Davao Light & Power Co., Inc. vs. Court of Appeals

A writ of preliminary attachment may validly issue ex parte against a defendant before the court acquires jurisdiction over his person by service of summons or voluntary submission to the court's authority. The court's acquisition of jurisdiction over the person of the defendant is distinct from its acquisition of jurisdiction over the subject matter of the action and over the person of the plaintiff, and the provisional remedy may be granted "at the commencement of the action" — which refers to the filing of the complaint — or at any time thereafter. However, levy on property pursuant to the writ may not be validly effected unless preceded or contemporaneously accompanied by service on the defendant of summons, a copy of the complaint, the application for attachment, the order of attachment, and the plaintiff's attachment bond.

Davao Light & Power Co., Inc. (Davao Light) filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna, which included an ex parte application for a writ of preliminary attachment. The case was assigned to Branch 8 of the Regional Trial Court of Davao City, presided over by Judge Milagros C. Nartatez. The dispute concerned the validity of an attachment issued before the defendants had been served with summons.

Davao Light & Power Co., Inc. (Davao Light) filed a verified complaint for recovery of a sum of money and damages against Queensland Hotel or Motel or Queensland Tourist Inn and Teodorico Adarna on May 2, 1989, docketed as Civil Case No. 19513-89 before the Regional Trial Court of Davao City. The complaint contained an ex parte application for a writ of preliminary attachment. On May 3, 1989, Judge Milagros C. Nartatez, to whose branch the case was assigned by raffle, issued an Order granting the ex parte application and fixing the attachment bond at P4,600,513.37.

On May 11, 1989, after Davao Light submitted the attachment bond, the writ of attachment issued. The following day, May 12, 1989, the summons, a copy of the complaint, the writ of attachment, and a copy of the attachment bond were served on defendants Queensland and Adarna; pursuant to the writ, the sheriff seized properties belonging to them.

On September 6, 1989, defendants Queensland and Adarna filed a motion to discharge the attachment, arguing that the trial court lacked jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the court had not yet acquired jurisdiction over the cause and over the persons of the defendants. Davao Light filed an opposition on September 14, 1989, and on September 19, 1989, the Trial Court issued an Order denying the motion to discharge.

Queensland and Adarna successfully challenged the September 19, 1989 Order in a special civil action of certiorari in the Court of Appeals. The Court of Appeals declared null and void the Orders dated May 3, 1989, September 19, 1989, and November 7, 1989, as well as the Writ of Attachment dated May 11, 1989 and the Notice of Levy on Preliminary Attachment, and ordered the attachment discharged. The appellate court reasoned that the court does not acquire jurisdiction over the person of the defendant until he is duly summoned or voluntarily appears, and that adding the phrase "ex parte" does not confer jurisdiction before actual summons had been made, nor retroact jurisdiction upon summons being made. Citing Sievert vs. Court of Appeals, the Court of Appeals held that the critical time in a proceeding in attachment is when the trial court acquires authority under law to act coercively against the defendant or his property, which it identified as the time of the vesting of jurisdiction in the court over the person of the defendant in the main case.

• Validity of Ex Parte Attachment Before Summons: Davao Light argued that a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction over the latter's person by service of summons or voluntary submission to the court's authority, and that the Court of Appeals erred in nullifying the attachment on the ground of lack of jurisdiction over the persons of the defendants at the time the writ was issued.

• Lack of Jurisdiction Over the Person: Respondents Queensland and Adarna argued that the attachment was void because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over the persons of the defendants, since summons had not yet been served on them.

• Validity of Ex Parte Attachment Before Acquisition of Jurisdiction Over the Defendant's Person: Whether a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction over the latter's person by service of summons or his voluntary submission to the Court's authority.

• Validity of Ex Parte Attachment Before Acquisition of Jurisdiction Over the Defendant's Person: Yes. A writ of preliminary attachment may validly issue ex parte before the court acquires jurisdiction over the person of the defendant. The petition for review was granted, the Court of Appeals' decision was reversed, and the order and writ of attachment were reinstated.

• Validity of Ex Parte Attachment Before Acquisition of Jurisdiction Over the Defendant's Person: The Court ruled that it is incorrect to theorize that after an action has been commenced and jurisdiction over the person of the plaintiff has been vested in the court, but before acquisition of jurisdiction over the person of the defendant, nothing can be validly done by the plaintiff or the court. The obtention by the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the action, or the res or object thereof.

An action or proceeding is commenced by the filing of the complaint or other initiatory pleading, pursuant to Section 6, Rule 2 of the Rules of Court. By that act, the jurisdiction of the court over the subject matter or nature of the action is invoked or called into activity, and the court acquires jurisdiction over said subject matter. It is by that self-same act of the plaintiff of filing the complaint — by which he signifies his submission to the court's power and authority — that jurisdiction is acquired by the court over his person. On the other hand, jurisdiction over the person of the defendant is obtained by the service of summons or other coercive process upon him or by his voluntary submission to the authority of the court.

