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G.R. No. 115678 February 23, 2001
PHILIPPINES BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS and BERNARDINO VILLANUEVA, respondents.
x ---------------------------------------- x
G.R. No. 119723 February 23, 2001
PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS and FILIPINAS TEXTILE MILLS, INC., respondents.
YNARES-SANTIAGO, J.:
Before us are consolidated petitions for review both filed by Philippine Bank of Communications; one against the May 24, 1994 Decision of respondent Court of Appeals in CA-G.R. SP No. 328631 and the other against its March 31, 1995 Decision in CA-G.R. SP No. 32762.2 Both Decisions set aside and nullified the August 11, 1993 Order3of the Regional Trial Court of Manila, Branch 7, granting the issuance of a writ of preliminary attachment in Civil Case No. 91-56711.
The case commenced with the filing by petitioner, on April 8, 1991, of a Complaint against private respondent Bernardino Villanueva, private respondent Filipinas Textile Mills and one Sochi Villanueva (now deceased) before the Regional Trial Court of Manila. In the said Complaint, petitioner sought the payment of P2,244,926.30 representing the proceeds or value of various textile goods, the purchase of which was covered by irrevocable letters of credit and trust receipts executed by petitioner with private respondent Filipinas Textile Mills as obligor; which, in turn, were covered by surety agreements executed by private respondent Bernardino Villanueva and Sochi Villanueva. In their Answer, private respondents admitted the existence of the surety agreements and trust receipts but countered that they had already made payments on the amount demanded and that the interest and other charges imposed by petitioner were onerous.
On May 31, 1993, petitioner filed a Motion for Attachment,4 contending that violation of the trust receipts law constitutes estafa, thus providing ground for the issuance of a writ of preliminary attachment; specifically under paragraphs "b" and "d," Section 1, Rule 57 of the Revised Rules of Court. Petitioner further claimed that attachment was necessary since private respondents were disposing of their properties to its detriment as a creditor. Finally, petitioner offered to post a bond for the issuance of such writ of attachment.
The Motion was duly opposed by private respondents and, after the filing of a Reply thereto by petitioner, the lower court issued its August 11, 1993 Order for the issuance of a writ of preliminary attachment, conditioned upon the filing of an attachment bond. Following the denial of the Motion for Reconsideration filed by private respondent Filipinas Textile Mills, both private respondents filed separate petitions for certiorari before respondent Court assailing the order granting the writ of preliminary attachment.1wphi1.nt
Both petitions were granted, albeit on different grounds. In CA-G.R. SP No. 32762, respondent Court of Appeals ruled that the lower court was guilty of grave abuse of discretion in not conducting a hearing on the application for a writ of preliminary attachment and not requiring petitioner to substantiate its allegations of fraud, embezzlement or misappropriation. On the other hand, in CA-G.R. SP No. 32863, respondent Court of Appeals found that the grounds cited by petitioner in its Motion do not provide sufficient basis for the issuance of a writ of preliminary attachment, they being mere general averments. Respondent Court of appeals held that neither embezzlement, misappropriation nor incipient fraud may be presumed; they must be established in order for a writ of preliminary attachment to issue.
Hence, the instant consolidated5 petitions charging that respondent Court of Appeals erred in
"1. Holding that there was no sufficient basis for the issuance of the writ of preliminary attachment in spite of the allegations of fraud, embezzlement and misappropriation of the proceeds or goods entrusted to the private respondents;
2. Disregarding the fact that the failure of FTMI and Villanueva to remit the proceeds or return the goods entrusted, in violation of private respondents' fiduciary duty as entrustee, constitute embezzlement or misappropriation which is a valid ground for the issuance of a writ of preliminary attachment."6
We find no merit in the instant petitions.
To begin with, we are in accord with respondent Court of Appeals in CA-G.R. SP No. 32863 that the Motion for Attachment filed by petitioner and its supporting affidavit did not sufficiently establish the grounds relied upon in applying for the writ of preliminary attachment.
The Motion for Attachment of petitioner states that
1. The instant case is based on the failure of defendants as entrustee to pay or remit the proceeds of the goods entrusted by plaintiff to defendant as evidenced by the trust receipts (Annexes "B", "C" and "D" of the complaint), nor to return the goods entrusted thereto, in violation of their fiduciary duty as agent or entrustee;
2. Under Section 13 of P.D. 115, as amended, violation of the trust receipt law constitute(s) estafa (fraud and/or deceit) punishable under Article 315 par. 1[b] of the Revised Penal Code;
3. On account of the foregoing, there exist(s) valid ground for the issuance of a writ of preliminary attachment under Section 1 of Rule 57 of the Revised Rules of Court particularly under sub-paragraphs "b" and "d", i.e. for embezzlement or fraudulent misapplication or conversion of money (proceeds) or property (goods entrusted) by an agent (entrustee) in violation of his fiduciary duty as such, and against a party who has been guilty of
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fraud in contracting or incurring the debt or obligation;
4. The issuance of a writ of preliminary attachment is likewise urgently necessary as there exist(s) no sufficient security for the satisfaction of any judgment that may be rendered against the defendants as the latter appears to have disposed of their properties to the detriment of the creditors like the herein plaintiff;
5. Herein plaintiff is willing to post a bond in the amount fixed by this Honorable Court as a condition to the issuance of a writ of preliminary attachment against the properties of the defendants.
Section 1 (b) and (d), Rule 57 of the then controlling Revised Rules of Court, provides, to wit
SECTION 1. Grounds upon which attachment may issue. A plaintiff or any proper party may, at the commencement of the action or at any time thereafter, have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:
x x x x x x x x x
(b) In an action for money or property embezzled or fraudulently misapplied or converted to his us by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty;
x x x x x x x x x
(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, or in concealing or disposing of the property for the taking, detention or conversion of which the action is brought;
x x x x x x x x x
While the Motion refers to the transaction complained of as involving trust receipts, the violation of the terms of which is qualified by law as constituting estafa, it does not follow that a writ of attachment can and should automatically issue. Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of the Revised Rules of Court, as mere reproduction of the rules, without more, cannot serve as good ground for issuing a writ of attachment. An order of attachment cannot be issued on a general averment, such as one ceremoniously quoting from a pertinent rule.7
The supporting Affidavit is even less instructive. It merely states, as follows
I, DOMINGO S. AURE, of legal age, married, with address at No. 214-216 Juan Luna Street, Binondo,
Manila, after having been sworn in accordance with law, do hereby depose and say, THAT:
1. I am the Assistant Manager for Central Collection Units Acquired Assets Section of the plaintiff, Philippine Bank of Communications, and as such I have caused the preparation of the above motion for issuance of a writ of preliminary attachment;
2. I have read and understood its contents which are true and correct of my own knowledge;
3. There exist(s) sufficient cause of action against the defendants in the instant case;
4. The instant case is one of those mentioned in Section 1 of Rule 57 of the Revised Rules of Court wherein a writ of preliminary attachment may be issued against the defendants, particularly subparagraphs "b" and "d" of said section;
5. There is no other sufficient security for the claim sought to be enforced by the instant case and the amount due to herein plaintiff or the value of the property sought to be recovered is as much as the sum for which the order for attachment is granted, above all legal counterclaims.
Again, it lacks particulars upon which the court can discern whether or not a writ of attachment should issue.
Petitioner cannot insist that its allegation that private respondents failed to remit the proceeds of the sale of the entrusted goods nor to return the same is sufficient for attachment to issue. We note that petitioner anchors its application upon Section 1(d), Rule 57. This particular provision was adequately explained in Liberty Insurance Corporation v. Court of Appeals,8 as follows
To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case (Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by petitioner was committed. As correctly held by respondent Court of Appeals, such fraudulent intent not to honor the admitted obligation cannot be inferred from the debtor's inability to pay or to comply with the obligations.9 On the other hand, as stressed, above, fraud may be gleaned from
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a preconceived plan or intention not to pay. This does not appear to be so in the case at bar. In fact, it is alleged by private respondents that out of the total P419,613.96 covered by the subject trust receipts, the amount of P400,000.00 had already been paid, leaving only P19,613.96 as balance. Hence, regardless of the arguments regarding penalty and interest, it can hardly be said that private respondents harbored a preconceived plan or intention not to pay petitioner.
The Court of Appeals was correct, therefore, in its finding in CA-G.R. SP No. 32863 that neither petitioner's Motion or its supporting Affidavit provides sufficient basis for the issuance of the writ of attachment prayed for.
We also agree with respondent Court of Appeals in CA-G.R. SP No. 32762 that the lower court should have conducted a hearing and required private petitioner to substantiate its allegations of fraud, embezzlement and misappropriation.
To reiterate, petitioner's Motion for Attachment fails to meet the standard set in D.P. Lub Oil Marketing Center, Inc. v. Nicolas,10 in applications for attachment. In the said case, this Court cautioned
The petitioner's prayer for a writ of preliminary attachment hinges on the allegations in paragraph 16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched in general terms devoid of particulars of time, persons and places to support support such a serious assertion that "defendants are disposing of their properties in fraud of creditors." There is thus the necessity of giving to the private respondents an opportunity to ventilate their side in a hearing, in accordance with due process, in order to determine the truthfulness of the allegations. But no hearing was afforded to the private respondents the writ having been issued ex parte. A writ of attachment can only be granted on concrete and specific grounds and not on general averments merely quoting the words of the rules.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc.,11 not only was petitioner's application defective for having merely given general averments; what is worse, there was no hearing to afford private respondents an opportunity to ventilate their side, in accordance with due process, in order to determine the truthfulness of the allegations of petitioner. As already mentioned, private respondents claimed that substantial payments were made on the proceeds of the trust receipts sued upon. They also refuted the allegations of fraud, embezzlement and misappropriation by averring that private respondent Filipinas Textile Mills could not have done these as it had ceased its operations starting in June of 1984 due to workers' strike. These are matters which should have been addressed in a preliminary hearing to guide the lower court to a judicious exercise of its discretion regarding the attachment prayed for. On this score, respondent Court of Appeals was correct in setting aside the issued writ of preliminary attachment.
Time and again, we have held that the rules on the issuance of a writ of attachment must be construed strictly against the applicants. This stringency is required because the remedy of attachment is harsh, extraordinary and summary in nature. If all the requisites for the granting of the writ are not present, then the court which issues it acts in excess of its jurisdiction.12
WHEREFORE, for the foregoing reasons, the instant petitions are DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 32863 and CA-G.R. SP No. 32762 are AFFIRMED. No pronouncement as to costs.1wphi1.nt
SO ORDERED.
G.R. No. 167741 July 12, 2007
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
MAJ. GEN. CARLOS FLORES GARCIA, CLARITA DEPAKAKIBO
GARCIA, IAN CARL DEPAKAKIBO GARCIA, JUAN PAULO
DEPAKAKIBO GARCIA, TIMOTHY DEPAKAKIBO GARCIA
and THE SANDIGANBAYAN (FOURTH
DIVISION), Respondents.
D E C I S I O N
CORONA, J.:
This petition for certiorari1 assails the January 14, 2005 and
March 2, 2005 resolutions2 of the Fourth Division of the
Sandiganbayan in Civil Case No. 0193 entitled Republic of the
Philippines v. Maj. Gen. Carlos Flores Garcia, Clarita Depakakibo
Garcia, Ian Carl Depakakibo Garcia, Juan Paulo Depakakibo
Garcia and Timothy Mark Depakakibo Garcia.
Civil Case No. 0193 was a petition for forfeiture of unlawfully
acquired properties, with a verified urgent ex-parte application
for the issuance of a writ of preliminary attachment, filed by
the Republic of the Philippines against Maj. Gen. Carlos F.
Garcia, his wife3 and children4 in the Sandiganbayan on
October 27, 2004. In praying for the issuance of a writ of
preliminary attachment, the Republic maintained that, as a
sovereign political entity, it was exempt from filing the
required attachment bond.
On October 29, 2004, the Sandiganbayan issued a resolution
ordering the issuance of a writ of preliminary attachment
against the properties of the Garcias upon the filing by the
Republic of a P1 million attachment bond.5On November 2,
2004, the Republic posted the required attachment bond to
avoid any delay in the issuance of the writ as well as to
promptly protect and secure its claim.
On December 7, 2004, the Republic filed a motion for partial
reconsideration of the October 29, 2004 resolution claiming
that it was exempt from filing an attachment bond and praying
for the release thereof.
In a resolution dated January 14, 2005, the Sandiganbayan
ruled that there was nothing in the Rules of Court that
exempted the Republic from filing an attachment bond. It
reexamined Tolentino v. Carlos6 which was invoked by the
Republic to justify its claimed exemption. That case was
decided under the old Code of Civil Procedure enacted more
than a century ago.
-
The Sandiganbayan denied the Republics motion.
Reconsideration was also denied in a resolution dated March 2,
2005.
As already stated, these two resolutions (January 14, 2005 and
March 2, 2005) are the subject of the present petition.
