Rules of Court
RULE 57-61
Lectures and Discussions by Atty. Geraldine Quimosing-Tiu
June 25, 2019 by Reginald Matt Santiago
What are provisional remedies?
Provisional Remedies, Defined
Provisional are writs and processes that are available during the
pendency of the action. A litigant may avail of provisional remedies to
preserve and protect certain rights and interests pending the issuance
of the final judgment in the case.These remedies are provisional
because they are temporary measures availed of during the pendency
of the action; they are ancillary because they are mere incidents in and
are dependent on the result of the main action.
The ancillary nature of provisional remedies means that they are adjunct
to the main suit. The distinguishing factor between the resolution of the
provisional remedy and the main case lies in the temporary character of
the ruling on the provisional relief, thus, the term "provisional." (V.
Francisco, The Revised Rules of Court in the Philippines: Provisional
Remedies).
CALO v. ROLDAN
76. Phil. 445
The provisional remedies denominated attachment, preliminary
injunction, receivership, and delivery of personal property, provided
in Rules 59, 60, 61, and 62 of the Rules of Court, respectively, are
remedies to which parties litigant may resort for the preservation or
protection of their rights or interest, and for no other purpose, during
the pendency of the principal action. If an action, by its nature, does
not require such protection or preservation, said remedies cannot be
applied for and granted.
To each kind of action or actions a proper provisional remedy is
provided for by law. The Rules of Court clearly specify the case in
which they may be properly granted.
What are the purposes of provisional remedies?
Purpose of Provisional Remedies
Generally, it is to protect the rights of the litigant pending litigation. And
specifically, there are four purposes that are recognized:
1. To preserve the litigants’ rights or interest while the main
action is pending;
2. To secure the judgment;
3. To preserve the status quo
4. To preserve the subject of the action.
What are the types of provisional remedies under the Rules of Court?
Types of Provisional of Remedies in the Rules of Court
1. Preliminary Attachment under Rule 57
2. Preliminary Injunction under Rule 58
3. Receivership under Rule 59
4. Replevin under Rule 60
5. Support Pendente Lite under Rule 61
Are these provisional remedies under the Rules of Court exclusive?
Provisional Remedies, Not Exclusive to Rules of Court
They are not exclusive, there are other provisional remedies provided in
special rules and also under special laws. Examples of special rules:
[1] Rule on Custody of Minors [AM No. 03-04-04-SC]
•
Temporary Custody (Section 13)
•
Temporary Visitation Rights (Section 15)
•
Hold Departure Order (Section 16)
•
Protection Order (Section 17)
[2] Rule on Provisional Orders [AM No. 02-11-12-SC]
These are issued usually in actions involving declaration of absolute
nullity of void marriage or for annulment of voidable marriage, or for legal
separation:
•
Spousal Support (Section 2)
•
Child Support (Section 3)
•
Child Custody (Section 4)
•
Visitation Rights (Section 5)
•
Hold Departure Order (Section 6)
•
Order of Protection (Section 7)
•
Administration of Common Property (Section 8)
Other kinds of provisional remedies not in the Rules of Court:
•
Deposit
•
Writ of Sequestration
Who can grant the provisional remedies?
Provisional remedies are granted by the court where the main action is
pending.
RULE 57
PRELIMINARY ATTACHMENT
What is a writ of preliminary attachment?
A preliminary attachment may be defined, paraphrasing the Rules of
Court, as the provisional remedy in virtue of which a plaintiff or other
party may, at the commencement of the action or at any time, thereafter,
have the property of the adverse party taken into the custody of the court
as security for the satisfaction of any judgment that may be recovered.
15 It is a remedy which is purely statutory in respect of which the law
requires a strict construction of the provisions granting it. 16 Withal no
principle, statutory or jurisprudential, prohibits its issuance by any court
before acquisition of jurisdiction over the person of the defendant.
What is the purpose?
Purposes of Preliminary Attachment
1. To seize the property of the debtor in advance of final
judgment and hold it for purposes of satisfying said judgment,
as in the grounds stated in paragraphs (a) to (e) of Section 1,
Rule 57 of the Rules of Court;
2. To acquire jurisdiction over the action by actual or constructive
seizure of the property in those where personal or substituted
service of summon on the defendant cannot be effected, as in
paragraph (f) of the same provision, in cases of actions of
purely personal nature.
Who can avail of the remedy of preliminary attachment?
Parties Who Can Avail of Preliminary Attachment
Any party may avail of preliminary attachment as long as any of the
grounds therefore exists:
1. The defendant on his counterclaim
2. A co-party in his cross-claim; and
3. A third-party plaintiff on his third-party claim.
What are the classes of attachment?
Classes of Attachment
1. Preliminary Attachment
2. Final Attachment
3. Garnishment which is a specie of attachment or execution for
reaching credits belonging to a judgment debtor and owing to
him from a stranger.
When is preliminary attachment availed of?
Preliminary Attachment, When Availed Of
1. At the commencement of the action; or
2. At any time before entry of judgment.
What may be the subject of the attachment?
The subject of the attachment is the property of the adverse party.
From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
In what actions can you ask for writ of attachment?
Attachment may be issued only in the case or actions specifically stated
in section 1, Rule 57, in order that the defendant may not dispose of his
property attached, and thus secure the satisfaction of any judgment that
may be recovered by plaintiff from defendant. (Calo v. Roldan).
If you main action is an injunction, can you ask for provisional remedy of
preliminary attachment?
No. If an action, by its nature, does not require such protection or
preservation, said remedies cannot be applied for and granted. To each
kind of action or actions a proper provisional remedy is provided for by
law. The Rules of Court clearly specify the case in which they may be
properly granted (Calo v. Roldan).
What is the ruling in the case of CALO v. ROLDAN?
CALO v. ROLDAN
76. Phil. 445
Attachment may be issued only in the case or actions specifically
stated in section 1, Rule 59, (now 57) in order that the defendant may
not dispose of his property attached, and thus secure the satisfaction
of any judgment that may be recovered by plaintiff from defendant.
For that reason a property subject of litigation between the parties,
or claimed by plaintiff as his, cannot be attached upon motion of the
same plaintiff.
The special remedy of preliminary prohibitory injunction lies when the
plaintiff's principal action is an ordinary action of injunction, that is,
when the relief demanded in the plaintiff's complaint consists in
restraining the commission or continuance of the act complained of,
either perpetually or for a limited period, and the other conditions
required by section 3 of Rule 60 are present.
The purpose of this provisional remedy is to preserve the status quo
of the things subject of the action or the relation between the parties,
in order to protect the rights of the plaintiff respecting the subject of
the action during the pendency of the suit. Because, otherwise or if
no preliminary prohibition injunction were issued, the defendant may,
before final judgment, do or continue the doing of the act which the
plaintiff asks the court to restrain, and thus make ineffectual the final
judgment rendered afterwards granting the relief sought by the
plaintiff.
What is the basic rule when you are applying a provisional remedy in
relation to the main action?
Direct Relationship Between Main Relief and Provisional Remedy
The provisional remedy must be related and be consistent with the main
action. If the main action is for injunction seeking the defendant to be
prevented from doing something, then it would not be consistent to ask
for the provisional remedy of attachment which is to seize a property. In
attachment, one seizes the property belonging to the defendant so that
it can be used to satisfy the judgment that one may obtain later. It is to
preserve the property for the satisfaction of judgment but this is now
inconsistent if the main action is for injunction.
are intending to enter and work or harvest whatever existing fruits may
now be found in the lands in violation of the plaintiffs.
What is the main relief asked in the case?
The main relief sought for is for restraining, enjoining and prohibiting
the defendants, their agents, servants, representatives, attorneys, and,
(or) other persons acting for and in their behalf, from entering in,
interfering with and/or in any wise taking any participation in the harvest
of the lands belonging to the plaintiffs; or in any wise working the lands.
If that is the main prayer in the complaint what provisional remedy can
you ask?
Then one can ask for injunction to prevent the defendants from the
commission of those acts in entering, working, harvesting in their lands
and their palay.
What Calo v. Roldan tells you is that, the provisional remedy that you
will ask from the court will depend on the main prayer of the complaint
and what main case is all about.
If the main case is for injunction, how can you ask for attachment or
receivership. If what you want the court to order, after determination of
the merits of the case, is to exclude defendant from a certain property,
or prohibit him from doing so, the main consideration is that there must
be a direct relationship between the main relief and provisional
remedy, they must be consistent, they must be aligned.
More importantly, When you ask for attachment, it must solely on the
grounds enumerated under Section 1 of Rule 57. In Calo v. Roldan it is
still under the old Rules that is why it is still Rule 59.
Calo v. Roldan Doctrines
The case of Calo v. Roldan tells you two things:
1.
It must be geared towards the preservation of rights of the parties
pending determination of the merits of the case, consistent with the final
outcome wanted from the case;
2.
What are the facts of this case?
Plaintiffs are owners and possessor of parcels of land and that the
defendants without any legal right whatsoever and in connivance with
each other, through the use of force, stealth and intimidation, intend or
Grounds for attachment is exclusive under Section 1,
Rule 57
One cannot add to the grounds not mentioned under Section 1. If the
grounds do not fall under Section 1, Rule 57 then you have no business
asking for the court for the issuance of preliminary attachment.
Therefore, it is important that you know by heart what are the grounds
for preliminary attachment under Section 1. Other than those grounds,
there are no other grounds for the court to issue an attachment writ.
Section 1. Grounds upon which attachment may issue. — At the
commencement of the action or at any time before entry of judgment,
a plaintiff or any proper party may have the property of the adverse
party attached as security for the satisfaction of any judgment that
may be recovered in the following cases:
(a)
In an action for the recovery of a specified amount of
money or damages, other than moral and exemplary, on a
cause of action arising from law, contract, quasi-contract,
delict or quasi-delict against a party who is about to depart
from the Philippines with intent to defraud his creditors;
(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, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty;
(c)
In an action to recover the possession of property unjustly
or fraudulently taken, detained or converted, when the
property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found or taken
by the applicant or an authorized person;
If you are going to prepare a complaint based on the urgency of the
client’s needs what will be the main consideration now?
The main consideration is now for the protection of the rights of the
plaintiff – thus citing Calo v. Roldan. The special remedy of preliminary
prohibitory injunction lies when the plaintiff's principal action is an
ordinary action of injunction, that is, when the relief demanded in the
plaintiff's complaint consists in restraining the commission or
continuance of the act complained of, either perpetually or for a limited
period, and the other conditions required by Rules are present. The court
implies that there is an inconsistency between the main action and the
provisional remedy.
Provisional remedy must be consistent with the main
action,
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
(d)
In an action against a party who has been guilty of a fraud
in contracting the debt or incurring the obligation upon
which the action is brought, or in the performance thereof;
(e)
In an action against a party who has removed or disposed
of his property, or is about to do so, with intent to defraud
his creditors; or
(f)
In an action against a party who does not reside and is not
found in the Philippines, or on whom summons may be
served by publication. (1a)
FIRST GROUND FOR PRELIMINARY ATTACHMENT
(a) In an action for the recovery of a specified amount of money or
damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict
against a party who is about to depart from the Philippines with intent
to defraud his creditors;
Elements for Section 1(a)
[1] Main Action:
Action for recovery of a specified amount of money or damages other
than moral and exemplary.
[2] Basis:
Law, contract, quasi-contract, delict or quasi-delict.
It is Not Simply an Action for Collection
It is not a simple collection case. It is the recovery of the sum of money.
This is not simply collection, because collection here presupposes the
existence of a contract – for example a contract of loan. It is not just any
collection. It is the recovery for sum of money because it includes asking
for damages.
This is because when one ask for the recovery of damages, one
essentially asks for a sum of money. But when one asks for damages, it
is not necessarily based on contract, unless liquidated damages. For
example damages arising from an accident that is arising from quasidelict or those arising from a delict – these are not based on a contract.
It covers a broad source of obligation – law, contract, quasi-contract,
quasi-delict or delict. It is not simply a collection but a recovery of a
sum money because covers a broader source of obligations insofar as
the defendant is concerned.
[3] Against Whom:
The defendant is a party who is about to depart from the Philippines with
intent to defraud his creditors. It is not simply someone who has a plane
ticket but it must be qualified with intent to defraud. The leaving of the
country must be coupled with intent to defraud the creditors.
Specified Amount of Money or Damages
The sum of money must be specified, this is because the damages must
be other than moral and exemplary damages. It must be liquidated as
well. If it is liquidated, it is agreed upon in a contract in a way it is
specified and is fixed – no need for the court to receive evidence for the
court to determine the amount.
If it is not moral or exemplary damages? What type of damages can you
recover here?
Actual damages which can be proved by receipt. It must be supported
with evidence, this is something that is not agreed upon by the parties
unlike liquidated damages.
In the case of K.O. GLASS v. VALENZUELA, was there a ground for
attachment under Section 1(a)?
There was no ground for attachment because in the petition for
preliminary attachment it was only alleged that defendant was a
foreigner, it was not alleged that he was about to depart from the
Philippines with intent to defraud his creditors.
Factual Circumstances of the Case:
Defendant
Kenneth O. Glass
Main Action
Recovery of Sum of Money of Agreed Rentals
Basis
Contract of Lease
Payment of rentals of truck: P37,190.00
Parties to the Contract:
KO Glass Construction and
Antonio D. Pinzon (plaintiff)
Can you ask attachment against a defendant who is impleaded who is
not even a party to the contract? Is he obligated to pay a sum of money
under any contract that was sued upon in this case?
The main party here is the K.O. Glass Corporation who is the main
defendant in the case. But the ground for attachment is that he is about
to depart from the Philippines with intent to defraud his creditors, which
is apparently referring to the individual defendant, Kenneth O. Glass.
How did the Supreme Court ruled on that ground? Was there a ground
for the attachment under Section 1(a)? How about the fact that the
defendant here is supposed to be a foreigner who at any time may
depart the Philippines with intent to defraud creditors? Is this not a
sufficient ground?
There was no sufficient ground:
K.O. GLASS CONSTRUCTION v. VALENZUELA
GR L-48756, September 11, 1982
Pinzon, however, did not allege that the defendant Kenneth O. Glass
"is a foreigner (who) may, at any time, depart from the Philippines
with intent to defraud his creditors including the plaintiff." He merely
stated that the defendant Kenneth O. Glass is a foreigner.
There being no showing, much less an allegation, that the
defendants are about to depart from the Philippines with intent to
defraud their creditor, or that they are non-resident aliens, the
attachment of their properties is not justified.
Second, the affidavit submitted by Pinzon does not comply with the
Rules. Under the Rules, an affidavit for attachment must state that
(a) sufficient cause of action exists, (b) the case is one of those
mentioned in Section I (a) of Rule 57; (c) there is no other sufficient
security 'or the claim sought to be enforced by the action, and (d) the
amount due to the applicant for attachment or the value of the
property the possession of which he is entitled to recover, is as much
as the sum for which the order is granted above all legal
counterclaims.
While Pinzon may have stated in his affidavit that a sufficient cause
of action exists against the defendant Kenneth O. Glass, he did not
state therein that "the case is one of those mentioned in Section 1
hereof; that there is no other sufficient security for the claim sought
to be enforced by the action; and that the amount due to the applicant
is as much as the sum for which the order granted above all legal
counter-claims."
It has been held that the failure to allege in the affidavit the requisites
prescribed for the issuance of a writ of preliminary attachment,
renders the writ of preliminary attachment issued against the property
of the defendant fatally defective, and the judge issuing it is deemed
to have acted in excess of his jurisdiction.
Is the mere allegation of flight risk sufficient to secure writ of attachment
under Section 1(a)?
Mere Flight Risk, Not Sufficient
Pinzon, however, did not allege that the defendant Kenneth O. Glass "is
a foreigner (who) may, at any time, depart from the Philippines with
intent to defraud his creditors including the plaintiff." He merely stated
that the defendant Kenneth O. Glass is a foreigner. Thus it does not
comply with the requirements of Section 1(a). It must be shown that:
•
The party is about to depart the Philippines;
•
With intent to defraud creditors.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
In GENERAL v. DE VENECIA, what was the main action here?
Main Action
Recovery of Sum of Money
Basis
Promissory Note – Collection based on a Loan
Contract of Loan of P4,000 payable within 6 months
after peace has been declared and government
established in PH
Ground
About to dispose his assets in defraud of creditors
Was the issuance by the trial court of the writ of attachment proper?
No. This is because the obligation is not yet due and demandable.
GENERAL v. DE VENECIA
78 Phil. 780, GR L-894, July 30, 1984
But the case for petitioner is stronger when we reflect that his promise
is to pay P4,000 "within six months after peace has been declared."
It being a matter of contemporary history that the peace treaty
between the United States and Japan has not even been drafted,
and that no competent official has formally declared the advent of
peace (see Raquiza vs. Bardford, 75 Phil., 50),
It is obvious that the six-month period has not begun; and Luis F.
General has at present and in June, 1946, no demandable duty to
make payment to plaintiffs, independently of the moratorium
directive.
On the question of validity of the attachment, "the general rule is that,
unless the statute expressly so provides, the remedy by attachment
is not available in respect to a demand which is not due and payable,
and if an attachment is issued upon such a demand without statutory
authority it is void." (7 C.J.S., p. 204.)
It must be observed that under our rules governing the matter the
person seeking a preliminary attachment must show that "a
sufficient cause of action exists" and that the amount due him is
as much as the sum for which the order of attachment is granted"
(sec. 3, Rule 59).
Inasmuch as the commitment of Luis F. General has not as yet
become demandable, there existed no cause of action against him,
and the complaint should have been dismissed and the attachment
lifted. (Orbeta vs. Sotto, 58 Phil., 505.)
MIALHE v. LENCQUESAING
142 SCRA 694, July 11, 1986
The Supreme Court, citing in agreement the IAC:
We find, therefore, and so hold that respondent court had exceeded
its jurisdiction in issuing the writ of attachment on a claim based on
an action for damages arising from delict and quasi delict the amount
of which is uncertain and had not been reduced to judgment just
because the defendant is not a resident of the Philippines.
Because of the uncertainty of the amount of plaintiff's claim it cannot
be said that said claim is over and above all legal counterclaims that
defendant may have against plaintiff, one of the indispensable
requirements for the issuance of a writ of attachment which should
be stated in the affidavit of applicant as required in Sec. 3 of Rule 57
or alleged in the verified complaint of plaintiff. The attachment
issued in the case was therefore null and void.
Why is the amount here considered uncertain? Is it not that he was
claiming P2,000,000 in damages? How about the prayer for Attorney’s
Fees for P250,000?
Cannot be Based on Contingency
The damages being claimed is not actual or liquidated damages. The
kind of damages that is being asked for. This specified amount, insofar
as damages is concerned, must be liquidated or actual, it must not be
moral or exemplary.
This is because these are contingent – these are dependent on the
court to grant, which applies also to attorney’s fees. Unlike actual
damages where you can show proof of pecuniary loss and the court will
have no discretion because it is duly proven.
Unlike moral or exemplary damages – depende yan sa drama mo sa
korte, kung paano ka nasaktan, sleepless nights, serious anxiety –
which are all contingent. They do not have receipts. Unlike actual
damages, it can be backed up by receipt. This is the reason why one
cannot ask for attachment based on recovery for damages not based on
actual or liquidated damages.
If you fail to comply the elements for each of the ground, then you cannot
ask for attachment, the court will not issue unless you have satisfied the
judgment. When you read the cases, you have to be guided, by the
elements of each ground.
July 2, 2019 by Chen Lee T. Apura
SECOND GROUND FOR PRELIMINARY ATTACHMENT
Obligation Must be Due and Demandable
Because of this condition, then the amount here was not yet due and
demandable.
Section 1. Grounds upon which attachment may issue.
Thus in applying Section 1(a), the amount that one is asking or trying
should be Due and Demandable it must not subject to a suspensive
condition, it has to be due and demandable.
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, broker, agent, or clerk,
in the course of his employment as such, or by any other person in
a fiduciary capacity, or for a willful violation of duty;
Aside from the requirement that it be due and demandable, what is
needed as stated in MIALHE v. DE LENCQUESAING, what was the
main action here?
Main Action:
Basis:
Damages (P2M Damages; P250K Attorney’s Fees)
Filing by respondent (then defendant) of a criminal
complaint for estafa, solely for the purpose of
embarrassing petitioner (then plaintiff) and
besmirching his honor and reputation as a private
person and as an Honorary Consul of the Republic
of the Philippine's in the City of Bordeaux, France.
Ground:
Respondent-defendant is a non-resident of the
Philippines", pursuant to paragraph (f), Section 1,
Rule 57
Trial Court:
Granted application for preliminary attachment
Proprietary:
It was not proper
Main Action under Section 1b: Recovery of sum of money or property.
Defendant under Section 1b: The person who is in custody of the
property to whom trust and confidence is given or the one entrusted with
the property.
In the case of TAN VS. ZANDUETA:
Defendant:
Isidro Tan
Plaintiff:
Tiu Chay (alias Tan Kia)
Main Action:
Recovery of Sum of Money
Subject Matter:
Sweepstakes Winnings (P22,500)
Ground:
Defendant allegedly appropriated half of
the prize exclusively for himself, in
complete disregard of Plaintiff.
Propriety of the Writ:
Proper
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What happened to the winnings?
Was there a fiduciary relationship? Yes
The winnings in the amount of P22,500 was claimed by the respondent
to be the half corresponding to him of the P45,000 which they (petitioner
and respondent) won as a prize in the sweepstakes. Said ticket was
alleged to be purchased by them with a part of the capital invested in a
sari-sari store. The winnings were appropriated by petitioner for himself.
What happened to the money here?
How was it appropriated?
Petitioner appropriated the entire prize exclusively for himself, in
complete disregard of respondent Tiu Chay, knowing that one- half
thereof did not belong to him but to said respondent; that he was merely
a depository or agent of the latter as to said half, and that the petitioner
acted in the manner stated notwithstanding the fact that he was required
to turn over to the respondent the part of the prize won corresponding to
the latter.
The corporate funds were converted or embezzled by the presidenttreasurer and general manager of the company. Defendant-appellant
has been taking money of the corporation without being duly authorized
to do so either by the board of directors or by the by-laws, the money
taken by him having amounted to the considerable sum of P66,207.62.
Of this sum, P19,000 was invested in the purchase of the house and lot
now under attachment in this case, and P50,000 in the purchase of 500
shares of stock of Prising at the price of P100 per share for himself and
Marker. A few days afterwards he began to sell the ordinary shares of
the corporation for P430 each.
If he has possession of the money and he is the president-treasurer and
general manager of the company, can he not use the money?
Do the defendant fall under any of the defendants enumerated under
Section 1b? Yes
He cannot without authorization from the board of directors or the bylaws.
Under what category?
Where is the fiduciary relationship here?
Other person in a fiduciary capacity (as depositary or agent)
Having, as he had, absolute and almost exclusive control over the
function of the corporation and its funds by virtue of his triple capacity as
president, treasurer and general manager, the defendant-appellant
should have been more scrupulous in the application of the funds of said
corporation to his own use. As a trustee of said corporation, it was his
duty to see by all legal means possible that the interests of the
stockholders were protected, and should not abuse the extraordinary
opportunity which his triple position offered him to dispose of the funds
of the corporation.
How was he a depositary here?
He held one- half of the winnings which belonged to respondent. In such
sense, he was merely a depository or agent of the latter as to said half.
Who gave the winnings here? Isidro Tan
Is there a fiduciary relationship between the complainant and
defendant? Yes
How did that happen? How does it arise? If you are a depositary, isn’t it
that when you deposit something that you are entitled to have it returned
to you? So was there deposit here of the winnings?
What is the common denominator between the cases of TAN VS.
ZANDUETA and of WALTER OLSEN & CO. VS.OLSEN?
In both cases there is fiduciary relationship.
Yes. The other half in the amount of P22,500.00 corresponding to
respondent was kept by defendant here.
In TAN VS. ZANDUETA, half of the winnings pertaining to respondent
was entrusted to petitioner.
TAN v. ZANDUETA
GR 43721, June 15,1935
In WALTER OLSEN & CO. VS.OLSEN, respondent being a trustee of
the corporate, it was his duty to see by all legal means possible that the
interests of the stockholders were protected, and should not abuse the
extraordinary opportunity which his triple position offered him to dispose
of the funds of the corporation.
The Supreme Court found that the writ of preliminary attachment was
issued in strict conformity to the law, because the complaint wherein
the said attachment was issued alleged that the petitioner, after
collecting the prize of a ticket in the last sweepstakes, consisting of
the amount of P50,000, belonging to the two, that is the petitioner
and the respondent Tiu Chay (alias Tan Kia), appropriated the entire
prize exclusively for himself, in complete disregard of said Tiu Chay,
knowing that one- half thereof did not belong to him but to said
respondent; that he was merely a depository or agent of the latter as
to said half, and that the petitioner acted in the manner stated
notwithstanding the fact that he was required to turn over to the
respondent the part of the prize won corresponding to the latter.
In the case of WALTER OLSEN & CO. VS.OLSEN:
Defendant:
Walter Olsen
Plaintiff:
Walter E. Olsen & Co.
Main Action:
Recovery of Sum of Money
Subject Matter:
Corporate funds (P66,207.62)
Ground:
The corporate funds were allegedly
converted or embezzled by Walter Olsen
– the president-treasurer and general
manager of the company.
Propriety of the Writ:
Proper
What do you mean by fiduciary relationship? A relationship of trust.
Atty. Tiu’s Discussion:
In both cases, the defendants here possess money in trust for another.
That is what fiduciary relationship is all about. The money or property
you have in your possession is not yours. You are holding it for someone
else. Therefore, you have the obligation to deliver it to the rightful owner.
The moment you have appropriated it for yourself then there is
misappropriation, embezzlement, conversion and you can be held liable
as a proper defendant under Section 1b of Rule 57.
Relationship of trust and breach thereof, main element
In OLSEN VS. OLSEN: That is the basis in Walter Olsen case, 3 major
positions were occupied by him. As treasurer, he has possession of the
funds but he cannot dispose of it by will without authority or order from
the board. Without such board resolution, he cannot dispose of such
money.
In TAN VS. ZANDUETA: He held half of the winnings in trust for the
plaintiff. Both of them contributed equally to the purchase of the ticket.
In that case, they should split the winnings equally. The moment the full
amount of the winnings is in your possession (half of it you hold in trust
for the other) then you have the obligation to deliver that to the other
person. If you breach that trust then you can be held liable to deliver the
money and liable as a defendant in an attachment proceeding. Your
property will be seized in order to secure the judgment in the case.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
There is a main case for the recovery of money or property held in trust
and there is a breach of that.
receipt and acceptance of the contracted supplies, with the balance
payable within thirty (30) days after the initial payment.
WALTER E. OLSEN & CO v. WALTER OLSEN
GR 23237, November 14, 1925
PROVI further alleged that out of TESDA’s liability of ₱39,475,000.00,
TESDA paid PROVI only ₱3,739,500.00, leaving an outstanding
balance of ₱35,735,500.00. Despite the two demand letters that PROVI
sent TESDA, the outstanding balance remained unpaid. Hence, the
complaint.
Having, as he had, absolute and almost exclusive control over the
function of the corporation and its funds by virtue of his triple capacity
as president, treasurer and general manager, the defendantappellant should have been more scrupulous in the application of the
funds of said corporation to his own use. As a trustee of said
corporation, it was his duty to see by all legal means possible that
the interests of the stockholders were protected, and should not
abuse the extraordinary opportunity which his triple position offered
him to dispose of the funds of the corporation. Ordinary delicacy
required that in the disposition of the funds of the corporation for his
personal use, he should be very careful, so as to do it in such a way
as would be compatible with the interests of the stockholders and his
fiduciary character.
The conduct of the defendant-appellant in connection with the funds
of the corporation he represented was more than an irregularity; and
while it is not sufficiently serious to constitute a criminal fraud, it, is
undoubtedly a fraud of a civil character, because it is an abuse of
confidence to the damage of the corporation and its stockholders.
Was the attachment granted? No.
What was the ground for attachment cited?
That TESDA fraudulently misapplied or embezzled the money
earmarked for the payment of the contracted supplies and services.
Was there embezzlement, misappropriation here under Section 1b? No.
Are the elements of Section 1b present in this case? No.
Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon,
applies only where money or property has been embezzled or converted
by a public officer, an officer of a corporation, or some other person who
took advantage of his fiduciary position or who willfully violated his duty.
What elements are missing?
Important factors to consider under Section 1b
1. The position of the defendant.
2. The relationship of the defendant vis-à-vis the plaintiff; and
3. The nature of the action is for the recovery of the property that was
converted, embezzled, or fraudulently misappropriated by the
defendant.
Fraud, crucial element under Section 1b
The crucial element here is FRAUD. There is breach of a fiduciary duty
due to fraud similar to the par (a) where the defendant is about to leave
the country with intent to defraud his creditors. So on the first two cases
where attachment may issue, the element of fraud is present although
the application of fraud may vary, still, there is fraud present. (lifted from
2018 TSN)
In the case of PROFESSIONAL VIDEO, INC. VS. TESDA:
Fiduciary relationship between PROVI and TESDA
Isn’t it that there was already a certification as to the availability of funds
attached to the contract and that TESDA was obliged to deliver the
amount stated in the contract? Would that not constitute violation of
fiduciary relationship?
Defendant:
TESDA
PROVI, in this case, never entrusted any money or property to TESDA.
While the Contract Agreement is supported by a Certificate as to
Availability of Funds (Certificate) issued by the Chief of TESDA’s
Accounting Division, this Certificate does not automatically confer
ownership over the funds to PROVI. Absent any actual disbursement,
these funds form part of TESDA’s public funds, and TESDA’s failure to
pay PROVI the amount stated in the Certificate cannot be construed as
an act of fraudulent misapplication or embezzlement.
Plaintiff:
Professional Video, Inc.
What is the use of the certification here?
Main Action:
Complaint for Sum of Money
Subject Matter:
Payment for supplies and services
(P35,735,500.00)
Ground:
That TESDA fraudulently misapplied or
embezzled the money earmarked for the
payment of the contracted supplies and
services
The certification provides that the sum so certified shall not thereafter be
available for expenditure for any other purpose until the obligation of the
government agency concerned under the contract is fully extinguished.
By law, therefore, the amount stated in the Certification should be intact
and remains devoted to its purpose since its original appropriation.
PROVI can rebut the presumption that necessarily arises from the cited
provision only by evidence to the contrary. No such evidence has been
adduced.
Propriety of the Writ:
Not proper
Was there a ground for attachment under Section 1b? No.
Who filed the complaint and what is it all about?
Professional Video, Inc. (PROVI) filed a complaint for sum of money with
damages against TESDA. PROVI additionally prayed for the issuance
of a writ of preliminary attachment/garnishment against TESDA against
the properties of TESDA.
TESDA enter into a negotiated contract with PROVI. On December 29,
1999, TESDA and PROVI signed and executed their "Contract
Agreement Project: PVC ID Card Issuance" (the Contract Agreement)
for the provision of goods and services in the printing and encoding of
PVC cards. TESDA and PROVI executed an "Addendum to the Contract
Agreement Project: PVC ID Card Issuance" (Addendum), whose terms
bound PROVI to deliver one hundred percent (100%) of the enumerated
supplies to TESDA. TESDA in turn undertook to pay PROVI thirty
percent (30%) of the total cost of the supplies within thirty (30) days after
The main action here is recovery of sum of money. That element is
present. What about the other elements, are they present?
As to the element that the public officer embezzled or misapplied the
property, it is not present in this case.
Atty. Tiu’s Discussion:
So this is a collection case based on contract, there is no showing of
fraud here or fraudulent misapplication of funds simply because there is
no trust relations between the parties. The certificate of the availability
of funds does not transfer ownership of funds to the petitioner here
because that only states the availability of funds. So there is yet no
transfer of the funds in favor of PROVI. In which case, TESDA was not
holding these funds in trust of PROVI so there is no trust relation.
TESDA was not obligated to deliver the funds to PROVI under the
Certificate of Availability of Funds. TESDA may have an obligation to
pay but with respect to the funds covered by the Certificate of Availability
of Funds, it has no duty to turn over. Since these funds belong to
TESDA, these are still public funds.
Property need not belong to the defendant, exception to the
general rule.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
When you speak of embezzlement, conversion, misappropriation, you
are referring to properties held in trust by the defendant in favor of the
plaintiff. In other words, the plaintiff owned the funds or the property
subject of the case.
So this is a deviation from the general understanding that the property
to be attached belongs to the defendant, not necessarily. Because in
this case, it should belong to the plaintiff but is merely embezzled,
converted or misappropriated by the defendant which entitles the
plaintiff to recover these properties. In addition to that, to secure the
judgment which may be obtained, while the case is pending, he can avail
of the remedy of Preliminary Attachment.
Section 1b
Fraud involves to
the intent of the
defendant who is
about to depart with
the property and
with intent to
defraud.
Section 1c
Property subject
matter of the case
was fraudulently
misapplied,
converted, or
embezzled.
Fraud is in the state
of mind of the
defendant.
The act of
appropriation of the
subject matter was
fraudulent.
GENERAL RULE: Property to be attached belongs to the defendant
EXCEPTION: The properties are embezzled and are sought to be
recovered by the rightful owner who is the plaintiff.
Section 1c
The taking of
personal property
was fraudulent, in
order to prevent its
recovery or being
found by the
applicant or
authorized person.
The act of taking
was fraudulent.
In these 3 grounds, you have already encountered the element of fraud.
In the case of SANTOS VS. BERNABE:
PROFESSIONAL VIDEO, INC. v. TESDA
GR 155504, June 26, 2009
Defendant:
Pablo Tiongson, Jose Bernabe
Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon,
applies only where money or property has been embezzled or
converted by a public officer, an officer of a corporation, or some
other person who took advantage of his fiduciary position or who
willfully violated his duty.
Plaintiff:
Urbano Santos
Main Action:
Recovery of Possession
Subject Matter:
Palay
PROVI, in this case, never entrusted any money or property to
TESDA. While the Contract Agreement is supported by a Certificate
as to Availability of Funds (Certificate) issued by the Chief of
TESDA’s Accounting Division, this Certificate does not automatically
confer ownership over the funds to PROVI. Absent any actual
disbursement, these funds form part of TESDA’s public funds, and
TESDA’s failure to pay PROVI the amount stated in the Certificate
cannot be construed as an act of fraudulent misapplication or
embezzlement.
Propriety of the Writ:
Proper
What is the main action for issuance of Writ of Attachment under Section
1c?
THIRD GROUND FOR PRELIMINARY ATTACHMENT
What happened to the Palay here?
Bernabe owns a warehouse. In his warehouse, Santos deposited 778
cavans and 38 kilos of palay and Tiongson deposited 1,026 cavans and
9 kilos of palay. Tiongson filed a case against Bernabe to recover from
him his palay, and asked for a writ of attachment. Now, 924 cavans were
seized. Comes now Santos who claims that he must be allowed to
intervene in the attachment. Urbano Santos contends that Pablo
Tiongson cannot claim the 924 cavans and 31 ½ kilos of palay attached
by the defendant sheriff as part of those deposited by him in Jose C.
Bernabe's warehouse, because, in asking for the attachment thereof, he
impliedly acknowledged that the same belonged to Jose C. Bernabe and
not to him.
Section 1. Grounds upon which attachment may issue.
What was the ground for the attachment?
c) In an action to recover the possession of property unjustly or
fraudulently taken, detained or converted, when the property, or any
part thereof, has been concealed, removed, or disposed of to prevent
its being found or taken by the applicant or an authorized person;
Based on Section 1C. The action brought by Pablo Tiongson against
Jose C. Bernabe is that provided in section 262 of the Code of Civil
Procedure for the delivery of personal property.
What kind of property? Personal property
Where can you find that under the present rules?
So mere possession of personal property will be a ground for the
issuance of writ of attachment? No.
The Rules of Court pertaining to delivery of personal property.
1.
2.
When the property has been unjustly or fraudulently taken,
detained or converted;
When the property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found or taken by the
applicant or an authorized person.
How do you distinguish that from Section 1b?
Section 1b
Involves money or property
Recovery of ownership of
money or property
Money or property was
embezzled, converted, or
misappropriated
Section 1c
Involves personal property
Recovery of possession
Personal property was
concealed, removed, or
disposed of to prevent its being
found or taken by the applicant.
There is fraud in both cases
If you notice, Section 1a, 1b, 1c they all involve fraud.
Isn’t a Replevin writ here more appropriate than an attachment writ?
It is but the court liberally construed the provisions of the law. Liberally
construing, the provisions of section 262 of the Code of Civil Procedure,
the writ of attachment applied for by Pablo Tiongson against the property
of Jose C. Bernabe may be construed as a claim for the delivery of the
sacks of palay deposited by the former with the latter.
Was there fraudulent taking or concealment of the Palay? Yes
Atty. Tiu’s Discussion:
Santos here is actually an intervenor because he is also claiming that
he has 778 cavans of palay in the warehouse which was covered by the
attachment. That is why the case is Santos vs. Bernabe. So the issue
here is - Was it proper for the court to issue the writ of attachment in
favor of the applicant (Tiongson)?
Santos claims that by asking for the attachment of palay inside the
warehouse of Bernabe, he is impliedly admitting that the palay belongs
to Bernabe. Again, under the general rule what can be attached is the
property of the defendant.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
So how is that addressed here? Or was it addressed?
Under Section 1d, what kind of fraud are we contemplating here?
Here, the court did not touch on the issue of ownership but it merely
resolved the issue of recovery of possession of palay. The court did not
find it tenable for Santos to argue that there was an implied admission
that the palay belong to Bernabe since it was already established in the
facts that Bernabe was a depositary of the palay.
FOURTH GROUND FOR PRELIMINARY ATTACHMENT
SANTOS v. BERNABE
GR L-31163, November 6, 1929
The 778 cavans and 38 kilos of palay belonging to the plaintiff Urbano
Santos, having been mixed with the 1,026 cavans and 9 kilos of palay
belonging to the defendant Pablo Tiongson in Jose C. Bernabe's
warehouse; the sheriff having found only 924 cavans and 31 1/2 kilos
of palay in said warehouse at the time of the attachment thereof; and
there being no means of separating form said 924 cavans and 31 1/2
of palay belonging to Urbano Santos and those belonging to Pablo
Tiongson, the following rule prescribed in article 381 of the Civil Code
for cases of this nature.
Art. 381. If, by the will of their owners, two things of identical or
dissimilar nature are mixed, or if the mixture occurs accidentally, if in
the latter case the things cannot be separated without injury, each
owner shall acquire a right in the mixture proportionate to the part
belonging to him, according to the value of the things mixed or
commingled.
The number of kilos in a cavan not having been determined, we will
take the proportion only of the 924 cavans of palay which were
attached and sold, thereby giving Urbano Santos, who deposited 778
cavans, 398.49 thereof, and Pablo Tiongson, who deposited 1,026
cavans, 525.51, or the value thereof at the rate of P3 per cavan.
Should this case be proper under Section 1b or Section 1c? According
to you Bernabe is a mere depositary of the palay, should this be under
Section 1b rather than Section 1c?
It is proper under Section 1c, because in Section 1b the issue of
ownership must be settled. The property there is held in trust, so the
ownership of the property by the applicant is established. While in
Section 1c, it does not provide for the necessity of establishing
ownership but the right to recover possession of the property. Thus, it is
under Section 1c.
Atty. Tiu’s Discussion:
Section 1b is for recovery of money and property while Section 1c is
recovery of possession. It is only to recover possession of property
unjustly taken. It presupposes that you have the right to possession over
the property. It only seek to recover possession, you are not asking to
recover ownership.
Section 1b, it says recover money or property. Therefore, you are
recovering ownership over the property subject matter of the case.
Under Section 1c, it obviously follows that the property whose
possession you seek to recover from the defendant is not owned by the
defendant. It presupposes that you are either the owner or you have the
right to possession. The argument of the implied admission of the palay
by Bernabe asserted by Santos does not necessarily apply.
Again, by Section 1b what you are recovering here need not be the
property of the defendant. What you can attach is your own property
which you are trying to recover.
Section 1c only recovery of possession not recovery of ownership. For
example, the subject matter here belongs to the defendant when the
defendant is the lessor of the personal property and you are the lessee
and he has unjustly taken away the property subject of the lease. And
you have the right to possession over the property despite it being
owned by the defendant. So you can ask for this, if all the other elements
are present. You do not have the right of ownership but you have the
right to possess the property owned by the defendant by virtue of a
contract of lease. The applicant only has to establish his right to possess
not right to own.
Section 1. Grounds upon which attachment may issue.
d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the action
is brought, or in the performance thereof;
In the case of PHILIPPINE BANK OF COMMUNICATION VS. CA:
Defendant:
Villanueva, Filipino Textile Mills
Plaintiff:
Philippine Bank of Communication
Main Action:
Action for Collection of Sum of Money
Subject Matter:
Payment for value of textile goods
(P 2,244,926.30)
Ground:
Violation of the Trust Receipts Law
Propriety of the Writ:
Not proper
How was the case commenced?
The case commenced with the filing by petitioner of a Complaint against
private respondent Bernardino Villanueva, private respondent Filipinas
Textile Mills and one Sochi Villanueva. In the said Complaint, petitioner
sought the payment of P2,244,926.30 representing the proceeds or
value of various textile 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; which, in turn, were
covered by surety agreements executed by private respondent
Bernardino Villanueva and Sochi Villanueva.
Where is fraud there?
Petitioner filed a Motion for Attachment contending that violation of the
trust receipts law constitutes estafa, thus providing ground for the
issuance of a writ of preliminary attachment; specifically under
paragraphs "b" and "d," Section 1, Rule 57 of the Revised Rules of
Court.
Was the attachment issued? No
The Motion for Attachment filed by petitioner and its supporting affidavit
did not sufficiently establish the grounds relied upon in applying for the
writ of preliminary attachment.
How about the allegation that there was a violation of the Trust Receipts
Law which is a ground for criminal action for estafa, would that not be a
sufficient allegation of fraud?
While the Motion refers to the transaction complained of as involving
trust receipts, the violation of the terms of which is qualified by law as
constituting estafa, it does not follow that a writ of attachment can and
should automatically issue. Petitioner cannot merely cite Section 1(b)
and (d), Rule 57, of the Revised Rules of Court, as mere
reproduction of the rules, without more, 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.
So Section 1b was also cited as well as Section 1d. Was there sufficient
allegation of fraud under said sections to warrant the issuance of the
writ? No.
Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of the
Revised Rules of Court, as mere reproduction of the rules, without more,
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.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
How about the allegation that there is failure to remit the proceeds?
Would that not be sufficient under Section 1d?
PHILIPPINE BANK OF COMMUNICATION VS. CA
GR 115678, February 23, 2001
We find an absence of factual allegations as to how the fraud alleged by
petitioner was committed. 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. On the other hand, as stressed, above,
fraud may be gleaned from a preconceived plan or intention not to pay.
This does not appear to be so in the case at bar.
The Motion for Attachment filed by petitioner and its supporting
affidavit did not sufficiently establish the grounds relied upon in
applying for the writ of preliminary attachment.
The Motion for Attachment of petitioner states that –
1.
In fact, it is alleged by private respondents that out of the total
P419,613.96 covered by the subject trust receipts, the amount of
P400,000.00 had already been paid, leaving only P19,613.96 as
balance. Hence, regardless of the arguments regarding penalty and
interest, it can hardly be said that private respondents harbored a
preconceived plan or intention not to pay petitioner.
2.
So what kind of fraud must be alleged under Section 1d for the writ to
issue?
3.
There must be factual allegations of the fraud. To sustain an attachment
upon Section 1(d), Rule 57, it must be shown that the debtor in
contracting the debt or incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the agreement and
must have been the reason which induced the other party into giving
consent which he would not have otherwise given. To constitute a
ground for attachment in Section 1 (d), Rule 57 of the Rules of Court,
fraud should be committed upon contracting the obligation sued upon.
A debt is fraudulently 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 circumstances attendant in each case.
Atty. Tiu’s Discussion:
You have to specify how the fraud was committed. You have to supply
all the details constituting the fraud. You cannot simply make a general
statement. You cannot infer it from the mere non-payment of the
obligation because fraud is never presumed. The allegations must be
made specifically in the pleadings. And when you say specific allegation,
you have to include all the details how the fraud arise. Because fraud is
just a mere conclusion. You have to lay the basis for such conclusion,
so supply all the factual details that will lead to the conclusion that there
was indeed fraud. Mere general averments will not suffice.
By simply saying there was violation of the Trust Receipts Agreement,
that will not suffice as an allegation of fraud. Although in Criminal Law,
violation of the Trust Receipts Law will be a ground for the case of estafa.
But if you only say that generally without factual details, as far as the
ground for attachment under Section 1d is concerned, that is insufficient.
The writ will not be issued and if it is issued, it will be discharged.
What do you mean by “fraud in contracting the debt”? Was there fraud
in contracting the debt in the case of PBCom?
To sustain an attachment upon Section 1(d), Rule 57, it must be shown
that the debtor in contracting the debt or incurring the obligation intended
to defraud the creditor. The fraud must relate to the execution of the
agreement and must have been the reason which induced the other
party into giving consent which he would not have otherwise given. To
constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules
of Court, fraud should be committed upon contracting the
obligation sued upon. A debt is fraudulently contracted if at the
time of contracting it the debtor has a preconceived plan or
intention not to pay.
Atty. Tiu’s Discussion:
So fraud in contracting the debt means that from the very start when you
entered into the transaction, you have no intention of honoring the
obligation. If that is your ground for attachment, you have to support it
with statement of facts why there is fraud in contracting the debt.
How you will prove that, depends in the factual circumstances of the
case but it cannot be simply proved by general averments. Can you infer
fraud in contracting the debt by a mere failure to pay? No. That is a
difficult allegation to substantiate but then again since it speaks of fraud,
you have to supply it with other details. So that the one reading it can
conclude that there is fraud.
The instant case is based on the failure of defendants as
entrustee to pay or remit the proceeds of the goods
entrusted by plaintiff to defendant as evidenced by the trust
receipts (Annexes "B", "C" and "D" of the complaint), nor
to return the goods entrusted thereto, in violation of their
fiduciary duty as agent or entrustee;
Under Section 13 of P.D. 115, as amended, violation of the
trust receipt law constitute(s) estafa (fraud and/or deceit)
punishable under Article 315 par. 1[b] of the Revised Penal
Code;
On account of the foregoing, there exist(s) valid ground for
the issuance of a writ of preliminary attachment under
Section 1 of Rule 57 of the Revised Rules of Court
particularly under sub-paragraphs "b" and "d", i.e. for
embezzlement or fraudulent misapplication or conversion
of money (proceeds) or property (goods entrusted) by an
agent (entrustee) in violation of his fiduciary duty as such,
and against a party who has been guilty of fraud in
contracting or incurring the debt or obligation.
While the Motion refers to the transaction complained of as involving
trust receipts, the violation of the terms of which is qualified by law
as constituting estafa, it does not follow that a writ of attachment can
and should automatically issue. Petitioner cannot merely cite
Section 1(b) and (d), Rule 57, of the Revised Rules of Court, as
mere reproduction of the rules, without more, 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.
Again, it lacks particulars upon which the court can discern whether
or not a writ of attachment should issue.
We find an absence of factual allegations as to how the fraud alleged
by petitioner was committed. 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. On the other hand, as stressed,
above, fraud may be gleaned from a 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 amount of P400,000.00 had
already been paid, leaving only P19,613.96 as balance. Hence,
regardless of the arguments regarding penalty and interest, it can
hardly be said that private respondents harbored a preconceived
plan or intention not to pay petitioner.
Neither petitioner’s Motion nor its supporting Affidavit provides
sufficient basis for the issuance of the writ of attachment prayed for.
The lower court should have conducted a hearing and required
private petitioner to substantiate its allegations.
In the case of SECURITY BANK CORPORATION VS. GREAT WALL
COMMERCIAL PRESS COMPANY:
Note: This case was decided roughly around 16 years from the decision
in the PBCom case.
Defendant:
Great Wall Commercial Press Company
Plaintiff:
Philippine Bank of Communication
Main Action:
Action for Collection of Sum of Money
Subject Matter:
Unpaid obligations under a credit facility
covered by trust receipts
(P 10,000,000.00)
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Ground:
Violation of the Trust Receipts Law
Propriety of the Writ:
Proper
Was there a ground for attachment here under Section 1d?
Yes, the attachment was valid.
What makes it different from the case of PBCom which says that a mere
violation of Trust Receipts Law is not a ground for attachment? Yet here,
it has the same scenario, there was a violation of the Trust Receipts
Law.
Security Bank was able to substantiate its factual allegation of fraud,
particularly, the violation of the trust receipt agreements, to warrant the
issuance of the writ of preliminary attachment.
Atty. Tiu’s Discussion:
Here, the applicant simply made specific allegations with respect to the
fraud. That is what is missing in the PBCom case. There was sufficient
basis for the issuance of the writ.
What allegations were made to support allegations of fraud that were
considered sufficient for the issuance of the writ? How was the violation
of the Trust Receipts here alleged?
Security Bank's complaint stated that Great Wall, through its Vice
President Fredino Cheng Atienza, executed various trust receipt
agreements in relation to its loan transactions. The trust receipts stated
that in consideration of the delivery to the entrustee (Great Wall) of the
possession of the goods, it obligates itself to hold in trust for the bank
the goods, to sell the goods for the benefit of the bank, to tum over the
proceeds of the sale to the bank, and to return the goods to the bank in
the event of non-sale. By signing the trust receipt agreements,
respondents fully acknowledged the consequences under the law once
they failed to abide by their obligations therein. The said trust receipt
agreements were attached to the complaint.
about in this case, there is also violation of said Trust Receipts and yet
the Supreme Court issued the Writ of Attachment. Is the violation of
Trust Receipts the ground for the issuance of the Writ of Attachment?
In PBCOM vs. CA, the applicant for the writ of preliminary attachment
simply stated in its motion that the defendant therein failed to remit the
proceeds or return the goods subject of the trust receipt and attached
an ambiguous affidavit stating that the case was covered by Sections 1
(b) and (d) of Rule 57. Obviously, these allegations and attachments are
too general and vague to prove that the defendant committed fraud.
Likewise, there was no hearing conducted in the RTC before it granted
the issuance of the writ of preliminary attachment. Thus, the Court had
no option but to lift the said writ.
In contrast, the complaint in the present case explained in detail the
factual circumstances surrounding the execution of the trust receipts, its
contents and the subsequent violation thereof. Security Bank attached
supporting annexes and presented its witness during the hearing in the
RTC to substantiate the specific violation of trust receipts by
respondents. Security Bank took great lengths to explain the contents of
the trust receipt and show that respondents expressed their conformity
to it. When the obligation became due, respondents did not satisfactorily
explain the non-compliance of their obligations, and despite a final
demand, they did not fulfill their obligations under the trust receipts.
Clearly, PBCom is inapplicable in the present case.
Wasn’t there a negotiation here for the restructuring of the loan? Yes,
there was.
Wouldn’t such negotiation prove that there was no fraud because they
intend to settle the obligation?
Security Bank detailed in its complaint that respondents, knowing fully
well that they were in default, submitted a Repayment Proposal. Then,
they requested for a meeting with the bank to discuss their proposal. For
unknown reasons, they did not meet the representatives of the Security
Bank.
Upon the maturity date, however, respondents failed to deliver the
proceeds of the sale to Security Bank or to return the goods in case of
nonsale. Security Bank sent a final demand letter to respondents, which
was also attached to the complaint, but it was unheeded. Curiously, in
their letter, respondents did not explain their reason for noncompliance
with their obligations under the trust receipts; rather, they simply stated
that Great Wall was having a sudden drop of its income. Such
unsubstantiated excuse cannot vindicate respondents from their failure
to fulfill their duties under the trust receipts.
Respondents even attached to its Motion to Lift Writ of Preliminary
Attachment Ad Cautelam the correspondence they had with Security
Bank, which revealed that they did not meet the representatives of the
latter despite providing a specific date to discuss the proposed
repayment scheme. Respondents merely offered lame excuses to justify
their absence in the arranged meeting and, ultimately, they failed to
clarify the non-compliance with their commitments. Such acts bared that
respondents were not sincere in paying their obligation despite their
maturity, substantiating the allegations of fraud in the performance
thereof.
In addition, Security Bank attached Pulgar's affidavit, which
substantiated its allegation that respondents failed to comply with its
obligations under the trust receipts.
These circumstances of the fraud committed by respondents in the
performance of their obligation undoubtedly support the issuance of a
writ of preliminary attachment in favor of Security Bank.
The Court is of the view that Security Bank's allegations of violation of
the trust receipts in its complaint was specific and sufficient to assert
fraud on the part of respondents. These allegations were duly
substantiated by the attachments thereto and the testimony of Security
Bank's witness.
Was mere failure to attend the arranged meeting already constitutes
fraud? (Hindi lang sumipot, already fraud? Hindi ba pwedeng na traffic
lang?)
Atty. Tiu’s Discussion:
Here, the application made a detailed narration of what happened in the
transaction - from the time they negotiated up to the execution of the
contracts. These allegations include the several types of contracts
executed which contained representations and guaranties on the
debtor’s ability to pay and commitment to pay the obligation without
which Security Bank would not have approved the loan. So very clear,
the agreements, representations and warranties made were specified
so that the Bank would approve the loan. In addition to that, there was
a trust receipt agreement. Despite demands, no payments were made.
It was very detailed. The Supreme Court said that it is sufficient for the
issuance of the Writ of Attachment.
You have to identify what kind of fraud is it under Section 1d – fraud in
contracting the debt or is it fraud in the performance of the obligation.
There are 2 types of fraud under Section 1d.
According to the PBCom case, mere violation of the Trust Receipts
Agreement will not warrant the issuance of the Writ of Attachment. What
Respondents merely offered lame excuses to justify their absence in the
arranged meeting and, ultimately, they failed to clarify the noncompliance with their commitments. Such acts bared that respondents
were not sincere in paying their obligation despite their maturity,
substantiating the allegations of fraud in the performance thereof.
Atty. Tiu’s Discussion:
The violation of the Trust Receipts Agreement was the main ground for
the issuance of the Writ of Attachment.
What kind of fraud is it? Fraud in contracting the debt or Fraud in the
performance of the obligation?
Fraud in the performance of the obligation
What was the reason of the CA in lifting the Writ of Attachment?
The CA stated in the assailed decision that under Section 1 (d) of Rule
57, fraud must only be present at the time of contracting the obligation,
and not thereafter. Hence, the CA did not consider the allegation of fraud
- that respondents offered a repayment proposal but questionably failed
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
to attend the meeting with Security Bank regarding the said proposal because these acts were done after contracting the obligation.
Atty. Tiu’s Discussion:
The CA in lifting the Writ said that there is no ground for the issuance
since there is no fraud in contracting the debt. But the Supreme Court
said that you should consider the fraud in the performance of the
obligation.
The present case, however, only deals with the civil fraud in the
noncompliance with the trust receipts to warrant the issuance of a
writ of preliminary attached. A fortiori, in a civil case involving a
trust receipt, the entrustee's failure to comply with its
obligations under the trust receipt constitute as civil fraud
provided that it is alleged, and substantiated with specificity, in
the complaint, its attachments and supporting evidence.
Fraud in the performance of the obligation, valid ground
Previously, Section 1 (d), Rule 57 of the 1964 Rules of Court provided
that a writ of preliminary attachment may be issued "in an action against
a party who has been guilty of a fraud in contracting the debt or incurring
the obligation upon which the action is brought xxx" Thus, the fraud that
justified the issuance of a writ of preliminary attachment then was only
fraud committed in contracting an obligation (dolo casuante). When the
1997 Rules of Civil Procedure was issued by the Court, Section l(d) of
Rule 57 conspicuously included the phrase "in the performance thereof."
Hence, the fraud committed in the performance of the obligation (dolo
incidente) was included as a ground for the issuance of a writ of
preliminary attachment.
The complaint in the present case explained in detail the factual
circumstances surrounding the execution of the trust receipts, its
contents and the subsequent violation thereof. Security Bank
attached supporting annexes and presented its witness during the
hearing in the RTC to substantiate the specific violation of trust
receipts by respondents. Security Bank took great lengths to explain
the contents of the trust receipt and show that respondents
expressed their conformity to it. When the obligation became due,
respondents did not satisfactorily explain the non-compliance of their
obligations, and despite a final demand, they did not fulfill their
obligations under the trust receipts.
This significant change in Section 1 (d) of Rule 57 was recognized
recently in Republic v. Mega Pacific eSolutions, Inc. The Court stated
therein that "[a]n amendment to the Rules of Court added the phrase
"in the performance thereof' to include within the scope of the
grounds for issuance of a writ of preliminary attachment those
instances relating to fraud in the performance of the obligation."
Is fraud or falsity in the collateral, a ground for issuance of writ of
attachment? No.
June 9, 2019 by Trisha Ann Samantha Aligato
2 TYPES OF FRAUD UNDER SECTION 1d:
1. Fraud at the inception of the transaction
2. Fraud in the course of the performance of the obligation
Atty. Tiu’s Discussion:
It is the 2nd type of fraud that is present in this case. Even if there is no
sufficient proof to show fraud in contracting the debt, there was sufficient
proof or basis in showing fraud in the performance of the obligation.
Take note of this case because this contrasts the PBCom case. Take
note how Security Bank was able to hurdle the deficiencies in the
PBCom case because they invoked the same ground (Section 1d) and
they involved practically the same transaction, trust receipts. But there
is a difference in how the Supreme Court ruled in the issuance of the
Writ of Attachment. Maybe because of how they complied with the
requirements for the issuance. So you can see there what needs to be
done under Section 1d for the issuance of the writ.
Section 1a-1d, all of them involves fraud. So you now have an idea that
you do not just make general averments of fraud, it has to be specific –
put all the details on how the fraud took place. Otherwise, your
application will not be granted. Or if it is granted, it will be discharged if
the case is elevated on a Petition for Certiorari.
SECURITY BANK CORPORATION VS. GREAT WALL
COMMERCIAL PRESS COMPANY
GR 219345, January 30, 2017
The Court finds that Security Bank was able to substantiate its factual
allegation of fraud, particularly, the violation of the trust receipt
agreements, to warrant the issuance of the writ of preliminary
attachment.
Nature of Trust Receipts Law Violation
Mere violations of the warranties and representations contained in
the credit agreement and the continuing suretyship agreement do not
constitute fraud under Section 1(d) of Rule 57 of the Rules of Court,
the same cannot be said with respect to the violation of the trust
receipts agreements.
Failure of the entrustee to tum over the proceeds of the sale of the
goods, covered by the trust receipt to the entruster or to return said
goods if they were not disposed of in accordance with the terms of
the trust receipt shall be punishable as estafa under Article 315 (1)
of the Revised Penal Code, without need of proving intent to defraud.
