Torres vs. Satsatin

A writ of preliminary attachment, though validly issued, cannot bind the defendant if it is implemented before the trial court acquires jurisdiction over the defendant’s person through service of summons; the writ must be served after or simultaneously with the summons, complaint, application, affidavit, bond, and order, and any surety bond must be covered by a valid Supreme Court clearance authorizing its acceptance in the issuing court.

Petitioners Sofia Torres, Fructosa Torres, the heirs of Mario Torres, and Solar Resources, Inc. were the plaintiffs in a dispute over the proceeds of a negotiated sale of adjacent parcels of land in Dasmariñas, Cavite; Nicanor Satsatin had been authorized by a special power of attorney to negotiate the sale, and Solar Resources, Inc. was allegedly the purchaser. The controversy implicates Rule 57 of the Rules of Court, which governs preliminary attachment, including the bond required for its issuance and the service of summons and the complaint upon the defendant in connection with the writ’s implementation.

The siblings Sofia Torres, Fructosa Torres, and Mario Torres each owned adjacent 20,000-square-meter tracts of land in Barrio Lankaan, Dasmariñas, Cavite, covered by Transfer Certificate of Title Nos. 251267, 251266, and 251265, respectively. Sometime in 1997, Nicanor Satsatin asked their mother, Agripina Aledia, whether she wanted to sell the lands. After consulting her daughters, daughter-in-law, and grandchildren, Agripina agreed to sell the properties, and petitioners authorized Nicanor, through a Special Power of Attorney, to negotiate the sale.

Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. Solar allegedly agreed to purchase the three parcels, together with a 10,000-square-meter property owned by Rustica Aledia, for ₱35,000,000. Petitioners alleged that Nicanor was supposed to remit to them a total of ₱28,000,000, or ₱9,333,333 each to Sofia, Fructosa, and the heirs of Mario. Petitioners claimed that Solar paid the entire purchase price of ₱35,000,000 to Nicanor in thirty-two post-dated checks, which Nicanor encashed or deposited on their respective due dates. Petitioners also learned that, from January 2000 to April 2002, Nicanor allegedly acquired a house and lot at Vista Grande BF Resort Village, Las Piñas City, and a car, which he registered in the names of his unemployed children, Nikki Normel Satsatin and Nikki Norlin Satsatin. Notwithstanding receipt of the entire payment, Nicanor remitted only ₱9,000,000, leaving an unremitted balance of ₱19,000,000; despite repeated verbal and written demands, he failed to remit the balance.

On October 25, 2002, petitioners filed before the Regional Trial Court a Complaint for sum of money and damages against Nicanor, Ermilinda Satsatin, Nikki Normel Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02 and raffled to RTC, Branch 90, Dasmariñas, Cavite. On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of Attachment, alleging that respondents were about to depart the Philippines; that they had real and personal properties in Metro Manila and nearby provinces; that the amount due was ₱19,000,000 above all other claims; that there was no other sufficient security for the claim; and that petitioners were willing to post a bond to answer for costs and damages. On the same date, the RTC issued an Order directing petitioners to post a bond of ₱7,000,000 before the writ of attachment would issue.

On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff, informing the court that they had already filed an attachment bond and praying that a sheriff be deputized to serve the writ. The RTC granted the motion and deputized the sheriff, with police security assistance, to serve the writ. The RTC then issued a Writ of Attachment dated November 15, 2002, directing the sheriff to attach the estate, real or personal, of respondents to the value of the demands and to return the writ with proceedings indorsed within twenty days. On November 19, 2002, a copy of the writ was served on respondents, and on the same date the sheriff levied their real and personal properties, including household appliances, cars, and a parcel of land in Las Piñas, Manila. Summons, together with a copy of the complaint, was served on respondents only on November 21, 2002.

On November 29, 2002, respondents filed their Answer and, on the same day, a Motion to Discharge Writ of Attachment. They grounded the motion on the following: the bond was issued before the writ of attachment; the writ was issued before summons was received by respondents; the sheriff did not serve copies of the application for attachment, order of attachment, plaintiffs’ affidavit, and attachment bond; the sheriff did not submit a sheriff’s return; and the grounds cited for the writ were baseless. In the alternative, respondents offered to post a counter-bond. On March 11, 2003, the RTC denied the motion but directed respondents to file a ₱7,000,000 counter-bond. On April 3, 2003, the RTC reiterated that the motion to discharge was denied until respondents posted the counter-bond. On December 15, 2003, the RTC denied respondents’ Urgent Motion to Lift/Set Aside Order Dated March [11], 2003, and on March 3, 2004, it denied their Urgent Motion for Reconsideration.

