of Clarificatory Order. 8 He wanted to be clarified on
whether or not he should wait for the trial court's order to attain finality before
returning the attached personal properties.
In the meantime, Sia filed his Notice of Appeal and Very Urgent Motion to Stay
Enforcement of Order to Return Seized Properties while Spouses Tiu filed an
Urgent Ex-Parte Motion to Cite Sheriff Virgilio Villar in Contempt of Court. 9
Not contented with the motion, Spouses Tiu also lodged the present administrative
complaint 10 against Sheriff Villar for his alleged questionable actions regarding the
implementation of the writ of attachment against them. HaECDI
First, Spouses Tui alleged that there was no proper service of summons upon them
by Sheriff Villar before the writ of attachment was implemented. They claimed that
Sheriff Villar merely left a copy of the summons with one of their employees in
violation of the rule on personal service of summons to the parties concerned as
required by the Rules of Court. Second, they averred that Sheriff Villar improperly
implemented the writ against them without prior coordination with the Sheriff's
Office of Pasig City. Third, they insinuated that Sheriff Villar asked for money for the
release of their seized properties. Fourth, they charged that Sheriff Villar maliciously
refused to return their attached properties despite the RTC's clear directive after the
case against them was dismissed.
In his Comment, 11 Sheriff Villar denied all the charges against him. He denied the
allegation of Spouses Tiu that there was no valid service of summons for the writ of
preliminary attachment. He explained that he effected a substituted service after
several unsuccessful attempts to personally serve the summons on them. He also
added that he made the proper coordination with the Sheriff's office of Pasig City
before implementing the writ of preliminary attachment against them. He denied
receiving P35,000.00 from their driver in exchange for the release of the couple's
seized properties. He asserted that he had no ill-motive against the return of the
seized properties to them and even sought clarification from the RTC.
Page 22
Incidentally, the RTC, in its Order 12 dated August 17, 2010, gave due course to the
Notice of Appeal and stated that by virtue of Sia's timely appeal it had no recourse
but to elevate the entire records of the case, including the issue of the return of
Spouses Tiu's attached properties, to the Court of Appeals.
sufficient age and discretion who is residing in the address, or who is in charge of
the office or regular place of business, of the defendant. It is likewise required that
the pertinent facts proving these circumstances be stated in the proof of service or
in the officer's return. 17
The Office of the Court Administrator (OCA), in its Report 13 dated June 22, 2011,
stated that the factual and conflicting allegations of the parties must be threshed
out in an appropriate investigation considering the seriousness of the charge being
imputed against Sheriff Villar. Accordingly, the OCA made the following
recommendations:
Based on the records, Sheriff Villar exhausted efforts to personally serve the
summons to Spouses Tiu as indicated in his Sheriff's Return of Summons 18 dated
April 23, 2010. When it was apparent that the summons could not be served
personally on the spouses, Sheriff Villar served the summons through Bauco, their
employee, at the office address of the couple's business, First Global and Classique.
It was evident that Bauco was competent and of sufficient age to receive the
summons on their behalf as she represented herself to be their General Manager
and Caretaker. DAaIEc
RECOMMENDATION:
We
respectfully
submit
for
the
consideration of the Honorable Court the recommendation that
the instant administrative complaint against Virgilio F. Villar,
Sheriff IV, Office of the Clerk of Court, Regional Trial Court,
Pasay City, be RE-DOCKETED as a regular administrative matter
and REFERRED to the Executive Judge of the Regional Trial
Court, Pasay City for investigation. The report and
recommendation relative to the investigation shall be submitted
within sixty (60) days from receipt of the records of the
administrative complaint. 14 TCaAHI
In its Resolution 15 dated September 12, 2011, the Court resolved to re-docket the
administrative complaint into a regular administrative matter and referred the same
to the Executive Judge of the Regional Trial Court, Pasay City for investigation,
report and recommendation.
In his Report and Recommendation 16 dated February 8, 2012, Executive Judge
Edwin B. Ramizo (Judge Ramizo) recommended the dismissal of the administrative
complaint against Sheriff Villar.
Judge Ramizo found that Sheriff Villar complied with the instruction embodied in
Administrative Circular No. 12 requiring a sheriff to notify in writing the sheriff of
the place where the execution of a writ is to take place. He likewise found nothing
irregular in the substituted service of summons effected by Sheriff Villar as the
same complied with the requisites mandated by the Rules of Court. Furthermore,
the investigating judge saw no bad faith when Sheriff Villar failed to return the
attached properties after the dismissal of the case and the issuance of the RTC
order to release the seized properties. According to him, Sheriff Villar merely
retained the properties because he was uncertain whether or not he should wait for
the finality of the order dismissing the case. Judge Ramizo gave no weight to
Spouses Tiu's allegation that Sheriff Villar demanded money from them to regain
possession of their seized properties.
After a careful examination of the records, the Court agrees with the
recommendation of Judge Ramizo that the complaint against Sheriff Villar be
dismissed.
On the questioned substituted service of summons, the Court concurs with the
findings of the investigating judge that there was a valid substituted service of
summons. As a rule, personal service of summons is preferred as against
substituted service. Thus, substituted service can only be resorted to by the process
server only if personal service cannot be made promptly. Most importantly, the
proof of substituted service of summons must (a) indicate the impossibility of
service of summons within a reasonable time; (b) specify the efforts exerted to
locate the defendant; and (c) state that the summons was served upon a person of
On the charge that Sheriff Villar did not comply with the requirement of prior
coordination as mandated in Administrative Circular No. 12, Judge Ramizo found it
baseless and stated that the sheriff properly complied with the circular.
Administrative Circular No. 12 19 lays down the guidelines and procedure in the
service and execution of court writs and processes in the reorganized courts. In
particular, paragraph 2 thereof states:
xxx xxx xxx
2.All Clerks of Court of the Metropolitan Trial Court and
Municipal Trial Courts in Cities, and/or their deputy sheriffs shall
serve all court processes and execute all writs of their
respective courts within their territorial jurisdiction;
[Emphasis ours]
xxx xxx xxx
Paragraph 5 of the same circular requires prior coordination with the sheriff of the
place where the execution of the writ will take place, to wit:
5.No sheriff or deputy sheriff shall execute a court writ outside
his territorial jurisdiction without first notifying in writing, and
seeking the assistance of, the sheriff of the place where the
execution shall take place; [Emphasis ours]
In the case at bench, documentary evidence indeed discloses that Sheriff Villar of
Pasay City coordinated with the Sheriff of Pasig City, in compliance with
Administrative Circular No. 12, before he implemented the writ of preliminary
attachment. In the Certification 20 dated November 17, 2011, the Clerk of Court of
Pasig City attested to the fact that Sheriff Villar formally coordinated with their office
in connection with the implementation of the writ of attachment. Attached to said
certification is a certified true copy of Sheriff Villar's request for
coordination 21 dated March 12, 2010, on which the word "received" was stamped
by the Office of the Clerk of Court and Ex-officio Sheriff, RTC-Pasig City.
As to Sheriff Villar's failure to effect the immediate release of the attached
properties despite the RTC's order of release, the Court finds the explanation of the
respondent sheriff acceptable enough as not to earn a sanction from the Court.
By law, sheriffs are obligated to maintain possession of the seized properties absent
any instruction to the contrary. In this case, the writ of preliminary attachment
authorizing the trial court to legally hold the attached items was set aside by the
RTC Order dated July 8, 2010 specifically ordering Sheriff Villar to immediately
Page 23
release the seized items to Spouses Tiu. Pertinently, Rule 57, Section 19 of the
Rules of Civil Procedure provides: HAaECD
SEC. 19.Disposition of attached property where judgment is for
party against whom attachment was issued. If judgment be
rendered against the attaching party, all the proceeds of sales
and money collected or received by the sheriff, under the order
of attachment, and all property attached remaining in any such
officer's hands, shall be delivered to the party against whom
attachment was issued, and the order of attachment
discharged.
The instruction of the trial court was clear and simple. Sheriff Villar was to return
the seized properties to Spouses Tiu. He should have followed the court's order
immediately. He had no discretion to wait for the finality of the court's order of
dismissal before discharging the order of attachment. Nevertheless, Sheriff Villar
showed no deliberate defiance of, or disobedience to, the court's order of release.
Records show that he took the proper step under the circumstances. He filed with
the trial court his Sheriff's Report with Urgent Prayer for the Issuance of a
Clarificatory Order. The Court perceives nothing amiss in consulting the judge before
taking action on a matter of which he is not an expert.
As to the allegation of grave misconduct for supposedly asking P35,000.00 to
facilitate the return of the attached items, the records bear out that it was a
baseless charge. In administrative proceedings, the complainant bears the onus of
establishing, by substantial evidence, the averments of his complaint. 22 Other
than the bare allegations of Spouses Tiu, no evidence showing that Sheriff Villar
surreptitiously demanded money from them for the release of their attached
properties was adduced. Mere suspicion without proof cannot be the basis of
conviction. 23
WHEREFORE, the complaint against Virgilio F. Villar, Sheriff IV, Office of the Clerk
of Court, Regional Trial Court, Pasay City, is hereby DISMISSED.
SO ORDERED.
||| (Spouses Tiu v. Villar, A.M. No. P-11-2986, [June 13, 2012])
x-x-x
Page 24
FIRST DIVISION
[G.R. No. 147970. March 31, 2006.]
PCL
INDUSTRIES
MANUFACTURING
CORPORATION, petitioner, vs. THE COURT OF APPEALS
and
ASA
COLOR
&
CHEMICAL
INDUSTRIES,
INC., respondents.
DECISION
AUSTRIA-MARTINEZ, J p:
This resolves the petition for certiorari seeking the reversal of the Decision 1 of the
Court of Appeals (CA) promulgated on February 21, 2001, which affirmed the
Decision of the Regional Trial Court (RTC) of Quezon City, Branch 226; and the CA
Resolution dated May 9, 2001 denying petitioner's motion for reconsideration.
The antecedent facts are as follows:
On October 10, 1995, private respondent filed a complaint with the RTC for Sum of
Money with Preliminary Attachment against herein petitioner. Private respondent
claims that during the period from January 18, 1994 to April 14, 1994, petitioner
purchased and received from it various printing ink materials with a total value of
P504,906.00, payable within 30 days from the respective dates of invoices; and that
petitioner, in bad faith, failed to comply with the terms of the sale and failed to pay
its obligations despite repeated verbal and written demands.
Petitioner was served with summons together with the Writ of Preliminary
Attachment on October 20, 1995. On October 23, 1995, petitioner filed a Motion to
Dissolve and/or Discharge Writ of Preliminary Attachment. On November 20, 1995,
the trial court issued an Order denying petitioner's motion to dissolve the writ of
preliminary attachment. Petitioner's motion for reconsideration of said order was
also denied per Order dated January 2, 1996. Petitioner no longer elevated to the
higher courts the matter of the propriety of the issuance of the writ of preliminary
attachment.
In the meantime, on October 30, 1995, petitioner filed its Answer with
Counterclaim. Petitioner claims that the various printing ink materials delivered to it
by private respondent were defective and sometime in August, October, and
November of 1993, they have returned ink materials to private respondent as
shown by several Transmittal Slips. Nevertheless, petitioner admits that it continued
to buy ink materials from private respondent in 1994 despite having rejected ink
materials delivered by private respondent in 1993. Petitioner, however, insists that
the ink materials delivered by private respondent in 1994 were also defective and
they made known their complaints to Frankie, the authorized representative of
private respondent. In a letter dated June 30, 1995, petitioner informed private
respondent that it had been complaining to its (private respondent's) representative
about the quality of the ink materials but nothing was done to solve the matter.
Private respondent replied through a letter dated July 16, 1995, that it was giving
petitioner the option to return the products delivered, "sealed and unused" within
one week from receipt of said letter or pay the full amount of its obligation.
Petitioner answered in a letter dated September 26, 1995, that private respondent
should pick up at its plant the remaining unused defective ink materials, and
requested to meet with private respondent to thresh out the matter. No meeting
was ever held. Petitioner further claims that it suffered damages in the amount of
P1,592,794.50 because its customers rejected the finished plastic products it
delivered, complaining of the bad smell, which, according to petitioner, was caused
by the defective ink materials supplied by private respondent. aDHCEA
After trial on the merits, the trial court rendered its Decision dated January 8, 1999,
the dispositive portion of which reads thus:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff. Defendant PCL Industries
Manufacturing Corporation is hereby ordered to pay plaintiff:
1) P504,906.00 plus 20% interest per annum from
April 1994 until fully paid;
2) 25% of the above amount as and for attorney's
fees; and
3) cost of suit.
The counterclaim of defendant
insufficiency of evidence.
is
hereby dismissed for
SO ORDERED. 2
The RTC Decision was appealed by herein petitioner to the CA. On February 21,
2001, the CA promulgated its Decision affirming the RTC judgment. The CA held
that there was sufficient evidence to prove that herein petitioner had the intention
of defrauding private respondent when it contracted the obligation because it agreed
to pay within 30 days from the date of purchase but once the merchandise was in
its possession, it refused to pay. Furthermore, the CA ruled that the issue on the
propriety of the issuance of the writ of preliminary attachment should be laid to rest
since petitioner no longer questioned the trial court's orders before the higher
courts.
As to the alleged defect of the ink delivered by private respondent, both the trial
court and the CA found that the evidence presented by petitioner was insufficient to
prove that it was indeed the ink from private respondent which caused the
unwanted smell in petitioner's finished plastic products. The trial court's analysis of
the evidence led it to the following conclusions, to wit:
[D]efendant presented transmittal receipts, which allegedly
represent the items returned by defendant [herein petitioner] to
plaintiff [herein respondent].
Page 25
xxx xxx xxx