The offense punished under P.D. No. 115 is in the nature of malum
prohibitum. Mere failure to deliver the proceeds of the sale or the
goods, if not sold, constitutes a criminal offense that causes prejudice
not only to another, but more to the public interest.
Why? What are the collaterals given in the case of STATE
INVESTMENT HOUSE V CA? What was the fraud alleged here in
connection with what collateral? In the case of State Investment House
vs. CA, the SC held that the mere decline of the value of the collaterals
does not constitute fraud in contracting the debt. (Enumerated):
STATE INVESTMENT HOUSE, INC v CA
G.R. No. L-82446. July 29, 1988.
FACTS
Main action: A collection suit.
The main thrust of the prayer for preliminary attachment is the alleged
misrepresentation of the debtor P.O. Valdez, Inc. in the Agreement
for Discounting Receivables and in the deeds of sale of said
receivables; that the two checks or "receivables" issued by Pedro
Valdez were payment for "actual sales of its merchandise and or
personalities made to its customers or otherwise arising from its other
legitimate business transactions" and "that the receivables . . . were
genuine, valid and subsisting and represent bona fide sales of
merchandise and or personalities made in the ordinary course of
business"
ISSUE: WON there was fraud in contracting the debt.
RULE: NO
There was no fraud in contracting the debt.
The court (CA, affirmed by SC) observed that:
1. With respect to the shares of stock which the respondents pledged
as additional security for the loan, the decline in their value did not
mean that the private respondents entered into the loan transaction
in bad faith or with fraudulent intent. For the private respondents
could not have foreseen how the stocks would fare in the market.
And if the petitioner thought they were worthless at the time, it should
have rejected them as collateral.
2. With respect to the two parcels of land which were mortgaged to
the petitioner, the latter should also have declined to accept them as
collateral if it believed they were worth less than their supposed
value.
3. With respect to the two postdated checks which bounced, the
Court of Appeals observed that since they were "sold" to the
petitioner after the loan had been granted to private respondents,
their issuance did not fraudulently induce the petitioner to grant the
loan applied for.
They were "mere evidence of the private respondents’ standing loan
obligation to the petitioner" or "mere collaterals for the loan granted
by the petitioner to the private respondents".
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
It can hardly be doubted that those representations in petitioner’s
printed deeds of sale were false. But false though they were, the
petitioners cannot claim to have been deceived or deluded by them
because it knew, or should have known, that the issuer of the checks,
Pedro O. Valdez, was not a "buyer" of the "merchandise and
personalities made in the ordinary course of business" by P.O.
Valdez, Inc. of which he was the president.
In case of WEE v TANKIANSEE, what was the allegation of fraud here?
Tee alleges that Tankiansee here as an officer and director of Wincorp
allegedly connived with other defendants to defraud petitioner.
ALEJANDRO NG WEE v. MANUEL TANKIANSEE
G.R. NO. 171124 : February 13, 2008
FACTS
Wee made several money placements totaling P210 Million with
Wincorp Investment Corp. Wee received disturbing news on
Wincorp's financial condition prompting him to inquire about and
investigate the company's operations and transactions with its
borrowers. He then discovered that the company extended a loan
equal to his total money placement to a corporation [Power Merge]
with a subscribed capital of only P37.5M. This credit facility
originated from another loan of about P1.5B extended by Wincorp to
another corporation [Hottick Holdings]. When the latter defaulted in
its obligation, Wincorp instituted a case against it and its surety.
Settlement was, however, reached in which Hottick's president, Luis
Juan L. Virata (Virata), assumed the obligation of the surety.
RTC- ordered the issuance of WPA against the properties not
exempt from execution of all the defendants in the civil case subject,
among others, to petitioner's filing of a P50M-bond.
ISSUE: WON there was sufficient allegation of fraud.
RULE: NO.
For a writ of attachment to issue under this rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred from the debtor's mere
non-payment of the debt or failure to comply with his obligation.
In the instant case, petitioner's October 12, 2000 Affidavit is bereft of
any factual statement that respondent committed a fraud.
The affidavit narrated only the alleged fraudulent transaction
between Wincorp and Virata and/or Power Merge, which, by the way,
explains why this Court, in G.R. No. 162928, affirmed the writ of
attachment issued against the latter. As to the participation of
respondent in the said transaction, the affidavit merely states that
respondent, an officer and director of Wincorp, connived with the
other defendants in the civil case to defraud petitioner of his money
placements. No other factual averment or circumstance details how
respondent committed a fraud or how he connived with the other
defendants to commit a fraud in the transaction sued upon. In other
words, petitioner has not shown any specific act or deed to support
the allegation that respondent is guilty of fraud.
Who perpetrated the fraud here? Wincorp and its officers and directors.
Who is the defendant here? Manuel Tankiansee, Vice Chairman and
Director of Wincorp.
Who connived with whom?
Under the scheme agreed upon by Wincorp and Hottick's president,
petitioner's money placements were transferred without his knowledge
and consent to the loan account of Power Merge through an agreement
that virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same
to Virata/Power Merge.
Was there sufficient allegation of fraud? No. Why not?
The SC held that it is not a sufficient ground. The affidavit narrated only
the alleged fraudulent transaction between Wincorp and Virata and/or
Power Merge. As to the participation of the respondent in the said
transaction, the affidavit merely states that respondent, an officer and
director of Wincorp, connived with the other defendants in the civil case
to defraud petitioner of his money placements.
No, other factual averment or circumstance details how respondent
committed a fraud or how he connived with the other defendants to
commit a fraud in the transaction sued upon. In other words, petitioner
has not shown any specific act or deed to support the allegation that
respondent is guilty of fraud. So again, we go back to the general rule
that to allege fraud, it must be with specific details. Now, what do you
understand in ―fraud in the performance thereof. It refers to the fraud
after the contract or agreement have been entered. (2015 TSN)
In the case of METRO INC. v LARA GIFTS, was there sufficient
allegation of fraud? What was the fraud here? How was there fraud here
in contracting the debt? How was it shown?
There is a valid basis for the issuance of the writ under para (d). When
petitioners undertook to sell exclusively and only through JRP/LGD for
Target Stores Corporation but that petitioners transacted directly with
respondents' foreign buyer is sufficient allegation of fraud to support
their application for a writ of preliminary attachment.
Fraud alleged: Fraud in the performance of the obligation
METRO, INC. VS. LARA'S GIFTS AND DECORS
G.R. No. 171741 November 27, 2009
Metro, et al and Lara Gifts, et. al agreed that respondents would
endorse to petitioners purchase orders received by respondents from
their buyers in the United States of America in exchange for a 15%
commission, to be shared equally by respondents and James R.
Paddon (JRP), LGD's agent.
LGD filed a complaint against petitioners for sum of money and
damages with a prayer for the issuance of a writ of preliminary
attachment. Subsequently, respondents filed an amended complaint
and alleged that, as of July 2002, petitioners defrauded them in the
amount of $521,841.62.
In their amended complaint, respondents alleged the following in
support of their prayer for a writ of preliminary attachment:
Frederick Juan approached respondent spouses and asked them to
help petitioner's export business.
He proposed the following:
a. That respondents transfer and endorse to petitioner Metro some
of the Purchase Orders (PO's) they will receive from their US buyers;
b. That petitioners will sell exclusively and "only thru" respondents for
their US buyer;
However, soon thereafter, just when the orders increased and the
amount involved likewise increased, petitioners suddenly, without
any justifiable reasons and in pure bad faith and fraud, abandoned
their contractual obligations to remit to respondents their shares. And
worse, petitioners transacted directly with respondents' foreign buyer
to the latter's exclusion and damage. Clearly, petitioners planned
everything from the beginning, employed ploy and machinations to
defraud respondents, and consequently take from them a valuable
client.
Petitioners are likewise guilty of fraud by violating the trust and
confidence reposed upon them by respondents. Petitioners received
the proceeds of respondents' LCs with the clear obligation of
remitting 15% thereof to the respondents. Their refusal and failure to
remit the said amount despite demand constitutes a breach of trust
amounting to malice and fraud.
R: In this case, the basis of respondents' application for the issuance
of a writ of preliminary attachment is Section 1(d), Rule 57 of the
Rules of Court
In Liberty Insurance Corporation v. Court of Appeals, we explained:
To sustain an attachment on this ground, it must be shown
that the debtor in contracting the debt or incurring the
obligation intended to defraud the creditor.
The fraud must relate to the execution of the agreement
and must have been the reason which induced the other
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
party into giving consent which he would not have
otherwise given. To constitute a ground for attachment in
Section 1(d), Rule 57 of the Rules of Court, fraud should
be committed upon contracting the obligation sued upon.
A debt is fraudulently 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.
The applicant for a writ of preliminary attachment must sufficiently
show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from the debtor's mere nonpayment of the debt or failure to comply with his obligation.
We rule that respondents' allegation that petitioners undertook to sell
exclusively and only through JRP/LGD for Target Stores Corporation
but that petitioners transacted directly with respondents' foreign
buyer is sufficient allegation of fraud to support their application for a
writ of preliminary attachment.
In REPUBLIC V MEGA PACIFIC SOLUTIONS What was the basis of
fraud here? What was the ruling of the trial court? Was the attachment
granted?
1.
Fraud on the part of respondent MPEI was sufficiently
established by the factual findings of this Court in its 2004 Decision
and subsequent pronouncements.
2.
A writ of preliminary attachment may issue over the
properties of the individual respondents using the doctrine of piercing
the corporate veil.
3.
The factual findings of this Court that have become final
cannot be modified or altered, much less reversed, and are
controlling in the instant case.
4.
The delivery of 1,991 units of ACMs does not negate fraud
on the part of respondents MPEI and Willy.
5.
Estoppel does not lie against the state when it acts to
rectify mistakes, errors or illegal acts of its officials and agents.
6.
The findings of the Ombudsman are not controlling in the
instant case.
RTC denied attachment.
What were the findings in the 2004 decision?
Why? How did the OSG allege fraud here? Why did the trial court say it
was not sufficient?
SC enumerated the badges of fraud. Fraud on the part of MPEI
The application was grounded upon the fraudulent misrepresentation of
respondents as to their eligibility to participate in the bidding for the
COMELEC automation project and the failure of the ACMs to comply
with mandatory technical requirements.
So with that allegation, do you think attachment would issue? That there
was disqualification? Only two grounds were cited. Two instances to
show fraud. Is that what you are saying?
The trial court denied the prayer for the issuance of the WPA. Ruling that
there was an absence of factual allegations as to how the fraud was
actually committed.
What was the ruling of CA?
The CA explained in its Amended Decision that respondents could not
be considered to have fostered a fraudulent intent to dishonor their
obligation, since they had delivered 1,991 units of ACMs. It directed
petitioner to present proof of respondents' intent to defraud COMELEC
during the execution of the automation contract. The CA likewise
emphasized that the Joint Affidavit submitted in support of petitioner's
application for the writ contained allegations that needed to be
substantiated. It added that proof must likewise be adduced to verify the
requisite fraud that would justify the piercing of the corporate veil of
respondent MPEI.
Why did the case reach the SC?
Because petitioner argues that the CA erred in ordering the remand of
the case to the trial court for the reception of evidence to determine the
presence of fraud.
Via Rule 45 Petition: Petitioner contends that this Court's 2004
Decision was sufficient proof of the fraud committed by respondents in
the execution of the voided automation contract.[46] Respondents
allegedly committed fraud by securing the automation contract, although
MPEI was not qualified to bid in the first place.
What was the ruling of the SC?
REPUBLIC,
v.
MEGA
GR No. 184666, Jun 27, 2016
PACIFIC
ESOLUTIONS
+
RULE:
A writ of preliminary attachment should issue in favor of petitioner
over the properties of respondents MPEI, Willy Yu (Willy) and the
remaining individual respondents. The bases for the writ are the
following:
What about the argument that there were deliveries of the units that
would negate fraud? There are 1,191 units delivered. Even though there
were deliveries, those units delivered were substandard.
Transcriber’s Note: Only salient points are discussed below. To
understand the intricacies of the case, read the full text.
In the case at bar, petitioner has sufficiently discharged the burden
of demonstrating the commission of fraud by respondent MPEI in the
execution of the automation contract in the two ways that were
enumerated
earlier
and
discussed
below:
A. Respondent MPEI had perpetrated a scheme against
petitioner to secure the automation contract by using MPC as
supposed bidder and eventually succeeding in signing the
automation contract as MPEI alone, an entity which was
ineligible
to
bid
in
the
first
place.
Respondents’ Contention: the bidder was not
Mega Pacific eSolutions, Inc. (MPEI), which was
incorporated only on February 27, 2003, or 11
days prior to the bidding itself. Rather, the bidder
was Mega Pacific Consortium (MPC), of which
MPEI was but a part.
However, there is no sign whatsoever of any joint venture
agreement, consortium agreement, memorandum of
agreement, or business plan executed among the
members
of
the
purported
consortium.
The only logical conclusion is that no such agreement was
ever submitted to the Comelec for its consideration, as part
of the bidding process. It thus follows that, prior the award
of the Contract, there was no documentary or other basis
for Comelec to conclude that a consortium had actually
been formed amongst MPEI, SK C&C and WeSolv, along
with Election.com and ePLDT.
B. Fraud on the part of respondent MPEI was further shown by
the fact that despite the failure of its ACMs to pass the tests
conducted by the DOST, respondent still acceded to being
awarded the automation contract.
Failure to Meet the Required Accuracy Rating
The first of the key requirements was that the counting
machines were to have an accuracy rating of at least
99.9995 percent. The BAC Report indicates that both
Mega Pacific and TIM failed to meet this standard.
The key requirement of accuracy rating happens to be part
and parcel of the Comelec's Request for Proposal (RFP).
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
x
x
x
Whichever accuracy rating is the right standard — whether
99.995 or 99.9995 percent — the fact remains that the
machines of the so-called "consort him" failed to even
reach the lesser of the two. On this basis alone, it ought to
have been disqualified and its bid rejected outright.
At this point, the Court stresses that the essence of public
bidding is violated by the practice of requiring very high
standards or unrealistic specifications that cannot be met
— like the 99.9995 percent accuracy rating in this case —
only to water them down after the bid has been
award.[sic] Such scheme, which discourages the entry of
prospective bona fide bidders, is in fact a sure indication of
fraud in the bidding, designed to eliminate fair competition.
Certainly, if no bidder meets the mandatory requirements,
standards or specifications, then no award should be made
and
a
failed
bidding
declared.
Failure of Software to Detect Previously Downloaded Data
Furthermore, on page 6 of the BAC Report, it appears that
the "consortium" as well as TIM failed to meet another key
requirement — for the counting machine's software
program to be able to detect previously downloaded
precinct results and to prevent these from being entered
again into the counting machine. This same deficiency on
the part of both bidders reappears on page 7 of the BAC
Report, as a result of the recurrence of their failure to meet
the
said
key
requirement.
That the ability to detect previously downloaded data at
different canvassing or consolidation levels is deemed of
utmost importance can be seen from the fact that it is
repeated three times in the RFP.
Inability to Print the Audit Trail
The BAC Report, on pages 6 and 7, indicate that the ACMs
of both bidders were unable to print the audit trail without
any loss of data. In the case of MPC, the audit trail system
was "not yet incorporated" into its ACMs.
ON PRELIMINARY ATTACHMENT:
We reject the CA's denial of petitioner's plea for the ancillary remedy
of preliminary attachment, considering that the cumulative effect of
the factual findings of this Court establishes a sufficient basis to
conclude that fraud had attended the execution of the automation
contract. Such fraud is deducible from the 2004 Decision and further
upheld in the 2006 Resolution. It was incongruous, therefore, for the
CA to have denied the application for a writ of preliminary attachment,
when the evidence on record was the same that was used to
demonstrate the propriety of the issuance of the writ of preliminary
attachment. This was the same evidence that We had already
considered and passed upon, and on which We based Our 2004
Decision to nullify the automation contract. It would not be right for
this Court to ignore these illegal transactions, as to do so would be
tantamount to abandoning its constitutional duty of safeguarding
public
interest.
Section 1. Grounds upon which attachment may issue.
xxx
(e) In an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;
xxx
What is the ground for attachment under paragraph e?
Fraud is present and the mere intent to defraud will suffice for the
issuance of the writ.
What is the main action here?—Any action. There is no specific action.
So this pertains to the defendant. The ground here is with respect to the
defendant, who fits the description under this paragraph.
If he has an obligation not to remove or dispose of his property. So it
could be an action for collection for sum of money, like in the cases
mentioned here—foreclosure of mortgage, recovery of ppossession,
recovery of ownership, so the description here is pertaining to the
defendant. The fraud is in the act of defendant.
Is mere physical removal of the property sufficient ground?
No. it is not sufficient ground. Such removal must carry with it the intent
to defraud his creditors.
Is the mere insolvency of the defendant a ground of attachment under
this paragraph? No.
Case in Point: Max Chamorro & Co. vs. Philippine Ready Mix Concrete
Company, Inc. and Hon. Manuel P. Barcelona as cited by Aboitiz v
Cotabato
Petitioner, however, disclaims any intention of advancing the theory that
insolvency is a ground for the issuance of a writ of attachment, and
insists that its evidence -is intended to prove his assertion that
respondent company has disposed, or is about to dispose, of its
properties, in fraud of its creditors. Aside from the reference petitioner
had made to respondent company's "nil" bank account, as if to show
removal of company's funds, petitioner also cited the alleged nonpayment of its other creditors, including secured creditors like the DBP
to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and rescue and removal of five attached buses.
Why not? If he is insolvent, he is unable to pay his obligation. Insolvency
does not automatically equate to an intention of fraud.
ABOITIZ V COTABATO
Ground for the issuance of the writ: The defendant "has removed
or disposed of its properties or assets, or is about to do so, with intent
to defraud its creditors.
ISSUE: whether respondent bus company has in fact removed its
properties, or is about to do so, in fraud of its creditors.
RULE:
It is an undisputed fact that, as averred by petitioner itself, the 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 the five repaired
ones before the repair. This cannot be the removal intended as
ground for the issuance of a writ of attachment under section 1 (e),
Rule 57, of the Rules of Court. The repair of the five buses was
evidently motivated by a desire to serve the interest of the riding
public, clearly not to defraud its creditors, as there is no showing that
they were not put on the run after their repairs, as was the obvious
purpose of their substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal
or disposal as alleged by petitioner to provide the basis for its prayer
for the issuance of a writ of attachment should be 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.
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 salaries and wages
of employees and workers. If, indeed the income of the company
were sufficiently profitable, it should not allow its buses to fall into
disuse by lack of repairs. It should also maintain a good credit
standing with its suppliers of equipment, and other needs of the
company to keep its business a going concern. Petitioner is only one
of the suppliers.
What is the requirement under this paragraph?
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It is, indeed, extremely hard to remove the buses, machinery and
other equipments which respondent company have to own and keep
to be able to engage and continue in the operation of its
transportation business. The sale or other form of disposition of any
of this kind of property is not difficult of detection or discovery, and
strangely, petitioner, has adduced no proof of any sale or transfer of
any of them, which should have been easily obtainable.
What was the purpose of removal? Was it sufficient to issue WPA?
Removal of buses. It is not sufficient ground to issue WPA.
How do you prove intent to defraud when it is a state of mind? How do
you show to the court that there is an intent to defraud?
The intent to defraud may be shown in the facts and circumstances of
the case. The facts must be detailed as to what acts constituted fraud
and how fraud is committed.
How do you say that the defendant has intent to defraud so as to issue
an attachment? How do you prove that in court?
By filing an affidavit, it must be clearly shown that the act of defendant
is with intent to defraud.
2018 TSN: So if the purpose of the removal is to repair, then that is not
commensurate to an intent to defraud. There can be no intent to defraud
because to repair is to preserve.
In PEOPLE‟S BANK & TRUST CO. VS. SYVELS, how was the intent
to defraud proven here?
Allegation based on the affidavits:
Syvels are disposing of their properties with intent to defraud their
creditors, particularly People’s Bank They testified that Syvel's Inc. had
disposed of all the articles covered by the chattel mortgage but had not
remitted the proceeds to People’s bank; that the Syvel's Stores at the
Escolta, Rizal Avenue and Morayta Street were no longer operated by
Syvel’s and that the latter were disposing of their properties to defraud
appellee bank.
Evidence adduced during the trial strongly shows that the witnesses
have personal knowledge of the facts stated in their affidavits in support
of the application for the writ. Such testimonies and circumstances were
given full credit by the trial court in its decision The attachment sought
on the ground of actual removal of property is justified where there is
physical removal thereof by the debtor, as shown by the records.
The actuations of appellants were clearly seen by the witnesses who
"saw a Fiat Bantam Car-Fiat Car, a small car and about three or four
persons hurrying; they were carrying goods coming from the back
portion of this store of Syvels at the Escolta, between 5:30 and 6:00
o'clock in the evening." Therefore, "the act of debtor (appellant) in taking
his stock of goods from the rear of his store at night, is sufficient to
support an attachment upon the ground of the fraudulent concealment
of property for the purpose of delaying and defrauding creditors."
In any case, intent to defraud may be and usually is inferred from the
facts and circumstances of the case; it can rarely be proved by direct
evidence. It may be gleaned also from the statements and conduct of
the debtor, and in this connection, the principle may be applied that
every person is presumed to intend the natural consequences of his
acts.
If you are going to execute an affidavit in order to allege fraud, under
paragraph e. what must be stated in the affidavit?
2018 TSN: So if your ground is under par (e) against a defendant who
has been removing or disposing of his property with intent to defraud his
creditors, then you must be very detailed in the factual allegations of
what this intent to defraud consists of. You cannot just make general
averments because intent is a state of mind and can only be determined
thru the facts and circumstances. So the more details as to how there is
intent to defraud, the better, so that the court can be guided and can
appropriately establish the intent to defraud.
In D.P. Lub Oil Marketing Center, Inc v Nicolas (not in the case list),
how was the intent to defraud alleged in the affidavit?
DP Lub Oil v Nicolas
To reiterate, petitioner's Motion for Attachment fails to meet the
standard set in D.P. Lub Oil Marketing Center, Inc. v. Nicolas, in
applications for attachment. In the said case, this Court cautioned The petitioner's prayer for a writ of preliminary attachment
hinges on the allegations in paragraph 16 of the complaint
and paragraph 4 of the affidavit of Daniel Pe which are
couched in general terms devoid of particulars of time,
persons and places to support support such a serious
assertion that "defendants are disposing of their properties
in fraud of creditors." There is thus the necessity of giving
to the private respondents an opportunity to ventilate their
side in a hearing, in accordance with due process, in order
to determine the truthfulness of the allegations. But no
hearing was afforded to the private respondents the writ
having been issued ex parte. 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.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc., not only
was petitioner's application defective for having merely given general
averments; what is worse, there was no hearing to afford private
respondents an opportunity to ventilate their side, in accordance with
due process, in order to determine the truthfulness of the allegations
of petitioner. As already mentioned, private respondents claimed that
substantial payments were made on the proceeds of the trust
receipts sued upon. They also refuted the allegations of fraud,
embezzlement and misappropriation by averring that private
respondent Filipinas Textile Mills could not have done these as it had
ceased its operations starting in June of 1984 due to workers' strike.
These are matters which should have been addressed in a
preliminary hearing to guide the lower court to a judicious exercise of
its discretion regarding the attachment prayed for. On this score,
respondent Court of Appeals was correct in setting aside the issued
writ of preliminary attachment.
In the case of ADLAWAN V TORRES, what was the allegation of fraud
here?
ADLAWAN vs. TORRES G.R. Nos. 65957-58 July 5, 1994
ISSUE: WON the execution of mortgage of the debtor in favour of
another person constitutes fraud sufficient for the issuance of a writ?
Held: No. The execution of a mortgage in favor of another creditor is
not conceived by the Rules as one of the means of fraudulently
disposing of one's property. By mortgaging a piece of property, a
debtor merely subjects it to a lien but ownership thereof is not parted
with. Furthermore, the inability to pay one's creditors is not
necessarily synonymous with fraudulent intent not to honor an
obligation.
What was the fraud here? What was the ground for attachment alleged?
Petitioner Eleazar Adlawan was awarded a contract for the construction
of the Tago Diversion Works for the Tago River Irrigation Project by the
National Irrigation Administration and that respondent Aboitiz loaned
him money and equipment, which indebtedness as of June 30, 1983
totaled P13,430,259.14. in view of the enormous liabilities which the
petitioner have with the respondent, Adlawan executed a real estate
mortgage covering eleven (11) parcels of land in favor of Philippine
Commercial and Industrial Bank (PCIB) to secure a P1,000,000.00 loan
with said bank which according to Aboitiz, Adlawan was able to remove,
conceal and dispose of their properties, obviously to defraud the plaintiff.
It is evident from said affidavit that the prayer for attachment rests on the
mortgage by petitioners of 11 parcels of land in Cebu, which
encumbrance respondent Aboitiz considered as fraudulent concealment
of property to its prejudice.
When you mortgage, that is not fraud, is that what you are saying? Yes.
Why?
There is no factual allegation which may constitute as a valid basis for
the contention that the mortgage was in fraud of respondent Aboitiz.
Bare allegation that an encumbrance of a property is in fraud of the
creditor does not suffice. Factual bases for such conclusion must be
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clearly averred. The execution of a mortgage in favor of another creditor
is not conceived by the Rules as one of the means of fraudulently
disposing of one's property. By mortgaging a piece of property, a debtor
merely subjects it to a lien but ownership thereof is not parted with.
Furthermore, the inability to pay one's creditors is not necessarily
synonymous with fraudulent intent not to honor an obligation.
(f). In an action against a party who does not reside and is not found
in the Philippines, or on whom summons may be served by
publication.
What is the ground under the last paragraph?
A party does not reside and is not found in the Philippines or a party may
be served summons by publication.
So, if you are going to file a case against a non-resident defendant not
found in the PH, and the nature of the action is action in personam, one
for damages or sum of money, mag research ka muna kung may
property sya ditto. Otherwise, walang mangyayari sa kaso mo.
If you are able to find a property, then you attach. That is one Section 1
(f) is for.
Walang fraud involved. This is different from Section 1(a) against a
defendant about to depart from the PH with intent to defraud his
creditors. Iba yun. Hindi pa yun nakakaalis ng Pilipinas. Paalis pa lang
siya. Eto iba rin. No fraud involved. He’s just not found in the PH. And
the nature of your action is one in personam.
Why is this rule here? What is the purpose of the rule? Is it for the
purpose of acquiring jurisdiction over the person of the defendant? NO!
What kind of action are we talking about? Action in personam.
What do you mean by action in personam? What is action in rem? Are
all actions in rem involving properties?
An action in personam is an action against a person on the basis of his
personal liability, while an action in rem is an action against the thing
itself, instead of against the person. Hence, a real action may at the
same time be an action in personam and not necessarily an action in
rem.
Do not confuse it with real action and personal action. Real action, it
pertains to a property. Action in rem, not necessarily. So, distinguish now
action in personal and action in rem. *review your civil procedure*
Attachment in this ground is necessary so that the court acquire
jurisdiction over the subject matter of the case, over the res. So that it
can proceed with the case, hindi yan tatakbo. If it is pertaining to the
STATUS of a person, do you still need to attach?
So in this case, under this ground, is the mere allegation that the
defendant is not in the Philippines, sufficient for attachment to issue?
What do you need to allege for it to be sufficient?
(all questions answered in the discussion below)
ATTY. TIU: You do not need to allege fraud. The only ground here is
that the defendant is not found in the Philippines. That’s it! And the
purpose here is only for the court to acquire jurisdiction over the subject
matter of the case. That’s why you need a property of the defendant
attached. That will now be the res. And if the court acquires jurisdiction
over the res, eventhough it does not acquire jurisdiction over the person
of the defendant, then it can proceed to hear the case. Otherwise, anong
mangyayari sa kaso mo?
You have action in personam against the defendant not found in the PH,
hindi sya mase-serve ng summons. So anong mangyayari? Archived
ang kaso mo! Pag na-archive yan, two years lang ang maximum nyan,
dinmissed! Walang mang-yayari. Saying lang ang binayad mo sa
abogado pagfile ng complaint, saying lang ang pagbayad mo ng filing
fees. The case will be dismissed pagkatapos nyang ma-archive.
The purpose is for the court to move on with the case at makakuha ka
ng favorable judgment. And that judgment can now be enforced, kahit
wala si defendant, against the res!
So, what is the requirement here?
1.
2.
3.
You have a personal action or action in personam against the
defendant;
He is not residing, not found in the PH;
And you have a property of the defendant in the PH that you
need to attach.
So maghahanap ka ngayon ng property nya. Ang problema, kung
walang property si defendant, goodbye ang kaso mo. Wag ka nang mag
try mag file ng case kung wala ka namang mahahagilap na property ni
defendant. You cannot continue with your case.
When you attach a property of a defendant under Section 1(f), by no
means do you acquire jurisdiction over his person. What the court
acquired is merely jurisdiction over the res. The property and the subject
matter of the case. The court remains to be without jurisdiction over the
person of the defendant. Kasi nga nasa labas siya ng territorial
jurisdiction ng korte. But the beauty of it is that by attaching it, you can
now serve summons by publication.
So pag na-attach mo na yan, pwede ka nang mag service of summons
by publication under Rule 14. Still the court does not acquire jurisdiction
over the person of the defendant even if there is summons by
publication. What is complied there is the DUE PROCCESS
REQUIREMENT.
So, whatever proceeding will the court conduct, it is deemed to be with
due process kasi meron nang service of summons by publication. There
is now constructive notice. Now take note that the extraterritorial service
of summons does not need to be publication of the summons in the
place where the defendant is actually residing abroad. It only has to do
with the publication here in the PH. So whatever constructive notice it
creates, it is within the ph. Still, jurisprudence tells you that is sufficient
to comply with the due process requirement. Take note of that.
What is complied here is only the requirement of due process. And in
order for you to do that, mag attach ka muna. Then serve summons by
publication. Edi may due process na, and then the court can proceed.
Does this ground apply to a foreign corporation doing business in the
Philippines?
2018 TSN: The SC said in the Claude Neon Light case, foreign
corporations are not covered by this provision Section 1(f) of Rule 57.
CLAUDE NEON LIGHTS, FEDERAL INC., U. S. A., vs PHILIPPINE
ADVERTISING CORPORATION and FRANCISCO SANTAMARIA,
Judge of First Instance of Manila
Facts: PAC filed a suit against petitioner claiming P300,000 as
damages for alleged breach of the agency with an application for writ
of attachment in which it is stated that the petitioner is a foreign
corporation having its principal place of business in the City of
Washington, District of Columbia. However, it is not alleged in said
application that the petitioner was about to depart from the Philippine
Islands with intent to defraud its creditors or that it was insolvent or
had removed or disposed of its property or was about to do so with
intent to defraud its creditors.
The respondent judge issued the writ of attachment and the sheriff
has attached all the properties of the petitioner in the Philippine
Islands appointing Manuel C. Grey receiver of said properties.
In its petition for the annulment of the writ of attachment issued and
appointment of receiver, the attorney in fact of the petitioner denied
the allegations of indebtedness and breached of contracts but the
court denied said motions to vacate the attachment and receivership
invoking under section 424, paragraph 2 in considering the petitioner
as a defendant not residing in the Philippines.
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Issue: WON petitioner, a foreign corporation, shall, in a metaphorical
sense, be deemed as "not residing in the Philippine Islands" in the
sense in which that expression would apply to a natural person?
Held: Having regard to the reason for the statute which is the
protection of the creditors of a non-resident, we are of the opinion
that there is not the same reason for subjecting a duly licensed
foreign corporation to the attachment of its property by a plaintiff
under section 424, paragraph 2, as may exist in the case of a natural
person not residing in the Philippine Islands.
Corporations, as a rule, are less mobile than individuals. This is
especially true of foreign corporations that are carrying on business
by proper authority in these Islands. They possess, as a rule, great
capital which is seeking lucrative and more or less permanent
investment in young and developing countries like our Philippines.
Some of them came here as far back as the Spanish regime and are
still important factors in our financial and industrial life. They are
anything but "flyby- night" concerns. The latter, we believe, are
effectually excluded from our Islands both by our laws and by our
geographical and
economic situation.
Paragraph 2 of section 424, does not apply to a domestic
corporation. Our laws and jurisprudence indicate a purpose to
assimilate foreign corporations, duly licensed to do business here, to
the status of domestic corporations. We think it would be entirely out
of line with this policy should we make a discrimination against a
foreign corporation, like the petitioner, and subject its property to the
harsh writ of seizure by attachment when it has complied not only
with every requirement of law made especially of foreign
corporations, but in addition with every requirement of law made of
domestic corporations.
So section 1 (f) contemplates of a defendant that is not a corporation. It
refers to an individual defendant. Why is that? What is the reason?
Having regard to the reason for the statute which is the protection of the
creditors of a non-resident, the court is of the opinion that there is not
the same reason for subjecting a duly licensed foreign corporation to the
attachment of its property by a plaintiff under section 424, paragraph 2,
as may exist in the case of a natural person not residing in the Philippine
Islands. The law does not require the latter, as it does the former, to
appoint a resident agent for service of process; nor to prove to the
satisfaction of the Government before he does business here, as the
foreign corporation must prove, that he "is solvent and in sound financial
condition"
So, what does that mean? We’re talking here of a foreign corporation
ha? Claude Neon Lights involve a foreign corporation.
So Claude Neon Lights tells you that it is only applicable to natural
persons, not corporations. Not even foreign corporations doing business
in the Philippines.
In STATE INVESTMENT HOUSE v CITIBANK, what was the reason
given why foreign corporations doing business in the Philippines are not
considered non-resident?
According to the Court in this case, a foreign corporation licitly doing
business in the Philippines, which is a defendant in a civil suit, may not
be considered a non-resident within the scope of the legal provision
authorizing attachment against a defendant not residing in the Philippine
Islands;" in other words, a preliminary attachment may not be applied
for and granted solely on the asserted fact that the defendant is a foreign
corporation authorized to do business in the Philippines — and is
consequently and necessarily, "a party who resides out of the
Philippines." Parenthetically, if it may not be considered as a party not
residing in the Philippines, or as a party who resides out of the country,
then, logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country.
2015 TSN: Can a foreign corporation be considered a non-resident
defendant for the purpose of the issuance of the writ of attachment?
Our laws and jurisprudence indicate a purpose to assimilate foreign
corporations, duly licensed to do business here, to the status of domestic
corporations. We think it would be entirely out of line with this policy
should we make a discrimination against a foreign corporation, like the
petitioner, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement of law
made especially of foreign corporations, but in addition with every
requirement of law made of domestic corporations.
Corporations, as a rule, are less mobile than individuals. This is
especially true of foreign corporations that are carrying on business by
proper authority in these Islands. They possess, as a rule, great capital
which is seeking lucrative and more or less permanent investment
Why is the ground under 1(f) not applicable to them?
According to the Supreme Court, foreign corporations duly licensed to
do business in the Philippines are considered "residents of the Philippine
Islands" as the word is understood under Section 20 of the Insolvency
Law authorizing at least three (3) resident creditors of the Philippines to
file a petition to declare a corporation insolvent. The tax rule also
declared that the term resident foreign corporations applies to foreign
corporations engaged in trade and business in the Philippines. As
distinguished from a non-resident corporation which is not engaged in
trade or business in the Philippines.
Are you saying now that foreign corporations not doing business in the
Philippines can be covered by this ground? Because they are not
considered resident of the Philippines?
So what is the difference now between a foreign corporation doing
business in the Philippines and a foreign corporation not doing business
in the Philippines?
Why not? You haven’t given me the basic difference. You keep reading,
reading, reading, I doubt if you really understand. What do you mean by
assimilation of foreign corporations duly licensed to do business to the
status of domestic corporations? So what if they are treated as domestic
corporation? What does that mean?
Transcriber’s Note: The questions are answered by the ruling of State
investment house case.
STATE INVESTMENT HOUSE, INC. and STATE FINANCING
CENTER, INC., vs. CITIBANK, N.A.,
G.R. Nos. 79926-27 October 17, 1991
Issue: whether these Philippine branches or units may be considered
"residents of the Philippine Islands" as that term is used in Section
20 of the Insolvency Law.
(The Insolvency Law does not have a definition of the term, resident,
or any clear indication of its meaning. But the court used the definition
of NIRC, Offshore Banking Law and General Banking Act)
•
The NIRC declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or
business within the Philippines," as distinguished from a " "nonresident foreign corporation" . . . (which is one) not engaged in trade
or business within the Philippines."
•
Offshore Banking Law states "that branches, subsidiaries,
affiliation, extension offices or any other units of corporation or
juridical person organized under the laws of any foreign country
operating in the Philippines shall be considered residents of the
Philippines."
•
The General Banking Act, Republic Act No. 337, places
"branches and agencies in the Philippines of foreign banks . . . (which
are) called Philippine branches," in the same category as
"commercial banks, savings associations, mortgage banks,
development banks, rural banks, stock savings and loan
associations"
RULE
This Court itself has already had occasion to hold that a foreign
corporation licitly doing business in the Philippines, which is a
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
defendant in a civil suit, may not be considered a non-resident within
the scope of the legal provision authorizing attachment against a
defendant not residing in the Philippine Islands;" 26 in other words, a
preliminary attachment may not be applied for and granted solely on
the asserted fact that the defendant is a foreign corporation
authorized to do business in the Philippines — and is consequently
and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may not be considered as a party not residing in
the Philippines, or as a party who resides out of the country, then,
logically, it must be considered a party who does reside in the
Philippines, who is a resident of the country. Be this as it may, this
Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate
foreign corporations, duly licensed to do business here, to the status
of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall
Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu; Cong Eng
vs. Trinidad, 47 Phil. 385, 411) We think it would be entirely out of
line with this policy should we make a discrimination against a foreign
corporation, like the petitioner, and subject its property to the harsh
writ of seizure by attachment when it has complied not only with every
requirement of law made specially of foreign corporations, but in
addition with every requirement of law made of domestic
corporations. . . . .
Obviously, the assimilation of foreign corporations authorized to do
business in the Philippines "to the status of domestic corporations,"
subsumes their being found and operating as corporations, hence,
residing, in the country.
Xxx
What effectively makes such a foreign corporation a resident
corporation in the Philippines is its actually being in the Philippines
and licitly doing business here, "locality of existence" being, to
repeat, the "necessary element in . . . (the) signification" of the term,
resident corporation.
In PCI BANK VS ALEJANDRO, was there a valid ground for attachment
here under Section 1 (f)? No
Was the attachment granted? Did the trial court grant it? Yes.
What was the nature of the action that is filed here? Complaint for sum
of money
So it’s an action in personam. So after the court granted the writ of
attachment? What did the defendant do?
Alejandro filed a motion to quash the writ contending that the withdrawal
of his unassigned deposits was not fraudulent as it was approved by
petitioner.
So, he disputed the ground under 1 (e). How about 1(f), that he was not
found in the Philippines? Did he dispute that also? Yes.
What did he allege?
He alleged that PCIB here knew that he maintains a permanent
residence at Calle Victoria, Ciudad Regina, Batasan Hills, Quezon City,
and an office address in Makati City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles, where he is a partner.
So lawyer pala sya. And he is a partner in a law office in Makati. So
obviously he is not a non-resident defendant not found in the Philippines.
What is he then? How would you characterize him now? Since he is
based in Hongkong? I think they have a branch office in Hongkong and
he is the one in-charged there, so anong category nya ngayon kung
hindi sya non-resident defendant not found in the Philiipines.
He is a defendant temporarily out in the PH. NOT NON-RESIDENT.
Temporarily out in the PH lang.
So, according to PCIB, a defendant who is temporarily out of the PH
may also be served summons by publication through extraterritorial
service. So sabi nya, pwede parin daw mag apply ang ground under
Section 1(f). Covered parin daw sya ng Section 1 (f). what is the ruling
of the SC now with respect to that argument?
Does Section 1 (f) cover defendants who are temporarily out of the
Philippines?
Why not?
A: Because Alejandro here is a resident of the Philippines, his act of
withdrawing his deposits with petitioner was without intent to defraud,
and that his act of withdrawing his deposits with PCI Bank was without
intent to defraud. And that PCI bank misrepresented that Alejandro was
residing out of the Philippines.
What was the ground alleged in the application for attachment by the
bank? Under what paragraph?
A: Paragraphs e and f.
So what is under (e)?
(e) In an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;
So in order to prove fraud, what was the allegation made?
That Alejandro, a resident of Hong Kong, executed in favor of PCI bank
a promissory note obligating himself to pay ₱249,828,588.90 plus
interest. In view of the fluctuations in the foreign exchange rates which
resulted in the insufficiency of the deposits assigned by respondent as
security for the loan, petitioner requested the latter to put up additional
security for the loan.
How was the fraud here under paragraph (e) alleged? Or was there an
allegation at all?
Petitioner filed a Motion for Attachment, contending that violation of the
trust receipts law constitutes estafa, thus providing ground for the
issuance of a writ of preliminary attachment; specifically 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 detriment as
a creditor.
No. Resort to substitution service of summons . you do not resort to
extraterritorial service of summons at all. Because mere substituted
service will suffice. May bahay at opisina naman pala ditto. Dun mo iserve ang summons thru substituted service. Kung hndi pwede ang
personal service, eh ‘di mag substituted service ka. You do not need to
attach the property of the defendant kahit wala pa sya ditto or he is
temporarily out of the Philippines.
Sec. 16. Residents temporarily out of the Philippines.
When any action is commenced against a defendant who
ordinarily resides within the Philippines, but who is temporarily
out of it, service may, by leave of court, be also effected out of
the Philippines, as under the preceding section.
In this case, the court said that for purposes of attachment under sec 1
(f), you must first resort to substituted service.
Pag wala na, saka pa mag attach. Kung hindi talaga uubra ang personal
service and substituted service to a resident defendant temporarily out
of the PH, saka pa lang mag-aattach. Why? Why did the court say that?
In a way, sinasabi ng court na exemption ito sa rule on service of
summons to defendants temporarily out of the PH.why?
The reason is that attachment is a harsh remedy. It exposes the
defendant in humiliation and embarrassment.
July 16, 2019 by Cavin Jhon Cabarlo
How is the writ of attachment issued?
The writ is issued either:
1. Ex-parte or
2. Upon motion with notice and hearing
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Section 2. Issuance and contents of order. — An order of
attachment may be issued either ex parte or upon motion with notice
and hearing by the court in which the action is pending, or by the
Court of Appeals or the Supreme Court, and must require the sheriff
of the court to attach so much of the property in the Philippines of the
party against whom it is issued, not exempt from execution, as may
be sufficient to satisfy the applicant's demand, unless such party
makes deposit or gives a bond as hereinafter provided in an amount
equal to that fixed in the order, which may be the amount sufficient
to satisfy the applicant's demand or the value of the 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. (2a)
Who can issue the writ?
1.
2.
3.
The court in which the action is pending
a. MTC
b. RTC
CA
SC
the main case — and that is what happened in this case — does not
confer jurisdiction upon the issuing court over the person of the
defendant.
Ordinarily, the prayer in a petition for a writ of preliminary attachment
is embodied or incorporated in the main complaint itself as one of the
forms of relief sought in such complaint. Thus, valid service of
summons and a copy of the complaint will in such case vest
jurisdiction in the court over the defendant both for purposes of the
main case and for purposes of the ancillary remedy of attachment. In
such case, notice of the main case is at the same time notice of the
auxiliary proceeding in attachment. Where, however, the petition for
a writ of preliminary attachment is embodied in a discrete pleading,
such petition must be served either simultaneously with service of
summons and a copy of the main complaint, or after jurisdiction over
the defendant has already been acquired by such service of
summons. Notice of the separate attachment petition is not notice of
the main action. If a court has no jurisdiction over the subject matter
or over the person of the defendant in the principal action, it simply
has no jurisdiction to issue a writ of preliminary attachment against
the defendant or his property.
Note: The point here is that the writ cannot be enforced without
acquiring jurisdiction over the person of the defendant.
What can be attached?
Subject of Preliminary Attachment
Properties of the defendant not exempt from execution located in the
Philippines may be the subject of attachment.
In the case of DAVAO LIGHT VS. CA, does it have the same facts?
No. The writ of attachment in this case was issued ex parte.
In summary,
Object:
Subject:
Location:
Property not exempt from execution
Defendant
Philippines
When can attachment be issued ex-parte?
DAVAO LIGHT VS. COURT OF APPEALS
204 SCRA 343
FACTS: Davao Light filed a verified complaint for recovery of sum of
money and damages against Queensland Hotel, Inc. and Teodoro
Adarna. The complaint contained an ex parte application for a writ of
preliminary attachment.
Preliminary Attachment, When issued ex-parte
A writ of preliminary attachment may be applied for by the plaintiff
1. At the commencement of the action or
2. At any time thereafter
Judge Nartatez issued an order granting the ex parte application of
the writ of preliminary attachment.
Therefore, the plaintiff can apply for the writ of attachment so long as the
action has commenced and the writ can be issued ex-parte without
participation on the part of the defendant.
Defendants Queensland Hotel, Inc. and Teodoro Adarna filed a
motion to discharge the attachment for lack of jurisdiction to issue the
same because at the time the order of attachment was promulgated
and the attachment writ issued, the Trial Court had not yet acquired
jurisdiction over the cause and over the persons of the defendants.
In the case of SIEVERT VS. COURT OF APPEALS, was the writ of
preliminary attachment issued ex parte?
No. The writ of preliminary attachment was issued after hearing was
conducted where Sievert’s counsel appeared for purposes of objecting
the issuance of the writ.
SIEVERT VS. COURT OF APPEALS
168 SCRA 563
FACTS: Alberto Sievert received by mail a Petition for Issuance of a
Preliminary Attachment without having previously received any
summons and complaint.
On the day set for the hearing of the Writ of Preliminary Attachment,
Sievert’s counsel appeared for the limited purpose of objecting to the
issuance of the writ on the ground that the court has not yet acquired
jurisdiction over the person of the defendant.
The trial court denied Sievert’s objection and proceeded with the
issuance of the writ of attachment. This was affirmed by the CA.
ISSUE: W/N the court which has not acquired jurisdiction over the
person of the defendant may bind such defendant by issuing a writ
of preliminary attachment?
RULING: No. A court which has not acquired jurisdiction over the
person of defendant, cannot bind that defendant whether in the main
case or in any ancillary proceeding such as attachment proceedings.
The service of a petition for preliminary attachment without the prior
or simultaneous service of summons and a copy of the complaint in
ISSUE: W/N the writ of preliminary attachment may be issued ex
parte against a defendant before acquisition of jurisdiction over the
latter’s person by service of summons or his voluntary appearance?
RULING: Yes. It is incorrect to theorize that after an action or
proceeding has been commenced and jurisdiction over the person of
the plaintiff has been vested in the court, but before acquisition of
jurisdiction over the person of the defendant (either by service of
summons or his voluntary submission to the court's authority),
nothing can be validly done by the plaintiff or the court. It is wrong to
assume that the validity of acts done during this period should be
dependent on, or held in suspension until, the actual obtention of
jurisdiction over the defendant's person. The obtention by the court
of jurisdiction over the person of the defendant is one thing; quite
another is the acquisition of jurisdiction over the person of the plaintiff
or over the subject matter or nature of the action, or the res or object
thereof.
This, too, is true with regard to the provisional remedies of preliminary
attachment, preliminary injunction, receivership or replevin. They
may be validly and properly applied for and granted even before the
defendant is summoned or is heard from.
What the rule is saying quite clearly is that after an action is properly
commenced -- by the filing of the complaint and the payment of all
requisite docket and other fees -- the plaintiff may apply for and
obtain a writ of preliminary attachment upon fulfillment of the
pertinent requisites laid down by law, and that he may do so at any
time, either before or after service of summons on the defendant.
Thus. writs of attachment may properly issue ex parte provided that
the Court is satisfied that the relevant requisites therefor have been
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fulfilled by the applicant, although it may, in its discretion, require prior
hearing on the application with notice to the defendant; but that levy
on property pursuant to the writ thus issued may not be validly
effected unless preceded, or contemporaneously accompanied, by
service on the defendant of summons, a copy of the complaint (and
of the appointment of guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiffs attachment
bond.
SIEVERT VS. CA
The application for the writ was
filed independently of the
complaint.
No service of summon during
application.
There was hearing conducted.
The issuance of the writ is valid.
The implementation was not
valid having failed to acquire
jurisdiction over the person of
the defendant.
DAVAO LIGHT VS. CA
The application for the writ was
filed together with the complaint.
Services of summons was
simultaneously made with the
application for the writ.
The writ was issued ex parte.
The issuance of the writ is valid.
The implementation is valid
since the court have served
summons
and
acquired
jurisdiction over the person of
the defendant.
Will service of summons matter?
Service of summons will not matter in the application for the issuance of
the writ of preliminary attachment. The minimum requirement under the
law is that the court has already acquired jurisdiction over the person of
the plaintiff or over the subject matter or nature of the action, or the res
or object thereof. This is consistent with the time when the writ may be
applied for – at the commencement of the action or at any time
thereafter.
What are the stage for the issuance of the attachment writ?
Stages in Issuance of Writ
The grant of provisional remedy of attachment practically involves
three stages:
3.
Spouses Evangelista filed a motion to set aside the order granting
the issuance of the writ of preliminary attachment ex parte on the
ground that it was improperly or irregularly issued having failed to
acquire jurisdiction over the person of the defendant.
ISSUE: W/N the court can issue the writ even before it acquired
jurisdiction over the person of the defendant?
Compare the two cases.
1.
2.
A copy of the writ of preliminary attachment, the order granting the
writ, the summons and the complaint were all simultaneously served
upon the private respondents at their residence.
The court issues the order granting the application
The writ of attachment issues pursuant to the order granting
the writ
The writ is implemented
At what stage, is the court required to acquire jurisdiction over the
defendant?
Issuance of the Writ; When jurisdiction over defendant required
Jurisdiction over the person of the defendant is required in the third
stage or during the implementation of the writ.
For the initial two stages, it is not necessary that jurisdiction over the
person of the defendant should first be obtained. However, once the
implementation commences, it is required that the court must have
jurisdiction over the person of the defendant for without such jurisdiction,
the court has no power and authority to act in any manner against the
defendant. Any order issuing from the court will not bind the defendant.
What happened in the case of CUARTERO VS. CA?
CUARTERO VS. CA
212 SCRA 260
FACTS: Ricardo Cuartero filed a complaint against the Evangelista
spouses for a sum of money plus damages with a prayer for the
issuance of a writ of preliminary attachment.
The RTC issued an order granting ex-parte the petitioner's prayer for
the issuance of a writ of preliminary attachment. The writ of
preliminary attachment was issued and the summons for the spouses
Evangelista was likewise prepared.
RULING: Yes. As held in the case of Davao Light vs. CA, a writ of
preliminary attachment may issue even before summons is served
upon the defendant. However, we have likewise ruled that the writ
cannot bind and affect the defendant. However, we have likewise
ruled that the writ cannot bind and affect the defendant until
jurisdiction over his person is eventually obtained. Therefore, it is
required that when the proper officer commences implementation of
the writ of attachment, service of summons should be simultaneously
made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues
the order granting the application; second, the writ of attachment
issues pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant should first be obtained.
However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any
manner against the defendant. Any order issuing from the Court will
not bind the defendant.
Moreover, an attachment may not be dissolved by a showing of its
irregular or improper issuance if it is upon a ground which is at the
same time the applicant's cause of action in the main case since an
anomalous situation would result if the issues of the main case would
be ventilated and resolved in a mere hearing of a motion.
Was the writ properly implemented?
Yes, the writ was properly implemented. The court has already acquired
jurisdiction over the person of the defendant when said defendant
participated in the proceeding. Thus, the implementation stage does not
contain any defect.
What is the basis for the issuance of the writ?
The basis for the issuance of the writ is the verified application together
with the affidavit stating therefore the reasons for the issuance of the
writ.
What if the affidavit supporting the application of the writ contains
vague grounds?
The court has discretion whether or not to issue the writ of preliminary
attachment.
If the court grants the writ ex-parte on the basis of the vague affidavit,
is that correct?
No. It is the duty of the court, before issuing the writ, to ensure that all
the requisites of the law have been complied with; otherwise the judge
acts in excess of his jurisdiction and the so issued writ shall be null and
void.
SALAS VS. ADIL
90 SCRA 121
FACTS: In a motion, Bedro and Yu filed a Motion for Attachment,
alleging, among others, that the case was "for annulment of a deed
of sale and recovery of damages" and that the defendants have
removed or disposed of their properties or are about to do so with
intent to defraud their creditors especially the plaintiffs in this case.
Judge Adil issued ex-parte a Writ of Attachment "against the
properties of the defendants.
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Contending that respondent Judge gravely abused his discretion in
issuing the said Writ of Attachment, Salas filed the present petition.
ISSUE: W/N the issuance of the writ is proper?
RULING: No. A preliminary attachment is a rigorous remedy, which
exposes the debtor to humiliation and annoyance, such it should not
be abused as to cause unnecessary prejudice. It is, therefore, the
duty of the court, before issuing the writ, to ensure that all the
requisites of the law have been complied with; otherwise the judge
acts in excess of his jurisdiction and the so issued shall be null and
void.
Considering the gravity of the allegation that herein petitioners have
removed or disposed of their properties or are about to do so with
intent to defraud their creditors, and further considering that the
affidavit in support of the pre attachment merely states such ground
in general terms, without specific allegations of lances to show the
reason why plaintiffs believe that defendants are disposing of their
properties in fraud of creditors, it was incumbent upon respondent
Judge to give notice to petitioners and to allow wherein evidence is
them to present their position at a to be received.
Was there sufficient allegation?
No. There was no sufficient allegation since the applicant merely copied
the ground stated under Section 1(e) of Rule 57 of the Rules of Court.
The allegation was stated in general terms without any sufficient
allegation as to how fraud was committed.
In LA GRANJA VS. SAMSON, was there sufficient allegation for the
ground cited?
There was no sufficient allegation. The respondent judge, in requiring
the presentation of evidence to establish the truth of the allegation of the
affidavit that the defendants had disposed or were disposing of their
property to defraud their creditors, has done nothing more than exercise
his sound discretion in determining the sufficiency of the affidavit.
The respondent judge, in requiring the presentation of evidence to
establish the truth of the allegation of the affidavit that the defendants
had disposed or were disposing of their property to defraud their
creditors, has done nothing more than exercise his sound discretion
in determining the sufficiency of the affidavit.
The mere filing of an affidavit executed in due form is not sufficient to
compel a judge to issue an order of attachment, but it is necessary
that by such affidavit it be made to appear to the court that there
exists sufficient cause for the issuance thereof, the determination of
such sufficiency being discretionary on the part of the court.
Was there compliance with presentation of evidence?
No. The petitioners refused to comply with the court’s requirement
arguing that it is not obliged to do so. However, the Supreme Court held
that it is within the sound discretion of the judge to require additional
evidence before the issuance of the writ of preliminary attachment. Thus,
the denial of the application was proper.
Aside from the affidavit, what else is required?
Aside from the affidavit, bond is required under Section 3.
Sec. 3. Affidavit and bond required. – An order of attachment shall
be granted only when it appears by the affidavit of the applicant, or
of some other person who personally knows the facts, that a
sufficient cause of action exists, that the case is one of those
mentioned in section 1 hereof, that there is no 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 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 duly filed with the court before the order issues.
What is needed to be alleged in the affidavit?
The following are required to be alleged in the affidavit:
LA GRANJA VS. SAMSON
58 PHIL 378
1.
2.
FACTS: La Granja, Inc. filed a complaint against Chua Bian, Chua
Yu Lee and Chua Ki, for the recovery of the sum of P2,418.18 with
interest thereon at the rate of 12 per cent per annum.
3.
4.
That a sufficient cause of action exists
That the case is one of those mentioned in section 1 of Rule
57
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 he is entitled to recover, is
as much as the sum for which the order is granted above all
legal counterclaims
La Granja at the same time, also prayed for the issuance of an order
of attachment against the aforementioned defendants' property and
accompanied said complaint with an affidavit of the manager of the
aforesaid petitioner, La Granja, Inc., wherein it was alleged among
other essential things, that the said defendants have disposed or are
disposing of their properties in favor of the Asiatic Petroleum Co.,
with intent to defraud their creditors.
When do you need to file the affidavit and the bond?
The respondent judge, wishing to ascertain or convince himself of
the truth of the alleged disposal, required the petitioner herein to
present evidence to substantiate its allegation, before granting its
petition. Inasmuch as the petitioner refused to comply with the court's
requirement, alleging as its ground that was not obliged to do so, the
respondent judge dismissed said petition for an order of attachment.
How much is the bond?
ISSUE: W/N the mere filing of an affidavit executed in due form is
sufficient to compel a judge to issue an order of attachment?
RULING: No. Although the law requires nothing more than the
affidavit as a means of establishing the existence of such facts,
nevertheless, such affidavit must be sufficient to convince the court
of their existence, the court being justified in rejecting the affidavit if
it does not serve this purpose and in denying the petition for an order
of attachment. The affidavit filed by the petitioner, La Granja, Inc.,
must not have satisfied the respondent judge inasmuch as he desired
to ascertain or convince himself of the truth of the facts alleged
therein by requiring evidence to substantiate them. The sufficiency
or insufficiency of an affidavit depends upon the amount of credit
given it by the judge, and its acceptance or rejection, upon his sound
discretion.
The affidavit and the bond must be submitted before the issuance of the
writ but it does not mean that both of them must be filed in the court at
the same time since the amount of the bond is still to be fixed by the
court after application has been made.
The amount of the bond is fixed by the court.
In KO GLASS VS. VALENZUELA, was the affidavit sufficient?
No. The affidavit was not sufficient. While Pinzon may have stated in is
affidavit that a sufficient cause of action exists against the defendant
Kenneth O. Glass, he did not state therein that "the case is one of those
mentioned in Section 1 hereof; that there is no other sufficient security
for the claim sought to be enforced by the action; and that the amount
due to the applicant is as much as the sum for which the order granted
above all legal counter-claims." It has been held that the failure to allege
in the affidavit the requisites prescribed for the issuance of a writ of
preliminary attachment, renders the writ of preliminary attachment
issued against the property of the defendant fatally defective, and the
judge issuing it is deemed to have acted in excess of his jurisdiction.
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KO GLASS VS. VALENZUELA
116 SCRA 563
FACTS: On October 6, 1977, an action was instituted by Antonio D.
Pinzon to recover from Kenneth O. Glass the sum of P37,190.00,
alleged to be the agreed rentals of his truck, as well as the value of
spare parts which have not been returned to him upon termination of
the lease. In his verified complaint, the Pinzon asked for an
attachment against the property of the defendant consisting of
collectibles and payables with the Philippine Geothermal, Inc., on the
grounds that the defendant is a foreigner; that he has sufficient cause
of action against the said defendant; and that there is no sufficient
security for his claim against the defendant in the event a judgment
is rendered in his favor.
