Escolar Documentos
Profissional Documentos
Cultura Documentos
PHILIPPINE COMMERCIAL
INTERNATIONAL BANK,
Petitioner,
- versus -
Promulgated:
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision[1] of the Court of
Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision [2] of
the Regional Trial Court of Makati, which granted respondent Joseph Anthony M.
Alejandros claim for damages arising from petitioner Philippine Commercial
International Banks (PCIB) invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a complaint[3] for
sum of money with prayer for the issuance of a writ of preliminary
attachment. Said complaint alleged that on September 10, 1997, respondent, a
resident of Hong Kong, executed in favor of petitioner a promissory note
obligating himself to pay P249,828,588.90 plus interest. In view of the
fluctuations in the foreign exchange rates which resulted in the insufficiency of the
deposits assigned by respondent as security for the loan, petitioner requested the
latter to put up additional security for the loan. Respondent, however, sought a
reconsideration of said request pointing out petitioners alleged mishandling of his
account due to its failure to carry out his instruction to close his account as early as
April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen
was US$1.00:JPY127.50.[4] It appears that the amount of P249,828,588.90 was the
consolidated amount of a series of yen loans granted by petitioner to respondent
during the months of February and April 1997.[5]
In praying for the issuance of a writ of preliminary attachment under Section
1 paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1)
respondent fraudulently withdrew his unassigned deposits notwithstanding his
verbal promise to PCIB Assistant Vice President Corazon B. Nepomuceno not to
withdraw the same prior to their assignment as security for the loan; and (2) that
respondent is not a resident of the Philippines. The application for the issuance of
a writ was supported with the affidavit of Nepomuceno.[6]
On October 24, 1997, the trial court granted the application and issued the
writ ex parte[7] after petitioner posted a bond in the amount of P18,798,734.69,
issued by Prudential Guarantee & Assurance Inc., under Bond No. HO-4676497. On the same date, the bank deposits of respondent with Rizal Commercial
Banking Corporation (RCBC) were garnished. On October 27, 1997, respondent,
through counsel, filed a manifestation informing the court that he is voluntarily
submitting to its jurisdiction.[8]
Subsequently, respondent filed a motion to quash [9] the writ contending that
the withdrawal of his unassigned deposits was not fraudulent as it was approved by
petitioner. He also alleged that petitioner knew that he maintains a permanent
residence at Calle Victoria, Ciudad Regina, Batasan Hills, Quezon City, and an
office address in Makati Cityat the Law Firm Romulo Mabanta Buenaventura
Sayoc & De los Angeles, [10] where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives. Respondent added
that he is the managing partner of the Hong Kong branch of said Law Firm; that
his stay in Hong Kong is only temporary; and that he frequently travels back to
the Philippines.
On December 24, 1997, the trial court issued an order quashing the writ and
holding that the withdrawal of respondents unassigned deposits was not intended
to defraud petitioner. It also found that the representatives of petitioner personally
transacted with respondent through his home address in Quezon City and/or his
office in Makati City. It thus concluded that petitioner misrepresented and
suppressed the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of summons,
respondents residence and office addresses are located in the Philippines. The
dispositive portion of the courts decision is as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being
meritorious, is hereby GRANTED, and the ORDER of 24 October
1997 is hereby RECONSIDERED and SET ASIDE and the WRIT OF
attachment of the same is hereby DISCHARGED.
SO ORDERED.[11]
and
Management
Engineering
and
of
the
University
of
the Philippines in 1987 with the degree of Bachelor of Laws. Respondent likewise
presented witnesses to prove that he is a well known lawyer in the business
community both in the Philippines and in Hong Kong.[18] For its part, the lone
witness presented by petitioner was Nepomuceno who claimed that she acted in
good faith in alleging that respondent is a resident of Hong Kong.[19]
On August 30, 2000, the trial court awarded damages to respondent in the
amount of P25 Million without specifying the basis thereof, thus:
The trial court denied petitioners motion for reconsideration on October 24,
2000.[21]
Petitioner elevated the case to the Court of Appeals which affirmed the
findings of the trial court. It held that in claiming that respondent was not a
resident of the Philippines, petitioner cannot be said to have been in good faith
considering that its knowledge of respondents Philippine residence and office
address goes into the very issue of the trial courts jurisdiction which would have
been defective had respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages awarded to
petitioner and specified their basis. The dispositive portion of the decision of the
Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the
decision appealed from is hereby MODIFIED. The award of damages in
the amount of P25,000,000.00 is deleted. In lieu thereof, Prudential
Guarantee & [Assurance, Inc.], which is solidarily liable with appellant
[herein petitioner], is ORDERED to pay appellee [herein
respondent] P2,000,000.00 as nominal damages; P5,000,000.00 as moral
damages; and P1,000,000.00 as attorneys fees, to be satisfied against the
attachment bond under Prudential Guarantee & Assurance, Inc. JCL (4)
No. 01081.