A closer look at these three transmittal receipts would readily
show that they are all for deliveries made in 1993, whereas the
items admittedly received by defendant and listed in paragraph
2 of the Complaint are all delivered and dated from January 18,
1994 to April 14, 1994.
The items, therefore, returned for being defective and
communicated by defendant to plaintiff are for those printing
ink materials delivered in 1993 and these are not the items left
unpaid and in issue in this present Complaint.
There is no other proof of demand made by defendant to
plaintiff corporation as to communicate to plaintiff any defect in
the printing ink materials delivered in 1994 except the demand
letter (Exhibit "42") which is dated September 26, 1995.
As admitted by defendant's witness, Eleno Cayabyab, the
demands made by Mr. Jovencio Lim to plaintiff had been oral or
verbal only and made only on two occasions. In fact said
witness cannot remember exactly when these oral demands
were made by Mr. Jovencio Lim, . . .
xxx xxx xxx
As regards the testimony of defendant's witness Jovencio Lim
that defendant's end-users returned the plastic packaging
materials to defendant and defendant had to reimburse its
clients of the amount paid by them and defendant allegedly
suffered damages, defendant failed to present sufficient
evidence of this allegation. . . . 3
Affirming the foregoing findings of the trial court, the CA further noted that:
As may be observed, as early as January 31, 1994, the
appellant [herein petitioner] had received complaints from its
customers about the alleged unwanted smell of their plastic
products. However, no steps were taken to investigate which of
its several suppliers delivered the defective ink and, if indeed,
the appellee's ink materials were the cause of the
smell, no immediate communications were sent to the latter. On
the contrary, it (appellant) continued to place orders and receive
deliveries from the appellee. Worse, the appellant failed to
convincingly show that the appellant stopped using the
subject ink materials upon notice of its customers of the
alleged unwanted smell of the products. Conversely, the
appellant continued using the same in their production of
plastic materials which would only show that the cause of
the alleged stinking smell cannot be attributed to the
subject ink materials used. The appellant tried to convince us
that the subject ink materials were the same ink delivered by
the appellee and used in the products that were returned
because of the unwanted smell. However, its evidence fails to
impress us. HTSIEa
There is no indication that the plasticized pouches

printed by the defendant-appellant and returned by its
customers were printed with the use of the paint
delivered by the plaintiff-appellee. The former's evidence
on this point are either self-serving or unreliable, or
totally unworthy of credence, as shown by the following:
1) The "work process" forms contain the names of two
(2) or three (3) suppliers, as shown by the following:
Exh. "12" STOCK/ASA
"13" SIMCOR/ASA
"14" SIMCOR/ASA
"15" SIMCOR/ASA
"16" SYNPAC/ASA
"17" SYNPAC/ASA
"18" SYNPAC/ASA
"19" SYNPAC/ASA
"20" SYNPAC/ASA/CDI
"21" SYNPAC/ASA
This is an indication that the supplier of the obnoxious paint
materials has not been properly identified or pinpointed.
2) The "Memorandum" to the appellant's Production
Department from its Records/Receiving Section is an
internal memo that does not indicate which of their
several suppliers delivered the "inferior quality of
ink". No witness
from
the
appellant's
Production
Department was presented to attest that the ink supplied
by the appellee was found defective. Not even the person
who prepared the said "Work Process" sheets was
presented to explain the entries thereon.
3) Exhibits "30", "31" and "32" are supposedly memos from
Frank F. Tanos of the Omega Manufacturing (one of the
appellant's customers), alleging that they have rejected certain
printed materials due to "unwanted smell". Again, these memos
do not indicate the source of such unwanted smell. In any case,
the memos were respectively dated June 15, 1994, July 15,
1994 and March 30, 1995 which dates are too far away from
the deliveries made by the appellee.
4) The defendant-appellant made returns of ink products to the
appellee much earlier on August 3, 1993, August 6, 1993,
October 13, 1993 and November 3, 1993 as shown by the
delivery receipts/return slips of such dates. According to the
appellee, these were samples that were really returnable if not
acceptable. This explanation appears to be plausible, since the
Page 26
quantity involved appears to be unusually low, compared to the

questioned and unpaid deliveries. At any rate, no similar
delivery receipts or return slips were presented to show that the
subject ink materials were indeed rejected and returned by the
appellant to the appellee. On the contrary, the appellant admits
that they still have them in their possession for the reason that
they were not picked up by the appellee's representative. Such
reasoning appears to be shallow and unworthy of credence. For
if the materials were indeed not picked up within a reasonable
time by the appellee's representative, the appellant should have
taken steps to return them; otherwise they will be held liable for
the value thereof.
First of all, although the petition states that it is one for certiorari under Rule 65 of
the Rules of Court as it imputes grave abuse of discretion committed by the CA, the
Court shall treat the petition as one for review on certiorari under Rule 45,
considering that it was filed within the reglementary period for filing a petition for
review on certiorari and the issues and arguments raised basically seek the review
of the CA judgment.
5) The defendant-appellant never made any written or formal

complaint about the alleged inferior quality ink and no steps
were taken to demand restitution or rectification.
The Court, however, finds the issuance of the Writ of Preliminary Attachment to be
improper. In Philippine Bank of Communications v. Court of Appeals, 6 the Court
held thus:
Its letter dated June 30, 1995 was the first time it made
a communication to the appellee about the alleged
inferior quality of the ink delivered by the latter. This
letter was its answer to the appellee's letter of demand
for payment. Obviously, the appellant's letter was written
to serve as an excuse for its failure to pay for its
contractual obligations. In any case, as a reaction to such
letter, the appellee dared the appellant to return the materials
within one week, through its letter of July 16, 1995.
Obviously, no such
return
was
made. 4(Emphasis
supplied) CAaDSI
Petitioner then filed the present petition for review on certiorari on the following
grounds:
I.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE
ABUSE OF DISCRETION IN ISSUING A WRIT OF PRELIMINARY
ATTACHMENT EX PARTE WITHOUT ANY LEGAL BASIS AND ON
GROUNDS NOT AUTHORIZED UNDER RULE 57 OF THE RULES
OF COURT
II.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE
ABUSE OF DISCRETION AS ITS JUDGMENT WAS BASED ON A
MISAPPREHENSION OF FACTS AND ITS FINDINGS ARE NOT
SUPPORTED BY THE EVIDENCE EXTANT IN THE RECORDS OF
THIS CASE
III.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN NOT REVERSING THE RULING OF
THE TRIAL COURT 5
Secondly, it should be pointed out that petitioner mistakenly stated that it was the
CA that issued the writ of preliminary attachment. Said writ was issued by the trial
court. On appeal, the CA merely upheld the trial court's order, ruling that the
applicant's (herein private respondent's) affidavit was sufficient basis for the
issuance of the writ because it stated that petitioner had the intention of defrauding
private respondent by agreeing to pay its purchases within 30 days but then refused
to pay the same once in possession of the merchandise.
Petitioner cannot insist that its allegation that private

respondents failed to remit the proceeds of the sale of
the entrusted goods nor to return the same is sufficient
for attachment to issue. We note that petitioner anchors its
application upon Section 1(d), Rule 57. This particular provision
was adequately explained in Liberty Insurance Corporation v.
Court of Appeals, as follows
To sustain an attachment on this ground, it must be
shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the
agreement and must have been the reason which
induced the other party into giving consent which he
would not have otherwise given. To constitute a ground
for attachment in Section 1 (d), Rule 57 of the Rules of
Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently
contracted if at the time of contracting it the
debtor has a preconceived plan or intention not
to pay, as it is in this case. Fraud is a state of mind
and need not be proved by direct evidence but may be
inferred from the circumstances attendant in each case
(Republic v. Gonzales, 13 SCRA 633). (Emphasis
ours) aETADI
We find an absence of factual allegations as to how the fraud
alleged by petitioner was committed. As correctly held by
respondent Court of Appeals, such fraudulent intent not to
honor the admitted obligation cannot be inferred from
the debtor's inability to pay or to comply with the
obligations. 7 (Emphasis supplied)
More recently, in Philippine National Construction Corporation v. Dy, 8 the Court
ruled that the following allegations in an affidavit to support the application for
a Writ of Preliminary Attachment is insufficient, to wit:
Page 27
Radstock grounded its application for a Writ of Preliminary

Attachment on Section 1 (d) and (e) of Rule 57 of the Rules of
Court which provides:
SECTION 1. Grounds upon which attachment may
issue. A plaintiff or any proper party may, at the
commencement of the action or at any time thereafter,
have the property of the adverse party attached as
security for the satisfaction of any judgment that may
be recovered in the following cases:
xxx xxx xxx
(d) In an action against a party who has been guilty of
fraud in contracting the debt or incurring the obligation
upon which the action is brought, or in the
performance thereof;
(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with
intent to defraud his creditors;
xxx xxx xxx
In support of these grounds, the affidavit of merit alleged the
following:
3. Despite repeated demands and periodic statements
of accounts sent to PNCC for the settlement of the
credit obligation Yen 5.46 Billion, its interests and
penalties within three (3) days from demand in writing,
and in the case of credit obligation for P20,000,000
which PNCC had agreed to punctually liquidate the said
advances to its subsidiary, PNCC failed to pay and
honor its obligations herein stated.
xxx xxx xxx
5. That PNCC knowing that it is bankrupt and that it
does not have enough assets to meet its existing
obligations is now offering for sale its assets as shown
in the reports published in newspapers of general
circulation.
6. That the above series of acts as enumerated in
paragraphs 3, 4 and 5[,] Marubeni believes, constitute
fraud on the part of PNCC in contracting the obligations
mentioned herein and will surely prejudice its creditors.
xxx xxx xxx
We do not see how the above allegations, even on the
assumption they are all true, can be considered as falling within
sub-paragraphs (d) and (e). The first three assert, in essence,
that PNCC has failed to pay its debt and is offering for sale its
assets knowing that it does not have enough to pay its
obligations. As previously held, fraudulent intent cannot be
inferred from a debtor's inability to pay or comply with
obligations. Also, the fact that PNCC has insufficient

assets to cover its obligations is no indication of fraud
even if PNCC attempts to sell them because it is quite
possible that PNCC was entering into a bona fide good
faith sale where at least fair market value for the assets
will be received. In such a situation, Marubeni would not
be in a worse position than before as the assets will still
be there but just liquidated. Also, that the Financial
Statements do not reflect the loan obligation cannot be
construed as a scheme to defraud creditors.
As to the last two paragraphs, these merely stated that
while PNCC continued to receive revenues from toll
charges and other loan obligations the debt to Marubeni
remained unpaid. Again, no fraud can be deduced from
these acts. While these may be sufficient averments to be
awarded damages once substantiated by competent evidence
and for which a writ of execution will issue, they are not
sufficient to obtain the harsh provisional remedy of
preliminary attachment which requires more than mere
deliberate failure to pay a debt. (Emphasis supplied) HCaEAT
Similarly, in this case, the bare allegations in the applicant's affidavit, to wit:
6. PCL Industries Manufacturing Corporation, after receiving the
above printing ink materials acted in bad faith when it failed to
comply with the terms and conditions of the sale thereby
prejudicing the interest of Asa Color & Chemical Industries, Inc.
xxx xxx xxx
10. Defendant [herein petitioner] was guilty of fraud in
contracting the obligation when he [sic] agreed to pay the
purchases within 30 days from date of purchases but once in
possession of the merchandise, refused to pay his just and valid
obligation thereby using the capital of plaintiff [herein private
respondent] to the latter's prejudices [sic]. 9
are insufficient to prove that petitioner was guilty of fraud in contracting the
debt or incurring the obligation. The affidavit does not contain statements of
other factual circumstances to show that petitioner, at the time of contracting
the obligation, had a preconceived plan or intention not to pay. Verily, in this
case, the mere fact that petitioner failed to pay its purchases upon falling due
and despite several demands made by private respondent, is not enough to
warrant the issuance of the harsh provisional remedy of preliminary
attachment.
However, with regard to the other issues raised in this petition, the Court finds the
same unmeritorious.
This Court reiterated in Child Learning Center, Inc. v. Tagario, 10 the well-settled
rule that:
Generally, factual findings of the trial court, affirmed by
the Court of Appeals, are final and conclusive and may
not be reviewed on appeal. The established exceptions are:
(1) when the inference made is manifestly mistaken, absurd or
Page 28
impossible; (2) when there is grave abuse of discretion; (3)

when the findings are grounded entirely on speculations,
surmises or conjectures; (4) when the judgment of the Court of
Appeals is based on misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when the Court of Appeals, in
making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and
appellee; (7) when the findings of fact are conclusions without
citation of specific evidence on which they are based; (8) when
the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and (9) when
the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on
record. (Emphasis supplied)
Petitioner insists that the CA should have given weight to its evidence, i.e., the work
processes (Exhibits "12" to "21"), which supposedly proved that respondent ASA
supplied the ink that caused the unpleasant smell of petitioner's finished products.
Petitioner argues that the CA erred in concluding that the work processes failed to
prove that the defective ink definitely came from respondent because said
documents showed not only the name of respondent ASA Color as supplier, but also
the names of several other suppliers. Petitioner now tries to explain that the other
names of suppliers appearing on the work processes were suppliers of plastic
materials, so the only supplier of ink appearing on said documents is respondent
ASA. It is further pointed out that, as testified by Jovencio Lim (Lim), petitioner's
President, during the period covered by the Work Processes, they had only two
suppliers of ink, CDI Sakada and respondent ASA Color.
Petitioner is likewise wrong in assuming that the CA totally disregarded the

