Zuneca Pharmaceutical vs Natrapharm

Facts: Respondent, an all-Filipino pharmaceutical company which manufactures and sells

CITICOLINE, a medicine for heart and stroke patients. The said medicine is marketed by
respondent under its registered trademark ZYNAPS, which respondent obtained from the
Intellectual Property Office (IPO) on September 24, 2007.

Since 2001, petitioners have been selling medicine imported from Pakistan with the name
CARBAMAZEPINE, which is an anti-convulsant for epilepsy under the brand name
ZYNAPS, a trademark not registered with the IPO. ZYNAPS is pronounced exactly like
ZYNAPSE.

Respondent claims that CARBAMEZEPINE has documented serious disfiguring side-effects,

such as the Stevens-Johnson Syndrome and that the sale of the medicines in the same
drugstores will give rise to medicine switching. Petitioners, on the other hand, claimed that they
have been using ZYNAPS since 2003, having been issued a BFAD Certificate of Product
Registration. Due to this, respondent filed a complaint against petitioners for trademark
infringement for violation of RA 8293 or the Intellectual Property Code of the Philippines (IPC).

Petitioners invoked good faith of the enjoyment of the prior use of the brand name ZYNAPS,
relying on their CPR issued by BFAD in 2003.

The RTC denied respondents application for TRO, holding that although respondent was able to
first register its mark ZYNAPSE with the IPO in 2007, it is nevertheless defeated by the prior
actual use of petitioners of ZYNAPS in 2003. The CA affirmed the RTCs ruling, holding that
no compelling reason was presented by the respondents that they had a clear and existing right
that will be violated by petitioners.

Subsequently, the CA upheld the allegations of respondent that it is entitled to injunctive relief
on the basis of its IPO registration and permanently enjoined petitioners from the commercial use
of ZYNAPS.

Issue: WON the CA may order a permanent injunction in deciding a petition for certiorari
against the denial of an application for preliminary injunction by the RTC.

Held: NO. A writ of preliminary injunction is generally based solely on initial and incomplete
evidence. The evidence submitted during the hearing on an application for a writ of preliminary
injunction is not conclusive or complete for only a sampling is needed to give the trial court an
idea of the justification for the preliminary injunction pending the decision of the case on the
merits. As such, the findings of fact and opinion of a court when issuing the writ of preliminary
injunction are interlocutory in nature and made even before the trial on the merits is commenced
or terminated.

By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms
part of the judgment on the merits and it can only be properly ordered only on final judgment. A
permanent injunction may thus be granted after a trial or hearing on the merits of the case and a
decree granting or refusing an injunction should not be entered until after a hearing on the merits
where a verified answer containing denials is filed or where no answer is required, or a rule to
show cause is equivalent to an answer.
B.F. Homes, Inc. vs MERALCO

Facts: MERALCO is a corporation duly organized and existing under Philippine laws engaged
in the distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems delivering water to over 12,000
households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias City,
Caloocan City, and Quezon City. The water distributed in the waterworks systems owned and
operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity
supplied by MERALCO.

On June 23, 2003, petitioner and PWCC filed a Petition with a Prayer for the Issuance of Writ of
Preliminary Injunction and for the Immediate Issuance of Restraining Order against MERALCO
before the RTC, invoking their right to refund based on the ruling of the SC in Republic vs
MERALCO wherein the Court held that the excess average amount of P0.167 per kilowatt hour
starting with the applicants billing cycles beginning February 1998 is ordered to be refunded to
MERALCOs customers or correspondingly credited in their favor for future consumption.
MERALCO claimed that it was entitled to a refund of Php 11, 834,570.91.

According to petitioner, MERALCO disconnected the electric supply to BF Homes and PWCCs
16 water pumps. MERALCO demanded for the payment of Php 4,717,768.15, but petitioner
requested the former to apply the said bill against the amount that MERALCO was supposed to
refund. However, MERALCO has yet to come up with a schedule for the refund of large
amounts. Instead, MERALCO threatened to cut off electric power connections to all of
petitioners water pumps if failed to pay their bills by June 20, 2003.

