55. Mindanao Savings Loan v. CA172 SCRA 480

FACTS: On September 10, 1986, private respondents filed in the Regional Trial Court of Davao City, a complaint against defendants D.S. Homes, Inc., and its directors (hereinafter referred to as D.S. Homes, et al.) for "Rescission of Contract and Damages" with a prayer for the issuance of a writ of preliminary attachment.

On September 28, 1986, Judge Dinopol issued an order granting ex parte the application for a writ of preliminary attachment.

D. S. Homes. Inc., et al. and the Davao Savings & Loan Association (later renamed Mindanao Savings & Loan Association, Inc. or "MSLA") and Francisco Villamor filed separate motions to quash the writ of attachment. When their motions were denied by the Court, D.S. Homes, Inc., et al. offered a counterbond in the amount of Pl,752,861.41 per certificate issued by the Land Bank of the Philippines, a banking partner of petitioner MSLA The lower court accepted the Land Bank Certificate of . Deposit for Pl,752,861.41 as counterbond and lifted the writ of preliminary attachment on June 5, 1987.

On July 29, 1987, MSLA and Villamor filed in the Court of Appeals a petition for certiorari to annul the order of attachment and the denial of their motion to quash the same. The CA dismissed the petition.

ISSUES:

(a) Whether or not a writ of preliminary attachment may be issued ex-parte?

(b) Whether or not objections against the writ may be invoked once a counterbond is filed for its lifting and dissolution.

HELD:

(a) YES. No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing would defeat the purpose of this provisional remedy. The time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues. Nevertheless, while no hearing is required by the Rules of Court for the issuance of an attachment (Belisle Investment & Finance Co., Inc. vs. State Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. vs. Relova, 11 7 SCRA 420), a motion to quash the writ may not be granted without "reasonable notice to the applicant" and only "after hearing" (Secs. 12 and 13, Rule 57, Rules of Court).

(b) NO. The Court of Appeals did not err in holding that objections to the impropriety or irregularity of the writ of attachment "may no longer be invoked once a counterbond is filed," when the ground for the issuance of the writ forms the core of the complaint.

Indeed, after the defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of Court, he may not file another motion under Section 13, Rule 57 to quash the writ for impropriety or irregularity in issuing it.

The reason is simple. The writ had already been quashed by filing a counterbond, hence, another motion to quash it would be pointless. Moreover, as the Court of Appeals correctly observed, when the ground for the issuance of the writ is also the core of the complaint, the question of whether the plaintiff was entitled to the writ can only be determined after, not before, a full-blown trial on the merits of the case. This accords with our ruling G.B. Inc. vs. Sanchez, 98 Phil. 886 that: "The merits of a main action are not triable in a motion to discharge an attachment, otherwise an applicant for the dissolution could force a trial on the merits of the case on this motion."

56. Benitez vs. IAC154 SCRA 41

FACTS:On December 6, 1984, private respondent Casa Filipina Development Corporation (Casa Filipina for brevity) filed a complaint against herein petitioner Helena T. Benitez for recission of contract, plus damages, with a prayer for preliminary attachment.

The complaint alleged that Casa Filipina, represented by Renato P. Dragon, and defendant Benitez entered into a verbal contract whereby Benitez allegedly agreed to undertake to purchase/convey land for Casa Filipina in the total value of One Million Pesos (P1,000,000.00) within the period of four (4) months from receipt of the total amount.

The four-month period allegedly elapsed without Benitez having purchased nor conveyed any real estate in the total value of One Million Pesos (P1,000,000.00) in favor of Casa Filipina, but instead Benitez converted the entrusted money for her own personal use in violation of her fiduciary relationship with plaintiff and that despite repeated demands for the refund or return of the aforementioned amount, Benitez chose to ignore the same. Praying for a writ of preliminary attachment, Casa Filipina submitted with its complaint, the affidavit of one Nestor P. Borromeo, the corporate secretary and acting treasurer of the corporation.

The writ of attachment was granted by respondent court exparte in an order dated December 11, 1985.

On December 27, 1984, the Clerk of Court issued a writ of preliminary attachment, by virtue of which the respondent Sheriff served notices of garnishment to the Philippine Women's University, Taft Avenue, Manila, the Unlad Development Resources Corporation and Bank of the Philippine Islands, Unlad Condominium, Taft Avenue, Manila, thereby garnishing the deposits, shares of stocks, salaries and other personal property of the petitioner. Likewise on January 30, 1984, petitioner was advised by the Acting Register of Deeds of Quezon City that a notice of levy was filed with the Registrar's Office affecting two parcels of prime land at

Mariposa Street, with an aggregate area of 4,304 square meters which are owned by and registered in the name of the petitioner.

Earlier on January 21, 1985, Benitez filed an answer with counterclaim and opposition to the petition for issuance of a writ of preliminary attachment. On the same date, Benitez also filed an Urgent Motion to Discharge Writ of Preliminary Attachment under Section 13, Rule 57 of the Rules of Court, on the ground that the same was improperly or irregularly issued.

In support of its urgent motion to discharge the writ of preliminary attachment, petitioner attached thereto the affidavit of her technical assistant and attorney-in-fact by the name of Virginia Real, who alleged. among other things, that she knows for a fact that the transaction between Benitez and Dragon for Casa Filipina, was one of purchase and sale.

The said motion was set for hearing on January 25, 1985 but the private respondent and its counsel failed to appear despite notice. Consequently, the motion was deemed submitted for resolution. On January 31, 1985, respondent Court denied petitioner's motion to discharge writ of preliminary attachment.

ISSUES:

(a) Whether a counter-attachment bond is necessary and indispensable under the circumstances before the subject writ of preliminary attachment may be recalled, quashed and/or discharged?