SO ORDERED.[22]
Both parties moved for reconsideration. On November 21, 2006, the Court
of Appeals denied petitioners motion for reconsideration but granted that of
respondents by ordering petitioner to pay additional P5Million as exemplary
damages.[23]
Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that petitioner
is not entitled to a writ of attachment because respondent is a resident of
the Philippines and that his act of withdrawing his deposits with petitioner was
without intent to defraud, can no longer be passed upon by this Court. More
importantly, the conclusions of the court that petitioner bank misrepresented that
respondent was residing out of the Philippines and suppressed the fact that
respondent has a permanent residence in Metro Manila where he may be served
with summons, are now beyond the power of this Court to review having been the
subject of a final and executory order. Said findings were sustained by the Court
of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No. 140605. The
rule on conclusiveness of judgment, which obtains under the premises, precludes
the relitigation of a particular fact or issue in another action between the same
parties even if based on a different claim or cause of action. The judgment in the
prior action operates as estoppel as to those matters in issue or points controverted,
upon the determination of which the finding or judgment was rendered. The
previous judgment is conclusive in the second case, as to those matters actually
and
directly
controverted
and
the
issues
of
the
final
judgment
that
petitioner
is
guilty
of
defendant mainly through defendants permanent residence in METROMANILA, either in defendants home address in Quezon City or his
main
business
address
at
the ROMULO
MABANTA
BUENAVENTURA SAYOC & DELOS ANGELES in MAKATI and
while at times follow ups were made through defendants temporary
home and business addresses in Hongkong. It is therefore clear that
plaintiff could not deny their personal and official knowledge that
defendants permanent and official residence for purposes of service of
summons is in the Philippines. In fact, this finding is further confirmed
by the letter of Mr. JOHN GOKONGWEI, JR. Chairman, Executive
Committee of plaintiff BANK, in his letter dated 6 October 1997 on the
subject loan to defendant of the same law firm was addressed to the
ROMULO LAW FIRM inMAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds
that the amount withdrawn was not part of defendants peso deposits
assigned with the bank to secure the loan and as proof that the
withdrawal was not intended to defraud plaintiff as creditor is that
plaintiff approved and allowed said withdrawals. It is even noted that
when the Court granted the prayer for attachment it was mainly on the
first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil
Procedure, that defendant resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew
from the beginning the deficiency of its second ground for attachment
[i.e.,] disposing properties with intent to defraud his creditors, and
therefore plaintiff had to resort to this misrepresentation that defendant
was residing out of the Philippines and suppressed the fact that
defendants permanent residence is in METRO MANILA where he
could be served with summons.
On the above findings, and mainly on the misrepresentations
made by plaintiff on the grounds for the issuance of the attachment in the
verified complaint, the Court concludes that defendant has duly proven
its grounds in the MOTION and that plaintiff is not entitled to the
attachment.[25]
writ. Similarly, in the case of Hanil Development Co., Ltd. v. Court of Appeals,
[26]
the Court debunked the claim of good faith by a party who maliciously sought
the issuance of a writ of attachment, the bad faith of said party having been
previously determined in a final decision which voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond, Escobar
claims in its petition that the award of attorneys fees and injunction bond
premium in favor of Hanil is [contrary] to law and jurisprudence. It contends that
no malice or bad faith may be imputed to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the
illegality of the attachment and Escobars bad faith in obtaining it has long been
settled in one of the earlier incidents of this case. The Court of Appeals, in its
decision rendered on February 3, 1983 in C.A.-G.R. No. SP-14512, voided the
challenged writ, having been issued with grave abuse of discretion. Escobars bad
faith in procuring the writ cannot be doubted. Its Petition for the Issuance of
Preliminary Attachment made such damning allegations that: Hanil was already
able to secure a complete release of its final collection from the MPWH; it has
moved out some of its heavy equipments for unknown destination, and it may
leave the country anytime. Worse, its Ex Parte Motion to Resolve Petition alleged
that after personal verification by (Escobar) of (Hanils) equipment in Cagayan
de Oro City, it appears that the equipments were no longer existing from their
compound. All these allegations of Escobar were found to be totally baseless and
untrue.
Even assuming that the trial court did not make a categorical pronouncement
of misrepresentation and suppression of material facts on the part of petitioner, the
factual backdrop of this case does not support petitioners claim of good faith. The
facts and circumstances omitted are highly material and relevant to the grant or
denial of writ of attachment applied for.
Finally, there is no merit in petitioners contention that respondent can be
considered a resident who is temporarily out of the Philippines upon whom service
of summons may be effected by publication, and therefore qualifies as among
those against whom a writ of attachment may be issued under Section 1, paragraph
(f), Rule 57 of the Rules of Court which provides:
(f)
In an action against a party x x x on whom summons
may be served by publication.
(c)
In an action to recover the possession of personal property
unjustly or fraudulently taken, detained, or converted, when the property,
or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized person;
(d)
In an action against a party who has been guilty of a fraud
in contracting the debt or incurring the obligation upon which the action
is brought, or in the performance thereof;
(e)
In an action against a party who has removed or disposed
of his property, or is about to do so, with intent to defraud his creditors;
(f)
In an action against a party who resides out of
the Philippines, or on whom summons may be served by publication.
