THIRD DIVISION

G.R. No. 125027

September 26, 1988, the trial court issued an Order of Preliminary Attachment 6 against petitioner. The
following day, the trial court issued a Writ of Preliminary Attachment.
August 12, 2002

ANITA
vs.
COURT OF APPEALS and LORETA GUINA, respondents.

MANGILA, petitioner,

CARPIO, J.:
The Case
This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the
Decision1of the Court of Appeals affirming the Decision2 of the Regional Trial Court, Branch 108, Pasay
City. The trial court upheld the writ of attachment and the declaration of default on petitioner while
ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent
attorneys fees and costs of suit.
The Facts
Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing business under
the name and style of Seafoods Products. Private respondent Loreta Guina ("private respondent" for
brevity) is the President and General Manager of Air Swift International, a single registered
proprietorship engaged in the freight forwarding business.
Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent
for shipment of petitioners products, such as crabs, prawns and assorted fishes, to Guam (USA)
where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on delivery.
Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue
accounts. In case of suit, the same invoice stipulates attorneys fees equivalent to 25 percent of the
amount due plus costs of suit. 3
On the first shipment, petitioner requested for seven days within which to pay private respondent.
However, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay private
respondent shipping charges amounting to P109, 376.95. 4
Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private
respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay City for collection of sum
of money.
On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on
petitioner. A woman found at petitioners house informed the sheriff that petitioner transferred her
residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that petitioner had left the
Philippines for Guam.5
Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with
intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. On

The trial court granted the request of its sheriff for assistance from their counterparts in RTC,
Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on
petitioners household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit
and Bond.7
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment 8 without submitting
herself to the jurisdiction of the trial court. She pointed out that up to then, she had not been served a
copy of the Complaint and the summons. Hence, petitioner claimed the court had not acquired
jurisdiction over her person.9
In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private
respondent sought and was granted a re-setting to December 9, 1988. On that date, private
respondents counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed
submitted for resolution.10
The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of
petitioners counter-bond. The trial court, however, did not rule on the question of jurisdiction and on
the validity of the writ of preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons, which the trial court issued
on January 19, 1989. 11 It was only on January 26, 1989 that summons was finally served on
petitioner.12
On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper
venue. Private respondents invoice for the freight forwarding service stipulates that "if court litigation
becomes necessary to enforce collection xxx the agreed venue for such action is Makati, Metro
Manila."13 Private respondent filed an Opposition asserting that although "Makati" appears as the
stipulated venue, the same was merely an inadvertence by the printing press whose general manager
executed an affidavit14 admitting such inadvertence. Moreover, private respondent claimed that
petitioner knew that private respondent was holding office in Pasay City and not in Makati. 15 The lower
court, finding credence in private respondents assertion, denied the Motion to Dismiss and gave
petitioner five days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was
denied.
Petitioner filed her Answer16 on June 16, 1989, maintaining her contention that the venue was
improperly laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m.
and requiring the parties to submit their pre-trial briefs. Meanwhile, private respondent filed a Motion
to Sell Attached Properties but the trial court denied the motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to
August 24, 1989 at 8:30 a.m..

On August 24, 1989, the day of the pre-trial, the trial court issued an Order 17 terminating the pre-trial
and allowing the private respondent to present evidence ex-parte on September 12, 1989 at 8:30
a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the counsel for
private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel
was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered
terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the
pre-trial. Petitioner explained that her counsel arrived 5 minutes after the second call, as shown by the
transcript of stenographic notes, and was late because of heavy traffic. Petitioner claims that the lower
court erred in allowing private respondent to present evidence ex-parte since there was no Order
considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not
state that petitioner was declared as in default but still the court allowed private respondent to present
evidence ex-parte.18
On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the
presentation of private respondents evidence ex-parte on October 10, 1989.1wphi1.nt
On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence exparte should be suspended because there was no declaration of petitioner as in default and petitioners
counsel was not absent, but merely late.
On October 18, 1989, the trial court denied the Omnibus Motion. 19
On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering
petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys
fees and costs of suit. Private respondent filed a Motion for Execution Pending Appeal but the trial
court denied the same.
The Ruling of the Court of Appeals
On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial
court. The Court of Appeals upheld the validity of the issuance of the writ of attachment and sustained
the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the declaration of
default on petitioner and concluded that the trial court did not commit any reversible error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the
same in a Resolution dated May 20, 1996.
Hence, this petition.
The Issues
The issues raised by petitioner may be re-stated as follows:
I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT
WAS IMPROPERLY ISSUED AND SERVED;
II.
WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;
III.
WHETHER THERE WAS IMPROPER VENUE.
IV.
WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY
P109, 376.95, PLUS ATTORNEYS FEES.20
The Ruling of the Court
Improper Issuance and Service of Writ of Attachment
Petitioner ascribes several errors to the issuance and implementation of the writ of attachment.
Among petitioners arguments are: first, there was no ground for the issuance of the writ since the
intent to defraud her creditors had not been established; second, the value of the properties levied
exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on
the question of the validity of the writ of attachment. Because of failure to serve summons on her
before or simultaneously with the writs implementation, petitioner claims that the trial court had not
acquired jurisdiction over her person and thus the service of the writ is void.
As a preliminary note, a distinction should be made between issuance and implementation of the writ
of attachment. It is necessary to distinguish between the two to determine when jurisdiction over the
person of the defendant should be acquired to validly implement the writ. This distinction is crucial in
resolving whether there is merit in petitioners argument.
This Court has long settled the issue of when jurisdiction over the person of the defendant should be
acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time
after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule
57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the
action or at any time thereafter."21 This phrase refers to the date of filing of the complaint which is
the moment that marks "the commencement of the action." The reference plainly is to a time before
summons is served on the defendant, or even before summons issues.
In Davao Light & Power Co., Inc. v. Court of Appeals, 22 this Court clarified the actual time when
jurisdiction should be had:
"It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant - issuance of summons, order of attachment and
writ of attachment - these do not and cannot bind and affect the defendant until and
unless jurisdiction over his person is eventually obtained by the court, either by

service on him of summons or other coercive process or his voluntary submission to the
courts
authority.
Hence,
when
the
sheriff
or
other
proper
officer
commences implementation of the writ of attachment, it is essential that he serve on the
defendant not only a copy of the applicants affidavit and attachment bond, and of the order of
attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed
to said defendant as well as a copy of the complaint xxx." (Emphasis supplied.)
Furthermore, we have held that the grant of the provisional remedy of attachment 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 be first
obtained. However, once the implementation of the writ commences, the court must have
acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and
authority to act in any manner against the defendant. Any order issuing from the Court will not bind
the defendant.23
In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and
implemented on October 28, 1988. However, the alias summons was served only on
January 26, 1989 or almost three months after the implementation of the writ of
attachment.
The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for
its issuance can be filed "at the commencement of the action." However, on the day the writ was
implemented, the trial court should have, previously or simultaneously with the implementation of the
writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the
summons was actually served on petitioner several months after the writ had been implemented.
Private respondent, nevertheless, claims that the prior or contemporaneous service of summons
contemplated in Section 5 of Rule 57 provides for exceptions. Among such exceptions are "where the
summons could not be served personally or by substituted service despite diligent efforts or where the
defendant is a resident temporarily absent therefrom x x x." Private respondent asserts that when she
commenced this action, she tried to serve summons on petitioner but the latter could not be located
at her customary address in Kamuning, Quezon City or at her new address in Guagua,
Pampanga.24 Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she
was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on petitioner after her personal
service failed. Likewise, if it were true that private respondent could not ascertain the whereabouts of
petitioner after a diligent inquiry, still she had some other recourse under the Rules of Civil Procedure.
The rules provide for certain remedies in cases where personal service could not be effected on a
party. Section 14, Rule 14 of the Rules of Court provides that whenever the defendants "whereabouts
are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected
upon him by publication in a newspaper of general circulation x x x." Thus, if petitioners whereabouts
could not be ascertained after the sheriff had served the summons at her given address, then
respondent could have immediately asked the court for service of summons by publication on
petitioner.25

Moreover, as private respondent also claims that petitioner was abroad at the time of the service of
summons, this made petitioner a resident who is temporarily out of the country. This is the exact
situation contemplated in Section 16, 26 Rule 14 of the Rules of Civil Procedure, providing for service of
summons by publication.
In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to
have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a
coercive process on petitioner without first obtaining jurisdiction over her person. The preliminary writ
of attachment must be served after or simultaneous with the service of summons on the defendant
whether by personal service, substituted service or by publication as warranted by the circumstances
of the case.27 The subsequent service of summons does not confer a retroactive acquisition of
jurisdiction over her person because the law does not allow for retroactivity of a belated service.
Improper Venue
Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private
respondents invoice which contains the following:
"3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to
25% of the principal amount will be charged. The agreed venue for such action is Makati,
Metro Manila, Philippines." 28
Based on this provision, petitioner contends that the action should have been instituted in the RTC of
Makati and to do otherwise would be a ground for the dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for the reason stated by
petitioner.
The Rules of Court provide that parties to an action may agree in writing on the venue on which an
action should be brought.29 However, a mere stipulation on the venue of an action is not enough to
preclude parties from bringing a case in other venues. 30 The parties must be able to show that such
stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a
suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional
requirements are followed. Venue stipulations in a contract, while considered valid and enforceable, do
not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. 31 In the
absence of qualifying or restrictive words, they should be considered merely as an agreement on
additional forum, not as limiting venue to the specified place. 32
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no
qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati
is the "only or exclusive" venue where the action could be instituted. We therefore agree with private
respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff." 33 The exception to this rule is when the parties agree

on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this
exception is not applicable in this case. Hence, following the general rule, the instant case may be
brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff (private
respondent herein).
In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in
the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift
International. It was only when private respondent testified in court, after petitioner was declared in
default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc., 34 the reverse happened. The plaintiff in that case
was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint,
however, did not allege the office or place of business of the corporation, which was in Binondo,
Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case
was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of
alleging the address of the corporations president and manager was to justify the filing of the suit in
Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was
improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered
as its residence for purposes of venue. Furthermore, the Court held that the residence of its president
is not the residence of the corporation because a corporation has a personality separate and distinct
from that of its officers and stockholders.
In the instant case, it was established in the lower court that petitioner resides in San Fernando,
Pampanga35while private respondent resides in Paraaque City.36 However, this case was brought in
Pasay City, where the business of private respondent is found. This would have been permissible had
private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises,
Inc. However, as admitted by private respondent in her Complaint 37 in the lower court, her business is
a sole proprietorship, and as such, does not have a separate juridical personality that could enable it
to file a suit in court.38 In fact, there is no law authorizing sole proprietorships to file a suit in court. 39
A sole proprietorship does not possess a juridical personality separate and distinct from the personality
of the owner of the enterprise. 40 The law merely recognizes the existence of a sole proprietorship as a
form of business organization conducted for profit by a single individual and requires its proprietor or
owner to secure licenses and permits, register its business name, and pay taxes to the national
government.41 The law does not vest a separate legal personality on the sole proprietorship or
empower it to file or defend an action in court. 42
Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff
in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the lower court
acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita Mangila,
respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift
International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private
respondent Guina, the proprietor with the juridical personality, which should be considered as one of
the proper venues for this case.
All these considered, private respondent should have filed this case either in San Fernando, Pampanga
(petitioners residence) or Paraaque (private respondents residence). Since private respondent
(complainant below) filed this case in Pasay, we hold that the case should be dismissed on the ground
of improper venue.

Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner
expressly stated that she was filing the motion without submitting to the jurisdiction of the court. At
that time, petitioner had not been served the summons and a copy of the complaint. 43 Thereafter,
petitioner timely filed a Motion to Dismiss 44on the ground of improper venue. Rule 16, Section 1 of the
Rules of Court provides that a motion to dismiss may be filed "[W]ithin the time for but before filing
the answer to the complaint or pleading asserting a claim." Petitioner even raised the issue of
improper venue in his Answer45 as a special and affirmative defense. Petitioner also continued to raise
the issue of improper venue in her Petition for Review 46 before this Court. We thus hold that the
dismissal of this case on the ground of improper venue is warranted.
The rules on venue, like other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom
to choose where to file the complaint or petition. 47
We find no reason to rule on the other issues raised by petitioner.1wphi1.nt
WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the
service of the writ of attachment. The decision of the Court of Appeals and the order of respondent
judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby
dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are
ordered returned to her immediately.
SO ORDERED.
Puno,
Panganiban,
Sandoval-Gutierrez, J., On leave.

and

JJ., concur.

FIRST DIVISION
G.R. No. 139941

January 19, 2001

VICENTE
B.
CHUIDIAN,
petitioner,
vs.
SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents.
YNARES-SANTIAGO, J.:
The instant petition arises from transactions that were entered into by the government in the
penultimate days of the Marcos administration. Petitioner Vicente B. Chuidian was alleged to be a
dummy or nominee of Ferdinand and Imelda Marcos in several companies said to have been illegally
acquired by the Marcos spouses. As a favored business associate of the Marcoses, Chuidian allegedly
used false pretenses to induce the officers of the Philippine Export and Foreign Loan Guarantee
Corporation (PHILGUARANTEE), the Board of Investments (BOI) and the Central Bank, to facilitate the
procurement and issuance of a loan guarantee in favor of the Asian Reliability Company, Incorporated
(ARCI) sometime in September 1980. ARCI, 98% of which was allegedly owned by Chuidian, was
granted a loan guarantee of Twenty-Five Million U.S. Dollars (US$25,000,000.00).1wphi1.nt

While ARCI represented to Philguarantee that the loan proceeds would be used to establish five interrelated projects in the Philippines, Chuidian reneged on the approved business plan and instead
invested the proceeds of the loan in corporations operating in the United States, more particularly
Dynetics, Incorporated and Interlek, Incorporated. Although ARCI had received the proceeds of the
loan guaranteed by Philguarantee, the former defaulted in the payments thereof, compelling
Philguarantee to undertake payments for the same. Consequently, in June 1985, Philguarantee sued
Chuidian before the Santa Clara County Superior Court, 1 charging that in violation of the terms of the
loan, Chuidian not only defaulted in payment, but also misused the funds by investing them in Silicon
Valley corporations and using them for his personal benefit.
For his part, Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by
the Marcoses as he was the true owner of these companies, and that he had in fact instituted an
action before the Federal Courts of the United States to recover the companies which the Marcoses
had illegally wrested from him.2
On November 27, 1985, or three (3) months before the successful people's revolt that toppled the
Marcos dictatorship, Philguarantee entered into a compromise agreement with Chuidian whereby
petitioner Chuidian shall assign and surrender title to all his companies in favor of the Philippine
government. In return, Philguarantee shall absolve Chuidian from all civil and criminal liability, and in
so doing, desist from pursuing any suit against Chuidian concerning the payments Philguarantee had
made on Chuidian's defaulted loans.
It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee
arising from Chuidian's default, the Philippine government shall pay Chuidian the amount of Five
Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five Hundred
Thousand Dollars (US$500,000.00) was actually received by Chuidian, as well as succeeding payment
of Two Hundred Thousand Dollars (US$200,000.00). The remaining balance of Four Million Six
Hundred Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable Letter of Credit
(L/C) from which Chuidian would draw One Hundred Thousand Dollars (US$100,000.00)
monthly.3 Accordingly, on December 12, 1985, L/C No. SSD-005-85 was issued for the said amount by
the Philippine National Bank (PNB). Subsequently, Chuidian was able to make two (2) monthly
drawings from said L/C at the Los Angeles branch of the PNB. 4
With the advent of the Aquino administration, the newly-established Presidential Commission on Good
Government (PCGG) exerted earnest efforts to search and recover money, gold, properties, stocks and
other assets suspected as having been illegally acquired by the Marcoses, their relatives and cronies.
Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May 30, 1986,
the PCGG issued a Sequestration Order5 directing the PNB to place under its custody, for and in behalf
of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Chuidian was then residing in the United
States, his name was placed in the Department of Foreign Affairs' Hold Order list. 6
In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County of
California in Civil Case Nos. 575867 and 577697 seeking to vacate the stipulated judgment containing
the settlement between Philguarantee and Chuidian on the grounds that: (a) Philguarantee was
compelled by the Marcos administration to agree to the terms of the settlement which was highly
unfavorable to Philguarantee and grossly disadvantageous to the government; (b) Chuidian
blackmailed Marcos into pursuing and concluding the settlement agreement by threatening to expose
the fact that the Marcoses made investments in Chuidian's American enterprises; and (c) the Aquino
administration had ordered Philguarantee not to make further payments on the L/C to Chuidian. After

