Rule 57 Preliminary Attachment

Provisional Remedies | Rule 57 Provisional Remedies Provisional remedies are writs and processes available during the pendency of the action which may be resorted to by a litigant to preserve and protect certain rights and interests therein pending rendition, and for purposes of the ultimate effects, of a final judgment in the case. They are provisional because they constitute temporary measures availed of during the pendency of the action, and they are ancillary because they are mere incidents in and are dependent upon the result of the main action. (Ma. Carminia C. Calderon (formerly Ma. Carminia Calderon-Roxas), represented by her attorney-in- fact, Marycris V. Baldevia Vs. Jose Antonio F. Roxas, G.R. No. 185595. January 9, 2013) Nature of provisional remedies Provisional remedies are not causes of action in themselves but merely adjuncts to a main suit. They are temporary measures availed of during the pendency of the action and ancillary because they are mere incidents. [Estares v. Court of Appeals, 459 SCRA 604] Purpose of provisional remedies The provisional remedies denominated attachment, preliminary injunction, receivership, and delivery of personal property, provided in Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are remedies to which parties litigant may resort for the preservation or protection of their rights or interest, and for no other purpose, during the pendency of the principal action. If an action, by its nature, does not require such protection or preservation, said remedies can not be applied for and granted. [Calo v. Roldan, G.R. No. L-252, March 30, 1946] Jurisdiction over provisional remedies

interest damages of whatever kind, attorney's fees, litigation expenses, and costs. [B.P. 129, Sec. 33]

CALO vs ROLDAN The plaintiff filed an action for Injunction and filed a petition for Preliminary Injunction and/or Receivership, which was granted by the court. Issue: W the Provisional Remedy of (Preliminary Attachment) is applicable in an Injunction Case. NO The provisional remedies denominated attachment, preliminary injunction, receivership, and delivery of personal property remedies to which parties litigant may resort for the preservation or protection of their rights or interest, and for no other purpose, during the pendency of the principal action. If an action, by its nature, does not require such protection or preservation, said remedies can not be applied for and granted. To each kind of action or actions a proper provisional remedy is provided for by law. The Rules of Court clearly specify the case in which they may be properly granted. . Attachment may be issued only in the case or actions specifically stated in section 1, Rule 59, in order that the defendant may not dispose of his property attached, and thus secure the satisfaction of any judgment that may be recovered by plaintiff from defendant. For that reason a property subject of litigation between the parties, or claimed by plaintiff as his, can not be attached upon motion of the same plaintiff. Undoubtedly, according to law, the provisional remedy proper to plaintiffs' action of injunction is a preliminary prohibitory injunction.

The court where the main action is pending. – MTC has exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of 1

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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RULE 57 Preliminary Attachment A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. [Davao Light v. Court of Appeals, 204 SCRA 343]

Preliminary attachment has three types: (a) Preliminary attachment – one issued at the commencement of the action or at any time before entry of judgment as security for the satisfaction of any judgment that may be recovered. Here the court takes custody of the property of the party against whom attachment is directed. (b) Garnishment – plaintiff seeks to subject either the property of defendant in the hands of a third person (garnishee) to his claim or the money which said third person owes the defendant. Garnishment does not involve actual seizure of property which remains in the hands of the garnishee. It simply impounds the property in the garnishee’s possession and maintains the status quo until the main action is finally decided. Garnishment proceedings are usually directed against personal property, tangible or intangible and whether capable of manual delivery or not. (c) Levy on execution – writ issued by the court after judgment by which the property of the judgment obligor is taken into custody of the court before the sale of the property on execution for the satisfaction of a final judgment. It is the preliminary step to the sale on execution of the property of the judgment debtor. Purpose of Preliminary Attachment 1. To seize the property of the debtor in advance of the final judgment and to hold it for purposes of satisfying the said judgment; and 2. To enable the court to acquire jurisdiction over the action by the actual or constructive seizure of the property in instances where summons cannot be effected. 2

Section 1. Grounds upon which attachment may issue. — At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: When can the Plaintiff file for PA – 1. At the commencement of the action (refer to discussions in the cases cited in Sec. 2); or 2. At any time before entry of judgment. (a) In an action for the recovery of a specified amount of money or damages, other than moral and exemplary, on a cause of action arising from law, contract, quasicontract, delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors; Basis of the action – Cause of action arising from law, contract, quasi-contract, delict, or quasi delict. Object of the action – recovery of a specified amount of money or damages. (Collection Case, Specific Performance, Claim for Damages arising from QD KO Glass vs Valenzuela Pinzon sought for recovery o sum of money from KO Glass. A writ of Preliminary Attachment was issued by the court at the instance of Pinzon on the ground that Glass is a Foreigner. Issue: W the PA is validly issued. NO Attachment; In pleading for attachment against a foreigner, allegation must not be merely that defendant is a foreigner.— Pinzon, however, did not allege that the defendant Kenneth O. Glass “is a foreigner (who) may, at any time, depart from the Philippines with intent to defraud his creditors including the plaintiff.” He merely stated that the defendant Kenneth O. Glass is a foreigner.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 There being no showing, much less an allegation, that the defendants are about to depart from the Philippines with intent to defraud their creditor, or that they are nonresident aliens, the attachment of their properties is not justified.

The amount of money must be specified, and due and demandable. General vs De Venecia Ruedas filed a collection case based on a Promissory Note against General with Petition for Attachment on the ground that General was about to dispose of his assets to defraud creditors. PN: For value received, I promise to pay Mr. Gregorio Ruedas the amount of four thousand pesos (P4,000), in Philippine currency within six (6) months after peace has been declared and government established in the Philippines. It being a matter of contemporary history that the peace treaty between the United States and Japan has not even been drafted (at the time of this case), and that no competent official has formally declared the advent of peace, it is obvious that the sixmonth period has not begun; and Luis F. General has at present and in June, 1946, no demandable duty to make payment to plaintiffs On the question of validity of the attachment, "the general rule is that, unless the statute expressly so provides, the remedy by attachment is not available in respect to a demand which is not due and payable, and if an attachment is issued upon such a demand without statutory authority it is void." It must be observed that under our rules governing the matter the person seeking a preliminary attachment must show that "a sufficient cause of action exists" and that the amount due him is as much as the sum for which the order of attachment is granted" (sec. 3, Rule 59). Inasmuch as the commitment of Luis F. General has not as yet become demandable, there existed no cause of action against him, and the complaint should have been dismissed and the attachment lifted. (Orbeta vs. Sotto, 58 Phil., 505.)

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Kinds of Damages that may be a ground for PA – Except moral and exemplary (i.e., Nominal, Temperate, Actual, Liquidated) MIALHE vs DE LENCQUESAING William filed a complaint against Elaine, for (Moral) Damages and attorney's fees allegedly sustained by him by reason of the filing by Elaine of a criminal complaint for estafa, solely for the purpose of embarrassing William and besmirching his honor and reputation as a private person and as an Honorary Consul of the Republic of the Philippine's in the City of Bordeaux, France. In his verified complaint, petitioner prayed for the issuance of a writ of preliminary attachment of the properties of respondent consisting of 1/6 undivided interests in certain real properties in the City of Manila on the ground that "respondentdefendant is a non-resident of the Philippines. The court granted the petition and issued a WPA. Issue: W an attachment can be issued in a case for Moral Damages. NO We find, therefore, and so hold that respondent court had exceeded its jurisdiction in issuing the writ of attachment on a claim based on an action for damages arising from delict and quasi delict the amount of which is uncertain and had not been reduced to judgment just because the defendant is not a resident of the Philippines. Because of the uncertainty of the amount of plaintiff's claim it cannot be said that said claim is over and above all legal counterclaims that defendant may have against plaintiff It is imperative that the amount sought be liquidated. (b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty;

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Provisional Remedies | Rule 57 Tan vs Zandueta Tan Kia filed an action to to recover from him the amount of P22,500 which he alleged to be the half corresponding to him of the P45,000 which they won as a prize in the last drawing of the sweepstakes with ticket No. 228619 which they purchased with a part of the capital invested in a sarisari store. Simultaneously with his complaint, said Tiu Chay (alias Tan Kia) asked and obtained from the respondent judge the attachment of the property of the petitioner Isidro Tan Issue: W the PA was validly issued. YES The writ of preliminary attachment in this case was issued in strict conformity to the law, because the complaint wherein it was issued alleged that the petitioner, after collecting the prize of a ticket in the last sweepstakes, consisting of the amount of P50,000, belonging to the two, that is, the petitioner and the respondent T. C. (alias T. K.) appropriated the entire prize exclusively for himself, in complete disregard of said T. C. (alias T. K.) knowing that one-half thereof did not belong to him but to said respondent; that he was merely a depository or agent of the latter as to said half, and that the petitioner acted in the manner stated notwithstanding the fact that he was required to turn over to the respondent the part of the prize won corresponding to the latter.

Walter E. Olsen & Co vs Olsen Olsen and Co filed a collection suit against Olsen, with a prayer for PA. Olsen was president-treasurer and general manager of the Olsen & Co corporation and exercised direct and almost exclusive supervision over its function, funds and books of account. He has been taking money of the corporation without being duly authorized to do so either by the board of directors or by the by-laws. Of this money, he purchased a house and lot now under attachment in this case, and shares of stock of Prising at the price of P100 per share, which he later sold at a higher price. Olsen attempted to justify his conduct, alleging that the withdrawal of the funds of the corporation for his personal use was made in his current account with said corporation, in whose treasury he deposited his own 4

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money and the certificates of title of his shares, as well as of his estate, a statement of his account with a debit balance was submitted to and approved by the stock holders. Olsen admitted that he has an outstanding debt with the company but denied that he contracted it fraudulently. Issue: W PA is validly issued. YES Having, as he had, absolute and almost exclusive control over the function of the corporation and its funds by virtue of his triple capacity as president, treasurer and general manager, the defendant-appellant should have been more scrupulous in the application of the funds of said corporation to his own use. As a trustee of said corporation, it was his duty to see by all legal means possible that the interests of the stockholders were protected, and should not abuse the extraordinary opportunity which his triple position offered him to dispose of the funds of the corporation. Ordinary delicacy required that in the disposition of the funds of the corporation for his personal use, he should be very careful, so as to do it in such a way as would be compatible with the interest of the stockholders and his fiduciary character. Olsen was in effect a lender and a borrower at the same time. The conduct of the defendant-appellant in connection with the funds of the corporation he represented was more than an irregularity; and while it is not sufficiently serious to constitute a criminal fraud, it is undoubtedly a fraud of a civil character, because it is an abuse of confidence to the damage of the corporation and its stockholders, and constitutes one of the grounds for application of a PA

(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or converted, when the property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken by the applicant or an authorized person;

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Provisional Remedies | Rule 57

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Generally in Attachment, the property sought to be attached must belong to or owned by the ADVERSE party.

cavans, 398.49 thereof and Pablo Tiongson, who deposited 1,026 cavans, 525.51 or the value thereof at the rate of P3 per cavan.

Santos vs Bernabe

Sec. 1 Par (c.) speaks about POSSESSION, and not ownership. The plaintiff may be the owner of the property sought to be attached, and that this property may have been unjustly or fraudulently taken by the adverse party.

Santos(778) and Tiongson(1026) deposited some palay with Bernabe. T sued Bernabe for recovery of palay, with prayer for PA. PA was issued. There were only 924 cavans of palay in the warehouse, all were sold in a public auction by the sheriff and proceeds were given to Santos pursuant to the writ. S sues T to recover his portion. The sacks of palay bore no marks or signs to distinguish T's from S's. S now contends that T cannot claim the palay attached and sold because in soliciting the attachment, he impliedly admitted that the palay belonged to B. Issue: W Attachment was properly issued. YES It will be seen that the action brought by Pablo Tiongson against Jose C. Bernabe is that provided for the delivery of personal property. Although it is true that the plaintiff and his attorney did not follow strictly the procedure provided in said section for claiming the delivery of said personal property, nevertheless, the procedure followed by him may be construed as equivalent thereto, considering that under the law, "the provisions of this Code, and the proceedings under it, shall be liberally construed, in order to promote its object and assist the parties in obtaining speedy justice." Liberally construing, therefore, the writ of attachment applied for by Pablo Tiongson against the property of Jose C. Bernabe may be construed as a claim for the delivery of the sacks of palay deposited by the former with the latter. "ART. 381. If, by the will of their owners, two things of identical or dissimilar nature are mixed, or if the mixture occurs accidentally, if in the latter case the things cannot be separated without injury, each owner shall acquire a right in the mixture proportionate to the part belonging to him, according to the value of the things mixed or com mingled." The number of kilos in a cavan not having been deter mined, we will take the proportion only of the 924 ca vans of palay which were attached and sold, thereby giving Urbano Santos, who deposited 778 5

(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof; The FRAUD pertains to the “contracting the debt.” Necessarily, the fraud must have induced or enticed the other party to enter to a contract by reason of such fraud. Fraud: 1. Must be specifically alleged; 2. Must be stated with factual averments; and 3. There must be proof of fraud. Philippine Bank of Communications vs CA PBCom filed a collection suit for a sum of money representing proceeds of goods covered by a trust receipt. PBCom applied for a PA on the ground that Filipinas violated the trust receipt law, as such it constitutes estafa (meaning there is fraud). Issue: W the PA is validly issued. NO An order of attachment cannot be issued on a general averment, such as one ceremoniously quoting from a pertinent rule.—While the Motion refers to the transaction complained of as involving trust receipts, the violation of the terms of which is qualified by law as constituting estafa, it does not follow that a writ of attachment can and should automatically issue. Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without more, cannot serve as good ground for issuing a writ of attachment. An order of attachment cannot be issued on a general

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Provisional Remedies | Rule 57 averment, such as one ceremoniously quoting from a pertinent rule.

personalities or from business transactions.

A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay.—To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case (Republic v. Gonzales, 13 SCRA 633).

P.O. Valdez, Inc. was required to provide collateral security for the loan: 1. certificates of stock of several corporations 2. executed a Real Estate Mortgage in favor of the SIHI covering two parcels of land

Fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor’s inability to pay or to comply with the obligations.—We find an absence of factual allegations as to how the fraud alleged by petitioner was committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor’s inability to pay or to comply with the obligations. On the other hand, as stressed, above, fraud may be gleaned from a preconceived plan or intention not to pay. This does not appear to be so in the case at bar.

Falsities or misrepresentations in the execution of collaterals for a loan are not a ground for PA. State Investment House Inc vs CA Valdez executed Surety Agreements to secure loans of P.O. Valdez, Inc. from the petitioner State Investment. Later, SIHI and P.O. Valdez, Inc. entered into an agreement for discounting with the SIHI the receivables of P.O. Valdez, Inc. The two checks or "receivables" were issued by Pedro Valdez allegedly for "actual sales of its merchandise and/or 6

other

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legitimate

When Pedro Valdez' two checks were deposited by the petitioner upon maturity, they bounced for insufficient funds. SIHI filed a collection suit with petition for PA on the ground of Valdez Inc alleged misrepresentation in the Agreement for Discounting Receivables and in the deeds of sale of said receivables. ISSUE: W there is a valid ground for PA. NO It can hardly be doubted that those representations in petitioner's printed deeds of sale were false. But false though they were, the SIHI cannot claim to have been deceived or deluded by them because it knew, or should have known, that the issuer of the checks, Pedro O. Valdez, wks not a "buyer" of the "merchandise and personalities made in the ordinary course of business" by P.O. Valdez, Inc. of which he was the president. SIHI was not defrauded by their issuance because the loans had been contracted and released to P.O. Valdez, Inc. long before the checks were issued. As to the other collaterals: 1. With respect to the shares of stock, the decline in their value did not mean that the Valdez entered into the loan transaction in bad faith or with fraudulent intent for they could not have foreseen how the stocks would fare in the market. And if SIHI thought they were worthless at the time, it should have rejected them as collateral. 2. With respect to the two parcels of land which were mortgaged to the petitioner, SIHI should also have declined to accept them as collateral if it believed they were worth less than their supposed value.

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Provisional Remedies | Rule 57 A general averment of fraud is not sufficient to justify the issuance of a PA.

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insufficient allegations, it should at once be corrected.

Wee vs Tankiansee Wee filed an action for recovery of his money placements plus damages, with a prayer for attachment on the ground that Tankiansee, being an officer of Wincorp, connived with other defendants to defraud Wee. Issue: W a PA can be issued based on such ground. NO For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor’s mere non-payment of the debt or failure to comply with his obligation. The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor. The affidavit must contain such particulars as to how the fraud imputed to Tankiansee was committed for the court to decide whether or not to issue the writ. Absent any statement of other factual circumstances to show that respondent, at the time of contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the alleged fraud, the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment. In the application for the writ under the said ground, compelling is the need to give a hint about what constituted the fraud and how it was perpetrated because established is the rule that fraud is never presumed. The provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance. The rules governing its issuance are, therefore, strictly construed against the applicant, such that if the requisites for its grant are not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction. Likewise, the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or

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AS TO FRAUD IN THE PERFORMANCE OF THE OBLIGATION Metro, Inc. vs Lara’s Gifts Sps. Villafuerte (Lara’s) filed an action against against Sps. Juan (Metro) for sum of money and damages with prayer for PA. Lara and Metro entered into a contract where Lara will submit to Metro purchase orders received from Lara’s US buyer and that Lara will receive a commission from such sale. Metro did not give Lara the commission and worse, Metro transacted directly to Lara’s customers, in violation of their agreement. Issue: W there is a sufficient ground for issuance of PA. YES To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor’s mere non-payment of the debt or failure to comply with his obligation. We rule that respondents’ allegation that petitioners undertook to sell exclusively and only through JRP/LGD for Target Stores Corporation but that petitioners transacted directly with respondents’ foreign buyer is sufficient allegation of fraud to support their application for a writ of preliminary attachment.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 (e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors; or There is a physical removal of a property. The mere removal is not sufficient, it must be qualified with his intent to defraud creditors. Insolvency is not a ground for a PA “Insolvency is not a ground for attachment, especially when defendant has not been shown to have committed any act intended to defraud its creditors. To authorize an attachment, at least one of the causes mentioned in the statute must exist. Mere insolvency ... is not a ground of attachment. A man may be unable to pay his debts in full, and still be doing all in his power to pay them, and, so long as he furnishes no statutory cause of attachment against him, no attachment will be against his property." (Max Chamorro & Co vs Philippine Ready Mix) The removal must be driven by defendant’s intent to defraud. In Aboitiz, the removal of the buses was to put it into repair precisely to guarantee safety of the riding public. Aboitiz vs Cotabato Bus Aboitiz filed a collection case against Cotabato Bus and prayed for the issuance of a PA on the ground that there has been removal of buses to defraud Aboitiz. It is an undisputed fact that, as averred by petitioner itself, the several buses attached are nearly junks. However, upon permission by the sheriff, five of them were repaired, but they were substituted with five buses which were also in the same condition as the five repaired ones before the repair. ISSUE: W the removal for the purpose of repair is a valid ground for PA. NO This cannot be the removal intended as ground for the issuance of a writ of attachment under Section 1(e), Rule 57, of the Rules of Court. The repair of the five buses was evidently motivated by a desire to serve the interest of the riding public, clearly not to defraud its creditors, as there is no showing that they were not put on the run after their repairs, as was the obvious purpose of their substitution to be placed in running condition.

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Moreover, as the buses were mortgaged to the DPB, their removal or disposal as alleged by petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be very remote, if not nil. If removal of the buses had in fact been committed, which seems to exist only in petitioner’s apprehensive imagination, the DBP should not have failed to take proper court action, both civil and criminal, which apparently has not been done. The dwindling of respondent’s bank account despite its daily income of from P10,000.00 to P14,000.00 is easily explained by its having to meet heavy operating expenses, which include salaries and wages of employees and workers. If, indeed the income of the company were sufficiently profitable, it should not allow its buses to fall into disuse by lack of repairs. It should also maintain a good credit standing with its suppliers of equipment and other needs of the company to keep its business a going concern. Petitioner is only one of the suppliers. It is, indeed, extremely hard to remove the buses, machinery and other equipments which respondent company have to own and keep to be able to engage and continue in the operation of its transportation business. The sale or other form of disposition of any of this kind of property is not difficult of detection or discovery, and strangely, petitioner has adduced no proof of any sale or transfer of any of them, which should have been easily obtainable. The attachment grounded on the actual removal of property is justified when there is physical removal thereof by the debtor. Intent to defraud is inferred from facts and circumstances of the case; Principle that every person is presumed to intend the natural consequences of his acts. People’s Bank & Trust vs Syvel’s Inc. People’s Bank filed an action for foreclosure of chattel mortgage against Syvel’s. People’s bank applied for Attachment on the ground that Syvel’s has been removing goods for the purpose of defrauding People’s Bank. Witnesses testified that Syvel’s Inc. had disposed of all the articles covered by the chattel mortgage but had not remitted the proceeds to appellee bank; that the Syvel’s

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Provisional Remedies | Rule 57 Stores at the Escolta, Rizal Avenue and Morayta Street were no longer operated by appellants and that the latter were disposing of their properties to defraud appellee bank. The actuations of appellants were clearly seen by the witnesses who “saw a Fiat Bantam Car—fiat Car, a small car and about three or four persons hurrying; they were carrying goods coming from the back portion of this store of Syvel’s at the Escolta, between 5:30 and 6:30 o’clock in the evening.” Issue: W the removal of goods is a ground for PA. YES The attachment sought on the ground of actual removal of property is justified where there is physical removal thereof by the debtor, as shown by the records Fraudulent concealment of property to delay and defraud creditors supports the attachment. Therefore, “the act of debtor (appellant) in taking his stock of goods from the rear of his store at night, is sufficient to support an attachment upon the ground of the fraudulent concealment of property for the purpose of delaying and defrauding creditors.” In any case, intent to defraud may be and usually is inferred from the facts and circumstances of the case; it can rarely be proved by direct evidence. It may be gleaned also from the statements and conduct of the debtor, and in this connection, the principle may be applied that every person is presumed to intend the natural consequences of his acts. Q: Is the act of mortgaging the property in favor of another creditor an act of removal? NO (Adlawan vs Torres) ADLAWAN VS TORRES Adlawan obtained a loan from Aboitiz, which he was not able to pay. Later, he executed a REM in favour of PCIB covering 11 parcels of land. Aboitiz filed a collection suit and a petition for PA on the ground of fraud, i.e, the mortgage executed in favour of PCIB. PA was issued. ISSUE: W PA was properly issued. NO To justify a preliminary attachment, the removal or disposal must have been made 9

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with intent to defraud defendant’s creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual basis on defendant’s intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly averred. The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one’s property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with. Inability to pay one’s creditors is not necessarily synonymous with fraudulent intent not to honor an obligation. (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]).

(f) In an action against does not reside and is the Philippines, or summons may be publication. (1a)

a party who not found in on whom served by

This paragraph pertains to non-resident defendant. Persons on whom summons may be served by publication: 1. When his identity or whereabouts is unknown (Sec. 14, Rule 14); 2. Non residents (Sec. 15, Rule 14); and 3. Residents temporarily out of the Philippines (Sec 16, Rule 14). RULE 14 Section 14. Service upon defendant whose identity or whereabouts are unknown. — In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 court, be effected upon him by publication in a newspaper of general circulation and in such places and for such time as the court may order. (16a) Section 15. Extraterritorial service. — When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. (17a) Section 16. Residents temporarily out of the Philippines. — When any action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under the preceding section. (18a) Can a foreign corporation be considered a non-resident defendant for the purpose of issuance of a PA? NO Claude Neon Lights vs Phil. Advertising Claude is a foreign corporation, principal business in Washington.

"arrested" or who is "not residing in the Philippine Islands". Only by fiction can it be held that a corporation is "not residing in the Philippine Islands". A corporation has no home or residence in the sense in which those terms are applied to natural persons. It can not be said that every statute applicable to natural persons is applicable to corporations. There is not the same reason for subjecting a duly licensed foreign corporation to the attachment of its property by a plaintiff, as may exist in the case of a natural person not residing in the Philippine Islands. Corporations, as a rule, are less mobile than individuals. This is specially true of foreign corporations that are carrying on business by proper authority in these Islands. Said section should not be held applicable to foreign corporations duly licensed to do business in the Philippine Islands both because the language and the reason of the statute limit it to natural persons. Also, this does not apply to a domestic corporation. Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to the status of domestic corporations. May a foreign corporation be considered a resident of the Philippines? What effectively makes such a foreign corporation a resident corporation in the Philippines is its actually being in the Philippines and licitly doing business here, "locality of existence" being the "necessary element in the signification" of the term, resident corporation. State Investment House vs Citibank CMI obtained loans from Citibank, HSBC, Bank of America, and SIHI.

with

Phil. Advertising sued Claude for damages for alleged breach of contract, with petition for PA on the ground that Claude is a foreign corporation. ISSUE: W a foreign corporation be considered a non-resident defendant for the purpose of issuance of a PA. NO The words of section 1(f) refer to a physical defendant who is capable of being 10

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SIHI filed a collection suit against CMI. SIHI also succeeded in having CMI’s properties attached. Citibank et. al filed a petition for an involuntary solvency of CMI. This was opposed by SIHI contending that the banks were non resident creditors of CMI. ISSUE: W Foreign banks licensed to do business in the Philippines may be considered as resident of the Philippines. YES

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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The assimilation of foreign corporations authorized to do business in the Philippines “to the status of domestic corporations,” subsumes their being found and operating as corporations, hence, residing, in the country.

an action to recover the purchase price paid to Gallemore.

This Court itself has already had occasion to hold that a foreign corporation licitly doing business in the Philippines, which is a defendant in a civil suit, may not be considered a non-resident within the scope of the legal provision authorizing attachment against a defendant “not residing in the Philippine Islands;” Parenthetically, if it may not be considered as a party not residing in the Philippines, or as a party who resides out of the country, then, logically, it must be considered a party who does reside in the Philippines, who is a resident of the country. Be this as it may, this Court pointed out that: “x x Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to the status of domestic corporations. We think it would be entirely out of line with this policy should we make a discrimination against a foreign corporation, like the petitioner, and subject its property to the harsh writ of seizure by attachment when it has complied not only with every requirement of law made specially of foreign corporations, but in addition with every requirement of law made of domestic corporations. xx.”

This receivable is initially attached to the extent of Mabanag’s claim.

What is an action in rem and action in personam? A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. A proceeding in rem is one brought against persons seeking to subject the property of such persons to the discharge of the claims assailed. In an action in rem, an individual is named as defendant and the purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the property. Mabanag vs Gallemore Gallemore sold to Mabanag parcels of land. The sale was later annulled. Mabanag filed

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Gallemore is said to be residing in California, USA and his only property is a receivable from a residet in Misamis.

ISSUE: W the court can render a judgment in a case where it failed to obtain jurisdiction over the person of the defendant. YES Attachment or garnishment of property of a non-resident defendant located in the Philippines confers jurisdiction on the court in an otherwise personal action. In other words, though no jurisdiction is obtained over the debtor’s person, the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction. Attachment is not always necessary if the ground is that the defendant is temporarily out of the Philippines. PCIB vs Alejandro Alejandro, who is temporarily in Hongkong, executed a Promissory Note in favour of PCIB. Alejandro did not meet the terms of the Note. PCIB filed a collection suit, with petition for PA on the ground that Alejandro is not a resident of the Philippines. PCIB contends that service of summons may be effected through publication. WPA was granted, and issued. ISSUE: W Sec1(f) covers defendants temporarily out of the Philippines. NO In order to acquire jurisdiction in actions in personam where defendant resides out of and is not found in the Philippines, it becomes a matter of course for the court to convert the action into a proceeding in rem or quasi in rem by attaching the defendant’s property. The service of summons in this case is no longer for the purpose of acquiring jurisdiction but for compliance with the requirements of due process. Where the defendant is a resident who is temporarily out of the Philippines, attachment of his/her property in an action

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Describes the defendant f

e

Secure Judgment Obtain Jurisdiction over the res

non resident

personal or real

removal to defraud creditors personal or real

personal Secure Judgment d

Describes the defendant

against a party for fraud against a party for removal of property against a non resident Describes the defendant

Describes the Nature of the action

possession of a property was taken through fraud to prevent it being found Fraud in contracting a debt, or performance personal Secure Judgment c

Fraud or abuse of confidence fiduciary capacity Secure Judgment

personal or real

Intent to defraud creditor Personal

b

Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its implied consent to be sued, TESDA’s funds are still public in nature and, thus, cannot be the valid subject of a writ of garnishment or attachment. TESDA funds, being sourced from the Treasury, are moneys belonging to the government, or any of its departments, in the hands of public officials. The basic concept, is that public funds cannot be the object of garnishment proceedings even if the

a party who is about to depart Ph

TESDA being a government instrumentality performing governmental functions, is immune from suit.

Secure Judgment

ISSUE: W public funds can be subject to attachment. NO

A

TESDA contends that the public funds cannot be the subject of attachment and claimed immunity from suit, being a governmental instrumentality.

Kind of Property

Provi filed for a complaint for sum of money against TESDA, and prayed for PA on the ground of embezzlement by public officials (Sec1(b)). WPA was issued.

Against whom

Provi and TESDA entered into a contract whereby Provi is to deliver goods and services to TESDA. Upon delivery of the goods and services, TESDA’s outstanding balance remained at 35M despite demands.

Purpose

PROFESSIONAL VIDEO vs TESDA

Fraud

PUBLIC FUND, however, cannot be the subject of attachment.

Describes the Nature of the action

recovery of money Recovery of money or property Recovery of possession Describes the Nature of the action

Action

Substituted service of summons is the normal mode of service of summons that will confer jurisdiction on the court over the person of residents temporarily out of the Philippines. Meaning, service of summons may be effected by (a) leaving copies of the summons at the defendant’s residence with some person of suitable discretion residing therein, or (b) by leaving copies at the defendant’s office or regular place of business with some competent person in charge thereof. Hence, the court may acquire jurisdiction over an action in personam by mere substituted service without need of attaching the property of the defendant.

consent to be sued had been previously granted and the state liability adjudged.

Nature of Action

in personam, is not always necessary in order for the court to acquire jurisdiction to hear the case.

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Provisional Remedies | Rule 57 Section 2. Issuance and contents of order. — An order of attachment may be issued either ex parte or upon motion with notice and hearing by the court in which the action is pending, or by the Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so much of the property in the Philippines of the party against whom it is issued, not exempt from execution, as may be sufficient to satisfy the applicant's demand, unless such party makes deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant's demand or the value of the property to be attached as stated by the applicant, exclusive of costs. Several writs may be issued at the same time to the sheriffs of the courts of different judicial regions. (2a) How is an order issued: 1. Ex-parte 1 2. Upon motion with notice and hearing by the court in which the action is pending. Q: When may Writs of attachment issue ex parte? Writs of attachment may properly issue ex-parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; (Davao Light & Power Co., Inc. vs. Court of Appeals, 204 SCRA 343, G.R. No. 93262 November 29, 1991) Q: Who issues the writ? The Court (MTC or RTC) in which the action is pending issues the writ, CA or SC. Q: Who can enforce the order of attachment? 1. Sheriff of the Court; 2. Chief of Police deputized as sheriff. Q: What properties can be attached? So much of the property in the Philippines of the party against whom it is 1

issued, not exempt from execution, as may be sufficient to satisfy the applicant's demand. Section 2 specifically provides that only properties located in the Philippines may be attached. The Courts have no jurisdiction over the properties outside of its territorial jurisdiction. Properties located outside the Philippines are beyond the reach of the Court. Q: Can writs of attachment be issued by the Court applicable to different parts of the Philippines? Yes. Writs issued by the Court of Appeals and Supreme Court are applicable anywhere in the Philippines. Q: When the writ is issued by the RTC or MTC where the case is pending, where is it enforceable? It is enforceable even outside the judicial region of the Court which issued it.

