Northern Islands vs. Garcia

Where the main action is appealed, a preliminary attachment issued as an incident thereof is also considered appealed and removed from the jurisdiction of the court a quo, mooting any further trial-court proceedings on the excessiveness of the attachment.

Northern Islands Co., Inc. is a supplier of appliances, while Spouses Dennis and Cherylin Garcia do business under the name and style Ecolamp Multi Resources as buyers and recipients of goods shipped through a common carrier. Their dealing involved bulk deliveries payable within a fixed credit period with stipulated interest on unpaid amounts. No prior related litigation is recited as necessary context beyond that commercial buyer-seller arrangement.

On September 23, 2005, Northern Islands Co., Inc. filed a Complaint with application for writ of preliminary attachment against Spouses Dennis and Cherylin Garcia, doing business as Ecolamp Multi Resources, before the Regional Trial Court of Quezon City, Branch 215, docketed as Civil Case No. Q-05-53699, subsequently amended on October 25, 2005. Petitioner alleged that from March to July 2004 it caused delivery to respondents of various appliances in the aggregate amount of P8,040,825.17, transported, shipped and delivered by Sulpicio Lines, Inc. and accepted in good order and condition by respondents' representatives. The parties allegedly agreed the goods were payable within 120 days with unpaid amounts earning eighteen percent interest per annum, but respondents failed to pay despite repeated demands and fraudulently asserted petitioner had no proof of receipt of the quantities.

Petitioner posted an attachment bond through Visayan Surety and Insurance Corporation in the amount of P8,040,825.17, and on November 7, 2005 the RTC issued the writ sought. Instead of filing an answer, respondents filed on November 11, 2001 an Urgent Motion for Extension of Time to File Proper Pleading and Motion for Discovery, asking to photocopy and examine the original invoices, delivery cargo receipts, and bills of lading attached to the Amended Complaint on the ground they could not come up with an intelligent answer without the originals. Thereafter, on January 11, 2006, respondents filed a Motion to Discharge Excess Attachment, alleging the attachment exceeded by P9,232,564.56 because their appraiser Gaudioso W. Lapaz assessed the attached properties including garnished bank accounts at P17,273,409.73 against a bond of only P8,040,825.17.

In an Order dated February 28, 2006, the RTC denied the November 11, 2001 Motion and directed respondents to file their answer, which they did through an Answer Ad Cautelam Ex Abudante with Compulsory Counterclaim on April 3, 2006, followed by another Motion for Leave of Court to File Motion for Discovery on April 7, 2006. In an Order dated June 21, 2006, the RTC denied the Motion to Discharge Excess Attachment, finding Lapaz's appraisal not reflective of true valuation and the bond sufficient security for damages from attachment, while granting discovery under Rule 27 despite petitioner's claim it lacked the originals. No production occurred on July 10, 2006 as directed because respondents received the order only on July 11, 2006. On July 25, 2006 respondents sought partial reconsideration, praying for referral to a commissioner under Rule 32 to determine the aggregate value of attached properties and for renewed production of originals, which the RTC denied on August 23, 2006. Respondents then elevated the matter to the CA via certiorari and mandamus as CA-G.R. SP No. 97448.

In the interim, the RTC rendered a Decision dated September 21, 2011 in the main case dismissing petitioner's Amended Complaint due to absence of evidence proving respondents agreed to the pricing of the goods. Petitioner appealed on October 27, 2011, and in an Order dated January 25, 2012 the RTC found the Notice of Appeal seasonably filed with proper fees paid and ordered elevation of the entire records to the CA, docketed as CA-G.R. CV No. 98237, with no appeal shown to have been filed by respondents.

• Loss of Jurisdiction Upon Appeal: Whether the RTC had lost jurisdiction over the matter of the preliminary attachment after petitioner appealed the decision in the Main Case, and thereafter ordered the transmittal of the records to the CA.
• Appointment of Commissioner and Discharge of Excess Attachment: Whether the CA erred in ordering the appointment of a commissioner and the subsequent discharge of any excess attachment found by said commissioner.

• Loss of Jurisdiction Upon Appeal: Yes. The RTC lost jurisdiction over the Main Case upon perfection of petitioner's timely appeal and lapse of respondents' period to appeal, pursuant to Section 9, Rule 41 of the Rules of Court.
• Appointment of Commissioner and Discharge of Excess Attachment: Yes, the CA erred. The ordered trial by commissioners on excessiveness, being merely ancillary to the appealed Main Case, was mooted by the appeal removing both main action and attachment from the court a quo.

