Professional Documents
Culture Documents
2nd Batch
2nd Batch
L-34548 November 29, 1988 directing the herein petitioner "to deliver in check
the amount garnished to Sheriff Faustino Rigor
RIZAL COMMERCIAL BANKING and Sheriff Rigor in turn is ordered to cash the
CORPORATION, petitioner, check and deliver the amount to the plaintiff's
vs. representative and/or counsel on record." [Record
THE HONORABLE PACIFICO P. DE CASTRO on Appeal, p. 20; Rollo, p. 5.] In compliance with
and PHILIPPINE VIRGINIA TOBACCO said Order, petitioner delivered to Sheriff Rigor a
ADMINISTRATION, respondents certified check in the sum of P 206,916.76.
In the second place, the bank had already filed a This argument deserves no serious consideration.
reply to the Notice of Garnishment stating that it As stated earlier, the order directing the bank to
had in its custody funds belonging to the PVTA, deliver the amount to the sheriff was distinct and
which, in fact was the basis of the plaintiff in filing separate from the order directing the sheriff to
ProvRem 2nd batch | 2
encash the said check. The bank had no choice credits belonging to the judgment
but to comply with the order demanding delivery debtor and owing to him from a
of the garnished amount in check. The very tenor stranger to the litigation. Under
of the order called for immediate compliance the above-cited rule, the
therewith. On the other hand, the bank cannot be garnishee [the third person] is
held liable for the subsequent encashment of the obliged to deliver the credits, etc.
check as this was upon order of the court in the to the proper officer issuing the
exercise of its power of control over the funds writ and "the law exempts from
placed in custodia legis by virtue of the liability the person having in his
garnishment. possession or under his control
any credits or other personal
In a recent decision [Engineering Construction property belonging to the
Inc., v. National Power Corporation, G.R. No. L- defendant, ..., if such property be
34589, June 29, 1988] penned by the now Chief delivered or transferred, ..., to the
Justice Marcelo Fernan, this Court absolved a clerk, sheriff, or other officer of the
garnishee from any liability for prompt compliance court in which the action is
with its order for the delivery of the garnished pending. [3 Moran, Comments on
funds. The rationale behind such ruling deserves the Rules of Court 34 (1970 ed.)]
emphasis in the present case:
Applying the foregoing to the case at bar,
But while partial restitution is warranted in MERALCO, as garnishee, after having been
favor of NPC, we find that the Appellate judicially compelled to pay the amount of the
Court erred in not absolving MERALCO, judgment represented by funds in its possession
the garnishee, from its obligations to NPC belonging to the judgment debtor or NPC, should
with respect to the payment of ECI of P be released from all responsibilities over such
1,114,543.23, thus in effect subjecting amount after delivery thereof to the sheriff. The
MERALCO to double liability. MERALCO reason for the rule is self-evident. To expose
should not have been faulted for its garnishees to risks for obeying court orders and
prompt obedience to a writ of processes would only undermine the
garnishment. Unless there are compelling administration of justice. [Emphasis supplied.]
reasons such as: a defect on the face of
the writ or actual knowledge on the part of The aforequoted ruling thus bolsters RCBC's
the garnishee of lack of entitlement on the stand that its immediate compliance with the
part of the garnisher, it is not incumbent lower court's order should not have been met with
upon the garnishee to inquire or to judge the harsh penalty of joint and several liability. Nor
for itself whether or not the order for the can its liability to reimburse PVTA of the amount
advance execution of a judgment is valid. delivered in check be premised upon the
subsequent declaration of nullity of the order of
Section 8, Rule 57 of the Rules of Court delivery. As correctly pointed out by the petitioner:
provides:
xxx xxx xxx
Effect of attachment of debts and
credits.All persons having in That the respondent Judge, after his
their possession or under their Order was enforced, saw fit to recall said
control any credits or other similar Order and decree its nullity, should not
personal property belonging to the prejudice one who dutifully abided by it,
party against whom attachment is the presumption being that judicial orders
issued, or owing any debts to the are valid and issued in the regular
same, all the time of service upon performance of the duties of the Court"
them of a copy of the order of [Section 5(m) Rule 131, Revised Rules of
attachment and notice as provided Court]. This should operate with greater
in the last preceding section, shall force in relation to the herein petitioner
be liable to the applicant for the which, not being a party in the case, was
amount of such credits, debts or just called upon to perform an act in
other property, until the accordance with a judicial flat. A contrary
attachment be discharged, or any view will invite disrespect for the majesty
judgment recovered by him be of the law and induce reluctance in
satisfied, unless such property be complying with judicial orders out of fear
delivered or transferred, or such that said orders might be subsequently
debts be paid, to the clerk, sheriff invalidated and thereby expose one to
or other proper officer of the court suffer some penalty or prejudice for
issuing the attachment. obeying the same. And this is what will
happen were the controversial orders to
Garnishment is considered as a be sustained. We need not underscore
specie of attachment for reaching the danger of this as a precedent.
ProvRem 2nd batch | 3
xxx xxx xxx such assets and incur such liabilities resulting
directly from operations authorized by the
[ Brief for the Petitioner, Rollo, p. provisions of this Act or as essential to the proper
212; Emphasis supplied.] conduct of such operations." [Section 3, Republic
Act No. 2265.]
