PROV REM/ Thur 5: 30-7:30 / Preliminary Attachment Rule 57 of RoC

1. Stages of attachment

I. Introduction to Provisional Remedies CASE:

Provisional Remedies are temporary, auxiliary and ancillary remedies available to a litigant for the TORRES V. SATSATIN
protection and preservation of his rights while the main action is pending. (Riano, CivilProcedure, 2009 Ed.)
2. Contemporaneous service of summons
Writs and processes which are not main actions and they presuppose the existence of a principal action.
The word Provisional Remedy is suggestive. It is something temporary. TORRES V. SATSATIN
Provisional Remedies are remedies which are temporary and is defined by the Supreme Court as remedies
which parties may resort B. Persons entitled (s1)
for the preservation or protection of their rights and interests and for no other purpose, during the pendency 1. Plaintiff
of the principal action. So these are the remedies resorted to just to preserve the rights of the parties while 2. Other proper party
the case is pending.
A. The Different provisional remedieS CASE:
1. Preliminary attachment (Rule 57)
2. Preliminary injunction (Rule 58) BORJA V. PLATON
3. Receivership (Rule 59)
4. Replevin(Rule 60) C. Grounds (s1)
5. Support pendent lite (Rule 61)
CASE: SECTION 1. Grounds upon which attachment may [Link] the commencement of the action or
CALO V. ROLDAN ATTACHMENT may be issued only in the cases or actions at any time before entry of judgment, a plaintiff or any proper party may have the property of
specifically stated in section 1, Rule 59, in order that the defendant may not dispose of his property attached, the adverse party attached as security for the satisfaction of any judgment that may be
and thus secure the satisfaction of any judgment that may be recovered in the following cases:
recovered by plaintiff from defendant. For that reason a property subject of litigation between the parties, or (a) In an action for the recovery of a specified amount of money or damages, other than
claimed by plaintiff as his, cannot be attached upon motion of the same plaintiff. moral and exemplary, on a cause of action arising from law, contract, quasi-contract,
The provisional remedy proper to plaintiffs' action of injunction is a preliminary prohibitory injunction, if delict or quasi-delict against a party who is about to depart from the Philippines with
plaintiffs' theory, as set forth in the complaint, that he is the owner and in actualpossession of the premises is intent to defraud his creditors;
correct. (b) In an action for money or property embezzled or fraudulently misapplied or converted
to his own use by a public officer, or an officer of a corporation, or an attorney, factor,
1. Purpose of provisional Remedies broker, agent, or clerk, in the course of his employment as such, or by any other person in
1. To protect and preserve the rights of the litigant while the main action is pending a fiduciary capacity, or for a willful violation of duty;
2. To secure judgement (c) In an action to recover the possession of property unjustly or fraudulently
3. To preserve the status quo taken, detained or converted, when the property, or any part thereof, has been concealed,
4. Preserve the subject matter of the action removed, or disposed of to prevent its being found or taken by the applicant or an
authorized person;

2. When provisional remedies cannot be availed of (d) In an action against a party who has been guilty of a fraud in contracting the
B. Outlining the rules debt or incurring the obligation upon which the action is brought, or in the performance
II. Attachment thereof;
A. Nature
Applicable not only to fraud in contracting the debt or incurring an obligation, but also to
Auxiliary remedy incidental to the main action, thus where the main action is appealed, the attachment which subsequent fraud relating to the performance thereof
may have been issued as an incident of that action, is also considered appealed and so also removed from the A debtors inability to pay is not necessarily synonymous with fraudulent intent not to honor an
jurisdiction of the court a quo. admitted obligation, that will justify the issuance of the writ of attachment.
CASE: (e) In an action against a party who has removed or disposed of his property, or
LIM V. LAZARO is about to do so, with intent to defraud his creditors; or
PEOPLE V, VELASCO (f) In an action against a party who does not reside and is not found in the
LIGON V. RTC Philippines, or on whom summons may be served by publication.
(b)

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dissolution of the writ would be tantamount to a trial on the merits. In other words, the merits of the action
would be ventilated at a mere hearing of a motion; instead of the regular trial. Therefore, when the writ of
1. What may be attached attachment is of this nature, the only way it can be dissolved is by a counterbond."

CASE: Xxxxxxxxxxxxxxxxxxxxxxxxx

PROVI V TESDA Liberty Insurance Corporation vs. Court of Appeals

2. Officer of a corporation CC:

CASE: FACTS:

OLSEN V. OLSEN 1. Imperial Organizations, Pty., thru Atty. Jose H. Imperial entered into an agreement with Coca-Cola
Bottlers Philippines to promote two concerts featuring a group known as "Earth, Wind and Fire"
3. Fraud incurring their obligation - For compliance the Coca-Cola required Imperial Organizations to put up a performance
bond. Petitioner Liberty Insurance put up the bond of 3M.
CASE:
- bond was to guarantee the return to Coca-Cola of "whatever portion of the cash sponsorship
and cash advances to be made by Coca-Cola to finance the holding of the concert
NG WEE [Link]

Wee v. Tankiansee,[43] we held that for a writ of attachment to issue under this Rule, the applicant must - petitioner required Imperial Organizations, Jose H. Imperial, Atilla Arkin, and Carmen
sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred Madlangbayan to execute an indemnity agreement in its favor to indemnify it for any and all
from the debtors mere non-payment of the debt or failure to comply with his obligation. The affidavit, being damages including attorney's fees which the petitioner may incur by reason of the issuance
the foundation of the writ, must contain particulars showing how the imputed fraud was committed for the of the bond.
court to decide whether or not to issue the writ. To reiterate, a writ of attachment can only be granted on
concrete and specific grounds and not on general averments merely quoting the words of the rules.[ 2 Unfortunately, Imperial Organizations and private respondents failed to comply with their
obligations to Coca Cola, as a result of petitioner became liable to coca-cola. Petitioner, demanded
reimbursement from Imperial, Arkin And Madlangbayan based on their indemnity bond but to no
avail.
LIBERTY INSURANCE V. CA 3 Theerafter, petitioner filed complaint for damages with application for the issuance of a writ of
preliminary attachment against private respondents.
In Liberty Insurance Corporation vs. Court of Appeals,[10] this Court, discussing Section 1(d), Rule -the RTC order allowing the issuance of the writ.
57, cautioned as follows -- - respondent Arkin filed a motion to Quash/ Recall Writ of Attachment but was denied.
To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or [Link] of defendant;
incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the - that no ground existed for the issuance of the preliminary attachment because he was not guilty
agreement and must have been the reason which induced the other party into giving consent which he would of fraud in incurring the obligation under the indemnity agreement.
not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of - After more than a year, , Arkin filed a MR of the
Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently order of denial.
contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in
this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the 5. On March 6, 1991, respondent judge reversed his earlier ruling and instead issued two orders, (1) granting
circumstances attendant in each case Arkin's Motion for Reconsideration and directing the lifting of the writ of preliminary attachment earlier issued,
and (2) ordering the deputy sheriff assigned to said court to immediately discharge or lift said writ.

- According to respondent court, the plaintiff did not prove the intent of defendant Arkin to defraud creditors.
"x x x, when the preliminary attachment is issued upon a ground which is at the same time the applicant's Aside From the fact that the alleged dispositions were made long prior to the filing of the case, the alleged
cause of action: e.g., x x x an action against a party who has been guilty of fraud in contracting the debt or dispositions were made of conjugal partnership property which were then the subjects of partition between
incurring the obligation upon which the action is brought, the defendant is not allowed to file a motion to Arkin and his estranged wife.
dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in
the plaintiffs application and affidavits on which the writ was based and consequently that the writ based
6. Aggrieved, petitioner filed a special civil action for certiorari with respondent CA to set aside the above
therein had been improperly or irregularly issued - the reason being that the hearing on such motion for
orders of respondent judge.

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Respondent court dismissed the petition on the ground that the filing of the said petition was premature
considering that there was yet a remedy available in the ordinary course of law.
FCY CONTRUCTION V. CA
ISSUE:
FCY CONSTRUCTION GROUP, INC., and FRANCIS C. YU, v. CA

FACTS:
1) Whether or not the writ of preliminary attachment in question was properly or regularly issued and
1. 1993, private respondent Ley Construction and Development Corporation filed a Complaint for
collection of a sum of money with application for preliminary attachment against petitioner FCY
2) Whether or not petitioner's failure to file a motion for reconsideration of the questioned orders of the Construction Group, Inc. and Francis C. Yu with the Makati Regional Trial Court
court a quo bars the filing of a special civil action for certiorari before the respondent court. 2. Private respondent alleged;
it had a joint venture agreement with petitioner FCY Construction Group, Inc. (wherein
petitioner Francis C. Yu served as President) over the Tandang Sora Commonwealth
Flyover government project for which it had provided funds and construction materials.
HELD: The Complaint was filed in order to compel petitioners to pay its half share in the
collections received in the project as well as those yet to be received therein. In
To sustain an attachment on the ground Section 1 (d) of Rule 57 support of its application for a writ of attachment, private respondent alleged that
petitioners were guilty of fraud in incurring the obligation and had fraudulently
it must be shown that the debtor in contracting the debt or incurring the obligation intended to misapplied or converted the money paid them, to which it had an equal share.
defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason 3. the lower court issued an Order for the issuance of a writ of preliminary attachment, conditioned
which induced the other party into giving consent which he would not have otherwise given. To constitute a upon the filing of a P7,000,000.00 attachment bond.
ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon 4. Petitioners moved for the lifting of the writ of preliminary attachment on the following grounds:
contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the (1) the attachment was heard, issued and implemented even before service of summons upon
debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need them;
(2) failure of the attaching officer to serve a copy of the affidavit of merit upon them; and
not be proved by direct evidence but may be inferred from the circumstances attendant in each case
(3) that there was no fraud in incurring the obligation.
-Here, it has been established that all the collaterals given by the respondent Arkin as security for the bond
were either fraudulent or heavily encumbered. 5. lower court issued another Order denying petitioners' Motion to Lift Attachment.[1] It, however, reduced
and confined the attachment to receivables due petitioners from the Tandang Sora commonwealth Flyover
project.
-the collaterals, turned out to be fake and spurious

6. Pet filed MR but was denied. Hence,filed in this court.

- Likewise, the supposed lien-free motor vehicle offered as collateral turned out to be heavily mortgaged and
was even disposed of without informing petitioner. Furthermore, it has also been proven that subsequent to 7. Petitioner alleged that;
the issuance of the May 30, 1988 surety bond, respondent Arkin started disposing of his other properties.
Prior to the filing of the complaint, respondent not only had sold the motor vehicle given as collateral but that the writ of preliminary attachment was irregularly issued inasmuch as there was no evidence of
his two other condominium units were also alienated in favor of a company of which respondent Arkin is the fraud in incurring the obligations sued upon.
president. All these circumstances unerringly point to the devious scheme of respondent Arkin to defraud private respondent's principal witness admitted that it was the Department of Public Works and
petitioner. Highways (DPWH) that induced it to deliver materials and cash for the Tandang Sora
Commonwealth Flyover project.
- It is therefore clear that fraud was present when private respondent, among others, entered into an The reassurance from the DPWH officials came, not at the inception of the obligation or contract,
indemnity agreement with petitioner. The actuations of respondent Arkin indubitably lead to the conclusion but during its performance. On the other hand, the fraud of which petitioners are accused of and
that he never entertained the idea of fulfilling his obligations under the agreement and was bent on which was the basis for the issuance of the questioned attachment, is fraud alleged to have been
defrauding petitioner from the very beginning. committed upon contracting the obligation sued upon. Thus, petitioners argument that
"the inducement was the mouth-watering temptation of a DPWH promise of a 'new project after
the Tandang Sora Flyover project will be finished"' is clearly off-tangent as such inducement, if
There is no impropriety or irregularity in the issuance of the writ of attachment especially so where petitioner
any, came not at the inception of the obligation.
has fully complied with the requirements for the issuance thereof.
Issue:
1, won there is fraud? (not sure)

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2. won the issuance of PA is improper?/WON pet can filed motion to lift the order of writ of PA James R. Paddon (JRP), LGDs agent. The terms of the agreement were later embodied in an
3. whether or not petitioner Francis Yu should remain as party-defendant. e-mail labeled as the 2001 Agreement.
3. In 2003 , respondent filed a case against petitioner in RTC for sum of money and damages
with a prayer for the issuance of a writ of preliminary attachment.
Held: the petition is dismiss 4. Respondent alleged that;
petitioners defrauded them in the amount of $521,841.62
1. Base on the evidence,the alleged inducement by the DPWH officials upon private respondent as respondet prayed for writ of PA against the properties and assets of petitioners
well as the circumstances surrounding the execution of the joint venture agreement, both appear 5. Thereafter the lower court ordered that Writ of Preliminary Attachment issue against the
immaterial as they were not committed upon contracting the obligation sued upon but properties and assets of Defendant METRO, INC. and against the properties and assets of
occurred long after the obligation has been established. Defendant SPOUSES FREDERICK AND LIZA JUAN not exempt from execution.
The fact that petitioners have paid a substantial amount of money to private respondent cannot save the day 6. petitioners filed a motion to discharge the writ of attachment. After considering the
for them either. As per their own accounting, such payments were for accounts payable for labor supplied, arguments of the parties, the trial court granted petitioners motion and lifted the writ of
construction materials and cash advances.[11] It is not denied that no payment of profits has been given to attachment.
private respondent, which is precisely what it is suing for. 7. Respondent filed MR but was denied. Respondent then filed in CA a petition for certiorari.
2. As cited in the case of liberty insurance V. CA"x x x, when the preliminary attachment is issued Respondents alleged that the trial court gravely abused its discretion when it ordered the
upon a ground which is at the same time the applicant's cause of action: e.g., x x x an action discharge of the writ of attachment without requiring petitioners to post a counter-
against a party who has been guilty of fraud in contracting the debt or incurring the obligation bond. WHEREIN the Court of Appeals granted respondents petition. That the trial court
upon which the action is brought, the defendant is not allowed to file a motion to dissolve the gravely abused its discretion when it ordered the discharge of the writ of attachment without
attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in requiring petitioners to post a counter-bond
the plaintiffs application and affidavits on which the writ was based and consequently that the writ ISSUE:
based therein had been improperly or irregularly issued - the reason being that the hearing on
such motion for dissolution of the writ would be tantamount to a trial on the merits. In other 1. whether the writ of attachment issued by the trial court was improperly issued such that it may be
words, the merits of the action would be ventilated at a mere hearing of a motion; instead of the discharged without the filing of a counter-bond.
regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be HELD:
dissolved is by a counterbond." The petition has no merit.
3. YES, the court agreed with the petitioners contention that, since the transactions were corporation
to corporation only, petitioner Francis Yu should be dropped as party-defendant considering the The basis of respondents application for the issuance of a writ of preliminary attachment is
hornbook law that corporate personality is a shield against personal liability of its officers. We Section 1(d), Rule 57 of the Rules of Court which provides:
agree that petitioner Francis Yu cannot be made liable in his individual capacity if he indeed
entered into and signed the contract in his official capacity as President, in the absence of (d) In an action against a party who has been guilty of fraud in contracting the debt or
stipulation to that effect, due to the personality of the corporation being separate and distinct incurring the obligation upon which the action is brought, or in the performance thereof;
from the persons composing it.
DENIED.
Furthermore, respondents alleged the following in support of their prayer for a writ of preliminary
attachment:
o defendant Frederick Juan approached plaintiff spouses and asked them to help
METRO INC V. LARAS GIFTS defendants export business. Defendants enticed plaintiffs to enter into a business
deal. He proposed to plaintiff spouses the following:
SPOUSES FREDERICK JUAN o That plaintiffs transfer and endorse to defendant Metro some of the Purchase Orders
and LIZA JUAN [Link] GIFTS AND (POs) they will receive from their US buyers;
o That defendants will sell exclusively and only thru plaintiffs for their US
CC: buyer;
FACTS: o Defendants are guilty of fraud committed both at the inception of the agreement and
1. Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the business in the performance of the obligation. Through machinations and schemes, defendants
of manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and Lara successfully enticed plaintiffs to enter into the 2001 Agreement. In order to secure
Maria R. Villafuerte are the president and vice-president of LGD respectively. Frederick Juan plaintiffs full trust in them and lure plaintiffs to endorse more POs and increase the
and Liza Juan are the principal officers of Metro, Inc. volume of the orders, defendants during the early part, remitted to plaintiffs shares
2. Sometime in 2001, petitioners and respondents agreed that respondents would endorse to under the Agreement.
petitioners purchase orders received by respondents from their buyers in the United States o However, soon thereafter, just when the orders increased and the amount involved
of America in exchange for a 15% commission, to be shared equally by respondents and likewise increased, defendants suddenly, without any justifiable reasons and in pure
bad faith and fraud, abandoned their contractual obligations to remit to plaintiffs

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their shares. And worse, defendants transacted directly with plaintiffs export the same, in violation of existing ban against cutting and export of the aforesaid
foreign buyer to the latters exclusion and damage. Clearly, defendants planned trees;
everything from the beginning, employed ploy and machinations to defraud plaintiffs, (d) obtained, in favor of PAMPLONA, a syndicated loan in the amount of millions of US
and consequently take from them a valuable client. dollars from a consortium of international banks, secured by the guarantee of the
o Defendants are likewise guilty of fraud by violating the trust and National Investment and Development Corporation (NIDC), a subsidiary of the
confidence reposed upon them by plaintiffs. Defendants received the Philippine National Bank; and in view of the default by PAMPLONA in the payment of
proceeds of plaintiffs LCs with the clear obligation of remitting 15% its principal and/or interest amortizations, the loan was converted, under the debt
thereof to the plaintiffs. Their refusal and failure to remit the said amount rescheduling arrangement between Republic and its foreign creditor banks, into a
despite demand constitutes a breach of trust amounting to malice and public sector obligation of Republic, to the grave and irreparable damage of the
fraud. Republic and the Filipino people.
SC Ruled that, respondents allegation that petitioners undertook to sell exclusively and only through 4. The Republic also alleged that the foregoing acts, singly or collectively, constituted grave and
JRP/LGD for Target Stores Corporation but that petitioners transacted directly with respondents foreign buyer gross abuse of official position and authority, flagrant breach of public trust and fiduciary
is sufficient allegation of fraud to support their application for a writ of preliminary attachment. Since the writ obligations, brazen abuse of right and power, unjust enrichment, and violation of the Constitution
of preliminary attachment was properly issued, the only way it can be dissolved is by filing a counter-bond in and laws of the Republic to the grave and irreparable damage to it and its citizens.
accordance with Section 12, Rule 57 of the Rules of Court 5. As its main prayer, the Republic asked for the reconveyance of all funds and property impressed
with constructive trust in favor of the Republic and the Filipino people, as well as funds and other
DENIED. property acquired with [respondents] abuse of right and power and through unjust enrichment,ol,
6. Meanwhile, Lim, Sr. passed away. On June 22, 1998, his estate filed a motion to lift the
sequestration[4] over certain real properties[5] contending that the PCGG impleaded him owing to
his alleged association with former Pres. Marcos. The estate would add, however, that Lim, Sr.
REPIBLIC ESTATE OF LIM secured title over almost all of his real properties thus sequestered way back in 1948, long before
the Marcoses came to power.
REPUBLIC OF THE PHILIPPINES, v. 7. To the motion to lift, the Republic interposed an opposition, alleging that the sequestered
ESTATE OF ALFONSO LIM, SR lots and titles stand as security for the satisfaction of any judgment the Republic may obtain
against the estate of Lim, Sr., his family, or his group of companies
FACTS: 8. However, the Sandiganbayan lifted the sequestration order in question. The republic filed MR but
1. Presidential Commission on Good Government (PCGG), filed before the Sandiganbayan, Second was denied.
Division, an Amended Complaint for reconveyance, reversion, accounting, restitution, and 9. an obvious bid to counter the effects of the lifting of the sequestration, the Republic, on
damages. September 9, 2002, filed a Motion for the Issuance of a Writ of Preliminary Attachment[13]
2. Republic averred that Alfonso Lim, Sr. (now deceased) and Alfonso Lim, Jr., acting by themselves against respondents in the amount of its claim.
and/or in unlawful collusion with Ferdinand E. Marcos and Imelda R. Marcos, and taking undue The Republic alleged that respondent Lims were guilty of fraud in incurring various
advantage of their relationship, influence, and connection with the latter, embarked upon devices legal obligations which the present action has been brought, by taking undue advantage of their
and stratagems to unjustly enrich themselves at the expense of the Republic and the Filipino relationship, influence and connection with the [Marcoses] to unjustly enriched themselves to the
people. prejudice of the Republic.
3. The acts of lim are 10. However, the CA denied the issuance of writ of PA
(a) actively solicited and obtained, upon the personal behest of [the Marcoses], with 11. Republic alleged;
the active collaboration of Teodoro Q. Pea, who was then Minister of Natural That the evidence offered before and admitted by the Sandiganbayan
Resources, additional timber concession in favor of Taggat Industries, Inc. (TAGGAT) provide sufficient is basis for the issuance of a writ of preliminary
and Pamplona Redwood Veneer, Inc. (PAMPLONA), corporations beneficially held and attachment.
controlled by Alfonso Lim and Alfonso Lim, Jr., which, in addition to other areas Section 1(d), Rule 57 of the Rules of Court,
already awarded to TAGGAT and PAMPLONA, resulted in their concession holdings in
excess of the allowable limits prescribed under Section 11, Article XIV of the 1973 12. Respondent maintain;
Constitution; their position on the absence of evidence of fraud, as required under Section 1(d),
(b)actively solicited and obtained, upon the personal behest of [the Marcoses], a Rule 57 of the Rules of Court, which would justify the issuance of the
management contract in favor of TAGGAT to operate and manage the logging desired writ.
concessions of Veterans Woodwork, Inc. (VETERANS), Sierra Madre Wood Industries,
Inc. (SIERRA MADRE), and Tropical Philippines Wood Industries, Inc. (TROPICAL) over ISSUE:
and above the objections of VETERANS; whether the Sandiganbayan, in the light of the denial of respondents demurrer to evidence, acted
(c) obtained a permit to cut down a certain number of Narra and Amaciga trees, and, with grave abuse of discretion amounting to lack or excess of jurisdiction in not considering that the evidence
on the very same day, was likewise given an authorization by Ferdinand E. Marcos to already on record support the issuance of a writ or preliminary attachment.
:

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HELD: the decision of SB is hereby reversed and hereby DIRECTED to ISSUE the Writ of Preliminary FOUNDATION SPECIALITD V BENTOVAL
Attachment prayed for by the Republic
FOUNDATION SPECIALISTS v. BETONVAL READY CONCRETE,
SC Agree with the Republics contention that the Sandiganbayans denial of its motion for a writ of INC. and STRONGHOLD
preliminary attachment constitutes grave and patent abuse of discretion amounting to lack or INSURANCE CO.,
excess of jurisdiction.
FACTS:
For a writ of attachment to issue under the above-quoted rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud.. 1. petitioner Foundation Specialists, Inc. (FSI) and respondent Betonval Ready Concrete, Inc.
Fraud may be defined as the voluntary execution of a wrongful act, or a willful (Betonval) executed three contracts[1] for the delivery of ready mixed concrete by Betonval to
omission, knowing and intending the effects which naturally and necessarily arise from FSI. There basic stipulations were: (a) for FSI to supply the cement to be made into ready mixed
such act or omission. concrete; (b) for FSI to pay Betonval within seven days after presentation of the invoices plus
In its general sense, fraud is deemed to comprise anything calculated to 30% interest p.a. in case of overdue payments and (c) a credit limit of P600,000 for FSI.
deceive, including all acts and omissions and concealment involving a breach of legal Betonval delivered the ready mixed concrete pursuant to the contracts but FSI failed to
or equitable duty, trust, or confidence justly reposed, resulting in damage to another, pay its outstanding balances.
or by which an undue and unconscientious advantage is taken of another. Fraud is also Betonval demand the outstanding balance. Despite FSI Rreduced its debt but
described as embracing all multifarious means which human ingenuity can device, and nonetheless failed to to fully settle its obligation.
which are resorted to by one individual to secure an advantage over another by false 2. Betonval thereafter filed an action for sum of money and damages RTC. It also applied for the
suggestions or by suppression of truth and includes all surprise, trick, cunning, issuance of a writ of preliminary attachment alleging that FSI employed fraud when it contracted
dissembling, and any unfair way by which another is cheated.[23] Fraudulent, on the with Betonval and that it was disposing of its assets in fraud of its creditors.
other hand, connotes intentionally wrongful, dishonest, or unfair.[24] 3. The RTC issued a writ of preliminary attachment and approved the P500,000 bond of respondent
In the case at bar, the Republic has, to us, sufficiently discharged the burden of demonstrating the Stronghold Insurance Co., Inc. (Stronghold).
commission of fraud committed by respondents Lims as a condition sine qua non for the issuance 4. FSI filed a counterbond of P500,000 thereby discharging the writ of preliminary attachment,
of a writ of preliminary attachment. The main supporting proving document is the Republics except with respect to FSIs excavator, crawler crane and Isuzu pick-up truck, which remained in
Exhibit B which the Sandiganbayan unqualifiedly admitted in evidence. And the fraud or custodia legis. An additional counterbond of P350,000 lifted the garnishment of FSIs receivables
fraudulent scheme principally came in the form of Lim, Sr. holding and/or operating logging from the Department of Public Works and Highways.
concessions which far exceeded the allowable area prescribed under the 1973 Constitution. 5. Thereafter, the RTC ruled for Betonval. However, it awarded P200,000 compensatory damages to
FSI on the ground that the attachment of its properties was improper.
EXHIBIT B: (1) Lim, Sr., through the seven (7) respondent corporations, had been 6. Both parties appealed in CA. The CA held that FSI should pay Betonval the value of unpaid ready
holding/operating/managing several timber concessions with a total area of 533,880 mixed concrete at 24% p.a. interest plus legal interest at 12%. The CA, however, reduced the
hectares, more or less, which was far in excess of the 100,000 hectares allowed in the award to FSI of actual and compensatory damages. CA upheld/concur to the ruling of TC that the
1973 Constitution attachment is improper.
The Lims resorted to their close connection with the Marcoses for the approval of the 7. FSI filed MR but was denied. Hence, filed petition in this court.
timber license agreements and the Lims were given access effectively to a total ISSUE: won the issuance of writ is proper?
633,880 hectares in violation of the 1973 Constitution and FAO No. 11. HELD: The petition is without merit.
Indeed, the Lims availment and enjoyment of logging concessions grossly in excess of
constitutional limits amount to a voluntary execution of a wrongful act, if not a serious was based on Section 1(d) and (e), Rule 57 of the Rules of Court. However, the SC, AGREED
breach of legal duty. By their acts, the Lims veritably defrauded and cheated the with the RTC and the CA that FSIs properties were improperly attached.
Filipino peoplethe ultimate beneficiaries of the countrys natural resources. o Betonval was not able to sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from FSIs mere nonpayment of the debt or failure to comply
with its obligation. In other words, mere failure to pay its debt is, of and by itself, not enough to
Clearly, the Republic has complied with and satisfied the legal obligation to show the specific acts justify an attachment of the debtors properties. A fraudulent intention not to pay (or not to comply
constitutive of the alleged fraud committed by respondents. The denial of the prayed writ, thus, evidently with the obligation) must be present
constitutes grave abuse of discretion on the part of Sandiganbayan. After all, attachment is a mere provisional As held in Ng Wee v. Tankiansee., The fraud must relate to the execution of the
remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate agreement and must have been the reason which induced the other party into giving consent
proceedings, obtain a judgment and have such property applied to its satisfaction.[39] Indeed, the properties which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d),
of respondents sought to be subjected to the ancillary writ of preliminary attachment are not only in danger of Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued
being lost but should be placed under custodia legis to answer for any liabilities that may be adjudged against upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a
them in the instant case. preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need
not be proved by direct evidence but may be inferred from the circumstances attendant in each
case.[

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The issuance of writ should be denied on the following grounds;

4. Disposal in fraud of creditors

1. several buses attached are nearly junks. However, upon permission by the sheriff, five of them
were repaired, but they were substituted with five buses which were also in the same condition as
CASE:
the five repaired ones before the repair.

ABOITI V COTABATO
This cannot be the removal intended as ground for the issuance of a writ of attachment under
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge of the Court of First section 1 (e), Rule 57, of the Rules of Court. The repair of the five buses was evidently
Instance of Davao, and the PROVINCIAL SHERIFF OF DAVAO DEL SUR, petitioners, motivated by a desire to serve the interest of the riding public, clearly not to defraud its creditors,
vs. as there is no showing that they were not put on the run after their repairs, as was the
COTABATO BUS COMPANY obvious purpose of their substitution to be placed in running condition.

2. Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by
CC: The present recourse is an appeal by certiorari from the decision of the Court of Appeals reversing the petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be
assailed orders of the RTC Davao. very remote, if not nil. If removal of the buses had in fact been committed, which seems to exist
only in petitioner's apprehensive imagination, the DBP should not have failed to take proper court
action, both civil and criminal, which apparently has not been done.
FACTS: 3. The dwindling of respondent's bank account despite its daily income of from P10,000.00 to
P14,000.00 is easily explained by its having to meet heavy operating expenses, which include
1. a writ of preliminary attachment which was issued ex-parte by the Court on the strength of salaries and wages of employees and workers. If, indeed the income of the company were
an affidavit of merit attached to the verified complaint filed by petitioner herein, Aboitiz & sufficiently profitable, it should not allow its buses to fall into disuse by lack of repairs. It should
Co., Inc., on November 2, 1971, as plaintiff in said case, for the collection of money in the also maintain a good credit standing with its suppliers of equipment, and other needs of the
sum of P 155,739.41, which defendant therein, the respondent in the instant case, Cotabato company to keep its business a going concern. Petitioner is only one of the suppliers.
Bus Co., owed the said petitioner.
2. By virtue of the writ of preliminary attachment, the provincial sheriff attached personal
properties of the defendant bus company consisting of some buses, machinery and
equipment.
3. The ground for the issuance of the writ is, as alleged in the complaint and the affidavit of
merit executed by the Assistant Manager of petitioner, that the defendant "has removed 5. Residing out of the Philippines
or disposed of its properties or assets, or is about to do so, with intent to defraud
its creditors."
CASE: MIALILHE V. DE LENCQUESAING
4. On the other hand, the respondent filed motion to quashed the writ, alleging the following;
"the Cotabato Bus Company has not been selling or disposing of its properties,
neither does it intend to do so, much less to defraud its creditors;
D. Issuance and contents of order (s2)
that also the Cotabato Bus Company, Inc. has been acquiring and buying more
assets".
SECTION 2. Issuance and contents of [Link] order of attachment may be issued either ex
5. However, denied. Hence, respondent filed in CA on a petition for certiorari alleging grave
parte or upon motion with notice and hearing by the court in which the action is pending, or by
abuse of discretion on the part of herein respondent Judge, Hon. Vicente R. Cusi Jr.
the Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so
6. The CA issued a restraining order restraining the trial court from enforcing further the writ of
much of the property in the Philippines of the party against whom it is issued, not exempt from
attachment and from proceeding. CA declared "null and void the order/writ of attachment
execution, as may be sufficient to satisfy the applicants demand, unless such party makes
ISSUE:
deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order,
WON writ of attachment was properly issued on the ground that respondent bus company has in fact
which may be the amount sufficient to satisfy the applicants demand or the value of the
removed its properties, or is about to do so, in fraud of its creditors?
property to be attached as stated by the applicant, exclusive of costs. Several writs may be
issued at the same time to the sheriffs of the courts of different judicial regions

HELD: DENIED.
1. Exparte
The SC ruled that the respondent CA has not committed any reversible error, much less grave
abuse of discretion, except that the restraining order issued by it should not have included restraining the trial
CASE:
court from hearing the case, altogether. Accordingly, the instant petition is hereby denied.

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TOLEDO V. BURGOS -petitioner, then, filed a Motion for Attachment, 4 contending that violation of the trust receipts law
constitutes estafa, thus providing ground for the issuance of a writ of preliminary attachment; specifically
2. Upon motion with notice and hearing under paragraphs "b" and "d," Section 1, Rule 57 of the Revised Rules of Court. Petitioner further claimed
that attachment was necessary since private respondents were disposing of their properties to its
CASE: SATSATI CASE detriment as a creditor.

3. contents 2. the lower court Order for the issuance of a writ of preliminary attachment, conditioned upon the filing of an
E. Affidavit and bonds (3&4) attachment bond.

3. However on motion, the Court of Appeals ruled that the lower court was guilty of grave abuse of discretion
in not conducting a hearing on the application for a writ of preliminary attachment and not requiring petitioner
SECTION 3. Affidavit and bond [Link] order of attachment shall be granted only when it to substantiate its allegations of fraud, embezzlement or misappropriation. Court of Appeals found that the
appears by the affidavit of the applicant, or of some other person who personally knows the grounds cited by petitioner in its Motion do not provide sufficient basis for the issuance of a writ of preliminary
facts, that a sufficient cause of action exists, that the case is one of those mentioned in section 1 attachment, they being mere general averments.
hereof that there is no other sufficient security for the claim sought to be enforced by the action,
and that the amount due to the applicant, or the value of the property the possession of which Issue:
he is entitled to recover, is as much as the sum for which the order is granted above all legal
counterclaims. The affidavit, and the bond required by the next succeeding section, must be Won preliminary attachment can be issued on the ground of estafa?
duly filed with the court before the order issues.
Held:

SECTION 4. Condition of applicants bondThe party applying for the order must thereafter give No. SC ruled that the petition is without merit.
a bond executed to the adverse party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to The violation of the terms of which is qualified by law as constituting estafa, it does not follow that a writ of
the adverse party and all damages which he may sustain by reason of the attachment, if the attachment can and should automatically issue.
court shall finally adjudge that the applicant was not entitled thereto
Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of the sale of
1. The affidavit, and the bond required by he next succeeding section, the entrusted goods nor to return the same is sufficient for attachment to issue. Petitioner cannot merely cite
must be duly filed with the court before the order issues. Section 1(b) and (d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without more,
2. Affidavit of: cannot serve as good ground for issuing a writ of attachment. An order of attachment cannot be issued on a
general averment, such as one ceremoniously quoting from a pertinent rule.
CASE:
Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of the sale of
PH BANK OF COMMUNICATION V. CA the entrusted goods nor to return the same is sufficient for attachment to issue.