considering the factual matters before it, the said court concluded that Philguarantee "had not carried
its burden of showing that the settlement between the parties should be set aside." 7 On appeal, the
Sixth Appellate District of the Court of Appeal of the State of California affirmed the judgment of the
Superior Court of Sta. Clara County denying Philguarantee's motion to vacate the stipulated judgment
based on the settlement agreement.8
After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States District
Court, Central District of California, an action against PNB seeking, among others, to compel PNB to
pay the proceeds of the L/C. PNB countered that it cannot be held liable for a breach of contract under
principles of illegality, international comity and act of state, and thus it is excused from payment of the
L/C. Philguarantee intervened in said action, raising the same issues and arguments it had earlier
raised in the action before the Santa Clara Superior Court, alleging that PNB was excused from making
payments on the L/C since the settlement was void due to illegality, duress and fraud. 9
The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making
payment on the L/C; and (2) in Chuidian's favor by denying intervenor Philguarantee's action to set
aside the settlement agreement.10
Meanwhile, on February 27, 1987, a Deed of Transfer 11 was executed between then Secretary of
Finance Jaime V. Ongpin and then PNB President Edgardo B. Espiritu, to facilitate the rehabilitation of
PNB, among others, as part of the government's economic recovery program. The said Deed of
Transfer provided for the transfer to the government of certain assets of PNB in exchange for which
the government would assume certain liabilities of PNB. 12 Among those liabilities which the
government assumed were unused commercial L/C's and Deferred L/C's, including SSD-005-85 listed
under Dynetics, Incorporated in favor of Chuidian in the amount of Four Million Four Hundred
Thousand Dollars (US$4,400,000.00). 13
On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against the
Marcos spouses, several government officials who served under the Marcos administration, and a
number of individuals known to be cronies of the Marcoses, including Chuidian. The complaint sought
the reconveyance, reversion, accounting and restitution of all forms of wealth allegedly procured
illegally and stashed away by the defendants.
In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the Marcos
spouses, engaged in "devices, schemes and stratagems" by: (1) forming corporations for the purpose
of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the coffers of government
financial institutions such as the Philguarantee; and (3) executing the court settlement between
Philguarantee and Chuidian which was grossly disadvantageous to the government and the Filipino
people.
In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with
the other defendants constituted "gross abuse of official position of authority, flagrant breach of public
trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the
Constitution and laws" of the land. 14
While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion for
issuance of a writ of attachment15 over the L/C, citing as grounds therefor the following:

(1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary
capacity, justifying issuance of the writ under Section 1(b), Rule 57 of the Rules of Court;
(2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in
contracting the debt or incurring the obligation upon which the action was brought, or that he
concealed or disposed of the property that is the subject of the action;
(3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff
as justified under Section 1(c) of Rule 57; and
(4) Chuidian is residing out of the country or one on whom summons may be served by
publication, which justifies the writ of attachment prayed for under Section 1(e) of the same
rule.
The Republic also averred that should the action brought by Chuidian before the U.S. District Court of
California to compel payment of the L/C prosper, inspite of the sequestration of the said L/C, Chuidian
can ask the said foreign court to compel the PNB Los Angeles branch to pay the proceeds of the L/C.
Eventually, Philguarantee will be made to shoulder the expense resulting in further damage to the
government. Thus, there was an urgent need for the writ of attachment to place the L/C under the
custody of the Sandiganbayan so the same may be preserved as security for the satisfaction of
judgment in the case before said court.
Chuidian opposed the motion for issuance of the writ of attachment, contending that:
(1) The plaintiff's affidavit appended to the motion was in form and substance fatally
defective;
(2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between
the plaintiff and Chuidian;
(3) While Chuidian does not admit fraud on his part, if ever there was breach of contract, such
fraud must be present at the time the contract is entered into;
(4) Chuidian has not removed or disposed of his property in the absence of any intent to
defraud plaintiff;
(5) Chuidian's absence from the country does not necessarily make him a non-resident; and
(6) Service of summons by publication cannot be used to justify the issuance of the writ since
Chuidian had already submitted to the jurisdiction of the Court by way of a motion to lift the
freeze order filed through his counsel.
On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of
attachment against L/C No. SSD-005-85 as security for the satisfaction of judgment. 16 The
Sandiganbayan's ruling was based on its disquisition of the five points of contention raised by the
parties. On the first issue, the Sandiganbayan found that although no separate affidavit was attached
to the motion, the motion itself contained all the requisites of an affidavit, and the verification thereof
is deemed a substantial compliance of Rule 57, Section 3 of the Rules of Court.

Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship
existing between Chuidian and the Republic, but only between Chuidian and ARCI. Since the Republic
is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke Section 1(b) of
Rule 57.
On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or disposing
of the subject property, the Sandiganbayan held that there was a prima facie case of fraud committed
by Chuidian, justifying the issuance of the writ of attachment. The Sandiganbayan also adopted the
Republic's position that since it was compelled to pay, through Philguarantee, the bank loans taken out
by Chuidian, the proceeds of which were fraudulently diverted, it is entitled to the issuance of the writ
of attachment to protect its rights as creditor.
Assuming that there is truth to the government's allegation that Chuidian has removed or disposed of
his property with the intent to defraud, the Sandiganbayan held that the writ of attachment is
warranted, applying Section 1(e) of Rule 57. Besides, the Rules provide for sufficient security should
the owner of the property attached suffer damage or prejudice caused by the attachment. 17
Chuidian's absence from the country was considered by the Sandiganbayan to be "the most potent
insofar as the relief being sought is concerned." 18 Taking judicial notice of the admitted fact that
Chuidian was residing outside of the country, the Sandiganbayan observed that:
"x x x no explanation whatsoever was given by him as to his absence from the country, or as to his
homecoming plans in the future. It may be added, moreover, that he has no definite or clearcut plan
to return to the country at this juncture given the manner by which he has submitted himself to the
jurisdiction of the court."19
Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines,
but is temporarily living outside, he is still subject to the provisional remedy of attachment.
Accordingly, an order of attachment 20 was issued by the Sandiganbayan on July 19, 1993, ordering the
Sandiganbayan Sheriff to attach PNB L/C No. SSD-005-85 for safekeeping pursuant to the Rules of
Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No. 0027.
On August 11, 1997, or almost four (4) years after the issuance of the order of attachment, Chuidian
filed a motion to lift the attachment based on the following grounds:
First, he had returned to the Philippines; hence, the Sandiganbayan's "most potent ground" for the
issuance of the writ of preliminary attachment no longer existed. Since his absence in the past was the
very foundation of the Sandiganbayan's writ of preliminary attachment, his presence in the country
warrants the immediate lifting thereof.
Second, there was no evidence at all of initial fraud or subsequent concealment except for the affidavit
submitted by the PCGG Chairman citing mere "belief and information" and "not on knowledge of the
facts." Moreover, this statement is hearsay since the PCGG Chairman was not a witness to the litigated
incidents, was never presented as a witness by the Republic and thus was not subject to crossexamination.

Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is
nothing in the records that support the Sandiganbayan's erroneous conclusion on the matter. Fourth,
Chuidian belied the allegation that he was also a defendant in "other related criminal action," for in
fact, he had "never been a defendant in any prosecution of any sort in the Philippines." 21 Moreover, he
could not have personally appeared in any other action because he had been deprived of his right to a
travel document by the government.
Fifth, the preliminary attachment was, in the first place, unwarranted because he was not "guilty of
fraud in contracting the debt or incurring the obligation". In fact, the L/C was not a product of
fraudulent transactions, but was the result of a US Court-approved settlement. Although he was
accused of employing blackmail tactics to procure the settlement, the California Supreme Court ruled
otherwise. And in relation thereto, he cites as a sixth ground the fact that all these allegations of fraud
and wrongdoing had already been dealt with in actions before the State and Federal Courts of
California. While it cannot technically be considered as forum shopping, it is nevertheless a "form of
suit multiplicity over the same issues, parties and subject matter." 22 These foreign judgments
constitute res judicata which warrant the dismissal of the case itself.
Chuidian further contends that should the attachment be allowed to continue, he will be deprived of
his property without due process. The L/C was payment to Chuidian in exchange for the assets he
turned over to the Republic pursuant to the terms of the settlement in Case No. 575867. Said assets,
however, had already been sold by the Republic and cannot be returned to Chuidian should the
government succeed in depriving him of the proceeds of the L/C. Since said assets were disposed of
without his or the Sandiganbayan's consent, it is the Republic who is fraudulently disposing of assets.
Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had been
in effect, the government had not set the case for hearing. Under Rule 17, Section 3, the case itself
should be dismissed for laches owing to the Republic's failure to prosecute its action for an
unreasonable length of time. Accordingly, the preliminary attachment, being only a temporary or
ancillary remedy, must be lifted and the PNB ordered to immediately pay the proceeds of the L/C to
Chuidian.
Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit the L/C
in an interest bearing account.23 Annex "D"; Rollo, pp. 77-79.23 He pointed out to the Sandiganbayan
that the face amount of the L/C had, since its attachment, become fully demandable and payable.
However, since the amount is just lying dormant in the PNB, without earning any interest, he proposed
that it would be to the benefit of all if the Sandiganbayan requires PNB to deposit the full amount to a
Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the
action.
The Republic opposed Chuidian's motion to lift attachment, alleging that Chuidian's absence was not
the only ground for the attachment and, therefore, his belated appearance before the Sandiganbayan
is not a sufficient reason to lift the attachment. Moreover, allowing the foreign judgment as a basis for
the lifting of the attachment would essentially amount to an abdication of the jurisdiction of the
Sandiganbayan to hear and decide the ill gotten wealth cases lodged before it in deference to the
judgment of foreign courts.
In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidian's motion to
lift attachment.24