From the foregoing, it may be concluded that the
charge of breach of trust and/or dereliction of duty Among the specific powers vested in the PVTA
as well as lack of prudence in effecting the are: 1) to buy Virginia tobacco grown in the
immediate payment of the garnished amount is Philippines for resale to local bona fide tobacco
totally unfounded. Upon receipt of the Notice of manufacturers and leaf tobacco dealers [Section
Garnishment, RCBC duly informed PVTA thereof 4(b), R.A. No. 2265]; 2) to contracts of any kind
to enable the latter to take the necessary steps as may be necessary or incidental to the
for its protection. However, right on the very next attainment of its purpose with any person, firm or
day after its receipt of such notice, RCBC was corporation, with the Government of the
already served with the Order requiring delivery of Philippines or with any foreign government,
the garnished amount. Confronted as it was with subject to existing laws [Section 4(h), R.A. No.
a mandatory directive, disobedience to which 22651; and 3) generally, to exercise all the
exposed it to a contempt order, it had no choice powers of a corporation under the Corporation
but to comply. Law, insofar as they are not inconsistent with the
provisions of this Act [Section 4(k), R.A. No.
The respondent Judge nevertheless held that the 2265.]
liability of RCBC for the reimbursement of the
garnished amount is predicated on the ruling of From the foregoing, it is clear that PVTA has
the Supreme Court in the case of Commissioner been endowed with a personality distinct and
of Public Highways v. Hon. San Diego[G.R. No. separate from the government which owns and
L-30098, February 18, 1970, 31 SCRA 616] controls it. Accordingly, this Court has heretofore
which he found practically on all fours with the declared that the funds of the PVTA can be
case at bar. garnished since "funds of public corporation
which can sue and be sued were not exempt from
The Court disagrees. garnishment" [Philippine National Bank v.
Pabalan, G.R. No. L-33112, June 15, 1978, 83
SCRA 595, 598.]
The said case which reiterated the rule
in Republic v. Palacio [G.R. No. L-20322, May 29,
1968, 23 SCRA 899] that government funds and In National Shipyards and Steel Corp. v.
properties may not be seized under writs of CIR [G.R. No. L-17874, August 31, 1964, 8 SCRA
execution or garnishment to satisfy such 781], this Court held that the allegation to the
judgment is definitely distinguishable from the effect that the funds of the NASSCO are public
case at bar. funds of the government and that as such, the
same may not be garnished, attached or levied
upon is untenable for, as a government-owned or
In the Commissioner of Public Highways case
controlled corporation, it has a personality of its
[supra], the bank which precipitately allowed the
own, distinct and separate from that of the
garnishment and delivery of the funds failed to
government. This court has likewise ruled that
inform its depositor thereof, charged as it was
other govemment-owned and controlled
with knowledge of the nullity of the writ of
corporations like National Coal Company, the
execution and notice of garnishment against
National Waterworks and Sewerage Authority
government funds. In the aforementioned case,
(NAWASA), the National Coconut Corporation
the funds involved belonged to the Bureau of
(NACOCO) the National Rice and Corn
Public Highways, which being an arm of the
Corporation (NARIC) and the Price Stabilization
executive branch of the government, has no
Council (PRISCO) which possess attributes
personality of its own separate from the National
similar to those of the PVTA are clothed with
Government. The funds involved
personalities of their own, separate and distinct
were government funds covered by the rule on
from that of the government [National Coal
exemption from execution.
Company v. Collector of Internal Revenue, 46
Phil. 583 (1924); Bacani and Matoto v. National
This brings us to the first issue raised by the Coconut Corporation et al., 100 Phil. 471 (1956);
petitioner: Are the PVTA funds public funds Reotan v. National Rice & Corn Corporation, G.R.
exempt from garnishment? The Court holds that No. L-16223, February 27, 1962, 4 SCRA 418.]
they are not. The rationale in vesting it with a separate
personality is not difficult to find. It is well-settled
Republic Act No. 2265 created the PVTA as an that when the government enters into commercial
ordinary corporation with all the attributes of a business, it abandons its sovereign capacity and
corporate entity subject to the provisions of the is to be treated like any other corporation [Manila
Corporation Law. Hence, it possesses the power Hotel Employees' Association v. Manila Hotel Co.
"to sue and be sued" and "to acquire and hold and CIR, 73 Phil. 734 (1941).]
In order that the trial court may validly acquire While it is true that defendant Jose M. Barredo
jurisdiction to bind the person of the garnishee, it was not a party in Civil Case No. 1636 when it
is not necessary that summons be served upon was instituted by appellant against the Philippine
him. The garnishee need not be impleaded as a Ready Mix Concrete Company, Inc.,
party to the case. All that is necessary for the trial however, jurisdiction was acquired over him by
court lawfully to bind the person of the garnishee the court and he became a virtual party to the
or any person who has in his possession credits case when, after final judgment was rendered in
belonging to the judgment debtor is service upon said case against the company, the sheriff served
him of the writ of garnishment. upon him a writ of garnishment in behalf of
appellant. Thus, as held by this Court in the case
The Rules of Court themselves do not require that of Tayabas Land Company vs. Sharruf, 41 Phil.