Did the Sandiganbayan commit grave abuse of discretion when
it rejected the Republics claim of exemption from the filing of
an attachment bond? Yes.
Sections 3 and 4, Rule 57 of the Rules of Court provide:
Sec. 3. Affidavit and bond required. An order of attachment
shall be granted only when it appears by the affidavit of the
applicant, or of some other person who personally knows the
facts, that a sufficient cause of action exists, that the case is one
of those mentioned in section 1 hereof, that there is no other
sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant, or the value of the
property the possession of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal
counterclaims. The affidavit, and the bond required by the
next succeeding section, must be duly filed with the court
before the order issues.
Sec. 4. Condition of applicants bond. The party applying for
the order must thereafter give a bond executed to the
adverse party in the amount fixed by the court in its order
granting the issuance of the writ, 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. (emphasis supplied)
Under these provisions, before a writ of attachment may issue,
a bond must first be filed to answer for all costs which may be
adjudged to the adverse party and for the damages he may
sustain by reason of the attachment. However, this rule does
not cover the State. In Tolentino,7 this Court declared that the
State as represented by the government is exempt from filing
an attachment bond on the theory that it is always solvent.
2. Section 427 of the Code of Civil Procedure provides that
before the issuance of a writ of attachment, the applicant
therefor or any person in his name, should file a bond in favor
of the defendant for an amount not less than P400 nor more
than the amount of the claim, answerable for damages in case
it is shown that the attachment was obtained illegally or
without sufficient cause; but in the case at bar the one who
applied for and obtained the attachment is the
Commonwealth of the Philippines, as plaintiff, and under
the theory that the State is always solvent it was not bound
to post the required bond and the respondent judge did not
exceed his jurisdiction in exempting it from such
requirement. x x x8 (emphasis supplied)
In other words, the issuance of a writ of preliminary
attachment is conditioned on the filing of a bond unless the
applicant is the State. Where the State is the applicant, the
filing of the attachment bond is excused.9
The attachment bond is contingent on and answerable for all
costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment
should the court finally rule that the applicant is not entitled to
the writ of attachment. Thus, it is a security for the payment of
the costs and damages to which the adverse party may be
entitled in case there is a subsequent finding that the applicant
is not entitled to the writ. The Republic of the Philippines need
not give this security as it is presumed to be always solvent
and able to meet its obligations.
The Sandiganbayan thus erred when it disregarded the
foregoing presumption and instead ruled that the Republic
should file an attachment bond. The error was not simply an
error of judgment but grave abuse of discretion.
There is grave abuse of discretion when an act is done contrary
to the Constitution, the law or jurisprudence.10Here, the
Sandiganbayans January 14, 2005 resolution was clearly
contrary to Tolentino.
Worse, the Sandiganbayan transgressed the Constitution and
arrogated upon itself a power that it did not by law possess. All
courts must take their bearings from the decisions and rulings
of this Court. Tolentino has not been superseded or reversed.
Thus, it is existing jurisprudence and continues to form an
important part of our legal system.11 Surprisingly, the
Sandiganbayan declared that Tolentino "need(ed) to be
carefully reexamined in the light of the changes that the rule on
attachment ha(d) undergone through the years."12 According
to the court a quo:
[Tolentino] was decided by the Supreme Court employing the
old Code of Civil Procedure (Act No. 190) which was enacted
by the Philippine Commission on August 7, 1901 or more than
a century ago.
That was then, this is now. The provisions of the old Code of
Civil Procedure governing attachment have been substantially
modified in the subsequent Rules of Court. In fact, Rule 57 of
the present 1997 Rules of Civil Procedure is an expanded
modification of the provisions of the old Code of Civil
Procedure governing attachment. Unlike the old Code of Civil
Procedure, the present 1997 Rules of Civil Procedure is
noticeably explicit in its requirement that the party applying
for an order of attachment should file a bond.
On this, Article VIII, Section 4(3) of the Constitution provides:
(3) Cases or matters heard by a division shall be decided or
resolved with the concurrence of majority of the Members who
actually took part in the deliberations on the issues in the case
and voted thereon, and in no case without the concurrence of
at least three of such Members. When the required number is
not obtained, the case shall be decided en banc; Provided,
that no doctrine or principle of law laid down by the court
in a decision rendered en banc or in division may be
-
modified or reversed except by the court sitting en banc.
(emphasis supplied)
The Constitution mandates that only this Court sitting en
banc may modify or reverse a doctrine or principle of law laid
down by the Court in a decision rendered en banc or in
division. Any court, the Sandiganbayan included, which
renders a decision in violation of this constitutional precept
exceeds its jurisdiction.
Therefore, the Sandiganbayan could not have validly
"reexamined," much less reversed, Tolentino. By doing
something it could not validly do, the Sandiganbayan
acted ultra vires and committed grave abuse of discretion.
The fact was, the revisions of the Rules of Court on attachment,
particularly those pertaining to the filing of an attachment
bond, did not quash Tolentino.
Tolentino applied Sec. 247 of Act No. 190 which provided:
Sec. 247. Obligation for damages in case of attachment.
Before the order is made, the party applying for it, or some
person on his behalf, must execute to the defendant an
obligation in an amount to be fixed by the judge, or justice
of the peace, and with sufficient surety to be approved by
him, which obligation shall be for a sum not less than two
hundred dollars, and not exceeding the amount claimed by the
plaintiff, that the plaintiff will pay all the costs which may be
adjudged to the defendant, and all damages which he may
sustain by reason of the attachment, if the same shall finally be
adjudged to have been wrongful or without sufficient cause.
(emphasis supplied)
Contrary to the pronouncement of the Sandiganbayan, Section
247 of Act No. 190 explicitly required the execution of an
attachment bond before a writ of preliminary attachment
could be issued.
The relevant provisions of Act No. 190 on attachment were
later substantially adopted as Sections 313 and 4, Rule 59 of the
1940 Rules of Court.
Sec. 3. Order issued only when affidavit and bond filed. An
order of attachment shall be granted only when it is made to
appear by the affidavit of the plaintiff, or of some other person
who personally knows the facts, that the case is one of those
mentioned in section 1 hereof, that there is no other sufficient
security for the claim sought to be enforced by the action, and
that the amount due to the plaintiff, or the value of the
property which he is entitled to recover possession of, is as
much as the sum for which the order is granted above all legal
counterclaims; which affidavit, and the bond required by the
next succeeding section, must be duly filed with the clerk
or judge of the court before the order issues. (emphasis
supplied)
Sec. 4. Bond required from plaintiff. The party applying for the
order must give a bond executed to the defendant in an
amount to be fixed by the judge, not exceeding the plaintiffs
claim, that the plaintiff will pay all the costs which may be
adjudged to the defendant and all damages which he may
sustain by reason of the attachment, if the court shall finally
adjudge that the plaintiff was not entitled thereto.
