Philippine Commercial International Bank vs. Alejandro

8/7/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 533
738 SUPREME COURT REPORTS ANNOTATED

Philippine Commercial International Bank vs. Alejandro
*
G.R. No. 175587. September 21, 2007.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK,

petitioner, vs. JOSEPH ANTHONY M. ALEJANDRO, respondent.
Remedial Law; Judgments; Conclusiveness of Judgment; The rule on

conclusiveness of judgment precludes the relitigation of a particular fact or
issue in another action between the same parties even if based on a different
claim or causes of action.—The conclusions of the court that petitioner
bank misrepresented that respondent was residing out of the Philippines and
suppressed the fact that respondent has a permanent residence in Metro
Manila where he may be served with summons, are now beyond the power
of this Court to review having been the subject of a final and executory
order. Said findings were sustained by the Court of Appeals in CA-
_______________
* THIRD DIVISION.
739
VOL. 533, SEPTEMBER 21, 2007 739
G.R. SP No. 50784 and by this Court in G.R. No. 140605. The rule on
conclusiveness of judgment, which obtains under the premises, precludes
the relitigation of a particular fact or issue in another action between the
same parties even if based on a different claim or cause of action. The
judgment in the prior action operates as estoppel as to those matters in issue
or points controverted, upon the determination of which the finding or
judgment was rendered. The previous judgment is conclusive in the second
case, as to those matters actually and directly controverted and determined.
Hence, the issues of misrepresentation by petitioner and the residence of
central.com.ph/sfsreader/session/00000173c786b786b0f97084003600fb002c009e/t/?o=False 1/20
respondent for purposes of service of summons can no longer be questioned

by petitioner in this case.
Same; Attachments; Purposes of Preliminary Attachment.—The

purposes of preliminary attachment are: (1) to seize the property of the
debtor in advance of final judgment and to hold it for purposes of satisfying
said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1,
Rule 57 of the Rules of Court; or (2) to acquire jurisdiction over the action
by actual or constructive seizure of the property in those instances where
personal or substituted service of summons on the defendant cannot be
effected, as in paragraph (f) of the same provision.
Same; Same; Summons; Jurisdictions; In order to acquire jurisdiction

in actions in personam where defendant resides out of and is not found in
the Philippines, it becomes a matter of course for the court to convert the
action into a proceeding in rem or quasi in rem by attaching the defendant’s
property; The service of summons in this case (which may be by publication
coupled with the sending by registered mail of the copy of the summons and
the court order to the last known address of the defendant) is no longer for
the purpose of acquiring jurisdiction but for compliance with the
requirements of due process.—In actions in personam, such as the instant
case for collection of sum of money, summons must be served by personal
or substituted service, otherwise the court will not acquire jurisdiction over
the defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be effected),
the remedy of the plaintiff in order for the court to acquire jurisdiction to try
the case is to convert the action into a proceeding in rem or quasi in rem by
attaching the property of the defendant. Thus, in order to acquire jurisdiction
in actions in per-
740
sonam where defendant resides out of and is not found in the Philippines, it
becomes a matter of course for the court to convert the action into a
proceeding in rem or quasi in rem by attaching the defendant’s property. The
service of summons in this case (which may be by publication coupled with
the sending by registered mail of the copy of the summons and the court
order to the last known address of the defendant), is no longer for the
purpose of acquiring jurisdiction but for compliance with the requirements
of due process.
Same; Same; Same; Same; Where the defendant is a resident who is

temporarily out of the Philippines, attachment of his/her property in an
action in personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.—Where the defendant is a resident who is
temporarily out of the Philippines, attachment of his/her property in an
action in personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case. Section 16, Rule 14 of the Rules of Court
reads: Sec. 16. Residents temporarily out of the Philippines.—When an
action is commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service may, by leave of court,
be also effected out of the Philippines, as under the preceding section. The
preceding section referred to in the above provision is Section 15 which
provides for extraterritorial service—(a) personal service out of the
Philippines, (b) publication coupled with the sending by registered mail of
the copy of the summons and the court order to the last known address of
the defendant; or (c) in any other manner which the court may deem
sufficient.
Same; Same; Same; Same; Substituted service of summons 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; The
court may acquire jurisdiction over an action in personam by mere
substituted service without need of attaching the property of the defendant.
—In Montalban v. Maximo,22 SCRA 1070, (1968), however, the Court held
that substituted service of summons (under the present Section 7, Rule 14 of
the Rules of Court) 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. Meaning, service of summons may be effected by (a)
leaving copies of the summons at the defendant’s residence with some
person of suitable discretion residing therein, or (b) by leaving copies at the
741
VOL. 533, SEPTEMBER 21, 2007 741
defendant’s office or regular place of business with some competent person