testimony of Frank Tanos (Tanos) who withdrew his testimony on February 24,
1998, or almost a year after testifying that petitioner's plastic products were
rejected by customers due to the bad smell of paint. The CA made no ruling on the
admissibility of Tanos' testimony. The appellate court merely stated that the memos
(Exhibits "30"-"32") from said witness also do not prove the source of the unwanted
smell. Thus, the CA obviously considered Tanos' testimony and the documents he
identified for whatever they were worth, but still found them unconvincing to prove
petitioner's claim that it was respondent who delivered defective ink materials.
Clearly, the findings of fact of both the trial court and the CA, as quoted above, are
strongly rooted on testimonial and documentary evidence submitted by both
parties. This case evidently does not fall under any of the enumerated exceptions to
the general rule that factual findings of the trial court, affirmed by the CA, are final
and conclusive and may not be reviewed on appeal.
IN VIEW OF THE FOREGOING, the petition is PARTLY GRANTED. Insofar as the
issuance of the Writ of Attachment is concerned, the Court finds the same improper,
hence, the attachment over any property of petitioner by the writ of preliminary
attachment is ordered LIFTED effective upon the finality of this Decision. In all other
respects, the Decision of the Court of Appeals dated February 21, 2001 and its
Resolution dated May 9, 2001 are AFFIRMED.
SO ORDERED.
||| (PCL Industries Manufacturing Corp. v. Court of Appeals, G.R. No. 147970,
[March 31, 2006], 520 PHIL 738-752)
x-x-x
The Court subjected the records of this case to close scrutiny, but found that
petitioner's allegation that the CA judgment is based on misapprehension of facts, is
absolutely unfounded.
There is no testimonial evidence whatsoever to support petitioner's belated
explanation that the other names of suppliers appearing on the work
processes are suppliers of plastic materials and not ink. Moreover, petitioner's
witnesses contradict each other. Lim claims that during the period covered by the
work processes, they had only 2 suppliers of ink, namely, CDI Sakada and ASA
Color. 11 On the other hand, contrary to Lim's claim, Victor Montaez, petitioner's
Head of the Accounting Department, testified that at that time, they had three or
four suppliers of ink materials. 12 The work process form dated April 29, 1994
marked as Exhibit "20" also listed the suppliers as "SYNPAC/ASA/CDI," and the
colors used as "Brown-ASA" and "Yellow-CDI." Hence, petitioner's own evidence
reveals that there were at least two suppliers of ink for that batch of production, as
Lim has stated that both ASA and CDI are suppliers of ink materials. 13 Hence, the
CA was correct in ruling that petitioner's evidence failed to prove that it was indeed
respondent ASA Color who supplied the defective ink. TSEHcA
Having failed to prove that the ink materials delivered by respondent were
defective, petitioner does not have any basis for claiming the right to return and not
pay for the materials it purchased from respondent. It is, therefore, no longer
necessary to discuss whether it was the obligation of respondent to pick-up the ink
from petitioner's warehouse.
Page 29
[G.R. No. 171741. November 27, 2009.]

METRO, INC. and SPOUSES FREDERICK JUAN and LIZA
JUAN, petitioners, vs. LARA'S GIFTS AND DECORS, INC.,
LUIS
VILLAFUERTE,
JR.
and
LARA
MARIA
R.
VILLAFUERTE, respondents.
DECISION
CARPIO, J p:
The Case
This is a petition for review 1 of the 29 September 2004 Decision 2 and 2 March
2006 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 79475. In its 29
September 2004 Decision, the Court of Appeals granted the petition for certiorari of
respondents Lara's Gifts and Decors, Inc., Luis Villafuerte, Jr., and Lara Maria R.
Villafuerte (respondents). In its 2 March 2006 Resolution, the Court of Appeals
denied the motion for reconsideration of petitioners Metro, Inc., Frederick Juan and
Liza Juan (petitioners).
The Facts
Lara's Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the
business of manufacturing, producing, selling and exporting handicrafts. Luis
Villafuerte, Jr. and Lara Maria R. Villafuerte are the president and vice-president of
LGD respectively. Frederick Juan and Liza Juan are the principal officers of Metro,
Inc.
Sometime in 2001, petitioners and respondents agreed that respondents would
endorse to petitioners purchase orders received by respondents from their buyers in
the United States of America in exchange for a 15% commission, to be shared
equally by respondents and James R. Paddon (JRP), LGD's agent. The terms of the
agreement were later embodied in an e-mail labeled as the "2001 Agreement". 4
In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Pias
City (trial court) a complaint against petitioners for sum of money and damages
with a prayer for the issuance of a writ of preliminary attachment. Subsequently,
respondents filed an amended complaint 5and alleged that, as of July 2002,
petitioners defrauded them in the amount of $521,841.62. Respondents also prayed
for P1,000,000 as moral damages, P1,000,000 as exemplary damages and 10% of
the judgment award as attorney's fees. Respondents also prayed for the issuance of
a writ of preliminary attachment.
In its 23 June 2003 Order, 6 the trial court granted respondents' prayer and issued
the writ of attachment against the properties and assets of petitioners. The 23 June
2003 Order provides: STcaDI
WHEREFORE, let a Writ of Preliminary Attachment issue against

the properties and assets of Defendant METRO, INC. and
against the properties and assets of Defendant SPOUSES
FREDERICK AND LIZA JUAN not exempt from execution, as may
be
sufficient
to
satisfy
the
applicants'
demand
of
US$521,841.62 US Dollars or its equivalent in Pesos upon actual
attachment, which is about P27 Million, unless such Defendants
make a deposit or give a bond in an amount equal to P27 Million
to satisfy the applicants' demand exclusive of costs, upon
posting by the Plaintiffs of a Bond for Preliminary Attachment in
the amount of twenty five million pesos (P25,000,000.00),
subject to the approval of this Court.
SO ORDERED. 7
On 26 June 2003, petitioners filed a motion to discharge the writ of attachment.
Petitioners argued that the writ of attachment should be discharged on the following
grounds: (1) that the 2001 agreement was not a valid contract because it did not
show that there was a meeting of the minds between the parties; (2) assuming that
the 2001 agreement was a valid contract, the same was inadmissible because
respondents failed to authenticate it in accordance with the Rules on Electronic
Evidence; (3) that respondents failed to substantiate their allegations of fraud with
specific acts or deeds showing how petitioners defrauded them; and (4) that
respondents failed to establish that the unpaid commissions were already due and
demandable.
After considering the arguments of the parties, the trial court granted petitioners'
motion and lifted the writ of attachment. The 12 August 2003 Order 8 of the trial
court provides:
Premises considered, after having taken a second hard look at
the Order dated June 23, 2003 granting plaintiff's application for
the issuance of a writ of preliminary attachment, the Court
holds that the issuance of a writ of preliminary attachment in
this case is not justified.
WHEREFORE, the writ of preliminary attachment issued in the
instant case is hereby ordered immediately discharged and/or
lifted.
SO ORDERED. 9
Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the
trial court denied the motion.
Respondents filed a petition for certiorari before the Court of Appeals. Respondents
alleged that the trial court gravely abused its discretion when it ordered the
discharge of the writ of attachment without requiring petitioners to post a counterbond.
In its 29 September 2004 Decision, the Court of Appeals granted respondents'
petition. The 29 September 2004 Decision provides:
WHEREFORE, finding merit in the petition, We GRANT the same.
The assailed Orders are hereby ANNULLED and SET ASIDE.
However, the issued Writ of Preliminary Attachment may be
ordered discharged upon the filing by the private respondents of
Page 30
the proper counter-bond pursuant to Section 12, Rule 57 of the

Rules of Civil Procedure.
SO ORDERED. 10 EcHAaS
Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the
Court of Appeals denied the motion.
Hence, this petition.
The 12 August 2003 Order of the Trial Court
According to the trial court, respondents failed to sufficiently show that petitioners
were guilty of fraud either in incurring the obligation upon which the action was
brought, or in the performance thereof. The trial court found no proof that
petitioners were motivated by malice in entering into the 2001 agreement. The trial
court also declared that petitioners' failure to fully comply with their obligation,
absent other facts or circumstances to indicate evil intent, does not automatically
amount to fraud. Consequently, the trial court ordered the discharge of the writ of
attachment for lack of evidence of fraud.
The 29 September 2004 Decision of the Court of Appeals
According to the Court Appeals, the trial court gravely abused its discretion when it
ordered the discharge of the writ of attachment without requiring petitioners to post
a counter-bond. The Court of Appeals said that when the writ of attachment is
issued upon a ground which is at the same time also the applicant's cause of action,
courts are precluded from hearing the motion for dissolution of the writ when such
hearing would necessarily force a trial on the merits of a case on a mere
motion. 11 The Court of Appeals pointed out that, in this case, fraud was not only
alleged as the ground for the issuance of the writ of attachment, but was actually
the core of respondents' complaint. The Court of Appeals declared that the only way
that the writ of attachment can be discharged is by posting a counter-bond in
accordance with Section 12, 12 Rule 57 of the Rules of Court.
The Issue
Petitioners raise the question of whether the writ of attachment issued by the trial
court was improperly issued such that it may be discharged without the filing of a
counter-bond.
The Ruling of the Court
The petition has no merit.
Petitioners contend that the writ of attachment was improperly issued because
respondents' amended complaint failed to allege specific acts or circumstances
constitutive of fraud. Petitioners insist that the improperly issued writ of attachment
may be discharged without the necessity of filing a counter-bond. Petitioners also
argue that respondents failed to show that the writ of attachment was issued upon
a ground which is at the same time also respondents' cause of action. Petitioners
maintain that respondents' amended complaint was not an action based on fraud
but was a simple case for collection of sum of money plus damages.
On the other hand, respondents argue that the Court of Appeals did not err in ruling
that the writ of attachment can only be discharged by filing a counter-bond.
According to respondents, petitioners cannot avail of Section 13, 13 Rule 57 of the
Rules of Court to have the attachment set aside because the ground for the
issuance of the writ of attachment is also the basis of respondents' amended

complaint. Respondents assert that the amended complaint is a complaint for
damages for the breach of obligation and acts of fraud committed by
petitioners. cAaDHT
In this case, the basis of respondents' application for the issuance of a writ of
preliminary attachment is Section 1 (d), Rule 57 of the Rules of Court which
provides:
SEC. 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 maybe recovered in the following cases: . . .
(d) In an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof; . . .
In Liberty Insurance Corporation v. Court of Appeals, 14 we explained:
To sustain an attachment on this ground, it must be shown that
the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason
which induced the other party into giving consent which he
would not have otherwise given. To constitute a ground for
attachment in Section 1(d), Rule 57 of the Rules of Court, fraud
should be committed upon contracting the obligation sued upon.
A debt is fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to pay, as it
is in this case. 15
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. 16
In their amended complaint, respondents alleged the following in support of their
prayer for a writ of preliminary attachment:
5. Sometime in early 2001, defendant Frederick Juan
approached plaintiff spouses and asked them to help
defendants' export business. Defendants enticed plaintiffs to
enter into a business deal. He proposed to plaintiff spouses the
following:
a. That plaintiffs transfer and endorse to defendant
Metro some of the Purchase Orders (PO's) they will
receive from their US buyers;
b. That defendants will sell exclusively and "only
thru" plaintiffs for their US buyer;
xxx xxx xxx
Page 31
6. After several discussions on the matter and further

inducement on the part of defendant spouses, plaintiff spouses
agreed. Thus, on April 21, 2001, defendant spouses confirmed
and finalized the agreement in a letter-document entitled "2001
Agreement" they emailed to plaintiff spouses, a copy of which is
hereto attached as Annex "A".
xxx xxx xxx
20. Defendants are guilty of fraud committed both at the
inception of the agreement and in the performance of the
obligation. Through machinations and schemes, defendants
successfully enticed plaintiffs to enter into the 2001 Agreement.
In order to secure plaintiffs' full trust in them and lure plaintiffs
to endorse more POs and increase the volume of the orders,
defendants during the early part, remitted to plaintiffs shares
under the Agreement. EHSTDA
a trial on the merits of the case on the strength of a mere motion to dissolve the
attachment has a basis.
WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004 Decision
and 2 March 2006 Resolution of the Court of Appeals in CA-G.R.SP No. 79475.
SO ORDERED.
||| (Metro, Inc. v. Lara's Gifts and Decors, Inc., G.R. No. 171741, [November 27,
2009], 621 PHIL 162-172)
x-x-x
21. However, soon thereafter, just when the orders increased

