1
G.R. No. 171624 December 6, 2010
BF HOMES, INC. and the PHILIPPINE WATERWORKS AND
CONSTRUCTION CORP., Petitioners,
vs.
MANILA ELECTRIC COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails
the Decision1 dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No.
82826, nullifying and setting aside (1) the Order2 dated November 21, 2003 of
the Regional Trial Court (RTC), Branch 202 of Las Pias City, in Civil Case No.
03-0151, thereby dissolving the writ of injunction against respondent Manila
Electric Company (MERALCO); and (2) the Resolution3 dated February 7, 2006
of the Court of Appeals denying the Motion for Reconsideration of petitioners BF
Homes, Inc. (BF Homes) and Philippine Waterworks and Construction
Corporation (PWCC).
MERALCO is a corporation duly organized and existing under Philippine laws
engaged in the distribution and sale of electric power in Metro Manila. On the
other hand, BF Homes and PWCC are owners and operators of waterworks
systems delivering water to over 12,000 households and commercial buildings
in BF Homes subdivisions in Paraaque City, Las Pias City, Caloocan City, and
Quezon City. The water distributed in the waterworks systems owned and
operated by BF Homes and PWCC is drawn from deep wells using pumps run by
electricity supplied by MERALCO.
On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the
Issuance of Writ of Preliminary Injunction and for the Immediate Issuance of
Restraining Order] against MERALCO before the RTC, docketed as Civil Case No.
03-0151.
In their Petition before the RTC, BF Homes and PWCC invoked their right to
refund based on the ruling of this Court in Republic v. Manila Electric Company4:
7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314,
entitled Republic of the Philippines vs. Manila Electric Company, and
G.R. No. 141369, entitled Lawyers Against Monopoly and Poverty
(LAMP) et al. vs. Manila Electric Compnay (MERALCO), (both cases shall
hereafter be referred to as "MERALCO Refund cases," for brevity), the
Supreme Court ordered MERALCO to refund its customers, which shall
be credited against the customers future consumption, the excess
average amount of P0.167 per kilowatt hour starting with the
customers billing cycles beginning February 1998. The dispositive
portion of the Supreme Court Decision in the MERALCO Refund cases
reads:
WHEREFORE, in view of the foregoing, the instant petitions are
GRANTED and the decision of the Court of Appeals in C.A. G.R. SP No.
46888 is REVERSED. Respondent MERALCO is authorized to adopt a rate
adjustment in the amount of P0.017 kilowatthour, effective with respect
to MERALCOs billing cycles beginning February 1994. Further, in
accordance with the decision of the ERB dated February 16, 1998, the
excess average amount of P0.167 per kilowatt hour starting with the
applicants billing cycles beginning February 1998 is ordered to be
refunded to MERALCOs customers or correspondingly credited in their
favor for future consumption.
x x x x.
8. The Motion for Reconsideration filed by MERALCO in the MERALCO
Refund cases was DENIED WITH FINALITY (the uppercase letters were
used by the Supreme Court) in the Resolution of the Supreme Court
dated April 9, 2003.
9. The amount that MERALCO was mandated to refund to [BF Homes
and PWCC] pursuant to the MERALCO Refund cases is in the amount
of P11,834,570.91.5
BF Homes and PWCC then alleged in their RTC Petition that:
10. On May 20, 2003, without giving any notice whatsoever, MERALCO
disconnected electric supply to [BF Homes and PWCCs] sixteen (16)
water pumps located in BF Homes in Paraaque, Caloocan, and Quezon
City, which thus disrupted water supply in those areas.
11. On June 4, 2003, [BF Homes and PWCC] received by facsimile
transmission a letter from MERALCO, x x x, in which MERALCO
demanded to [BF Homes and PWCC] the payment of electric bills
amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting
MERALCO to apply the P4,717,768.15 electric bill against
the P11,834,570.91 that MERALCO was ordered to refund to [BF Homes
and PWCC] pursuant to the MERALCO Refund cases. x x x
13. Displaying the arrogance that has become its distinction, MERALCO,
in its letter dated June 16, 2003, x x x, denied [BF Homes and PWCCs]

request alleging that it has not yet come up with the schedule for the
refund of large amounts, such as those of [BF Homes and PWCC].
14. Even while MERALCO was serving its reply-letter to [BF Homes and
PWCC], MERALCO, again, without giving any notice, cut off power supply
to [BF Homes and PWCCs] five (5) water pumps located in BF Homes
Paraaque and BF Resort Village, in Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to
cut off electric power connections to all of [BF Homes and PWCCs] water
pumps if [BF Homes and PWCC] failed to pay their bills demanded by
MERALCO by June 20, 2003.6
BF Homes and PWCC thus cited the following causes of action for their
RTC Petition:
16. In refusing to apply [MERALCOs] electric bills against the amounts
that it was ordered to refund to [BF Homes and PWCC] pursuant to the
MERALCO Refund cases and in making the implementation of the refund
ordered by the Supreme Court dependent upon its own will and caprice,
MERALCO acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly entitled to the remedies under
the law to compel MERALCO to consider [BF Homes and PWCCs] electric
bills fully paid by the amounts which MERALCO was ordered to refund
to [BF Homes and PWCC] pursuant to the MERALCO Refund cases, to
enjoin MERALCO to reconnect electric power to all of [BF Homes and
PWCCs] water pumps, and to order MERALCO to desist from further
cutting off power connection to [BF Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF
Homes and PWCCs] good name and besmirched their reputation for
which [BF Homes and PWCC] should be indemnified by way of moral
damages in the amount of not less than P1,000,000.00.
19. As an example for the public good, to dissuade others from
emulating MERALCOs unjust, oppressive and mercenary conduct,
MERALCO should be directed to pay [BF Homes and PWCC] exemplary
damages of at least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF Homes
and PWCC] to engage the services of counsel to defend their rights and
thereby incur litigation expenses in the amount of at least P500,000.00
for which [BF Homes and PWCC] should be indemnified.7
2
BF Homes and PWCC additionally prayed that the RTC issue a writ of
preliminary injunction and restraining order considering that:
21. As indicated in its letter dated June 4, 2003 (Annex A), unless
seasonably restrained, MERALCO will cut off electric power connections
to all of [BF Homes and PWCCs] water pumps on June 20, 2003.
22. Part of the reliefs herein prayed for is to restrain MERALCO from
cutting off electric power connections to [BF Homes and PWCCs] water
pumps.
23. Unless MERALCOS announced intention to cut off electric power
connections to [BF Homes and PWCCs] water pumps is restrained, [BF
Homes and PWCC] will suffer great and irreparable injury because they
would not [be] able to supply water to their customers.
24. [BF Homes and PWCC] therefore pray that a writ for preliminary
injunction be issued upon posting of a bond in an amount as will be
determined by this Honorable Court.
25. [BF Homes and PWCC] further pray that, in the meantime and
immediately upon the filing of the above captioned Petition, a restraining
order be issued before the matter of preliminary injunction can be
heard.8
On August 15, 2003, MERALCO filed before the RTC its Answer with
Counterclaims and Opposition to the Application for Writ of Preliminary
Injunction9 of BF Homes and PWCC.
According to MERALCO:
2.2. Both petitioners BF Homes, Incorporated and Philippine Waterworks
Corporation are admittedly the registered customers of [MERALCO] by
virtue of the service contracts executed between them under which the
latter undertook to supply electric energy to the former for a fee. The
following twenty-three (23) Service Identification Nos. (SINs) are
registered under the name of BF Homes, Incorporated: x x x. While the
following twenty-one (21) Service Identification Nos. (SINs) are
registered under the name of Philippine Waterworks Construction
Corporation: x x x
xxxx
2.4. The service contracts as well as the terms and conditions of
[MERALCOs] service as approved by BOE [Board of Energy], now ERC

[Energy Regulatory Commission], provide in relevant parts, that [BF
Homes and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is
in arrears in the payment of bills or for failure to pay the adjusted bills in those
cases where the meter stopped or failed to register the correct amount of energy
consumed, or for failure to comply with any of these terms and conditions, or in
case of or to prevent fraud upon the Company. Before disconnection is made in
the case of, or to prevent fraud, the Company may adjust the bill of said
customer accordingly and if the adjusted bill is not paid, the Company may
disconnect the same." (Emphasis supplied)
2.5. This contractual right of [MERALCO] to discontinue electric service
for default in the payment of its regular bills is sanctioned and approved
by the rules and regulations of ERB (now the ERC). This right is
necessary and reasonable means to properly protect and enable
[MERALCO] to perform and discharge its legal and contractual obligation
under its legislative franchise and the law. Cutting off service for non-
payment by the customers of the regular monthly electric bills is the
only practical way a public utility, such as [MERALCO], can ensure and
maintain efficient service in accordance with the terms and conditions
of its legislative franchise and the law.
xxxx
2.14. Instead of paying their unpaid electric bills and before [MERALCO]
could effect its legal and contractual right to disconnect [BF Homes and
PWCCs] electric services, [BF Homes and PWCC] filed the instant
petition to avoid payment of [MERALCOs] valid and legal claim for
regular monthly electric bills.
2.15. [BF Homes and PWCCs] unpaid regular bills totaled
P6,551,969.55 covering the May and June 2003 electric bills. x x x
xxxx
2.17. [BF Homes and PWCC] knew that [MERALCO] is already in the
process of implementing the decision of the Supreme Court as to the
refund case. But this refund has to be implemented in accordance with
the guidelines and schedule to be approved by the ERC. Thus [BF Homes
and PWCCs] filing of the instant petition is merely to evade payment of
their unpaid electric bills to [MERALCO].10
3
Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and
PWCC on the following grounds:
3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF
Homes and PWCC] because:
a) The petition is in effect preempting or defeating the power of the ERC
to implement the decision of the Supreme Court.
b) [MERALCO] is a utility company whose business activity is wholly
regulated by the ERC. The latter, being the regulatory agency of the
government having the authority over the respondent, is the one tasked
to approve the guidelines, schedules and details of the refund.
c) The decision of the Supreme Court, dated November 15, 2002, clearly
states that respondent is directed to make the refund to its customers
in accordance with the decision of the ERC (formerly ERB) dated
February 16, 1998. Hence, [MERALCO] has to wait for the schedule and
details of the refund to be approved by the ERC before it can comply
with the Supreme Court decision.
3.2. [MERALCO] has the right to disconnect the electric service to [BF Homes
and PWCC] in that:
a) The service contracts between [MERALCO] and [BF Homes and
PWCC] expressly authorize the former to discontinue and disconnect
electric services of the latter for their failure to pay the regular electric
bills rendered.
b) It is [MERALCOs] legal duty as a public utility to furnish its service
to the general public without arbitrary discrimination and, consequently,
[MERALCO] is obligated to discontinue and disconnect electric services
to [BF Homes and PWCC] for their refusal or failure to pay the electric
energy actually used by them.11
For its compulsory counterclaims, MERALCO prayed that the RTC orders BF
Homes and PWCC to pay MERALCO P6,551,969.55 as actual damages
(representing the unpaid electric bills of BF Homes and PWCC for May and June
2003), P1,500,000.00 as exemplary damages, P1,500,000.00 as moral
damages, and P1,000,000.00 as attorneys fees.
Lastly, MERALCO opposed the application for writ of preliminary injunction of BF
Homes and PWCC because:
I