in charge thereof. Hence, the court may acquire jurisdiction over an action
in personam by mere substituted service without need of attaching the
property of the defendant.
Same; Same; Damages; It is a well-settled rule that one who has been
injured by a wrongful attachment can recover damages for the actual loss
resulting therefrom.—Anent the actual damages, the Court of Appeals is
correct in not awarding the same inasmuch as the respondent failed to
establish the amount garnished by petitioner. It is a well settled rule that one
who has been injured by a wrongful attachment can recover damages for the
actual loss resulting therefrom. But for such losses to be recoverable, they
must constitute actual damages duly established by competent proofs, which

are, however, wanting in the present case.
Same; Same; Same; While as a general rule, the liability on the

attachment bond is limited to actual (or in some cases, temperate or
nominal) damages, exemplary damages may be recovered where the
attachment was established to be maliciously sued out.—Considering
petitioner’s bad faith in securing the writ of attachment, we sustain the
award of exemplary damages by way of example or correction for public
good. This should deter parties in litigations from resorting to baseless and
preposterous allegations to obtain writs of attachments. While as a general
rule, the liability on the attachment bond is limited to actual (or in some
cases, temperate or nominal) damages, exemplary damages may be
recovered where the attachment was established to be maliciously sued out.
Nevertheless, the award of exemplary damages in this case should be
reduced from P5M to P500,000.00.
PETITION for review on certiorari of a decision of the Court of

Appeals.
The facts are stated in the opinion of the Court.

Siguion Reyna, Montecillo and Ongsiako for petitioner.
Abbas, Alejandro-Abbas, Francisco & Associates for
respondent.
742

YNARES-SANTIAGO, J.:
1
This petition for review assails the May 31, 2006 Decision of the
Court of Appeals in2
CA-G.R. CV No. 78200 affirming the August
30, 2000 Decision of the Regional Trial Court of Makati, which
granted respondent Joseph Anthony M. Alejandro’s claim for
damages arising from petitioner Philippine Commercial
International Bank’s (PCIB) invalid garnishment of respondent’s
deposits.
On October
3
23, 1997, petitioner filed against respondent a
complaint for sum of money with prayer for the issuance of a writ
of preliminary attachment. Said complaint alleged that on September
10, 1997, respondent, a resident of Hong Kong, executed in favor of
petitioner a promissory note obligating himself to pay
P249,828,588.90 plus interest. In view of the fluctuations in the
foreign exchange rates which resulted in the insufficiency of the
deposits assigned by respondent as security for the loan, petitioner
requested the latter to put up additional security for the loan.
Respondent, however, sought a reconsideration of said request

pointing out petitioner’s alleged mishandling of his account due to
its failure to carry out his instruction to close his account as early as
April 1997, when the prevailing rate of exchange of the US Dollar to
4
Japanese yen was US$1.00:JPY127.50. It appears that the amount
of P249,828,588.90 was the consolidated amount of a series of yen
loans granted by petitioner to respondent during the months of
February and April 1997.5
In praying for the issuance of a writ of preliminary attachment
under Section 1 paragraphs (e) and (f) of Rule 57 of the
_______________
1 Rollo, pp. 199-220. Penned by Associate Justice Magdangal M. De Leon and

concurred in by Associate Justices Conrado M. Vasquez, Jr. and Mariano C. Del
Castillo.
2 Record on appeal, vol. 1, pp. 357-365.
3 Id., at pp. 13-16.
4 Id., at p. 40.
5 Id., at pp. 34-35.
743
VOL. 533, SEPTEMBER 21, 2007 743