(b) Whether or not the issue on the propriety of the issuance of the subject writ may be resolved without going into the merits of the principal action?

HELD:

(a) YES. A writ of attachment may be discharged pursuant to Section 13, Rule 57, without the necessity of filing a cash deposit or counterbond. The provisions of the aforesaid section grants an aggrieved party relief from baseless and unjustifiable attachments procured, among others, upon false allegations, without having to file any cash deposit or counterbond.

(b) NO. It was grave abuse of discretion on the part of respondent Judge Rosario Veloso to deny petitioner's Urgent Motion to Discharge Writ of Preliminary Attachment, without conducting a hearing and requiring the plaintiff to substantiate its allegation of fraud. Neither can respondent Judge avoid deciding the issue raised in petitioner's urgent motion by ruling that "the issue cannot be determined without adducing evidence at the same time going into the merits of the case." Having issued the writ of preliminary attachment ex parte, it was incumbent on the respondent court, upon proper challenge of its order, to determine whether or not the same was improvidently issued. A preliminary attachment is a rigorous remedy which exposes the debtor to humiliation and annoyance, such that it should not be abused to cause unnecessary prejudice and, if wrongfully issued on the basis of false allegation, should at once be corrected.

57. Filinvest Credit vs. Relova117 SCRA 420

FACTS:On August 2, 1977, Filinvest Credit Corporation (hereinafter referred to as FILINVEST) filed a complaint in the lower court against defendants Rallye Motor Co., Inc. (hereinafter referred to as RALLYE) and Emesto Salazar for the collection of a sum of money with damages and preliminary writ of attachment.

Praying for a writ of preliminary attachment, FILINVEST submitted with its complaint the affidavit of one Gil Mananghaya.

Judge Jorge R. Coquia (now Justice of the Court of Appeals), then presiding Judge of the lower court, granted the prayer for a writ of attachmen.

More than a year later, in an Urgent Motion dated December 11, 1978, 4 defendant Salazar prayed that the writ of preliminary attachment issued ex parte and implemented solely against his property be recalled and/or quashed. He argued that when he signed the promissory note and chattel mortgage on May 5, 1977 in favor of RALLYE, FILINVEST was not yet his creditor or obligee, therefore, he could not be said to have committed fraud when he contracted the obligation on May 5, 1977. Salazar added that as the motor vehicle which was the object of the chattel mortgage and the consideration for the promissory note had admittedly not been delivered to him by RALLYE, his repudiation of the loan and mortgage is more justifiable.

FILINVEST filed an Opposition, but on February 2, 1979, the court a quo, this time presided over by herein respondent Judge, ordered the dissolution and setting aside of the writ of preliminary attachment issued on August 17, 1977 and the return to defendant Salazar of all his properties attached by the Sheriff by virtue of the said writ.

Petioner filed a Motion for Reconsideration, but it was denied.

ISSUES:

(a) Whether or not the writ of preliminary attachment was improperly or irregularly issued for being issued ex parte without notice to him and without hearing.(b) Whether or not the writ of preliminary attachment already enforced by the Sheriff of Manila may be dissolved without Salazar's posting a counter-replevin bond as required by Rule 57, Section 12.

HELD:

(a) NO. Nothing in the Rules of Court makes notice and hearing indispensable and mandatory requisites for the issuance of a writ of attachment. a writ of attachment may be issued ex parte. Sections 3 and 4, Rule 57, merely require that an applicant for an order of attachment file an affidavit and a bond: the affidavit to be executed by the applicant himself or some other person who personally knows the facts and to show that (1) there is a sufficient cause of action, (2) the case is one of those mentioned in Section 1 of Rule 57, (3) there 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 is granted above all legal counterclaims; and the bond to be "executed to the adverse party in an amount fixed by the judge, not exceeding the applicant's claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.(b) YES. A writ of attachment may be discharged without the necessity of filing the cash deposit or counter-bond required by Section 12, Rule 57.

Sec. 13, Rule 57 grants an aggrieved party relief from baseless and unjustifiable attachments procured, among others, upon false allegations, without having to file any cash deposit or counter-bond. In the instant case the order of attachment was granted upon the allegation of petitioner, as plaintiff in the court below, that private respondent RALLYE, the defendants, had committed "fraud in contracting the debt or incurring the obligation upon which the action is brought," covered by Section i(d), Rule 57, earlier quoted. Subsequent to the issuance of the attachment order on August 17, 1977, private respondent filed in the lower court an "Urgent Motion for the Recall and Quashal of the Writ of Preliminary Attachment on (his property)" dated December 11, 1978 precisely upon the assertion that there was "absolutely no fraud on (his) part" in contracting the obligation sued upon by petitioner. Private respondent was in effect claiming that petitioner's allegation of fraud was false, that hence there was no ground for attachment, and that therefore the attachment order was "improperly or irregularly issued." This Court was held that "(i)f the grounds upon which the attachment was issued were not true ..., the defendant has his remedy by immediately presenting a motion for the dissolution of the same.  We find that private respondent's abovementioned Urgent Motion was filed under option 13, Rule 57.

The last sentence of the said provision, however, indicates that a hearing must be conducted by the judge for the purpose of determining whether or not there reality was a defect in the issuance of the attachment. The question is: At this hearing, on whom does the burden of proof lie? Under the circumstances of the present case, We sustain the ruling of the court a quo in its questioned Order dated February 2, 1979 that it should be the plaintiff (attaching creditor), who should prove his allegation of fraud. This pronouncement finds support in the first sentence of Section 1, Rule 131, which states that: "Each party must prove his own affirmative allegations." The last part of the same provision also provides that: "The burden of proof lies on the party who would be defeated if no evidence were given on either side." It must be borne in mind that in this jurisdiction, fraud is never presumed.