Subsequently, MERALCO filed before the RTC its counterclaims and Opposition to the
Application for Writ of Preliminary Injunction of BF Homes and PWCC, citing their previous
agreement wherein it states that The Company reserves the right to discontinue service in case
the customer is in arrears in the payment of bills or for failure to pay the adjusted bills in those
cases where the meter stopped or failed to register the correct amount of energy consumed, or for
failure to comply with any of these terms and conditions, or in case of or to prevent fraud upon
the Company. Before disconnection is made in the case of, or to prevent fraud, the Company
may adjust the bill of said customer accordingly and if the adjusted bill is not paid, the Company
may disconnect the same.

The RTC issued an order granting the application of petitioners and issued a writ of preliminary
injunction, stating that paramount substantial and constitutional rights of the public to the usage
and enjoyment of waters in their community must be respected.
The CA agreed with MERLACO that the RTC had no jurisdiction to issue a writ of preliminary
injunction as it had no jurisdiction over the case to begin with, citing Section 43 (u) of RA 9136
or the Electric Power Industry Reform Act wherein it states that the ERC shall have the original
and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the
ERC in the exercise of its powers, functions and responsibilities and over all cases involving
disputes between and among participants or players in the energy sector. Section 4(o) of Rule 3
of the Implementing Rules and Regulations of RA 9136 likewise provides that the ERC shall
also be empowered to issue such other rules that are essential in the discharge of its functions as
an independent quasi-judicial body.

Issue: WON the RTC has jurisdiction to issue the injunction.

Held: NO. Settled is the rule that jurisdiction is conferred only by the Constitution or the law.
Republic v. Court of Appeals, 263 SCRA 758 (1996), also enunciated that only a statute can
confer jurisdiction on courts and administrative agencies.

A prayer or demand for relief is not part of the petition of the cause of action; nor does it enlarge
the cause of action stated or change the legal effect of what is alleged. In determining which
body has jurisdiction over a case, the better policy is to consider not only the status or
relationship of the parties but also the nature of the action that is the subject of their controversy.

The ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all cases
contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its powers,
functions and responsibilities, and over all cases involving disputes between and among
participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules and
Regulation provides that the ERC shall also be empowered to issue such other rules that are
essential in the discharge of its functions as in independent quasi-judicial body.

Courts cannot and will not resolve a controversy involving a question within the jurisdiction of
an administrative tribunal, especially when the question demands the sound exercise of
administrative discretion requiring special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact. The court cannot
arrogate into itself the authority to resolve a controversy, the jurisdiction of which is initially
lodged with the administrative body of special competence.

Jurisdiction over the subject matter cannot be acquired through, or waived by, any act or
omission of the parties. Neither would the active participation of the parties nor estoppel operate
to confer jurisdiction on the RTC where the latter has none over a cause of action. Indeed, when
a court has no jurisdiction over the subject matter, the only power it has is to dismiss the action.
Northern Island Company, Inc. vs Sps. Garcia

Facts: Petitioner Northern Islands Co., Inc. filed a complaint with application for a writ of
preliminary attachment before the RTC against respondents, alleging that: (a) from March to July
2004, petitioner caused the delivery to respondents of various appliances in the aggregate amount
of P8,040,825.17;7 (b) the goods were transported, shipped, and delivered by Sulpicio Lines,
Inc., and were accepted in good order and condition by respondents representatives;8 (c) the
parties agreed that the goods delivered were payable within 120 days, and that the unpaid
amounts would earn interest at a rate of eighteen percent (18%) per annum;9 (d) however, the
value of the goods were not paid by respondents despite repeated demands;10 and (e)
respondents fraudulently asserted that petitioner had no proof that they had indeed received the
quantity of the subject goods.

Petitioner then posted a bond through Visayan Surety and Insurance Corporation in the amount
of Php 8,040,825.17. The RTC issued the writ sought for.

