G.R. No. 84481 - Mindanao Savings and Loan Association, Inc. vs. Court of Appeals

On September 10, 1986, private respondents filed a complaint in the Regional Trial Court of Davao City against D.S. Homes, Inc. and its directors for “Rescission of Contract and Damages.”
The complaint initially sought a writ of preliminary attachment against the defendants.
On September 22, 1986, the private respondents amended their complaint, and on October 10, 1986, a second amended complaint was filed which impleaded as additional defendants petitioners Davao Savings & Loan Association, Inc. (later renamed Mindanao Savings & Loan Association, Inc. or “MSLA”) and its president, Francisco Villamor, while dropping one of the original defendants.

On September 28, 1986, Judge Dinopol issued, ex parte, an order granting the application for a writ of preliminary attachment.
On November 5, 1986, an amended order of attachment was issued ex parte against all defendants named in the second amended complaint, including the petitioners (MSLA and Villamor) but excluding one defendant.
Subsequently, separate motions to quash the writ of attachment were filed by D.S. Homes, Inc., et al. and by MSLA and Francisco Villamor.

After the motions to quash were denied by the trial court, D.S. Homes, Inc., et al. submitted a counterbond in the amount of P1,752,861.41 per certificate issued by the Land Bank of the Philippines, which was accepted by the lower court.
The counterbond led to the lifting of the writ of preliminary attachment on June 5, 1987.

On July 29, 1987, MSLA and Francisco Villamor filed a petition for certiorari with the Court of Appeals, seeking annulment of the attachment order and the previous denial of their motion to quash.
The petitioners argued that the trial court exceeded its jurisdiction by issuing the ex parte orders and denying their motion to quash the attachment.
The Court of Appeals, on May 5, 1988, dismissed the petition for certiorari and remanded the case for further proceedings, emphasizing that once a counterbond is filed, objections to the underlying warrant for attachment (which forms the core of the complaint) may no longer be raised through a motion to quash.

Petitioners elevated the case to the Supreme Court, challenging the correctness of the Court of Appeals’ ruling.
The Supreme Court noted that the only prerequisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 are the affidavit and bond of the applicant.
The Court underscored that the Rules of Court do not require notice or a hearing prior to the issuance of an attachment writ, as such a hearing would defeat the remedial purpose.
It was reaffirmed that once a defendant obtains the discharge of the writ by filing a counterbond, a subsequent motion to quash under Section 13, Rule 57 is impermissible when the grounds for the attachment are central to the plaintiff’s cause of action.

Justice Narvasa concurred with the affirmation of the lower court’s decision but provided additional clarifications regarding the modes of discharging a preliminary attachment.
He explained the two primary methods for discharging an attachment under Rule 57: by giving a counterbond (Section 12) and by proving the attachment was improperly or irregularly issued (Section 13).
Emphasis was made that when the attachment is based on allegations that form the core of the complaint (i.e., allegations constituting the cause of action), the only effective remedy is the submission of a counterbond.
He further stressed that the filing of a counterbond does not extinguish the sureties’ liability related to the plaintiff’s own attachment bond, which remains in force until a final adjudication is rendered on the merits.

Whether the trial court acted in excess of its jurisdiction by issuing ex parte orders of preliminary attachment without notice or hearing.
Whether the denial of the motion to quash the writ of attachment was proper under the Rules of Court.

Whether the filing of a counterbond under Section 12, Rule 57 precluded the possibility of filing another motion under Section 13, Rule 57 to quash the writ based on allegations of impropriety or irregularity.
Whether such subsequent motions would effectively constitute a trial on the merits, thereby contravening the remedial nature of the provisional attachment.

Whether the attachment, being based on the core allegations of the complaint, could be challenged on its merits outside the regular trial proceedings after a counterbond is posted.