G.R. No. 144740 August 31, 2005 In view of the finality of this Court’s decision in G.R. No.

his Court’s decision in G.R. No. 106214, the

private complainant moved for execution of judgment before the trial
SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners, court.12
vs. THE HON. AMELIA TRIA-INFANTE, In her official capacity
as Presiding Judge, Regional Trial Court, Branch 9, Manila; THE On 07 May 1999, the trial court, now presided over by respondent
PEOPLE OF THE PHILIPPINES, represented by Spouses Judge, issued a Writ of Execution.13
REYNALDO and ZENAIDA ANZURES; and REYNALDO R.
BUAZON, In his official capacity as Sheriff IV, Regional Trial Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon
Villaluz, but the latter no longer resided in her given address. This
Before Us is a petition for review on certiorari, assailing the Decision1 being the case, the sheriff sent a Notice of Garnishment upon
and Resolution2 of the Court of Appeals in CA-G.R. SP No. 58147, petitioner at its office in Makati City, by virtue of the counter-bond
dated 16 June 2000 and 22 August 2000, respectively. The said posted by Villaluz with said insurance corporation in the amount of
Decision and Resolution declared that there was no grave abuse of ₱2,500,000.00. As reported by the sheriff, petitioner refused to assume
discretion on the part of respondent Judge in issuing the assailed its obligation on the counter-bond it posted for the discharge of the
order dated 31 March 2000, which was the subject in CA-G.R. SP No. attachment made by Villaluz.14
58147.
Reynaldo Anzures, through the private prosecutor, filed a Motion to
THE FACTS Proceed with Garnishment,15 which was opposed by petitioner16
contending that it should not be held liable on the counter-
The factual milieu of the instant case can be traced from this Court’s attachment bond.
decision in G.R. No. 106214 promulgated on 05 September 1997.
The trial court, in its Order dated 31 March 2000,17 granted the
On 26 August 1988, Reynaldo Anzures instituted a complaint against Motion to Proceed with Garnishment. The sheriff issued a Follow-Up
Teresita Villaluz (Villaluz) for violation of Batas Pambansa Blg. 22. of Garnishment18 addressed to the President/General Manager of
The criminal information was brought before the Regional Trial petitioner dated 03 April 2000.
Court, City of Manila, and raffled off to Branch 9, then presided over
by Judge Edilberto G. Sandoval, docketed as Criminal Case No. 89- On 07 April 2000, petitioner filed a Petition for Certiorari with
69257. Preliminary Injunction and/or Temporary Restraining Order19 with
the Court of Appeals, seeking the nullification of the trial court’s
An Ex-Parte Motion for Preliminary Attachment3 dated 06 March order dated 31 March 2000 granting the motion to proceed with
1989 was filed by Reynaldo Anzures praying that pending the garnishment. Villaluz was also named as petitioner. The petitioners
hearing on the merits of the case, a Writ of Preliminary Attachment contended that the respondent Judge, in issuing the order dated 31
be issued ordering the sheriff to attach the properties of Villaluz in March 2000, and the sheriff committed grave abuse of discretion and
accordance with the Rules. grave errors of law in proceeding against the petitioner corporation
on its counter-attachment bond, despite the fact that said bond was
On 03 July 1989, the trial court issued an Order4 for the issuance of a not approved by the Supreme Court, and that the condition by which
writ of preliminary attachment "upon complainant’s posting of a said bond was issued did not happen.20
bond which is hereby fixed at ₱2,123,400.00 and the Court’s approval
of the same under the condition prescribed by Sec. 4 of Rule 57 of the On 16 June 2000, the Court of Appeals rendered a Decision,21 the
Rules of Court…." dispositive portion of which reads:

An attachment bond5 was thereafter posted by Reynaldo Anzures WHEREFORE, premises considered, the Court finds no grave abuse
and approved by the court. Thereafter, the sheriff attached certain of discretion on the part of respondent judge in issuing the assailed
properties of Villaluz, which were duly annotated on the order. Hence, the petition is dismissed.
corresponding certificates of title.
A Motion for Reconsideration22 was filed by petitioner, but was
On 25 May 1990, the trial court rendered a Decision6 on the case denied for lack of merit by the Court of Appeals in its Resolution23
acquitting Villaluz of the crime charged, but held her civilly liable. dated 22 August 2000.
The dispositive portion of the said decision is reproduced hereunder:
Undeterred, petitioner filed the instant petition under Rule 45 of the
WHEREFORE, premises considered, judgment is hereby rendered 1997 Rules of Civil Procedure, with Urgent Application for a Writ of
ACQUITTING the accused TERESITA E. VILLALUZ with cost de Preliminary Injunction and/or Temporary Restraining Order.24
oficio. As to the civil aspect of the case however, accused is ordered
to pay complainant Reynaldo Anzures the sum of TWO MILLION On 13 December 2000, this Court issued a Resolution25 requiring the
ONE HUNDRED TWENTY THREE THOUSAND FOUR HUNDRED private respondents to file their Comment to the Petition, which they
(P2,123,400.00) PESOS with legal rate of interest from December 18, did. Petitioner was required to file its Reply26 thereafter.
1987 until fully paid, the sum of P50,000.00 as attorney’s fees and the
cost of suit.7
Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo
and Zenaida Anzures executed a Memorandum of Understanding
Villaluz interposed an appeal with the Court of Appeals, and on 30 (MOU).27 In it, it was stipulated that as of said date, the total amount
April 1992, the latter rendered its Decision,8 the dispositive portion garnished from petitioner had amounted to ₱1,541,063.85, and so the
of which partly reads: remaining amount still sought to be executed was ₱958,936.15.28
Petitioner tendered and paid the amount of ₱300,000.00 upon signing
WHEREFORE, in CA-G.R. CV No. 28780, the Decision of the Regional of the MOU, and the balance of ₱658,936.15 was to be paid in
Trial Court of Manila, Branch 9, dated May 25, 1990, as to the civil installment at ₱100,000.00 at the end of each month from February
aspect of Criminal Case No. 89-69257, is hereby AFFIRMED, in all 2001 up to July 2001. At the end of August 2001, the amount of
respects…. ₱58,936.00 would have to be paid. This would make the aggregate
amount paid to the private respondents ₱2,500,000.00.29 There was,
The case was elevated to the Supreme Court (G.R. No. 106214), and however, a proviso in the MOU which states that "this contract shall
during its pendency, Villaluz posted a counter-bond in the amount not be construed as a waiver or abandonment of the appellate review
of ₱2,500,000.00 issued by petitioner Security Pacific Assurance pending before the Supreme Court and that it will be subject to all
Corporation.9 Villaluz, on the same date10 of the counter-bond, filed such interim orders and final outcome of said case."
an Urgent Motion to Discharge Attachment.11
On 13 August 2001, the instant petition was given due course, and
On 05 September 1997, we promulgated our decision in G.R. No. the parties were obliged to submit their respective Memoranda.30
106214, affirming in toto the decision of the Court of Appeals.
ISSUES
The petitioner raises the following issues for the resolution of this
Court:
Main Issue - WHETHER OR NOT THE COURT OF Appeals
committed reversible error in affirming the 31 march 2000 order of
public respondent judge which allowed execution on the counter-
bond issued by the petitioner.
. . . [C]ounterbonds 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. . . .
In Imperial Insurance, Inc. v. De Los Angeles,38 we ruled:

Corollary Issues – (1) WHETHER OR NOT THE COURT OF
APPEALS CORRECTLY RULED THAT THE ATTACHMENT ON
THE PROPERTY OF VILLALUZ WAS DISCHARGED WITHOUT
NEED OF COURT APPROVAL OF THE COUNTER-BOND
POSTED; and (2) WHETHER OR NOT THE COURT OF APPEALS
CORRECTLY RULED THAT THE ATTACHMENT ON THE
PROPERTY OF VILLALUZ WAS DISCHARGED BY THE MERE
ACT OF POSTING THE COUNTER-BOND.
THE COURT’S RULING
Petitioner seeks to escape liability by contending, in the main, that the
writ of attachment which was earlier issued against the real
properties of Villaluz was not discharged. Since the writ was not
discharged, then its liability did not accrue. The alleged failure of this
Court in G.R. No. 106214 to approve the counter-bond and to cause
the discharge of the attachment against Villaluz prevented the
happening of a condition upon which the counter-bond’s issuance
was premised, such that petitioner should not be held liable
thereon.31
Petitioner further asserts that the agreement between it and Villaluz
is not a suretyship agreement in the sense that petitioner has become
an additional debtor in relation to private respondents. It is merely Suretyship is a contractual relation resulting from an agreement
waiving its right of excussion32 that would ordinarily apply to
counter-bond guarantors as originally contemplated in Section 12,
Rule 57 of the 1997 Rules.
In their Comment,33 the private respondents assert that the filing of
the counter-bond by Villaluz had already ipso facto discharged the
attachment on the properties and made the petitioner liable on the
bond. Upon acceptance of the premium, there was already an express
contract for surety between Villaluz and petitioner in the amount of
₱2,500,000.00 to answer for any adverse judgment/decision against
Villaluz.
. . . 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 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.
In Philippine British Assurance Co., Inc. v. Intermediate Appellate
Court,39 we further held that "the counterbond is intended to secure
the payment of ‘any judgment’ that the attaching creditor may recover
in the action."
Petitioner does not deny that the contract between it and Villaluz is
one of surety. However, it points out that the kind of surety
agreement between them is one that merely waives its right of
excussion. This cannot be so. The counter-bond itself states that the
parties jointly and severally bind themselves to secure the payment
of any judgment that the plaintiff may recover against the defendant
in the action. A surety is considered in law as being the same party as
the debtor in relation to whatever is adjudged touching the obligation
of the latter, and their liabilities are interwoven as to be
inseparable.40
whereby one person, the surety, engages to be answerable for the
debt, default or miscarriage of another, known as the principal. The
surety’s obligation is not an original and direct one for the
performance of his own act, but merely accessory or collateral to the
obligation contracted by the principal. Nevertheless, although the
contract of a surety is in essence secondary only to a valid principal
obligation, his liability to the creditor or promise of the principal is
said to be direct, primary and absolute; in other words, he is directly
and equally bound with the principal. The surety therefore becomes
liable for the debt or duty of another although he possesses no direct
or personal interest over the obligations nor does he receive any
benefit therefrom.41

Petitioner filed a Reply34 dated 09 May 2001 to private respondents’

In view of the nature and purpose of a surety agreement, petitioner,
Comment, admitting the binding effect of the bond as between the
thus, is barred from disclaiming liability.
parties thereto. What it did not subscribe to was the theory that the
attachment was ipso facto or automatically discharged by the mere
filing of the bond in court. Such theory, according to petitioner, has Petitioner’s argument that the mere filing of a counter-bond in this
no foundation. Without an order of discharge of attachment and case cannot automatically discharge the attachment without first an
approval of the bond, petitioner submits that its stipulated liability order of discharge and approval of the bond, is lame.
on said bond, premised on their occurrence, could not possibly arise,
for to hold otherwise would be to trample upon the statutorily Under the Rules, there are two (2) ways to secure the discharge of an
guaranteed right of the parties to contractual autonomy. attachment. First, the party whose property has been attached or a
person appearing on his behalf may post a security. Second, said
Based on the circumstances present in this case, we find no party may show that the order of attachment was improperly or
compelling reason to reverse the ruling of the Court of Appeals. irregularly issued.42 The first applies in the instant case. Section 12,
Rule 57,43 provides:
Over the years, in a number of cases, we have made certain
pronouncements about counter-bonds. SEC. 12. Discharge of attachment upon giving counter-bond. – After a writ
of attachment has been enforced, the party whose property has been
attached, or the person appearing on his behalf, may move for the
In Tijam v. Sibonghanoy,35 as reiterated in Vanguard Assurance Corp. v.
discharge of the attachment wholly or in part on the security given.
Court of Appeals,36 we held:
The court shall, after due notice and hearing, order the discharge of
the attachment if the movant makes a cash deposit, or files a counter-
. . . [A]fter the judgment for the plaintiff has become executory and bond executed to the attaching party with the clerk of the court where
the execution is ‘returned unsatisfied,’ as in this case, the liability of the application is made, in an amount equal to that fixed by the court
the bond automatically attaches and, in failure of the surety to satisfy in the order of attachment, exclusive of costs. But if the attachment is
the judgment against the defendant despite demand therefore, writ sought to be discharged with respect to a particular property, the
of execution may issue against the surety to enforce the obligation of counter-bond shall be equal to the value of that property as
the bond. determined by the court. In either case, the cash deposit or the
counter-bond shall secure the payment of any judgment that the
In Luzon Steel Coporation v. Sia, et al.: 37 attaching party may recover in the action. A notice of the deposit shall
forthwith be served on the attaching party. Upon the discharge of an
attachment in accordance with the provisions of this section, the
property attached, or the proceeds of any sale thereof, shall be
delivered to the party making the deposit or giving the counter-bond,
or to the person appearing on his behalf, the deposit or counter-bond
aforesaid standing in place of the property so released. Should such
counter-bond for any reason be found to be or become insufficient,
and the party furnishing the same fail to file an additional counter-
bond, the attaching party may apply for a new order of attachment.
It should be noted that in G.R. No. 106214, per our Resolution dated
15 January 1997,44 we permitted Villaluz to file a counter-attachment
bond. On 17 February 1997,45 we required the private respondents to
comment on the sufficiency of the counter-bond posted by Villaluz.
It is quite palpable that the necessary steps in the discharge of an
attachment upon giving counter-bond have been taken. To require a
specific order for the discharge of the attachment when this Court, in
our decision in G.R. No. 106214, had already declared that the
petitioner is solidarily bound with Villaluz would be mere
surplusage. Thus:
During the pendency of this petition, a counter-attachment bond was
filed by petitioner Villaluz before this Court to discharge the
attachment earlier issued by the trial court. Said bond amounting to
P2.5 million was furnished by Security Pacific Assurance, Corp.
which agreed to bind itself "jointly and severally" with petitioner for
"any judgment" that may be recovered by private respondent against
the former.46
We are not unmindful of our ruling in the case of Belisle Investment
and Finance Co., Inc. v. State Investment House, Inc.,47 where we held:
. . . [T]he Court of Appeals correctly ruled that the mere posting of a
counterbond does not automatically discharge the writ of
attachment. It is only after hearing and after the judge has ordered
the discharge of the attachment if a cash deposit is made or a
counterbond is executed to the attaching creditor is filed, that the writ
of attachment is properly discharged under Section 12, Rule 57 of the
Rules of Court.
The ruling in Belisle, at first glance, would suggest an error in the
assailed ruling of the Court of Appeals because there was no specific
resolution discharging the attachment and approving the counter-
bond. As above-explained, however, consideration of our decision in
G.R. No. 106214 in its entirety will readily show that this Court has
virtually discharged the attachment after all the parties therein have
been heard on the matter.
On this score, we hew to the pertinent ratiocination of the Court of
Appeals as regards the heretofore cited provision of Section 12, Rule
57 of the 1997 Rules of Civil Procedure, on the discharge of
attachment upon giving counter-bond:
. . . The filing of the counter-attachment bond by petitioner Villaluz
has discharged the attachment on the properties and made the
petitioner corporation liable on the counter-attachment bond. This
can be gleaned from the "DEFENDANT’S BOND FOR THE
DISSOLUTION OF ATTACHMENT", which states that Security
Pacific Assurance Corporation, as surety, in consideration of the
dissolution of the said attachment jointly and severally, binds itself with
petitioner Villaluz for any judgment that may be recovered by private
respondent Anzures against petitioner Villaluz.
The contract of surety is only between petitioner Villaluz and
petitioner corporation. The petitioner corporation cannot escape Section 22, on the other hand, reads:
liability by stating that a court approval is needed before it can be
made liable. This defense can only be availed by petitioner
corporation against petitioner Villaluz but not against third persons
who are not parties to the contract of surety. The petitioners hold
themselves out as jointly and severally liable without any conditions
in the counter-attachment bond. The petitioner corporation cannot
impose requisites before it can be made liable when the law clearly
does not require such requisites to be fulfilled.48 (Emphases
supplied.)
Verily, a judgment must be read in its entirety, and it must be
construed as a whole so as to bring all of its parts into harmony as far LESSOR does not want to use said properties, it may instead
as this can be done by fair and reasonable interpretation and so as to
give effect to every word and part, if possible, and to effectuate the
intention and purpose of the Court, consistent with the provisions of
the organic law.49
Insurance companies are prone to invent excuses to avoid their just
obligation.50 It seems that this statement very well fits the instant
case.
WHEREFORE, in view of all the foregoing, the Decision and
Resolution of the Court of Appeals dated 16 June 2000 and 22 August
2000, respectively, are both AFFIRMED. Costs against petitioner.SO
ORDERED.
G.R. No. 158997 October 6, 2008
FORT BONIFACIO DEVELOPMENT CORPORATION petitioner,
vs.YLLAS LENDING CORPORATION and JOSE S. LAURAYA, in
his official capacity as President, respondents.
The Case
This is a petition for review on certiorari1 of the Orders issued on 7
March 20032 and 3 July 20033 by Branch 59 of the Regional Trial Court
of Makati City (trial court) in Civil Case No. 01-1452. The trial court's
orders dismissed Fort Bonifacio Development Corporation's (FBDC)
third party claim and denied FBDC's Motion to Intervene and Admit
Complaint in Intervention.
The Facts
On 24 April 1998, FBDC executed a lease contract in favor of Tirreno,
Inc. (Tirreno) over a unit at the Entertainment Center - Phase 1 of the
Bonifacio Global City in Taguig, Metro Manila. The parties had the
lease contract notarized on the day of its execution. Tirreno used the
leased premises for Savoia Ristorante and La Strega Bar.
Two provisions in the lease contract are pertinent to the present case:
Section 20, which is about the consequences in case of default of the
lessee, and Section 22, which is about the lien on the properties of the
lease. The pertinent portion of Section 20 reads:
Section 20. Default of the Lessee
20.1 The LESSEE shall be deemed to be in default within the
meaning of this Contract in case:
(i) The LESSEE fails to fully pay on time any rental, utility
and service charge or other financial obligation of the
LESSEE under this Contract;
xxx
20.2 Without prejudice to any of the rights of the LESSOR
under this Contract, in case of default of the LESSEE, the
lessor shall have the right to:
(i) Terminate this Contract immediately upon written notice
to the LESSEE, without need of any judicial action or
declaration;
xxx
Section 22. Lien on the Properties of the Lessee
Upon the termination of this Contract or the expiration of
the Lease Period without the rentals, charges and/or
damages, if any, being fully paid or settled, the LESSOR
shall have the right to retain possession of the properties of
the LESSEE used or situated in the Leased Premises and the
LESSEE hereby authorizes the LESSOR to offset the
prevailing value thereof as appraised by the LESSOR
against any unpaid rentals, charges and/or damages. If the
 sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.
Tirreno began to default in its lease payments in 1999. By July 2000,
Tirreno was already in arrears by P5,027,337.91. FBDC and Tirreno
entered into a settlement agreement on 8 August 2000. Despite the
execution of the settlement agreement, FBDC found need to send
Tirreno a written notice of termination dated 19 September 2000 due
to Tirreno's alleged failure to settle its outstanding obligations. On 29
September 2000, FBDC entered and occupied the leased premises.
FBDC also appropriated the equipment and properties left by Tirreno
pursuant to Section 22 of their Contract of Lease as partial payment
for Tirreno's outstanding obligations. Tirreno filed an action for
forcible entry against FBDC before the Municipal Trial Court of
Taguig. Tirreno also filed a complaint for specific performance with
a prayer for the issuance of a temporary restraining order and/or a
writ of preliminary injunction against FBDC before the Regional Trial
Court (RTC) of Pasig City. The RTC of Pasig City dismissed Tirreno's
complaint for forum-shopping.
On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in owned the mortgaged properties as FBDC already enforced its lien
his official capacity as President, (respondents) caused the sheriff of on 29 September 2000.
Branch 59 of the trial court to serve an alias writ of seizure against
FBDC. On the same day, FBDC served on the sheriff an affidavit of
title and third party claim. FBDC found out that on 27 September
2001, respondents filed a complaint for Foreclosure of Chattel
Mortgage with Replevin, docketed as Civil Case No. 01-1452, against
Tirreno, Eloisa Poblete Todaro (Eloisa), and Antonio D. Todaro
(Antonio), in their personal and individual capacities, and in Eloisa's
official capacity as President. In their complaint, respondents alleged
that they lent a total of P1.5 million to Tirreno, Eloisa, and Antonio.
On 9 November 2000, Tirreno, Eloisa and Antonio executed a Deed
of Chattel Mortgage in favor of respondents as security for the loan.
The following properties are covered by the Chattel Mortgage:
a. Furniture, Fixtures and Equipment of Savoia Ristorante
and La Strega Bar, a restaurant owned and managed by
[Tirreno], inclusive of the leasehold right of [Tirreno] over
its rented building where [the] same is presently located.
b. Goodwill over the aforesaid restaurant, including its
business name, business sign, logo, and any and all interest
therein.
c. Eighteen (18) items of paintings made by Florentine
Master, Gino Tili, which are fixtures in the above-named
restaurant.
The details and descriptions of the above items are specified
in Annex "A" which is hereto attached and forms as an
integral part of this Chattel Mortgage instrument.4
In the Deed of Chattel Mortgage, Tirreno, Eloisa, and Antonio made
the following warranties to respondents:
1. WARRANTIES: The MORTGAGOR hereby declares and
warrants that:
a. The MORTGAGOR is the absolute owner of the above
named properties subject of this mortgage, free from all
liens and encumbrances.
b. There exist no transaction or documents affecting the
same previously presented for, and/or pending
transaction.5
Despite FBDC's service upon him of an affidavit of title and third
party claim, the sheriff proceeded with the seizure of certain items
from FBDC's premises. The sheriff's partial return indicated the
seizure of the following items from FBDC:
A. FIXTURES
(2) - Smaller Murano Chandeliers
(1) - Main Murano Chandelier
B. EQUIPMENT
(13) - Uni-Air Split Type 2HP Air Cond.
(2) - Uni-Air Split Type 1HP Air Cond.
(3) - Uni-Air Window Type 2HP Air Cond.
(56) - Chairs
(1) - Table
(2) - boxes - Kitchen equipments [sic]6
The sheriff delivered the seized properties to respondents. FBDC
questioned the propriety of the seizure and delivery of the properties
to respondents without an indemnity bond before the trial court.
FBDC argued that when respondents and Tirreno entered into the
chattel mortgage agreement on 9 November 2000, Tirreno no longer
In ruling on FBDC's motion for leave to intervene and to admit
complaint in intervention, the trial court stated the facts as follows:
Before this Court are two pending incidents, to wit: 1)
[FBDC's] Third-Party Claim over the properties of [Tirreno]
which were seized and delivered by the sheriff of this Court
to [respondents]; and 2) FBDC's Motion to Intervene and to
Admit Complaint in Intervention.
Third party claimant, FBDC, anchors its claim over the
subject properties on Sections 20.2(i) and 22 of the Contract
of Lease executed by [FBDC] with Tirreno. Pursuant to said
Contract of Lease, FBDC took possession of the leased
premises and proceeded to sell to third parties the
properties found therein and appropriated the proceeds
thereof to pay the unpaid lease rentals of [Tirreno].
FBDC, likewise filed a Motion to Admit its Complaint-in-
Intervention.
In Opposition to the third-party claim and the motion to
intervene, [respondents] posit that the basis of [FBDC's]
third party claim being anchored on the aforesaid Contract
[of] Lease is baseless. [Respondents] contend that the
stipulation of the contract of lease partakes of a pledge
which is void under Article 2088 of the Civil Code for being
pactum commissorium.
xxx
By reason of the failure of [Tirreno] to pay its lease rental
and fees due in the amount of P5,027,337.91, after having
notified [Tirreno] of the termination of the lease, x x x FBDC
took possession of [Tirreno.'s] properties found in the
premises and sold those which were not of use to it.
Meanwhile, [respondents], as mortgagee of said properties,
filed an action for foreclosure of the chattel mortgage with
replevin and caused the seizure of the same properties
which [FBDC] took and appropriated in payment of
[Tirreno's] unpaid lease rentals.7
The Ruling of the Trial Court
In its order dated 7 March 2003, the trial court stated that the present
case raises the questions of who has a better right over the properties
of Tirreno and whether FBDC has a right to intervene in respondents'
complaint for foreclosure of chattel mortgage.
In deciding against FBDC, the trial court declared that Section 22 of
the lease contract between FBDC and Tirreno is void under Article
2088 of the Civil Code.8 The trial court stated that Section 22 of the
lease contract pledges the properties found in the leased premises as
security for the payment of the unpaid rentals. Moreover, Section 22
provides for the automatic appropriation of the properties owned by Respondents, as well as the trial court, contend that Section 22
Tirreno in the event of its default in the payment of monthly rentals constitutes a pactum commissorium, a void stipulation in a pledge
to FBDC. Since Section 22 is void, it cannot vest title of ownership contract. FBDC, on the other hand, states that Section 22 is merely a
over the seized properties. Therefore, FBDC cannot assert that its dacion en pago.
right is superior to respondents, who are the mortgagees of the
disputed properties. Articles 2085 and 2093 of the Civil Code enumerate the requisites
essential to a contract of pledge: (1) the pledge is constituted to secure
The trial court quoted from Bayer Phils. v. Agana9 to justify its ruling the fulfillment of a principal obligation; (2) the pledgor is the absolute
that FBDC should have filed a separate complaint against owner of the thing pledged; (3) the persons constituting the pledge
respondents instead of filing a motion to intervene. The trial court have the free disposal of their property or have legal authorization
quoted from Bayer as follows: for the purpose; and (4) the thing pledged is placed in the possession
of the creditor, or of a third person by common agreement. Article
In other words, construing Section 17 of Rule 39 of the 2088 of the Civil Code prohibits the creditor from appropriating or
Revised Rules of Court (now Section 16 of the 1997 Rules on disposing the things pledged, and any contrary stipulation is void.
Civil Procedure), the rights of third-party claimants over
certain properties levied upon by the sheriff to satisfy the On the other hand, Article 1245 of the Civil Code defines dacion en
judgment may not be taken up in the case where such claims pago, or dation in payment, as the alienation of property to the
are presented but in a separate and independent action creditor in satisfaction of a debt in money. Dacion en pago is governed
instituted by the claimants.10 by the law on sales. Philippine National Bank v. Pineda13 held that
dation in payment requires delivery and transmission of ownership
The dispositive portion of the trial court's decision reads: of a thing owned by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. There is no dation in
payment when there is no transfer of ownership in the creditor's
WHEREFORE, premises considered, [FBDC's] Third Party
favor, as when the possession of the thing is merely given to the
Claim is hereby DISMISSED. Likewise, the Motion to
creditor by way of security.
Intervene and Admit Complaint in Intervention is
DENIED. 11
Section 22, as worded, gives FBDC a means to collect payment from
Tirreno in case of termination of the lease contract or the expiration
FBDC filed a motion for reconsideration on 9 May 2003. The trial
of the lease period and there are unpaid rentals, charges, or damages.
court denied FBDC's motion for reconsideration in an order dated 3
The existence of a contract of pledge, however, does not arise just
July 2003. FBDC filed the present petition before this Court to review
because FBDC has means of collecting past due rent from Tirreno
pure questions of law.
other than direct payment. The trial court concluded that Section 22
constitutes a pledge because of the presence of the first three
The Issues requisites of a pledge: Tirreno's properties in the leased premises
secure Tirreno's lease payments; Tirreno is the absolute owner of the
FBDC alleges that the trial court erred in the following: said properties; and the persons representing Tirreno have legal
authority to constitute the pledge. However, the fourth requisite,
1. Dismissing FBDC's third party claim upon the trial court's that the thing pledged is placed in the possession of the creditor, is
erroneous interpretation that FBDC has no right of absent. There is non-compliance with the fourth requisite even if
ownership over the subject properties because Section 22 of Tirreno's personal properties are found in FBDC's real property.
the contract of lease is void for being a pledge and a pactum Tirreno's personal properties are in FBDC's real property because of
commissorium; the Contract of Lease, which gives Tirreno possession of the personal
properties. Since Section 22 is not a contract of pledge, there is no
pactum commissorium.
2. Denying FBDC intervention on the ground that its proper
remedy as third party claimant over the subject properties
is to file a separate action; and FBDC admits that it took Tirreno's properties from the leased
premises without judicial intervention after terminating the Contract
of Lease in accordance with Section 20.2. FBDC further justifies its
3. Depriving FBDC of its properties without due process of
action by stating that Section 22 is a forfeiture clause in the Contract
law when the trial court erroneously dismissed FBDC's
of Lease and that Section 22 gives FBDC a remedy against Tirreno's
third party claim, denied FBDC's intervention, and did not
failure to comply with its obligations. FBDC claims that Section 22
require the posting of an indemnity bond for FBDC's
authorizes FBDC to take whatever properties that Tirreno left to pay
protection. 12
off Tirreno's obligations.

The Ruling of the Court

We agree with FBDC.

The petition has merit.

Taking of Lessee's Properties
without Judicial Intervention
We reproduce Section 22 of the Lease Contract below for easy
reference:
Section 22. Lien on the Properties of the Lessee
Upon the termination of this Contract or the expiration of
the Lease Period without the rentals, charges and/or
damages, if any, being fully paid or settled, the LESSOR
shall have the right to retain possession of the properties of
the LESSEE used or situated in the Leased Premises and the
LESSEE hereby authorizes the LESSOR to offset the
prevailing value thereof as appraised by the LESSOR
against any unpaid rentals, charges and/or damages. If the
LESSOR does not want to use said properties, it may instead
sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.
A lease contract may be terminated without judicial intervention.
Consing v. Jamandre upheld the validity of a contractually-stipulated
termination clause:
This stipulation is in the nature of a resolutory condition, for
upon the exercise by the [lessor] of his right to take
possession of the leased property, the contract is deemed
terminated. This kind of contractual stipulation is not
illegal, there being nothing in the law proscribing such kind
of agreement.
xxx
Judicial permission to cancel the agreement was not,
therefore necessary because of the express stipulation in the
contract of [lease] that the [lessor], in case of failure of the
[lessee] to comply with the terms and conditions thereof,
can take-over the possession of the leased premises, thereby
cancelling the contract of sub-lease. Resort to judicial action
is necessary only in the absence of a special provision
granting the power of cancellation.14
A lease contract may contain a forfeiture clause. Country Bankers
Insurance Corp. v. Court of Appeals upheld the validity of a forfeiture
clause as follows:
A provision which calls for the forfeiture of the remaining
deposit still in the possession of the lessor, without
prejudice to any other obligation still owing, in the event of
the termination or cancellation of the agreement by reason
of the lessee's violation of any of the terms and conditions of
the agreement is a penal clause that may be validly entered
into. A penal clause is an accessory obligation which the
parties attach to a principal obligation for the purpose of
insuring the performance thereof by imposing on the debtor
a special prestation (generally consisting in the payment of
a sum of money) in case the obligation is not fulfilled or is
irregularly or inadequately fulfilled.15
In Country Bankers, we allowed the forfeiture of the lessee's advance
deposit of lease payment. Such a deposit may also be construed as a
guarantee of payment, and thus answerable for any unpaid rent or
charges still outstanding at any termination of the lease.
In the same manner, we allow FBDC's forfeiture of Tirreno's
properties in the leased premises. By agreement between FBDC and
Tirreno, the properties are answerable for any unpaid rent or charges
at any termination of the lease. Such agreement is not contrary to law,
morals, good customs, or public policy. Forfeiture of the properties is
the only security that FBDC may apply in case of Tirreno's default in
its obligations.
Intervention versus Separate Action
Respondents posit that the right to intervene, although permissible,
is not an absolute right. Respondents agree with the trial court's
ruling that FBDC's proper remedy is not intervention but the filing of
a separate action. Moreover, respondents allege that FBDC was
accorded by the trial court of the opportunity to defend its claim of
ownership in court through pleadings and hearings set for the
purpose. FBDC, on the other hand, insists that a third party claimant
may vindicate his rights over properties taken in an action for
replevin by intervening in the replevin action itself.
officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or
not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and
whether or not the intervenor's rights may be fully protected
in a separate proceeding.
Although intervention is not mandatory, nothing in the Rules
proscribes intervention. The trial court's objection against FBDC's
intervention has been set aside by our ruling that Section 22 of the
lease contract is not pactum commissorium.
Indeed, contrary to respondents' contentions, we ruled in BA Finance
Corporation v. Court of Appeals that where the mortgagee's right to the
possession of the specific property is evident, the action need only be
maintained against the possessor of the property. However, where
the mortgagee's right to possession is put to great doubt, as when a
contending party might contest the legal bases for mortgagee's cause
of action or an adverse and independent claim of ownership or right
of possession is raised by the contending party, it could become
essential to have other persons involved and accordingly impleaded
for a complete determination and resolution of the controversy. Thus:
A chattel mortgagee, unlike a pledgee, need not be in, nor
entitled to, the possession of the property, unless and until
the mortgagor defaults and the mortgagee thereupon seeks
to foreclose thereon. Since the mortgagee's right of
possession is conditioned upon the actual default which
itself may be controverted, the inclusion of other parties, like
the debtor or the mortgagor himself, may be required in
order to allow a full and conclusive determination of the
case. When the mortgagee seeks a replevin in order to effect
the eventual foreclosure of the mortgage, it is not only the
existence of, but also the mortgagor's default on, the chattel
mortgage that, among other things, can properly uphold the
right to replevy the property. The burden to establish a valid
justification for that action lies with the plaintiff [-
mortgagee]. An adverse possessor, who is not the
mortgagor, cannot just be deprived of his possession, let
alone be bound by the terms of the chattel mortgage
contract, simply because the mortgagee brings up an
action for replevin.20 (Emphasis added)

We agree with FBDC.