Respondents then filed before the Court of Appeals a Petition for Certiorari, Mandamus and Prohibition with Preliminary Injunction and Temporary Restraining Order under Rule 65, docketed as CA-G.R. SP No. 83595. They argued that the writ was improper and irregular because it was issued and enforced without the lower court acquiring jurisdiction over their persons, that it was implemented without serving summons and the complaint, and that the bond was defective because the bonding company lacked the proper clearance to transact business with the RTC of Dasmariñas, Cavite; the clearances it obtained applied only to the courts of Pasay, Pasig, Manila, and Makati. The Court of Appeals found that the bond’s certification did not cover the RTC of Dasmariñas and that the writ had been implemented before summons was served on respondents.

• Discharge Only by Counter-Bond: Petitioners maintained that, as in FCY Construction Group, Inc. vs. Court of Appeals, the only way to dissolve the subject writ of attachment is by a counter-bond; respondents were not allowed to file a motion to dissolve under Section 13, Rule 57, because a hearing on such motion would amount to a trial on the merits when the attachment ground is also the applicant’s cause of action.
• Sound Discretion of Trial Court: Petitioners argued that the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower court.
• Validity of Bond: Petitioners contended that the Certification issued by the Office of the Administrator and the Certifications issued by the clerks of court of the RTCs of Dasmariñas and Imus, Cavite, showed that the bonds offered by Western Guaranty Corporation may be accepted by the RTCs of Dasmariñas and Imus, Cavite, and that the bonding company had no pending liability with the government.
• Estoppel, Laches, and Prescription: Petitioners contended that respondents were barred by estoppel, laches, and prescription from questioning the RTC orders issuing the writ of attachment.
• Mootness: Petitioners maintained that the issue of impropriety or irregularity in the issuance of the orders was moot and academic because the attachment bond expired on November 14, 2003 and petitioners renewed it for November 14, 2003 to November 14, 2004, and further renewed it for November 14, 2004 to November 14, 2005.

• Lack of Jurisdiction over Persons: Respondents argued that the writ was improper and irregular because it was issued and enforced without the lower court acquiring jurisdiction over their persons.
• Improper Implementation: Respondents maintained that the writ of attachment was implemented without serving upon them the summons together with the complaint.
• Defective Bond: Respondents argued that the bond issued in favor of petitioners was defective because the bonding company failed to obtain the proper clearance to transact business with the RTC of Dasmariñas, Cavite.
• Limited Clearances: Respondents added that the various clearances issued in favor of the bonding company were applicable only in the courts of the cities of Pasay, Pasig, Manila, and Makati, but not in the RTC, Imus, Cavite.
• Grave Abuse of Discretion: In their CA petition, respondents anchored their claims on public respondents’ grave abuse of discretion amounting to lack of or in excess of jurisdiction in failing to notice that the lower court had no jurisdiction over the person and subject matter when the writ was issued, and in granting the writ despite non-compliance with the formal requisites for the bond and the writ.

• Discharge of Attachment: Whether a writ of preliminary attachment may be dissolved only by a counter-bond, or whether a motion to discharge under Section 13, Rule 57 is a proper remedy for irregularities in its issuance or service.
• Validity of the Attachment Bond: Whether the trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction in approving the surety bond posted by petitioners despite the Office of the Court Administrator’s certification limiting its acceptance to the RTCs of Makati, Pasay, and Pasig.
• Jurisdiction over the Person at Implementation: Whether the writ of attachment was improperly or irregularly enforced when it was implemented before summons and the complaint were served on respondents.
• Estoppel, Laches, Prescription, and Mootness: Whether respondents were barred by estoppel, laches, and prescription from questioning the writ, and whether the renewal of the attachment bond rendered the issue moot and academic.

