• Lim v. Lazaro, G.R. No.

185734, July 3, 2013

Three parcels of land were levied upon by virtue of a writ of preliminary attachment in
connection of action involving a collection for sum of money. Subsequently, the parties entered into
compromise agreement on which Y, the owner of the properties attached, will pay the entire amount to
X in installment basis. After approval by the court of the said agreement, Y filed an omnibus motion to
lift the writ on which the court granted. Is the lifting proper?

No, the lifting is improper as the court in effect removes the protective value of the writ. As
established in Lim v Lazaro, preliminary attachment serves to preserve and protect certain rights and
interest of the litigant during the pendency of the action. Jurisprudence dictates that the said lien
continues until the debt is paid. Here, though the case is considered closed and terminated on the basis
of the compromise agreement, the debt is not yet paid. Hence, X’s interest will not be protected until
payment since the terms of the compromise agreement is yet to be executed.

 Ligon v. RTC, 717 SCRA 373

Y’s property was levied upon by virtue of a writ of preliminary attachment in connection of
action involving a collection for sum of money filed by X. Z filed a similar complaint in another court
involving the same property. The said court rendered a decision in favor of Z and ordered the Register of
Deed to issue a new TCT free from any lien and encumbrances after the property was sold to the highest
bidder. In effect, the earlier attachment was not carried over to the new TCT named to the highest
bidder. Thereafter, the first court rendered a decision in favor of X who found out of the deletion of the
earlier attachment. Did the second court committed an error?

Yes, the said court committed an error on disregarding the earlier attachment because the said
order negates the efficacy of the preliminary attachment lien and defies the legal characterization of
attachment proceedings. As established in Ligon v. RTC, Attachment is a proceeding in rem, and, hence,
is against the particular property, enforceable against the whole world. Accordingly, 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. Thus, a prior registration of an attachment
lien creates a preference, such that when an attachment has been duly levied upon a property, a
purchaser thereof subsequent to the attachment takes the property subject to the said attachment. As
provided under PD 1529, said registration operates as a form of constructive notice to all persons. Here,
when the second court issued the said order, it disregarded the preference of X.

 Torres v. Satsatin, G.R. No. 166759, November 25, 2009

B convinced A for the former to sell the property of the latter on which A agreed. B was able to sell the
property but failed to remit the full amount of the purchase price. A filed for the issuance of writ of
attachment on which the court granted. B filed for a discharge on the ground that the issuance is
irregular given the said writ is enforced without acquiring jurisdiction over his person. If you are the
judge, would you grant the motion to discharge?
Yes, I will grant the motion because the Rules of Court provides service of summons upon enforcement
of writ of attachment. Under the Rules of Court, no levy on attachment shall be enforced unless it is
preceded, or contemporaneously accompanied by service of summons on the defendant within the
Philippines. As established in Cuartero v. CA, the grant involves three stages: the granting, issuance, and
the implementation of the writ. Once the implementation of the write commences, the court must have
acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and
authority to act in any manner against the defendant.

 Borja v. Platon, 73 Phil. 659

A brought a civil action against B to annul the sale made by the latter. Thereafter, B filed a counterclaim
and with the basis of such counterclaim petition the court for preliminary attachment. A objected the
petition and argued that no writ can be issued in favor of a defendant who presents a counterclaim.
Rule on the objection.

I will overrule the objection because the remedy is not only available to an original plaintiff but also to
counter-claimant and cross-claimant. As established in De Borja v. Platon, a writ of preliminary
attachment may be issued in favor of a defendant who sets up a counterclaim.

 Professional Video, Inc. v. TESDA, G.R. No. 155504, June 26, 2009

X Technologies Inc. entered into a negotiated contracted TESDA on which the corporation obliged itself
to deliver electronic equipment to the latter for a certain amount. Upon due date, TESDA only paid 10
percent of the total contract price. After demands went unheeded, X sued TESDA for sum of money with
a prayer for the issuance of writ of preliminary attachment. TESDA filed a motion to discharge on the
ground that public funds cannot be subject of garnishment. The motion to discharge was denied. Is the
denial proper?

Yes, the denial is proper as public funds cannot be subject to garnishment. As established in Republic v.
Villasor, public funds cannot be the object of garnishment proceedings even if the consent to be sued
had been previously granted and the state liability adjudged. Here, the fund of TESDA is a public fund.
Hence the denial is just proper.

Olsen v Olsen

X, as the general manager and treasurer of XYZ Corporation, was overseeing the operations and finances
of the company. During his stint, X had been taking money without authority from the board or by the
by-laws. Through the directors, the corporation sued X for recovery of money with prayer of issuance of
writ of preliminary attachment on the ground that X fraudulently misapplied the funds. If you are the
judge, would you issue the writ?