Rules of Court, petitioner alleged that (1) respondent fraudulently

withdrew his unassigned deposits notwithstanding his verbal
promise to PCIB Assistant Vice President Corazon B. Nepomuceno
not to withdraw the same prior to their assignment as security for the
loan; and (2) that respondent is not a resident of the Philippines. The
application for the issuance of a writ was supported with the
6
affidavit of Nepomuceno.
On October 24, 1997, the trial court granted the application and
7
issued the writ ex parte after petitioner posted a bond in the amount
of P18,798,734.69, issued by Prudential Guarantee & Assurance
Inc., under Bond No. HO-46764-97. On the same date, the bank
deposits of respondent with Rizal Commercial Banking Corporation
(RCBC) were garnished. On October 27, 1997, respondent, through
counsel, filed a manifestation informing the court that he is
8
voluntarily submitting to its jurisdiction.
9
Subsequently, respondent filed a motion to quash the writ
contending that the withdrawal of his unassigned deposits was not
fraudulent as it was approved by petitioner. He also alleged that
petitioner knew that he maintains a permanent residence at Calle
Victoria, Ciudad Regina, Batasan Hills, Quezon City, and an office
address in Makati City at the Law Firm Romulo Mabanta
10
Buenaventura Sayoc & De los Angeles, where he is a partner. In
both addresses, petitioner regularly communicated with him through

its representatives. Respondent added that he is the managing
partner of the Hong Kong branch of said Law Firm; that his stay in
Hong Kong is only temporary; and that he frequently travels back to
the Philippines.
_______________
6 Id., at p. 17.
7 Id., at pp. 22-28.
8 TSN, vol. II, set I, pp. 633-639.
9 Record on appeal, vol. I, pp. 30-38.
10 Also spelled as Delos Angeles in some parts of the Records and Rollo.
744

On December 24, 1997, the trial court issued an order quashing the
writ and holding that the withdrawal of respondent’s unassigned
deposits was not intended to defraud petitioner. It also found that the
representatives of petitioner personally transacted with respondent
through his home address in Quezon City and/or his office in Makati
City. It thus concluded that petitioner misrepresented and suppressed
the facts regarding respondent’s residence considering that it has
personal and official knowledge that for purposes of service of
summons, respondent’s residence and office addresses are located in
the Philippines. The dispositive portion of the court’s decision is as
follows:
“WHEREFORE, the URGENT MOTION TO QUASH, being meritorious,

is hereby GRANTED, and the ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the
same is hereby DISCHARGED.
11
SO ORDERED.”
12
With the denial of petitioner’s motion for reconsideration, it
elevated the case to the Court of Appeals (CA-G.R. SP No. 50748)
via a petition for certiorari. On May 10, 1999, the petition was
dismissed for failure to prove that13the trial court abused its discretion
in issuing the aforesaid order. Petitioner filed a motion for
14
reconsideration but was denied on October 28, 1999. On petition
with this Court, the case was dismissed for late filing 15in a minute
resolution (G.R. No. 140605) dated January 19, 2000. Petitioner
filed a motion for
_______________
11 Id., at pp. 67-69. Penned by Judge Fernando V. Gorospe, Jr.
12 Id., at p. 128.
13 Rollo, pp. 328-334. The Decision was penned by Associate Justice Hector L.
Hofileña and concurred in by Associate Justices Bernardo P. Abesamis and Presbitero
J. Velasco, Jr. (now a member of this Court).
14 Id., at pp. 335-336.
15 Id., at p. 337.
745
VOL. 533, SEPTEMBER 21, 2007 745

reconsideration but was likewise denied with finality on March 6,

16
2000.
Meanwhile, on May 20, 1998, respondent filed a claim for
17
damages in the amount of P25 Million on the attachment bond
(posted by Prudential Guarantee & Assurance, Inc., under JCL(4)
No. 01081, Bond No. HO-46764-97) on account of the wrongful
garnishment of his deposits. He presented evidence showing that his
P150,000.00 RCBC check payable to his counsel as attorney’s fees,
was dishonored by reason of the garnishment of his deposits. He
also testified that he is a graduate of the Ateneo de Manila
University in 1982 with a double degree of Economics and
Management Engineering and of the University of the Philippines in
1987 with the degree of Bachelor of Laws. Respondent likewise
presented witnesses to prove that he is a well known lawyer in 18
the
business community both in the Philippines and in Hong Kong. For
its part, the lone witness presented by petitioner was Nepomuceno
who claimed that she acted 19in good faith in alleging that respondent
is a resident of Hong Kong.
On August 30, 2000, the trial court awarded damages to
respondent in the amount of P25 Million without specifying the
basis thereof, thus:
“WHEREFORE, premises above considered, and defendant having duly

established his claim in the amount of P25,000,000.00, judgment is hereby
rendered ordering Prudential Guarantee & [Assurance] Co., which is
solidarily liable with plaintiff to pay defendant the full amount of bond
under Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond
No. HO-46764-97], dated 24 October 1997 in the amount of
P18,798,734.69. And, considering that the amount of the bond is insufficient
to fully satisfy the award for damages, plaintiff is hereby ordered to pay
defendant the amount of P6,201,265.31.
_______________
16 Id., at p. 338.
17 Record on appeal, vol. I, pp. 73-78.
18 Id., at pp. 359-361.
19 Id., at p. 362.
746