[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND
PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF NON-PAYMENT, TO
DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES and PWCC]
II
[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS
PROTECTION BY INJUNCTIVE PROCESS
After hearing,12 the RTC issued an Order on November 21, 2003 granting the
application of BF Homes and PWCC for the issuance of a writ of preliminary
injunction. The RTC found that the records showed that all requisites for the
issuance of said writ were sufficiently satisfied by BF Homes and PWCC. The RTC
stated in its Order:
Albeit, this Court respects the right of a public utility company like MERALCO,
being a grantee of a legislative franchise under Republic Act No. 9029, to collect
overdue payments from its subscribers or customers for their respective
consumption of electric energy, such right must, however, succumb to the
paramount substantial and constitutional rights of the public to the usage and
enjoyment of waters in their community. Thus, there is an urgent need for the
issuance of a writ of preliminary injunction in order to prevent social unrest in
the community for having been deprived of the use and enjoyment of waters
flowing through [BF Homes and PWCCs] water pumps.13
The RTC decreed in the end:
WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for
the issuance of a writ of preliminary injunction is hereby GRANTED. Respondent
Manila Electric Company is permanently restrained from proceeding with its
announced intention to cut-off electric power connection to [BF Homes and
PWCCs] water pumps unless otherwise ordered by this Court. Further, [BF
Homes and PWCC] are hereby ordered to post a bond in the amount of P500,000
to answer for whatever injury or damage that may be caused by reason of the
preliminary injunction.14
The Motion for Reconsideration of MERALCO of the aforementioned Order was
denied by the RTC in another Order issued on January 9, 2004.15 The RTC
reiterated its earlier finding that all the requisites for the proper issuance of an
injunction had been fully complied with by BF Homes and PWCC, thus:
Records indubitably show that all the requisites for the proper issuance of an
injunction have been fully complied with in the instant case.
It should be noted that a disconnection of power supply would obviously cause
irreparable injury because the pumps that supply water to the BF community will
4
be without electricity, thereby rendering said community without water. Water
is a basic and endemic necessity of life. This is why its enjoyment and use has
been constitutionally safeguarded and protected. Likewise, a community without
water might create social unrest, which situation this Court has the mandate to
prevent. There is an urgent and paramount necessity for the issuance of the
injunctive writ to prevent serious damage to the guaranteed rights of [BF Homes
and PWCC] and the residents of the community to use and enjoy water.16
The RTC resolved the issue on jurisdiction raised by MERALCO, as follows:
As to the jurisdictional issue raised by respondent MERALCO, it can be gleaned
from a re-evaluation and re-assessment of the records that this Court has
jurisdiction to delve into the case. This Court gave both parties the opportunity
to be heard as they introduced evidence on the propriety of the issuance of the
injunctive writ. It is well-settled that no grave abuse of discretion could be
attributed to its issuance where a party was not deprived of its day in court as it
was heard and had exhaustively presented all its arguments and defenses.
(National Mines and Allied Workers Union vs. Valero, 132 SCRA 578, 1984.)17
Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari
under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 82826.
MERALCO sought the reversal of the RTC Orders dated November 21, 2003 and
January 9, 2004 granting a writ of preliminary injunction in favor of BF Homes
and PWCC. MERALCO asserted that the RTC had no jurisdiction over the
application of BF Homes and PWCC for issuance of such a writ.
In its Decision dated October 27, 2005, the Court of Appeals agreed with
MERALCO that the RTC had no jurisdiction to issue a writ of preliminary
injunction in Civil Case No. 03-0151, as said trial court had no jurisdiction over
the subject matter of the case to begin with. It ratiocinated in this wise:
For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction
over the case. Explicitly, Section 43(u) of Republic Act No. 9136, otherwise
known as the "Electric Power Industry Reform Act," (RA 9136), states that the
ERC shall have the original and exclusive jurisdiction over all cases contesting
rates, fees, fines and penalties imposed by the ERC in the exercise of its powers,
functions and responsibilities and over all cases involving disputes between and
among participants or players in the energy sector. Section 4(o) of Rule 3 of the
Implementing Rules and Regulations of RA 9136 likewise provides that the ERC
shall also be empowered to issue such other rules that are essential in the
discharge of its functions as an independent quasi-judicial body.
For another, the respondent judge, instead of presiding over the case, should
have dismissed the same and yielded jurisdiction to the ERC pursuant to the
doctrine of primary jurisdiction. It is plain error on the part of the respondent
judge to determine, preliminary or otherwise, a controversy involving a question

which is within the jurisdiction of an administrative tribunal, especially so where
the question demands the exercise of sound administrative discretion.
Needless to state, the doctrine of primary jurisdiction applies where the
administrative agency, as in the case of ERC, exercises its quasi-judicial and
adjudicatory function. Thus, in cases involving specialized disputes, the practice
has been to refer the same to an administrative agency of special competence
pursuant to the doctrine of primary jurisdiction. The courts will not determine a
controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate
matters of fact, and a uniformity of ruling is essential to comply with the
premises of the regulatory statute administered.
Verily, the cause of action of [BF Homes and PWCC] against [MERALCO]
originates from the Meralco Refund Decision as it involves the perceived right of
the former to compel the latter to set-off or apply their refund to their present
electric bill. The issue delves into the right of the private respondents to collect
their refund without submitting to the approved schedule of the ERC, and in
effect give unto themselves preferential right over other equally situated
consumers of [MERALCO]. Perforce, the ERC, as can be gleaned from the afore-
stated legal provisions, has primary, original and exclusive jurisdiction over the
said controversy.
Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO]
to disconnect its services to [BF Homes and PWCC] on the premise that the court
has jurisdiction to apply the provisions on compensation or set-off in this case.
Although [MERALCO] recognizes the right of [BF Homes and PWCC] to the refund
as provided in the Meralco Refund Decision, it is the ERC which has the authority
to implement the same according to its approved schedule, it being a dispute
arising from the exercise of its jurisdiction.
Moreover, it bears to stress that the Meralco Refund Decision was brought into
fore by the Decision dated 16 February 1998 of the ERC (then Energy Regulatory
Board) granting refund to [MERALCOs] consumers. Being the agency of origin,
the ERC has the jurisdiction to execute the same. Besides, as stated, it is
empowered to promulgate rules that are essential in the discharge of its
functions as an independent quasi-judicial body.18
The dispositive portion of the judgment of the appellate court reads:
WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED
and the assailed Orders REVERSED and SET ASIDE. Accordingly, the writ of
injunction against [MERALCO] is hereby DISSOLVED. No costs.19
5
In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion
for Reconsideration of BF Homes and PWCC for failing to raise new and
persuasive and meritorious arguments.
Now, BF Homes and PWCC come before this Court via the instant Petition, raising
the following assignment of errors:
1. The Court of Appeals ERRED in saying that the respondent judge
committed grave abuse of discretion by issuing the disputed writ of
injunction pending the merits of the case including the issue of subject
matter jurisdiction.
2. The Court of Appeals ERRED in saying that the ERC under the doctrine
of primary jurisdiction has the original and EXCLUSIVE jurisdiction to
take cognizance of a petition for injunction to prevent electrical
disconnection to a customer entitled to a refund.
3. The Court of Appeals ERRED in NOT SAYING that the ERC as a quasi-
judicial body under RA 9136 has no power to issue any injunctive relief
or remedy to prevent disconnection.
4. The Court of Appeals ERRED in not resolving the issue as to the
violation of MERALCO of a standing injunction order while the case
remains undecided.20
At the core of the Petition is the issue of whether jurisdiction over the subject
matter of Civil Case No. 03-0151 lies with the RTC or the Energy Regulatory
Commission (ERC). If it is with the RTC, then the said trial court also has
jurisdiction to issue the writ of preliminary injunction against MERALCO. If it is
with the ERC, then the RTC also has no jurisdiction to act on any incidents in
Civil Case No. 03-0151, including the application for issuance of a writ of
preliminary injunction of BF Homes and PWCC therein.
BF Homes and PWCC argued that due to the threat of MERALCO to disconnect
electric services, BF Homes and PWCC had no other recourse but to seek an
injunctive remedy from the RTC under its general jurisdiction. The merits of Civil
Case No. 03-0151 was not yet in issue, only the propriety of issuing a writ of
preliminary injunction to prevent an irreparable injury. Even granting that the
RTC has no jurisdiction over the subject matter of Civil Case No. 03-0151, the
ERC by enabling law has no injunctive power to prevent the disconnection by
MERALCO of electric services to BF Homes and PWCC.
The Petition has no merit.