the garnishee be served with summons or 382, the proceeding by garnishment is a species
impleaded in the case in order to make him liable. of attachment for reaching credits belonging to
the judgment debtor and owing to him from a
stranger to the litigation. By means of the citation,
Rule 39, Section 15 provides:
the stranger becomes a forced intervenor; and
In the present case, there can be no doubt, But reliance by petitioner on the case
therefore, that the trial court actually acquired of Economic Insurance Company, Inc. v. Torres
jurisdiction over petitioner Perla when it was (supra) is misplaced. The Court there held that a
served with the writ of garnishment of the third- separate action needs to be commenced when
party liability insurance policy it had issued in the garnishee "claims an interest in the property
favor of judgment debtor Nelia Enriquez. Perla adverse to him (judgment debtor) or denies the
cannot successfully evade liability thereon by debt." In the instant case, petitioner Perla did not
such a contention. deny before the trial court that it had indeed
issued a third-party liability insurance policy in
Every interest which the judgment debtor may favor of the judgment debtor. Petitioner moreover
have in property may be subjected to refrained from setting up any substantive defense
execution.19 In the instant case, the judgment which it might have against the insured-judgment
debtor Nelia Enriquez clearly had an interest in debtor. The only ground asserted by petitioner in
the proceeds of the third-party liability insurance its "Motion for Reconsideration of the Order dated
contract. In a third-party liability insurance August 6, 1979 and to Quash Notice of
contract, the insurer assumes the obligation of Garnishment" was lack of jurisdiction of the trial
paying the injured third party to whom the insured court for failure to implead it in the case by
is liable. 20 The insurer becomes liable as soon serving it with summons. Accordingly, Rule 39,
as the liability of the insured to the injured third Section 45 of the Rules of Court is not applicable
person attaches. Prior payment by the insured to in the instant case, and we see no need to require
the injured third person is not necessary in order a separate action against Perla: a writ of
that the obligation of the insurer may arise. From garnishment suffices to hold petitioner
the moment that the insured became liable to the answerable to the judgment creditor. If Perla had
third person, the insured acquired an interest in any substantive defenses against the judgment
the insurance contract, which interest may be debtor, it is properly deemed to have waived them
garnished like any other credit. 21 by laches.
Petitioner also contends that in order that it may WHEREFORE, the Petition for Certiorari and
be held liable under the third-party liability Prohibition is hereby DISMISSED for having been
insurance, a separate action should have been filed out of time and for lack of merit. The assailed
commenced by private respondents to establish Orders of the trial court are hereby AFFIRMED.
petitioner's liability. Petitioner invokes Economic Costs against petitioner. This Decision is
Insurance Company, Inc. vs. Torres, 22 which immediately executory.
stated:
SO ORDERED.
It is clear from Section 45, Rule 39 that if a
persons alleged to have property of the judgment G.R. No. L-35990 June 17, 1981
debtor or to be indebted to him claims an interest
in the property adverse to him or denies the debt, ABOITIZ & COMPANY, INC., HONORABLE
the court may only authorize the judgment VICENTE N. CUSI JR., Judge of the Court of
creditor to institute an action against such person First Instance of Davao, and the PROVINCIAL
for the recovery of such interest or debt. Said SHERIFF OF DAVAO DEL SUR, petitioners,
section does not authorize the court to make a vs.
finding that the third person has in his possession COTABATO BUS COMPANY, INC., respondent.
property belonging to the judgment debtor or is
It is an undisputed fact that, as averred by G.R. No. L-28297 March 30, 1970
petitioner itself, the several buses attached are
ProvRem 2nd batch | 10
ELPIDIO JAVELLANA, plaintiff-appellant, .... During the period from 23 July 1959 to 30 July
vs. 1960, defendant, in a series of transactions,
D. O. PLAZA ENTERPRISES, INC., defendant- purchased from plaintiff wire ropes, tractors and
appellee. diesel spare parts, (in) payment for which he
issued several checks amounting to P43,017.32,
REYES, J.B.L., J.: which, when presented to the bank, were
dishonored for lack of funds. Defendant
Direct appeal, on points of law, from an order of substituted these checks with another set of
the Court of First Instance of Manila, in its Civil checks for the same amount, but again, the same
Case No. 46762, modifying an earlier decision for were dishonored for lack of funds, as evidenced
the plaintiff by reducing the rate of interest on the by Exhibits A to M, except for one check in the
sum adjudged, and also the attorney's fees; and amount of P3,900.00 as evidenced by Exhibit C.
by ordering the plaintiff to pay damages to the Thus, the principal obligation was reduced to
defendant on account of a preliminary attachment P39,117.32. At the time of the issuance of the
obtained by the former upon the latter's said checks, the defendant never informed
counterclaim. plaintiff that it had funds to back them up. Plaintiff
made demands to defendant for payment, but
defendant pleaded for time and liberalization of
The complaint in the aforesaid civil case was for
payment, which was rejected by the plaintiff. The
collection of the sum of P43,017.32 representing
transactions in question were covered by invoices
balance due on purchases of wire ropes, tractors
listed in Exhibit P, a sample of which is evidenced
and diesel parts made by the defendant-appellee,
by Exhibit C, wherein said transactions were for
D. O. Plaza Enterprises, Inc., from the plaintiff-
30-day term, 12% interest per annum to be
appellant, Elpidio Javellana. The complaint
charged from date of invoice, and 25% attorney's
prayed that the defendant be ordered to pay the
fees in case of litigation.
said sum of P43,017.32, with legal interest, plus
attorney's fees in the sum of P5,000.00; it also
prayed for a writ of preliminary attachment. The defendant claims that there were other
transactions between plaintiff and defendant
involving the amount of P196,828.58; that it had
Upon plaintiff's putting up a bond, the trial court,
no intention not to pay the checks it issued upon
on 15 April 1961, issued a writ of attachment. On
presentment; and that it suffered damages in the
20 May 1961, the defendant moved to discharge
amount of P14,800.00 by reason of the
the attachment on the ground that it was
attachment.
improperly issued. The motion was denied.
xxx xxx xxx
On 7 November 1961, the defendant filed its
answer and counter-claimed for damages arising
from the attachment. The plaintiff answered and The counterclaim for damages arising from the
interposed a counterclaim to the counterclaim. attachment is without merit. The defendant was
manifestly in bad faith when it issued two sets of
bouncing checks. Hence, the attachment was not
After some years, or on 27 April 1966, the
improper, contrary to defendant's claim.
defendant moved for the dissolution of the
preliminary attachment. Upon its filing a
counterbond, the court, on 7 May 1966, dissolved The dispositive portion of the decision decreed:
the attachment.
WHEREFORE, judgment is hereby rendered for
On 3 November 1966, the plaintiff filed a motion the plaintiff and against the defendant, ordering
to admit his amended complaint, which the court the latter to pay the former the sum of P39,117.32
granted on 12 November 1966. In this amended with interest at 12% per annum from 14 April
complaint, the plaintiff averred that of the sum of 1961, the date of the filing of the original
P43,017.32 alleged in the original complaint, the complaint, until final payment, plus 25% of the
defendant has paid P3,900.00, thereby leaving a principal indebtedness as attorney's fees and
balance of P39,117.32 unpaid, but that, as costs of suit.
indicated by invoices, defendant's purchases
were payable within thirty (30) days and were to The counterclaim as well as the counterclaim to
bear interest of 12% per annum plus 25% the counter claim are hereby dismissed for lack of
attorney's fees. The amended complaint merit.
accordingly prayed for the increased amounts.
Defendant did not answer this amended On 28 June 1967, the defendant moved to
complaint. reconsider. Over the objection of the plaintiff, the
court issued an order dated 10 August 1967, now
After trial, the court, on 15 June 1967, rendered the subject of the present appeal, modifying the
judgment. It found the following facts: previous decision, in the manner following:
The first two assigned errors are well taken. The FOR THE FOREGOING REASONS, the
court a quo reduced the interest stated in its appealed order is hereby reversed insofar as it
previous decision from 12% to mere legal interest reduced the amount of attorney's fees and the
and the attorney's fees from 25% to P5,000.00 on interest on the principal sum adjudged in the
the basis of estoppel, the ground therefor being original decision dated 15 June 1967; but the
that the reduced amounts were those alleged, order is affirmed in all other respects. No costs.
hence admitted, by the plaintiff in his original
complaint. This was error. The original complaint
was not formally offered in evidence. Having been [G.R. No. 115678. February 23, 2001]
amended, the original complaint lost its character
as a judicial admission, which would have PHILIPPINE BANK OF
required no proof, and became merely an COMMUNICATIONS, petitioner, vs. HON.
extrajudicial admission, the admissibility of which, COURT OF APPEALS and BERNARDINO
as evidence, requires its formal offer. VILLANUEVA, respondents.
Pleadings superseded or amended disappear [G.R. No. 119723. February 23, 2001]
from the record as judicial admissions. However,
any statement contained therein may be PHILIPPINE BANK OF
considered as an extrajudicial admission, and as COMMUNICATIONS, petitioner, vs. HON.
such, in order that the court may take it into COURT OF APPEALS and FILIPINAS TEXTILE
consideration, it should be offered formality in MILLS, INC., respondents.
evidence. (5 Moran 58, citing Lucido v. Calupitan,
27 Phil. 148; Bastida v. Menzi, 58 Phil. 188.) DECISION
The Motion was duly opposed by private 1. The instant case is based on the failure of
respondents and, after the filing of a Reply defendants as entrustee to pay or remit the
thereto by petitioner, the lower court issued its proceeds of the goods entrusted by plaintiff to
August 11, 1993 Order for the issuance of a writ defendant as evidenced by the trust receipts
of preliminary attachment, conditioned upon the (Annexes B, C and D of the complaint), nor to
filing of an attachment bond. Following the denial return the goods entrusted thereto, in violation of
of the Motion for Reconsideration filed by private their fiduciary duty as agent or entrustee;
respondent Filipinas Textile Mills, both private
respondents filed separate petitions 2. Under Section 13 of P.D. 115, as amended,
for certiorari before respondent Court assailing violation of the trust receipt law constitute(s)
the order granting the writ of preliminary estafa (fraud and/or deceit) punishable under
attachment. Article 315 par. 1[b] of the Revised Penal Code;
Both petitions were granted, albeit on different 3. On account of the foregoing, there exist(s) valid
grounds. In CA-G.R. SP No. 32762, respondent ground for the issuance of a writ of preliminary
Court of Appeals ruled that the lower court was attachment under Section 1 of Rule 57 of the
guilty of grave abuse of discretion in not Revised Rules of Court particularly under sub-
conducting a hearing on the application for a writ paragraphs b and d, i.e. for embezzlement or
of preliminary attachment and not requiring fraudulent misapplication or conversion of money
petitioner to substantiate its allegations of fraud, (proceeds) or property (goods entrusted) by an
embezzlement or misappropriation. On the other agent (entrustee) in violation of his fiduciary duty
hand, in CA-G.R. SP No. 32863, respondent as such, and against a party who has been guilty
Court of Appeals found that the grounds cited by of fraud in contracting or incurring the debt or
petitioner in its Motion do not provide sufficient obligation;
basis for the issuance of a writ of preliminary
attachment, they being mere general 4. The issuance of a writ of preliminary
averments. Respondent Court of Appeals held attachment is likewise urgently necessary as
that neither embezzlement, misappropriation nor there exist(s) no sufficient security for the
incipient fraud may be presumed; they must be satisfaction of any judgment that may be
established in order for a writ of preliminary rendered against the defendants as the latter
attachment to issue. appears to have disposed of their properties to
the detriment of the creditors like the herein
plaintiff;
SECTION 1. Grounds upon which attachment 4. The instant case is one of those mentioned in
may issue. A plaintiff or any proper party may, at Section 1 of Rule 57 of the Revised Rules of
the commencement of the action or at any time Court wherein a writ of preliminary attachment
thereafter, have the property of the adverse party may be issued against the defendants,
attached as security for the satisfaction of any particularly sub-paragraphs b and d of said
judgment that may be recovered in the following section;
cases:
5. There is no other sufficient security for the
xxxxxxxxx claim sought to be enforced by the instant case
and the amount due to herein plaintiff or the value
(b) In an action for money or property embezzled of the property sought to be recovered is as much
or fraudulently misapplied or converted to his use as the sum for which the order for attachment is
by a public officer, or an officer of a corporation, granted, above all legal counterclaims.
