Philippine Commercial International Bank vs. Alejandro

A writ of preliminary attachment is not necessary to acquire jurisdiction over a resident temporarily out of the Philippines if substituted service of summons can be effected at the defendant’s residence or office, and a plaintiff who suppresses the fact of such local residence to procure a writ is liable for damages arising from the wrongful attachment.

Respondent Joseph Anthony M. Alejandro obtained a series of yen loans from petitioner Philippine Commercial International Bank (PCIB) in February and April 1997, consolidated under a promissory note for ₱249,828,588.90. Due to foreign exchange fluctuations causing a deficiency in the assigned security deposits, PCIB requested additional collateral. Respondent refused, blaming PCIB for mishandling his account by failing to close it earlier at a more favorable exchange rate. PCIB subsequently filed a complaint for sum of money with an application for preliminary attachment, alleging respondent fraudulently withdrew unassigned deposits and resided out of the Philippines.

• The Loan and Dispute: Respondent obtained consolidated yen loans from PCIB, secured by assigned deposits. Following foreign exchange fluctuations, PCIB demanded additional security. Respondent refused, citing PCIB’s failure to follow his prior instructions to close his account, which he argued caused the shortfall.
• The Attachment Application: PCIB filed a complaint for sum of money with preliminary attachment under Section 1(e) and (f) of Rule 57. PCIB alleged respondent fraudulently withdrew unassigned deposits despite a verbal promise not to, and that respondent resided out of the Philippines.
• Garnishment and Quashal: The RTC issued the writ ex parte, resulting in the garnishment of respondent’s deposits with RCBC. Respondent moved to quash, presenting evidence that PCIB approved the withdrawals and that PCIB knew of his permanent residence in Quezon City and office in Makati City, regularly transacting with him there.
• Finding of Misrepresentation: The RTC quashed the writ, finding the withdrawal was approved by PCIB and thus not fraudulent. More critically, the RTC found PCIB deliberately misrepresented respondent’s residence, suppressing the fact that his permanent addresses were in the Philippines, to ensure the writ’s issuance. This finding attained finality after PCIB’s unsuccessful challenges in the CA and SC.
• Claim for Damages: Respondent filed a claim against the attachment bond for wrongful garnishment, proving his ₱150,000 check for attorney’s fees was dishonored due to the garnishment. The RTC awarded ₱25,000,000 in damages. The CA reduced the award and specified the categories of damages, later adding exemplary damages upon reconsideration.

• Good Faith: Petitioner maintained that it acted in good faith in alleging respondent was a resident of Hong Kong, asserting no malicious intent to mislead the court.
• Propriety of Attachment under Rule 57(f): Petitioner argued that even if respondent were considered a resident temporarily out of the Philippines, attachment was still proper under Section 1, paragraph (f) of Rule 57, because summons could be served by publication, thereby justifying the writ’s issuance.

• Absence of Fraud: Respondent countered that the withdrawal of unassigned deposits was not fraudulent, having been approved by petitioner.
• Misrepresentation of Residence: Respondent argued that petitioner knew of his permanent residence and office in the Philippines, making the allegation of non-residency a deliberate suppression of material fact to secure the writ.

• Liability for Wrongful Attachment: Whether petitioner is liable for damages arising from the improper issuance of the writ of attachment.
• Good Faith Defense: Whether petitioner can invoke good faith despite a final judgment finding it misrepresented respondent’s residence.
• Jurisdictional Necessity of Attachment: Whether a writ of attachment is proper against a resident temporarily out of the Philippines upon whom summons may be served by publication.

• Liability for Wrongful Attachment: Petitioner’s liability for damages was affirmed. The wrongful issuance of the writ, procured through misrepresentation, directly caused the garnishment of respondent’s funds, entitling respondent to damages.
• Good Faith Defense: The defense of good faith was rejected. The principle of conclusiveness of judgment bars relitigation of the issue of misrepresentation, which was definitively settled in the prior proceedings quashing the writ. The tenor of the quashal order explicitly found a deliberate strategy to mislead the court.
• Jurisdictional Necessity of Attachment: Attachment was ruled unnecessary and improper under the alternative ground. For residents temporarily out of the Philippines, substituted service of summons is the normal mode of acquiring jurisdiction, rendering attachment unnecessary solely for jurisdictional purposes. Because jurisdiction could have been acquired by substituted service at respondent’s known Philippine addresses, the attachment—justified by petitioner solely as a jurisdictional measure—was baseless.

• Conclusiveness of Judgment — A final judgment on a particular issue is conclusive in a subsequent action between the same parties, even if based on a different claim. The prior final determination that PCIB misrepresented respondent’s residence and suppressed material facts precluded PCIB from claiming good faith in the subsequent action for damages.
• Preliminary Attachment against Residents Temporarily Out of the Philippines — Substituted service of summons is the normal mode of acquiring jurisdiction over a resident temporarily out of the Philippines, not attachment with service by publication. Attachment is a harsh, extraordinary remedy that should be resorted to only when necessary; if substituted service can confer jurisdiction, attachment is unwarranted.

• "A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. [...] It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up."
• "The rules on the application of a writ of attachment must be strictly construed in favor of the defendant. For attachment is harsh, extraordinary, and summary in nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance."
• "The misrepresentation of petitioner that respondent does not reside in the Philippines and its omission of his local addresses was thus a deliberate move to ensure that the application for the writ will be granted."

• Hanil Development Co., Ltd. v. Court of Appeals, G.R. Nos. 113176 & 113342, July 30, 2001 — Followed. The Court applied this precedent to debunk a claim of good faith by a party who maliciously sought a writ of attachment, emphasizing that bad faith in procuring a writ, once determined in a final decision voiding the writ, precludes subsequent claims of good faith.
• Montalban v. Maximo, 131 Phil. 154 (1968) — Followed. The Court relied on this case to establish that substituted service of summons is the normal mode of service for residents temporarily out of the Philippines, thereby negating the necessity of attachment for jurisdictional purposes.

• Section 1, Rule 57 of the Rules of Court — Enumerates the grounds for preliminary attachment. Paragraph (f) allows attachment against a party who resides out of the Philippines, or on whom summons may be served by publication. The Court interpreted this provision in relation to jurisdiction, clarifying that attachment is not required to acquire jurisdiction if substituted service on a temporarily absent resident is feasible.
• Section 16, Rule 14 of the Rules of Court — Provides for extraterritorial service on residents temporarily out of the Philippines. The Court clarified that this section, read in conjunction with substituted service under Section 7 (now Section 7, Rule 14), renders attachment unnecessary for jurisdiction over such residents.
• Article 2221, Civil Code — Applied to justify the award of nominal damages for the violation of respondent’s right to use his garnished money, reduced to ₱50,000 due to the short duration of the writ and lack of evidence on the garnished amount.
• Article 2232, Civil Code — Applied to justify exemplary damages by way of example or correction for public good, deterring parties from resorting to baseless allegations to obtain writs of attachment.

Austria-Martinez, Chico-Nazario, Nachura, Reyes