and the amount involved likewise increased, defendants
suddenly, without any justifiable reasons and in pure bad faith
and fraud, abandoned their contractual obligations to remit to
plaintiffs their shares. And worse, defendants transacted
directly with plaintiffs' foreign buyer to the latter's
exclusion and damage. Clearly, defendants planned
everything from the beginning, employed ploy and machinations
to defraud plaintiffs, and consequently take from them a
valuable client.
22. Defendants are likewise guilty of fraud by violating
the trust and confidence reposed upon them by plaintiffs.
Defendants received the proceeds of plaintiffs' LCs with
the clear obligation of remitting 15% thereof to the
plaintiffs. Their refusal and failure to remit the said
amount despite demand constitutes a breach of trust
amounting to malice and fraud. 17 (Emphasis and
underscoring in the original) (Boldfacing and italicization
supplied)
We rule that respondents' allegation that petitioners undertook to sell exclusively
and only through JRP/LGD for Target Stores Corporation but that petitioners
transacted directly with respondents' foreign buyer is sufficient allegation of fraud to
support their application for a writ of preliminary attachment. Since the writ of
preliminary attachment was properly issued, the only way it can be dissolved is by
filing a counter-bond in accordance with Section 12, Rule 57 of the Rules of Court.
Moreover, the reliance of the Court of Appeals in the cases of Chuidian v.
Sandiganbayan, 18 FCY
Construction
Group,
Inc.
v.
Court
of
Appeals, 19and Liberty Insurance Corporation v. Court of Appeals 20 is proper. The
rule that "when the writ of attachment is issued upon a ground which is at the same
time the applicant's cause of action, the only other way the writ can be lifted or
dissolved is by a counter-bond" 21 is applicable in this case. It is clear that in
respondents' amended complaint of fraud is not only alleged as a ground for the
issuance of the writ of preliminary attachment, but it is also the core of
respondents' complaint. The fear of the Court of Appeals that petitioners could force
Page 32
[G.R. No. 115678. February 23, 2001.]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs.
HON.
COURT
OF
APPEALS
and
BERNARDINO
VILLANUEVA,respondents.
[G.R. No. 119723. February 23, 2001.]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs.
HON. COURT OF APPEALS and FILIPINAS TEXTILE MILLS,
INC.,respondents.
The Motion was duly opposed by private respondents and, after the filing of a Reply
thereto by petitioner, the lower court issued its August 11, 1993 Order for the
issuance of a writ of preliminary attachment, conditioned upon the filing of an
attachment bond. Following the denial of the Motion for Reconsideration filed by
private respondent Filipinas Textile Mills, both private respondents filed separate
petitions for certiorari before respondent Court assailing the order granting the writ
of preliminary attachment.
Both petitions were granted, albeit on different grounds. In CA-G.R. SP No. 32762,
respondent Court of Appeals ruled that the lower court was guilty of grave abuse of
discretion in not conducting a hearing on the application for a writ of preliminary
attachment and not requiring petitioner to substantiate its allegations of fraud,
embezzlement or misappropriation. On the other hand, in CA-G.R. SP No. 32863,
respondent Court of Appeals found that the grounds cited by petitioner in its Motion
do not provide sufficient basis for the issuance of a writ of preliminary attachment,
they being mere general averments. Respondent Court of Appeals held that neither
embezzlement, misappropriation nor incipient fraud may be presumed; they must
be established in order for a writ of preliminary attachment to issue.
Hence, the instant consolidated 5 petitions charging that respondent Court of
Appeals erred in
DECISION
YNARES-SANTIAGO, J p:
Before us are consolidated petitions for review both filed by Philippine Bank of
Communications; one against the May 24, 1994 Decision of respondent Court of
Appeals in CA-G.R. SP No. 32863 1 and the other against its March 31, 1995
Decision in CA-G.R. SP No. 32762 2 Both Decisions set aside and nullified the
August 11, 1993 Order 3 of the Regional Trial Court of Manila, Branch 7, granting
the issuance of a writ of preliminary attachment in Civil Case No. 91-56711.
The case commenced with the filing by petitioner, on April 8, 1991, of a Complaint
against private respondent Bernardino Villanueva, private respondent Filipinas
Textile Mills and one Sochi Villanueva (now deceased) before the Regional Trial
Court of Manila. In the said Complaint, petitioner sought the payment of
P2,244,926.30 representing the proceeds or value of various textile goods, the
purchase of which was covered by irrevocable letters of credit and trust receipts
executed by petitioner with private respondent Filipinas Textile Mills as obligor;
which, in turn, were covered by surety agreements executed by private respondent
Bernardino Villanueva and Sochi Villanueva. In their Answer, private respondents
admitted the existence of the surety agreements and trust receipts but countered
that they had already made payments on the amount demanded and that the
interest and other charges imposed by petitioner were onerous.
On May 31, 1993, petitioner filed a Motion for Attachment, 4 contending that
violation of the trust receipts law constitutes estafa, thus providing ground for the
issuance of a writ of preliminary attachment; specifically under paragraphs "b" and
"d," Section 1, Rule 57 of the Revised Rules of Court. Petitioner further claimed that
attachment was necessary since private respondents were disposing of their
properties to its detriment as a creditor. Finally, petitioner offered to post a bond for
the issuance of such writ of attachment.
"1. Holding that there was no sufficient basis for the issuance of
the writ of preliminary attachment in spite of the allegations of
fraud, embezzlement and misappropriation of the proceeds or
goods entrusted to the private respondents;
2. Disregarding the fact that the failure of FTMI and Villanueva
to remit the proceeds or return the goods entrusted, in violation
of private respondents' fiduciary duty as entrustee, constitute
embezzlement or misappropriation which is a valid ground for
the issuance of a writ of preliminary attachment." 6
We find no merit in the instant petitions.
To begin with, we are in accord with respondent Court of Appeals in CA-G.R. SP No.
32863 that the Motion for Attachment filed by petitioner and its supporting affidavit
did not sufficiently establish the grounds relied upon in applying for the writ of
preliminary attachment.
The Motion for Attachment of petitioner states that
1. The instant case is based on the failure of defendants as
entrustee to pay or remit the proceeds of the goods entrusted
by plaintiff to defendant as evidenced by the trust receipts
(Annexes "B", "C" and "D" of the complaint), nor to return the
goods entrusted thereto, in violation of their fiduciary duty as
agent or entrustee;
2. Under Section 13 of P.D. 115, as amended, violation of the
trust receipt law constitute(s) estafa (fraud and/or deceit)
punishable underArticle 315 par. 1 [b] of the Revised Penal
Code;
3. On account of the foregoing, there exist(s) valid ground for
the issuance of a writ of preliminary attachment under Section 1
of Rule 57 of the Revised Rules of Court particularly under sub-
Page 33
paragraphs "b" and "d", i.e. for embezzlement or fraudulent

misapplication or conversion of money (proceeds) or property
(goods entrusted) by an agent (entrustee) in violation of his
fiduciary duty as such, and against a party who has been guilty
of fraud in contracting or incurring the debt or obligation;
4. The issuance of a writ of preliminary attachment is likewise
urgently necessary as there exist(s) no sufficient security for
the satisfaction of any judgment that may be rendered against
the defendants as the latter appears to have disposed of their
properties to the detriment of the creditors like the herein
plaintiff;
5. Herein plaintiff is willing to post a bond in the amount fixed
by this Honorable Court as a condition to the issuance of a writ
of preliminary attachment against the properties of the
defendants.
Section 1(b) and (d), Rule 57 of the then controlling Revised Rules of Court,
provides, to wit
SECTION 1. Grounds upon which attachment may issue. A
plaintiff or any proper party may, at the commencement of the
action or at any time thereafter, have the property of the
adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases: HCTDIS
xxx xxx xxx
(b) In an action for money or property embezzled or
fraudulently misapplied or converted to his use by a public
officer, or an officer of a corporation, or an attorney, factor,
broker, agent or clerk, in the course of his employment as such,
or by any other person in a fiduciary capacity, or for a willful
violation of duty;
xxx xxx xxx
(d) In an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the
action is brought, or in concealing or disposing of the property
for the taking, detention or conversion of which the action is
brought;
xxx xxx xxx
While the Motion refers to the transaction complained of as involving trust receipts,
the violation of the terms of which is qualified by law as constituting estafa, it does
not follow that a writ of attachment can and should automatically issue. Petitioner
cannot merely cite Section 1(b) and (d), Rule 57, of the Revised Rules of Court, as
mere reproduction of the rules, without more, cannot serve as good ground for
issuing a writ of attachment. An order of attachment cannot be issued on a general
averment, such as one ceremoniously quoting from a pertinent rule. 7
The supporting Affidavit is even less instructive. It merely states, as follows
I, DOMINGO S. AURE, of legal age, married, with address at No.

214-216 Juan Luna Street, Binondo, Manila, after having been
sworn in accordance with law, do hereby depose and say, THAT:
1. I am the Assistant Manager for Central Collection Units
Acquired Assets Section of the plaintiff, Philippine Bank of
Communications, and as such I have caused the preparation of
the above motion for issuance of a writ of preliminary
attachment;
2. I have read and understood its contents which are true and
correct of my own knowledge;
3. There exist(s) sufficient cause
defendants in the instant case;
of
action
against
the
4. The instant case is one of those mentioned in Section 1 of

Rule 57 of the Revised Rules of Court wherein a writ of
preliminary attachment may be issued against the defendants,
particularly sub-paragraphs "b" and "d" of said section;
5. There is no other sufficient security for the claim sought to be
enforced by the instant case and the amount due to herein
plaintiff or the value of the property sought to be recovered is
as much as the sum for which the order for attachment is
granted, above all legal counterclaims.
Again, it lacks particulars upon which the court can discern whether or not a writ of
attachment should issue.
Petitioner cannot insist that its allegation that private respondents failed to remit
the proceeds of the sale of the entrusted goods nor to return the same is sufficient
for attachment to issue. We note that petitioner anchors its application upon Section
1(d), Rule 57. This particular provision was adequately explained in Liberty
Insurance Corporation v. Court of Appeals, 8 as follows
To sustain an attachment on this ground, it must be shown that
the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason
which induced the other party into giving consent which he
would not have otherwise given. To constitute a ground for
attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud
should be committed upon contacting the obligation sued
upon. A debt is fraudulently contracted if at the time of
contracting it the debtor has a preconceived plan or intention
not to pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be inferred from
the circumstances attendant in each case (Republic
v. Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by petitioner