• Discharge of Attachment: No. A writ of preliminary attachment may be discharged either by a counter-bond under Section 12, Rule 57 or by a motion to quash under Section 13, Rule 57 for irregular or improvident issuance; filing a counter-bond does not waive defects.
• Validity of the Attachment Bond: Yes, grave abuse of discretion was committed. The OCA certification at the time of issuance authorized acceptance of the bonding company’s bonds only in the RTCs of Makati, Pasay, and Pasig, not in the RTC of Dasmariñas, so the bond should not have been accepted.
• Jurisdiction over the Person at Implementation: Yes, the writ was improperly or irregularly enforced. The writ was implemented on November 19, 2002, while summons and the complaint were served only on November 21, 2002; jurisdiction over respondents’ persons was required at implementation.
• Estoppel, Laches, Prescription, and Mootness: No. Respondents were not barred; the filing of a counter-bond is merely a speedier way of discharging the writ and does not waive defects, and belated service of summons does not retroactively cure the invalid enforcement.

• Discharge of Attachment: Rule 57 provides two ways of discharging an attachment: by filing a counter-bond under Section 12, and by quashing the attachment on the ground that it was irregularly or improvidently issued under Section 13. Petitioners’ reliance on FCY Construction Group, Inc. vs. Court of Appeals was misplaced. The rule that an attachment may not be dissolved by showing irregular or improper issuance when the ground is also the applicant’s cause of action applies only when the main case would be ventilated in a mere motion; here, respondents’ grounds were irregularities in the issuance and service of the writ, not petitioners’ cause of action. The attachment debtor cannot be deemed to have waived any defect by availing one mode of discharge instead of the other; filing a counter-bond is merely a speedier way.
• Validity of the Attachment Bond: In accepting a surety bond, all requisites for approval must be met; otherwise, the bond should be rejected. Every bond must be accompanied by a clearance from the Supreme Court showing that the company is qualified to transact business, valid only for thirty days from issuance. The OCA Certification at the time the bond was issued showed that bonds offered by Western Guaranty Corporation could be accepted only in the RTCs of Makati, Pasay, and Pasig. Because the RTC of Dasmariñas, Branch 90, was not covered, the surety bond should not have been accepted, and the trial court acted with grave abuse of discretion in issuing the writ founded on that bond.
• Jurisdiction over the Person at Implementation: Rule 57 permits attachment at the commencement of the action or at any time before entry of judgment; this refers to the date of filing the complaint, before summons is served or even before summons issues. The Court distinguished issuance from implementation. Under Davao Light & Power Co., Inc. vs. Court of Appeals, acts done before jurisdiction over the defendant is acquired do not bind the defendant until jurisdiction is obtained by service of summons or voluntary submission. At implementation, the sheriff must serve not only the applicant’s affidavit, attachment bond, and order of attachment but also the summons and complaint. Cuartero vs. Court of Appeals held that the grant of attachment involves three stages: the order granting the application, the issuance of the writ, and the implementation of the writ; jurisdiction over the person is not required for the first two, but is required once implementation commences. Here, the writ was issued on November 15, 2002 and implemented on November 19, 2002, but summons and the complaint were served only on November 21, 2002. At implementation, the trial court had not acquired jurisdiction over respondents. The writ was therefore improperly or irregularly enforced and could not bind them.
• Estoppel, Laches, Prescription, and Mootness: Petitioners’ contention that respondents were barred by estoppel, laches, and prescription, and that the issue had become moot by the renewal of the attachment bond, was devoid of merit. The Court of Appeals correctly held that there are two ways of discharging an attachment and that an attachment debtor does not waive defects by choosing one mode over the other. Even assuming the writ was validly issued, the belated service of summons did not cure the fatal defect in enforcement. The trial court could not enforce a coercive process on respondents without first obtaining jurisdiction over their persons. The preliminary writ must be served after or simultaneously with the service of summons, and subsequent service does not confer retroactive acquisition of jurisdiction because the law does not allow retroactivity of a belated service.

