G.R. No. 73610; April 19, 1991
Philippine Commercial International Bank (formerly Philippine Commercial & Industrial Bank), petitioner, vs. Intermediate Appellate Court and Spouses Jose Salgado and Julieta Salgado, respondents.

FACTS

Petitioner PCIB filed a complaint for sum of money against the respondent spouses to enforce a P1.3 million promissory note. To secure a writ of preliminary attachment, PCIB alleged in its complaint and supporting affidavit that the note was unsecured and that the spouses were disposing of properties to defraud creditors. The writ was issued, and properties were levied upon. The spouses moved to quash the writ, alleging PCIB committed fraud by deleting the notation “REM” (Real Estate Mortgage) from the copy of the note attached to the complaint to make it appear unsecured. The trial court granted the motion and lifted the attachment.
In the main case for recovery, the trial court initially dismissed PCIB’s complaint, finding the note was secured by a real estate mortgage and the obligation was not yet due due to a restructuring agreement. It awarded the spouses moral and exemplary damages and attorney’s fees. On reconsideration, a different judge reversed, ordering the spouses to pay the debt and reinstating the attachment. The spouses appealed to the Intermediate Appellate Court (IAC). Separately, the Supreme Court in G.R. No. 55381 ultimately declared the issuance of the writ irregular, finding the affidavit basis false as the note was in fact secured by a registered real estate mortgage.

ISSUE

Whether the respondent spouses are entitled to damages on account of the wrongful issuance of the writ of preliminary attachment.

RULING

Yes, the spouses are entitled to damages. The Supreme Court affirmed the IAC’s finding of liability but modified the amounts awarded. The legal logic is grounded in the established principle that a party who sustains loss by reason of a wrongful attachment is entitled to compensation. The foundation for this award is the final determination in G.R. No. 55381 that the attachment was irregularly obtained because PCIB’s affidavit contained a false allegation regarding the lack of security for the debt. Since the note was secured by a registered mortgage, the ground for attachment under the Rules of Court was absent.
The Court clarified the recoverable damages. Moral damages are recoverable for the besmirched reputation, wounded feelings, and social humiliation suffered by the spouses due to the public levy on their properties. Exemplary damages are also proper, as they may be awarded when the wrongful act was attended by bad faith or gross negligence, which the fraudulent misrepresentation in securing the writ exemplifies. Attorney’s fees are a proper element of damages in an action based on wrongful attachment, covering costs incurred in defending against it. However, all awards must be reasonable and not excessive. The Court found the IAC’s initial awards of P10 million in moral and P5 million in exemplary damages to be unconscionable and reduced them to P40,000 and P15,000, respectively, with attorney’s fees set at P20,000. The decision balances the right to redress for a wrongful legal process with the principle that damages must be temperate and proportionate.