20
SO ORDERED.”
The trial court denied

21
petitioner’s motion for reconsideration on
October 24, 2000.
Petitioner elevated the case to the Court of Appeals which
affirmed the findings of the trial court. It held that in claiming that
respondent was not a resident of the Philippines, petitioner cannot be
said to have been in good faith considering that its knowledge of
respondent’s Philippine residence and office address goes into the
very issue of the trial court’s jurisdiction which would have been
defective had respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages
awarded to petitioner and specified their basis. The dispositive
portion of the decision of the Court of Appeals states:
“WHEREFORE, the appeal is PARTIALLY GRANTED and the decision

appealed from is hereby MODIFIED. The award of damages in the amount
of P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee &
[Assurance, Inc.], which is solidarily liable with appellant [herein
petitioner], is ORDERED to pay appellee [herein respondent]
P2,000,000.00 as nominal damages; P5,000,000.00 as moral damages; and
P1,000,000.00 as attorney’s fees, to be satisfied against the attachment bond
under Prudential Guarantee & Assurance, Inc. JCL (4) No. 01081.
22
SO ORDERED.”
Both parties moved for reconsideration. On November 21, 2006, the

Court of Appeals denied petitioner’s motion for reconsideration but
granted that of respondent’s by ordering petitioner to pay additional
23
P5Million as exemplary damages.
_______________
20 Id., at p. 365. Penned by Judge Fernando V. Gorospe, Jr.

21 Id., at pp. 392-394.
22 Rollo, p. 220.
23 Id., at pp. 223-225.
747
VOL. 533, SEPTEMBER 21, 2007 747

Hence, the instant petition.

At the outset, it must be noted that the ruling of the trial court
that petitioner is not entitled to a writ of attachment because
respondent is a resident of the Philippines and that his act of
withdrawing his deposits with petitioner was without intent to
defraud, can no longer be passed upon by this Court. More
importantly, the conclusions of the court that petitioner bank
misrepresented that respondent was residing out of the Philippines
and suppressed the fact that respondent has a permanent residence in
Metro Manila where he may be served with summons, are now
beyond the power of this Court to review having been the subject of
a final and executory order. Said findings were sustained by the
Court of Appeals in CA-G.R. SP No. 50784 and by this Court in
G.R. No. 140605. The rule on conclusiveness of judgment, which
obtains under the premises, precludes the relitigation of a particular
fact or issue in another action between the same parties even if based
on a different claim or cause of action. The judgment in the prior
action operates as estoppel as to those matters in issue or points
controverted, upon the determination of which the finding or
judgment was rendered. The previous judgment is conclusive in the
second case, as to those matters actually and directly controverted
24
and determined. Hence, the issues of misrepresentation by
petitioner and the residence of respondent for purposes of service of
summons can no longer be questioned by petitioner in this case.
The core issue for resolution is whether petitioner bank is liable
for damages for the improper issuance of the writ of attachment
against respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of
misrepresentation and suppression of a material
_______________
24 Tan v. Court of Appeals, G.R. No. 142401, August 20, 2001, 363 SCRA 444,
445 and 449-450.
748

fact, the latter contends that it acted in good faith. Petitioner also
contends that even if respondent is considered a resident of the
Philippines, attachment is still proper under Section 1, paragraph (f),
Rule 57 of the Rules of Court since he (respondent) is a resident
who is temporarily out of the Philippines upon whom service of