On the same day, the Sandiganbayan issued another Resolution denying Chuidian's motion to require
deposit of the attached L/C in an interest bearing account. 25
In a motion seeking a reconsideration of the first resolution, Chuidian assailed the Sandiganbayan's
finding that the issues raised in his motion to lift attachment had already been dealt with in the earlier
resolution dated July 14, 1993 granting the application for the writ of preliminary attachment based on
the following grounds:
First, Chuidian was out of the country in 1993, but is now presently residing in the country.
Second, the Sandiganbayan could not have known then that his absence was due to the non-renewal
of his passport at the instance of the PCGG. Neither was it revealed that the Republic had already
disposed of Chuidian's assets ceded to the Republic in exchange for the L/C. The foreign judgment was
not an issue then because at that time, said judgment had not yet been issued and much less final.
Furthermore, the authority of the PCGG Commissioner to subscribe as a knowledgeable witness
relative to the issuance of the writ of preliminary attachment was raised for the first time in the
motion to lift the attachment. Finally, the issue of laches could not have been raised then because it
was the Republic's subsequent neglect or failure to prosecute despite the passing of the years that
gave rise to laches.26
Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to
require deposit of the L/C into an interest bearing account. He argued that contrary to the
Sandiganbayan's pronouncement, allowing the deposit would not amount to a virtual recognition of his
right over the L/C, for he is not asking for payment but simply requesting that it be deposited in an
account under the control of the Sandiganbayan. He further stressed that the Sandiganbayan
abdicated its bounden duty to rule on an issue when it found "that his motion will render nugatory the
purpose of sequestration and freeze orders over the L/C." Considering that his assets had already
been sold by the Republic, he claimed that the Sandiganbayan's refusal to exercise its fiduciary duty
over attached assets will cause him irreparable injury. Lastly, the Sandiganbayan's position that
Chuidian was not the owner but a mere payee-beneficiary of the L/C issued in his favor negates
overwhelming jurisprudence on the Negotiable Instruments Law, while at the same time obliterating
his rights of ownership under the Civil Code. 27
On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for the attached L/C to be
deposited in an interest-bearing account, on the ground that it will redound to the benefit of both
parties.
The Sandiganbayan declared the national government as the principal obligor of the L/C even though
the liability remained in the books of the PNB for accounting and monitoring purposes.
The Sandiganbayan, however, denied Chuidian's motion for reconsideration of the denial of his motion
to lift attachment, agreeing in full with the government's apriorisms that:
x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon
grounds other than defendant's absence in the Philippine territory. In its Resolution dated July 14,
1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and that
defendant has recovered or disposed of his property with the intent of defrauding plaintiff; (2)
Chuidian's belated presence in the Philippines cannot be invoked to secure the lifting of attachment.
The rule is specific that it applies to a party who is about to depart from the Philippines with intent to

defraud his creditors. Chuidian's stay in the country is uncertain and he may leave at will because he
holds a foreign passport; and (3) Chuidian's other ground, sufficiency of former PCGG Chairman
Gunigundo's verification of the complaint, has been met fairly and squarely in the Resolution of July
14, 1993.28
Hence, the instant petition for certiorari contending that the respondent Sandiganbayan committed
grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that:
1) Most of the issues raised in the motion to lift attachment had been substantially addressed
in the previous resolutions dated July 14, 1993 and August 26, 1998, while the rest were of no
imperative relevance as to affect the Sandiganbayan's disposition; and
2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential
Proclamation No. 50.
The Rules of Court specifically provide for the remedies of a defendant whose property or asset has
been attached. As has been consistently ruled by this Court, the determination of the existence of
grounds to discharge a writ of attachment rests in the sound discretion of the lower courts. 29
The question in this case is: What can the herein petitioner do to quash the attachment of the L/C?
There are two courses of action available to the petitioner:
First. To file a counterbond in accordance with Rule 57, Section 12, which provides:
SEC. 12. Discharge of attachment upon giving counterbond. At anytime after an order of attachment
has been granted, the party whose property has been attached, or the person appearing on his behalf,
may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order discharging the attachment wholly or in
part on the security given. The judge shall, after hearing, order the discharge of the attachment if a
cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of the
adverse party, with the clerk or judge of the court where the application is made, in an amount equal
to the value of the property attached as determined by the judge, to secure the payment of any
judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond,
copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an
attachment in accordance with the provisions of this section the property attached, or the proceeds of
any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or the
person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the
property so released. Should such counterbond for any reason be found to be, or become, insufficient,
and the party furnishing the same fail to file an additional counter-bond, the attaching creditor may
apply for a new order of attachment.1wphi1.nt
or
Second. To quash the attachment on the ground that it was irregularly or improvidently issued, as
provided for in Section 13 of the same Rule:
SEC. 13. Discharge of attachment for improper or irregular issuance. - The party whose property has
been attached may also, at any time either before or after the release of the attached property, or

before any attachment shall have been actually levied, upon reasonable notice to the attaching
creditor, apply to the judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the attachment on the ground that the same was improperly or
irregularly issued. If the motion be made on affidavits on the part of the party whose property has
been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or
other evidence in addition to that on which the attachment was made. After hearing, the judge shall
order the discharge of the attachment if it appears that it was improperly or irregularly issued and the
defect is not cured forthwith.
It would appear that petitioner chose the latter because the grounds he raised assail the propriety of
the issuance of the writ of attachment. By his own admission, however, he repeatedly acknowledged
that his justifications to warrant the lifting of the attachment are facts or events that came to light or
took place after the writ of attachment had already been implemented.
More particularly, petitioner emphasized that four (4) years after the writ was issued, he had returned
to the Philippines. Yet while he noted that he would have returned earlier but for the cancellation of his
passport by the PCGG, he was not barred from returning to the Philippines. Then he informed the
Sandiganbayan that while the case against him was pending, but after the attachment had already
been executed, the government lost two (2) cases for fraud lodged against him before the U.S.
Courts, thus invoking res judicata. Next, he also pointed out that the government is estopped from
pursuing the case against him for failing to prosecute for the number of years that it had been pending
litigation.
It is clear that these grounds have nothing to do with the issuance of the writ of attachment. Much
less do they attack the issuance of the writ at that time as improper or irregular. And yet, the rule
contemplates that the defect must be in the very issuance of the attachment writ. For instance, the
attachment may be discharged under Section 13 of Rule 57 when it is proven that the allegations of
the complaint were deceptively framed,30 or when the complaint fails to state a cause of
action.31 Supervening events which may or may not justify the discharge of the writ are not within the
purview of this particular rule.
In the instant case, there is no showing that the issuance of the writ of attachment was attended by
impropriety or irregularity. Apart from seeking a reconsideration of the resolution granting the
application for the writ, petitioner no longer questioned the writ itself. For four (4) long years he kept
silent and did not exercise any of the remedies available to a defendant whose property or asset has
been attached. It is rather too late in the day for petitioner to question the propriety of the issuance of
the writ.
Petitioner also makes capital of the two foreign judgments which he claims warrant the application of
the principle of res judicata. The first judgment, in Civil Case Nos. 575867 and 577697 brought by
Philguarantee before the Santa Clara Country Superior Court, denied Philguarantee's prayer to set
aside the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached
L/C. On March 14, 1990, the Court of Appeal of the State of California affirmed the Superior Court's
judgment. The said judgment became the subject of a petition for review by the California Supreme
Court. There is no showing, however, of any final judgment by the California Supreme Court. The
records, including petitioner's pleadings, are bereft of any evidence to show that there is a final
foreign judgment which the Philippine courts must defer to. Hence, res judicata finds no application in
this instance because it is a requisite that the former judgment or order must be final. 32

Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL
brought by petitioner Chuidian against PNB to compel the latter to pay the L/C. The said Court's
judgment, while it ruled in favor of petitioner on the matter of Philguarantee's action-in-intervention to
set aside the settlement agreement, also ruled in favor of PNB, to wit:

In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it was at
the same time the government's cause of action in the main case.

Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to enforce
its directives and orders by contempt proceedings. Under Executive Order No. 2, the PCGG is
empowered to freeze any, and all assets, funds and property illegally acquired by former President
Marcos or his close friends and business associates.

x x x when the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently
misapplied or converted to his own 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," or "an action against a party who has
been guilty of fraud in contracting the debt or incurring the obligation upon which the action is
brought," the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of
Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and
affidavits on which the writ was based and consequently that the writ based thereon had been
improperly or irregularly issued the reason being that the hearing on such a motion for dissolution of
the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the
action would be ventilated at a mere hearing of a motion, instead of at the regular
trial.34 (Underscoring ours)

On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any further
drawings on the L/C. The freeze order has remained in effect and was followed by a sequestration
order issued by the PCGG. Subsequently, Chuidian's Philippine counsel filed a series of challenges to
the freeze and sequestration orders, which challenges were unsuccessful as the orders were found
valid by the Philippine Supreme Court. The freeze and sequestration orders are presently in effect.
Thus, under the PCGG order and Executive Orders Nos. 1 and 2, performance by PNB would be illegal
under Philippine Law. Therefore PNB is excused from performance of the L/C agreement as long as the
freeze and sequestration orders remain in effect. (Underscoring ours)
xxx

xxx

xxx

Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that the
negotiations for which occurred in California, and that two of the payments were made at PNB/LA,
compels the conclusion that the act of prohibiting payment of the L/C occurred in Los Angeles.
However, the majority of the evidence andTchacosh and Sabbatino compel the opposite conclusion.
The L/C was issued in Manila, such was done at the request of a Philippine government instrumentality
for the benefit of a Philippine citizen, the L/C was to be performed in the Philippines, all significant
events relating to the issuance and implementation of the L/C occurred in the Philippines, the L/C
agreement provided that the L/C was to be construed according to laws of the Philippines, and the
Philippine government certainly has an interest in preventing the L/C from being remitted in that it
would be the release of funds that are potentially illgotten gains. Accordingly, the Court finds that the
PCGG orders are acts of state that must be respected by this Court, and thus PNB is excused from
making payment on the L/C as long as the freeze and sequestration orders remain in
effect.33 (Underscoring ours)
Petitioner's own evidence strengthens the government's position that the L/C is under the jurisdiction
of the Philippine government and that the U.S. Courts recognize the authority of the Republic to
sequester and freeze said L/C. Hence, the foreign judgments relied upon by petitioner do not
constitute a bar to the Republic's action to recover whatever alleged ill-gotten wealth petitioner may
have acquired.
Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence of
fraud on record other than the affidavit of PCGG Chairman Gunigundo. This issue of fraud, however,
touches on the very merits of the main case which accuses petitioner of committing fraudulent acts in
his dealings with the government. Moreover, this alleged fraud was one of the grounds for the
application of the writ, and the Sandiganbayan granted said application after it found a prima
facie case of fraud committed by petitioner.

We have uniformly held that:

Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary
attachment has been issued are not triable on a motion for dissolution of the attachment, otherwise
an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion. 35
It is not the Republic's fault that the litigation has been protracted. There is as yet no evidence of
fraud on the part of petitioner. Petitioner is only one of the twenty-three (23) defendants in the main
action. As such, the litigation would take longer than most cases. Petitioner cannot invoke this delay in
the proceedings as an excuse for not seeking the proper recourse in having the writ of attachment
lifted in due time. If ever laches set in, it was petitioner, not the government, who failed to take action
within a reasonable time period. Challenging the issuance of the writ of attachment four (4) years
after its implementation showed petitioner's apparent indifference towards the proceedings before the
Sandiganbayan.
In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its
discretion in a whimsical, capricious and arbitrary manner. There are no compelling reasons to warrant
the immediate lifting of the attachment even as the main case is still pending. On the other hand,
allowing the discharge of the attachment at this stage of the proceedings would put in jeopardy the
right of the attaching party to realize upon the relief sought and expected to be granted in the main or
principal action. It would have the effect of prejudging the main case.
The attachment is a mere provisional remedy to ensure the safety and preservation of the thing
attached until the plaintiff can, by appropriate proceedings, obtain a judgment and have such property
applied to its satisfaction. 36To discharge the attachment at this stage of the proceedings would render
inutile any favorable judgment should the government prevail in the principal action against petitioner.
Thus, the Sandiganbayan, in issuing the questioned resolutions, which are interlocutory in nature,
committed no grave abuse of discretion amounting to lack or excess of jurisdiction. As long as the
Sandiganbayan acted within its jurisdiction, any alleged errors committed in the exercise of its
jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely
appeal and not by special civil action of certiorari. 37

Moreover, we have held 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
counterbond, in accordance with Section 12 of the same rule. 38 This recourse, however, was not
availed of by petitioner, as noted by the Solicitor General in his comment. 39
To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond
immediately; or (b) by moving to quash on the ground of improper and irregular issuance. 40 These
grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and the power
of the Court to dissolve an attachment is circumscribed by the grounds specified therein. 41 Petitioner's
motion to lift attachment failed to demonstrate any infirmity or defect in the issuance of the writ of
attachment; neither did he file a counterbond.
Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account. We
agree with the Sandiganbayan that any interest that the proceeds of the L/C may earn while the case
is being litigated would redound to the benefit of whichever party will prevail, the Philippine
government included. Thus, we affirm the Sandiganbayan's ruling that the proceeds of the L/C should
be deposited in an interest bearing account with the Land Bank of the Philippines for the account of
the Sandiganbayan in escrow until ordered released by the said Court.
We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of
Transfer, whereby certain liabilities of PNB were transferred to the national government, cannot affect
the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil Code
provides:

x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is
presumed to be the lawful payee-beneficiary of the L/C until such time that the plaintiff successfully
proves that said L/C is ill-gotten and he has no right over the same. 42
In Republic v. Sandiganbayan,43 we held that the provisional remedies, such as freeze orders and
sequestration, were not "meant to deprive the owner or possessor of his title or any right to the
property sequestered, frozen or taken over and vest it in the sequestering agency, the Government or
other person."
Thus, until such time that the government is able to successfully prove that petitioner has no right to
claim the proceeds of the L/C, he is deemed to be the lawful payee-beneficiary of said L/C, for which
any substitution of debtor requires his consent. The Sandiganbayan thus erred in relieving PNB of its
liability as the original debtor.
WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the
Sandiganbayan dated November 6, 1998 and July 2, 1999 are AFFIRMED. The PNB is DIRECTED to
remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in the amount of U.S.
$4.4 million within fifteen (15) days from notice hereof, the same to be placed under special time
deposit with the Land Bank of the Philippines, for the account of Sandiganbayan in escrow for the
person or persons, natural or juridical, who shall eventually be adjudged lawfully entitled thereto, the
same to earn interest at the current legal bank rates. The principal and its interest shall remain in said
account until ordered released by the Court in accordance with law.1wphi1.nt
No costs.

Novation which consists in substituting a new debtor in the place of the original one, may be made
without the knowledge or against the will of the latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237.
Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent
thereto cannot just be presumed. Even though Presidential Proclamation No. 50 can be considered an
"insuperable cause", it does not necessarily make the contracts and obligations affected thereby
exceptions to the above-quoted law, such that the substitution of debtor can be validly made even
without the consent of the creditor. Presidential Proclamation No. 50 was not intended to set aside
laws that govern the very lifeblood of the nation's commerce and economy. In fact, the Deed of
Transfer that was executed between PNB and the government pursuant to the said Presidential
Proclamation specifically stated that it shall be deemed effective only upon compliance with several
conditions, one of which requires that:
(b) the BANK shall have secured such governmental and creditors' approvals as may be necessary to
establish the consummation, legality and enforceability of the transactions contemplated hereby."
The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its liability
thereunder considering that neither the PNB nor the government bothered to secure petitioner's
consent to the substitution of debtors. We are not unmindful that any effort to secure petitioner's
consent at that time would, in effect, be deemed an admission that the L/C is valid and binding. Even
the Sandiganbayan found that: 36 Sta. Ines Melale Forest Products Corp. v. Macaraig, Jr., 299 SCRA
491, 515 (1998).

SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

THIRD DIVISION
G.R. No. 171124

February 13, 2008

ALEJANDRO
vs.
MANUEL TANKIANSEE, respondent.

NG

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 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January
6, 2006 Resolution2denying 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

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

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

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

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
Affidavit8 of petitioner, the trial court ordered the issuance of a 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
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 UEM-MARA'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

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
Decision25 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, 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 perpetrated 38 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 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 CA-G.R. SP No. 90130 are AFFIRMED.

of P19,000,000.00. Despite repeated verbal and written demands, Nicanor failed to remit to them the
balance of P19,000,000.00.

SO ORDERED.

Consequently, on October 25, 2002, petitioners filed before the regional trial court (RTC) a
Complaint7 for sum of money and damages, against Nicanor, Ermilinda Satsatin, Nikki Normel
Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02, and raffled to
RTC, Branch 90, Dasmarias, Cavite.

THIRD DIVISION
G.R. No. 166759

November 25, 2009

SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF MARIO TORRES and SOLAR RESOURCES,
INC.,Petitioners,
vs.
NICANOR SATSATIN, EMILINDA AUSTRIA SATSATIN, NIKKI NORMEL SATSATIN and NIKKI
NORLIN SATSATIN, Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari assailing the Decision 1 dated November 23, 2004 of the Court
of Appeals (CA) in CA-G.R. SP No. 83595, and its Resolution 2 dated January 18, 2005, denying
petitioners motion for reconsideration.

