24

SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
G.R.No.105827.January31,2000.*
J.L. BERNARDO CONSTRUCTION, represented by attorneysinfact
Santiago R. Sugay, Edwin A. Sugay and Fernando S.A. Erana,
SANTIAGO R. SUGAY, EDWIN A. SUGAY and FERNANDO S.A.
ERANA,petitioners, vs. COURTOFAPPEALSandMAYORJOSEL.
SALONGA,respondents.
RemedialLaw;Certiorari;Certiorarimaybeissuedonlywhereitisclearly
shownthatthereisapatentandgrossabuseofdiscretionastoamounttoanevasion
ofpositivedutyortovirtualrefusaltoperformadutyenjoinedbylaw,ortoactatall
incontemplationoflaw,aswherethepowerisexercisedinanarbitraryanddespotic
mannerbyreasonofpassionorpersonalhostility.Theofficeofawritofcertiorari
isrestrictedtotrulyextraordinarycaseswhereintheactofthelowercourtorquasi
judicialbodyiswhollyvoid.Weheldinarecentcasethatcertiorarimaybeissued
onlywhereitisclearlyshownthatthereisapatentandgrossabuseofdiscretionas
to amount to an evasion of positive duty or to virtual refusal to perform a duty
enjoinedbylaw,or toact at all incontemplationof law,aswherethepoweris
exercised in an arbitrary and despotic manner by reason of passion or personal
hostility.
Same; Same; Certiorari isanappropriateremedytoassailaninterlocutory
order(1)whenthetribunalissuedsuchorderwithoutorinexcessofjurisdictionor
with grave abuse of discretion and (2) when the assailed interlocutory order is
patently erroneous and the remedy of appeal would not afford adequate and
expeditiousrelief.Asageneralrule,aninterlocutoryorderisnotappealableuntil
aftertherenditionofthejudgmentonthemeritsforacontraryrulewoulddelaythe
administrationofjusticeandundulyburdenthecourts.However,wehaveheldthat
certiorari is an appropriate remedy to assail an interlocutory order (1) when the
tribunalissuedsuchorderwithoutorinexcessofjurisdictionorwithgraveabuseof
discretionand(2)whentheassailedinterlocutoryorderispatentlyerroneousandthe
remedyofappealwouldnotaffordadequateandexpeditiousrelief.
_______________

*THIRDDIVISION.

25
VOL.324,JANUARY31,2000
 25
J.L.BernardoConstructionvs.CourtofAppeals
CivilLaw;Obligations;Article2242oftheCivilCodeapplieswhenthereisa
concurrenceofcredits,i.e.whenthesamespecificpropertyofthedebtorissubjected
totheclaimsofseveralcreditorsandthevalueofsuchpropertyofthedebtoris
insufficienttopayinfullallthecreditors.Article2242onlyfindsapplicationwhen
thereisaconcurrenceofcredits,i.e.whenthesamespecificpropertyofthedebtoris
subjectedtotheclaimsofseveralcreditorsandthevalueofsuchpropertyofthe
debtorisinsufficienttopayinfullallthecreditors.Insuchasituation,thequestionof
preferencewillarise,thatis,therewillbeaneedtodeterminewhichofthecreditors
willbepaidaheadoftheothers.Fundamentaltenetsofdueprocesswilldictatethat
thisstatutorylienshouldthenonlybeenforcedinthecontextofsomekindofa
proceeding where the claims of all the preferred creditors may be bindingly
adjudicated,suchasinsolvencyproceedings.
Same;Same;Attachment;Awritofattachmentoverregisteredrealpropertyis
enforcedbythesheriffbyfilingwiththeregistryofdeedsacopyoftheorderof
attachment,togetherwithadescriptionofthepropertyattached,andanoticethatit
isattached,andbyleavingacopyofsuchorder,description,andnoticewiththe
occupantoftheproperty,ifany.Itnothavingbeenallegedintheirpleadingsthat
theyhaveanyrightsasamortgageeunderthecontracts,petitionersmayonlyobtain
possessionanduseofthepublicmarketbymeansofapreliminaryattachmentupon
suchproperty,intheeventthattheyobtainafavorablejudgmentinthetrialcourt.
Underourrulesofprocedure,awritofattachmentoverregisteredrealpropertyis
enforcedbythesheriffbyfilingwiththeregistryofdeedsacopyoftheorderof
attachment,togetherwithadescriptionofthepropertyattached,andanoticethatitis
attached, and by leaving a copy of such order, description, and notice with the
occupantoftheproperty,ifany.Ifjudgmentberecoveredbytheattachingpartyand
executionissuethereon,thesheriffmaycausethejudgmenttobesatisfiedbyselling
somuchofthepropertyasmaybenecessarytosatisfythejudgment.Onlyinthe
event that petitioners are able to purchase the property will they then acquire
possessionanduseofthesame.
SPECIALCIVILACTIONintheSupremeCourt.Certiorari.

ThefactsarestatedintheopinionoftheCourt.
26
26
SUPREMECOURTREPORTSANNOTATED
 J.L.BernardoConstructionvs.CourtofAppeals
Gonzalez,Sinense,Jimenez&Associates and Cruz, Durian,Alday&
CruzMattersforpetitioners.
BautoandBautoLawOfficeforprivaterespondent.
GONZAGAREYES,J.:.

ThispetitionforcertiorariunderRule65seekstoannulandsetasidethe
following:
1. 1.
DecisiondatedFebruary6,1992issuedbytheEleventhDivisionofthe
CourtofAppealsinCAG.R.No.26336whichnullifiedtheorderof
theRegionalTrialCourtofCabanatuanCityinCivilCaseNo.1016
AFgrantingplaintiffs(petitionersherein)awritofattachmentanda
contractorslienupontheSanAntonioPublicMarket;and
2. 2.
ResolutiondatedJune10,1992issuedbytheformerEleventhDivision
oftheCourtofAppealsinCAG.R.No.26336denyingthemotions
forreconsiderationfiledbybothparties.
Thefactualantecedentsofthiscase,asculledfromthepleadings,areas
follows:
Sometimein1990,themunicipalgovernmentofSanAntonio,Nueva
EcijaapprovedtheconstructionoftheSanAntonioPublicMarket.The
constructionofthemarketwastobefundedbytheEconomicSupport
FundSecretariat(ESFS),agovernmentagencyworkingwiththeUSAID.
UnderESFSgrantloanequityfinancingprogram,thefundingforthe
marketwouldbecomposedofa(a)grantfromESFS,(b)loanextendedby
ESFStotheMunicipalityofSanAntonio,and(c)equityorcounterpart
fundsfromtheMunicipality.
It is claimed by petitioners Santiago R. Sugay, Edwin A. Sugay,
Fernando S.A. Erana and J.L. Bernardo Construction, a single
proprietorship owned by Juanito L. Bernardo, that they entered into a
businessventureforthepurposeofparticipatinginthebiddingforthe
publicmarket.ItwasagreedbypetitionersthatSantiagoSugaywouldtake
theleadroleandberesponsibleforthepreparationandsubmissionofthe
biddocuments,financingtheentireproject,providingand
27
VOL.324,JANUARY31,2000
 27
J.L.BernardoConstructionvs.CourtofAppeals
utilizinghisownequipment,providingthenecessarylabor,suppliesand
materialsandmakingthenecessaryrepresentationsanddoingtheliaison
workwiththeconcernedgovernmentagencies.
OnApril20,1990,J.L.BernardoConstruction,thrupetitionerSantiago
Sugay, submitted its bid together with other qualified bidders. After
evaluating the bids, the municipal prequalification bids and awards
committee, headed by respondent Jose L. Salonga (then incumbent
municipalmayorofSanAntonio)asChairman,awardedthecontractto
petitioners.OnJune8,1990,aConstructionAgreementwasenteredinto
bytheMunicipalityofSanAntoniothrurespondentSalongaandpetitioner
J.L.BernardoConstruction.
ItisclaimedbypetitionersthatunderthisConstructionAgreement,the
Municipalityagreedtoassumetheexpensesforthedemolition,clearing
andsitefillingoftheconstructionsiteintheamountofP1,150,000and,in
addition,toprovidecashequityofP767,305.99toberemitteddirectlyto
petitioners.
Petitionersallegethat,althoughthewholeamountofthecashequity
becamedue,theMunicipalityrefusedtopaythesame,despiterepeated
demandsandnotwithstandingthatthepublicmarketwasmorethanninety
eightpercent(98%)completeasofJuly20,1991.Furthermore,petitioners
maintain that Salonga induced them to advance the expenses for the
demolition,clearingandsitefillingworkbymakingrepresentationsthat
theMunicipalityhadthefinancialcapabilitytoreimbursethemlateron.
However,petitionersclaimthattheyhavenotbeenreimbursedfortheir
expenses.1
OnJuly31,1991,J.L.BernardoConstruction,SantiagoSugay,Edwin
SugayandFernandoErana,withthelatterthreebringingthecaseintheir
own personal capacities and also in representation of J.L. Bernardo
Construction, filed a complaint for breach of contract, specific
performance, and collection of a sum of money, with prayer for
preliminary
________________

1Rollo,1619.