And with the promulgation of the 1964 Rules of Court, the
rules on attachment were renumbered as Rule 57, remaining
substantially the same:
Sec. 3. Affidavit and bond required. An order of attachment
shall be granted only when it appears by the affidavit of the
applicant, or of some other person who personally knows the
facts, that a sufficient cause of action exists, that the case is one
of those mentioned in section 1 hereof, that there is no other
sufficient security for the claim sought to be enforced by the
action, and that the amount due to applicant, or the value of the
property the possession of which he is entitled to recover, is as
much as the sum for which the order is granted above all legal
counterclaims. The affidavit, and the bond required by the
next succeeding section, must be duly filed with the clerk
or judge of the court before the order issues. (emphasis
supplied)
Sec. 4. Condition of applicants bond. The party applying for
the order must thereafter give a bond executed to the adverse
party in an amount to be fixed by the judge, not exceeding the
applicants 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.
Clearly, the filing of an attachment bond before the issuance of
a writ of preliminary attachment was expressly required under
the relevant provisions of both the 1940 and 1964 Rules of
Court.
Commentaries on Sections 3 and 4 of the 1964 Rules of Court
uniformly cited Tolentino. They stated that the government is
exempt from filing an attachment bond14 and that the State
need not file an attachment bond.15
Where the Republic of the Philippines as a party to an action
asks for a writ of attachment against the properties of a
defendant, it need not furnish a bond. This is so because the
State is presumed to be solvent.16
When plaintiff is the Republic of the Philippines, it need not file
a bond when it applies for a preliminary attachment. This is on
the premise that the State is solvent.17
And then again, we note the significant fact that Sections 3 and
4, Rule 57 of the 1964 Rules of Court were substantially
incorporated as Sections 3 and 4, Rule 57 of the present (1997)
Rules of Court.18 There is thus no reason why the Republic
should be made to file an attachment bond.1avvphi1
In fact, in Spouses Badillo v. Hon. Tayag,19 a fairly recent case,
this Court declared that, when the State litigates, it is not
required to put up a bond for damages or even an appeal bond
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because it is presumed to be solvent. In other words, the State
is not required to file a bond because it is capable of paying its
obligations.20
The pronouncement in Spouses Badillo applies in this case even
if Spouses Badillo involved the filing of a supersedeas bond. The
pronouncement that the State "is not required to put up a bond
for damages or even an appeal bond" is general enough to
encompass attachment bonds. Moreover, the purpose of an
attachment bond (to answer for all costs and damages which
the adverse party may sustain by reason of the attachment if
the court finally rules that the applicant is not entitled to the
writ) and a supersedeas bond (to answer for damages to the
winning party in case the appeal is found frivolous) is
essentially the same.1awphil.zw+
In filing forfeiture cases against erring public officials and
employees, the Office of the Ombudsman performs the States
sovereign functions of enforcing laws, guarding and protecting
the integrity of the public service and addressing the problem
of corruption in the bureaucracy.
The filing of an application for the issuance of a writ of
preliminary attachment is a necessary incident in forfeiture
cases. It is needed to protect the interest of the government
and to prevent the removal, concealment and disposition of
properties in the hands of unscrupulous public officers.
Otherwise, even if the government subsequently wins the case,
it will be left holding an empty bag.
Accordingly, the petition is hereby GRANTED. The January 14,
2005 and March 2, 2005 resolutions of the Sandiganbayan
are REVERSED and SET ASIDE. The Republic of the
Philippines is declared exempt from the payment or filing of an
attachment bond for the issuance of a writ of preliminary
attachment issued in Civil Case No. 0193. The Sandiganbayan is
hereby ordered to release the P1,000,000 bond posted by the
Republic of the Philippines to the Office of the Ombudsman.
SO ORDERED.
A.M. No. P-11-2986 June 13, 2012
(Formerly A.M. OCA IPI No. 10-3460-P)
SPOUSES RAINER TIU and JENNIFER TIU, Complainants,
vs.
VIRGILIO F. VILLAR, Sheriff IV, Regional Trial Court, Office
of the Clerk of Court, Pasay City, Respondent.
D E C I S I O N
MENDOZA, J.:
This is an administrative matter for Grave Misconduct, Grave
Abuse of Authority and Conduct Prejudicial to the Best Interest
of the Service filed against respondent Virgilio F. Villar, Sheriff
IV, Office of the Clerk of Court, Regional Trial Court, Pasay City
(Sheriff Villar), relating to the implementation of the Writ of
Preliminary Attachment in Civil Case No. R-PSY-10-02698-CV,
a case for Sum of Money and Damages, captioned as "Henry Sia
and Hankook Industrial Sales Co. v. Spouses Rainer Tiu and
Jennifer Calacday Tiu, et al."1
The factual antecedents are as follows:
On February 17, 2010, Henry Sia (Sia) and Hankook Industrial
Sales Co. filed a Complaint for Sum of Money and Damages with
prayer for Preliminary Attachment against Classique Concept
International Corporation(Classique), First Global Ventures,
Inc. (First Global) and herein complainants, spouses Rainer and
Jennifer Tiu(Spouses Tiu), before the Regional Trial Court,
Pasay City, Branch 115 (RTC). In its Order2 dated February 25,
2010, the RTC granted the prayer for the issuance of a writ of
preliminary attachment. Accordingly, on March 8, 2010, the
Writ of Preliminary Attachment addressed to Sheriff Carlos G.
Tadeo and Sheriff Virgilio Villar was issued. Preliminarily, on
March 17, 2010, Sheriff Villar served copies of the summons,
complaint and the writ of preliminary attachment to Spouses
Tiu in the office of First Global at Unit 1905 Raffles Corporate
Center, Emerald Avenue, Ortigas Center, Pasig City. The copies
were received by Grace Tan Bauco (Bauco), who introduced
herself as the companys General Manager and Caretaker, after
efforts to personally serve them to Spouses Tiu failed.
Thereafter, Sheriff Villar attached the personal properties
found in said address.
Unperturbed, Spouses Tiu moved to have the case against them
dismissed on the ground of improper venue.3
In its Order4 dated July 8, 2010, the RTC granted the motion
and ordered the release of the attached properties in favor of
Spouses Tiu. The decretal portion of the order reads:
WHEREFORE, under Rule 4, Sec. 2, in relation to Rule 16, Sec. 1
(c), because of improper venue, the defendants Motion to
Dismiss and Supplemental Motion to Dismiss are GRANTED,
and this case is DISMISSED.