The purposes of preliminary attachment are: (1) to seize the property of the
debtor in advance of final judgment and to hold it for purposes of satisfying said
judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of
the Rules of Court; or (2) to acquire jurisdiction over the action by actual or
constructive seizure of the property in those instances where personal or
substituted service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.[27]
Corollarily, in actions in personam, such as the instant case for collection of
sum of money,[28] summons must be served by personal or substituted service,
otherwise the court will not acquire jurisdiction over the defendant. In case the
defendant does not reside and is not found in the Philippines (and hence personal
and substituted service cannot be effected), the remedy of the plaintiff in order for
the court to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the defendant.
[29]
resides out of and is not found in the Philippines, it becomes a matter of course for
the court to convert the action into a proceeding in rem or quasi in rem by attaching
the defendants property. The service of summons in this case (which may be by
publication coupled with the sending by registered mail of the copy of the
summons and the court order to the last known address of the defendant), is no
longer for the purpose of acquiring jurisdiction but for compliance with the
requirements of due process.[30]
However, where the defendant is a resident who is temporarily out of
the Philippines, attachment of his/her property in an action in personam, is not
always necessary in order for the court to acquire jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an
action is commenced against a defendant who ordinarily resides within
the Philippines, but who is temporarily out of it, service may, by leave of
court, be also effected out of the Philippines, as under the preceding
section.
over the person of residents temporarily out of the Philippines. Meaning, service of
summons may be effected by (a) leaving copies of the summons at the defendants
residence with some person of suitable discretion residing therein, or (b) by leaving
copies at the defendants office or regular place of business with some competent
person in charge thereof.[32] Hence, the court may acquire jurisdiction over an
action in personam by mere substituted service without need of attaching the
property of the defendant.
The rationale in providing for substituted service as the normal mode of
service for residents temporarily out of the Philippines, was expounded
in Montalban v. Maximo,[33] in this wise:
A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to which
any inquiry about him may be directed and where he is bound to return.
Where one temporarily absents himself, he leaves his affairs in the hands
of one who may be reasonably expected to act in his place and stead; to
do all that is necessary to protect his interests; and to communicate with
him from time to time any incident of importance that may affect him or
his business or his affairs. It is usual for such a man to leave at his home
or with his business associates information as to where he may be
contacted in the event a question that affects him crops up.
whether from the allegations in the complaint, substituted service (to persons of
suitable discretion at the defendants residence or to a competent person in charge
of his office or regular place of business) will suffice, or whether there is a need to
attach the property of the defendant and resort to service of summons by
publication in order for the court to acquire jurisdiction over the case and to
comply with the requirements of due process.
In the instant case, it must be stressed that the writ was issued by the trial
court mainly on the representation of petitioner that respondent is not a resident of
thePhilippines.[34] Obviously, the trial courts issuance of the writ was for the sole
purpose of acquiring jurisdiction to hear and decide the case. Had the allegations
in the complaint disclosed that respondent has a residence in Quezon City and an
office in Makati City, the trial court, if only for the purpose of acquiring
jurisdiction, could have served summons by substituted service on the said
addresses, instead of attaching the property of the defendant. The rules on the
application of a writ of attachment must be strictly construed in favor of the
defendant. For attachment is harsh, extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to humiliation and annoyance. [35] It
should be resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that respondent is a
resident temporarily out of the Philippines, petitioner is still not entitled to a writ of
attachment because the trial court could acquire jurisdiction over the case by
substituted service instead of attaching the property of the defendant. The
misrepresentation
of
petitioner
that
respondent
does
not
reside
in
the Philippines and its omission of his local addresses was thus a deliberate move
to ensure that the application for the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the finding
of the trial court that petitioner is liable for damages for the wrongful issuance of a
writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not awarding
the same inasmuch as the respondent failed to establish the amount garnished by
petitioner. It is a well settled rule that one who has been injured by a wrongful
attachment can recover damages for the actual loss resulting therefrom. But for
such losses to be recoverable, they must constitute actual damages duly established
by competent proofs, which are, however, wanting in the present case.[36]
Nevertheless, nominal damages may be awarded to a plaintiff whose right
has been violated or invaded by the defendant, for the purpose of vindicating or
recognizing that right, and not for indemnifying the plaintiff for any loss suffered
by him. Its award is thus not for the purpose of indemnification for a loss but for
the recognition and vindication of a right. Indeed, nominal damages are damages
in name only and not in fact. [37] They are recoverable where some injury has been
done but the pecuniary value of the damage is not shown by evidence and are thus
subject to the discretion of the court according to the circumstances of the case.[38]
In this case, the award of nominal damages is proper considering that the
right of respondent to use his money has been violated by its garnishment. The
amount of nominal damages must, however, be reduced from P2 million
to P50,000.00 considering the short period of 2 months during which the writ was
in effect as well as the lack of evidence as to the amount garnished.
modified,
petitioner
Philippine
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
MINITA V. CHICO-NAZARIO
Associate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice