G.R. No.
L-17797 November 29, 1963 Upon petition of respondent Abaya (Annex L), respondent Judge issued an
ISABELO CARPIO, petitioner,
vs.
HON. HIGINIO MACADAEG, as presiding Judge of Branch X, Court of
First Instance of Manila; OSCAR C. ABAYA, Provincial Sheriff of Rizal
and City Sheriff of Manila, respondents.
MAKALINTAL, J.:
Isabelo Carpio filed this petition for certiorari and prohibition to annul and
stop implementation of respondent Judge's orders of October 24 and
November 25, 1960, directing the sale of five race horses and goods
previously attached upon motion of respondent Oscar Abaya. We issued a
writ of preliminary injunction to restrain the sale, with instructions to
respondent Sheriff of Rizal to allow the daily training of the said horses
and their participation in races whenever they were included in the racing
programs.
On January 17, 1960 respondent Oscar Abaya filed a complaint against
petitioner for the recovery of various sums aggregating P25,000 (Civil
Case No. 42450, C.F.I. Manila). Before summons was served, and upon ex
parte motion of respondent Abaya (Annex B), respondent Judge issued
two orders of attachment dated February 8 (Annex C-1) and February 10,
1960 (Annex C), pursuant to which the Sheriff of Manila garnished goods
consisting of hardware imported by petitioner, and the Sheriff of Rizal
seized petitioner's five racing horses named Mohamad, Mohamad's Pride,
Magic Spell, Nashua and Sirius. On February 12, 1960 petitioner filed an
urgent petition to discharge the orders of attachment (Annex 1). Acting
thereon, respondent Judge, on March 11, 1960, set aside the two orders of
February 8 and 10, 1960 (Annex F).
Upon two motions of respondent Abaya (Annexes H and 1), respondent
Judge, on March 29, 1960, set aside his order of March 11, 1960 (Annex
K). Though no new petition was filed for issuance of a writ of attachment
and no new order or alias writ of attachment was issued, respondent
Sheriff of Manila garnished the aforementioned goods and respondent
Sheriff of Rizal attached the five racing horses.
1
order directing the sale at public auction of the five racing horses (Annex
M). However, the sale was halted by petitioner's putting up a bond of
P4,000 and the horses were released to him by respondent Sheriff of Rizal.
Upon motion of respondent Abaya (Annex R), respondent Judge, on
October 24, 1960, ordered the increase of the bond to P10,000, and
ordered respondent Sheriff of Rizal to proceed with the sale of the horses
should petitioner failed to file the additional bond of P6,000 (Annex S).
Motions filed by petitioner seeking reconsideration of the said order of
October 24 were denied by respondent Judge on November 25, 1960
(Annex X). So, respondent Sheriff of Rizal advertised the sale at public
auction of the five racing horses. Upon motion of respondent Abaya
(Annex T), and despite the opposition of petitioner(Annex U), respondent
Judge, on the same day November 25 issued an order authorizing the
sale of the garnished goods (Annex Z).
Petitioner seeks annulment of the order of October 24, 1960 ordering him
to file an additional bond of P6,000; the order of November 25, 1960
denying his motion for reconsideration of the order of October 24; and the
order of the same date authorizing the sale of the garnished goods, on the
ground that in issuing them respondent Judge acted without jurisdiction
and/or with grave abuse of discretion.
Respondent Judge should not have issued the two writs of preliminary
attachment (Annexes C and C-1) on Abaya's simple allegation that the
petitioner was about to dispose of his property, thereby leaving no security
for the satisfaction of any judgment.1 Mere removal or disposal of
property, by itself, is not ground for issuance of preliminary attachment,
notwithstanding absence of any security for the satisfaction of any
judgment against the defendant. The removal or disposal, to justify
preliminary attachment, must have been made with intent to defraud
defendant's creditors.2
Respondent Judge in fact corrected himself. Acting on petitioner's motion
to discharge attachment and apparently believing the correctness of the
grounds alleged therein,3 he set aside the orders of attachment (Order of
March 11, 1960, Annex F).
But reversing himself again, he set aside his order of March 11, 1960
(Annex K, dated March 29, 1960.4 This he did apparently on Abaya's
contention that petitioner was about to remove or dispose of his property
in order to defraud his creditors, as examples of which disposals he
pointed to the alleged sale of the horses and of petitioner's office furniture
(Abaya's motion for reconsideration dated March 15, 1960, Annex H).
These averments of fraudulent disposals were controverted by petitioner
who, in his opposition to Abaya's motions for reconsideration (Annex J),
reiterated the defenses against preliminary attachment which he had
previously enumerated in his petition to discharge the two orders of
attachment. Thus the question of fraudulent disposal was put in issue; and
respondent Judge, before issuing the preliminary attachment anew, should
have given the parties opportunity to prove their respective claims or, at
the very least, should have provided petitioner with the chance to show
that he had not been disposing of his property in fraud of creditors.5
or to his motion for reconsideration dated March 16, 1960 (Annex I), upon
which the order of attachment (Annex K) was based.
Having construed that the preliminary attachment should not have been
ordered, we believe it is no longer necessary to discuss the subsequent
actuations of respondent Judge which were all based on the erroneous
assumption that his order of March 29, 1960 was valid (Annex K).
WHEREFORE, the order of March 29, 1960 and all succeeding orders of
respondent Judge with respect to said preliminary attachment, are hereby
declared null and void; the attached properties are ordered released; and
the preliminary injunction issued by this Court is made permanent. Costs
against respondent Abaya.

But for much more than the above reason, respondent Judge should not
have again ordered the issuance of the writ of preliminary attachment
since Abaya never made any affidavit as required by Rule 59, Rules of
Court, which states that:

SEC. 3. Order issued only when affidavit and bond filed An
order of attachment shall be granted when it is made to appear by
the affidavit of the plaintiff, or of some other person who
personally knows the facts, that a sufficient cause of action exists,
that the case is one of those mentioned in section 1 hereof, that
there is no other sufficient security for the claim sought to be
enforced by the action, and that the amount due to the plaintiff, or
the value of the property which he is entitled to recover the
possession of, is as much as the sum for which the order is granted
above all legal counterclaims; which affidavit, and the bond
required by the next succeeding section, must be duly filed with
the clerk or judge of the court before the order issues.
SECOND DIVISION
[G.R. No. 76113. November 16, 1990.]
D.P. LUB OIL MARKETING CENTER, INC., Petitioner, v. RAUL
NICOLAS, SOCORRO VALERIE GUTIERREZ, and THE HONORABLE
PONCIANO C. INOPIQUEZ (In his official capacity as the Presiding
Judge of Regional Trial Court of Manila, Branch
XIV), Respondents.
Simeon M. Magdamit for Petitioner.
Artemio IL. Vendivil for Respondents.

For the purposes of issuance of preliminary attachment, the affidavit

(Annex B-1) attached to Abaya's motion therefor (Annex B), as we have SYLLABUS
said, is not sufficient, and it does not appear that he ever executed another
affidavit that complies with the above section. None appears attached
either to his motion for reconsideration dated March 15, 1960 (Annex H) 1. COMMERCIAL LAW; CODE OF COMMERCE; ARTICLES 580 AND
584 THEREOF, EXPRESSLY REPEALED BY SECTION 2 OF PD NO.
214. In resolving the first issue, we affirm the conclusion of
2
the respondent judge that, indeed, Articles 580 and 584 of the
Code of Commerce had been expressly repealed by the
provisions of Presidential Decree (PD) No. 214 thereby rendering
the former abrogated and of no more force and effect. Section 2
of PD No. 214, which is the repealing clause is crystal clear. No
interpretation is necessary. It is plain, as plain as ordinary and
simple words can ever be, that Articles 580 and 584 of the Code
of Commerce were expressly referred to and repealed by Section
2 of PD 214. Ita lex scripta est.
2. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT;
NATURE THEREOF; GRANTED ONLY ON CONCRETE AND SPECIFIC
GROUNDS. The issue as to whether or not the case of Salas v.
Adil is applicable is not important. The respondent judge acted in
accordance with the existing laws and prevailing jurisprudence.
The rules on the issuance of a writ of attachment must be
construed strictly against the applicants. This stringency is
required because the remedy of attachment is harsh,
extraordinary, and summary in nature. If all the requisites for
the granting of the writ are not present, then the court which
issues it acts in excess of its jurisdiction. (Gruenberg v. Court of
Appeals, No. L- 45948, promulgated on September 10, 1985,
138 SCRA 471) The petitioners prayer for a preliminary
attachment hinges on the allegations in paragraph 16 of the
complaint and paragraph 4 of the affidavit of Daniel Pe which
are couched in general terms devoid of particulars of time,
persons, and places to support such a serious assertion that
"defendants are disposing of their properties in fraud of the
creditors." There is thus the necessity of giving to the private
respondents an opportunity to ventilate their side in a hearing,
in accordance with due process, in order to determine the
truthfulness of the allegations. But no hearing was afforded to
the private respondents the writ having been issued ex parte. A
writ of attachment can only be granted on concrete and specific
grounds and not on general averments merely quoting the
words of the rules.
3. ID.; ID.; ID.; NO NEED TO POST A COUNTERBOND IF THE WRIT
WAS IMPROPERLY GRANTED. The respondent judge merely
corrected himself by issuing the questioned orders, thereby
making his actions conform with the applicable laws and his
findings of fact. Since the writ of attachment was improperly
granted, the respondent trial courts orders discharging it were
compelling and justified to rectify the initial error. Hence, there
3
was no need at all inceptively for the private respondents to
post a counterbond. (Miranda v. Court of Appeals, Et Al., G.R. No.
80030, promulgated on October 26, 1989, 6)
DECISION
SARMIENTO, J.:
Assailed in this petition for certiorari under Rule 65 of the
Revised Rules of Court In The Philippines are the respondent trial
courts orders, in Civil Case No. 86-35983, the first, dated August
28, 1986, and the second, September 24, 1986, which denied
the petitioner-plaintiffs motion for reconsideration. The
concluding portion of the August 28, 1986 order
reads:chanrob1es virtual 1aw library
x x x
With the dissolution of the writ of attachment and the
withdrawal of the counterbond, the Court deems it no longer
necessary to discuss the plaintiffs Motion to Revive the Writ of
Attachment.
WHEREFORE, premised upon the findings and observations
above, the first motion is GRANTED dissolving the writ of
attachment and the counterbond withdrawn. The second motion
is denied.
SO ORDERED. 1
The questioned orders stemmed from a complaint lodged by the
petitioner, D.P. Lub Oil Marketing Center, Inc., against private
respondents Raul Nicolas and Socorro Valerie Gutierrez for a sum
of money and damages, docketed as Civil Case No. 86-35983, on
May 23, 1986. 2
The said complaint contained a prayer for the issuance of a writ
of preliminary attachment upon the ground that the claim
resulted from the non-payment of the purchase price of fuel oil
used for the ten vessels of the private respondents-defendants 3
and that pursuant to the provisions of the Code of Commerce,
Article 584 in relation to Article 580 (subpar. 8), the said vessels
may be attached. There was the added averment that the
private respondents were about to dispose of the said vessels in
 fraud of their creditors including the petitioner herein.
A writ of preliminary attachment was issued ex parte by a court
order, 4 dated May 28, 1986, upon the posting of a bond by the
petitioner in the amount of P220,000.00. Armed with the writ,
the Sheriff of Manila on June 18, 1986, boarded the private
respondents fishing vessel, "Star Vangeline," and placed it
under custodia legis.chanrobles law library
The following day, on June 19, 1986, an order 5 was issued by
the respondent judge lifting the attachment upon the posting of
a counterbond in the amount of P220,000.00, upon motion of
the private respondents without waiving or abandoning their
objections to the alleged grounds for the issuance of the writ of
attachment.
Thereafter, the private respondents filed a "Motion to Withdraw
Counter-bond and to Dissolve Writ of Attachment," 6 dated July
3, 1986. Despite opposition from the petitioner, the respondent
Judge issued the first of the disputed orders dated August 28,
1986, 7 which dissolved the writ of attachment and allowed the
private respondents withdrawal of their counterbond. The
petitioners subsequent motion for reconsideration 8 was also
denied in the second assailed order dated September 24, 1986.
9 the credits pending for the payment of materials and work in the
The petitioner submits the following legal issues for resolution
by the Court:chanrob1es virtual 1aw library
a) Has (sic) the provisions of Articles 580 and 584 of the Code of
Commerce being (sic) expressly repealed by the provisions of
Presidential Decree 214 so as to render the same abrogated and
negated already?
b) Is the case of Salas v. Adil (90 SCRA 121) applicable in the
instant case so as to justify the Honorable Respondent Judge in
ordering the withdrawal of the bond?
c) Has the Honorable Respondent Judge committed grave abuse
of discretion tantamount to lack of jurisdiction in issuing the
questioned order? 10
The answer to the first question is affirmative.
4
The second and third issues may be consolidated
thus:chanrob1es virtual 1aw library
WAS THE PETITIONER ENTITLED TO A WRIT OF PRELIMINARY
ATTACHMENT IN THE FIRST PLACE?
The answer to this second question is negative.
In resolving the first issue, we affirm the conclusion of the
respondent judge that, indeed, Articles 580 and 584 of the Code
of Commerce had been expressly repealed by the provisions of
Presidential Decree (PD) No. 214 thereby rendering the former
abrogated and of no more force and effect. The pertinent
provisions are quoted as follows:chanrobles law library
Articles 580(8) and 584 of the Code of Commerce:chanrob1es
virtual 1aw library
ARTICLE 580. In all judicial sales of vessels for the payment of
creditors, the said creditors shall have preference in the order
stated:chanrob1es virtual 1aw library
x x x
8. The part of the price which has not been paid the last vendor,
construction of the vessel, when it has not navigated, and those
arising from the repair and equipment of the vessel and from its
provisioning with victuals and fuel during its last voyage.
In order that the credits provided for in this subdivision may
enjoy the preference they must appear by contracts recorded in
the registry of vessels, or if they were contracted for the vessel
while on a voyage and said vessel has not returned to the port of
her registry, they must be made under the authority required for
such cases and entered in the certificate of registry of the said
vessel.
x x x
ARTICLE 584. The vessels subject to the liability for the credits
mentioned in Article 580 may be attached and judicially sold in
the manner prescribed in Article 579, in the port in which they
are at the instance of any of the creditors; but if they should be
loaded and ready to sail, the attachment cannot take place
except for debts contracted for the preparation and provisioning
of the vessels for the same voyage, and even then the
attachment shall be dissolved if any person interested in her
sailing should give bond for the return of the vessel within the
period fixed in the certificate of navigation, and binding himself
to pay the debt in so far as it may be legal, should the vessel be
delayed in her return even if it were caused by some fortuitous
event. 11
x x x were expressly referred to and repealed by Section 2 of PD 214.
Section 2 of PD No. 214, which is the repealing clause is crystal
clear.
SEC. 2. The provisions of Commonwealth Act Numbered Six
hundred and six, as amended by Republic Act Numbered Nine
hundred and thirteen; the Code of Commerce, particularly
Articles 580 and 584 thereof; and all other Acts, executive
orders and regulations inconsistent herewith are hereby
repealed or modified accordingly. 12 (Emphasis ours.)
x x x present, then the court which issues it acts in excess of its
The petitioner assails the conclusion of the trial court, averring
in its petition:chanrobles virtual lawlibrary
x x x general terms devoid of particulars of time, persons, and places
A mere application on the basic rule of statutory construction
would reveal to us that only those inconsistent with the
provisions of Presidential Decree 214 are repealed or modified
accordingly. We respectfully submit that the intention of
Presidential Decree 214 is not to abrogate or negate Articles 580
and 584 of the Code of Commerce. Otherwise it could have
clearly and categorically stated so. 13
x x x
The petitioner submits that the conflicting provisions can co-
exist together and that it was not the intention of PD 214 to
render nugatory Articles 580 and 584 of the Code of Commerce
5
since they are not inconsistent with the former. It concludes that
the respondent judge had committed grave abuse of discretion
tantamount to lack of jurisdiction in issuing the questioned
orders. 14
The submission is not meritorious. No interpretation is
necessary. It is plain, as plain as ordinary and simple words can
ever be, that Articles 580 and 584 of the Code of Commerce
Ita lex scripta est.
On the second issue, the petitioner advances the argument that
the case of Salas v. Adil is not applicable to the case at bar. 15
The issue as to whether or not Salas is applicable is not
important. The respondent judge acted in accordance with the
existing laws and prevailing jurisprudence. The rules on the
issuance of a writ of attachment must be construed strictly
against the applicants. This stringency is required because the
remedy of attachment is harsh, extraordinary, and summary in
nature. If all the requisites for the granting of the writ are not
jurisdiction. 16
The petitioners prayer for a preliminary attachment hinges on
the allegations in paragraph 16 of the complaint 17 and
paragraph 4 of the affidavit 18 of Daniel Pe which are couched in
to support such a serious assertion that "defendants are
disposing of their properties in fraud of the creditors." There is
thus the necessity of giving to the private respondents an
opportunity to ventilate their side in a hearing, in accordance
with due process, in order to determine the truthfulness of the
allegations. But no hearing was afforded to the private
respondents the writ having been issued ex parte. A writ of
attachment can only be granted on concrete and specific
grounds and not on general averments merely quoting the
words of the rules. 19
The respondent judge merely corrected himself by issuing the
questioned orders, thereby making his actions conform with the
applicable laws and his findings of fact. Since the writ of
attachment was improperly granted, the respondent trial courts
orders discharging it were compelling and justified to rectify the
initial error. Hence, there was no need at all inceptively for the
private respondents to post a counterbond. 20
WHEREFORE, the petition is DISMISSED with costs against the
petitioner.chanrobles.com:cralaw:red
SO ORDERED.
SECOND DIVISION
G.R. No. 74696 November 11, 1987
JOSE D. CALDERON, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE,
GEORGE SCHULZE, JR., ANTONIO C. AMOR, MANUEL A. MOZO,
and VICTOR M. NALUZ, respondents.
G. R. No. 73916 November 11, 1987
FIRST INTEGRATED BONDING AND INSURANCE COMPANY,
INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE,
ANTONIO C. AMOR, MANUEL A. MOZO and VICTOR M.
NALUZ, respondents.
PARAS, J.:
For review on certiorari is respondent appellate Court's decision 1 in AC-
G.R. No. 01420, which affirmed the Regional Trial Court's
decision 2 appealed from holding the plaintiff Jose D. Calderon (petitioner
herein) and his bondsman the Integrated Bonding and Insurance Company,
Inc., jointly and severally liable to pay defendants (private respondents
herein), damages caused by the filing by Calderon of the allegedly
unwarranted suit and the wrongful and malicious attachment of private
respondents' properties.
The facts of the case are briefly as follows:
6
On November 2, 1976, petitioner Calderon purchased from the private
respondents the following: the Luzon Brokerage Corporation (LBC for
brevity) and its five (5) affiliate companies, namely, Luzon Air Freight,
Inc., Luzon Port Terminals Services, Inc., Luzon (GS) Warehousing
Corporation, GS Industrial Management Corporation, and GS Luzon
Trucking Corporation. Twenty one (21) days thereafter or on November
23, 1976, the Bureau of Customs suspended the operations of LBC for
failure to pay the amount of P1,475,840.00 representing customs taxes and
duties incurred prior to the execution of the sale. In order to lift the
suspension Calderon paid the sum of P606,430.00 to the Bureau of
Customs.
On October 27, 1977, Calderon filed a complaint against private
respondents to recover said amount of P1,475,840.00, with damages by
reason of breach of warranty. In the same complaint, the petitioner prayed
for a preliminary attachment, alleging: that private respondents had
deliberately and willfully concealed from his knowledge such staggering
liability of the LBC for the purpose of misleading him into buying the six
aforesaid companies; and that private respondent Schulze is about to
depart from the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, the petitioner posted a
surety bond of P1,475,840.00. On October 28, 1977, the trial court issued
a writ of preliminary attachment, whereupon properties of the private
respondents were attached and their bank deposits were garnished.
On November 10, 1977, petitioner Calderon filed an amended complaint,
alleging that while the liabilities of LBC are reflected in its books, the
aforesaid amount was fraudulently withdrawn and misappropriated by
private respondent Schulze. (pp. 7-18, Rollo)
On the other hand, private respondents claimed: that the amount of
P1,475,840.00 due to the Bureau of Customs represents the duties and
taxes payable out of the advanced payments made by LBC's client,
Philippine Refining Company (PRC, for brevity) in August, September
and October, 1976, and in the first and second weeks of November 1976,
after Calderon himself had taken control of the management of LBC
(Exhibit A); that these deposit payments were properly recorded in the
books of the corporation and existing as part of the corporate funds; that
from the first week of June, 1976 up to October 30, 1976, private
respondent Schulze fully disclose and explained to Calderon that these An other dispositions in the judgment appealed from, including the
customer's advanced deposit payments (including those of the PRC) are to dismissal of the amended complainant are hereby affirmed in toto. SO
be paid to the Bureau of Customs when their corresponding customs taxes ORDERED.
and duties become due; that during this phase of the negotiation, Calderon
and his representatives inspected and studied the corporate books and In his petition, petitioner Calderon asserts, among other things, that the
records at will and learned the daily operations and management of LBC; court below erred:
that the petitioner did not pay out of his own pocket but out of the LBC
funds the said amount of P606,430,30 demanded by the Bureau of I
Customs, as evidenced by a manager's check No. FEBTC 25092 (Exhibits IN HOLDING THAT THE PETITIONER FAILED TO
9, 10, 11 & 38) and another facility negotiated with the Insular Bank of ESTABLISH HIS CLAIMS.
Asia and America (Exhibit K-2); and that private respondents are setting II
up a counterclaim for actual, moral and exemplary damages as well as IN HOLDING THAT THE PRELIMINARY
attorney's fees, as a consequence of the filing of the baseless suit and the ATTACHMENT HAD BEEN WRONGFULLY AND
wrongful and malicious attachment of their properties, (pp. 217-221, MALICIOUSLY SUED OUT.
Rollo) III
IN HOLDING THAT THE PETITIONER IS LIABLE
On November 17, 1977, private respondents filed a counterbond, NOT ONLY FOR ACTUAL DAMAGES BUT MORAL
whereupon the trial court issued an order directing the sheriff to return all AND EX-EXEMPLARY DAMAGES AS WELL.
real and personal properties already levied upon and to lift the notices of
garnishment issued in connection with the said attachment (Annex B, p. On the other hand, petitioner Insurance Company raises the following
42, Rollo). issues:
I
After trial, the trial court dismissed the complaint, holding Calderon and WHETHER OR NOT THE PETITIONER SURETY IS
his surety First integrated Bonding and Insurance Co., Inc., jointly and LIABLE FOR DAMAGES ON ITS CONTRACTED
severally liable to pay the damages prayed for by the private respondents. SURETYSHIP NOTWITHSTANDING THE
DISSOLUTION OF THE WRIT OF PRELIMINARY
Said decision was affirmed on appeal, although slightly modified in the ATTACHMENT, AS A CON. SEQUENCE OF THE
sense that the award of moral and exemplary damages in favor of private FILING OF THE DEFENDANT'S COUNTER- BOND,
respondents Schulze and Amor was reduced. The dispositive portion of the WHEREBY LEVIED PROPERTIES WERE ORDERED
judgment of affirmance and modification reads: BY THE COURT RETURNED TO PRIVATE
RESPONDENTS AND THE NOTICES OF
WHEREFORE, the judgment of the lower court is modified as follows: GARNISHMENT ISSUED IN CONNECTION
THEREWITH ORDERED LIFTED.
To defendant-appellee George Schulze: II
P650,000.00 as moral damages and WHETHER OR NOT THE SUBSEQUENT FILING BY
P200,000.00 as exemplary damages. PRIVATE RESPONDENTS OF A COUNTER-BOND TO
DISCHARGE THE WRIT OF PRELIMINARY
To defendant-appellee Antonio C. Amor: ATTACHMENT CONSTITUTE A WAIVER ON ANY
P150,000.00 as moral damages and DEFECT IN THE ISSUANCE OF THE ATTACHMENT
P30,000.00 as exemplary damages, WRIT.

7
 III
WHETHER OR NOT A SURETY IS A GUARANTOR OF
THE EXISTENCE OF A GOOD CAUSE OF ACTION IN
THE COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an
outstanding liability of LBC or was misappropriated by private respondent
Schulze is purely a factual issue. That Calderon was clearly in bad faith
when he asked for the attachment is indicated by the fact that he failed to
appear in court to support his charge of misappropriation by Schulze, and
in effect, preventing his being cross-examined, no document on the
charges was presented by him.
What the Appellate Court found in this regard need not be further
elaborated upon. The Appellate Court ruled:
... The record shows that appellant Calderon failed to produce any
evidence in support of his sworn charge that appellee Schulze had
deliberately and willfully concealed the liabilities of Luzon Brokerage
Corporation. Neither did appellant Calderon prove his sworn charges
that appellee Schulze had maliciously and fraudulently withdrawn
and misappropriated the amount of Pl,475,840.00 and that an the
defendants had maliciously and fraudulently concealed and withheld
from him this alleged liability of Luzon Brokerage Corporation in
breach of the contract-warranty that said corporation had no
obligations or liabilities except those appearing in the books and
records of the said corporation. Indeed, appellant Calderon never
appeared in the trial court to substantiate the charges in his verified
complaints and in his affidavit to support his petition for the issuance
of a writ of attachment. He distanced himself from the appellees and
avoided cross-examination regarding his sworn allegations. ...
... But even though appellant Calderon failed to prove his serious
charges of fraud, malice and bad faith, the appellees took it upon
themselves to show that they did not conceal or withhold from
appellant's knowledge the deposits made by Philippine Refining Co.,
Inc. with Luzon Brokerage Corporation and that they did not
8
withdraw and misappropriate the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage Corporation.
The books and records of Luzon Brokerage Corporation on which the
Financial Statement of Luzon Brokerage Corporation, as of October
31, 1976 was prepared by the auditing firm retained by appellant
Calderon himself (Exhibit 1), disclose that the liabilities of Luzon
Brokerage Corporation in the total amount of P4,574,498.32 appear
under the heading 'Customers Deposit' (Exhibit 1-A) this amount
includes the deposit of Philippine Refining Co., Inc. in the sum of
Pl,475,840.00.
But appellant Calderon contends that this financial statement was
dated February 4, 1977 (see Exhibit 1-C). There is nothing
commendable in this argument because the bases of the financial
statement were the books, records and documents of Luzon
Brokerage Corporation for the period ending October 31, 1976, which
were all turned over to and examined by appellant Calderon and his
executive, legal and financial staffs. There is also no merit in the
contention of appellant Calderon that the appellees have tampered the
books of Luzon Brokerage Corporation because there is no proof to
back this charge, let alone the fact that appellant Calderon did not
even present the said books to support his charge.
As stated above, the amount of customers' deposits in the sum of
P4,574,498.32 includes the deposits of Philippine Refining Co., Inc.
(Exhibits 46-A, 46-B, 46-C, 46-D, 46-E, 46-F, 46-G, 46-H, 46-1, 46-
J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The amounts deposited by
Philippine Refining Co., Inc. on various dates with Luzon Brokerage
Corporation made before the execution of the sale were all entered in
three other corporate books of Luzon Brokerage Corporation namely,
the Cash Receipts Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B
to 39-K-1-B), the Journal Vouchers (Exhibits 42 to 46 and 42-A to 43-
A), and the Customer's Deposit Ledger (Exhibit 46-A to 46-J) ... .
Thus, the claim of appellant Calderon that the deposits made by
Philippine Refining Co., Inc. with Luzon Brokerage Corporation of
P406,430.00 on August 24, 1976 (Exhibit N P53,640.00 on October
13, 1976 (Exhibit 0), P406,430.00 on September 8, 1976 (Exhibit P
P199,508.00 on September 24, 1976 (Exhibit Q P52,738.00 on
 October 22, 1976 (Exhibit R and P264,436.00 on October 7, 1976
(Exhibit S) were not entered in the books of Luzon Brokerage
Corporation, is completely without merit. ... (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously sued
out and that as already pointed out Schulze was not in bad faith.
While as a general rule, the liability on the attachment bond is limited to
actual damages, moral and exemplary damages may be recovered where
the attachment was alleged to be maliciously sued out and established to
be so. (Lazatin vs. Twano et al,
L-12736, July 31, 1961).
In the instant case, the issues of wrongful and malicious suing out of the
writ of preliminary attachment were joined not only in private
respondents' motion to discharge the attachment but also in their answer to
the amended complaint (p. 38, Rollo). The trial court observed that the
books and records of Luzon Brokerage Corporation disclose that the
liabilities of the said corporation in the total amount of P4,574,498.32
appear under the heading "Customs Deposit" (Exhibit 1-A) and this
amount includes the deposit of Philippine Refining Co., Inc. in the sum of
P1,475,840.00 (p. 26, Rollo). On the other hand, plaintiff never appeared
in court, and failed to produce any evidence to substantiate his charges (p.
26, Rollo).
Well settled is the rule that the factual findings of the trial court are
entitled to great weight and respect on appeal, especially when established
by unrebutted testimonial and documentary evidence, as in this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the dissolution of the
attachment extinguishes its obligation under the bond, for the basis of its
liability, which is wrongful attachment, no longer exists, the attachment
bond having been rendered void and ineffective, by virtue of Section 12,
Rule 57 of the Rules of Court. (p. 5, Petition)
While Section 12, Rule 57 of the Rules of Court provides that upon the
filing of a counterbond, the attachment is discharged or dissolved,
9
nowhere is it provided that the attachment bond is rendered void and
ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the
Rules of Court, as follows:
Sec. 4. Condition of applicant's bond. The party applying for the order
must give a bond executed to the adverse party in an amount to be
fixed by the judge, not exceeding the applicant's claim, conditioned
that the latter will pay all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not
entitled thereto.
It is clear from the above provision that the responsibility of the surety
arises "if the court shall finally adjudge that the plaintiff was not entitled
thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we held that the
liability attaches if the plaintiff is not entitled to the attachment because
the requirements entitling him to the writ are wanting, or if the plaintiff
has no right to the attachment because the facts stated in his affidavit, or
some of them, are untrue. It is, therefore, evident that upon the dismissal
of an attachment wrongfully issued, the surety is liable for damages as a
direct result of said attachment.
Equally untenable is the Surety's contention that by filing a counterbond,
private respondents waived any defect or flaw in the issuance of the
attachment writ, for they could have sought, without need of filing any
counterbond, the discharge of the attachment if the same was improperly
or irregularly issued, as provided in Section 13, Rule 57 of the Rules of
Court.
Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that the
order of attachment was improperly or irregularly issued, the liability of
the surety on the attachment bond subsists because the final reckoning is
when "the Court shall finally adjudge that the attaching creditor was not
entitled" to the issuance of the attachment writ in the first place.
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. Moreover, the filing
of a counterbond is a speedier way of discharging the attachment writ
maliciously sought out by the attaching creditor instead of the other way,
which, in most instances like in the present case, would require
presentation of evidence in a full-blown trial on the merits and cannot
easily be settled in a pending incident of the case.
We believe, however, that in the light of the factual situation in this case,
the damages awarded by the Intermediate Appellate Court are rather
excessive. They must be reduced.
WHEREFORE, the judgment of said Appellate Court is
hereby modified as follows: Both petitioner Calderon and petitioner First
Integrated Bonding and Insurance Company, Inc. are hereby ordered to
give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and
P50,000.00 as exemplary damages; and
2. Respondent Antonio C. Amor, P50,000.00 as moral damages and
P10,000.00 as exemplary damages.
The rest of the judgment of the Intermediate Appellate Court is hereby
AFFIRMED. SO ORDERED.
SECOND DIVISION
G.R. No. 83897 November 9, 1990
ESTEBAN B. UY JR. and NILO S. CABANG, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, WILSON TING, and YU
HON. respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to reverse the
decision ** which dismissed CA-G.R. No. SP-05659 for certiorariand
Prohibition with Preliminary Injunction and/or Restraining Order filed by
petitioner seeking to annul and set aside the two Orders dated August 24,
10
1982 and October 10, 1983 issued by the then Court of First Instance of
Rizal Branch LII *** (now Regional Trial Court of Quezon City Branch
XCLVll ****) in Civil Case No. Q-35128, granting a writ of preliminary
attachment and directing the sheriff assigned therein to attach the
properties of defendants Uy and Cabang (herein petitioners); and denying
defendants' motion to dismiss.
The antecedent facts of the case as found by the Court of Appeals are as
follows:
On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed a
complaint against Sy Yuk Tat for sum of money, damages, with
preliminary attachment, docketed as Civil Case No. Q-34782 ("the
first case" for short) in the then Court of First Instance of Rizal,
Branch LII, Quezon City (the case was later assigned to the Regional
Trial Court of Quezon City, Branch XCVII now presided over by
respondent Judge). On the same day, upon plaintiff filing a bond of
P232,780.00 said court issued a writ of preliminary attachment and
appointed Deputy Sheriff Nilo S. Cabang (co-petitioner herein) as
Special Sheriff to implement the writ. On April 6, 1982, the same
court issued a break-open order upon motion filed by petitioner Uy.
On the following day, April 7, 1982, petitioner Cabang
began to implement the writ of preliminary attachment as
the Special Sheriff on the case.
On April 19, 1982, petitioner Cabang filed a Partial Sheriffs Return,
stating, inter alia:
xxx xxx xxx
That in the afternoon of April 12, 1982, the undersigned together with
Atty. Lupino Lazaro, plaintiff's counsel and the members of the same
team proceeded to No. 65 Speaker Perez St., Quezon City, and
effected a physical and actual count of the items and merchandise
pointed to by the Ting family as having been taken from the Mansion
Emporium and nearby bodega which are as follows:
a) 329 boxes of "GE" Flat Iron, each box containing 6 pcs.
each;
b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;
 c) 239 boxes of floor polishers marked "Sanyo"
d) 54 boxes of floor polishers marked "Ronson"
xxx xxx xxx
On April 12, 1982, a third party claim was filed by Wilson Ting and Yu
Hon (private respondents herein) in the same Civil Case No. Q-34782,
addressed to petitioner Cabang asserting ownership over the properties
attached at No. 65 Speaker Perez St., Quezon City (other than those
attached at No. 296 Palanca St., Manila). The third party claim
specifically enumerated the properties, as reflected in the Partial
Sheriffs Return dated April 1 3, 1 982, belonging to the plaintiffs
(private respondents herein).
On the same day that petitioner Cabang filed his Partial Sheriffs
Return (April 19, 1982) the third party claimants and Yu filed a motion
to dissolve the aforementioned writ of preliminary attachment in the
same Civil Case No. Q-34782; alleging among others, that being the
absolute owners of the personal properties listed in their third party
claim which were illegally seized from them they were willing to file a
counterbond for the return thereof; which motion was opposed by
plaintiff Uy.
On April 29, 1982, then CFI Judge Jose P. Castro rendered judgment
by default in said Civil Case No. Q-34782 in favor of plaintiff Uy.
Meanwhile, on May 5, 1982, third party claimants Wilson Ting and Yu
Hon filed a complaint for Damages with application for preliminary
injunction against Esteban Uy and Nilo Cabang (co-petitioners herein)
in the then Court of First Instance of Rizal, Branch 52, Quezon City
('the court a quo' for short) which case was docketed as Civil Case No.
Q-35128 ('the second case' for short). The complaint alleged inter
alia that the plaintiffs are the owners of the personal properties
reflected in the Partial Sheriffs Return dated April 13, 1983 which
have been attached and seized by defendant Cabang. In this second
civil case, the court a quo (then presided over by CFI Judge
Concepcion B. Buencamino) issued an order on May 5, 1982, stating
among other things, the following:
11
Considering that it will take time before this Court could act upon
said prayers for the issuance of a Writ of Preliminary Injunction,
the parties are hereby ordered to maintain the STATUS QUO in
this case with respect to the properties attached and subject of this
action alleged to belong to the plaintiffs" (Rollo, p. 133)
Meanwhile, in the first case, where a judgment by default had
been rendered, the first court issued an order striking off from the
records all pleadings filed by the third party claimants.
With respect to the case in the court a quo, defendants Uy and
Cabang filed their answer with counterclaim.
Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an
ex-parte motion for writ of execution which was granted the
following day, June 8, 1982.
On the same day (June 7, 1982) that plaintiff Uy filed his exparte
motion for writ of execution he and Cabang filed a motion to
quash or dissolve status quo order in the case a quo as defendants
therein on the ground that the court "has no jurisdiction to
interfere with properties under custodia legis on orders of a court
of co-equal and co-ordinate jurisdiction" and that plaintiffs'
complaint is not for recovery of properties in question.
On June 24, 1982, plaintiff Uy in the first case filed his ex
parte motion to authorize Sheriff to sell the attached properties
enumerated in Sheriff Cabang's partial return filed on April 19,
1982, on the ground that the properties under custodia legis were
perishable especially those taken from No. 65 Speaker Perez,
Quezon City.
Subsequently, on July 2, 1982, in the case a quo the court denied
defendants', Uy and Cabang, motion to quash or dissolve the
status quo order.
Meanwhile, the first case on July 12, 1982, Cabang filed another
partial sheriffs return this time stating among others that the
judgment in that case had been partially satisfied, and that in the
public auction sale held on July 6, 1982, certain personal
 properties had been sold to plaintiff Esteban Uy, Jr., the winning
bidder for P15,000.00 while the other properties were sold in the
amount of P200,000.00 in cash with Bernabe Ortiz of No. 97
Industrial Avenue, Northern Hill, Malabon Manila as the highest
bidder.
Back to the case a quo, on August 23, 1982, plaintiffs Ting and Yu
Hon filed a motion for preliminary attachment alleging this
ground: "In the case at bar, which, is one 'to recover possession of
personal properties unjustly detained, ... the property... has been ...
removed ... (and) disposed of to prevent its being found or taken
by the applicant or an officer" and/or said defendants are guilty of
fraud in disposing of the property for the taking, (or) detention ...
of which the action is brought (Sec. 1(c) and (d), Rule 57, Rules
of Court)
Acting on such motion the court a quo, on August 24, 1 982,
issued the disputed order granting the writ of preliminary
attachment prayed for by the plaintiffs (Wilson Ting and Yu Hon),
stating that:
Let a writ of preliminary attachment issue upon the plaintiffs
putting up a bond in the amount of P1,430,070.00, which shall be
furnished to each of the defendants with copies of the verified
application therewith, and the sheriff assigned to this court,
Danilo Del Mundo, shall forthwith attach such properties of the
defendants not exempt from execution, sufficient to satisfy the
applicants' demand. (Rollo, p. 247)
On August 31, 1982, in the same case a quo, defendant Uy filed
an urgent motion to quash and/or dissolve preliminary attachment
which motion was opposed by plaintiffs Ting and Yu Hon.
About half a year later, on February 21, 1982, in the case a quo,
defendant Uy filed a motion for preliminary hearing on
affirmative defenses as motion to dismiss. Following an exchange
of subsequent papers between the parties, the court a quo issued
the other disputed order which denied defendant Uy's motion to
dismiss on October 10, 1983. The motion to quash was also
denied by the court a quo on December 9, 1983. Defendant Uy
12
filed a motion for reconsideration on both Orders. Finally, on
February 15, 1985, respondent Judge issued two Orders denying
both motions for reconsideration. (CA decision, Rollo, p. 109-
122)
Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the
Court of Appeals a petition for Certiorari and Prohibition with prayer for a
Writ of Preliminary Injunction or a Restraining Order to annul and set
aside the two orders issued by the then CFI of Rizal Branch 52.
In its decision, the Court of Appeals dismissed the petition, the dispositive
portion of which reads:
WHEREFORE, finding respondent Judge not to have committed a
grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the order dated August 24, 1982, denying
petitioners' motion to quash the writ of preliminary attachment,
and the order dated October 10, 1983, denying petitioners' motion
to dismiss the complaint a quo, we hereby deny the instant
petition, and therefore dismiss the same. No pronouncement as to
cost. (Rollo, pp. 132-133)
Hence, the instant petition.
In the resolution of October 16, 1989, the Court gave due course to the
petition and required both parties to submit simultaneous memoranda
within thirty days from notice (Rollo, p. 190). Private respondents filed
their memorandum on December 6, 1989 (Ibid., p. 192) while petitioners
filed their memorandum on January 5, 1990 (Ibid., p. 208)
The main issue in this case is whether or not properties levied and seized
by virtue of a writ of attachment and later by a writ of execution, were
under custodia legis and therefore not subject to the jurisdiction of another
co-equal court where a third party claimant claimed ownership of the same
properties.
The issue has long been laid to rest in the case of Manila Herald
Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951]) where the Court filed
that while it is true that property in custody of the law may not be
interfered with, without the permission of the proper court, this rule is
confined to cases where the property belongs to the defendant or one in
which the defendant has proprietary interests. But when the Sheriff, acting
beyond the bounds of his office seizes a stranger's property, the rule does
not apply and interference with his custody is not interference with
another court's order of attachment.
Under the circumstances, this Court categorically stated:
It has been seen that a separate action by the third party who claims to
be the owner of the property attached is appropriate. If this is so, it
must be admitted that the judge trying such action may render
judgment ordering the sheriff or whoever has in possession of the
attached property to deliver it to the plaintiff claimant or desist from
seizing it. It follows further that the court may make an interlocutory
order, upon the filing of such bond as may be necessary, to release the
property pending final adjudication of the title. Jurisdiction over an
action includes jurisdiction on interlocutory matter incidental to the
cause and deemed necessary to preserve the subject matter of the suit
or protect the parties' interests. This is self-evident. (Manila Herald
Publishing Co. Inc. v. Ramos,supra).
The foregoing ruling was reiterated in the later case of Traders Royal Bank
v. IAC (133 SCRA 141 [1984]) and even more recently in the case of
Escovilla v. C.A. G.R. No. 84497, November 6, 1989, where this Court
stressed:
The power of the court in the execution of judgments
extends only over properties unquestionably belonging to the
judgment debtor. The levy by the sheriff of a property by virtue of a
writ of attachment may be considered as made under the authority of
the court only when the property levied upon belongs to the
defendant. If he attaches properties other than those of the defendant,
he acts beyond the limits of this authority. The court issuing a writ of
execution is supposed to enforce its authority only over properties of
the judgment debtor. Should a third party appear to claim the property
levied upon by the sheriff, the procedure laid down by the Rules is
that such claim should be the subject of a separate and independent
action.
13
Neither can petitioner complain that they were denied their day in court
when the Regional Trial Court issued a writ of preliminary attachment
without hearing as it is well settled that its issuance may be made by the
court ex parte. As clearly explained by this Court, no grave abuse of
discretion can be ascribed to respondent Judge in the issuance of a writ of
attachment without notice to petitioners as there is nothing in the Rules of
Court which makes notice and hearing indispensable and mandatory
requisites in its issuance. (Filinvest Credit Corp. v. Relova, 117 SCRA 420
[1982]; Belisle Investment & Finance Co. Inc. v. State Investment House,
Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988]).
In addition, petitioner's motion to quash or discharge the questioned
attachment in the court a quo is in effect a motion for reconsideration
which cured any defect of absence of notice. (Dormitorio v. Fernandez, 72
SCRA 388 [1976]).
Estoppel is likewise unavailing in the case at bar by the mere fact that
private respondent Ting (complainant in the court a quo) pointed the items
and merchandise taken from the Mansion House and nearby Bodega
which were levied and hauled by Special Sheriff Cabang, where in the
report of said Sheriff made earlier on April 6, 1982, he stated that on the
same occasion referred to in his Partial Return, private respondents denied
Sy Yuk Tat's ownership over the goods in question. (Rollo, pp. 203-204).
In like manner, the sale of the disputed properties at the public auction, in
satisfaction of a judgment of a co-equal court does not render the case
moot and academic. The undeviating ruling of this Court in such cases is
that attachment and sale of properties belonging to a third person is void
because such properties cannot be attached and sold at public auction for
the purpose of enforcing a judgment against the judgment debtor. (Orosco
v. Nepomuceno, 57 Phil. 1007 [1932-33]).
The other issues in this case deserve scant consideration.
On the issue of the expiration of the restraining order, there is no argument
that the life span of the status quoorder automatically expires on the 20th
day and no judicial declaration to that effect is necessary (Paras v. Roura,
163 SCRA 1 [1988]). But such fact is of no consequence in so far as the
propriety of the questioned attachment is concerned. As found by the
Court of Appeals, the grounds invoked by respondents for said attachment
did not depend at all upon the continuing efficacy of the restraining order.
As to petitioner's contention that the complaint filed by private respondent
in the lower court is merely seeking an ancillary remedy of injunction
which is not a cause of action itself, the Court of Appeals correctly
observed that the object of private respondents' complaint is injunction
although the ancillary remedy of preliminary injunction was also prayed
for during the pendency of the proceeding.
Finally, the non-joinder of the husband of private respondent, Yu Hon as
well as her failure to verify the complaint does not warrant dismissal of
the complaint for they are mere formal requirements which could be
immediately cured without prejudice to the rights of the petitioners. This
Court frowns on the resort to technicalities to defeat substantial justice.
Thus, the Court states that the rules of procedure are intended to promote
not to defeat substantial justice, and therefore, they should not be applied
in a very rigid and technical sense. (Angel v. Inopiquez, G.R. 66712,
January 13, 1989). Again on another occasion where an appeal should
have been dismissed for non-compliance with the Rules, the Court relaxed
the rigid interpretation of the Rules holding that a straight-jacket
application will do more injustice. (Pan-Am Airways v. Espiritu, 69 SCRA
45 [1976]).
PREMISES CONSIDERED, the petition is hereby DENIED and the
assailed decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
THIRD DIVISION
G.R. No. 102448 August 5, 1992
14
RICARDO CUARTERO, petitioner,
vs.
COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA
EVANGELISTA, respondents.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari seeking to annul the decision of
the Court of Appeals promulgated on June 27, 1991 as well as the
subsequent resolution dated October 22, 1991 denying the motion for
reconsideration in CA-G.R. SP No. 23199 entitled "Spouses Roberto and
Felicia Evangelista v. Honorable Cezar C. Peralejo, Presiding Judge
Regional Trial Court of Quezon City, Branch 98, and Ricardo Cuartero,"
which nullified the orders of the trial court dated August 24, 1990 and
October 4, 1990 and cancelled the writ of preliminary attachment issued
on September 19, 1990.
Following are the series of events giving rise to the present controversy.
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before
the Regional Trial Court of Quezon City against the private respondents,
Evangelista spouses, for a sum of money plus damages with a prayer for
the issuance of a writ of preliminary attachment. The complaint was
docketed as Civil Case No. Q-90-6471.
On August 24, 1990, the lower court issued an order granting ex-parte the
petitioner's prayer for the issuance of a writ of preliminary attachment.
On September 19, 1990, the writ of preliminary attachment was issued
pursuant to the trial court's order dated August 24, 1990. On the same day,
the summons for the spouses Evangelista was likewise prepared.
The following day, that is, on September 20, 1990, a copy of the writ of
preliminary attachment, the order dated August 24, 1990, the summons
and the complaint were all simultaneously served upon the private
respondents at their residence. Immediately thereafter, Deputy Sheriff
Ernesto L. Sula levied, attached and pulled out the properties in
compliance with the court's directive to attach all the properties of private
respondents not exempt from execution, or so much thereof as may be
sufficient to satisfy the petitioner's principal claim in the amount of
P2,171,794.91.
Subsequently, the spouses Evangelista filed motion to set aside the order
dated August 24, 1990 and discharge the writ of preliminary attachment
for having been irregularly and improperly issued. On October 4, 1990,
the lower court denied the motion for lack of merit.
Private respondents, then, filed a special civil action for certiorari with the
Court of Appeals questioning the orders of the lower court dated August
24, 1990 and October 4, 1990 with a prayer for a restraining order or writ
of preliminary injunction to enjoin the judge from taking further
proceedings below.
In a Resolution dated October 31, 1990, the Court of Appeals resolved not
to grant the prayer for restraining order or writ of preliminary injunction,
there being no clear showing that the spouses Evangelista were entitled
thereto.
On June 27, 1991, the Court of Appeals granted the petition
for certiorari and rendered the questioned decision. The motion for
reconsideration filed by herein petitioner Cuartero was denied for lack of
merit in a resolution dated October 22, 1991. Hence, the present recourse
to this Court.
The petitioner raises the following assignment of errors
I contracting the debt or incurring the obligation upon which the action is
THE COURT OF APPEALS ERRED AND COMMITTED A GRAVE
ABUSE OF DISCRETION, AMOUNTING TO LACK OF
JURISDICTION WHEN IT HELD THAT THE REGIONAL TRIAL
COURT DID NOT ACQUIRE JURISDICTION OVER RESPONDENT
SPOUSES.
II
THE COURT OF APPEALS ERRED AND ACTED WITH
GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE
REGIONAL TRIAL COURT COULD NOT VALIDLY ISSUE THE
SUBJECT WRIT OF PRELIMINARY ATTACHMENT WHICH IS
AN ANCILLARY REMEDY. (Rollo, p. 13)
15
The Court of Appeals' decision is grounded on its finding that the trial
court did not acquire any jurisdiction over the person of the defendants
(private respondents herein). It declared that:
. . . the want of jurisdiction of the trial court to proceed in the main
case as well as the ancillary remedy of attachment is quite clear. It is
not disputed that neither service of summons with a copy of the
complaint nor voluntary appearance of petitioners was had in this
case before the trial court issued the assailed order dated August 24,
1990, as well as the writ of preliminary attachment dated September
19, 1990. This is reversible error and must be corrected on certiorari.
(Rollo, p. 24)
The appellate tribunal relied on the case of Sievert v. Court of Appeals,
168 SCRA 692 (1988) in arriving at the foregoing conclusion. It stated
that:
Valid service of summons and a copy of the complaint vest jurisdiction
in the court over the defendant both for the purpose of the main case
and for purposes of the ancillary remedy of attachment and a court
which has not acquired jurisdiction over the person of defendant,
cannot bind the defendant whether in the main case or in any ancillary
proceeding such as attachment proceedings (Sievert v. Court of
Appeals, 168 SCRA 692). (Rollo, p. 24)
The private respondents, in their comment, adopted and reiterated the
aforementioned ruling of the Court of Appeals. They added that aside from
the want of jurisdiction, no proper ground also existed for the issuance of
the writ of preliminary attachment. They stress that the fraud in
brought which comprises a ground for attachment must have already been
intended at the inception of the contract. According to them, there was no
intent to defraud the petitioner when the postdated checks were issued
inasmuch as the latter was aware that the same were not yet funded and
that they were issued only for purposes of creating an evidence to prove a
pre-existing obligation.
Another point which the private respondents raised in their comment is the
alleged violation of their constitutionally guaranteed right to due process
when the writ was issued without notice and hearing.
In the later case of Davao Light and Power Co., Inc. v. Court of Appeals,
G.R. No. 93262, November 29, 1991, we had occasion to deal with certain
misconceptions which may have arisen from our Sievert ruling. The
question which was resolved in the Davao Light case is whether or not a
writ of preliminary attachment may issue ex-parteagainst a defendant
before the court acquires jurisdiction over the latter's person by service of
summons or his voluntary submission to the court's authority. The Court
answered in the affirmative. This should have clarified the matter but
apparently another ruling is necessary.
A writ of preliminary attachment is defined as a provisional remedy issued
upon order of the court where an action is pending to be levied upon the
property or properties of the defendant therein, the same to be held
thereafter by the sheriff as security for the satisfaction of whatever
judgment might be secured in said action by the attaching creditor against
the defendant (Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v.
Aquino, 53 SCRA 30-31 [1973]).
Under section 3, Rule 57 of the Rules of Court, the only requisites for the
issuance of the writ are the affidavit and bond of the applicant. As has
been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190 SCRA
262 (1990), citing Mindanao Savings and Loan Association, Inc. v. Court
of Appeals, 172 SCRA 480 (1989), no notice to the adverse party or
hearing of the application is required inasmuch as the time which the
hearing will take could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues. In such a case, a
hearing would render nugatory the purpose of this provisional remedy. The
ruling remains good law. There is, thus, no merit in the private
respondents' claim of violation of their constitutionally guaranteed right to
due process.
The writ of preliminary attachment can be applied for and granted at the
commencement of the action or at any time thereafter (Section 1, Rule 57,
Rules of Court). In Davao Light and Power, Co., Inc. v. Court of Appeals,
supra, the phrase "at the commencement of the action" is interpreted as
referring to the date of the filing of the complaint which is a time before
summons is served on the defendant or even before summons issues. The
Court added that
. . . after an action is properly commenced by filing of the
complaint and the payment of all requisite docket and other fees
the plaintiff may apply and obtain a writ of preliminary attachment
16
upon the fulfillment of the pertinent requisites laid down by law, and
that he may do so at any time, either before or after service of
summons on the defendant. And this, indeed, has been the
immemorial practice sanctioned by the courts: for the plaintiff or
other proper party to incorporate the application for attachment in
the complaint or other appropriate pleading (counter-claim, cross-
claim, third-party-claim) and for the Trial Court to issue the writ ex-
parte at the commencement of the action if it finds the application
otherwise sufficient in form and substance.
The Court also pointed out that:
. . . It is incorrect to theorize that after an action or proceeding has
been commenced and jurisdiction over the person of the plaintiff has
been vested in the Court, but before acquisition of jurisdiction over
the person of the defendant (either by service of summons or his
voluntary submission to the Court's authority), nothing can be
validly done by the plaintiff or the Court. It is wrong to assume that
the validity of acts done during the period should be dependent on,
or held in suspension until, the actual obtention of jurisdiction over
the defendants person. The obtention by the court of jurisdiction over
the person of the defendant is one thing; quite another is the
acquisition of jurisdiction over the person of the plaintiff or over the
subject matter or nature of the action, or the res or object thereof.
It is clear from our pronouncements that a writ of preliminary attachment
may issue even before summons is served upon the defendant. However,
we have likewise ruled that the writ cannot bind and affect the defendant.
However, we have likewise ruled that the writ cannot bind and affect the
defendant until jurisdiction over his person is eventually obtained.
Therefore, it is required that when the proper officer commences
implementation of the writ of attachment, service of summons should be
simultaneously made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues the
order granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is implemented.
For the initial two stages, it is not necessary that jurisdiction over the
person of the defendant should first be obtained. However, once the
implementation commences, it is required that the court must have
acquired jurisdiction over the defendant for without such jurisdiction, the
court has no power and authority to act in any manner against the
defendant. Any order issuing from the Court will not bind the defendant.
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its
questioned decision, the writ of attachment issued ex-parte was struck
down because when the writ of attachment was being implemented, no
jurisdiction over the person of the defendant had as yet been obtained. The
court had failed to serve the summons to the defendant.
The circumstances in Sievert are different from those in the case at bar.
When the writ of attachment was served on the spouses Evangelista, the
summons and copy of the complaint were also simultaneously served.
Moreover, an attachment may not be dissolved by a showing of its
irregular or improper issuance if it is upon a ground which is at the same
time the applicant's cause of action in the main case since an anomalous
situation would result if the issues of the main case would be ventilated
and resolved in a mere hearing of a motion (Davao Light and Power Co.,
Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp.
(Solidbank) v. Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegations in petitioner's complaint below
is that the defendant spouses induced the plaintiff to grant the loan by
issuing postdated checks to cover the installment payments and a separate
set of postdated cheeks for payment of the stipulated interest (Annex "B").
The issue of fraud, then, is clearly within the competence of the lower
court in the main action.

It is appropriate to reiterate this Court's exposition in the Davao Light and WHEREFORE, premises considered, the Court hereby GRANTS the
Power case cited earlier, to wit: petition. The challenged decision of the Court of Appeals is REVERSED,
and the order and writ of attachment issued by Hon. Cezar C. Peralejo,
. . . writs of attachment may properly issue ex-parte provided that the Presiding Judge of Branch 98, Regional Trial Court of Quezon City
Court is satisfied that the relevant requisites therefore have been against spouses Evangelista are hereby REINSTATED. No pronouncement
fulfilled by the applicant, although it may, in its discretion, require as to costs.
prior hearing on the application with notice to the defendant, but that
levy on property pursuant to the writ thus issued may not be validly SO ORDERED.
effected unless preceded, or contemporaneously accompanied by
service on the defendant of summons, a copy of the complaint (and
of the appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment
bond.

The question as to whether a proper ground existed for the issuance of the
writ is a question of fact the determination of which can only be had in
appropriate proceedings conducted for the purpose (Peroxide Philippines
Corporation V. Court of Appeals, 199 SCRA 882 [1991]). It must be noted
that the spouses Evangelista's motion to discharge the writ of preliminary
attachment was denied by the lower court for lack of merit. There is no
showing that there was an abuse of discretion on the part of the lower
court in denying the motion.

