Yu vs. Te

An attachment defendant is entitled to temperate damages and attorney's fees for wrongful attachment even without proof of actual damages or malice, provided pecuniary loss is recognized though its exact amount cannot be ascertained, and expenses were incurred to lift the writ.

Spouses Gregorio and Josefa Yu purchased detergent soap from Ngo Yet Te and issued three postdated checks as payment. Upon presentment, the checks were dishonored for "ACCOUNT CLOSED." Te filed a collection complaint with a prayer for preliminary attachment, supported by an affidavit alleging the spouses committed fraud and were disposing of properties to defraud creditors. The trial court issued a writ of attachment, prompting the sheriff to levy the spouses' lot and four vehicles in Cebu City.

• The Attachment and Its Dissolution: After the checks were dishonored, Te filed a collection suit and applied for preliminary attachment, alleging fraud. The RTC issued the writ, leading to the levy of Spouses Yu's lot and four vehicles. Spouses Yu moved to dissolve the writ. The CA lifted the attachment, finding the affidavit contained general averments without specific badges of fraud, and mere insolvency does not justify attachment. The SC denied Te's appeal, making the wrongful attachment finding final and conclusive.
• The Main Case and Counterclaim: The RTC ruled in favor of Te on the collection suit but declined to rule on Spouses Yu's counterclaim for damages, deferring to the higher courts. After the SC resolution, the RTC still declined to award damages, stating the CA and SC merely declared the writ improvidently issued without awarding damages. Spouses Yu appealed the denial of their counterclaim to the CA.
• Evidence of Damages: To support their counterclaim, Spouses Yu presented used and unused bus ticket stubs and Josefa Yu's testimony claiming a ₱1,500.00 daily income from the attached passenger bus. However, a sheriff's manifestation revealed that the bus had been previously attached by the Mandaue City Sheriff in another case and stored in a warehouse before the subject attachment was issued.

• Bad Faith: Petitioners maintained that the writ was procured in bad faith because a final judgment established there was no true ground for it, which suggests malice pursuant to Javellana v. D.O. Plaza Enterprises, Inc.
• Automatic Award of Damages: Petitioners argued that actual, moral, and exemplary damages should be awarded as a matter of right or by implication once the attachment is declared wrongful, even absent separate proof of malice.

• Procedural Defect: Respondent countered that the counterclaim was correctly dismissed for failure to comply with Section 20 of Rule 57, because the surety company was not notified of the counterclaim.
• Lack of Evidentiary Basis: Respondent argued that petitioners failed to adduce sufficient evidence to prove the nature and extent of their damages.

• Bad Faith: Whether the appellate court erred in not holding that the writ of attachment was procured in bad faith after a final judgment established there was no true ground therefor.
• Award of Damages: Whether the appellate court erred in refusing to award actual, moral, and exemplary damages after it was established by final judgment that the writ of attachment was wrongfully issued.

• Bad Faith: Malice or bad faith was not established. The mere fact that the attachment was wrongful does not prove malice. Petitioner Josefa Yu's own testimony revealed that they closed their bank account and transferred funds instead of covering the checks, which reasonably led respondent to conclude they never intended to pay; thus, respondent cannot be faulted for applying for the writ.
• Award of Damages: The dismissal of actual, moral, and exemplary damages was affirmed. Actual damages require proof with reasonable certainty; ticket sales for five days are too speculative to establish average daily income, and the passenger bus was already seized in a prior case. Moral and exemplary damages require proof of malice, which is absent. However, temperate damages of ₱50,000.00 were awarded because pecuniary loss was sustained though its exact amount is unprovable. Attorney's fees of ₱30,000.00 were awarded as an exception to the general rule, justified by the expenses incurred to lift the wrongfully issued writ.
• Procedural Compliance on Surety: The claim against the surety was procedurally sound. The surety was notified via motion and order, and even if it had not been, due process merely requires that the surety be heard before the judgment is enforced against the bond.

• Wrongful Attachment and Damages — Where there is wrongful attachment, the attachment defendant may recover actual damages even without proof of bad faith. If the attachment is also malicious, moral and exemplary damages may be recovered. However, the wrongfulness of the attachment does not automatically warrant damages; the defendant must prove the nature and extent of the loss.
• Proof of Actual Damages — Must be proven with the best evidence obtainable, capable of proof, and with a reasonable degree of certainty. Unrealized profits must be supported by independent evidence of the mean income of the business interrupted.
• Attorney's Fees in Wrongful Attachment — As a rule, attorney's fees cannot be awarded when moral and exemplary damages are not granted; the exception is when a party incurred expenses to lift a wrongfully issued writ of attachment.

• "Either way, the wrongfulness of the attachment does not warrant the automatic award of damages to the attachment defendant; the latter must first discharge the burden of proving the factual basis of their counterclaim for damages."
• "As a rule, attorney’s fees cannot be awarded when moral and exemplary damages are not granted, the exception however is when a party incurred expenses to lift a wrongfully issued writ of attachment."

• Javellana v. D.O. Plaza Enterprises, Inc. — Distinguished. Cited by petitioners to argue that illegal attachment suggests malice; clarified that it did not involve moral damages, so malice was not required there.
• Lazatin v. Twaño — Followed. Laid down the rule that actual damages for wrongful attachment can be recovered without proof of bad faith, but moral/exemplary damages require proof of malice.
• Malayan Insurance Company, Inc. v. Salas — Followed. Held that if a surety was not given notice when the claim for damages against the principal was heard, the surety is entitled to be heard when the judgment is sought to be enforced against the bond.
• MC Engineering, Inc. v. Court of Appeals — Followed. Cited for the rule that wrongfulness does not automatically warrant damages and for the attorney's fees exception.

• Section 20, Rule 57, Rules of Court — Governs the procedure for claiming damages on an attachment bond. Applied to hold that even if the surety was not initially notified, due process requires notice before enforcement against the bond.
• Section 10, Rule 60, Rules of Court (1964) — Governs claims on replevin bonds. Held to be procedurally identical to claims on attachment bonds.

Consuelo Ynares-Santiago, Romeo J. Callejo, Sr., Minita V. Chico-Nazario