Section 14

G.R. No. 83897 November 9, 1990

ESTEBAN B. UY, JR., ET AL. vs. COURT OF APPEALS, ET AL.

SECOND DIVISION
[G.R. No. 83897. November 9, 1990.]

ESTEBAN B. UY, JR. and NILO S. CABANG, petitioners, vs. THE HONORABLE COURT OF APPEALS, WILSON TING, and
YU HON, respondents.

E.P. Mallari & Associates for petitioners.

Elpidio G. Navarro for private respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; RULE ON PROPERTY IN CUSTODY OF THE LAW,
WHEN APPLICABLE. — The issue has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos (88 Phil.
94 [1951] where the Court ruled that while it is true that property in custody of the law may not be interfered with, without the
permission of the proper court, this rule is confined to cases where the property belongs to the defendant or one in which the
defendant has proprietary interests. But when the Sheriff, acting beyond the bounds of his office seizes a stranger's property, the
rule does not apply and interference with his custody is not interference with another court's order of attachment.
2. ID.; ID.; ID.; WRIT OF PRELIMINARY ATTACHMENT, MAY BE ISSUED BY THE COURT EX PARTE. — Neither can
petitioner complain that they were denied their day in court when the Regional Trial Court issued a writ of preliminary attachment
without hearing as it is well settled that its issuance may be made by the court ex parte. As clearly explained by this Court, no
grave abuse of discretion can be ascribed to respondent Judge in the issuance of a writ of attachment without notice to
Rule 57: Preliminary Attachment | 1
petitioners as there is nothing in the Rules of Court which makes notice and hearing indispensable and mandatory requisites in
its issuance. (Filinvest Credit Corp. v. Relova, 117 SCRA 420 [1982]; Belisle Investment & Finance Co. Inc. v. State Investment
House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988]).
3. ID.; ID.; ID.; EFFECT OF FILING A MOTION TO QUASH OR DISCHARGE THE SAME. — In addition, petitioner's motion
to quash or discharge the questioned attachment in the court a quo is in effect a motion for reconsideration which cured any
defect of absence of notice. (Dormitorio v. Fernandez, 72 SCRA 388 [1976])
4. ID.; ID.; ID.; SALE OF PROPERTIES BELONGING TO A THIRD PERSON, CONSIDERED VOID; REASON THEREFOR.
— In like manner, the sale of the disputed properties at the public auction, in satisfaction of a judgment of a co-equal court does
not render the case moot and academic. The undeviating ruling of this Court in such cases is that attachment and sale of
properties belonging to a third person is void because such properties cannot be attached and sold at public auction for the
purpose of enforcing a judgment against the judgment debtor. (Orosco v. Nepomuceno [57 Phil. 1007 [1932-33])
5. ID.; ID.; INJUNCTION; RESTRAINING ORDER; LIFE SPAN THEREOF AUTOMATICALLY EXPIRES ON THE 20TH
DAY. — On the issue of the expiration of the restraining order, there is no argument that the life span of the status quo order
automatically expires on the 20th day and no judicial declaration to that effect is necessary (Paras v. Roura, 163 SCRA 1
[1988]).
6. ID.; TECHNICALITIES; COURT FROWNS ON RESORT THERETO TO DEFEAT SUBSTANTIAL JUSTICE. — Finally,
the non-joinder of the husband of private respondent, Yu Hon as well as her failure to verify the complaint does not warrant
dismissal of the complaint for they are mere formal requirements which could be immediately cured without prejudice to the
rights of the petitioners. This Court frowns on the resort to technicalities to defeat substantial justice. Thus, the Court states that
the rules of procedure are intended to promote not to defeat substantial justice, and therefore, they should not be applied in a
very rigid and technical sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989). Again on another occasion where an appeal
should have been dismissed for non-compliance with the Rules, the Court relaxed the rigid interpretation of the Rules holding
that a straight jacket application will do more in justice. (Pan-Am Airways v. Espiritu, 69 SCRA 45 [1976]).

DECISION

Rule 57: Preliminary Attachment | 2

PARAS, J p:
This is a petition for review on certiorari seeking to reverse the decision * which dismissed CA-G.R. No. SP-05659 for Certiorari
and Prohibition with Preliminary Injunction and/or Restraining Order filed by petitioner seeking to annul and set aside the two
Orders dated August 24, 1982 and October 10, 1983 issued by the then Court of First Instance of Rizal Branch LII ** (now
Regional Trial Court of Quezon City Branch XCLVII *** ) in Civil Case No. Q-35128, granting a writ of preliminary attachment and
directing the sheriff assigned therein to attach the properties of defendants Uy and Cabang (herein petitioners); and denying
defendants' motion to dismiss.
The antecedent facts of the case as found by the Court of Appeals are as follows: llcd
On March 24, 1982, Esteban B. Uy, Jr. (herein petitioner) filed a complaint against Sy Yuk Tat for sum of money, damages, with
preliminary attachment, docketed as Civil Case No. Q-34782 ("the first case" for short) in the then Court of First Instance of
Rizal, Branch LII, Quezon City (the case was later assigned to the Regional Trial Court of Quezon City, Branch XCVII now
presided over by respondent Judge). On the same day, upon plaintiff filing a bond of P232,780.00 said court issued a writ of
preliminary attachment and appointed Deputy Sheriff Nilo S. Cabang (co-petitioner herein) as Special Sheriff to implement the
writ. On April 6, 1982, the same court issued a break-open order upon motion filed by petitioner Uy.
On the following day, April 7, 1982, petitioner Cabang began to implement the writ of preliminary attachment as the Special
Sheriff on the case.
On April 19, 1982, petitioner Cabang filed a Partial Sheriff's Return, stating, inter alia:
xxx xxx xxx
That in the afternoon of April 12, 1982, the undersigned together with Atty. Lupino Lazaro, plaintiff's counsel and the members of
the same team proceeded to No. 65 Speaker Perez St., Quezon City, and effected a physical and actual count of the items and
merchandise pointed to by the Ting family as having been taken from the Mansion Emporium and nearby bodega which are as
follows:
a) 329 boxes of "GE" Flat Iron each box containing 6 pcs. each;
b) 229 boxes of Magnetic Blank Tapes with 48 pcs. each;
c) 239 boxes of floor polishers marked "Sanyo"
d) 54 boxes of floor polishers marked "Ronson".
Rule 57: Preliminary Attachment | 3
xxx xxx xxx
On April 12, 1982, a third party claim was filed by Wilson Ting and Yu Hon (private respondents herein) in the same Civil Case
No. Q-34782, addressed to petitioner Cabang asserting ownership over the properties attached at No. 65 Speaker Perez St.,
Quezon City (other than those attached at No. 296 Palanca St., Manila). The third party claim specifically enumerated the
properties, as reflected in the Partial Sheriff's Return dated April 13, 1982, belonging to the plaintiff's (private respondents
herein).
On the same day that petitioner Cabang filed his Partial Sheriff's Return (April 19, 1982) the third party claimants Ting and Yu
filed a motion to dissolve the aforementioned writ of preliminary attachment in the same Civil Case No. Q-34782; alleging among
others, that being the absolute owners of the personal properties listed in their third party claim which were illegally seized from
them they were willing to file a counterbond for the return thereof; which motion was opposed by plaintiff Uy.
On April 29, 1982, then CFI Judge Jose P. Castro rendered judgment by default in said Civil Case No. Q-34782 in favor of
plaintiff Uy.
Meanwhile, on May 5, 1982, third party claimants Wilson Ting and Yu Hon filed a complaint for Damages with application for
preliminary injunction against Esteban Uy and Nilo Cabang (co-petitioners herein) in the then Court of First Instance of Rizal,
Branch 52, Quezon City ("the court a quo" for short) which case was docketed as Civil Case No. Q-35128 ("the second case" for
short). The complaint alleged inter alia, that the plaintiffs are the owners of the personal properties reflected in the Partial
Sheriff's Return dated April 13, 1983 which have been attached and seized by defendant Cabang. In this second civil case, the
court a quo (then presided over by CFI Judge Concepcion B. Buencamino) issued an order on May 5, 1982, stating among other
things, the following:
"Considering that it will take time before this Court could act upon said prayers for the issuance of a Writ of Preliminary
Injunction, the parties are hereby ordered to maintain the STATUS QUO in this case with respect to the properties attached and
subject of this action alleged to belong to the plaintiffs" (Rollo, p. 133).
Meanwhile, in the first case, where a judgment by default had been rendered, the first court issued an order striking off from the
records all pleadings filed by the third party claimants.
With respect to the case in the court a quo, defendants Uy and Cabang filed their answer with counterclaim.

Rule 57: Preliminary Attachment | 4

Meanwhile, in the first case, plaintiff Uy on June 7, 1982, filed an ex-parte motion for writ of execution which was granted the
following day, June 8, 1982.
On the same day (June 7, 1982) that plaintiff Uy filed his ex-parte motion for writ of execution he and Cabang filed a motion to
quash or dissolve status quo order in the case a quo as defendants therein on the ground that the court "has no jurisdiction to
interfere with properties under custodia legis on orders of a court of co-equal and co-ordinate jurisdiction" and that plaintiffs'
complaint is not for recovery of properties in question."
On June 24, 1982, plaintiff Uy in the first case filed his ex-parte motion to authorize Sheriff to sell the attached properties
enumerated in Sheriff Cabang's partial return filed on April 19, 1982, on the ground that the properties under custodia legis were
perishable especially those taken from No. 65 Speaker Perez, Quezon City.
Subsequently, on July 2, 1982, in the case a quo the court denied defendants' Uy and Cabang motion to quash or dissolve the
status quo order.
Meanwhile, the first case on July 12, 1982, Cabang filed another partial sheriff's return this time stating among others that the
judgment in that case had been partially satisfied, and that in the public auction sale held on July 6, 1982, certain personal
properties had been sold to plaintiff Esteban Uy, Jr., the winning bidder for P15,000.00 while the other properties were sold in the
amount of P200,000.00 in cash with Bernabe Ortiz of No. 97 Industrial Avenue, Northern Hill, Malabon Manila as the highest
bidder.
Back to the case a quo, on August 23, 1982, plaintiffs Ting and Yu Hon filed a motion for preliminary attachment alleging this
ground: "In the case at bar, which, is one 'to recover possession of personal properties unjustly detained, . . the property . . has
been . . removed . . (and) disposed of to prevent its being found or taken by the applicant or an officer' and or said defendants
are guilty of fraud in disposing of the property for the taking, (or) detention . . of which the action is brought' (Sec. 1 (c) and (d),
Rule 57, Rules of Court).
Acting on such motion the court a quo, on August 24, 1982, issued the disputed order granting the writ of preliminary attachment
prayed for by the plaintiffs (Wilson Ting and Yu Hon), stating that:
"Let a writ of preliminary attachment issue upon the plaintiffs putting up a bond in the amount of P1,430,070.00, which shall be
furnished to each of the defendants with copies of the verified application therewith, and the sheriff assigned to this court, Danilo

Rule 57: Preliminary Attachment | 5

Del Mundo, shall forthwith attach such properties of the defendants not exempt from execution, sufficient to satisfy the
applicants' demand." (Rollo, p. 247)
On August 31, 1982, in the same case a quo, defendant Uy filed an urgent motion to quash and/or dissolve preliminary
attachment which motion was opposed by plaintiffs Ting and Yu Hon.
About half a year later, on February 21, 1982, in the case a quo, defendant Uy filed a motion for preliminary hearing on
affirmative defenses as motion to dismiss. Following an exchange of subsequent papers between the parties, the court a quo
issued the other disputed order which denied defendant Uy's motion to dismiss on October 10, 1983. The motion to quash was
also denied by the court a quo on December 9, 1983. Defendant Uy filed a motion for reconsideration on both Orders. Finally, on
February 15, 1985, respondent Judge issued two Orders denying both motions for reconsideration. (CA decision, Rollo, p. 109-
122)
Thereafter, petitioners Esteban Uy, Jr. and Nilo Cabang filed with the Court of Appeals a petition for Certiorari and Prohibition
with prayer for a Writ of Preliminary Injunction or a Restraining Order to annul and set aside the two orders issued by the then
CFI of Rizal Branch 52.
In its decision, the Court of Appeals dismissed the petition, the dispositive portion of which reads:
WHEREFORE, finding respondent Judge not to have committed a grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the order dated August 24, 1982, denying petitioners' motion to quash the writ of preliminary attachment,
and the order dated October 10, 1983, denying petitioners' motion to dismiss the complaint a quo, we hereby deny the instant
petition, and therefore dismiss the same. No pronouncement as to cost." (Rollo, pp. 132-133)
Hence, the instant petition.
In the resolution of October 16, 1989, the Court gave due course to the petition and required both parties to submit simultaneous
memoranda within thirty days from notice (Rollo, p. 190). Private respondents filed their memorandum on December 6, 1989
(Ibid., p. 192) while petitioners filed their memorandum on January 5, 1990 (Ibid., p. 208).
The main issue in this case is whether or not properties levied and seized by virtue of a writ of attachment and later by a writ of
execution, were under custodia legis and therefore not subject to the jurisdiction of another co-equal court where a third party
claimant claimed ownership of the same properties.

Rule 57: Preliminary Attachment | 6

The issue has long been laid to rest in the case of Manila Herald Publishing Co. Inc. v. Ramos (88 Phil. 94 [1951] where the
Court ruled that while it is true that property in custody of the law may not be interfered with, without the permission of the proper
court, this rule is confined to cases where the property belongs to the defendant or one in which the defendant has proprietary
interests. But when the Sheriff, acting beyond the bounds of his office seizes a stranger's property, the rule does not apply and
interference with his custody is not interference with another court's order of attachment.
Under the circumstances, this Court categorically stated:
"It has been seen that a separate action by the third party who claims to be the owner of the property attached is appropriate. If
this is so, it must be admitted that the judge trying such action may render judgment ordering the sheriff or whoever has in
possession of the attached property to deliver it to the plaintiff claimant or desist from seizing it. It follows further that the court
may make an interlocutory order, upon the filing of such bond as may be necessary, to release the property pending final
adjudication of the title. Jurisdiction over an action includes jurisdiction on interlocutory matter incidental to the cause and
deemed necessary to preserve the subject matter of the suit or protect the parties interests. This is self-evident (Manila Herald
Publishing Co. Inc. v. Ramos supra).
The foregoing ruling was reiterated in the later case of Traders Royal Bank v. IAC (133 SCRA 141 [1984]) and even more
recently in the case of Escovilla v. C.A. G.R. No. 84497, November 6, 1989, where this Court stressed:
"The power of the court in the execution of judgments extends only over properties unquestionably belonging to the judgment
debtor. The levy by the sheriff of a property by virtue of a writ of attachment may be considered as made under the authority of
the court only when the property levied upon belongs to the defendant. If he attaches properties other than those of the
defendant, he acts beyond the limits of his 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."
Neither can petitioner complain that they were denied their day in court when the Regional Trial Court issued a writ of preliminary
attachment without hearing as it is well settled that its issuance may be made by the court ex parte. As clearly explained by this
Court, no grave abuse of discretion can be ascribed to respondent Judge in the issuance of a writ of attachment without notice to
petitioners as there is nothing in the Rules of Court which makes notice and hearing indispensable and mandatory requisites in

Rule 57: Preliminary Attachment | 7

its issuance. (Filinvest Credit Corp. v. Relova, 117 SCRA 420 [1982]; Belisle Investment & Finance Co. Inc. v. State Investment
House, Inc. 151 SCRA 631 [1987]; Toledo v. Burgos, 168 SCRA 513 [1988]).
In addition, petitioner's motion to quash or discharge the questioned attachment in the court a quo is in effect a motion for
reconsideration which cured any defect of absence of notice. (Dormitorio v. Fernandez, 72 SCRA 388 [1976]) LLphil
Estoppel is likewise unavailing in the case at bar by the mere fact that private respondent Ting (complainant in the court a quo)
pointed the items and merchandise taken from the Mansion House and nearby Bodega which were levied and hauled by Special
Sheriff Cabang, where in the report of said Sheriff made earlier on April 6, 1982, he stated that on the same occasion referred to
in his Partial Return, private respondents denied Sy Yuk Tat's ownership over the goods in question. (Rollo, pp. 203-204)
In like manner, the sale of the disputed properties at the public auction, in satisfaction of a judgment of a co-equal court does not
render the case moot and academic. The undeviating ruling of this Court in such cases is that attachment and sale of properties
belonging to a third person is void because such properties cannot be attached and sold at public auction for the purpose of
enforcing a judgment against the judgment debtor. (Orosco v. Nepomuceno [57 Phil. 1007 [1932-33])
The other issues in this case deserve scant consideration.
On the issue of the expiration of the restraining order, there is no argument that the life span of the status quo order
automatically expires on the 20th day and no judicial declaration to that effect is necessary (Paras v. Roura, 163 SCRA 1
[1988]). But such fact is of no consequence in so far as the propriety of the questioned attachment is concerned. As found by the
Court of Appeals, the grounds invoked by respondents for said attachment did not depend at all upon the continuing efficacy of
the restraining order.
As to petitioner's contention that the complaint filed by private respondent in the lower court is merely seeking an ancillary
remedy of injunction which is not a cause of action itself, the Court of Appeals correctly observed that the object of private
respondents' complaint is injunction although the ancillary remedy of preliminary injunction was also prayed for during the
pendency of the proceeding.
Finally, the non-joinder of the husband of private respondent, Yu Hon as well as her failure to verify the complaint does not
warrant dismissal of the complaint for they are mere formal requirements which could be immediately cured without prejudice to
the rights of the petitioners. This Court frowns on the resort to technicalities to defeat substantial justice. Thus, the Court states
that the rules of procedure are intended to promote not to defeat substantial justice, and therefore, they should not be applied in
Rule 57: Preliminary Attachment | 8
a very rigid and technical sense. (Angel v. Inopiquez, G.R. 66712, January 13, 1989). Again on another occasion where an
appeal should have been dismissed for non-compliance with the Rules, the Court relaxed the rigid interpretation of the Rules
holding that a straight jacket application will do more in justice. (Pan-Am Airways v. Espiritu, 69 SCRA 45 [1976]). LLjur
PREMISES CONSIDERED, the petition is hereby DENIED and the assailed decision of the Court of Appeals is hereby
AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla, Sarmiento and Regalado, JJ., concur.

Rule 57: Preliminary Attachment | 9

G.R. No. L-4268 January 18, 1951
MANILA HERALD PUBLISHING CO., INC. vs. SIMEON RAMOS, ET AL.
088 Phil 94

EN BANC
[G.R. No. L-4268. January 18, 1951.]

MANILA HERALD PUBLISHING CO, INC., doing business under the name of Evening Herald Publishing Co., Inc., and Printers,
Inc., petitioner, vs. SIMEON RAMOS, Judge of the Court of First Instance of Manila, MACARIO A. OFILADA, Sheriff of City of
Manila, ANTONIO QUIRINO and ALTO SURETY & INSURANCE CO, INC., respondents.

Edmundo M. Reyes and Antonio Barredo, for petitioners.

Bousa & Ampil, for respondents.

SYLLABUS
1. ACTION; DISMISSAL; MOTION TO THIS END MUST BE DULY PRESENTED AND FILED, AS A PREREQUISITE;
DISMISSAL BY COURT AT ITS INITIATIVE, IMPROPER. — Q filed a libel suit against A, P and L, editors of a newspapers,
asking damages aggregating P90,000 and secured a writ of preliminary attachment upon certain office and printing equipment
frond in the premises of said newspapers. A publishing company filed with the sheriff separate third party claims alleging
ownership of the property attached, but Q filed a counterbond to meet the claim of the publishing company. Unsuccessful in the
attempt to quash said attachment, the publishing company commenced a joint suit against the sheriff, Q and the surety. The
court required the parties in the latter suit to submit memoranda on the question whether the subject matters therein involved
should be ventilated in an independent action or by means of a complaint in intervention. Memoranda having been filed, the
lower court declared that the latter suit unnecessary, superfluous and illegal and so dismissed the same, holding that the
publishing company should intervene in the aforesaid suit for libel. Held: Section 1 of Rule 8 enumerates the grounds upon an
action may be dismissed, and it specifically orders that a motion to this end be filed. The lower court had no power to dismiss the
Rule 57: Preliminary Attachment | 10
case without the requisite motion presented. The fact that the parties filed memoranda upon the court's indication or order in
which they discussed the proposition that the action was unnecessary and was improperly brought outside and independently of
the case for libel, did not supply the deficiency. Rule 30 of the Rules of Court provides for the causes in which an action may be
dismissed, and the inclusion of those therein provided excludes any other, under the familiar maxim inclusio unius est exclusio
alterius. The only instance in which, according to said Rules, the court may dismiss an action the court's own motion is when the
"plaintiff fails to appear at the time of the trial or to prosecute his action for an unreasonable length of time or to comply with the
Rules or any order of the court."
2. STATUTORY CONSTRUCTION; ATTACHMENT; THIRD-PARTY CLAIMS; "PROPER ACTION" IN SECTION 14, RULE
59, INTERPRETED. — Section 14 of Rule 59, which treats of the steps to be taken when property attached is claimed by any
other person than the defendant or his agent, contains the proviso that "Nothing herein contained shall prevent such third person
from vindicating his claim to the property by any proper action." What is "proper action"? It would be strange if the framers of the
Rules of Court or the Legislature should have 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.
3. ID.; ID.; INDEPENDENT ACTION OR INTERVENTION. — Separate action was the correct and only procedure available
to the third-party claimant. The right to intervene, unlike the right to being a new action, is not absolute but left to the sound
discretion of the court to allow. This qualification makes intervention less preferable to an independent action from the standpoint
of the claimants, at least. Because availability of intervention depends upon the court in which the main case is pending, there
would be no assurance for the herein petitioners that they would be permitted to come into that case.
4. ID.; INTERFERENCE WITH PROPERTY ATTACHED; PROPERTY ATTACHED IS IN "CUSTODIA LEGIS";
ATTACHMENT OF STRANGER'S PROPERTY PRINCIPLE DOES NOT APPLY. — It is true of course that property in custody
of the law can not be interfered with without the permission of the proper court, and property legally attached is property in
custodia legis. But for the reason just stated, this rule is confined to cases where the property belongs to the defendant or one in
which the defendant has proprietary interest. 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.

Rule 57: Preliminary Attachment | 11

DECISION

TUASON, J p:
This is a petition for "certiorari with preliminary injunction" arising upon the following antecedents:
Respondent Antonio Quirino filed a libel suit, docketed as civil case No. 11531, against Aproniano G. Borres, Pedro Padilla and
Loreto Pastor, editor, managing editor and reporter, respectively, of the Daily Record, a daily newspaper published in Manila,
asking damages aggregating P90,000. With the filing of this suit, the plaintiff secured a writ of preliminary attachment upon
putting up a P50,000 bond, and the Sheriff of the City of Manila levied an attachment upon certain office and printing equipment
found in the premises of the Daily Record.
Thereafter the 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. Whereupon, the sheriff required of Quirino a counterbond of P41,500 to meet the
claim of the Manila Herald Publishing Co., Inc., and another bond of P59,500 to meet the claim of Printers, Inc. These amounts,
upon Quirino's motion filed under Section 13, Rule 59, of the Rules of Court, were reduced by the court to P11,000 and P10,000
respectively.
Unsuccessful in their attempt to quash the attachment, on October 7, 1950, the Manila Herald Publishing Co., Inc. and Printers,
Inc. commenced a joint suit against the sheriff, Quirino and Alto Surety & Insurance Co. Inc., in which the former sought (1) to
enjoin the defendants from proceeding with the attachment of the properties above mentioned and (2) P45,000 damages. This
suit was docketed as civil case No. 12263.
Whereas case No. 11531 was being handled by Judge Sanchez or pending in the branch of the Court presided by him, case No.
12263 fell in the branch of Judge Pecson. On the same date, in virtue of an ex parte motion in case No. 12263 by the Manila
Herald Publishing Co. Inc., and Printers, Inc., Judge Pecson issued a writ of preliminary injunction to the sheriff directing him to
desist from proceeding with the attachment of the said properties.
After the issuance of that preliminary injunction, Antonio Quirino filed an ex parte petition for its dissolution, and Judge Simeon
Ramos, to whom case No. 12263 had in the meanwhile been transferred, granted the petition on a bond of P21,000. However
Judge Ramos soon set aside the order just mentioned on a motion for reconsideration by the Manila Herald Publishing Co. Inc.
and Printers, Inc. and set the matter for hearing for October 14, then continued to October 16.
Rule 57: Preliminary Attachment | 12
Upon the conclusion of that hearing, Judge Ramos required the parties to submit memoranda on the question whether "the
subject matter of civil case No. 12263 should be ventilated in an independent action or by means of a complaint in intervention in
civil case No. 11531." Memoranda having been filed, His Honor declared that the suit, in case No. 12263, was 'unnecessary,
superfluous and illegal" and so dismissed the same. He held that what Manila Herald Publishing Co., Inc., and Printers, Inc.,
should do was intervene in Case No. 11531.
The questions that emerge from these facts and the arguments are: Did Judge Ramos have authority to dismiss case No. 12263
at the stage when it was thrown out of court? Should the Manila. Herald Publishing Co., Inc., and Printers, Inc., come as
intervenors into the case for libel instead of bringing an independent action? And did Judge Pecson or Judge Ramos have
jurisdiction in case No. 12263 to quash the attachment levied in case No. 11531?
In case No. 12263, it should be recalled, neither a motion to dismiss nor an answer had been made when the decision under
consideration was handed down. The matter then before the court was a motion seeking a provisional or collateral remedy,
connected with and incidental to the principal action. It was a motion to dissolve the preliminary injunction granted by Judge
Pecson restraining the sheriff from proceeding with the attachment in case No. 11531. The question of dismissal was suggested
by Judge Ramos on a ground perceived by His Honor. To all intents and purposes, the dismissal was decreed by the court on its
own initiative.
Section 1 of Rule 8 enumerates the grounds upon which an action may be dismissed, and it specifically ordains that a motion to
this end be filed. In the light of this express requirement we do not believe that the court had power to dismiss the case without
the requisite motion duly presented. The fact that the parties filed memoranda upon the court's indication or order in which they
discussed the proposition that the action was unnecessary and was improperly brought outside and independently of the case
for libel did not supply the deficiency. Rule 30 of the Rules of Court provides for the cases in which an action may be dismissed,
and the inclusion of those therein provided excludes any other, under the familiar maxim, inclusio unius est exclusio alterius. The
only instance in which, according to said Rules, the court may dismiss upon the court's own motion an action is, when the
"plaintiff fails to appear at the time of the trial or to prosecute his action for an unreasonable length of time or to comply with the
Rules or any order of the court."

Rule 57: Preliminary Attachment | 13

The Rules of Court are devised as a matter of necessity, intended to be observed with diligence by the courts as well as by the
parties for the orderly conduct of litigation and judicial business. In general, it is compliance with these rules which gives the
court jurisdiction to act.
We are of the opinion that the court acted with grave abuse of discretion if not in excess of its jurisdiction in dismissing the case
without any formal motion to dismiss.
The foregoing conclusions should suffice to dispose of this proceeding for certiorari, but the parties have discussed the second
question and we propose to rule upon it if only to put out of the way a probable cause for future controversy and consequent
delay in the disposal of the main cause.
Section 14 of Rule 59, which treats of the steps to be taken when property attached is claimed by any other person than the
defendant or his agent, contains the proviso that "Nothing herein contained shall prevent such third person from vindicating his
claim to the property by any proper action." What is "proper action"? Section 1 of Rule 2 defines action as "an ordinary suit in a
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 section 2, entitled "Commencement of Action," says that "civil action may be commenced by filing a complaint
with the court."
"Action" has acquired a well-defined, 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 employed the term "proper action" instead of "intervention" or equivalent
expression if the intention had been just that. It was all the easier, simplier 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 in such cases as this, the statute does not extend to owners of property attached, for, under this view, "it is
Rule 57: Preliminary Attachment | 14
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."
(See 7 C. J. S., 545 and footnote No. 89 where extracts from the decision in Lewis vs. Lewis, 10 N. W., 586, a leading case, are
printed.)
Separate action was indeed said to be the correct and only procedure contemplated by Act No. 190, intervention being a new
remedy introduced by the Rules of Court as addition to, but not in substitution of, the old process. The new Rules adopted
section 121 of Act No. 190 and added thereto Rule 24 (a) of the Federal Rules of Procedure. Combined, the two modes of
redress are now section 1 of Rule 13, 1 the last clause of which is the newly added provision. The result is that, whereas, "under
the old procedure, the third person could not intervene, he having no interest in the debt (or damages) sued upon by the
plaintiff," under the present Rules, "a third person claiming to be the owner of such property may, not only file a third-party claim
with the sheriff, but also intervene in the action to ask that the writ of attachment be quashed." (I Moran's Comments on the
Rules of Court, 3rd Ed., 238, 239.) Yet, the right to intervene, unlike the right to bring a new action, is not absolute but left to the
sound discretion of the court to allow. This qualification makes intervention less preferable to an independent action from the
standpoint of the claimants, at least. Because availability of intervention depends upon the court in which Case No. 11531 is
pending, there would be no assurance for the herein petitioners that they would be permitted to come into that case.
Little reflection should disabuse the mind from the assumption that an independent action creates a multiplicity of suits. There
can 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 the underlying objective of the rules of pleading and practice.
That is why intervention is subject to the court's discretion.
The same reasons which impelled us to decide the second question, just discussed, urge us to take cognizance of and express
an opinion on the third.

Rule 57: Preliminary Attachment | 15

The objection that at once suggests itself to entertaining in Case No. 12263 the motion to discharge the preliminary attachment
levied in case No. 11531 is that by so doing one judge would interfere with another judge's actuations. The objection is
superficial and will not bear analysis.
It has been seen that a separate action by the third party who claims to be the owner of the property attached is appropriate. If
this is so, it must be admitted that the judge trying such action may render judgment ordering the sheriff of whoever has in
possession the attached property to deliver it to the plaintiff-claimant or desist from seizing it. It follows further that the court may
make an interlocutory order, upon the filing of such bond as may be necessary, to release the property pending final adjudication
of the title. Jurisdiction over an action includes jurisdiction over an interlocutory matter incidental to the cause and deemed
necessary to preserve the subject matter of the suit or protect the parties' interests. This is self-evident.
The fault with the respondent's argument is that it assumes that the Sheriff is holding the property in question by order of the
court handling the case for libel. In reality this is true only to a limited extent. That court did not direct the sheriff to attach the
particular property in dispute. The order was for the sheriff to attach Borres' Padilla's and Pastor's property. He was not
supposed to touch any property other than that of these defendants', and if he did, he acted beyond the limits of his authority and
upon his personal responsibility.
It is true of course that property in custody of the law can not be interfered with without the permission of the proper court, and
property legally attached is property in custodia legis. But for the reason just stated, this rule is confined to cases where the
property belongs to the defendant or one in which the defendant has proprietary interest. 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.
It may be argued that the third-party claim may be unfounded; but so may it be meritorious, for that matter. Speculations are
however beside the point. The title is the very issue in the case for the recovery to property or the dissolution of the attachment,
and pending final decision, the court may enter any interlocutory order calculated to preserve the property in litigation and protect
the parties' rights and interests.
None of what has been said is to be construed as implying that setting aside of the attachment prayed for by the plaintiffs in
Case No. 12263 should be granted. The preceding discussion is intended merely to point out that the court has jurisdiction to act
in the premises, not the way the jurisdiction should be exercised. The granting or denial, as the case may be, of the prayer for
Rule 57: Preliminary Attachment | 16
the dissolution of the attachment would be a proper subject of a new proceeding if the party adversely affected should be
dissatisfied.
The petition for certiorari is granted with costs against the respondents except the respondent Judge.
Moran, C.J., Paras, Feria, Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo and Baustista Angelo, JJ., concur.

Footnote

1. SECTION 1. When proper. — A person may, at any period of a trial, be permitted by the court, in its discretion, to
intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest
against both, or when he is so situated as to be adversely affected by a distribution of other disposition of property in the custody
of the court or of an officer thereof.

Rule 57: Preliminary Attachment | 17

G.R. No. L-66321 October 31, 1984
TRADERS ROYAL BANK vs. INTERMEDIATE APPELLATE COURT, ET AL.

SECOND DIVISION
[G.R. No. L-66321. October 31, 1984.]

TRADERS ROYAL BANK, petitioner, vs. THE HON. INTERMEDIATE APPELLATE COURT, HON. JESUS R. DE VEGA, as
Presiding Judge of the Regional Trial Court, Third Judicial Region, Branch IX, Malolos, Bulacan, LA TONDEÑA, INC.,
VICTORINO P. EVANGELISTA, in his capacity as Ex-Oficio Provincial Sheriff of Bulacan, and/or any and all his DEPUTIES,
respondents.

DECISION

ESCOLIN, J p:
The issue posed for resolution in this petition involves the authority of a Regional Trial Court to issue, at the instance of a third-
party claimant, an injunction enjoining the sale of property previously levied upon by the sheriff pursuant to a writ of attachment
issued by another Regional Trial Court.
The antecedent facts, undisputed by the parties, are set forth in the decision of the respondent Intermediate Appellate Court
thus:
"Sometime on March 18, 1983 herein petitioner Traders Royal Bank instituted a suit against the Remco Alcohol Distillery, Inc.
(REMCO) before the Regional Trial Court, Branch CX, Pasay City, in Civil Case No. 9894-P, for the recovery of the sum of Two
Million Three Hundred Eighty Two Thousand Two Hundred Fifty Eight & 71/100 Pesos (P2,382,258.71) obtaining therein a writ
of preliminary attachment directed against the assets and properties of Remco Alcohol Distillery, Inc.
"Pursuant to said writ of attachment issued in Civil Case No. 9894-P, Deputy Sheriff Edilberto Santiago levied among others
about 4,600 barrels of aged or rectified alcohol found within the premises of said Remco Distillery Inc. A third party claim was

Rule 57: Preliminary Attachment | 18

filed with the Deputy Sheriff by herein respondent La Tondeña, Inc. on April 1, 1982 claiming ownership over said attached
property (Complaint, p. 17, Rollo).
"On May 12, 1982, private respondent La Tondeña, Inc. filed a complaint-in-intervention in said Civil Case No, 9894, alleging
among others, that 'it had made advances to Remco Distillery Inc. which totalled P3M and which remains outstanding as of date'
and that the 'attached properties are owned by La Tondeña, Inc.' (Annex '3' to petitioner's Motion to Dismiss dated July 27, 1983
— Annex "C" to the petition).
"Subsequently, private respondent La Tondeña, Inc., without the foregoing complaint-in-intervention having been passed upon
by the Regional Trial Court, Branch CX, (Pasay City), filed in Civil Case No. 9894-P a 'Motion to Withdraw' dated October 8,
1983, praying that it be allowed to withdraw alcohol and molasses from the Remco Distillery Plant (Annex 4 to Petitioner's Motion
to Dismiss — Annex C, Petition) and which motion was granted per order of the Pasay Court dated January 27, 1983,
authorizing respondent La Tondeña, Inc. to withdraw alcohol and molasses from the Remco Distillery Plant at Calumpit, Bulacan
(Annex 'I' to Reply to Plaintiff's Opposition dated August 2, 1983 — Annex E to the Petition).
"The foregoing order dated January 27, 1983 was however reconsidered by the Pasay Court by virtue of its order dated
February 18, 1983 (Annex A — Petition, p. 15) declaring that the alcohol 'which has not been withdrawn remains in the
ownership of defendant Remco Alcohol Distillery Corporation' and which order likewise denied La Tondeña's motion to intervene.
"A motion for reconsideration of the foregoing order of February 18, 1983 was filed by respondent La Tondeña, Inc., on March 8,
1983 reiterating its request for leave to withdraw alcohol from the Remco Distillery Plant, and praying further that the 'portion of
the order dated February 18, 1983' declaring Remco to be the owner of subject alcohol, 'be reconsidered and striken off said
order'. This motion has not been resolved (p. 4, Petition) up to July 18, 1983 when a manifestation that it was withdrawing its
motion for reconsideration was filed by respondent La Tondeña Inc.
"On July 19, 1983, private respondent La Tondeña Inc. instituted before the Regional Trial Court, Branch IX, Malolos, Bulacan
presided over by Respondent Judge, Civil Case No. 7003-M, in which it asserted its claim of ownership over the properties
attached in Civil Case No. 9894-P, and likewise prayed for the issuance of a writ of Preliminary Mandatory and Prohibitory
Injunction (Annex B, id).
"A Motion to Dismiss and/or Opposition to the application for a writ of Preliminary Injunction by herein respondent La Tondeña
Inc. was filed by petitioner on July 27, 1983 (Annex C, p. 42, id.)
Rule 57: Preliminary Attachment | 19
"This was followed by respondent La Tondeña's opposition to petitioner's Motion to Dismiss on August 1, 1983 (Annex D, p. 67,
id.).
"A reply on the part of petitioner was made on the foregoing opposition on August 3, 1983 (p. 92, id.).
"Hearings were held on respondent La Tondeña's application for injunctive relief and on petitioner's motion to dismiss on August
8, 19 & 23, 1983 (p. 5, id.).
"Thereafter, the parties filed their respective memoranda (Annex F, p. 104; Annex G, p. 113, Rollo).
"Subsequently, the questioned order dated September 28, 1983 was issued by the respondent Judge declaring respondent La
Tondeña Inc. to be the owner of the disputed alcohol, and granting the latter's application for injunctive relief (Annex H-1, id.).
"On October 6, 1983, respondent Sheriff Victorino Evangelista issued on Edilberto A. Santiago Deputy Sheriff of Pasay City the
corresponding writ of preliminary injunction (Annex N, p. 127, id.).
"This was followed by an order issued by the Pasay Court dated October 11, 1983 in Civil Case No, 9894-P requiring Deputy
Sheriff Edilberto A. Santiago to enforce the writ of preliminary attachment previously issued by said court, by preventing
respondent sheriff and respondent La Tondeña, Inc. from withdrawing or removing the disputed alcohol from the Remco ageing
warehouse at Calumpit, Bulacan, and requiring the aforenamed respondents to explain and show cause why they should not be
cited for contempt for withdrawing or removing said attached alcohol belonging to Remco, from the latter's ageing warehouse at
Calumpit, Bulacan (Annex F, p. 141, Petition)."
Thereafter, petitioner Traders Royal Bank filed with the Intermediate Appellate Court a petition for certiorari and prohibition, with
application for a writ of preliminary injunction, to annul and set aside the Order dated September 28, 1983 of the respondent
Regional Trial Court of Malolos, Bulacan, Branch IX, issued in Civil Case No. 7003-M; to dissolve the writ of preliminary
injunction dated October 6, 1983 issued pursuant to said order; to prohibit respondent Judge from taking cognizance of and
assuming jurisdiction over Civil Case No. 7003-M; and to compel private respondent La Tondeña, Inc., and Ex-Oficio Provincial
Sheriff of Bulacan to return the disputed alcohol to their original location at Remco's ageing warehouse at Calumpit, Bulacan.
LibLex
In its decision, the Intermediate Appellate Court dismissed the petition for lack of legal and factual basis, holding that the
respondent Judge did not abuse his discretion in issuing the Order of September 28, 1983 and the writ of preliminary injunction

Rule 57: Preliminary Attachment | 20

dated October 3, 1983, citing the decision in Detective and Protective Bureau vs. Cloribel (26 SCRA 255). Petitioner moved for
reconsideration, but the respondent court denied the same in its resolution dated February 2, 1984.
Hence, this petition.
Petitioner contends that respondent Judge of the Regional Trial Court of Bulacan acted without jurisdiction in entertaining Civil
Case No. 7003-M, in authorizing the issuance of a writ of preliminary mandatory and prohibitory injunction, which enjoined the
sheriff of Pasay City from interferring with La Tondeña's right to enter and withdraw the barrels of alcohol and molasses from
Remco's ageing warehouse and from conducting the sale thereof, said merchandise having been previously levied upon
pursuant to the attachment writ issued by the Regional Trial Court of Pasay City in Civil Case No. 9894-P. It is submitted that
such order of the Bulacan Court constitutes undue and illegal interference with the exercise by the Pasay Court of its coordinate
and co-equal authority on matters properly brought before it.
We find the petition devoid of merit.
There is no question that the action filed by private respondent La Tondeña, Inc., as third-party claimant, before the Regional
Trial Court of Bulacan in Civil Case No. 7003-M wherein it claimed ownership over the property levied upon by Pasay City
Deputy Sheriff Edilberto Santiago is sanctioned by Section 14, Rule 57 of the Rules of Court. Thus —
"If 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 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 the attachment, unless the attaching creditor or his agent, on
demand of said officer, secures him against such claim by a bond in a sum not greater than the value of the property attached. In
case of disagreement as to such value, the same shall be decided by the court issuing the writ of attachment. The officer shall
not be liable for damages, for the taking or keeping of such property, to any such third-party claimant, unless such a claim is so
made and the action upon the bond brought within one hundred and twenty (120) days from the date of the filing of said bond.
But nothing herein contained shall prevent such third person from vindicating his claim to the property by proper action. . . . "
The foregoing rule 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 (Abiera vs. Court of Appeals, 45 SCRA
Rule 57: Preliminary Attachment | 21
314). And this precisely was the remedy resorted to by private respondent La Tondeña when it filed the vindicatory action before
the Bulacan Court. prcd
The case before us does not really present an issue of first impression. In Manila Herald Publishing Co., Inc. vs. Ramos, 1 this
Court resolved a similar question in this wise:
"The objection that at once suggests itself to entertaining in Case No. 12263 the motion to discharge the preliminary attachment
levied in Case No. 11531 is that by so doing one judge would interfere with another judge's actuations. The objection is
superficial and will not bear analysis.
"It has been seen that a separate action by the third party who claims to be the owner of the property attached is appropriate. If
this is so, it must be admitted that the judge trying such action may render judgment ordering the sheriff of whoever has in
possession the attached property to deliver it to the plaintiff-claimant or desist from seizing it. It follows further that the court may
make an interlocutory order, upon the filing of such bond as may be necessary, to release the property pending final adjudication
of the title. Jurisdiction over an action includes jurisdiction over an interlocutory matter incidental to the cause and deemed
necessary to preserve the subject matter of the suit or protect the parties' interests. This is self-evident.
xxx xxx xxx
"It is true of course that property in custody of the law can not be interfered without the permission of the proper court, and
property legally attached is property in custodia legis. But for the reason just stated, this rule is confined to cases where the
property belongs to the defendant or one in which the defendant has proprietary interest. 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.
"It may be argued that the third-party claim may be unfounded; but so may it be meritorious, for that matter. Speculations are
however beside the point. The title is the very issue in the case for the recovery of property or the dissolution of the attachment,
and pending final decision, the court may enter any interlocutory order calculated to preserve the property in litigation and protect
the parties' rights and interests."
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
Rule 57: Preliminary Attachment | 22
or category, a power which devolves upon the proper appellate court. 2 The purpose of the rule is to avoid conflict of power
between different courts of coordinate jurisdiction and to bring about a harmonious and smooth functioning of their proceedings.
It is further argued that since private respondent La Tondeña, Inc., had voluntarily submitted itself to the jurisdiction of the Pasay
Court by filing a motion to intervene in Civil Case No. 9894-P, the denial or dismissal thereof constitutes a bar to the present
action filed before the Bulacan Court.
We cannot sustain the petitioner's view. Suffice it to state that 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. 3 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. 4
WHEREFORE, the instant petition is hereby dismissed and the decision of the Intermediate Appellate Court in AC G.R. No. SP-
01860 is affirmed, with costs against petitioner Traders Royal Bank.
SO ORDERED.
Aquino, Concepcion, Jr., Guerrero and Cuevas, JJ., concur.
Makasiar and Abad Santos, JJ., I reserve my vote.

Footnotes

1. 88 Phil, 94.
2. Arabay, Inc. v. Salvador, 82 SCRA 138.
3. Manila Herald Publishing Co., Inc. v. Ramos, supra; Zulueta, et al. v. Muñoz, et al., 17 SCRA 979; Bayer Phil., Inc. v.
Agana, 63 SCRA 365.
4. Potenciano v. Dineros, 97 Phil. 196, 200.

Rule 57: Preliminary Attachment | 23

SECOND DIVISION

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

ALFREDO CHING and ENCARNACION CHING, petitioners, vs. THE HON. COURT OF APPEALS and
ALLIED BANKING CORPORATION, respondents.

DECISION
CALLEJO, SR., J.:

This petition for review, under Rule 45 of the Revised Rules of Court, assails the Decision 1[1]
of the Court of Appeals (CA)
dated November 27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution on April 2, 1996 denying the petitioners’ motion
2[2]

for reconsideration. The impugned decision granted the private respondent’s petition for certiorari and set aside the Orders of
the trial court dated December 15, 1993 3[3]
and February 17, 1994 4[4]
nullifying the attachment of 100,000 shares of stocks of the
Citycorp Investment Philippines under the name of petitioner Alfredo Ching.

The following facts are undisputed:

On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan of P9,000,000.00 from the
Allied Banking Corporation (ABC). By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching,

1 [1]
Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices Jesus M. Elbinias and Salvador J. Valdez, Jr. concurring.
2 [2]
Rollo, p. 39.
3 [3]
Records, p. 467.
4 [4]
Id. at 494.
Rule 57: Preliminary Attachment | 24
executed a promissory note for the said amount promising to pay on December 22, 1978 at an interest rate of 14% per annum. 5[5]

As added security for the said loan, on September 28, 1978, Alfredo Ching, together with Emilio Tañedo and Chung Kiat Hua,
executed a continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment of all the PBMCI
obligations owing the ABC to the extent of P38,000,000.00. 6[6]
The loan was subsequently renewed on various dates, the last
renewal having been made on December 4, 1980. 7[7]

Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in the amount of P13,000,000.00 payable in
eighteen months at 16% interest per annum. As in the previous loan, the PBMCI, through Alfredo Ching, executed a promissory
note to evidence the loan maturing on June 29, 1981. This was renewed once for a period of one month.
8[8] 9[9]

The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981, the ABC filed a complaint for sum of
money with prayer for a writ of preliminary attachment against the PBMCI to collect the P12,612,972.88 exclusive of interests,
penalties and other bank charges. Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio Tañedo and Chung
Kiat Hua in their capacity as sureties of the PBMCI.

The case was docketed as Civil Case No. 142729 in the Regional Trial Court of Manila, Branch XVIII. 10[10]
In its application for
a writ of preliminary attachment, the ABC averred that the “defendants are guilty of fraud in incurring the obligations upon which
the present action is brought 11[11]
in that they falsely represented themselves to be in a financial position to pay their obligation
upon maturity thereof.” 12[12]
Its supporting affidavit stated, inter alia, that the “[d]efendants have removed or disposed of their

5 [5]
Annex “A,” Records, p. 11.
6 [6]
Annex “C,” id. at 15-16.
7 [7]
Records, p. 12.
8 [8]
Annex “B,” Records, p. 13.
9 [9]
Records, p. 14.
10 [10]
Id. at 1-10.
11 [11]
Section 1, paragraph (d), Rule 57 of the Rules of Court.
12 [12]
Id. at 4.
Rule 57: Preliminary Attachment | 25
properties, or [are] ABOUT to do so, with intent to defraud their creditors.” 13[13]

On August 26, 1981, after an ex-parte hearing, the trial court issued an Order denying the ABC’s application for a writ of
preliminary attachment. The trial court decreed that the grounds alleged in the application and that of its supporting affidavit “are
all conclusions of fact and of law” which do not warrant the issuance of the writ prayed for. 14[14]
On motion for reconsideration,
however, the trial court, in an Order dated September 14, 1981, reconsidered its previous order and granted the ABC’s
application for a writ of preliminary attachment on a bond of P12,700,000. The order, in relevant part, stated:

With respect to the second ground relied upon for the grant of the writ of preliminary attachment ex-parte, which is the alleged
disposal of properties by the defendants with intent to defraud creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court,
the affidavits can only barely justify the issuance of said writ as against the defendant Alfredo Ching who has allegedly bound
himself jointly and severally to pay plaintiff the defendant corporation’s obligation to the plaintiff as a surety thereof.

WHEREFORE, let a writ of preliminary attachment issue as against the defendant Alfredo Ching requiring the sheriff of this
Court to attach all the properties of said Alfredo Ching not exceeding P12,612,972.82 in value, which are within the jurisdiction of
this Court and not exempt from execution upon, the filing by plaintiff of a bond duly approved by this Court in the sum of Twelve
Million Seven Hundred Thousand Pesos (P12,700,000.00) executed in favor of the defendant Alfredo Ching to secure the payment
by plaintiff to him of all the costs which may be adjudged in his favor and all damages he may sustain by reason of the attachment if
the court shall finally adjudge that the plaintiff was not entitled thereto.

SO ORDERED.15[15]

Upon the ABC’s posting of the requisite bond, the trial court issued a writ of preliminary attachment. Subsequently,
summonses were served on the defendants, 16[16]
save Chung Kiat Hua who could not be found.

Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of payments with the

13 [13]
Section 1, paragraph (e), Rule 57 of the Rules of Court, p. 9.
14 [14]
Section 1, paragraph (d), Rule 57 of the Rules of Court, p. 17.
15 [15]
Records, pp. 29-30.
16 [16]
Id. at 37.
Rule 57: Preliminary Attachment | 26
Securities and Exchange Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking the PBMCI’s
rehabilitation. 17[17]

On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including its assets and liabilities, under
rehabilitation receivership, and ordered that “all actions for claims listed in Schedule “A” of the petition pending before any court
or tribunal are hereby suspended in whatever stage the same may be until further orders from the Commission.” 18[18]
The ABC was
among the PBMCI’s creditors named in the said schedule.

Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or motion to suspend
the proceedings in Civil Case No. 142729 invoking the PBMCI’s pending application for suspension of payments (which Ching
co-signed) and over which the SEC had already assumed jurisdiction. 19[19]
On February 4, 1983, the ABC filed its Opposition
thereto. 20[20]

In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000 common shares of
City Corp stocks in the name of Alfredo Ching. 21[21]

Thereafter, in an Order dated September 16, 1983, the trial court partially granted the aforementioned motion by
suspending the proceedings only with respect to the PBMCI. It denied Ching’s motion to dismiss the complaint/or suspend the
proceedings and pointed out that P.D. No. 1758 only concerns the activities of corporations, partnerships and associations and
was never intended to regulate and/or control activities of individuals. Thus, it directed the individual defendants to file their
answers. 22[22]

Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend Proceedings on the same ground of the

17 [17]
Id. at 310.
18 [18]
Id. at 44.
19 [19]
Id. at 39.
20 [20]
Id. at 56.
21 [21]
Id. at 416.
22 [22]
Id. at 87-89.
Rule 57: Preliminary Attachment | 27
pendency of SEC Case No. 2250. This motion met the opposition from the ABC. 23[23]

On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-claim. 24[24]
Ching eventually filed his Answer on
July 12, 1984. 25[25]

On October 25, 1984, long after submitting their answers, Ching filed an Omnibus Motion, 26[26]
again praying for the dismissal
of the complaint or suspension of the proceedings on the ground of the July 9, 1982 Injunctive Order issued in SEC Case No.
2250. He averred that as a surety of the PBMCI, he must also necessarily benefit from the defenses of his principal. The ABC
opposed Ching’s omnibus motion.

Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion 27[27]

praying for the dismissal of the complaint, arguing that the
ABC had “abandoned and waived” its right to proceed against the continuing guaranty by its act of resorting to preliminary
attachment.

On December 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond from P12,700,000
to P6,350,000. 28[28]
Alfredo Ching opposed the motion, 29[29]
but on April 2, 1987, the court issued an Order setting the incident for
further hearing on May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the properties of Alfredo
Ching levied on by the sheriff. 30[30]

On March 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment bond of

23 [23]
Id. at 124.
24 [24]
Id. at 107.
25 [25]
Id. at 142.
26 [26]
Id. at 173.
27 [27]
Id. at 244.
28 [28]
Id. at 340-341.
29 [29]
Id. at 347.
30 [30]
Id. at 351.
Rule 57: Preliminary Attachment | 28
P6,350,000. 31[31]

On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside the levy
on attachment. She alleged inter alia that the 100,000 shares of stocks levied on by the sheriff were acquired by her and her
husband during their marriage out of conjugal funds after the Citycorp Investment Philippines was established in 1974.
Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship contract executed by petitioner
Alfredo Ching for the account of PBMCI did not redound to the benefit of the conjugal partnership. She, likewise, alleged that
being the wife of Alfredo Ching, she was a third-party claimant entitled to file a motion for the release of the properties. 32[32]
She
attached therewith a copy of her marriage contract with Alfredo Ching. 33[33]

The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records, contending that:

2.1 The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has no personality
to file any motion before this Honorable Court;

2.2 Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of the Rules of
Court;

2.3 Said Motion cannot even be construed to be in the nature of a Third-Party Claim conformably with Sec. 14,
Rule 57 of the Rules of Court.

3. Furthermore, assuming in gracia argumenti that the supposed movant has the required personality, her Motion cannot be
acted upon by this Honorable Court as the above-entitled case is still in the archives and the proceedings thereon still remains
suspended. And there is no previous Motion to revive the same.34[34]

The ABC also alleged that the motion was barred by prescription or by laches because the shares of stocks were in custodia

31 [31]
Id. at 413.
32
Citing the rulings of the Court in Ong v. Tating, 149 SCRA 265 (1987); Rejuso v. Estipona, 72 SCRA 509 (1976); Polaris Marketing Corporation
[32]

v. Plan, 69 SCRA 93 (1976).

33 [33]
Records, pp. 416-420.
34 [34]
Id. at 423-424.
Rule 57: Preliminary Attachment | 29
legis.

During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to Alfredo Ching to prove
that they were married on January 8, 1960; 35[35]
the articles of incorporation of Citycorp Investment Philippines dated May 14,
1979; 36[36]
and, the General Information Sheet of the corporation showing that petitioner Alfredo Ching was a member of the Board
of Directors of the said corporation and was one of its top twenty stockholders.

On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge records.

Acting on the aforementioned motion, the trial court issued on December 15, 1993 an Order 37[37]
lifting the writ of preliminary
attachment on the shares of stocks and ordering the sheriff to return the said stocks to the petitioners. The dispositive portion
reads:

WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated November 9, 1993, is hereby granted. Let the writ
of preliminary attachment subject matter of said motion, be quashed and lifted with respect to the attached 100,000 common shares
of stock of Citycorp Investment Philippines in the name of the defendant Alfredo Ching, the said shares of stock to be returned to
him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on July 26, 1983, or by whoever may
be presently in possession thereof.

SO ORDERED.38[38]

The plaintiff Allied Banking Corporation filed a motion for the reconsideration of the order but denied the same on February
17, 1994. The petitioner bank forthwith filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 33585, for the
nullification of the said order of the court, contending that:

1. The respondent Judge exceeded his authority thereby acted without jurisdiction in taking cognizance of, and granting a
“Motion” filed by a complete stranger to the case.

35 [35]
Exhibit “I.”
36 [36]
Exhibit “J.”
37 [37]
Records, p. 467.
38 [38]
Id. at 469.
Rule 57: Preliminary Attachment | 30
 2. The respondent Judge committed a grave abuse of discretion in lifting the writ of preliminary attachment without any
basis in fact and in law, and contrary to established jurisprudence on the matter.39[39]

On November 27, 1995, the CA rendered judgment granting the petition and setting aside the assailed orders of the trial
court, thus:

WHEREFORE, premises considered, the petition is GRANTED, hereby setting aside the questioned orders (dated December
15, 1993 and February 17, 1994) for being null and void.

SO ORDERED.40[40]

The CA sustained the contention of the private respondent and set aside the assailed orders. According to the CA, the RTC
deprived the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The petitioner
Encarnacion T. Ching was not a party in the trial court; hence, she had no right of action to have the levy annulled with a motion
for that purpose. Her remedy in such case was to file a separate action against the private respondent to nullify the levy on the
100,000 Citycorp shares of stocks. The court stated that even assuming that Encarnacion T. Ching had the right to file the said
motion, the same was barred by laches.

Citing Wong v. Intermediate Appellate Court, 41[41]

the CA ruled that the presumption in Article 160 of the New Civil Code shall
not apply where, as in this case, the petitioner-spouses failed to prove the source of the money used to acquire the shares of
stock. It held that the levied shares of stocks belonged to Alfredo Ching, as evidenced by the fact that the said shares were
registered in the corporate books of Citycorp solely under his name. Thus, according to the appellate court, the RTC committed
a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders. The petitioners’ motion
for reconsideration was denied by the CA in a Resolution dated April 2, 1996.

The petitioner-spouses filed the instant petition for review on certiorari, asserting that the RTC did not commit any grave
abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed orders in their favor; hence, the CA erred in

39 [39]
CA Rollo, pp. 7-8.
40 [40]
Rollo, p. 38.
41 [41]
200 SCRA 792 (1991).
Rule 57: Preliminary Attachment | 31
reversing the same. They aver that the source of funds in the acquisition of the levied shares of stocks is not the controlling
factor when invoking the presumption of the conjugal nature of stocks under Art. 160, 42[42]
and that such presumption subsists
even if the property is registered only in the name of one of the spouses, in this case, petitioner Alfredo Ching. 43[43]
According to
the petitioners, the suretyship obligation was not contracted in the pursuit of the petitioner-husband’s profession or business. 44[44]

And, contrary to the ruling of the CA, where conjugal assets are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main case and not file a separate suit. 45[45]
Furthermore, the
petitioners contend that under Art. 125 of the Family Code, the petitioner-husband’s gratuitous suretyship is null and void ab
initio, 46[46]
and that the share of one of the spouses in the conjugal partnership remains inchoate until the dissolution and liquidation
of the partnership. 47[47]

In its comment on the petition, the private respondent asserts that the CA correctly granted its petition for certiorari nullifying
the assailed order. It contends that the CA correctly relied on the ruling of this Court in Wong v. Intermediate Appellate Court.
Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private respondent alleges that the continuing guaranty
and suretyship executed by petitioner Alfredo Ching in pursuit of his profession or business. Furthermore, according to the
private respondent, the right of the petitioner-wife to a share in the conjugal partnership property is merely inchoate before the
dissolution of the partnership; as such, she had no right to file the said motion to quash the levy on attachment of the shares of
stocks.

The issues for resolution are as follows: (a) whether the petitioner-wife has the right to file the motion to quash the levy on
attachment on the 100,000 shares of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC committed a
grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.

42 [42]
Rollo, p. 17.
43 [43]
Id. at 19.
44 [44]
Id. at 20.
45 [45]
Id. at 23.
46 [46]
Id. at 24.
47 [47]
Id. at 27.
Rule 57: Preliminary Attachment | 32
 On the first issue, we agree with the petitioners that the petitioner-wife had the right to file the said motion, although she was
not a party in Civil Case No. 142729. 48[48]

In Ong v. Tating, 49[49]

we held that the sheriff may attach only those properties of the defendant against whom a writ of
attachment has been issued by the court. When the sheriff erroneously levies on attachment and seizes the property of a third
person in which the said defendant holds no right or interest, the superior authority of the court which has authorized the
execution may be invoked by the aggrieved third person in the same case. Upon application of the third person, the court shall
order a summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of
his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of
property not belonging to the plaintiff. If so, the court may then order the sheriff to release the property from the erroneous levy
and to return the same to the third person. In resolving the motion of the third party, the court does not and cannot pass upon
the question of the title to the property with any character of finality. It can treat the matter only insofar as may be necessary to
decide if the sheriff has acted correctly or not. If the 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. 50[50]

In this case, the petitioner-wife filed her motion to set aside the levy on attachment of the 100,000 shares of stocks in the
name of petitioner-husband claiming that the said shares of stocks were conjugal in nature; hence, not liable for the account of
her husband under his continuing guaranty and suretyship agreement with the PBMCI. The petitioner-wife had the right to file
the motion for said relief.

48 [48]
Naguit v. Court of Appeals, 347 SCRA 60 (2000).
49 [49]
Supra, cited in Sy v. Discaya, 181 SCRA 378 (1990).
50 [50]
Naguit v. Court of Appeals, supra.
Rule 57: Preliminary Attachment | 33
 On the second issue, we find and so hold that the CA erred in setting aside and reversing the orders of the RTC. The
private respondent, the petitioner in the CA, was burdened to prove that the RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction. The tribunal acts without jurisdiction if it does not have the legal purpose to
determine the case; there is excess of jurisdiction where the tribunal, being clothed with the power to determine the case,
oversteps its authority as determined by law. There is grave abuse of discretion where the tribunal acts in a capricious,
whimsical, arbitrary or despotic manner in the exercise of its judgment and is equivalent to lack of jurisdiction. 51[51]

It was incumbent upon the private respondent to adduce a sufficiently strong demonstration that the RTC acted whimsically
in total disregard of evidence material to, and even decide of, the controversy before certiorari will lie. A special civil action for
certiorari is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. When a court exercises its
jurisdiction, an error committed while so engaged does not deprive it of its jurisdiction being exercised when the error is
committed. 52[52]

After a comprehensive review of the records of the RTC and of the CA, we find and so hold that the RTC did not commit any
grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the assailed orders.

Article 160 of the New Civil Code provides that all the properties acquired during the marriage are presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively to the husband, or to the wife. In Tan v. Court of Appeals, 53[53]

we held that it is not even necessary to prove that the properties were acquired with funds of the partnership. As long as the
properties were acquired by the parties during the marriage, they are presumed to be conjugal in nature. In fact, even when the
manner in which the properties were acquired does not appear, the presumption will still apply, and the properties will still be
considered conjugal. The presumption of the conjugal nature of the properties acquired during the marriage subsists in the
absence of clear, satisfactory and convincing evidence to overcome the same. 54[54]

51 [51]
Condo Suit Club Travel, Inc. v. NLRC, 323 SCRA 679 (2000).
52 [52]
Pure Foods Corporation v. NLRC, 171 SCRA 415 (1989).
53 [53]
273 SCRA 229 (1997).
54 [54]
Wong v. Intermediate Appellate Court, supra.
Rule 57: Preliminary Attachment | 34
 In this case, the evidence adduced by the petitioners in the RTC is that the 100,000 shares of stocks in the Citycorp
Investment Philippines were issued to and registered in its corporate books in the name of the petitioner-husband when the said
corporation was incorporated on May 14, 1979. This was done during the subsistence of the marriage of the petitioner-spouses.
The shares of stocks are, thus, presumed to be the conjugal partnership property of the petitioners. The private respondent
failed to adduce evidence that the petitioner-husband acquired the stocks with his exclusive money. 55[55]
The barefaced fact that
the shares of stocks were registered in the corporate books of Citycorp Investment Philippines solely in the name of the
petitioner-husband does not constitute proof that the petitioner-husband, not the conjugal partnership, owned the same. 56[56]
The
private respondent’s reliance on the rulings of this Court in Maramba v. Lozano 57[57]
and Associated Insurance & Surety Co., Inc.
v. Banzon 58[58]
is misplaced. In the Maramba case, we held that where there is no showing as to when the property was acquired,
the fact that the title is in the wife’s name alone is determinative of the ownership of the property. The principle was reiterated in
the Associated Insurance case where the uncontroverted evidence showed that the shares of stocks were acquired during the
marriage of the petitioners.

Instead of fortifying the contention of the respondents, the ruling of this Court in Wong v. Intermediate Appellate Court 59[59]

buttresses the case for the petitioners. In that case, we ruled that he who claims that property acquired by the spouses during
their marriage is not conjugal partnership property but belongs to one of them as his personal property is burdened to prove the
source of the money utilized to purchase the same. In this case, the private respondent claimed that the petitioner-husband
acquired the shares of stocks from the Citycorp Investment Philippines in his own name as the owner thereof. It was, thus, the
burden of the private respondent to prove that the source of the money utilized in the acquisition of the shares of stocks was that
of the petitioner-husband alone. As held by the trial court, the private respondent failed to adduce evidence to prove this
assertion.

55 [55]
Salvador v. Court of Appeals, 243 SCRA 239 (1995).
56 [56]
Bucoy v. Paulino, 23 SCRA 248 (1968).
57 [57]
20 SCRA 474 (1967).
58 [58]
26 SCRA 268 (1968).
59 [59]
Supra.
Rule 57: Preliminary Attachment | 35
 The CA, likewise, erred in holding that by executing a continuing guaranty and suretyship agreement with the private
respondent for the payment of the PBMCI loans, the petitioner-husband was in the exercise of his profession, pursuing a
legitimate business. The appellate court erred in concluding that the conjugal partnership is liable for the said account of PBMCI
under Article 161(1) of the New Civil Code.

Article 161(1) of the New Civil Code (now Article 121[2 and 3] 60[60]
of the Family Code of the Philippines) provides:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and those contracted by
the wife, also for the same purpose, in the cases where she may legally bind the partnership.

The petitioner-husband signed the continuing guaranty and suretyship agreement as security for the payment of the loan
obtained by the PBMCI from the private respondent in the amount of P38,000,000. In Ayala Investment and Development Corp.
v. Court of Appeals, 61[61]
this Court ruled “that the signing as surety is certainly not an exercise of an industry or profession. It is
not embarking in a business. No matter how often an executive acted on or was persuaded to act as surety for his own
employer, this should not be taken to mean that he thereby embarked in the business of suretyship or guaranty.”

For the conjugal partnership to be liable for a liability that should appertain to the husband alone, there must be a showing
that some advantages accrued to the spouses. Certainly, to make a conjugal partnership responsible for a liability that should
appertain alone to one of the spouses is to frustrate the objective of the New Civil Code to show the utmost concern for the
solidarity and well being of the family as a unit. The husband, therefore, is denied the power to assume unnecessary and
unwarranted risks to the financial stability of the conjugal partnership. 62[62]

60 [60]
Art. 121. The conjugal partnership shall be liable for:
…
(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or
by both spouses or by one of them with the consent of the other;
(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;
61 [61]
286 SCRA 272 (1998).
62 [62]
Luzon Surety Co., Inc. v. De Garcia, 30 SCRA 111 (1969).
Rule 57: Preliminary Attachment | 36
 In this case, the private respondent failed to prove that the conjugal partnership of the petitioners was benefited by the
petitioner-husband’s act of executing a continuing guaranty and suretyship agreement with the private respondent for and in
behalf of PBMCI. The contract of loan was between the private respondent and the PBMCI, solely for the benefit of the latter.
No presumption can be inferred from the fact that when the petitioner-husband entered into an accommodation agreement or a
contract of surety, the conjugal partnership would thereby be benefited. The private respondent was burdened to establish that
such benefit redounded to the conjugal partnership. 63[63]

It could be argued that the petitioner-husband was a member of the Board of Directors of PBMCI and was one of its top
twenty stockholders, and that the shares of stocks of the petitioner-husband and his family would appreciate if the PBMCI could
be rehabilitated through the loans obtained; that the petitioner-husband’s career would be enhanced should PBMCI survive
because of the infusion of fresh capital. However, these are not the benefits contemplated by Article 161 of the New Civil Code.
The benefits must be those directly resulting from the loan. They cannot merely be a by-product or a spin-off of the loan itself. 64[64]

This is different from the situation where the husband borrows money or receives services to be used for his own business
or profession. In the Ayala case, we ruled that it is such a contract that is one within the term “obligation for the benefit of the
conjugal partnership.” Thus:

(A) If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used
in or for his own business or his own profession, that contract falls within the term “… obligations for the benefit of the conjugal
partnership.” Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing
of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services
to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does
not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and
rightly so, that such obligation will redound to the benefit of the conjugal partnership.65[65]

The Court held in the same case that the rulings of the Court in Cobb-Perez and G-Tractors, Inc. are not controlling because

63 [63]
Ayala Investment & Development Corp. v. Court of Appeals, supra.
64 [64]
See note 61.
65 [65]
Id. at 281-282.
Rule 57: Preliminary Attachment | 37
the husband, in those cases, contracted the obligation for his own business. In this case, the petitioner-husband acted merely as
a surety for the loan contracted by the PBMCI from the private respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of Appeals are
SET ASIDE AND REVERSED. The assailed orders of the RTC are AFFIRMED.

SO ORDERED.

Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

Rule 57: Preliminary Attachment | 38

Section 15

G.R. No. 15499. February 9, 1921

TAYABAS LAND COMPANY vs. SALOMON SHARRUF, ET AL.
041 Phil 382

EN BANC
[G.R. No. 15499. February 9, 1921.]

THE TAYABAS LAND COMPANY, plaintiff-appellee, vs. SALOMON SHARRUF, CANUTO BARTOLOME, sheriff of Tayabas,
SALVADOR FARRE and FRANCISCO ALVAREZ, defendants. SALOMON SHARRUF, appellant.

Crossfield & O'Brien for appellant.

Alfredo Chicote and Jose Arnaiz for appellee.

SYLLABUS
1. JUDGMENT; EXECUTION AGAINST JUDGMENT CREDITOR; JUDGMENT NOT TO BE SOLD UPON EXECUTION. —
A judgment for a sum of money is, as to the party entitled to payment, a credit; and as to the party who ought to pay the money a
debt; and although it constitutes property in the sense necessary to make it liable to be taken for the payment of the judgment
obtained in another action, nevertheless, being property which is incapable of manual delivery, it cannot be sold by the sheriff at
public auction under section 457 of the Code of Civil Procedure.
2. EXECUTION; JUDGMENT; GARNISHMENT. — While a judgment cannot be sold upon execution, it may be "attached
upon execution in like manner as upon writs of attachment" (sec. 450, Code of Civ. Proc.), that is it must be reached by process
of garnishment in the same way that debts and credits are attached under section 431 of the Code of Civil Procedure.

Rule 57: Preliminary Attachment | 39

3. GARNISHMENT; NATURE OF PROCESS. — The proceeding by garnishment is a species of attachment for reaching
credits belonging to the judgment debtor and owing to him from a stranger to the litigation. By means of the citation 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. It is merely a case of involuntary
novation by the substitution of one creditor for another.
4. JUDGMENT; SATISFACTION OF JUDGMENT BY THIRD PERSON. — Any person indebted to another against whom an
execution has been issued may pay the amount of his indebtedness, or so much thereof as may be necessary to satisfy the
execution, to the officer holding the execution, or to the judgment creditor himself, thereby merging the credit in his own
indebtedness and absolving himself pro tanto from his obligation to the execution debtor.

DECISION

STREET, J p:
On December 10, 1914, one Salvador Farre recovered a joint and several judgment against Salomon M. Sharruf and Farham M.
Sharruf in the Court of First Instance of the city of Manila for the sum of P1,300, with legal interest from September 5, 1914, and
with costs. This judgment having remained unsatisfied, an execution was upon April 3, 1916, issued thereon at the instance of
the plaintiff.
Meanwhile on March 27, 1915, Salomon M. Sharruf had himself recovered a judgment, also in the Court of First Instance of the
city of Manila, against the Tayabas Land Company and A. M. Ginainati, for the sum of P6,841.36, with interest and costs; and as
there seems to have been no visible property belonging to Salomon M. Sharruf and Farham M. Sharruf subject to seizure by the
sheriff to satisfy the execution in favor of Salvador Farre, it became important for Farre to subject the judgment in favor of
Salomon M. Sharruf against the Tayabas Land Company and A. M. Ginainati to the payment of his own claim.
To this end process of garnishment (notificacion de embargo) was, on April 6, 1916, issued at the instance of Salvador Farre in
aid of his execution against the Sharrufs and was on the same or succeeding day duly served upon the Tayabas Land Company.
By this process the Tayabas Land Company was informed that levy had, by virtue of the execution aforesaid, been made upon
all the property of S. M. Sharruf in the possession of said Tayabas Land Company and upon all debts owing by the latter to said
Rule 57: Preliminary Attachment | 40
Sharruf, and in particular 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 Company and others.
In pursuance of the levy thus effected upon the judgment in favor of Salomon M. Sharruf against the Tayabas Land Company,
the sheriff of the city of Manila, as in ordinary cases of levy upon chattels or real property, proceeded upon April 15, 1916, to
expose to sale all right, title, and interest of said Sharruf in the judgment aforesaid. At this sale Salvador Farre, the execution
creditor himself, became the purchaser of the judgment in question for the sum of P200; but the Tayabas Land Company, with a
legitimate view to its own protection, afterwards stepped in, and acting through Mr. Francisco Alvarez, as attorney and
intermediary, purchased from Farre, on October 6, 1917, the judgment of Salomon M. Sharruf against itself, paying to Farre the
full amount due him, to wit, the sum of P1,588.24.
At this point it should be stated that when levy of execution was made in the manner above stated, upon the judgment in favor of
Sharruf against the Tayabas Land Company and others, the time allowed by law for an appeal in that case to the Supreme Court
had not passed; and said cause was in fact subsequently appealed to the Supreme Court, where final judgment was rendered,
affirming the decision of the lower court, on February 15, 1918.
It may also be stated that on April 4, 1916, Salomon M. Sharruf, by a public document, which was duly incorporated in the record
in his case against the Tayabas Land Company et al., sold and transferred unto O'Brien & Company, a corporation, his right,
title, and interest in the judgment aforesaid to the extent necessary to satisfy a debt for P988.14, owing to O'Brien & Company,
for merchandise purchased from said entity by Sharruf; and upon the same date Messrs. Crossfield & O'Brien, as attorneys, filed
a memorandum of an attorney's lien in their favor to the extent of 25 per cent of the amount of the judgment. These transactions,
as will be seen, had the result of reducing in a considerable degree the apparent beneficial interest of Salomon M. Sharruf in the
result of the litigation, but they do not affect the fundamentals of the case.
As a consequence of the facts above narrated the Tayabas Land Company supposes that the judgment obtained by Salomon M.
Sharruf against it and A. M. Ginainati has been wholly satisfied, while Salomon M. Sharruf and those interested under him claim
that the execution sale of the judgment in question was void and that as a consequence said judgment remains wholly
unsatisfied. Proceeding upon this conception of the case, Messrs. Crossfield and O'Brien, as attorneys for the plaintiff in that
action, procured an execution to be issued on August 30, 1918, upon said judgment for the entire amount of the recovery,

Rule 57: Preliminary Attachment | 41

including accrued interest and costs, less the sum of P13.21, which had been secured in a garnishment proceeding against one
of the local banks.
Being thus menaced with the levy of an execution upon its property, the Tayabas Land Company instituted the present action in
the Court of First Instance of the city of Manila, against Salomon M. Sharruf and others, including the sheriff of the Province of
Tayabas, to obtain an order restraining the threatened levy of execution and perpetually enjoining all proceedings for the
enforcement of the judgment against it. Upon hearing the cause the trial court, while recognizing the validity of the claims of
O'Brien & Company and of Crossfield and O'Brien, held that all other interest in said judgment pertaining to Salomon M. Sharruf
had passed by virtue of the execution sale to Salvador Farre and thence by transfer through Francisco Alvarez to the Tayabas
Land Company. As a consequence the court declared the preliminary injunction perpetual. From said judgment Salomon M.
Sharruf appealed to this court.
The principal question in the case relates to the validity of the proceedings whereby the judgment against the Tayabas Land
Company and A. M. Ginainati in favor of Salomon M. Sharruf was, on April 15, 1916, exposed to sale by the sheriff under the
execution issued in the action of Salvador Farre against the two Sharrufs; and we believe it will be conducive to clarity in the
discussion for us to proceed at once to consider the manner in which, under the provisions of our Code of Civil Procedure, a
judgment for a sum of money entered in favor of the plaintiff in one case can be reached and applied to the payment of a
judgment in another case against the-party who occupies the position of creditor in the former.
In the first place, we have no hesitancy in saying that a judgment for a sum of money, that is, the interest of the plaintiff in such a
judgment, is liable to execution. A judgment for a sum of money is, as to the party entitled to payment, a creditor and as to the
party who ought to pay the money, a debt. Furthermore, 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 expressly declared, in section 450 of the Code of Civil Procedure, to be liable to execution. It will be noted,
however, that under the section just cited, debts, credits, and other property not capable of manual delivery are to be dealt with
in a different manner from that prescribed in case of the execution of tangible property; for while tangible property is proceeded
with by seizure and sale under execution, debts and credits are to be attached by the citation of the debtor. The provisions
governing the execution of tangible property are found in sections 453 to 457, inclusive, of the Code of Civil Procedure; while the

Rule 57: Preliminary Attachment | 42

provisions prescribing the method of reaching debts and credits are found chiefly in the chapter relating to attachment, consisting
principally of sections 431 to 436, inclusive, of the Code of Civil Procedure.
The proceeding thus indicated as proper, in order to subject a debt or credit is known in American civil procedure as the process
of garnishment; and it may be truly said that garnishment is one of the simplest processes, and the least involved in
technicalities, of any proceeding known to the law. It consists in the citation of some stranger to the litigation, who is debtor to
one of the parties to the action. By this means such debtor stranger becomes a forced intervenor; and the court, having acquired
jurisdiction over his person 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. 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).
To proceed a little further with the barest details of the process of garnishment, we note that a citation issues from the court
having jurisdiction of the principal litigation, notifiying 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.
In cases where indebtedness is admitted, as not infrequently occurs, 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, under
paragraph No. 3 of section 436 of the Code of Civil Procedure, collect the money and pay it to the person entitled.
The circumstance that garnishment has not been made the subject of independent treatment in our Code of Civil Procedure and
that the rules relating thereto are only brought out inferentially in connection with the subject of attachment has undoubtedly
contributed to obscure a matter which upon principle is simple enough. Additional light on the subject may, however, be acquired
by referring to sections 476, 481, 482, and 486 of the Code of Civil Procedure, which treat of supplementary proceedings. It will
Rule 57: Preliminary Attachment | 43
be found that those proceedings are identical in principle with the proceeding for the citation of debtors explained in the chapter
on attachment.
Enough has now been said to show clearly that the action of the sheriff in exposing to public sale the judgment which had been
procured by Salomon M. 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 dealing with the problems which have from time to time arisen in connection with garnishment proceedings, courts have
sometimes been perplexed over the matter of protesting the garnishee from the danger of having to pay his debt twice; and it
goes without saying that the procedure must be so adjusted as not to subject the garnishee to this risk. Otherwise it is a fatal
obstacle to the garnishment. No such difficulty would arise in a case like this, where the two judgments are both of record in the
same court, and where consequently that court has control over the process in both cases.
Our conclusion that the sale of the judgment in question under process of execution was void is supported by the decisions of
the Supreme Court of California, construing the very section of the California Code of Civil Procedure from which section 450 of
the Code of Civil Procedure of the Philippine Islands was taken. Thus, in McBride vs. Fallon (65 Cal., 301, 303), the Supreme
Court of that State said:
"After enumerating the kinds of property of a judgment debtor liable to execution, the Code provides that 'shares and interests in
any corporation or company, and debts and credits . . . and all other property not capable of manual delivery, may be attached
on execution in like manner as upon writs of attachment.
"Debts and credits and property not capable of manual delivery must be attached in the mode pointed out by subdivision 5, sec.
542.' " (Corresponding to section 431 of the Philippine Code of Civil Procedure.) "That is 'by leaving with the person owing the
debt or having in possession or under his control such credits and other personal property, or with his agent, a copy of the writ,
and a notice that the debts owing by him to the defendant, or the credits and other personal property' in his possession or under
his control, belonging to the defendant are attached in pursuance of such writ."
Rule 57: Preliminary Attachment | 44
"'The fact that a debt is evidenced by a judgment does not, in our opinion, make it anything more or less than a debt, or more
capable of manual delivery than it would be if not so evidenced. No provision is made for attaching or levying on evidences of
debt. It is the debt itself which may be attached by writ of attachment, or on execution in like manner as upon writs of
attachment.' This we think to be the meaning of the Code, and the mode prescribed by it is exclusively . . . "
In order to avoid misunderstanding, we wish to say that we make no question as to the propriety of the proceedings up to the
time when the judgment in question was advertised and exposed to sale by the sheriff. The issuance of the execution and the
service of the garnishment were appropriate; and the garnishment was effective for the purpose of preventing the garnishee, the
Tayabas Land Company, from paying the judgment to Salomon M. Sharruf.
Moreover, the garnishment was effective for the purpose of conferring upon the Tayabas Land Company the right to pay off the
judgment which Farre had obtained against Sharruf. This right is not only recognized in section 481 of the Code of Civil
Procedure but also in subsection 3 of article 1210 of the Civil Code; and by satisfying Farre's claim, regardless of the manner in
which it was accomplished, the Tayabas Land Company absolved itself pro tanto from its indebtedness to Sharruf. It results that,
although the judgment against the Tayabas Land Company has not yet been satisfied in full, said company is entitled to be
credited with the sum of P1,588.24, paid by it, through Francisco Alvarez, to Farre on October 6, 1917, with interest.
In the view we take of the case it becomes unnecessary to consider at length the fact that Sharruf's judgment against the
Tayabas Land Company was appealed to the Supreme Court after the process of garnishment had been served on the
company. Suffice it to say that this circumstance would at most merely postpone the realization of the results without defeating
the garnishment.
Reflection upon this feature of the case, however, confirms the opinion that our lawmakers acted wisely in requiring that debts
and credits should be executed by means of the process of garnishment rather than by exposing them to public sale. In the case
before us a judgment for a large amount was sold for a merely nominal sum, and such would generally be the case at a sale
under similar conditions. This cannot fail to be highly prejudicial to the debtor who is under immediate execution. The proceeding
by garnishment, on the contract, enables all parties to realize their rights without unduly disturbing the position of any.
The judgment must be reversed, and the defendants will be absolved from the complaint. It is so ordered, without express
pronouncement as to costs of either instance.
Mapa, C.J., Araullo, Malcolm, Avanceña and Villamor, JJ., concur.
Rule 57: Preliminary Attachment | 45
Footnotes

1. See Sharruf vs. Tayabas Land Co., and Ginainati (37 Phil., 655).

Rule 57: Preliminary Attachment | 46

FIRST DIVISION

A.M. P-94-1008 July 6, 1995

FLORENTINA BILAG-RIVERA, petitioner,
vs.
CRISANTO FLORA, respondent.

