Preliminary Attachment

Rule 57 of the Rules of Court By Aguila & Reyes

Purposes of the Writ of Preliminary Attachment

To seize the property of the debtor in advance of final judgment and to hold it for purposes of satisfying said judgment; or To enable the court to acquire jurisdiction over the action by the actual or constructive seizure of the property in those instances where personal service of summons on the creditor cannot be affected.

As to availability and effects of attachment

Preliminary: Resorted to at commencement of the action or at time before entry of judgment, for temporary seizure of property of adverse party; and the any the the

Final/Levy upon execution: Available after the judgment in the main action has become executory, and for the satisfaction of said judgment.

As to form and procedure of enforcement

Regular form of attachment which refers to corporeal property in the possession of the party; and Garnishment which refers to money, stocks, credits, and other incorporeal property which belong to the party but are in the possession or under the control of a third person.

3 Stages
The issuance of the order of the court granting the application;
The issuance of the WPA; and

The implementation of the WPA.

When It May Be Obtained

At the commencement of the action or at anytime before entry of judgment At the commencement of the action = date of the filing of the complaint and before summons is served on the defendant, or even before summons issues

When It May Be Obtained

However, the court, in its discretion, may require prior hearing on the application with notice to the defendant.

Section 1: The Grounds

(a) In an action for the recovery of a

specified amount of money or damages, other than moral and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors.

1st Ground
Implied contracts include liabilities arising from law, quasi-contract, delict, or quasidelict No issuance may be made in actions for moral and exemplary damages only

Illustrative Case
K. O. Glass Construction Co., Inc. v. Valenzuela, 116 SCRA 563 (1982)
The plaintiff merely alleged that Kenneth O. Glass is a foreigner Failed to allege that he may depart from the Philippines with intent to defraud his creditors. SC set aside the issuance of the writ of preliminary attachment.

2nd Ground
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty.

Illustrative Case
Walter E. Olsen & Co. v. Olsen, 48 Phil. 238 (1925)
Abuse of confidence of an officer who acted as the president, treasurer and general manager of a company

Tan v. Zanduete and Tiu Chay, 61 Phil. 526 (1935)

Unlawful appropriation of the entire amount of a sweepstakes prize

3rd Ground
(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or converted, when the property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken by the applicant or an authorized person.

3rd Ground
Replevin (Rule 60) The purpose of the action is for the recovery of possession of personal property belonging to the plaintiff. Preliminary Attachment (Rule 57)

The property belongs to the defendant and is sought to be attached by the plaintiff to secure the satisfaction of any judgment that he

4th Ground
(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought or in the performance thereof. Therefore, the 4th ground is fraud in the: 1. Contracting of a debt; 2. Incurring an obligation; and 3. Performance of an obligation.

There must be intent to commit fraud.

5th Ground
(e) In an action against a party who has removed . or disposed of his property, or is about to do so, with intent to defraud his creditors. Mere removal or disposal without intent to defraud defendant's creditor is not ground for attachment.

Mere allegation that the defendant is in the verge of insolvency . . . since insolvency is not a ground for attachment, especially if the defendant has not been shown to have committed any act to defraud its creditors. Sps. Yu v. Te

5th Ground
Mere removal or disposal of property by itself is not a ground for preliminary attachment. . . The removal must have been made to defraud defendants creditors. Carpio v. Macadaeg Mere allegation that the defendant mortgaged his property does not necessarily imply that it is being done in fraud of creditors. Factual bases for such allegation must be clearly averred. Adlawan v. Torres

6th Ground
(f) In an action against a party who does not reside and is not found in the Philippines, or on whom summons may be served by publication. Preliminary attachment may be granted against a defendant who does not reside and is not found in the Philippines under Sec. 15 Rule 14 or against a defendant whose identity and whereabouts is unknown and cannot be ascertained by diligent inquiry. The attachment converts an action in personam into an action quasi in rem and validates

Section 2: Issuance and Contents of the Order

The order of attachment may be issued either: without notice and hearing, upon ex parte hearing, or upon motion with notice and hearing.

