Title
Philippine Commercial and International Bank vs. Alejandro
Case
G.R. No. 175587
Decision Date
Sep 21, 2007
PCIB wrongfully garnished Alejandro’s deposits via misrepresentation, leading to liability for damages; SC reduced excessive awards for nominal, moral, exemplary damages, and attorney’s fees.
bank liability
damages
wrongful garnishment
A

Case Summary (G.R. No. 175587)

Factual Background: Loan, Security and Alleged Withdrawals

PCIB advanced a series of yen loans to respondent during February and April 1997, consolidated into a promissory note for P249,828,588.90. Petitioner asserted that fluctuations in foreign exchange rendered existing deposits insufficient as security and demanded additional security. Respondent contested the demand on grounds of the bank’s alleged mishandling of his account and maintained that deposits had been handled with the bank’s approval; he traced the relevant events to his instruction to close an account in April 1997 when the dollar-yen rate favored him.

Grounds for Attachment and Ex Parte Issuance

PCIB sought a writ of preliminary attachment under Rule 57, Section 1, alleging (1) fraudulent withdrawal of unassigned deposits despite a verbal promise not to withdraw them, and (2) that respondent was not a resident of the Philippines. The bank supported its application with an affidavit of an assistant vice-president. The trial court granted the ex parte writ on October 24, 1997, conditioned on a bond of P18,798,734.69 posted by Prudential Guarantee & Assurance, Inc., and caused garnishment of respondent’s deposits at RCBC.

Respondent’s Motion to Quash and Trial Court Findings

Respondent voluntarily submitted to the court’s jurisdiction and filed a motion to quash the writ, arguing that the withdrawals were with the bank’s approval and that he maintained Philippine residence and an office address where the bank had dealt with him. The trial court granted the motion on December 24, 1997, finding that the withdrawals were not intended to defraud the bank and that PCIB had misrepresented and suppressed material facts—specifically respondent’s permanent Philippine addresses—thus rendering the attachment improper. The court discharged the writ.

Procedural History of Appeals and Finality of Prior Findings

PCIB sought certiorari from the Court of Appeals and later relief from the Supreme Court, but those actions failed (including dismissal for late filing). The trial court’s finding that PCIB misrepresented respondent’s residence and suppressed material facts was sustained on the procedural track and became final and executory. The doctrine of conclusiveness of judgments was thereafter invoked by the Supreme Court to preclude relitigation of those factual determinations in the subsequent damages action.

Damages Claim on the Attachment Bond and Trial Proof

Respondent filed a damages claim against the attachment bond for P25 million, alleging, among other consequences, the dishonor of a P150,000 RCBC check due to the garnishment. At trial, respondent presented testimony establishing his local residence, professional standing, and the practical effects of the garnishment. PCIB’s witness asserted the bank’s good faith in alleging respondent’s foreign residence. The trial court, relying on the prior findings of misrepresentation and the record, awarded P25 million in damages jointly and severally against Prudential and PCIB, directing payment from the bond and augmenting the shortfall against the bank.

Court of Appeals Determination and Subsequent Modification

On appeal the Court of Appeals affirmed liability but substantially modified the award: it ordered Prudential (solidarily liable with the bank) to pay P2,000,000 as nominal damages, P5,000,000 as moral damages, and P1,000,000 as attorney’s fees, to be satisfied against the attachment bond. After motions for reconsideration, the Court of Appeals further granted respondent’s motion to add exemplary damages of P5,000,000, increasing the total award as affirmed before the Supreme Court review.

Issues Presented to the Supreme Court

Because the trial court’s findings on PCIB’s misrepresentation and respondent’s Philippine residence were final, the critical issue for the Supreme Court was whether PCIB was liable for damages arising from the wrongful issuance and enforcement of the writ of attachment, and, if so, the proper measure of damages given the evidence.

Res Judicata and Its Effect on PCIB’s Good-Faith Defense

The Supreme Court held that the prior final adjudication that PCIB misrepresented respondent’s residence and suppressed material facts conclusively established PCIB’s bad faith for purposes of the damages action. Under the rule of conclusiveness of judgment, matters actually and directly litigated and determined in prior proceedings cannot be relitigated between the same parties; consequently PCIB was barred from asserting good faith in procuring the attachment.

Proper Grounds and Limits for Attachment; Substituted Service for Residents Temporarily Abroad

The Court reiterated that preliminary attachment is an extraordinary remedy that must be strictly construed in favor of the defendant. Rule 57, Section 1(f) permits attachment in an action against a party on whom summons may be served by publication—that is, typically nonresidents or those not found in the Philippines. However, where a defendant is a resident who is temporarily out of the Philippines, Rule 14 (Sections 15–16) allows substituted or extraterritorial service (including substituted service at the defendant’s residence or office) which is ordinarily sufficient to confer jurisdiction without converting the action into quasi in rem by attachment. The Supreme Court relied on Montalban v. Maximo and related authorities to hold that substituted service is the normal mode for residents temporarily abroad, and attachment should be a last resort only when substituted service would not suffice.

Supreme Court’s Application: Attachment Was Unnecessary and Improper

Applying those principles, the Court found that attachment was sought mainly to secure jurisdiction on the misrepresentation that respondent resided outside the Philippines. Because the bank knew of respondent’s Philippine residence and office and could have sought substituted service, attachment was unnecessary and constituted an abuse designed to secure an ex parte seizure. The misrepresentation and omission were therefore deliberate, and liability for wrongful attachment ensued.

Assessment of Damages: Actual, Nominal, Moral, Exemplary, and Attorney’s Fees

  • Actual damages: The Court found no competent proof of the specific amount garnished or other quantified pecuniary losses; thus actual damages were not awarded.
  • Nominal damages: Recognizing the violation of respondent’s right to use his money, the Court affirmed an award of nominal damages but reduced the amount from P2,000,000 to P50,000 in light of the short duration of the writ (approximately two months) and lack of proof of the amount garnished.
  • Moral damages: The Court sustained an award for moral damages due to PCIB’s culpable conduct but reduced the amount from P5,000,000 to P500,000, observing that

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