PADILLA, J.:
In an affidavit-complaint 1 filed with the Office of the Court Administrator, complainant Florentina Bilag-Rivera charged
respondent Crisanto Flora, deputy sheriff, RTC of Baguio City, with grave misconduct and dishonesty, when he released a motor
vehicle subject of a writ of attachment to a representative of the plaintiff in a civil case, without authority from the court which
issued the writ, thereby enabling said plaintiff to sell the motor vehicle to a third person, to the damage and prejudice of
complainant who claims ownership over said motor vehicle.
On 5 August 1990, Elsie V. Tacay bought an Isuzu Jitney on installment basis from Panda Automotive Corporation (PANDA),
Dagupan City, represented by Charlie Q. Carlos, for the amount of P256,000.00. On 17 March 1992, when the installment
payments reached P145,000.00, Tacay demanded for the execution of a Deed of Absolute Sale which she obtained from
PANDA on the same date. On 23 March 1992, Tacay registered the vehicle in her name with the Land Transportation Office
(LTO) in Lingayen. On 10 May 1992, Tacay tendered a check for P100,000.00 to cover part of the P120,000.00 balance still due
PANDA. Upon presentment by PANDA with the drawee bank, the check for P100,000.00 was dishonored as the same was
allegedly forged. When confronted by PANDA about the check's dishonor, Tacay promised to pay the balance of P120,000.00
on or before 23 June 1992.
On 8 July 1992, however, Tacay sold the Isuzu jitney to complainant Florentina Bilag-Rivera for the amount of P250,000.00,
covered by an Absolute Deed of Sale. 2 Hence, possession of the vehicle and its LTO registration papers were turned over to
complainant.
It appears that Tacay failed to fulfill her promise to pay the P120,000 balance on the vehicle due PANDA Corporation, prompting
the latter to verify the whereabouts of the said vehicle. PANDA later learned of the deed of sale between Tacay and complainant
Rule 57: Preliminary Attachment | 47
and obtained information that the alleged deed of sale was not registered or even annotated on the Certificate of Registration of
the motor vehicle.
In September 1992, with Tacay still in default on her outstanding obligation to Panda Corporation, the latter, thru its manager
Charlie Carlos, filed a complaint for specific performance, replevin, and damages with the RTC of Dagupan City, Branch 40
[docketed as Civil Case No. D-10205] with prayer for the issuance of a writ of preliminary attachment against Elsie Tacay, with
complainant (Rivera) impleaded as co-defendant.
On 18 September 1992, the, RTC of Dagupan issued a writ of preliminary attachment against Tacay and complainant. Since the
subject motor vehicle was believed to be in the City of Baguio, the writ was addressed to the RTC, City Sheriff, Baguio City.
Complainant alleges that being a buyer in good faith, she should not have been impleaded in the complaint of Panda
Corporation. Instead of proceeding against the principal defendant Elsie V. Tacay, the respondent Deputy Sheriff proceeded to
attach the subject motor vehicle in complainant's possession. At that time, respondent Sheriff was accompanied by Charlie
Carlos, PANDA's Manager. Respondent issued to the complainant a handwritten receipt on the same day (18 September 1992)
which indicated that he took possession of the vehicle pursuant to the writ of attachment. 3
Complainant requested the City Sheriff of the RTC, Baguio City to hold the vehicle for a few days as she would prepare the
amount of P20,000.00 as counterbond to discharge the attachment. Since there was no bonded warehouse in the City of Baguio,
the office of the City Sheriff requested complainant to pay P1,000.00 to justify their holding on to said vehicle until she could post
the counterbond. Complainant paid the amount of P1,000.00 and was duly receipted for said payment. 4
On 23 December 1992, however, the RTC of Dagupan City issued an order in Civil Case No. D-10285 for the issuance of an
alias writ of attachment as prayed for by Panda Motors. The writ was again addressed to the office of the City Sheriff, RTC of
Baguio City with an order to attach the same motor vehicle in possession of complainant. Respondent received the alias writ on
23 February 1993.
The alias writ was not served immediately by respondent because the whereabouts of the said vehicle could not be ascertained.
It was only on 15 March 1993 when Charlie Carlos, the manager of Panda Motors, came personally to the office of respondent
and informed him; that the vehicle to be attached was in the possession of Carlos Camiwet, a cousin of complainant.
Forthwith, respondent together with Charlie Carlos, proceeded to the residence of Carlos Camiwet and served the alias writ of
attachment on the latter with an attachment bond of P120,000.00. Complainant avers that this time, respondent sheriff did not
Rule 57: Preliminary Attachment | 48
issue any receipt to cover for his re-possession of the said vehicle. Worse, complainant maintains that at the time of the levy,
various tools worth P50,000.00, which were not integral to the motor vehicle, were also taken by respondent sheriff.
The following day, complainant accompanied by her lawyer, went to the office of respondent to inquire about the motor vehicle
and to request for a receipt. According to complainant, respondent told her not to worry and that the issuance of a receipt was no
longer necessary because the vehicle and its tools were being kept in a safe place. Complainant then informed respondent that
she would be posting a counterbond as soon as she had the money.
Complainant further alleges that on several occasions, she came to the office of respondent to inspect the vehicle but
respondent did not allow her to see the vehicle nor was she informed of its whereabouts. Respondent, however, gave
complainant repeated assurances that the vehicle was being kept in a safe place.
On 17 May 1993, complainant attended the hearing in Civil Case No.D-10285 to argue her Motion to Dismiss and Motion to
Quash the Writ of Preliminary Attachment. To her surprise, she was informed by the lawyer of Panda Corporation that a certain
Elsie Tacay had voluntarily surrendered the vehicle together with its documents to Panda Corporation and that Panda's
manager, Charlie Carlos, had already sold the vehicle to a person named Leonardo Sarmiento for P175,000.00.
Complainant manifested before the court that the subject motor vehicle was in custodia legis and that the above-mentioned
transactions were anomalous and contrary to law. Thereafter, the court directed complainant's lawyer to investigate the matter
and to report his findings to the court.
Complainant's lawyer then sent a letter of inquiry to the Clerk of Court of Baguio City, asking why respondent did not issue a
receipt when he executed the alias writ of attachment; why there was no sheriff's return on the writ of attachment filed in court;
why the vehicle was no longer seen again after 15 March 1993; and whether it was true that Elsie Tacay took the vehicle
together with the tools from respondent and returned it to Panda Corporation. 5 Complainant also sent a letter of inquiry to the
LTO office in Lingayen to check on the current registration of the said vehicle. 6
Meanwhile, the Clerk of Court and the Ex-Officio Sheriff of RTC, Baguio issued a memo to respondent requiring him to explain
the proceedings he conducted in enforcing the alias writ of attachment in Civil Case No. D-10285.
In his compliance dated 18 June 1993, respondent stated that he:
. . . served and took the subject vehicle into "custodia legis", and a receipt was duly issued. The receipt not however received nor
signed by the defendants as they refused to do so, thereafter, said motor vehicle was surrendered to the Plaintiff in the above-
Rule 57: Preliminary Attachment | 49
captioned case for safekeeping and custody for the reason that this office has no bonded warehouse to keep the said motor
vehicle. An acknowledgment receipt was duly signed by the manager of said Plaintiff (Panda Motors) in the person of Mr. Charlie
Marcos. 7 (Emphases supplied)
In addition, respondent denied the existence of the tools when he levied the alias writ of attachment on the said vehicle.
In respondent's return of the alias writ of attachment dated 7 June 1993, he similarly stated that:
xxx xxx xxx
On March 15, 1993, the said (alias) writ of attachment was enforced together with the manager of Panda Corporation, Mr.
Charlie Carlos from Mrs. Florentina Rivera, but refused to acknowledge the receipt of the said motor vehicle for the reason that
she will just file(d) the necessary counterbond.
And on the said date said motor vehicle was taken by the plaintiff thru Mr. Charlie Carlos for safekeeping and custody for the
reason that this officer has no bonded warehouse to place the said motor vehicle. 8
On 10 June 1993, complainant's lawyer received a reply from the LTO in Lingayen with certified photocopies of the vehicle's
registration indicating that on 1 April 1993, Elsie V. Tacay re-sold the subject vehicle for P175,000.00 to Charlie Carlos 9 and
that on 10 April 1993, Charlie Carlos sold the same unit for P175,000.00 to Leonardo Sarmiento of Bautista, Pangasinan 10 and
that the same had been registered in Sarmiento's name for LTO registration year 1993-1994.
Complainant now argues that the foregoing facts and circumstances clearly demonstrate that respondent sheriff adopted an
irregular procedure and entered into an anomalous transaction in not issuing a receipt to complainant when he served the alias
writ of attachment and on the very same day turned over possession of the vehicle to the attaching creditor which simply issued
an acknowledgment receipt for the vehicle, instead of securing the permission of the trial court, knowing fully well that the vehicle
was in custodia legis. Compared to the service of the first writ of attachment when respondent requested the amount of
P1,000.00 from complainant as storage fees for the vehicle, respondent in serving the alias writ of attachment in effect made
Charlie Carlos his agent when he turned over the said vehicle to the latter for alleged "safekeeping and custody."
In his comment 11 filed with this Court, respondent contends that the Office of the City Sheriff of Baguio has no bonded
warehouse to store the vehicle for the disposition of the (trial) court, hence, the vehicle was turned over to the attaching-
creditor's representative, Charlie Carlos, who immediately asked respondent that the motor vehicle be kept in his custody for

Rule 57: Preliminary Attachment | 50

which Carlos signed a receipt 12 acknowledging that the vehicle was under custody of the Court but shall be temporarily
deposited in the company's (Panda's) premises (in Dagupan City).
Respondent explains that after the due enforcement of the alias writ of attachment, he awaited for further disposition of the same
by the trial court, and for all intents and purposes, his (ministerial) function had been fully served. Thus, he no longer had any
knowledge, consent nor participation with respect to the subsequent deed of sale between Elsie Tacay and Charlie Carlos 13
and between Charlie Carlos and Leonardo Sarmiento 14. Neither did he receive nor enjoy any benefit in any form out of these
transactions.
In a resolution dated 27 July 1994, this Court, as recommended by the Office of the Court Administrator, referred this case to
Executive Judge Clarence J. Villanueva of the Regional Trial Court of Baguio City, Branch 7 for investigation, report and
recommendation within sixty (60) days from receipt of the records.
In a six (6) page report dated 15 November 1994, Judge Villanueva made the following findings and recommendations:
. . . there is clear evidence on record that respondent sheriff Crisanto Flora was remiss of [sic] his duties as an officer of the court
in releasing the subject motor vehicle to Charlie Carlos, a representative of the plaintiff in the case where the writ of attachment
emanated, without seeking an order or permission from the court concerned. It was incumbent of Sheriff Flora to take into his
custody the motor vehicle subject of attachment and protect it. A sheriff who takes possession of the property under a writ of
attachment is duty bound to protect the property from damage or loss and to exercise ordinary and reasonable care for the
preservation of the property (Adm. Matter p. 128, 81 SCRA 599). The fact that respondent Flora failed to immediately make a
return of his proceedings on the second writ of attachment is something to consider. He enforced the second writ of attachment
on March 15, 1993 but he waited until June 18, 1993 to do so at the direction of the Clerk of Court Atty. Delilah Gonzales-Muñoz
as contained in the memorandum issued to respondent (see Exh. "B" page 45 record; see also Exhs. "C" and "C-1"). While it is
true that there are no bonded warehouse(s) where sheriffs could deposit attached properties for safe keeping, herein respondent
is not exempt from exercising reasonable diligence in performing his duties as an officer of the court. The least that he could
have done is to ask permission for the concerned court to allow him to turn over the subject vehicle to Charlie Carlos. This he
failed to do. 15
The Court agrees with the findings of Judge Villanueva and concludes that while the evidence may be insufficient to prove that
respondent conspired with Charlie Carlos and Elsie Tacay in eventually alienating the vehicle to a third person, his particular zeal
Rule 57: Preliminary Attachment | 51
and precipitate decision to give possession of the vehicle to a party litigant (plaintiff) and treat the same as "in custodia legis"
effectively destroys the presumption of regularity in the performance of his official duties.
As deputy sheriff, respondent could not be unaware of Rule 57, section 6 of the rules of Court which provides that:
Immediately after executing the order of the officer must make a return thereon to the clerk or judge of the court from which the
order issued, with a full statement of his proceeding under the order and a complete inventory of the property attached, together
with any counter-bond given by the party against whom attachment is issued, and serve a copy of any such counter-bond on the
applicant or his lawyer.
Section (7) (c) of the same Rule also mandates that:
Properties shall be attached by the officer executing the order in the following manner:
xxx xxx xxx
(c) Personal property capable of manual delivery, by taking and safely keeping it in his capacity, after issuing the corresponding
receipt therefor.
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
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 on 15 March 1993.
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. In the same vein, her cousin Camiwet refused to sign the receipt because,
as he testified, the same was misleading as he was being forced to sign a receipt which indicated that complainant and Elsie
Tacay surrendered the vehicle to respondent by virtue of the said alias writ of attachment.
The Court is more inclined to believe the testimony of Camiwet during the investigation to the effect that he only surrendered the
vehicle to respondent because he was repeatedly assured by respondent that everything was all right and that Charlie Carlos
was really after Elsie Tacay, that as soon as Mr. Carlos returned to Dagupan, he (Camiwet) or complainant could retrieve the
vehicle in his (respondent's) possession. 16
Rule 57: Preliminary Attachment | 52
Respondent himself virtually admitted his nonfeasance when he testified that it had been their practice to give possession of
properties subject of writs of attachment to party litigants because they have no bonded warehouse in their jurisdiction. However,
he could not explain why, in this particular case, in the first writ of attachment, he even demanded P1,000.00 from complainant
for alleged storage fees while complainant bought time to find the amount for her counterbond, and yet, in the execution of the
alias writ, he usurped the court's function and released the vehicle to the custody of Mr. Carlos. Equally reprehensible is his
attempt to cover up his misdeed by concealing it from complainant when the latter confronted him thereafter in his office. 17
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.
Time and again, the Court has reiterated the rule that the conduct of every employee of the judiciary must be at all time
characterized with propriety and decorum and above all else, it must be above and beyond suspicion. 18 In the case at bench,
respondent cannot successfully defend his negligent omission to secure a court order before disposing of the property by simply
alleging that a party litigant had agreed to be his agent. In the same vein, a sheriff or deputy sheriff cannot act as special deputy
sheriff of any party litigant.
The Court takes notice that on 18 July 1994, the RTC of Dagupan City rendered a decision in Civil Case No. D-102805 awarding
damages 19 in favor of complainant Rivera. Said decision became final and executory as Panda and Elsie Tacay did not
interpose any appeal therefrom. This circumstance adds more credence to complainant's claim that she would not have been
defrauded in the first place had respondent sheriff performed his duty in accordance with the rules instead of unduly
accommodating the request of a party litigant.
In his report, Judge Villanueva recommends that respondent be suspended for six (6) months without pay. The Court considers
said penalty to be too harsh in the absence of direct evidence showing that respondent has pecuniarily received any financial
gain from the anomalous transactions.
But for his failure to exercise reasonable diligence in the performance of his duties as an officer of the court, the Court hereby
imposes a fine of P5,000 on respondent Flora with STERN WARNING that any repetition of the same act in the future will be
dealt with more severely. Let a copy of this decision be entered in respondent's personal record.
SO ORDERED.
Rule 57: Preliminary Attachment | 53
Davide, Jr., Bellosillo, Quiason and Kapunan, JJ., concur.

Rule 57: Preliminary Attachment | 54

G.R. No. 47578 April 8, 1941
PHILIPPINE NATIONAL BANK vs. ESTEBAN I. VAZQUEZ
071 Phil 433

EN BANC
[G.R. No. 47578. April 8, 1941.]

PHILIPPINE NATIONAL BANK, plaintiff-appellant, vs. ESTEBAN I. VAZQUEZ, defendant-appellee.

Ramon Diokno, for appellant.

Zoilo Hilario, for appellee.

SYLLABUS
1 ATTACHMENT; EXECUTION; DUTY OF SHERIFF. — 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 satisfaction 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.
2. ID; ID.; ID.; CASE AT BAR. — 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, 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 take sheriff on the sale of the goods or property may be regarded just like
Rule 57: Preliminary Attachment | 55
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.

DECISION

LAUREL, J p:
Plaintiff appeals to this court from a decision of Court of First Instance of Occidental Negros, promulgated January 18, 1938, the
dispositive part reading:
"Wherefore, the court hereby renders judgment in favor of the plaintiff and against the defendant, reviving the judgment in the
aforesaid civil case No. 4031 of this same court, but deducting from the amount thereof the sum P5,250.13, the deduction to be
computed as of the date the judgment in said civil case had become final and executory."
It appears that on or about the 27th day of May, 1926, Esteban I. Vazquez succeeded in negotiating with the Philippine National
Bank a loan for P24,000, on the 1925-26 sugarcane harvest of his hacienda "Mandalagan"; that the money advanced him by the
plaintiff bank totalled P19,521.09, at an agreed 9 per cent interest per annum and a mortgage executed on his sugarcane
harvest; that additional guaranty was put up by one Cristeta Ibañez; and, that after liquidation of the debt as of March 31, 1927,
the following was the result:

Total advances against 1926-26 crop loan P19,521.09

Total proceeds of sugar sales 7,636.59
—————
Deficit (principal)' 11,884.50
Interest at 9 per cent to March 31,1927 7,984.97
—————
Total deficit to March 31, 1937 19,869.47
Daily interest on P11,884.60 at 9 per cent 2.97
(Bill of Exceptions, pp. 9-10.)
Rule 57: Preliminary Attachment | 56
Subsequently, in an action filed by the bank for the recovery of the total amount due and owing, defendant Vazquez was ordered
by the court to settle his obligation in full. (Civil Case No. 4031, Court of First Instance of Occidental Negros.) No appeal was
interposed by any of the parties to the decision of October 31, 1931, and the same became and executory. But the said
judgment not having enforced by writ of execution and the period of five having elapsed, the plaintiff bank, on July 22, 1937, a
complaint (Bill of Exceptions, pp. 2-6) for the revival of the judgment. To this complaint, defendant on August 12, 1937, filed his
answer and set up the following counterclaim:
"Que, como se puede ver en el expediente de la causa civil No. 4031 mencionada en el parrafo II de la demanda, a piticion del
demandante, previa fianza prestada por el mismo actor y en virtud de ordenes judiciales, fueron embargados preventivamente
del demandado 500 picos de azucar de la propiedad de este, y vendidos por el Shiriff Provincial de Negros Occidental a razon
de P10.75 cada uno, habiendose tambien ordenado por el mismo Hon. Juzgado, a peticion igualmente del demandante, el
deposito en el Banco Nacional Filipino del producto neto de dicha·venta montante a P5,250.13, cantidad que debe ser
descontada de la suma de P19,869.47 expresada en el parrafo 1V de la demanda, con la consiguiente reduccion de los
intereses referidos en dicho mismo parrafo IV, por no haberse levantado ni anulado nunca dicho embargo y por haberse dictado
contra el demandado sentencia condenatoria, que ha sido firme, en dicho asunto civil No. 4031."
The plaintiff's appeal is limited to the portion of the decision which orders the deduction of the sum mentioned therein from the
amount adjudicated to the plaintiff. In the aforementioned civil case No. 4031, the plaintiff bank prayed for and obtained an order
of preliminary attachment, by virtue of which 500 piculs of sugar belonging to the defendant Vazquez was levied upon by the
sheriff and sold at public auctian at the rate of P10.75 per picul, the proceeds therefrom amounting to P5,250.13. This amount
was deposited with the plaintiff bank, upon its own petition, in the name of one Andres Covacha personally, then a deputy of the
Provincial Sheriff of Occidental Negros. On August 14, 1928, a deposit of P5,250.13, was made in the name of the Provincial
Sheriff of Occidental Negros with the bank, by virtue of another petition of the plaintiff approved by the court to transfer the
deposit in the name of the provincial sheriff proper. It appears, however, that the Provincial Sheriff made other deposits on this
current account, and that he has been making withdrawals therefrom until it was closed on January 6, 1932.
The plaintiff Bank contends that the amount of P5,250.13 should not have been deducted from the judgment awarded to it, for
the reason that the defendant, despite the attachment, is still the owner of the 500 piculs of sugar and of its proceeds after the
Rule 57: Preliminary Attachment | 57
public auction sale, and loss or misappropriation thereof should be for his account. The reason invoked is not applicable here. As
correctly observed by the trial judge, "once the decision in the aforesaid civil case had become final, the proceed of the sugar
attached in connection therewith should be considered as partial satisfaction of the amount of the judgment." "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 satisfaction 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." (Freeman on Judgments, pp. 2366-
2367, citing Yourt v. Hopkins, 24 Ill. 326 and Kenrick v. Ruff, 71 Mo. 570.)
And whether or not the Provincial Sheriff was negligent in the performance of his official duties by not turning the money over to
the plaintiff, is a question which could only be determined in a separate case and hence, immaterial in the present controversy.
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.
We find defendant Esteban I. Vazquez liable to the plaintiff Philippine National Bank for the principal sum of P19,869.47, with
interest on the sum of P11,884.50 at 9 per cent per annum from April 1, 1927, but deducting the sum of P5,250.13, the deduction
to be computed as of the date the judgment in civil case No. 4031 had become final and executory. The appealed decision is
therefore affirmed, with costs against the appellant. So ordered.
Imperial, Diaz, Moran and Horrilleno, JJ., concur.

Rule 57: Preliminary Attachment | 58

G.R. No. 49188 January 30, 1990
PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS, ET AL.

EN BANC
[G.R. No. 49188. January 30, 1990.]

PHILIPPINE AIRLINES, INC., petitioner, vs. HON. COURT OF APPEALS, HON. JUDGE RICARDO D. GALANO, Court of First
Instance of Manila, Branch XIII, JAIME K. DEL ROSARIO, Deputy Sheriff, Court of First Instance, Manila, and AMELIA TAN,
respondents.

DECISION

GUTIERREZ, JR., J p:
Behind the simple issue of validity of an alias writ of execution in this case is a more fundamental question. Should the Court
allow a too literal interpretation of the Rules with an open invitation to knavery to prevail over a more discerning and just
approach? Should we not apply the ancient rule of statutory construction that laws are to be interpreted by the spirit which
vivifies and not by the letter which killeth?
This is a petition to review on certiorari the decision of the Court of Appeals in CA-G.R. No. 07695 entitled "Philippine Airlines,
Inc. v. Hon. Judge Ricardo D. Galano, et al.", dismissing the petition for certiorari against the order of the Court of First Instance
of Manila which issued an alias writ of execution against the petitioner.
The petition involving the alias writ of execution had its beginnings on November 8, 1967, when respondent Amelia Tan, under
the name and style of Able Printing Press commenced a complaint for damages before the Court of First Instance of Manila. The
case was docketed as Civil Case No. 71307, entitled "Amelia Tan, et al. v. Philippine Airlines, Inc."
After trial, the Court of First Instance of Manila, Branch 13, then presided over by the late Judge Jesus P. Morfe rendered
judgment on June 29, 1972, in favor of private respondent Amelia Tan and against petitioner Philippine Airlines, Inc. (PAL) as
follows:
Rule 57: Preliminary Attachment | 59
"WHEREFORE, judgment is hereby rendered, ordering the defendant Philippine Air Lines:
"1. On the first cause of action, to pay to the plaintiff the amount of P75,000.00 as actual damages, with legal interest thereon
from plaintiffs extra-judicial demand made by the letter of July 20, 1967;
"2. On the third cause of action, to pay to the plaintiff the amount of P18,200.00, representing the unrealized profit of 10%
included in the contract price of P200,000.00 plus legal interest thereon from July 20, 1967;
"3. On the fourth cause of action, to pay to the plaintiff the amount of P20,000.00 as and for moral damages, with legal
interest thereon from July 20, 1967;
"4. On the sixth cause of action, to pay to the plaintiff the amount of P5,000.00 damages as and for attorney's fee.
"Plaintiffs second and fifth causes of action, and defendant's counterclaim, are dismissed.
With costs against the defendant." (CA Rollo, p. 18)
On July 28, 1972, the petitioner filed its appeal with the Court of Appeals. The case was docketed as CA-G.R. No. 51079-R.
On February 3, 1977, the appellate court rendered its decision, the dispositive portion of which reads:
"IN VIEW WHEREOF, with the modification that PAL is condemned to pay plaintiff the sum of P25,000.00 as damages and
P5,000.00 as attorney's fee, judgment is affirmed, with costs." (CA Rollo, p. 29)
Notice of judgment was sent by the Court of Appeals to the trial court and on dates subsequent thereto, a motion for
reconsideration was filed by respondent Amelia Tan, duly opposed by petitioner PAL.
On May 23, 1977, the Court of Appeals rendered its resolution denying the respondent's motion for reconsideration for lack of
merit.
No further appeal having been taken by the parties, the judgment became final and executory and on May 31, 1977, judgment
was correspondingly entered in the case.
The case was remanded to the trial court for execution and on September 2, 1977, respondent Amelia Tan filed a motion praying
for the issuance of a writ of execution of the judgment rendered by the Court of Appeals. On October 11, 1977, the trial court,
presided over by Judge Galano, issued its order of execution with the corresponding writ in favor of the respondent. The writ was
duly referred to Deputy Sheriff Emilio Z. Reyes of Branch 13 of the Court of First Instance of Manila for enforcement.
Four months later, on February 11, 1978, respondent Amelia Tan moved for the issuance of an alias writ of execution stating that
the judgment rendered by the lower court, and affirmed with modification by the Court of Appeals, remained unsatisfied.
Rule 57: Preliminary Attachment | 60
On March 1, 1978, the petitioner filed an opposition to the motion for the issuance of an alias writ of execution stating that it had
already fully paid its obligation to plaintiff through the deputy sheriff of the respondent court, Emilio Z. Reyes, as evidenced by
cash vouchers properly signed and receipted by said Emilio Z. Reyes.
On March 3, 1978, the Court of Appeals denied the issuance of the alias writ for being premature, ordering the executing sheriff
Emilio Z. Reyes to appear with his return and explain the reason for his failure to surrender the amounts paid to him by petitioner
PAL. However, the order could not be served upon Deputy Sheriff Reyes who had absconded or disappeared.
On March 28, 1978, motion for the issuance of a partial alias writ of execution was filed by respondent Amelia Tan.
On April 19, 1978, respondent Amelia Tan filed a motion to withdraw "Motion for Partial Alias Writ of Execution" with Substitute
Motion for Alias Writ of Execution. On May 1, 1978, the respondent Judge issued an order which reads:
"As prayed for by counsel for the plaintiff, the Motion to Withdraw 'Motion for Partial Alias Writ of Execution' with Substitute
Motion for Alias Writ of Execution is hereby granted, and the motion for partial alias writ of execution is considered withdrawn.
"Let an Alias Writ of Execution issue against the defendant for the full satisfaction of the judgment rendered. Deputy Sheriff
Jaime K. del Rosario is hereby appointed Special Sheriff for the enforcement thereof." (CA Rollo, p. 34).
On May 18, 1978, the petitioner received a copy of the first alias writ of execution issued on the same day directing Special
Sheriff Jaime K. del Rosario to levy on execution in the sum of P25,000.00 with legal interest thereon from July 20, 1967 when
respondent Amelia Tan made an extrajudicial demand through a letter. Levy was also ordered for the further sum of P5,000.00
awarded as attorney's fees.
On May 23, 1978, the petitioner filed an urgent motion to quash the alias writ of execution stating that no return of the writ had as
yet been made by Deputy Sheriff Emilio Z. Reyes and that the judgment debt had already been fully satisfied by the petitioner as
evidenced by the cash vouchers signed and receipted by the server of the writ of execution, Deputy Sheriff Emilio Z. Reyes.
On May 26, 1978, the respondent Jaime K. del Rosario served a notice of garnishment on the depository bank of petitioner, Far
East Bank and Trust Company, Rosario Branch, Binondo, Manila, through its manager and garnished the petitioner's deposit in
the said bank in the total amount of P64,408.00 as of May 16, 1978. Hence, this petition for certiorari filed by the Philippine
Airlines, Inc., on the grounds that:
I

Rule 57: Preliminary Attachment | 61

AN ALIAS WRIT OF EXECUTION CANNOT BE ISSUED WITHOUT PRIOR RETURN OF THE ORIGINAL WRIT BY THE
IMPLEMENTING OFFICER.
II
PAYMENT OF JUDGMENT TO THE IMPLEMENTING OFFICER AS DIRECTED IN THE WRIT OF EXECUTION
CONSTITUTES SATISFACTION OF JUDGMENT.
III
INTEREST IS NOT PAYABLE WHEN THE DECISION IS SILENT AS TO THE PAYMENT THEREOF.
IV
SECTION 5, RULE 39, PARTICULARLY REFERS TO LEVY OF PROPERTY OF JUDGMENT DEBTOR AND DISPOSAL OR
SALE THEREOF TO SATISFY JUDGMENT.
Can an alias writ of execution be issued without a prior return of the original writ by the implementing officer?
We rule in the affirmative and we quote the respondent court's decision with approval:
"The issuance of the questioned alias writ of execution under the circumstances here obtaining is justified because even with the
absence of a Sheriffs return on the original writ, the unalterable fact remains that such a return is incapable of being obtained
(sic) because the officer who is to make the said return has absconded and cannot be brought to the Court despite the earlier
order of the court for him to appear for this purpose. (Order of Feb. 21, 1978, Annex C, Petition). Obviously, taking cognizance of
this circumstance, the order of May 11, 1978 directing the issuance of an alias writ was therefore issued. (Annex D. Petition).
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 abhorrent 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." (Rollo, pp. 35-
36)
Judicium non debet esse illusorium; suum effectum habere debet (A judgment ought not to be illusory; it ought to have its proper
effect). LLjur

Rule 57: Preliminary Attachment | 62

Indeed, technicality cannot be countenanced to defeat the execution of a judgment for execution is the fruit and end of the suit
and is very aptly called the life of the law (Ipekdjian Merchandising Co. v. Court of Tax Appeals, 8 SCRA 59 [1963];
Commissioner of Internal Revenue v. Visayan Electric Co. ,19 SCRA 697, 698 [1967]). A judgment cannot be rendered nugatory
by the unreasonable application of a strict rule of procedure. Vested rights were never intended to rest on the requirement of a
return, the office of which is merely to inform the court and the parties, of any and all actions taken under the writ of execution.
Where such information can be established in some other manner, the absence of an executing officer's return will not preclude
a judgment from being treated as discharged or being executed through an alias writ of execution as the case may be. More so,
as in the case at bar. Where the return cannot be expected to be forthcoming, to require the same would be to compel the
enforcement of rights under a judgment to rest on an impossibility, thereby allowing the total avoidance of judgment debts. So
long as a judgment is not satisfied, a plaintiff is entitled to other writs of execution (Government of the Philippines v. Echaus and
Gonzales, 71 Phil. 318). It is a well known legal maxim that he who cannot prosecute his judgment with effect, sues his case
vainly.
More important in the determination of the propriety of the trial court's issuance of an alias writ of execution is the issue of
satisfaction of judgment.
Under the peculiar circumstances surrounding this case, did the payment made to the absconding sheriff by check in his name
operate to satisfy the judgment debt? The Court rules that the plaintiff who has won her case should not be adjudged as having
sued in vain. To decide otherwise would not only give her an empty but a pyrrhic victory.
It should be emphasized that under the initial judgment, Amelia Tan was found to have been wronged by PAL.
She filed her complaint in 1967.
After ten (10) years of protracted litigation in the Court of First Instance and the Court of Appeals, Ms. Tan won her case.
It is now 1990.
Almost twenty-two (22) years later, Ms. Tan has not seen a centavo of what the courts have solemnly declared as rightfully hers.
Through absolutely no fault of her own, Ms. Tan has been deprived of what, technically, she should have been paid from the
start, before 1967, without need of her going to court to enforce her rights. And all because PAL did not issue the checks
intended for her, in her name.

Rule 57: Preliminary Attachment | 63

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:
"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." (Emphasis supplied)
Thus, payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular
payment (Ulen v. Knecttle, 50 Wyo. 94, 58 [2d] 446, 111 ALR 65). Payment made to one having apparent authority to receive the
money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one
who by law is authorized to act for the creditor, it will work a discharge (Hendry v. Benlisa, 37 Fla. 609, 20 SO 800, 34 LRA 283).
The receipt of money due on a judgment by an officer authorized by law to accept it will, therefore, satisfy the debt (See 40 Am
Jur 729, 25; Hendry v. Benlisa, supra; Seattle v. Stirrat, 55 Wash. 104 p. 834, 24 LRA [NS] 1275).
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 at
bar, to the sheriff should be valid payment to extinguish the judgment debt. cdrep
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.
Did such payments extinguish the judgment debt?
Article 1249 of the Civil Code provides:
"The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then
in the currency which is legal tender in the Philippines.
"The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect
of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.
"In the meantime, the action derived from the original obligation shall be held in abeyance."

Rule 57: Preliminary Attachment | 64

In the absence of an agreement, either express or implied, payment means the discharge of a debt or obligation in money (US v.
Robertson, 5 Pet. [US] 641, 8 L. ed. 257) and unless the parties so agree, a debtor has no rights, except at his own peril, to
substitute something in lieu of cash as medium of payment of his debt (Anderson v. Gill, 79 Md. 312, 29 A 527, 25 LRA 200, 47
Am. St. Rep. 402). 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 (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American Bank, 7
Phil. 255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager's check or ordinary check, is not legal
tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee
or creditor. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is actually realized (Art. 1249, Civil Code, par. 3).
If bouncing checks had been issued in the name of Amelia Tan and not the Sheriffs, there would have been no payment. After
dishonor of the checks, Ms. Tan could have run after other properties of PAL. The theory is that she has received no value for
what had been awarded her. Because the checks were drawn in the name of Emilio Z. Reyes, neither has she received
anything. The same rule should apply.
It is argued that if PAL had paid in cash to Sheriff Reyes, there would have been payment in full legal contemplation. The
reasoning is logical but is it valid and proper? Logic has its limits in decision making. We should not follow rulings to their logical
extremes if in doing so we arrive at unjust or absurd results. LLpr
In the first place, PAL did not pay in cash. It paid in checks.
And second, payment in cash always carries with it certain cautions. Nobody hands over big amounts of cash in a careless and
inane manner. Mature thought is given to the possibility of the cash being lost, of the bearer being waylaid or running off with
what he is carrying for another. Payment in checks is precisely intended to avoid the possibility of the money going to the wrong

Rule 57: Preliminary Attachment | 65

party. The situation is entirely different where a Sheriff seizes a car, a tractor, or a piece of land. Logic often has to give way to
experience and to reality. Having paid with checks, PAL should have done so properly.
Payment in money or cash to the implementing officer may be deemed absolute payment of the judgment debt but the Court has
never, in the least bit, suggested that judgment debtors should settle their obligations by turning over huge amounts of cash or
legal tender to sheriffs and other executing officers. Payment in cash would result in damage or interminable litigations each time
a sheriff with huge amounts of cash in his hands decides to abscond.
As a protective measure, therefore, the courts encourage the practice of payments by check provided adequate controls are
instituted to prevent wrongful payment and illegal withdrawal or disbursement of funds. If particularly big amounts are involved,
escrow arrangements with a bank and carefully supervised by the court would be the safer procedure. Actual transfer of funds
takes place within the safety of bank premises. These practices are perfectly legal. The object is always the safe and incorrupt
execution of the judgment.
It is, indeed, out of the ordinary that checks intended for a particular payee are made out in the name of another. Making the
checks payable to the judgment creditor would have prevented the encashment or the taking of undue advantage by the sheriff,
or any person into whose hands the checks may have fallen, whether wrongfully or in behalf of the creditor. The issuance of the
checks in the name of the sheriff clearly made possible the misappropriation of the funds that were withdrawn.
As explained and held by the respondent court:.
" . . . [K]nowing as it does that the intended payment was for the private-party respondent Amelia Tan, the petitioner corporation,
utilizing the services of its personnel who are or should be knowledgeable about the accepted procedures and resulting
consequences of the checks drawn, nevertheless, in this instance, without prudence, departed from what is generally observed
and done, and placed as payee in the checks the name of the errant Sheriff and not the name of the rightful payee. Petitioner
thereby created a situation which permitted the said Sheriff to personally encash said checks and misappropriate the proceeds
thereof to his exclusive personal benefit. For the prejudice that resulted, the petitioner himself must bear the fault. The judicial
guideline which we take note of states as follows:
"'As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it
possible by his act of confidence must bear the loss.'" (Blondeau, et al. v. Nano, et al., L-41377, July 26, 1935, 61 Phil. 625).

Rule 57: Preliminary Attachment | 66

Having failed to employ the proper safeguards to protect itself, the judgment debtor whose act made possible the loss had but
itself to blame.
The attention of this Court has been called to the bad practice of a number of executing officers, of requiring checks in
satisfaction of judgment debts to be made out in their own names. If a sheriff directs a judgment debtor to issue the checks in the
sheriff's name, claiming he must get his commission or fees, the debtor must report the sheriff immediately to the court which
ordered the execution or to the Supreme Court for appropriate disciplinary action. Fees, commissions, and salaries are paid
through regular channels. This improper procedure also allows such officers, who have sixty (60) days within which to make a
return, to treat the moneys as their personal funds and to deposit the same in their private accounts to earn sixty (60) days
interest, before said funds are turned over to the court or judgment creditor (See Balgos v. Velasco, 108 SCRA 525 [1981]).
Quite as easily, such officers could put up the defense that said checks had been issued to them in their private or personal
capacity. Without a receipt evidencing payment of the judgment debt, the misappropriation of finds by such officers becomes
clean and complete. The practice is ingenious but evil as it unjustly enriches court personnel at the expense of litigants and the
proper administration of justice. The temptation could be far greater, as proved to be in this case of the absconding sheriff. The
correct and prudent thing for the petitioner was to have issued the checks in the intended payee's name. LLphil
The pernicious effects of issuing checks in the name of a person other than the intended payee, without the latter's agreement or
consent, are as many as the ways that an artful mind could concoct to get around the safeguards provided by the law on
negotiable instruments. An angry litigant who loses a case, as a rule, would not want the winning party to get what he won in the
judgment. He would think of ways to delay the winning party's getting what has been adjudged in his favor. We cannot condone
that practice especially in cases where the courts and their officers are involved. We rule against the petitioner.
Anent the applicability of Section 15, Rule 39, as follows:
"Section 15. Execution of money judgments. — The officer must enforce an execution of a money judgment by levying on all the
property, real and personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment
debtor not exempt from execution, or on a sufficient amount of such property, if they be sufficient, and selling the same, and
paying to the judgment creditor, or his attorney, so much of the proceeds as will satisfy the judgment. . . . ."
the respondent court held:

Rule 57: Preliminary Attachment | 67

"We are obliged to rule that the judgment debt cannot be considered satisfied and therefore the orders of the respondent judge
granting the alias writ of execution may not be pronounced as a nullity.
xxx xxx xxx
"It is clear and manifest that after levy or garnishment, for a judgment to be executed there is the requisite of payment by the
officer to the judgment creditor, or his attorney, so much of the proceeds as will satisfy the judgment and none such payment had
been concededly made yet by the absconding Sheriff to the private respondent Amelia Tan. The ultimate and essential step to
complete the execution of the judgment not having been performed by the City Sheriff, the judgment debt legally and factually
remains unsatisfied."
Strictly speaking execution cannot be equated with satisfaction of a judgment. Under unusual circumstances as those obtaining
in this petition, the distinction comes out clearly.
Execution is the process which carries into effect a decree or judgment (Painter v. Berglund, 31 Cal. App. 2d. 63, 87 P 2d 360,
363; Miller v. London, 294 Mass 300, 1 NE 2d 198, 200; Black's Law Dictionary), whereas the satisfaction of a judgment is the
payment of the amount of the writ, or a lawful tender thereof, or the conversion by sale of the debtor's property into an amount
equal to that due, and, it may be done otherwise than upon an execution (Section 47, Rule 39). Levy and delivery by an
execution officer are not prerequisites to the satisfaction of a judgment when the same has already been realized in fact (Section
47, Rule 39). Execution is for the sheriff to accomplish while satisfaction of the judgment is for the creditor to achieve. Section
15, Rule 39 merely provides the sheriff with his duties as executing officer including delivery of the proceeds of his levy on the
debtor's property to satisfy the judgment debt. It is but to stress that the implementing officer's duty should not stop at his receipt
of payments but must continue until payment is delivered to the obligor or creditor.
Finally, we find no error in the respondent court's pronouncement on the inclusion of interests to be recovered under the alias
writ of execution. This logically follows from our ruling that PAL is liable for both the lost checks and interest. The respondent
court's decision in CA-G.R. No. 51079-R does not totally supersede the trial court's judgment in Civil Case No. 71307. It merely
modified the same as to the principal amount awarded as actual damages.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED. The judgment of the respondent Court of
Appeals is AFFIRMED and the trial court's issuance of the alias writ of execution against the petitioner is upheld without

Rule 57: Preliminary Attachment | 68

prejudice to any action it should take against the errant sheriff Emilio Z. Reyes. The Court Administrator is ordered to follow up
the actions taken against Emilio Z. Reyes.
SO ORDERED.
Fernan, C.J., Cruz, Paras, Bidin, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Separate Opinions

NARVASA, J., dissenting:

The execution of final judgments and orders is a function of the sheriff, an officer of the court whose authority is by and large
statutorily determined to meet the particular exigencies arising from or connected with the performance of the multifarious duties
of the office. It is the acknowledgment of the many dimensions of this authority, defined by statute and chiselled by practice,
which compels me to disagree with the decision reached by the majority. llcd
A consideration of the wide latitude of discretion allowed the sheriff as the officer of the court most directly involved with the
implementation and execution of final judgments and orders persuades me that PAL's payment to the sheriff of its judgment debt
to Amelia Tan, though made by check issued in said officer's name, lawfully satisfied said obligation and foreclosed further
recourse therefor against PAL, notwithstanding the sheriffs failure to deliver to Tan the proceeds of the check.
It is a matter of history that the judiciary . . is an inheritor of the Anglo-American tradition. While the common law as such . . 'is
not in force' in this jurisdiction, 'to breathe the breath of life into many of the institutions, introduced [here] under American
sovereignty, recourse must be had to the rules, principles and doctrines of the common law under whose protecting aegis the
prototypes of these institutions had their birth.' A sheriff is 'an officer of great antiquity,' and was also called the shire reeve. A
shire in English law is a Saxon word signifying a division later called a county. A reeve is an ancient English officer of justice
inferior in rank to an alderman . . appointed to process, keep the King's peace, and put the laws in execution. From a very
remote period in English constitutional history . . the shire had another officer, namely the shire reeve or as we say, the sheriff. . .
The Sheriff was the special representative of the regal or central authority, and as such usually nominated by the King. . . Since
the earliest times, both in England and the United States, a sheriff has continued his status as an adjunct of the court . . . As it

Rule 57: Preliminary Attachment | 69

was there, so it has been in the Philippines from the time of the organization of the judiciary . . ." (J. Fernando's concurring
opinion in Bagatsing v. Herrera, 65 SCRA 434).
One of a sheriff's principal functions is to execute final judgments and orders. The Rules of Court require the writs of execution to
issue to him, directing him to enforce such judgments and orders in the manner therein provided (Rule 39). The mode of
enforcement varies according to the nature of the judgment to be carried out: whether it be against property of the judgment
debtor in his hands or in the hands of a third person (i.e. money judgment), or for the sale of property, real or personal (i.e.
foreclosure of mortgage) or the delivery thereof, etc. (sec. 8, Rule 39).
Under sec. 15 of the same Rule, the sheriff is empowered to levy on so much of the judgment debtor's property as may be
sufficient to enforce the money judgment and sell these properties at public auction after due notice to satisfy the adjudged
amount. It is the sheriff who, after the auction sale, conveys to the purchaser the property thus sold (secs. 25, 26, 27, Rule 39),
and pays the judgment creditor so much of the proceeds as will satisfy the judgment. When the property sold by him on
execution is an immovable which consequently gives rise to a right of redemption on the part of the judgment debtor and others
(secs. 29, 30, Rule 39), it is to him (or to the purchaser or redemptioner) that the payments may be made by those declared by
law as entitled to redeem (sec. 31, Rule 39); and in this situation, it becomes his duty to accept payment and execute the
certificate of redemption (Enage v. Vda. y Hijos de Escano, 38 Phil. 657, cited in Moran, Comments on the Rules of Court, 1979
ed., vol. 2, pp. 326-327). It is also to the sheriff that "written notice of any redemption must be given and a duplicate filed with the
registrar of deeds of the province, and if any assessments or taxes are paid by the redemptioner or if he has or acquires any lien
other than that upon which the redemption was made, notice thereof must in like manner be given to the officer and filed with the
registrar of deeds," the effect of failure to file such notice being that redemption may be made without paying such assessments,
taxes, or liens (sec. 30, Rule 39).
The sheriff may likewise be appointed a receiver of the property of the judgment debtor where the appointment of the receiver is
deemed necessary for the execution of the judgment (sec. 32, Rule 39).
At any time before the sale of property on execution, the judgment debtor may prevent the sale by paying the sheriff the amount
required by the execution and the costs that have been incurred therein (sec. 20, Rule 39).

Rule 57: Preliminary Attachment | 70

The sheriff is also authorized to receive payments on account of the judgment debt tendered by "a person indebted to the
judgment debtor," and his "receipt shall be a sufficient discharge for the amount so paid or directed to be credited by the
judgment creditor on the execution" (sec. 41, Rule 39).
Now, obviously, the sheriff's sale extinguishes the liability of the judgment debtor either in full, if the price paid by the highest
bidder is equal to, or more than the amount of the judgment or pro tanto, if the price fetched at the sale be less. Such extinction
is not in any way dependent upon the judgment creditor's receiving the amount realized, so that the conversion or embezzlement
of the proceeds of the sale by the sheriff does not revive the judgment debt or render the judgment creditor liable anew therefor.
LLpr
So, also, the taking by the sheriff of, say, personal property from the judgment debtor for delivery to the judgment creditor, in
fulfillment of the verdict against him, extinguishes the debtor's liability; and the conversion of said property by the sheriff, does
not make said debtor responsible for replacing the property or paying the value thereof.
In the instances where the Rules allow or direct payments to be made to the sheriff, the payments may be made by check, but it
goes without saying that if the sheriff so desires, he may require payment to be made in lawful money. If he accepts the check,
he places himself in a position where he would be liable to the judgment creditor if any damages are suffered by the latter as a
result of the medium in which payment was made (Javellana v. Mirasol, et al., 40 Phil. 761). The validity of the payment made by
the judgment debtor, however, is in no wise affected and the latter is discharged from his obligation to the judgment creditor as of
the moment the check issued to the sheriff is encashed and the proceeds are received by said office. The issuance of the check
to a person authorized to receive it (Art. 1240, Civil Code; Sec. 46 of the Code of Civil Procedure; Enage v. Vda y Hijos de
Escano, 38 Phil. 657, cited in Javellana v. Mirasol, 40 Phil. 761) operates to release the judgment debtor from any further
obligations on the judgment.
The sheriff is an adjunct of the court; a court functionary whose competence involves both discretion and personal liability
(concurring opinion of J. Fernando, citing Uy Piaoco v. Osmeña, 9 Phil. 299, in Bagatsing v. Herrera, 65 SCRA 434). Being an
officer of the court and acting within the scope of his authorized functions, the sheriff's receipt of the checks in payment of the
judgment execution, may be deemed, in legal contemplation, as received by the court itself (Lara v. Bayona, 10 May 1955, No.
L-10919).

Rule 57: Preliminary Attachment | 71

That the sheriff functions as a conduit of the court is further underscored by the fact that one of the requisites for appointment to
the office is the execution of a bond, "conditioned (upon) the faithful performance of his (the appointee's) duties . . for the delivery
or payment to Government, or the person entitled thereto, of all properties or sums of money that shall officially come into his
hands" (sec. 330, Revised Administrative Code).
There is no question that the checks came into the sheriff's possession in his official capacity. The court may require of the
judgment debtor, in complying with the judgment, no further burden than his vigilance in ensuring that the person he is paying
money or delivering property to is a person authorized by the court to receive it. Beyond this, further expectations become
unreasonable. To my mind, a proposal that would make the judgment debtor unqualifiedly the insurer of the judgment creditor's
entitlement to the judgment amount — which is really what this case is all about — begs the question.
That the checks were made out in the sheriff's name (a practice, by the way, of long and common acceptance) is of little
consequence if juxtaposed with the extent of the authority explicitly granted him by law as the officer entrusted with the power to
execute and implement court judgments. The sheriff's requirement that the checks in payment of the judgment debt be issued in
his name was simply an assertion of that authority; and PAL's compliance cannot in the premises be faulted merely because of
the sheriff's subsequent malfeasance in absconding with the payment instead of turning it over to the judgment creditor.
If payment had been in cash, no question about its validity or of the authority and duty of the sheriff to accept it in settlement of
PAL's judgment obligation would even have arisen. Simply because it was made by checks issued in the sheriff's name does not
warrant reaching any different conclusion.
As payment to the court discharges the judgment debtor from his responsibility on the judgment, so too must payment to the
person designated by such court and authorized to act in its behalf, operate to produce the same effect. Cdpr
It is unfortunate and deserving of commiseration that Amelia Tan was deprived of what was adjudged to her when the sheriff
misappropriated the payment made to him by PAL in dereliction of his sworn duties. But I submit that her remedy lies, not here
and in reviving liability under a judgment already lawfully satisfied, but elsewhere.
ACCORDINGLY, I vote to grant the petition.
Melecio-Herrera and Gancayco, JJ., dissent.
FELICIANO, J., dissenting:

Rule 57: Preliminary Attachment | 72

I concur in the able dissenting opinions of Narvasa and Padilla, JJ. and would merely wish to add a few footnotes to their lucid
opinions.
1. Narvasa, J. has demonstrated in detail that a sheriff is authorized by the Rules of Court and our case law to receive either
legal tender or checks from the judgment debtor in satisfaction of the judgment debt. In addition, Padilla, J. has underscored the
obligation of the sheriff, imposed upon him by the nature of his office and the law, to turn over such legal tender, checks and
proceeds of execution sales to the judgment creditor. The failure of a sheriff to effect such turnover and his conversion of the
funds (or goods) held by him to his own uses, do not have the effect of frustrating payment by and consequent discharge of the
judgment debtor.
To hold otherwise would be to throw the risk of the sheriff faithfully performing his duty as a public officer upon those members of
the general public who are compelled to deal with him. It seems to me that a judgment debtor who turns over funds or property to
the sheriff can not reasonably be made an insurer of the honesty and integrity of the sheriff and that the risk of the sheriff
carrying out his duties honestly and faithfully is properly lodged in the State itself. The sheriff, like all other officers of the court, is
appointed and paid and controlled and disciplined by the Government, more specifically by this Court. The public surely has a
duty to report possible wrongdoing by a sheriff or similar officer to the proper authorities and, if necessary, to testify in the
appropriate judicial and administrative disciplinary proceedings. But to make the individual members of the general community
insurers of the honest performance of duty of a sheriff, or other officer of the court, over whom they have no control, is not only
deeply unfair to the former. It is also a confession of comprehensive failure and comes too close to an abdication of duty on the
part of the Court itself. This Court should have no part in that.
2. I also feel compelled to comment on the majority opinion written by Gutierrez, J. with all his customary and special way
with words. My learned and eloquent brother in the Court apparently accepts the proposition that payment by a judgment debtor
of cash to a sheriff produces the legal effects of payment, the sheriff being authorized to accept such payment. Thus, in page 10
of his ponencia, Gutierrez, J. writes:
"The receipt of money due on a judgment by an officer authorized by law to accept it will satisfy the debt. (Citations omitted).
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 at
bar, to the sheriff would be valid payment to extinguish the judgment debt."
Rule 57: Preliminary Attachment | 73
Shortly thereafter, however, Gutierrez, J. backs off from the above position and strongly implies that payment in cash to the
sheriff is sheer imprudence on the part of the judgment debtor and that therefore, should the sheriff abscond with the cash, the
judgment debtor has not validly discharged the judgment debt:
"It is argued that if PAL had paid in cash to Sheriff Reyes, there would have been payment in full legal contemplation. The
reasoning is logical but is it valid and proper?
In the first place, PAL did not pay in cash. It paid in checks.
And second, payment in cash always carries with it certain cautions. Nobody hands over big amounts of cash in a careless and
inane manner. Mature thought is given to the possibility of the cash being lost, of the bearer being waylaid or running off with
what he is carrying for another. Payment in checks is precisely intended to avoid the possibility of the money going to the wrong
party. . . . .
Payment in money or cash to the implementing officer may be deemed absolute payment of the judgment debt but the court has
never, in the least bit, suggested that judgment debtors should settle their obligations by turning over huge amounts of cash or
legal tender to sheriffs and other executing officers. . . . " (Emphasis in the original) (Majority opinion, pp. 12-13)
There is no dispute with the suggestion apparently made that maximum safety is secured where the judgment debtor delivers to
the sheriff not cash but a check made out, not in the name of the sheriff, but in the judgment creditor's name. The fundamental
point that must be made, however, is that under our law only cash is legal tender and that the sheriff can be compelled to accept
only cash and not checks, even if made out to the name of the judgment creditor. 1 The sheriff could have quite lawfully required
PAL to deliver to him only cash, i.e., Philippine currency. If the sheriff had done so, and if PAL had complied with such a
requirement, as it would have had to, one would have to agree that legal payment must be deemed to have been effected. It
requires no particularly acute mind to note that a dishonest sheriff could easily convert the money and abscond. The fact that the
sheriff in the instant case required, not cash to be delivered to him, but rather a check made out in his name, does not change
the legal situation. PAL did not thereby become negligent; it did not make the loss anymore possible or probable than if it had
instead delivered plain cash to the sheriff. prLL
It seems to me that the majority opinion's real premise is the unspoken one that the judgment debtor should bear the risk of the
fragility of the sheriff's virtue until the money or property parted with by the judgment debtor actually reaches the hands of the
judgment creditor. This brings me back to my earlier point that that risk is most appropriately borne not by the judgment debtor,
Rule 57: Preliminary Attachment | 74
nor indeed by the judgment creditor, but by the State itself. The Court requires all sheriffs to post good and adequate fidelity
bonds before entering upon the performance of their duties and, presumably, to maintain such bonds in force and effect
throughout their stay in office. 2 The judgment creditor, in circumstances like those of the instant case, could be allowed to
execute upon the absconding sheriff's bond. 3
I believe the Petition should be granted and I vote accordingly.
Melecio-Herrera, J., dissents.
PADILLA, J., dissenting:
From the facts that appear to be undisputed, I reach a conclusion different from that of the majority. Sheriff Emilio Z. Reyes, the
trial court's authorized sheriff, armed with a writ of execution to enforce a final money judgment against the petitioner Philippine
Airlines (PAL) in favor of private respondent Amelia Tan, proceeded to petitioner PAL's office to implement the writ. LLjur
There is no question that Sheriff Reyes, in enforcing the writ of execution, was acting with full authority as an officer of the law
and not in his personal capacity. Stated differently, PAL had every right to assume that, as an officer of the law, Sheriff Reyes
would perform his duties as enjoined by law. It would be grossly unfair to now charge PAL with advanced or constructive notice
that Mr. Reyes would abscond and not deliver to the judgment creditor the proceeds of the writ of execution. If a judgment debtor
cannot rely on and trust an officer of the law, as the Sheriff, whom else can he trust?
Pursued to its logical extreme, if PAL had delivered to Sheriff Reyes the amount of the judgment in CASH, i.e. Philippine
currency, with the corresponding receipt signed by Sheriff Reyes, this would have been payment by PAL in full legal
contemplation, because under Article 1240 of the Civil Code, "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." And said payment if made by PAL in
cash, i.e., Philippine currency, to Sheriff Reyes would have satisfied PAL's judgment obligation, as payment is a legally
recognized mode for extinguishing one's obligation. (Article 1231, Civil Code).
Under Sec. 15, Rule 39, Rules of Court which provides that —
"Sec. 15. Execution of money judgments. — The officer must enforce an execution of a money judgment by levying on all the
property, real and personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment
debtor not exempt from execution, or on a sufficient amount of such property, if there be sufficient, and selling the same, and
paying to the judgment creditor, or his attorney, so much of the proceeds as will satisfy the judgment. . . . ." (emphasis supplied)
Rule 57: Preliminary Attachment | 75
it would be the duty of Sheriff Reyes to pay to the judgment creditor the proceeds of the execution i.e., the cash received from
PAL (under the above assumption). But, the duty of the sheriff to pay the cash to the judgment creditor would be a matter
separate the distinct from the fact that PAL would have satisfied its judgment obligation to Amelia Tan, the judgment creditor, by
delivering the cash amount due under the judgment to Sheriff Reyes.
Did the situation change by PAL's delivery of its two (2) checks totalling P30,000.00 drawn against its bank account, payable to
Sheriff Reyes, for account of the judgment rendered against PAL? I do not think so, because when Sheriff Reyes encashed the
checks, the encashment was in fact a payment by PAL to Amelia Tan through Sheriff Reyes, an officer of the law authorized to
receive payment, and such payment discharged PAL's obligation under the executed judgment. llcd
If the PAL checks in question had not been encashed by Sheriff Reyes, there would be no payment by PAL and, consequently,
no discharge or satisfaction of its judgment obligation. But the checks had been encashed by Sheriff Reyes — giving rise to a
situation as if PAL had paid Sheriff Reyes in cash, i.e., Philippine currency. This, we repeat, is payment, in legal contemplation,
on the part of PAL and this payment legally discharged PAL from its judgment obligation to the judgment creditor. To be sure, the
same encashment by Sheriff Reyes of PAL's checks delivered to him in his official capacity as Sheriff, imposed an obligation on
Sheriff Reyes to pay and deliver the proceeds of the encashment to Amelia Tan who is deemed to have acquired a cause of
action against Sheriff Reyes for his failure to deliver to her the proceeds of the encashment. As held:
"Payment of a judgment, to operate as a release or satisfaction, even pro tanto, must be made to the plaintiff or to some person
authorized by him, or by law, to receive it. The payment of money to the sheriff having an execution satisfies it, and, if the plaintiff
fails to receive it, his only remedy is against the officer (Henderson v. Planters' and Merchants Bank, 59 SO 493,178 Ala. 420).
"Payment of an execution satisfies it without regard to whether the officer pays it over to the creditor or misapplies it (340, 33
C.J.S. 644, citing Elliot v. Higgins, 83 N.C. 459). lf defendant consents to the Sheriff's misapplication of the money, however,
defendant is estopped to claim that the debt is satisfied (340, 33 C.J.S. 644, citing Heptinstall v. Medlin, 83 N.C. 16)."
The above rulings find even more cogent application in the case at bar because, as contended by petitioner PAL (not denied by
private respondent), when Sheriff Reyes served the writ of execution on PAL, he (Reyes) was accompanied by private
respondent's counsel. Prudence dictated that when PAL delivered to Sheriff Reyes the two (2) questioned checks (payable to
Sheriff Reyes), private respondent's counsel should have insisted on their immediate encashment by the Sheriff with the drawee
bank in order to promptly get hold of the amount belonging to his client, the judgment creditor.
Rule 57: Preliminary Attachment | 76
ACCORDINGLY, I vote to grant the petition and to quash the court a quo's alias writ of execution.
Melecio-Herrera, Gancayco, Sarmiento and Cortes, JJ., concur.

Footnotes

FELICIANO, J., dissenting:

1. Art. 1249, Civil Code; e.g., Belisario v. Natividad, 60 Phil. 156 (1934); Villanueva v. Santos, 67 Phil 648 (1938).
2. See e.g., Sec. 46, Republic Act No. 296, as amended by Republic Act No. 4814.
3. See e.g., Sec. 9, Act No. 3598.

Rule 57: Preliminary Attachment | 77

Section 17

G.R. No. L-26449 May 15, 1969

LUZON STEEL CORPORATION vs. JOSE O. SIA

EN BANC
[G.R. No. L-26449. May 15, 1969.]

LUZON STEEL CORPORATION, represented by TOMAS AQUINO CU, plaintiff- appellant, vs. JOSE O. SIA, defendant, TIMES
SURETY & INSURANCE CO., INC., surety-appellee.

German A. Sipin for plaintiff-appellant.

Galicano S. Calapatia for surety-appellee.

SYLLABUS
1. REMEDIAL LAW; ATTACHMENT; COUNTERBOND TO DISCHARGE A LEVY ON ATTACHMENT; RULE. — Rule 57,
Section 12, specifies that an attachment may be discharged upon the making of a cash deposit or filing a counterbond "in an
amount equal to the value of the property attached as determined by the judge"; that upon the filing of the counterbond "the
property attached - shall be delivered to the party making the deposit or giving the counterbond, or the person appearing on his
behalf, the deposit or counterbond aforesaid standing in place of the property so released". Whether the judgment be rendered
after trial on the merits or upon compromise, such judgment may be made effective upon the property released; and since the
counterbond merely stands in the place of such property, there is no reason why the judgment should not be made effective
against the counterbond regardless of the manner how the judgment was obtained.
2. ID.; ID.; ID.; SAID COUNTERBONDS DISTINGUISHED FROM BOND FILED BY PLAINTIFF FOR THE ISSUANCE OF
WRIT OF ATTACHMENT. — Counterbonds posted to obtain the lifting of a writ of attachment is a security for the payment of
Rule 57: Preliminary Attachment | 78
any judgment that the attaching party may obtain; they are thus mere replacements of the property formerly attached and may
be levied upon after final judgment in the case in order to realize the amount adjudged. This situation does not obtain in the case
of injunction counterbonds, since the sureties in the latter case merely undertake to pay all damages that the plaintiff may suffer
by reason of the continuance - of the acts complained of and not to secure payment of the judgment recovered.
3. ID.; ID.; ID.; NATURE THEREOF. — The counterbond contemplated in Section 17 of Rule 57 of the Revised Rules of
Court is ordinary guaranty where the sureties assume a subsidiary liability.
4. CIVIL LAW; SPECIAL CONTRACTS; GUARANTY; EXCUSSION; PREVIOUS EXHAUSTION OF PROPERTY OF
DEBTOR DOES NOT APPLY WHERE SURETY IS BOUND IN SOLIDUM. — Article 2059, paragraph 2, of the Civil Code of the
Philippines requiring excussion (previous exhaustion of the property of the debtor) does not apply if the guarantor has bound
himself solidarily with the debtor.
5. ID.; ID.; ID.; ID.; REASON. — A procedural rule may not amend the substantive law expressed in the Civil Code, and
would nullify the express stipulation of the parties.
6. ID.; ID.; ID.; INSTANCE WHEN EXCUSSION DOES NOT APPLY. — 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.
7. ID.; ID.; ID.; LIABILITY OF SURETY ATTACHES UPON RENDITION OF JUDGMENT. — Where under the rule and the
bond the undertaking is to pay the judgment, the liability of the surety or sureties attaches upon the rendition of the judgment,
and the issue of an execution and its return nulla bona is not, and should not be, a condition to the right to resort to the bond.
Payment under the bond is not made to depend upon the redelivery or availability of the property previously attached.
8. ID.; ID.; ID.; REQUIREMENT OF NOTICE AND HEARING, SUBSTANTIAL COMPLIANCE THEREWITH. — Where the
surety was allowed to move for the quashal of the writ of execution and for the cancellation of its obligation, the requirement of
notice and summary hearing in the same action is substantially complied with.

DECISION

REYES, J.B.L., Acting C.J p:

Rule 57: Preliminary Attachment | 79
Direct appeal from two orders, dated 19 May and 5 June 1965, issued by the Court of First Instance of Manila (Judge Francisco
Arca presiding), in its Civil Case No. 54913, entitled Luzon Steel Corporation, plaintiff, vs. Metal Manufacturing of the Philippines,
Inc., and Jose O. Sia, defendants, whereby the court aforesaid quashed a writ of execution issued against the Times Surety &
Insurance Co., Inc., and cancelled the undertaking of said surety company.
The essential and uncontroverted facts of the case may be summarized as follows:
Luzon Steel Corporation has sued Metal Manufacturing of the Philippines and Jose O. Sia, the former's manager, for breach of
contract and damages. It obtained a writ of preliminary attachment of the properties of the defendants, but the attachment was
lifted upon a P25,000.00 counter-bond executed by the defendant Sia, as principal, and the Times Surety & Insurance., Inc.
(hereinafter designated as the surety), as solidary guarantor, in the following terms:
"'WHEREFORE, we JOSE O. SIA, as principal, and the TIMES SURETY & INSURANCE CO., INC., as Surety, in consideration
of the dissolution of attachment, hereby jointly and severally bind ourselves in the sum of Twenty Five Thousand Pesos
(P25,000.00), Philippine currency, to answer for the payment to the plaintiff of any judgment it may recover in the action in
accordance with Section 12, Rule 59, of the Rules of Court. (pp. 32, 45, Rec. on Appeal.)"
Issues having been joined, plaintiff and defendant (without intervention of the surety) entered into a compromise whereby
defendant Sia agreed to settle the plaintiff's claim in the following manner:
"1. That the Defendant shall settle with the Plaintiff the amount of TWENTY FIVE THOUSAND (P25,000.00) PESOS, in the
following manner: FIVE HUNDRED (P500.00) PESOS, monthly for the first six (6) months to be paid at the end of every month
and to commence in January, 1965, and within one month after paying the last installment of P500.00, the balance of
P22,000.00 shall be paid in lump sum, without interest. It is understood that failure of the Defendant to pay one or any
installment will make the whole obligation immediately due and demandable and that a writ of execution will be issued
immediately against Defendants bond."
The compromise was submitted to the court and the latter approved it, rendered judgment in conformity therewith, and directed
the parties to comply with the same (Record on Appeal, page 22).
Defendant having failed to comply, plaintiff moved for and obtained a writ of execution against defendant and the joint and
several counter-bond. 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. The court, overruling the plaintiff's
Rule 57: Preliminary Attachment | 80
opposition, set aside the writ of execution, and later cancelled the counter-bond, and denied the motion for reconsideration.
Hence this appeal.
Main issues posed are (1) whether the judgment upon the compromise discharged the surety from its obligation under its
attachment counterbond and (2) whether the writ of execution could be issued against the surety without previous exhaustion of
the debtor's properties.
Both questions can be solved by bearing in mind that we are dealing with a counterbond filed to discharge a levy on attachment.
Rule 57, Section 12, specifies that an attachment may be discharged upon the making of a cash deposit or filing a counterbond
"in an amount equal to the value of the property attached as determined by the judge"; that upon the filing of the counterbond
"the property attached . . . shall be delivered to the party making the deposit or giving the counterbond, or the person appearing
on his behalf, the deposit or counterbond of aforesaid standing in place of the property so released".
The italicized expressions constitute the key to the entire problem. Whether the judgment be rendered after trial on the merits or
upon compromise, such judgment undoubtedly may be made effective upon the property released; and since the counterbond
merely stands in the place of such property, there is no reason why the judgment should not be made effective against the
counterbond regardless of the manner how the judgment was obtained.
Squarely on the point, and rebutting the appellee's apprehension that the compromise could be the result of a collusion between
the parties to injure the surety, is our decision in Anzures vs. Alto Surety & Insurance Co., Inc., et al., 92 Phil. 742, where this
Court, through former Chief Justice Paras, ruled as follows:
"Under Section 12, Rule 59, of the Rules of Court, the bond filed, as in this case, for the discharge of an attachment is 'to secure
the payment to the plaintiff of any judgment he may recover in the action,' and stands 'in place of the property so released'. It
follows that the order of cancellation issued by the respondent judge is erroneous. Indeed, judgment had already been rendered
by the Court of First Instance of Manila in civil case No. 11748, sentencing Benjamin Aguilar to pay the sum of P3,500.00 to the
petitioner; and it is not pretended that said judgment is a nullity. There is no point in the contention of the respondent Surety
Company that the compromise was entered into without its knowledge and consent, thus becoming as to it essentially fraudulent.
The Surety is not a party to civil case No. 11748 and, therefore, need not be served with notice of the petition for judgment. As
against the conjecture of said respondent that the parties may easily connive by means of a compromise to prejudice it, there is

Rule 57: Preliminary Attachment | 81

also the likelihood that the same end may be attained by parties acting in bad faith through a simulated trial. At any rate, it is
within the power of the Surety Company to protect itself against a risk of the kind.
Wherefore, the order of the respondent Judge cancelling the bond in question is set aside. So ordered with costs against the
respondent Alto Surety & Insurance Co., Inc."
The lower court and the appellee herein appear to have relied on doctrines of this Court concerning the liability of sureties in
bonds filed by a plaintiff for the issuance of writs of attachment, without discriminating between such bonds and those filed by a
defendant for the lifting of writs of attachment already issued and levied. This confusion is hardly excusable considering that this
Court has already called attention to the difference between these kinds of bonds. Thus, in Cajefe vs. Judge Fernandez, et al., L-
15709, 19 October 1960, this Court pointed out that —
"The diverse rule in Section 17 of Rule 59 for counterbonds posted to obtain the lifting of a writ of attachment is due to these
bonds being security for the payment of any judgment that the attaching party may obtain; they are thus mere replacements of
the property 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 countersureties ascertainable after the judgment has become final. This situation does
not obtain in the case of injunction counterbonds, since the sureties in the latter case merely undertake 'to pay all damages that
the plaintiff may suffer by reason of the continuance . . . of the acts complained of' (Rule 60, Section 6) and not to secure
payment of the judgment recovered." 1
It was, therefore, error on the part of the court below to have ordered the surety bond cancelled, on the theory that the parties'
compromise discharged the obligation of the surety.
As declared by us in Mercado vs. Macapayag, 69 Phil. 403, 405- 406, in passing upon the liability of counter sureties in replevin
who bound themselves to answer solidarily for the obligations of the defendants to the plaintiffs in a fixed amount of P912.04, to
secure payment of the amount that said plaintiff be adjudged to recover from the defendants, 2
"the liability of the sureties was fixed and conditioned on the finality of the judgment rendered regardless of whether the decision
was based on the consent of the parties or on the merits. A judgment entered on a stipulation is nonetheless a judgment of the
court because consented to by the parties. "But the surety in the present case insists (and the court below so ruled) that the
execution issued against it was invalid because the writ issued against its principal, Jose O. Sia, et al., defendants below, had

Rule 57: Preliminary Attachment | 82

not been returned unsatisfied; and the surety invoked in its favor Section 17 of Rule 57 of the Revised Rules of Court (old Rule
59), couched in the following terms:
"SEC. 17 When execution returned unsatisfied recovery had upon bond.—If the execution be returned unsatisfied in whole or
in part, the surety or sureties on any counterbond given pursuant to the provisions of this rule to secure the payment of the
judgment shall become charged on such counterbond, and bound to pay to the judgment creditor 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."
The surety's contention is untenable. The counterbond 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 excussion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself
solidarily with the debtor". The rule heretofore quoted can not 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. There is no record that the appellee surety has done so. Says Article
2060 of the Civil Code of the Philippines:
"ART. 2060. In order that the guarantor may make use of the benefit of excussion, he must set it up against the creditor upon
the latter's demand for payment from him, and point out to the creditor available property of the debtor within Philippine territory,
sufficient to cover the amount of the debt."
A third reason against the thesis of appellee is that, under the rule and its own terms, the counter-bond is only conditioned upon
the rendition of the judgment. Payment under the bond is not made to depend upon the re-delivery or availability of the property
previously attached, as it was under Section 440 of the old Code of Civil Procedure. Where under the rule and the bond the

Rule 57: Preliminary Attachment | 83

undertaking is to pay the judgment, the liability of the surety or sureties attaches upon the rendition of the judgment, and the
issue of an execution and its return nulla bona is not, and should not be, a condition to the right to resort to the bond. 3
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.
WHEREFORE, the orders appealed from are reversed, and the court of origin is ordered to proceed with the execution against
the surety appellee, Times Surety & Insurance Co., Inc. Costs against said appellee.
Dizon, Makalintal, Zaldivar, Sanchez, Fernando, Capistrano, and Barredo, JJ., concur.
Teehankee, Concepcion, C.J. and Castro, JJ., took no part.

Footnotes

1. See concurring opinion, Alliance Insurance & Surety Co. vs. Piccio, ante.
2. Note the similarity in conditions of this replevin bond with that of appellee surety in the case at bar (v. ante. page 2).
3. See Anzures vs. Alto Surety and Mercado vs. Macapayag, ante; 7 C.J.S., page 510; 6 Am. Jur. 2d, page 938, Section
530.

Rule 57: Preliminary Attachment | 84

G.R. No. 72005 May 29, 1987
PHILIPPINE BRITISH ASSURANCE CO., INC. vs. INTERMEDIATE APPELLATE COURT

FIRST DIVISION
[G.R. No. 72005. May 29, 1987.]

PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT,
SYCWIN COATING & WIRES, INC., and DOMINADOR CACPAL, Chief Deputy Sheriff of Manila, respondents.

DECISION

GANCAYCO, J p:
This is a Petition for Review on Certiorari of the Resolution dated September 12, 1985 of the Intermediate Appellate Court in AC-
G.R. No. CR-05409 1 granting private respondent's motion for execution pending appeal and ordering the issuance of the
corresponding writ of execution on the counterbond to lift attachment filed by petitioner. The focal issue that emerges is whether
an order of execution pending appeal of a judgment maybe enforced on the said bond. In the Resolution of September 25, 1985
2 this Court as prayed for, without necessarily giving due course to the petition, issued a temporary restraining order enjoining
the respondents from enforcing the order complaint of.
The records disclose that private respondent Sycwin Coating & Wires, Inc., filed a complaint for collection of a sum of money
against Varian Industrial Corporation before the Regional Trial Court of Quezon City. During the pendency of the suit, private
respondent succeeded in attaching some of the properties of Varian Industrial Corporation upon the posting of a supersedeas
bond. 3 The latter in turn posted a counterbond in the sum of P1,400,000.00 4 thru petitioner Philippine British Assurance Co.,
Inc., so the attached properties were released.
On December 28, 1984, the trial court rendered a Decision, the dispositive portion of which reads:
"WHEREFORE, plaintiff's Motion for Summary Judgment is hereby GRANTED, and judgment is rendered in favor of the plaintiff
and against the defendant Varian Industrial Corporation, and the latter is hereby ordered:
Rule 57: Preliminary Attachment | 85
1. To pay plaintiff the amount of P1,401,468.00, the principal obligation with 12% interest per annum from the date of default
until fully paid;
2. To pay plaintiff 5% of the principal obligation as liquidated damages;
3. To pay plaintiff P30,000.00 as exemplary damages;
4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as and for attorney's fees; and
5. To pay the costs of suit.
Accordingly, the counterclaim of the defendant is hereby DISMISSED for lack of merit.
SO ORDERED." 5
Varian Industrial Corporation appealed the decision to the respondent Court. Sycwin then filed a petition for execution pending
appeal against the properties of Varian in respondent Court. Varian was required to file its comment but none was filed. In the
Resolution of July 5, 1985, respondent Court ordered the execution pending appeal as prayed for. 6 However, the writ of
execution was returned unsatisfied as Varian failed to deliver the previously attached personal properties upon demand. In a
Petition dated August 13, 1985 filed with respondent Court Sycwin prayed that the surety (herein petitioner) be ordered to pay
the value of its bond. 7 In compliance with the Resolution of August 23, 1985 of the respondent Court herein petitioner filed its
comment. 8 In the Resolution of September 12, 1985, 9 the respondent Court granted the petition. Hence this action. prLL
It is the submission of private respondent Sycwin that without a previous motion for reconsideration of the questioned resolution,
certiorari would not lie. While as a general rule a motion for reconsideration has been considered a condition sine qua non for the
granting of a writ of certiorari, this rule does not apply when special circumstances warrant immediate or more direct action. 10 It
has been held further that a motion for reconsideration may be dispensed with in cases like this where execution had been
ordered and the need for relief was extremely urgent. 11
The counterbond provides:
"WHEREAS, in the above-entitled case pending in the Regional Trial Court, National Capital Judicial Region, Branch LXXXV
Quezon City, an order of Attachment was issued against abovenamed Defendant;
WHEREAS, the Defendant, for the purpose of lifting and/or dissolving the order of attachment issued against them in the above-
entitled case, have offered to file a counterbond in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY
P1,400,000.00), Philippine Currency, as provided for in Section 5 Rule 57 of the Revised Rules of Court.
Rule 57: Preliminary Attachment | 86
NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION, as Principal and the PHILIPPINE BRITISH ASSURANCE
COMPANY, INC., a corporation duly organized and existing under and by virtue of the laws of the Philippines, as Surety in
consideration of the above and of the lifting or dissolution of the order of attachment, hereby jointly and severally, bind ourselves
in favor of the above Plaintiff in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY (P1,400,000.00),
Philippine Currency, under the condition that in case the Plaintiff recovers judgment in the action, and Defendant will, on
demand, re-deliver the attached property so released to the Officer of the Court and the same shall be applied to the payment of
the judgment, or in default thereof, the defendant and Surety will, on demand, pay to the Plaintiff the full value of the property
released.
EXECUTED at Manila, Philippines, this 28th day of June, 1984." 12
Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:
SEC. 5. Manner of attaching property. — The officer executing the order shall without delay attach, to await judgment and
execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from
execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the
clerk or judge of the court from which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient
to satisfy such demand besides costs, or in an amount equal to the value of the property which is about to be attached, to secure
payment to the applicant of any judgment which he may recover in the action. The officer shall also forthwith serve a copy of the
applicant's affidavit and bond, and of the order of attachment, on the adverse party, if he be found within the province.
SEC. 12. Discharge of attachment upon giving counterbond. — At any time after an order of attachment has been granted,
the party whose property has been attached, or the person appearing on his behalf, may, upon reasonable notice to the
applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security given. The judge shall, after hearing, order the discharge of the
attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is filed, on behalf of the adverse party,
with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as
determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the
filing of such counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of
an attachment in accordance with the provisions of this section the property attached, or the proceeds of any sale thereof, shall
Rule 57: Preliminary Attachment | 87
be delivered to the party making the deposit or giving the counterbond aforesaid standing in place of the property so released.
Should such counterbond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an
additional counterbond, the attaching creditor may apply for a new order of attachment.
SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole
or in part, 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 counterbond and bound to pay to the judgment creditor 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. (Emphasis supplied.)
Under Sections 5 and 12, Rule 57 above reproduced it is provided that the counterbond 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
counterbond." cdphil
The counterbond was issued in accordance with the provisions of Section 5, Rule 57 of the Rules of Court as provided in the
second paragraph aforecited which is deemed reproduced as part of the counterbond. In the third paragraph it is also stipulated
that the counterbond is to be "applied for the payment of the judgment." Neither the rules nor the provisions of the counterbond
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.
It is well recognized rule that where the law does not distinguish, courts should not distinguish. Ubi lex non distinguit nec nos
distinguere debemos. 13 The rule, founded on logic, is a corollary of the principle that general words and phrases in a statute
should ordinarily be accorded their natural and general significance. 14 The rule requires that a general term or phrase should
not be reduced into parts and one part distinguished from the other so as to justify its exclusion from the operation of the law. 15
In other words, there should be no distinction in the application of a statute where none is indicated. 16 For courts are not
authorized to distinguish where the law makes no distinction. They should instead administer the law not as they think it ought to
be but as they find it and without regard to consequences. 17

Rule 57: Preliminary Attachment | 88

A corollary of the principle is the rule that where the law does not make any exception, courts may not except something
therefrom, unless there is compelling reason apparent in the law to justify it. 18 Thus where a statute grants a person against
whom possession of "any land" is unlawfully withheld the right to bring an action for unlawful detainer, this Court held that the
phrase "any land" includes all kinds of land, whether agricultural, residential, or mineral. 19 Since the law in this case does not
make any distinction nor intended to make any exception, when it speaks of "any judgment" which maybe charged against the
counterbond, it should be interpreted to refer not only to a final and executory judgment in the case but also a judgment pending
appeal.
All that is required is that the conditions provided for by law are complied with, as outlined in the case of Towers Assurance
Corporation v. Ororama Supermart, 20
"Under Section 17, in order that the judgment creditor might recover from the surety on the counterbond, it is necessary (1) that
the execution be first issued against the principal debtor and that such execution was returned unsatisfied in whole or in part; (2)
that the creditor make a demand upon the surety for the satisfaction of the judgment, and (3) that the surety be given notice and
a summary hearing on the same action as to his liability for the judgment under his counterbond."
The rule therefore, is that the counterbond to lift attachment that is issued in accordance with the provisions of Section 5, Rule
57, of the Rules of Court, shall be charged with the payment of any judgment that is returned unsatisfied. It covers not only a
final and executory judgment but also the execution of a judgment pending appeal. prLL
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the restraining order issued on September 25, 1985 is
hereby dissolved with costs against petitioner.
SO ORDERED.
Yap (Chairman), Narvasa, Melencio-Herrera, Cruz and Sarmiento, JJ., concur.
Feliciano, J., is on leave.