Finding the petition to be sufficient in form and substance, the
respondent Judge ordered the issuance of a writ of attachment
against the properties of the defendant upon the plaintiff's filing of a
bond in the amount of P37,190.00.
The defendant Kenneth O. Glass moved to quash the writ of
attachment on the grounds that there is no cause of action against
him since the transactions or claims of the plaintiff were entered into
by and between the plaintiff and the K.O. Glass Construction Co.,
Inc., a corporation duly organized and existing under Philippine laws;
that there is no ground for the issuance of the writ of preliminary
attachment as defendant Kenneth O. Glass never intended to leave
the Philippines, and even if he does, plaintiff cannot be prejudiced
thereby because his claims are against a corporation which has
sufficient funds and property to satisfy his claim; and that the money
being garnished belongs to the K.O. Glass Corporation Co., Inc. and
not to defendant Kenneth O. Glass.
As such, Pinzon amended his complaint to include K.O. Glass
Corporation Co., Inc., as co-defendant of Kenneth O. Glass.
The defendants therein filed a supplementary motion to discharge
and/or dissolve the writ of preliminary attachment upon the ground
that the affidavit filed in support of the motion for preliminary
attachment was not sufficient or wanting in law for the reason that:
1. the affidavit did not state that the amount of plaintiff's claim
was above all legal set-offs or counterclaims, as required
by Sec. 3, Rule 57 of the Revised Rules of Court;
2. the affidavit did not state that there is no other sufficient
security for the claim sought to be recovered by the action
as also required by said Sec. 3; and
3. the affidavit did not specify any of the grounds enumerated
in Sec. 1 of Rule 57.
Despite such grounds, the respondent Judge denied the motion and
upheld the propriety of the writ of preliminary attachment.
ISSUE: W/N the affidavit of Pinzon complied with Section 3 of Rule
57?
RULING: No. While Pinzon may have stated in his affidavit that a
sufficient cause of action exists against the defendant Kenneth O.
Glass, he did not state therein that "the case is one of those
mentioned in Section 1 hereof; that there is no other sufficient
security for the claim sought to be enforced by the action; and that
the amount due to the applicant is as much as the sum for which the
order granted above all legal counter-claims." It has been held that
the failure to allege in the affidavit the requisites prescribed for the
issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant
fatally defective, and the judge issuing it is deemed to have acted in
excess of his jurisdiction.
What is the effect of the issuance of the writ based on a defective
affidavit?
The failure to allege in the affidavit the requisites prescribed for the
issuance of a writ of preliminary attachment, renders the writ of
preliminary attachment issued against the property of the defendant
fatally defective, and the judge issuing it is deemed to have acted in
excess of his jurisdiction.
In GUZMAN VS. CATOLICO, were all elements present?
No, not all the elements were present. There is no allegation, either in
the complaint or in affidavit solemnizing it, to the effect that there is no
other sufficient security for the claim which the plaintiff seeks to enforce
by his action, and that the amount due him from the defendant, above
all legal set-offs and counterclaims, is as much as the sum for which the
writ of preliminary attachment has been granted.
GUZMAN VS. CATOLICO
58 PHIL 482
FACTS: Alfredo Catolico brought an action against the herein
petitioner Ventura Guzman in the Court of First Instance of Isabela,
for the recovery from the latter of the amount of his fees for services
rendered by him as attorney, praying, at the same time, for the
issuance of a writ of preliminary attachment against all of the
properties adjudicated to said Vicente Guzman.
As grounds for the issuance of said writ of preliminary attachment,
he alleged: "That the herein defendant is trying to sell and dispose of
the properties adjudicated to him, with intention to defraud his
creditors, particularly the herein plaintiff, thereby rendering illusory
the judgment that may be rendered against him, inasmuch as he has
no other properties outside the same to answer for the fees the court
may fix in favor of the plaintiff, this case being one of those mentioned
by the Code of Civil Procedure warranting the issuance of a writ of
preliminary attachment".
The RTC granted the petition and ordered the issuance of the writ of
preliminary attachment.
Ventura Guzman filed a motion for the cancellation of said writ of
preliminary attachment on the ground that it had been improperly,
irregularly and illegally issued, there being no allegation, either in the
complaint or in the affidavit solemnizing it, that there is no other
sufficient security for the claim sought to be enforced by the action;
that the amount due to the plaintiff, above the legal set-off and
counterclaim, is as much as the sum of which the preliminary
attachment has been granted, and that the affidavit of the plaintiff is
based in mere information and belief.
ISSUE: W/N the requisites prescribed by law for the issuance of a
writ of preliminary attachment have been complied with?
RULING: No. There is no allegation, either in the complaint or in
affidavit solemnizing it, to the effect that there is no other sufficient
security for the claim which the plaintiff seeks to enforce by his action,
and that the amount due him from the defendant, above all legal setoffs and counterclaims, is as much as the sum for which the writ of
preliminary attachment has been granted.
In JARDINE MANILA INC. VS. CA, was the affidavit sufficient?
No, the affidavit was not sufficient. The issuance of the attachment is
irregular or illegal in the absence of the following allegations in the
application for attachment:
1.
2.
that there is no 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 on the basis of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal
counterclaims.
In fact, the affidavit states that the defendant corporation has real and
personal properties located in Metro Manila, Rizal and Nueva Ecija.
In TING VS. VILLARIN, what was missing?
Specific allegation of fraud is missing. The application of the writ of
preliminary attachment was based on Section 1(d) of Rule 57. However,
the affidavit merely states that: “Defendants are guilty of fraud in
contracting their obligations more specifically illustrated by their violation
of the trust receipt agreement which is a ground defined under Sec. 1,
Rule 57 of the Rules of Court for the issuance of a writ of preliminary
attachment.”
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
The affidavit must state what constituted the fraud and how it was
perpetrated. The complaint did not provide for a sufficient basis for the
issuance of a writ of preliminary attachment. It is not enough for the
complaint to ritualistically cite, as here, that the defendants are "guilty of
fraud in contracting an obligation." An order of attachment cannot be
issued on a general averment, such as one ceremoniously quoting from
a pertinent rule. The need for a recitation of factual circumstances that
support the application becomes more compelling here considering that
the ground relied upon is "fraud in contracting an obligation." The
complaint utterly failed to even give a hint about what constituted the
fraud and how it was perpetrated. Fraud cannot be presumed.”
amendment. (Note: This is on the view that the amendment was filed
after the writ was issued.)
If the affidavit is defective, can it be cured by amendment?
The affidavit is the foundation of the writ and if it is fatally defective, then
there is no other option but to discharge the attachment. A defective
affidavit cannot be a basis for the issuance of the writ. The remedy is to
file a new application for a writ of attachment.
No. Where the affidavit for attachment is fatally defective, the attachment
must be held to have been improperly or irregularly issued and must be
discharged, and such fatal defect cannot be cured by amendment.
Exception: Amendment may be made at or before the hearing of the
application.
What if the amendment was made before the writ was issued?
The writ may be issued. If the amendment was made prior to the
issuance of the writ, it may still be amended but not after the grant of the
attachment.
In CARLOS VS. SANDOVAL, was the affidavit sufficient?
CU UNJIENG VS. GODDARD
58 PHIL 482
FACTS: Hongkong & Shanghai Banking Corporation filed a case for
recovery of sum of money against Cu Unjieng. Simultaneously with
the filing of the complaint, HSBC asked for a writ of attachment which
was granted.
Cu Unjieng filed a motion to discharge the attachment on the ground
that it had been improperly and irregularly issued. They alleged that
the affidavit was defective in that it fails to state that there is no other
sufficient security for the claim sought to be enforced by the action
and that the amount due the plaintiff involves as much as the sum for
which the order of attachment was granted.
Shortly after the hearing to discharge the attachment had begun,
HSBC asked leave to file an amended affidavit in support of its
petition for a writ of attachment.
No. There was no sufficient cause of action to warrant the preliminary
attachment since Carlos had merely alleged general averments in order
to support his prayer for attachment.
What is the main action?
Rescission of contracts between Carlos and Sandoval. The applicant
wanted to recover the properties subject of the said contract/agreement,
hence the application for the writ of attachment.
What is the ground for the issuance of the writ?
The ground invoked is Section 1(d) of Rule 57, that is, in an action
against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the
performance thereof.
What is there sufficient allegation?
The judge entered an order admitting the amended affidavit of
attachment.
On the other hand, Cu Unjieng maintains that the affidavit of
attachment cannot be amended.
There was no sufficient allegation as there was merely general
averments that the contract entered into was defective for want of
consideration.
What is the effect if what you alleged turns out to be false?
ISSUE: W/N the amendment of the application is proper?
The writ of attachment will be discharged.
RULING: No. If upon such application it satisfactorily appears that
the writ of attachment was improperly or irregularly issued it must be
discharged; provided that such attachment shall not be discharged if
at or before the hearing of such application, the writ of attachment,
or the affidavit, or undertaking upon which such attachment was
based shall be amended and made to conform to the provisions of
the law.
Note: The amendment was not proper in this case since the
amendment was filed after the hearing for the discharge of the writ
took place.
In the case of SALGADO VS. CA, the Supreme Court held that:
“Section 13, Rule 57 of the Rules of Court authorizes the
discharge of an attachment where the same had been
improperly or irregularly issued.
In National Coconut Corporation v. Hon. Potenciano
Pecson, this Court ruled that when the facts or some of them,
stated in the plaintiff’s affidavit, are shown by the defendant to
be untrue, the writ of attachment may be considered as
improperly or irregularly issued.”
How was the defect brought to the attention of the court?
The defect was brought to the attention of the court through a motion to
discharge.
What did the applicant do?
SALGADO VS. CA
128 SCRA 395
FACTS: Philippine Commercial and Industrial Bank filed an action to
recover a promissory note in the amount of P1,510,905.96. The Bank
further prayed for the issuance of the writ of attachment.
The applicant requested to amend the affidavit.
Was it granted?
Yes. The amendment was granted.
Attached to the complaint was the affidavit of Mrs. Helen Osias,
Senior Branch Credit Division Manager of the Bank, wherein she
stated, among others, "that there is no sufficient security for the claim
sought to be enforced by this action."
The trial court issued an order granting the Bank’s prayer for
preliminary attachment.
Was it proper?
No.
General Rule: Where the affidavit for attachment is fatally defective, the
attachment must be held to have been improperly or irregularly issued
and must be discharged, and such fatal defect cannot be cured by
Salgado moved to quash the writ of attachment on the ground that
respondent Bank made fraudulent misrepresentation in securing the
writ by deleting the words "R E M" or "Real Estate Mortgage" from
the xerox copy of the promissory note attached to the complaint,
thereby "making it appear that the note was unsecured when in truth
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
and in fact it was fully secured by a series of valid and existing real
estate mortgages duly registered and annotated in the titles of the
affected real properties in favor of the plaintiff Bank.".
managing partner of the Hong Kong branch of said Law Firm; that his
stay in Hong Kong is only temporary; and that he frequently travels
back to the Philippines.
The trial court issued an order lifting the writ of attachment previously
issued.
The RTC issued an order quashing the writ on the ground the the
withdrawal was not intended to defraud PCIB. It also found that the
representatives of PCIB personally transacted with Alenjandro
through his home address in Quezon City and/or his office in Makati
City. It thus concluded that PCIB misrepresented and suppressed the
facts regarding respondent’s residence considering that it has
personal and official knowledge that for purposes of service of
summons, respondent’s residence and office addresses are located
in the Philippines.
ISSUE: W/N the issuance of the writ was proper?
RULING: No. The chief purpose of the remedy of attachment is to
secure a contingent lien on defendant's property until plaintiff can, by
appropriate proceedings, obtain a judgment and have such property
applied to its satisfaction, or to make some provision for unsecured
debts in cases where the means of satisfaction thereof are liable to
be removed beyond the jurisdiction, or improperly disposed of or
concealed, or otherwise placed beyond the reach of creditors.
Section 3 of Rule 57 provides that "an order of attachment shall be
granted only when it is made to appear by the affidavit of the
applicant or some other person who personally knows the facts, that
x x x there is no other sufficient security for the claim sought to be
enforced by the action."
The reason for the rule prohibiting attachment where indebtedness
was already secured is to prevent the secured creditors from
attaching additional property and thus tying up more of the debtor's
property than was necessary to secure the indebtedness.
Thus, to sustain an order of attachment, it is incumbent upon plaintiff
to establish either of these two facts, to wit:
a. that the obligation had not been secured originally, or
b. that, if secured at its beginning, the security later became
valueless.
In the instant case, the allegation in the affidavit of the Bank's Credit
Division Manager, Mrs. Helen Osias, to the effect that "there is no
sufficient security for the claim sought to be enforced by this action"
has been shown to be false. It is undisputed that the note sued upon
"is fully secured by a series of valid and existing real estate
mortgages duly registered and annotated in the titles of the affected
real property in favor of the plaintiff Bank." Thus, the writ is improperly
and irregularly issued.
What made the affidavit false?
The affidavit alleged that there is no other sufficient security for the claim
sought to be enforced by the action when it is secured by a real estate
mortgage.
What happened in the case of PCIB VS. ALEJANDRO?
PCIB VS. ALEJANDRO
533 SCRA 738
FACTS: PCIB filed against Alejandro, a resident of Hongkong, for
sum of money with prayer for the issuance of a writ of preliminary
attachment. In the complaint, Alejandro executed a promissory note
in favor PCIB. As a security for the loan, Alejandro assigned his
deposits and promised not to withdraw such deposit.
In praying for the issuance of a writ of preliminary attachment under
Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court,
PCIB alleged that (1) Alejandro fraudulently withdrew his unassigned
deposits notwithstanding his verbal promise to PCIB Assistant Vice
President Corazon B. Nepomuceno not to withdraw the same prior
to their assignment as security for the loan; and (2) that respondent
is not a resident of the Philippines.
The RTC granted the issuance of the writ.
Alejandro filed a motion to quash the writ contending that the
withdrawal of his unassigned deposits was not fraudulent as it was
approved by PCIB. He also alleged that PCIB knew that he maintains
a permanent residence at Calle Victoria, Ciudad Regina, Batasan
Hills, Quezon City, and an office address in Makati City at the Law
Firm Romulo Mabanta Buenaventura Sayoc & De los Angeles, where
he is a partner. In both addresses, petitioner regularly communicated
with him through its representatives. Alejnadro added that he is the
ISSUE: W/N the issuance of the writ is proper?
RULING: No. The Court finds that the amount withdrawn was not
part of defendant’s peso deposits assigned with the bank to secure
the loan and as proof that the withdrawal was not intended to defraud
plaintiff as creditor is that plaintiff approved and allowed said
withdrawals. It is even noted that when the Court granted the prayer
for attachment it was mainly on the first ground under Section 1(f) of
Rule 57 of the 1997 Rules of Civil Procedure, that defendant resides
out of the Philippines.
Based on the court’s findings, it is obvious that plaintiff already knew
from the beginning the deficiency of its second ground for attachment
[i.e.,] disposing properties with intent to defraud his creditors, and
therefore plaintiff had to resort to this misrepresentation that
defendant was residing out of the Philippines and suppressed the
fact that defendant’s permanent residence is in METRO MANILA
where he could be served with summons.
Finally, there is no merit in petitioner’s contention that respondent
can be considered a resident who is temporarily out of the Philippines
upon whom service of summons may be effected by publication, and
therefore qualifies as among those against whom a writ of
attachment may be issued under Section 1, paragraph (f), Rule 57 of
the Rules of Court.
In actions in personam, such as the instant case for collection of sum
of money, summons must be served by personal or substituted
service, otherwise the court will not acquire jurisdiction over the
defendant. In case the defendant does not reside and is not found in
the Philippines (and hence personal and substituted service cannot
be effected), the remedy of the plaintiff in order for the court to
acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the
defendant. Thus, in order to acquire jurisdiction in actions in
personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the
action into a proceeding in rem or quasi in rem by attaching the
defendant’s property. The service of summons in this case (which
may be by publication coupled with the sending by registered mail of
the copy of the summons and the court order to the last known
address of the defendant), is no longer for the purpose of acquiring
jurisdiction but for compliance with the requirements of due process.
However, where the defendant is a resident who is temporarily out of
the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
In the instant case, it must be stressed that the writ was issued by
the trial court mainly on the representation of petitioner that
respondent is not a resident of the Philippines. Obviously, the trial
court’s issuance of the writ was for the sole purpose of acquiring
jurisdiction to hear and decide the case. Had the allegations in the
complaint disclosed that respondent has a residence in Quezon City
and an office in Makati City, the trial court, if only for the purpose of
acquiring jurisdiction, could have served summons by substituted
service on the said addresses, instead of attaching the property of
the defendant. The rules on the application of a writ of attachment
must be strictly construed in favor of the defendant. For attachment
is harsh, extraordinary, and summary in nature; it is a rigorous
remedy which exposes the debtor to humiliation and annoyance. It
should be resorted to only when necessary and as a last remedy.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Aside from the affidavit, you have to submit a bond. What is the condition
of the bond?
Sec 4. Condition of applicant's bond. — The party applying for the
order must thereafter give a bond executed to the adverse party in
the amount fixed by the court in its order granting the issuance of the
writ, conditioned that the latter will pay all the costs which may be
adjudged to the adverse party and all damages which he may sustain
by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.
In the case of ARELLANO VS. FLOJO, was there a valid bond posted
by the applicant?
No. Instead of a bond, what was executed here was merely an
undertaking in the form of a promissory note.
Is the undertaking sufficient?
No. The Rules of Court requires a bond in the form of cash, property or
surety must be filed together with the affidavit. An undertaking is not a
kind of bond required by law.
What is the effect if the bond posted is not sanctioned by the Rules?
The writ of attachment will not be issued since the Rule requires for an
affidavit and a bond and the requisites for each must be complied with.
Any writ of preliminary attachment issued based on a bond in violation
of the Rules will be considered as improperly issued.
The Rule requires the bond to be in the form of cash, property or surety.
What is the common denominator among these three?
All the three forms of bond allow for an immediate recourse for all the
costs which may be adjudged to the adverse party and all damages
which he may sustain by reason of the wrongful issuance of the
attachment.
All the types of bond present liquidity which means that all of them can
be made to answer immediately for any damages or costs.
Is the liability of the attachment bond be considered waived or dissolved
the moment the defendant posts a counterbond?
No. The attachment bond is not considered waived or dissolved the
moment the defendant posts a counterbond.
An attachment bond is a requisite for the issuance of the writ. On the
other hand, a counterbond is a mode of extinguishing the writ of
attachment. The attachment bond and the counterbond has no
connection with each other.
Equally untenable is the Surety's contention that by filing a
counterbond, private respondents waived any defect or flaw in the
issuance of the attachment writ, for they could have sought, without
need of filing any counterbond, the discharge of the attachment if the
same was improperly or irregularly issued, as provided in Section 13,
Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of the two (2) ways
indicated in the law, i.e., by filing a counterbond or by showing that
the order of attachment was improperly or irregularly issued, the
liability of the surety on the attachment bond subsists because the
final reckoning is when "the Court shall finally adjudge that the
attaching creditor was not entitled" to the issuance of the attachment
writ in the first place.
The attachment debtor cannot be deemed to have waived any defect
in the issuance of the attachment writ by simply availing himself of
one way of discharging the attachment writ, instead of the other.
Moreover, the filing of a counterbond is a speedier way of discharging
the attachment writ maliciously sought out by the attaching creditor
instead of the other way, which, in most instances like in the present
case, would require presentation of evidence in a full-blown trial on
the merits and cannot easily be settled in a pending incident of the
case.
Who is exempt from posting an attachment bond?
The State is exempt from the filing the attachment bond on the theory
that it is always solvent.
What about the theory that the State is immune from liability?
The State may exercise two functions for which his liability may depend
which are as follows:
1.
2.
As to the State’s governmental functions, it cannot be sued
without its consent.
As to the State’s proprietary functions such as when it entered
into a contract with a private individual, it can be sued as it
descends into the level of a private individual.
Implied consent, on the other hand, arises when the State itself
commences litigation, thus opening itself to a counterclaim, or when it
enters into a contract in its proprietary capacity but not in its sovereign
or governmental capacity. In this situation, the government is deemed
to have descended to the level of the other contracting party and to have
divested itself of its sovereign immunity. When the state itself
commences litigation, irrespective of whether or not it is in its proprietary
or non-governmental capacity, it waives its immunity from suit (Republic
v. Sandiganbayan, 204 SCRA 212 [1991]).
What may be attached?
The counterbond has nothing to do with the extinguishment of the
attachment bond as what it seeks to extinguish is the writ of preliminary
attachment. Thus, the liability of the attachment bond for the wrongful
issuance of the writ remains whether a counterbond is filed or not.
Real and personal properties, shares of stocks, debts and credits and
an interest over an estate.
CALDERON VS. IAC
155 SCRA 531
Section 5 provides that the sheriff may attach only so 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 applicant's
demand
RULING: The liability of the attachment bond is defined in Section 4,
Rule 57 of the Rules of Court, as follows:
Sec. 4. Condition of applicant's bond. The party applying
for the order must give a bond executed to the adverse
party in an amount to be fixed by the judge, not exceeding
the applicant's claim, conditioned that the latter will pay all
the costs which may be adjudged to the adverse party and
all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.
It is clear from the above provision that the responsibility of the surety
arises "if the court shall finally adjudge that the plaintiff was not
entitled thereto."
How do you know how much of the property should be attached?
Sec 5. Manner of attaching property. — The sheriff enforcing the
writ shall without delay and with all reasonable diligence attach, to
await judgment and execution in the action, only so 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
applicant's demand, unless the former makes 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 value of the property to be attached,
exclusive of costs. No levy on attachment pursuant to the writ issued
under section 2 hereof shall be enforced unless it is preceded, or
contemporaneously accompanied, by service of summons, together
with a copy of the complaint, the application for attachment the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
applicant's affidavit and bond, and the order and writ of attachment,
on the defendant within the Philippines.
The requirement of prior or contemporaneous service of summons
shall not apply where the summons could not be served personally
or by substituted service despite diligent efforts, or the defendant is
a resident of the Philippines temporarily absent therefrom, or the
defendant is a non-resident of the Philippines, or the action is one in
rem or quasi in rem.
Third, the ease by which a writ of attachment can be obtained is
counter-balanced by the ease by which the same can be discharged:
the defendant can either make a cash deposit or post a counter-bond
equivalent to the value of the property attached. The petitioners
herein tried to have the writ of attachment discharged by posting a
counter-bond, the same was denied by respondent Judge on the
ground that the amount of the counter-bond was less than that of Sun
Life's bond”
In the En Banc case, what was the ruling of the SC?
If you are the defendant and the sheriff is already at your door, how do
you prevent the writ from being implemented?
The Rule provides that the defendant may make a deposit with the court
from which the writ is issued, or give 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 value of the property to be attached, exclusive of
costs.
What is required of the sheriff upon the enforcement of the writ?
The sheiff shall serve summons, together with a copy of the complaint,
the application for attachment the applicant's affidavit and bond, and the
order and writ of attachment, on the defendant within the Philippines.
OÑATE VS. ABROGAR (EN BANC)
241 SCRA 659
RULING: The SC reversed the Division ruling. SC held that there
must be a prior or simultaneous service of summons before the writ
can be enforced.
“The attachment of properties before the service of summons on the
defendant is invalid, even though the court later acquires jurisdiction
over the defendant. At the very least, then, the writ of attachment
must be served simultaneously with the service of summons before
the writ may be enforced. As the properties of the petitioners were
attached by the sheriff before he had served the summons on them,
the levies made must be considered void.
Is there an exception to the requirement of the service of summons?
Yes. The requirement of prior or contemporaneous service of summons
shall not apply where the summons could not be served personally or
by substituted service despite diligent efforts, or the defendant is a
resident of the Philippines temporarily absent therefrom, or the
defendant is a non-resident of the Philippines, or the action is one in rem
or quasi in rem.
In the case of OÑATE VS. ABROGAR (2ND DIVISION), was there a
valid implementation of the writ?
No. The writ was implemented on Jan. 3, 1992. But the summons was
only served to the defendants on Jan. 9, 6 days after the implementation
of the writ.
The attachment of properties before the service of summons on the
defendant is invalid, even though the court later acquires jurisdiction
over the defendant. At the very least, then, the writ of attachment must
be served simultaneously with the service of summons before the writ
may be enforced. As the properties of the petitioners were attached by
the sheriff before he had served the summons on them, the levies made
must be considered void.
How did the Supreme Court 2nd Division ruled in this case?
OÑATE VS. ABROGAR (2ND DIVISION)
230 SCRA 181
RULING: The Supreme Court upheld the validity of the writ based on
substantial compliance ratiocinating that:
Thus, an exception to the established rule on the enforcement of the
writ of attachment can be made where a previous attempt to serve
the summons and the writ of attachment failed due to factors beyond
the control of either the plaintiff or the process server, provided that
such service is effected within a reasonable period thereafter Several
reasons can be given for the exception. First, there is a possibility
that a defendant, having been alerted of plaintiffs action by the
attempted service of summons and the writ of attachment, would put
his properties beyond the reach of the plaintiff while the latter is trying
to serve the summons and the writ anew. By the time the plaintiff may
have caused the service of summons and the writ, there might not be
any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners
six days later. To nullify the notices of garnishment issued prior
thereto would again open the possibility that petitioners would
transfer the garnished monies while Sun Life applied for new notices
of garnishment.
Nor can the attachment of petitioners' properties before the service
of summons on them was made be justified as the ground that unless
the writ was then enforced, petitioners would be alerted and might
dispose of their properties before summons could be served on them.
The Rules of Court do not require that issuance of the writ be kept a
secret until it can be enforced. Otherwise in no case may the service
of summons on the defendant precede the levy on attachment. To
the contrary, Rule 57, § 13 allows the defendant to move to discharge
the attachment even before any attachment is actually levied upon,
thus negating any inference that before its enforcement, the issuance
of the writ must be kept secret.”
Why is it that the SC did not adopt the substantial compliance doctrine
which was used as a justification of the 2nd Division?
OÑATE VS. ABROGAR (EN BANC)
241 SCRA 659
RULING: “To authorize the attachment of property even before
jurisdiction over the person of the defendant is acquired through the
service of summons or his voluntary appearance could lead to abuse.
It is entirely possible that the defendant may not know of the filing of
a case against him and consequently may not be able to take steps
to protect his interests.
Nor may sheriff's failure to abide by the law be excused on the pretext
that after all the court later acquired jurisdiction over petitioners. More
important than the need for insuring success in the enforcement of
the writ is the need for affirming a principle by insisting on that "most
fundamental of all requisites the jurisdiction of the court issuing
attachment over the person of the defendant." It may be that the
same result would follow from requiring that a new writ be served all
over again. The symbolic significance of such an act, however, is that
it would affirm our commitment to the rule of law.”
July 23, 2019 by Mary Caroline Castro
What is the remedy if there is a defect in the implementation of the Writ
of Attachment?
If there is a defect in the implementation of the Writ, the remedy is to
serve anew.
In the case of HB v. Court of Appeals, was there a valid implementation
of the Writ?
There is no valid implementation of the Writ in this case.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
There was no valid implementation of the Writ in this case because the
Writ of attachment was served on a person not authorized by law to
receive summons for and in behalf of the defendant corporation.
Because here, the summons was served thru Ruby Apostol but not to
its designated resident agent Atty. Lucas Nunag whom the summons
and legal processes against the defendant corporation may be served
pursuant to Section 128 of the Corporation Code.
Should the writ here be quashed on the ground that there is an improper
implementation of the Writ?NO. The Writ here should not be quashed.
other person, by filing with the registry 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 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 person or his
agent if found within the province. Where the property has been
brought under the operation of either the Land Registration Act or
the Property Registration Decree, the notice shall contain a
reference to the number of the certificate of title, the volume and
page in the registration book where the certificate is registered, and
the registered owner or owners thereof.
Was it quashed in this case? NO.
Section 6. Sheriff’s return. – After 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 counter-bond given by the party against whom attachment
is issued, and serve copies thereof on the applicant. (6a)
After the Writ has been served, what will the Sheriff do after the
implementation of the Writ of Attachment?
After enforcing the writ, the Sheriff must likewise without delay make
a return thereon to the court from which the Writ issued.
What should be contained in the return?
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 in whose name it stands in
the records. If the attachment is not claimed on the entire area of the
land covered by the certificate of title, a description sufficiently
accurate for the identification of the land or interest to be affected
shall be included in the registration of such attachment;
(b) Personal property capable of manual delivery, by taking and
safely keeping it in his custody, after issuing the corresponding
receipt therefor.
(c) Stocks or shares, or an interest in stocks or shares, of any
corporation or company, by leaving with the president or managing
agent thereof, a copy of the writ, and a notice stating that the stock
or interest of the party against whom the attachment is issued is
attached in pursuance of such writ;
Contents of Sheriff’s return:
1.
2.
3.
A full statement of his proceedings under the Writ;
A complete inventory of the property attached;
Any counter-bond given by the party against whom
attachment is issued.
When should the return be made?
The return must be made without delay within 10 days from receipt of
the Writ.
In the case of BILAG-RIVERA v. LORA, how many days should the
Sheriff made the return?
The Supreme Court held that, as a deputy sheriff, respondent could not
be unaware of Rule 57, Section 6 of the Rules of Court which provides
that:
Immediately after executing the order of the officer must make a
return thereon to the Clerk or Judge of the Court from which the
order issued, with a full statement of his proceeding under the
order and a complete inventory of the property attached,
together with any counter-bond given by the party against whom
attachment is issued, and serve a copy of any such counterbond on the applicant or his lawyer.
xxx xxx xxx
Chapter VIII (e) (4) of the Manual for Clerks of Court similarly states
that:
All Sheriffs and Deputy Sheriffs shall submit a report to the judge
concerned on the action taken on all Writs and processes
assigned to them within (10) days from receipt of said process
or writ. Said report form part of the records.
Section 7. Attachment of real and personal property; recording
thereof. — Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(d) Debts and credits, including bank deposits, financial interest,
royalties, commissions and other personal property not capable of
manual delivery, by leaving with the person owing such debts, or
having in his possession or under his control, such credits or other
personal property, or with his agent, a copy of the writ, and notice
that the debts owing by him to the party against whom attachment is
issued, and the credits and other personal property in his
possession, or under his control, belonging to said party, are
attached in pursuance of such writ;
(e) The interest of the party against whom attachment is issued in
property belonging to the estate of the decedent, whether as heir,
legatee, or devisee, by serving the executor or administrator or other
personal representative of the decedent with a copy of the writ and
notice that said interest is attached. A copy of said writ of attachment
and of said notice shall also be filed in the office of the clerk of the
court in which said estate is being settled and served upon the heir,
legatee or devisee concerned.
If the property sought to be attached is in custodia legis, a copy of
the writ of attachment shall be filed with the proper court or quasijudicial agency, and notice of the attachment served upon the
custodian of such property. (7a)
How should real properties be attached?
Section 7 (a) provides: 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 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 records of the registry of deeds in the name of any
other person:
1.
2.
3.
4.
5.
(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 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 records of the registry of deeds in the name of any
6.
by filing with the registry 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
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
person or his agent if found within the province.
Where the property has been brought under the operation of
either the Land Registration Act or the Property Registration
Decree, the notice shall contain a reference to the number of
the certificate of title, the volume and page in the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
7.
8.
registration book where the certificate is registered, and the
registered owner or owners thereof.
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 in whose name it
stands in the records.
If the attachment is not claimed on the entire area of the land
covered by the certificate of title, a description sufficiently
accurate for the identification of the land or interest to be
affected shall be included in the registration of such
attachment.
Can you attach real property that is not registered with the registry of
deeds? YES.
Can you attach real property that is not in the name of the defendant?
NO. Real property cannot be attached if it is not in the name of the
defendant.
If the real property is not registered, how would you attach it? If the land
is unregistered, how would you attach it?
If the property is a registered land, the Sheriff must go first to the register
of deeds.
However, if the land is unregistered, the Sheriff must go to the
unregistered land and leave a copy of the order with the description of
the notice to the occupant of the subject property.
NO. The notice contains that it is an unregistered land where in fact it is
already covered by a certificate of title.
Here, the notice of levy made by the Sheriff as regards parcel number 1
which is registered land contains NO REFERENCE to the number of its
certificate of title and the volume and page in the registry book where
the title is registered, it follows that the said notice is legally ineffective
and as such did not have the effect of binding the property for purposes
of execution.
Consequently, the sale carried out by virtue of said levy is also invalid
and of no legal effect.
Supposing that the notice of levy only contains the reference to the
certificate number without indicating the volume and the page in the
registry book, is that valid?
YES. According to the Supreme Court, there was SUBSTANTIAL
COMPLIANCE. There was substantial compliance because the
reference number of the certificate of title together with the notice and
the description of the property is already sufficient to inform the debtor
and as well as the third person that the property is under the custody of
the court.
Also, in the case of RAVANERA v. IMPERIAL
RAVANERA v. IMPERIAL
93 SCRA 589
What do you need to submit before the Registry of Deeds?
Need to be submitted before the ROD
1.
2.
3.
4.
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
standing in the name of such other person are attached.
Is there a difference between levy on registered and unregistered lands?
YES.
REGISTERED LAND
The Sheriff must go first to the
Registry of Deeds.
The notice shall contain a
reference to the number of the
certificate of title, the volume and
page in the registration book
where
the
certificate
is
registered, and the registered
owner or owners thereof.
The notice of levy will be
annotated at the back of the title.
UNREGISTERED LAND
The Sheriff must go to the
unregistered land and leave a
copy of the order with the
description of the notice to the
occupant of the subject property.
Held: The Supreme Court said that, from the records of the case, the
notice of levy made by the Sheriff as regards the registered land,
contains reference to the number of its certificate of title but not to
the volume and page in the registry book where the title is registered.
Nevertheless, from what was stated in the case of Siari Valley Estate
vs. Lucasan, supra, it would seem that the purpose of the
requirement of Section 7(a), Rule 39 of the Revised Rules of Court
is substantially complied with. This is more so where as in this case,
there appears in the notice of levy the following certification:
It is hereby certified that this instrument has
been duly registered proper memorandum
hereof made on transfer Certificate of Title No.
257 & 258 and on its owner's duplicate Reg.
Book No. 3; File No. 1-248.
Naga City, Sept. 29, 1969.
Supreme Court said, Reference to the number of the certificate of
title of every registered land in the notice of levy, together with the
technical description thereof, would certainly suffice to inform the
debtor, as well as third persons what particular land or property is
brought to the custody of the court, as is the purpose of the aforecited
provision of the Rules of Court.
The notice of levy will be
annotated by recording it in the
books.
What is the nature of the requirement that you should state the number
of the certificate of title, the volume and the page in the registration
book?
Incidentally, no third person appears, to be interested in the matter
now before this Court. From the fact that respondent Imperial was
able to exercise his right of redemption with reference to three
registered parcels of land, it can be easily deduced that insofar as
respondent Imperial is concerned, the purpose of the requirement of
reference having to be made to the number of the certificate of title,
and also the volume and page in the registration book where the
certificate is registered, has been fully served or attained.
The nature is MANDATORY.
What is the effect if there is no notice upon the occupant of the property?
Why is this necessary? What is the reason for this requirement?
It is necessary for NOTIFICATION purposes. The evident purpose of the
law in imposing these requirements is to make the levy public and
notorious, to prevent liens from attaching secretly and by surreptitious
entries and endorsements, and to enable the affected party to inquire
into the date and circumstances surrounding the creation of the
encumbrance, as well as to give him ample opportunity to file timely
claims to the property levied upon.
In the case or SIARE VALLEY ESTATES, INC. v. LUCASAN, was there
a valid levy of a registered property?
The Levy would not be valid if there was no notice to the occupant of the
property.
You have made the registration in the registry of deeds. You made a
proper levy. You made a recording in the registry books. But there is no
notice on actual occupant. Why would that invalidate the levy? What is
the reason?
Isn’t it that registration in the registry of deeds constitutes constructive
notice? Why you need to serve notice to the actual occupant? What is
the reason?
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Which would prevail, the annotated Writ of attachment or a subsequent
of a notice of lis pendens?
What happens now if there was no notice to the occupant? In the case
of Obana v. Court of Appeals what happened here?
The duly registered/annotated writ of attachment should prevail. The
reason is stated in the case of DU v. STRONGHOLD.
OBANA v. COURT OF APPEALS
172 SCRA 866
DU v. STRONGHOLD INSURANCE CO., INC
433 SCRA 43
Which is given more preference -- a duly registered attachment
or a subsequent notice of lispendens?
Held: The duly registered attachment. The preference given to a duly
registered levy on attachment or execution over a prior unregistered
sale is well-settled in our jurisdiction. An attachment that is duly
annotated on a certificate of title is superior to the right of a prior but
unregistered buyer.
The subsequent sale of the property to the attaching creditor must,
of necessity, retroact to the date of the levy. Otherwise, the
preference created by the levy would be meaningless and illusory.
The doctrine is well-settled that a levy on execution duly registered
takes preference over a prior unregistered sale; and that even if the
prior sale is subsequently registered before the sale in execution but
after the levy was duly made, the validity of the execution sale should
be maintained, because it retroacts to the date of the levy; otherwise,
the preference created by the levy would be meaningless and
illusory.
The act of registration shall be the operative act to convey or
affect the land insofar as third persons are concerned, and in all
cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or the city where
the land lies.
What is the effect if the writ is annotated in the title?
When the Sheriff attaches real property by registering it in the registry of
deeds, that would be already annotated in the title if that was registered.
And it would be the date of the annotation which would be the effectivity
date when that particular property was later on sold on an execution sale
by virtue of a favorable judgment under the same case.
So, it is not the actual execution sale that would be the reckoning point
but it is actually the registration of the Writ of Attachment. That is
important because in cases of double transactions, or multiple
registration of a deeds of the same property you would have to reckon
the date of execution sale to the date of registration of the Writ of
Attachment. Then will know who has priority in time. Because if it is a
registered land, whoever registers first the property will have a superior
right. So, you have to look at the dates. If you have a prior date then you
have a superior right to the res. So, it matters.
That is why in attaching real property, the sheriff only goes to the registry
of deeds, furnishes it with the copy of the order and registers the notice
of levy with the description of the property including the interest standing
thereon that are levied on attachment. And the registry of deeds will
register that in the books. If it is registered properly, the sheriff must
include and indicate title number, the volume and the page number
references of the title.
If you put there only the title number, the is substantial compliance. Even
if you do not include the page and the volume number. But if you do not
state any of those including the title number, then the levy is void.
But if it is an unregistered land, no need to indicate the title number
obviously because there is no title to speak of. So just the recording of
the order as well as the notice of levy containing the description of the
property.
In both instances, you have to serve a copy of notice of levy as well as
a copy to the occupant of the property. There has to be actual notice to
the occupant.
If the property has no occupant, leave copy on the premises. That is how
attachment on the property is effected validly by the Sheriff.
Main action: An action for sum of money.
Here, Atty. Suntay filed a complaint for sum of money against Liberty
Dizon and her minor children in an effort to collect an attorney’s fee
in a guardianship he handled for them. The Court ordered the
payment of P5000 in favor or Atty. Suntay. However, Dizon failed to
comply with the said order, which prompted Atty. Suntay to file a
complaint with sum of money (1972) before the CFI of Bulacan and
moved for the issuance of the order of Writ of Attachment upon
certain parcels of land owned by Dizon.
The Sheriff failed to serve the summons for the reason that Mrs Dizon
and her wards no longer resided at the last known address, and their
present address cannot be ascertained. Thus, appellant in the said
case filed a Motion for Service of Summons by Publication. Which
was granted by the Court.
Meanwhile, pursuant to a Deed of Absolute Sale dated May 16, 1973
executed between Dizon and Obana, a new certificate of title was
issued to Obana. Which atty. Suntay seeks to cancel.
The Supreme Court Held:
Section 7 of Rule 57 requires that in attaching real property a copy of
the order, description, and notice must be served on the occupant. In
this case the occupant at 48 Damortiz Street, Damar Village, Quezon
City. The trial court in the annulment case ruled that the attachment
was void from the beginning. The action in personam which required
personal service was never converted into an action in rem where
service by publication would have been valid.
The Court of Appeals reversed the trial court principally on the ground
that Leonora Obaña was neither a defendant nor a party-in-interest
in the collection case. It ignored the fact that property already sold to
her was attached and then bedded out to Atty. Suntay without any
notice to her. And because the notice of lis pendens in the collection
case was secured ex-parte without the defendant Dizon and
petitioner Obaña who were never brought to court, having any inkling
about it, the notice was not annotated on the owner's duplicate copy
of Transfer Certificate of Title No. 173792.
There was attachment made. After that by virtue of the default judgment,
execution was made on the same property. But for the main time, the
property was sold to Obana. And a new title was issued to Obana. But
it contains of the annotation of the attachment.
The question now is: was the execution sale, valid? To whom the
property should go? To Suntay or to Obana?
Here, the Supreme Court held, the the property should go to Obana and
not to Suntay. Because, in this case, there was no valid notice of levy as
there was no notice to the occupant. There was no proper notice given
to Obana as the occupant of the property subject of the attachment.
There was two notice of levy made here. One for attachment and one
for execution. The same procedure should be done twice. Because the
same procedure for attaching a real property should be followed when
you execute the property on a sale pursuant to favorable judgment.
Dapat twice mo yan I comply. In a notice of levy in a Writ of Attachment,
serve a copy containing the description of the property with references
of the certificate of title as well as the volume and the page number of
the title. Then you serve a notice to the occupant. That’s it. You have
levied it on attachment.
Pag nag execution kana, the same procedure na naman. You go the
Registry of Deeds. Furnish a copy of the order. Give a copy of notice of
levy containing the description of the property, together with the
references of the title and the page number and the volume number.
And then serve a copy of the notice on the occupant.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What was missing here is the notice on the property and the occupant.
Which at that time was already Obana. ‘Yon lang ang mali dito. Walang
notice on the occupant. According to the Supreme Court, the Levy is
void. So, the sale is void. The Execution made on the property is void.
That is following the literal requirements of section 7 (a).
But if you look at it closely, there is a deeper reason why the Supreme
Court very strict with these requirements. It is because of inequity. It is
because of equity considerations. The one suing here is a lawyer against
the client for unpaid legal fees. And it happens sometime in 1970’s.
Malaking pera na ‘yong 10,000. Ang nakita dito nang Supreme Court is
the greed of the lawyer. That is why nahanapan nila nang butas at ni
nullify ang execution sale in his favor dito sa notice requirement nito.
The moral lesson here, if you are a lawyer, do not be greedy. Because
the Supreme Court will never favor you.
Because when you look at it, when binenta ‘yong property kay Obana,
na carry over ‘yong annotation nang attachment, so, she is aware of the
attachment. Because constructive notice sa kanya. But ano ang ruling
nang Supreme Court, di naman naka indicate sa duplicate original. But
if you look at the registry law, that will not hold because what is
controlling is what is recorded in the Registry of Deeds. The Supreme
Court made that flimsy excuse. In a way, desperado na din ang Supreme
Court para matulungan ‘yong pobreng kliyente na iniisahan nang lawyer.
What comes to mind is the Supreme Court trying to help the client nang
lawyer na pinagbabayad niya.
Supposing that the property that was attached was previously sold?
(Although the sale was not registered). What should prevail, the
unregistered sale or the attachment of the property?
The duly registered Writ of Attachment of the property should prevail. As
held in the case of Valdevieso v. Damalerio.
VALDEVIESO vs. DAMALERIO
G.R. No. 133303. February 17, 2005
The Supreme Court held:
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so
because an attachment is a proceeding in rem. It is against the
particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property
which nothing can subsequently destroy except the very dissolution
of the attachment or levy itself. Such a proceeding, in effect, means
that the property attached is an indebted thing and a virtual
condemnation of it to pay the owner's debt. The lien continues until
the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment
discharged or vacated in some manner provided by law.
If it is unregistered, again, the principle of priority in time in the
registration. If it is unregistered it is good as if the third person is not
aware of it. It is just between the two persons or between the parties. If
the attachment is registered first, that would prevail.
Is there an exception to the rule that the prior registered sale cannot
prevail over registered Writ of Attachment?
Yes, there is an exception to the rule. As held in the case of Rural Bank
of Sta. Barbara v. Manila Mission. The exception is when the party has
the knowledge of the prior unregistered sale.
In sum, our decision in Ruiz v. CA and Valdevieso v. Damalerio
oblige us to rule that the duly registered levy on attachment by
petitioner Rural Bank takes preference over the prior but then
unregistered sale of respondent Manila Mission. There was no
evidence of knowledge on the part of petitioner Rural Bank of any
third-party interest in the subject property at the time of the
attachment. We are, therefore, constrained to grant the instant
Petition for Review and nullify the Orders of the RTC discharging the
subject property from attachment.
The only thing that can defeat the registration of the Writ of Attachment
vis-à-vis unregistered sale is when there was ACTUAL KNOWLEDGE.
Because actual knowledge is considered to be equivalent to registration.
How do you attach personal property capable of manual delivery?
Section 7. Attachment of real and personal property; recording
thereof. — Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(b) Personal property capable of manual delivery, by taking and
safely keeping it in his custody, after issuing the corresponding
receipt therefor.
So, the sheriff can just go and get the property?
At this time, the Sheriff already implements the Writ. And in doing so, he
must serve the order of attachment, Writ of Attachment, the copy of the
bond, and if there is yet no summons, serve (it) the copy of the summons
together with the copy of the complaint.
Hindi lang sya basta papasok sa bahay mo at kukunin kung anong mga
properties na mayroon doon. Dapat kompleto ang mga documents n’ya
the moment he implements that Writ. If there is no summons yet
(kasama dapat pati ang complaint) together with that there must be a
notice of levy.
The complaint, the summons all of these emanate from the court.
Summons must be actually signs by the Clerk of Court and the Order
granting the attachment signed by the judge, then you have the Writ of
Attachment that is also signed by the Clerk of Court, then the bond
issued by the surety/sureties or if it is a Cash Bond a receipt from the
Office of the Clerk of Court. All of these must be complete and serve on
the defendant the moment he implements the Writ.
He cannot just go and get your property without a notice of levy.
kailangan may notice of levy din s’ya to notify you I implement na n’ya
‘yong Writ of Attachment.
If it is a personal property capable of manual delivery then he will take
hold of it.
What will he do with the property?
The Sheriff will safely keep the property in his custody (Sec. 7 b). If there
is final judgment, the Sheriff will deliver the property to the prevailing
party.
Can the Sheriff instead of getting hold of the property simply made a
declaration that he has already levied the property on the personal
property capable of manual delivery? Will that be a valid levy?
No. That would be an invalid levy.
If there is knowledge by the buyer of the attachment creditor of the
unregistered sale and that would be tantamount to registration therefore
the prior unregistered sale will prevail over the levy on attachment.
If the Sheriff instead of taking the property makes a verbal declaration
and leads the property where it is, is there a valid levy?
RURAL BANK OF STA. BARBARA v. MANILA MISSION
August 19, 2009
No. There is no valid levy. In the case of WALKER V. MCMICKING the
SC said, a mere verbal declaration of seizure or service of writ is
insufficient.
The Supreme Court held:
In Ruiz, the very case cited by petitioner, we made a qualification of
the general rule that a duly annotated attachment is superior to an
unregistered prior sale, because knowledge of the unregistered sale
by the attaching creditor is deemed equivalent to registration.
There must be actual assumption of control. This is not saying that a
defendant may not be custodian; but the possession and responsibility
must be the sheriff's and not the defendants. If as stated in defendant's
brief, such an arrangement is an everyday occurrence in attachment
levies, here the vice of it can too soon be declared.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
WALKER vs. MCMICKING
G.R. No. L-5534 December 23, 1909
No. Instead the Supreme Court held that the Sheriff may deposit the said
property to a bonded warehouse.
The Supreme Court held:
Who will pay the bonded warehouse?
To constitute a valid levy of an attachment, the officer levying it must
take actual possession of the property attached as far as under the
circumstances is practicable. He must put himself in position to, and
must assert and, in fact, enforce a dominion over the property
adverse to and exclusive of the attachment debtor, and such property
must be in substantial presence and possession. Of course, this does
not mean that the attaching officer may not, under an arrangement
satisfactory to himself, put anyone in possession of the property for
the purpose of guarding it, but he cannot in this way relieve himself
from liability to the parties interested in said attachment.
The court can necessarily direct the attaching creditor to post the fee in
keeping the property in a bonded warehouse. That can be part of the
cost of litigation that can be charged with the party which will prevail.
What is the important here to be remember when the property to be
levied is a personal property capable of manual delivery?
The important things to remember when the property to be levied is a
personal property capable of manual delivery, are:
1.
2.
There must be taking made by the Sheriff; and
The said property must be safely kept by the Sheriff in his
custody.
What if the defendant will request that the property will be left with him
instead of being taken by the Sheriff? And in return there will be this
undertaking made by the defendant that he will just produce the property
whenever it is needed. Is that allowed?
No. As held in the case of NBI v. Tuliao, that is not allowed.
NBI vs. TULIAO
A.M. No. P-96-1184. March 24, 1997
Leaving the attached property in the possession of the attaching
creditor makes a farce of the attachment. This is not compliance with
the issuing courts order. When a writ is placed in the hands of a
sheriff, it is his duty, in the absence of any instructions to the contrary,
to proceed with reasonable celerity and promptness to execute it
according to its mandate. He is supposed to execute the order of the
court strictly to the letter. If he fails to comply, he is liable to the person
in whose favor the process or writ runs.
By acceding to the request of Ignacio, respondent sheriff actually
extended an undue favor which prejudiced the complainant as well
as the orderly administration of justice. He exceeded his powers
which were limited to the faithful execution of the courts orders and
service of its processes. His prerogatives did not give him any
discretion to determine who among the parties was entitled to
possession of the attached property.
If the Sheriff takes hold of the property, can he deliver it to the applicant?
No. The sheriff will not immediately deliver the property to the applicant
as held in the case of Sebastian v. Valino.
SEBASTIAN vs. VALINO
A.M. No. P-91-549 July 5, 1993
Under the Revised Rules of Court, the property seized under a writ
of replevin is not to be delivered immediately to the plaintiff. The
sheriff must retain it in his custody for five days and shall return it to
the defendant, If the latter, as in the case, requires its return and files
a counterbond (Sec. 4, Rule 60, Revised Rules of Court). In violation
of said Rule, respondent immediately turned over the seized articles
to PDCP. His claim that the Office of the Regional Sheriff did not have
a place to store the seized items, cannot justify his violation of the
Rule. As aptly noted by the Investigating Judge, the articles could
have been deposited in a bonded warehouse
Supposing the Sheriff has no choice because there is no storage space
and it is going to seize a jeepney a vehicle, where he will put it? Can he
not turn over it to the applicant so that he cannot be held responsible for
the safety of the property?
What if the property cannot be hold of physically, what will the sheriff
do? Like in the case of a vessel? Do you mean to tell me that the sheriff
will bring the vessel to court? Or put it inside a bonded warehouse?
In such situation, the Supreme Court held in the case of Roque v. Court
of Appeals that the registration of the notice of levy is sufficient to
constitute constructive possession over the property.
ROQUE vs. COURT OF APPEALS
G.R. No. L-42594 October 18, 1979
The Supreme Court held:
As a general rule, however, a levy of an attachment upon personal
property may be either actual or constructive. In this case, levy had
been constructively made by the registration of the same with the
Philippine Coast Guard on February 7, 1974. Constructive
possession should be held sufficient where actual possession is not
feasible, particularly when it was followed up by the actual seizure of
the property as soon as that could possibly be effected.
In cases of vessels, it can be through constructive levy. It that be
actual/physical levy. Mere constructive levy will suffice and that is by
registering the notice of levy. That is an exception to the rule if that is
personal property capable of manual delivery. Otherwise, the Sheriff will
get hold of it. He will have physical possession of it.
The idea there is for the Sheriff to exert control over the property. That
is why he will take it to his possession. That is why he cannot leave it in
the possession of the defendant or turning over to the possession of the
plaintiff. Because by then, he could no longer control over the property.
Siya (Sheriff) dapat ang may control at pag nawala ‘yan or na damage
‘yan s’ya rin ang mananagot. The liability is on him. If you really need a
storage space for the properties he has levied on, that is the time that
he can ask for a bonded warehouse. And since the attachment of the
property is for the account or for the benefit of the applicant, then it would
be on the applicant now who will bear the expenses for such bonded
warehouse.
But the important thing is for the Sheriff to have control over the attached
property and nobody else. Only then that you can say that that property
is under custodia legis. If it is left to the possession of the defendant or
turned over to the possession of the plaintiff, hindi s’ya under custodia
legis. Because the reason of control being exerted by the sheriff. That is
the crucial thing to remember when the property to be attached is a
personal property capable of manual delivery. And that is decided cases
want to tell you, whether the property is a typewriter or a machinery, a
jeepney.
The common denominator there is the Sheriff must have possession and
control over these properties after there is a levy. Otherwise, there is no
proper levy. magkakaroon nang question on the validity of levy. And ang
kakambal n’yan would be an administrative case on the part of the
Sheriff. Like what happen in the case of Hao (not under sec. 7).
In the said case, Sheriff Andres was suspended for 18 months. Pagbalik
n’ya sinuntok s’ya ni Mayor Inday Sara. S’ya yong nag implement nag
demolition sa Agdao, mainit ang ulo ni Inday Sara, sinuntok s’ya. That’s
him. Ang ending n’ya transfer s’ya somewhere else. Because his life is
supposedly in danger.
There, he was suspended because he turned over the vehicle that he
seized by virtue of the Writ of Attachment to the possession of the
plaintiff at hindi na nya ma account saan na yong mga vehicles na yon
after he turned over, so, na suspend sya. It will not only lead to the
question as to the validity of the levy, it will also give rise to administrative
liability on the part of the Sheriff.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
HAO vs. ANDRES
A.M. No. P-07-2384 June 18, 2008
SUMMIT TRADING vs. AVENDANO
G.R. No. L-60038 March 18, 1985
Sheriff turned over the seized articles to plaintiff without waiting
for the 5-day period to lapse.
May the copy of the writ be served on the secretary of the
president of the corporation?
Held: First, the rules provide that property seized under a writ of
replevin is not to be delivered immediately to the plaintiff. In
accordance with the said rules, Andres should have waited no less
than five days in order to give the complainant an opportunity to
object to the sufficiency of the bond or of the surety or sureties
thereon, or require the return of the seized motor vehicles by filing a
counter-bond. This, he failed to do.
Held: Yes. Saquilayan, being the secretary of the president (whose
contact with the outside world is normally through his secretary), may
be regarded as an "agent". The logical assumption is that she
delivered it to her boss, the president of Summit Trading. As already
stated, she received a copy of the decision and Summit Trading
became aware of it.
Records show that Andres took possession of two of the subject
motor vehicles on October 17, 2005, four on October 18, 2005, and
another three on October 19, 2005. Simultaneously, as evidenced
by the depository receipts, on October 18, 2005, Silver received from
Andres six of the seized motor vehicles, and three more motor
vehicles on October 19, 2005.
Consequently, there is no question that Silver was already in
possession of the nine seized vehicles immediately after seizure, or
no more than three days after the taking of the vehicles. Thus,
Andres committed a clear violation of Section 6, Rule 60 of the Rules
of Court with regard to the proper disposal of the property.
It matters not that Silver was in possession of the seized vehicles
merely for safekeeping as stated in the depository receipts. The rule
is clear that the property seized should not be immediately delivered
to the plaintiff, and the sheriff must retain custody of the seized
property for at least five days. Hence, the act of Andres in delivering
the seized vehicles immediately after seizure to Silver for whatever
purpose, without observing the five-day requirement finds no legal
justification.
Likewise, Andres’ claim that he had no knowledge that the compound
is owned by Silver fails to convince us. Regardless of who actually
owns the compound, the fact remains that Andres delivered the
vehicles to Silver prematurely. It violates the rule requiring him to
safekeep the vehicles in his custody. The alleged lack of facility to
store the seized vehicles is unacceptable considering that he should
have deposited the same in a bonded warehouse. If this was not
feasible, he should have sought prior authorization from the court
issuing the writ before delivering the vehicles to Silver.
Second, it must be stressed that from the moment an order of
delivery in replevin is executed by taking possession of the property
specified therein, such property is in custodia legis. As legal
custodian, it is Andres’ duty to safekeep the seized motor vehicles.
Hence, when he passed his duty to safeguard the motor vehicles to
Silver, he committed a clear neglect of duty.
If the property is a personal property that is incapable of manual delivery,
like shares of stocks (incorporeal rights), how do you attach this
property?
Section 7. Attachment of real and personal property; recording
thereof. — Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(c) Stocks or shares, or an interest in stocks or shares, of any
corporation or company, by leaving with the president or managing
agent thereof, a copy of the writ, and a notice stating that the stock
or interest of the party against whom the attachment is issued is
attached in pursuance of such writ;
Who are the persons who should be given copies of the Writ as well as
copies of levy?
1. president or
2. managing agent thereof
How about if you served it to the personal secretary of the
president, would that be suffice?
Yes. As held in the case of Summit Trading v. Avendano and Chemphil
v. CA
CHEMPHIL vs. CA
G.R. No. Nos. 112438-39 December 12, 1995
On the validity of service of writ to secretary
A secretary's major function is to assist his or her superior. He/she is
in effect an extension of the latter. Obviously, as such, one of her
duties is to receive letters and notices for and in behalf of her
superior, as in the case at bench. The notice of garnishment was
addressed to and was actually received by Chemphil's president
through his secretary who formally received it for him. Thus, in one
case, we ruled that the secretary of the president may be considered
an "agent" of the corporation and held that service of summons on
him is binding on the corporation.
Here, you must to be distinguished if there is already prior service of
summons or none. If there was, then there is no problem. The service
of the Writ and the notice of levy to the personal secretary will be valid.
Because that is separate to the service of summons.
But if you are serving it with the summons, doon ka magkaka problema.
Like what happened in the case of HB Zachary. Mali ‘yong taong na
serve nang summons. So, there was an improper implementation of the
Writ.
But here, supposing there is no summons involved, only the Writ and
the notice of levy—No problem.
But if you have to serve summons as well, kasi wala pang prior service
of summons, then service to the personal secretary of the president will
not suffice. Has to be the president of the corporation. That presuppose
that the defendant is a corporation. If the defendant is a corporation, sino
ang I serve mo nang summons?
In case of Corporation, Rule 14, Section 11 of the Rules of Court
provides, the service of summons may be made on the:
1. president,
2. managing partner,
3. general manager,
4. corporate secretary,
5. treasurer, or
6. in-house counsel.