or an attorney, factor, broker, agent or clerk, in
the course of his employment as such, or by any Again, it lacks particulars upon which the court
other person in a fiduciary capacity, or for a willful can discern whether or not a writ of attachment
violation of duty; should issue.
Thus, on July 7, 2005, Watercraft filed against On August 12, 2005, Wolfe's accounts at the
Wolfe a Complaint for Collection of Sum of Money Bank of the Philippine Islands were also
with Damages with an Application for the garnished.
Issuance of a Writ of Preliminary Attachment. The
case was docketed as Civil Case No. 4534-MN, By virtue of the Notice of Attachment and Levy
and raffled to Branch 1703 of the Regional Trial dated September 5, 2005, a white Dodge pick-up
Court (RTC) of Malabon City. truck with plate number XXL 111 was also levied
upon. However, a certain Jeremy Simpson filed a
In his Answer, Wolfe claimed he was hired as Motion for Leave of Court to Intervene, claiming
Service and Repair Manager, instead of Shipyard that he is the owner of the truck as shown by a
Manager. He denied owing Watercraft the amount duly-notarized Deed of Sale executed on August
of US$16,324.82 representing storage fees for 4, 2005, the Certificate of Registration No.
the sailboat. He explained that the sailboat was 3628665-1 and the Official Receipt No.
purchased in February 1998 as part of an 271839105.
agreement between him and Watercraft1 s then
General Manager, Barry Bailey, and its President, On November 8, 2005, Wolfe filed a Motion to
Ricky Sandoval, for it to be repaired and used as Discharge the Writ of Attachment, arguing that
training or fill-in project for the staff, and to be Watercraft failed to show the existence of fraud
sold later on. He added that pursuant to a central and that the mere failure to pay or perform an
Listing Agreement for the sale of the sailboat, he obligation does not amount to fraud. Me also
was appointed as agent, placed in possession claimed that he is not a flight risk for the following
thereof and entitled to a ten percent (10%) sales reasons: (1) contrary to the claim that his Special
commission. He insisted that nowhere in the Working Visa expired in April 2005, his Special
agreement was there a stipulation that berthing Subic Working Visa and Alien Certificate of
and storage fees will be charged during the entire Registration are valid until April 25, 2007 and May
time that the sailboat was in Watercraft's 11, 2006, respectively; (2) he and his family have
dockyard. Thus, he claimed to have been been residing in the Philippines since 1997; (3) he
surprised when he received five (5) invoices is an existing stockholder and officer of Wolfe
billing him for the said fees two (2) months after Marine Corporation which is registered with the
his services were terminated. Fie pointed out that Securities and Exchange Commission, and a
the complaint was an offshoot of an illegal consultant of "Sudeco/Ayala" projects in Subic, a
dismissal case he filed against Watercraft which member of the Multipartite Committee for the new
had been decided in his favor by the Labor port development in Subic, and the Subic
Arbiter. Chamber of Commerce; and (4) he intends to
finish prosecuting his pending labor case against
Meanwhile, finding Watercraft's ex- Watercraft. On even date, Watercraft also filed a
parte application for writ of preliminary attachment Motion for Preliminary Hearing of its affirmative
sufficient in form and in substance pursuant to defenses of forum shopping, litis pendentia, and
Section 1 of Rule 57 of the Rules of Court, the laches.
RTC granted the same in the Order dated July
15, 2005, thus: In an Order dated March 20, 2006, the RTC
denied Wolfe's Motion to Discharge Writ of
WHEREFORE, let a Writ of Preliminary Attachment and Motion for Preliminary Hearing
Attachment be issued accordingly in favor of the for lack of merit.
plaintiff, Watercraft Ventures Corporation
conditioned upon the filing of attachment bond in Wolfe filed a motion for reconsideration, but the
the amount of Three Million Two Hundred RTC also denied it for lack of merit in an Order
Thirty-One Thousand Five Hundred and dated November 10, 2006. Aggrieved, Wolfe filed
Eighty-Nine and 25/100 Pesos a petition for certiorari before the CA.