Section 2: Issuance and Contents of the Order

Davao Light & Power Co., Inc. v. CA, 204 SCRA 343 (1991)
An order of attachment may be granted ex parte, but the writ may not be enforced unless preceded or contemporaneously accompanied by service of summons. However, should the Court decide to hold a hearing with notice to the adverse party, summons should first be served on the latter.

Section 2: Issuance and Contents of the Order

Duty of the sheriff with regard to the levy on attachment
The sheriff is required to attach only so much of the property, not exempt from execution, of the party against whom the order is issued as may be sufficient to satisfy the applicants demand, the amount of which is stated in the order, unless a deposit is made or a counter-bond is given equal to the said amount.

Section 2: Issuance and Contents of the Order

Duty of the sheriff with regard to the levy on attachment
However, if the value of the property to be attached is less than the amount of the demand, the amount of the applicants bond may be equal to the value of said property, and the amount of the adverse partys deposit or counter-bond may be equal to the applicants bond.

Section 3: Affidavit and Bond Required

Affidavit
To ensure that the applicant states the truth by requiring him to allege the presence of all the legal requisites UNDER OATH. The Affidavit is the foundation of the writ and if none be filed or one be filed wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void.

Bond
To cover any damages that may be caused the party against whom the attachment is issued if it is not warranted.

Section 2: Affidavit and Bond Required

Contents of the affidavit

A sufficient cause of action exists.

The case is one of those mentioned in Sec. 1, Rule 57. There is no sufficient security for the claim sought to be enforced by the action.

The amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims.

Cause of Action
It is not enough to state that a sufficient cause of action exists
Must state facts showing cause of action Must convince the court that the facts support a cause of action Whether or not the affidavit sufficiently established facts therein stated is a question to be determined by the court in the exercise of sound discretion. It all depends upon the amount of credit given it by the judge who may accept or reject it in the exercise of his discretion. (La Granja, Inc. vs. Samson, 58 Phil 378)

Section 2: Affidavit and Bond Required

Contents of the affidavit

A sufficient cause of action exists.

The case is one of those mentioned in Sec. 1, Rule 57. There is no sufficient security for the claim sought to be enforced by the action.

The amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims.

Case Falls Under Sec. 1 Rule 57

Must state that the case is one of those mentioned

in Sec.

1 Rule 57; and

State facts, i.e. place, time, date, etc. to illustrate grounds for attachment relied upon.

Adlawan vs. Torres, 233 SCRA 645 A bare allegation that an encumbrance of property is in fraud of creditors does not suffice. Factual bases for such conclusion must be clearly averred.

Section 2: Affidavit and Bond Required

Contents of the affidavit

A sufficient cause of action exists.

The case is one of those mentioned in Sec. 1, Rule 57. There is no sufficient security for the claim sought to be enforced by the action.

The amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims.

Security
It must be alleged that there is no sufficient security for the claim. Rationale: If the claim is secured, there is no need to attach!

Failure to state lack of sufficient security is

FATAL to the petition. (K.O. Glass

Construction Co., Inc. vs. Valenzuela, 116 SCRA 563)

Section 2: Affidavit and Bond Required

Contents of the affidavit

A sufficient cause of action exists.

The case is one of those mentioned in Sec. 1, Rule 57. There is no sufficient security for the claim sought to be enforced by the action.

The amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims.

Claim is Above All Legal Counterclaims

The amount due to the applicant is as much as the sum for which the order is granted above all legal counterclaims. Reason: If the adverse party has a counterclaim against the applicant, this may off-set the claim.
Applicants Claim > Adverse Partys Counterclaim

Section 4: Condition of Applicants Bond

Executed in favor of the adverse party In the amount fixed by the court
Which may be equal to the applicants demand or to the value of the property to be attached

Conditioned that the bond will pay all the costs which be adjudged to the adverse party and all damages he may sustain if the court should later adjudge that the applicant is not entitled thereto.