17

SECOND DIVISION
[G.R. No. 32945 : December 3, 1990.]
191 SCRA 783-795
MARIANO T. NASSER, Petitioner, vs. THE COURT OF APPEALS,
HON. MALCOLM SARMIENTO, in his capacity as Presiding Judge,
Court of First Instance of Pampanga, Branch I, AURORA RIVERA
CANLAS, PATERNO R. CANLAS, and TOMAS CENTILLAS,
Respondents.
[G.R. No. 32946. December 3, 1990.]
191 SCRA 783-795
MARIANO T. NASSER, Petitioner, vs. THE COURT OF APPEALS,
PATERNO R. CANLAS, AURORA RIVERA-CANLAS, TOMAS
CENTILLAS and THE CHIEF OF POLICE OF SAN ISIDRO, DAVAO
ORIENTAL, Respondents.
DECISION
PARAS, J.:
These are petitions for certiorari and/or prohibition filed by
petitioner Mariano T. Nasser, in G.R. No. L-32945 entitled
"Mariano T. Nasser v. Court of Appeals, Hon. Malcolm Sarmiento
etc., Aurora Rivera Canlas, Paterno R. Canlas and Tomas
Centillas" seeking: (1) to annul and set aside: (a) the decision *
of the Court of Appeals dated October 7, 1970 in CA No. 45317-R
between the same parties, dismissing the petition for lack of
merit and dissolving the writ of preliminary injunction issued on
June 17, 1970 and (b) the resolution dated December 4, 1970
denying the motion for reconsideration and (2) to restrain or
enjoin the Chief of Police of Governor General, Davao Oriental
from implementing the Order of Attachment issued by the Court
of First Instance of Pampanga in Civil Case No. 3641 and in G.R.
No. L-32946 entitled "Mariano T. Nasser, et. al. v. The Court of
Appeals, Paterno R. Canlas, Aurora Rivera-Canlas, Tomas
Centillas and the Chief of Police of San Isidro, Davao Oriental
seeking: (1 ) to annul and set aside the decision of the Court of
18
Appeals dated October 10, 1970 in CA-G.R. No. 44856-R entitled
"Aurora Rivera-Canlas et al. v. Hon. Judge Vicente P. Bullecer, et
al." which declared permanent the Amended Writ of Preliminary
Injunction it issued on June 16, 1970 directing the CFI of Davao
Oriental to refrain from enforcing the writs of preliminary
injunctions it issued in Civil Case No. 3641 of the Court of First
Instance of Pampanga and (2) to restrain or prohibit: (a) the
Court of Appeals from enforcing the amended writ of preliminary
injunction it issued on June 16, 1970 and (b) Tomas Centillas,
Chief of Police of Governor Generoso and the Chief of Police of
San Isidro, both of Davao Oriental from further executing or
implementing the Order of Attachment dated January 20, 1970,
issued also in Civil Case No. 3641, CFI of Pampanga.:-cralaw
These two cases have their origin from an order of attachment
issued in Civil Case No. 3641, entitled "Aurora Fe Rivera Canlas
vs. Mariano T. Nasser" in the Court of First Instance of
Pampanga (now Regional Trial Court, RTC for short) Branch I,
presided by respondent Hon. Judge Malcolm G. Sarmiento, for
collection of a sum of money. It is evident that both petitions
seek to enjoin or prohibit the implementation of the said order.
As gathered from the records, the facts of the case are as
follows:
Petitioner Mariano T. Nasser was a lessee of haciendas La Union,
Montserrat, Sigaboy, Pundaguitan and Colatinan, in Davao
Oriental owned by the Estate of Don Amadeo Matute Olave (G.R.
No. 32945, p. 109, vol. I, Rollo).
Matias S. Matute, co-administrator of the Olave Estate executed
(a) an original Contract of Lease dated February 10, 1965, to
expire on August 10, 1970 and (b) a Supplemental Contract of
Lease dated June 12, 1965, for a period of five (5) years after the
expiration of the original Contract of Lease dated February 10,
1965, both of which are in favor of NASSER as lessee (pp. 112-
113, G.R. No. 32945).
On April 25, 1966, NASSER executed three (3) Promissory Notes
in favor of Matias S. Matute, with the following highlighted
provisions, viz:
(1) P378,000.00
x x x
"Should my original contract of lease dated February 10,
1965 and supplemental contract of lease dated January 7,
 1966 over the haciendas of the Estate (Hacienda La
Union, Sigaboy, Montserrat, Colatinan and Pundaguitan)
leased by the co-administrator Matias S. Matute is already
terminated or cancelled before the expiration of the
period thereof by final court judgment or sale to us, any
and all future installments of this PROMISSORY NOTE as of
said date of termination and cancellation shall be deemed
also extinguished, cancelled and become no longer
payable.
"Any action involving the enforcement of this contract
shall be brought within the City of Manila, Philippines . . ."
(G.R. No. L-32945, Vol. I, p. 109).
(2) "ORIGINAL LEASE
231,000.00
x x x
(3) "SUPPLEMENTAL LEASE
P210,000.00
x x x
(G.R. No. L-32945, Vol. I, pp. 110)
On February 7, 1967, Matias S. Matute assigned, sold,
transferred and set-over unto respondent Aurora Rivera-Canlas,
all the above described promissory notes with the express
conformity of petitioner Nasser (G.R. No. L-32945, Vol. I, p. 107).
In 1968, NASSER bought the hereditary shares of the heirs Luis
Augustina, Elena, Amadeo, all surnamed Matute and
Anunciacion Candelario for the total amount of P660,000.00
(Rollo of G.R. No. 32945, pp. 182-186-195, Vol. I).
Out of the total amount of P819,000.00 due on the three (3)
promissory notes, petitioner has paid only P121,983.45 leaving a
total unpaid balance of P697,016.55.:-cralaw
In G.R. No. L-32945
Respondent Aurora joined by her husband, Paterno R. Canlas,
filed a complaint on January 6, 1970 for a sum of money with
application for a Writ of Preliminary Attachment docketed as Civil
Case No. 3641 before the Court of First Instance of Pampanga
(now Regional Trial Court) dated December 27, 1969 (Rollo, G.R.
No. L-32945, pp. 99-105; 106-108) which was granted by Judge
Sarmiento upon a bond of P20,000.00 put up by respondents
19
(G.R. No. L-32945, pp. 120-121). The Sheriff of Manila issued a
notice of garnishment against NASSER as transferee-pendente-
lite of heirs Luis and Jose Matute and Amadeo Matute
Candelario, Jr., which was entered and made part and parcel of
the case in Special Proceeding No. 25876 in Re: Testate Estate of
Amadeo Matute Olave (G.R. No. L-32945, p. 122). Upon motion
of Canlas spouses, respondent judge issued an order deputizing
the Chief of Police of Governor Generoso, Davao Oriental, to
serve, execute and fully implement the Order of Attachment
dated January 20, 1970, until the amount of P697,016.55 is
realized.
By virtue of the writ, respondent Chief of Police attached the
properties of petitioner, not otherwise exempt from execution,
among which were the latter's leasehold rights in Hacienda
Sigaboy, Montserrat, La Union, Colatinan and Pundaguitan,
which are producing copra and rendered his report of such
action to the court on February 18, 1970. (emphasis supplied)
Meanwhile, NASSER, as defendant, filed: (1) an Urgent Motion to
Dismiss on the ground of improper venue (G.R. No. L-32945, pp.
136-140) and (2) an Urgent Motion to Dissolve or Discharge the
Order of Attachment issued on January 20, 1970, on the ground
that the order of attachment was improperly and irregularly
issued (G.R. No. L-32945, pp. 143-150). Said motions were
opposed by the respondent spouses on February 10, 1970 (G.R.
No. L-32945, pp. 152-159; 162-167) both of which were denied
by respondent Judge. Instead of filing an answer, NASSER filed
an urgent Motion for Reconsideration.:-cralaw
Hence, on March 19, 1970, respondent judge declared Nasser in
default, allowed spouses Canlas to present their evidence ex-
parte (G.R. No. L-32945, p. 206), and on the following day,
March 20, 1970 rendered judgment in Civil Case No. 3641 in
favor of said spouses and ordered Nasser to pay them
P684,015.55, with interest at 6% per annum from the filing of
the complaint until fully paid plus P20,000.00 as attorney's fees
and another P5,000.00 for expenses of litigation.
However, respondent judge motu propio set aside the order of
default on March 23, 1970 (Rollo, Vol. I, pp. 206-208), it
appearing that Nasser had filed an "Urgent Ex-Parte Motion to
Lift Order of Default dated March 19, 1970" (Rollo, p. 201-204).
Then on April 3, 1970, herein petitioner filed in the lower court
another "Urgent Motion to Set Aside or Revoke the order of
January 24, 1970" deputizing the Chief of Police of Governor
Generoso, Davao Oriental as special sheriff with prayer for
restraining order or injunction (Rollo, pp. 208-223). This was
opposed by the Canlas spouses on April 8, 1970 (Rollo, pp. 228-
250) to which Nasser filed a "Reply".
On April 24, 1970, respondent judge issued two orders, namely:
(1) holding in abeyance his resolution on petitioner's motion to
relieve the Chief of Police of Governor Generoso, in view of the
pendency of CA G.R. No. 44856-R before the Court of Appeals,
where the same issue was supposedly raised (Rollo, p. 267); and
(2) denying Nasser's motion for a reconsideration of the order
dated February 23, 1970 denying his motion to dismiss.
From the orders dated April 24, 1970, petitioner filed a petition
for certiorari and/or prohibition with the Supreme Court, the
same was docketed as G.R. No. L-31904. After finding that the
issues posed are closely connected and interdependent with
those raised in CA-G.R. No. 44856-R pending in the Court of
Appeals, the Supreme Court remanded the case to the Court of
Appeals for appropriate action in its resolution dated May 8,
1970 and was docketed as CA-G.R. No. 45317-R.
On June 17, 1970, the Court of Appeals gave due course to the
petition and issued a writ of preliminary injunction enjoining the
respondent judge Malcolm G. Sarmiento from continuing the
hearing of Civil Case No. 3641 in whatever stage it may be found
and to enforce the Order of Attachment issued in Civil Case No.
3641, and enjoining also the Chief of Police of Governor
Generoso, Davao Oriental, from executing such Order of
Attachment.
An answer to the petition was filed by the Canlas spouses on July
23, 1970.:-cralaw
On October 7, 1970, the respondent Court of Appeals rendered
its decision in CA-G.R. No. 45317-R, the dispositive portion of
which reads:
"WHEREFORE, the present petition for writs of certiorari
and or prohibition is hereby denied for lack of merit and
the writ of preliminary injunction issued by this Court on
June 16, 1970 in connection with this case is ordered
dissolved. The costs of this proceeding shall be borne by
the petitioner.
SO ORDERED." (Rollo, Vol. II, p. 644)
20
Nasser's motion and supplemental motion for reconsideration
were denied. Hence, this petition in G.R. No. L-32945.
In G.R. No. L-32946
Meanwhile, Nasser on February 12, 1970 filed Civil Case No. 138
in a co-equal court CFI-Davao Oriental, a complaint for injunction
against respondent Chiefs of Police of Governor Generoso and
San Isidro praying that the latter be enjoined or restrained from
attempting to stop petitioner from removing or disposing the
copra from the haciendas for lack of authority.
Respondents Chiefs of Police filed an Urgent Opposition to the
Issuance of a Writ of Preliminary Injunction and Motion to
Dismiss Civil Case No. 138 alleging that the CFI-Davao Oriental
lacks jurisdiction over the case and that the complaint states no
cause of action.
On February 23, 1970, NASSER filed Civil Case No. 140 with the
CFI-Davao Oriental against respondents Canlas and Matias S.
Matute for annulment of said Promissory Notes and Deed of
Assignment.
On even date NASSER filed in Civil Case No. 138, a
Supplemental Complaint with Urgent Motion for Grant of a Writ
of Preliminary Injunction Ex-Parte and Urgent Motion for
Restraining Order dated February 28, 1970, which motions (G.R.
No. L-32946, pp. 14-15, Vol. I) were granted by Judge Vicente
Bullecer, CFI-Davao Oriental in the Order of March 3, 1970,
restraining the Chiefs of Police of Governor Generoso and San
Isidro from further attaching the copra of petitioner. (Emphasis
supplied)
On March 7, 1970, Canlas and the respective Chiefs of Police of
Governor Generoso and San Isidro filed a petition for certiorari
and prohibition with preliminary injunction before the Court of
Appeals docketed as CA-G.R. No. 44856-R against Judge Bullecer
of CFI-Davao Oriental and petitioner, praying that Judge Bullecer
be restrained from continuing the hearing of Civil Case No. 138
and from enforcing the restraining order he had issued.
On March 11, 1970, the Court of Appeals issued the writ of
preliminary injunction prayed for, enjoining petitioner or any of
his agents, representatives or employees to refrain from
interfering and taking possession of the properties levied on the
properties subject of leasehold rights and levied on attachment
by the special sheriff and from impeding and obstructing the
Writ of Attachment issued in Civil Case No. 3641, CFI-Pampanga,
until further orders.
Afterwards other cases were filed against respondents allegedly
by dummies of NASSER and in which Judge Bullecer of CFI-Davao
Oriental also issued writs of preliminary injunction as follows:
Civil Case No. 174 entitled Renato Cruz, plaintiff versus
Sisenando Rivera, Jr., Vicente Castro, Tomas Centillas,
Defendants.
Civil Case No. 175 entitled Felixberto Carios, plaintiff versus
Sisenando Rivera, Jr., Rufino Nasser, Tomas Centillas and Vicente
Castro, defendants.
Civil Case No. 176 entitled Jose S. Matute, Rosario S. Matute,
Trinidad Matute, Fortunata Zambrano Matute, plaintiffs versus
Sisenando Rivera, Jr., Rufino Nasser, Tomas Centillas, Vicente
Castro, Cesario Udtoman, and Rolando Centillas, defendants.
enjoining the defendants, their agents, and / or representatives
and men working under them to desist from interfering
harassing and molesting and taking away the possession of and
management of the five (5) haciendas (which were subject
matter of the Order of Attachment issued in Civil Case No. 3641,
CFI-Pampanga). (pp. 226-227, Vol. I, G.R. No. L-32946; and pp.
622-633, Vol. II, Ibid. (Emphasis supplied)
In view thereof, upon motion of respondent Canlas, the Court of
Appeals issued an Amended Writ of Preliminary Injunction which
likewise enjoined the hearing of Civil Cases Nos. 140, 174, 175,
176 or any other case brought before the CFI-Davao Oriental by
any party for the purpose of rendering nugatory or ineffective,
impeding or obstructing the writ of preliminary attachment
issued by the CFI-Pampanga in Civil Case No. 3641.
On October 10, 1970, the Court of Appeals rendered its decision
in CA-G R. No. 44856-R making permanent the Amended Writ of
Preliminary Injunction dated June 16, 1970.
A motion to reconsider said decision was filed by NASSER but
the same was denied by the Court of Appeals on November 3,
1970.
Hence, this petition in G.R. No. L-32946.
G.R. Nos. L-32945 and L-32946 were consolidated in the
resolution of January 12, 1971 and a writ of preliminary
injunction was issued in G.R. No. L-32945 enjoining the Court of
21
Appeals from enforcing its decision dated October 7, 1970 and
respondent judge from continuing the hearing of Civil Case No.
3641 and the Chief of Police of Governor Generoso from
executing the Order of Attachment.:- nad
Respondents filed a Joint Memorandum in both cases (G.R. No. L-
32946, p. 747, Vol. II) while petitioner failed to file the required
memorandum.
The center of the conflict is whether or not the writ of
preliminary attachment in Civil Case No. 3641 (G.R. No. L-32945)
issued by the CFI of Pampanga in favor of Canlas may be
enjoined in Civil Case No. 138 (G.R. No. L-32946) by the CFI of
Davao Oriental in favor of Nasser.
The issues common to both G.R. No. L-32945 and L-32946 are:
(1) that the venue was improperly laid, subject Civil Case No.
3641 having been filed in Pampanga instead of in Manila as
stipulated; (2) that the appointment of the Chief of Police of
Governor Generoso, Davao Oriental as Special Sheriff to serve
and implement the Order of Attachment was erroneous; and (3)
that the Order of Attachment was not validly issued.
Aside from the fact, that it has already been settled, that
stipulations in a contract which specify a definite place for the
institution of an action arising in connection therewith, do not,
as a rule, supersede the general rule on the matter set out in
Rule 4 of the Rules of Court, so that it should be construed
merely as an agreement on an additional forum, not as limiting
venue to the specified place (Western Minolco Corporation v.
Court of Appeals, 167 SCRA 592 [1988]), Nasser has in effect
waived his objection thereto, by: (a) his motion to dismiss based
on the court's lack of authority to issue the Order of Attachment
but on the non-observance of requirements of the Rules; (b) his
motion to lift order of default; and (c) his answer with
counterclaim fled in the Court of First Instance of Pampanga.
Consequently, it is immaterial as to whether or not there is a
novation of contract in this case.chanrobles virtual law library
It is likewise evident that respondent judge did not err in
deputizing the Chief of Police of Governor Generoso, as special
sheriff under Section 2, Rule 57 of the Revised Rules of Court
where the former is expressly authorized to require not only the
sheriff but also other officers of the province or the sheriffs or
other proper officers of different provinces in this case, the Chief
of Police of Governor Generoso, to attach all the properties of
the party against whom it may be issued within the province not
exempt from execution.
Finally, it is settled that a verified statement incorporated in the
complaint without a separate affidavit is sufficient and valid to
obtain the attachment (Tolentino v. Carla, et al., 66 Phil. 140-
143). Thus, under the same ruling, the verified complaint in the
case at bar entitled "Application for a Writ of Preliminary
Attachment" which specifically stated that to avoid redundancy
and repetition, the affidavit of the plaintiffs as required under
Section 3, Rule 57 of the Revised Rules of Court is dispensed
with, as the matters to be treated and contained therein are
already incorporated and made part of the complaint, duly
verified by them, has undoubtedly substantially complied with
the requirements of the Rules and the court to which the
application for the attachment was filed has jurisdiction to issue
the writ prayed for (Central Capiz v. Salas, 43 Phil., 30 [1922]).
Additional issues raised in G.R. No. L-32946, are: (1) the
prematurity of the petition for certiorari and prohibition and (2)
lack of legal standing of Canlas to file this petition.
The certiorari and prohibition case instituted by respondents
Chiefs of Police was not filed prematurely in view of the
injunction order issued by the CFI-Davao Oriental enjoining the
further enforcement of the Order of Attachment in Civil Case No.
3641, which injunction order unduly interfered with the acts of
another court of co-equal, coordinate and concurrent
jurisdiction.:-cralaw
It is doctrinal that no court has the power to interfere by
injunction with the judgment or order of another court of
concurrent or coordinate jurisdiction (Ngo Bun Tiong v. Sayo, 163
SCRA 237 [1988]; Investors Finance Corporation v. Ebarle, 163
SCRA 60 [1988]; Municipality of Malolos v. Libangang Malolos,
Inc., 164 SCRA 290 [1988]).
Respondents Canlas are aggrieved parties within the meaning of
Sections 1 and 2 of Rule 65, Revised Rules of Court even if not
made parties nor intervenors in Civil Case No. 138 since they are
the plaintiffs in the prior case (Civil Case No. 3641) in whose
favor the Order of Attachment was issued and which order was
being enforced by respondents Chiefs of Police. It is but natural
that any interference with or obstruction to the implementation
of said Order of Attachment would work prejudice to them and
make them aggrieved parties. Otherwise stated, respondents
22
Canlas as ruled in a recent case, are real parties in interest who
would be benefitted or injured by the judgment or entitled to the
avails of the suit (Lee v. Romillo, Jr., 161 SCRA 589 [1988]).
In the same manner, the Court of Appeals cannot be faulted by
its issuance by mere motion of respondents Canlas of an
Amended Writ of Preliminary Injunction which included Civil
Cases Nos. 140, 174, 175, 176 or any other case brought before
the Court of First Instance of Davao Oriental by any party for the
purpose of obstructing or rendering nugatory the preliminary
attachment issued by the Court of First Instance of Pampanga in
Civil Case No. 3641. To require the parties to file a new petition
or an independent suit for the purpose would be preposterous, it
being the very objection of the petition in CA-G.R. No. 44856-R
where the motion was filed, to enjoin the undue and improper
interference of the CFI-Davao Oriental to the Order of
Attachment issued by the CFI-Pampanga.:- nad
The issuance of an amended writ of preliminary injunction by the
Court of Appeals is within its inherent power to amend and
control its processes and orders so as to make them
conformable to law and justice (Section 5(g), Rule 135, Revised
Rules of Court). Undoubtedly, the injunction is essential for the
orderly administration of justice and was sought to avoid
multiplicity of suits.
In Government Service Insurance System vs. Hon. Alfredo C.
Florendo, etc., et al., G.R. No. L-48603, September 29, 1989, the
High Tribunal ruled that:
". . . The very foundation of the jurisdiction to issue the writ of
injunction rests in the probability of irreparable injury,
inadequacy of pecuniary compensation and the prevention of
multiplicity of suit . . ."
PREMISES CONSIDERED, both petitions in G.R. Nos. L-32945 and
L-32946 are hereby DISMISSED for lack of merit and the assailed
decisions of the Court of Appeals are hereby AFFIRMED and the
temporary restraining order issued in G.R. No. L-32945 is hereby
LIFTED.
SO ORDERED.

FIRST DIVISION
G.R. No. 84481 April 18, 1989
MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (formerly
Davao Savings & Loan Association) & FRANCISCO
VILLAMOR, petitioners,
vs.
HON. COURT OF APPEALS, POLY R. MERCADO, and JUAN P.
MERCADO, respondents.
GRIO-AQUINO, J.:
On September 10, 1986, private respondents filed in the Regional Trial
Court of Davao City, a complaint against defendants D.S. Homes, Inc.,
and its directors, Laurentino G. Cuevas, Saturnino R. Petalcorin, Engr.
Uldarico D. Dumdum, Aurora P. De Leon, Ramon D. Basa, Francisco D.
Villamor, Richard F. Magallanes, Geronimo S. Palermo Felicisima V.
Ramos and Eugenio M. De los Santos (hereinafter referred to as D.S.
Homes, et al.) for "Rescission of Contract and Damages" with a prayer for
the issuance of a writ of preliminary attachment, docketed as Civil Case
No. 18263.
On September 28, 1986, Judge Dinopol issued an order granting ex
parte the application for a writ of preliminary attachment.
On September 22, 1986, the private respondents amended their complaint
and on October 10, 1986, filed a second amended complaint impleading as
additional defendants herein petitioners Davao Savings & Loan
Association, Inc. and its president, Francisco Villamor, but dropping
Eugenio M. De los Santos.
23
On November 5, 1986, Judge Dinopol issued ex parte an amended order of
attachment against all the defendants named in the second amended
complaint, including the petitioners but excluding Eugenio C. de los
Santos.
D. S. Homes. Inc., et al. and the Davao Savings & Loan Association (later
renamed Mindanao Savings & Loan Association, Inc. or "MSLA") and
Francisco Villamor filed separate motions to quash the writ of attachment.
When their motions were denied by the Court, D.S. Homes, Inc., et al.
offered a counterbond in the amount of Pl,752,861.41 per certificate
issued by the Land Bank of the Philippines, a banking partner of petitioner
MSLA The lower court accepted the Land Bank Certificate of . Deposit
for Pl,752,861.41 as counterbond and lifted the writ of preliminary
attachment on June 5, 1987 (Annex V)
On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a
petition for certiorari (Annex A) to annul the order of attachment and the
denial of their motion to quash the same (CA-G.R. SP No. 12467). The
petitioners alleged that the trial court acted in excess of its jurisdiction in
issuing the ex parte orders of preliminary attachment and in denying their
motion to quash the writ of attachment, D.S. Homes, Inc., et al. did not
join them.
On May 5, 1988, the Court of Appeals dismissed the petition
for certiorari and remanded the records of Civil Case No. 18263 to the
Regional Trial Court of Davao City, Branch 13, for expeditious
proceedings. It held:
Objections against the writ may no longer be invoked once a
counterbond is filed for its lifting or dissolution.
The grounds invoked for the issuance of the writ form the core of the
complaint and it is right away obvious that a trial on the merits was
necessary. The merits of a main action are not triable in a motion to
discharge an attachment otherwise an applicant for dissolution could
force a trial on the merits on his motion (4 Am. Jur., Sec. 635, 934,
cited in G.G. Inc. vs. Sanchez, et al., 98 Phil. 886, 890, 891). (Annex
B, p. 185, Rollo.)
Dissatisfied, the petitioners appealed to this Court.
A careful consideration of the petition for review fails to yield any novel
legal questions for this Court to resolve.
The only requisites for the issuance of a writ of preliminary attachment
under Section 3, Rule 57 of the Rules of Court are the affidavit and bond
of the applicant.
SEC. 3. Affidavit and bond required . An order of
attachment shall be granted only when it is made to appear by the
affidavit of the applicant, or of some other person who personally
knows the facts, that a sufficient cause of action exists that the case is
one of those mentioned in section 1 hereof, that there is no other
sufficient security for the claim sought to be enforced by the action,
and that the amount due to the applicant, or the value of the. property
the possession of which he is entitled to recover, is as much as the
sum for which the order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding section must
be duly filed with the clerk or judge of the court before the order
issues.
No notice to the adverse party or hearing of the application is required. As
a matter of fact a hearing would defeat the purpose of this provisional
remedy. The time which such a hearing would take, could be enough to
enable the defendant to abscond or dispose of his property before a writ of
attachment issues. Nevertheless, while no hearing is required by the Rules
of Court for the issuance of an attachment (Belisle Investment & Finance
Co., Inc. vs. State Investment House, Inc., 72927, June 30, 1987; Filinvest
Credit Corp. vs. Relova, 11 7 SCRA 420), a motion to quash the writ may
not be granted without "reasonable notice to the applicant" and only "after
hearing" (Secs. 12 and 13, Rule 57, Rules of Court).
The Court of Appeals did not err in holding that objections to the
impropriety or irregularity of the writ of attachment "may no longer be
invoked once a counterbond is filed," when the ground for the issuance of
the writ forms the core of the complaint.
Indeed, after the defendant has obtained the discharge of the writ of
attachment by filing a counterbond under Section 12, Rule 57 of the Rules
of Court, he may not file another motion under Section 13, Rule 57 to
quash the writ for impropriety or irregularity in issuing it.
24
The reason is simple. The writ had already been quashed by filing a
counterbond, hence, another motion to quash it would be pointless.
Moreover, as the Court of Appeals correctly observed, when the ground
for the issuance of the writ is also the core of the complaint, the question
of whether the plaintiff was entitled to the writ can only be
determined after, not before, a full-blown trial on the merits of the case.
This accords with our rulingG.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The
merits of a main action are not triable in a motion to discharge an
attachment, otherwise an applicant for the dissolution could force a trial on
the merits of the case on this motion."
May the defendant, after procuring the dissolution of the attachment by
filing a counterbond, ask for the cancellation of the counterbond on the
ground that the order of attachment was improperly issued? That question
was answered by this Court when it ruled in Uy Kimpang vs. Javier, 65
Phil. 170, that "the obligors in the bond are absolutely liable for the
amount of any judgment that the plaintiff may recover in the
action without reference to the question of whether the attachment was
rightfully or wrongfully issued."
The liability of the surety on the counterbond subsists until the Court shall
have finally absolved the defendant from the plaintiff s claims. Only then
may the counterbond be released. The same rule applies to the plaintiffs
attachment bond. "The liability of the surety on the bond subsists because
the final reckoning is when the Court shall finally adjudge that the
attaching creditor was not entitled to the issuance of the attachment writ,"
(Calderon vs. Intermediate Appellate Court, 155 SCRA 531.)
WHEREFORE, finding no reversible error in the decision of the Court of
Appeals in CA-G.R. SP No. 12467, the petition for review is denied for
lack of merit with costs against the petitioners.
SO ORDERED.
Cruz, Gancayco and Medialdea, JJ., concur.

SECOND DIVISION
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court,
assails the Decision1 of the Court of Appeals (CA) dated November 27,
1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April 2,
1996 denying the petitioners motion for reconsideration. The impugned
decision granted the private respondents petition for certiorari and set
aside the Orders of the trial court dated December 15, 19933 and February
17, 19944 nullifying the attachment of 100,000 shares of stocks of the
Citycorp Investment Philippines under the name of petitioner Alfredo
Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc.
(PBMCI) obtained a loan of P9,000,000.00 from the Allied Banking
Corporation (ABC). By virtue of this loan, the PBMCI, through its
Executive Vice-President Alfredo Ching, executed a promissory note for
the said amount promising to pay on December 22, 1978 at an interest rate
of 14% per annum.5 As added security for the said loan, on September 28,
1978, Alfredo Ching, together with Emilio Taedo and Chung Kiat Hua,
executed a continuing guaranty with the ABC binding themselves to
jointly and severally guarantee the payment of all the PBMCI obligations
25
owing the ABC to the extent of P38,000,000.00.6 The loan was
subsequently renewed on various dates, the last renewal having been made
on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the
PBMCI in the amount of P13,000,000.00 payable in eighteen months at
16% interest per annum. As in the previous loan, the PBMCI, through
Alfredo Ching, executed a promissory note to evidence the loan maturing
on June 29, 1981.8 This was renewed once for a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August
21, 1981, the ABC filed a complaint for sum of money with prayer for a
writ of preliminary attachment against the PBMCI to collect
the P12,612,972.88 exclusive of interests, penalties and other bank
charges. Impleaded as co-defendants in the complaint were Alfredo Ching,
Emilio Taedo and Chung Kiat Hua in their capacity as sureties of the
PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial
Court of Manila, Branch XVIII.10 In its application for a writ of
preliminary attachment, the ABC averred that the "defendants are guilty of
fraud in incurring the obligations upon which the present action is
brought11 in that they falsely represented themselves to be in a financial
position to pay their obligation upon maturity thereof."12 Its supporting
affidavit stated, inter alia, that the "[d]efendants have removed or disposed
of their properties, or [are] ABOUT to do so, with intent to defraud their
creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an
Order denying the ABCs application for a writ of preliminary attachment.
The trial court decreed that the grounds alleged in the application and that
of its supporting affidavit "are all conclusions of fact and of law" which do
not warrant the issuance of the writ prayed for.14 On motion for
reconsideration, however, the trial court, in an Order dated September 14,
1981, reconsidered its previous order and granted the ABCs application
for a writ of preliminary attachment on a bond of P12,700,000. The order,
in relevant part, stated:
With respect to the second ground relied upon for the grant of the writ of
preliminary attachment ex-parte, which is the alleged disposal of
properties by the defendants with intent to defraud creditors as provided in
Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can only barely
justify the issuance of said writ as against the defendant Alfredo Ching
who has allegedly bound himself jointly and severally to pay plaintiff the
defendant corporations obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the
defendant Alfredo Ching requiring the sheriff of this Court to attach all the
properties of said Alfredo Ching not exceeding P12,612,972.82 in value,
which are within the jurisdiction of this Court and not exempt from
execution upon, the filing by plaintiff of a bond duly approved by this
Court in the sum of Twelve Million Seven Hundred Thousand Pesos
(P12,700,000.00) executed in favor of the defendant Alfredo Ching to
secure the payment by plaintiff to him of all the costs which may be
adjudged in his favor and all damages he may sustain by reason of the
attachment if the court shall finally adjudge that the plaintiff was not
entitled thereto.
SO ORDERED.15
Upon the ABCs posting of the requisite bond, the trial court issued a writ
of preliminary attachment. Subsequently, summonses were served on the
defendants,16 save Chung Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a
petition for suspension of payments with the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 2250, at the same time
seeking the PBMCIs rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCIs business,
including its assets and liabilities, under rehabilitation receivership, and
ordered that "all actions for claims listed in Schedule "A" of the petition
pending before any court or tribunal are hereby suspended in whatever
stage the same may be until further orders from the Commission."18 The
ABC was among the PBMCIs creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly
filed a Motion to Dismiss and/or motion to suspend the proceedings in
Civil Case No. 142729 invoking the PBMCIs pending application for
suspension of payments (which Ching co-signed) and over which the SEC
26
had already assumed jurisdiction.19 On February 4, 1983, the ABC filed
its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court
levied on attachment the 100,000 common shares of Citycorp stocks in the
name of Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court partially
granted the aforementioned motion by suspending the proceedings only
with respect to the PBMCI. It denied Chings motion to dismiss the
complaint/or suspend the proceedings and pointed out that P.D. No. 1758
only concerns the activities of corporations, partnerships and associations
and was never intended to regulate and/or control activities of individuals.
Thus, it directed the individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to
Suspend Proceedings on the same ground of the pendency of SEC Case
No. 2250. This motion met the opposition from the ABC.23
On January 20, 1984, Taedo filed his Answer with counterclaim and
cross-claim.24 Ching eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an
Omnibus Motion,26 again praying for the dismissal of the complaint or
suspension of the proceedings on the ground of the July 9, 1982 Injunctive
Order issued in SEC Case No. 2250. He averred that as a surety of the
PBMCI, he must also necessarily benefit from the defenses of his
principal. The ABC opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion27 praying for
the dismissal of the complaint, arguing that the ABC had "abandoned and
waived" its right to proceed against the continuing guaranty by its act of
resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of
his preliminary attachment bond fromP12,700,000
to P6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2,
1987, the court issued an Order setting the incident for further hearing on
May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual
value of the properties of Alfredo Ching levied on by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of
the ABC and rendered the attachment bond of P6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband
Alfredo Ching, filed a Motion to Set Aside the levy on attachment. She
alleged inter alia that the 100,000 shares of stocks levied on by the sheriff
were acquired by her and her husband during their marriage out of
conjugal funds after the Citycorp Investment Philippines was established
in 1974. Furthermore, the indebtedness covered by the continuing
guaranty/comprehensive suretyship contract executed by petitioner
Alfredo Ching for the account of PBMCI did not redound to the benefit of
the conjugal partnership. She, likewise, alleged that being the wife of
Alfredo Ching, she was a third-party claimant entitled to file a motion for
the release of the properties.32 She attached therewith a copy of her
marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment
and/or motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to
this present case; thus, she has no personality to file any motion
before this Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention
pursuant to Section 2, Rule 12 of the Rules of Court;
2.3 Said Motion cannot even be construed to be in the nature of a
Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules
of Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant
has the required personality, her Motion cannot be acted upon by this
Honorable Court as the above-entitled case is still in the archives and the
proceedings thereon still remains suspended. And there is no previous
Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by
laches because the shares of stocks were in custodia legis.
27
During the hearing of the motion, Encarnacion T. Ching adduced in
evidence her marriage contract to Alfredo Ching to prove that they were
married on January 8, 1960;35 the articles of incorporation of Citycorp
Investment Philippines dated May 14, 1979;36 and, the General
Information Sheet of the corporation showing that petitioner Alfredo
Ching was a member of the Board of Directors of the said corporation and
was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to
the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on December
15, 1993 an Order37 lifting the writ of preliminary attachment on the
shares of stocks and ordering the sheriff to return the said stocks to the
petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment,
dated November 9, 1993, is hereby granted. Let the writ of preliminary
attachment subject matter of said motion, be quashed and lifted with
respect to the attached 100,000 common shares of stock of Citycorp
Investment Philippines in the name of the defendant Alfredo Ching, the
said shares of stock to be returned to him and his movant-spouse by
Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on July
26, 1983, or by whoever may be presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the
reconsideration of the order but denied the same on February 17, 1994.
The petitioner bank forthwith filed a petition for certiorari with the CA,
docketed as CA-G.R. SP No. 33585, for the nullification of the said order
of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted
without jurisdiction in taking cognizance of, and granting a
"Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion in
lifting the writ of preliminary attachment without any basis in fact
 and in law, and contrary to established jurisprudence on the
matter.39
On November 27, 1995, the CA rendered judgment granting the petition
and setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby
setting aside the questioned orders (dated December 15, 1993 and
February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside
the assailed orders. According to the CA, the RTC deprived the private
respondent of its right to file a bond under Section 14, Rule 57 of the
Rules of Court. The petitioner Encarnacion T. Ching was not a party in the
trial court; hence, she had no right of action to have the levy annulled with
a motion for that purpose. Her remedy in such case was to file a separate
action against the private respondent to nullify the levy on the 100,000
Citycorp shares of stocks. The court stated that even assuming that
Encarnacion T. Ching had the right to file the said motion, the same was
barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
presumption in Article 160 of the New Civil Code shall not apply where,
as in this case, the petitioner-spouses failed to prove the source of the
money used to acquire the shares of stock. It held that the levied shares of
stocks belonged to Alfredo Ching, as evidenced by the fact that the said
shares were registered in the corporate books of Citycorp solely under his
name. Thus, according to the appellate court, the RTC committed a grave
abuse of its discretion amounting to excess or lack of jurisdiction in
issuing the assailed orders. The petitioners motion for reconsideration was
denied by the CA in a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on certiorari,
asserting that the RTC did not commit any grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders in
their favor; hence, the CA erred in reversing the same. They aver that the
source of funds in the acquisition of the levied shares of stocks is not the
controlling factor when invoking the presumption of the conjugal nature of
28
stocks under Art. 160,42 and that such presumption subsists even if the
property is registered only in the name of one of the spouses, in this case,
petitioner Alfredo Ching.43 According to the petitioners, the suretyship
obligation was not contracted in the pursuit of the petitioner-husbands
profession or business.44 And, contrary to the ruling of the CA, where
conjugal assets are attached in a collection suit on an obligation contracted
by the husband, the wife should exhaust her motion to quash in the main
case and not file a separate suit.45 Furthermore, the petitioners contend
that under Art. 125 of the Family Code, the petitioner-husbands gratuitous
suretyship is null and void ab initio,46 and that the share of one of the
spouses in the conjugal partnership remains inchoate until the dissolution
and liquidation of the partnership.47
In its comment on the petition, the private respondent asserts that the CA
correctly granted its petition for certiorari nullifying the assailed order. It
contends that the CA correctly relied on the ruling of this Court in Wong v.
Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors,
Inc. v. Court of Appeals, the private respondent alleges that the continuing
guaranty and suretyship executed by petitioner Alfredo Ching in pursuit of
his profession or business. Furthermore, according to the private
respondent, the right of the petitioner-wife to a share in the conjugal
partnership property is merely inchoate before the dissolution of the
partnership; as such, she had no right to file the said motion to quash the
levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has
the right to file the motion to quash the levy on attachment on the 100,000
shares of stocks in the Citycorp Investment Philippines; (b) whether or not
the RTC committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction in issuing the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had
the right to file the said motion, although she was not a party in Civil Case
No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those
properties of the defendant against whom a writ of attachment has been
issued by the court. When the sheriff erroneously levies on attachment and
seizes the property of a third person in which the said defendant holds no
right or interest, the superior authority of the court which has authorized
the execution may be invoked by the aggrieved third person in the same
case. Upon application of the third person, the court shall order a summary
hearing for the purpose of determining whether the sheriff has acted
rightly or wrongly in the performance of his duties in the execution of the
writ of attachment, more specifically if he has indeed levied on attachment
and taken hold of property not belonging to the plaintiff. If so, the court
may then order the sheriff to release the property from the erroneous levy
and to return the same to the third person. In resolving the motion of the
third party, the court does not and cannot pass upon the question of the
title to the property with any character of finality. It can treat the matter
only insofar as may be necessary to decide if the sheriff has acted correctly
or not. If the claimants proof does not persuade the court of the validity of
the title, or right of possession thereto, the claim will be denied by the
court. The aggrieved third party may also avail himself of the remedy of
"terceria" by executing an affidavit of his title or right of possession over
the property levied on attachment and serving the same to the office
making the levy and the adverse party. Such party may also file an action
to nullify the levy with damages resulting from the unlawful levy and
seizure, which should be a totally separate and distinct action from the
former case. The above-mentioned remedies are cumulative and any one
of them may be resorted to by one third-party claimant without availing of
the other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on
attachment of the 100,000 shares of stocks in the name of petitioner-
husband claiming that the said shares of stocks were conjugal in nature;
hence, not liable for the account of her husband under his continuing
guaranty and suretyship agreement with the PBMCI. The petitioner-wife
had the right to file the motion for said relief.
On the second issue, we find and so hold that the CA erred in setting aside
and reversing the orders of the RTC. The private respondent, the petitioner
in the CA, was burdened to prove that the RTC committed a grave abuse
of its discretion amounting to excess or lack of jurisdiction. The tribunal
acts without jurisdiction if it does not have the legal purpose to determine
the case; there is excess of jurisdiction where the tribunal, being clothed
with the power to determine the case, oversteps its authority as determined
by law. There is grave abuse of discretion where the tribunal acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise of its
judgment and is equivalent to lack of jurisdiction.51
29
It was incumbent upon the private respondent to adduce a sufficiently
strong demonstration that the RTC acted whimsically in total disregard of
evidence material to, and even decide of, the controversy before certiorari
will lie. A special civil action for certiorari is a remedy designed for the
correction of errors of jurisdiction and not errors of judgment. When a
court exercises its jurisdiction, an error committed while so engaged does
not deprive it of its jurisdiction being exercised when the error is
committed.52
After a comprehensive review of the records of the RTC and of the CA,
we find and so hold that the RTC did not commit any grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired
during the marriage are presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband, or to the
wife. InTan v. Court of Appeals,53 we held that it is not even necessary to
prove that the properties were acquired with funds of the partnership. As
long as the properties were acquired by the parties during the marriage,
they are presumed to be conjugal in nature. In fact, even when the manner
in which the properties were acquired does not appear, the presumption
will still apply, and the properties will still be considered conjugal. The
presumption of the conjugal nature of the properties acquired during the
marriage subsists in the absence of clear, satisfactory and convincing
evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the
100,000 shares of stocks in the Citycorp Investment Philippines were
issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on May
14, 1979. This was done during the subsistence of the marriage of the
petitioner-spouses. The shares of stocks are, thus, presumed to be the
conjugal partnership property of the petitioners. The private respondent
failed to adduce evidence that the petitioner-husband acquired the stocks
with his exclusive money.55 The barefaced fact that the shares of stocks
were registered in the corporate books of Citycorp Investment Philippines
solely in the name of the petitioner-husband does not constitute proof that
the petitioner-husband, not the conjugal partnership, owned the
same.56 The private respondents reliance on the rulings of this Court in
Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v.
Banzon58 is misplaced. In the Maramba case, we held that where there is
no showing as to when the property was acquired, the fact that the title is
in the wifes name alone is determinative of the ownership of the property.
The principle was reiterated in the Associated Insurance case where the
uncontroverted evidence showed that the shares of stocks were acquired
during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this
Court in Wong v. Intermediate Appellate Court59 buttresses the case for
the petitioners. In that case, we ruled that he who claims that property
acquired by the spouses during their marriage is not conjugal partnership
property but belongs to one of them as his personal property is burdened
to prove the source of the money utilized to purchase the same. In this
case, the private respondent claimed that the petitioner-husband acquired
the shares of stocks from the Citycorp Investment Philippines in his own
name as the owner thereof. It was, thus, the burden of the private
respondent to prove that the source of the money utilized in the acquisition
of the shares of stocks was that of the petitioner-husband alone. As held by
the trial court, the private respondent failed to adduce evidence to prove
this assertion.
The CA, likewise, erred in holding that by executing a continuing
guaranty and suretyship agreement with the private respondent for the
payment of the PBMCI loans, the petitioner-husband was in the exercise
of his profession, pursuing a legitimate business. The appellate court erred
in concluding that the conjugal partnership is liable for the said account of
PBMCI under Article 161(1) of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the
Family Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit of
the conjugal partnership, and those contracted by the wife, also for the
same purpose, in the cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship
agreement as security for the payment of the loan obtained by the PBMCI
30
from the private respondent in the amount of P38,000,000. In Ayala
Investment and Development Corp. v. Court of Appeals,61 this Court
ruled "that the signing as surety is certainly not an exercise of an industry
or profession. It is not embarking in a business. No matter how often an
executive acted on or was persuaded to act as surety for his own employer,
this should not be taken to mean that he thereby embarked in the business
of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should
appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal
partnership responsible for a liability that should appertain alone to one of
the spouses is to frustrate the objective of the New Civil Code to show the
utmost concern for the solidarity and well being of the family as a unit.
The husband, therefore, is denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitioner-husbands act
of executing a continuing guaranty and suretyship agreement with the
private respondent for and in behalf of PBMCI. The contract of loan was
between the private respondent and the PBMCI, solely for the benefit of
the latter. No presumption can be inferred from the fact that when the
petitioner-husband entered into an accommodation agreement or a contract
of surety, the conjugal partnership would thereby be benefited. The private
respondent was burdened to establish that such benefit redounded to the
conjugal partnership.63
It could be argued that the petitioner-husband was a member of the Board
of Directors of PBMCI and was one of its top twenty stockholders, and
that the shares of stocks of the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated through the loans obtained;
that the petitioner-husbands career would be enhanced should PBMCI
survive because of the infusion of fresh capital. However, these are not the
benefits contemplated by Article 161 of the New Civil Code. The benefits
must be those directly resulting from the loan. They cannot merely be a
by-product or a spin-off of the loan itself.64
This is different from the situation where the husband borrows money or
receives services to be used for his own business or profession. In the
Ayala case, we ruled that it is such a contract that is one within the term
"obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own
business or his own profession, that contract falls within the term "
obligations for the benefit of the conjugal partnership." Here, no actual
benefit may be proved. It is enough that the benefit to the family is
apparent at the time of the signing of the contract. From the very nature of
the contract of loan or services, the family stands to benefit from the loan
facility or services to be rendered to the business or profession of the
husband. It is immaterial, if in the end, his business or profession fails or
does not succeed. Simply stated, where the husband contracts obligations
on behalf of the family business, the law presumes, and rightly so, that
such obligation will redound to the benefit of the conjugal partnership.65
The Court held in the same case that the rulings of the Court in Cobb-
Perez and G-Tractors, Inc. are not controlling because the husband, in
those cases, contracted the obligation for his own business. In this case,
the petitioner-husband acted merely as a surety for the loan contracted by
the PBMCI from the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decision and Resolution of the Court of Appeals are SET ASIDE AND
REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.
SECOND DIVISION
G.R. No. L-28454 May 18, 1978
EMILIO APACHECHA and ROSITA OTERO, petitioners,
vs.
HONORABLE VALERIO V. ROVIRA, as Judge of the Court of First
Instance of Iloilo (Branch IV); EUSTAQUIO AGOS, MARIA
BALAJADIA and PACIFICO LUMAUAG, respondent
BARREDO, J.:
31
Petitioner for certiorari impugning " a grave abuse of discretion the order
of respondent judge of September 16, 1967 in Civil Case No. 5911 of the
Court of First Instance of Iloilo, entitled Emilio Apachecha and Rosita
Otero vs. Eustaquio Agos and Maria Balajadia, which denied petitioners'
motion praying that private respondent Pacifico Lumauag be made to pay,
as surety on the supersedeas bond filed to stay the execution pending
appeal of the judgment that petitioners had secured against Agos and
Balajadia in the same Civil Case No. 5911, d appeal having been
dismissed by the Court of Appeals, ultimately affirmed by the Supreme
Court, for failure of the appellants to submit the printed record on appeal
on time and after the record had been remanded to the trial court and the
execution against the judgment debtors had been returned unsatisfied.
In denying petitioners' motion in question, respondent judge sustained the
contention of Lumauag that under Section 9 of Rule 58 in connection with
Section 20 of Rule 57, and the rulings of the Supreme Court thereunder, in
order that a surety may be bound under a bond for damages, the
application for damages must be filed before the entry of final judgment
and there must be a hearing with notice to the surety. Respondent judge
paid no heed to the contention of petitioners that the matter on hand is not
a claim for damages in a case of preliminary injunction governed by the
rules just referred to but a motion to enforce the supereas bond filed by
Lumauag and two other persons to secure the stay of the immediate
execution of a judgment in favor of petitioners, which is significally
governed by Section 3 of Rule 39 providing thus:
SEC. 3. Stay of execution. Execution issued before the expiration
of the nine to appeal may be stayed upon the approval by the court of a
sufficient supersedeas bond filed by the appellant, conditioned upon
the performance of the judgment or order appealed from in case it be
affirmed wholly or in part. The bond thus given may be proceeded
against on motion before the trial court, with notice to the surety, after
the case is remanded to it by the appellate court.
The petition must be granted. Petitioners are correct that what they seek is
not damages resulting from an improper preliminary injunction. Rather,
they are after the execution of a judgment in their favor which was stayed
on the strength of the supersedeas bond filed by Lumauag. And it
appearing that the appeal in question has been finally dismissed and the
record of the case has already been remanded to respondent court, the
filing of petitioners' motion seeking relief against private respondent
Lumauag was perfectly in order.
Anent Lumauag's contention in his answer here that apparently, his
principals, the judgment debtors, have amicably settled with petitioners,
the same was not raised by him in the court below. Besides, it is denied by
petitioners and, therefore, becomes a factual issue not appropriate for Us
to resolve here. It should be threshed out in the trial court.
aside, and said respondent is directed to proceed to act on petitioners'
motion of April 22, 1967 pursuant to the above opinion. Costs against
private respondent Lumauag.
Fernando (Chairman), Antonio, Aquino, Concepcion, Jr., and Santos, JJ.,
concur.