(Php3,231,589.25) and the said writ be served
In a Resolution dated January 24, 2008, the CA Watercraft also faults the CA in finding no merit in
denied Watercraft's motion for reconsideration of its allegation that Wolfe is a flight risk. It avers
its Decision, there being no new or significant that he was supposed to stay and work in the
issues raised in the motion. country for a limited period, and will eventually
leave; that despite the fact that his wife and
Dissatisfied with the CA Decision and Resolution, children reside in the country, he can still leave
Watercraft filed this petition for review with them anytime; and that his work in the
on certiorari, raising these two issues: country will not prevent him from leaving, thereby
defeating the purpose of the action, especially
I. since he had denied responsibility for his
outstanding obligations. It submits that the CA
overlooked paragraph 28 of its Complaint which
alleged that "[i]n support of the foregoing
WHETHER THE EX-PARTE ISSUANCE OF THE
allegations and the prayer for the issuance of a
PRELIMINARY ATTACHMENT BY THE TRIAL
Writ of Preliminary Attachment in the instant case,
COURT IN FAVOR OF THE PETITIONER IS
the Plaintiff has attached hereto the Affidavit of
VALID.
the Vice-President of the Plaintiff, MS. ROSARIO
E. RANOA x x x."9
II.
Watercraft asserts that it has sufficiently complied
with the only requisites for the issuance of the writ
WHETHER THE ALLEGATIONS IN THE of preliminary attachment under Section 3, Rule
AFFIDAVIT OF MERIT CONCERNING FRAUD 57 of the Rules of Court, i.e., affidavit of merit and
ARE SUFFICIENT TO WARRANT THE bond of the applicant. It posits that contrary to the
ISSUANCE OF A PRELIMINARY WRIT OF CA ruling, there is no requirement that evidence
ATTACHMENT BY THE TRIAL COURT IN must first be offered before a court can grant such
FAVOR OF THE PETITIONER.7 writ on the basis of Section 1 (d) of Rule 57, and
that the rules only require an affidavit showing
Watercraft argues that the CA erred in holding that the case is one of those mentioned in Section
that the RTC committed grave abuse of discretion 1, Rule 57. It notes that although a party is
in issuing the writ of preliminary attachment, and entitled to oppose an application for the issuance
in finding that the affidavit of merit only of the writ or to move for the discharge thereof by
enumerated circumstances tending to show the controverting the allegations of fraud, such rule
possibility of Wolfe's flight from the country, but does not apply when the same allegations
failed to show fraudulent intent on his part to constituting fraud are the very facts disputed in
defraud the company. the main action, as in this case.
G.R. No. L-50378 September 30, 1982 That he is the Collection Manager, Automotive
Division of Filinvest Credit Corporation;
FILINVEST CREDIT CORPORATION, petitioner,
vs. That in the performance of his duties, he came to
THE HONORABLE JUDGE BENJAMIN know of the account of Ernesto Salazar, which is
RELOVA (In his capacity as Presiding Judge covered by a Promissory Note and secured by a
of the Court of First Instance of Manila, Chattel Mortgage, which documents together with
Branch XI) and ERNESTO all the rights and interest thereto were assigned
SALAZAR, respondents. by Rallye Motor Co., Inc.;
Judge Jorge R. Coquia (now Justice of the Court The plaintiff's evidence show that the defendant
of Appeals), then presiding Judge of the lower Rallye Motor assigned to the former defendant
court, granted the prayer for a writ of attachment Salazar's promissory note and chattel mortgage
in an Order dated August 17, 1977 stating that: by virtue of which plaintiff discounted the note.
Defendant Salazar refused to pay the plaintiff for
Finding the complaint sufficient in form and the reason that Rallye Motor has not delivered to
substance, and in view of the sworn statement of Salazar the motor vehicle which he bought from
Gil Mananghaya, Collection Manager of the Rallye. It is the position of plaintiff that defendant
plaintiff that defendants have committed fraud in Salazar was in conspiracy with Rallye Motor in
securing the obligation and are now avoiding defrauding plaintiff.
payment of the same, let a writ of attachment
issue upon the plaintiff's filing of a bond in the Ernesto Salazar, on his part complained that he
sum of P97,000.00. was himself defrauded, because while he signed
a promissory note and chattel mortgage over the
In the meantime, let summons issue on the motor vehicle which he bought from Rallye Motor,
defendants. 3 Rallye Motor did not deliver to him the personal
property he bought; that the address and
More than a year later, in an Urgent Motion dated existence of Rallye Motor can no longer be found.
December 11, 1978, 4 defendant Salazar prayed
that the writ of preliminary attachment issued ex While it is true that the plaintiff may have been
parte and implemented solely against his property defrauded in this transaction, it having paid Rallye
be recalled and/or quashed. He argued that when Motor the amount of the promissory note, there is
he signed the promissory note and chattel no evidence that Ernesto Salazar had connived or
mortgage on May 5, 1977 in favor of RALLYE, in any way conspired with Rallye Motor in the
FILINVEST was hot vet his creditor or obligee, assignment of the promissory note to the plaintiff,
therefore, he could not be said to have committed because of which the plaintiff paid Rallye Motor
fraud when he contracted the obligation on May the amount of the promissory note. Defendant
5, 1977. Salazar added that as the motor vehicle Ernesto Salazar was himself a victim of fraud.
