Assignment No. 1 Case Digests in SCARP AND SPECPROSubmitted by Christopher G. HalninTo Atty. Christian Kit Villasis

1. Silangang Textile (STMC) vs. Hon. Demetria and Luzon Spinning (LSMI) G.R. No. 166719 March 12, 2007

FACTS:Sometime in the year 1998, petitioner, SMTC, represented by Anita, Jimmy and Benito in their capacity as stockholders and officers of petitioner, entered a contract of agreement with the private respondent, LSMI, for the delivery of 111,161.60 kilograms of yarn, valued in the total amount ofP9,999,845.00 from November 1998 to June 1999. Petitioner received the yarn as evidenced by a delivery receipt. In payment, petitioner issued 34 postdated checks covering said amount. When presented for payment, the checks were dishonored for "Insufficient Fund". LSMI demanded from STMC the immediate payment of the obligation.STMC failed and refused to heed the demand of LSMI, hence, the latter filed the Complaint before the RTC for collection of sum of money with prayer for a writ of preliminary attachment against STMCs properties which was granted. Apparently, LSMI had already previously instituted before the Municipal Trial Court (MTC) of Lipa City, Branch 1, criminal cases against the Silangans for violation of Batas Pambansa Blg. 22. Thus, STMC was prompted to file a Motion, praying to dismiss the civil complaint before the RTC to discharge the writ of preliminary attachment issued by the trial court.

ISSUE:Whether or not the writ of preliminary attachment can be a separate action in an action for BP 22?

HELD:The Court held in the negative. The Court said attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the attaching party to realize upon relief sought and expected to be granted in the main or principal action.Being an ancillary or auxiliary remedy, it is available during the pendency of the action which may be resorted to by a litigant to preserve and protect certain rights and interests therein pending rendition, and for purposes of the ultimate effects, of a final judgment in the case. They are provisional because they constitute temporary measures availed of during the pendency of the action and they are ancillary because they are mere incidents in and are dependent upon the result of the main action.

In the case at bar, the Court applied and interpreted Supreme Court Circular No. 57-97 effective 16 September 1997, which reads: (1.) The criminal action for violation of Batas PambansaBlg. 22 shall be deemed to necessarily include the corresponding civil action, and no reservation to file such action separately shall be allowed or recognized. From this Supreme Court Circular was adopted Rule 111(b) of the 2000 Revised Rules of Criminal Procedure which reads: (b) The criminal action for violation of Batas PambansaBlg. 22 shall be deemed to include the corresponding civil action. No reservation to file such civil action separately shall be allowed.

A writ of preliminary attachment is a species of provisional remedy. As such, it is a collateral proceeding, permitted only in connection with a regular action, and as one of its incidents; one of which is provided for present need, or for the occasion; that is, one adapted to meet a particular exigency.Based on the facts and discussions, the SC finds the dismissal of the civil case to be in order, the writ of preliminary attachment issued by the trial court in the said case must be lifted.

2. Bangko Sentral ng Pilipinas vs. Exec. Judge LanzanasA.M. No. RTJ-06-1999 (formerly OCA IPI No. 03-1903-RTJ)December 8, 2010

FACTS:Complainant, BSP, alleged that, on January 19, 2000, Judge Rosmari D. Carandang of the RTC, Branch 12, Manila, issued a Writ of Attachmentagainst the assets and properties of Orient Commercial Banking Corporation, Jose C. Go, Vicente C. Go, Gotesco Properties, Inc. and Go Tong Electrical Supply, Inc. The writ was served, among others, on the various malls owned by the defendants, resulting in the garnishment of the rentals of the tenants. Hence, payments by mall tenants were deposited to Land Bank of the Philippines by order of the court in the account of the RTC, Manila.

Defendant Jose C. Go and his wife Elvy T. Go are also the defendants in Civil Case filed by PBCOM, which was pending before the RTC, Branch 42, Manila.

On May 23, 2003, when the BSPs counsel, Fe B. Macalino, inquired into the status of their Civil Case, she was allegedly informed by the personnel of the RTC, Branch 12, Manila, that portions of the subject funds (P85,631,690.38) had been withdrawn and released to PBCOM on the basis of a Notice to Deliver Garnished Amount, dated May 12, 2003, served by Cachero,based on the writ of execution issued by Judge Guillermo G. Purganan of the RTC, Branch 42, Manila, in Civil Case No. 01-101190,Philippine Bank of Communications v. Spouses Jose C. Go and Elvy T. Go.

The BSP protested that the withdrawals from the garnished rental payments in Civil Case No. 99-95993 were irregular as a court has no power to lift a writ of preliminary attachment by a co-equal court. It stressed that the RTC, Manila, Branch 42, no longer had jurisdiction over the case involving PBCOM and the Spouses Go because the case records were transmitted to the Court of Appeals on March 7, 2003.

ISSUE:Whether or not the property that is subject of attachment in custodia legis in another court may be ordered by another court for garnishment?

HELD:The Court held in the negative. Rule 57, Section 7(e) of the Rules of Court provides, If the property sought to be attached is incustodia legis, a copy of the writ of attachment shall be filed with the proper court or quasi-judicial agency, and notice of the attachment served upon the custodian of such property.

No evidence or record in the present case exists showing that the above provision had been complied with when Cachero asked for the release of the garnished funds. No copy of the writ of attachment was filed with the proper court, the RTC, Branch 12, Manila, in Civil Case No. 99-95993. The disputed funds were clearly under the custody of Branch 12, not Branch 42.

In Traders Royal Bank v. Intermediate Appellate Court,33we declared that "property in the custody of the law cannot be interfered with without the custody of the proper court and properly legally attached is property incustodia legis."

3. Mun. of Hagonoy, Bulacan vs. Hon. Dumdum Jr.G.R. No. 168289 March 22, 2010

FACTS:Case stems from a complaint filed by private Emily Rose Go Ko Lim Chao against petitioners, the Mun. of Hagonoy, Bulacan and its Mayor Felix V. Ople for collection of sum of money and damages.

Respondent Lim Chao is engaged in buying and selling surplus trucks, heavy equipment, machinery, spare parts and related supplies. She entered into an agreement with petitioner Mun. of Hagonoy through its Mayor Ople for the delivery of motor vehicles needed to carry out developmental undertakings in the Mun. Because of Oples earnest representation that funds had already been allocated for the project, Lim Chao agreed to deliver twenty-one motor vehicles whose value totaled P5,820,000.00. Lim Chao attached to the complaint copies of the bills of lading showing that the items were consigned, delivered to and received by the Mun.

Despite the deliveries, Ople failed to make the necessary payment. Thus respondent prayed for the payment of the full amount with interest, plus damages, and costs of the suit.

RTC granted respondents Lim Chao prayer for a writ of preliminary attachment upon posting a bond equivalent to the amount of the claim. The Writ of Preliminary Attachment was issued directing the sheriff to attach the estate, real and personal properties of the Municipality.

Mun. filed motion to dismiss on the ground that claim on which action had been brought was unenforceable under the Statute Of Frauds pointing out that there was no written contract or document that would evince the aggreement wih the respondent. Mun. also stated that no contact was ever entered into by the Mun. due to non compliance of public bidding. Motion were denied by the RTC. Appeal was filed in CA alleging that RTC made an error for dismissing the complaint despite that the alleged contract with respondent Lim Chao is unenforceable under the Statute Of Frauds and disregarding the rule that the Mun. is immune from suit. CA denied the appeal and affirm RTCs order.

ISSUE:Whether or not the property of the LGUs can be subjected to a writ of preliminary attachment?

HELD:The Court held in the negative. The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimants action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriations as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects.