Yes, I will issue a writ of preliminary attachment because there is a fraudulent misapplication of money
by an officer of a corporation. As provided for by the Rules of Court, a plaintiff may have the property of
the adverse party attached as security in an action for money embezzled or fraudulently misapplied or
converted to his own use by an officer of a corporation. As established in Olsen v. Olsen, such conduct
was more than an irregularity. It is undoubtedly of a civil character because it is an abuse of confidence
to the damage of the corporation and the stockholders. Here, instead of X protecting the interest of the
stockholders, X keeps on using the corporate funds for his personal use without authority.

 Ng Wee v. Tankiansee, G.R. No. 171124, February 13, 2008

A was disturbed when he received a news that the investment bank on which he made several money
placement was experiencing severe financial difficulties. He then discovered that the investment bank
extended a loan equal to this total money placement to PM Corporation which credited facility
originated from HH Company which eventually defaulted from its loan. A received information that his
total money placement was for the account of PM through an agreement that virtually freed HH from
any liability. A sued for damages; the affidavit narrated the alleged fraudulent transaction between the
investment bank and of PM and on the basis of such averment the court issued a writ of preliminary
attachment. Is the issuance proper?

The issuance is improper since the averments in the complaint did not sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot be inferred. As established in Ng
Wee v. Tiangkansee, the applicant must sufficiently show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred. The applicant must then be able to demonstrate that the
debtor has intended to defraud the creditor. It could be proved by circumstantial evidences. Here, no
other factual averment or circumstance details how PM and HH committed a fraud. In other words, A
has not shown any specific act or deed to support the allegation that the corporations are guilty of
fraud.

 Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 222 SCRA 37, 45 [1993]

An indemnity agreement was signed between the insurance company and X in connection of the
performance bond issued by the former. Subsequently, the insurance company, on the basis of the
performance bond, became liable upon its performance bond. Expectedly, the insurance company
demanded for reimbursement on no avail; instead, it discovered that one of the real property used as a
collateral turned out to be fake and spurious while the rest of the properties are either heavily
encumbered or disposed. The insurance company prayed for the issuance of the writ on which X
vehemently objected on the ground that the delivery of the said collaterals was made two days after the
issuance of the surety bond hence it is not prior to or simultaneous with the execution. Rule on the
objection.

I will deny the objection as the actuations of X are clear manifestation of fraud in contracting the debt or
incurring the obligation upon which the action is brought. Consequently, I will issue the writ of the
preliminary attachment. As provided for by the Rules of Court, a plaintiff may have the property of the
adverse party attached as a security in an action against a party who has been guilty of fraud in
contracting the debt. As established in Liberty Insurance Corp. v. CA, The fraud must relate to the
execution of the agreement and must have been the reason which induced the other party into giving
consent which he would not have otherwise given. A debt is fraudulently contracted if at the time of
contracting it the debtor has a preconceived plan or intention not to pay. Here, the collaterals were
either fraudulent or heavily encumbered. This fact point to the devious scheme of X.

 FCY Construction Group, Inc. v. Court of Appeals, G.R. No. 123358, 381 Phil. 282 (2000).
X Company filed a collection for sum of money with application for preliminary attachment against Y
Company in connection to a joint venture agreement entered by the two corporations on which the
former is obliged to deliver materials to X after payment. The ground for the prayer is the existence of
fraud in incurring the obligation and the specific acts of the fraud were alleged. Y Corporation argued
that there are no evidences of fraud since the witness of X admitted to open court that a third party
induced the delivery which happened after the signing of the JV of the materials with a promise of
future projects. The court issued the writ on the basis of the complaint. Is the issuance proper?

Yes, the issuance is proper because the complaint sufficiently show the factual circumstances of the
alleged fraud. As established in Ng Wee v. Tankiansee, the applicant must then be able to demonstrate
that the debtor has intended to defraud the creditor. Here, there was such an allegation. The argument
of Y that fraud is absent because of the testimony of the witness. As established in FCY Construction v
CA, when the preliminary attachment is issued upon a ground which is at the same time the applicant's
cause of action, the defendant is not allowed to file a motion to dissolve the attachment by offering to
show falsity of the factual averments since it would be tantamount to a trial on the merits. Therefore,
the only way a writ of this nature can be dissolved is by a counter bond. Here, Y did not post a counter
bond. Hence, the writ must stand.

 Metro, Inc. v. Lara’s Gifts, G.R. No. 171741, November 27, 2009
X and Y, which are engaged in the business of manufacturing, selling, and exporting handicrafts, agreed
that the latter would endorse to former purchase orders from Y's buyer from the US. Y, on his motion to
discharge the writ, argued that the agreement was not a valid contract because there was no showing
that there was indeed a meeting of the mind and that there was the failure to substantiate the
allegation of fraud. X vehemently objected that the substantiation requirement is complied with. If you
are the judge, rule on the motion of Y.