On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of
Attachment,8 alleging among other things: that respondents are about to depart the Philippines; that
they have properties, real and personal in Metro Manila and in the nearby provinces; that the amount
due them is P19,000,000.00 above all other claims; that there is no other sufficient security for the
claim sought to be enforced; and that they are willing to post a bond fixed by the court to answer for
all costs which may be adjudged to the respondents and all damages which respondents may sustain
by reason of the attachment prayed for, if it shall be finally adjudged that petitioners are not entitled
thereto.
On October 30, 2002, the trial court issued an Order 9 directing the petitioners to post a bond in the
amount ofP7,000,000.00 before the court issues the writ of attachment, the dispositive portion of
which reads as follows:

The factual and procedural antecedents are as follows:

WHEREFORE, premises considered, and finding the present complaint and motion sufficient in form
and substance, this Court hereby directs the herein plaintiffs to post a bond, pursuant to Section 3,
Rule 57 of the 1997 Rules of Civil Procedure, in the amount of Seven Million Pesos (P7,000,000.00),
before the Writ of Attachment issues.10

The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa), and Mario Torres (Mario) each own
adjacent 20,000 square meters track of land situated at Barrio Lankaan, Dasmarias, Cavite, covered
by Transfer Certificate of Title (TCT) Nos. 251267, 3 251266,4 and 251265,5 respectively.

On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff, 11 informing the court that
they have already filed an attachment bond. They also prayed that a sheriff be deputized to serve the
writ of attachment that would be issued by the court.

Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners mother, Agripina Aledia, if she
wanted to sell their lands. After consultation with her daughters, daughter-in-law, and grandchildren,
Agripina agreed to sell the properties. Petitioners, thus, authorized Nicanor, through a Special Power of
Attorney, to negotiate for the sale of the properties. 6

In the Order12 dated November 15, 2002, the RTC granted the above motion and deputized the sheriff,
together with police security assistance, to serve the writ of attachment.

Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. (Solar). Solar
allegedly agreed to purchase the three parcels of land, together with the 10,000-square-meter
property owned by a certain Rustica Aledia, for P35,000,000.00. Petitioners alleged that Nicanor was
supposed to remit to them the total amount ofP28,000,000.00 or P9,333,333.00 each to Sofia,
Fructosa, and the heirs of Mario.
Petitioners claimed that Solar has already paid the entire purchase price of P35,000,000.00 to Nicanor
in Thirty-Two (32) post-dated checks which the latter encashed/deposited on their respective due
dates. Petitioners added that they also learned that during the period from January 2000 to April
2002, Nicanor allegedly acquired a house and lot at Vista Grande BF Resort Village, Las Pias City and
a car, which he registered in the names of his unemployed children, Nikki Normel Satsatin and Nikki
Norlin Satsatin. However, notwithstanding the receipt of the entire payment for the subject property,
Nicanor only remitted the total amount of P9,000,000.00, leaving an unremitted balance

Thereafter, the RTC issued a Writ of Attachment 13 dated November 15, 2002, directing the sheriff to
attach the estate, real or personal, of the respondents, the decretal portion of which reads:
WE, THEREFORE, command you to attach the estate, real or personal, not exempt from execution, of
the said defendants, in your province, to the value of said demands, and that you safely keep the
same according to the said Rule, unless the defendants give security to pay such judgment as may be
recovered on the said action, in the manner provided by the said Rule, provided that your legal fees
and all necessary expenses are fully paid.
You shall return this writ with your proceedings indorsed hereon within twenty (20) days from the date
of receipt hereof.
GIVEN UNDER MY HAND AND SEAL of this Court, this 15th day of November, 2002, at Imus for
Dasmarias, Cavite, Philippines.14

On November 19, 2002, a copy of the writ of attachment was served upon the respondents. On the
same date, the sheriff levied the real and personal properties of the respondent, including household
appliances, cars, and a parcel of land located at Las Pias, Manila. 15
On November 21, 2002, summons, together with a copy of the complaint, was served upon the
respondents.16
On November 29, 2002, respondents filed their Answer.17
On the same day respondents filed their answer, they also filed a Motion to Discharge Writ of
Attachment18anchored on the following grounds: the bond was issued before the issuance of the writ
of attachment; the writ of attachment was issued before the summons was received by the
respondents; the sheriff did not serve copies of the application for attachment, order of attachment,
plaintiffs affidavit, and attachment bond, to the respondents; the sheriff did not submit a sheriffs
return in violation of the Rules; and the grounds cited for the issuance of the writ are baseless and
devoid of merit. In the alternative, respondents offered to post a counter-bond for the lifting of the
writ of attachment.19
On March 11, 2003, after the parties filed their respective pleadings, the RTC issued an
Order20 denying the motion, but at the same time, directing the respondents to file a counter-bond, to
wit:
WHEREFORE, premises considered, after the pertinent pleadings of the parties have been taken into
account, the herein defendants are hereby directed to file a counter-bond executed to the attaching
party, in the amount of Seven Million Pesos (P7,000,000.00), to secure the payment of any judgment
that the attaching party may recover in the action, with notice on the attaching party, whereas, the
Motion to Discharge Writ of Attachment is DENIED.

WHEREFORE, premises considered, defendants Urgent Motion to Lift/Set Aside Order Dated March 23,
2003 (With Manifestation to Dissolve Writ of Attachment) is hereby DENIED for lack of Merit.
SO ORDERED.
Respondents filed an Urgent Motion for Reconsideration, 25 but it was denied in the Order 26 dated March
3, 2004.
Aggrieved, respondents filed before the CA a Petition for Certiorari, Mandamus and Prohibition with
Preliminary Injunction and Temporary Restraining Order 27 under Rule 65 of the Rules of Court,
docketed as CA-G.R. SP No. 83595, anchored on the following grounds:
(1) public respondents committed grave abuse of discretion amounting to lack of or in excess
of jurisdiction in failing to notice that the lower court has no jurisdiction over the person and
subject matter of the complaint when the subject Writ of Attachment was issued;
(2) public respondents committed grave abuse of discretion amounting to lack of or in excess
of jurisdiction in granting the issuance of the Writ of Attachment despite non-compliance with
the formal requisites for the issuance of the bond and the Writ of Attachment. 28
Respondents argued that the subject writ was improper and irregular having been issued and enforced
without the lower court acquiring jurisdiction over the persons of the respondents. They maintained
that the writ of attachment was implemented without serving upon them the summons together with
the complaint. They also argued that the bond issued in favor of the petitioners was defective,
because the bonding company failed to obtain the proper clearance that it can transact business with
the RTC of Dasmarias, Cavite. They added that the various clearances which were issued in favor of
the bonding company were applicable only in the courts of the cities of Pasay, Pasig, Manila, and
Makati, but not in the RTC, Imus, Cavite. 29

SO ORDERED.21
Thereafter, respondents filed a motion for reconsideration and/or motion for clarification of the above
order. On April 3, 2003, the RTC issued another Order 22 which reads:

On November 23, 2003, the CA rendered the assailed Decision in favor of the respondents, finding
grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of the RTC in
issuing the Orders dated December 15, 2003 and March 3, 2004. The decretal portion of the Decision
reads:

In view of the Urgent Motion For Reconsideration And/Or Motion For Clarification of the Order of this
Court dated March 11, 2003, denying their Motion to Discharge Writ of Attachment filed by the
defendants through counsel Atty. Franco L. Loyola, the Motion to Discharge Writ of Attachment is
denied until after the defendants have posted the counter-bond in the amount of Seven Million Pesos
(P7,000,000.00).

WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders are hereby
nullified and set aside. The levy on the properties of the petitioners pursuant to the Writ of Attachment
issued by the lower court is hereby LIFTED.
SO ORDERED.30

The defendants, once again, is directed to file their counter-bond of Seven Million Pesos
(P7,000,000.00), if it so desires, in order to discharge the Writ of Attachment.

Petitioners filed a Motion for Reconsideration, 31 but it was denied in the Resolution 32 dated January 18,
2005.

SO ORDERED.
On December 15, 2003, respondents filed an Urgent Motion to Lift/Set Aside Order Dated March [11],
2003,23which the RTC denied in an Order24 of even date, the dispositive portion of which reads:

Hence, this petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE LIFTING OF THE WRIT OF
ATTACHMENT PURSUANT TO SECTION 13, RULE 57 OF THE REVISED RULES OF CIVIL PROCEDURE.

same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment that
might be secured in the said action by the attaching creditor against the defendant. 36

II.