FBDC exercised its lien to Tirreno's properties even before
respondents and Tirreno executed their Deed of Chattel Mortgage.
Both the trial court and respondents relied on our ruling in Bayer FBDC is adversely affected by the disposition of the properties seized
Phils. v. Agana16 to justify their opposition to FBDC's intervention and by the sheriff. Moreover, FBDC's intervention in the present case will
to insist on FBDC's filing of a separate action. In Bayer, we declared result in a complete adjudication of the issues brought about by
that the rights of third party claimants over certain properties levied Tirreno's creation of multiple liens on the same properties and
upon by the sheriff to satisfy the judgment may not be taken up in subsequent default in its obligations.
the case where such claims are presented, but in a separate and
independent action instituted by the claimants. However, both
Sheriff's Indemnity Bond
respondents and the trial court overlooked the circumstances behind
the ruling in Bayer, which makes the Bayer ruling inapplicable to the
present case. The third party in Bayer filed his claim during execution; FBDC laments the failure of the trial court to require respondents to
in the present case, FBDC filed for intervention during the trial. file an indemnity bond for FBDC's protection. The trial court, on the
other hand, did not mention the indemnity bond in its Orders dated
7 March 2003 and 3 July 2003.
The timing of the filing of the third party claim is important because
the timing determines the remedies that a third party is allowed to
file. A third party claimant under Section 16 of Rule 39 (Execution, Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn
Satisfaction and Effect of Judgments)17 of the 1997 Rules of Civil over to respondents the properties subject of this case in view of
Procedure may vindicate his claim to the property in a separate respondents' failure to file a bond. The bond in Section 14 of Rule 57
action, because intervention is no longer allowed as judgment has (proceedings where property is claimed by third person) is different
already been rendered. A third party claimant under Section 14 of from the bond in Section 3 of the same rule (affidavit and bond).
Rule 57 (Preliminary Attachment)18 of the 1997 Rules of Civil Under Section 14 of Rule 57, the purpose of the bond is to indemnify
Procedure, on the other hand, may vindicate his claim to the property the sheriff against any claim by the intervenor to the property seized
by intervention because he has a legal interest in the matter in or for damages arising from such seizure, which the sheriff was
litigation.19 making and for which the sheriff was directly responsible to the third
party. Section 3, Rule 57, on the other hand, refers to the attachment
bond to assure the return of defendant's personal property or the
We allow FBDC's intervention in the present case because FBDC
payment of damages to the defendant if the plaintiff's action to
satisfied the requirements of Section 1, Rule 19 (Intervention) of the
recover possession of the same property fails, in order to protect the
1997 Rules of Civil Procedure, which reads as follows:
plaintiff's right of possession of said property, or prevent the
defendant from destroying the same during the pendency of the suit.
Section 1. Who may intervene. - A person who has a legal
interest in the matter in litigation, or in the success of either Because of the absence of the indemnity bond in the present case,
of the parties, or an interest against both, or is so situated as
FBDC may also hold the sheriff for damages for the taking or keeping
to be adversely affected by a distribution or other of the properties seized from FBDC.
disposition of property in the custody of the court or of an
WHEREFORE, we GRANT the petition. We SET ASIDE the Orders With respect to the second ground relied upon for the grant of the
dated 7 March 2003 and 3 July 2003 of Branch 59 of the Regional Trial writ of preliminary attachment ex-parte, which is the alleged disposal
Court of Makati City in Civil Case No. 01-1452 dismissing Fort of properties by the defendants with intent to defraud creditors as
Bonifacio Development Corporation's Third Party Claim and provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits
denying Fort Bonifacio Development Corporation's Motion to can only barely justify the issuance of said writ as against the
Intervene and Admit Complaint in Intervention. We REINSTATE defendant Alfredo Ching who has allegedly bound himself jointly
Fort Bonifacio Development Corporation's Third Party Claim and and severally to pay plaintiff the defendant corporation’s obligation
GRANT its Motion to Intervene and Admit Complaint in to the plaintiff as a surety thereof.
Intervention. Fort Bonifacio Development Corporation may hold the
Sheriff liable for the seizure and delivery of the properties subject of
WHEREFORE, let a writ of preliminary attachment issue as against
this case because of the lack of an indemnity bond. SO ORDERED. the defendant Alfredo Ching requiring the sheriff of this Court to
attach all the properties of said Alfredo Ching not exceeding
G.R. No. 124642 February 23, 2004 ₱12,612,972.82 in value, which are within the jurisdiction of this Court
ALFREDO CHING and ENCARNACION CHING, petitioners and not exempt from execution upon, the filing by plaintiff of a bond
vs. THE HON. COURT OF APPEALS and ALLIED BANKING duly approved by this Court in the sum of Twelve Million Seven
CORPORATION, respondents. Hundred Thousand Pesos (₱12,700,000.00) 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
This petition for review, under Rule 45 of the Revised Rules of Court,
may sustain by reason of the attachment if the court shall finally
assails the Decision1 of the Court of Appeals (CA) dated November
adjudge that the plaintiff was not entitled thereto.
27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April
2, 1996 denying the petitioners’ motion for reconsideration. The
impugned decision granted the private respondent’s petition for SO ORDERED.
15

certiorari and set aside the Orders of the trial court dated December
15, 19933 and February 17, 19944 nullifying the attachment of 100,000 Upon the ABC’s posting of the requisite bond, the trial court issued a
shares of stocks of the Citycorp Investment Philippines under the writ of preliminary attachment. Subsequently, summonses were
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 ₱9,000,000.00 from the Allied Banking
Corporation (ABC). By virtue of this loan, the PBMCI, through its
Executive Vice-President Alfredo Ching, executed a promissory note
for the said amount promising to pay on December 22, 1978 at an
interest rate of 14% per annum.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
₱38,000,000.00.6 The loan was subsequently renewed on various
dates, the last renewal having been made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the
PBMCI in the amount of ₱13,000,000.00 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, 1981.8 This was renewed once for a period
of one month.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 ₱12,612,972.88 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 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 brought11 in that they falsely represented themselves to be Instead of filing an answer, Ching filed on January 14, 1984 a Motion
in a financial position to pay their obligation upon maturity to Suspend Proceedings on the same ground of the pendency of SEC
thereof."12 Its supporting affidavit stated, inter alia, that the Case No. 2250. This motion met the opposition from the ABC.23
"[d]efendants have removed or disposed of their properties, or [are]
ABOUT to do so, with intent to defraud their creditors." 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. On motion for reconsideration, however, the trial court, in an
14
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 ₱12,700,000. The order, in relevant part, stated:
served on the defendants,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 Securities and
Exchange Commission (SEC), docketed as SEC Case No. 2250, at the
same time seeking the PBMCI’s rehabilitation.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 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 On February
4, 1983, the ABC filed its Opposition thereto. 20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court
levied on attachment the 100,000 common shares of Citycorp stocks
in the name of Alfredo Ching.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
On January 20, 1984, Tañedo filed his Answer with counterclaim and
cross-claim.24 Ching eventually filed his Answer on July 12, 1984. 25
On October 25, 1984, long after submitting their answers, Ching filed
an Omnibus Motion,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 who effected the levy thereon on July 26, 1983, or by whoever may be
praying for the dismissal of the complaint, arguing that the ABC had presently in possession thereof.
"abandoned and waived" its right to proceed against the continuing
guaranty by its act of resorting to preliminary attachment. SO ORDERED.38

On December 17, 1986, the ABC filed a Motion to Reduce the amount
of his preliminary attachment bond from ₱12,700,000 to ₱6,350,000.28
Alfredo Ching opposed the motion,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
On March 2, 1988, the trial court issued an Order granting the motion
of the ABC and rendered the attachment bond of ₱6,350,000.31
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.

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 She attached therewith a copy of her marriage contract
with Alfredo Ching.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 private respondent of its right to file a bond under Section 14, Rule 57
party to this present case; thus, she has no personality to file of the Rules of Court. The petitioner Encarnacion T. Ching was not a
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. 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
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
The CA sustained the contention of the private respondent and set
aside the assailed orders. According to the CA, the RTC deprived the
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.

2.3 Said Motion cannot even be construed to be in the nature

Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
of a Third-Party Claim conformably with Sec. 14, Rule 57 of
presumption in Article 160 of the New Civil Code shall not apply
the Rules of Court.
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
3. Furthermore, assuming in gracia argumenti that the supposed the levied shares of stocks belonged to Alfredo Ching, as evidenced
movant has the required personality, her Motion cannot be acted by the fact that the said shares were registered in the corporate books
upon by this Honorable Court as the above-entitled case is still in the of Citycorp solely under his name. Thus, according to the appellate
archives and the proceedings thereon still remains suspended. And court, the RTC committed a grave abuse of its discretion amounting
there is no previous Motion to revive the same.34 to excess or lack of jurisdiction in issuing the assailed orders. The
petitioners’ motion for reconsideration was denied by the CA in a
The ABC also alleged that the motion was barred by prescription or Resolution dated April 2, 1996.
by laches because the shares of stocks were in custodia legis.
The petitioner-spouses filed the instant petition for review on
During the hearing of the motion, Encarnacion T. Ching adduced in certiorari, asserting that the RTC did not commit any grave abuse of
evidence her marriage contract to Alfredo Ching to prove that they discretion amounting to excess or lack of jurisdiction in issuing the
were married on January 8, 1960;35 the articles of incorporation of assailed orders in their favor; hence, the CA erred in reversing the
Citycorp Investment Philippines dated May 14, 1979;36 and, the same. They aver that the source of funds in the acquisition of the
General Information Sheet of the corporation showing that petitioner levied shares of stocks is not the controlling factor when invoking the
Alfredo Ching was a member of the Board of Directors of the said presumption of the conjugal nature of stocks under Art. 160,42 and
corporation and was one of its top twenty stockholders. that such presumption subsists even if the property is registered only
in the name of one of the spouses, in this case, petitioner Alfredo
On December 10, 1993, the Spouses Ching filed their Ching. According to the petitioners, the suretyship obligation was
43

Reply/Opposition to the motion to expunge records. not contracted in the pursuit of the petitioner-husband’s profession
or business.44 And, contrary to the ruling of the CA, where conjugal
assets are attached in a collection suit on an obligation contracted by
Acting on the aforementioned motion, the trial court issued on
the husband, the wife should exhaust her motion to quash in the main
December 15, 1993 an Order37 lifting the writ of preliminary
case and not file a separate suit.45 Furthermore, the petitioners
attachment on the shares of stocks and ordering the sheriff to return
contend that under Art. 125 of the Family Code, the petitioner-
the said stocks to the petitioners. The dispositive portion reads:
husband’s gratuitous suretyship is null and void ab initio,46 and that
the share of one of the spouses in the conjugal partnership remains
WHEREFORE, the instant Motion to Quash Preliminary Attachment, inchoate until the dissolution and liquidation of the partnership.47
dated November 9, 1993, is hereby granted. Let the writ of
preliminary attachment subject matter of said motion, be quashed
In its comment on the petition, the private respondent asserts that the
and lifted with respect to the attached 100,000 common shares of
CA correctly granted its petition for certiorari nullifying the assailed
stock of Citycorp Investment Philippines in the name of the
order. It contends that the CA correctly relied on the ruling of this
defendant Alfredo Ching, the said shares of stock to be returned to
Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez
him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo
v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private
respondent alleges that the continuing guaranty and suretyship After a comprehensive review of the records of the RTC and of the
executed by petitioner Alfredo Ching in pursuit of his profession or CA, we find and so hold that the RTC did not commit any grave
business. Furthermore, according to the private respondent, the right abuse of its discretion amounting to excess or lack of jurisdiction in
of the petitioner-wife to a share in the conjugal partnership property issuing the assailed orders.
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 Article 160 of the New Civil Code provides that all the properties
attachment of the shares of stocks. acquired during the marriage are presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the
The issues for resolution are as follows: (a) whether the petitioner- husband, or to the wife. In Tan v. Court of Appeals,53 we held that it
wife has the right to file the motion to quash the levy on attachment is not even necessary to prove that the properties were acquired with
on the 100,000 shares of stocks in the Citycorp Investment funds of the partnership. As long as the properties were acquired by
Philippines; (b) whether or not the RTC committed a grave abuse of the parties during the marriage, they are presumed to be conjugal in
its discretion amounting to excess or lack of jurisdiction in issuing the nature. In fact, even when the manner in which the properties were
assailed orders. acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the
On the first issue, we agree with the petitioners that the petitioner- conjugal nature of the properties acquired during the marriage
wife had the right to file the said motion, although she was not a party subsists in the absence of clear, satisfactory and convincing evidence
in Civil Case No. 142729.48 to overcome the same.54

In Ong v. Tating,49 we held that the sheriff may attach only those In this case, the evidence adduced by the petitioners in the RTC is
properties of the defendant against whom a writ of attachment has that the 100,000 shares of stocks in the Citycorp Investment
been issued by the court. When the sheriff erroneously levies on Philippines were issued to and registered in its corporate books in the
attachment and seizes the property of a third person in which the said name of the petitioner-husband when the said corporation was
defendant holds no right or interest, the superior authority of the incorporated on May 14, 1979. This was done during the subsistence
court which has authorized the execution may be invoked by the of the marriage of the petitioner-spouses. The shares of stocks are,
aggrieved third person in the same case. Upon application of the thus, presumed to be the conjugal partnership property of the
third person, the court shall order a summary hearing for the purpose petitioners. The private respondent failed to adduce evidence that the
of determining whether the sheriff has acted rightly or wrongly in the petitioner-husband acquired the stocks with his exclusive money.55
performance of his duties in the execution of the writ of attachment, The barefaced fact that the shares of stocks were registered in the
more specifically if he has indeed levied on attachment and taken corporate books of Citycorp Investment Philippines solely in the
hold of property not belonging to the plaintiff. If so, the court may name of the petitioner-husband does not constitute proof that the
then order the sheriff to release the property from the erroneous levy petitioner-husband, not the conjugal partnership, owned the same. 56
and to return the same to the third person. In resolving the motion of The private respondent’s reliance on the rulings of this Court in
the third party, the court does not and cannot pass upon the question Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc. v.
of the title to the property with any character of finality. It can treat Banzon58 is misplaced. In the Maramba case, we held that where there
the matter only insofar as may be necessary to decide if the sheriff has is no showing as to when the property was acquired, the fact that the
acted correctly or not. If the claimant’s proof does not persuade the title is in the wife’s name alone is determinative of the ownership of
court of the validity of the title, or right of possession thereto, the the property. The principle was reiterated in the Associated
claim will be denied by the court. The aggrieved third party may also Insurance case where the uncontroverted evidence showed that the
avail himself of the remedy of "terceria" by executing an affidavit of shares of stocks were acquired during the marriage of the petitioners.
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 Instead of fortifying the contention of the respondents, the ruling of
party. Such party may also file an action to nullify the levy with this Court in Wong v. Intermediate Appellate Court59 buttresses the
damages resulting from the unlawful levy and seizure, which should case for the petitioners. In that case, we ruled that he who claims that
be a totally separate and distinct action from the former case. The property acquired by the spouses during their marriage is not
above-mentioned remedies are cumulative and any one of them may conjugal partnership property but belongs to one of them as his
be resorted to by one third-party claimant without availing of the personal property is burdened to prove the source of the money
other remedies.50 utilized to purchase the same. In this case, the private respondent
claimed that the petitioner-husband acquired the shares of stocks
In this case, the petitioner-wife filed her motion to set aside the levy from the Citycorp Investment Philippines in his own name as the
on attachment of the 100,000 shares of stocks in the name of owner thereof. It was, thus, the burden of the private respondent to
petitioner-husband claiming that the said shares of stocks were prove that the source of the money utilized in the acquisition of the
conjugal in nature; hence, not liable for the account of her husband shares of stocks was that of the petitioner-husband alone. As held by
under his continuing guaranty and suretyship agreement with the the trial court, the private respondent failed to adduce evidence to
PBMCI. The petitioner-wife had the right to file the motion for said prove this assertion.
relief.
The CA, likewise, erred in holding that by executing a continuing
On the second issue, we find and so hold that the CA erred in setting guaranty and suretyship agreement with the private respondent for
aside and reversing the orders of the RTC. The private respondent, the payment of the PBMCI loans, the petitioner-husband was in the
the petitioner in the CA, was burdened to prove that the RTC exercise of his profession, pursuing a legitimate business. The
committed a grave abuse of its discretion amounting to excess or lack appellate court erred in concluding that the conjugal partnership is
of jurisdiction. The tribunal acts without jurisdiction if it does not liable for the said account of PBMCI under Article 161(1) of the New
have the legal purpose to determine the case; there is excess of Civil Code.
jurisdiction where the tribunal, being clothed with the power to
determine the case, oversteps its authority as determined by law. Article 161(1) of the New Civil Code (now Article 121[2 and 3] 60 of
There is grave abuse of discretion where the tribunal acts in a the Family Code of the Philippines) provides:
capricious, whimsical, arbitrary or despotic manner in the exercise of
its judgment and is equivalent to lack of jurisdiction.51 Art. 161. The conjugal partnership shall be liable for:

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
(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
₱38,000,000. In Ayala Investment and Development Corp. v. Court of G.R. No. 155868 February 6, 2007SPOUSES GREGORIO and
Appeals,61 this Court ruled "that the signing as surety is certainly not JOSEFA YU, Petitioners, vs.NGO YET TE, doing business under
an exercise of an industry or profession. It is not embarking in a the name and style, ESSENTIAL MANUFACTURING,
business. No matter how often an executive acted on or was Respondent.
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
Before us is a Petition for Review on Certiorari under Rule 45 of the
or guaranty."
Rules of Court assailing the March 21, 2001 Decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 522462 and its October 14, 2002
For the conjugal partnership to be liable for a liability that should Resolution.3
appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal
The antecedent facts are not disputed.
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 Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo
family as a unit. The husband, therefore, is denied the power to Yet Te (Te) bars of detergent soap worth ₱594,240.00, and issued to
assume unnecessary and unwarranted risks to the financial stability the latter three postdated checks as payment of the purchase price.
4

of the conjugal partnership.62 When Te presented the checks at maturity for encashment, said
checks were returned dishonored and stamped "ACCOUNT
CLOSED".5 Te demanded6 payment from Spouses Yu but the latter
In this case, the private respondent failed to prove that the conjugal
did not heed her demands. Acting through her son and attorney-in-
partnership of the petitioners was benefited by the petitioner-
fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC),
husband’s act of executing a continuing guaranty and suretyship
Branch 75, Valenzuela, Metro Manila, a Complaint,7 docketed as Civil
agreement with the private respondent for and in behalf of PBMCI.
Case No. 4061-V-93, for Collection of Sum of Money and Damages
The contract of loan was between the private respondent and the
with Prayer for Preliminary Attachment.
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 In support of her prayer for preliminary attachment, Te attached to
partnership would thereby be benefited. The private respondent was her Complaint an Affidavit executed by Sy that Spouses Yu were
burdened to establish that such benefit redounded to the conjugal guilty of fraud in entering into the purchase agreement for they never
partnership.63 intended to pay the contract price, and that, based on reliable
information, they were about to move or dispose of their properties
to defraud their creditors.8
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 Upon Te’s posting of an attachment bond, the RTC issued an Order
9

and his family would appreciate if the PBMCI could be rehabilitated of Attachment/Levy dated March 29, 1993 on the basis of which
10

through the loans obtained; that the petitioner-husband’s career Sheriff Constancio Alimurung (Sheriff Alimurung) of RTC, Branch
would be enhanced should PBMCI survive because of the infusion of 19, Cebu City levied and attached Spouses Yu’s properties in Cebu
fresh capital. However, these are not the benefits contemplated by City consisting of one parcel of land (known as Lot No. 11) and four
11

Article 161 of the New Civil Code. The benefits must be those directly units of motor vehicle, specifically, a Toyota Ford Fierra, a jeep, a
resulting from the loan. They cannot merely be a by-product or a Canter delivery van, and a passenger bus.
12

spin-off of the loan itself.64

On April 21, 1993, Spouses Yu filed an Answer 13 with counterclaim
This is different from the situation where the husband borrows for damages arising from the wrongful attachment of their
money or receives services to be used for his own business or properties, specifically, actual damages amounting to ₱1,500.00 per
profession. In the Ayala case, we ruled that it is such a contract that day; moral damages, ₱1,000,000.00; and exemplary damages,
is one within the term "obligation for the benefit of the conjugal ₱50,000.00. They also sought payment of ₱120,000.00 as attorney’s
partnership." Thus: fees and ₱80,000.00 as litigation expenses.14 On the same date,
Spouses Yu filed an Urgent Motion to Dissolve Writ of Preliminary
Attachment.15 They also filed a Claim Against Surety Bond16 in which
(A) If the husband himself is the principal obligor in the contract, i.e.,
they demanded payment from Visayan Surety and Insurance
he directly received the money and services to be used in or for his
Corporation (Visayan Surety), the surety which issued the
own business or his own profession, that contract falls within the
attachment bond, of the sum of ₱594,240.00, representing the
term "… obligations for the benefit of the conjugal partnership." Here,
damages they allegedly sustained as a consequence of the wrongful
no actual benefit may be proved. It is enough that the benefit to the
attachment of their properties.
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 While the RTC did not resolve the Claim Against Surety Bond, it
or profession of the husband. It is immaterial, if in the end, his issued an Order dated May 3, 1993, discharging from attachment
17

business or profession fails or does not succeed. Simply stated, where the Toyota Ford Fierra, jeep, and Canter delivery van on
the husband contracts obligations on behalf of the family business, humanitarian grounds, but maintaining custody of Lot No. 11 and
the law presumes, and rightly so, that such obligation will redound the passenger bus. Spouses Yu filed a Motion for Reconsideration
18

to the benefit of the conjugal partnership. 65 which the RTC denied. 19

The Court held in the same case that the rulings of the Court in Cobb-
Perez and G-Tractors, Inc. are not controlling because 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.
Dissatisfied, they filed with the CA a Petition for Certiorari,20
docketed as CA-G.R. SP No. 31230, in which a Decision21 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 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.
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.

This is reversible error. Insolvency is not a ground for attachment (3) This Court hereby reiterates in toto its Decision in this
especially when defendant has not been shown to have committed case dated July 20, 1994. 30 (Emphasis ours)
any act intended to defraud its creditors x x x.
The RTC also issued an Order dated December 2, 1994,31 denying the
For lack of factual basis to justify its issuance, the writ of preliminary Motion for Reconsideration of Spouses Yu.32
attachment issued by the respondent court was improvidently issued
and should be discharged.22 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
From said CA Decision, Te filed a Motion for Reconsideration but to Interest and a Motion for Execution Pending Appeal.33 The RTC also
no avail.23 denied Spouses Yu’s Notice of Appeal34 from the July 20, 1994
Decision and August 9, 1994 Order of the RTC.
Te filed with us a Petition for Review on Certiorari24 but we denied
the same in a Resolution dated June 8, 1994 for having been filed late From said December 2, 1994 RTC Order, Spouses Yu filed another
and for failure to show that a reversible error was committed by the Notice of Appeal 35 which the RTC also denied in an Order36 dated
CA.25 Entry of Judgment of our June 8, 1994 Resolution was made on January 5, 1995.
July 22, 1994.26 Thus, the finding of the CA in its September 14, 1993
Decision in CA-G.R. SP No. 31230 on the wrongfulness of the Spouses Yu filed with the CA a Petition37 for Certiorari, Prohibition
attachment/levy of the properties of Spouses Yu became conclusive and Mandamus, docketed as CA-G.R. SP No. 36205, questioning the
and binding. denial of their Notices of Appeal; and seeking the modification of the
July 20, 1994 Decision and the issuance of a Writ of Execution. The
However, on July 20, 1994, the RTC, apparently not informed of the CA granted the Petition in a Decision38 dated June 22, 1995.
SC Decision, rendered a Decision, the dispositive portion of which
reads: Hence, Spouses Yu filed with the CA an appeal39 docketed as CA-
G.R. CV No. 52246, questioning only that portion of the July 20, 1994
WHEREFORE, premises considered, the Court finds that the plaintiff Decision where the RTC declined to rule on their counterclaim for
has established a valid civil cause of action against the defendants, damages.40 However, Spouses Yu did not dispute the specific
and therefore, renders this judgment in favor of the plaintiff and monetary awards granted to respondent Te; and therefore, the same
against the defendants, and hereby orders the following: have become final and executory.

1) Defendants are hereby ordered or directed to pay the Although in the herein assailed Decision41 dated March 21, 2001, the
plaintiff the sum of ₱549,404.00, with interest from the date CA affirmed in toto the RTC Decision, it nonetheless made a ruling on
of the filing of this case (March 3, 1993); the counterclaim of Spouses Yu by declaring that the latter had failed
to adduce sufficient evidence of their entitlement to damages.
2) The Court, for reasons aforestated, hereby denies the
grant of damages to the plaintiff; Spouses Yu filed a Motion for Reconsideration42 but the CA denied it
in the herein assailed Resolution43 dated October 14, 2002.
3) The Court hereby adjudicates a reasonable attorney’s fees
and litigation expenses of ₱10,000.00 in favor of the plaintiff; Spouses Yu filed the present Petition raising the following issues:

4) On the counterclaim, this Court declines to rule on this, I. Whether or not the appellate court erred in not holding
considering that the question of the attachment which that the writ of attachment was procured in bad faith, after
allegedly gave rise to the damages incurred by the it was established by final judgment that there was no true
defendants is being determined by the Supreme Court. ground therefor.

SO ORDERED.27 (Emphasis ours)
Spouses Yu filed with the RTC a Motion for Reconsideration 28
questioning the disposition of their counterclaim. They also filed a
Manifestation29 informing the RTC of our June 8, 1994 Resolution in
G.R. No. 114700.
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
II. Whether or not the appellate court erred in refusing to
award actual, moral and exemplary damages after it was
established by final judgment that the writ of attachment
was procured with no true ground for its issuance.44
There is one preliminary matter to set straight before we resolve the
foregoing issues.
According to respondent Te,45 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 and Urgent Motion to Dissolve
Writ of Preliminary Attachment.46 Further, the records reveal that on
June 18, 1993, Spouses Yu filed with the RTC a Motion to Give Notice
to Surety.47 The RTC granted the Motion in an Order48 dated June 23, In this case, the actual damages cannot be determined. Defendant-
1993. Accordingly, Visayan Surety was notified of the pre-trial appellant Josefa Yu testified on supposed lost profits without clear
conference to apprise it of a pending claim against its attachment and appreciable explanation. Despite her submission of the used and
bond. Visayan Surety received the notice on July 12, 1993 as shown unused ticket stubs, there was no evidence on the daily net income,
by a registry return receipt attached to the records. 49 the routes plied by the bus and the average fares for each route. The
submitted basis is too speculative and conjectural. No reports
Moreover, even if it were true that Visayan Surety was left in the regarding the average actual profits and other evidence of
proceedings a quo, such omission is not fatal to the cause of Spouses profitability necessary to prove the amount of actual damages were
Yu. In Malayan Insurance Company, Inc. v. Salas, 50 we held that "x x presented. Thus, the Court a quo did not err in not awarding damages
x if the surety was not given notice when the claim for damages in favor of defendants-appellants.
64

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 We usually defer to the expertise of the CA, especially when it
judgment for damages against the principal is sought to be enforced concurs with the factual findings of the RTC.65 Indeed, findings of fact
against the surety’s replevin bond."51 This remedy is applicable for may be passed upon and reviewed by the Supreme Court in the
the procedures governing claims for damages following instances: (1) when the conclusion is a finding grounded
entirely on speculations, surmises, or conjectures; (2) when the
on an attachment bond and on a replevin bond are the same.52 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
We now proceed to resolve the issues jointly.
the lower court, in making its findings, went beyond the issues of the
case and such findings are contrary to the admissions of both
Spouses Yu contend that they are entitled to their counterclaim for appellant and appellee; (6) when the factual findings of the CA are
damages as a matter of right in view of the finality of our June 8, 1994 contrary to those of the trial court; (7) when the findings of fact are
Resolution in G.R. No. 114700 which affirmed the finding of the CA themselves conflicting; (8) when the findings of fact are conclusions
in its September 14, 1993 Decision in CA-G.R. SP No. 31230 that made without a citation of specific evidence on which they are based;
respondent Te had wrongfully caused the attachment of their (9) when the facts set forth in the petition as well as in the petitioner’s
properties. Citing Javellana v. D.O. Plaza Enterprises, Inc.,53 they main and reply briefs are not disputed by the respondents; (10) when
argue that they should be awarded damages based solely on the CA the findings of fact of the lower court are premised on the supposed
finding that the attachment was illegal for it already suggests that Te absence of evidence and are contradicted by the evidence on record.66
acted with malice when she applied for attachment. And even if we However, the present case does not fall under any of the exceptions.
were to assume that Te did not act with malice, still she should be We are in full accord with the CA that Spouses Yu failed to prove
held liable for the aggravation she inflicted when she applied for their counterclaim.
attachment even when she was clearly not entitled to it.54
Spouses Yu’s claim for unrealized income of ₱1,500.00 per day was
That is a rather limited understanding of Javellana. The counterclaim based on their computation of their average daily income for the year
disputed therein was not for moral damages and therefore, there was 1992. Said computation in turn is based on the value of three ticket
no need to prove malice. As early as in Lazatin v. Twaño,55 we laid stubs sold over only five separate days in 1992.67 By no stretch of the
down the rule that where there is wrongful attachment, the imagination can we consider ticket sales for five days sufficient
attachment defendant may recover actual damages even without evidence of the average daily income of the passenger bus, much less
proof that the attachment plaintiff acted in bad faith in obtaining the its mean income. Not even the unrebutted testimony of Josefa Yu can
attachment. However, if it is alleged and established that the add credence to such evidence for the testimony itself lacks
attachment was not merely wrongful but also malicious, the corroboration.68
attachment defendant may recover moral damages and exemplary
damages as well. 56 Either way, the wrongfulness of the attachment
Besides, based on the August 29, 1994 Manifestation69 filed by Sheriff
does not warrant the automatic award of damages to the attachment
Alimurung, it would appear that long before the passenger bus was
defendant; the latter must first discharge the burden of proving the
placed under preliminary attachment in Civil Case No. 4061-V-93, the
nature and extent of the loss or injury incurred by reason of the
same had been previously attached by the Sheriff of Mandaue City in
wrongful attachment.57
connection with another case and that it was placed in the Cebu
Bonded Warehousing Corporation, Cebu City. Thus, Spouses Yu
In fine, the CA finding that the attachment of the properties of cannot complain that they were unreasonably deprived of the use of
Spouses Yu was wrongful did not relieve Spouses Yu of the burden the passenger bus by reason of the subsequent wrongful attachment
of proving the factual basis of their counterclaim for damages. 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
To merit an award of actual damages arising from a wrongful operation of the passenger bus.
attachment, the attachment defendant must prove, with the best
evidence obtainable, the fact of loss or injury suffered and the amount Moreover, petitioners did not present evidence as to the damages
thereof.58 Such loss or injury must be of the kind which is not only they suffered by reason of the wrongful attachment of Lot No. 11.
capable of proof but must actually be proved with a reasonable
degree of certainty. As to its amount, the same must be measurable
Nonetheless, we recognize that Spouses Yu suffered some form of
based on specific facts, and not on guesswork or speculation. 59 In
pecuniary loss when their properties were wrongfully seized,
particular, if the claim for actual damages covers unrealized profits,
although the amount thereof cannot be definitively ascertained.
the amount of unrealized profits must be estalished and supported
Hence, an award of temperate or moderate damages in the amount
by independent evidence of the mean income of the business
of ₱50,000.00 is in order.70
undertaking interrupted by the illegal seizure. 60

As to moral and exemplary damages, to merit an award thereof, it

Spouses Yu insist that the evidence they presented met the foregoing
standards. They point to the lists of their daily net income from the
operation of said passenger bus based on used ticket stubs61 issued to
their passengers. They also cite unused ticket stubs as proof of income
foregone when the bus was wrongfully seized.62 They further cite the
unrebutted testimony of Josefa Yu that, in the day-to-day operation
of their passenger bus, they use up at least three ticket stubs and earn
a minimum daily income of ₱1,500.00.63
In ruling that Spouses Yu failed to adduce sufficient evidence to
support their counterclaim for actual damages, the CA stated, thus:
must be shown that the wrongful attachment was obtained by the
attachment plaintiff with malice or bad faith, such as by appending a
false affidavit to his application.71
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 him.72
The testimony of petitioner Josefa Yu herself negates their claim for (subject properties). His brother, Teofilo ("Teofilo"), died intestate in
moral and exemplary damages. On cross-examination she testified, 1992. At the time of his death, Teofilo was apparently married to
thus: Sandoval, and cohabiting with her and their child, respondent Teofilo
II. Nonetheless, Carlos alleged in his Complaint that Teofilo and
Q: Did you ever deposit any amount at that time to fund the check? 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
A: We requested that it be replaced and staggered into smaller
concluded that he was also the sole heir of his brother Teofilo, since
amounts.
the latter had died without leaving any heirs.

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.
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

Q: How much money did you transfer from that bank to which the
want of consideration, the premise for these contracts being non-
three checks were drawn to this new bank?
existent. Thus, Carlos prayed of the RTC to declare the alleged
marriage between Teofilo and Sandoval void ab initio, provided that
A: I don’t know how much was there but we transferred already to Teofilo died without issue, order that new titles covering the subject
the Solid Bank. properties be issued in the name of Carlos, and require Sandoval to
restitute Carlos in the amount of ₱18,924,800.00.4
Q: Who transferred?
Carlos likewise prayed for the issuance of the provisional relief of
A: My daughter, sir.73 (Emphasis ours) preliminary attachment. The RTC issued an Order dated 7 September
1995 granting the prayer for preliminary attachment, and on 15
Based on the foregoing testimony, it is not difficult to understand September 1995, a writ of preliminary attachment. Carlos posted a
why Te concluded that Spouses Yu never intended to pay their bond for ₱20,000,000.00 issued by herein petitioner
obligation for they had available funds in their bank but chose to
transfer said funds instead of cover the checks they issued. Thus, we SIDDCOR Insurance Corporation (SIDDCOR).5 Shortly thereafter, a
cannot attribute malice nor bad faith to Te in applying for the Notice of Garnishment was served upon the Philippine National Bank
attachment writ. We cannot hold her liable for moral and exemplary (PNB) over the deposit accounts maintained by respondents.
damages.
Respondents filed an Urgent Motion to Discharge the Writ of
As a rule, attorney’s fees cannot be awarded when moral and Attachment, which was opposed by Carlos. On 4 December 1995, the
exemplary damages are not granted, the exception however is when RTC rendered an order denying the motion. This caused respondents
a party incurred expenses to lift a wrongfully issued writ of to file a Petition for Certiorari with the Court of Appeals, seeking to set
attachment.1awphi1.net74 Without a doubt, Spouses Yu waged a aside the RTC order granting the writ of preliminary attachment
protracted legal battle to fight off the illegal attachment of their denying the motion for the discharge of the writ. This case was
properties and pursue their claims for damages. It is only just and docketed as CA-G.R. SP No. 39267.6
equitable that they be awarded reasonable attorney’s fees in the
amount of ₱30,000.00. On 27 February 1996, the Court of Appeals Second Division
promulgated its Decision in CA-G.R. SP No. 39267, wherein it granted
In sum, we affirm the dismissal of the counterclaim of petitioners the Petition for Certiorari and ordered the discharge and dissolution of
Spouses Yu for actual, moral, and exemplary damages. However, we the Writ of Attachment and Notice of Garnishment.7 The Court of
grant them temperate damages and attorney’s fees. Appeals found that there was no sufficient cause of action to warrant
the preliminary attachment, since Carlos had merely alleged general
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 averments in order to support his prayer.8 Carlos elevated the said
Decision of the Court of Appeals is AFFIRMED with the Decision to this Court by way of Petition for Review on Certiorari, which
MODIFICATION that petitioners’ counterclaim is PARTLY was docketed as G.R. No. L-125717. In a Resolution dated 21 October
GRANTED. Gregorio Yu and Josefa Yu are awarded ₱50,000.00 1996, the Court denied Carlos’s Petition, and thus the Court of
temperate damages and ₱30,000.00 attorney’s fees. No costs.SO Appeals’ Decision ordering the dissolution of the Writ of Attachment
ORDERED. and Notice of Garnishment became final.

G.R. No. 135830 September 30, 2005JUAN DE DIOS CARLOS, In the meantime, the hearing on Carlos’s Complaint ensued before the
Petitioners, vs.FELICIDAD SANDOVAL, also known as RTC. Respondents duly filed their Answer and thereafter filed a
FELICIDAD S. VDA. DE CARLOS or FELICIDAD S. CARLOS or Motion for Summary Judgment. Carlos opposed the motion and
FELICIDAD SANDOVAL DE CARLOS, and TEOFILO CARLOS countered with his own Motion for Summary Judgment. On 8 April
II,. 1996, the RTC rendered a summary judgment in favor of Carlos.
Carlos’s victory was wholesale, with the RTC making the following
These consolidated petitions emanated from a civil case filed by Juan pronouncements:
de Dios Carlos ("Carlos") against respondents Felicidad Sandoval
("Sandoval") and Teofilo Carlos II (Teofilo II) docketed with the 1. Declaring the marriage between defendant Felicidad Sandoval and
Regional Trial Court (RTC) of Muntinlupa City as Civil Case No. 95- Teofilo Carlos solemnized at Silang, Cavite, on May 14, 1962,
135. evidenced by the Marriage Contract submitted in this case, null and
void ab initio for lack of the requisite marriage license;
In his Complaint before the RTC, Carlos asserted that he was the sole 2. Declaring that the defendant minor, Teofilo S. Carlos II, is not the
surviving compulsory heir of his parents, Felix B. Carlos and Felipa natural, illegitimate, or legally adopted child of the late Teofilo E.
Elemia,1 who had acquired during their marriage, six parcels of land Carlos;
3. Ordering defendant Sandoval to pay and restitute to plaintiff the On such denial, Carlos filed a Motion for Reconsideration. Respondents
sum of ₱18,924,800.00, together with the interest thereon at the legal likewise filed a Motion for Partial Reconsideration dated 17 April 1998,
rate from date of filing of the instant complaint until fully paid; arguing that under the Revised Internal Rules of the Court of Appeals
(RIRCA), the case may be re-raffled for assignment for study and
4. Declaring plaintiff as the sole and exclusive owner of the parcel of report only after there is a resolution that the case is deemed
land, less the portion adjudicated to the plaintiffs in Civil Case No. submitted for decision. They pointed out that re-raffle could not yet
15

11975, covered by TCT No. 139061 of the Register of Deeds of Makati be effected, as there were still pending incidents, particularly the
City, and ordering said Register of Deeds to cancel said title and to motions for reconsideration of Carlos and themselves, as well as the
issue another title in the sole name of plaintiff herein; Motion for Judgment on Attachment Bond.

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;
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.