was committed. As correctly held by respondent Court of Appeals, such fraudulent
intent not to honor the admitted obligation cannot be inferred from the debtor's
inability to pay or to comply with the obligations. 9 On the other hand, as stressed,
Page 34
above, fraud may be gleaned from a preconceived plan or intention not to pay. This
does not appear to be so in the case at bar. In fact, it is alleged by private
respondents that out of the total P419,613.96 covered by the subject trust receipts,
the amount of P400,000.00 had already been paid, leaving only P19,613.96 as
balance. Hence, regardless of the arguments regarding penalty and interest, it can
hardly be said that private respondents harbored a preconceived plan or intention
not to pay petitioner.
The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. 32863
that neither petitioner's Motion or its supporting Affidavit provides sufficient basis
for the issuance of the writ of attachment prayed for.
WHEREFORE, for the foregoing reasons, the instant petitions are DENIED. The
decision of the Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP No. 32762
are AFFIRMED. No pronouncement as to costs.
SO ORDERED.
||| (Philippine Bank of Communication v. Court of Appeals, G.R. No. 115678,
119723, [February 23, 2001])
x-x-x
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that the
lower court should have conducted a hearing and required private petitioner to
substantiate its allegations of fraud, embezzlement and misappropriation.
To reiterate, petitioner's Motion for Attachment fails to meet the standard set forth
in D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 10 in applications for attachment.
In the said case, this Court cautioned
The petitioner's prayer for a writ of preliminary attachment
hinges on the allegations in paragraph 16 of the complaint and
paragraph 4 of the affidavit of Daniel Pe which are couched in
general terms devoid of particulars of time, persons and places
to support such a serious assertion that "defendants are
disposing of their properties in fraud of creditors." There is thus
the necessity of giving to the private respondents an
opportunity to ventilate their side in a hearing, in accordance
with due process, in order to determine the truthfulness of the
allegations. But nohearing was afforded to the private
respondents the writ having been issued ex parte. A writ of
attachment can only be granted on concrete and specific
grounds and not on general averments merely quoting the
words of the rules.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc., 11 not only was
petitioner's application defective for having merely given general averments; what is
worse, there was no hearing to afford private respondents an opportunity to
ventilate their side, in accordance with due process, in order to determine the
truthfulness of the allegations of petitioner. As already mentioned, private
respondents claimed that substantial payments were made on the proceeds of the
trust receipts sued upon. They also refuted the allegations of fraud, embezzlement
and misappropriation by averring that private respondent Filipinas Textile Mills could
not have done these as it had ceased its operations starting in June of 1984 due to
workers' strike. These are matters which should have been addressed in a
preliminary hearing to guide the lower court to a judicious exercise of its discretion
regarding the attachment prayed for. On this score, respondent Court of Appeals
was correct in setting aside the issued writ of preliminary attachment.
Time and again, we have held that the rules on the issuance of a writ of attachment
must be construed strictly against the applicants. This stringency is required
because the remedy of attachment is harsh, extraordinary and summary in nature.
If all the requisites for the granting of the writ are not present, then the court which
issues it acts in excess of its jurisdiction. 12
Page 35
THIRD DIVISION
[G.R. No. 102448. August 5, 1992.]
RICARDO CUARTERO, petitioner, vs. COURT OF APPEALS,
ROBERTO
EVANGELISTA
and
FELICIA
EVANGELISTA, respondents.
Subsequently, the spouses Evangelista filed a 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. LexLib
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.
DECISION
GUTIERREZ, JR., J p:
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:
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
Cesar
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-906471.
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 ofP2,171,794.91.
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 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: cdll
Page 36
"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)
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
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 writof preliminary attachment may issue
ex-parte against a defendant before the court acquires jurisdiction over the latter's
person by service ofsummons 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 ofAppeals, 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. llcd
The writ of preliminary attachment can be applied for and granted at
commencement of the action or at any time thereafter (Section 1, Rule
Rules of Court). In Davao Light and Power, Co. Inc. v. Court of Appeals, supra,
phrase "at the commencement of the action" is interpreted as referring to
the
57,
the
the
" . . . 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, crossclaim, 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,
to held in suspension until, the actual obtention of jurisdiction
over
the
defendant's
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 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 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, thecourt 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. prcd
Page 37
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 checks
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. Cesar C. Peralejo, Presiding Judge of Branch 98,
Regional Trial Court of Quezon City against spouses Evangelista are hereby
REINSTATED. No pronouncement as to costs. llcd
SO ORDERED.
||| (Cuartero v. Court of Appeals, G.R. No. 102448, [August 5, 1992])
x-x-x
Page 38
G.R. No. 171124
writ of preliminary attachment against the properties not exempt from execution of
all the defendants in the civil case subject, among others, to petitioner's filing of
aP50M-bond.9 The writ was, consequently, issued on November 6, 2000.10
February 13, 2008
ALEJANDRO
NG
vs.
MANUEL TANKIANSEE, respondent.
WEE, petitioner,
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the September 14, 2005 Decision 1 of the Court of Appeals (CA) in
CA-G.R. SP No. 90130 and its January 6, 2006 Resolution 2denying the motion for
reconsideration thereof.
The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont
Bank (now United Overseas Bank), made several money placements
totaling P210,595,991.62 with the bank's affiliate, Westmont Investment
Corporation (Wincorp), a domestic entity engaged in the business of an investment
house with the authority and license to extend credit.3
Sometime in February 2000, petitioner received disturbing news on Wincorp's
financial condition prompting him to inquire about and investigate the company's
operations and transactions with its borrowers. He then discovered that the
company extended a loan equal to his total money placement to a corporation
[Power Merge] with a subscribed capital of only P37.5M. This credit facility
originated from another loan of about P1.5B extended by Wincorp to another
corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp
instituted a case against it and its surety. Settlement was, however, reached in
which Hottick's president, Luis Juan L. Virata (Virata), assumed the obligation of the
surety.4
Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's
money placements were transferred without his knowledge and consent to the loan
account of Power Merge through an agreement that virtually freed the latter of any
liability. Allegedly, through the false representations of Wincorp and its officers and
directors, petitioner was enticed to roll over his placements so that Wincorp could
loan the same to Virata/Power Merge.5
Finding that Virata purportedly used Power Merge as a conduit and connived with
Wincorp's officers and directors to fraudulently obtain for his benefit without any
intention of paying the said placements, petitioner instituted, on October 19, 2000,
Civil Case No. 00-99006 for damages with the Regional Trial Court (RTC) of
Manila.6 One of the defendants impleaded in the complaint is herein respondent
Manuel Tankiansee, Vice-Chairman and Director of Wincorp.7
On October 26, 2000, on the basis of the allegations in the complaint and the
October 12, 2000 Affidavit 8 of petitioner, the trial court ordered the issuance of a
Arguing that the writ was improperly issued and that the bond furnished was grossly
insufficient, respondent, on December 22, 2000, moved for the discharge of the
attachment.11 The other defendants likewise filed similar motions. 12 On October 23,
2001, the RTC, in an Omnibus Order,13 denied all the motions for the discharge of
the attachment. The defendants, including respondent herein, filed their respective
motions for reconsideration 14 but the trial court denied the same on October 14,
2002.15
Incidentally, while respondent opted not to question anymore the said orders, his
co-defendants, Virata and UEM-MARA Philippines Corporation (UEM-MARA), assailed
the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No.
74610]. The appellate court, however, denied the certiorari petition on August 21,
2003,16 and the motion for reconsideration thereof on March 16, 2004. 17 In a
petition for review on certioraribefore this Court, in G.R. No. 162928, we denied
the petition and affirmed the CA rulings on May 19, 2004 for Virata's and UEMMARA's failure to sufficiently show that the appellate court committed any reversible
error.18We subsequently denied the petition with finality on August 23, 2004. 19
On September 30, 2004, respondent filed before the trial court another Motion to
Discharge Attachment,20 re-pleading the grounds he raised in his first motion but
raising the following additional grounds: (1) that he was not present in Wincorp's
board meetings approving the questionable transactions; 21 and (2) that he could not
have connived with Wincorp and the other defendants because he and Pearlbank
Securities, Inc., in which he is a major stockholder, filed cases against the company
as they were also victimized by its fraudulent schemes.22
Ruling that the grounds raised were already passed upon by it in the previous
orders affirmed by the CA and this Court, and that the additional grounds were
respondent's affirmative defenses that properly pertained to the merits of the case,
the trial court denied the motion in its January 6, 2005 Order.23
With the denial of its motion for reconsideration, 24 respondent filed
a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On
September 14, 2005, the appellate court rendered the assailed Decision 25 reversing
and setting aside the aforementioned orders of the trial court and lifting the
November 6, 2000 Writ of Preliminary Attachment 26 to the extent that it concerned
respondent's properties. Petitioner moved for the reconsideration of the said ruling,
but the CA denied the same in its January 6, 2006 Resolution.27
Thus, petitioner filed the instant petition on the following grounds:
A.
IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD
NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED
BY RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT,
Page 39
WHICH, UNDER PREVAILING JURISPRUDENCE, ARE NOT THE PROPER

SUBJECTS OF A WRIT OF CERTIORARI.
B.
MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY
THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC)
LIFTING THE WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE
GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. 00-99006
WHICH, UNDER PREVAILING JURISPRUDENCE, CANNOT BE USED AS
BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.
C.
LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS
ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY
RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY
DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO
BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE
LOWER COURT.28
For his part, respondent counters, among others, that the general and sweeping
allegation of fraud against respondent in petitioner's affidavit-respondent as an
officer and director of Wincorp allegedly connived with the other defendants to
defraud petitioner-is not sufficient basis for the trial court to order the attachment of
respondent's properties. Nowhere in the said affidavit does petitioner mention the
name of respondent and any specific act committed by the latter to defraud the
former. 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.
Connivance cannot also be based on mere association but must be particularly
alleged and established as a fact. Respondent further contends that the trial court,
in resolving the Motion to Discharge Attachment, need not actually delve into the
merits of the case. All that the court has to examine are the allegations in the
complaint and the supporting affidavit. Petitioner cannot also rely on the decisions
of the appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to
support his claim because respondent is not a party to the said cases. 29
We agree with respondent's contentions and deny the petition.
In the case at bench, the basis of petitioner's application for the issuance of the writ
of preliminary attachment against the properties of respondent is Section 1(d) of
Rule 57 of the Rules of Court which pertinently reads:
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:
xxxx
(d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the action is
brought, or in the performance thereof.
For a writ of attachment to issue under this rule, the applicant must sufficiently
show the factual circumstances of the alleged fraud because fraudulent intent
cannot be inferred from the debtor's mere non-payment of the debt or failure to
comply with his obligation.30 The applicant must then be able to demonstrate that
the debtor has intended to defraud the creditor.31 In Liberty Insurance Corporation
v. Court of Appeals,32 we explained as follows:
To sustain an attachment on this ground, it must be shown that the debtor
in contracting the debt or incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the agreement and must
have been the reason which induced the other party into giving consent
which he would not have otherwise given. To constitute a ground for
attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be
committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this case. Fraud is a
state of mind and need not be proved by direct evidence but may be
inferred from the circumstances attendant in each case. 33
In the instant case, petitioner's October 12, 2000 Affidavit 34 is bereft of any factual
statement that respondent committed a fraud. The affidavit narrated only the
alleged fraudulent transaction between Wincorp and Virata and/or Power Merge,
which, by the way, explains why this Court, in G.R. No. 162928, affirmed the writ of
attachment issued against the latter. As to the participation of respondent in the
said transaction, the affidavit merely states that respondent, an officer and director
of Wincorp, connived with the other defendants in the civil case to defraud
petitioner of his money placements. No other factual averment or circumstance
details how respondent committed a fraud or how he connived with the other
defendants to commit a fraud in the transaction sued upon. In other words,
petitioner has not shown any specific act or deed to support the allegation that
respondent is guilty of fraud.
The affidavit, being the foundation of the writ, 35 must contain such particulars as to
how the fraud imputed to respondent was committed for the court to decide
whether or not to issue the writ. 36 Absent any statement of other factual
circumstances to show that respondent, at the time of contracting the obligation,
had a preconceived plan or intention not to pay, or without any showing of how
respondent committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who allegedly connived with the
other defendants to commit a fraud, is insufficient to support the issuance of a writ
of preliminary attachment.37 In the application for the writ under the said ground,
compelling is the need to give a hint about what constituted the fraud and how it
was perpetrated38 because established is the rule that fraud is never
presumed.39 Verily, the mere fact that respondent is an officer and director of the
company does not necessarily give rise to the inference that he committed a fraud
or that he connived with the other defendants to commit a fraud. While under
Page 40
certain circumstances, courts may treat a corporation as a mere aggroupment of

persons, to whom liability will directly attach, this is only done when the wrongdoing
has been clearly and convincingly established.40
Let it be stressed that the provisional remedy of preliminary attachment is harsh
and rigorous for it exposes the debtor to humiliation and annoyance. 41 The rules
governing its issuance are, therefore, strictly construed against the applicant, 42 such
that if the requisites for its grant are not shown to be all present, the court shall
refrain from issuing it, for, otherwise, the court which issues it acts in excess of its
jurisdiction.43 Likewise, the writ should not be abused to cause unnecessary
prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it
should at once be corrected.44
Considering, therefore, that, in this case, petitioner has not fully satisfied the legal
obligation to show the specific acts constitutive of the alleged fraud committed by
respondent, the trial court acted in excess of its jurisdiction when it issued the writ
of preliminary attachment against the properties of respondent.
We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et
al.,45 that
[t]he merits of the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could force a trial of
the merits of the case on his motion.46
However, the principle finds no application here because petitioner has not yet
fulfilled the requirements set by the Rules of Court for the issuance of the writ
against the properties of respondent.47 The evil sought to be prevented by the said
ruling will not arise, because the propriety or impropriety of the issuance of the writ
in this case can be determined by simply reading the complaint and the affidavit in
support of the application.
Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of
attachment is properly issued insofar as it concerns the properties of Virata and
UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA,
respondent is "never a party thereto." 48 Also, he is not in the same situation as
Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the
alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a
general allegation of fraud was made against respondent.
We state, in closing, that our ruling herein deals only with the writ of preliminary
attachment issued against the properties of respondent-it does not concern the
other parties in the civil case, nor affect the trial court's resolution on the merits of
the aforesaid civil case.
WHEREFORE, premises considered, the petition is DENIED. The September 14,
2005 Decision and the January 6, 2006 Resolution of the Court of Appeals in CAG.R. SP No. 90130 are AFFIRMED.
Page 41
3. To prevent undue removal or withdrawal of funds, until further orders to

the Commission.
4. To report to the Commission on Good Government within five (5) days.
Further, you are authorized to request the Commission for security support from the
Military/Police authorities only if necessary.
.
G.R. No. 111174
March 9, 2000
xxx
xxx
xxx
FOR THE COMMISSION:
REPUBLIC
OF
THE
PHILIPPINES, petitioner,
vs.
HON. BERNARDO V. SALUDARES, Presiding Judge, RTC, Br. 28, Lianga,
Surigao del Sur, and HUNG MING KUK, respondents.
Originally Signed
MARY CONCEPCION BAUTISTA
QUISUMBING, J.:
Commissioner
This special civil action for certiorari assails the decision1 of the Regional Trial Court
of Lianga, Surigao del Sur, Branch 28, dated March 19, 1993. At issue is the
jurisdiction of the trial court over properties owned by Lianga Bay Logging Company,
Inc. (LBLC), but allegedly sequestered by the Presidential Commission on Good
Government (PCGG).
The facts on record show that on April 2, 1986, the PCGG issued a writ of
sequestration,2 which reads:
IN THE MATTER OF THE SEQUESTRATION OF LIANGA BAY LOGGING
x-----------------------x
TO: MR. ARISTIDES M. ESCOSORA
Baganga, Davao Oriental
WRIT OF SEQUESTRATION
By virtue of the power vested unto this Commission and by authority of the
President of the Philippines, LIANGA BAY LOGGING, with offices at 2nd Floor,
Emerald Building, Emerald Ave., Ortigas Office Bldg. Complex, Pasig, Metro Manila is
hereby sequestered.
Mr. Aristides Escosora is hereby appointed Fiscal Agent of this Commission and as
such, he is hereby ordered to:
The writ of sequestration was based on the ground that the shares of stocks in LBLC
owned by Peter A. Sabido formed part of "illegally acquired wealth." On July 27,
1987, the Republic of the Philippines through the PCGG and the Office of the
Solicitor General filed before the Sandiganbayan a complaint 3 for reconveyance,
reversion, accounting, restitution and damages against, among others, Peter A.
Sabido.
On August 12, 1991, Sabido filed a Motion to Lift the Writs of Sequestration before
the Sandiganbayan. On November 29, 1991, the Sandiganbayan granted the
motion, disposing as follows:
WHEREFORE, the "Motion (to Lift Writs of Sequestration)" dated August 12,
1991, is granted. Accordingly, the Writs of Sequestration issued against the
Philippine Integrated Meat Corporation on March 17, 1986, and Lianga Bay
Logging Company, Inc. on April 2, 1986, are declared to have been
deemed automatically lifted upon the lapse of six months from the
ratification of the 1987 Constitution on February 2, 1987, without prejudice
to the continuation of the proceedings against PIMECO and Lianga. . . .
(emphasis supplied)
xxx
xxx
xxx
SO ORDERED.4
1. To implement this sequestration order with a minimum disruption of