The writ of preliminary attachment dated March 8, 2010
previously issued by this Court is set aside, and everything seized
thereby be immediately returned by the sheriff responsible to the
defendants. [Emphasis ours]
SO ORDERED.5
The motion for reconsideration filed by the group of Sia was
denied by the RTC in a subsequent order6 dated July 16, 2010.
The RTC reiterated its previous order to return the attached
items to Spouses Tiu. The fallo reads:
WHEREFORE, finding no cogent or legal reason to reverse or
modify the Order dated July 8, 2010, the plaintiffs Motion for
Reconsideration with Motion to Conduct Ocular Inspection is
DENIED.
Sheriff Virgilio Villar is directed to immediately return to
defendants the seized items.7
-
Acting on the RTCs directive, Sheriff Villar submitted his
Sheriffs Report with Urgent Prayer for Issuance of
Clarificatory Order.8 He wanted to be clarified on whether or
not he should wait for the trial courts order to attain finality
before returning the attached personal properties.
In the meantime, Sia filed his Notice of Appeal and Very Urgent
Motion to Stay Enforcement of Order to Return Seized
Properties while Spouses Tiu filed an Urgent Ex-Parte Motion
to Cite Sheriff Virgilio Villar in Contempt of Court.9
Not contented with the motion, Spouses Tiu also lodged the
present administrative complaint10 against Sheriff Villar for his
alleged questionable actions regarding the implementation of
the writ of attachment against them.
First, Spouses Tui alleged that there was no proper service of
summons upon them by Sheriff Villar before the writ of
attachment was implemented. They claimed that Sheriff Villar
merely left a copy of the summons with one of their employees
in violation of the rule on personal service of summons to the
parties concerned as required by the Rules of Court. Second,
they averred that Sheriff Villar improperly implemented the
writ against them without prior coordination with the Sheriffs
Office of Pasig City. Third, they insinuated that Sheriff Villar
asked for money for the release of their seized properties.
Fourth, they charged that Sheriff Villar maliciously refused to
return their attached properties despite the RTCs clear
directive after the case against them was dismissed.
In his Comment,11 Sheriff Villar denied all the charges against
him. He denied the allegation of Spouses Tiu that there was no
valid service of summons for the writ of preliminary
attachment. He explained that he effected a substituted service
after several unsuccessful attempts to personally serve the
summons on them. He also added that he made the proper
coordination with the Sheriffs office of Pasig City before
implementing the writ of preliminary attachment against them.
He denied receiving P35,000.00 from their driver in exchange
for the release of the couples seized properties. He asserted
that he had no ill-motive against the return of the seized
properties to them and even sought clarification from the RTC.
Incidentally, the RTC, in its Order12 dated August 17, 2010,
gave due course to the Notice of Appeal and stated that by
virtue of Sias timely appeal it had no recourse but to elevate
the entire records of the case, including the issue of the return
of Spouses Tius attached properties, to the Court of Appeals.
The Office of the Court Administrator (OCA), in its
Report13 dated June 22, 2011, stated that the factual and
conflicting allegations of the parties must be threshed out in an
appropriate investigation considering the seriousness of the
charge being imputed against Sheriff Villar. Accordingly, the
OCA made the following recommendations:
RECOMMENDATION: We respectfully submit for the
consideration of the Honorable Court the recommendation that
the instant administrative complaint against Virgilio F. Villar,
Sheriff IV, Office of the Clerk of Court, Regional Trial Court,
Pasay City, be RE-DOCKETED as a regular administrative
matter and REFERRED to the Executive Judge of the Regional
Trial Court, Pasay City for investigation. The report and
recommendation relative to the investigation shall be
submitted within sixty (60) days from receipt of the records of
the administrative complaint.14
In its Resolution15 dated September 12, 2011, the Court
resolved to re-docket the administrative complaint into a
regular administrative matter and referred the same to the
Executive Judge of the Regional Trial Court, Pasay City for
investigation, report and recommendation.
In his Report and Recommendation16 dated February 8, 2012,
Executive Judge Edwin B. Ramizo (Judge
Ramizo) recommended the dismissal of the administrative
complaint against Sheriff Villar.
Judge Ramizo found that Sheriff Villar complied with the
instruction embodied in Administrative Circular No. 12
requiring a sheriff to notify in writing the sheriff of the place
where the execution of a writ is to take place. He likewise
found nothing irregular in the substituted service of summons
effected by Sheriff Villar as the same complied with the
requisites mandated by the Rules of Court. Furthermore, the
investigating judge saw no bad faith when Sheriff Villar failed
to return the attached properties after the dismissal of the case
and the issuance of the RTC order to release the seized
properties. According to him, Sheriff Villar merely retained the
properties because he was uncertain whether or not he should
wait for the finality of the order dismissing the case. Judge
Ramizo gave no weight to Spouses Tius allegation that Sheriff
Villar demanded money from them to regain possession of
their seized properties.
After a careful examination of the records, the Court agrees
with the recommendation of Judge Ramizo that the complaint
against Sheriff Villar be dismissed.
On the questioned substituted service of summons, the Court
concurs with the findings of the investigating judge that there
was a valid substituted service of summons. As a rule, personal
service of summons is preferred as against substituted service.
Thus, substituted service can only be resorted to by the
process server only if personal service cannot be made
promptly. Most importantly, the proof of substituted service of
summons must (a) indicate the impossibility of service of
summons within a reasonable time; (b) specify the efforts
exerted to locate the defendant; and (c) state that the
summons was served upon a person of sufficient age and
discretion who is residing in the address, or who is in charge of
the office or regular place of business, of the defendant. It is
likewise required that the pertinent facts proving these
circumstances be stated in the proof of service or in the
officers return.17
Based on the records, Sheriff Villar exhausted efforts to
personally serve the summons to Spouses Tiu as indicated in
his Sheriffs Return of Summons18 dated April 23, 2010. When
it was apparent that the summons could not be served
-
personally on the spouses, Sheriff Villar served the summons
through Bauco, their employee, at the office address of the
couples business, First Global and Classique. It was evident
that Bauco was competent and of sufficient age to receive the
summons on their behalf as she represented herself to be their
General Manager and Caretaker.
On the charge that Sheriff Villar did not comply with the
requirement of prior coordination as mandated in
Administrative Circular No. 12, Judge Ramizo found it baseless
and stated that the sheriff properly complied with the circular.
