Case Summary (G.R. No. 107303)
Factual Background
On December 23, 1991, Sun Life Assurance Company of Canada filed a complaint for a sum of money and prayed for the immediate issuance of a writ of attachment against petitioners and Noel L. Dino, docketed as Civil Case No. 91-3506 and raffled to Branch 150, RTC Makati. The trial court issued an order on December 24, 1991, granting the issuance of a writ of attachment, and the writ was actually issued on December 27, 1991. On January 3, 1992, the court amended the writ to reflect the alleged indebtedness. Deputy Sheriff Arturo C. Flores attempted service of the amended writ and summons at petitioners' known office address on January 3, 1992, but could not effect personal delivery because no responsible officer was present.
Acts of Enforcement
Notwithstanding the failure to obtain personal service on January 3, 1992, Sheriff Flores, accompanied by a representative of Sun Life, proceeded over several days to serve notices of garnishment upon banks and financial institutions and to levy on attachment a condominium unit and a real property of petitioner Onate. Summons was eventually served upon the petitioners on January 9, 1992, while Noel L. Dino was served on January 16, 1992.
Trial Court Proceedings
Petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment" on January 21, 1992. That same day, Sun Life obtained an ex parte order to examine the bank accounts and ledgers of Brunner Development Corporation at Urban Bank, Legaspi Village, and the examination occurred on January 23, 1992. Petitioners moved to nullify that examination for lack of their presence. On January 30, 1992, Sun Life moved for further bank examinations, including a BPI account and PNB records, and to have the banks comply with notices of garnishment. On February 6, 1992, the trial court denied petitioners' motion to discharge the amended writ, approved an additional attachment bond of Sun Life, granted the motion to examine the BPI account, and denied the motion to nullify the January 23 proceedings. Petitioners' motion for reconsideration was denied on September 6, 1992.
Petitioners' Contentions
Petitioners asserted that the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in two principal respects: that the issuance ex parte of the original and amended writs of preliminary attachment and the consequent garnishment and levy were invalid because jurisdiction over them had not yet been acquired; and that the court erred in permitting the examination of bank records without notice to them.
Respondent and Proponent Contentions
Sun Life invoked Section 10, Rule 57, Rules of Court as authority to examine persons holding credits or property of the attached party and to compel their attendance and examination. Sun Life defended the ex parte issuance and enforcement of the writs on the ground that a writ of preliminary attachment may be applied for and granted at the commencement of the action or at any time thereafter, and that the bank examinations were necessary to trace proceeds and were authorized without notice to the defendant where the persons to be examined were garnishees.
Issues Presented
The Court framed the contested legal questions as whether (1) a trial court may validly issue and enforce a writ of preliminary attachment ex parte before acquisition of personal jurisdiction over the defendant through service of summons; and (2) whether the court may order examination of bank records and compel attendance without giving notice to the defendant whose property was attached.
Ruling of the Supreme Court
The Supreme Court dismissed both petitions and lifted the temporary restraining order issued on June 28, 1993. The Court held that the issuance of a writ of preliminary attachment ex parte before service of summons was not void per se and that the trial court did not commit grave abuse of discretion. The Court further held that the examination of bank records under Section 10, Rule 57 did not require prior notice to the defendant when the intended witnesses were garnishees or persons in possession or control of credits belonging to the defendant, and that the examination fell within the exception under Republic Act No. 1405 for cases where the deposit is the subject matter of litigation.
Legal Basis and Reasoning
The Court reaffirmed established precedent that a writ of preliminary attachment is a statutory provisional remedy which may be granted at the commencement of the action or at any time thereafter and that nothing in the Rules of Court prohibits issuance before personal jurisdiction over the defendant has been acquired. The Court cited the rationale that the act of filing the complaint and paying required fees constitutes commencement of the action and supports ex parte issuance when statutory requisites are met. The Court explained that a defendant's challenge to the grounds of attachment which overlap with the plaintiff's cause of action in the main case may not be resolved in a summary motion to dissolve the writ without venturing into the merits of the main action. The Court noted that the dismissal of a criminal estafa complaint by the provincial prosecutor did not necessarily negate civil liability and was therefore immaterial to the attachment issue.