28
28
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
attachmentandenforcementofcontractorslienagainsttheMunicipality
of San Antonio, Nueva Ecija andSalonga, in his personal and official
capacity as municipal mayor. After defendants filed their answer, the
RegionalTrialCourtheldhearingsontheancillaryremediesprayedforby
plaintiffs.2
On September 5, 1991, the Regional Trial Court issued the writ of
preliminary attachment prayed for by plaintiffs. It also granted J.L.
Bernardo Construction the right to maintain possession of the public
marketandtooperatethesame.Thedispositiveportionofthedecision
provides:
IN VIEW OF THE FOREGOING DISQUISITION, the Court finds the auxiliary
reliefsofattachmentprayedforbytheplaintiffstobewelltakenandthesameis
herebyGRANTED.Conformablythereto,letawritofpreliminaryattachmentbe
issueduponthefilingbytheplaintiffsofabondintheamountofP2,653,576.84to
answerforcostsanddamageswhichthedefendantsmaysuffershouldtheCourt
finallyadjudged(sic)thattheplaintiffsarenotentitledtothesaidattachment,and
thereafter,theDeputySheriffofthiscourtisherebyorderedtoattachtheproperties
of the defendants JOSE LAPUZ SALONGA and the MUNICIPALITY OF SAN
ANTONIO,NUEVAECIJAwhicharenotexemptfromexecution.
CORROLARILY, the Court grants the plaintiffs J.L. BERNARDO
CONSTRUCTION,representedbySANTIAGOR.SUGAY,EDWINA.SUGAY
andFERNANDOS.A.ERANA,theauthoritytoholdontothepossessionofthe
public market in question and to open and operate the same based on fair and
reasonableguidelinesandothermechanicsofoperationtobesubmittedbyplaintiffs
withinfifteen(15)daysfromtheirreceiptofthisOrderwhichshallbesubjectto
Courts approval and to deposit the income they may derive therefrom to the
ProvincialTreasurerofNuevaEcijaafterdeductingthenecessaryexpensesforthe
operationandmanagementofsaidmarket,subjecttofurtherordersfromthisCourt.
SOORDERED.
Thetrialcourtgavecredencetoplaintiffsclaimsthatdefendantswere
guiltyoffraudinincurringtheircontractualobligationsasevidencedby
thecomplaintandtheaffidavitsof
______________
 2Ibid.,6396.

29
VOL.324,JANUARY31,2000
29
J.L.BernardoConstructionvs.CourtofAppeals
plaintiffsSantiagoSugayandErana.Thecourtruledthatdefendantsacts
of...obtainingproperty,creditorservicesbyfalserepresentationsasto
materialfactsmadebythedefendanttotheplaintiffwithintenttodeceive
constitutesfraudwarrantingattachmentandthat...adebtisconsidered
fradulentlycontractedifatthetimeofcontractingit,thedebtorentertained
anintentionnottopay.
With regards to the contractors lien, the trial court held that since
plaintiffs have not been reimbursed for the cash equity and for the
demolition,clearingandsitefillingexpenses,theystandinthepositionof
anunpaidcontractorandassuchareentitled,pursuanttoArticles2242
and2243oftheCivilCode,toalienintheamountofP2,653,576.84(asof
August1,1991),excludingtheotherclaimeddamages,attorneysfeesand
litigationexpenses,uponthepublicmarketwhichtheyconstructed.Itwas
explainedthat,althoughtheusualwayofenforcingalienisbyadecree
for the sale of the property and the application of the proceeds to the
paymentofthedebtsecuredbyit,itismorepracticalandreasonableto
permitplaintiffstooperatethepublicmarketandtoapplytotheirclaims
theincomederivedtherefrom,intheformofrentalsandgoodwillfromthe
prospectivestallholdersofthemarket,asprayedforbyplaintiffs.
Thetrialcourtmadeshortshriftofdefendantsargumentthatthecase
wasnotinstitutedinthenameoftherealpartiesininterest.Itexplained
thattheplaintiffinthecauseofactionformoneyclaimsforunpaidcash
equity and demolition and site filling expenses is J.L. Bernardo
Construction,whiletheplaintiffsintheclaimfordamagesforviolationof
their rights under the Civil Code provisions on human relations are
plaintiffsSantiagoSugay,EdwinSugayandErana.3
Thedefendantsmovedforreconsiderationofthetrialcourtsorder,to
whichtheplaintiffsfiledanopposition.OnOctober10,1991themotion
wasdenied.Thefollowingday,thetrialcourtapprovedtheguidelinesfor
theoperationoftheSanAntonioPublicMarketfiledbyplaintiffs.
______________
 3Ibid.,106126.