Administrative Circular No. 1219 lays down the guidelines and
procedure in the service and execution of court writs and
processes in the reorganized courts. In particular, paragraph 2
thereof states:
x x x x
2. All Clerks of Court of the Metropolitan Trial Court and
Municipal Trial Courts in Cities, and/or their deputy sheriffs
shall serve all court processes and execute all writs of their
respective courts within their territorial
jurisdiction; [Emphasis ours]
x x x x
Paragraph 5 of the same circular requires prior coordination
with the sheriff of the place where the execution of the writ
will take place, to wit:
5. No sheriff or deputy sheriff shall execute a court writ outside
his territorial jurisdiction without first notifying in
writing, and seeking the assistance of, the sheriff of the place
where the execution shall take place; [Emphasis ours]
In the case at bench, documentary evidence indeed discloses
that Sheriff Villar of Pasay City coordinated with the Sheriff of
Pasig City, in compliance with Administrative Circular No. 12,
before he implemented the writ of preliminary attachment. In
the Certification20 dated November 17, 2011, the Clerk of Court
of Pasig City attested to the fact that Sheriff Villar formally
coordinated with their office in connection with the
implementation of the writ of attachment. Attached to said
certification is a certified true copy of Sheriff Villars request
for coordination21dated March 12, 2010, on which the word
"received" was stamped by the Office of the Clerk of Court and
Ex-officio Sheriff, RTC-Pasig City.
As to Sheriff Villars failure to effect the immediate release of
the attached properties despite the RTCs order of release, the
Court finds the explanation of the respondent sheriff
acceptable enough as not to earn a sanction from the Court.
By law, sheriffs are obligated to maintain possession of the
seized properties absent any instruction to the contrary. In this
case, the writ of preliminary attachment authorizing the trial
court to legally hold the attached items was set aside by the
RTC Order dated July 8, 2010 specifically ordering Sheriff Villar
to immediately release the seized items to Spouses Tiu.
Pertinently, Rule 57, Section 19 of the Rules of Civil Procedure
provides:
SEC. 19. Disposition of attached property where judgment is for
party against whom attachment was issued.Ifjudgment be
rendered against the attaching party, all the proceeds of sales
and money collected or received by the sheriff, under the order
of attachment, and all property attached remaining in any such
officers hands, shall be delivered to the party against whom
attachment was issued, and the order of attachment
discharged.
The instruction of the trial court was clear and simple. Sheriff
Villar was to return the seized properties to Spouses Tiu. He
should have followed the courts order immediately. He had no
discretion to wait for the finality of the courts order of
dismissal before discharging the order of attachment.
Nevertheless, Sheriff Villar showed no deliberate defiance of,
or disobedience to, the courts order of release. Records show
that he took the proper step under the circumstances. He filed
with the trial court his Sheriffs Report with Urgent Prayer for
the Issuance of a Clarificatory Order. The Court perceives
nothing amiss in consulting the judge before taking action on a
matter of which he is not an expert.
As to the allegation of grave misconduct for supposedly
asking P35,000.00 to facilitate the return of the attached items,
the records bear out that it was a baseless charge. In
administrative proceedings, the complainant bears the onus of
establishing, by substantial evidence, the averments of his
complaint.22 Other than the bare allegations of Spouses Tiu, no
evidence showing that Sheriff Villar surreptitiously demanded
money from them for the release of their attached properties
was adduced. Mere suspicion without proof cannot be the basis
of conviction.23
WHEREFORE, the complaint against Virgilio F. Villar, Sheriff
IV, Office of the Clerk of Court, Regional Trial Court, Pasay City,
is hereby DISMISSED.
SO ORDERED.
G.R. No. L-7717 April 27, 1956
G.B., INC., ETC., petitioner,
vs.
THE HONORABLE JUDGE CONRADO V. SANCHEZ, ET
AL., respondents.
Zafra, Lara, De Leon and Veneracion for petitioner.
Juan T. Chuidian for respondents.
PARAS, C.J.:
Petitioner herein G.B. Inc. is the Trustee of Juan Luna
Subdivision Inc. Allison Gibbs is the President of the petitioner
and manager of Juan Luna Subdivision, Inc. Before December
31, 1953, herein respondent Juan T. Chuidian and Allison Gibbs
were partners of the law firm "Gibbs, Gibbs, Chuidian and
-
Quasha", the retaining counsel of Juan Luna Subdivision, Inc.
On June 18, 1948, a loan of P40,000 was granted by Juan Luna
Subdivision, Inc. to respondent Chuidian, and an "Agreement to
sell" was executed on that date whereby respondent Chuidian
acknowledge the receipt of said amount for which he agreed
and promised to transfer within 60 days to Juan Luna
Subdivision, Inc. the land which he bought from one Florence
Shuster the loan thus obtained. On June 19, 1948, respondent
Chuidian addressed a letter to Juan Luna Subdivision, Inc.
indicating his intention to secure a loan from the Rehabilitation
Finance Corporation with which to pay his debt to Juan Luna
Subdivision, Inc. On May 5, 1953, in his letter to Juan Luna
Subdivision, Inc. respondent Chuidian acknowledged his
indebtedness of P53,817.72, representing balance of principal
and interest. Instead of conveying the land bought from
Florence Shuster to Juan Luna Subdivision, Inc. respondent
Chuidian sold the same to Elenita Hernandez for P25,000 in
order to pay his wife's gambling death. On December 1, 1953,
Allison Gibbs and respondent Chuidian ceased to be law
partners. On March 4, 1954, the petitioner filed a complaint
against respondent Chuidian in the Court of First Instance of
Manila, Civil Case No. 22183, for the collection of his
indebtedness based on his "Agreement to Sell". At the
commencement of the action, the petitioner asked for the
issuance ex-parte of a writ of preliminary attachment which as
granted by the court upon the filing by the petitioner of a bond
of P57,000. On March 12, 1954, respondent Chuidian filed a
"Motion to Discharge Attachment" based on the ground that
said attachment was improperly issued, to which the petitioner
filed an opposition on March 16, 1954. On March 31, 1954, the
petition filed an urgent motion praying that respondent
Chuidian's "Motion to Discharge Attachment" be denied or that
it be granted after the filing of a counter bound or that the
hearing of said "Motion to Discharge Attachment" be held after
respondent Chuidian shall have filed an answer to the
complaint. The respondent Judge of the Court of First Instance
of Manila denied petitioner's urgent motion and set the hearing
of the "Motion to Discharge Attachment" on April 3, 1954. Such
hearing was held on April 3 and 6, 1954. When the hearing in
the afternoon of April 6 and was about to end, counsel for
petitioner requested that the latter be given a chance to
present an absent witness, which the court denied on the
ground that it had previously warned the parties that will
witnesses should be presented on said date.