6. Declaring the Contract, Annex M of the Complaint, between The second resolution is at the center of the present petitions. The
plaintiff and defendant Sandoval null and void; 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
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 proceeded to rule on these pending incidents. While the first
exclusive name of plaintiff herein. 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
8. Ordering the cancellation of TCT No. 210878 in the names of
for damages meritorious, citing the earlier decisions ruling that
defendant Sandoval and defendant minor Teofilo S. Carlos II and
Carlos was not entitled to the preliminary attachment. Invoking
ordering the Register of Deeds of Manila to issue another title in the
Section 20, Rule 57 of the Rules of Court, as well as jurisprudence, 17
sole name of plaintiff herein.9
the Court of Appeals ruled that it was not necessary for the
determination of damages on the injunction bond to await the
Upon promulgation of the Summary Judgment, Carlos moved before decision on appeal.
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
The Court of Appeals then proceeded to determine to what damages
1996, the RTC issued a Writ of Execution.
respondents were entitled to. In ruling that the award of actual
damages was warranted, the court noted:
Meanwhile, respondents filed a Motion for Reconsideration of the
Summary Judgment, which was denied in an Order dated 20 May 1996.
It is also not disputed that the PNB, on June 27, 1996, issued two
Respondents then appealed the RTC Decision to the Court of Appeals,
manager’s checks: MC No. 938541 for ₱4,932,621.09 and MC 938542
wherein such appeal was docketed as CA-G.R. CV No. 53229. The
for ₱10,451,888.89 payable to the order of "Luis C. Bucayon II, Sheriff
case was raffled to the appellate courts’ Fourteenth Division for
IV, RTC, Branch 256, Muntinlupa", duly received by the latter in the
completion of records. Sandoval and Carlos also filed a Petition for
total amount of PESOS FIFTEEN MILLION THREE HUNDRED
Certiorari with Temporary Restraining Order dated 2 June 1996. This
EIGHTY FOUR THOUSAND FIVE HUNDRED NINE & 98/100
special civil action primarily attacked the allowance of execution
(₱15,384,509.98), drawn against the accounts of Ms. Felicidad
pending appeal, and prayed for the annulment of the Order granting
Sandoval Vda. de Carlos which were earlier garnished for the
execution pending appeal, and of the Writ of Execution
satisfaction of the above-mentioned writ of attachment (Annex "E",
Motion for Judgment on the Attachment Bond, pp. 7-8)18
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. The contention of [Carlos] that the writ of attachment was not
Accordingly, they were entitled to damages under Section 20, Rule 57 implemented falls flat on the face of the manifestation of PNB that the
of the then Rules of Civil Procedure, which governed claims for delivery of the garnished ₱15,384,509.98 to him was effected through
damages on account of unlawful attachment. In support of their the sheriff.
19

allegation of damages, they cite the Notice of Garnishment served on

PNB Malolos Branch, where Felicidad Carlos maintained The Court of Appeals found that moral and exemplary damages were
not warranted, there being no malice in pursuing the attachment. The
deposits amounting to ₱15,546,121.98. Also presented in support of appellate court also found the claim of ₱2,000,000.00 for attorney’s
11

the motion was a Notice of Delivery/Payment by the RTC Sheriff, fees as excessive, and reduced the sum by half. Correspondingly, the
directing the PNB Malolos Branch to deliver the amounts previously dispositive portion of the assailed Resolution reads:
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. WHEREFORE, premises considered, judgment is hereby rendered
40819, stating that PNB had already delivered to the RTC Sheriff on against the attachment bond, ordering SIDDCOR INSURANCE
27 June 1996 the amount of ₱15,384,509.98 drawn against the accounts CORPORATION and plaintiff-appellee to pay defendants-
of Carlos; and a Certification to the same effect issued by the PNB appellants, jointly and severally, the sum of ₱15,384,509.98 and 12%
Malolos Branch. In an Addendum to Motion for Judgment on the interest per annum from June 27, 1996 when the unlawful
Attachment Bond, respondents additionally prayed for moral and garnishment was effected until fully paid and ₱1,000,000.00 as
exemplary damages.13 attorney’s fees with 6% interest thereon from the trial court’s decision
on April 8, 1986 until fully paid.
After various pleadings were duly filed by the parties, the Court of
Appeals Special Fourth Division issued a Resolution dated 23 March SO ORDERED.20
1998, certifying that all the necessary pleadings have been filed, and
that the case may already be referred to the Raffle Committee for Both Carlos and SIDDCOR filed their respective motions for
assignment to a ponente for study and report. The same Resolution reconsideration of the Resolution. For their part, respondents filed a
likewise denied without elaboration a Motion to Dismiss on the Motion for Immediate Execution dated 7 August 1998 in regard to the
ground of forum-shopping filed earlier by Carlos.14 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
rulings on execution pending appeal under Section 2, Rule 39 in
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 Appeals27 wherein it was ruled
that such indeed constitutes a final and appealable order.

In its Motion for Reconsideration, SIDDCOR explicitly assailed the SIDDCOR points out that no hearing was conducted on the Motion
allowance of the Motion for Immediate Execution.23 This was denied by for Immediate Execution despite the requirement in Section 2, Rule 39
the Court of Appeals in a Resolution dated 22 December 1998.24 that "discretionary execution may only issue upon good reasons to be
stated in a special order after due hearing." SIDDCOR likewise notes
From these antecedents, the following petitions were filed before this that the motion granting immediate execution was granted in the
Court: 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
G.R. No. 135830
insofar as its statutory right to appeal was concerned, as the
resolution that it intended to appeal from was already the subject of
This Appeal by Certiorari with Prayer for Temporary Restraining immediate execution.
Order/Preliminary Injunction dated 26 October 1998 filed by Carlos
assailed the two resolutions of the Court of Appeals both dated 26
Finally, SIDDCOR contests the special reasons cited by the Court of
June 1998, as well as the Resolution of 10 October 1998, which denied
Appeals in granting the Motion for Immediate Execution.
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 Facts Arising Subsequent to the Filing of Instant Petitions
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 On 7 May 1999, the Court of Appeals issued a Writ of Execution
without conducting any hearing; that the Court of Appeals had no directing the enforcement of the judgment on the attachment bond. 28
jurisdiction over the motion as the docketing fees had not yet been However, in a Resolution dated 9 June 1999, this Court through the
filed; that the motion for judgment, which did not contain any First Division issued a Temporary Restraining Order, enjoining the
certification against forum-shopping, was an application subject to enforcement of the said Writ of Execution.
the requirements of certification against forum-shopping; that there
was no supporting evidence to support the award of damages; and On 15 October 2002, the Court of Appeals First Division rendered a
that the Court of Appeals committed grave abuse of discretion in Decision29 on the merits of CA-G.R. CV No. 53229, setting aside the
denying the Motion for Reconsideration without adverting to specific Summary Judgment and ordering the remand of the case for further
reasons mentioned for the denial of each issue.25 proceedings.30 Both parties filed their respective motions for
reconsideration.31 In addition, Carlos filed a motion to inhibit the
Carlos likewise ascribes grave abuse of discretion to the Court of author of the assailed decision, Justice Rebecca de Guia-Salvador,32
Appeals in its other Resolution dated 26 June 1998 for its refusal to who thereafter agreed to inhibit herself.33 Then on 7 August 2003, the
dismiss CA-G.R. CV No. 53229 on the ground of forum-shopping, Court of Appeals Former First Division issued a Resolution deferring
adding that the appellate court should have deferred resolution of the action on the motions for reconsideration in light of the temporary
Motion for Judgment on the Attachment Bond considering the prejudicial restraining order issued by this Court until the resolution of the
question raised in Carlos’s motion to dismiss the main case on the present petitions.
ground of forum-shopping.
The factual background may be complicated, but the court need only
G.R. No. 136035 concern itself with the propriety of the judgment on the attachment
bond and the subsequent moves to secure immediate execution of
This concerns a Petition for Review filed by SIDDCOR, likewise such judgment. Should this Court be called upon to tackle the merits
challenging the Resolution of 26 June 1998 of the Court of Appeals and of the original action, Carlos’s complaint, it shall be in the review of
the 10 October 1998 Resolution wherein Siddcor’s Motion for the final resolution of the Court of Appeals in CA-G.R. CV No. 53229.
Reconsideration, among others, was denied. Siddcor argues therein
that the Court of Appeals erred in ruling on the motion for damages Consolidation of Issues in
without awaiting judgment in the main case; granting that damages
may be awarded, these should encompass only such damages G.R. Nos. 135830 and 136035
incurred during the pendency of the appeal; and that a hearing was
necessary to prove the claim for damages and the appellate court
The petitions in G.R. Nos. 135830 and 136035 are concerned with the
erred in granting the award for damages despite lack of hearing.
award of damages on the attachment bond. They may be treated
separately from the petition in G.R. No. 137743, which relates to the
G.R. No. 137743 immediate execution of the said award.

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
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 respondents’ motion.42 Clearly, all the relevant parties had been
or excessive attachment.—An application for damages on account of afforded the bare right to be heard on the matter.
improper, irregular or excessive attachment must be filed before the
trial or before appeal is perfected or before the judgment becomes Concededly, the facts of this case differ from that in Paramount,
executory, with due notice to the attaching obligee or his surety or wherein the award of damages was predicated under Section 8, Rule
sureties, setting forth the facts showing his right to damages and the 58, and the trial on the merits included the claim for damages on the
amount thereof. Such damages may be awarded only after proper attachment bond. The Court did note therein that the counsel of the
hearing and shall be included in the judgment on the main case. surety was present during the hearings.43 In this case, unlike in
Paramount, there were no open court hearings conducted by the
If the judgment of the appellate court be favorable to the party against Court of Appeals, and it is precisely this absence that the petitioners
whom the attachment was issued, he must claim damages sustained assert as fatal.
during the pendency of the appeal by filing an application in the
appellate court with notice to the party in whose favor the attachment Plainly, there is no express requirement under the rule that the
was issued or his surety or sureties, before the judgment of the hearing be done in open court, or that the parties be allowed to
appellate court becomes executory. The appellate court may allow confront adverse witnesses to the claim of damages on the bond. The
the application to be heard and decided by the trial court. proper scope of the hearing requirement was explained before
Paramount in Peroxide Philippines Corp. v. Court of Appeals,44 thus:
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the . . . [It] is undeniable that when the attachment is challenged for
damages awarded to him from any property of the attaching obligee having been illegally or improperly issued, there must be a hearing
not exempt from execution should the bond or deposit given by the with the burden of proof to sustain the writ being on the attaching
latter be insufficient or fail to fully satisfy the award. (Emphasis creditor. That hearing embraces not only the right to present evidence
supplied.) but also a reasonable opportunity to know the claims of the opposing
parties and meet them. The right to submit arguments implies that
Section 20 essentially allows the application to be filed at any time opportunity, otherwise the right would be a barren one. It means a
before the judgment becomes executory. It should be filed in the same fair and open hearing.
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 From this pronouncement, we can discern that the "proper hearing"
time of the application.35 The remedy provided by law is exclusive contemplated would not merely encompass the right of the parties to
and by failing to file a motion for the determination of the damages submit their respective positions, but also to present evidence in
on time and while the judgment is still under the control of the court, support of their claims, and to rebut the submissions and evidence of
the claimant loses his right to damages.36 the adverse party. This is especially crucial considering that the
necessary elements to be established in an application for damages
There is no question in this case that the Motion for Judgment on the are essentially factual: namely, the fact of damage or injury, and the
Attachment Bond filed by respondents on 10 December 1996 was quantifiable amount of damages sustained. Such matters cannot be
properly filed since it was filed with the Court of Appeals during the established on the mere say-so of the applicant, but require
pendency of the appeal in the main case and also as an incident evidentiary support. At the same time, there was no equivocal
thereto. The core questions though lie in the proper interpretation of statement from the Court in Peroxide that the hearing required under
the condition under Section 20, Rule 57 that reads: "Such damages the rule should be a full-blown hearing on the merits
may be awarded only after proper hearing and shall be included in
the judgment on the main case." Petitioners assert that there was no In this case, we rule that the demands of a "proper hearing" were
proper hearing on the application for damages and that the Court of satisfied as of the time the Court of Appeals rendered its assailed
Appeals had wrongfully acted on the application in that it resolved it judgment on the attachment bond. The circumstances in this case that
prior to the rendition of the main judgment. we consider particularly telling are the settled premises that the
judicial finding on the wrongfulness of the attachment was then
"Such Damages May Be Awarded already conclusive and beyond review, and that the amount of actual
damages sustained was likewise indubitable as it indeed could be
Only After Proper Hearing…." 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
We first discuss whether the "proper hearing" requirement under
amount of actual damages sustained by reason of the garnishment.
Section 20, Rule 57 had been satisfied prior to the award by the Court
of Appeals of damages on the attachment bond. 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
Section 20 of Rule 57 requires that there be a "proper hearing" before such damages.
the application for damages on the attachment bond may be granted.
The hearing requirement ties with the indispensable demand of
Moreover, petitioners were afforded the opportunity to counter the
procedural due process. Due notice to the adverse party and its
arguments extended by the respondents. They fully availed of that
surety setting forth the facts supporting the applicant's right to
right by submitting their respective comments/oppositions. In fine,
damages and the amount thereof under the bond is essential. No
the due process guarantee has been satisfied in this case.
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 It should be noted that this case poses a situation different from what
issuance of the writ.37 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
In Paramount Insurance v. Court of Appeals,38 the Court held that under
demand for a more extensive hearing on the application of damages.
the rule, it was neither mandatory nor fatal that there should be a
The modality of hearing should remain within the discretion of the
separate hearing in order that damages upon the bond can be
court having jurisdiction to hear the application for damages. The
claimed, ascertained and awarded.39 What is necessary only is for the
only demand, concordant to due process, would be the satisfaction of
attaching party and his surety or sureties to be duly notified and
the right to be heard, to present evidence, and to rebut the evidence
given the opportunity to be heard.40
and arguments of the opposing party.

In this case, both Carlos and SIDDCOR were duly notified by the
Some disquisition is necessary on whether or not, as petitioners
appellate court of the Motion for Judgment on the Attachment Bond and
submit, a full-blown hearing in open court is compulsory under
were required to file their respective comments thereto. Carlos and
41

SIDDCOR filed their respective comments in opposition to private 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 attachment bond. The Court does not sanction the indolent award of
documentary evidence offered de novo, and to formulate conclusions damages on the attachment bond by the appellate court without
on the admissibility and credibility of the same. affording the adverse party and the bonding company concerned the
opportunity to present their sides and adduce evidence in their
However, a different situation applies if it is the Court of Appeals or behalf, or on the basis of unsubstantiated evidence.
the Supreme Court before which the application for damages is filed.
Both these courts, which are capacitated to receive and act on such "…And Shall be Included in the
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 Judgment on the Main Case"
Section 20, Rule 57 authorizes these appellate courts to refer the
application for damages to the trial court for hearing and decision.
Section 20, Rule 57 does state that the award of damages shall be
The trial courts are functionally attuned to ascertain and evaluate at
included in the judgment on the main case, and seemingly indicates
the first instance the necessary factual premises that would establish
that it should not be rendered prior to the adjudication of the main
the right to damages. Still, reference of the application for damages
case.
to the trial court is discretionary on the part of the appellate courts.
The latter, despite their traditional appellate jurisdiction and review
function, are still empowered under Section 20 to rule on the The rule, which guarantees a right to damages incurred by reason of
application for damages, notwithstanding the factual dimension such wrongful attachment, has long been recognized in this jurisdiction. 49
question presents. 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
To impose as mandatory on the Court of Appeals or the Supreme
by such party.50 The Court however subsequently clarified that under
Court to hear the application for damages through full-blown
the rule, "recovery for damages may be had by the party thus
hearings in open court is supremely unwise and beyond the demands
prejudiced by the wrongful attachment, even if the judgment be
of Section 20, Rule 57. The effect would be unduly disruptive on the
adverse to him."51
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 The language used in the 1997 revision of the Rules of Civil Procedure
application for damages, fact-oriented as it may be, that would leaves no doubt that there is no longer need for a favorable judgment
require it to be heard by the appellate courts in open court when no in favor of the party against whom attachment was issued in order
such mandatory rule applies to other judicial matters for resolution that damages may be awarded. It is indubitable that even a party who
that are also factual in nature. 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
For example, the review of death penalty convictions by the Court of
damages arising from such wrongful attachment may arise and be
Appeals and the Supreme Court necessitates a thorough evaluation
decided separately from the merits of the main action. As noted by
of the evidence presented, notwithstanding the prior factual
the Court in Philippine Charter Insurance Corp. v. Court of Appeals:52
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 The surety does not, to be sure, become liable on its bond simply
hearing or oral argument. If no such mandatory rule for hearing is because judgment is subsequently rendered against the party who
imposed on the appellate courts when the supreme penalty of death obtained the preliminary attachment. The surety becomes liable
is involved, why then should an exceptional rule be imposed in the only when and if "the court shall finally adjudge that the applicant
case for the relatively insignificant application for damages on the was not entitled to the attachment." This is so regardless of the
attachment bond? 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
If open court hearings are ever resorted to by appellate courts, such be entirely different from the ground relied upon by him for a
result from the exercise of discretion rather than by imposition by preliminary attachment, it may well be that although the evidence
statute or procedural rule. Indeed, there is no existing statute, warrants judgment in favor of said applicant, the proofs may
procedural rule, or jurisprudential fiat that makes it mandatory on nevertheless also establish that said applicant's proferred ground
the Court of Appeals or the Supreme Court to conduct an open-court for attachment was inexistent or specious and hence, the writ
hearing on any matter for resolution. There is nothing demonstrably should not have issued at all; i.e., he was not entitled thereto in the
urgent with an application for damages under Section 20, Rule 57 that first place. In that event, the final verdict should logically award to
would necessitate this Court to adopt an unprecedented rule the applicant the relief sought in his basic pleading, but at the same
mandating itself or the Court of Appeals to conduct full-blown open time sentence him—usually on the basis of a counterclaim—to pay
court hearings on a particular type of action. damages caused to his adversary by the wrongful attachment.
[Emphasis supplied.]
This pronouncement does not contradict our ruling in Hanil
Development v. IAC,46 which Carlos interprets as requiring the Court Moreover, a separate rule—Section 8, Rule 58— covers instances
of Appeals to conduct a proper hearing on an application for when it is the trial court that awards damages upon the bond for
damages on the attachment bond. Hanil concerned the refusal by the preliminary injunction of the adverse party. Tellingly, it requires that
Intermediate Appellate Court (now Court of Appeals) to take the amount of damages to be awarded be claimed, ascertained, and
cognizance of the application for damages on the attachment bond, awarded under the same procedure prescribed in Section 20 of Rule
such refusal being reversed by the Court, which ruled that the 57.
Intermediate Appellate Court (IAC) had jurisdiction to accept and
rule on such application. While the Court therein recognized that the In this case, we are confronted with a situation wherein the
IAC was empowered to try cases and conduct hearings, or otherwise determination that the attachment was wrongful did not come from
perform acts necessary to resolve factual issues in cases, 47 it did not the trial court, or any court having jurisdiction over the main action.
require the appellate court to conduct a hearing in open court, but It was rendered by the Court of Appeals in the exercise of its certiorari
merely to reinstate the application for damages.
jurisdiction in the original action reviewing the propriety of the
issuance of the Writ of Preliminary Attachment against the private
Admittedly, the dispositive portion of Hanil required the Court of respondents. Said ruling attained finality when it was affirmed by
Appeals to conduct hearings on the application for damages, 48 but this Court.
nowhere in the decision was a general rule laid down mandating the
appellate court to conduct such hearings in open court. The The courts are thus bound to respect the conclusiveness of this final
ascertainment of the need to conduct full-blown hearings is best left judgment, deeming as it does the allowance by the RTC of
to the discretion of the appellate court which chooses to hear the preliminary attachment as improper. This conclusion is no longer
application. At the same time, the Court cautions the appellate courts subject to review, even by the court called upon to resolve the
to carefully exercise their discretion in determining the need for
open-court hearings on the application for damages on the
application for damages on the attachment bond. The only matter left the more justification is supplied for allowing the award for damages
for adjudication is the proper amount of damages. despite its apparent prematurity, if it is in all other respects proper.

Nevertheless, Section 20, Rule 57 explicitly provides that the award The same reasons apply in resolving the question of whether the
for damages be included in the judgment on the main case. This point Court of Appeals could have decided the Motion for Judgment on the
was apparently not lost on the Court of Appeals when it rendered its Attachment Bond considering that the case had not yet been re-raffled
Resolution dated 23 March 1998, certifying that the case may now be under the two-raffle system for study and report. Under Section 5,
referred to the Raffle Committee for assignment to a ponente. The Rule 3 of the RIRCA, a case filed with the Court of Appeals undergoes
appellate court stated therein: "The Resolution of defendants- two raffles for assignment to a particular Justice. The first raffle is
appellants’ motion for judgment on the attachment may be made for completion of records.56 Afterwards, "all raffled appealed
incorporated in the decision by the ponente for study and report,"53 cases, the records of which have been completed and submitted for
and such observation is in conformity with Section 20. decision, shall be re-raffled for assignment to a Justice for study and
report."57
However, this reasoning was assailed by respondents, who argued
that the motion for judgment on the attachment bond was a pending The fact that Section 20, Rule 57 provides that the award of damages
incident that should be decided before the case can be re-raffled to a on the attachment bond "shall be included in the judgment on the
ponente for decision. Respondents may be generally correct on the main case" necessarily implies that it is to be made only after the case
point that a case can only be deemed submitted for decision only after has been re-raffled for study and report, and concurrently decided
all pending incidents are resolved. Yet since Section 20, Rule 57 with the judgment of the ponente in the main case. Again, the Court
provides that their application for damages on the attachment bond of Appeals failed to consider Section 20, Rule 57 when it acted upon
"shall be included in the judgment on the main case," it is clear that the application even before the second raffle was made.
the award for damages need not be resolved before the case is
submitted for decision, but should instead be resolved and included Had Section 20, Rule 57 been faithfully complied with, a different
in the judgment on the main case, or the decision on the Appeal by Justice of the Court of Appeals would have penned the ruling on the
Certiorari filed by the respondents. application for damages, in accordance with the RIRCA. Yet this
circumstance does not outweigh the other considerations earlier
Thus, the action of the Court of Appeals in resolving the application mentioned that would warrant a liberal interpretation of the
for damages even before the main judgment was issued does not procedural rules in favor of respondents. The parties had adduced all
conform to Section 20, Rule 57. However, the special particular their arguments and evidence before the Court of Appeals, and
circumstances of this case lead us to rule that such error is not mortal indeed, these were appreciated on first instance by Justice Demetria,
to the award of damages. who eventually penned the assailed resolutions. There was already a
final determination that the attachment was wrongful. And any delay
As noted earlier, the award of damages was made after a proper brought about by requiring that it be the ponencia, determined after
hearing had occurred wherein all the concerned parties had been the second raffle, who decides the application for damages may bear
given the opportunity to present their arguments and evidence in pro forma adherence to the letter of the rule, but would only cause the
support and in rebuttal of the application for damages. The delay of the resolution of this long-pending case. Procedural rules are
premature award of damages does not negate the fact that the parties designed, and must therefore be so interpreted as, to give effect to
were accorded due process, and indeed availed of their right to be lawful and valid claims and not to frustrate them.
58

heard.
Even SIDDCOR acknowledges that there are recognized instances
Moreover, we are compelled to appreciate the particular where the award of damages or judgment on the attachment bond
circumstance in this case that the right of private respondents to may not be included in the decision on the main case, such as if the
acquire relief through the award of damages on account of the main case was dismissed for lack of jurisdiction and no claim for
wrongful preliminary attachment has been conclusively affirmed by damages could have been presented in the main case.
59

the highest court of the land. This differs from the normal situation
under Section 20, Rule 57 wherein the court having jurisdiction over Scope of Damages
the main action is still required to ascertain whether the applicant
actually has a right to damages. To mandatorily require that the Properly Awardable
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
Next, we examine the particular award of damages made in this case,
the same time the main judgment is made. However, when the said
consisting of ₱15,384,509.98, plus interest, as well as ₱1,000,000.00 as
right is already made viable by reason of a final judgment which is
attorney’s fees. There seems to be no dispute that the former amount
no longer subject to review, there should be no unnecessary
constituted the amount drawn against the account of Sandoval by
impediments to its immediate implementation.
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
And finally, any ruling on our part voiding the award of damages 19 July 1996, confirming the garnishment.
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
Respondents’ burden in proving damages in this case was
proper adjudication together with the main case may exhibit fealty to
considerably lessened by the fact that there was already a final
the letter of the procedural rule, but not its avowed aims of promoting
judgment, no longer subject to review, that the preliminary
a just and speedy disposition of every action and proceeding. After
attachment allowed by the trial court was indeed wrongful. Hence,
all, if we were to compel the Court of Appeals to decide again on the
all that was necessary to be proved was the amount of damage
application for damages and incorporate its ruling in the judgment
actually sustained by respondents by reason of the wrongful
on the main action, the appellate court will be examining exactly the
attachment. It is unquestioned that by virtue of the writ of
same evidence and applying exactly the same rules as it already did
preliminary attachment, a Notice of Garnishment was served upon the
when it issued the assailed resolution awarding damages on the
PNB over deposit accounts maintained by respondents. Said Notice of
bond. This would be unnecessarily redundant especially considering
Garnishment placed under the control of the RTC all the accounts
that the Supreme Court had already affirmed that there was wrongful
maintained by respondents, and prevented the transfer or disposition
attachment in this case.
of these accounts.60 Then the subsequent Writ of Execution dated 27
May 1996 ordered the delivery to Carlos of these accounts earlier
There is also the fact that remanding the question of damages, singly subjected to garnishment.61
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
Clearly, the amount of actual pecuniary loss sustained by
the Court of Appeals for more than nine years now.54 Our Rules of
respondents has been well established. The Manifestation submitted
Court precisely requires liberal construction of the procedural rules
by the PNB further affirmed the actual amount seized by Carlos, an
to promote the objective of securing a just, speedy and inexpensive
amount which could not have been acquired had it not been for the
disposition of every action and proceeding.55 With this precept, all
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
The case Paramount Insurance Corp. v. Court of Appeals63 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: Other Issues Raised in G.R. No. 135830
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 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 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 ₱1,000,000.00 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 ₱1,000,000.00 as excessive, and modify the award of
attorney’s fees to ₱500,000.00 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.
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. Surla73 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 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 the reasoning ultimately employed by the appellate court is correct,
set up.75 (Emphasis supplied.) and it hardly would be judicious to require the lower court to adhere
to the movant’s erroneous ratiocination and preclude the proper
It is clear that under Section 20, Rule 57, the application for damages application of the law.
on the attachment bond cannot be independently set up, but must be
filed in the main case, before the judgment therein becomes final and We need not review in length the justification of the Court of Appeals
executory. Santo Tomas squarely applies in determining that no in allowing execution pending appeal. The standard set under
certification against forum-shopping was required in the Motion for Section 2(a), Rule 39 merely requires "good reasons," a "special order,"
Judgment on the Attachment Bond. The same reasoning also sustains a and "due hearing." Due hearing would not require a hearing in open
ruling that neither legal fees were required for the filing of the said
court, but simply the right to be heard, which SIDDCOR availed of
motion. Section 1, Rule 141 of the Rules of Court provides that legal when it filed its opposition to the motion for immediate execution.
fees are prescribed upon the filing of the pleading or other The Resolution dated 16 October 1998 satisfies the "special order"
application which initiates an action or proceeding. 76 Since the saidrequirement, and it does enumerate at length the "good reasons" for
application for judgment on the attachment bond cannot be allowing execution pending appeal. As to the appreciation of "good
considered as an initiatory pleading, as it cannot be independently reasons," we simply note that the advanced age alone of Sandoval
set up from the main action, it is not likewise chargeable with legal would have sufficiently justified execution pending appeal, pursuant
fees. to the well-settled jurisprudential rule.79 The wrongfulness of the
attachment, and the length of time respondents have been deprived
As to the issue relating to the other Resolution dated 26 June 1998 of their money by reason of the wrongful attachment further justifies
denying the motion to dismiss appeal on the ground of forum- execution pending appeal under these circumstances.
shopping, we find Carlos’s arguments as unmeritorious. Forum-
shopping allegedly existed because petitioners had filed two cases WHEREFORE, the petitions are DISMISSED. The Temporary
before the Court of Appeals, CA-G.R. CV No. 53229, and the Petition Restraining Order issued in the Resolution dated 9 June 1999 is hereby
for Certiorari with Temporary Restraining Order dated 2 June 1996 LIFTED. The assailed Resolution of the Court of Appeals Special
attacking the allowance of execution pending appeal. Evidently, the Fourth Division dated 26 June 1998 is AFFIRMED with the
two causes of action in these two petitions are different, CA-G.R. CV MODIFICATIONS that the legal interest on the award of actual
No. 53229 being an appeal from the Summary Judgment rendered by damages should commence from the date of the finality of the
the RTC, and the second petition assailing the subsequent allowance Decision of the Court of Appeals in CA G.R. SP No. 39267 and that the
by the RTC of execution pending appeal. There is no identity between award of attorney’s fees is in the amount of ₱500,000. Costs against
these two causes of action that would warrant a finding of forum- petitioners.SO ORDERED.
shopping.
G.R. No. 185734 July 3, 2013
Issues Raised in G.R. No. 137743 ALFREDO C. LIM, JR., PETITIONER, vs.
SPOUSES TITO S. LAZARO AND CARMEN T. LAZARO,
To recount, respondents, having obtained a favorable decision on RESPONDENTS.
their Motion for Judgment on the Attachment Bond, filed a Motion for
Immediate Execution of the award of damages. This was granted by the Assailed in this petition for review on certiorari1 are the July 10, 2008
Court of Appeals in its Resolution dated 16 October 1998, said Decision2 and December 18, 2008 Resolution3 of the Court of Appeals
resolution now specifically assailed by SIDDCOR in G.R. No. 137743. (CA) in CA-G.R. SP No. 100270, affirming the March 29, 2007 Order4
of the Regional Trial Court of Quezon City, Branch 223 (RTC), which
In their Motion for Immediate Execution, respondents’ theory in seeking lifted the writ of preliminary attachment issued in favor of petitioner
the immediate execution of the award of damages was that said Alfredo C. Lim, Jr. (Lim, Jr.).
award was not subject to appeal, the ruling thereupon being an
interlocutory order.77 This position was not adopted by the Court of The Facts
Appeals in its 16 October 1998 Resolution, which was otherwise
favorably disposed to respondents. Instead, the Court of Appeals
On August 22, 2005, Lim, Jr. filed a complaint5 for sum of money with
predicated the immediate execution on the following grounds: (1)
prayer for the issuance of a writ of preliminary attachment before the
that the judicial finding that the writ of preliminary attachment was
RTC, seeking to recover from respondents-spouses Tito S. Lazaro and
wrongful was already final and beyond review; (2) there were no
Carmen T. Lazaro (Sps. Lazaro) the sum of ₱2,160,000.00, which
material and substantial defenses against the motion for the issuance
represented the amounts stated in several dishonored checks issued
of the judgment bond; (3) Sandoval was elderly and sickly, without
by the latter to the former, as well as interests, attorney’s fees, and
means of livelihood and may not be able to enjoy the fruits of the
costs. The RTC granted the writ of preliminary attachment
judgment on the attachment bond; (4) that immediate execution
application6 and upon the posting of the required ₱2,160,000.00
would end her suffering caused by the arbitrary garnishment of her
bond,7 issued the corresponding writ on October 14, 2005.8 In this
PNB account.
accord, three (3) parcels of land situated in Bulacan, covered by
Transfer Certificates of Title (TCT) Nos. T-64940, T-64939, and T-
There is no doubt that a judgment on the attachment bond is a final 86369 (subject TCTs), registered in the names of Sps. Lazaro, were
and appealable order. As stated earlier, it is, under normal course, levied upon.9
included in the main judgment, which in turn is final and appealable.
Respondents admit that they had erred in earlier characterizing the
In their Answer with Counterclaim,10 Sps. Lazaro averred, among
said judgment as an interlocutory order. Still, SIDDCOR argues that
others, that Lim, Jr. had no cause of action against them since: (a)
such earlier error is fatal, and that the Court of Appeals abused its
Colim Merchandise (Colim), and not Lim, Jr., was the payee of the
discretion in ruling on the motion on a theory different from that
fifteen (15) Metrobank checks; and (b) the PNB and Real Bank checks
urged on by respondents.
were not drawn by them, but by Virgilio Arcinas and Elizabeth
Ramos, respectively. While they admit their indebtedness to Colim,
By no means could respondents be deemed as estopped from Sps. Lazaro alleged that the same had already been substantially
changing their legal theory, since the rule on estoppel applies to reduced on account of previous payments which were apparently
questions of fact and not questions of law.78 Moreover, courts are misapplied. In this regard, they sought for an accounting and
empowered to decide cases even if the parties raise legal rationales reconciliation of records to determine the actual amount due. They
other than that which would actually apply in the case. The basis of likewise argued that no fraud should be imputed against them as the
whether respondents are entitled to immediate execution arises from aforesaid checks issued to Colim were merely intended as a form of
law, particularly Section 2(a), Rule 39 of the Rules of Court, and not collateral.11 Hinged on the same grounds, Sps. Lazaro equally
solely on whatever allegations may be raised by the movant. opposed the issuance of a writ of preliminary attachment. 12

Thus, we find no grave abuse of discretion on the part of the Court of Nonetheless, on September 22, 2006, the parties entered into a
Appeals, even though it allowed execution pending appeal on a legal Compromise Agreement13 whereby Sps. Lazaro agreed to pay Lim,
basis different from that originally adduced by respondents. After all, Jr. the amount of ₱2,351,064.80 on an installment basis, following a
schedule of payments covering the period from September 2006 until
October 2013, under the following terms, among others: (a) that
should the financial condition of Sps. Lazaro improve, the monthly
installments shall be increased in order to hasten the full payment of
the entire obligation;14 and (b) that Sps. Lazaro’s failure to pay any
installment due or the dishonor of any of the postdated checks
delivered in payment thereof shall make the whole obligation
immediately due and demandable.
The aforesaid compromise agreement was approved by the RTC in
its October 31, 2006 Decision15 and January 5, 2007 Amended
Decision.16
Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking to lift
the writ of preliminary attachment annotated on the subject TCTs,
which the RTC granted on March 29, 2007.18 It ruled that a writ of
preliminary attachment is a mere provisional or ancillary remedy,
resorted to by a litigant to protect and preserve certain rights and
interests pending final judgment. Considering that the case had
already been considered closed and terminated by the rendition of
the January 5, 2007 Amended Decision on the basis of the September
22, 2006 compromise agreement, the writ of preliminary attachment
should be lifted and quashed. Consequently, it ordered the Registry
of Deeds of Bulacan to cancel the writ’s annotation on the subject
TCTs.
Applying these principles, the Court finds that the discharge of the
writ of preliminary attachment against the properties of Sps. Lazaro
was improper.
Records indicate that while the parties have entered into a
compromise agreement which had already been approved by the
RTC in its January 5, 2007 Amended Decision, the obligations
thereunder have yet to be fully complied with – particularly, the
payment of the total compromise amount of ₱2,351,064.80. Hence,
given that the foregoing debt remains unpaid, the attachment of Sps.
Lazaro’s properties should have continued to subsist.
In Chemphil Export & Import Corporation v. CA, 29 the Court
pronounced that a writ of attachment is not extinguished by the
execution of a compromise agreement between the parties, viz:
Did the compromise agreement between Antonio Garcia and the
consortium discharge the latter’s attachment lien over the disputed
shares?
CEIC argues that a writ of attachment is a mere auxiliary remedy
which, upon the dismissal of the case, dies a natural death. Thus,
when the consortium entered into a compromise agreement, which
resulted in the termination of their case, the disputed shares were
released from garnishment.