Q: How do you defeat a Writ? The party against whom the writ is issued may defeat such by making a deposit or by giving a bond in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant's demand or the value of the property to be attached as stated by the applicant, exclusive of costs. Q. What is Levy of Attachment? Levy of attachment is the service upon the defendant a copy of plaintiff's affidavit and bond and of the order of attachment. (Reinsurance Company of the Orient Inc. Vs. Barcelona) Q: How is levy on property validly effected? Levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint, the application for attachment, the order of attachment, and the plaintiff ‘s attachment bond. (Davao Light & Power Co., Inc. vs. Court of Appeals)

Ex- Parte - A judicial proceeding, order, injunction, etc., is said to be ex-parte when it is taken or granted at the instance and for the benefit of one party only, and without notice to or contestation by, any person adversely interested (Black’s Law Dictionary)

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q. What is the duty of the sheriff with regard to the Levy of Attachment? The sheriff is required to attach only so much of the property in the Philippines, not exempt from execution, as may be sufficient to satisfy the applicant's demand, the amount of which is stated in the order. Q. When can the Court issue several writs? Several writs may be issued at the same time to the sheriffs of the courts of different judicial regions.

SIEVERT vs CA Sievert, a resident of the Philippines, received by mail, the petition for issuance of Preliminary Attachment, however he had not received any summons or copy of the complaint against him. During the hearing for Petition for PA, Sievert’s counsel opposed claiming lack of jurisdiction of the Court over his person since no summons had been served to him in the main case. ISSUE: W a Court which did not acquire jurisdiction over the person of the defendant in the main case may bind such defendant or his property by issuing a PA. NO There is no question that a writ of preliminary attachment may be applied for a plaintiff “at the commencement of the action or at any time thereafter”. However, is not to be resolved by determining when an action may be regarded as having been commenced, a point in time which is not necessarily fixed and identical regardless of the specific purpose for which the determination is to be made. The critical time which must be identified is, rather, when the trial court acquires authority under law to act coercively against the defendant or his property in a proceeding in attachment. We believe and so hold that that critical time is the time of the vesting of jurisdiction in the court over the person of the defendant in the main case. A court which has not acquired jurisdiction over the person of defendant, cannot bind that defendant whether in the main case or in any ancillary proceeding such as attachment proceedings. The service of a petition for preliminary attachment without 14

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the prior or simultaneous service of summons and a copy of the complaint in the main case does not of course confer jurisdiction upon the issuing court over the person of the defendant. Ordinarily, the prayer in a petition for a writ of preliminary attachment is embodied or incorporated in the main complaint itself as one of the forms of relief sought in such complaint. Thus, valid service of summons and a copy of the complaint will in such case vest jurisdiction in the court over the defendant both for purposes of the main case and for purposes of the ancillary remedy of attachment. In such case, notice of the main case is at the same time notice of the auxiliary proceeding in attachment. Where the petition for a writ of preliminary attachment is embodied in a discrete pleading, such petition must be served either simultaneously with service of summons and a copy of the main complaint, or after jurisdiction over the defendant has already been acquired by such service of summons. Notice of the separate attachment petition is not notice of the main action. If a court has no jurisdiction over the subject matter or over the person of the defendant in the principal action, it simply has no jurisdiction to issue a writ of preliminary attachment against the defendant or his property. When a petition for PA is embodied in a discrete pleading, such petition must be served either simultaneously with service of summons and a copy of the main complaint or after jurisdiction over the defendant is acquired. Q: When is an action or proceeding commenced? An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked or called into activity; and it is thus that the court acquires jurisdiction over said subject matter or nature of the action. And it is by that self-same act of the plaintiff of filing the complaint (or other appropriate pleading) that jurisdiction is acquired by the court over his person. On the other hand, jurisdiction over the person of the defendant is obtained by

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 the service of summons or other coercive process upon him or by his voluntary submission to the authority of the court. Davao Light vs CA Davao Light filed a complaint for recovery of money & damages against Queensland. The complaint contained an ex-parte application for PA. On May 3, 1989, the Court granted the exparte application and on May 11, 1989, the WPA was issued. On May 12, 1989, the Sheriff served the summons, copy of the complaint, WPA, and copy of attachment bond to Queensland. Queensland contends that the Court could not have validly granted and issued the WPA on May 3 and 11, since the Court did not acquire jurisdiction over the person of the defendant. ISSUE: W a PA may be issued before the Court acquired jurisdiction over the person of the defendant. YES The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is filed, summons issues to the defendant, the summons is then transmitted to the sheriff, and finally, service of the summons is effected on the defendant in any of the ways authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time between the day of the filing of the complaint and the day of service of summons of the defendant. During this period, different acts may be done by the plaintiff or by the Court, which are unquestionable validity and propriety. No principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant. It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority. 15

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SIEVERT vs CA

DAVAO LIGHT vs CA

Service of summo n and other docs

No Service of summons on the Main Case

A valid service of summon was effected

Levy on Attachment

Attempt to be effected despite lack of service of summon in the main case

The levy was made after service of summon

Petition for PA

Effect of lack of juris’n over defend’t

Filed separately with the main case

PA is not validly issued

petition for a writ of preliminary attachment is incorporated in the main complaint PA is valid but for it to be effective, jurisdiction over the defendant must be acquired

Stages in the issuance of the writ: FIRST STAGE: The court issues the order granting the application. SECOND STAGE: The writ of attachment is issued pursuant to the order granting the writ. THIRD STAGE: The Writ is implemented.

Cuartero vs CA Cuartero filed a complaint against Evangelista for sum of money with damages, with a prayer for issuance of PA. On Aug. 24, 1990, the Court issued an order granting ex-parte the issuance of the PA. Sept 19, 1990, the WPA was issued. On Sept. 20, 1990, the writ was implemented and the copy of WPA, summons and complaint were simultaneously served on Evangelista.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Evangelista contends that the WPA is improperly issued for lack of jurisdiction over his person and that there is a violation of his constitutional right to due process when the writ was issued without notice and hearing.

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Q: In what instance is a hearing required despite compliance with the requirements of affidavit and bond of the applicant? 1. If the ground to which the Attachment is issued is stated in general terms or averments; and

ISSUE: W the WPA is properly issued. YES On Due Process: As has been expressly ruled in BF Homes, Inc. v. Court of Appeals, 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.

2. If the Judge is not convinced of the sufficiency of the affidavit. Salas vs Adil Bedro and Yu filed an action against Salas for the annulment of a deed of sale covering a lot which is said to be a subdivision lot, and recovery of damages. They also filed for a motion for Attachment on the ground that defendants have removed or disposed of their properties or about to do so with intent to defraud the plaintiffs. The Judge issued ex-parte a WPA, and subsequently the Sheriff levied upon the properties stated in the writ.

On Lack of Jurisdiction: A writ of preliminary attachment may issue even before summons is served upon the defendant. However, we have likewise ruled that the writ cannot bind and affect the defendant until jurisdiction over his person is eventually obtained. When is jurisdiction necessary: 3rd stage. For the first and second 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. Writ of attachment may be issued ex-parte or without a hearing provided that the Court is satisfied that the relevant requisites therefore have been fulfilled by the applicant. Q: What are the requisites? 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.

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ISSUE: W the issuance ex-parte of a WPA is proper. NO Considering the gravity of the allegation that herein petitioners have removed or disposed of their properties or are about to do so with intent to defraud their creditors, and further considering that the affidavit in support of the preliminary attachment merely states such ground in general terms, without specific allegations of circumstances to show the reason why plaintiffs believe that defendants are disposing of their properties in fraud of creditors, it was incumbent upon respondent Judge to give notice to petitioners and to allow them to present their position at a hearing wherein evidence is to be received. “All in all due process would seem to require that both parties further ventilate their respective contentions in a hearing that could indeed reveal the truth. Fairness would be served thereby, the demand of reason satisfied.” Moreover, it appears from the records that private respondent are claiming unliquidated damages, including moral damages, from petitioners. The authorities agree that the writ of attachment is not available in a suit for damages where the amount claimed is contigent or unliquidated.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 La Granja vs Samson La Granja filed a complaint against Chua for the recovery of the sum of money, and prayed for the issuance of attachment on the ground that defendants have disposed or are disposing of their properties in favor of the Asiatic Petroleum Co., with intent to defraud their creditors. The judge, wishing to ascertain or convince himself of the truth of the alleged disposal, required La Granja to present evidence to substantiate its allegation, before granting its petition. La Granja refused to comply with the court's requirement, alleging as its ground that was not obliged to do so. The Judge dismissed said petition for an order of attachment. ISSUE: W the mere filing of an affidavit in due form is sufficient to compel a judge to issue an order of attachment. NO Although the law requires nothing more than the affidavit as a means of establishing the existence of such facts, nevertheless, such affidavit must be sufficient to convince the court of their existence, the court being justified in rejecting the affidavit if it does not serve this purpose and in denying the petition for an order of attachment. The sufficiency or insufficiency of an affidavit depends upon the amount of credit given it by the judge, and its acceptance or rejection, upon his sound discretion. Hence, the respondent judge, in requiring the presentation of evidence to establish the truth of the allegation of the affidavit that the defendants had disposed or were disposing of their property to defraud their creditors, has done nothing more than exercise his sound discretion in determining the sufficiency of the affidavit.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

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Provisional Remedies | Rule 57 Section 3. Affidavit and bond required. — An order of attachment shall be granted only when it appears 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 court before the order issues. (3a) Q: When can an order of attachment granted? The order of attachment may be granted when it appears by the affidavit of the applicant, or of some other person who personally knows the facts: 1.

That a sufficient cause of action exists; 2. That the case is one of those mentioned in section 1; 3. That there is no other sufficient security for the claim sought to be enforced by the action; and 4. 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. Q: What are the requisites attachment to be granted?

for

an

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KO Glass vs Valenzuela Pinzon sought for recovery of sum of money from KO Glass. A writ of Preliminary Attachment was issued by the court at the instance of Pinzon on the ground that Glass is a Foreigner. KO Glass opposed saying that the writ of preliminary attachment upon the ground that the affidavit filed was not sufficient for the reason that: (1) the affidavit did not state that the amount of plaintiff’s claim was above all legal setoffs or counterclaims, as required by Sec. 3, Rule 57 of the Revised Rules of Court; (2) the affidavit did not state that there is no other sufficient security for the claim sought to be recovered by the action as also required by said Sec. 3; and (3) the affidavit did not specify any of the grounds enumerated in Sec. 1 of Rule 57. Issue: W the PA is validly issued. NO It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance of a writ of preliminary attachment, renders the writ of preliminary attachment issued against the property of the defendant fatally defective, and the judge issuing it is deemed to have acted in excess of his jurisdiction.

Guzman vs Catolico

Q: What is the effect if the affidavit does not contain all the matters required to be stated therein?

Catolico filed an action against Guzman for the recovery of his fees for services rendered as an attorney, and prayed for the issuance of PA on the ground that defendant is trying to sell and dispose his properties with intent to defraud his creditors.

Writ issued on the basis of such affidavit is fatally defective.

The TC issued an order granting the petition, and subsequently issued the WPA.

The affidavit, and the bond (Sec. 4) must be duly filed with the court before the order issues.

Guzman contends that the PA was improperly issued since there is no allegation in the affidavit that (a.) there is no other sufficient security for the claim sought to be enforced by the action; (b.) the amount due to the applicant, or the value of the property the possession of which he is 18

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 entitled to recover, is as much as the sum for which the order is granted above all legal counterclaims; and (c.) the fact that the affidavit is based on mere information and belief of the plaintiff. Issue: W the PA is validly issued. NO As to (a.) and (b.): There is no allegation, either in the complaint or in the affidavit solemnizing it, to the effect that there is no other sufficient security for the claim which the plaintiff seeks to enforce by his action, and that the amount due him from the defendant, above all legal set-offs and counterclaims, is as much as the sum for which the writ of preliminary attachment has been granted. Now then, does the omission of these two requisites constitute a defect preventing a judge of the Court of First Instance from issuing a writ of preliminary attachment. As to (c.): The affidavit is not defective because in it the therein plaintiff and herein respondent Alfredo Catolico states "that all the allegations thereof are certain and true, to the best of my knowledge and belief", and not that they are so according to his information and belief.

JARDINE MANILA FINANCE vs CA Jardine filed a collection suit against Impact, and impleaded de Leons by reason of their Surety Agreement Undertaking. Jardine prayed for the issuance of PA on the ground of fraud in contracting the obligation. In their affidavit, they state that (D.) Impact, Ricardo and Eduardo (de Leon) have no visible other sufficient security for the claim sought to be enforced by the action other than their real and personal properties located in Metro Manila, Province of Rizal, Province of Nueva Ecija, or elsewhere. The TC granted and issued the PA. Impact et al contends that the issuance of PA is irregular because it failed to allege that (a.) there is no other sufficient security for the claim sought to be enforced by the action; (b.) 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.

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Jardine admits that they did not use the exact words of the Rules but the provision in (D.) is compliant, and while they did not state that the sum due is above all legal counterclaim, such is not necessary in the face of actual proof in the answer which did not carry any counterclaim. They stressed that mere forms must not be given more weight than substance. ISSUE: W the non compliance of the formal requirements invalidate the PA. YES. It has been held that the failure to allege in the affidavit the requisites prescribed for the issuance of the writ of preliminary attachment, renders the writ of preliminary attachment issued against the property of the defendant fatally defective, and the judge issuing it is deemed to have acted in excess of his jurisdiction. In such cases, the defect cannot even be cured by amendment. The general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void. Thus, while not unmindful of the fact that the property seized under the writ and brought into court is what the court finally exercises jurisdiction over, the court cannot subscribe to the proposition that the steps pointed out by statutes to obtain such writ are inconsequential, and in no sense jurisdictional. Considering that petitioner’s application for the subject writ of preliminary attachment did not actually fully comply with the requisites prescribed by law, said writ is, as it is hereby declared null and void and of no effect whatsoever. Further it must be noted that in Clause (D.) Jardine stated that they have sufficient property.

Ting vs Villarin Consolidated bank filed an action against Perlon Mills and Roberto (Director) and Dolores (Wife – impleaded so as to bind conjugal partnership which allegedly benefitted). The first cause of action is based on the promissory notes which Roberto signed binding himself jointly and severally liable to Conso.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 The second cause of action of Consolidated is the violation of the trust receipts. They prayed for PA on the ground of fraud in contracting the obligations. In their affidavit, Ting stated that [16. Defendants are guilty of fraud in contracting their obligations more specifically illustrated by their violation of the trust receipt agreement which is a ground defined under Sec. 1, Rule 57 of the Rules of Court for the issuance of a writ of preliminary attachment.]

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Simultaneously with the filing of the complaint, plaintiffs asked for a writ of attachment, which was granted. Cu Unjieng filed a motion to dismiss on the ground that the affidavit is defective because it fails to state (a) that there is no allegation, either in the affidavit or the complaint, that there was no other sufficient security for the claim sought to be enforced by the action and (b) that the amount due to the plaintiff above all legal set-offs or counterclaims is as much as the sum for which the order is granted.

ISSUE: W the writ is validly issued. NO The complaint did not provide for a sufficient basis for the issuance of a writ of preliminary attachment. It is not enough for the complaint to ritualistically cite, as here, that the defendants are “guilty of fraud in contracting an obligation.” An order of attachment cannot be issued on a general averment, such as one ceremoniously quoting from a pertinent rule.6 The need for a recitation of factual circumstances that support the application becomes more compelling here considering that the ground relied upon is “fraud in contracting an obligation.” The complaint utterly failed to even give a hint about what constituted the fraud and how it was perpetrated. Fraud cannot be presumed.

A defective affidavit cannot be cured by amendment so as to support the issuance of PA, and WPA issued based on such affidavit must be discharged. Q: What, then, may be the remedy of the plaintiff? A: Before the issuance of a PA, the affidavit can be amended, or the plaintiff may file for the application of a new WPA.

The bank asked leave to file an amended affidavit in support of its petition for a writ of attachment. ISSUE: W a defective affidavit can be cured by an amendment so as to justify issuance of a PA. NO. Citing Winters vs Pearsons, “on a motion to discharge a writ of attachment, on the ground that it was improperly or irregularly issued, the affidavit on which the writ was issued is not amendable. This, in our opinion, is in accordance with the rule, which provides that the writ was improperly or irregularly issued, it must be discharged. To allow the affidavit to be made good by amendment, and upon such action refused to discharge the writ, would violate the requirements of the rule on motion to discharge a writ. It therefore allows that where the affidavit for attachment is fatally defective, the attachment must be held to have been improperly or irregularly issued and must be discharged, and such fatal defect cannot be cured by amendment. The writ of attachment in this case should therefore have been discharged.

Cu Unjieng vs Goddard Carlos vs Sandoval Cu Unjieng allegedly entered into a fraudulent conspiracy or combination with one Fernandez, by which the conspirators would hypothecate and pledge forged securities of various kinds with the various banking institutions and other commercial firms of the City of Manila, and pursuant to said fraudulent conspiracy, secured credit with the bank, and the plaintiff was defrauded by the defendants and Fernandez in the sum of P1,411,312.80. 20

Carlos sought to nullify the agreements he contracted with Sandoval for want of consideration, the premise for these contracts being non-existent, and prayed for the issuance of PA. The RTC granted and issued a WPA. Carlos posted a bond for P20,000,000.00. Sandoval filed Motion to discharge WPA.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 ISSUE: W the writ was validly issued. NO The WPA issued by the RTC was improperly granted because there was no sufficient cause of action to warrant the preliminary attachment, since Carlos had merely alleged general averments in order to support his prayer. If the affidavit is proven to be false, the WPA issued will be discharged pursuant to Sec. 13, Rule 57.

Q: May a PA be issued if there already exists a security or collateral for a debt? NO Salgado vs CA PCIB filed an action against Salgado to recover sum of money on a Promissory Note, and prayed for issuance of PA, which was granted by the Court and PA was issued. In the affidavit, plaintiff stated: 1. that Salgado has misappropriated or converted personal use and benefit the the sugar given as security for of the indebtedness;

fraudulently to their own proceeds of the payment

2. that petitioners are guilty of fraud in contracting their obligation and have concealed, removed or disposed of the properties mortgaged or assigned to the plaintiff, or are concealing, removing or disposing or about to do so, with intent to defraud their creditor; 3. that the obligation sought to be enforced is genuine and, therefore, a sufficient cause of action exists; and 4. that there is no sufficient security for the claim sought to be enforced by the action. Salgado moved to quash the writ alleging that the indebtedness is secured by a Real Estate Mortgage.

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creditors from attaching additional property and thus tying up more of the debtor’s property than was necessary to secure the indebtedness. Thus, to sustain an order of attachment, "it is incumbent upon plaintiff to establish either of these two facts, to wit: (a) that the obligation had not been secured originally, or (b) that, if secured at its beginning, the security later became valueless." 3 When the facts or some of them, stated in the plaintiff’s affidavit, are shown by the defendant to be untrue, the writ of attachment may be considered as improperly or irregularly issued.

When there exist misrepresentation in the affidavit, the issuance of a PA on the basis of such affidavit, is not valid. PCIB vs Alejandro Alejandro, who is temporarily in Hongkong, executed a Promissory Note in favour of PCIB. Alejandro did not meet the terms of the Note. PCIB filed a collection suit, with petition for PA. In praying for the issuance of WPA, plaintiff alleged in the affidavit that Alejandro is not a resident of the Philippines. The TC granted the application and issued the writ after petitioner posted a bond. Subsequently, respondent filed a motion to quash WPA contending that PCIB knew that he maintains a permanent residence at Quezon City, and an office address in Makati City, where PCIB regularly communicated with him through its representatives. ISSUE: W the writ was validly issued. NO

ISSUE: W the writ was validly issued. NO Sec. 3 provides that an order of attachment shall be granted when there is no sufficient security for the claim sought to be enforced by the action, among others. The reason for the rule prohibiting attachment where indebtedness was already secured is to prevent the secured 21

The representatives of PCIB personally transacted with respondent through his home address in Quezon City and/or his office in Makati City. PCIB misrepresented and suppressed the facts regarding Alejandro’s residence considering that it has personal and official knowledge that for purposes of service of summons, Alejandro’s residence and office addresses are located in the Philippines.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 There being misrepresentations in the affidavit, the issuance of the WPA lacks basis.

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which the adverse party may be entitled in case there is a subsequent finding that the applicant is not entitled to the writ. The Republic of the Philippines need not give this security as it is presumed to be always solvent and able to meet its obligations.

Q: Is the state required to post an attachment bond before a WPA may be issued? NO Republic vs Flores Republic of the Philippines filed a petition for forfeiture of unlawfully acquired properties, with a verified urgent ex-parte application for the issuance of a writ of preliminary attachment, against Maj. Gen. Carlos F. Garcia, his wife, and children, in the Sandiganbayan. In praying for the issuance of a WPA, the Republic maintained that, as a sovereign political entity, it was exempt from filing the required attachment bond. The Sandiganbayan issued a resolution ordering the issuance of a WPA against the properties of the Garcias upon the filing by the Republic of a P1 million attachment bond. To promptly protect and secure its claim, the republic filed the attachment bond.

ISSUE: W the Republic of the Philippines is required to post an attachment bond in compliance with Sec. 3 and Sec. 4, Rule 57. NO

This rule does not cover the State. In Tolentino vs Carlos, this Court declared that the State as represented by the government is exempt from filing an attachment bond on the theory that it is always solvent. In other words, the issuance of a writ of preliminary attachment is conditioned on the filing of a bond unless the applicant is the State. Where the State is the applicant, the filing of the attachment bond is excused. The attachment bond is contingent on and answerable for all costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment should the court finally rule that the applicant is not entitled to the writ of attachment. Thus, it is a security for the payment of the costs and damages to 22

Section 4. Condition of applicant's bond2. — The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs 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. (4a) Q: What is the amount of the applicant’s bond? A: The Court shall fix in its order granting the writ the amount of the bond. It may be equal to the applicant’s demand or to the value of the property to be attached. Q: What is the bond answerable for? A: If the court shall finally adjudge that the applicant was not entitled to PA, the bond shall answer for the payment of: 1. All the costs which may be adjudged to the adverse party; and 2. All damages which he may sustain by reason of the attachment.

Q: What the effect of the insufficiency of the bond? A: If the applicant’s bond is insufficient to fully satisfy the costs and damages, any property of the attaching party not exempt from execution could be levied on execution. (Sec. 20, Rule 57)

Q: When plaintiff moves to dismiss an action, may the defendant be entitled to damages for wrongful attachment? A: Yes. If the plaintiff, by his MTD the action admits that the attachment was wrongful or without sufficient cause, the court should hear proof of the alleged damage caused to the defendant for the wrongful attachment.

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A bond is a financial instrument used as a form of guarantee or promise. (Black’s Law Dictionary)

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What are the kinds of bonds? A: They may be: 1. Cash Bonds; 2. Surety Bonds; or 3. Property Bonds. Q: What damages may an attachment bond be answerable for? A: As a general rule, it is limited to actual, or in some cases, temperate or nominal damages. However, exemplary damages may be recovered where the attachment was established to be maliciously sued out. (PCIB vs Alejandro) PCIB vs Alejandro Alejandro filed a claim for damages in the amount of P25 M on the attachment bond posted by Prudential Guarantee on account of the wrongful garnishment of his deposits. HELD: PCIB is liable for damages for the wrongful issuance of a writ of attachment against respondent, but 25M is excessive. ACTUAL damages to be recoverable, they must constitute actual damages duly established by competent proofs, which is wanting in this case. Hence not awarded NOMINAL damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Considering that the right of respondent to use his money has been violated by its garnishment. (P50,000) The award of attorneys fees is proper when a party is compelled to incur expenses to lift a wrongfully issued writ of attachment. (P200,000) Moral damages is awarded on account of petitioners misrepresentation and bad faith (P500,000) Exemplary damages is awarded considering petitioners bad faith in securing the writ of attachment, by way of example or correction for public good. This should deter parties in litigations from resorting to baseless and preposterous allegations to obtain writs of attachments. (500,000)

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Arellano vs Flojo Arellano filed a verified complaint for neglect of duty, misconduct, bias, and partiality against (b) Felino Bangalan, then Acting Clerk of Court III, for issuing the WPA despite the failure of the plaintiffs to post the required attachment bond of P100,000.00. It appears that what is posted is only a promissory note in the form of an affidavit executed by Victor Suguitan, Andres Langaman, and Mariano Retreta. ISSUE: W a bond can be substituted by an undertaking or promissory note. NO Where a statute authorizing attachment requires, as a condition to the issuance of the writ, that a bond shall be given by plaintiff to indemnify defendant for any loss or injury resulting from the attachment in case it proves to be wrongful, a failure to give such bond is fatal, and an attachment issued without the necessary bond is invalid.

Calderon vs IAC Calderon purchased from the Schulze LBC and its 5 affiliate companies. Thereafter, BOC suspended the operations of LBC for failure to pay customs taxes and duties incurred prior to the execution of the sale. To lift the suspension Calderon paid the duties to the BOC. Calderon filed a complaint against private respondents to recover said amount paid to BOC, with damages by reason of breach of warranty, and prayed for a PA, alleging: (1.) 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 (2.) that private respondent Schulze is about to depart from the Philippines in order to defraud his creditors. Calderon posted a surety bond of P1,475,840.00. The TC issued a WPA, thereafter the properties of Schulze were attached and their bank deposits were garnished. Schulze filed a counterbond, so the TC issued an order directing the sheriff to return

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 all real and personal properties already levied upon and to lift the notices of garnishment issued in connection with the said attachment. After trial, the TC dismissed the complaint, holding Calderon and his surety First integrated Bonding and Insurance Co., Inc., jointly and severally liable to pay the damages prayed for by the private respondents. Petitioner surety contends: 1. 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; and 2. 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.

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.

ISSUE: W the Surety is liable for damages on its contracted suretyship despite the dissolution of the WPA as a result of the filing of a counter-bond by the defendant. YES While Section 12, Rule 57 provides that upon the filing of a counterbond, the attachment is discharged or dissolved, 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. It is clear that the responsibility of the surety arises "if the court shall finally adjudge that the plaintiff was not entitled thereto." 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. 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 24

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 5. Manner of attaching property. — The sheriff enforcing the writ shall without delay and with all reasonable diligence attach, to await judgment and execution in the action, only so much of the property in the Philippines of the party against whom the writ is issued, not exempt from execution, as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the court from which the writ is issued, or gives a counter-bond executed to the applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be attached, exclusive of costs. No levy on attachment pursuant to the writ issued under section 2 hereof shall be enforced unless it is preceded, or contemporaneously accompanied, by service of summons, together with a copy of the complaint, the application for attachment the applicant's affidavit and bond, and the order and writ of attachment, on the defendant within the Philippines. The requirement of prior or contemporaneous service of summons shall not apply where the summons could not be served personally or by substituted service despite diligent efforts, or the defendant is a resident of the Philippines temporarily absent therefrom, or the defendant is a nonresident of the Philippines, or the action is one in rem or quasi in rem. (5a) Q: How much [many] properties should be attached? A: The sheriff shall attach only so much of the property in the Philippines of the party against whom the writ is issued, not exempt from execution, as may be sufficient to satisfy the applicant's demand.

Q: What kind of properties should be attached? A: Real and personal property may be attached, as provided in Sec. 7 Rule 57.

Q: What properties attachment? A: The following attachment:

are are

exempt from exempt

from

1. Public funds, as held in Professional Video vs TESDA; 25

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2. Title is not in the name of defendant (unless it is shown that he has a beneficial interest in the property.) (Gotauco v. ROD) 3. Those mentioned under Sec. 13, Rule 39, as follows: a. The judgment obligor’s family home as provided by law, or the homestead in which he resides, and the land necessarily used in connection therewith; b. Ordinary tools and implements personally used by him in his trade, employment, or livelihood; c. Three horses, or three cows, or three carabaos, or other beasts of burden, such as the judgment obligor may select necessarily used by him in his ordinary occupation; d. His necessary clothing and articles for ordinary personal use, excluding jewelry; e. Household furniture and utensils necessary for housekeeping, and used for that purpose by the judgment obligor and his family, such as the judgment obligor may select, of a value not exceeding 100,000 pesos. f. Provisions for individual or family use sufficient for four months; g. The professional libraries and equipment of judges, lawyers, physicians, pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other professionals, not exceeding 300,000 pesos; h. One fishing boat and accessories not exceeding the total value of 100,000 pesos owned by a fisherman and by the lawful use of which he earns his livelihood; i. So much of the salaries, wages, or earnings of the judgment obligor for his personal services with 4 months preceding the levy as are necessary for the support of his family; j. Lettered gravestones; k. Monies, benefits, privileges, or annuities accruing or in any manner growing out of any life insurance; l. The right to receive legal support, or money or property obtained as such support, or any pension or gratuity from the government; and m. Properties specially exempted by law (Sec. 13, Rule 39).

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: How can levy be prevented? A: The defendant or adverse party may: 1. Make a deposit with the court from which the writ is issued; 2. Give a counter-bond executed to the applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be attached, exclusive of costs; or 3. File a motion to quash the writ.

Q: What is the purpose of a counterbond? A: It is for the purpose of securing the payment of any judgment in favour of the attaching party

Q: What is required for a levy to be enforced, as a general rule? A: As a general rule, it must be preceded, or contemporaneously accompanied, by service of: 1. Summons; 2. A copy of the complaint; 3. The application for attachment, applicant's affidavit and bond; and 4. The order and writ of attachment. Except: 1. Where summons could not be served personally or by substituted service despite diligent efforts; 2. When the defendant is a resident of the Philippines temporarily absent therefrom; 3. When the defendant is a non-resident of the Philippines; or 4. Where the action is one in rem or quasi in rem.

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GOTAUCO V. ROD The register of deeds in this case denied the inscription of a levy of execution on the title of the property as it was in the name of Florentino Vilar and not in the name of the Rafael Vilar, the judgment debtor and that no evidence having been submitted that the Rafael Vilar had any interest in the property. However, it was later on shown that the Rafael Vilar was one of the heirs of the Florentino Vilar in whose name the property appeared.

ISSUE: W the inscription of the levy of excution is proper. YES.

Rafael Vilar as one of the heirs, allthough the value of his participation in the estate of Florentino Vilar was indeterminable before the final liquidation of the estate, nevertheless, the right of participation in the estate and the lands thereof may be attached and sold. The real test (Reyes v. Grey) is whether the judgment debtor hold such a beneficial interest in the property that he can sell or otherwise dispose of its for value. Nothing appears in this record to indicate that Rafael Vilar being sui juris could not dispose of his interest or share as heir in the estate of Florentino Vilar. Having this right, he could by a conveyance defeat pro tanto the provisions of section 450 of the Code of Civil Procedure, judgment in this consulta was reversed. Q. Is a writ served 6 days earlier than the service of summons be considered a valid execution of the writ? A: NO. (Onate vs Abrogar En Banc) OÑATE V. ABROGAR (2 nd Division) December 23, 1991, Sun-Life filed a complaint for a sum of money with a prayer for the issuance of WPA against Oñate, Econ Holdings Corp., Brunner Dev’t Corp and Noel L. Diño. On December 24, 1991, Judge Abrogar issued an order granting the issuance of a WPA, and was actually issued on December 27, 1991.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 On January 3, 1992, the writ of attachment was amended to reflect the alleged amount of the indebtedness. That same day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the amended writ of attachment upon petitioners at their known office address at 108 Aguirre St., Makati but was not able to do so since there was no responsible officer to receive the same. Nonetheless, Sheriff Flores proceeded to serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Oñate. Summons was eventually served upon petitioners on January 9, 1992, while defendant Diño was served with summons on January 16, 1992. Petitioners filed a Motion to Discharge/Dissolve WPA on the ground that the enforcement of the writ is invalid since it preceded the actual service of summons by six days. ISSUE: W the enforcement of the writ was valid. YES As a general rule, the enforcement of writ of attachment may not validly be effected until and unless proceeded or contemporaneously accompanied by service of summons. (Davao Light vs CA) An exception to the established rule on the enforcement of the writ of attachment can be made where a previous attempt to serve the summons and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server, provided that such service is effected within a reasonable period thereafter. Sheriff Flores and Sun Life did attempt a contemporaneous service of both summons and the writ of attachment on January 3, 1992, but was made impossible by the absence of a responsible officer in petitioners' offices. Reasons for the exception: 1st, there is a possibility that a defendant, having been alerted of plaintiffs action by the attempted service of summons and the writ of attachment, would put his properties beyond the reach of the plaintiff while the 27

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latter is trying to serve the summons and the writ anew. By the time the plaintiff may have caused the service of summons and the writ, there might not be any property of the defendant left to attach. 2nd, the court eventually acquired jurisdiction over the petitioners six days later. To nullify the notices of garnishment issued prior thereto would again open the possibility that petitioners would transfer the garnished monies while Sun Life applied for new notices of garnishment. 3rd, the ease by which a writ of attachment can be obtained is counter-balanced by the ease by which the same can be discharged: the defendant can either make a cash deposit or post a counter-bond equivalent to the value of the property attached. The petitioners herein tried to have the writ of attachment discharged by posting a counter-bond, the same was denied by respondent Judge on the ground that the amount of the counter-bond was less than that of Sun Life's bond. The Supreme Court sitting En Banc overturned the decision of the 2nd Division and ruled that prior or contemporaneous service of summon is necessary for the levy of the writ. OÑATE V. ABROGAR (En Banc) Petitioners maintain that the attachment of their properties was void because the TC had not at that time acquired jurisdiction over them and that the subsequent service of summons on them did not cure the invalidity of the levy. ISSUE: W the subsequent service of summon (6 days after the levy of the WPA) cured the invalidity of such levy. NO The attachment of petitioners' properties prior to the acquisition of jurisdiction by the respondent court is void and that the subsequent service of summons on petitioners did not cure the invalidity of such attachment. Whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of the defendant, as above indicated — issuance of summons, order of attachment and writ of attachment — and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court's authority. (Davao Light & Power, Co. vs CA) 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. (Cuartero vs CA) At the very least, then, the writ of attachment must be served simultaneously with the service of summons before the writ may be enforced. As the properties of the petitioners were attached by the sheriff before he had served the summons on them, the levies made must be considered void. Nor can the attachment of petitioners' properties before the service of summons on them was made be justified on the ground that unless the writ was then enforced, petitioners would be alerted and might dispose of their properties before summons could be served on them. The Rules of Court do not require that issuance of the writ be kept a secret until it can be enforced. Otherwise in no case may the service of summons on the defendant precede the levy on attachment. Even if there was already substantial compliance by reason that the sheriff was still able to serve the summons, although belatedly, the Court refused to validate the levy on such attachment for the reason that it could lead to abuse. It is entirely possible that the defendant may not know of the filing of a case against him and consequently may not be able to take steps to protect his interests.