I will deny the motion on the ground that when the writ of attachment is issued upon a ground which is
the same time the applicant's cause of action, the only way the writ can be lifted or dissolved is by a
counter-bond. As established in FCY Construction Group v. CA, the defendant is not allowed to file a
motion to dissolve the attachment by offering to show falsity of the factual averments since it would be
tantamount to a trial on the merits. Therefore, the only way a writ of this nature can be dissolved is by a
counter bond. Here, the existence of the contract is still a question that is best ventilated on the trial on
the merits. Hence, as long Y files the counter-bond, I will not rule in favor of Y's petition.

 Republic v. Estate of Lim, G.R. No. 164800, July 22, 2009

The PCGG which reprsented the Republic filed a complaint for reconveyance and reversion with a prayer
for the issuance of writ of preliminary attachment on the grounds of fraud against X who is known to be
a very close associate of the president. The Republic alleged that X by taking undue advantage of his
relationship with the first family was able to secure timber licenses which cover a mass land area
beyond the limits prescribed the law. The evidence is the decision of the DENR cancelling the logging
concessions which ground is based on that same allegation. SANDIGANBAYAN issued the writ of
attachment. Is the issuance proper?

Yes, the issuance is proper as X's act is a manifestation of fraud in a form of taking undue and
unconscientious advantage. As provided for by the Rules of Court, a plaintiff may have the property of
the adverse party attached as security for the satisfaction of any judgement in an action against a party
who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is
brought. In Republic v. Estate of Lim, the SC apparently expanded the concept of fraud. It now pertains
the advantage of receiving special privileges and concession by the reason of close relationship with the
president. Fraud compose anything calculated to deceive by which an undue advantage is taken of
another. Here, it seems that the DENR is not privy of the granting of the concession which cover went
beyond of the limits prescribed by law. Hence, taking all the circumstances together and with the
evidence showing indicia of fraud, the issuance is just proper.

 Foundation Specialist, Inc. v. Betonval, G.R. No. 170674, 24 August 2009

ABC Supplies delivered to XYZ Construction materials needed for its project. The construction company
failed to pay for the materials deliver which happening prompted ABC Supplies to file for sum of money
with a prayer for the issuance of a writ of preliminary attachment on the ground that XYZ Construction
employed fraud when it contracted with ABC Supplies and that the construction company is disposing of
its assets in fraud of creditors. The court issued the writ of attachment. Is the issuance proper?
No, the issuance is improper as there is failure on the part of the applicant to sufficiently show the
factual circumstance of the alleged fraud. As established in Foundation Specialist, Inc. v. Bentoval,
fraudulent intent cannot be inferred for mere nonpayment of debt or failure to comply with its
obligation. As established in Ng Wee v. Tankiansee, the applicant must be able to demonstrate that the
debtor intended to defraud the creditor.

1. Disposal in fraud of creditors

 Aboitiz v. Cotabato, 105 SCRA 88

X filed a collection of sum of money against ABC Bus Company with prayer of issuance of writ of
preliminary attachment on which the court subsequently granted. The grounds relied upon by X is the
removal or disposal of the assets and that the company is in the brink of bankruptcy which all shows
intent to defraud the creditor. ABC Bus Company filed a motion to quash the writ on the ground that it is
not disposing the asset since the operation is ongoing and in fact, with the permission of the sheriff, the
buses were repaired. The dwindling of the bank account is explained as the funds are used to cover
operational and repair expense to keep the business going. Rule on the motion of ABC Bus Company.

I will quash the writ because the facts belie the existence of intent to defraud. As established in Aboitiz v
Cotobato, the repair of buses is not the act contemplated by the law as a disposal of asset with the
intent to defraud. Likewise, it is also established that insolvency is not a ground for attachment,
especially when defendant has not been shown to have committed any act intended to defraud its
creditors.

2. Residing out of the Philippines

 Mialilhe v. De Lencquesaing, 142 SCRA 694

X filed a collection for sum of money with prayer of the issuance of writ of preliminary attachment
against Y. The ground relied upon X is that the action is against a party who resides out of the
Philippines. Y was having here residence in France and was even appointed as an honorary consul. The
court issued the writ; is the issuance proper?

Yes, the issuance is proper because it is an action against a party who resides out of the Philippines. As
provided by the Rules of Court, a plaintiff may have the property of the adverse party attached as
security for the satisfaction of any judgement in an action against a party who resides out of the
Philippines. As established in Mialihe v De Lencqueasing, the ground is irrespective of the nature of the
action or suit and that each of the six grounds treated ante is independent of the others.
 A. Issuance and Contents of Order (sec 2)

1. Ex parte

 Toledo v. Burgos, 168 SCRA 513

2. Upon motion with notice and hearing

An application of for the issuance of a writ of preliminary attachment was denied by the judge even
without hearing. The counsel of the applicant vehemently objected and even accused the judge the
denial was made in undue haste and without proper notice of hearing despite given a chance to present
in court on which the party is absent on scheduled hearings. Is the denial allowed?

Yes, the denial is allowed even without setting a hearing. As established by Toledo v Burgos, issuance of
a writ of preliminary attachment may be made by the court ex parte. Nothing in the Rules of Court
makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of
attachment.