With this in mind, the Court holds that the writ of preliminary attachment must be dissolved and, indeed, it must not have been issued in the very first place. While there is merit in private respondents position that she, by affidavit, was able to substantiate the allegation of fraud in the same way that the fraud attributable to petitioners was sufficiently alleged in the complaint and, hence, the issuance of the writ would have been justified. Still, the writ of attachment in this case would only prove to be useless and unnecessary under the premises, since the property of the municipality may not, in the event that respondents claim is validated, be subjected to writs of execution and garnishment unless, of course, there has been a corresponding appropriation provided by law.

SC holds that the writ of preliminary attachment must be dissolved and, indeed, it must not have been issued in the very first place.

4. Pablo Pua vs. Lourdes DeytoG.R. No. 173336November 26, 2012

FACTS:Pua is engaged in the business of wholesale rice trading. Among his clients was respondent Jennelita Ang, allegedly operating under the business and trade name of JD Grains Center. In October 2000, Pua delivered to Ang truckloads of rice worth P766,800.00. Ang paid Pua through two (2) postdated checks dated November 4, 2000 and November 6, 2000. When the checks fell due, Pua tried to encash them, but they were dishonored because they were drawn from a closed account. Pua immediately went to Angs residence to complain. Unfortunately, he was only able to talk to Angs mother and co-respondent, Lourdes Deyto, who told him that Ang had been missing. Unable to locate Ang, Pua demanded payment from Deyto, but she refused to pay.

On November 24, 2000, Pua filed a complaint5 with the RTC for collection of sum of money with preliminary attachment against Ang and Deyto, as co-owners of JD Grains Center. The complaint alleged that the respondents were guilty of fraud in contracting the obligation, as theypersuaded Pua to conduct business with them and presented documents regarding their financial capacity to fund the postdated checks.

On November 28, 2000, the RTC issued an order for the issuance of a writ of preliminary attachment upon an attachment bond of P766,800.00. Since Ang could not be found and had no available properties to satisfy the lien, the properties of Deyto were levied upon.Summons was duly served on Deyto, but not on Ang who had absconded.

Since service of summons could not be effected on Ang, Pua moved for leave of court to serve summons by publication on Ang on January 8, 2002. The RTC granted the motion in an order dated January 11, 2002.

ISSUE:Whether or not summons by publication grants jurisdiction by the court to the person for the proper issuance of writ attachment?

HELD:The Court held in the affirmative. In Santos, Jr. v. PNOC Exploration Corporation, the Court authorized resort to service of summons by publication even in actions in personam, considering that the provision itself allow this mode in any action, i.e., whether the action is in personam, in rem, or quasi in rem. The ruling, notwithstanding, there must be prior resort to service in person on the defendant21 and substituted service, and proof that service by these modes were ineffective before service by publication may be allowed for defendants whose whereabouts are unknown, considering that Section 14, Rule 14 of the Rules of Court requires a diligent inquiry of the defendantswhereabouts.

Until the summons has been served on Ang, the case cannot proceed since Ang is an indispensable party to the case; Pua alleged in his complaint that the respondents are co-owners of JD Grains Center.25 An indispensable party is one who must be included in an action before it may properly go forward. A court must acquire jurisdiction over the person of indispensableparties before it can validly pronounce judgments personal to the parties. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.

5. Thunder Security vs. National Food AuthorityG.R. No. 182042July 27, 2011

FACTS:Sometime in September 2002, petitioner, owned and operated by petitioner Lourdes M. Lasala as sole proprietor, entered into a Contract for Security Serviceswith respondent National Food Authority (NFA), Region I. The contract provided that Thunder Security will provide 132 security guards to safeguard the NFAs personnel, offices, facilities and properties in Region I for a period of one year from September 15, 2002 to September 15, 2003.

Subsequently, Republic Act (R.A.) No. 9184was enacted on January 10, 2003, and took effect on January 26, 2003. Said law expressly repealed, among others, Executive Order (E.O.) No. 40, Series of 2001which governed the bidding procedure of service contracts in the Government.

Since petitioners contract with the NFA was about to expire on September 15, 2003, the NFA caused the publication of an Invitation to Apply for Eligibility and to Bid on May 11 and 18, 2003, intended for all private security agencies.Petitioner signified its intention to participate in the bidding process. However, on June 9, 2003, the NFA, through Assistant Regional Director Victoriano Molina, chairman of respondent NFA-Regional Bids and Awards Committee (NFA-RBAC), notified petitioner to submit the required documents not later than June 19, 2003 in order to qualify for the bidding.On June 26, 2003, the NFA-RBAC informed petitioner that its application to bid had been rejected due to its failure to submit the required documents.Aggrieved, petitioner sent a letter of protest to the NFA contending that until the Implementing Rules and Regulations (IRR) of R.A. No. 9184 can be promulgated, no bidding should take place. Notwithstanding, respondents rejected petitioners application. Respondents defended their position, citing an instruction coming from then NFA Administrator Arthur C. Yap which directed that in the absence of the said IRR and due to the exigency of the service, respondents projects would be temporarily guided by the provisions of E.O. No. 40, among others, provided the same are consistent with R.A. No. 9184.

Unfazed, petitioner filed before the RTC a Petitionfor Prohibition and Preliminary Injunction, with a prayer for the issuance of a Temporary Restraining Order (TRO) plus Damages, seeking, among others, to enjoin respondents from awarding the contract to another security agency. On August 8, 2003, the RTC issued a TRO against respondents. Correlatively, in its Orderdated August 27, 2003, the RTC granted the writ of preliminary injunction in favor of petitioner and directed respondents to desist from terminating petitioners services until further orders from the RTC.

ISSUE:Whether or not Petitioner is entitled to injunctive relief?

HELD:The Court held in the negative. 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 partys 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.

At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power the exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction. It should only be extended in cases of great injury where courts of law cannot afford an adequate or commensurate remedy in damages; "in cases of extreme urgency; where the right is very clear; where considerations of relative inconvenience bear strongly in complainants favor; where there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance, the injury being a continuing one, and where the effect of the mandatory injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation."

For the writ to issue, two requisites must be present, namely, (1) the existence of the right to be protected, and (2) that the facts against which the injunction is to be directed are violative of said right.It is necessary that one must show an unquestionable right over the premises.

In this case, it is apparent that when the RTC issued its December 1, 2005 Order, petitioner has no more legal rights under the service contract which already expired on September 15, 2003. Therefore, it has not met the first vital requisite that it must have material and substantial rights that have to be protected by the courts.33It bears stressing that an injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action. There must exist an actual right. Verily, petitioner cannot lay claim to an actual, clear and positive right based on an expired service contract.

6. Roman Catholic Archbishop vs. Eduardo Soriano, Jr., et. al.G.R. No. 153829August 17, 2011

FACTS: The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B. Aniceto, D.D., claimed that it is the owner of a vast tract of land located near the Catholic Church at Poblacion, Macabebe, Pampanga. The RCA alleged that several individuals unlawfully occupied the subject land and refused to vacate despite repeated demands. Having no other recourse, the RCA filed an ejectment case. The defendants countered that the RCA has no cause of action against them because its title is spurious. They contended that the subject land belonged to the State, but they have already acquired the same by acquisitive prescription as they and their predecessors-in-interest have been in continuous possession of the land for more than thirty (30) years. The MCTC rendered decision on September 28, 2001 in favor of the RCA remains valid and binding against the whole world until it is declared void by a court of competent jurisdiction. Thus, defendants were ordered to vacate the premises and to pay reasonable monthly rentals from August 15, 2000 until they shall have finally vacated the premises.

Seeking to enjoin the implementation of the writ of execution and the notice to vacate, Guinto filed the instant Petition for Injunction with Prayer for Issuance of a Temporary Restraining Order (TRO)

ISSUE: Whether or not respondents are entitled to an injunctive writ?HELD: The Court held in the negative. To be entitled to the injunctive writ, the applicant must show that there exists a right to be protected which is directly threatened by an act sought to be enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial and that there is an urgent and paramount necessity for the writ to prevent serious damage. The applicants right must be clear and unmistakable. In the absence of a clear legal right, the issuance of the writ constitutes grave abuse of discretion. Where the applicants right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable damage without proof of an actual existing right is not a ground for injunction.

A clear and positive right especially calling for judicial protection must be shown.Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action. There must exist an actual right. There must be a patent showing by the applicant that there exists a right to be protected and that the acts against which the writ is to be directed are violative of said right.

In this case, the defendants in the ejectment case possess no such legal rights that merit the protection of the courts through the writ of preliminary injunction. The MCTC has already rendered a decision in favor of the RCA and ordered the defendants therein to vacate the premises.

7. Jaime S. Perez vs. Sps. MadronaG.R. No. 184478 March 21, 2012

FACTS:Respondent-spouses FortunitoMadrona and Yolanda B. Pante are registered owners of a residential property located in Lot 22, Block 5, France Street corner Italy Street, Greenheights Subdivision, Phase II, Marikina City and in 1989, respondents built their house thereon and enclosed it with a concrete fence and steel gate. In 1999, respondents received a letter dated May 25, 1999 from petitioner Jaime S. Perez, Chief of the Marikina Demolition Office, stating that the perimeter fence built by respondents are encroaching on the sidewalk and is a violation of existing laws and demands that said structure be demolished. In answer, respondent sent a letter stating that the petitioners letter (1) contained an accusation libelous in nature as it is condemning him and his property without due process; (2) has no basis and authority since there is no court order authorizing him to demolish their structure; (3) cited legal bases which do not expressly give petitioner authority to demolish; and (4) contained a false accusation since their fence did not in fact extend to the sidewalk. After a year the same letter was sent by the petitioner to respondent hence prompted the respondent to file a complaint for injunction before the Marikina City RTC. The RTC held that respondents, being lawful owners of the subject property, are entitled to the peaceful and open possession of every inch of their property and petitioners threat to demolish the concrete fence around their property is tantamount to a violation of their rights as property owners who are entitled to protection under the Constitution and laws. The RTC also ruled that there is no showing that respondents fence is a nuisance per se and presents an immediate danger to the communitys welfare, nor is there basis for petitioners claim that the fence has encroached on the sidewalk as to justify its summary demolition.

Petitioner contends that the requisites for the issuance of writ of injunction are not present in the instant case.

ISSUE:Whether or not respondents are entitled to the issuance of writ of injunction?

HELD:The Court held in the affirmative. For injunction to issue, two requisites must concur: first, there must be a right to be protected and second, the acts against which the injunction is to be directed are violative of said right. Here, the two requisites are clearly present: there is a right to be protected, that is, respondents right over their concrete fence which cannot be removed without due process; and the act, the summary demolition of the concrete fence, against which the injunction is directed, would violate said right. If petitioner indeed found respondents fence to have encroached on the sidewalk, his remedy is not to demolish the same summarily after respondents failed to heed his request to remove it. Instead, he should go to court and prove respondents supposed violations in the construction of the concrete fence. Indeed, unless a thing is a nuisance per se, it may not be abated summarily without judicial intervention.

8. TML Gasket Industries Inc. vs. BPI Family Savings Bank, Inc.G.R. No. 188768January 7, 2013

FACTS:TML obtained a loan from the Bank of Southeast Asia, Inc. (BSA), which TML can avail via a credit facility of 85,000,000.00. As security for the loan, TML executed a real estate mortgage over commercial and industrial lots. For additional security, BSA required TML to execute a promissory note for each availment from the credit facility. During the period of the loan, BSA changed its corporate name to DBS Bank Phils. (DBS), which eventually merged with BPI under the latters corporate name. TML defaulted in the payment of its loan leading BPI to extrajudicially foreclose the mortgaged properties. TMLs indebtedness to BPI amounted to 71,877,930.56, excluding penalties, charges, attorneys fees and other expenses of foreclosure. Because of the imminent foreclosure sale of its mortgaged properties, TML, on 21 November 2002, filed a Complaint for Declaratory Relief, Accounting, Declaration of Nullity of Notice of Extra-Judicial Sale, Increased in Interest Rates, Penalty Charges Plus, Damages, with Prayer for the Issuance of Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction against BPI and DBS before the RTC on the ground that the loan would be subject to only a 16% interest rate per annum but BSA unreasonably, unconscionably and unilaterally imposed a 33% interest rate per annum, and ultimately, a penalty of 36% interest on past due principal and corresponding interest thereon. TML likewise pointed out that it had demanded an independent accounting and liquidation of its loan account, which went unheeded. Ultimately, for TML, it cannot be considered in default of an obligation with an undetermined and unascertained amount. In that regard, TML argued that the intended foreclosure of TMLs mortgaged properties is unwarranted for being illegal; thus, the foreclosure ought to be enjoined to prevent TML from suffering grave and irreparable damage, especially since TMLs office and factory are located at the mortgaged properties. Refuting TMLs allegations, BPI maintained that the interest rates on TMLs loan obligation were mutually and voluntarily agreed upon. On TMLs application for the issuance of a writ of preliminary injunction, BPI countered that it has the absolute right to foreclose the mortgage constituted over TMLs properties given that TML defaulted on its loan obligation, which had already become due and demandable.

The trial court denied TMLs application for the issuance of a preliminary injunction but on motion for reconsideration, ordered the issuance of the writ in favor of TML, subject to the posting of a bond in the amount of 300,000.00.

Court of Appeals reversed and set aside the twin Orders of the trial court, thus this petition for certiorari.

ISSUE:Whether or not the issuance of a writ of preliminary injunction is proper?

HELD:The Court held in the negative. The issuance of a preliminary injunction 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. For the issuance of the writ of preliminary injunction to be proper, it must be shown that the invasion of the right sought to be protected is material and substantial, that the right of complainant is clear and unmistakable and that there is an urgent and paramount necessity for the writ to prevent serious damage. In the absence of a clear legal right, the issuance of a writ of injunction constitutes grave abuse of discretion. The possibility of irreparable damage without proof of actual existing right is no ground for an injunction.

9. China Banking Corporation vs. Sps. CiriacoG.R. No. 170038July 11, 2012

FACTS: In 1996, Spouses Harry and Esther Ciriaco obtained a loanfrom the petitioner, secured by a real estate mortgageover their land in La Trinidad, Benguet. When the respondents defaulted in the payment of their loan, the petitioner extra-judicially foreclosedthe mortgaged property and sold it at public auction where the petitioner emerged as the highest bidder. The Sheriff executed a Certificate of Salein the petitioners favor and the Register of Deeds annotated the Certificate of Sale on the TCT.A day before the expiration of the redemption period, the respondents filed a complaint with the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch, for Injunction to enjoin the consolidation of title in the petitioners favor, assailing the redemption price of the foreclosed property.

The RTC dismissed the complaint for being moot due to the previous consolidation of title in the petitioners favor, without prejudice to the filing of an appropriate action.The respondents then filed another complaint with the RTC of La Trinidad, Benguet for Cancellation of Consolidation of Ownership over a Real Property, Specific Performance, and Damages. They again questioned the redemption price of the foreclosed property.The petitioner filed its Answer with Compulsory Counterclaim, denying the allegations of the respondents complaint.

Respondents filed an Omnibus Motion for Leave to Amend Complaint and to Admit Attached Amended Complaint as well as Motion for Hearing on the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order (TRO). They sought to amend the complaint to allege further that fraud attended the consolidation of title in the petitioners favor and to include a prayer for the issuance of a writ of preliminary injunction and/or TRO to enjoin the petitioner from disposing of the foreclosed property or taking possession thereof.The petitioner subsequently filed its Opposition to the omnibus motion,arguing that the respondents further allegation of fraud changes the theory of the case which is not allowed, and that the respondents failed to show that they have a clear right in esse that should be protected by an injunctive relief.cr

The RTC admitted the amended complaint and directed the petitioner to file an answer. It noted that the 1997 Rules of Civil Procedure relaxed the rule on amendments to pleadings, subject only to the limitation that they are not dilatory. It also granted the respondents application for the issuance of a writ of preliminary injunction and/or TRO, since the respondents were entitled to prove their claim of fraud, and their claim that the interests and penalty charges imposed by the bank had no factual basis.

The RTC denied the petitioners subsequent motion for reconsideration and issued a writ of preliminary injunction, restraining the petitioner from disposing of the foreclosed property or taking possession thereof.

The petitioner then filed a Rule 65 petition for certiorari with the CA, arguing that the RTC gravely abused its discretion in precipitately granting the respondents application for the issuance of a writ of preliminary injunction without any hearing.libraryThe CA denied the petition for lack of merit. It found that the RTC did not commit any grave abuse of discretion since it gave the parties ample opportunity to present their respective positions on the propriety of an injunctive writ during the hearings and that the petitioner was also heard on its motion for reconsideration.

Petitioner then filed a petition for review on certiorariarguing that the RTC granted the respondents application for the issuance of a writ of preliminary injunction and/or TRO, despite the lack of a hearing thereon and that the RTC conducted hearings on the respondents omnibus motion only, not on the respondents application for the issuance of a writ of preliminary injunction and/or TRO, which has not yet been set for hearing.cra

ISSUE:Whether the CA erred in finding that the RTC did not commit any grave abuse of discretion in granting the respondents application for the issuance of a writ of preliminary injunction and/or TRO?

HELD:The Court held in the affirmative. The court found merit in the petition. A preliminary injunction is an order granted at any stage of an action 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 is the strong arm of equity,an extraordinary peremptory remedy that must be used with extreme caution, affecting as it does the respective rights of the parties.

Sections 3 and 5, Rule 58 of the 1997 Rules of Civil Procedure on preliminary injunction, pertinent to this case, provide the requirements for the issuance of a writ of preliminary injunction or a TRO:SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is established:(a) 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 a (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.

SEC. 5. Preliminary injunction not granted without notice; exception. - No preliminary injunction shall be granted without hearing and prior notice to the party or persons 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 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 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. The court shall also determine, within the same period, whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order.

However, 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 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.

From the provisions, it appears clearly that before a writ of preliminary injunction may be issued, a clear showing must be made that there exists a right to be protected and that the acts against which the writ is to be directed are violative of an established right. The holding of a hearing, where both parties can introduce evidence and present their side, is also required before the courts may issue a TRO or an injunctive writ.

Generally, an RTC's decision to grant or to deny injunctive relief will not be set aside on appeal, unless the trial court abused its discretion. In granting or denying injunctive relief, a court abuses its discretion when it lacks jurisdiction; fails to consider and make a record of the factors relevant to its determination; relies on clearly erroneous factual findings; considers clearly irrelevant or improper factors; clearly gives too much weight to one factor; relies on erroneous conclusions of law or equity; or misapplies its factual or legal conclusions.

In this case, the Court found that the RTC abbreviated the proceedings and precipitately granted the respondents application for injunctive relief. The RTC did not conduct a hearing for reception of a sampling of the parties respective evidence to give it an idea of the justification for its issuance pending the decision of the case on the merits. It failed to make any factual finding to support the issuance of the writ of preliminary injunction since it did not conduct any hearing on the application for the issuance of the writ of preliminary injunction or TRO. The RTC conducted the hearings on the respondents omnibus motion only - whether to admit the amended complaint and whether to hold a hearing on the respondents application for a writ of preliminary injunction.crIn fact the RTC granted the respondents application for a writ of preliminary injunction based only on the respondents unsubstantiated allegations. Clearly, the respondents right to injunctive relief has not been clearly and unmistakably demonstrated. The respondents have not presented evidence, testimonial or documentary, other than the bare allegations contained in their pleadings, to support their claim of fraud that brings about the irreparable injury sought to he avoided by their application for injunctive relief. Thus, the RTC's grant of the writ of preliminary injunction in favor of the respondents, despite the lack of any evidence of a clear and unmistakable right on their part, constitutes grave abuse of discretion amounting to lack of jurisdiction.

Every court should remember that an injunction is a limitation upon the freedom of the defendant's action 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;no power exists whose exercise is more delicate, which requires greater caution and deliberation, or is more dangerous in a doubtful case, than the issuance of an injunction.

10. EL BANCO ESPAOL-FILIPINO vs. VICENTE PALANCAG.R. No. L-11390 March 26, 1918

FACTS:A mortagage was executed by original defendant Engracion Palanca Tanguinyen y Limquingcoupon various real property situated in Manila as security for a debt owing by him to Plaintiff El Banco Espaol-Filipino. Afterwhich, he returned to his native country China, and died there without returning to the Philippines.As the Defendant was a non-resident at the time of the institution of the foreclosure of said mortgage, it was necessary for the Plaintiff therein to give notice to the former by publication pursuant to Section 399 of the Code of Civil Procedure. An Order for Publication was accordingly obtained from the court, and publication was made in due form in a newspaper of the City of Manila. At the same time that the order of the court should deposit in the post office in a stamped envelope a copy of the Summons and Complaint directed to the Defendant at his last place of residence, to wit, the City of Amoy, in the Empire of China.It does not affirmatively appear whether the clerk complied with this order. However, Bernardo Chan y Garcia, the banks attorney, signed an affidavit showing that he had deposited in the Manila post-office a registered letter, addressed to EngracioPalancaTanquinyeng, at Manila, containing copies of the Complaint, the Plaintiffs Affidavit, the Summons, and the aforesaid Order for Publication. It appears from the postmasters receipt that Bernardo probably used an envelope obtained from the clerks office, as the receipt purports to show that the letter emanated from the office.

The Defendant did not appear. Thus,Judgment by Default was then taken againsthim before the trial court and a Decision rendered in favor of Plaintiff. In this Decision, it was recited that publication had been properly made in a periodical, but nothing was said about notice having been given by mail.Foreclosure of the subject property proceeded and sale was confirmed by the court thereafter.

Seven years after the confirmation sale, Vicente Palanca, as administrator of the Defendants estate, moved that the Order of Default and the above Judgment rendered thereonbedeclared void. Said Motion to Vacate Judgmentwas denied; hence, this Appeal.

Defendant-Appellant Vicente Palanca argues that the Order of Default and the Judgment rendered thereon were void because the court had never acquired jurisdiction over the person of the Defendant or over the subject of the action.

ISSUE:Whether the trial court acquired the necessary jurisdiction over the property to proceed with the foreclosure proceeding?

HELD:The Court held in the affirmative. The action to foreclose a mortgage is quasi in rem. The property itself is the sole thing which is impleaded and which is the subject of the exercise of judicial power. The jurisdiction of the court is derived from the power which it possesses over the property. The jurisdiction over the person is non-essential. The Judgment appealed from is without error, and the same is accordingly affirmed, with costs against Defendant-Appellant.

Here the property itself is in fact the sole thing which is impleaded and is the responsible object which is the subject of the exercise of judicial power. It follows that the jurisdiction of the court in such case is based exclusively on the power which, under the law, it possesses over the property; and any discussion relative to the jurisdiction of the court over the person of the defendant is entirely apart from the case. The jurisdiction of the court over the property, considered as the exclusive object of such action, is evidently based upon the following conditions and considerations, namely: (1) that the property is located within the district; (2) that the purpose of the litigation is to subject the property by sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper stage of the proceedings takes the property into custody, if necessary, and expose it to sale for the purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in this proceeding than such as can be enforced against the property.

We may then, from what has been stated, formulate the following proposition relative to the foreclosure proceeding against the property of a non-resident mortgagor who fails to come in and submit himself personally to the jurisdiction of the court: (I) that the jurisdiction of the court is derived from the power which it possesses over the property; (II) that jurisdiction over the person is not acquired and is non-essential; (III) that the relief granted by the court must be limited to such as can be enforced against the property itself.

Involved in this decision is the principle that in proceedings in rem or quasi in rem against a non-resident who is not served personally within the state, and who does not appear, the relief must be confined to the res, and the court cannot lawfully render a personal judgment against him (Dewey vs. Des Moines, 173 U. S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.).

Therefore in an action to foreclose a mortgage against a non-resident, upon whom service has been effected exclusively by publication, no personal judgment for the deficiency can be entered (Latta vs. Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.).

11. Davao Light vs. Court of AppealsG.R. No. 93262 December 29, 1991

FACTS:On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel, etc. and Teodorico Adarna. The complaint contained an ex parte application for a writ of preliminary attachment which was subsequently granted and fixed the attachment bond at P4,600,513.37 on May 3, 1989. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ of attachment issued. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were served on defendants Queensland and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.

On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants.

On September 14, 1989, Davao Light filed an opposition to the motion to discharge attachment.On September 19, 1989, the Trial Court issued an Order denying the motion to discharge.

This Order of September 19, 1989 was successfully challenged by Queensland and Adarna in a special civil action of certiorari instituted by them in the Court of Appeals. The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May 4, 1990 CA: While it is true that a prayer for the issuance of a writ of preliminary attachment may be included in the complaint, as is usually done, it is likewise true that the Court does not acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears, and adding the phrase that it be issued "ex parte" does not confer said jurisdiction before actual summons had been made, nor retroact jurisdiction upon summons being made. . . .

It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in attachment," the "critical time which must be identified is . . . when the trial court acquires authority under law to act coercively against the defendant or his property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court over the person of the defendant in the main case."

Hence, this petition.

ISSUE:Whether or not a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction of the latter's person by service of summons or his voluntary submission to the Court's authority?

HELD:The Court held in the affirmative. 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 the 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 hereof.

An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked or called into activity; and it is thus that the court acquires jurisdiction over said subject matter or nature of the action. And it is by that self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate pleading) by which he signifies his submission to the court's power and authority that jurisdiction is acquired by the court over his person. On the other hand, jurisdiction over the person of the defendant is obtained by the service of summons or other coercive process upon him or by his voluntary submission to the authority of the court.

A preliminary attachment may be defined 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. It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. With that no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant.

Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." The phase, "at the commencement of the action," obviously refers to the date of the filing of the complaint which, as above pointed out, is the date that marks "the commencement of the action;" 18 and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly 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. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance.

12. PCI Bank vs. Joseph Anthony M. AlejandroG.R. No. 175587 (533 SCRA 738)September 21, 2007

FACTS:OnOctober 23, 1997, Philippine Commercial International Bank (petitioner) filed against Joseph Anthony M. Alejandrino (respondent) a complaintfor sum of money with prayer for the issuance of a writ of preliminary attachment.Said complaint alleged that on September 10, 1997, respondent, a resident of Hong Kong, executed in favor of petitioner a promissory note obligating himself to payP249,828,588.90 plus interest.In view of the fluctuations in the foreign exchange rates which resulted in the insufficiency of the deposits assigned by respondent as security for the loan, petitioner requested the latter to put up additional security for the loan.Respondent, however, sought a reconsideration of said request pointing out petitioners alleged mishandling of his account due to its failure to carry out his instruction to close his account as early as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was US$1.00:JPY127.50.It appears that the amount ofP249,828,588.90 was the consolidated amount of a series of yen loans granted by petitioner to respondent during the months of February and April 1997.

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice President Corazon B. Nepomuceno not to withdraw the same prior to their assignment as security for the loan; and (2) that respondent is not a resident of the Philippines.The application for the issuance of a writ was supported with the affidavit of Nepomuceno.

OnOctober 24, 1997, the trial court granted the application and issued the writex parte after petitioner posted a bond in the amount ofP18,798,734.69, issued by Prudential Guarantee & Assurance Inc. On the same date, the bank deposits of respondent with Rizal Commercial Banking Corporation (RCBC) were garnished.

Subsequently, respondent filed a motion to quashthe writ contending that the withdrawal of his unassigned deposits was not fraudulent as it was approved by petitioner.

OnDecember 24, 1997, the trial court issued an order quashing the writ and holding that the withdrawal of respondents unassigned deposits was not intended to defraud petitioner.It also found that the representatives of petitioner personally transacted with respondent through his home address inQuezon Cityand/or his office inMakatiCity.It thus concluded that petitioner misrepresented and suppressed the facts regarding respondents residence considering that it has personal and official knowledge that for purposes of service of summons, respondents residence and office addresses are located in thePhilippines.

With the denial of petitioners motion for reconsideration, it elevated the case to the Court of Appeals (CA-G.R. SP No. 50748)viaa petition forcertiorari.OnMay 10, 1999, the petition was dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid order.Petitioner filed a motion for reconsideration but was denied onOctober 28, 1999.On petition with this Court, the case was dismissed for late filing in a minute resolution (G.R. No. 140605) datedJanuary 19, 2000.Petitioner filed a motion for reconsideration but was likewisedenied with finality onMarch 6, 2000.

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25 Million on the attachment bond (posted by Prudential Guarantee & Assurance, Inc.) on account of the wrongful garnishment of his deposits. OnAugust 30, 2000, the trial court awarded damages to respondent in the amount of P25 Million without specifying the basis thereof.

Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial court.It held that in claiming that respondent was not a resident of the Philippines, petitioner cannot be said to have been in good faith considering that its knowledge of respondents Philippine residence and office address goes into the very issue of the trial courts jurisdiction which would have been defective had respondent not voluntarily appeared before it.

Both parties moved for reconsideration.OnNovember 21, 2006, the Court of Appeals denied petitioners motion for reconsideration but granted that of respondents by ordering petitioner to pay additionalP5Million as exemplary damages.

Hence, the instant petition.

ISSUE: Whether or not petitioner is liable for damages for the improper issuance of the writ of attachment against respondent?

HELD:The Court held in the affirmative. Notwithstanding the final judgment that petitioner is guilty of misrepresentation and suppression of a material fact, the latter contends that it acted in good faith.Petitioner also contends that even if respondent is considered a resident of thePhilippines, attachment is still proper under Section 1, paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a resident who is temporarily out of thePhilippinesupon whom service of summons may be effected by publication.

Petitioners contentions are without merit. While the final order of the trial court which quashed the writ did not categorically use the word bad faith in characterizing the representations of petitioner, the tenor of said order evidently considers the latter to have acted in bad faith by resorting to a deliberate strategy to mislead the court.Finally, there is no merit in petitioners contention that respondent can be considered a resident who is temporarily out of the Philippines upon whom service of summons may be effected by publication, and therefore qualifies as among those against whom a writ of attachment may be issued under Section 1, paragraph (f), Rule 57 of the Rules of Court which provides: (f)In an action against a party x xx on whom summons may be served by publication.

In so arguing, petitioner attempts to give the impression that although it erroneously invoked the ground that respondent does not reside in the Philippines, it should not be made to pay damages because it is in fact entitled to awritof attachment had it invoked the proper ground under Rule 57.However, even on this alternative ground, petitioner is still not entitled to the issuance of awritof attachment.The purposes of preliminary attachment are:(1) to seize the property of the debtor in advance of final judgment and to hold it for purposes of satisfying said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or(2)to acquire jurisdictionover the action by actual or constructive seizure of the property in thoseinstances where personal or substituted service of summons on the defendant cannot be effected, as in paragraph (f) of the same provision.Corollarily, in actionsin 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 proceedingin remorquasi in remby attaching the property of the defendant.

In actionsin personamagainst residents temporarily out of thePhilippines, the court need not always attach the defendants property in order to have authority to try the case.Where the plaintiff seeks to attach the defendants property and to resort to the concomitant service of summons by publication, the same must be with prior leave, precisely because,if the sole purpose of the attachment is for the court to acquire jurisdiction,the latter must determine whether from the allegations in the complaint, substituted service (to persons of suitable discretion at the defendants residence or to a competent person in charge of his office or regular place of business) will suffice, or whether there is a need to attach the property of the defendant and resort to service of summons by publication in order for the court to acquire jurisdiction over the case and to comply with the requirements of due process.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on the representation of petitioner that respondent is not a resident of thePhilippines.Obviously, the trial courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the case.Had the allegations in the complaint disclosed that respondent has a residence in Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have served summons by substituted service on the said addresses, instead of attaching the property of the defendant.The rules on the application of a writ of attachment must be strictly construed in favor of the defendant.For attachment is harsh, extraordinary, and summary in nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance. It should be resorted to only when necessary and as a last remedy.

It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out of thePhilippines, petitioner is still not entitled to a writ of attachment because the trial court could acquire jurisdiction over the case by substituted service instead of attaching the property of the defendant.The misrepresentation of petitioner that respondent does not reside in thePhilippines and its omission of his local addresses was thus a deliberate move to ensure that the application for the writ will be granted.

Contrary to the claim of petitioner, the instant case for damages by reason of the invalid issuance of the writ, survives the dismissal of the main case for sum of money.Suffice it to state that the claim for damages arising from such wrongful attachment may arise and be decided separately from the merits of the main action.13. BAC Manufacturing and Sales Corporation vs. Court of AppealsG.R. No. 96784August 2, 1991

FACTS: BAC Manufacturing and Sales Corporation, as assignee of certain rights of one BOFTEX LIMITED under various contracts for ladies shorts, denim pants and men's trousers which the latter entered into on various dates in 1985 with the Wynner Garments Manufacturing, Inc., filed a complaint against the latter with the Regional Trial Court of Makati (Branch 145), National Capital Judicial Region. Embodied in the complaint is an application for the issuance of a writ of preliminary attachment. Supporting it is an affidavit of its general manager which is attached to the complaint. A writ of preliminary attachment was issued on 10 October 1986. No summons and a copy of the complaint were, however, served upon private respondent.

The trial court issued an Order directing petitioner, as plaintiff, to take the necessary steps towards the active prosecution of the case, otherwise it would be dismissed for failure to prosecute. Petitioner filed a Request for Alias Summons, and the Clerk of Court of the trial court issued an Alias Summons.

Then a levy on attachment was made upon the machineries of private respondent by Deputy Sheriff Ruben S. Nequinto of the aforesaid Branch 145 of the trial courta quo. Neither the Alias Summons nor the order granting the issuance of the writ of preliminary attachment or the writ of attachment itself was served on the private respondent before or at the time the levy was made.

Private respondent filed a motion to dismiss the complaint and to dissolve the attachmentfor failure of petitioner to prosecute its case for an unreasonable length of time and that no copies of the summons and order of attachment were served upon it. Petitioner filed its opposition thereto alleging therein that it could not, inspite of its diligent efforts, locate private respondent's principal office address.The trial court denied the motion to dismiss and ordered private respondent to file its answer. The latter filed a motion for the reconsideration of the Order, but the trial court denied it. Private respondent filed an Answer With Counterclaims whereinit prays that the complaint be dismissed for lack of merit, the writ of attachment be discharged and the attached properties be returned to it. On its counterclaim, private respondent prays that petitioner be ordered to pay moral and exemplary damages as may be determined by the court, attorney's fees in the sum of P50,000.00 and the litigation expenses and costs in an amount to be proved at the trial.The trial court set the pre-trial of the case. However, private respondent filed with the Supreme Court a petition to annul the aforesaid Orders.

The Supreme Court referred the petition to the respondent Court of Appeals. In said petition, the private respondent herein contends that the trial court: (a) has not acquired jurisdiction over it as it has not been duly served with summons, and (b) petitioner's failure to cause summons to be served upon private respondent for an unreasonable length of time warrants the dismissal of the complaint for failure to prosecute.

In its challenged decision, the respondent Court sustains the private respondent, ruling that: Since private respondent was not validly or properly served with summons, the court below did not acquire jurisdiction over it.

ISSUE: Whether or not the trial court acquired jurisdiction over the case for the writ of attachment to lie?

HELD: The motion to dismiss the complaint and to dissolve the writ of attachment filed by private respondent on 16 February 1987 was precisely based on failure to prosecute for an unreasonable length of time because summons has not been served even up to that point in time and on the nullity of the attachment for failure to serve summons on private respondent and to furnish it with copies of the writ of attachment and the notice thereof. It claims that failure to serve the summons is sufficient to vacate or annul the writ.The appearance of private respondent was not, contrary to the claim of petitioner, a general appearance, and did not operate as waiver of service of summons.

The filing of the Answer by private respondent does not appear to have been squarely raised in the proceedings before the respondent court.

Petitioner makes no direct and specific allegation in its petition in the instant case that it had initially raised and pursued with vigor this matter in any of the pleadings it filed before the promulgation of the challenged decision. The latter does not mention it. Not having been properly and seasonably raised, the respondent Court could not have considered the legal effects of the filing of the Answer in its decision of 7 December 1989. Moreover, as impliedly ruled by respondent Court in its resolution of 4 January 1991, the filing of the Answer did not affect the issue of failure to prosecute for an unreasonable length of time. We agree with the respondent Court in this regard for to rule otherwise is to reward petitioner for its inaction and to punish private respondent for complying with the trial court's order of 20 May 1988 which denied the motion to reconsider the Order of 17 March 1988 and required it to file its Answer. That its answer was filed solely for that purpose is made manifest by its filing of a petition for certiorari precisely to annul said Order and the previous Order of 17 March 1988 denying the motion to dismiss and to dissolve the writ of attachment. A dismissal for failure to prosecute for an unreasonable length of time puts an end to the case and it would be unjust and unfair to compel a defendant to abort such a result by filing an answer. As a matter of fact, the trial court committed grave abuse of discretion when it ordered private respondent to file the Answer despite the fact that it was not yet served with summons and a copy of the complaint.

The trial court then did not validly acquire jurisdiction over the person of private respondent. and the implementation of the writ of attachment against the property of private respondent is null and void. Nil it is true that under Section 1 of Rule 57 of the Rules of Court the property of the defendant may be attached, as security for the satisfaction of any judgment that may be recovered in the cases therein enumerated, upon application by the plaintiff at the commencement of the action or at any time thereafter, a court which has not acquired jurisdiction over the person of the defendant cannot bind the defendant, whether in the main case or in the proceedings for the ancillary remedy of attachment.

14. Sps. Gregorio and Josefa Yu vs. Ngo Yet TeG.R. No. 155868February 6, 2007

FACTS:Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent soap worthP594,240.00, and issued to the latter three postdated checksas payment of the purchase price. When Te presented the checks at maturity for encashment, said checks were returned dishonoredand stamped ACCOUNT CLOSED.Te demandedpayment from Spouses Yubut the latter did not heed her demands. Acting through her son and attorney-in-fact, Charry Sy (Sy), Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela, Metro Manila, a Complaint,docketed as Civil Case No. 4061-V-93, for Collection of Sum of Money and Damages with Prayer for Preliminary Attachment.In support of her prayer for preliminary attachment,Te attached to her Complaint an Affidavit executed by Sy that Spouses Yu were guilty of fraud in entering into the purchase agreement for they never intended to pay the contract price, and that, based on reliable information, they were about to move or dispose of their properties to defraud their creditors. Upon Tes posting of an attachment bond,theRTC issued an Order of Attachment/Levy[dated March 29, 1993 on the basis of which Sheriff Constancio Alimurung (Sheriff Alimurung) of RTC, Branch 19, Cebu Citylevied and attached Spouses Yus properties in Cebu City consisting of one parcel of land (known as Lot No. 11)and four units of motor vehicle, specifically,a Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus. OnApril 21, 1993, Spouses Yu filed an Answer with counterclaim for damages arising from the wrongful attachment of their properties, specifically, actual damages amounting toP1,500.00 per day; moral damages,P1,000,000.00; and exemplary damages,P50,000.00. They also sought payment ofP120,000.00 as attorneys fees andP80,000.00 as litigation expenses.On the same date, Spouses Yu filed an Urgent Motion to Dissolve Writ of Preliminary Attachment.They also filed a Claim Against Surety Bondin which they demanded paymentfrom Visayan Surety and Insurance Corporation (Visayan Surety), the surety which issued the attachment bond,of the sum ofP594,240.00, representing the damages they allegedly sustained as a consequence of the wrongful attachment of their properties.

Whilethe RTC did not resolve the Claim Against Surety Bond, it issued an OrderdatedMay 3, 1993,discharging from attachment the Toyota Ford Fierra, jeep, and Canter delivery van on humanitarian grounds, but maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed a Motion for Reconsiderationwhich the RTC denied.

Dissatisfied, they filed with the CA a Petition for Certiorari, a decision was rendered lifting the RTC Order of Attachment on their remaining properties the court stated that Insolvency is not a ground for attachment especially when defendant has not been shown to have committed any act intended to defraud its creditorsTe filed a Motion for Reconsideration but was later on denied by the CA, he then filed with SC a Petition for Review on Certiorari but the same were denied for having been filed late and for failure to show that a reversible error was committed by the CA in a resolution dated June 8, 1994. Thus, the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 on the wrongfulness of the attachment/levy of the properties of Spouses Yu became conclusive and binding.

However, on July 20, 1994, the RTC, apparently not informed of the SC Decision, rendered a Decision ordering spouses YU to pay the plaintiff the sum of P549,404.00, with interest from the date of the filing of this case and attorneys fee. On the counterclaim, the Court declines to rule on this, considering that the question of the attachment which allegedly gave rise to the damages incurred by the defendants is being determined by the Supreme Court. Spouses Yu filed with the CA an appeal questioning only that portion of the July 20, 1994 Decision where the RTC declined to rule on their counterclaim for damages the CA affirmed in toto the RTC Decision, it nonetheless made a ruling on the counterclaim of Spouses Yu by declaring that the latter had failed to adduce sufficient evidence of their entitlement to damages. Spouses Yu filed a Motion for Reconsideration but the CA denied the motion.

ISSUE:Whether the appellate court erred in refusing to award actual, moral and exemplary damages after it was established by final judgment that the writ of attachment was procured with no true ground for its issuance?

HELD:To merit an award of actual damages arising from a wrongful attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered and the amount thereof. Such loss or injury must be of the kind which is not only capable of proof but must actually be proved with a reasonable degree of certainty. As to its amount, the same must be measurable based on specific facts, and not on guesswork or speculation. In particular, if the claim for actual damages covers unrealized profits, the amount of unrealized profits must be established and supported by independent evidence of the mean income of the business undertaking interrupted by the illegal seizure.

In the case at bar, the actual damages cannot be determined. Defendant-appellant Josefa Yu testified on supposed lost profits without clear and appreciable explanation. Despite her submission of the used and unused ticket stubs, there was no evidence on the daily net income, the routes plied by the bus and the average fares for each route. The submitted basis is too speculative and conjectural. No reports regarding the average actual profits and other evidence of profitability necessary to prove the amount of actual damages were presented. Besides, based on the August 29, 1994 Manifestation, it would appear that long before the passenger bus was placed under preliminary attachment in Civil Case No. 4061-V-93,the same had been previously attached by the Sheriff of Mandaue City in connection with another case and that it was placed in the Cebu Bonded Warehousing Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were unreasonably deprived of the use of the passenger bus by reason of the subsequent wrongful attachment issued in Civil Case No. 4061-V-93. Nor can they also attribute to the wrongful attachment their failure to earn income or profit from the operation of the passenger bus. Moreover, petitioners did not present evidence as to the damages they suffered by reason of the wrongful attachment of Lot No. 11.

Moral and Exemplary DamagesTo merit an award thereof, it must be shown that the wrongful attachment was obtained by the attachment plaintiff with malice or bad faith, such as by appending a false affidavit to his application.

In the case, Te concluded that Spouses Yu never intended to pay their obligation for they had available funds in their bank but chose to transfer said funds instead of cover the checks they issued. Thus, we cannot attribute malice nor bad faith to Te in applying for the attachment writ. We cannot hold her liable for moral and exemplary damages.

Temperate or Moderate Damages and Attorneys feesAs a rule, attorneys fees cannot be awarded when moral and exemplary damages are not granted, the exception however is when a party incurred expenses to lift a wrongfully issued writ of attachment.

In the case, Spouses Yu waged a protracted legal battle to fight off the illegal attachment of their properties and pursue their claims for damages. It is only just and equitable that they be awarded reasonable attorneys fees in the amount of P30,000.00.

Further, we recognize that Spouses Yu suffered some form of pecuniary loss when their properties were wrongfully seized, although the amount thereof cannot be definitively ascertained. Hence, an award of temperate or moderate damages in the amount of P50,000.00 is in order.

15. Alfredo Ching vs. Court of AppealsG.R. No. 124642 February 23, 2004

FACTS:OnSeptember 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI) obtained a loan ofP9,000,000.00from the Allied Banking Corporation (ABC).By virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo Ching, executed a promissory note for the said amount promising to pay onDecember 22, 1978 at an interest rate of 14%per annum.As added security for the said loan, onSeptember 28, 1978, Alfredo Ching, together with Emilio Taedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding themselves to jointly and severally guarantee the payment of all the PBMCI obligations owing the ABC to the extent ofP38,000,000.00.The loan was subsequently renewed on various dates, the last renewal having been made onDecember 4, 1980.

Earlier, onDecember 28, 1979, the ABC extended another loan to the PBMCI in the amount ofP13,000,000.00payable in eighteen months at 16% interestper annum.As in the previous loan, the PBMCI, through Alfredo Ching, executed a promissory note to evidence the loan maturing onJune 29, 1981.This was renewed once for a period of one month.

The PBMCI defaulted in the payment of all its loans.Hence, onAugust 21, 1981, the ABC filed a complaint for sum of money with prayer for a writof preliminary attachment against the PBMCI to collect theP12,612,972.88exclusive of interests, penalties and other bank charges.Impleaded as co-defendants in the complaint were Alfredo Ching, Emilio Taedo and Chung Kiat Hua in their capacity as sureties of the PBMCI.

OnAugust 26, 1981, after anex-partehearing, the trial court issued an Order denying the ABCs application for a writ of preliminary attachment.The trial court decreed that the grounds alleged in the application and that of its supporting affidavit are all conclusions of fact and of law which do not warrant the issuance of the writ prayed for. On motion for reconsideration, however, the trial court, in an Order datedSeptember 14, 1981, reconsidered its previous order and granted the ABCs application for a writ of preliminary attachment on a bond ofP12,700,000.

Upon the ABCs posting of the requisite bond, the trial court issued a writ of preliminary attachment.Subsequently, summonses were served on the defendants, save Chung Kiat Hua who could not be found.

Meanwhile, onApril 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition for suspension of payments with the Securities and Exchange Commission (SEC), docketed as SEC Case No. 2250, at the same time seeking the PBMCIs rehabilitation.

OnJuly 9, 1982, the SEC issued an Order placing the PBMCIs business, including its assets and liabilities, under rehabilitation receivership, and ordered that all actions for claims listed in Schedule A of the petition pending before any court or tribunal are hereby suspended in whatever stage the same may be until further orders from the Commission.The ABC was among the PBMCIs creditors named in the said schedule.

Subsequently, onJanuary 31, 1983, the PBMCI and Alfredo Ching jointly filed a Motion to Dismiss and/or motion to suspend the proceedings in Civil Case No. 142729 invoking the PBMCIs pending application for suspension of payments (which Ching co-signed) and over which the SEC had already assumed jurisdiction.OnFebruary 4, 1983, the ABC filed its Opposition thereto.

In the meantime, onJuly 26, 1983, the deputy sheriff of the trial court levied on attachment the 100,000 common shares of Citycorp stocks in the name of Alfredo Ching.

Thereafter, in an Order datedSeptember 16, 1983, the trial court partially granted the aforementioned motion by suspending the proceedings only with respect to the PBMCI.It denied Chings motion to dismiss the complaint/or suspend the proceedings and pointed out thatP.D. No. 1758 only concerns the activities of corporations, partnerships and associations and was never intended to regulate and/or control activities of individuals.Thus, it directed the individual defendants to file their answers.

Instead of filing an answer, Ching filed onJanuary 14, 1984 a Motion to Suspend Proceedings on the same ground of the pendency of SEC Case No. 2250.This motion met the opposition from the ABC.

OnDecember 17, 1986, the ABC filed a Motion to Reduce the amount of his preliminary attachment bond fromP12,700,000 toP6,350,000.Alfredo Ching opposed the motion,but onApril 2, 1987, the court issued an Order setting the incident for further hearing onMay 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the actual value of the properties of Alfredo Ching levied on by the sheriff.

OnMarch 2, 1988, the trial court issued an Order granting the motion of the ABC and rendered the attachment bond ofP6,350,000.

OnNovember 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo Ching, filed a Motion to Set Aside the levy on attachment.She allegedinter aliathat the 100,000 shares of stocks levied on by the sheriff were acquired by her and her husband during their marriage out of conjugal funds after the Citycorp Investment Philippines was established in 1974.Furthermore, the indebtedness covered by the continuing guaranty/comprehensive suretyship contract executed by petitioner Alfredo Ching for the account of PBMCI did not redound to the benefit of the conjugal partnership.She, likewise, alleged that being the wife of Alfredo Ching, she was a third-party claimant entitled to file a motion for the release of the properties.She attached therewith a copy of her marriage contract with Alfredo Ching.

The ABC filed a comment on the motion to quash preliminary attachment and/or motion to expunge records, contending that: (1) The supposed movant, Encarnacion T. Ching, is not a party to this present case; thus, she has no personality to file any motion before this Honorable Court;(2)Said supposed movant did not file any Motion for Intervention pursuant to Section 2, Rule 12 of the Rules of Court; (3)Said Motion cannot even be construed to be in the nature of a Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of Court.

Furthermore, assuming ingracia argumentithat the supposed movant has the required personality, her Motion cannot be acted upon by this Honorable Court as the above-entitled case is still in the archives and the proceedings thereon still remains suspended.And there is no previous Motion to revive the same.

The ABC also alleged that the motion was barred by prescription or by laches because the shares of stocks were incustodia legis.

During the hearing of the motion, Encarnacion T. Ching adduced in evidence her marriage contract to Alfredo Ching to prove that they were married onJanuary 8, 1960;the articles of incorporation of Citycorp Investment Philippines datedMay 14, 1979;and, the General Information Sheet of the corporation showing that petitioner Alfredo Ching was a member of the Board of Directors of the said corporation and was one of its top twenty stockholders. OnDecember 10, 1993, the Spouses Ching filed their Reply/Opposition to the motion to expunge records.

Acting on the aforementioned motion, the trial court issued onDecember 15, 1993 an Orderlifting the writ of preliminary attachment on the shares of stocks and ordering the sheriff to return the said stocks to the petitioners.The CA sustained the contention of the private respondent and set aside the assailed orders.According to the CA, the RTC deprived the private respondent of its right to file a bond under Section 14, Rule 57 of the Rules of Court.The petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had no right of action to have the levy annulled with a motion for that purpose.Her remedy in such case was to file a separate action against the private respondent to nullify the levy on the 100,000 Citycorp shares of stocks.The court stated that even assuming that Encarnacion T. Ching had the right to file the said motion, the same was barred by laches.

ISSUE:Whether or not the petitioner wife has the right to file the motion to quash the levy on attachment on the 100,000 shares of stocks in Citycorp Investment Philippines?

HELD:The Court held in the affirmative. The Court agree with the petitioners that the petitioner-wife had the right to file the said motion, although she was not a party in the Civil Case.InOng v. Tating,we held that the sheriff may attach only those properties of the defendant against whom a writ of attachment has been issued by the court. When the sheriff erroneously levies on attachment and seizes the property of a third person in which the said defendant holds no right or interest, the superior authority of the court which has authorized the execution may be invoked by the aggrieved third person in the same case.Upon application of the third person, the court shall order a summary hearing for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to the plaintiff.If so, the court may then order the sheriff to release the property from the erroneous levy and to return the same to the third person.In resolving the motion of the third party, the court does not and cannot pass upon the question of the title to the property with any character of finality.It can treat the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not.If the claimants proof does not persuade the court of the validity of the title, or right of possession thereto, the claim will be denied by the court.The aggrieved third party may also avail himself of the remedy of terceria by executing an affidavit of his title or right of possession over the property levied on attachment and serving the same to the office making the levy and the adverse party.Such party may also file an action to nullify the levy with damages resulting from the unlawful levy and seizure, which should be a totally separate and distinct action from the former case.The above-mentioned remedies are cumulative and any one of them may be resorted to by one third-party claimant without availing of the other remedies. 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.

16. Fort Bonifacio Development Corp. vs. Yllas Lending Corp.G.R. No. 158997October 6, 2008

FACTS:On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno) over a unit at the Entertainment Center - Phase 1 of the Bonifacio Global City in Taguig, Metro Manila. The parties had the lease contract notarized on the day of its execution. Tirreno used the leased premises for Savoia Ristorante and La Strega Bar.Two provisions in the lease contract are pertinent to the present case: Section 20, which is about the consequences in case of default of the lessee, and Section 22, which is about the lien on the properties of the lease. The pertinent portion of Section 20 reads:Section 20.Default of the Lessee20.1 The LESSEE shall be deemed to be in default within the meaning of this Contract in case:(i) The LESSEE fails to fully pay on time any rental, utility and service charge or other financial obligation of the LESSEE under this Contract;20.2 Without prejudice to any of the rights of the LESSOR under this Contract, in case of default of the LESSEE, the lessor shall have the right to:(i) Terminate this Contract immediately upon written notice to the LESSEE, without need of any judicial action or declaration;Section 22, on the other hand, reads:Section 22.Lien on the Properties of the LesseeUpon the termination of this Contract or the expiration of the Lease Period without the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR shall have the right to retain possession of the properties of the LESSEE used or situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to offset the prevailing value thereof as appraised by the LESSOR against any unpaid rentals, charges and/or damages. If the LESSOR does not want to use said properties, it may instead sell the same to third parties and apply the proceeds thereof against any unpaid rentals, charges and/or damages.

Tirreno began to default in its lease payments in 1999. By July 2000, Tirreno was already in arrears byP5,027,337.91. FBDC and Tirreno entered into a settlement agreement on 8 August 2000. Despite the execution of the settlement agreement, FBDC found need to send Tirreno a written notice of termination dated 19 September 2000 due to Tirreno's alleged failure to settle its outstanding obligations. On 29 September 2000, FBDC entered and occupied the leased premises. FBDC also appropriated the equipment and properties left by Tirreno pursuant to Section 22 of their Contract of Lease as partial payment for Tirreno's outstanding obligations.

On 4 March 2002, Yl