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Q. What is the remedy so as to validly levy the properties of the defendant? A: More important than the need for insuring success in the enforcement of the writ is the need for affirming a principle by insisting on that "most fundamental of all requisites — the jurisdiction of the court issuing attachment over the person of the defendant." It may be that the same result would follow from requiring that a new writ be served all over again. The symbolic significance of such an act is that it would affirm our commitment to the rule of law. (Onate v. Abrogar, En Banc) The writ may be validly served anew. (HB Zachry vs CA)

HB ZACHARY V. CA VBC (subcontractor) entered into a written Subcontract Agreement with Zachry (contractor), a foreign corporation; for the design and construction of 264 Family Housing Units at the US Naval Base at Subic, Zambales. When VBC had almost completed the project, Zachry complained of the quality of work, making it a reason for its decision to take over the management of the project. Zachry failed to pay, despite repeated demands, the remaining balance of $1,103,000.00 due in favor of VBC. On 20 March 1990, VBC filed a Complaint w/ RTC of Makati against Zachry for the collection of the payments due it with a prayer for WPA. The complaint alleges that Zachry "is a foreign corporation with address at 527 Longwood Street, San Antonio, Texas, U.S.A. and has some of its officers working at U.S. Naval Base, Subic Bay, Zambales where it may be served with summons." On 21 March 1990, the TC issued an order granting the application for the issuance of the writ of preliminary attachment and fixing the attachment bond at P24,.26M, which VBC complied. On 27 March 1990, the trial court issued the WPA. It was served, together with the summons, a copy of the complaint with annexes, the bond, and a copy of the order

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 of attachment to Ruby Apostol (employee of HB Zachry) who acknowledged receipt thereof. On 6 April 1990, Zachry filed a motion to dismiss for lack of jurisdiction over its person because the summons was not validly served on it, alleging that it is a foreign corporation duly licensed SEC to do business in the Philippines, and had appointed Atty. Lucas Nunag as its resident agent on whom any summons and legal processes against it may be served. Summons and a copy of the Amended Complaint were served on 24 April 1990 on Zachry through Atty. Nunag as shown in the sheriff's return dated 24 April 1990. On 24 May 1990, Zachry filed an Omnibus Motion (a) to dismiss the complaint for lack of jurisdiction over its person since the subsequent service of summons did not cure the jurisdictional defect. CA held that summons was served on Zachry only on 24 April 1990; hence, applying Sievert vs. Court of Appeals, the TC "had no authority yet to act coercively against the defendant" when it issued the writ of attachment on 21 March 1990 (Date of issuance of WPA). VBC’ Contention: pursuant to the ruling in Davao Light & Power Co. vs. Court of Appeals, that the issuance of the writ of attachment on 21 March 1990, although before the service of the summons, was valid. Its issuance and implementation are two different and separate things; the first is not affected by any defect in the implementation which may be corrected. Moreover, assuming arguendo that the initial service of summons was defective, it was cured by the numerous pleadings thereafter filed. Finally, whatever doubts existed on the effectiveness of the implementation of the writ was erased by its re-service on the resident agent of Zachry. Zachry’s Contention: pursuant to the Sievert and Davao Light rulings, the issuance of the writ of attachment before the service of summons on Zachry's resident agent was invalid and that the various pleadings filed by the parties did not cure its invalidity.

Writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint, the application for attachment, the order of attachment, and the plaintiff's attachment bond. The writ of attachment cannot be validly enforced through the levy of Zachry's property before the court had acquired jurisdiction over Zachry's person either through its voluntary appearance or the valid service of summons upon it. A distinction should be made between the issuance and the enforcement of the writ. The TC has unlimited power to issue the writ upon the commencement of the action even before it acquires jurisdiction over the person of the defendant, but enforcement thereof can only be validly done after it shall have acquired such jurisdiction. The issuance of the PA is VALID. However, the enforcement of the preliminary attachment on 27 March 1990, although simultaneous with the service of the summons and a copy of the complaint, did not bind Zachry because the service of the summons was not validly made. When a foreign corporation has designated a person to receive service of summons pursuant to the Corporation Code, that designation is exclusive and service of summons on any other person is inefficacious. The valid service of summons and a copy of the amended complaint was only made upon it on 24 April 1990, and it was only then that the trial court acquired jurisdiction over Zachry's person. Accordingly, the levy on attachment made by the sheriff on 27 April 1990 was invalid. REMEDY: However, the writ of preliminary attachment may be validly served anew.

ISSUE: W the subsequent service of summons cure the jurisdictional defect. NO

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 6. Sheriff's return. — After enforcing the writ, the sheriff must likewise without delay make a return thereon to the court from which the writ issued, with a full statement of his proceedings under the writ and a complete inventory of the property attached, together with any counter-bond given by the party against whom attachment is issued, and serve copies thereof on the applicant. (6a)

Q: What is the duty of the sheriff after the enforcement (levy) of attachment? A: The sheriff must, without delay make a return thereon to the court from which the writ issued. Q: What does the sheriff’s return contain? A: It must contain the following: 1. A full statement of his proceedings under the writ; 2. A complete inventory of the property attached; and 3. Any counter-bond given by the party against whom attachment is issued

Q: To whom is return submitted? A: The return must be submitted to the court which issued the writ, and the applicant must also be furnished with copies thereof.

Q: How long should the sheriff make a return? A: The return must be made immediately without delay. Sec. 7 does not provide for a specific period. However, a return executed more than two months after the enforcement of the WPA is not considered as to have been made immediately. It was more of an afterthought rather than the fulfilment of a positive duty. (Bilag-Rivera vs. Flora)

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ROQUE v. CA Associated Banking Corp. instituted an action against Fil-Eastern Wood Industries, Inc., a domestic corporation, for recovery of a sum of money, and prayed for issuance of WPA. On February 4, 1974, TC issued an Order of Attachment commanding the Sheriff to attach the estate, real and personal, of FilEastern. On February 7, 1974, the Sheriff's "Notice of Levy Pursuant to the Writ of Attachment" was registered in the Office of the Commander of the First Coast Guard, District of Manila. However, prior to the issuance of said WPA, Fil-Eastern had delivered the barge to the Cotabato Visayan Development Corporation for repair, which was completed in June 1973, but Fil-Eastern failed to pay the cost of repair. So a public auction sale was conducted, at the instance of Cotabato Visayan, and Roque acquired the barge. On August 29, 1974, Bank filed a "Motion for the Issuance of Another Writ of Attachment" stating that at the time of the issuance of the Writ on February 4, 1974, the barge in question could not be located within the jurisdiction of the Court, having been anchored somewhere in the Visayas, and that actual levy on the barge could not be made as "the original Order of attachment is allegedly in the possession of the Branch Deputy Sheriff appointed by the Honorable Court, who has not reported to the office since August 26, 1974, and, therefore, could not implement the writ." Court denied the issuance of another Writ because it was deemed unnecessary, but instead ordered the Deputy Sheriff coordinate with the City Sheriff of Manila in the implementation of the Writ previously issued.

Manual for Clerks of Court Chapter VIII (e) (4). All sheriffs and deputy sheriffs shall submit a report to the judge concerned on the action taken on all writs and processes assigned to them within 10 days from the receipt of such process or writ. Said report shall form part of the records.

On August 30, 1974, Deputy Sheriff Garvida actually seized the vessel. Roque’s contention: The levy was illegal because the Writ was implemented more than 60 days after its issuance so that they need not have complied with Section 14, Rule 57. ISSUE: WON the levy was illegal because the writ was implemented more than 60 days after its issuance. NO

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Provisional Remedies | Rule 57

The Rules do not provide any lifetime for a Writ of Attachment unlike a Writ of Execution. But even granting that a Writ of Attachment is valid for only sixty days, yet, since there was constructive levy within that period the fact that actual seizure was effected only thereafter cannot affect the validity of that levy. Verily, petitioners' remedy was to ventilate their claims of ownership in a separate and independent reivindicatory action, as even then suggested by the Court of Appeals. That was the arena where the question of preferential rights, if any, impliedly raised in the first assigned error, could have been fully threshed out. In the interest of justice, petitioners can still file an independent civil action to establish their ownership over the barge. Q: Is a paper levy allowed? YES A: As a general rule, however, a levy of an attachment upon personal property may be either actual or constructive. In this case, levy had been constructively made by the registration of the same with the Philippine Coast Guard on February 7, 1974. Constructive possession should be held sufficient where actual possession is not feasible, particularly when it was followed up by the actual seizure of the property as soon as that could possibly be effected.

Note: A writ of attachment has no lifetime as distinguished from a writ of execution. 3 The new rules fixes the lifetime of the writ of execution at 5 years from the date of entry of judgment.4

3 4

Roque v. CA Sec. 6, Rule 39

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Provisional Remedies | Rule 57 Section 7. Attachment of real and personal property; recording thereof. — Real and personal property shall be attached by the sheriff executing the writ in the following manner: (a) Real property, or growing crops thereon, or any interest therein, standing upon the record of the registry of deeds of the province in the name of the party against whom attachment is issued, or not appearing at all upon such records, or belonging to the party against whom attachment is issued and held by any other person, or standing on the records of the registry of deeds in the name of any other person, by filing with the registry of deeds a copy of the order, together with a description of the property attached, and a notice that it is attached, or that such real property and any interest therein held by or standing in the name of such other person are attached, and by leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other person or his agent if found within the province. Where the property has been brought under the operation of either the Land Registration Act or the Property Registration Decree, the notice shall contain a reference to the number of the certificate of title, the volume and page in the registration book where the certificate is registered, and the registered owner or owners thereof. The registrar of deeds must index attachments filed under this section in the names of the applicant, the adverse party, or the person by whom the property is held or in whose name it stands in the records. If the attachment is not claimed on the entire area of the land covered by the certificate of title, a description sufficiently accurate for the identification of the land or interest to be affected shall be included in the registration of such attachment;

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Q: In attaching REAL properties, how is it made? A: It is made by: A. Filing with the registry of deeds the following: 1. A copy of the order; 2. A description of the property attached; and 3. A notice* that it is attached, or that such real property and any interest therein held by or standing in the name of such other person are attached, B. By leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other person or his agent if found within the province. Additional requirement if the land is REGISTERED: Where the property has been brought under the operation of either the Land Registration Act or the Property Registration Decree, the notice* shall contain a reference to the number of the certificate of title, the volume and page in the registration book where the certificate is registered, and the registered owner or owners thereof.

In Siari Valley, the notice did not contain the reference number, volume, and page number in the registration book. SIARI VALLEY vs LUCASAN CFI Zamboanga rendered decision ordering Filemon Lucasan to deliver to the Siari Valley Estates, Inc. the cattle inside the former's pasture or pay its value. When the same became final and executory, a writ of execution was issued. In carrying out this writ, the sheriff proceeded to levy on certain parcels of lands belonging to defendant. These lands were sold by the sheriff at public auction to the corporation as the highest bidder. The levied property is a registered land with OCT-2492, Patent No. 50967, duly registered in the ROD of Zamboanga del Norte in the name of Filemon Lucasan.

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Provisional Remedies | Rule 57

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When this property was levied on execution by the sheriff, the notice of levy merely described the property as unregistered land and that in the notice of sale the property was merely described according to the boundaries and area appearing in the tax declaration and not according to what appears in the certificate of title.

In Ravanera v. Imperial, the levy is valid.

ISSUE: W the levy was valid. NO

A writ of execution was issued.

The provision regarding attachment of real property postulates that the attachment shall be made "by filing with the register of deeds a copy of the order, together with the description of the property attached, and a notice that it is attached, and by leaving a copy of said order, description, and notice with the occupant of the property, if any there be," and that "Where the property has been brought under the operation of the Land Registration Act, the notice shall contain a reference to the number of the certificate of title and the volume and page in the registration book where the certificate is registered" (Section 7 [a], Rule 59).

Sheriff issued a notice of Levy by which certain properties of Imperial were attached or levied upon.

PURPOSE OF REFERENCE NUMBER: The requirement that the notice of levy should contain a reference to the number of the certificate of title and the volume and page in the registration book where the certificate is registered is made in order that the debtor as well as a third person may be properly informed of the particular land or property that is under the custody of the court. This can only be accomplished by making a reference to the certificate of title covering the property. Defect in the notice: Since the notice of levy made by the sheriff as regards parcel number 1 which is a registered land contains no reference to the number of its certificate of title and the volume and page in the registry book where the title is registered, it follows that said notice is legally ineffective and as such did not have the effect of binding the property for purposes of execution. Consequently, the sale carried out by virtue of said levy is also invalid and of no legal effect. Q: What if it is an unregistered land? A: As provided in Sec 7(a), except that it is enough that the notice be registered under Act 3344. (Siari Valley v. Lucasan)

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Ravanera vs. Imperial (1979) Roman Catholic Archiboshop of Caceres filed an action for Rescission of Contract and Recovery of Possession against Felipe Imperial.

On September 24, 1969, the sheriff issued notice of levy on attachment. 25 Sep ’69: the alias writ of Execution was personally served by the Sheriff upon Imperial. 29 Sep ’69: Notice of levy was registered with the ROD. There appears in the notice of levy the following certification: “It is hereby certified that this instrument has been duly registered proper memorandum hereof made on transfer Certificate of Title No. 257 & 258 and on its owner's duplicate Reg. Book No. 3; File No. 1-248.” There is a reference number but the volume and page number were not indicated. 7 Oct ’69: Sheriff issued a Notice of Public Auction sale of the properties levied upon which was published a weekly newspaper of general circulation. 15 Oct ’69: Notice of auction sale was delivered to Imperial through registered mail. 3 Nov ’69: Public auction sale was held and Erlinda Ravanera was the highest bidder. CA ruled in favour of Imperial saying that: 1. the occupants/possessors of the properties levied were not furnished with notice of levy, and 2. The notice of levy did not contain the volume and the page in the registry. ISSUE: WON there was a valid levy upon the properties of Imperial Yes. It appears in this case that the notice of levy was registered with the ROD on Sep 29, 1969. The notice of levy and the notice of auction sale addressed to Imperial was delivered on Oct 15, 1969 to Pelaguia Comba, member of the household of the

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Provisional Remedies | Rule 57 addressee. Imperial was, therefore, notified by registered mail of the levy and the auction sale long before Nov 3, 1969, the date of the auction sale. What is required is that the judgment debtor must be notified of the auction sale before the actual date of sale which was done in the case at bar. AS TO THE ISSUE OF REFERENCE NUMBER, VOLUME, AND PAGE NUMBER: Contention: CA erred in applying to one unregistered parcel of land and the one unregistered residential house described in the Notice of Levy the formal requirements of the ROC which are applicable only to registered properties (Volume and Page). No merit. Section 7 (a) of Rule 57 is so explicit that only as to property which has been brought under the operation of the Land Registration Act should the notice of levy contain the volume and page in the registration book where the certificate is registered, impliedly, the requirement does not apply to property not registered under the said Act. It is enough that the notice of levy upon unregistered land be registered under Act 3344, as was done in this case. From the records of the case, the notice of levy made by the sheriff as regards the registered land contains reference to the number of its certificate of title but not to the volume and page in the registry book where the title is registered. Nevertheless from what was stated in the case of Siari Valley Estate vs. Lucasan, it would seem that the purpose of the requirement of Section 7(a), Rule 57 of the Revised Rules of Court is substantially complied with. Reference to the number of the certificate of title of every registered land in the notice of levy, together with the technical description thereof, would certainly suffice to inform the debtor, as well as third persons what particular land or property is brought to the custody of the court, as is the purpose of the aforecited provision of the Rules of Court. Imperial’s contention: Brands the levy as irregular for failure of the occupants of the attached or levied properties to be left with copy of the order, notice of levy and description of the properties. The finding of facts of the CA which was quoted in full above, fails to disclose the existence of occupants of the properties 34

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levied upon other than the owner, Imperial. It was incumbent on said Imperial to prove by evidence duly submitted to the Court a fact that would tend to support his claim that the levy is void or otherwise illegal. The levy being an official act of a government functionary its regularity is presumed. Note that in Ravanera v. Imperial, it involves Notice of levy on execution. Sec. 15, Par. 2, Rule 39 provides that real properties, stocks, shares, debts, credits and other personal property, or any interest in either real or personal property, may be levied on in like manner and with like effect as under a writ of attachment…5 (Refer to Sec. 7 (a), Rule 57)

OBANA v. CA Atty. Suntay, filed an action for a sum of money against Dizon, with prayer for attachment upon a certain parcel of land. December 1, 1972, by virtue of the WPA, a levy was made on said property, which levy was annotated at the back of TCT of the Register of Deeds of Quezon City The sheriff failed to serve the summonses for the reason that Mrs. Dizon and her wards no longer resided at the last known address in QC, and that their present address cannot be ascertained. Accordingly, summonses were served upon Mrs. Dizon and her wards through publication. On May 16, 1973, Dizon, et al., and Obaña entered into a sale covering the attached properties. The ROD issued a new title in favour of Obana, necessarily transferring in the process the encumbrance consisting of notice of levy in favor of Suntay. The court awarded Suntay his claims for Attorney’s fees, and a writ of execution was issued, followed by a notice of levy on execution dated August 7, 1974. Suntay was the highest bidder during the public auction. Thereafter, Suntay sought to transfer the title in his name. Obana opposed claiming that the sheriff did not comply with the manner of service of notice under the new rules of court. 5

Applicable also in the case of Obana v. CA.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 The Court ruled in favour of Obana saying that no valid attachment and levy were made by the sheriff as no personal service of the copy of the notice to the occupant of the property was made. ISSUE: W there was a valid notice of levy. NO Section 7 of Rule 57 requires that in attaching real property a copy of the order, description, and notice must be served on the occupant, in this case the occupant at 48 Damortiz Street, Damar Village, Quezon City. The trial court in the annulment case ruled that the attachment was void from the beginning. The action in personam which required personal service was never converted into an action in rem where service by publication would have been valid. The Court of Appeals reversed the trial court principally on the ground that Leonora Obaña was neither a defendant nor a partyin-interest in the collection case. It ignored the fact that property already sold to her was attached and then bedded out to Atty. Suntay without any notice to her. And because the notice of lis pendens in the collection case was secured ex-parte without the defendant Dizon and petitioner Obaña who were never brought to court, having any inkling about it, the notice was not annotated on the owner's duplicate copy of Transfer Certificate of Title No. 173792. While the there was already an annotation on TCT in the ROD, such was notice of levy on ATTACHMENT. The defect in Obana v. CA was the lack of notice of levy on EXECUTION.

Preference is given to a duly registered attachment over a subsequent notice of lis pendens, even if the beneficiary of the notice acquired the subject property before the registration of the attachment. Under the torrens system, the auction sale of an attached realty retroacts to the date the levy was registered. Du v. Stronghold Aurora sold the property to Du under a Conditional Deed of Sale. Aurora then sold the same property to spouses Caliwag without prior notice to Luz 35

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Du. A new TCT was issued in favor of the Caliwag spouses. Stronghold filed an action against Spouses Caliwag for allegedly defrauding Stronghold and misappropriating the companys fund, with a prayer for WPA duly annotated at the back of TCT on August 7, 1990. Due filed an action for the annulment of sale between Aurora and Sps Caliwag, causing a Notice of Lis Pendens of the TCT on January 3, 1991. The action of Stronghold against Caliwag was favourably acted upon. On March 12, 1991, a notice of levy on execution was annotated on TCT and the attached property was sold in a public auction.

ISSUE: Whether a Notice of Levy on Attachment on the property is a superior lien over that of the unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional Sale. YES

The preference given to a duly registered levy on attachment or execution over a prior unregistered sale is well-settled in our jurisdiction. As early as Gomez v. Levy Hermanos, this Court has held that an attachment that is duly annotated on a certificate of title is superior to the right of a prior but unregistered buyer. In that case, the Court explained as follows: In the registry, therefore, the attachment appeared in the nature of a real lien when Apolonia Gomez had her purchase recorded. The legal effect of the notation of said lien was to subject and subordinate the right of the purchaser, to the lien. She acquired the ownership of the said parcels only from the date of the recording of her title in the register, and the right of ownership which she inscribed was not an absolute but a limited right, subject to a prior registered lien, by virtue of which Levy Hermanos, Inc. was entitled to the execution of the judgment credit over the lands in question, a right which is preferred and superior to that of the plaintiff. As the property in this case was covered by the torrens system, the

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 registration of Strongholds attachment was the operative act that gave validity to the transfer and created a lien upon the land in favor of respondent. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. The precedence should be given to a levy on attachment or execution, whose registration was before that of the prior sale. If either the third-party claim or the subsequent registration of the prior sale was insufficient to defeat the previously registered attachment lien, it follows that a notice of lis pendens is likewise insufficient for the same purpose. Such notice does not establish a lien or an encumbrance on the property affected. As the name suggests, a notice of lis pendens with respect to a disputed property is intended merely to inform third persons that any of their transactions in connection therewith -- if entered into subsequent to the notation -would be subject to the result of the suit.

Valdevieso v. Damalerio Valdevieso bought from spouses Uy a parcel of land. The deed of sale was not registered, nor was the title of the land transferred to Valdevieso, but it was declared by Valdevieso for taxation purposes. Spouses Damalerio filed a complaint for a sum of money against spouses Uy, with application for WPA. On 23 April 1996, WPA was issued, then the property (land sold to Valdevieso) was levied. The levy was duly recorded in the ROD and annotated on the TCT.

ISSUE: W a registered writ of attachment on the land is a superior lien over that of an earlier unregistered deed of sale. YES.

The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual condemnation of it to pay the owners debt. The lien continues until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law. Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien when petitioner had his purchase recorded. The effect of the notation of said lien was to subject and subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of the land only from the date of the recording of his title in the register, and the right of ownership which he inscribed was not absolute but a limited right, subject to a prior registered lien of respondents, a right which is preferred and superior to that of petitioner.

On 06 June 1996, a new TCT was issued in the name of Valdevieso, which now carries the attachment in favor of Damalerio. Valdevieso moved to discharge or annul the attachment levied on the property on the ground that the said property belongs to him and no longer to Uy.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What is the exception to the rule that a registered writ of attachment on the land is a superior lien over that of an earlier unregistered deed of sale? A: Knowledge of the attaching creditor of a prior existing interest of a third person. Rural Bank of Sta. Barbara v. Manila Mission On May 18, 1992, Spouses Soliven sold the subject property to Manila Mission. However, it was only on 28 April 1994 a new TCT was issued in the name of Manila Mission, carrying the annotation on the WPA. On 15 April 1993, Rural Bank filed an action for sum of money with prayer for WPA against spouses Soliven. A WPA was subsequently issued. On May 1993, Sheriff Reynaldo C. Daray attached the subject property (TCT still under the name of Soliven). The WPA was annotated the TCT on 24 May 1993. Manila Mission filed a Motion to Release Property from Attachment contending that Rural Bank new about the prior sale and that the construction of a church edifice on the subject property was about to be finished at the time the WPA was implemented on 24 May 1993, and that the construction of the church was actually completed by mid-1993. Rural Bank contends that a duly registered levy on attachment takes preference over a prior unregistered sale, and that Manila Mission failed to present evidence to prove the fact that a church had already been constructed on the subject property by the time the said property was attached, thus, constituting notice to Rural Bank of the claim or right of Manila Mission to the same.

EXCEPTION: But where a party has knowledge of a prior existing interest which is unregistered at that time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him. Knowledge of an unregistered sale is equivalent to registration. (Ruiz v. CA) However, Manila Mission presented no evidence of the building of the chapel other than its bare allegation thereof. More importantly, even assuming for the sake of argument that the chapel was indeed being built at the time of the attachment of the property, we cannot simply apply Ruiz and conclude that this confirms knowledge of a previous conveyance of the property at that time. In Ruiz, the attaching party was the wife of the vendor of the subject property, whom she sued for support. It was thus very probable that she knew of the sale of the property to the vendee therein, considering that the vendee had already introduced improvements thereon. In the case at bar, there is no special relationship between petitioner Rural Bank and the spouses Soliven sufficient to charge the former with an implied knowledge of the state of the latters properties. Unlike in the sale of real property, an attaching creditor is not expected to inspect the property being attached, as it is the sheriff who does the actual act of attaching the property. Neither did respondent Manila Mission present any evidence of knowledge on the part of petitioner Rural Bank of the prior existing interest of the former at the time of the attachment. Respondent Manila Mission merely argues that there was a tacit recognition on the part of petitioner Rural Bank of the construction of the chapel when the latter did not deny this allegation in its Opposition to the Motion to Discharge Property from Attachment.

ISSUE: whether or not a registered writ of attachment on the land is a superior lien over that of an earlier unregistered deed of sale. YES

GENERAL RULE: It is settled that a duly registered levy on attachment takes preference over a prior unregistered sale.

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Provisional Remedies | Rule 57 (b) Personal property capable of manual delivery, by taking and safely keeping it in his custody, after issuing the corresponding receipt therefor. Q: Can there be a levy on personal property by mere verbal declarations? A: A mere verbal declaration of seizure or service of writ is insufficient. There must be actual assumption of control. (Walker v. McMicking) Q: Can the sheriff relieve himself from responsibilities and liabilities with regard to levied properties by executing an undertaking relieving him from such liabilities? A: He can not in this way relieve himself from liability to the parties interested in said attachment. Walker v. McMicking An action was filed against Arenas & Co., to recover possession of certain personal properties, with a prayer for attachment. The WPA was issued on December 17, 1908. McMicking, acting as acting as sheriff of the city of Manila, levied an attachment upon the said factory and its contents, by virtue of a judgment rendered against Arenas & Co. It appears, however, by an indorsement upon the WPA, or by a stipulation between the parties to the attachment, that the goods attached "shall remain in the possession of Arenas & Co., relieving the sheriff of all responsibility as regards the care and custody thereof." Rohde is the owner of the land where the factory is located, and Walker is a creditor of Arenas & Co. Based on their claims, they took possession of the factory & all its equipment on January 1909. ISSUE: W the attachment was properly made. NO To constitute a valid levy of an attachment, the officer levying it must take actual possession of the property attached as far as under the circumstances is practicable. He must put himself in position to, and must assert and, in fact, enforce a dominion over the property adverse to and exclusive of the

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attachment debtor, and such property must be in substantial presence and possession. Of course, this does not mean that the attaching officer may not, under an arrangement satisfactory to himself, put anyone in possession of the property for the purpose of guarding it, but he can not in this way relieve himself from liability to the parties interested in said attachment. We are of the opinion, and so hold, that the attachment was not properly made in accordance with the provisions of the Code of the Procedure in Civil Actions.

Q: What is the duty of the sheriff with regard to the levy on attachment? A: He is to proceed with reasonable celerity and promptness to execute it according to its mandate. Q: What is the extent of his liability should he fail to carry out his duty? A: He can be held administratively liable, and he is also liable to the person in whose favour the process or writ runs. NBI v. Tuliao Salvador bought a passenger jeep from Ignacio to be paid in monthly installments. For his alleged nonpayment of installments due, a collection suit was filed by Ignacio, with prayer for WPA. Subsequently, an order was issued by the RTC directing sheriff Tuliao to attach the passenger jeep. Salvador filed a motion to discharge attachment upon filing of a counterbond for the release of the vehicle in his favor. The counterbond of was approved. Thus, the Sheriff was ordered to release to Salvador the attached vehicle. Sheriff Tuliao refused to comply with the said order. Instead, he released the passenger jeep to Ignacio after the latter had executed a receipt together with an undertaking that he would produce the jeep whenever required by the court. The sheriff justified such release by saying that the court had no storage building that

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Provisional Remedies | Rule 57

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would protect the jeep from damage or loss. He also imputes the fault to Ignacio for violating his obligation to produce the jeep whenever needed by the court.

Q: Can the sheriff exercise his discretion in enforcing the writ?

ISSUE: W the manner of attachment is irregular. YES

Villanueva-Fabella v. Judge Ralph Lee

Sheriff’s act of leaving the passenger jeep in the possession and control of the creditor did not satisfy the Rules. The note in the receipt that imposed on Ignacio the obligation to produce the same whenever required by the court was no compliance either, because it did not establish that the property was in sheriff’s substantial presence and possession. The Sheriff fell short of his obligation to take and safely keep the attached property in his capacity. That Ignacio was able to move the passenger jeep to an unknown location is further proof that respondent sheriff had not taken and safely kept it in his substantial presence, possession and control. His claim that the RTC did not have any storage facility to house said property is no justification. He could have deposited it in a bonded warehouse. A court employee should keep in mind that he is an integral part of that organ of the government that is involved in the sacred task of administering justice. His conduct and behavior should perforce be circumscribed with the heavy burden of responsibility and must at all times be characterized by propriety and decorum. When a writ is placed in the hands of a sheriff, it is his duty, in the absence of any instructions to the contrary, to proceed with reasonable celerity and promptness to execute it according to its mandate. He is supposed to execute the order of the court strictly to the letter. If he fails to comply, he is liable to the person in whose favor the process or writ runs.

A: No. His duty is purely ministerial.

Star Paper Corporation filed an action against Society of St. Paul and Fr. Leonardo Eleazar for Sum of Money with Prayer for Preliminary Attachment, for allegedly contracting a debt in bad faith with no intention of paying it. On June 19, 2002, Society of St. Paul was served a copy of the complaint and a Writ of Attachment by Sheriff Dela Cruz. On the same day, a printing machine was levied and delivered to the plaintiffs warehouse, although there was an offer by the defendants to pay right there and then, the amount fixed in the order of attachment, which was denied by Star Paper. Society of St. Paul claimed that Sheriff Dela Cruz violated Sec. 7(b), Rule 57 because the machinery was brought to the plaintiffs warehouse in San Francisco del Monte, Quezon City. The sheriff claims that it was in his own belief and best judgment to temporarily place the delicate printing machine in the warehouse of the plaintiff for safekeeping. The machine was eventually returned to the defendants by virtue of the Order discharging the Writ. In fact, one of the complainants personally acknowledged receipt of the machine. ISSUE: W the attachment is properly enforced. NO The Sheriff blatantly violated Section 7(b) of Rule 57 of the Rules of Court when he deposited the machine in the warehouse of the plaintiff. The levied property must be in the substantial presence and possession of the levying officer, who cannot act as special deputy sheriff of any party litigant. The officer may put someone in possession of the property for the purpose of guarding it, but the former cannot be relieved from liability to the parties interested in said attachment. Sheriffs are officers of the court, and they must discharge their duties with great care and diligence. They have to perform

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Provisional Remedies | Rule 57 faithfully and accurately what is incumbent upon them and show at all times a high degree of professionalism in the performance of their duties. The duty of sheriffs to execute a writ issued by a court is purely ministerial, not discretionary. They exercise no discretion in this regard, for attachment is harsh, extraordinary and summary in nature -- a rigorous remedy which exposes the debtor to humiliation and annoyance. In implementing the Writ, respondent sheriff cannot afford to err without adversely affecting the proper dispensation of justice. Sheriffs must always hold inviolate and invigorate the tenet that a public office is a public trust. As court personnel, their conduct must be beyond reproach and free from any suspicion that may taint the judiciary. In view of their exalted position as keepers of public faith, court personnel are indeed saddled with a heavy burden of responsibility to the public. Once again we emphasize that at the grassroots of our judicial machinery, sheriffs are indispensably in close contact with the litigants, hence, their conduct should be geared towards maintaining the prestige and integrity of the court, for the image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel; hence, it becomes the imperative sacred duty of each and everyone in the court to maintain its good name and standing as a temple of justice.

Q: What is the purpose why the property attached must be in the possession of the sheriff? A: The purpose of the levy is to put the property in custodia legis, i.e. in the custody of the court. Sheriffs are officers of the court, therefore possession of the sheriff is possession of the court.

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Sebastian v. Sheriff Valino PDCP filed a replevin suit against Marblecraft, Inc. in order to foreclose the chattels mortgaged by Marblecraft. On March 30, 1989, the RTC issued a writ of seizure against Marblecraft covering the chattels sought to be replevied. On November 9, 1990, at around 10:37 A.M., Sheriff Valino, accompanied by several policemen and PDCP employees, went to the office of Marblecraft at Barrio Santolan, Pasig, to implement the writ of seizure. They 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. Valino turned over the seized articles to the counsel of PDCP and allowed these items to be stored in PDCP's warehouse. PDCP posted a counterbond. The RTC approved the bond and directed the immediate return of the seized items. However, the seized items were not returned because of the refusal of PDCP to release it. An administrative complaint against Sheriff Valino.

was

filed

Sheriff Valino claims that the complaint is 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 also contends that the Office of the Regional Sheriff did not have a place to store the seized items. Judge Villarama found respondent guilty of partiality when he immediately turned over the seized items to PDCP. ISSUE: W there was a proper enforcement of the Writ of Seizure. NO Under Rule 60 ROC, 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 defendant, If the latter, as in the case, requires its return and files a counterbond (Sec. 4, Rule 60, Revised Rules of Court).

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 His claim that the office of the regional sheriff did not have a place to store the seized items does not justify his violation of the Rule, because the articles could have been deposited in a bonded warehouse. The Sheriff 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. The more serious infraction of respondent is his refusal to implement the order of the RTC for him to return to complainant the articles seized. The only action taken by respondent to implement the Order was to write a letter addressed to the counsel of PDCP, requesting the turnover of seized articles, which PDCP refused to comply. Instead of taking possession of the articles, Sheriff Valino merely reported to the RTC that "it is now clear that the undersigned cannot implement the Court order by reason of the refusal of PDCP to accept or to honor said Court order". Respondent could have avoided getting into his present predicament had he not turned over the possession of the seized goods prematurely to the PDCP. Q: If the Office of the Regional Sheriff, or RTC does not have a storage facility for the levied properties, what should the sheriff do? A: The articles can be deposited in a bonded warehouse. The Court may direct the attaching creditor to post the fee in keeping the property in a bonded warehouse.

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Q: Can a writ be enforced against the property of a person who is not a judgment debtor? A: No. If an execution against one man would excuse the sheriff for taking the property of another, every citizen would be at his mercy and none could call his estate his own. (Villareal v. Rarama) Villareal v. Rarama Rural Bank filed an action for collection of a sum of money against Spouses Villareal, Lacorda and Cangrejo. Cangrejo was eventually declared in default, hence a judgment was rendered against him. On March 29, 1994, an alias writ of execution was issued by the TC against Cangrejo. On April 25, 1994, Sheriff Rarama, 3 other sheriffs, and an employee of the bank, arrived at Sps. Villareal’s house, and informed her that they were going to attach her properties because she lost in a case. She claims that the writ was not addressed to her but to Cangrejo. The reply given her was that she is the principal borrower and the only one who is solvent. Sheriff Rarama immediately proceeded to pull out from complainant's house some personal properties. ISSUE: W the Sheriff can implement a WPA against a co-defendant in a collection case, but not the judgment debtor. NO While there is evidence to show that indeed Villareal is the principal debtor while Cangrejo is merely a co-maker, the fact remains that Cangrejo was the sole debtor adjuged liable for the loan obtained from the Rural Bank and the alias writ of execution was directed only against him. Hence, respondent Rarama had no authority to implement the same against herein complainant considering that, although she was named as a defendant in the collection case, there was no judgment against her as of the date of the incident. When a writ is placed in the hands of a sheriff it is his duty, in the absence of any instructions to the contrary, to proceed with reasonable celerity and promptness to execute it according to its mandate. He is to execute the directives of the court therein

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strictly in accordance with the letter thereof and without any deviation therefrom.

already been effected and the premises delivered to the plaintiff.

A sheriff has no authority to levy on execution upon the property of any person other than that of the judgment debtor. If he does so, the writ of execution affords him no justification, for such act is not in obedience to the mandate of the writ. As long as the sheriff confines his acts to the authority of the process, he is not liable, but all of his acts which are not justified by the writ are without authority of law. This is so because if an execution against one man would excuse the sheriff for taking the property of another, every citizen would be at his mercy and none could call his estate his own.

ISSUE: W the Sheriff administratively liable. NO

Considering the ministerial nature of his duty in enforcing writs of execution, it is incumbent upon him to ensure that only that part of a decision ordained or decreed in the dispositive portion should be the subject of execution, no more and no less. That the title of the case specifically names complainant as one of the defendants is of no moment as execution must conform to that which is directed in the dispositive portion and not what appears in the title of the case.

Balantes v. Ocampo Balantes is a defendant in an ejectment case filed by Roco, which was decided against Balantes. A Writ of Execution and Demolition pending appeal was issued ordering the removal of one-half (1/2) portion of Balantes' residential house built inside the titled property of Roco. On August 19, 1992, a second writ of demolition was issued by the respondent Judge, followed by a third one dated February 3, 1993. The writ was implemented only on September 2, 1992; that a motion for reconsideration was filed by herein complainant on August 29, 1992 to forestall its implementation but the same was submitted for the court's consideration only on September 3, 1992 and by that time the writ had already been implemented. The restraining order issued on September 2, 1992, however it cannot be complied with because by the time it was received by the City Sheriff, the writ of demolition had

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It appears from the certification she issued that the Temporary Restraining Order issued by the RTC, Branch 27, Naga City was received by her on September 2, 1992 at 2:15 p.m., after the demolition had been completely effected and the premises delivered to the plaintiff at 1:30 p.m. of same date. It appears that respondent Buena was not aware of the existing TRO which she received within the hour after the demolition had taken place, thus rendering said restraining order a fait accompli6. The rule is that when a writ is placed in the hands of a sheriff, it is his duty, in the absence of instructions, to proceed with reasonable celerity and promptness to execute it according to its mandate. He may not apply his discretion as to whether to execute it or not.

Q: What is the liability of the sheriff if he fails to execute the writ? A: A sheriff, to whom a valid writ or process is delivered to be levied upon a property within his jurisdiction, is liable to the person in whose favor the process or writ runs if he fails to make a levy upon property owned by the judgment debtor within his jurisdiction and by reason thereof the judgment creditor is injured. Elipe v. Fabre On June 19, 1992, MTCC issued a writ of execution for the enforcement of a barangay agreement in Case for collection of unpaid rentals and construction materials amounting to P100,000.00. On June 25, 1992, at 9AM, Sheriff Fabre served the writ to judgment debtors Michael dela Cerna and his wife but the Sheriff was able to levy only upon a dilapidated vehicle and an old piano. At 10PM of the same day, the judgment debtors surreptitiously removed several pieces of furniture from the house which they rented. On these occasions, respondent did not make any effort to prevent the judgment debtors from 6

Making a situation that is irreversible and other people have to live with. (Black’s Law Dictionary)

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 removing leviable properties to implement the writ, despite the fact that he had been told by Elipe of the judgment debtors' activities. Sheriff Fabre claimed that he levied on several personal properties of the judgment debtors, but unfortunately the bid price paid for them at the public auction was only P27,007. The result is that the judgment debt of P100,000.00 was only partially satisfied to such extent. Elipe was the highest bidder. He justified his action in levying only on the personal properties which he found at the business establishment and in desisting from enforcing the writ with respect to properties on the second floor of the residence of the judgment debtors on the grounds that the judgment debtors refused to let him in and that he did not have any order from the MTCC to force open the door which had been locked. ISSUE: W the sheriff properly enforced the writ. NO If indeed respondent Sheriff is dedicated in his work, respondent Sheriff could have chosen to stop the carting away of the valuable properties of judgment debtor for the very purpose of levying it and for the purpose of complying with the Order. Furthermore, respondent Sheriff exhibited an utter disregard of what is incumbent upon him when he failed to inform the complainant that in order to levy properties of the defendant on the second floor of the establishment, a special order of the court is necessary to force or break-open the closed door in accordance with Section 14, Rule 39 of the Rules of Court. The respondent Sheriff's duty was apparent but he did not comply with it as he should have. Indeed, as clearly stated in the Manual for Clerks of Court, a sheriff, to whom a valid writ or process is delivered to be levied upon a property within his jurisdiction, is liable to the person in whose favor the process or writ runs if he fails to make a levy upon property owned by the judgment debtor within his jurisdiction and by reason thereof the judgment creditor is injured. It is omission not dependent upon intentional wrong or negligent omission to seize property of judgment debtor.

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In the case at bar, it is not that respondent did not know what he should do, given the problem that he was confronted with. He tried to excuse himself from what was his duty, claiming that he did not force his way into the second floor where the judgment debtors resided because a special court order was needed to enable him to do this. Knowing this to be the case, it was his duty to see to it that such an order was secured from the court.

Q: Is the rule that the sheriff must have actual possession of a personal property capable of manual delivery? A: No, especially where the property cannot be actually seized, as in the case of a vessel. ROQUE v. CA On February 7, 1974, the Sheriff's "Notice of Levy Pursuant to the Writ of Attachment" was registered in the Office of the Commander of the First Coast Guard, District of Manila. The sheriff was not able to seize the vessel, since it is in the Visayas and was already sold at a public auction for the payment of its repairs. On August 30, 1974, Deputy Sheriff Garvida actually seized the vessel. Meanwhile, without prior authority from Deputy Sheriff Garvida the barge in question was "spirited away" to Bacolod City by a certain Captain Marcelino Agito. Capt. Agito was ordered, in coordination with Deputy Sheriff Garvida, to bring back to Manila the barge in question. On March 7, 1975, Judge issued a Writ of Execution and ordered the sale of the barge at public auction. On April 14, 1975, the judge ordered that the vessel be surrendered to the Sheriff, under pain of being cited in contempt of Court. CA ruled that Roque should have availed himself of the remedy provided in Section 14, Rule 57 of the Rules of Court: If the property taken be claimed by any person other than the party against whom attachment had been issued or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 title, and serves such affidavit upon the officer while the latter has possession of the property, and a copy thereof upon the attaching creditor, the officer shall not be bound to keep the property under attachment, unless the attaching creditor or his agent, on demand of the said officer, secures him against such claim by a bond in a sum not greater than the value of the property attached. ... ROQUE CONTENDS that he could not avail of the Rules inasmuch as the vessel was not in the actual custody of the Sheriff nor of the Court, since the supposed levy by the Sheriff on February 7, 1974 was a mere paper levy which, in legal contemplation, is no levy at an. ISSUE: WON the (paper) levy placed the vessel in custodia legis. YES It is a fact that respondent Sheriff could not effect seizure immediately, first, because the barge could nowhere be found in this vicinity, and subsequently when found, because petitioners would not deliver possession to the Sheriff. It was not until the trial Court granted the Sheriff's Motion praying for an Order directing petitioners or their agents to surrender the barge to the custody of the Court, that the Sheriff was able to take physical custody. As a general rule, however, a levy of an attachment upon personal property may be either actual or constructive. In this case, levy had been constructively made by the registration of the same with the Philippine Coast Guard on February 7, 1974. Constructive possession should be held sufficient where actual possession is not feasible, particularly when it was followed up by the actual seizure of the property as soon as that could possibly be effected. Note that constructive levy, such as registration of the notice of levy with the Coast Guard, must be followed by the actual seizure of the personal property. In case of constructive levy, it must be subsequently followed by actual seizure of the property.

(c) Stocks or shares, or an interest in stocks or shares, of any corporation or company, by leaving with the president or managing 44

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agent thereof, a copy of the writ, and a notice stating that the stock or interest of the party against whom the attachment is issued is attached in pursuance of such writ; Q: To whom should the copy of the writ or the notice of levy be left? A: It must be left with the president or managing agent, as provided in Sec. 7(c), or the president’s secretary as provided in Summit Trading v. Avendano. SUMMIT TRADING v. AVENDANO Pilipinia filed a complaint against Ortega and Summit Trading for the redemption or repurchase of the two lots. Ortega was duly summoned. He failed to answer the complaint. He was declared in default. Summit Trading was duly summoned through Marina Saquilayan as secretary of Balaguer, the president of Summit Trading. She received the summons on August 28, 1981. A copy of the judgment was also served on her on November 13, 1981. Bonifacio Tiongson was the corporate secretary. Summit Trading was also declared in default. Summit Trading filed MR alleging that the TC did not acquire jurisdiction over it because summons was not served to the president, manager, secretary, cashier, agent, or any of its directors. (Sec. 13, R 14) ISSUE: W the TC acquired jurisdiction over Summit Trading through the service of summons to Saquilayan. YES It is true that Saquilayan is not among the persons mentioned in section 13. However, she, being under the control of Summit Trading, has not explained what she has done with the summons and complaint. The logical assumption is that she delivered it to her boss, the president of Summit Trading. She received a copy of the decision and Summit Trading became aware of it. There was no strict compliance with section 13. However, under the facts of this case, Saquilayan, being the secretary of the president (whose contact with the outside world is normally through his secretary), may be regarded as an "agent" within the meaning of section 13. As the president’s secretary, she could have easily notified the

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 president that an action was filed against the corporation just as she had apprised him of the judgment in this case. It is not to say that theservice on such a secretary is always proper. Generally, it is improper. The president himself must be served personally with the summons if it is desired to effect the service on that particular officer. But, as already stated, under the facts of this case, the president's secretary may be regarded as the "agent" within the meaning of section 13 since service upon her of the judgment itself came to the notice of Summit Trading. Hence summons was validly served upon Summit Trading. Its negligence in not answering the complaint was inexcusable. Caveat: Service to the President’s Secretary is GENERALLY NOT proper.

CHEMPHIL Export & Import v. CA Dynetics, Inc. and Garcia filed a complaint for injunction against the PISO, BPI, LBP, PCIB and RCBC (consortium) to perpetually enjoin the consortium from enforcing any purported obligations which Dynetics and Garcia might have undertaken in the surety agreement. The consortium filed answers with counterclaims alleging that the surety agreement was valid and binding. It applied for the issuance of a WPA against Dynetics and Garcia. On 23 April 1985, Dynetics, Garcia and MMTC filed a complaint for injunction against the Security Bank. SBTC filed an answer with prayer for WPA. WPA in favour of SBTC was issued on 9 July 1985, a notice of garnishment covering Garcia's shares in CIP/Chemphil was served on Chemphil through its then President. The notice of garnishment was duly annotated in the stock and transfer books of Chemphil on the same date. On 12 July 1985, RTC granted the consortium's prayer for a consolidated WPA. Hence, on 19 July 1985, WPA was issued and various real and personal properties of Dynetics and Garcia were garnished, including the shares garnished by SBTC. This garnishment, however, was 45

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not annotated in Chemphil's stock and transfer book. In the mean time, Garcia offered to pay SBTC, which was refused by SBTC. Garcia consigned the check with the RTC for payment of the judgment if favour of SBTC. He then sold the shares to FCI, which in turn assigned it to CEIC. The shares were registered in the corporate book of Chemphil under the name of CEIC. Garcia entered into an agreement with the consortium for the payment of his obligation, but when he failed to make good his obligation, the consortium filed a motion for execution, which was granted by the RTC. Garcia’s properties, including the shares in CIP were levied. The Consortium acquired the shares in the public auction. The consortium filed a motion to order the corporate secretary of Chemphil to enter in its stock and transfer books the sheriff’s certificate of sale and to issue new certificates of stock in the name of the banks. CEIC intervened alleging that it is the rightful owner of the shares. The consortium opposed alleging that their attachment lien over the disputed shares of stocks must prevail over the private sale in favor of the CEIC considering that said shares of stock were garnished in the consortium's favor as early as 19 July 1985. The TC ruled in favour of CEIC: The matter of non-recording of the Consortium's attachment in Chemphil's stock and transfer book on the shares of Antonio M. Garcia assumes significance considering CEIC's position that FCI and later CEIC acquired the CHEMPHIL shares of Antonio M. Garcia without knowledge of the attachment of the CONSORTIUM. This is also important as CEIC claims that it has been subrogated to the rights of SBTC since CEIC's predecessor-in-interest, the FCI, had paid SBTC the amount of P35,462,869.12 pursuant to the Deed of Sale and Purchase of Shares of Stock executed by Antonio M. Garcia on July 15, 1988. By reason of such payment, sale with the knowledge and consent of Antonio M. Garcia, FCI and CEIC, as party-in-interest to FCI, are subrogated by operation of law to the rights of SBTC. The Court is not unaware of the citation in CEIC's reply that "as between two (2) attaching creditors, the one whose

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claims was first registered on the books of the corporation enjoy priority."

order to have "force and effect as against third persons."

The Court holds that a levy on the shares of corporate stock to be valid and binding on third persons, the notice of attachment or garnishment must be registered and annotated in the stock and transfer books of the corporation, more so when the shares of the corporation are listed and traded in the stock exchange, as in this case.

The word (transfer) is defined as (the act and effect of transferring); and the verb transfer, (to assign or waive the right in, or absolute ownership of, a thing in favor of another, making him the owner thereof).

ISSUE: W the notice of levy must be registered with the books of the corporation. NO The attachment of shares of stock in a corporation need not be recorded in the corporation's stock and transfer book in order to bind third persons. Section 7(d), Rule 57 of the Rules of Court was complied with by the consortium when the notice of garnishment over the Chemphil shares of Garcia was served on the president of Chemphil on July 19, 1985. The Revised Rules of Court and the Corporation Code do not require annotation in the corporation's stock and transfer books for the attachment of shares of stock to be valid and binding on the corporation and third party. Section 74 of the Corporation Code which enumerates the instances where registration in the stock and transfer books of a corporation such as sale or transfer of stock made. Indeed, to bind third persons, no law requires that an attachment of shares of stock be recorded in the stock and transfer book of a corporation. Therefore, the attachment made over the Chemphil shares in the name of Garcia on July 19, 1985 was made in accordance with law and the lien created thereby remained valid and subsisting at the time Garcia sold those shares to FCI (predecessor-in-interest of appellee CEIC) in 1988.

ISSUE: Are attachments of shares of stock included in the term "transfer"? NO Only absolute transfers of shares of stock are required to be recorded in the corporation's stock and transfer book in 46

"Transfer" means any act by which property of one person is vested in another, and "transfer of shares", as used in Uniform Stock Transfer Act (Comp. St. Supp. 690), implies any means whereby one may be divested of and another acquire ownership of stock. Attachment of the disputed shares of stock as in the present controversy does not mean “transfer” since an attachment does not constitute an absolute conveyance of property but is primarily used as a means "to seize the debtor's property in order to secure the debt or claim of the creditor in the event that a judgment is rendered."

(d) Debts and credits, including bank deposits, financial interest, royalties, commissions and other personal property not capable of manual delivery, by leaving with the person owing such debts, or having in his possession or under his control, such credits or other personal property, or with his agent, a copy of the writ, and notice that the debts owing by him to the party against whom attachment is issued, and the credits and other personal property in his possession, or under his control, belonging to said party, are attached in pursuance of such writ; This paragraph refers to intangible properties not capable of manual delivery. Note that the debt must be due and demandable. Tayabas Land v. Sharruf Farre recovered a judgment against Sharruf for the sum of P1,300, with legal interest and costs. This judgment having remained unsatisfied. Sharruf also recovered a judgment against the Tayabas Land for the sum of P6,841.36, with interest and costs.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Sharruf have no visible property that may be subject to seizure by the sheriff to satisfy the execution in favor of Farre, so Farre subjected the judgment in favor of Sharruf against the Tayabas Land to the payment of his own claim. A notice of garnishment was issued at the instance of Farre in aid of his execution against the Sharrufs and was duly served upon the Tayabas Land Company. Tayabas Land Company was informed that levy had been made upon all the property of S. M. Sharruf in the possession of said Tayabas Land and upon all debts owing to said Sharruf, and upon all participation and interest of S. M. Sharruf in the judgment rendered in his favor in the action prosecuted by him against the Tayabas Land. The sheriff then proceeded to sell all right, title, and interest of Sharruf in the judgment. Farre became the purchaser of the judgment in question for the sum of P200. Tayabas Land then purchased from Farre, paying P1,588.24, the full amount due.

ISSUE: W the public auction/sale of the judgment debt in favor of Sharruf to Farre is the proper action. NO A judgment for a sum of money, that is, the interest of the plaintiff in such a judgment, is liable to execution. The interest of the creditor in such a judgment is clearly property, though not capable of manual delivery. All of these elements of value — "debts." "credits," and "all other property not capable of manual delivery" are to be liable to execution. However, debts, credits, and other property not capable of manual delivery are to be attached by the citation of the debtor. The proper proceeding is known as the process of garnishment. The process of garnishment consists of a citation issued from the court having jurisdiction of the principal litigations, notifying the garnishee that the property and credits of the judgment debtor have been levied upon or attached in the hands of such garnishee, and enjoining him not to deliver, transfer, or otherwise dispose of any effects or credits belonging to that person, and requiring him furthermore to make a 47

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statement to the court of the property of the judgment debtor in his hands and of the debts owing by the garnishee to such debtor. It is merely a case of involuntary novation by the substitution of one creditor for another. Upon principle the remedy is a species of attachment or execution for reaching any property pertaining to a judgment debtor which may be found owing to such debtor by a third person. The situation involved supposes the existence of at least three persons, to wit, a judgment creditor, a judgment debtor, and the garnishee, or person cited, who in turn is supposed to be indebted to the first debtor (i.e., judgment debtor). The payment of the money by the garnishee to the judgment creditor or into court, brings the proceeding to a close, so far as the garnishee is concerned; but if the garnishee fails to answer, or does not admit the indebtedness, he may be required to attend before the court in which the action is pending to be examined on oath respecting the same. Finally, if the liability of the garnishee is made manifest, the officer of the court may collect the money and pay it to the person entitled. The action of the sheriff in exposing to public sale the judgment which had been procured by Sharruf in the action against the Tayabas Land Company, et al., was wholly unauthorized, and said sale must be considered void. The proper step would have been for the court to require the Tayabas Land Company, after the judgment against it had become final, to pay into court, in the cause wherein Salvador Farre was plaintiff, a sufficient amount of money to satisfy Farre's claim against Sharruf; and if the judgment against the Tayabas Land Company had been permitted to go to the stage of execution, the proceeds in the hands of the sheriff would have been applied, under the direction of the court, to the payment of Farre's claim before any part would have been payable to Sharruf.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

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(e) The interest of the party against whom attachment is issued in property belonging to the estate of the decedent, whether as heir, legatee, or devisee, by serving the executor or administrator or other personal representative of the decedent with a copy of the writ and notice that said interest is attached. A copy of said writ of attachment and of said notice shall also be filed in the office of the clerk of the court in which said estate is being settled and served upon the heir, legatee or devisee concerned.

Rafael Vilar as one of the heirs, allthough the value of his participation in the estate of Florentino Vilar was indeterminable before the final liquidation of the estate, nevertheless, the right of participation in the estate and the lands thereof may be attached and sold.

If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall be filed with the proper court or quasi-judicial agency, and notice of the attachment served upon the custodian of such property. (7a)

Nothing appears in this record to indicate that Rafael Vilar being sui juris could not dispose of his interest or share as heir in the estate of Florentino Vilar. Having this right, he could by a conveyance defeat pro tanto the provisions of section 450 of the Code of Civil Procedure, judgment in this consulta was reversed.

Q: To whom should the copies of the notice be served? A: It is to be served to the executor or administrator or other personal representative of the decedent with a copy of the writ and notice that said interest is attached. A copy of said writ of attachment and of said notice shall also be filed in the office of the clerk of the court in which said estate is being settled and served upon the heir, legatee or devisee concerned. Q: What if there is no testate or intestate proceeding, or settlement of estate proceeding? A: Par. (e) will not be applicable since it presupposes that there is a settlement case. In such case, Sec.7(a) will be applied. GOTAUCO V. ROD The register of deeds in this case denied the inscription of a levy of execution on the title of the property as it was in the name of Florentino Vilar and not in the name of the Rafael Vilar, the judgment debtor and that no evidence having been submitted that the Rafael Vilar had any interest in the property. However, it was later on shown that the Rafael Vilar was one of the heirs of the Florentino Vilar in whose name the property appeared.

The real test (Reyes v. Grey) is whether the judgment debtor hold such a beneficial interest in the property that he can sell or otherwise dispose of its for value.

Q: Why is it necessary to notify the clerk of court? A: It is to inform that a lien is created by the attachment. In case of a settlement proceeding, the estate under consideration is already in custodia legis. Hence in such case, when the share of an heir, which is in the custody of the court, is being attached, the mere notification to the Clerk of Court will suffice.

Q: What is the purpose of levy? A: The purpose of levy is to put the property in custodia legis, so that the court may have control over the properties and subject them to the outcome of the main case. It is not for the purpose of transferring ownership, nor to transfer control thereof to the attaching creditor.

Q: What is the effect of noncompliance with Sec. 7? A: Noncompliance thereof means that the court did not validly acquire the custody of the properties, and will render the levy void.

ISSUE: W the inscription of the levy of excution is proper. YES.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 8. Effect of attachment of debts, credits and all other similar personal property. — All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued, or owing any debts to him, at the time of service upon them of the copy of the writ of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of such credits, debts or other similar personal property, until the attachment is discharged, or any judgment recovered by him is satisfied, unless such property is delivered or transferred, or such debts are paid, to the clerk, sheriff, or other proper officer of the court issuing the attachment. (8a) Q: What kind of personal properties are involve in Sec. 8? A: This involves personal properties which are not capable of manual delivery.

Q: What kind of attachment is contemplated in Sec. 8? A: Sec. 8 speaks of garnishment.

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Engineering Construction v. NPC ECI filed a complaint for damages against the NPC. The TC ruled in favour of ECI, and ECI moved for and was granted execution pending appeal. Subsequently, Deputy Sheriff Quemada garnished in favor of ECI all amounts due and payable to NPC which were in possession of MERALCO. On appeal, the execution pending appeal was declared null and void. MERALCO sought clarification of the decision on the ground that NPC is compelling MERALCO to return the amount of P1,114,545.23 (inclusive of sheriff's fees) in two checks which it had already entrusted to the deputy sheriff on February 23, 1971, who then indorsed and delivered the same to ECI. The CA then held the sheriff, MERALCO and ECI liable to restore to NPC the amount due to NPC which MERALCO had earlier turned over to the sheriff for payment to ECI. ISSUE: W Meralco is bound to restore to NPC the judgment amount which has been delivered to ECI in compliance with the writ of garnishment. NO

Q: What is garnishment? A: Garnishment is considered as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. (Engineering Construction v. NPC)

Q: When will the liability on the garnishment terminate? A: It will be terminated when the attachment is discharged, or when the judgment is satisfied.

Q: Can the garnishee be held liable if it delivers to the sheriff the amount garnished? A: No, a garnishee, who is compelled by the court to deliver the amount garnished is exempted from liability. 49

MERALCO, the garnishee, is absolved from its obligations to NPC with respect to the payment to ECI of P1,114,543.23. MERALCO should not be faulted for its prompt obedience to a writ of garnishment. Unless there are compelling reasons such as: a defect on the face of the writ or actual knowledge on the part of the garnishee of lack of entitlement on the part of the garnisher, it is not incumbent upon the garnishee to inquire or to judge for itself whether or not the order for the advance execution of a judgment is valid. Under Sec. 8, the garnishee [the third person] is obliged to deliver the credits, etc. to the proper officer issuing the writ and "the law exempts from liability the person having in his possession or under his control any credits or other personal property be, longing to the defendant, ..., if such property be delivered or transferred, ..., to the clerk, sheriff, or other officer of the court in which the action is pending."

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 MERALCO, as garnishee, after having been judicially compelled to pay the amount of the judgment represented by funds in its possession belonging to the judgment debtor or NPC, should be released from all responsibilities over such amount after delivery thereof to the sheriff. The reason for the rule is self-evident. To expose garnishees to risks for obeying court orders and processes would only undermine the administration of justice.

RCBC vs. Judge Castro Badoc Planters filed an action for recovery of unpaid tobacco deliveries against Philippine Virginia Tobacco. Philippine Viginia was ordered to pay Badoc Planters the amount of P206,916.76. Badoc filed a Motion for a Writ of Execution, which was granted. Accordingly, the Clerk of Court issued a Writ of Execution addressed to Special Sheriff Rigor, who then issued a Notice of Garnishment addressed to the General Manager and/or Cashier of RCBC as to any property which the PVTA might have in the possession or control of RCBC or of any debts owing by the RCBC to PVTA. RCBC notified PVTA to enable the PVTA to take the necessary steps for the protection of its own interest. Upon motion of Badoc, the court issued an order to RCBC "to deliver in check the amount garnished to Sheriff Rigor and Sheriff Rigor in turn is ordered to cash the check and deliver the amount to the plaintiff's representative and/or counsel on record." RCBC delivered to Sheriff Rigor a certified check in the sum of P 206,916.76. On appeal, the court ordered that RCBC and Badoc reimburse PVTA. PVTA claims that the manner in which RCBC complied with the Notice of Garnishment indicated breach of trust and dereliction of duty as custodian of government funds, and that the delivery of the garnished amount by RCBC to the special sheriff even in the absence of a demand to deliver is premature. As such, RCBC can be held liable with Badoc for the wrongful release of the money. 50

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ISSUE: W RCBC can be held solidarily liable with the judgment creditor to PVTA for reimbursement of the garnished funds. NO RCBC merely obeyed a mandatory directive from the Court ordering RCBC "to deliver in check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor is in turn ordered to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record." RCBC did not deliver the amount on the strength solely of a Notice of Garnishment; rather, the release of the funds was made in compliance with the court order. While the Notice of Garnishment contained no demand of payment as it was a mere request for petitioner to withhold any funds of the PVTA then in its possession, the Order of the Court categorically required the delivery in check of the amount garnished to the special sheriff, Faustino Rigor. RCBC also duly informed PVTA regarding the notice of garnishment to enable the latter to take the necessary steps for the protection of its own interest. There was nothing irregular in the delivery of the funds of PVTA by check to the sheriff, whose custody is equivalent to the custody of the court, he being a court officer. The order of the court was composed of two parts, requiring: 1) RCBC to deliver in check the amount garnished to the designated sheriff and 2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record. It must be noted that in delivering the garnished amount in check to the sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a check does not produce the effect of payment until it has been cashed. By virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 its depositor's funds pursuant to a court order which was merely in the exercise of its power of control over such funds. RCBC cannot therefore be compelled to make restitution solidarily with BADOC. BADOC alone was responsible for the issuance of the Writ of Execution and Order of Payment and so, the plaintiff alone should bear the consequences of a subsequent annulment of such court orders; hence, only the plaintiff can be ordered to restore the account of the PVTA. Q: Why is the garnishee released from liability upon the delivery of the check to the Sheriff? A: The garnishee is no longer liable for the reason that the check was already placed in custodia legis when such was delivered to the sheriff. Upon the delivery of the check, the responsibility is passed on to the sheriff who has control and custody over the property. Note that the reckoning point is the time of delivery of the check, and not its encashment.

Q: Is partial execution of a judgment a ground to discharge garnishee from liability? A: No. Section 8 provides that the liability continues until the attachment is discharged, or judgment is satisfied. Partial execution does not fully satisfy the judgment. The Manila Remnant Co v. CA Ventanilla filed an action for specific performance, annulment of deeds, and damages against Manila Remnant Co., Inc., A.U. Valencia and Co., Inc., and Carlos Crisostomo, for the subsequent sale of lots to Crisostomo, which has been previously sold to Ventanilla.

MRCI alleged that it cannot convey the land to Ventanilla as it was already sold to Marquez. Nevertheless, MRCI offered to reimburse the amount paid by the respondents. Ventanillas accepted the amount of P210,000.00 as damages but opposed the reimbursement offered by MRCI in lieu of the execution of the absolute deed of sale. MRCI contends that it has already partially complied with the judgment and that it has always expressed its willingness to reimburse the amount paid by the respondents, hence there is no need for a garnishment order. ISSUE: W the garnishment order may be lifted on the ground that the judgment has been partially complied with. NO A garnishment order shall be lifted if it established that: (a) the party whose accounts have been garnished has posted a counterbond or has made the requisite cash deposit; (b) the order was improperly or irregularly issued as where there is no ground for garnishment or the affidavit and/or bond filed therefor are defective or insufficient; (c) the property attached is exempt from execution, hence exempt from preliminary attachment; or (d) the judgment is rendered against the attaching or garnishing creditor. Partial execution of the judgment is not included in the above enumeration of the legal grounds for the discharge of a garnishment order. Neither does the petitioner's willingness to reimburse render the garnishment order unnecessary.

The TC ruled in favour of Ventanilla and ordered the MRCI to execute an absolute deed of sale in favor of the Ventanillas, and to pay damages amounting to P210,000.00. Ventanilla moved for the execution of the judgment, a writ was issued, and served upon MRCI.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Chemphil Export and Import vs CA Garcia entered into an agreement with the consortium for the payment of his obligation, but when he failed to make good his obligation, the consortium filed a motion for execution, which was granted by the RTC. Garcia’s properties, including the shares in CIP were levied. The Consortium acquired the shares in the public auction. CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the dismissal of the case, dies a natural death. Thus, when the consortium entered into a compromise agreement, which resulted in the termination of their case, the disputed shares were released from garnishment. ISSUE: W the garnishment is discharged when the parties entered into a compromise agreement, which was left unfulfilled. NO A writ of attachment is not extinguished by the execution of a compromise agreement among the parties. To subscribe to CEIC’s contentions would be to totally disregard the concept and purpose of a preliminary attachment. An attachment lien continues until the debt is paid, or sale is had under execution issued on the judgment or until judgment is satisfied, or the attachment discharged or vacated in the same manner provided by law. The case at bench admits of a peculiar character in the sense that it involves a compromise agreement. Nonetheless, the rule established in the aforequoted cases still applies, even more so since the terms of the agreement have to be complied with in full by the parties thereto. The parties to the compromise agreement should not be deprived of the protection provided by an attachment lien especially in an instance where one reneges on his obligations under the agreement, as in the case at bench, where Antonio Garcia failed to hold up his own end of the deal, so to speak.

Abinujar vs. CA Ramiro filed a complaint for ejectment against Abinujar. Subsequenty, Ramiro and Abinujar executed a compromise agreement, which 52

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was approved by the TC. It provides that failure to pay 3 instalments will entitle Ramiro to a writ of execution. Thereafter, Ramiro filed a motion for execution on the ground that Abinujar failed to pay the first three instalments stipulated in the compromise agreement. ISSUE: What is the effect of the nonfulfilment of the compromise agreement. A compromise agreement is a contract between the parties, which if not contrary to law, morals or public policy, is valid and enforceable between them. There are two kinds of compromise agreements, the judicial, which puts an end to a pending litigation, and the extrajudicial, which is to avoid a litigation The non-fulfillment of the terms and conditions of a compromise agreement approved by the court justifies execution thereof and the issuance of the writ for said purpose is the court's ministerial duty enforceable by mandamus. In the compromise agreement, petitioners obligated themselves to pay private respondents the amount of P50,000.00 on January 31, 1990, P10,000.00 on February 28, 1990, and P10,000.00 on March 31, 1990. Clearly, there was a breach, for it was only on August 17, 1990 that petitioners attempted to pay by means of nine postdated checks the amounts agreed upon. The order of garnishment or a writ of attachment is not discharged by mere execution of a compromise agreement by the parties. The purpose of attachment/garnishment is to secure the satisfaction of a judgment, be it based on a compromise. In such case, the violation of the terms of the compromise gives the party the right to move for execution. As a general rule, the execution of a compromise agreement does not discharge or dissolve a writ of attachment, even though it may result in the termination of the main case. However, when the judgment on the compromise issued by the court states that the writ of attachment is discharged, the writ is dissolved.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 PNB vs. Olutanga Rubber Company PNB is as an ordinary creditor in the involuntary insolvency of the Olutanga Lumber Company. A Writ of attachment was issued in his favour, against Olutanga. BPI filed an action against Olutanga Lumber Company. The Court ordered that BPI should pay Olutanga. Writ of execution was issued, which was complied with by the sheriff of Zamboanga by presenting it to the manager of the branch of the BPI Zamboanga, but without levying execution on any property of BPI. The sheriff also sent a telegram to BPI Central Office of its obligation to pay Olutanga, otherwise, levy will be made in Zamboanga Office. Before receiving the telegram, BPI Central Office was notified by the sheriff of Manila that all the credits and debts contracted by it with the Olutanga Lumber Company were levied upon in the name of the PNB by virtue of a writ of attachment. BPI-CO delivered the amount attached to the sheriff of Manila, pursuant to the letter sent by the sheriff requiring BPI to deliver the attached amount to him. After the delivery to the sheriff of Manila, BPI notified the sheriff of Zamboanga that the amount of the judgment in favor of the Olutanga Lumber Company against BPI had been delivered to the sheriff of Manila, and that any question on that subject should be taken up with him. The sheriff of Manila sent a telegram to the sheriff of Zamboanga, telling him that the amount of the judgment against BPI and in favor of Olutanga Lumber Company had been attached by virtue of two writs of attachment issued by the PNB against the Olutanga Lumber Company, and that such had been deposited with him by BPI. The sheriff of Zamboanga still attempted to collect from the branch of BPI Zamboanga the amount of the judgment in favor of the Olutanga Lumber Company, threatening to levy, and in fact did levy, an attachment against said branch. ISSUE: W BPI Zamboanga’s properties can still be levied despite the delivery of BPI Central Office of the amount garnished by Sheriff of Manila. NO

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The general rule is that, where attached properties belonging to the principal debtor are taken out of the hands of a person by legal process, after he had been notified of the order of attachment, said person cannot be made to answer for the properties in a proceeding to carry out said attachment. In the present case, the fact that the funds attached in the possession of the BPI, belonging to the Olutanga Lumber Company, had been deposited with the sheriff of Manila by order of said officer, does not change the juridical situation of said funds as attached in the possession of the BPI, and, BPI, having been judicially compelled to pay the amount of the judgment represented by said funds to the Olutanga Lumber Company, after having employed all the legal means to avoid it, is released from all responsibility to PNB in whose favor the writ of attachment was issued. When a person has funds in his possession belonging to a debtor, and said funds are attached by a creditor of the latter, said person is relieved from all responsibility to said creditor if he is judicially compelled to deliver said funds to the aforesaid debtor. The sheriff of Manila is ordered to return to BPI the amount deposited by virtue of the writ of attachment. Nota Bene: To discharge a garnishee from liability under the WPA, he must have been judicially compelled to pay. A voluntary tender of the amount, without any legal compulsion is not sufficient to discharge liability, and that he has every reason to object to the validity of the payment. The reckoning point is whether there is legal compulsion employed, absence thereof, the garnishee is not discharged from liability.

Q: What is the difference between a garnishment or writ of attachment and a writ of execution? A: Garnishment has been defined as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. A writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the termination, of a

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

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Provisional Remedies | Rule 57 suit. It places the attached properties in custodia legis, obtaining pendente lite a lien until the judgment of the proper tribunal on the plaintiff’s claim is established, when the lien becomes effective as of the date of the levy.

Q: What does Garnishment imply? A: It implies that there is a third person (garnishee) who will be liable to the judgment creditor for the judgment rendered against the judgment debtor. In legal contemplation, it is a forced novation by the substitution of creditors: the judgment debtor, who is the original creditor of the garnishee is, through service of the writ of garnishment, substituted by the judgment creditor who thereby becomes creditor of the garnishee. Garnishment has also been described as a warning to a person having in his possession property or credits of the judgment debtor, not to pay the money or deliver the property to the latter, but rather to appear and answer the plaintiff's suit. (Perla Compania de Seguros vs. Ramolete) The stranger becomes a forced intervenor; and the court, having acquired jurisdiction over him by means of the citation, requires him to pay his debt, not to his former creditor, but to the new creditor, who is creditor in the main litigation. (Tayabas Land vs. Sharruf)

Q: Is a garnishee part of the case? A: He is intervenor.”

considered

as

a

“forced

Through service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a "forced intervenor" in, the case and the trial court thereby acquires jurisdiction to bind him to compliance with all orders and processes of the trial court with a view to the complete satisfaction of the judgment of the court. (Perla Compania de Seguros vs. Ramolete)

Q: Does the garnishee impleaded in the case?

need

to

be

A: No. In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not necessary that summons be served upon him. The garnishee need not be impleaded as a party to the case. All that is necessary for the trial court lawfully to bind the person of the garnishee or any person who has in his possession credits belonging to the judgment debtor is service upon him of the writ of garnishment. The Rules of Court themselves do not require that the garnishee be served with summons or impleaded in the case in order to make him liable. (Perla Compania de Seguros vs. Ramolete) Perla Compania de Seguros vs. Ramolete The widow of Palmes filed a complaint against Enriquez claiming actual, moral, nominal and exemplary damages as a result of the vehicular accident. The court ordered Enriquez to pay Palmes. The judgment became final and executory and a writ of execution was issued, which was returned unsatisfied. Enriquez declared that the PUJ involved in the accident was covered by a third-party liability insurance policy issued by Perla. Palmes filed a motion for garnishment against the insurance policy issued by Perla in favor of the judgment debtor. The Judge issued an Order directing the Sheriff to garnish the third-party liability insurance policy. Perla moved for quashal of the writ of garnishment, alleging that the writ was void on the ground that it was not a party to the case and that jurisdiction over its person had never been acquired by the trial court by service of summons or by any process. ISSUE: W the garnishee Perla is bound by the Garnishment Order considering that Perla was not impleaded in the case against Enriquez. YES Through service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a "forced intervenor" in, the case and the trial court thereby acquires jurisdiction to

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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bind him to compliance with all orders and processes of the trial court with a view to the complete satisfaction of the judgment of the court.

The sheriff attempted to execute the judgment, however this did not materialize since the Bank has already sold the bales f tobacco.

In RCBC v. De Castro, the Court stressed that the asset or credit garnished is thereupon subjected to a specific lien:

Tec Bi instituted an action against the Bank, garnishee.

The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under the sole control of such court. In the present case, there can be no doubt, therefore, that the trial court actually acquired jurisdiction over petitioner Perla when it was served with the writ of garnishment of the third-party liability insurance policy it had issued in favor of judgment debtor Enriquez. Perla cannot successfully evade liability thereon by such a contention.

Q: What is the remedy of the attaching creditor if the garnishee, after having served with notice of garnishment, fraudulently disposes the garnished property, resulting to non-satisfaction of the judgment? A: A plaintiff who has sued out an attachment and given the necessary notice to a garnishee that the property in his hands is attached, and subsequently the garnishee fraudulently disposes of the property, has a right to waive his lien on the property, and bring suit for the value of the property, against the garnishee. Tec Bi and Co vs. Chartered Bank of India Tec Bi filed an action against La Urania. The Court ruled in favour of Tec be, and issued a WPA against the bales of Tobacco owned by La Urania. The said bales were in the possession of the bank, inasmuch as it was under a contract of Pledge.

The garnishee contends that Tec Bi should not have been permitted to maintain an original and independent action against the garnishee, and such action may be disposed of very summarily, citing Roberts & Co. v. Landecker (9 Cal., 262), and Carter v. Los Angeles National Bank (116 Cal., 370-1). ISSUE: W the judgment creditor can institute a separate action against the garnishee. YES The plaintiff may or may not, at his election, require the garnishee to appear and answer on oath, and his liability will not be affected by the failure of the plaintiff to take such a step. (Roberts & Co. v. Landecker (9 Cal., 262)) A plaintiff who has sued out an attachment and given the necessary notice to a garnishee that the property in his hands is attached, and subsequently the garnishee fraudulently disposes of the property, has a right to waive his lien on the property, and bring suit for the value of the property, against the garnishee. (Roberts & Co. v. Landecker (9 Cal., 262)) After execution unsatisfied against the judgment in debtor, the judgment creditor may bring an action at law against a garnishee upon whom notice was served under an attachment issued in the action before judgment; and it is necessary before bringing such action that the garnishee should be required to appear and answer, or that an order should be obtained authorizing the action against the garnishee; and no equitable circumstance need be shown to justify the suit, which is upon direct liability of the garnishee to the plaintiff in that suit provided for in section 544 of the Code of Civil Procedure. (Carter v. Los Angeles National Bank (116 Cal., 370-1))

The Sheriff notified the bank that the bales of tobacco were attached. However, the bank claimed that such was a security for a loan and that the bank intends to sell the same.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: Can a mortgaged property be attached?

The foregoing conclusion necessary consequences:

has

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A: Yes.

Q: What is the remedy of the attaching creditor if the mortgaged property has been extrajudicially foreclosed by the mortgagee? A: The attaching creditor is subrogated to the rights of the attachment debtor. The attaching creditor acquires the debtor’s right of redemption. As such, he may redeem the property from the purchaser.

Consolidated Bank vs. IAC NICOS mortgaged real properties to UCPB. NICOS also entered into contract of loan with Solid Bank, which were not paid. Solid Bank instituted a collection case against NICOS, and was able to secure an attachment over the real properties of that were subject of a mortgage. Pursuant to the writ, the sheriff levied the properties and such notice of levy was annotated in the title with the ROD. The attached properties were then extrajudicially foreclosed by UCPB, and was acquired by UCPB as highest bidder.

1. The writ of possession issued in favor of Golden Star is null and void ab initio because it interfered with the jurisdiction of a co-ordinate and co-equal court While property or money is in custodia legis, the officer holding it is the mere hand of the court, his possession is the possession of the court, and to interfere with it is to invade the jurisdiction of the court itself. 2. Solidbank acquired by operation of law the right of redemption over the foreclosed properties pursuant to Sec. 6 of Act No. 3135, to wit: In all such cases in which an extrajudicial sale is made ... any person having a lien on the property subsequent to the mortgage ... may redeem the same at any time within the term of one year from and after the date of sale. It has been held that "an attaching creditor may succeed to the incidental rights to which the debtor was entitled by reason of his ownership of the property, as for example, a right to redeem from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7 SJS 505). The fact that NICOS executed a waiver of right of redemption in favor of Golden Star is of no moment as by that time it had no more right which it may waive in favor of another.

Thereafter, UCPB sold the properties to Go, who in turn sold it to Goldenstar. NICOS executed a “Waiver of Right of Redemption” in favour of Golden Star. ISSUE: W an attaching creditor acquires the right of redemption of a debtor over the attached properties which are subsequently extrajudicially foreclosed by third parties. YES The subject properties were under custodia legis by virtue of the prior annotation of a writ of attachment in petitioner's favor at the time the properties were extrajudicially foreclosed. When a writ of attachment has been levied on real property or any interest therein belonging to the judgment debtor, the levy thus effected creates a lien which nothing can destroy but its dissolution 56

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: Can the appointment of a rehabilitation receiver defeat the writ of attachment made on the properties? A: No. This is for the reason that in the event that the receivership is terminated with such claims not having been satisfied, the creditors may also find themselves without security therefor in the civil action because of the dissolution of the attachment. (BF Homes v. CA) BF HOMES vs. CA BF contracted a loan from Roa and Mendoza. The obligation was embodied in a promissory note and secured by PDC issued by BF in favor of the ROA & Mendoza. Subsequently, BF filed a Petition for Rehabilitation and Suspension of Payments with the SEC. Roa and Mendoza file an action for the recovery of the loan with a prayer for WPA against the properties of BF. The TC issued the WPA against properties of BF sufficient to satisfy the principal claim. BF moved for the dismissal of the case and lifiting of WPA in view of the pendency of Petition for Rehabilitation. The SEC issued an order creating a management committee and suspending all actions for claims against BF pending before any court, tribunal or board. The CA, on appeal, suspended the collection case until the management committee is impleaded as party defendant, and declared the WPA null and void. According to the CA, the purpose of the suspension was to enable the management committee to substitute BF as party defendant and prosecute the defense to conclusion. As to the dissolution of the WPA, the CA said that Roa and Mendoza were secured in the satisfaction of any judgment they might obtain against BF since all the properties of the latter were already in the custody of the management committee. The CA did not rule on the validity of the WPA.

of institution of management committee under the rehabilitation plan. YES The WPA must stand despite the suspension of the proceedings. The writ was issued prior to the creation of the management committee and so should not be regarded as an undue advantage of Mendoza and Roa over the other creditors of BF. The appointment of a rehabilitation receiver who took control and custody of BF has not necessarily secured the claims of Roa and Mendoza. In the event that the receivership is terminated with such claims not having been satisfied, the creditors may also find themselves without security therefor in the civil action because of the dissolution of the attachment. This should not be permitted. Having previously obtained the issuance of the writ in good faith, they should not be deprived of its protection if the rehabilitation plan does not succeed and the civil action is resumed. It is settled that: If there is an attachment or sequestration of the goods or estate of the defendant in an action which is removed to a bankruptcy court, such an attachment or sequestration will continue in existence and hold the goods or estate to answer the final judgment or decree in the same manner as they would have been held to answer the final judgment or decree rendered by the Court from which the action was removed, unless the attachment or sequestration is invalidated under applicable law. Under the Rules of Court, a writ of attachment may be dissolved only upon the filing of a counter-bond or upon proof of its improper or irregular issuance. Neither ground has been established in the case at bar to warrant the discharge of the writ. No counter-bond has been given. As for the contention that the writ was improperly issued for lack of notice to BF on the application for the writ, 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. No notice to the adverse party or hearing of the application is required.

ISSUE: W the WPA should stand despite the suspension of the proceeding by reason 57

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What is sequestration? A: Sequestration is the process, which may be employed as a conservatory writ whenever the right of the property is involved, to preserve, pending litigation, specific property subject to conflicting claims of ownership or liens and privileges. (BASECO vs. PCGG)

Q: What is the nature of sequestration? A: Sequestration is akin to the provisional remedy of preliminary attachment, or receivership. By attachment, a sheriff seizes property of a defendant in a civil suit so that it may stand as security for the satisfaction of any judgment that may be obtained, and not disposed of, or dissipated, or lost intentionally or otherwise, pending the action. (Rule 57, Rules of Court) By receivership, property, real or personal, which is subject of litigation, is placed in the possession and control of a receiver appointed by the Court, who shall conserve it pending final determination of the title or right of possession over it. (Rule 59, Rules of Court) All these remedies--sequestration, freezing, provisional, takeover, attachment and receivership--are provisional, temporary, designed for particular exigencies, attended by no character of permanency or finality, and always subject to the control of the issuing court or agency. (Republic vs. Sandiganbayan) Republic vs. Saludares On April 2, 1986, the PCGG issued a writ of sequestration against LBLC on the ground that the shares of stocks in LBLC owned by Sabido formed part of "illegally acquired wealth." The Republic filed before the Sandiganbayan a complaint for reconveyance, reversion, accounting, restitution and damages against, among others, Sabido.

Lianga. The PCGG was not impleaded by Hung Ming Kuk as party-defendant nor was the sequestration case referred to the RTC's proceedings. The TC granted the WPA in favor of Hung Ming Kuk. For failure to file responsive pleadings by LBLC, the RTC rendered judgment by default in favour of Hung Ming Kuk. In another case, the SC en banc confirmed the validity of the writ of Sequestration. Republic contends that the RTC of Lianga has no jurisdiction over the subject matter of the case inasmuch as the same are under sequestration by the PCGG, and that the sequestered assets have been placed under custodia legis of the PCGG pending the final determination by the Sandiganbayan that said assets are in fact ill-gotten. Hung Ming Kuk claims that the attachment order was issued after the Sandiganbayan had lifted the writ of sequestration against LBLC. ISSUE: W the WPA was validly issued. NO The disputed properties of LBLC were already under custodia legis by virtue of a valid writ of sequestration issued by the PCGG on April 2, 1986, when Judge Saludares issued the WPA in favor of Hung Ming Kuk. At that time the writ of sequestration issued by PCGG against LBLC was subsisting. Said writ of the PCGG could not be interfered with by the RTC of Lianga, because the PCGG is a coordinate and co-equal body. The PCGG had acquired by operation of law the right of redemption over the property until after the final determination of the case or until its dissolution.

Upon motion by Sabido, the Writ of Sequestration was lifted. Hung Ming Kuk filed a complaint for sum of money against LBLC, with a prayer for a writ of preliminary attachment, with RTC 58

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 9. Effect of attachment of interests in property belonging to the estate of a decedent. — The attachment of the interest of an heir, legatee, or devisee in the property belonging to the estate of a decedent shall not impair the powers of the executor, administrator, or other personal representative of the decedent over such property for the purpose of administration. Such personal representative, however, shall report the attachment to the court when any petition for distribution is filed, and in the order made upon such petition, distribution may be awarded to such heir, legatee or devisee, but the property attached shall be ordered delivered to the sheriff making the levy, subject to the claim of such heir, legatee, or devisee, or any person claiming under him. (9a)

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Q: What is the duty of the Executor, Administrator or Personal Representative when an order is made upon such petition? A: The distribution may be awarded to such heir, legatee or devisee, but the property attached shall be ordered delivered to the sheriff making the levy, subject to the claim of such heir, legatee, or devisee, or any person claiming under him.

NOTA BENE: After the estate has been settled and distributed, it is the time where the sheriff can actually levy the specific share in the estate that pertains to the defendant. Instead of the defendant receiving his share, it will be delivered to the sheriff.

Q: What is the effect of an attachment of the interest in the property belonging to the estate of the decedent? A: The attachment shall not impair the powers of the executor, administrator, or other personal representative of the decedent over such property for the purpose of administration.

Q: Why does Sec. 9 refer to the interest in the estate? A: Pending distribution or settlement of the estate, the parties to the attachment cannot yet exactly state or know the exact properties with the judgment debtor may receive. Hence, only the interest can be attached.

Q: How do you attach the interest? A: It is done by serving a copy of the attachment to the executor, administrator, or personal representative of the estate, and serving a copy thereof to the Clerk of Court where the settlement is pending.

Q: What is the duty of the executor, administrator or personal representative in case of petition for distribution? A: He shall report the attachment to the court. 59

Section 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to sheriff. — Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court, and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk of the court or sheriff on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action. (10a) Q: What is the procedure if the garnishee denies indebtedness? A: If the garnishee denies indebtedness, he may be required to attend before the court in which the action is pending to be examined on oath respecting the same 7. (Tayabas Land vs. Sharuff)

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Provisional Remedies and Special Civil Actions Reviewer-Primer by Feria

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What is the purpose of examination under Sec. 10? A: It depends upon who is to be examined. If the third party is to be examined, it is for the purpose of eliciting information regarding the properties or debt owing to the defendant, which are in the possession of the third party. If the defendant is to be examined, it is for the purpose of eliciting information regarding his properties.

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investigation, the judge may issue a warrant of arrest if he finds after an examination in writing and under oath of the complainant and his witnesses in the form of searching question and answers, that a probable cause exists and that there is a necessity of placing the respondent under immediate custody in order not to frustrate the ends of justice The examination under Sec. 10 is a mode of discovery applied in cases wherein no property of the debtor is found. The examination is resorted to identify other possible properties of the defendant which may have been concealed by him, or is in the possession of other person.

Q: Who may be examined? A: The following persons may be examined: 1. 2. 3. 4.

Defendant himself; Creditor of the defendant; Debtor of the defendant; or Any person who has under his control other personal properties belonging to the defendant.

Q: What is the consequence is the third person or the defendant gives false testimony? A: They can be held criminally liable for the false testimony since the examination mentioned in Sec. 10 is under oath.

Q: Who may examine? A: It is the Court in which the action is pending, or a commissioner appointed by the court.

Q: If the garnishee denies the debt or claims the property, may the court compel him to pay or deliver the property?

Q: After the examination, what order may be issued by the Court?

A: No. If the garnishee does not admit indebtedness or makes a legal or equitable claim to the property or amount in his hands, the controversy must be determined by a separate action as provided in Sec. 43, Rule 39.

A: The court may order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk of the court or sheriff on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action.

Sec. 10, Rule 57 is applicable only in cases where the indebtedness is admitted by the garnishee, or a personal property capable of manual delivery belonging to the defendant is in the possession of the person required to attend before the court.

Q: Is the examination in Sec. 10, similar to the examination in criminal procedure for the issuance of a warrant of arrest for determination of probable cause? A: No. Sec. 6 Rule 112 provides that without waiting for the conclusion of the 60

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Is notice to defendant regarding examination of bank records necessary? OÑATE V. ABROGAR (2 nd Division) Sun Life filed motion for examination of bank accounts with BPI — which, incidentally, Onate claim not to be owned by them — and the records of PNB with regard to checks payable to Brunner. The Judge issued an order granting Sun Life's motion to examine the BPI account. Onate’s basic argument is that the Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in allowing the examination of the bank records though no notice was given to them. ISSUE: W the defendant has to be notified of the examination of the bank records. NO Under Sec. 10, notice need only be given to the garnishee, or the person who is holding property or credits belonging to the defendant. The provision does not require that notice be furnished the defendant himself, except when there is a need to examine said defendant "for the purpose of giving information respecting his property. The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the proceeds of the check it paid to petitioners.

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Section 11. When attached property may be sold after levy on attachment and before entry of judgment. — Whenever it shall be made to appear to the court in which the action is pending, upon hearing with notice to both parties, that the property attached is perishable, or that the interests of all the parties to the action will be subserved by the sale thereof, the court may order such property to be sold at public auction in such manner as it may direct, and the proceeds of such sale to be deposited in court to abide the judgment in the action. (11a) Q: Can the sheriff dispose of the property subject of the attachment during the pendency of the litigation? A: As a general rule, the sheriff can only dispose of the property when the main case has been terminated. However, Section 11 provides for two instances where the sheriff can sell the attached property pending litigation, as an exception. 1. When the property attached is perishable; or 2. When the interests of all the parties to the action will be subserved by the sale thereof. Q: What are the procedures to be followed under Sec. 11? A: The requirements are as follows: 1. That there must be a hearing with notice to both parties; and 2. That the attaching creditor must be able to prove to the Court where the action is pending that the property attached is perishable in nature and that the parties agreed to sell the attached property for the protection of their own interest. Q: How should the sale be made, and what happens to the proceeds thereof? A: It must be sold at a public auction in such a manner as the court may direct, and the proceeds of such sale to be deposited in court to abide the judgment in the action.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 12. Discharge of attachment upon giving counter-bond. — After a writ of attachment has been enforced, the party whose property has been attached, or the person appearing on his behalf, may move for the discharge of the attachment wholly or in part on the security given. The court shall, after due notice and hearing, order the discharge of the attachment if the movant makes a cash deposit, or files a counterbond executed to the attaching party with the clerk of the court where the application is made, in an amount equal to that fixed by the court in the order of attachment, exclusive of costs. But if the attachment is sought to be discharged with respect to a particular property, the counter-bond shall be equal to the value of that property as determined by the court. In either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in the action. A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an attachment in accordance with the provisions of this section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counterbond, or to the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counter-bond for any reason be found to be or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching party may apply for a new order of attachment. (12a) Q: What is the procedure to discharge an attachment by counter-bond?

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making the deposit or giving the counter-bond.

Q: When do you file a counter-bond? A: In Sec. 12, the counter-bond is filed after the levy of the attached property. The purpose is to have the attached property released. In Sec. 5, the counter-bond is filed before the levy of the property to be attached. It is for the purpose of avoiding levy on property. In Sec. 2, the counter-bond can be filed upon the issuance of the writ of attachment. The purpose is to prevent the levy on property.

Q: What is the purpose of hearing? A: To determine whether the action is proper, or the party is entitled to the motion to discharge attachment.

Q: What is the purpose of the cash deposit or counter-bond? A: It is to secure the payment of any judgment that the attaching party may recover in the action standing in place of the property released. The counter-bond takes the place of the attached property.

A: The procedure is as follows: 1. File a motion for discharge of attachment by counter-bond wholly or in part of the security given; 2. Make a cash deposit, or file a counter-bond executed to the attaching party with the clerk of the court where the application is made; 3. The court will conduct a hearing with due notice to all the parties; 4. The court will order the discharge; and 5. The property attached, or the proceeds of any sale thereof, shall be delivered to the party

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Q: What is the effect of the discharge on the property attached? A: The property is released from liability. It is free and no longer liable to the results in the proceeding in which it was attached. (Mercantile Co. vs. Flores)

Q: What is the effect of discharge on the attachment bond? A: The liability on the attachment bond subsists and continues to be in force despite the discharge of the attachment by counter-bond.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What happens if the counter-bond is found to be or becomes insufficient? A: The party who filed the same shall be required to furnish an additional counterbond, and if he fails, the attaching party may apply for a new order of attachment.

Q: What is the amount of counter-bond? A: It is the amount equal to that fixed by the court in the order of attachment, exclusive of costs. But if the attachment is sought to be discharged with respect to a particular property, the counter-bond shall be equal to the value of that property as determined by the court.

Q: May the court order that the amount of the counter-bond be more than that of the amount of the obligation? A: Yes. In Manila Remnant vs CA, the imposition of the court of a P500,000 counter-bond despite the fact that the obligation was only P66,571 (selling price of the land) is valid, for the reason that the amount corresponds to the current fair market value of the property in litigation. The determining point is the value of the property. The Manila Remnant Co v. CA (1978) MRCI filed a motion prying for the lifting of the garnishment order. The RTC ruled that “to ensure that there is enough amount to cover the lots involved if the transfer thereof to the plaintiff may no longer be effected, the garnishment may be ordered lifted only upon the deposit to the Court the amount of P500,000 in cash. On appeal, the CA ruled that the cash bond fixed by the RTC for the lifting of the garnishment order was fair and reasonable because the value of the lot in question had increased considerably. MRCI contends that there is no need for the garnishment order because it is willing to reimburse Ventanillas the amount it paid for the lot (P66,571) in lieu of the execution of absolute deed of sale. 63

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ISSUE: W the garnishment may be ordered lifted without the posting of the counter bond. NO The Court issued the garnishment order for the purpose of ensuring their compliance with the judgment pertaining to the execution of the absolute deed of sale in favour of Ventanilla, which by its term could be lifted only upon the filling of a cash bond of P500,000.00. A garnishment order shall be lifted if it established that the party whose accounts have been garnished has posted a counterbond or has made the requisite cash deposit, among others. As for the counterbond, the RTC did not err when it fixed the same at P500,000.00. As correctly pointed out by the CA, that amount corresponds to the current fair market value of the property in litigation and was a reasonable basis for determining the amount of the counterbond.

In Insular Savings Bank vs. Ca, the determining point is the liability of the party, or the principal claim. Insular Savings Bank vs. CA (1991) FEBTC instituted an arbitration case against ISB for a total of P25.2M. During the pendency of the arbitration proceeding, FEBTC filed a collection case with the RTC, and prayed for WPA. RTC granted and issued the WPA. Subsequently, FEBTC and ISB entered into an agreement where FEBTC was now in the possession of P12.6M representing half of the disputed amount. ISB filed for a motion to discharge attachment by counterbond in the amount of P12.6M. The Court denied the motion stating that the amount of counterbond should be the unsecured portion of the claim amounting to P12.6M, actual damages of P7.8275M, legal interest of P3.8052M, exemplary damages of P2M, and attorney’s fee and litigation cost of P1M (total of P27.2377M). ISB contends that the starting point in computing the amount of counter-bond is

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 the amount of the respondent’s demand or claim only, that is P25.2M, excluding contingent expense and unliquidated amount of damages. Considering their agreement, the amount of P12.6M should be the basis for computing the amount of counter-bond. ISSUE: W the denial of the motion to discharge by counter-bond is proper. NO Under Sec. 12, the party whose property has been attached … may apply to the judge who granted the order … for an order discharging the attachment wholly or in part on the security given. The judge shall … order the discharge of the attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is filed … in an amount equal to the value of the property attached as determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. The amount of the counter-attachment bond is to be measured against the value of the attached property, as determined by the judge to secure the payment of any judgment that the attaching creditor may recover in the action. Albeit not explicitly stated in the same section and without necessarily diminishing the sound discretion of the issuing judge on matters of bond approval, the counter-bond should as much as possible correspond in value to, or approximately match the attaching creditors principal claim. Else, excessive attachment, which ought to be avoided at all times, shall ensue. FEBTC’s principal claim against ISB immediately prior to the filing of the motion to discharge attachment has effectively been pruned down to P12,600,000.00. Accordingly, RTC should have allowed a total discharge of the attachment on a counter-bond based on the reduced claim of respondent. If a portion of the claim is already secured, we see no justifiable reason why such portion should still be subject of counter-bond. It may be that a counter-bond is intended to secure the payment of any judgment that the attaching party may recover in the main action. Simple common sense, if not consideration of fair play, however, dictates that a part of a possible judgment that has veritably been preemptively satisfied or secured need not be covered by the counter-bond.

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FEBTC did not pray for attachment on its other claims, contingent and unliquidated as they were. Then, too, the attaching writ rightly excluded such claims. Be that as it may, it was simply unjust for the trial court to base the amount of the counter-bond on a figure beyond the P25,200,000.00 threshold, as later reduced to P12,600,200.00. NOTA BENE: Unlike the former Section 12 of Rule 57 of the Rules of Court where the value of the property attached shall be the defining measure in the computation of the discharging counter-attachment bond, the present less stringent Section 12 of Rule 57 provides that the court shall order the discharge of attachment if the movant makes a cash deposit, or files a counter-bond . . . in an amount equal to that fixed by the court in the order of attachment, exclusive of costs. Not being in the nature of a penal statute, the Rules of Court cannot be given retroactive effect. (Insular Savings Bank vs. CA)

Before the amendment to the Rules of Court (1997), the rule is that if the attachment is with respect to a specific property, the court can fix the counter-bond based on the value of the properties attached. If it is not with respect to a specific property, it will be based on the claim of the attaching creditor. PREVAILING RULE: As a general rule, it should be equal to the amount of the attachment bond as stated in the attachment order. As an exception, the court may, in its discretion, decide that the counter-bond be based on the value of the property.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: What is the purpose of counter-bond? A: The filing of the counter-bond will serve the purpose of preserving the defendant's property and at the same time give the plaintiff security for any judgment that may be obtained against the defendant. KO Glass vs. Valenzuela Glass moved to quash the WPA upon the ground that the affidavit filed was not sufficient. KO Glass filed a bond in the amount of P37,190.00 and asked the court for the release of the same amount deposited with the Clerk of Court, but, the respondent Judge did not order the release of the money deposited. ISSUE: W the denial of the discharge of WPA by counter-bond is proper. NO There being no showing, much less an allegation that the defendants are about to depart from the Philippines with intent to defraud their creditor, or that they are nonresident aliens, and for the reason that the affidavit of Pinzon did not comply with Sec. 3, the attachment of their properties is not justified. Since KO Glass has filed a counterbond in the amount of P37,190.00 to answer for any judgment that may be rendered against the defendant. Upon receipt of the counter-bond the respondent Judge should have discharged the attachment pursuant to Section 12. The filing of the counter-bond will serve the purpose of preserving the defendant's property and at the same time give the plaintiff security for any judgment that may be obtained against the defendant.

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Q: Is the writ automatically discharged upon the filing of the counter-bond? A: Generally, the mere posting of a counterbond does not automatically discharge the writ of attachment. It is only after hearing and after the judge has ordered the discharge of the attachment if a cash deposit is made or a counterbond is executed to the attaching creditor is filed, that the writ of attachment is properly discharged under Section 12, Rule 57 of the Rules of Court.

Q: What is the nature of the liability of the surety in Security Pacific vs. Infante? A: The liability is joint and several, as stated in the counter-bond itself. A surety is considered in law as being the same party as the debtor in relation to whatever is adjudged against him. Security Pacific Assurance vs Infante Anzures filed a criminal complaint against Villaluz, with prayer for WPA. The Court issued WPA after the posting of the attachment bond. The sheriff attached certain properties of Villaluz, which were duly annotated on the corresponding certificates of title. Villaluz was acquitted of the crime charged, but was held civilly liable. Villaluz interposed an appeal with the CA regarding her liabilities, but was denied. She elevated the same to the SC, and during its pendency, Villaluz posted a counter-bond in the amount of P2,500,000.00 issued by Security Pacific Assurance Corporation. Villaluz then filed a Motion to Discharge Attachment. The SC affirmed the ruling of the CA as to her civil liabilities. A writ of execution was issued and the Sheriff sent a Notice of Garnishment upon Security Pacific by virtue of the counterbond posted by Villaluz with said insurance corporation in the amount of P2,500,000.00. Security Insurance refused to assume its obligation on the counter-bond it posted for the discharge of the attachment made by Villaluz.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Security Insurance contends that the WPA against the real properties of Villaluz was not discharged, as such, its liability did not accrue. The alleged failure of the SC to approve the counter-bond and to cause the discharge of the attachment against Villaluz prevented the happening of a condition upon which the counter-bonds issuance was premised, such that petitioner should not be held liable thereon. ISSUE: W the attachment was ipso facto discharged by the mere act of posting the counter-bond. NO We are not unmindful of our ruling in the case of Belisle Investment and Finance Co., Inc. v. State Investment House, Inc., where we held “that the mere posting of a counterbond does not automatically discharge the writ of attachment. It is only after hearing and after the judge has ordered the discharge of the attachment if a cash deposit is made or a counterbond is executed to the attaching creditor is filed, that the writ of attachment is properly discharged under Section 12, Rule 57 of the Rules of Court.” However, considering our decision in G.R. No. 106214 it shows that this Court has virtually discharged the attachment after all the parties therein have been heard on the matter. Further, the court held that “The filing of the counter-attachment bond by Villaluz has discharged the attachment on the properties and made the corporation liable on the counter-attachment bond. This can be gleaned from the DEFENDANTS BOND FOR THE DISSOLUTION OF ATTACHMENT, which states that Security Pacific Assurance Corporation, as surety, in consideration of the dissolution of the said attachment jointly and severally, binds itself with Villaluz for any judgment that may be recovered by Anzures against Villaluz. The contract of surety is only between Villaluz and the corporation. The corporation cannot escape liability by stating that a court approval is needed before it can be made liable. This defense can only be availed by corporation against Villaluz but not against third persons who are not parties to the contract of surety. The petitioners hold themselves out as jointly and severally liable without any conditions in the counterattachment bond. The corporation cannot impose requisites before it can be made 66

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liable when the law clearly does not require such requisites to be fulfilled.”

Q: Do the posting of the counter-bond to discharge an attachment constitutes a waiver to any defect in the Writ of Attachment? A: No. 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. Calderon vs. IAC Schulze filed a counterbond, so the TC issued an order directing the sheriff to return all real and personal properties already levied upon and to lift the notices of garnishment issued in connection with the said attachment. After trial, the complaint against Schulze was dismissed, holding Calderon and his surety First integrated Bonding and Insurance Co., Inc., jointly and severally liable to pay the damages prayed for by Schulze. First Integrated 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. First Integrated also contends that by filing a counterbond, Schulze 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.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 ISSUE: W the filing of a counter-bond to discharge the writ of attachment constitute a waiver on any defect in the issuance of the WPA. NO While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond, the attachment is discharged or dissolved, nowhere is it provided that the attachment bond is rendered void and ineffective upon the filing of counterbond.

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Metro, Inc. vs. Lara’s Gifts and Décor Metro filed a motion to discharge the writ of attachment on the following ground that Lara’s Gift failed to substantiate their allegations of fraud with specific acts or deeds showing how Metro Inc defrauded them, among others. The TC lifted the writ of attachment ruling that the issuance of a WPA is not justified.

Thus, the responsibility of the surety arises "if the court shall finally adjudge that the plaintiff was not entitled thereto."

Lara’s Gifts contends that the discharge of the WPA without requiring Metro to post a counter-bond is invalid.

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.

On appeal, the CA ruled that the discharge of WPA without requiring petitioners to post a counter-bond is erroneous.

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.

METRO CONTENDS that the WPA was improperly issued because amended complaint failed to allege specific acts or circumstances constitutive of fraud. As such, it may be discharged without the necessity of filing a counter-bond. LARA’S GIFTS CONTENDS that Metro Inc. cannot avail of Section 13, Rule 57 of the Rules of Court to have the attachment set aside because the ground for the issuance of the writ of attachment is also the basis of respondents amended complaint. ISSUE: W the WPA was improperly issued such that it may be discharged without the filing of a counter-bond. NO The WPA was properly issued. The only way it can be dissolved is by filing a counter-bond in accordance with Section 12, Rule 57 of the Rules of Court. The rule is when the WPA is issued upon a ground which is at the same time the applicant’s cause of action, the only other way the writ can be lifted or dissolved is by a counter-bond. It is clear that in Lara’s amended complaint of fraud is not only alleged as a ground for the issuance of the WPA, but it is also the core of Lara’s complaint.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 13. Discharge of attachment on other grounds. — The party whose property has been ordered attached may file a motion with the court in which he action is pending, before or after levy or even after the release of the attached property, for an order to set aside or discharge the attachment on the ground that the same was improperly or irregularly issued or enforced, or that the bond is insufficient. If the attachment is excessive, the discharge shall be limited to the excess. If the motion be made on affidavits on the part of the movant but not otherwise, the attaching party may oppose the motion by counteraffidavits or other evidence in addition to that on which the attachment was made. After due notice and hearing, the court shall order the setting aside or the corresponding discharge of the attachment if it appears that it was improperly or irregularly issued or enforced, or that the bond is insufficient, or that the attachment is excessive, and the defect is not cured forthwith. (13a) Q: What are the grounds to discharge WPA? A: The grounds for the discharge of WPA are:

2. If the motion be made on affidavits on the part of the movant but not otherwise, the attaching party may oppose the motion by counteraffidavits or other evidence in addition to that on which the attachment was made; and 3. After due notice and hearing, the court shall order the setting aside or the corresponding discharge of the attachment

Q: What are the instances when the WPA is said to be improperly of irregularly issued? A: WPA is improperly or irregularly issued when: 1. The complaint states no cause of action (Orbeta vs. Sotto); 2. The allegations in the complaint are deceptively framed (Chuidian vs. Sandiganbayan); 3. The plaintiff’s affidavit and bond are not in accordance with Sec. 3 and Sec. 4; 4. The allegations in the affidavit are false (Jopillo Jr vs. CA).

1. Improper or irregular issuance of the order of attachment; 2. Improper or irregular enforcement of the WPA; 3. Insufficiency of the bond; or 4. Excessive attachment, but the discharge is limited to the excess.

Q: When may the motion to lift based on these grounds be filed? A: It can be filed (a.) before the levy, (b.) after levy, or (c.) even after the property has been released from levy.

Q: How to avail of Sec. 13? A: The party whose property has been ordered attached may: 1. File a motion with the court in which he action is pending for an order to set aside or discharge the attachment; 68

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: How do you establish illegality of issuance of WPA? A: A motion to discharge a writ of attachment on the ground that the same was improperly or irregularly issued may be established by the affidavits submitted by the party whose property has been attached or such other evidence presented at the hearing of the motion. The attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that with which the attachment was made. If the movant establishes that the facts stated in the plaintiffs affidavit or some of them, are shown to be false or untrue, the writ of attachment may be considered as improperly or irregularly issued. The determination of the existence of said grounds to discharge a writ of attachment rests in the sound discretion of the lower court. (Jopillo Jr. vs. CA) Jopillo Jr. vs CA Lim filed a complaint for the collection of a sum of money against Jopillo, Jr., with a prayer for WPA, on the ground that Jopillo is guilty of fraud in contracting the obligation with no intent to pay the same and that he is disposing of the scrap materials subject of their agreement to defraud Lim.

Lim's allegations, Court would have to go into the merits of the case aside from the evidence introduced in support of the motion to discharge the attachment. While the Court is competent whether the affidavits submitted show the existence of a cause of action against the Jopillo Jr, this gives no general right to a trial on such motion of the merits of such cause. Moreover, in this instant petition, since Jopillo Jr. has not yet answered the complaint and the principal action is not ready for trial, Court cannot resolve the issue on the merits of the case. In the complaint, it appears that the genuineness of the alleged receipt of the scrap materials which Jopillo claims to have delivered to Lim to offset his obligation is in issue. Besides, the nature of the agreement and the actual deliveries made of the scrap materials, among others, are factual issues that must be resolved at the trial on the merits and not at the hearing of the motion to discharge the writ of attachment. If Lim did not present any counter-affidavit or evidence to counteract what has been adduced by Jopillo at the hearing of the motion, it must be because Lim believed that it was not necessary.

WPA was granted ex-parte and was issued upon filing of bond by Lim. Sheriff attached a Chevrolet truck owned by Jopillo. Jopillo moved to quash the WPA claiming that its issuance was irregular and improper as the allegations of Lim are false. At the hearing of the motion, he testified that their agreement is a simple loan and that it was already fully paid by way of off-set when he delivered scrap materials to Lim on various occasions. To support the claim, he presented receipts purportedly signed by the secretary of private respondent accepting deliveries of the scrap materials. However, the TC denied motion, but further ruled that the WPA may be lifted if he puts up a counterbond (Section 12 of Rule 57 of the Rules of Court). ISSUE: W the WPA may be lifted pursuant Sec. 13 upon presentation of evidence disclaiming fraud. NO In order to resolve the issue as to whether petitioner's evidence proves the falsity of 69

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: Do the posting of the counter-bond to discharge an attachment constitutes a waiver to any defect in the Writ of Attachment? A: No. 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 counter-bond 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. (Calderon vs IAC) MINDANAO SAVINGS & LOAN ASSOCIATION, INC. & VILLAMOR vs. CA & MERCADO Mercado filed a complaint against MSLA (Formerly DSLA), and its directors for "Rescission of Contract and Damages" with a prayer for WPA. TC granted ex parte the application for, and issued a WPA. MSAL and Villamor filed separate motions to quash WPA, but the same were denied by TC. Hence they offered a counter-bond, which was accepted by the court and lifted the WPA. MSLA and Villamor filed in the CA a petition for certiorari to annul the order of attachment and the denial of their motion to quash the same. The CA dismissed their petition and ruled that the objections against the writ may no longer be invoked once a counterbond is filed for its lifting or dissolution.

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. The reason is simple. The writ had already been quashed by filing a counterbond, hence, another motion to quash it would be pointless. Moreover, 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 ruling G.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." NB: Reconciliation of the cases of Calderon vs IAC and Mindanao Savings vs. CA: When the defendant posts a counter-bond to release the property attached, he can no longer move to discharge the same under Sec. 13 for the purpose of releasing the same property because the purpose of the discharge has already been achieved. The remedies under Sec. 12 and Sec. 13 cannot be availed of at the same time especially when the purpose of the remedy has already been achieved. However, if there are defects in the issuance of the WPA which constitutes a ground for the discharge under Sec. 13, these defects are not deemed waived by the filing of counter-bond. As such, the defect may be used as a ground to claim for damages against the attachment bond posted by the plaintiff.

ISSUE: W MSLA can still file a motion to discharge the attachment based on Sec. 13 after they have filed a counter-bond. NO 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. After the defendant has obtained the discharge of the writ of attachment by filing 70

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Q: When is the ground for the issuance of WPA the same as the cause of action in the main case? A: The preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action in the following instances: 1. Sec. 1(b) - An action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty; or 2. Sec. 1(d) - An action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought. Separate Opinions NARVASA, J.: Dissenting Opinion

Concurring

And

I agree that the decision of the Court of Appeals subject of the appeal in this case should be affirmed. I write this separate opinion simply to stress certain principles relative to the discharge of preliminary attachments so that our own decision or that thereby affirmed be not applied to juridical situations beyond their intendment, which may well result from the statement that "after the defendant has obtained the discharge of the writ of attachment by filing a counter-bond 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." Rule 57 specifies in clear terms the modes by which a preliminary attachment may be discharged at the instance of the party against whom it has been issued. The first is by the submission of a 1. counter-bond or security. The second is by a 2. demonstration of the attachment's improper or irregular issuance. 1.0. The discharge of an attachment on security given is governed by Section 12 of the Rule.

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This mode of dissolution presents no apparent difficulty. It applies when there has already been a seizure of property by the sheriff. All that is entailed is the presentation of a motion to the proper court, seeking approval of a cash or surety bond in an amount equivalent to the value of the property seized and the lifting of the attachment on the basis thereof. The counter-bond stands, according to the cited section, "in place of the property so released." 1.1. But a party need not wait until his property has been seized before seeking its dissolution upon security. In fact he may prevent the seizure of his property under attachment by giving security in an amount sufficient to satisfy the claims against him. The relevant provision of the Rule is Section 5. 2.0. The second way of lifting a preliminary attachment is by proving its irregular or improper issuance, under Section 13 of Rule 57. Like the first, this second mode may be availed of even before any property has been actually attached. It may even be resorted to after the property has already been released from the levy on attachment, as the pertinent provision makes clear. As pointed out in Calderon v. IAC, "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 counter-bond 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 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." 3.0. However, when the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., Sec. 1(b)"an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty," or Sec. 1(d)"an action against a party who has been guilty of fraud in contracting the debt

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 or incurring the obligation upon which the action is brought,” the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs application and affidavits on which the writ was based the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counter-bond. 4.0. The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to discharge the sureties on plaintiffs own attachment bond. The reason is simple. That bond is 'executed to the adverse party, conditioned that the (applicant) 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." Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn.

Q: If the defendant files a motion to discharge WPA under Sec. 13, what should the court do? A: The court must conduct a hearing requiring the plaintiff to substantiate his allegation of fraud to justify the issuance of the WPA. The reason is that the person who alleges fraud has the burden of proving the same. The court cannot dispense with the hearing requirement, even if the plaintiff fails to appear on the date set for the hearing.

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purchase land for Casa Filipina for P1,000,000.00. Casa was able to make payments in favour of Benitez but she was not able to purchase nor convey any real estate in favor of Casa Filipina, and that despite repeated demands for the refund or return of the money, Benitez chose to ignore the same WPA was granted and was subsequently issued. Sheriff served notices of garnishment to PWU and several banks garnishing the deposits, shares of stocks, salaries and other personal property of Benitez. Benitez filed a Motion to Discharge WPA under Section 13 on the ground that on the ground that the same was predicated upon false and untrue allegations, alleging that Casa Filipina agreed to buy 10 has. of Benitez' land for a total consideration of P1,500,000.00; that it is only upon full payment that delivery of land will be made; that Casa Filipina was not able to comply with the obligation despite repeated demands and instead filed for rescission. To support motion for discharge, she attached the affidavit of her technical assistant, who alleged that the transaction is purchase and sale and that Benitez is willing and able to execute a deed of absolute sale in favor of Casa Filipina upon full payment of the balance of P500,000.00. Motion was set for hearing on January 25, 1985 but the Casa Filipina and its counsel failed to appear despite notice. Consequently, the motion was deemed submitted for resolution. TC denied motion to discharge WPA ruling that the issue cannot be determined without adducing evidence at the same time going into the merits of the case which could not be done at this stage of the proceedings, and that the same may not be lifted or discharged without the defendant filing a counter-bond.

Benitez vs. IAC Casa Filipina filed a complaint against Benitez for rescission of contract, with a prayer for WPA on the ground that Benitez converted the entrusted money for her own personal use in violation of her fiduciary relationship with Casa Filipina. It was alleged that Casa Filipina and Benitez entered into a verbal contract whereby Benitez allegedly agreed to undertake to 72

ISSUE: W denial of the Motion to discharge WPA without a hearing is proper. NO Benitez’ Motion to Discharge WPA was filed under Section 13,. The last sentence of said provision indicates that a hearing must be conducted by the judge for the purpose of determining whether or not there really was a defect in the issuance of the attachment.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 No hearing was conducted by the court. Indeed, when the case was called for hearing, Casa Filipina failed to appear and the Benitez’ motion was considered submitted for resolution. It was grave abuse of discretion on the part of Judge Veloso to deny Motion to Discharge WPA, without conducting a hearing and requiring the plaintiff to substantiate its allegation of fraud. ISSUE: Does the rule that "the issue cannot be determined without adducing evidence at the same time going into the merits of the case" not applicable? NO Having issued the WPA ex parte, it was incumbent on the TC, upon proper challenge of its order, to determine whether the same was improvidently issued. A preliminary attachment is a rigorous remedy which exposes the debtor to humiliation and annoyance, such that it should not be abused to cause unnecessary prejudice and, if wrongfully issued on the basis of false allegation, should at once be corrected. WPA may be discharged pursuant to Sec. 13, without the necessity of filing a cash deposit or counter-bond. Sec. 13 grants an aggrieved party relief from baseless and unjustifiable attachments procured, among others, upon false allegations, without having to file any cash deposit or counterbond.

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Davao Light vs CA Davao Light filed a complaint for recovery of money & damages against Queensland. The complaint contained an ex-parte application for PA. On May 3, 1989 Judge Nartatez issued an Order granting the ex parte application and fixing the attachment bond. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment issued. On May 12, 1989, the summons and a copy of the complaint, as well as the WPA and a copy of the attachment bond, were served on Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to them. Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants. Davao Light filed an opposition to the motion to discharge attachment. TC denied the motion to discharge. On appeal, the CA discharged the PA. ISSUE: W the PA should be discharged. NO

Q: May the merits of the main action be tried in a motion to discharge attachment? A: No. When the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., Sec. 1(b) or Sec. 1(d), Rule 57, the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiffs application and affidavits on which the writ was based the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial.

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(A.) When an attachment may not be dissolved by a showing of its irregular or improper issuance: . . . (W)hen the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been guilty of fraud m contracting the debt or incurring the obligation upon which the action is brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based — and consequently that the writ based thereon had been improperly or irregularly issued— the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond. (B.) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond: The dissolution of the preliminary attachment upon security given, or a showing of its irregular or improper issuance, does not of course operate to discharge the sureties on plaintiff's own attachment bond. The reason is simple. That bond is "executed to the adverse party, conditioned that the (applicant) 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" (SEC. 4, Rule 57). Hence, until that determination is made, as to the applicant's entitlement to the attachment, his bond must stand and cannot be withdrawn. It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant, and however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court. However in the case at bar, the summons and a copy of the complaint, as well as the order and writ of attachment and the attachment bond were served on the defendant contemporaneously with the levy. Hence it is valid. The WPA is reinstated.

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Cuartero vs CA Cuartero filed a complaint against Evangelista for sum of money with damages, with a prayer for issuance of PA. On Aug. 24, 1990, the Court issued an order granting ex-parte the issuance of the PA. Sept 19, 1990, the WPA was issued. On Sept. 20, 1990, the writ was implemented and the copy of WPA, summons and complaint were simultaneously served on Evangelista. Sps Evangelista filed motion to discharge WPA for having been irregularly and improperly issued, but the TC denied the motion for lack of merit. Sps Evangelista filed a special civil action for certiorari with CA questioning the orders of TC. CA granted the petition for certiorari. The decision is grounded on its finding that the TC did not acquire any jurisdiction over the person of the defendants. Sps Evangelista further claims that no proper ground also existed for the issuance of the writ of preliminary attachment. They stress that the fraud in contracting the debt or incurring the obligation upon which the action is brought which comprises a ground for attachment must have already been intended at the inception of the contract. According to them, there was no intent to defraud the petitioner when the postdated checks were issued inasmuch as the latter was aware that the same were not yet funded and that they were issued only for purposes of creating an evidence to prove a pre-existing obligation. ISSUE: W the ground for the discharge of the WPA claimed by Sps. Evangelista may be heard in the motion to discharge. NO 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). 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

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 showing that there was an abuse of discretion on the part of the lower court in denying the motion. 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,) In the present case, one of the allegations in petitioner's complaint 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. The issue of fraud, then, is clearly within the competence of the lower court in the main action.

The defect that the bond filed by the attaching creditor was not approved, can no longer be raised by the defendant or the sureties on appeal based on the doctrine of estoppel. Any objection to the bond or irregularity of the issuance of the WPA must be alleged in the proper time allowed by law, otherwise lack of objection shall be considered as a waiver. Uy Kimpang vs. Javier Uy Kimpang filed a collection suit with prayer for WPA on the ground that the defendants were disposing or about to dispose of their properties with intent to defraud their creditors and the plaintiff. The justice of the peace of the capital of Antique, acting in the place of the Judge of the CFI of Antique, ruled favourably on Uy Kimpang’s motion and ordered the clerk of court to issue WPA against the properties of defendants upon the execution by the plaintiff of a bond in the sum of P9,500. After the plaintiff had executed the bond, the clerk issued WPA in question, notwithstanding the fact that the bond was not yet approved. The sheriff attached the belonging to the defendants.

properties

On the same day of the levy, the defendants executed a counter-bond in the sum of 75

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P9,500 with a view to dissolving the attachment levied upon their properties. Said counter-bond, which was approved on the same date by the justice of the peace who issued the order of attachment, was signed by all the defendants and their sureties Autajay and Magbanua who bound themselves jointly and severally. Autajay prayed that he be permitted to withdraw from his obligation as surety of the defendants, and eventually, this was granted by the TC subject to the condition that the defendants must submit to the court for approval another obligation (bond) in substitution for the one to be rendered ineffective by the withdrawal of the surety Autajay. However, the defendants did not execute the new obligation required. It was later established that the Court issued a judgment in favour of Uy Kimpang and the judgment was partially executed. Uy Kimpang & Co moved again for the execution of the judgment, but this time against the properties of the two sureties, which was denied.

ISSUE: W justice of the peace of the capital of Antique could issue the writ of attachment even if the amount sued for was in excess of that provided by law in the cases in which justice of the peace of the provincial capitals may order an attachment. YES The justice of the peace of the capital acting "in the absence of the Judge of First Instance" has the power to issue an order of attachment in spite of the fact that the amount litigated is in excess of that fixed by law for his ordinary jurisdiction. (Wise & Co. v. Larion, 45 Phil., 314.) Failure of defendants to prove that CFI judge was having a session buttress the presumption that he is absent on that day.

ISSUE: W the WPA was illegal because it was issued by the clerk and not by the judge, and that the order authorizing the clerk to issue the same was likewise illegal because it conferred powers which under the law could not be delegated. NO Only the justices, judges of First Instance, and justices of the peace or municipal

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 judges may issue an order of attachment when prayed for, provided the legal requisites are present. In the case at bar all the requirements of the law were complied with. Inasmuch as the order for which WPA was issued, was entered by a competent judge, it cannot be alleged that said writ was a mere capricious act of the clerk. The writ was issued in strict compliance with a perfectly valid order given to him. The law does not provide or state that the writs of attachment must be issued by the very justice or judge who is to authorize it; it simply determines the judicial authority who shall have the power to grant an attachment.

ISSUE: W the properties of the defendants were validly attached, even if WPA was not signed by the judge. YES Even supposing that the writ in dispute is defective because it was not signed by the judge who authorized its issuance, it is now too late to raise the question after the same was accepted and believed to be valid not only by the defendants but by their sureties. It is noteworthy that in their counter-bond they made it understood that they were aware of the issuance of a WPA against the defendants; that the properties of the latter had been attached by the sheriff; that all wanted or at least prayed that said attachment be discharged; and that they offered to execute, as in fact they immediately did execute, the counter-bond required. The general rule is that "irregularities and defects in attachment or garnishment proceedings which render the attachment merely voidable and not void, are deemed to be waived unless promptly taken advantage of by appropriate mode of raising objection thereto." In the case of Hammond v. Starr, it was held that "irregularities in affidavit and undertaking or in proceedings to procure attachment, if waived in attachment suit, cannot be taken advantage of by sureties in collateral proceedings on undertaking given to secure release of attachment." The execution of a bond under and in accordance with these statutes estops the 76

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defendant from controverting the attachment, and renders the obligors in the bond absolutely liable for the amount of any judgment the plaintiff recovers in the action, without reference to the question whether the attachment was rightfully or wrongfully sued out." The obligors in the bond are precluded and estopped from traversing the truth of the allegations of the affidavit, or setting up that the defendant in the attachment was not the owner of the property levied on. It must be remembered that the defendants and the sureties- appellees not only failed to object to the procedure followed by the clerk but executed the counter-bond required by law for the discharge of the attachment, and that Autajay and Magbanua were the ones who signed the counter-bond as sureties and submitted the same to the justice of the peace for approval. It must also be remembered that in all the motions which they subsequently filed in these proceedings, the said sureties confined themselves to the request that they be permitted to withdraw from their obligation for the reason that it was against their interest to continue being sureties of the defendants. The rule is that “all objections to the writ will be waived by moving to set aside the attachment on other grounds and failing to make the objections before giving bond for the release of the property” because "after issue made and trial begun upon the merits of a case, it is too late for an objection to the petition or attachment for want of verification."

ISSUE: W the attachment was proper even if the attachment bond was not approved by the court. YES The omission referred to by the trial court could be supplied and was not in any wise capital, because the writ signed by the clerk was issued by him in compliance with the order entered on December 24, 1925 by the justice of the peace of the capital who was authorized by law to do so in the absence of the Judge of First Instance of the District. The defendants and the sureties, by executing the counter-bond, had accepted the obligation filed by the plaintiff for the issuance of the WPA. It is now too late and futile to allege that the said obligation is

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 invalid for lack of approval by the judge. They are estopped from doing so by their own acts, inasmuch as their failure to question the said bond at the proper time constitutes a waiver of their right. One who has any objection to the sufficiency or validity of a bond in attachment proceedings, should record the same before executing the counter-bond required for the discharge of the attachment; otherwise, it will be understood that he does not question, or that he renounces his right to question, the sufficiency or validity of the said bond. ISSUE: W the fact that it does not appear on court records that the properties were released after filing the counter-bond excuse the sureties from complying with the obligation. NO It must be assumed that the court discharged it by virtue of the said counterbond; otherwise, the reason for approving it cannot be explained, and said approval would have no finality. Where the goods were in fact released as a consequence of the bond being given, and the undertaking for the release of the attached property recited that it was given pursuant to an order of the court requiring it to be given, and the officer accepted the bond and surrendered the property, it must be presumed that an order discharging the attachment was made . . . and that the officer regularly performed his duty in releasing the goods. (Rosenthal vs. Perkins)

ISSUE: W Uy Kimpang has the right to enforce the counter-bond. YES

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Filinvest Credit Corp vs. Relova Filinvest filed an action for collection of sum of money against Rallye and Salazar, and prayed for issuance of WPA on the ground stated in Sec 1(d). Salazar executed a Promissory Note and a deed of Chattel Mortgage over a motor vehicle in favour of Rallye. Rallye assigned all its rights, title and interest in the note and mortgage to Filinvest. Filinvest claims that the defendants intentionally, fraudulently and with malice concealed from it the fact that there was no vehicle delivered under the documents negotiated and assigned to it, otherwise, it would not have accepted the negotiation and assignment of the rights and interest covered by the promissory note and chattel mortgage. TC granted & issued WPA. More than a year later, Salazar moved to quash the WPA. Filinvest filed an Opposition but in the hearing, counsel for the plaintiff manifested that he was not going to present evidence in support of the allegation of fraud. He maintained that it should be the defendant who should prove the truth of his allegation in the motion to dissolve the said writ. TC discharged the WPA ruling that when the incident was called for hearing, the Court announced that, as a matter of procedure, when a motion to quash a writ of preliminary attachment is filed, it is incumbent upon the plaintiff to prove the truth of the allegations which were the basis for the issuance of said writ.

The sureties are not released from the obligation inasmuch as when the defendants were required to deliver to the sheriff the properties released from the attachment, they could not do so, as at least three of said properties were sold after their release, and the appellees failed to prove that the defendants had other properties susceptible of attachment and execution.

Filinvest filed a Motion for Reconsideration and was subsequently allowed to adduce evidence to prove that Salazar committed fraud. Both parties presented evidence. However, the TC still discharged the WPA ruling that there is no evidence that Salazar connived with Rally-e to defraud Filinvest.

ISSUE: W Aujutay is released from his obligation in the counter-bond by virtue of his withdrawal. NO

Section 13 grants an aggrieved party relief from baseless and unjustifiable attachments procured upon false allegations, without having to file any cash deposit or counterbond.

He was never so released in view of the failure of the defendants to execute the new obligation required by the order. 77

ISSUE: At this hearing, on whom does the burden of proof lie?

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 In the instant case the order of attachment was granted upon the allegation of petitioner that the defendants had committed "fraud in contracting the debt or incurring the obligation upon which the action is brought," (Section 1(d)) The last sentence of the said provision, however, indicates that a hearing must be conducted by the judge for the purpose of determining whether or not there reality was a defect in the issuance of the attachment. Under the circumstances of the present case, it should be the plaintiff (attaching creditor), who should prove his allegation of fraud. This pronouncement finds support in the first sentence of Section 1, Rule 131, which states that: "Each party must prove his own affirmative allegations." The last part of the same provision also provides that: "The burden of proof lies on the party who would be defeated if no evidence were given on either side." It must be borne in mind that in this jurisdiction, fraud is never presumed. Indeed, private transactions are presumed to have been fair and regular. Likewise, written contracts such as the documents executed by the parties in the instant case, are presumed to have been entered into for a sufficient consideration. The affidavit supporting the petition for the issuance of the preliminary attachment may have been sufficient to justify the issuance of the preliminary writ, but it cannot be considered as proof of the allegations contained in the affidavit. The reason is obvious. The allegations are mere conclusions of law, not statement of facts. No acts of the defendants are ever mentioned in the affidavit to show or prove the supposed concealment to defraud creditors. Said allegations are affirmative allegations, which plaintiffs had the obligation to prove. (Villongco, et al., vs. Hon. Panlilio, et al.) ISSUE: W the attachment was properly discharged. NO Since it was claimed that Rally-e did not deliver the motor vehicle, it follows that the delivery receipt signed by Salazar were fictitious. It also follows that PN for the undelivered vehicle was without consideration and therefore fake; the Chattel Mortgage over the non-existent vehicle was likewise a fraud; the registration of the vehicle in the name of Salazar was a falsity and the assignment of the promissory 78

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note by RALLYE with the conforme of respondent Salazar in favor of petitioner over the undelivered motor vehicle was fraudulent and a falsification. We rule that the failure of respondent Salazar to disclose the material fact of nondelivery of the motor vehicle, there being a duty on his part to reveal them, constitutes fraud.

Miranda vs. CA and Rayos Miranda filed a complaint for damages with WPA. Miranda alleged that Rayos sold to him a parcel of land under a deed of sale with assumption of mortgage. Miranda initially paid Rayos Php150,000 and subsequently paid the mortgagee bank. However, the last instalment was refused by the bank informing him that Rayos already made the final payment and title was already delivered to him. On the basis of these allegations, TC issued the WPA. Rayos then filed a motion to discharge the attachment, claiming there was no proof that he had committed fraud in contracting the debt or incurring the obligation on which the complaint was based. The writ was later discharged on the finding that Rayos could not be faulted with fraud. It turns out that the Assumption of Mortgage was to be approved by the bank and that the bank did not approve of such. Such fact was conveyed to Miranda by Rayos and such was also stated in the documents signed by Miranda. ISSUE: W the discharge is proper. YES If at all — and on this we do not rule categorically as the matter is yet to be litigated in the court a quo — the fraud might have been committed by Rayos after the conclusion of the contract. However, such fraud is not covered by the aforesaid rule, let alone the fact that it has yet to be established. Rayos cannot be said to have deluded Miranda into entering into the contract by taking advantage of his position as a lawyer

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 and withholding necessary information from Miranda. The evidence shows that he was in fact informed of the need for the approval of the assumption of mortgage and actually sought to secure such approval although unsuccessfully. This shows that no fraud was imposed on him by Rayos when they entered into the Deed of Sale with Assumption of Mortgage, which also means that there was really no ground for the issuance of the writ of attachment. As the writ of attachment was improperly granted, it was only fitting that it be discharged by the trial court in rectification of its initial error. Hence, there was no need at all for the private respondent to post a counterbond. Finally, we also agree with the respondent court that the order lifting the attachment being merely interlocutory, it should not have been questioned on certiorari. This extraordinary remedy is available only when there is a clear showing of a grave abuse of discretion amounting to lack of jurisdiction, and there is no such showing here.

When petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge should have considered it as a motion for the discharge of the attachment ADLAWAN VS TORRES Aboitiz filed a collection suit and a petition for PA on the ground of fraud, i.e, the mortgage executed in favour of PCIB. PA was issued. Petitioners moved for a bill of particulars 8 and to set aside the ex parte writ of attachment. Finding merit in the motion to set aside the writ, Branch 11 ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge of the property levied upon.

Adlawan filed an omnibus motion for the reconsideration and dissolution of the writ of seizure, the retrieval of the property seized, and the dismissal of the complaint. He also averred that the property seized were in custodia legis by virtue of the writ of attachment issued by Branch 11. His omnibus motion was denied. Subsequently, he filed a motion for reconsideration which was not granted.

ISSUE: W defendant can file a motion for reconsideration to discharge WPA. YES When petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counteraffidavits from the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates. This procedure should be followed because, as the Court has time and again said, attachment is a harsh, extraordinary and summary remedy and the rules governing its issuance must be construed strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]). The judge before whom the application is made exercises full discretion in considering the supporting evidence proffered by the applicant. One overriding consideration is that a writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the termination of the suit.

8

Sec. 1, Rule 12 - Before responding to a pleading, a party may move for a definite statement or for a bill of particulars of any matter which is not averted with sufficient definiteness or particularity to enable him properly to prepare his responsive pleading. Bill of particulars is a more specific allegation which should specify the alleged defects of the complaint and the details desired to allow the accused to prepare for his defense.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Peroxide Philippines Corporation vs CA BPI sued Peroxide, et. al. for the collection of an indebtedness of Peroxide wherein Eastman and the Mapuas bound themselves to be solidarily liable. The TC issued WPA upon filing of attachment bond, and the sheriff accordingly attached the petitioners’ properties. Eastman and the Mapuas moved to lift the attachment, which motion was set for hearing. BPI opposed and asked for a hearing. However, motion for a hearing of BPI was denied, and lifted the WPA as prayed for by Eastman and the Mapuas. BPI filed a motion for reconsideration. BPI asserts that the discharge is illegal and void because the order lifting the same is violative of Section 13, Rule 57 of the Rules of Court which requires, among others, a prior hearing before the judge may order the discharge of the attachment upon proof adduced therein of the impropriety or irregularity in the issuance of the writ and the defect is not cured forthwith. ISSUE: What is the nature of the hearing required in Sec. 13? It is true that petitioner's motion to discharge was set for hearing with notice to BPI but it is likewise true that counsel for the latter asked for an opportunity to file a written opposition and for a hearing to which he asked that petitioner Edmund O. Mapua be subpoenaed. Said counsel was allowed to file a written opposition which he seasonably did, but Judge Pineda denied both the requested subpoena and hearing and, instead, granted the discharge of the attachment. These are the bases for BPI's complaint that it was denied due process.

hearing. And, as provided by the aforecited Section 13 of Rule 57, the attaching creditor should be allowed to oppose the application for the discharge of the attachment by counter-affidavit or other evidence, in addition to that on which the attachment was made. Respondent court was, therefore, correct in holding that, on the above-stated premises, the attachment of the properties of Eastman and the Mapuas remained valid from its issuance since the judgment had not been satisfied, nor has the writ been validly discharged either by the filing of a counterbond or for improper or irregular issuance. We likewise affirm the findings and conclusion of respondent court that the order of Judge Acosta, dated May 29, 1986, suspending the writ of attachment was in essence a lifting of said writ which order, having likewise been issued ex parte and without notice and hearing in disregard of Section 13 of Rule 57, could not have resulted in the discharge of the attachment. Said attachment continued unaffected by the so-called order or suspension and could not have been deemed inefficacious until and only by reason of its supposed restoration in the order of December 16, 1987 of Judge Gerona. Under the facts of this case, the ex parte discharge or suspension of the attachment is a disservice to the orderly administration of justice and nullifies the underlying role and purpose of preliminary attachment in preserving the rights of the parties pendente lite as an ancillary remedy. We may mention in this regard that if the petition for the discharge of the writ violates the requirements of the law, the trial judge does not acquire jurisdiction to act thereon.

Now, it is undeniable that when the attachment is challenged for having been illegally or improperly issued, there must be a hearing with the burden of proof to sustain the writ being on the attaching creditor. That hearing embraces not only the right to present evidence but also a reasonable opportunity to know the claims of the opposing parties and meet them. The right to submit arguments implies that opportunity, otherwise the right would be a barren one. It means a fair and open 80

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 14. Proceedings where property claimed by third person. — If the property attached is claimed by any person other than the party against whom attachment had been issued or his agent, and such person makes an affidavit of his title thereto, or right to the possession thereof, stating the grounds of such right or title, and serves such affidavit upon the sheriff while the latter has possession of the attached property, and a copy thereof upon the attaching party, the sheriff shall not be bound to keep the property under attachment, unless the attaching party or his agent, on demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied upon. In case of disagreement as to such value, the same shall be decided by the court issuing the writ of attachment. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.

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3. Serve such affidavit upon the sheriff while the latter has possession of the attached property; and 4. Serve a copy thereof upon the attaching party. This remedy must be availed of while the sheriff has possession of the attached properties. Generally, when a 3rd party claims the ownership of property attached, and the 3 rd person has complied with the process, the sheriff is not bound to keep the property under attachment. However, he may demand that the attaching creditor must make a bond, which will be used to indemnify the third party claimant, and the sheriff will have a reason not to release the properties subject of the attachment. TERCERIA has to be filed within one hundred twenty (120) days from the date of the filing of the bond, otherwise the action is barred. However, the third party claimant may still file a separate action for damages.

The sheriff shall not be liable for damages for the taking or keeping of such property to any such third-party claimant, if such bond shall be filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the same or a separate action.

The purpose of the bond is to indemnify the third-party claimant in a sum not less than the value of the property levied upon, or value decided by the court, in case of disagreement.

When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff is sued for damages as a result of the attachment, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. (14a)

If the claim of the third party turns out to be frivolous, the attaching creditor may vindicate his claim by filing an action for damages against the third party, in the same action or in a separate action.

This is also known as Terceria. The process by which the third person should follow is: 1. Make an affidavit of his title thereto, or right to the possession thereof; 2. Stating the grounds of such right or title,

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When the bond has been filed, the sheriff will not release the property, and the sheriff cannot be held liable for damages for the keeping of the property.

UY vs. CA Uy, Jr. filed a complaint against Sy Yuk Tat for sum of money, damages, with preliminary attachment, which was granted and issued. Upon levy, the sheriff seized personal properties.

several

However, a third party claim was filed by Ting and Yu Hon asserting ownership over the properties attached

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 The third party claimants filed a motion to dissolve WPA 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 RTC ruled in favor of Uy. Meanwhile, third party claimants filed a complaint for Damages with application WPA against Uy and Sheriff Cabang alleging that they are the owners of the personal properties attached and seized by Cabang. The court issued a Status Quo order. ISSUE: W properties levied and seized by virtue of WPA 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. 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. 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.

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Intervention vs Separate Action MANILA RAMOS

HERALD

PUBLISHING

vs.

Quirino filed a libel suit against editor, managing editor and reporter of the Daily Record, with prayer for WPA. WPA was issued and and the Sheriff levied printing equipment found in the premises of the Daily Record. Manila Herald Publishing Co. Inc. and Printers, Inc., filed with the sheriff separate third-party claims, alleging that they were the owners of the property attached. The sheriff required of Quirino a counter bound 3rd to meet the claims of the 3rd parties. Unsuccessful in their attempt to quash the attachment, the 3rd party claimants commenced a joint suit against the sheriff, Quirino and Alto Surety to enjoin the defendants from proceeding with the attachment and damages. This suit was docketed as civil case No. 12263. TC declared that the suit, in case No. 12263, was "unnecessary, superfluous and illegal" and so dismissed the same. He held that what 3rd party claimants should do was intervene in the libel suit. ISSUE: Should the Manila Herald Publishing Co., Inc., and Printers, Inc., come as intervenors into the case for libel instead of bringing an independent action? What is "proper action"? It is "an ordinary suit in court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong," while "Commencement of Action," says that "civil action may be commenced by filing a complaint with the court." "Action" has acquired a well-define, technical meaning, and it is in this restricted sense that the word "action" is used in the above rule. In employing the word "commencement" the rule clearly indicates an action which originates an entire proceeding and puts in motion the instruments of the court calling for summons, answer, etc, and not any intermediary step taken in the course of the proceeding whether by the parties themselves or by a stranger. It would be strange indeed if the framers of the Rules of Court or the Legislature should have

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 employed the term "proper action" instead of "intervention" or equivalent expression if the intention had been just that. It was all the easier, simpler and the more natural to say intervention if that had been the purpose, since the asserted right of the third-party claimant necessarily grows out of the pending suit, the suit in which the order of attachment was issued. The most liberal view that can be taken in favor of the respondents' position is that intervention as a means of protecting the third-party claimants' right is not exclusive but cumulative and suppletory to the right to bring a new, independent suit. It is significant that there are courts which go so far as to take the view that even where the statute expressly grants the right of intervention is such cases as this, the statute does not extend to owners of property attached, for, under this view, "it is considered that the ownership is not one of the essential questions to be determined in the litigation between plaintiff and defendant;" that "whether the property belongs to defendant or claimant, if determined, is considered as shedding no light upon the question in controversy, namely, that defendant is indebted to plaintiff."

ON MULTIPLICITY OF SUITS There can also be no multiplicity of suits when the parties in the suit where the attachment was levied are different from the parties in the new action, and so are the issues in the two cases entirely different. In the circumstances, separate action might, indeed, be the more convenient of the two competing modes of redress, in that intervention is more likely to inject confusion into the issues between the parties in the case for debt or damages with which the third-party claimant has nothing to do and thereby retard instead of facilitate the prompt dispatch of the controversy which is underlying objective of the rules of pleading and practice. That is why intervention is subject to the court's discretion.

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The action for terceria and a separate action are cumulative remedies which may be availed of by the third party claimant. TRADERS ROYAL vs. IAC Traders Royal Bank instituted a suit against the Remco. Remco’s properties were attached. A third party claim was filed with the Sheriff by La Tondeña, Inc. claiming ownership over said attached property. La Tondeña, Inc. filed a complaint-inintervention claiming that it is the owner of the properties attached. RTC denied intervene.

La

Tondeña's motion to

La Tondeña Inc. instituted an action claiming ownership over the properties attached with prayer for WP Injunction. RTC declared La Tondeña Inc. to be the owner of the disputed alcohol, and granting the latter's application for injunctive relief. ISSUE: W the filing of a separate action is precluded for the reason that the 3rd party already availed of the motion for terceria. NO Sec. 14 explicitly sets forth the remedy that may be availed of by a person who claims to be the owner of property levied upon by attachment, viz: to lodge a third- party claim with the sheriff, and if the attaching creditor posts an indemnity bond in favor of the sheriff, to file a separate and independent action to vindicate his claim. And this precisely was the remedy resorted to by private respondent La Tondeña when it filed the vindicatory action before the Bulacan Court. Generally, the rule that no court has the power to interfere by injunction with the judgments or decrees of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief sought by injunction, is applied in cases where no third-party claimant is involved, in order to prevent one court from nullifying the judgment or process of another court of the same rank or category, a power which devolves upon the proper appellate court . 2The purpose of the rule is to avoid conflict of power between different courts of coordinate jurisdiction and to bring about a

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 harmonious and smooth functioning of their proceedings. Further, intervention as a means of protecting the third-party claimant's right in an attachment proceeding is not exclusive but cumulative and suppletory to the right to bring an independent suit. The denial or dismissal of a third-party claim to property levied upon cannot operate to bar a subsequent independent action by the claimant to establish his right to the property even if he failed to appeal from the order denying his original third-party claim.

The petitioner-wife had the right to file the said motion, although she was not a party in Civil Case. CHING vs CA Ching, assisted by her husband Alfredo, filed a Motion to Set Aside the levy on attachment. She alleged 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. She attached therewith a copy of her marriage contract with Alfredo Ching. TC lifted the WPA on the shares of stocks and ordering the sheriff to return the said stocks to the petitioners. ISSUE: W 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. YES The petitioner-wife had the right to file the said motion, although she was not a party in Civil Case No. 142729.

the execution may be invoked by the aggrieved third person in the same case. Upon application of the third person, the court shall order a summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to the plaintiff. If so, the court may then order the sheriff to release the property from the erroneous levy and to return the same to the third person. In resolving the motion of the third party, the court does not and cannot pass upon the question of the title to the property with any character of finality. It can treat the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If the claimant’s proof does not persuade the court of the validity of the title, or right of possession thereto, the claim will be denied by the court. The aggrieved third party may also avail himself of the remedy of "terceria" by executing an affidavit of his title or right of possession over the property levied on attachment and serving the same to the office making the levy and the adverse party. Such party may also file an action to nullify the levy with damages resulting from the unlawful levy and seizure, which should be a totally separate and distinct action from the former case. The 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. 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.

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 84

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 RURAL BANK OF STA. BARBARA vs. MANILA MISSION RBSB contends that the Motion to Release Property from Attachment filed by respondent before the RTC, in Civil Case No. D-10583, is not the proper remedy under Section 14, Rule 57 of the Rules of Court. Petitioner argues that the remedy of a third person claiming to be the owner of an attached property are limited to the following: (1) filing with the Sheriff a third-party claim, in the form of an affidavit, per the first paragraph of Section 14; (2) intervening in the main action, with prior leave of court, per the second paragraph of Section 14, which allows a third person to vindicate his/her claim to the attached property in the same x x x action; and (3) filing a separate and independent action, per the second paragraph of Section 14, which allows a third person to vindicate his/her claim to the attached property in a separate action. Manila Mission contends that it tried to pursue the first remedy, i.e., filing a thirdparty claim with the Sheriff. Respondent did file an Affidavit of Title and Ownership with the Sheriff, but said officer advised respondent to file a motion directly with the RTC in the main case. Respondent heeded the Sheriffs advice by filing with the RTC a Motion to Release Property from Attachment. The Court of Appeals recognized and allowed said Motion, construing the same as an invocation by respondent of the power of control and supervision of the RTC over its officers, which includes the Sheriff. ISSUE: W the action is proper. YES The filing by respondent of the Motion to Release Property from Attachment was made on the advice of the Sheriff upon whom respondent served its Affidavit of Title and Ownership. Respondent should not be faulted for merely heeding the Sheriffs advice. Apparently, the Sheriff, instead of acting upon the third-party claim of respondent on his own, would rather have some direction from the RTC. Indeed, the Sheriff is an officer of the RTC and may be directed by the said court to allow the thirdparty claim of respondent. Therefore, the filing of the Motion in question can be 85

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deemed as a mere continuation of the thirdparty claim of respondent, in the form of its Affidavit of Title and Ownership, served upon the Sheriff, in accord with the first paragraph of Section 14, Rule 57 of the Rules of Court. Alternatively, we may also consider the Motion to Release Property from Attachment, filed by respondent before the RTC, as a Motion for Intervention in Civil Case No. D-10583, pursuant to the second paragraph of Section 14, Rule 56, in relation to Rule 19 of the Rules of Court. Respondent, to vindicate its claim to the subject property, may intervene in the same case, i.e., Civil Case No. D-10583, instituted by petitioner against the spouses Soliven, in which the said property was attached. Respondent has the personality to intervene, as it is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. The RTC, in acting upon and granting the Motion to Release Property from Attachment in its Order dated 9 October 1995, is deemed to have allowed respondent to intervene in Civil Case No. D-10583. Moreover, it may do petitioner well to remember that rules of procedure are merely tools designed to facilitate the attainment of justice. They were conceived and promulgated to effectively aid the court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial discretion. In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat to substantive rights, and not the other way around. Thus, if the application of the Rules would tend to frustrate rather than promote justice, it is always within the power of the Court to suspend the rules, or except a particular case from its operation. Hence, even if the Motion to Release Property from Attachment does not strictly comply with Section 14, Rule 56 of the Rules of Court, the RTC may still allow and act upon said Motion to render substantive justice.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 15. Satisfaction of judgment out of property attached, return of sheriff. — If judgment be recovered by the attaching party and execution issue thereon, the sheriff may cause the judgment to be satisfied out of the property attached, if it be sufficient for that purpose in the following manner: (a) By paying to the judgment obligee the proceeds of all sales of perishable or other property sold in pursuance of the order of the court, or so much as shall be necessary to satisfy the judgment; (b) If any balance remains due, by selling so much of the property, real or personal, as may be necessary to satisfy the balance, if enough for that purpose remain in the sheriff's hands, or in those the clerk of the court; (c) By collecting from all persons having in their possession credits belonging to the judgment obligor, or owing debts to the latter at the time of the attachment of such credits or debts, the amount of such credits and debts as determined by the court in the action, and stated in the judgment, and paying the proceeds of such collection over to the judgment obligee. The sheriff shall forthwith make a return in writing to the court of his proceedings under this section and furnish the parties with copies thereof. (15a) A judgment is satisfied by: 1. Payment of the proceeds of sale of perishable items; 2. Sale of properties, if there is a balance; 3. Collection of property from garnishee; and 4. Sheriff’s return.

Sheriff’s return must be filed within 10 days from receipt of the writ or order.

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assigned to them within (10) days from receipt of said process or writ. Said report shall form part of the records. Respondent could not evade the positive duty of serving the attaching creditor’s affidavit, bond, and the order of attachment on complainant’s representative (Camiwet) by now alleging that it was the fault of complainant and her representative in refusing to sign the receipt that he allegedly issued. The records of the investigation reveal otherwise—that complainant could not have signed the acknowledgment receipt because she was not present when the vehicle was attached. Thus, the return he executed more than two (2) months after the enforcement of the alias writ was more of an afterthought rather than the fulfillment of a positive duty, because by then he had been ordered by the clerk of court to explain his proceedings under the alias writ of attachment.

Tayabas Land v. Sharruf ISSUE: W the public auction/sale of the judgment debt in favor of Sharruf to Farre is the proper action. NO The proper proceeding is known as the process of garnishment. The process of garnishment consists of a citation issued from the court having jurisdiction of the principal litigations, notifying the garnishee that the property and credits of the judgment debtor have been levied upon or attached in the hands of such garnishee, and enjoining him not to deliver, transfer, or otherwise dispose of any effects or credits belonging to that person, and requiring him furthermore to make a statement to the court of the property of the judgment debtor in his hands and of the debts owing by the garnishee to such debtor.

BILAG-RIVERA vs. FLORA Chapter VIII(e)(4) of the Manual for Clerks of Court similarly states that: All sheriffs and deputy sheriffs shall submit a report to the judge concerned on the action taken on all writs and processes 86

It is merely a case of involuntary novation by the substitution of one creditor for another. Upon principle the remedy is a species of attachment or execution for reaching any property pertaining to a judgment debtor which may be found owing to such debtor by a third person.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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The situation involved supposes the existence of at least three persons, to wit, a judgment creditor, a judgment debtor, and the garnishee, or person cited, who in turn is supposed to be indebted to the first debtor (i.e., judgment debtor).

Provincial Sheriff has been withdrawals until it was closed.

The payment of the money by the garnishee to the judgment creditor or into court, brings the proceeding to a close, so far as the garnishee is concerned; but if the garnishee fails to answer, or does not admit the indebtedness, he may be required to attend before the court in which the action is pending to be examined on oath respecting the same. Finally, if the liability of the garnishee is made manifest, the officer of the court may collect the money and pay it to the person entitled.

"Personal property may have been levied upon under attachment and left in the possession of the sheriff or other officer levying the writ to secure the payment of such judgment as may be recovered in the action. Where execution issues, it is the duty of such officer to apply towards its satisf action the property so attached and left in his hands; but he may have embezzled or otherwise misappropriated it, or allowed it to be lost by his negligence. When such is the case, we think the better opinion is, that it must, as between the plaintiff and defendant, and persons claiming under defendant, be treated as though it had been levied upon under execution as well as under attachment, and therefore as satisfying the judgment to the extent of its value."

The action of the sheriff in exposing to public sale the judgment which had been procured by Sharruf in the action against the Tayabas Land Company, et al., was wholly unauthorized, and said sale must be considered void. The proper step would have been for the court to require the Tayabas Land Company, after the judgment against it had become final, to pay into court, in the cause wherein Salvador Farre was plaintiff, a sufficient amount of money to satisfy Farre's claim against Sharruf; and if the judgment against the Tayabas Land Company had been permitted to go to the stage of execution, the proceeds in the hands of the sheriff would have been applied, under the direction of the court, to the payment of Farre's claim before any part would have been payable to Sharruf.

In cases where the property has been attached, but the amount was misappropriated by the sheriff, and there has been a final judgment, can the judgment debtor be made to pay again? In PNB vs Vasquez, SC ruled that the debtor can no longer be held liable. However, in PAL vs CA, the SC ruled that the debtor is still liable based on its facts.

ISSUE: W the defendant may be held liable as to the misappropriated amount of the sheriff. NO

It should be observed that affirmative acts of the plaintiff Bank have resulted in the attachment and subsequent sale of the property of the defendant. It seems fair that plaintiff having put defendant's property into the hands of the sheriff, the loss should fall on him and not on defendant. When a sheriff takes property or goods in execution or by attachment, he becomes the bailee for the benefit of all parties interested, and certainly for the party who set him in motion. After obtaining the judgment, plaintiff at once was entitled to have the proceeds of the sale applied to the satisfaction of his judgment and it was the duty of the sheriff to pay the proceeds over. The money collected or paid the sheriff on the sale of the goods or property may be regarded just like money in the hands of a sheriff collected on execution. If the sheriff collects money from a judgment debtor, and then fails to pay it over, the debtor cannot be compelled to pay it again.

PNB vs VASQUEZ (1941) PNB prayed for and obtained an order of PA, by virtue of which 500 piculs of sugar belonging to Vazquez was levied upon by the sheriff and sold at public auction, the proceeds amounting to P5,250.13 was deposited with the PNB. However, the 87

making

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Payment must be in legal tender, unless payment through checks were expressly agreed. PAL vs CA (1990) PAL filed an urgent motion to quash the alias writ of execution stating that no return of the writ had as yet been made by the sheriff and that the judgment debt had already been fully satisfied by PAL as evidenced by the cash vouchers signed and receipted by the server of the writ of execution, Sheriff Reyes. Respondent del Rosario served a notice of garnishment on the depository bank of PAL, FEBTC, through its manager and garnished PAL's deposit in the said bank in the total amount of P64,408.00 as of May 16, 1978. ISSUE: W PAL can still be held liable despite garnishment. YES The need for such a return as a condition precedent for the issuance of an alias writ was justifiably dispensed with by the court below and its action in this regard meets with our concurrence. A contrary view will produce an abhorent situation whereby the mischief of an erring officer of the court could be utilized to impede indefinitely the undisputed and awarded rights which a prevailing party rightfully deserves to obtain and with dispatch. The final judgment in this case should not indeed be permitted to become illusory or incapable of execution for an indefinite and over extended period, as had already transpired. Under the peculiar circumstances of this case, the payment to the absconding sheriff by check in his name did not operate as a satisfaction of the judgment debt. In general, a payment, in order to be effective to discharge an obligation, must be made to the proper person. Article 1240 of the Civil Code provides that “payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it.” The theory is where payment is made to a person authorized and recognized by the creditor, the payment to such a person so authorized is deemed payment to the creditor. Under ordinary circumstances, payment by the judgment debtor in the case

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at bar, to the sheriff should be valid payment to extinguish the judgment debt. There are circumstances in this case, however, which compel a different conclusion. The payment made by the petitioner to the absconding sheriff was not in cash or legal tender but in checks. The checks were not payable to Amelia Tan or Able Printing Press but to the absconding sheriff. Consequently, unless authorized to do so by law or by consent of the obligee a public officer has no authority to accept anything other than money in payment of an obligation under a judgment being executed. Strictly speaking, the acceptance by the sheriff of the petitioner's checks, in the case at bar, does not, per se, operate as a discharge of the judgment debt. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment.

Section 16. Balance due collected upon an execution; excess delivered to judgment obligor. — If after realizing upon all the property attached, including the proceeds of any debts or credits collected, and applying the proceeds to the satisfaction of the judgment less the expenses of proceedings upon the judgment any balance shall remain due, the sheriff must proceed to collect such balance as upon ordinary execution. Whenever the judgment shall have been paid, the sheriff, upon reasonable demand, must return to the judgment obligor the attached property remaining in his hands, and any proceeds of the sale of the property attached not applied to the judgment. (16a) If the attached and garnished properties are insufficient, the sheriff must proceed to collect such balance as upon ordinary execution. If the attached and garnished properties are more than the judgment to be satisfied, the sheriff, upon reasonable demand, must return to the judgment obligor the attached or garnished properties and the excess of the proceeds of the public sale remaining in his hands.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57

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Section 17. Recovery upon the counterbond. — When the judgment has become executory, the surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon demand the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing in the same action. (17a)

of Counter-Bond was already a demand upon Acropolis, as surety, for the payment of the amount due, pursuant to the terms of the bond.

To recover upon the counter-bond, the following requisites must be present:

Prior to the filing of the ex parte motion for a writ of execution, the respondents filed a motion for recovery on the surety bonds where the petitioner was duly notified and the said motion was heard. Moreover, the petitioner filed a motion for reconsideration of the order rendering judgment against the petitioner on its counterbonds.

1. The creditor demands upon the surety for satisfaction of the judgment 2. The surety be given notice and a summary hearing in the same action as to his liability for judgment under the counterbond.

How is demand made? UPPC vs Acropolis Central Guaranty Corp. UPPC argues that it complied with the requirement of demanding payment from Acropolis by notifying it, in writing and by personal service, of the hearing held on UPPC’s Motion to Order Respondent-Surety to Pay the Bond. Moreover, it points out that the terms of the counter-attachment bond are clear in that Acropolis, as surety, shall jointly and solidarily bind itself with Unibox and Ortega to secure the payment of any judgment that UPPC may recover in the action.

When is there compliance with the notice and hearing requirement? The Imperial Insurance, Inc. vs. De los Angeles

The respondent judge set the hearing of the ex parte motion for writ of execution together with the motion for reconsideration of the order dated November 10, 1966 on December 17, 1966 at 8:30 o’clock in the morning. The petitioner received the notice of the said hearing on December 9, 1966 as evidenced by Registry Return Receipt No. 40122. On January 9, 1967, the respondent Judge issued an order denying the motion for reconsideration dated November 23, 1966 for lack of merit. In an order dated January 19, 1967, the motion for writ of execution was granted by the respondent judge. The surety on the counterbond filed to lift the writ of attachment was duly notified of the hearing of the motion for execution against the counterbond.

ISSUE: W there was a demand. YES Under Sec. 17, a surety on a counter-bond given to secure the payment of a judgment becomes liable for the payment of the amount due upon: (1) demand made upon the surety; and (2) notice and summary hearing on the same action. After a careful scrutiny of the records of the case, the Court is of the view that UPPC indeed complied with these twin requirements. This Court has consistently held that the filing of a complaint constitutes a judicial demand. Accordingly, the filing by UPPC of the Motion to Order Surety to Pay Amount 89

Luzon Steel vs. Sia Defendant having failed to comply compromise, the plaintiff moved obtained a writ of execution defendant and the joint and counterbond.

with the for and against several

The surety, however, moved to quash the writ of execution against it, averring that it was not a party to the compromise, and that the writ was issued without giving the surety notice and hearing.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 ISSUE: W the notice requirement was complied with. YES It is true that under Section 17 recovery from the surety or sureties should be "after notice and summary hearing in the same action". But this requirement has been substantially complied with from the time the surety was allowed to move for the quashal of the writ of execution and for the cancellation of their obligation.