which was the object of the chattel mortgage and Rallye Motor was the only party which committed
the consideration for the promissory note had it. 6
admittedly not been delivered to him by RALLYE,
his repudiation of the loan and mortgage is more From the above order denying reconsideration
justifiable. and ordering the sheriff to return to Salazar the
personal property attached by virtue of the writ of
FILINVEST filed an Opposition, but on February preliminary attachment issued on August 17,
2, 1979, the court a quo, this time presided over 1977, FILINVEST filed the instant Petition on April
by herein respondent Judge, ordered the 19, 1979. On July 16, 1979, petitioner FILINVEST
dissolution and setting aside of the writ of also filed an Urgent Petition for Restraining
preliminary attachment issued on August 17, Order 7 alleging, among others, that pending this
1977 and the return to defendant Salazar of all certiorari proceeding in this court, private
his properties attached by the Sheriff by virtue of respondent Salazar filed a Motion for Contempt of
ProvRem 2nd batch | 23
Court in the court below directed against place, in that it was issued ex parte without notice
FILINVEST and four other persons allegedly for to him and without hearing.
their failure to obey the Order of respondent
Judge dated April 4, 1979, which Order is the We do not agree with the contention of private
subject of this Petition. On July 23, 1979, this respondent. Nothing in the Rules of Court makes
Court issued a temporary restraining order notice and hearing indispensable and mandatory
"enjoining respondent Judge or any person or requisites for the issuance of a writ of attachment.
persons acting in his behalf from hearing private The statement in the case of Blue Green Waters,
respondent's motion for contempt in Civil Case Inc. vs. Hon. Sundiam and Tan 9 cited by private
No. 109900, entitled, 'Filinvest Credit Corporation, respondent, to the effect that the order of
Plaintiff, versus The Rallye Motor Co., Inc., et al., attachment issued without notice to therein
Defendants' of the Court of First Instance of petitioner Blue Green Waters, Inc. and without
Manila, Branch XI. " 8 giving it a chance to prove that it was not
fraudulently disposing of its properties is irregular,
Petitioner FILINVEST in its MEMORANDUM gives the wrong implication. As clarified in the
contends that respondent Judge erred: separate opinion of Mr. Justice Claudio
Teehankee in the same cited case, 10 a writ of
(1) In dissolving the writ of preliminary attachment attachment may be issued ex parte. Sections 3
already enforced by the Sheriff of Manila without and 4, Rule 57, merely require that an applicant
Salazar's posting a counter-replevin bond as for an order of attachment file an affidavit and a
required by Rule 57, Section 12; and bond: the affidavit to be executed by the applicant
himself or some other person who personally
(2) In finding that there was no fraud on the part knows the facts and to show that (1) there is a
of Salazar, despite evidence in abundance to sufficient cause of action, (2) the case is one of
show the fraud perpetrated by Salazar at the very those mentioned in Section 1 of Rule 57, (3) there
inception of the contract. is no other sufficient security for the claim sought
to be enforced, and (4) the amount claimed in the
action is as much as the sum for which the order
It is urged in petitioner's first assignment of error
is granted above all legal
that the writ of preliminary attachment having
counterclaims; and the bond to be "executed to
been validly and properly issued by the lower
the adverse party in an amount fixed by the
court on August 17, 1977, the same may only be
judge, not exceeding the applicant's claim,
dissolved, quashed or recalled by the posting of a
conditioned that the latter will pay all the costs
counter-replevin bond under Section 12, Rule 57
which may be adjudged to the adverse party and
of the Revised Rules of Court which provides
all damages which he may sustain by reason of
that:
the attachment, if the court shall finally adjudge
that the applicant was not entitled thereto."
Section 12. Discharge of Attachment upon, gluing
counterbond.At any time after an order of
We agree, however, with private respondents
attachment has been granted, the party whose
contention that a writ of attachment may be
property has been attached, or the person
discharged without the necessity of filing the cash
appearing on his behalf, may, upon reasonable
deposit or counter-bond required by Section 12,
notice to the applicant, apply to the judge who
Rule 57, cited by petitioner. The following
granted the order, or to the judge of the court, in
provision of the same Rule allows it:
which the action is pending, for an order
discharging the attachment wholly or in part on
the security given. The judge shall, after hearing, Sec. 13. Discharge of attachment for improper or
order the discharge of the attachment if a cash irregular issuance.The party whose property
deposit is made, or a counter-bond executed to has been attached may also, at any time either
the attaching creditor is filed, on behalf of the before or after the release of the attached
adverse party, with the clerk or judge of the court property, or before any attachment shall have
where the application is made, in an amount been actually levied, upon reasonable notice to
equal to the value of the property attached as the attaching creditor, apply to the judge who
determined by the judge, to secure the payment granted the order, or to the judge of the court in
of any judgment that the attaching creditor may which the action is pending, for an order
recover in the action. ... to discharge the attachment on the ground that
the same was improperly or irregularly issued. If
the motion be made on affidavits on the part of
Citing the above provision, petitioner contends
the party whose property has been attached, but
that the court below should not have issued the
not otherwise, the attaching creditor may oppose
Orders dated February 2, 1979 and April 4, 1979
the same by counter-affidavits or other evidence
for failure of private respondent Salazar to make
in addition to that on which the attachment was
a cash deposit or to file a counter-bond.
made. After hearing, the judge shall order the
discharge of the attachment if it appears that it
On the other hand, private respondent counters was improperly or irregularly issued and the
that the subject writ of preliminary attachment defect is not cured forthwith."(Emphasis supplied)
was improperly or irregularly issued in the first
ProvRem 2nd batch | 24
The foregoing provision grants an aggrieved party defraud their creditors. Subsequently, the lower
relief from baseless and unjustifiable attachments court dissolved the writ of attachment. This was
procured, among others, upon false allegations, questioned in a certiorari proceeding wherein this
without having to file any cash deposit or counter- Court held, inter alia, that:
bond. In the instant case the order of attachment
was granted upon the allegation of petitioner, as The affidavit supporting the petition for the
plaintiff in the court below, that private respondent issuance of the preliminary attachment may have
RALLYE, the defendants, had committed "fraud in been sufficient to justify the issuance of the
contracting the debt or incurring the obligation preliminary writ, but it cannot be considered as
upon which the action is brought," covered by proof of the allegations contained in the affidavit.