30
30
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
RespondentSalongafiledamotionfortheapprovalofhiscounterbond
whichwastreatedbythetrialcourtinitsOctober29,1991orderasa
motion to fix counterbond and for which it scheduled a hearing on
November19,1991.
OnOctober21,1991,duringthependencyofhismotion,respondent
SalongafiledwiththeCourtofAppealsapetitionforcertiorariunderRule
65 with prayer for a writ of preliminary injunction and temporary
restrainingorderwhichcasewasdocketedasCAG.R.SPNo.26336.4
Petitionersopposedthepetition,claimingthatrespondenthadinfacta
plain,speedyandadequateremedyasevidencedbythefilingofamotion
toapprovecounterbondwiththetrialcourt.5
OnFebruary6,1992,theCourtofAppealsreversedthetrialcourts
decision and ruled in favor of Salonga. The dispositive portion of its
decisionstates
FORALLTHEFOREGOING,thepetitionisherebygrantedasfollows:
1. 1.
TherespondentjudgesORDERdatedSeptember5,1991fortheissuanceofawrit
ofattachmentandfortheenforcementofacontractorslien,ishereby
NULLIFIEDandSETASIDE;thewritofattachmentissuedpursuantthereto
andtheproceedingsconductedbytheSheriffsassignedtoimplementthesame
are,asaconsequence,alsoherebyNULLIFIEDandSETASIDE;
2. 2.
TherespondentjudgesORDERdatedOctober11,1991furtherenforcingthe
contractorslienandapprovingtheguidelinesfortheoperationoftheSan
AntonioPublicMarketisalsoNULLIFIEDandSETASIDE.
PetitionersprayersforthedismissalofCivilCaseNo.1016(nowpendingbefore
respondent judge)andforhisdeletionfromsaidcaseasdefendantinhisprivate
capacityare,however,DENIED.
TherespondentjudgemaynowproceedtohearingofCivilCaseNo.1016onthe
merits.
SOORDERED.
________________
 4Ibid.,128146.

5Ibid.,55.

31
VOL.324,JANUARY31,2000
31
J.L.BernardoConstructionvs.CourtofAppeals
TheappellatecourtreasonedthatsincetheConstructionAgreementwas
onlybetweenJuanitoBernardoandtheMunicipalityofSanAntonio,and
sincethereisnoswornstatementbyJuanitoBernardoallegingthathehad
beendeceivedormisledbyMayorSalongaortheMunicipalityofSan
Antonio,itisapparentthattheapplicanthasnotproventhatthedefendants
are guilty of inceptive fraud in contracting the debt or incurring the
obligation,pursuanttoRule57oftheRulesofCourt,andtherefore,the
writofattachmentshouldbestruckdownforhavingbeenimprovidently
andirregularlyissued.
Thefilingofamotionfortheapprovalofcounterbondbydefendants
didnot,accordingtotheCourtofAppeals,renderthepetitionforcertiorari
premature.Theappellatecourtheldthatsuchmotioncouldnotcurethe
defectintheissuanceofthewritofattachmentandthat,moreover,the
defendantsmotionwasfiledbythemwithoutprejudicetothepetitionfor
certiorari.
Astothecontractorslien,theappellatecourtruledthatArticles2242
of the Civil Code finds application only in the context of insolvency
proceedings,asexpresslystatedinArticle2243.Evenifitisconcededthat
plaintiffs are entitled to retain possession of the market under its
contractorslien,theappellatecourtheldthatthesamerightcannotbe
expanded to include the right to use the building. Therefore, the trial
courtsgrantofauthoritytoplaintiffstooperatetheSanAntonioPublic
Marketamountstoagraveabuseofdiscretion.
Withregardtotheallegationsofdefendantsthatplaintiffsarenotthe
proper parties, the Court of Appeals ruled that such issue should be
assignedasanerrorbydefendantslateronshouldtheoutcomeofthecase
beadversetothelatter.6
Petitioners are now before this Court assailing the appellate courts
decision.Intheirpetition,theymakethefollowingassignmentoferrors:
______________
 6Ibid.,5262.

32
32
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
1. 1.
THEDECISIONISCONTRARYTOLAWINTHATTHECOURT
OFAPPEALSOVERLOOKEDAND/ORDISREGARDEDTHE
FUNDAMENTALREQUIREMENTANDESTABLISHED
SUPREMECOURTDECISIONSINACTIONSFOR
CERTIORARICONSIDERINGTHATTHEFILINGOFTHE
PETITIONBYRESPONDENTSALONGAWITHTHECOURT
OFAPPEALSISOBVIOUSLYPREMATUREANDIMPROPER
SINCETHEREADMITTEDLYEXISTSAPLAIN,SPEEDYAND
ADEQUATEREMEDYAVAILABLETORESPONDENT
SALONGAWHICHISHISUNRESOLVEDMOTIONTO
APPROVECOUNTERBONDPENDINGWITHTHETRIAL
COURT.
2. 2.
INCOMPLETEDISREGARDOFESTABLISHED
JURISPRUDENCE,THECOURTOFAPPEALSHASSKIRTED
AND/ORFAILEDTOCONSIDER/DISREGARDEDTHE
EQUALLYCRUCIALISSUETHATTHEQUESTIONED
ORDERSARECLEARLYANDADMITTEDLY
INTERLOCUTORYINNATUREANDTHEREFORETHEY
CANNOTBETHEPROPERSUBJECTOFANACTIONFOR
CERTIORARI;PROOFTHATTHEORDERSASSAILEDBY
RESPONDENTSALONGAAREINTERLOCUTORYIN
CHARACTERISTHEDISPOSITIVEPORTIONOFTHE
DECISIONWHENTHECOURTOFAPPEALSSAIDTHE
RESPONDENTJUDGEMAYNOWPROCEEDTOHEARINGOF
SAIDCIVILCASENO.1016ONTHEMERITS;PETITION
FILEDBYRESPONDENTSALONGAWITHTHECOURTOF
APPEALSSHOULDHAVEBEENDISMISSEDOUTRIGHTLY
ASSOUGHTBYHEREINPETITIONERSINTHEIRVARIOUS
UNACTEDPLEADINGS.
3. 3.
 THEDECISIONISBASEDONFINDINGSOFFACTSAND
CONCLUSIONSWHICHARENOTONLYGROSSLY
ERRONEOUSBUTARESQUARELYCONTRADICTEDBY
THEEVIDENCEONRECORD.
4. 4.
THECOURTOFAPPEALSHASCLEARLYMISAPPRECIATED,
MISREADANDDISREGARDEDHEREINPETITIONERS
CAUSESOFACTIONAGAINSTRESPONDENTSALONGA
ANDHISCORESPONDENTMUNICIPALITYOFSAN
ANTONIONUEVAECIJA.
5. 5.
THECOURTOFAPPEALSHASMADEERRONEOUSAND
CONTRADICTORYCONCLUSIONSANDFINDINGSONTHE
ISSUEOFREALPARTYININTERESTINCOMPLETE
DISREGARDOFTHEPOWERSANDAUTHORITYGRANTED
BY
33
VOL.324,JANUARY31,2000
33
J.L.BernardoConstructionvs.CourtofAppeals
1. JUANITO L. BERNARDO CONSTRUCTION TO HEREIN
PETITIONERS.
2. 6.
THECOURTOFAPPEALSHASSKIRTEDTHEIMPORTANT
ISSUEOFAGENCYCOUPLEDWITHANINTEREST.
3. 7.
THECOURTOFAPPEALSWENTBEYONDTHEISSUESOFTHE
CERTIORARICASEANDITSFINDINGSANDCONCLUSIONS
ONISSUESNOTRELATEDTOTHECASEFORCERTIORARI
ARECONTRARYTOTHEPLEADINGSANDDONOT
CONFORMTOTHEEVIDENCEONRECORD.
4. 8.
THECOURTOFAPPEALSHASLIKEWISEDISREGARDEDTHE
PRECEPTTHATCONCLUSIONSANDFINDINGSOFFACTOF
THETRIALCOURTAREENTITLEDTOGREATWEIGHTON
APPEALANDSHOULDNOTBEDISTURBEDSINCETHERE
ISNOSTRONGANDCOGENTREASONWHATSOVERTO
 OVERCOMETHEWELLWRITTENANDDETAILEDAND
ESTABLISHEDFACTUALFINDINGSOFTHETRIALCOURT.
5. 9.
PETITIONERSHAVESTRONGREASONSTOBELIEVETHAT