• Loss of Jurisdiction Upon Appeal: Petitioner duly perfected its appeal of the September 21, 2011 Decision through timely filing of its Notice of Appeal dated October 27, 2011 with payment of docket fees, a fact confirmed by the RTC Order dated January 25, 2012 ordering elevation of the entire records to the CA. Records did not show respondents filed any appeal, resulting in lapse of their period to appeal. Under Section 9, Rule 41, in appeals by notice of appeal the court loses jurisdiction upon perfection of timely appeals and expiration of the other parties' time to appeal, leaving no serious doubt the RTC had lost jurisdiction over the Main Case.
• Appointment of Commissioner and Discharge of Excess Attachment: With loss of jurisdiction over the Main Case necessarily came loss of jurisdiction over matters merely ancillary thereto, so the propriety of trial by commissioners to determine excessiveness of the preliminary attachment was mooted by the supervening appeal in CA-G.R. CV No. 98237. A preliminary attachment is only an incident of the principal action without independent existence apart from the main suit, and must fail if the suit itself cannot be maintained because the purpose of the writ can no longer be justified. Hence where the main action is appealed, the attachment issued as an incident is also considered appealed and removed from the jurisdiction of the court a quo, making discussion of other issues unnecessary.

• Loss of jurisdiction upon perfection of appeal — Under Section 9, Rule 41 of the Rules of Court, in appeals by notice of appeal, the trial court loses jurisdiction over the case upon perfection of appeals filed in due time and expiration of the time to appeal of the other parties. The Court applied it to hold the RTC had lost jurisdiction over Civil Case No. Q-05-53699 after confirming petitioner's timely appeal and ordering elevation of records, with no appeal by respondents.
• Preliminary attachment as ancillary remedy — Attachment is a provisional remedy by which an adverse party's property is taken into legal custody at commencement or thereafter as security for satisfaction of any judgment that may be recovered; it is auxiliary and cannot have independent existence apart from the main suit, and must fail if the suit cannot be maintained because the writ's purpose can no longer be justified. The Court applied it to hold the attachment could not be the subject of a separate action and was considered appealed with the main action, mooting the commissioner proceedings on alleged excessiveness.
• Attachment follows the appealed main action — Where the main action is appealed, the attachment issued as an incident of that action is also considered appealed and removed from the jurisdiction of the court a quo. The Court relied on this formulation from Sps. Olib vs. Judge Pastoral to set aside the CA order directing the RTC to appoint a commissioner and discharge any excess attachment.

• "in appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties." — States the controlling jurisdictional rule under Section 9, Rule 41 applied to find the RTC had lost jurisdiction after petitioner's perfected appeal.
• "Attachment is defined as a provisional remedy by which the property of an adverse party is taken into legal custody, either at the commencement of an action or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party." — Defines the nature of attachment as provisional and security-oriented, grounding its ancillary character.
• "Being merely ancillary to a principal proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of the writ can no longer be justified." — Articulates why ancillary attachment proceedings cannot survive independently of the main suit's viability.
• "The consequence is that where the main action is appealed, the attachment which may have been issued as an incident of that action, is also considered appealed and so also removed from the jurisdiction of the court a quo." — States the decisive ratio for mootness of the commissioner proceedings upon appeal of the main case.

• Sps. Olib vs. Judge Pastoral, 266 Phil 762 (1990) — Controlling precedent followed for the propositions that attachment is only an incident without independent existence, must fail if the main suit cannot be maintained, and is considered appealed with the main action and removed from the court a quo.

• Section 9, Rule 41, Rules of Court — Provides for loss of trial-court jurisdiction in appeals by notice of appeal upon perfection of timely appeals and expiration of other parties' time to appeal; applied to hold the RTC had lost jurisdiction over the Main Case and its ancillary attachment matters.
• Rule 32, Rules of Court — Governs trial by commissioners; invoked by respondents and ordered by the CA to settle conflicting valuations of attached properties, but held by the Court to be mooted as an ancillary matter after appeal of the Main Case.
• Rule 27, Rules of Court — Governs production and inspection of documents; the RTC had granted respondents' Motion for Discovery thereunder while the CA later denied compelling production of originals not in petitioner's possession.

Teresita J. Leonardo-De Castro, Acting Chairperson, Lucas P. Bersamin, Jose Portugal Perez, Francis H. Jardeleza