Before concluding, however, We deem it opportune to draw attention of

the respondent court to the terms of the judgment in issue which reads
thus:

PREMISES CONSIDERED, the Court hereby renders judgment in

favor of the plaintiffs and against the defendants, hereby ordering the
defendants to resell to the plaintiffs the land described in paragraph 2
of the complaint in consideration of the sum of P3,000.00; the
defendants shall execute in favor or, sign and deliver to the plaintiffs,
the corresponding deed of sale, otherwise, the Clerk of Court shall
execute the same once this decision becomes final and after the
plaintiffs shall have deposited' with him the sum of P3,000.00
representing the repurchase price of the land; the defendants shall
immediately vacate the land and deliver its possession to the plaintiffs:
they shall also reimburse the plaintiffs the sum of P6,123.30 for the
produce of the land which the defendants received and which the
plaintiffs could have received for the period from January, 1961 up to THIRD DIVISION
October 27, 1964; to pay a monthly damage of P278.33 beginning
November 1, 1964 until possession of the land shall have been G.R. No. 98118 December 6, 1991
delivered to the plaintiffs; pay the plaintiffs attorneys fees in the
amount of P1,000.00, plus the costs. (Page 37, Record.) HON. PETE NICOMEDES PRADO, in his capacity as Officer-in-Charge
of the Department of Transportation and Communications, ATTY. JUAN
Although the questioned order here has already resolved the matter of the C. STA. ANA, in his capacity as Manager of the Philippine Ports
execution of the instrument of resale ordered in the above judgment., what Authority, Port District of Manila, and the PHILIPPINE PORTS
needs to be clarified before execution may issue against Lumauag is the AUTHORITY, petitioners,
exact amount of the liability of the judgment debtors, which does not seem vs.
to be necessarily the full amount of the P10,000 supersedeas bond he HON REGINO T. VERIDIANO II, in his capacity as the Presiding Judge
had filed. of Branch 31 of the Regional Trial Court of Manila, PORT AREA
REALTY, INC., EVERETT STEAMSHIP CORPORATION, HARBOR
ACCORDINGLY, the petition is granted and the impugned orders of IMPORT SHOPPING CENTER, ORIENTAL MEDIA, INC. and ESTER
respondent judge of April 22, 1967 and October 21, 1967 are hereby set CALING LIM, respondents.
32
DAVIDE, JR., J.:p
On the basis of an unverified motion, may a court validly issue ex-parte a
so-called "status quo order" which could operate either as a temporary
restraining order or writ of preliminary injunction?
This is the main issue in this case which the following and procedural
antecedents have generated:
On 11 September 1920, the Smith Bell and Company leased from the
Government, through the Bureau of Lands, Blocks 144 and 145,
containing an area of 9,023.36 square meters, located at the Port Area,
Manila. The lessee transferred all its leasehold rights to the Philippine
Building Corporation on 27 May 1946, which the Secretary of Agriculture
and Natural Resources approved. The assignee was able to renew the lease
contract, but transferred in 1952 all its rights under the lease agreement to
S. Villanueva Enterprises, Inc. (SVEI), which secured on 1 September
1969 a renewal of the contract for another 25 years. On 26 November
1986, the then Minister of General Services ordered the cancellation of the
contract for violation by SVEI of its provisions. SVEI appealed the order
to the Office of the President which affirmed it in its Order of 29
September 1987. SVEI's several motions for reconsideration were denied.
The last denial, which affirmed with finality the 29 September 1987 Order,
was issued on 29 January 1990.
Earlier, on 17 March 1988, the President issued Executive Order No. 321
expanding the territorial area of the South Harbor Zone of the Port of
Manila and placing the whole area under the jurisdiction of the Philippine
Ports Authority (PPA).
On 16 March 1989, the PPA wrote SVEI informing the latter of PPA's
intention to take possession of the leased premises and demanding
payment of P728,861.38 representing accrued rentals and interests. On 30
June 1989, SVEI offered to restructure its obligations provided that the
PPA assured it in writing that the contract of lease will not be terminated.
In its letter of 22 August 1989, the PPA rejected the proposal and instead
demanded that SVEI vacate the premises within thirty (30) days from
receipt of the letter.
33
Thereafter, the PPA caused to be published a notice of bidding of Blocks
144 and 145 to be held on 28 November 1989. SVEI, however, filed on 23
November 1989 a complaint for Specific Performance with prayer for
preliminary injunction and/or restraining order against the PPA with
Branch 38 of the Regional Trial Court of Manila. The complaint sought to
enjoin the PPA from conducting the scheduled bidding. The case was
docketed as Civil Case No. 89-51192. SVEI invoked its right to remain in
the premises until 1994 by virtue of its 25-year renewed contract of lease.
The court issued a writ of preliminary injunction enjoining the PPA from
proceeding with the bidding.
In the meantime, on 22 March 1990, the PPA filed with the Metropolitan
Trial Court of Manila an ejectment case against SVEI. The case was
docketed as Special Action 131889-CV and was assigned to Branch 5 of
said court. 1
Upon the PPA's motion to dismiss Civil Case No. 89-51192, on the ground
that the lease contract had already been cancelled, and such cancellation
was affirmed by the Office of the President, and that there is a pending
ejectment case, Branch 38 of the Regional Trial Court of Manila, through
Judge Arturo Barias, Jr., issued on 30 August 1990 an Order dismissing
the case. It held that the Government had sufficient ground to cancel the
contract of lease in view of the violations of its terms by SVEI and that:
Secondly, the mere fact that there is an ejectment case filed with the
Metropolitan Trial Court of Manila, the Court is of the opinion and so
holds that all the issues raised herein, more specifically that of
possession, should better be threshed out in the metropolitan trial
court involving as they do (sic) the same parties and the same subject
matter. 2
SVEI appealed the order to the Court of Appeals where it is still pending
resolution.
In line with its plan to fully maximize the utility of Block 145, the PPA
decided to improve and renovate it. Pursuant thereto, it caused to be
published in the issues of the Manila Bulletin of 17, 22 and 29 October
1990 an Invitation to Prequalify and Bid for the lease and rehabilitation-
development of Block 145. Per the published notice, the opening of sealed
bids was set for 28 November 1990 at 2:00 P.M.
On 27 November 1990, herein private respondents Port Area Realty, Inc.,
Everett Steamship Corporation, Harbor Import Shopping Center, Oriental
Media, Inc., and Ester Caling Lim, on her behalf and on behalf of others
similarly situated, claiming to be actual occupants of the building located
in Block 145, filed a petition 3 with the Regional Trial Court of Manila for
Specific Performance with preliminary injunction and/or restraining order
against the Philippine Ports Authority, the Department of Transportation
and Communication, Atty. Juan C. Sta. Ana, in his capacity as Chairman
of the Bidding Committee and the members thereof. They claim to be
sublessees of Block 145, which is now a commercial complex. Private
respondents Port Area Realty, Inc. and Harbor Import Shopping Center
allege that they developed their respective areas into shopping stalls which
they leased to interested parties. Private respondent Oriental Media alleges
that it is using a portion of its premises for its printing machines but had
the rest developed into stalls which are leased to other parties. Private
respondent Everett Steamship claims that it is using the premises for its
offices while private respondent Lim avers that she is one of the
stallholders.
They attached to the petition a copy of the Order of Judge Barias.
The petition was docketed as Civil Case No. 90-55248 and was assigned
to Branch 31 of the Regional Trial Court of Manila which is presided over
by respondent Judge.
As their cause of action, private respondents allege in their petition that
the offer to bid Block 145 is patently discriminatory and deprives them of
their property rights without due process of law as there was no notice to
them, much less a call for a meeting, despite the knowledge of the PPA-
Port District of Manila that they developed, improved and spent for the
establishment of the complex. They are "small-time" and struggling
businessmen who "could not afford and easily win in such bidding," and
that in order to prevent such discrimination and deprivation of their
property rights, they should be allowed to negotiate with the Government
on such terms and conditions that are appropriate, reasonable and just.
They then pray that the court issue an order restraining the defendants
from continuing with the bidding of Block 145 and that if it is already
auctioned off, to annul the sale and direct the defendants to negotiate with
them for a contract of lease, rehabilitate, operate and/or manage Block 145
34
under such terms as are reasonable, just and proper and that after trial,
render judgment making the preliminary injunction permanent.
The respondent Judge issued on 28 November 1990 a temporary
restraining order (TRO) which was, however, served after the bidding; the
bidding itself was declared a failure because only two (2) bidders
participated.
Defendants, petitioners herein, filed an opposition to the application for
preliminary injunction. This was later followed by their Answer wherein
they plead the following special an affirmative defenses:
1) Plaintiffs are mere sublessees of S. Villanueva Enterprise Inc.
(SVEI); the contract in favor of the latter was cancelled, validity of
which cancellation was upheld in the Order of 30 August 1990 in
Civil Case No. 89-51192.
2) An ejectment case against SVEI is pending; considering a
judgment in an ejectment case is binding not only upon the defendant
but also against the latter's sublessees, privies, agents and/or
successors-in-interest, then the complaint should be dismissed on
ground (sic) of litis pendencia, moreover, plaintiffs are guilty of
forum shopping.
3) Plaintiffs do not have better rights than SVEI; are bidder and/or
possessors in bad faith; their possession of Block 145 does not create
any vested right; have not availed of appropriate administrative
remedies.
4) A negotiated contract, as suggested by plaintiffs, is never mode to
ensure any party the award of a contract.
and interpose a counterclaim for temperate and exemplary damages. 4
The application for injunction was heard on 7 January 1991 with the
private respondents presenting their first witness, Mr. Catalino Luzano,
president of the Port Area Realty, Inc. The hearing was ordered set for
continuation on 15, 17 and 22 January 1991. On 1 5 January 1991, counsel
for private respondents moved for postponement and the hearing was reset
for 29 January 1991. On said date, the parties manifested to the court that
they had agreed to consider the injunction incident moot and academic
because the act sought to be enjoined had already been accomplished.
Respondent Judge dictated in open court an order declaring the application
for injunction as "deemed abandoned." By agreement of the parties, the
pre-trial conference was set for 28 February 1991.
Thereafter, the PPA caused to be published in the 7, 14 and 21 February
1991 issues of the Manila Bulletin another Invitation to Prequahfy and Bid
for the "lease, renovation and operations of Block 145," setting the pre-bid
conference on 16 April 1991 and the submission and opening of sealed
bids on 25 April 1991.
On 28 February 1991, private respondents moved for the postponement of
the pre-trial on the ground that they had not yet received the notice of pre-
trial. The pre-trial was reset for 16 April 1991.
On 15 April 1991, a day before the pre-trial conference, private
respondents filed in Civil Case No. 90-55248 an unverified Urgent Motion
for the Issuance of a Status Quo Order 5 alleging therein as follows:
1. That the Restraining Order issued by this Honorable Court has
already lapsed;
2. That the hearing on Plaintiffs' motion for the issuance of a writ of
preliminary injunction was then in progress before it was abandoned
because of Defendants' assurance that there would be no public bidding
to be conducted during the pendency of this case;
3. That Defendants, in violation of this agreement, are intending and
threatening to conduct a-s in fact, a public bidding of the premises was
(sic) scheduled to be conducted on April 25,1991 which, if completed,
would render the issues in this case moot and academic.
and praying that "a status quo order be issued enjoining the Defendants
and their agents from continuing the scheduled public bidding on April 25,
1991 until after the issues shall have been resolved by the Honorable
Court." 6
This motion does not contain any notice of hearing to counsel for the
defendants (petitioners herein). There is a notice of hearing but it is
addressed to the Clerk of Court and reads:
The Clerk of Court
RTC-Manila
Branch 31
35
Greetings:
Kindly set the afore-stated Motion for resolution and
approval of the Honorable Court on April 15, 1991 at 9:00
A.M. or as soon thereafter at the convenience of the Court.
Above this notice is an entry reading:
Copy Furnished:
Solicitor Roman G. Del
Rosario
Office of the Solicitor
General
Salcedo Street, Legaspi
Village
Makati, Metro Manila
Acting on the aforesaid urgent motion on the day it was filed, the
respondent Judge dictated in open court an Order wherein he stated that:
... The motion alleges among other things the Prayer for
Writ of Preliminary Injunction was abandoned because of
Defendants' assurance that there would be no public
bidding to be conducted during the pendency of this case.
The movants pointed that in violation of this agreement, the
defendants are intending to conduct a public bidding on
April 25,1991 which will render the issues in this case
moot and academic.
It is the observation of this court that plaintiffs have
insisted in this action their vested rights to enter into
negotiations in lieu of public bidding, and in order that the
same will not become moot and academic, the Motion is
hereby granted.
and ruled as follows:
 WHEREFORE, both parties are hereby ordered to maintain
a status quo condition, that is defendants and their agents
are enjoined from continuing the public bidding on April
25, 1991 or any bidding thereafter until the issues shall
have been resolved by this Court. 7
When the case was called for pre-trial on 16 April 1991, as earlier agreed
upon by the parties, counsel for private respondents asked for a
postponement on the ground that one of them, Atty. Bandayrel, had not yet
prepared his Pre-Trial Brief, while the other, Atty. Jurado, claimed that his
client, Oriental Media, Inc., had not received its notice of hearing. Despite
the objection by counsel for herein petitioners, respondent Judge reset the
pre-trial for 16, 23 and 30 May 1991.
Petitioners then filed on 22 April 1991 the instant petition without even
moving for a reconsideration of the status quo order in view of the urgent
necessity for relief pleaded by the government 8 and because such a move
would be inadequate.
In Our Resolution of 24 April 1991, We required the respondents to
comment on the petition and issued a Temporary Restraining Order
enjoining the respondent Judge, his agents, representatives and/or any
person acting upon his orders or in his place or stead from enforcing
and/or carrying out the above Order of 15 April 1991.
Petitioners herein assert that respondent Judge committed grave abuse of
discretion in issuing the challengedstatus quo order since private
respondents' unverified urgent motion for its issuance does not allege any
fact or show any clear legal right to justify it and that it was heard without
notice to petitioners; additionally, it was issued without requiring private
respondents to put up a bond.
In their Comment filed on 6 May 1991, respondents allege that they did
not pursue their prayer for a preliminary mandatory injunction because of
the assurance of petitioners that the public bidding shall not be held while
the resolution of the issues in the case remain pending. However, since
petitioners disregarded that commitment, private respondents had to rush
to the court a quo for the issuance of a restraining order. The latter
argue, inter alia, that what the respondent judge issued was not a
preliminary injunction but merely a temporary restraining order, which, as
36
mandated by law, lapses ipso vigore after twenty (20) days from its
issuance. Hence, the legal basis for its issuance, that is, without hearing
and without requiring the putting up of a bond, should not be under
question." 9
In their Reply filed on 26 June 1991, petitioners insist that the status
quo order of 15 April 1991 is a "writ of preliminary injunction, but
whether it is a temporary restraining order or a writ of preliminary
injunction, the same was issued despotically and without the least legal
basis." If it is to be considered a temporary restraining order, it is, in
effect, an extension of the 28 November 1990 TRO, which would be
irregular and unlawful per Defalobos vs. Aquilizan. 10 Moreover, private
respondents are not entitled to the writ since the complaint fails to show a
cause of action. Finally, there was no agreement whatsoever that no
bidding would be conducted; the claim is a blatant lie, for, at the hearing
on 7 January, when Atty. Bandayrel for the private respondents sought to
make a misrepresentation on this point, his scheme was immediately
aborted, thus:
Atty. Bandayrel:
But there is already an admission of the
defendant that there will be no more bidding
with respect to the Block 145, Your Honor.
Solicitor Del Rosario:
There was no admission, Your Honor. There
was merely a bidding which was declared a
failure. As to whether we will hold another
bidding, Your Honor, that depends upon the
discretion of the management of the
Philippine Ports Authority.
Atty. Bandayrel:
I withdraw that manifestation, Your Honor. 11
In the Resolution of 3 July 1991, this Court gave due course to the petition
and required both parties to file their respective memoranda, which
petitioners complied with on 14 August 1991 and the respondents on 6
November 1991. In their Memorandum, respondents come forward with a
new theory, namely: The questioned status quoorder "was (sic) a mere
reinstatement of the previous temporary restraining order already issued
which was recalled because of Petitioner's assurance." 12
We do not hesitate to grant the petition. It is impressed with merit. There is
no doubt at all that respondent Judge had acted with palpable abuse of
discretion, so grave that it amounts to lack of jurisdiction, in issuing
the status quo order of 15 April 1991. His conduct can vividly be
described as despotic, arbitrary and capricious. The following suffice to
support this conclusion:
1. Respondent Judge knew, or should have known because it was his duty
to read the pleading, that the urgent motion for the issuance of a status
quo order does not contain a notice of hearing addressed to the counsel of
the adverse parties (defendants, herein petitioners). The notice
incorporated therein is a notice addressed to the Clerk of Court. This does
not comply with Sections 4 and 5, Rule 15 of the Rules of Court which
explicitly provide that the notice shall be served by the applicant to all
parties concerned at least three (3) days before the hearing thereof and
"shall be directed to the parties concerned, and shall state the time and
place for the hearing of the motion." A notice of hearing addressed to the
Clerk of Court and not to the parties is no notice at all.
In Philippine Advertising Counselors, Inc. vs. Revilla, 13 this Court, citing
prior relevant cases, held:
Finally, Section 4, Rule 15 of the Rules of Court provides that notice
of a motion shall be served by the applicant to all parties concerned,
at least three (3) days before the hearing thereof, together with a
copy of the motion, and of any affidavits and other papers
accompanying it; and Section 5 of the same Rule requires the notice
to be directed to the parties concerned and to state the time and place
for the hearing of the motion. A motion which fails to comply with
these requirements is nothing but a useless piece of paper [Manila
Surety and Fidelity Co., Inc. v. Bath Construction Company, et al.,
L-16636, June 24, 1965, 14 SCRA 435, 437, citing PNB v. Donasco,
L-18638, February 28, 1963; Manakil v. Revilla, Phil. 81; Roman
Catholic Bishop of Lipa v. Municipality of Unisan, 44 Phil. 866; and
37
Director of Lands v. Sanz, 45 Phil. 117. Sebastian v. Cabal, etc., et
al., L-25699, April 30, 1970, 32 SCRA 453, 454-55. Cledera, etc., et
al., v. Sarmiento, etc., et al., L-32450-54, June 10, 1971, 39 SCRA
552, 562-576]. In the instant case, there was, according to the trial
court in its Order of April 7, 1969, "no proof that plaintiff was duly
served with a copy of the motion for reconsideration."Moreover, the
motion did not contain a notice of hearing directed to petitioner
stating the time and place of the hearing. The notice was addressed
to the Clerk of Court requesting the latter to "set the foregoing
motion for the consideration and approval of this Honorable Court
immediately upon receipt hereof." The notice of hearing caused to be
issued by the trial court did not cure the defect of lack of notice, for
the duty to give such notice devolves upon the movant, not upon the
court [Magno v. Ortiz, etc., et al., L-22670, January 31, 1969, 26
SCRA 692, 695, citing Fulton Insurance Company v. Manila
Railroad Co., et al., L-24263, Nov. 18, 1967, 21 SCRA 974. Cledera,
etc., et al. v. Sarmiento, etc., et al., Ibid.]." (emphasis supplied).
We reiterated the above rule in Sacdalan vs. Bautista, et al., 14 and,
recently, in Bank of the Philippine Islands vs. Far East Molasses Corp. 15
A motion that does not contain a notice of hearing is but a mere scrap of
paper; it presents no question which merits the attention and consideration
of the Court. It is not even a motion for it does not comply with the rules
and, hence, the clerk has no right to receive it. 16 In Filipinas Fabricators
and Sales, Inc., et al. vs. Hon. Magsino, et al., 17 this Court was more
emphatic:
... a motion without notice of hearing is nothing but a piece
of paper filed in court, which should be disregarded and
ignored. ... (emphasis supplied).
The motion in question does not also show that a copy thereof was
actually served on counsel for the defendants (petitioners herein). It
merely states, copy furnished: without indicating how a copy was so
furnished. The respondent Judge could not have failed to notice that the
motion was filed only on 15 April 1991 and that there was no sufficient
proof of service thereof to counsel for the adverse parties. Section 6, Rule
15 of the Rules of Court provides that "no motion shall be acted upon by
the court, without proof of service of the notice thereof, except when the
court is satisfied that the rights of the adverse party or parties are not
affected." Respondent Judge knew very well that Government rights and
interests were involved and that its appropriate agencies have been
resisting not only the claims of private respondents as sublessees but also
those of the lessee (SVEI) whose contract of lease had in fact been
cancelled and against whom an ejectment suit is presently pending.
No compelling reason existed for acting on the motion on shorter notice. It
sought to restrain the holding of a public bidding scheduled on 25 April
1991, a full ten (10) days from its filing. The pre-trial conference had
earlier been reset to 16 April 1991. If private respondents had some
respect for fairness and were motivated by good faith, they could have
very well set the hearing of the motion on 16 April 1991. That there was in
fact an absence of urgency is best borne out by the date the motion was
prepared. It is dated APRIL 10, 1991. 18 If the movants had actually
intended to have had it heard on 15 April, they clearly had sufficient time
to comply with the rules without using the cover of "Urgency." Besides,
the notice of bidding was last published in the 21 February 1991 issue of
the Manila Bulletin. There is no indication at all that private respondents
came to know of the publication only on or shortly before 10 April to
justify their sense of urgency in preparing the said motion.
Obviously, respondent Judge deliberately defied and ignored the above
solemn pronouncements of this Court and disregarded the basic rules on
notice if only to grant special favor to movants. To quote a line
from Manila Surety and Fidelity Co., Inc. vs. Batu Construction Co., et al.,
supra, what he did is "intolerable in a well-ordered judicial system."
What We stated in Cledera vs. Sarmiento, supra, bears repeating if only to
express the Court's condemnation of callous and defiant disregard of
simple rules and settled doctrines:
To emphasize once more, the directives in Section 2 of
Rule 37 and Sections 4, 5, and 6 of Rule of the Revised Rules of Court
are as mandatory as they are clear and simple; and non-compliance
therewith is fatal to the cause of the movant, because the mere filing of
the motion for reconsideration, without the requisite notice of hearing,
does not toll the running of the period for appeal. Unless the movant
sets the time and place of hearing in the notice and serves the adverse
party with the same, the court would have no way to determine
38
whether the party agrees to or objects to the motion, and if he objects,
to hear him on his objection, since the rules themselves do not fix any
period within which to file his reply or opposition. The rules
commanding the movant to serve on the adverse party a written notice
of the motion (Section 2, Rule 37) and that the notice of hearing "shall
be directed to the parties concerned, and shall state the time and place
for the hearing of the motion" (Section 5, Rule 15), do not provide for
any qualifications, much less exceptions. To deviate from the
peremptory principle thus uniformly reaffirmed in the latest cases
aforecited in, and to exempt from the rigor of the operation of said
principle, the case at bar would be one step in the emasculation of the
revised rules and would be subversive of the stability of the rules and
jurisprudence thereon all to the consternation of the Bench and Bar
and other interested persons as well as the general public who would
thereby be subjected to such an irritating uncertainty as to when to
render obedience to the rules and when their requirements may be
ignored. We had to draw a line somewhere and WE did when we
promulgated on January 1, 1964 the Revised Rules of Court, wherein
WE delineated in a language matchless in simplicity and clarity the
essential requirements for a valid notice of hearing on any motion, to
eliminate all possibilities of equivocation or misunderstanding.
2. The urgent motion for a status quo order is unverified. Whether it be
considered as one for a temporary restraining order or for a preliminary
injunction, it is still patently insufficient in form and in substance. What is
sought to be enjoined is "the scheduled public bidding on April 25, 1991,"
an event which is not pleaded in or covered by the original petition in
Civil Case No. 90-55248 filed on 27 November 1990. It is, therefore, a
subsequent event or occurrence which could properly be the subject of a
supplemental pleading pursuant to Section 6, Rule 10 of the Rules of
Court. But even conceding for the moment that a motion may be allowed
for the purpose, such must be verified. This is the conclusion which
necessarily flows from the mandatory preconditions for the issuance of
either a preliminary injunction or a temporary restraining order. Section 4,
Rule 58 of the Rules of Court provides that a preliminary injunction may
be granted only if: (a) the complaint is verified and (b) the plaintiff files
with the clerk of court in which the action is pending the requisite bond;
and the pertinent portion of Section 5 thereof, as amended by B.P. Blg.
224, reads:
 SECTION 5. Preliminary injunction not granted without
notice; issuance of restraining order. No preliminary
injunction shall be granted without notice to the defendant.
If it shall appear from the facts shown by affidavits or by
the verified complaint that great or irreparable injury would
result to the applicant before the matter can be heard on
notice, the judge to whom the application for preliminary
injunction was made, may issue a restraining order to be
effective only for a period of twenty days from date of its
issuance. Within the said twenty-day period, the judge must
cause an order to be served on the defendant requiring him
to show cause, at a specified time and place, why the
injunction should not be granted, and determine within the
same period whether or not the preliminary injunction shall
be granted, and shall accordingly issue the corresponding
order. In the event that the application for preliminary
injunction is denied, the restraining order is deemed
automatically vacated. ... (emphasis supplied).
Thus, if in a pending case, a mere motion for the issuance of a writ of
preliminary injunction or temporary restraining order may be allowed in
connection with a supervening act, event or occurrence, the motion must
also be verified. That said motion is only an incident to a verified petition
does not provide an exception to what is stated above since the event
against which it is directed is not covered by or within the contemplation
of the petition.
In an apparent attempt to be clever, respondent Judge sought to
circumvent the above rule by carefully avoiding the use of the
term preliminary injunction or temporary restraining order. He just
directed the parties to maintain a status quo condition. Unfortunately, such
move displayed neither wisdom nor wit, but rather defiance of the rule.
3. The status quo order is in fact a preliminary injunction which enjoins
the defendants (petitioners) and their agents from continuing not only the
public bidding on 25 April 1991, but also "any bidding thereafter until the
issues shall have been resolved by the court a quo." Even if We set aside
the requirement of verification for the motion, respondent court cannot
validly and lawfully issue it without notice to the defendants and without
the compliance of the bond requirement, which is mandatory. 19
39
Worse, considering the allegations in the motion and the petition itself, to
which is attached as Annex "A" the Order of Judge Barias of 30 August
1990, it is obvious that private respondents have not shown any clear and
positive right to be entitled to the protection by the ancillary relief of
preliminary injunction. They are mere sublessees. As indisputably shown
in the Order of Judge Barias, which dismissed Civil Case No. 89-51192
filed by SVEI, the contract of lease over Blocks 144 and 145 in favor of
SVEI had been cancelled and such cancellation was affirmed with finality
by the Office of the President on 29 January 1990. Respondent Judge is
presumed to have read the petition and this Annex "A", as well as the
Answer of the defendants which makes reference to it and attaches as part
thereof a copy of the complaint for ejectment against SVEI. Such
admissions and pleadings provide enough basis for a denial of the
application for preliminary injunction since, in the absence of any further
evidence, it is quite obvious that the applicants had failed to show any
clear and positive right to the premises. As mere sublessees, they cannot
invoke any right superior to that of the lessee, their sublessor. The moment
the sublessor (SVEI in this case) is ousted from the premises, the
sublessees would have no legs to stand on. 20 In an ejectment case,
sublessees need even be impleaded as co-defendants with the lessee
(sublessor and a judgment of eviction against the lessee binds
sublessees. 21 As such, they cannot likewise claim any right to a
negotiated contract, especially one on their terms because according to
them, they are merely "small-time" or "struggling" businessmen. This
would clearly be against public policy and public interest.
For a writ of injunction to issue, the existence of a clear and positive right
especially calling for judicial protection must be shown; injunction is not
to protect contingent or future rights; nor is it a remedy to enforce an
abstract right. 22 An injunction will not issue to protect a right not in
esse and which may never arise or to restrain an act which does not give
rise to a cause of action. There must exist an actual right. 23
4. Finally, respondents submit that the status quo order "was a mere
reiteration of the previous temporary restraining order already issued
which was recalled because of petitioners' assurance." This compounds the
arbitrariness of respondent Judge's action and his inexplicable propensity
to disregard doctrines laid down by this Court. We ruled in Dionisio, et al.
vs. CFI of South Cotabato 24 that if before the expiration of the 20 day
period the application for preliminary injunction is denied, the temporary
restraining order would thereby be deemed automatically vacated. But if
no action is taken by the judge on the application within said 20-day
period, the temporary restraining order would automatically expire on the
20th day by the sheer force of law. 25 By the terms of B.P. Blg. 224, a
temporary restraining order can no longer exist indefinitely. This rule was
reiterated in Board of Transportation vs. Castro; 26whoever, to emphasize
the automatic expiration, this Court further stated that no judicial
declaration to that effect is necessary. In the recent case ofAquino, et al.
vs. Luntok, et al., 27 We further made the following pronouncement:

The 20-day period of effectivity of a TRO is non-extendible; the

restraining order automatically terminates at the end of such period
without the need of any judicial declaration to that effect. [Golden
Gate Realty Corp. vs. IAC, 152 SCRA 684]. Any extension would,
therefore, ordinarily, be disallowed. But, when injunction is
subsequently granted, as in the case at bar, any defect in the order
brought about by the extension of its enforceability is deemed cured FIRST DIVISION
[Footnote, Banque De L'Indochine Et De Suez, et al. vs. Torres, et al.,
G.R. Nos. 82405-06, July 10, 1989]. G.R. No. 88705 June 11, 1992

By no stretch of the imagination then may the earlier TRO, issued on 28 JOY MART CONSOLIDATED CORPORATION, petitioners,
November 1990, be deemed to have been reinstated, revived or
resurrected. vs.

Finally, We find to be unsubstantiated the claim of private respondents that
petitioners violated the "gentleman's agreement" that no bidding shall be
conducted until the issues are resolved. On the contrary, as shown above,
the crude attempt of Atty. Bandayrel in the court below to hold the
petitioners to an alleged admission was immediately rebuffed by Solicitor
De Rosario and Atty. Bandayrel was compelled to withdraw his
manifestation.
WHEREFORE, the instant petition is GRANTED. The challenged status
quo order dated 15 April 1991 issued by respondent Judge in Civil Case
No. 90-55248 is hereby SET ASIDE and declared NULL AND VOID.
Costs against private respondents. IT IS SO ORDERED
40
HON. COURT OF APPEALS, PHOENIX OMEGA DEVELOPMENT
AND MANAGEMENT CORPORATION and LIGHT RAIL TRANSIT
AUTHORITY, respondents.
GRIO-AQUINO, J.:
Does a trial court possess jurisdiction to dissolve a writ of preliminary
injunction which is pending review oncertiorari in the Court of Appeals?
In 1978-79, the government planned the Light Rail Transit (LRT) system
to service the transportation requirements of the commuting public from
Baclaran to Balintawak Monument and vice versa. The property of Joy
Mart at Carriedo Street, Sta. Cruz, Manila, where the Isetann Department
Store is located, and three (3) other adjoining parcels of land (with a total
area of 1,611 sq. m., on which stands the Presidente Hotel leased by Joy
Mart) was among the properties that would be needed for the LRT system
and were being considered for expropriation should negotiations for their
acquisition fail. As a gesture of cooperation with the government, Joy
Mart consented to sell the property and give up its leasehold rights over
the adjacent properties, provided, it would be given the first option to
redevelop the entire area denominated as the consolidated block of the
LRT Carriedo station encompassing Joy Mart's properties.
On September 8, 1982, while negotiations for the purchase of the
properties were ongoing between Joy Mart and the Special Committee on
Land and Property Acquisition of the Light Rail Transit Authority (LRTA),
the latter entered into a contract with the Philippine General Hospital
Foundation Inc. which had been granted the right, authority, and license to
develop the areas adjacent to the LRT stations and to manage and operate
the concessions to be established in Caloocan, Manila, and Pasay, with the
right to sublease, assign, and transfer any of its rights and interests therein.
On February 22, 1983, Joy Mart conveyed its property and waived its
leasehold rights on the adjacent lots in favor of the government, through
the LRTA, under a Deed of Absolute Sale. The Deed provided, among
other things, that "upon recommendation of the special panel created by
the LRTA Committee on Land and Property Acquisition. LRTA agreed that
Joy Mart, the owner of Isetann and lessee of the Presidente Hotel, should
be given the first option in the redevelopment of the consolidated block,
notwithstanding their compensation for the property."
As partial compliance with the aforestated first option, the PGH
Foundation subleased to Joy Mart the LRT Carriedo station covering the
consolidated block for the purpose of constructing a multi-storey building
of first class materials.
Subsequently, Joy Mart submitted to LRTA its plans for the construction
of the building occupying the consolidated block. However, LRTA
informed Joy Mart that the proposed building should occupy only an area
of 1,141.20 square meters as the rest of the areas within the consolidated
block would be used by the LRT station and as set-back area or open space
for the benefit of the commuting public.
When Joy Mart reminded LRTA of the contract provisions over the
consolidated block, the former was assured that, in the event any area in
41
the consolidated block was to be released for redevelopment, the first
option of Joy Mart would be respected and implemented.
On August 30, 1984, an Addendum to the Sublease Agreement was
executed between Joy Mart and the PGH Foundation increasing the area to
be used and occupied by Joy Mart. Aside from the increase of monthly
rental and provision for an escalation clause, Joy Mart was made to pay
"goodwill" in the sum of P3.0 Million.
Pursuant to its understanding with, and the assurances of, LRTA, Joy Mart
constructed an eight-storey building with ten levels fully airconditioned in
the subject area. Joy Mart had to borrow P50.0 Million for this project.
The feasibility study on the viability of this project was conditioned upon
Joy Mart serving the business requirements in the LRT Carriedo station
and maintaining its first option to redevelop and occupy any available area
therein.
On November 28, 1986, LRTA entered into Commercial Stalls Concession
Contract with the Phoenix Omega Development and Management
Corporation ("Phoenix" for brevity) awarding to it all the areas and
commercial spaces within the three LRT terminals and the fifteen (15) on-
line stations.
In the third quarter of 1987, Joy Mart learned of the contract between
LRTA and Phoenix when construction activities commenced within the
consolidated block of the LRT Carriedo station.
Joy Mart made representations with the LRTA and reiterated its first
option to redevelop the subject area, but to no avail.
Joy Mart filed a complaint for specific performance of contract and
damages for breach of contract with injunction against the LRTA and
Phoenix on August 21, 1987. The case entitled "Joy Mart vs. LRTA and
Phoenix," was docketed as Civil Case No. 87-41731 in the Regional Trial
Court of Manila. Branch XXXII. Joy Mart asked that LRTA be ordered to
award to it, either by sale, or lease, the redevelopment of the area known
as the consolidated block of the LRT Carriedo station which is part of the
area subject of the Deed of Absolute Sale dated February 22, 1983,
executed by Joy Mart in favor of the Government or LRTA. Joy Mart also
asked the court to issue a writ of preliminary injunction and/or restraining
order "commanding the respondents (LRTA and Phoenix) individually and
collectively, their officers and employees, to cease and desist from the
construction being had in the property adjacent to the leased premises."
On September 25, 1987, the trial court, presided by Judge (now Court of
Appeals Justice) Artemon D. Luna, after hearing the parties and
considering their respective memorandums in amplification of oral
arguments, issued a writ of preliminary injunction "commanding the
defendant Phoenix to cease and desist from continuing with the
construction going on adjacent to the property on lease to the plaintiff by
LRTA, until further orders from this court, upon posting by the plaintiff of
a P10,000.00 bond approved by the court, which may answer for any
damages that the defendants may sustain by reason of the issuance of this
writ" (p. 41. Rollo).
Phoenix sought relief in the Court of Appeals by filing a Petition for
Certiorari and Prohibition (CA-G.R. SP No. 12998) praying the appellate
court: (1) to require the trial court to immediately lift the writ of injunction
and/or to refrain from further carrying out or implementing it; and (2) after
due hearing: (a) reverse and set aside the order granting the writ of
preliminary injunction; (b) dissolve the writ of injunction dated September
23, 1987; and (c) prohibit the trial judge from taking cognizance of the
case and to remand it to Branch IX of the Regional Trial Court of Manila
which had first taken cognizance of the case. The petition was docketed as
CA-G.R. SP No. 12998 and raffled to the Sixteenth Division of the Court
of Appeals which gave due course to the petition but did not issue a
restraining order against the trial court.
Meanwhile, in the trial court, the LRTA and Phoenix filed separate
answers to Joy Mart's complaint in Civil Case No. 87-41731. The pre-trial
of the case was set on November 13, 1987. As Phoenix and Joy Mart were,
exploring avenues for an amicable settlement, the pre-trial conference was
re-set on December 11, 1987, January 14, 1988, and lastly on March 2,
1988 when it was declared terminated.
On May 30, 1988, while their certiorari petition to review the writ of
preliminary injunction issued by Judge Luna (CA-G.R. SP No. 12998) was
still pending in the Court of Appeals, the LRTA and Phoenix filed in the
trial court a joint petition to dissolve the said Writ of Preliminary
Injunction, offering to post a counterbond for that purpose. They alleged
42
that the writ of preliminary injunction was causing tremendous losses to
LRTA and Phoenix because they have been unable to use the commercial
stalls in the consolidated block while Joy Mart could be compensated for
any loss it may suffer if the injunction were lifted; "that at a rate of
P1,000.00 monthly rental per square meter, the 28 stalls would earn
P305,800.00 a month (tsn, idem), that since September 21, 1987 when the
injunction was issued up to the present, Phoenix should have earned
P2,752.200.00 and suffered as much in damages which it will continue to
suffer if the injunction is not lifted" (p. 80. Rollo). They pleaded that they
"are as much entitled to the protection of their rights as plaintiff, that if fair
play gives the plaintiff a right to prolong the litigation, fairness also
demands that defendants be relieved of the thousands of pesos in damages
that they suffer for every day of delay in this case occasioned by the
imposition of the injunction" (p. 69. Rollo).
Joy Mart opposed the petition to dissolve the injunction. The petition was
heard on June 17, 1988 with the parties orally arguing their respective
sides of the question.
On July 6, 1988, the trial court dissolved the writ of preliminary injunction
on the ground that its continuance would cause great damage to the
respondents, while the petitioner's claim for damages, which was yet to be
proven, can be fully compensated. Joy Mart filed a motion for
reconsideration. LRTA and Phoenix opposed it. The trial court denied Joy
Mart's Motion for Reconsideration on August 9, 1988, stating thus:
The petition for dissolution is based on pertinent portion of Section 6,
Rule 58 of the Rules of Court, that the continuance of the injunction
would cause great and irreparable damage to defendants while plaintiff
can be fully compensated for whatever damages that it may suffer. The
evidence adduced during the hearing of the petition for dissolution of the
writ showed that the continuance of the writ would cause great damages
to defendants and plaintiff's claim for damages, if any and which it has
yet to prove, can be fully compensated.
The order of dissolution expressed in no uncertain terms that this Court
may not be ascribed as having pre-empted the authority and jurisdiction
of the Court of Appeals over the certiorariproceedings. The authority of
this Court to dissolve the writ is inferable in Section 6, Rule 58, Rules of
Court that it may dissolve the writ if it appears during the hearing that
 although plaintiff is entitled to the injunction, its continuance would
cause great damage to the defendants while the plaintiff can be fully
compensated for such damages as it may suffer (Cf. Tiaoqui and
Imperial vs. Horilleno, 63 Phil. 116, 120). (pp. 70-71, Rollo.)
On August 17, 1988, the Sixteenth Division of the Court of Appeals upon
being apprised by Phoenix of the trial court's action, dismissed Phoenix's
petition for certiorari (CA-G.R. SP No. 12998) for having become moot
and academic.
On September 14, 1989, Joy Mart sought relief in the Court of Appeals
from Judge Luna's order lifting the writ of preliminary injunction. In its
petition for certiorari with preliminary injunction and restraining order
(CA-G.R. SP No. 15618, assigned to the Ninth Division of the Court of
Appeals), Joy Mart prayed that:
. . . a temporary restraining order be forthwith issued
commanding the Honorable respondent Court to refrain from further
proceeding in the matter sought to be reviewed . . . ; (c) the application
for a writ of preliminary injunction be granted restraining respondent
Phoenix from continuing its subleasing and construction activities
adjacent to the premises leased to petitioner by respondent LRTA until
the main case is finally decided; and (d) a judgment be rendered
declaring the order of 6 July 1988, as well as the order of 9 August 1988,
of the Honorable respondent Court to be null and void, and upholding
the order of 21 September 1987 to be valid and binding. (pp. 39-
40, Rollo.)
The Court of Appeals, Ninth Division, gave due course to the petition and
required the respondents to answer within ten (10) days from notice. The
Court temporarily restrained the respondents "from implementing the
questioned orders of 6 July 1988 and 9 August 1988, and for private
respondent Phoenix to refrain from engaging in subleasing and
construction activities in the questioned premises, and from implementing
the sublease contracts if already signed, or the occupancy of the
commercial stalls if already constructed, until further orders from this
court" (pp. 17-18, Rollo). It set the hearing of the application for a writ of
preliminary injunction on September 29, 1988.
43
Despite the temporary restraining order which it received on September
19, 1988, Phoenix continued its construction activities and allowed its
tenants to occupy the finished stalls. Whereupon Joy Mart filed a motion
praying the Court of Appeals to declare Phoenix in contempt of court.
After hearing the application for a writ of preliminary injunction, the
opposition and answers of the LRTA and Phoenix, and the memoranda of
the parties, the Court of Appeals, Ninth Division, on February 28, 1989,
dismissed Joy Mart's petition.
Hence, this petition for review in which Joy Mart alleges that the Court of
Appeals erred:
1. in not finding that the trial court lost jurisdiction to act on the
motion to dissolve the writ of preliminary injunction, after the said
writ had been elevated to the Court of Appeals, Sixteenth Division, for
review;
2. in not finding that Phoenix is guilty of forum-shopping; and
3. in not finding Phoenix guilty of contempt, of court, and in not
issuing a writ of preliminary mandatory injunction.
These assignments of error are reducible to the lone issue of whether the
trial court continued to have control of the writ of preliminary injunction
even after the same had been raised to the Court of Appeals for review.
The answer is no. After the LRTA and Phoenix had elevated the writ of
preliminary injunction even after the same had been raised to the Court of
Appeals for review.
The answer is no. After the LRTA and Phoenix had elevated the writ of
preliminary injunction to the Court of Appeals for determination of the
propriety of its issuance (CA-G.R. SP No. 12998), the trial court
(notwithstanding the absence of a temporary restraining order from the
appellate court) could not interfere with or preempt the action or decision
of the Court of Appeals on the writ of preliminary injunction whose
annulment was sought therein by Phoenix and the LRTA.
In petitioning the trial court to lift the writ of preliminary injunction which
they themselves had brought up to the Court of Appeals for review,
Phoenix and the LRTA engaged in forum-shopping. After the question of
whether the writ of preliminary injunction should be annulled or continued
had been elevated to the Court of Appeals for determination, the trial court
lost jurisdiction or authority to act on the same matter. By seeking from
the trial court an order lifting the writ of preliminary injunction, Phoenix
and LRTA sought to divest the Court of Appeals of its jurisdiction to
review the writ. They improperly tried to moot their own petition in the
Court of Appeals a clear case of trifling with the proceedings in the
appellate court or of disrespect for said court.
In Prudential Bank vs. Castro, 142 SCRA 223, 231 where the trial judge
issued an order changing or correcting his previous order which had been
elevated to the Supreme Court for review, the judge's actuation was
deemed to be "disrespectful of this Court."
(e) Respondent Judge, in his Order of March 13, 1985,
gave course to the appeal of Complainant Bank although he had already
ruled that the latter had lost the right of appeal. That Order of March 13,
1985 was issued after Complainant Bank had instituted G.R. No. 69907
on February 19, 1985, asking that Respondent Judge be ordered to
allow its appeal from the summary judgment. The order of March 13,
1985 was clearly intended to render G.R. No. 69907 moot and
academic. Said Order was disrespectful of this Court. If at all,
Respondent Judge should have come to this Court in said G.R. No.
69907, to ask for leave to allow the appeal of Complainant Bank with
admission that he had realized that his previous denial of the appeal
was erroneous.
The actuation of Judge Luna in Civil Case No. 87-41731 can be
categorized as such. It is not excused by the fact that Phoenix and LRTA
were presenting evidence of losses and damages in support of their motion
to lift the writ of preliminary injunction, for that could as easily have been
done by them in the Court of Appeals which possesses "the power to try
cases and conduct hearing, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original
and appellate jurisdiction, including the power to grant and conduct new
trials or further proceedings" (Sec. 9, par. [3], 2nd par.. B.P. Blg. 129).
44
The trial judge played into the hands of Phoenix and the LRTA, and acted
with grave abuse of discretion amounting to excess of jurisdiction in
granting their motion to dissolve the writ of injunction. Judicial courtesy
behooved the trial court to keep its hands off the writ of preliminary
injunction and defer to the better judgment of the Court of Appeals the
determination of whether the writ should be continued or discontinued.
The non-issuance of a temporary restraining order by the Court of Appeals
upon receipt of the petition in CA-G.R. SP No. 12998 simply meant that
the trial court could proceed to hear and decide the main complaint of Joy
Mart for specific performance of contract and damages against the LRTA
and Phoenix. It did not give the lower court a license to interfere with the
appellate court's disposition of the writ of preliminary injunction.
By simply "noting" that the trial court's order lifting the writ of
preliminary injunction had mooted the case before it, the Court of Appeals
displayed regrettable indifference toward the lower court's interference
with the exercise of the appellate court's jurisdiction to decide and dispose
of the petition for certiorari pending before it. Instead of being jealous of
its jurisdiction, the Appellate Court was simply glad to be rid of the case.
The Court of Appeals' reasoning that the trial court did not overlap or
encroach upon its (the Court of Appeals') jurisdiction because the trial
court "was actually delving into a new matter the propriety of the
continuance of the writ of preliminary injunction in view of developments
and circumstances occurring after the issuance of the injunction" (pp. 51-
52, Rollo), is unconvincing, for the issue of the impropriety of issuing the
writ of preliminary injunction was inseparable from the issue of whether
the writ should be maintained or not. By lifting the writ of
injunction before the Court of Appeals could rule on whether or not it was
properly issued, the trial court in effect preempted the Court of Appeals'
jurisdiction and flouted its authority.
The private respondents' application to the trial court for the dissolution of
the writ of preliminary injunction that was pending review in the Court of
Appeals was a form of forum shopping which this Court views with
extreme disapproval. The lower court's proceeding being void for lack of
jurisdiction, the writ of preliminary injunction should be reinstated, and
the petition to annul the writ (CA-G.R. SP No. 12998) should be dismissed
on the ground of forum shopping as provided in Rule No. 17 of the
Interim Rules and Guidelines, Rules of Court.
17. Petitions for writs of certiorari, etc. No petition
for certiorari, mandamus, prohibition, habeas corpus or quo
warranto may be filed in the Intermediate Appellate Court if another
similar petition has been filed or is still pending in the Supreme
Court. Nor may such petition be filed in the Supreme Court if a
similar petition has been filed or is still pending in the Intermediate
Appellate Court, unless it be to review the action taken by the
Intermediate Appellate Court on the petition filed with it. A violation
of this rule shall constitute contempt of court and shall be a cause for
the summary dismissal of both petitions, without prejudice to the
taking of appropriate action against the counsel or party concerned.
The dismissal of Phoenix and LRTA's petition in G.R. No. SP 12998 by
the Court of Appeals (Sixteenth Division) was correct, but it should be for
violation of Rule 17 of the Interim Rules and Guidelines (forum-
shopping), not because the petition had become moot and academic.
The dismissal of Joy Mart's petition for certiorari in. CA-G.R. SP No.
15618 by the Court of Appeals (Ninth Division) is annulled and set aside
for grave abuse of discretion.
WHEREFORE, the petition for review is GRANTED. The Court of
Appeals' decision dated February 28, 1989 in CA G.R. SP No. 115618,
dismissing Joy Mart's petition for certiorari and upholding the dissolution
by the Regional Trial Court of Manila, Branch 32, of the preliminary writ
of injunction in Civil Case No. 87-41731, is hereby annulled and set aside
and the preliminary writ of injunction issued by the trial court on
September 23, 1987 in Civil Case No. 87-41731 is reinstated. However, if
in the meantime the construction and occupancy of the private
respondents' commercial stalls sought to be stopped by the injunction have
been completed, the rentals received by the private respondents after the
finality of this decision shall be deposited by them, or the lessees, in the
Regional Trial Court to await the final judgment in Civil Case No. 87-
41731. Costs against the private respondents.
The Court of Appeals, Ninth Division, is ordered to hear and decide Joy
Mart's petition to declare Phoenix in contempt of court for having
45
allegedly defied and disobeyed the Court's temporary restraining order of
September 15, 1988 in CA-G.R. SP No. 115618.
SO ORDERED.
G.R. No. 110086. July 19, 1999]
PARAMOUNT INSURANCE CORPORATION, petitioner, vs. COURT
OF APPEALS and DAGUPAN ELECTRIC
CORPORATION, respondents.
DECISION
YNARES-SANTIAGO, J.:
Before this Court is a petition for review on certiorari assailing the
Decision of the Court of Appeals dated April 30, 1993 in CA-G.R. CV No.
11970 which dismissed petitioner Paramount Insurance Corporations
(PARAMOUNT) appeal, thereby affirming the decision of the court a
quo finding petitioner liable on its injunction bond.
McAdore Finance and Investment, Inc. (McADORE) was the owner
and operator of the McAdore International Palace Hotel in Dagupan
City. Private respondent Dagupan Electric Corporation (DECORP), on the
other hand, was the grantee of a franchise to operate and maintain electric
services in the province of Pangasinan, including Dagupan City.
On February 2, 1978, McADORE and DECORP entered into a
contract whereby DECORP shall provide electric power to McADOREs
Hotel. During the term of their contract for power service, DECORP
noticed discrepancies between the actual monthly billings and the
estimated monthly billings of McADORE. Upon inspection, it was
discovered that the terminal in the transformers connected to the meter had
been interchanged resulting in the slow rotation of the
meter. Consequently, DECORP issued a corrected bill but McADORE
refused to pay. As a result of McADOREs failure and continued refusal to
pay the corrected electric bills, DECORP disconnected power supply to
the hotel on November 27, 1978.
 Aggrieved, McADORE commenced a suit against DECORP for
damages with prayer for a writ of preliminary injunction. McADORE
posted injunction bonds from several sureties, one of which was herein
petitioner PARAMOUNT, which issued an injunction bond on July 7,
1980 with a face amount of P500,000.00. Accordingly, a writ of
preliminary injunction was issued wherein DECORP was ordered to
continue supplying electric power to the hotel and restrained from further
disconnecting it.
After due hearing, the Regional Trial Court of Quezon City, Branch
106, rendered judgment in favor of DECORP, the dispositive portion of
which reads:
WHEREFORE, there being preponderance of evidence, the court hereby
dismisses the amended complaint. Further, the court rescinds the service
contract between the parties, and orders McAdore to pay Decorp the
following:
1. Actual damages consisting of total arrearages for electric
services rendered from February 1978 to January 1983, in the
sum of P3,834,489.62, plus interest at the legal rate, computed
from the date of demand until full payment;
2. Moral damages in the sum of P600,000.00;
3. Exemplary damages in the sum of P400,000.00;
4. Attorneys fees in the sum of P100,000.00; and
5. Costs of the suit.
While this case was under litigation, the court issued a number of
restraining orders or injunctions. During these incidents, McAdore filed
the following bonds: Policy No. 8022709 by Paramount Insurance
Corporation for P500,000.00; No. 00007 and No. 00008 by Sentinel
Insurance Company, Inc. for P100,000.00 and P50,000.00; and No. 1213
by the Travelers Multi-Indemnity Corporation for P225,000.00.
Pursuant to the dispositive portion of this decision, the court holds that
these bonding companies are jointly and severally liable with McAdore, to
the extent of the value of their bonds, to pay the damages adjudged to
Decorp.
Send this decision to: plaintiffs counsel Atty. Pagapong; defendants
counsel Atty. Vera Cruz; and to each of the bondsman.
46
It is so ordered.[1]
McADORE did not appeal the above decision. PARAMOUNT,
however, appealed to the Court of Appeals assigning the following errors,
to wit:
I. APPELLANT SURETY WAS NOT GRANTED DUE
PROCESS NOR GIVEN ITS DAY IN COURT.
II. APPELLANTS SURETY BOND, BEING AN INJUNCTION
OR TEMPORARY RESTRAINING ORDER BOND, THE
MANDATORY PROCEDURE IN SEC. 20, RULE 57, IN
RELATION TO SEC. 9, RULE 58, RULES OF COURT WAS
NOT OBSERVED IN THIS CASE;
III. NO EVIDENCE NOR PROOF HAD BEEN PRESENTED
TO SHOW THAT HEREIN APPELLANT SURETY BOND
SHOULD BE HELD LIABLE FOR TOTAL DAMAGES AS
ADJUDGED IN THE CHALLENGED DECISION.[2]
In essence, PARAMOUNT contended that it was not given its day in
court because it was not notified by DECORP of its intention to present
evidence of damages against its injunction bond, as mandated by Sec. 9 of
Rule 58, in relation to Sec. 20 of Rule 57 of the Revised Rules of Court.
The Court of Appeals was not convinced with petitioners
contentions. On April 30, 1993, it affirmed the decision of the trial court.
In the instant petition, PARAMOUNT seeks to reverse and set aside
the decision of the Court of Appeals on the following assignment of errors:
FIRSTLY, THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT NOTICE TO PETITIONER AND ITS PRESENCE
THROUGH COUNSEL IN ONE HEARING WHERE NO EVIDENCE
IN SUPPORT OF THE DAMAGES GUARANTEED BY PETITIONERS
BOND RENDERS THE NEED FOR ANOTHER HEARING ON THAT
MATTER A SUPERFLUITY.
SECONDLY, THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE DECISION OF THE COURT A QUO THAT
PETITIONER IS JOINTLY AND SEVERALLY LIABLE WITH
McADORE TO THE EXTENT OF ITS BOND, WHICH DECISION IS
NOT SUPPORTED BY THE EVIDENCE.[3]
 PARAMOUNT asserts that (t)he bone of contention in the instant case
is the matter of evidence (or lack thereof) presented by private respondent
during the hearing of the case a quo, notice (or lack thereof) to the surety
relative to the proceedings before the court a quo during which said
evidence was presented, as well as the actual proceedings themselves.
[4]
PARAMOUNT further asseverates that no evidence relative to
damages suffered by private respondent as a result of the injunction was
ever presented, or that if any such evidence was presented, the same was
done without notice to petitioner and in violation of its right to due
process.[5] Moreover, petitioner maintains that the injunction bond was
issued and approved sometime in April 1980 to guarantee actual and
material damages as may be sustained and duly proved by private
respondent. Thus, it can only cover the period prospectively from the date
of its issuance and does not retroact to the date of the initial controversy.
In its Comment, DECORP claims that PARAMOUNT participated in
the proceedings and was given its day in court. This is evidenced by the
Notice of Hearing dated February 26, 1985 addressed to the three
sureties. In fact, at the hearing on March 22, 1985, PARAMOUNT was in
attendance represented by Atty. Nonito Q. Cordero. Likewise,
PARAMOUNT was notified of the next hearing scheduled for April 26,
1985. DECORP further stressed that the hearing on April 26, 1985
proceeded as scheduled without any comment, objection, opposition or
reservation from PARAMOUNT.
The core issue to be resolved here is whether or not petitioner
Paramount Insurance Corporation was denied due process when the trial
court found the injunction bond it issued in favor of McADORE liable to
DECORP. Stated otherwise, was there sufficient evidence to establish the
liability of the petitioner on its injunction bond?
The petition is devoid of merit.
Petitioners submissions necessitates going into the nature of an
injunction as well as over the procedure in claiming, ascertaining and
awarding damages upon the injunction bond.
Injunction is an extraordinary remedy calculated to preserve the status
quo of things and to prevent actual or threatened acts violative of the rules
of equity and good conscience as would consequently afford an injured
party a cause of action resulting from the failure of the law to provide for
an adequate or complete relief.[6] A preliminary injunction is an order
granted at any stage of an action or proceeding prior to the judgment or
47
final order, requiring a party or a court, agency or a person to refrain from
a particular act or acts. It may also require the performance of a particular
act or acts, in which case it shall be known as a preliminary mandatory
injunction.[7] Its sole purpose is not to correct a wrong of the past, in the
sense of redress for injury already sustained, but to prevent further injury.
[8]
A preliminary injunction or temporary restraining order may be
granted only when, among others, the applicant, unless exempted by the
court, files with the court where the action or proceeding is pending, a
bond executed to the party or person enjoined, in an amount to be fixed by
the court, to the effect that the applicant will pay such party or person all
damages which he may sustain by reason of the injunction or temporary
restraining order if the court should finally decide that the applicant was
not entitled thereto. Upon approval of the requisite bond, a writ of
preliminary injunction shall be issued.[9] At the trial, the amount of
damages to be awarded to either party, upon the bond of the adverse party,
shall be claimed, ascertained, and awarded under the same procedure
prescribed in Section 20 of Rule 57.[10]
Rule 57, Section 20, of the 1997 Rules of Civil Procedure, which is
similarly applicable to preliminary injunction, pertinently provides:
Sec. 20. Claim for damages on account of improper, irregular or excessive
attachment. - An application for damages on account of improper,
irregular or excessive attachment must be filed before the trial or before
appeal is perfected or before the judgment becomes executory, with due
notice to the attaching obligee or his surety or sureties, setting forth the
facts showing his right to damages and the amount thereof. Such damages
may be awarded only after proper hearing and shall be included in the
judgment on the main case.
If the judgment of the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained during
the pendency of the appeal by filing an application in the appellate court
with notice to the party in whose favor the attachment was issued or his
surety or sureties, before the judgment of the appellate court becomes
executory. The appellate court may allow the application to be heard and
decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages
awarded to him from any property of the attaching obligee not exempt
from execution should the bond or deposit given by the latter be
insufficient or fail to fully satisfy the award. (mutatis mutandis)
The above rule comes into play when the plaintiff-applicant for
injunction fails to sustain his action, and the defendant is thereby granted
the right to proceed against the bond posted by the former. In the case at
bench, the trial court dismissed McADOREs action for damages with
prayer for writ of preliminary injunction and eventually adjudged the
payment of actual, moral, and exemplary damages against plaintiff-
applicant. Consequently, private respondent DECORP can proceed against
the injunction bond posted by plaintiff-applicant to recover the damages
occasioned by the issuance by the trial court of the writ of injunction.
In order for the injunction bond to become answerable for the above-
described damages, the following requisites must concur:[11]
1. The application for damages must be filed in the same case
where the bond was issued;
2. Such application for damages must be filed before the entry of
judgment; and
3. After hearing with notice to the surety.
The records of this case reveal that during its pendency in the trial
court, DECORP filed its Answer raising compulsory counterclaims for
rescission of contract, moral damages, exemplary damages, attorneys fees
and litigation expenses.[12] During the trial, Atty. Nonito Cordero
appeared[13] as counsel for petitioner. PARAMOUNT as well as the other
sureties were properly notified of the hearing and given their day in
court. Specifically, notice was sent to Atty. Cordero of the hearing on April
27, 1985, which was set for the purpose of determining the liability of the
sureties. The counterclaims for damages of DECORP were proven at the
trial and yet PARAMOUNT did not exert any effort to controvert the
evidence presented by DECORP. Given these circumstances,
PARAMOUNT cannot hide under the cloak of non-liability on its
injunction bond on the mere expediency that it was deprived of due
process. It bears stressing that what the law abhors is not the absence of
previous notice but rather the absolute lack of opportunity to ventilate a
partys side.[14] In other words, petitioner cannot successfully invoke
48
denial of due process where it was given the chance to be heard. As aptly
held by the Court of Appeals, viz.:
The records of the case disclose that during the trial of the case,
PARAMOUNT was present and represented by its counsel Atty. Nonito Q.
Cordero as shown in the trial courts order dated March 22, 1985 (Annex A
of Appellees Brief). In the said order, PARAMOUNT was duly notified of
the next hearing which was scheduled on April 26, 1985. Evidently,
PARAMOUNT was well-apprised of the next hearing and it cannot feign
lack of notice. Having been given an opportunity to be heard during the
main hearing for the matter of damages, PARAMOUNT therefore, cannot
bewail that it was not given an opportunity to be heard upon denial of its
motion to cancel its injunction bond. Of what use, therefore, is there to
conduct another hearing when the issue of damages has been the subject of
the main action of which PARAMOUNT had been duly notified? A new
notice and hearing prescribed by Sec. 20, Rule 57, is therefore a repetition
and a superfluity.
Moreover, PARAMOUNT has only itself to blame when it did not make
any opposition or objection during the hearing for the reception of
DECORPs evidence. Having manifested its desire to cancel its bond, it
should have asked for a deferment of hearing on DECORPs evidence but
PARAMOUNT did not do anything of this sort. Only when an adverse
judgment was rendered by the trial court against its principal McAdore did
it whimper a denial of procedural due process.[15]
On the same point, PARAMOUNT argues that contrary to the ruling
of the Court of Appeals, there is a need for a separate hearing for the
purpose of presenting evidence on the alleged damages claimed by
DECORP on petitioners injunction bond. PARAMOUNT contends that a
separate hearing is needed as no evidence dealing with DECORPs claim
for damages on petitioners bond was presented during the hearing wherein
petitioners counsel attended nor in the next hearing wherein petitioner was
notified but failed to attend. Since no hearing was held for the purpose of
establishing its liability on the injunction bond, PARAMOUNT concludes
that it is released from its obligation as surety.
Contrary to petitioners thesis, it is neither mandatory nor fatal that
there should be a separate hearing in order that damages upon the bond
can be claimed, ascertained and awarded, as can be gleaned from a cursory
reading of the provisions of Rule 57, Section 20. This Court agrees with
the appellate courts ruling that:
Jurisprudential findings laid down the doctrine that a final adjudication
that the applicant is not entitled to the injunction does not suffice to make
the surety liable. It is necessary, in addition, that the surety be accorded
due process, that is, that it be given an opportunity to be heard on the
question of its solidary liability for damages arising from a wrongful
injunction order. Withal, the fact that the matter of damages was among
the issues tried during the hearings on the merits will not render
unnecessary or superfluous a summary hearing to determine the extent of
a suretys liability unless of course, the surety had been impleaded as a
party, or otherwise earlier notified and given opportunity to be present
and ventilate its side on the matter during the trial.
The exception under the doctrinal ruling abovenoted is extant in the case
at bar.[16]
What is necessary only is for the attaching party and his surety or
sureties to be duly notified and given the opportunity to be heard. In the
case at bench, this Court accords due respect to the factual finding of the
Court of Appeals that PARAMOUNT was present and represented by its
counsel Atty. Nonito Q. Cordero as shown in the trial courts order dated
March 22, 1985 x x x.[17]
As stated, PARAMOUNT also argues that assuming it is liable on its
injunction bond, its liability should be limited only to the amount of
damages accruing from the time the injunction bond was issued until the
termination of the case, and not from the time the suit was commenced. In
short, it claims that the injunction bond is prospective and not retroactive
in application.
This Court does not agree. Rule 58, Section 4(b), provides that a bond
is executed in favor of the party enjoined to answer for all damages which
he may sustain by reason of the injunction. This Court already had
occasion to rule on this matter in Mendoza v. Cruz,[18] where it held that
(t)he injunction bond is intended as a security for damages in case it is
finally decided that the injunction ought not to have been granted. It is
designed to cover all damages which the party enjoined can possibly
suffer. Its principal purpose is to protect the enjoined party against loss or
49
damage by reason of an injunction. No distinction was made as to when
the damages should have been incurred.
Moreover, when petitioner issued its injunction bond in favor of
DECORP, it was done with the full knowledge of the relevant facts
obtaining in the controversy between DECORP and McADORE. At the
time the injunction bond was issued, DECORP was already claiming
arrears in electric bills and damages from McADORE.
It bears stressing that McADORE was found liable to pay actual
damages, moral damages, exemplary damages, attorneys fees and costs of
the suit. To argue therefore that PARAMOUNT is only liable on its
injunction bond from the time of its issuance and not from the time the suit
was commenced is preposterous if not absurd. Indeed, it would be
impossible to determine the reckoning point when moral damages,
exemplary damages, attorneys fees and costs of the suit were supposed to
have been incurred. Consequently, it can be safely deduced that the bond
answers for any and all damages arising from the injunction, regardless of
whether it was sustained before or after the filing of the injunction bond.
PARAMOUNT further maintains that it is liable to pay actual
damages only.[19] However, Rule 58, Section 4(b), clearly provides that
the injunction bond is answerable for all damages. The bond insures with
all practicable certainty that the defendant may sustain no ultimate loss in
the event that the injunction could finally be dissolved. Consequently, the
bond may obligate the bondsmen to account to the defendant in the
injunction suit for all: (1) such damages; (2) costs and damages; (3) costs,
damages and reasonable attorneys fees as shall be incurred or sustained by
the person enjoined in case it is determined that the injunction was
wrongfully issued.[20] Thus, PARAMOUNT is liable, jointly and
severally, for actual damages, moral damages, exemplary damages,
attorneys fees and costs of the suit, to the extent of the amount of the
bond.
Be that as it may, a scrutiny of petitioners Indemnity
Agreement[21] with McADORE shows that the former agreed to become
surety for the stated amount in favor of Dagupan Electric Corp. It should
be noted that McADORE was already in arrears starting from June
1979[22] up to the time it entered into an Indemnity Agreement with
PARAMOUNT on July 17, 1980.
It may not be amiss to point out that by the contract of suretyship, it is
not for the obligee to see to it that the principal pays the debt or fulfills the
contract, but for the surety to see to it that the principal pay or perform.
[23]
The purpose of the injunction bond is to protect the defendant against
loss or damage by reason of the injunction in case the court finally decides
that the plaintiff was not entitled to it, and the bond is usually conditioned
accordingly. Thus, the bondsmen are obligated to account to the defendant
in the injunction suit for all damages, or costs and reasonable counsels
fees, incurred or sustained by the latter in case it is determined that the
injunction was wrongfully issued.[24]
The posting of a bond in connection with a preliminary injunction (or
attachment under Rule 57, or receivership under Rule 59, or seizure or
delivery of personal property under Rule 60) does not operate to relieve
the party obtaining an injunction from any and all responsibility for the
damages that the writ may thereby cause. It merely gives additional
protection to the party against whom the injunction is directed. It gives the
latter a right of recourse against either the applicant or his surety, or
against both.[25] In the same manner, when petitioner PARAMOUNT
issued the bond in favor of its principal, it undertook to assume all the
damages that may be suffered after finding that the principal is not entitled
to the relief being sought.
WHEREFORE, based on the foregoing, the instant petition is
DENIED. The decision of the Court of Appeals dated April 30, 1993 in
CA-G.R. CV No. 11970 is AFFIRMED. With costs.
SO ORDERED.
50
FIRST DIVISION
A.M. No. P-91-549 July 5, 1993
REYNALDO SEBASTIAN, complainant,
vs.
SHERIFF ALBERTO A. VALINO, respondent.
QUIASON, J.:
Marblecraft, Inc., represented by its Assistant General Manager, Reynaldo
Sebastian, charges Alberto A. Valino, Senior Deputy Sheriff, Office of the
Regional Sheriff, Pasig, Metro Manila, with (1) gross abuse of authority
committed in connection with the implementation of the writ issued by the
Regional Trial Court, Makati, Metro Manila, in Civil Case No. 89-3368,
and (2) refusal to enforce the trial court's for the return of the seized items.
Complainant alleges that:
1. On March 3, 1989, Private Development Corporation of the
Philippines (PDCP) filed a replevin suit against Marblecraft, Inc., in Civil
Case No. 89-3368, in order to foreclose the chattels mortgaged by
Marblecraft. On March 30, 1989, the Regional Trial Court, Makati, issued
a writ of seizure directed against Marblecraft covering the chattels sought
to be replevied.
2. The enforcement of the writ of seizure was delayed because of
the writ of preliminary injunction enjoining PDCP from proceeding with
the foreclosure sale issued by the Regional Trial Court, Pasig, Metro
Manila in Civil Case No. 58006, It was only on October 31,1990, when
the Regional Trial Court, Pasig, dissolved the writ of preliminary
injunction.
3. On November 9, 1990, at around 10:37 A.M., respondent,
accompanied by several policemen and PDCP employees, went to the
office of Marblecraft at Barrio Santolan, Pasig, to implement the writ of
seizure. Respondent and his companions forcibly opened the lockers and
desk drawers of the employees of complainant and took their personal
belongings, as well as some office equipment issued to them. The
employees filed with the Office of the Provincial Prosecutor of Rizal two
criminal complaints for robbery against respondent and his companions.
4. Respondent only showed to complainant's counsel a copy of the
writ but did not furnish him with a copy of the application for the writ, the
supporting affidavit and the bond.
5. In the course of the implementation of the writ, which lasted for
four days, several pieces of machinery and equipment were destroyed or
taken away by respondent.
6. Respondent turned over the seized articles to the counsel of
PDCP and allowed these items to be stored in PDCP's warehouse in
Taguig, Metro Manila.
7. On November 14, 1990, complainant posted a counterbond. In
an order issued on the same day, the Regional Trial Court, Makati,
approved the bond and directed the immediate return of the seized items.
After denying PDCP's motion to set aside the November 14 Order, the trial
court reiterated the directive for the return of the seized items in its
November 26 Order. Respondent did not implement the orders.
8. PDCP filed a motion for reconsideration of the November 26
Order, which was denied in an Order dated December 11, 1990.
In his comment, respondent branded the administrative complaint against
him as pure harassment filed by Marblecraft after he had refused to defer
the implementation of the writ of seizure. He said that if he did not
implement the writ, he would have been accused by PDCP of non-
performance of his duties as a sheriff. He pointed out that the criminal
complaints for theft filed against him by the employees of complainant
were dismissed by the Provincial Prosecutor of Rizal.
The administrative complaint was referred to Judge Martin S. Villarama Jr.
of the Regional Trial Court, Pasig, for investigation, report and
recommendation.
In his report, Judge Villarama, found respondent guilty of partiality when
he immediately turned over the seized items to PDCP, and of willful
refusal to enforce the November 14, 26 and December 11, 1990 Orders of
the Regional Trial Court, Makati.
Under the Revised Rules of Court, the property seized under a writ of
replevin is not to be delivered immediately to the plaintiff. The sheriff
must retain it in his custody for five days and shall return it to the
51
defendant, If the latter, as in the case, requires its return and files a
counterbond (Sec. 4, Rule 60, Revised Rules of Court). In violation of said
Rule, respondent immediately turned over the seized articles to PDCP. His
claim that the Office of the Regional Sheriff did not have a place to store
the seized items, cannot justify his violation of the Rule. As aptly noted by
the Investigating Judge, the articles could have been deposited in a bonded
warehouse.
Respondent must serve on Marblecraft not only a copy of the order of
seizure but also a copy of the application, affidavit and bond (Sec. 4, Rule
60, Revised Rules of Court). Respondent did not furnish defendant with a
copy of the application, affidavit and bond. By his own admission, he only
served it with a copy of the order of seizure (Rollo, p. 37).
The more serious infraction of respondent is his refusal to implement the
order of the Regional Trial Court, Makati for him to return to complainant
the articles seized pursuant to the writ of seizure dated March 30, 1990.
The Order dated November 14, 1990 directed him "to immediately return
to defendant all its properties seized and taken from its premises pursuant
to the writ of seizure of March 30, 1989, from receipt of this Order (sic)"
(Rollo,
p. 42)
The Order dated November 26, 1990 directed him "to implement the
Order of this Court dated November 14, 1990 and to immediately return to
defendant all its properties seized and taken from its premises pursuant to
the writ of seizure dated March 30, 1989 from receipt of this Order (sic)"
(Rollo,
p. 44).
The Order dated December 11, 1990 directed him "to implement the Order
of this Court dated November 26, 1990, within three (3) days from the
receipt hereof, otherwise this Court will be constrained to appoint and
deputize another sheriff to implement the order dated November 26, 1990"
(Rollo, p. 47).
The only action taken by respondent to implement the Order dated
December 11, 1990 was to write a letter on December 12, 1990, addressed
to the counsel of PDCP, requesting the turnover of seized articles. As
expected, PDCP's counsel refused to part with the possession of the seized
articles and to issue a letter of authorization to withdraw the same from the
warehouse. Instead of taking possession of the articles, respondent merely
reported to the Regional Trial Court that "[i]t is now clear that the
undersigned cannot implement the Court order dated December 11, 1990
by reason of the refusal of PDCP to accept or to honor said Court order"
(Rollo, p.48).
The petition for certiorari of PDCP to question the orders of the Regional
Trial Court, Makati, was filed with the Court of Appeals only on
December 17, 1990. The Court of Appeals issued a temporary restraining
order only on December 21, 1990. Respondent therefore had more than
seven days within which to enforce the orders of the trial court if he was
minded to do so.
Respondent could have avoided getting into his present predicament had
he not turned over the possession of the seized goods prematurely to the
PDCP.
The complainant cannot be blamed if it harbored the suspicion that
respondent was beholden to PDCP. The zeal with which respondent
enforced the order of seizure in favor of PDCP was in sharp contrast with
his inaction in enforcing the three orders of the trial court directing him to
return the seized items to complainant.
It is not for respondent to question the validity of the orders of the trial
court. It is for him to execute them. As observed by the Investigating
Judge, "[t]here is therefore no excuse for respondent's wilfull refusal to
implement the Order of the Court" (Report and Recommendation, p. 10).
Disobedience by court employees of orders of the court is not conducive
to the orderly administration of justice. The display of partially in favor of
a party as against the other party erodes public confidence in the integrity
of the courts.
IN VIEW OF THE FOREGOING, the Court finds respondent guilty of
serious misconduct and RESOLVED to impose upon him the penalty of
FOUR (4) MONTHS SUSPENSION without pay, the period of which
should not be charged to his accumulated leave, with a WARNING that a
repetition of the same or of acts calling for disciplinary action will be dealt
with more severely. This resolution is IMMEDIATELY EXECUTORY,
52
and respondent is hereby ordered to forthwith desist from performing any
further official functions appertaining to said office.
SO ORDERED.
SECOND DIVISION
G.R. No. 89020 May 5, 1992
STRONGHOLD INSURANCE CO., INC., petitioner,
vs.
COURT OF APPEALS, respondent.
Gascon, Garcia & Associates for petitioner.
Castillo, Laman, Tan & Pantaleon for Northern Motors, Inc.
PARAS, J.:
In this petition for review on certiorari, petitioner Stronghold Insurance
Co., Inc. assails the decision * of the Court of Appeals in CA-G.R. CV No.
16154 affirming the order of the Regional Trial Court, Branch 167, Pasig,
Metro Manila in its Civil Case No. 52177. The dispositive portion of this
order of the Trial court reads:
WHEREFORE, in view of the foregoing consideration, the
claim of the defendant against SICI Bond No. 11652 of the Stronghold
Insurance Company, Inc. is found to have been established and said
surety company is adjudged liable for damages suffered by the defendant
as found by this Court in its decision dated June 9, 1986, to the extent of
the amount of the replevin bond, which is P42,000.00 (p. 20, Rollo)
The factual antecedents are not disputed.
On March 21, 1985, Leisure Club, Inc. filed Civil Case No. 52177 against
Northern Motors Inc. for replevin and damages. It sought the recovery of
certain office furnitures and equipments. In an order dated March 22,
1985, the lower court ordered the delivery of subject properties to Leisure
Club Inc. subject to the posting of the requisite bond under Section 2, Rule
60 of the Rules of Court. Accordingly, Leisure Club Inc. posted a replevin
bond (SICI Bond No. 11652) dated March 25, 1985 in the amount of
P42,000.00 issued by Stronghold Insurance Co., Inc. In due course, the
lower court issued the writ of replevin, thereby enabling Leisure Club Inc.
to take possession of the disputed properties.
Northern Motors Inc. filed a counterbond for the release of the disputed
properties. However, efforts to recover these properties proved futile as
Leisure Club Inc. was never heard of again.
For failure to appear in the pre-trial of the case, Leisure Club, Inc. was
declared non-suited. Northern Motors Inc. presented its evidence ex-
parte and on June 9, 1986, the lower court rendered its decision in favor of
Northern Motors Inc., the dispositive portion of which reads
PREMISE CONSIDERED, the instant petition is hereby dismissed and
on the counterclaim, plaintiff is ordered to pay defendant the following:
a) the actual value of the property sold at public auction by defendant,
and repossessed by plaintiff, of P20,900.00;
b) exemplary damages of P10,000.00;
c) attorney's fees in the amount of P10,000.00; and
d) costs of suit.
SO ORDERED. (p. 21, Rollo)
In the said decision, the lower court ruled that:
1. Northern Motors Inc. had rightful ownership and right of
possession over the subject properties.
2. Leisure Club Inc. is a sister company of Macronics Inc.,
a debtor of Northern Motors Inc., and former owner of
these properties.
3) Under the circumstances, Leisure Club Inc. instituted the
action for replevin as part of a scheme to spirit away these
properties and pave the way for the evasion of lawful
obligations by its sister company. (Decision dated June 4,
1986, p. 4).
On July 3, 1986, Northern Motors Inc. filed a "Motion for Issuance of
Writ of Execution Against Bond of Plaintiff's Surety", pursuant to Section
53
10, Rule 20 of the Rules of Court, which was treated by the lower court as
an application for damages against the replevin bond.
At the hearing of the said motion as well as the opposition thereto filed by
Stronghold Insurance Co., Inc., Northern Motors Inc. presented one
witness in the person of its former manager Clarissa G. Ocampo, whose
testimony proved that:
(a) Northern Motors Inc., and Macronics Marketing entered into a
leased agreement wherein the latter leased certain premises from the
former.
(b) Macronics failed to pay its bills to Northern Motors Inc., so the
latter was forced to terminate the lease.
(c) Because of Macronics' unpaid liabilities to Northern Motors Inc.,
the latter was forced to sell off the former's properties in an auction sale
wherein Northern Motors Inc. was the buyer. Macronics was duly
notified of the sale.
(d) These properties sold were the sole means available by which
Northern Motors Inc. could enforce its claim against Macronics. (TSN
dated January 30, 1987; pp. 94-95, Rollo)
Stronghold Insurance Co., Inc. did not cross-examine the said witness.
Instead it asked for continuance in order to present its own witness.
Stronghold, however, never presented any witness.
On July 21, 1987, the lower court issued its now disputed Order finding
Stronghold liable under its surety bond for the damages awarded to
Northern Motors Inc. in the June 8, 1986 Decision. In the said Order, the
lower court held:
Submitted for resolution is the "Motion for Issuance of Writ of
Execution Against Bond of Plaintiff's Surety" filed by the defendant
and the opposition thereto filed by the Stronghold Insurance Company,
Inc.
In the decision rendered by the Court on June 9, 1977, the defendant
Northern Motors, Inc. was the prevailling party and the judgment in its
favor ordered the plaintiff to pay the actual value of the property sold at
public auction by the defendant and repossessed by plaintiff in the
amount of P20,900.00, which is in favor of the plaintiff if the latter is
 found not entitled to the writ of replevin earlier issued against the
defendant.
The thrust of the opposition of the bonding company is to the effect that
the motion for a writ of execution is not the proper remedy but an
application against the bond should have been the remedy pursued. The
surety company contends that it is not a party to the case and that the
decision clearly became final and executory and, therefore, is no longer
liable on the bond. The surety company likewise raised the issue as to
when the decision became final and executory. Moreover, the surety
company avers that the defendant failed to prove any damage by reason
of the insurance of replevin bond.
Sec. 20 of Rule 57, in relation to Sec. 10 of Rule 60, provides that the
party against whom the bond was issued may recover on the bond for
any damage resulting from the issuance of the bond upon application
and hearing. The application must be filed either: before trial; before
appeal is perfected; before judgment becomes final and executory.
Being the prevailing party, it is undeniable that the defendant is entitled
to recover against the bond. The application for that propose was made
before the decision became final and before the appeal was perfected.
Both the prevailing and losing parties may appeal the decision. In the
case of the plaintiff appears that its counsel did not claim the decision
which was sent by registered mail on June 20, 1986 and filed the
motion for execution against the bond on July 3, 1986. Hence, with
respect to the defendant the motion against the bond was filed before
any appeal was instituted and definitely on or before the judgment
became final.
Although the claim against the bond was denominated as a motion for
issuance of a writ of execution, the allegations are to the effect that the
defendant is applying for damages against the bond. In fact, the
defendant invokes Sec. 10, Rule 60, in relation to Sec. 20, Rule 57,
Rules of Court. Evidently, therefore, the defendant is in reality claiming
damages against the bond.
It is undisputed that the replevin bond was obtained by the plaintiff to
answer for whatever damages the defendant may suffer for the
wrongful issuance of the writ. By virtue of the writ, the plaintiff took
54
possession of the auctioned properties. Despite a redelivery bond issued
by the defendant, the plaintiff refused to return the properties and in the
fact repossessed the same. Clearly, defendant suffered damages by
reason of the wrongful replevin, in that it has been deprived of the
properties upon which it was entitled to enforce its claim. Moreover, the
extent of the damages has been qualified in the decision dated June 9,
1986.
(pp. 21-23, Rollo)
This Order was appealed by Stronghold to the Court of Appeals. In a
decision dated July 7, 1989, the Court of Appeals affirmed the order of the
lower court. This decision is now the subject of the instant petition.
Petitioner raises the following assignment of error:
1. The lower court erred in awarding damages against
herein petitioner despite complete absence of evidence in
support of the application.
2. The lower court erred in just adopting the dispositive
portion of the decision dated June 7, 1986 as basis for the
award of damages against herein petitioner.
3. The lower court erred in awarding exemplary damages in
favor of Northern Motors, Inc. and against petitioner
Stronghold Insurance Co., Inc.
4. The lower court erred in awarding the attorney's fees of
P10,000.00 as damages against the bond.
(pp. 10-11, Rollo)
We find no merit in the petition.
In the case of Visayan Surety & Insurance Corp. vs. Pascual, 85 Phil. 779,
the Court explained the nature of the proceedings to recover damages
against a surety, in this wise:
In such case, upon application of the prevailing party, the
court must order the surety to show cause why the bond should not
respond for the judgment of damages. If the surety should contest the
reality or reasonableness of the damages claimed by the prevailing
party, the court must set the application and answer for hearing.
The hearing will be summary and will be limited to such new
 defense, not previously set up by the principal, as the surety may
allege and offer to prove. (Id. at 785; emphasis supplied) (p.
96, Rollo)
Stronghold Insurance Co., Inc., never denied that it issued a replevin bond.
Under the terms of the said bond, Stronghold Insurance together with
Leisure Club Inc. solidarily bound themselves in the sum of P42,000
(a) for the prosecution of the action,
(b) for the return of the property to the defendant if the
return thereof be adjudged, and
(c) for the payment of such sum as may in the cause be
recovered against the plaintiff and the costs of the action.
In the case at bar, all the necessary conditions for proceeding against the
bond are present, to wit:
(i) the plaintiff a quo, in bad faith, failed to prosecute the
action, and after relieving the property, it promptly
disappeared;
(ii) the subject property disappeared with the plaintiff,
despite a court order for their return; and
(iii) a reasonable sum was adjudged to be due to
respondent, by way of actual and exemplary damages,
attorney's fees and costs of suit.
(p. 63, Rollo)
On the propriety of the award for damages and attorney's fees, suffice it to
state, that as correctly observed by the Court of Appeals, the record shows
that the same is supported by sufficient evidence. Northern Motors proved
the damages it suffered thru evidence presented in the hearing of the case
itself and in the hearing of its motion for execution against the replevin
bond. No evidence to the contrary was presented by Stronghold Insurance
Co., Inc. in its behalf. It did not impugn said award of exemplary damages
and attorney's fees despite having every opportunity to do so.
As correctly held by respondent Court of Appeals
55
Stronghold Insurance, Inc. has no ground to assail the
awards against it in the disputed Order. Unless it has a new
defense, it cannot simplistically dissociate itself from
Leisure Club, Inc. and disclaim liability vis-a-vis the
findings made in the Decision of the lower court dated June
9, 1986. Under Section 2, Rule 60 the bond it filed is to
ensure "the return of the property to the defendant if the
return thereof be adjudged, and for the payment to the
defendant of such sum as he may recover from the plaintiff
in the action." The bond itself ensures, inter alia, "the
payment of such sum as may in the cause be recovered
against the plaintiff and the cost of the action." (pp. 24-
25, Rollo)
Beside, Leisure Club Inc.'s act of filing a replevin suit without the
intention of prosecuting the same but for the mere purpose of disappearing
with the provisionally recovered property in order to evade lawfully
contracted obligations constitutes a wanton, fraudulent, reckless,
oppressive and malevolent breach of contract which justifies award of
exemplary damages under Art. 2232 of the Civil Code.
The attorney's fees awarded in favor of Northern Motors Inc. are likewise
warranted under Article 2208 of the New Civil Code.
In any event, the trial court has decided with finality that the
circumstances justifying the award of exemplary damages and attorney's
fees exist. The obligation of Stronghold Insurance Co., Inc., under the
bond is specific. It assures "the payment of such sum as may in the cause
be recovered against the plaintiff, and the costs of the action." (emphasis
supplied)
WHEREFORE, the petition is DENIED for lack of merit. No costs.
SO ORDERED.
THIRD DIVISION
G.R. No. 79021 May 17, 1993
ROMEO S. CHUA, petitioner,
vs.
THE HON. COURT OF APPEALS, DENNIS CANOY AND ALEX DE
LEON, respondents.
BIDIN, J.:
This is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court assailing the decision of the Court of Appeals dated May 7,
1987 which nullified the orders dated April 18, 1986 and May 19, 1986 of
the Regional Trial Court of Cebu City Branch VIII.
The facts of the case are not disputed. On April 12, 1986, Judge Lauro V.
Francisco of the Regional Trial Court of Cebu City Branch XIII, after
examining 2Lt. Dennis P. Canoy and two (2) other witnesses, issued a
search warrant directing the immediate search of the premises of R.R.
Construction located at M.J. Cuenco Avenue, Cebu City, and the seizure of
an Isuzu dump truck with plate number GAP-175. At twelve noon of the
same date, respondent Canoy seized the aforesaid vehicle and took
custody thereof.
On April 14, 1986, a civil action for Replevin/Sum of Money for the
recovery of possession of the same Isuzu dump truck was filed by
petitioner against respondent Canoy and one "John Doe" in the Regional
Trial Court of Cebu City Branch VIII, presided by Judge Leonardo B.
Caares and docketed thereat as Civil Case No. CEB 4384 alleging among
other things, petitioner's lawful ownership and possession of the subject
vehicle; that he has not sold the subject vehicle to anyone; that he has not
stolen nor carnapped it, and that he has never been charged of the crime of
carnapping or any other crime for that matter. Further, petitioner
questioned the validity of the search warrant and the subsequent seizure of
the subject vehicle on the strength of the aforesaid search warrant.
On the same date, April 14, 1986, Judge Caares of the Regional Trial
Court of Cebu City Branch VIII directed the issuance of a writ of replevin
upon the posting of a bond in the amount of one hundred thousand pesos
(P100,000.00). The writ of replevin was also issued on the same date, and
56
the subject vehicle was seized on 15 April 1986 by Deputy Sheriff
Galicano V. Fuentes.
On April 16, 1986, respondent Canoy filed a motion for the dismissal of
the complaint and for the quashal of the writ of replevin. The motion was
opposed by petitioner. The motion to dismiss and to quash the writ of
replevin was denied in an Order dated April 18, 1986. A motion for
reconsideration of the aforementioned Order was filed and was opposed
by petitioner. In an order dated May 19, 1986, the Regional Trial Court of
Cebu Branch VIII denied the motion for reconsideration and directed the
delivery of the subject vehicle to petitioner. Not satisfied, herein private
respondents filed with the Court of Appeals a Petition for Certiorari and
Prohibition praying for the nullification of the orders dated April 18, 1986
and May 19, 1986.
Meanwhile, a case for Carnapping docketed as I.S. No. 86-185, entitled
"Alex De Leon, Complainant, vs. Romeo Chua, Respondent" pending
preliminary investigation before the Office of the City Fiscal of Cebu City
was provisionally dismissed upon motion of Romeo Chua with the
following reservation: "without prejudice to its reopening once the issue of
ownership is resolved", (Rollo, p. 62).
In a decision dated May 17, 1987, the Court of Appeals reversed the
Regional Trial Court of Cebu City Branch VIII, and nullified the
questioned orders. The appellate court ordered the dismissal of the
Replevin action, and directed that possession of the subject vehicle be
restored to Canoy. It applied the ruling in the case ofPagkalinawan vs.
Gomez (21 SCRA 1275 [1967]) which held:
Once a Court of First Instance has been informed that a search warrant
has been issued by another court of first instance, it cannot require a
sheriff or any proper officer of the court to take the property subject of
the replevin action, if theretofore it came into custody of another public
officer by virtue of a search warrant. Only the court of first instance that
issued such a search warrant may order its release.
Furthermore, it was also pointed out in the same case that the validity of a
search warrant may only be questioned in the same court that issued it.
Petitioner moved for a reconsideration of the decision, but the respondent
court denied the same. Thus, petitioner filed this appeal by certiorari. The
parties submitted their respective memoranda, and thereafter the case was
deemed submitted for decision.
The issue presented before the Court is whether or not the validity of a
seizure made pursuant to a search warrant issued by a court can be
questioned in another branch of the same court, where the criminal action
filed in connection with which the search warrant was issued, had been
dismissed provisionally.
At the outset, it must be pointed out that the ruling made by the Office of
the City Fiscal in the complaint for carnapping was erroneous. It held: ". . .
the preliminary investigation of that case is premature until such time that
the issue of ownership will be resolved by the Court of Appeals, so that
the instant case is hereby dismissed provisionally without prejudice to its
reopening once the issue of ownership is resolved in favor of
complainant." (emphasis supplied).
A criminal prosecution for carnapping need not establish the fact that
complainant therein is the absolute owner of the motor vehicle. What is
material is the existence of evidence which would show that respondent
took the motor vehicle belonging to another. The Anti-Carnapping Law or
Republic Act No. 6539 punishes as carnapping the taking with intent to
gain, of a motor vehicle belonging to another person, without the latter's
consent or by means of violence or intimidation of person or by using
force upon things.
Another aspect which needs to be stressed is the fact that since a
preliminary investigation is not part of the trial, the dismissal of a case by
the fiscal will not constitute double jeopardy and hence there is no bar to
the filing of another complaint for the same offense (People vs. Medted,
68 Phil. 435).
We find no merit in the main issue presented before Us. Petitioner seeks a
reversal of a decision of the Court of Appeals which relied on the decision
in Pagkalinawan vs. Gomez (supra).
The principle followed among courts in the dispensation of justice is that a
judge who presides in a branch of a court cannot modify or annul the
57
orders issued by another branch of the same court, since the two (2) courts
are of the same rank, and act independently but coordinately (Montesa vs.
Manila Cordage Co., 92 Phil. 25 [1952]).
It is a basic tenet of civil procedure that replevin will not lie for property
in custodia legis. A thing is in custodia legiswhen it is shown that it has
been and is subjected to the official custody of a judicial executive officer
in pursuance of his execution of a legal writ (Bagalihog vs. Fernandez,
198 SCRA 614 [1991]). The reason posited for this principle is that if it
was otherwise, there would be interference with the possession before the
function of the law had been performed as to the process under which the
property was taken. Thus, a defendant in an execution or attachment
cannot replevy goods in the possession of an officer under a valid process,
although after the levy is discharged, an action to recover possession will
lie (Francisco, Revised Rules of Court in the Philippines: Provisional
Remedies, p. 402 [1985]).
The Court had occasion to rule on this issue in the case of Vlasons
Enterprises Corporation vs. Court of Appeals(155 SCRA 186 [1987]). In
the aforementioned case, two (2) propeller pieces were seized on the
strength of a search warrant issued by the Court of First Instance of
Manila Branch XVIII. After the seizure, criminal complaints were filed
against the alleged thieves. However, the complaints were later on
dismissed. Five (5) months later, a civil action for the recovery of the
possession of the propellers were filed in the Court of First Instance of
Manila Branch XXIX. The latter court granted the motion for repossession
of the propellers. On appeal this Court held:
The proceeding for the seizure of the property in virtue of a search
warrant does not end with the actual taking of the property . . . and its
delivery . . ., to the court . . . . It is merely the first step in the process
to determine the character of the seized property. That determination is
done in the criminal action involving the crime or crimes in connection
with which the search warrant was issued. Hence, such a criminal
action should be prosecuted, or commenced if not yet instituted, and
prosecuted. The outcome of the criminal action will dictate the
disposition of the seized property. (Vlasons Enterprises Corp. vs. Court
of Appeals, supra.)
In the Vlasons case, the Court differentiated the case brought before it the same court because they are co-equal and independent bodies acting
therein, from the Pagkalinawan case. It stated that in coordinately, must always be
the Pagkalinawan case, there was a conflict in jurisdiction. On the other adhered to.
hand, in the Vlasons case, it was certain that no criminal case would ensue
subsequent to or in connection with the search warrant, hence no conflict WHEREFORE, the petition is denied. The decision of the Court of
in jurisdiction or in the ultimate disposition of the property could arise. Appeals dated May 7, 1987 is AFFIRMED.
Thus, where personal property is seized under a search warrant and it
appears that the seizure will not be followed by the filing of any criminal SO ORDERED.
action, but there are conflicting claims asserted over the seized property,
the appropriate remedy is the institution of an ordinary civil action by any
interested party, or of an interpleader action by the Government itself, in
the proper competent court to which the seizing court shall transfer
custody of the articles. Another branch of the same court, in an action to
recover said property and during the pendency thereof, cannot order the
delivery of said personal property to therein plaintiff pendente lite.