business activities.
On December 11, 1991, PCGG filed a motion for reconsideration of the decision of
Sandiganbayan praying for the nullification of the order which lifted the writ of
sequestration of LBLC.
2. To preserve and safeguard, as well as prevent the removal concealment

of records and the disposition and dissipation of assets, funds and
resources.
In the meantime, on February 11, 1993, private respondent Hung Ming Kuk filed a
complaint5 for sum of money against LBLC, with a prayer for a writ of preliminary
Page 42
attachment, with the Regional Trial Court, Branch 28, of Lianga, Surigao del Sur.
The PCGG was not impleaded by Hung Ming Kuk as party-defendant nor was the
sequestration case referred to the RTC's proceedings.
Thus, the Republic of the Philippines filed a special civil action 6 for certiorari under
Rule 65, dated March 29, 1993, with the Supreme Court. This petition, docketed as
G.R. No. 109314, was later on consolidated with other similar cases.
Meantime, on February 15, 1993, the Sandiganbayan denied the motion for
reconsideration of PCGG, dated December 11, 1991.
On February 17, 1993, the trial court granted the writ of preliminary attachment in
favor of Hung Ming Kuk.
Thereafter, Hung Ming Kuk filed a motion to declare LBLC in default for failure to file
responsive pleadings pursuant to Sec. 1, Rule 18 of the Rules of Court. The RTC of
Lianga, acting on the motion of Hung Ming Kuk, issued an order dated March 4,
1993, declaring LBLC as in default. Consequently, on March 19, 1993, the RTC
rendered judgment by default, and decreed thus:
WHEREFORE, premised on the foregoing evidences and findings, this court
hereby renders judgment in favor of the plaintiff, and ordering the
defendant-Corporation to pay, as follows:
1. To pay plaintiff the principal amount of the accrued unpaid
obligation in the total amount of P18,031,563.78, with interests at
14% per annum reckoned from July 1992 to February 1993 in the
computed total of P1,250,666.66, the same to continue until said
obligation is fully paid;
2. To pay plaintiff moral and exemplary damages in the total
amount of P150,000.00, plus Appearance Fee for the counsel in
the sum of P5,000.00;
3. To pay plaintiff the total amount of P4,857,195.45 for Sheriff's
Expenses, Attached Properties Guards' Fees, Filing Fees, Litigation
Expenses, and Attorneys Fees computed at 25% of the principal
obligation, or P4,507,890.95, or a total amount of P4,857,195.45;
4. To pay the costs of the suit.
IT IS SO ORDERED.7
In the meantime, on January 23, 1995, the Supreme Court en banc issued its
decision in the consolidated cases of Republic vs. Sandiganbayan (First Division),
240 SCRA 376 (1995). The decision included the nullification of the resolution of the
Sandiganbayan that lifted the writ of sequestration of LBLC properties in G.R. No.
109314. Hence, the Court effectively confirmed the validity of the writ of
sequestration over said properties. Peter A. Sabido's motion for reconsideration was
denied. Finally, an entry of judgment was issued on April 22, 1997, in G.R. No.
109314.
Petitioner contends that the RTC of Lianga has no jurisdiction over the subject
matter of the case inasmuch as the same are under sequestration by the PCGG.
Citing Baseco vs. PCGG, 150 SCRA 181 (1987), petitioner asserts that the
sequestered assets have been placed under custodia legis of the PCGG pending the
final determination by the Sandiganbayan that said assets are in fact ill-gotten.
Hence, the RTC has no jurisdiction to order the attachment of said sequestered
properties.
Private respondent, however avers that his original complaint was for a sum of
money. It was a demand for payment of a valid obligation owed to him by LBLC. He
adds that it would be unfair and unjust to declare the entire RTC proceedings
regarding his claim for sum of money null and void.
Private respondent further claims that the attachment order of the trial court was
issued after the Sandiganbayan had lifted the writ of sequestration against LBLC.
But petitioner asserts that this order of the Sandiganbayan was reversed by the
Supreme Court in a banc decision8 dated January 23, 1995, resolving several
consolidated cases for which G.R. No. 109314 was included. Petitioner stresses that
said reversal had become final and executory on April 22, 1997.
In PAGCOR vs. CA, 275 SCRA 433-434 (1997), involving ownership by Philippine
Casino Operators Corporation (PCOC) over several gaming and office equipment
during the time that PCOC was under a sequestration by PCGG, the Court ruled:
We disagree with the RTC and the CA on the issue of jurisdiction. While
there can be no dispute that PCOC was sequestered, the fact of
sequestration alone did not automatically oust the RTC of jurisdiction to
decide upon the question of ownership of the subject gaming and office
equipment. The PCGG must be a party to the suit in order that the
Sandiganbayan's exclusive jurisdiction may be correctly invoked. This is
deducible from no less than E.O. No. 14, the "Pea" and "Nepomuceno"
cases relied upon by both subordinate courts. Note that in Section 2 of E.O.
No. 14 which provides:
On August 11, 1993, petitioner filed this special civil action under Rule 65 of the
Rules of Court, raising the sole issue as follows:
Sec. 2. The Presidential Commission on Good Government shall

file all such cases, whether civil or criminal, with the
Sandiganbayan, which shall have exclusive and original
jurisdiction thereof.
WHETHER, THE TRIAL COURT FAULTED IN DECIDING THE CLAIM OF

PRIVATE RESPONDENT WHICH INVOLVED THE PROPERTIES OF LIANGA
BAY LOGGING CO. INC.
it speaks of the PCGG as party-plaintiff. On the other hand, the PCGG was
impleaded as co-defendant in both the "Pea" and "Nepomuceno" cases.
But here, the PCGG does not appear in either capacity, as the complaint is
Page 43
solely between PAGCOR and respondents PCOC and Marcelo. The "Pea"
and "Nepomuceno" cases which recognize the independence of the PCGG
and the Sandiganbayan in sequestration cases, therefore, cannot be
invoked in the instant case so as to divest the RTC of its jurisdiction, under
Section 19 of B.P. Blg. 129, over PAGCOR's action for recovery of personal
property.
In the case at bar, the claim of private respondent Hung Ming Kuk is for a sum of
money arising from a debt incurred by LBLC. Under a contract, private respondent
had extended cash advances and supplied LBLC hardware materials, auto spare
parts, and rendered services, for cutting and hauling logs. The total claim amounts
to P18,031,563.78. Following Section 19 of B.P. Blg. 129, as amended by R.A. No.
7691 on March 25, 1994, the complaint falls within the jurisdiction of the Regional
Trial Court, viz:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxx
xxx
xxx
(8) In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses, and costs or the
value of the property in controversy exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds Two hundred thousand
pesos (P200,000).
Petitioner relies, however, on the case of PCGG vs. Pea, 159 SCRA 556 (1988) and
asserts that the controversy of LBLC or a sequestered company falls within the
exclusive jurisdiction of the Sandiganbayan and not of the trial court.
In the Pea case, the trial court issued a temporary restraining order which
prevented PCGG from enforcing the memorandum of then PCGG Commissioner Mary
Concepcion Bautista. Her memorandum denied complainant's authority to sign and
manage the funds of the sequestered company. The Supreme Court ruled that the
trial court had no jurisdiction over PCGG being a co-equal body, and therefore, the
regional trial courts may not interfere with and restrain the PCGG or set aside the
orders and actions of its Commissioner.
In contrast, the case now before us concerns receivables of the private respondent
arising out of a legitimate business contract to supply goods and services in favor of
LBLC. When a collection suit was filed against LBLC by its supplier, Hung Ming Kuk,
evidently PCGG could not be the proper party to defend against such claim. More so,
because when PCGG had not taken over the LBLC's business operations.
We note that PCGG is not an owner but a conservator. It can exercise only powers of
administration over property sequestered, frozen or provisionally taken over. Even
resort to the provisional remedies should entail the least possible interference with
business operations or activities so that, in the event that the accusation that the
business enterprise is "ill-gotten" be not proven, it may be returned to its rightful
owner as far as possible in the same condition as it was at the time of

sequestration. 9
The holding in Pea which confers exclusive jurisdiction on the Sandiganbayan in
sequestration cases cannot also be relied upon by petitioner in this case. We hold
that the Regional Trial Court has jurisdiction over the complaint for payment of
money allegedly averred by LBLC to private respondent.
We now move to the ancillary issue of whether or not the provisional remedy of
attachment issued by the trial court in favor of the private respondent is valid.
It bears recalling that when the Sandiganbayan ordered that the writ of
sequestration be lifted, PCGG filed a special civil action for certiorari to contest that
order. The Supreme Court ruled in favor of PCGG when it granted the
latter's petition to declare the lifting of the writ of sequestration by the
Sandiganbayan null and void. The Court's en banc resolution pertinently reads:
WHEREFORE, judgment is hereby rendered:
A. NULLIFYING AND SETTING ASIDE:
xxx
xxx
xxx
17) in G.R. No. 109314, its impugned Resolutions

1991 and February 16, 1993.
10
dated November 29,
In the same en banc Resolution, the Court observed:

II. Provisional Remedies in Pursuance of Policy
Special adjective tools or devices were provided by the Revolutionary
Government for the recovery of that "ill-gotten wealth." These took the
form of provisional remedies akin to preliminary attachment (Rule 57), writ
of seizure of personalty (Rule 60) and receivership (Rule 59). They were
(a) sequestration and (b) freeze orders, as regards "unearthed instance of
"ill-gotten wealth"; and (c) provisional takeover, as regards "business
enterprises and properties taken over by the government of the Marcos
Administration or by entities or persons close to former President Marcos."
A. Executive Orders Re Sequestration, Freezing and Takeover
These special remedies were prescribed and defined in Executive Orders
Numbered 1 and 2, promulgated by President Corazon C. Aquino in March,
1986. Their validity and propriety were sustained by this Court on May 27,
1987, against claims that they were unconstitutional as being bills of
attainder, or as violative of the right against self-incrimination and the
guaranty against unreasonable searches and seizures. In the same case,
the Court also set the parameters for and restrictions on the proper
exercise of the remedies.
Page 44
In BASECO vs. PCGG, 150 SCRA 181, 182 (1987), sequestration is defined as the
process, which may be employed as a conservatory writ whenever the right of the
property is involved, to preserve, pending litigation, specific property subject to
conflicting claims of ownership or liens and privileges. 11
The Court also noted the relationship between attachment and receivership, on one
hand, and sequestration, freeze order and provisional takeover on the other. The
latter there are ancillary remedies in prosecuting the ill-gotten wealth of the
previous Marcos regime. The Court observed that sequestration, freezing and
provisional takeover are akin to the provisional remedy of preliminary attachment or
receivership.1wphi1
By an order of attachment, a sheriff seizes property of a defendant in a civil suit so
that it may stand as security for the satisfaction of any judgment that may be
obtained, and not disposed of, or dissipated, or lost intentionally, or otherwise,
pending the action. 12 When a writ of attachment has been levied on real property or
any interest therein belonging to the judgment debtor, the levy creates a lien which
nothing can destroy but its dissolution. 13This well-settled rule is likewise applicable
to a writ of sequestration.
Attachment is in the nature of a proceeding in rem. It is against a particular
property of a debtor. The attaching creditor thereby acquires a specific lien upon the
attached property which ripens into a judgment against the reswhen the order of
sale is made. Such a proceeding is in effect a finding that the property attached is
an indebted thing and results in its virtual condemnation to pay for the owner's
debt. The law does not provide the length of time during which an attachment lien
shall continue after the rendition of the judgment, and it must therefore continue
until the debt is paid, or sale is had under execution issued in the judgment, or until
the judgment is satisfied, or the statement discharged or vacated in some manner
provided by law. 14
In our view, the disputed properties of LBLC were already under custodia legis by
virtue of a valid writ of sequestration 15 issued by the PCGG on April 2, 1986, when
respondent Judge Saludares issued the assailed writ of attachment in favor of
private respondent Hung Ming Kuk. At that time the writ of sequestration issued by
PCGG against LBLC was subsisting. Said writ of the PCGG could not be interfered
with by the RTC of Lianga, because the PCGG is a coordinate and co-equal body.
The PCGG had acquired by operation of law the right of redemption over the
property until after the final determination of the case or until its dissolution.
WHEREFORE, the instant petition is partially GRANTED. The default Order issued by
the public respondent dated March 19, 1993, is AFFIRMED, but should be held in
abeyance until the sequestration case involving LBLC before the Sandiganbayan is
determined. The Order of Attachment issued by the public respondent is declared
NULL and VOID. No pronouncement as to costs.1wphi1.nt
SO ORDERED.
Page 45
G.R. No. 134241
August 11, 2003
DAVID
REYES
(Substituted
by
Victoria
R.
Fabella), petitioner,
vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of the
Court of Appeals in CA-G.R. SP No. 46224. The Court of Appeals dismissed the
petition for certiorari assailing the Orders dated 6 March 1997, 3 July 1997 and 3
October 1997 of the Regional Trial Court of Paranaque, Branch 260 2 ("trial court") in
Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a
complaint for annulment of contract and damages against respondents Jose Lim
("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer
entered into a contract to sell ("Contract to Sell") a parcel of land ("Property")
located along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the
Property as lessee with a monthly rental of P35,000. The Contract to Sell provided
for the following terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel of
land together with the perimeter walls found therein is TWENTY EIGHT
MILLION (P28,000,000.00) PESOS payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to
Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be
paid on or before March 8, 1995 at 9:30 A.M. at a bank to be designated
by the Buyer but upon the complete vacation of all the tenants or
occupants of the property and execution of the Deed of Absolute Sale.
However, if the tenants or occupants have vacated the premises earlier
than March 8, 1995, the VENDOR shall give the VENDEE at least one week
advance notice for the payment of the balance and execution of the Deed
of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of
this sale shall not vacate the premises on March 8, 1995 as stated above,
the VENDEE shall withhold the payment of the balance of P18,000,000.00
and the VENDOR agrees to pay a penalty of Four percent (4%) per month
to the herein VENDEE based on the amount of the downpayment of TEN
MILLION (P10,000,000.00) PESOS until the complete vacation of the
premises by the tenants therein.4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the
Property before the end of January 1995. Reyes also informed Keng 5 and Harrison
Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for
the penalty of P400,000 a month as provided in the Contract to Sell. The complaint
further alleged that Lim connived with Harrison Lumber not to vacate the Property
until the P400,000 monthly penalty would have accumulated and equaled the
unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer 6 denying they
connived with Lim to defraud Reyes. Keng and Harrison Lumber alleged that Reyes
approved their request for an extension of time to vacate the Property due to their
difficulty in finding a new location for their business. Harrison Lumber claimed that
as of March 1995, it had already started transferring some of its merchandise to its
new business location in Malabon.7
On 31 May 1995, Lim filed his Answer 8 stating that he was ready and willing to pay
the balance of the purchase price on or before 8 March 1995. Lim requested a
meeting with Reyes through the latters daughter on the signing of the Deed of
Absolute Sale and the payment of the balance but Reyes kept postponing their
meeting. On 9 March 1995, Reyes offered to return the P10 million down payment
to Lim because Reyes was having problems in removing the lessee from the
Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes title
to the Property. Lim learned that Reyes had already sold the Property to Line One
Foods Corporation ("Line One") on 1 March 1995 for P16,782,840. After the
registration of the Deed of Absolute Sale, the Register of Deeds issued to Line One
TCT No. 134767 covering the Property. Lim denied conniving with Keng and Harrison
Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint
due to supervening facts. These included the filing by Lim of a complaint for estafa
against Reyes as well as an action for specific performance and nullification of sale
and title plus damages before another trial court. 9 The trial court granted the motion
in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996, 10 Lim prayed for the cancellation of
the Contract to Sell and for the issuance of a writ of preliminary attachment against
Reyes. The trial court denied the prayer for a writ of preliminary attachment in an
Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the
P10 million down payment with the cashier of the Regional Trial Court of Paraaque.
The trial court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997
on the ground the Order practically granted the reliefs Lim prayed for in his
Amended Answer.11 The trial court denied Reyes motion in an Order 12 dated 3 July
Page 46
1997. Citing Article 1385 of the Civil Code, the trial court ruled that an action for
rescission could prosper only if the party demanding rescission can return whatever
he may be obliged to restore should the court grant the rescission.
The trial court denied Reyes Motion for Reconsideration in its Order 13 dated 3
October 1997. In the same order, the trial court directed Reyes to deposit the P10
million down payment with the Clerk of Court on or before 30 October 1997.
On 8 December 1997, Reyes 14 filed a Petition for Certiorari15 with the Court of
Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3 July
1997 and 3 October 1997 be set aside for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. On 12 May 1998, the Court of Appeals
dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders in
the exercise of its equity jurisdiction. The court may grant equitable reliefs to
breathe life and force to substantive law such as Article 1385 16 of the Civil Code
since the provisional remedies under the Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit the
P10 million to the custody of the trial court to protect the interest of Lim who paid
the amount to Reyes as down payment. This did not mean the money would be
returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue
the questioned Orders dated March 6, 1997, July 3, 1997 and October 3,
1997, requiring petitioner David Reyes to deposit the amount of Ten Million
Pesos (P10,000,000.00) during the pendency of the action, when deposit is
not among the provisional remedies enumerated in Rule 57 to 61 of the
1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue
the questioned Orders on grounds of equity when there is an applicable law
on the matter, that is, Rules 57 to 61 of the 1997 Rules on Civil
Procedure.17
The Courts Ruling
Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated in
the 1997 Rules of Civil Procedure. Reyes stresses the enumeration in the Rules is
exclusive. Not one of the provisional remedies in Rules 57 to 61 18 applies to this
case. Reyes argues that a court cannot apply equity and require deposit if the law
already prescribes the specific provisional remedies which do not include deposit.
Reyes invokes the principle that equity is "applied only in the absence of, and never
against, statutory law or x x x judicial rules of procedure." 19Reyes adds the fact that
the provisional remedies do not include deposit is a matter of dura lex sed lex. 20
The instant case, however, is precisely one where there is a hiatus in the law and in
the Rules of Court. If left alone, the hiatus will result in unjust enrichment to Reyes
at the expense of Lim. The hiatus may also imperil restitution, which is a
precondition to the rescission of the Contract to Sell that Reyes himself seeks. This
is not a case of equity overruling a positive provision of law or judicial rule for there
is none that governs this particular case. This is a case of silence or insufficiency of
the law and the Rules of Court. In this case, Article 9 of the Civil Code expressly
mandates the courts to make a ruling despite the "silence, obscurity or insufficiency
of the laws."21 This calls for the application of equity,22 which "fills the open spaces
in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the
deposit of the P10 million down payment in court. The purpose of the exercise of
equity jurisdiction in this case is to prevent unjust enrichment and to ensure
restitution. Equity jurisdiction aims to do complete justice in cases where a court of
law is unable to adapt its judgments to the special circumstances of a case because
of the inflexibility of its statutory or legal jurisdiction. 24 Equity is the principle by
which substantial justice may be attained in cases where the prescribed or
customary forms of ordinary law are inadequate.25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is
also seeking cancellation of the Contract to Sell. The trial court then ordered Reyes
to deposit in court the P10 million down payment that Lim made under the Contract
to Sell. Reyes admits receipt of the P10 million down payment but opposes the
order to deposit the amount in court. Reyes contends that prior to a judgment
annulling the Contract to Sell, he has the "right to use, possess and enjoy" 26 the P10
million as its "owner"27 unless the court orders its preliminary attachment.28
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of Lim.
Reyes sold to Line One the Property even before the balance of P18 million under
the Contract to Sell with Lim became due on 8 March 1995. On 1 March 1995,
Reyes signed a Deed of Absolute Sale 29 in favor of Line One. On 3 March 1995, the
Register of Deeds issued TCT No. 134767 30 in the name of Line One. 31 Reyes cannot
claim ownership of the P10 million down payment because Reyes had already sold
to another buyer the Property for which Lim made the down payment. In fact, in his
Comment32 dated 20 March 1996, Reyes reiterated his offer to return to Lim the P10
million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the
P10 million down payment. The application of equity always involves a balancing of
the equities in a particular case, a matter addressed to the sound discretion of the
court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10
Page 47
million down payment in good faith only to discover later that Reyes had
subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the plaintiff
could not continue to benefit from the property or funds in litigation during the
pendency of the suit at the expense of whomever the court might ultimately
adjudge as the lawful owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner
admitted among others in its complaint in Interpleader that it is still obligated to
pay certain amounts to private respondent; that it claims no interest in such
amounts due and is willing to pay whoever is declared entitled to said amounts. x x
x
Under the circumstances, there appears to be no plausible reason for petitioners
objections to the deposit of the amounts in litigation after having asked for the
assistance of the lower court by filing a complaint for interpleader where the deposit
of aforesaid amounts is not only required by the nature of the action but is a
contractual obligation of the petitioner under the Land Development Program (Rollo,
p. 252).
condition to the hiatus in the Rules of Court where the aggrieved party, during the
pendency of the case, has no other recourse based on the provisional remedies of
the Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a
buyer if the seller himself seeks rescission of the sale because he has subsequently
sold the same property to another buyer.40 By seeking rescission, a seller
necessarily offers to return what he has received from the buyer. Such a seller may
not take back his offer if the court deems it equitable, to prevent unjust enrichment
and ensure restitution, to put the money in judicial deposit.
There is unjust enrichment when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience. 41In this case, it was
just, equitable and proper for the trial court to order the deposit of the P10 million
down payment to prevent unjust enrichment by Reyes at the expense of Lim. 42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.
There is also no plausible or justifiable reason for Reyes to object to the deposit of
the P10 million down payment in court. The Contract to Sell can no longer be
enforced because Reyes himself subsequently sold the Property to Line One. Both
Reyes and Lim are now seeking rescission of the Contract to Sell. Under Article 1385
of the Civil Code, rescission creates the obligation to return the things that are the
object of the contract. Rescission is possible only when the person demanding
rescission can return whatever he may be obliged to restore. A court of equity will
not rescind a contract unless there is restitution, that is, the parties are restored to
the status quo ante.34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to
deposit the P10 million down payment in court. 35 Such deposit will ensure restitution
of the P10 million to its rightful owner. Lim, on the other hand, has nothing to
refund, as he has not received anything under the Contract to Sell. 36
In Government of the Philippine Islands v. Wagner and Cleland
Wagner,37 the Court ruled the refund of amounts received under a contract is a
precondition to the rescission of the contract. The Court declared:
The Government, having asked for rescission, must restore to the
defendants whatever it has received under the contract. It will only be just
if, as a condition to rescission, the Government be required to refund to the
defendants an amount equal to the purchase price, plus the sums
expended by them in improving the land. (Civil Code, art. 1295.)
The principle that no person may unjustly enrich himself at the expense of another
is embodied in Article 22 38 of the Civil Code. This principle applies not only to
substantive rights but also to procedural remedies. One condition for invoking this
principle is that the aggrieved party has no other action based on contract, quasicontract, crime, quasi-delict or any other provision of law.39 Courts can extend this
Page 48
Involved here are two petitions for review assailing the decision of
the Court of Appeals in CA-G.R. No. Sp 05411, entitled BF Homes, Inc. v. Judge
Tutaan, et al., dated June 6, 1986, as amended on October 22, 1986.
BF Homes, Inc. is a domestic corporation previously engaged in the business of
developing and selling residential lots and houses and other related realty matters.
On July 19, 1984, BF contracted a loan from Rosalinda R. Roa and Vicente Mendoza
in the amount of P250,000.00 with interest at the rate of 33% per annum payable
after 32 days. The obligation was embodied in a promissory note and secured by
two post-dated checks issued by BF in favor of the lenders.
On September 25, 1984, BF filed a Petition for Rehabilitation and for a Declaration
in a State of Suspension of Payments under Sec. 5(d) of P.D. No. 902-A with a
prayer that upon the filing of the petition and in the meantime, all claims against it
for any and all accounts or indebtedness be suspended, but allowing petitioner to
continue with its normal operations. It also asked for the approval of the proposed
rehabilitation plan.
On October 17, 1984, Roa and Mendoza filed a complaint against BF with the
Regional Trial Court of Quezon City, docketed as Civil Case No. Q-43104, for the
recovery of the loan of P250,000.00, with interest and attorney's fees. The
complaint also prayed for the issuance of a writ of preliminary attachment against
the properties of BF.
On October 22, 1984, the trial court issued the writ against properties
of BF sufficient to satisfy the principal claim in the amount of P257,333.33.
FIRST DIVISION
[G.R. No. 76879. October 3, 1990.]
BF HOMES, INCORPORATED, petitioner, vs. COURT OF APP
EALS,
ROSALINDA
R.
ROA
and
VICENTE
MENDOZA, respondents.
[G.R. No. 77143. October 3, 1990.]

ROSALINDA
ROA
and
VICENTE
MENDOZA, petitioners, vs. COURT OF APPEALS and BF HOM
ES, INCORPORATED, respondents.
DECISION
CRUZ, J p:
In a motion dated October 25, 1984, BF moved for the dismissal of the case for lack
of jurisdiction, or at least for its suspension in view of the pendency of SEC Case No.
002693. It also asked for the lifting of the writ of preliminary attachment.
The trial court denied the motion to dismiss on November 20, 1984, and the motion
for reconsideration on January 11, 1985. Citing the case of DMRC Enterprises v.
Este del Sol Mountain Reserves, Inc., 1 the trial court held it had jurisdiction
because what was involved was not an intra-corporate or partnership dispute but
merely a determination of the rights of the parties arising out of the contract of
loan.
On February 13, 1985, BF filed with the Intermediate Appellate Court
(now Court of Appeals) an original action for certiorari with prayer for a writ of
preliminary injunction against the regional trial court, Roa and Mendoza. On
February 14, 1985, the Court of Appeals issued an order temporarily restraining
proceedings in Civil Case No. Q-43104.
On March 18, 1985, the SEC, finding an urgent need to rehabilitate BF, issued an
order creating a management committee and suspending all actions for claims
against BF pending before any court, tribunal or board.
On June 6, 1986, the Court of Appeals rendered a decision dismissing the complaint
in Civil Case No. Q-43104 and declaring the writ of preliminary attachment null and
void. But upon a motion for reconsideration filed by Roa and Mendoza, the decision
was set aside and a new one was entered upholding the jurisdiction of the regional
trial court over the case. At the same time, however, it suspended the proceedings
therein until after the management committee shall have been impleaded as party
defendant. The dissolution of the writ of preliminary attachment was maintained.
Page 49
Both parties filed separate motions for reconsideration. BF took exception to the
amended decision insofar as it directed the continuation of proceedings in Civil Case
No. Q-43104 until after the management committee shall have been impleaded. Roa
and Mendoza faulted the Court ofAppeals for ordering BF to be substituted by the
management committee and for dissolving the writ of preliminary attachment
without the filing of the necessary counter-bond by the defendant.
In a resolution dated December 22, 1986, the Court of Appeals denied both motions
for reconsideration, noting that the proceedings in the civil case could not remain
suspended forever. The purpose of the suspension, it said, was to enable the
management committee to substitute BF as party defendant and prosecute the
defense to conclusion. Substitution was necessary to prevent collusion between the
previous management and creditors it might seek to favor, to the prejudice of its
other creditors.
In sustaining the dissolution of the writ of preliminary attachment, the respondent
court said that Roa and Mendoza were secured in the satisfaction of any judgment
they might obtain against BF since all the properties of the latter were already in
the custody of the management committee.
Their motions for reconsideration having been denied, both parties filed their
respective petitions for review before this Court.
In G.R. No. 76879, entitled "BF Homes, Inc. v. Court of Appeals, Rosalinda R. Roa
and Vicente Mendoza," the petitioner contends that the respondent court committed
an error and violated Sec. 5(d) of P.D. No. 902-A when it authorized continuation of
proceedings in Civil Case No. Q-43104 after the management committee created by
the SEC shall have been impleaded.
In
G.R.
No.
77143,
entitled
"Rosalinda
R.
Roa
and
Vicente
Mendoza v. Court of Appeals and BF Homes, Inc.," the petitioners seek a review on
the grounds that the management committee was not a proper party and should not
have been ordered substituted as party defendant in the regional trial court and that
the writ of preliminary attachment should not have been dissolved.
These two petitions were ordered consolidated in the resolution of this Court dated
August 17, 1987.
On February 2, 1988, the SEC issued an order approving the proposed revised
rehabilitation plan and dissolving the management committee earlier created. Atty.
Florencio Orendain was appointed rehabilitation receiver.
Now to the merits.
The parties in both cases are agreed that the proceedings in the civil case for the
recovery of a sum of money should be suspended. BF originally maintained that the
action should be resumed only until after SEC Case No. 002693 shall have been
adjudicated on the merits but now agrees with Roa and Mendoza, in line with the
"assessment" of the Solicitor General, that the action should be suspended pending
the outcome of the rehabilitation proceedings.
The pertinent provision of law dealing with the suspension of actions for claims
against the corporation is Sec. 6(c) of P.D. 902-A, as amended, which reads:
Sec. 6. In order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
xxx xxx xxx

