G.R. No. 155868 February 6, 2007
SPOUSES GREGORIO and JOSEFA YU, Petitioners, vs. NGO YET TE, doing business under the name and style, ESSENTIAL MANUFACTURING, Respondent.

FACTS

Respondent Ngo Yet Te supplied detergent soap to petitioners Spouses Gregorio and Josefa Yu, who issued postdated checks as payment. The checks were dishonored upon presentment. Te filed a collection case with a prayer for a writ of preliminary attachment, alleging fraud by the spouses in incurring the obligation without intent to pay and an imminent disposal of their properties. The trial court granted the writ, attaching the spouses’ land and vehicles. The spouses moved to dissolve the attachment and filed a counterclaim for damages.
The Court of Appeals, in a special civil action for certiorari filed by the spouses, ruled that the writ of preliminary attachment was improperly issued due to a lack of specific factual basis for the alleged fraud. This decision became final and executory after the Supreme Court denied Te’s petition. Meanwhile, the trial court proceeded with the main collection case and rendered a decision ordering the spouses to pay the debt but declining to rule on their counterclaim for damages arising from the wrongful attachment, citing the pending Supreme Court action. The spouses moved for reconsideration on the counterclaim.

ISSUE

Whether the trial court erred in not awarding damages on the counterclaim after the writ of preliminary attachment was declared to have been wrongfully issued.

RULING

Yes, the trial court erred. The Supreme Court held that a final declaration that a writ of preliminary attachment was wrongfully or improperly issued entitles the party aggrieved thereby to recover damages on the attachment bond. The Court of Appeals’ decision, which became final, constituted a conclusive adjudication that the writ was issued without sufficient cause. This finality rendered the issue of the attachment’s impropriety res judicata.
Consequently, the trial court had the ministerial duty to award damages upon application and proof of the loss incurred. The right to recover arises from the wrongful issuance itself, not from a separate finding of malice or bad faith in the main action. The trial court’s justification for deferring the counterclaim—the pendency of a petition already denied by the Supreme Court—was a grave error. The case was remanded to the trial court solely for the purpose of receiving evidence and determining the precise amount of damages, attorney’s fees, and costs suffered by the petitioners due to the wrongful attachment. The right to such damages is vested upon the finality of the decision nullifying the writ.