Bank's wrongful garnishment of deposits through invalid preliminary attachment based on misrepresentation of borrower's residence
Summary
PCIB filed a collection case against lawyer Joseph Alejandro for P249.8 million yen loans, obtaining a preliminary attachment by misrepresenting that Alejandro was a non-resident. The trial court initially granted the writ, garnishing Alejandro's bank deposits, but later quashed it upon finding PCIB knew Alejandro maintained permanent addresses in Quezon City and Makati where they regularly transacted. This finding became final after unsuccessful appeals. Alejandro then claimed damages on the attachment bond. The Supreme Court affirmed PCIB's bad faith but significantly reduced damages from the Court of Appeals' P13 million total award to P1.25 million, emphasizing that preliminary attachment is an extraordinary remedy requiring strict compliance with procedural requirements and that PCIB's misrepresentation was a deliberate strategy to mislead the court.
Focus of dispute
Bank's wrongful garnishment of deposits through invalid preliminary attachment based on misrepresentation of borrower's residence
Legal facts
On September 10, 1997, respondent Joseph Anthony M. Alejandro, a lawyer with addresses in Quezon City and Makati, executed a promissory note to PCIB for P249,828,588.90 representing consolidated yen loans. Due to foreign exchange fluctuations, PCIB requested additional security. On October 23, 1997, PCIB filed a complaint for sum of money with preliminary attachment, claiming respondent was a non-resident of the Philippines and fraudulently withdrew unassigned deposits. The trial court granted the writ ex parte on October 24, 1997, after PCIB posted an attachment bond, leading to garnishment of respondent's RCBC deposits. Respondent filed a motion to quash, proving he maintained permanent residence in Quezon City and office in Makati, where PCIB representatives regularly transacted with him. The court found PCIB misrepresented respondent's residence and suppressed material facts.
Judgement and reasoning
{"Court of Appeals (CA)": "Affirmed the trial court's findings that PCIB acted in bad faith by misrepresenting respondent's residence. Modified the damages award by deleting the P25 million and instead awarding P2 million as nominal damages, P5 million as moral damages, and P1 million as attorney's fees. Later granted respondent's motion for reconsideration by adding P5 million as exemplary damages. Held that PCIB cannot claim good faith when its knowledge of respondent's Philippine residence goes to the very issue of the court's jurisdiction.", "Regional Trial Court of Makati": "Granted the preliminary attachment ex parte based on PCIB's representations that respondent was a non-resident. Later quashed the writ on December 24, 1997, finding that PCIB misrepresented respondent's residence and that withdrawal of unassigned deposits was not fraudulent as it was approved by PCIB. Found PCIB had personal and official knowledge of respondent's Philippine addresses through regular transactions. In the damages case, awarded P25 million without specifying basis, ordering payment from the attachment bond and requiring PCIB to pay the excess.", "Supreme Court (SC)": "Affirmed the findings of bad faith and misrepresentation, noting these are conclusive due to prior final judgments. Rejected PCIB's alternative argument that attachment was proper under Rule 57(f) for residents temporarily out of the Philippines, explaining that substituted service would have sufficed for acquiring jurisdiction. Reduced damages significantly: nominal damages from P2M to P50,000; attorney's fees from P1M to P200,000; moral damages from P5M to P500,000; and exemplary damages from P5M to P500,000. Emphasized that attachment is harsh and extraordinary remedy that should be used only when necessary and as last resort."}