Section i(d), Rule 57, earlier quoted. Subsequent The reason is obvious. The allegations are mere
to the issuance of the attachment order on August conclusions of law, not statement of facts. No
17, 1977, private respondent filed in the lower acts of the defendants are ever mentioned in the
court an "Urgent Motion for the Recall and affidavit to show or prove the supposed
Quashal of the Writ of Preliminary Attachment on concealment to defraud creditors. Said
(his property)" dated December 11, allegations are affirmative allegations, which
1978 11 precisely upon the assertion that there plaintiffs had the obligation to prove ... 17
was "absolutely no fraud on (his) part" in
contracting the obligation sued upon by petitioner. It appears from the records that both herein
Private respondent was in effect claiming that private parties did in fact adduce evidence to
petitioner's allegation of fraud was false, that support their respective claims. 18 Attached to the
hence there was no ground for attachment, and instant Petition as its Annex "H" 19 is a
that therefore the attachment order was Memorandum filed by herein petitioner
"improperly or irregularly issued." This Court was FILINVEST in the court below on March 20, 1979.
held that "(i)f the grounds upon which the After private respondent filed his Comment to the
attachment was issued were not true ..., the Petition, 20 petitioner filed a Reply 21,attaching
defendant has his remedy by immediately another copy of the aforesaid Memorandum as
presenting a motion for the dissolution of the Annex "A" 22 In this case on February 28, 1979
same. 12 We find that private respondent's and March 1, 1979, the plaintiff (FILINVEST)
abovementioned Urgent Motion was filed under presented in evidence documentary exhibits
option 13, Rule 57. "marked Exhibit A, A- I, B, B-1, B-2, B-3, B-4, C,
C-1, D, E, F, G and G-1. The Memorandum goes
The last sentence of the said provision, however, on to state that FILINVEST presented as its
indicates that a hearing must be conducted by the witness defendant Salazar himself who testified
judge for the purpose of determining whether or that he signed Exhibits A, B, C, D, E and G; that
not there reality was a defect in the issuance of he is a holder of a master's degree in Business
the attachment. The question is: At this hearing, Administration and is himself a very careful and
on whom does the burden of proof lie? Under the prudent person; that he does not sign post-dated
circumstances of the present case, We sustain documents; that he does not sign contracts which
the ruling of the court a quo in its questioned do not reflect the truth or which are irregular on
Order dated February 2, 1979 that it should be their face, that he intended to purchase a school
the plaintiff (attaching creditor), who should prove bus from Rallye Motors Co., Inc. from whom he
his allegation of fraud. This pronouncement finds had already acquired one unit; that he had been
support in the first sentence of Section 1, Rule dealing with Abel Sahagun, manager of RALLYE,
131, which states that: "Each party must prove his whom he had known for a long time that he
own affirmative allegations." The last part of the intended to purchase the school bus on
same provision also provides that: "The burden of installment basis so he applied for financing with
proof lies on the party who would be defeated if the FILINVEST; that he knew his application was
no evidence were given on either side." It must be approved; that with his experience as a business
b rne in mind that in this jurisdiction, fraud is executive, he knew that under a financing
never presumed. FRAUS EST IdIOS ET NON arrangement, upon approval of his application,
PRAESUMENDA. 13 Indeed, private transactions when he signed Exhibits A, B, C, D, E and G, the
are presumed to have been fair and financing company (FILINVEST) would release
regular. 14 Likewise, written contracts such as the the proceeds of the loan to RALLYE and that he
documents executed by the parties in the instant would be obligated to pay the installments to
case, are presumed to have been entered into for FILINVEST; that he signed Exhibits A, B and C
a sufficient consideration. 15 simultaneously; that it was his wife who was
always transacting business with RALLYE and
In a similar case of Villongco, et al., vs. Hon. Abel Sahagun. 23
Panlilio, et al., 16 a writ of preliminary attachment
was issued ex parte in a case for damages on the Without disputing the above summary of
strength of the affidavit of therein petitioners to evidence, private respondent Salazar states in his
the effect that therein respondents had Comment that "the same evidence proferred by
concealed, removed or disposed of their (petitioner's) counsel was adopted by (private
properties, credits or accounts collectible to
According to the court a quo in its assailed order WHEREFORE, IN VIEW OF THE FOREGOING,
of April 4, 1979, Emesto Salazar "was himself the appealed Orders of the lower court dated
defrauded because while he signed the February 2, 1979 and April 4, 1979 are hereby
promissory note and the chattel mortgage over REVERSED and SET ASIDE. The temporary
the vehicle which he bought from Rallye Motors, restraining order issued by Us on July 23, 1979 is
RALLYE did not deliver to him the personal hereby made permanent. No costs. Petition
property he bought." And since no fraud was granted. SO ORDERED.
committed by Salazar, the court accordingly
ordered the sheriff to return to Salazar the
properties attached by virtue of the writ of
preliminary attachment issued on August 17,
1977.