Settled is the rule that jurisdiction is conferred only by the Constitution or the
law.21 Republic v. Court of Appeals22 also enunciated that only a statute can
confer jurisdiction on courts and administrative agencies.
Related to the foregoing and equally well-settled is the rule that the nature of
an action and the subject matter thereof, as well as which court or agency of the
government has jurisdiction over the same, are determined by the material
allegations of the complaint in relation to the law involved and the character of
the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any
or all of such reliefs. A prayer or demand for relief is not part of the petition of
the cause of action; nor does it enlarge the cause of action stated or change the
legal effect of what is alleged. In determining which body has jurisdiction over a
case, the better policy is to consider not only the status or relationship of the
parties but also the nature of the action that is the subject of their controversy.23
In Manila Electric Company v. Energy Regulatory Board,24 the Court traced the
legislative history of the regulatory agencies which preceded the ERC, presenting
a summary of these agencies, the statutes or issuances that created them, and
the extent of the jurisdiction conferred upon them, viz:
1. The first regulatory body, the Board of Rate Regulation (BRR), was
created by virtue of Act No. 1779. Its regulatory mandate under Section
5 of the law was limited to fixing or regulating rates of every public
service corporation.
2. In 1913, Act No. 2307 created the Board of Public Utility
Commissioners (BPUC) to take over the functions of the BRR. By express
provision of Act No. 2307, the BPUC was vested with jurisdiction,
supervision and control over all public utilities and their properties and
franchises.
3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the
Public Service Act (PSA), was passed creating the Public Service
Commission (PSC) to replace the BPUC. Like the BPUC, the PSC was
expressly granted jurisdiction, supervision and control over public
services, with the concomitant authority of calling on the public force to
exercise its power, to wit:
"SEC. 13. Except as otherwise provided herein, the Commission shall have
general supervision and regulation of, jurisdiction and control over, all public
utilities, and also over their property, property rights, equipment, facilities and
franchises so far as may be necessary for the purpose of carrying out the
provisions of this Act, and in the exercise of its authority it shall have the
necessary powers and the aid of the public force x x x."
Section 14 of C.A. No. 146 defines the term "public service" or "public utility" as
including "every individual, copartnership, association, corporation or joint-stock
6
company, . . . that now or hereafter may own, operate, manage or control within
the Philippines, for hire or compensation, any common carrier, x x x, electric
light, heat, power, x x x, when owned, operated and managed for public use or
service within the Philippines x x x." Under the succeeding Section 17(a), the
PSC has the power even without prior hearing
(a) To investigate, upon its own initiative, or upon complaint in writing, any
matter concerning any public service as regards matters under its jurisdiction;
to require any public service to furnish safe, adequate and proper service as the
public interest may require and warrant, to enforce compliance with any
standard, rule, regulation, order or other requirement of this Act or of the
Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national
government and implementing the Integrated Reorganization Plan. Under the
reorganization plan, jurisdiction, supervision and control over public services
related to electric light, and power heretofore vested in the PSC were transferred
to the Board of Power and Waterworks (BOPW).
Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to
power utilities, including its authority to grant provisional relief, were transferred
to the newly-created Board of Energy (BOE).
5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172
reconstituting the BOE into the ERB, transferring the formers functions and
powers under P.D. No. 1206 to the latter and consolidating in and entrusting on
the ERB "all the regulatory and adjudicatory functions covering the energy
sector." Section 14 of E.O. No. 172 states that "(T)he applicable provisions of
[C.A.] No. 146, as amended, otherwise known as the Public Service Act; x x x
and [P.D.] No. 1206, as amended, creating the Department of Energy, shall
continue to have full force and effect, except insofar as inconsistent with this
Order."25
Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power
Industry Reform Act of 2001 (EPIRA), was enacted, providing a framework for
restructuring the electric power industry. One of the avowed purposes of the
EPIRA is to establish a strong and purely independent regulatory body. The
Energy Regulatory Board (ERB) was abolished and its powers and functions not
inconsistent with the provision of the EPIRA were expressly transferred to the
ERC.26
The powers and functions of the ERB not inconsistent with the EPIRA were
transferred to the ERC by virtue of Sections 44 and 80 of the EPIRA, which read:
Sec. 44. Transfer of Powers and Functions. The powers and functions of the
Energy Regulatory Board not inconsistent with the provisions of this Act are
hereby transferred to the ERC. The foregoing transfer of powers and functions

shall include all applicable funds and appropriations, records, equipment,
property and personnel as may be necessary.
Sec. 80. Applicability and Repealing Clause. The applicability provisions of
Commonwealth Act No. 146, as amended, otherwise known as the "Public
Service Act." Republic Act 6395, as amended, revising the charter of NPC;
Presidential Decree 269, as amended, referred to as the National Electrification
Decree; Republic Act 7638, otherwise known as the "Department of Energy Act
of 1992"; Executive Order 172, as amended, creating the ERB; Republic Act
7832 otherwise known as the "Anti-Electricity and Electric Transmission
Lines/Materials Pilferage Act of 1994"; shall continue to have full force and effect
except insofar as they are inconsistent with this Act.
The provisions with respect to electric power of Section 11(c) of Republic Act
7916, as amended, and Section 5(f) of Republic Act 7227, are hereby repealed
or modified accordingly.
Presidential Decree No. 40 and all laws, decrees, rules and regulations, or
portions thereof, inconsistent with this Act are hereby repealed or modified
accordingly.
In addition to the foregoing, the EPIRA also conferred new powers upon the ERC
under Section 43, among which are:
SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage
market development, ensure customer choice and penalize abuse of market
power in the restructured electricity industry. In appropriate cases, the ERC is
authorized to issue cease and desist order after due notice and hearing. Towards
this end, it shall be responsible for the following key functions in the restructured
industry:
xxxx
(f) In the public interest, establish and enforce a methodology for setting
transmission and distribution wheeling rates and retail rates for the captive
market of a distribution utility, taking into account all relevant considerations,
including the efficiency or inefficiency of the regulated entities. The rates must
be such as to allow the recovery of just and reasonable costs and a reasonable
return on rate base (RORB) to enable the entity to operate viably. The ERC may
adopt alternative forms of internationally-accepted rate-setting methodology as
it may deem appropriate. The rate-setting methodology so adopted and applied
must ensure a reasonable price of electricity. The rates prescribed shall be non-
discriminatory. To achieve this objective and to ensure the complete removal of
cross subsidies, the cap on the recoverable rate of system losses prescribed in
Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced
by caps which shall be determined by the ERC based on load density, sales mix,
cost of service, delivery voltage and other technical considerations it may
7
promulgate. The ERC shall determine such form of rate-setting methodology,
which shall promote efficiency. x x x.
xxxx
(u) The ERC shall have the original and exclusive jurisdiction over all cases
contesting rates, fees, fines and penalties imposed by the ERC in the exercise of
the abovementioned powers, functions and responsibilities and over all cases
involving disputes between and among participants or players in the energy
sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing rates
or fees shall be published at least twice for two successive weeks in two (2)
newspapers of nationwide circulation.
A careful review of the material allegations of BF Homes and PWCC in their
Petition before the RTC reveals that the very subject matter thereof is the off-
setting of the amount of refund they are supposed to receive from MERALCO
against the electric bills they are to pay to the same company. This is squarely
within the primary jurisdiction of the ERC.
The right of BF Homes and PWCC to refund, on which their claim for off-setting
depends, originated from the MERALCO Refund cases. In said cases, the Court
(1) authorized MERALCO to adopt a rate adjustment in the amount of P0.017
per kilowatthour, effective with respect to its billing cycles beginning February
1994; and (2) ordered MERALCO to refund to its customers or credit in said
customers favor for future consumption P0.167 per kilowatthour, starting with
the customers billing cycles that begin February 1998, in accordance with the
ERB Decision dated February 16, 1998.
It bears to stress that in the MERALCO Refund cases, this Court only affirmed
the February 16, 1998 Decision of the ERB (predecessor of the ERC) fixing the
just and reasonable rate for the electric services of MERALCO and granting
refund to MERALCO consumers of the amount they overpaid. Said Decision was
rendered by the ERB in the exercise of its jurisdiction to determine and fix the
just and reasonable rate of power utilities such as MERALCO.
Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the
EPIRA over all cases contesting rates, fees, fines, and penalties imposed by the
ERC in the exercise of its powers, functions and responsibilities, and over all
cases involving disputes between and among participants or players in the
energy sector. Section 4(o) of the EPIRA Implementing Rules and Regulation
provides that the ERC "shall also be empowered to issue such other rules that
are essential in the discharge of its functions as in independent quasi-judicial
body."

Indubitably, the ERC is the regulatory agency of the government having the
authority and supervision over MERALCO. Thus, the task to approve the
guidelines, schedules, and details of the refund by MERALCO to its consumers,
to implement the judgment of this Court in the MERALCO Refund cases, also falls
upon the ERC. By filing their Petition before the RTC, BF Homes and PWCC intend
to collect their refund without submitting to the approved schedule of the ERC,
and in effect, enjoy preferential right over the other equally situated MERALCO
consumers.
Administrative agencies, like the ERC, are tribunals of limited jurisdiction and,
as such, could wield only such as are specifically granted to them by the enabling
statutes. In relation thereto is the doctrine of primary jurisdiction involving
matters that demand the special competence of administrative agencies even if
the question involved is also judicial in nature. Courts cannot and will not resolve
a controversy involving a question within the jurisdiction of an administrative
tribunal, especially when the question demands the sound exercise of
administrative discretion requiring special knowledge, experience and services
of the administrative tribunal to determine technical and intricate matters of fact.
The court cannot arrogate into itself the authority to resolve a controversy, the
jurisdiction of which is initially lodged with the administrative body of special
competence.27
Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in
Civil Case No. 03-0151, then it was also devoid of any authority to act on the
application of BF Homes and PWCC for the issuance of a writ of preliminary
injunction contained in the same Petition. The ancillary and provisional remedy
of preliminary injunction cannot exist except only as an incident of an
independent action or proceeding.28
Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of
Executive Order No. 172 which explicitly vested on the ERB, as an incident of its
principal function, the authority to grant provisional relief, thus:
Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing
of an application, petition or complaint or at any stage thereafter and without
prior hearing, on the basis of supporting papers duly verified or authenticated,
grant provisional relief on motion of a party in the case or on its own initiative,
without prejudice to a final decision after hearing, should the Board find that the
pleadings, together with such affidavits, documents and other evidence which
may be submitted in support of the motion, substantially support the provisional
order: Provided, That the Board shall immediately schedule and conduct a
hearing thereon within thirty (30) days thereafter, upon publication and notice
to all affected parties.
The aforequoted provision is still applicable to the ERC as it succeeded the ERB,
by virtue of Section 80 of the EPIRA. A writ of preliminary injunction is one such
provisional relief which a party in a case before the ERC may move for.
8
Lastly, the Court herein already declared that the RTC not only lacked the
jurisdiction to issue the writ of preliminary injunction against MERALCO, but that
the RTC actually had no jurisdiction at all over the subject matter of the Petition
of BF Homes and PWCC in Civil Case No. 03-0151. Therefore, in addition to the
dissolution of the writ of preliminary injunction issued by the RTC, the Court also
deems it appropriate to already order the dismissal of the Petition of BF Homes
and PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the
subject matter of the same. Although only the matter of the writ of preliminary
injunction was brought before this Court in the instant Petition, the Court is
already taking cognizance of the issue on the jurisdiction of the RTC over the
subject matter of the Petition. The Court may motu proprio consider the issue of
jurisdiction. The Court has discretion to determine whether the RTC validly
acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction
over the subject matter is conferred only by law. Jurisdiction over the subject
matter cannot be acquired through, or waived by, any act or omission of the
parties. Neither would the active participation of the parties nor estoppel operate
to confer jurisdiction on the RTC where the latter has none over a cause of
action.29Indeed, when a court has no jurisdiction over the subject matter, the
only power it has is to dismiss the action.30
WHEREFORE, the instant Petition for Review is DENIED. The Decision dated
October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826 is AFFIRMED
with the MODIFICATION that the Regional Trial Court, Branch 202 of Las Pias
City, is ORDERED to dismiss the Petition [With Prayer for the Issuance of Writ of
Preliminary Injunction and for the Immediate Issuance of Restraining Order] of
BF Homes, Inc. and Philippine Waterworks and Construction Corporation in Civil
Case No. 03-0151. Costs against BF Homes, Inc. and Philippine Waterworks and
Construction Corporation.
SO ORDERED.
G.R. No. 203240
NORTHERN ISLANDS, CO., INC., Petitioner,
vs.
SPOUSES DENNIS and CHERYLIN* GARCIA, doing business under the
name and style "Ecolamp Multi Resources,", Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated January
19, 2012 and the Resolution3dated August 24, 2012 of the Court of Appeals (CA)
in CA-G.R. SP No. 97448, ordering the Regional Trial Court of Quezon City,
Branch 215 (RTC) to appoint a commissioner to determine the value of the

attached properties of respondents Spouses Dennis and Cherylin Garcia
(respondents), and to discharge any excessive attachment found thereby.
The Facts
On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed
a Complaint4 with application for a writ of preliminary attachment, before the
RTC against respondents, docketed as Civil Case No. Q-05-53699 (Main Case),
which was subsequently amended5 on October 25, 2005.6 It alleged that: (a)
from March to July 2004, petitioner caused the delivery to respondents of various
appliances in the aggregate amount of P8,040,825.l 7;7 (b) the goods were
transported, shipped, and delivered by Sulpicio Lines, Inc., and were accepted
in good order and condition by respondents' representatives;8 (c) the parties
agreed that the goods delivered were payable within 120 days, and that the
unpaid amounts would earn interest at a rate of eighteen percent (18%) per
annum;9 (d) however, the value of the goods were not paid by respondents
despite repeated demands;10 and (e) respondents fraudulently asserted that
petitioner had no proof that they had indeed received the quantity of the subject
goods.11
In connection with the application for a writ of preliminary attachment, petitioner
posted a bond, through Visayan Surety and Insurance Corporation, in the
amount of P8,040,825.l 7. On November 7, 2005, the RTC issued the writ sought
for.12
Instead of filing an answer, respondents filed on November 11, 2001, an Urgent
Motion for Extension of Time to File Proper Pleading and Motion for Discovery
(Production and Inspection)13 (November 11, 2001 Motion), asking the RTC to
allow them to photocopy and personally examine the original invoices, delivery
cargo receipts, and bills of lading attached to the Amended Complaint, claiming
that they could not "come up with an intelligent answer" without being presented
with the originals of such documents.14
Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge
Excess Attachment,15 alleging that the attachment previously ordered by the
RTC exceeded by P9,232,564.56 given that the estimated value of the attached
properties, including the garnished bank accounts, as assessed by their
appraiser, Gaudioso W. Lapaz (Lapaz), amounted to Pl 7,273,409.73, while the
attachment bond is only in the amount of P8,040,825.17.16
In an Order17 dated February 28, 2006, the RTC denied the November 11, 2001
Motion, and, instead, directed respondents to file their answer, which the latter
complied with through the filing of their Answer Ad Cautelam Ex Abudante with
Compulsory Counterclaim18 on April 3, 2006. Despite this, respondents again
filed a Motion for Leave of Court to File Motion for Discovery (Production and
Inspection)19 (Motion for Discovery) on April 7, 2006.20
9
The RTC Ruling
In an Order21 dated June 21, 2006, the RTC, among others, denied the Motion
to Discharge Excess Attachment, finding that the appraisal made by Lapaz was
not reflective of the true valuation of the properties, adding too that the bond
posted by petitioner stands as sufficient security for whatever damages
respondents may sustain by reason of the attachment.22
On the other hand, the RTC granted the Motion for Discovery in accordance with
Rule 27 of the Rules of Court, despite petitioner's claim that it did not have the
originals of the documents being sought.23
However, no production or inspection was conducted on July 10, 2006 as the
RTC directed since respondents received the copy of the above order only on
July 11, 2006.24
On July 25, 2006, respondents filed a Motion for Partial Reconsideration of the
Order dated June 21, 2006, specifically assailing the denial of their Motion to
Discharge Excess Attachment. In this relation, they prayed that the RTC refer to
a commissioner, pursuant to Rule 32 of the Rules of Court, the factual
determination of the total aggregate amount of respondents' attached properties
so as to ascertain if the attachment was excessive. Also, they prayed that the
order for production and inspection be modified and that petitioner be ordered
to produce the original documents anew for their inspection and copying.25
The foregoing motion was, however, denied by the RTC in an Order26 dated
August 23, 2006 for lack of merit. Thus, respondents elevated the matter to the
CA via petition for certiorari and mandamus,27 docketed as CA-G.R. SP No.
97448 (Certiorari Case).
In the interim, the RTC rendered a Decision28 dated September 21, 2011 in the
Main Case. Essentially, it dismissed petitioner's Amended Complaint due to the
absence of any evidence to prove that respondents had agreed to the pricing of
the subject goods.29
The RTC's September 21, 2011 Decision was later appealed30 by petitioner
before the CA on October 27, 2011. Finding that the Notice of Appeal was
seasonably filed, with the payment of the appropriate docket fees, the RTC, in
an Order31 dated January 25, 2012, ordered the elevation of the entire records
of the Main Case to the CA. The appeal was then raffled to the CA's Eighth
Division, and docketed as CA-GR. CV No. 98237. On the other hand, records
do not show that respondents filed any appeal.32
The CA Ruling in the Certiorari Case

Meanwhile, the CA, in a Decision33 dated January 19, 2012, partly granted the
certiorari petition of respondents, ordering the RTC to appoint a commissioner
as provided under Rule 32 of the Rules of Court as well as the subsequent
discharge of any excess attachment if so found therein, and, on the other hand,
denying respondents' Motion for Discovery.34
It held that: (a) on the issue of attachment, trial by commissioners under Rule
32 of the Rules of Court was proper so that the parties may finally settle their
conflicting valuations;35 and (b) on the matter of discovery, petitioner could not
be compelled to produce the originals sought by respondents for inspection since
they were not in the former's possession.36
Aggrieved, petitioner filed a Motion for Partial Reconsideration37 on February 13,
2012 but was, however, denied in a Resolution38 dated August 24, 2012, hence,
the present petition.
The Issues Before the Court
The issues presented for the Court's resolution are: (a) whether the RTC had lost
jurisdiction over the matter of the preliminary attachment after petitioner
appealed the decision in the Main Case, and thereafter ordered the transmittal
of the records to the CA; and (b) whether the CA erred in ordering the
appointment of a commissioner and the subsequent discharge of any excess
attachment found by said commissioner.
The Court's Ruling
The petition is meritorious.
Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of
appeal, the court loses jurisdiction over the case upon the perfection of
the appeals filed in due time and the expiration of the time to appeal of
the other parties.
In this case, petitioner had duly perfected its appeal of the RTC's September 21,
2011 Decision resolving the Main Case through the timely filing of its Notice of
Appeal dated October 27, 2011, together with the payment of the appropriate
docket fees. The RTC, in an Order39 dated January 25, 2012, had actually
confirmed this fact, and thereby ordered the elevation of the entire records to
the CA. Meanwhile, records do not show that.respondents filed any appeal,
resulting in the lapse of its own period to appeal therefrom. Thus, based on
Section 9, Rule 41, it cannot be seriously doubted that the RTC had already lost
jurisdiction over the Main Case.
With the RTC's loss of jurisdiction over the Main Case necessarily comes its loss
of jurisdiction all over matters merely ancillary thereto. Thus, the propriety of
10
conducting a trial by commissioners in order to determine the excessiveness of
the subject preliminary attachment, being a mere ancillary matter to the Main
Case, is now mooted by its supervening appeal in CA-G.R. CV No. 98237.
Note that in Sps. Olib v. Judge Pastoral,40 the Court, in view of the nature of a
preliminary attachment, definitively ruled that the attachment itself cannot be
the subject of a separate action independent of the principal action because the
attachment was only an incident of such action, viz.:
Attachment is defined as a provisional remedy by which the property of an
adverse party is taken into legal custody, either at the commencement of an
action or at any time thereafter, as a security for the satisfaction of any judgment
that may be recovered by the plaintiff or any proper party.
It is an auxiliary remedy and cannot have an independent existence apart from
the main suit or claim instituted by the plaintiff against the defendant.isi Being
merely ancillary to a principal proceeding, the attachment must fail if
the suit itself cannot be maintained as the purpose of the writ can no
longer be justified.
The consequence is that where the main action is appealed, the attachment
which may have been issued as an incident of that action, is also considered
appealed and so also removed from the jurisdiction of the court a quo. The
attachment itself cannot be the subject of a separate action independent
of the principal action because the attachment was only an incident of
such action.41 (Emphases supplied)
That being said, it is now unnecessary to discuss the other issues raised herein.
In fine, the petition is granted and the assailed CA rulings are set aside.
WHEREFORE, the petition is GRANTED. The Decision dated January 19, 2012
and the Resolution dated August 24, 2012 of the Court of Appeals in CA-G.R. SP
No. 97448 are hereby SET ASIDE.
SO ORDERED.
G.R. No. 133303 February 17, 2005
BERNARDO VALDEVIESO, petitioner,
vs.
CANDELARIO DAMALERIO AND AUREA C. DAMALERIO, respondents.
DECISION
CHICO-NAZARIO, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the 25 September 1997 Decision and the 10 February 1998
Resolution of the Court of Appeals in CA-G.R. SP No. 43082 entitled, "Candelario
Damalerio and Aurea Damalerio v. Honorable Antonio S. Alano, et al."1
There is no dispute as to the following facts:
On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses
Lorenzo and Elenita Uy a parcel of land consisting of 10,000 square meters, more
or less, located at Bo. Tambler, General Santos City, and covered by Transfer
Certificate of Title (TCT) No. T-30586.2
The deed of sale was not registered, nor was the title of the land transferred to
petitioner.3
On 07 December 1995, the said property was immediately declared by petitioner
for taxation purposes as Tax Declaration No. l6205 with the City Assessors
Office.4
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio
(respondents) filed with the Regional Trial Court (RTC) of General Santos City, a
complaint for a sum of money against spouses Lorenzo and Elenita Uy docketed
as Civil Case No. 5748 with application for the issuance of a Writ of Preliminary
Attachment.5
On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by
virtue of which the property, then still in the name of Lorenzo Uy but which had
already been sold to petitioner, was levied. The levy was duly recorded in the
Register of Deeds of General Santos City and annotated upon TCT No. T-30586.6
On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled
and, in lieu thereof, TCT No. T-74439 was issued in the name of petitioner.7 This
new TCT carried with it the attachment in favor of respondents.
On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to
discharge or annul the attachment levied on the property covered by TCT No. T-
74439 on the ground that the said property belongs to him and no longer to
Lorenzo and Elenita Uy.8
In a resolution dated 21 October 1996, the trial court ruled for the
petitioner.9 Citing Manliguez v. Court of Appeals10 and Santos v. Bayhon,11 it
held that the levy of the property by virtue of attachment is lawful only when
the levied property indubitably belongs to the defendant. Applying the rulings in
the cited cases, it opined that although defendant Lorenzo Uy remained the
registered owner of the property attached, yet the fact was that he was no longer
11
the owner thereof as it was already sold earlier to petitioner, hence, the writ of
attachment was unlawful.1awphi1.nt
Respondents sought reconsideration thereof which was denied by the trial court
in a resolution dated 03 January 1997.12
From the unfavorable resolution of the trial court in the third-party claim,
respondents appealed to the Court of Appeals. The appellate court reversed the
resolution and by judgment promulgated on 25 September 1997, it declared that
an attachment or levy of execution, though posterior to the sale, but if registered
before the sale is registered, takes precedence over the sale.13 The writ of
attachment in favor of the respondents, being recorded ahead of the sale to
petitioner, will therefore take precedence.
Petitioner moved for reconsideration but this was denied by the Court of Appeals
in its Resolution of 10 February 1998.14
Hence, this Petition for Review on Certiorari.
The sole issue in this case is whether or not a registered writ of attachment on
the land is a superior lien over that of an earlier unregistered deed of sale.
Petitioner maintains that he has a superior right over the questioned property
because when the same was attached on 23 April 1996, this property was no
longer owned by spouses Uy against whom attachment was issued as it was
already sold to petitioner on 05 December 1995. The ownership thereof was
already transferred to petitioner pursuant to Article 147715 in relation to Article
149816 of the Civil Code.
Dismissing the allegation that he slept on his rights by not immediately
registering at least an adverse claim based on his deed of sale, petitioner avers
that he promptly worked out for the transfer of registration in his name. The
slight delay in the registration, he claims was not due to his fault but attributable
to the process involved in the registration of property such as the issuance of
the Department of Agrarian Reform clearance which was effected only after
compliance with several requirements.1awphi1.nt
Considering the peculiar facts and circumstances obtaining in this case,
petitioner submits it would be in accord with justice and equity to declare him as
having a superior right to the disputed property than the respondents.
Respondents maintain the contrary view. They aver that registration of a deed
of sale is the operative act which binds the land and creates a lien thereon.
Before the registration of the deed, the property is not bound insofar as third
persons are concerned. Since the writ of attachment in favor of respondents was
registered earlier than the deed of sale to petitioner, respondents were of the