THEDECISIONOFTHECOURTOFAPPEALSWASISSUED
WITHSERIOUSINJUSTICEANDAGAINSTTHETENETSOF
FAIRPLAYSINCETHEDECISIONHADBEENKNOWNTOAS
ITWASOPENLYANDPUBLICLYANNOUNCEDBY
RESPONDENTSALONGALONGBEFOREITWAS
PROMULGATEDBYTHECOURTOFAPPEALS.
The various issues raised by petitioners may be restated in a more
summarymanneras
1. 1.
WhetherornottheCourtofAppealscorrectlyassumedjurisdictionover
thepetitionforcertiorarifiledbyrespondentshereinassailingthe
trialcourtsinterlocutoryordersgrantingthewritofattachmentand
thecontractorslien?
2. 2.
WhetherornottheCourtofAppealscommittedreversibleerrorsoflaw
initsdecision?
Apetitionforcertiorarimaybefiledincaseatribunal,boardorofficer
exercising judicial or quasijudicial functions has acted without or in
excessofjurisdiction,orwithgraveabuseofdiscretionamountingtolack
orexcessofjurisdiction,
34
34
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
andthereisnoappeal,oranyplain,speedy,andadequateremedyinthe
ordinarycourseoflaw.7
Theofficeofawritofcertiorariisrestrictedtotrulyextraordinarycases
whereintheactofthelowercourtorquasijudicialbodyiswhollyvoid. 8
Weheldinarecentcasethatcertiorarimaybeissuedonlywhereitis
clearlyshownthatthereisapatentandgrossabuseofdiscretionasto
amounttoanevasionofpositivedutyortovirtualrefusaltoperforma
dutyenjoinedbylaw,ortoactatallincontemplationoflaw,aswherethe
power is exercised in an arbitrary and despotic manner by reason of
passionorpersonalhostility.9
Asageneralrule,aninterlocutoryorderisnotappealableuntilafterthe
renditionofthejudgmentonthemeritsforacontraryrulewoulddelaythe
administrationofjusticeandundulyburdenthecourts.10However,wehave
heldthatcertiorariisanappropriateremedytoassailaninterlocutoryorder
(1)whenthetribunalissuedsuchorderwithoutorinexcessofjurisdiction
orwithgraveabuseofdiscretionand(2)whentheassailedinterlocutory
orderispatentlyerroneousandtheremedyofappealwouldnotafford
adequateandexpeditiousrelief.11
We hold that the petition for certiorari filed by Salonga and the
MunicipalitywiththeCourtofAppealsquestioningthewritofattachment
issuedbythetrialcourtshouldnothavebeengivenduecourseforthey
stillhadrecoursetoaplain,speedyandadequateremedythefilingofa
motiontofixthecounterbond,whichtheyinfactfiledwiththetrialcourt,
thegrantofwhichwouldeffectivelypreventtheissuanceofthewritof
attachment.Moreover,theycouldalsohavefiledamotiontodischargethe
attachmentforhavingbeenimprop
________________

7Abadv.NationalLaborRelationsCommission,286SCRA355(1998);RulesofCourt,

Rule65,sec.1.
8Fortichv.Corona,289SCRA624(1998).

9Lalicanv.Vergara,276SCRA518(1997).

10Id.

11 Pearsonv.IntermediateAppellateCourt,295SCRA27(1998); Casilv.Courtof

Appeals,285SCRA264(1998).
35
VOL.324,JANUARY31,2000
35
J.L.BernardoConstructionvs.CourtofAppeals
erlyorirregularlyissuedorenforced,orthatthebondisinsufficient,or
thattheattachmentisexcessive.12Withsuchremediesstillavailabletothe
MunicipalityandSalonga,thefilingofapetitionforcertiorariwiththe
Court of Appeals insofar as it questions the order of attachment was
clearlypremature.
 However,withregardstothecontractorslien,weupholdtheappellate
courtsrulingreversingthetrialcourtsgrantofacontractorslieninfavor
ofpetitioners.
Articles2241and2242oftheCivilCodeenumeratescertaincredits
whichenjoypreferencewithrespecttospecificpersonalorrealpropertyof
the debtor. Specifically, the contractors lien claimed by petitioners is
grantedunderthethirdparagraphofArticle2242whichprovidesthatthe
claimsofcontractorsengagedintheconstruction,reconstructionorrepair
ofbuildingsorotherworksshallbepreferredwithrespecttothespecific
buildingorotherimmovablepropertyconstructed.13
_______________

12RulesofCourt,Rule57,sec.13.
13Article2242.Withreferencetospecificimmovablepropertyandrealrightsofthe
debtor,thefollowingclaims,mortgagesandliensshallbepreferred,andshall
constituteanencumbranceontheimmovableorrealright:
1. (1)
Taxesdueuponthelandorbuilding;
2. (2)
Fortheunpaidpriceofrealpropertysold,upontheimmovablessold;
3. (3)
Claimsoflaborers,masons,mechanicsandotherworkmen,aswellasofarchitects,
engineersandcontractors,engagedintheconstruction,reconstructionorrepair
ofbuildings,canalsorotherworks,uponsaidbuildings,canalsorotherworks;
4. (4)
Claimsoffurnishersofmaterialsusedintheconstruction,reconstruction,orrepair
ofbuildings,canalsorotherworks,uponsaidbuildings,canalsorotherworks;
5. (5)
MortgagecreditsrecordedintheRegistryofProperty,upontherealestate
mortgaged;
36
36
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
However,Article2242onlyfindsapplicationwhenthereisaconcurrence
ofcredits,i.e.whenthesamespecificpropertyofthedebtorissubjectedto
theclaimsofseveralcreditorsandthevalueofsuchpropertyofthedebtor
is insufficient to pay in full all the creditors. In such a situation, the
questionofpreferencewillarise,thatis,therewillbeaneedtodetermine
which of the creditors will be paid ahead of the others. 14 Fundamental
tenetsofdueprocesswilldictatethatthisstatutorylienshouldthenonly
beenforcedinthecontextofsomekindofaproceedingwheretheclaims
of all the preferred creditors may be bindingly adjudicated, such as
insolvencyproceedings.16
ThisismadeexplicitbyArticle2243whichstatesthattheclaimsand
liens enumerated in Articles 2241 and 2242 shall be considered as
mortgages or pledges of real or personal property, or liens within the
purviewoflegalprovisionsgoverninginsolvency.16
_______________

1. (6)
Expensesforthepreservationorimprovementofrealpropertywhenthelawauthorizes
reimbursement,upontheimmovablespreservedorimproved;
2. (7)
CreditsannotatedintheRegistryofProperty,invirtueofajudicialorder,byattachments
orexecution,uponthepropertyaffected,andonlyastolatercredits;
3. (8)
Claimsofcoheirsforwarrantyinthepartitionofanimmovableamongthem,uponthe
realpropertythusdivided;
4. (9)
Claimsofdonorsofrealpropertyforpecuniarychargesorotherconditionsimposedupon
thedonee,upontheimmovabledonated;
5. (10)
Creditsofinsurers,uponthepropertyinsured,fortheinsurancepremiumfortwoyears.
14PhilippineSavingsBankv.Lantin,124SCRA476(1983).

15Id.