Respondents filed an Urgent Motion for Extension fo Time to File Proper Pelading and motion
for Discovery (Production and Inspection), asking the RTC to personally allow them to examine
the original invoices, delivery cargo receipts and bills of lading.

Thereafter, respondents filed a Motion to Discharge Exess Attachment, alleging that the
attachment previously ordered by the RTC exceeded by P9,232,564.56 given that the estimated
value of the attached properties, including the garnished bank accounts, as assessed by their
appraiser, Gaudioso W. Lapaz (Lapaz), amounted to P17,273,409.73, while the attachment bond
is only in the amount of P8,040,825.17.

The RTC denied the Motion to Discharge Excess Attachment, finding that the appraisal made by
Lapaz was not reflective of the true valuation of the properties, adding too that the bond posted
by petitioner stands as sufficient security for whatever damages respondents may sustain by
reason of the attachment. On the other hand it granted the Motion for Discovery. However, no
production or inspection was conducted upon receipt by the respondents.

Respondents filed for a Motion for Partial Reconsideration, assailing the denial of their Motion
to Discharge Excess Attachment. This was denied by the RTC. This promted respondents to
elevate the matter to the CA.
In the interim, the RTC rendered a Decision, wherein it dismissed petitioners Amended
Complaint due to the absence of any evidence to prove that respondents had agreed to the pricing
of the subject goods.

The petitioner sought recourse to the CA. Finding that the Notice of Appeal was seasonably
filed, the RTC ordered the elevation of the entire records of the Main Case to the CA.

The CA granted the certiorari petition of the respondents, ordering the RTC to appoint a
commissioner, as well as the discharge of any excess attachment if so found therein, anddenying
respondents Motion for discovery.

Issue: WON the attachment itself can be the subject of a separate action.

Held: NO. Note that in Sps. Olib v. Judge Pastoral, 188 SCRA 692 (1990), the Court, in view of
the nature of a preliminary attachment, definitively ruled that the attachment itself cannot be the
subject of a separate action independent of the principal action because the attachment was only
an incident of such action, viz.: Attachment is defined as a provisional remedy by which the
property of an adverse party is taken into legal custody, either at the commencement of an action
or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered
by the plaintiff or any proper party. It is an auxiliary remedy and cannot have an independent
existence apart from the main suit or claim instituted by the plaintiff against the defendant. Being
merely ancillary to a principal proceeding, the attachment must fail if the suit itself cannot be
maintained as the purpose of the writ can no longer be justified. The consequence is that where
the main action is appealed, the attachment which may have been issued as an incident of that
action, is also considered appealed and so also removed from the jurisdiction of the court a quo.
The attachment itself cannot be the subject of a separate action independent of the principal
action because the attachment was only an incident of such action.
Valdevieso vs Damalerio

Facts: On December 5, 1995, petitioner Bernardo Valdevieso bought from spouses Lorenzo and
Elenita Uy a parcel of land. The deed of Sale was not registered, nor was the title of the lot
transferred to petitioner. A year later, on April 19, 1996, respondent spouses Damalerio filed
with the RTC a complaint for the collection of a sum of money against spouses Uy.

On April 23, 1996, the RTC issued a Writ of Preliminary Attachment, by virtue of which, the
property, then still in the name of Lorenzo Uy, but which was already sold to petitioner, was
levied.

The title of the land in the name of Lorenzo Uy was cancelled and, in lieu thereof, a new title
was issued in the name of petitioner. The new title carried the attachment in favor of respondent
spouses.

Subsequently, petitioner filed a third-party claim to discharge or annul the attachment levied on
the property on the ground that the said property already belongs to him, and no longer to the
spouses Uy.

The RTC ruled in favor of petitioner, holding that the levy of the property by virtue of
attachment is lawful only when the levied property indubitably belongs to the defendant.

The CA reversed the RTCs ruling and held that an attachment or levy of execution, though
posterior to the sale, but if registered before the sale is registered, takes precedence over the sale.
The writ of attachment in favor of the respondents, being recorded ahead of the sale to petitioner,
will therefore take precedence.

Issue: WON the CA erred in reversing the RTCs decision.

Held: NO. When petitioner bought the property on 05 December 1995, it was, at that point, no
more than a private transaction between him and the spouses Uy. It needed to be registered
before it could bind third parties, including respondents. When the registration finally took place
on 06 June 1996, it was already too late because, by then, the levy in favor of respondents,
pursuant to the preliminary attachment ordered by the General Santos City RTC, had already
been annotated on the title.

The settled rule is that levy on attachment, duly registered, takes preference over a prior
unregistered sale. This result is a necessary consequence of the fact that the property involved
was duly covered by the Torrens system which works under the fundamental principle that
registration is the operative act which gives validity to the transfer or creates a lien upon the land.
The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against
the particular property, enforceable against the whole world. The attaching creditor acquires a
specific lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the owners debt. The lien
continues until the debt is paid, or sale is had under execution issued on the judgment, or until
the judgment is satisfied, or the attachment discharged or vacated in some manner provided by
law.

As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in the
presence of a law clearly applicable to the case. We reiterate that this Court, while aware of its
equity jurisdiction, is first and foremost, a court of law. While equity might tilt on the side of one
party, the same cannot be enforced so as to overrule positive provisions of law in favor of the
other. Equity cannot supplant or contravene the law. The rule must stand no matter how harsh it
may seem. Dura lex sed lex.
K.O. Glass Construction vs Valenzuela

Facts: On October 6, 1977, an action was instituted in the Court of First Instance of Rizal by
respondent Antonio Pinzo to recover from petitioner the sum of P37,190.00 alleged to be the
agreed rentals of his truck, as well as the value of spare parts which have not been returned to
him upon termination of the lease.

In his verified complaint, private respondent Pinzon sought for the attachment against the
property of petitioner consisting of collectibles and payables with Philippine Geothermal Inc., on
the grounds that petitioner is a foreigner, he has sufficient cause of action, and the lack of
security for his claims if a judgment was rendered in his favor.

Petitioner moved to quash the writ of attachment on the grounds that: (a) There is no cause of
action due to the fact that respondent entered into a contract with K.O. Glass Construction Co., a
duly organized and existing corporation under Philippines laws; (b) that Kenneth O. Glass never
intended to leave the Philippines; (c) That the money being garnished belongs to the corporation
and not to defendant Kenneth O. Glass.

The RTC denied the motion and ordered Philippine Geothermal, Inc. to deliver and deposit the
amount sought for by Pinzon.

Kenneth Glass filed a supplementary motion to discharge and/or dissolve the writ of preliminary
attachment, on the ground that the affidavit filed in support of the motion for preliminary
attachment was insufficient.

Issue: WON the writ of preliminary attachment is proper.

Held: NO. Pinzon, however, did not allege that the defendant Kenneth O. Glass is a foreigner
(who) may, at any time, depart from the Philippines with intent to defraud his creditors including
the plaintiff. He merely stated that the defendant Kenneth O. Glass is a foreigner.

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

The affidavit submitted by Pinzon does not comply with the Rules. Under the Rules, an affidavit
for attachment must state that (a) a sufficient cause of action exists; (b) the case is one of those
mentioned in Section 1 (b) of Rule 57; (c) there is no other sufficient security for the claim
sought to be enforced by the action; and (c) the amount due to the applicant for attachment or the
value of the property the possession of which he is entitled to recover, is as much as the sum for
which the order is granted above all legal counterclaims.

While Pinzon may have stated in his affidavit that a sufficient cause of action exists against the
defendant Kenneth O. Glass, he did not state therein that the case is one of those mentioned in
Section 1 hereof; that there is no other sufficient security for the claim sought to be enforced by
the action; and that the amount due to the applicant is as much as the sum for which the order
granted above all legal counterclaims. It has been held that the failure to allege in the affidavit
the requisites prescribed for the issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant fatally defective, and the
judge issuing it is deemed to have acted in excess of his jurisdiction.