If the corporation itself is the defendant and you want to levy on his
shares of stocks, dapat ma serve ‘yong mga officers enumerated (any
of those). But if you are levying on the shares of stock of the individual
in a corporation, then obviously, yong service of summons mo must be
done on the individual. At ang notice of levy mo, doon sa corporation
mo.
Service of notice of levy on the Secretary of the President is valid. It
would suffice because wala s’yang kinalaman sa service of summons.
Hindi naman ang corporation and defendant. Kung stockholder ‘yan, the
individual, there would be a separate service of summons on the
individual and its shareholding that is being subject of the Writ of
Attachment. You have to make a distinction of – who are the parties.
Whose properties are being levied.
When you levy and attach shares of stocks, is there a need for this notice
of levy to be registered or recorded in the Books of the Corporation?
No need to register or record it in the Books of Corporation. Because the
registration requirement only applies when there is transfer of
ownership. Here, not yet because it is just a levy. But pretty soon when
there is an execution, it will retroact to the date of levy.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What is the reason why the notice of levy to the personal secretary of
the president of the corporation will suffice?
The reason is that the secretary’s job is to receive communication for
the president. The secretary is privy to all communications for the
president and it is presumed that she brings to the attention of the
president. That is the job of the secretary.
In the CHEMPHIL vs. CA the Supreme Court held: A secretary's major
function is to assist his or her superior. He/she is in effect an extension
of the latter. Obviously, as such, one of her duties is to receive letters
and notices for and in behalf of her superior, as in the case at bench.
In so far as notice of levy is concern, it is not rigid as service of summons
to the corporation. There is specific kung sino ‘yong tatanggap.
Here, even if the personal secretary not even the corporate secretary
can validly serve the notice of levy.
How do you attach debts and credits, including bank deposits, financial
interest, royalties, commissions and other personal or incorporeal
property?
Section 7. Attachment of real and personal property; recording
thereof. — Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(d) Debts and credits, including bank deposits, financial interest,
royalties, commissions, and other personal property not capable of
manual delivery, by leaving with the person owing such debts, or
having in his possession or under his control, such credits or other
personal property, or with his agent, a copy of the writ, and notice
that the debts owing by him to the party against whom attachment is
issued, and the credits and other personal property in his
possession, or under his control, belonging to said party, are
attached in pursuance of such writ;
This is a different kind of property we are looking at. Actually, dapat
kasama din dito ang shares of stocks, kaya lang there is a different
treatment sa shares of stocks. Kasi may specific persons na dapat i-se
serve. But this one is more general. You have debts and credits,
including bank deposits, financial interest, royalties, xxx these are
properties incapable of manual delivery. Di mo kayang I physical seizure
ang property. There is now a different treatment how will you attach.
When you say debt, what is included?
Debts here includes due and demandable debts.
When you are going to attach debts and credits, who will be serve notice
of levy? The GARNISHEE.
What type of attachment is involved here?
GARNISHMENT. This is where you apply the rules on garnishment.
When you say garnishments— this always involves these kinds of
properties.
In TAYABAS v. SHARRUF, what is the property levied here?
Attachment was made on the judgment debt of Tayabas in favor of
Farre. It is a judgment debt.
How did the Sheriff levy on that judgment debt?
In pursuance of the levy thus effected upon the judgment in favor of
Salomon M. Sharruf against the Tayabas Land Company, the sheriff of
the city of Manila, as in ordinary cases of levy upon chattels or real
property, proceeded upon April 15, 1916, to expose to sale all right,
title, and interest of said Sharruf in the judgment aforesaid. At this
sale Salvador Farre, the execution creditor himself, became the
purchaser of the judgment in question for the sum of P200; but the
Tayabas Land Company, with a legitimate view to its own protection,
afterwards stepped in, and acting through Mr. Francisco Alvarez, as
attorney and intermediary, purchased from Farre, on October 6, 1917,
the judgment of Salomon M. Sharruf against itself, paying to Farre the
full amount due him, to wit, the sum of P1,588.24.
Was that proper?
No. Supreme Court held: A judgment for a sum of money is, as to the
party entitled to payment, a credit; and as to the party who ought to pay
the money a debt; and although it constitutes property in the sense
necessary to make it liable to be taken for the payment of the judgment
obtained in another action, nevertheless, being property which is
incapable of manual delivery, it cannot be sold by the sheriff at public
auction under section 457 of the Code of Civil Procedure.
While a judgment cannot be sold upon execution, it may be "attached
upon execution in like manner as upon writs of attachment" (sec. 450,
Code of Civ. Proc.) , that is it must be reached by process of garnishment
in the same way that debts and credits are attached under section 431
of the Code of Civil Procedure.
In other words, the proper remedy here is to subject the property under
garnishment.
What is garnishment?
The proceeding by garnishment is a species of attachment for reaching
credits belonging to the judgment debtor and owing to him from a
stranger to the litigation. By means of the citation the stranger becomes
a forced intervenor; and the court, having acquired jurisdiction over him
by means of the citation, requires him to pay his debt, not to his former
creditor, but to the new creditor, who is creditor in the main litigation. It
is merely a case of involuntary novation by the substitution of one
creditor for another.
In a garnishment, what is necessary is merely to notify the garnishee of
the act of garnishment. The notice of levy shall be given to the
garnishee. The one who holds the credit.
If you are the debtor and hold an amount to the defendant against whom
the Writ of Attachment was issued, then the Sheriff will simply serve you
a notice of levy, telling you that the money owing to the defendant should
not be paid to the defendant rather it should be paid or it should be
garnished. Hindi sya muna ibabayad sa defendant. To be garnished and
to await for the outcome of the case.
What do you think when the property is garnished, does it mean that
there must be actual delivery to the court? No.
What happen to the property subject to the garnishment?
This is common in banks. Like bank deposits. Anong mangyayari sa
Bank Deposit? Will the sheriff withdraw it and deposit it in court?
The property subject of the garnishment will have to be preserved and
withheld by the garnishee, until the Writ of Order to pay it. Pag na attach
yan, like in a bank deposit maging frozen delight yan. The account owner
cannot touch it. Cannot withdraw money from it. Frozen yong account
nya.
If nagkaroon nang judgment and there will an execution and there will
be notice of levy of the execution, then— there will be payment of that
amount to the judgment creditor.
If may natira pwede nyang I withdraw. If wala at kulang pa, wala syang
makukuha. The bank will hold it and freeze that account until further
orders of the court. Because that money once garnished it is deemed
under Custodia Legis.
It applies to all kinds of debts even hindi bank deposits. Kahit lending
institution. Whoever holds debt in favor of attachment debtor—pwede
syang bigyan nang notice of levy/attachment. And he will have to hold
the payment of such amount until further orders of the court or until the
outcome of the case.
Kung mananalo si attaching creditor, sa kanya nya ito ibabayad. Hindi
doon sa inutangan nya. Hindi doon sa attaching debtor. That is the
principle of attachment/garnishment.
In a garnishment, what kind of a relationship would arise here? Was it
discuss in Tayabas?
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
In the case of Tayabas, the judgment debt was treated like it was a
property capable of manual delivery while it was auctioned. It was
auction at the execution sale. The Supreme Court said, that was wrong.
That was improper. That is not how you treat debts, credits or other
incorporeal rights or properties incapable of manual delivery. That will
apply sa auction sale ngayon sa real property or personal property
capable of manual delivery. And not these kinds of properties. The
proper way of attaching here is by way of garnishment.
How do you attach the share of an heir in the estate that is still being
settled in court?
Section 7. Attachment of real and personal property; recording
thereof. — Real and personal property shall be attached by the
sheriff executing the writ in the following manner:
(e) The interest of the party whom attachment is issued in property
belonging to the estate of the decedent, whether as heir, legatee, or
devisee, by serving the executor or administrator or other personal
representative of the decedent with a copy of the writ and notice that
said interest is attached. A copy of said writ of attachment and of said
notice shall also be filed in the office of the clerk of the court in which
said estate is being settled and served upon the heir, legatee or
devisee concerned.
If the property sought to be attached is in Custodia Legis, a copy of
the writ of attachment shall be filed with the proper court or quasijudicial agency and notice of the attachment served upon the
custodian of such property.
Here, it is another type of property that may be subject of attachment.
That is your hereditary share in an Estate. And what is peculiar about it
is that there is not yet division, partition or distribution of property of the
Estate. It is still under settlement proceeding in court. In that scenario,
the Sheriff will only go to the executor, administrator and serve the notice
of levy on the share of the heirs or any of the heirs of the Estate.
And also, to give a copy to the Clerk of Court where the settlement
proceeding is pending. That’s it. Then the executor or administrator will
be notified of the attachment of the share of one of the heirs so that when
the net estate will be distributed, automatic kung ano yong share na na
attached ibibigay yon when there is already judgment on the merits and
levy of execution—the share will be given to the attaching creditor or to
the judgment creditor.
If it concerns real property and mabibigay nya yon sa heir who is an
attaching debtor, and he becomes the absolute owner of the property—
pwede na nya later on I annotate ang notice of levy. but pending
distribution, pending settlement of the estate—hindi pa kasi yan na tatransfer sa heirs (judgment debtor). What happens would be it is in the
hands of the executor or administrator on how the property will be
managed. Kaya sila dapat ang bigyan nang notice of levy. Copy
furnished land si Clerk of Court.
The main picture that you need to remember here, an heir share can be
attached. The only thing is that it cannot be attach immediately or the
sheriff cannot take hold of precisely because the estate is still
undergoing settlement. Hindi pa ma determined ngayon which part of
the estate goes to defendant or the attaching debtor. That is why there
is a need to await for the outcome of that settlement. Kaya ang notice of
levy ibibigay muna ngayon sa Executor or Administrator and the Clerk
of Court.
July 30, 2019 by Al Frederick L. Cavite
What happened in the case of ENGINEERING v. NPC?
ECI filed a complaint for damages against the NPC in the then Court of
First Instance of Manila, Branch 15, alleging that it suffered damages to
its facilities and equipment due to the inundation of its campsite in Ipo,
Norzagaray, Bulacan, as a direct result of the improper and careless
opening by NPC of the spillway gates of Angat Dam at the height of
typhoon "Welming.
The trial court found NPC guilty of gross negligence and rendered its
judgment. Later, a writ of execution is granted.
Subsequently, Deputy Sheriff Restituto R. Quemada who was assigned
to enforce the writ of execution, garnished in favor of ECI all amounts
due and payable to NPC which were then in possession of MERALCO
and sufficient to cover the judgment sum of P1,108,985.31.
Correspondingly, NPC filed with the Court of Appeals a petition for
certiorari which was granted by the said court, nullifying the execution of
the judgment rendered by the trial court as well as all issued writs and
processes in connection with the execution.
The said decision of the CA was being used by NPC to compel
MERALCO to return the amount of P1,114,545.23 (inclusive of sheriff's
fees) in two checks which the latter had already entrusted to the deputy
sheriff, who then indorsed and delivered the same to ECI.
The Supreme Court held that MERALCO should not have been faulted
for its prompt obedience to a writ of garnishment. Unless there are
compelling reasons such as: a defect on the face of the writ or actual
knowledge on the part of the garnishee of lack of entitlement on the part
of the garnisher, it is not incumbent upon the garnishee to inquire or to
judge for itself whether or not the order for the advance execution of a
judgment is valid.
MERALCO, as garnishee, after having been judicially compelled to pay
the amount of the judgment represented by funds in its possession
belonging to the judgment debtor or NPC, should be released from all
responsibilities over such amount after delivery thereof to the sheriff.
The reason for the rule is self-evident. To expose garnishees to risks for
obeying court orders and processes would only undermine the
administration of justice.
If the garnishee knows that the order of garnishment is void, or the
garnisher is not entitled to the funds, can he refuse to deliver the
property or the money?
Unless there are compelling reasons such as: a defect on the face of the
writ or actual knowledge on the part of the garnishee of lack of
entitlement on the part of the garnisher, it is not incumbent upon the
garnishee to inquire or to judge for itself whether or not the order for the
advance execution of a judgment is valid.
Unless There are Compelling Reasons
What is the qualifying phrase here? Unless there are compelling
reasons such as a defect on the face of the writ or actual knowledge on
the part of the garnishee of lack of entitlement on the part of the
garnisher.
If there is actual knowledge by the garnishee as to fatal defects in the
order of garnishment as well as to the entitlement of the garsnisher, it
need not release the amount or the properties.
Rather, it can very well bring that matter to the attention of the court. The
better part of prudence here is not to release the property. Kasi alam mo
na defective, ni-release mo, o later on nagkaproblema, anong
mangyayari? Subject to double liability ka talaga.
So a mere blind obedience to the order of garnishment, notwithstanding
your actual knowledge of the fatal defects therein will not absolve you
from double liability. Talagang magiging double liable ka diyan,
kasalanan mo, alam mo nang may problema binigay mo pa yung
property. You have nobody else to blame but yourself.
You didn’t act prudently. A prudent person would have withheld release
of the property kapag ganun, may actual knowledge siya, especially
when you are talking here of millions worth of property. Why would just
release it blindly on the basis of notice of garnishment? If you know very
well there is fatal defect? You take note of that.
What happened in RCBC v. DE CASTRO?
By virtue of an ORDER dated January 27, 1970, and after a Notice of
Garnishment was received by it, RCBC was made to deliver in check
the amount garnished to the sheriff of the sheriff who in turn is ordered
to cash the check and deliver the amount to the plaintiff Badoc. The
garnished amount in check represents the funds of PVTA deposited with
the RCBC. PVTA was the defendant in the case filed by BADOC.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What happened to the order of garnishment?
PVTA filed a Motion for Reconsideration which was granted in an order,
setting aside the Orders of Execution and of Payment and the Writ of
Execution and ordering RCBC and BADOC "to restore, jointly and
severally, the account of PVTA with the said bank in the same condition
and state it was before the issuance of the aforesaid Orders by
reimbursing the PVTA of the amount of P 206, 916.76 with interests at
the legal rate from January 27, 1970 until fully paid to the account of the
PVTA
Can the bank here be held liable for the value of the check? To return
the value of the check?
The Supreme Court held that the order directing the bank to deliver the
amount to the sheriff was distinct and separate from the order directing
the sheriff to encash the said check. The bank had no choice but to
comply with the order demanding delivery of the garnished amount in
check. The very tenor of the order called for immediate compliance
therewith. On the other hand, the bank cannot be held liable for the
subsequent encashment of the check as this was upon order of the court
in the exercise of its power of control over the funds placed in custodia
legis by virtue of the garnishment.
Is RCBC liable here for the value of the check after the notice was set
aside?
RCBC’s immediate compliance with the lower court’s order should not
have been met with the harsh penalty of joint and several liability. Nor
can its liability to reimburse PVTA of the amount delivered in check be
premised upon the subsequent declaration of nullity of the order of
delivery. Here, RCBC was already served with the Order requiring
delivery of the garnished amount. Confronted as it was with a mandatory
directive, disobedience to which exposed it to a contempt order, it had
no choice but to comply.
What happened after there was delivery of the check?
By virtue of the order of garnishment, the same was placed in custodia
legis and therefore, from that time on, RCBC was holding the funds
subject to the orders of the court a quo. That the sheriff, upon delivery
of the check to him by RCBC encashed it and turned over the proceeds
thereof to the plaintiff was no longer the concern of RCBC as the
responsibility over the garnished funds passed to the court.
What if the amount is given in cash? Will RCBC be then liable?
If the amount was in cash, RCBC would be liable because in this case
the order was to deliver in check and not in cash. But if what was
incumbent upon it is to deliver the amount in cash to the sheriff, then in
that case, RCBC will not be held liable.
where one reneges on his obligations under the agreement, as in the
case at bench, where Antonio Garcia failed to hold up his own end of
the deal, so to speak.
Moreover, a violation of the terms and conditions of a compromise
agreement entitles the aggrieved party to a writ of execution.
Attachment lien continues
A compromise agreement will merely terminate the case but the
attachment lien continues until such time the parties shall have complied
their respective obligations under the compromise agreement. Such
that, a violation of the terms of the agreement will render the attached
properties still to be liable, to answer for the debt. Violation of the
compromise agreement is a ground for a writ of execution.
Di ba ganun yun sa Civil Procedure? Nag-compromise nga kayo, is that
the end of it? NO! You have to comply with the terms and conditions of
your compromise. ‘Pag nag-violate kayo niyan, hingi ka kaagad ng
execution. Anong i-execute mo ‘pag wala nang attachment lien? ‘Pag
na-dissolve na ang attachment lien? Ano pang hahanapin mo, ano pang
i-eexecute mo?
Supposedly the attached properties are to stand as security for any
judgment you might obtain in the case. In this scenario when there is
compromise agreement, it should be a win-win solution for both parties.
If the defendant reneges on his obligation under the compromise
agreement, then the plaintiff can ask for a writ of execution. Holding the
attached property liable for the unpaid obligation. That is the reason
kung bakit siya di na-didissolve kahit pa may compromise agreement
pa.
So you go back to the basic concept of compromise agreement. Ano
ang epekto niyan, ano ang bearing niyan? Sa kaso? Sa obligasyon ng
mga parties to the compromise agreement? You go back to the basic
concept. Then you will know, that the discharge of the attachment lien
cannot be done, otherwise it will result in a gross injustice on the part of
the attaching creditor. It’s so unfair that just by executing the
compromise agreement, tanggal na ang attachment lien, then the
defendant can just renege on his agreement under the compromise
agreement. That is not contemplated by the law.
In the case of SPS. ABINUJAR, it merely reiterates CHEMPHIL in case
of failure to comply with the terms of the compromise agreement, the
aggrieved party is entitled to execution, ipapa-execute siya, hihingi siya
ngayon ng writ of execution. The terms of the writ of execution will be in
accordance with the terms and conditions of the compromise. ‘Pag hindi
nag-comply sa writ of execution, pwede niya kunin yung attached
property, because it still stands as security. What does it tell you, the
attached property will stand as security until full satisfaction of the
judgment, whether the judgment is on the merits or based on a
compromise agreement. That is the principle that you have to
remember.
Will a partial execution of a judgment discharge a notice of garnishment?
No, as held in MANILA REMNANT v. CA, A garnishment order shall be
lifted if it established that:
(a) the party whose accounts have been garnished has posted a
counterbond or has made the requisite cash deposit;
(b) the order was improperly or irregularly issued as where there
is no ground for garnishment or the affidavit and/or bond filed
therefor are defective or insufficient;
(c) the property attached is exempt from execution, hence
exempt from preliminary attachment; or
(d) the judgment is rendered against the attaching or garnishing
creditor.
Partial execution of the judgment is not included in the above
enumeration of the legal grounds for the discharge of a garnishment
order. Neither does the petitioner's willingness to reimburse render the
garnishment order unnecessary.
SPOUSES ABINUJAR v. CA
G.R. No. 104133, April 18, 1995
The non-fulfillment of the terms and conditions of a compromise
agreement approved by the court justifies execution thereof and the
issuance of the writ for said purpose is the court's ministerial duty
enforceable by mandamus.
Can a garnishment writ be enforced on a branch of the garnishee after
another branch has already made the payment? What is the ruling in the
case of PNB v. OLATUNGA LUMBER?
PNB V. OLUTANGA LUMBER COMPANY
G.R. No. L-30982, January 31, 1930
What about a compromise agreement? Can a compromise agreement
dissolve a notice of garnishment? Does the execution of a compromise
agreement dissolve the notice of garnishment?
The general rule is that, where attached properties belonging to the
principal debtor are taken out of the hands of a person by legal
process, after he had been notified of the order of attachment, said
person cannot be made to answer for the properties in a proceeding
to carry out said attachment.
No, as the Supreme Court said in CHEMPHIL EXPORT v. CA, the
parties to the compromise agreement should not be deprived of the
protection provided by an attachment lien especially in an instance
In the present case, the fact that the funds attached in the possession
of the Bank of the Philippine Islands, belonging to the Olutanga
Lumber Company, had been deposited with the sheriff of the City of
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Manila by order of said officer, does not change the juridical situation
of said funds as attached in the possession of the Bank of the
Philipine Islands, and, according to the above-quoted rule, the
aforesaid Bank of the Philippine Islands, having been judicially
compelled to pay the amount of the judgment represented by said
funds to the Olutanga Lumber Company, after having employed all
the legal means to avoid it, is released from all responsibility to
the Philippine National Bank in whose favor the writ of
attachment was issued.
Which branch paid?
Here, BPI Manila delivered to the sheriff of Manila the garnished amount
in compliance of a Notice of Garnishment issued in a case involving PNB
and Olutanga Lumber. However, despite such delivery, BPI Zamboanga
was still required by the provincial sheriff of Zamboanga to comply with
the writ of execution which was issued by virtue of a judgment in a case
between BPI Zamboanga and Olutanga Lumber, where the Supreme
Court ruled against BPI Zamboanga ordering it to pay Olutanga Lumber
the amount of P31,242.11.
Can BPI Zamboanga be still held liable despite the payment of BPI
Manila?
Yes. Appearing that the writ of execution complained of was issued and
served upon BPI before the latter received notice by the garnishment,
and two days before it was required by the sheriff of Manila to deliver
the amount mentioned in the said garnishment proceedings, wherefore,
the respondent judge did not exceed its jurisdiction in issuing the
aforesaid writ of execution. In view of this, the sheriff of Zamboanga can
compel BPI Zamboanga to comply with the writ of execution.
Thus, BPI Zamboanga had no other remedy than to deliver to the sheriff
of Zamboanga the said amount.
Why will the garnishee now be deemed released from the liability?
The general rule is that, where attached properties belonging to the
principal debtor are taken out of the hands of a person by legal process,
after he had been notified of the order of attachment, said person cannot
be made to answer for the properties in a proceeding to carry out said
attachment. Thus, the aforesaid Bank of the Philippine Islands, having
been judicially compelled to pay the amount of the judgment represented
by said funds to the Olutanga Lumber Company, after having employed
all the legal means to avoid it, is released from all responsibility to the
Philippine National Bank in whose favor the writ of attachment was
issued.
What kind of delivery is required here? Supposing there was voluntary
payment here made by BPI Manila, will that extinguish the liability under
the garnishment?
No, the delivery must be made by reason of a judicial compulsion,
meaning there must be a judicial compulsion.
Section 8. Effect of attachment of debts, credits and all other
similar personal property. — All persons having in their possession
or under their control any credits or other similar personal property
belonging to the party against whom attachment is issued, or owing
any debts to him, at the time of service upon them of the copy of the
writ of attachment and notice as provided in 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 by him is satisfied, unless
such property is delivered or transferred, or such debts are paid, to
the clerk, sheriff, or other proper officer of the court issuing the
attachment. (8a)
Must Be Due to a Judicial Compulsion
So the termination of the liability of the garnishee must be due to a
judicial compulsion. Under Section 8 there are three modes of
terminating the liability of the garnishee, one is discharge of the writ of
attachment. The discharge of the writ of attachment may either be before
or after payment of the garnished amount by the garnishee. If it is before,
then obviously, the garnishee is not liable to pay anything under the
notice of garnishment that was discharged.
If it is after, again the garnishee is not required to deliver again the
amount that was paid prior to the discharge of garnishment notice,
because the delivery of the property by virtue of a judicial compulsion
already absolves the garnishee of liability, unless the garnishee has
personal knowledge of fatal defects in the notice of garnishment or the
lack of entitlement of the garnisher. So yun yung exception.
Another mode of terminating the liability of the garnishee is when he or
she is compelled judicially to deliver the amount or the property to the
garnisher, or to the sheriff, clerk of court or other officers of the court by
virtue of a judicial order. So all of those are found under Section 8.
Modes of terminating the liability of the garnishee under Section 8.
1. Discharge of the writ of attachment;
2. Full satisfaction of the judgment;
3. Delivery of the garnishee of the amount or property to the
clerk, sheriff or other proper officer of the court.
What is the nature of the garnishee’s participation in the case?
PERLA COMPANIA DE SEGUROS v. RAMOLETE
G.R. No. L-60887, November 13, 1991
Through service of the writ of garnishment, the garnishee becomes
a "virtual party" to, or a "forced intervenor" in, the case and the trial
court thereby acquires jurisdiction to bind him to compliance with all
orders and processes of the trial court with a view to the complete
satisfaction of the judgment of the court.
What happens when garnishment notice is served upon the garnishee?
What is the legal consequence of that?
The court acquires jurisdiction over the person of the garnishee. As held
in the case of PERLA COMPANIA, in order that the trial court may
validly acquire jurisdiction to bind the person of the garnishee, it is not
necessary that summons be served upon him. The garnishee need not
be impleaded as a party to the case. All that is necessary for the trial
court lawfully to bind the person of the garnishee or any person who has
in his possession credits belonging to the judgment debtor is service
upon him of the writ of garnishment.
What do you mean by garnishment?
Garnishment, Defined
Garnishment has been defined as a species of attachment for reaching
any property or credits pertaining or payable to a judgment debtor. 13 In
legal contemplation, it is a forced novation by the substitution of
creditors: the judgment debtor, who is the original creditor of the
garnishee is, through service of the writ of garnishment, substituted by
the judgment creditor who thereby becomes creditor of the garnishee.
Garnishment has also been described as a warning to a person having
in his possession property or credits of the judgment debtor, not to pay
the money or deliver the property to the latter, but rather to appear and
answer the plaintiff's suit.
What happens if the garnishee after being served with the notice of
garnishment, instead of paying or giving the property to the sheriff,
absconds with it or disposes of it? What happens now?
As held in TEC BI v. CHARTERED BANK OF INDIA, a plaintiff who has
sued out an attachment and given the necessary notice to a garnishee
that the property in his hands is attached, and subsequently the
garnishee fraudulently disposes of the property, has a right to waive his
lien on the property, and bring suit for the value of the property, against
the garnishee.
We are already at the execution stage. A notice of garnishment has been
issued, instead of the garnishee paying off the amount, disposes of it
instead, how do you go after the garnishee now? Who will go after the
garnishee? Is it the court?
No, it is the judgment creditor. As in the case of TEC BI, after execution
unsatisfied against the judgment debtor, the judgment creditor may bring
an action at law against a garnishee upon whom notice was served
under an attachment issued in the action before judgment; and it is not
necessary before bringing such action that the garnishee should be
required to appear and an-swer, or that an order should be obtained
authorizing the action against the garnishee; and no equitable
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
circumstance need be shown to justify the suit, which is upon direct
liability of the garnishee to the plaintiff in that suit.
In what proceeding? In the same proceeding?
It can be in the same proceeding because a garnishee is a forced party
to the case. It can also be in a separate case to enforce his liability.
Garnishee, a forced party.
The garnishee here, becomes a forced party to the case. I don’t know
why it’s called intervenor, you are only allowed to intervene before
judgment but at execution stage, after the judgment, that’s why it’s
questionable why it is called a forced intervenor. You are not allowed to
intervene anymore once judgment has been rendered. When you file
your motion for intervention, you have to attached, your pleading-inintervention, whether it is complaint-in-intervention or answer-inintervention. So the court will know which side you will be on, are you
for the plaintiff? Or are you for the defense? Again, that will not apply in
the case of a garnishee, because it is by operation of law, not by any
voluntary filing of pleadings that the garnishee becomes a party to the
case.
So, the garnishee here becomes a party to the case by forced novation,
by substitution of the judgment debtors. Instead of the defendant being
held liable for the judgment, it will now be the garnishee who has in his
possession credits or debts payable to the judgment debtor. So instead
of the judgment debtor paying the plaintiff – the attachment creditor – it
will now be the garnishee, that is the concept.
The most appropriate classification of the garnishee would be a
substituted debtor or in the case of forced novation. He will stand in
place of the judgment debtor. If he does not deliver the property after
being served with the notice of garnishment, he can be held liable in the
same case or in a separate case. Pursuing his liability in the same case
would be justified precisely because he has become a forced party to
the case. You can also institute a separate case in order to enforce his
liability. In fact, you can also have a criminal case against the garnishee
aside from enforcing his civil liability. If there’s fraud amounting to a
crime, you can also file a criminal case.
What happens when the property attached has been foreclosed by a
mortgagee?
In CONSOLIDATED BANK v. IAC, the Supreme Court held that in all
such cases in which an extrajudicial sale is made x x x any person
having a lien on the property subsequent to the mortgage x x x may
redeem the same at any time within the term of one year from and after
the date of sale.
What about the annotation of the mortgage? Which came first, the
annotation of the mortgage lien or the levy and attachment?
In this case, the properties were mortgaged on March 11, 1982, while
the levy and attachment was made on September 1, 1982.
Who has the better right to that property?
The foreclosing creditor.
The Foreclosing Creditor Has Superior Right
Why would you redeem if the foreclosure is not considered valid? The
right of redemption arises when the foreclosure is valid. So if Solidbank
as attaching creditor merely acquires the right to redeem the property
after foreclosure, it means the foreclosing creditor or mortgagee has a
superior right over the property. That’s what it is, otherwise what’s the
point of redeeming a null and void foreclosure?
There was an annotation here of that notice of levy, then after that there
was an extrajudicial foreclosure. Just because nauna ang pag-annotate
ng notice of levy, later na yung extrajudicial foreclosure, does not mean
that the creditor-mortgagee has an inferior right to the attaching creditor.
When you extra-judicially foreclose a mortgage, it presupposes that that
same mortgage has been registered beforehand. Upon the execution of
the mortgage, naka-annotate na yan sa titulo. In this case, nauna ang
annotation ng mortgage lien, therefore creditor-mortgagee has a
superior right over the attaching creditor. Nauna siya nagpa-register eh.
So, you have a mortgage registered here, an attachment registered
here, and then you have a foreclosure registered here. Nasa gitna si
attachment, nauna pa rin si mortgagee, so the mortgagee has every
right to foreclose, he has a superior right over the property, superior lien
yung kanya, nauna yung registration niya. Ano’ng gagawin ngayon ni
attachment creditor? Wala siyang kawala, nauna na-register ang
mortgage lien eh, as opposed to the later registration of the attachment
lien. Wala siyang makukuha kasi na-foreclose eh. The right that he has
is to redeem the property from the mortgage creditor, or whoever is the
buyer during foreclosure within a period of one year. Yun ang right ng
attaching creditor kapag ang attached property has been validly
foreclosed. You cannot insist na mauuna sa kanya ang property. All he
has is the right to redeem the property within a period of one year.
Therefore, instead of the debtor redeeming that property from the
mortgagee or the foreclosing mortgagee, it will now be the attaching
creditor who has that right, and can exercise that right within that oneyear period provided by law.
All of this presupposes that there was a valid foreclosure of the property
and that the creditor-mortgagee has a superior right over the same
property by virtue of the prior registration of the mortgage lien before
foreclosure. The ruling here is that Solidbank merely acquired the right
of redemption, that already tells you that the foreclosure is valid,
otherwise you cannot redeem kapag invalid yan; what’s the point of
redeeming? The mere exercise of a right of redemption is an
acknowledgment that the foreclosure is valid. Kapag valid ang
foreclosure, ibig sabihin may superior right si creditor-mortgagee over
that property. The only way na mapupunta sa attaching creditor ang
property is to redeem it from the buyer during redemption period.
Yan ang example where the attaching creditor has a claim of around
10M, prior to that, the property was mortgaged for 1M. After the
mortgage lien was registered, nag-attach ka, na-register, then na
foreclose. Since 1M lang ang utang doon sa mortgage, you only sell it
for the value of the debt plus yung interest and expenses. Let’s say
nabenta siya at a price of – let’s say from credit bid yun, banko – they
will only bid up to the extent of the debt – so if 2M, 2M lang – pero ang
utang sa’yo 10M eh as attaching creditor and you know the value of the
property is higher than 10M. So it’s practical for you now to redeem that
property from the mortgagee or from the buyer at foreclosure. Lalabas
ka ng 2M, but you have in your favor now a security for the debt, valued
at more than 10M. So practical. That is the purpose here why the
attaching creditor is given that right to redeem the property once it has
been foreclosed. You cannot get or force the property to be given to you,
but you have that right of redemption to be exercised instead of the
debtor exercising it, you now have acquired it. That is the effect if you
are an attaching creditor.
What happens if a rehabilitation receiver is appointed over the property
attached?
In BF HOMES INC. v. CA, the Supreme Court said the appointment of
a rehabilitation receiver who took control and custody of BF has not
necessarily secured the claims of Roa and Mendoza. In the event that
the receivership is terminated with such claims not having been
satisfied, the creditors may also find themselves without security therefor
in the civil action because of the dissolution of the attachment. This
should not be permitted. Having previously obtained the issuance of the
writ in good faith, they should not be deprived of its protection if the
rehabilitation plan does not succeed and the civil action is resumed.
When was the management committee here created, before or after the
issuance of the writ of attachment?
After the issuance of the writ of attachment.
What is the effect of that?
The effect is that the attaching creditor will have a superior right if the
creation of a management committee was done after the writ of
attachment was issued.
The Effect of the Prior Issuance of the Writ
A rehabilitation receiver or management committee created over a
corporation in order to facilitate the rehabilitation of – it’s not really an
insolvent corporation but more of a non-liquid corporation – no, pwede
insolvent corporation. It means that there will be nonpayment – napadala
mo na yung stay order issued by the court – or there will be suspension
of payments to all creditors. Again the timing here is important, when
was the writ issued. If the writ was issue prior to the appointment of the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
rehabilitation receiver or the creation of a management committee, then
the attaching creditor will have superior right over that certain properties
attached. You have a superior lien, and they need not be included in the
other group of creditors who should be paid. Kasi, in a way, secured
creditor sila. But again, it is subject to the outcome of the case. The
property that was attached is only reserved to answer for the favorable
judgment that they may obtain in the main case.
How about sequestration of properties made by the PCGG, what is the
effect of that.
Who are these persons? How many persons are being contemplated
here who may be examined?
The following persons may be examined:
(a) Debtor himself;
(b) Creditor of the defendant;
(c) Debtors of the defendant; or
(d) Any person who has under his control other personal property
belonging to the defendant.
What is the purpose of the examination?
REPUBLIC v. SALUDARES
G.R. No. 111174, March 9, 2000
In our view, the disputed properties of LBLC were already under
custodia legis by virtue of a valid writ of sequestration 15 issued by
the PCGG on April 2, 1986, when respondent Judge Saludares
issued the assailed writ of attachment in favor of private respondent
Hung Ming Kuk. At that time the writ of sequestration issued by
PCGG against LBLC was subsisting. Said writ of the PCGG could
not be interfered with by the RTC of Lianga, because the PCGG is a
coordinate and co-equal body. The PCGG had acquired by operation
of law the right of redemption over the property until after the final
determination of the case or until its dissolution.
What properties are usually sequestered by the PCGG? What kind of
properties are these? Ill gotten properties.
What is the effect when interest in the property of the deceased is
attached?
Section 9. Effect of attachment of interests in property
belonging to the estate of a decedent. — 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 personal representative of the decedent over
such property for the purpose of administration. Such personal
representative, however, shall report the attachment to the court
when any petition for distribution is filed, and in the order made upon
such petition, distribution may be awarded to such heir, legatee or
devisee, but the property attached shall be ordered delivered to the
sheriff making the levy, subject to the claim of such heir, legatee, or
devisee, or any person claiming under him. (9a)
This is a continuation of Section 7 when you will attach the hereditary
share from the estate of the deceased person. So, you notify the
administrator or executor copy furnished the clerk of court in the same
court where the settlement case is pending. The administrator under
Section 9 will continue to serve as such over properties of the estate,
will administer all properties of the estate, and then inform the court with
regard to the attachment.
When? What is the crucial time that you should make report to the court?
Is it upon receipt of the notice of levy, or after? When will the
administrator report to the court about the attachment of that property?
Shall report the attachment to the court when any petition for distribution
is filed.
It is for the purpose of giving information with regard to the property of
the party whose property is attached.
Who may conduct the examination? The court.
What orders may be issued by the court after conducting the
examination?
The court may, after such examination, order personal property capable
of manual delivery belonging to him, in the possession of the person so
required to attend before the court, to be delivered to the clerk of the
court or sheriff on such terms as may be just, having reference to any
lien thereon or claim against the same, to await the judgment in the
action.
So the person can be required to surrender the property belonging to
the defendant in order to serve as security for a judgment that may be
obtained by the attachment creditor, if the property is capable of manual
delivery.
Can the property attached be sold after it has been levied upon pending
litigation?
Section 11. When attached property may be sold after levy on
attachment and before entry of judgment. — Whenever it shall be
made to appear to the court in which the action is pending, upon
hearing with notice to both parties, that the property attached is
perishable, or that the interests of all the parties to the action will be
subserved by the sale thereof, the court may 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 judgment
in the action. (11a)
What is the requirement before you can sell the properties attached
pending litigation?
The requirements for the sheriff to be able to dispose of the
properties pending litigation are as follows:
(a) First, there must be hearing with notice to both parties; and
(b) Second, the attaching creditor must be able to prove to the
court in which the action is pending that the property attached
is perishable in nature and that the parties agreed to sell the
attached property for the protection of their own interest.
What will happen to the proceeds of the sale?
Who may be examined under section 10? What is this right of
examination all about?
The proceeds of such sale to be deposited in court to abide the judgment
in the action.
Section 10. Examination of party whose property is attached
and persons indebted to him or controlling his property;
delivery of property to sheriff. — Any person owing debts to the
party whose property is attached or having in his possession or
under his control any credit or other personal property belonging to
such party, may be required to attend before the court in which the
action is pending, or before a commissioner appointed by the court,
and be examined on oath respecting the same. The party whose
property is attached may also be required to attend for the purpose
of giving information respecting his property, and may be examined
on oath. The court may, after such examination, order personal
property capable of manual delivery belonging to him, in the
possession of the person so required to attend before the court, to
be delivered to the clerk of the court or sheriff on such terms as may
be just, having reference to any lien thereon or claim against the
same, to await the judgment in the action. (10a)
The sale of the property attached here necessarily brings the property
outside custodia legis but the proceeds will take the place of the property
sold as security for whatever judgment that the plaintiff will obtain.
What are the modes of discharging an attachment writ? How do you
discharge an attachment writ?
The procedure for filing a counter-bond are as follows:
(1) File a motion for the discharge of the attachment wholly or in part
of the security given;
(2) 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;
(3) There will be hearing with notice to all parties; and
(4) If proper, the court will order the discharge of attachment.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
How do you discharge an attachment writ by filing a counter-bond, what
is the procedure?
Section 12. Discharge of attachment upon giving counter-bond.
— After a writ of attachment has been enforced, the party whose
property has been attached, or the person appearing on his behalf,
may move for the discharge of the attachment wholly or in part on
the security given. The court shall, after due notice and hearing,
order the discharge of the attachment if the movant makes a cash
deposit, or files a counter-bond executed to the attaching party with
the clerk of the court where the application is made, in an amount
equal to that fixed by the court in the order of attachment, exclusive
of costs. But if the attachment is sought to be discharged with respect
to a particular property, the counter-bond shall be equal to the value
of that property as determined by the court. In either case, the cash
deposit or the counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action. A notice
of the deposit shall forthwith be served on the attaching party. Upon
the discharge of an attachment in accordance with the provisions of
this section, the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or giving
the counter-bond, or to the person appearing on his behalf, the
deposit or counter-bond aforesaid standing in place of the property
so released. Should such counter-bond for any reason be found to
be or become insufficient, and the party furnishing the same fail to
file an additional counter-bond, the attaching party may apply for a
new order of attachment. (12a)
It could be that the court will later on after noting the filing of the counterbond will make a formal order lifting the writ by virtue of the counter-bond
posted. But, at that point in time that you made the counter-bond, wala
pa yang order of discharge, still, it has the effect as if there was a
discharge, because the sheriff will now be prevented from enforcing the
writ and that is the most important thing, or from levying on your
properties. Kaya at that point in time you don’t really need an order of
discharge kasi wala pa siyang na-levy eh, hindi pa nga naka-annotate
sa ROD eh yung levy of execution mo – especially involving real
properties. You only need the order of discharge after a levy has been
made, and you need proof that indeed the writ has already been
discharged as when the levy was annotated on a title certificate. That is
important, it is crucial that you have an order of discharge.
Among the three, the one that requires motion, notice and hearing,
should be under Section 12. The writ will not be deemed discharged
even if you file a counter-bond, unless there is an order issued by the
court officially discharging the writ. Yun ang kailangan mo – ang order –
under section 12, that’s when the notice and hearing requirement will
kick-in. But earlier than that – prior to the levy or at that point of issuance
of the writ, immediately after the issuance of the writ – you don’t need to
file a motion. Just go ahead and post a counter-bond – it will have the
effect of discharging the writ even without the express pronouncement
or an order officially lifting the writ, the effect is the same. Ang crucial
lang na kailangan kayo may order of discharge is after the levy has been
made under Section 12, and then you will require filing of the motion and
the compliance of the notice and hearing requirement.
August 06, 2019 by Belle Fabe
When can a counter-bond be posted?
Under Section 2, a counter-bond may be posted when the writ was
issued; under Section 5, a counter-bond may be issued during the
enforcement of the writ; and under Section 12, a counter-bond may be
posted to discharge the writ of attachment.
When will the writ of attachment be deemed discharge under these
instances? At what point in time?
Under Sections 2 and 5, the writ is deemed discharge upon the deposit
or delivery of the counter-bond, in the case of Section 5, to the sheriff.
But under Section 12, when there is already an order of discharge.
Section 12 requires you to file a motion and then after to post a counterbond. Section 12 contemplates a situation where the property has
already been levied upon – nakuha na, under custodia legis na yung
property. A formal motion is necessary in order to discharge the writ and
release the property from custodia legis. You have to obtain that order
of discharge especially if the levy is made on the real property – nakaannotate nay yan sa titulo mo – that’s why you need that order from the
court. So that, that order discharging the writ will also be annotated for
everyone to know that the levy has already been lifted.
Under Sections 2 and 5, iba yun. Wala pang seizure or levy on the
property made here by the sheriff. Section 2, issuance pa lang yan ng
writ, but the rules allow the defendant to lift and discharge the writ by
posting a counter-bond or making a deposit of the property to the court.
Voluntary ito on the part of the defendant, direct to the court, at that point
in time wala pa si sheriff, issuance of the writ pa yun eh.
Sa enforcement stage, there is the sheriff already knocking on the door
trying to enforce the writ. Instead of him seizing your properties, you give
him a counter-bond instead. That’s why it’s important that you have a
copy of a writ of attachment, the order granting it, as well as the
attachment bond – so you will know how much will be your counterbond.
How much is the counter-bond?
It should be equal to that amount fixed by the court in the writ of
attachment.
The counter-bond will largely be based on the amount fixed by the court
as stated in the order of attachment. During enforcement, the moment
you give your counter-bond to the sheriff, the sheriff now will note that in
his return. There may be no order of discharge of the writ as in Section
12 upon the posting of the counter-bond, but it has the same effect as if
the writ has been discharged because the writ will no longer be enforced.
The court shall, after due notice and hearing, order the discharge of the
attachment if the movant makes a cash deposit, or files a counter-bond
executed to the attaching party with the clerk of the court where the
application is made, in an amount equal to that fixed by the court in
the order of attachment, exclusive of costs.
But if the attachment is sought to be discharged with respect to a
particular property, the counter-bond shall be equal to the value of that
property as determined by the court.
In the case of INSULAR SAVINGS vs. CA, what is the amount fixed by
the court in the order of attachment?
The order of attachment dated January 22, 1992 fixed the bond to be
posted by respondent, as applicant, at 6 MILLION.
Why was the amount of the counterbond not 6M in this case?
On February 11, 1992, before the Arbitration Committee of the Philippine
Clearing House Corporation, petitioner and respondent, however,
agreed to equally divide between themselves, although on a temporary
basis, the disputed amount of P25,200,000.00, subject to the outcome
of the arbitration proceedings. Thus, the release by petitioner of the
amount of P12,600,000.00 to respondent. Therefore, respondent's
principal claim against petitioner immediately prior to the filing of the
motion to discharge attachment has effectively been pruned down to
P12,600,000.00.
What are the (2) instances wherein you can post a counter-bond other
than Section 12?
1. Section 2, Rule 57
2. Section 5, Rule 57:
There are (3) counter-bonds under Rule 57.
As to the
Amount
SECTION 2
equal
to
that fixed in
the order
As to how •
to defeat a
Writ
of •
Attachment
deposit;
or
counter
bond
SECTION 5
equal to the
bond fixed by
the court in the
order of
attachment
•
•
SECTION 12
equal to that
fixed by the
court in the
order
of
attachment
deposit; or
•
counterbond
•
cash
deposit; or
counterbond
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
This “order” refers to the order granting the writ of attachment and in
an order granting the writ of attachment, the amount there that is being
referred to should be the Attachment Bond. If you want to be consistent
with all (3). The counterbond should be equal to the attachment bond.
Section 2 and Section 5— no hearing is required for you to post the
counterbond.
When you want to discharge the writ of attachment under—
1. SECTION 2: you can either deposit or counterbond.
2. SECTION 5: deposit or file a counterbond fixed in the order or
equal to the value of the property to be attached.
But under Section 12, it is necessary—it has to be approved by the court
and there has to be, under Section 12, an order discharging the writ
before you can really say it is discharged unlike Section(s) 2 and 5, the
mere fact that you gave a counterbond it already prevents the
implementation of the writ so it’s as good as discharged, although the
official/formal order is to be followed— that it will not be implemented
due to the posting of the counterbond.
There are (2) bases of the counterbond— the amount of the
attachment bond or the value of the property under Section 5 and
Section 12.
Going back now to INSULAR vs. CA, why was the counterbond, not in
the amount of 6 MILLION which was the amount of the attachment
bond?
How about Section 2? Same. All (3) of them— uniform.
The rest looks like a shortcut on how it is stated—in an amount equal to
that fixed in the order.
Respondent's principal claim against petitioner immediately prior to the
filing of the motion to discharge attachment has effectively been pruned
down to P12,600,000.00. The parties entered into a compromise
agreement while the arbitration is pending wherein the parties agreed to
pay half of the total liability in the amount of P 25.2 MILLION.
PRINCIPAL CLAIM: 25.2 M
ATTACHMENT BOND: 6 M
COUNTERBOND: 12.6 M
What amount? It could be the amount of the thing in the order. But
Section 5 makes it clearer, in an amount equal to the bond fixed by the
court in the order.
What is the basis of the counterbond?
The basis of the counterbond would be the modified liability of the
defendant which is 12.6 MILLION.
Another basis is the value of the property.
Here, there was a modification of the claim by virtue of the compromise
because they agreed to split the liability 50/50. The principal claim of P
25.2 MILLION obviously has been lowered also. The basis of the
counterbond would be on the modified liability of the defendant which
is 12.6 MILLION. Otherwise, if the court will require a counterbond in an
amount of P25.2 MILLION, there will be an excessive posting of a
counterbond here, which is not also allowed. In the same manner, that
you are not allowed to do excessive attachment, the same thing with the
posting of a counterbond, it should just be sufficient.
TAKE NOTE: it is only Section 5 that is very clear— equal to the
amount of the bond fixed by the court in the order of attachment
or to the value of the property to be attached.
When will the court resort to the amount fixed in the order of attachment
and when will it resort to the value of the property in granting the
counterbond? When can the court say, your counterbond should be
based on the value of the property? And when can the court say, that it
should be based on the attachment bond?
If it refers to a particular property, it should be based on the value of the
value of the property.
If there are several properties attached, and you only want to release a
specific property, then this is allowed— value of the property.
Let’s say the attachment bond is in the amount of 10 MILLION and then
the property attached is worth 20 MILLION (several properties), now you
only want (1) property to be released, and the value of that property is 5
MILLION, so the value of that is the value of your counterbond for
purposes of discharging the writ of attachment with respect to that
specific property.
That’s how you can interpret the Rules because there are (2) bases of
the counterbond, whether it’s the value of the attachment bond or the
value of the property.
When do you apply the counterbond in an amount fixed in the order?
When do you file the counterbond equal to the amount of the attachment
bond?
When the writ is not yet enforced, like under Section 2, when it was just
issued, or Section 5, when the sheriff is just about to serve you a copy,
or when it is served but there is no levy or actual seizure, then you can
rely on the attachment bond fixed in the order as the basis of your
counterbond so the levy will not proceed.
But if there is already an actual attachment, or actual seizure of the
property or actual levy made on real properties or other intangible
properties, then that’s the time, it will now be subject to the court’s
discretion on the value of the counterbond— that will fall under Section
12.
Because under Section 12, there will be notice and hearing, it will be
during that [hearing] procedure, there will be determination, the court
can ascertain from the arguments, evidence presented on the value of
the counterbond that the defendant has to post in order to discharge the
writ of attachment. The value of the attachment bond will only just be a
factor to be considered by the court as well the value of the property.
All those will be discovered during the hearing.
What now is the effect if a counterbond is posted in all these (3) [Section
2, 5, 12] instances? What will happen to the counterbond?
It substitutes the discharged property as security for the judgment in the
main case.
What are forms of a counterbond?
Property or surety.
If it is a surety, what will be the liability of the surety on the counterbond?
Joint and Solidary. A surety is considered in law as being the same
party as the debtor in relation to whatever is adjudged touching the
obligation of the latter, and their liabilities are interwoven as to be
inseparable. [SECURITY PACIFIC vs. INFANTE]
Will the filing of a counterbond be deemed a waiver of the grounds to
discharge the writ? No.
Is it a waiver of any defect in the issuance of the writ? No.
The attachment debtor cannot be deemed to have waived any defect in
the issuance of the attachment writ by simply availing himself of one way
of discharging the attachment writ, instead of the other. Moreover, the
filing of a counterbond is a speedier way of discharging the attachment
writ maliciously sought out by the attaching creditor instead of the other
way, which, in most instances in like in the present case, would require
presentation of evidence in a full-blown trial on the merits and cannot
easily be settled in a pending incident of the case. [CALDERON vs. IAC]
If he files a counterbond, can he still pursue the defects in the writ as a
ground to discharge the writ?
No.
Section 13. Discharge of attachment on other grounds. – The party
whose property has been 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 discharged
the attachment on the ground that the same was improperly or irregularly
issued or enforced, or that the bond is insufficient. If the attachment is
excessive, the discharge shall be limited to the excess.
APURA ALIGATO BAYQUEN CABARLO CASTRO CAVITE DINGAL FABE MONDRAGON PAMAOS PIANG SANTIAGO | III-Manresa 2019
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
If the motion be made on affidavits on the part of the movant but not
otherwise, the attaching party may oppose the motion by counteraffidavits or other evidence in addition to that on which the attachment
was made.
writ maliciously sought out by the attaching creditor instead of the other
way, which, in most instances in like in the present case, would require
presentation of evidence in a full-blown trial on the merits and cannot
easily be settled in a pending incident of the case.
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
improperly or irregularly issued or enforced, or that the bond is
insufficient, or that the attachment is excessive, and the defect is not
cured forthwith
CALDERON vs. IAC, says once you post the counterbond under
Section 12, you do not waive the defects in the issuance of the writ
meaning all the defects— the grounds for your discharge under Section
13 are not deemed waived— it is still preserved.
Under Section 13, what are the grounds to discharge a writ of
attachment?
1. The writ was improperly issued;
2. It was improperly or irregularly enforced;
3. The bond is insufficient [INCOMPLETE]
But MINDANAO SAVINGS, says you can’t have both. You only choose
(1) remedy. Stick to one remedy. It’s either Section 12 or Section 13.
Why? Because these are both modes to discharge— so if you’ve already
chosen one, it’s already discharged. What else can you discharge under
Section 13—the title of that is Discharge of attachment. It’s also the
same thing, discharge of attachment under Section 12. They are both
the same modes of discharge.
There are (6) grounds.
Once you’ve chosen one, don’t look for something else.
When will the remedy of discharge under Section 13 be availed of?
Before or after levy or even after the release of the attached property.
Who can avail of that?
The party whose property has been ordered attached.
How do you avail?
1. 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.
2.
3.
If the motion be made on affidavits on the part of the movant but
not otherwise, the attaching party may oppose the motion by
counter-affidavits or other evidence in addition to 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 the grounds are
present.
What kind of hearing? Summary hearing.
Cite an instance where there is an irregular issuance of the attachment.
If the ground is inexistent. Falsity in the allegations.
According to you the motion to discharge under Section 13 may be
availed of before levy or after levy or even after the property attached
has been released, what is an instance when an attached property has
been released and you can still avail of a motion to discharge?
If you look at Section 13, this particular instance where you avail of the
discharge after the release of the attached property it can only be
referring to a posting of a counterbond.
Why would you still file a motion to discharge?
Section 12 and Section 13, can they both be availed of?
MINDANAO SAVINGS vs. CA:
Objections to the impropriety or irregularity of the writ of attachment
"may no longer be invoked once a counterbond is filed," when the
ground for the issuance of the writ forms the core of the complaint.
Indeed, after the defendant has obtained the discharge of the writ of
attachment by filing a counterbond under Section 12, Rule 57 of the
Rules of Court, he may not file another motion under Section 13, Rule
57 to quash the writ for impropriety or irregularity in issuing it.
The reason is simple. The writ had already been quashed by filing a
counterbond, hence, another motion to quash it would be pointless.
CALDERON vs. CA
The attachment debtor cannot be deemed to have waived any defect in
the issuance of the attachment writ by simply availing himself of one way
of discharging the attachment writ, instead of the other. Moreover, the
filing of a counterbond is a speedier way of discharging the attachment
What is CALDERON saying now, even if you post a counterbond, you
do not waive the defects, what is that for? What is being said here in
Section 13, that a property that has already been discharged, you can
still avail of this Section 13 even if the property attached has already
been discharged?
Section 13 is saying, when do you avail of it— before levy, after levy or
even after the release of the property, when is this property released?
Upon the posting of a counterbond— Section 12 meaning it’s
discharged.
Why is it under Section 13, you can still avail of it even after the attached
property has been released? Isn’t contrary to the ruling in MINDANAO
SAVINGS? Will that not bolster the ruling in CALDERON?
Between the two, the speedier remedy is Section 12.
Just for you to be clarified, MINDANAO SAVINGS vs. CA is correct.
Stick to one. You cannot have both.
What does this mean—after the release of the property?
This will apply if, there was availment of Section 12 but your ground is
the attachment bond is insufficient under Section 13. You’re questioning
now the validity of the attachment itself—the property was indeed
released on a counterbond and yet there was a problem with the
attachment bond posted and it was not sufficient. And then, you can use
it as a ground.
The amount of the counterbond should be sufficient if it was released.
When it says released, that’s Section 12 because there was already a
levy. Section, 5 and Section 2 there’s no levy. Section 12 there is already
levy, and yet even after the release of the property, you can still
discharge. That is still something that has to be reconciled.
MINDANAO SAVINGS vs. CA, is still good law. You can only choose
(1) remedy because both are to discharge the writ so if one is already
availed of, what is there to discharge? Nothing.
CALDERON vs. IAC: here, you do not waive any of the defects
precisely because the defects can be used here, as ground to claim
against the attachment bond under Section 20, Rule 57.
Whatever defects that were incurred or made in the issuance,
implementation of the writ of attachment, they are not deemed waived
simply because you posted a counterbond. You can still use of those
defects not to discharge the writ under Section 13 because the writ was
already discharged but to claim for damages against the attachment
bond.
ATTACHMENT BOND
liable for damages incurred by
the defendant.
COUNTERBOND
will take the place of the
attached property, meaning to
say it will stand as security for
whatever judgment the plaintiff
may obtain after trial on the
merits.
APURA ALIGATO BAYQUEN CABARLO CASTRO CAVITE DINGAL FABE MONDRAGON PAMAOS PIANG SANTIAGO | III-Manresa 2019
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
to answer for any damage that
might be incurred by the
defendant by reason of the
issuance of the writ even if the
defendant
has
posted
a
counterbond
in
order
to
discharge the writ.
security, same purpose as the
attached property.
The question still is— let’s go back, what is that, even after the property
has been released? I have yet to encounter a case on how it is
illustrated. Maybe that is something, inadvertently placed there for no
particular reason. It’s there anyway. You have to be careful in choosing
a remedy.
Can the court grant a motion to discharge without conducting any
hearing? No.
What is the requirement?
There must be a hearing.
The last sentence of the said provision [SECTION 13], however,
indicates that a hearing must be conducted by the judge for the purpose
of determining whether or not there reality was a defect in the issuance
of the attachment. [FILINVEST CREDIT vs. RELOVA]
Now, in that hearing, who will have the burden now to show the
existence of fraud?
The burden now is on the attaching creditor.
But the movant here is the defendant, shouldn’t the defendant who filed
the motion to discharge be the one who is charged with the burden of
proof?
BURDEN OF PROOF TO PROVE THE ISSUANCE OF THE WRIT
Can the court accept the ground raised by the defendant to discharge
the writ without hearing the parties thereon? No.
But the ground of attachment is fraud, can the defendant question the
ground of fraud by filing a motion to discharge? What will the court do,
in that sense?
If the fraud is the main ground for the issuance of the writ and it’s also
the main cause of action and that is the very same issue in a motion to
discharge— they’re questioning now the existence of fraud, what will the
court do?
FILINVEST CREDIT vs. RELOVA
The question is: At this hearing, on whom does the burden of proof lie?
Under the circumstances of the present case, it should be the plaintiff
(ATTACHING CREDITOR), who should prove his allegation of fraud.
This pronouncement finds support in the first sentence of Section 1, Rule
131, which states that: Each party must prove his own affirmative
allegations. The last part of the same provision also provides that: The
burden of proof lies on the party who would be defeated if no evidence
were given on either side.
If the bone of contention is the very cause of action in the main case, the
rule is that the court will not grant the discharge. If the issuance of the
writ is on the basis of fraud, and you are asking for the discharge of the
writ, because you’re saying there is no fraud, and the fraud there is the
main cause of action, then the court will not grant the motion.
Fraud is never presumed. Indeed, private transactions are presumed to
have been fair and regular. Likewise, written contracts such as the
documents executed by the parties in the instant case, are presumed to
have been entered into for a sufficient consideration.
The court will proceed to try the main case. Otherwise, you have an
anomalous situation where the entire merits of the case will be disposed
upon the hearing of a mere motion – that will shortcut the proceedings
and that will preempt the judgment of the court on the merits of the case.
Here, he who makes an affirmative or a positive allegation must prove
it. If the defendant is challenging the issuance of the writ, claiming that
there was no fraud, he is actually making a negative assertion that
there’s no fraud.
The court, in that case, will deny the motion to discharge, and require
the defendant to post a counterbond to discharge the writ. It will
recommend that if you really want to discharge the writ, file a
counterbond instead. No questions asked on the grounds whether there
is fraud. That is a speedier way of discharging the writ. All you have to
do is come up with a sufficient counterbond. That’s it. If it has been
approved, then the writ will be discharged.
It’s the ATTACHING CREDITOR who should prove the existence of
fraud as the ground for the issuance of the writ.
•
As between the two modes, if your ground to discharge is the
very same cause of action of the main case, forget about Section
13.
Tell your client to file a counterbond. Chances are, it will not
be acted upon or the court will just deny our motion to
discharge. That’s the surest way that you can have the writ
discharged.
•
If you have other grounds, other than the main cause of action,
you will not touch upon the main cause of action, you can still
fight for it in the motion to discharge under Section 13.
Sometimes the client does not want to spend. If you post a
counterbond, you will spend— bring out money or give a
premium to the surety and that’s also a substantial amount.
If you go for a motion to discharge, make sure your ground is also
not touching upon the main cause of action of the complaint.
Otherwise, that will not be granted by the court. If you have no
other ground, except the main cause of action, then better advise
your client, let’s post a counterbond. That’s easier and the surest
way to have the writ discharged.
If the ground of the writ is fraud, and in your motion to discharge there
is no fraud, what should the court do? Let’s say the main issue here is
not fraud but the ground of the issuance is fraud. You know under
Section 1, there is only one that is not fraud-related, all have fraud. If
there’s no fraud, can the court discharge the writ upon proof that there
was no fraud? Yes, it can.
And the party who will be defeated if there is no evidence presented will
have the burden of proof. If there’s no proof of fraud, the attaching
creditor will lose. That’s why the burden of proof is on him because in
the absence of proof in the allegation of fraud, the writ will be discharged.
He will lose so it’s his own lookout now to make sure that there was
factual and evidentiary basis for the issuance of the writ on the ground
of fraud.
If the court conducts a hearing under Section 13, what hearing is
contemplated here?
The hearing for a motion under Section 13 refers to a fair and open
hearing. [SUMMARY HEARING]
Is it a trial type hearing? What do you mean by a fair and open hearing
if it’s not a trial-type hearing? No.
They will have their affidavits already. It’s attached to the motion. The
witnesses will only identify their affidavit. It’s like a Judicial Affidavit.
Whatever testimony you have in court, is through Judicial Affidavit. Here,
when it says affidavit, it actually refers now to Judicial Affidavit. Once
you submit to the court, you still have the witnesses to identify it,
otherwise the affidavit will be hearsay. It has no probative value. That
affiant may be questioned on cross-examination if it is necessary to do
so to determine the veracity of the statements in the affidavit.
If you just submit an affidavit, it is hearsay. It’s very basic in your
Evidence. It has no probative value so it has to be there and that’s what
the hearing is for. You bring all your witnesses. Since it’s already an
affidavit, it’s going to expedite the proceedings—it’s not too lengthy.
Whatever point you’re going to prove, that’s where you will focus on the
affidavit. If the other party wishes to cross-examine, it’s allowed. if the
court would want to ask the witnesses, a question, it is allowed if only to
ascertain if there is really a ground for the issuance of the writ— the
existence of the ground of the issuance of the writ.
APURA ALIGATO BAYQUEN CABARLO CASTRO CAVITE DINGAL FABE MONDRAGON PAMAOS PIANG SANTIAGO | III-Manresa 2019
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Although there will be opportunity to present your witnesses, the entire
procedure is SUMMARY HEARING. It’s just fast.
It’s just a very expedited way of hearing the evidence of the parties. If
it’s testimonial evidence then you have to have the affidavits, identified
by the witness in court. If it’s documentary evidence, as long as they are
certified true copies, there’s no problem. You don’t even have to present
a witness for that— official documents, certified true copies issued by a
government agency or notarized documents. You don’t need any
witness for that. There are judges who require it but that’s just a
surplusage because the document is already a public document. That
will expedite further the hearing. If it’s testimonial evidence, you really
need witnesses and their affidavits and submit them to the court and
have the witnesses identify them in court.
In the case of ADLAWAN vs. TORRES, how was the writ here
discharged? What was the mode?
MOTION FOR RECONSIDERATION was filed.
Where does it fall, Section 12 or Section 13?
Section 13 – obviously, there’s no counterbond here.
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
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.
This is now in the implementation stage, where the sheriff attached a
property is not owned by the defendant or he thought it was the
defendant’s but is being claimed by another person, not the defendant
as owner or a person who has the right to possess.
How do you make a third-party claim?
He should make 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 latter has possession of the attached
party, and a copy thereof upon the attaching party.
It’s a mere affidavit of your claim. You have to state what is the basis of
your claim and serve it on the sheriff, copy furnished the attaching
creditor. And it says here, that you serve the affidavit on the sheriff while
the latter has possession of the attached property.
ADLAWAN vs. TORRES
When petitioners filed a motion for the reconsideration of the order
directing the issuance of the writ of attachment, respondent Judge
should have considered it as a motion for the discharge of the
attachment and should have conducted a hearing or required
submission of counter-affidavits from the petitioners, if only to gather
facts in support of the allegation of fraud. This is what Section 13 of Rule
57 mandates.
But a motion for reconsideration of the order granting the writ of
attachment can be considered as a motion to discharge under Section
13. That is exactly what happened in the case of ADLAWAN vs.
TORRES.
The caption is not a MOTION TO DISCHARGE but it is MOTION FOR
RECONSIDERATION. Regardless, of how you caption your motion or
the title of your motion, for as long as the goal is the same— to discharge
the writ then it falls under Section 13. You can easily differentiate the (2)
modes of discharge.
What is Terceira?
It is a third-party claim.
When can there be a third-party claim?
Section 14. Proceedings where property claimed by third person.
If the property attached is claimed by any person other than the party
against whom attachment had been issued or his agent, and such
person makes an affidavit of his title thereto, or right to the possession
thereof, stating the grounds of such right or title, and serves such
affidavit upon the sheriff while the latter has possession of the attached
party, 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 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 disagreement as to such
value, the same shall be decided by the court issuing the writ of
attachment.
No claim for damages for the taking or keeping of the property may be
enforced 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 such prevent 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 plainly spurious claim, in the same or a separate
action.
Is there an instance that the sheriff will not be in possession of the
attached property?
The presupposition of this is that the sheriff has already levied the
property and it was the wrong property levied. You will serve your
affidavit while the sheriff is in possession of the property meaning the
levy is already done, the property is with him –while the sheriff has
possession of the attached property and you file a third-party claim, then
the sheriff will release it to the third party claimant unless, how do you
prevent the sheriff from releasing it to the third party claimant?
The sheriff shall not be bound to keep the property under attachment,
unless the attaching party or 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.
Who will post?
The attaching creditor or his agent.
If you don’t want the sheriff to release the property to the 3rd-party
claimant, then the attaching creditor has to post another bond. What is
the value of the bond?
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.
The minimum amount is the value of the property.
What if now, there is a disagreement as to the value of the property?
In case of disagreement as to such value, the same shall be decided by
the court issuing the writ of attachment.
What is the purpose of that bond that will be filed by the attaching
creditor?
The bond is to protect the sheriff against claim for damages for not
releasing the property attached.
And when can you claim for damages against that bond?
No claim for damages for the taking or keeping of the property may be
enforced against the bond unless the action therefor is filed within (120)
days from the date of the filing of the bond. [before the expiration of
120 days]
This is an additional requirement aside from the bond that was posted
by the attaching creditor (plaintiff). If the property attached is being
claimed by a third-party claimant, there is a new bond to post under
Section 14 so that the sheriff will not release that property to the thirdparty claimant. And to answer the third-party claimant for any damage
that may be caused by reason of the levy on that property by the sheriff
– or the non-release by the sheriff of that property to the claimant.
APURA ALIGATO BAYQUEN CABARLO CASTRO CAVITE DINGAL FABE MONDRAGON PAMAOS PIANG SANTIAGO | III-Manresa 2019
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What happens if the third-party claim is frivolous – he was in conspiracy
with the defendant so the property will not be attached? There is
collusion with the third-party claimant and the defendant in order to keep
the property beyond the reach of the attaching creditor.
File a case for damages in the same case or in a separate action [or a
criminal case for perjury].
If it’s conjugal, then it’s also the property of the husband, why can’t it be
liable?
For the conjugal partnership to be liable for a liability that should
appertain to the husband alone, there must be a showing that
some advantages accrued to the spouses.
If the grant of the attachment was on the basis of fraud because the
defendant was removing his properties in fraud of his creditors, and he
makes an agreement with the third-party claimant for him to say that it
is his property, so he has a propensity to be fraudulent.
The contract of loan was between the private respondent and
the PBMCI, solely for the benefit of the latter. No presumption
can be inferred from the fact that when the petitioner-husband
entered into an accommodation agreement or a contract of
surety, the conjugal partnership would thereby be benefited.
The private respondent was burdened to establish that such
benefit redounded to the conjugal partnership.
In that situation, the attaching creditor can go after the third-party
claimant for filing such a spurious or fraudulent claim for damages in the
same action or separate action. The worst case here is that he can file
a criminal case for perjury because the third-party claim is in an affidavit
form. It’s under oath. In addition to his remedy for damages against the
third-party claimant for making a spurious or fraudulent claim or frivolous
claim.
Now what if it’s true, and it is a meritorious claim, what are the remedies
of the third-party claimant other than filing a third-party claim and he
can’t get the property because the attaching creditor posted a bond? He
can ask for damages within the 120 days from the posting of the bond,
but what if he wasn’t able to do that? What is his recourse now?
1.
2.
3.
4.
TERCERIA/THIRD PARTY CLAIM
INDEPENDENT ACTION
MOTION FOR INTERVENTION
MOTION TO DISCHARGE ATTACHMENT
[CUMULATIVE]
If you’re the third-party claimant which among these remedies would be
suitable?
The least expensive is a motion to discharge. You can ask for leave of
court.
Between intervention and a separate case, which one is preferable?
When you file a motion for intervention it is subject to the court’s
discretion if you’re going to be allowed to intervene. You can file a
separate action. No argument with that. There’s no court’s discretion on
where you file an action but you have to be prepared for the expense.
How then can you avail of a motion to discharge under Section 13 when
you are not a party to the case? And what will now be the basis of the
court in entertaining your motion when you’re not a party to the case?
What happened in the case of CHING vs. CA?
FACTS: ABC filed a complaint for sum of money with prayer for
a writ of preliminary attachment against PBMCI to collect P12,
612, 972.88.
Sheriff levied on attachment the 100, 000 common shares of
CITYCORP stocks in the name of Alfredo Ching.
Was the wife a signatory of the continuing guaranty? No.
That is the main point there. That’s why in loans from banks, it should
be the husband and wife that are asked to sign so there’s no escape. All
their conjugal properties can be answerable especially a surety
agreement. Two people are asked to sign because the wife can
complain.
What does the Family Code say if the husband signs and you don’t have
a signature, is that transaction valid, void or unenforceable? Void but it’s
a continuing offer unless the other spouse consents. In a way, it’s like
an unenforceable contract subject to ratification by the other spouse.
That’s the reason why she’s complaining and why she is considered a
third-party claimant.
However, looking at it, she shouldn’t be a third-party claimant. The
reason there is that the husband is the only one who signed the loan
documents and because of that, she didn’t file a separate case, she
didn’t intervene.
She filed a MOTION TO SET ASIDE THE LEVY ON ATTACHMENT –
meaning her ground is that there’s an irregularity in the enforcement of
the writ which is a ground for a motion to discharge under Section 13 but
she’s not a defendant. What she did here is a motion to set the levy, not
to discharge the writ per se, but just to set aside that particular levy and
the reason there is because of an improper levy made by the sheriff.
What is the scope of inquiry here? Should the court deal on the issue of
ownership where it determines whether there is property levy here made
by the sheriff? What is the nature of the hearing here? Will there be a
trial type hearing here?
The scope of inquiry is whether or not the sheriff was correct in making
the levy – only the action of the sheriff if it’s right/wrong. And if it’s wrong,
the levy will be lifted.
What type of hearing is required?
SUMMARY HEARING. It’s the same procedure as Section 13. We will
not have a full-blown trial.
ISSUE: Does the petitioner-wife have the right to file the motion
to quash the levy on attachment on the 100, 000 shares of
stocks?
The discharge here is with respect to the property levied upon because
it could be the writ was implemented on several properties. Only the
property claimed by a 3rd person. The correct motion there is to set aside
the levy, not to discharge the writ. You have no other interest here with
respect to the other properties covered by the writ. You’re not a main
party to the case. The only person who can do that would be the
defendant— he is the only one who has the right to discharge the writ
because precisely the writ was issued against him so your motion
shouldn’t even be to discharge the writ. It’s motion to set aside the levy
like what happened in the case of CHING vs. CA. – because you’re the
one affected by that particular levy, not the defendant.
RULING: YES. The petitioner-wife had the right to file the said
motion, although she was not a party in Civil Case No. 142729.
You have to distinguish the difference here, if it’s a motion to discharge
or a motion to set aside.
In this case, the petitioner-wife filed her motion to set aside the
levy on attachment of the 100,000 shares of stocks in the name
of petitioner-husband claiming that the said shares of stocks
were conjugal in nature; hence, not liable for the account of her
husband under his continuing guaranty and suretyship
agreement with the PBMCI. The petitioner-wife had the right to
file the motion for said relief.
But if it’s a motion to set the levy, the same procedure is followed under
Section 13:
•
There will be a summary hearing.
•
SCOPE OF INQUIRY: on the propriety of the action taken by the
sheriff in implementing/enforcing the writ.
•
It may involve issues of ownership, then that may be summarily
ruled upon during that summary hearing.
Encarnacion Ching filed a MOTION TO SET ASIDE THE LEVY
ON ATTACHMENT alleging that the 100, 000 shares of stocks
levied were acquired by her and husband during the marriage
out of conjugal funds. She alleged that being the wife she was
third-party claimant entitled to file a motion for the release of the
properties.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
August 20, 2019 by Nice Mondragon
“Even After The Release Of The Attached Property”
When it says you can avail of a motion to discharge under Sec 13 even
if the property has been released, if you consider that phrase as to mean
the release of the property physically without posting any counterbond,
then that would contemplate a situation under Sec 14 where the sheriff
has released the property by virtue of a 3rd party claim. If that is the
scenario, then you can still have the writ of attachment discharged.
But if the release of the property is by virtue of the posting of a
counterbond under Sec 12 then you cannot anymore move for the
discharge of the writ of attachment if you apply the ruling of MINDANAO
SAVINGS LOAN ASSO.,INC. v CA.
So if the release of the property is by virtue of a 3rd party claim, then
technically you can still have the writ of attachment discharged by motion
under Sec 13. That’s the closest that we could reconcile that phrase,
“even after the release of the attached property”.
Recap of Sec. 14:
Section 14 talks about the 3rd party claim. All the remedies of the 3rd
party claimant are cumulative, meaning if the one does not work, then
the 3rd party claimant can still avail of the other remedies. One does not
preclude the availment of the remaining benefits.
SECTION 15. Satisfaction of judgment out of property attached;
return of officer. — If judgment be recovered by the attaching party and
execution issue thereon, the sheriff may cause the judgment to be
satisfied out of the property attached, if it be sufficient for that purpose,
in the following manner:
(a) By paying to the judgment obligee the proceeds of all sales of
perishable or other property sold in pursuance of the order of the court,
or so much as shall be necessary to satisfy the judgment;
(b) If any balance remains due, by selling so much of the property, real
or personal, as may be necessary to satisfy the balance, if enough for
that purpose remain in the sheriff’s hands, or in those of the clerk of the
court; and
(c) By collecting from all persons having in their possession credits
belonging to the 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 under this section and furnish the parties with copies
thereof. (5a)
What happens to the attached property if the plaintiff or the attaching
creditor prevails in the main case? If there is a favorable judgment for
the attaching creditor, what happens to the attached property?
If judgment be recovered by the attaching party and execution issue
thereon, the sheriff may cause the judgment to be satisfied out of the
property attached, if it be sufficient for that purpose, in the following
manner:
(a) By paying to the judgment obligee the proceeds of all sales
of perishable or other property sold in pursuance of the order
of the court, or so much as shall be necessary to satisfy the
judgment;
(b) If any balance remains due, by selling so much of the
property, real or personal, as may be necessary to satisfy the
balance, if enough for that purpose remain in the sheriff’s
hands, or in those of the clerk of the court; and
(c) By collecting from all persons having in their possession
credits belonging to the 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.
[Sec. 15, Rule 57]
What is the order of the satisfaction of judgment under Sec 15?
1)
2)
3)
Proceeds from the sale of perishable items
Sale of real or personal properties
From garnished properties
In the case of TAYABAS LAND CO. v SHARRUF, how was the
judgment here satisfied?
There was a judgment in favor of the attaching creditor and there was a
garnished judgment debt in the amount of P1588.24. But instead of
following the proper procedure of garnishment to satisfy the judgment, it
was sold in execution for P200. The judgment in favor of the attaching
creditor cannot be satisfied. The Supreme Court said that that was the
wrong procedure. The entire thing was void, that is not how you satisfy
a favorable judgment from a garnished judgment debt.
If you have a garnished amount, there is a separate procedure for
satisfying the judgment out of it. If you have properties that were
seized by virtue of the levy, real or personal, so those were the
things that are subject to auction sale NOT judgment credits or
judgment debts.
Because of that, there was an erroneous procedure for the satisfaction
of the judgment, it is obviously void. You cannot satisfy the judgment if
what was sold was not capable of being sold.
What should have sold would be real or personal property, so you have
the order of payment under Section 15:
1)
2)
3)
Proceeds from the sale of perishable items
Sale of real or personal properties
From garnished amounts
If you don’t have the first two, but you have a garnished amount, then
that will be your last recourse. If an amount, debt or credit is garnished,
there is forced novation and the garnishee becomes liable directly to the
attaching creditor. Instead of paying to the defendant, the amount owing
to the defendant will be paid by the garnishee directly to the attaching
creditor.
TAYABAS LAND CO. v SHARRUF
41 Phil. 382
Reflection upon this feature of the case, however, confirms the opinion
that our lawmakers acted wisely in requiring that debts and credits
should be executed by means of the process of garnishment rather than
by exposing them to public sale. In the case before us a judgment for a
large amount was sold for a merely nominal sum, and such would
generally be the case at a sale under similar conditions. This cannot fail
to be highly prejudicial to the debtor who is under immediate execution.
The proceeding by garnishment, on the contract, enables all parties to
realize their rights without unduly disturbing the position of any.
Negligence or fault of the sheriff:
Supposing the property attached was not applied towards the
satisfaction of the judgment by reason of the negligence or fault of the
sheriff, what happens? Will the judgment obtained by the attaching
creditor considered satisfy?
PNB v. VASQUEZ
71 Phil. 433
It seems fair that plaintiff having put defendant’s property into the hands
of the sheriff, the loss should fall on him (sheriff) and not on defendant.
When a sheriff takes property or goods in execution or by attachment,
he becomes the bailee for the benefit of all parties interested, and
certainly for the party who set him in motion. After obtaining the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
judgment, plaintiff at once was entitled to have the proceeds of the sale
applied to the satisfaction of his judgment and it was the duty of the
sheriff to pay the proceeds over. The money collected or paid the sheriff
on the sale of the goods or property may be regarded just like money in
the hands of a sheriff collected on execution. If the sheriff collects money
from a judgment debtor, and then fails to pay it over, the debtor cannot
be compelled to pay it again.
You apply the principle of judicial compulsion. Obedience to the order of
the court and being compelled to pay by the court will absolve the
defendant from paying again.
What happens if the sheriff absconds with the money subject to the
execution?
The loss shall fall on the judgment creditor if there is no showing that the
judgment debtor exercised any contributory negligence to the failure of
the sheriff to remit or deliver the proceeds.
Example of a contributory negligence
An example is the case of PAL v CA. The judgment debtor, PAL, issued
a check as payment for the judgment. However, they have issued a
check in the name of the sheriff instead of the judgment creditor.
Because of this, the sheriff was able to abscond with the money. The
judgment debtor was made to pay again the amount of the judgment.
PAL v COURT OF APPEALS
181 SCRA 557
Balance/ Excess of the Attached Properties
What happens if there is a balance? Meaning, the attached property is
not enough to pay off the judgment award?
If after realizing upon all the property attached, including the proceeds
of any debts or credits collected, and applying the proceeds to the
satisfaction of the judgment, less the expenses of proceedings upon the
judgment, any balance shall remain due, the sheriff must proceed to
collect such balance as upon ordinary execution. [Section 16, Rule 57]
What if there is an excess?
The sheriff, upon reasonable demand, must return to the judgment
obligor the attached property remaining in his hands, and any proceeds
of the sale of the property attached not applied to the judgment. [Section
16, Rule 57]
If the attached properties are insufficient, there will be execution on the
other remaining properties like any other ordinary executions. But if
there is an excess, then it has to be returned to the obligor.
SECTION 17. Recovery upon the counter-bond. — When the
judgment has become executory, the surety or sureties on any counterbond given pursuant to the provisions of this Rule to secure the payment
of the judgment shall become charged on such counter-bond, and bound
to pay to the judgment obligee upon demand the amount due under the
judgment, which amount may be recovered form such surety or sureties
after notice and summary hearing in the same action. (17a)
When will the sureties be held liable on the counterbond?
The theory is where payment is made to a person authorized and
recognized by the creditor, the payment to such a person so authorized
is deemed payment to the creditor. Under ordinary circumstances,
payment by the judgment debtor in the case at bar, to the sheriff should
be valid payment to extinguish the judgment debt.
There are circumstances in this case, however, which compel a different
conclusion.
The payment made by the petitioner to the absconding sheriff was not
in cash or legal tender but in checks. The checks were not payable to
Amelia Tan or Able Printing Press but to the absconding sheriff. Xxx
It is, indeed, out of the ordinary that checks intended for a particular
payee are made out in the name of another. Making the checks payable
to the judgment creditor would have prevented the encashment or the
taking of undue advantage by the sheriff, or any person into whose
hands the checks may have fallen, whether wrongfully or in behalf of the
creditor. The issuance of the checks in the name of the sheriff clearly
made possible the misappropriation of the funds that were
withdrawn.xxx
Having failed to employ the proper safeguards to protect itself, the
judgment debtor whose act made possible the loss had but itself to
blame.
If there is fault or negligence on the part of the defendant that led to the
loss of the amount turned over to the sheriff, then the defendant can be
made to pay again. So only when there is no fault or negligence on the
part of the defendant can the defendant be not held liable again for the
judgment.
SECTION 16. Balance due collected upon an execution; excess
delivered to judgment obligor. — If after realizing upon all the property
attached, including the proceeds of any debts or credits collected, and
applying the proceeds to the satisfaction of the judgment, less the
expenses of proceedings upon the judgment, any balance shall remain
due, the sheriff must proceed to collect such balance as upon ordinary
execution. Whenever the judgment shall have been paid, the sheriff,
upon reasonable demand, must return to the judgment obligor the
attached property remaining in his hands, and any proceeds of the sale
of the property attached not applied to the judgment. (16a)
The sureties will be made liable upon demand of the amount due under
the judgment.
What are the conditions?
Conditions of the recovery upon the counterbond
1. The creditor demands upon the surety for satisfaction of the judgment
2. The surety be given notice and a summary hearing in the same action
as to his liability for judgment under the counterbond.
a. The bondsmen are not liable on the bond when the
obligation assumed is premised upon the issuance of a writ of
attachment by the court which was not actually issued.
b. The motion by the surety to quash the writ of execution is
sufficient notice.
c. After demand, the amount may be recovered from the
surety in the same action. There is no need for a separate
action.
d. The rule of exclusion cannot be invoked by a bondsman of
a counterbond against an attachment writ where there is
already a final and executor judgment sentencing the
bondsman as solidarily liable pro indiviso.
e. The bond answers for the judgment even if not expressly
stipulated. The under which this bond is issued shall be
considered as part of the bond.
Counterbond held liable
When will the counterbond be held liable? At what point in time?
When the judgment favorable to the plaintiff has become final and
executory. Just like any execution proceedings, you cannot have an
execution until the judgment has become executory. You have to wait
for its finality.
In other words, there must be no pending appeal or no pending motion
for reconsideration of the judgment. The period to appeal should have
already lapsed for the judgment to become final and executory. That’s
the time that you can move for the execution of the judgment.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Since we are talking about a counterbond, meaning, there is no attached
property because a counterbond has been filed. Therefore, whatever
that was attached, has already been released. In its stead, you have the
counterbond. The attaching creditor will now run after the counterbond
because the attached property has already been released.
have to follow the conditions on when judgment can be executed
pending appeal.
Separate action
Is it necessary to file a separate action to make the surety liable on a
counterbond?
We are now in the point wherein you have a final and executory
judgment and instead of an attached property, you are now dealing with
a counterbond. If the counterbond is in a form of a surety bond, how can
you make the counterbond liable?
The liability of a surety can be made in the same case, no need to file a
separate action. In fact, Sec. 17 provides for the procedure on when the
counterbond can be made liable.
Requisites to hold the surety on a counterbond
To hold a surety on a counter-bond liable, what is entailed is:
liable:
In the case of ZARAGOZA v. FIDELINO, how was the counterbond here
made liable? What did the attachment creditor do?
1. The filing of an application therefor with the Court having
jurisdiction of the action;
Zaragoza moved for the amendment of the decision so as to include the
surety, Mabini Insurance & Fidelity Co., Inc., as a party solidarily liable
with the defendant for the payment of the sums awarded in the
judgment.
2. The presentation thereof before the judgment becomes
executory (or before the trial or before appeal is perfected);
Is that allowed?
3. The statement in said application of the facts showing the
applicant's right to damages and the amount thereof,
4. The giving of due notice of the application to the attaching
debtor and his surety or sureties; and
5. The holding of a proper hearing at which the attaching
creditor and the sureties may be heard on the application.
There should be a summary hearing and the surety is solidarily liable
with the judgment obligor.
Right of Excussion
Can the surety invoke the right of excussion?
The sureties cannot invoke the right of excussion because the liability
of the counterbond is direct and final. There is no need to prove that
there is no more property of the debtor sufficient to satisfy the
obligation.
PIONEER INSURANCE & SURETY vs. CAMILON
116 SCRA 190
The rule of excussion claimed by petitioner under Section 17 of Rule 17,
which petitioner invokes considering it was only the bondsman to secure
the lifting of the writ of preliminary attachment, is not applicable in the
instant case where there is already a final and executory judgment
sentencing the bondsman as joint and solidarily liable.
Yes, because no separate action was necessary to enforce the surety’s
liability.
You can have the counterbond and the surety made liable by asking for
the amendment of the decision. In that case, you have to give notice to
the surety in order to be heard, that will now be the summary hearing
required for the surety to be given his day in court.
ZARAGOZA v. FIDELINO
163 SCRA 443
This being so, the appellant surety's liability attached upon the
promulgation of the verdict against Fidelino. All that was necessary to
enforce the judgment against it was, as aforestated, an application
therefor with the Court, with due notice to the surety, and a proper
hearing, i.e., that it be formally notified that it was in truth being made
responsible for its co-principal's adjudicated prestation (in this case, the
payment of the balance of the purchase price of the automobile which
could no longer be found and therefore could not be ordered returned),
and an opportunity, at a hearing called for the purpose, to show to the
Court why it should not be adjudged so responsible. A separate action
was not necessary; it was in fact proscribed. And again, the record
shows substantial compliance with these basic requirements, obviously
imposed in deference to due process.
There is a summary hearing to comply with the due process
requirement. The surety will be heard during the summary hearing and
the applicant must show the right to claim the amount due in the
judgment.
SECTION 18. Disposition of money deposited. — Where 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 assignee. If the judgment is in favor of
the party against whom attachment was issued, the whole sum
deposited must be refunded to him or his assignee. (18a)
Execution pending appeal
Can there be an execution in the counterbond pending appeal? Yes.
If there is a cash bond or money deposited in court, how will it be
disposed after judgment has been rendered in the case?
Hearing
Can the surety demand his right to heard before it can be made liable?
Can he demand a hearing?
PHILIPPINE BRITISH ASSURANCE vs. IAC
150 SCRA 520
Under the third paragraph it is also stipulated that the counterbond is to
be "applied for the payment of the judgment." Neither the rules nor the
provisions of the counterbond are limited in its application to a final and
executory judgment. Indeed, it is specified that it applies to the payment
of any judgment that maybe recovered by plaintiff. Thus, the only logical
conclusion is that an execution of any judgment including one pending
appeal if returned unsatisfied maybe charged against such a
counterbond.
If judgment was executed pending appeal, then a counterbond can also
be executed on pending appeal. The same principle applies. You just
Where 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 assignee. If the
judgment is in favor of the party against whom attachment was issued,
the whole sum deposited must be refunded to him or his assignee.
[Section 18, Rule 57]
If the judgment is in favor of the attaching creditor, what happens to the
cash? 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 assignee.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What happens if the judgment in the main case is against the attaching
creditor?
Yes, whenever the judgment is against the attaching creditor, the liability
is AUTOMATIC against the attachment bond.
If the judgment is in favor of the party against whom attachment was
issued, the whole sum deposited must be refunded to him or his
assignee.
What are the qualifications?
If the plaintiff or the attaching creditor loses the case on the merits, there
is nothing to be awarded in his favor. Whatever property that has been
attached or cash that has been deposited must be returned to the
debtor. There is nothing to award to the attaching creditor.
Under section 20, in order to recover damages on a replevin bond (or
on a bond for preliminary attachment, injunction or receivership) it is
necessary:
1. That the defendant-claimant has secured a favorable
judgment in the main action, meaning that the plaintiff has no
cause of action and was not, therefore, entitled to the
provisional remedy of replevin;
SECTION 19. Disposition of attached property where judgment is
for party against whom attachment was issued. — If judgment be
rendered against the attaching party, all the proceeds of sales and
money collected or received by sheriff, under the order of attachment,
and all property attached remaining in any such officer’s hands, shall be
delivered to the party against whom attachment was issued, and the
order of attachment discharged. (19a)
2. That the application for damages, showing claimant's right
thereto and the amount thereof, be filed in the same action
before trial or before appeal is perfected or before the
judgment becomes executory;
3. That due notice be given to the other party and his surety
or sureties, notice to the principal not being sufficient and
Aside from returning the property what will happen when the judgment
is against the attaching creditor?
If judgment be rendered against the attaching party, all the proceeds of
sales and money collected or received by sheriff, under the order of
attachment, and all property attached remaining in any such officer’s
hands, shall be delivered to the party against whom attachment was
issued, and the order of attachment discharged. [Section 19, Rule 57]
If the case is dismissed, you expect two things to happen:
1.
2.
Attached property returned and any cash deposit or any sale
of perishable property that has been attached will be returned
to the defendant
The writ of attachment will be discharged
SECTION 20. Claim for damages on account of improper, irregular
or excessive attachment. — An application for damages on account of
improper, irregular or excessive attachment must be filed before the trial
or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching 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.
If the judgment on the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained
during the pendency of the appeal by filing an application in the appellate
court, with notice to the party in whose favor the attachment was issued
or his surety or sureties, before the judgment of the appellate court
becomes executory. The appellate court may allow the application to be
heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages
awarded to him from any property of the attaching party not exempt from
execution should the bond or deposit given by the latter be insufficient
or fail to fully satisfy the award. (20a)
Aside from the return of the attached property to the defendant when the
case is dismissed on the merits, and the writ of attachment has been
discharged by virtue of an adverse ruling or judgment to the attaching
creditor, what else can the judgment debtor or defendant may claim
here?
The attachment debtor may claim for damages on account of improper,
irregular or excessive attachment as stated in Section 20, Rule 57.
Damages against what?
Against the attachment bond
Does it follow that when the judgment is against the attaching creditor,
the defendant is entitled to damages?
4. That there should be a proper hearing and the award for
damages should be included in the final judgment.
How will the claim for damages be made?
HANIL DEVELOPMENT CO. v IAC
144 SCRA 557
As may be gathered from section 20 of Rule 57, the application for
damages against the surety must be filed (with notice to the surety) in
the Court of First Instance before the trial or before appeal is perfected
or before the judgment becomes executory.
If an appeal is taken, the application must be filed in the appellate court
but always before the judgment of that court becomes executory so that
the award may be included in its judgment (Luneta Motor Co. v.
Menendez, supra).
Claim for damages
If your claim for damages is included in your answer, how will the court
hear your claim for damages? In what form will you claim damages in
the answer?
The three instances under Sec. 20 where you can make a claim for
damages are the following:
a. Before trial. or
b. Before appeal is perfected, or
c. Before the judgment becomes executory
Before trial
A defendant will make his claim for damages as early as his
responsive pleading (answer) in a form of a counterclaim.
After trial
The defendant will make his claim
i.
ii.
Before the appeal is perfected or
Before the judgment becomes final, either of the two
If the decision does not provide for the award of damages, then you
make a motion that you’d be awarded damages. In the case of
ZARAGOZA v. FIDELINO, you can either:
a. Move for the amendment of the decision to include
an award for damages (Motion to Amend Decision)
b. You can move for a motion for partial
reconsideration because there was no judgment for
damages (Motion for Partial Reconsideration)
If the decision has already an award for damages, all you have to do is
have it executed. The problem arises if the judgment is silent on your
claim for damages despite the fact that you made it in your counterclaim.
If the judgment is silent, then you have to move so that you can be
awarded damages.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Why do you have to ask the court to reconsider its decision partially so
that you can be awarded damages? Are you sure that you’ll be awarded
damages?
Yes, because the damages here will be against the attachment bond
without which the writ of attachment will not have been issued. That is
an indispensable requisite for the issuance of a writ of attachment. At
the end of the case, the attaching creditor lost, so under Sec 19, the
attached property will be returned to the defendant or whatever deposit
was made in court will be returned to the defendant.
If the attached property was sold, the proceeds will be returned to the
defendant. That’s not all, you can now claim for damages against the
attachment bond. If the judgment already awards you damages, it’s just
a matter of executing it against the attachment bond. If it’s silent, you
have to move for the damages to be included in the judgment. You do
that before finality of the judgment. Before that 15-day reglementary
period to appeal or for the judgment to become final, you have to make
your claim for damages. Make the court realize that you have a claim for
damages. If there is already that award for damages, you can already
make the attachment bond liable.
Supposing there is no appeal made and there is no provision for the
award of damages in favor of the defendant in the decision, when should
the defendant claim for damages without any appeal being perfected?
Can you not file a separate case?
Claim for damages be made in the same proceeding
No, when the judgment on the merits is adverse on the attaching
creditor, the claim for damages against the attachment bond must be
made in the same proceeding and included in the judgment before the
judgment becomes final and executory. If the trial court failed to include
that in the judgment, you have to make your claim right away before the
judgment becomes final and executory, otherwise it is barred forever.
You cannot make a claim when the judgment becomes final and
executory.
Automatic
liability
against
the
attachment
bond
If you read the rules, whenever the judgment is against the attaching
creditor, the liability is AUTOMATIC against the attachment bond. Since
that is the nature of the liability of the attachment bond, it cannot be
made separately in a different case. It has to be in the same case.
Why is the liability automatic when the case is dismissed?
Attachment bond in the form of a surety
If the attachment bond is in the form of a surety, how can you make the
surety liable on the attachment bond? What are the requisites?
If there is a judgment rendering the principal liable then the surety will
also be automatically liable.
Requisites for recovery of damages:
Under section 20, in order to recover damages on a replevin bond (or
on a bond for preliminary attachment, injunction or receivership) it is
necessary:
1. That the defendant-claimant has secured a favorable
judgment in the main action, meaning that the plaintiff has no
cause of action and was not, therefore, entitled to the
provisional remedy of replevin;
2. That the application for damages, showing claimant's right
thereto and the amount thereof, be filed in the same action
before trial or before appeal is perfected or before the
judgment becomes executory;
3. That due notice be given to the other party and his surety
or sureties, notice to the principal not being sufficient and
4. That there should be a proper hearing and the award for
damages should be included in the final judgment.
Can the surety claim that he has been deprived of due process if the
liability is automatic?
No, that has been satisfied by the notice and hearing requirement
What will be the grounds of the claim of damages against the attachment
bond?
An attachment is a harsh remedy. It exposes the defendant to
humiliation and embarrassment when his property is subject to
attachment. Whenever there is a wrongful attachment, which will be
revealed when the case is dismissed on the merits, then the defendant
is entitled to claim damages because the condition of an attachment
bond is that, it will answer for ANY damage that the defendant will suffer
if it turns out later that the attaching creditor is not entitled to the remedy.
If the main case it dismissed, it means that he was not entitled to that
provisional remedy of writ of preliminary attachment in the first place.
Like what happened in the case of PCIB v ALEJANDRO, how much
damage was he able to collect when his property was attached
wrongfully based on improper attachment? In this case, they lied in their
application for attachment.
PCIB v. ALEJANDRO
Sept. 21, 2007
In light of the foregoing, the Court of Appeals properly sustained the
finding of the trial court that petitioner is liable for damages for the
wrongful issuance of a writ of attachment against respondent. Xxx
WHEREFORE, the petition is PARTIALLY GRANTED. The May 31,
2006 Decision of the Court of Appeals in CA-G.R. CV No. 78200 is
AFFIRMED with MODIFICATIONS. As modified, petitioner Philippine
Commercial International Bank is ordered to pay respondent Joseph
Anthony M. Alejandro the following amounts: P50,000.00 as nominal
damages, P200,000.00 as attorney’s fees; and P500,000.00 as moral
damages, and P500,000.00 as exemplary damages, to be satisfied
against the attachment bond issued by Prudential Guarantee &
Assurance Inc.,under JCL (4) No. 01081, Bond No. HO-46764-97.
Basic rule under Sec. 20 is you cannot claim for damages against the
bond once the decision becomes final.
The ground for the application for damages is on account of improper,
irregular or excessive attachment.
Surety; notice and hearing
If the judgment is appealed, how do you claim for damages?
If you are a surety, are you entitled to notice and hearing? Yes.
If the judgment is appealed, the defendant shall claim damages before
the appellate court. The appellate court may:
1.
2.
Resolve it on its own or
Remand it to the trial court
It may resolve the claim for damages if the evidence on record already
constitutes the claim for damages. However, if there is a need for
additional evidence, the appellate court may remand the case to the
trial
court.
MALAYAN INSURANCE CO. v. EMILIO V. SALAS
179 Phil. 201
It was held that, because the surety was not notified of the hearing on
the damages suffered by the defendant in the manner prescribed in
section 20 of Rule 59, now Rule 57, it was not liable for damages under
its attachment bond.
The surety is notified so that he may cross-examine the witnesses
testifying as to the damages and question the evidence presented by
the claimant and interpose any appropriate defense. xxx
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
The surety may be held liable only if before the judgment for damages
against the principal becomes executory, an order is entered against
him after a hearing with notice to him. After the judgment becomes
executory, it is too late to file such claim for damages with notice to the
surety.
How can you make the surety liable higher than the amount?
What type of hearing?
When there is a malicious prosecution, you can file a separate case not
because you want to claim from the attachment bond but because you
want to claim damages for malicious prosecution.
Summary in nature.
Can the surety demand that a full blown trial in the merits be made? No.
STRONGHOLD INSURANCE v CA
Nov 6, 1989
The hearing will be summary and will be limited to such new defense,
not previously set up by the principal, as the surety may allege and offer
to prove. The oral proof of damages already adduced by the claimant
may be reproduced without the necessity of retaking the testimony, but
the surety should be given an opportunity to cross-examine the witness
or witnesses if it so desires." That procedure would forestall the
perpetration of fraud or collusion against the surety.
The surety can no longer be made liable on the amount higher than the
attachment bond.
Then how can you claim the excess?
In which case, you may claim more than the attachment bond and you
can claim it in a separate action. However the downside to that is, you
will prepare a complaint again, pay the filing fee etc and present
evidence. There is also no assurance that it will be granted by the court.
Whereas, if you will just claim against the attachment bond, it will be
faster because you will just be relying on the evidence already
presented, the judgment made in your favor and you don’t have to pay
the filing fee anymore. However, the downside to it is, you are only
limited to the amount of the attachment bond. You cannot go higher.
If it’s not an open, trial-type hearing then what is the purpose of that
hearing?
The surety can submit countervailing evidence, can review the evidence
presented by the parties and can be given the opportunity to rebut that
evidence. In other words, give the surety his day in court, the opportunity
to be heard. That is the purpose of the summary hearing. It is not
necessary that you have a trial type hearing.
Distinguish the claim against the counterbond and the claim against the
attachment bond:
Grounds
Who may
claim
When do you
claim
When will it be
held liable
Attachment Bond
Claim for damages
on account of
improper, irregular or
excessive
attachment
Defendant
Counterbond
When it is found
by the court that
the writ of
attachment is
proper.
Plaintiff
a.Before trial, or
b.Before appeal is
perfected, or
c.Before the
judgment becomes
executory [Section
20, Rule 57]
When the
judgment has
become
executory
[Section 17, Rule
57]
If it is claimed before
trial, it must be in the
form of a
counterclaim in the
answer. In the 2nd
and 3rd stage, it must
be after the trial.
If the attaching
creditor lost and the
judgment is not yet
final and executory.
Otherwise, your
claim is barred
forever.
If the attaching
creditor prevails
and there is
already a final
and executory
judgment
Malicious Prosecution; Liability higher than the attachment bond
Can you make the attachment bond liable in the amount higher than
the bond?
As a general rule, the attachment bond can only be made liable for the
amount of the bond. However, it can be made liable higher than the
amount of the bond when there is a malicious filing of the attachment
bond.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
RULE 58
PRELIMINARY INJUNCTION
August 27, 2019 by Kindy Mae Pamaos
Preliminary Injunction, Defined
Section 1. Preliminary injunction defined; classes. — A preliminary
injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court, agency
or a person to refrain from a particular act or acts. It may also require
the performance of a particular act or acts, in which case it shall be
known as a preliminary mandatory injunction. (1a)
PNB VS. RJ VENTURES
G.R. NO. 164548 : September 27, 2006
Status Quo Ante Is Not
The Situation Immediately Prior To The Filing Of The Case
The status quo referred is “the last actual, uncontested, peaceful
situation between the parties prior to the controversy”. This is with regard
to the status of parties prior to the conflict or desertion of their respective
rights. You go back to the incident before the parties had conflict.
So it is not the situation immediately prior to the filing of the case
because during that period, there is already a conflict or actual violation
of their rights. So go back to where the parties had no transaction yet, in
the case of First Global, before the mortgage and there was no
agreement yet. That is the last peaceful, uncontested status.
THEREFORE, if the transaction between the parties is based on a
contract, then the last uncontested status between the parties is that
prior to the execution of the contract.
What do you mean by Actual Controversy?
A preliminary injunction is an order granted at any stage of an action
prior to judgment of final order, requiring a party, court, agency, or
person to refrain from a particular act or acts. It is a preservative remedy
to ensure the protection of a party's substantive rights or interests
pending the final judgment in the principal action. A plea for an injunctive
writ lies upon the existence of a claimed emergency or extraordinary
situation which should be avoided for otherwise, the outcome of a
litigation would be useless as far as the party applying for the writ is
concerned.
Actual Controversy, Defined.
The actual controversy refers to the cause of action of the case filed.
What is the purpose of the writ of preliminary injunction?
Answer: The status quo ante here is before the line was disconnected
because it was the last actual, peaceful and uncontested status that
preceded the actual controversy. Without such disconnection, there
could be no case filed.
Purpose of the Writ of Preliminary Injunction
A preliminary injunction is merely a provisional remedy, adjunct to the
main case subject to the latter's outcome. It is not a cause of action in
itself. The sole object of a preliminary injunction is to maintain the status
quo until the merits can be heard.
FIRST GLOBAL REALTY VS. AGUSTIN
G.R. No. 144499 : February 19, 2002
Example No. 1
When the Davao Light discovers the illegal connection and cuts it off,
the complainant may go to court asking for a writ of preliminary injunction
to preserve the status quo ante.
Question: What is the status quo ante here?
What is the real nature of the remedy of Preliminary injunction?
Real Nature of Preliminary Injunction
The real nature of the remedy of Preliminary Injunction is
PRESERVATIVE OF THE STATUS QUO ANTE.
What court shall issue a writ of preliminary injunction?
A preliminary injunction is merely temporary, subject to the final
disposition of the principal action and its purpose is to preserve the
status quo of the things subject of the action and/or the relation between
the parties, in order to protect the right of the plaintiff respecting the
subject of the action during the pendency of the suit. Otherwise or if no
preliminary injunction were issued, the defendant may, before final
judgment, do or continue the doing of the act which the plaintiff asks the
court to restrain, and thus make ineffectual the final judgment rendered
afterwards granting the relief sought by the plaintiff. Its issuance rests
entirely within the discretion of the court taking cognizance of the case
and is generally not interfered with except in cases of manifest abuse.
The purpose of a preliminary injunction, then, is "to prevent threatened
or continuous irremediable injury to some of the parties before their
claims can be thoroughly studied and adjudicated. Its sole aim is to
preserve the status quo until the merits of the case can be heard fully.”
Thus, it will be issued only upon a showing of a clear and unmistakable
right that is violated. Moreover, an urgent and permanent necessity for
its issuance must be shown by the applicant.
What is the status quo ante?
Status Quo Ante, Defined
Status quo ante literally means "the way things were before." It restores
a specific condition to the state it previously existed prior to the issuance
of an assailed order or action.
FIRST GLOBAL REALTY VS. AGUSTIN
G.R. NO. 144499 : FEBRUARY 19, 2002
A preliminary injunction is a provisional remedy that a party may resort
to in order to preserve and protect certain rights and interests during the
pendency of an action. It is issued to preserve the status quo ante -the last actual, peaceful, and uncontested status that preceded the
actual controversy.
The Court Who May Issue a Writ of Preliminary Injunction
Section 2 of Rule 58 provides that the court where the action or
proceeding is pending may grant a writ of preliminary injunction. For
Preliminary injunction:
1. The Municipal Trial Court
2.
Regional Trial Court
3.
The Court of Appeals, or any member thereof, or
4.
The Supreme Court or any member thereof
5.
Where the action or proceeding is pending.
What are the kinds of preliminary injunction?
Kinds of Injunction:
1. Preliminary injunction – an order granted at any stage
of an action or proceeding prior to the judgment or
final order, requiring a party or a court, agency or a
person to refrain from a particular act or acts.
2. Preliminary mandatory
injunction –
requires the
performance of a particular act or acts, in which case it
shall be known as a [Sec. 1, Rule 58]
Section 2. Who may grant preliminary injunction. — A preliminary
injunction may be granted by the court where the action or proceeding
is pending. If the action or proceeding is pending in the Court of Appeals
or in the Supreme Court, it may be issued by said court or any member
thereof. (2a)
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Who may be enjoined?
Section 1. Preliminary injunction defined; classes. — A preliminary
injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court, agency
or a person to refrain from a particular act or acts. It may also require
the performance of a particular act or acts, in which case it shall be
known as a preliminary mandatory injunction. (1a)
Is an injunction suit against the government a suit against the state such
that it can raise as a defense the Doctrine of State Immunity from suit?
Yes. You can ask a writ of Preliminary Injunction in a suit for specific
performance. Section 1 of Rule 58 provides that a preliminary injunction
is may also require the performance of a particular act or acts.
Which court can grant a preliminary injunction?
The Court Who May Grant A Writ Of Preliminary Injunction
Section 2 of Rule 58 provides that the court where the action or
proceeding is pending may grant a writ of preliminary injunction. For
Preliminary injunction:
1. The Municipal Trial Court
No. In the case of DOH VS. PHIL. PHARMAWEALTH, the Supreme
Court ruled that the defense of state immunity from suit does not apply
in causes of action, which do not seek to impose a charge or financial
liability against the State. The defense of immunity from suit will not avail
in preliminary injunction and mandamus because it does not seek to
impose a charge or financial liability against the State.
2.
Regional Trial Court
3.
The Court of Appeals, or any member thereof, or
4.
The Supreme Court or any member thereof
In the case of DOH VS. PHIL. PHARMAWEALTH, is there a claim for
damages here against the state? YES.
5.
Where the action or proceeding is pending.
Main Action:
Phil. Pharmawealth filed a complaint for
injunction, mandamus and damages with prayer for the issuance
of a writ of preliminary injunction and/or TRO
Purpose of the suit:
Praying that the RTC “nullify the award of the Penicillin G
Benzathine contract to YSS Laboratories, and direct DOH, Romualdez,
Galon and Lopez to declare Pharmawealth as the lowest complying
responsible bidder for the Benzathine contract, among others.
Won’t the state immunity from suit apply?
No. The State’s immunity from suit does not apply here.
DOH VS. PHIL. PHARMAWEALTH
G.R. NO. 182358 FEBRUARY 20, 2013
While the doctrine of state immunity appears to prohibit only suits
against the state without its consent, it is also applicable to complaints
filed against officials of the state for acts allegedly performed by them in
the discharge of their duties. The suit is regarded as one against the
state where satisfaction of the judgment against the officials will require
the state itself to perform a positive act, such as the appropriation of the
amount necessary to pay the damages awarded against them.
However, the rule does not apply where the public official is charged in
his official capacity for acts that are unauthorized or unlawful and
injurious to the rights of others. Neither does it apply where the public
official is clearly being sued not in his official capacity but in his personal
capacity, although the acts complained of may have been committed
while he occupied a public position.
In the present case, suing individual petitioners in their personal
capacities for damages in connection with their alleged act of "illegally
abusing their official positions to make sure that Pharmawealth would
not be awarded the Benzathine contract which act was done in bad faith
and with full knowledge of the limits and breadth of their powers given
by law" is permissible, in consonance with the foregoing principles.
What kind of preliminary injunction is prayed for by Pharmawealth?
The kind of preliminary injunction prayed for by Pharmawealth is a
Mandatory Preliminary Injunction where one requires a person to
perform particular act or acts.
Was the preliminary injunction here issued?
Main Action
Yes. The Writ of preliminary injunction was issued in this case.
In what cases may a writ of preliminary injunction issued? What kind of
action involve?
The kind of actions involved in a writ of Preliminary Injunction are those
which refrain or require the performance a person, agency or a party
from a particular act or acts.
RTC of Marawi City
In a suit for specific performance, can you ask for a writ of preliminary
injunction? And why?
What is the effectivity of the writ of preliminary injunction issued by the
regional trial court?
Injunctions issued by the Regional Trial Courts are limited to acts
committed or to be committed within its territorial jurisdiction or judicial
region as defined by the Supreme Court.
What is the doctrine of non-jurisdiction?
As far as those acts committed outside its jurisdiction, the court has no
jurisdiction to issue a writ of preliminary injunction. Ergo, it cannot issue
or restrain acts beyond its territorial jurisdiction.
How is the doctrine of non-jurisdiction different from the doctrine of
territoriality? Are they the same or not?
Doctrine of Non- Jurisdiction vis-a-vis the Doctrine of Territoriality
The doctrine of non-jurisdiction is very much related to the doctrine of
territoriality. It is a negative statement as to what the Regional Trial Court
may enjoin or what it may not enjoin.
As far as those acts committed outside its jurisdiction, it has no
jurisdiction to issue a writ of preliminary injunction. Ergo, it cannot issue
or restrain acts beyond its territorial jurisdiction. It’s a negative way of
defining the scope of jurisdiction or effectivity of the writ issued by the
RTC.
The Davao court cannot enjoin acts performed in Manila or in Cebu. You
apply there the doctrine of non-jurisdiction. Because what the Davao
courts can enjoin is only those acts committed within the territorial
jurisdiction of the Davao courts. The territoriality doctrine is the basis
for the doctrine of non-jurisdiction. Because the non-jurisdiction
there would pertains to acts performed outside its territorial jurisdiction
of the RTC.
So the first thing that you determine is, is it within the territorial
jurisdiction of the trial court. Can you enjoin this acts? If not, you cannot
invoke the jurisdiction of the RTC. The Trial court would dismiss it for the
lack of jurisdiction.
However in the case of GOMOS V ADIONG, the writ of preliminary
injunction was granted although it was beyond the territorial jurisdiction
of the court.
What happened in this case?
Saripada Ali Pacasum filed Special Civil Action for mandamus with
application for preliminary mandatory injunction against Fund for
Assistance To Private Education, alleging that FAPE, whose principal
place of business was in Makati City, was required by law to pay subsidy
to Pacasum College, Inc. under the Educational Service Program of
DECS.
Judge Adiong granted the application for preliminary mandatory
injunction upon posting by Pacasum of a surety or property bond of
P200K. Against FAPE, in its principal office in Makati City, which is
outside the 12th judicial region where the RTC of Marawi City belongs.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
GOMOS VS ADIONG
A.M. NO. RTJ-04-1863. OCTOBER 22, 2004
Judge Adiong’s failure to comply with procedural due process is
aggravated by his total inattention to the parameters of his jurisdiction.
As the presiding judge of RTC Marawi City, he should have known that
Makati City was way beyond the boundaries of his territorial jurisdiction
insofar as enforcing a writ of preliminary injunction is concerned. Section
21(1) of B.P. Blg. 129, as amended, provides that the RTC shall exercise
original jurisdiction in the issuance of writs of certiorari, prohibition,
mandamus, quo warranto, habeas corpus and injunction which may be
enforced in any part of their respective regions. The trial court has no
jurisdiction to issue a writ of preliminary injunction to enjoin acts being
performed or about to be performed outside its territorial jurisdiction.
In the case at bar, the issuance of the writ of preliminary injunction is not
a mere deficiency in prudence, or lapse of judgment on the part of Judge
Adiong but a blatant disregard of basic rules constitutive of gross
ignorance of the law.
Why is the doctrine of non-jurisdiction is in a negative statement?
The Court doesn’t have the jurisdiction to enjoin acts beyond its
jurisdiction. The lack of jurisdiction to enjoin acts performed or to be
performed beyond its jurisdiction.
What is the positive way of saying the Doctrine of non-jurisdiction?
The power of the court to issue a writ of preliminary injunction is limited
only to acts performed within its jurisdiction.
Mangahas and Verdejo are therefore barred from assailing the ruling
that the injunction issued by the Quezon City RTC has no binding effect
to the courts of Caloocan City as this issue had already been passed
upon with finality. Consequently, the issue involving the binding effect of
the injunction issued by the Quezon City RTC became the law of the
case between the parties.
What is the exception to the doctrine of non-jurisdiction?
Exceptions To The Doctrine Of Non-Jurisdiction
a.
When the decision was issued by the head of a government
agency or administrative body and the act to be enjoined is outside of
the territorial jurisdiction of the court where the head office is located.
(Decano vs Edu)
b.
Private corporations where the acts to be enjoined are outside
of the court’s territorial jurisdiction. Determine the principal place of
business because that is where the directive of the performance of those
acts emanate. (Dagupan vs Pano)
FIRST EXCEPTION:
The exception applies:
1.
When decision was issued by the head of a government
agency or administrative body and
2.
the act to be enjoined is outside of the territorial jurisdiction of
the court where the head office is located.
What is the effect of that writ he issued?
It was void and there was an abuse of discretion on the part of the judge.
Also, this is an administrative case for gross ignorance of the law
because the doctrine of non-jurisdiction is basic.
It contemplates of a situation where the government renders a decision
but the same is going to be implemented locally. In which case, you can
enjoin the act here even though the one who issued the decision is
outside the court’s territorial jurisdiction.
Does the doctrine of non-jurisdiction apply to the Court of Appeals and
the Supreme Court?
NO. The jurisdiction of the Court of Appeals and the Supreme Court to
issue the writ of preliminary injunction is all over the Philippines.
It applies to the cases where the legality of the decisions of heads of the
administrative bodies is the sole issue and the acts sought to be
enjoined where the writ is to be implemented is within the court’s
jurisdiction. The exception here is very specific. It’s not simply stating
where the acts is being issued by the person in manila to be
implemented somewhere else and the court where the decision is to be
implemented does not have jurisdiction to enjoin it. That is not the
exception. That is not how it should be stated.
In the case of MANGAHAS VS PAREDES, how did the Supreme Court
ruled on the territorial jurisdiction of courts in so far as the writ of
preliminary is concerned? Avelino Banaag filed a verified complaint
for ejectment against Augusto Mangahas and Marilou Verdejo. Issued
a Writ of Preliminary Injunction enjoining the MeTCs of Quezon City and
Caloocan City from ordering the eviction and demolition of all occupants
of the Tala Estate.
the writ of preliminary injunction is enforceable in Caloocan City.
MeTC of Caloocan City
denied the manifestation and motion
filed by Mangahas and Verdejo
ratiocinating that the injunction
issued by the Quezon City RTC has
binding effect only within the
territorial boundaries of the said court
and since Caloocan City is not within
the territorial area of same, the
injunction it issued is null and void for
lack of jurisdiction.
RTC of Caloocan City
Affirmed the decision of the MeTC
CA
Affirmed the decision of the RTC and
became final and executory.
MANGAHAS VS PAREDES
G.R. NO. 157866
FEBRUARY 14, 2007
Under Sec. 17 of BP 129, the exercise of jurisdiction of the Regional
Trial Courts and their judges is basically regional in scope but under Sec.
18, it may be limited to the territorial area of the branch in which the
judge sits.
The RTC of Caloocan City could not be deemed to have committed a
reversible error when it denied Mangahas’ Motion to Suspend
Proceedings. Apparently, the extent of the enforceability of an
injunction writ issued by the RTC is defined by the territorial region
where the magistrate presides.
What is the rationale for the exception?
Reason for the exception
The rationale for the exception is equity and practicality. The exception
allows access to courts by litigants who cannot afford to go to Manila to
question decisions of the heads of the government. The person affected
by the decision of the administrative heads can question it and have it
enjoin it by seeking a writ of preliminary injunction within his own judicial
region.
What was the ruling in the case of GAYACAO VS HON. EXECUTIVE
SECRETARY?
The doctrines invoked in support of the theory of non-jurisdiction are
inapplicable, in that those cases involved petitions for writs of injunction
seeking to control the actions of courts or officers outside the territorial
jurisdiction of the respondent courts involved. Here the sole point in
issue is whether the decision of the respondent public officers was
legally correct or not, and, without going into the merits of the case, we
see no cogent reason why this power of judicial review should be
confined to the courts of first instance of the locality where the offices of
respondents are maintained, to the exclusion of the courts of first
instance in those localities where the plaintiffs reside, and where the
questioned decisions are being enforced.
It is easy to see that if the contested ruling of the court below is
sustained, the same would result not only in hardship to litigants of
limited means, practically amounting to denial of access to the courts,
but would also unnecessarily encumber the Manila courts whose
dockets are already over-burdened. Actually, since Ortua vs. Singson,
59 Phil. 440, the power of provincial courts of first instance to review
administrative decisions of national officials has been consistently
recognized.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
In the case of DECANO VS EDU, what happened in this case?
Main Action
Decano, a janitor, filed a petition for
"Mandamus and Injunction" before
the RTC of Pangasinan, claiming that
Romeo F. Edu, in his then capacity as
Acting of the Land Transportation
Commission, acted without power and
in excess of authority in removing him
from the service, and therefore praying
for the court to declare as null and
void
Who issued the order
the order of dismissal was issued by
Commissioner Edu, a national official
stationed at Quezon City
Implemented where
Dagupan City by his subordinate
officer, the Acting Registrar of the LTC
stationed at Dagupan
RTC of Pangasinan
issued the writ of preliminary
injunction
DECANO V. EDU
99 SCRA 410 (1980)
The ruling on non-jurisdiction does not apply to the facts and
circumstance at bar. The national official stationed at Quezon City,
namely, Commissioner Edu, was impleaded as respondent in the
Pangasinan court for a complete determination of the issues involved,
the legality of Edu's order of dismissal being the pivotal issue to
determine the merits of the mandamus and injunction aspects of the
petition. In other words, Mr. Edu was joined as respondent not for
injunction purposes but mainly for testing the legality of his dismissal
order and his transmittal thereof to his co-respondent registrar at
Dagupan City to implement the same and terminate the services of
Decano in Dagupan.
It has been held that where the issue is the correctness of a national
official's decision, the provincial courts of first instance have equal
jurisdiction with the Manila courts to review decisions of national officials,
as otherwise litigants of ted means would practically be denied access
to the courts of the localities where the reside and where the questioned
acts are sought to be enforced.
SECOND EXCEPTION
The second exception applies when private corporations where the acts
to be enjoined are outside of the court’s territorial jurisdiction.
This involves private corporations as oppose to administrative heads in
the first exception.
1. Corporations with principal place of businesses in one place
and
2. they will be implementing decisions somewhere else.
In cases of private corporations, as long as the court has jurisdiction
over the principal place of business, the court can enjoin the acts of the
corporation and the subsequent implementation wherever they maybe
in the entire Philippines.
What happened in the case of DAGUPAN ELECTRIC CORP. VS.
PAÑO?
Main action
MC Adore filed a complaint for
damages with writ of preliminary
mandatory
injunction
against
DECORP in CFI Rizal
Principal place of business
DECORP’S principal place is in Quezon
City, although its generating plant is
located in Pangasinan.
MC Adore is also a domestic corporation
with office in Cubao, Quezon City. MC
Adore owns and operates the MC Adore
Int’l Palace Hotel at Dagupan City.
RTC of Rizal
issued an ex parte order for a
preliminary injunction, commanding
DECORP as well as its agents in
Dagupan
City
to
"restore
immediately not later than 5-M p.m.,
December 7, 1978, the electrical
power of the MC Adore International
Palace Hotel and resume the
electrical supply of and the electrical
services and facilities to said hotel
to enable it to operate it fully, under
pain of contempt.
DAGUPAN ELECTRIC CORP. VS. PAÑO
95 SCRA 693 (1980)
Court of First Instance of Rizal at Quezon City has jurisdiction. DECORP
has its principal office in Quezon City where the business of the
corporation is managed by the Board of Directors. Decisions of the said
corporation are made in Quezon City. The employees of DECORP in
Dagupan City merely carry out the orders issued by the officials of said
corporation in Quezon City. Hence the acts sought to be restrained are
being committed in Quezon City.
On the question of jurisdiction, both parties are residents of Quezon City,
as they have their principal offices in Quezon City. The disconnection
order was initiated and had its life and source in Quezon City. The
mandatory injunction is addressed to the corporation in Quezon City.
The Dagupan plant acts only upon order of its officers in Quezon City.
What is the rationale for the second exception?
Reason For The Second Exception
The reason for that because it is in the principal place of business where
the business of the corporation is being managed by the board of
directors. Therefore you don’t have to go to the act where it is to be
implemented but you go to the place of business. Because it could be
that the implementation of the act would be nationwide. Don’t tell me you
will file for injunction to every place where it is to be implemented?
While the writ of preliminary injunction is ancillary, that will determine
where you will file the case. Study whether it falls under the general rule
or under the exceptions.
September 10, 2019 by Anna Sophia Tarhata Piang
Does the Court of Appeals have jurisdiction over actions for injunction?
Jurisdiction of the Court of Appeals in Injunction Cases
Section 2 of Rule 58 provides that it may be granted by the court where
the action or proceeding is pending. If the action or proceeding is
pending in the Court of Appeals or in the Supreme Court, it may be
issued by said court or any member thereof.
Section 2. Who may grant preliminary injunction. — A
preliminary injunction may be granted by the court where the action
or proceeding is pending. If the action or proceeding is pending in
the Court of Appeals or in the Supreme Court, it may be issued by
said court or any member thereof.
Can the decisions of the Civil Service Commission (CSC) be enjoined?
If yes, which court has the authority to issue the injunction?
Yes, decisions rendered by the Civil Service Commission can be
enjoined. Neither the Administrative Code nor the rules of Civil Service
Commission deprive courts of their power to grant restraining orders or
preliminary injunctions to stay the execution of CSC decisions pending
appeal.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Section 82 of Rule VI of CSC Memorandum Circular 19-99 provides:
Section 82. Effect of Pendency of Petition for Review/Certiorari
with the Court. — The filing and pendency of a petition for review
with the Court of Appeals or certiorari with the Supreme Court shall
not stop the execution of the final decision of the Commission unless
the Court issues a restraining order or an injunction.
This section recognizes the authority of the Court of Appeals and the
Supreme Court to issue restraining orders or injunctions.
Do administrative agencies have the power to issue injunctions? Which
agencies?
Yes. The National Commission on Indigenous Peoples (NCIP).
CITY GOVERNMENT OF BAGUIO v. BAUTISTA
G.R. No. 180206, February 4, 2009
NCIP Administrative Circular No. 1-03 provides:
Sec. 82. Preliminary Injunction and Temporary Restraining
Order.—A writ of preliminary injunction or restraining order may be
granted by the Commission pursuant to the provisions of Sections 59
and 69 of R.A. [No.] 8371 when it is established, on the basis of
sworn allegations in a petition, that the acts complained of involving
or arising from any case, if not restrained forthwith, may cause grave
or irreparable damage or injury to any of the parties, or seriously
affect social or economic activity. This power may also be exercised
by RHOs in cases pending before them in order to preserve the rights
of the parties.
As can be gleaned from the foregoing provisions, the NCIP may issue
temporary restraining orders and writs of injunction without any
prohibition against the issuance of the writ when the main action is
for injunction. The power to issue temporary restraining orders or
writs of injunction allows parties to a dispute over which the NCIP has
jurisdiction to seek relief against any action which may cause them
grave or irreparable damage or injury. In this case, the Regional
Hearing Officer issued the injunctive writ because its jurisdiction was
called upon to protect and preserve the rights of private respondents
who are undoubtedly members of ICCs/IPs.
Parenthetically, in order to reinforce the powers of the NCIP, the
IPRA even provides that no restraining order or preliminary injunction
may be issued by any inferior court against the NCIP in any case,
dispute or controversy arising from or necessary to the interpretation
of the IPRA and other laws relating to ICCs/IPs and ancestral
domains.
Court of Appeals. We are constrained to rectify the same considering
the provisions of Section 5, Rule 58 of the Rules of Court, to wit:
"Section 5.
xxx
xxx
xxx
"xxx. The effectivity of a temporary restraining order is not extendible
without need of any judicial declaration to that effect and no court
shall have authority to extend or renew the same on the ground for
which it was issued.
"However, if issued by the Court of Appeals or a member thereof,
the temporary restraining order shall be effective for sixty (60) days
from service on the party or person sought to be enjoined. A
restraining order issued by the Supreme Court or a member thereof
shall be effective until further orders." (emphasis supplied)
and Sections 9 and 10, Rule 3 of the then prevailing Revised Internal
Rules of the Court of Appeals which provide:
"Section 9. Action by a Justice. - The following may be considered
and acted upon by the Justice to whom the case is assigned for study
and report:
"xxx
xxx
xxx;
"b. Motion or petition for the issuance of a writ of preliminary
injunction, restraining order, and other auxiliary writs;
"xxx
xxx
xxx"
"Section 10. Absence of the Justice Assigned to the Study and
Report. -When the Justice to whom the case is assigned for study
and report is absent, the motions and incidents enumerated in the
proceeding section may be acted upon by the Chairman or by the
other member of the Division to which that Justice belongs. If
the members of the division are all absent, any motion for the
issuance of a restraining order shall be referred to the Presiding
Justice for appropriate action.
"All other matters not mentioned in the proceeding section shall be
cognizable by the Division." (emphasis supplied)
Clearly therefrom, even only one (1) member of the Court of Appeals
may issue a temporary restraining order. Thus, on this matter,
respondent could not be held guilty of gross misconduct.
Can the trial courts issue injunctions against the NCIP?
Nevertheless, we maintain that the issuance of temporary restraining
order by only one or two justices of the Court of Appeals must be
exercised sparingly, that is, only in case of extreme necessity where
there is compelling reason to abate or avoid a grave injury to a party.
Can the collection of taxes be enjoined?
No. Republic Act No. 8371 or the Indigenous Peoples’ Rights Act (IPRA)
provides:
Yes. In ANGELES V. ANGELES CITY ELECTRIC CORP.,the Supreme
Court has held that:
Section 70. No Restraining Order or Preliminary Injunction. —
No inferior court of the Philippines shall have jurisdiction to issue any
restraining order or writ of preliminary injunction against the NCIP or
any of its duly authorized or designated offices in any case, dispute
or controversy arising from, necessary to, or interpretation of this Act
and other pertinent laws relating to ICCs/IPs and ancestral domains.
ANGELES CITY v. ANGELES CITY ELECTRIC CORPORATION
G.R. No. 166134, June 29, 2010
Can a justice of the Court of Appeals issue a temporary restraining order
(TRO) or a writ of preliminary injunction (WPI)?
Yes. In the case of REYES V. DEMETRIA, the Supreme Court held that:
REYES v. DEMETRIA
A.M. No. CA-01-32, January 14, 2003
After reviewing our Decision promulgated on January 23, 2002 and
the records of the case, we find that respondent's motion for
reconsideration is partly meritorious.
Respondent was found guilty of gross ignorance of the law for
disregarding existing rules of procedure in issuing a temporary
restraining order which bore the signatures of only two justices of the
The Local Government Code does not specifically prohibit an
injunction enjoining the collection of taxes
A principle deeply embedded in our jurisprudence is that taxes being
the lifeblood of the government should be collected promptly, without
unnecessary hindrance or delay. In line with this principle, the
National Internal Revenue Code of 1997 (NIRC) expressly provides
that no court shall have the authority to grant an injunction to restrain
the collection of any national internal revenue tax, fee or charge
imposed by the code. An exception to this rule obtains only when in
the opinion of the Court of Tax Appeals (CTA) the collection thereof
may jeopardize the interest of the government and/or the taxpayer.
The situation, however, is different in the case of the collection of
local taxes as there is no express provision in the LGC prohibiting
courts from issuing an injunction to restrain local governments from
collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court
of First Instance of Isabela, Branch II, cited by the petitioner, we ruled
that:
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Unlike the National Internal Revenue Code, the Local Tax Code does
not contain any specific provision prohibiting courts from enjoining
the collection of local taxes. Such statutory lapse or intent, however
it may be viewed, may have allowed preliminary injunction where
local taxes are involved but cannot negate the procedural rules and
requirements under Rule 58.
3.
4.
The loan secured by the mortgage has been paid or is not
delinquent.
The interest on the loan is unconscionable.
Principles on the Power of Courts to Enjoin Tax Collection
1. Courts may only enjoin the collection of local taxes.
2. As a general rule, the collection of national internal revenue
taxes cannot be enjoined.
•
The exception is that when in the opinion of the
Court of Tax Appeals (CTA), the collection thereof
may prejudice the interest of the government and/or
the taxpayer.
Requisites for Applying the Grounds
[As provided by A.M. No. 99-10-05-0]
1. Payment of loan
a. The application must be verified; and
b. It must be supported by evidence of payment.
2. Unconscionable loan
a. The debtor must pay the mortgagee at least twelve
percent (12%) per annum interest on the principal
obligation as stated in the application for
foreclosure sale, which shall be updated monthly
while the case is pending.
Can extrajudicial foreclosures be enjoined?
What are the grounds for the issuance of a preliminary injunction?
Yes. The rules pertaining to the enjoinment of foreclosures are provided
found in A.M. No. 99-10-05-0 as amended.
Section 3. Grounds for issuance of preliminary injunction. — A
preliminary injunction may be granted when it is established:
OCA CIRCULAR NO. 25-2007
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act
or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or
is attempting to do, or is procuring or suffering to be done some act
or acts probably in violation of the rights of the applicant respecting
the subject of the action or proceeding, and tending to render the
judgment ineffectual. (3a)
TO: ALL JUDGES AND CLERKS OF COURT OF THE REGIONAL
TRIAL COURTS
SUBJECT: PROCEDURE IN EXTRAJUDICIAL OR JUDICIAL
FORECLOSURE OF REAL ESTATE MORTGAGES
The Supreme Court En Banc, acting on the recommendation of the
Committee on Revision of the Rules of Court, in its Resolution dated
February 20, 2007 in A.M. No. 99-10-05-0 Resolved to adopt the
following additional rules with respect to Extrajudicial or Judicial
Foreclosure of Real Estate Mortgages:
(1)
(2)
(3)
(4)
No temporary restraining order or writ of preliminary
injunction against the extrajudicial foreclosure of real
estate mortgage shall be issued on the allegation that the
loan secured by the mortgage has been paid or is not
delinquent unless the application is verified and supported
by evidence of payment.
No temporary restraining order or writ of preliminary
injunction against the extrajudicial foreclosure of real
estate mortgage shall be issued on the allegation that the
interest on the loan is unconscionable, unless the debtor
pays the mortgagee at least twelve percent per annum
interest on the principal obligation as stated in the
application for foreclosure sale, which shall be updated
monthly while the case is pending.
Where a writ of preliminary injunction has been issued
against a foreclosure of mortgage, the disposition of the
case shall be speedily resolved. To this end, the court
concerned shall submit to the Supreme Court, through the
Office of the Court Administrator, quarterly reports on the
progress of the cases involving ten million pesos and
above.
All requirements and restrictions prescribed for the
issuance of a temporary restraining order/writ of
preliminary injunction, such as the posting of a bond,
which shall be equal to the amount of the outstanding debt,
and the time limitation for its effectivity, shall apply as well
to a status quo order.
Upon effectivity of these additional rules, all rules resolutions, orders
and circulars of this Court, which are inconsistent herewith, are
hereby repealed or modified accordingly.
These additional Rules in the Procedure in Extrajudicial or Judicial
Foreclosure of Real Estate Mortgages shall take effect on March 10,
2007 following their publication in a newspaper of general circulation
not later than February 28, 2007.
What are the grounds for the issuance of an injunction against
foreclosures?
Grounds for Enjoining Foreclosures
[As provided by A.M. No. 99-10-05-0]
What are requisites for the issuance of a writ of preliminary injunction?
Requisites for the Issuance of a Writ of Preliminary Injunction
1. The existence of a clear and unmistakable right that must be
protected; and
2. An urgent and paramount necessity for the writ to prevent
serious damage.
What is a right in esse?
Right in Esse, Concept
A right in esse means a clear and unmistakable right. A party seeking to
avail of an injunctive relief must prove that he or she possesses a right
in esse or one that is actual or existing. It should not be contingent,
abstract, or future rights, or one which may never arise.
What is the basis of a right in esse?
The basis of a right in esse is a clear legal right which is one founded in
or granted by law or is “enforceable as a matter of law”.
Cite an example of a case with a right in esse:
TALENTO v. ESCALADA
[G.R. No. 180884, June 27, 2008]
Main Action:
Petition for a Preliminary Writ of Injunction to enjoin
the sale through public auction of Petron’s
machineries which were seized for its failure to
settle the tax assessment sent to it by the Provincial
Assessor’s Office.
Basis:
Filing by Petron a petition contesting the revised tax
assessment sent to it by the Provincial Assessor’s
Office.
Ground:
The subject assessment pertained to properties
that have been previously declared; and that the
assessment covered periods of more than 10 years
which is not allowed under the Local Government
Code (LGC).
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Trial Court:
Granted application for preliminary injunction
Propriety:
It was proper.
Ratio Decidendi:
The private respondent contested the revised
assessment on the following grounds: that the
subject assessment pertained to properties that
have been previously declared; that the
assessment covered periods of more than 10 years
which is not allowed under the LGC; that the fair
market value or replacement cost used by petitioner
included items which should be properly excluded;
that prompt payment of discounts were not
considered in determining the fair market value;
and that the subject assessment should take effect
a year after or on January 1, 2008.
To our mind, the resolution of these issues would
have a direct bearing on the assessment made by
petitioner. Hence, it is necessary that the issues
must first be passed upon before the properties of
respondent is sold in public auction.
Right in esse:
Legal Basis:
The taxpayer has shown a clear and
unmistakable right to refuse or to hold in
abeyance the payment of taxes.
The Local Government Code
superseded PD No. 1818 and delineates more clearly the coverage
of the prohibition, reserves the power to issue such writs exclusively
with this Court, and provides penalties for its violation. Obviously,
neither the Manila RTC nor the Oriental Mindoro RTC can issue an
injunctive writ to stop the construction of the mooring facility. Only
this Court can do so under PD No. 1818 and later under RA No. 8975.
Thus, the question of whether the Manila RTC has jurisdiction over
the complaint considering that its injunctive writ is not enforceable in
Oriental Mindoro is academic.
REPUBLIC ACT NO. 8975
AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION
AND COMPLETION OF GOVERNMENT INFRASTRUCTURE
PROJECTS BY PROHIBITING LOWER COURTS FROM ISSUING
TEMPORARY
RESTRANING
ORDERS.
PRELIMINARY
INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS,
PROVIDING PENALTIES FOR VIOLATIONS THEREOF, AND FOR
OTHER PURPOSES.
xxx
Section 2. Definition of Terms. –
(a)
”National government projects" shall refer to all current and
future national government infrastructure, engineering
works and service contracts, including projects undertaken
by government-owned and – controlled corporations, all
projects covered by Republic Act No. 6957, as amended
by Republic Act No. 7718, otherwise known as the BuildOperate-and-Transfer Law, and other related and
necessary activities such as site acquisition, supply and/or
installation of equipment and materials, implementation,
construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of the
source of funding.
(b)
"Service contracts" shall refer to infrastructure contracts
entered into by any department, office or agency of the
national government with private entities and nongovernment organizations for services related or incidental
to the functions and operations of the department, office or
agency concerned.
Can government projects be enjoined?
General Rule: No.
Exception: When the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is
issued, grave injustice and irreparable injury will arise.
Example:
EDUARDO FERNANDEZ v. NAPOCOR
G.R. No. 145328 March 23, 2006
In the case at bar, petitioners sought the issuance of a preliminary
injunction on the ground that the NAPOCOR Project impinged on
their right to health as enshrined in Article II, Section 15 of the 1987
Constitution, which provides:
Sec. 15. The State shall protect and promote the right to health of
the people and instill consciousness among them.
To boot, petitioners, moreover, harp on respondent’s failure to
conduct prior consultation with them, as the community affected by
the project, in stark violation of Section 27 of the Local Government
Code which provides: "no project or program shall be implemented
by government authorities unless the consultations mentioned are
complied with, and prior approval of the Sanggunian concerned is
observed." From the foregoing, whether there is a violation of
petitioners’ constitutionally protected right to health and whether
respondent NAPOCOR had indeed violated the Local Government
Code provision on prior consultation with the affected communities
are veritable questions of law that invested the trial court with
jurisdiction to issue a TRO and subsequently, a preliminary
injunction. As such, these questions of law divest the case from the
protective mantle of Presidential Decree No. 1818.
In cases concerning infrastructure projects of the government, which
tribunal has the authority to issue injunctions?
The Supreme Court
BANGUS FRY FISHERFOLK DIWATA MAGBUHOS v. ENRICO
LANZANAS
GR No. 131442, July 10, 2003
Presidential Decree No. 1818 ("PD No. 1818") prohibited courts from
issuing injunctive writs against government infrastructure projects
like the mooring facility in the present case. Republic Act No. 8975
("RA No. 8975"), which took effect on 26 November 2000,
Section 3. Prohibition on the Issuance of Temporary Restraining
Orders, Preliminary Mandatory Injunctions. – No court, except the
Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or
entity, whether public or private acting under the government
direction, to restrain, prohibit or compel the following acts:
(a)
Acquisition, clearance and development of the right-of-way
and/or site or location of any national government project;
(b)
Bidding or awarding of contract/ project of the national
government as defined under Section 2 hereof;
(c)
Commencement prosecution, execution, implementation,
operation of any such contract or
(d)
Termination or rescission of any such contract/project; and
(e)
The undertaking or authorization of any other lawful activity
necessary for such contract/project.
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders
involving such contract/project. This prohibition shall not apply when
the matter is of extreme urgency involving a constitutional issue, such
that unless a temporary restraining order is issued, grave injustice
and irreparable injury will arise. The applicant shall file a bond, in an
amount to be fixed by the court, which bond shall accrue in favor of
the government if the court should finally decide that the applicant
was not entitled to the relief sought.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
In after due hearing the court finds that the award of the contract is
null and void, the court may, if appropriate under the circumstances,
award the contract to the qualified and winning bidder or order a
rebidding of the same, without prejudice to any liability that the guilty
party may incur under existing laws.
Section 4. Nullity of Writs and Orders. – Any temporary restraining
order, preliminary injunction or preliminary mandatory injunction
issued in violation of Section 3 hereof is void and of no force and
effect.
INSTRUCTOR’S COMMENT: There are certain laws that disallow the
injunction of certain acts of the government. In a way, these laws take
away rights in esse. Examples of such laws include:
1.
2.
The National Internal Revenue Code (NIRC) on the
collection of taxes.
The Indigenous Peoples Rights Act (IPRA) on the authority
of trial courts to issue injunctions in disputes or controversies
arising from, necessary to, or interpretation of the IPRA, and
other pertinent laws relating to ICCs/IPs and ancestral
domains.
Was there a right in esse in the case of MANILA INTERNATIONAL
AIRPORT AUTHORITY v. COURT OF APPEALS? No.
MANILA INTERNATIONAL AIRPORT AUTHORITY v. COURT OF
APPEALS
G. R. No. 118249, February 14, 2003
The requisites necessary for the issuance of a writ of preliminary
injunction are: (1) the existence of a clear and unmistakable right that
must be protected; and (2) an urgent and paramount necessity for
the writ to prevent serious damage. The duty of the court taking
cognizance of a prayer for a writ of preliminary injunction is to
determine whether the requisites necessary for the grant of an
injunction are present in the case before it.
In the instant case, however, the trial courts order of January 20,
1993 was, on its face, bereft of basis for the issuance of a writ of
preliminary injunction. There were no findings of fact or law in the
assailed order indicating that any of the elements essential for the
grant of a preliminary injunction existed. The trial court alluded to
hearings during which the parties marked their respective exhibits
and the trial court heard the oral arguments of opposing counsels.
However, it cannot be ascertained what evidence was formally
offered and presented by the parties and given weight and credence
by the trial court. The basis for the trial courts conclusion that K
Services was entitled to a writ of preliminary injunction is unclear.
In its order of August 5, 1993, the trial court stated that it issued the
injunction to prevent irreparable loss that might be caused to K
Services. Once more, however, the trial court neglected to mention
what right in esse of K Services, if any, was in danger of being
violated and required the protection of a preliminary injunction. The
trial court stated merely that K Services was servicing MIAA as a
porterage contractor and that a notice of termination was sent to K
Services. Absent a preliminary finding by the trial court that K
Services possessed the right to continue as MIAAs
concessionaire, MIAAs termination of K Services was not
sufficient in itself to establish that there was an invasion of K
Services right.
Considering the far-reaching effects of a writ of preliminary injunction,
the trial court should have exercised more prudence and
judiciousness in its issuance of the injunction order. We remind trial
courts that while generally the grant of a writ of preliminary injunction
rests on the sound discretion of the court taking cognizance of the
case, extreme caution must be observed in the exercise of such
discretion. The discretion of the court a quo to grant an injunctive writ
must be exercised based on the grounds and in the manner provided
by law. Thus, the Court declared in Garcia v. Burgos:
"It has been consistently held that there is no power the exercise of
which is more delicate, which requires greater caution, deliberation
and sound discretion, or more dangerous in a doubtful case, than the
issuance of an injunction. It is the strong arm of equity that should
never be extended unless to cases of great injury, where courts of
law cannot afford an adequate or commensurate remedy in
damages.
Every court should remember that an injunction is a limitation upon
the freedom of action of the defendant and should not be granted
lightly or precipitately. It should be granted only when the court is fully
satisfied that the law permits it and the emergency demands it."
(Emphasis supplied)
The records before the Court do not reveal a clear and unmistakable
right on the part of K Services that would entitle the latter to the
protection of an injunctive writ.
The available records show, and the parties do not dispute, that the
last contract between MIAA and K Services had already expired. K
Services claim to an "Extended/Expanded Contract" is anchored on
the letter of May 31, 1991 from General Manager Carrascoso.
However, this letter expressly stipulated that the extension would
only be "until further notice" from MIAA. We find the argument of the
OSG on this matter persuasive:
"While it may be conceded that private respondent was allowed to
continue operating the porterage service after the expiration of the
contract as the above letter shows, there is no question, however,
that private respondent was only allowed to operate up to a certain
time, specified therein as "until further notice from us." Indeed, there
is nothing in said letter to indicate that private respondent has until
forever to operate the porterage service as private respondent would
like to make it appear.xxx”
Was there a right in esse in case of FEBTC v. COURT OF APPEALS?
No.
FAR EAST BANK & TRUST COMPANY v. COURT OF APPEALS
G.R. No. 123569 April 1, 1996
Facts: Pacific Banking Corporation (PBC) was placed under
receivership by the Central Bank and thereafter placed under
liquidation. Banks were invited to submit proposals for the purchase
of PBC's assets. On November 14, 1985, petitioner Far East Bank
and Trust Company (FEBTC) submitted its formal offer to purchase
all the assets of PBC. Subsequently, a Memorandum of Agreement
(MOA) was entered into by and among the petitioner as buyer, PBC
through its liquidator as seller, and the Central Bank (CB).
On December 18, 1986, the Regional Trial Court, Branch 31 of
Manila where the liquidation proceeding was pending, approved the
Purchase Agreement executed by and among the same parties
pursuant to the Memorandum of Agreement (MOA) earlier entered
into by them. Alleging compliance with its obligations under the MOA
and the Purchase Agreement, petitioner then requested PBC's
liquidator to execute the proper deeds of sale involving PBC's fixed
assets located in certain branches.
PBC's liquidator consistently refused to execute said deeds of sale
and proceeded to offer for bidding to third parties the subject fixed
assets.
On July 5, 1993 FEBTC filed with the trial court a motion to direct
PBC's liquidator to execute the deeds of sale with application for
issuance of preliminary injunction and/or temporary restraining order
to prevent the liquidator from further offering to sell to third parties
the subject fixed assets.
The RTC denied the application of the petitioner for a writ of
preliminary injunction. Aggrieved, petitioner went to the respondent
Court of Appeals.
On October 23, 1995, the respondent Court of Appeals rendered its
decision likewise denying petitioner's application for injunction.
Petitioner: Having met all the conditions and performed all its
obligations under the Memorandum of Agreement as well as the
Purchase Agreement, it follows, as a matter of course, that it (the
petitioner) has obtained a clear right over the subject fixed assets,
which right is being jeopardized by the stubborn refusal of the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
alone that he is the creator thereof, conformably
with Republic Act No. 8293, otherwise known as the
Intellectual Property Code, Section 172.2.
respondent liquidator to execute the deeds of sale covering these
fixed assets.
Respondent: Contrary to petitioner's claim, the petitioner herein has
not acquired ownership over the subject fixed assets because the
same were submitted as collaterals with the Central Bank, and
pursuant to Section 1(a) of the Memorandum of Agreement, these
properties are excluded from among the assets that can be
purchased by the petitioner.
It would also appear that the two (2) contracts
expired on October 1, 1975 and March 11, 1978,
respectively, there being neither an allegation,
much less proof, that petitioner Bayanihan ever
made use of the compositions within the two-year
period agreed upon by the parties.
Issue: Whether or not injunction in favor of the petitioner should
issue? No.
Anent the copyrights obtained by petitioner on the
basis of the selfsame two (2) contracts, suffice it to
say 'that such purported copyrights are not
presumed to subsist in accordance with Section
218[a] and [b], of the Intellectual Property Code,
because respondent Chan had put in issue the
existence thereof.
Held: In this case, the trial court, as affirmed by the respondent Court
of Appeals, found that the subject fixed assets were indeed submitted
as collaterals with the Central Bank, and therefore were among the
items not covered by the Purchase Agreement signed by the parties
pursuant to the Memorandum of Agreement. Hence, the inescapable
conclusion is the petitioner never acquired ownership over these
properties.
It is noted that Chan revoked and terminated said
contracts, along with others, on July 30, 1997, or
almost two years before petitioner Bayanihan wrote
its sort of complaint/demand letter dated December
7, 1999 regarding the recent "use/recording of the
songs 'Can We Just Stop and Talk A While' and
'Afraid for Love to Fade,'" or almost three years
before petitioner filed its complaint on August 8,
2000.
Was there a right in esse in the case of BAYANIHAN MUSIC v. BMG
RECORDS?
No.
BAYANIHAN MUSIC v. BMG RECORDS
[G.R. No. 166337, March 7, 2005]
Main Action:
Complaint by Bayanihan for violation of Section 216
of Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines, with a
prayer for the issuance of Temporary Restraining
Order (TRO) and/or writ of preliminary injunction,
enjoining respondent BMG from further recording
and distributing the subject musical compositions in
whatever form of musical products, and Chan from
further granting any authority to record and
distribute the same musical compositions.
Basis:
Violation of Section 216 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code
of the Philippines.
Ground:
Chan and Bayanihan had previously entered into a
contract whereunder the former assigned to the
latter all his rights, interests and participation over
his musical composition "Can We Just Stop and
Talk A While". On March 11, 1976, the parties
entered into a similar contract over Chan's other
musical composition entitled "Afraid For Love To
Fade".
Despite this, without the knowledge and consent of
petitioner Bayanihan, Chan authorized his corespondent BMG Records (Pilipinas) [BMG] to
record and distribute the aforementioned musical
compositions.
Trial Court:
Denied the application for TRO.
Entitlement to
Injunction:
No.
Ratio Decidendi:
Of course, while a clear showing of the right to an
injunctive writ is necessary albeit its existence need
not be conclusively established, as the evidence
required therefor need not be conclusive or
complete, still, for an applicant, like petitioner
Bayanihan, to be entitled to the writ, he is required
to show that he has the ostensible right to the final
relief prayed for in its complaint.
Here, the trial court did not find ample justifications
for the issuance of the writ prayed for by petitioner.
Unquestionably,
respondent
Chan,
being
undeniably the composer and author of the lyrics of
the two (2) songs, is protected by the mere fact
Presence of
Right in Esse:
No.
When should injunction issue in trademark infringement cases?
LEVI STRAUSS & CO. v. CLINTON APPARELLE, INC.
G.R. No. 138900 September 20, 2005
Petitioners anchor their legal right to "Dockers and Design"
trademark on the Certificate of Registration issued in their favor by
the Bureau of Patents, Trademarks and Technology Transfer.*
According to Section 138 of Republic Act No. 8293,42 this Certificate
of Registration is prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark and of the
exclusive right to use the same in connection with the goods or
services and those that are related thereto specified in the certificate.
Section 147.1 of said law likewise grants the owner of the registered
mark the exclusive right to prevent all third parties not having the
owner’s consent from using in the course of trade identical or similar
signs for goods or services which are identical or similar to those in
respect of which the trademark is registered if such use results in a
likelihood of confusion.
However, attention should be given to the fact that petitioners’
registered trademark consists of two elements: (1) the word mark
"Dockers" and (2) the wing-shaped design or logo. Notably, there is
only one registration for both features of the trademark giving the
impression that the two should be considered as a single unit. Clinton
Apparelle’s trademark, on the other hand, uses the "Paddocks" word
mark on top of a logo which according to petitioners is a slavish
imitation of the "Dockers" design. The two trademarks apparently
differ in their word marks ("Dockers" and "Paddocks"), but again
according to petitioners, they employ similar or identical logos. It
could thus be said that respondent only "appropriates" petitioners’
logo and not the word mark "Dockers"; it uses only a portion of the
registered trademark and not the whole.
Given the single registration of the trademark "Dockers and Design"
and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the
challenged "Paddocks" device is far from clear. Stated otherwise, it
is not evident whether the single registration of the trademark
"Dockers and Design" confers on the owner the right to prevent
the use of a fraction thereof in the course of trade. It is also
unclear whether the use without the owner’s consent of a
portion of a trademark registered in its entirety constitutes
material or substantial invasion of the owner’s right.
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moment of their creation. Patentable inventions, on
the other hand, refer to any technical solution of a
problem in any field of human activity which is new,
involves an inventive step and is industrially
applicable.
It is likewise not settled whether the wing-shaped logo, as opposed
to the word mark, is the dominant or central feature of petitioners’
trademark—the feature that prevails or is retained in the minds of the
public—an imitation of which creates the likelihood of deceiving the
public and constitutes trademark infringement. In sum, there are vital
matters which have yet and may only be established through a fullblown trial.
Petitioner has no right to support her claim for the
exclusive use of the subject trade name and its
container. The name and container of a beauty
cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its
definition. In order to be entitled to exclusively
use the same in the sale of the beauty cream
product, the user must sufficiently prove that
she registered or used it before anybody else
did. The petitioner’s copyright and patent
registration of the name and container would not
guarantee her the right to the exclusive use of the
same for the reason that they are not appropriate
subjects of the said intellectual rights.
Consequently, a preliminary injunction order cannot
be issued for the reason that the petitioner has not
proven that she has a clear right over the said name
and container to the exclusion of others, not having
proven that she has registered a trademark thereto
or used the same before anyone did.
From the above discussion, we find that petitioners’ right to injunctive
relief has not been clearly and unmistakably demonstrated. The right
has yet to be determined. Petitioners also failed to show proof
that there is material and substantial invasion of their right to
warrant the issuance of an injunctive writ. Neither were
petitioners able to show any urgent and permanent necessity
for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for
injunctive relief, urging that the erosion or dilution of their trademark
is protectable. They assert that a trademark owner does not have to
wait until the mark loses its distinctiveness to obtain injunctive relief,
and that the mere use by an infringer of a registered mark is already
actionable even if he has not yet profited thereby or has damaged
the trademark owner.
INSTRUCTOR’S COMMENT: In intellectual property cases,
applications for preliminary injunction are often sought. While the main
case is pending, a preliminary injunction serves to stop the defendant
from continuing to use the allegedly infringed intellectual creation.
Usually, the best evidence to prove the existence of a right in esse in
intellectual property cases is the certificate of registration which is filed
with the intellectual Property Office (IPO).
However, such registration certificate is not necessary in cases
concerning copyright since copyrighted works are protected from the
moment of creation.
Presence of
Right in Esse:
Was there a right in esse in the case of UNILEVER v. COURT OF
APPEALS?
Yes.
UNILEVER v. COURT OF APPEALS
[GR NO. 119280, August 10, 2006]
Was there a right in esse in the case of ELIDAD KHO v. COURT OF
APPEALS?
No.
No.
Main Action:
Private respondent Procter and Gamble Phils., Inc.
(P&GP) filed a complaint for injunction with
damages and a prayer for temporary restraining
order and/or writ of preliminary injunction against
petitioner Unilever.
Basis:
P&GP is the copyright owner of the “tac-tac” visual.
Unilever on 24 July 1993 started airing a 60 second
television commercial "TVC" of its "Breeze
Powerwhite" laundry product called "Porky." The
said TVC included a stretching visual presentation
and sound effects almost [identical] or substantially
similar to P&GP's "tac-tac" key visual.
Ground:
Section 2 of PD 49 which states that the copyright
for a work or intellectual creation subsists from the
moment of its creation.
Trial Court:
Granted application for writ of preliminary
injunction.
Propriety:
It was proper.
Ratio Decidendi:
Petitioner does not deny that the questioned TV
advertisements are substantially similar to P&GP's
"double tug" or "tac-tac" key visual. However, it
submits that P&GP is not entitled to the relief
demanded, which is to enjoin petitioner from airing
said TV advertisements, for the reason that
petitioner has Certificates of Copyright Registration
for which advertisements while P&GP has none
with respect to its "double-tug" or "tac-tac" key
visual. In other words, it is petitioner's contention
that P&GP is not entitled to any protection because
it has not registered with the National Library the
very TV commercials which it claims have been
infringed by petitioner.
ELIDAD KHO v. COURT OF APPEALS
[G.R. No. 115758. March 19, 2002]
Main Action:
Injunction and damages with a prayer for the
issuance of a writ of preliminary injunction against
the
respondents
Summerville
General
Merchandising and Company (Summerville, for
brevity) and Ang Tiam Chay.
Basis:
Alleged violation of Kho’s rights as a copyright
owner as provided by the Intellectual Property
Code.
Ground:
Petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the
registered owner of the copyrights Chin Chun Su
and Oval Facial Cream Container/Case.
Respondents were using containers bearing similar
designs.
Trial Court:
Entitlement to
Injunction:
Ratio Decidendi:
Granted the application for WPI.
No.
Trademark, copyright and patents are different
intellectual property rights that cannot be
interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an
enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade name
means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope
of a copyright is confined to literary and artistic
works which are original intellectual creations in the
literary and artistic domain protected from the
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We disagree. Section 2 of PD 49 stipulates that the
copyright for a work or intellectual creation subsists
from the moment of its creation. Accordingly, the
creator acquires copyright for his work right upon its
creation. Contrary to petitioner's contention, the
intellectual creator's exercise and enjoyment of
copyright for his work and the protection given by
law to him is not contingent or dependent on any
formality or registration. Therefore, taking the
material allegations of paragraphs 1.3 to 1.5 of
P&GP's verified Complaint in the context of PD 49,
it cannot be seriously doubted that at least, for
purposes of determining whether preliminary
injunction should issue during the pendency of the
case, P&GP is entitled to the injunctive relief prayed
for in its Complaint.
The term irreparable injury has a definite meaning in law. It does not
have reference to the amount of damages that may be caused but rather
to the difficulty of measuring the damages inflicted. If full compensation
can be obtained by way of damages, equity will not apply the remedy of
injunction. (PNB v. RJ Ventures)
Main Action:
RJ Ventures Realty filed a Complaint for Injunction
with Prayer for Issuance of Temporary Restraining
Order and Writ of Preliminary Injunction against
petitioner PNB and Juan S. Baun, Jr.
As the copyright owner, P&GP is entitled to have
his intellectual property rights protected. There was
of course extreme urgency for the court a quo to act
on plaintiff's application for preliminary injunction.
The airing of TV commercials is necessarily of
limited duration only. Without such temporary relief,
any permanent injunction against the infringing TV
advertisements of which P&GP may possibly
succeed in getting after the main case is finally
adjudicated could be illusory if by then such
advertisements are no longer used or aired by
petitioner. It is therefore not difficult to perceive the
possible irreparable damage which P&GP may
suffer if respondent Judge did not act promptly on
its application for preliminary injunction.
Basis:
Due to its failure to settle its outstanding loan
obligations, PNB sought to take possession of and
sell the radio equipment of RJVR which were given
as collateral. It also wished to take control of the
radio stations.
Ground:
Respondents alleged that RJVRD and RNB would
suffer great and irreparable injury by the
extrajudicial foreclosure of the property and the
takeover of RBN's radio facilities in Baguio, unless
a Temporary Restraining Order and/or Writ of
Preliminary Injunction is issued enjoining
defendants from implementing the Notice of
Extrajudicial Sale dated 1 February 1999, and
enjoining PNB from taking possession and control
of RBN's radio facilities in Baguio City.
Respondents maintained that the commission or
continuance of the acts complained of during the
litigation or the non-performance thereof would
work injustice to RJVRD and RBN. They
manifested their willingness to post a bond as the
court a quo may fix in its discretion, to answer for
whatever damages PNB may sustain for the reason
of the restraining order or injunction, if finally
determined that respondents are not entitled
thereto.
Section 3. Grounds for issuance of preliminary injunction.
Trial Court:
Denied the application for WPI.
A preliminary injunction may be granted when it is established:
Entitlement to
Injunction:
Yes.
Right in esse:
Legal Basis:
Cite an example of an irreparable injury:
PHILIPPINE NATIONAL BANK v. RJ VENTURES REALTY
[G.R. No. 164548, September 27, 2006]
Presidential Decree No. 49
With regard to material or substantial invasion of a right, must there be
an actual violation of the same before a writ of preliminary injunction can
be issued?
No. All that is needed is that the act or acts complained of or those
sought to be enjoined will probably violate the right in esse. Mere
probability will suffice for as long as the clear and unmistakable right can
be established.
(a)
(b)
(c)
That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;
That the commission, continuance or non-performance of
the act or acts complained of during the litigation would
probably work injustice to the applicant; or
That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation
of the rights of the applicant respecting the subject of the
action or proceeding, and tending to render the judgment
ineffectual.
What should an Order granting an injunction contain or state?
The factual and legal bases for the issuance of the injunction Order.
What is the nature of the court’s determination of the applicant’s
entitlement to the relief demanded?
The determination is provisional in nature. Meaning, that it is tentative
and not final. It is subject to change by virtue of the presentation of
evidence on the merits and the adjudication of the main case.
Ratio Decidendi:
To be sure, this court has declared that the term
irreparable injury has a definite meaning in law. It
does not have reference to the amount of damages
that may be caused but rather to the difficulty of
measuring the damages inflicted. If full
compensation can be obtained by way of damages,
equity will not apply the remedy of injunction.
The Court of Appeals declared that the evidence
adduced by respondents more than satisfies the
legal and jurisprudential requirements of irreparable
injury. It behooves this court to appreciate the
unique character of the collaterals that stand to be
affected should the Writ of Preliminary Injunction be
dissolved as PNB would have it. The direct and
inevitable result would be the stoppage of the
operations of respondents' radio stations,
consequently, losing its listenership, and tarnishing
the image that it has built over time. It does not
stretch one's imagination to see that the cost of a
destroyed image is significantly the loss of its good
name and reputation. As aptly appreciated by the
appellate court, the value of a radio station's
image and reputation are not quantifiable in
terms of monetary value.
What is meant by ‘irreparable injury’?
What are the procedural requirements for the issuance of a writ of
preliminary injunction?
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Section 4. Verified application and bond for preliminary
injunction or temporary restraining order.
A preliminary injunction or temporary restraining order may be
granted only when:
a)
b)
c)
The application in the action or proceeding is verified, and
shows facts entitling the applicant to the relief demanded;
and
Unless exempted by the court, the applicant files with the
court where the action or proceeding is pending, a bond
executed to the party or person enjoined, in an amount to
be fixed by the court, to the effect that the applicant will
pay to such party or person all damages which he may
sustain by reason of the injunction or temporary restraining
order if the court should finally decide that the applicant
was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued.
When an application for a writ of preliminary injunction or
a temporary restraining order is included in a complaint or
any initiatory pleading, the case, if filed in a multiple-sala
court, shall be raffled only after notice to and in the
presence of the adverse party or the person to be
enjoined. In any event, such notice shall be preceded, or
contemporaneously accompanied, by service of
summons, together with a copy of the complaint or
initiatory pleading and the applicant’s affidavit and bond,
upon the adverse party in the Philippines.
However, where the summons could not be served
personally or by substituted service despite diligent efforts,
or the adverse party is a resident of the Philippines
temporarily absent therefrom or is a nonresident thereof,
the requirement of prior or contemporaneous service of
summons shall not apply.
d)
The application for a temporary restraining order shall
thereafter be acted upon only after all parties are heard in
a summary hearing which shall be conducted within
twenty-four (24) hours after the sheriff’s return of service
and/or the records are received by the branch selected by
raffle and to which the records shall be transmitted
immediately.
Section 5. Preliminary injunction not granted without notice;
exception. – No preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be enjoined.
If it shall appear from facts shown by affidavits or by verified
application that great or irreparable injury would result to the
applicant before the matter can be heard on notice, the court to which
the application for preliminary injunction was made, may issue ex
parte a temporary restraining order to be effective only for a period
of twenty (20) days from service on the party or person sought to be
enjoined, except as herein provided. Within the said twenty-day
period, the court must order said party or person to show cause, at
a specified time and place, why the injunction should not be granted,
determine within the same period whether or not the preliminary
injunction shall be granted, and accordingly issue the corresponding
order.
However, and subject to the provisions of the preceding sections, if
the matter is of extreme urgency and the applicant will suffer grave
injustice and irreparable injury, the executive judge of a multiple-sala
court or the presiding judge of a single-sala court may issue ex parte
a temporary restraining order effective for only seventy-two (72)
hours from issuance but he shall immediately comply with the
provisions of the next preceding section as to service of summons
and the documents to be served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge before whom the case
is pending shall conduct a summary hearing to determine whether
the temporary restraining order shall be extended until the
application for preliminary injunction can be heard. In no case shall
the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours
provided herein.
In the event that the application for preliminary injunction is denied
or not resolved within the said period, the temporary restraining order
is deemed automatically vacated. The effectivity of a temporary
restraining order is not extendible without need of any judicial
declaration to that effect and no court shall have authority to extend
or renew the same on the same ground for which it was issued.
However, if issued by the Court of Appeals or a member thereof, the
temporary restraining order shall be effective for sixty (60) days from
service on the party or person sought to be enjoined. A restraining
order issued by the Supreme Court or a member thereof shall be
effective until further orders.
The trial court, the Court of Appeals, the Sandiganbyan or the Court
of Tax Appeals that issued a writ of preliminary injunction against a
lower court, board, officer, or quasi-judicial agency shall decide the
main case or petition within six (6) months from the issuance of the
writ.
What is the nature of the hearing? It is summary in nature.
Is there any instance in which the requirement of a hearing may be
dispensed with?
Yes. Paragraph 3 of Section 5 of Rule 58 provides to wit:
However, and subject to the provisions of the preceding sections, if
the matter is of extreme urgency and the applicant will suffer grave
injustice and irreparable injury, the executive judge of a multiple-sala
court or the presiding judge of a single-sala court may issue ex parte
a temporary restraining order effective for only seventy-two
(72) hours from issuance but he shall immediately comply with the
provisions of the next preceding section as to service of summons
and the documents to be served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge before whom the case
is pending shall conduct a summary hearing to determine whether
the temporary restraining order shall be extended until the
application for preliminary injunction can be heard. In no case shall
the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours
provided herein.
[NOTE: This paragraph only pertains to temporary restraining orders
(TROs). This does not apply to injunctive writs.]
What are the kinds of TROs under Rule 58?
1. 72-hour Ex-Parte TRO issued by the executive judge
2. 20-day TRO issued by a presiding judge
Who can issue a 72-hour TRO?
The Executive Judge of a multiple-sala court, if there is one in the
area of jurisdiction where the Order is to be issued and enforced. Upon
the filing of the complaint with him, he will determine whether a TRO
should be issued. However, if only presiding judge of a single-sala court
is available in the area of jurisdiction, that judge may issue the Order.
Can presiding judge issue 72-hour ex-parte TRO? General rule, no.
What are the differences between a TRO issued by an Executive judge
and a TRO issued by a Presiding Judge?
EXECUTIVE JUDGE
PRESIDING JUDGE
As to duration of validity
TRO is valid for 72 hours
TRO is valid for 20 days
[including the first 72 hours (3
days) if the same originated from
an Executive Judge.]
As to time of issuance
Issued before the raffling of the Issued after the raffling of the
case
case
As to the necessity of a hearing
Issued ex-parte
Issued after summary hearing
As to ground
Extreme urgency that grave and Grave and irreparable injury that
irreparable injury will arise would result before the matter
unless it is issued immediately.
concerning
the
writ
of
preliminary injunction can be
heard.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Can it be extended? No
INSTRUCTOR’S COMMENT: If no ex-parte 72-hour TRO had been
applied for or issued by an Executive Judge, then the Presiding Judge
shall conduct a hearing for the purpose of determining whether or not a
20-day TRO should be issued.
What happens during the 20-day period?
Within the said twenty-day period, the court must determine whether or
not the preliminary injunction should be granted, and accordingly issue
the corresponding order.
What happens after the expiration of the 20-day period?
The TRO is automatically vacated. It is not subject to further extension.
Process concerning 72-hour TROs
Filing of the complaint and application for 72-hour TRO with an
Executive Judge
Issuance of the TRO by an Executive Judge
Raffling of the case and complaint to a Presiding Judge
Conduct of a summary hearing to determine if there is a need to
extend the duration for another 17 days
Issuance of the 20-day TRO
[Note: According to the instructor, the necessity of applying for 72-hour
TROs with Executive Judges has been rendered practically needless in
urban cities due to the modern practice of e-filing. Through the e-filing
system, cases are automatically raffled and assigned to specific courts
and presiding judges. As a result, parties may directly apply for 20-day
TROs with their respectively assigned presiding judges. However, such
TROs shall no longer be issued ex-parte.]
September 24, 2019 by Carla Louise Bayquen
Distinguish Preliminary Injunction from Injunction
Preliminary Injunction
An order granted at any stage of
any action or proceeding prior to
the judgment or final order,
requiring a party or a court,
agency, or a person to refrain
from a particular act or acts.
It persists until it is dissolved or
until the termination of the action
without the court issuing a final
injunction.
Provisional (Ancillary) Remedy
Main Action for Injunction
One issued in a judgment of a
case “perpetually restraining the
party or person enjoined from the
commission or continuance of the
act or acts or confirming the
preliminary mandatory injunction.
Seeks a judgment embodying a
final injunction which is distinct
from and should not be confused
with preliminary injunction.
Main Action (Remedy)
What is an Injunction?
A final injunction is one which is included in the judgement as the relief
or part of the relief granted as the result of the action. The final injunction
is the one mentioned Section 9.
Distinguish Preliminary Injunction from TRO
Preliminary Injunction
Cannot be issued ex parte
Temporary Restraining Order
Issued to preserve the status quo
until the hearing of the application
for preliminary injunction.
A TRO is a temporary relief given before the hearing of the application
for preliminary injunction.
What is the maximum period of a TRO?
20 Days from the date of issuance
A TRO in the word of Dean Inigo is like a baby injunction. The maximum
period of the TRO is 20 days. The ex parte TRO on the other hand is
different.
How long is the period of an ex parte TRO?
72 hours
Distinguish now an ex parte TRO from a TRO?
Ex-parte TRO
Temporary Restraining Order
Issued by the executive judge
Issued by the presiding judge of a
branch
Valid for 72 hours upon issuance Valid for 20 days including the 72
hours
Issued before raffling the case
Issued after raffling and assignment of the case
Issued ex-parte
Issued after summary hearing
Ground is extreme urgency
Ground is grave and irreparable
injury
The only role of the executive judge is to issue the ex-parte TRO and
raffle the case to a presiding judge. Within that 72 period, the presiding
judge will conduct a hearing on whether or not to extend the TRO for
another 17 days.
If it is extended, the presiding judge will conduct a marathon hearing on
whether or not to issue the writ of preliminary injunction.
The court is limited within the 20 day period to receive the evidence of
the parties and make a ruling on whether to issue the writ of preliminary
injunction.
Can the presentation of evidence be extended beyond the 20 day
period? If it can be extended, can it extend the 20 day period of the
TRO?
No
The presiding judge is time bound. What usually happens is the judge
asks the parties if there are still evidences that will be presented and
received by the court for the parties to observe the status quo pending
the resolution of the preliminary injunction.
By the agreement of the parties in effect there would be an extension of
the TRO. But of course you will not say extended, the parties voluntarily
agreed to observe the status quo pending the resolution on the issuance
of the preliminary injunction.
That’s how you take away the time pressure in resolving the preliminary
injunction. That is, if the parties agreed. If they don’t agree, the judge
has no choice but to resolve it within the 20 day period.
Can the court set the case for hearing the issuance of the TRO and then
issue the TRO even if there is no application for TRO?
No
Why not?
When you ask for that kind of relief the application must be verified and
Section 5 provides for the requisites for this relief to be granted. No
preliminary injunction shall be granted without hearing and prior notice
to the party or person sought to be enjoined. If it shall appear from facts
shown by affidavits or by the verified application that great or irreparable
injury would result to the applicant before the matter can be heard on
notice. If it is not asked for the parties it cannot be availed of.
Discussion:
It is a perfect example of “ask-so-that-you-can-receive.” If you do not ask
that in your pleading why should you receive it? If it is not prayed for in
the complaint or the initiatory pleading then why grant it?
September 24, 2019 by Reginald Matt Santiago
Must be Stated in the Pleading
Whenever you file a complaint, and you are asking for an injunction relief
be it WPI or TRO whether ex-parte or 20 day TRO, you have specifically
state that in your pleading. And even in the caption you have to state it,
so that the court at the first glance will know that you are asking for such
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
immediate relief. You do not expect the Court to go through several
pages of your complaint and to check your relief in the last page.
In the caption it must already be stated: “With Prayer for Ex-Parte TRO/
20-day TRO and Writ of Preliminary Injunction.” So that the Court is
aware that you are asking for this reliefs, and the court will immediately
set it for hearing. In order to address the urgent reliefs prayed for in your
initiatory pleading. If not stated, then there is no basis to grant that.
Remember, ask and you shall receive.
Will the court require a bond for the issuance of a TRO? What is the
nature of the bond?
Bond Requirement in TRO
In the case of UNIVERSAL MOTORS v. ROJAS, the Supreme Court
said that there is a bond required for the issuance of TRO. Prior to the
effectivity of the 1997 Rules of Civil Procedure, no bond was required
for the availment of a TRO. However, present Rules now regulate the
issuance of TROs, not only by requiring a hearing, but also by imposing
a bond on the applicant to prevent the abuse of this relief by the litigants.
UNIVERSAL MOTORS v. ROJAS
May 26, 2005
Under this amended section, a temporary restraining order has been
elevated to the same level as a preliminary injunction in the
procedure, grounds and requirements for its obtention. Specifically
on the matter of the requisite bond, the present requirement therefor
not only for a preliminary injunction but also for a restraining order,
unless exempted therefrom by the court, puts to rest a controversial
policy which was either wittingly or unwittingly abused. Heretofore,
no bond was required for the issuance of a temporary restraining
order, except in labor cases brought to the Supreme Court on
certiorari from a decision of the National Labor Relations
Commission where a monetary award was granted, in which case
the policy of the Supreme Court was to require a bond equivalent to
the monetary award or benefits granted as a condition for the
issuance of a temporary restraining order. The exemption from bond
in other cases, plus the fact that no hearing was required, made a
temporary restraining order a much sought relief for petitioners.
Discretionary Nature of TRO Bond
While Section 4(b) of Rule 58 gives presiding judge the discretion
to require a bond before granting a temporary restraining order,
the Rules did not intend to give the judge the license to exercise such
discretion arbitrarily to the prejudice of the defendant. Certainly, each
member of the Bench is not a depository of arbitrary power, but a
judge under the sanction of law.
Purpose of the Bond
The bond under Rule 58 is intended to pay all the damages which
the party or person against whom the temporary restraining order or
injunction is issued may sustain by reason thereof should the court
finally decide that the applicant was not entitled thereto. Hence, it
follows that unless it appears that the enjoined party will not suffer
any damage, the presiding judge must require the applicant to post
a bond, otherwise the courts could become instruments of
oppression and harassment.
How about in cases of Preliminary Injunction? Is the posting of the bond
discretionary? Is this discretionary on the part of the court?
Mandatory with Regard with WPI
Section 4(b) provides: (b) Unless exempted by the court the applicant
files with the court where the action or proceeding is pending, a bond
executed to the party or person enjoined, in an amount to be fixed by
the court, to the effect that the applicant will pay to such party or person
all damages which he may sustain by reason of the injunction or
temporary restraining order if the court should finally decide that the
applicant was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued.
Who is exempted from the bond requirement?
Exempted from the Filing of the Bond Requirement
1. If it appears that the enjoined party will not suffer any damage
2. Status quo orders
3. Other cases exempted by the Court
What is the purpose of the bond? What is the condition of bond?
Purpose of the Bond; Condition of the Bond
To pay to such party or person all damages which he may sustain by
reason of the injunction or temporary restraining order if the court should
finally decide that the applicant was not entitled thereto. Upon approval
of the requisite bond, a writ of preliminary injunction shall be issued.
(Section 4b).
When an ex-parte TRO is issued by an Executive Judge, does it require
a bond? Is a bond necessary for ex-parte TRO?
This is not necessary because an ex-parte TRO is issued by
reason of extreme urgency.
When an ex-parte TRO is issued is it mandatory that the notice of raffle
and the raffle in the presence of adverse party be conducted?
No. Upon application for a writ of preliminary injunction, where matter is
of extreme urgency and grave injustice and irreparable injury will arise,
the Executive Judge may issue ex parte a TRO effective for 72 hours
from issuance. Before the expiry of the 72 hours, the presiding judge to
whom the case is raffled shall conduct a summary hearing to determine
whether the TRO can be extended until the pending application for
injunction can be heard (Fortune Life v. Luczon, November 30, 2006).
Who will conduct the hearing? The Presiding Judge
Reckoning Period to Conduct Summary Hearing
The reckoning period within which to conduct a summary hearing is not
from the time the case is raffled but 24 hours after the records are
branch where it is raffled.
Can the Executive Judge sit on it, and not raffle the case after issuing
the ex-parte TRO? – NO.
The ex-parte TRO issued by the Executive Judge is no longer observed
due to the e-raffling. The executive judge may only issue an ex-parte
TRO if no raffling can be made. Unless, there is brownout or breach in
the system, that is the only time you can run to the executive judge for
the raffling of the case. The moment it is already raffled, your application
for injunction should be filed with the presiding judge.
When can a Preliminary Injunction be applied for?
When to Apply for Preliminary Injunction
A preliminary injunction is granted at any stage of an action or
proceeding prior to the judgment or final order (Sec. 1, Rule 58).
What are the formal requisites in applying for preliminary injunction?
Formal Requisites for Applying Preliminary Injunction
Section 4. Verified application and bond for preliminary
injunction or temporary restraining order. — A preliminary
injunction or temporary restraining order may be granted only when:
(a) The application in the action or proceeding is verified, and shows
facts entitling the applicant to the relief demanded; and
(b) Unless exempted by the court the applicant files with the court
where the action or proceeding is pending, a bond executed to the
party or person enjoined, in an amount to be fixed by the court, to
the effect that the applicant will pay to such party or person all
damages which he may sustain by reason of the injunction or
temporary restraining order if the court should finally decide that the
applicant was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued.
(c) When an application for a writ of preliminary injunction or a
temporary restraining order is included in a complaint or any initiatory
pleading, the case, if filed in a multiple-sala court, shall be raffled
only after notice to and in the presence of the adverse party or the
person to be enjoined. In any event, such notice shall be preceded,
or contemporaneously accompanied, by service of summons,
together with a copy of the complaint or initiatory pleading and the
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
applicant's affidavit and bond, upon the adverse party in the
Philippines.
However, where the summons could not be served personally or by
substituted service despite diligent efforts, or the adverse party is a
resident of the Philippines temporarily absent therefrom or is a
nonresident thereof, the requirement of prior or contemporaneous
service of summons shall not apply.
(d) The application for a temporary restraining order shall thereafter
be acted upon only after all parties are heard in a summary hearing
which shall be conducted within twenty-four (24) hours after the
sheriff's return of service and/or the records are received by the
branch selected by raffle and to which the records shall be
transmitted immediately.
What if the supporting affidavits are not attached will the writ of
preliminary injunction issue?
The absence of an Affidavit of Merit is not final where the petition itself
which is under oath recites the circumstances or facts which constitute
the grounds of the petition (Fortune Life v. Luczon, Jr,. supra).
threatened by an act sought to be enjoined. And while a clear showing
of the right claimed is necessary, its existence need not be conclusively
established. In fact, the evidence to be submitted to justify preliminary
injunction at the hearing thereon need not be conclusive or complete but
need only be a "sampling" intended merely to give the court an idea
of the justification for the preliminary injunction pending the
decision of the case on the merits. This should really be so since our
concern here involves only the propriety of the preliminary injunction and
not the merits of the case still pending with the trial court. Thus, to be
entitled to the writ of preliminary injunction, the private respondent needs
only to show that it has the ostensible right to the final relief prayed for
in its complaint (Saulog v. CA, GR 11969, September 18, 1996).
Atty Tiu: It is merely a sampling of the evidence to prove the right in
esse, (1) only the existence of the right in esse and (2) the actual and
threatened violation of that right. These are two basic elements that
need be addressed in a preliminary injunction hearing. You need not
prove damages, all the other causes of action – only with respect to the
elements for the issuance of writ of preliminary injunction. Even then,
you need not exhaustively present evidence because only a sampling is
necessary. Because whatever the finding of the court will be is also
provisional in nature, it is not final neither is it conclusive. It is only
provisional and temporary based on the sample evidence presented.
Atty Tiu: Thus, the injunction can still be granted for as long
as the application is verified, even if there are no affidavits attached.
Section 5. Preliminary injunction not granted without notice;
exception. — No preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be enjoined.
If it shall appear from facts shown by affidavits or by the verified
application that great or irreparable injury would result to the
applicant before the matter can be heard on notice, the court to which
the application for preliminary injunction was made, may issue a
temporary restraining order to be effective only for a period of twenty
(20) days from service on the party or person sought to be enjoined,
except as herein provided. Within the said twenty-day period, the
court must order said party or person to show cause, at a specified
time and place, why the injunction should not be granted, determine
within the same period whether or not the preliminary injunction shall
be granted, and accordingly issue the corresponding order. (Bar
Matter No. 803, 17 February 1998)
However, and subject to the provisions of the preceding sections, if
the matter is of extreme urgency and the applicant will suffer grave
injustice and irreparable injury, the executive judge of a multiple-sala
court or the presiding judge of a single sala court may issue ex parte
a temporary restraining order effective for only seventy-two (72)
hours from issuance but he shall immediately comply with the
provisions of the next preceding section as to service of summons
and the documents to be served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge before whom the case
is pending shall conduct a summary hearing to determine whether
the temporary restraining order shall be extended until the
application for preliminary injunction can be heard. In no case shall
the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours
provided herein.
In the event that the application for preliminary injunction is denied
or not resolved within the said period, the temporary restraining order
is deemed, automatically vacated. The effectivity of a temporary
restraining order is not extendible without need of any judicial
declaration to that effect and no court shall have authority to extend
or renew the same on the same ground for which it was issued.
However, if issued by the Court of Appeals or a member thereof, the
temporary restraining order shall be effective for sixty (60) days from
service on the party or person sought to be enjoined. A restraining,
order issued by the Supreme Court or a member thereof shall be
effective until further orders. (5a)
What about the notice and hearing requirement? Can it be issued
without the notice and hearing requirement? What type of hearing is
essential for the issuance of preliminary injunction?
Notice and Hearing Necessary; Sample Evidences
It need not be a full-blown hearing, that for the court to act, there must
be an existing basis of facts affording a present right which is directly
September 24, 2019 by Anna Sophia Tarhata Piang
Can the Court of Appeals issue a TRO?
Yes. The final paragraph of Section 6, Rule 58 provides:
“However, if issued by the Court of Appeals or a member thereof, the
temporary restraining order shall be effective for sixty (60) days from
service on the party or person sought to be enjoined. xxx”
Can an Executive judge issue an ex-parte TRO that will last for 20 days?
No. However, within the said 72-hour period, the presiding judge
before whom the case is pending shall conduct a summary hearing to
determine whether the temporary restraining order shall be extended
until the application for preliminary injunction can be heard. In no case
shall the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours.
An Executive Judge cannot extend an ex-parte TRO.
Who has the burden of proof in cases for the issuance of preliminary
injunctions? It is the applicant. The applicant must prove that they have
a right in esse.
Who has the burden of proof in cases for the issuance of 72-hour TROs?
It is the applicant.
Who has the burden of proof in cases for the issuance of 20-day TROs?
It is still the applicant. The applicant should prove that the TRO should
be extended.
Note: When the 72-hour TRO is issued, there is a presumption that a
right in esse exists. The extension is an affirmation of such
existence.
When shall the burden of proof shift to the adverse party?
The burden of proof shall be shifted to the adverse party when the 72hour TRO is extended by 17 days, thereby completing the 20-day
period. During this 20-day period, the adverse party must show cause
as to why the preliminary injunction should not be granted.
When no 20-day TRO has been issued, the burden of proof shall remain
with the applicant. The applicant must prove that the writ of preliminary
injunction must be issued because they have a right in esse.
How is a writ of preliminary injunction dissolved?
In general:
1. By filing a motion to discharge or dissolve
2. By filing a counterbond
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Section 6. Grounds for objection to, or for motion of dissolution
of, injunction or restraining order. — The application for injunction
or restraining order may be denied, upon a showing of its
insufficiency. The injunction or restraining order may also be denied,
or, if granted, may be dissolved, on other grounds upon affidavits of
the party or person enjoined, which may be opposed by the applicant
also by affidavits. It may further be denied, or if granted, may be
dissolved, if it appears after hearing that although the applicant is
entitled to the injunction or restraining order, the issuance or
continuance thereof, as the case may be, would cause irreparable
damage to the party or person enjoined while the applicant can be
fully compensated for such damages as he may suffer, and the
former files a bond in an amount fixed by the court conditioned that
he will pay all damages which the applicant may suffer by the denial
or the dissolution of the injunction or restraining order. If it appears
that the extent of the preliminary injunction or restraining order
granted is too great, it may be modified. (6a)
Grounds for objection to, or for dissolution:
1. The application for injunction or restraining order may be
denied, upon a showing of its insufficiency.
2. The injunction or restraining order may also be denied, or, if
granted, may be dissolved, on other grounds upon affidavits
of the party or person enjoined, which may be opposed by the
applicant also by affidavits.
3. It may further be denied, or if granted, may be dissolved, if it
appears after hearing that although the applicant is entitled to
the injunction or restraining order, the issuance or
continuance thereof, as the case may be, would cause
irreparable damage to the party or person enjoined while the
applicant can be fully compensated for such damages as he
may suffer, and the former files a bond in an amount fixed by
the court conditioned that he will pay all damages which the
applicant may suffer by the denial or the dissolution of the
injunction or restraining order.
4. If it appears that the extent of the preliminary injunction or
restraining order granted is too great, it may be modified.
How do you question the issuance of a writ of preliminary injunction if it
is not dissolved upon your motion? What is the remedy? If your motion
to dissolve is denied, what is your remedy?
Certiorari under Rule 65
Since a denial of motion to dissolve is an interlocutory order, it is not
a final order, then you can question it by elevating it to the Court of
Appeals on Certiorari under Rule 65 and the ground is grave abuse of
discretion.
Motion to Dissolve and Counterbond, Cumulative Remedies
Can you avail of a Motion to Dissolve and Counterbond the same time?
Are these remedies cumulative or alternative? Can you have your
cake and eat it too? Or you must stick to one remedy? What happened
in the case of YAP v. IBANK? – Cumulative.
Atty. Tiu: Here, there was already an action for certiorari, questioning
the trial court in issuing the injunctive writ. Here, there was already a
motion to dissolve. But here, the validity of the injunctive writ was upheld.
SPOUSES YAP v. INTERNATIONAL EXCHANGE BANK
March 28, 2008
We hold that the trial court may still order the dissolution of the
preliminary injunction it previously issued. We do not agree with
petitioners' argument that the trial court may no longer dissolve the
preliminary injunction because this Court previously ruled that its
issuance was not tainted with grave abuse of discretion. The
issuance of a preliminary injunction is different from its dissolution.
Its issuance is governed by Section 3, Rule 58 of the 1997 Rules of
Civil Procedure while the grounds for its dissolution are contained in
Section 6, Rule 58 of the 1997 Rules of Civil Procedure. As long as
the party seeking the dissolution of the preliminary injunction can
prove the presence of any of the grounds for its dissolution, same
may be dissolved notwithstanding that this Court previously ruled that
its issuance was not tainted with grave abuse of discretion.
September 24, 2019 by Reginald Matt Santiago
Modes to Dissolve the Preliminary Injunction
(1) Motion to Discharge or Dissolve – look at the grounds if
they are sufficient in the issuance of the preliminary injunction
if the requisites are complied (grounds, right in esse, etc.)
(2) Counterbond – it is not simple posting of the counterbond, it
must be shown that the injunction would great and irreparable
injury to the defendant.
a. Counterbond can be filed only if defendant stands
to suffers irreparable damage or injury due to the
continued implementation of the injunctive writ.
Writ of Preliminary Injunction
Based on right of esse and clear
and threatened violation of such
right.
Counterbond
Defendant will suffer great and
irreparable damage or injury if
the injunction shall be
implemented
For Counterbond Against an Injunctive Writ
It is not enough that you post a counterbond
There has to be a showing of great and irreparable damage
to the party enjoined
That the other party can be compensated for any damage that
he may suffer
You can only resort to a counterbond, if you are able to
show that you will irreparable injury by the implementation of
the injunctive.
If there is no showing of such, you are not allowed to file a counterbond
(1) Meaning, you can only dissolve the injunctive writ by a Motion
to Dissolve by looking at requirements if it sufficiently met.
(2) If you can problematic areas, then you argue on that (like
there is no right in esse).
Counterbond in Injunction
There must be showing of great
and irreparable injury, mere
posting is not sufficient.
Counterbond in Attachment
There mere posting of the
counterbond is sufficient to
discharge the attachment.
Is the remedy of Counterbond still available to a defendant who has
already questioned the propriety of the issuance of an injunctive writ?
Yes. In other words, you can avail of a Motion to Dissolve and
if that does not work, you can file a Counterbond for as long as you are
able to show and the continued employment of the injunctive writ will
cause great and irreparable injury. Thus, in this case, you can have
your cake and eat it too. They have DIFFERENT GROUNDS and one
is not dependent to another.
But in counterbond, you have to shell out cash. In a motion to dissolve
you just question, thus the latter is the cheaper remedy. Suffice it to say,
in the case of yap, you can avail of the two remedies.
Who shall be given copies of the bond?
Section 7. Service of copies of bonds; effect of disapproval of
same. — The party filing a bond in accordance with the provisions
of this Rule shall forthwith serve a copy of such bond on the other
party, who may except to the sufficiency of the bond, or of the surety
or sureties thereon. If the applicant's bond is found to be insufficient
in amount, or if the surety or sureties thereon fail to justify, and a
bond sufficient in amount with sufficient sureties approved after
justification is not filed forthwith the injunction shall be dissolved. If
the bond of the adverse party is found to be insufficient in amount,
or the surety or sureties thereon fail to justify a bond sufficient in
amount with sufficient sureties approved after justification is not filed
forthwith, the injunction shall be granted or restored, as the case may
be. (8a)
Service of Copies of Bonds
One should furnish copies the other parties the copies of the bond,
especially if it is a surety bond. It will be proof that you deposited cash
that the other party will know as to the sufficiency. Same thing holds
true for the counterbond. Either bond, you must inform the other party.
Supposing there is a failure to furnish a copy of the bond, to other party,
would that be a ground now to dissolve the injunctive writ or nullify it?
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Failure to Serve Copies of the Bond, Not Fatal
The Supreme Court held that the failure of the defendants to furnish the
adverse parties with copies of the bonds prior to their approval is not
sufficient to invalidate the orders dissolving the preliminary injunction
where the attorney’s for the latter were notified of the filing of the first
bond; where they ultimately received copies of the bonds; and where
they do not contend that said bond are insufficient or that the sureties
are not solvent (Fortune Life v. Luczon, 2003).
In all of these, where you file a claim against the injunction bond:
•
The SURETY must be notified. He must be allowed to
participates if he so wants.
•
He must be given a chance to participate for the damage claim
will be enforced against the surety.
•
If there is no surety bond, no surety to speak.
Thus, the failure to furnish a copy of the bond may be
dispensed with or may be excused, so long as the other party has
given notice of the posting of the bond and will be given the opportunity
to the sufficiency of the bond. As long as he has notice, even if he has
no actual copy of the bond, that would be sufficient.
Section 9. When final injunction granted. — If after the trial of the
action it appears that the applicant is entitled to have the act or acts
complained of permanently enjoined the court shall grant a final
injunction perpetually restraining the party or person enjoined from
the commission or continuance of the act or acts of confirming the
preliminary mandatory injunction. (10a)
But if there is no notice. – That would be a valid issue to question the
injunctive bond. But again if there is notice and check the sufficiency of
the bond this would suffice. If there is really no notice you can question
then you can raise it under Section 7.
How do you claim damages against the injunction bond?
Damages Against the Injunction Bond
(1) That the defendant-claimant has secured a favorable
judgment in the main action;
(2) That the application for damages showing the claimant’s right
thereto and the amount thereof be filed in the same action
before the judgment becomes final and executory;
(3) That due notice be given to the other party and his surety or
sureties, notice to the principal not being sufficient;
(4) That there should be property hearing and the award of
damages should be included in the final judgment.
Thus, when you claim damages, it has to be before judgment becomes
final and executory.
Section 8. Judgment to include damages against party and
sureties. — At the trial, the amount of damages to be awarded to
either party, upon the bond of the adverse party, shall be claimed,
ascertained, and awarded under the same procedure prescribed in
section 20 of Rule 57.
How about if the decision is appealed? Can you file application for the
damages against the injunction bond before the appellate court?
Section 20, Rule 57: If the judgment of the appellate court be favorable
to the party against whom the attachment was issued he must claim
damages sustained during the pendency of the appeal by filing an
application in the appellate court, with notice to the party in whose favor
the attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may allow
the application to be heard and decided by the trial court.
Atty Tiu: Even if the judgment is on appeal, you can still claim the
damages before the appellate court. It could be in the lower court the
plaintiff won but upon appeal it was reversed, then you can claim
damages against the injunction bond before the appellate court.
Who will resolve the issue on damages if its filed in the appellate court?
The appellate court can:
(a) Grant it, or
(b) Remand it for the lower court to hear the claim for damages.
The important thing here is that the judgment has not become final and
executory. If the case is on appeal, obviously it is not yet final and
executory buhay pa yung claim for damages against the injunction bond.
The only obstacle that you will have is if the judgment has already
became final or executory in which case the claim cannot be made.
Which is same principle under attachment (Section 20, Rule 57). You
file it before the judgment becomes final and executory.
As much as possible it must be included in the judgment of the lower
court, if not you move for the lower to grant your claim against the bond
before it becomes file and executory. Then if it is appealed, you can still
file in it and the CA can either grant it or remand it.
When can the court issue a final injunction?
Final Injunction
If the plaintiff prevails in the case, the preliminary injunction becomes a
permanent and final injunction. If he loses, then the preliminary
injunction shall be automatically dissolved. And that shall be that time,
before the judgment becomes final, that the defendant can claim the
damages against the injunction bond.
Section 8 refers to the defendant prevails in the main case
Section 9 refers to the plaintiff prevails in the main case
Suppose that the Court has already ruled on the merits of the case, but
the issue of the preliminary injunction is pending before the appellate
court because it was questioned on its propriety via certiorari. Suppose
that the Court decides the plaintiff prevails. What is the effect of that in
the pending case in the appellate court?
KHO v. COURT OF APPEALS
March 19, 2002
Citing La Vista Association v. Court of Appeals, to wit:
Considering that preliminary injunction is a provisional remedy
which may be granted at any time after the commencement of the
action and before judgment when it is established that the plaintiff is
entitled to the relief demanded and only when his complaint shows
facts entitling such reliefs xxx and it appearing that the trial court had
already granted the issuance of a final injunction in favor of petitioner
in its decision rendered after trial on the merits xxx the Court resolved
to Dismiss the instant petition having been rendered moot and
academic. An injunction issued by the trial court after it has already
made a clear pronouncement as to the plaintiff's right thereto, that is,
after the same issue has been decided on the merits, the trial court
having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final xxx.
Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of
the decision rendered on the merit of the main case for
injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary
determination of its non-existence ceases to have any force and
effect.
La Vista categorically pronounced that the issuance of a final
injunction renders any question on the preliminary injunctive order
moot and academic despite the fact that the decision granting a final
injunction is pending appeal. Conversely, a decision denying the
applicant-plaintiff's right to a final injunction, although appealed,
renders moot and academic any objection to the prior dissolution of
a writ of preliminary injunction.
If the injunction is denied in the lower court, the case was dismissed and
there was a pending issue on certiorari on the appellate court as to the
propriety of the issuance of the injunction – that is the one that will be
moot and academic. This is because on the merits, the main case has
been dismissed. The preliminary injunction shall be automatically
dissolved, the dissolution is immediately executory and no need to wait
for the 15-day period.
When you lose the case, any injunctive writ you get is automatically
dissolved. Thus, the ruling in Kho v. CA, that is why it is moot and
academic on the issue of writ of preliminary injunction.
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This is because the very basis of its existence which it was based was
already dismissed, the question that was asked was different.
What if there is a final injunction, meaning that the plaintiff won in the
main case and there was permanent injunction, and there was still
pending case on certiorari in appellate court, will it be dismissed?
In Kho v. CA, La Vista categorically pronounced that the
issuance of a final injunction renders any question on the preliminary
injunctive order moot and academic despite the fact that the decision
granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiff's right to a final injunction, although
appealed, renders moot and academic any objection to the prior
dissolution of a writ of preliminary injunction.
Atty. Tiu: So if a final determination is made on merits of the case, any
pending issue regarding the preliminary injunction will also be affected.
•
If the main case is dismissed, then the issue on the PI will
become moot and academic.
•
If the main case if favorably ruled upon by the Court, meaning
it is granted and a permanent injunction issued, then any issue
with respect to the PI will also be mooted.
If the issue on preliminary injunction is resolved ahead the main case,
meaning the appellate court resolved first, would that have effect on the
main case?
As we have said, the issuance of the injunctive writ, will be based on a
sampling of the evidence, at that particular moment when the injunction
proceeding is being heard. Obviously, if the main case has been decided
when the parties were given opportunity to present evidence at a full
blown trial of the case on the merits, then it has a wider range of
evidence in which to base its final decision. As against the sampling of
evidence that was used as basis for the issuance of the injunctive writ.
So a final disposition of the case on the merits, will have bearing on the
pending issue with respect to the issuance or dissolution of injunctive
writ for the basis of the decision of the court is one the evidence as whole
and not just the sampling. Because of that, the decision of the lower
court is SUPERIOR after hearing of all the evidence of the parties and
its evaluation and weighing.
Can you nullify the writ, simply because the enforcement was done with
the assistance of the police or armed person? Will that not be a ground
to nullify the writ due to irregularity on its enforcement?
No. So long as the sheriff was there to enforce the writ and
the police were only there to help the sheriff and not to initiate violence,
there is nothing wrong with that. And, in certain cases, where the
implementation of the writ will meet strong resistance from the
defendants, the assistance of police authorities has been recognized to
be advisable in such cases.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
judgment, or to aid execution when the execution has been
returned unsatisfied or the judgment obligor refuses to apply
his property in satisfaction of the judgment, or otherwise to
carry the judgment into effect;
RULE 59
RECEIVERSHIP
September 28, 2019 by Trisha Ann Samantha Aligato
Section 1. Appointment of receiver.
Upon a verified application, one or more receivers of the property
subject of the action or proceeding may be appointed by the court
where the action is pending, or by the Court of Appeals or by the
Supreme Court, or a member thereof, in the following cases:
(d) Whenever in other cases it appears that the appointment
of a receiver is the most convenient and feasible means of
preserving, administering, or disposing of the property in
litigation.
What is the nature of the remedy under Rule 59? Why is it necessary to
appoint a receiver?
What is the scope of the application of Rule 59?
(a) When it appears from the verified application, and such other
proof as the court may require, that the party applying for the
appointment of a receiver has an interest in the property or fund
which is the subject of the action or proceeding, and that such
property or fund is in danger of being lost, removed, or materially
injured unless a receiver be appointed to administer and preserve it;
(b) When it appears in an action by the mortgagee for the foreclosure
of a mortgage that the property is in danger of being wasted or
dissipated or materially injured, and that its value is probably
insufficient to discharge the mortgage debt, or that the parties have
so stipulated in the contract of mortgage;
2018 TSN: What is the scope of the application of Rule 59,
does it include corporations under receivership?
In the case of Umale v ASB Realty Corporation, Petitioners
insist that the rehabilitation receiver has the power to bring
and defend actions in his own name as this power is provided
in Section 6 of Rule 59 of the Rules of Court. Indeed, PD 902A, as amended, provides that the receiver shall have the
powers enumerated under Rule 59 of the Rules of Court. But
Rule 59 is a rule of general application. It applies to different
kinds of receivers rehabilitation receivers, receivers of entities
under management, ordinary receivers, receivers in
liquidation and for different kinds of situations. While the SEC
has the discretion to authorize the rehabilitation receiver, as
the case may warrant, to exercise the powers in Rule 59, the
SECs exercise of such discretion cannot simply be assumed.
(c) After judgment, to preserve the property during the pendency of
an appeal, or to dispose of it according to the judgment, or to aid
execution when the execution has been returned unsatisfied or the
judgment obligor refuses to apply his property in satisfaction of the
judgment, or otherwise to carry the judgment into effect;
(d) Whenever in other cases it appears that the appointment of a
receiver is the most convenient and feasible means of preserving,
administering, or disposing of the property in litigation.
During the pendency of an appeal, the appellate court may allow an
application for the appointment of a receiver to be filed in and
decided by the court of origin and the receiver appointed to be
subject to the control of said court.
In cases of corporation, who may appoint receivers? The court.
What court? the court where the action is pending, or by the Court of
Appeals or by the Supreme Court, or a member thereof
2015 TSN:
1. MTC where action is pending
2. RTC where action is pending
3. CA or any member thereof
4. SC or any member thereof
5. In case of dissolution of corporations, the SEC has
jurisdiction over dissolution of corporations and the
appointment of receiver (Sec 117-122 of Corp Code)
What are the grounds to appoint a receiver?
(a) When it appears from the verified application, and such
other proof as the court may require, that the party applying
for the appointment of a receiver has an interest in the
property or fund which is the subject of the action or
proceeding, and that such property or fund is in danger of
being lost, removed, or materially injured unless a receiver be
appointed to administer and preserve it;
(b) When it appears in an action by the mortgagee for the
foreclosure of a mortgage that the property is in danger of
being wasted or dissipated or materially injured, and that its
value is probably insufficient to discharge the mortgage debt,
or that the parties have so stipulated in the contract of
mortgage;
(c) After judgment, to preserve the property during the
pendency of an appeal, or to dispose of it according to the
There is no allegation whatsoever in this case that the SEC
gave ASB Realty’s rehabilitation receiver the exclusive right
to sue
What are these kinds of receivers?
•
•
•
•
Rehabilitation receivers
Receivers of entities under management
Ordinary receivers
Receivers in liquidation and for different kinds of situation
When a corporate receiver has been appointed for corporation under
rehabilitation, is the receiver solely responsible for the filing of suits on
behalf of the corporation under receivership?
No. Corporate rehabilitation is defined as the restoration of the
debtor to a position of successful operation and solvency, if it
is shown that its continuance of operation is economically
feasible and its creditors can recover by way of the present
value of payments projected in the plan more if the corporation
continues as a going concern than if it is immediately
liquidated. The intention of the law is to effect a feasible and
viable rehabilitation by preserving a floundering business as a
going concern, because the assets of a business are often
more valuable when so maintained than they would be when
liquidated.
This concept of preserving the corporations business as a
going concern while it is undergoing rehabilitation is called
debtor-in-possession or debtor-in-place. This means that the
debtor corporation (the corporation undergoing rehabilitation),
through its Board of Directors and corporate officers, remains
in control of its business and properties, subject only to the
monitoring of the appointed rehabilitation receiver.
The concept of debtor-in-possession, is carried out more
particularly in the SEC Rules, the rule that is relevant to the
instant case. It states therein that the interim rehabilitation
receiver of the debtor corporation does not take over the
control and management of the debtor corporation. Likewise,
the rehabilitation receiver that will replace the interim receiver
is tasked only to monitor the successful implementation of the
rehabilitation plan. There is nothing in the concept of
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
corporate rehabilitation that would ipso facto deprive the
Board of Directors and corporate officers of a debtor
corporation, such as ASB Realty, of control such that it can no
longer enforce its right to recover its property from an errant
lessee. (2018 TSN)
So? The corporation cannot sue other than the receiver?
The receiver is NOT THE ONLY party who can sue
What is the role of the receiver? Whenever the corporation is under
rehabilitation if the receiver is not the one filing the suit? What is the
receiver there?Is the role of the receiver merely to monitor the assets?
No. Sec. 6.
Who has the capacity to sue in cases of corporation under rehabilitation
other than the receiver?
reduced to a "scrap heap." Neither have they proven that the property
has been materially injured which necessitates its protection and
preservation. 15 In fact, at the hearing on respondent bank's motion
to dismiss, respondent bank, through counsel, manifested in open
court that the leak in the ice plant had already been remedied and
that no other leakages had been reported since. 16 This statement
has not been disputed by petitioners.
At the time the trial court issued the order for receivership of the
property, the problem had been remedied and there was no imminent
danger of another leakage. Whatever danger there was to the
community and the environment had already been contained.
The "drastic sanctions" that may be brought against petitioners due
to their inability to pay their employees and creditors as a result of
"the numbing manner by which [respondent bank] took the ice plant"
does not concern the ice plant itself. These claims are the personal
liabilities of petitioners themselves. They do not constitute "material
injury" to the ice plant.
Its corporate officers.
A corporation undergoing rehabilitation may still sue on its on even
without the participation of the appointed receiver. Just because it is
under receivership it not deprived of its capacity to sue. So may
personality siya to sue and be sued. The receiver can initiate the action
or it can be the board of directors or the corporate officers. In the latter
case, the role of the receiver is to be informed. So if it is the corporate
officers who will initiate the action, the receiver has to be NOTIFIED. So
that the receiver will know of the status of the case and will monitor the
assets of the corporation if in suing it requires recovery of assets or
collection of sum of money, then that falls part of the assets of the
corporation if the suit is successful. Therefore, the receiver has to be
informed so that whenever favorable judgment the suit might bring and
any execution in its favor, might be included in the assests of the
coporation and duly minitierd and administerd by the rececveoiver.
When the ground for a receiver is danger of loss of material injury to the
subject matter of the action, is mere allegation of such ground sufficient?
no
In the case of Commodities Storage Ice Plant v CA, What was the
ground for the appointment of the receiver here?
(c) When it appears in an action by the mortgagee for the
foreclosure of a mortgage that the property is in danger of
being wasted or materially injured, and that its value is
probably insufficient to discharge the mortgage debt, or that
the parties have so stipulated in the contract of mortgage;
That the property is a danger to the lives, health, and peace of mind of
the inhabitants.
What was the property subject matter to the cause of action? Ice plant
What was the allegation with respect to the application of the receiver?
6.1 Danger to the lives, health and peace of mind of the
inhabitants living near the Sta. Maria Ice Plant;
6.2 Drastic action or sanctions that could be brought against
the plaintiff by affected third persons, including workers who
have claims against the plaintiff but could not be paid due to
the numbing manner by which the defendant took the Sta.
Maria Ice Plant;
6.3 The rapid reduction of the Ice Plant into a scrap heap
because of evident incompetence, neglect and vandalism.
Are these sufficient allegations for the appointment of the receiver? No.
COMMODITIES STORAGE & ICE PLANT CORPORATION,
SPOUSES VICTOR & JOHANNAH TRINIDAD, Petitioners, v.
COURT OF APPEALS, JUSTICE PEDRO A.. RAMIREZ,
CHAIRMAN and FAR EAST BANK & TRUST COMPANY,
A petition for receivership under Section 1 (b) of Rule 59 requires that
the property or fund which is the subject of the action must be in
danger of loss, removal or material injury which necessitates
protection or preservation. The guiding principle is the prevention of
imminent danger to the property. If an action by its nature, does not
require such protection or reservation, said remedy cannot be
applied for and granted. 14
In the instant case, we do not find the necessity for the appointment
of a receiver. Petitioners have not sufficiently shown that the Sta.
Maria Ice Plant is in danger of disappearing or being wasted and
What is necessary? The facts and circumstances must be properly
stated that the property is in fact in the danger of loss unless a receiver
is appointed.
If a mortgagee applies for the appointment of a receiver, what is
necessary to be shown to the court?
Does it follow that if you are a mortgagee and you have initiated an
action for judicial foreclosure that you can automatically apply for the
appointment of a receiver and that the court should appoint a receiver
over the subject matter?
How is that determined?
Indispensable requirement in either case
Is mere proof that the property is in danger of being materially injured
enough for the court to appoint a receiver?
So two scenarios are contemplated here:
1. that the property is in danger of being wasted or materially
injured, AND
2. that its value is probably insufficient to discharge the
mortgage debt, or that the parties have so stipulated in the
contract of mortgage;
What is the main action in the case of ice plant?
Extrajudicial foreclosure. So we are not talking here of a judicial
foreclosure.
I am talking about an action for judicial foreclosure where the mortgagee
files the action. If a mortgagee is able to show that the property subject
to the action is in danger of being materially injured, is it enough for the
court to appoint a receiver? (paulit-ulit ang question ni maam)
CODAL ANG SAGOT DYAN. Basic.
(c) When it appears in an action by the mortgagee for the
foreclosure of a mortgage that the property is in danger of
being wasted or materially injured, and that its value is
probably insufficient to discharge the mortgage debt, or that
the parties have so stipulated in the contract of mortgage;
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So what does it mean? If you to interpret this, if you are the court. Will
you grant the application for a receiver by the mere showing of material
injury to the subject matter of the judicial foreclosure? Wil you grant?
1. that the property is in danger of being wasted or materially
injured, AND
2. that its value is probably insufficient to discharge the
mortgage debt, or that the parties have so stipulated in the
contract of mortgage;
NOTE: Two requirements. Hindi lang showing that the property is
in danger of being wasted or materially injured. Kailangan, its value
is probably insufficient to discharge the mortgage debt or that the
parties have so stipulated in the contract of mortgage
In either case, the indispensable requirement is the showing of
material injury.
You either show that the value is probably insufficient to discharge the
mortgage debt OR there is an express stipulation for the appointment of
a receiver.
Can a receiver still be appointed after the case has been decided? Yes
Under what circumstances?
Under Sec 1
(c) After judgment, to preserve the property during the pendency of
an appeal, or to dispose of it according to the judgment, or to aid
execution when the execution has been returned unsatisfied or the
judgment obligor refuses to apply his property in satisfaction of the
judgment, or otherwise to carry the judgment into effect;
So the judgment here may either be FINAL or NOT YET FINAL.
When it is not yet final, it is subject to an appeal. When it is final, it is
subject to execution proceedings. So either way, you can still avail of the
remedy of receivership.
What is the main purpose of appointing a receiver?
To preserve and conserve the property in litigation and to prevent its
possible destruction if it is left in the possession of any of the parties
In case of a real property subject to an action, and a notice of lis pendens
has been annotated. Will that not be sufficient to preserve the property?
The lis pendens is sufficient if it is for the preservation of the rights but if
it is for the preservation of the property, there should be receivership.
When the action involves a piece of land, an empty piece of land, what
is the remedy to reserve a property? To FILE A NOTICE OF LIS
PENDENS or to APPOINT A RECEIVER To file a notice of lis pendens.
property when that property is in the possession of one of the parties of
the case?
The right of the possessor of the property is superior over the right of
receivership, provided that the possessor has the valid ground of
possessing the subject property. The court should not grant the
application of receivership if the court is still determining if the
possession of the defendant is proper or not. If there is no valid ground,
the receivership may be allowed by the court.
Why can’t the court appoint a receiver when the defendant is in
possession?
When there is a receivership, the possession will be transferred to the
receiver, depriving the possessor of such right.
One of the duties or functions of a receiver is to take possession so it
follows that if the case involves a property in the possession of the
defendant, and the issue is possession, the court should not appoint a
receiver because that would have the effect of ousting the defendant
from the property when the issue of possession is yet to be determined
by the court. That is a limitation of the power of the court to appoint a
receiver, even if there is a showing of material injury to the property
subject matter of the action.
Section 2. Bond on appointment of receiver. — Before issuing the
order appointing a receiver the court shall require the applicant to file a
bond executed to the party against whom the application is presented,
in an amount to be fixed by the court, to the effect that the applicant will
pay such party all damages he may sustain by reason of the
appointment of such receiver in case the applicant shall have procured
such appointment without sufficient cause; and the court may, in its
discretion, at any time after the appointment, require an additional bond
as further security for such damages. (3a)
How do you oppose an application for a receiver or discharge a receiver
already appointed?
Section 3. Denial of application or discharge of receiver. — The
application may be denied, or the receiver discharged, when the adverse
party files a bond executed to the applicant, in an amount to be fixed by
the court, to the effect that such party will pay the applicant all damages
he may suffer by reason of the acts, omissions, or other matters
specified in the application as ground for such appointment. The receiver
may also be discharged if it is shown that his appointment was obtained
without sufficient cause. (4a)
What are the two remedies?
1. Filing a counterbond
2. Discharge
Comparison of the counterbond and receivership bond:
Counterbond
Why not a receiver?
Because, generally, if the property involves a real estate, there is no
danger of the empty property being destroyed.
September 28 by Nice Mondragon
Generally, if the property involves a real estate, there is no danger of the
empty property being destroyed. Thus, there is no need for receivership.
If it’s an empty land, what will be dissipated from there? What will be
materially injured? There is none. Unless there are improvements that
needed to be administered or taken care of, you don’t need a receiver.
So, you can simply annotate the notice of lis pendens for the
preservation of the rights of the parties with respect to that property.
Amount
Condition
Amount fixed by the
court
To the effect that such
party will pay the
applicant all damages
he may suffer by
reason of the acts,
omissions, or other
matters specified in
the application as
ground
for
such
appointment. [Sec 3,
Rule 59]
Receivership
bond
Amount fixed by
the court.
To the effect that
the applicant will
pay such party all
damages he may
sustain by reason
of the appointment
of such receiver in
case the applicant
shall
have
procured
such
appointment
without sufficient
cause [Sec 2, Rule
59]
Situation: Property in possession of the defendant
Supposed, the property is occupied, is it proper for the court to appoint
a receiver on the ground that there is danger of material injury to the
Take note that the conditions are different. The amount of both
receivership bond and counterbond depends on the discretion of the
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September 28 by Mary Caroline Castro
court. As long as the court can justify the basis of the amount, that is
already sufficient. That cannot be questioned. The law makes it
discretionary on the part of the court.
Will that discharge the remedy of a receivership?
What damages can you claim against the counterbond?
No. it will not discharge the remedy of a receivership.
Those damages that the person may suffer by reason of the acts,
omissions, or other matters specified in the application as ground for
such appointment.
What is now the remedy?
Conditions of the counterbond under Rule 57, 58 and 59:
The remedies are:
1.
2.
The receiver will file a bond; or if not,
To look for another qualified receiver.
Rule 57- Preliminary Attachment: It will take the place of the
attached property. Pag manalo si plaintiff, nadischarge na ang
attachment writ pero may counterbond naman, doon nya i-enforce ang
judgment niya against the counterbond. That will require finality of the
judgment.
Because there is such a necessity of protecting the property. Hindi lang
nag qualify ‘tong isa kasi wala syang bond.
Rule 58- Preliminary Injunction: If there are damages incurred by
the dissolution of the injunctive writ, you go after the counterbond
under Rule 58.
If the receivership is granted by the court under Rule 59 and the
defendant has offered to post a counter bond or let’s say posted a
counter bond—is it automatic on the part of the court to discharge or
dispense with the receivership?
Rule 59- Receivership: The adverse party will pay the applicant all
damages he may suffer by reason of the acts, omissions, or other
matters specified in the application as ground for such appointment.
Comparison of the counterbond under Rule 58 and 59
The grounds for damages against the counterbond under Rule 59 are
much narrower in scope compared to the grounds in Rule 58.
Under Rule 58, if you incurred damages by reason of dissolution of the
writ through a counterbond, you can claim against the counterbond.
Under Rule 59, even if there is damage, but it was not alleged in the
application of the possible damages that you might incur if there is no
receiver appointed, you cannot claim that against the counterbond. If
you did not make any allegation, even if you incurred damage, you
cannot claim damages against the counterbond under Rule 59
Supposing, you apply for a receiver and you were able to show a proper
ground. Then the defendant does not oppose. Will that now dispense
the posting of a receivership bond because the other party agreed?
No, the filing of the receivership bond is mandatory.
Aside from the receivership bond, what other bond should be posted
when the court appoints a receiver?
Section 4. Oath and bond of receiver. — Before entering upon his
duties, the receiver must be sworn to perform them faithfully, and shall
file a bond, executed to such person and in such sum as the court may
direct, to the effect that he will faithfully discharge his duties in the action
or proceeding and obey the orders of the court. (5a)
The remedy is not to discharge the receivership but to get another
person that will qualify as receiver.
No. The rule states that the application may be denied, or the receiver
discharged. In statutory construction, the word “may” has always been
construed as permissive. If the intent is to make it mandatory or
ministerial for the trial court to order the recall of the receiver upon the
offer to post a counterbond, then the court should have used the word
“shall”. Thus, the trial court has to consider the posting of the
counterbond in addition to other reasons presented by the offeror why
the receivership has to be set aside.
The mere posting of a counter bond not enough?
Yes. Because the court must consider other factors to justify the
discharge or dispense with the receivership other than posting of a
counter bond.
Who may be serve of a copy of a bonds?
Sec. 5. Service of copies of bonds; effect of disapproval of
same. The person filing a bond in accordance with the provisions of
this Rule shall forthwith serve a copy thereof on each interested
party, who may except to its sufficiency or of the surety or sureties
thereon. If either the applicant’s or the receiver’s bond is found to be
insufficient in amount, or if the surety or sureties thereon fail to justify,
and a bond sufficient in amount with sufficient sureties approved
after justification is not filed forthwith, the application shall be denied
or the receiver discharged, as the case may be. If the bond of the
adverse party is found to be insufficient in amount or the surety or
sureties thereon fail to justify, and a bond sufficient in amount with
sufficient sureties approved after justification is not filed forthwith, the
receiver shall be appointed or re-appointed, as the case may be.
What is the purpose of serving copies to the parties of the bonds?
Two bonds
1.
2.
Receivership bond- for the grant of the receivership
Receiver’s bond- for the issuance of the appointment to the
receiver himself or herself, there must be a bond.
No receivership bond, effect
If there is no receivership bond, there is no receivership. There will be a
denial of the application for receivership.
No receiver’s bond, effect
If there is no receiver’s bond, it will discharge the receiver but not the
remedy of receivership. The remedy is to look for another qualified
receiver. There is still that necessity of protecting the property. The
remedy is not to discharge the receivership but to get another person
who will qualify as receiver.
The purpose is to have the opportunity on the part of the interested party
to contest the sufficiency of the bond.
What is the time frame for the filing of the bond and the service copies
of the bond? Na grant na ang application mo, when ka magpa file?
There are two bonds here.
1. The Receivership’s bond;
2.
The Receiver’s bond.
(Ma’am talks about common sense. And not every details are provided
by law. Some gaps must to be filled in by logic—common sense.)
If you look at the rules, there is no time frame kung kalian ka mag popost nang bond.
Put yourself in the shoe of the plaintiff, nangangailangan nang urgent
provisional remedy from the court. Nag mamadali ka. May I e-enjoin,
may I a-attach kang property in endanger of being spirited out by the
defendant. Material injury was being done to the property of the plaintiff,
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
nag mamadali ka. Time is of the essence. Marathon hearing for the
presentation of evidence and there you’ve got an order granting your
application. When do you file the Bond? Para ma issue ang order
appointing the receiver, or the Writ of Injunction, or the Writ of
Preliminary Attachment.
The moment nalaman mo magkano ang fixed na bond—mag post
ka agad! Walang time period ‘yan. The longer you delay, the longer
the order will be issued. Depende ‘yan sa iyong urgency. Kung talagang
urgent ‘yan—ASAP! Post ka agad nang bond and that indicate to the
court kung talagang urgent ‘yan. Pag hindi ka agad nag post nang bond,
ang ibig sabihin—binobola mo lang ang korte na may urgency and need
mo. Bakit pagdating sa pag post nang bond and tagal mong mag post?
That contradicts your prayer for urgency.
If talagang urgent ‘yan, you show to the court from the moment na na
grant ‘yan and nag fix sya nang amount of the bond—post mo kaagad.
Ano pa ang hinihintay mo? Na ma moot and academic ang kaso? Ang
preliminary relief na hinihingi mo? Kasi all of the fears that you have
been conjuring up in your head nangyari na kasi hindi ka nag post nang
bond? When in fact granted naman sana ‘yong provisional remedy mo.
Inaagapan mo dito ‘yong damage. ‘Yong urgency. The moment you
know the amount of the bond—I post mo kaagad. If di mo agad pi-nost
it will give indication to the court na hindi urgent ang prayer mo. And that
will even result in the recall of the order granting your provisional
remedy. Wala kang mamapala. Nag issue nga ng order granting but
hindi naman na i-issue ang Writ. Useless!
Because it is the Writ itself the commands the defendants that not to do
anything in Injunction. In the Writ of Attachment, that commands the
Sheriff to seize properties and levy on the properties of the defendants.
Pag wala ‘yong Writ—walang mangyayari.
The Writ granting the Preliminary Attachment and Injunction kung hindi
mo mapa issue ‘yong Writ mismo—i-laminate mo nalang ‘yan kasi pang
display nalang ‘yan. Walang gamit ‘yan. Useless!
What good is an order granting your provisional remedy kung di ka
naman makakakuha nang actual Writ? ‘Yon ang pinaka importante. If
you are alleging urgency so dapat urgent din ang pag file mo nang bond
para na issue kaagad ang Writ. Because it is the Writ that is crucial here.
That is what will prevent defendant from doing something or command
him to do something in case of mandatory injunction.
(In our case, August 8 na issue ang order granting our Writ. Bond 2M.
Pinatanong namin saan ang surety bond dito na accredited by the
Supreme Court. Walang listahan ang RTC. Walang maibigay sa amin.
Hindi pa daw available. August 8 ‘yon. Anong ginawa namin? Cash
Bond 2M. No choice. Urgent eh. Pag di naming ‘yan pi-nost—walang
aksyon ang korte. Walang ma i-issue na Writ. At ‘yong kinatatakotan
namin na act—mangyayari at mangyayari ‘yon if di namin ‘yon napa issue-han nag writ at wala na served sa kanila na writ.)
What you do after the grant of that provisional remedy that you have
prayed for before the court will determined how sincere you are. And will
determined also if there is urgency in the relief that you are asking for.
In other words, you have to be consistent.
If you are pleading for urgency or immediate relief from the court then
you should also comply ASAP kung ano yong hinihingi nang korte para
ma grant ang relief na ‘yan. Consistency and kailangan d’yan. These are
not found in the rules—common sense.
As soon as you post the bond, you furnish a copy to the other party. So
that the other party may object the sufficiency of the bond. Because that
is also a ground to discharge the remedy. And the other party has the
right to know whether or not sufficient ang bond mo.
Let’s go to the powers of the receiver. It was mentioned earlier that the
receiver may initiate action. If it is a corporation, the officer may still
initiate an action with notice to the receiver.
Supposing it is the receiver who files the action, can the receiver be also
sued?
Section 6. General powers of receiver. — Subject to the control of
the court in which the action or proceeding is pending a receiver shall
have the power to bring and defend, in such capacity, actions in his
own name; to take and keep possession of the property in
controversy; to receive rents; to collect debts due to himself as
receiver or to the fund, property, estate, person, or corporation of
which he is the receiver; to compound for and compromise the same;
to make transfers; to pay outstanding debts; to divide the money and
other property that shall remain among the persons legally entitled
to receive the same; and generally to do such acts respecting the
property as the court may authorize.
However, funds in the hands of a receiver may be invested only by
order of the court upon the written consent of all the parties to the
action. (7a) No action may be filed by or against a receiver
without leave of the court which appointed him. (n)
If you are going to sue the receiver, you must first seek permission from
the court.
What about if the receiver the one suing?
Subject to the control of the court in which the action or proceeding
is pending a receiver shall have the power to bring and defend, in
such capacity, actions in his own name x x x
One of the powers of receiver is to take possession of the subject
property of the action. What happens now if there is refusal or failure to
turn over the possession of the property to the receiver?
Section 7. Liability for refusal or neglect to deliver property to
receiver. — A person who refuses or neglects, upon reasonable
demand, to deliver to the receiver all the property, money, books,
deeds, notes, bills, documents and papers within his power or
control, subject of or involved in the action or proceeding, or in case
of disagreement, as determined and ordered by the court, may be
punished for contempt and shall be liable to the receiver for the
money or the value of the property and other things so refused
or neglected to be surrendered, together with all damages that
may have been sustained by the party or parties entitled thereto
as a consequence of such refusal or neglect. (n)
If there is failure to deliver the property such person can be held in
contempt in addition to damages.
Will be the liability attached?
Upon reasonable demand, to deliver to the receiver all the property,
money, books, deeds, notes, bills, documents and papers within his
power or control, subject of or involved in the action or proceeding, or in
case of disagreement, as determined and ordered by the court xxx
The receiver will make a demand. And after non-compliance the receiver
may go to court and seek to cite this person in contempt and also to ask
for damages.
What are the grounds for terminating receivership?
Section 8. Termination of receivership; of receiver. — Whenever
the court, motu proprio or on motion of either party, shall determine
that the necessity for a receiver no longer exists, it shall, after
due notice to all interested parties and hearing, settle the accounts
of the receiver, direct the delivery of the funds and other property in
his possession to the person adjudged to be entitled to receive them
and order the discharge of the receiver from further duty as such.
The court shall allow the receiver such reasonable compensation as
the circumstances of the case warrant, to be taxed as costs against
the defeated party, or apportioned, as justice requires. (8a)
What is the main ground in terminating receivership?
The necessity for a receiver no longer exists. If there is no necessity
anymore for a receiver.
Who may cause the termination?
1. the Court Motu Proprio; or
2. upon motion of the either party.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What is the procedure of the termination of the receivership?
1.
There shall be due notice to all interested parties and hearing,
2.
settle the accounts of the receiver,
3.
direct the delivery of the funds and other property in his
possession to the person adjudged to be entitled to receive
them and order the discharge of the receiver from further duty
as such.
4.
The court shall allow the receiver such reasonable
compensation as the circumstances of the case warrant, to be
taxed as costs against the defeated party, or apportioned, as
justice requires.
How will the receiver be compensated? Who fixes the amount of the
compensation? The Court.
Can the receiver withhold amount or deduct from the property under
receivership his compensation?
No. Because under the rules, the court shall allow the receiver such
reasonable compensation as the circumstances of the case warrant, xxx
Who is liable to the compensation of the receiver?
The compensation of the receiver is to be taxed as costs against the
defeated party, or apportioned, as justice requires. Also it can also be
shared by the prevailing party or by the third party as justice may require.
Generally, it will be the defeated party who will be liable to pay the
compensation of the receiver. Or in some cases it could be apportioned
between the parties. But the compensation cannot be deducted from the
property under receivership.
It would be taxed separately against the defeated party or persons liable.
If for instance the applicant loses in the case and there was no sufficient
cause for the appointment of the receiver, how may the defendant claim
damages against the receivership bond?
Section 9. Judgment to include recovery against sureties. —
The amount, if any, to be awarded to any party upon any bond filed
in accordance with the provisions of this Rule, shall be claimed,
ascertained, and granted under the same procedure prescribed in
section 20 of Rule 57
What are the general in claiming damages against attachment bond?
Under Section 20 (Rule 57)— An application for damages on
account of improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching 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.
If the judgment of the appellate court be favorable to the party
against whom the attachment was issued he must claim damages
sustained during the pendency of the appeal by filing an application
in the appellate court, with notice to the party in whose favor the
attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court.
You can claim damages before the judgment become final and
executory. If the judgment does not include award of damages against
the receivership bond—then you have to, either: 1. File an appropriate
motion in order to include such claim for damages or 2. an appeal for
the payment of damages as long as the judgment is yet final—you can
still claim for damages. The same principle on the claim of damages
against attachment bond as well as injunction bond applies against the
receivership bond. (3-min break)
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
RULE 60
REPLEVIN
September 28, 2019 by Kindy Mae Pamaos
described as a mixed action, being partly in rem and partly in personam
– in rem insofar as the recovery of specific property is concerned, and
in personam as regards to damages involved.
As an "action in rem," the gist of the replevin action is the right of the
plaintiff to obtain possession of specific personal property by reason of
his being the owner or of his having a special interest therein.
What is Replevin?
What is the main action for Replevin?
Replevin, Defined
SUPERLINES TRANSPORTATION COMPANY, INC. V. PNCC
MARCH 28, 2007
The term replevin is popularly understood as "the return to or recovery
by a person of goods or chattels claimed to be wrongfully taken or
detained upon the person's giving security to try the matter in court and
return the goods if defeated in the action;" "the writ by or the commonlaw action in which goods and chattels are replevied," i.e., taken or
gotten back by a writ for replevin;" and to replevy, means to recover
possession by an action of replevin; to take possession of goods or
chattels under a replevin order.
The main action is for the RECOVERY OF POSSESSION OF
PERSONAL PROPERTY.
What is it is recovery of real property, can you apply for Replevin?
GENERAL RULE: NO. You cannot apply for replevin.
However, in the case of SERG. PRODUCTS INC. V PCI LEASING AND
FINANCE, INC., a writ of replevin was issued although the machineries
were immovable properties.
MAIN ACTION:
The term therefore may refer either to the action itself, for the recovery
of personality, or the provisional remedy traditionally associated with it,
by which possession of the property may be obtain[ed] by the plaintiff
and retained during the pendency of the action.
PCI Leasing and Finance filed a complaint for sum
of money, with an application for a writ of replevin.
RTC:
Just like Injunction, action of Replevin can either be:
1. A provisional remedy or
2. The main action
The judge issued a writ of replevin directing its sheriff
to seize and deliver the machineries and equipment
to PCI Leasing after 5 days and upon the payment
of the necessary expenses.
SERG.
Petitioners filed a motion for special protective order
praying for a directive for the sheriff to defer
enforcement of the writ of replevin.
PCI LEASING
"This motion was opposed by PCI Leasing on the
ground that the properties were still personal and
therefore still subject to seizure and a writ of replevin.
Section 1. Application. A party praying for the recovery of
possession of personal property may, at the commencement of the
action or at any time before answer, apply for an order for the delivery
of such property to him, in the manner hereinafter provided.
SERG
petitioners asserted that the properties sought to be
seized [were] immovable
ISSUE:
What is the nature of the subject machineries?
What do you mean by personal property?
RULING:
Movable Property. In the present case, the
machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory
built on their own land. Indisputably, they were
essential and principal elements of their chocolatemaking industry.
What is the subject matter of Replevin?
SUBJECT MATTER
The subject matter of Replevin is a personal property.
PERSONAL PROPERTY
Article. 416. The following things are deemed to be personal property:
1. Those movables susceptible of appropriation which are not
included in the preceding article;
2. Real property by special provision of law considered as
personal property;
3. Forces of nature which are brought under control of science;
and
4. In general, all things, which can be transported from, placeto-place without impairment of the real property to which they
are fixed.
How about machineries?
Machineries are considered movable properties unless immobilized by
destination because they are essential and principal elements in the
industry.
ARTICLE 415. The following are immovable property:
xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works.
What is the nature of a replevin?
PCI LEASING INC. V. DAI
SEPTEMBER 21, 2007
Hence, although each of them was movable or
personal property on its own, all of them have
become "immobilized by destination because they
are essential and principal elements in the
industry." In that sense, petitioners are correct in
arguing that the said machines are real, not
personal, property pursuant to Article 415 (5) of the
Civil Code.
Court has held that contracting parties may validly
stipulate that a real property be considered as
personal. After agreeing to such stipulation, they
are consequently estopped from claiming
otherwise. Under the principle of estoppel, a party
to a contract is ordinarily precluded from denying
the truth of any material fact found therein.
In the present case, the Lease Agreement clearly
provides that the machines in question are to be
considered as personal property. Clearly then,
petitioners are estopped from denying the
characterization of the subject machines as
personal property. Under the circumstances, they
are proper subjects of the Writ of Seizure.
The action is primarily possessory in nature and generally determines
nothing more than the right of possession. Replevin is so usually
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
When do you apply for a writ of Replevin?
Section 1. Application. A party praying for the recovery of possession
of personal property may, at the commencement of the action or at
any time before answer, apply for an order for the delivery of such
property to him, in the manner hereinafter provided.
How do you apply for a writ of Replevin?
The applicant must:
1. File an affidavit, and
2. give a bond, executed to the adverse party in double the value
of the property as stated in the affidavit aforementioned, for
the return of the property to the adverse party if such return
be adjudged, and for the payment to the adverse party of such
sum as he may recover from the applicant in the action.
What must the affidavit allege?
Sec. 2. Affidavit and bond. The applicant must show by his own
affidavit or that of some other person who personally knows the facts:
a) That the applicant is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof;
b) That the property is wrongfully detained by the adverse party, alleging
the cause of detention thereof according to the best of his knowledge,
information, and belief;
c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of execution
or preliminary attachment, or otherwise placed under custodia legis, or
if so seized, that it is exempt from such seizure or custody; and
d) The actual market value of the property.
Must the applicant for the writ of Replevin be the owner of the property?
In the case if SERVICEWIDE SPECIALIST, INC. VS CA, "There can be
no question that persons having a special right of property in the goods
the recovery of which is sought, such as a chattel mortgagee, may
maintain an action for replevin therefor.
Who is the person entitled to the possession of the property?
Rule 60 of the Revised Rules of Court the person entitled to the
possession of the property is the owner of the property claimed,
particularly describing it, or is entitled to the possession thereof.
Does it follow that in case of default the mortgagee is entitled to the
possession of the property? NO
SERVICEWIDE SPECIALIST, INC. VS CA
NOVEMBER 19, 1999
There can be no question that persons having a special right of property
in the goods the recovery of which is sought, such as a chattel
mortgagee, may maintain an action for replevin therefor. Where the
mortgage authorizes the mortgagee to take possession of the property
on default, he may maintain an action to recover possession of the
mortgaged chattels from the mortgagor or from any person in whose
hands he may find them.
Can you dispense with the affidavit requirement? YES, if there is
substantial compliance.
What is substantial compliance?
CITYBANK NA VS CA
MARCH 17, 1999
Substantial Compliance
There is substantial compliance with the rule requiring that an affidavit
of merit to support the complaint for replevin if the complaint itself
contains a statement of every fact required to be stated in the affidavit
of merit and the complaint is verified like an affidavit.
What is meant by wrongful detention?
Wrongful Detention
Wrongful detention means:
1. There is no cause for the detention of the property, or
2. Despite demand, the property is detained for wrongful reason
under the law, or
3. If the person cannot show ownership or right over the
property, or
4. The property is not in custodial legis or seized without
sufficient cause or the corresponding order from the court or
without any writ supporting the seizure, or
5. The property was not confiscated for payment of taxes.
Can you apply for replevin when property is taken or detained without a
cause?
Yes. That is one thing that you must allege aside from your right to
possess. There was no sufficient cause for the detention.
1. You must show your right to possess and that could be in the
form of ownership, or any contract that grants you possession
over the property.
2. You need to show that the property was taken or being
withhold for no cause.
September 28, 2019 by Johanna E. Dingal
How do you determine actual value?
Actual Value Basis
Actual value was based on appraisal report and insurance valuation.
Petitioner alleged that the machineries and equipment involved are
valued at P200,000.00 while respondent denies the same, claiming that
per the appraisal report, the market value of the said properties is
P1,710,000.00 and their replacement cost is P2,342,300.00. Petitioner's
assertion is belied by the fact that upon taking possession of the
aforesaid properties, it insured the same for P610,593.74 and
P450,000.00, separately.
It bears stressing that the actual value of the properties subject of a
replevin is required to be stated in the affidavit because such actual
value will be the basis of the replevin bond required to be posted by the
plaintiff. Therefore, when the petitioner failed to declare the actual value
of the machineries and equipment subject of the replevin suit, there was
non-compliance with Section 2, Rule 60 of the Revised Rules of Court.
Between the insurance valuation and the appraisal cost, which one
would indicate the actual market value of the property?
Insurance Valuation Is A More Reliable Basis
It's the insurance valuation. It is closest to the actual value because in
cases of loss or damage to the property, that is the recoverable amount.
When you insure your car for instance, may mga insurance companies
na wise eh. They value it higher for you to pay higher premiums. Kung
ikaw naman, alam mo na may depreciation na, you will have to argue
that that is not accurate. The value of the car is lower now because of
the depreciation. Therefore, recalculation must be made.
Again, common sense ito. Gumamit kayo ng common sense at logic.
Now, if you are going to apply for writ of replevin in court, you have to
prove not just allege actual market value of the property to be replevin.
That is not a simple matter to prove. You have to obtain the best
available evidence in order to show the actual market value of the
property. Since we are dealing here with personal property, most of time,
cars, writ of replevin is a common remedy especially among banks
during foreclosure of chattel mortgage. Failure to show actual market
value will result to the denial of your application for the writ or replevin.
If ever granted, the same shall be dissolved.
The case of Citibank, it gives you an idea how to determine actual
market value. Do not just rely on probable value or assessed value.
Why is it important to allege actual market value?
Actual Market Value, Importance
The Rules of Court requires the plaintiff to "give a bond, executed to the
defendant in double the value of the property as stated in the affidavit x
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
x x ." Hence, the bond should be double the actual value of the
properties involved.
the right of the actual possessor of the property when your right is
dependent on the contract of mortgage na di naman siya party, diba?
In a replevin bond, the Court no longer has the discretion in fixing the
amount of the bond as the amount will be based on the actual market
value declared on the application or affidavit. The amount of the bond
shall be double the actual market value declared.
No. You cannot apply nor enforce a writ of replevin if your right to
possess is premised on on the mortgage contract. Being contractual in
nature, it takes effect only upon the parties. Di basta - basta ma enforce
sa non-party. There has to be more to the mortgage contract for you to
apply a writ of replevin against a third person. Hindi lang dapat based
on a mortgage contract. In the absence of your basis of your right to
possess, the application will fail.
In this case, what was posted was merely an amount which was double
the probable value as declared by the plaintiff and, therefore, inadequate
should there be a finding that the actual value is actually far greater than
P200,000.00.
What is now the condition of the replevin bond? What will it answer for?
Condition Of The Replevin Bond
It should be noted that a replevin bond is intended to indemnify the
defendant against any loss that he may suffer by reason of its being
compelled to surrender the possession of the disputed property pending
trial of the action.14 [Alim vs. Court of Appeals, 200 SCRA 450, 458;
Sapugay, et al. vs. Court of Appeals, et al., G.R. No. 86792, March 21,
1990.] The same may also be answerable for damages if any when
judgment is rendered in favor of the defendant or the party against whom
a writ of replevin was issued and such judgment includes the return of
the property to him.15 [Stronghold Insurance Co., vs. Court of Appeals,
179 SCRA 117.] Thus, the requirement that the bond be double the
actual value of the properties litigated upon. Such is the case because
the bond will answer for the actual loss to the plaintiff, which corresponds
to the value of the properties sought to be recovered and for damages,
if any.
It is not just the value of the property that will be charged against the
replevin bond but also any damage that the other party may incur by
reason of the issuance of the writ of replevin. Kaya siya double the actual
value. That is the condition of the replevin bond.
Can the court approve the replevin bond when the value of the property
is in dispute?
When Value Is Disputed
No, just like in the present case. Since the valuation made by the
petitioner has been disputed by the respondent, the lower court should
have determined first the actual value of the properties. It was thus an
error for the said court to approve the bond, which was based merely on
the probable value of the properties.
If the value of the property is disputed, should the Court deny the
application for the writ of replevin?
No. As there was a disagreement on the valuation of the properties in
the first place, proper determination of the value of the bond to be posted
by the plaintiff cannot be sufficiently arrived at. Though the rules
specifically require that the needed bond be double the value of the
properties, since plaintiff merely denominated a probable value of
P200,000.00 and failed to aver the properties' actual value, which is
claimed to be much greater than that declared by plaintiff, the amount of
P400,000.00 would indeed be insufficient as found by the Court of
Appeals.
What is the basis of a mortgagee's right to apply for a replevin?
Basis Of a Mortgagee’s Right For Replevin
There must be a specific provision in the contract that you are allowed
to take possession the moment there is default. Right to possess in this
case is contractual in nature. There must be an express stipulation in
the mortgage contract itself that you are entitled to possession whenever
there is default. That is the basis of your right to possess. It must be
alleged both in your application and affidavits. Otherwise, foreclosure is
not the remedy for you.
Can you enforce the writ of replevin against a non-mortgagor and you
are a mortgagee?
Writ Of Replevin Against A Non-Mortgagor
If you are the mortgagee suing in a contract of mortgage, obviously, ang
defendant mo niyan ang mortgagor. If you want to get a writ of replevin
based on a contract of mortgage, dapat against the mortgagor. If nonmortgagor yan, how do you establish your right to possess as against
Comparing this to a writ of injunction, what you have to prove is your
clear and unmistakable right to enjoin the act. Ito naman, you have to
establish your clear right to possess in a writ of replevin. Both writs are
based on law and contract. Magka iba lang ang scope. You have to pay
attention on the basis of your right to possess.
Can a mortgagee maintain an action for replevin? Yes.
SERVICEWIDE SPECIALISTS VS CA
November 19, 1999
There can be no question that persons having a special right of
property in the goods the recovery of which is sought, such as a
chattel mortgagee, may maintain an action for replevin therefor.
Where the mortgage authorizes the mortgagee to take possession of
the property on default, he may maintain an action to recover
possession of the mortgaged chattels from the mortgagor or from any
person in whose hands he may find them.
What if the property is in possession of a third person who asserts
ownership over the thing, can the mortgagee recover the property by a
writ of replevin?
Yes. In default of the mortgagor, the mortgagee is thereby constituted
as attorney-in-fact of the mortgagor, enabling such mortgagee to act for
and in behalf of the owner. That the defendant is not privy to the chattel
mortgage should be inconsequential. By the fact that the object of
replevin is traced to his possession, one properly can be a defendant
Octboer 1, 2019 by Johanna E. Dingal
RIGHT OF POSSESSION— he is entitled to possession thereof, by
reason of his being the owner or of his having a special interest therein.
[UST GOLDEN NOTES 2019]
What is wrongful detention?
There is no cause under the law.
Why was there no wrongful detention there?
TWIN ACE HOLDINGS vs. RUFINA
Rule 60, Section 2(a), of the Revised Rules of Court mandates that a
party praying for the recovery of possession of personal property must
show by his own affidavit or that of some other person who personally
knows the facts that he is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof.
Replevin is a possessory action the gist of which focuses on the right of
possession that, in turn, is dependent on a legal basis that, not
infrequently, looks to the ownership of the object sought to be replevied.
Wrongful detention by the defendant of the properties sought in an
action for replevin must be satisfactorily established. If only a
mechanistic averment thereof is offered, the writ should not be issued.
In this case, Twin Ace has not shown that it is entitled to the possession
of the bottles in question and consequently there is thus no basis for the
demand by it of due compensation.
Since the purchaser at his discretion could either retain or return the
bottles, the transaction must be regarded as a sale of the bottles when
the purchaser actually exercised that discretion and decided not to
return them to the vendor. We also take judicial notice of the standard
practice today that the cost of the container is included in the selling
price of the product such that the buyer of liquor or any such product
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
from any store is not required to return the bottle nor is the liquor placed
in a plastic container that possession of the bottle is retained by the
store.
When a property is being held as evidence in a criminal case, can that
be wrongful detention?
If the property was held as evidence in a criminal case, it cannot be
wrongful detention. But the rule applies only where the property is
lawfully held.
When will a property like in the case of a vehicle, be considered to be in
custodia legis?
SUPERLINES TRANSPORTATION vs. PNCC
As the Court said in Tamisin vs. Odejar, a thing is in custodia legis
when it is shown that it has been and is subjected to the official custody
of a judicial executive officer in pursuance of his execution of a legal writ.
If a vehicle is impounded, is it considered in custodia legis?
No. Only when property is lawfully taken by virtue of legal process is it
considered in the custody of the law and not otherwise. [supra]
Can properties seized by the Bureau of Customs be subject of replevin?
No.
custodia legis— that is the main reason why you cannot have these
properties released by virtue of a replevin because there is no wrongful
detention of the property by reason of the fact that these properties are
placed under custodia legis.
For you to determine, whether or not there is indeed custodia legis, over
the properties, you have to trace the law— the legal basis of the seizure
of these properties. In the case of DENR, you look at PD 707. In the
case of Bureau of Customs (BOC), you look at the law governing the
BOC. And if it has basis in these laws, then the conclusion is that these
properties are under custodia legis. Hence, it cannot be replevied.
You relate now these provisions of laws to the main requirement for the
issuance of a writ of replevin and that the property should not have been
taken for tax assessment, or otherwise placed under custodia legis—
because the main element there is that the possession of the defendant
over the property should be wrongful. How can that be wrongful when
it’s custodia legis?
What happens after the application is filed in court?
Section 3. Order. — Upon the filing of such affidavit and approval of the
bond, the court shall issue an order and the corresponding writ of
replevin, describing the personal property alleged to be wrongfully
detained and requiring the sheriff forthwith to take such property into his
custody.
ASIAN TERMINALS vs. RICAFORT
Section 602 of the TCC provides that the Bureau of Customs shall
exercise exclusive jurisdiction over seized and forfeited cars. It is tasked
to enforce tariff, and supervise and control customs law and all other
laws, rules and regulations relating to the tariff and customs
administration; and to supervise and control all import and export
cargoes, loaded or stored in piers, terminal facilities, including container
yards and freight stations, for the protection of government revenues.
Under Section 2301 of the TCC, the Collector of Customs is empowered
to make a seizure of cargoes and issue a receipt for the detention
thereof.
Regional Trial Courts are devoid of any competence to pass upon the
validity or regularity of seizure and forfeiture proceedings conducted by
the Bureau of Customs and to enjoin or otherwise interfere with these
proceedings.
It is the Collector of Customs sitting in seizure and forfeiture
proceedings, who has exclusive jurisdiction to hear and determine all
questions touching on the seizure and forfeiture of dutiable goods. The
RTC/s are precluded from assuming cognizance over such matters even
through petitions of certiorari, prohibition or mandamus.
How about the vehicle seized by the DENR? Can it be subject to a
replevin?
No.
PAAT vs. CA
The truck was seized by the petitioners because it was transporting
forest products without the required permit of the DENR in manifest
contravention of Section 68 of P.D. 705 as amended by E.O 277.
Section 68-A of P.D. 705, as amended, unquestionably warrants the
confiscation as well as the disposition by the Secretary of DENR or his
duly authorized representatives of the conveyances used in violating the
provision of forestry laws.
Evidently, the continued possession or detention of the truck by the
petitioners for administrative forfeiture proceeding is legally permissible,
hence, no wrongful detention exists in the case at bar.
What is the nature of the possession of the DENR over properties
confiscated by law?
The continued possession or detention of the truck by the petitioners for
administrative forfeiture proceeding is legally permissible, hence, no
wrongful detention exists in the case at bar.
Properties seized by the DENR, by the Bureau of Customs, pursuant to
the law being enforced by these agencies, to place the properties under
Is it necessary that there be notice and hearing before the writ can be
issued? No.
Since there is no hearing, does it mean that the issuance of the writ of
replevin is ex-parte?
ATTY. TIU [2018 TSN]: The rules are not clear on whether the issuance
of the writ requires hearing because if you look at the time when you
apply for the writ, it says, “at the commencement of the action or before
answer”— obviously, once the defendant files an answer you no longer
have the right. You cannot apply anymore— meaning to say, even
before the service of summons the writ can be issued. Chances of such
writ being issued ex-parte is very high.
Will that not violate the due process requirement considering you’re
going to take the property from the defendant? Why does the rule not
allow the defendant to have an opportunity to contest the issuance of
the writ replevin? Is there an instance that the defendant can be given
notice prior to the issuance of the writ of replevin? Does the rule allow
that?
ATTY. TIU [2019]: The nature of the writ is ex-parte—that’s why you can
only apply for a writ of replevin before the answer is filed. If the defendant
has already filed an answer, that right to apply is gone—he cannot apply
anymore a writ of replevin once an answer has been filed. Usually, you
make the application in the complaint itself— to be sure, before the
answer.
And when the application is sufficient in form, the basis is very clear for
the issuance of the writ, then the writ will be issued upon the posting of
the bond.
The nature of this remedy is ex-parte.
There really is no opportunity for notice and hearing. And the reason for
that is because you’re dealing with personal properties that can easily
be spirited away. Time is of the essence here. There is also urgency
here that needs to be preserved before that personal property can be
taken away.
You compare this now— the remedy of writ of replevin from the remedy
of attachment. Remember in a writ of attachment, there is also a remedy
there of recovery of property. This one as well. How do you distinguish
replevin from attachment?
What ground under Rule 57?
Section 1. (c) In an action to recover the possession of property unjustly
or fraudulently taken, detained or converted when the property or any
part thereof, has been concealed, removed, or disposed of to prevent its
being found or taken by the applicant or an authorized person;
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[UST GOLDEN NOTES 2019]
It says there recovery of possession, it’s also the same here in replevin.
You’re not trying to recover ownership there, it’s also like that here [in
replevin]. It’s merely a question of possession— that’s what replevin is
for.
Purpose
Owner
When can it
be availed
Kind of
property
Concealment,
Removal
Property
under
custodia legis
Bond
REPLEVIN
To recover personal
property capable of
manual delivery
The personal
property belongs
either to the plaintiff
or one over which
the plaintiff has a
right of possession
Only when the
defendant is in
actual or
constructive
possession of the
personal property
only to personal
property capable of
manual delivery
ATTACHMENT
To
place
the
property
under
the custody of the
court to secure
the satisfaction of
the judgment that
may be rendered
in favor of the
applicant at some
future time
The property
does not belong
to the plaintiff but
to the defendant
Even
if
the
property is in the
custody of third
persons
all kinds of
property (real,
personal or
incorporeal)
May be availed of
The applicant in
without showing
certain cases
that the property is
needs to show
being concealed or
that the property
disposed of to the
is being removed,
prejudice of the
concealed or
applicant
disposed of
Property under
May be attached
custodia legis
even if the
cannot be replevied property is in
custodia legis
Double the value of Equal to that fixed
the property as by the court which
stated
in
the is the amount
affidavit submitted sufficient
to
in support of the satisfy
the
application
applicant’s
demand or the
value
of
the
property to be
attached.
[RIANO, CITED IN 2018 TSN]
If your action is to recover possession, what provisional remedy should
you get— attachment or replevin?
If there is fraud, attachment, is allowed. But in attachment, it
presupposes you’re just recovering the possession – meaning you’re the
owner. Whereas, here, in replevin, you don’t need to be an owner,
although you can be an owner but that’s not the only ground/right you
can assert in applying replevin. You can be the rightful/lawful possessor
for you to apply the writ of replevin. And you only need to show is
wrongful detention which need not involve fraud. But either it involves
personal property, it involves recovery of possession. You have to make
the fine line distinction here— what is applicable to your case.
Sometimes it’s confusing.
But in attachment when do you apply for an attachment, is it limited to
before answer or even after answer?
WHEN TO APPLY
Preliminary
Attachment
Replevin
At the commencement of the action or at
any time before entry of judgment
At the commencement of the action or at
any time before answer
The period to apply in attachment is longer whereas in replevin, very
limited to apply— so, all of these you have to take into consideration
when you choose the kind of provisional remedy that you are going to
apply for.
Let’s go back to the order, once the court issues the order, what will the
sheriff do?
Section 4. Duty of the sheriff. — Upon receiving such order, the sheriff
must serve a copy thereof on the adverse party, together with a copy of
the application, affidavit and bond, and must forthwith take the property,
if it be in the possession of the adverse party, or his agent and retain it
in his custody.
If the property or any part thereof, be concealed in a building or
enclosure, the sheriff must demand its delivery, and if it be not delivered,
he must cause the building or enclosure to be broken open and take the
property into his possession.
After the sheriff has taken possession of the property as herein provided,
he must keep it in a secure place and shall be responsible for its delivery
to the party entitled thereto upon receiving his fees and necessary
expenses for taking and keeping the same.
What are the documents must the sheriff serve on the defendant?
1. Copy of the order;
2. Copy of the application, affidavit and bond;
What about the copy of the complaint? What about summons?
2014 TSN: it does not even require the service of summons
simultaneously or prior to the summons. In fact, the application of the
writ is at the commencement of the action and prior to the filing of the
answer. The implementation can be made even before the service of
summons before the defendant can participate.
RIVERA vs. VARGAS
Service of the writ upon the adverse party is mandatory in line with the
constitutional guaranty on procedural due process and as a safeguard
against unreasonable searches and seizures.
How can there be due process?
By mere service of the writ and the required documents [copy of the
order and copy of the application, affidavit and bond]
Can the sheriff delegate the implementation of the writ?
TORRES vs. CABESEULA
As ruled, in Tordesillas vs. Basco, it was held that under Sections 3 and
4 of Rule 60 of the Rules of Court, it is the personal duty and
responsibility of the sheriff to personally implement the writ and it
constitutes serious misconduct and gross negligence for a sheriff to
delegate his primary role in implementing a writ of seizure. Respondent's
absence during the seizure of the subject vehicle by the police officers
falls squarely within this prohibition for which he should be held liable.
What if the property is outside the territorial jurisdiction of the court?
TORRES vs. CABESEULA
The act of respondent in issuing the Sheriffs Deputization [to the Chief
of Police Nueva Ecija] is without legal basis.
First, respondent should have known that under Administrative Circular
No. 12 (5) it is provided that "No sheriff or deputy sheriff shall
execute a court writ outside his territorial jurisdiction without first
notifying in writing and seeking the assistance of, the sheriff of the
place where the execution shall take place".
Respondent's act of implementing the writ in Nueva Ecija when his
territorial jurisdiction is confined only to Manila is a clear violation of the
law. The proper recourse would have been to seek the assistance of the
sheriff of Nueva Ecija rather than deputizing the police officer of said
place.
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The writ itself can be enforced outside the court’s territory just like an
attachment. The court can issue several writs of attachment for
properties all over the Philippines. The writ that has limited effect is
injunction— you have the doctrine of non-jurisdiction. Here in replevin,
it can be enforced outside, but there has to be coordination with the
sheriffs of different regions for the enforcement. The sheriff here cannot
go to Manila to enforce it. He has to coordinate that with the sheriff in
Manila. That’s how it goes.
October 1, 2019 by Al Frederick L. Cavite
What if the property is outside the territorial jurisdiction of the court, can
the sheriff enforced the writ beyond the territorial jurisdiction of the court
that issue the writ?
Yes, the sheriff can enforce the writ outside the territorial jurisdiction of
the court which issue the writ as long as he notified in writing and sought
the assistance of the sheriff of the place where the execution shall take
place.
TORRES v. CABESUELA
A.M. No. P-00-1391, September 28, 2001
As a ministerial officer, respondent sheriff should have known that it
was his duty, in the absence of instructions, to faithfully perform what
was incumbent upon him to do.
Administrative Circular No. 12 was promulgated in order to
streamline the service and execution of court writs and processes in
the reorganized courts under Batas Pambansa Blg. 129 and to better
serve the public good and facilitate the administration of justice.
Paragraph 5 of said Circular is clear and self-explanatory. "No sheriff
or deputy sheriff shall execute a court writ outside his territorial
jurisdiction without first notifying in writing, and seeking the
assistance of the sheriff of the place where the execution shall take
place."
Accordingly, as sheriff of the MeTC, Branch 9 of the City of Manila,
respondent sheriff should have notified in writing, and should have
sought the assistance of, the sheriff of San Antonio, Nueva Ecija, to
enforce the subject writ instead of unlawfully deputizing the Chief of
Police of San Antonio, Nueva Ecija.
Writ of Replevin, Enforceable Outside the Territory
The writ itself can be enforced outside the courts’ territory, just like an
attachment. The court can issue several writs of attachment for
properties all over the Philippines. Yung limited lang ang effect ng
kanyang writ, yun yung injunction. You have the doctrine of nonjurisdiction, do you remember that? Pagdating naman dito sa replevin,
pwede siya i-enforce outside but there has to be coordination with the
sheriffs of different judicial regions for the enforcement of the writ. Hindi
pupwede na ang sheriff dito siya ang pupunta sa Manila to enforce it,
iko-coordinate niya yan ngayon sa sheriff in Manila. Okay? That’s how
it goes. The injunctive writ which is limited by the territorial jurisdiction of
the court, this one (replevin) and the writ of attachment can be enforced
outside. In fact, sa writ of attachment pwede talaga mag-issue siya kahit
i-direct niya yun sa labas, several writs can be issued.
What happened in the case of RIVERA v. VARGAS? How was the writ
issued here?
In the case at bar, petitioner avers that the writ of replevin was served
upon the security guard where the rock-crushing plant to be seized was
located. The signature of the receiving party indicates that the writ was
received on April 29, 2003 by a certain Joseph Rejumo, the guard on
duty in a plant in Sariaya, Quezon, where the property to be seized was
located, and witnessed by Claudio Palatino, respondent’s caretaker.
Why was the service on the security guard not valid? Would that not
constitute substituted service?
No, because the writ must also satisfy proper service in order to be valid
and effective: i.e. it should be directed to the officer who is authorized to
serve it; and it should be served upon the person who not only has the
possession or custody of the property involved but who is also a party
or agent of a party to the action.
Does that render the writ invalid because there was an invalid service?
What is the remedy if the writ was invalidly served?
The proper remedy should have been to file a motion to quash the writ
of replevin or a motion to vacate the order of seizure.
So in the case of RIVERA v. VARGAS, summons was served together
with the writ. Even if the rules are quiet on simultaneous or prior service
of summons, in actual practice, it is being simultaneously served with
the writ. It is in keeping with the Constitutional requirements of due
process; that is when you can act coercively against the defendant by
acquiring jurisdiction over his person. It is important that the person
served with the writ must be the defendant himself, or his agent, or the
authorized agent of the adverse party. If you just served it with a security
guard or any other person not authorized, then that would be invalid.
Also, if you do not serve documents required by rules, the service would
also be invalid. Dapat kompleto kung ano ang naka-enumerate diyan.
RIVERA v. VARGAS
G.R. No. 165895, June 5, 2009
The law presumes that every possessor is a possessor in good faith.
He is entitled to be respected and protected in his possession as if
he were the true owner thereof until a competent court rules
otherwise. Before a final judgment, property cannot be seized unless
by virtue of some provision of law. The Rules of Court, under Rule
60, authorizes such seizure in cases of replevin. However, a person
seeking a remedy in an action for replevin must follow the course laid
down in the statute, since the remedy is penal in nature. When no
attempt is made to comply with the provisions of the law relating
to seizure in this kind of action, the writ or order allowing the
seizure is erroneous and may be set aside on motion by the
adverse party. Be it noted, however, that a motion to quash the writ
of replevin goes to the technical regularity of procedure, and not to
the merits of the case36 in the principal action.
The process regarding the execution of the writ of replevin in Section
4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of
replevin and prior to the taking of the property, must serve a copy
thereof to the adverse party (petitioner, in this case) together with the
application, the affidavit of merit, and the replevin bond. The reasons
are simple, i.e., to provide proper notice to the adverse party that his
property is being seized in accordance with the court’s order upon
application by the other party, and ultimately to allow the adverse
party to take the proper remedy consequent thereto.
Service of the writ upon the adverse party is mandatory in line with
the constitutional guaranty on procedural due process and as
safeguard against unreasonable searches and seizures. If the writ
was not served upon the adverse party but was instead merely
handed to a person who is neither an agent of the adverse party nor
a person authorized to receive court processes on his behalf, the
service thereof is erroneous and is, therefore, invalid, running afoul
of the statutory and constitutional requirements. The service is
likewise invalid if the writ of replevin was served without the required
documents. Under these circumstances, no right to seize and to
detain the property shall pass, the act of the sheriff being both
unlawful and unconstitutional.
x x x But since the writ was invalidly served, petitioner is correct in
contending that there is no reckoning point from which the mandatory
five-day period shall commence to run.
When the property is in an enclosed place, what will the sheriff do? Does
he need a court order for that?
If the property or any part thereof be concealed in a building or
enclosure, the sheriff must demand its delivery, and if it be not delivered,
he must cause the building or enclosure to be broken open and take the
property into his possession. Under the rules, there’s no need for the
sheriff to obtain a court order since he is expressly authorized to do so.
After he has taken possession of the property, where will he keep it?
After the sheriff has take possession of the property as herein provided,
he must keep it in a secure place and shall be responsible for its delivery
to the party entitled thereto upon receiving his fees and necessary
expenses for taking and keeping the same.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
What happened in the case of GOMEZ v. CONCEPCION?
In GOMEZ v. CONCEPCION, a jeepney which figured in an accident
was placed under the custody of Sheriff Concepcion. While under his
custody, he just parked the jeepney in front of his residence, making it
an easy prey for thieves and carnappers, it was in fact carnapped.
Why was it not allowed that he put it in front of his residence? Where
should the jeepney have been kept according to this case?
GOMEZ v. CONCEPCION
A.M. No. P-98-1283, May 9, 2000
Sec. 4, Rule 60 of the Rules of Court provides: . . . When the officer
has taken property as herein provided, he must keep it in a secure
place and shall be responsible for it and ultimately deliver it to the
party entitled thereto upon receiving his fees and necessary
expenses for taking and keeping the same. Evidently, the respondent
was remiss in the performance of his official duty and responsibility
to safely secure the property in his custody until its delivery to the
party entitled to it, as mandated by the rules.The vehicle could have
been deposited in the premises of the court where it is secured, or,
at any other place where the required security is provided for and
available. For after all, the respondent should have known that his
office could have charged the party entitled to it, allowable fees for
storage, necessary in safely keeping the property in custodia legis.
Who’s gonna be responsible for the value of the jeepney? The sheriff.
Sheriff, Liable
If you do not keep the property safely, the sheriff will be liable for any
loss and damage that happened to the property. I do not know if they
still have it there in the court, ang daming bulok na sasakyan na
nakaparada diyan. Mga ano yan, seized vehicles yan, they just placed
it there kasi nga yan ang nakasabi dito, you place it or put it in the
premises of the court. Kung sasakyan yan, nakatambak lang yan diyan,
exposed to the elements, and you don’t even bother to turn it on from
time-to-time para umandar yung makina niya, talagang magde-detoriate
yan, nabubulok. Nagiging junk shop yung harap ng court, for a while ang
daming nakatambak diyan. Because of that, because of this rule na
kailangan nasa premises ng court. We don’t have the proper area where
to place all the seized vehicles especially if case would run o yun mga
attached na properties or vehicles, ganun din it’s the same situation.
If the sheriff cannot keep the property in his residence, can he turn it
over directly to the applicant, so that he will not be liable for any loss or
damage? Immediately, without awaiting for the 5-day period to lapse?
The remedies under Section 5 are:
1. Object to the sufficiency of the bond of the applicant;
2. File a redelivery bond.
What is the effect if you object to the sufficiency of the bond?
Under Section 5 of Rule 60, if the adverse party objects to the sufficiency
of the applicant’s bond, or of the sureties thereon, he cannot immediately
require the return of the property.
If he does not object?
If he does not object, he may, at any time before the delivery of the
property to the applicant, require the return thereof, by filing with the
court where the action is pending a redelivery bond executed to the
applicant, in double the value of the property as stated in the applicant’s
affidavit for the delivery thereof to the applicant, if such delivery be
adjudged, and for the payment of such sum, to him as may be recovered
against the adverse party, and by serving a copy of such bond on the
applicant.
Under Section 5, there are two remedies: you can object to the
sufficiency of the replevin bond; or you can post a counter-bond. If you
choose the first option, can you still avail of the counter-bond?
Not anymore, the remedies under Section 5 are ALTERNATIVE. In the
first remedy, you are questioning the sufficiency of the bond while in the
second, by filing the bond, you are admitting the validity of the replevin
bond. The two remedies are inconsistent with each other, hence
alternative in nature. The second remedy cannot be availed anymore if
the first remedy is already availed of or vice versa.
Choose Which Remedy
If you are going to avail of the first remedy, you will question the
sufficiency of the replevin bond, then you cannot post the redelivery
bond or the counter-bond. You have to choose which remedy. If you
choose the first remedy, it will take a while, di mo kaagad makukuha
yung property. You cannot immediately require the return of the
property, it will be subject to hearing on whether or not the bond is
sufficient. It will take a while.
Pero kung gusto mo ng madalian na remedy, what should you choose?
Filing a redelivery bond is the better option since it will not take a while
and you could immediately require the return of the property.
October 1, 2019 by Chen Lee T. Apura
What is the amount of the counterbond?
No, as held in the case of HAO v. ANDRES, the property seized should
not be immediately delivered to the plaintiff, and the sheriff must retain
custody of the seized property for at least five days. Hindi pwede iturnover kaagad yung property to the applicant, there has to be that waiting
period. If you turn-over it right-away without waiting for that five-day
period, the sheriff will be held administratively liable. The rules say you
have to wait for the five day period, and you have to store it in a place
where you can keep it safe. Preferably, within the premises of the court.
The last resort would be to rent a warehouse which will be paid by the
applicant. The applicant will pay but the name will be in the name of the
court, the one who has control will be the court. The property will be in
custodia legis. The rented warehouse will be rented by the court,
pangalan ng court yun, ang magbabayad lang charge to applicant. On
paper it will be in the name of the court, so the property will still be in
custodia legis.
What are the remedies available to the adverse party?
Section 5. Return of property. — If the adverse party objects to the
sufficiency of the applicant's bond, or of the surety or sureties thereon,
he cannot immediately require the return of the property, but if he does
not so object, he may, at any time before the delivery of the property to
the applicant, require the return thereof, by filing with the court where
the action is pending a bond executed to the applicant, in double the
value of the property as stated in the applicant's affidavit for the delivery
thereof to the applicant, if such delivery be adjudged, and for the
payment of such sum, to him as may be recovered against the adverse
party, and by serving a copy of such bond on the applicant. (5a).
Double the actual market value of the property declared by the applicant
himself. In other words, it is equal to the replevin bond. Since the
replevin bond is also double the actual market value.
When do you post the counterbond?
Within the 5 day period after the taking of the property by the sheriff.
Can you not post it after 5 days? What happens if the 5 day period lapses
and there is no counterbond filed?
Section 6. Disposition of property by sheriff. — If within five (5)
days after the taking of the property by the sheriff, the adverse party
does not object to the sufficiency of the bond, or of the surety or
sureties thereon; or if the adverse party so objects and the court
affirms its approval of the applicant's bond or approves a new bond,
or if the adverse party requires the return of the property but his bond
is objected to and found insufficient and he does not forthwith file an
approved bond, the property shall be delivered to the applicant. If for
any reason the property is not delivered to the applicant, the sheriff
must return it to the adverse party. (6a)
So if there is a counterbond within the 5-day period, the property will not
be delivered to the applicant.
What if there is no redelivery bond or counterbond, instead the remedy
availed of was to question the sufficiency of the bond and the 5-day
period had lapsed, what happens to the property?
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The property shall be delivered to the applicant.
Even if the issue on the sufficiency of the bond is still pending? No, the
property shall not be delivered to the applicant until the issue on the
sufficiency has been resolved.
What are the instances where the sheriff may deliver the property to the
applicant?
1.
2.
3.
The adverse party does not object to the sufficiency of the bond,
or of the surety or sureties thereon.
If the adverse party so objects and the court affirms its approval
of the applicant's bond or approves a new bond
If the adverse party requires the return of the property but his
bond is objected to and found insufficient and he does not
forthwith file an approved bond. (Section 6)
Is there an instance when the 5-day period does not commence to run?
Yes, in the case of RIVERA VS. VARGAS, where there is improper
service of the writ.
RIVERA VS. VARGAS
G.R. NO. 165895 June 5, 2009
The process regarding the execution of the writ of replevin in Section
4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of
replevin and prior to the taking of the property, must serve a copy
thereof to the adverse party (petitioner, in this case) together with the
application, the affidavit of merit, and the replevin bond. The reasons
are simple, i.e., to provide proper notice to the adverse party that his
property is being seized in accordance with the court's order upon
application by the other party, and ultimately to allow the adverse
party to take the proper remedy consequent thereto.
Service of the writ upon the adverse party is mandatory in line with
the constitutional guaranty on procedural due process and as
safeguard against unreasonable searches and seizures. If the writ
was not served upon the adverse party but was instead merely
handed to a person who is neither an agent of the adverse party nor
a person authorized to receive court processes on his behalf, the
service thereof is erroneous and is, therefore, invalid, running afoul
of the statutory and constitutional requirements. The service is
likewise invalid if the writ of replevin was served without the required
documents. Under these circumstances, no right to seize and to
detain the property shall pass, the act of the sheriff being both
unlawful and unconstitutional.
In the case at bar, petitioner avers that the writ of replevin was served
upon the security guard where the rock-crushing plant to be seized
was located. . . . since the writ was invalidly served, petitioner is
correct in contending that there is no reckoning point from which the
mandatory five-day period shall commence to run.
What is the effect if there is improper service of the writ?
It is as if the 5-day period did not commence. If there is invalid service
of the writ, the 5-day period will not start running. Kahit pa beyond the 5day period ka mag post ng counterbond, pwede pa.
In the case of RIVERA VS. VARGAS, what should have been the
remedy availed of by the adverse party here?
The proper remedy should have been to file a motion to quash the writ
of replevin or a motion to vacate the order of seizure on the ground of
improper service. That is another remedy. It is not just the filing of the
counterbond or the questioning of the sufficiency of the bond. You can
also move to quash the writ if it has been improperly served. In that case,
if it has been quashed, the property will have to be returned to the
adverse party.
What is the remedy of the applicant? The applicant may file a new
application for replevin should he choose to do so. If it has been
quashed, the applicant has no choice but to file a new application for
replevin because of the improper service of the writ.
In what instances may a sheriff return the property to the adverse party?
1. The adverse party posted a redelivery bond
2. The property is not delivered to the applicant
3. Improper service of the writ
4. Insufficiency of the bond
If you question the sufficiency of the bond and it has been found
insufficient, return the property to the adverse party.
What is the purpose of the 5-day period? Why do you have to wait for 5
days before the sheriff delivers the property? To give adverse party a
chance to oppose to the sufficiency of the bond or to file a counter-bond.
So it is only for the purposes of filing a counterbond that the 5-day
waiting period is provided by law?
It is within the 5-day period that the defendant can contest or object to
the sufficiency of the bond or to post the counterbond, either of the 2
remedies. But if he does object to the sufficiency of the bond, no
immediate return of the property can be made since the issue on the
sufficiency must be resolved first.
It might take beyond 5 days but the important thing is that you make your
objection within the 5-day period, you cannot make the objection beyond
5 days. That will be waived or barred. The same thing with the posting
of the counterbond, you have to do it within 5 days.
As to the quashal of the writ due to the improper service of the writ, it
need not be done within 5 days. It could be beyond 5 days since that is
a motion to quash. The motion to quash cannot be limited by the 5-day
period. The 5-day period only limits the remedy of questioning the
sufficiency of the bond or the posting of the counterbond.
Supposing the 5-day period had lapsed and the adverse party did
nothing. He did not contest or object to the sufficiency of the bond or
post a counterbond. What is now the nature of the duty of the sheriff to
deliver the property to the applicant?
It is ministerial duty on the part of sheriff. The delivery to applicant of the
property shall be mandatory after the 5-day period. Not within the 5-day
period. There would be no excuse for the sheriff to deliver the property.
Is the remedy of Terceria available in Replevin? Yes.
Section 7. Proceedings where property claimed by third person.
— If the property taken is claimed by any person other than the party
against whom the writ of replevin had been issued or his agent, and
such person makes an affidavit of his title thereto, or right to the
possession thereof, stating the grounds therefor, and serves such
affidavit upon the sheriff while the latter has possession of the
property and a copy thereof upon the applicant, the sheriff shall not
be bound to keep the property under replevin or deliver it to the
applicant unless the applicant or his agent, on demand of said 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 under
replevin as provided in section 2 hereof. In case of disagreement as
to such value, the court shall determine the same. No claim for
damages for the taking or keeping, of the property may be enforced
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 such claimant or any
third person from vindicating his claim to the property, or prevent the
applicant from claiming damages against a third-party claimant who
filed a frivolous or plainly spurious claim, in the same or a separate
action.
When the writ of replevin 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
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a result of the replevin, he shall be represented by the Solicitor
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. (7a)
How do you avail of Terceria under Rule 60?
If the property taken is claimed by any person other than the party
against whom the writ of replevin had been issued or his agent, and such
person makes an affidavit of his title thereto, or right to the possession
thereof, stating the grounds therefor, and serves such affidavit upon the
sheriff while the latter has possession of the property and a copy thereof
upon the applicant. (Section 7, Rule 60)
Is it the same procedure as the terceria in attachment?
Yes. If the property attached is claimed by any person other than the
party against whom attachment had been issued or his agent, and such
person makes an affidavit of his title thereto, or right to the possession
thereof, stating the grounds of such right or title, and serves such
affidavit upon the sheriff while the latter has possession of the attached
property, and a copy thereof upon the attaching party. (Sec 14, Rule 57)
RULE 57: PRELIMINARY ATTACHMENT
Section 14. Proceedings where property claimed by third
person. — If the property attached is claimed by any person other
than the party against whom attachment had been issued or his
agent, and such person makes an affidavit of his title thereto, or right
to the possession thereof, stating the grounds of such right or title,
and serves such affidavit upon the sheriff while the 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 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 disagreement as to such value,
the same shall be decided by the court issuing the writ of attachment.
No claim for damages for the taking or keeping of the property may
be enforced 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 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 plainly spurious claim, in the same or a
separate action.
After the 5 days he has to turn it
over to the applicant or to the
adverse party.
When sheriff has possession of
the property, he does not have to
deliver it to the applicant.
Can the sheriff have possession of the property beyond 5 days?
Yes. The 5-day period is only to avail of the remedies, whether to
question the sufficiency of the bond or to post the counterbond. So, if an
objection is made within the 5-day period to question the sufficiency of
the bond, until that issue is resolved, the sheriff may continue to have
possession of the property.
Only when there is no reaction from the adverse party will it be
mandatory for the sheriff to turn over the property to the applicant after
the 5-day period. That is the only scenario that the sheriff can hold on to
the property for only 5 days. But if there is a question on the sufficiency
of the bond, he cannot turn over the property after 5 days without the
issue being resolved. It does not give rise to a mandatory obligation on
the part of the sheriff to turn over the property.
Thus, for as long as the sheriff has possession over the property,
terceria may be filed.
When should the sheriff make a return?
Section 8. Return of papers. — The sheriff must file the order, with
his proceedings indorsed, thereon, with the court within ten (10) days
after taking the property mentioned therein. (8a)
October 8, 2019 by Cavin Jhon Cabarlo
What should the judgment in a replevin case contain?
Section 9. Judgment. — After trial of the issues the court shall
determine who has the right of possession to and the value of the
property and shall render judgment in the alternative for the delivery
thereof to the party entitled to the same, or for its value in case
delivery cannot be made, and also for such damages as either party
may prove, with costs.
Who is entitled to damages?
The Rule provides that either party may be entitled to such damages as
may be proved.
Who is entitled for the delivery of the property?
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
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)
NOTE: The only ground for the sheriff not to deliver the property is
when the applicant will post the bond equal to the value of the
property. If you’re the third-party claimant, just execute the affidavit.
The only way to counter that is bond from the applicant. It’s the same
procedure. Further, the period to claim damages against the
applicant’s bond is 120 days. It is the same for both.
TERCERIA IN REPLEVIN
There is a time limit involved.
There is a 5-day waiting period
when the sheriff has possession
of the property. You have to
make the third-party claim within
such period, or for as long as the
sheriff has possession over the
property. The moment the sheriff
loses possession, the remedy is
not available.
TERCERIA IN WRIT OF
ATTACHMENT
No time limit involved. The
nature of attachment is that,
when the sheriff keeps the
property, the sheriff will not
deliver it to the applicant. That
will serve as security for the
judgment of the plaintiff in the
case. It will be under custodia
legis for the entire duration of the
case.
The Rule provides that the court shall render judgment for the delivery
of the property to the party entitled to the same or for its value in case
delivery cannot be made.
When does the judgment under Section 9 not applicable?
The judgment under Section 9 is not applicable when replevin is resorted
to preparatory to foreclosure.
ALLANDALE SPORTSLINE v. THE GOOD DEVELOPMENT
574 SCRA 625
RULING: By causing the auction sale of the mortgaged properties,
respondent effectively adopted and pursued the remedy of extrajudicial foreclosure, using the writ of replevin as a tool to get hold of
the mortgaged properties.
The properties of petitioners which were seized by virtue of the Writs
of Replevin were extrajudicially foreclosed and sold at public auction
by respondent in the exercise of its absolute right under the contract
entered into by the parties, without need of prior notice or demand to
forthwith judicially or extra-judicially foreclose this mortgage and
proceed against all or any of the mortgaged rights, interests and
properties for the full satisfaction of the mortgagors' entire obligation
to the mortgagee.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
From 2015 TSN on why Section 9 is inapplicable
The purpose of the replevin preparatory to a foreclosure proceeding is
to gain possession of the property so you may sell it at public auction.
While in an ordinary replevin case, the issues that are to be tried and
must be settled in the judgment includes who has the right to possession
over the property.
That is no longer applicable in an extrajudicial foreclosure because, by
virtue of the mortgage contract, the mortgagor has already granted
authority to the mortgagee to obtain possession of the mortgaged
property for purposes of public auction. No issue at all with respect to
who has the legal right to possess the property because that has already
been conceded by the mortgagor in the mortgage contract, which is the
main basis of the foreclosure.
Who should be liable for damages in case of wrongful replevin?
The applicant shall be liable for damages in case of a wrongful replevin.
How do you claim damages?
Section 10. Judgment to include recovery against sureties. —
The amount, if any, to be awarded to any party upon any bond filed
in accordance with the provisions of this Rule, shall be claimed,
ascertained, and granted under the same procedure as prescribed
in Section 20 of Rule 57.
Does this apply to a counterbond?
Yes. Section 10 of Rule 60 provides that the amount to be awarded to
any party may be claimed upon any bond filed.
When do you avail of the claim against the bond?
Based on Section 20 of Rule 57, claim against bond may be availed of:
1. Before trial
2. Before appeal is perfected
3. Before the judgment became executory
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
to be automatically remitted directly to the woman. Failure to
remit and/or withhold or any delay in the remittance of support
to the woman and/or her child without justifiable cause shall
render the respondent or his employer liable for indirect
contempt of court.
RULE 61
SUPPORT PENDENTE LITE
What is support pendente lite?
Support pendent lite is an amount adjudicated by the trial court during
the pendency of an action for support upon application by the plaintiff at
the commencement of the proper action or at anytime afterwards. It is a
remedy by the Revised Rules of Court and classified as a provisional
remedy rendered by the court as equity and justice may require.
What are the main action where you can claim support pendente lite?
The main action where support pendente lite may be claimed are as
follows:
1. Action for support
2. Acknowledgement of the child
3. Declaration of nullity of marriage
4. Annulment of Marriage
5. Legal Separation
6. Rape when it results in an offspring
7. VAWC cases
8. Action for custody
9. Compel recognition of an illegitimate child
Can you ask for support pendente lite in an action to recover ownership
of property?
No. One cannot ask for support pendente lite in an action to recover
ownership of property.
COQUIA VS. BALTAZAR
85 PHIL 265
RULING: The action commenced before the respondent judge was
not for support but for the recovery of the ownership and possession
of real property. Manifestly such an action is not "the proper action"
contemplated by said rule The mere fact that the plaintiffs have legal
and equitable rights in the property they seek to recover does not
authorize the court to compel the defendants to support the plaintiffs
pending the determination of the suit.
Can you ask for support pendente lite in an action for the declaration of
nullity of a bigamous marriage?
Yes. One can ask for support pendente lite in an action for the
declaration of nullity of a bigamous marriage provided that the party
asking for support, whether plaintiff or defendant, has a legal basis for
the claim of the legal support.
Example: The wife institutes the action against the bigamous husband.
Such wife may ask for support pendente lite in an action for the
declaration of a bigamous marriage.
Who can ask for support pendente lite?
The Rule provides the any party may ask for support pendente lite.
Section 1. Application. — At the commencement of the proper
action or proceeding, or at any time prior to the judgment or final
order, a verified application for support pendente lite may be filed by
any party stating the grounds for the claim and the financial
conditions of both parties, and accompanied by affidavits,
depositions or other authentic documents in support thereof.
Can you ask for support pendente lite in a TPO/PPO case?
Yes. Section 8 (g) of RA 9262 provides that the protection orders that
may be issued under this Act shall include any, some or all of the
following reliefs:
(g) Directing the respondent to provide support to the woman
and/or her child if entitled to legal support. Notwithstanding
other laws to the contrary, the court shall order an appropriate
percentage of the income or salary of the respondent to be
withheld regularly by the respondent's employer for the same
Can an illegitimate child ask for support pendente lite in a TPO/PPO
case?
Yes. An illegitimate child can ask for support pendente lite in a TPO/PPO
case against the erring parent.
Can a petitioner who is allegedly an abused woman claim support
pendente lite in a TPO/PPO case?
Yes but only if such woman is entitled to legal support. Violence against
women and children is defined under RA 9262 as any act or a series of
acts committed by any person against
1.
2.
3.
4.
5.
a woman who is his wife
former wife
against a woman with whom the person has or had a sexual
or dating relationship
with whom he has a common child, or
against her child whether legitimate or illegitimate.
Note: Violence against a woman under RA 9262 may be directed
against someone who is not the wife. Thus, support pendente lite cannot
be automatically claimed by any woman under such law. Mere allegation
of a woman is not sufficient to entitle her for support. There has to be a
legal basis for the claim of support.
Who is entitled to legal support?
Article 195 of the Family Code provides for the list of who is entitled to
legal support as follows:
Article 195. Subject to the provisions of the succeeding articles, the
following are obliged to support each other to the whole extent set
forth in the preceding article:
(1) The spouses;
(2) Legitimate ascendants and descendants;
(3) Parents and their legitimate children and the legitimate and
illegitimate children of the latter;
(4) Parents and their illegitimate children and the legitimate and
illegitimate children of the latter; and
(5) Legitimate brothers and sisters, whether of full or half-blood
October 8, 2019 by Anna Sophia Tarhata Piang
When can you claim support pendete lite?
Section 1. Application. — At the commencement of the proper
action or proceeding, or at any time prior to the judgment or final
order, a verified application for support pendente lite may be filed by
any party stating the grounds for the claim and the financial
conditions of both parties, and accompanied by affidavits,
depositions or other authentic documents in support thereof.
1.
2.
At the commencement of the proper action or proceeding
At any time prior to the judgment or final order
What is the basis for granting support?
Article 203 of the Family Code: The obligation to give support shall
be demandable from the time the person who has a right to receive
the same needs it for maintenance, but it shall not be paid except
from the date of judicial or extra-judicial demand.
Support pendente lite may be claimed in accordance with the Rules
of Court.
Payment shall be made within the first five days of each
corresponding month or when the recipient dies, his heirs shall not
be obliged to return what he has received in advance. (298a)
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What supporting documents should be attached in a petition for support
pendente lite?
•
•
A verified application for support pendente lite
o
stating the grounds for
▪
the claim and the financial conditions of
both parties, and
accompanied by
o
affidavits,
o
depositions or
o
other authentic documents in support thereof.
In determining whether to grant the application for support pendente lite,
what factors must the court consider?
The pertinent facts and the sufficiency of the evidence presented. It
must show a clear and satisfactory proof that the applicant is entitled
for support pendente lite.
In a hearing for support pendete lite, the parties must submit and
present evidence to prove the grounds which they anchor their claims
on.
E.g. Support on the ground of marriage. If the defendant negates the
claim, the petitioner must prove the fact of marriage.
After the application is made, will the court grant it ex-parte?
No. The adverse party shall be served a copy of the application and
have the opportunity to comment. A hearing will also take place.
Section 2. Comment. — A copy of the application and all supporting
documents shall be served upon the adverse party, who shall have
five (5) days to comment thereon unless a different period is fixed by
the court upon his motion. The comment shall be verified and shall
be accompanied by affidavits, depositions or other authentic
documents in support thereof.
Form of the Comment:
The comment shall:
•
be verified and
•
shall be accompanied by
o
affidavits,
o
depositions or
o
other authentic documents in support thereof.
Section 3. Hearing. — After the comment is filed, or after the
expiration of the period for its filing, the application shall be set for
hearing not more than three (3) days thereafter. The facts in issue
shall be proved in the same manner as is provided for evidence on
motions.
Date of the Hearing:
Not more than three (3) days:
•
After the comment is filed, or
•
after the expiration of the period for its filing
What are the possible defenses that can be invoked in an application for
support pendete lite
1. Denial of Paternity
2. Non-existence of marriage
3. Death of Recipient
4. Improper conduct of the person seeking support
What is the quantum of proof required in applications for support
pendete lite?
When a denial has been made by the defendant, the quantum of proof
is clear and satisfactory proof.
However, if no denial was made and there is admission, there is no need
to present evidence.
If the defendant negates the claim for support, what should be done by
the court?
Section 4. Order. — The court shall determine provisionally the
pertinent facts and shall render such orders as justice and equity
may require, having the regard to the probable outcome of the case
and such other circumstances as may aid in the proper resolution of
the question involved. If the application is granted, the court shall fix
the amount of money to be provisionally paid or such other forms of
support as should be provided, taking into account the necessities of
the applicant and the resources or means of the adverse party, and
the terms of payment or mode for providing the support. If the
application is denied, the principal case shall be tried and decided as
early as possible.
It is after the presentation of evidence that the court will determine the
facts of the case which shall be the basis of its decision with regard to
the question whether or not support pendete lite should be granted
In determining the amount of support pendente lite, what should the
court consider? What are the factors?
1.
2.
3.
The necessities of the applicant
The resources or means of the adverse party
The terms of payment or mode for providing the support
What is the nature of an Order granting support pendete lite?
It is interlocutory and immediately executory.
Considering its interlocutory nature, what is the remedy available to
question the Order?
A petition for certiorari under Rule 65.
What will happen if the Order is not complied with?
Section 5. Enforcement of Order. — If the adverse party fails to
comply with an order granting support pendente lite, the court shall,
motu proprio or upon motion; issue an order of execution against
him, without prejudice to his liability for contempt.
When the person ordered to give support pendente lite refuses or
fails to do so, any third person who furnished that support to the
applicant may, after due notice and hearing in the same case obtain
a writ of execution to enforce his right of reimbursement against the
person ordered to provide such support.
Enforcement of order:
If the adverse party fails to comply with an order granting support
pendente lite,
•
the court shall,
o
motu proprio or upon motion;
•
issue an order of execution against him,
•
without prejudice to his liability for contempt.
Remedy of third person who has furnished support in lieu of
defendant:
Any third person who furnished that support to the applicant may,
•
after due notice and hearing in the same case
•
obtain a writ of execution
•
to enforce his right of reimbursement against the person
ordered to provide such support.
Can support be asked for in criminal cases? Yes.
Section 6. Support in criminal cases. — In criminal actions where
the civil liability includes support for the offspring as a consequence
of the crime and the civil aspect thereof has not been waived,
reserved and instituted prior to its filing, the accused may be ordered
to provide support pendente lite to the child born to the offended
party allegedly because of the crime. The application therefor may
be filed successively by the offended party, her parents,
grandparents or guardian and the State in the corresponding criminal
case during its pendency, in accordance with the procedure
established under this Rule. (n)
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Applicable criminal cases: In criminal actions where the civil liability
includes support for the offspring as a consequence of the crime.
MANGONON v. COURT OF APPEALS
June 5, 2013
Parties who may file the application:
1. offended party
2. her parents
3. grandparents
4. guardian and
5. the State
Action
Note: It shall be filed in the corresponding criminal case during its
pendency.
Factual
Antecedents
Filed by
Against
October 08, 2019 by Reginald Matt Santiago
Were abandoned by Federico and Francisco
At time of petition, Rica and Rina were about to
enter college in the USA where petitioner had
moved and settled. Rica and Rina were
financially incapable of pursuing collegiate
education because of the costs involved.
In RA 9262, it is possible. But in acts of lasciviousness, hindi. Hindi
makakabuntis yan. Walang nabubuntis sa acts of lasciviousness. In
seduction, possible. All crimes that can lead to pregnancy or where the
victim can be pregnant then you can ask for support. You have to
analyze it on a case to case basis.
If the person who gave support turns out not to be liable for support,
what happens?
Section 7. Restitution. — When the judgment or final order of the
court finds that the person who has been providing support pendente
lite is not liable therefor, it shall order the recipient thereof to return
to the former the amounts already paid with legal interest from the
dates of actual payment, without prejudice to the right of the recipient
to obtain reimbursement in a separate action from the person legally
obliged to give the support. Should the recipient fail to reimburse said
amounts, the person who provided the same may likewise seek
reimbursement thereof in a separate action from the person legally
obliged to give such support. (n)
So he has to return the amount that he has received for support, to the
person was made liable for it who turns out not liable for support. Thus,
in a TPO/PPO case, the paramour who asked for support it shall be
returned. This is the basis – restitution.
It is just proper and just for it to be rendered. It has to be done in a final
order and judgment after the full blown trial and all the evidence have
been presented, malalaman ng court if there is a right or obligation to
support.
If it turns out that there is none and that support was given during the
pendency of the case, then there has to be a return – there will then be
restitution.
What happens if it will not be returned? In the same action?
“Should the recipient fail to reimburse said amounts, the person who
provided the same may likewise seek reimbursement thereof in a
separate action from the person legally obliged to give such support.”
Thus, the one who gave who cannot recover will now seek for
reimbursement. If it turns out he was not the father, and if the one who
received cannot return, he can seek reimbursement with the real father.
If the real father is not a party in the same case then you have then to
institute a separate action against the person required to give support.
What happens if judgment is appealed? Can you still ask for support?
Yes. As long as the judgment has not yet been final.
Supposing the file of the case happened later, and it is proven that the
defendant has the obligation, but never gave support in the previous
years, can support in arrears be granted? What is support in arrears?
Support in Arrears
It would be that amount of support that should have been granted to the
applicant adjudged to be entitled for support. It is also termed as
retroactive support.
In the case of MANGONON v. COURT OF APPEALS, what was the
support here all about?
Petition for Declaration of Legitimacy and
Support with Application for Support Pendente
Lite
Ma. Belen Mangonon in behalf of her then minor
children Rica and Rina (twin daughters)
Federico Delgado (father)
Francisco Delgado (grandfather)
Seven months after annulment of marriage gave
birth to twins,
Order of Trial
Court
CA
Francisco argues that the birth certificates of
Rica and Rina do not bear signature of alleged
father Federico, and whatever goods deeds he
may have done to Rica and Rina was on pure
acts of Christian Charity.
Monthly support pendente lite of 5,000 each
(petitioner was unsatisfied)
Dismissed certiorari and affirmed order
It was the grandfather who was made liable to support in this case. The
father tried to evade liability by saying that he does not have much
resources to support the education of the twins. They were not given
support, thus the twins took out student loans in order to continue with
their education. Thus, it was the loan, it must be paid.
Thus, this is where the concept of support in arrears comes in. They
already finished schooling as there is no urgent necessity but the
obligation is there, since there was a loan. And since the father had no
means, it was the grandfather who had the means. Thus the grandfather
was made liable for support in arrears. If for instance, if there are past
expenses because of the sustenance and education, then you can still
claim it. It does not mean because that period of development of growth
is done, you can still claim as arrears you just have to be prove it in the
court as to the amount of the support in arrears, especially if the child
has been abandoned.
The parent has the obligation to shoulder, if not the entire expense at
least half of it. This is part of the obligation when it comes to children.
Now supposing that the person is required to give support, like in the
case of a child, through the mother, and yet it was not given, but what
he does is he gives it directly to the children. Can the support given
directly to the children be credited as payment for support ordered by
the court? What happened in the case of LUA v. LIM-LUA?
Atty Tiu: This involved a well to do family and what is in issue is the
support in relation to the lifestyle of the children and the spouse, they
have to maintain that kind of lifestyle. This involves a legitimate family
and based on the means of the husband to give shall be maintained.
What was given here involved cars and expensive things. As long as he
has the means to support his family, then he is obliged to provide such
amount of support.
In this case the father seeks to deduct from the support in arrears certain
properties that he gave to the children.
LUA v. LIM-LUA
June 5, 2013
Here, the CA should not have allowed all the expenses incurred by
respondent to be credited against the accrued support pendente lite.
As earlier mentioned, the monthly support pendente lite granted by
the trial court was intended primarily for food, household expenses
such as salaries of drivers and house helpers, and also petitioner’s
scoliosis therapy sessions.
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From the Discussions and Lectures of Atty. Geraldine V. Quimosing-Tiu
Hence, the value of two expensive cars bought by respondent for his
children plus their maintenance cost, travel expenses of petitioner
and Angelli, purchases through credit card of items other than
groceries and dry goods (clothing) should have been disallowed, as
these bear no relation to the judgment awarding support pendente
lite. While it is true that the dispositive portion of the executory
decision in CA-G.R. SP No. 84740 ordered herein respondent to pay
the support in arrears "less than the amount supposedly given by
petitioner to the private respondent as her and their two (2) children
monthly support," the deductions should be limited to those basic
needs and expenses considered by the trial and appellate
courts. The assailed ruling of the CA allowing huge deductions from
the accrued monthly support of petitioner and her children, while
correct insofar as it commends the generosity of the respondent to
his children, is clearly inconsistent with the executory decision in CAG.R. SP No. 84740. More important, it completely ignores the unfair
consequences to petitioner whose sustenance and well-being, was
given due regard by the trial and appellate courts.
In the case at bar, records clearly show and in fact has been admitted
by petitioner that aside from paying the expenses of their two (2)
children’s schooling, he gave his two (2) children two (2) cars and
credit cards of which the expenses for various items namely: clothes,
grocery items and repairs of their cars were chargeable to him which
totaled an amount of more than One Hundred Thousand
(₱100,000.00) for each of them and considering that as testified by
the private respondent that she needs the total amount of
₱113,000.00 for the maintenance of the household and other
miscellaneous expenses and considering further that petitioner can
afford to buy cars for his two (2) children, and to pay the expenses
incurred by them which are chargeable to him through the credit
cards he provided them in the amount of ₱100,000.00 each, it is but
fair and just that the monthly support pendente lite for his wife, herein
private respondent, be fixed as of the present in the amount of
₱115,000.00 which would be sufficient enough to take care of the
household and other needs. This monthly support pendente lite to
private respondent in the amount of ₱115,000.00 excludes the
amount of One Hundred Thirty-Five (₱135,000.00) Thousand Pesos
for medical attendance expenses needed by private respondent for
the operation of both her eyes which is demandable upon the
conduct of such operation.
Likewise, this monthly support of ₱115,000.00 is without prejudice to
any increase or decrease thereof that the trial court may grant private
respondent as the circumstances may warrant i.e. depending on the
proof submitted by the parties during the proceedings for the main
action for support.
Note: During the discussion the claimed monthly support was P250,000
but the Court in its decision reduced it into P115,000. This comprised
the housemaid and for the children.
How do you treat now the other items given directly to the children (cars
etc.)? Are they still support in the first place?
These are outside the monthly support. These are voluntary gifts which
cannot be claimed nor credited and off settled. Probably if it was given
to the mother, it might be considered to be credited. But if it was given
directly to the kids it cannot be credited directly against the support in
arrears of the kids. This will be over and above to the amount of
support given to the kids. Here, you have a glimpse here how the rich
give the kind of support and the kind of support to get from the courts.
END OF PROVISIONAL REMEDIES
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