In the case at bar, the CA correctly found that there was grave abuse of discretion amounting to lack
of or in excess of jurisdiction on the part of the trial court in approving the bond posted by petitioners
despite the fact that not all the requisites for its approval were complied with. In accepting a surety
bond, it is necessary that all the requisites for its approval are met; otherwise, the bond should be
rejected.37

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN
GRANTING THE WRIT OF ATTACHMENT DESPITE THE BOND BEING INSUFFICIENT AND HAVING BEEN
IMPROPERLY ISSUED.
III.
THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION BY REASON OF
ESTOPPEL, LACHES AND PRESCRIPTION AND IN HOLDING THAT THE WRIT OF ATTACHMENT WAS
IMPROPERLY AND IRREGULARLY ENFORCED IN VIOLATION OF SECTION 5, RULE 57 OF THE REVISED
RULES OF COURT.
IV.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRINCIPLE OF ESTOPPEL WILL
NOT LIE AGAINST RESPONDENTS.
Petitioners maintain that in the case at bar, as in the case of FCY Construction Group, Inc. v. Court of
Appeals,33the only way the subject writ of attachment can be dissolved is by a counter-bond. They
claim that the respondents are not allowed to file a motion to dissolve the attachment under Section
13, Rule 57 of the Rules of Court. Otherwise, the hearing on the motion for the dissolution of the writ
would be tantamount to a trial on the merits, considering that the writ of preliminary attachment was
issued upon a ground which is, at the same time, the applicants cause of action.
Petitioners insist that the determination of the existence of grounds to discharge a writ of attachment
rests in the sound discretion of the lower court. They argue that the Certification 34 issued by the Office
of the Administrator and the Certifications 35 issued by the clerks of court of the RTCs of Dasmarias
and Imus, Cavite, would show that the bonds offered by Western Guaranty Corporation, the bonding
company which issued the bond, may be accepted by the RTCs of Dasmarias and Imus, Cavite, and
that the said bonding company has no pending liability with the government.
Petitioners contend that respondents are barred by estoppel, laches, and prescription from questioning
the orders of the RTC issuing the writ of attachment. They also maintain that the issue whether there
was impropriety or irregularity in the issuance of the orders is moot and academic, considering that
the attachment bond questioned by the respondent had already expired on November 14, 2003 and
petitioners have renewed the attachment bond covering the period from November 14, 2003 to
November 14, 2004, and further renewed to cover the period of November 14, 2004 to November 14,
2005.
The petition is bereft of merit.
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

Every bond should be accompanied by a clearance from the Supreme Court showing that the company
concerned is qualified to transact business which is valid only for thirty (30) days from the date of its
issuance.38However, it is apparent that the Certification 39 issued by the Office of the Court
Administrator (OCA) at the time the bond was issued would clearly show that the bonds offered by
Western Guaranty Corporation may be accepted only in the RTCs of the cities of Makati, Pasay, and
Pasig. Therefore, the surety bond issued by the bonding company should not have been accepted by
the RTC of Dasmarias, Branch 90, since the certification secured by the bonding company from the
OCA at the time of the issuance of the bond certified that it may only be accepted in the abovementioned cities. Thus, the trial court acted with grave abuse of discretion amounting to lack of or in
excess of jurisdiction when it issued the writ of attachment founded on the said bond.
Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction between
the issuance and the implementation of the writ of attachment is of utmost importance to the validity
of the writ. The distinction is indispensably necessary to determine when jurisdiction over the person
of the defendant should be acquired in order to validly implement the writ of attachment upon his
person.
This Court has long put to rest the issue of when jurisdiction over the person of the defendant should
be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time
after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule
57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action
or at any time before entry of judgment."40 This phrase refers to the date of the filing of the complaint,
which is the moment that marks "the commencement of the action." The reference plainly is to a time
before summons is served on the defendant, or even before summons issues. 41
In Davao Light & Power Co., Inc. v. Court of Appeals, 42 this Court clarified the actual time when
jurisdiction should be had:
It goes without saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of defendant x x x issuance of summons, order of attachment and writ
of attachment x x x these do not and cannot bind and affect the defendant until and unless
jurisdiction over his person is eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to the courts authority. Hence, when
the sheriff or other proper officer commences implementation of the writ of attachment, it is essential
that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and
of the order of attachment, as explicitly required by Section 5 of Rule 57, but also
thesummons addressed to said defendant as well as a copy of the complaint x x x. (Emphasis
supplied.)

In Cuartero v. Court of Appeals, 43 this Court held that the grant of the provisional remedy of
attachment 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 be first obtained. However, once the implementation of the writ commences, the court must
have acquired jurisdiction over the defendant, for without such jurisdiction, the court has no power
and authority to act in any manner against the defendant. Any order issuing from the Court will not
bind the defendant.44
Thus, it is indispensable not only for the acquisition of jurisdiction over the person of the defendant,
but also upon consideration of fairness, to apprise the defendant of the complaint against him and the
issuance of a writ of preliminary attachment and the grounds therefor that prior or contemporaneously
to the serving of the writ of attachment, service of summons, together with a copy of the complaint,
the application for attachment, the applicants affidavit and bond, and the order must be served upon
him.

Moreover, again assuming arguendo that the writ of attachment was validly issued, although the trial
court later acquired jurisdiction over the respondents by service of the summons upon them, such
belated service of summons on respondents cannot be deemed to have cured the fatal defect in the
enforcement of the writ. The trial court cannot enforce such a coercive process on respondents without
first obtaining jurisdiction over their person. The preliminary writ of attachment must be served after
or simultaneous with the service of summons on the defendant whether by personal service,
substituted service or by publication as warranted by the circumstances of the case. The subsequent
service of summons does not confer a retroactive acquisition of jurisdiction over her person because
the law does not allow for retroactivity of a belated service. 46
WHEREFORE, premises considered, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated November 23, 2004 and January 18, 2005, respectively, in CA-G.R. SP No. 83595 are
AFFIRMED.
SO ORDERED.

In the instant case, assuming arguendo that the trial court validly issued the writ of attachment on
November 15, 2002, which was implemented on November 19, 2002, it is to be noted that the
summons, together with a copy of the complaint, was served only on November 21, 2002.

DIOSDADO
Associate Justice

At the time the trial court issued the writ of attachment on November 15, 2002, it can validly to do so
since the motion for its issuance can be filed "at the commencement of the action or at any time
before entry of judgment." However, at the time the writ was implemented, the trial court has not
acquired jurisdiction over the persons of the respondent since no summons was yet served upon
them. The proper officer should have previously or simultaneously with the implementation of the writ
of attachment, served a copy of the summons upon the respondents in order for the trial court to have
acquired jurisdiction upon them and for the writ to have binding effect. Consequently, even if the writ
of attachment was validly issued, it was improperly or irregularly enforced and, therefore, cannot bind
and affect the respondents.

THIRD DIVISION
G.R. No. 203530

M.

PERALTA

April 13, 2015

LUZON DEVELOPMENT BANK, TOMAS CLEMENTE, JR., and OSCAR RAMIREZ, Petitioners,
vs.
ERLINDA KRISHNAN, Respondent.
DECISION

Moreover, although there is truth in the petitioners contention that 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 applicants 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. However, the
same is not applicable in the case bar. It is clear from the respondents pleadings that the grounds on
which they base the lifting of the writ of attachment are the irregularities in its issuance and in the
service of the writ; not petitioners cause of action.1avvphi1
Further, petitioners contention that respondents are barred by estoppel, laches, and prescription from
questioning the orders of the RTC issuing the writ of attachment and that the issue has become moot
and academic by the renewal of the attachment bond covering after its expiration, is devoid of merit.
As correctly held by the CA:
There are two ways of discharging the attachment. First, to file a counter-bond in accordance with
Section 12 of Rule 57. Second[,] [t]o quash the attachment on the ground that it was irregularly or
improvidently issued, as provided for in Section 13 of the same rule. Whether the attachment was
discharged by either of the two ways indicated in the law, the attachment debtor cannot be deemed to
have waived any defect in the issuance of the attachment writ by simply availing himself of one way of
discharging the attachment writ, instead of the other. The filing of a counter-bond is merely a speedier
way of discharging the attachment writ instead of the other way.45

PERALTA J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure praying
for the annulment of the Decision 1 dated March 27, 2012 and Resolution 2 dated September 11, 2012
of the Court of Appeals (CA) in CA-G.R. SP No. 120664, which affirmed the Orders dated September
24, 2010 and May 26, 2011, respectively, of Branch 30, Regional Trial Court (RTC) -Manila.
The factual antecedents, as found by the CA, are as follows:
Petitioners Luzon Development Bank, Tomas Clemente, and Oscar Ramirez (hereafter petitioners) are
the respondents in the complaint for Collection of Sum of Money and Damages filed by respondent
Erlinda Khrishnan (hereafter respondent Erlinda) on February 7, 2001. Respondent Erlinda claimed
that she is a client of respondent bank wherein she maintained several accounts including time
deposits. On several occasions, when respondent Erlinda presented her Time Deposits Certificates
amounting to P28,597,472.70 for payment because they have become due, petitioners refused to
honor them for the reason that they were fraudulent. Respondent Erlinda likewise applied for a
Preliminary Writ of Attachment which the RTC granted on February 27, 2001.

