Cash Deposit or Counter Bond: The Only Ways to Discharge an Attachment in Philippine Courts

Luzon Development Bank v. Krishnan (G.R. No. 203530, April 13, 2015) settles a recurring question in attachment disputes: may a party whose property has been garnished offer real property instead of cash or a counter-bond to lift the writ? The Supreme Court answered with a clear no, reaffirming that the Rules of Court provide only two ways to discharge an attachment.

The Dispute

Erlinda Krishnan sued Luzon Development Bank and its officers for collection of sum of money and damages involving time deposit certificates worth over P28 million. The trial court granted her application for a preliminary writ of attachment, which led to the garnishment of the bank's accounts.

The petitioners sought to lift the attachment and later moved to substitute their garnished accounts with government securities. After a series of orders and a certiorari petition, the Court of Appeals directed the petitioners to file a counter-bond under Section 12, Rule 57 of the Rules of Court. When they failed to do so, the trial court reinstated the writ. The petitioners then asked the court to allow them to deposit certificates of title to real property in lieu of a cash deposit or counter-bond. The trial court denied the motion, and the Court of Appeals affirmed.

The Issue

The sole question before the Supreme Court was whether the Court of Appeals erred in affirming the trial court's denial of the petitioners' motion to deposit real property in lieu of cash or a counter-bond.

The Ruling

The Supreme Court denied the petition and affirmed the lower courts' rulings. The Court examined Sections 2 and 5 of Rule 57 of the Rules of Court, which govern the issuance of a writ of attachment and the discharge of an attachment.

Under these provisions, once a writ of attachment is issued, the party whose property is attached may prevent or lift the attachment only by making a cash deposit with the court or by filing a counter-bond executed to the applicant. The amount must equal the bond fixed in the order of attachment or the value of the property to be attached, exclusive of costs.

The petitioners argued that the word and in this context means money.

• Strategic planning. A party facing attachment should prepare the cash or secure a surety bond early, rather than litigating alternatives that the Rules do not recognize.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.