• Preliminary Attachment — Issuance and Implementation — A writ of preliminary attachment is a provisional remedy issued upon order of the court where an action is pending, levied upon the defendant’s property and held by the sheriff as security for the satisfaction of any judgment. Its grant involves three stages: the court issues the order granting the application; the writ issues pursuant to the order; and the writ is implemented. Jurisdiction over the person of the defendant is not required for the first two stages, but once implementation commences, the court must have acquired jurisdiction over the defendant; otherwise, the writ cannot bind the defendant. Applied: the writ was implemented before summons was served, so it could not bind respondents.
• Requisites for Approval of a Surety Bond — In accepting a surety bond, all requisites for approval must be met; otherwise, the bond should be rejected. Every bond must be accompanied by a clearance from the Supreme Court showing that the company is qualified to transact business, valid only for thirty days from issuance. Applied: the OCA certification allowed acceptance only in Makati, Pasay, and Pasig, so the bond should not have been accepted in Dasmariñas.
• Discharge of Attachment — An attachment may be discharged in two ways: by filing a counter-bond under Section 12, Rule 57, or by quashing the attachment on the ground that it was irregularly or improvidently issued under Section 13, Rule 57. Filing a counter-bond is merely a speedier way of discharging the writ and does not waive defects in the issuance or service of the attachment. Applied: respondents’ motion to discharge was proper because their grounds were irregularities in issuance and service, not petitioners’ cause of action.
• Service of Summons and Complaint at Implementation — Prior to or simultaneously with the implementation of a writ of attachment, the defendant must be served not only with the applicant’s affidavit, attachment bond, and order of attachment but also with the summons and a copy of the complaint. Applied: the writ was implemented on November 19, 2002, but summons and complaint were served only on November 21, 2002.
• Non-Retroactivity of Belated Service of Summons — Subsequent service of summons does not retroactively confer jurisdiction over the defendant’s person, because the law does not allow retroactivity of a belated service. Applied: the later service of summons did not cure the invalid enforcement of the writ.

• "A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court where an action is pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment that might be secured in the said action by the attaching creditor against the defendant." — Defines preliminary attachment and frames the provisional remedy at issue in the case.
• "In accepting a surety bond, it is necessary that all the requisites for its approval are met; otherwise, the bond should be rejected." — States the controlling rule on approval of surety bonds, which the trial court violated when it accepted the bond outside the OCA certification.
• "For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant, for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant." — Articulates the ratio on the three stages of attachment and the jurisdictional requirement at implementation.
• "The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service." — Rejects the argument that later service of summons can cure the invalid enforcement of the writ.

• FCY Construction Group, Inc. vs. Court of Appeals, G.R. No. 123358, February 1, 2000, 324 SCRA 270 — Cited by petitioners for the proposition that attachment may be dissolved only by counter-bond; distinguished because the ground invoked was not the applicant’s cause of action.
• Cuartero vs. Court of Appeals, G.R. No. 102448, August 5, 1992, 212 SCRA 260 — Followed for the three stages of attachment and the requirement of jurisdiction over the person at implementation.
• Davao Light & Power Co., Inc. vs. Court of Appeals, G.R. No. 93262, November 29, 1991, 204 SCRA 343, 355-356 — Followed for the rule that acts before acquisition of jurisdiction do not bind the defendant and that summons and complaint must be served at implementation.
• Mangila vs. Court of Appeals, 435 Phil. 870, 880 (2002) — Followed for the rule that belated service of summons does not retroactively confer jurisdiction.
• Judicial Audit and Physical Inventory of Confiscated Cash, Surety and Property Bonds at RTC, Tarlac City, Brs. 63, 64 & 65, A.M. No. 04-7-358-RTC, July 22, 2005, 464 SCRA 21, 28 — Cited for the requirement that every bond be accompanied by a Supreme Court clearance valid for thirty days and that all requisites for approval must be met.

• Section 1, Rule 57, Rules of Court — Allows preliminary attachment at the commencement of the action or at any time before entry of judgment; the Court used it to explain that issuance may occur before summons, but implementation still requires jurisdiction over the defendant.
• Section 3, Rule 57, Rules of Court — Requires an attachment bond; the RTC directed petitioners to post ₱7,000,000 before the writ would issue.
• Section 5, Rule 57, Rules of Court — Requires service on the defendant of the applicant’s affidavit, attachment bond, order of attachment, summons, and complaint; the Court found the writ was implemented without such service.
• Section 12, Rule 57, Rules of Court — Allows discharge of attachment by counter-bond; the Court recognized this as one of two ways to discharge.
• Section 13, Rule 57, Rules of Court — Allows discharge of attachment on the ground that it was irregularly or improvidently issued; the Court held respondents could avail of this remedy despite not posting a counter-bond.
• Rule 65, Rules of Court — Respondents filed a Petition for Certiorari, Mandamus and Prohibition with Preliminary Injunction and Temporary Restraining Order under Rule 65, anchored on grave abuse of discretion amounting to lack or excess of jurisdiction; the CA granted the petition.

Renato C. Corona (Chairperson), Minita V. Chico-Nazario, Presbitero J. Velasco, Jr., and Antonio Eduardo B. Nachura.