By virtue of the writ, petitioner banks accounts in BPI Family Bank, Calamba, Laguna in the amount
ofP28,597,472.70 and its account amounting to P49,000,000.00 in the Central Bank were garnished.
On March 9, 2001, petitioners filed an urgent ex-parte Motion to Recall Quash and/or Lift Attachment
or Garnishment (in excess of amounts in the writ). Respondent Erlinda opposed the motion.
On August 15, 2001, petitioners filed an Omnibus Motion seeking the substitution of their garnished
account with government securities and the immediate resolution of their motion to discharge
attachment and setting the motion for hearing, which respondent Erlinda opposed.
On May 22, 2002, the RTC resolved the pending incidents and required the petitioners to justify their
motion to discharge the attachment. During pre-trial on May 23, 2002, respondents requested
additional time to file a supplemental motion to justify their earlier motions which was granted and
gave petitioners ten (10) days from receipt within which to comment or opposed (sic) it.
On September 8, 2003, the RTC issued an order lifting the attachment to which respondent Erlinda
filed a motion for reconsideration. Respondent Erlinda also filed a Motion for Inhibition. On December
18, 2003, the RTC denied the motion for reconsideration but granted the motion for inhibition. The
said Order was questioned by respondent Erlinda by way of Petition for Certiorari before the 7th
Division which rendered a decision on November 15, 2006, the dispositive portion of which reads as
follows:
"WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.
THE ORDERS dated September 8, 2003, and December 18, 2003 are NULLIFIED and SET ASIDE.
The private respondents, as defendants in Civil Case No. 01-100046 entitled Erlinda C. Krishnan v.
Luzon Development Bank, et al., are ORDERED to file a counter bond in accordance with Sec. 12, Rule
57, 1997 Rules of Civil Procedure, within 10 days from the finality of this decision; otherwise, the
REGIONAL TRIAL COURT, BRANCH 36, in Manila shall immediately reinstate the writ of attachment
issued and implemented in Civil Case No. 01-100046.
Costs of suit to be paid by the respondents.

Meanwhile, on July 3, 2009, petitioners filed an Omnibus Motion praying that a hearing be held to
determine the sufficiency of the attachment bond and they be allowed to deposit Certificates of Title of
real property, and the issuance of the writ of attachment be held in abeyance.
On July 20, 2009, petitioners filed a motion for extension of time to comply and/or file the appropriate
pleading and to hold in abeyance the reinstatement of the writ of attachment.
On January 28, 2010, petitioners filed a motion to admit bank property in lieu of counter bond which
was opposed by respondent Erlinda.1avvphi1
On September 24, 2010, respondent judge denied petitioners motion in the assailed Order. Their
subsequent motion for reconsideration was denied on May 26, 2011.
On June 27, 2011, respondent judge issued an Order reinstating the Writ of Attachment dated March
1, 2001 for failure of petitioners to file the required counter bond. Respondent judge also issued an
amended Reinstated Writ of Attachment directing respondent Sheriff Oscar L. Rojas (hereafter
respondent Sheriff) to attach the real estate or personal properties of petitioners in the amount
of P28,597,472.70. On June 30, 2011, the sheriff served the Notice of Garnishment and the Amended
Reinstated Writ of Attachment.
On July 4, 2011, petitioners filed an urgent motion to recall, suspend or hold in abeyance and reexamination of the amended reinstated writ of preliminary attachment of June 27, 2011 which was
opposed by respondent Erlinda.
On July 19, 2011, respondent Sheriff issued a Sheriffs Partial Report. Thereafter, petitioners filed this
petition for certiorari x x x.
In a Decision dated March 27, 2012,the CA dismissed petitioners certiorari petition and affirmed the
Orders of the RTC reinstating the Writ of Attachment for failure of petitioners to file the required
counter-bond. The CA ruled that the RTC judge committed no grave abuse of discretion in denying
petitioners motion to admit bank property in lieu of counter-bond, thus, it held: WHEREFORE,
premises considered, the petition is DISMISSED and accordingly, DENIED DUE COURSE. The Orders
dated September 24, 2010 and May 26, 2011 are hereby AFFIRMED. SO ORDERED.3

SO ORDERED.

Petitioners filed a motion for reconsideration against said decision, but the same was denied in a
Resolution dated September 11, 2012.

Petitioners subsequent motion for reconsideration was denied. Thereafter, their petition and motion
for reconsideration before the Supreme Court were likewise denied.

Hence, petitioners filed this present petition raising the following grounds:

On May 09, 2008, respondent judge issued an Order directing respondent Erlinda to file a new
attachment bond in the amount of P35,000,000.00 and petitioners to file a counterbond within ten
days from notice of the filing and approval of the bond of respondent Erlinda. Petitioners moved for
the reconsideration of the said Order which respondent judge denied and granted a period of fifteen
days for respondent Erlinda to file an attachment bond.
Respondent Erlinda filed her attachment bond on June 25, 2009 in the amount of P35,000,000.00
through Visayan Surety and Insurance Corporation which was approved by respondent on July 7,
2009.

IN THE FIRST ASSAILED ORDER THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN IT MISCONSTRUED AND FAILED TO RULE ON THE CORRECT LEGAL ISSUE
PRESENTED IN THE PETITION FOR CERTIORARI.4
IN THE SECOND ASSAILED ORDER THE HONORABLE COURT OF APPEALS AGAIN ACTED WITH GRAVE
ABUSE OF DISCRETION WHEN IT FAILED TO PRESENT ANY LEGAL BASIS FOR STATING THAT RULE 39
OF THE REVISED RULES OF COURT DOES NOT APPLY.5

Simply stated, the issue for our resolution is whether the CA erred in affirming the RTCs decision
which denied petitioners motion praying that bank property be deposited in lieu of cash or a counterbond.
In their petition, petitioners contend that it has the option to deposit real property, in lieu of cash or a
counter-bond, to secure any contingent lien on its property in the event respondent wins the case.
They argue that Section 2 of Rule 57 only mentions the term "deposit," thus, it cannot only be
confined or construed to refer to cash.
We rule in the negative.
Section 2, Rule 57 of the Rules of Court explicitly states that "[a]n order of attachment may be issued
either ex parte or upon motion with notice and hearing by the court in which the action is pending, or
by the Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so
much of the property in the Philippines of the party against whom it is issued, not exempt from
execution, as may be sufficient to satisfy the applicants demand, unless such party makes deposit or
gives a bond as hereinafter provided in an amount equal to that fixed in the order, which may be the
amount sufficient to satisfy the applicants demand or the value of the property to be attached as
stated by the applicant, exclusive of costs."
Section 5 of the same Rule likewise states that "[t]he sheriff enforcing the writ shall without delay and
with all reasonable diligence attach, to await judgment and execution in the action, only so much of
the property in the Philippines of the party against whom the writ is issued, not exempt from
execution, as may be sufficient to satisfy the applicants demand, unless the former makes a deposit
with the court from which the writ is issued, or gives a counter-bond executed to the applicant, in an
amount equal to the bond fixed by the court in the order of attachment or to the value of the property
to be attached, exclusive of costs."
From the foregoing, it is evidently clear that once the writ of attachment has been issued, the only
remedy of the petitioners in lifting the same is through a cash deposit or the filing of the counterbond. Thus, the Court holds that petitioners argument that it has the option to deposit real property
instead of depositing cash or filing a counter-bond to discharge the attachment or stay the
implementation thereof is unmeritorious.
In fact, in Security Pacific Assurance Corporation v. Tria-Infante, 6 we held that one of the ways to
secure the discharge of an attachment is for the party whose property has been attached or a person
appearing on his behalf, to post a counter bond or make the requisite cash deposit in an amount equal
to that fixed by the court in the order of attachment. 7
Apropos, the trial court aptly ruled that while it is true that the word deposit cannot only be confined
or construed to refer to cash, a broader interpretation thereof is not justified in the present case for
the reason that a party seeking a stay of the attachment under Section 5 is required to make a
deposit in an amount equal to the bond fixed by the court in the order of attachment or to the value of
the property to be attached. The proximate relation of the word "deposit" and "amount" is
unmistakable in Section 5 of Rule 57. Plainly, in construing said words, it can be safely concluded that
Section 5 requires the deposit of money as the word "amount" commonly refers to or is regularly
associated with a sum of money.

In Alcazar v. Arante,8 we held that in construing words and phrases used in a statute, the general rule
is that, in the absence of legislative intent to the contrary, they should be given their plain, ordinary
and common usage meaning. The words should be read and considered in their natural, ordinary,
commonly-accepted and most obvious signification, according to good and approved usage and
without resorting to forced or subtle construction. Words are presumed to have been employed by the
lawmaker in their ordinary and common use and acceptation. 9 Thus, petitioners should not give a
special or technical interpretation to a word which is otherwise construed in its ordinary sense by the
law and broaden the signification of the term "deposit" to include that of real properties.
WHEREFORE, premises considered, the instant petit10n is DENIED. The Decision dated March 27,
2012 and Resolution dated September 11, 2012 of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
DIOSDADO
Associate Justice

M.

PERALTA