CARLOS VS. SANDOVAL (This is a long case with lots of convoluted facts)

TOPIC: Preliminary attachment:

DOCTRINE: Damages arising from illegal attachment may be claimed and awarded only after proper hearing and shall be included in the judgment of the main case.

FACTS: This case is a consolidation of three related cases.

The AntecedentFelix and Felipa Carlos acquired during their marriage six parcels of land. They had two sons: Juan and Teofilo. Felix and Felipa died intestate. Teofilo also died intestate, leaving his wife Sandoval and his son, Teofilo II (herein defendants). Juan Carlos claims he is the only heir of Felix and Felipa, because his late brother Teofilo and Sandoval were not validly married (no marriage license), and their son, Teofilo II could not be considered as Teofilo’s child - in effect, Teofilo died without leaving any heirs.

However, the subject parcels of land were registered in the name of Teofilo to due a tax-saving scheme they made in the past. To get back the land, Juan entered into certain agreement with Sandoval. But upon knowing that the marriage of Teofilo and Sandoval was invalid, Juan sought to nullify these agreements. He also sought:(1) that the marriage between Teofilo and Sandoval be declared void; (2) that new titles of the properties be issued in his name; (3) restitution for 18M. Juan also prayed for issuance of provisionary relief of preliminary attachment.

Juan Carlos posted a 20M bond issued by Siddcor Insurance. The court granted the preliminary attachment. Notice of garnishment was served upon PNB over the accounts of Sandoval.

Sandoval filed a motion to discharge the writ of attachment but it was denied. Sandoval filed certiorari with the CA. The CA granted and ordered the discharge and dissolution of the writ of attachment and notice of garnishment, which became final.

Back to the original complaint, after Sandoval filed an answer, she filed a motion for Summary Judgment. Juan Carlos countered in by also filing his own Summary Judgment. The court rendered a Summary Judgment in favor of Juan Carlos, granting all his motions and prayers.

Juan Carlos moved for execution pending appeal, which was also granted by the court and issued writ of execution.

Sandoval appealed to CA. She likewise filed a Petition for Certiorari with TRO, attacking the allowance of execution pending appeal, and prayed for the annulment of order granting execution and the writ.

Also, respondent Sandoval filed a Motion for Judgment on the Attachment Bond. They noted that the CA, as affirmed by SC, had already ruled that the Writ of Preliminary Attachment was improper and it had attained its finality (as above), and they were entitled for damages as a result of unlawful attachment. With this, the CA decided that it was necessary to resolve this motion first. The CA found that the claim of Sandoval for damages was meritorious. PNB certified that the account of Sandoval amounting to 15M had already been garnished while the court earlier decided that Juan Carlos was not entitled to the preliminary attachment. Thus, the Court ordered Juan Carlos and Siddcor Insurance to pay Sandoval 15M.

GR no. 135830

Juan Carlos argued that the CA could not have resolved the Motion for Judgment on the Attachment Bond since the case had not yet been raffled; that CA erred in resolving the motion without conducting any hearing; that CA had no jurisdiction because the docketing fees had not yet been filed.

GR no. 136035Siddcor Insurance argued that CA erred in ruling on the motion for damages without awaiting the judgment in the main case; that a hearing was necessary to prove the claim for damages.

GR no. 137743Siddcor Insurance assails the allowance by the CA of the immediate execution of the award for damages. Siddcor argues that the execution of a final order pending appeal maybe made only on a motion of a prevailing party.

Sandoval countered that the judgment sought to be executed was interlocutory and not appealable.

Facts arising subsequent to the filing of this instant petitionThe CA issued writ of enforcement pertaining to the judgment on the attached bond.SC issued TRO enjoining the enforcement of the said writ.

CA rendered a decision setting aside the Summary Judgment and remanding the case to RTC for further proceedings.

ISSUE RELEVANT TO THE TOPIC: Whether CA properly complied with the hearing requirement prior to its judgment on the attached bond.

HELD: YES

Section 20 Rule 57: An application for damages on account of improper, irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching obligee or his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case.

There is no question in this case that the Motion for Judgment on the Attachment Bond filed by respondents was properly filed since it was filed with the Court of Appeals during the pendency of the appeal in the main case. The core questions though lie in the proper interpretation of the condition under Section 20, Rule 57 that reads: "Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case." Petitioners assert that there was no proper hearing on the application for damages and that the Court of Appeals had wrongfully acted on the application in that it resolved it prior to the rendition of the main judgment.

“such damages may be awarded only on proper hearing” The hearing requirement ties with the indispensable demand of procedural due process. Due notice to the adverse party and its surety setting forth the facts supporting the applicant's right to damages and the amount thereof under the bond is essential. No judgment for damages may be entered and executed against the surety without giving it an opportunity to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the writ. That hearing embraces not only the right to present evidence but also a reasonable opportunity to know the claims of the opposing parties and meet them.

The Court found it not mandatory that there should be a separate hearing in order that damages upon the bond can be awarded. What is necessary only is for the attaching party and his surety to be duly notified and given the opportunity to be heard.

In this case, both Juan Carlos and Siddcor were duly notified by the appellate court of the Motion for Judgment on the Attachment Bond; and Carlos and Siddcor filed their respective comments in opposition. The relevant parties had been afforded the bare right to be heard on the matter.

Proper hearing would not merely encompass the right of the parties to submit their respective positions, but also to present evidence in support of their claims, and to rebut the submissions and evidence of the adverse party. This is especially crucial considering that the necessary elements to be established in an application for damages are essentially factual: namely, the fact of damage or injury, and the quantifiable amount of damages sustained. Such matters cannot be established on the mere say-so of the applicant, but require evidentiary support. But the hearing is not necessarily be a full-blown hearing on the merits.

In this case, proper hearing was satisfied as of the time the Court of Appeals rendered its assailed judgment on the attachment bond. The judicial finding on the wrongfulness of the attachment was then already conclusive and beyond review, and that the amount of actual damages sustained was likewise indubitable. As a result, petitioners would have been precluded from either raising the defenses that the preliminary attachment was valid or disputing the amount of actual damages sustained by reason of the garnishment. The only matter of controversy that could be litigable through the traditional hearing would be the matter of moral and exemplary damages, but the Court of Appeals appropriately chose not to award such damages.

Moreover, petitioners were afforded the opportunity to counter the arguments extended by the respondents. They fully availed of that right by submitting their respective comments/oppositions. In fine, the due process guarantee has been satisfied in this case.

As to whether there should be an extensive full-blown hearing is discretionary upon the trial court. However, with the CA and SC, they may choose to refer the hearing to the trial courts, as CA and SC are not trier of facts. To impose mandatory full-blown hearings on these appellate courts is supremely unwise.

“and shall be included in the judgment on the main case”There is no need for a favorable judgment in favor of the party against whom attachment was issued in order that damages may be awarded. It is indubitable that even a party who loses the action in main but is able to establish a right to damages by reason of improper, irregular, or excessive attachment may be entitled to damages. Damages arising from wrongful attachment may arise and be decided separately from the merits of the main action.

As to the surety, it becomes liable only when and if the court shall finally adjudge that the applicant was not entitled to the attachment.

In the present case, the determination that the attachment was wrongful did not come from the trial court, but from the CA in its exercise of its certiorari jurisdiction and confirmed by SC. Such decision should be respected by the trial court and is no longer subject for review. The only matter left for adjudication is the proper amount of damages. And as the court puts it, the award for damages need not be resolved before the case is submitted for decision, but should instead be resolved and included in the judgment on the main case.

The action of the CA in resolving the application for damages even before the main judgment was issued does not conform to the rule. But such error is not mortal to the award of damages. The premature award of damages does not negate the fact that the parties were accorded due process.

On Damages

The Court examined the particular award of damages made and found that the manifestation made by PNB over the deposits maintained by the respondents affirmed the actual amount seized by Juan Carlos.

As to the liability of the surety, its liability cannot be limited to the damages caused by the improper attachment only during the pendency of the appeal. The intendment of the law is that the surety shall answer for all damages that the party may suffer as a result of the illicit attachment for levy to dissolution.

DISPOSITIVE: The petitions are DISMISSED. Decision of CA is AFFIRMED.