The Court enumerated various acts that may be validly done during the interval between the filing of the complaint and the service of summons, including the appointment of a guardian ad litem, the grant of authority to the plaintiff to prosecute the suit as a pauper litigant, the amendment of the complaint by the plaintiff as a matter of right without leave of court, authorization by the Court of service of summons by publication, and the dismissal of the action by the plaintiff on mere notice. The same is true with regard to the provisional remedies of preliminary attachment, preliminary injunction, receivership, or replevin — they may be validly and properly applied for and granted even before the defendant is summoned or is heard from.

Rule 57 speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." The phrase "at the commencement of the action" obviously refers to the date of the filing of the complaint, which marks the commencement of the action, and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. The rule clearly states that after an action is properly commenced — by the filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, at any time, either before or after service of summons on the defendant.

The Court noted that this has been the immemorial practice sanctioned by the courts: for the plaintiff to incorporate the application for attachment in the complaint and for the Trial Court to issue the writ ex parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. Citing Toledo vs. Burgos, the Court ruled that a hearing on a motion or application for preliminary attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion. Citing Filinvest Credit Corporation vs. Relova, the Court declared that nothing in the Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment. The only pre-requisite is that the Court be satisfied, upon consideration of the affidavit of the applicant or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in Section 1 of Rule 57, that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as the sum for which the order of attachment is granted above all legal counterclaims.

The Court also cited Mindanao Savings & Loan Association, Inc. vs. Court of Appeals, which emphasized that no hearing is required on an application for preliminary attachment with notice to the defendant, because this would defeat the objective of the remedy since the time which such a hearing would take could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues. Such a procedure would warn absconding debtors-defendants of the commencement of the suit against them and the probable seizure of their properties, and thus give them the advantage of time to hide their assets.

The Court distinguished the cases of Sievert vs. Court of Appeals and BAC Manufacturing and Sales Corporation vs. Court of Appeals, where writs of attachment issued ex parte were struck down. In Sievert, levy on attachment was attempted notwithstanding that only the petition for issuance of the writ of preliminary attachment was served on the defendant, without any prior or accompanying summons and copy of the complaint. In BAC Manufacturing and Sales Corporation, neither the summons nor the order granting the preliminary attachment or the writ of attachment itself was served on the defendant before or at the time the levy was made. In contrast, in the case at bar, the summons and a copy of the complaint, as well as the order and writ of attachment and the attachment bond, were all served on the defendant.

The Court reiterated that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of the defendant, these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court. Hence, when the sheriff commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant's affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint, as explicitly directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint against him, of the issuance of a writ of preliminary attachment and the grounds therefor, and thus accord him the opportunity to prevent attachment of his property by the posting of a counterbond or dissolving it.

The Court reaffirmed that writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint, the application for attachment, the order of attachment, and the plaintiff's attachment bond.

• Distinction between jurisdiction over the person of the defendant and jurisdiction over the subject matter and the person of the plaintiff — Jurisdiction over the person of the defendant is obtained by service of summons or other coercive process upon him or by his voluntary submission to the authority of the court. Jurisdiction over the subject matter is invoked by the filing of the complaint, and jurisdiction over the person of the plaintiff is acquired by the same act of filing. The Court applied this distinction to hold that the issuance of a writ of preliminary attachment before service of summons on the defendant is not invalid, since the court's authority to act in the case is not dependent on the acquisition of jurisdiction over the defendant's person.

• Ex parte issuance of preliminary attachment — A writ of preliminary attachment may issue ex parte at the commencement of the action or at any time thereafter, provided the court is satisfied that the requisites under Section 1, Rule 57 exist. No hearing with notice to the defendant is required, since such a hearing would defeat the objective of the remedy by enabling the defendant to abscond or dispose of his property. The Court applied this doctrine to uphold the trial court's issuance of the writ before summons was served on the defendants.

• Requisites for valid levy under a writ of attachment — Levy on property pursuant to a writ of attachment may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint, the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond. The Court applied this doctrine to distinguish the case from Sievert and BAC Manufacturing, where the writs were struck down for failure to serve these documents.

• Modes of discharging a preliminary attachment — There are two ways of discharging an attachment: first, by the posting of a counterbond under Section 12 of Rule 57 (after seizure) or Section 5 of Rule 57 (before levy); and second, by a showing of its improper or irregular issuance under Section 13 of Rule 57. The Court discussed these modes to show that ample recourse against a preliminary attachment is secured by law to the defendant, matching the relative ease with which the attachment may be obtained.

• "It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction over the person of the plaintiff has been vested in the court, but before acquisition of jurisdiction over the person of the defendant (either by service of summons or his voluntary submission to the court's authority), nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done during this period should be dependent on, or held in suspension until, the actual obtention of jurisdiction over the defendant's person. The obtention by the court of jurisdiction over the person of the defendant is one thing; quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or nature of the action, or the res or object thereof." — This passage articulates the core doctrinal distinction between the different types of jurisdiction and forms the basis of the Court's ruling that the attachment was validly issued before service of summons.

• "Rule 57 in fact speaks of the grant of the remedy 'at the commencement of the action or at any time thereafter.' The phrase, 'at the commencement of the action,' obviously refers to the date of the filing of the complaint — which, as above pointed out, is the date that marks 'the commencement of the action;' and the reference plainly is to a time before summons is served on the defendant, or even before summons issues." — This passage establishes the statutory basis for the Court's interpretation of when a preliminary attachment may be applied for and granted.

• "For the guidance of all concerned, the Court reiterates and reaffirms the proposition that writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond." — This is the canonical formulation of the rule on ex parte issuance of writs of attachment and the requirements for valid levy, which the Court explicitly reaffirmed for the guidance of all concerned.

• Sievert vs. Court of Appeals, G.R. No. 84034, December 22, 1988, 168 SCRA 692 — Distinguished. In that case, levy on attachment was attempted notwithstanding that only the petition for issuance of the writ of preliminary attachment was served on the defendant, without any prior or accompanying summons and copy of the complaint. The Court distinguished it from the case at bar, where summons and a copy of the complaint, as well as the order and writ of attachment and the attachment bond, were all served on the defendant.

• BAC Manufacturing and Sales Corporation vs. Court of Appeals, G.R. No. 96784, August 2, 1991 — Distinguished. In that case, neither the summons nor the order granting the preliminary attachment or the writ of attachment itself was served on the defendant before or at the time the levy was made. The Court distinguished it from the present case, where all required documents were served on the defendants.

• Toledo vs. Burgos, 168 SCRA 513 (December 19, 1988) — Cited for the proposition that a hearing on a motion or application for preliminary attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion. The Court noted that in that case, the application for preliminary attachment ex parte should have been denied because the fundamental requisites under Rule 57, Section 1 did not exist, and not because ex parte applications are per se illegal.

• Filinvest Credit Corporation vs. Relova, 117 SCRA 420 — Cited for the declaration that nothing in the Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment.

• Mindanao Savings & Loan Association, Inc. vs. Court of Appeals, 172 SCRA 480 (April 18, 1989) — Cited for the postulate that no hearing is required on an application for preliminary attachment with notice to the defendant, because this would defeat the objective of the remedy since the time which such a hearing would take could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues.

• Calderon vs. I.A.C., 155 SCRA 531 (1987) — Cited for the proposition that the attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ instead of the other.

• Section 1, Rule 57, Rules of Court — Defines preliminary attachment as the provisional remedy in virtue of which a plaintiff or other proper party may, at the commencement of the action or at any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. The Court interpreted the phrase "at the commencement of the action" to refer to the filing of the complaint, which may be before summons is served on the defendant.

• Section 3, Rule 57, Rules of Court — Sets forth the requisites for the issuance of an order of attachment: the Court must be satisfied, upon consideration of the affidavit of the applicant or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in Section 1, that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant is as much as the sum for which the order of attachment is granted above all legal counterclaims.

• Section 4, Rule 57, Rules of Court — Requires the applicant to post a bond executed to the adverse party in an amount to be fixed by the judge, not exceeding the plaintiff's claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.

• Section 5, Rule 57, Rules of Court — Governs the manner of attaching property and requires the officer executing the order to attach all the properties of the party against whom the order is issued, unless the latter makes a deposit or gives a counter-bond. The Court also noted that this section requires service on the defendant of a copy of the applicant's affidavit and attachment bond, and of the order of attachment.

• Section 12, Rule 57, Rules of Court — Provides for the discharge of attachment upon giving a counterbond, allowing the party whose property has been attached to apply for an order discharging the attachment wholly or in part on security given in an amount equal to the value of the property attached.

• Section 13, Rule 57, Rules of Court — Provides for the discharge of attachment for improper or irregular issuance, allowing the party whose property has been attached to apply for an order to discharge the attachment on the ground that the same was improperly or irregularly issued, at any time either before or after the release of the attached property, or before any attachment shall have been actually levied.

• Section 6, Rule 2, Rules of Court — Provides that an action or proceeding is commenced by the filing of the complaint or other initiatory pleading. The Court noted that the action is not deemed commenced, however, and will not be deemed to interrupt the running of the period of prescription, unless and until the docket and other court fees are fully paid.

• Section 3, Rule 14, Rules of Court — Requires service of summons, a copy of the complaint, and the order for appointment of guardian ad litem, if any, on the defendant. The Court held that service of all such documents is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon considerations of fairness.

Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Grino-Aquino, Medialdea, Regalado, and Romero, JJ., concurred. Fernan, C.J., was on leave. Davide, Jr., J., took no part.