A separate action against the surety on the counter-bond is not necessary. The Imperial Insurance vs. de los Angeles (1982) To recover against the petitioner surety on its counter-bonds it is not necessary to file a separate action. Recovery and execution may be had in the same case, as sanctioned by Sec. 17, Rule 57, of the Revised Rules of Court. The counter-bonds merely stand in place of the properties so released. They are mere replacements of the properties formerly attached, and just as the latter may be levied upon after final judgment in the case in order to realize the amount adjudged so is the liability of the counter sureties ascertainable after the judgment has become final. The judgment having been rendered against the defendant, Felicisimo V. Reyes, the counter-bonds given by him and the surety, The Imperial Insurance, Inc., under Sec. 12, Rule 57 are made liable after execution was returned unsatisfied. Under the said rule, a demand shall be made upon the surety to pay the plaintiff the amount due on the judgment, and if no payment is so made, the amount may be recovered from such surety after notice and hearing in the same action. A separate action against the sureties is not necessary. All the requisites under Sec. 17, Rule 57, being present in this case, namely: (1) the writ of execution must be returned unsatisfied, in whole or in part; (2) the plaintiff must demand the amount due under the judgment from the surety or sureties, and (3) notice and hearing of such demand although in a summary manner, complied with, the liability of the petitioner automatically attaches. 90

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In fact, respondent Judge could have even issued a writ of execution against petitioner on its bond immediately after its failure to satisfy the judgment against the defendant upon demand, since liability on the bond automatically attaches after the writ of execution against the defendant was returned unsatisfied as held in the case of Tijan vs. Sibonghanoy, CA-G.R. No. 23669-R, December 11, 1927.

The surety can even be made liable based on a mere amendment of the decision, without having to file a separate action. Zaragoza vs. Fidelino Zaragoza moved for the amendment of the decision so as to include the surety, Mabini Insurance & Fidelity Co., Inc., as a party solidarily liable with the defendant for the payment of the sums awarded in the judgment. Despite having been duly furnished with copies of the motion and the notice of hearing, neither Fidelino nor the surety company filed any opposition to the motion, nor did either of them appear at the hearing thereof. The Trial Court deemed the motion meritorious and granted it. ISSUE: W the sureties of the counter-bond be made liable under an amended decision. YES The appellant surety's liability attached upon the promulgation of the verdict against Fidelino. All that was necessary to enforce the judgment against it was, an application therefor with the Court, with due notice to the surety, and a proper hearing, i.e., that it be formally notified that it was in truth being made responsible for its co-principal's adjudicated prestation (in this case, the payment of the balance of the purchase price of the automobile which could no longer be found and therefore could not be ordered returned), and an opportunity, at a hearing called for the purpose, to show to the Court why it should not be adjudged so responsible. A separate action was not necessary; it was in fact proscribed. And again, the record shows substantial compliance with these basic requirements, obviously imposed in deference to due process. Appellant surety undoubtedly received copy of Zaragoza's Motion to Amend Decision. That motion made clear its purpose—that the decision "be amended, or an appropriate order be issued, to include (the surety) as a party jointly and severally liable with the defendant to the extent of the sums awarded

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 in the decision to be paid to plaintiff'-as well as the basis thereof-the counter-bond filed by it by the explicit terms of which it bound itself "jointly and severally (with the defendant) .. for the payment of such sum to him (plaintiff) as may be recovered against the defendant and the cost of the action." The motion contained, at the foot thereof, a "notice that on Saturday, March 23, 1968, at 8:30 a.m., or as soon thereafter as the matter may be heard, the .. (plaintiffs counsel would) submit the foregoing motion for the consideration of the Court." And likewise indubitable is the fact that, as the Court a quo has observed, "neither .. Fidelinos counsel nor the surety company filed any opposition to said motion, nor did they appear in the hearing of the motion on March 23, 1968 .. (for which reason) the motion was deemed submitted for resolution." The surety's omission to appear at the hearing despite notice of course constituted a waiver of the right to be heard on the matter. The surety's theory that never having been served with summons, it never came under the Lower Court's jurisdiction, is untenable. The terms of the counter-bond voluntarily filed by it in defendant's behalf leave no doubt of its assent to be bound by the Court's adjudgment of the defendant's liability, i.e., its acceptance of the Court's jurisdiction. For in that counterbond, it implicitly prayed for affirmative relief; the release of the seized car, in consideration of which it explicitly bound itself solidarily with said defendant to answer for the delivery of the car subject of the action "if such delivery is adjudged," i.e., commanded by the Court's judgment, or "for the payment of such sum as may be recovered against the defendant and the costs of the action," the reference to a possible future judgment against the defendant, and necessarily against itself, being certain and unmistakable. The filing of that bond was clearly an act of voluntary submission to the Court's authority, which is one of the modes for the acquisition of jurisdiction over a party.

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with the defendant for the satisfaction of the judgment in this case. Therefore the surety cannot argue that it cannot be made liable for the judgment because of lack of jurisdiction of the court.

Is there a need for prior exhaustion of the judgment debtor’s properties before the surety can be made liable? As a general rule, the rule of excussion or prior exhaustion of properties of the judgment debtor applies, since the nature of the liability of a surety is similar to that in ordinary guaranty. Exceptions: 1. There has been a final and executor judgment ordering the judgment debtor and surety liable; and 2. The surety binds himself solidarily liable. PIONEER INSURANCE AND SURETY VS CAMILON The rule of excussion claimed by petitioner under Section 17 of Rule 17, which petitioner invokes considering it was only the bondsman to secure the lifting of the writ of preliminary attachment, is not applicable in the instant case where there is already a final and executory judgment sentencing the bondsman as joint and solidarily liable, the Court resolved to DISMISS the petition, without prejudice to petitioner recovering from its co-judgment debtor whatever it has to pay under the writ of execution herein questioned.

LUZON STEEL vs SIA (1969) Does the surety become a party to the case?

Caveat: This was decided under the old Rules of Court

YES. The surety of the counterbond becomes automatically a party to the case by accepting or by filing a counterbond and agreed to be made liable to the judgment in exchange for the release of the attached property, the surety has in effect submitted to the jurisdiction of the court and that surety has become a party to the case. Although not specifically mentioned as a defendant but he becomes solidarily liable

Luzon Steel Corporation sued Metal Manufacturing of the Philippines and Jose O. Sia, the former's manager, for breach of contract and damages. It obtained a WPA of the properties of the defendants, but the attachment was lifted upon a P25,000.00 counter-bond executed by Sia, as principal, and the Times Surety, as solidary guarantor.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Defendant having failed to comply, plaintiff moved for and obtained a writ of execution against defendant and the joint and several counterbond. Surety contends that the execution issued against it was invalid because the writ issued against its principal, Jose O. Sia, et al., defendants below, had not been returned unsatisfied. ISSUE: W the writ of execution could be issued against the surety without previous exhaustion of the debtor's properties. YES The surety's contention is untenable. The counter-bond contemplated in the rule is evidently an ordinary guaranty where the sureties assume a subsidiary liability. This is not the case here, because the surety in the present case bound itself "jointly and severally" (in solidum) with the defendant; and it is prescribed in Article 2059, paragraph 2, of the Civil Code of the Philippines that excusion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor". The OLD RULE cannot be construed as requiring that an execution against the debtor be first returned unsatisfied even if the bond were a solidary one; for a procedural rule may not amend the substantive law expressed in the Civil Code, and further would nullify the express stipulation of the parties that the surety's obligation should be solidary with that of the defendant. A second reason against the stand of the surety and of the court below is that even if the surety's undertaking were not solidary with that of the principal debtor, still he may not demand exhaustion of the property of the latter, unless he can point out sufficient leviable property of the debtor within Philippine territory.

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Corporation upon the posting of a supersedeas bond. The latter in turn posted a counter-bond in the sum of P1,400, 000 thru Philippine British Assurance Co., Inc., so the attached properties were released. The attaching creditor succeeded in obtaining a motion for execution pending appeal. The RTC ordered the issuance of the corresponding writ of execution on the counter-bond to lift attachment filed by petitioner. ISSUE: W an order of execution pending appeal of a judgment maybe enforced on the said counter-bond. YES Under Sections 5 and 12, Rule 57 it is provided that the counter-bond is intended to secure the payment of "any judgment" that the attaching creditor may recover in the action. Under Section 17 of same rule it provides that when "the execution be returned unsatisfied in whole or in part" it is only then that "payment of the judgment shall become charged on such counter-bond." It is also stipulated that the counter-bond is to be "applied for the payment of the judgment." Neither the rules nor the provisions of the counter-bond limited its application to a final and executory judgment. Indeed, it is specified that it applies to the payment of any judgment that maybe recovered by plaintiff. Thus, the only logical conclusion is that an execution of any judgment including one pending appeal if returned unsatisfied maybe charged against such a counterbond.

The bondsmen are not liable on the bond when the obligation assumed is premised upon the issuance of a writ of attachment by the court which was not actually issued. Vadil vs. De Venecia

Can the counter-bond be used to secure a payment of a judgment pending appeal? Phil. British Assurance Co vs. IAC (1987) Sycwin Coating & Wires, Inc. filed a complaint for collection of a sum of money against Varian Industrial Corporation. During the pendency of the suit, private respondent succeeded in attaching some of the properties of Varian Industrial 92

Surety contends that they are not liable to the plaintiff in the trial court because their undertaking under the bond was to pay "all the costs which may be awarded to the defendant” rather than to pay the judgment that plaintiff might recover. This is a case where, instead of a bond conditioned the payment to the plaintiff of any judgment which may recover in an action, as the trial court directed, the bond

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 filed provides that the sureties will pay “all the costs which may be awarded to the defendant, and all damages that the defendant may suffer by reason the WPA should it be finally a judged that the same was done without legitimate cause,” thus raising doubt as to whether the petitioners, as sureties, understood the import of the order of the court. ISSUE: W the surety of the counterbond can be held liable to the judgment in favour of the plaintiff. NO We are inclined to resolve the doubt in favor of petitioners. Assuming an obligation without any thought of material gain, except in some instances, all presumptions are indulged in their favor. The rationale of this doctrine is reasonable; an accommodation surety acts without motive of pecuniary gain and, hence, should be protected against unjust pecuniary impoverishment by imposing on the principal duties akin to those of a fiduciary. This cannot be said of compensated corporate surety which is a business association organized for the purpose of assuming classified risks in large numbers, for profit and on an impersonal basis, through the medium of standardized written contractual forms drawn by its own representatives with the primary aim of protecting its own interests.” We hold therefore that petitioners are not liable to Pablo Española Estate, Inc. on their bond.

Can the counter-bond be made liable for damages suffered by reason of the discharge or lifting of the writ? Dizon vs Valdez Judgment was rendered directing defendants Valleson, Inc. and Valdes "to pay jointly and severally to the plaintiff. Valleson, Inc. filed its notice of appeal. Plaintiff petitioned for and TC directed the issuance of WPA against the properties of Valdes and Valleson, Inc.. The Sheriff garnished and attached properties of the defendant. The judgment debtors moved to dissolve the WPA on counterbond subscribed by the Capital Insurance & Surety Co., Inc., hence the writ was dissolved. 93

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Plaintiff filed a motion to "Claim for Damages" on the ground that the dissolution "put out of the reach the properties and assets which may be held to answer for the adjudged claim" and that "it suffered and will suffer damages. “ The surety opposed contending that the surety on any counter-bond shall only become charged and bound to pay plaintiff upon demand, the amount due under the judgment, and that such amount may be recovered from the surety after notice and summary hearing in the same action — only if execution be returned unsatisfied in whole or in part. ISSUE: W the surety can be held liable for the damages suffered by the discharge of the writ. NO By the terms of the counter-bond itself liability thereunder attaches only "in case the plaintiff recovers judgment in the action." Since at the time the claim for damages was registered, the case was still pending appeal, it is quite obvious that the motion for the claim for damages was premature. And the lower court thus correctly ruled out plaintiff's motion. For, Section 17 contemplates of proceedings on execution after judgment. And, it is only thereafter that liability upon the surety's bond may be determined. The key term in Section 17 is the phrase "[i]f the execution be returned unsatisfied in whole or in part." Until such proceeding shall have taken place and unless unsatisfied liability under the judgment still exists, no action upon the counter-bond may be taken against the surety. We do not follow plaintiff when he says that what controls here is Section 20 of Rule 57 (then Rule 59). By its very terms, this obviously refers to the recovery of damages by a party against whom attachment was issued. This is a remedy available to the defendants here, not the plaintiff. It is therefore not to be doubted that, upon the applicable rules, the counter-bond does not answer for damages on account of the lifting of the attachment, but for the payment of the amount due under the judgment that may be recovered by an attaching creditor.

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 18. Disposition of money deposited. — Where the party against whom attachment had been issued has deposited money instead of giving counterbond, it shall be applied under the direction of the court to the satisfaction of any judgment rendered in favor of the attaching party, and after satisfying the judgment the balance shall be refunded to the depositor or his assignee. If the judgment is in favor of the party against whom attachment was issued, the whole sum deposited must be refunded to him or his assignee. (18a)

Section 19. Disposition of attached property where judgment is for party against whom attachment was issued. — If judgment be rendered against the attaching party, all the proceeds of sales and money collected or received by the sheriff, under the order of attachment, and all property attached remaining in any such officer's hands, shall be delivered to the party against whom attachment was issued, and the order of attachment discharged. (19a) If the judgment is in favour of the defendant, whose properties were attached, all that has been attached, garnished, and the proceeds of the sold attached properties, must be returned by the sheriff to the defendant immediately.

Tiu vs Villar

ISSUE: W the properties attached must be returned despite the fact that judgment is not yet final and executor. YES As to Sheriff Villars failure to effect the immediate release of the attached properties despite the RTCs order of release, the Court finds the explanation of the respondent sheriff acceptable enough as not to earn a sanction from the Court. By law, sheriffs are obligated to maintain possession of the seized properties absent any instruction to the contrary. In this case, the writ of preliminary attachment authorizing the trial court to legally hold the attached items was set aside by the RTC Order stating that Sheriff Villar to immediately release the seized items to Spouses Tiu. The instruction of the trial court was clear and simple. Sheriff Villar was to return the seized properties to Spouses Tiu. He should have followed the courts order immediately. He had no discretion to wait for the finality of the courts order of dismissal before discharging the order of attachment. Nevertheless, Sheriff Villar showed no deliberate defiance of, or disobedience to, the courts order of release. Records show that he took the proper step under the circumstances. He filed with the trial court his Sheriffs Report with Urgent Prayer for the Issuance of a Clarificatory Order. The Court perceives nothing amiss in consulting the judge before taking action on a matter of which he is not an expert.

RTC ordered the release of the attached properties in favor of Spouses Tiu: “The writ of preliminary attachment dated March 8, 2010 previously issued by this Court is set aside, and everything seized thereby be immediately returned by the sheriff responsible to the defendants.” The RTC in a subsequent order reiterated its previous order to return the attached items to Spouses Tiu: “Sheriff Virgilio Villar is directed to immediately return to defendants the seized items.” Sheriff Villar submitted his Sheriffs Report with Urgent Prayer for Issuance of Clarificatory Order. He wanted to be clarified on whether or not he should wait for the trial courts order to attain finality before returning the attached personal properties.

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“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 Section 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 party and 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 party not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. (20a)

The bond referred to in Sec. 20 is that filed by the applicant or attaching party, under Secs. 3 & 4, to be paid to the defendant for any damages he may have suffered by reason of the improper, excessive or irregular attachment.

BA FINANCE CORP. vs. CA (1988) An attachment may be said to be wrongful when, for instance, the plaintiff has no cause of action, or that there is no true ground therefore, or that the plaintiff has a sufficient security other than the property attached, which is tantamout to saying that the plaintiff is not entitled to attachment because the requirements of entitling him to the writ are wanting.

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Spouses Yu vs. Ngo Yet Te To merit an award of actual damages arising from a wrongful attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. In particular, if the claim for actual damages covers unrealized profits, the amount of unrealized profits must be established and supported by independent evidence of the mean income of the business undertaking interrupted by the illegal seizure. Requisites in order to recover damages on bond: Malayan Insurance v. Salas Under Section 20, in order to recover damages on a replevin bond or on a bond for preliminary attachment, injunction or receivership, it is necessary: (1) that the defendant-claimant has secured a favorable judgment in the main action, meaning that the plaintiff has no cause of action and was not, therefore, entitled to the provisional remedy of relieving; (2) that the application for damages, showing claimant’s right thereto and the amount thereof, be filed in the same action before trial or before appeal is perfected or before the judgment becomes executory; (3) that due notice be given to the other party and his surety or sureties, notice to the principal not being sufficient and (4) that their should be a proper hearing and the award for damages should be included in the final judgment Q: May a defendant recover damages resulting from illegal attachment even if the judgment is against him? YES Zaragoza v. Fidelino (July 14, 1988)

Although a party be adjudged liable to another, if it be established that the attachment issued at the latter's instance was wrongful and the former had suffered injury thereby, recovery for damages may be had by the party thus prejudiced by the wrongful attachment, even if the judgment be adverse to him. For it is entirely possible for a plaintiff to have a meritorious cause of action against a defendant but have no

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 proper ground for a preliminary attachment. In such a case, if the plaintiff nevertheless applies for and somehow succeeds in obtaining an attachment, but is subsequently declared by final judgment as not entitled thereto, and the defendant shows that he has suffered damages by reason of the attachment, there can be no gainsaying that indemnification is justly due the latter. When to file or apply for damages? 1. Before trial, as a matter of right. In such case, it may be properly set up by way of counterclaim in the answer, or in a supplemental answer if the attachment was made and damages were suffered after the filing of the original answer; 2. After trial, in the discretion of the court: a. Before appeal is perfected; or b. Before judgment becomes executory. 3. During the pendency of the appeal, if the judgment of the appellate court is favourable to the adverse party. Hanil Development Co. v. IAC (1986) As may be gathered from Section 20 of Rule 57, the application for damages against the surely must be filed (with notice to the surety) in the court of the First Instance before the trial or before appeal is perfected or before the judgment becomes executory. If an appeal is taken, the application must be filed in the appellate court but always before the judgment of the court becomes executory so that the award may be included in its judgment. Note that under the second paragraph of Section 20, Rule 57 of the present Rules of Court, the damages suffered during the pendency of an appeal in a case where the writs of attachment, injunction and replevin or an order or receivership were issued should be claimed in the appellate court.

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HEARING Q: May damages be recovered ex-parte? A: No. The rule provides that such damages may be awarded only after a proper hearing. It cannot be issued or granted exparte. Stronghold v. CA (1989) The hearing will be summary and will be limited to such new defenses, not previously set up by the principal, as the surety may allege and offer to prove. The oral proof of damages already adduced by the claimant may be reproduced without the necessity of retaking the testimony, but the surety should be given an opportunity to cross-examine the witness or witnesses if he so desires.

Carlos v. Sandoval Petitioners assert that there was no proper hearing on the application for damages and that the Court of Appeals had wrongfully acted on the application in that it resolved it prior to the rendition of the main judgment. ISSUE: W a full blown hearing in open court is compulsory under Sec. 20. NO. To impose this as a mandatory requirement would ultimately prove too onerous to our judicial system. Perhaps such a demand would be less burdensome on the regional trial courts, which, as a matter of routine, receive testimonial or documentary evidence offered de novo, and to formulate conclusions on the admissibility and credibility of the same. However, a different situation applies if it is the Court of Appeals or the Supreme Court before which the application for damages is filed. Both these courts, which are capacitated to receive and act on such actions, are generally not triers of facts, and do not, in the course of daily routine, conduct hearings. It is partly for such reason that Section 20, Rule 57 authorizes these appellate courts to refer the application for damages to the trial court for hearing and decision. The trial courts are functionally attuned to ascertain and evaluate at the first instance the necessary factual premises that would establish the right to damages. Still, reference of the application for damages to the trial court is discretionary on

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 the part of the appellate courts. The latter, despite their traditional appellate jurisdiction and review function, are still empowered under Section 20 to rule on the application for damages, notwithstanding the factual dimension such question presents. To impose as mandatory on the Court of Appeals or the Supreme Court to hear the application for damages through full-blown hearings in open court is supremely unwise and beyond the demands of Section 20, Rule 57. The effect would be unduly disruptive on the daily workflow of appellate courts such as the Court of Appeals and the Supreme Court, which rarely conduct open court hearings. Neither could the Court see what is so markedly special about an application for damages, fact-oriented as it may be, that would require it to be heard by the appellate courts in open court when no such mandatory rule applies to other judicial matters for resolution that are also factual in nature. If open court hearings are ever resorted to by appellate courts, such result from the exercise of discretion rather than by imposition by statute or procedural rule. Indeed, there is no existing statute, procedural rule, or jurisprudential fiat that makes it mandatory on the Court of Appeals or the Supreme Court to conduct an opencourt hearing on any matter for resolution. There is nothing demonstrably urgent with an application for damages under Section 20, Rule 57 that would necessitate this Court to adopt an unprecedented rule mandating itself or the Court of Appeals to conduct full-blown open court hearings on a particular type of action.

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In the case at bar, the trial court did not make any express ruling that the writ of attachment was maliciously sued out by the plaintiff or any finding of facts or circumstances from which it may be necessarily inferred that the attachment was thus obtained. Attachment defendant is not entitled to moral damages, unless it is alleged and established that the writ was maliciously sued out. In order that moral damages may be recovered in connection with the writ of attachment under consideration, malice is an essential ingredient thereof. SPOUSES GREGORIO and JOSEFA YU vs. NGO YET TE (2007) To merit an award thereof, it must be shown that the wrongful attachment was obtained by the attachment plaintiff with malice or bad faith, such as by appending a false affidavit to his application.

SAME ACTION GENERAL RULE: The claim for damages must be made in the same action, otherwise it is barred. Stronghold v. CA (1989) To avoid multiplicity of suits, all incidents arising from the same controversy must be settled in the same court having jurisdiction of the main action. Thus, the application for damages must be filed in the court which took cognizance of the case, with due notice to the other parties.

General Rule: the liability on the attachment bond is limited to actual damages.

The trial court did not lose its jurdisdiction over the case because the application for judgment on the bond in this case, as well as the motion for immediate execution was filed before the appeal was perfected hence, the award for damages was proper.

Exception: Moral and exemplary damages may be recovered where the attachment was alleged to be maliciously sued out and established to be so.

The fact that one of the parties had filed a notice of appeal does not perfect such appeal. An appeal is perfected upon the lapse of the last day for all parties to appeal.

EXTENT OF DAMAGES Calderon v. IAC (1987)

LAZATIN vs. TWAÑO (1961) Only actual or compensatory damages are recoverable for wrongful but not malicious attachment. 97

It should also be noted that the filing of the application for judgment on the bond by private respondent Orosa was in the nature of a motion for reconsideration under Section l(c), Rule 37 of the Rules of Court,

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 which consequently had the effect of interrupting the period to appeal. This being so, the order holding in abeyance plaintiff 's notice of appeal was not even necessary and was an apparent superfluity.

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of suits. We have earlier ruled that "the explicit provision of Section 20 of Rule 57, Revised Rules of Court that the judgment against the surety should be included in the final judgment is to avoid additional proceedings.

Pioneer Insurance vs. Hontanosas (1977) The claim for damages against a bond in an alleged wrongful attachment can only be prosecuted in the same court where the bond was filed and the attachment issued. Rodriguez sought that judgment be rendered against the surety for such amount of damages as may be proved or established by him, and was granted by the court the opportunity to prove damages against the bond of the surety company. He even cited the very provision of the Revised Rules of Court, Rule 57, Sec. 20 to justify his application, and the cases supporting his application, for otherwise his claim will forever be barred. In effect, at this point in time, defendant Rodriguez waived the lack of jurisdiction on his person, be seeking an affirmative relief from the court, which he cannot now complain before this Court. We agree with the petitioners that the Court of Appeals erred in not dismissing the complaint with respect to the petitioner Pioneer Insurance & Surety Corp., over which respondent-appellee Judge had not acquired jurisdiction pursuant to Sec. 20, Rule 57 of the Revised Rules of the Court. Santos vs. CA (1954) The procedure for recovery of damages on account of the issuance of a writ of attachment, injunction, receivership, and replevin proceedings, as interpreted in the cases adverted to, requires that the claim for damages should be presented in the same action which gave rise to the special proceeding in order that it may be included in the final judgment of the case, and it cannot be the subject of a separate action. The philosophy of the ruling seems to be that the court that had acted on the special proceeding which occasioned the damages has the exclusive jurisdiction to assess them because of its control of the case. This ruling is sound and tends to avoid multiplicity of action. Hanil vs. IAC (1986)

EXCEPTION: 1. The principal action is dismissed for lack of jurisdiction over the subject matter and the court is prevented from rendering any judgment therein which could include the claim for damages (Santos v. CA); and 2. The defendant’s claim for damages exceeds the jurisdiction of the municipal court where the main action is pending, in which case, such claim must be made in a separate action. Santos v. CA (1954) Apart from the circumstance that the PRCI has never claimed that the writ of attachment was wrongfully issued in Civil Case No. 241, it appears that the latter case was dismissed for lack of jurisdiction, and no claim for damages could therefore properly have been presented in said case, because the CFI of Cotabato, thus lacking jurisdiction, was in fact prevented from rendering any final judgment therein which could include such damages. 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. This is a case where the attaching party lost in the trial court but the appellate court decided in his favour. In that case, he may claim damages in the appellate court. He should also notify the sureties of the adverse party.

The application for judgment against the bond seasonably filed by the petitioner in the appellate court would avoid multiplicity 98

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Provisional Remedies | Rule 57 Q: What if the attached property insufficient to answer for the damages?

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A: He may execute other properties of the adverse party not exempt from execution. Q: Is the liability of a party obtaining attachment limited to the bond? No. A: The posting of a bond to secure attachment (or injunction, receivership, or replevin) does not operate to relieve the party obtaining the same from any and all responsibility for the damages the writ may have caused. It merely gives additional protection to the party against whom the writ is directed. It gives the latter a right of recourse either against the applicant or the surety. (Paramount Insurance Corporation v. CA (1999)) In fact, the party against whom the writ was issued may recover in the same action the damages awarded to him from any property of the attaching party not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. However, the liability of the surety is limited to the bond. Zenith Insurance Corporation v. CA (1982) The phrase "all damages" refers to those resulting from the undertaking itself. It does not mean that the surety is answerable for all costs and damages that may be adjudged against its principal over the above what is adjudged against it in the dispositive portion of the Decision, as it would be unreasonable to expand debtor." When a surety executes a bond, it does not guarantee that the plaintiff's cause of action is meritorious, and that it will be responsible for all the costs that may be adjudicated against its principal in case the action fails. The extent of a surety's liability is determined only by the clause of the contract of suretyship. It cannot be extended by implication, beyond the terms of the contract.

one not to be extended by implication, and it will not be inferred that he agreed to do more than that which is fairly expressed in the bond

General Rule: Surety’s liability shall be included in the executory judgment. Exception: Where CA failed to include in its judgment the award for damages or when CA refers it to trial court. Malayan Insurance v. Salas We hold that the trial court has jurisdiction to pass upon Fernando's application for the recovery of damages on the surety's replevin bond. The reason is that Fernando seasonably filed his application for damages in the Court of Appeals. It was not his fault that the damages claimed by him against the surety were not included in the judgment of the Court of Appeals affirming the trial court's award of damages to Fernando payable by the principal in the replevin bond. The peculiar factual situation of this case makes it an exception to the settled rule that the surety's liability for damages should be included in the final judgment to prevent duplicity of suits or proceedings. The application for damages against the surety must be filed (with notice to the surety) in the Court of First Instance before the trial or before appeal is perfected or before the judgment becomes executory. If an appeal is taken, the application must be filed in the appellate court but always before the judgment of that court becomes executory so that the award may be included in its judgment. But it is not always mandatory that the appellate court should include in its judgment the award of damages against the surety. Thus, it was held that where the application for damages against the surety is seasonably made in the appellate court, "the latter must either proceed to hear and decide the application or refer "it" to the trial court and allow it to hear and decide the same"

Liability on the bond is contractual in nature, and is ordinarily restricted to the obligation expressly assumed therein. Liability on an attachment bond is created by, and rests on, its stipulations. The obligor has a right to stand on the very terms of his contract, and his liability will not be extended beyond the fair import of the words used; his liability is 99

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Provisional Remedies | Rule 57 To hold a surety on a counter-bond liable, what is entailed is: 1. the filing of an application therefor with the Court having jurisdiction of the action; 2. the presentation thereof before the judgment becomes executory (or before the trial or before appeal is perfected); 3. the statement in said application of the facts showing the applicant's right to damages and the amount thereof, 4. the giving of due notice of the application to the attaching creditor and his surety or sureties; and 5. the holding of a proper hearing at which the attaching creditor and the sureties may be heard on the application. Hanil v. IAC (1986) Is it always necessary that the appellate court should include in its judgment the award of damages against the surety? Held: No. If an appeal is taken, the application must be filed in the appellate court but always before the judgment of that court becomes executory so that the award may be included in its judgment. But it is not always mandatory that the appellate court should include in its judgment the award of damages against the surety. Thus, it was held that where the application for damages against the surety is seasonably made in the appellate court, 'the latter must either proceed to hear and decide the application or refer 'it' to the trial court and allow it to hear and decide the same'

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(2) That if the surety is given such due notice, he is bound by the judgment that may be entered against the principal, and writ of execution may issue against said Surety to enforce the obligation of the bond; and (3) That if, as in this case, no notice is given to the surety of the application for damages, the judgment that may be entered against the principal cannot be executed against the surety without giving the latter an opportunity to be heard as to the reality or reasonableness of the alleged damages. 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 for 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. The oral proof of damages already adduced by tie claimant may be reproduced without the necessity of retaking the testimony, but the surety should be given an opportunity to cross-examine the witness or witnesses it so desires.

Q: Should the surety be notified of the application for damages? A: YES. Under Sec. 20 of Rule 57 (applicable to Rules 58-60), if no application is made before the entry of the judgment, the surety of the bond is relieved from liability therefor. (Malayan Insurance v. Salas) Visayan Surety & Insurance Corp. v. Pascual (1950)

What are the principles with regard to the procedure in the claim for damages against the surety? (1) That damages resulting from preliminary attachment, preliminary injunction, the appointment of a receiver, or the seizure of personal property, the payment of which is secured by judicial bond, must be claimed and ascertained in the same action with due notice to the surety;

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In the present case the defendant Victoria Pascual filed her application for damages for the wrongful seizure of the truck, in the same action, before the trial; and such damages were included in the judgment. However, the surety was not notified of said application for damages. The surety contends that the respondent judge exceeded his jurisdiction and abused his discretion in issuing a writ of execution against the surety, it appearing that the

“Do not pray for an easy life, pray for the strength to endure a difficult one.”

Provisional Remedies | Rule 57 latter had not been notified of defendant's application for damages, as provided in section 20 of Rule 59. ISSUE: What is the effect of the omission of such notice? In the present case the application for damages was made before the trial and damages were included in the judgment. The rule does not say that the failure to give to the surety due notice of the application for damages would release the surety from the obligation of the bond. But the surety cannot be deprived of his right to the notice and of his right to be heard if he so desires. Consequently, no judgment for damages may be entered and executed against the surety without giving the latter an opportunity to be heard as to the reality or reasonableness of the alleged damages. Otherwise, fraud or collusion may be perpetrated against the surety. In the present case, although the plaintiff Yu Sip filed an answer to defendant's application for damages and prayed that it be dismissed, he did not appear during the trial and as a result the proofs adduced by the defendant as to the amount of the alleged damages remained uncontradicted. Had the herein surety been duly notified of said, application for damages, it could have appeared and contested defendant's claim as excessive. The damages awarded against the plaintiff for his retention of the truck in question from January 6, 1947, to November 20, 1948, aggregate more than P20,500. That seems exorbitant, considering that the truck itself was valued at only P2,300.

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