Section 4: Condition of Applicants Bond

If an attachment were excessive, the remedy of the defendant is to apply to the court for a reduction or partial discharge and substitution of the attached properties. Otherwise, the lien acquired by the plaintiff creditor as of the date of the original levy would be lost and this would, in effect, constitute a deprivation without due process of law of the attaching creditors interest in the attached property as security for the satisfaction of the judgment which he may obtain.

Section 5: Manner of Attaching Property

The sheriff enforcing the writ shall without delay and with all reasonable diligence attach as may be sufficient to satisfy the applicants demand. If you were the adverse party, how would you prevent the levy on attachment?

Section 5: Manner of Attaching Property

How to prevent levy on attachment
The adverse party should make a deposit or give a counter-bond in an amount equal to that fixed in the order of attachment, to secure the payment of any judgment which the attaching party may recover in the action.

Section 5: Manner of Attaching Property

Requirement of prior or contemporaneous service of summons
General Rule: The writ of attachment shall not be enforced unless there has been a prior or contemporaneous service of summons, together with a copy of the
complaint, the application for attachment, the applicants affidavit and bond, and the order and writ of attachment, on the defendant

within the Philippines.

Section 5: Manner of Attaching Property

Requirement of prior or contemporaneous service of summons
Exceptions:
When defendant is a resident of the Philippines who is temporarily absent Summons may be served by substituted service. It may also be served by publication, although this is open to question in actions in personam. (See Rule 14, Sec.

Section 5: Manner of Attaching Property

Requirement of prior or contemporaneous service of summons
Exceptions:
When defendant is a non-resident of the Philippines and the action is in rem or quasi in rem Summons may be served personally or by publication in accordance with Section 15 of Rule 14. If the action is in personam becomes quasi in rem by attaching the property of

Upon Whom Summons May Be Served By Publication

PCIB vs. Alejandro, September 21, 2007 G.R. No. 175587
Substituted service is the normal mode of service of summons that will confer jurisdiction on the court over the person of residents temporarily out of the Philippines. This may be effected by (a) leaving copies of the summons at the defendants residence with some person of suitable discretion residing therein, or (b) by leaving copies at the defendants office or regular place of business with some competent person in charge thereof.

Prior or Contemporaneous Service of Summons

In Davao Light, 204 SCRA 343, the Court held: 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 of summons, a copy of the complaint x x x, the application for attachment (if not incorporated in but submitted separately from the complaint), the order of attachment, and the plaintiffs attachment bond.

Prior or Contemporaneous Service of Summons

In H.B. Zachry v. CA, 232 SCRA 329, the Court expounded on the aforecited ruling as follows: [A] distinction should be made between the issuance and the enforcement of the writ. The trial court has unlimited power to issue the writ upon commencement of the action even before it acquires jurisdiction over the person of the defendant, but enforcement thereof can only be validly done after it shall have acquired jurisdiction.

Section 5: Manner of Attaching Property

Only property not exempt from execution may be attached. (See Sec. 13 of Rule 39) Defendant may point out to sheriff property to be attached.
People v. Hernandez, 59 Phil 343 (1933) See also Sec. 9(b) of Rule 39

Sheriffs actual possession of movable property attached is necessary for valid levy of attachment. Walker v. McMicking, 14 Phil. 668 (1909)

Section 6: Sheriffs Return

The sheriff is now required to return to the court from which the writ issued and to serve on the applicant a copy of his return and accompanying documents, including a complete inventory of the property attached, together with any counter-bond.

Section 7: Attachment of Real & Personal Property

Real Property, or growing crops thereon or any interest therein
Filing with the registry of deeds a copy of the order With a description of the property attached A notice that it is attached

Leave a copy of these with the occupant of the property or with such other person or his agent if found within the province.