16 De Barretto v. Villanueva, 6 SCRA 928 (1962), citing the Report of the Code
Commission,provides:
ThequestionastowhethertheCivilCodeandtheInsolvencyLawcanbeharmonizedissettledby
thisArticle(2243).ThepreferencesnamedinArticles2261and2262(now
37
VOL.324,JANUARY31,2000
37
J.L.BernardoConstructionvs.CourtofAppeals
Theactionfiledbypetitionersinthetrialcourtdoesnotpartakeofthe
natureofaninsolvencyproceeding.Itisbasicallyforspecificperformance
anddamages.17Thus,evenifitisfinallyadjudicatedthatpetitionersherein
actually stand in the position of unpaid contractors and are entitled to
invokethecontractorsliengrantedunderArticle2242,suchliencannot
be enforced in the present action for there is no way of determining
whetherornotthereexistotherpreferredcreditorswithclaimsoverthe
SanAntonioPublicMarket.Therecordsdonotcontainanyallegationthat
petitionersaretheonlycreditorswithrespecttosuchproperty.Thefact
thatnothirdpartyclaimshavebeenfiledinthetrialcourtwillnotbar
othercreditorsfromsubsequentlybringingactionsandclaimingthatthey
alsohavepreferredliensagainstthepropertyinvolved.18
OurdecisionhereinisconsistentwithourrulinginPhilippineSavings
Bankv.Lantin19,whereinwealsodisallowedthecontractorfromenforcing
hislienpursuanttoArticle2242oftheCivilCodeinanactionfiledby
himforthecollectionofunpaidconstructioncosts.
Itnothavingbeenallegedintheirpleadingsthattheyhaveanyrightsas
amortgageeunderthecontracts,petitionersmayonlyobtainpossession
anduseofthepublicmarketbymeansofapreliminaryattachmentupon
suchproperty,intheeventthattheyobtainafavorablejudgmentinthe
trial court. Under our rules of procedure, a writ of attachment over
registeredrealpropertyisenforcedbythesheriffbyfilingwiththeregistry
ofdeedsacopyoftheorderofattachment,togetherwithadescriptionof
thepropertyattached,andanoticethatitisattached,andbyleavingacopy
ofsuchorder,description,andnoticewiththeoccupantoftheproperty,if
any.20Ifjudgmentberecoveredbytheattachingpartyandexecutionissue
_______________

2241and2242)aretoenforcedinaccordancewiththeInsolvencyLaw.
17Rollo,3738.

18PhilippineSavingsBankv.Lantin,supra.

19Id.

20RulesofCourt,Rule57,sec.7.

38
38
SUPREMECOURTREPORTSANNOTATED
J.L.BernardoConstructionvs.CourtofAppeals
thereon,thesheriffmaycausethejudgmenttobesatisfiedbysellingso
muchofthepropertyasmaybenecessarytosatisfythejudgment. 21Onlyin
theeventthatpetitionersareabletopurchasethepropertywilltheythen
acquirepossessionanduseofthesame.
Clearly, the trial courts order of September 5, 1991 granting
possessionanduseofthepublicmarkettopetitionersdoesnotadhereto
theprocedureforattachmentlaidoutintheRulesofCourt.Inissuingsuch
an order, the trial court gravely abusedits discretion andthe appellate
courtsnullificationofthesameshouldbesustained.
Atthisstageofthecase,thereisnoneedtopassuponthequestionof
whether or not petitioners herein are the real partiesininterest. In the
eventthatjudgmentisrenderedagainstSalongaandtheMunicipality,this
issuemaybeassignedasanerrorintheirappealfromsuchjudgment.
WHEREFORE, we UPHOLD the Court of Appeals Decision dated
February 6, 1992 in CAG.R. SP No. 26336 insofar as it nullifies the
contractorsliengrantedbythetrialcourtinfavorofpetitionersinits
September5,1991Order.Consequently,wealsoUPHOLDtheappellate
courtsnullificationofthetrialcourtsOctober11,1991Orderapproving
the guidelines for the operation of the San Antonio Public Market.
However,weREVERSEtheappellatecourtsordernullifyingthewritof
attachmentgrantedbythetrialcourt.
Nopronouncementastocosts.
SOORDERED.
Melo(Chairman),Vitug,PanganibanandPurisima,JJ.,concur.
Judgmentupheld,orderreversed.
Notes.Where aninterlocutoryorder isissuedwith graveabuseof
discretionamountingtolackorexcessofjurisdiction,
_______________

21Id.,sec.15.

39
VOL.324,JANUARY31,2000
39
LapandayAgriculturalDevelopmentCorporationvs.CourtofAppeals
suchordermaybequestionedbeforetheCourtonapetitionforcertiorari
underRule65oftheRevisedRulesofCourt.(Pearsonvs.Intermediate
AppellateCourt,295SCRA27[1998])
Attachmentisprimarilyinaidofcreditors.(Sta.InesMelaleForest
ProductsCorporationvs.Macaraig,Jr.,299SCRA491[1998])
 The grant or denial of a writ of attachment rests upon the sound
discretionofthecourt.(Ibid.)
o0o

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