The Court distinguished prior decisions which held that enforcement of a writ of attachment must be contemporaneous with service of summons where no attempt at service had been made. The Court found that in the present case a bona fide attempt to serve both summons and the writ occurred on January 3, 1992, but failed due to absence of a responsible officer. The Court deemed an exception appropriate where attempt to serve was thwarted by factors beyond the process server's control and where service was effected within a reasonable period thereafter; the Court reasoned that this exception prevents a defendant alerted by the attempted service from dissipating assets before attachment, and that jurisdiction was eventually acquired six days later. The Court observed that attachment is readily obtainable but also readily dischargeable through cash deposit or a counter-bond under Rule 57, Section 12, Rules of Court, and that petitioners' attempt to secure discharge by posting a counter-bond failed because the proposed amount was less than Sun Life's bond.
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Case Syllabus (G.R. No. 107303)
Parties and Procedural Posture
- Emmanuel C. Onate and Econ Holdings Corporation filed G.R. No. 107303 as petitioners for certiorari with prayer for temporary restraining order.
- Brunner Development Corporation filed G.R. No. 107491 as a separate petitioner for certiorari directed at the same trial-court orders.
- Hon. Zeus C. Abrogar, presiding judge of Branch 150, RTC Makati, and Sun Life Assurance Company of Canada are the respondents.
- Sun Life commenced Civil Case No. 91-3506 by filing a complaint for sum of money with prayer for immediate issuance of a writ of attachment on December 23, 1991.
- The RTC issued an order granting the writ on December 24, 1991, and the writ was actually issued on December 27, 1991.
- Petitioners filed motions to discharge or nullify the attachment and to reconsider; the trial court denied these motions in orders dated February 6, 1992 and September 6, 1992 respectively.
- Petitioners sought relief by certiorari in this Court, and a temporary restraining order had been issued on June 28, 1993 and later lifted by this decision.
Key Factual Allegations
- Sun Life obtained an amended writ of attachment on January 3, 1992 reflecting the alleged indebtedness.
- Deputy Sheriff Arturo C. Flores attempted service of summons and the amended writ at 108 Aguirre St., Makati on January 3, 1992 but found no responsible officer to receive them.
- Despite the failed personal service, Sheriff Flores proceeded to serve notices of garnishment upon several banks and levied a condominium unit and a real property owned by petitioner Onate.
- Summons was eventually served on petitioners on January 9, 1992, and on defendant Noel L. Dino on January 16, 1992.
- Sun Life obtained court orders for examination of bank accounts, including Urban Bank, BPI Account No. 0041-0277-03 which petitioners denied owning, and PNB records concerning checks payable to Brunner.
- A criminal complaint for estafa by Sun Life against petitioners was dismissed by the provincial prosecutor on April 21, 1992, and the dismissal was upheld on July 13, 1992, with the matter elevated to the Department of Justice.
Issues Presented
- Whether the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing ex parte the original and amended writs of preliminary attachment before acquisition of personal jurisdiction over petitioners.
- Whether the trial court acted with grave abuse of discretion in allowing ex parte examination of bank records without prior notice to petitioners.
Contentions of the Parties
- Petitioners argued that the writs and related garnishments were void because the court had not yet acquired jurisdiction over them at the time of issuance and enforcement.
- Petitioners further contended that the factual ground for attachment, alleged fraud, did not exist and that the attachment enforcement preceded valid service of summons.
- Petitioners maintained that examinations of bank records were invalid for want of notice to them.
- Sun Life relied on its statutory remedy under Rule 57 to secure a writ of preliminary attachment and to examine bank accounts as part of tracing and securing assets relevant to its cause of action.
- The trial court justified its rulings by denying the motions to discharge, approving additional attachment bond, and permitting bank examinations under the Rules.