1. PHILIPPINE BANK OF COMMUNICATIONS, vs. CA and FILIPINAS TEXTILE Petitioner anchors its application upon Section 1(d), Rule 57. However, SC find absence of factual allegations
as to how the fraud alleged by petitioner was committed. As correctly held by respondent Court of Appeals,
CC: The writ of attachment cannot be issued in this case. There is no Estafa. such fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor's inability to
pay or to comply with the obligations.9 On the other hand, as stressed, above, fraud may be gleaned from a
Facts: preconceived plan or intention not to pay. This does not appear to be so in the case at bar. In fact, it is
alleged by private respondents that out of the total P419,613.96 covered by the subject trust receipts, the
1. Petitioner filed a case against private respondent Bernardino Villanueva, & Filipinas Textile Mills and one amount of P400,000.00 had already been paid, leaving only P19,613.96 as balance. Hence, regardless of the
Sochi Villanueva. arguments regarding penalty and interest, it can hardly be said that private respondents harbored a
-petitioner sought the payment of P2,244,926.30 representing the proceeds or value of various textile preconceived plan or intention not to pay petitioner.
goods, the purchase of which was covered by irrevocable letters of credit and trust receipts executed by
petitioner with private respondent Filipinas Textile Mills as obligor.
-private respondents admitted the existence of the surety agreements and trust receipts but countered
that they had already made payments on the amount demanded and that the interest and other charges
imposed by petitioner were onerous. NG WEE CASE

3. Contents of bond

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CASE: REPUBLIC V GARCIA SECTION 5. Manner of attaching [Link] sheriff enforcing the writ shall without delay and
with all reasonable diligence attach, to await judgment and execution in the action, only so
CC: State is exempt from filing attachment bond. much of the property in the Philippines of the party against whom the writ is issued, not exempt
from execution, as may be sufficient to satisfy the applicants demand, unless the former makes
Facts: a deposit with the court from which the writ is issued, or gives a counter-bond executed to the
applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the
1. Petitioner republic, filed a petition for forfeiture of unlawfully acquired properties, with a verified value of the property to be attached, exclusive of costs. No levy on attachment pursuant to the
urgent ex-parte application for the issuance of a writ of preliminary attachment against Maj. Gen. writ issued under section 2 hereof shall be enforced unless it is preceded, or contemporaneously
Carlos F. Garcia, his wifeand children] in the Sandiganbayan. The Republic maintained that, as a accompanied, by service of summons, together with a copy of the complaint, the application for
sovereign political entity, it was exempt from filing the required attachment bond. attachment, the applicants affidavit and bond, and the order and writ of attachment, on the
2. Thereafter the SB issued an order for the issuance of the writ of the preliminary attachment defendant within the Philippines.
against the properties of Garcias upon filing by the Republic of 1M attachment bond. The requirement of prior or contemporaneous service of summons shall not apply
3. ubsequently, the Republic filed a motion for partial reconsideration claiming that it was exempt where the summons could not be served personally or by substituted service despite diligent
from filing an attachment bond and praying for the release thereof. efforts, or the defendant is a resident of the Philippines temporarily absent therefrom, or the
4. However, the SB issued a resolution and ruled that there was nothing in the Rules of Court that defendant is a non-resident of the Philippines, or the action is one in rem or quasi in rem.
exempted the Republic from filing an attachment bond. Republic filed MR but nonetheless was
denied. MODES OF APPLICATION

1. The petition for writ of preliminary attachment is embodied or incorporated in the main complaint
Issue: itself, in which case a valid service of summons and a copy of the complaint upon the defendant
for purposes of both of the main case and for ancillary remedy of attachment; or
WON the Sandiganbayan commit grave abuse of discretion when it rejected the Republics claim of exemption 2. The petition for a writ of preliminary attachment is embodied in a discrete pleading, in which case
from the filing of an attachment bond? such petition must be served either simultaneously with the service of summons and copy of the
main complaint or after jurisdiction over the defendant has already been acquired by such service
Held: Yes of summons.

Under Sections 3 and 4, Rule 57 of the Rules of Court , before a writ of attachment may issue, a bond REQUISITES FOR VALID LEVY:
must first be filed to answer for all costs which may be adjudged to the adverse party and for the damages he
may sustain by reason of the attachment. However, this rule does not cover the State. Levy shall not be made unless preceded or contemporaneously accompanied by:
In Tolentino,this Court declared that the State as represented by the government is exempt from filing an 1. Service of summons;
attachment bond on the theory that it is always solvent. 2. Copy of the complaint;
3. Application for attachment;
In other words, the issuance of a writ of preliminary attachment is conditioned on the filing of a bond unless 4. Affidavit and bond of the applicant; and
the applicant is the State. Where the State is the applicant, the filing of the attachment bond is excused. [9] 5. Order and writ of attachment
But prior or contemporaneous service of summons shall NOT APPLY when:
The attachment bond is contingent on and answerable for all costs which may be adjudged to the 1. Summons could not be served personally or by substituted service
adverse party and all damages which he may sustain by reason of the attachment should the court finally rule 2. Defendant is a resident of the Philippines temporarily absent therefrom
that the applicant is not entitled to the writ of attachment. Thus, it is a security for the payment of the costs 3. Defendant is a non-resident
and damages to which the adverse party may be entitled in case there is a subsequent finding that the 4. The action is one in rem or quasi-in rem
applicant is not entitled to the writ. The Republic of the Philippines need not give this security as it is
presumed to be always solvent and able to meet its obligations. Note: All properties exempt from exempt from execution are likewise exempt from attachment(Sec. 2, Rule
57,Sec.13, Rule 39).
The SB thus erred when it disregarded the foregoing presumption and instead ruled that the
Republic should file an attachment bond. The error was not simply an error of judgment but grave abuse of Q: What is the Rule on Prior or Contemporaneous Service of Summons?
discretion.
A: Enforcement of the writ of preliminary attachment must be preceded by or simultaneously accompanied by
service of summons, copy of complaint, application and affidavits for the attachment and the bond upon the
4. bond adverse party. Jurisdiction must first be acquired through valid service of summons first before a preliminary
F. Manner of attaching property (s5) attachment may be enforced. This Rule is not necessary for the validity of the ISSUANCE of a writ of
attachment (Davao Light v. CA, 204SCRA 343 (1991)), it is however necessary for the validity of the
ENFORCEMENT of the writ. (Onate v. Abrogar, 241 SCRA 659 (1995))

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Acting on the RTCs directive, Sheriff Villar submitted his Sheriffs Report with Urgent Prayer for
Q: What are the cases in which contemporaneous service is not required? Issuance of Clarificatory Order. He wanted to be clarified on whether or not he should wait for the
trial courts order to attain finality before returning the attached personal properties
A: The requirement of prior or contemporaneous service of summons shall not apply where: 5. However, not contented with the motion, Tui filed administrative complaint against Sheriff Villar
1. the summons could not be served despite diligent efforts; for his alleged questionable actions regarding the implementation of the writ of attachment
2. the defendant is a resident of the Philippines temporarily absent therefrom; against them.
3. the defendant is a non-resident of the Philippines; or
4. The action is in rem or quasi in rem (Sec. 5, Rule 57). Issue:

Exceptions to prior or contemporaneous service of summons 1. Whether or not sheriff Villar is liable for maliciously refused to return the attached
properties despite the RTCs clear directive?
Can be made where a previous attempt to serve the summons and the writ of attachment failed 2. Whether or not there is proper service of summons upon made by Sheriff Villar?
due to factors beyond the control or either the plaintiff or the process server, provided such is
effected within a reasonable time(onate vs Abrogar). Held:

Issuance and enforcement, distinguished The course Dismissed the case.

The trial court has unlimited power to issue the writ upon commencement of the action even 1. the Court agrees with the recommendation of Judge Ramizo that the complaint against
before it acquires jurisdiction over the person of the defendant, but the enforcement thereof can Sheriff Villar be dismissed.
only be validly done after it shall acquire such jurisdiction either through its voluntary appearance -Sheriff Villar complied with the instruction embodied in Administrative Circular No. 12
or valid service of summons upon it. The mere fact that attachment ordered is issued does not requiring a sheriff to notify in writing the sheriff of the place where the execution of a writ is
mean that the defendants property should be seized. Attachment is not self-executory. There to take place.
must be first a levy or garnishment of the property to be made by the sheriff. This levy or - He likewise found nothing irregular in the substituted service of summons effected by
garnishment is the operative act that brings the property in custodia legis. Sheriff Villar as the same complied with the requisites mandated by the Rules of Court.
- there is no bad faith when Sheriff Villar failed to return the attached properties, Sheriff
Villar merely retained the properties because he was uncertain whether or not he should
CASE: wait for the finality of the order dismissing the case.

SPS TUI V. VILLAR 2. SC ruled, that there was a valid substituted service of summons.

CC: substituted service of summons As a rule, personal service of summons is preferred as against substituted service. Thus,
substituted service can only be resorted to by the process server only if personal service cannot be made
Facts: promptly.

1. Henry Sia & Hankook Industrial Sales Co. filed a Complaint for Sum of Money and Damages with Based on the records, Sheriff Villar exhausted efforts to personally serve the summons to Spouses
prayer for Preliminary Attachment against Classique Concept International Tiu as indicated in his Sheriffs Return of Summons .When it was apparent that the summons could not be
Corporation (Classique), First Global Ventures, Inc. (First Global) and herein complainants, served personally on the spouses, Sheriff Villar served the summons through Bauco, their employee, at the
spouses Rainer and Jennifer Tiu in RTC. office address of the couples business, First Global and Classique. It was evident that Bauco was competent
2. The RTC ordered for the issuance of writ of preliminary attachment and addressed to Sheriff and of sufficient age to receive the summons on their behalf as she represented herself to be their General
Carlos G. Tadeo and Sheriff Virgilio Villar the said writ. Manager and Caretaker.
3. Sheriff Villar served copies of the summons, complaint and the writ of preliminary attachment to
Spouses Tiu in their office. The copies were received their General Manager and Caretaker, after
efforts to personally serve them to Spouses Tiu failed. Thereafter, Sheriff Villar attached the
personal properties found in said address.
4. Spouses Tiu moved to have the case against them dismissed on the ground of improper venue.
The RTC granted the motion and ordered the release of the attached properties in favor of G. Sheriffs return (s6)
Spouses Tiu. wherein Sheriff Virgilio Villar is directed to immediately return to defendants the
seized items. SECTION 6. Sheriffs returnAfter enforcing the writ, the sheriff must likewise without delay
make a return thereon to the court from which the writ issued, with a full statement of his
proceedings under the writ and a complete inventory of the property attached, together with any

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counter-bond given by the party against whom attachment is issued, and serve copies thereof on a. It creates a lien
the applicant. (6a)
In favor of the attaching party, the lien obtained by attachment stand upon a high ground as
SECTION 7. Attachment of real and personal property; recording thereofReal and personal mortage lien, a fixed and positive security which must necessarily continue until sold to satisfy
property shall be attached by the sheriff executing the writ in the following manner: judgement, or discharged in the manner provided by the Rules of Court, requiring the conduct of a
proper hearing by the courts.
(a) Real property, or growing crops thereon, or any interest therein, standing
upon the record of the registry of deeds of the province in the name of the party against b. Attached property falls under custodia legis
whom attachment is issued, or not appearing at all upon such records, or belonging to the
party against whom attachment is issued and held by any other person, or standing on the Upon levy by attachment of the property in question by order of the courts, said property falls into
records of the registry of deeds in the name of any other person, by filing with the registry custodia legis of the court.
of deeds a copy of the order, together with a description of the property attached, and a
notice that it is attached, or that such real property and any interest therein held by or c. Writ partakes of an execution
standing in the name of such other person are attached, and by leaving a copy of such
order, description, and notice with the occupant of the property, if any, or with such other The writ of attachment is substantially a writ of execution except that it emanates at the beginning
person or his agent if found within the province. Where the property has been brought instead of the termination, of a suit. It places the attached properties in custodia legis, obtaining a
under the operation of either the Land Registration Act or the Property Registration pendente lite a lein until the judgement of the proper tribunal on the plaintiffs claim is
Decree, the notice shall contain a reference to the number of the certificate of title, the established, when the lien becomes effective as of the date of the levy.
volume and page in the registration book where the certificate is registered, and the
registered owner or owners thereof. d. Attachment inferior to prior liens
The registrar of deeds must index attachments filed under this section in the
names of the applicant, the adverse party, or the person by whom the property is held or But when the properties attached was already mortgaged, judgement creditors liens become
in whose name it stands in the records. If the attachment is not claimed on the entire area inferior to that of mortgagee-banks which claims in the event of foreclosure must first be satisfied.
of the land covered by the certificate of title, a description sufficiently accurate for the What is attached is merely right or equity of redemption
identification of the land or interest to be affected shall be included in the registration of
such attachment; Properties exempt from attachment:
(b) Personal property capable of manual delivery, by taking and safely keeping
it in his custody, after issuing the corresponding receipt therefor; Section 13, Rule 39:
(c) Stocks or shares, or an interest in stocks or shares, of any corporation or SEC. 13. Property exempt from [Link] as otherwise expressly
company, by leaving with the president or managing agent thereof, a copy of the writ, and provided by law, the following property, and no other, shall be exempt from
a notice stating that the stock or interest of the party against whom the attachment is execution:
issued is attached in pursuance of such writ; (a) The judgment obligors family home as provided by law, or the
(d) Debts and credits, including bank deposits, financial interest, royalties, homestead in which he resides, and land necessarily used in
commissions and other personal property not capable of manual delivery, by leaving with connection therewith;
the person owing such debts, or having in his possession or under his control, such credits (b) Ordinary tools and implements personally used by him in his
or other personal property, or with his agent, a copy of the writ, and notice that the debts trade, employment, or livelihood;
owing by him to the party against whom attachment is issued, and the credits and other (c) Three horses, or three cows, or three carabaos, or other beasts
personal property in his possession, or under his control, belonging to said party, are of burden, such as the judgment obligor may select necessarily
attached in pursuance of such writ; used by him in his ordinary occupation;
(e) The interest of the party against whom attachment is issued in property (d) His necessary clothing and articles for ordinary personal use,
belonging to the estate of the decedent, whether as heir, legatee, or devisee, by serving excluding jewelry;
the executor or administrator or other personal representative of the decedent with a copy (e) Household furniture and utensils necessary for house-keeping,
of the writ and notice that said interest is attached. A copy of said writ of attachment and and used for that purpose by the judgment obligor and his
of said notice shall also be filed in the office of the clerk of the court in which said estate is family, such as the judgment obligor may select, of a value not
being settled and served upon the heir, legatee or devisee concerned. exceeding one hundred thousand pesos;
If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall (f) Provisions for individual or family use sufficient for four months;
be filed with the proper court or quasi-judicial agency, and notice of the attachment served upon (g) The professional libraries and equipment of judges, lawyers,
the custodian of such property. (7a) physicians, pharmacists, dentists, engineers, surveyors,
clergymen, teachers, and other professionals, not exceeding
EFFECTS OF ATTACHMENT three hundred thousand pesos in value;

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(h) One fishing boat and accessories not exceeding the total value
of one hundred thousand pesos owned by a fisherman and by The trial court does not have power to garnish its deposit to answer for any eventual judgement
the lawful use of which he earns his livelihood; against it, however where an entity is distinct and separate from the government which owns and
(i) So much of the salaries, wages, or earnings of the judgment controls it, its funds can be garnished since funds from a public corporation which can sue and be
obligor for his personal services within the four months sued are not exempt from garnishment (PNB vs. Pabalan).
preceding the levy as are necessary for the support of his
family; Q: How can a property be attached?
(j) Lettered gravestones;
(k) Monies, benefits, privileges, or annuities accruing or in any A: (Sec. 7, Rule 57)
manner growing out of any life insurance; 1. Real property, growing crops or interest therein
(1) The right to receive legal support, or money or property a. File a copy of the Order of Attachment with the proper Registry of Deeds and Occupant or
obtained as such support, or any pension or gratuity from the his agent within the province
Government; b. Description of the property
(m) Properties specially exempted by law. But no article or species c. Notice of attachment
of property mentioned in this section shall be exempt from 2. Personal property capable of manual delivery sheriff taking into custody and safely keeping it, he
execution issued upon a judgment recovered for its price or wll issue a receipt;
upon a judgment of foreclosure of a mortgage thereon. (12a) 3. Stocks, shares or interest Leaving copy of the writ and notice of attachment with President or
Managing Agent
Garnishment (d) 4. Debts and credits, bank deposits, financial interests, royalties, commission and other personal
property not capable of manual delivery - Leaving copy of the writ and notice of attachment with
Is a species of attachment before reaching credit belonging to the judgement debtor and person owing or having custody over the property
owing to him from a stranger to the litigation. It is an attachment by means of which the
5. Interest in the estate of a decedent Leaving copy of writ and notice of attachment with:
plaintiff seeks to subject his claim property of the defendant in the hands of a third person
a. Executor or administrator of estate
or garnishee to the defendant.
b. Clerk of Court where estate is being settled
Par d, sec. 7, Rule 57
c. Heir, devisee, or legatee;
Property in custodialegis writ to the court or agency and notice to custodian
Freeze order, akin to garnishment

SECTION 8. Effect of attachment of debts, credits and all other similar personal [Link]
In a sense, freeze order is akin to garnishment by which possessor or ostensible owner dispose of
persons having in their possession or under their control any credits or other similar personal
any effects or credits in his possession or control, and thus becomes in a sense an involuntary
property belonging to the party against whom attachment is issued, or owing any debts to him,
depositary of the property.
at the time of service upon them of the copy of the writ of attachment and notice as provided in
It is a force novation by substitution of the creditors.
the last preceding section, shall be liable to the applicant for the amount of such credits, debts or
other similar personal property, until the attachment is discharged, or any judgment recovered
Summon is not necessary in order for the court to validly acquire jurisdiction to bind the person of
by him is satisfied, unless such property is delivered or transferred, or such debts are paid, to the
the garnishee. The garnishee doesnt need to be a party in the case. All that is necessary is the
clerk, sheriff, or other proper officer of the court issuing the attachment.
WRIT OF GARNISHMENT.

SECTION 9. Effect of attachment of interest in property belonging to the estate of a decedent

GROUNDS FOR GARNISHMENT IN ORDER TO BE LIFTED OR ESTABLISHED:
The attachment of the interest of an heir, legatee, or devisee in the property belonging to the
estate of a decedent shall not impair the powers of the executor, administrator, or other
1. The party whose accounts have been garnished has posted a counter bond or has made the
personal representative of the decedent over such property for the purpose of administration.
requisite cash deposit;
Such personal representative, however, shall report the attachment to the court when any
2. Order was improperly or irregularly issued as where there is no ground for garnishment or the
petition for distribution is filed, and in the order made upon such petition, distribution may be
affidavit and/m or bond filed are defective or insufficient;
awarded to such heir, legatee, or devisee, but the property attached shall be ordered delivered
3. The property attached is exempt from execution, hence exempt from preliminary attachment ;and
to the sheriff making the levy, subject to the claim of such heir, legatee, or devisee, or any
4. The judgement is rendered against attaching or garnishing creditor.
person claiming under him.
Partial judgement is not a ground for discharge of the garnishment.
If attachment is excessive, the remedy is to apply to the court for partial discharge the
attachment.
H. Examination of party S10

Garnishment of public funds

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SECTION 10. Examination of party whose property is attached and persons indebted to him or 3. Then, Ventanillas discovered Valencias deception. Believing that they had already remitted the
controlling his property; delivery of property to [Link] person owing debts to the party total amount of P73,122.35 for the two lots, the Ventanillas offered to pay the balance to MRCI.
whose property is attached or having in his possession or under his control any credit or other To their shock, their names as lot buyers did not appear in MRCIs records. Instead, MRCI showed
personal property belonging to such party, may be required to attend before the court in which them a copy of the contract to sell signed by Valencia, in favor of Crisostomo. MRCI refused the
the action is pending, or before a commissioner appointed by the court, and be examined on Ventanillas offer to pay for the remainder of the contract price. Ventanillas filed an action for
oath respecting the same. The party whose property is attached may also be required to attend specific performance, annulment of deeds and damages against MRCI, AUVC, and Crisostomo. The
for the purpose of giving information respecting his property, and may be examined on oath. The court ruled that, the contracts to sell in favor of the Ventanillas isvalid and subsisting, and
court may, after such examination, order personal property capable of manual delivery annulling the contract to sell in favor of Crisostomo.
belonging to him, in the possession of the person so required to attend before the court, to be 4. MRCI, AUVC and Crisostomo are solidarily liable to the Ventanillas for the reimbursement of the
delivered to the clerk of the court or sheriff on such terms as may be just, having reference to sum of P73,122.35,
any lien thereon or claim against the same, to await the judgment in the action. (10a) 5. the Ventanillas moved for the issuance of a writ of execution. A notice of levy was annotated in
the titles of MRCI. However, MRCI alleged that the subject properties could not longer be
Notice to party not required delivered to the Ventanillas because they had already been sold to Marquez, while its petition
was pending. Nevertheless, MRCI offered to reimburse the amount paid by the Ventanillas. The
Notice need only to be given to the garnishee, the person who is holding property or credits court ruled in favor of ventanillas.
belonging to a defendant.
6. Samuel Cleofe, Register of Deeds for Quezon City (ROD Cleofe) revealed to them, MRCI
registered a deed of absolute sale to Marquez who eventually sold the same property to
the Saberons, which conveyance was registered in July 1992. Apparently, the notice of levy,
I. Sale of attached property S11 through inadvertence, was not carried over to the title issued to Marquez, the same being a junior
J. SECTION 11. When attached property may be sold after levy on attachment encumbrance which was entered after the contract to sell to Marquez had already been annotated
and before entry of judgmentWhenever it shall be made to appear to the 7. CA ruled, The said parties were found guilty of bad faith for selling the lots to Marquez at a time
court in which the action is pending, upon hearing with notice to both when litigation as to the validity of the first sale to the Ventanillas was still pending.
parties, that the property attached is perishable, or that the interests of all 8. Aggrieved by the decision, SABERONS appeal to this court and alleged that they arepurchasers
the parties to the action will be subserved by the sale thereof, the court may in good faith.
order such property to be sold at public auction in such manner as it may
direct, and the proceeds of such sale to be deposited in court to abide the Issue:
judgment in the action. (11a)
whether or not the registration of the notice of levy had produced constructive notice that would bind third
persons despite the failure of the ROD-QC to annotate the same in the certificates of title?
CASE:

SABERON V. VENTANILLA

CC: Preference created by the levy on attachment was not diminished by the subsequent registration of the Held:
prior sale. Superiority and preference in rights were given to the registration of the levy on attachment;
although the notice of attachment had not been noted on the certificate of title, its notation in the book of The courts favored Ventanillas. Superiority of the their notice of levy.
entry of the Register of Deeds produced all the effects which the law gave to its registration or inscription
The records show that on the strength of a final and executory decision by the Court, they successfully
Facts: obtained a writ of execution from the RTC and a notice of levy was then entered, albeit on the primary entry
book only. The contract to sell to Marquez was registered on May 21, 1991, while the notice of levy was
1. In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the petitioner, owner of Capitol Homes issued ten (10) days later, or on May 31, 1991. In February 1992, MRCI executed the Deed of Sale with
Subdivision Nos. I and II which entered into a contract with A.U. Valencia & Co. Inc. (AUVC) Marquez, under whose name the clean titles, sans the notice of levy, were issued. A year later, or on March
whereby, the latter was to develop the aforesaid subdivision with authority to manage the sales 11, 1992, MRCI registered the deed of sale to Marquez who later sold the same property to the Saberons.
thereof; execute contracts to sell to lot buyers; and issue official receipts. At that time, the
president of AUVC, was Artemio U. Valencia (Valencia).
2. MRCI and AUVC executed two (2) contracts to sell in favor of Ventanillas. However, Valencia, This complex situation could have been avoided if it were not for the failure of ROD Cleofe to carry over the
without the knowledge of the Ventanillas, resold the same property to Carlos Crisostomo notice of levy to Marquezs title, serving as a senior encumbrance that might have dissuaded the Saberons
(Crisostomo), without any consideration. from purchasing the properties

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Considering that the deed of sale in favor of Marquez was of later registration, the notice of levy should have of the deposit shall forthwith be served on the attaching party. Upon the discharge of an
been carried over to the title as a senior encumbrance. 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
A levy of a judgment debtor creates a lien, which nothing can subsequently destroy except the very
standing in place of the property so released. Should such counter-bond for any reason be found
dissolution of the attachment of the levy itself. Prior registration of the lien creates a preference, since
to be or become insufficient, and the party furnishing the same fail to file an additional counter-
the act of registration is the operative act to convey and affect the land. Jurisprudence dictates that
bond, the attaching party may apply for a new order of attachment. (12a)
the said lien continues until the debt is paid, or the sale is had under an execution issued on the judgment or
until the judgment is satisfied, or the attachment is discharged or vacated in the same manner provided by
law. Under no law, not even P.D. No. 1529, is it stated that an attachment shall be discharged upon sale of
the property other than under execution.
CASE:

GB V. SANCHEZ

K. Discharge of attachment Cc: sec 12.

Q: What are the grounds for the discharge of a preliminary attachment? Facts:

1. It must be based on the following grounds: 1. Petioner in this case is the Trustee of Juan Luna Subdivision Inc. Juan Chuidian & Allison Gibbs are
partners of law firm w/c is the retaining counsel of Juan Luna Subdivision.
a. Writ was improperly or irregularly issued or enforced (Sec. 13, Rule 57) 2. Sometime a loan of 40k was granted by Juan Luna Subdivision to resp. Juan Chuidian in w/c an
b. Insufficiency of bond (Sec. 13, Rule 57) agreement to sell was executed, which Chuidia promised to transfer w/I 60 days to Juan Luna
c. Excessive attachment (Sec. 13, Rule 57) Subdivision the which he brought from Florence Shuster.
Effect: Partial discharge (Regalado, Remedial Law Compendium, Vol. I, p. 3. However, Reps. Chuidian sold the land he brought from Florence Shuster to Elenita Hernandez
683, 2005 ed.) for 25K in order to pay his wifes gambling deaths.
d. No ground for attachment (Sec. 1, Rule 57) 4. Hence, pet. File a suit for collection of his indebtedness based on his "Agreement to Sell" and
e. Property is exempt from execution (Secs 2 and 5, Rule 57) asked for the issuance ex-parte of a writ of preliminary attachment which as granted by the court
f. Judgment is rendered against the attaching creditor ( Sec. 19, Rule 57) upon the filing by the petitioner of a bond of P57,000
g. Dissolution of attachment 1 month next preceding the commencement of insolvency 5. On other hand, Chuidian filed Motion to Discharge Attachment.
proceedings (Insolvency Law) (Feria, Civil Procedure Annotated, Vol. II, p. 305, 2001 The respondent Judge of the CFI of Manila denied petitioner's urgent motion and set the hearing
ed.) of the "Motion to Discharge Attachment".
the respondent Judge issued an order granting respondent Chuidian's "Motion to Discharge
2. Filing of a cash deposit or counterbond (Sec. 12, Rule 57) Attachment" under section 13 of Rule 59 of the Rules of Court.
Notice and Hearing (Sec. 12, Rule 57)

Issue:
1. Upon the counter bond (s12)
Won the respondent court is correct in discharging the writ of preliminary attachment ? Yes

Held:
SECTION 12. Discharge of attachment upon giving [Link] a writ of attachment has
been enforced, the party whose property has been attached, or the person appearing on his There is no fraud. The defendant did not pocket the money no money passed hands with that conveyance
behalf, may move for the discharge of the attachment wholly or in part on the security given. to Elenita Hernandez. The conveyance was in the form of a dacion en pago. Defendant was practically driven
The court shall, after due notice and hearing, order the discharge of the attachment if the to the wall the family name must be reserved.
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 Hence, this court (SC) the financial instability on the part of respondent Chuidian, the most that the
the order of attachment, exclusive of costs. But if the attachment is sought to be discharged respondent Judge could have done in his favor to which the petitioner has expressed its agreement was
with respect to a particular property, the counter-bond shall be equal to the value of that to discharge the attachment in question upon the filing upon respondent Chuidian of a counter bond in the
property as determined by the court. In either case, the cash deposit or the counter-bond shall sum of P57,000, under section 12 of Rule 59 of the Rules of Court.
secure the payment of any judgment that the attaching party may recover in the action. A notice

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adverse party, with the clerk or judge of the court where the application is made in an amount
equal to the value of the property attached as determined by the judge, to secure the
INSULAR SAVING BANK V CA payment of any judgment that the attaching creditor may recover in the action. x x x .
Should such counter-bond for any reason be found to be, or become insufficient, and the party
CC: furnishing the same fail to file an additional counter-bond, the attaching party may apply for a
new order of attachment.
-Section 12 of Rule 57 provides that the court shall order the discharge of attachment if the
movant makes a cash deposit, or files a counter-bond . . . in an amount equal to that fixed by Cleary, under this provision (sec12 R57 of RC) the amount of counter bond be measured against the
the court in the order of attachment, exclusive of costs. Not being in the nature of a penal value of the attached property, as determined by the judge to secure the payment of any judgment that the
statute, the Rules of Court cannot be given attaching creditor may recover in the [Link] the counter-bond necessary to discharge the lien on
retroactive effect such property - should as much as possible correspond in value to, or approximately match the attaching
creditors principal claim.
-Writ of preliminary attachment cannot be issued
for moral and exemplary and other unliquidated The case at bar, records show that the principal claim of respondent, is P25,200,000.00, representing the
or contingent claims three (3) unfunded checks drawn against, and presented for clearing to, respondent bank. Jurisprudence
teaches that a writ of attachment cannot be issued for moral and exemplary damages, and other unliquidated
Facts: or contingent claim. However while the case is pending in PCHC, petitioner and respondent, however, agreed
to equally divide between themselves, albeit on a temporary basis, the disputed amount of P25,200,000.00,
1. respondent Bank [Far East Bank and Trust Company] instituted against petitioner [Insular Savings subject to the outcome of the arbitration proceedings. Thus, the release by petitioner of the amount
Bank] before the Arbitration Committee of the Philippine Clearing House Corporation [[Link] of P12,600,000.00 to respondent. Therefore, respondents principal claim against petitioner immediately prior
dispute between the parties involved three [unfunded] checks with a total value to the filing of the motion to discharge attachment has effectively been pruned down to P12,600,000.00.
of P25,200,000.00. IOW, the principal claim or respondent bank is 25,200,000.00. ]. Respondent
bank file in RTC fir the issuance of writ of preliminary attachment which was grated eventually.. Trial court, therefore, committed grave abuse of discretion when it denied petitioners motion to discharge
however while the case is pending in PCHC petitioner and respondent Bank agreed to temporarily attachment by counter-bond in the amount ofP12,600,000.00. The CA, committed reversible error when it
divide between them the disputed amount of P25,200,000.00 while the dispute has not yet been dismissed petitioners recourse thereto in CA-G.R. SP No. 34876.
resolved. As a result, the sum of P12,600,000.00 is in the possession of respondent Bank.
2. petitioner filed a motion to discharge attachment by counter-bond in the amount
of P12,600,000.00. However, the respondent court denied its motion that the amount of
counterbond must be P27,237,700.00,. UNITD PULP & PAPER V. ACROPOLIS
3. Petitioner filed in CA for GADALJ of LC. However the CA denied it.
4. Pet. argues that the starting point in computing the amount of counter-bond is the amount of the
CC: execution of a compromise agreement between the parties and the subsequent rendition of a judgment
respondents demand or claim only, in this case P25,200,000.00, excluding contingent expenses
based on the said compromise agreement does not release the surety from its obligation nor does it novate
and unliquidated amount of damages.
the obligation

Issue:
Facts;
Whether or not the CA erred in not ruling that the trial court committed grave abuse of discretion in denying
petitioners motion to discharge attachment by counter-bond in the amount of P12,600,000.00.? Yes, CA is 1. United Pulp and Paper Co., Inc. (UPPC) filed for collection of the amount of P42,844,353.14 w/
wrong. writ of PA against UNIBOX & Vicente Ortega that the latter were on the verge of insolvency and
were transferring assets in fraud of [Link], the RTC issued the Writ of Attachment
after UPPC posted a bond in the same amount of its claim. By virtue of the said writ, several
Held: The petition is meritorious. properties and assets of Unibox and Ortega were attached
2. Unibox & Ortega filed Motion for the Discharge of Attachment with filing of counter-bond which
1. Under sec12 of R57 of RC, was granted by the RTC. Respondent Acropolis Central Guaranty Corporation ( Acropolis) issued
SEC. 12. Discharge of attachment upon giving counter-bond. At any time after an order of the Defendants Bond for Dissolution of Attachmentin the amount of P42,844,353.14 in favor of
attachment has been granted, the party whose property has been attached, . . . may upon Unibox.
reasonable notice to the applicant, apply to the judge who granted the order or to the judge of 3. Unibox, Ortega and UPPC enetered into compromise agreement which was approve by RTC
the court which the action is pending, for an order discharging the attachment wholly or in part on wherein Unibox and Ortega acknowledged their obligation to UPPC. However, Unibox & Ortega
the security given. The judge shall, after hearing, order the discharge of the attachment if a cash failed to pay the required amounts for scheduled dates.
deposit is made, or a counter-bond executed to the attaching creditor is filed, on behalf of the

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4. Writ of Execution was issued by the court. When the sheriff enforce the writ the assets/property of the surety; and (2) notice and summary hearing on the same action. After a careful scrutiny of the records of
unibox had been foreclosed by its creditor bank. the case, the Court is of the view that UPPC indeed complied with these twin requirements
5. Hence, UPPC filed its Motion to Order Surety to Pay Amount of Counter-Bonddirected at Acropolis
which was granted. The filing of a complaint constitutes a judicial demand. The filing by UPPC of the Motion to Order Surety to
6. Acropolis filed MR & arguing that; Pay Amount of Counter-Bond was already a demand upon Acropolis, as surety, for the payment of the
o it did not receive a demand for payment from UPPC. amount due, pursuant to the terms of the bond. In said bond, Acropolis bound itself in the sum of
o its obligation had been discharged by virtue of the novation of its obligation pursuant 42,844,353.14 to secure the payment of any judgment that UPPC might recover against Unibox and Ortega.
to the compromise agreement executed by UPPC, Unibox and Ortega. The court also ruled that Acropolis was duly notified of the hearing and it was personally served a copy of the
The CA grants the pettion of acropolis, reversing the Order of the RTC, and absolving and relieving motion
Acropolis of its liability to honor and pay the amount of its counter-attachment bond. CA stated that;

2. No novation despite compromise agreement; acropolis still liable under the terms of the counter-
1. Acropolis was able to comply with the three-day notice rule because the motion it filed was
bond.
sent by registered mail on December 13, 2004, four days prior to the hearing set for
December 17, 2004;
The terms of the Bond for Dissolution of Attachment issued by Unibox and Acropolis in favor of UPPC are clear
2. UPPC failed to comply with the following requirements for recovery of a judgment
and leave no room for ambiguity.
creditor from the surety on the counter-bond in accordance with Section 17, Rule
Acropolis voluntarily bound itself with Unibox to be solidarily liable to answer for ANY judgment which UPPC
57 of the Rules of Court, to wit: (1) demand made by creditor on the surety, (2) notice
may recover from Unibox in its civil case for collection. Its counter-bond was issued in consideration of the
to surety and (3) summary hearing as to his liability for the judgment under the counter-
dissolution of the writ of attachment on the properties of Unibox and Ortega. The counter-bond then replaced
bond; and
the properties to ensure recovery by UPPC from Unibox and Ortega. It would be the height of injustice to
3. the failure of UPPC to include Acropolis in the compromise agreement was fatal to its
allow Acropolis to evade its obligation to UPPC, especially after the latter has already secured a favorable
case.[27]
judgment.
Nothing in the compromise agreement indicates, or even hints at, releasing Acropolis from its obligation to
Issue; pay UPPC after the latter has obtained a favorable [Link], there is no incompatibility between the
(1) Whether UPPC failed to make the required demand and notice upon Acropolis? No. compromise agreement and the counter-bond. Neither can novation be presumed in this case.
Therefore, Acropolis, as surety under the terms of the counter-bond it issued, should be held liable for the
payment of the unpaid balance due to UPPC

(2) Whether the execution of the compromise agreement between UPPC and Unibox and Ortega was
tantamount to a novation which had the effect of releasing Acropolis from its obligation under the counter-
2. On other grounds (s13)
attachment bond? No.

Held:
SECTION 13. Discharge of attachment on other [Link] party whose property has been
The petition is granted. The decision of CA IS reversed & set aside. ordered attached may file a motion with the court in which the action is pending, before or after
levy or even after the release of the attached property, for an order to set aside or discharge the
attachment on the ground that the same was improperly or irregularly issued or enforced, or
1. UCPP complied with the twin notice requirement that the bond is insufficient. If the attachment is excessive, the discharge shall be limited to the
excess. If the motion be made on affidavits on the part of the movant but not otherwise, the
Section 17, Rule 57 of the Rules of Court sets forth the procedure for the recovery from a surety on a attaching party may oppose the motion by counter-affidavits or other evidence in addition to
counter-bond: that on which the attachment was made. After due notice and hearing, the court shall order the
setting aside or the corresponding discharge of the attachment if it appears that it was
Sec. 17. Recovery upon the counter-bond. When the judgment has become executory, the surety improperly or irregularly issued or enforced, or that the bond is insufficient, or that the
or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the payment of the attachment is excessive, and the defect is not cured forthwith. (13a)
judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon demand
the amount due under the judgment, which amount may be recovered from such surety or sureties after
notice and summary hearing on the same action.
From a reading of the abovequoted provision, it is evident that a surety on a counter-bond given to secure L. Third party claims (s14)
the payment of a judgment becomes liable for the payment of the amount due upon: (1) demand made upon

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SECTION 14. Proceedings where property claimed by third [Link] the property attached is Note: If it remains unsatisfied, recovery may be had on the counterbond upon demand and notice and
claimed by any person other than the party against whom attachment had been issued or his hearing to surety (Sec. 17, Rule 57).
agent, and such person makes an affidavit of his title thereto, or right to the possession thereof,
stating the grounds of such right or title, and serves such affidavit upon the sheriff while the Q: What is the order of satisfaction of judgment of attached property?
latter has possession of the attached property, and a copy thereof upon the attaching party, the
sheriff shall not be bound to keep the property under attachment, unless the attaching party or A: Order of satisfaction of judgment of attached property:
his agent, on demand of the sheriff, shall file a bond approved by the court to indemnify the
third-party claimant in a sum not less than the value of the property levied upon. In case of 1. Perishable or other property sold in pursuance of the order of the court
disagreement as to such value, the same shall be decided by the court issuing the writ of 2. Property, real or personal, as may be necessary to satisfy the balance
attachment. No claim for damages for the taking or keeping of the property may be enforced 3. collecting from debtors of the judgment
against the bond unless the action therefor is filed within one hundred twenty (120) days from
the date of the filing of the bond.
The sheriff shall not be liable for damages for the taking or keeping of such property, to any
such third-party claimant, if such bond shall be filed. Nothing herein contained shall prevent CASE: RURAL BANK OF STA BARBARA V. MANILA MISSION OF CHURCH
such claimant or any third person from vindicating his claim to the property, or prevent the
attaching party from claiming damages against a third-party claimant who filed a frivolous or
Cc: The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered
plainly spurious claim, in the same or a separate action.
sale
When the writ of attachment is issued in favor of the Republic of the Philippines, or
any officer duly representing it, the filing of such bond shall not be required, and in case the
sheriff is sued for damages as a result of the attachment, he shall be represented by the Solicitor Facts:
General, and if held liable therefor, the actual damages adjudged by the court shall be paid by
the National Treasurer out of the funds to be appropriated for the purpose. (14a)
1. Sps. Soliven was a registered owner of the subject property w/c was sold the property to
respondent (Manila Mission). 1994 TCT No. T-125213 in the name of the spouses Soliven was
[Link] 15. Satisfaction of judgment out of property attached; return of sheriff If judgment
cancelled, and TCT No. 195616 was issued in the name of respondent.
be recovered by the attaching party and execution issue thereon, the sheriff may cause the
2. In the meantime, 1993, petitioner Rural Bank of Sta. Barbara (Pangasinan), Inc. filed with the RTC
judgment to be satisfied out of the property attached, if it be sufficient for that purpose in the
a Complaint against the spouses Soliven for a sum of money, w/a prayer for the issuance of a Writ
following manner:
of Preliminary Attachment. W/c the RTC granted & ordered the issuance of the Writ of Attachment
(a) By paying to the judgment obligee the proceeds of all sales of perishable or other
3. The Writ of Attachment was annotated on TCT No. T-125213 on 24 May 1993. Thus, when TCT
property sold in
No. T-125213 of the spouses Soliven was cancelled and TCT No. 195616 of petitioner was issued
pursuance of the order of the court, or so much as shall be necessary to satisfy the
on 28 April 1994, the annotation on the Writ of Attachment was carried from the former to the
judgment;
latter.
(b) If any balance remains due, by selling so much of the property, real or personal, as
4. While the case was still pending before the RTC, respondent (MM)executed an Affidavit
may be necessary
claiming title and ownership over the subject property and filed Motion to Release Property from
to satisfy the balance, if enough for that purpose remain in the sheriffs hands, or in
Attachment.
those of the clerk of the court;
5. The RTC discharging the subject property from attachment.
(c) By collecting from all persons having in their possession credits belonging to the
6. Pet. filed opposition and argue they have better right over the property.
judgment obligor, or owing debts to the latter at the time of the attachment of such
credits or debts, the amount of such credits and debts as determined by the court in
the action, and stated in the judgment, and paying the proceeds of such collection
over to the judgment obligee.
The sheriff shall forthwith make a return in writing to the court of his proceedings Issue:
under this section and furnish the parties with copies thereof. (15a) Whether or not a registered writ of attachment on the land is a superior lien over that of an earlier
unregistered deed of sale.
Q: How can the judgment be satisfied out of the attached property?

A: (Sec. 15, Rule 57)

1. Payment to judgment creditor of all sales of perishable or other property
2. If any balance remains, selling property as may be necessary to satisfy the judgment Held: the petition is meritorious, therefore, granted
3. Collecting from all persons having possession of credits belonging to the judgment debtor and
paying the proceeds to judgment creditor

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a. The settled rule is that levy on attachment, duly registered, takes preference over a prior The bond is extinguished by non-payment of the premium in the absence of an express stipulation
unregistered sale. This result is a necessary consequence of the fact that the property involved of the contract making such non-payment of premiums a cause for the extinguishment or
was duly covered by the Torrens system which works under the fundamental principle that termination of the undertaking
registration is the operative act which gives validity to the transfer or creates a lien upon the
land. SECTION 17. Recovery upon the [Link] the judgment has become executory, the
surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure
The preference created by the levy on attachment is not diminished even by the subsequent the payment of the judgment shall become charged on such counter-bond and bound to pay the
registration of the prior sale. This is so because an attachment is a proceeding in rem. It is judgment obligee upon demand the amount due under the judgment, which amount may be
against the particular property, enforceable against the whole world. The attaching creditor recovered from such surety or sureties after notice and summary hearing in the same action.
acquires a specific lien on the attached property which nothing can subsequently destroy except (17a)
the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the
property attached is an indebted thing and a virtual condemnation of it to pay the owners
debt. The lien continues until the debt is paid, or sale is had under execution issued on the N. Disposition
judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some
manner provided by law. SECTION 18. Disposition of money [Link] the party against whom attachment had
been issued has deposited money instead of giving counter-bond, it shall be applied under the
direction of the court to the satisfaction of any judgment rendered in favor of the attaching
party, and after satisfying the judgment the balance shall be refunded to the depositor or his
b. The manila mission argues that there was a tacit recognition on the part of petitioner Rural Bank of the assignee. If the judgment is in favor of the party against whom attachment was issued, the
construction of the chapel when the latter did not deny this allegation in its Opposition to the Motion to whole sum deposited must be refunded to him or his assignee. (18a)
Discharge Property from Attachment. However the court find, that Manila Mission did not present any
evidence of knowledge on the part of petitioner Rural Bank of the prior existing interest of the former at the SECTION 19. Disposition of attached property where judgment is for party against whom
time of the attachment attachment was [Link] judgment be rendered against the attaching party, all the proceeds
of sales and money collected or received by the sheriff, under the order of attachment, and all
Hence the case of RUIZ cannot be apply in this case. Where a party has knowledge of a prior existing property attached remaining in any such officers hands, shall be delivered to the party against
interest which is unregistered at that time he acquired a right to the same land, his knowledge of that whom attachment was issued, and the order of attachment discharged. (19a)
prior unregistered interest has the effect of registration as to him. Knowledge of an unregistered sale
is equivalent to registration. The order of attachment is considered discharged only where the judgement had already become
final and executor and not when still on appeal.
Nevertheless, respondent Manila Mission would not be left without remedy. It could file a counter-bond
pursuant to Section 12, Rule 57[11] of the Rules of Court in order to discharge the attachment. If respondent
Manila Mission fails to do the same and the property ends up being subjected to execution, respondent can
redeem the property and seek reimbursement from the spouses Soliven. O. Claim for damages (s20)

SECTION 20. Claim for damages on account of improper, irregular or excessive [Link]
application for damages on account of improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the judgment becomes executory, with
due notice to the attaching party and his surety or sureties, setting forth the facts showing his
right to damages and the amount thereof. Such damages may be awarded only after proper
hearing and shall be included in the judgment on the main case.
M. Balance collected upon execution (s16)
If the judgment of the appellate court be favorable to the party against whom the
attachment was issued, he must claim damages sustained during the pendency of the appeal by
SECTION 16. Balance due collected upon an execution; excess delivered to judgment [Link]
filing an application in the appellate court, with notice to the party in whose favor the
after realizing upon all the property attached, including the proceeds of any debts or credits
attachment was issued or his surety or sureties, before the judgment of the appellate court
collected, and applying the proceeds to the satisfaction of the judgment, less the expenses of
becomes executory. The appellate court may allow the application to be heard and decided by
proceedings upon the judgment, any balance shall remain due, the sheriff must proceed to
the trial court.
collect such balance as upon ordinary execution. Whenever the judgment shall have been paid,
Nothing herein contained shall prevent the party against whom the attachment was
the sheriff, upon reasonable demand, must return to the judgment obligor the attached property
issued from recovering in the same action the damages awarded to him from any property of the
remaining in his hands, and any proceeds of the sale of the property attached not applied to the
attaching party not exempt from execution should the bond or deposit given by the latter be
judgment. (16a)
insufficient or fail to fully satisfy the award. (20a)

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Q: WHEN MUST APPLICATION FOR DAMAGES BE FILED: to Quash Writ of Preliminary Attachment in RTC but was denied. C & T Filed in CA, in w/c granted
the petition and reversed and set aside the decision of RTC.
A: Before the trial or before appeal is perfected, or before the judgement becomes final and executory. 4. Now when the sheriif ordered to return the properties, eviodence show that there is
mismanagement of the attach property.
It shall be awarded after hearing and included in the judgement. If the judgement of the appellate 5. The CA upheld the ruling of RTC that Maranon and Stronghold insurance are solidary liable and
court be favourable to the party against whom the attachment was issued, he must claim ordered to pay 1M for the bond and damages of the property.
damages during pendency of the appeal. 6. Pet appealed in this court
Procedure for claiming damages outlined in Section 20 is exclusive. Hence, such claims for
damages cannot be the subject of an independent action.
Issue:

EXCEPTION:
Whether the Cuencas and Tayactac could themselves recover damages arising from the wrongful attachment
1. When the principal case was dismissed for lack of jurisdiction by the trial court without of the assets of Arc Cuisine, Inc. by claiming against the bond issued by Stronghold Insurance? NO.
giving an opportunity to the party whose property was attached to apply for and prove his
claim; and Held: .
2. Where the damages by reason of attachment was sustained by a third person who was not a
party to the action wherein such writ was issued.
The petition is meritorious. Hence, the decision of CA is hereby reversed & set aside.
Note: Any award of damages for wrongful issuance of a provisional remedy should be recovered in the SAME
CASE. The recovery for damages cannot be had in a separate action. There is no dispute that the properties subject to the levy on attachment belonged to Arc Cuisine, Inc. alone,
CASE: not to the Cuencas and Tayactac in their own right. They were only stockholders of Arc Cuisine, Inc., which
had a personality distinct and separate from that of any or all of them. 42 The damages occasioned to the
STRONGHOLD INSURNCE V. CUENCA properties by the levy on attachment, wrongful or not, prejudiced Arc Cuisine, Inc., not them. As such, only
Arc Cuisine, Inc. had the right under the substantive law to claim and recover such damages. This right could
9. Strong hold insurance company v. Cuaenca not also be asserted by the Cuencas and Tayactac unless they did so in the name of the corporation itself. But
that did not happen herein, because Arc Cuisine, Inc. was not even joined in the action either as an original
party or as an intervenor.
Cc: The personality of a corporation is distinct and separate from the personalities of its stockholders. Hence,
its stockholders are not themselves the real parties in interest to claim and recover compensation for the
damages arising from the wrongful attachment of its assets. Only the corporation is the real party in interest The Cuencas and Tayactac were clearly not vested with any direct interest in the personal properties coming
for that purpose. under the levy on attachment by virtue alone of their being stockholders in Arc Cuisine, Inc. Their
stockholdings represented only their proportionate or aliquot interest in the properties of the corporation, but
did not vest in them any legal right or title to any specific properties of the corporation. Without doubt, Arc
(ang gi attached na property is sa coporation unya ang nangutang is [Link] and distinct Cuisine, Inc. remained the owner as a distinct legal person. 43
personality rule will apply).

Given the separate and distinct legal personality of Arc Cuisine, Inc., the Cuencas and Tayactac lacked the
Facts: legal personality to claim the damages sustained from the levy of the formers properties.

Maranon- creditor Equitable banking corporation v. special steel products.

Cuenca & Tayatac- debtor

Cc:
1. Maraon filed a complaint in the RTC against the Cuencas for the collection of a sum of money -A crossed check with the notation account payee only can only be deposited in the named payees account. It is gross
and damages w/ a prayer of writ of PA. negligence for a bank to ignore this rule solely on the basis of a third partys oral representations of having a good title thereto.
2. the RTC granted the application for the issuance of the writ of PA conditioned upon the posting of However, the is issuance of writ of PA was wrong against petitioner. SPPI is ordered to PAY
a bond of P1,000,000.00 executed in favor of the Cuencas. Maranon amended his complaint and Equitable Banking Corporation actual damages in the total amount of P30,204.36, for the wrongful preliminary
included TAYACTAC as defendant. attachment of its properties.
3. Maranon then post a bond of 1M issued by Stronghold Insurance. The writ was granted. And
therefore was issued. The service of the writ, summons and copy of the complaint were made on
Tayactac. Then, the sheriff levied upon the equipment, supplies, materials and various other Payee: Special Steel Products, Inc. (SSPI)
personal property belonging to Arc Cuisine. Cuenca and Tayactac filed Motion to Dismiss and Payor/depositor: International Copra Export Corporation (Interco)

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PROV REM/ Thur 5: 30-7:30 / Preliminary Attachment Rule 57 of RoC
Depositary bank: Equitable Banking Corporation (Equitable or bank) 3. SC finds the award of P3 million excessive. Moral damages are given not to punish the defendant but only to
Third person: give the plaintiff the means to assuage his sufferings with diversions and recreation. Court finds, that the award
of P50,000.00 as moral damages is reasonable under the circumstances.

Facts:
4. Sc finds, equitable is not guilty of fraud. the trial court should not have issued the writ of preliminary
1. SSPI is a private domestic corporation selling steel products. Its co-respondent Pardo is SSPIs President &
attachment in favor of SSPI. The wrongful attachment compelled Equitable to incur expenses for a counter-
majority stockholder. Interco is its regular customer. Jose IsidoroUy, is an Interco employee, in charge of the
bond, amounting to P30,204.26, and caused it to sustain damage, amounting to P5 million, to its goodwill and
purchasing department, and the son-in-law of its majority stockholder. SSPI sold welding electrodes to Interco
business credit
evidence by several sales invoices w/c provides that in case of delay Interco would pay interest at the rate of
36% per annum.
A writ of preliminary attachment is too harsh a provisional remedy to be issued based on mere abstractions of
fraud. Rather, the rules require that for the writ to issue, there must be a recitation of clear and concrete factual
2. Interco issued three checks payable to the order of SSPI. Each check was crossed with the notation account
circumstances manifesting that the debtor practiced fraud upon the creditor at the time of the execution of their agreement
payee only and was drawn against [Link] presented each crossed check to Equitable on the day of its
in that said debtor had a preconceived plan or intention not to pay the creditor. No proof was adduced tending to show that
issuance and claimed that he had good title. He demanded the deposit of the checks in his personal accounts
Equitable had a preconceived plan not to pay SSPI or had knowingly participated in Uys scheme.
which eventually equitable bank heed to Uys demand.

3. When SSPI demand for the payment, Interco replied that it had already issued three checks payable to
SSPI and drawn against Equitable. However, SSPI denied receipt of these checks. Eventually, SPPI & INTERCOS
discover of Uys scheme.
4. Interco finally paid the value of the three checks to SSPI, plus a portion of the accrued interests. Interco refused
Optional readings:
to pay the entire accrued interest of P767,345.64 on the ground that it was not responsible for the delay. Thus,
SSPI was unable to collect P437,040.35 (at the contracted rate of 36% per annum) in interest income.
5. SSPI and its president, Pardo, filed a complaint for damages with application for a writ of preliminary attachment Ligon v. RTC
against Uy and Equitable Bank. Saberon v. Ventanilla
The court granted the writ of PA & then the sheriff implemented the writ. Equitables filed motion and filing of a People v. velasco
counter-bond. Trial Court discharged the attachment. Lim v. Lazaro

Issue:
1.. Whether SSPI has a cause of action against Equitable for quasi-delict;

2. Whether SSPI can recover, as actual damages, the stipulated 36% per annum interest from Equitable;

3. Whether speculative fears and imagined scenarios, which cause sleepless nights, may be the basis for the award of moral
damages; and

4. Whether the attachment of Equitables personal properties was wrongful.

Held:
1. SSPIs cause of action is not based on the three checks. SSPI does not ask Equitable or Uy to deliver to it the
proceeds of the checks as the rightful payee. SSPI does not assert a right based on the undelivered checks or for
breach of contract. Instead, it asserts a cause of action based on quasi-delict. A quasi-delict is an act or omission,
there being fault or negligence, which causes damage to another. Quasi-delicts exist even without a contractual
relation between the parties. The courts below correctly ruled that SSPI has a cause of action for quasi-delict
against Equitable.
2. it is clear that defendants actions deprived SSPI of the present use of its money for a period of two years. SSPI is
therefore entitled to obtain from the tortfeasors the profits that it failed to obtain from July 1991 to June
1993. SSPI should recover interest at the legal rate of 6% per annuLthis being an award for damages based on
quasi-delict and not for a loan or forbearance of money.

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