Section 7: Attachment of Real & Personal Property

Real Property, or growing crops thereon or any interest therein
If property is brought under the operation of either the Land Registration Act or the Property Registration Decree Notice shall contain a reference to the number of the certificate of title Volume and page in the registration book Registered owner/s

Section 7: Attachment of Real & Personal Property

Personal property capable of manual delivery, by taking and safely keeping it in his custody, after issuing the corresponding receipt therefor.

Section 7: Attachment of Real & Personal Property

Stocks or shares, or an interest in stocks or shares, of any corporation or company, by leaving with the president or managing agent thereof, a copy of the writ, and a notice stating that the stock or interest of the party against whom the attachment is issued is attached in pursuance of such writ;

Section 7: Attachment of Real & Personal Property

Debts and credits, including bank deposits, financial interest, royalties, commissions and other personal property not capable of manual delivery, by leaving with the person owing such debts, or having in his possession or under his control, such credits or other personal property, or with his agent, a copy of the writ, and notice that the debts owing by him to the party against whom attachment is issued, and the credits and other personal property in his possession, or under his control, belonging to said party, are attached in pursuance of such writ;

Section 7: Attachment of Real & Personal Property

Debt: as used in Section 7(d) of Rule 57, means some definite amount of money, ascertained or capable of being ascertained, which may be paid over to the sheriff or the court under an order; Credits and personal property: something belonging to the defendant but in possession and under the control of the garnishee (City of Manila v. Game, 13 Phil. 684)

Section 7: Attachment of Real & Personal Property

Only salary that is due may be subject of attachment
Only salary due the judgment debtor is subject to attachment and execution AND Only if it is not made to appear by the affidavit of the debtor or otherwise that such earnings are necessary for the support of his family.
NOTE: Under Sec. 13(i) of Rule 39, so much of the salaries, wages or earnings of the judgment obligor for his personal services within the 4 months preceding the levy as are necessary for the support of his family, are exempt from execution.

Section 7: Attachment of Real & Personal Property

The interest of the party against whom attachment is issued in property belonging to the estate of the decedent
By serving the executor or administrator or other personal representative of the decedent With a copy of the writ and notice, that said interest is attached.

A copy of said writ of attachment and of said notice shall also be filed in the office of the clerk of the court in which said estate is being settled and served upon the heir, legatee or devisee concerned.

Section 7: Attachment of Real & Personal Property

If the property sought to be attached is in custodia legis (in reference to property taken into the courts custody during the pendency of litigation over it) a copy of the writ of attachment shall be filed with the proper court or quasi-judicial agency and notice of the attachment served upon the custodian of such property.

Section 8: Effect of Attachment of Debts, Credits And All Other Similar Property
Garnishment
Results in a forced novation by the substitution of creditors, that is, the judgment debtor who is the original creditor of the garnishee is, through service of the writ of garnishment, substituted by the judgment creditor who thereby becomes the creditor of the garnishee.

Shall not impair the powers of the executor, administrator, or other personal representative of the decedent over the property for administration purposes. Such personal representative, however, shall report the attachment to the court when any petition for distribution is filed, Distribution may be awarded but the property attached shall be ordered delivered to the sheriff making the levy, subject to the claim of such heir,

Section 9: Effect of Attachment of Interest in Property Belonging to the Estate of a Decedent

Section 10: Examination of Party Whose Property is Attached and Persons Indebted to Him or Controlling His Property; Delivery of Property to Sheriff

Section 10
Procedure if garnishee denies indebtedness
If indebtedness is admitted payment of the

money by the garnishee to the judgment creditor or into court brings the proceeding to a close, so far as the garnishee is concerned If indebtedness is not admitted or if the garnishee fails to answer he may be required to attend before the court in which the action is pending to be examined on oath
If the liability is made manifest, the officer of the court

(under Sec. 15 of Rule 57) may collect the money and pay it to the person entitled.

Section 10
If garnishee denies the debt or claims the property, the court cannot compel him to pay or deliver the property, but a separate action must be instituted.
Order personal property capable of manual delivery xxx
Applicable only in cases where indebtedness is admitted by garnishee, or a personal property capable of manual delivery belonging to the defendant is in the possession of the person so required to attend before the court.

Bucra v. Macadaeg, 84 Phil. 493: controversy must be determined by action, as provided in Sec. 43,

Section 11
Property that has been attached may be sold after levy and before judgment when they are perishable or at the interest of all parties. Proceeds shall be deposited in court (custodia legis) and after entry of judgment, shall be paid to judgment obligee or returned to judgment obligor.

Section 12
The attachment is totally discharged upon a cash deposit or a counter bond is filed equal to the amount as fixed in the order of attachment. Attachment is only partially discharged on a particular property if the cash deposit or bond is only equal to the value of the cash deposit or bond. Either way, the cash bond or counter bond secures the payment of the judgment. The released property becomes free and no longer liable to the results of the proceeding.

Section 13
Grounds for Discharge
1. Attachment was improperly or irregularly

issued under Section 3.

2. Attachment is excessive but the discharge

shall be limited to the excess.

3. Insufficiency of cash deposit or bond

Section 13
Other Grounds for Discharge
1. Debtor has posted a counter bond or cash

deposit (Sec. 12).

2. Judgment is rendered against attaching creditor

(Sec. 19).
3. Property attached is exempt from attachment.

(eg: FC 153 & 157, the family home)

Section 14
Property is Claimed by a 3rd Person If a 3rd Party Claim is filed, the sheriff is not bound to proceed with the levy unless he is given by the judgment creditor an indemnity bond. Escovilla v. CA

The absence of an indemnity bond may hold the sheriff liable for damages for keeping or taking the property seized. FBCD v. Yllas Lending

Section 14
Remedies of 3rd Pary
1. 3rd Party Claim 2. Independent action to recover property 3. Motion for intervention

A 3rd party claim may be filed with the sheriff while he is still in possession.

Section 15
If judgment is in favor of attaching party and writ of execution is issued, the sheriff may cause judgment be satisfied from the attached property by:

Paying to judgment obligee the proceeds of the sale in pursuance of court order or as much as necessary to satisfy judgment. If balance is due, by selling real and personal property in the sheriff or courts hands to satisfy the balance. Collecting credits or debts belonging to judgment obligor at the time of attachment and paying judgment obligee.

Section 16
If there are any balance left after selling attached property and collecting credits and debts, the sheriff must collect such balance as in any executions. Upon satisfaction of the judgment and property still remains with the sheriff, he must return them to judgment obligor and any excess of the proceeds of sale of attached property.

Section 17
In order that a judgment creditor may recover from the surety on the counter bond it is necessary: 1. Execution be first issued against debtor and said execution is returned unsatisfied. 2. Creditor must make a demand on the surety. 3. Surety be given notice and hearing in the same action as to his liability under the counter bond. Leelin Marketing v. C&S Agro Surety is entitled to be heard before execution can be issued against him. Notice and hearing constitute procedural due process. Towers Assurance v. Ororama Supermarket

Section 18
If instead of a counter bond, cash deposit is made by the party with attached property, the cash shall be used to satisfy the judgment. If there are any excess, it must be refunded to the depositor. If judgment is in favor of the depositor, the whole amount must be refunded to him.

Section 19
If judgment is in favor of the party whose property was attached, all attached properties including proceeds of any sale and money, debts or credit collected shall be returned to him. In such a case, the attachment shall be discharged.

Section 20
Claim for damage on account of improper, irregular and excessive attachment

The bond posted by the attaching creditor is to answer for cost and damages which may be sustained by defendant by reason of the suit. It is a claim for damage on account of illegal attachment and which shall be included in the final judgment. This claim must be filed before trial or before appeal is perfected or before judgment becomes executory with notice to attaching creditor and surety Leelin Marketing v. C&A Agro

Section 20
Finding of wrongful attachment does not warrant automatic award of damages to attachment debtor, the latter must first discharge the burden of proving the nature and extent of the injury incurred by reason of wrongful attachment. Sps. Yu v. Te

Defendant may be awarded damages even if the main action is against him. Id.