summons may be effected by publication.
Petitioner’s contentions are without merit.
While the final order of the trial court which quashed the writ did
not categorically use the word “bad faith” in characterizing the
representations of petitioner, the tenor of said order evidently
considers the latter to have acted in bad faith by resorting to a
deliberate strategy to mislead the court. Thus—
“In the hearings of the motion, and oral arguments of counsels before the
Court, it appears that plaintiff BANK through its contracting officers Vice
President CORAZON B. NEPOMUCENO and Executive Vice President
JOSE RAMON F. REVILLA, personally transacted with defendant mainly
through defendant’s permanent residence in METRO-MANILA, either in
defendant’s home address in Quezon City or his main business address at
the ROMULO MABANTA BUENAVENTURA SAYOC & DELOS
ANGELES in MAKATI and while at times follow ups were made through
defendant’s temporary home and business addresses in Hongkong. It is
therefore clear that plaintiff could not deny their personal and official
knowledge that defendant’s permanent and official residence for purposes of
service of summons is in the Philippines. In fact, this finding is further
confirmed by the letter of Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his letter dated 6 October 1997
on the subject loan to defendant of the same law firm was addressed to the
ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that the
amount withdrawn was not part of defendant’s peso deposits assigned with
the bank to secure the loan and as proof that the withdrawal was not
intended to defraud plaintiff as creditor is that plaintiff approved and
allowed said withdrawals. It is even noted that when the Court granted the
prayer for attachment it was
749
VOL. 533, SEPTEMBER 21, 2007 749

mainly on the first ground under Section 1(f) of Rule 57 of the 1997 Rules
of Civil Procedure, that defendant resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the
beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore
plaintiff had to resort to this misrepresentation that defendant was residing
out of the Philippines and suppressed the fact that defendant’s permanent
residence is in METRO MANILA where he could be served with summons.
On the above findings, and mainly on the misrepresentations made by
plaintiff on the grounds for the issuance of the attachment in the verified
complaint, the Court concludes that defendant has duly proven its grounds
25
in the MOTION and that plaintiff is not entitled to the attachment.”
Petitioner is therefore barred by the principle of conclusiveness of

judgment from again invoking good faith in the application for the
issuance of the writ. Similarly,26 in the case of Hanil Development
Co., Ltd. v. Court of Appeals, the Court debunked the claim of
good faith by a party who maliciously sought the issuance of a writ
of attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus
—
“Apropos the Application for Judgment on the Attachment Bond, Escobar

claims in its petition that the award of attorney’s fees and injunction bond
premium in favor of Hanil is [contrary] to law and jurisprudence. It
contends that no malice or bad faith may be imputed to it in procuring the
writ.
Escobar’s protestation is now too late in the day. The question of the
illegality of the attachment and Escobar’s bad faith in obtaining it has long
been settled in one of the earlier incidents of this case. The Court of
Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-
14512, voided the challenged writ, having been issued with grave abuse of
discretion. Escobar’s bad faith in procur
_______________
25 Record on appeal, Vol. II, pp. 67-68.

26 G.R. Nos. 113176 & 113342, July 30, 2001, 362 SCRA 1, 15.
750

ing the writ cannot be doubted. Its Petition for the Issuance of Preliminary
Attachment made such damning allegations that: Hanil was already able to
secure a complete release of its final collection from the MPWH; it has
moved out some of its heavy equipments for unknown destination, and it
may leave the country anytime. Worse, its Ex Parte Motion to Resolve
Petition alleged that “after personal verification by (Escobar) of (Hanil’s)
equipment in Cagayan de Oro City, it appears that the equipments were no
longer existing from their compound.” All these allegations of Escobar were
found to be totally baseless and untrue.”
Even assuming that the trial court did not make a categorical
pronouncement of misrepresentation and suppression of material
facts on the part of petitioner, the factual backdrop of this case does
not support petitioner’s claim of good faith. The facts and
circumstances omitted are highly material and relevant to the grant

or denial of writ of attachment applied for.
Finally, there is no merit in petitioner’s contention that
respondent can be considered a resident who is temporarily out of
the Philippines upon whom service of summons may be effected by
publication, and therefore qualifies as among those against whom a
writ of attachment may be issued under Section 1, paragraph (f),
Rule 57 of the Rules of Court which provides:
“(f) In an action against a party x x x on whom summons may be served

by publication.”
In so arguing, petitioner attempts to give the impression that

although it erroneously invoked the ground that respondent does not
reside in the Philippines, it should not be made to pay damages
because it is in fact entitled to a writ of attachment had it invoked
the proper ground under Rule 57. However, even on this alternative
ground, petitioner is still not entitled to the issuance of a writ of
attachment.
751
VOL. 533, SEPTEMBER 21, 2007 751

The circumstances under which a writ of preliminary attachment

may be issued are set forth in Section 1, Rule 57 of the Rules of
Court, to wit:
“SEC. 1. Grounds upon which attachment may issue.—At the

commencement of the action or at any time before entry of judgment, a
plaintiff or any proper party may have the property of the adverse party
attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
(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 quasidelict
against a party who is about to depart from the Philippines with
intent to defraud his creditors;
(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;
(c) In an action to recover the possession of personal 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;
(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;
(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;
(f) In an action against a party who resides out of the Philippines, or
on whom summons may be served by publication.”
The purposes of preliminary attachment are: (1) to seize the property

of the debtor in advance of final judgment and to hold it for purposes
of satisfying said judgment, as in the grounds stated in paragraphs
(a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to
acquire jurisdiction over the ac-
752

tion by actual or constructive seizure of the property in those

instances where personal or substituted service of summons on the
defendant cannot be effected, as in paragraph (f) of the same
27
provision.
Corollarily, in actions in 28personam, such as the instant case for
collection of sum of money, summons must be served by personal
or substituted service, otherwise the court will not acquire
jurisdiction over the defendant. In case the defendant does not reside
and is not found in the Philippines (and hence personal and
substituted service cannot be effected), the remedy of the plaintiff in
order for the court to acquire jurisdiction to try the case is to convert
the action into a proceeding in rem or quasi in rem by attaching the
29
property of the defendant. Thus, in order to acquire jurisdiction in
actions in personam where defendant resides out of and is not found
in the Philippines, it becomes a matter of course for the court to
convert the action into a proceeding in rem or quasi in rem by
attaching the defendant’s property. The service of summons in this
case (which may be by publication coupled with the sending by
registered mail of the copy of the summons and the court order to
the last known address of the defendant), is no longer for the
purpose of acquiring jurisdiction but for compliance with the
30
requirements of due process.
However, where the defendant is a resident who is temporarily
out of the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
_______________
27 Herrera, Remedial Law, vol. III, pp. 2 and 8; Regalado, Remedial Law
Compendium, vol. I, ninth revised edition, p. 678.
28 Obaña v. Court of Appeals, G.R. No. 78635, April 27, 1989, 172 SCRA 866,
874.
29 Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L82811, October 18,
1988, 166 SCRA 589, 593-594; Obaña v. Court of Appeals, supra at p. 874.
30 Sahagun v. Court of Appeals, G.R. No. 78328, June 3, 1991, 198 SCRA 44, 54.
753
VOL. 533, SEPTEMBER 21, 2007 753

Section 16, Rule 14 of the Rules of Court reads:
“Sec. 16. Residents temporarily out of the Philippines.—When an action is

commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service may, by leave of court,
be also effected out of the Philippines, as under the preceding section.”
The preceding section referred to in the above provision is Section

15 which provides for extraterritorial service—(a) personal service
out of the Philippines, (b) publication coupled with the sending by
registered mail of the copy of the summons and the court order to
the last known address of the defendant; or (c) in any other manner
which the court may deem sufficient.
31
In Montalban v. Maximo, however, the Court held that
substituted service of summons (under the present Section 7, Rule
14 of the Rules of Court) 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. Meaning, service of summons
may be effected by (a) leaving copies of the summons at the
defendant’s residence with some person of suitable discretion
residing therein, or (b) by leaving copies at the defendant’s office or
regular place of business with some competent person in charge
32
thereof. Hence, the
_______________
31 131 Phil. 154, 165-166; 22 SCRA 1070, 1080 (1968).

32 The pronouncement of the Court in Castillo v. Court of First Instance of
Bulacan, Branch IV (G.R. No. L-55869, February 20, 1984, 127 SCRA 632) that with
respect to residents temporarily out of the Philippines, non-compliance with the
modes of service under Section 17 (now Section 15, i.e., service of summons out of
the Philippines by personal service, or by publication in a newspaper of general
circulation), is a denial of due process and renders the proceedings void, does not
mean that said modes of service are exclusive. Substituted service of summons is still
the normal mode of service for residents temporarily out of the Philippines. The
declaration of nullity of the proceedings in the said case was by reason of the
defective substituted service of summons to a person not author
754

court may acquire jurisdiction over an action in personam by mere

substituted service without need of attaching the property of the
defendant.
The rationale in providing for substituted service as the normal
mode of service for residents temporarily out of the Philippines, was
33
expounded in Montalban v. Maximo, in this wise:
“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. Where
one temporarily absents himself, he leaves his affairs in the hands of one
who may be reasonably expected to act in his place and stead; to do all that
is necessary to protect his interests; and to communicate with him from time
to time any incident of importance that may affect him or his business or his
affairs. 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.”
Thus, in actions in personam against residents temporarily out of the

Philippines, the court need not always attach the defendant’s
property in order to have authority to try the case. Where the
plaintiff seeks to attach the defendant’s property and to resort to the
concomitant service of summons by publication, the same must be
with prior leave, precisely because, if the sole purpose of the
attachment is for the court to acquire jurisdiction, the latter must
determine whether from the allegations in the complaint, substituted
service (to persons of suitable discretion at the defendant’s residence
or to a competent person in charge of his office or regular place of
business) will suffice, or whether there is a need to attach the
_______________
ized to receive the same being a mere overseer of the lessee in the conjugal
property of the defendant, and not because substituted service of summons per se is
not among the valid modes of service upon a resident temporarily out of the country.
33 Supra at pp. 164-165; pp. 1070-1080.
755
VOL. 533, SEPTEMBER 21, 2007 755

property of the defendant and resort to service of summons by

publication in order for the court to acquire jurisdiction over the case
and to comply with the requirements of due process.
In the instant case, it must be stressed that the writ was issued by
the trial court mainly on the representation 34
of petitioner that
respondent is not a resident of the Philippines. Obviously, the trial
court’s issuance of the writ was for the sole purpose of acquiring
jurisdiction to hear and decide the case. Had the allegations in the
complaint disclosed that respondent has a residence in Quezon City
and an office in Makati City, the trial court, if only for the purpose of
acquiring jurisdiction, could have served summons by substituted
service on the said addresses, instead of attaching the property of the
defendant. 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
35
which exposes the debtor to humiliation and annoyance. It should
be resorted to only when necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that
respondent is a resident temporarily out of the Philippines, petitioner
is still not entitled to a writ of attachment because the trial court
could acquire jurisdiction over the case by substituted service
instead of attaching the property of the defendant. 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.
_______________
34 The pertinent portion of the December 24, 1997 Order of the trial court,
provides:
“It is even noted that when the Court granted the prayer for attachment it was mainly on the
first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil Procedure, that defendant
resides out of the Philippines.”
35 Jardine-Manila Finance, Inc. v. Court of Appeals, G.R. No. 55272, April 10,
1989, 171 SCRA 636, 645.
756

In light of the foregoing, the Court of Appeals properly sustained the

finding of the trial court that petitioner is liable for damages for the
wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not
awarding the same inasmuch as the respondent failed to establish the
amount garnished by petitioner. It is a well settled rule that one who
has been injured by a wrongful attachment can recover damages for
the actual loss resulting therefrom. But for such losses to be
recoverable, they must constitute actual damages duly established by
36
competent proofs, which are, however, wanting in the present case.
Nevertheless, nominal damages may be awarded to a plaintiff
whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, and not for
indemnifying the plaintiff for any loss suffered by him. Its award is
thus not for the purpose of indemnification for a loss but for the
recognition and vindication of a right. Indeed, nominal damages are
37
damages in name only and not in fact. They are recoverable where
some injury has been done but the pecuniary value of the damage is
not shown by evidence and are thus subject to the discretion of the
38
court according to the circumstances of the case.
In this case, the award of nominal damages is proper considering
that the right of respondent to use his money has been violated by its
garnishment. The amount of nominal damages must, however, be
reduced from P2 million to P50,000.00 considering the short period
of 2 months during
_______________
36 Philippine Commercial International Bank v. Intermediate Appellate Court,

G.R. No. 73610, April 19, 1991, 196 SCRA 29, 36-37.
37 Almeda v. Cariño, G.R. No. 152143, January 13, 2003, 395 SCRA 144, 149-
150.
38 Robes-Francisco Realty & Development Corporation v. Court of First Instance
of Rizal, (Branch XXXIV), G.R. No. L-41093, October 30, 1978, 86 SCRA 59, 64;
Pedrosa v. Court of Appeals, G.R. No. 118680, March 5, 2001, 353 SCRA 620, 630-
631.
757
VOL. 533, SEPTEMBER 21, 2007 757

which the writ was in effect as well as the lack of evidence as to the
amount garnished.
Likewise, the award of attorney’s fees is proper when a party is
compelled to incur expenses to lift a wrongfully issued writ of
attachment. The basis of the award thereof is also the amount of
money garnished, and the length of time respondents have been
deprived of the use of their money by reason of the wrongful