Lim, Jr. filed a motion for reconsideration19 which was, however,

We disagree. To subscribe to CEIC’s contentions would be to totally
denied on July 26, 2007,20 prompting him to file a petition for
disregard the concept and purpose of a preliminary attachment.
certiorari21 before the CA.

xxxx
The CA Ruling

The case at bench admits of peculiar character in the sense that it

On July 10, 2008, the CA rendered the assailed decision,22 finding no
involves a compromise agreement. Nonetheless, x x x. The parties to
grave abuse of discretion on the RTC’s part. It observed that a writ of
the compromise agreement should not be deprived of the protection
preliminary attachment may only be issued at the commencement of
provided by an attachment lien especially in an instance where one
the action or at any time before entry of judgment. Thus, since the
reneges on his obligations under the agreement, as in the case at
principal cause of action had already been declared closed and
bench, where Antonio Garcia failed to hold up his own end of the
terminated by the RTC, the provisional or ancillary remedy of
deal, so to speak.
preliminary attachment would have no leg to stand on, necessitating
its discharge.23
xxxx
Aggrieved, Lim, Jr. moved for reconsideration24which was likewise
denied by the CA in its December 18, 2008 Resolution. 25 If we were to rule otherwise, we would in effect create a back door by
which a debtor can easily escape his creditors. Consequently, we
would be faced with an anomalous situation where a debtor, in order
Hence, the instant petition.
to buy time to dispose of his properties, would enter into a
compromise agreement he has no intention of honoring in the first
The Issue Before the Court place. The purpose of the provisional remedy of attachment would
thus be lost. It would become, in analogy, a declawed and toothless
The sole issue in this case is whether or not the writ of preliminary tiger. (Emphasis and underscoring supplied; citations omitted)
attachment was properly lifted.
In fine, the Court holds that the writ of preliminary attachment
The Court’s Ruling subject of this case should be restored and its annotation revived in
the subject TCTs, re-vesting unto Lim, Jr. his preferential lien over the
The petition is meritorious. properties covered by the same as it were before the cancellation of
the said writ. Lest it be misunderstood, the lien or security obtained
by an attachment even before judgment, is in the nature of a vested
By its nature, preliminary attachment, under Rule 57 of the Rules of
interest which affords specific security for the satisfaction of the debt
Court (Rule 57), is an ancillary remedy applied for not for its own
put in suit.30 Verily, the lifting of the attachment lien would be
sake but to enable the attaching party to realize upon the relief sought
tantamount to an abdication of Lim, Jr.’s rights over Sps. Lazaro’s
and expected to be granted in the main or principal action; it is a
properties which the Court, absent any justifiable ground therefor,
measure auxiliary or incidental to the main action. As such, it is
cannot allow.
available during its pendency which may be resorted to by a litigant
to preserve and protect certain rights and interests during the
interim, awaiting the ultimate effects of a final judgment in the case.26 WHEREFORE, the petition is GRANTED. The July 10, 2008 Decision
In addition, attachment is also availed of in order to acquire and the December 18, 2008 Resolution of the Court of Appeals in CA-
jurisdiction over the action by actual or constructive seizure of the G.R. SP No. 100270 are REVERSED and SET ASIDE, and the March
property in those instances where personal or substituted service of 29, 2007 Order of the Regional Trial Court of Quezon City, Branch 223
summons on the defendant cannot be effected.27 is NULLIFIED. Accordingly, the trial court is directed to RESTORE
the attachment lien over Transfer Certificates of Title Nos. T-64940,
T-64939, and T-86369, in favor of petitioner Alfredo C. Lim, Jr.
In this relation, while the provisions of Rule 57 are silent on the length
of time within which an attachment lien shall continue to subsist after
the rendition of a final judgment, jurisprudence dictates that the said SO ORDERED.
lien continues until the debt is paid, or the sale is had under execution
issued on the judgment or until the judgment is satisfied, or the
attachment discharged or vacated in the same manner provided by
law.28
G.R. No. 171750 January 25, 2012 in his November 4, 2008 Partial Return17 that there was no
UNITED PULP AND PAPER CO., INC., Petitioner, satisfaction of the remaining unpaid balance by Unibox and Ortega.
vs. ACROPOLIS CENTRAL GUARANTY CORPORATION,
Respondent. On the basis of the said return, UPPC filed its Motion to Order Surety
to Pay Amount of Counter-Bond18 directed at Acropolis. On
This is a petition for review under Rule 45 praying for the annulment November 30, 2004, the RTC issued its Order19 granting the motion
of the November 17, 2005 Decision1 and the March 2, 2006 and ordering Acropolis to comply with the terms of its counter-bond
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 89135 and pay UPPC the unpaid balance of the judgment in the amount of
entitled Acropolis Central Guaranty Corporation (formerly known as ₱27,048,568.78 with interest of 12% per annum from default.
the Philippine Pryce Assurance Corp.) v. Hon. Oscar B. Pimentel, as
Presiding Judge, RTC of Makati City, Branch 148 (RTC), and United Thereafter, on December 13, 2004, Acropolis filed its Manifestation
Pulp and Paper Co., Inc. and Very Urgent Motion for Reconsideration,20 arguing that it could
not be made to pay the amount of the counter-bond because it did not
The Facts receive a demand for payment from UPPC. Furthermore, it reasoned
that its obligation had been discharged by virtue of the novation of
On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil its obligation pursuant to the compromise agreement executed by
case for collection of the amount of ₱42,844,353.14 against Unibox UPPC, Unibox and Ortega. The motion, which was set for hearing on
Packaging Corporation (Unibox) and Vicente Ortega (Ortega) before December 17, 2004, was received by the RTC and UPPC only on
the Regional Trial Court of Makati, Branch 148 (RTC).3 UPPC also December 20, 2004.21 In the Order dated February 22, 2005, the RTC
prayed for a Writ of Preliminary Attachment against the properties denied the motion for reconsideration for lack of merit and for having
of Unibox and Ortega for the reason that the latter were on the verge been filed three days after the date set for the hearing on the said
of insolvency and were transferring assets in fraud of creditors.4 On motion.22
August 29, 2002, the RTC issued the Writ of Attachment5 after UPPC
posted a bond in the same amount of its claim. By virtue of the said Aggrieved, Acropolis filed a petition for certiorari before the CA with
writ, several properties and assets of Unibox and Ortega were a prayer for the issuance of a Temporary Restraining Order and Writ
attached.6 of Preliminary Injunction.23 On November 17, 2005, the CA rendered
its Decision24 granting the petition, reversing the February 22, 2005
On October 10, 2002, Unibox and Ortega filed their Motion for the Order of the RTC, and absolving and relieving Acropolis of its
Discharge of Attachment,7 praying that they be allowed to file a liability to honor and pay the amount of its counter-attachment bond.
counter-bond in the amount of ₱42,844,353.14 and that the writ of In arriving at said disposition, the CA stated that, firstly, Acropolis
preliminary attachment be discharged after the filing of such bond. was able to comply with the three-day notice rule because the motion
Although this was opposed by UPPC, the RTC, in its Order dated it filed was sent by registered mail on December 13, 2004, four days
October 25, 2002, granted the said motion for the discharge of the writ prior to the hearing set for December 17, 2004;25 secondly, UPPC
of attachment subject to the condition that Unibox and Ortega file a failed to comply with the following requirements for recovery of a
counter-bond.8 Thus, on November 21, 2002, respondent Acropolis judgment creditor from the surety on the counter-bond in accordance
Central Guaranty Corporation (Acropolis) issued the Defendant’s with Section 17, Rule 57 of the Rules of Court, to wit: (1) demand
Bond for Dissolution of Attachment9 in the amount of ₱42,844,353.14 made by creditor on the surety, (2) notice to surety and (3) summary
in favor of Unibox. hearing as to his liability for the judgment under the counter-bond;26
and, thirdly, the failure of UPPC to include Acropolis in the
compromise agreement was fatal to its case.27
Not satisfied with the counter-bond issued by Acropolis, UPPC filed
its Manifestation and Motion to Discharge the Counter-Bond10 dated
November 27, 2002, claiming that Acropolis was among those UPPC then filed a motion for reconsideration but it was denied by
insurance companies whose licenses were set to be cancelled due to the CA in its Resolution dated March 1, 2006.28
their failure to put up the minimum amount of capitalization
required by law. For that reason, UPPC prayed for the discharge of Hence, this petition.
the counter-bond and the reinstatement of the attachment. In its
December 10, 2002 Order,11 the RTC denied UPPC’s Motion to The Issues
Discharge Counter-Bond and, instead, approved and admitted the
counter-bond posted by Acropolis. Accordingly, it ordered the sheriff
For the allowance of its petition, UPPC raises the following
to cause the lifting of the attachment on the properties of Unibox and
Ortega.
GROUNDS
On September 29, 2003, Unibox, Ortega and UPPC executed a
compromise agreement,12 wherein Unibox and Ortega I.
acknowledged their obligation to UPPC in the amount of
₱35,089,544.00 as of August 31, 2003, inclusive of the principal and The Court of Appeals erred in not holding respondent liable on its
the accrued interest, and bound themselves to pay the said amount counter-attachment bond which it posted before the trial court
in accordance with a schedule of payments agreed upon by the inasmuch as:
parties. Consequently, the RTC promulgated its Judgment13 dated
October 2, 2003 approving the compromise agreement. A. The requisites for recovering upon the respondent-surety were
clearly complied with by petitioner and the trial court, inasmuch as
For failure of Unibox and Ortega to pay the required amounts for the prior demand and notice in writing was made upon respondent, by
months of May and June 2004 despite demand by UPPC, the latter personal service, of petitioner’s motion to order respondent surety to
filed its Motion for Execution14 to satisfy the remaining unpaid pay the amount of its counter-attachment bond, and a hearing
balance. In the July 30, 2004 Order,15 the RTC acted favorably on the thereon was held for the purpose of determining the liability of the
said motion and, on August 4, 2004, it issued the requested Writ of respondent-surety.
Execution.16
B. The terms of respondent’s counter-attachment bond are clear, and
The sheriff then proceeded to enforce the Writ of Execution. It was unequivocally provide that respondent as surety shall jointly and
discovered, however, that Unibox had already ceased its business solidarily bind itself with defendants to secure and pay any judgment
operation and all of its assets had been foreclosed by its creditor bank. that petitioner may recover in the action. Hence, such being the terms
Moreover, the responses of the selected banks which were served of the bond, in accordance with fair insurance practices, respondent
with notices of garnishment indicated that Unibox and Ortega no cannot, and should not be allowed to, evade its liability to pay on its
longer had funds available for garnishment. The sheriff also counter-attachment bond posted by it before the trial court.
proceeded to the residence of Ortega to serve the writ but he was
denied entry to the premises. Despite his efforts, the sheriff reported II.
The Court of Appeals erred in holding that the trial court gravely No novation despite compromise agreement; Acropolis still liable under the
abused its discretion in denying respondent’s manifestation and terms of the counter-bond
motion for reconsideration considering that the said motion failed to
comply with the three (3)-day notice rule under Section 4, Rule 15 of UPPC argues that the undertaking of Acropolis is to secure any
the Rules of Court, and that it had lacked substantial merit to warrant judgment rendered by the RTC in its favor. It points out that because
a reversal of the trial court’s previous order.29 of the posting of the counter-bond by Acropolis and the dissolution
of the writ of preliminary attachment against Unibox and Ortega,
Simply put, the issues to be dealt with in this case are as follows: UPPC lost its security against the latter two who had gone
bankrupt.36 It cites the cases of Guerrero v. Court of Appeals37 and
(1) Whether UPPC failed to make the required demand and notice Martinez v. Cavives38 to support its position that the execution of a
upon Acropolis; and 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 does it novate the
(2) Whether the execution of the compromise agreement between
obligation.39
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. 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
The Court’s Ruling
part of Unibox and Ortega that was prejudicial to it as the surety.
Accordingly, it cannot be bound by the judgment issued based on the
UPPC complied with the twin requirements of notice and demand said agreement.40 Acropolis also questions the applicability of
Guerrero and draws attention to the fact that in said case, the
On the recovery upon the counter-bond, the Court finds merit in the compromise agreement specifically stipulated that the surety shall
arguments of the petitioner. continue to be liable, unlike in the case at bench where the
compromise agreement made no mention of its obligation to
UPPC argues that it complied with the requirement of demanding UPPC.41
payment from Acropolis by notifying it, in writing and by personal
service, of the hearing held on UPPC’s Motion to Order Respondent- On this issue, the Court finds for UPPC also.
Surety to Pay the Bond.30 Moreover, it points out that the terms of
the counter-attachment bond are clear in that Acropolis, as surety, The terms of the Bond for Dissolution of Attachment issued by
shall jointly and solidarily bind itself with Unibox and Ortega to Unibox and Acropolis in favor of UPPC are clear and leave no room
secure the payment of any judgment that UPPC may recover in the for ambiguity:
action.31
WHEREAS, the Honorable Court in the above-entitled case issued on
Section 17, Rule 57 of the Rules of Court sets forth the procedure for
_____ an Order dissolving / lifting partially the writ of attachment
the recovery from a surety on a counter-bond: levied upon the defendant/s personal property, upon the filing of a
counterbond by the defendants in the sun of PESOS FORTY TWO
Sec. 17. Recovery upon the counter-bond. – When the judgment has MILLION EIGHT HUNDRED FORTY FOUR THOUSAND THREE
become executory, the surety or sureties on any counter-bond given HUNDRED FIFTY THREE AND 14/100 ONLY (P 42,844,353.14)
pursuant to the provisions of this Rule to secure the payment of the Philippine Currency.
judgment shall become charged on such counter-bond and bound to
pay the judgment obligee upon demand the amount due under the NOW, THEREFORE, we UNIBOX PACKAGING CORP. as Principal
judgment, which amount may be recovered from such surety or and PHILIPPINE PRYCE ASSURANCE CORP., a corporation duly
sureties after notice and summary hearing on the same action. organized and existing under and by virtue of the laws of the
Philippines, as Surety, in consideration of the dissolution of said
From a reading of the abovequoted provision, it is evident that a attachment, hereby jointly and severally bind ourselves in the sum
surety on a counter-bond given to secure the payment of a judgment of FORTY TWO MILLION EIGHT HUNDRED FORTY FOUR
becomes liable for the payment of the amount due upon: (1) demand THOUSAND THREE HUNDRED FIFTY THREE AND 14/100
made upon the surety; and (2) notice and summary hearing on the ONLY (P 42,844,353.14) Philippine Currency, in favor of the
same action. After a careful scrutiny of the records of the case, the plaintiff to secure the payment of any judgment that the plaintiff
Court is of the view that UPPC indeed complied with these twin may recover against the defendants in this action.42 [Emphasis and
requirements. underscoring supplied]

This Court has consistently held that the filing of a complaint
constitutes a judicial demand.32 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 UPPC might recover against Unibox
and Ortega.33
Furthermore, an examination of the records reveals that the motion
was filed by UPPC on November 11, 2004 and was set for hearing on
November 19, 2004.34 Acropolis was duly notified of the hearing and
it was personally served a copy of the motion on November 11,
2004,35 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.
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 the height of injustice to
allow Acropolis to evade its obligation to UPPC, especially after the
latter has already secured a favorable judgment.
This issue is not novel. In the case of Luzon Steel Corporation v. Sia,43
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, Although this issue has been obviated by our disposition of the two
speaking through the learned Justice J.B.L. Reyes, discussed the main issues, the Court would like to point out that the three-day
nature of the liability of a surety on a counter-bond: notice requirement is not a hard and fast rule and substantial
compliance is allowed.
Main issues posed are (1) whether the judgment upon the
compromise discharged the surety from its obligation under its Pertinently, Section 4, Rule 15 of the Rules of Court reads:
attachment counterbond and (2) whether the writ of execution could
be issued against the surety without previous exhaustion of the Sec. 4. Hearing of motion. – Except for motions which the court may
debtor's properties. act upon without prejudicing the rights of the adverse party, every
written motion shall be set for hearing by the applicant.
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, Every written motion required to be heard and the notice of the
section 12, specifies that an attachment may be discharged upon the hearing thereof shall be served in such a manner as to insure its
making of a cash deposit or filing a counterbond "in an amount equal receipt by the other party at least three (3) days before the date of
to the value of the property attached as determined by the judge"; hearing, unless the court for good cause sets the hearing on shorter
that upon the filing of the counterbond "the property attached ... shall notice. [Emphasis supplied]1âwphi1
be delivered to the party making the deposit or giving the
counterbond, or the person appearing on his behalf, the deposit or
The law is clear that it intends for the other party to receive a copy of
counterbond aforesaid standing in place of the property so released."
the written motion at least three days before the date set for its
hearing. The purpose of the three (3)-day notice requirement, which
The italicized expressions constitute the key to the entire problem. was established not for the benefit of the movant but rather for the
Whether the judgment be rendered after trial on the merits or upon adverse party, is to avoid surprises upon the latter and to grant it
compromise, such judgment undoubtedly may be made effective sufficient time to study the motion and to enable it to meet the
upon the property released; and since the counterbond merely stands arguments interposed therein.47 In Preysler, Jr. v. Manila Southcoast
in the place of such property, there is no reason why the judgment Development Corporation,48 the Court restated the ruling that "the
should not be made effective against the counterbond regardless of date of the hearing should be at least three days after receipt of the
the manner how the judgment was obtained. notice of hearing by the other parties."

xxx 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
As declared by us in Mercado v. Macapayag, 69 Phil. 403, 405-406, in it, there is compliance with the rule. This was the ruling in the case of
passing upon the liability of counter sureties in replevin who bound Jehan Shipping Corporation v. National Food Authority,49 where it was
themselves to answer solidarily for the obligations of the defendants written:
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 Purpose Behind the
defendants, Notice Requirement

the liability of the sureties was fixed and conditioned on the finality This Court has indeed held time and time again that, under Sections
of the judgment rendered regardless of whether the decision was 4 and 5 of Rule 15 of the Rules of Court, mandatory is the notice
based on the consent of the parties or on the merits. A judgment requirement in a motion, which is rendered defective by failure to
entered on a stipulation is nonetheless a judgment of the court comply with the requirement. As a rule, a motion without a notice of
because consented to by the parties.44 hearing is considered pro forma and does not affect the reglementary
period for the appeal or the filing of the requisite pleading.
[Emphases and underscoring supplied]
As an integral component of procedural due process, the three-day
The argument of Acropolis that its obligation under the counter-bond notice required by the Rules is not intended for the benefit of the
was novated by the compromise agreement is, thus, untenable. In movant. Rather, the requirement is for the purpose of avoiding
order for novation to extinguish its obligation, Acropolis must be able surprises that may be sprung upon the adverse party, who must be
to show that there is an incompatibility between the compromise given time to study and meet the arguments in the motion before a
agreement and the terms of the counter-bond, as required by Article resolution by the court. Principles of natural justice demand that the
1292 of the Civil Code, which provides that: right of a party should not be affected without giving it an
opportunity to be heard.
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 The test is the presence of the opportunity to be heard, as well as to
unequivocal terms, or that the old and the new obligations be on have time to study the motion and meaningfully oppose or
every point incompatible with each other. (1204) controvert the grounds upon which it is based. Considering the
circumstances of the present case, we believe that the requirements
Nothing in the compromise agreement indicates, or even hints at, of procedural due process were substantially complied with, and that
releasing Acropolis from its obligation to pay UPPC after the latter the compliance justified a departure from a literal application of the
has obtained a favorable judgment. Clearly, there is no rule on notice of hearing.50 [Emphasis supplied]
incompatibility between the compromise agreement and the counter-
bond. Neither can novation be presumed in this case. As explained in In the case at bench, the RTC gave UPPC sufficient time to file its
Duñgo v. Lopena:45 comment on the motion. On January 14, 2005, UPPC filed its
Opposition to the motion, discussing the issues raised by Acropolis
Novation by presumption has never been favored. To be sustained, it in its motion. Thus, UPPC’s right to due process was not violated
need be established that the old and new contracts are incompatible because it was afforded the chance to argue its position.
in all points, or that the will to novate appears by express agreement
of the parties or in acts of similar import.46 WHEREFORE, the petition is GRANTED. The November 17, 2005
Decision and the March 1, 2006 Resolution of the Court of Appeals,
All things considered, Acropolis, as surety under the terms of the in CA-G.R. SP No. 89135, are hereby REVERSED and SET ASIDE. The
counter-bond it issued, should be held liable for the payment of the November 30, 2004 Order of the Regional Trial Court, Branch 148,
unpaid balance due to UPPC. 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 ₱27,048,568.78 with interest of 12% per annum from
Three-day notice rule, not a hard and fast rule
default is REINSTATED.
 G.R. No. 212025 On April 29, 2004, the RTC issued another order12 directing the
EXCELLENT QUALITY APPAREL, INC., Petitioners, deposit of the garnished funds of petitioner to the cashier of the Clerk
vs.VISAYAN SURETY & INSURANCE CORPORATION, and of Court of the RTC.
FAR EASTERN SURETY & INSURANCE CO., INC., Respondent.
Win Multi-Rich then filed a motion,13 dated April 29, 2004, to release
The present case involves the wrongful attachment and release of the petitioner’s cash deposit to it. Notably, the motion was granted by the
petitioner's funds to the adverse party and its plight to recover the RTC in the Order,14 dated May 3, 2004. Subsequently, on May 7,
same. It seems that when misfortune poured down from the skies, the 2004, Win Multi-Rich posted Surety Bond No. 1019815 issued by
petitioner received a handful. The scales of justice, however, do not respondent Far Eastern Surety and Insurance Co., Inc. (FESICO) for
tilt based on chance; rather on the proper application of law, the amount of P9,000,000.00, to secure the withdrawal of the cash
jurisprudence and justice. deposited by petitioner. Thus, Win Multi-Rich was able to receive the
funds of petitioner even before the trial began.
This is a petition for review on certiorari seeking to reverse and set
aside the October 21, 2013 Decision1 and the April 1, 2014 On June 18, 2004, petitioner filed a petition for certiorari16 under Rule
Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 95421, 65 of the 1997 Rules of Civil Procedure before the CA. The petition
which affirmed the January 15, 20103 and May 19, 20104 Orders of sought to annul and set aside the April 12, 2004 and April 29, 2004
the Regional Trial Court of Manila, Branch 32 (RTC), in Civil Case No. Orders of the RTC. Petitioner then filed its Supplemental
04-108940. Manifestation and Motion,17 asserting that its cash deposit with the
RTC was turned over to Win Multi-Rich.
The Facts
On March 14, 2006, the CA rendered a decision,18 annulling the April
12 2004 and April 29, 2004 Orders of the RTC. It ruled, however, that
On March 26, 1996, petitioner Excellent Quality Apparel, Inc.
the RTC had jurisdiction over the case inspite of the arbitration clause
(petitioner), then represented by Max L.F. Ying (Ying), Vice-President
because it was a suit for collection of sum of money. The dispositive
for Productions, and Alfiero R. Orden, Treasurer, entered into a
portion of which reads:
contract with Multi-Rich Builders (Multi-Rich), a single
proprietorship, represented by Wilson G. Chua, its President and
General Manager, for the construction of a garment factory within the IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby
Cavite Philippine Economic Zone Authority (CPEZA). The duration GRANTED. The Orders dated April 12, 2004 and April 29, 2004 of
of the project was for a maximum period of five (5) months or 150 respondent judge are hereby ANNULLED and SET ASIDE.
consecutive calendar days. Included in the contract was an Accordingly, the writ of preliminary injunction is hereby MADE
Arbitration Clause in case of dispute. PERMANENT.

On November 27, 1996, the construction of the factory building was SO ORDERED.19
completed.
Petitioner filed a motion for reconsideration arguing, among others,
On February 20, 1997, Win Multi-Rich Builders, Inc. (Win Multi-Rich) that the CA decision failed to state an order to return the garnished
was incorporated with the Securities and Exchange Commission amount of P8,634,448.20, which was taken from its bank account and
(SEC). given to Win Multi-Rich. In its Resolution,20 dated October 11, 2006,
the CA denied the motion.
On January 26, 2004, Win Multi-Rich filed a complaint for sum of
money and damages against petitioner and Ying before the RTC.5 It Aggrieved, petitioner elevated the matter to the Court by way of a
also prayed for the issuance of a writ of attachment, claiming that petition for review on certiorari under Rule 45, docketed as G.R. No.
Ying was about to abscond and that petitioner had an impending 175048.
closure.
On February 10, 2009, in G.R. No. 175048, the Court promulgated a
Win Multi-Rich then secured the necessary bond in the amount of Decision21 in favor of petitioner and held: first, that Win Multi-Rich
P8,634,448.20 from respondent Visayan Surety and Insurance was not a real party in interest; second, that the RTC should not have
Corporation (Visayan Surety).6 In the Order,7 dated February 2, 2004, taken cognizance of the collection suit because the presence of the
the RTC issued a writ of preliminary attachment in favor of Win arbitration clause vested jurisdiction on the CIAC over all
Multi-Rich. construction disputes between petitioner and Multi-Rich; and lastly,
that Win Multi-Rich could not retain the garnished amount, as the
RTC did not have jurisdiction to issue the questioned writ of
To prevent the enforcement of the writ of preliminary attachment on
attachment and to order the release of the funds. The dispositive
its equipment and machinery, petitioner issued Equitable PCI Bank
portion reads:
Check No. 160149,8 dated February 16, 2004, in the amount of
P8,634,448.20 payable to the Clerk of Court of the RTC.
WHEREFORE, the petition is GRANTED. The Decision of the Court
of Appeals is hereby MODIFIED. Civil Case No. 04-108940 is
On February 19, 2004, petitioner filed its Omnibus Motion,9 seeking
DISMISSED. Win Multi-Rich Builders, Inc. is ORDERED to return the
to discharge the attachment. Petitioner also questioned the
garnished amount of EIGHT MILLION SIX HUNDRED THIRTY
jurisdiction of the RTC due to the presence of the Arbitration Clause
FOUR THOUSAND FOUR HUNDRED FORTY-EIGHT PESOS AND
in the contract. It asserted that the case should have been referred first
TWENTY CENTAVOS (P8,634,448.20), which was turned over by the
to the Construction Industry Arbitration Commission (CIAC)
Regional Trial Court, to petitioner with legal interest of 12 percent
pursuant to Executive Order (E.O.) No. 1008.
(12%) per annum upon finality of this Decision until payment.

The motion, however, was denied by the RTC in its Order,10 dated
SO ORDERED.22
April 12, 2004, because the issues of the case could be resolved after
a full-blown trial.
Win Multi-Rich filed a motion for reconsideration but it was denied
by the Court in its April 20, 2009 Resolution.23 Pursuant to an entry
On April 26, 2004, petitioner filed its Answer with Compulsory
of judgment,24 the Court’s decision became final and executory on
Counterclaim11 before the RTC. It denied the material allegation of
June 2, 2009.
the complaint and sought the immediate lifting of the writ of
attachment. It also prayed that the bond filed by Win Multi-Rich to
support its application for attachment be held to satisfy petitioner’s On June 26, 2009, petitioner moved for execution thereof, praying for
claim for damages due to the improper issuance of such writ. the return of its cash deposit and, in the event of refusal of Win Multi-
Rich to comply, to hold Visayan Surety and FESICO liable under their
respective bonds.25
Win Multi-Rich, Visayan Surety and FESICO were served with copies WOULD GIVE FULL EFFECT TO THE TERMS OF THE
of the motion for execution.26 During the August 7, 2009 hearing on JUDGMENT.34
the motion for execution, counsels for petitioner, Win Multi-Rich and
FESICO were present.27 The hearing, however, was reset to Petitioner contends that Visayan Surety and FESICO could be held
September 16, 2009. On the said date, Win Multi-Rich, Visayan Surety liable because the Court, in G.R. No. 175048, ruled that it cannot allow
and FESICO were given fifteen (15) days to submit their respective Win Multi-Rich to retain the garnished amount turned over by the
comments or oppositions to the motion for execution.28 RTC, which had no jurisdiction to issue the questioned writ of
attachment. Petitioner argues that if Win Multi-Rich fails or refuses
On October 15, 2009, Win Multi-Rich opposed the motion for to refund or return the cash deposit, then Visayan Surety and FESICO
Execution29 because the cash deposit awarded to it by the RTC had must be held liable under their respective bonds. Also, petitioner
been paid to suppliers and the said amount was long overdue and claims that the surety bond of FESICO is not covered by Section 20,
demandable. Rule 57 because it did not pertain to the writ of attachment itself, but
on the withdrawal of the cash deposit.
The RTC granted the motion for execution in an Order,30 dated
October 19, 2009, and issued a writ of execution.31 Visayan Surety On October 3, 2014, Visayan Surety filed its Comment.35 It asserted
and FESICO separately moved for reconsideration of the RTC order. that no application for damages was filed before the Court in G.R.
No. 175048. Thus, there was no occasion to direct the RTC to hear and
The RTC Ruling decide the claim for damages, which constituted a violation of its
right to due process. Also, Visayan Surety contended that Section 20,
Rule 57 provided a mandatory rule that an application for damages
On January 15, 2010, the RTC issued the order,32 granting the surety
must be filed before the judgment becomes final and executory.
respondents’ motion for reconsideration and lifting its October 19,
2009 Order insofar as it granted the motion for execution against
Visayan Surety and FESICO. The RTC absolved the surety On October 8, 2014, FESICO filed its Comment.36 It averred that
respondents because petitioner did not file a motion for judgment on petitioner failed to comply with Section 20, Rule 57 of the Rules of
the attachment bond before the finality of judgment, thus, violating Court because the hearing on the motion for execution was
the surety respondents’ right to due process. It further held that the conducted after the decision in G.R. No. 175048 had already become
execution against the surety respondents would go beyond the terms final and executory. It also stated that petitioner failed to implead the
of the judgment sought to be executed considering that the Court surety respondents as parties in G.R. No. 175048.
decision pertained to Win Multi-Rich only.
On January 26, 2015, petitioner filed its Consolidated Reply.37 It
Petitioner moved for reconsideration, but its motion was denied by stressed that because the highest court of the land had directed the
the RTC in its May 19, 2010 Order.33 return of the wrongfully garnished amount to petitioner, proceedings
on the application under Section 20, Rule 57, became no longer
necessary.
Undaunted, petitioner appealed before the CA, arguing that there
was no violation of the right to due process because the liability of
the surety respondents were based on the bonds issued by them. The Court’s Ruling

The CA Ruling The petition is partly meritorious.

In the assailed decision, dated October 21, 2013, the CA found There was an application
petitioner’s appeal without merit. Citing Section 20, Rule 57 of the for damages; but there
1997 Rules of Civil Procedure (Section 20, Rule 57), the CA held that was no notice given to
petitioner failed to timely claim damages against the surety before Visayan Surety
the decision of the Court became final and executory. It further stated
that a court judgment could not bind persons who were not parties By its nature, preliminary attachment, under Rule 57 of the Rules of
to the action as the records showed that Visayan Surety and FESICO Court, "is an ancillary remedy applied for not for its own sake but to
were neither impleaded nor informed of the proceedings before the enable the attaching party to realize upon relief sought and expected
Court in G.R. No. 175048. It was the view of the CA that "[h]aving to be granted in the main or principal action; it is a measure auxiliary
failed to observe very elementary rules of procedure which are or incidental to the main action. As such, it is available during the
mandatory, [petitioner] caused its own predicament." pendency of the action which may be resorted to by a litigant to
preserve and protect certain rights and interests therein pending
Petitioner filed a motion for reconsideration, but it was denied by the rendition and for purposes of the ultimate effects, of a final judgment
CA in the assailed April 1, 2014 Resolution. in the case.38 In addition, attachment is also availed of in order to
acquire jurisdiction over the action by actual or constructive seizure
of the property in those instances where personal or substituted
Hence, this present petition, anchored on the following service of summons on the defendant cannot be effected."39

STATEMENT OF ISSUES The party applying for the order of attachment must thereafter give
a bond executed to the adverse party in the amount fixed by the court
I in its order granting the issuance of the writ.40 The purpose of an
attachment bond is to answer for all costs and damages which the
THE ASSAILED DECISION AND THE ASSAILED adverse party may sustain by reason of the attachment if the court
RESOLUTION OF THE COURT OF APPEALS SHOULD BE finally rules that the applicant is not entitled to the writ.41
REVERSED AND SET ASIDE FOR BEING CONTRARY TO LAW
AND JURISPRUDENCE CONSIDERING THAT THE RIGHT TO In this case, the attachment bond was issued by Visayan Surety in
DUE PROCESS OF THE TWO SURETY COMPANIES WILL NOT order for Win Multi-Rich to secure the issuance of the writ of
BE VIOLATED IF EXECUTION OF THE JUDGMENT AGAINST attachment. Hence, any application for damages arising from the
THEM IS ALLOWED. improper, irregular or excessive attachment shall be governed by
Section 20, Rule 57, which provides:
II
Sec. 20. Claim for damages on account of improper, irregular or
THE ASSAILED DECISION AND THE ASSAILED excessive attachment.
RESOLUTION OF THE COURT OF APPEALS SHOULD BE
REVERSED AND SET ASIDE FOR BEING CONTRARY TO LAW
An application for damages on account of improper, irregular or
AND JURISPRUDENCE CONSIDERING THAT TO ALLOW THE
excessive attachment must be filed before the trial or before appeal is
EXECUTION AGAINST THE TWO SURETY COMPANIES
perfected or before the judgment becomes executory, with due notice
to the attaching party and his surety or sureties, setting forth the facts attachment caused it actual damages in the amount of at least
showing his right to damages and the amount thereof. Such damages P3,000,000.00. It added that the Equitable PCI Bank Check No. 160149
may be awarded only after proper hearing and shall be included in it issued to the RTC Clerk of Court, to lift the improper writ of
the judgment on the main case. attachment, should be returned to it.50 Evidently, these allegations
constitute petitioner’s application for damages arising from the
If the judgment of the appellate court be favorable to the party against wrongful attachment, and the said application was timely filed as it
whom the attachment was issued, he must claim damages sustained was filed before the finality of judgment.
during the pendency of the appeal by filing an application in the
appellate court, with notice to the party in whose favor the The next requisite that must be satisfied by petitioner to hold Visayan
attachment was issued or his surety or sureties, before the judgment Surety liable would be that the judgment against the wrongful
of the appellate court becomes executory. The appellate court may attachment was promulgated after the hearing with notice to the
allow the application to be heard and decided by the trial court. surety. Certainly, the surety must be given prior notice and an
opportunity to be heard with respect to the application for damages
Nothing herein contained shall prevent the party against whom the before the finality of the judgment. The Court rules that petitioner did
attachment was issued from recovering in the same action the not satisfy this crucial element.
damages awarded to him from any property of the attaching party
not exempt from execution should the bond or deposit given by the Section 20, Rule 57 specifically requires that the application for
latter be insufficient or fail to fully satisfy the award. damages against the wrongful attachment, whether filed before the
trial court or appellate court, must be with due notice to the attaching
The history of Section 20, Rule 57 was discussed in Malayan Insurance, party and his surety or sureties. Such damages may be awarded only
Inc. v. Salas.42 In that case, the Court explained that Section 20, Rule after proper hearing and shall be included in the judgment on the
57 was a revised version of Section 20, Rule 59 of the 1940 Rules of main case.
Court, which, in turn, was a consolidation of Sections 170, 177, 223,
272, and 439 of the Code of Civil Procedure regarding the damages Due notice to the adverse party and its surety setting forth the facts
recoverable in case of wrongful issuance of the writs of preliminary supporting the applicant's right to damages and the amount thereof
injunction, attachment, mandamus and replevin and the under the bond is indispensable. The surety should be given an
appointment of a receiver. opportunity to be heard as to the reality or reasonableness of the
damages resulting from the wrongful issuance of the writ. In the
Thus, the current provision of Section 20, Rule 57 of the 1997 Rules of absence of due notice to the surety, therefore, no judgment for
Civil Procedure covers application for damages against improper damages may be entered and executed against it.51
attachment, preliminary injunction, receivership, and replevin.43
Consequently, jurisprudence concerning application for damages In the old case of Visayan Surety and Insurance Corp. v. Pascual,52 the
against preliminary injunction, receivership and replevin bonds can application for damages was made before the finality of judgment,
be equally applied in the present case. but the surety was not given due notice. The Court allowed such
application under Section 20, Rule 59 of the 1940 Rules of Court
In a catena of cases,44 the Court has cited the requisites under Section because there was no rule which stated that the failure to give to the
20, Rule 57 in order to claim damages against the bond, as follows: surety due notice of the application for damages would release the
surety from the obligation of the bond.53
1. The application for damages must be filed in the same
case where the bond was issued; The case of Visayan Surety and Insurance Corp. v. Pascual, however,
was abandoned in the subsequent rulings of the Court because this
was contrary to the explicit provision of Section 20, Rule 57.54
2. Such application for damages must be filed before the
entry of judgment; and
In People Surety and Insurance Co. v. CA,55 the defendant therein filed
an application for damages during the trial but the surety was not
3. After hearing with notice to the surety.
notified. The Court denied the application and stated that "it is now
well settled that a court has no jurisdiction to entertain any
The first and second requisites, as stated above, relate to the proceeding seeking to hold a surety liable upon its bond, where the
application for damages against the bond. An application for surety has not been given notice of the proceedings for damages
damages must be filed in the same case where the bond was issued, against the principal and the judgment holding the latter liable has
either (a) before the trial or (b) before the appeal is perfected or (c) already become final."56
before the judgment becomes executory.45 The usual procedure is to
file an application for damages with due notice to the other party and
In Plaridel Surety & Insurance Co. v. De Los Angeles,57 a motion for
his sureties. The other method would be to incorporate the
execution against the bond of the surety was filed after the finality of
application in the answer with compulsory counterclaim.46
judgment. The petitioner therein asserted that the motion for
execution was a sufficient notification to the surety of its application
The purpose of requiring the application for damages to be filed in for damages. The Court ruled, that "[t]his notification, however,
the same proceeding is to avoid the multiplicity of suit and forum which was made after almost a year after the promulgation of the
shopping. It is also required to file the application against the bond judgment by the Court of Appeals, did not cure the tardiness of the
before the finality of the decision to prevent the alteration of the claim upon the liability of the surety, which, by mandate of the Rules,
immutable judgment.47 should have been included in the judgment."58

In Paramount Insurance Corp. v. CA,48 the Court allowed an
application for damages incorporated in the answer with compulsory
counterclaim of the defendant therein. The sureties were properly
notified of the hearing and were given their day in court.
Conversely, in the recent case of Advent Capital and Finance Corp. v.
Young,49 the application for damages against the bond was not
allowed. The respondent therein filed his omnibus motion claiming
damages against surety after the dismissal order issued by the trial
court had attained finality.
In the present petition, the Court holds that petitioner sufficiently
incorporated an application for damages against the wrongful
attachment in its answer with compulsory counterclaim filed before
the RTC. Petitioner alleged that the issuance of the improper writ of
In the present case, petitioner’s answer with compulsory
counterclaim, which contained the application for damages, was not
served on Visayan Surety.59 Also, a perusal of the records60 revealed
that Visayan Surety was not furnished any copies of the pleadings,
motions, processes, and judgments concerned with the application
for damages against the surety bond. Visayan Surety was only
notified of the application when the motion for execution was filed
by petitioner on June 29, 2009, after the judgment in G.R. No. 175048
had become final and executory on June 2, 2009.
Clearly, petitioner failed to comply with the requisites under Section
20, Rule 57 because Visayan Surety was not given due notice on the
application for damages before the finality of judgment. The
subsequent motion for execution, which sought to implicate Visayan
Surety, cannot alter the immutable judgment anymore.
FESICO’s bond is not cash deposit of petitioner, as replacement of the properties to be
covered by Section 20, attached, should never have been released to Win Multi-Rich.
Rule 57
Nevertheless, the Court must determine the nature of the surety bond
While Visayan Surety could not be held liable under Section 20, Rule of FESICO. The cash deposit or the counter-bond was supposed to
57, the same cannot be said of FESICO. In the case at bench, to secure the payment of any judgment that the attaching party may
forestall the enforcement of the writ of preliminary attachment, recover in the action.63 In this case, however, Win Multi-Rich was
petitioner issued Equitable PCI Bank Check No. 160149, dated able to withdraw the cash deposit and, in exchange, it posted a surety
February 16, 2004, in the amount of P8,634,448.20 payable to the Clerk bond of FESICO in favor of petitioner to answer for the damages that
of Court of the RTC. Pursuant to the RTC Order, dated April 29, 2004, the latter may sustain. Corollarily, the surety bond of FESICO
the garnished funds of petitioner were deposited to the cashier of the substituted the cash deposit of petitioner as a security for the
Clerk of Court of the RTC. The procedure to discharge the writ of judgment. Thus, to claim damages from the surety bond of FESICO,
preliminary attachment is stated in Section 12, Rule 57, to wit: Section 17, Rule 57 could be applied. It reads:

Sec. 12. Discharge of attachment upon giving counterbond. Sec. 17. Recovery upon the counter-bond.

After a writ of attachment has been enforced, the party whose
property has been attached, or the person appearing on his behalf,
may move for the discharge of the attachment wholly or in part on
the security given. The court shall, after due notice and hearing,
order the discharge of the attachment if the movant makes a cash
deposit, or files a counter-bond executed to the attaching party with
the clerk of the court where the application is made, in an amount
equal to that fixed by the court in the order of attachment, exclusive
of costs. But if the attachment is sought to be discharged with respect
to a particular property, the counter-bond shall be equal to the value
of that property as determined by the court. In either case, the cash
deposit or the counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action. A notice
of the deposit shall forthwith be served on the attaching party. Upon
the discharge of an attachment in accordance with the provisions of
this section, the property attached, or the proceeds of any sale thereof,
shall be delivered to the party making the deposit or giving the
counter-bond, or to the person appearing on his behalf, the deposit
or counter-bond aforesaid standing in place of the property so
released. Should such counter-bond for any reason to be found to be
or become insufficient, and the party furnishing the same fail to file
an additional counter-bond, the attaching party may apply for a new
order of attachment.
When the judgment has become executory, the surety or sureties on
any counter-bond given pursuant to the provisions of this Rule to
secure the payment of the judgment shall become charged on such
counter-bond and bound to pay the judgment obligee upon demand
the amount due under the judgment, which amount may be
recovered from such surety or sureties after notice and summary
hearing in the same action.
From a reading of the above-quoted 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.64 Noticeably, unlike Section 20, Rule 57, which requires
notice and hearing before the finality of the judgment in an
application for damages, Section 17, Rule 57 allows a party to claim
damages on the surety bond after the judgment has become
executory.65
The question remains, in contrast to Section 20, why does Section 17
sanction the notice and hearing to the surety after the finality of
judgment? The answer lies in the kind of damages sought to be
enforced against the bond.

[Emphasis Supplied] Under Section 20, Rule 57, in relation to Section 4 therein,66 the surety
bond shall answer for all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the
Win Multi-Rich, however, took a step further and filed a motion to
attachment. In other words, the damages sought to be enforced
release petitioner’s cash deposit to it. Immediately, the RTC granted
against the surety bond are unliquidated. Necessarily, a notice and
the motion and directed Win Multi-Rich to post a bond in favor of
hearing before the finality of judgment must be undertaken to
petitioner in the amount of P9,000,000.00 to answer for the damages
properly determine the amount of damages that was suffered by the
which the latter may sustain should the court decide that Win Multi-
defendant due to the improper attachment. These damages to be
Rich was not entitled to the relief sought. Subsequently, Win Multi-
imposed against the attaching party and his sureties are different
Rich filed a surety bond of FESICO before the RTC and was able to
from the principal case, and must be included in the judgment.
obtain the P8,634,448.20 cash deposit of petitioner, even before the
trial commenced.
On the other hand, under Section 17, Rule 57, in relation to Section 12
therein, the cash deposit or the counter-bond shall secure the
Strictly speaking, the surety bond of FESICO is not covered by any of
payment of any judgment that the attaching party may recover in the
the provisions in Rule 57 of the Rules of Court because, in the first
action. Stated differently, the damages sought to be charged against
place, Win Multi-Rich should not have filed its motion to release the
the surety bond are liquidated. The final judgment had already
cash deposit of petitioner and the RTC should not have granted the
determined the amount to be awarded to the winning litigant on the
same. The release of the cash deposit to the attaching party is
main action. Thus, there is nothing left to do but to execute the
anathema to the basic tenets of a preliminary attachment.
judgment against the losing party, or in case of insufficiency, against
its sureties.
The chief purpose of the remedy of attachment is to secure a
contingent lien on defendant’s property until plaintiff can, by
Here, the Court is convinced that a demand against FESICO had been
appropriate proceedings, obtain a judgment and have such property
made, and that it was given due notice and an opportunity to be
applied to its satisfaction, or to make some provision for unsecured
heard on its defense.1âwphi1 First, petitioner filed a motion for
debts in cases where the means of satisfaction thereof are liable to be
execution on June 29, 2009, a copy of which was furnished to
removed beyond the jurisdiction, or improperly disposed of or
FESICO;67 second, petitioner filed a manifestation,68 dated July 13,
concealed, or otherwise placed beyond the reach of creditors.61 The
2009, that FESICO was duly served with the said motion and notified
garnished funds or attached properties could only be released to the
of the hearing on August 7, 2009; third, during the August 7, 2009
attaching party after a judgment in his favor is obtained. Under no
hearing on the motion for execution, the counsels for petitioner, Win
circumstance, whatsoever, can the garnished funds or attached
Multi-Rich and FESICO were all present;69 fourth, in an Order, dated
properties, under the custody of the sheriff or the clerk of court, be
September 16, 2009, FESICO was given fifteen (15) days to submit its
released to the attaching party before the promulgation of
comment or opposition to the motion for execution;70 and lastly,
judgment.
FESICO filed its comment71 on the motion on October 1, 2009. Based
on the foregoing, the requirements under Section 17, Rule 57 have
Cash deposits and counterbonds posted by the defendant to lift the been more than satisfied.
writ of attachment is a security for the payment of any judgment that
the attaching party may obtain; they are, thus, mere replacements of
Indeed, FESICO cannot escape liability on its surety bond issued in
the property previously attached.62 Accordingly, the P8,634,448.20
favor of petitioner. The purpose of FESICO's bond was to secure the
withdrawal of the cash deposit and to answer any damages that
would be inflicted against petitioner in the course of the
proceedings.72 Also, the undertaking73 signed by FESICO stated that
the duration of the effectivity of the bond shall be from its approval
by the court until the action is fully decided, resolved or terminated.
FESICO cannot simply escape liability by invoking that it was not a
party in G.R. No. 175048. From the moment that FESICO issued
Surety Bond No. 10198 to Win Multi-Rich and the same was posted
before the RTC, the court has acquired jurisdiction over the surety,
and the provisions of Sections 12 and 17 of Rule 57 became
operational. Thus, the Court holds that FESICO is solidarily liable
under its surety bond with its principal Win Multi-Rich.
On a final note, the Court reminds the bench and the bar that
lawsuits, unlike duels, are not to be won by a rapier's thrust.
Technicality, when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant
consideration from courts. There should be no vested rights in
technicalities.74
WHEREFORE, the petition is PARTIALLY GRANTED. The October
21, 2013 Decision and the April 1, 2014 Resolution of the Court of
Appeals in CA-G.R. CV No. 95421 are AFFIRMED WITH
MODIFICATION. The Regional Trial Court of Manila, Branch 32 in
Civil Case No. 04-108940 is hereby ordered to proceed with the
execution against Far Eastern Surety & Insurance Co., Inc., to the
extent of the amount of the surety bond.SO ORDERED.
After Advent’s posting of ₱3,000,000 replevin bond, which was
double the value of the subject car at the time, through Stronghold
Insurance Company, Incorporated (Stronghold), the trial court issued
a Writ of Seizure8 directing the Sheriff to seize the subject car from
Young. Upon receipt of the Writ of Seizure, Young turned over the
car to Advent,9 which delivered the same to the rehabilitation
receiver.10
Thereafter, Young filed an Answer alleging that as a former employee
of Advent, he had the option to purchase the subject car at book value
pursuant to the company car plan and to offset the value of the car
with the proceeds of his retirement pay and stock option plan. Young
sought the (1) execution of a deed of sale over the subject car; and (2)
determination and payment of the net amount due him as retirement
benefits under the stock option plan.
Advent filed a Reply with a motion to dismiss Young’s counterclaim,
alleging that the counterclaim did not arise from or has no logical
relationship with the issue of ownership of the subject car.
After issues have been joined, the parties entered into pre-trial on 2
April 2004, which resulted in the issuance of a pre-trial order of even
date reciting the facts and the issues to be resolved during the trial.
On 28 April 2005, the trial court issued an Order dismissing the
replevin case without prejudice for Advent’s failure to prosecute. In
the same order, the trial court dismissed Young’s counterclaim
against Advent for lack of jurisdiction. The order pertinently reads:

G.R. No. 183018 August 3, 2011ADVENT CAPITAL AND It appears that as of July 28, 2003, subject motor vehicle has been
FINANCE CORPORATION, Petitioner, turned over to the plaintiff, thru its authorized representative, and
vs.ROLAND YOUNG, Respondent. adknowledged by the parties’ respective counsels in separate
Manifestations filed. To date, no action had been taken by the plaintiff
The Case in the further prosecution of this case. Accordingly, this case is
ordered dismissed without prejudice on the ground of failure to
prosecute.
This petition for review assails the 28 December 2007 Decision and
1 2

15 May 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No.

96266. The Court of Appeals set aside the 24 March 2006 and 5 July Anent plaintiff’s Motion to Dismiss defendant Young’s counterclaim
2006 Orders4 of the Regional Trial Court of Makati City, Branch 147, for benefits under the retirement and stock purchase plan, the Court
and directed petitioner Advent Capital and Finance Corporation to rules as follows: The only issue in this case is who is entitled to the
return the seized vehicle to respondent Roland Young. The Court of possession of the subject motor vehicle. This issue may have a
Appeals denied the motion for reconsideration. connection, but not a necessary connection with defendant’s rights
under the retirement plan and stock purchase plan as to be
considered a compulsory counterclaim.
The Antecedents

xxx
The present controversy stemmed from a replevin suit instituted by
petitioner Advent Capital and Finance Corporation (Advent) against
respondent Roland Young (Young) to recover the possession of a Notably, defendant’s claim is basically one for benefits under and by
1996 Mercedes Benz E230 with plate number UMN-168, which is virtue of his employment with the plaintiff, and the subject vehicle is
registered in Advent’s name.5 merely an incident in that claim. Said claim is properly ventilated, as
it is resolvable by, the Rehabilitation Court which has jurisdiction and
Prior to the replevin case, or on 16 July 2001, Advent filed for has acquired jurisdiction, to the exclusion of this Court. Accordingly,
corporate rehabilitation with the Regional Trial Court of Makati City, plaintiff’s Motion To Dismiss defendant Young’s counterclaim is
Branch 142 (rehabilitation court).6 granted.11

On 27 August 2001, the rehabilitation court issued an Order (stay
order) which states that "the enforcement of all claims whether for
money or otherwise, and whether such enforcement is by court action
or otherwise, against the petitioner (Advent), its guarantors and
sureties not solidarily liable with it, is stayed."7
On 5 November 2001, Young filed his Comment to the Petition for
Rehabilitation, claiming, among others, several employee benefits
allegedly due him as Advent’s former president and chief executive
officer.
On 10 June 2005, Young filed a motion for partial reconsideration of
the dismissal order with respect to his counterclaim.
On 8 July 2005, Young filed an omnibus motion, praying that Advent
return the subject car and pay him ₱1.2 million in damages "(f)or the
improper and irregular seizure" of the subject car, to be charged
against the replevin bond posted by Advent through Stronghold.
On 24 March 2006, the trial court issued an Order denying Young’s
motion for partial reconsideration, viz:

On 6 November 2002, the rehabilitation court approved the
rehabilitation plan submitted by Advent. Included in the inventory
of Advent’s assets was the subject car which remained in Young’s
possession at the time.
Young’s obstinate refusal to return the subject car, after repeated
demands, prompted Advent to file the replevin case on 8 July 2003.
The complaint, docketed as Civil Case No. 03-776, was raffled to the
Regional Trial Court of Makati City, Branch 147 (trial court).
In the instant case, defendant, in his counterclaim anchored her [sic]
right of possession to the subject vehicle on his alleged right to
purchase the same under the company car plan. However,
considering that the Court has already declared that it no longer has
jurisdiction to try defendant’s counterclaim as it is now part of the
rehabilitation proceedings before the corporate court concerned, the
assertions in the Motion for Reconsiderations (sic) will no longer
stand.
On the other hand, the plaintiff did not file a Motion for
Reconsideration of the same Order, dismissing the complaint for
failure to prosecute, within the reglementary period. Hence, the same
has attained finality.
Defendant alleged that the dismissal of the case resulted in the
dissolution of the writ. Nonetheless, the Court deems it proper to
suspend the resolution of the return of the subject vehicle. In this case,
the subject vehicle was turned over to plaintiff by virtue of a writ of
replevin validly issued, the latter having sufficiently shown that it is
the absolute/registered owner thereof. This was not denied by the
defendant. Plaintiff’s ownership includes its right of possession. The
case has been dismissed without a decision on the merits having been
rendered. Thus, to order the return of the vehicle to one who is yet to
prove his right of possession would not be proper.
Accordingly, the Motion for Partial Reconsideration is denied. 12
On 8 June 2006, Young filed a motion to resolve his omnibus motion.
In an Order dated 5 July 2006, the trial court denied the motion to
resolve, to wit:
In the instant case, the Court suspended the resolution of the return
of the vehicle to defendant Roland Young. It should be noted that the
writ of replevin was validly issued in favor of the plaintiff and that it
has sufficiently established ownership over the subject vehicle which
includes its right to possess. On the other hand, the case (Olympia
International vs. Court of Appeals) cited by defendant finds no
application to this case, inasmuch as in the former the Court has not
rendered judgment affirming plaintiff’s (Olympia) right of
possession on the property seized. Moreover, the Court, in the Order
dated April 28, 2005, has already denied defendant’s counterclaim
upon which he based his right of possession on the ground of lack of
jurisdiction. Accordingly, the Court reiterates its previous ruling that
to order the return of the subject vehicle to defendant Young, who is
yet to prove his right of possession before the Rehabilitation Court
would not be proper.
WHEREFORE, there being no new and substantial arguments raised,
the Motion to Resolve is denied.13
Young filed a petition for certiorari and mandamus with the Court of
Appeals seeking to annul the trial court’s Orders of 24 March 2006
and 5 July 2006.
The Court of Appeals’ Ruling
In his petition before the Court of Appeals, Young argued mainly that
the trial court committed grave abuse of discretion amounting to lack
or excess of jurisdiction in (1) not directing the return of the subject SO ORDERED.15
vehicle to him; (2) refusing to hold a hearing to determine the
damages to be recovered against the replevin bond; and (3)
Advent filed a motion for reconsideration, which was denied by the
dismissing his counterclaim.
Court of Appeals in a Resolution dated 15 May 2008.
The Court of Appeals ruled in favor of Young and annulled the
assailed rulings of the trial court. The Court of Appeals held:
It is noteworthy that the case was dismissed by the court a quo for
failure of Advent to prosecute the same. Upon dismissal of the case,
the writ of seizure issued as an incident of the main action (for
replevin) became functus officio and should have been recalled or
lifted. Since there was no adjudication on the merits of the case, the
issue of who between Advent and petitioner has the better right to
possess the subject car was not determined. As such, the parties
should be restored to their status immediately before the institution
of the case.
The Supreme Court’s ruling in Olympia International, Inc. vs. Court of
Appeals (supra) squarely applies to the present controversy, to wit:
"Indeed, logic and equity demand that the writ of replevin be
cancelled. Being provisional and ancillary in character, its existence
and efficacy depended on the outcome of the case. The case having
been dismissed, so must the writ’s existence and efficacy be
dissolved. To let the writ stand even after the dismissal of the case
would be adjudging Olympia as the prevailing party, when precisely,
no decision on the merits had been rendered. The case having been
dismissed, it is as if no case was filed at all and the parties must revert
to their status before the litigation."
Indeed, as an eminent commentator on Remedial Law expounds:
"The plaintiff who obtains possession of the personal property by a
writ of replevin does not acquire absolute title thereto, nor does the
defendant acquire such title by rebonding the property, as they only
hold the property subject to the final judgment in the action." (I
Regalado, Remedial Law Compendium, Eighth Revised Edition, p.
686)
Reversion of the parties to the status quo ante is the consequence ex
proprio vigore of the dismissal of the case. Thus, in Laureano vs. Court
of Appeals (324 SCRA 414), it was held:
"(A)lthough the commencement of a civil action stops the running of
the statute of prescription or limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in exactly the same
position as though no action had been commenced at all."
By the same token, return of the subject car to petitioner pending
rehabilitation of Advent does not constitute enforcement of claims
against it, much more adjudication on the merits of petitioner’s
counterclaim. In other words, an order for such return is not a
violation of the stay order, which was issued by the rehabilitation
court on August 27, 2001. x x x
Corollarily, petitioner’s claim against the replevin bond has no
connection at all with the rehabilitation proceedings. The claim is not
against the insolvent debtor (Advent) but against bondsman,
Stronghold. Such claim is expressly authorized by Sec. 10, Rule 60, in
relation to Sec. 20, Rule 57, id., x x x 14
The dispositive portion of the Court of Appeals’ decision reads:
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED. The orders of the Regional Trial Court dated March 24,
2006 and July 5, 2006 are ANNULLED and SET ASIDE in so far as
they suspended resolution of petitioner’s motion for, and/or
disallowed, the return of the subject car to petitioner. Accordingly,
respondent Advent Capital and Finance Corporation is directed to
return the subject car to petitioner.
The Regional Trial Court of Makati City (Branch 147) is directed to
conduct a hearing on, and determine, petitioner’s claim for damages
against the replevin bond posted by Stronghold Insurance Co.
The Issue
The main issue in this case is whether the Court of Appeals
committed reversible error in (1) directing the return of the seized car
to Young; and (2) ordering the trial court to set a hearing for the
determination of damages against the replevin bond.
The Court’s Ruling
The petition is partially meritorious.
On returning the seized vehicle to Young
We agree with the Court of Appeals in directing the trial court to
return the seized car to Young since this is the necessary consequence
of the dismissal of the replevin case for failure to prosecute without
prejudice. Upon the dismissal of the replevin case for failure to
prosecute, the writ of seizure, which is merely ancillary in nature,
became functus officio and should have been lifted. There was no
adjudication on the merits, which means that there was no
determination of the issue who has the better right to possess the in the same case that is the main action,21 and with the court having
subject car. Advent cannot therefore retain possession of the subject jurisdiction over the case at the time of the application. 22
car considering that it was not adjudged as the prevailing party
entitled to the remedy of replevin. In this case, there was no application for damages against Stronghold
resulting from the issuance of the writ of seizure before the finality of
Contrary to Advent’s view, Olympia International Inc. v. Court of the dismissal of the complaint for failure to prosecute. It appears that
Appeals16 applies to this case. The dismissal of the replevin case for Young filed his omnibus motion claiming damages against
failure to prosecute results in the restoration of the parties’ status Stronghold after the dismissal order issued by the trial court on 28
prior to litigation, as if no complaint was filed at all. To let the writ of April 2005 had attained finality. While Young filed a motion for
seizure stand after the dismissal of the complaint would be adjudging partial reconsideration on 10 June 2005, it only concerned the
Advent as the prevailing party, when precisely no decision on the dismissal of his counterclaim, without any claim for damages against
merits had been rendered. Accordingly, the parties must be reverted the replevin bond. It was only on 8 July 2005 that Young filed an
to their status quo ante. Since Young possessed the subject car before omnibus motion seeking damages against the replevin bond, after the
the filing of the replevin case, the same must be returned to him, as if dismissal order had already become final for Advent’s non-appeal of
no complaint was filed at all. such order. In fact, in his omnibus motion, Young stressed the finality
of the dismissal order.23 Thus, Young is barred from claiming
Advent’s contention that returning the subject car to Young would damages against the replevin bond.
constitute a violation of the stay order issued by the rehabilitation
court is untenable. As the Court of Appeals correctly concluded, In Jao v. Royal Financing Corporation,24 the Court held that defendant
returning the seized vehicle to Young is not an enforcement of a claim therein was precluded from claiming damages against the surety
against Advent which must be suspended by virtue of the stay order bond since defendant failed to file the application for damages before
issued by the rehabilitation court pursuant to Section 6 of the Interim the termination of the case, thus:
Rules on Corporate Rehabilitation (Interim Rules).17 The issue in the
replevin case is who has better right to possession of the car, and it The dismissal of the case filed by the plaintiffs-appellees on July 11,
was Advent that claimed a better right in filing the replevin case 1959, had become final and executory before the defendant-appellee
against Young. In defense, Young claimed a better right to possession corporation filed its motion for judgment on the bond on September
of the car arising from Advent’s car plan to its executives, which he 7, 1959. In the order of the trial court, dismissing the complaint, there
asserts entitles him to offset the value of the car against the proceeds appears no pronouncement whatsoever against the surety bond. The
of his retirement pay and stock option plan. appellee-corporation failed to file its proper application for damages
prior to the termination of the case against it. It is barred to do so now.
Young cannot collect a money "claim" against Advent within the The prevailing party, if such would be the proper term for the
contemplation of the Interim Rules. The term "claim" has been appellee-corporation, having failed to file its application for damages
construed to refer to debts or demands of a pecuniary nature, or the against the bond prior to the entry of final judgment, the bondsman-
assertion to have money paid by the company under rehabilitation to appellant is relieved of further liability thereunder.
its creditors.18 In the replevin case, Young cannot demand that
Advent pay him money because such payment, even if valid, has Since Young is time-barred from claiming damages against the
been "stayed" by order of the rehabilitation court. However, in the replevin bond, the dismissal order having attained finality after the
replevin case, Young can raise Advent’s car plan, coupled with his application for damages, the Court of Appeals erred in ordering the
retirement pay and stock option plan, as giving him a better right to trial court to set a hearing for the determination of damages against
possession of the car. To repeat, Young is entitled to recover the the replevin bond.
subject car as a necessary consequence of the dismissal of the replevin
case for failure to prosecute without prejudice.
WHEREFORE, the Court GRANTS the petition IN PART. The Court
SETS ASIDE the portion in the assailed decision of the Court of
On the damages against the replevin bond Appeals in CA-G.R. SP No. 96266 ordering the trial court to set a
hearing for the determination of damages against the replevin bond.
Section 10, Rule 60 of the Rules of Court19 governs claims for damages
on account of improper or irregular seizure in replevin cases. It SO ORDERED.
provides that in replevin cases, as in receivership and injunction
cases, the damages to be awarded upon the bond "shall be claimed,
G.R. No. 139941 January 19, 2001
ascertained, and granted" in accordance with Section 20 of Rule 57
VICENTE B. CHUIDIAN, petitioner,
which reads
vs. SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF
THE PHILIPPINES, respondents.
Sec. 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 The instant petition arises from transactions that were entered into by
before appeal is perfected or before the judgment becomes executory, the government in the penultimate days of the Marcos
with due notice to the attaching obligee or his surety or sureties, administration. Petitioner Vicente B. Chuidian was alleged to be a
setting forth the facts showing his right to damages and the amount dummy or nominee of Ferdinand and Imelda Marcos in several
thereof. Such damages may be awarded only after proper hearing companies said to have been illegally acquired by the Marcos
and shall be included in the judgment on the main case. e spouses. As a favored business associate of the Marcoses, Chuidian
allegedly used false pretenses to induce the officers of the Philippine
Export and Foreign Loan Guarantee Corporation
If the judgment of the appellate court be favorable to the party against
(PHILGUARANTEE), the Board of Investments (BOI) and the
whom the attachment was issued, he must claim damages sustained
Central Bank, to facilitate the procurement and issuance of a loan
during the pendency of the appeal by filing an application in the
guarantee in favor of the Asian Reliability Company, Incorporated
appellate court with notice to the party in whose favor the attachment
(ARCI) sometime in September 1980. ARCI, 98% of which was
was issued or his surety or sureties, before the judgment of the
allegedly owned by Chuidian, was granted a loan guarantee of
appellate court becomes executory. The appellate court may allow
Twenty-Five Million U.S. Dollars (US$25,000,000.00).1âwphi1.nêt
the application to be heard and decided by the trial court.

While ARCI represented to Philguarantee that the loan proceeds

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.
The above provision essentially allows the application to be filed at
any time before the judgment becomes executory.20 It should be filed
would be used to establish five inter-related projects in the
Philippines, Chuidian reneged on the approved business plan and
instead invested the proceeds of the loan in corporations operating in
the United States, more particularly Dynetics, Incorporated and
Interlek, Incorporated. Although ARCI had received the proceeds of
the loan guaranteed by Philguarantee, the former defaulted in the
payments thereof, compelling Philguarantee to undertake payments
for the same. Consequently, in June 1985, Philguarantee sued
Chuidian before the Santa Clara County Superior Court, 1 charging Clara Superior Court, alleging that PNB was excused from making
that in violation of the terms of the loan, Chuidian not only defaulted payments on the L/C since the settlement was void due to illegality,
in payment, but also misused the funds by investing them in Silicon duress and fraud.9
Valley corporations and using them for his personal benefit.
The Federal Court rendered judgment ruling: (1) in favor of PNB
For his part, Chuidian claimed that he himself was a victim of the excusing the said bank from making payment on the L/C; and (2) in
systematic plunder perpetrated by the Marcoses as he was the true Chuidian's favor by denying intervenor Philguarantee's action to set
owner of these companies, and that he had in fact instituted an action aside the settlement agreement.10
before the Federal Courts of the United States to recover the
companies which the Marcoses had illegally wrested from him. 2 Meanwhile, on February 27, 1987, a Deed of Transfer 11 was executed
between then Secretary of Finance Jaime V. Ongpin and then PNB
On November 27, 1985, or three (3) months before the successful President Edgardo B. Espiritu, to facilitate the rehabilitation of PNB,
people's revolt that toppled the Marcos dictatorship, Philguarantee among others, as part of the government's economic recovery
entered into a compromise agreement with Chuidian whereby program. The said Deed of Transfer provided for the transfer to the
petitioner Chuidian shall assign and surrender title to all his government of certain assets of PNB in exchange for which the
companies in favor of the Philippine government. In return, government would assume certain liabilities of PNB.12 Among those
Philguarantee shall absolve Chuidian from all civil and criminal liabilities which the government assumed were unused commercial
liability, and in so doing, desist from pursuing any suit against L/C's and Deferred L/C's, including SSD-005-85 listed under
Chuidian concerning the payments Philguarantee had made on Dynetics, Incorporated in favor of Chuidian in the amount of Four
Chuidian's defaulted loans. Million Four Hundred Thousand Dollars (US$4,400,000.00).13

It was further stipulated that instead of Chuidian reimbursing the
payments made by Philguarantee arising from Chuidian's default,
the Philippine government shall pay Chuidian the amount of Five
Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial
payment of Five Hundred Thousand Dollars (US$500,000.00) was
actually received by Chuidian, as well as succeeding payment of Two
Hundred Thousand Dollars (US$200,000.00). The remaining balance
of Four Million Six Hundred Thousand Dollars (US$4,600,000.00)
was to be paid through an irrevocable Letter of Credit (L/C) from
which Chuidian would draw One Hundred Thousand Dollars
(US$100,000.00) monthly.3 Accordingly, on December 12, 1985, L/C
No. SSD-005-85 was issued for the said amount by the Philippine
National Bank (PNB). Subsequently, Chuidian was able to make two
(2) monthly drawings from said L/C at the Los Angeles branch of the
PNB.4
With the advent of the Aquino administration, the newly-established
Presidential Commission on Good Government (PCGG) exerted
earnest efforts to search and recover money, gold, properties, stocks
and other assets suspected as having been illegally acquired by the
Marcoses, their relatives and cronies.
Petitioner Chuidian was among those whose assets were sequestered
by the PCGG. On May 30, 1986, the PCGG issued a Sequestration
Order5 directing the PNB to place under its custody, for and in behalf While the case was pending, on March 17, 1993, the Republic of the
of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Philippines filed a motion for issuance of a writ of attachment15 over
Chuidian was then residing in the United States, his name was placed the L/C, citing as grounds therefor the following:
in the Department of Foreign Affairs' Hold Order list.6
In the meantime, Philguarantee filed a motion before the Superior
Court of Santa Clara County of California in Civil Case Nos. 575867
and 577697 seeking to vacate the stipulated judgment containing the
settlement between Philguarantee and Chuidian on the grounds that:
(a) Philguarantee was compelled by the Marcos administration to
agree to the terms of the settlement which was highly unfavorable to
Philguarantee and grossly disadvantageous to the government; (b)
Chuidian blackmailed Marcos into pursuing and concluding the
settlement agreement by threatening to expose the fact that the
Marcoses made investments in Chuidian's American enterprises; and
(c) the Aquino administration had ordered Philguarantee not to make
further payments on the L/C to Chuidian. After considering the
factual matters before it, the said court concluded that Philguarantee
"had not carried its burden of showing that the settlement between
the parties should be set aside."7 On appeal, the Sixth Appellate
District of the Court of Appeal of the State of California affirmed the
judgment of the Superior Court of Sta. Clara County denying
Philguarantee's motion to vacate the stipulated judgment based on
the settlement agreement.8
On July 30, 1987, the government filed before the Sandiganbayan
Civil Case No. 0027 against the Marcos spouses, several government
officials who served under the Marcos administration, and a number
of individuals known to be cronies of the Marcoses, including
Chuidian. The complaint sought the reconveyance, reversion,
accounting and restitution of all forms of wealth allegedly procured
illegally and stashed away by the defendants.
In particular, the complaint charged that Chuidian, by himself
and/or in conspiracy with the Marcos spouses, engaged in "devices,
schemes and stratagems" by: (1) forming corporations for the purpose
of hiding and avoiding discovery of illegally obtained assets; (2)
pillaging the coffers of government financial institutions such as the
Philguarantee; and (3) executing the court settlement between
Philguarantee and Chuidian which was grossly disadvantageous to
the government and the Filipino people.
In fine, the PCGG averred that the above-stated acts of Chuidian
committed in unlawful concert with the other defendants constituted
"gross abuse of official position of authority, flagrant breach of public
trust and fiduciary obligations, brazen abuse of right and power,
unjust enrichment, violation of the Constitution and laws" of the
land.14
(1) Chuidian embezzled or fraudulently misapplied the
funds of ARCI acting in a fiduciary capacity, justifying
issuance of the writ under Section 1(b), Rule 57 of the Rules
of Court;
(2) The writ is justified under Section 1(d) of the same rule
as Chuidian is guilty of fraud in contracting the debt or
incurring the obligation upon which the action was brought,
or that he concealed or disposed of the property that is the
subject of the action;
(3) Chuidian has removed or disposed of his property with
the intent of defrauding the plaintiff as justified under
Section 1(c) of Rule 57; and
(4) Chuidian is residing out of the country or one on whom
summons may be served by publication, which justifies the
writ of attachment prayed for under Section 1(e) of the same
rule.

After payment on the L/C was frozen by the PCGG, Chuidian filed
before the United States District Court, Central District of California,
an action against PNB seeking, among others, to compel PNB to pay
the proceeds of the L/C. PNB countered that it cannot be held liable
for a breach of contract under principles of illegality, international
comity and act of state, and thus it is excused from payment of the
L/C. Philguarantee intervened in said action, raising the same issues
and arguments it had earlier raised in the action before the Santa
The Republic also averred that should the action brought by
Chuidian before the U.S. District Court of California to compel
payment of the L/C prosper, inspite of the sequestration of the said
L/C, Chuidian can ask the said foreign court to compel the PNB Los
Angeles branch to pay the proceeds of the L/C. Eventually,
Philguarantee will be made to shoulder the expense resulting in
further damage to the government. Thus, there was an urgent need
for the writ of attachment to place the L/C under the custody of the
Sandiganbayan so the same may be preserved as security for the
satisfaction of judgment in the case before said court.
Chuidian opposed the motion for issuance of the writ of attachment,
contending that:
Accordingly, an order of attachment20 was issued by the
Sandiganbayan on July 19, 1993, ordering the Sandiganbayan Sheriff
to attach PNB L/C No. SSD-005-85 for safekeeping pursuant to the
Rules of Court as security for the satisfaction of judgment in
Sandiganbayan Civil Case No. 0027.

(1) The plaintiff's affidavit appended to the motion was in
form and substance fatally defective;
(2) Section 1(b) of Rule 57 does not apply since there was no
fiduciary relationship between the plaintiff and Chuidian;
(3) While Chuidian does not admit fraud on his part, if ever
there was breach of contract, such fraud must be present at
the time the contract is entered into;
On August 11, 1997, or almost four (4) years after the issuance of the
order of attachment, Chuidian filed a motion to lift the attachment
based on the following grounds:
First, he had returned to the Philippines; hence, the Sandiganbayan's
"most potent ground" for the issuance of the writ of preliminary
attachment no longer existed. Since his absence in the past was the
very foundation of the Sandiganbayan's writ of preliminary
attachment, his presence in the country warrants the immediate
lifting thereof.

(4) Chuidian has not removed or disposed of his property in

Second, there was no evidence at all of initial fraud or subsequent
the absence of any intent to defraud plaintiff;
concealment except for the affidavit submitted by the PCGG
Chairman citing mere "belief and information" and "not on
(5) Chuidian's absence from the country does not knowledge of the facts." Moreover, this statement is hearsay since the
necessarily make him a non-resident; and PCGG Chairman was not a witness to the litigated incidents, was
never presented as a witness by the Republic and thus was not subject
(6) Service of summons by publication cannot be used to to cross-examination.
justify the issuance of the writ since Chuidian had already
submitted to the jurisdiction of the Court by way of a motion Third, Chuidian denies that he ever disposed of his assets to defraud
to lift the freeze order filed through his counsel. the Republic, and there is nothing in the records that support the
Sandiganbayan's erroneous conclusion on the matter. Fourth,
On July 14, 1993, the Sandiganbayan issued a Resolution ordering the Chuidian belied the allegation that he was also a defendant in "other
issuance of a writ of attachment against L/C No. SSD-005-85 as related criminal action," for in fact, he had "never been a defendant in
security for the satisfaction of judgment.16 The Sandiganbayan's any prosecution of any sort in the Philippines."21 Moreover, he could
ruling was based on its disquisition of the five points of contention not have personally appeared in any other action because he had
raised by the parties. On the first issue, the Sandiganbayan found that been deprived of his right to a travel document by the government.
although no separate affidavit was attached to the motion, the motion
itself contained all the requisites of an affidavit, and the verification Fifth, the preliminary attachment was, in the first place, unwarranted
thereof is deemed a substantial compliance of Rule 57, Section 3 of because he was not "guilty of fraud in contracting the debt or
the Rules of Court. incurring the obligation". In fact, the L/C was not a product of
fraudulent transactions, but was the result of a US Court-approved
Anent the second contention, the Sandiganbayan ruled that there was settlement. Although he was accused of employing blackmail tactics
no fiduciary relationship existing between Chuidian and the to procure the settlement, the California Supreme Court ruled
Republic, but only between Chuidian and ARCI. Since the Republic otherwise. And in relation thereto, he cites as a sixth ground the fact
is not privy to the fiduciary relationship between Chuidian and that all these allegations of fraud and wrongdoing had already been
ARCI, it cannot invoke Section 1(b) of Rule 57. dealt with in actions before the State and Federal Courts of California.
While it cannot technically be considered as forum shopping, it is
On the third issue of fraud on the part of Chuidian in contracting the nevertheless a "form of suit multiplicity over the same issues, parties
loan, or in concealing or disposing of the subject property, the and subject matter." These foreign judgments constitute res judicata
22

Sandiganbayan held that there was a prima facie case of fraud which warrant the dismissal of the case itself.
committed by Chuidian, justifying the issuance of the writ of
attachment. The Sandiganbayan also adopted the Republic's position Chuidian further contends that should the attachment be allowed to
that since it was compelled to pay, through Philguarantee, the bank continue, he will be deprived of his property without due process.
loans taken out by Chuidian, the proceeds of which were The L/C was payment to Chuidian in exchange for the assets he
fraudulently diverted, it is entitled to the issuance of the writ of turned over to the Republic pursuant to the terms of the settlement
attachment to protect its rights as creditor. in Case No. 575867. Said assets, however, had already been sold by
the Republic and cannot be returned to Chuidian should the
Assuming that there is truth to the government's allegation that government succeed in depriving him of the proceeds of the L/C.
Chuidian has removed or disposed of his property with the intent to Since said assets were disposed of without his or the Sandiganbayan's
defraud, the Sandiganbayan held that the writ of attachment is consent, it is the Republic who is fraudulently disposing of assets.
warranted, applying Section 1(e) of Rule 57. Besides, the Rules
provide for sufficient security should the owner of the property Finally, Chuidian stressed that throughout the four (4) years that the
attached suffer damage or prejudice caused by the attachment.17 preliminary attachment had been in effect, the government had not
set the case for hearing. Under Rule 17, Section 3, the case itself
Chuidian's absence from the country was considered by the should be dismissed for laches owing to the Republic's failure to
Sandiganbayan to be "the most potent insofar as the relief being prosecute its action for an unreasonable length of time. Accordingly,
sought is concerned."18 Taking judicial notice of the admitted fact that the preliminary attachment, being only a temporary or ancillary
Chuidian was residing outside of the country, the Sandiganbayan remedy, must be lifted and the PNB ordered to immediately pay the
observed that: proceeds of the L/C to Chuidian.

"x x x no explanation whatsoever was given by him as to his absence Subsequently, on August 20, 1997, Chuidian filed a motion to require
from the country, or as to his homecoming plans in the future. It may the Republic to deposit the L/C in an interest bearing account. 23
be added, moreover, that he has no definite or clearcut plan to returnAnnex "D"; Rollo, pp. 77-79.23 He pointed out to the Sandiganbayan
to the country at this juncture – given the manner by which he has that the face amount of the L/C had, since its attachment, become
submitted himself to the jurisdiction of the court."19 fully demandable and payable. However, since the amount is just
lying dormant in the PNB, without earning any interest, he proposed
that it would be to the benefit of all if the Sandiganbayan requires
Thus, the Sandiganbayan ruled that even if Chuidian is one who
PNB to deposit the full amount to a Sandiganbayan trust account at
ordinarily resides in the Philippines, but is temporarily living
any bank in order to earn interest while awaiting judgment of the
outside, he is still subject to the provisional remedy of attachment.
action.
The Republic opposed Chuidian's motion to lift attachment, alleging
that Chuidian's absence was not the only ground for the attachment
and, therefore, his belated appearance before the Sandiganbayan is
not a sufficient reason to lift the attachment. Moreover, allowing the
foreign judgment as a basis for the lifting of the attachment would
essentially amount to an abdication of the jurisdiction of the
Sandiganbayan to hear and decide the ill gotten wealth cases lodged
before it in deference to the judgment of foreign courts.
belated presence in the Philippines cannot be invoked to secure the
lifting of attachment. The rule is specific that it applies to a party who
is about to depart from the Philippines with intent to defraud his
creditors. Chuidian's stay in the country is uncertain and he may
leave at will because he holds a foreign passport; and (3) Chuidian's
other ground, sufficiency of former PCGG Chairman Gunigundo's
verification of the complaint, has been met fairly and squarely in the
Resolution of July 14, 1993.28

In a Resolution promulgated on November 13, 1998, the
Sandiganbayan denied Chuidian's motion to lift attachment. 24
On the same day, the Sandiganbayan issued another Resolution
denying Chuidian's motion to require deposit of the attached L/C in
an interest bearing account.25
In a motion seeking a reconsideration of the first resolution, Chuidian
assailed the Sandiganbayan's finding that the issues raised in his
motion to lift attachment had already been dealt with in the earlier
resolution dated July 14, 1993 granting the application for the writ of
preliminary attachment based on the following grounds:
Hence, the instant petition for certiorari contending that the
respondent Sandiganbayan committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it ruled that:
1) Most of the issues raised in the motion to lift attachment
had been substantially addressed in the previous
resolutions dated July 14, 1993 and August 26, 1998, while
the rest were of no imperative relevance as to affect the
Sandiganbayan's disposition; and
2) PNB was relieved of the obligation to pay on its own L/C
by virtue of Presidential Proclamation No. 50.

First, Chuidian was out of the country in 1993, but is now presently The Rules of Court specifically provide for the remedies of a
residing in the country. defendant whose property or asset has been attached. As has been
consistently ruled by this Court, the determination of the existence of
Second, the Sandiganbayan could not have known then that his grounds to discharge a writ of attachment rests in the sound
absence was due to the non-renewal of his passport at the instance of discretion of the lower courts.29
the PCGG. Neither was it revealed that the Republic had already
disposed of Chuidian's assets ceded to the Republic in exchange for The question in this case is: What can the herein petitioner do to
the L/C. The foreign judgment was not an issue then because at that quash the attachment of the L/C? There are two courses of action
time, said judgment had not yet been issued and much less final. available to the petitioner:
Furthermore, the authority of the PCGG Commissioner to subscribe
as a knowledgeable witness relative to the issuance of the writ of First. To file a counterbond in accordance with Rule 57, Section 12,
preliminary attachment was raised for the first time in the motion to which provides:
lift the attachment. Finally, the issue of laches could not have been
raised then because it was the Republic's subsequent neglect or
SEC. 12. Discharge of attachment upon giving counterbond. – At anytime
failure to prosecute despite the passing of the years that gave rise to
after an order of attachment has been granted, the party whose
laches.26
property has been attached, or the person appearing on his behalf,
may, upon reasonable notice to the applicant, apply to the judge who
Chuidian also moved for a reconsideration of the Sandiganbayan granted the order, or to the judge of the court in which the action is
resolution denying the motion to require deposit of the L/C into an pending, for an order discharging the attachment wholly or in part
interest bearing account. He argued that contrary to the on the security given. The judge shall, after hearing, order the
Sandiganbayan's pronouncement, allowing the deposit would not discharge of the attachment if a cash deposit is made, or a
amount to a virtual recognition of his right over the L/C, for he is not counterbond executed to the attaching creditor is filed, on behalf of
asking for payment but simply requesting that it be deposited in an the adverse party, with the clerk or judge of the court where the
account under the control of the Sandiganbayan. He further stressed application is made, in an amount equal to the value of the property
that the Sandiganbayan abdicated its bounden duty to rule on an attached as determined by the judge, to secure the payment of any
issue when it found "that his motion will render nugatory the judgment that the attaching creditor may recover in the action. Upon
purpose of sequestration and freeze orders over the L/C." the filing of such counter-bond, copy thereof shall forthwith be
Considering that his assets had already been sold by the Republic, he served on the attaching creditor or his lawyer. Upon the discharge of
claimed that the Sandiganbayan's refusal to exercise its fiduciary an attachment in accordance with the provisions of this section the
duty over attached assets will cause him irreparable injury. Lastly, property attached, or the proceeds of any sale thereof, shall be
the Sandiganbayan's position that Chuidian was not the owner but a delivered to the party making the deposit or giving the counter-bond,
mere payee-beneficiary of the L/C issued in his favor negates or the person appearing on his behalf, the deposit or counter-bond
overwhelming jurisprudence on the Negotiable Instruments Law, aforesaid standing in place of the property so released. Should such
while at the same time obliterating his rights of ownership under the counterbond for any reason be found to be, or become, insufficient,
Civil Code.27 and the party furnishing the same fail to file an additional counter-
bond, the attaching creditor may apply for a new order of
On July 13, 1999, the Sandiganbayan gave due course to Chuidian's attachment.1âwphi1.nêt
plea for the attached L/C to be deposited in an interest-bearing
account, on the ground that it will redound to the benefit of both or
parties.
Second. To quash the attachment on the ground that it was
The Sandiganbayan declared the national government as the irregularly or improvidently issued, as provided for in Section 13 of
principal obligor of the L/C even though the liability remained in the the same Rule:
books of the PNB for accounting and monitoring purposes.
SEC. 13. Discharge of attachment for improper or irregular issuance. - The
The Sandiganbayan, however, denied Chuidian's motion for party whose property has been attached may also, at any time either
reconsideration of the denial of his motion to lift attachment, agreeing before or after the release of the attached property, or before any
in full with the government's apriorisms that: attachment shall have been actually levied, upon reasonable notice to
the attaching creditor, apply to the judge who granted the order, or
x x x (1) it is a matter of record that the Court granted the application to the judge of the court in which the action is pending, for an order
for writ of attachment upon grounds other than defendant's absence to discharge the attachment on the ground that the same was
in the Philippine territory. In its Resolution dated July 14, 1993, the improperly or irregularly issued. If the motion be made on affidavits
Court found a prima facie case of fraud committed by defendant on the part of the party whose property has been attached, but not
Chuidian, and that defendant has recovered or disposed of his otherwise, the attaching creditor may oppose the same by counter-
property with the intent of defrauding plaintiff; (2) Chuidian's affidavits or other evidence in addition to that on which the
attachment was made. After hearing, the judge shall order the counsel filed a series of challenges to the freeze and sequestration
discharge of the attachment if it appears that it was improperly or orders, which challenges were unsuccessful as the orders were found
irregularly issued and the defect is not cured forthwith. valid by the Philippine Supreme Court. The freeze and sequestration
orders are presently in effect. Thus, under the PCGG order and
It would appear that petitioner chose the latter because the grounds Executive Orders Nos. 1 and 2, performance by PNB would be illegal
he raised assail the propriety of the issuance of the writ of attachment. under Philippine Law. Therefore PNB is excused from performance
By his own admission, however, he repeatedly acknowledged that of the L/C agreement as long as the freeze and sequestration orders
his justifications to warrant the lifting of the attachment are facts or remain in effect. (Underscoring ours)
events that came to light or took place after the writ of attachment
had already been implemented. xxx xxx xxx

More particularly, petitioner emphasized that four (4) years after the Chuidian argues that the fact that the L/C was issued pursuant to a
writ was issued, he had returned to the Philippines. Yet while he settlement in California, that the negotiations for which occurred in
noted that he would have returned earlier but for the cancellation of California, and that two of the payments were made at PNB/LA,
his passport by the PCGG, he was not barred from returning to the compels the conclusion that the act of prohibiting payment of the L/C
Philippines. Then he informed the Sandiganbayan that while the case occurred in Los Angeles. However, the majority of the evidence and
against him was pending, but after the attachment had already been Tchacosh and Sabbatino compel the opposite conclusion. The L/C
executed, the government lost two (2) cases for fraud lodged against was issued in Manila, such was done at the request of a Philippine
him before the U.S. Courts, thus invoking res judicata. Next, he also government instrumentality for the benefit of a Philippine citizen, the
pointed out that the government is estopped from pursuing the case L/C was to be performed in the Philippines, all significant events
against him for failing to prosecute for the number of years that it had
relating to the issuance and implementation of the L/C occurred in
been pending litigation. the Philippines, the L/C agreement provided that the L/C was to be
construed according to laws of the Philippines, and the Philippine
It is clear that these grounds have nothing to do with the issuance of government certainly has an interest in preventing the L/C from
the writ of attachment. Much less do they attack the issuance of the being remitted in that it would be the release of funds that are
writ at that time as improper or irregular. And yet, the rule potentially illgotten gains. Accordingly, the Court finds that the
contemplates that the defect must be in the very issuance of the PCGG orders are acts of state that must be respected by this Court,
attachment writ. For instance, the attachment may be discharged and thus PNB is excused from making payment on the L/C as long
under Section 13 of Rule 57 when it is proven that the allegations of as the freeze and sequestration orders remain in effect.
33

the complaint were deceptively framed,30 or when the complaint fails (Underscoring ours)
to state a cause of action.31 Supervening events which may or may not
justify the discharge of the writ are not within the purview of this Petitioner's own evidence strengthens the government's position that
particular rule. the L/C is under the jurisdiction of the Philippine government and
that the U.S. Courts recognize the authority of the Republic to
In the instant case, there is no showing that the issuance of the writ sequester and freeze said L/C. Hence, the foreign judgments relied
of attachment was attended by impropriety or irregularity. Apart upon by petitioner do not constitute a bar to the Republic's action to
from seeking a reconsideration of the resolution granting the recover whatever alleged ill-gotten wealth petitioner may have
application for the writ, petitioner no longer questioned the writ acquired.
itself. For four (4) long years he kept silent and did not exercise any
of the remedies available to a defendant whose property or asset has Petitioner may argue, albeit belatedly, that he also raised the issue
been attached. It is rather too late in the day for petitioner to question that there was no evidence of fraud on record other than the affidavit
the propriety of the issuance of the writ. of PCGG Chairman Gunigundo. This issue of fraud, however,
touches on the very merits of the main case which accuses petitioner
Petitioner also makes capital of the two foreign judgments which he of committing fraudulent acts in his dealings with the government.
claims warrant the application of the principle of res judicata. The first Moreover, this alleged fraud was one of the grounds for the
judgment, in Civil Case Nos. 575867 and 577697 brought by application of the writ, and the Sandiganbayan granted said
Philguarantee before the Santa Clara Country Superior Court, denied application after it found a prima facie case of fraud committed by
Philguarantee's prayer to set aside the stipulated judgment wherein petitioner.
Philguarantee and Chuidian agreed on the subject attached L/C. On
March 14, 1990, the Court of Appeal of the State of California affirmed In fine, fraud was not only one of the grounds for the issuance of the
the Superior Court's judgment. The said judgment became the subject preliminary attachment, it was at the same time the government's
of a petition for review by the California Supreme Court. There is no cause of action in the main case.
showing, however, of any final judgment by the California Supreme
Court. The records, including petitioner's pleadings, are bereft of any We have uniformly held that:
evidence to show that there is a final foreign judgment which the
Philippine courts must defer to. Hence, res judicata finds no
x x x when the preliminary attachment is issued upon a ground which
application in this instance because it is a requisite that the former
is at the same time the applicant's cause of action; e.g., "an action for
judgment or order must be final. 32
money or property embezzled or fraudulently misapplied or
converted to his own use by a public officer, or an officer of a
Second, petitioner cites the judgment of the United States District corporation, or an attorney, factor, broker, agent, or clerk, in the
Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian course of his employment as such, or by any other person in a
against PNB to compel the latter to pay the L/C. The said Court's fiduciary capacity, or for a willful violation of duty," or "an action
judgment, while it ruled in favor of petitioner on the matter of against a party who has been guilty of fraud in contracting the debt
Philguarantee's action-in-intervention to set aside the settlement or incurring the obligation upon which the action is brought," the
agreement, also ruled in favor of PNB, to wit: defendant is not allowed to file a motion to dissolve the attachment
under Section 13 of Rule 57 by offering to show the falsity of the
Under Executive Order No. 1, the PCGG is vested by the Philippine factual averments in the plaintiff's application and affidavits on
President with the power to enforce its directives and orders by which the writ was based – and consequently that the writ based
contempt proceedings. Under Executive Order No. 2, the PCGG is thereon had been improperly or irregularly issued – the reason being
empowered to freeze any, and all assets, funds and property illegally that the hearing on such a motion for dissolution of the writ would
acquired by former President Marcos or his close friends and be tantamount to a trial of the merits of the action. In other words, the
business associates. merits of the action would be ventilated at a mere hearing of a
motion, instead of at the regular trial.34 (Underscoring ours)
On March 11, 1986, PNB/Manila received an order from the PCGG
ordering PNB to freeze any further drawings on the L/C. The freeze Thus, this Court has time and again ruled that the merits of the action
order has remained in effect and was followed by a sequestration in which a writ of preliminary attachment has been issued are not
order issued by the PCGG. Subsequently, Chuidian's Philippine triable on a motion for dissolution of the attachment, otherwise an
applicant for the lifting of the writ could force a trial of the merits of
Accordingly, any substitution of debtor must be with the consent of
the case on a mere motion.35 the creditor, whose consent thereto cannot just be presumed. Even
though Presidential Proclamation No. 50 can be considered an
It is not the Republic's fault that the litigation has been protracted. "insuperable cause", it does not necessarily make the contracts and
There is as yet no evidence of fraud on the part of petitioner. obligations affected thereby exceptions to the above-quoted law, such
Petitioner is only one of the twenty-three (23) defendants in the main that the substitution of debtor can be validly made even without the
action. As such, the litigation would take longer than most cases. consent of the creditor. Presidential Proclamation No. 50 was not
Petitioner cannot invoke this delay in the proceedings as an excuse intended to set aside laws that govern the very lifeblood of the
for not seeking the proper recourse in having the writ of attachment nation's commerce and economy. In fact, the Deed of Transfer that
lifted in due time. If ever laches set in, it was petitioner, not the was executed between PNB and the government pursuant to the said
government, who failed to take action within a reasonable time Presidential Proclamation specifically stated that it shall be deemed
period. Challenging the issuance of the writ of attachment four (4) effective only upon compliance with several conditions, one of which
years after its implementation showed petitioner's apparent requires that:
indifference towards the proceedings before the Sandiganbayan.
(b) the BANK shall have secured such governmental and creditors'
In sum, petitioner has failed to convince this Court that the approvals as may be necessary to establish the consummation,
Sandiganbayan gravely abused its discretion in a whimsical, legality and enforceability of the transactions contemplated hereby."
capricious and arbitrary manner. There are no compelling reasons to
warrant the immediate lifting of the attachment even as the main case The validity of this Deed of Transfer is not disputed. Thus, PNB is
is still pending. On the other hand, allowing the discharge of the estopped from denying its liability thereunder considering that
attachment at this stage of the proceedings would put in jeopardy the neither the PNB nor the government bothered to secure petitioner's
right of the attaching party to realize upon the relief sought and consent to the substitution of debtors. We are not unmindful that any
expected to be granted in the main or principal action. It would have effort to secure petitioner's consent at that time would, in effect, be
the effect of prejudging the main case. deemed an admission that the L/C is valid and binding. Even the
Sandiganbayan found that: 36 Sta. Ines Melale Forest Products Corp.
The attachment is a mere provisional remedy to ensure the safety and v. Macaraig, Jr., 299 SCRA 491, 515 (1998).
preservation of the thing attached until the plaintiff can, by
appropriate proceedings, obtain a judgment and have such property x x x Movant has basis in pointing out that inasmuch as the L/C was
applied to its satisfaction.36 To discharge the attachment at this stage issued in his favor, he is presumed to be the lawful payee-beneficiary
of the proceedings would render inutile any favorable judgment of the L/C until such time that the plaintiff successfully proves that
should the government prevail in the principal action against said L/C is ill-gotten and he has no right over the same.42
petitioner. Thus, the Sandiganbayan, in issuing the questioned
resolutions, which are interlocutory in nature, committed no grave In Republic v. Sandiganbayan,43 we held that the provisional remedies,
abuse of discretion amounting to lack or excess of jurisdiction. As such as freeze orders and sequestration, were not "meant to deprive
long as the Sandiganbayan acted within its jurisdiction, any alleged the owner or possessor of his title or any right to the property
errors committed in the exercise of its jurisdiction will amount to sequestered, frozen or taken over and vest it in the sequestering
nothing more than errors of judgment which are reviewable by agency, the Government or other person."
timely appeal and not by special civil action of certiorari. 37
Thus, until such time that the government is able to successfully
Moreover, we have held that when the writ of attachment is issued prove that petitioner has no right to claim the proceeds of the L/C,
upon a ground which is at the same time the applicant's cause of he is deemed to be the lawful payee-beneficiary of said L/C, for
action, the only other way the writ can be lifted or dissolved is by a which any substitution of debtor requires his consent. The
counterbond, in accordance with Section 12 of the same rule. 38 This Sandiganbayan thus erred in relieving PNB of its liability as the
recourse, however, was not availed of by petitioner, as noted by the original debtor.
Solicitor General in his comment.39
WHEREFORE, in view of all the foregoing, the petition is
To reiterate, there are only two ways of quashing a writ of DISMISSED. The Resolutions of the Sandiganbayan dated November
attachment: (a) by filing a counterbond immediately; or (b) by 6, 1998 and July 2, 1999 are AFFIRMED. The PNB is DIRECTED to
moving to quash on the ground of improper and irregular issuance.40 remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-
These grounds for the dissolution of an attachment are fixed in Rule 005-85 in the amount of U.S. $4.4 million within fifteen (15) days from
57 of the Rules of Court and the power of the Court to dissolve an notice hereof, the same to be placed under special time deposit with
attachment is circumscribed by the grounds specified therein.41 the Land Bank of the Philippines, for the account of Sandiganbayan
Petitioner's motion to lift attachment failed to demonstrate any in escrow for the person or persons, natural or juridical, who shall
infirmity or defect in the issuance of the writ of attachment; neither eventually be adjudged lawfully entitled thereto, the same to earn
did he file a counterbond. interest at the current legal bank rates. The principal and its interest
shall remain in said account until ordered released by the Court in
Finally, we come to the matter of depositing the Letter of Credit in an accordance with law.1âwphi1.nêt No costs. SO ORDERED.
interest-bearing account. We agree with the Sandiganbayan that any
interest that the proceeds of the L/C may earn while the case is being G.R. No. 193572
litigated would redound to the benefit of whichever party will TSUNEISHI HEAVY INDUSTRIES (CEBU), INC., Petitioner
prevail, the Philippine government included. Thus, we affirm the vs MIS MARITIME CORPORATION, Respondent
Sandiganbayan's ruling that the proceeds of the L/C should be
deposited in an interest bearing account with the Land Bank of the
Philippines for the account of the Sandiganbayan in escrow until This is a petition for review on certiorari1 under Rule 45 of the Rules
ordered released by the said Court. of Court filed by petitioner Tsuneishi Heavy Industries (Cebu), Inc.
(Tsuneishi) challenging the Decision2 of the Court of Appeals (CA)
in CAG.R. CEB-SP No. 03956 dated October 7, 2009 and its
We find no legal reason, however, to release the PNB from any
Resolution3 dated August 26, 2010. The CA Decision reversed three
liability thereunder. The Deed of Transfer, whereby certain liabilities
Orders of Branch 7 of the Regional Trial Court (RTC), Cebu City
of PNB were transferred to the national government, cannot affect the
dated April 15, 2008, July 7, 2008, and December 11, 2008,
said L/C since there was no valid substitution of debtor. Article 1293
respectively.4 The Resolution denied Tsuneishi's motion for
of the New Civil Code provides:
reconsideration.

Novation which consists in substituting a new debtor in the place of

Respondent MIS Maritime Corporation (MIS) contracted Tsuneishi to
the original one, may be made without the knowledge or against the
dry dock and repair its vessel M/T MIS-1 through an Agreement
will of the latter, but not without the consent of the creditor. Payment
dated March 22, 2006.5 On March 23, 2006, the vessel dry docked in
by the new debtor gives him the rights mentioned in Articles 1236
Tsuneishi's shipyard. Tsuneishi rendered the required services.
and 1237.
However, about a month later and while the vessel was still dry
docked, Tsuneishi conducted an engine test on M/T MIS-1. The and all billings that you (plaintiff) may have against our fleet of
vessel's engine emitted smoke. The parties eventually discovered that vessels which include those registered under Cattleya Shipping
this was caused by a burnt crank journal. The crankpin also showed Panama S.A. (MT White Cattleya) x x x.16
hairline cracks due to defective lubrication or deterioration,
Tsuneishi insists that the damage was not its fault while MIS insists Tsuneishi also filed the Affidavit17 of its employee Lionel T. Bitera
on the contrary. Nevertheless, as an act of good will, Tsuneishi paid (Bitera Affidavit), in accordance with the requirement for the
for the vessel's new engine crankshaft, crankpin, and main bearings.6 issuance of a writ of preliminary attachment under Rule 57 of the
Rules of Court. The Bitera Affidavit stated that Tsuneishi performed
Tsuneishi billed MIS the amount of US$318,571.50 for payment of its dry docking and repair services for M/T MIS-1 and M/T White
repair and dry docking services. MIS refused to pay this amount. Cattleya. It also alleged that after Tsuneishi performed all the services
Instead, it demanded that Tsuneishi pay US$471,462.60 as payment required, MIS and Cattleya refused to pay their obligation. According
for the income that the vessel lost in the six months that it was not to the Bitera Affidavit, this refusal to pay constitutes fraud because:
operational and dry docked at Tsuneishi's shipyard. It also asked that
its claim be set off against the amount billed by Tsuneishi. MIS further d. The breach of the obligation was willful. In the case of M/T MIS-1
insisted that after the set off, Tsuneishi still had the obligation to pay no single installment payment was made despite the fact that the
it the amount of US$152,891.10.7 Tsuneishi rejected MIS' demands. It vessel was accepted fully dry docked and with a brand new engine
delivered the vessel to MIS in September 2006.8 On November 6, crankshaft installed by the yard free of charge to the Owner. MIS
2006, MIS signed an Agreement for Final Price.9 However, despite Maritime Corporation was blaming the yard for the damage
repeated demands, MIS refused to pay Tsuneishi the amount billed sustained by the engine crank shaft on 25 April 2006 when the engine
under their contract. was started in preparation for sea trial. When the incident happened
the dry docking had already been completed and the vessel was
Tsuneishi claims that MIS also caused M/T White Cattleya, a vessel already in anchorage position for sea trial under the management and
owned by Cattleya Shipping Panama S.A. (Cattleya Shipping), to supervisory control of the Master and engineers of the vessel.
stop its payment for the services Tsuneishi rendered for the repair Besides, the incident was not due to the fault of the yard. It was
and dry docking of the vessel.10 eventually traced to dirty lube oil or defective main engine
lubricating oil which was the lookout and responsibility of the
MIS argued that it lost revenues because of the engine damage in its vessel's engineers.
vessel. This damage occurred while the vessel was dry docked and
being serviced at Tsuneishi's yard. MIS insisted that since this arose xxxx
out of Tsuneishi's negligence, it should pay for MIS' lost income.
Tsuneishi offered to pay 50% of the amount demanded but MIS e. The action taken by MIS Maritime Corporation in setting off its
refused any partial payment.11 drydocking obligation against their claim for alleged lost revenues
was unilaterally done, and without legal and factual basis for while,
On April 10, 2008, Tsuneishi filed a complaint12 against MIS before on one hand, the drydocking bill was for a fixed and agreed amount,
the RTC. This complaint stated that it is invoking the admiralty the claim of MIS Maritime for lost revenues, on the other hand, was
jurisdiction of the RTC to enforce a maritime lien under Section 21 of not liquidated as it was for a gross amount. X X X
the Ship Mortgage Decree of 197813 (Ship Mortgage Decree). It also
alleged as a cause of action MIS' unjustified refusal to pay the amount f. Cattleya Shipping for its part had nothing to do with the dry
it owes Tsuneishi under their contract. The complaint included a docking of M/T MIS-1. There was no incident whatsoever during the
prayer for the issuance of arrest order/writ of preliminary dry docking of its vessel M/T WHITE CATTLEYA. In fact, after this
attachment. To support this prayer, the complaint alleged that vessel was satisfactorily dry docked and delivered to its Owner
Section 21 of the Ship Mortgage Decree as well as Rule 57 of the Rules (Cattleya Shipping) the latter started paying the monthly installments
of Court on attachment authorize the issuance of an order of arrest of without any complaint whatsoever. X X X18
vessel and/or writ of preliminary attachment.14
The RTC issued a writ of preliminary attachment in an Order19 dated
In particular, Tsuneishi argued that Section 21 of the Ship Mortgage April 15, 2008 (First Order) without hearing. Consequently, MIS'
Decree provides for a maritime lien in favor of any person who condominium units located in the financial district of Makati, cash
furnishes repair or provides use of a dry dock for a vessel. Section 21 deposits with various banks, charter hire receivables from Shell
states that this may be enforced through an action in rem. Further, amounting to ₱26.6 Million and MT MIS-1 were attached.20
Tsuneishi and MIS' contract granted Tsuneishi the right to take
possession, control and custody of the vessel in case of default of
MIS filed a motion to discharge the attachment.21 The RTC denied
payment. Paragraph 9 of this contract further states that Tsuneishi
this motion in an Order22 dated July 7, 2008 (Second Order). MIS
may dispose of the vessel and apply the proceeds to the unpaid repair
filed a motion for reconsideration which the RTC also denied in an
bill.15
Order23 dated December 11, 2008 (Third Order).

Finally, Tsuneishi's complaint alleges that there are sufficient

MIS then filed a special civil action for certiorari24 before the CA
grounds for the issuance of a writ of preliminary attachment. In
assailing the three Orders. MIS argued that the RTC acted with grave
particular, it claims that MIS is guilty of fraud in the performance of
abuse of discretion when it ordered the issuance of a preliminary writ
its obligation. The complaint states:
of attachment and denied MIS’ motion to discharge and motion for
reconsideration.
40. X X X Under the factual milieu, it is wrongful for defendant MIS
Maritime to take undue advantage of an unfortunate occurrence by
The CA ruled in favor of MIS. It reversed the three assailed Orders
withholding payment of what is justly due to plaintiff under law and
after finding that the RTC acted with grave abuse of discretion in
contract. Defendant MIS Maritime knew or ought to have known that
issuing the writ of preliminary attachment.25
its claim for lost revenues was unliquidated and could not be set-off
or legally compensated against the dry-docking and repair bill which
was liquidated and already fixed and acknowledged by the parties. According to the CA, the Bitera Affidavit lacked the required
allegation that MIS has no sufficient security for Tsuneishi's claim. In
fact, the CA held that the evidence on record shows that MIS has
41. Defendant CATTLEYA SHIPPING's actions and actuations in
sufficient properties to cover the claim. It also relied on jurisprudence
performing its obligation were clearly fraudulent because, firstly, it
stating that when an affidavit does not contain the allegations
had no business getting involved as far as the M/T MIS-1 incident
required under the rules for the issuance of a writ of attachment and
was concerned; secondly, no incident of any sort occurred when its
the court nevertheless issues the writ, the RTC is deemed to have
vessel M/T WHITE CATTLEYA was dry docked and repaired. It had
acted with grave abuse of discretion. Consequently, the writ of
no claim against the plaintiff. Yet, it (defendant Cattleya Shipping)
preliminary attachment is fatally defective.26 The CA further
allowed itself to be used by defendant MIS Maritime when it willfully
highlighted that a writ of preliminary attachment is a harsh and
and unlawfully stopped paying plaintiff, and conspired to make
rigorous remedy. Thus, the rules must be strictly construed. Courts
good defendant MIS Maritime's threat to "withhold payment of any
have the duty to ensure that all the requisites are complied with.27
The CA also found that the RTC ordered the issuance of the writ of In its comment,35 MIS challenges Tsuneishi's argument that its
preliminary attachment despite Tsuneishi's failure to prove the petition raises a novel question of law. According to MIS, the issue in
presence of fraud. It held that the bare and unsubstantiated allegation this case is simple. A reading of Tsuneishi's complaint shows that it
in the Bitera Affidavit that MIS willfully refused to pay its obligation prayed for the issuance of a writ of preliminary attachment under
is not sufficient to establish prima facie fraud. The CA emphasized that Rule 57 of the Rules of Court or arrest of vessel to enforce its maritime
a debtor's mere inability to pay is not fraud. Moreover, Tsuneishi's lien under the Ship Mortgage Decree.36 Thus, Tsuneishi knew from
allegations of fraud were general. Thus, they failed to comply with the start that a remedy exists for the enforcement of its maritime lien-
the requirement in the Rules of Court that in averments of fraud, the through an arrest of vessel under the Ship Mortgage Decree.
circumstances constituting it must be alleged with particularity. The However, the RTC itself characterized the complaint as a collection
CA added that while notice and hearing are not required for the of sum of money with prayer for the issuance of a writ of preliminary
issuance of a writ of preliminary attachment, it may become attachment. Thus, what it issued was a writ of preliminary
necessary in instances where the applicant makes grave accusations attachment. Unfortunately for Tsuneishi, the CA reversed the RTC
based on grounds alleged in general terms. The CA also found that because it found that the element of fraud was not duly established.
Tsuneishi failed to comply with the requirement that the affidavit Thus, there was no ground for the issuance of a writ of preliminary
must state that MIS has no other sufficient security to cover the attachment. 37
amount of its obligation.28
MIS insists that Tsuneishi is raising this alleged novel question of law
The CA disposed of the case, thus: for the first time before this Court in an attempt to skirt the issue that
it failed to sufficiently establish that MIS acted with fraud in the
WHEREFORE, the petition is GRANTED. The three (3) Orders dated performance of its obligation. MIS contends that fraud cannot be
April 15, 2008, July 7, 2008 and December 11, 2008, respectively, of inferred from a debtor's mere inability to pay. There is no distinction
the Regional Trial Court, Branch 7, Cebu City, in Civil Case No. CEB- between inability and a refusal to pay where the refusal is based on
34250, are ANNULLED and SET ASIDE.29 (Emphasis in the its claim that Tsuneishi damaged its vessel. According to MIS, its
original, citations omitted.) vessel arrived at Tsuneishi's shipyard on its own power. Its engine
incurred damage while it was under Tsuneishi's custody. Thus,
Tsuneishi is presumed negligent.38
Tsuneishi filed this petition for review on certiorari under Rule 45 of
the Rules of Court challenging the CA's ruling. Tsuneishi pleads that
this case involves a novel question of law. It argues that while Section MIS further highlights that Tsuneishi completed the dry docking in
21 of the Ship Mortgage Decree grants it a maritime lien, the law April 2006. It was during this time that the damage in the vessel's
itself, unfortunately, does not provide for the procedure for its engine was discovered. The vessel was turned over to MIS only in
enforcement. It posits that to give meaning to this maritime lien, this September 2006. Thus, it had lost a significant amount of revenue
Court must rule that the procedure for its enforcement is Rule 57 of during the period that it was off-hire. Because of this, it demanded
the Rules of Court on the issuance of the writ of preliminary payment from Tsuneishi which the latter rejected.39
attachment. Thus, it proposes that aside from the identified grounds
for the issuance of a writ of preliminary attachment in the Rules of Hence, MIS argues that this is not a situation where, after Tsuneishi
Court, the maritime character of this action should be considered as rendered services, MIS simply absconded.1âwphi1 MIS has the right
another basis to issue the writ.30 to demand for the indemnification of its lost revenue due to
Tsuneishi's negligence.40
To support its application for the issuance of a writ of preliminary
attachment, Tsuneishi also invokes a provision in its contract with MIS further adds that the CA correctly held that there was no
MIS which states that: statement in the Bitera Affidavit that MIS had no adequate security
to cover the amount being demanded by Tsuneishi. Tsuneishi cannot
In case of default, either in payment or in violation of the warranties validly argue that this allegation is found in its complaint and that
stated in Section 11. by the Owner, the Owner hereby appoints the this should be deemed compliance with the requirement under Rule
Contractor as its duly authorized attorney in fact with full power and 57.41
authority to take possession, control, and custody of the said Subject
Vessel and / or any of the Subject Vessel's accessories and equipment, Further, in its motion to discharge the preliminary attachment, MIS
or other assets of the Owner, without resorting to court action, and presented proof that it has the financial capacity to pay any liability
that the Owner hereby empowers the Contractor to take custody of arising from Tsuneishi's claims. In fact, there was an excessive levy of
the same until the obligation of the Owner to the Contractor is fully MIS' properties. This is proof in itself that MIS has adequate security
paid and settled to the satisfaction of the Contractor. x x x31 to cover Tsuneishi's claims. Finally, MIS agrees with the CA that the
(Underscoring omitted.) RTC should have conducted a hearing. While it is true that a hearing
is not required by the Rules of Court, jurisprudence provides that a
It insists that the writ of preliminary attachment must be issued so as hearing is necessary where the allegations in the complaint and the
to give effect to this provision in the contract. affidavit are mere general averments. Further, where a motion to
discharge directly contests the allegation in the complaint and
affidavit, the applicant has the burden of proving its claims of
Tsuneishi also disputes the CA's finding that it failed to show fraud
fraud.42
in MIS' performance of its obligation. It opines that MIS' failure to
comply with its obligation does not arise from a mere inability to pay.
If that were the case, then the CA would be correct in saying that MIS There are two central questions presented for the Court to resolve,
committed no fraud. However, MIS' breach of its obligation in this namely: (1) whether a maritime lien under Section 21 of the Ship
case amounts to a gross unwillingness to pay amounting to fraud.32 Mortgage Decree may be enforced through a writ of preliminary
attachment under Rule 57 of the Rules of Court; and (2) whether the
CA correctly ruled that Tsuneishi failed to comply with the
Tsuneishi adds that the CA erred in holding that the RTC acted with
requirements for the issuance of a writ of preliminary injunction.
grave abuse of discretion when it failed to conduct a hearing prior to
the issuance of the writ of preliminary attachment. It insisted that the
Rules of Court, as well as jurisprudence, does not require a hearing We deny the petition.
prior to issuance.33
I
Finally, Tsuneishi disagrees with the ruling of the CA that it did not
comply with the requirements under the rules because the Bitera We begin by classifying the legal concepts of lien, maritime lien and
Affidavit did not state that MIS has no other sufficient security. This the provisional remedy of preliminary attachment.
was already stated in Tsuneishi's complaint filed before the RTC.
Thus, the rules should be applied liberally in favor of rendering Alien is a "legal claim or charge on property, either real or personal,
justice.34 as a collateral or security for the payment of some debt or
obligation.43 It attaches to a property by operation of law and once
attached, it follows the property until it is discharged. What it does is
to give the party in whose favor the lien exists the right to have a debt It is enforced by filing a proceeding in court. When a maritime lien
satisfied out of a particular thing. It is a legal claim or charge on the exists, this means that the party in whose favor the lien was
property which functions as a collateral or security for the payment established may ask the court to enforce it by ordering the sale of the
of the obligation.44 subject property and using the proceeds to settle the obligation.

Section 21 of the Ship Mortgage Decree establishes a lien. It states: On the other hand, a writ of preliminary attachment is issued
precisely to create a lien. When a party moves for its issuance, the
Sec. 21. Maritime Lien for Necessaries; Persons entitled to such Lien. party is effectively asking the court to attach a property and hold it
- Any person furnishing repairs, supplies, towage, use of dry dock or liable for any judgment that the court may render in his or her favor.
marine railway, or other necessaries to any vessel, whether foreign or This is similar to what a lien does. It functions as a security for the
domestic, upon the order of the owner of such vessel, or of a person payment of an obligation. In Quasha Asperilla Ancheta Valmonte
authorized by the owner, shall have a maritime lien on the vessel, Peña & Marcos v. Juan,47 we held:
which may be enforced by suit in rem, and it shall be necessary to
allege or prove that credit was given to the vessel. An attachment proceeding is for the purpose of creating a lien on the
property to serve as security for the payment of the creditors' claim.
In practical terms, this means that the holder of the lien has the right Hence, where a lien already exists, as in this case a maritime lien, the
to bring an action to seek the sale of the vessel and the application of same is already equivalent to an attachment. X X X48
the proceeds of this sale to the outstanding obligation. Through this
lien, a person who furnishes repair, supplies, towage, use of dry dock To be clear, we repeat that when a lien already exists, this is already
or marine railway, or other necessaries to any vessel, in accordance equivalent to an attachment. This is where Tsuneishi's argument fails.
with the requirements under Section 21, is able to obtain security for
the payment of the obligation to him. Clearly, because it claims a maritime lien in accordance with the Ship
Mortgage Decree, all Tsuneishi had to do is to file a proper action in
A party who has a lien in his or her favor has a remedy in law to hold court for its enforcement. The issuance of a writ of preliminary
the property liable for the payment of the obligation. A lienholder has attachment on the pretext that it is the only means to enforce a
the remedy of filing an action in court for the enforcement of the lien. maritime lien is superfluous. The reason that the Ship Mortgage
In such action, a lienholder must establish that the obligation and the Decree does not provide for a detailed procedure for the enforcement
corresponding lien exist before he or she can demand that the of a maritime lien is because it is not necessary. Section 21 already
property subject to the lien be sold for the payment of the obligation. provides for the simple procedure-file an action in rem before the
Thus, a lien functions as a form of security for an obligation. court.

Liens, as in the case of a maritime lien, arise in accordance with the To our mind, this alleged novel question of law is a mere device to
provision of particular laws providing for their creation, such as the remedy the error committed by Tsuneishi in the proceedings before
Ship Mortgage Decree which clearly states that certain persons who the trial court regarding the issuance of a writ of preliminary
provide services or materials can possess a lien over a vessel. The attachment. We note that the attachment before the trial court
Rules of Court also provide for a provisional remedy which extended to other properties other than the lien itself, such as bank
effectively operates as a lien. This is found in Rule 57 which governs accounts and real property. Clearly, what was prayed for in the
the procedure for the issuance of a writ of preliminary attachment. proceedings below was not an attachment for the enforcement of a
maritime lien but an attachment, plain and simple.
A writ of preliminary attachment is a provisional remedy issued by a
court where an action is pending. In simple terms, a writ of II
preliminary attachment allows the levy of a property which shall
then be held by the sheriff. This property will stand as security for the Tsuneishi's underlying difficulty is whether it succeeded in proving
satisfaction of the judgment that the court may render in favor of the that it complied with the requirements for the issuance of a writ of
attaching party. In Republic v. Mega Pacific eSolutions (Republic),45 preliminary attachment. This is the only true question before us. In
we explained that the purpose of a writ of preliminary attachment is particular, we must determine whether the Bitera Affidavit stated
twofold: that MIS lacked sufficient properties to cover the obligation and
whether MIS acted with fraud in refusing to pay.
First, it seizes upon property of an alleged debtor in advance of final
judgment and holds it subject to appropriation, thereby preventing At the onset, we note that these questions dwell on whether there was
the loss or dissipation of the property through fraud or other means. sufficient evidence to prove that Tsuneishi complied with the
Second, it subjects the property of the debtor to the payment of a requirements for the issuance of a writ of preliminary attachment.
creditor's claim, in those cases in which personal service upon the Sufficiency of evidence is a question of fact which this Court cannot
debtor cannot be obtained. This remedy is meant to secure a review in a Rule 45 petition. We are not a trier of fact.
contingent lien on the defendant's property until the plaintiff can,
by appropriate proceedings, obtain a judgment and have the
Nevertheless, we have examined the record before us and we agree
property applied to its satisfaction, or to make some provision for
unsecured debts in cases in which the means of satisfaction thereof with the factual findings of the CA.
are liable to be removed beyond the jurisdiction, or improperly
disposed of or concealed, or otherwise placed beyond the reach of The record clearly shows that the Bitera Affidavit does not state that
creditors.46 (Citations omitted, emphasis supplied. Italics in the MIS has no other sufficient security for the claim sought to be
original.) enforced. This is a requirement under Section 3, Rule 57 of the Rules
of Court. We cannot agree with Tsuneishi's insistence that this
As we said, a writ of preliminary attachment effectively functions as allegation need not be stated in the affidavit since it was already
a lien. This is crucial to resolving Tsuneishi's alleged novel question found in the complaint. The rules are clear and unequivocal. There is
of law in this case. Tsuneishi is correct that the Ship Mortgage Decree no basis for Tsuneishi's position. Nor is it entitled to the liberal
does not provide for the specific procedure through which a maritime application of the rules. Not only has Tsuneishi failed to justify its
lien can be enforced. Its error is in insisting that a maritime lien can omission to include this allegation, the facts also do not warrant the
only be operationalized by granting a writ of preliminary attachment setting aside of technical rules. Further, rules governing the issuance
under Rule 57 of the Rules of Court. Tsuneishi argues that the of a writ of preliminary attachment are strictly construed.
existence of a maritime lien should be considered as another ground
for the issuance of a writ of preliminary attachment under the Rules We also agree with the CA's factual finding that MIS did not act with
of Court. fraud in refusing to pay the obligation.1âwphi1 We emphasize that
when fraud is invoked as a ground for the issuance of a writ of
Tsuneishi's argument is rooted on a faulty understanding of a lien preliminary attachment under Rule 57 of the Rules of Court, there
and a writ of preliminary attachment. As we said, a maritime lien must be evidence clearly showing the factual circumstances of the
exists in accordance with the provision of the Ship Mortgage Decree. alleged fraud.49 Fraud cannot be presumed from a party's mere
failure to comply with his or her obligation. Moreover, the Rules of
Court require that in all averments of fraud, the circumstances The record shows that Tsuneishi released the vessel in September
constituting it must be stated with particularity.50 2006. MIS signed the Agreement of the Final Price only in November
2006. Thus, Tsuneishi's claim that MIS'act of signing the document
In Republic, we defined fraud as: and making it believe that MIS will pay the amount stated is the
fraudulent act which induced it to release the vessel cannot stand.
Tsuneishi agreed to release the vessel even before MIS signed the
[A]s the voluntary execution of a wrongful act or a wilful omission,
document. It was thus not the act which induced Tsuneishi to turn
while knowing and intending the effects that naturally and
over the vessel.
necessarily arise from that act or omission. In its general sense, fraud
is deemed to comprise anything calculated to deceive -- including all
acts and omission and concealment involving a breach of legal or Further, Tsuneishi is well aware of MIS' claims. It appears from the
equitable duty, trust, or confidence justly reposed ---- resulting in record, and as admitted by MIS in its pleadings, that the reason for
damage to or in undue advantage over another. Fraud is also its refusal to pay is its claim that its obligation should be set off
described as embracing all multifarious means that human ingenuity against Tsuneishi's liability for the losses that MIS incurred for the
can device, and is resorted to for the purpose of securing an unwarranted delay in the turn-over of the vessel. MIS insists that
advantage over another by false suggestions or by suppression of Tsuneishi is liable for the damage on the vessel. This is not an act of
truth; and it includes all surprise, trick, cunning, dissembling, and fraud. It is not an intentional act or a willful omission calculated to
any other unfair way by which another is cheated.51 (Citations deceive and injure Tsuneishi. MIS is asserting a claim which it
omitted.) believes it has the right to do so under the law. Whether MIS' position
is legally tenable is a different matter. It is an issue fit for the court to
decide. Notably, MIS filed this as a counterclaim in the case pending
By way of example, in Metro, Inc. v. Lara's Gifts and Decors, Inc.,52 we
before the RTC.58 Whether MIS is legally correct should be threshed
ruled that the factual circumstances surrounding the parties'
out there.
transaction clearly showed fraud. In this case, the petitioners entered
into an agreement with respondents where the respondents agreed
that they will endorse their purchase orders from their foreign buyers Even assuming that MIS is wrong in refusing to pay Tsuneishi, this is
to the petitioners in order to help the latter's export business. The nevertheless not the fraud contemplated in Section 1(d), Rule 57 of
petitioners initially promised that they will transact only with the the Rules of Court. Civil law grants Tsuneishi various remedies in the
respondents and never directly contact respondents' foreign buyers. event that the trial court rules in its favor such as the payment of the
To convince respondents that they should trust the petitioners, obligation, damages and legal interest. The issuance of a writ of
petitioners even initially remitted shares to the respondents in preliminary attachment is not one of those remedies.
accordance with their agreement. However, as soon as there was a
noticeable increase in the volume of purchase orders from There is a reason why a writ of preliminary attachment is available
respondents' foreign buyers, petitioners abandoned their contractual only in specific cases enumerated under Section 1 of Rule 57. As it
obligation to respondents and directly transacted with respondents' entails interfering with property prior to a determination of actual
foreign buyers. We found in this case that the respondents' allegation liability, it is issued with great caution and only when warranted by
(that the petitioners undertook to sell exclusively through the circumstances. As we said in Ng Wee v. Tankiansee,59 the rules
respondents but then transacted directly with respondents' foreign on the issuance of the writ of preliminary attachment as a provisional
buyer) is sufficient allegation of fraud to support the issuance of a remedy are strictly construed against the applicant because it exposes
writ of preliminary attachment.53 the debtor to humiliation and annoyance.60

In contrast, in PCL Industries Manufacturing Corporation v. Court of Moreover, we highlight that this petition for review on certiorari arose
Appeals,54 we found no fraud that would warrant the issuance of a out of a Decision of the CA in a Rule 65 petition. In cases like this, this
writ of preliminary attachment. In that case, petitioner purchased Court's duty is only to ascertain whether the CA was correct in ruling
printing ink materials from the private respondent. However, that the RTC acted with grave abuse of discretion amounting to lack
petitioner found that the materials delivered were defective and thus or excess of jurisdiction.
refused to pay its obligation under the sales contract. Private
respondent insisted that petitioner's refusal to pay after the materials Jurisprudence has consistently held that a court that issues a writ of
were delivered to it amounted to fraud. We disagreed. We preliminary attachment when the requisites are not present acts in
emphasized our repeated and consistent ruling that the mere fact of excess of its jurisdiction.61 In Philippine Bank of Communications v.
failure to pay after the obligation to do so has become due and despite Court of Appeals,62 we highlighted:
several demands is not enough to warrant the issuance of a writ of
preliminary attachment.55
Time and again, we have held that the rules on the issuance of a writ
of attachment must be construed strictly against the applicants. This
An examination of the Bitera Affidavit reveals that it failed to allege stringency is required because the remedy of attachment is harsh,
the existence of fraud with sufficient specificity. The affidavit merely extraordinary and summary in nature. If all the requisites for the
states that MIS refused to pay its obligation because it demanded a granting of the writ are not present, then the court which issues it acts
set off between its obligation to Tsuneishi and Tsuneishi's liability for in excess of its jurisdiction.63 (Citation omitted.)
MIS' losses caused by the delay in the turn-over of the vessel. The
affidavit insists that this demand for set off was not legally possible.
In accordance with consistent jurisprudence, we must thus affirm the
Clearly, there is nothing in the affidavit that even approximates any
ruling of the CA that the RTC, in issuing a writ of preliminary
act of fraud which MIS committed in the performance of its
attachment when the requisites under the Rules of Court were clearly
obligation. MIS' position was clear: Tsuneishi caused the damage in
not present, acted with grave abuse of discretion.
the vessel's engine which delayed its trip and should thus be liable
for its losses. There is no showing that MIS performed any act to
deceive or defraud Tsuneishi. WHEREFORE, in view of the foregoing, the petition is DENIED. The
Decision of the Court of Appeals dated October 7, 2009 and its
Resolution dated August 26, 2010 are AFFIRMED.
In Watercraft Venture Corporation v. Wolfe,56 we ruled that an affidavit
which does not contain concrete and specific grounds showing fraud
is inadequate to sustain the issuance of the writ of preliminary SO ORDERED.
attachment.57

Moreover, the record tells a different story.

 G.R. No. 218232
RAMON "BONG" B. REVILLA, JR., Petitioner
vs.SANDIGANBAYAN (FIRST DIVISION) and PEOPLE OF THE
PHILIPPINES, Respondents
The Case
The petitions for certiorari 1 in G.R. Nos. 218232, 218235, and 218266,
filed by petitioners Ramon "Bong" B. Revilla, Jr. (Revilla), Richard A.
Cambe (Cambe), and Janet Lim Napoles (Napoles), respectively,
assail the Resolution2 dated 1 December 2014 of the Sandiganbayan
denying them bail and the Resolution3 dated 26 March 2015 denying
their motion for reconsideration in Criminal Case No. SB-14-CRM-
0240.
In G.R. No. 218903, the Office of the Ombudsman assails the
Resolution4 dated 4 September 2014 of the Sandiganbayan denying
the prosecution's motion to transfer the place of detention of Revilla
and Cambe, and the Resolution5 dated 20 May 2015 denying the
motion for reconsideration. In G.R. No. 219162, Revilla assails the
Resolution6 dated 5 February 2015 of the Sandiganbayan granting the
prosecution's motion for the issuance of a writ of preliminary
attachment and the Resolution7 dated 28 May 2015 denying his
motion for reconsideration.
plea; thus, the Sandiganbayan entered a plea of not guilty in his behalf
pursuant to Section 1 (c), Rule 116 of the Rules of Court. 10
In a Resolution11 dated 19 June 2014, the Sandiganbayan issued
warrants of arrest against Revilla, Cambe, and Napoles. On the same
day, Revilla voluntarily surrendered to the Philippine National Police
(PNP) and filed a Motion to Elect Detention Facilities Ad Cautelam 12
praying for his detention at the PNP Custodial Center in Camp
Crame. On 20 June 2014, Cambe also voluntarily surrendered to the
Sandiganbayan and filed an Urgent Motion to Commit Accused to
Criminal Investigation and Detection Group (CIDG)13 pending trial
of the case.
In two separate Resolutions14 both dated 20 June 2014, the
Sandiganbayan ordered the turn over of Revilla and Cambe to the
PNPCIDG, Camp Crame, Quezon City for detention at its PNP
Custodial Center Barracks.
G.R. Nos. 218232, 218235 and 218266
Revilla filed a Petition for Bail Ad Cautelam dated 20 June 2014; Cambe
filed an Application for Bail15 dated 23 June 2014; and Napoles filed
a Joint Petition for Bail dated 25 June 2014, together with co-accused
Ronald John Lim (Lim) and John Raymund De Asis (De Asis). 16

The Facts Thereafter, the Sandiganbayan conducted the bail hearings for
Revilla, Cambe, and Napoles.
The cases before us stemmed from the Information dated 5 June 2014
filed by the Office of the Ombudsman in the Sandiganbayan charging During the bail hearings, the prosecution presented nine witnesses,
petitioners Revilla, Cambe, and Napoles, among others, with the namely: Commission on Audit (COA) Assistant Commissioner in the
crime of Plunder, defined and penalized under Section 2 of Republic Special Services Sector Susan P. Garcia; Department of Budget and
Act No. (RA) 7080, as amended. The Amended Information8 reads: Management (DBM) Directors Carmencita N. Delantar and Lorenzo
C. Drapete; the whistleblowers Benhur K. Luy (Luy), Merlina P. Sufias
In 2006 to 2010, or thereabout, in the Philippines, and within this (Sufias), Marina C. Sula (Sula), and Mary Arlene Joyce B. Baltazar
Honorable Court's jurisdiction, above-named accused RAMON (Baltazar); National Bureau of Investigation (NBI) Special Investigator
"BONG" BAUTISTA REVILLA, JR., then a Philippine Senator and III Joey I. Narciso (Narciso); and Anti-Money Laundering Council
RICHARD ABDON CAMBE, then DIRECTOR III at the Office of (AMLC) Bank Officer II Atty. Leigh Vhon Santos (Santos).
Senator Revilla, Jr., both public officers, committing the offense in
relation to their respective offices, conspiring with one another and The Sandiganbayan summarized the prosecution's evidence as
with JANET LIM NAPOLES, RONALD JOHN B. LIM, and JOHN follows:
RAYMUND S. DE ASIS, did then and there willfully, unlawfully, and
criminally amass, accumulate and/or acquire ill-gotten wealth
From 2007 to 2009, accused Revilla was allocated and utilized
amounting to at least TWO HUNDRED TWENTY FOUR MILLION
[Priority Development Assistance Fund (PDAF)] in the total amount
FIVE HUNDRED TWELVE THOUSAND FIVE HUNDRED PESOS
of ₱517,000,000.00, covered by twelve (12) [Special Allotment Release
(Php224,512,500.00), through a combination or series of overt criminal
Orders (SAROs)], for livelihood and agricultural projects. He named
acts, as follows:
the [Technology Livelihood Resource Center (TLRC), National Agri-
Business Corporation (NABCOR), and National Livelihood
a) by repeatedly receiving from NAPOLES and/or Development Corporation (NLDC)] to be the [implementing agencies
her representatives LIM, DEASIS, and others, (IAs)], and endorsed five (5) of Napoles' [non-governmental
kickbacks or commissions under the following organization (NGOs)], i.e., [Agri & Economic Program for Farmers
circumstances: before, during and/or after the Foundation, Inc. (AEPFFI), Philippine Social Development Foundation, Inc.
project identification, NAPOLES gave, and (PSDFI), Masaganang Ani Para sa Magsasaka Foundation, Inc. (MAMFI),
REVILLA, JR. and/or CAMBE received, a Social Development Program for Farmers Foundation, Inc. (SDPFFI), and
percentage of the cost of a project to be funded from Agricultura Para Sa Magbubukid Foundation, Inc. (APMFI),] as project
REVILLA, JR. 's Priority Development Assistance partners. Of the 12 SAROs, Luy identified six (6) SAROs in his
Fund (PDAF), in consideration of REVILLA, JR. 's Summary of Rebates, showing how he came up with the supposed
endorsement, directly or through CAMBE, to the ₱224,512,500.00 rebates/commissions/kickbacks mentioned in the
appropriate government agencies, of NAPOLES' Information. The six (6) SAROs with their corresponding amounts,
non-government organizations which became the beneficiary NGOs, IAs, and the amount of commissions received by
recipients and/or target implementors of Revilla, through Cambe, mentioned in Luy's Summary are shown in
REVILLA, JR. 's PDAF projects, which duly-funded the table below:
projects turned out to be ghosts or fictitious, thus
enabling NAPOLES to misappropriate the PDAF
TABLE A
proceeds for her personal gain;
Other commissions without corresponding SARO numbers lifted
from Luy's Summary are shown hereunder.
b) by taking undue advantage, on several
occasions, of their official positions, authority,
TABLE B
relationships, connections, and influence to
Accused Revilla's commissions represented 50% of the project cost,
unjustly enrich themselves at the expense and to
25% percent of which was released by accused Napoles upon showing
the damage and prejudice, of the Filipino people
that the DBM already received accused Revilla's endorsement letter
and the Republic of the Philippines.
with project listings. The other 25% was released upon issuance of the
SARO. On the other hand, accused Cambe's share was 5% of the
CONTRARY TO LAW.9 project cost.

Upon arraignment, Napoles and Cambe pleaded not guilty to the But there were instances that, prior to the issuance of the SARO and
charge against them, while petitioner Revilla refused to enter any preempting its release, accused Revilla advanced money from
accused Napoles. There were also times that his share was given to
him in tranches until the full amount was paid. Thus, there appear the parties stipulated on the authenticity and due execution of her
entries in Luy's Summary of Rebates without corresponding SARO immigration records. Both Cambe and Napoles adopted the direct
numbers, and in amounts less than 25% or 50% of the amount of the examination of Pagui.
SARO. Accused Cambe got his commission either together with that
of accused Revilla or separately. To acknowledge receipt of the The Sandiganbayan thereafter admitted all the documentary exhibits
rebates for himself or that for accused Revilla, accused Napoles' office of Revilla, Cambe, and Napoles except for Exhibits 273 to 277 of
had accused Cambe sign JLN vouchers which, however, were already Revilla for lack of sponsorship. Revilla made a tender of excluded
shredded upon the instruction of accused Napoles. exhibits and rested his case. Cambe and Napoles also rested their case
relative to their application for bail.
Upon release of the SARO, documents like letters signed by accused
Revilla indorsing accused Napoles' NGO, MOAs signed by accused In a Resolution dated 1 December 2014, 18 the Sandiganbayan denied
Cambe, project proposal, and foundation profile, were submitted to the separate applications for bail filed by Revilla, Cambe, and
the IA. Napoles. The Sandiganbayan held that the prosecution duly
established with strong evidence that Revilla, Cambe, and Napoles,
Subsequently, the IA, after deducting a 3% management fee, released in conspiracy with one another, committed the crime of plunder
a check in the name of the NGO endorsed by accused Revilla. Accused defined and penalized under RA 7080; thus, they are not entitled to
Napoles had either the president of the payee NGO or anybody from the constitutional right to bail.
his trusted employees receive the check. Accused Napoles'
representative signed the IA voucher and, in return, issued a receipt In a Resolution dated 26 March 2015, 19 the Sandiganbayan denied
to the IA in the name of the foundation. for lack of merit: (a) Napoles' Motion for Reconsideration dated 17
December 2014; (b) Revilla's Omnibus Motion: (1) for
The check was then deposited to the account of the payee foundation. Reconsideration, and (2) To Adduce Additional Evidence dated 17
After it was cleared, accused Napoles had her trusted employees December 2014; and (c) Cambe's: (1) Motion for Reconsideration
withdraw the proceeds of the check. The money was brought to dated 15 December 2014, and (2) Motion to Adduce Additional
accused Napoles, usually to her office at 2502 Discovery Center, and Evidence and Request for Subpoena embodied in his Reply dated 28
was disposed of at her will or upon her instruction. Part of the January 2015.
proceeds was used to pay the commissions of accused Revilla and
Cambe. Some were kept at the office vault or was brought to her Thus, Revilla, Cambe, and Napoles filed their separate petitions for
condo unit at l8D Pacific Plaza. Accused Napoles' share was pegged certiorari assailing the Resolutions of the Sandiganbayan before this
at 32% and 40%, depending on the IA, and she used it to buy dollars Court. The petition filed by Revilla is docketed as G.R. No. 218232, the
and to acquire properties in the Philippines and abroad. She also petition filed by Cambe is docketed as G.R. No. 218235, and the
made deposits in a foreign account to support her daughter Jean and petition filed by Napoles is docketed as G.R. No. 218266.
accused Napoles' brother Reynald Lim in the US.
On 21 December 2016, Revilla filed a Motion to Withdraw20 the
To make it appear that there were implementations of the projects for Petition for Certiorari he filed before this Court alleging that
which accused Revilla's PDAFs were intended, the NGOs submitted "[c]onsidering, however, that the presentation of prosecution
liquidation documents such as official receipts, delivery receipts, evidence in the Plunder Case below will already commence on 12
accomplishment reports, which were all fake, and lists of beneficiaries January 2017, and that trial will be conducted every Thursday
which were just fabricated having only signed by Napoles' thereafter, petitioner will avail of the remedies available to him in said
employees, children, household helpers, drivers, and security guards. proceedings once the insufficiency of the evidence against him is
The receipts were issued by bogus suppliers which were likewise established. "21
owned or controlled by accused Napoles. 17
G.R. No. 218903
On the other hand, the defense presented Atty. Desiderio A. Pagui
(Pagui), a lawyer and retired document examiner of the NBI, as expert
Meanwhile, on 14 July 2014, the Office of the Ombudsman, through
witness. In his Report No. 09-10-2013, attached to his Judicial
the Office of the Special Prosecutor, filed a Motion to Transfer the
Affidavit dated 12 November 2014 and adopted as his direct
Place of Detention of Accused22 Revilla, Cambe, and Napoles to the
testimony, Pagui stated that upon comparison of Revilla's purported
Bureau of Jail Management and Penology (BJMP) facility in Camp
signatures on the photocopies of the PDAF documents and the
Bagong Diwa or other similar facilities of the BJMP. The motion states
standard documents bearing Revilla's authentic signature, the
that the PNP Custodial Center is not a detention facility within the
purported signatures are not authentic and affixed by Revilla. Pagui
supervision of BJMP under RA 6975 and their continued detention in
examined the originals and photocopies of the PDAF documents in
a non-BJMP facility affords them special treatment. In a Manifestation
open court using a magnifying glass, and he maintained that the
dated 4 August 2014, the prosecution alleged that the Sandiganbayan
purported signatures are not authentic and affixed by Revilla. Pagui
ordered the detention of Napoles in the BJMP facility in Camp Bagong
likewise testified that he also examined the photocopies of documents
Diwa; thus, as for Napoles, the motion of the prosecution became
with signatures of Cambe and his findings were embodied in Report
moot.
No. 10-11- 2013.

In his Opposition23 dated 26 July 2014, Revilla alleged that his

On cross-examination, Pagui testified that during his stint as
document examiner in the NBI, it would take them an average of one
or two days to examine a signature, their findings would be reviewed
by the majority of the examiners present in the Questioned Document
Division of the NBI, and it was the NBI's policy not to examine
photocopies of documents as safety precaution. He, however,
believed that an examination of the photocopies can now be made
since there are already clear copies. He confirmed that it took him
three months after the submission of the specimen signature and
questioned signature to finish his Report, while it took him only a few
minutes to make a conclusion that the photocopies are faithful
reproduction of the original. Pagui was paid a professional fee of
₱200,000.00 for examining the signatures of Revilla and Cambe.
Cambe dispensed with the presentation of his witness, Fabian S.
Fabian, supervisor of the Records Section of the Philippine Airlines
after the parties stipulated on the authenticity and due execution of
the Certification he issued and the Passenger Manifest for Flight Nos.
PR 102 and PR 103. Napoles likewise dispensed with the testimony of
Joel M. de Guzman, representative of the Bureau of Immigration, after
detention in the PNP Custodial Center is in accord with the Rules and
upon a valid resolution of the Sandiganbayan. On 6 August 2014,
Cambe also filed his Opposition24 to the Motion to Transfer the place
of his detention.
In a Resolution25 dated 4 September 2014, the Sandiganbayan denied
the motion for failure to advance justifiable grounds for Revilla and
Cambe's transfer. The Sandiganbayan held that detention in facilities
other than a jail is sanctioned in our jurisdiction and there is no law
mandating that detention prisoners shall only be detained in a jail
supervised by the BJMP. The Sandiganbayan also found that it was
not shown that Revilla and Cambe were granted benefits above the
standards set for other detention prisoners.
The prosecution moved for reconsideration of the Sandiganbayan
Resolution, while Revilla and Cambe filed their separate Opposition
to the motion for reconsideration.
In a Manifestation (Re: Unauthorized Movement of Accused Revilla
on 14 February 2015) with Motion (For the Issuance of an Order
Directing the Concerned PNP Officials to Explain)26 dated 27
February 2015, the prosecution alleged that Revilla was allowed to
attend the birthday celebration of Juan Ponce Enrile in the PNP
General Hospital under the guise of a medical emergency on 14
February 2015, bolstering its argument that Revilla's detention in the
PNP Custodial Center is improper.
In his Comment27 to the Manifestation, PDDG Leonardo A. Espina
alleged that he directed the CIDG to investigate the incident, and he
approved the recommendations of the CIDG to file an administrative
case for Grave Misconduct and violation of PNPHSS 2012 Manual of
Operations, and criminal case against PSUPT Eulogio Lovello R.
Fabro (Fabro), PSINSP Celina D. Tapaoan (Tapaoan), and PO2 Jaydie
Pelagio upon finding that Fabro and Tapaoan connived to facilitate
the visit of Revilla to Enrile and tried to cover it up by requesting the
attending physician PCINSP Duds Raymond Santos to change his
statement.
In a Resolution28 dated 20 May 2015, the Sandiganbayan denied the
motion for reconsideration of the prosecution for lack of merit. The
Sandiganbayan did not consider as sufficient reason the reported
unauthorized visit of Revilla to the hospital room of Enrile to justify
his transfer to Camp Bagong Diwa, since the concerned PNP officials
have already been admonished for failure to comply with the
Sandiganbayan's Order.
Thus, the Office of the Ombudsman, through the Office of the Special
Prosecutor, filed a petition for certiorari before us assailing the
Sandiganbayan Resolutions dated 4 September 2014 and 20 May 2015. The Issues
This petition is docketed as G.R. No. 218903.
G.R. No. 219162
On 27 October 2014, the Office of the Ombudsman, through the Office
of the Special Prosecutor, filed an Ex Parte Motion for Issuance of Writ
of Preliminary Attachment/Garnishment29 against the monies and
properties of Revilla to serve as security for the satisfaction of the
amount of ₱224,512,500.00 alleged as ill-gotten wealth, in the event
that a judgment is rendered against him for plunder. The motion
states that there is an imminent need for the issuance of the ex parte
writ to prevent the disappearance of Revilla's monies and properties
found to be prima facie unlawfully acquired, considering that the
AMLC reported that many investment and bank accounts of Revilla
were "terminated immediately before and after the PDAF scandal
circulated in [the] media,"30 and Revilla himself publicly confirmed
that he closed several bank accounts when the PDAF scam was
exposed. The details of the monies and properties sought to be
attached were attached as Annex "B-Motion" in the prosecution's
motion.
On 14 November 2014, Revilla filed an Opposition31 to the
prosecution's motion, arguing that the factual basis for the issuance of
the writ is yet to be proven, and that the issuance of the writ would
unduly preempt the proceedings in his bail application.
On 28 January 2015, the prosecution filed an Urgent Motion to
Resolve Ex Parte Motion for Issuance of Writ of Preliminary
Attachment/ Gamishment,32 alleging that the safeguarding of
Revilla's properties has become even more necessary after the
Sandiganbayan denied Revilla's bail application and ruled that there
is strong evidence of his guilt.
In a Resolution33 dated 5 February 2015, the Sandiganbayan granted
the prosecution's motion upon finding of its sufficiency both in form
and substance. The Sandiganbayan held that the issuance of a writ of
preliminary attachment is properly anchored on Sections 1 and 2 of
Rule 57, and Sections 1 and 2 (b) and (c) of Rule 127 of the Rules of
Court. Thus, the Sandiganbayan issued a Writ of Attachment directed
to the Acting Chief, Sheriff and Security Services of the
Sandiganbayan. On 10 July 2015, the Sandiganbayan granted the
prosecution's amendatory motion and issued an Alias Writ of
Preliminary Attachment, which included the properties under the
known aliases or other names of Revilla and his spouse, Lani
Mercado. 34
Revilla filed a motion for reconsideration, which the Sandiganbayan
denied in a Resolution35 dated 28 May 2015. The Sandiganbayan held
that the writ of preliminary attachment is not the penalty of forfeiture
envisioned under Section 2 of RA 7080, contrary to Revilla's
argument. The Sandiganbayan further elucidated that the issuance of
the writ is an ancillary remedy which can be availed of during the
pendency of the criminal case of plunder, and it is not necessary to
await the final resolution of the bail petition before it can be issued.
Thus, Revilla filed a petition for certiorari before us assailing the
Sandiganbayan Resolutions dated 5 February 2015 and 28 May 2015.
This petition is docketed as G.R. No. 219162.
In a Resolution36 dated 4 August 2015, the Court En Banc resolved to
consolidate G.R. No. 219162 (Ramon "Bong" Revilla, Jr. v.
Sandiganbayan [First Division]) and People of the Philippines); G.R. No.
218232 (Ramon "Bong" Revilla, Jr. v. Sandiganbayan [First Division] and
People of the Philippines); G.R. No. 218235 (Richard A. Cambe v.
Sandiganbayan [First Division], People of the Philippines, and Office of the
Ombudsman); G.R. No. 218266 (Janet Lim Napoles v. Sandiganbayan
[First Division], Hon. Conchita Carpio Morales, in her capacity as
Ombudsman, and People of the Philippines); and G.R. No. 218903 (People
of the Philippines v. Sandiganbayan [First Division}, Ramon "Bong"
Bautista Revilla, Jr. and Richard A. Cambe ).
In a Resolution37 dated 21 February 2017, the Court En Banc resolved
to note the compliance dated 10 February 2017 filed by the counsel of
Revilla informing the Court that Revilla's Motion to Withdraw dated
14 December 2016 pertains only to the petition in G.R. No. 218232.
In G.R. No. 218232, Revilla raises the following issue for resolution:
The Sandiganbayan committed grave abuse of discretion amounting
to lack or excess of jurisdiction in denying petitioner's application for
admission to bail despite the fact that the evidence on record do not
show a clear and strong evidence of his guilt [for] the crime of
plunder. 38
In G.R. No. 218235, Cambe argues that the Sandiganbayan committed
grave abuse of discretion amounting to lack or excess of jurisdiction
in issuing the assailed resolutions:
A. The denial of petitioner's application for bail was based on
Criminal Procedure 1900 (General Order No. 58), which requires a
much lower quantum of proof to deny bail (i.e., proof of guilt is
evident or presumption of guilt is strong), and not on Section 13,
Article III of the 1987 Philippine Constitution, which requires proof
that "evidence of guilt is strong."
B. The denial of petitioner's motion for reconsideration was based on
the concept of "totality of evidence" which is applicable in Writ of
Amparo cases only.
C. Even assuming that "proof evident," "presumption great," or proof
that "the presumption of guilt is strong" are the tests to determine
whether petitioner may be granted or denied bail, the assailed
resolutions were based on mere presumptions and inferences. 39
In G.R. No. 218266, Napoles alleged that the Sandiganbayan
committed grave abuse of discretion in ruling:
A. that the prosecution was able to prove with strong evidence that
[Revilla] and [Cambe] conspired with [Napoles], in amassing,
accumulating, and acquiring ill-gotten wealth. Thus, their petition for
bail should be denied.
B. that the hard disk, disbursement ledger and the summary of rebates
are reliable and with integrity.
C. [that] the testimonies of the witnesses and the documents they
[submitted are credible].
D. [that] x x x that the evidence of the prosecution prove[s] plunder.40
In G.R. No. 218903, the Office of the Ombudsman, through the Office shall be admitted to bail when evidence of guilt is strong, regardless
of the Special Prosecutor, alleged that the Sandiganbayan committed of the stage of the criminal prosecution. (Emphasis supplied)
grave abuse of discretion amounting to lack and/or excess of
jurisdiction: The grant or denial of bail in an offense punishable by reclusion
perpetua, such as plunder, hinges on the issue of whether or not the
A. when it substituted its own judgment and refused to apply the evidence of guilt of the accused is strong. This requires the conduct of
clear mandate of [RA 6975].1âwphi1 bail hearings where the prosecution has the burden of showing that
the evidence of guilt is strong,47 subject to the right of the defense to
B. when it denied the transfer of private respondents to a BJMP- cross-examine witnesses and introduce evidence in its own rebuttal.
operated facility despite the absence of cogent reasons to justify their 48 The court is to conduct only a summary hearing, or such brief and
detention in a facility other than that prescribed by law. speedy method of receiving and considering the evidence of guilt as
is practicable and consistent with the purpose of the hearing which is
merely to determine the weight of evidence for purposes of bail.49
C. when it refused to recognize that the continued detention of private
respondents at Camp Crame affords them special treatment and
subjects them to different rules and procedures.41 The order granting or refusing bail which shall thereafter be issued
must contain a summary of the evidence for the prosecution. 50 The
summary of the evidence shows that the evidence presented during
In G.R. No. 219162, Revilla alleged that the Sandiganbayan committed
the prior hearing is formally recognized as having been presented and
grave abuse of discretion amounting to lack or excess of jurisdiction
most importantly, considered.51 The summary of the evidence is the
in granting the State's Ex-Parte Motion for the issuance of a writ of
basis for the judge's exercising his judicial discretion. 52 Only after
preliminary attachment considering that:
weighing the pieces of evidence as contained in the summary will the
judge formulate his own conclusion as to whether the evidence of
A. the issuance of the assailed writ is erroneous and premature. The guilt against the accused is strong based on his discretion. 53 Thus,
plunder law does not allow the issuance of a writ of preliminary judicial discretion is not unbridled but must be supported by a finding
attachment, as it amounts to a prejudgment and violates petitioner's of the facts relied upon to form an opinion on the issue before the
constitutional rights to presumption of innocence and due process; court. 54 It must be exercised regularly, legally and within the
and confines of procedural due process, that is, after evaluation of the
evidence submitted by the prosecution. 55 Any order issued in the
B. there is neither legal nor factual basis for the issuance of the writ of absence thereof is not a product of sound judicial discretion but of
preliminary attachment or garnishment. 42 whim, caprice, and outright arbitrariness. 56

The Ruling of the Court In the present case, we find that the Sandiganbayan did not abuse its
discretion amounting to lack or excess of jurisdiction when it denied
G.R. Nos. 218232, 218235, and 218266 bail to Cambe and Napoles, upon a finding of strong evidence that
they committed the crime of plunder in conspiracy with one another.
At the outset, we note that Revilla withdrew his petition before the
Court assailing the Resolution of the Sandiganbayan denying him Plunder, defined and penalized under Section 257 of RA 7080, as
bail. In withdrawing his petition, he stated "[he] will avail of the amended, has the following elements: (a) that the offender is a public
remedies available to him in [the plunder case before the officer, who acts by himself or in connivance with members of his
Sandiganbayan] once the insufficiency of the evidence against him is family, relatives by affinity or consanguinity, business associates,
established."43 Accordingly, we no longer find it necessary to rule subordinates or other persons; (b) that he amasses, accumulates or
upon the issues raised by Revilla in his petition in G.R. No. 218232. acquires ill-gotten wealth through a combination or series of overt or
criminal acts described in Section l(d)58 hereof; and (c) that the
aggregate amount or total value of the ill-gotten wealth amassed,
Now, we proceed to determine whether or not the Sandiganbayan
accumulated or acquired is at least Fifty Million Pesos
committed grave abuse of discretion amounting to lack or excess of
(₱50,000,000.00).
jurisdiction in denying bail to Cambe and Napoles, who are charged
with the crime of plunder, after finding strong evidence of their guilt.
In finding that there is strong evidence that petitioners Revilla,
Cambe, and Napoles committed the crime of plunder, the
Judicial discretion, by its very nature, involves the exercise of the
Sandiganbayan held that:
judge's individual opinion and the law has wisely provided that its
exercise be guided by well-known rules which, while allowing the
judge rational latitude for the operation of his own individual views, THE FIRST ELEMENT. Accused Revilla and Cambe were public
prevent them from getting out of control. 44 We have held that officers at the time material to this case, accused Revilla being a
discretion is guided by: first, the applicable provisions of the member of the Senate of the Philippines, and accused Cambe being
Constitution and the statutes; second, by the rules which this Court Revilla's Chief of Staff/Political Officer/Director III as appearing on
may promulgate; and third, by those principles of equity and justice the face of the documents on record. Accused Napoles is a private
that are deemed to be part of the laws of the land.45 The discretion of individual charged in conspiracy with accused Revilla and Carnbe.
the court, once exercised, cannot be reviewed by certiorari nor As provided in Section 2 of RA 7080, "[a]ny person who participated
controlled by mandamus save in instances where such discretion has with the said public officer in the commission of an offense
been so exercised in an arbitrary or capricious manner. 46 contributing to the crime of plunder shall likewise be punished for
such offense."
Section 13, Article III of the 1987 Constitution provides that:
THE SECOND ELEMENT. x x x.
All persons, except those charged with offenses punishable by
reclusion perpetua when evidence of guilt is strong, shall, before xxxx
conviction, be bailable by sufficient sureties, or be released on
recognizance as may be provided by law. The right to bail shall not be The separate and individual acts of accused Revilla, Cambe and
impaired even when the privilege of the writ of habeas corpus is Napoles convincingly appear to have facilitated the amassing,
suspended. Excessive bail shall not be required. (Emphasis supplied) accumulation, and acquisition of ill-gotten wealth by accused Revilla.
It is immaterial whether or not the prosecution has presented
Rule 114 of the Rules of Court emphasizes that offenses punishable evidence that accused Cambe and Napoles by themselves have
by death, reclusion perpetua or life imprisonment are non-bailable likewise amassed, accumulated, or acquired ill-gotten wealth in the
when the evidence of guilt is strong: amount of at least P50 Million each. It is sufficient that the prosecution
has established that accused Revilla and accused Cambe have
conspired with one another, and with accused Napoles in the
Sec. 7. Capital offense or an offense punishable by reclusion perpetua or life
accumulation or acquisition of ill-gotten wealth of at least ₱50 million.
imprisonment, not bailable. - No person charged with a capital offense,
or an offense punishable by reclusion perpetua or life imprisonment,
The Court is persuaded that the prosecution has presented otherwise inexistent. The lists of beneficiaries were bogus, and this
compelling evidence that accused Revilla amassed, accumulated or was confirmed by the COA during its own investigation where it was
acquired ill-gotten wealth by repeatedly receiving from accused found that either there were no projects implemented or there were
Napoles or her representatives or agents, money, through accused no such names of beneficiaries that existed.
Cambe, and in those several occasions, accused Revilla and/or
Cambe made use of his or their official position, authority, Accused Napoles' connection to and control of the NGOs are made
connections, and influence. This was established by the testimonies evident by the bank transactions of the NGOs. Records of bank
of the witnesses and the documents they testified to which, at this transactions of these NGOs reveal, as testified to by witness Santos
stage of the proceedings, [have] remained unrebutted, and thus, from the AMLC, that the accounts of these NGOs with the
given full faith and credence by the Court. Landbank and Metro bank were only temporary repository of funds
and that the withdrawal from the accounts of the NGOs had to be
From 2006 to 2009, accused Revilla was earmarked PDAF from the confirmed first with accused Napoles nothwithstanding that the
national budget. He had no physical and direct possession of the accounts were not under her name. It is well to note that the bank
fund. However, as the fund was allocated to his office, he alone could accounts of these NGOs were opened by the named presidents
trigger its release, after accomplishment of the necessary using JLN Corp. identification cards. These circumstances are
documentary requirements. All he had to do, and which he actually consistent to the testimonies of accused Luy, Sula, Suiias and
did, was to request its release from then President Gloria Macapagal- Baltazar that as soon as the check of the PDAF proceeds were
Arroyo (PGMA) or from the DBM accompanied by a list of projects encashed, accused Napoles directed them or any of her trusted
and endorsement naming a certain implementing agency on the employees to withdraw the same. At this stage, the Court sees no
DBM's menu as project implementor. Finding everything to be in basis to doubt the strong evidence against accused Napoles.
order, the DBM processed accused Revilla's request, approved it, and
eventually released the SARO. Accused Revilla was informed of this Accused Revilla managed to remain incognito in reaping benefits from
release. After the SARO, the DBM issued the NCA to cover the cash the illegal scheme with the help and cooperation of accused Cambe.
requirements of the IA authorized under the SARO. The DBM issued Concededly, there are no direct proofs that accused Revilla received
"Notice of Cash Allocation Issued ("NCAI) to the Bureau of Treasury. commissions/rebates out of the proceeds of his PDAF routed to
In tranches, the IA issued checks to the NGOs. The "NGOs were paid accused Napoles, but the circumstances persuasively attest that
in full of the project cost upon submission of liquidation reports with accused Revilla on several occasions, received money from the
supporting documents, such as delivery receipts, purchase orders and illegitimate deals involving his PDAF, through accused Cambe. Also,
list of beneficiaries, with corresponding signatures. accused Cambe profited from the same transactions so far computed
at ₱13,935,000.00.
xxxx
There are solid reasons to infer that accused Cambe acted on behalf
It is well to note that accused Revilla's endorsement consisted of two of accused Revilla and with the latter's imprimatur, and that accused
Revilla effectively clothed accused Cambe with full authority.
phases. The first phase consisted of letters addressed to PGMA or the
Consider these: (1) accused Cambe worked for Revilla in the Senate;
DBM requesting for the release of the PDAF, with attached list of
(2) accused Revilla designated accused Cambe to follow up,
priority projects. Itemized in the list were the location, name and
supervise and act on his behalf for the implementation of the
amount of the project as well as the IA he desired to implement the
projects, and to sign necessary documents; (3) accused Cambe,
project. The second phase consisted of letters to the IAs subsequent to
representing accused Revilla or Revilla's office, signed the MOAs
the issuance of the SARO, this time, endorsing "Napoles' "NGOs to and other documents used to support the issuance of the checks
the IAs as the latter's project partners. from the IA to accused Napoles' NGOs to supposedly finance the
projects out of accused Revilla's PDAF. Accused Cambe likewise
The endorsement letters and other documents submitted to the IAs signed liquidation documents such as accomplishment reports; (4)
show that accused Revilla's participation did not just stop at initiating Luy, Suñas, and Sula forthrightly and positively identified Cambe
the release of his PDAF, but extended to the implementation stage of to have received from them or from accused Napoles the
his identified projects. He sent communications to the IAs appointing commissions/rebates of accused Revilla; (5) the said witnesses
and authorizing accused Cambe to monitor, follow up, or assist in the likewise candidly testified that accused Cambe also personally got
implementation of the projects, and "to sign in his behalf all other his own commission either from them or from accused Napoles; (6)
documents needed to smooth the process." Accused Cam be, for Luy had recorded the commissions/rebates per his testimony, and
accused Revilla, conformed to the project activities and project as shown by his disbursement ledgers and Summary of Rebates.
profiles prepared by the "NGOs. He likewise signed on the tripartite These points may rest heavily on the credibility of the witnesses.
MOAs with the representatives of the IA and the "NGO concerned. But, as discussed, the Court, in the meantime, saw no cogent
Also, accused Cambe, by himself or for accused Revilla, signed justification to invalidate their testimonies.
liquidation documents such as accomplishment/terminal reports,
reports of disbursement (fund utilization), inspection and acceptance x x x x
reports.
THE THIRD ELEMENT. Of the Php224,512,500.00 alleged in the
xxxx Information to have been plundered by accused Revilla and/or
Cambe, theprosecution has so far strongly proven the amount of
Accused Revilla could not have possibly drawn money from his ₱103,000,000.00 broken down below. This is the total amount received
PDAF allocation directly to himself. He had to do it through channels by accused Cambe for Revilla, to which Luy, Sula and Suñas have
or conduits to camouflage the flow with a semblance of legitimacy. testified to their personal knowledge. In other words, Luy, Sula or
Here lies the indispensable participation of accused "Napoles. Like Suñas either directly handed the money to accused Cambe, or they
accused Revilla, accused "Napoles stayed at the background, using saw accused Napoles, or any one of them, give the money to accused
other people as her tentacles to fulfill her part of the conspiracy. Cambe. Thus:
Although accused Napoles' signature does not appear in any of these
documents, evidence abounds to support that she was the brains (Emphasis supplied)
behind the vital link of the conspiracy. Luy, Sufi.as, Sula and Baltazar,
who once worked for accused "Napoles, consistently declared that Thus, the Sandiganbayan exercised its judicial discretion within the
they moved and acted upon the instruction of "Napoles, from the bounds of the Constitution, law, rules, and jurisprudence after
creation of fake "NGOs to the diversion of the proceeds of the PDAF. appreciating and evaluating the evidence submitted by the parties.
Accused "Napoles engineered the creation of the "NGOs through
which the proceeds of accused Revilla's PDAF were funneled.
During the bail hearings, both parties were afforded opportunities to
offer their evidence. The prosecution presented nine witnesses and
Evidence discloses that the "NGOs were illicitly established for some documentary evidence to prove the strong evidence of guilt of the
dishonest purpose. Their presidents and incorporators either have accused. The defense likewise introduced evidence in its own rebuttal
working or personal relations to accused Napoles, or unknown to her, and cross-examined the witnesses presented by the prosecution. Only
or fictitious. The addresses of the NGOs were either the location of after both parties rested their case that the Sandiganbayan issued its
her property or that of her employees whom she made presidents, or
Resolution, which contains the summary of the prosecution's
evidence. The summary of the prosecution's evidence shows the basis
for the Sandiganbayan's discretion to deny bail to Cambe and
Napoles.
In finding strong evidence of guilt against Cambe, the Sandiganbayan
considered the PDAF documents and the whistleblowers' testimonies
in finding that Cambe received, for Revilla, the total amount of
₱103,000,000.00, in return for Revilla's endorsement of the NGOs of
Napoles as the recipients of Revilla's PDAF. It gave weight to Luy's
summary of rebates and disbursement ledgers containing Cambe's
receipt ofmoney, which Luy obtained from his hard drive. The
Sandiganbayan likewise admitted Narciso as expert witness, who
attested to the integrity of Luy's hard drive and the files in it.
In finding strong evidence of guilt against Napoles, the
Sandiganbayan considered the AMLC Report, as attested by witness
Santos, stating that Napoles controlled the NGOs, which were the
recipients of Revilla's PDAF. The Sandiganbayan found that the
circumstances stated in the AMLC Report, particularly that the bank
accounts of these NGOs were opened by the named presidents using
JLN Corp. IDs, these accounts are temporary repository of funds, and
the withdrawal from these accounts had to be confirmed first with
Napoles, are consistent with the whistleblowers' testimonies that they
were named presidents of Napoles' NGOs and they withdrew large
amounts of cash from the NGOs' bank accounts upon instruction of
Napoles. The Sandiganbayan also took note of the COA report, as
confirmed by the testimony of Garcia, that Revilla's PDAF projects
failed to comply with the law, Napoles' NGOs were fake, no projects
were implemented and the suppliers selected to supply the NGOs
were questionable.
Accordingly, there is no basis for the allegation of Cambe that the
Sandiganbayan Resolutions were based on mere presumptions and
inferences. On the other hand, the Sandiganbayan considered the
entire record of evidence in finding strong evidence of guilt.
For purposes of bail, we held in People v. Cabral60 that: "[b ]y judicial
discretion, the law mandates the determination of whether proof is
evident or the presumption of guilt is strong. 'Proof evident' or
'Evident proof' in this connection has been held to mean clear, stron2
evidence which leads a well-guarded dispassionate judgment to the
conclusion that the offense has been committed as charged, that
accused is the guilty agent, and that he will probably be punished
capitally if the law is administered. 'Presumption great' exists when
the circumstances testified to are such that the inference of guilt
naturally to be drawn therefrom is strong, clear, and convincing to
an unbiased judgment and excludes all reasonable probability of
any other conclusion."61 The weight of evidence necessary for bail
purposes is not proof beyond reasonable doubt, but strong evidence
of guilt, or "proof evident," or "presumption great." A finding of
"proof evident" or "presumption great" is not inconsistent with the
determination of strong evidence of guilt, contrary to Cambe's
argument.
Cambe further alleged that the Sandiganbayan gravely abused its
discretion in relying on the concept of totality of evidence, which only
applies in writ of amparo cases. To support this argument, Cambe's
previous counsel cited Razon, Jr. v. Tagitis. 62
We specifically held in Razon that the: "unique situations that call for
the issuance of the writ [of amparo ], as well as the considerations and
measures necessary to address these situations, may not at all be the
same as the standard measures and procedures in ordinary court
actions and proceedings."63 Thus, the case of Razon should not have
been applied in this case. On the other hand, as we held in People v.
Cabral: "[e]ven though there is a reasonable doubt as to the guilt of
accused, if on an examination of the entire record the presumption is
great that accused is guilty of a capital offense, bail should be
refused." 64 Accordingly, an examination of the entire record -
totality of evidence - is necessary to determine whether there is
strong evidence of guilt, for purposes of granting or denying bail to
the accused.
In their separate petitions before us, Cambe and Napoles attempt to
individually refute each evidence presented by the prosecution. In his
petition, Cam be alleges that there was even no evidence that: (1) he
is a public officer; and (2) he and Napoles also amassed, accumulated
or acquired ill-gotten wealth of at least ₱50,000,000.00. Napoles, on the
other hand, argues that there was no direct evidence that Revilla
amassed illgotten wealth. In addition, Napoles argues that: (1) the
whistleblowers' testimonies lack credibility and are hearsay because
of their admission that they never saw Revilla talk with Napoles about
their alleged agreement; (2) the AMLC report is multiple hearsay; and
(3) the hard disk, disbursement ledger, and summary of rebates are
not reliable because Narciso is not an expert witness, and the entries
in the disbursement ledger are hearsay. In short, Cambe and Napoles
question the conclusions of the Sandiganbayan insofar as its
appreciation of the facts is concerned.
Generally, the factual findings of the Sandiganbayan are binding
upon the Court. 65 However, this general rule is subject to some
exceptions, among them: (1) when the conclusion is a finding
grounded entirely on speculation, surmise and conjectures; (2) the
inference made is manifestly mistaken; (3) there is a grave abuse of
discretion; ( 4) the judgment is based on misapprehension of facts; (5)
said findings of facts are conclusions without citation of specific
evidence on which they are based; and (6) the findings of fact of the
Sandiganbayan are premised on the absence of evidence on record.66
We will not set aside the factual findings of the Sandiganbayan,
absent any showing that the Sandiganbayan exercised its discretion
out of whim, caprice, and outright arbitrariness amounting to grave
abuse of discretion.
In any event, Cambe is estopped from claiming that he is not a public
officer. Cambe himself admitted in his Application for Bail that "while
accused Cambe is a public officer, he did not act by himself or in
connivance with members of his family x x x."67 Furthermore, such is
a factual finding of the Sandiganbayan, which is binding before us.
Also, there is no need to prove that Cambe and Napoles likewise
amassed, accumulated or acquired ill-gotten wealth of at least
₱50,000,000.00 or that Revilla talked with Napoles about their alleged
agreement. The charge against them is conspiracy to commit plunder.
In Estrada v. Sandiganbayan, 68 we held that "the gravamen of the
conspiracy charge, therefore, is not that each accused agreed to
receive protection money from illegal gambling, that each
misappropriated a portion of the tobacco excise tax, that each accused
ordered the GSIS and SSS to purchase shares of Belle Corporation and
receive commissions from such sale, nor that each unjustly enriched
himself from commissions, gifts and kickbacks; rather, it is that each
of them, by their individual acts, agreed to participate, directly or
indirectly, in the amassing, accumulation and acquisition of ill-
gotten wealth of and/or for [petitioner Estrada]."69 Also, proof of
the agreement need not rest on direct evidence, as the agreement
itself may be inferred from the conduct of the parties disclosing a
common understanding among them with respect to the commission
of the offense. 70 It is not necessary to show that two or more persons
met together and entered into an explicit agreement setting out the
details of an unlawful scheme or the details by which an illegal
objective is to be carried out.71 Thus, in Guy v. People of the
Philippines,72 we held that conspiracy was properly appreciated by
the Sandiganbayan because even though there was no direct proof
that petitioners agreed to cause injury to the government and give
unwarranted benefits to a certain corporation, their individual acts
when taken together as a whole showed that they were acting in
concert and cooperating to achieve the same unlawful objective. The
conspiracy to commit plunder need not even be proved beyond
reasonable doubt, but only for purposes of determining whether bail
shall be granted.
Moreover, in giving credence to the testimonies of the prosecution
witnesses, we held that the trial court's - the Sandiganbayan's -
assessment of the credibility of a witness is entitled to great weight,
sometimes even with finality. 73 This Court will not interfere with
that assessment, absent any indication that the lower court has
overlooked some material facts or gravely abused its discretion. 74
Minor and insignificant inconsistencies in the testimony tend to
bolster, rather than weaken, the credibility of witnesses,for they show
that the testimony is not contrived or rehearsed. 75 Moreover, the
testimony of a witness must be considered in its entirety and not
merely in its truncated parts. 76 Similarly, we held that "the credibility
of the expert witness and the evaluation of his testimony is left to the
discretion of the trial court whose ruling thereupon is not reviewable and did not abuse its discretion in ordering the commitment of Revilla
in the absence of an abuse of that discretion. "77 and Cambe in the PNP Custodial Center.

As for the weight given by the Sandiganbayan to whistleblowers' Clearly, Section 24 of RA 6975 vests authority in the PNP to detain
testimonies, expert's testimony, AMLC report, the hard disk, arrested persons such as Revilla and Cambe, and the Revised PNP
disbursement ledger and summary of rebates, we emphasize that for Police Operational Procedures Manual includes the PNP
purposes of bail, the court does not try the merits or enter into any Detention/CustodialCenter as an institution where any person
inquiry as to the weight that ought to be given to the evidence arrested due to the commission of a crime/s can be
against the accused, nor will it speculate on the outcome of the trial detained/admitted.
or on what further evidence may be offered therein.78 The course of
inquiry may be left to the discretion of the court which may confine The prosecution, however, anchors its motion to transfer the
itself to receiving such evidence as has reference to substantial detention of Revilla and Cambe on Section 3, Rule 113 of the Rules of
matters, avoiding unnecessary thoroughness in the examination and Court and Section 63 of RA 6975. Section 3, Rule 113 of the Rules of
cross-examination.79 Court provides that: "It shall be the duty of the officer executing the
warrant to arrest the accused and to deliver him to the nearest police
Grave abuse of discretion implies a capricious and whimsical exercise station or jail without unnecessary delay." On the other hand, Section
of judgment tantamount to lack or excess of jurisdiction. 80 The abuse 63 of RA 6975 provides:
of discretion must be so patent and gross as to amount to an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by SECTION 63. Establishment of District, City or Municipal Jail. - There
law, or to act at all in contemplation of law as where the power is shall be established and maintained in every district, city and
exercised in an arbitrary and despotic manner by reason of passion or municipality a secured, clean, adequately equipped and sanitary jail
hostility. 81 for the custody and safekeeping of city and municipal prisoners, any
fugitive from justice, or person detained awaiting investigation or
We find that the Sandiganbayan was far from abusive of its discretion. trial and/or transfer to the national penitentiary, and/or violent
On the contrary, its findings were based on the evidence extant in the mentally ill person who endangers himself or the safety of others,
records. In its appreciation and evaluation of the evidence against duly certified as such by the proper medical or health officer, pending
Cambe and Napoles, the Sandiganbayan did not commit grave abuse the transfer to a medical institution.
of discretion in finding that the prosecution established strong
evidence of their guilt. The municipal or city jail service shall preferably be headed by a
graduate of a four (4) year course in psychology, psychiatry,
G.R. No. 218903 sociology, nursing, social work or criminology who shall assist in the
immediate rehabilitation of individuals or detention of prisoners.
We find that the Sandiganbayan did not commit grave abuse of Great care must be exercised so that the human rights of [these]
discretion amounting to lack and/or excess of jurisdiction when it prisoners are respected and protected, and their spiritual and physical
denied the prosecution's motion to transfer the detention of Revilla well-being are properly and promptly attended to.
and Cambe from the PNP Custodial Center to a BJMP-operated
facility. However, both Section 3 of Rule 113 and Section 63 of RA 6975 are
inapplicable in the present case. It must be noted that Revilla and
The Rules of Court provide that an arrest is the taking of a person into Cambe voluntarily surrendered to the Sandiganbayan, and there is no
custody in order that he may be bound to answer for the commission opportunity for the arresting officer to execute the warrants of arrest
of anoffense. 82 An arrest is made by an actual restraint of a person to against them. Moreover, the said rule merely refers to the duty of the
be arrested, or by his submission to the custody of the person arresting officer to deliver the arrested person to the nearest police
making the arrest. 83 Section 24 of RA 6975, or An Act Establishing station or jail. The rule did not state about the duty "to detain" the
The Philippine National Police Under A Reorganized Department of arrested person to the nearest police station or jail. There is nothing in
the Interior and Local Government, and for Other Purposes, provides the rule referring to the place of detention of the arrested person.
that: "The Philippine National Police (PNP) shall have the following
powers and functions: x x x (e) Detain an arrested person for a period In the same manner, there is nothing in Section 63 of RA 697 5 which
not beyond what is prescribed by law, informing the person so expressly mandates and limits the place of detention in BJMP-
detained of all his rights under the Constitution; x x x." The Revised controlled facilities. On the other hand, it merely provides that: "there
PNP Police Operational Procedures Manual provides that: "any shall be established and maintained in every district, city and
person arrested due to the commission of a crime/s can be municipality a secured, clean, adequately equipped and sanitary jail
detained/admitted in the PNP Detention/Custodial Center."84 As x x x." When the language of the law is clear and explicit, there is no
defined in the Revised PNP Police Operational Procedures Manual, room for interpretation, only application.
85 a detention/Custodial Center is an institution secured by the PNP
Units concerned for the purpose of providing short term custody of Section 61 of the same law states that the BJMP shall exercise
[a] detention prisoner thereby affording his safety and preventing supervision and control over all city and municipal jails, while the
escape while awaiting the court's disposition of the case or his provincial jails shall be supervised and controlled by the provincial
transfer to the appropriate penal institution. government within its jurisdiction. 88 Evidently, a provincial jail is a
place of detention not within the supervision and control of the BJMP.
In the present case, both Revilla and Cambe voluntarily surrendered From the law itself, there are places of detention for the accused,
to the Sandiganbayan upon the issuance of the warrants of arrest which are not within the control and supervision of the BJMP.
against them, albeit with motion to elect the detention facilities in the
PNP Custodial Center. Upon their voluntary surrender, they are Thus, to argue, as the prosecution did, that Revilla and Cambe's
deemed arrested and taken into custody. The Sandiganbayan detention in the PNP Custodial Center afforded them special
thereafter allowed both Revilla and Cambe to be detained in the PNP treatment because it is not a jail supervised by the BJMP would be
Custodial Center barracks. Under the Rules of Court, the court, such similar to saying that detention of an accused in a provincial jail
as the Sandiganbayan in the present case, shall exercise supervision supervised by the provincial government would afford such accused
over all persons in custody for the purpose of eliminating special treatment.
unnecessary detention. 86
Aside from its bare statements, the prosecution did not advance
When by law jurisdiction is conferred on a court, all auxiliary writs, compelling reasons to justify the transfer of detention of Revilla and
processes and other means necessary to carry it into effect may be Cambe. The prosecution likewise failed to substantiate its allegation
employed by such court; and if the procedure to be followed in the of special treatment towards Revilla. As the Sandiganbayan properly
exercise of such jurisdiction is not specifically pointed out by law or held:
by these rules, any suitable process or mode of proceeding may be
adopted which appears comfortable to the spirit of the said law or
The prosecution failed to advance compelling and reasonable
rules. 87 Accordingly, the Sandiganbayan acted within its jurisdiction
grounds to justify the transfer of accused Revilla and Cambe from the
PNP Custodial Center, Camp Crame, to a BJMP controlled jail. Since
their detention at the PNP Custodial Center on June 20, 2014, the
conditions of their confinement have not been altered by
circumstances that would frustrate the very purpose of their
detention. Both accused have submitted themselves to the Court
when required. No concrete incidents have been cited by the
prosecution to establish that their continued detention in Camp
Crame is no longer viable, and that the better part of discretion is to
transfer them to a BJMP controlled jail. The prosecution does not
articulate what is in a BJMP facility that the PNP Custodial Center
lacks, or vice versa, which will make a difference in the administration
of justice.
Before the Court is simply a general proposition that the accused
should be confined in a BJMP controlled detention facility based on
some rules, which the Court have previously discussed to be
unacceptable, backed up by an unsubstantiated generic declaration
that the PNP Custodial Center affords them special treatment not
extended to all other detention prisoners under BJMP control. To the
prosecution, this is a violation of the constitutional right to equal
protection of the other detention prisoners, like Atty. Reyes, who is
now detained in a BJMP facility.
But, the Court is not convinced. To agree with the prosecution on the
matter of special treatment is to accept a general notion that the public
officers in a BJMP facility are more circumspect in the handling of
detention prisoners than in a non-BJMP facility, like the PNP
Custodial Center. Verily, the "special treatment," e.g., wedding
anniversary celebration of Senator Jinggoy Estrada claimed by the
prosecution, does not go with the place. It has even nothing to do with
accused Revilla and Cambe. "Special treatment" is a judgment call by
the people concerned in the place. For no matter which detention
place will accused Revilla and Cambe be confined if the people
controlling that place would extend themprivileges not usually given
to other detention prisoners, there would always be that dreaded
"special treatment." Thus, special treatment can be addressed by
ensuring that the people around the accused in their present detention
facility will deter from giving them exceptional benefits, through a
firm implementation of policies and measures, and the imposition of
sanctions for non-compliance. The "special treatment" cannot be
remedied by transferring the accused to another detention facility.
The transfer must be reasonably justified.
The Court solicitously agrees that it is the fact of detention and not the
place of detention that is important. x x x. 89
In its Resolution dated 20 May 2015, the Sandiganbayan stated that it
so took into account, considering the circumstances of the accused,
the security conditions of the place, and its proximity to the court. 90
With these factors, the Sandiganbayan viewed that the PNP Custodial
Center would be able to secure the accused and ensure their
attendance at trial, at a reasonable cost to the government. Absent any
showing of grave abuse of discretion, the factual findings of the
Sandiganbayan are binding upon the Court. We affirm the order of
the Sandiganbayan directing the PNP-CIDG "to keep the accused in
its custody at the aforesaid barracks (PNP Custodial Center Barracks)
and not allow the accused to be moved, removed, or relocated until
further orders from the court."91
G.R. No. 219162
We find that the Sandiganbayan did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in ordering the
issuance of the writ of preliminary attachment against Revilla's
monies and properties.
Presidential Decree No. 1606, as amended by RA 10660, provides that
the Sandiganbayan has jurisdiction to jointly determine in the same
proceeding the criminal action and the corresponding civil action for
the recovery of civil liability, considering that the filing of the criminal
action before the Sandiganbayan is deemed to necessarily carry with
it the filing of the civil action. 92 The same law provides that the Rules
of Courtpromulgated by the Supreme Court shall apply to all cases
and proceedings filed with the Sandiganbayan. 93 The Rules of Court
state that the provisional remedies in civil actions, insofar as they are
applicable, may be availed of in connection with the civil action
deemed instituted with the criminal action. 94
The grounds for the issuance of the writ of preliminary attachment
have been provided in Rule 57 and Rule 127 of the Rules of Court.
Rule 127 states that the provisional remedy of attachment on the
property of the accused may be availed of to serve as security for the
satisfaction of any judgment that may be recovered from the accused
when the criminal action is based on a claim for money or property
embezzled or fraudulently misapplied or converted to the use of the
accused who is a public officer, in the course of his employment as
such, or when the accused has concealed, removed or disposed of
his property or is about to do so.95 Similarly, Rule 57 provides that
attachment may issue: "x x x (b) in an action for money or property
embezzled or fraudulently misapplied or converted to his own use
by a public officer x x x; (c) in an action to recover the possession of
property unjustly or fraudulently taken, detained or converted, when
the property, or any part thereof, has been concealed, removed, or
disposed of to prevent its being found or taken by the applicant or
an authorized person; x x x."96
It is indispensable for the writ of preliminary attachment to issue that
there exists a prima facie factual foundation for the attachment of
properties, and an adequate and fair opportunity to contest it and
endeavor to cause its negation or nullification.97 Considering the
harsh and rigorous nature of a writ of preliminary attachment, the
court must ensure that all the requisites of the law have been complied
with; otherwise, the court which issues it acts in excess of its
jurisdiction. 98
Thus, for the ex-parte issuance of a writ of preliminary attachment to
be valid, an affidavit of merit and an applicant's bond must be filed
with the court in which the action is pending.99 For the affidavit of
merit, Section 3 ofthe same rule states that: "[a]n order of attachment
shall be granted only when it is made to appear by the affidavit of the
applicant or some other person who personally knows of the facts that
a sufficient cause of action exists, that the case is one of those
mentioned in Section 1 hereof, that there is no sufficient security for
the claim sought to be enforced by the action, and that the amount
due to applicant or the value of the property the possession of which
he is entitled to recover is as much as the sum for which the order is
granted above all legal counterclaims." The mere filing of an affidavit
reciting the facts required by Section 3, however, is not enough to
compel the judge to grant the writ of preliminary attachment. 100
Whether or not the affidavit sufficiently established facts therein
stated is a question to be determined by the court in the exercise of its
discretion. 101 The sufficiency or insufficiency of an affidavit depends
upon the amount of credit given it by the judge, and its acceptance or
rejection, upon his sound discretion. 102 On the requirement of a
bond, when the State is the applicant, the filing of the attachment
bond is excused. 103
We find that the Sandiganbayan acted within its jurisdiction since all
the requisites for the issuance of a writ of preliminary attachment
have been complied with.
Revilla, while still a public officer, is charged with plunder,
committed by amassing, accumulating, and acquiring ill-gotten
wealth, through a combination or series of overt or criminal acts, as
follows:
1) Through misappropriation, conversion, misuse, or malversation
of public funds or raids on the public treasury;
2) By receiving, directly or indirectly, any commission, gift, share,
percentage, kickbacks or any other form of pecuniary benefit from
any person and/or entity in connection with any government contract
or project or by reason of the office or position of the public officer
concerned;.
3) By the illegal or fraudulent conveyance or disposition of assets
belonging to the National Government or any of its subdivisions,
agencies or instrumentalities or government-owned or -controlled
corporations and their subsidiaries;
4) By obtaining, receiving or accepting directly or indirectly any
shares of stock, equity or any other form of interest or participation
including promise of future employment in any business enterprise
or undertaking;
5) By establishing agricultural, industrial or commercial monopolies Even assuming that plunder is not based on a claim for public funds
or other combinations and/or implementation of decrees and orders or property misappropriated, converted, misused or malversed by the
intended to benefit particular persons or special interests; or public officer, the prosecution nevertheless alleged that Revilla has
concealed, removed, or disposed of his property, or is about to do so,
6) By taking undue advantage of official position, authority, which is another ground for the issuance of the writ of preliminary
relationship, connection or influence to unjustly enrich himself or attachment. The AMLC report, attached to the Motion, states that
themselves at the expense and to the damage and prejudice of the many investment and bank accounts of Revilla were "terminated
Filipino people and the Republic of the Philippines. 104 (Emphasis immediately before and after the PDAF scandal circulated in [the]
supplied) media," and Revilla himself publicly confirmed that he closed several
bank accounts when the PDAF scam was exposed. Revilla failed to
rebut these allegations with any evidence.
Clearly, the crime of plunder is based on a claim for public funds or
property misappropriated, converted, misused, or malversed by the
accused who is a public officer, in the course of his employment as Considering that the requirements for its issuance have been
such. The filing of the criminal action for plunder, which is within the complied with, the issuance of the writ of preliminary attachment by
jurisdiction of the Sandiganbayan, 105 is deemed to necessarily carry the Sandiganbayan is in order.1âwphi1
with it the filing of the civil action. Accordingly, the writ of
preliminary attachment is an available provisional remedy in the Contrary to Revilla's allegation, a writ of preliminary attachment may
criminal action for plunder. issue even without a hearing. Section 2, Rule 57 of the Rules of Court
states that: "[a]n order of attachment may be issued either ex parte or
In its Motion, the prosecution alleged that: "[Revilla] converted for his upon motion with notice and hearing by the court in which the action
own use or caused to be converted for the use by unauthorized is pending, or by the Court of Appeals or the Supreme Court, and
persons the sum of Php515,740,000.00 worth of public funds sourced must require the sheriff of the court to attach so much of the property
from his PDAF through 'ghost' projects." 106 In Cambe v. Office of the in the Philippines of the party against whom it is issued, not exempt
Ombudsman, 107 we agreed with the Ombudsman's finding of from execution, as may be sufficient to satisfy the applicant's demand,
probable cause against Revilla and held that for purposes of arriving unless such party makes deposit or gives a bond as hereinafter
at a finding of probable cause, "only facts sufficient to support a prima provided in an amount equal to that fixed in the order, which may be
facie case against the [accused] are required, not absolute certainty." the amount sufficient to satisfy the applicant's demand or the value of
Thus, we held that the prosecution's evidence established a prima facie the property to be attached as stated by the applicant, exclusive of
case for plunder against Revilla: costs. x x x."

Taking together all of the above-stated pieces of evidence, the COA In Davao Light & Power Co., Inc. v. Court of Appeals,109 this Court ruled
and FIO reports tend to prima facie establish that irregularities had that "a hearing on a motion or application for preliminary attachment
indeed attended the disbursement of Sen. Revilla's PDAF and that is not generally necessary unless otherwise directed by the trial court
he had a hand in such anomalous releases, being the head of Office in its discretion." 110 In the same case, the Court declared that
which unquestionably exercised operational control thereof. As the "[n]othing in the Rules of Court makes notice and hearing
Ombudsman correctly observed, "[t]he PDAF was allocated to him by indispensable and mandatory requisites for the issuance of a writ of
virtue of his position as a Senator, and therefore he exercise[ d] control attachment." 111 Moreover, there is an obvious need to avoid alerting
in the selection of his priority projects and programs. He indorsed suspected possessors of "ill-gotten" wealth and thereby cause that
[Napoles'] NGOs in consideration for the remittance of kickbacks and disappearance or loss of property precisely sought to be prevented.
commissions from Napoles. Compounded by the fact that the PDAF- 112 In any case, Revilla was given an adequate and fair opportunity
funded projects turned out to be 'ghost projects', and that the rest of to contest its issuance.
the PDAF allocation went into the pockets of Napoles and her cohorts,
[there is probable cause to show that] Revilla thus unjustly enriched Also, contrary to Revilla's allegation, there is no need for a final
himself at the expense and to the damage and prejudice of the Filipino judgment of ill-gotten wealth, and a preliminary attachment is
people and the Republic of the Philippines." Hence, he should stand entirely different from the penalty of forfeiture imposed upon the
trial for violation of Section 3(e) of RA 3019. For the same reasons, it final judgment of conviction under Section 2 of RA 7080. By its nature,
is apparent that ill-gotten wealth in the amount of at least a preliminary attachment is an ancillary remedy applied for not for its
₱50,000,000.00 (i.e., ₱224,512,500.00) were amassed, accumulated or own sake but to enable the attaching party to realize upon the relief
acquired through a combination or series of overt acts stated in sought and expected to be granted in the main or principal action; it
Section 1 of the Plunder Law. Therefore, Sen. Revilla should likewise is a measure auxiliary or incidental to the main action. 113 As such, it
stand trial for Plunder. 108 (Emphasis supplied) is available during the pendency of the action which may be resorted
to by a litigant to preserve and protect certain rights and interests
Thus, contrary to Revilla's insinuations, there exists a prima facie during the interim, awaiting the ultimate effects of a final judgment
factual foundation for the attachment of his monies and properties. in the case. 114 The remedy of attachment is provisional and
temporary, designed for particular exigencies, attended by no
character of permanency or finality, and always subject to the control
Furthermore, in its Resolution dated 1 December 2014 denying bail to
of the issuing court. 115
Revilla, the Sandiganbayan held that the prosecution duly established
with strong evidence that Revilla, Cambe, and Napoles, in conspiracy
with one another, committed the crime of plunder. The finding of On the other hand, Section 2 of RA 7080 requires that upon conviction,
strong evidence forpurposes of bail is a greater quantum of proof the court shall declare any and all ill-gotten wealth and their interests
required than prima facie factual foundation for the attachment of and other incomes and assets including the properties and shares of
properties. Thus, the Sandiganbayan properly exercised its discretion stock derived from the deposit or investment thereof forfeited in favor
in issuing the writ of preliminary attachment upon appreciating and of the State. The State may avail of the provisional remedy of
evaluating the evidence against Revilla. attachment to secure the preservation of these unexplained wealth
and income, in the event that a judgment of conviction and forfeiture
is rendered. The filing of an application for the issuance of a writ of
Moreover, the Affidavit of Merit attached to the Motion and executed
preliminary attachment is a necessary incident in forfeiture cases. 116
by graft investigators of Revilla's PDAF likewise established that (1) a
It is needed to protect the interest of the government and to prevent
sufficient cause of action exists for the issuance of a writ of
the removal, concealment, and disposition of properties in the hands
preliminary attachment; (2) the case is one of those mentioned in
of unscrupulous public officers. 117 Otherwise, even if the
Sections 57 and 127 of the Rules of Court, and (3) that Revilla has no
government subsequently wins the case, it will be left holding an
visible sufficient security in the event that judgment is rendered
empty bag.118
against him. The sufficiency of the affidavit depends upon the amount
of credit given by the Sandiganbayan, and its acceptance, upon its
sound discretion. We refuse to interfere in its exercise of discretion, This Decision does not touch upon the guilt or innocence of any of the
absent any showing that the Sandiganbayan gravely abused its petitioners.WHEREFORE, we DISMISS the petitions for lack of
discretion. merit and AFFIRM the assailed Resolutions of the Sandiganbayan.

SO ORDERED.