Rule 57: Preliminary Attachment | 89

G.R. No. L-28030 January 18, 1982
IMPERIAL INSURANCE, INC. vs. WALFRIDO DE LOS ANGELES, ET AL.

FIRST DIVISION
[G.R. No. L-28030. January 18, 1982.]

THE IMPERIAL INSURANCE, INC., petitioner, vs. HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance of
Rizal, Quezon City Branch IV, ROSA V. REYES, PEDRO V. REYES and CONSOLACION V. REYES, respondents.

Paredes, Poblador, Nazareno & Azada for petitioner.

Dakila T. Castro for private respondents.

SYNOPSIS
The plaintiffs in two separate civil actions against a common defendant were able to obtain preliminary writs of attachment
whereby properties of the defendant were attached. However, the attachments were dissolved upon the execution by defendant
of a counterbond where the petitioner, as surety, bound itself "jointly and severally" with the defendant to satisfy any judgment
that may be rendered against the latter in the said civil cases. Consequently, when judgment was rendered against the
defendant after a joint trial of the cases, and the writs of execution against him were returned unsatisfied, the plaintiff filed a
motion for recovery on the counterbonds. and, in a letter, demanded payment of the accounts from the surety. The trial court
granted the motion over the opposition of the surety company, and a writ of execution was issued on ex parte motion of the
plaintiffs. In the meantime, the surety moved for reconsideration of the order granting plaintiffs' motion to recover on the
counterbond, and upon denial thereof, filed a petition for certiorari with the Court of Appeals. The petition was dismissed. Hence,
this recourse. Petitioner surety company assailed the trial court's issuance of the writ of execution against the counterbond
without prior notice of hearing and without prior exhaustion of defendant's properties, and faulted the appellate court for not
holding that the order granting the motion for recovery on the counterbond was final and therefore appealable.

Rule 57: Preliminary Attachment | 90

The Supreme Court held that the requirements of notice and hearing to charge the counterbond under Section 17, Rule 57 of the
Rules of Court had been satisfactorily complied with as shown by the records; that the rule that the counterbond contemplated in
the said Section 17 is an ordinary guaranty, cannot apply where the surety bound itself "jointly and severally" with the defendant;
and that under the same Section 17, the liability of the surety on a counterbond automatically attaches and a writ of execution
may immediately be issued once the requirements set forth in the said provision of the Rules have been met.
Decision affirmed.
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY ATTACHMENT; COUNTERBOND TO LIFT
ATTACHMENT; REQUISITES TO HOLD SURETY THEREON LIABLE. — Under Section 17, Rule 57 of the Rules of Court, the
liability of the surety upon a counterbond to lift an order of attachment automatically attaches after the following requisites have
been complied with: (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.
2. ID.; ID.; ID.; ID.; REQUIREMENTS SATISFACTORILY COMPLIED WITH IN CASE AT BAR; JUDGMENT AGAINST
COUNTERBOND A SUPERFLUITY. — It is clear from the indubitable documents on record that the requirements of notice and
hearing of demand upon the surety on the counterbond had been satisfactorily complied with by the private respondents in the
case at bar when they filed the motion for recovery on the surety bond dated September 9, 1966 and to which the surety filed
their opposition dated September 24, 1966. Therefore, all the requisites under Section 17, Rule 57 of the Rules of Court have
been complied with, and the liability of the petitioner surety automatically attaches.
3. ID.; ID.; ID.; ID.; NATURE THEREOF. — The counterbonds under Section 17, Rule 57 of the Rules of Court merely stand
in place of the properties attached and released by virtue of the filing of such counterbond. 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.
4. ID.; ID.; ID.; ID.; SURETIES SUBSIDIARILY LIABLE THEREON; CASE AT BAR, AN EXCEPTION. — Although the
counterbond contemplated in Section 17, Rule 57 of the Rules of Court is an ordinary guaranty where the sureties assume a

Rule 57: Preliminary Attachment | 91

subsidiary liability, the rule cannot apply to a counterbond where the surety bound itself "jointly and severally" (in solidum) with
the defendant as in the present case
5. ID.; ID.; ID.; ID.; ID.; NO EXCUSSION WHERE SURETY BOUND HIMSELF SOLIDARILY WITH PRINCIPAL DEBTOR.
— In accordance with Article 2059, par. 2 of the Civil Code of the Philippines, excussion (previous exhaustion of the property of
the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor.'' Section 17, Rule 57 of the
Rules of Court cannot be construed 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.
6. ID.; ID.; ID.; ID.; RECOVERY AND EXECUTION AGAINST SURETY IN THE SAME CIVIL CASE. — To recover against
the petitioner surety on its counterbonds, it is not necessary to file a separate action. Recovery and execution may be had in the
same civil cases as sanctioned by Section 17, Rule 57 of the Rules of Court. Where all the requisites under the said Rule are
present, as in the present case, the liability of the surety automatically attaches. The order rendering judgment against the
counterbonds in this case was, therefore, a superfluity. The respondent Judge could have immediately issued a writ of execution
against the petitioner surety upon demand.
7. ID.; ID.; ID.; ID.; ORDER RENDERING JUDGMENT AGAINST COUNTERBOND, FINAL AND NON-APPEALABLE;
APPLICABLE RULE. — The finality and non-appealability of the order rendering judgment against the counterbond in the case
at bar is made certain and absolute with the issuance of the order of execution upon the filing of the ex parte motion for writ of
execution of which the petitioner was duly notified by the respondent Judge and which was duly heard. The general rule is that
an order of execution is not appealable, otherwise a case would never end. The two exceptions to this rule are; (1) where the
order of execution varies the tenor of the judgment; and (2) when the terms of the judgment are not very clear, and there is room
for interpretation. The case at bar does not fall under either exception. There is no showing that the order of execution varies the
tenor of the judgment in the two civil cases, nor of the order rendering judgment against the surety, but is in fact in consonance
therewith and the terms of the judgment are clear and definite, therefore, the general rule of non-appealability applies.
8. ID.; ID.; ID.; ID.; UNDERTAKING UNDER COUNTERBOND CONDITIONED UPON RENDITION OF JUDGMENT; CASE
AT BAR. — Under the law and under their own terms, the counter-bonds are only conditioned upon the rendition of the
judgment. As held by this Court in the case of Luzon Steel Corporation vs. Sia (28 SCRA 58, 64) "where under the role and the
Rule 57: Preliminary Attachment | 92
bond the undertaking is to pay the judgment, the liability of the surety or sureties attaches upon the rendition of the judgment,
and the issue of an execution and its return nulla bona is not, and should not be a condition tu the right to resort to the bond."
Thus, it matters not whether the Provincial Sheriff, in making the return of the writ of execution served or did not serve a copy
thereof with notice of attachment on the administratrix of the intestate estate in the case at bar and filed a copy of said writ with
the Office of the Clerk of Court with notice in accordance with Section 7(f), Rule 57 of the Revised Rules of Court. The petitioner
surety as solidary obligor is liable just the same.

DECISION

FERNANDEZ, J p:
This is a petition for certiorari to review the decision of the Court of Appeals in CA-G.R. No. 38824-R promulgated on July 19,
1967 entitled "The Imperial Insurance, Inc., petitioner versus Hon. Walfrido de los Angeles, Judge of the Court of First Instance
of Rizal, Branch IV, Quezon City, et al., respondents," the dispositive part of which reads:
"WHEREFORE, the instant petition is dismissed and the writ of preliminary injunction issued by the Court on January 31, 1967,
is hereby dissolved, with costs against petitioner.
"SO ORDERED." 1
As found by the Court of Appeals, the uncontroverted facts are:
"It appears that herein private respondent Rosa V. Reyes is the plaintiff in Civil Case No. Q-8213 of the Court of First Instance of
Rizal, Branch IV, Quezon City, entitled, 'Rosa V. Reyes vs. Felicisimo V. Reyes, etc.,' where she obtained a writ of preliminary
attachment and, accordingly, levied upon all the properties of the defendant, Felicisimo V. Reyes, in said case. The other two
herein private respondents, namely, Pedro V. Reyes and Consolacion V. Reyes, are the plaintiffs in Civil Case No. Q-5214 of the
same court entitled, 'Pedro V. Reyes, etc.,' and likewise, obtained a writ of preliminary attachment and, accordingly, levied upon
all the properties of the defendant, Felicisimo V. Reyes, in said case.
"For the dissolution of the attachments referred to above, the herein petitioner, The Imperial Insurance, Inc., as surety, and
Felicisimo V. Reyes, as principal, posted a 'defendant's bond for dissolution of attachment' in the amount of P60,000.00 in Civil
Case No. Q-5213 and another bond of the same nature in the amount of P40,000.00 in Civil Case No. Q-5214.
Rule 57: Preliminary Attachment | 93
"Civil Cases Nos. Q-5213 and 5214 were jointly tried and the decision therein rendered was in favor of the plaintiffs. This
decision was affirmed by this Court on appeal in cases CA-G.R. Nos. 33783-R and 33784-R. The decision of this Court, having
become final, the records of the cases were remanded to the Court of First Instance of Rizal, Quezon City Branch, for execution
of judgment.
"Accordingly, on June 24,1966, the Court below, presided by the herein respondent Judge, Hon. Walfrido de los Angeles, issued
the writs of execution of judgment in said cases. However, on August 20, 1966, the Provincial Sheriff of Bulacan returned the
writs of execution 'unsatisfied in whole or in part.'
"On September 9,1966, private respondents filed a 'motion for recovery on the surety bonds.' Thereafter, said private
respondents, thru counsel, sent a letter of demand upon petitioner asking the latter to pay them the accounts on the counter-
bonds. On September 24,1966, petitioner filed its 'opposition' to the private respondents' 'Motion for recovery on the surety
bonds.' Respondent Judge, in his order, dated November 10,1966, rendered judgment against the counter-bonds.
"On November 15, 1966, private respondents filed an 'ex parte motion for writ of execution' without serving copy thereof on
petitioner.
"In the meantime, on or about November 23, 1966, petitioner filed a 'motion for reconsideration' of the order, dated November
10, 1966. This motion was, however, denied by the respondent Judge on January 9, 1967.
"On or about January 11, 1967, petitioner filed its 'notice of intention to appeal' from the final orders of the respondent Judge,
dated November 10, 1966 and January 9, 1967.
"On January 19, 1967, the respondent Judge issued an order granting the issuance of the writ of execution against the bonds
filed by the petitioner" (Exhibit J, petition). 2
On January 25, 1967, the petitioner filed a petition for certiorari with prayer for preliminary injunction with the Court of Appeals to
restrain the enforcement of the writ of execution. 3 The petition was given due course and on January 30, 1967 a writ of
preliminary injunction was issued. 4 After the parties had submitted their respective pleadings and memoranda in lieu of oral
argument, the Court of Appeals rendered the decision now under review.
The defendant, Felicisimo V. Reyes, in the abovementioned cases died during the pendency of the trial. He was duly substituted
by his surviving spouse, Emilia T. David, an administratrix of his intestate estate. 5
The petitioner assigns as errors allegedly committed by the Court of Appeals the following:
Rule 57: Preliminary Attachment | 94
"I
"THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RESPONDENT JUDGE COULD LEGALLY ISSUE
THE WRIT OF EXECUTION AGAINST THE PETITIONER AS SURETY IN A COUNTERBOND (BOND TO DISSOLVE
ATTACHMENT) ON THE BASIS OF AN EX-PARTE MOTION FOR EXECUTION WHICH WAS NEITHER SERVED UPON THE
SURETY NOR SET FOR HEARING.
"II
"THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE PLAINTIFF WHO OBTAINED A JUDGMENT
AGAINST THE DEFENDANT MAY LEGALLY CHOOSE 'TO GO DIRECTLY' AFTER THE SURETY IN A COUNTERBOND
WITHOUT PRIOR EXHAUSTION OF THE DEFENDANT'S PROPERTIES.
"III
"THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE 'JUDGMENT' RENDERED AGAINST THE
MENTIONED COUNTERBONDS IS A 'FINAL ORDER' IN THE CONTEMPLATION OF SECTION 2, RULE 41 OF THE
REVISED RULES OF COURT AND, THEREFORE, APPEALABLE.
"IV
"THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT IN THE ABSENCE OF AN EXPRESS PROVISION
OF THE REVISED RULES OF COURT, THE PROCEDURE FOLLOWED BY THE SHERIFF IN THE EXECUTION OF THE
JUDGMENT ON THE 'SURVIVING CLAIMS', WHEN THE DEFENDANT DIED DURING THE PENDENCY OF THE TRIAL OF
HIS CASE AND BEFORE JUDGMENT WAS DULY SUBSTITUTED BY THE COURT APPOINTED ADMINISTRATRIX OF HIS
ESTATE, SHOULD HAVE BEEN THE SAME AS THE PROCEDURE SET OUT IN SECTION (f), RULE 57 RESPECTING THE
EXECUTION OF A WRIT OF PRELIMINARY ATTACHMENT OF PROPERTIES IN CUSTODIA LEGIS." 6
Anent the first error, the petitioner contends that the Court of Appeals erred in holding that the respondent Judge could legally
issue the writ of execution against the petitioner as surety in a counterbond (bond to dissolve attachment) on the basis of an ex
parte motion for execution which was allegedly never served upon the surety nor set for hearing. This contention is devoid of
merit.
The counterbonds filed to lift the writs of attachment executed by the herein petitioner, The Imperial Insurance, Inc., for and in
behalf of the deceased defendant Felicisimo V . Reyes in favor of the plaintiffs, private respondents herein Rosa V. Reyes and
Rule 57: Preliminary Attachment | 95
Consolacion V. Reyes in Civil Case No. Q-5214 docketed with the Court of First Instance of Rizal, Branch IV, Quezon City, are
clearly the bonds contemplated under Sec. 17, Rule 57 of the Rules of Court which provides:
"Sec. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole
or in part, the surety or sureties on any counterbond given pursuant to the provisions of this rule to secure the payment of the
judgment shall become charged on such counterbond, and bound to pay to the judgment creditor 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."
This section allows the counterbond filed to lift an attachment to be charged only after notice and summary hearing in the same
action. The records show that the notice and hearing requirement was substantially complied with in the instant case.
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 on September 24, 1966. 7 Moreover, on November 23,
1966 the petitioner filed a motion for reconsideration of the order dated November 10, 1966 rendering judgment against the
petitioner on its counterbonds in the amount of P60,000.00 in Civil Case No. Q-5213 and P40,000.00 in Civil Case No. Q-52l4. 8
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. 9 The petitioner received the notice of
the said hearing on December 9, 1966 as evidenced by Registry Return No. 40122. 10 On January 9, 1967, the respondent
Judge issued an order denying the motion for reconsideration dated November 23,1966 for lack of merit. 11 In an order dated
January 19, 1967, the motion for writ of execution was granted by the respondent judge. 12
It is thus clear from indubitable documents on record that the requirements of notice and hearing had been satisfactorily
complied with by the respondents. The first error assigned is overruled.
The petitioner asserts that the Court of Appeals gravely erred in holding that the plaintiff who obtained judgment against the
defendant may legally choose "to go directly" after the surety in a counterbond without prior exhaustion of the defendant's
properties. This contention is likewise not meritorious.
Although the counterbond contemplated in the aforequoted Sec. 17, Rule 57, of the Rules of Court is an ordinary guaranty where
the sureties assume a subsidiary liability, the rule cannot apply to a counterbond where the surety bound itself "jointly and
severally" (in solidum) with the defendant as in the present case. The counterbond executed by the deceased defendant
Rule 57: Preliminary Attachment | 96
Felicisimo V. Reyes, as principal, and the petitioner, The Imperial Insurance, Inc., as solidary guarantor to lift the attachment in
Civil Case No. Q-5213 is in the following terms:
"WHEREFORE, We, FELICISIMO V. REYES, of legal age, Filipino, and with postal address at San Jose, San Miguel, Bulacan
and/or 1480 Batangas Street, Sta. Cruz, Manila, as PRINCIPAL and THE IMPERIAL INSURANCE, INC., a corporation duly
organized and existing under the laws of the Philippines, as SURETY, in consideration of the dissolution of said attachment,
hereby JOINTLY AND SEVERALLY, bind ourselves in the sum of SIXTY THOUSAND PESOS ONLY (P60,000.00), Philippine
Currency, under the condition that in case the plaintiff recovers judgment in the action, the defendant shall pay the sum of SIXTY
THOUSAND PESOS (P60,000.00), Philippine Currency, being the amount released for attachment, to be applied to the payment
of the judgment, or in default thereof, the Surety will, on demand, pay to the plaintiff said amount of SIXTY THOUSAND PESOS
ONLY (P60,000.00), Philippine Currency. (Emphasis supplied).
"Manila, Philippines ,June 30, 1960." 13
The counterbond executed by the same parties in Civil Case No. Q-5214, likewise states:
"WHEREFORE, We, FELICISIMO V. REYES, of legal age, Filipino, and with postal address at San Jose, San Miguel, Bulacan,
and/or 1480 Batangas Street, Sta. Cruz, Manila, as PRINCIPAL and THE IMPERIAL INSURANCE, INC., a corporation duly
organized and existing under the laws of the Philippines, as SURETY, in consideration of the dissolution of said attachment,
hereby JOINTLY and SEVERALLY, bind ourselves in the action the defendant shall pay the sum of FORTY THOUSAND
PESOS ONLY (40,000.00), Philippine Currency, being the amount released for attachment, to be applied to the payment of the
judgment, or in default thereof, the Surety will, on demand, pay to the plaintiffs said amount of FORTY THOUSAND PESOS
ONLY (P40,000.00), Philippine Currency. (Capitalizations supplied).
"Manila, Philippines, June 30th, 1960." 14
Clearly, the petitioner, the Imperial Insurance, Inc., had bound itself solidarily with the principal, the deceased defendant
Felicisimo V. Reyes. In accordance with Article 2059, par. 2 of the Civil Code of the Philippines, 15 excussion (previous
exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor."
Section 17, Rule 57 of the Rules of Court cannot be construed 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

Rule 57: Preliminary Attachment | 97

further would nullify the express stipulation of the parties that the surety's obligation should be solidary with that of the
defendant." 16
Hence the petitioner, cannot escape liability on its counterbonds based on the second error assigned.
As regards the third error, the petitioner submits that the Court of Appeals erred in not holding that the order dated November 10,
1966 rendering judgment against the counterbonds, as well as the order dated January 9, 1967, denying the motion for
reconsideration thereof, and the order of the writ of execution dated January 19, 1967 are final and appealable in accordance
with Sec. 2, Rule 41 of the Revised Rules of Court. This submission is also without merit.
To recover against the petitioner surety on its counterbonds it is not necessary to file a separate action. Recovery and execution
may be had in the same Civil Cases Nos. Q-5213 and Q-5214, as sanctioned by Sec. 17, Rule 57, of the Revised Rules of
Court.

The decision in Civil Cases Nos. Q-5213 and Q-5214, having become final, the respondent Judge issued the writs of execution
in said cases. On August 20, 1966, the Provincial Sheriff of Bulacan returned the writs of execution "unsatisfied in whole or in
part. 17 "
Sec. 12, Rule 57 of the Revised Rules of Court 18 specifies that an attachment may be discharged upon the making of a cash
deposit or filing a counterbond "in an amount equal to the value of the property attached as determined by the judge"; and that
upon filing the counterbond "the property attached shall be delivered to the party making the deposit or giving the counter bond
or the person appearing in his behalf, the deposit or counterbond standing in place of the property so released."
The counterbonds 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. 19
The judgment having been rendered against the defendant, Felicisimo V. Reyes, the counterbonds 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. 20
Rule 57: Preliminary Attachment | 98
In the present case, the demand upon the petitioner surety was made with due notice and hearing thereon when the private
respondents filed the motion for recovery on the surety bonds dated September 9, 1966 and to which the petitioner filed their
opposition dated September 24, 1966. 21
Therefore, all the requisites under Sec. 17, Rule 57, being present, 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.
In effect, the order dated November 10, 1966 rendering judgment against the counterbonds was a superfluity. The respondent
Judge could have issued immediately a writ of execution against the petitioner surety upon demand.
As correctly held by the Court of Appeals:
"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." 22
Moreover, the finality and non-appealability of the order dated November 10, 1966 is made certain and absolute with the
issuance of the order of execution dated January 19, 1967 23 upon the filing of the ex parte motion for writ of execution 24 of
which the petitioner was duly notified by the respondent Judge and which was duly heard. 25 The general rule is that an order of
execution is not appealable, otherwise a case would never end. The two exceptions 26 to this rule are: (1) where the order of
execution varies the tenor of the judgment; and (2) when the terms of the judgment are not very clear, and there is room for
interpretation. The case at bar does not fall under either exception. There is no showing that the order of execution varies the
tenor of the judgment in Civil Cases Nos. Q-5213 and Q-5214, nor of the order dated November 10, 1966, but is in fact, in
consonance therewith and the terms of the judgment are clear and definite, therefore, the general rule of non-appealability
applies.
It is no longer necessary to discuss the fourth error assigned because of this Court's finding that the liability expressly assumed
by the petitioner on the counterbonds is solidary with the principal debtor, the deceased defendant, Felicisimo V. Reyes. As a

Rule 57: Preliminary Attachment | 99

solidary guarantor, the petitioner, the Imperial Insurance, Inc., is liable to pay the amount due on such counterbonds should the
creditors, private respondents herein, choose to go directly after it. 27
Under the law and under their own terms, the counterbonds are only conditioned upon the rendition of the judgment. As held by
this Court in the aforecited case of Luzon Steel Corporation vs. Sia 28 ;" where under the rule and the bond the undertaking is to
pay the judgment, the liability of the surety or sureties attaches upon the rendition of the judgment, and the issue of an execution
and its return nulla bona is not, and should not be a condition to the right to resort to the bond." Thus, it matters not whether the
Provincial Sheriff of Bulacan, in making the return of the writ of execution served or did not serve a copy thereof with notice of
attachment on the administratrix of the intestate estate of Felicisimo V. Reyes and filed a copy of said writ with the Office of the
Clerk of Court with notice in accordance with Sec. 7 (f), Rule 57 of the Revised Rules of Court. The petitioner surety as solidary
obligor is liable just the same.
WHEREFORE, the decision of the Court of Appeals promulgated on July 19, 1967 in CA-G.R. No. 38824-R is affirmed and the
order of the respondent Judge dated January 19, 1967 and all writs or orders issued in consequence or in pursuance thereof are
also affirmed. The court of origin is hereby ordered to proceed with the execution against the petitioner surety, the Imperial
Insurance, Inc., with costs against said petitioner.
SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero, Melencio-Herrera and Plana, JJ., concur.

Footnotes

1. CA decision was penned by Justice Ramon O. Nolasco and concurred in by Justice Julio Villamor and Justice Jesus
Perez, Rollo, pp. 21-28.
2. Annex "A", Petition (CA Decision), pp l-4; Rollo, pp 21-24.
3. CA Rollo, p 1-9.
4. Ibid, p. 44.
5. Annex "A", Petition, pp. 5-6, Rollo, pp. 24-25.
6. Brief for the Petitioner, pp. a-c, Rollo, p. 59.
Rule 57: Preliminary Attachment | 100
 7. Annex "E", Answer, CA Rollo, p. 70.
8. Exhibit "F", Petition, CA Rollo, pp. 27-29.
9. Annex "A-1", Answer, CA Rollo, p. 64.
10. Annex "A-2", Answer, CA Rollo, p. 65.
11. Exhibit "H", Petition, CA Rollo, p. 38.
12. Exhibit "J", Petition, CA Rollo, pp. 40-41.
13. Exhibit "A", Petition, CA Rollo, p. 10.
14. Exhibit "B", Petition, CA Rollo, p. 12.
15. Art. 2059, par. 2. — This excussion shall not take place:

(1) . . .

(2) If he has bound himself solidarily with the debtor;

(3) . . .
16. Luzon Steel Corp. vs. Sia, 28 SCRA 58, 63.
17. Annex "B" to Exhibit "D", Petition, CA Rollo, p. 19.
18. "Sec. 12, Rule 57; Discharge of attachment upon giving counterbond. — At any time after an order of attachment has
been granted, the party whose property has been attached, or the person appearing on his behalf, may, upon reasonable notice
to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security given. The judge shall, after hearing, order the discharge of the
attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is filed, on behalf of the adverse party,
with the clerk or judge of the court where the application is made, on 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 action. Upon the filing
of such counterbond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharged of an
attachment in accordance with the provisions of this section the property attached, or the proceeds of any sale thereof, shall be
Rule 57: Preliminary Attachment | 101
delivered to the party making the deposit or giving the counter-bond, or the person appearing in his behalf, the deposit or
counterbond aforesaid standing in place of the property so released. Should such counterbond for any reason be found to be, or
become, insufficient, and the party furnishing the same fail to file an additional counterbond, the attaching creditor may apply for
a new order of attachment."
19. Cajefe vs. Judge Fernandez, 109 Phils. 743, 749.
20. Moran, Comments on the Rules of Court, Vol. 3, 1980 Edition, pp. 50-51.
21. Annex "A", Petition, p. 3, Rollo, p. 23: Annex "D", Answer, CA Rollo, p. 70.
22. Ibid. p. 27.
23. Exhibit "J", Petition, CA Rollo, p. 40.
24. Exhibit "K", Petition, CA Rollo, pp. 42-43.
25. Annex "A-1" Answer, CA Rollo, p. 64.
26. Corpus vs. Alikpala, 22 SCRA 104, 109.
27. Article 1216, New Civil Code.
28. 28 SCRA 58, 64.

Rule 57: Preliminary Attachment | 102

G.R. No. L-16113 October 31, 1963
VICTOR VADIL, ET AL. vs. JOSE R. DE VENECIA, ET AL.

EN BANC
[G.R. No. L-16113. October 31, 1963.]

VICTOR VADIL, JOAQUIN VADIL, VICENTE VADIL, ESTEBAN VADIL, EUGENIO VADIL and JUAN GALIBOSO, petitioners,
vs. HON. JOSE R. DE VENECIA, Judge of the Court of First Instance of NUEVA VIZCAYA, MIGUEL M. GUEVARA, Provincial
Sheriff Ex-Oficio for Nueva Vizcaya and PABLO ESPAÑOLA ESTATE INC., respondents.

Primicias & Del Castillo for petitioners.

F. S. Galutera for respondents.

SYLLABUS
1. SURETYSHIP; INTERPRETATION OF TERMS OF JUDICIAL BOND; DOUBTS RESOLVED IN FAVOR OF SURETY. —
Sureties are favorites of the law (People vs. De la Cruz, 93 Phil., 487, 49 Off. Gaz., No. 8 3389). Assuming an obligation without
any thought of material gain, except in some instances, all presumptions are indulged in their favor.
2. ID.; ID.; BONDSMEN NOT LIABLE WHERE OBLIGATION PREMISED ON ISSUANCE OF WRIT OF ATTACHMENT
WHICH WAS NEVER ISSUED. — Where, instead of a bond conditioned on the payment to the plaintiff of any judgment which
he may recover in an action, as the trial court directed, the bond filed provides that the sureties will pay "all the costs which may
be awarded to the defendant, and all the damages that the defendant may suffer by reason of the writ of Preliminary Attachment
should it be finally adjudged that the same was done without legitimate cause", it is held: that the obligation to be assumed by
the bondmen is premised upon the issuance of a writ of attachment by the court and no such writ having been actually issued,
the bondsmen are not liable on such bond.

DECISION
Rule 57: Preliminary Attachment | 103
REGALA, J p:
This is a petition for certiorari to review the order dated August 5, 1959 of the Court of First Instance of Nueva Vizcaya, directing
the execution of petitioners' bond.
On April 13, 1953, Pablo Española Estate, Inc. filed in the court of First Instance of Nueva Vizcaya an action against Raymundo
Guinsatao for the recovery of the sum of P9,360. It applied for a writ of preliminary attachment on the ground that Guinsatao had
removed or was about to remove his properties with intent to defraud his creditors.
Guinsatao denied the allegations of the complaint and expressed willingness to file a counterbond to discharge the writ of
preliminary attachment applied for by Pablo Española Estate Inc. Whereupon, the court ordered him "to file a counterbond within
5 days from the receipt of this order, in the amount of P9,360.00 to secure the payment to the plaintiff of any judgment he may
recover in the present case."
Guinsatao filed a bond entitled "Defendant's Bond" which reads:
"Whereas, in an action now pending in the Court of First Instance of the Province of Nueva Vizcaya, First Judicial District,
wherein PABLO ESPAÑOLA ESTATE INC., is plaintiff, and RAYMUNDO GUINSATAO defendant, the above-named plaintiff has
applied for an order of a Writ of Preliminary Attachment against RAYMUNDO GUINSATAO.
"And whereas, the Law allows the plaintiff certain securities:
"Know all men by these presents: That RAYMUNDO GUINSATAO of Mabasa, Dupax, Nueva Vizcaya as principal and
ESTEBAN VADIL, EUGENIO VADIL, JUAN GALIBOSO, JOAQUIN VADIL, VICTOR VADIL and VICENTE VADIL all of Mabasa,
Dupax, Nueva Vizcaya as sureties, are hereby held and in the sum of NINE THOUSAND THREE HUNDRED SIXTY (P9,360.00)
PESOS, for which payment well and truly to be made we bind ourselves, our heirs, and legal representatives, jointly and
severally, firmly by these presents.
"The condition of this obligation is as follows:
"To pay all the costs which may be awarded to the defendant, and all damages that the defendant may suffer by reason of the
Writ of Preliminary Attachment should it be finally adjudged that the same was done without legitimate cause.
"Then this obligation shall be null and void, otherwise of full force and virtue.
"(Sgd.) JOAQUIN VADIL (Sgd.) RAYMUNDO GUINSATAO
Rule 57: Preliminary Attachment | 104
(Sgd.) VICTOR VADIL (Sgd.) ESTEBAN VADIL
(Sgd.) VICENTE VADIL (Sgd.) EUGENIO VADIL
(Sgd.) JUAN GALIBOSO"
The case was then tried, after which the trial court rendered judgment ordering Guinsatao to pay respondent Pablo Española
Estate Inc. the sum of P9,360 plus legal interest. After the decision become final, execution followed but Guinsatao had no
sufficient property. And so, on motion of Pablo Española Estate Inc., the lower court ordered the execution of the bond. Hence,
this petition.
While this case was pending in this Court, petitioner Joaquin Vadil moved for the dismissal of the case as to him on the ground
that he had not engaged the services of Attorneys Primicias and Del Castillo. While joining in the motion to dismiss the case as
to Joaquin Vadil, Atty. Teodoro Regino of the law firm of Primicias and Del Castillo denied Joaquin's allegation and asked that
Joaquin Vadil be cited for contempt for allegedly telling falsehood.
As prayed for by Joaquin Vadil, this case is dismissed as to him. There is no ground in the motion to cite Joaquin Vadil for
contempt.
We now come to the merits of this case. Petitioners contend 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, and all damages that the
defendant may suffer by reason of the Writ of Preliminary Attachment should it be finally adjudicated that the same was done
without legitimate cause" rather than to pay the judgment that plaintiff might recover.
This is a case where, instead of a bond conditioned on the payment to the plaintiff of any judgment which he may recover in an
action, as the trial court directed, the bond 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 of the Writ
of Preliminary Attachment should it be finally adjudged 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.
This doubt, as to whether petitioners understood the court order, is further shown by the fact that under Section 2 of Rule 59 of
the Rules of Court, the issuance of an order of attachment may be prevented if the defendant "makes deposit or gives bond . . .
in an amount sufficient to satisfy such demand, besides costs, or in an amount equal to the value of the property which is to be
attached." Now, if, as alleged in the motion of Pablo Española Inc., only P150 was realized from the sale of Guinsatao's property,
Rule 57: Preliminary Attachment | 105
it is not likely that petitioners would agree to stand surety for P9,360 for the defendant, whose properties (worth only P150) stood
in imminent danger of attachment.
We are inclined to resolve the doubt in favor of petitioners. As this Court held in People vs. De la Cruz, 49 O.G., No. 8, 3389,
sureties are favorites of the law. Assuming an obligation without any thought of material gain, except in some instances, all
presumption are indulged in their favor. And in Pacific Tobacco Co. vs. Lorenzana, et al., G.R. No. L-8088, October 31, 1957,
this Court said in amplification:
". . . 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 interest. (See Stearn's The Law of Suretyship, 4th
ed. 402-403).
We hold therefore that petitioners are not liable to Pablo Española Estate, Inc. on their bond.
Another reason in support of the conclusion reached herein is that actually there was no writ of attachment issued by the Court.
It is to be noted that the obligation to be assumed by the bondsmen is premised upon the issuance of such a writ.
We feel it unnecessary to pass upon the other assignments of error.
WHEREFORE, the petition is granted; the writ of preliminary injunction is made permanent and the order dated August 5, 1939
and the writ of execution dated September 4, 1959 are hereby set aside, without pronouncement as to costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion and Paredes, JJ., concur.
Reyes, J.B.L. J., concurs, that no writ of attachment having issued and the sureties were not heard before final judgment.
Barrera, J., concurs in the concurring opinion of Justice Reyes.
Dizon and Makalintal, JJ., concur in the result.

Rule 57: Preliminary Attachment | 106

G.R. No. L-29723 July 14, 1988
ANTONIO ZARAGOZA vs. MARIA ANGELA FIDELINO, ET AL.

FIRST DIVISION
[G.R. No. L-29723. July 14, 1988.]

ANTONIO ZARAGOZA, plaintiff-appellee, vs. MARIA ANGELA FIDELINO and/or "JOHN DOE," defendants MABINI
INSURANCE & FIDELITY CO., INC., surety-appellant.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; DELIVERY OF PERSONAL PROPERTY; PROCEDURE TO HOLD
SURETY LIABLE UPON A COUNTERBOND. — 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.
2. ID.; ID.; ID.; ID.; MOTION TO AMEND DECISION SO AS TO INCLUDE SURETY AS PARTY SOLIDARILY LIABLE WITH
DEFENDANT, SUFFICIENT COMPLIANCE WITH PROCEDURE; CASE AT BAR. — The plaintiff in a suit for the replevy of a
car which he sold to but was not paid for by the defendant obtained a writ of delivery and had the car possessed by the sheriff.
The car was thereafter returned to the defendant upon a surety bond being posted for its release. The suit having resulted in a
judgment for the plaintiff for the unpaid balance of the purchase price of the car and liquidated damages, within the reglementary
period for taking an appeal, plaintiff moved for amendment of the decision so as to include the surety company as a party
solidarily liable with the defendant for the sums awarded in the judgment. The motion was granted. HELD: The decision, as
amended, is affirmed. The motion for amendment 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
Rule 57: Preliminary Attachment | 107
awarded 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 . . . (defendant's) 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.
3. ID.; ID.; ID.; ID.; ID.; FILING OF COUNTERBOND IS VOLUNTARY SUBMISSION TO JURISDICTION OF COURT. —
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 counter-bond, 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.
4. ID.; ID.; ID.; ID.; ID.; MOTION TO AMEND DECISION IS IN THE NATURE OF A MOTION FOR RECONSIDERATION. —
The appellant surety's last argument that by the time the Court amended its decision, the decision had already become final, and
therefore unalterable, is also untenable. The motion for amendment of the decision was unquestionably in the nature of a motion
for reconsideration under Section 1 (c), Rule 37 of the Rules of Court which, having been filed within "the period for perfecting an
appeal," had the effect of interrupting said period.

DECISION

Rule 57: Preliminary Attachment | 108

NARVASA, J p:
Involved in this appeal is no more than the procedure to hold a surety liable upon a counter-bond posted by it for the release of
an automobile seized from a defendant in a replevin action under a writ issued by the Trial Court at the plaintiffs instance.

The suit for the replevy of the car was brought by Antonio Zaragoza in the Court of First Instance at Quezon City 1 against Ma.
Angela Fidelino and/or John Doe. His complaint alleged that the car had been sold to Fidelino but the latter had failed to pay the
price in the manner stipulated in their agreement. The car was taken from Fidelino's possession by the sheriff on the strength of
a writ of delivery, 2 but was promptly returned to her on orders of the Court when a surety bond for the car's release 3 was
posted in her behalf by Mabini Insurance & Fidelity Co., Inc. LLjur
The action resulted in a judgment 4 for the plaintiff the dispositive part of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to the
plaintiff the sum of P19,417.46, representing the balance of the purchase price of the car sold including interest thereon,
collection charges, notarial fees and sheriffs fees and expenses in connection with the recovery of the vehicle sold; to pay
liquidated damages in the amount of P6,471.84 equivalent to 33 1/3% of the balance outstanding; and to pay the costs of this
suit."
Within the reglementary period for taking an appeal, 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. 5 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. 6 The Trial Court
deemed the motion meritorious and granted it. Its Order of April 16, 1968 7 decreed the following:
"WHEREFORE, the motion is hereby granted, and the dispositive portion of the decision in this case is hereby amended to read
as follows:
'WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering defendant Maria Angela
Fidelino and her surety, the Mabini Insurance & Fidelity Co., Inc., to pay jointly and severally to the plaintiff the sum of
P19,417.46, representing the balance of the purchase price of the car sold, including interests thereon, collection charges,

Rule 57: Preliminary Attachment | 109

notarial fees and sheriff's fees and expenses in connection with the recovery of the vehicle sold, liquidated damages in the
amount of P6,471.84 equivalent to 33 1/3% of the balance outstanding; and to pay the costs of this suit.'"
No motion for reconsideration was filed or appeal taken by the defendant Fidelino as regards either the original or the amended
decision. It was the surety which presented a motion for reconsideration, and upon its denial, appealed to this Court. 8 It ascribes
to the Court a quo, as might be expected, reversible error in amending the judgment in the manner just described. It argues that
the Lower Court never acquired jurisdiction over it since no summons was ever served on it, its filing of a counter-bond not being
equivalent to voluntary submission to the Court's jurisdiction; Zaragoza failed to make a proper application with notice before
finality of the decision as provided by Section 20, Rule 57 of the Rules of Court; and when the order amending the judgment was
promulgated, the judgment had already become final, the running of the period of appeal not having been suspended by
Zaragoza's motion to amend decision, 9 and so, the Court no longer had authority to amend it on April 16, 1968.
The appellant surety posits, quite correctly, that the situation at bar is governed by Section 10, Rule 60, in relation to Section 20,
Rule 57, of the Rules of Court. Section 10, Rule 60, provides as follows:
"SEC. 10. Judgment to include recovery against sureties. — The amount, if any, to be awarded to either party upon any bond
filed by the other in accordance with the provisions of this rule, shall be claimed, ascertained, and granted under the same
procedure as prescribed in section 20 of Rule 57.
And Section 20, Rule 57 reads as follows:
"SEC. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be
included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof. prcd
xxx xxx xxx" 10
It would seem at first blush that Section 20, Rule 57 above quoted is not relevant. Its title and first sentence speak [1] of an illegal
attachment, and [2] of a judgment "in favor of the party against whom (said illegal) attachment was issued." In the case at bar,
the writ of delivery was not illegal; and the judgment was for, not against, the party in whose favor the writ of delivery was issued.
Rule 57: Preliminary Attachment | 110
In other words, it would appear that for Section 20, Rule 57 to apply to the instant action, 11 the judgment should have been "in
favor of " defendant Fidelino (the party "against whom" the writ of delivery was issued). This however was not the case. The
judgment was in fact against, NOT in favor of Fidelino.
It thus seems indeed that the first sentence of Section 20 precludes recovery of damages by a party against whom an
attachment is issued and enforced if the judgment be adverse to him. This is not however correct. 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. Slight reflection will show the validity of this proposition. For it is entirely possible for a plaintiff to have a
meritorious cause of action against a defendant but have no 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. So has this Court already had occasion to rule, in Baron v. David, 51
Phil. 1, and Javellana v. D.O. Plaza Enterprises, 32 SCRA 261.
Be all this as it may, the second and third sentences of Section 20, Rule 57, in relation to Section 10, Rule 60, are
unquestionably relevant to the matter of the surety's liability upon a counter-bond for the discharge of a writ of delivery in a
replevin suit. 12 Under Section 10, Rule 60 (which makes reference "to either party upon any bond filed by the other in
accordance with the provisions of this rule" [60]), the surety's liability for damages upon its counter-bond should "be claimed,
ascertained, and granted under the same procedure as prescribed in section 20 of Rule 57;" 13 and said section 20 pertinently
decrees that "(s)uch damages may be awarded only upon application and after proper hearing, and shall be included in the final
judgment . . . (which means that the (application must be filed before the trial or before appeal is perfected or before the
judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing
his right to damages and the amount thereof ." Stated otherwise, 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
Rule 57: Preliminary Attachment | 111
heard on the application. These requisites apply not only in cases of seizure or delivery under Rule 60, but also in cases of
preliminary injunctions under Rule 58, 14 and receiverships under Rule 59. 15
It should be stressed, however, that enforcement of a surety's liability on a counter-bond given for the release of property seized
under a writ of preliminary attachment is governed, not by said Section 20, but by another specifically and specially dealing with
the matter; Section 17 of Rule 57, which reads as follows:
"SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole
or in part, 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 to the judgment creditor 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."
The record shows that the appellant surety company bound itself " jointly and severally" with the defendant Fidelino "in the sum
of PESOS FORTY EIGHT THOUSAND ONLY (P48,000.00), Philippine Currency, which is double the value of the property
stated in the affidavit of the plaintiff, for the delivery thereof if such delivery is adjudged, or for the payment of such sum to him as
may be recovered against the defendant and the costs of the action." 16
This being so, 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, as aforestated, 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), 17 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. 18 And
again, the record shows substantial compliance with these basic requirements, obviously imposed in deference to due process.
Cdpr
Appellant surety undoubtedly received copy of Zaragoza's Motion to Amend Decision. 19 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 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
Rule 57: Preliminary Attachment | 112
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 . . . (Fidelino's) 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." 20 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 counter-bond, 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. 21
The same theory as that espoused by appellant surety in this case was, in substance, passed upon and declared to be without
merit in a 1962 decision of this Court, Dee v. Masloff . 22 There, a surety on a counter-bond given to release property from
receivership, also sought to avoid liability by asserting that it was not a party to the case, had never been made a party, and had
not been notified of the trial. The Court overruled the contention, and upheld the propriety of the amendment of the judgment
which ordered the appellant surety company to pay — to the extent of its bond and jointly and severally with defendant — the
judgment obligation. The Court ruled that since such "amended judgment . . . (had been) rendered after the appellant surety
company as party jointly and severally liable with the defendant . . . for the damages already awarded to the appellees, to which
the appellant surety company filed its 'Opposition' and 'Rejoinder' to the 'Reply to Opposition' filed by the appellees, without
putting in issue the reasonableness of the amount awarded for damages but confining itself to the defense in avoidance of
liability on its bond that it was not a party to the case and never made a party therein and was not notified of the trial of the case,
Rule 57: Preliminary Attachment | 113
and that the appellees were guilty of laches, the requirement of hearing was fully satisfied or complied with; . . . (in any case,)
appellant surety company never prayed for an opportunity to present evidence in its behalf."
The appellant surety's last argument that by the time the Court amended its decision, the decision had already become final, and
therefore unalterable, is also untenable. The motion for amendment of the decision was unquestionably in the nature of a motion
for reconsideration under Section 1 (c), Rule 37 of the Rules of Court which, having been filed within "the period for perfecting an
appeal," had the effect of interrupting said period of appeal. 23
WHEREFORE, judgment is hereby rendered AFFIRMING in toto the Decision of the Court a quo dated February 12, 1968, as
amended by the Order of April 16, 1968. Costs against the appellant surety. llcd
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1. Branch 5, the case being docketed as Civil Case No. Q-9979.

2. Secs. 3 and 4, Rule 60, Rules of Court.
3. Sec. 5, Rule 60, provides that the bond be "in double the value of the property as stated in the plaintiff's affidavit (to
guarantee) . . . the delivery of the property to the plaintiff, if such delivery be adjudged, and for the payment of such sum to him
as may be recovered against the defendant."
4. Rendered February 12, 1968; pp. 64 et seq. Rec. on Appeal (Rollo, p. 8).
5. Rec. on Appeal, pp. 68-72.
6. Order, April 16, 1968 (Rec. on App.: Rollo, p. 8).
7. Pp. 74-76, Rec. on App.; italics supplied.
8. The appeal was taken in accordance with Section 2, Rule 42 of the Rules of Court, prior to the effectivity of R.A. No. 5440,
which required that appeals on pure questions of law be taken by petition for review on certiorari, as under Rule 45.
9. Mabini says that Zaragoza received notice of the decision on March 7, 1968; the 30-day period of appeal was not
interrupted by the motion to amend decision dated March 20, 1968 and therefore the judgment became final and executory on

Rule 57: Preliminary Attachment | 114

April 7, 1968 and hence could no longer be amended on April 16, 1968 when the Order of amendment was promulgated. (Pp.
96-97, Rec. on App.).
10. Emphasis supplied.
11. In relation to said Sec. 10, Rule 60.
12. This is precisely the appellant surety's thesis, as already pointed out.
13. The distinctions between a bond given as security for an attachment and a counter-bond for the discharge thereof, is
treated of in some detail in Leelin Marketing Corp. v. C & S Agro Dev. Co., 121 SCRA 725, 728-730.
14. Sec. 9, Rule 58.
15. Sec. 9, Rule 59; SEE Material Distributors (Phil.), Inc. v. Miles Timber and Transport Corp., et al., 103 Phil. 162, upholding
the order of the Trial Court which declared a surety liable upon its counter-bond for the release of property under receivership
(which counter-bond took "the place of the properties released"), the order having "issued after due notice and hearing."
16. Pp. 59-60 Rec. on App.: Rollo, p. 8.
17. P. 67, Rec. on App.
18. In Del Rosario v. Nava, 95 Phil. 637, 642-643, the Court declared inter alia that the rule "plainly calls for only one
judgment for damages against the . . . (losing) party and his sureties; . . (s)ince a judicial bondsman has no right to demand the
exhaustion of the property of the principal debtor, . . . there is no justification for the entering of separate judgments against
them; . . . (and) while the prevailing party may apply for an award of damages against the surety even after an award has been
already attained against the principal, as ruled in Visayan Surety and Insurance Co. vs. Pascual, G.R. No. L-3694, still the
application and notice against the surety must be made before the judgment against the principal becomes final and executory,
so that all awards for damages may be included in the final judgment." SEE, also, Asian Surety & Insurance Co., Inc. v. Nolasco,
79 SCRA 472; Cruz v. Manila Surety & Fidelity Co., Inc., 92 Phil. 699; Japco v. City of Manila, 48 Phil. 851; 855; cf. Pajarito v.
Señeris, 87 SCRA 275.
19. Pp. 69-73, Rec. on App.
20. 74, Rec. on App.
21. Sec. 23, Rule 14, Rules of Court; C.J.S., 122, 123; SEE Feria, Civil Procedure, 1969 ed., pp. 19-20, and Moran, op. cit.,
Vol. 1, p. 55.
Rule 57: Preliminary Attachment | 115
22. G.R. Nos. L-15836 and 16220, Sept. 29, 1962, 6 SCRA 98, citing Visayan Surety & Insurance Corp. v. Pascual, et al., 85
Phil. 779 (referring to cases of wrongfully issued writs of preliminary injunction, receivership, and seizure of personal property),
and Material Distributors (Phil.) Inc. v. Miles Timber and Transport Corp., et al., 55 O.G 1025, 103 Phil. 162, supra (relating to
receivership).
23. Sec. 3, Rule 41, Rules of Court.

Rule 57: Preliminary Attachment | 116

G.R. No. L-23920 April 25, 1968
RAMON R. DIZON vs. LORENZO J. VALDES, ET AL.

EN BANC
[G.R. No. L-23920. April 25, 1968.]

RAMON R. DIZON, plaintiff-appellant, vs. LORENZO J. VALDES, VALLESON, INC., and AUGUSTO J. VALDES, defendants-
appellees.

Jose Agbulos for appellant.

Felix Law office for appellees.

SYLLABUS
1. SURETY; COUNTERBOND; ACTION FOR DAMAGES. — Section 17 of Rule 59 of the Rules of Court contemplates of
proceedings on execution after judgment. It is only thereafter that liability upon the surety's bond may be determined. The key
term in section 17 is the phrase "if 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 counterbond may be taken against
the surety.
2. ID.; ID.; ID.; FOR WHAT SHALL IT ANSWER. — Rule 20 of Rule 59 obviously refers to the recovery of damages by a
party against whom attachment was issued, a remedy available to the defendant, not the plaintiff. It is undoubted, therefore, 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. The counter-bond precisely
stands "in place of the properties so released. "The release of such property cannot really "prejudice the rights of the attaching
party."

DECISION
Rule 57: Preliminary Attachment | 117
SANCHEZ, J p:
The case before us is an incident in a suit for a sum of money (Civil Case Q-2618, Court of First Instance of Rizal, Quezon City
Branch), entitled "Ramon R. Dizon, Plaintiff, vs. Lorenzo J. Valdes, Valleson, Inc., and Augusto J. Valdes, Defendant." Judgment
was, on December 2, 1960, there rendered directing defendants Valleson, Inc. and Augusto J. Valdes (Lorenzo J. Valdes
excluded) "to pay jointly and severally to the plaintiff the amount of P6,260.00 with interest at the rate of 12% per annum from
September 1, 1954 until fully paid and to pay attorney's fees in the amount of P600.00 with costs." The counterclaim of
defendants Lorenzo J. Valdes and Valleson, Inc. was dismissed.
On January 11, 1961, Valleson, Inc. filed its notice of appeal. Its appeal was perfected on February 11, 1961.
Meanwhile, on January 10, 1961, one day before Valleson's notice of appeal, plaintiff petitioned for and the trial court directed
the issuance of a writ of preliminary attachment against the properties, real and personal, of defendants Augusto J. Valdes and
Valleson, Inc. upon an P11,730-bond. On January 11, said bond having been filed, the corresponding writ was issued. Pursuant
thereto, garnishment notices were served by the Manila Sheriff on one Restituto Sibal and the Philippine Guaranty Co.
On February 9, 1961, the judgment debtors moved to dissolve the writ of attachment, upon an P11,730-counter-bond subscribed
by the Capital Insurance & Surety Co., Inc. The following day, February 10, 1961, the trial court dissolve the writ.
On February 24, 1961, plaintiff registered a motion to admit its "Claim for Damages" attached thereto. Plaintiff's claim was that
the dissolution of the attachment "put out of the reach of the plaintiff the properties and assets which may be held to answer for
the adjudged claim"; and that, by reason thereof, "plaintiff suffered and will suffer damages in the amount of P11,730.00 plus the
corresponding 12% on interest thereon and attorney's fees and costs." He then prayed that "defendants and the Capital
Insurance & Surety Co., Inc., be ordered to pay the plaintiff, jointly and severally, the amount of P11,730.00 plus interests,
expenses, and attorney's fees."
On March 1, 1961, the surety, Capital Insurance & Surety Co., Inc., opposed. Assertion was made that pursuant to the Rules of
Court (then, Section 17, Rule 59; now Section 17, Rule 57), 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.

Rule 57: Preliminary Attachment | 118

On April 25, 1961, at the hearing fixed by the court, plaintiff presented evidence on the merits of its claim for damages, in the
absence of defendants and surety, who made no appearance thereat.
The trial court, in its order of May 16, 1961, ruled that plaintiff's claim for damages was premature, since the main case was then
still pending appeal.
Plaintiff's motion for reconsideration, filed on July 10, 1961, was thwarted by the court below on September 16, 1961.
Under the environmental facts, can plaintiff's claim for damages on defendants' counter-bond prosper? The answer must be in
the negative.
1. By the terms of the counter-bond itself, 1 liability thereunder attaches only "in case the plaintiff recover judgment in the
action." Indeed, by Section 12 of Rule 59 of the old Rules, 2 the law in force at the time the counter-bond was executed, the
statutory counter-bond was made "to secure the payment to the plaintiff of any judgment he may recover in the action."
Complementary to this legal precept is Section 17 of the same Rule 59 of the old Rules 3 — which should be deemed as read
into the bond — viz:
"SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole
or in part, the surety or sureties on any bond given pursuant to the provisions of this rule to secure the payment of the judgment
shall become finally charged on such bond, and bound to pay to the plaintiff 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."
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 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. 4
2. 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,
5 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.

Rule 57: Preliminary Attachment | 119

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. 6
3. Nor is importance to be attached to plaintiff's argument that the dissolution of the attachment put out of his reach the
properties and assets answerable for his claim. The counter-bond, it should be emphasized, precisely stands "in place of the
properties so released." 7 Thus, the release of such property cannot really "prejudice the rights of the attaching party." 8
We accordingly affirm the lower court's order of May 16,1961 under review.
Costs against plaintiff-appellant.
SO ORDERED.
Reyes, J.B.L., (Acting C.J.), Makalintal, Bengzon, J.P., Castro, Angeles and Fernando, JJ., concur.
Dizon and Zaldivar, JJ., did not take part.

Footnotes

1. Record on Appeal, pp. 43-47; italics supplied.

2. Now Section 12, Rule 57.
3. Substantially the same as Section 17, Rule 57 of the present Rules.
4. See: Bautista vs. Joaquin, 46 Phil. 885, 890.
5. Section 20, Rule 59, reads:

"SEC. 20. Claim for damages on plaintiff's bond on account of illegal attachment. — If the judgment on the
action be in favor of the defendant, he may recover, upon the bond given by the plaintiff, damages resulting from the attachment.
Such damages may be awarded only upon application and after proper hearing, and shall be included in the final judgment. The
application must be filed before the trial or, in the discretion of the court, before entry of the final judgment, with due notice to the
plaintiff and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Damages
sustained during the pendency of an appeal may be claimed by the defendant, if the judgment of the appellate court be favorable
Rule 57: Preliminary Attachment | 120
to him, by filing an application therewith, with notice to the plaintiff and his surety or sureties, and the appellate court may allow
the application to be heard and decided by the trial court."

6. Anzures vs. Alto Surety & Insurance Co., Inc., 92 Phil 742, 743, Cajefe vs. Fernandez L-15709, October 19, 1960.
7. Section 12, Rule 59 (now Rule 57); Anzures vs. Alto Surety & Insurance Co., Inc., supra, at p. 743.
8. Manila Mercantile Co. vs. Flores, 50 Phil. 759, 763.

Rule 57: Preliminary Attachment | 121

G.R. No. L-42447 August 30, 1982
PIONEER INSURANCE AND SURETY CORPORATION vs. SERAFIN E. CAMILON
201 Phil. 658

SECOND DIVISION
[G.R. No. L-42447. August 30, 1982.]

PIONEER INSURANCE AND SURETY CORPORATION, petitioner, vs. HON. SERAFIN E. CAMILON, in his capacity as Judge
of the Court of First Instance of Rizal, Branch VIII; THE CITY SHERIFF OF MANILA; and STEEL DISTRIBUTORS, INC.,
respondents.

Jose T.M. Mayo for petitioner.

Eugenio T. Estavillo for respondents.

SYNOPSIS
Respondent judge rendered a judgment in a civil case, holding defendants therein and petitioner surety company jointly and
severally liable to pay plaintiff Steel Distributors, Inc. a sum of money. The Court of Appeals affirmed the judgment except as to
the liability of one of the defendants which it held to be only subsidiary. Upon motion of the judgment creditors, the respondent
judge ordered the issuance of a writ of execution against one of the defendants and the petitioner herein. A motion to quash the
said writ, on the ground of non-inclusion of the other defendants was denied. Hence this appeal from the denial of the motion to
quash.
The Supreme Court AFFIRMED the order denying the motion to quash on the ground that the rule on excussion claimed by the
petitioner is not applicable in the case, as 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.

Rule 57: Preliminary Attachment | 122

SYLLABUS
REMEDIAL LAW; CIVIL PROCEDURES; JUDGMENTS; LIABILITY OF BONDSMAN;; RULE ON EXCUSSION NOT
APPLICABLE WHERE BONDSMAN SENTENCED TO PAY SOLIDARILY WITH PRINCIPAL. — The Court being of the view
that the rule of excussion under Section 17 of Rule 57, 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.

RESOLUTION

BARREDO, J p:
It appearing from the allegations of the petition and the comment of respondents, that, as reiterated in their respective
memoranda, (1) in Civil Case No. 9205 of the Court of First Instance of Rizal, entitled Steel Distributors, Inc. vs. Co Ban Ling &
Sons, et al. a judgment was rendered on August 24, 1968, worded as follows:
"WHEREFORE, judgment is hereby rendered ordering the defendants Co Ban Ling and Sons, Co Chin Leng and the Pioneer
Insurance and Surety Corporation, to pay, jointly and severally, the plaintiff, Steel Distributors, Inc. the sum of P35,760.00 with
interest of 12% per annum from March 31, 1966, the date of the filing of the complaint, until fully paid, the further sum of
P3,000.00 as attorney's fees, and the costs of this suit.
"In the event that the properties of the defendants Co Ban Ling and Sons, Co Chin Leng and the Pioneer Insurance and Surety
Corporation are not sufficient to satisfy the judgment, defendant Co Chin Tong and Macario Co Ling are hereby ordered to pay,
jointly with the other partners, the balance of the obligation to the plaintiff.
"The counterclaim filed by the defendants is hereby dismissed." (Pp. 14-15, Record.)
and upon appeal to the Court of Appeals, the appellate court decided thus:
"WHEREFORE, except with the modification that the liability of appellant Co Chin Leng in the questioned transaction at bar is
only joint, or pro rata and subsidiary, the decision under review is hereby affirmed in all other respects, at appellants Costs."
(Page 23, Record.)

Rule 57: Preliminary Attachment | 123

(2) upon motion of the judgment creditors, the respondent judge ordered the issuance of a writ of execution wherein petitioner
herein was included as object also thereof; (3) a motion to quash the said writ of execution insofar as petitioner is concerned was
denied by respondent judge this wise:
"There is no merit in the Motion to Quash Writ of Execution filed by Pioneer Insurance and Surety Corporation since under the
decision affirmed by the Court of Appeals its liability was adjudged to be jointly and severally with defendant Co Ban Ling & Sons
Co.
"On the other hand, non-inclusion of the other defendants in the writ is of no consequence at this stage since their liability is not
primary but will accrue only in the event the judgment cannot be satisfied by defendant partnership and Pioneer Insurance and
Surety Corporation.
"In view thereof, the Motion to Quash is denied.
"SO ORDERED." (Page 31, Record.)
and, the Court being of the view that 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, as in
the case of Luzon Steel Corporation vs. Sia, 28 SCRA, 58-63, 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. The
restraining order issued by this Court on January 22, 1976 is hereby lifted effective immediately.
Barredo, (Chairman), Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:

I dissent because the petitioner was not served with copies of the decisions of the trial court and the Court of Appeals and of the
motion for execution. It came to know of its solidarily liability only when the sheriff wanted to enforce the writ of execution against
it.

Rule 57: Preliminary Attachment | 124

It contends that its liability under its counterbond was fixed at P35,760 but under the judgment it is liable to pay 12% interest and
attorney's fees. The amount sought to be enforced against it in 1976 already exceeded P80,000.
The petitioner is entitled to a summary hearing on the amount of its liability, as contemplated in section 17, Rule 57 of the Rules
of Court (Towers Assurance Corporation vs. Ororarama Supermart, L-45848, November 9, 1977, 80 SCRA 262). The hearing on
its motion to quash the writ of execution was not a sufficient hearing.

Rule 57: Preliminary Attachment | 125

Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

Rule 57: Preliminary Attachment | 126

UNITED PULP AND PAPER G.R. No. 171750
CO., INC.,
Petitioner, Present:

CORONA, CJ, 

VELASCO, JR., J., Chairperson,

ABAD,
- versus – MENDOZA, and
PERLAS-BERNABE, JJ.

ACROPOLIS CENTRAL Promulgated:

GUARANTY CORPORATION,
Respondent. January 25, 2012

x --------------------------------------------------------------------------------------- x

DECISION

MENDOZA, J.:

Designated as additional member in lieu of Associate Justice Diosdado M. Peralta, per Raffle dated July 20, 2009.
Rule 57: Preliminary Attachment | 127
 This is a petition for review under Rule 45 praying for the annulment of the November 17, 2005
[1] [2]
Decision 66
and the March 2, 2006 Resolution 67
of the Court of Appeals (CA) in CA-G.R. SP No. 89135
entitled Acropolis Central Guaranty Corporation (formerly known as the Philippine Pryce Assurance Corp.) v.
Hon. Oscar B. Pimentel, as Presiding Judge, RTC of Makati City, Branch 148 (RTC), and United Pulp and
Paper Co., Inc.

The Facts

On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil case for collection of the amount
of P42,844,353.14 against Unibox Packaging Corporation (Unibox) and Vicente Ortega (Ortega) before the
[3]
Regional Trial Court of Makati, Branch 148 (RTC). 68
UPPC also prayed for a Writ of Preliminary Attachment
against the properties of Unibox and Ortega for the reason that the latter were on the verge of insolvency and
[4] [5]
were transferring assets in fraud of creditors. 69
On August 29, 2002, the RTC issued the Writ of Attachment 70

after UPPC posted a bond in the same amount of its claim. By virtue of the said writ, several properties and
[6]
assets of Unibox and Ortega were attached. 71

66[1]
Rollo, pp. 234-241; Penned by Associate Justice Delilah Vidallon-Magtolis and concurred in by Associate Justice Josefina Guevara-Salonga and Associate Justice
Fernanda Lampas-Peralta.
67[2]
Id. at 257.
68[3]
Id. at 47 and 235.
69[4]
Id. at 46-47.
70[5]
Id. at 51-52.
71[6]
Id. at 53 and 235.
Rule 57: Preliminary Attachment | 128
 [7]
On October 10, 2002, Unibox and Ortega filed their Motion for the Discharge of Attachment, 72
praying
that they be allowed to file a counter-bond in the amount of P42,844,353.14 and that the writ of preliminary
attachment be discharged after the filing of such bond. Although this was opposed by UPPC, the RTC, in its
Order dated October 25, 2002, granted the said motion for the discharge of the writ of attachment subject to
[8]
the condition that Unibox and Ortega file a counter-bond. 73
Thus, on November 21, 2002, respondent
Acropolis Central Guaranty Corporation (Acropolis) issued the Defendant’s Bond for Dissolution of
[9]
Attachment 74
in the amount of P42,844,353.14 in favor of Unibox.

Not satisfied with the counter-bond issued by Acropolis, UPPC filed its Manifestation and Motion to
[10]
Discharge the Counter-Bond 75
dated November 27, 2002, claiming that Acropolis was among those
insurance companies whose licenses were set to be cancelled due to their failure to put up the minimum
amount of capitalization required by law. For that reason, UPPC prayed for the discharge of the counter-bond
[11]
and the reinstatement of the attachment. In its December 10, 2002 Order, 76
the RTC denied UPPC’s Motion
to Discharge Counter-Bond and, instead, approved and admitted the counter-bond posted by Acropolis.
Accordingly, it ordered the sheriff to cause the lifting of the attachment on the properties of Unibox and Ortega.

[12]
On September 29, 2003, Unibox, Ortega and UPPC executed a compromise agreement, 77
wherein
Unibox and Ortega acknowledged their obligation to UPPC in the amount of P35,089,544.00 as of August 31,
72[7]
Id. at 56-59.
73[8]
Id. at 235-236.
74[9]
Id. at 54.
75[10]
Id. at 64-66.
76[11]
Id. at 90-93.
77[12]
Id. at 106-113.
Rule 57: Preliminary Attachment | 129
2003, inclusive of the principal and the accrued interest, and bound themselves to pay the said amount in
accordance with a schedule of payments agreed upon by the parties. Consequently, the RTC promulgated its
[13]
Judgment 78
dated October 2, 2003 approving the compromise agreement.

For failure of Unibox and Ortega to pay the required amounts for the months of May and June 2004
[14]
despite demand by UPPC, the latter filed its Motion for Execution 79
to satisfy the remaining unpaid balance.
[15]
In the July 30, 2004 Order, 80
the RTC acted favorably on the said motion and, on August 4, 2004, it issued
[16]
the requested Writ of Execution. 81

The sheriff then proceeded to enforce the Writ of Execution. It was discovered, however, that Unibox
had already ceased its business operation and all of its assets had been foreclosed by its creditor bank.
Moreover, the responses of the selected banks which were served with notices of garnishment indicated that
Unibox and Ortega no longer had funds available for garnishment. The sheriff also proceeded to the residence
of Ortega to serve the writ but he was denied entry to the premises. Despite his efforts, the sheriff reported in
[17]
his November 4, 2008 Partial Return 82
that there was no satisfaction of the remaining unpaid balance by
Unibox and Ortega.

78[13]
Id. at 114-115.
79[14]
Id. at 118-119.
80[15]
Id. at 131-132.
81[16]
Id. at 132.
82[17]
Id. at 133-134.
Rule 57: Preliminary Attachment | 130
 On the basis of the said return, UPPC filed its Motion to Order Surety to Pay Amount of Counter-
[18] [19]
Bond 83
directed at Acropolis. On November 30, 2004, the RTC issued its Order 84
granting the motion and
ordering Acropolis to comply with the terms of its counter-bond and pay UPPC the unpaid balance of the
judgment in the amount of P27,048,568.78 with interest of 12% per annum from default.

Thereafter, on December 13, 2004, Acropolis filed its Manifestation and Very Urgent Motion for
[20]
Reconsideration, 85
arguing that it could not be made to pay the amount of the counter-bond because it did
not receive a demand for payment from UPPC. Furthermore, it reasoned that its obligation had been
discharged by virtue of the novation of its obligation pursuant to the compromise agreement executed by
UPPC, Unibox and Ortega. The motion, which was set for hearing on December 17, 2004, was received by
[21]
the RTC and UPPC only on December 20, 2004. 86
In the Order dated February 22, 2005, the RTC denied
the motion for reconsideration for lack of merit and for having been filed three days after the date set for the
[22]
hearing on the said motion. 87

Aggrieved, Acropolis filed a petition for certiorari before the CA with a prayer for the issuance of a
[23]
Temporary Restraining Order and Writ of Preliminary Injunction. 88
On November 17, 2005, the CA rendered
[24]
its Decision 89
granting the petition, reversing the February 22, 2005 Order of the RTC, and absolving and

83[18]
Id. at 135-138.
84[19]
Id. at 139.
85[20]
Id. at 140-148.
86[21]
Id. at 18.
87[22]
Id. at 159-160.
88[23]
Id. at 166-189.
89[24]
Id. at 234-241.
Rule 57: Preliminary Attachment | 131
relieving Acropolis of its liability to honor and pay the amount of its counter-attachment bond. In arriving at said
disposition, the CA stated that, firstly, Acropolis was able to comply with the three-day notice rule because the
motion it filed was sent by registered mail on December 13, 2004, four days prior to the hearing set for
[25]
December 17, 2004; 90
secondly, UPPC failed to comply with the following requirements for recovery of a
judgment creditor from the surety on the counter-bond in accordance with Section 17, Rule 57 of the Rules of
Court, to wit: (1) demand made by creditor on the surety, (2) notice to surety and (3) summary hearing as to
[26]
his liability for the judgment under the counter-bond; 91
and, thirdly, the failure of UPPC to include Acropolis in
[27]
the compromise agreement was fatal to its case. 92

UPPC then filed a motion for reconsideration but it was denied by the CA in its Resolution dated March
[28]
1, 2006. 93

Hence, this petition.

The Issues

For the allowance of its petition, UPPC raises the following

90[25]
Id. at 239.
91[26]
Id. at 239-240.
92[27]
Id. at 240.
93[28]
Id. at 257.
Rule 57: Preliminary Attachment | 132
GROUNDS

I.

The Court of Appeals erred in not holding respondent liable on its counter-attachment bond which it
posted before the trial court inasmuch as:

A. The requisites for recovering upon the respondent-surety were clearly complied with by
petitioner and the trial court, inasmuch as prior demand and notice in writing was made upon
respondent, by personal service, of petitioner’s motion to order respondent surety to pay the
amount of its counter-attachment bond, and a hearing thereon was held for the purpose of
determining the liability of the respondent-surety.

B. The terms of respondent’s counter-attachment bond are clear, and unequivocally provide
that respondent as surety shall jointly and solidarily bind itself with defendants to secure and
pay any judgment that petitioner may recover in the action. Hence, such being the terms of the
bond, in accordance with fair insurance practices, respondent cannot, and should not be
allowed to, evade its liability to pay on its counter-attachment bond posted by it before the
trial court.

II.

The Court of Appeals erred in holding that the trial court gravely abused its discretion in denying
respondent’s manifestation and motion for reconsideration considering that the said motion failed to

Rule 57: Preliminary Attachment | 133

 comply with the three (3)-day notice rule under Section 4, Rule 15 of the Rules of Court, and that it had
94[29]
lacked substantial merit to warrant a reversal of the trial court’s previous order.

Simply put, the issues to be dealt with in this case are as follows:

(1) Whether UPPC failed to make the required demand and notice upon Acropolis; and

(2) Whether the execution of the compromise agreement between UPPC and Unibox and Ortega
was tantamount to a novation which had the effect of releasing Acropolis from its obligation
under the counter-attachment bond.

The Court’s Ruling

UPPC complied with the twin requirements of notice and demand

On the recovery upon the counter-bond, the Court finds merit in the arguments of the petitioner.

94[29]
Id. at 23-24.
Rule 57: Preliminary Attachment | 134
 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
[30]
the Bond. 95
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
[31]
that UPPC may recover in the action. 96

Section 17, Rule 57 of the Rules of Court sets forth the procedure for the recovery from a surety on a
counter-bond:

Sec. 17. Recovery upon the counter-bond. – 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 on the same action.

From a reading of the abovequoted provision, it is evident that 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.

95[30]
Id. at 25.
96[31]
Id. at 28.
Rule 57: Preliminary Attachment | 135
 [32]
This Court has consistently held that the filing of a complaint constitutes a judicial demand. 97

Accordingly, the filing by UPPC of the Motion to Order Surety to Pay Amount 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. In
said bond, Acropolis bound itself in the sum of ₱42,844,353.14 to secure the payment of any judgment that
[33]
UPPC might recover against Unibox and Ortega. 98

Furthermore, an examination of the records reveals that the motion was filed by UPPC on November 11,
[34]
2004 and was set for hearing on November 19, 2004. 99
Acropolis was duly notified of the hearing and it was
[35]
personally served a copy of the motion on November 11, 2004, 100
contrary to its claim that it did not receive a
copy of the motion.

On November 19, 2004, the case was reset for hearing on November 30, 2004. The minutes of the
hearing on both dates show that only the counsel for UPPC was present. Thus, Acropolis was given the
opportunity to defend itself. That it chose to ignore its day in court is no longer the fault of the RTC and of
UPPC. It cannot now invoke the alleged lack of notice and hearing when, undeniably, both requirements were
met by UPPC.

97[32]
Guerrero v. Court of Appeals, G.R. No. L-22366, October 30, 1969, 29 SCRA 791, 796; Monzon v. Intermediate Appellate Court, 251 Phil. 695, 704 (1989).
98[33]
Records, p. 885.
99[34]
Id. at 1067-1070.
100[35]
Id. at 1070.
Rule 57: Preliminary Attachment | 136
No novation despite compromise agreement; Acropolis still liable
under the terms of the counter-bond

UPPC argues that the undertaking of Acropolis is to secure any judgment rendered by the RTC in its
favor. It points out that because of the posting of the counter-bond by Acropolis and the dissolution of the writ
of preliminary attachment against Unibox and Ortega, UPPC lost its security against the latter two who had
[36] [37] [38]
gone bankrupt. 101
It cites the cases of Guerrero v. Court of Appeals 102
and Martinez v. Cavives 103
to support
its position that the execution of a compromise agreement between the parties and the subsequent rendition
of a judgment based on the said compromise agreement does not release the surety from its obligation nor
[39]
does it novate the obligation. 104

Acropolis, on the other hand, contends that it was not a party to the compromise agreement. Neither
was it aware of the execution of such an agreement which contains an acknowledgment of liability on the part
of Unibox and Ortega that was prejudicial to it as the surety. Accordingly, it cannot be bound by the judgment
[40]
issued based on the said agreement. 105
Acropolis also questions the applicability of Guerrero and draws
attention to the fact that in said case, the compromise agreement specifically stipulated that the surety shall
continue to be liable, unlike in the case at bench where the compromise agreement made no mention of its
[41]
obligation to UPPC. 106

101[36]
Rollo, p. 28.
102[37]
Supra note 32.
103[38]
25 Phil. 581 (1913).
104[39]
Rollo, pp. 29-30.
105[40]
Id. at 306-307.
106[41]
Id. at 308.
Rule 57: Preliminary Attachment | 137
 On this issue, the Court finds for UPPC also.

The terms of the Bond for Dissolution of Attachment issued by Unibox and Acropolis in favor of UPPC
are clear and leave no room for ambiguity:

WHEREAS, the Honorable Court in the above-entitled case issued on _____ an Order dissolving / lifting
partially the writ of attachment levied upon the defendant/s personal property, upon the filing of a counterbond by
the defendants in the sun of PESOS FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR THOUSAND
THREE HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14) Philippine Currency.

NOW, THEREFORE, we UNIBOX PACKAGING CORP. as Principal and PHILIPPINE PRYCE

ASSURANCE CORP., a corporation duly organized and existing under and by virtue of the laws of the Philippines,
as Surety, in consideration of the dissolution of said attachment, hereby jointly and severally bind
ourselves in the sum of FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR THOUSAND THREE
HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14) Philippine Currency, in favor of the plaintiff
to secure the payment of any judgment that the plaintiff may recover against the defendants in this
107[42]
action. [Emphasis and underscoring supplied]

Based on the foregoing, Acropolis voluntarily bound itself with Unibox to be solidarily liable to answer for
ANY judgment which UPPC may recover from Unibox in its civil case for collection. Its counter-bond was
issued in consideration of the dissolution of the writ of attachment on the properties of Unibox and Ortega. The
counter-bond then replaced the properties to ensure recovery by UPPC from Unibox and Ortega. It would be

107[42]
Records, p. 885.
Rule 57: Preliminary Attachment | 138
the height of injustice to allow Acropolis to evade its obligation to UPPC, especially after the latter has already
secured a favorable judgment.

[43]
This issue is not novel. In the case of Luzon Steel Corporation v. Sia, 108
Luzon Steel Corporation sued
Metal Manufacturing of the Philippines and Jose Sia for breach of contract and damages. A writ of preliminary
attachment was issued against the properties of the defendants therein but the attachment was lifted upon the
filing of a counter-bond issued by Sia, as principal, and Times Surety & Insurance Co., as surety. Later, the
plaintiff and the defendants entered into a compromise agreement whereby Sia agreed to settle the plaintiff’s
claim. The lower court rendered a judgment in accordance with the terms of the compromise. Because the
defendants failed to comply with the same, the plaintiff obtained a writ of execution against Sia and the surety
on the counter-bond. The surety moved to quash the writ of execution on the ground that it was not a party to
the compromise and that the writ was issued without giving the surety notice and hearing. Thus, the court set
aside the writ of execution and cancelled the counter-bond. On appeal, this Court, speaking through the
learned Justice J.B.L. Reyes, discussed the nature of the liability of a surety on a counter-bond:

Main issues posed are (1) whether the judgment upon the compromise discharged the surety from its
obligation under its attachment counterbond and (2) whether the writ of execution could be issued against the
surety without previous exhaustion of the debtor's properties.

Both questions can be solved by bearing in mind that we are dealing with a counterbond filed to discharge a
levy on attachment. Rule 57, section 12, specifies that an attachment may be discharged upon the making of a
cash deposit or filing a counterbond “in an amount equal to the value of the property attached as determined by
108[43]
138 Phil. 62 (1969).
Rule 57: Preliminary Attachment | 139
 the judge”; that upon the filing of the counterbond “the property attached ... shall be delivered to the party making
the deposit or giving the counterbond, or the person appearing on his behalf, the deposit or counterbond aforesaid
standing in place of the property so released.”

The italicized expressions constitute the key to the entire problem. Whether the judgment be rendered after
trial on the merits or upon compromise, such judgment undoubtedly may be made effective upon the property
released; and since the counterbond merely stands in the place of such property, there is no reason why
the judgment should not be made effective against the counterbond regardless of the manner how the
judgment was obtained.

xxx

As declared by us in Mercado v. Macapayag, 69 Phil. 403, 405-406, in passing upon the liability of counter
sureties in replevin who bound themselves to answer solidarily for the obligations of the defendants to the plaintiffs
in a fixed amount of ₱912.04, to secure payment of the amount that said plaintiff be adjudged to recover from the
defendants,

the liability of the sureties was fixed and conditioned on the finality of the judgment rendered
regardless of whether the decision was based on the consent of the parties or on the merits. A
judgment entered on a stipulation is nonetheless a judgment of the court because consented
109[44]
to by the parties.

109[44]
Luzon Steel Corporation v. Sia, 138 Phil. 62, 65-67 (1969).
Rule 57: Preliminary Attachment | 140
 [Emphases and underscoring supplied]

The argument of Acropolis that its obligation under the counter-bond was novated by the compromise
agreement is, thus, untenable. In order for novation to extinguish its obligation, Acropolis must be able to show
that there is an incompatibility between the compromise agreement and the terms of the counter-bond, as
required by Article 1292 of the Civil Code, which provides that:

Art. 1292. In order that an obligation may be extinguished by another which substitute the same, it is
imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point
incompatible with each other. (1204)

Nothing in the compromise agreement indicates, or even hints at, releasing Acropolis from its obligation
to pay UPPC after the latter has obtained a favorable judgment. Clearly, there is no incompatibility between
the compromise agreement and the counter-bond. Neither can novation be presumed in this case. As
[45]
explained in Duñgo v. Lopena: 110

110[45]
116 Phil. 1305 (1962).
Rule 57: Preliminary Attachment | 141
 Novation by presumption has never been favored. To be sustained, it need be established that the old and
new contracts are incompatible in all points, or that the will to novate appears by express agreement of the parties
111[46]
or in acts of similar import.

All things considered, Acropolis, as surety under the terms of the counter-bond it issued, should be held
liable for the payment of the unpaid balance due to UPPC.

Three-day notice rule, not a hard and fast rule

Although this issue has been obviated by our disposition of the two main issues, the Court would like to
point out that the three-day notice requirement is not a hard and fast rule and substantial compliance is
allowed.

Pertinently, Section 4, Rule 15 of the Rules of Court reads:

Sec. 4. Hearing of motion. – Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.

Id. at 1313-1314, citing Martinez v. Cavives, 25 Phil. 581 (1913); Tiu Siuco v. Habana, 45 Phil. 707 (1924); Asia Banking Corp. v. Lacson Co., 48 Phil. 482 (1925);
111[46]

Pascual v. Lacsamana, 53 O.G. 2467, April 1957.

Rule 57: Preliminary Attachment | 142
 Every written motion required to be heard and the notice of the hearing thereof shall be served in such a
manner as to insure its receipt by the other party at least three (3) days before the date of hearing , unless
the court for good cause sets the hearing on shorter notice. [Emphasis supplied]

The law is clear that it intends for the other party to receive a copy of the written motion at least three
days before the date set for its hearing. The purpose of the three (3)-day notice requirement, which was
established not for the benefit of the movant but rather for the adverse party, is to avoid surprises upon the
latter and to grant it sufficient time to study the motion and to enable it to meet the arguments interposed
[47] [48]
therein. 112
In Preysler, Jr. v. Manila Southcoast Development Corporation, 113
the Court restated the ruling
that “the date of the hearing should be at least three days after receipt of the notice of hearing by the other
parties.”

It is not, however, a hard and fast rule. Where a party has been given the opportunity to be heard, the
time to study the motion and oppose it, there is compliance with the rule. This was the ruling in the case of
[49]
Jehan Shipping Corporation v. National Food Authority, 114
where it was written:

Purpose Behind the

Notice Requirement

112[47]
Sembrano v. Ramirez, 248 Phil. 260, 266 (1988), citing E & L Mercantile, Inc. v. Intermediate Appellate Court, 226 Phil. 299, 305 (1986).
113[48]
G.R. No. 171872, June 28, 2010, 621 SCRA 636, 645.
114[49]
514 Phil. 166 (2005).
Rule 57: Preliminary Attachment | 143
 This Court has indeed held time and time again that, under Sections 4 and 5 of Rule 15 of the Rules of
Court, mandatory is the notice requirement in a motion, which is rendered defective by failure to comply with the
requirement. As a rule, a motion without a notice of hearing is considered pro forma and does not affect the
reglementary period for the appeal or the filing of the requisite pleading.