Finally, it appears that the petitioner has filed a counter-bond in the amount of P37,190.00 to
answer for any judgment that may be rendered against the defendant. Upon receipt of the
counter-bond, the respondent Judge should have discharged the attachment pursuant to Section
12, Rule 57 of the Revised Rules of Court.
Philippine Commercial Intl Bank vs Alejandro

Facts: Petitioner filed against respondent Alejandro a complaint for sum of money with a prayer
for the issuance of a writ of preliminary attachment. The complaint alleged that respondent, a
resident of Hong Kong, executed in favor of petitioner a promisory 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. 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.

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 trial court granted the application and issued the writ ex parte. Subsequently, respondent
filed a motion to quash 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 and an office address here in the Philippines. In both addresses,
petitioner regularly communicated with him through its representatives. The trial court issued an
order quashing the writ. With the denial of petitioners motion for reconsideration, it elevated the
case to the CA via petition for certiorari. The CA dismissed the case.

Issue: WON the issuance of the writ was proper.

Held: NO. 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.
In actions in personam, such as the instant case for collection of sum of money, 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. Thus, in order to acquire
jurisdiction in actions in personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the action into a proceeding in
rem or quasi in rem by attaching the 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.

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. The preceding section referred to in the above
provision is Section 15 which provides for extraterritorial service(a) personal service out of
the Philippines, (b) 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; or (c) in any other
manner which the court may deem sufficient.
Davao Light & Power Co., Inc. vs CA

Facts: Davao Light and Power Inc, Co. filed a complaint for recovery of sum of money and
damages against Queensland Hotel and Teodorico Adarna. The complaint contained an ex parte
application for a writ of preliminary attachment.

Judge Nartatez granted the writ and fixed the attachment bond at around P4Million. The
summons, copy of complaint, writ of attachment, copy of attachment bond were served upon
Queensland and Adarna. Pursuant to the writ, the Sheriff seized the properties of the latter.

Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to
issue the same because at the time the order of attachment was promulgated (May 3, 1989) and
the attachment writ issued (May 11,1989), the Trial Court had not yet acquired jurisdiction over
cause and person of defendants.

Trial Court denied the motion to discharge. The CA annulled the RTCs order stating that While
it is true that a prayer for the issuance of a writ of preliminary attachment may be included m the
complaint, as is usually done, it is likewise true that the Court does not acquire jurisdiction over
the person of the defendant until he is duly summoned or voluntarily appears, and adding the
phrase that it be issued "ex parte" does not confer said jurisdiction before actual summons had
been made, nor retroact jurisdiction upon summons being made.

Issue: WON preliminary attachment may issue ex parte against a defendant before
acquiring jurisdiction over his person.

Held: YES. Rule 57 xxx speaks of the grant of the remedy at the commencement of the action
or at any time thereafter. The phrase, at the commencement of the action, obviously refers to
the date of the filing of the complaintwhich, as above pointed out, is the date that marks the
commencement of the action; and the reference plainly is to a time before summons is served
on the defendant, or even before summons issues. What the rule is saying quite clearly is that
after an action is properly commencedby the filing of the complaint and the payment of all
requisite docket and other feesthe plaintiff may apply for and obtain a writ of preliminary
attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at
any time, either before or after service of summons on the defendant. And this indeed, has been
the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading
(counterclaim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at
the commencement of the action if it finds. the application otherwise sufficient in form and
substance.
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of
attachment may properly issue ex parte provided that the Court is satisfied that the relevant
requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require
prior hearing on the application with notice to the defendant; but that levy on property pursuant
to the writ thus issued may not be validly effected unless preceded, or contemporaneously
accompanied, by service on the defendant of summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the application for attachment (if not incorporated in
but submitted separately from the complaint), the order of attachment, and the plaintiff s
attachment bond.