G.R. No. 86181-82 - Santos vs. Aquino, Jr.

Petitioners: Manuel T. Santos and Rafael G. Camus, seeking the recovery of their money placements amounting to P752,100 and P769,500, respectively.
Respondents:

Judge Benjamin M. Aquino, Jr. of the Regional Trial Court of Malabon-Navotas.
FINASIA Investments and Finance Corporation (FINASIA).
Jose T. Villarosa.
Other corporate and individual entities including Triplex Enterprises Inc., Jomarias International Corporation (formerly Metro Realty Corp.), Philippine Commercial and International Bank, Philippine American Life Insurance Corporation, Far East Bank & Trust Co., and the Registers of Deeds of Makati and Parañaque.

The petition arose from preliminary attachments issued in civil cases filed in November 1983 for fraudulent misrepresentation in money placements with FINASIA.
The writs of attachment secured petitioners’ claims against specific properties of FINASIA and Villarosa, including various lots in Pasay City and a property in Makati.

On petitioners’ application, attachments were issued on several properties, including two lots in Pasay City owned by Jose Villarosa and the FINASIA property at Pasong Tamo, Makati, among others.
Attachment bonds amounting to P1,276,058 were posted by the petitioners.

FINASIA was placed under receivership on January 9, 1984, resulting in the suspension of proceedings against it due to its non-compliance with SEC registration and failure to honor maturing money market placements.
Both FINASIA and Villarosa later filed separate motions to lift the attachments by offering counterbonds, which petitioners opposed on grounds of insufficiency and the unreliability of the bonding companies.

In mid-1988, FINASIA and Villarosa filed separate motions to substitute the properties under attachment with supposedly unencumbered properties worth at least P3.5 million.
The hearing was initially set for August 16, 1988, then reset for September 22, 1988.
Due to a communicated cancellation for a seminar and subsequent miscommunication, the petitioners did not appear at the hearing.

On September 22, 1988, when the hearing was canceled and not properly rescheduled or communicated to the petitioners, the judge declared the motions “submitted for resolution.”
Later, on October 6, 1988, another hearing was set for the motions.
On October 10, 1988, respondent Judge Benjamin M. Aquino, Jr. issued an order granting the motions, effectively substituting the attached properties with others.
The order discharged the attachment on Villarosa’s properties and replaced them with eight small lots in Pasay City owned by FINASIA.

Santos, having discharged his attorney for gross negligence in failing to notify him of the hearing, filed a motion for reconsideration of the substitution order.
The motion argued that due process was denied and that the substitution was beyond the court’s jurisdiction.

Prior to the lifting of the attachment, Villarosa had sold his two lots to Metro Realty Corporation (later renamed Jomarias International Inc.), which subsequently re-annotated the titles.
New transactions followed, including the mortgaging of substituted properties to financial institutions (e.g., PCIB and Philamlife), raising issues on the validity of these transactions in light of the still subsisting attachment.

A preliminary injunction restraining further proceedings on Civil Cases Nos. 365-MN and 374-MN.
Nullification of the orders dated October 10, 1988, and December 10, 1988, on the grounds of lack of jurisdiction and grave abuse of discretion.
A declaration that the original attachments were never effectively discharged and that any subsequent transactions affecting those properties were null ab initio.
Orders directing the Registers of Deeds to re-annotate the original attachments on the new titles and cancel the inscriptions reflecting the erroneous substitution order.

Whether respondent Judge Benjamin M. Aquino, Jr. gravely abused his discretion or exceeded his jurisdiction in allowing the substitution of the attached properties.
Whether the order for substitution of attached properties, which was executed without the petitioners being heard, violated the due process rights of the attaching creditors by effectively nullifying the original attachment.
Whether the subsequent transactions (sale and mortgaging) of the properties, completed after the erroneous substitution order, bind third parties or can be invalidated due to the continuing existence of the original attachment lien.