As an integral component of procedural due process, the three-day notice required by the Rules is not
intended for the benefit of the movant. Rather, the requirement is for the purpose of avoiding surprises that may be
sprung upon the adverse party, who must be given time to study and meet the arguments in the motion before a
resolution by the court. Principles of natural justice demand that the right of a party should not be affected without
giving it an opportunity to be heard.

The test is the presence of the opportunity to be heard, as well as to have time to study the motion
and meaningfully oppose or controvert the grounds upon which it is based. Considering the circumstances
of the present case, we believe that the requirements of procedural due process were substantially complied with,
115[50]
and that the compliance justified a departure from a literal application of the rule on notice of hearing.
[Emphasis supplied]

In the case at bench, the RTC gave UPPC sufficient time to file its comment on the motion. On January
14, 2005, UPPC filed its Opposition to the motion, discussing the issues raised by Acropolis in its motion.
Thus, UPPC’s right to due process was not violated because it was afforded the chance to argue its position.

115[50]
Id. at 173-174.
Rule 57: Preliminary Attachment | 144
 WHEREFORE, the petition is GRANTED. The November 17, 2005 Decision and the March 1, 2006
Resolution of the Court of Appeals, in CA-G.R. SP No. 89135, are hereby REVERSED and SET ASIDE. The
November 30, 2004 Order of the Regional Trial Court, Branch 148, Makati City, ordering Acropolis to comply
with the terms of its counter-bond and pay UPPC the unpaid balance of the judgment in the amount of
P27,048,568.78 with interest of 12% per annum from default is REINSTATED.

Rule 57: Preliminary Attachment | 145

Section 20

G.R. No. 74696 November 11, 1987

JOSE D. CALDERON vs. INTERMEDIATE APPELLATE COURT, ET AL.

SECOND DIVISION
[G.R. No. 74696. November 11, 1987.]

JOSE D. CALDERON, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, GEORGE SCHULZE, GEORGE SCHULZE,
JR., ANTONIO C. AMOR, MANUEL A. MOZO, and VICTOR M. NALUZ, respondents.

[G.R. No. 73916. November 11, 1987.]

FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., petitioner, vs. THE INTERMEDIATE APPELLATE
COURT, GEORGE SCHULZE, ANTONIO C. AMOR, MANUEL A. MOZO and VICTOR M. NALUZ, respondents.

SYLLABUS
1. REMEDIAL LAW; ATTACHMENT BOND: LIABILITY EXTENDS TO MORAL AND EXEMPLARY DAMAGES IN CASE
ATTACHMENT WAS MALICIOUSLY SUED OUT AND ESTABLISHED TO BE SO. — While as a general rule, the liability on the
attachment bond is limited to actual damages, moral and exemplary damages may be recovered where the attachment was
alleged to be maliciously sued out and established to be so. (Lazatin vs. Twano et al, L-12736, July 31, 1961). Well settled is the
rule that the factual findings of the trial court are entitled to great weight and respect on appeal, especially when established by
unrebutted testimonial and documentary evidence, as in this case.
2. ID.; ID.; NOT RENDERED VOID UPON FILING OF THE COUNTERBOUND; DISABILITY OF ATTACHMENT, DEFINED.
— While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond, the attachment is discharged
Rule 57: Preliminary Attachment | 146
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 of the Rules of Court. It is clear from the above provision that the
responsibility of the surety arises "if the court shall finally adjudge that the plaintiff was not entitled thereto." In Rocco vs. Meads,
96 Phil. Reports 884, we held that the liability attaches if the plaintiff is not entitled to the attachment because the requirements
entitling him to the writ are wanting, or if the plaintiff has no right to the attachment because the facts stated in his affidavit, or
some of them, are untrue. It is, therefore, evident that upon the dismissal of an attachment wrongfully issued, the surety is liable
for damages as a direct result of said attachment.
3. ID.; ID.; LIABILITY OF SURETY SUBSISTS UNTIL FINALLY RECKONED BY THE COURT THAT THE CREDITOR WAS
NOT ENTITLED TO ISSUANCE OF THE ATTACHMENT WRIT. — Whether the attachment was discharged by either of the two
(2) ways indicated in the law, i.e., by filing a counterbond or by showing that the order of attachment was improperly or irregularly
issued, the liability of the surety on the attachment bond subsists because the final reckoning is when "the Court shall finally
adjudge that the attaching creditor was not entitled" to the issuance of the attachment writ in the first place. The attachment
debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way
of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging
the attachment writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances like in the
present case, would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending
incident of the case.
4. CIVIL LAW; DAMAGES; AWARD BEING EXCESSIVE ORDERED REDUCED. — We believe, however, that in the light of
the factual situation in this case, the damages awarded by the Intermediate Appellate Court are rather excessive. They must be
reduced.

DECISION

PARAS, J p:
For review on certiorari is respondent appellate Court's decision 1 in AC-G.R. No. 01420, which affirmed the Regional Trial
Court's decision 2 appealed from holding the plaintiff Jose D. Calderon (petitioner herein) and his bondsman the Integrated
Rule 57: Preliminary Attachment | 147
Bonding and Insurance Company, Inc., jointly and severally liable to pay defendants (private respondents herein), damages
caused by the filing by Calderon of the allegedly unwarranted suit and the wrongful and malicious attachment of private
respondents properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased from the private respondents the following: the Luzon Brokerage
Corporation (LBC, for brevity) and its five (5) affiliate companies, namely — Luzon Air Freight, Inc., Luzon Port Terminals
Services, Inc., Luzon (GS) Warehousing Corporation, GS Industrial Management Corporation, and GS Luzon Trucking
Corporation. Twenty one (21) days thereafter or on November 23, 1976, the Bureau of Customs suspended the operations of
LBC for failure to pay the amount of P1,475,840.00 representing customs taxes and duties incurred prior to the execution of the
sale. In order to lift the suspension, Calderon paid the sum of P606,430.00 to the Bureau of Customs.
On October 27, 1977, Calderon filed a complaint against private respondents to recover said amount of P1,475,840.00, with
damages by reason of breach of warranty. In the same complaint, the petitioner prayed for a preliminary attachment, alleging:
that private respondents had deliberately and willfully concealed from his knowledge such staggering liability of the LBC for the
purpose of misleading him into buying the six aforesaid companies; and that private respondent Schulze is about to depart from
the Philippines in order to defraud his creditors.
To support the petition for preliminary attachment, the petitioner posted a surety bond of P1,475,840.00. on October 28, 1977,
the trial court issued a writ of preliminary attachment, whereupon properties of the private respondents were attached and their
bank deposits were garnished.
On November 10, 1977, petitioner Calderon filed an amended complaint, alleging that while the liabilities of LBC are reflected in
its books, the aforesaid amount was fraudulently withdrawn and misappropriated by private respondent Schulze. (pp. 7-18,
Rollo).
On the other hand, private respondents claimed: that the amount of P1,475,840.00 due to the Bureau of Customs represents the
duties and taxes payable out of the advanced payments made by LBC's client, Philippine Refining Company (PRC, for brevity) in
August, September and October, 1976, and in the first and second weeks of November 1976, after Calderon himself had taken
control of the management of LBC (Exhibit A); that these deposit payments were properly recorded in the books of the
corporation and existing as part of the corporate funds; that from the first week of June, 1976 up to October 30, 1976, private
Rule 57: Preliminary Attachment | 148
respondent Schulze fully disclosed and explained to Calderon that these customer's advanced deposit payments (including
those of the PRC) are to be paid to the Bureau of Customs when their corresponding customs taxes and duties become due;
that during this phase of the negotiation, Calderon and his representatives inspected and studied the corporate books and
records at will and learned the daily operations and management of LBC; that the petitioner did not pay out of his own pocket but
out of the LBC funds the said amount of P606,430.30 demanded by the Bureau of Customs, as evidenced by a manager's check
No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and another facility negotiated with the Insular Bank of Asia and America (Exhibit K-
2); and that private respondents are setting up a counterclaim for actual, moral and exemplary damages as well as attorney's
fees, as a consequence of the filing of the baseless suit and the wrongful and malicious attachment of their properties. (pp. 217-
221, Rollo)
On November 17, 1977, private respondents filed a counter-bond, whereupon the trial court 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 (Annex B, p. 42, Rollo).
After trial, the trial court 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.
Said decision was affirmed on appeal, although slightly modified in the sense that the award of moral and exemplary damages in
favor of private respondents Schulze and Amor was reduced. The dispositive portion of the judgment of affirmance and
modification reads:
"WHEREFORE, the judgment of the lower court is modified as follows:
To defendant-appellee George Schulze:
P650,000.00 as moral damages and
P200,000.00 as exemplary damages.
To defendant-appellee Antonio C. Amor:
P150,000.00 as moral damages and
P30,000.00 as exemplary damages.
"All other dispositions in the judgment appealed from, including the dismissal of the amended complaint, are hereby affirmed in
toto.
Rule 57: Preliminary Attachment | 149
"SO ORDERED."
In his petition, petitioner Calderon asserts, among other things, that the court below erred:
I
IN HOLDING THAT THE PETITIONER FAILED TO ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY ATTACHMENT HAD BEEN WRONGFULLY AND MALICIOUSLY SUED OUT.
III
IN HOLDING THAT THE PETITIONER IS LIABLE NOT ONLY FOR ACTUAL DAMAGES BUT MORAL AND EXEMPLARY
DAMAGES AS WELL.
On the other hand, petitioner Insurance Company raises the following issues:
I
WHETHER OR NOT THE PETITIONER SURETY IS LIABLE FOR DAMAGES ON ITS CONTRACTED SURETYSHIP
NOTWITHSTANDING THE DISSOLUTION OF THE WRIT OF PRELIMINARY ATTACHMENT, AS A CONSEQUENCE OF THE
FILING OF THE DEFENDANT'S COUNTER-BOND, WHEREBY LEVIED PROPERTIES WERE ORDERED BY THE COURT
RETURNED TO PRIVATE RESPONDENTS AND THE NOTICES OF GARNISHMENT ISSUED IN CONNECTION THEREWITH
ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT FILING BY PRIVATE RESPONDENTS OF A COUNTER-BOND TO DISCHARGE
THE WRIT OF PRELIMINARY ATTACHMENT CONSTITUTE A WAIVER ON ANY DEFECT IN THE ISSUANCE OF THE
ATTACHMENT WRIT.
III
WHETHER OR NOT A SURETY IS A GUARANTOR OF THE EXISTENCE OF A GOOD CAUSE OF ACTION IN THE
COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly disclosed as an outstanding liability of LBC or was misappropriated by
private respondent Schulze is purely a factual issue. That Calderon was clearly in bad faith when he asked for the attachment is
Rule 57: Preliminary Attachment | 150
indicated by the fact that he failed to appear in court to support his charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on the charges was presented by him.
What the Appellate Court found in this regard need not he further elaborated upon. The Appellate Court ruled: llcd
". . . The record shows that appellant Calderon failed to produce any evidence in support of his sworn charge that appellee
Schulze had deliberately and willfully concealed the liabilities of Luzon Brokerage Corporation. Neither did appellant Calderon
prove his sworn charges that appellee Schulze had maliciously and fraudulently withdrawn and misappropriated the amount of
P1,475,840.00 and that all the defendants had maliciously and fraudulently concealed and withheld from him this alleged liability
of Luzon Brokerage Corporation in breach of the contract-warranty that said corporation had no obligations or liabilities except
those appearing in the books and records of the said corporation. Indeed, appellant Calderon never appeared in the trial court to
substantiate the charges in his verified complaints and in his affidavit to support his petition for the issuance of a writ of
attachment. He distanced himself from the appellees and avoided cross-examination regarding his sworn allegations. . . .
" . . . But even though appellant Calderon failed to prove his serious charges of fraud, malice and bad faith, the appellees took it
upon themselves to show that they did not conceal or withhold from appellant's knowledge the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage Corporation and that they did not withdraw and misappropriate the deposits made by
Philippine Refining Co., Inc. with Luzon Brokerage Corporation.
"The books and records of Luzon Brokerage Corporation on which the Financial Statement of Luzon Brokerage Corporation, as
of October 31, 1976 was prepared by the auditing firm retained by appellant Calderon himself (Exhibit 1), disclose that the
liabilities of Luzon Brokerage Corporation in the total amount of P4,574,498.32 appear under the heading 'Customers Deposit'
(Exhibit 1-A) this amount includes the deposit of Philippine Refining Co., Inc. in the sum of P1,475,840.00.
"But appellant Calderon contends that this financial statement was dated February 4, 1977 (see Exhibit 1-C). There is nothing
commendable in this argument because the bases of the financial statement were the books, records and documents of Luzon
Brokerage Corporation for the period ending October 31, 1976, which were all turned over to and examined by appellant
Calderon and his executive, legal and financial staffs. There is also no merit in the contention of appellant Calderon that the
appellees have tampered the books of Luzon Brokerage Corporation because there is no proof to back this charge, let alone the
fact that appellant Calderon did not even present the said books to support his charge.

Rule 57: Preliminary Attachment | 151

"As stated above, the amount of customers' deposits in the sum of P4,574,498.32 includes the deposits of Philippine Refining
Co., Inc. (Exhibits 46-A, 46-B, 46-C, 46-D, 46-E:, 46-F, 46-G, 46-H, 46-I, 46-J, t.s.n. July 23, 1980, pp. 12-13, 14-15). The
amounts deposited by Philippine Refining Co., Inc. on various dates with Luzon Brokerage Corporation made before the
execution of the sale were all entered in three other corporate books of Luzon Brokerage Corporation namely, the Cash Receipts
Register (Exhibits 39-A-1 to 39-K-1 and 39-A-1-B to 39-K-1-B), the Journal Vouchers (Exhibits 42 to 46 and 42-A to 45-A), and
the Customer's Deposit Ledger (Exhibit 46-A to 46-J) . . .
Thus, the claim of appellant Calderon that the deposits made by Philippine Refining Co., Inc. with Luzon Brokerage Corporation
of P406,430.00 on August 24, 1976 (Exhibit N), P53,640.00 on October 13, 1976 (Exhibit O), P406,430.00 on September 8,
1976 (Exhibit P), P199,508.00 on September 24, 1976 (Exhibit Q), P52,738.00 on October 22, 1976 (Exhibit R), and
P264,436.00 on October 7, 1976 (Exhibit S) were not entered in the books of Luzon Brokerage Corporation, is completely
without merit. . . . (pp. 85-87, Rollo)
It is evident from the foregoing that the attachment was maliciously sued out and that as already pointed out Schulze was not in
bad faith.
While as a general rule, the liability on the attachment bond is limited to actual damages, moral and exemplary damages may be
recovered where the attachment was alleged to be maliciously sued out and established to be so. (Lazatin vs. Twano et al, L-
12736, July 31, 1961).
In the instant case, the issues of wrongful and malicious suing out of the writ of preliminary attachment were joined not only in
private respondents motion to discharge the attachment but also in their answer to the amended complaint (p. 38, Rollo). The
trial court observed that the books and records of Luzon Brokerage Corporation disclose that the liabilities of the said corporation
in the total amount of P4,574,498.32 appear under the heading "Customs Deposit" (Exhibit 1-A) and this amount includes the
deposit of Philippine Refining Co., Inc. in the sum of P1,475,840.00 (p. 26, Rollo). On the other hand, plaintiff never appeared in
court, and failed to produce any evidence to substantiate his charges (p. 26, Rollo). LLjur
Well settled is the rule that the factual findings of the trial court are entitled to great weight and respect on appeal, especially
when established by unrebutted testimonial and documentary evidence, as in this case.
Anent the petition of the surety, We say the following:

Rule 57: Preliminary Attachment | 152

Specifically, petitioner surety contends that the dissolution of the attachment extinguishes its obligation under the bond, for the
basis of its liability, which is wrongful attachment, no longer exists, the attachment bond having been rendered void and
ineffective, by virtue of Section 12, Rule 57 of the Rules of Court. (p. 5, Petition).
While Section 12, Rule 57 of the Rules of Court provides that upon the filing of a counterbond, the attachment is discharged or
dissolved, nowhere is it provided that the attachment bond is rendered void and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in Section 4, Rule 57 of the Rules of Court, as follows:
"Sec. 4. Condition of applicant's bond. The party applying for the order must give a bond executed to the adverse party in
an amount to be fixed by the judge, not exceeding the applicant s claim, conditioned that the latter will pay all the costs which
may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto."
It is clear from the above provision that the responsibility of the surety arises "if the court shall finally adjudge that the plaintiff
was not entitled thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we held that the liability attaches if the plaintiff is not entitled
to the attachment because the requirements entitling him to the writ are wanting, or if the plaintiff has no right to the attachment
because the facts stated in his affidavit, or some of them, are untrue. It is, therefore, evident that upon the dismissal of an
attachment wrongfully issued, the surety is liable for damages as a direct result of said attachment.
Equally untenable is the Surety's contention that by filing a counterbond, private respondents waived any defect or flaw in the
issuance of the attachment writ, for they could have sought, without need of filing any counterbond, the discharge of the
attachment if the same was improperly or irregularly issued, as provided in Section 13, Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by
showing that the order of attachment was improperly or irregularly issued, the liability of the surety on the attachment bond
subsists because the final reckoning is when "the Court shall finally adjudge that the attaching creditor was not entitled" to the
issuance of the attachment writ in the first place. The attachment debtor cannot be deemed to have waived any defect in the
issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other.
Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching
creditor instead of the other way, which, in most instances like in the present case, would require presentation of evidence in a
fullblown trial on the merits and cannot easily be settled in a pending incident of the case.
Rule 57: Preliminary Attachment | 153
We believe, however, that in the light of the factual situation in this case, the damages awarded by the Intermediate Appellate
Court are rather excessive. They must be reduced. LLpr
WHEREFORE, the judgment of said Appellate Court is hereby modified as follows: Both petitioner Calderon and petitioner First
Integrated Bonding and Insurance Company, Inc. are hereby ordered to give jointly and severally:
1. Respondent George Schulze, P250,000.00 as moral damages and P50,000.00 as exemplary damages; and
2. Respondent Antonio C. Amor, P50,000.00 as moral damages and P10,000.00 as exemplary damages.
The rest of the judgment of the Intermediate Appellate Court is hereby AFFIRMED.
SO ORDERED.
Yap (Chairman), Melencio-Herrera and Padilla, JJ., concur.
Sarmiento, J., took no part.

Rule 57: Preliminary Attachment | 154

G.R. No. L-35951 August 31, 1977
PIONEER INSURANCE & SURETY CORP., ET AL. vs. AGAPITO HONTANGAS, ET AL.

FIRST DIVISION
[G.R. No. L-35951. August 31, 1977.]

PIONEER INSURANCE & SURETY CORP. AND HADJI ESMAYATEN LUCMAN, petitioners-appellants, vs. THE HON.
AGAPITO HONTANGAS, JUDGE OF THE COURT OF FIRST INSTANCE OF CEBU, BRANCH XI AND THE SPOUSES BEN
UY RODRIGUEZ, respondents-appellees.

Eriberto D. Ignacio for appellant.

Francisco E.F. Remotigue & Hilario G. Davide, Jr. for private respondent.

DECISION

GUERRERO, J p:
We reverse the decision of the Court of Appeals 1 promulgated on October 3, 1972 in CA-G.R. No. 00951-R entitled "Pioneer
Insurance & Surety Corp., et al., petitioners, vs. Hon. Judge Agapito Hontanosas, et al., respondents," which decision had
denied for lack of merit the petition filed therein for certiorari prohibition and/or mandamus with preliminary injunction seeking to
nullify the order of default of February 29, 1972 and the decision of March 9, 1972 in Civil Case No. R-12069, entitled "Ben
Rodriguez, et al. vs. Allied Overseas Commercial Co., et al." issued by the respondent Presiding Judge of the Court of First
Instance of Cebu. cdll
The case commenced on October 12, 1970 when Allied Overseas Commercial Co., Ltd., a foreign corporation domiciled in
Hongkong, filed in the Court of First Instance of Manila a complaint against the respondent-appellee Ben Uy Rodriguez for the
collection of a sum of money arising out of a transaction between them in the amount of P450,533.00, the agreed peso
equivalent of the HK$418,279.60 balance unpaid. Plaintiff therein having prayed for the issuance of a writ of preliminary
Rule 57: Preliminary Attachment | 155
attachment, the game was granted by the Court against Rodriguez upon the filing by said plaintiff of a bond in the amount of
P450,000.00, which petitioner-appellant Pioneer Insurance & Surety Corp. duly posted. The corresponding levy in attachment
was made by annotation on the properties of Rodriguez which consisted of 4 pieces of lots; notices of garnishment on different
Cebu banks turned out negative, while personal properties found at the Rodriguez residence, although attached, were, however,
not removed therefrom.
A motion to dismiss the complaint was thereupon filed by Rodriguez, followed by an application for damages against the bond,
praying that he be permitted to present evidence of damages he sustained by reason of the wrongful attachment, and to enforce
said claim against the surety on its bond, alleging further that otherwise his claim against the bond will forever be barred as said
claim cannot be the subject of an independent civil action under Sec. 20, Rule 57 of the Rules of Court. The court in its order of
December 22, 1970 dismissed the complaint on the ground of improper venue since defendant Rodriguez was a resident of
Cebu, and lifted the writ of preliminary attachment, setting the hearing on the claim for damages against the bond on January 14,
1971.
With the intention of filing a separate civil action in the Court of First Instance of Cebu, respondent-appellee Rodriguez withdrew
his claim for damages against Pioneer Insurance and Surety Corp., which motion for withdrawal was granted by the Court.
Thereafter, the respondents-appellees Rodriguez spouses filed a complaint for damages on February 15, 1971 against Pioneer
Insurance & Surety Corp. and Allied Overseas Commercial Co. (the Hongkong-based corporation), docketed as Civil Case No.
R-12069, Court of First Instance of Cebu presided by respondent Judge Hon. Agapito Hontanosas, the complaint praying that
Rodriguez be declared as not in any manner indebted to the defendant Allied Overseas Commercial Co. and that Pioneer
Insurance & Surety Corp. be held liable for damages, attorney's fees and expenses of litigation by reason of the wrongful and
malicious attachment issued by the Manila Court.
Defendant Pioneer Insurance and Surety Corp. filed its answer to the complaint (Civil Care No. R-12069) alleging affirmative and
special defenses. With respect to the other defendant Allied Overseas Commercial Co., summons was coursed thru the
Philippine Consulate General in Hongkong which turned it down as it had no authority to serve the process under the Rules of
Court.
On April 27, 1971, defendant Pioneer Insurance & Surety Corp. filed a motion for a preliminary hearing of its affirmative defenses
of lack of cause of action and bar by prior judgment and/or abandonment, which are grounds for a motion to dismiss. This was
Rule 57: Preliminary Attachment | 156
denied by the respondent Judge in his Order dated Play 15, 1971, so also was the motion for reconsideration per its Order of
June 2, 1971.
On May 5, 1971, the case was called for pre-trial. Plaintiffs with counsel attended; defendant Pioneer Insurance & Surety Corp.,
thru counsel was present. The other defendant, Allied Overseas Commercial Co. was not yet summoned, hence absent. The
parties manifested failure to settle the case amicably, thus the Court set the trial of the case on the merits for June 11, 1971.
A petition for certiorari and prohibition was then filed by Pioneer Insurance and Surety Corp. on August 3, 1971 in the Court of
Appeals, CA-G.R. No. 00369-R (Record on Appeal, p. 133) with prayer to enjoin a hearing scheduled on August 7, 1971,
alleging that respondent Judge committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in denying
the motion for preliminary hearing. The Court of Appeals in its Resolution dated August 7, 1971 dismissed this petition for
certiorari. (Record on Appeal, pp. 133-137).
An amended complaint was now submitted to and admitted by the Court on August 14, 1971 by impleading petitioner-appellant
Hadji Esmayaten Lucman as additional defendant, making allegations tending to show confabulation between the new defendant
and the foreign-based corporation to collect a non-existent debt. To the amended complaint, Pioneer Insurance & Surety Corp.
filed its answer.
Lucman, having been impleaded as assignee of defendant Allied Overseas Commercial Co., filed a motion to dismiss on the
ground of auter action pendant, that is an action pending in the Court of First Instance of Rizal, Civil Case No. 141351 between
the same parties, with the same allegations and defenses and counterclaims. On November 25, 1971, respondent Judge denied
the motion to dismiss, whereupon Lucman filed his answer to the amended complaint.
Upon an ex parte motion of Rodriguez, the Court declared Lucman in default in its Order of January 10, 1972 and thereafter
promulgated a decision dated January 28, 1972 against Lucman only, ordering him to pay damages in the amount of
P150,000.00; declaring that Rodriguez was not in any manner indebted to Lucman or to Allied Overseas Commercial Co., and
that the Metropolitan Bank & Trust Co. (Cebu Branch) Check No. CB2169 (xerox copy marked Exhibit M) issued by Rodriguez to
pay the indebtedness was a forgery.
Lucman moved on February 11, 1972 to set aside the order of default and to admit the answer earlier filed by him to the
amended complaint. On February 21, 1972, respondent Judge set aside the order of default against Lucman including the
decision against him, the dispositive portion of which order reads as follows:
Rule 57: Preliminary Attachment | 157
"WHEREFORE, the Order of Default dated January 10, 1972 as well as the decision (Re: Hadji Esmayaten Lucman) dated
January 28, 1972, are hereby reconsidered and set aside. Let the hearing of this case on the merits be scheduled as previously
set for February 28, 1972 at 8:30 o'clock in the morning.
The parties thru their respective counsels are to he immediately notified of this order. The Clerk of Court is directed to notify
defendant Hadji Esmayaten Lucman thru counsel Atty. Eriberto D. Ignacio At Rm. 414, Madrigal Bldg., Escolta, Manila by
telegram.
SO ORDERED.
Cebu City, Philippines, February 21, 1972.
(SGD.) AGAPITO HONTANOSAS
JUDGE"
(Record on Appeal, pp. 297-298)
Forthwith, the clerk of court sent the telegram notices in the following wise:
"YOUR MOTION SET ASIDE ORDER, DEFAULT AND DECLARE PROCEEDINGS NULL AND VOID RE CIVIL CASE BEN
RODRIGUEZ ET AL VERSUS HADJI ESMAYATEN LUCMAN GRANTED STOP PRETRIAL SHALL PROCEED AS
PREVIOUSLY SCHEDULED FEBRUARY 28 1972 MORNING"
(Record on Appeal, p. 298)
Counsel for the petitioners received the telegram notices on February 21, 1972; and on February 23, 1972 counsel filed an
urgent motion for postponement of the pre-trial, claiming that he was not aware of any such pre-trial having been previously set
for February 28, 1972 in the morning, as indeed no such pretrial can as yet be set as the issues with respect to the amended
complaint are not yet fully joined since plaintiffs have not answered the compulsory counterclaims separately set up by the
defendants in said amended complaint; neither has there been a valid service of summons to the foreign corporation Allied
Overseas Commercial Co. Ltd. of Hongkong, nor have plaintiffs asked that said foreign corporation be dropped from the
amended complaint; that counsel has a hearing in Manila of a criminal case which is of intransferable character, and prayed that
the pre-trial be set at some other date in March preferably either March 22 or 23, 1972 at 9:00 a.m. which were the only free
dates for the month of March 1972 in the calendar of the counsel. (Record on Appeal, pp. 301-303)

Rule 57: Preliminary Attachment | 158

Apparently, the above urgent motion for postponement although vent through registered airmail special delivery and received by
the Dispatching Section of the Post Office of Cebu on February 28, 1972 (Resolution, Court of Appeals, Record on Appeal, pp.
365-366) was not received by the Court for on February 28, 1972 when the case was called, an order was issued by the Court
postponing the pre-trial of the case to March 20, 1972 in view of the absence of the defendants and counsel notwithstanding
notices of bearing and telegrams sent to them, on the condition that should defendants be found that as of February 28, 1972 or
earlier they had received said notices, plaintiffs will be allowed to present their evidence and the defendants will be declared in
default for failure to appear at the pre-trial. (Record on Appeal, pp. 304-305).
Upon verification from the Radio Communications of the Philippines that the telegrams mentioned above were delivered and
received by the addresses or February 21, 1972, the Court on February 29, 1972 declared the defendants in default and allowed
the plaintiffs to present their evidence in support of their complaint before the Clerk of Court (Record on Appeal, pp. 306-307).
The evidence was thereupon presented and on March 9, 1977 the respondent Judge promulgated his Decision declaring that the
plaintiff Rodriguez is not in any manner indebted to defendant Lucman or to Allied Overseas Commercial Co., declaring the
personal check of the plaintiff to be a forgery; that the attachment of the properties of plaintiff in the Manila case was wrongful
and malicious, and ordering defendant Pioneer Insurance and Surety Co. to pay P350,000.00 as moral damages, P50,000.00 as
exemplary damages and P50,000.00 for expenses of litigation in Manila. Defendant Lucman was also ordered to pay plaintiffs
the sum of P50,000.00 as exemplary damages and P30,000.00 as attorney's fees. LibLex
Within the 30 days reglementary period to perfect the appeal, defendants Pioneer Insurance & Surety Corp. and Hadji
Esmayaten Lucman filed the Notice of Appeal and the Original Record on Appeal, the latter ordered corrected and amended but
finally approved by the Court on July 31, 1972.
Meanwhile, petitioners filed on April 4, 1972 before the Court of Appeals a petition for certiorari, prohibition and/or mandamus
with preliminary injunction (CA-G.R. No. 00951-R) seeking to nullify the order of default of February 29, 1972 and the Decision of
March 9, 1972 of respondent Judge, to command said Judge to elevate the records of the case for review and to prohibit him
from enforcing his decision and from taking further action in the case, No. 12069.
On April 13, 1972, the Court of Appeals promulgated its resolution dismissing the petition aforestated and ruled among others as
follows:

Rule 57: Preliminary Attachment | 159

"Furthermore, petitioners instant remedy is not proper because of their own admission that appeal is available from the decision
of respondent Judge (Discussion, pp. 12-13 of their Petition). This is shown by the handwriting at the upper right hand corner of
Annex R (Decision) when they received the decision on March 25, 1972 and the period to appeal will expire on April 24, 1972.
We are not, therefore, convinced that the remedy of appeal is inadequate, considering that whatever errors respondent Judge
might have committed can be assigned as specific errors on appeal. It has been consistently held that certiorari is not available
where the remedy of appeal is present . . ."
(Record on Appeal, p. 373)
On a motion for reconsideration, the Court of Appeals reconsidered the resolution cited above, and issued another resolution
dated July 25, 1972 giving due course to the petition and required the respondents to answer the petition (not a motion to
dismiss), and among others, stated, to wit:
"Upon this fact alone, we believe, as petitioners contend that although appeal is available, such remedy is not sufficiently speedy
and adequate to cure the defects in the proceedings therein or to remedy the disadvantageous position of petitioners because,
since they were deprived of raising any issue or defense that they have in the respondent court by reason of the order of default,
they cannot raise said issues or defenses for the first time on appeal."
(Rollo, p. 98)
The petition having been given due course, the respondents herein answered the same, and on October 30, 1972, the Court of
Appeals rendered its Decision denying the petition for lack of merit, and held among others,
thus —
"Finally, we are not also convinced that the remedy of appeal is inadequate under the circumstances obtaining in the principal
case. Whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in
their appeal. This Court can review any and all such errors of fact and law in the appeal."
(Rollo, p. 138)
Petitioners filed a motion for reconsideration which was denied, hence this appeal by certiorari from the decision of the Court of
Appeals and is now before Us being assailed and faulted on three principal issues: 1. the illegality of the order of default and the
decision arising therefrom; 2. the inadequacy of the remedy of appeal; and 3. the lack of jurisdiction of the Court in the principal
case.
Rule 57: Preliminary Attachment | 160
The petitioner's main thrust in this legal attack is directed to the order dated February 29, 1972 declaring defendants (now the
petitioners) in default at the second pre-trial hearing and allowing the plaintiffs (the present private respondents) to present
evidence ex parte before the Clerk of Court, which evidence uncontradicted and unrebutted was lifted almost en toto as the basis
of the decision granting damages so enormous and so huge in amount as to exceed the bounds of reason and fairness.
The procedure for the pre-trial of a case is laid down by Rule 20, Revised Rules of Court, which provides, to wit:
Sec. 1. Pre-trial mandatory. — In any action, after the last pleading has been filed, the court shall direct the parties and
their attorneys to appear before it for a conference to consider':
(a) The possibility of an amicable settlement or of a submission to arbitration;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;
(d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid unnecessary proofs;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a commissioner;
(g) Such other matters as may aid in the prompt disposition of the action.
Sec. 2. Failure to appear at pre-trial conference. — A party who fails to appear at a pre-trial conference may be non-suited
or considered as in default.
Sec. 3. Allows the court to render judgment on the pleadings or a summary Judgment as justice require. Sec. 4 directs that
a record of the pre-trial results be made; and Sec. 5 requires the court to prepare a pre-trial calendar of cases for consideration
as above provided, and that upon the submission of the last pleading in a particular case, it shall be the duty of the clerk of court
to place case in the pre-trial calendar.
Unquestionably, the present Rules make pre-trial mandatory. And the reason for making pre-trial mandatory is that pre-trial
conferences bring the parties together thus making possible an amicable settlement or doing away with at least the non-
essentials of a case from the beginning. (Borja vs. Roxas, 73 Phil. 647). LexLib
Philippine jurisprudence has laid down the legal doctrine that while it is true that it is mandatory for the parties and their attorneys
to appear before the trial court for a pre-trial conference to consider inter alia the possibility of an amicable settlement, the rule
was by no means intended as an implacable blugeon but as a tool to assist the trial court in the orderly and expeditious conduct
Rule 57: Preliminary Attachment | 161
of trials. The rule is addressed to the sound discretion of the trial court. (Rice and Corn Administration vs. Ong Ante, et. al., G. R.
No. L-30558, Oct. 4, 1971).
Both client and counsel must appear at the pre-trial. This is mandatory. Failure of the client to appear is a ground for dismissal.
(American Ins. Co. vs. Republic 1967D Phil. 63; Hone Ins. Co. vs. United States Lines Co., 1967D Phil. 41, cited in Saulog vs.
Custombuilt Manufactures Corp. No. L-29612, Nov. 15, 1968; Taroma v. Sayo, L-37296, Oct. 30, 1975 (67 SCRA 508).
In the case of Insurance Co. of North America vs. Republic, et. al., G. R. No. L-26794, Nov. 15, 1967, 21 SCRA 887, the
Supreme Court, speaking thru Justice Bengzon, held that Sec. 1, Rule 20 of the Rules requires the court to hold a pre-trial
before the case is heard and since in this case, a pre-trial has already been had, the fact that an amended complaint was later
filed, did not necessitate another pre-trial. It would have been impractical, useless and time-consuming to call another pre-trial.
Under the rules of pleading and practice, the answer ordinarily is the last pleading, but when the defendant's answer contains a
counterclaim, plaintiff's answer to it is the last pleading. When the defendant's answer has a cross-claim, the answer of the
cross-defendant to it is the last pleading. Where the plaintiff's answer to a counterclaim contains a counterclaim against the
opposing party or a cross-claim against a co-defendant, the answer of the opposing party to the counterclaim or the answer of
the co-defendant to the cross-claim is the last pleading. And where the plaintiff files a reply alleging facts in denial or avoidance
of new matter by way of defense in the answer, such reply constitutes the last pleading. (Francisco, The Revised Rules of Court,
Vo. II, pp. 2-3).
The above citations and authorities are the ground rules upon which the conflicting claims of the opposing parties' may be
resolved and decided.
First, the legality of the order of default dated February 29, 1972 and the decision dated March 9, 1972. There is spread out in
the Record on Appeal, pp. 92-93 that on May 5, 1971, pre-trial was conducted by the court between the plaintiff Ben Uy
Rodriguez spouses and the defendant Pioneer Insurance & Surety Corp. The record or results of said pre-trial is found in the
order of the court dated May 5, 1971, which states:
"When this case was called for pre-trial today, the plaintiffs and their counsel, Atty. Hilario Davide, Jr. appeared. On the other
hand, the defendant Pioneer Insurance & Surety Corp. represented by its counsel, Atty. Amando Ignacio also appeared.

Rule 57: Preliminary Attachment | 162

When asked by the Court if there is any possibility of settling this case amicably, the counsel for the defendant answered in the
negative. Both counsel, agreed that the only issue to be resolved by the Court is whether the bonding company is liable or not,
and if so, how much?
Atty. Hilario Davide, Jr. caused the markings of the following exhibit.
Exhibit "A-pre-trial", the financial report of Ben Rodriguez as of December 31, 1969 and
Exhibit "B-pre-trial", the affidavit of handwriting expert Perfecto Espina, and thereafter he reserved his right to mark additional
exhibits during the trial on the merits.
The counsel for the defendant also reserved his right to object to the Exhibits of the plaintiffs and mark his exhibits during the trial
on the merits of the case.
Both counsels are given ten (10) days from today within which to file their simultaneous memoranda or authorities in support of
the motion for preliminary hearing and its objection thereto. and thereafter his incident will be resolved by the Court.
Following agreement of the parties, the trial on the merits of this case is set for June 11, 1971 at 8:30 o'clock in the morning.
The parties thru their respective counsels are notified in open court of this order.
SO ORDERED.
Cebu City, Philippines, May 5, 1971
(SGD.) AGAPITO HONTANOSAS
JUDGE"
(Record on Appeal, p. 93)
The defendant Pioneer Insurance & Surety Corp. having complied with the order of the Court to appear and attend this pre-trial,
and had manifested its opposition to settling the case amicably, said party may no longer be compelled to attend a second pre-
trial hearing, and neither may it be punished by the court by its order declaring said defendant as in default. The mandatory
character of a pre-trial and the serious consequences confronting the parties in the event that each party fails to attend the
same must impose a strict application of the Rule such that where we find no authority for the Court to call another pre-trial
hearing, as in fact there is none in said Rule, the conclusion is inescapable that the respondent Judge committed a grave and
serious abuse of discretion and acted in excess of jurisdiction in declaring defendant Pioneer Insurance & Surety Corp. "as in
default" for failure to attend the second pre-trial called by the Judge on February 29, 1972. In other words, there is nothing in the
Rule 57: Preliminary Attachment | 163
Rules that empowers or authorizes the court to call a second pre-trial hearing after it has called a first pre-trial duly attended by
the parties, and lacking such authority, the court perforce lacks the authority to declare a failure to prosecute on the part of the
plaintiff for failing to attend such second pre-trial; it also lacks the authority to declare the defendant "as in default" by reason of
the latter's failure to be present at the said second pre-trial.
It serves no purpose for the court to call again another pre-trial where the parties had previously agreed to disagree, where the
issues had been joined and where the court itself had been satisfied that a hearing on the merits is the next step to conduct as
in the instant case where the court, after the pre-trial on May 5, 1971, set the trial of the case on its merits for June 11, 1971.
Indeed, a second pre-trial is impractical, useless and time-consuming.
We have not lost sight of the fact that when the first pre-trial was called and conducted, the party litigants were the Ben Uy
Rodriguez spouses as plaintiffs, while Pioneer Insurance & Surety Corp. and Allied Overseas Commercial Co. (although not yet
summoned) were the defendants, whereas at the time the second pre-trial was called the original complaint had been amended
to implead Hadji Esmayaten Lucman as additional defendant. The amendment of the complaint to implead Lucman did not,
however, alter the impracticability, the uselessness and the absence of authority to call a second pre-trial hearing since the
amended complaint merely impleaded Lucman as the assignee of the original defendant Allied Overseas Commercial Co. and
no additional cause of action was alleged; the prayer was the same and the amount of damages sought was the same as that in
the original complaint.
Second, the prematureness of the pre-trial called on February 28, 1972, assuming that there was need to have another pre-trial.
The records (Record on Appeal, p. 293) show that the notice of the clerk of court setting the case for pre-trial on February 28,
1972 was issued and dated February 7, 1972. As of this date, February 7, 1972, the complaint had been amended on August
27, 1971 by impleading the defendant Hadji Esmayaten Lucman who filed has answer on December 24, 1971, interposing
therein a compulsory counterclaim. (Record on Appeal, pp. 239-240). Before this date of February 7, 1972, the court had already
promulgated the Decision dated January 28, 1972 as against Lucman only.
Likewise, as February 7, 1972, defendant Pioneer Insurance & Surety Corp. had also filed its answer to the amended complaint,
interposing too a compulsory counterclaim. But as of February 7, 1972, the plaintiff have not yet filed their answer to the
compulsory counterclaim of the defendants which is necessarily the last pleading to be filed in order that the case is ready and

Rule 57: Preliminary Attachment | 164

ripe for the pre-trial). It was only on February 22, 1972 that plaintiffs made their reply to the answer, and their answer to the
compulsory counterclaim of defendant Lucman. (Record on Appeal, p. 299-301). LibLex
The records do not disclose any reply of the plaintiffs to the answer of Pioneer Insurance & Surety Corp. nor any answer to the
compulsory counterclaim of the Corp. The above state of the case as far as the pleadings are concerned clearly and manifestly
show that the case was not yet already for pre-trial; that it was as yet premature because the last pleading had not yet been filed
by the plaintiffs.
Event the state of the pleadings as of February 21, 1972 when the telegrams were sent notifying the parties of the pre-trial for
February 28, 1972 reveals the prematureness of calendaring the case for pre-trial. As of February 21, 1972, the complaint was
already amended to implead Lucman who submitted his answer to with compulsory counterclaim. But plaintiffs had not yet filed
their reply and their answer to the counterclaim, because the records indicate that the plaintiffs' answer to the counterclaim is
dated February 22, 1972. (Record on Appeal, pp. 299-301). And to the compulsory counterclaim of defendant Pioneer Insurance
& Surety Corp., plaintiffs made no answer whatsoever.
Third, the notices given by the clerk of court thru telegrams on February 21, 1972 notifying the parties of the pre-trial on February
28, 1972 were insufficient, in law and jurisprudence.
We have carefully noted the telegraphic notices sent by the clerk of court and we find this omission which is fatal to the
respondents' cause: no telegram was sent to the defendant Pioneer Insurance & Surety Corp. The telegram was sent to the
counsel of this defendant, but none to the defendant itself.
The Court had directed the clerk of court to sent notice by the telegram to the parties for the February 28 pre-trial. The clerk did
sent the telegram to Atty. Eriberto Ignacio, counsel for Pioneer Insurance & Surety Corp., but omitted and failed to sent another
telegram to the party itself, the corporation, as required strictly by law. Notice to the counsel is not enough. We reiterate — that
this failure is a jurisdictional defect.
Reading the order of the court dated February 29, it appears in black and white (Record on Appeal, pp, 306-307, Annex W,
Rollo, p. 194) that only two telegraphic messages were sent by the clerk of court, thus — (1) the message addressed to Atty.
Eriberto Ignacio delivered to the given address at 3:45 P.M. the same day it was filed but the signature of the recipient was
unreadable; (2) the other message addressed to Hadji Esmayaten Lucman per RCPI San Juan also delivered on the same day,

Rule 57: Preliminary Attachment | 165

February 21, 1972 and personally received by the addressee himself. This was the official advice received by the Court from the
Radio Communications of the Philippines thru which the telegrams were wired.
This is also confirmed by the Order of the Court dated April 11, 1972 denying the defendants' Urgent Motion for Reconsideration.
The order states:
"Per advice from the Radio Communications of the Philippines, Inc. these two messages were received by the addressess, Atty.
Eriberto Ignacio and Hadji Esmayaten Lucman on the same day it was filed, that is on February 21, 1972."
(Record on Appeal, p. 357)
Decidedly, there was no telegram sent to party defendant Pioneer Insurance & Surety Corp., informing it of the February 28 pre-
trial hearing. The reason for requiring in the case of Home Insurance Co. vs. United Lines Co. (L-25593, November 15, 1967, 21
SCRA 863), where the Court, speaking thru Justice Bengzon, said that:
A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. This shows the purpose of
the Rules to compel the parties to appear personally before the court to reach, if possible, a compromise. Accordingly, the court
is given the discretion to dismiss the cased should plaintiff not appear at the pre-trial."
Fourth, denial of the motion for postponement was a grave abuse of discretion. We grant the court the discretion to postpone any
hearing, pre-trial or on the merits of the case, but the exercise of discretion must be based on reasonable grounds which are
meritorious and not frivolous nor intended for delay, which are — 1. no formal order of the court scheduling the February 28 pre-
trial had been received; 2. pre-trial cannot be had as yet be set as the issues are not yet fully joined; 3. counsel has a hearing
previously set in Manila in a criminal case which was of an intransferable character. We are also concede that counsel may not
presume nor take for granted that his motion for postponement and the proposed setting to March 22 or 23, 1972 will be granted
by the court but where the court had actually postponed the hearing on February 28, 1972 due to the absence of the defendants
and their counsel, and rescheduled the pre-trial to March 20, 1972 at 8:30 o'clock in the morning (Record on Appeal, pp. 304-
306), we find no reason nor fairness in the court's order of February 29, 972 finding defendants as in default since the pre-trial
was moved to a later date in March as prayed in the motion.
The motion for postponement was received on February 28, 1972 at the Cebu Post Office, as shown in the postmarks on the
envelope (photographed on p. 322, Record on Appeal) but was not immediately delivered to the court although the envelope
bore the words, "Registered Air Mail/Special Delivery with Return Card." If the letter containing the motion was not yet delivered
Rule 57: Preliminary Attachment | 166
to the Court the next day, February 29, 1972 when the court made the order declaring defendants in default, this was clearly a
postal neglect and omission to perform its duty, not attributable to defendants. The Court, in the exercise of wise discretion,
could have restored their standing in court and given them an even chance to face their opponents.
For refusing to set aside said order of default and the decision, we hold the Court of Appeals in reversible error therefor. The
respondent Court of Appeals has ignored established rulings of the Supreme Court in Pineda vs. Court of Appeals, 67 SCRA
228, that a party may not be declared in default for failure to attend the pre-trial where only his counsel was notified of the pre-
trial schedule; in Sta. Maria, Jr. vs. Court of Appeals, 45 SCRA 596 that a pre-trial is unnecessary where the case could not be
settled and that the fact that an amended complaint was later filed with leave of court did not, under the circumstances,
necessitate another pre-trial; and in Pineda vs. Court of Appeals, 67 SCRA 288 that Courts should be liberal in setting aside
default judgment.
At this juncture, it is necessary to emphasize once more the pronouncement of this Court speaking through Justice Teehankee in
Taroma vs. Sayo, 67 SCRA 509, pp. 512-513, that:
"For the guidance of the bench and bar, therefore, the Court in reaffirming the ruling that notice of pre-trial must be served
separately upon the party and his counsel of record, restates that while service of such notice to party may be made directly to
the party, it is best that the trial courts uniformly serve such notice to party through or care of his counsel at counsel's address
with the express imposition upon counsel of the obligation of notifying the party of the date, time and place of the pre-trial
conference and assuring that the party either appear thereat or deliver to counsel a written authority to represent the party with
power to compromise the case, with the warning that a party who fails to do so may be non-suited or declared in default."
The second point at issue is whether the remedy of ordinary appeal in the case is plain, speedy and adequate such that the writ
of certiorari will not lie. We have adverted to previously that the Court of Appeals in its extended Resolution dated July 25, 1972
ruled that although appeal was available, such remedy is not sufficiently speedy and adequate to cure the defects in the
proceedings therein or to remedy the disadvantageous position of petitioners because, since they were deprived of raising any
issue or defense that they have in the respondent court by reason of the order of default, they cannot raise said issue or defense
for the first time on appeal. Yet, on October 30, 1972, the Court in its decision held that the remedy of appeal is not inadequate in
that whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in their
appeal before said tribunal, and that it can review any errors of fact and of law in the appeal.
Rule 57: Preliminary Attachment | 167
This conflicting stand of the Court of Appeals issuing from the same case is as difficult to resolve as it is to reconcile them. We
have but to rule on them, hold one to be correct and dislodge the other as an error. prLL
On general principles, the writ of certiorari will lie where there is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of law. The existence of an appeal is a bar to writ of certiorari where such appeal is in itself a sufficient and
adequate remedy, in that it will promptly relieve the petitioner from the injurious effects of the order or judgment complained of.
(Silvestre v. Torres, 57 Phil. 885, 890; Pachoco v. Tumangday, L-14500, May 25, 1960; Lopez et al. v. Alvendia, et al. L-20697,
Dec. 24, 1964). Courts ordinarily do not deny the writ if the result would be to deprive a party of his substantial rights and leave
him without remedy, and in those instances wherein the lower court has acted without jurisdiction over the subject matter, or
where the order or judgment complained of is a patent nullity, courts have gone even as far as to disregard completely the
question of petitioner's fault, the reason being, undoubtedly, that acts performed with absolute want of jurisdiction over the
subject matter are void ab initio and cannot be validated by consent, express or implied, of the parties. (Moran, Comments on
the Rules of Court, Vol. 3, 1970 ed., pp. 169-170).
There are numerous cases where the Supreme Court has granted the writ notwithstanding the existence of an appeal. Thus, the
Supreme Court to avoid future litigations, passed upon a petition for certiorari though the proper remedy was appeal. Writs have
been granted despite the existence of the remedy of Appeal where public welfare and the advancement of public policy so
dictate, the broader interests of justice so require, or where the orders complained of were found to be completely null and void,
or that the appeal was not considered the appropriate remedy. (Fernando v. Varquez, No. L-26417, Jan. 30, 1970).
As to what is an adequate remedy, it has been defined as "a remedy which is equally beneficial, speedy and sufficient, not
merely a remedy which at some time in the future will bring about a revival of the judgment of the lower court complained of in
the certiorari proceeding, but a remedy which will promptly relieve the petitioner from the injurious effects of that judgment and
the acts of the inferior court or tribunal." (Silvestre v. Torres, 57 Phil. 885, 11 CJ., p. 113).
Now, to the case at bar, We find here a number of special facts and circumstances which address themselves to the wise
discretion of this Court with such force to induce Us to grant the writ in order to prevent a total or partial failure of justice, to,
redress or prevent the wrong done. We are satisfied that petitioners are cornered into a desperate position where they have
been ordered to pay damages over and above the amount of the bond posted for the attachment of private respondents'
properties as ordered by the decision of the court based on evidence presented ex parte by reason of the order of default, and
Rule 57: Preliminary Attachment | 168
more than that, plaintiff Rodriguez is relieved from civil liability on an inexplicable and unprecedented finding that the plaintiffs'
check was a forgery, (when the check exhibited was only a xerox copy of the original, which original was in the records of the
case filed in the Court of First Instance of Rizal, Civil Case No. 14499 entitled "Hadji Esmayaten Lucman vs. Benjamin
Rodriguez, et al.," (Record on Appeal, pp. 49-55). Again, the conflicting notices as to the hearing ordered, pretrial in one and on
the merits in the other, is not the doing of the petitioners of their standing in court was in effect a failure of justice. Petitioners can
no longer present their evidence to rebut the claim of damages, or reduce the unconscionable and excessive damages or
question the release of plaintiff's debt, for the same may not be submitted nor raised for the first time on appeal. We, therefore,
hold that the Court of Appeals erred in holding that the appeal is adequate. The court erred in ignoring the doctrine laid down in
Omico v. Villegas, 63 SCRA 285, that appeal is not an adequate remedy where party is illegally declared in default.
Petitioners assail the jurisdiction of the Court of First Instance of Cebu in Civil Case No. 12069-R filed by the Rodriguez spouses,
seeking damages for the alleged malicious and unlawful issuance of the writ of preliminary attachment against the latter's
properties granted by the Court of First Instance of Manila upon the posting of a security bond in the amount of P450,000.00
given by the petitioner Pioneer Insurance & Surety Corp. The petitioners contend that under Sec. 20, Rule 57 of the Revised
Rules of Court, 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. prLL
Rule 57, Sec. 20 of the Revised Rules of Court provides, to wit:
"Claim for damages on account of illegal attachment. — If the Judgment on the action be in favor of the party against whom
attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting
from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in
the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to damages
and the amount thereof.
xxx xxx xxx"
On the other hand, the private respondents argue that the above rule is not applicable to the case at bar, citing Moran, Vol. 3,
Rules of Court, 1963 ed., pp. 51-52, to wit:

Rule 57: Preliminary Attachment | 169

". . . the rule that a claim for damages arising from the issuance of a writ of attachment, injunction, receivership and replevin
should be presented in the same action is not applicable where the principal case has been dismissed for lack of jurisdiction and
no claim for damages could therefore have been presented in said case."
The position of the petitioners is correct. The ruling in the case of Santos vs. Court of Appeals, et al., 95 Phil. 360 advanced by
respondents to support their stand, is not controlling here, for We find that no claim for damages against the surety bond in
support of a preliminary attachment was ever presented or filed. The latest decisions of this Court in Ty Tion, et al., vs. Marsman
& Co., et al., L-17229, July 31, 1962, 5 SCRA 761 reiterating the rulings in Del Rosario vs. Nava, 50 O.G. 4189; Estioco vs.
Hamada, L-11079, May 21, 1958; Neva Espana vs. Montelibano, 58 Phil. 807; Tan Suyco vs. Javier, 21 Phil. 82; Raymundo vs.
Carpio, 33 Phil. 894; Santos v. Moir, 36 Phil. 350; lay down the proper and pertinent rule that 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. LibLex
Moreover, the records show that private respondent Rodriguez filed an Application for Damages Against Bond dated December
3, 1970 (Record on Appeal, pp. 77-81) praying that —
"WHEREFORE. it is respectfully prayed that in the event the motion to dismiss and the motion to discharge attachment were
granted, the defendant be allowed to present evidence to prove damages sustained by him by reason of the attachment against
the Pioneer Insurance & Surety Corp. in a hearing that may he conducted for the purpose with due notice to the plaintiff and the
surety, and that after due notice and hearing judgment be rendered against the Pioneer Insurance and Surety Corp. for such
amount of damages as may be proved and established for defendant.
The defendant further prays for such other reliefs and remedies consistent with law, justice and equity.
Cebu City, December 3, 1970.
ESTANISLAO FERNANDEZ
JOSE D PALMA
Attorney for Defendant"
The Court of First Instance of Manila in its order dated December 22, 1970, after dismissing the complaint and lifting the writ of
preliminary attachment, ordered that the hearing of the application for damages against the bond be set aside on January 14,
1971 at 8:30 a.m. (Record on Appeal, pp. 82-86).
Rule 57: Preliminary Attachment | 170
In other words, defendant 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, by seeking an affirmative relief from the court, which he cannot now
complain before this Court.
Thus, Francisco, in his Revised Rules of Court, Vol. 1, p. 130 citing 21 C.J.S. writes that:
"Objections to lack of jurisdiction of the person, and other objections to jurisdiction not based on the contention that there is an
absolute want of jurisdiction of the subject matter, are waived by invoking the court's jurisdiction, as by a counterclaim, consent,
or voluntary submission, to jurisdiction, or conduct amounting to a general appearance.
In Soriano v. Palacio, 12 SCRA 557, this Court held that even if jurisdiction was not originally acquired by the Court over the
defendant due to allegedly defective services of summons, still when the latter filed a motion for reconsideration of the judgment
by default, he is considered to have submitted to said court's jurisdiction.
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 Court.
IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is reversed and another one is entered declaring the
order of default dated February 29, 1972 and the decision rendered by the respondent Judge on March 9, 1972 null and void,
holding that the Court of First Instance of Cebu lacks Jurisdiction to hear and determine the claim for damages arising from the
alleged wrongful attachment issued by the Court of First Instance of Manila and ordering the dismissal of that case (Civil Case
No. 12069 of the Court of First Instance of Cebu), as well as the pending appeal of the judgment herein annuled in the Court of
Appeals which has been rendered moot.
Petition granted.
SO ORDERED.
Teehankee (Chairman), Makasiar, Martin and Fernandez, JJ., concur.
Muñoz Palma, J., took no part.
Rule 57: Preliminary Attachment | 171
Footnotes

1. Special Fourth Division, penned by Justice Juan O. Reyes and concurred by Justice Hermogenes Concepcion, Jr., and
Cecilia Muñoz Palma.

Rule 57: Preliminary Attachment | 172

G.R. No. 84979 November 6, 1989
STRONGHOLD INSURANCE CO. INC. vs. COURT OF APPEALS, ET AL.

SECOND DIVISION
[G.R. No. 84979. November 6, 1989.]

STRONGHOLD INSURANCE CO. INC., petitioner, vs. HON. COURT OF APPEALS, HON. CLEMENTE M. SORIANO, Presiding
Judge of Branch 3, Regional Trial Court of Manila, Sheriff JAIME K. DEL ROSARIO, Deputy Sheriff of Branch 3, Regional Trial
Court of Manila, and JOSE OROSA, respondents.

Santos, Gascon, Cuartero & Associates for petitioner.

Aladdin F. Trinidad for respondent Orosa.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; REPLEVIN BOND; REQUISITES TO HOLD THE
SURETY LIABLE. — The rule is clear that where the judgment in an action is in favor of the party against whom the writ of
replevin was issued, he may recover damages resulting therefrom and the replevin bond required under Section 2, Rule 60 of
the Rules of Court may be held to answer for this purpose. The procedure to hold the surety liable upon the replevin bond is
provided for under Section 10 of the same rule in relation to Section 20 of Rule 57. Compliance with the following requisites is
essential: ". . . (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 sureties
may be heard on the application. These requisites apply not only in cases of seizure or delivery under Rule 60, but also in cases
of preliminary injunctions under Rule 58, and receiverships under Rule 59." (Zaragosa vs. Fidelino, et al. 165 SCRA 443)

Rule 57: Preliminary Attachment | 173

2. ID.; ID.; ID.; ID.; APPLICATION FOR DAMAGES MUST BE FILED IN THE COURT WHICH TOOK COGNIZANCE OF
THE CASE. — 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.
3. ID.; ID.; ID.; ID.; TIMELINESS OF THE APPLICATION FOR JUDGMENT ON THE BOND; A NOTICE OF APPEAL DOES
NOT PERFECT AN APPEAL. — The timeliness of the application for judgment on the bond in this case, as well as the motion
for immediate execution, is apparent because it was filed before the appeal was perfected. 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. 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 1 (c), Rule 37 of the Rules of Court, 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.
4. ID.; ID.; ID.; ID.; ORAL PROOF OF DAMAGES MAY BE REPRODUCED WITHOUT THE NECESSITY OF RETAKING
THE TESTIMONY; SURETY MUST BE GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE WITNESSES. — Petitioner
nevertheless claims that there was failure to hold a proper hearing. Such requirement, however, has been held to mean that "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." In the present case, as respondent court correctly pointed out, petitioner did not allege and offer to prove any new
defense not previously set up by the principal. Furthermore, the grounds relied upon in its opposition to the application requires
no hearing for their proper consideration by the court a quo, aside from the fact that the trial court adequately and particularly
resolved them in its order of June 6, 1988.
5. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — If petitioner really had additional defenses, if should have asked for the
opportunity to present the same when the motion to dismiss the application for judgment on the bond was denied. This is also
true with respect to the cross-examination of the witnesses which petitioner is now belatedly asking for. While there was no one
to cross-examine during the hearing of the application for judgment on the bond because of private respondent's absence.
Rule 57: Preliminary Attachment | 174
Petitioner could have invoked and insisted on such right. Further, even if private respondent had appeared during the hearing, it
could reasonably be expected that no witnesses would be presented since the application for judgment on the bond relied mainly
on the same grounds that were already presented in court and were subject of the trial on the merits, or were at least already of
record. To repeat, had petitioner been sincere in the stance that it now takes to create an issue, it should have demanded its
right to cross-examine such witnesses as it was minded to. As it turned out, the opportunity to so demand was present but
petitioner did not care to do so. Instead, it preferred to stick to its stand that the application should be denied for failure of
respondent Orosa to appear during the hearing. The petitioner should, therefore, suffer the consequences of its inexplicable
inaction and conscious omission.
6. ID.; ID.; ID.; ID.; RESOLUTION ON THE APPLICATION FOR JUDGMENT ON THE BOND; REMEDY IS APPEAL; CASE
AT BAR. — Independent of the foregoing considerations, neither does the petitioner have the right to question the "supplemental
judgment" of the trial court. As already stated, the application for judgment on the bond was in the nature of a motion for
reconsideration, hence the resolution thereof constitutes a final and appealable order. Appeal being the proper and then
available remedy, the original action for certiorari does not lie and cannot substitute for the remedy of appeal that was thereafter
lost.
7. ID.; ID.; ID.; ID.; MERE FILING OF A BOND DOES NOT WARRANT EXECUTION PENDING APPEAL. — We cannot,
however, sanction the execution pending appeal which was authorized in this case. The order for advance execution must be
struck down for lack of the requisite good reasons therefor. It is already settled that the mere filing of a bond does not warrant
execution pending appeal. To consider the mere filing of a bond a good reason would precisely make immediate execution of a
judgment pending appeal routinary, the rule rather than the exception.
8. ID.; ID.; ID.; ID.; ALLEGED IMMINENT DANGER OF INSOLVENCY DOES NOT CONSTITUTE A GOOD REASON FOR
IMMEDIATE EXECUTION. — The alleged imminent danger of insolvency of plaintiff FCP Credit Corporation does not also
constitute a good reason for immediate execution. In the aforecited Philippine National Bank case, we ruled that where there are
two or more parties who are held to be solidarily or subsidiarily liable for the judgment account, the insolvency of one will not
justify immediate execution where the others are capable of paying the obligation. The obligation of petitioner surety company
and the plaintiff corporation in the case at bar is in solidum. Their agreement states that the principal and the surety therein
jointly and severally bound themselves "in the sum of TWO HUNDRED TEN THOUSAND PESOS ONLY (P210,000.00)
Rule 57: Preliminary Attachment | 175
Philippine Currency for the prosecution of the action, for the return of the property to defendant, if the return thereof be adjudged,
and for the
payment . . . of such sum as may in the cause be recovered against the plaintiff, and costs of the action."

DECISION

REGALADO, J p:
In a complaint filed against private respondent Jose Orosa, dated November 13, 1984 and docketed as Civil Case No. 8428188
in Branch 3 of the Regional Trial Court of Manila, therein plaintiff FCP Credit Corporation prayed that a writ of replevin be issued
against private respondent Jose Orosa ordering the seizure of the motor vehicle covered by a chattel mortgage executed in favor
of said plaintiff. Upon the filing of an affidavit of merit 1 and a replevin bond put up by petitioner Stronghold Insurance Co., Inc. in
the amount of P210,000.00, 2 a writ of replevin was issued by the court a quo.
On March 25, 1988, judgment was rendered by the trial court 3 with the following dispositive portion: llcd
"WHEREFORE, judgment is rendered for the defendant, and against the plaintiff:
1) Dismissing the complaint for lack of merit;
2) Declaring that the plaintiff was not entitled to the Writ of Replevin, issued on January 7, 1985, and is now liable to the
defendant for actual damages under the Replevin bond it filed;
3) On defendant's counterclaim, ordering the plaintiff to pay the defendant the sum of P400,000.00 as moral damages;
P100,000.00 as exemplary damages, and P50,000.00 as, and for, attorney's fees;
4) Ordering the plaintiff to return to the defendant the subject 1983 Ford Laser Sedan, with Motor or Serial No. SUNKBT
14584, or its equivalent, in kind or value, in cash as of this date and to pay the costs."
Copy of the decision was received by private respondent on April 11, 1988 while petitioner received a copy thereof on April 13,
1988. On the following day, April 14, 1988, private respondent Orosa filed a motion for execution of the judgment pending
appeal, alleging that the judgment in the case may be rendered ineffective because FCP Credit Corporation was already
liquidating its business affairs. He expressed his willingness to file a bond for such purpose. 4 Petitioner opposed said motion

Rule 57: Preliminary Attachment | 176

through a "Motion for Partial Reconsideration of the Decision and Opposition to the Motion for Execution" 5 filed on April 26,
1988, on the following grounds, as summarized by the respondent court, to wit:
"1. The petitioner was adjudged liable in the decision without the benefit of hearing in violation of Rule 57, Section 20 in
relation to Section 10, Rule 60, Rules of Court;
"2. The petitioner being not a party to the proceedings, judgment against it could not be rendered without violating the
elementary rules of procedure;
"3. The allegations in private respondent's motion for execution pending appeal are purely speculative, self-serving
conclusions and without factual basis;
"4. The exact liability of the bondsman is not specified." 6
An application for judgment on the bond was thereafter filed by private respondent Orosa on April 26, 1988, adopting by
reference his motion for execution of judgment pending appeal and the findings of the trial court. 7 An opposition thereto was
filed by petitioner on the contentions that the appeal had been perfected hence the trial court had already lost jurisdiction to hear
therein defendant's motion; that the application for damages does not set forth the facts showing his right thereto and the amount
thereof; and that the motion is fatally defective for lack of the requisite three (3) days notice. 8
The hearing on the application was scheduled on April 29, 1988, but the herein private respondent Orosa and his counsel failed
to appear therein. Consequently, petitioner's counsel orally moved for the denial of said application for judgment on the bond, but
the court below denied said motion and declared all incidents submitted for resolution. 9 In the meantime, action on therein
plaintiffs notice of appeal and motion to elevate the records to the Court of Appeals, which were earlier filed on April 14, 1988,
was held in abeyance by the court. 10
In a special order dated June 3, 1988, the trial court ordered the issuance of a writ of execution pending appeal upon respondent
Orosa's filing of a bond in the amount of P500,000.00. The special reasons cited by the court for said immediate execution are
(1) "defendant's willingness to file a required bond to answer for damages in the case of reversal of the judgment" and (2) "the
plaintiff is in imminent danger of insolvency or dissolution." 11 The motion for partial reconsideration of the decision and
opposition to the motion for execution filed on April 26, 1988 by petitioner was likewise denied for lack of merit in another order
on the same date. 12

Rule 57: Preliminary Attachment | 177

Respondent Orosa's right to recover damages on the replevin bond and the liability of herein petitioner for said damages and for
all the sums of money recovered in the case in the lower court by therein defendant against the plaintiff, jointly and severally with
the plaintiff to the extent of the value of the bond, was held to be unquestionable in an order of the court a quo dated June 6,
1988. 13
The following day, June 7, 1988, the trial court issued what was designated as a "supplemental decision," which reads: prcd
"Pursuant to the order of June 6, 1988 and Sec. 10, Rule 60 of the Rules of Court, and by way of supplement to the decision,
dated March 25, 1988, judgment is hereby rendered, for the defendant, ordering the Surety, Stronghold Insurance Co., Inc.,
jointly and severally with the plaintiff, to return to the defendant, the 1983 Ford Laser 1.5 Sedan involved, or its equivalent in kind
or in cash, as of the date of the said decision (March 25, 1988), to pay him the damages specified in the said decision, to the
extent of the value of the replevin bond which is P210,000.00, with costs against the said Surety." 14
Respondent Deputy Sheriff Jaime Del Rosario, by virtue of the order of execution pending appeal, levied upon the properties of
petitioner and garnished its funds with Far East Bank and United Coconut Planters Bank on June 17, 1988.
A few days thereafter, on June 22, 1988, petitioner filed a petition for certiorari, with a prayer for preliminary injunction and/or
restraining order, in respondent court where it was docketed as CA-G.R. SP No. 14938. Petitioner sought therein the annulment
of the orders of the trial court dated June 3 and 6, 1988, the supplemental decision of June 7, 1988 and the writ of execution
issued in Civil Case No. 84-28188.
Significantly, even after the filing of the petition for certiorari with the appellate court, the trial court acted on several motions filed
either before or after said petition was instituted. On the same day of the filing of said petition, an order was issued by the trial
court supplementing its order of execution pending appeal dated June 3, 1988 by ordering private respondent Orosa to file an
additional bond in the amount of P200,000.00. 15
An "Urgent Omnibus Motion for Reconsideration with Prayer for Restraining Order," dated June 24, 1988, was filed by the
petitioner with the trial court, alleging that "there exists no good and valid reasons to justify execution pending appeal against
SICI considering that it is very solvent and any final judgment against it would surely be satisfied." 16 The motion was denied for
lack of merit on June 27, 1988.
Likewise, the trial court denied on July 6, 1988 the motion of therein plaintiff, dated June 20, 1988, for the reconsideration of the
special order of the court issued on June 3, 1988. 17
Rule 57: Preliminary Attachment | 178
On July 11, 1988, upon an ex ports motion, the trial court directed the enforcement of the writ of execution pending appeal
against therein plaintiff FCP Credit Corporation alone. 18 Later, on August 5, 1988, another order was issued this time directing
its enforcement against petitioner. 19 Petitioner moved for the reconsideration of said order and in the hearing of said motion, its
counsel adduced additional arguments in support thereof. The court was informed that its application for a writ of injunction was
already submitted for resolution by the Court of Appeals. 20
Eventually, the application for a writ of injunction referred to by petitioner was granted by the Court of Appeals on August 26,
1988. Nevertheless, the same writ was lifted and set aside when the petition for certiorari was dismissed in a decision
promulgated by respondent court on September 9, 1988 in CA-G.R. SP No. 14938. 21 No grave abuse of discretion was found
to have been committed by the trial court in issuing the questioned orders.
Hence, this petition to set aside and annul the aforesaid decision of respondent court.
The rule is clear that where the judgment in an action is in favor of the party against whom the writ of replevin was issued, he
may recover damages resulting therefrom and the replevin bond required under Section 2, Rule 60 of the Rules of Court may be
held to answer for this purpose. The procedure to hold the surety liable upon the replevin bond is provided for under Section 10
of the same rule in relation to Section 20 of Rule 57. Compliance with the following requisites is essential:
". . . (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 sureties may be
heard on the application. These requisites apply not only in cases of seizure or delivery under Rule 60, but also in cases of
preliminary injunctions under Rule 58, and receiverships under Rule 59." 22
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.
The timeliness of the application for judgment on the bond in this case, as well as the motion for immediate execution, is
apparent because it was filed before the appeal was perfected. 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. 23
Rule 57: Preliminary Attachment | 179
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 1 (c), Rule 37 of the Rules of Court, which consequently had the effect of
interrupting the period to appeal. 24 This being so, the order holding in abeyance plaintiff's notice of appeal was not even
necessary and was an apparent superfluity. LLpr
Petitioner nevertheless claims that there was failure to hold a proper hearing. Such requirement, however, has been held to
mean that "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." 25 In the present case, as respondent court correctly pointed out, petitioner did not allege and offer to prove any
new defense not previously set up by the principal. Furthermore, the grounds relied upon in its opposition to the application
requires no hearing for their proper consideration by the court a quo, aside from the fact that the trial court adequately and
particularly resolved them in its order of June 6, 1988.
If petitioner really had additional defenses, if should have asked for the opportunity to present the same when the motion to
dismiss the application for judgment on the bond was denied. This is also true with respect to the cross-examination of the
witnesses which petitioner is now belatedly asking for. While there was no one to cross-examine during the hearing of the
application for judgment on the bond because of private respondent's absence. Petitioner could have invoked and insisted on
such right. Further, even if private respondent had appeared during the hearing, it could reasonably be expected that no
witnesses would be presented since the application for judgment on the bond relied mainly on the same grounds that were
already presented in court and were subject of the trial on the merits, or were at least already of record. To repeat, had petitioner
been sincere in the stance that it now takes to create an issue, it should have demanded its right to cross-examine such
witnesses as it was minded to. As it turned out, the opportunity to so demand was present but petitioner did not care to do so.
Instead, it preferred to stick to its stand that the application should be denied for failure of respondent Orosa to appear during the
hearing. The petitioner should, therefore, suffer the consequences of its inexplicable inaction and conscious omission.
Independent of the foregoing considerations, neither does the petitioner have the right to question the "supplemental judgment"
of the trial court. As already stated, the application for judgment on the bond was in the nature of a motion for reconsideration,

Rule 57: Preliminary Attachment | 180

hence the resolution thereof constitutes a final and appealable order. Appeal being the proper and then available remedy, the
original action for certiorari does not lie and cannot substitute for the remedy of appeal that was thereafter lost.
We cannot, however, sanction the execution pending appeal which was authorized in this case. The order for advance execution
must be struck down for lack of the requisite good reasons therefor. It is already settled that the mere filing of a bond does not
warrant execution pending appeal. To consider the mere filing of a bond a good reason would precisely make immediate
execution of a judgment pending appeal routinary, the rule rather than the exception. 26
The alleged imminent danger of insolvency of plaintiff FCP Credit Corporation does not also constitute a good reason for
immediate execution. In the aforecited Philippine National Bank case, we ruled that where there are two or more parties who are
held to be solidarily or subsidiarily liable for the judgment account, the insolvency of one will not justify immediate execution
where the others are capable of paying the obligation. The obligation of petitioner surety company and the plaintiff corporation in
the case at bar is in solidum. Their agreement states that the principal and the surety therein jointly and severally bound
themselves "in the sum of TWO HUNDRED TEN THOUSAND PESOS ONLY (P210,000.00) Philippine Currency for the
prosecution of the action, for the return of the property to defendant, if the return thereof be adjudged, and for the payment . . . of
such sum as may in the cause be recovered against the plaintiff, and costs of the action." 27
IN VIEW OF THE FOREGOING, the order of the trial court, dated June 3, 1988, ordering the issuance of a writ of execution
pending appeal, as well as the other orders for its implementation, are hereby ANNULLED and SET ASIDE. In all other respects,
the decision of respondent Court of Appeals is AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairman), Paras, Padilla and Sarmiento, JJ., concur.

Footnotes

1. Rollo, 38.
2. Annex B-1; Rollo, 39.
3. Penned by Judge Clemente M. Soriano; Rollo, 40-47.
4. Annex D; Rollo, 48-50.
Rule 57: Preliminary Attachment | 181
 5. Annex F; ibid., 52-56.
6. Rollo, 25-26.
7. Annex G; ibid., 57-59.
8. Annex H; ibid., 60-61.
9. Annex I; ibid., 62.
10. Annex J; ibid., 63.
11. Annex K; ibid., 64-65.
12. Annex M; ibid., 68.
13. Annex L; ibid., 66-67.
14. Annex N; ibid., 69.
15. Annex R; ibid., 94.
16. Annex M, Comment of Respondent Orosa.
17. Annex R-3; Rollo, 97.
18. Annex R-4; ibid., 98.
19. Annex R-5; ibid., 99.
20. Annex R-6; ibid., 100.
21. Penned by Justice Celso L. Magsino, with Justices Oscar R. Victoriano and Luis D. Victor concurring.
22. Zaragoza vs. Fidelino, et al., 163 SCRA 443 (1988).
23. Sec. 23, Interim Rules and Guidelines; Universal Far East Corporation vs. Court of Appeals, et al., 131 SCRA 642 (1984);
Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., et al., 136 SCRA 294 (1985); Yabut vs. Intermediate Appellate Court, et
al., 142 SCRA 124 (1986); Belgado vs. Intermediate Appellate Court, et al., 147 SCRA 258 (1987); Magtibay vs. Court of
Appeals, et al., G.R. No. 77040, November 29, 1988.
24. Zaragoza vs. Fidelino, et al., supra.
25. Visayan Surety & Insurance Corporation vs. Pascual, et al., 85 Phil. 779 (1950).
26. Roxas vs. Court of Appeals, et al., 157 SCRA 370 (1988); Philippine National Bank vs. Hon. Benigno M. Puno, et al., G.R.
No. 76018, February 10, 1989.
Rule 57: Preliminary Attachment | 182
27. Annex B-1; Rollo, 39.

Rule 57: Preliminary Attachment | 183

 
SECOND DIVISION
                                                       
JUAN DE DIOS CARLOS,                 G.R. No.  135830
                    Petitioner,            
             -  versus  -                                              
FELICIDAD SANDOVAL, known as FELICIDAD S. VDA. DE CARLOS or FELICIDAD S.
CARLOS or FELICIDAD              Promulgated:
SANDOVAL DE CARLOS, 
and TEOFILO CARLOS II,         
                    Respondents.                 September 30, 2005
 
x-------------------------------------------------------------------x
 
SIDDCOR (now MEGA PACIFIC)      G.R. No.  136035
INSURANCE CORPORATION,
                       Petitioner,
 
 
-        versus  -
 
 
Rule 57: Preliminary Attachment | 184
FELICIAD SANDOVAL VDA. DE
CARLOS and TEOFILO CARLOS II,
                      Respondents.
 
x------------------------------------------------------------------x
 
 
 
 
SIDDCOR (now MEGA PACIFIC)      G.R. No.  137743
INSURANCE CORPORATION,
                      Petitioner,
 
 
-        versus  -
 
 
HON. COURT OF APPEALS (FORMER
SPECIAL FOURTH DIVISION), HON.
ALBERTO L. LERMA and/or the
REGIONAL TRIAL COURT OF THE
CITY OF MUNTINLUPA, BRANCH 256,
Rule 57: Preliminary Attachment | 185
FELICIDAD SANDOVAL, also known as
FELICIDAD S. VDA. DE CARLOS OR
FELICIDAD S. CARLOS OR FELICIDAD
SANDOVAL CARLOS OR FELICIDAD
SANDOVAL VDA. DE CARLOS and
TEOFILO CARLOS II,
                          Respondents.
 
x-------------------------------------------------------------------x
 
 
DECISION
 
TINGA, J.:
 
        These consolidated petitions emanated from a civil case filed by Juan de Dios Carlos (“Carlos”) against  
respondents Felicidad Sandoval (“Sandoval”) and Teofilo Carlos II (Teofilo II) docketed with the Regional Trial
Court (RTC) of Muntinlupa City as Civil Case No. 95-135.
 
 
 

Rule 57: Preliminary Attachment | 186

        In his Complaint before the RTC, Carlos asserted that he was the sole surviving compulsory heir of his
parents, Felix B. Carlos and Felipa Elemia, [1] who had acquired during their marriage, six parcels of land
(subject properties). His brother, Teofilo (“Teofilo”), died intestate in 1992. At the time of his death, Teofilo was
apparently married to Sandoval, and cohabiting with her and their child, respondent Teofilo II. Nonetheless,
Carlos alleged in his Complaint that Teofilo and Sandoval were not validly married as they had not obtained
any marriage license.[2] Furthermore, Carlos also asserted that  Teofilo II could not be considered as Teofilo’s
child. As a result, Carlos concluded that he was also the sole heir of his brother Teofilo, since the latter had
died without leaving any heirs.
 
        Carlos also claimed that Teofilo, prior to their father Felix’s  death in 1963, developed a scheme to save
the elder Carlos’s estate from inheritance taxes. Under the scheme, the properties of the father would be
transferred to Teofilo who would, in turn, see to it that the shares of the legal heirs are protected and delivered
to them. Felix assented to the plan, and the subject properties were transferred in the name of Teofilo. After
Teofilo’s death, Carlos entered into certain agreements with Sandoval in connection with the subject
properties. Carlos did so, believing that the latter was the lawful wife of his brother Teofilo. Subsequently
though, Carlos discovered that Sandoval and his brother were never validly married, as their marriage was
contracted without a marriage license.[3]
 
Carlos now sought to nullify these agreements with Sandoval for want of consideration, the premise for
these contracts being non-existent. Thus, Carlos prayed of the RTC to declare the alleged marriage between
Teofilo and Sandoval void ab initio, provided that Teofilo died without issue, order that new titles covering the

Rule 57: Preliminary Attachment | 187

subject properties be issued in the name of Carlos, and require Sandoval to restitute Carlos in the amount of
P18,924,800.00.[4]
 
        Carlos likewise prayed for the issuance of the provisional relief of preliminary attachment. The RTC
issued an Order dated 7 September 1995 granting the prayer for preliminary attachment, and on 15
September 1995, a writ of preliminary attachment. Carlos posted a bond  for  P20,000,000.00  issued  by  
herein   petitioner SIDDCOR Insurance Corporation (SIDDCOR). [5] Shortly thereafter, a Notice of Garnishment
was served upon the Philippine National Bank (PNB) over the deposit accounts maintained by respondents.
 
Respondents filed an Urgent Motion to Discharge the Writ of Attachment, which was opposed by Carlos.
On 4 December 1995, the RTC rendered an order denying the  motion. This caused respondents to file a
Petition for Certiorari with the Court of Appeals, seeking to set aside the RTC order granting the writ of
preliminary attachment denying the motion for the discharge of the writ. This case was docketed as CA-G.R.
SP No. 39267.[6] 
 
On 27 February 1996, the Court of Appeals Second Division promulgated its Decision in CA-G.R. SP
No. 39267, wherein it granted the Petition for Certiorari and ordered the discharge and dissolution of the Writ
of Attachment and Notice of Garnishment. [7] The Court of Appeals found that 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.[8] Carlos elevated the said Decision to this Court by way of Petition for Review on
Certiorari, which was docketed as G.R. No. L-125717. In a Resolution dated 21 October 1996, the Court

Rule 57: Preliminary Attachment | 188

denied Carlos’s Petition, and thus the Court of Appeals’ Decision ordering the dissolution of the Writ of
Attachment and Notice of Garnishment became final.
       
        In the meantime, the hearing on Carlos’s Complaint ensued before the RTC. Respondents duly filed their
Answer and thereafter filed a Motion for Summary Judgment. Carlos opposed the motion and countered with
his own Motion for Summary Judgment.   On 8 April 1996, the RTC rendered a summary judgment in favor of
Carlos. Carlos’s victory was wholesale, with the RTC making the following pronouncements:
 
1. Declaring the marriage between defendant Felicidad Sandoval and Teofilo Carlos solemnized at Silang,
Cavite, on May 14, 1962, evidenced by the Marriage Contract submitted in this case, null and void ab initio for lack of
the requisite marriage license;
 
2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the natural, illegitimate, or legally adopted child
of the late Teofilo E. Carlos;
 
3. Ordering defendant Sandoval to pay and restitute to plaintiff the sum of P18,924,800.00, together with the
interest thereon at the legal rate from date of filing of the instant complaint until fully paid;
 
 
 
4. Declaring plaintiff as the sole and exclusive owner of the parcel of land, less the portion adjudicated to the
plaintiffs in Civil Case No. 11975, covered by TCT No. 139061 of the Register of Deeds of Makati City, and ordering
said Register of Deeds to cancel said title and to issue another title in the sole name of plaintiff herein;
 
Rule 57: Preliminary Attachment | 189
 5. Declaring the Contract, Annex K of the Complaint, between plaintiff and defendant Sandoval null and void,
and ordering the Register of Deeds of Makati City to cancel TCT No. 139058 in the name of Teofilo Carlos, and to
issue another title in the sole name of the plaintiff herein;
 
6. Declaring the Contract, Annex M of the Complaint, between plaintiff and defendant Sandoval null and void;
 
7. Ordering the cancellation of TCT No. 210877 in the names of defendant Sandoval and defendant minor
Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the exclusive name of plaintiff
herein.
 
8. Ordering the cancellation of TCT No. 210878 in the names of defendant Sandoval and defendant minor
Teofilo S. Carlos II and ordering the Register of Deeds of Manila to issue another title in the sole name of plaintiff
herein. [9]

 
 
        Upon promulgation of the Summary Judgment, Carlos moved before the RTC for execution pending
appeal. The RTC granted the motion for execution pending appeal upon the filing of a bond. [10] On 27 May
1996, the RTC issued a Writ of Execution.
 
 
Meanwhile, respondents filed a Motion for Reconsideration of the Summary Judgment, which was
denied in an Order dated 20 May 1996. Respondents then appealed the RTC Decision to the Court of
Appeals, wherein such appeal was docketed as CA-G.R. CV No. 53229. The case was raffled to the appellate
courts’ Fourteenth Division for completion of records.  Sandoval and Carlos also filed a Petition for Certiorari
Rule 57: Preliminary Attachment | 190
with Temporary Restraining Order dated 2 June 1996. This special civil action primarily attacked the allowance
of execution pending appeal, and prayed for the annulment of the Order granting execution pending appeal,
and of the Writ of Execution
 
        On 10 December 1996, in CA-G.R. CV No. 53229, respondents filed a Motion for Judgment On the
Attachment Bond.  They noted that the Court of Appeals had already ruled that the Writ of Preliminary
Attachment issued by the RTC was improperly granted and that its Decision, as affirmed by the Supreme
Court, had attained finality. Accordingly, they were entitled to damages under Section 20, Rule 57 of the then
Rules of Civil Procedure, which governed claims for damages on account of unlawful attachment. In support of
their allegation of damages, they cite the Notice of Garnishment served on PNB  Malolos Branch, where
Felicidad Carlos maintained

Rule 57: Preliminary Attachment | 191

deposits amounting to P15,546,121.98.[11] Also presented in support of the motion was a Notice of
Delivery/Payment by the RTC Sheriff, directing the PNB Malolos Branch to deliver the amounts previously
garnished by virtue of the Writ of Execution dated 27 May 1996;[12] a Manifestation filed by PNB dated 19 July
1996 in CA-G.R. SP No. 40819, stating that PNB had already delivered to the RTC Sheriff on 27 June 1996
the amount of P15,384,509.98 drawn against the accounts of Carlos; and a Certification to the same effect
issued by the PNB Malolos Branch. In an Addendum to Motion for Judgment on the Attachment Bond,
respondents additionally prayed for moral and exemplary damages. [13]
 
        After various pleadings were duly filed by the parties, the Court of Appeals Special Fourth Division issued
a Resolution dated 23 March 1998, certifying that all the necessary pleadings have been filed, and that the
case may already be referred to the Raffle Committee for assignment to a ponente for study and report. The
same Resolution likewise denied without elaboration a Motion to Dismiss on the ground of forum-shopping
filed earlier by Carlos.[14]
 
On such denial, Carlos filed a Motion for Reconsideration. Respondents likewise filed a Motion for
Partial Reconsideration dated 17 April 1998, arguing that under the Revised Internal Rules of the Court of
Appeals (RIRCA), the case may be re-raffled for assignment for study and report only after there is a
resolution that the case is deemed submitted for decision. [15] They pointed out that re-raffle could not yet be
effected, as  there were still pending incidents, particularly the motions for reconsideration of Carlos and
themselves, as well as the Motion for Judgment on Attachment Bond.
 

Rule 57: Preliminary Attachment | 192

        On 26 June 1998, the Court of Appeals Former Special Fourth Division promulgated two resolutions. [16]
The first, in response to Carlos’s Motion for Reconsideration, again denied Carlos’s Motion to Dismiss the
Appeal and Motion for Suspension, but explained the reasons for such denial.
 
        The second resolution is at the center of the present petitions. The assailed Resolution agreed with
respondents that it was first necessary to resolve the pending incidents before the case could be re-raffled for
study  and  report.  Accordingly,  the   Court   of  Appeals
proceeded to rule on these pending incidents. While the first resolution dwelt on the pending motions filed by
Carlos, this Resolution tackled the other matter left unresolved, the Motion for Judgment on Attachment Bond.
The Court of Appeals found the claim for damages meritorious, citing the earlier decisions ruling that Carlos
was not entitled to the preliminary attachment. Invoking Section 20, Rule 57 of the Rules of Court, as well as
jurisprudence,[17] the Court of Appeals ruled that it was not necessary for the determination of damages on the
injunction bond to await the decision on appeal.
 
        The Court of Appeals then proceeded to determine to what damages respondents were entitled to. In
ruling that the award of actual damages was warranted, the court noted:
 
                   It is also not disputed that the PNB, on June 27, 1996, issued two manager’s checks: MC No.
938541 for P4,932,621.09 and MC 938542 for P10,451,888.89 payable to the order of “Luis C. Bucayon II,
Sheriff IV, RTC, Branch 256, Muntinlupa”, duly received by the latter in the total amount of PESOS FIFTEEN
MILLION THREE HUNDRED EIGHTY FOUR THOUSAND FIVE HUNDRED NINE & 98/100 (P15,384,509.98),
drawn against the accounts of Ms. Felicidad Sandoval Vda. de Carlos which were earlier garnished for the

Rule 57: Preliminary Attachment | 193

 satisfaction of the above-mentioned writ of attachment (Annex “E”, Motion for Judgment on the Attachment
Bond, pp. 7-8) [18]

 
                            . . .  .
 
                   The contention of [Carlos] that the writ of attachment was not implemented falls flat on the face of
the manifestation of PNB that the delivery of the garnished P15,384,509.98 to him was effected through the
sheriff. [19]

 
 
        The Court of Appeals found that moral and exemplary damages were not warranted, there being no
malice in pursuing the attachment. The appellate court also found the claim of P2,000,000.00 for attorney’s
fees as excessive, and reduced the sum by half. Correspondingly, the dispositive portion of the assailed
Resolution reads:
 
                   WHEREFORE, premises considered, judgment is hereby rendered against the attachment bond, ordering
SIDDCOR INSURANCE CORPORATION and plaintiff-appellee to pay defendants-appellants, jointly and
severally, the sum of P15,384,509.98 and 12% interest per annum from June 27, 1996 when the unlawful
garnishment was effected until fully paid and P1,000,000.00 as attorney’s fees with 6% interest thereon from the
trial court’s decision on April 8, 1986 until fully paid.
 
                   SO ORDERED. [20]

 
 
Rule 57: Preliminary Attachment | 194
 
 
        Both Carlos and SIDDCOR filed their respective motions for reconsideration of the Resolution. For their
part, respondents filed a Motion for Immediate Execution dated 7 August 1998 in regard to the Resolution of
26 June 1998 awarding them damages.
 
In the Resolution dated 10 October 1998,[21] the Court of Appeals denied the motions for reconsideration
and granted the Motion for Immediate Execution. In granting the Motion for Immediate Execution, the Court of
Appeals cited the reasons that the appeal to be undertaken from the 26 June 1998 Resolution was patently
dilatory; that there were no material and substantial defenses against the motion for judgment on the
attachment bond, rendering the appeal pro-forma and dilatory; that Sandoval was of advanced age and might
not enjoy the fruits of the judgment on the attachment bond; and that immediate execution would end her
suffering due to the arbitrary garnishment of her account pursuant to an improper attachment. [22]
 
 
 
 
 
 
In its Motion for Reconsideration, SIDDCOR explicitly assailed the allowance of the Motion for
Immediate Execution.[23] This was denied by the Court of Appeals in a Resolution dated 22 December 1998.[24]
 
Rule 57: Preliminary Attachment | 195
        From these antecedents, the following petitions were filed before this Court:     
 
 G.R. No. 135830
 
        This Appeal by Certiorari with Prayer for Temporary Restraining Order/Preliminary Injunction dated 26
October 1998 filed by Carlos assailed the two resolutions of the Court of Appeals both dated 26 June 1998, as
well as the Resolution of 10 October 1998, which denied Carlos’s motion for reconsideration. Carlos argues
that the Court of Appeals, through the Former Special Fourth Division, could not have resolved the Motion for
Judgment on the Attachment Bond since the case had not yet been re-raffled under the two-raffle system for
study and report; that the Court of Appeals erred in resolving the motion without conducting any hearing; that
the Court of Appeals had no jurisdiction over the motion as the docketing fees had not yet been filed; that the
motion for judgment, which did not contain any certification against forum-shopping, was an application
subject to the requirements of certification against forum-shopping; that there was no supporting evidence to
support the award of damages; and that the Court of Appeals committed grave abuse of discretion in denying
the Motion for Reconsideration without adverting to specific reasons mentioned for the denial of each issue. [25]
 
        Carlos likewise ascribes grave abuse of discretion to the Court of Appeals in its other Resolution dated
26 June 1998 for its refusal to dismiss CA-G.R. CV No. 53229 on the ground of forum-shopping, adding that
the appellate court should have deferred resolution of the Motion for Judgment on the Attachment Bond
considering the prejudicial question raised in Carlos’s motion to dismiss the main case on the ground of forum-
shopping.
 
Rule 57: Preliminary Attachment | 196
G.R. No. 136035
 
        This concerns a Petition for Review filed by SIDDCOR, likewise challenging the Resolution of 26 June
1998 of the Court of Appeals and the 10 October 1998 Resolution wherein Siddcor’s Motion for
Reconsideration, among others, was denied. Siddcor argues therein that the Court of Appeals erred in ruling
on the motion for damages without awaiting judgment in the main case; granting that damages may be
awarded, these should encompass only such damages incurred during the pendency of the appeal; and that a
hearing was necessary to prove the claim for damages and the appellate court erred in granting the award for
damages despite lack of hearing.
 
G.R. No. 137743
 
        The third petition for adjudication, a Petition for Certiorari under Rule 65 with Prayer for Temporary
Restraining Order or Preliminary Injunction, was also filed by SIDDCOR. This petition, dated 8 March 1999,
specifically assails the allowance by the Court of Appeals of the immediate execution of the award of
damages, made through the resolutions dated 10 October 1998 and 22 December 1998.
 
SIDDCOR hereunder argues that Section 2, Rule 39 of the Rules of Civil Procedure requires that
execution of a judgment or final order pending appeal may be made only on motion of the prevailing party and
may be made “even before the expiration of the period to appeal.” [26]  Respondents had argued in their Motion
for Immediate Execution that the judgment sought to be executed (that on the attachment bond) was
interlocutory and not appealable, yet cited rulings on execution pending appeal under Section 2, Rule 39 in
Rule 57: Preliminary Attachment | 197
support of their position. SIDDCOR cites this inconsistency as proof of a change of theory on the part of
respondents which could not be done for the theories are incompatible. Such being the case, SIDDCOR
argues, the Court of Appeals gravely abused its discretion in granting immediate execution since respondents
had filed its motion on the premise that the award on the judgment bond was interlocutory and not appealable.
SIDDCOR also claims that the judgment on the attachment bond is not interlocutory, citing Stronghold
Insurance Co., Inc. v. Court of Appeals [27] wherein it was ruled that such indeed constitutes a final and
appealable order.
 
SIDDCOR points out that no hearing was conducted on the Motion for Immediate Execution despite the
requirement in Section 2, Rule 39 that “discretionary execution may only issue upon good reasons to be stated
in a special order after due hearing.” SIDDCOR likewise notes that the motion granting immediate execution
was granted in the very same resolution which had denied the motion for reconsideration of the resolution
sought to be immediately executed. For SIDDCOR, such constituted a denial of procedural due process
insofar as its statutory right to appeal was concerned, as the resolution that it intended to appeal from was
already the subject of immediate execution.
 
Finally, SIDDCOR contests the special reasons cited by the Court of Appeals in granting the Motion for
Immediate Execution.
 
Facts Arising Subsequent to the Filing of Instant Petitions
 

Rule 57: Preliminary Attachment | 198

 On 7 May 1999, the Court of Appeals issued a Writ of Execution directing the enforcement of the
judgment on the attachment bond.[28] However, in a Resolution dated 9 June 1999, this Court through the First
Division issued a Temporary Restraining Order, enjoining the enforcement of the said Writ of Execution.
 
On 15 October 2002, the Court of Appeals First Division rendered a Decision[29] on the merits of CA-G.R.
CV No. 53229, setting aside the Summary Judgment and ordering the remand of the case for further
proceedings.[30] Both parties filed their respective motions for reconsideration. [31]  In addition, Carlos filed a
motion to inhibit the author of the assailed decision, Justice Rebecca de Guia-Salvador, [32]  who thereafter
agreed to inhibit herself.[33] Then on 7 August 2003, the Court of Appeals Former First Division issued a
Resolution deferring action on the motions for reconsideration in light of the temporary restraining order issued
by this Court until the resolution of the present petitions.
 
The factual background may be complicated, but the court need only concern itself with the propriety of
the judgment on the attachment bond and the subsequent moves to secure immediate execution of such
judgment. Should this Court be called upon to tackle the merits of the original action, Carlos’s complaint, it
shall be in the review of the final resolution of the Court of Appeals in CA-G.R. CV No. 53229.
 
Consolidation of Issues in
G.R. Nos. 135830 and 136035
 

Rule 57: Preliminary Attachment | 199

 The petitions in G.R. Nos. 135830 and 136035 are concerned with the award of damages on the
attachment bond. They may be treated separately from the petition in G.R. No. 137743, which relates to the
immediate execution of the said award.
 
 
 
We consolidate the main issues in G.R. Nos. 135830 and 136035, as follows: (1) whether the assailed
judgment on the attachment bond could have been rendered, as it was, prior to the adjudication of the main
case; (2) whether the Court of Appeals properly complied with the hearing requirement under Section 20, Rule
57 prior to its judgment on the attachment bond; and (3) whether the Court of Appeals properly ascertained
the amount of damages it awarded in the judgment on the attachment bond.
 
Resolving these issues requires the determination of  the proper scope and import of Section 20, Rule
57 of the 1997 Rules of Civil Procedure. The provision governs the disposal of claims for damages on account
of improper, irregular or excessive attachment.
 
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 obligee or his surety or
sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be
awarded only after proper hearing and shall be included in the judgment on the main case.
 

Rule 57: Preliminary Attachment | 200

 If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he
must claim damages sustained during the pendency of the appeal by filing an application in the appellate court with
notice to the party in whose favor the attachment was issued or his surety or sureties, before the judgment of the
appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial
court.
 
Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in
the same action the damages awarded to him from any property of the attaching obligee not exempt from execution
should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. (Emphasis supplied.)
 
 
Section 20 essentially allows the application to be filed at any time before the judgment becomes
executory. It should be filed in the same case that is the main action, and cannot be instituted separately. [34] It
should be filed with the court having jurisdiction over the case at the time of the application. [35] The remedy
provided by law is exclusive and by failing to file a motion for the determination of the damages on time and
while the judgment is still under the control of the court, the claimant loses his right to damages. [36]
 
There is no question in this case that the Motion for Judgment on the Attachment Bond filed by
respondents on 10 December 1996 was properly filed since it was filed with the Court of Appeals during the
pendency of the appeal in the main case and also as an incident thereto. The core questions though lie in the
proper interpretation of the condition under Section 20, Rule 57 that reads: “Such damages may be awarded
only after proper hearing and shall be included in the judgment on the main case.” Petitioners assert that there

Rule 57: Preliminary Attachment | 201

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.
 
 
“Such Damages May Be Awarded
Only After Proper Hearing….”
 
        We first discuss whether the “proper hearing” requirement under Section 20, Rule 57 had been satisfied
prior to the award by the Court of Appeals of damages on the attachment bond.
 
Section 20 of Rule 57 requires that there be a “proper hearing” before the application for damages on
the attachment bond may be granted. The hearing requirement ties with the indispensable demand of
procedural due process.  Due notice to the adverse party and its surety setting forth the facts supporting the
applicant's right to damages and the amount thereof under the bond is essential. No judgment for damages
may be entered and executed against the surety without  giving  it  an   opportunity   to be heard as to the
reality or reasonableness of the damages resulting from the wrongful issuance of the writ. [37]
 
In Paramount Insurance v. Court of Appeals,[38] the Court held that under the rule, it was neither
mandatory nor fatal that there should be a separate hearing in order that damages upon the bond can be
claimed, ascertained and awarded.[39] What is necessary only is for the attaching party and his surety or
sureties to be duly notified and given the opportunity to be heard. [40]
 
Rule 57: Preliminary Attachment | 202
 In this case, both Carlos and SIDDCOR were duly notified by the appellate court of the Motion for
Judgment on the Attachment Bond and were required to file their respective  comments  thereto.[41]  Carlos 
and SIDDCOR filed  their  respective  comments  in opposition to private respondents’ motion. [42] Clearly, all
the relevant parties had been afforded the bare right to be heard on the matter.
 
Concededly, the facts of this case differ from that in Paramount, wherein the award of damages was
predicated under Section 8, Rule 58, and the trial on the merits included the claim for damages on the
attachment bond. The Court did note therein that the counsel of the surety was present during the hearings. [43]
In this case, unlike in Paramount, there were no open court hearings conducted by the Court of Appeals, and it
is precisely this absence that the petitioners assert as fatal.
 
Plainly, there is no express requirement under the rule that the hearing be done in open court, or that the
parties be allowed to confront adverse witnesses to the claim of damages on the bond. The proper scope of
the hearing requirement was explained before Paramount in Peroxide Philippines Corp. v. Court of Appeals,[44]
thus:
 
. . . [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 hearing.
 
 
Rule 57: Preliminary Attachment | 203
        From this pronouncement, we can discern that the “proper hearing” contemplated would not merely
encompass the right of the parties to submit their respective positions, but also to present evidence in support
of their claims, and to rebut the submissions and evidence of the adverse party. This is especially crucial
considering that the necessary elements to be established in an application for damages are essentially
factual: namely, the fact of damage or injury, and the quantifiable amount of damages sustained. Such matters
cannot be established on the mere say-so of the applicant, but require evidentiary support. At the same time,
there was no equivocal statement from the Court in Peroxide that the hearing required under the rule should
be a full-blown hearing on the merits
 
        In this case, we rule that the demands of a “proper hearing” were satisfied as of the time the Court of
Appeals rendered its assailed judgment on the attachment bond. The circumstances in this case that we
consider particularly telling are the settled premises that the judicial finding on the wrongfulness of the
attachment was then already conclusive and beyond review, and that the amount of actual damages
sustained  was likewise indubitable as it  indeed could be found in the official case record in CA-G.R. CV No.
53229. As a result, petitioners would have been precluded from either raising the defenses that the preliminary
attachment was valid or disputing the amount of actual damages sustained by reason of the garnishment. The
only matter of controversy that could be litigable through the traditional hearing would be the matter of moral
and exemplary damages, but the Court of Appeals appropriately chose not to award such damages.
 
        Moreover, petitioners were afforded the opportunity to counter the arguments extended by the
respondents. They fully availed of that right by submitting their respective comments/oppositions. In fine, the
due process guarantee has been satisfied in this case.
Rule 57: Preliminary Attachment | 204
 
It should be noted that this case poses a situation different from what is normally contemplated under
Section 20, Rule 57—wherein the very wrongfulness of the attachment remains one of the issues in contention
in the main case. In such a case, there would be a greater demand for a more extensive hearing on the
application of damages. The modality of hearing should remain within the discretion of the court having
jurisdiction to hear the application for damages.  The only demand, concordant to due process, would be the
satisfaction of the right to be heard, to present evidence, and to rebut the evidence and arguments of the
opposing party.
 
Some disquisition is necessary on whether or not, as petitioners submit, a full-blown hearing in open
court is compulsory under Section 20, Rule 57. 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 the part of the appellate courts. The latter, despite
Rule 57: Preliminary Attachment | 205
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.
 
For example, the review of death penalty convictions by the Court of Appeals and the Supreme Court
necessitates a thorough evaluation of the evidence presented, notwithstanding the prior factual appreciation
made by the trial court. [45] Notwithstanding the factual nature of the questions involved, there is no rule
requiring the Court of Appeals or the Supreme Court to call death penalty cases for hearing or oral argument.
If no such mandatory rule for hearing is imposed on the appellate courts when the supreme penalty of death is
involved, why then should an exceptional rule be imposed in the case for the relatively insignificant application
for damages on the attachment bond?
 
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
Rule 57: Preliminary Attachment | 206
to conduct an open-court 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.
 
        This pronouncement does not contradict our ruling in Hanil Development v. IAC,[46] which Carlos
interprets as requiring the Court of Appeals to conduct a proper hearing on an application for damages on the
attachment bond. Hanil concerned the refusal by the Intermediate Appellate Court (now Court of Appeals) to
take cognizance of the application for damages on the attachment bond, such refusal being reversed by the
Court, which ruled that the Intermediate Appellate Court (IAC) had jurisdiction to accept and rule on such
application. While the Court therein recognized that the IAC was empowered to try cases and conduct
hearings, or otherwise perform acts necessary to resolve factual issues in cases, [47] it did not require the
appellate court to conduct a hearing in open court, but merely to reinstate the application for damages.
 
Admittedly, the dispositive portion of Hanil required the Court of Appeals to conduct hearings on the
application for damages,[48] but nowhere in the decision was a general rule laid down mandating the appellate
court to conduct such hearings in open court. The ascertainment of the need to conduct full-blown hearings is
best left to the discretion of the appellate court which chooses to hear the application. At the same time, the
Court cautions the appellate courts to carefully exercise their discretion in determining the need for open-court
hearings on the application for damages on the attachment bond. The Court does not sanction the indolent
award of damages on the attachment bond by the appellate court without affording the adverse party and the

Rule 57: Preliminary Attachment | 207

bonding company concerned the opportunity to present their sides and adduce evidence in their behalf, or on
the basis of unsubstantiated evidence.
 
“…And Shall be Included in the
Judgment on the Main Case”
 
Section 20, Rule 57 does state that the award of damages shall be included in the judgment on the main
case, and seemingly indicates that it should not be rendered prior to the adjudication of the main case.
 
The rule, which guarantees a right to damages incurred by reason of wrongful attachment, has long
been recognized in this jurisdiction.[49] Under Section 20, Rule 57 of the 1964 Rules of Court, it was provided
that there must be first a judgment on the action in favor of the party against whom attachment was issued
before damages can be claimed by such party. [50] The Court however subsequently clarified that under the
rule, “recovery for damages may be had by the party thus prejudiced by the wrongful attachment, even if the
judgment be adverse to him.”[51]
 
The language used in the 1997 revision of the Rules of Civil Procedure leaves no doubt that there is no
longer need for a favorable judgment in favor of the party against whom attachment was issued in order that
damages may be awarded. It is indubitable that even a party who loses the action in main but is able to
establish a right to damages by reason of improper, irregular, or excessive attachment may be entitled to
damages. This bolsters the notion that the claim for damages arising from such wrongful attachment may arise

Rule 57: Preliminary Attachment | 208

and be decided separately from the merits of the main action. As noted by the Court in Philippine Charter
Insurance Corp. v. Court of Appeals:[52]
 
 
 
The surety does not, to be sure, become liable on its bond simply because judgment is subsequently rendered
against the party who obtained the preliminary attachment. The surety becomes liable only when and if "the court
shall finally adjudge that the applicant was not entitled to the attachment." This is so regardless of the nature
and character of the judgment on the merits of the principal claims, counterclaims or cross-claims, etc.
asserted by the parties against each other. Indeed, since an applicant's cause of action may be entirely
different from the ground relied upon by him for a preliminary attachment, it may well be that although the
evidence warrants judgment in favor of said applicant, the proofs may nevertheless also establish that said
applicant's proferred ground for attachment was inexistent or specious and hence, the writ should not have
issued at all; i.e., he was not entitled thereto in the first place. In that event, the final verdict should logically award to
the applicant the relief sought in his basic pleading, but at the same time sentence him—usually on the basis of a
counterclaim—to pay damages caused to his adversary by the wrongful attachment. [Emphasis supplied.]
 
 
Moreover, a separate rule—Section 8, Rule 58— covers instances when it is the trial court that awards
damages upon the bond for preliminary injunction of the adverse party. Tellingly, it requires that the amount of
damages to be awarded be claimed, ascertained, and awarded under the same procedure prescribed in
Section 20 of Rule 57.
 

Rule 57: Preliminary Attachment | 209

 In this case, we are confronted with a situation wherein the determination that the attachment was
wrongful did not come from the trial court, or any court having jurisdiction over the main action. It was
rendered by the Court of Appeals in the exercise of its certiorari jurisdiction in the original action reviewing the
propriety of the issuance of the Writ of Preliminary Attachment against the private respondents. Said ruling
attained finality when it was affirmed by this Court.
 
The courts are thus bound to respect the conclusiveness of this final judgment, deeming as it does the
allowance by the RTC of preliminary attachment as improper. This conclusion is no longer subject to review,
even by the court called upon to resolve the application for damages on the attachment bond. The only matter
left for adjudication is the proper amount of damages.
 
Nevertheless, Section 20, Rule 57 explicitly provides that the award for damages be included in the
judgment on the main case. This point was apparently not lost on the Court of Appeals when it rendered its
Resolution dated 23 March 1998, certifying that the case may now be referred to the Raffle Committee for
assignment to a ponente. The appellate court stated therein: “The Resolution of defendants-appellants’ motion
for judgment on the attachment may be incorporated in the decision by the ponente for study and report,”[53]
and such observation is in conformity with Section 20.
 
However, this reasoning was assailed by respondents, who argued that the motion for judgment on the
attachment bond was a pending incident that should be decided before the case can be re-raffled to a
ponente for decision. Respondents may be generally correct on the point that a case can only be deemed
submitted for decision only after all pending incidents are resolved. Yet since Section 20, Rule 57 provides
Rule 57: Preliminary Attachment | 210
that their application for damages on the attachment bond “shall be included in the judgment on the main
case,” it is clear that the award for damages need not be resolved before the case is submitted for decision,
but should instead be resolved and included in the judgment on the main case, or the decision on the Appeal
by Certiorari filed by the respondents.
 
Thus, the action of the Court of Appeals in resolving the application for damages even before the main
judgment was issued does not conform to Section 20, Rule 57. However, the special particular circumstances
of this case lead us to rule that such error is not mortal to the award of damages.
 
As noted earlier, the award of damages was made after a proper hearing had occurred wherein all the
concerned parties had been given the opportunity to present their arguments and evidence in support and in
rebuttal of the application for damages. The premature award of damages does not negate the fact that the
parties were accorded due process, and indeed availed of their right to be heard.
 
Moreover, we are compelled to appreciate the particular circumstance in this case that the right of
private respondents to acquire relief through the award of damages on account of the wrongful preliminary
attachment has been conclusively affirmed by the highest court of the land. This differs from the normal
situation under Section 20, Rule 57 wherein the court having jurisdiction over the main action is still required to
ascertain whether the applicant actually has a right to damages. To mandatorily require that the award of
damages be included in the judgment in the main case makes all the sense if the right to damages would be
ascertained at the same time the main judgment is made. However, when the said right is already made viable

Rule 57: Preliminary Attachment | 211

by reason of a final judgment which is no longer subject to review, there should be no unnecessary
impediments to its immediate implementation.
 
        And finally, any ruling on our part voiding the award of damages solely for the reason that it was not
included in the judgment on the main case, and remanding the motion to the Court of Appeals for proper
adjudication together with the main case may exhibit fealty to the letter of the procedural rule, but not its
avowed aims of promoting a just and speedy disposition of every action and proceeding. After all, if we were to
compel the Court of Appeals to decide again on the application for damages and incorporate its ruling in the
judgment on the main action, the appellate court will be examining exactly the same evidence and applying
exactly the same rules as it already did when it issued the assailed resolution awarding damages on the bond.
This would be unnecessarily redundant especially considering that the Supreme Court had already affirmed
that there was wrongful attachment in this case.
 
There is also the fact that remanding the question of damages, singly for the purpose of adhering to the
letter of the procedural rule, would further prolong the resolution of the main case, which has been with the
Court of Appeals for more than nine years now. [54] Our Rules of Court precisely requires liberal construction of
the procedural rules to promote the objective of securing a just, speedy and inexpensive disposition of every
action and proceeding.[55] With this precept, all the more justification is supplied for allowing the award for
damages despite its apparent prematurity, if it is in all other respects proper.
 
 
 
Rule 57: Preliminary Attachment | 212
  
 
The same reasons apply in resolving the question of whether the Court of Appeals could have decided
the Motion for Judgment on the Attachment Bond considering that the case had not yet been re-raffled under
the two-raffle system for study and report. Under Section 5, Rule 3 of the RIRCA, a case filed with the Court of
Appeals undergoes two raffles for assignment to a particular Justice. The first raffle is made for completion of
records.[56] Afterwards, “all raffled appealed cases, the records of which have been completed and submitted
for decision, shall be re-raffled for assignment to a Justice for study and report.” [57]
 
The fact that Section 20, Rule 57 provides that the award of damages on the attachment bond “shall be
included in the judgment on the main case” necessarily implies that it is to be made only after the case has
been re-raffled for study and report, and concurrently decided with the judgment of the ponente in the main
case. Again, the Court of Appeals failed to consider Section 20, Rule 57 when it acted upon the application
even before the second raffle was made.
 
Had Section 20, Rule 57 been faithfully complied with, a different Justice of the Court of Appeals would
have penned the ruling on the application for damages, in accordance with the RIRCA. Yet this circumstance
does not outweigh the other considerations earlier mentioned that would warrant a liberal interpretation of the
procedural rules in favor of respondents. The parties had adduced all their arguments and evidence before the
Court of Appeals, and indeed, these were appreciated on first instance by Justice Demetria, who eventually
penned the assailed resolutions. There was already a final determination that the attachment was wrongful.
And any delay brought about by requiring that it be the ponencia, determined after the second raffle, who
Rule 57: Preliminary Attachment | 213
decides the application for damages may bear pro forma adherence to the letter of the rule, but would only
cause the delay of the resolution of this long-pending case. Procedural rules are designed, and must therefore
be so interpreted as, to give effect to lawful and valid claims and not to frustrate them. [58]
 
Even SIDDCOR acknowledges that there are recognized instances where the award of damages or
judgment on the attachment bond may not be included in the decision on the main case, such as if the main
case was dismissed for lack of jurisdiction and no claim for damages could have been presented in the main
case.[59]
 
Scope of Damages
Properly Awardable
 
 
        Next, we examine the particular award of damages made in this case, consisting of P15,384,509.98, plus
interest, as well as P1,000,000.00 as attorney’s fees. There seems to be no dispute that the former amount
constituted the amount drawn against the account of Sandoval by reason of the writ of execution issued by the
trial court on 27 May 1996. This fact was confirmed by the PNB, in its Manifestation dated 19 July 1996,
confirming the garnishment.
 
        Respondents’ burden in proving damages in this case was considerably lessened by the fact that there
was already a final judgment, no longer subject to review, that the preliminary attachment allowed by the trial
court was indeed wrongful. Hence, all that was necessary to be proved was the amount of damage actually
Rule 57: Preliminary Attachment | 214
sustained by respondents by reason of the wrongful attachment. It is unquestioned that by virtue of the writ of
preliminary attachment, a Notice of Garnishment was served upon the PNB over deposit accounts maintained
by respondents. Said Notice of Garnishment placed under the control of the RTC all the accounts maintained
by respondents, and prevented the transfer or disposition of these accounts. [60] Then the subsequent Writ of
Execution dated 27 May 1996 ordered the delivery to Carlos of these accounts earlier subjected to
garnishment.[61]
 
        Clearly, the amount of actual pecuniary loss sustained by respondents has been well established. The
Manifestation submitted by the PNB further affirmed the actual amount seized by Carlos, an amount which
could not have been acquired had it not been for the writ of preliminary attachment which was wrongfully
issued.
 
        Carlos lamely argues in his petition that there was no concrete or supporting evidence to justify the
amount of actual damages, a claim that is belied by the official case records. The more substantive argument
is presented by SIDDCOR, which submits that any damages that may be awarded to respondents can include
only those that were incurred, if any, during the pendency of the appeal.  But this contention is belied by
Section 4, Rule 57 of the 1997 Rules of Civil Procedure, which provides that the bond issued for preliminary
attachment is 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.”[62]
 

Rule 57: Preliminary Attachment | 215

        The case Paramount Insurance Corp. v. Court of Appeals [63] is instructive. It discusses the scope of the
bond executed by upon an application for preliminary injunction, [64] which similarly covers “all damages which
[may be] sustain[ed] by reason of the injunction or temporary restraining order if the court should finally decide
that the applicant was not entitled thereto.” [65] The surety in that case claimed that it could be liable “only to the
amount of damages accruing from the time the injunction bond was issued until the termination of the case,
and not from the time the suit was commenced.” [66] In rebutting this claim, the Court ruled:
 
 
. . . . Rule 58, Section 4(b), provides that a bond is executed in favor of the party enjoined to answer for all damages
which he may sustain by reason of the injunction. This Court already had occasion to rule on this matter in Mendoza v.
Cruz, where it held that "(t)he injunction bond is intended as a security for damages in case it is finally decided that the
injunction ought not to have been granted. It is designed to cover all damages which the party enjoined can
possibly suffer. Its principal purpose is to protect the enjoined party against loss or damage by reason of an
injunction." No distinction was made as to when the damages should have been incurred. [67]

 
 
        Our ruling in Philippine Charter Insurance Corp. v. Court of Appeals, relied upon by the Court of Appeals,
squarely applies to this case:
 
Under the circumstances, too, there can be no gainsaying the surety’s full awareness of its undertakings under
its bond: that, as the law puts it: "the plaintiff will pay all costs which may be adjudged to the defendant(s), and all
damages which may be sustained by reason of the attachment, if the same shall finally be adjudged to have been
wrongful and without cause," and that those damages plainly comprehended not only those sustained during the trial
of the action but also those during the pendency of the appeal. This is the law, and this is how the surety's liability
Rule 57: Preliminary Attachment | 216
 should be understood. The surety's liability may be enforced whether the application for damages for wrongful
attachment be submitted in the original proceedings before the Trial Court, or on appeal, so long as the judgment has
not become executory. The surety's liability is not and cannot be limited to the damages caused by the
improper attachment only during the pendency of the appeal. That would be absurd. The plain and patent
intendment of the law is that the surety shall answer for all damages that the party may suffer as a result of
the illicit attachment, for all the time that the attachment was in force; from levy to dissolution. . . .
 
The fact that the second paragraph of the rule speaks only of "damages sustained during the pendency
of the appeal" is of no moment; it obviously proceeds from the assumption in the first paragraph that the
award for the damages suffered during the pendency of the case in the trial court was in fact "included in the
final judgment" (or applied for therein before the appeal was perfected or the judgment became executory); hence, it
states that the damages additionally suffered thereafter, i.e., during the pendency of the appeal, should be claimed
before the judgment of the appellate tribunal becomes executory. It however bears repeating that where. as in the
case at bar, the judgment of the Trial Court has expressly or impliedly sustained the attachment and thus has
given rise to no occasion to speak of, much less, file an application for damages for wrongful attachment, and
it is only in the decision of the Court of Appeals that the attachment is declared wrongful and that the
applicant "was not entitled thereto," the rule is, as it should be, that it is entirely proper at this time for the
application for damages for such wrongful attachment to be filed—i.e., for all the            damages sustained
thereby, during all the time that it was in force, not only during the pendency of the appeal. . . . [68]

 
 
The rule is thus well-settled that the bond issued upon an application for preliminary attachment answers
for all damages, incurred at whatever stage, which are sustained by reason of the attachment. The award of
actual damages by the Court of Appeals is thus proper in amount. However, we disagree that the rate of legal
interest be counted from the date of the “unlawful garnishment,” or on 27 June 1996. Properly, interest should
Rule 57: Preliminary Attachment | 217
start to accrue only from the moment it had been finally determined that the attachment was unlawful, since it
is on that basis that the right to damages comes to existence. In this case, legal interest commences from the
date the Court of Appeals decision in CA-G.R. SP No. 39267 became final, by reason of its affirmation by this
Court.
 
        The award of attorney’s fees in the amount of P1,000,000.00 is also questioned before this Court,
considering that the Court of Appeals did not award moral or exemplary damages. The general rule may be
that an award of attorney’s fees should be deleted where the award of moral and exemplary damages are
eliminated.[69] Nonetheless, attorney’s fees may be awarded under the Civil Code where the court deems it just
and equitable that attorney’s fees and expenses of litigation should be recovered, [70] even if moral and
exemplary damages are unavailing.[71]
 
        Particularly, the Court has recognized as just and equitable that attorney's fees be awarded when a party
is compelled to incur expenses to lift a wrongfully issued writ of attachment. [72] The amount of money
garnished, and the length of time respondents have been deprived from use of their money by reason of the
wrongful attachment, all militate towards a finding that attorney’s fees are just and equitable under the
circumstances. However, we deem the amount of P1,000,000.00 as excessive, and modify the award of
attorney’s fees to P500,000.00 which represents merely approximately three percent of the actual damages
suffered by and awarded to respondents. We also delete the imposition of legal interest made by the Court of
Appeals on the awarded attorney’s fees. 
 
Other Issues Raised in G.R. No. 135830
Rule 57: Preliminary Attachment | 218
 
        The issues raised in G.R. No. 136035 have been dispensed with, and the remaining issues in G.R. No.
135830 are relatively minor. There is no need to dwell at length on them.
 
        Carlos insists that respondents were liable to have paid docket fees upon filing of their Motion for
Judgment on Attachment Bond, on the theory that they claimed therein for the first time the alleged damages
resulting from the dissolved attachment. The said motion is characterized as an initiatory proceeding because
it is claimed therein for the first time, the damages arising from the attachment. In the same vein, Carlos
argues that the absence of a certification against forum-shopping attached to the motion renders the said
motion as fatal. Again, it is pointed out that initiatory pleadings must contain the said certification against
forum-shopping.
 
        Our ruling in Santo Tomas University Hospital v. Surla[73] is instructive. It was argued therein that the
requirement of the certification against forum-shopping, as contained in Administrative Circular No. 04-94, [74]
covered compulsory counterclaims. The Court ruled otherwise:
 
It bears stressing, once again, that the real office of Administrative Circular No. 04-94, made effective on 01
April 1994, is to curb the malpractice commonly referred to also as forum-shopping. . . . The language of the circular
distinctly suggests that it is primarily intended to cover an initiatory pleading or an incipient application of a party
asserting a claim for relief.
 
It should not be too difficult, the foregoing rationale of the circular aptly taken, to sustain the view that
the circular in question has not, in fact, been contemplated to include a kind of claim which, by its very
Rule 57: Preliminary Attachment | 219
 nature as being auxiliary to the proceeding in the suit and as deriving its substantive and jurisdictional
support therefrom, can only be appropriately pleaded in the answer and not remain outstanding for
independent resolution except by the court where the main case pends. Prescinding from the foregoing, the
proviso in the second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil Procedure, i.e., that the violation of
the anti-forum shopping rule "shall not be curable by mere amendment . . . but shall be cause for the dismissal of the
case without prejudice," being predicated on the applicability of the need for a certification against forum shopping,
obviously does not include a claim which cannot be independently set up. (Emphasis supplied.)
[75]

 
 
        It is clear that under Section 20, Rule 57, the application for damages on the attachment bond cannot be
independently set up, but must be filed in the main case, before the judgment therein becomes final and
executory. Santo Tomas squarely applies in determining that no certification against forum-shopping was
required in the Motion for Judgment on the Attachment Bond. The same reasoning also sustains a ruling that
neither legal fees were required for the filing of the said motion. Section 1, Rule 141 of the Rules of Court
provides that legal fees are prescribed upon the filing of the pleading or other application which initiates an
action or proceeding.[76] Since the said application for judgment on the attachment bond cannot be considered
as an initiatory pleading, as it cannot be independently set up from the main action, it is not likewise
chargeable with legal fees.
 
        As to the issue relating to the other Resolution dated 26 June 1998 denying the motion to dismiss appeal
on the ground of forum-shopping, we find Carlos’s arguments as unmeritorious. Forum-shopping allegedly
existed because petitioners had filed two cases before the Court of Appeals, CA-G.R. CV No. 53229, and the
Petition for Certiorari with Temporary Restraining Order dated 2 June 1996 attacking the allowance of
Rule 57: Preliminary Attachment | 220
execution pending appeal. Evidently, the two causes of action in these two petitions are different, CA-G.R. CV
No. 53229 being an appeal from the Summary Judgment rendered by the RTC, and the second petition
assailing the subsequent allowance by the RTC of execution pending appeal. There is no identity between
these two causes of action that would warrant a finding of forum-shopping.
 
Issues Raised in G.R. No. 137743
 
        To recount, respondents, having obtained a favorable decision on their Motion for Judgment on the
Attachment Bond, filed a Motion for Immediate Execution of the award of damages. This was granted by the
Court of Appeals in its Resolution dated 16 October 1998, said resolution now specifically assailed by
SIDDCOR in G.R. No. 137743.
 
        In their Motion for Immediate Execution, respondents’ theory in seeking the immediate execution of the
award of damages was that said award was not subject to appeal, the ruling thereupon being an interlocutory
order.[77] This position was not adopted by the Court of Appeals in its 16 October 1998 Resolution, which was
otherwise favorably disposed to respondents. Instead, the Court of Appeals predicated the immediate
execution on the following grounds: (1) that the judicial finding that the writ of preliminary attachment was
wrongful was already final and beyond review; (2) there were no material and substantial defenses against the
motion for the issuance of the judgment bond; (3) Sandoval was elderly and sickly, without means of livelihood
and may not be able to enjoy the fruits of the judgment on the attachment bond; (4) that immediate execution
would end her suffering caused by the arbitrary garnishment of her PNB account.
 
Rule 57: Preliminary Attachment | 221
        There is no doubt that a judgment on the attachment bond is a final and appealable order. As stated
earlier, it is, under normal course, included in the main judgment, which in turn is final and appealable.
Respondents admit that they had erred in earlier characterizing the said judgment as an interlocutory order.
Still, SIDDCOR argues that such earlier error is fatal, and that the Court of Appeals abused its discretion in
ruling on the motion on a theory different from that urged on by respondents.
 
        By no means could respondents be deemed as estopped from changing their legal theory, since the rule
on estoppel applies to questions of fact and not questions of law. [78] Moreover, courts are empowered to
decide cases even if the parties raise legal rationales other than that which would actually apply in the case.
The basis of whether respondents are entitled to immediate execution arises from law, particularly Section
2(a), Rule 39 of the Rules of Court, and not solely on whatever allegations may be raised by the movant.
 
        Thus, we find no grave abuse of discretion on the part of the Court of Appeals, even though it allowed
execution pending appeal on a legal basis different from that originally adduced by respondents. After all, the
reasoning ultimately employed by the appellate court is correct, and it hardly would be judicious to require the
lower court to adhere to the movant’s erroneous ratiocination and preclude the proper application of the law.
 
        We need not review in length the justification of the Court of Appeals in allowing execution pending
appeal. The standard set under Section 2(a), Rule 39 merely requires “good reasons,” a “special order,” and
“due hearing.” Due hearing would not require a hearing in open court, but simply the right to be heard, which
SIDDCOR availed of when it filed its opposition to the motion for immediate execution. The Resolution dated
16 October 1998 satisfies the “special order” requirement, and it does enumerate at length the “good reasons”
Rule 57: Preliminary Attachment | 222
for allowing execution pending appeal. As to the appreciation of “good reasons,” we simply note that the
advanced age alone of Sandoval would have sufficiently justified execution pending appeal, pursuant to the
well-settled jurisprudential rule.[79] The wrongfulness of the attachment, and the length of time respondents
have been deprived of their money by reason of the wrongful attachment further justifies execution pending
appeal under these circumstances.
 
        WHEREFORE, the petitions are DISMISSED. The Temporary Restraining Order issued in the Resolution
dated 9 June 1999 is hereby LIFTED. The assailed Resolution of the Court of Appeals Special Fourth Division
dated 26 June 1998 is AFFIRMED with the MODIFICATIONS that the legal interest on the award of actual
damages should commence from the date of the finality of the Decision of the Court of Appeals in CA G.R. SP
No. 39267 and that the award of attorney’s fees is in the amount of P500,000. Costs against petitioners.
 
        SO ORDERED.

Rule 57: Preliminary Attachment | 223

G.R. Nos. 73559-62 March 26, 1990
HEIRS OF THE LATE SANTIAGO MANINGO, ET AL. vs. INTERMEDIATE APPELLATE COURT, ET AL.

FIRST DIVISION
[G.R. Nos. 73559-62. March 26, 1990.]

THE HEIRS OF THE LATE SANTIAGO MANINGO NAMELY: PIOQUITA C. VDA. DE MANINGO, JANNILDA C. MANINGO,
MARY LOU C. MANINGO, and MINORS: SANTIAGO C. MANINGO JR., CORAZON C. MANINGO, CHRISTINE C. MANINGO,
ENGELBERT C. MANINGO (ALL REPRESENTED IN THIS PETITION BY THEIR MOTHER, PIOQUITA C. VDA. DE
MANINGO), petitioners, vs. INTERMEDIATE APPELLATE COURT, NEVILLE V. LAMIS ENTERPRISES and NEVILLE V.
LAMIS, respondents.

Nonito Q. Cordero for the Surety.

SYLLABUS
1. REMEDIAL LAW; RES JUDICATA; REQUISITES THEREOF, COMPLIED WITH IN CASE AT BAR. — The principle of
res judicata is applicable herein. Its requisites are present in the instant case, namely: 1) the presence of a final former judgment;
2) the former judgment was rendered by a court having jurisdiction over the subject matter and the parties; 3) the former
judgment is a judgment on the merits; and 4) there is between the first and second actions, identity of parties, of subject matter
and of cause of action (Pantranco North Express, Inc. v. NLRC, No. 64152, December 29, 1983, 126 SCRA 526). We find that
Our Resolution in G.R. No. 62733 on February 28, 1983 is a bar to SP No. 03725 subject of this petition for review. G.R. No.
62733 is a petition for certiorari filed by Maningo, who is now succeeded by petitioners herein, questioning the order of the lower
court granting the application for damages of Lamis in Civil Case No. 1395, and alleging: that Lamis failed to comply with Rule
57, Sec. 20 insofar as the application for damages must be made before entry of judgment in the subject case; and that Lamis
made such application only after final judgment. These are the very same issues and contentions raised by the heirs in the
present petition with respect to AC-G.R. SP No. 03725. It is worthy to note that G.R. No. 62733 was dismissed with finality by
Rule 57: Preliminary Attachment | 224
this Court on February 28, 1983 and entry of final judgment was made on May 4, 1983. While contained in a minute resolution,
the dismissal was an adjudication on the merits of the case and constituted a bar to a relitigation of the issues raised therein
under the rules of res judicata (Commercial Union Assurance Company Limited v. Lepanto Consolidated Mining Company, L-
43342, October 30, 1978, 86 SCRA 79; Sy v. Tuvera, No. 76639, July 16, 1987, 152 SCRA 103).
2. ID.; ID.; LEGAL CONSEQUENCE THEREOF. — A final judgment on the merits is conclusive as to matters put in issue
and actually determined by the court, when they are raised again in a subsequent litigation between the same parties, even
though it is irregular or erroneous. Hence, whether Our resolution in G.R. No. 62733 is right or wrong, is of no importance herein.
As long as the judgment in that case had become final, the issues that were litigated therein cannot be reopened by the parties
in this subsequent petition, whether erroneously decided or not.
3. ID.; PROVISIONAL REMEDIES; ATTACHMENT, CLAIM FOR DAMAGES ON ACCOUNT OF ILLEGALITY THEREOF;
PROCEDURE PROVIDED FOR UNDER SECTION 20, RULE 57 OF THE RULES OF COURT. — Under Section 20, Rule 57,
the claim for damages resulting from wrongful seizure of personal property must be filed in the same action in which the writ of
attachment or the writ of replevin was issued; otherwise, it is barred (Tan-Suyco v. Javier, 21 Phil. 82; Nueva-España v.
Montelibano, 58 Phil. 807). It may be presented, before trial in the answer by way of counterclaim (Medina v. Maderera del Norte
de Catanduanes, 51 Phil. 240). In the discretion of the court, it may also be made at any other time even after the rendition of
final judgment if the court has still jurisdiction over the case (Visayan Surety & Insurance Corp. v. Pascual, 85 Phil. 779). Hence,
if the application for damages is not made in compliance with the procedure laid down in the rules, even the surety on the bond
is relieved from liability therefor. The remedy provided by law is exclusive and by failing to file a motion for the determination of
the damages on time and while the judgment is still under the control of the court, the claimant loses his right to damages
(Santos v. Mair, 36 Phil. 350; Japco v. The City of Manila, 48 Phil. 851; Cruz v. Manila Surety & Fidelity Co., Inc., et al., 92 Phil.
699).
4. ID.; ID.; ID.; ID.; AWARD THEREOF NULL AND VOID WHERE CLAIM FILED OUT OF TIME. — In the case at bar, there
is no showing that respondent Lamis had timely filed his claim for damages arising from the wrongful issuance of the writ of
replevin in Civil Case No. 147, or prior to the dismissal on December 15, 1982, of the replevin case, upon Lamis' petition for
certiorari. It was only years later on June 11, 1984 that Lamis applied for damages on the replevin bond, after the case had long
been dismissed. The trial court no longer had jurisdiction and control over the case when it awarded damages after it was
Rule 57: Preliminary Attachment | 225
dismissed and thrown out of court in the certiorari case filed by Lamis himself. Thus, the judgment of the trial court awarding
damages against the estate of Maningo in the amount of P7,677,177.00 in the replevin case is null and void. Logically, the
petitioners' surety, Paramount Insurance Corporation, should be released from its liability under the bond.

DECISION

MEDIALDEA, J p:
This is a petition for review on certiorari seeking the reversal of the decision rendered by the Intermediate Appellate Court (now
Court of Appeals) on November 18, 1985, dismissing the following cases: 1) AC-G.R. SP No. 03725, entitled, "The Heirs of the
late Santiago Maningo, et al. vs. Hon. Adolfo Alba, as Presiding Judge of RTC Davao, et al., 2) AC-G.R. SP No. 04480 entitled,
"Pioquita Vda. de Maningo as Administratrix of the Estate of Santiago Maningo vs. Judge Jose R. Nolasco of the RTC, Tagum,
Davao, et al., 3) AC-G.R. SP No. 04517 entitled, "Paramount Insurance Corporation vs. Hon. Jose R. Nolasco, et al., and 4) AC-
G.R. SP No. 04377 entitled, "Pioquita Vda. de Maningo vs. Hon. Judge Adolfo Alba, et al." llcd
The antecedent facts in the aforestated cases as found by the respondent appellate court are as follows:
AC-G.R. SP No. 03725
On November 16, 1979, Neville Lamis Enterprises through its proprietor Neville Lamis, filed a complaint for specific performance
with damages against Santiago Maningo before the Court of First Instance (now Regional Trial Court) of Pasig, Rizal, docketed
as Civil Case No. 35199, to enforce a Memorandum Agreement entered into by them.
During the pendency of the case, on December 8, 1979, Maningo instituted a complaint against Lamis for collection of a sum of
money with preliminary attachment before the RTC-Tagum, Davao, docketed as Civil Case No. 1395. The following day, on
December 9, 1980, the court issued a writ of preliminary attachment upon a bond of P100,000.00 issued by Paramount
Insurance Corporation. As a consequence thereof, the Deputy Provincial Sheriff levied upon certain personal properties of
Lamis. The latter filed an ex-parte manifestation with the Provincial Sheriff for the suspension of the levy on the ground that Civil
Case No. 1395 was merely a duplicity of Civil Case No. 35199 which was pending in the CFI (now RTC) of Pasig. Lamis further
moved for the dismissal of Civil Case No. 1395 based on lis pendens and for improper venue. The court denied the motion in an
order dated April 2, 1981.
Rule 57: Preliminary Attachment | 226
Lamis went on certiorari to this Court in a petition filed on July 1, 1981 docketed as G.R. No. 57250. On October 30, 1981, We
rendered a decision granting the petition and ordering the dismissal of Civil Case No. 1395. Said decision became final on April
8, 1982. cdll
Four months later, on August 2, 1982, Lamis filed an urgent ex-parte motion in Civil Case No. 1395 for the confiscation of
Maningo's attachment bond. The lower court, on October 18, 1982, issued an order setting for hearing the issue of damages.
At the said hearing for the reception of evidence on damages suffered by Lamis, both the surety, Paramount Insurance Corp.
and Maningo objected to the hearing.
On December 22, 1982, Maningo filed a petition for certiorari and prohibition with this Court, docketed as G.R. No. 62733,
alleging the following: That Lamis failed to comply with Section 20, Rule 57, which provides that the application for damages
must be made before entry of judgment in the subject case; that Lamis filed his application for damages only after final judgment;
that Lamis' claim for damages could not by law, exceed the attachment bond; and that in G.R. No. 57250, Lamis is not entitled to
the possession of the tractor unit, which is one of properties attached. The petition was dismissed by this Court in a resolution
dated February 28, 1983, for lack of merit. This became final on May 4, 1983.
In view of the dismissal, Lamis filed a motion for the execution of this Court's resolution in G.R. No. 62733 and a motion in Civil
Case No. 1395 to be allowed to present evidence for the confiscation of Maningo's attachment bond and for damages.
However, on August 14, 1983, Santiago Maningo died intestate and his counsel moved for the dismissal of Case No. 1395 on
the ground that the heirs are no longer interested in the prosecution of the case. Cdpr
The lower court, on December 28, 1983, denied the above motion and set the case for hearing.
In the meantime, on March 6, 1984, the court issued an order requiring the sheriffs to take into custody in favor of Lamis all
attached properties still unreleased by Maningo.
On March 13, 1984, the intestate proceedings of the late Santiago Maningo began in the RTC of Davao, docketed as Sp. Proc.
248.
On May 24, 1984, the lower court issued two orders: 1) an order requiring the surety to pay Lamis the sum of P100,000.00 as
the total claim for damages by reason of the unlawful attachment; and 2) another order for the issuance of a writ of execution
against the surety. The hearing for the reception of evidence against the heirs was reset to another date.

Rule 57: Preliminary Attachment | 227

Hence, on July 10, 1984, the heirs of Maningo filed with the Intermediate Appellate Court, a petition for certiorari, mandamus,
with preliminary injunction docketed as AC-G.R. SP No. 03725, seeking to set aside all the orders of the lower court. Upon
dismissal thereof, the present petition was filed by the heirs of Santiago Maningo.
AC-G.R. No. 04480
On December 11, 1981, the late Santiago Maningo filed with the Regional Trial Court of Tagum, Branch I, Davao City, a
complaint for Foreclosure of Chattel Mortgage, interest, damages and attorney's fees with prayer for attachment against Neville
Lamis Enterprises, Neville Lamis and others, docketed as Civil Case No. 147 (Santiago Maningo (deceased), as substituted by
his heirs thru Special Administratrix, Mrs. Pioquita Vda. de Maningo v. Neville Y. Lamis Enterprises and Neville Lamis). The
complaint was later amended to Replevin, damages and attorney's fees. cdrep
On December 21, 1981, the court issued an order for the seizure of a bulldozer, upon a replevin bond of P340,000 by Paramount
Insurance Corporation.
On May 25, 1982, Lamis moved for the dismissal of the aforesaid Civil Case No. 147 and to cite Maningo for contempt on the
ground of litis pendencia or multiplicity of suits; that the said case is barred by the pendency of his Civil Case No. 35199 then
pending with Regional Trial Court of Pasig and also by the prior judgment of this Court in G.R. No. 57250 dismissing Civil Case
No. 1395 filed by Maningo.
On July 2, 1982, Lamis filed with this Court a petition for certiorari and prohibition, docketed as G.R. No. 61419, to dismiss Civil
Case No. 147 on the ground of litis pendencia. In a resolution dated December 15, 1982, We ordered the dismissal of Civil Case
No. 147.
One and a half years later, on June 11, 1984, Lamis filed a motion in Civil Case No. 147 for the reception of evidence on the
damages he sustained by reason of the issuance of the writ of replevin. Despite objections by the surety, Paramount Insurance
Corporation, the lower court granted the said motion, and in an order dated September 20, 1984, it required the Estate of
Maningo to pay to Lamis, compensatory damages by reason of the unlawful issuance of replevin.
The Administratrix of Maningo's estate filed a petition for certiorari with preliminary injunction with this Court seeking the
dismissal of Lamis' action for damages in the lower court. We, however, referred the case to the Intermediate Appellate Court for
proper determination docketed as AC-G.R. SP No. 04480.
SP-04377
Rule 57: Preliminary Attachment | 228
In the meantime, in an order dated September 20, 1984, the Regional Trial Court in Civil Case No. 147 awarded Lamis, et al. the
amount of P7,677,177.00 as compensatory damages by reason of the issuance of the writ of replevin. On September 21, 1984,
writs of execution were issued by the court and the cash deposits of Santiago Maningo, now deceased, with the Philippine
National Bank, Davao Branch and the Bank of the Philippine Islands, Davao Branch, were ordered garnished. prcd
On September 25, 1984, Lamis filed an ex-parte application in Special Proceedings No. 248, for the release of Maningo estate's
garnished deposits which was granted, and an order was issued directing the banks concerned to release to the sheriff the cash
deposits of Maningo.
Prior to the issuance of the above-stated order, however, the court had authorized the Special Administratrix of Maningo's estate
to withdraw in cash from the Philippine National Bank, Davao Branch, the amounts of P654,963.03 and P90,829.45. On a motion
for clarification, the court issued an order on September 26, 1984, setting aside its previous order allowing the special
administratrix to withdraw the amount from the bank, and declared the branch manager and branch attorney of PNB in contempt
of court. cdrep
Aggrieved, Pioquita Vda. de Maningo, special administratrix of the estate of Santiago Maningo, filed with the Intermediate
Appellate Court on October 2, 1985, a petition for certiorari, mandamus with preliminary mandatory injunction and damages
against the respondent judge of RTC, Tagum, Davao, (Special Proc. No. 248), Neville Lamis and the Provincial Deputy Sheriffs,
for unlawfully intervening in Civil Case No. 147 and praying that all orders of the respondent judge pertaining to the garnishment
of the money deposited by the decedent Maningo be nullified and set aside.
SP-04517
On the other hand, on September 21, 1984, the surety, Paramount Insurance Corporation, appealed to the respondent appellate
court from the order of the trial court making it liable for the sum of P340,000.00. On the same date, the trial court issued a writ of
execution of Civil Case No. 147.
The surety, Paramount Insurance Corporation, filed with this Court a petition for certiorari, prohibition with preliminary injunction
against Judge Jose R. Nolasco of the Regional Trial Court of Tagum, Davao and against Lamis. We referred the case to the
Intermediate Appellate Court (now Court of Appeals) on October 8, 1984.
On November 18, 1985, the Intermediate Appellate Court (now Court of Appeals) rendered judgment on the above four cases,
namely, SP-03725, SP-04480, SP-04517 and SP-04377, the dispositive portion of which states:
Rule 57: Preliminary Attachment | 229
"WHEREFORE, premises considered, the petitions in SP-03725, SP-04480 and SP-04517 are all dismissed with costs against
the petitioners, while in SP-04377 including the PNB's intervention thereon, the petition is also dismissed insofar as the orders of
Judge Adolfo Alba dated September 25 and 26, 1984 in SP Proc. No. 248 are concerned. However, his (Judge Alba) orders
dated September 29, 1984, October 1, 1984, October 2, 1984 and October 3, 1984 are hereby annulled and set aside. No costs.
LLjur
"SO ORDERED." (p. 88, Rollo)
Hence, the present petition, which was filed on February 19, 1986. We issued a temporary restraining order on February 20,
1986, against the implementation of the orders of the trial court on the award of damages, and the decision of the Intermediate
Appellate Court (now Court of Appeals).
For Us to consider is the following error assigned by petitioners:
"THE RESPONDENT HONORABLE INTERMEDIATE APPELLATE COURT, WITH ALL DUE RESPECT, HAS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AND/OR SANCTIONED SUCH DEPARTURE
OF THE LOWER COURT WHEN IT AFFIRMED THE PROCEEDINGS CONDUCTED BY THE LOWER COURTS (RTC-
TAGUM, DAVAO, BRANCH II IN CIVIL CASE NO. 1395 AND RTC-TAGUM, DAVAO BRANCH I IN SP. CIVIL CASE NO. 147),
IN ALLOWING RESPONDENT LAMIS TO PRESENT EVIDENCE ON ALLEGED DAMAGES SUSTAINED AND IN AWARDING
DAMAGES, EVEN LONG AFTER THE ABOVEMENTIONED CASES HAS BEEN ORDERED DISMISSED BY THIS
HONORABLE SUPREME COURT WITHOUT AWARD OF DAMAGES. (pp. 33-34, Rollo)
Petitioners contend that Civil Case No. 1395 was ordered dismissed by Us in G.R. No. 57250 upon petition of private respondent
Lamis; and that said decision became final on April 8, 1982 long before the latter applied for damages sustained by reason of the
unlawful attachment.
Anent Civil Case No. 1395, the respondent appellate court, in AC-G.R. SP No. 03725, made the following findings:
"Actually, this matter had already been threshed out by the deceased Santiago Maningo to the Supreme Court when (he) filed a
petition for certiorari and prohibition on December 22, 1982 which was docketed therein as G.R. L-62733. Unfortunately, the
Supreme Court, in a minute resolution dated February 28, 1983 dismissed the aforesaid petition, (see p. 103, Annex L 03725)
which resolution became final on May 4, 1983." (p. 77, Rollo)

Rule 57: Preliminary Attachment | 230

We agree with the aforequoted findings of the appellate court. The principle of res judicata is applicable herein. Its requisites are
present in the instant case, namely: 1) the presence of a final former judgment; 2) the former judgment was rendered by a court
having jurisdiction over the subject matter and the parties; 3) the former judgment is a judgment on the merits; and 4) there is
between the first and second actions, identity of parties, of subject matter and of cause of action (Pantranco North Express, Inc.
v. NLRC, No. 64152, December 29, 1983, 126 SCRA 526). LexLib
We find that Our Resolution in G.R. No. 62733 on February 28, 1983 is a bar to SP No. 03725 subject of this petition for review.
G.R. No. 62733 is a petition for certiorari filed by Maningo, who is now succeeded by petitioners herein, questioning the order of
the lower court granting the application for damages of Lamis in Civil Case No. 1395, and alleging: that Lamis failed to comply
with Rule 57, Sec. 20 insofar as the application for damages must be made before entry of judgment in the subject case; and
that Lamis made such application only after final judgment. These are the very same issues and contentions raised by the heirs
in the present petition with respect to AC-G.R. SP No. 03725.
It is worthy to note that G.R. No. 62733 was dismissed with finality by this Court on February 28, 1983 and entry of final
judgment was made on May 4, 1983. While contained in a minute resolution, the dismissal was an adjudication on the merits of
the case and constituted a bar to a relitigation of the issues raised therein under the rules of res judicata (Commercial Union
Assurance Company Limited v. Lepanto Consolidated Mining Company, L-43342, October 30, 1978, 86 SCRA 79; Sy v. Tuvera,
No. 76639, July 16, 1987, 152 SCRA 103). A final judgment on the merits is conclusive as to matters put in issue and actually
determined by the court, when they are raised again in a subsequent litigation between the same parties, even though it is
irregular or erroneous. Hence, whether Our resolution in G.R. No. 62733 is right or wrong, is of no importance herein. As long as
the judgment in that case had become final, the issues that were litigated therein cannot be reopened by the parties in this
subsequent petition, whether erroneously decided or not.
With respect to AC-G.R. SP No. 04480, petitioners allege that Civil Case No. 147 was also ordered dismissed on December 15,
1982 by this Court upon petition of private respondent Lamis in G.R. No. 61419; and that the said dismissal became final on
March 3, 1983 long before Lamis applied for damages sustained by reason of unlawful replevin. LexLib
The respondent appellate court, on this matter, ruled, interalia:
"Thus, after the Supreme Court in a decision rendered on December 15, 1982 in G.R. L-61419, has ordered for (sic) the
dismissal of Civil Case No. 147, the discharge of the writ of replevin issued in the aforesaid civil case is likewise necessarily
Rule 57: Preliminary Attachment | 231
included therein. Hence the respondent judge has all the reason to order the return of the property subject of the replevin order
and to proceed in hearing and adjudicating whatever damages the defendants (Lamises) may have suffered by reasons thereof."
(p. 79, Rollo)
We find the latter portion of the ruling of the appellate court as aforequoted, incorrect.
Section 10 of Rule 60 of the Rules of Court provides that in the recovery of damages against the bond posted by the applicant in
replevin cases, the procedure shall follow that what is laid down in Section 20 of Rule 57, which reads:
"Sec. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover upon the bond given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be
included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof. LibLex
"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 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."
As may be gathered from Section 20, Rule 57, the claim for damages resulting from wrongful seizure of personal property must
be filed in the same action in which the writ of attachment or the writ of replevin was issued; otherwise, it is barred (Tan-Suyco v.
Javier, 21 Phil. 82; Nueva-España v. Montelibano, 58 Phil. 807). It may be presented, before trial in the answer by way of
counterclaim (Medina v. Maderera del Norte de Catanduanes, 51 Phil. 240). In the discretion of the court, it may also be made at
any other time even after the rendition of final judgment if the court has still jurisdiction over the case (Visayan Surety &
Insurance Corp. v. Pascual, 85 Phil. 779). Hence, if the application for damages is not made in compliance with the procedure
laid down in the rules, even the surety on the bond is relieved from liability therefor. The remedy provided by law is exclusive and
by failing to file a motion for the determination of the damages on time and while the judgment is still under the control of the
court, the claimant loses his right to damages (Santos v. Mair, 36 Phil. 350; Japco v. The City of Manila, 48 Phil. 851; Cruz v.
Manila Surety & Fidelity Co., Inc., et al., 92 Phil. 699). cdrep
Rule 57: Preliminary Attachment | 232
In the case at bar, there is no showing that respondent Lamis had timely filed his claim for damages arising from the wrongful
issuance of the writ of replevin in Civil Case No. 147, or prior to the dismissal on December 15, 1982, of the replevin case, upon
Lamis' petition for certiorari. It was only years later on June 11, 1984 that Lamis applied for damages on the replevin bond, after
the case had long been dismissed. The trial court no longer had jurisdiction and control over the case when it awarded damages
after it was dismissed and thrown out of court in the certiorari case filed by Lamis himself. Thus, the judgment of the trial court
awarding damages against the estate of Maningo in the amount of P7,677,177.00 in the replevin case is null and void. Logically,
the petitioners' surety, Paramount Insurance Corporation, should be released from its liability under the bond. Notwithstanding,
Our dismissal of the latter's petition seeking review on certiorari of the same decision of the respondent appellate court on July 2,
1986, upholding the award of damages to Lamis, We release said surety from liability based on the same principles We have
pronounced in the foregoing discussion.
ACCORDINGLY, the petition is hereby GRANTED in part, and the judgment of the Intermediate Appellate Court (now Court of
Appeals) dated November 18, 1985 with respect to AC G.R. SP No. 04480, which upheld the award of damages by the trial court
in Civil Case No. 147, is REVERSED and SET ASIDE. In all other respects, the petition is DENIED and the judgment of the
respondent appellate court is AFFIRMED. The temporary restraining order issued on February 20, 1986, is lifted. cdphil
SO ORDERED.
Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.

Rule 57: Preliminary Attachment | 233

G.R. No. L-6436 June 30, 1954
OFRECINO T. SANTOS vs. COURT OF APPEALS, ET AL.
095 Phil 360

EN BANC
[G.R. No. L-6436. June 30, 1954.]

OFRECINO T. SANTOS, petitioner, vs. THE COURT OF APPEALS, ET AL., respondents.

Amado A. Mundo for petitioner.

Teodulo M. Cruz for respondent Philippine Reconstruction Corporation, Inc.

SYLLABUS
1. CERTIORARI; DOES NOT LIE WITHIN WHEN THERE IS REMEDY OF APPEAL. — Certiorari will not lie when the
remedy of appeal is available.
2. ATTACHMENT; DAMAGES; RECOVERY IN SEPARATE ACTION. — The rule that recovery of damages are sought not
because the writ of attachment was illegally or wrongful issued by the court, but because said writ was caused to be levied upon
the property of the plaintiff which was not a party in the case where the attachment was issued.

DECISION

PARAS, C.J p:
On May 20, 1950, Ofrecino T. Santos (hereinafter to be referred to as petitioner) filed in the Court of First Instance of Cotabato
an action for the recovery of the sum of P1,628 against Teodulo M. Cruz and Valentin C. Garcia (Civil Case No. 241). The
petitioner secured a writ of preliminary attachment which was levied upon a tractor which, though believed by the petitioner to
belong to the defendants in Civil Case No. 241, in fact was owned by the Philippine Reconstruction Corporation Inc. (hereinafter
Rule 57: Preliminary Attachment | 234
to be referred to as respondent), which in due time filed a third party claim. The petitioner filed an amended complaint including
the respondent as a defendant, but upon motion filed by Teodulo M. Cruz and Valentin C. Garcia, Civil Case No. 241 was
dismissed by the Court of First Instance of Cotabato for lack of jurisdiction, the amount involved being less than P2,000. The
petitioner filed a similar action in the Justice of the Peace Court of Buayan, Cotabato, against the respondent as sole defendant,
wherein the petitioner was awarded the sum of P1,638.10, with interest and costs, but this decision is still the subject matter of a
pending certiorari proceeding in the Court of First Instance of Cotabato instituted by the respondent.
On May 9, 1951, the respondent filed in the Court of First Instance of Manila Civil Case No. 13778 against the petitioner, for
damages resulting from the levy of its tractor under the writ of attachment issued in Civil Case No. 241. Paragraphs III and VII of
the respondent's complaint in Civil Case No. 13778 read as follows:
"III
"That on or about the month of September, 1950 and in connection with the execution of a preliminary writ of attachment
secured by the herein defendant Ofrecino T. Santos in Civil Case No. 241 of the Court of First Instance of Cotabato entitled
Ofrecino T. Santos, plaintiff vs. Teodulo M. Cruz and Valentin C. Garcia, defendants, the above- named defendants conspiring,
confabulating and conniving with one another procured and caused to be attached a certain Caterpillar D-8 tractor of herein
plaintiff who was not a party in said case and that defendants herein fully knowing that the said tractor does not belong to any of
the defendants Teodulo M. Cruz and Valentin C. Garcia in said Civil Case No. 241 of the Court of First Instance of Cotabato;
"VII
"That due to the said wrongful and malicious attachment levied by the herein defendants on plaintiffs' tractor and their
subsequent refusal to release the same from attachment as above stated plaintiff was consequently forced to violate its
contractual undertaking with a certain Mr. Tomas Gonzales as stated in the sworn third party claim so that it was compelled to
pay a liquidated damages in the sum of Three Thousand Pesos (P3,000) aside from having lost a sure income from rent on said
tractor in the sum of One Thousand Five Hundred Pesos (P1,500);"
The other necessary details are recited as follows in the decision of the Court of Appeals 1 promulgated on October 30, 1952 in
CA-G.R. No. 9925-R, Ofrecino T. Santos, petitioner, vs. Philippine Reconstruction Corporation, Inc., and the Honorable Demetrio
B. Encarnacion, Judge, Branch I, Court of First Instance of Manila, respondents:

Rule 57: Preliminary Attachment | 235

"On June 10, 1951, petitioner (defendant in Civil Case No. 13778 of Manila) was duly summoned to answer the complaint filed in
said Civil Case. A motion to dismiss, filed by defendant's counsel, was received on June 23, 1951, in the Court of First Instance
of Manila. On the other hand, counsel for plaintiff Philippine Reconstruction Corporation (now respondent) filed on July 12, 1951,
an ex-parte motion, praying that defendant Ofrecino T. Santos was declared in default on the ground that his motion to dismiss
does not contain a notice for hearing as provided in Rule 26 of the Rules of Court, and therefore not a valid one. Copy of said
order was received by defendant's counsel on August 2, 1951. On August 26th, plaintiffs counsel moved that the aforesaid Civil
Case No. 13778 be set for hearing. In his turn, counsel for defendant Ofrecino T. Santos filed on September 1st a petition
praying that the order of default dated July 23rd be set aside; that his motion to dismiss be given due course, either by sustaining
or denying the same; and that if denied, defendant be allowed to file his answer.
"By virtue of an order dated February 12, 1952, the case was set for hearing on February 28th, and on the following day decision
was rendered in favor of the plaintiff and against the defendants, ordering the later to pay the sum of P4,500 with legal rate of
interest from the date of the filing of the complaint and to further pay the sum of P1,000.00 as attorney's fees and costs of the
suit. A copy of this decision was on March 7, 1952, sent by registered mail to Ofrecino T. Santos' counsel who received the
same in March 17th. Consequently, on April 5, 1952, defendant Ofrecino T. Santos, thru his counsel, moved for the
reconsideration of the aforesaid decision, to which motion counsel for the plaintiff filed his opposition on April 20, 1952. On June
11, 1952, said motion for reconsideration was denied.
"Ofrecino T. Santos now comes before us as petitioner, alleging that the respondent court committed a grave abuse of discretion
when, as defendant in the aforesaid Civil Case No. 13778, he was arbitrarily declared in default; and when it declared his motion
to dismiss not a valid one. Petitioner further claims that the respondent court again committed a grave abuse of discretion when,
instead of acting upon his petition (Annex `A') for relief from the order of default, it set the case for hearing and proceeded to
hear plaintiff's evidence and rendered a decision. It is also alleged by petitioner that the Court of First Instance of Manila acted
without jurisdiction, the cause of action in Civil Case No. 13778 having arisen from a supposed wrongful attachment ordered by
the Court of First Instance of Cotabato in Civil Case No. 241, and for that reason, that the latter court has exclusive jurisdiction to
determine whether its legal processes are wrongful or not; and even granting that the Court of First Instance of Manila had
proper jurisdiction, the particular cause of action in said Civil Case No. 13778 is banned by the decision of the Justice of the
Peace Court of Buayan, Cotabato."
Rule 57: Preliminary Attachment | 236
From the decision of the Court of Appeals dismissing his petition for certiorari, the petitioner has interposed the present appeal
by way of certiorari, assigning the following alleged errors:
"1. The Court of Appeals erred in finding the motion to dismiss dated June 19, 1951 in Civil Case No. 13778 of Manila as no
motion at all.
"2. The Court of Appeals erred in sustaining the ruling of the Court of First Instance of Manila that Ofrecino T. Santos was in
default in Civil Case No. 13778.
"3. The Court of Appeals erred in finding that the petition for relief from order dated August 23, 1951 was `impliedly overruled
when the respondent court set Civil Case No. 13778 for hearing, received plaintiff's evidence and finally rendered decision
therein.'
"4. The Court of Appeals erred in holding Ofrecino T. Santos under estoppel to raise the `issue of jurisdiction.'
"5. The Court of Appeals erred in sustaining a decision that was null and void, emanating as it did from a court which had no
jurisdiction to try Civil Case No. 13778."
Without deciding whether the petitioner's motion to dismiss filed in Civil Case No. 13778 was a mere scrap of paper for lack of
notice of hearing, it is clear that he could and should have appealed from the decision on the merits rendered therein by the
Court of First Instance of Manila, of which he was duly notified, raising in said appeal the propriety of the ruling of default against
him, the failure of the trial court to expressly dispose of his petition for relief, and the principal question of jurisdiction. It is
elementary that certiorari will not lie where the remedy of appeal is available.
On the issue of jurisdiction, it is to be recalled that, when respondent's tractor was levied upon, it was not a party in Civil Case
No. 241, and although an amended complaint was filed, no new writ of attachment was issued so as to cover respondent's
properties. It is also significant that Civil Case No. 241 was dismissed by the Court of First Instance of Cotabato for lack of
jurisdiction. We have no hesitancy in declaring that the Court of First Instance of Manila correctly took cognizance of Civil Case
No. 13778, because the respondent sought damages, not on the allegation that the writ of attachment was illegally or wrongfully
issued by the Court of First Instance of Cotabato in Civil Case No. 241, but on theory that said writ was caused by the petitioner
to be levied upon the tractor of the respondent which was not a party defendant. The filing of the amended complaint did not cure
the defect, since the seizure continued to be in virtue of the original writ, none having been issued under the amended complaint.

Rule 57: Preliminary Attachment | 237

The petitioner is invoking the following pronouncement in our decision in Cruz vs. Manila Surety & Fidelity Co., Inc., et al., 49 Off.
Gaz. (3) 964; 92 Phil. 699:
"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."
The citation is not controlling, for the reason that, apart from the circumstance that, as already stated, the respondent 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 Court of
First Instance of Cotabato, thus lacking jurisdiction, was in fact prevented from rendering any final judgment therein which could
include such damages. Avoidance of multiplicity of suite presupposes the competence of the court in the first or earlier case.
Wherefore, the appealed decision is affirmed, and it is so ordered with costs against the petitioner.
Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador and Concepcion, JJ., concur.

Footnotes

1. After the Court of First Instance of Manila rendered a decision in Civil Case No. 13778, sentencing the petitioner to pay to
the defendant the sum of P4,500, with legal interest, attorney's fees in the sum of P1,000, and costs, the petitioner, instead of
appealing, instituted in the Court of Appeals a special civil action for certiorari.

Rule 57: Preliminary Attachment | 238

G.R. No. L-23868 October 22, 1970
ZACARIAS C. AQUINO vs. FRANCISCO SOCORRO

FIRST DIVISION
[G.R. No. L-23868. October 22, 1970.]

ZACARIAS C. AQUINO, petitioner, vs. FRANCISCO SOCORRO and COURT OF APPEALS, respondents.

Tranquilino O. Calo, Jr. for petitioner.

Alfaro & Associates for respondent Francisco Socorro.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DAMAGES CAUSED BY INJUNCTION,
RECOVERABLE. — This Court has ruled that damages sustained on account of the improvident issuance of a writ of injunction
may be recovered upon the bond filed with the Court.
2. ID.; ID.; ID.; RECOVERABLE DAMAGES, LIMITED TO AMOUNT OF BOND. — There is nothing in the Rules of Court
which allows recovery of damages other than upon the bond pledged by the party suing for an injunction. Section 9, Rule 58 of
the Rules of Court, limits the amount of recovery only upon the bond, the amount measuring the extent of the assumed liability.
3. ID.; ID.; ID.; MALICE OR LACK OF GOOD FAITH, NOT A DEFENSE FOR RECOVERY OF DAMAGES AGAINST THE
INJUNCTION BOND. — The statutory undertaking of the bond is that it shall answer for all damages which the party to be
restrained may sustain by reason of the injunction if the court should finally decide that the plaintiff was not entitled thereto.
Malice or lack of good faith is not an element of recovery on the bond; otherwise, the filing of the bond is a useless formality.
4. ID.; ACTION FOR DAMAGES CAUSED BY INJUNCTION; PRINCIPLE GOVERNING THE ACTION. — The same
principles govern an action for damages for the improper suing out of an injunction that govern an action brought to recover
damages for the wrongful filing of an action. The party claiming damages must prove that the party applicant obtained the writ of

Rule 57: Preliminary Attachment | 239

injunction maliciously and without probable cause. This rule, however, applies only where the party restrained pursues his claim
for damages not upon the injunction bond.
BARREDO, J., concurring:
1. REMEDIAL LAW; PLEADING AND PRACTICE; PRELIMINARY INJUNCTION BOND, NATURE AND SCOPE. — The
injunction bond is the security which the law requires the complainant in a bill of an injunction to execute, to indemnify the
defendant, in case the injunction shall be dissolved. The bond becomes, when forfeited, the cause of action, and is intended by
the law, to measure the damages of every kind which the party may sustain by wrongfully suing out the injunction in case it is
dissolved. It is not at all like the official bonds of sheriffs which are made payable to the People of the State. The injunction bond
is made payable to the defendant.
2. ID.; ID.; BOND DESIGNED TO COVER ALL DAMAGES. — There is no remedy other than upon the bond, whether the
injunction is maliciously or otherwise obtained. Good faith is never a defense in a claim for damages caused by the unwarranted
or unjustified issuance of the injunction. It is designed by the statute, to cover all damages the party enjoined can possibly
sustain, and it is in the power of the judge or officer granting the writ to require a bond in a penalty sufficient to cover all
conceivable damages.

DECISION

CASTRO, J p:
On February 14, 1964 the Court of Appeals, upon petition of Francisco Socorro in CA-G.R. 33560-R, 1 issued a writ of
preliminary injunction in his favor upon his posting a P1,000 bond. The writ of preliminary injunction, among others, restrained
Zacarias Aquino "from entering, cutting, hauling, selling and/or exporting logs or other forest products from the forest area"
subject of litigation. Aquino, however, filed a counterbond in the amount of P2,000, effecting the immediate dissolution of the writ.
The Court of Appeals, on June 29, 1964, dismissed Socorro's petition re the main action, for lack of jurisdiction to entertain the
same. Socorro subsequently appealed the decision of the appellate court to this Court. We affirmed the appellate court's
decision in a resolution dated December 24, 1964 in case G.R. L-23608.

Rule 57: Preliminary Attachment | 240

On July 15, 1964, before the appellate court's decision dismissing Socorro's petition became final, Aquino filed with the appellate
court his claim for damages in the amount of P199,000 on account of the wrongful issuance of the writ of preliminary injunction.
The appellate court denied Aquino's claim, for want of bad faith and malice on the part of Socorro in filing his petition and
securing the issuance of the writ of preliminary injunction. Aquino's subsequent motion for reconsideration was denied.
Hence, the present petition for certiorari to review the resolution of the Court of Appeals denying his claim for damages.
Aquino contends that the respondent appellate court erred in denying his claim for damages on the ground of want of bad faith
and malice on the part of the respondent Socorro in filing the petition for certiorari re the main case and securing the issuance of
the writ of preliminary injunction. He invokes the provisions of Section 9, Rule 58 in relation to Section 20, Rule 57, of the Rules
of Court. Section 9, Rule 58 recites:
"Judgment to include damages against party and sureties.—Upon the trial the amount of damages to be awarded to the plaintiff,
or to the defendant, as the case may be, upon the bond of the other party, shall be claimed, ascertained, and awarded under the
same procedure as prescribed in Section 20 of Rule 57."
Section 20, Rule 57 reads:
"Claim for damages on account of illegal attachment.—If the judgment on the action be in favor of the party against whom
attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting
from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in
the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to damages
and the amount thereof.
"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 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."
Aquino points out that the said provisions do not require a claimant who seeks to recover damages on account of the wrongful
issuance of a writ of preliminary injunction, to prove bad faith and malice on the part of the party who obtained the issuance of
the writ. To reinforce his contention, he invokes the provisions of Section 4(b) of Rule 58 of the Rules of Court. This rule, Aquino
Rule 57: Preliminary Attachment | 241
avers, makes the party applying for an injunction liable for all damages sustained by the other party if the court finally decides the
party applicant as not entitled thereto. He maintains that, in the case at bar, the dissolution of the writ of preliminary injunction by
the respondent appellate court clearly demonstrates that the respondent Socorro was not entitled thereto.
Socorro, on the other hand, prays for the dismissal of the present petition on the following grounds: (1) The petitioner "refused to
prosecute his claim for damages . . . in the main action then already on appeal to this Court;" (2) The petitioner "failed to state in
his motion claiming for damages the facts upon which his rights thereto are based;" (3) The petitioner, if "suing on the bond . . .
has no more cause of action as the said bond had already been dissolved 2 upon motion by the petitioner Aquino;" and (4) The
petitioner, if "suing beyond the bond . . . failed to show, or there is no showing that the respondent Socorro," in filing his petition
for certiorari and securing the issuance of the writ of preliminary injunction, "was motivated by malice or bad faith."
The present case raises the question of whether Aquino's claim for damages on account of the improvident issuance by the
respondent appellate court of the writ of preliminary injunction should be dismissed on the ground that he has failed to show or
prove bad faith and malice on the part of the respondent Socorro in obtaining the issuance of the writ of preliminary injunction.
In Pacis vs. The Commission on Elections, 3 this Court made an extensive discussion of the principles applicable to the
recovery of damages caused through the improvident issuance of a writ of preliminary injunction. This Court said that "damages
sustained as a result of a wrongfully obtained injunction may be recovered upon the injunction bond required to be filed with the
court." The same provisions permitting the issuance of the writ of preliminary injunction require the filing of a bond before the
grant of the writ. "The statutory undertaking of the bond is that it shall answer for all damages which the party to be restrained
may sustain by reason of the injunction if the court should finally decide that the plaintiff was not entitled thereto. Malice or lack of
good faith is not an element of recovery on the bond. This must be so, because to require malice as a prerequisite would make
the filing of the bond a useless formality."
Continuing, this Court said that "the dissolution of the injunction, even if the injunction was obtained in good faith, amounts to a
determination that the injunction was wrongfully obtained and a right of action on the injunction bond immediately accrues."
Thus, for the purpose of recovery upon the injunction bond, "the dissolution of the injunction because of the failure of petitioner's
main cause of action" provides the "actionable wrong" for the purpose of recovery upon the bond.
This Court also stressed, in the same case, that "there is nothing in the Rules of Court which allows recovery of damages other
than upon the bond pledged by the party suing for an injunction. Section 9, Rule 58, limits recovery only upon the bond, and it
Rule 57: Preliminary Attachment | 242
specifically states that xxx 'the amount of damages to be awarded to the plaintiff, or to the defendant, as the case may be, upon
the bond of the other party, shall be claimed, ascertained, and awarded under the same procedure as prescribed in Section 20 of
Rule 57.'" Under this provision, the party restrained, if he can recover anything, can recover only by reason of and upon the bond
— the only security and protection conceded to him by the rules. Consequently, the rule limits the amount of recovery in a suit on
an injunction bond to the sum thus fixed, the amount measuring the extent of the assumed liability.
This Court also finds it necessary to restate the rule in Molina vs. Somes 4 that "an action for damages for the improper suing
out of an injunction must be maintained upon the same principles which govern an action for the wrongful bringing of an action."
This rule, however, applies only when the party restrained pursues his claim for damages not upon the injunction bond. In such a
case where the party restrained sues not on the injunction bond, the rules accord him no relief by way of a claim for damages
unless he can establish that the party applicant secured the issuance of the writ maliciously and without probable cause. This
Court stated that ". . . when the process has been sued out maliciously there may be a right of action in favor of the defendant.
But this right depends upon the law governing malicious prosecutions, and has no relation to the claim for damages urged by the
defendant in this case. . . ." 5
Additionally, this Court, citing Palmer vs. Foley (71 N.Y. 106, 108), said:
"It seems that, without some security given before the granting of an injunction order, or without some order of the court or a
judge, requiring some act on the part of the plaintiff, which is equivalent to the giving of security — such as a deposit of money in
court — the defendant has no remedy for any damages which he may sustain from the issuing of the injunction, unless the
conduct of the plaintiff has been such as to give ground for an action for malicious prosecution.
In the case at bar, the record reveals that the petitioner Aquino, in the proceedings before the respondent appellate court, filed a
counterbond in the amount of P2,000 and opposed the injunction bond filed by the respondent Socorro on the ground of its
insufficiency. In effect, these brought about the immediate dissolution of the writ of preliminary injunction. Thus Aquino pursues
his claim for damages in the amount of P199,000 no longer upon the injunction bond in the amount of P1,000 filed by Socorro
with the respondent appellate court. This being the case, applicable here is the holding in Molina vs. Somes, supra, that an
application for damages on account of the improvident issuance of a preliminary injunction writ must be governed by the same
principles applicable to an action for the wrongful bringing of an action. Before the respondent's liability can attach, it must
appear that he filed his petition for certiorari re the main action and obtained the issuance of the writ of preliminary injunction
Rule 57: Preliminary Attachment | 243
maliciously and without probable cause. These two essential requisites, malicious prosecution and lack of probable cause, are
neither alleged nor proved in this case before us. Nothing in the record tends to establish the liability of the respondent Socorro.
ACCORDINGLY, the present petition for certiorari is hereby denied. No cost.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Villamor and Makasiar, JJ., concur.
Barredo, J., concurs in separate opinion.
Concepcion, C.J., is on official leave.

Separate Opinions
BARREDO, J., concurring:
I concur in the result.
The first thing I would like to clarify because it is not touched in the main opinion is that were it not for the fact that petitioner has
erroneously assumed that respondent's injunction bond had been validly cancelled, apparently without any objection or protest
on his part, and, on the basis of such erroneous assumption, he filed his application for damages without regard to said bond, I
would have voted to reverse the appealed resolution in order to allow petitioner to recover on the said injunction bond to the full
extent thereof, its cancellation, if true, having been improperly made.
Secondly, I consider it necessary to emphasize that the appealed main resolution of the Court of Appeals made reference to the
"want of bad faith and malice on the part of petitioner (herein respondent) in filing the instant (in that court) petition." In other
words, the want of bad faith or malice contemplated by the appellate court is not with reference to the seeking or securing of the
injunction itself. I stress this point because, indeed, the records fail to show any specific finding of the appellate court that the
injunction in question had been improvidently issued. I am not ready to hold that the mere dismissal of an action wherein a
preliminary injunction has been issued at the instance of plaintiff or the mere rendition of a judgment favorable to defendant in
such an action constitutes in itself an implied finding that the plaintiff was not entitled to the injunction. The provision in Section
20 of Rule 57 on Attachment to the effect that "if the judgment on the action be in favor of the party against whom attachment
was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting from the
attachment" may not necessarily apply to injunctions, since it is conceivable that the propriety or impropriety of an injunction may

Rule 57: Preliminary Attachment | 244

not depend on the tenability or lack of it of plaintiff's alleged cause of action as in the case of attachment. The terms of Section 3
of Rule 58, to wit:
"SEC. 3. Grounds for issuance of preliminary injunction.—A preliminary injunction may be granted at any time after the
commencement of the action and before judgment, when it is established:
"(a) That the plaintiff is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the acts complained of, or in the performance of an act or acts, either for a limited period or
perpetually;
"(b) That the commission or continuance of some act complained of during the litigation or the non-performance thereof would
probably work injustice to the plaintiff; or
"(c) That the defendant is doing, threatens, or is about to do, or is procuring or suffering to be done, some act probably in
violation of the plaintiff's rights respecting the subject of the action, and tending to render the judgment ineffectual."
do not necessarily exclude the possibility of an injunction being properly and justly issued, even if the plaintiff ultimately fails to
prove the cause of action alleged in his complaint.
Thirdly, an examination of Annex C of the petition reveals that all that petitioner alleged in his "Claim for Damages for Wrongful
Injunction" were these:
"COMES now respondent Zacarias C. Aquino through counsel and before this honorable Court respectfully states:
"1. That this Court issued a writ of preliminary injunction in the above-entitled case subject to the condition that petitioner
shall answer for whatever damages that may be suffered by respondents;
"2. That because of the issuance of the writ of preliminary injunction, respondent Aquino suffered damages amounting to
P199,000.00.
"WHEREFORE, it is respectfully prayed that after due trial, petitioner be ordered to pay damages to respondent Aquino in the
sum of P199,000.00."
In the face of the undenied statement of fact in respondent's brief to the effect that upon the dissolution of the injunction on
account of petitioner's having filed a counterbond of P2,000.00 "Socorro (respondent) did not press on the injunction and had not
taken possession and enjoyed the use of said forest area," I sustain respondent's contention that for such a huge claim of
practically one-fifth of a million pesos, petitioner's abovequoted application does not comply with the requirement of Section 20 of
Rule 57: Preliminary Attachment | 245
Rule 57 in relation to Section 9 of Rule 58 of "setting forth the facts showing his right to damages." In other words, petitioner has
not even alleged that after the writ of injunction was issued it was actually enforced or implemented. I cannot imagine how the
mere issuance of the writ, without more, could have occasioned the huge amount of damages claimed by petitioner.
Fourthly, the main opinion gives me the impression that the ruling in Pacis as follows:
"As stated, this present proceeding is upon a motion for assessment of damages on the bond. There is nothing in the Rules of
Court which allows recovery of damages other than upon the bond pledged by the party suing for an injunction. Section 9, Rule
58, limits recovery only upon the bond, thus:
'SEC. 9. Judgment to include damages against party and sureties. — Upon the trial the amount of damages to be awarded
to the plaintiff, or to the defendant, as the case may be, upon the bond of the other party, shall be claimed, ascertained, and
awarded under the same procedure as prescribed in Section 20 of Rule 57.' (Italics supplied. Section 20, Rule 57, has been here
quoted earlier.)
It would be misreading the rule to allow damages beyond the amount of the bond. The bond, under this rule, is the only
protection conceded to the party restrained. Recovery cannot be made beyond what the law permits.
"This principle is skillfully explained in Molina vs. Somes, supra, at pp. 64-65, thus:
'The assertion by some text writers and courts that the one who sues out an injunction without legal cause is liable on the theory
that he wrongfully induced or moved the court to take the action which it did, is, in our judgment, without stable foundation. He
who obtains a thing by permission of the law, and by strict compliance with the law, ought not to be held liable in any manner
except that specified in the law under which he operates. He ought not to be held for a trespass or other wrong, as they assert
he may be in replevin, etc. How can it be logically said that one who, acting in good faith, obtains an injunction or property under
a replevin in precisely the manner required by law has committed a legal wrong against the person as to whom the law
authorizes him to obtain the injunction? The law itself, by virtue of the conditions which it imposes, fully protects the defendant
against the evil effects of the injunction; and if the party securing the injunction has performed all that the law requires of him as
a condition precedent to obtaining it, what more can be asked? In return for the restrictions of the injunction, the defendant has
been given certain legal rights against the plaintiff by way of an undertaking which, by virtue of the law itself, fully compensates
him for the change of position. The bond is full compensation for the privileges which the plaintiff receives and for those which
the defendant loses. The law says so. The statute asserts that the doing of certain things by the plaintiff shall be a complete
Rule 57: Preliminary Attachment | 246
compensation to the defendant for that which the law requires him to give up. If it is not complete compensation, then the law is
unjust, in that it requires the defendant to give up something for which he receives no compensation. It is not to be presumed or
believed that the legislature intended to do such a thing, and it is not to be presumed or believed that it did do it. But even if the
law be unjust, an injustice of the law cannot be cured by an injustice to a party. The giving of the undertaking legally equalizes
the status of the two. To put upon the plaintiff the additional burden of a trespass or other wrong would destroy the legal
equilibrium and produce an injustice.'
"Recovery of private respondent must therefore be limited to the amount of the bond. Where the bond is insufficient in amount,
the law expressly gives the party affected the recourse of excepting thereto and provides for the dissolution of the injunction if 'a
bond sufficient in amount with sufficient sureties approved after justification is not filed forthwith. (Section 8, Rule 58, Rules of
Court." 1
which to me means that a defendant in injunction has no remedy for the recovery of damages arising from the unwarranted or
unjustified issuance of the injunction other than upon the bond, is qualified by Somes in that independently of the bond or when
the amount of damages claimed is in excess of the amount of the bond, the enjoined party may sue for damages upon a
showing of malicious prosecution. I am not sure that such is the true import of Somes. While I may admit that some of the
decisions cited or quoted in Somes do give hints of such a possibility, I do not see that the statutory background of the injunction
bonds in those cases is the same as ours in this jurisdiction.
Besides, the following passage in Somes, added to that quoted by Justice Sanchez in Pacis, is to me clear enough in indicating
that when a bond is required by law, it is the exclusive recourse to which an injunction defendant is entitled:
"The assertion of text writers that the party in cases of replevin or injunction, wrongfully put the court in operation, and that,
therefore, he is liable as in tort or otherwise apart from his bond to the defendant therefore, is, in our judgment, also unfounded.
Such a theory is bad not only for the reasons already given but also for the further reason that it makes the plaintiff an insurer of
the judgment of the court. In other words, upon that theory, the plaintiff, before he can safely obtain an injunction or a replevin,
must be certain that the court will decide in his favor; that is, the plaintiff must insure a judgment of the court in his favor, on the
pain of being sued in tort or other legal wrong, in addition to his liability resulting from the responsibility of his sureties on the
bond. Such a theory nullifies the symmetry of the law and destroys the equality between the parties which the law establishes.
As we have said, the statute asserts conclusively that the giving of a bond to the defendant is an exact equivalent for the loss
Rule 57: Preliminary Attachment | 247
which he sustains by reason of his change of position. In other words, the plaintiff has paid the defendant in full for whatever
benefits he has obtained from him. If, now, we add to that payment the obligation to respond to a defense in damage for the
commission of a tort or the wrong, we at once destroy that equality which the law has established, and lay a burden upon the
plaintiff which, in equity, he ought not to bear and which, under the law, he is not required to bear. The law expressly states what
shall be his punishment if he is wrong. Courts cannot be their own fiat add anything more. The injury is caused by operation of
the law, not by the act of plaintiff." (Molina vs. Somes, 24 Phil. 49, 65-66.)
I am more inclined, therefore, to hold that Pacis has restricted whatever broad implications Somes may have. In other words, my
view is that under Pacis there is no remedy other than upon the bond, whether the injunction is maliciously or otherwise
obtained, and that good faith of the enjoiner is never a defense in a claim for damages caused by the unwarranted or unjustified
issuance of the injunction. If additional authority of similar weight to those relied upon in Somes is needed to support this view, I
find that in Gorton v. Brown, 27 Ill. 489, 81 Am. Dec. 245, wherein it appeared that a bond had been given upon obtaining an
injunction, the bond being required by statute, it was held that the remedy of the defendant in injunction proceedings was
exclusively upon the bond. The Court said: "We hold the remedy on the bond given on obtaining the injunction is all the remedy
to which the injured party can resort. It is designed by the statute, to cover all damages the party enjoined can possibly sustain,
and it is in the power of the judge or officer granting the writ to require a bond in a penalty sufficient to cover all conceivable
damages. This bond is a high security which the law requires the complainant in a bill for an injunction to execute, to indemnify
the defendant, in case the injunction shall be dissolved. It is a familiar principle, when a party has taken a higher security, his suit
must be brought on that security. . . . The bond becomes, when forfeited, the cause of action, and is intended by the law, to
measure the damages of every kind which the party may sustain by wrongfully suing out the injunction in case it is dissolved. It is
not at all like the official bonds of sheriffs. They are made payable to the People of the State, not to any particular person, and
consequently do not merge a remedy one may have outside of the bond, and besides, it is the policy of the law to multiply the
remedies against public officers. Not so with the injunction bond; that is made payable to the defendant. He is the only person
interested in it. It is his security. It is all the law gives him as his security, and he is bound to sue on the bond. Were no bond
given or required, then the action might lie. This action on the case, under the circumstances shown, cannot and ought not to be
maintained. It is against public policy." (150 ALR 907-908.)
This case looks to me nearer to our statutory background than any of those cited in Somes.
Rule 57: Preliminary Attachment | 248
In any event, I do not feel it is necessary for me to make a definite commitment on this point in this case. The first three reasons I
have given above, are more than enough to justify the denial of the present petition. Withal, although it appears that its original
appealed resolution of denial the Court of Appeals did mention "want of bad faith or malice", it is not clear to me that after the
petitioner filed his motion for reconsideration, the appellate court was still of the same view. The record shows that respondent
filed with the said appellate court the following opposition or answer to petitioner's motion for reconsideration, which motion
pointed out that the rules do not require any showing of the malice or bad faith referred to by the Court of Appeals:
"Comes now petitioner above, and per order of this Court, dated October 2, 1964, in answer to the motion for reconsideration to
the denial of the original motion of respondents demanding damages for wrongful injunction, respectfully submit:
"1. That the decision of this Honorable Court under date of June 29, 1964, having been appealed for review with the
Supreme Court under case No. L-23605, and the petition for the issuance of a writ of Certiorari, still pending with said Superior
Court, it is deemed that said motion on the part of respondents is still premature and should be addressed to the latter as it was
held in said decision that this Court lacked jurisdiction over the petition as above-entitled; and
"2. That the matter of the determination whether there was any wrongful attachment or not is still to be resolved in what final
decision may be made on the case of Certiorari and Mandamus, and therefore, any issues incidental to the question of the
issuance of a preliminary injunction, should be resolved in a court with proper jurisdiction and not with this Court, as it was held
that it had no jurisdiction over the main action.
"WHEREFORE, premises considered, it is prayed that the motion for reconsideration be denied."
and the appellate court simply resolved as follows:
"Upon consideration of the motion filed by counsel for the respondents in case CA-G. R. No. 33060-R, Francisco Socorro vs.
Hon. Montano A. Ortiz, etc., et al., praying that the resolution of August 17, 1964, be reconsidered on the ground that malice and
bad faith or motive are not factors in the determination of whether or not a party litigant is liable for damages for the wrongful
issuance of a writ of preliminary injunction, and that as long as the issuance of the writ caused damages to the adverse party he
is entitled to a judgment for damages; and of the answer thereto of counsel for petitioner; the Court RESOLVED to DENY the
motion. Let the resolution of August 17, 1964, denying respondent Zacarias C. Aquino's claim for damages, STAND."

Rule 57: Preliminary Attachment | 249

Under these circumstances, I am not convinced that the grounds of the action taken by the Court of Appeals being assailed in
the present case before Us is clear enough for Us to make a categorical ruling on the point under discussion. I prefer to reserve
my final opinion on it until a more appropriate case comes to this Court.
Lastly, if the ruling in the main opinion that an action for malicious prosecution lies independently of the claim on the injunction
bond is meant to prevail, I believe it is but fair to petitioner to hold also as a corollary to said ruling that the procedural
requirements and limitations of Section 9 of Rule 58, which contemplates exclusively claims upon the injunction bond, do not
apply to such action for malicious prosecution. In consequence, the Court of Appeals is not the proper court where petitioner's
claim should have been filed and, therefore, petitioner is still free to pursue such claim elsewhere.
Before closing, I notice that the main opinion holds towards the end thus:
". . . This being the case, applicable here is the holding in Molina vs. Somes, supra, that an application for damages on account
of the improvident issuance of a preliminary injunction writ must be governed by the same principles applicable to an action for
the wrongful bringing of an action. Before the respondent's liability can attach, it must appear that he filed his petition for
certiorari to the main action and obtained the issuance of the writ of preliminary injunction maliciously and without probable
cause. These two essential requisites, malicious prosecution and lack of probable cause, are neither alleged nor proved in this
case before us. Nothing in the record tends to establish the liability of the respondent Socorro."
Does this mean that in the action for malicious prosecution to recover damages arising from an unwarranted injunction, the
damaged party has to show malice or bad faith in both the filing of the action and the securing of the injunction, otherwise, he
cannot recover? In the affirmative, is the resolution of the Court of Appeals which We are refusing to review, correct in requiring
the showing of malice or bad faith in the main claim, without also referring to the malice or bad faith in the securing of the
injunction? Does Somes require malice or bad faith in filing the main action in order that there may be a recovery for malicious
obtaining of an injunction in connection with such main action? What, indeed, is the basis of the possible award of damages, the
malicious prosecution of the suit, the malicious securing of the injunction, or both? In Somes, Justice Moreland quotes from
Russel vs. Farley, 105 U.S. 433, 438, thus:
"And if the legal right is doubtful, either in point of law or of fact, the court is always reluctant to take a course which may result in
material injury to either party, for the damage arising from the act of the court itself is a damnum absque injuria, for which there is
no redress except a decree for the costs of the suit, or in a particular (proper) case, an action for malicious prosecution. To
Rule 57: Preliminary Attachment | 250
remedy this defect (difficulty), the court, in the exercise of its discretion, frequently resorts to the expedient of imposing terms and
conditions upon the party at whose instance it proposes to act."
Is it clear from this that the action that can be filed independently of the bond is one for malicious prosecution of the main action
or merely for malicious suing out of the injunction? Frankly, I cannot answer these questions in the light of the main opinion.
These considerations have compelled me to write this separate concurring opinion.

Footnotes

1. "Francisco Socorro, petitioner, vs. Hon. Montano A. Ortiz, as Presiding Judge of the Court of First Instance of Agusan,
Director of Forestry, Zacarias C. Aquino, and the Commissioner of Customs, respondents."
2. Respondent Socorro alleges on page five of his brief that the filing by the petitioner of a counterbond brought about the
dissolution of the injunction bond he filed with the respondent appellate court. Aquino offered no statement to rebut this
allegation of Socorro. Assuming, however, this allegation of Socorro to be true, the dissolution or cancellation of Socorro's bond
contravenes the accepted rule that the filing of a counter bond by a party opposing the injunction bond on the ground of its
insufficiency does not automatically cancel or effect the dissolution of the injunction bond.
3. L-29026, August 29, 1969, 29 SCRA 25.
4. 24 Phil. 66 (1913).
5. Note 4, at p. 67, citing the case of the City of St. Louis vs. St. Louis Gaslight Company, 82 Mo. 349-357.
1. L-29026, August 22, 1969, 29 SCRA 25, pp. 29-30.

Rule 57: Preliminary Attachment | 251

G.R. No. 71229 September 30, 1986
HANIL DEVELOPMENT CO., LTD. vs. INTERMEDIATE APPELLATE COURT

SECOND DIVISION
[G.R. No. 71229. September 30, 1986.]

HANIL DEVELOPMENT CO., LTD., petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and M. R. ESCOBAR
EXPLOSIVES ENGINEERS, INC., represented by its General Manager, MANUEL R. ESCOBAR, respondents.

M.A. Aguinaldo & Associates for petitioner.

Ponciano H. Gupit for private respondent.

SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURES; ATTACHMENT; CLAIMS FOR DAMAGES AGAINST AN ILLEGAL
ATTACHMENT; REQUISITES. — In Malayan Insurance Co., Inc., vs. Sales (90 SCRA 252), lays down the procedures regarding
claims for damages against an illegal attachment. It states: "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 (Luneta Motor Co. vs. Menendez, 117 Phil,
970, 974;.3 Moran's Comments on the Rules of Court, 1970 Ed., pp. 54-56. See Cruz vs. Manila Surely & Fidelity Co., zinc., 92
Phil. 699)."
2. ID.; ID.; ID.; ID.; RULE TO FILE THEREOF. — "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
Rule 57: Preliminary Attachment | 252
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" (Luneta Motor Co. vs. Menendez, 117 Phil. 970). "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 of refer 'it' to the
trial court and allow it to hear and decide the same" (Rivera vs. Talavera, 112 Phil. 209, 219). "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." [Malayan Insurance Co., Inc. vs. Salas (90 SCRA 252)].
3. ID.; ID.; ID.; ID.; ID.; SEASONABLY FILED IN CASE AT BAR. — The notice of "file appellant's brief within 45 days from
receipt" was received by the petitioners on February 25, 1985. The petitioner filed the application for judgment against the
attachment bond and motion to defer filing of appellant's brief on March 13, 1985. Thus, the petitioner filed its motions on the
16th day after receipt of the notice to file appellant's brief and within the 45-day reglementary period. On March 26, 1985, the
appellate court issued its resolution directing the private respond to file its comment on the motions of the petitioner. At this point,
counting from February 25, 1985 to March 26, 1985, a total number of 29 days had lapsed. Hence, the petitioners still had 16
days within the 45-day reglementary period to file its appellants brief in the event that its motions were denied. It is likewise the
practice in the Court of Appeals, after granting an initial period of 45 days, to routinely grant a motion for extension of another 45
days for the filing of an appellant's brief. Considering the amount involved in this litigation and the nature of the defenses raised
by the petitioner, the appellate court was unduly severe when it peremptorily dismissed the appeal.
4. ID.; ID.; ID.; ID.; SURELY MUST BE FILED IN THE FINAL JUDGMENT; PURPOSE. — We have earlier rule that "the
explicit provision of Section 20 of Rule 57, Revised Rules of the Court that the judgment against the surety should be included in
the final judgment is to avoid additional proceeding (Cruz vs. Manila Surety Fidelity Co., et al., 92 Phil. 699).
5. ID.; ID.; INTERMEDIATE APPELLATE COURT ; SCOPE OF POWER TO RESOLVE FACTUAL ISSUES IN CASES
FALLING WITHIN ITS ORIGINAL AND APPELLATE JURISDICTION. — Applying the principle laid down in Malayan Insurance
Co., Inc. vs. Sales (90 SCRA 252) to the circumstances surrounding the application for judgment against attachment bond in this
case, the appellate court committed grave abuse of discretion in denying the application for judgment against attachment bond.
The appellate court's error in this case is more pronounced considering that under Section 9 of the Judiciary Reorganization Act
Rule 57: Preliminary Attachment | 253
of 1980 (Batas Pambansa Blg. 129) the Intermediate Appellate Court is now empowered to try cases and conduct hearings,
receive evidence and perform acts necessary to resolve factual issues in cases falling within its original and appellate
jurisdiction. Certainty, the amount, of damages, if any, suffered by the petitioner as a result of the issuance of the illegal
attachment during the pendently of the appeal in a factual issue.

DECISION

GUTIERREZ, JR., J p:
This is a petition for certiorari, mandamus, and prohibition, with prayer for mandatory injunction and restraining order from the
resolutions of the then Intermediate Appellate Court dated April 30, 1985 and June 20, 1985 in AC-G.R. No. 05055 entitled
"Hanil Development Co., Ltd. v. M.R. Escobar Explosives Engineers, Inc., represented by its General Manager, Manuel R.
Escobar."
The present controversy has its origins in a complaint for recovery of a sum of money with damages filed by private respondent
Escobar Explosives Engineers, Inc., against petitioner Hanil Development Co., Ltd., before the then Court of First Instance of
Rizal, Branch XXXI, Pasig, Metro Manila. The petitioner is a foreign corporation organized under the laws of the Republic of
Korea and doing business in the Philippines pursuant to the Corporation Code and the Foreign Investment Act. The complaint
docketed as Civil Case No. 35966 sought to compel the petitioner to pay for the blasting services rendered by the private
respondent in connection with the former's contract with the Ministry of Public Highways to construct the 200 Km. Oro - Butuan
Road Project in Mindanao.
The trial court, on April 16, 1983, rendered a decision in favor of the private respondent. The petitioner was ordered to pay the
private respondent the sum of P1,341,727.40 corresponding to the value of the rocks blasted by the private respondent; ten
percent (10%) of said amount as attorney's fees and costs. llcd
On May 6, 1982, the private respondent filed a petition for the issuance of a preliminary attachment. The motion was set for
hearing.
On May 13, 1982, the petitioner filed its notice of appeal and cash appeal bond with the trial court.
Rule 57: Preliminary Attachment | 254
On May 24, 1982, the trial court issued an order granting the petition for the issuance of preliminary attachment.
On May 26, 1982, the private respondent moved for the appointment of Deputy Sheriff Felix Honoracion as special sheriff to
serve the writ of attachment/garnishment.
Consequently, the order dated May 24, 1982 and the writ of attachment dated May 27, 1982 were enforced by the respondents
and the bank accounts of the petitioner were garnished and its equipment attached.
The petitioner then filed a motion for reconsideration of the May 24, 1982 order. While this motion was pending, the private
respondent filed another motion, this time an 'Ex-Parte Motion to Deposit Cash" praying that an order be issued directing the
Finance Manager of the National Power Corporation (NAPOCOR) to withdraw available funds of the petitioner from the
NAPOCOR and deposit them with the clerk of court of the Court of First Instance of Rizal. This motion was granted in an order
dated June 29, 1982.
In view of this development, the petitioner filed with the then Intermediate Appellate Court a petition for certiorari with prayer for
prohibition, injunction and preliminary restraining order challenging the orders dated May 24, 1982 and June 29, 1982 of the trial
court. The case was docketed as CA-G.R. No. 14512.
The appellate court temporarily restrained the enforcement of the challenged orders and after a hearing issued a preliminary
injunction enjoining the implementation of said orders upon the filing of a P50,000.00 cash bond by the petitioner.
In a decision dated February 3, 1983, the appellate court granted the petition and declared the challenged orders null and void,
having been issued with grave abuse of discretion.
While the above-mentioned petition was pending before the appellate court and despite the writ of injunction issued by it, other
developments continued to unfold in the trial court.
In an order dated August 23, 1982, the trial court disapproved the petitioner's amended record on appeal on the ground that it
was "filed beyond the reglementary period and the extension granted." The appeal was dismissed. The petitioner filed a motion
for reconsideration of the dismissal while the private respondent filed a motion for execution of judgment.
On October 19, 1982, the trial court issued an order denying the petitioner's motion for reconsideration and at the same time
granting the private respondent's motion for execution of judgment. LLjur
The petitioner filed a petition for certiorari and mandamus with prayer for prohibition with the Intermediate Appellate Court
assailing the trial court's orders dated August 23, 1982 and October 19, 1982. The case was docketed as AC-G.R. No. 15050.
Rule 57: Preliminary Attachment | 255
The appellate court granted the petition. The challenged orders were set aside and declared null and void. Hence, the
petitioner's appeal in Civil Case No. 35966 was reinstated and the trial court was ordered to elevate the entire records of the
case to the appellate court.
A petition for review of the decision in AC-G.R. No. 15050 was filed by the private respondent before this Court, but was denied
for lack of merit.
After transmittal of the records, the appellate court on February 11, 1985, sent a notice to the petitioner to file appellant's brief
within forty-five (45) days from receipt. The petitioner received the notice on February 25, 1985.
On March 13, 1985, and within the reglementary period to file appellant's brief, the petitioner filed an "Application for Judgment
against Attachment Bond" and "Motion to Defer Filing of Appellant's Brief" praying for a hearing before the appellate court so it
could prove the damages it sustained as a result of the illegal writ of attachment issued by the trial court. It wanted a judgment
against the attachment bond posted by the private respondent and its insurer Sanpiro Insurance Corporation to be included in
the final decision in the main case, Civil Case No. 35966, now pending before the appellate court.
Acting on the petitioner's motions, the appellate court issued a resolution directing the private respondent to comment on these
motions.
The private respondent filed its "Comment" with a "Motion to Dismiss Appeal" for the petitioner's alleged failure to file its
appellant's brief.
In a resolution dated April 30, 1985, the appellate court denied the petitioner's application for judgment against the attachment
bond and the motion to defer filing of appellant's brief, granted the private respondent's motion to dismiss the appeal, and
dismissed the appeal. The petitioner filed a motion for reconsideration but this was denied in a resolution dated June 20, 1985.
Hence, this petition.
In a resolution dated July 17, 1985, we issued a temporary restraining order to enjoin the respondents from proceeding with the
execution of the decision in Civil Case No. 35966.
The petitioner now asserts that the April 30, 1985 and June 20, 1985 resolutions were issued by the appellate court with grave
abuse of discretion.
The questioned April 30, 1985 minute resolution of the appellate court states:

Rule 57: Preliminary Attachment | 256

"Acting upon (1) the application for judgment against attachment bond, etc. filed by counsel for defendant-appellant on March 13,
1985; (2) the comment thereto; (3) the motion to dismiss appeal filed by counsel for plaintiff-appellee on April 24, 1985; and the
docket report dated April 25, 1985, the COURT RESOLVED: (a) to DENY the application for judgment against attachment bond
and the motion to defer filing of appellant's brief; and (b) to GRANT the motion to dismiss appeal and to dismiss the instant
appeal."
The issues to be resolved in the instant petition are: (1) whether or not the petitioner's application for judgment against the
attachment bond and its motion to defer filing of appellant's brief were correctly denied by the appellate court and (2) whether or
not the same court rightly dismissed the petitioner's appeal. LLjur
Anent the first issue, the petitioner contends that its application for judgment against the attachment bond was pursuant to
Section 20, Rule 57 of the Revised Rules of Court.
Section 20, Rule 57 of the Revised Rules of Court provides for the claim of damages on account of illegal attachment, to wit:
"Claim for damages on account of illegal attachment. — If the judgment on the motion be in favor of the party against whom
attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting
from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in
the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes
executory, with notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to damages and
the amount thereof.
"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 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."
In the instant case, the initial writ of attachment issued by the trial court in the main case — Civil Case No. 35966 which is the
subject of appeal — was declared null and void by the appellate court in CA-G.R. No. 14512. This present writ of attachment
was issued and subsequently enforced after the trial court's decision in Civil Case No. 35966 had been rendered and after the
petitioner had already perfected its appeal. The petitioner, therefore, argues that the application for judgment against the
attachment bond was properly lodged with the appellate court pursuant to Section 9, of the Judiciary Reorganization Act of 1980
Rule 57: Preliminary Attachment | 257
(Batas Pambansa Blg. 129) which grants the Intermediate Appellate Court "power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues . . ." It contends that it is only in the appellate court
that these damages could well be ventilated because they occurred during the pendency of the appeal in AC-G.R. No. 15050.
The petitioner's arguments are well-taken.
The application for judgment against attachment bond was filed to prove the damages sustained by the petitioner as a result of
the illegal writ of attachment issued by the trial court so that the judgment against the attachment bond posted by the private
respondent and its insurer could be included in the final judgment of the main case. The assessment and award of such
damages could not have been made in CA-G.R. No. 14512 as alleged by the private respondent because the question therein
was whether or not the writ of attachment in Civil Case No. 35966 should have been issued. prcd
The object was to set aside the preliminary attachment immediately. It was a preventive measure.
The private respondent, in its petition for writ of attachment filed with the trial court, posted an attachment bond issued by the
Sanpiro Insurance Corporation in the amount of P1,341,727.40, the relevant portion of which reads:
"WHEREFORE, WE, M.R. ESCOBAR EXPLOSIVE ENGINEERS as PRINCIPAL, and the SANPIRO INSURANCE
CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the Philippines, as SURETY in
consideration of the above and of the levying of said attachment, hereby jointly and severally bind ourselves in the sum of
PESOS: ONE MILLION THREE HUNDRED FORTY ONE THOUSAND SEVEN HUNDRED TWENTY SEVEN & 40/100
(P1,341,727.40), Philippine Currency, under the condition that we will pay all the costs which may be adjudged to said
defendant/s and all damages which said defendant/s may sustain by reason of the attachment, if the Court shall finally adjudge
that plaintiff/s was/were not entitled thereto."
Contrary to the claim of the private respondent, this writ of attachment issued by the trial court was executed. The petitioner's
equipment and bank accounts were garnished pursuant to the writ. In fact, the private respondent's opposition to the petitioner's
motion for reconsideration of the trial court's order which issued the writ of attachment stated that the same should be denied for
being moot and academic "because the writ of attachment and/or garnishment have already been executed."
Considering that the writ of attachment was declared null and void, the petitioner had the right to ask for whatever damages it
may have incurred as a result of its issuance pursuant to Section 20, Rule 57 of the Revised Rules of Court.

Rule 57: Preliminary Attachment | 258

Malayan Insurance Co., Inc. v. Salas (90 SCRA 252), lays down the procedure regarding claims for damages against an illegal
attachment. It states:
"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 replevin; (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 there should be a proper hearing and the award for damages should be
included in the final judgment (Luneta Motor Co. v. Menendez, 117 Phil. 970, 974; 3 Moran's Comments on the Rules of Court,
1970 Ed., pp. 54-56. See Cruz v. Manila Surety & Fidelity Co., Inc., 92 Phil. 699).
xxx xxx xxx
"As may be gathered from section 20 of Rule 57, 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 (Luneta Motor Co. v. Menendez, supra).
"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'
(Rivera v. Talavera, 112 Phil. 209, 219).
xxx xxx xxx
"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 of receivership were issued
should be claimed in the appellate court."
xxx xxx xxx
In the instant case, the application for judgment against the attachment bond was filed under the following circumstances: (1) the
writ of attachment was issued by the trial court after it had rendered its decision and after the petitioner had already perfected its
Rule 57: Preliminary Attachment | 259
appeal; (2) the private respondent posted a surety bond to answer for any damages that may be adjudged to the petitioner if the
writ is later found to be illegal; (3) the writ of attachment was declared illegal; and (4) the application for Judgment against the
attachment bond was made with notice to the insurer, Sanpiro Insurance Corporation. cdll
Applying the principles laid down in the Malayan case to the circumstances surrounding the application for judgment against
attachment bond in this case, the appellate court committed grave abuse of discretion in denying the application for judgment
against attachment bond. The appellate court's error in this case is more pronounced considering that under Section 9 of the
Judiciary Reorganization Act of 1980 (Batas Pambansa Blg. 129) the Intermediate Appellate Court is now empowered to try
cases and conduct hearings, receive evidence and perform acts necessary to resolve factual issues in cases falling within its
original and appellate jurisdiction. Certainly, the amount of damages, if any, suffered by the petitioner as a result of the issuance
of the illegal attachment during the pendency of the appeal is a factual issue.
Moreover, the application for judgment against the bond seasonably filed by the petitioner in the appellate court would avoid
multiplicity 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. (Cruz v. Manila Surety &
Fidelity Co., Inc., et al., 92 Phil. 699; Japco v. City of Manila, 48 Phil. 851, 855 cited in Malayan Insurance Corporation v. Salas,
supra).
Consequently, the appellate court also committed a grave abuse of discretion in denying the motion to defer filing of appellant's
brief. The petitioner filed this motion for the purpose of first settling the issue on damages against the attachment bond so that
such issue would be discussed and included in the appellant's brief and ultimately in the final judgment thereby avoiding
multiplicity of suits.
Needless to say, the appellate court should not have dismissed the petitioner's appeal.
We take notice of the circumstances under which the appellate court dismissed the appeal. Granting that the petitioner's
application for judgment against attachment bond was not meritorious, the appellate court's dismissal of the appeal would still be
unwarranted.
The record shows that in response to the petitioner's application for judgment against the attachment bond and motion to defer
filing of the appellant's brief which was filed on March 13, 1985 and within the 45-day reglementary period to file appellant's brief,
the appellate court issued a resolution directing the private respondent to comment on the motion within ten (10) days from
Rule 57: Preliminary Attachment | 260
notice. Upon motion of the private respondent, the appellate court issued another resolution granting an extension of ten (10)
days from April 13, 1985 to file comment on the said motions of the petitioner. The extension granted meant that the private
respondent had until April 24, 1985 to file its comment. In addition to the comment, the private respondent filed on April 24, 1985
a motion to dismiss appeal contending that the petitioner had not filed its appellant's brief within the 45-day reglementary period.
Upon verification from its docket decision that no appellant's brief was filed as of April 25, 1985, the appellate court dismissed
the appeal.
Under these circumstances, the dismissal of the appeal by the appellate court due to the failure to file the appellant's brief within
the 45-day reglementary period counted from February 25, 1985 to April 25, 1985 without allowing any interruption gave undue
advantage to the private respondent. This is so, because the private respondent after having been given ten (10) days from
receipt of notice to comment on the twin motions of the petitioner was again granted a ten-day extension or until April 24, 1985 to
file its comment thereto. This, in effect, removed a substantial number of days from the 45-day period of the petitioner to file its
brief, through no fault of its own.
The procedure adopted by the appellate court in interpreting the 45-day reglementary period to file appellant's brief was unfair.
When the appellate court issued the resolution requiring the private respondent to comment on the petitioner's application for
judgment against the attachment bond and motion to defer appellant's brief the 45-day period should be deemed to have
stopped, and the period to commence again after denial of the motions. llcd
The notice to "file appellant's brief within 45 days from receipt" was received by the petitioner on February 25, 1985. The
petitioner filed the application for judgment against the attachment bond and motion to defer filing of appellant's brief in March
13, 1985. Thus, the petitioner filed its motions on the 16th day after receipt of the notice to file appellant's brief and within the 45-
day reglementary period. On March 26, 1985, the appellate court issued its resolution directing the private respondent to file its
comment on the motions of the petitioner. At this point, counting from February 25, 1985 to March 26, 1985, a total number of 29
days had lapsed. Hence, the petitioner still had 16 days within the 45-day reglementary period to file its appellant's brief in the
event that its motions were denied.
It is likewise the practice in the Court of Appeals, after granting an initial period of 45 days, to routinely grant a motion for
extension of another 45 days for the filing of an appellant's brief. Considering the amount involved in this litigation and the nature
of the defenses raised by the petitioner, the appellate court was unduly severe when it peremptorily dismissed the appeal.
Rule 57: Preliminary Attachment | 261
Therefore, we have to set aside the appellate court's action in simultaneously denying the application for judgment against the
attachment bond and the motion to defer the filing of appellant's brief and in dismissing the appeal. Since the petitioner's two
motions were denied on April 30, 1985, the petitioner still had 16 days from notice of the denial to file its appellant's brief. In
short, the petitioner's 45-day period within which to file its appellant's brief had not yet lapsed when the appellate court dismissed
the appeal. The brief could have been filed or a motion for extension of time requested.
WHEREFORE, the instant petition is GRANTED. The questioned resolutions dated April 30, 1985 and June 20, 1985 of the then
Intermediate Appellate Court are hereby REVERSED and SET ASIDE. The Court of Appeals is directed to conduct hearings on
the application for judgment against attachment bond filed by the petitioner and to reinstate the appeal. The temporary
restraining order dated July 17, 1985 is made PERMANENT.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.

Rule 57: Preliminary Attachment | 262

G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION vs. COURT OF APPEALS, ET AL.

FIRST DIVISION
[G.R. No. L-61464. May 28, 1988.]

BA FINANCE CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing
business under the name and style of A & L INDUSTRIES), respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; AUTHENTICATION AND PROOF OF DOCUMENTS; GENUINENESS OF STANDARD,
HOW ESTABLISHED. — In the case of Plymouth Saving & Loan Ass'n. No. 2 v. Kassing (125 N.E. 488, 494): "We believe the
true rule deduced from the authorities to be that the genuineness of a 'standard' writing may be established (1) by the admission
of the person sought to be charged with the disputed writing made at or for the purposes of the trial or by his testimony; (2) by
witnesses who saw the standards written or to whom or in whose hearing the person sought to be charged acknowledged the
writing thereof; (3) by evidence showing that the reputed writer of the standard has acquiesced in or recognized the same, or that
it has been adopted and acted upon by him his business transactions or other concerns . . ."
2. ID.; ID.; ID.; ID.; CASE AT BAR. — The records show that the signatures which were used as "standards" for comparison
with the alleged signature of the private respondent in the Special Power of Attorney were those from the latter's residence
certificates in the years 1973, 1974 and 1975, her income tax returns for the years 1973 and 1975 and from a document on long
bond paper dated May 18, 1977. Not only were the signatures in the foregoing documents admitted by the private respondent as
hers but most of the said documents were used by the private respondent in her transactions with the government.
3. CIVIL LAW; ADMINISTRATION OF CONJUGAL PARTNERSHIP; OBLIGATIONS CONTRACTED BY THE HUSBAND
TO BE CHARGEABLE AGAINST THE CONJUGAL PARTNERSHIP MUST REDOUND TO ITS BENEFIT. — There is no dispute
that A & L Industries was established during the marriage of Augusto and Lily Yulo and therefore the same is presumed conjugal
and the fact that it was registered in the name of only one of the spouses does not destroy its conjugal nature (See Mendoza v.

Rule 57: Preliminary Attachment | 263

Reyes, 124 SCRA 161, 165). However, for the said property to be held liable, the obligation contracted by the husband must
have redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code.
4. ID.; ID.; ID.; ID.; CASE AT BAR NOT A CASE OF. — In the present case, the obligation which the petitioner is seeking to
enforce against the conjugal property managed by the private respondent Lily Yulo was undoubtedly contracted by Augusto Yulo
for his own benefit because at the time he incurred the obligation he had already abandoned his family and had left their conjugal
home. Worse, he made it appear that he was duly authorized by his wife in behalf of A & L Industries, to procure such loan from
the petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust and contrary to the express provision
of the Civil Code.
5. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT, WHEN IMPROPER. — "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 therefor, or that the plaintiff has a
sufficient security other than the property attached, which is tantamount to saying that the plaintiff is not entitled to attachment
because the requirements of entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section 4, Rule 57, Francisco, Revised
Rules of Court)
6. CIVIL LAW; DAMAGES; UNREALIZED PROFIT; AWARD NOT PROPER WHERE CLAIM IS SPECULATIVE &
CONJECTURAL. — We cannot, however, sustain the award of P500,000.00 representing unrealized profits because this
amount was not proved or justified before the trial court. The basis of the alleged unearned profits is too speculative and
conjectural to show actual damages for a future period. The private respondent failed to present reports on the average actual
profits earned by her business and other evidence of profitability which are necessary to prove her claim for the said amount
(See G. A. Machineries, Inc. v. Yaptinchay, 126 SCRA 78, 88).

DECISION

GUTIERREZ, JR., J p:
This is a petition for review seeking to set aside the decision of the Court of Appeals which affirmed the decision of the then
Court of First Instance of Manila, dismissing the complaint instituted by the petitioner and ordering it to pay damages on the
basis of the private respondent's counterclaim.
Rule 57: Preliminary Attachment | 264
On July 1, 1975, private respondent Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced
by a promissory note he signed in his own behalf and as representative of the A & L Industries. Respondent Yulo presented an
alleged special power of attorney executed by his wife, respondent Lily Yulo, who manages A & L Industries and under whose
name the said business is registered, purportedly authorizing Augusto Yulo to procure the loan and sign the promissory note.
About two months prior to the loan, however, Augusto Yulo had already left Lily Yulo and their children and had abandoned their
conjugal home. When the obligation became due and demandable, Augusto Yulo failed to pay the same.
On October 7, 1975, the petitioner filed its amended complaint against the spouses Augusto and Lily Yulo on the basis of the
promissory note. It also prayed for the issuance of a writ of attachment alleging that the said spouses were guilty of fraud in
contracting the debt upon which the action was brought and that the fraud consisted of the spouses' inducing the petitioner to
enter into a contract with them by executing a Deed of Assignment in favor of the petitioner, assigning all their rights, titles and
interests over a construction contract executed by and between the spouses and A. Soriano Corporation on June 19, 1974 for a
consideration of P615,732.50 when, in truth, the spouses did not have any intention of remitting the proceeds of the said
construction contract to the petitioner because despite the provisions in the Deed of Assignment that the spouses shall, without
compensation or costs, collect and receive in trust for the petitioner all payments made upon the construction contract and shall
remit to the petitioner all collections therefrom, the said spouses failed and refused to remit the collections and instead,
misappropriated the proceeds for their own use and benefit, without the knowledge or consent of the petitioner.
The trial court issued the writ of attachment prayed for thereby enabling the petitioner to attach the properties of A & L Industries.
Apparently not contented with the order, the petitioner filed another motion for the examination of attachment debtor, alleging
that the properties attached by the sheriff were not sufficient to secure the satisfaction of any judgment that may be recovered by
it in the case. This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim, alleging that although Augusto Yulo and she are husband and
wife, the former had abandoned her and their children five (5) months before the filing of the complaint; that they were already
separated when the promissory note was executed; that her signature in the special power of attorney was forged because she
had never authorized Augusto Yulo in any capacity to transact any business for and in behalf of A & L Industries, which is owned
by her as a single proprietor, that she never got a single centavo from the proceeds of the loan mentioned in the promissory

Rule 57: Preliminary Attachment | 265

note; and that as a result of the illegal attachment of her properties, which constituted the assets of the A & L Industries, the
latter closed its business and was taken over by the new owner.
After hearing, the trial court rendered judgment dismissing the petitioner's complaint against the private respondent Lily Yulo and
A & L Industries and ordering the petitioner to pay the respondent Lily Yulo P660,000.00 as actual damages; P500,000.00 as
unrealized profits; P300,000.00 as exemplary damages; P30,000.00 as and for attorney's fees; and to pay the costs.
The petitioner appealed. The Court of Appeals affirmed the trial court's decision except for the exemplary damages which it
reduced from P300,000.00 to P150,000.00 and the attorney's fees which were reduced from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in holding that the signature of respondent Lily Yulo in the special
power of attorney was forged, the Court of Appeals said:
"The crucial issue to be determined is whether or not the signatures of the appellee Lily Yulo in Exhibits B and B-1 are forged.
Atty. Crispin Ordoña, the Notary Public, admitted in open court that the parties in the subject documents did not sign their
signatures in his presence. The same were already signed by the supposed parties and their supposed witnesses at the time
they were brought to him for ratification. We quote from the records the pertinent testimony of Atty. Ordoña, thus:
"Q This document marked as Exhibit B-1, when this was presented to you by that common friend, June Enriquez, it was
already typewritten, it was already accomplished, all typewritten?
"A Yes, sir.
"Q And the parties had already affixed their signatures in this document?
"A Yes, sir.
"Q In this document marked as Exhibit B although it appears here that this is an acknowledgment, you have not stated here
that the principal actually acknowledged this document to be her voluntary act and deed?
"A This is one of those things that escaped my attention. Actually I have not gone over the second page. I believed it was in
order I signed it. (TSN., pp. 13-14, Hearing of Nov. 26, 1976).
"The glaring admission by the Notary Public that he failed to state in the acknowledgment portion of Exhibit B-1 that the appellee
Lily Yulo acknowledged the said document to be her own voluntary act and deed, is a very strong and commanding
circumstance to show that she did not appear personally before the said Notary Public and did not sign the document.

Rule 57: Preliminary Attachment | 266

"Additionally, the Notary Public admitted that, while June Enriquez is admittedly a mutual friend of his and the defendant Augusto
Yulo, and who is also an instrumental witness in said Exhibit B-1, he could not recognize or tell which of the two signatures
appearing therein, was the signature of this June Enriquez.
"Furthermore, as the issue is one of credibility of a witness, the findings and conclusions of the trial court before whom said
witness, Atty. Crispin Ordoña, the Notary Public before whom the questioned document was supposedly ratified and
acknowledged, deserve great respect and are seldom disturbed on appeal by appellate tribunals, since it is in the best and
peculiar advantage of determining and observing the conduct, demeanor and deportment of a particular witness while he is
testifying in court, an opportunity not enjoyed by the appellate courts who merely have to rely on the recorded proceedings which
transpired in the court below, and the records are bare of any circumstance of weight, which the trial court had overlooked and
which, if duly considered, may radically affect the outcome of the case.
"On the other hand, the appellee Lily Yulo, to back up her claim of forgery of her signature in Exhibit B-1, presented in court a
handwriting expert witness in the person of Police Captain Yakal Giron of the Integrated National Police Training Command, and
who is also a Document Examiner of the same Command's Crime Laboratory at Fort Bonifacio, Metro Manila. His experience as
an examiner of questioned and disputed documents, in our mind, is quite impressive. To qualify him as a handwriting expert, he
declared that he underwent extensive and actual studies and examination of disputed or questioned document, both at the
National Bureau of Investigation Academy and National Bureau of Investigation Questioned Document Laboratory, respectively,
from July 1964, up to his appointment as Document Examiner in June, 1975, and, to further his experience along this line, he
attended the 297th Annual Conference of the American Society of Questioned Document Examiners held at Seattle,
Washington, in August 1971, as a representative of the Philippines, and likewise conducted an observation of the present and
modern trends of crime laboratories in the West Coast, U.S.A., in 1971; that the likewise had conducted actual tests and
examination of about 100,000 documents, as requested by the different courts, administrative, and governmental agencies of the
Government, substantial portions of which relate to actual court cases.
"In concluding that the signatures of the appellee Lily Yulo, in the disputed document in question (Exh. B-1), were all forgeries,
and no her genuine signatures, the expert witness categorically recited and specified in open court what he observed to be about
twelve (12) glaring and material significant differences, in his comparison of the signatures appearing in the genuine specimen
signatures of the said appellee and with those appearing in the questioned document (Exhibit B-1). Indeed, we have likewise
Rule 57: Preliminary Attachment | 267
seen the supposed notable differences, found in the standard or genuine signatures of the appellee which were lifted and
obtained in the official files of the government, such as the Bureau of Internal Revenue on her income tax returns, as compared
to the pretended signature of the appellee appearing in Exhibits B, B-1. It is also noteworthy to mention that the appellant did not
even bother to conduct a cross-examination of the handwriting expert witness, Capt. Giron, neither did the appellant present
another handwriting expert, at least to counter-act or balance the appellee's handwriting expert.
"Prescinding from the foregoing facts, we subscribe fully to the lower court's observations that the signatures of the appellee Lily
Yulo in the questioned document (Exh. B-1) were forged. Hence, we find no factual basis to disagree." (pp. 28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily Yulo was forged or even if the attached properties were her
exclusive property, the same can be made answerable to the obligation because the said properties form part of the conjugal
partnership of the spouses Yulo, the appellate court held that these contentions are without merit because there is strong
preponderant evidence to show that A & L Industries belongs exclusively to respondent Lily Yulo, namely: a) The Certificate of
Registration of A & L Industries, issued by the Bureau of Commerce, showing that said business is a single proprietorship, and
that the registered owner thereof is only Lily Yulo; b) The Mayor's Permit issued in favor of A & L Industries, by the Caloocan City
Mayor's Office showing compliance by said single proprietorship company with the City Ordinance governing business
establishments; and c) The Special Power of Attorney itself, assuming but without admitting its due execution, is tangible proof
that Augusto Yulo has no interest whatsoever in the A & L Industries, otherwise, there would have been no necessity for the
Special Power of Attorney if he is a part owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed the findings of the trial court that there was bad faith on the
part of the petitioner as to entitle the private respondent to damages as shown not only by the fact that the petitioner did not
present the Deed of Assignment or the construction agreement or any evidence whatsoever to support its claim of fraud on the
part of the private respondent and to justify the issuance of a preliminary attachment, but also by the following findings:
"Continuing and elaborating further on the appellant's mala fide actuations in securing the writ of attachment, the lower court
stated as follows:
"'Plaintiff not satisfied with the instant case where an order for attachment has already been issued and enforced, on the strength
of the same Promissory Note (Exhibit 'A'), utilizing the Deed of Chattel Mortgage (Exhibit '4'), filed a foreclosure proceedings
before the Office of the Sheriff of Caloocan (Exhibit '6') foreclosing the remaining properties found inside the premises formerly
Rule 57: Preliminary Attachment | 268
occupied by the A & L Industries. A minute examination of Exhibit '4' will show that the contracting parties thereto, as appearing
in par. 1 thereof, are Augusto Yulo, doing business under the style of A & L Industries (should be A & L Glass Industries
Corporation), as mortgagor and BA Finance Corporation as mortgagee, thus the enforcement of the Chattel Mortgage against
the property of A & L Industries exclusively owned by Lily T. Yulo appears to be without any factual or legal basis whatsoever.
The chattel mortgage, Exhibit '4' and the Promissory Note, Exhibit 'A,' are based on one and the same obligation. Plaintiff tried to
enforce as it did enforce its claim into two different modes a single obligation.
"'Aware that defendant Lily Yulo, filed a Motion to Suspend Proceedings by virtue of a complaint she filed with the Court of First
Instance of Caloocan, seeking annulment of the Promissory Note, the very basis of the plaintiff in filing this complaint,
immediately after the day it filed a Motion for the Issuance of an Alias Writ of Preliminary Attachment . . . Yet, inspite of the
knowledge and the filing of this Motion to Suspend Proceedings, the Plaintiff still filed a Motion for the Issuance of a Writ of
Attachment dated February 6, 1976 before this court. To add insult to injury, plaintiff even filed a Motion for Examination of the
Attachment Debtor, although aware that Lily Yulo had already denied participation in the execution of Exhibits "A" and "B." These
incidents and actions taken by plaintiff, to the thinking of the court, are sufficient to prove and establish the element of bad faith
and malice on the part of plaintiff which may warrant the award of damages in favor of defendant of Lily Yulo. (Ibid., pp. 102-
103).'
"Indeed, the existence of evident bad faith on the appellant's part in proceeding against the appellee Lily Yulo in the present
case, may likewise be buttressed on the fact that its officer Mr. Abraham Co, did not even bother to demand the production of at
least the duplicate original of the Special Power of Attorney (Exhibit B) and merely contended himself with a mere xerox copy
thereof, neither did he require a more specific authority from the A & L Industries to contract the loan in question, since from the
very content and recitals of the disputed document, no authority, express or implied, has been delegated or granted to August
Yulo to contract a loan, especially with the appellant." (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the petitioner should have presented evidence to disprove or rebut
the private respondent's claim but it remained quiet and chose not to disturb the testimony and the evidence presented by the
private respondent to prove her claim. LibLex
In this petition for certiorari, the petitioner raises three issues. The first issue deals with the appellate court's affirmance of the
trial court's findings that the signature of the private respondent on the Special Power of Attorney was forged. According to the
Rule 57: Preliminary Attachment | 269
petitioner, the Court of Appeals disregarded the direct mandate of Section 23, Rule 132 of the Rules of Court which states in part
that evidence of handwriting by comparison may be made "with writings admitted or treated as genuine by the party against
whom the evidence is offered, or proved to be genuine to the satisfaction of the judge," and that there is no evidence on record
which proves or tends to prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as "standards" for comparison with the alleged signature of the private
respondent in the Special Power of Attorney were those from the latter's residence certificates in the years 1973, 1974 and 1975,
her income tax returns for the years 1973 and 1975 and from a document on long bond paper dated May 18, 1977. Not only
were the signatures in the foregoing documents admitted by the private respondent as hers but most of the said documents were
used by the private respondent in her transactions with the government. As was held in the case of Plymouth Saving & Loan
Ass'n. No. 2 v. Kassing (125 N.E. 488, 494):
"We believe the true rule deduced from the authorities to be that the genuineness of a 'standard' writing may be established (1)
by the admission of the person sought to be charged with the disputed writing made at or for the purposes of the trial or by his
testimony; (2) by witnesses who saw the standards written or to whom or in whose hearing the person sought to be charged
acknowledged the writing thereof; (3) by evidence showing that the reputed writer of the standard has acquiesced in or
recognized the same, or that it has been adopted and acted upon by him his business transactions or other concerns . . ."
Furthermore, the judge found such signatures to be sufficient as standards. In the case of Taylor-Wharton Iron & Steel Co. v.
Earnshaw (156 N.E. 855, 856), it was held:
"When a writing is offered as a standard of comparison it is for the presiding judge to decide whether it is the handwriting of the
party to be charged. 'Unless his finding is founded upon error of law, or upon evidence which is, as matter of law, insufficient to
justify the finding, this court will not revise it upon exceptions.' (Costelo v. Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuñez v.
Perry, 113 Mass, 274, 276.)"
We cannot find any error on the part of the trial judge in using the above documents as standards and also in giving credence to
the expert witness presented by the private respondent whose testimony the petitioner failed to rebut and whose credibility it
likewise failed to impeach. But more important is the fact that the unrebutted handwriting expert's testimony noted twelve (12)
glaring and material differences in the alleged signature of the private respondent in the Special Power of Attorney as compared
Rule 57: Preliminary Attachment | 270
with the specimen signatures, something which the appellate court also took into account. In Cesar v. Sandiganbayan (134
SCRA 105, 132), we ruled:
"Mr. Maniwang pointed to other significant divergences and distinctive characteristics between the sample signatures and the
signatures on the questioned checks in his report which the court's Presiding Justice kept mentioning during Maniwang's
testimony.

"In the course of his cross-examination, NBI expert Tabayoyong admitted that he saw the differences between the exemplars
used and the questioned signatures but he dismissed the differences because he did not consider them fundamental. We role
that significant differences are more fundamental than a few similarities. A forger always strives to master some similarities."
The second issue raised by the petitioner is that while it is true that A & L Industries is a single proprietorship and the registered
owner thereof is private respondent Lily Yulo, the said proprietorship was established during the marriage and its assets were
also acquired during the same. Therefore, it is presumed that this property forms part of the conjugal partnership of the spouses
Augusto and Lily Yulo and thus, could be held liable for the obligations contracted by Augusto Yulo, as administrator of the
partnership.
There is no dispute that A & L Industries was established during the marriage of Augusto and Lily Yulo and therefore the same is
presumed conjugal and the fact that it was registered in the name of only one of the spouses does not destroy its conjugal nature
(See Mendoza v. Reyes, 124 SCRA 161, 165). However, for the said property to be held liable, the obligation contracted by the
husband must have redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code. In the present case,
the obligation which the petitioner is seeking to enforce against the conjugal property managed by the private respondent Lily
Yulo was undoubtedly contracted by Augusto Yulo for his own benefit because at the time he incurred the obligation he had
already abandoned his family and had left their conjugal home. Worse, he made it appear that he was duly authorized by his wife
in behalf of A & L Industries, to procure such loan from the petitioner. Clearly, to make A & L Industries liable now for the said
loan would be unjust and contrary to the express provision of the Civil Code. As we have ruled in Luzon Surety Co., Inc. v. De
Garcia (30 SCRA 111, 115-117):
"As explained in the decision now under review: 'It is true that the husband is the administrator of the conjugal property pursuant
to the provisions of Art. 163 of the new Civil Code. However, as such administrator the only obligations incurred by the husband
Rule 57: Preliminary Attachment | 271
that are chargeable against the conjugal property are those incurred in the legitimate pursuit of his career, profession or business
with the honest benefit that he is doing right for the benefit of the family. This is not true in the case at bar for we believe that the
husband in acting as guarantor or surety for another in am indemnity agreement as that involved in this case did not act for the
benefit of the conjugal partnership. Such inference is more emphatic in this case, when no proof is presented that Vicente Garcia
in acting as surety or guarantor received consideration therefor, which may redound to the benefit of the conjugal partnership.'
(Ibid, pp. 46-47).
xxx xxx xxx
". . . In the most categorical language, a conjugal partnership under that provision is liable only for such 'debts and obligations
contracted by the husband for the benefit of the conjugal partnership.' There must be the requisite showing then of some
advantage which clearly accrued to the welfare of the spouses. There is none in this case . . .
xxx xxx xxx
"Moreover, it would negate the plain object of the additional requirement in the present Civil Code that a debt contracted by the
husband to bind a conjugal partnership must redound to its benefit. That is still another provision indicative of the solicitude and
tender regard that the law manifests for the family as a unit. Its interest is paramount; its welfare uppermost in the minds of the
codifiers and legislators."
We, therefore, rule that the petitioner cannot enforce the obligation contracted by Augusto Yulo against his conjugal properties
with respondent Lily Yulo. Thus, it follows that the writ of attachment cannot issue against the said properties. LLpr
Finally, the third issue assails the award of actual damages. According to the petitioner, both the lower court and the appellate
court overlooked the fact that the properties referred to are still subject to a levy on attachment. They are, therefore, still under
custodia legis and thus, the assailed decision should have included a declaration as to who is entitled to the attached properties
and that assuming arguendo that the attachment was erroneous, the lower court should have ordered the sheriff to return to the
private respondent the attached properties instead of condemning the petitioner to pay the value thereof by way of actual
damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:
xxx xxx xxx

Rule 57: Preliminary Attachment | 272

". . . It should be observed that Sec. 4 of Rule 59, does not prescribe the remedies available to the attachment defendant in case
of a wrongful attachment, but merely provides an action for recovery upon the bond, based on the undertaking therein made and
not upon the liability arising from a tortious act, like the malicious suing out of an attachment. Under the first, where malice is not
essential, the attachment defendant, is entitled to recover only the actual damages sustained by him by reason of the
attachment. Under the second, where the attachment is maliciously sued out, the damages recoverable may include a
compensation for every injury to his credit, business or feelings (Tyler v. Mahoney, 168 NC 237, 84 SE 362; Pittsburg etc. 5
Wakefield, etc., 135 NC 73, 47 SE 234) . . ."
The question before us, therefore, is whether the attachment of the properties of A & L Industries was wrongful so as to entitle
the petitioner to actual damages only or whether the said attachment was made in bad faith and with malice to warrant the award
of other kinds of damages. Moreover, if the private respondent is entitled only to actual damages, was the court justified in
ordering the petitioner to pay for the value of the attached properties instead of ordering the return of the said properties to the
private respondent Lily Yulo?
Both the trial and appellate courts found that there was bad faith on the part of the petitioner in securing the writ of attachment.
We do not think so. "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 therefor, or that the plaintiff has a sufficient security other than the property attached, which is tantamount
to saying that the plaintiff is not entitled to attachment because the requirements of entitling him to the writ are wanting. (7 C.J.S.,
664)" (p. 48, Section 4, Rule 57, Francisco, Revised Rules of Court)
Although the petitioner failed to prove the ground relied upon for the issuance of the writ of attachment, this failure cannot be
equated with bad faith or malicious intent. The steps which were taken by the petitioner to ensure the security of its claim were
premised on the firm belief that the properties involved could be made answerable for the unpaid obligation due it. There is no
question that a loan in the amount of P591,003.59 was borrowed from the bank. prLL
We, thus, find that the petitioner is liable only for actual damages and not for exemplary damages and attorney's fees.
Respondent Lily Yulo has manifested before this Court that she no longer desires the return of the attached properties since the
said attachment caused her to close down the business. From that time she has become a mere employee of the new owner of
the premises. She has grave doubts as to the running condition of the attached machineries and equipments considering that the
attachment was effected way back in 1975. She states as a matter of fact that the petitioner has already caused the sale of the
Rule 57: Preliminary Attachment | 273
machineries for fear that they might be destroyed due to prolonged litigation. We, therefore, deem it just and equitable to allow
private respondent Lily Yulo to recover actual damages based on the value of the attached properties as proven in the trial court,
in the amount of P660,000.00. In turn, if there are any remaining attached properties, they should be permanently released to
herein petitioner.
We cannot, however, sustain the award of P500,000.00 representing unrealized profits because this amount was not proved or
justified before the trial court. The basis of the alleged unearned profits is too speculative and conjectural to show actual
damages for a future period. The private respondent failed to present reports on the average actual profits earned by her
business and other evidence of profitability which are necessary to prove her claim for the said amount (See G. A. Machineries,
Inc. v. Yaptinchay, 126 SCRA 78, 88).
The judgment is therefore set aside insofar as it holds the petitioner liable for P500,000.00 actual damages representing
unrealized profits, P150,000.00 for exemplary damages and P20,000.00 for attorney's fees. As stated earlier, the attached
properties, should be released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and the petitioner is ordered to pay the private
respondent Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS (P660,000.00) as actual damages. The
remaining properties subject of the attachment are ordered released in favor of the petitioner.
SO ORDERED.
Fernan (Chairman), Feliciano, Bidin and Cortes. JJ., concur.

Rule 57: Preliminary Attachment | 274

G.R. No. L-48820 May 25, 1979
MALAYAN INSURANCE CO., INC. vs. EMILIO V. SALAS

SECOND DIVISION
[G.R. No. L-48820 May 25, 1979]

MALAYAN INSURANCE CO., INC., petitioner, vs. HON. EMILIO V. SALAS, as Presiding Judge, Court of First Instance of Rizal,
Branch I, Pasig, Metro Manila, ROSENDO FERNANDO and JOHN DOE, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Lazaro, Abinoja & Associates for private respondents.

SYNOPSIS
Makati Motor Sales, Inc., sued Rosendo Fernando for recovery of four trucks and obtain immediate possession thereof, posted a
replevin bond executed by petitioner surety company. The lower court rendered a judgment, ordering Makati Motor Sales,
among others, to return the trucks to Fernando and to pay him damages in the amount of P600 daily from the time they were
seized until their return. Makati Motor Sales, Inc. appealed. Before the elevation of the record, Fernando filed an application for
damages against the bond but the trial court denied it. During the pendency of the appeal, Fernando filed in the Court of
Appeals his claim for damages against the bond and prayed that the same be included in the judgment. The Court of Appeals
affirmed the appealed judgment, and ordered the trial court to hear Fernando's claim.
After the record had been remanded to the trial court, Fernando moved to set for hearing his application for damages against the
bond, with notice to the surety company. Fernando submitted documentary evidence. The surety moved to quash the
proceedings and stood pat on its contention that the trial court has no jurisdiction. The trial court denied the motion to quash and
directed the surety to pay Fernando the damages which it had adjudged against Makati Motor Sales, Inc. From the trial court's
order, the surety appealed.

Rule 57: Preliminary Attachment | 275

The Supreme Court held that the trial court had jurisdiction to comply with the Court of Appeals' directive, but reversed the trial
court's order requiring the surety to pay the damages, stating that the trial court's implementation of the appellate court's directive
was incorrect.
Case remanded, directing the trial court to hold a summary hearing wherein the surety should be given a chance to contest the
reasonableness of Fernando's claim for damages.

SYLLABUS
1. REPLEVIN BONDS; RECOVERY OF DAMAGES ON REPLEVIN BOND. — Under section 20, Rule 57, 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 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 replevin; (2) that the application for damages, showing claimant's rights
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 the other party and his surety or sureties, notice to the principal not being
sufficient and (4) that there should be a proper hearing and the award for damages should be included in the final judgment.
2. ID.; ID.; APPEAL; APPLICATION FOR DAMAGES ON THE BOND. — 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 of the court 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.
3. ID.; ID.; ID.; APPELLATE COURT SHOULD INCLUDE AWARD OF DAMAGES AGAINST SURETY. — Where the
application for damages against the surety is seasonably made in the appellate court, the latter must either proceed to decide
and hear the application or refer it to the trial court and allow it to hear and decide the same.
4. ID.; ID.; ID.; LAW OF THE CASE DIRECTIVE TO THE TRIAL COURT TO HEAR CLAIM. — Where a claim for damages
on the replevin bond was timely made with the Court of Appeals, and the surety was notified thereof, but the Court of Appeals
did not resolve the claim immediately and instead directed the trial court to hear that claim, it was held that this peculiar factual
situation makes it an exception to the settled rule that the surety's liability for damages should be included in the final judgment

Rule 57: Preliminary Attachment | 276

to prevent duplicity of suits or proceedings. Obviously, the lower court has no choice but to implement the directive which is the
law of the case.
5. ID.; ID.; NOTICE SURETY. — If the surety was not given notice when the claim for damages against the principal in the
replevin bond was heard, then as a matter of procedural due process the surety is entitled to be heard when the judgment for
damages against the principal is sought to be enforced against the surety's replevin bond. 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 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 it so desires. That procedure would forestall the
perpetration of fraud or collusion against the surety.
6. ID.; ID.; FAILURE TO GIVE SUMMARY HEARING. — Where the surety company was not given the summary hearing
during which it could contest the reality or reasonableness of the claim for damages on the replevin bond, the trial court's order
awarding damages against it will be set aside and, in the interest of justice, it should be given an opportunity to be heard on the
merits of the prevailing party's claim for damages.
7. ID.; ID.; COUNTERCLAIM. — The defendant in a replevin case cannot file a separate action for damages due to the
wrongful issuance of the writ. He should claim the damages as a counterclaim in the original replevin suit.
8. ID.; REPLEVIN BOND DISTINGUISHED FROM COUNTERBOND AND FROM SURETY'S OBLIGATION ON AN
ADMINISTRATOR'S BOND. — The procedure in Section 20 of the Rule 57 should not be confounded with the procedure in
section 17 of the same rule regarding the surety's liability on the counterbond for the lifting of the preliminary attachment. Under
section 17, the surety may be held liable after notice and summary hearing conducted after the judgment had become executory
and the execution was returned unsatisfied. The case contemplated in section 17 of Rule 57 is different from the case envisaged
in section 20 of that rule. Nor does section 20 of Rule 57 apply to cases where the surety bound himself to abide by the judgment
against his principal and hereby renounced his right to be sued or cited, or where the surety guaranteed the return of certain
goods and he did not raise the issue of lack of notice, or where the sureties bound themselves to pay the plaintiff a definite
amount. Note that a different rule also obtains with respect to the surety in the bond of an administrator or executor. The nature
of the surety's obligation on an administrator's bond, which makes him privy to the proceeding against his principal, is such that
he is bound and concluded, in the absence of fraud or collusion, surety was not a party to the proceedings.
Rule 57: Preliminary Attachment | 277
DECISION

AQUINO, J p:
This case is about the surety company's liability on its replevin bond which was not included in the final judgment against the
principal in the bond. It is undisputed that in 1970 Makati Motor Sales, Inc., as vendor mortgagee, sued Rosendo Fernando for
the recovery of four diesel trucks and the collection of the balance of his obligation plus damages (Civil Case No. 13874, Court of
First Instance of Rizal, Pasig Branch I).
To obtain immediate possession of the trucks pending trial, Makati Motors Sales, Inc. posted a replevin bond executed by the
Malayan Insurance Co., Inc. In that bond the surety bound itself to pay P362,775.92 "for the return of the property to the
defendant, if the return thereof be adjudged, and for the payment of such sum as may in the cause be recovered against the
plaintiff". Pursuant to the order of the court, the sheriff seized the four trucks. Later, two of the trucks were returned to Fernando.
cdll
After trial, or on March 2, 1973, the lower court rendered judgment ordering Makati Motor Sales, Inc. to return to Fernando the
other two trucks and to pay him, for the seizure of each of them, damages in the sum of three hundred pesos daily from
September 25 and 26, 1970 (or six hundred pesos for the two trucks from the latter date) until their return to Fernando plus
P26,000 as actual and moral damages.
In turn, Fernando was ordered to pay Makati Motor Sales, Inc. the sum of P66,998.34, as the balance of the price of the two
trucks, with twelve percent interest from February 28, 1969 until fully paid and the further sum of P15,730.20 as the cost of the
repair with six percent interest from September 11, 1970 until fully paid.
Makati Motor Sales, Inc. appealed to the Court of Appeals. It affirmed the lower court's judgment in its decision of March 1, 1977
in CA-G. R. No. 54196-R.
Meanwhile, on May 11, 1973, or before the elevation of the record to the Court of Appeals, Fernando filed in the trial court an
application for damages against the replevin bond. It was opposed by the surety on the ground that the trial court had lost
jurisdiction over the case because of the perfection of the appeal. The trial court denied the application on June 28, 1973.

Rule 57: Preliminary Attachment | 278

On May 27, 1974 Fernando filed in the Court of Appeals his claim for damages against the replevin bond. He prayed that the
same be included in the judgment. The surety, which was furnished with a copy of the claim, filed an opposition to it.
The Court of Appeals did not act immediately on that claim but in its 1977 decision it observed that Fernando's motion or claim
"was correct" and it ordered that his claim against Malayan Insurance Co., Inc. "be heard before the trial court". That decision
affirming the lower court's judgment became final and executory on March 18, 1977.
On April 6, 1977, or after the remand of the record to the trial court, Fernando filed a motion to set for hearing his application for
damages against the surety on its replevin bond. The application was heard with notice to Makati Motor Sales, Inc. and Malayan
Insurance Co., Inc. Fernando submitted documentary evidence. On December 15, 1977 Malayan Insurance Co., Inc. moved to
quash the proceeding regarding the claim for damages. It contended that the trial court has no jurisdiction to alter or modify the
final judgment of the Court of Appeals.
The trial court in its order of July 14, 1978 denied the motion to quash. It directed Malayan Insurance Co., Inc. to pay Fernando
the damages which it had adjudged against Makati Motor Sales, Inc. The surety company appealed from that order to this Court
pursuant to Republic Act No. 5440.
Section 10, Rule 60 of the Rules of Court provides that in replevin cases, as in receivership and injunction cases, the damages
"to be awarded to either party upon any bond filed by the other" "shall be claimed, ascertained, and granted" in accordance with
section 20 of Rule 57 which reads:
"SEC. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be
included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof.
"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 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."
Rule 57: Preliminary Attachment | 279
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 replevin; (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 there should be a proper hearing and the award for damages should be
included in the final judgment (Luneta Motor Co. vs. Menendez, 117 Phil. 970, 974; 3 Moran's Comments on the Rules of Court,
1970 Ed., pp. 54-56. See Cruz vs. Manila Surety & Fidelity Co., Inc., 92 Phil. 699).
In this appeal, Malayan Insurance Co., Inc. contends that the trial court's judgment against it is not warranted under section 20 of
Rule 57. It assails the trial court's competence to render judgment against the surety after the decision of the Court of Appeals
against the surety's principal had become final and executory. prLL
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.
As may be gathered from section 20 of Rule 57, 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 (Luneta Motor Co. vs. Menendez, 117 Phil. 970, 976).
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"
(Rivera vs. Talavera, 112 Phil. 209, 219).
Rule 57: Preliminary Attachment | 280
We have stated earlier that in the instant case Fernando in 1974 made a timely claim in the Court of Appeals for an award of
damages against Malayan Insurance Co., Inc. enforceable against its replevin bond. The surety was notified of that application. It
registered an opposition to the claim. The Court of Appeals did not resolve the claim immediately but in its 1977 decision it
directed the trial court to hear that claim.
Obviously, the lower court has no choice but to implement that directive which is the law of the case (See Compagnie Franco-
Indochinoise vs. Deutsch, etc., 39 Phil. 474, 476).
However, the trial court's implementation of that directive was incorrect. It set the claim for hearing but the surety assailed its
jurisdiction and did not consider itself bound by the mandate of the appellate court. The merits of the claim for damages were not
threshed out at the hearing because the surety stood pat on its contention that the trial court has no jurisdiction to allow the claim
in view of the finality of the decision of the Court of Appeals.
This Court has held that, if the surety was not given notice when the claim for damages against the principal in the replevin bond
was heard, then as a matter of procedural due process the surety is entitled to be heard when the judgment for damages against
the principal is sought to be enforced against the surety's replevin bond.
"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 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 it so
desires." That procedure would forestall the perpetration of fraud or collusion against the surety (Visayan Surety and Insurance
Corporation vs. Pascual, 85 Phil. 779, 785-786).
Inasmuch as in this case appellant Malayan Insurance Co., Inc. was not given the summary hearing during which it could contest
the reality or reasonableness of Fernando's claim for damages, we have to set aside the trial court's order awarding damages
against it and, in the interest of justice, give it another opportunity to be heard on the merits of Fernando's claim for damages.
Before closing, it may be useful to make a review and synthesis of the copious jurisprudence on the surety's liability in
attachment, injunction, replevin and receivership bonds. It was observed in one case that once upon a time the rulings on that
point were in a muddled state.
Section 20 of Rule 57 is a revised version of section 20, Rule 59 of the 1940 Rules of Court which earlier section 20 is a
restatement of this Court's rulings under sections 170, 177, 223, 272 and 439 of the Code of Civil Procedure regarding the
Rule 57: Preliminary Attachment | 281
damages recoverable in case of the wrongful issuance of the writs of preliminary injunction, attachment, mandamus and replevin
and the appointment of a receiver. LLjur
Section 170 contains the provision that the damages suffered in connection with the issuance of a preliminary injunction shall be
ascertained by the court trying the action (meaning the court where the action is pending) and shall be included in the final
judgment "against the plaintiff and against the sureties". As to damages in case of wrongful attachment, see section 439 of the
Code of Civil Procedure and Belzunce vs. Fernandez, 10 Phil. 452.
So, as held under the Code of Civil Procedure, if the preliminary injunction was issued by this Court, the specification of
damages should be filed in this Court. The petitioner and his bondsmen should be served with copies of the specification (Somes
vs. Crossfield, 9 Phil. 13 and Macatangay vs. Municipality of San Juan de Bocboc, 9 Phil. 19).
On the other hand, under section 439 of the Code of Civil Procedure, the damages caused by a wrongful attachment may be
adjudicated in a summary hearing but the better practice would be to claim the damages in the answer and to offer evidence in
support thereof during the trial (Gasataya vs. Fallon, 32 Phil. 245 and Raymundo vs. Carpio, 33 Phil. 395).
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 of receivership were issued
should be claimed in the appellate court.
There is an old ruling that the sureties in an injunction bond are bound by a judgment for damages against their principal even if
the sureties were not heard at the time the claim for damages was tried. The reason for that ruling is that the sureties in an
injunction bond "assume such a connection with the suit that they are included by a judgment in it in a suit at law upon the bond,
so far as the same issues are involved; and that, upon the entry of a judgment against the principal, their liability is absolute"
(Florentino vs. Domadag, 45 O.G. 4937, 81 Phil. 882).
Also, it was held that if damages were awarded against the principal in a replevin bond without notice to the surety, that final
judgment may be enforced against the surety after it has been given an opportunity to be heard as to the reality or
reasonableness of the alleged damages. In such a case, the trial court must order the surety to show cause why the bond should
not answer for the judgment for damages. The hearing is summary and the surety may cross-examine the witnesses presented
by the defendant (Visayan Surety & Insurance Corporation vs. Pascual, 85 Phil. 779).

Rule 57: Preliminary Attachment | 282

Insofar as those rulings in the Florentino and Visayan Surety cases allowed a claim for damages against the surety to be
ventilated in a separate proceeding or after the finality of the judgment for damages against the principal in the bond, those
rulings were jettisoned and abandoned in several subsequent cases because they are contrary to the explicit provision of section
20 of Rule 59, now Rule 57, that the judgment for damages against the surety should be included in the final judgment to avoid
additional proceedings (Cruz vs. Manila Surety & Fidelity Co., Inc. 92 Phil. 699; Japco vs. City of Manila, 48 Phil. 851, 855).
The damages are recoverable on the theory that an actionable wrong was committed by the losing party. The recovery is limited
to the amount of the bond (Pacis vs. Commission on Elections, L-29026, August 22, 1969, 29 SCRA 24, 29).
The usual procedure is to file an application for damages with due notice to the other party and his sureties. The other party may
answer the application. Upon the issues thus being joined, the matter will be tried and determined. A court order declaring the
bond confiscated without adhering to that procedure is void (Fabella vs. Tancinco, 86 Phil. 543; Luzon Surety Co., Inc. vs.
Guerrero, L-20705, June 20, 1966, 17 SCRA 400).
The claim for damages against the surety should be made with notice to the surety and before the judgment against the principal
becomes executory. The liability of the surety should be included in the final judgment. That remedy is exclusive. If not availed
of, the surety is released (Curilan vs. Court of Appeals, 105 Phil. 1160 and De la Rama vs. Villarosa, 118 Phil. 424, 430;
Jesswani vs. Dialdas, 91 Phil. 915; Estioco vs. Hamada, 103 Phil. 1145).
Therefore, the prevailing settled rule is that a court has no jurisdiction to entertain any proceeding seeking to hold a surety liable
upon its bond if such surety has not been given notice of the claim for damages against the principal and the judgment holding
the latter liable has already become executory (People's Surety & Insurance Co., Inc. vs. Court of Appeals, L-21627, June 29,
1967, 20 SCRA 481).
If the judgment awarding damages against the principal in a bond for the lifting of a preliminary injunction had already become
executory, that claim cannot be pressed against the surety by setting it for hearing with notice to the surety. The failure to notify
the surety of the claim for damages against the principal relieves the surety from any liability on his bond (Sy vs. Ceniza, 115
Phil. 396; Pacis vs. Commission on Elections, L-29026, August 22, 1969, 29 SCRA 24; Dee vs. Masloff, 116 Phil. 412). cdll
To entertain the belated claim against the surety after the judgment for damages against the principal has become executory
would result in the alteration of that judgment. That should not be done (De Guia vs. Alto Surety & Insurance Co., Inc., 117 Phil.
434; Visayan Surety & Insurance Co., Inc. vs. De Aquino, 96 Phil. 900; Port Motors, Inc. vs. Raposas and Alto Surety &
Rule 57: Preliminary Attachment | 283
Insurance Co., Inc., 100 Phil. 732; Gerardo vs. Plaridel Surety & Insurance Co., Inc., 100 Phil. 178; Luneta Motor Co. vs. Lopez,
105 Phil. 327; Curilan vs. Court of Appeals, 105 Phil. 1160; Riel vs. Lacson, 104 Phil. 1055).
Moreover, the damages claimed by the defendant should be pleaded as a compulsory counterclaim in his answer. Hence, a
separate action to claim those damages is unwarranted (Ty Tion and Yu vs. Marsman & Co. and Alpha Insurance & Surety Co.,
Inc., 115 Phil. 746, 749; Medina vs. Maderera del Norte de Catanduanes, Inc., 51 Phil. 240; Nueva-España vs. Montelibano, 58
Phil. 807; Tan-Suyco vs. Javier, 21 Phil. 82).
It may be noted that in the Visayan Surety case, 85 Phil. 779, Visayan Surety & Insurance Corporation filed a replevin bond for
one Yu Sip who sued Victoria Pascual for the recovery of a truck. The trial court found that the writ of replevin was wrongfully
procured, that Victoria Pascual was the lawful owner of the truck and that she suffered damages on account of its wrongful
seizure by the sheriff at the instance of plaintiff Yu Sip.
The trial court ordered Yu Sip to return the truck to Victoria Pascual or to pay its value of P2,300 in case of his inability to return it
and, in either case, to pay thirty pesos daily from January 6, 1947 up to the date of the return of the truck or until its value was
fully paid. The Court of Appeals affirmed that judgment.
After the return of the record to the trial court, Victoria Pascual filed a "petition for execution of the surety bond" wherein she
prayed for a writ of execution against the surety to satisfy the judgment out of its replevin bond. The surety opposed that petition.
It contended that it was never notified by Victoria Pascual regarding her presentation of evidence covering the damages which
she had suffered. The trial court granted the petition and ordered the issuance of a writ of execution against the surety. That
order was assailed in a certiorari in this Court.
It was held that the writ of execution should be set aside and that the surety should be given a chance to be heard in a summary
proceeding. That proceeding was conducted after the judgment against Yu Sip, the principal in the replevin bond, had become
final and executory.
What was done in the Visayan Surety case, as recounted above, was not allowed in subsequent cases. Thus, in Manila
Underwriters Insurance Co., Inc. vs. Tan, 107 Phil. 911, the trial court rendered in 1954 a judgment dissolving the preliminary
attachment and ordering the plaintiff to pay the defendant the damages which the latter suffered by reason of the wrongful
attachment. The surety in the attachment bond was not notified of the hearing but it was furnished with a copy of the decision.

Rule 57: Preliminary Attachment | 284

In 1957 the Court of Appeals affirmed that judgment. After it became final, the defendant filed in the trial court against the surety
a motion for execution which the latter opposed. At the hearing of the motion, the defendant offered to reproduce the evidence
which he had presented at the trial. The offer was accepted by the trial court. It issued the writ of execution against the surety.
It was held that, because the surety was not notified of the hearing on the damages suffered by the defendant in the manner
prescribed in section 20 of Rule 59, now Rule 57, it was not liable for damages under its attachment bond.
The surety is notified so that he may cross-examine the witnesses testifying as to the damages and question the evidence
presented by the claimant and interpose any appropriate defense (Riel vs. Lacson, 104 Phil. 1055; Liberty Construction Supply
Co. vs. Pecson, 89 Phil. 50).
So, if plaintiff's claim for damages resulting from the wrongful lifting of the writ of preliminary injunction was awarded in the main
decision without notice to the surety and the decision had become executory, the failure to notify the surety on time relieves him
from his liability under the bond (Alliance Insurance & Surety Co., Inc. vs. Piccio, 105 Phil. 1192). LibLex
The surety may be held liable only if before the judgment for damages against the principal becomes executory, an order is
entered against him after a hearing with notice to him. After the judgment becomes executory, it is too late to file such claim for
damages with notice to the surety (Abelow vs. Riva, 105 Phil. 159; Visayan Surety & Insurance Corp. vs. Lacson, 96 Phil. 878).
Where the Court of Appeals dismissed a mandamus action originally filed in that court and dissolved the preliminary injunction
which it had issued and after entry of judgment was made the record was remanded to the trial court, it was error for the Court of
Appeals to allow the respondent in that case to file a claim for damages against the principal and surety in the injunction bond.
The claim should have been filed before the judgment of dismissal became final (Luzon Surety Co., Inc. vs. Court of Appeals,
108 Phil. 157).
Section 20 of Rule 57 contemplates one judgment for damages against the principal and the surety in the injunction, replevin,
attachment and receivership bonds. Since the judicial bondsman has no right to demand the exhaustion of the property of the
principal debtor, there is no justification for entering separate judgments against them. The claim for damages against the surety
should be made before entry of judgment (Del Rosario vs. Nava, 95 Phil. 637).
In the Del Rosario case, a judgment for damages was rendered against the principal in an attachment bond but there was no
notice to the surety of the claim for damages. That judgment became final. After the execution against the principal was returned

Rule 57: Preliminary Attachment | 285

unsatisfied, the claimant filed a motion praying that the surety company be required to show cause why it should not answer for
the judgment against the principal.
It was held that, while the prevailing party may apply for an award of damages against the surety even after the award has
already been obtained against the principal, nevertheless, in order that all awards for damages may be included in the final
judgment, the application and notice to the surety must be made before the judgment against the principal becomes final and
executory.
In another case, it was held that as the winning party sought to hold the surety liable on its replevin bond almost a year after the
judgment of the Court of Appeals became final, the trial court erred in enforcing its judgment against the surety. "The surety may
only be held liable if, before judgment becomes final an order against the surety is entered after a hearing with notice to the
surety". The claim against the surety should be included in the final judgment. It is not sufficient that the surety be afforded an
opportunity to oppose the writ of execution. (Plaridel Surety & Insurance Company vs. De los Angeles, L-25550, July 31, 1968,
24 SCRA 487).
After this Court's judgment dissolving a preliminary injunction had become final and executory, it would be too late to entertain in
the trial court the defendant's application for damages allegedly caused by the injunction (Santos vs. Moir, 36 Phil. 350).
The defendant in a replevin case cannot file a separate action for damages due to the wrongful issuance of the writ. He should
have claimed the damages as a counterclaim in the original replevin suit (Pascua vs. Sideco, 24 Phil. 26: Ty Tion and Yu vs.
Marsman & Co. and Alpha Ins. & Surety Co. Inc., 115 Phil. 746).
A final judgment for damages against the principal in a replevin bond cannot be enforced against the surety company which was
not notified of the claim for damages and was not afforded a chance to be heard (People's Surety and Ins. Co., Inc. vs. Aragon,
117 Phil. 257).
Where an injunction was dissolved and only attorney's fees and costs were adjudged against the principal, and the procedure for
claiming damages against the surety was not followed, no recourse could be had against the injunction bond in case the writ of
execution against the principal was not satisfied. Moreover, the attorney's fees and costs could be recovered from the principal
even without the filing of the bond (People's Surety & Insurance Co., Inc. vs. Bayona, 103 Phil. 1109).
Where after the dismissal of a petition for relief from the judgment of a municipal court, the Court of First Instance ordered ex
parte the issuance of a writ of execution against the petitioner's injunction bond, that order is void because there was no formal
Rule 57: Preliminary Attachment | 286
claim for damages and there was no hearing with notice to the petitioner and his surety. The court should hold a hearing. (Luzon
Surety Co., Inc. vs. Guerrero, L-20705, June 20, 1966, 17 SCRA 400).
Where on June 11, 1959 an action to stop the foreclosure of a chattel mortgage was dismissed, without prejudice, for failure to
prosecute and, before that dismissal became final, the defendant did not prove any damages resulting from the issuance of the
preliminary injunction, defendant's motion of September 7, 1959 praying that judgment be rendered against the surety's bond
could no longer be entertained. The claim for damages should have been made before entry of final judgment. It must be duly
substantiated at the proper hearing with notice to the surety (Jao and Sia vs. Royal Financing Corporation, 114 Phil. 1152;
Visayan Surety & Insurance Corp. vs. Lacson, 96 Phil. 878).
If the case wherein the injunction was issued was dismissed for failure to prosecute and no damages were awarded to the
defendant by reason of the issuance of the injunction, it was error for the trial court to issue a writ of execution against the surety
since there was no claim nor evidence of damages suffered by the defendant. The order of dismissal did not include any award
of damages. (Vet Bros. and Co., Inc. vs. Movido. 114 Phil. 211).
The case of Vadil vs. De Venecia, 118 Phil. 1217, involves a queer situation. Plaintiff corporation in that case filed an action to
recover a sum of money. It asked for a writ of attachment. Before any attachment could be issued, the defendant filed a
counterbond. But this bond provided that the defendant and his sureties would pay "all damages that the defendant (sic) may
suffer by reason of" the attachment. In other words, the defendant executed a bond in favor of himself.
Judgment was rendered for the plaintiff. As the execution was returned unsatisfied, the trial court on plaintiff's motion ordered
execution against defendant's bond. It was held that the execution was wrongfully issued.
However, where an injunction was issued in a forcible entry case but on certiorari to the Court of First Instance, the justice of the
peace court was held to be without jurisdiction to entertain the ejectment case, that ejectment suit is not considered dismissed
and it may still be regarded as pending in the justice of the peace court for the purpose of allowing the defendant's claim for
damages on the injunction bond (Cruz vs. Manila Surety & Fidelity Co., 92 Phil. 699).
Section 10 of Rule 60 makes section 20 of Rule 57 applicable not only to the replevin bond but also to the redelivery bond
posted by the defendant for the lifting of the order of seizure. The requisites for holding the surety liable on the replevin bond are
also the requisites for holding the surety liable on the redelivery bond. So, if the surety on the redelivery bond was not notified of
the plaintiff's claim for damages, the surety cannot be held liable on its redelivery bond for the damages adjudged against the
Rule 57: Preliminary Attachment | 287
principal. It is necessary that the surety be notified and that its liability be included in the final judgment against the principal
(Luneta Motor Co. vs. Menendez, 117 Phil. 970). LLphil
The writ of execution issued against the counterbond for the dissolution of an injunction is void if it was issued without notice to
the surety and after the judgment on the merits had become executory. The surety's liability should have been included in the
final judgment (Cajefe vs. Fernandez, 109 Phil. 743).
If the judgment awarding damages against the principals in the counterbonds filed for the lifting of the receivership was appealed
to the Court of Appeals and the plaintiff-appellee filed in the trial court (not in the appellate court) his application for damages
against the sureties in the counterbonds, the trial court cannot hear the said application after the record is remanded to it
because, by then, the decision of the appellate court had become final and the damages to be awarded against the sureties
could no longer be included in that judgment. The application for damages against the sureties should have been filed in the
Court of Appeals (Luneta Motor Co. vs. Menendez, 117 Phil. 970, 976).
The procedure in section 20 of Rule 57 should not be confounded with the procedure in section 17 of the same rule regarding
the surety's liability on the counterbond for the lifting of the preliminary attachment. Under section 17, the surety may be held
liable after notice and summary hearing conducted after the judgment had become executory and the execution was returned
unsatisfied (Towers Assurance Corporation vs. Ororama Supermart, L-45848, November 9, 1977, 80 SCRA 262; Vanguard
Assurance Corporation vs. Court of Appeals, L-25921, May 27, 1975, 64 SCRA 148).
The case contempated in section 17 of Rule 57 is different from the case envisaged in section 20 of that rule (Dizon vs. Valdes,
L-23920, April 25, 1968, 23 SCRA 200; Visayan Surety & Insurance Corp. vs. De Aquino, 96 Phil. 900).
Nor does section 20 of Rule 57 apply to cases where the surety bound himself to abide by the judgment against his principal and
thereby renounced his right to be sued or cited, or where the surety guaranteed the return of certain goods and he did not raise
the issue of lack of notice, or where the sureties bound themselves to pay the plaintiff a definite amount (Aguasin vs. Velasquez,
88 Phil. 357; Lawyers Cooperative Publishing Co. vs. Periquet, 71 Phil. 204; Mercado vs. Macapayag and Pineda, 69 Phil. 403
cited in Alliance Insurance case, 105 Phil. 1201).
Note that a different rule also obtains with respect to the surety in the bond of an administrator or executor. The nature of a
surety's obligation on an administrator's bond, which makes him privy to the proceeding against his principal, is such that he is
bound and concluded, in the absence of fraud or collusion, by a judgment against his principal, even though the surety was not a
Rule 57: Preliminary Attachment | 288
party to the proceedings (Laurente vs. Rizal Surety & Insurance Co., Inc., L-21250, March 31, 1966, 16 SCRA 551, citing
Philippine Trust Co. vs. Luzon Surety Co., Inc., 112 Phil. 44. See Cosme de Mendoza vs. Pacheco and Cordero, 64 Phil. 34).
It should be underscored that in the instant case, although the surety's liability was not included in the final judgment, which
became executory, nevertheless, there was a timely application for damages in the Court of Appeals which in its decision
ordered the trial court to hear defendant-appellee Fernando's claim for damages against the surety. That feature of the case
removes it from the coverage of the rule that the surety should be heard before the judgment becomes executory and that his
liability should be included in the final judgment.
WHEREFORE, we hold that the trial court has jurisdiction to comply with the directive of the Court of Appeals but we reverse and
set aside its order of July 14, 1978, requiring petitioner-appellant Malayan Insurance Co., Inc. to pay the damages which it had
adjudged against Makati Motor Sales, Inc.
The trial court is required to hold a summary hearing wherein appellant surety should be given a chance to contest the reality or
reasonableness of respondent-appellee Rosendo Fernando's claim for damages. After such hearing, or if the surety should
waive it, the trial court should render the proper judgment. No costs.
SO ORDERED.
Concepcion, Jr., Santos and Abad Santos, JJ., concur.
Fernando, Actg. C.J. and Barredo, J., took no part.

Separate Opinions

ANTONIO, J., concurring:

I concur.
1. Under section 20 of Rule 57, application for damages against the surety resulting from wrongful attachment or wrongful
seizure of personal property must be filed in the Court of First Instance in the same action in which the Writ of Attachment or the
writ or replevin was issued, before trial, or even after trial but before the judgment becomes executory or before perfection of the
appeal. In other words, the court must still have jurisdiction over the case. The attaching creditor and his surety or sureties must
be notified of the application setting forth the facts showing the right of the applicant to and the amount of damages sustained by
Rule 57: Preliminary Attachment | 289
him. If the appeal is taken, then the application must be filed in the Appellate Court but always before the judgment of said court
becomes final and executory.
2. That where such application is seasonably made to the Appellate Court, the latter must either proceed to hear and decide
the application or refer the application to the trial court and allow it to hear and decide the same. Application for damages
sustained during the proceeding of the appeal may similarly be filed with the Appellate Court, which may hear the application or
refer it to the trial court for the said court to hear and decide.
3. The hearing is 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. While the previous testimony by the claimant on the damages may be reproduced, the surety should
be given an opportunity to cross-examine the witness or witnesses, if it so desires.
In the case at bar, there was a timely application for damages in the Court of Appeals on May 27, 1974, where the case was
then pending, and in its 1977 decision, the Appellate Court ordered that the claim against the surety be heard before the trial
court. This circumstance apparently brings it out of the ambit of the rule that the application to recover damages cannot be the
subject of separate action, in order to avoid multiplicity of suits, since the hearing before the trial court is just an implementation
of the judgment of the Appellate Court. LexLib

Rule 57: Preliminary Attachment | 290

G.R. No. 88379 November 15, 1989
PHILIPPINE CHARTER INSURANCE CORPORATION vs. COURT OF APPEALS, ET AL.

FIRST DIVISION
[G.R. No. 88379. November 15, 1989.]

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, GATES LEARJET
CORPORATION and GATES LEARJET EXPORT CORPORATION, respondents.

T.J. Sumawang & Associates for petitioner.

Quasha, Asperilla, Ancheta, Peña & Nolasco for private respondents.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; ISSUANCE MAY EITHER BE EX PARTE OR UPON
HEARING. — A writ of preliminary attachment may issue either ex parte upon consideration of the application and its supporting
affidavits and documents or after hearing as the court may in its discretion consider proper, once said court is satisfied that any
of the grounds specified by law exists and an acceptable bond is given by the applicant.
2. ID.; ID.; ID.; SURETY BOND; BINDS THE SURETY TO FAITHFULLY COMPLY WITH ITS OBLIGATIONS UNDER THE
BOND. — The filing of the surety bond implies the surety's voluntary submission to the Court's jurisdiction, and binds it to
faithfully comply with its obligations under its bonds.
3. ID.; ID.; ID.; ID.; LIABILITY OF SURETY ARISES WHEN THE APPLICANT IS HELD NOT TO BE ENTITLED TO THE
ATTACHMENT. — Where the judgment rendered is against the party who obtained the preliminary attachment, the surety
becomes liable only upon a finding at a summary hearing that the applicant is not entitled to attachment, regardless of the nature
and character of the judgment on the merits.

Rule 57: Preliminary Attachment | 291

4. ID.; ID.; ID.; ID.; SURETY'S LIABILITY INCLUDES COSTS AND DAMAGES DUE TO ATTACHMENT. — The surety on
the attachment bond answers for all the costs which may be adjudged to the adverse party and all damages which he may
sustain by reason of the attachment from levy to dissolution.
5. ID.; ID.; ID.; ID.; SURETY MUST BE ACCORDED DUE PROCESS. — The surety of an attachment bond must be given
an opportunity to answer the application for the satisfaction of its solidarily liability for damages arising from the wrongful
attachment at a summary hearing scheduled after judgment on the merits.
6. ID.; ID.; ID.; WHEN CLAIM FOR DAMAGES MAY BE FILED. — A claim for damages on account of illegal attachment
"must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the
attaching creditor and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof." (Sec.
20, Rule 57 of the Rules of Court.)

DECISION

NARVASA, J p:
In December, 1981, Learjet Phil. Inc. commenced suit in the Regional Trial Court at Pasig against Gates Learjet Corporation and
Gates Learjet Export Corporation. 1 On said plaintiffs application, and upon the posting of an attachment bond in its behalf by
Philippine Charter Insurance Corporation (then known as Phil-Am Assurance Co., Inc.), the Court issued a writ of preliminary
attachment directed against the defendants' properties. On the strength of the writ, the sheriff seized a twin engine airplane, a
Learjet 35-A-3799, belonging to the defendants. cdll
After due proceedings, judgment was rendered by the Trial Court in plaintiffs' favor, sentencing the defendants to pay
US$2,250,000.00 as actual damages, P200,000.00 as moral damages, P100,000.00 as exemplary damages, as well as
attorney's fees and costs. On appeal to the Court of Appeals by the defendants, 2 however, this judgment was reversed. The
decision of the Appellate Tribunal, promulgated on December 10, 1986, disposed as follows:
"WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and Civil Case No. 43874 of the Regional
Trial Court of Pasig is DISMISSED for lack of merit. For the wrongful attachment of Learjet aircraft 35A-44 owned by defendant-

Rule 57: Preliminary Attachment | 292

appellant Gates Learjet Corporation, plaintiff-appellee Learjet Philippines, Inc. is hereby ordered to pay to the former by way of
actual damages the amount of $73,179.36, P50,000.00 as exemplary damages, and the costs of the suit."
On December 16, 1986 four days after notice of the judgment was served on the defendants, they filed with the Court of Appeals
an "Urgent Petition to have Damages Awarded on Account of Illegal Attachment Executed Against Attachment Bond Issued by
the Surety Philippine American Assurance Co., Inc., Now Pan-Philippines General Insurance Corporation." The petition adverted
to the attachment bond posted by the surety firm in the amount of P2,000,000.00, and asked that the "damages awarded
defendants-appellants by reason of the wrongful attachment be enforced, after proper notice to plaintiff and its bondsman and
hearing of . . . (the) application, jointly and severally against both the plaintiff and the bondsman-surety . . ." A copy of the petition
was furnished the surety. The plaintiff, in its turn, filed a motion for reconsideration of the decision of December 10, 1986.
By Resolution dated March 10, 1987, the Court of Appeals: 3 (1) denied the plaintiffs motion for reconsideration for lack of merit;
and (2) NOTED "defendants-appellants' application or claim for damages against the surety" and RESOLVED "to refer the said
claim or application to the trial court and allow the latter to hear and decide the same pursuant to Section 20, Rule 57 of the
Rules of Court."
The plaintiff tried to have the Appellate Court's decision reviewed and reversed by us, but failed. 4 We denied its petition for
review by resolution dated August 10, 1987; and entry of the resolution was made on February 26, 1988.
On remand of the case to the Trial Court, the defendants filed an "Urgent Petition to Have Damages Awarded on Account of
Illegal Attachment Executed Against Attachment Bond Issued by the Surety Philippine American Assurance Co., Inc., now Pan-
Philippines General Insurance Corporation" dated December 16, 1986. The Court ordered execution of the judgment "against
the plaintiff at Suite 10 Prescon Strata 100 Emerald Avenue, Pasig, Metro Manila" in accordance with the Rules. The writ issued
on April 8, 1988.
Evidently, the sheriff sought to enforce the writ also against the surety, "Philippine Charter Insurance Corporation . . . (formerly
Pan-Philippines General Insurance Corporation)." Said surety thereupon filed with the Trial Court an "Urgent Motion to Recall
and Nullify Sheriff's Notice of Enforcement of Writ of Execution, and for Issuance of Restraining Order/Writ of Preliminary
Injunction." It contended that there was in truth no judgment against it "due to the wrongful attachment of . . . (the defendants')
Learjet Aircraft 35A-44," that since neither Section 20, Rule 57 of the Rules of Court nor the Resolution of the Court of Appeals

Rule 57: Preliminary Attachment | 293

of March 10, 1987 had been complied with, there existed no award of damages against it under its attachment bond, and
enforcement of execution against said bond would be contrary to due process. llcd
The Trial Court forthwith restrained enforcement of the writ of execution against the surety and set the surety's motion for
hearing in the morning of May 27, 1988. After receiving the parties' arguments, the Court promulgated an Order on June 14,
1988 overruling the movant surety's argument that it (the Court) had lost competence to hear and determine the application for
damages against the attachment bond because the judgment of the Court of Appeals had become final and executory. The
Court observed that:
"What is contemplated under Section 20, Rule 57, is that if no application for damages is made before the entry of the final
judgment the surety on the bond is relieved from liability therefor. (Visayan Surety and Insurance Corporation v. Pascual [85 Phil.
779], citing Facundo vs. Tan and Facundo vs. Lim). In the case at bar, an application was made before the entry of final
judgment . . . What was merely deferred was the hearing of said application before the trial court. In fact, said application was
duly noted by the Honorable Court of Appeals in its resolution. Hence, an application for damages was filed in time.
"Considering the foregoing, and in order to determine the extent of the liability of both principal and surety on the attachment
bond, a hearing is necessary."
The Court also resolved to issue, upon a bond of P1,000,000.00, a writ of preliminary injunction restraining the sheriffs from
enforcing the writ of execution or otherwise executing the judgment against the surety "until the application for damages on the
attachment bond is heard and decided;" and set the hearing on the matter on August 9, 1988. The surety moved for
reconsideration, but its motion was denied by Order handed down on October 13, 1988.
The surety then went to the Court of Appeals again, where it sought annulment of the Trial Court's Orders of June 14, 1988 and
October 13, 1988. Its petition for certiorari, prohibition and preliminary injunction, filed on November 3, 1988, was docketed as
CA-G.R. No. SP No. 15987. In it the surety argued that it had been denied its day in court when, without its being present at the
trial, the defendants had "adduced evidence in support of . . . (the) damages" eventually awarded by the Court of Appeals; that
said defendants had "fatally failed to file an application for damages on account of the wrongful attachment," and consequently,
the Court had "no more jurisdiction to set for hearing . . . (the) urgent petition" (to have damages awarded on account of illegal
attachment executed against attachment bond, etc.).

Rule 57: Preliminary Attachment | 294

The Appellate Court's verdict however again went against the surety. By Decision promulgated on March 8, 1989, 5 the petition
was "DENIED DUE COURSE." According to the Court, (1) the "general prayer" in the petition (to hold surety liable on its bond)
dated December 16, 1986 "for such further reliefs justified in the premises" was "broad enough to include and embrace an
application or claim for whatever damages movants sustained during the pendency of the appeal, by reason of . . . "the wrongful
attachment . . .", (2) such a finding was consistent with "Supreme Court rulings' and the earlier "Resolution of March 10, 1987"
noting "defendants-appellants' application or claim for damages against the surety" and referring it "to the trial court . . . pursuant
to Section 20, Rule 57 of the Rules of Court;" and (3) "what must have been contemplated . . . (in said application or claim for
damages) were not the damages awarded in CA-G.R. CV No. 08585, 6 but the damages which applicants or claimants could
have suffered during the pendency of said appeal, as a consequence of the wrongful attachment found by final judgment," for
otherwise "there would have been no need for this Court to allow and, in effect, direct the trial court a quo 'to hear and decide'
subject post-judgment petition in CA-G.R. CV No. 08585." The surety's motion for reconsideration dated March 28, 1989 was
denied by Resolution dated May 17, 1989.
The surety is once again before us, 7 this time praying for reversal of the Appellate Tribunal's aforesaid judgment of March 8,
1989. Once again it will fail, no merit being discerned in its petition for review on certiorari.
By settled rule a writ of preliminary attachment may issue once the Court is satisfied, on consideration ex parte of the application
and its supporting affidavits and documents, 8 or after hearing, as the court may in its discretion consider proper, that any of the
grounds specified by law exists, and an acceptable bond is given by the applicant — 9
". . . executed to the adverse party in an amount . . . fixed by the judge, not exceeding the applicant's claim, conditioned that the
latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto."
The filing of the attachment bond by a surety undoubtedly connotes and operates as a voluntary submission by it to the Court's
jurisdiction, and of course binds it to faithfully comply with its specific obligations under its bond.
The surety does not, to be sure, become liable on its bond simply because judgment is subsequently rendered against the party
who obtained the preliminary attachment. The surety becomes liable only when and if "the court shall finally adjudge that the
applicant was not entitled to the attachment." This is so regardless of the nature and character of the judgment on the merits of
the principal claims, counterclaims or cross-claims, etc. asserted by the parties against each other. Indeed, since an applicant's
Rule 57: Preliminary Attachment | 295
cause of action may be entirely different from the ground relied upon by him for a preliminary attachment, 10 it may well be that
although the evidence warrants judgment in favor of said applicant, the proofs may nevertheless also establish that said
applicant's proferred ground for attachment was inexistent or specious and hence, the writ should not have issued at all; i.e., he
was not entitled thereto in the first place. In that event, the final verdict should logically award to the applicant the relief sought in
his basic pleading, but at the same time sentence him - usually on the basis of a counterclaim — to pay damages caused to his
adversary by the wrongful attachment. 11
When the final judgment declares that the party at whose instance an attachment had issued was not entitled thereto, there is no
question about the eminent propriety of condemning that party to the payment of all the damages that the wrongful attachment
had caused to the party whose property had been seized under the attachment writ.
But what of the surety's liability? The surety on an attachment bond, as already pointed out, assures 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." 12 In other words the surety, by submitting its
attachment bond, binds itself solidarily to make the same payments which its principal — the party at whose instance the
attachment issues — may be condemned to make, to compensate for the damages resulting from the wrongful attachment,
although unlike its principal, its liability is limited to the amount stated in its bond.
The final adjudication "that the applicant was not entitled" to the attachment, standing alone, does not suffice to make the surety
liable. It is necessary, in addition, that the surety be accorded due process, i.e., that it be given an opportunity to be heard on the
question of its solidarily liability for damages arising from wrongful attachment. This, by established rule and practice, is accorded
to the surety at a summary hearing, scheduled after, judgment on presentation of an application to hold it answerable on its
bond. Evidently, such a summary hearing is not rendered unnecessary or superfluous by the fact that the matter of damages
was among the issues tried during the hearings on the merits, unless of course, the surety had previously been duly impleaded
as a party, or otherwise earlier notified and given opportunity to be present and ventilate its side on the matter during the trial.
The procedure for the rendition of a binding directive on the surety upon its solidarily liability for damages for wrongful
attachment is indicated in Section 20, Rule 57 of the Rules of Court. The section reads as follows:
Sec. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover upon the bond given or deposit made by the attaching creditor, any damages
Rule 57: Preliminary Attachment | 296
resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be
included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof.
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 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.
Certain principles are derived from this provision of the Rules. A party against whom a writ of preliminary attachment issues may
impugn the writ by alleging and proving inter alia that the applicant was not entitled thereto, i.e., that the asserted ground for
attachment was inexistent, or the amount for which the writ was sought was excessive, etc., this, by appropriate motion. He may
also claim damages on account of the wrongful attachment through an appropriate pleading, such as a counterclaim, or other
form of application. What is important is that the "application must be filed before the trial or before appeal is perfected or before
the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts
showing his right to damages and the amount thereof."
In the case at bar, since the Trial Court's decision had gone against the defendants, and no irregularity had been adjudged as
regards the preliminary attachment, the latter obviously had no occasion to apply for damages from wrongful attachment —
although they could have so applied therefor because, as already pointed out, it is entirely possible under the law that an
applicant for preliminary attachment be adjudged entitled to relief on his basic claim and at the same time pronounced as not
entitled to the attachment.
As things turned out, the Trial Court's judgment was reversed by the Court of Appeals; the latter dismissed the complaint,
declared the plaintiff not entitled to the attachment and sentenced it to pay to the defendants damages on account thereof. And it
was only at this time that the defendants could have presented and did actually present their petition to enforce the surety's
liability on its bond. This petition, as aforestated, the Court of Appeals (a) noted and (b) referred to the Trial Court with
instructions "to hear and

Rule 57: Preliminary Attachment | 297

decide . . . pursuant to Section 20, Rule 57 of the Rules of Court." Under the circumstances, and in the light of the explicit
provisions of said Section 20, Rule 57, there can be no debate about the seasonableness of the defendants' application for
damages and the correctness of the referral by the Court of Appeals of the application for damages to the Trial Court for hearing
and determination. LLjur
Under the circumstances, too, there can be no gainsaying the surety s full awareness of its undertakings under its bond: that, as
the law puts it: "the plaintiff will pay all costs which may be adjudged to the defendant(s), and all damages which may be
sustained by reason of the attachment, if the same shall finally be adjudged to have been wrongful and without cause," and that
those damages plainly comprehended not only those sustained during the trial of the action but also those during the pendency
of the appeal. This is the law, 13 and this is how the surety's liability should be understood. The surety's liability may be enforced
whether the application for damages for wrongful attachment be submitted in the original proceedings before the Trial Court, or
on appeal, so long as the judgment has not become executory. The surety's liability is not and cannot be limited to the damages
caused by the improper attachment only during the pendency of the appeal. That would be absurb. The plain and patent
intendment of the law is that the surety shall answer for all damages that the party may suffer as a result of the illicit attachment,
for all the time that the attachment was in force; from levy to dissolution. The fact that the attachment was initially (and
erroneously) deemed correct by the Trial Court, and it was only on appeal that it was pronounced improper, cannot restrict
recovery on the bond only to such damages as might have been sustained during the appeal. The declaration by the appellate
court that the applicant for attachment "was not entitled thereto," signifies that the attachment should not have issued in the first
place, that somehow the Trial Court had been misled into issuing the writ although no proper ground existed therefor. The logical
and inevitable conclusion is that the applicant for attachment and the surety on the attachment bond are solidarily liable for all
the damages suffered by the party against whom the writ is enforced, except only that the surety's liability is limited to the
amount set forth in its bond.
The fact that the second paragraph of the rule speaks only of "damages sustained during the pendency of the appeal" is of no
moment; it obviously proceeds from the assumption in the first paragraph that the award for the damages suffered during the
pendency of the case in the trial court was in fact "included in the final judgment" (or applied for therein before the appeal was
perfected or the judgment became executory); hence, it states that the damages additionally suffered thereafter, i.e., during the
pendency of the appeal, should be claimed before the judgment of the appellate tribunal becomes executory. It however bears
Rule 57: Preliminary Attachment | 298
repeating that where. as in the case at bar, the judgment of the Trial Court has expressly or impliedly sustained the attachment
and thus has given rise to no occasion to speak of, much less, file an application for damages for wrongful attachment, and it is
only in the decision of the Court of Appeals that the attachment is declared wrongful and that the applicant "was not entitled
thereto," the rule is, as it should be, that it is entirely proper at this time for the application for damages for such wrongful
attachment to be filed — i.e., for all the damages sustained thereby, during all the time that it was in force, not only during the
pendency of the appeal. And the application must be filed "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." In such a situation, the appellate court
may resolve the application itself or allow it "to be heard and decided by the trial court." prcd
WHEREFORE, the petition is DISMISSED for lack of merit, with costs against the petitioner.
SO ORDERED.
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1. The case was docketed as Civil Case No. 43874 and assigned to Branch 162 of said Court.
2. Docketed as CA-G.R. No. CV No. 08585.
3. Per Nocon (then Associate, now Presiding, Justice) and Ejercito and Martinez, JJ., concurring.
4. The appeal was docketed as G.R. No. 77673.
5. Written for the Division by Purisima, Chairman, with whom concurred Fule and Ordonez-Benitez, JJ.
6. See footnote 4 related text at page 2, supra.
7. See footnote 4 related text at page 2, supra.
8. Secs. 1 and 3, Rule 57, Rules of Court.
9. Sec. 4, Rule 57.
10. E.g., the action is for damages arising from tort, and the ground for attachment is that the defendant has removed or
disposed of his property; or is about to do so, with intent to defraud his creditors.
11. See Baron v. David, 51 Phil. 1; Nueva España v. Montelibano, 58 Phil. 807, 809.
Rule 57: Preliminary Attachment | 299
12. This, in fact, is substantially the language in which the surety's undertaking is couched. Emphasis supplied.
13. Secs. 4 and 20, Rule 57, Rules of Court.

Rule 57: Preliminary Attachment | 300

G.R. No. L-29723 July 14, 1988
ANTONIO ZARAGOZA vs. MARIA ANGELA FIDELINO, ET AL.

FIRST DIVISION
[G.R. No. L-29723. July 14, 1988.]

ANTONIO ZARAGOZA, plaintiff-appellee, vs. MARIA ANGELA FIDELINO and/or "JOHN DOE," defendants MABINI
INSURANCE & FIDELITY CO., INC., surety-appellant.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; DELIVERY OF PERSONAL PROPERTY; PROCEDURE TO HOLD
SURETY LIABLE UPON A COUNTERBOND. — 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.
2. ID.; ID.; ID.; ID.; MOTION TO AMEND DECISION SO AS TO INCLUDE SURETY AS PARTY SOLIDARILY LIABLE WITH
DEFENDANT, SUFFICIENT COMPLIANCE WITH PROCEDURE; CASE AT BAR. — The plaintiff in a suit for the replevy of a
car which he sold to but was not paid for by the defendant obtained a writ of delivery and had the car possessed by the sheriff.
The car was thereafter returned to the defendant upon a surety bond being posted for its release. The suit having resulted in a
judgment for the plaintiff for the unpaid balance of the purchase price of the car and liquidated damages, within the reglementary
period for taking an appeal, plaintiff moved for amendment of the decision so as to include the surety company as a party
solidarily liable with the defendant for the sums awarded in the judgment. The motion was granted. HELD: The decision, as
amended, is affirmed. The motion for amendment 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
Rule 57: Preliminary Attachment | 301
awarded 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 . . . (defendant's) 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.
3. ID.; ID.; ID.; ID.; ID.; FILING OF COUNTERBOND IS VOLUNTARY SUBMISSION TO JURISDICTION OF COURT. —
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 counter-bond, 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.
4. ID.; ID.; ID.; ID.; ID.; MOTION TO AMEND DECISION IS IN THE NATURE OF A MOTION FOR RECONSIDERATION. —
The appellant surety's last argument that by the time the Court amended its decision, the decision had already become final, and
therefore unalterable, is also untenable. The motion for amendment of the decision was unquestionably in the nature of a motion
for reconsideration under Section 1 (c), Rule 37 of the Rules of Court which, having been filed within "the period for perfecting an
appeal," had the effect of interrupting said period.

DECISION

Rule 57: Preliminary Attachment | 302

NARVASA, J p:
Involved in this appeal is no more than the procedure to hold a surety liable upon a counter-bond posted by it for the release of
an automobile seized from a defendant in a replevin action under a writ issued by the Trial Court at the plaintiffs instance.

The suit for the replevy of the car was brought by Antonio Zaragoza in the Court of First Instance at Quezon City 1 against Ma.
Angela Fidelino and/or John Doe. His complaint alleged that the car had been sold to Fidelino but the latter had failed to pay the
price in the manner stipulated in their agreement. The car was taken from Fidelino's possession by the sheriff on the strength of
a writ of delivery, 2 but was promptly returned to her on orders of the Court when a surety bond for the car's release 3 was
posted in her behalf by Mabini Insurance & Fidelity Co., Inc. LLjur
The action resulted in a judgment 4 for the plaintiff the dispositive part of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay to the
plaintiff the sum of P19,417.46, representing the balance of the purchase price of the car sold including interest thereon,
collection charges, notarial fees and sheriffs fees and expenses in connection with the recovery of the vehicle sold; to pay
liquidated damages in the amount of P6,471.84 equivalent to 33 1/3% of the balance outstanding; and to pay the costs of this
suit."
Within the reglementary period for taking an appeal, 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. 5 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. 6 The Trial Court
deemed the motion meritorious and granted it. Its Order of April 16, 1968 7 decreed the following:
"WHEREFORE, the motion is hereby granted, and the dispositive portion of the decision in this case is hereby amended to read
as follows:
'WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering defendant Maria Angela
Fidelino and her surety, the Mabini Insurance & Fidelity Co., Inc., to pay jointly and severally to the plaintiff the sum of
P19,417.46, representing the balance of the purchase price of the car sold, including interests thereon, collection charges,

Rule 57: Preliminary Attachment | 303

notarial fees and sheriff's fees and expenses in connection with the recovery of the vehicle sold, liquidated damages in the
amount of P6,471.84 equivalent to 33 1/3% of the balance outstanding; and to pay the costs of this suit.'"
No motion for reconsideration was filed or appeal taken by the defendant Fidelino as regards either the original or the amended
decision. It was the surety which presented a motion for reconsideration, and upon its denial, appealed to this Court. 8 It ascribes
to the Court a quo, as might be expected, reversible error in amending the judgment in the manner just described. It argues that
the Lower Court never acquired jurisdiction over it since no summons was ever served on it, its filing of a counter-bond not being
equivalent to voluntary submission to the Court's jurisdiction; Zaragoza failed to make a proper application with notice before
finality of the decision as provided by Section 20, Rule 57 of the Rules of Court; and when the order amending the judgment was
promulgated, the judgment had already become final, the running of the period of appeal not having been suspended by
Zaragoza's motion to amend decision, 9 and so, the Court no longer had authority to amend it on April 16, 1968.
The appellant surety posits, quite correctly, that the situation at bar is governed by Section 10, Rule 60, in relation to Section 20,
Rule 57, of the Rules of Court. Section 10, Rule 60, provides as follows:
"SEC. 10. Judgment to include recovery against sureties. — The amount, if any, to be awarded to either party upon any bond
filed by the other in accordance with the provisions of this rule, shall be claimed, ascertained, and granted under the same
procedure as prescribed in section 20 of Rule 57.
And Section 20, Rule 57 reads as follows:
"SEC. 20. Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be
included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof. prcd
xxx xxx xxx" 10
It would seem at first blush that Section 20, Rule 57 above quoted is not relevant. Its title and first sentence speak [1] of an illegal
attachment, and [2] of a judgment "in favor of the party against whom (said illegal) attachment was issued." In the case at bar,
the writ of delivery was not illegal; and the judgment was for, not against, the party in whose favor the writ of delivery was issued.
Rule 57: Preliminary Attachment | 304
In other words, it would appear that for Section 20, Rule 57 to apply to the instant action, 11 the judgment should have been "in
favor of " defendant Fidelino (the party "against whom" the writ of delivery was issued). This however was not the case. The
judgment was in fact against, NOT in favor of Fidelino.
It thus seems indeed that the first sentence of Section 20 precludes recovery of damages by a party against whom an
attachment is issued and enforced if the judgment be adverse to him. This is not however correct. 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. Slight reflection will show the validity of this proposition. For it is entirely possible for a plaintiff to have a
meritorious cause of action against a defendant but have no 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. So has this Court already had occasion to rule, in Baron v. David, 51
Phil. 1, and Javellana v. D.O. Plaza Enterprises, 32 SCRA 261.
Be all this as it may, the second and third sentences of Section 20, Rule 57, in relation to Section 10, Rule 60, are
unquestionably relevant to the matter of the surety's liability upon a counter-bond for the discharge of a writ of delivery in a
replevin suit. 12 Under Section 10, Rule 60 (which makes reference "to either party upon any bond filed by the other in
accordance with the provisions of this rule" [60]), the surety's liability for damages upon its counter-bond should "be claimed,
ascertained, and granted under the same procedure as prescribed in section 20 of Rule 57;" 13 and said section 20 pertinently
decrees that "(s)uch damages may be awarded only upon application and after proper hearing, and shall be included in the final
judgment . . . (which means that the (application must be filed before the trial or before appeal is perfected or before the
judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing
his right to damages and the amount thereof ." Stated otherwise, 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
Rule 57: Preliminary Attachment | 305
heard on the application. These requisites apply not only in cases of seizure or delivery under Rule 60, but also in cases of
preliminary injunctions under Rule 58, 14 and receiverships under Rule 59. 15
It should be stressed, however, that enforcement of a surety's liability on a counter-bond given for the release of property seized
under a writ of preliminary attachment is governed, not by said Section 20, but by another specifically and specially dealing with
the matter; Section 17 of Rule 57, which reads as follows:
"SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole
or in part, 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 to the judgment creditor 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."
The record shows that the appellant surety company bound itself " jointly and severally" with the defendant Fidelino "in the sum
of PESOS FORTY EIGHT THOUSAND ONLY (P48,000.00), Philippine Currency, which is double the value of the property
stated in the affidavit of the plaintiff, for the delivery thereof if such delivery is adjudged, or for the payment of such sum to him as
may be recovered against the defendant and the costs of the action." 16
This being so, 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, as aforestated, 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), 17 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. 18 And
again, the record shows substantial compliance with these basic requirements, obviously imposed in deference to due process.
Cdpr
Appellant surety undoubtedly received copy of Zaragoza's Motion to Amend Decision. 19 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 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
Rule 57: Preliminary Attachment | 306
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 . . . (Fidelino's) 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." 20 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 counter-bond, 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. 21
The same theory as that espoused by appellant surety in this case was, in substance, passed upon and declared to be without
merit in a 1962 decision of this Court, Dee v. Masloff . 22 There, a surety on a counter-bond given to release property from
receivership, also sought to avoid liability by asserting that it was not a party to the case, had never been made a party, and had
not been notified of the trial. The Court overruled the contention, and upheld the propriety of the amendment of the judgment
which ordered the appellant surety company to pay — to the extent of its bond and jointly and severally with defendant — the
judgment obligation. The Court ruled that since such "amended judgment . . . (had been) rendered after the appellant surety
company as party jointly and severally liable with the defendant . . . for the damages already awarded to the appellees, to which
the appellant surety company filed its 'Opposition' and 'Rejoinder' to the 'Reply to Opposition' filed by the appellees, without
putting in issue the reasonableness of the amount awarded for damages but confining itself to the defense in avoidance of
liability on its bond that it was not a party to the case and never made a party therein and was not notified of the trial of the case,
Rule 57: Preliminary Attachment | 307
and that the appellees were guilty of laches, the requirement of hearing was fully satisfied or complied with; . . . (in any case,)
appellant surety company never prayed for an opportunity to present evidence in its behalf."
The appellant surety's last argument that by the time the Court amended its decision, the decision had already become final, and
therefore unalterable, is also untenable. The motion for amendment of the decision was unquestionably in the nature of a motion
for reconsideration under Section 1 (c), Rule 37 of the Rules of Court which, having been filed within "the period for perfecting an
appeal," had the effect of interrupting said period of appeal. 23
WHEREFORE, judgment is hereby rendered AFFIRMING in toto the Decision of the Court a quo dated February 12, 1968, as
amended by the Order of April 16, 1968. Costs against the appellant surety. llcd
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1. Branch 5, the case being docketed as Civil Case No. Q-9979.

2. Secs. 3 and 4, Rule 60, Rules of Court.
3. Sec. 5, Rule 60, provides that the bond be "in double the value of the property as stated in the plaintiff's affidavit (to
guarantee) . . . the delivery of the property to the plaintiff, if such delivery be adjudged, and for the payment of such sum to him
as may be recovered against the defendant."
4. Rendered February 12, 1968; pp. 64 et seq. Rec. on Appeal (Rollo, p. 8).
5. Rec. on Appeal, pp. 68-72.
6. Order, April 16, 1968 (Rec. on App.: Rollo, p. 8).
7. Pp. 74-76, Rec. on App.; italics supplied.
8. The appeal was taken in accordance with Section 2, Rule 42 of the Rules of Court, prior to the effectivity of R.A. No. 5440,
which required that appeals on pure questions of law be taken by petition for review on certiorari, as under Rule 45.
9. Mabini says that Zaragoza received notice of the decision on March 7, 1968; the 30-day period of appeal was not
interrupted by the motion to amend decision dated March 20, 1968 and therefore the judgment became final and executory on

Rule 57: Preliminary Attachment | 308

April 7, 1968 and hence could no longer be amended on April 16, 1968 when the Order of amendment was promulgated. (Pp.
96-97, Rec. on App.).
10. Emphasis supplied.
11. In relation to said Sec. 10, Rule 60.
12. This is precisely the appellant surety's thesis, as already pointed out.
13. The distinctions between a bond given as security for an attachment and a counter-bond for the discharge thereof, is
treated of in some detail in Leelin Marketing Corp. v. C & S Agro Dev. Co., 121 SCRA 725, 728-730.
14. Sec. 9, Rule 58.
15. Sec. 9, Rule 59; SEE Material Distributors (Phil.), Inc. v. Miles Timber and Transport Corp., et al., 103 Phil. 162, upholding
the order of the Trial Court which declared a surety liable upon its counter-bond for the release of property under receivership
(which counter-bond took "the place of the properties released"), the order having "issued after due notice and hearing."
16. Pp. 59-60 Rec. on App.: Rollo, p. 8.
17. P. 67, Rec. on App.
18. In Del Rosario v. Nava, 95 Phil. 637, 642-643, the Court declared inter alia that the rule "plainly calls for only one
judgment for damages against the . . . (losing) party and his sureties; . . (s)ince a judicial bondsman has no right to demand the
exhaustion of the property of the principal debtor, . . . there is no justification for the entering of separate judgments against
them; . . . (and) while the prevailing party may apply for an award of damages against the surety even after an award has been
already attained against the principal, as ruled in Visayan Surety and Insurance Co. vs. Pascual, G.R. No. L-3694, still the
application and notice against the surety must be made before the judgment against the principal becomes final and executory,
so that all awards for damages may be included in the final judgment." SEE, also, Asian Surety & Insurance Co., Inc. v. Nolasco,
79 SCRA 472; Cruz v. Manila Surety & Fidelity Co., Inc., 92 Phil. 699; Japco v. City of Manila, 48 Phil. 851; 855; cf. Pajarito v.
Señeris, 87 SCRA 275.
19. Pp. 69-73, Rec. on App.
20. 74, Rec. on App.
21. Sec. 23, Rule 14, Rules of Court; C.J.S., 122, 123; SEE Feria, Civil Procedure, 1969 ed., pp. 19-20, and Moran, op. cit.,
Vol. 1, p. 55.
Rule 57: Preliminary Attachment | 309
22. G.R. Nos. L-15836 and 16220, Sept. 29, 1962, 6 SCRA 98, citing Visayan Surety & Insurance Corp. v. Pascual, et al., 85
Phil. 779 (referring to cases of wrongfully issued writs of preliminary injunction, receivership, and seizure of personal property),
and Material Distributors (Phil.) Inc. v. Miles Timber and Transport Corp., et al., 55 O.G 1025, 103 Phil. 162, supra (relating to
receivership).
23. Sec. 3, Rule 41, Rules of Court.

G.R. No. L-57957 December 29, 1982

ZENITH INSURANCE CORPORATION vs. COURT OF APPEALS, ET AL.
204 Phil. 805

FIRST DIVISION
[G.R. No. L-57957. December 29, 1982.]

ZENITH INSURANCE CORPORATION, petitioner, vs. HON. COURT OF APPEALS, HON. RICARDO J. FRANCISCO, as
Presiding Judge of Branch VI, Court of First Instance of Rizal, PROVINCIAL SHERIFF OF RIZAL, JEZZER BOTE, Deputy
Sheriff of Rizal and PEDRO F. MEJORADA, respondents.

Pelaez, Adriano & Gregorio Law Offices for petitioner.

Angel R. Gonzales for respondents.

SYNOPSIS
In a suit for collection of a sum of money filed by William Murphy against respondent Pedro Mejorada, the trial Court granted the
Writ of Preliminary Attachment upon a bond of P250,000.00 issued by petitioner surety in favor of Murphy. The Court decided in
favor of Mejorada and ordered Murphy and petitioner to pay the former jointly and severally damages against the attachment
bond. The Court of Appeals affirmed the decision subject to partial execution in the sum of P115,680.55 granted pending appeal.
Rule 57: Preliminary Attachment | 310
Mejorada proceeded against and collected the balance of the bond. Later on, Mejorada moved for the issuance of an Alias Writ
of Execution to enforce the judgment award beyond the amount of the attachment bond. Initially denied by the Trial Court, the
writ was granted upon Motion for Reconsideration holding that the surety's liability is not limited to the amount of the bond but
includes all the actual and consequential damages suffered by Mejorada because of petitioner's malice and bad faith. The Court
of Appeals upheld the Alias Writ of Execution. Reconsideration having been denied, petitioner filed the instant petition claiming
that its liability cannot exceed the amount of the attachment bond.
The Supreme Court held that the liability of petitioner is limited only to the amount of the bond because a guaranty is not
presumed, it must be express and cannot extend to more than what is stipulated therein (Art. 2055 Civil Code).
Petition granted.
SYLLABUS
1. REMEDIAL LAW; JUDGMENTS; DISPOSITIVE PORTION PREVAILS IN THE ABSENCE OF AMBIGUITY. — The
dispositive portion of the Trial Court's Decision, "ordering the plaintiff and the respondent Zenith Insurance Corporation to pay
defendant, jointly and severally against the attachment bond but not exceeding the amount secured thereby in the sum of P250,
000.00" is clear. There it no ambiguity that would "justify resort to the entire contents of the decision in order to determine the
extent of the liability of a party litigant" (Decision, CA-G.R. No. SP-12295, p. 6).
2. CIVIL LAW; CONTRACTS; GUARANTY; LIABILITY OF SURETY THEREON; TERMINATED BY CONTRACT. — The
Decision of the Appellate Court expressly limiting the liability of petitioner to P250,000.00, the amount of the attachment bond, is
correct. "A guaranty is not presumed, it must be express and cannot extend to more than what is stipulated therein." (Art. 2055,
Civil Code) 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 (Rocco vs. Meads, 96 Phil.
884 [1955]). The extent of a surety's liability is determined only by the clause of the contract of suretyship (Republic vs. Umali, 22
SCRA 922 [1968]). It cannot be extended by implication, beyond the terms of the contract (Magdalena Estate, Inc. vs.
Rodriguez, 18 SCRA 967 [1966]; Jao vs. Royal Financing Corporation, 4 SCRA 1210 [1962]).
3. ID.; ID.; ID.; SURETY IS LIABLE FOR DAMAGES RESULTING FROM THE UNDERTAKING ITSELF, CASE AT BAR. —
The Appellate Court held petitioner "equally liable with its principal for all damages sustained resulting from the wrongful
issuance of the Wilt (of Preliminary Attachment)." The phrase "all damages" refers to those resulting from the undertaking itself
Rule 57: Preliminary Attachment | 311
and it does not mean that the surety is answerable for all costs and damages that may be adjudged against its principal over and
above what is adjudged against it in the dispositive portion of the Decision, as it would be unreasonable to expand petitioner's
liability for any and all amounts arising from the case as if it were a "solidary judgment debtor."
4. ID.; ID.; ID.; ID.; ID.; RULING IN PNB vs. LUZON SURETY CO. INC., (68 SCRA 207 [1975]) INCREASING SURETY'S
LIABILITY BEYOND MAXIMUM OF BOND, NOT APPLICABLE IN CASE AT BAR. — The ruling in PNB vs. Luzon Surety Co.
Inc., 68 SCRA 207 (1975), which increased the surety's liability beyond the maximum of the bond making it liable to pay interest
because of its failure to pay its obligation on demand, does not apply in this case, because petitioner herein has settled its
obligation and its liability had already been fully satisfied, unlike in the cited case where the increased liability was "not because
of the contract but because of the default and the necessity of judicial collection."

DECISION

MELENCIO-HERRERA, J p:
The issue for resolution is the correctness of the Order for the issuance of the Alias Writ of Execution by the Court of First
Instance of Rizal, Branch VI, in Civil Case No. 9490, which was affirmed by the Court of Appeals in CA-G.R. No. SP-12295,
making petitioner Zenith Insurance Corporation liable for more than the amount of the bond it had issued in favor of its principal,
William B. Murphy.
The controversy stemmed from the following facts:
On September 5, 1966, William B. Murphy filed a case for collection of a sum of money, accounting and damages, in the Court
of First Instance of Rizal, Branch VI, Pasig, against private respondent Pedro Mejorada (Civil Case No. 9490). Murphy likewise
prayed for a Writ of Preliminary Attachment, which the Trial Court granted upon a bond of P250,000.00 issued by petitioner
Zenith Insurance Corporation in favor of Murphy.
After hearing on the merits, the Trial Court rendered its Decision, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered:
1. Dismissing the plaintiff's Complaint dated September 3, 1966 and filed on September 5, 1966;
2. Declaring the Agreement dated July 20, 1966 (Exhs. B and 30) null and void and without any legal effect whatsoever;
Rule 57: Preliminary Attachment | 312
3. Ordering the plaintiff to pay the defendant P250,000.00 for cash advances and P146,092.48 for spare parts and materials;
4. Ordering plaintiff to pay the defendant P330,000.00 representing unrealized profits;
5. Ordering plaintiff to pay defendant P20,000.00 by way of attorney's fees; and
6. On the action of defendant against the attachment bond, ordering the plaintiff and the respondent Zenith Insurance
Corporation to pay the defendant, jointly and severally against the attachment bond but not exceeding the amount secured
thereby in the sum of P250,000.00, the following amounts:
a. P67,822.65 as actual damages plus interest of 6% per annum on the yearly premiums paid by the defendant on the two
counterbounds posted, from their dates of payment until satisfied by the plaintiff and/or his surety;
b. Actual damages representing the simple legal interest of 6% per annum on 93,336.85, posted by the defendant in
securing his initial counterbond for the same amount, from September 12, 1966 when the writ of preliminary attachment was
served on the defendant's bank until January 8, 1970 when said writ was dissolved;
c. P30,000.00 as compensatory damages for injury to the business and goodwill of the defendant;
d. P66,526.00 as compensatory damages for the unrealized value(s) of the properties of the defendant which were sold in
haste, or auctioned in public bidding(s) therefor;
e. P30,000.00 as moral damages;
f. P30,000.00 as exemplary or corrective damages; and
g. P20,000.00 as attorney's fees.
Plaintiff shall pay costs."
From the said Decision, Murphy and petitioner, as surety, appealed to the Court of Appeals (CA-G.R. No. 53497-R). Pending
appeal, and upon motion of respondent, judgment was partially executed in the amount of P115,680.55.
On May 22, 1979, the Court of Appeals rendered judgment affirming in toto the Decision of the Trial Court, thus:
"WHEREFORE, the decision appealed from being in accordance with law and evidence, the same is AFFIRMED in toto subject
to the partial execution in the sum of P115,680.55 earlier enforced. No costs."
Murphy moved for reconsideration. This was denied by the Court of Appeals. Murphy then appealed by way of Certiorari to this
Court (G.R. No. 53536). The petition was denied for late filing in this Court's Resolution of June 13, 1980.

Rule 57: Preliminary Attachment | 313

Thereafter, private respondent proceeded against the balance of petitioner's attachment bond coverage, and collected
P80,000.00 on July 24, 1980 and P54,319.45 on August 15, 1980, adding up to the full value of the bond of P250,000.00,
including the amount of P115,680.55 already partially executed. Private respondent acknowledged the last payment on August
15, 1980 to be "in full satisfaction of the writ of execution issued."
On November 26, 1980, private respondent filed a Motion for the Issuance of an Alias Writ of Execution to enforce the judgment
award. The Trial Court initially denied alias execution as against petitioner on January 26, 1981, reasoning that, in executing the
judgment, only the dispositive portion is to be looked into in the absence of such ambiguity as would justify resort to the body of
the Decision, and that as the judgment is clear, the liability of petitioner is confined to the amount of the bond.
Private respondent moved for reconsideration. On April 9, 1981, the Trial Court issued the questioned Order reconsidering its
Order of January 26, 1981, and granting the Motion for the issuance of an Alias Writ of Execution, petitioner's liability "not (being)
limited to the amount of the bond it has put up but includes all the actual and consequential damages suffered by private
respondent, there having intervened malice and bad faith" on petitioner's part. Alias Writ was issued and served upon petitioner.
The latter's cash deposit at the Commercial Bank and Trust Company, Escolta Branch, and at the Philippine Bank of
Communications, Juan Luna Branch, were garnished.
Petitioner filed with the Court of Appeals, a Petition for "Certiorari and Prohibition with Preliminary Mandatory Injunction" (CA-
G.R. No. SP-12295) imputing grave abuse of discretion to respondent Judge in the issuance of the Order of April 9, 1981
granting the Alias Writ.
On May 21, 1981, respondent Court of Appeals upheld Alias Writ of Execution, petitioner's "solidary liability (having) been clearly
pronounced by this Court in case CA-G.R. No. 53497-R" when it held that petitioner is equally liable for the damages that
resulted from the wrongful issuance of the writ (of attachment)." Petitioner moved for reconsideration arguing that liability on the
attachment bond is not to be founded with liability on the judgment, and that its liability cannot exceed the amount of the
attachment bond. Reconsideration was denied for lack of merit.
Petitioner filed the present Petition stating that respondent Judge acted without or in excess of jurisdiction in issuing the Order for
the issuance of the Alias Writ of Execution for the further enforcement of the judgment against petitioner; and that respondent
Court of Appeals acted with grave abuse of discretion or erred in sustaining the said Order considering that:

Rule 57: Preliminary Attachment | 314

"1) private respondent has been paid the full value of the P250,000.00 attachment bond posted by petitioner for plaintiff, as
required by the judgment and has, upon receipt of the last installment completing such payment, acknowledged the same to be
`in full satisfaction of the writ of execution',
2) the alias writ of execution would have petitioner surety company satisfy, not the judgment with respect to the damages
resulting from the wrongful issuance of the writ of attachment, but the judgment on the causes of action asserted by defendant
(herein private respondent) in his counterclaims against plaintiff;
3) the alias writ of execution would have petitioner surety company pay more than the value of the attachment bond, in
disregard of the express limitation in the judgment of its liability to the value of the bond as well as of settled jurisprudence."
On September 16, 1981, we issued a Temporary Restraining Order enjoining enforcement of the Order dated April 9, 1981 and
on November 4, 1981, we resolved to give due course and required the filing of Memoranda by the parties, which they have
done.
The only issue to be determined in this Petition is whether or not respondent Court committed grave abuse of discretion in
ordering the issuance of the Alias Writ of Execution making petitioner solidarily liable for all costs and damages, or, for more than
the amount of its bond.
We find for petitioner.
Paragraph "6" of the dispositive portion of the Trial Court's Decision, which states:
"6. On the action of the defendant against the attachment bond, ordering the plaintiff and the respondent Zenith Insurance
Corporation to pay defendant, jointly and severally against the attachment bond but not exceeding the amount secured thereby
in the sum of P250,000.00 the following amounts:"
xxx xxx xxx
is clear and correct. There is no ambiguity that would "justify resort to the entire contents of the decision in order to determine the
extent of the liability of a party litigant". 1 The liability of petitioner is expressly limited to P250,000,00, the amount of the
attachment bond. "A guaranty is not presumed, it must be express and cannot extend to more than what is stipulated therein." 2
It is true that in CA-G.R. No. 53497-R (the appeal from the Trial Court's Decision), petitioner was pronounced "equally liable with
its principal for all damages sustained resulting from the wrongful issuance of the Writ (of Preliminary Attachment)". 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
Rule 57: Preliminary Attachment | 315
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 petitioner's liability for any and all amounts arising from the case as if it were a
"solidary judgment 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 principal in case the action fails. 3 The extent of a surety's liability is
determined only by the clause of the contract suretyship. 4 It cannot be extended by implication, beyond the terms of the
contract. 5
Specifically, this Court in Rocco vs. Meads, supra, ruled:
"Liability on the bond is contractual in nature, and is ordinarily restricted to the obligation expressly assumed therein. Liability an
attachment bond is created by, and rests on, its stipulations 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 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."
The ruling in PNB vs. Luzon Surety Co., Inc. 68 SCRA 207 (1975), which increased the surety's liability beyond the maximum of
the bond by making it liable to pay interest because of its failure to pay its obligation on demand, does not apply in this case,
because petitioner herein has settled its obligation, and its liability had already been fully satisfied, unlike in the cited case where
the increased liability was "not because of the contract but because of the default and the necessity of judicial collection."
WHEREFORE, the Petition is hereby granted. The questioned Order of April 9, 1981 of the Court of First Instance of Rizal,
Branch VI, in Civil Case No. 9490, entitled "William B. Murphy vs. Pedro F. Mejorada, defendant, and Zenith Insurance
Corporation, Surety" and the Decision of the Court of Appeals in CA-G.R. No. SP-12295, entitled "Zenith Insurance Corporation
vs. Hon. Judge Ricardo Francisco, et. als.," are hereby REVERSED and SET ASIDE. The "Temporary Restraining Order"
heretofore issued is hereby made permanent.
No costs.
SO ORDERED.
Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Footnotes
Rule 57: Preliminary Attachment | 316
1. Decision, CA-G.R. No. SP-12295, p. 6.
2. Art. 2055, Civil Code.
3. Rocco vs. Meads, 96 Phil. 884 (1955).
4. Republic vs. Umali, 22 SCRA 922 (1968).
5. Magdalena Estate, Inc. vs. Rodriguez, 18 SCRA 967 (1966); Jao vs. Royal Financing Corporation, 4 SCRA 1210 (1962).

Rule 57: Preliminary Attachment | 317

G.R. No. L-12736 July 31, 1961
FRANCISCO L. LAZATIN vs. ANGEL C. TWAÑO, ET AL.

EN BANC
[G.R. No. L-12736. July 31, 1961.]

FRANCISCO L. LAZATIN, plaintiff-appellant, vs. ANGEL C. TWAÑO and GREGORIO T. CASTRO, defendants-appellees.

Leonardo Abola for plaintiff-appellant.

Manuel O. Chan for defendants-appellees.

SYLLABUS
1. ATTACHMENT; DAMAGES; WHEN ATTACHMENT DEFENDANT ENTITLED TO MORAL DAMAGES. — In order that
an attachment defendant may be entitled to moral damages, he must allege and establish that the writ of attachment was
maliciously sued out.
2. ID.; ID.; WHEN ATTACHMENT DEFENDANT ENTITLED ONLY TO ACTUAL DAMAGES. — Where there is no issue of
malice, the attachment defendant is entitled to recover only the actual damages sustained by him by reason of the attachment.
3. ID.; ID.; WHEN ATTACHMENT DEFENDANT ENTITLED TO COMPENSATION FOR INJURY TO HIS CREDIT. —
Where the attachment is maliciously sued out, the damages recoverable may include a compensation for every injury to his
credit, business, or feelings.
4. ID.; ID.; ACTION TO RECOVER DAMAGES FOR MALICIOUS ATTACHMENT ANALOGOUS TO THAT FOR
MALICIOUS PROSECUTION. — An action to recover damages from the attachment plaintiff, for the wrongful issuance and levy
of an attachment (Malicious attachment) is identical with or analogous to the ordinary action for malicious prosecution (Easten
vs. Bank of Stockton, 66 Cal. 123, 56 Am. Rep. 77, 4 Pac, 1106; Robinson vs. Kellum, 6 Cal. 399; Grant vs. Moore, 29 Cal. 644;
King vs. Montgomery, 50 Cal. 115; Gonzales vs. Cobliner, 68 Cal. 151, 8 Pac. 697; Asevado vs. Orr. 100 Cal. 293; 34 Pac. 777).

Rule 57: Preliminary Attachment | 318

DECISION

PAREDES, J p:
The case at bar had its genesis in Civil Case No. 213, CFI, Manila entitled "Angel C. Twaño and Gregorio T. Castro, plaintiffs,
versus F. L. Lazatin, et al., defendants, Dionisio P. Tanglao, Intervenor", for the recovery of P35,000.00, plus interest, realized in
connection with the purchase by them (plaintiffs and defendants) from the U.S. government, and the subsequent sale, of some
225 auto- trucks. After trial, the CFI of Manila dismissed the complaint as well as the intervention. The order of dismissal was
taken to the Court of Appeals (CA-G.R. No. 4533-R), which, on November 3, 1950, rendered judgment reversing the said order
and declaring that plaintiffs and defendants were co-owners in the business of buying and selling surplus auto-trucks, and
ordered the defendants (one of them Lazatin) to pay to the plaintiffs therein, the sum of P10,000.00, with legal interest from the
filing of the complaint. The said decision became final; it was executed, with the levy of the properties of defendant Lazatin and
their subsequent sale at public auction, wherein the plaintiffs Twaño and Castro were the purchasers. Before the expiration of
the redemption period, on August 2, 1952, defendant Lazatin, deposited with the Sheriff of Pampanga, the sum of P13,849.88,
redemption price.
On August 9, 1952, the same Francisco Lazatin, filed the present action, to recover from the same Twaño and Castro, the sum
of P19,676.09, supposedly a balance of the proceeds of auto-trucks, sold directly to purchasers by said defendants. On the
same date, plaintiff Lazatin, alleging that "there is no security whatsoever for the payment of the amount claimed in the complaint
and that the defendants are moving or are about to remove or dispose of their property with intent to defraud their creditors,
particularly the plaintiff", secured a writ of attachment in the amount he deposited, and pursuant thereto, the Sheriff of Pampanga
refused to deliver the sum of P13,849.88 which should have been paid to the herein defendants.
On August 12, 1952, the herein defendants filed an Urgent Motion to Dissolve the Writ of Preliminary Attachment, on the
following grounds:
1. That the plaintiff has no cause of action because (a) the right of action, if any, has prescribed, and (b) the cause of action
is barred by a prior judgment; and
2. That the allegations in the petition for the issuance of the writ and in the affidavit in support thereof are false.
On September 10, 1952, the lower court, after due hearing, dissolved the writ.
Rule 57: Preliminary Attachment | 319
Subsequently, the defendants filed their answer and after the customary admissions and denials, interposed as special
defenses, the same ground averred in the motion to lift the writ and counterclaimed:
1. That the plaintiff herein has filed a clearly unfounded civil action against the herein defendants as a result of which the
latter had suffered actual or compensatory damages by way of attorney's fees in the sum of P3,000.00.
2. That as a result of the wrongful attachment and the false statements made by the plaintiffs, under oath, in support of his
Ex- Parte Petition for the Writ the herein defendants have suffered moral damages to the amount of P10,000.00.
3. That the wrongful attachment against the properties and the sum of P13,849.88 had caused actual damages to the herein
defendants, represented by the legal interest on such amount.
On May 9, 1953, plaintiff Lazatin died and on March 10, 1954, Gil Gotiangco was appointed and qualified as administrator of
plaintiff's estate.
On the date set for hearing, the defendants herein were granted, a preliminary hearing on their special defenses (Sec. 5, Rule 8).
The lower court on November 12, 1954, entered an order, dismissing the complaint on the ground that it was barred by a prior
judgment and by the statute of limitations. At the same time, the Court set the case for hearing on defendants' counterclaim. On
October 28, 1955, the trial court rendered judgment, ordering the estate of Lazatin to pay the defendants therein the following
sums: —
"(1) 3,000.00 for the fees of Attorney Manuel O. Chan;
(2) P2,500.00 for moral damages to each of the defendants;
(3) Six percent (6%) interest on the amount of P13,849.88 from August 6, 1952 until said amount is actually delivered to and
receipted by the defendants; and
(4) To pay the costs.
"Judgment is also rendered against the Central Surety and Insurance Co., which is solidarily liable with the Estate of the
deceased plaintiff Francisco L. Lazatin on its bond for the sum of P20,000.00, filed by said Company for the issuance of the writ
of attachment for the amounts mentioned in Nos. (2) and (3) of the dispositive part of the decision".
Upon appellant's request, the appeal was certified by the Court of Appeals to this Court, as the issues involved therein are purely
legal in character.

Rule 57: Preliminary Attachment | 320

The law on damages is found on Title XVII of the Civil Code (Arts. 2195 to 2235). The rules governing damages laid down in
other laws, and the principles of the general law on damages are adopted in so far as they are not inconsistent with the Code
(Arts. 2196 and 2198). Article 2197 mentions the kind of damages recoverable, among which are (1) actual or compensatory and
(2) moral. Article 2219 provides that moral damages may be recovered in the following and analogous cases . . . (3) malicious
prosecution. There is an abundance of cases holding that the action to recover damages from the attachment plaintiff, for the
wrongful issuance and levy of an attachment (malicious attachment) is identical or is analogous to the ordinary action for
malicious prosecution (Easten vs. Bank of Stockton, 66 Cal. 123, 56 Am. Rep. 77, 4 Pac. 1106; Robinson vs. Kellum 6 Cal. 399;
Grant vs. Moore, 29 Cal. 644; King vs. Montgomery 50 Cal. 115; Gonzales vs. Cobliner 63 Cal. 151, 8 Pac. 697; Asevado vs.
Orr, 100 Cal. 293, 34 Pac. 777). It may logically be inferred, therefore, that in order that moral damages may be recovered in
connection with the writ of attachment under consideration, malice is an essential ingredient thereof. In Songco vs. Sellner, 37
Phil., 254, where the evidence showed that defendant suffered damages to his credit, as a result of a writ of attachment
wrongfully issued, the Court declared that such damages were remote and speculative and that there was no finding that the
attachment was maliciously sued out. In Aboitiz vs. Da Silva, 45 Phil., 883, the Court refused to grant damages for loss of
reputation by reason of an improper attachment, on the ground that there was no evidence from which malice on the part of the
plaintiff or loss of credit to the defendant, may be inferred or presumed. In Masterson vs. Smith Navigation, 60 Phil., 366,
damages to good name, allegedly suffered by the defendant as a result of a writ of attachment wrongfully issued, were
disallowed on the ground that such damages were very problematical. In American jurisdictions, where the principles of the
general laws on damages in common law (adopted by Art. 2198 of the new Civil Code), are in force, only actual or compensatory
damages are recoverable for wrongful but not malicious attachment. An allowance may be made for injury to feeling if the
attachment was sued out maliciously and without probable cause; but in the absence of this element there can be no recovery.
(6 C.J., 533- 534; 541). "The authorities are quite uniform in holding that, in the absence of malice, injuries to credit, reputation
and business, are too remote and speculative to be recovered" (Union Nat. Bank vs. Cross, 100 Wis. 174, 75 NW 992). Where
there is no issue of malice, damages must be compensatory merely, and confined to the actual loss from deprivation of the
property attached or injury to it, or in case of closing business, to the probable profits of the business, during the time of its
stoppage (Holiday Bros. vs. Cohen 34 Ark. 707). All of which go to show that the attachment defendant is not entitled to moral
damages, unless it is alleged and established that the writ was maliciously sued out.
Rule 57: Preliminary Attachment | 321
This notwithstanding, the defendants-appellees invoke the following rule, in support of their thesis.
"SEC. 4. Bond required from plaintiff. — The party applying for the order must give a bond executed to the defendant in an
amount to be fixed by the judge not exceeding the plaintiff's claim, that the plaintiff will pay all the costs which may be adjudged
to the defendant and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the
plaintiff was not entitled thereto." (Rule 59, R.C.)
They claim that under the above section, malice and want of probable cause are not essential (II Moran's Rules of Court, 2nd
Ed. pp. 19-20); that the language used therein is clear and its intent and purpose are obvious; its provision cannot be given a
broader scope than what it imports; and the element of malice cannot be implied from the terms thereof. It is finally argued that
as the attachment- plaintiff, according to the rule, should pay "all the damages" which the attachment defendant might sustain by
reason of the attachment, if the court shall finally adjudge that the plaintiff was not entitled thereto, the ruling of the trial court that
the appellant should pay the appellees moral damages, is correct. We do not share this view. It should be observed that Sec. 4
of Rule 59, does not prescribe the remedies available to the attachment defendant in case of a wrongful attachment, but merely
provides an action for recovery upon the bond, based on the undertaking therein made and not upon the liability arising from a
tortious act, like the malicious suing out of an attachment. Under the first, where malice is not essential, the attachment
defendant, is entitled to recover only the actual damages sustained by him, by reason of the attachment. Under the second,
where the attachment is maliciously sued out, the damages recoverable may include a compensation for every injury to his
credit, business or feelings (Tyler vs. Mahoney 168 NC 237, 84 SE 362; Pittsburg etc. 5 Wakefield etc. 135 NC 73, 47 SE 234).
And considering the fact that the Rules of Court are of older vintage than the new Civil Code, the matter of damages in the said
rules should he encompassed within the framework of the Civil Code (Art. 2196 Civil Code). It is quite true that said section 4
employs the expression "all damages", but this should be understood to refer to the damages resulting from the undertaking
itself, the recovery of which is subject to "the principles of the general law on damages", earlier discussed. (Art. 2198, Civil Code,
supra).
A cursory perusal of the decision would show that 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. The decision does not make any finding that the defendants-appellees did in fact suffer mental
anguish or injury to their credit or reputation. The decision simply states: "Coming now to the moral damages which defendants
Rule 57: Preliminary Attachment | 322
have suffered consisting of mental anguish, serious anxiety and besmirched reputation, it is believed that being businessmen of
good commercial standing and reputation, each of them should be awarded at least P2,500.00." Moreover, the dissolution of the
writ was due to a technicality. No moral damages can be inferred from the mere fact that the redemption price to which
defendants were entitled, had been retained by the provincial sheriff for a period of 38 days. The trial court held that the present
action was already investigated and adjudged in CA-G. R. No. 4533-R and the right of action was barred by the statute of
limitations, and that since the writ of attachment was only a remedy adjunct to the main suit, plaintiff-appellant was not entitled to
the writ. While the lower court declared that the defendants-appellees had an outstanding balance of P171,947.80 in the bank
and that they were not disposing their property in fraud of creditors or of the plaintiff, as alleged in the petition for the issuance of
the writ, still the said court did not make any finding that the said petition was maliciously sued out. We are, therefore, of the
opinion that the defendants-appellees are not entitled to moral damages.
"In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: . .
.
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff.
xxx xxx xxx
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be
recovered." (Art. 2208, Civil Code).
Defendants' counterclaim for the recovery of attorney's fees is based on paragraph 4 of the cited provision, for legal services
rendered in defending the main suit. There is no showing in the decision appealed from that plaintiffs' action is "clearly
unfounded". Plaintiffs-appellants' complaint was not dismissed because the facts alleged therein were found untrue, but on
purely technical grounds the special defenses of prescription of the action and res adjudicata. While it may be hard to believe
that plaintiff had labored under the impression that the matters involved in his complaint had not been adjudicated in the previous
litigation between the same parties (Civil Case No. 213 CFI Manila), because plaintiff himself was a lawyer, such error of
judgment on his part would not justify the inference that the action was "clearly unfounded". As aptly observed by appellants'
counsel, defenses as the one interposed by appellee in their counterclaim "raise questions of law not always of obvious and
easy solution". While it may appear also that the move was a scheme to prevent the defendants-appellees from reaping the

Rule 57: Preliminary Attachment | 323

benefits of the final judgment rendered in their favor in said case CA-G. R. No. 5433- R, still one cannot nullify, without cause,
the good and honest motive, which should be presumed, when a litigant goes to court for the determination of his alleged right.
Withal, and considering the fact that defendants-appellees were drawn into this litigation by plaintiff-appellant and were
compelled to hire an attorney to protect and defend them, and taking into account the work done by said attorney, as reflected in
the record, throughout the proceedings, we deem it just and equitable to award attorney's fees for defendants-appellees. The
sum of P3,000.00 adjudicated by the trial court, is reasonable under the circumstances (par. 11, Art. 2208, Civil Code).
It appears that plaintiffs-appellants have abandoned their appeal with respect to the payment of 6% interest in the amount of
P13,849.88.
Modified, with the elimination of moral damages, the decision appealed from is affirmed in all other respects. Costs against
plaintiff-appellant.
Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon, De Leon and Natividad, JJ., concur.
Bautista Angelo, J., is on leave.

Rule 57: Preliminary Attachment | 324

THIRD DIVISION

[G.R. No. 104047. April 3, 2002]

MC ENGINEERING, INC., petitioner, vs. THE COURT OF APPEALS, GERENT BUILDERS, INC. and
STRONGHOLD INSURANCE CO., INC., respondents.

DECISION
CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal of the decision of the Court
of Appeals dated November 14, 1991 [1] and its resolution dated February 5, 1992. [2] The Court of Appeals reversed the decision
dated July 15, 1989 of the Regional Trial Court, Branch 85, [3] Quezon City, in Civil Case No. Q-44392 dismissing the Complaint
for Sum of Money With Preliminary Attachment and Damages filed by respondent Gerent Builders, Inc. (“respondent Gerent” for
brevity) against petitioner MC Engineering, Inc., (“petitioner” for brevity). The trial court ordered respondents Gerent and
Stronghold Surety and Insurance Company (“respondent Surety” for brevity) to pay petitioner, jointly and severally, damages and
attorney’s fees.

The Facts

Rule 57: Preliminary Attachment | 325

 The undisputed facts in this case as found by the trial court and quoted by the Court of Appeals in its assailed decision are
as follows:

“x x x On October 29, 1984, Mc Engineering, Inc. and Surigao Coconut Development Corporation (Sucodeco, for short) signed
a contract (Exh. B, also Exh. 5), for the restoration of the latter’s building, land improvement, electrical, and mechanical equipment
located at Lipata, Surigao City, which was damaged by typhoon Nitang. The agreed consideration was P5,150,000.00* of which
P2,500,000.00** was for the restoration of the damaged buildings and land improvement, while the P3,000,000.00 was for the
restoration of the electrical and mechanical works.

The next day, on October 30, 1984 defendant Mc Engineering and plaintiff Gerent Builders, Inc. entered into an agreement
wherein defendant subcontracted to plaintiff the restoration of the buildings and land improvement phase of its contract with
Sucodeco but defendant retained for itself the restoration of the electrical and mechanical works. The subcontracted work covered
the restoration of the buildings and improvement for P1,665,000.00 (Exh. C, also Exh. 6).

Two (2) months later, on December 3, 1984, Sucodeco and defendant Mc Engineering entered into an agreement amending
provision No. VII, par 1 of their contract dated October 29, 1984, by increasing the price of the civil works from P2,250,000.00 to
P3,104,851.51, or an increase of P854,851.51, with the express proviso that ‘except for the amendment above specified, all the
other provisions of the original contract shall remain the same’ (Exh. L).

The civil work aspect consisting of the building restoration and land improvement from which plaintiff would get P1,665,000.00
was completed (TSN., p. 14, July 30, 1986) and the corresponding certificate of acceptance was executed (Exh. F), but the
electrical works were cancelled (Tsn., p. 8, July 30, 1986; Tsn., p. 19, Feb. 11, 1987). On January 2, 1985, plaintiff received from
defendant the amount of P1,339,720.00* as full payment of the sub-contract price, after deducting earlier payments made by
defendant to plaintiff, as evidenced by the affidavit executed by plaintiff’s president, Mr. Narciso C. Roque (Exh. 1), wherein the
latter acknowledged complete satisfaction for such payment on the basis of the Statement of Account (Exh. 2, 2-a & 2-b) which
plaintiff had earlier forwarded to defendant.

Nevertheless, plaintiff is still claiming from defendant the sum of P632,590.13 as its share in the adjusted contract cost in the
amount of P854,851.51, alleging that the sub-contract is subject to the readjustment provided for in Section VII of the agreement,
and also the sum of P166,252.00 in payment for additional electrical and civil works outside the scope of the sub-contract.”[4]

Rule 57: Preliminary Attachment | 326

 Petitioner refused to pay respondent Gerent. Thus, on March 21, 1985, respondent Gerent filed the complaint against
petitioner. On March 28, 1985, the trial court issued the corresponding writ of preliminary attachment upon the filing by
respondent Gerent of a P632,590.13 bond issued by respondent Surety. [5] On April 24, 1985, petitioner moved to quash the writ
on the ground that it was improperly issued. The trial court denied the motion.

Petitioner assailed the denial in a petition for certiorari[6] filed with the Court of Appeals. In a resolution dated October 17,
1986, the Court of Appeals[7] rendered a decision granting the petition, as follows:

“Wherefore, finding merit to the petition, the writ of attachment dated March 28, 1985, and the order dated August 14, 1985,
denying the motion to quash writ of attachment should be as it is hereby declared null and void, and the execution made by
respondent Deputy Sheriff Cristobal C. Florendo, under the writ of attachment issued should be as it is hereby nullified. The
respondent Sheriff is hereby directed to restore ownership of the properties heretofore seized and attached to petitioner. No
pronouncement as to costs.”[8]

On July 13, 1987, the trial court ordered the return of petitioner’s properties that deputy sheriff Cristobal C. Florendo
attached and seized. The sheriff reported to the court that he never seized a single property of petitioner but merely conducted a
“paper levy”.

On January 5, 1988, petitioner filed an application against the attachment bond to recover damages it suffered due to the
wrongful issuance of the writ of attachment. Respondent Surety opposed the application.

In its Answer, petitioner vigorously denied respondent Gerent’s causes of action. Petitioner counterclaimed for damages
and attorney’s fees due to the improper issuance of the writ of attachment.

On July 15, 1989, after trial on the merits, the trial court rendered its decision, the dispositive portion of which reads:

“WHEREFORE, judgment is hereby rendered against the plaintiff and in favor of the defendant, as follows:

1. Dismissing the instant case;

2. Ordering the plaintiff and Stronghold Surety And Insurance Company to pay defendant M.C. Engineering, Inc., jointly and
severally, the sum of P70,000.00 as moral damages; P30,000.00 as exemplary damages; and P50,000.00 as attorney’s fees,

Rule 57: Preliminary Attachment | 327

 plus costs.

SO ORDERED.”[9]

From the foregoing decision, respondents filed separate notices of appeal on September 5, 1989 and November 2, 1989,
respectively.[10]

The Court of Appeals rendered the assailed Decision on November 14, 1991. [11] On February 5, 1992, the Court of Appeals
denied petitioner’s motion for reconsideration. [12]

The Ruling of the Court of Appeals

The Court of Appeals ruled respondent Gerent’s claim meritorious, declaring that Gerent is entitled to share 74% of the price
increase in the civil works portion of the main contract.

First, the Court of Appeals found that the price increase arose from a second detailed estimate of the costs of civil works
allegedly submitted by respondent Gerent to petitioner. Thus, the Court of Appeals stated:

“xxx. To obtain an adjustment in the contract price, it appears that plaintiff-appellant, as sub-contractor, submitted a second
detailed estimate of the costs of civil works (Exh. D) to appellee which, after marking up the figures therein to reflect its share,
attached the same to its letter of proposal for an increase in the contract price eventually submitted to SUCODECO. On the basis
of the estimates, the latter agreed to increase the cost for the full restoration of its typhoon damaged buildings and land
improvement (civil works) from P2,250,000.00 to P3,104,851.51 (Exh. L). Payment of this adjustment was made by SUCODECO on
December 27, 1984 (Exh. N). It is from this increase of P854,851.51 that plaintiff-appellant sought to recover its share from the
appellee.”[13]

“Appellee denies the submission of the second detailed estimates by plaintiff-appellant. It must be observed, however, that
appellee is an electro-mechanical engineering firm which becomes an accredited civil contractor only for as long as it has civil
engineers to do the civil works. Thus, in the SUCODECO project, appellee hired plaintiff-appellant, an undisputed civil contractor,
to furnish civil engineering services. Taking into account the technical expertise required to draw up such a detailed estimate of civil
Rule 57: Preliminary Attachment | 328
 works as Exh. D and the absence of proof that other civil contractors apart from plaintiff-appellant was ever engaged by appellee, it
is undoubtedly plausible that plaintiff-appellant made the estimates which appellee submitted to SUCODECO, with the
corresponding adjustments in the costs.”[14]

Second, the Court of Appeals noted that the price increase preceded the cancellation of petitioner’s electrical and
mechanical works portion of the main contract.

Petitioner’s president, Mario Cruel, testified that on December 3, 1984, Sucodeco approved the price increase for the civil
works portion of the main contract. A week later, or on December 14, 1984, Sucodeco wrote to petitioner canceling the electrical
and mechanical works portion of the main contract. [15] The Court of Appeals thus reasoned:

“From the foregoing, it is apparent that the adjustment in the price of civil works preceded the cancellation of the electro-
mechanical works. If it is indeed true that the adjustment was for the sole benefit of appellee for its preparatory expenses and lost
profits, the increase would have been effected simultaneously with or after the cancellation of the electrical and mechanical works.
The fact that the amendment in the contract was made before the cancellation could only mean that SUCODECO agreed to
increase the cost of the civil works not to compensate appellee for the then still subsisting original agreement but as a result of the
higher estimates submitted by the contractor and subcontractor on the expenses for the civil works.”[16]

Third, the Court of Appeals did not consider the absence of an itemized listing of material and labor costs relevant to
respondent Gerent’s right to a share in the price increase.

The Court of Appeals ruled that it is Sucodeco, the project owner, and not petitioner who can question the true value of the
material and labor costs. Since Sucodeco did not raise any question, it must have agreed to the price increase even without the
submission of the true value. Consequently, the Court of Appeals held that it was petitioner’s obligation to pay respondent
Gerent its share of the price increase in accordance with the subcontract. [17]

Fourth, the Court of Appeals found no evidence that petitioner spent substantial amounts on the electrical and mechanical
portion of the main contract to justify petitioner’s claim to the entire price increase.

The Court of Appeals rejected petitioner’s claim that the price increase was intended to compensate petitioner for the losses
it suffered due to the cancellation of the electrical and mechanical portion of the main contract. The Court of Appeals stated that:
Rule 57: Preliminary Attachment | 329
 “It is important to note that despite appellee’s posturing that it incurred expenses prior to the cancellation of its contract, thus
entitling it to the whole adjustment price, the records are bereft of proof showing substantial amounts expended by appellee. To
justify its entitlement to the whole amount, it could have presented receipts reflecting purchases of materials, drawing plans of
engineering designs, detailed estimates of electrical and mechanical works and testimonies of engineers allegedly mobilized to start
the planning. As it is, the most that appellee could produce were three (3) purchase invoices totaling P110,000.00. xxx.”[18]

Fifth, the Court of Appeals found the quitclaim executed by respondent Gerent on January 2, 1985 vitiated with fraud since
petitioner intentionally withheld from Gerent the information that on December 3, 1984 Sucodeco had already agreed to the price
increase. The Court of Appeals ruled:

“xxx. The mere fact that an affidavit or quitclaim was executed by Mr. Roque on behalf of his company does not preclude or
estop plaintiff-appellant from recovering its just share for it appears that appellee intentionally withheld from Mr. Roque a vital
information. Had he known, it is highly unlikely that he will sign the quitclaim. We are more apt to believe Mr. Roque’s protestations
that he did not know about the adjustment. His testimony is straightforward, consistent and unwavering. Moreover, a prudent man
engaged in the business of construction for decades and whose interests are amply protected by a written instrument will not be
easily convinced to acquiesce to have appellee get P1.4M of the whole contractual price. Appellee apparently led Mr. Roque to
believe that no adjustment was made to hide its big share in the contract. Considering the fraud employed against plaintiff-
appellant, the quitclaim is not binding at all.”[19]

Thus, in the dispositive portion of the assailed decision the Court of Appeals decreed:

“WHEREFORE, premises considered, judgment is hereby rendered setting aside the appealed decision of the lower court, and
in lieu thereof defendant-appellee is ordered to pay plaintiff-appellant the sum of P632,590.13 representing the increased contract
price in the sub-contract agreement, with the civil works by SUCODECO, and attorney’s fees equivalent to 25% of P632,590.13.
Plaintiff-appellant and the surety-appellant are hereby adjudged to solidarily pay appellee the sum of P5,000.00 as attorney’s fees,
in connection with the wrongful obtention of the writ of attachment. With costs against defendant-appellee.

SO ORDERED.”

Hence, this petition.

Rule 57: Preliminary Attachment | 330

The Issues

In its Memorandum, petitioner raises the following issues:

1. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AND GROSSLY ERRED IN
HOLDING THAT RESPONDENT GERENT IS ENTITLED TO P632,590.13 OR 74% OF THE PRICE INCREASE IN THE CIVIL
WORKS PORTION OF THE MAIN CONTRACT BETWEEN PETITIONER AND SUCODECO.

2. WHETHER OR NOT THE QUITCLAIM EXECUTED BY GERENT WAS VITIATED WITH FRAUD.

3. WHETHER OR NOT PETITIONER IS ENTITLED TO ACTUAL, MORAL, AND EXEMPLARY DAMAGES DUE TO THE
WRONGFUL ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT.

4. WHETHER OR NOT THE AMOUNT OF P5,000.00 AS ATTORNEY’S FEES IS SUFFICIENT.

5. WHETHER OR NOT RESPONDENT GERENT IS ENTITLED TO ATTORNEY’S FEES IN THE AMOUNT EQUIVALENT TO
TWENTY FIVE PERCENT (25%) OF P632,590.13.

The Ruling of the Court

The Court finds for petitioner MC Engineering, Inc.

The Quitclaim of Respondent Gerent

We begin with the issue of whether the so-called quitclaim executed by respondent Gerent is valid. If the quitclaim is valid,
then the quitclaim settles with finality all the claims of respondent Gerent, rendering its complaint against petitioner without any
legal basis. If fraud vitiated the quitclaim, then it becomes necessary to determine if petitioner still owes respondent Gerent any
amount under their subcontract.

Rule 57: Preliminary Attachment | 331

 The quitclaim is embodied in the Affidavit executed on January 2, 1985 by respondent Gerent’s president, Narciso Roque.
The Affidavit is not the usual quitclaim which expressly discharges and releases a party from any and all liabilities. The Affidavit
does not contain such express language. However, the Affidavit expressly acknowledges receipt by Gerent of “ full payment” of
the subcontract price[20] from petitioner. The effect, nevertheless, is the same because a creditor who receives and
acknowledges full payment from his debtor causes the extinguishment of his claim against the debtor. [21] Roque, however, now
claims that had petitioner informed him of the price increase granted by Sucodeco on December 3, 1984, he would not have
signed the Affidavit of January 2, 1985.

The primary question to resolve is whether petitioner misled, deceived or coerced respondent Gerent into signing the
Affidavit. We rule petitioner did not. The Court of Appeals erred in declaring that fraud vitiated the Affidavit.

Fraud is never presumed but must be established by clear and convincing evidence. There is no evidence that petitioner
misled, deceived or coerced respondent Gerent’s president into signing the Affidavit. A mere preponderance of evidence is not
even adequate to prove fraud. Thus, in Maestrado vs. Court of Appeals, [22] the Court ruled that:

“The deceit employed must be serious. It must be sufficient to impress or lead an ordinarily prudent person into error, taking
into account the circumstances of each case. Silence or concealment, by itself, does not constitute fraud, unless there is a
special duty to disclose certain facts. Moreover, the bare existence of confidential relation between the parties, standing alone,
does not raise the presumption of fraud.”[23] (Emphasis supplied)

There was no proof of fraud presented by respondent Gerent other than its bare and unsubstantiated allegations. On the
contrary, respondent Gerent’s president, Roque, admitted that he was fully aware and certain of the impending price increase.
Thus, Roque testified:

“Q: Is it really true that you knew that there will be an increase because you were discussing that already?

A: I know that there will be an increase.

Q: Because you were discussing it?

A: Yes. I know that there will be an increase, that is why I am always inquiring from Mr. Cruel whether there was already an

Rule 57: Preliminary Attachment | 332

 increase made and adjustment of the contract.

Q: When was the increase being discussed?

A: Even during the time of the initial start of the project it was already discussed.

Q: What particular month?

A: About November.

Q: And the contract was signed by Mario Cruel and Sucodeco in October? October 29, 1984?

A: Yes, sir.” [24] (Emphasis supplied)

Despite his certainty that a price increase was imminent, Roque still signed the Affidavit without any reservation. Since
respondent Gerent was fully aware of the impending price increase, it cannot claim that it was misled or deceived into signing the
Affidavit. The non-disclosure by petitioner of the price increase did not mislead or deceive respondent Gerent because Roque
fully knew that the price increase would in any event happen. Based on his own testimony, Roque voluntarily, willingly and
freely signed the Affidavit without any compulsion or coercion from anyone. Thus, Roque testified:

“Q: But you know before hand that what you signed is supposed to be an affidavit?

A: Yes, sir.

Q: Did you make any complaint to MC Engineering?

A: No, sir.

xxx.

Q: When you signed that affidavit Exh. “1”, did you not make any protests?

A: No, I did not make any protest.”[25]

Petitioner was under no obligation to disclose to respondent Gerent, a subcontractor, any price increase in petitioner’s main
contract with Sucodeco. Respondent Gerent is not a party to the main contract. The subcontract between petitioner and

Rule 57: Preliminary Attachment | 333

respondent Gerent does not require petitioner to disclose to Gerent any price increase in the main contract. The non-disclosure
by petitioner of the price increase cannot constitute fraud or breach of any obligation on the part of petitioner.

Moreover, the record shows that the P139,720.30 representing final and full payment of the subcontract price was paid by
petitioner to respondent Gerent based on the statement of account Gerent itself prepared and submitted to petitioner. This can
be gleaned from the testimony of Roque, to wit:

“Q: You have submitted likewise a statement of account?

A: Yes, sir.

Q: And this statement of account is this Annex “1” of the Answer?

A: Yes, sir.

ATTY. AGUINALDO

May we request that this statement of account be marked as Exh. “2”.

And the signature above the typewritten name Narciso Roque including the words submitted by, be marked as Exh. 2-A and the figure
P139,720.30 be encircled and be marked as Exh. 2-B.”[26]

The Statement of Account signed and submitted by respondent Gerent’s president Roque to petitioner provides as follows:

“January 2, 1985

MC ENGINEERING, INC.
98 Sgt. J. Catolos St.,
Cubao, Quezon City

Subject: Breakdown for sub-contracted work at Sucodeco Proj.

STATEMENT OF ACCOUNT

CONTRACT AMOUNT…………………………………………..…........P1,665,000.00

Less: Previous Payments:

Rule 57: Preliminary Attachment | 334
 October 30 - 50% downpayment - P832,500.00

December 4 – 2nd partial payments. - 400,000.00

December 13- 3rd partial payments. - 200,000.00

P1432,500.00

Deduction for cost of materials 92,779.70 1,525,279.70

taken from Sucodeco.

BALANCE DUE & COLLECTIBLE P139,720.30

vvvvvvvvvvvv

Submitted by:

NARCISO C. ROQUE
Chairman

Conforme:

__________________”[27] (Emphasis supplied)

Again, nothing in the Statement of Account indicates any reservation relating to the impending price increase. Thus,
respondent Gerent was paid what it actually believed, estimated and demanded should be its fair compensation for its
subcontract work. The voucher issued by petitioner to respondent Gerent in full payment of the subcontract price states as
follows:

“MC ENGINEERING, INC.

Quezon City CHECK VOUCHER NO. 21324

Date January 2, 1985

TO: GERENT BUILDERS INCORPORATED

Full payment for subcontracted work at Sucodeco Project………..................................………………….

Rule 57: Preliminary Attachment | 335
 ……………..139,720.30

Less: 3% of 15% withholding tax…………………………………….628.74

P139,091.56

Amount paid by Check No. RCBC # 479476 P139,091.56

Received the sum of PESOS one hundred thirty nine

thousand ninety one pesos & 56/100 only from MC
ENGINEERING, INC. in full payment of account.

By:

_____________________
Payee

Checked and recommended by: APPROVED BY:

______________________________ _______________________
Office Assistant President”[28]

(Emphasis supplied)

This voucher, stating that the amount of P139,091.56 was in “full payment” for the subcontract work, was signed by Roque
at the same time he received the check payment for the same amount.

Finally, the Affidavit that Roque signed provides as follows:

“A F F I D A V I T

I, NARCISO C. ROQUE, of legal age, Filipino, married with residence and postal address at No. 58 Lanzones Street, Quezon
City, Metro Manila, Philippines, after being sworn to in accordance with law, do hereby depose and say:

1. That I am the CHAIRMAN/PRESIDENT of GERENT BUILDERS, INC.;

2. That my Company, GERENT BUILDERS, INC., has sub-contracted with MC ENGINEERING, INC. for the restoration
Rule 57: Preliminary Attachment | 336
 works of building and land improvement of SUCODECO OIL HILLS, INC. located at Bo. Lipata, Surigao City;

3. That in the prosecution of restoration works and land improvement of SUCODECO OIL MILLS, INC. Buildings,
GERENT BUILDERS, INC. had fully paid the wages of laborers, rentals of equipment and machineries used; and fully
paid materials used in the fabrication, delivery and erection of same, and that no supplier, laborer, equipment and
machinery owner has standing claim against my company;

4. That all taxes due in accordance with the project have been fully paid as of date;

5. That the ONE HUNDRED THIRTY NINE THOUSAND SEVEN HUNDRED TWENTY PESOS AND 30/100
(P139,720.30) ONLY, released on January 2, 1985 REPRESENTS FULL PAYMENT OF MY CONTRACT WITH MC
ENGINEERING, INC.; (Emphasis supplied)

6. That this affidavit is being executed for purpose of collecting from MC ENGINEERING, INC.;

7. That affiant, further sayeth none.

NARCISO C. ROQUE

Affiant” [29]

(Emphasis supplied)

The inescapable conclusion is that the Affidavit was meant to be a total quitclaim by respondent Gerent, fully discharging
petitioner from whatever amounts it may have owed Gerent under the subcontract. There is nothing in the Affidavit that reserves
respondent Gerent’s right to collect a portion of any price increase in the main contract. On the other hand, the Affidavit is clear,
unequivocal and absolute that respondent Gerent had received "full payment” under the subcontract. Respondent Gerent is
now estopped from impugning the validity of the Affidavit simply because petitioner secured a higher price for the main contract.

Thus, in Maestrado vs. Court of Appeals[30] we stated that:

“The freedom to enter into contracts, such as the quitclaims, is protected by law and the courts are not quick to interfere with
such freedom unless the contract is contrary to law, morals, good customs, public policy or public order. Quitclaims, being contracts
of waiver, involve the relinquishment of rights, with knowledge of their existence and intent to relinquish them. xxx.
Rule 57: Preliminary Attachment | 337
 Quitclaims being duly notarized and acknowledged before a notary public, deserve full credence and are valid and enforceable
in the absence of overwhelming evidence to the contrary.”

In the instant case, the Affidavit is indisputably intended to document the fact that petitioner had fully paid respondent Gerent
for the subcontract work. Roque’s signature thereon attests to the truth of the contents of the Affidavit. Thus, Roque again
testified:

“Q: But you read the contents of the affidavit?

A: Yes, sir.

Q: You understand the contents of the affidavit when you signed?

A: Yes, sir.”[31]

The execution of the Affidavit by Roque, president of respondent Gerent, finally puts to rest all the claims of Gerent against
petitioner under the subcontract. The very purpose of the Affidavit, just like a quitclaim, is precisely to finally settle all the claims
of respondent Gerent, regardless of the merits of the claims. The Affidavit can be annulled only if it was procured through fraud.
There is no convincing evidence to establish that fraud vitiated the Affidavit. The fact that petitioner received a windfall because
of the price increase is not a reason to annul the Affidavit. Consequently, the Affidavit renders moot and academic all the other
issues raised in this petition. Nevertheless, the Court will still painstakingly discuss and resolve the remaining issues raised by
petitioner.

The 74%-26% Sharing.

The Court of Appeals upheld respondent Gerent’s theory that the subcontract provides for a 74%-26% sharing between
Gerent and petitioner in any price increase for the civil woks portion of the main contract. Ruled the Court of Appeals:

“The question left to be determined is the amount of appellant’s share in the adjusted price. The record reveals that out of the
P2,250,000.00 originally earmarked for civil works, plaintiff-appellant, as sub-contractor, was awarded P1,665,000.00 which is 74%

Rule 57: Preliminary Attachment | 338

of the first amount. Moreover, in the second detailed estimate submitted by plaintiff-appellant to appellee, the total cost of
P2,297,590.00 was charged for civil works. This amount was subsequently increased by appellee to P3,104,851.00* when it
submitted the estimates to SUCODECO. Again, the mark-up was 26% of plaintiff-appellant’s estimate. Under the circumstances,
the parties had clearly intended to split the cost award to 74%-26% in plaintiff-appellant’s favor. This entitles plaintiff-appellant to
the sum of P632,590.13 as its share in the adjusted price.”[32]

Again, we do not agree. A perusal of the subcontract reveals the following stipulations:

“ARTICLE II

SUB-CONTRACT PRICE

2.1. In consideration of the full and satisfactory performance of the works by the SUB-CONTRACTOR the CONTRACTOR
shall pay the SUB-CONTRACTOR the Lump Sum amount of ONE MILLION SIX HUNDRED SIXTY FIVE THOUSAND
(P1,665,000.00) PESOS.

2.2. The SUB-CONTRACT PRICE above is subject to section VIII of MAIN CONTRACT. By reason thereof, parties hereby
declare and understand that the SUB-CONTRACT PRICE of P1.665 is subject to change and verification pending the final
submission of the true value as maybe determined by evaluation and inspection by representatives of OWNER, CONTRACTOR
and SUB-CONTRACTOR.”[33] (Emphasis supplied)

On the other hand, the main contract between petitioner and Sucodeco provides as follows:

“VIII. SPECIAL SIDE AGREEMENT. – It is hereby declared and understood that Contract Price of P5.25M is subject to
changes and verification pending the final submission of the true value as maybe determined by evaluation and inspection by
representatives of both parties, SURIGAO COCONUT DEVELOPMENT CORPORATION and MC ENGINEERING, INC.”[34]

(Emphasis supplied)

The Court of Appeals was correct in holding that:

“The above-cited stipulations are very clear and need no extraneous interpretation. The lump sum amount of P1,665,000.00
due to plaintiff-appellant in payment of the civil works subcontracted to it is subject to change depending on the true value to be
submitted and evaluated by the parties to the contracts.”[35] (Emphasis supplied)
Rule 57: Preliminary Attachment | 339
However, the Court of Appeals erred in upholding respondent Gerent’s claim that it was entitled to a 74% share in the price
increase of the main contract.

Respondent Gerent alleges that as a customary business practice petitioner and respondent Gerent agreed to a 74%-26%
sharing in the main contract price for the civil works portion. The alleged 74%-26% sharing can be upheld only if such specific
sharing was agreed upon in the subcontract, or if the subcontract is a joint venture. A textual examination of the terms of the
subcontract shows no provision regarding any 74%-26% sharing between petitioner and respondent Gerent. Instead, the
subcontract specifically provides for a fixed price for the civil works in the amount of P1,665,000.00, subject to change only
upon submission of the “true value” of the work undertaken by the subcontractor.

Neither is there any stipulation in the subcontract indicating a joint venture between petitioner and respondent Gerent. That
the subcontract price corresponds to 74% of the main contract price cannot by itself be interpreted to mean that the parties
agreed to a 74%-26% sharing of any price increase in petitioner’s main contract with Sucodeco. Roque, respondent Gerent’s
president, testified that the 74%-26% arrangement was not incorporated in the subcontract and was a mere gentleman’s
agreement. This can be gleaned from the testimony of Roque, to wit:

“Q: Mr. Witness, you mentioned under page 5 of the transcript when you gave your direct testimony that the agreement between
you and the defendant was a joint venture, is that correct?

A: Yes, sir.

Q: Where is that agreement?

A: It was a verbal agreement between us. Among contractors there is such a thing as gentleman’s agreement.

Q: Are you referring to…you mean to say that that agreement is not in writing?

A: It is not in writing but it was verbally agreed between the defendant and myself.

xxx.

“Q: Why was that 74%-26% sharing not placed in the agreement with MC Engineering by your company?

xxx.
Rule 57: Preliminary Attachment | 340
 A: Prior to entering into our proposal we have already an agreement with Mr. Cruel that whatever contract we will get, the civil work will
be awarded to me on subcontract wherein 26% will be for MC Engineering and 74% will be for us.

Q: That is verbal agreement?

A: Verbal prior to the execution of the subcontract agreement.

Q: That was the verbal agreement prior to the execution and signing of the subcontract agreement?

A: It was.

xxx.

“Q: This agreement, to reiterate your testimony for the alleged 74% and 26% sharing, this has never been reduced into writing?

A: It is not, sir.”[36] (Emphasis supplied)

The terms of the subcontract are clear and explicit. There is no need to read into them any alleged intention of the parties. If
the true intention of the parties was a 74%-26% sharing in any price increase in the main contract, the parties could have easily
incorporated such sharing in the subcontract, being a very important matter. They did not because that was not their agreement.

Section 9, Rule 130 of the Revised Rules of Court provides that “[w]hen the terms of an agreement have been reduced to
writing, it is to be considered as containing all the terms agreed upon and there can be, between the parties and their successors
in interest, no evidence of such terms other than the contents of the written agreement.” Simply put, evidence of a prior or
contemporaneous verbal agreement is generally not admissible to vary, contradict, or defeat the operation of a valid contract. [37]
While parol evidence is admissible to explain the meaning of written contracts, it cannot serve the purpose of incorporating into
the contract additional contemporaneous conditions which are not mentioned at all in writing, unless there has been fraud or
mistake.[38] It is basic that parties are bound by the terms of their contract which is the law between them. [39]

Respondent Gerent claims that petitioner cannot be allowed to evade its lawful obligation arising from the subcontract, citing
the well-known principle of law against unjust enrichment. Article 22 of the Civil Code provides that “[e]very person who through
an act or performance by another, or by any other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him.” Two conditions must generally concur before the rule on unjust
Rule 57: Preliminary Attachment | 341
enrichment can apply, namely: (a) a person is unjustly benefited, and (b) such benefit is derived at another’s expense or
damage.[40]

Such a situation does not exist in this case. The benefit or profit derived by petitioner neither comes from respondent Gerent
nor makes the Gerent any poorer. The profit derived by petitioner comes from Sucodeco by virtue of the main contract to which
respondent Gerent is not a party. Respondent Gerent’s rights under the subcontract are not diminished in any way, and Gerent
remains fully compensated according to the terms of its own subcontract. The profit derived by petitioner is neither unjust, nor
made at the expense of respondent Gerent.

That a main contractor is able to secure a price increase from the project owner does not automatically result in a
corresponding price increase to the subcontractor in the absence of an agreement to the contrary. In this case, there is no
stipulation in the subcontract that respondent Gerent will automatically receive 74% of whatever price increase petitioner may
obtain in the civil works portion of the main contract. Neither has the subcontract been changed to reflect a higher subcontract
price.

In a subcontract transaction, the benefit of a main contractor is not unjust even if it does less work, and earns more profit,
than the subcontractor. The subcontractor should be satisfied with its own profit, even though less than the main contractor’s,
because that is what it bargained for and contracted with the main contractor. Article 22 of the Civil Code is not intended to
insure that every party to a commercial transaction receives a profit corresponding to its effort and contribution. If a
subcontractor knowingly agrees to receive a profit less than its proportionate contribution, that is its own lookout. The fact that a
subcontractor accepts less does not make it dumb for that may be the only way to beat its competitors. The winning
subcontractor cannot be allowed to later on demand a higher price after bagging the contract and beating competitors who asked
for higher prices. Even if the subcontractor incurs a loss because of its low price, it cannot invoke Article 22 of the Civil Code to
save it from financial loss. Article 22 is not a safety net against bad or overly bold business decisions.

Under the foregoing circumstances, we hold that Gerent is not entitled to any share in the price increase in the main
contract. Whatever price increase petitioner obtained in the main contract, whether for the civil works portion or otherwise, was
solely for the benefit of petitioner.
Rule 57: Preliminary Attachment | 342
The First and Second Detailed Estimates

There is no true valuation of the civil works.

The main contract clearly provides that as a condition precedent for any upward or downward adjustment in the contract
price, there must first be a true valuation of the materials and labor costs to be determined through evaluation and inspection by
representatives of petitioner and Sucodeco. [41] A similar provision is found in the subcontract requiring, before any change in the
subcontract price, for a true valuation to be determined by Sucodeco, petitioner and respondent Gerent. The records establish
that respondent Gerent was responsible for making the estimates of the actual cost of the civil works which served as basis for
the original price of the main contract.

However, the Court of Appeals erred in finding that the price increase in the main contract was based on a second detailed
estimate supplied by respondent Gerent. [42] The evidence adduced reveals that the parties did not undertake any true valuation of
the cost of the civil works. The price increase could not have been based on a true valuation because no true valuation was ever
made as required by the main contract and subcontract. There is no substantial evidence to support respondent Gerent’s
assertion that the price increase was based on a second estimate that Gerent allegedly supplied petitioner.

The true valuation of the works must be based on the true value or estimates of the actual materials and labor required for
the work. An examination of the alleged second detailed estimate reveals nothing but a plain summary of computation. Not only
is it undated but there is also nothing in the said estimate which indicates that it was indeed received, evaluated and marked-up
by petitioner as claimed by respondent Gerent. Neither was it clearly established by convincing evidence that the same was the
true and final valuation of the civil works pursuant to the terms of the subcontract and main contract. This is evident from the
testimony of Roque, the president of respondent Gerent, to wit:

“Q: So your conclusion is that based on the payment of SUCODECO to MC Engineering, you are now entitled to your claim of alleged
74%?

A: Yes, sir.

Q: And it is not based on the actual determination of the true value of the materials and labor spent and utilized in the project?
Rule 57: Preliminary Attachment | 343
 A: In the same manner as MC Engineering.…it is not based on the true value.

Q: It is not based on the true value?

A: Yes sir.”[43] (Underscoring Supplied)

Clearly, the price increase did not result from a true valuation of materials and labor, which is the only valid ground for any
adjustment in the subcontract price.

The second estimate is lower than the first estimate.

A further perusal of the testimony of Narciso Roque clearly shows that the alleged second estimate, assuming it was agreed
to by petitioner and Sucodeco, was actually even lower than the first estimate which was the basis of the original contract price
for the civil works. Thus, respondent Gerent’s Roque testified as follows:

“Q: Now, you made a second estimate?

A: Yes, sir, I made a second estimate on November 5.”

xxx.

“Q: How much was that?

A: P2,297,590.00, for the restoration of the civil works and land development.”

xxx.

“Q: How much again was the total of the first estimate?

A: In the first estimate the total…

Q: The breakdown first.

A: For building is P2,257,351.20 and the land improvement is P247,361.40.

Rule 57: Preliminary Attachment | 344

 Q: And this is the first estimate, am I correct?

A: Yes, sir.

Q: When was this made?

A: That was October 15.

Q: Then there was a second estimate?

A: The second estimate is the final adjusted cost submitted to MC Engineering by Gerent Builders. The total for building and land
improvement is P2,297,590.00.”[44] (Underscoring supplied)

If indeed the price increase in the main contract were based on the lower second estimate, then the actual price adjustment
would have been downward and not upward. The fact that the main contract price went up from the original P2,250,000.00 to
P3,104,851.51 shows that the price increase was not made on the basis of the second estimate.

There was no itemized listing of material and labor costs.

Moreover, the record is bereft of proof of an itemized listing of the costs of materials and labor to be used upon which
respondent Gerent could have based its second estimate. This negates further respondent Gerent’s claim that the price increase
was based on its second estimate.

The inevitable conclusion is that the price increase in the civil works portion of the main contract was based on other factors
and not on the alleged second estimate submitted by respondent Gerent.

Third Issue: Award of actual, moral and exemplary damages.

We come to the issue of whether or not petitioner is entitled to its counterclaim for actual, moral and exemplary damages
due to the wrongful issuance of the writ of attachment. The Court of Appeals held that:
Rule 57: Preliminary Attachment | 345
 “xxx. In the instant suit, appellee failed to establish bad faith and malice against plaintiff-appellant when it sought to attach the
former’s properties. The lower court itself in its decision did not make any express pronouncement as to the existence of malice and
bad faith in the procurement of the writ of attachment. Instead the trial court concluded that ‘as a result of such attachment, the
defendant’s business operation and credit standing have been prejudiced and damaged’ and ‘the defendant is entitled to recover
moral and exemplary damages by reason of the irregular issuance of the writ of attachment.’ Such conclusions do not immediately
warrant the award of moral damages. It is true that the attachment was wrongful. But in the absence of proof of bad faith or malice,
plaintiff-appellant’s application cannot be said to be harassing or oppressing but merely an act done to assert and protect a legal
right. (Emphasis supplied)

The grant of exemplary damages is likewise improper. Since no moral damages is due to appellee and it appearing that no
actual damages was awarded by the lower court, the grant of exemplary damages has no leg on which to stand (Art. 2234, Civil
Code).

If at all, the wrongful issuance of the writ of attachment, as ruled out by this Court, merely resulted in actual damages to
appellee. But such is not automatically awarded for it is subject to proof. Appellee’s claim that it lost major contracts after a credit
investigation revealed that its accounts were garnished is a bare allegation not merely unsupported by solid evidence but is also
speculative. The alleged $35,000.00 remittance refused by the Hongkong and Shanghai Bank does not inspire belief for failure of
appellee to produce documentary proof to buttress its claim.”[45]

We agree with the Court of Appeals that the trial court erred in awarding moral and exemplary damages to petitioner. The
mere fact that a complaint is dismissed for lack of legal basis will not justify an award of moral damages to the prevailing party. [46]
Even the dismissal of a “clearly unfounded civil action or proceeding” will not entitle the winning party to moral damages. [47] For
moral damages to be awarded, the case must fall within the instances enumerated in Article 2219, or under Article 2220, of the
Civil Code.[48] Moreover, in the absence of fraud, malice, wanton recklessness or oppressiveness, exemplary damages cannot be
awarded.[49]

Fourth and Fifth Issues : Award of Attorney’s Fees

Rule 57: Preliminary Attachment | 346

 The last matter to be determined is the reasonableness of the attorney’s fees awarded to both parties. The Court of Appeals
held that:

“xxx, the award of attorney’s fees must vary. Considering the wrongful attachment made against appellee’s accounts, it is
understandable that it incurred attorney’s fees in procuring the discharge of the attachment for which reason the amount of
P5,000.00 may reasonably be awarded. However, inasmuch as plaintiff-appellant was constrained to file this suit to protect its legal
interest, and pursuant to the terms of the sub-contract, appellee is adjudged to pay appellant 25% of P632,590.13, the amount
involved in this suit.”[50]

The award must be modified. The Court of Appeals was partly correct in holding that the award of attorney’s fees to
petitioner is justified considering that petitioner was constrained to engage the services of counsel at an agreed attorney’s fees.
To secure the lifting of the writ of attachment, petitioner’s counsel, Atty. Mario Aguinaldo testified that he was paid P1,250.00 on
January 1985, P10,000.00 on April 10, 1985 and another P10,000.00 on June 30, 1985 for his legal services, totaling
P21,500.00.[51] Accordingly, the award of P5,000.00 is hereby increased to P21,250.00. We deem it just and equitable that
attorney’s fees be awarded when a party is compelled to incur expenses to lift a wrongfully issued writ of attachment. [52]

WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals is SET ASIDE. The decision of
the trial court is AFFIRMED WITH MODIFICATION. The complaint against petitioner is dismissed with prejudice. Respondents
Gerent Builders, Inc. and Stronghold Surety and Insurance Company are ordered to pay petitioner MC Engineering, Inc., jointly
and severally, the sum of P21,250.00 as attorney’s fees. Costs against respondents.

SO ORDERED.

Melo, (Chairman), Panganiban, and Sandoval-Gutierrez, JJ., concur.

Vitug, J., on official leave.

Rule 57: Preliminary Attachment | 347

SECOND DIVISION

[G.R. No. 154106. June 29, 2004]

D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S. DAYRIT, petitioners, vs. READYCON
TRADING AND CONSTRUCTION CORP., respondent.

DECISION
QUISUMBING, J.:

This petition for review assails the decision [1] of the Court of Appeals, dated January 30, 2002, as well as its resolution [2]
dated June 20, 2002 in CA-GR CV No. 49101, denying petitioners’ motion for reconsideration. The appellate court affirmed the
decision[3] of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, ordering petitioners to pay the sum of
P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the
complaint, until fully paid to Readycon Trading and Construction Corp., plus damages.

Petitioner D.M. Wenceslao and Associates, Inc. (WENCESLAO, for brevity) is a domestic corporation, organized under and
existing pursuant to Philippine laws, engaged in the construction business, primarily infrastructure, foundation works, and
subdivision development. Its co-petitioner, Dominador Dayrit, is the vice-president of said company. [4] Respondent Readycon
Trading and Construction Corporation (READYCON, for brevity) is likewise a corporate entity organized in accordance with
Philippine laws. Its primary business is the manufacture and sale of asphalt materials. [5]

The facts of this case are not in dispute.

WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway in the R-1

Rule 57: Preliminary Attachment | 348

Toll Project along the Coastal Road in Parañaque City. To fulfill its obligations to the PEA, WENCESLAO entered into a contract
with READYCON on April 16, 1991. READYCON agreed to sell to WENCESLAO asphalt materials valued at P1,178,308.75.
The contract bore the signature of co-petitioner Dominador Dayrit, as signatory officer for WENCESLAO in this agreement.
Under the contract, WENCESLAO was bound to pay respondent a twenty percent (20%) downpayment, or P235,661.75, upon
delivery of the materials contracted for. The balance of the contract price, amounting to P942,647, was to be paid within fifteen
(15) days thereof. It was further stipulated by the parties that respondent was to furnish, deliver, lay, roll the asphalt, and if
necessary, make the needed corrections on a prepared base at the jobsite. [6]

On April 22, 1991, READYCON delivered the assorted asphalt materials worth P1,150,531.75. Accordingly, WENCESLAO
paid the downpayment of P235,661.75 to READYCON. Thereafter, READYCON performed its obligation to lay and roll the
asphalt materials on the jobsite.[7]

Fifteen (15) days after performance of said work, READYCON demanded that WENCESLAO pay the balance of the contract
price. WENCESLAO, however, ignored said demand.

On May 30, 1991, the counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good on the
balance it owed. Again, WENCESLAO failed to heed the demand. It did not even bother to reply to the demand letter. [8]

In view of this development, on July 19, 1991, READYCON filed a complaint with the Regional Trial Court of Pasig City for
collection of a sum of money and damages, with prayer for writ of preliminary attachment against D.M. Wenceslao and/or
Dominador Dayrit, docketed as Civil Case No. 61159. READYCON demanded payment of P1,014,110.45 from petitioners herein
with P914,870.75 as the balance of contract price, as well as payment of P99,239.70, representing another unpaid account. [9]

As READYCON timely posted the required bond of P1,150,000, its application for the writ of preliminary attachment was
granted.

On September 5, 1991, the RTC Sheriff attached certain assets of WENCESLAO, particularly, the following heavy
equipments: One (1) asphalt paver, one (1) bulldozer, one (1) dozer and one (1) grader. [10]

On September 16, 1991, WENCESLAO moved for the release of the attached equipments and posted its counter-bond. The
Rule 57: Preliminary Attachment | 349
trial court granted the motion and directed the RTC Sheriff to return the attached equipments.

On September 25, 1991, the Sheriff released the attached heavy machineries to WENCESLAO. [11]

In the proceedings below, WENCESLAO admitted that it owed READYCON P1,014,110.45 indeed. However, it alleged that
their contract was not merely one of sale but also of service, namely, that respondent shall lay the asphalt in accordance with the
specifications and standards imposed by and acceptable to the government. WENCESLAO also alleged that since the contract
did not indicate this condition with respect to the period within which the balance must be paid, the contract failed to reflect the
true intention of the parties.[12] It alleged READYCON agreed that the balance in the payments would be settled only after the
government had accepted READYCON’s work as to its quality in laying the asphalt. By way of counterclaim, WENCESLAO
prayed for the payment of damages caused by the filing of READYCON’s complaint and the issuance of the writ of attachment
despite lack of cause.[13]

On December 26, 1994, the RTC rendered judgment in this wise:

WHEREFORE, judgment is hereby rendered ordering the defendant D.M. Wenceslao & Associates, Inc. to pay plaintiff as
follows:

1. The amount of P1,014,110.45 with interest at the rate of 12% per annum (compounded annually) from August 9, 1991, date
of filing of the complaint, until fully paid.

2. The amount of P35,000.00 as and for attorney’s fees and expenses of litigation.

3. Costs of suit.

The counterclaim of the defendants is dismissed for lack of merit.[14]

Dissatisfied with the decision, the petitioners appealed to the Court of Appeals. The appellate court, however, affirmed in
toto the decision of the lower court.[15]

In denying the appeal, the appellate court found that contrary to WENCESLAO’s assertion, malice and bad faith in obtaining
a writ of attachment must be proved before a claim for damages on account of wrongful attachment will prosper, citing Philippine
Commercial International Bank v. Intermediate Appellate Court, 196 SCRA 29 (1991). The CA stressed that the trial court found
Rule 57: Preliminary Attachment | 350
neither malice nor bad faith relative to the filing of the complaint and the obtaining of the writ of attachment. Also, according to
the CA, petitioners did not adduce evidence to show that the attachment caused damage to the cited pieces of heavy equipment.
[16]

The appellate court also found that the trial court correctly interpreted the period for payment of the balance. It held that the
text of the stipulation that the balance shall be paid within fifteen days is clear and unmistakable. Granting that the sales contract
was not merely for supply and delivery but also for service, the balance was already due and demandable when demand was
made on May 30, 1991, which was a month after READYCON performed its obligation. [17]

Hence, the instant petition, wherein petitioners raise the following issues:

1. WHETHER OR NOT QUESTIONS OF FACTS ARE RAISED IN THE APPEAL BY CERTIORARI;

2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENT LIABLE
FOR COMPENSATORY DAMAGES FOR THE WRONGFUL ISSUANCE OF THE WRIT OF PRELIMINARY
ATTACHMENT;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THE OBLIGATION [AS]
NOT YET DUE AND DEMANDABLE.[18]

We find proper for resolution two issues: (1) Is respondent READYCON liable to petitioner WENCESLAO for damages
caused by the issuance and enforcement of the writ of preliminary attachment? (2) Was the obligation of WENCESLAO to pay
READYCON already due and demandable as of May 30, 1991?

On the first issue, petitioners rely mainly on Lazatin v. Twano and Castro, 112 Phil. 733 (1961), reiterated in MC Engineering
v. Court of Appeals, 380 SCRA 116 (2002). In Lazatin, we held that actual or compensatory damages may be recovered for
wrongful, though not malicious, attachment. Lazatin also held that attorney’s fees may be recovered under Article 2208 of the
Civil Code.[19] Petitioners contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAO’s
equipment resulted in a paralysis of its operations, causing it to sustain a loss of P100,000 per day in terms of accomplishment
of work. Since the attachment lasted 19 days it suffered a total loss of P1.9 million. Aside from that, it had to spend P50,000 on
the pullout of the equipment and another P100,000 to repair and restore them to their former working condition. [20]
Rule 57: Preliminary Attachment | 351
 Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy under the rules, a penalty
cannot be meted out for the enforcement of a right, such as in this case when it sought such relief. It stresses that the writ was
legally issued by the RTC, upon a finding that READYCON sought the relief without malice or bad faith. Furthermore,
WENCESLAO failed to show concrete and credible proof of the damages it suffered. The issuance of a writ and its enforcement
entail a rigorous process where the court found that it was not attended by malice or bad faith. It cites Mindanao Savings and
Loan Association v. Court of Appeals, 172 SCRA 480 (1989), to the effect where a counter-bond is filed, the right to question the
irregularity and propriety of the writ of attachment must be deemed waived since the ground for the issuance of the writ forms the
core of the complaint.[21]
We find for the respondent on this issue. However, its reliance upon Mindanao Savings and Loan Association is misplaced.
It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to damages arising from a
[22]
wrongful attachment. This we have made clear in previous cases, e.g., Calderon v. Intermediate Appellate Court, where we
ruled that:

Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by
showing that the order of attachment was improperly or irregularly issued, the liability of the surety on the attachment bond subsists
because the final reckoning is when “the Court shall finally adjudge that the attaching creditor was not entitled” to the issuance of
the attachment writ in the first place. The attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of
a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching party creditor instead of
the other way, which in most instances like in the present case, would require presentation of evidence in a fullblown trial on the
merits and cannot easily be settled in a pending incident of the case.[23]

The point in Mindanao Savings, alluded to by respondent, pertained to the propriety of questioning the writ of attachment by
filing a motion to quash said writ, after a counter-bond had been posted by the movant. But nowhere in Mindanao Savings did we
rule that filing a counter-bond is tantamount to a waiver of the right to seek damages on account of the impropriety or illegality of
the writ.

We note that the appellate court, citing Philippine Commercial & Industrial Bank, 196 SCRA 29 (1991), stressed that bad
Rule 57: Preliminary Attachment | 352
faith or malice must first be proven as a condition sine qua non to the award of damages. The appellate court appears to have
misread our ruling, for pertinently what this Court stated was as follows:

The silence of the decision in GR No. 55381 on whether there was bad faith or malice on the part of the petitioner in securing
the writ of attachment does not mean the absence thereof. Only the legality of the issuance of the writ of attachment was brought in
issue in that case. Hence, this Court ruled on that issue without a pronouncement that procurement of the writ was attended by bad
faith. Proof of bad faith or malice in obtaining a writ of attachment need be proved only in the claim for damages on account of the
issuance of the writ. We affirm the finding of the respondent appellate court that malice and bad faith attended the application by
PCIB of a writ of attachment.[24]

Plainly, we laid no hard and fast rule that bad faith or malice must be proved to recover any form of damages. In Philippine
Commercial & Industrial Bank, we found bad faith and malice to be present, thereby warranting the award of moral and
exemplary damages. But we denied the award of actual damages for want of evidence to show said damages. For the mere
existence of malice and bad faith would not per se warrant the award of actual or compensatory damages. To grant such
damages, sufficient proof thereon is required.

Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as prerequisite to the claim of actual
damages is dispensed with. Otherwise stated, in the present case, proof of malice and bad faith are unnecessary because, just
like in Lazatin and MC Engineering, what is involved here is the issue of actual and compensatory damages. Nonetheless, we
find that petitioner is not entitled to an award of actual or compensatory damages. Unlike Lazatin and MC Engineering, wherein
the respective complaints were dismissed for being unmeritorious, the writs of attachment were found to be wrongfully issued, in
the present case, both the trial and the appellate courts held that the complaint had merit. Stated differently, the two courts
found READYCON entitled to a writ of preliminary attachment as a provisional remedy by which the property of the defendant is
taken into custody of the law as a security for the satisfaction of any judgment which the plaintiff may recover. [25]

Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:

SEC. 4. Condition of applicant’s bond. - 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
Rule 57: Preliminary Attachment | 353
 finally adjudge that the applicant was not entitled thereto (italics for emphasis).

In this case, both the RTC and the Court of Appeals found no reason to rule that READYCON was not entitled to issuance of
the writ. Neither do we find now that the writ is improper or illegal. If WENCESLAO suffered damages as a result, it is merely
because it did not heed the demand letter of the respondent in the first place. WENCESLAO could have averted such damage if
it immediately filed a counter-bond or a deposit in order to lift the writ at once. It did not, and must bear its own loss, if any, on
that account.

On the second issue, WENCESLAO admits that it indeed owed READYCON the amount being claimed by the latter.
However, it contends that while the contract provided that the balance was payable within fifteen (15) days, said agreement did
not specify when the period begins to run. Therefore, according to petitioner, the appellate court erred when it held the contract
clear enough to be understood on its face. WENCESLAO insists that the balance of the purchase price was payable only “upon
acceptance of the work by the government.” In other words, the real intent of the parties was that it shall be due and demandable
only fifteen days after acceptance by the government of the work. This is common practice, according to petitioner.

Respondent argues that the stipulation in the sales contract is very clear that it should be paid within fifteen (15) days without
any qualifications and conditions. When the terms of a contract are clear and readily understandable, there is no room for
construction. Even so, the contention was mooted and rendered academic when, a few days after institution of the complaint, the
government accepted the work but WENCESLAO still failed to pay respondent.

Under Article 1582 of the Civil Code, the buyer is obliged to pay the price of the thing sold at the time stipulated in the
contract. Both the RTC and the appellate court found that the parties’ contract stated that the buyer shall pay the manufacturer
the amount of P1,178,308.75 in the following manner:

20% downpayment - P235,661.75

Balance – payable within fifteen (15) days – P942,647.00

Following the rule on interpretation of contracts, no other evidence shall be admissible other than the original document
itself,[26] except when a party puts in issue in his pleading the failure of the written agreement to express the true intent of the

Rule 57: Preliminary Attachment | 354

parties.[27] This was what the petitioners wanted done.

However, to rule on whether the written agreement failed to express the true intent of the parties would entail having this
Court reexamine the facts. The findings of the trial court as affirmed by the appellate court on this issue, however, bind us now.
For in a petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, this Court may not review the findings of fact all
over again. Suffice it to say, however, that the findings by the RTC, then affirmed by the CA, that the extra condition being
insisted upon by the petitioners is not found in the sales contract between the parties. Hence it cannot be used to qualify the
reckoning of the period for payment. Besides, telling against petitioner WENCESLAO is its failure still to pay the unpaid account,
despite the fact of the work’s acceptance by the government already.

With submissions of the parties carefully considered, we find no reason to warrant a reversal of the decisions of the lower
courts. But since Dominador Dayrit merely acted as representative of D.M. Wenceslao and Associates, Inc., in signing the
contract, he could not be made personally liable for the corporation’s failure to comply with its obligation thereunder. Petitioner
WENCESLAO is properly held liable to pay respondent the sum of P1,014,110.45 with interest rate of 12% per annum
(compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid, plus damages.

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No.
49101, affirming the judgment of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, are AFFIRMED.
No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur.

Austria-Martinez, J., on leave.

Rule 57: Preliminary Attachment | 355

THIRD DIVISION

SPOUSES GREGORIO and G.R. NO. 155868

JOSEFA YU,
Petitioners,

- versus -
NGO YET TE, doing business
under the name and style,
ESSENTIAL MANUFACTURING, Respondent. February 6, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Rule 57: Preliminary Attachment | 356

 Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the March
[1] [2]
21, 2001 Decision 116
of the Court of Appeals (CA) in CA-G.R. CV No. 52246 117
and its October 14, 2002
[3]
Resolution. 118

The antecedent facts are not disputed.

Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent soap
[4]
worth P594,240.00, and issued to the latter three postdated checks 119
as payment of the purchase price.
When Te presented the checks at maturity for encashment, said checks were returned dishonored and
[5] [6]
stamped “ACCOUNT CLOSED”. 120
Te demanded 121
payment from Spouses Yu but the latter did not heed
her demands. Acting through her son and attorney-in-fact, Charry Sy (Sy), Te filed with the Regional Trial
[7]
Court (RTC), Branch 75, Valenzuela, Metro Manila, a Complaint, 122
docketed as Civil Case No. 4061-V-93, for
Collection of Sum of Money and Damages with Prayer for Preliminary Attachment.

In support of her prayer for preliminary attachment, Te attached to her Complaint an Affidavit executed
by Sy that Spouses Yu were guilty of fraud in entering into the purchase agreement for they never intended to

116 [1]
Rollo, p. 26.
117 [2]
Entitled “Ngo Yet Te, doing business under the name and style ESSENTIAL MANUFACTURING, represented by her attorney-in-fact Charry N. Sy, Plaintiff-
Appellee, v. Sps. Gregorio and Josefa Yu, doing business under the name and style ARCHIE’S STORE, Defendants-Appellants.”
118 [3]
Rollo, p. 45.
119 [4]
Exhibit Envelope, Exhibits “A,” “B,” and “C,” envelope of exhibits.
120 [5]
Exhibits “A-1,” “B-1,” and “C-1,” envelope of exhibits.
121 [6]
Exhibit “H,” envelope of exhibits.
122 [7]
Records, p. 1.
Rule 57: Preliminary Attachment | 357
pay the contract price, and that, based on reliable information, they were about to move or dispose of their
[8]
properties to defraud their creditors. 123

[9] [10]
Upon Te’s posting of an attachment bond, 124
the RTC issued an Order of Attachment/Levy 125
dated
March 29, 1993 on the basis of which Sheriff Constancio Alimurung (Sheriff Alimurung) of RTC, Branch 19,
Cebu City levied and attached Spouses Yu’s properties in Cebu City consisting of one parcel of land (known
[11]
as Lot No. 11) 126
and four units of motor vehicle, specifically, a Toyota Ford Fierra, a jeep, a Canter delivery
[12]
van, and a passenger bus. 127

[13]
On April 21, 1993, Spouses Yu filed an Answer 128
with counterclaim for damages arising from the
wrongful attachment of their properties, specifically, actual damages amounting to P1,500.00 per day; moral
damages, P1,000,000.00; and exemplary damages, P50,000.00. They also sought payment of P120,000.00
[14]
as attorney’s fees and P80,000.00 as litigation expenses. 129
On the same date, Spouses Yu filed an Urgent
[15] [16]
Motion to Dissolve Writ of Preliminary Attachment. 130
They also filed a Claim Against Surety Bond 131
in
which they demanded payment from Visayan Surety and Insurance Corporation (Visayan Surety), the surety
which issued the attachment bond, of the sum of P594,240.00, representing the damages they allegedly
sustained as a consequence of the wrongful attachment of their properties.

123
Id. at 10.
[8]

124[9]
Id. at 18.
125[10]
Id. at 19.
126[11]
Id. at 48.
127[12]
Id. at 47.
128[13]
Id. at 20.
129[14]
Id. at 22-23.
130[15]
Id. at 30.
131[16]
Id. at 28.
Rule 57: Preliminary Attachment | 358
 [17]
While the RTC did not resolve the Claim Against Surety Bond, it issued an Order 132
dated May 3, 1993,
discharging from attachment the Toyota Ford Fierra, jeep, and Canter delivery van on humanitarian grounds,
but maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed a Motion for
[18] [19]
Reconsideration 133
which the RTC denied. 134

[20]
Dissatisfied, they filed with the CA a Petition for Certiorari, 135
docketed as CA-G.R. SP No. 31230, in
[21]
which a Decision 136
was rendered on September 14, 1993, lifting the RTC Order of Attachment on their
remaining properties. It reads in part:

In the case before Us, the complaint and the accompanying affidavit in support of the application for the writ
only contains general averments. Neither pleading states in particular how the fraud was committed or the badges
of fraud purportedly committed by the petitioners to establish that the latter never had an intention to pay the
obligation; neither is there a statement of the particular acts committed to show that the petitioners are in fact
disposing of their properties to defraud creditors. x x x.

xxxx

Moreover, at the hearing on the motion to discharge the order of attachment x x x petitioners presented
evidence showing that private respondent has been extending multi-million peso credit facilities to the petitioners
for the past seven years and that the latter have consistently settled their obligations. This was not denied by
132[17]
Id. at 69.
133[18]
Id. at 88.
134[19]
Id. at 94.
135[20]
Id. at 230.
136 [21]
Penned by Associate Justice Minerva P. Gonzaga-Reyes (now a retired member of this Court) and concurred in by Associate Justices Vicente V. Mendoza
(now a retired member of this Court) and Pacita Canizares-Nye (deceased).
Rule 57: Preliminary Attachment | 359
 private respondent. Neither does the private respondent contest the petitioners’ allegations that they have been
recently robbed of properties of substantial value, hence their inability to pay on time. By the respondent court’s
own pronouncements, it appears that the order of attachment was upheld because of the admitted financial
reverses the petitioner is undergoing.

This is reversible error. Insolvency is not a ground for attachment especially when defendant has not been
shown to have committed any act intended to defraud its creditors x x x.

For lack of factual basis to justify its issuance, the writ of preliminary attachment issued by the respondent
[22]
court was improvidently issued and should be discharged. 137

[23]
From said CA Decision, Te filed a Motion for Reconsideration but to no avail. 138

[24]
Te filed with us a Petition for Review on Certiorari 139
but we denied the same in a Resolution dated
June 8, 1994 for having been filed late and for failure to show that a reversible error was committed by the
[25] [26]
CA. 140
Entry of Judgment of our June 8, 1994 Resolution was made on July 22, 1994. 141
Thus, the finding of
the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 on the wrongfulness of the
attachment/levy of the properties of Spouses Yu became conclusive and binding.

137[22]
Records, pp. 226-227.
138[23]
Id. at 229.
139[24]
Docketed as G.R. No. 114700.
140[25]
Records, p. 340.
141[26]
Id. at 409-410.
Rule 57: Preliminary Attachment | 360
 However, on July 20, 1994, the RTC, apparently not informed of the SC Decision, rendered a Decision,
the dispositive portion of which reads:
WHEREFORE, premises considered, the Court finds that the plaintiff has established a valid civil cause of
action against the defendants, and therefore, renders this judgment in favor of the plaintiff and against the
defendants, and hereby orders the following:

1) Defendants are hereby ordered or directed to pay the plaintiff the sum of P549,404.00, with interest from
the date of the filing of this case (March 3, 1993);

2) The Court, for reasons aforestated, hereby denies the grant of damages to the plaintiff;

3) The Court hereby adjudicates a reasonable attorney’s fees and litigation expenses of P10,000.00 in favor
of the plaintiff;

4) On the counterclaim, this Court declines to rule on this, considering that the question of the
attachment which allegedly gave rise to the damages incurred by the defendants is being determined by
the Supreme Court.

142[27]
SO ORDERED. (Emphasis ours)

[28]
Spouses Yu filed with the RTC a Motion for Reconsideration 143
questioning the disposition of their
[29]
counterclaim. They also filed a Manifestation 144
informing the RTC of our June 8, 1994 Resolution in G.R.
No. 114700.
142[27]
Id. at 336-337.
143[28]
Id. at 371.
144[29]
Id. at 339.
Rule 57: Preliminary Attachment | 361
 The RTC issued an Order dated August 9, 1994, which read:

xxxx

(2) With regard the counter claim filed by the defendants against the plaintiff for the alleged improvident
issuance of this Court thru its former Presiding Judge (Honorable Emilio Leachon, Jr.), the same has been ruled
with definiteness by the Supreme Court that, indeed, the issuance by the Court of the writ of preliminary attachment
appears to have been improvidently done, but nowhere in the decision of the Supreme Court and for that
matter, the Court of Appeal’s decision which was in effect sustained by the High Court, contains any ruling
or directive or imposition, of any damages to be paid by the plaintiff to the defendants, in other words, both
the High Court and the CA, merely declared the previous issuance of the writ of attachment by this Court thru its
former presiding judge to be improvidently issued, but it did not award any damages of any kind to the defendants,
hence, unless the High Court or the CA rules on this, this Court coud not grant any damages by virtue of the
improvident attachment made by this Court thru its former presiding judge, which was claimed by the defendants in
their counter claim.

[30]
(3) This Court hereby reiterates in toto its Decision in this case dated July 20, 1994. 145
(Emphasis ours)

[31]
The RTC also issued an Order dated December 2, 1994, 146
denying the Motion for Reconsideration of
[32]
Spouses Yu. 147

145[30]
Id. at 345-346.
146[31]
Id. at 404.
[32]
147
In the same December 2, 1994 Order, the RTC granted two motions filed by Te, a Motion to Correct and to Include Specific Amount for Interest and a
Motion for Execution Pending Appeal. (Id.) Spouses Yu filed a Notice of Appeal from said Order but the same was denied by the RTC in an Order dated
January 5, 1995. (Id. at 411 and 423) Spouses Yu filed with the CA a Petition for Certiorari, Prohibition and Mandamus, docketed as CA G.R. SP No. 36205,
Rule 57: Preliminary Attachment | 362
 In the same December 2, 1994 Order, the RTC granted two motions filed by Te, a Motion to Correct and
[33]
to Include Specific Amount for Interest and a Motion for Execution Pending Appeal. 148
The RTC also denied
[34]
Spouses Yu’s Notice of Appeal 149
from the July 20, 1994 Decision and August 9, 1994 Order of the RTC.

[35]
From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of Appeal 150
which the RTC
[36]
also denied in an Order 151
dated January 5, 1995.

[37]
Spouses Yu filed with the CA a Petition 152
for Certiorari, Prohibition and Mandamus, docketed as CA-
G.R. SP No. 36205, questioning the denial of their Notices of Appeal; and seeking the modification of the July
[38]
20, 1994 Decision and the issuance of a Writ of Execution. The CA granted the Petition in a Decision 153
dated
June 22, 1995.

[39]
Hence, Spouses Yu filed with the CA an appeal 154
docketed as CA-G.R. CV No. 52246, questioning
only that portion of the July 20, 1994 Decision where the RTC declined to rule on their counterclaim for
[40]
damages. 155
However, Spouses Yu did not dispute the specific monetary awards granted to respondent Te;
and therefore, the same have become final and executory.
questioning the denial of their Notice of Appeal, the modification of the July 20, 1994 Decision and the issuance of a Writ of Execution. (Id. at 427) The CA
granted the Petition in a Decision dated June 22, 1995. (Id. at 515)
148[33]
Id.
149[34]
Id. at 353 and 423.
150[35]
Id. at 411.
151[36]
Id. at 423.
152[37]
Id. at 427.
153[38]
Id. at 515.
154[39]
CA rollo, p. 43.
155[40]
Id. at 48.
Rule 57: Preliminary Attachment | 363
 [41]
Although in the herein assailed Decision 156
dated March 21, 2001, the CA affirmed in toto the RTC
Decision, it nonetheless made a ruling on the counterclaim of Spouses Yu by declaring that the latter had
failed to adduce sufficient evidence of their entitlement to damages.

[42]
Spouses Yu filed a Motion for Reconsideration 157
but the CA denied it in the herein assailed
[43]
Resolution 158
dated October 14, 2002.

Spouses Yu filed the present Petition raising the following issues:

I. Whether or not the appellate court erred in not holding that the writ of attachment was procured in bad faith,
after it was established by final judgment that there was no true ground therefor.

II. Whether or not the appellate court erred in refusing to award actual, moral and exemplary damages after it
[44]
was established by final judgment that the writ of attachment was procured with no true ground for its issuance. 159

There is one preliminary matter to set straight before we resolve the foregoing issues.

156 [41]
Penned by Associate Justice Ruben T. Reyes and concurred in by Associate Justices Presbitero J. Velasco, Jr. (now a member of this Court) and Juan Q.
Enriquez, Jr., id. at 120.
157 [42]
Id. at 131.
158 [43]
Penned by Associate Justice Ruben T. Reyes and concurred in by Associate Justices Cancio C. Garcia (now a member of this Court) and Juan Q. Enriquez, Jr.,
id. at 162.
159[44]
Petition, rollo, p. 12.
Rule 57: Preliminary Attachment | 364
 [45]
According to respondent Te, 160
regardless of the evidence presented by Spouses Yu, their counterclaim
was correctly dismissed for failure to comply with the procedure laid down in Section 20 of Rule 57. Te
contends that as Visayan Surety was not notified of the counterclaim, no judgment thereon could be validly
rendered.

Such argument is not only flawed, it is also specious.

As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same day they filed their Answer
[46]
and Urgent Motion to Dissolve Writ of Preliminary Attachment. 161
Further, the records reveal that on June 18,
[47]
1993, Spouses Yu filed with the RTC a Motion to Give Notice to Surety. 162
The RTC granted the Motion in an
[48]
Order 163
dated June 23, 1993. Accordingly, Visayan Surety was notified of the pre-trial conference to apprise
it of a pending claim against its attachment bond. Visayan Surety received the notice on July 12, 1993 as
[49]
shown by a registry return receipt attached to the records. 164

Moreover, even if it were true that Visayan Surety was left in the proceedings a quo, such omission is
[50]
not fatal to the cause of Spouses Yu. In Malayan Insurance Company, Inc. v. Salas, 165
we held that “x x x if
the surety was not given notice when the claim for damages against the principal in the replevin bond was
heard, then as a matter of procedural due process the surety is entitled to be heard when the judgment for

160[45]
Id. at 111-112.
161[46]
See notes 13, 14 and 15.
162[47]
Records, p. 160.
163[48]
Id. at 172.
164[49]
Id. at 171-b.
165[50]
G.R. No. L-48820, May 25, 1979, 90 SCRA 252.
Rule 57: Preliminary Attachment | 365
 [51]
damages against the principal is sought to be enforced against the surety’s replevin bond.” 166
This remedy
is applicable for the procedures governing claims for damages

[52]
on an attachment bond and on a replevin bond are the same. 167

We now proceed to resolve the issues jointly.

Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of right in view
of the finality of our June 8, 1994 Resolution in G.R. No. 114700 which affirmed the finding of the CA in its
September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te had wrongfully caused the
[53]
attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises, Inc., 168
they argue that they should
be awarded damages based solely on the CA finding that the attachment was illegal for it already suggests
that Te acted with malice when she applied for attachment. And even if we were to assume that Te did not act
with malice, still she should be held liable for the aggravation she inflicted when she applied for attachment
[54]
even when she was clearly not entitled to it. 169

That is a rather limited understanding of Javellana. The counterclaim disputed therein was not for moral
[55]
damages and therefore, there was no need to prove malice. As early as in Lazatin v. Twaño, 170
we laid down

166[51]
Id. at 258-259. Emphasis ours.
167[52]
RULES OF COURT (1964), Rule 60, Sec. 10, reads:
The amount, if any, to be awarded to either party upon any bond filed by the other in accordance with the provisions of this Rule, shall be claimed,
ascertained, and granted under the same procedure as prescribed in Section 20 of Rule 57.
168[53]
143 Phil. 129 (1970).
169[54]
Rollo, pp. 13-16.
170[55]
112 Phil. 733 (1961).
Rule 57: Preliminary Attachment | 366
the rule that where there is wrongful attachment, the attachment defendant may recover actual damages even
without proof that the attachment plaintiff acted in bad faith in obtaining the attachment. However, if it is
alleged and established that the attachment was not merely wrongful but also malicious, the attachment
[56]
defendant may recover moral damages and exemplary damages as well. 171
Either way, the wrongfulness of
the attachment does not warrant the automatic award of damages to the attachment defendant; the latter
must first discharge the burden of proving the nature and extent of the loss or injury incurred by reason of the
[57]
wrongful attachment. 172

In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful did not relieve
Spouses Yu of the burden of proving the factual basis of their counterclaim for damages.

To merit an award of actual damages arising from a wrongful attachment, the attachment defendant
[58]
must prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. 173

Such loss or injury must be of the kind which is not only capable of proof but must actually be proved with a
reasonable degree of certainty. As to its amount, the same must be measurable based on specific facts, and
[59]
not on guesswork or speculation. 174
In particular, if the claim for actual damages covers unrealized profits,
the amount of unrealized profits must be estalished and supported by independent evidence of the mean
[60]
income of the business undertaking interrupted by the illegal seizure. 175

171 [56]
Calderon v. Intermediate Appellate Court, G.R. No. 74696, November 11, 1987, 155 SCRA 531, 539.
172 [57]
MC Engineering, Inc. v. Court of Appeals, 429 Phil. 634, 666 (2002). See also Carlos v. Sandoval, G.R. No.  135830, September 30, 2005, 471 SCRA 266, 296.
[58]
173
Carlos v. Sandoval, supra; MC Engineering, Inc. v. Court of Appeals, supra; Rivera v. Solidbank Corporation, G.R. No. 163269, April 19, 2006, 487 SCRA
512, 546.
174 [59]
Saguid v. Security Finance, Inc., G.R. No. 159467, December 9, 2005, 477 SCRA 256, 275; Villafuerte v. Court of Appeals, G.R. No. 134239, May 26, 2005, 459
SCRA 58, 69.
175 [60]
Public Estates Authority v. Chu, G.R. No. 145291, September 21, 2005, 470 SCRA 495, 503; Villafuerte v. Court of Appeals, supra note 59.
Rule 57: Preliminary Attachment | 367
 Spouses Yu insist that the evidence they presented met the foregoing standards. They point to the lists
[61]
of their daily net income from the operation of said passenger bus based on used ticket stubs 176
issued to
their passengers. They also cite unused ticket stubs as proof of income foregone when the bus was wrongfully
[62]
seized. 177
They further cite the unrebutted testimony of Josefa Yu that, in the day-to-day operation of their
[63]
passenger bus, they use up at least three ticket stubs and earn a minimum daily income of P1,500.00. 178

In ruling that Spouses Yu failed to adduce sufficient evidence to support their counterclaim for actual
damages, the CA stated, thus:

In this case, the actual damages cannot be determined. Defendant-appellant Josefa Yu testified on
supposed lost profits without clear and appreciable explanation. Despite her submission of the used and unused
ticket stubs, there was no evidence on the daily net income, the routes plied by the bus and the average fares for
each route. The submitted basis is too speculative and conjectural. No reports regarding the average actual profits
and other evidence of profitability necessary to prove the amount of actual damages were presented. Thus, the
[64]
Court a quo did not err in not awarding damages in favor of defendants-appellants. 179

We usually defer to the expertise of the CA, especially when it concurs with the factual findings of the
[65]
RTC. 180
Indeed, findings of fact may be passed upon and reviewed by the Supreme Court in the following
instances: (1)  when the conclusion is a finding grounded entirely on speculations, surmises, or conjectures;
(2) when the inference made is manifestly mistaken, absurd, or impossible; (3) where there is a grave abuse
of discretion in the appreciation of facts; (4) when judgment is based on a misapprehension of facts; (5)  when
176 [61]
Exhibits “11-A” to “11-C,” “12-A” to “12-C,” “13-A” to “13-C,” “14-A” to “14-C” and “15-A” to “15-C,” envelope of exhibits.
177[62]
Rollo, p. 17.
178[63]
Id. at 18-21; TSN, March 8, 1994, pp. 56-63.
179[64]
CA rollo, pp. 129-130.
180 [65]
Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo, Inc., G.R. No. 159831, October 14, 2005, 473 SCRA 151, 162.
Rule 57: Preliminary Attachment | 368
the lower court, in making its findings, went beyond the issues of the case and such findings are contrary to
the admissions of both appellant and appellee; (6) when the factual findings of the CA are contrary to those of
the trial court; (7) when the findings of fact are themselves conflicting; (8) when the findings of fact are
conclusions made without a citation of specific evidence on which they are based; (9) when the facts set forth
in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents;   (10)
when the findings of fact of the lower court are premised on the supposed absence of evidence and are
[66]
contradicted by the evidence on record. 181
However, the present case does not fall under any of the
exceptions. We are in full accord with the CA that Spouses Yu failed to prove their counterclaim.

Spouses Yu’s claim for unrealized income of P1,500.00 per day was based on their computation of their
average daily income for the year 1992. Said computation in turn is based on the value of three ticket stubs
[67]
sold over only five separate days in 1992. 182
By no stretch of the imagination can we consider ticket sales for
five days sufficient evidence of the average daily income of the passenger bus, much less its mean income.
Not even the unrebutted testimony of Josefa Yu can add credence to such evidence for the testimony itself
[68]
lacks corroboration. 183

[69]
Besides, based on the August 29, 1994 Manifestation 184
filed by Sheriff Alimurung, it would appear that
long before the passenger bus was placed under preliminary attachment in Civil Case No. 4061-V-93, the
same had been previously attached by the Sheriff of Mandaue City in connection with another case and that it
was placed in the Cebu Bonded Warehousing Corporation, Cebu City. Thus, Spouses Yu cannot complain

181 [66]
Child Learning Center, Inc. v. Tagario, G.R. No. 150920, November 25, 2005, 476 SCRA 236, 241-242.
182
There were 15 ticket stubs presented in evidence. Given that Spouses Yu issue three tickets stubs each day of operation, it follows that the 15 ticket stubs
[67]

represent sales for five separate days.

183[68]
Saguid v. Security Finance, Inc., supra note 59.
184[69]
Records, p. 362.
Rule 57: Preliminary Attachment | 369
that they were unreasonably deprived of the use of the passenger bus by reason of the subsequent wrongful
attachment issued in Civil Case No. 4061-V-93. Nor can they also attribute to the wrongful attachment their
failure to earn income or profit from the operation of the passenger bus.

Moreover, petitioners did not present evidence as to the damages they suffered by reason of the
wrongful attachment of Lot No. 11.

Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary loss when their properties
were wrongfully seized, although the amount thereof cannot be definitively ascertained. Hence, an award of
[70]
temperate or moderate damages in the amount of P50,000.00 is in order. 185

As to moral and exemplary damages, 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
[71]
affidavit to his application. 186

Spouses Yu argue that malice attended the issuance of the attachment bond as shown by the fact that
Te deliberately appended to her application for preliminary attachment an Affidavit where Sy perjured himself
by stating that they had no intention to pay their obligations even when he knew this to be untrue given that
they had always paid their obligations; and by accusing them of disposing of their properties to defraud their
creditors even when he knew this to be false, considering that the location of said properties was known to
[72]
him. 187

185[70]
Villafuerte v. Court of Appeals, supra note 59, at 77.
186 [71]
MC Engineering, Inc. v. Court of Appeals, supra note 57; Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28, 2005, 464 SCRA
409, 429; Philippine Commercial International Bank v. Intermediate Appellate Court, G.R. No. 73610, April 19, 1991, 196 SCRA 29, 36.
187[72]
Petition, rollo, pp. 13-16.
Rule 57: Preliminary Attachment | 370
 The testimony of petitioner Josefa Yu herself negates their claim for moral and exemplary damages. On
cross-examination she testified, thus:

Q: Did you ever deposit any amount at that time to fund the check?

A: We requested that it be replaced and staggered into smaller amounts.

COURT: Did you fund it or not?

Atty. Ferrer: The three checks involved?

Atty. Florido: Already answered. She said that they were not able to fund it.

Atty. Ferrer: And as a matter of fact, you went to the bank to close your account?

A: We closed account with the bank because we transferred the account to another bank.

Q: How much money did you transfer from that bank to which the three checks were drawn to this new bank?

A: I don’t know how much was there but we transferred already to the Solid Bank.

Q: Who transferred?
188[73]
A: My daughter, sir. (Emphasis ours)

Based on the foregoing testimony, it is not difficult to understand why Te concluded that Spouses Yu
never intended to pay their obligation for they had available funds in their bank but chose to transfer said
funds instead of cover the checks they issued. Thus, we cannot attribute malice nor bad faith to Te in applying
for the attachment writ. We cannot hold her liable for moral and exemplary damages.

188[73]
TSN, April 26, 1994, pp. 14-15.
Rule 57: Preliminary Attachment | 371
 As a rule, attorney’s fees cannot be awarded when moral and exemplary damages are not granted, the
[74]
exception however is when a party incurred expenses to lift a wrongfully issued writ of attachment. 189

Without a doubt, Spouses Yu waged a protracted legal battle to fight off the illegal attachment of their
properties and pursue their claims for damages. It is only just and equitable that they be awarded reasonable
attorney’s fees in the amount of P30,000.00.

In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu for actual, moral, and
exemplary damages. However, we grant them temperate damages and attorney’s fees.

WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of Appeals
is AFFIRMED with the MODIFICATION that petitioners’ counterclaim is PARTLY GRANTED. Gregorio Yu
and Josefa Yu are awarded P50,000.00 temperate damages and P30,000.00 attorney’s fees.

No costs.

SO ORDERED.

189 [74]
Carlos v. Sandoval, supra note 57, at 299-300; MC Engineering, Inc. v. Court of Appeals, supra note 57, at 667.
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