belief that their registered writ of attachment on the subject property enjoys
preference and priority over petitioners earlier unregistered deed of sale over
the same property. They also contend that Articles 1477 and 1498 of the Civil
Code as cited by petitioner are not applicable to the case because said provisions
apply only as between the parties to the deed of sale. These provisions do not
apply to, nor bind, third parties, like respondents, because what affects or binds
third parties is the registration of the instrument in the Register of Deeds.
Furthermore, respondents argue that petitioner cannot invoke equity in his favor
unless the following conditions are met: (a) the absence of specific provision of
a law on the matter; and (b) if the person who invokes it is not guilty of delay.
Both conditions have not been met, however, since there is a law on the subject
matter, i.e., Section 51 of Presidential Decree No. 1529, and that petitioner
allegedly slept on his rights by not immediately registering an adverse claim
based on his deed of sale.
We agree with the respondents.
The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said
Section provides:
Sec. 51. Conveyance and other dealings by registered owner. - An owner of
registered land may convey, mortgage, lease, charge, or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds,
mortgages, leases or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument, except a will purporting
to convey or affect registered land, shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as evidence
of authority to the Register of Deeds to make registration.
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 city where the land lies.
It is to be noted that though the subject land was deeded to petitioner as early
as 05 December 1995, it was not until 06 June 1996 that the conveyance was
registered, and, during that interregnum, the land was subjected to a levy on
attachment. It should also be observed that, at the time of the attachment of
the property on 23 April 1996, the spouses Uy were still the registered owners
of said property. Under the cited law, the execution of the deed of sale in favor
of petitioner was not enough as a succeeding step had to be taken, which was
the registration of the sale from the spouses Uy to him. Insofar as third persons
are concerned, what validly transfers or conveys a persons interest in real
property is the registration of the deed. Thus, when petitioner bought the
property on 05 December 1995, it was, at that point, no more than a private
transaction between him and the spouses Uy. It needed to be registered before
it could bind third parties, including respondents. When the registration finally
12
took place on 06 June 1996, it was already too late because, by then, the levy
in favor of respondents, pursuant to the preliminary attachment ordered by the
General Santos City RTC, had already been annotated on the title.
The settled rule is that levy on attachment, duly registered, takes preference
over a prior unregistered sale.17This result is a necessary consequence of the
fact that the property involved was duly covered by the Torrens system which
works under the fundamental principle that registration is the operative act
which gives validity to the transfer or creates a lien upon the land.18
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.19 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.20 Such a proceeding, in effect, means that the
property attached is an indebted thing and a virtual condemnation of it to pay
the owners debt.21 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.
Thus, in the registry, the attachment in favor of respondents appeared in the
nature of a real lien when petitioner had his purchase recorded. The effect of the
notation of said lien was to subject and subordinate the right of petitioner, as
purchaser, to the lien. Petitioner acquired ownership of the land only from the
date of the recording of his title in the register, and the right of ownership which
he inscribed was not absolute but a limited right, subject to a prior registered
lien of respondents, a right which is preferred and superior to that of petitioner.22
Anent petitioners reliance on the rulings laid down in Manliguez v. Court of
Appeals and Santos v. Bayhon, we find the same to be misplaced. These cases
did not deal at all with the dilemma at hand, i.e. the question of whether or not
a registered writ of attachment on land is superior to that of an earlier
unregistered deed of sale. In Santos, what was involved were machinery and
pieces of equipment which were executed upon pursuant to the favorable ruling
of the National Labor Relations Commission. A third party claimed that the
machinery were already sold to her, but it does not appear in the facts of the
case if such sale was ever registered.l^vvphi1.net Manliguez is similar
to Santos, except that the former involved buildings and improvements on a
piece of land. To stress, in both cited cases, the registration of the sale, if any,
of the subject properties was never in issue.1awphi1.nt
As to petitioners invocation of equity, we cannot, at this instance, yield to such
principle in the presence of a law clearly applicable to the case. We reiterate that
this Court, while aware of its equity jurisdiction, is first and foremost, a court of
law.23 While equity might tilt on the side of one party, the same cannot be
enforced so as to overrule positive provisions of law in favor of the other.24 Equity

cannot supplant or contravene the law.25 The rule must stand no matter how
harsh it may seem. Dura lex sed lex.
WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No.
43082 dated 25 September 1997, and its Resolution dated 10 February 1998,
are hereby AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-48756 September 11, 1982
K.O. GLASS CONSTRUCTION CO., INC., petitioner,
vs.
THE HONORABLE MANUEL VALENZUELA, Judge of the Court of First
Instance of Rizal, and ANTONIO D. PINZON, respondents.
Guillermo E. Aragones for petitioner.
Ruben V. Lopez for respondent Antonio D. Pinzon.
CONCEPCION, JR., J.:
Petition for certiorari to annul and set aside the writ of preliminary attachment
issued by the respondent Judge in Civil Case No. 5902-P of the Court of First
Instance of Rizal, entitled: Antonio D. Pinzon plaintiff, versus K.O. Glass
Construction Co., Inc., and Kenneth O. Glass, defendants, and for the release of
the amount of P37,190.00, which had been deposited with the Clerk of Court, to
the petitioner.
On October 6, 1977, an action was instituted in the Court of First Instance of
Rizal 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 plaintiff 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. 1
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. 2
13
Thereupon, on November 22, 1977, 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 can not 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. 3
By reason thereof, Pinzon amended his complaint to include K.O. Glass
Construction Co., Inc. as co-defendant of Kenneth O. Glass. 4
On January 26, 1978, 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, 5 but, the
respondent Judge denied the motion and ordered the Philippine Geothermal, Inc.
to deliver and deposit with the Clerk of Court the amount of P37,190.00
immediately upon receipt of the order which amount shall remain so deposited
to await the judgment to be rendered in the case. 6
On June 19, 1978, the defendants therein filed a bond in the amount of
P37,190.00 and asked the court for the release of the same amount deposited
with the Clerk of Court, 7 but, the respondent Judge did not order the release of
the money deposited. 8
Hence, the present recourse. As prayed for, the Court issued a temporary
restraining order, restraining the respondent Judge from further proceeding with
the trial of the case. 9
We find merit in the petition. The respondent Judge gravely abused his discretion
in issuing the writ of preliminary attachment and in not ordering the release of
the money which had been deposited with the Clerk of Court for the following
reasons:
First, there was no ground for the issuance of the writ of preliminary attachment.
Section 1, Rule 57 of the Revised Rules of Court, which enumerates the grounds
for the issuance of a writ of preliminary attachment, reads, as follows:

Sec. 1. Grounds upon which attachment may issue. A plaintiff
or any proper party may, at the commencement of the action
or at any time thereafter, 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 money or damages on a
cause of action arising from contract, express or implied,
against a party who is about to depart from the Philippines with
intent to defraud his creditor;
(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 personal property
unjustly detained, 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 officer;
(d) In an action against the party who has been guilty of a fraud
in contracting the debt or incurring the obligation upon which
the action is brought, or in concealing or disposing of the
property for the taking, detention or conversion of which the
action is brought;
(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;
(f) In an action against a party who resides out of the
Philippines, or on whom summons may be served by
publication.
In ordering the issuance of the controversial writ of preliminary attachment, the
respondent Judge said and We quote:
The plaintiff filed a complaint for a sum of money with prayer
for Writ of Preliminary Attachment dated September 14, 1977,
alleging that the defendant who is a foreigner may, at any time,
depart from the Philippines with intent to defraud his creditors
including the plaintiff herein; that there is no sufficient security
for the claim sought to be enforced by this action; that the
14
amount due the plaintiff is as much as the sum for which an
order of attachment is sought to be granted; and that defendant
has sufficient leviable assets in the Philippines consisting of
collectibles and payables due from Philippine Geothermal, Inc.,
which may be disposed of at any time, by defendant if no Writ
of Preliminary Attachment may be issued. Finding said motion
and petition to be sufficient in form and substance. 10
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. The pertinent portion of the complaint reads, as
follows:
15. Plaintiff hereby avers under oath that defendant is a
foreigner and that said defendant has a valid and just obligation
to plaintiff in the total sum of P32,290.00 arising out from his
failure to pay (i) service charges for the hauling of construction
materials; (ii) rentals for the lease of plaintiff's Isuzu Cargo
truck, and (iii) total cost of the missing/destroyed spare parts
of said leased unit; hence, a sufficient cause of action exists
against said defendant. Plaintiff also avers under oath that
there is no sufficient security for his claim against
the defendant in the event a judgment be rendered in favor of
the plaintiff. however, defendant has sufficient assets in the
Philippines in the form of collectible and payables due from the
Philippine Geothermal, Inc. with office address at Citibank
Center, Paseo de Roxas, Makati, Metro Manila, but which
properties, if not timely attached, may be disposed of
by defendants and would render ineffectual the reliefs prayed
for by plaintiff in this Complaint. 11
In his Amended Complaint, Pinzon alleged the following:
15. Plaintiff hereby avers under oath that defendant GLASS is
an American citizen who controls most, if not all, the affairs of
defendant CORPORATION. Defendants CORPORATION and
GLASS have a valid and just obligation to plaintiff in the total
sum of P32,290.00 arising out for their failure to pay (i) service
charges for hauling of construction materials, (ii) rentals for the
lease of plaintiff's Isuzu Cargo truck, and (iii) total cost of the
missing/destroyed spare parts of said leased unit: hence, a
sufficient cause of action exist against said defendants. Plaintiff
also avers under oath that there is no sufficient security for his
claim against the defendants in the event a judgment be
rendered in favor of the plaintiff. however, defendant
CORPORATION has sufficient assets in the Philippines in the
form of collectibles and payables due from the Philippine

Geothermal., Inc. with office address at Citibank Center, Paseo
de Roxas, Makati, Metro Manila, but which properties, if not
timely attached, may be disposed of by defendants and would
render ineffectual the reliefs prayed for by plaintiff in this
Complaint. 12
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. Section 3,
Rule 57 of the Revised Rules of Court reads. as follows:
Section 3. Affidavit and bond required.An order of attachment
shall be granted only when it is made to appear by the affidavit
of the applicant, or of some 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 clerk or
judge of the court before the order issues.
In his affidavit, Pinzon stated the following:
I, ANTONIO D. PINZON Filipino, of legal age, married and with
residence and postal address at 1422 A. Mabini Street, Ermita,
Manila, subscribing under oath, depose and states that.
1. On October 6,1977,I filed with the Court of First Instance of
Rizal, Pasay City Branch, a case against Kenneth O. Glass
entitled 'ANTONIO D. PINZON vs. KENNETH O. GLASS',
docketed as Civil Case No. 5902-P;
2. My Complaint against Kenneth O. Glass is based on several
causes of action, namely:
15
(i) On February 15, 1977, we mutually agreed that I undertake
to haul his construction materials from Manila to his
construction project in Bulalo, Bay, Laguna and vice-versa, for
a consideration of P50.00 per hour;
(ii) Also, on June 18, 1977, we entered into a separate
agreement whereby my Isuzu cargo truck will be leased to him
for a consideration of P4,000.00 a month payable on the 15th
day of each month;
(iii) On September 7, 1977, after making use of my Isuzu truck,
he surrendered the same without paying the monthly rentals
for the leased Isuzu truck and the peso equivalent of the spare
parts that were either destroyed or misappropriated by him;
3. As of today, October 11, 1977, Mr. Kenneth 0. Glass still
owes me the total sum of P32,290.00 representing his
obligation arising from the hauling of his construction materials,
monthly rentals for the lease Isuzu truck and the peso
equivalent of the spare parts that were either destroyed or
misappropriated by him;
4. I am executing this Affidavit to attest to the truthfulness of
the foregoing and in compliance with the provisions of Rule 57
of the Revised Rules of Court. 13
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. 14
Finally, it appears that the petitioner has filed a counterbond in the amount of
P37,190.00 to answer for any judgment that may be rendered against the
defendant. Upon receipt of the counter-bond the respondent Judge should have
discharged the attachment pursuant to Section 12, Rule 57 of the Revised Rules
of Court which reads, as follows:
Section 12. Discharge of attachment upon giving
counterbond.At any time after an order of attachment has
been granted, the party whose property has been attached, or
the person appearing on his behalf, may upon reasonable notice

to the applicant, apply to the judge who granted the order, or
to the judge of the court in which the action is pending, for an
order discharging the attachment wholly or in part on the
security given. The judge shall, after hearing, order the
discharge of the attachment if a cash deposit is made or a
counterbond executed to the attaching creditor is filed, on
behalf of the adverse party, with the clerk or judge of the court
where the application is made, in an amount equal to the value
of the property attached as determined by the judge, to secure
the payment of any judgment that the attaching creditor may
recover in the action. Upon the filing of such counter-bond, copy
thereof shall forthwith be served on the attaching creditor or his
lawyer. 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 the person
appearing on his behalf, the deposit or counter-bond aforesaid
standing in the 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 creditor may apply for a
new order of attachment.
The filing of the counter-bond will serve the purpose of preserving the
defendant's property and at the same time give the plaintiff security for any
judgment that may be obtained against the defendant. 15
WHEREFORE, the petition is GRANTED and the writ prayed for is issued. The
orders issued by the respondent Judge on October 11, 19719, January 26, 1978,
and February 3, 1978 in Civil Case No. 5902-P of the Court of First Instance of
Rizal, insofar as they relate to the issuance of the writ of preliminary attachment,
should be as they are hereby ANNULLED and SET ASIDE and the respondents
are hereby ordered to forthwith release the garnished amount of P37,190.00 to
the petitioner. The temporary restraining order, heretofore issued, is hereby
lifted and set aside. Costs against the private respondent Antonio D. Pinzon.
SO ORDERED.
G.R. No. 175587 September 21, 2007
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
DECISION
16
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision1 of the Court of
Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision2 of the
Regional Trial Court of Makati, which granted respondent Joseph Anthony M.
Alejandros claim for damages arising from petitioner Philippine Commercial
International Banks (PCIB) invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a complaint3 for 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
pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign
exchange rates which resulted in the insufficiency of the deposits assigned by
respondent as security for the loan, petitioner requested the latter to put up
additional security for the loan. Respondent, however, sought a reconsideration
of said request pointing out petitioners alleged mishandling of his account due
to its failure to carry out his instruction to close his account as early as April
1997, when the prevailing rate of exchange of the US Dollar to Japanese yen
was US$1.00:JPY127.50.4 It appears that the amount of P249,828,588.90 was
the consolidated amount of a series of yen loans granted by petitioner to
respondent during the months of February and April 1997.5
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.6
On October 24, 1997, the trial court granted the application and issued the writ
ex parte7 after petitioner posted a bond in the amount of P18,798,734.69, issued
by Prudential Guarantee & Assurance Inc., under Bond No. HO-46764-97. On
the same date, the bank deposits of respondent with Rizal Commercial Banking
Corporation (RCBC) were garnished. On October 27, 1997, respondent, through
counsel, filed a manifestation informing the court that he is voluntarily
submitting to its jurisdiction.8
Subsequently, respondent filed a motion to quash9 the writ contending that the
withdrawal of his unassigned deposits was not fraudulent as it was approved by
petitioner. He also alleged that petitioner knew that he maintains a permanent
residence 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, 10 where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives. Respondent added
that he is the 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.
On December 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 in Quezon City
and/or his office in Makati City. 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 the Philippines. The
dispositive portion of the courts decision is as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is hereby
GRANTED, and the ORDER of 24 October 1997 is hereby RECONSIDERED and
SET ASIDE and the WRIT OF attachment of the same is hereby DISCHARGED.
SO ORDERED.11
With the denial12 of petitioners motion for reconsideration, it elevated the case
to the Court of Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On
May 10, 1999, the petition was dismissed for failure to prove that the trial court
abused its discretion in issuing the aforesaid order.13 Petitioner filed a motion for
reconsideration but was denied on October 28, 1999.14 On petition with this
Court, the case was dismissed for late filing in a minute resolution (G.R. No.
140605) dated January 19, 2000.15 Petitioner filed a motion for reconsideration
but was likewise denied with finality on March 6, 2000.16
Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount
of P25 Million17 on the attachment bond (posted by Prudential Guarantee &
Assurance, Inc., under JCL(4) No. 01081, Bond No. HO-46764-97) on account
of the wrongful garnishment of his deposits. He presented evidence showing that
his P150,000.00 RCBC check payable to his counsel as attorneys fees, was
dishonored by reason of the garnishment of his deposits. He also testified that
he is a graduate of the Ateneo de Manila University in 1982 with a double degree
of Economics and Management Engineering and of the University of the
Philippines in 1987 with the degree of Bachelor of Laws. Respondent likewise
presented witnesses to prove that he is a well known lawyer in the business
community both in the Philippines and in Hong Kong.18 For its part, the lone
witness presented by petitioner was Nepomuceno who claimed that she acted in
good faith in alleging that respondent is a resident of Hong Kong.19
On August 30, 2000, the trial court awarded damages to respondent in the
amount of P25 Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly established
his claim in the amount of P25,000,000.00, judgment is hereby rendered
17
ordering Prudential Guarantee & [Assurance] Co., which is solidarily liable with
plaintiff to pay defendant the full amount of bond under Prudential Guarantee &
Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated 24 October
1997 in the amount of P18,798,734.69. And, considering that the amount of the
bond is insufficient to fully satisfy the award for damages, plaintiff is hereby
ordered to pay defendant the amount of P6,201,265.31.
SO ORDERED.20
The trial court denied petitioners motion for reconsideration on October 24,
2000.21
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.
The Court of Appeals, however, reduced the amount of damages awarded to
petitioner and specified their basis. The dispositive portion of the decision of the
Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed from
is hereby MODIFIED. The award of damages in the amount of P25,000,000.00
is deleted. In lieu thereof, Prudential Guarantee & [Assurance, Inc.], which is
solidarily liable with appellant [herein petitioner], is ORDERED to pay appellee
[herein respondent] P2,000,000.00 as nominal damages; P5,000,000.00 as
moral damages; and P1,000,000.00 as attorneys fees, to be satisfied against
the attachment bond under Prudential Guarantee & Assurance, Inc. JCL (4) No.
01081.
SO ORDERED.22
Both parties moved for reconsideration. On November 21, 2006, the Court of
Appeals denied petitioners motion for reconsideration but granted that of
respondents by ordering petitioner to pay additional P5Million as exemplary
damages.23
Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that petitioner is
not entitled to a writ of attachment because respondent is a resident of the
Philippines and that his act of withdrawing his deposits with petitioner was
without intent to defraud, can no longer be passed upon by this Court. More
importantly, the conclusions of the court that petitioner bank misrepresented

that respondent was residing out of the Philippines and suppressed the fact that
respondent has a permanent residence in Metro Manila where he may be served
with summons, are now beyond the power of this Court to review having been
the subject of a final and executory order. Said findings were sustained by the
Court of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No. 140605.
The rule on conclusiveness of judgment, which obtains under the premises,
precludes the relitigation of a particular fact or issue in another action between
the same parties even if based on a different claim or cause of action. The
judgment in the prior action operates as estoppel as to those matters in issue or
points controverted, upon the determination of which the finding or judgment
was rendered. The previous judgment is conclusive in the second case, as to
those matters actually and directly controverted and determined.24 Hence, the
issues of misrepresentation by petitioner and the residence of respondent for
purposes of service of summons can no longer be questioned by petitioner in
this case.
The core issue for resolution is whether petitioner bank is liable for damages for
the improper issuance of the writ of attachment against respondent.
We rule 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 the
Philippines, 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
the Philippines upon 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. Thus
In the hearings of the motion, and oral arguments of counsels before the Court,
it appears that plaintiff BANK through its contracting officers Vice President
Corazon B. Nepomuceno and Executive Vice President Jose Ramon F. Revilla,
personally transacted with defendant mainly through defendants permanent
residence in METRO-MANILA, either in defendants home address in Quezon City
or his main business address at the Romulo Mabanta Buenaventura Sayoc &
Delos Angeles in MAKATI and while at times follow ups were made through
defendants temporary home and business addresses in Hongkong. It is
therefore clear that plaintiff could not deny their personal and official knowledge
that defendants permanent and official residence for purposes of service of
summons is in the Philippines. In fact, this finding is further confirmed by the
letter of Mr. JOHN GOKONGWEI, JR. Chairman, Executive Committee of plaintiff
18
BANK, in his letter dated 6 October 1997 on the subject loan to defendant of the
same law firm was addressed to the ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that the amount
withdrawn was not part of defendants 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.
On the above 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 defendants permanent residence is in METRO MANILA
where he could be served with summons.
On the above findings, and mainly on the misrepresentations made by plaintiff
on the grounds for the issuance of the attachment in the verified complaint, the
Court concludes that defendant has duly proven its grounds in the MOTION and
that plaintiff is not entitled to the attachment.25
Petitioner is therefore barred by the principle of conclusiveness of judgment from
again invoking good faith in the application for the issuance of the writ. Similarly,
in the case of Hanil Development Co., Ltd. v. Court of Appeals,26the Court
debunked the claim of good faith by a party who maliciously sought the issuance
of a writ of attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond, Escobar claims
in its petition that the award of attorneys fees and injunction bond premium in
favor of Hanil is [contrary] to law and jurisprudence. It contends that no malice
or bad faith may be imputed to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the illegality of
the attachment and Escobars bad faith in obtaining it has long been settled in
one of the earlier incidents of this case. The Court of Appeals, in its decision
rendered on February 3, 1983 in C.A.-G.R. No. SP-14512, voided the challenged
writ, having been issued with grave abuse of discretion. Escobars bad faith in
procuring the writ cannot be doubted. Its Petition for the Issuance of Preliminary
Attachment made such damning allegations that: Hanil was already able to
secure a complete release of its final collection from the MPWH; it has moved
out some of its heavy equipments for unknown destination, and it may leave the
country anytime. Worse, its Ex Parte Motion to Resolve Petition alleged that
"after personal verification by (Escobar) of (Hanils) equipment in Cagayan de
Oro City, it appears that the equipments were no longer existing from their

compound." All these allegations of Escobar were found to be totally baseless
and untrue.
Even assuming that the trial court did not make a categorical pronouncement of
misrepresentation and suppression of material facts on the part of petitioner,
the factual backdrop of this case does not support petitioners claim of good
faith. The facts and circumstances omitted are highly material and relevant to
the grant or denial of writ of attachment applied for.
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 x x 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 a writ of 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 a writ of attachment.
The circumstances under which a writ of preliminary attachment may be issued
are set forth in Section 1, Rule 57 of the Rules of Court, to wit:
SEC. 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;
19
(c) In an action to recover the possession of personal 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;
(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;
(f) In an action against a party who resides out of the Philippines, or on
whom summons may be served by publication.
The purposes of preliminary attachment are: (1) to seize the property of the
debtor in advance of final judgment and to hold it for purposes of satisfying said
judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule
57 of the Rules of Court; or (2) to acquire jurisdiction over the action by actual
or constructive seizure of the property in those instances where personal or
substituted service of summons on the defendant cannot be effected, as in
paragraph (f) of the same provision.27
Corollarily, in actions in personam, such as the instant case for collection of sum
of money,28 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.29Thus, in order to acquire jurisdiction in actions in personam where
defendant resides out of and is not found in the Philippines, it becomes a matter
of course for the court to convert the action into a proceeding in rem or quasi in
rem by attaching the defendants property. The service of summons in this case
(which may be by publication coupled with the sending by registered mail of the
copy of the summons and the court order to the last known address of the
defendant), is no longer for the purpose of acquiring jurisdiction but for
compliance with the requirements of due process.30
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.
Section 16, Rule 14 of the Rules of Court reads:

Sec. 16. Residents temporarily out of the Philippines. When an action is
commenced against a defendant who ordinarily resides within the Philippines,
but who is temporarily out of it, service may, by leave of court, be also effected
out of the Philippines, as under the preceding section.
The preceding section referred to in the above provision is Section 15 which
provides for extraterritorial service (a) personal service out of the Philippines,
(b) publication coupled with the sending by registered mail of the copy of the
summons and the court order to the last known address of the defendant; or (c)
in any other manner which the court may deem sufficient.
In Montalban v. Maximo,31 however, the Court held that substituted service of
summons (under the present Section 7, Rule 14 of the Rules of Court) is the
normal mode of service of summons that will confer jurisdiction on the court
over the person of residents temporarily out of the Philippines. Meaning, service
of summons may be effected by (a) leaving copies of the summons at the
defendants residence with some person of suitable discretion residing therein,
or (b) by leaving copies at the defendants office or regular place of business
with some competent person in charge thereof.32 Hence, the court may acquire
jurisdiction over an action in personam by mere substituted service without need
of attaching the property of the defendant.
The rationale in providing for substituted service as the normal mode of service
for residents temporarily out of the Philippines, was expounded in Montalban v.
Maximo,33 in this wise:
A man temporarily absent from this country leaves a definite place of residence,
a dwelling where he lives, a local base, so to speak, to which any inquiry about
him may be directed and where he is bound to return. Where one temporarily
absents himself, he leaves his affairs in the hands of one who may be reasonably
expected to act in his place and stead; to do all that is necessary to protect his
interests; and to communicate with him from time to time any incident of
importance that may affect him or his business or his affairs. It is usual for such
a man to leave at his home or with his business associates information as to
where he may be contacted in the event a question that affects him crops up.
Thus, in actions in personam against residents temporarily out of the Philippines,
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
20
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
the Philippines.34 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.35 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 the Philippines, 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 the Philippines
and its omission of his local addresses was thus a deliberate move to ensure that
the application for the writ will be granted.
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.
Anent the actual damages, the Court of Appeals is correct in not awarding the
same inasmuch as the respondent failed to establish the amount garnished by
petitioner. It is a well settled rule that one who has been injured by a wrongful
attachment can recover damages for the actual loss resulting therefrom. But for
such losses to be recoverable, they must constitute actual damages duly
established by competent proofs, which are, however, wanting in the present
case.36
Nevertheless, nominal damages may be awarded to a plaintiff whose right has
been violated or invaded by the defendant, for the purpose of vindicating or
recognizing that right, and not for indemnifying the plaintiff for any loss suffered
by him. Its award is thus not for the purpose of indemnification for a loss but for
the recognition and vindication of a right. Indeed, nominal damages are damages
in name only and not in fact.37 They are recoverable where some injury has been
done but the pecuniary value of the damage is not shown by evidence and are
thus subject to the discretion of the court according to the circumstances of the
case.38

In this case, the award of nominal damages is proper considering that the right
of respondent to use his money has been violated by its garnishment. The
amount of nominal damages must, however, be reduced from P2 million
to P50,000.00 considering the short period of 2 months during which the writ
was in effect as well as the lack of evidence as to the amount garnished.1wphi1
Likewise, the award of attorneys fees is proper when a party is compelled to
incur expenses to lift a wrongfully issued writ of attachment. The basis of the
award thereof is also the amount of money garnished, and the length of time
respondents have been deprived of the use of their money by reason of the
wrongful attachment.39 It may also be based upon (1) the amount and the
character of the services rendered; (2) the labor, time and trouble involved; (3)
the nature and importance of the litigation and business in which the services
were rendered; (4) the responsibility imposed; (5) the amount of money and
the value of the property affected by the controversy or involved in the
employment; (6) the skill and the experience called for in the performance of
the services; (7) the professional character and the social standing of the
attorney; (8) the results secured, it being a recognized rule that an attorney may
properly charge a much larger fee when it is contingent than when it is not.40
All the aforementioned weighed, and considering the short period of time it took
to have the writ lifted, the favorable decisions of the courts below, the absence
of evidence as to the professional character and the social standing of the
attorney handling the case and the amount garnished, the award of attorneys
fees should be fixed not at P1 Million, but only at P200,000.00.
The courts below correctly awarded moral damages on account of petitioners
misrepresentation and bad faith; however, we find the award in the amount of P5
Million excessive. Moral damages are to be fixed upon the discretion of the court
taking into consideration the educational, social and financial standing of the
parties.41Moral damages are not intended to enrich a complainant at the expense
of a defendant.42 They are awarded only to enable the injured party to obtain
means, diversion or amusements that will serve to obviate the moral suffering
he has undergone, by reason of petitioners culpable action. Moral damages must
be commensurate with the loss or injury suffered. Hence, the award of moral
damages is reduced to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment, we sustain
the award of exemplary damages by way of example or correction for public
good. This should deter parties in litigations from resorting to baseless and
preposterous allegations to obtain writs of attachments. While as a general rule,
the liability on the attachment bond is limited to actual (or in some cases,
temperate or nominal) damages, exemplary damages may be recovered where
the attachment was established to be maliciously sued out.43 Nevertheless, the
award of exemplary damages in this case should be reduced from P5M
to P500,000.00.
21
Finally, 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.44
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 attorneys 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.,45 under JCL (4) No. 01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or
QUEENSLAND TOURIST INN, and TEODORICO ADARNA, respondents.
Breva & Breva Law Offices for petitioner.
Goc-Ong & Associates for private respondents.
NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals
in CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna
v. Davao Light & Power Co., Inc.," promulgated on May 4, 1990. 1 That decision
nullified and set aside the writ of preliminary attachment issued by the Regional
Trial Court of Davao City 2 in Civil Case No. 19513-89 on application of the
plaintiff (Davao Light & Power Co.), before the service of summons on the
defendants (herein respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the
Appellate Tribunal's judgment of May 4, 1990.

1. 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 (docketed as Civil Case No. 19513-
89). The complaint contained an ex parte application for a writ of preliminary
attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by
raffle, issued an Order granting the ex parte application and fixing the
attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light,
the writ of attachment issued.
4. 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.
5. 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.
6. On September 14, 1989, Davao Light filed an opposition to the motion to
discharge attachment.
7. 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. The Appellate Court's decision closed with the
following disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a
writ of preliminary attachment, dated September 19, 1989
denying the motion to discharge attachment; dated November
7, 1989 denying petitioner's motion for reconsideration; as well
as all other orders emanating therefrom, specially the Writ of
Attachment dated May 11, 1989 and Notice of Levy on
Preliminary Attachment dated May 11, 1989, are hereby
declared null and void and the attachment hereby ordered
DISCHARGED.
22
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of
preliminary attachment may be included m the complaint, as is
usually done, it is likewise true that the Court does not acquire
jurisdiction over the person of the defendant until he is duly
summoned or voluntarily appears, and adding the phrase that
it be issued "ex parte" does not confer said jurisdiction before
actual summons had been made, nor retroact jurisdiction upon
summons being made. . . .
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."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao
Light seeks in the present appellate proceedings.
The question is 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.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted.
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 defendant
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. 4 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; 5 and it is thus that the court acquires jurisdiction over said subject
matter or nature of the action. 6 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. 7 On the other hand, jurisdiction over
the person of the defendant is obtained, as above stated, by the service of
summons or other coercive process upon him or by his voluntary submission to
the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well
known. After the complaint is filed, summons issues to the defendant, the
summons is then transmitted to the sheriff, and finally, service of the summons
is effected on the defendant in any of the ways authorized by the Rules of Court.
There is thus ordinarily some appreciable interval of time between the day of the
filing of the complaint and the day of service of summons of the defendant.
During this period, different acts may be done by the plaintiff or by the Court,
which are unquestionable validity and propriety. Among these, for example, are
the appointment of a guardian ad litem, 9 the grant of authority to the plaintiff
to prosecute the suit as a pauper litigant, 10 the amendment of the complaint
by the plaintiff as a matter of right without leave of court, 11 authorization by
the Court of service of summons by publication, 12 the dismissal of the action
by the plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary
attachment, preliminary injunction, receivership or replevin. 14 They may be
validly and properly applied for and granted even before the defendant is
summoned or is heard from.
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.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the
action or at any time thereafter." 17 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
23
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.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or
application for preliminary attachment is not generally necessary unless
otherwise directed by the Trial Court in its discretion. 20 And in Filinvest Credit
Corporation v. Relova, 21 the Court declared that "(n)othing in the Rules of
Court makes notice and hearing indispensable and mandatory requisites for the
issuance of a writ of attachment." The only pre-requisite is that the Court be
satisfied, upon consideration of "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 . . . (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 (of attachment) is granted above all legal counterclaims." 22 If the
court be so satisfied, the "order of attachment shall be granted," 23 and the writ
shall issue upon the applicant's posting of "a bond executed to the adverse party
in an amount to be fixed by the judge, not exceeding the plaintiffs 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." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on
April 18, 1989, 25 this Court had occasion to emphasize the postulate that no
hearing is required on an application for preliminary attachment, with notice to
the defendant, for the reason that this "would defeat the objective of the remedy
. . . (since the) time which such a hearing would take, could be enough to enable
the defendant to abscond or dispose of his property before a writ of attachment
issues." As observed by a former member of this Court, 26 such a procedure
would warn absconding debtors-defendants of the commencement of the suit
against them and the probable seizure of their properties, and thus give them
the advantage of time to hide their assets, leaving the creditor-plaintiff holding
the proverbial empty bag; it would place the creditor-applicant in danger of
losing any security for a favorable judgment and thus give him only an illusory
victory.
Withal, ample modes of recourse against a preliminary attachment are secured
by law to the defendant. The relative ease with which a preliminary attachment
may be obtained is matched and paralleled by the relative facility with which the
attachment may legitimately be prevented or frustrated. These modes of
recourse against preliminary attachments granted by Rule 57 were discussed at
some length by the separate opinion in Mindanao Savings & Loans
Asso. Inc. v. CA., supra.

That separate opinion stressed that there are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of
its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an
attachment already enforced against property, or even of preventing its
enforcement altogether.
1.1. When property has already been seized under attachment, the attachment
may be discharged upon counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond.
At any time after an order of attachment has been granted, the
party whose property has been attached or the person
appearing in his behalf, may, upon reasonable notice to the
applicant, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order
discharging the attachment wholly or in part on the security
given . . . in an amount equal to the value of the property
attached as determined by the judge to secure the payment of
any judgment that the attaching creditor may recover in the
action. . . .
1.2. But even before actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not wait until his property
is seized before seeking the discharge of the attachment by a counterbond. This
is made possible by Section 5 of Rule 57.
Sec. 5. Manner of attaching property. The officer executing
the order shall without delay attach, to await judgment and
execution in the action, all the properties of the party against
whom the order is issued in the province, not exempt from
execution, or so much thereof as may be sufficient to satisfy
the applicant's demand, unless the former makes a deposit with
the clerk or judge of the court from which the order issued, or
gives a counter-bond executed to the applicant, in an amount
sufficient to satisfy such demand besides costs, or in an amount
equal to the value of the property which is about to be attached,
to secure payment to the applicant of any judgment which he
may recover in the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also
be lifted or discharged on the ground that it has been irregularly or improperly
issued, in accordance with Section 13 of Rule 57. Like the first, this second mode
of lifting an attachment may be resorted to even before any property has been
levied on. Indeed, it may be availed of after property has been released from a
levy on attachment, as is made clear by said Section 13, viz.:
24
Sec. 13. Discharge of attachment for improper or irregular
issuance. The party whose property has been attached may
also, at any time either BEFORE or AFTER the release of the
attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching
creditor, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order
to discharge the attachment on the ground that the same was
improperly or irregularly issued. If the motion be made on
affidavits on the part of the party whose property has been
attached, but not otherwise, the attaching creditor may oppose
the same by counter-affidavits or other evidence in addition to
that on which the attachment was made. . . . (Emphasis
supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987),
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 . . . would require presentation of evidence in a fullblown trial on the
merits, and cannot easily be settled in a pending incident of the case." 27
It may not be amiss to here reiterate other related principles dealt with
in Mindanao Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of
its irregular or improper issuance:
. . . (W)hen the preliminary attachment is issued upon a ground
which is at the same time the applicant's cause of action; e.g.,
"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." (Sec. 1 [b], Rule 57), or "an action against a party who
has been guilty of fraud m contracting the debt or incurring the
obligation upon which the action is brought" (Sec. 1 [d], Rule
57), the defendant is not allowed to file a motion to dissolve the
attachment under Section 13 of Rule 57 by offering to show the
falsity of the factual averments in the plaintiff's application and
affidavits on which the writ was based and consequently that
the writ based thereon had been improperly or irregularly
issued (SEE Benitez v. I.A.C., 154 SCRA 41) the reason being
that the hearing on such a motion for dissolution of the writ
would be tantamount to a trial of the merits of the action. In

other words, the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the regular trial.
Therefore, when the writ of attachment is of this nature, the
only way it can be dissolved is by a counterbond (G.B. Inc. v.
Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs
attachment bond:
. . . The dissolution of the preliminary attachment upon security
given, or a showing of its irregular or improper issuance, does
not of course operate to discharge the sureties on plaintiff's own
attachment bond. The reason is simple. That bond is "executed
to the adverse party, . . . conditioned that the . . . (applicant)
will pay all the costs which may be adjudged to the adverse
party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant
was not entitled thereto" (SEC. 4, Rule 57). Hence, until that
determination is made, as to the applicant's entitlement to the
attachment, his bond must stand and cannot be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule
58), receivership (Rule 59), replevin or delivery of personal property (Rule 60),
the rule is the same: they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of defendant, as above indicated
issuance of summons, order of attachment and writ of attachment (and/or
appointments of guardian ad litem, or grant of authority to the plaintiff to
prosecute the suit as a pauper litigant, or amendment of the complaint by the
plaintiff as a matter of right without leave of court 30 and however valid and
proper they might otherwise be, these do not and cannot bind and affect the
defendant until and unless jurisdiction over his person is eventually obtained by
the court, either by service on him of summons or other coercive process or his
voluntary submission to the court's authority. Hence, when the sheriff or other
proper officer commences implementation of the writ of attachment, it is
essential that he serve on the defendant not only a copy of the applicant's
affidavit and attachment bond, and of the order of attachment, as explicity
required by Section 5 of Rule 57, but also the summons addressed to said
defendant as well as a copy of the complaint and order for appointment of
guardian ad litem, if any, as also explicity directed by Section 3, Rule 14 of the
Rules of Court. Service of all such documents is indispensable not only for the
acquisition of jurisdiction over the person of the defendant, but also
upon considerations of fairness, to apprise the defendant of the complaint
against him, of the issuance of a writ of preliminary attachment and the grounds
therefor and thus accord him the opportunity to prevent attachment of his
property by the posting of a counterbond in an amount equal to the plaintiff's
claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or
25
dissolving it by causing dismissal of the complaint itself on any of the grounds
set forth in Rule 16, or demonstrating the insufficiency of the applicant's affidavit
or bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of
service of summons and the other documents above indicated that writs of
attachment issued by the Trial Court ex parte were struck down by this Court's
Third Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC
Manufacturing and Sales Corporation v. Court of Appeals, et al. 32 In contrast
to the case at bar where the summons and a copy of the complaint, as well
as the order and writ of attachment and the attachment bond were served on
the defendant in Sievert, levy on attachment was attempted notwithstanding
that only the petition for issuance of the writ of preliminary attachment was
served on the defendant, without any prior or accompanying summons and copy
of the complaint; and in BAC Manufacturing and Sales Corporation, neither the
summons nor the order granting the preliminary attachment or the writ of
attachment itself was served on the defendant "before or at the time the levy
was made."
For the guidance of all concerned, the Court reiterates and reaffirms the
proposition that writs of attachment may properly issue ex parte provided that
the Court is satisfied that the relevant requisites therefor have been fulfilled by
the applicant, although it may, in its discretion, require prior hearing on the
application with notice to the defendant; but that levy on property pursuant to
the writ thus issued may not be validly effected unless preceded, or
contemporaneously accompanied, by service on the defendant of summons, a
copy of the complaint (and of the appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in but submitted separately from
the complaint), the order of attachment, and the plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of
Appeals is hereby REVERSED, and the order and writ of attachment issued by
Hon. Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of
Davao City in Civil Case No. 19513-89 against Queensland Hotel or Motel or
Queensland Tourist Inn and Teodorico Adarna are hereby REINSTATED. Costs
against private respondents.
SO ORDERED.