39
attachment. It may also be based upon (1) the amount and the
character of the services rendered; (2) the labor, time and trouble
involved; (3) the nature and importance of the litigation and business
in which the services were rendered; (4) the responsibility imposed;
(5) the amount of money and the value of the property affected by
the controversy or involved in the employment; (6) the skill and the
experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the
results secured, it being a recognized rule that an attorney may
properly
40
charge a much larger fee when it is contingent than when it
is not.
All the aforementioned weighed, and considering the short period
of time it took to have the writ lifted, the favorable decisions of the
courts below, the absence of evidence as to the professional
character and the social standing of the attorney handling the case
and the amount garnished, the award of attorney’s fees should be
fixed not at P1 Million, but only at P200,000.00.
The courts below correctly awarded moral damages on account
of petitioner’s misrepresentation and bad faith; however, we find the
award in the amount of P5 Million excessive. Moral damages are to
be fixed upon the discretion of the court taking into consideration
the educational, social and financial
_______________
39 Carlos v. Sandoval, G.R. No. 135830, September 30, 2005, 471 SCRA 266,
300.
40 Prudential Bank v. Court of Appeals, G.R. No. 125536, March 16, 2000, 328
SCRA 264, 272.
758

41
standing of the parties. Moral damages are not intended to enrich a
42
complainant at the expense of a defendant. They are awarded only
to enable the injured party to obtain means, diversion or amusements
that will serve to obviate the moral suffering he has undergone, by
reason of petitioner’s culpable action. Moral damages must be
commensurate with the loss or injury suffered. Hence, the award of
moral damages is reduced to P500,000.00.
Considering petitioner’s bad faith in securing the writ of
attachment, we sustain the award of exemplary damages by way of
example or correction for public good. This should deter parties in
litigations from resorting to baseless and preposterous allegations to
obtain writs of attachments. While as a general rule, the liability on
the attachment bond is limited to actual (or in some cases, temperate

or nominal) damages, exemplary damages may be recovered where
43
the attachment was established to be maliciously sued out.
Nevertheless, the award of exemplary damages in this case should
be reduced from P5M to P500,000.00.
Finally, contrary to the claim of petitioner, the instant case for
damages by reason of the invalid issuance of the writ, survives the
dismissal of the main case for sum of money. Suffice it to state that
the claim for damages arising from such wrongful attachment may
44
arise and be decided separately from the merits of the main action.
WHEREFORE, the petition is PARTIALLY GRANTED. The
May 31, 2006 Decision of the Court of Appeals in CA-G.R. CV No.
78200 is AFFIRMED with MODIFICATIONS. As modified,
petitioner Philippine Commercial International
_______________
41 Philippine Commercial International Bank v. Intermediate Appellate Court,

supra at pp. 38-39.
42 Filinvest Credit Coporation v. Intermediate Appellate Court, G.R. No. L-65935,
September 30, 1988, 166 SCRA 155, 165-166.
43 Hanil Development Co., Ltd. v. Court of Appeals, supra note 26 at p.16.
44 Carlos v. Sandoval, supra at pp. 290-291.
759
VOL. 533, SEPTEMBER 21, 2007 759

Bank is ordered to pay respondent Joseph Anthony M. Alejandro the

following amounts: P50,000.00 as nominal damages, P200,000.00 as
attorney’s fees; and P500,000.00 as moral damages, and
P500,000.00 as exemplary damages, to be satisfied against the
45
attachment bond issued by Prudential Guarantee & Assurance Inc.,
under JCL (4) No. 01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
Chico-Nazario, Nachura and Reyes, JJ., concur.

Austria-Martinez, J., I concur but moral damages should be
reduced to P200,000.00 and exemplary damages be reduced to
P100,000.00.
Petition partially granted, judgment affirmed with modifications.
Note.—Extraterritorial service of summons or summons by

publication applies only when the action is in rem or quasi in rem.
(Jose vs. Boyon, 414 SCRA 216 [2003])
——o0o——
_______________
45 The Surety, Prudential Guarantee & Assurance, Inc., was duly notified of
respondent’s application for damages (Record on appeal, p. 78) pursuant to Section
20, Rule 57 of the Rules of Court.
760
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8/7/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 533

738 SUPREME COURT REPORTS ANNOTATED