Construing the Pagkalinawan case together with the Vlasons case, we rule
that where personal property is seized under a search warrant and there is
reason to believe that the seizure will not anymore be followed by the
filing of a criminal and there are conflicting claims over the seized
property, the proper remedy is the filing of an action for replevin, or an
interpleader filed by the Government in the proper court, not necessarily
the same one which issued the search warrant; however, where there is
still a probability that the seizure will be followed by the filing of a
criminal action, as in the case at bar where the case for carnapping was
"dismissed provisionally, without prejudice to its reopening once the issue
of ownership is resolved in favor of complainant" (emphasis supplied), or
the criminal information has actually been commenced, or filed, and
actually prosecuted, and there are conflicting claims over the property
seized, the proper remedy is to question the validity of the search warrant
in the same court which issued it and not in any other branch of the said
court.

Thus, the Regional Trial Court of Cebu Branch VIII erred when it ordered
the transfer of possession of the property seized to petitioner when the
latter filed the action for replevin. It should have dismissed the case since
by virtue of the "provisional dismissal", of the carnapping case there is
still a probability that a criminal case would be filed, hence a conflict in THIRD DIVISION
jurisdiction could still arise. The basic principle that a judge who presides
in one court cannot annul or modify the orders issued by another branch of G.R. No. 61508 March 17, 1999
58
Citibank, N.A. (Formerly First National City Bank), petitioner,
vs.
The Honorable Court of Appeals and Douglas F. Anama, respondents.
PURISIMA, J.:
At bar is a special civil action for certiorari with prayer for a temporary
restraining order faulting the Court of Appeals 1 with grave abuse of
discretion for nullifying the lower court's order of seizure of mortgaged
properties subject of a case for sum of money and replevin.
The facts leading to the institution of the case are as follows:
In considering for a loan obtained from Citibank, N.A. (formerly First
National City Bank), the defendant (private respondent herein) Douglas
Anama executed a promissory note, dated November 10, 1972, 2 to pay the
plaintiff bank the sum of P418,000.00 in sixty (60) equal successive
monthly installments of P8,722.25, starting on the 10th day of December
1972 and on the 10th of every month thereafter. The said Promissory Note
stipulated further that:
(a) the loan is subject to interest at the rate of twelve percent
(12%) per annum;
(b) the promissory note and the entire amount therein stated shall
become immediately due and payable without notice or demand
upon
(aa) default in the payment of any installment of principal or
interest at the time when the same is due;
(bb) the occurrence of any change in the condition and
affairs of the defendant, which in the opinion of the plaintiff
shall increase its credit risk;
(c) the defendant agrees to pay all costs, expenses, handling and
insurance charges incurred in the granting of the loan;
59
(d) in case the services of a lawyer is made necessary for collection,
defendant shall be liable for attorney's fees of at least ten percent
(10%) of the total amount due. 3
To secure payment of the loan, private respondent Anama also constituted
a Chattel Mortgage of even date in favor of petitioner, on various
machineries and equipment located at No. 1302 Epifanio delos Santos
Avenue, Quezon City, under the following terms and conditions:
(a) The machineries and equipment subject of the mortgage, stand
as security for defendant's account.
(b) All replacement, substitutions, additions, increases and
accretions to the properties mortgaged shall also be subject to the
mortgage.
(c) The defendant appoints the plaintiff as his attorney-in-fact with
authority to enter the premises of the defendant and take actual
possession of the mortgaged chattels without any court order, to sell
said property to any party.
(d) All expenses in carrying into effect the stipulations therein shall
be for the account of the defendant and shall form part of the
amount of the obligation secured by the mortgage.
(e) In case the plaintiff institutes proceedings for the foreclosure of
the mortgage, the plaintiff shall be entitled to the appointment of a
receiver without a bond.
(f) In case of default, the defendant shall be liable for attorney's fees
and cost of collection in the sum equal to twenty-five (25%) of the
total amount of the indebtedness outstanding and unpaid. 4
On November 25, 1974, for failure and refusal of the private respondent to
pay the monthly installment due under the said promissory note since
January 1974, despite repeated demands, petitioner filed a verified
complaint against private respondent Anama for the collection of his
unpaid balance of P405,820.52 on the said promissory note, for the
delivery and possession of the chattels covered by the Chattel Mortgage
preparatory to the foreclosure thereof as provided under Section 14 of the
Chattel Mortgage Law, docketed as Civil Case No. 95991 before the then
Court of First Instance of Manila.
On February 20, 1975, the defendant Anama submitted his Answer with
Counterclaim, denying the material averments of the complaint, and
averring inter alia (1) that the remedy of replevin was improper and the
writ of seizure should be vacated; (2) that he signed the promissory note
for P418,000.00 without receiving from plaintiff Citibank any amount, and
was even required to pay the first installment on the supposed loan in
December 1974; (3) that the understanding between him and the Citibank
was for the latter to release to him the entire loan applied for prior to and
during the execution of his promissory note, but Citibank did not do so
and, instead, delayed the release of any amount on the loan even after the
execution of the promissory note thereby disrupting his timetable of plans
and causing him damages; (4) that the amount released by Citibank to him
up to the present was not the amount stated in the promissory note, and his
alleged default in paying the installment on the loan was due to the delay
in releasing the full amount of the loan as agreed upon; (5) that the
macheniries and equipment described in the chattel mortgage executed by
him are really worth more than P1,000,000.00 but he merely acceded to
the valuation thereof by Citibank in said document because of the latter's
representation that the same was necessary to speed up the granting of the
loan applied for by him; (6) that the properties covered by said chattel
mortgage are real properties installed in a more or less permanent nature at
his (defendant's) premises in Quezon City, as admitted by Citibank in said
mortgage document; (7) that the mortgage contract itself stipulated that the
manner and procedure for affecting the sale or redemption of the mortgage
properties, if made extrajudicial, shall be governed by Act No. 1508 and
other pertinent laws which all pertain to real properties; and (8) that
because of the filing of this complaint without valid grounds therefor, he
suffered damages and incurred attorney's fees; the defendant, now private
respondent, averred.
On December 2, 1974, the trial court upon proof of default of the private
respondent in the payment of the said loan, issued an Order of Replevin
over the macheneries and equipment covered by the Chattel Mortgage.
However, despite the issuance of the said order of seizure of subject
chattels, actual delivery of possession thereof to petitioner did not take
60
place because negotiations for an amicable settlement between the parties
were encouraged by the trial court.
On March 24, 1975, a pre-trial conference was held and the lower court
issued an order for joint management by the petitioner and the private
respondent of the latter's business for ten (10) days, after which the former
would appointed receiver for the said business.
On April 1, 1975, the petitioner took over private respondent's business as
receiver. When further proposals to settle the case amicably failed, the
lower court proceeded to try the case on the merits.
On January 29, 1977, petitioner presented a Motion for the Issuance of
an Alias Writ of Seizure, ordering the sheriff to seize the properties
involved and dispose of them in accordance with the Revised Rules of
Court. The lower court then gave private respondent five (5) days to
oppose the said motion and on February 22, 1977, he sent in his
opposition thereto on the grounds: (1) that Citibank's P400,000 replevin
bond to answer for damages was grossly inadequate because the market
value of the properties involved is P1,710,000 and their replacement cost
is P2,342,300.00 per the appraisal report of the Appraisal and Research
Corp.; (2) that he was never in default to justify the seizure; (3) that the
Civil Case No. 18071 of the Court of First Instance, entitled Hernandes
vs. Anama, et al., which, according to Citibank, supposedly increased its
credit risk in the alleged obligation, had already been dismissed as against
him and the case terminated with the dismissal of the complaint against
the remaining defendant, First National City Bank, by the Court in its
orders of January 12, 1977 and February 7, 1977; (4) that his (defendant's)
supposed obligations with Citibank were fully secured and his mortgaged
properties are more than sufficient to secure payment thereof; and (5) that
the writ of seizure if issued would stop his business operations and
contracts and expose him to lawsuits from customers, and also dislocate
his employees and their families entirely dependent thereon for their
livelihood.
On February 28, 1977, acting on the said Motion and private respondent's
opposition, the trial court issued an Order granting the Motion
for Alias Writ of Seizure, ruling thus:
 WHEREFORE, the motion for alias writ of seizure is
hereby granted. At any rate, this Order gives another
opportunity for defendant and the intervenor who claims to
be a part owner to file a counterbond under Sec. 60 of
Rules of Court. 5
Private respondent moved for reconsideration of the aforesaid order but
the same was denied by the Resolution of March 18, 1977, to wit:
In view of the foregoing, the motion for reconsideration is
hereby denied.
At any rate, as already stated, the defendant has still a
remedy available which is to file a bond executed to the
plaintiff in double the value of the properties as stated in
the plaintiff's affidavit. The Court at this instance therefore
has no authority to stop or suspended the writ of seizure
already ordered. 6
Accordingly, by virtue of the Alias writ of Seizure, petitioner took
possession of the mortgaged chattels of private respondent. As a
consequence, the sheriff seized subject properties, dismantled and
removed them from the premises where they were installed, delivered
them to petitioner's possession on March 17, 18 and 19, 1977 and
advertised them for sale at public auction scheduled on March 22, 1977.
On March 21, 1977, private respondent filed with the Court of Appeals a
Petition for Certiorari and Prohibition 7with Injunction to set aside and
annul the questioned resolution of the trial court on the ground that they
were issued "in excess of jurisdiction and with grave abuse of discretion"
because of the "lack of evidence and clear cut right to possession of First
National City Bank (herein petitioner)" top the machineries subject of the
Chattel Mortgage.
On July 30, 1982, finding that the trial court acted with grave abuse of
discretion amounting to excess of lack of jurisdiction in issuing the
assailed resolutions, the Court of Appeals granted petition, holding that the
provision of the Rules of Court on Replevin and Receivership have not
been complied with, in that (1) there was no Affidavit of Merit
accompanying the Complaint for Replevin; (2) the bond posted by
61
Citibank was insufficient; and (3) there was non-compliance with the
requirement of a receiver's bond and oath of office. The decretal portion of
the assailed decision of the Court of Appeals, reads:
WHEREFORE, the petition is granted. The questioned resolutions
issues by the respondent judge in Civil Case No. 95991, dated
February 28, 1977 and March 18, 1977, together with the writs and
processes emanating or deriving therefrom, are hereby declare null and
void ab initio.
The respondent ex-officio sheriff of Quezon City and the respondent
First National City Bank are hereby ordered to return all the
machineries and equipment with their accessories seized, dismantled
and hauled, to their original and respective places and position in the
shop flooring of the petitioner's premises where these articles were,
before they were dismounted, seized and hauled at their own expense.
The said respondents are further ordered to cause the repair of the
concrete foundations destroyed by them including the repair of the
electrical wiring and facilities affected during the seizure, dismanting
and hauling.
The writ of preliminary injunction heretofore in effect is hereby made
permanent. Costs against the private respondents.
SO ORDERED 8
Therefrom, Citibank came to this Court via its present petition
for certiorari, ascribing grave abuse of discretion to the Court of Appeals
and assigning as errors, that:
I
THE RESPONDENT COURT ERRED IN
PRACTICALLY AND IN EFFECT RENDERING
JUDGMENT ON THE MERITS AGAINST THE HEREIN
PETITIONER BY ORDERING THE RETURN OF THE
MACHINERIES AND EQUIPMENT AND ITS
ACCESSORIES TO THEIR ORIGINAL AND
RESPECTIVE PLACES AND POSITIONS.
II
THE RESPONDENT COURT ERRED IN FINDING
THAT THE COMPLAINT OF THE PETITIONER DID
 NOT COMPLY WITH THE PROVISIONS OF SEC. 2,
RULE 60 OF THE RULES OF COURT.
III
THAT THE RESPONDENT COURT ERRED IN
FINDING THAT THE BOND POSTED BY THE
PETITIONER IS QUESTIONABLE AND/OR
INSUFFICIENT.
IV
THE RESPONDENT COURT ERRED IN FINDING
THAT THE PETITIONER DID NOT COMPLY WITH
THE PROVISIONS OF SEC. 5, RULE 59 BY FAILING
TO POST A RECEIVER'S BOND.
V Court, which prescribed the procedure for the recovery of
THE RESPONDENT ERRED IN FINDING THAT THE
HON. JORGE R. COQUIA ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO EXCESS
OR LACK OF JURISDICTION IN DEALING WITH THE
SITUATION.
I (a) That the plaintiff is the owner of the
Anent the first assigned error, petitioner contends that the Court of
Appeals, by nullifying the writ of seizure issued below, in effect,
rendered judgment on the merits and adjudged private respondent
Anama as the person lawfully entitled to the possession of the
properties subject of the replevin suit. It is theorized that the same
cannot be done, as the case before the court below was yet at trial
stage and lower court still had to determine whether or not private
respondent was in fact in default in the payment of his obligation
to petitioner Citibank, which default would warrant the seizure of
subject machineries and equipment.
The contention is untenable. A judgment is on the merits when it
determines the rights and liabilities of the parties on the basis of
the disclosed facts, irrespective of formal technical or dilatory
objections, and it is not necessary that there should have been a
trial. 9 The assailed decision of the Court of Appeals did not make
any adjudication on the rights and liabilities between Citibank and
Douglas Anama. There was no finding yet of the fact of default.
The decision only ruled on the propriety of the issuance of the writ
62
of seizure by the trial court. As worded by the respondent court
itself, "the main issues to be resolved are whether there was lack or
excess of jurisdiction, or grave abuse of discretion, in the issuance
of the orders in question, and there is no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law." 10
In resolving the issue posed by the petition, the Court of Appeals
limited its disposition to a determination of whether or not the
assailed order of seizure was issued in accordance with law, that is,
whether the provisions of the Rules of Court on delivery of
personal property or replevin as a provisional remedy were
followed. The Court of Appeals relied on Ruled 60 of the Rules of
possession of personal property, which Rule, provides:
Sec. 2. Affidavit and Bond. Upon applying or such order
the plaintiff must show by his own affidavit or that of some
other person who personally knows the facts:
property claimed particularly describing it,
or is entitled to the possession thereof;
(b) That the property is wrongfully detained
by the defendant, alleging the cause of
detention thereof according to his best of
knowledge, information and belief;
(c) That it has nor been taken for a tax
assessment or fine pursuant to law, or seized
under an execution, or an attachment against
the property of the plaintiff, or is so seized,
that is exempt from such seizure; and
(d) The actual value of the property.
The plaintiff must also give a bond, executed to the
defendant in double of the value of the property as stated in
the affidavit aforementioned, for the property to the
 defendant of such sum as he may recover from the plaintiff
in the action.
The Court of Appeals did not pass upon the issue of who, as between
Douglas Anama and Citibank, is entitled to the possession of subject
machineries, as asserted by the latter. When it ordered the restoration of
the said machineries to Douglas Anama (now the private respondent), it
merely defendant to the possession of his properties, since there was a
finding that the issuance of the writ was not in accordance with the
specific rules of the Rules of Court.
II
In its second assignment of errors, petitioner theorizes that the
Court of Appeals erred in finding that it did not comply with
Section 2, Rule 60 of the Rules of Court requiring the replevin
plaintiff to attach an affidavit of merit to the compliant.
Petitioner maintains that although there was no affidavit of merit
accompanying its complaint, there was nonetheless substantial compliance
with the said rule as all that is required to be alleged in the affidavit of
merit was set forth in its verified complaint. Petitioner argues further that
assuming arguendo that there was non-compliance with the affidavit of
merit requirement, such defense can no longer be availed of by private
respondent Anama as it was not alleged in his Answer and was only
belatedly interposed in his Reply to the Petitioner's Comment on the
Petitioner for Certiorari before the Court of Appeals.
Petitioner is correct insofar as it contends that substantial compliance with
the affidavit requirement may be permissible. There is substantial
compliance with the rule requiring that an affidavit of merit to support the
complaint for replevin if the complaint itself contains a statements of
every fact required to be stated in the affidavit of merit and the complaint
is verified like an affidavit. On the matter of replevin, Justice Vicente
Francisco's Comment on the Rules of Court, states:
Although the better practice is to keep the affidavit and
pleading separate, if plaintiff's pleading contains a statement of every
fact which the statute requires to be shown in the affidavits, and the
pleading is verified by affidavit covering every statement therein, this
63
will be sufficient without a separate affidavit; but in no event can the
pleading supply the absence of the affidavit unless all that the affidavit
is required to contain is embodied in the pleading, and the pleading is
verified in the form required in the case of a separate affidavit. (77 CJS
65 cited in Francisco, Rules of Court of the Philippines, Vol. IV-A, p.
383)
And similarly, in the case of an attachment which likewise requires an
affidavit of merit, the Court held that the absence of an affidavit of merit is
not fatal where the petition itself, which is under oath, recites the
circumstances or facts constitutive of the grounds for the petition. 11
The facts that must be set forth in the affidavit of merit are (1) that
plaintiff owns the property particularly describing the same, or that he is
entitled to its possession; (2) wrongful detention by defendants of said
property; (3) that the property is not taken by virtue of a tax assessment or
fine pursuant to law or seized under execution or attachment or, if it is so
seized, that it is exempt from seizure; and the, (4) the actual value of the
property. 12
But, as correctly taken note of by the Court of Appeals, petitioner's
complaint does not allege all the facts that should be set forth in an
affidavit of merit. Although the complaint alleges that petitioner is entitled
to the possession of subject properties by virtue of the chattel mortgage
executed by the private respondent, upon the latter's default on its
obligation, and the defendant's alleged "wrongful detention" of the same,
the said complaint does not state that subject properties were not taken by
virtue of a tax assessment or fine imposed pursuant to law or seized under
execution or attachment or, if they were so seized, that they are exempt
from such seizure.
Then too, petitioner stated the value of subject properties at a "probable
value of P200,000.00, more or less". Pertinent rules require that the
affidavit of merit should state the actual value of the property subject of a
replevin suit and not just its probable value. Actual value (or actual market
value) means "the price which an article would command in the ordinary
course of business, that is to say, when offered for sale by one willing to
sell, but not under compulsion to sell and purchased by another who is
willing to buy, but under no obligation to purchase it".13 Petitioner alleged
that the machineries and equipment involved are valued at P200,000.00
while respondent denies the same, claiming that per the appraisal report,
the market value of the said properties is P1,710,000.00 and their
replacement cost is P2,342,300.00. Petitioner's assertion is belied by the
fact that upon taking possession of the aforesaid properties, it insured the
same for P610,593.74 and P450,000.00, separately. It bears stressing that
the actual value of the properties subject of a replevin is required to be in
the affidavit because such actual value will be the basis of the replevin
bond required to be posted by the plaintiff. Therefore, when the petitioner
failed to declare the actual value of the machineries and equipment subject
of the replevin suit, there was non-compliance with Section 2, Rule 60 of
the Revised Rules of Court.
It should be noted, however, that the private respondent interposed the
defense of lack of affidavit of merit only in his Reply to the Comment of
Citibank on the Petition for Certiorari which respondent filed with the
Court of Appeals. Section 2, Rule 9 of the Revised Rules of Court,
provides:
Sec. 2. Defenses and objections not pleaded deemed
waived Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived;
except the failure to state a cause of action which may be
alleged in later pleading, . . . .
This Rule has been revised and amended, as follows:
Sec. 1. Defenses and objection not pleaded. Defenses
and objections not pleaded in a motion to dismiss or in the
answer are deemed waived. However, when it appears from
the pleadings or the evidence on record that the court has
no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by
statute of limitations, the court shall dismiss the claim.
Thus, although respondent's defense of lack of affidavit of merit is
meritorious, procedurally, such a defense is no longer available for failure
to plead the same in the Answer as required by the omnibus motion rule.
III
64
Petitioner also faults the Court of Appeals for finding that the bond posted
by the petitioner is questionable and/or insufficient. It is averred that, in
compliance with Section 2, Rule 60 requiring the replevin plaintiff to post
a bond in double the value of the properties involved, it filed a bond in the
amount P400,000.00 which is twice the amount of P200,000.00 declared
in its complaint.
The Court reiterates its findings on the second assignment of errors,
particularly on the issue of the actual of subject properties as against their
probable value. Private respondent, at the onset, has put into issues the
value of the said properties. In the Special Defenses contained in his
Answer, private respondent averred:
That while defendant admits that he executed a Chattel
Mortgage in favor of plaintiff, he vigorously denies that the
machineries covered therein are worth P200,000.00. The
fact is that plaintiff knew fully well that said chattels are
worth no less than P1,000,000.00, said defendant having
acceded to said valuation upon plaintiff's representation
that it would be necessary to speed up the granting of the
loan.
As here was a disagreement on the valuation of the properties in the first
place, proper determination of the value of the bond to be posted by the
plaintiff cannot be sufficiently arrived at. Though the rules specifically
require that the needed bond be double the value of the properties, since
plaintiff merely denominated a probable value of P200,000.00 and failed
to aver the properties' actual value, which is claimed to be much greater
than that declared by plaintiff, the amount of P400,000.00 would indeed
be insufficient as found by the Court of Appeals. The Rules of Court
requires the plaintiff to "give a bond, executed to the defendant in double
the value of the property as stated in the affidavit
. . . ." Hence, the bond should be double the actual value of the properties
involved. In this case, what was posted was merely an amount which was
double the probable value as declared by the plaintiff and, therefore,
inadequate should there be a finding that the actual value is actually far
greater than P200,000.00. Since the valuation made by the petitioner has
been disputed by the respondent, the lower court should have determined
first the actual value of the properties. It was thus as error for the said
court to approve the bond, which was based merely on the probable value
of the properties.
It should be noted that a replevin bond is intended to indemnify the
defendant against any loss that he may suffer by reason of its being
compelled to surrender the possession of the disputed property pending
trial of the
action. 14 The same may also be answerable for damages if any when
judgment is rendered in favor of the defendant or the party against whom a
writ of replevin was issued and such judgment includes the return of the
property to him. 15 Thus, the requirement that the bond be double the
actual value of the properties litigated upon. Such is the case because the
bond will answer for the actual loss to the plaintiff, which corresponds to
the value of the properties sought to be recovered and for damages, if any.
Petitioner also maintains that, assuming for the sake of argument that its
replevin bond was grossly inadequate or insufficient, the recourse of the
respondent should be to post a counterbound or a redelivery bond as
provided under Section 5 of Rule 60.
Sec. 5 and 6, Rule 60 of the Rules of Court, read:
Sec. 5. Return of property. If the defendant objects to the sufficient
of the plaintiff's bond, or of the surety or sureties thereon, he cannot
require the return of the property as in this section provided; but if he
does not so object, he may, at any time before the delivery of the
property to the plaintiff, if such delivery be adjudge, and for the
payment of such sum to him as may be recovered against the
defendant, and by serving a copy of such bond on the plaintiff or his
attorney.
Sec. 6. Disposition of property by officer. If within five (5) days
after the taking of the property by the officer, the defendant does not
object to the sufficiecy of the bond, or of the surety or sureties thereon,
or require the return of the property as provided in the last preceding
section; or if the defendant so objects, and the plaintiff's first or new
bond is approved; or if the defendant so require, and his bond is object
to and found insufficient and he does not forthwith file an approved
bond, the property shall be delivered to the plaintiff, the officer must
return it to the defendant.
65
The Court held in a prior case 16 that the remedies provided under Section
5, Rule 60, are alternative remedies. ". . . If a defendant in a replevin
action wishes to have the property taken by the sheriff restored to him, he
should, within five days from such taking, (1) post a counter-bond in
double the value of said property, and (2) serve plaintiff with a copy
thereof, both requirements as well as compliance therewith within the
five-day period mentioned being mandatory." 17 This course of action is
available to the defendant for as long as he does not object to the
sufficiency of the plaintiff's bond.
Conformably, a defendant in a replevin suit may demand the return of
possession of the property replevined by filing a redelivery bond executed
to the plaintiff in double the value of the property as stated in the plaintiff's
affidavit within the period specified in Section 5 and 6.
Alternatively, "the defendant may object to the sufficiency of the plaintiff's
bond, or of the surety or sureties thereon;" but if he does so, "he cannot
require the return of the property" by posting a counter-bond pursuant to
Section 5 and 6. 18
In the case under consideration, the private respondent did not opt
to cause redelivery of the properties to him by filing a counter-
bond precisely because he objected to the sufficiency of the bond
posted by plaintiff. Therefore, he need not file a counter-bond or
redelivery bond. When such objection was not given due course in
the court below when, instead of requiring the plaintiff to post a
new bond, the court approved the bond in the amount of
P400,000.00, claimed by respondent to be insufficient, and ordered
the seizure of the properties recourse to a petition
for certiorari before the Court of Appeals assailing such order is
proper under the circumstances.
IV
As its fourth assignment of errors, petitioner contends that the Court of
Appeals made an error of judgment in finding that the petitioner did not
comply with the provisions of Section 5, Rule 59 by failing to post a
receiver's bond. Petitioner contends that although it is in agreement with
the Court of Appeals that a receiver's bond is separate and distinct from a
replevin bond, under the circumstances it was not required to file a
receiver's bond because it did not assume receivership over the properties.
It is further argued that assuming that it did assume receivership, the
Chattel Mortgage expressly provides, that:
In case the MORTGAGEE institutes proceedings, judicially
or otherwise, for the foreclosure of this Chattel Mortgage,
or to enforce any of its rights hereunder, the
MORTGAGEE shall be entitled as a matter of right to the
appointment of a receiver, without bond, of the mortgaged
properties and of such properties, real or personal, claims
and rights of the MORTGAGOR as shall be necessary or
proper to enable the said receiver to property control and
dispose of the mortgaged properties. 19
The order of the trial court dated March 24, 1975 provided, among others,
that the properties shall be under joint management for a period of ten
days, after which period "the bank, by virtue of the stipulations under the
chattel mortgage, becomes the Receiver to perform all the obligations as
such Receiver" and "in the event that the bank decides not to take over the
receivership, the joint management continues." 20
From the evidence on record, it is palpably clear that petitioner Citibank
did, in fact, assume receivership. A letter21 dated April 1, 1975 sent by
petitioner to the private respondent, reads:
5 faithfully, and must file a bond, executed to such person
Anama Engineering Service Group
114 R. Lagmay Street
San Juan, Rizal
Attention: Mr. Douglas Anama
Gentlemen:
Pursuant to the Court order, we have decided to take over
your machine shop as Receiver.
66
We are hereby appointing Mr. Artemio T. Gonzales as our
representative.
Petitioner cannot therefore deny that nine days after the trial court issued
the order of receivership, it informed he private respondent that it would,
as it did, assume receivership.
The Court of Appeals found that the requirements of Section 5, Rule 59 on
receivership were not complied with by the petitioner, particularly the
filing or posting of a bond and the taking of an oath.
It should be noted that under the old Rules of Court which was in effect at
the time this case was still at trial stage, a bond for the appointment of a
receiver was not generally required of the applicant, except when the
application was ex parte. 22 Therefore, petitioner was not absolutely
required to file a bond. Besides, as stipulated in the chattel mortgage
contract between the parties, petitioner, as the mortgagee, is entitled to the
appointment of a receiver without a bond.
However, the Court of Appeals was right in finding a defect in such
assumption of receiver in that the requirement of taking an oath has not
been complied with Section 5, Rule 59, states:
Sec. 5. Oath and bond of receiver. Before entering upon
his duties, the receiver must be sworn to perform them
and in such sum as the court or judge may direct, to the
effect that he will faithfully discharge the duties of receiver
in the action and obey the orders of the court therein.
Consequently, the trail court erred in allowing the petitioner to assume
receivership over the machine shop of private respondent without
requiring the appointed receiver to take an oath.
V
In light of the foregoing, the answer to the fifth assignment of errors is in
the negative. For erroneously issuing thealias writ of seizure without
inquiring into the sufficiency of the replevin bond and for allowing
petitioner to assume receivership without the requisite oath, the Court of
Appeals aptly held that the trial court acted with grave abuse of discretion
in dealing with situation.

Under the Revised Rules of Court, the property seized under a writ of
replevin is not to be delivered immediately to the plaintiff. 23 This is
because a possessor has every right to respected in its possession and may
not be deprived of it without due process. 24

As enunciated by this Court in the case of Filinvest Credit Corporation

vs. Court of Appeals, 25

The reason why the law does not allow the creditor to
possess himself of the mortgaged property with violence
and against the will of the debtor is to be found in the fact
that the creditor's right of possession is conditioned upon
the fact of default, and the existence of this fact may
naturally be the subject of controversy. The debtor, for
instance, may claim in good faith, and rightly or wrongly,
that the debt is paid, or that for some other reason the
alleged default is nonexistent. His possession in this
situation is as fully entitled to protection as that of any G.R. No. 93540 December 13, 1999
other person, and in the language of Article 446 of the Civil
Code, he must be respected therein. To allow the creditor to FULGENCIO S. FACTORAN, JR., Secretary, Department of
seized the property against the will of the debtor would Environment and Natural Resources, VICENTE A. ROBLES and
make the former to a certain extent both judge and NESTOR GAPUZAN, petitioners,
executioner in his own cause a thing which is vs.
inadmissible in the absence of unequivocal agreement in COURT OF APPEALS (Third Division), Hon. BENIGNO T. DAYAW, as,
the contract itself or express provision to the effect in the Judge, Regional Trial Court of Quezon City, Branch 80, JESUS SY and
statute. LILY FRANCISCO UY, respondents.

WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No DE LEON, JR., J.:
pronouncement as to costs.
Before us is a petition for review on certiorari of the Decision and
SO ORDERED. Resolution of the Court of Appeals dated March 30, 1990 and May 18,
1990, respectively, dismissing petitioners' charge that Honorable Benigno
T. Dayaw, Presiding Judge of Branch 80 of the Regional Trial Court
(RTC) of Quezon City, committed grave abuse of discretion in ordering
them to deliver to private respondents the six-wheeler truck and its cargo,
some 4,000 board feet of narra lumber which were confiscated by the

67
Department of Environment and Natural Resources (DENR) and forfeited
in favor of the government. 1
The antecedent facts:
On August 9, 1988, two (2) police officers of the Marikina Police Station,
Sub-Station III, intercepted a six-wheeler truck, with Plate No. NJT-881,
carrying 4,000 board feet of narra lumber as it was cruising along the
Marcos Highway. They apprehended the truck driver, private respondent
Jesus Sy, and brought the truck and its cargo to the Personnel Investigation
Committee/Special Actions and Investigation Division (PIC/SAID) of the
DENR Office in Quezon City. There, petitioner Atty. Vecente Robies of
the PIC/SAID investigated them, and discovered the following
discrepancies in the documentaion of the narra lumber: 2
a. What were declared in the documents (Certificate of Timber Origin,
Auxiliary Invoices and various Certifications) were narra flitches,
while the cargo of the truck consisted of narra lumber;
b. As appearing in the documents, the Plate Numbers of the truck
supposed to carry the forest products bear the numbers BAX-404,
PEC-492 OR NSN-267, while the Plate Number of the truck
apprehended is NVT-881;
c. Considering that the cargo is lumber, the transport should have been
accompanied by a Certificate of Lumber Origin, scale sheet of said
lumber and not by a Certificate of Timber Origin, which merely covers
only transport of logs and flitches;
d. The log Sale Purchase Agreement presented is between DSM Golden
Cup International as the seller and Bonamy Enterprises as the
buyer/consignee and not with Lily Francisco Lumber and Hardware. 3
which are in violation of Bureau of Forestry Development (BFD) Circular
No. 10. The said BFD Circular requires possession or transportation of
lumber to be supported by the following documents: (1) Certificate of
Lumber Origin (CLO) which shall be issued only be the District Forester,
or in his absence, the Assistant District Forester; (2) Sales Invoice; (3)
Delivery Receipt; and (4) Tally Sheets. 4 Such omission is punishable
under Sec. 68 of Presidential Decree (P.D.) No. 705 otherwise known as
68
the Revised Forestry Code. 5 Thus, petitioner Atty. Robles issued a
temporary seizure order and seizure receipt for the narra lumber and the
six-wheeler truck. 6
On January 20, 1989, petitioner Fulgencio S. Factoran, then Secretary of
Environment and Natural Resources (hereinafter referred to as petitioner
Secretary) issued an order for the confiscation of the narra lumber and the
six- wheeler truck. 7
Private respondents neither asked for reconsideration of nor appealed, the
said order to the Office of the President. Consequently, the confiscated
narra lumber and six-wheeler truck were forfeited in favor of the
government. They were subsequently advertised to be sold at public
auction on March 20, 1989. 8
On March 17, 1989, private respondents filed a complaint with prayer for
the issuance of writs of replevin and preliminary injunction and/or
temporary restraining order for the recovery of the confiscated lumber and
six-wheeler truck, and to enjoin the planned auction sale of the subject
narra lumber, respectively. 9 Said complaint was docketed as Civil Case
No. Q-89-2045 and raffled to Branch 80 of the RTC of Quezon City.
On the same day, the trial court issued an Order directing petitioners to
desist from proceeding with the planned auction sale and setting the
hearing for the issuance of the writ of preliminary injunction on March 27,
1989. 10
On March 20, 1989, the scheduled date of the auction sale, private
respondents filed an Ex-Parte Motion for Release and Return of Goods
and Documents (Replevin) supported by an Affidavit for Issuance of Writ
of Replevin and Preliminary Injunction and a Replevin Bond in the
amount of P180,000.00. 11 The trial court granted the writ of replevin on
the same day and directed the petitioners "to deliver the . . . [n]arra
lumber, original documents and truck with plate no. NJT 881 to the
custody of the plaintiffs and/or their representative . . . . 12
On March 22, 1989, the trial court issued a writ of seizure. However,
petitioners refused to comply therewith. 13David G. Brodett, Sheriff of
Branch 80 of the RTC of Quezon City (hereinafter referred to as the
Sheriff) reported that petitioners prevented him from removing the subject
properties from the DENR Compound and transferring them to the Mobil
Unit Compound of the Quezon City Police Force. To avoid any
unwarranted confrontation between them, he just agreed to a constructive
possession of the properties in question. 14
In the afternoon of the same day, petitioners filed a Manifestation stating
their intention to file a counterbond under Rule 60 of the Rules of Court to
stay the execution of the writ of seizure and to post a cash bond in the
amount of P180,000.00. But the trial court did not oblige petitioners for
they failed to serve a copy of the Manifestation on private respondents.
Petitioners then immediately made the required service and tendered the
cash counterbond in the amount of P180,000.00, but it was refused,
petitioners' Manifestation having already been set for hearing on March
30, 1989. 15
On March 27, 1989, petitioners made another attempt to post a
counterbond which was, however, denied for the same reason. 16
On the same day, private respondents filed a motion to declare petitioners
in contempt for disobeying the writ of seizure. 17 The trial court gave
petitioners twenty-four (24) hours to answer the motion. Hearing thereon
was scheduled on March 30, 1989.
However, on March 29, 1989, petitioners filed with the Court of Appeals a
Petition for Certiorari, Prohibition and/or Mandamus to annul the Orders
of the trial court dated March 20, 1989 and March 27, 1989. 18
On March 30, 1989, the Court of Appeals granted petitioners temporary
relief in the form of a temporary restraining order (TRO).
On September 11, 1989, the Court of Appeals converted the TRO into a
writ of preliminary injunction upon filing by petitioners of a bond in the
amount of P180,000.00. 19
However, on March 30, 1990, the Court of Appeals lifted the writ of
preliminary injunction and dismissed the petition. It declared that as the
complaint for replevin filed by private respondents complied with the
requirements of an affidavit and bond under Secs. 1 and 2 of Rule 60 of
the Revised Rules of court, issuance of the writ of replevin was
mandatory. 20
69
As for the contempt charges against petitioners, the Court of Appeals
believed the same were sufficiently based on a written charge by private
respondents and the report submitted by the Sheriff. 21
On April 25, 1990, petitioners filed a motion for reconsideration of the
foregoing decision. However, that motion was denied by the Court of
Appeals in its Resolution dated May 18, 1990. 22
Hence this petition.
On the one hand, petitioners contend, thus:
(1) Confiscated lumber cannot be subject of replevin. 23
(2) Petitioners not compelled to criminally prosecute private
respondents but may opt only to confiscate lumber. 24
(3) Private respondent charged criminally in court. 25 and
(4) Writ of Replevin issued in contravention of PD #605. 26
On the other hand, private respondents argue that:
(1) The respondent Judge had jurisdiction to take cognizance of the
complaint for recovery of personal property and, therefore, had
jurisdiction to issue the necessary orders in connection therewith. 27
(2) The issuance of the order for the delivery of personal property
upon application, affidavit and filing of replevin bond by the
plaintiff is mandatory and not discretionary, hence, no abuse of
discretion can be committed by the trial court in the issuance
thereof. 28
(3) The Order of March 20, 1989 was in accordance with Section
4, Rule 60 of the Rules of Court and is, therefore, valid. 29
(4) The private respondents have not been proven to have violated
Section 68 of the Revised Forestry Code. 30
(5) The petitioners do not have the authority to keep private
respondents' property for an indefinite period, more so, to dispose
of the same without notice and hearing or without due process. 31
(6) Contrary to the allegation of petitioners, no formal
investigation was conducted by the PIC with respect to the subject
lumber in this case. 32
(7) The alleged Order dated January 20, 1989 of the petitioner
Secretary Fulgencio Factoran, Jr. of the DENR is not valid and
does not make the issuance of the order of replevin illegal. 33 and
 (8) The subject properties were not in custody of the law and may
be replevied. 34
At the outset we observe that herein respondents never appealed the
confiscation order of petitioner Secretary to the Office of the President as
provided for in Sec. 8 of P.D. No. 705 which reads:
All actions and decisions of the Director are subject to
review, motu propio or upon appeal of any person aggrieved
thereby, by the Department Head whose decision shall be final and
executory after the lapse of thirty (30) days from receipt by the
aggrieved party of said decision unless appealed to the President . .
. . The decision of the Department Head may not be reviewed by
the courts except through a special civil action for certiorari and
prohibition.
The doctrine of exhaustion of administrative remedies is basic.
Courts, for reasons of law, comity and convenience, should not
entertain suits unless the available administrative remedies have
first been resorted to and the proper authorities have been given an
appropriate opportunity to act and correct their alleged errors, if
any, committed in the administrative forum. 35 As to the application
of this doctrine in cases involving violations of P.D. No. 705, our
ruling in Paat v. Court of Appeals, is apropos:
Moreover, it is important to point out that the enforcement of
forestry laws, rules and regulations and the protection,
development and management of forest lands fall within the
primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its
function, the DENR should be given a free hand unperturbed
by judicial intrusion to determine a controversy which is well
within its jurisdiction. The assumption by the trial court,
therefore, of the replevin suit filed by the private respondents
constitutes an encroachment into the domain of the
administrative agency's prerogative. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is
initially lodged with an administrative body of special
competence. In Felipe Ismael, Jr. and Co. vs. Deputy Executive
70
Secretary, which was reiterated in the recent case of Concerned
Officials of MWSS vs.Vasquez, this Court held:
Thus, while the administration grapples with the complex
and multifarious problems caused by unbridled
exploitation of these resources, the judiciary will stand
clear. A long line of cases establish the basic rule that the
courts will not interfere in matters which are addressed to
the sound discretion of government agencies entrusted
with the regulation of activities coming under the special
technical knowledge and training of such agencies.36
However, petitioners did not file a motion to dismiss based on the ground
of non-exhaustion of administrative remedies. Thus, it is deemed
waived. 37
Nonetheless, the petition is impressed with merit.
First. A writ of replevin does not just issue as a matter of course upon the
applicant's filing of a bond and affidavit, as the Court of Appeals has
wrongly put it. The mere filing of an affidavit, sans allegations therein that
satisfy the requirements of Sec. 2, Rule 60 of the Revised Rules of Court,
cannot justify the issuance of a writ of replevin. Said provision reads:
Affidavit and bond. Upon applying for such order the
plaintiff must show by his own affidavit or that of some
other person who personally knows the facts:
(a) That the plaintiff is the owner of the property claimed,
particularly describing it, or entitled to the possession
thereof;
(b) That the property is wrongfully detained by the
defendant, alleging the cause of detention thereof to his
best knowledge, information, and belief;
(c) That it has not been taken for a tax assessment or fine
pursuant to law, or seized under an execution, or an
attachment against the property of the plaintiff, or, if so
seized, that it is exempt from such seizure; and
 (d) The actual value of the property.
xxx xxx xxx
Wrongful detention by the defendant of the properties sought in an action
for replevin must be satisfactorily established. If only a mechanistic
averment thereof is offered, the writ should not be issued.
In the case at bar, the subject narra lumber and six-wheeler truck were
confiscated by petitioner Secretary pursuant to Section 68-A of P.D. No.
705, as amended by Executive Order (E.O.) No. 277, to wit:
Sec. 68-A. Administrative Authority of the Department
Head or His Duly Authorized Representative to Order
Confiscation. In all cases of violations of this Code or
other forest laws, rules and regulations, the Department
Head or his duly authorized representative, may order the
confiscation of any forest products illegally
cut, gathered, removed, or possessed or abandoned, and all
conveyances used either by land, water, or air in the
commission of the offense and to dispose of the same in
accordance with pertinent laws, regulations or policies on
the matter. 38
As the petitioner Secretary's administrative authority to confiscate
is clearly provided by law, the taking of the subject properties is
not wrongful and does not warrant the issuance of a writ of
replevin prayed for by private respondents.
Second. Issuance of the confiscation order by petitioner Secretary was a
valid exercise of his power under Sec. 68-A of P.D. No. 705. By virtue of
said order, the narra lumber and six-wheeler truck of private respondents
were held in custodia legis and hence, beyond the reach of replevin.
Property lawfully taken by virtue of legal process is deemed to be
in custodia legis. 39 When a thing is in official custody of a judicial or
executive officer in pursuance of his execution of a legal writ, replevin
will not lie to recover it. 40Otherwise, there would be interference with the
possession before the function of law had been performed as to the process
under which the property was taken. 41 So basic is this doctrine that it
71
found inclusion in the 1997 amendments introduced to the Rules of Civil
Procedure. Thus, Sec. 2(c), Rule 60 of the 1997 Rules of Civil Procedure
provides that:
Affidavit and bond. Upon applying for such order the
plaintiff must show by his own affidavit or that of some
other person who personally knows the facts:
xxx xxx xxx
(c) That the property has not been distrained or taken for a
tax assessment or fine pursuant to law, or seized under a
writ of execution, or preliminary attachment or otherwise
placed under custodia legis, or if so seized, that it is exempt
from such seizure or custody; . . .
xxx xxx xxx. 42
Third. Petitioner Secretary's authority to confiscate forest products under
Sec. 68-A of P.D. No. 705 is distinct from and independent of the
confiscation of forest products in a criminal action provided for in Section
68 of P.D. No. 705. Thus, in Paat, we held that:
. . . precisely because of the need to make forestry laws
"more responsive to present situations and realities" and in
view of the "urgency to conserve the remaining resources
of the country," that the government opted to add Section
68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal
proceedings. . . . . The preamble of EO 277 that added
Section 68-A to PD 705- is most revealing:
WHEREAS, there is an urgency to conserve the
remaining forest resources of the country for the benefit
and welfare of the present and future generations of
Filipinos;
WHEREAS, our forest resources may be effectively
conserved and protected through the vigilant
enforcement and implementation of our forestry laws,
rules and regulations;
 WHEREAS, the implementation of our forestry laws
suffers from technical difficulties, due to certain
inadequacies in the Penal provisions of the Revised
Forestry Code of the Philippines; and
WHEREAS, to overcome this [sic] difficulties, there is
a need to penalize certain acts more responsive to
present situations and realities;
It is interesting to note that Section 68-A is a new provision
authorizing the DENR to confiscate, not only
"conveyances" but forest products as well. On the other
hand, confiscation of forest products by the "court" in a
criminal action has long been provided for in Section 68. If
as private respondents insist, the power of confiscation
cannot be exercised except only through the court under
Section 68, then Section 68-A would have no purpose at all.
Simply put, Section 68-A would not have provided any
solution to the problem perceived in EO 277, . . . . 43
Sec. 68-A was added precisely to supplant the inadequacies and
supplement criminal enforcement of forestry laws.
Fourth. Sec. 80 of P.D. No. 705 which requires delivery of the seized
forest products within six (6) hours from the time of the seizure to the
appropriate official designated by law to conduct preliminary
investigations applies only to criminal prosecutions provided for in Sec.
68, and not to administrative confiscation provided for in Section 68-A.
Sec. 80 of P.D. No. 705 provides:
Sec. 80. Arrest; Institution of criminal actions. A forest
officer or employee of the Bureau shall arrest even without
a warrant any person who has committed or is committing
in his presence any of the offenses defined in this Chapter.
He shall also seize and confiscate, in favor of the
Government, the tools and equipment used in committing
the offense, and the forest products cut, gathered or taken
by the offender in the process of committing the offense.
The arresting officer or employee shall thereafter deliver
within six (6) hours from the time of arrest and seizure, the
72
offender and the confiscated forest products, tools and
equipment to, and file the proper complaint with, the
appropriate official designated by law to conduct
preliminary investigations and file informations in court.
xxx xxx xxx
The title of Sec. 80 "Arrest; Institution of Criminal Actions"
bespeaks this intendment of the law. The fact, too, that Secs. 68
and 80 were co-existing prior to the introduction of Sec. 68-A,
proves that Sec. 80 applies to the criminal prosecutions subject of
Sec. 68 and not to the administrative confiscation subject of Sec.
68-A. Sec. 68-A, therefore, should not be interpreted in relation to
Sec. 80 as to require that criminal charges be filed with and seized
forest products be immediately delivered to, the fiscal in case of
administrative confiscation, for this renders nugatory the purpose
sought to be achieved thereby. Statutes should always be construed
in the light of the object to be achieved and the evil or mischief to
be suppressed, and they should be given such interpretation as will
advance the object, suppress the mischief, and secure the benefits
intended. 44
Fifth. Nothing in the records supports private respondents' allegation that
their right to due process was violated as no investigation was conducted
prior to the confiscation of their properties.
On the contrary, by private respondents' own admission, private
respondent Sy who drove the six-wheeler truck was properly investigated
by petitioner Atty. Robles at the PIC/SAID Office of the DENR.
Thereafter, private respondent Sy and his witnesses were given full
opportunity to explain the deficiencies in the documents. 45Private
respondents categorically stated that they made a "continuous and almost
daily follow-up and plea . . . with the PIC for the return of the truck and
lumber . . . ." 46 Finally in a letter dated December 30, 1989, private
respondent Lily Francisco Uy requested petitioner Secretary for
"immediate resolution and release of the impounded narra sawn
lumber." 47
Undoubtedly, private respondents were afforded an opportunity to be
heard before the order of confiscation was issued. There was no formal or
trial type hearing but the same is not, in all instances, essential in
administrative proceedings. It is settled that due process is satisfied when
the parties are afforded fair and reasonable opportunity to explain their
side of the controversy or an opportunity to move for a reconsideration of
the action or ruling complained of. 48

Moreover, respondents claim that the order of confiscation was antedated

and not the product of the investigation supposedly conducted by the PIC
of the DENR. However, they proffer no proof to support that allegation.
On the other hand, there is the legal presumption that official duty has
been regularly performed. The presumption of regularity in the
performance of official duties is even particularly strong with respect to
administrative agencies like the DENR which are vested with quasi-
judicial powers in enforcing the laws affecting their respective fields of
activity, the proper regulation of which requires of them such technical
mastery of all relevant conditions obtaining in the nation. 49

Finally. The writ of seizure and the writ of replevin were issued by the
trial court in grave abuse of its discretion. Thus, disobedience thereto
cannot constitute indirect contempt of court which presupposes that the
court order thereby violated was valid and legal. Without a lawful order
having been issued, no contempt of court could be committed. 50

WHEREFORE, the instant petition is hereby GRANTED. The Decision of

the Court of Appeals dated March 30, 1990 and its Resolution dated May SECOND DIVISION
18, 1990 in CA-G.R. SP No. 17194 are hereby SET ASIDE and
REVERSED. Respondent Presiding Judge Benigno T. Dayaw, of the G.R. No. 183018 August 3, 2011
Regional Trial Court of Quezon City, is PERMANENTLY ENJOINED
from enforcing the Orders dated March 20, 1989 and March 22, 1989 in ADVENT CAPITAL AND FINANCE CORPORATION, Petitioner,
Civil Case No. Q-89-2045, or if said orders have already been enforced, vs.
the said respondent Judge is directed to render judgment of forfeiture on ROLAND YOUNG, Respondent.
the replevin bond filed by private respondents. Finally, the said respondent
Judge is PERMANENTLY ENJOINED from further acting on the Motion DECISION
for Contempt filed by private respondents against the petitioners.
CARPIO, J.:
Costs against private respondents.
The Case
SO ORDERED.
This petition for review1 assails the 28 December 2007 Decision2 and
15 May 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No.
73
96266. The Court of Appeals set aside the 24 March 2006 and 5 July 2006
Orders4 of the Regional Trial Court of Makati City, Branch 147, and
directed petitioner Advent Capital and Finance Corporation to return the
seized vehicle to respondent Roland Young. The Court of Appeals denied
the motion for reconsideration.
The Antecedents
The present controversy stemmed from a replevin suit instituted by
petitioner Advent Capital and Finance Corporation (Advent) against
respondent Roland Young (Young) to recover the possession of a 1996
Mercedes Benz E230 with plate number UMN-168, which is registered in
Advents name.5
Prior to the replevin case, or on 16 July 2001, Advent filed for corporate
rehabilitation with the Regional Trial Court of Makati City, Branch 142
(rehabilitation court).6
On 27 August 2001, the rehabilitation court issued an Order (stay order)
which states that "the enforcement of all claims whether for money or
otherwise, and whether such enforcement is by court action or otherwise,
against the petitioner (Advent), its guarantors and sureties not solidarily
liable with it, is stayed."7
On 5 November 2001, Young filed his Comment to the Petition for
Rehabilitation, claiming, among others, several employee benefits
allegedly due him as Advents former president and chief executive
officer.
On 6 November 2002, the rehabilitation court approved the rehabilitation
plan submitted by Advent. Included in the inventory of Advents assets
was the subject car which remained in Youngs possession at the time.
Youngs obstinate refusal to return the subject car, after repeated demands,
prompted Advent to file the replevin case on 8 July 2003. The complaint,
docketed as Civil Case No. 03-776, was raffled to the Regional Trial Court
of Makati City, Branch 147 (trial court).
After Advents posting of P3,000,000 replevin bond, which was double the
value of the subject car at the time, through Stronghold Insurance
74
Company, Incorporated (Stronghold), the trial court issued a Writ of
Seizure8 directing the Sheriff to seize the subject car from Young. Upon
receipt of the Writ of Seizure, Young turned over the car to
Advent,9 which delivered the same to the rehabilitation receiver.10
Thereafter, Young filed an Answer alleging that as a former employee of
Advent, he had the option to purchase the subject car at book value
pursuant to the company car plan and to offset the value of the car with the
proceeds of his retirement pay and stock option plan. Young sought the (1)
execution of a deed of sale over the subject car; and (2) determination and
payment of the net amount due him as retirement benefits under the stock
option plan.
Advent filed a Reply with a motion to dismiss Youngs counterclaim,
alleging that the counterclaim did not arise from or has no logical
relationship with the issue of ownership of the subject car.
After issues have been joined, the parties entered into pre-trial on 2 April
2004, which resulted in the issuance of a pre-trial order of even date
reciting the facts and the issues to be resolved during the trial.
On 28 April 2005, the trial court issued an Order dismissing the replevin
case without prejudice for Advents failure to prosecute. In the same order,
the trial court dismissed Youngs counterclaim against Advent for lack of
jurisdiction. The order pertinently reads:
It appears that as of July 28, 2003, subject motor vehicle has been turned
over to the plaintiff, thru its authorized representative, and adknowledged
by the parties respective counsels in separate Manifestations filed. To
date, no action had been taken by the plaintiff in the further prosecution of
this case. Accordingly, this case is ordered dismissed without prejudice on
the ground of failure to prosecute.
Anent plaintiffs Motion to Dismiss defendant Youngs counterclaim for
benefits under the retirement and stock purchase plan, the Court rules as
follows: The only issue in this case is who is entitled to the possession of
the subject motor vehicle. This issue may have a connection, but not a
necessary connection with defendants rights under the retirement plan and
stock purchase plan as to be considered a compulsory counterclaim.
xxx
Notably, defendants claim is basically one for benefits under and by
virtue of his employment with the plaintiff, and the subject vehicle is
merely an incident in that claim. Said claim is properly ventilated, as it is
resolvable by, the Rehabilitation Court which has jurisdiction and has
acquired jurisdiction, to the exclusion of this Court. Accordingly,
plaintiffs Motion To Dismiss defendant Youngs counterclaim is
granted.11
On 10 June 2005, Young filed a motion for partial reconsideration of the
dismissal order with respect to his counterclaim.
On 8 July 2005, Young filed an omnibus motion, praying that Advent
return the subject car and pay him P1.2 million in damages "(f)or the
improper and irregular seizure" of the subject car, to be charged against
the replevin bond posted by Advent through Stronghold.
On 24 March 2006, the trial court issued an Order denying Youngs
motion for partial reconsideration, viz:
In the instant case, defendant, in his counterclaim anchored her [sic] right
of possession to the subject vehicle on his alleged right to purchase the
same under the company car plan. However, considering that the Court
has already declared that it no longer has jurisdiction to try defendants
counterclaim as it is now part of the rehabilitation proceedings before the
corporate court concerned, the assertions in the Motion for
Reconsiderations (sic) will no longer stand.
On the other hand, the plaintiff did not file a Motion for Reconsideration
of the same Order, dismissing the complaint for failure to prosecute,
within the reglementary period. Hence, the same has attained finality.
Defendant alleged that the dismissal of the case resulted in the dissolution
of the writ. Nonetheless, the Court deems it proper to suspend the
resolution of the return of the subject vehicle. In this case, the subject
vehicle was turned over to plaintiff by virtue of a writ of replevin validly
issued, the latter having sufficiently shown that it is the absolute/registered
owner thereof. This was not denied by the defendant. Plaintiffs ownership
includes its right of possession. The case has been dismissed without a
75
decision on the merits having been rendered. Thus, to order the return of
the vehicle to one who is yet to prove his right of possession would not be
proper.
Accordingly, the Motion for Partial Reconsideration is denied.12
On 8 June 2006, Young filed a motion to resolve his omnibus motion.
In an Order dated 5 July 2006, the trial court denied the motion to resolve,
to wit:
In the instant case, the Court suspended the resolution of the return of the
vehicle to defendant Roland Young. It should be noted that the writ of
replevin was validly issued in favor of the plaintiff and that it has
sufficiently established ownership over the subject vehicle which includes
its right to possess. On the other hand, the case (Olympia International vs.
Court of Appeals) cited by defendant finds no application to this case,
inasmuch as in the former the Court has not rendered judgment affirming
plaintiffs (Olympia) right of possession on the property seized. Moreover,
the Court, in the Order dated April 28, 2005, has already denied
defendants counterclaim upon which he based his right of possession on
the ground of lack of jurisdiction. Accordingly, the Court reiterates its
previous ruling that to order the return of the subject vehicle to defendant
Young, who is yet to prove his right of possession before the
Rehabilitation Court would not be proper.
WHEREFORE, there being no new and substantial arguments raised, the
Motion to Resolve is denied.13
Young filed a petition for certiorari and mandamus with the Court of
Appeals seeking to annul the trial courts Orders of 24 March 2006 and 5
July 2006.
The Court of Appeals Ruling
In his petition before the Court of Appeals, Young argued mainly that the
trial court committed grave abuse of discretion amounting to lack or
excess of jurisdiction in (1) not directing the return of the subject vehicle
to him; (2) refusing to hold a hearing to determine the damages to be
recovered against the replevin bond; and (3) dismissing his counterclaim.
The Court of Appeals ruled in favor of Young and annulled the assailed
rulings of the trial court. The Court of Appeals held:
It is noteworthy that the case was dismissed by the court a quo for failure
of Advent to prosecute the same. Upon dismissal of the case, the writ of
seizure issued as an incident of the main action (for replevin)
became functus officio and should have been recalled or lifted. Since there
was no adjudication on the merits of the case, the issue of who between
Advent and petitioner has the better right to possess the subject car was
not determined. As such, the parties should be restored to their status
immediately before the institution of the case.
The Supreme Courts ruling in Olympia International, Inc. vs. Court
of Appeals (supra) squarely applies to the present controversy, to wit:
"Indeed, logic and equity demand that the writ of replevin be cancelled.
Being provisional and ancillary in character, its existence and efficacy
depended on the outcome of the case. The case having been dismissed, so
must the writs existence and efficacy be dissolved. To let the writ stand
even after the dismissal of the case would be adjudging Olympia as the
prevailing party, when precisely, no decision on the merits had been
rendered. The case having been dismissed, it is as if no case was filed at
all and the parties must revert to their status before the litigation."
Indeed, as an eminent commentator on Remedial Law expounds:
"The plaintiff who obtains possession of the personal property by a writ of
replevin does not acquire absolute title thereto, nor does the defendant
acquire such title by rebonding the property, as they only hold the property
subject to the final judgment in the action." (I Regalado, Remedial Law
Compendium, Eighth Revised Edition, p. 686)
Reversion of the parties to the status quo ante is the
consequence ex proprio vigore of the dismissal of the case. Thus,
in Laureano vs. Court of Appeals (324 SCRA 414), it was held:
"(A)lthough the commencement of a civil action stops the running of the
statute of prescription or limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all."
76
By the same token, return of the subject car to petitioner pending
rehabilitation of Advent does not constitute enforcement of claims against
it, much more adjudication on the merits of petitioners counterclaim. In
other words, an order for such return is not a violation of the stay order,
which was issued by the rehabilitation court on August 27, 2001. x x x
Corollarily, petitioners claim against the replevin bond has no connection
at all with the rehabilitation proceedings. The claim is not against the
insolvent debtor (Advent) but against bondsman, Stronghold. Such claim
is expressly authorized by Sec. 10, Rule 60, in relation to Sec. 20, Rule 57,
id., x x x14
The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED. The orders of the Regional Trial Court dated March 24, 2006
and July 5, 2006 are ANNULLED and SET ASIDE in so far as they
suspended resolution of petitioners motion for, and/or disallowed, the
return of the subject car to petitioner. Accordingly, respondent Advent
Capital and Finance Corporation is directed to return the subject car to
petitioner.
The Regional Trial Court of Makati City (Branch 147) is directed to
conduct a hearing on, and determine, petitioners claim for damages
against the replevin bond posted by Stronghold Insurance Co.
SO ORDERED.15
Advent filed a motion for reconsideration, which was denied by the Court
of Appeals in a Resolution dated 15 May 2008.
The Issue
The main issue in this case is whether the Court of Appeals committed
reversible error in (1) directing the return of the seized car to Young; and
(2) ordering the trial court to set a hearing for the determination of
damages against the replevin bond.
The Courts Ruling
The petition is partially meritorious.
On returning the seized vehicle to Young
We agree with the Court of Appeals in directing the trial court to return the
seized car to Young since this is the necessary consequence of the
dismissal of the replevin case for failure to prosecute without prejudice.
Upon the dismissal of the replevin case for failure to prosecute, the writ of
seizure, which is merely ancillary in nature, became functus officio and
should have been lifted. There was no adjudication on the merits, which
means that there was no determination of the issue who has the better right
to possess the subject car. Advent cannot therefore retain possession of the
subject car considering that it was not adjudged as the prevailing party
entitled to the remedy of replevin.
Contrary to Advents view, Olympia International Inc. v. Court of
Appeals16 applies to this case. The dismissal of the replevin case for
failure to prosecute results in the restoration of the parties status prior to
litigation, as if no complaint was filed at all. To let the writ of seizure
stand after the dismissal of the complaint would be adjudging Advent as
the prevailing party, when precisely no decision on the merits had been
rendered. Accordingly, the parties must be reverted to their status quo ante.
Since Young possessed the subject car before the filing of the replevin
case, the same must be returned to him, as if no complaint was filed at all.
Advents contention that returning the subject car to Young would
constitute a violation of the stay order issued by the rehabilitation court is
untenable. As the Court of Appeals correctly concluded, returning the
seized vehicle to Young is not an enforcement of a claim against Advent
which must be suspended by virtue of the stay order issued by the
rehabilitation court pursuant to Section 6 of the Interim Rules on
Corporate Rehabilitation (Interim Rules).17 The issue in the replevin
case is who has better right to possession of the car, and it was Advent that
claimed a better right in filing the replevin case against Young. In defense,
Young claimed a better right to possession of the car arising from Advents
car plan to its executives, which he asserts entitles him to offset the value
of the car against the proceeds of his retirement pay and stock option plan.
Young cannot collect a money "claim" against Advent within the
contemplation of the Interim Rules. The term "claim" has been construed
77
to refer to debts or demands of a pecuniary nature, or the assertion to have
money paid by the company under rehabilitation to its creditors.18 In the
replevin case, Young cannot demand that Advent pay him money because
such payment, even if valid, has been "stayed" by order of the
rehabilitation court. However, in the replevin case, Young can raise
Advents car plan, coupled with his retirement pay and stock option plan,
as giving him a better right to possession of the car. To repeat, Young is
entitled to recover the subject car as a necessary consequence of the
dismissal of the replevin case for failure to prosecute without prejudice.
On the damages against the replevin bond
Section 10, Rule 60 of the Rules of Court19 governs claims for damages
on account of improper or irregular seizure in replevin cases. It provides
that in replevin cases, as in receivership and injunction cases, the damages
to be awarded upon the bond "shall be claimed, ascertained, and granted"
in accordance with Section 20 of Rule 57 which reads:
Sec. 20. Claim for damages on account of improper, irregular or excessive
attachment. - An application for damages on account of improper,
irregular or excessive attachment must be filed before the trial or before
appeal is perfected or before the judgment becomes executory, with due
notice to the attaching obligee or his surety or sureties, setting forth the
facts showing his right to damages and the amount thereof. Such damages
may be awarded only after proper hearing and shall be included in the
judgment on the main case. e
If the judgment of the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained during
the pendency of the appeal by filing an application in the appellate court
with notice to the party in whose favor the attachment was issued or his
surety or sureties, before the judgment of the appellate court becomes
executory. The appellate court may allow the application to be heard and
decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages
awarded to him from any property of the attaching obligee not exempt
from execution should the bond or deposit given by the latter be
insufficient or fail to fully satisfy the award.
The above provision essentially allows the application to be filed at any WHEREFORE, the Court GRANTS the petition IN PART. The
time before the judgment becomes executory.20 It should be filed in the Court SETS ASIDE the portion in the assailed decision of the Court of
same case that is the main action,21 and with the court having Appeals in CA-G.R. SP No. 96266 ordering the trial court to set a hearing
jurisdiction over the case at the time of the application.22 for the determination of damages against the replevin bond.

In this case, there was no application for damages against Stronghold SO ORDERED.
resulting from the issuance of the writ of seizure before the finality of the
dismissal of the complaint for failure to prosecute. It appears that Young
filed his omnibus motion claiming damages against Stronghold after the
dismissal order issued by the trial court on 28 April 2005 had attained
finality. While Young filed a motion for partial reconsideration on 10 June
2005, it only concerned the dismissal of his counterclaim, without any
claim for damages against the replevin bond. It was only on 8 July 2005
that Young filed an omnibus motion seeking damages against the replevin
bond, after the dismissal order had already become final for Advents non-
appeal of such order. In fact, in his omnibus motion, Young stressed the
finality of the dismissal order.23 Thus, Young is barred from claiming
damages against the replevin bond.

In Jao v. Royal Financing Corporation,24 the Court held that defendant

therein was precluded from claiming damages against the surety bond
since defendant failed to file the application for damages before the
termination of the case, thus:

The dismissal of the case filed by the plaintiffs-appellees on July 11, 1959,
had become final and executory before the defendant-appellee corporation
filed its motion for judgment on the bond on September 7, 1959. In the
order of the trial court, dismissing the complaint, there appears no
pronouncement whatsoever against the surety bond. The appellee-
corporation failed to file its proper application for damages prior to the
termination of the case against it. It is barred to do so now. The prevailing
party, if such would be the proper term for the appellee-corporation,
having failed to file its application for damages against the bond prior to
the entry of final judgment, the bondsman-appellant is relieved of further
liability thereunder.

Since Young is time-barred from claiming damages against the replevin

bond, the dismissal order having attained finality after the application for
damages, the Court of Appeals erred in ordering the trial court to set a
hearing for the determination of damages against the replevin bond.

78