(c) To appoint one or more receivers of the property, real and
personal, which is the subject of the action pending before the
Commission in accordance with the pertinent provisions of the
Rules of Court, and in such other cases whenever necessary in
order to preserve the rights of parties-litigants and/or protect
the interest of the investing public and creditors: Provided,
however, That the Commission may, in appropriate cases,
appoint a rehabilitation receiver of corporations, partnerships or
other associations not supervised or regulated by other
government agencies who shall have, in addition to the powers
of a regular receiver under the provisions of the Rules of Court,
such functions and powers as are provided for in the succeeding
paragraph (d) hereof: Provided, further, That the Commission
may appoint a rehabilitation receiver of corporations,
partnership or other associations supervised or regulated by
other government agencies, such as banks and insurance
companies, upon request of the government agency
concerned: Provided, finally, That upon appointment of a
management committee, rehabilitation receiver, board or body,
pursuant to this Decree, all actions for claims against
corporations, partnership, or associations under management or
receivership pending before any court, tribunal, board or body
shall be suspended accordingly. (As amended by P.D. Nos.
1653, 1758 and 1799; emphasis supplied.)
As will be noted, the duration of the suspension is not indicated in the law itself. And
neither is it specified in the SEC order creating the management committee.
The Court feels that the respondent court erred in ordering the resumption of the
civil proceeding after the management committee shall have been impleaded as
party defendant. The explanation that the only purpose of suspending the civil
action was to enable the management committee to substitute BF as party
defendant is not acceptable.
The view of the respondent court is that the continuation of the action is necessary
for the purpose of determining the extent of the liability of BFto Roa and Mendoza.
The flaw in this theory is that even if such liability is determined, it still cannot be
enforced by the trial court as long as BF is under receivership. 2 Moreover, it
disregards the possibility that such determination would not be necessary at all
should the rehabilitation receiver favorably consider and fully acknowledge the
claims made by Roa and Mendoza.
Under Sec. 6(d) of P.D. No. 902-A, the management committee or rehabilitation
receiver is empowered to take custody and control of all existing assets and
properties of such corporations under management; to evaluate the existing assets
and liabilities, earnings and operations of such corporations; to determine the best
way to salvage and protect the interest of investors and creditors; to study, review
and evaluate the feasibility of continuing operations and restructure and rehabilitate
such entities if determined to be feasible by the SEC.
In light of these powers, the reason for suspending actions for claims against the
corporation should not be difficult to discover. It is not really to enable the
Page 50
management committee or the rehabilitation receiver to substitute the defendant in

any pending action against it before any court, tribunal, board or body. Obviously,
the real justification is to enable the management committee or rehabilitation
receiver to effectively exercise its/his powers free from any judicial or extra-judicial
interference that might unduly hinder or prevent the "rescue" of the debtor
company. To allow such other action to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time, effort and resources
would be wasted in defending claims against the corporation instead of being
directed toward its restructuring and rehabilitation.
In BF Homes, Inc. v. Hon. Fernando P. Agdamag, et al. 3 the Court of Appeals held:
It must be emphasized that the suspension is only for a
temporary period to prevent the irreversible collapse of the
corporation and give the management committee or receiver
the absolute tranquility to study the viability of the corporation.
During this period, the law creates a wall around the corporation
against all claims.
In Alemar's Sibal & Sons, Inc. v. Hon. Jesus M. Elbinias, et al., 4 this Court,
explaining the legal consequences of a receivership, said:
. . . When a corporation threatened by bankruptcy is taken over
by a receiver, all the creditors should stand on an equal footing.
Not anyone of them should be given any preference by paying
one or some of them ahead of the others. This is precisely the
reason for the suspension of all pending claims against the
corporation under receivership. Instead of creditors vexing the
courts with suits against the distressed firm, they are directed
to file their claims with the receiver who is a duly appointed
officer of the SEC. (Emphasis supplied)
Consequently, we feel that the trial court cannot at this point determine the extent
of BF's liability, if any, to Roa and Mendoza. This is true whether it is retained as
party defendant or substituted by the management committee (or the rehabilitation
receiver) as directed by the respondent court. What Roa and Mendoza should do
now is file their claims with the rehabilitation receiver and submit to him such
evidence as they would otherwise have to adduce before the trial court to prove
such claims.
As the revised rehabilitation plan approved by the SEC is expected to be
implemented within ten years, the proceedings in the Regional Trial Court of Quezon
City should be suspended during that period, to begin from February 2, 1988, the
date of its approval. This is without prejudice to the authority of the SEC to extend
the period when warranted and even to order the liquidation of BF if the plan is
found to be no longer feasible. On the other hand, on a more positive note, the SEC
can also find within that period that BF has been sufficiently revived and able to
resume its normal business operations without further need of rehabilitation.
Coming now to the writ of preliminary attachment, we find that it must stand
despite the suspension of the proceedings in the Regional Trial Court of Quezon City.
The writ was issued prior to the creation of the management committee and so
should not be regarded as an undue advantage of Mendoza and Roa over the other
creditors of BF.
In its amended decision and the resolution ordering the discharge of the writ of
preliminary attachment, the respondent court did not rule on whether the issuance
of the writ was improper or irregular. It simply said that the writ was no longer
proper or necessary at that time because the properties of BF were in the hands of
the receiver. We do not think so.
The appointment of a rehabilitation receiver who took control and custody of BF has
not necessarily secured the claims of Roa and Mendoza. In the event that the
receivership is terminated with such claims not having been satisfied, the creditors
may also find themselves without security therefor in the civil action because of the
dissolution of the attachment. This should not be permitted. Having previously
obtained the issuance of the writ in good faith, they should not be deprived of its
protection if the rehabilitation plan does not succeed and the civil action is resumed.
It is settled that:
If there is an attachment or sequestration of the goods or estate
of the defendant in an action which is removed to a bankruptcy
court, such an attachment or sequestration will continue in
existence and hold the goods or estate to answer the final
judgment or decree in the same manner as they would have
been held to answer the final judgment or decree rendered by
the Court from which the action was removed, unless the
attachment or sequestration is invalidated under applicable law.
(28 USCS No. 1479 [a].) 5
As we ruled in Government of the Philippine Islands v. Mercado: 6
Attachment is in the nature of a proceeding in rem. It is against
the particular property. The attaching creditor thereby acquires
specific lien upon the attached property which ripens into a
judgment against the res when the order of sale is made. Such
a proceeding is in effect a finding that the property attached is
an indebted thing and a virtual condemnation of it to pay the
owner's debt. The law does not provide the length of time an
attachment lien shall continue after the rendition of judgment,
and it must therefore necessarily continue until the debt is paid,
or sale is had under execution issued on the judgment or until
judgment is satisfied, or the attachment discharged or vacated
in some manner provided by law.
It has been held that the lien obtained by attachment stands
upon as high equitable grounds as a mortgage lien:
"The lien or security obtained by an
attachment even before judgment, is a fixed and
positive security, a specific lien, and, although whether
it will ever be made available to the creditor depends
on contingencies, its existence is in no way contingent,
conditioned or inchoate. It is a vested interest, an
actual and substantial security, affording specific
security for satisfaction of the debt put in suit, which
constitutes a cloud on the legal title, and is as specific
as if created by virtue of a voluntary act of the debtor
and stands upon as high equitable grounds as a
Page 51
mortgage." (7 Corpus Juris Secundum, 433, and

authorities therein cited.)
Under the Rules of Court, a writ of attachment may be dissolved only upon the filing
of a counter-bond or upon proof of its improper or irregular issuance. Neither
ground has been established in the case at bar to warrant the discharge of the writ.
No counter-bond has been given. As for the contention that the writ was improperly
issued for lack of notice to BF on the application for the writ, it suffices to
cite Mindanao Savings & Loan Association, Inc. v. Court of Appeals, where we
held: 7
The only requisites for the issuance of a writ of preliminary
attachment under Section 3, Rule 57 of the Rules of Court are
the affidavit and bond of the applicant.
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 of
some other person who personally knows 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 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 is granted above all legal
counterclaims. The affidavit, and the bond required by
the next succeeding section must be duly filed with the
clerk or judge of the court before the order issues."
No notice to the adverse party or hearing of the application is
required. As a matter of fact a hearing would defeat the purpose
of this provisional remedy. The time which such a hearing would

take, could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues.
Nevertheless, while no hearing is required by the Rules of Court
for the issuance of an attachment (Belisle Investment & Finance
Co., Inc. v. State Investment House, Inc., 72927, June 30,
1987; Filinvest Credit Corp. v. Relova, 117 SCRA 420), a motion
to quash the writ may not be granted without "reasonable
notice to the applicant" and only "after hearing" (Secs. 12 and
13, Rule 57, Rules of Court).
In sum, the Court holds that the substitution of the management
committee/rehabilitation receiver in Civil Case No. Q-43104 in the Regional Trial
Court of Quezon City is not necessary because the proceedings therein shall be
suspended anyway pending implementation of the revised rehabilitation plan, during
which the writ of preliminary attachment shall remain in force.
WHEREFORE, the decision of the respondent court is SET ASIDE and judgment is
rendered as follows:
(1) In G.R. No. 76879, the petition is GRANTED. The proceedings in Civil Case No.
Q-43104 shall remain suspended for a period of ten (10) years from February 2,
1988, unless extended or shortened by the SEC as circumstances may warrant; and
(2) In G.R. No. 77143, the petition is GRANTED insofar as it seeks restoration of the
writ of preliminary attachment, issued on October 22, 1984, which is hereby
reinstated.
SO ORDERED.
||| (BF Homes, Inc. v. Court of Appeals, G.R. No. 76879, 77143, [October 3, 1990])
Page 52

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[G.R. No. 185734. July 3, 2013.

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

suit. 30 Verily, the lifting of the attachment lien would be tantamount to an

CEIC argues that a writ of attachment is a mere auxiliary

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

G.R. No. 190028

February 26, 2014

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

The petition is partly meritorious.

A. Issuance of the Assailed Orders vis--vis

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

G.R. No. 192669

April 21, 2014

RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON, Petitioners,

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

Thereafter, MRCI terminated its business relationship with AUVC on account of

The 1994 Case

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

(5) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

The Court finds the Saberons to be builders in good faith.

WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The appealed

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

[G.R. No. 124642. February 23, 2004.]

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

It could be argued that the petitioner-husband was a member of the Board of

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

[G.R. No. 168289. March 22, 2010.]

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

Traders Royal Bank v. Intermediate Appellate Court, 37 citing Commissioner of

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

[A.M. No. P-11-2986. June 13, 2012.]

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

WHEREFORE, under Rule 4, Sec. 2, in relation to Rule 16, Sec. 1

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

hereby dismissed for

xxx xxx xxx

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

There is no indication that the plasticized pouches

quantity involved appears to be unusually low, compared to the

5) The defendant-appellant never made any written or formal

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

Petitioner cannot insist that its allegation that private

Radstock grounded its application for a Writ of Preliminary

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

obligations. Also, the fact that PNCC has insufficient

impossible; (2) when there is grave abuse of discretion; (3)

Petitioner is likewise wrong in assuming that the CA totally disregarded the

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

[G.R. No. 171741. November 27, 2009.]

PROVISIONAL REMEDIES AND SPECIAL CIVIL ACTIONS

WHEREFORE, let a Writ of Preliminary Attachment issue against

the proper counter-bond pursuant to Section 12, Rule 57 of the