DAVAO LIGHT POWER Co. vs. C.A.

G.R. No. 93262 November 29, 1991

FACTS:

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. 19613-89). The complaint contained an ex parte application for a writ of preliminary attachment.

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.

It was successfully challenged by Queensland and Adarna in a special civil action of certiorari instituted
by them in the Court of Appeals. The Court of Appeals has held that while it is true that a prayer for the
issuance of a writ of preliminary attachment may be included in the complaint, as is usually done, it is
likewise true that the Court does not acquire jurisdiction over the person of the defendant until he in
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

The Court of Appeals further disposes, citing Sievert v. Court of Appeals, 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" critical time is the time
of the vesting of jurisdiction in the court over the person of the defendant in the main case."

ISSUE:

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

RULING:

YES.

The Supreme Court has held that Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The phrase, "at the commencement of the
action," obviously refers to the date of the filing of the complaint — which, as pointed out, is the date
that marks "the commencement of the action;" 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.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in
virtue of which a plaintiff or other proper party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party taken into the custody of the court as security for the
satisfaction of any judgment that may be recovered. It is a remedy which is purely statutory in respect of
which the law requires a strict construction of the provisions granting it. Withal no principle, statutory
or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of
the defendant.

PCIB vs. Alejandro

FACTS:

Petitioner filed against respondent a complaint 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.

Petitioner prayed 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. The trial
court granted the application and issued the writ ex parte.

Subsequently, the trial court, upon motion of respondent, issued an order quashing the writ and holding
that the withdrawal of respondent's 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 respondent's residence considering that it has personal and official
knowledge that for purposes of service of summons, respondent's residence and office addresses are
located in the Philippines

Respondent filed a claim for damages on account of the wrongful garnishment of his deposits.

The petitioner, for its part, presented Nepomuceno as its lone witness who claimed that she acted in
good faith in alleging that respondent is a resident of Hong Kong.

ISSUE:

Whether petitioner bank is liable for damages for the improper issuance of the writ of attachment
against respondent.
RULING:

YES.

The Supreme Court has held that Escobar's bad faith in procuring the writ cannot be doubted. Escobar’s
allegation that Hanil was already able to secure a complete release of its final collection from the
MPWH; that he personally verified that it has moved out some of its heavy equipments for unknown
destination, and it may leave the country anytime were totally baseless and untrue.

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.

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. 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.

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.

Likewise, the award of attorney's 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.

The courts below correctly awarded moral damages on account of petitioner's misrepresentation and
bad faith.

Considering petitioner's 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.

NOTES:

Rule of Conclusiveness of Judgement - 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.

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;

(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.
Rationale of par. (f):

in actions in personam, such as the instant case for collection of sum of money, summons must be
served by personal or substituted service, otherwise the court will not acquire jurisdiction over the
defendant. In case the defendant does not reside and is not found in the Philippines (and hence
personal and substituted service cannot be effected), the remedy of the plaintiff in order for the court
to acquire jurisdiction to try the case is to convert the action into a proceeding in rem or quasi in rem
by attaching the property of the defendant. Thus, in order to acquire jurisdiction in actions in
personam where defendant resides out of and is not found in the Philippines, it becomes a matter of
course for the court to convert the action into a proceeding in rem or quasi in rem by attaching the
defendant's property. The service of summons in this case (which may be by publication coupled with
the sending by registered mail of the copy of the summons and the court order to the last known
address of the defendant), is no longer for the purpose of acquiring jurisdiction but for compliance
with the requirements of due process.

However, where the defendant is a resident who is temporarily out of the Philippines, attachment of
his/her property in an action in personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.

NOTES ON ACQUIRING JURISDICTION OVER A PERSON NOT A RESIDENT OF THE PHILIPPINES OR

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, 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 defendant's residence with some person of suitable discretion
residing therein, or

(b) by leaving copies at the defendant's office or regular place of business with some competent person
in charge thereof. Hence, the court may acquire jurisdiction over an action in personam by mere
substituted service without need of attaching the property of the defendant.

Rationale is that here 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 defendant's property in order to have authority to try the case. Where the plaintiff
seeks to attach the defendant's 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 defendant's residence or to a
competent person in charge of his office or regular place of business) will suffice, or whether there is a
need to attach the property of the defendant and resort to service of summons by publication in order
for the court to acquire jurisdiction over the case and to comply with the requirements of due process.

PURPOSE OF PRELIMINARY ATTACHMENT:

The purposes of preliminary attachment are: