Case Summary (G.R. No. 107303)
Key Dates and Procedural Events
Sun Life filed its complaint for a sum of money with a prayer for immediate issuance of a writ of attachment on December 23, 1991. The trial court issued an order granting issuance of a writ of attachment on December 24, 1991; the writ was issued December 27, 1991 and was amended on January 3, 1992. Attempts to serve summons and the amended writ were made January 3, 1992 but were initially unsuccessful; notices of garnishment and levies were served thereafter; summons were served on petitioners on January 9, 1992. Petitioners moved to discharge/dissolve the attachment on January 21, 1992; the trial court issued several orders (including denial of the motion to discharge and approval of additional attachment bond) on February 6, 1992; a motion for reconsideration was filed March 12, 1992 and denied September 6, 1992. The petitions for certiorari followed.
Applicable Law and Authorities
The decision applies the 1987 Philippine Constitution as the constitutional basis for the tribunal’s authority. Governing statutory and procedural provisions invoked include Rule 57 of the Rules of Court (notably Sections 10 and 12 concerning examination of persons and counter-bond) and Republic Act No. 1405, as amended (bank secrecy statute). The Court relied on established jurisprudence construing the provisional remedy of preliminary attachment, including Davao Light & Power Co., Inc. v. Court of Appeals; Cuartero v. Court of Appeals; Cuatro v. Court of Appeals; and the cases cited by petitioners (Sievert; BAC Manufacturing) for comparative principles.
Factual Background Relevant to the Issues
Sun Life alleged indebtedness and sought a writ of preliminary attachment as security for potential recovery. Following issuance of the writ, the deputy sheriff, accompanied by a Sun Life representative, attempted service at petitioners’ known address but could not find a responsible officer to accept service. Despite this, garnishment notices were served on banks and levy effected on real and personal property belonging to petitioner Onate. Sun Life also obtained court permission to examine certain bank accounts and to obtain copies; examinations occurred in the absence of petitioners, who thereafter sought nullification. Petitioners challenged the issuance and enforcement of the writ, and the allowance of the bank examinations as grave abuse of discretion amounting to lack or excess of jurisdiction.
Issue 1 — Validity of Issuance of Preliminary Attachment Before Acquisition of Personal Jurisdiction
The primary legal question was whether the trial court acted without jurisdiction or in grave abuse by issuing ex parte the original and amended writs of preliminary attachment before service of summons and, hence, before acquisition of jurisdiction over the person of the defendants. Petitioners argued that the trial court could not validly issue or enforce attachment prior to service.
Court’s Analysis on Attachment Prior to Service
The Court reaffirmed the settled rule that a writ of preliminary attachment may be validly applied for and granted at the commencement of the action or at any time thereafter, including before the defendant is summoned or heard from. Rule 57 contemplates that the remedy may be sought at the filing of the complaint (i.e., prior to issuance or service of summons). The issuance of the writ ex parte at the commencement of the action is permissible when the statutory requisites are satisfied. Consequently, the mere fact that the writ was issued before actual service did not, by itself, render it void.
Issue 2 — Appropriateness of Dissolution of Attachment Based on the Merits Alleged by Defendant
Petitioners contended the writ should be dissolved because the factual ground relied upon by Sun Life (fraud in contracting the obligation) was absent. The Court held that an attachment grounded upon the same facts that constitute the plaintiff’s cause of action in the main case cannot be dissolved in a preliminary motion that would effectively resolve the substantive dispute prematurely. In other words, where the alleged ground for attachment overlaps with the merits of the main action, the propriety of attachment is to be litigated in the main action rather than in a routine motion to discharge.
Relevance of Criminal Proceedings to Civil Liability
The Court noted that dismissal of a criminal complaint for estafa by the prosecutor (and even its upholding in administrative review) bears upon criminal liability only and does not preclude civil liability or the civil remedy of attachment. Sun Life’s elevation of the criminal matter for further review did not negate the civil claim or the basis for provisional remedies in the civil action.
Enforcement of Attachment Before Service — Distinction from Authorities Cited by Petitioners
Petitioners invoked Sievert and BAC Manufacturing to argue that enforcement of the writ before service cannot bind the defendant. The Court distinguished those authorities: in the cited cases summons was never served and no attempt was made to serve summons up to resolution by the Court; here there was contemporaneous attempt to serve summons and the writ on January 3, 1992, which was thwarted by absence of a responsible officer. The Court recognized an exception permitting enforcement when an earlier contemporaneous attempt to serve failed due to circumstances beyond the plaintiff’s control and actual service is effected within a reasonable period thereafter. The Court articulated policy reasons for the exception: preventing a defendant, having notice of the action by attempted service, from placing property beyond reach; the subsequent acquisition of jurisdiction by the court upon service; and the balancing mechanism that the attachment is easily discharged by deposit or counter‑bond.
Petitioners’ Attempt to Counteract Attachment via Counter‑Bond
The record showed petitioners attempted to secure discharge by posting a counter‑bond, but the trial court denied the request on the ground that the proposed counter‑bond was for a
...continue readingCase Syllabus (G.R. No. 107303)
Title, Docketing and Nature of Relief Sought
- Two separate certiorari petitions with prayer for temporary restraining order: G.R. No. 107303 (Emmanuel C. Onate and Econ Holdings Corporation) and G.R. No. 107491 (Brunner Development Corporation).
- Both petitions assail several orders issued by Hon. Zeus C. Abrogar, Presiding Judge, Branch 150, Regional Trial Court (RTC) of Makati, in Civil Case No. 91-3506.
- The petitions seek review of the trial court’s orders by certiorari and sought temporary relief (temporary restraining order).
Parties
- Petitioners in G.R. No. 107303: Emmanuel C. Onate and Econ Holdings Corporation.
- Petitioner in G.R. No. 107491: Brunner Development Corporation.
- Common respondent in both: Hon. Zeus C. Abrogar, Presiding Judge, Branch 150, RTC Makati.
- Adverse party below and real party in interest: Sun Life Assurance Company of Canada (Sun Life).
Chronology of Material Facts
- December 23, 1991: Sun Life filed a complaint for a sum of money with a prayer for immediate issuance of a writ of attachment; case docketed as Civil Case No. 91-3506 and raffled to Branch 150, RTC Makati.
- December 24, 1991: Respondent Judge issued an order granting issuance of a writ of attachment.
- December 27, 1991: The writ of attachment was actually issued.
- January 3, 1992:
- Trial court amended the writ of attachment to reflect the alleged amount of indebtedness upon Sun Life’s ex parte motion.
- Deputy Sheriff Arturo C. Flores, accompanied by a Sun Life representative, attempted to serve summons and a copy of the amended writ at petitioners’ known office address (108 Aguirre St., Makati), but was unable to do so because no responsible officer was present to receive the process.
- Despite failure to serve at the office, Sheriff Flores proceeded over several days to serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Onate.
- January 9, 1992: Summons was eventually served upon petitioners.
- January 16, 1992: Defendant Noel L. Dino was served with summons.
- January 21, 1992:
- Petitioners filed an “Urgent Motion to Discharge/Dissolve Writ of Attachment.”
- Sun Life filed an ex parte motion to examine the books of accounts and ledgers of Brunner Development Corporation at Urban Bank, Legaspi Village Branch, and to obtain copies thereof; respondent Judge granted this motion.
- January 23, 1992: Examination of the Urban Bank account took place; petitioners filed a motion to nullify the proceedings of that examination on the ground that they were not present.
- January 30, 1992:
- Petitioners and co-defendants filed a memorandum in support of the motion to discharge the attachment.
- Sun Life filed another motion to examine: BPI Account No. 0041-0277-03 (which petitioners claim is not theirs) and PNB records regarding checks payable to Brunner; Sun Life asked the court to order compliance with notices of garnishment.
- February 6, 1992: Respondent Judge issued an order with four directives:
- Denied petitioners’ and co-defendants’ motion to discharge the amended writ of attachment.
- Approved Sun Life’s additional attachment bond.
- Granted Sun Life’s motion to examine the BPI account.
- Denied petitioners’ motion to nullify the January 23, 1992 proceedings.
- March 12, 1992: Petitioners filed a motion for reconsideration of the February 6, 1992 order.
- September 6, 1992: Respondent Judge denied the motion for reconsideration.
- Following denial of reconsideration, petitioners elevated the matter to this Court by filing the instant certiorari petitions.
- Additional record facts:
- Petitioners Onate and Econ Holdings admitted in their answer that offices of Brunner and Econ Holdings were at the same address, that Onate is President of Econ Holdings, Dino is President of Brunner and also stockholder and director of Econ Holdings.
- Sun Life had filed a criminal complaint for estafa against petitioners which was dismissed by the Provincial Prosecutor of Rizal for Makati on April 21, 1992 and that dismissal was upheld by the Provincial Prosecutor on July 13, 1992; Sun Life elevated the matter to the Department of Justice where review was pending at the time of decision.
Procedural Rulings Below that Were Assailed
- Issuance and enforcement of ex parte original and amended writs of preliminary attachment, and corresponding notices of garnishment and levy on attachment, allegedly before the trial court acquired jurisdiction over petitioners.
- Granting of ex parte motions to examine bank accounts and ledgers (Urban Bank; later BPI and PNB) and the taking of examinations without notice to petitioners.
- Denial of petitioners’ motion to discharge/dissolve the writ of attachment and denial of their motion to nullify the January 23 examination.
- Approval of Sun Life’s additional attachment bond and denial of petitioners’ attempt to discharge the writ by posting a counter-bond.
Petitioners’ Principal Arguments
- Respondent Judge acted with grave abuse of discretion amounting to lack or excess of jurisdiction by:
- Issuing the original and amended writs of preliminary attachment ex parte before the court had acquired jurisdiction over petitioners.
- Allowing examination of bank records without any notice to petitioners; such examinations were invalid for lack of notice.
- The writ should have been discharged because the alleged ground for issuance (fraud in contracting the obligation) was not present.
- The enforcement of the writ was invalid because it preceded actual service of summons by up to six days; petitioners relied on Sievert v. Court of Appeals and BAC Manufacturing and Sales Corp. v. Court of Appeals to assert that enforcement cannot bind a defendant if the court has not acquired jurisdiction via summons or voluntary appearance.
- Petitioners attempted to discharge the writ by posting a counter-bond but respondent Judge denied it on grounds that the amount offered was less than Sun Life’s bond.
Relief Sought by Petitioners in the Supreme Court
- Annulment of the trial court’s orders granting and enforcing the writs of attachment and related orders.
- Issuance of certiorari to correct alleged grave abuse of discretion.
- Continuation or extension of the temporary restraining order previously issued (which ultimately was addressed and lifted by the Court).
Legal Provisions and Authorities Relied Upon in the Decision
- Rule 57 of the Rules of Court (as discussed and quoted): especially Section 10 (examination of party whose property is attached and persons indebted or controlling property) and reference to Section 12 (counter-bond provision).
- Republic Act No. 1405, as amended (prohibiting inquiry into deposits with banking institutions), with the court noting the statutory exception “in cases where the money deposited or invested is the subject matter of the litigation.”
- Prior Supreme Court jurisprudence cited and relied upon:
- Davao Light & Power Co., Inc. vs. Court of