On April 22, 1954, the respondent Judge issued an order
granting respondent Chuidian's "Motion to Discharge
Attachment" under section 13 of Rule 59 of the Rules of Court.
A motion for reconsideration having been denied, the
petitioner filed the present petition for certiorari with
preliminary injunction. On May 4, 1954, this Court issued the
preliminary injunction prayed for, restraining the respondent
Judge and the sheriff of the City of Manila from enforcing the
order of April 22, 1945, discharging the writ of attachment.
The grounds advanced by the petitioner for the issuance of the
writ of attachment were (a) respondent Chuidian converted to
his own use the land which he bought in a fiduciary capacity
for Juan Luna Subdivision, Inc.; (b) that respondent Chuidian is
guilty of fraud in contracting his indebtedness and incurring
the obligations upon which the action is brought; and (c) that
respondent Chuidian has removed or disposed of his property
or is about to do so with intent to defraud his creditor. the
petitioner also points out that in addition to the grounds set
forth in the motion for the issuance of an ex parte writ of
preliminary attachment, other grounds contained in the
allegations of the complaint were made a part of said ex
parte motion by reference. Attached to the "Motion to
Discharge Attachment" filed by the respondent Chuidian, was
an affidavit contradicting the grounds alleged by the petitioner.
Respondent Chuidian herein stresses the fact that while the
writ of attachment was obtained by petitioner ex parte, its
discharge was ordered by the respondent Judge after extended
hearings and the submission of memoranda.
Stripped of non-essentials, the petitioner argues that
respondent Chuidian converted to his own use the land which
he brought in the fiduciary for Juan Luna Subdivision, Inc., or at
least is guilty of fraud in contracting his indebtedness and
incurring the obligation upon which the action in Civil Case No.
22138 is brought reliance being placed on the "Agreement to
Sell" executed by respondent Chuidian on June 18, 1948, and
the letter written by him to Juan Luna Subdivision, Inc., on June
19, 1948, herein above already referred to. Respondent
Chuidian in his testimony during the hearing of his "Motion to
Discharge Attachment" alleged that said "Agreement to Sell"
did not express the true intentions of the parties; that all the
papers relied upon by the petitioner were mere formalities to
avoid criticisms of the monitory stockholders of Juan Luna
Subdivision, Inc., conceived by Allison Gibbs; that the real and
true intention of the parties was that the money would be
advanced by Allison Gibbs to respondent Chuidian and the
former would pay the Juan Luna Subdivision, Inc.
Petitioner also alleges that if it had been allowed to present its
absent witness, Elenita Hernandez, the following facts would
have been proven: (1) that Chuidian's wife's indebtedness to
Elenita Hernandez was contracted before the "Agreement to
Sell"; (2) that such indebtedness has been outstanding for
some time before such date (June 18, 1948); and (3) that the
"Agreement to Sell" dated June 18, 1948 and letter on June 19,
1948, were executed with the preconceived intention of not
complying with them. It is therefore obvious that, in order to
determine whether or not respondent Chuidian converted to
his own use the land which he bought in a fiduciary capacity
for the Juan Luna Subdivision, Inc., or was guilty of fraud in
contracting his debt and incurring the obligations upon which
the action is brought, considering that respondent Chuidian
has alleged that the "Agreement to Sell" executed by him and
other papers relief upon by the petitioner, did not express the
real intentions of the parties; and considering that the grounds
invoked by the petitioner for the issuance of the writ
attachment form the very basis of its complaint in Civil Case
No. 22138,a trial of the merits, after answer shall have been
filed by respondent Chuidian, was necessary. In this case the
hearings of the "Motion to Discharge" were held before the
issues have been joined (respondent Chuidian not having as
yet filed his answer to the complaint), and the order of the
respondent Judge discharging the attachment would have the
effect of deciding or prejudging the main action. "The merits of
-
the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could
force a trial of the merits of the case on his motion." (4 Am. Jur.,
Sec. 635, 934.) The petitioner's case is rather strengthened by
the fact that it was not given an opportunity to present an
absent material witness, in the person of Elenita Hernandez.
In holding that there was no fraud on the part of respondent
Chuidian, the respondent Judge held as follows: "It must be
borne in mind that defendant did not pocket the money no
money passed hands with that conveyance to Elenita
Hernandez. The conveyance was in the form of a dacion en
pago. Defendant was practically driven to the wall the family
name must be reserved. If defendant received actually that
sum of P25,000 consideration for the conveyance, perhaps
there may yet be reason for branding defendant as a fraud. But
such was not the case.' It is evident, however, that the fact that
respondent Chuidian did not pocked the money paid for the
conveyance by Elenita Hernandez, is immaterial, inasmuch as
the petitioner was deprived of the same amount of P25,000,
assuming that under its complaint respondent Chuidian was in
fact indebted to the petitioner in the manner stated in said
complaint.
We are, therefore, of the opinion that, from what has been said,
in a view of the return of the sheriff showing financial
instability on the part of respondent Chuidian, the most that
the respondent Judge could have done in his favor to which
the petitioner has expressed its agreement was to discharge
the attachment in question upon the filing upon respondent
Chuidian of a counter bond in the sum of P57,000, under
section 12 of Rule 59 of the Rules of Court. This would have
accomplished respondent Chuidian's purpose of preserving his
property and family name, at the same time giving the
petitioner security for any judgment that it may obtain against
him. We are constrained to hold the respondent Judge acted
with grave abuse of discretion.
Wherefore, the order of the respondent Judge dated April 22,
1954, is hereby set aside, and the writ of preliminary
attachment issued on March 4, 1954 maintained.
So ordered with costs against respondent Juan T. Chuidian.
G.R. NO. 123638 June 15, 2005
INSULAR SAVINGS BANK, Petitioner,
vs.
COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity
as Presiding Judge of Branch 135 of the Regional Trial
Court of Makati, and FAR EAST BANK AND TRUST
COMPANY, Respondents.
D E C I S I O N
GARCIA, J.:
Thru this appeal via a petition for review on certiorari under
Rule 45 of the Rules of Court, petitioner Insular Savings
Bank seeks to set aside the D E C I S I O N1 dated October 9,
1995 of the Court of Appeals in CA-G.R. SP No. 34876 and
its resolution dated January 24, 1996,2 denying petitioners
motion for reconsideration.
The assailed decision of October 9, 1995 cleared the Regional
Trial Court (RTC) at Makati, Branch 135, of committing, as
petitioner alleged, grave abuse of discretion in denying
petitioners motion to discharge attachment by counter-bond
in Civil Case No. 92-145, while the equally assailed resolution
of January 24, 1996 denied petitioners motion for
reconsideration.
The undisputed facts are summarized in the appellate courts
decision3 under review, as follows:
"On December 11, 1991, respondent Bank [Far East Bank and
Trust Company] instituted Arbitration Case No. 91-069 against
petitioner [Insular Savings Bank] before the Arbitration
Committee of the Philippine Clearing House Corporation
[PCHC]. The dispute between the parties involved three
[unfunded] checks with a total value ofP25,200,000.00. The
checks were drawn against respondent Bank and were
presented by petitioner for clearing. As respondent Bank
returned the checks beyond the reglementary period, [but
after petitioners account with PCHC was credited with the
amount of P25,200,000.00] petitioner refused to refund the
money to respondent Bank. While the dispute was pending
arbitration, on January 17, 1992, respondent Bank
instituted Civil Case No. 92-145 in the Regional Trial Court of
Makati and prayed for the issuance of a writ of preliminary
attachment. On January 22, 1992, Branch 133 of the Regional
Trial Court of Makati issued an Order granting the application
for preliminary attachment upon posting by respondent Bank
of an attachment bond in the amount of P6,000,000.00. On
January 27, 1992, Branch 133 of the Regional Trial Court of
Makati issued a writ of preliminary attachment for the amount
of P25,200,000.00. During the hearing on February 11, 1992
before the Arbitration Committee of the Philippine Clearing
House Corporation, petitioner and respondent Bank agreed to
temporarily divide between them the disputed amount
of P25,200,000.00 while the dispute has not yet been resolved.
As a result, the sum ofP12,600,000.00 is in the possession of
respondent Bank. On March 9, 1994, petitioner filed a motion
to discharge attachment by counter-bond in the amount
-
of P12,600,000.00. On June 13, 1994, respondent Judge
issued the first assailed order denying the motion. On June
27, 1994, petitioner filed a motion for reconsideration
which was denied in the second assailed order dated July
20, 1994" (Emphasis and words in bracket added).
From the order denying its motion to discharge attachment by
counter-bond, petitioner went to the Court of Appeals on a
petition for certiorari thereat docketed as CA-G.R. SP No.
34876, ascribing on the trial court the commission of grave
abuse of discretion amounting to lack of jurisdiction.
While acknowledging that "[R]espondent Judge may have erred
in his Order of June 13, 1994 that the counter-bond should be in
the amount of P27,237,700.00", in that he erroneously factored
in, in arriving at such amount, unliquidated claim items, such
as actual and exemplary damages, legal interest, attorneys fees
and expenses of litigation, the CA, in the herein
assailed decision dated October 9, 1995, nonetheless denied
due course to and dismissed the petition. For, according to the
appellate court, the RTCs order may be defended by, among
others, the provision of Section 12 of Rule 57 of the Rules of
Court, infra. The CA added that, assuming that the RTC erred
on the matter of computing the amount of the discharging
counter-bond, its error does not amount to grave abuse of
discretion.
With its motion for reconsideration having been similarly
denied, petitioner is now with us, faulting the appellate court,
as follows:
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE
PRINCIPAL AMOUNT CLAIMED BY RESPONDENT BANK
SHOULD BE THE BASIS FOR COMPUTING THE AMOUNT OF
THE COUNTER-BOND, FOR THE PRELIMINARY ATTACHMENT
WAS ISSUED FOR THE SAID AMOUNT ONLY.
"II. THE COURT OF APPEALS ERRED IN NOT RULING THAT
THE ARGUMENT THAT THE AMOUNT OF THE COUNTER-
BOND SHOULD BE BASED ON THE VALUE OF THE PROPERTY
ATTACHED CANNOT BE RAISED FOR THE FIRST TIME IN THE
COURT OF APPEALS.
"III. THE COURT OF APPEALS ERRED IN RULING THAT THE
AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON
THE VALUE OF THE PROPERTY ATTACHED EVEN IF IT WILL
RESULT IN MAKING THE AMOUNT OF THE COUNTER-BOND
EXCEED THE AMOUNT FOR WHICH PRELIMINARY
ATTACHMENT WAS ISSUED."
Simply put, the issue is whether or not the CA erred in not
ruling that the trial court committed grave abuse of discretion
in denying petitioners motion to discharge attachment by
counter-bond in the amount ofP12,600,000.00.
Says the trial court in its Order of June 13, 1994:
"xxx (T)he counter-bond posted by [petitioner] Insular Savings
Bank should include the unsecured portion of [respondents]
claim of P12,600,000.00 as agreed by means of arbitration
between [respondent] and [petitioner]; Actual damages at 25%
percent per annum of unsecured amount of claim from October
21, 1991 in the amount of P7,827,500.00; Legal interest of 12%
percent per annum from October 21, 1991 in the amount
ofP3,805,200.00; Exemplary damages in the amount
of P2,000,000.00; and attorneys fees and expenses of litigation
in the amount of P1,000,000.00 with a total amount
of P27,237,700.00 (Adlawan vs. Tomol, 184 SCRA 31 (1990)".
Petitioner, on the other hand, argues that the starting point in
computing the amount of counter-bond is the amount of the
respondents demand or claim only, in this
case P25,200,000.00, excluding contingent expenses and
unliquidated amount of damages. And since there was a mutual
agreement between the parties to temporarily, but equally,
divide between themselves the said amount pending and
subject to the final outcome of the arbitration, the amount
of P12,600,000.00 should, so petitioner argues, be the basis for
computing the amount of the counter-bond.
The Court rules for the petitioner.
The then pertinent provision of Rule 57 (Preliminary
Attachment) of the Rules of Court under which the appellate
court issued its assailed decision and resolution, provides as
follows:
"SEC. 12. Discharge of attachment upon giving counter-bond.
At any time after an order of attachment has been granted, the
party whose property has been attached, . . . may upon
reasonable notice to the applicant, apply to the judge who
granted the order or to the judge of the court which the action
is pending, for an order discharging the attachment wholly or
in part on the security given. The judge shall, after hearing,
order the discharge of the attachment if a cash deposit is made,
or a counter-bond executed to the attaching creditor is filed, on
behalf of the adverse party, with the clerk or judge of the court
where the application is made in an amount equal to the
value of the property attached as determined by the judge,
to secure the payment of any judgment that the attaching
creditor may recover in the action. x x x . Should such
counter-bond for any reason be found to be, or become
insufficient, and the party furnishing the same fail to file an
additional counter-bond, the attaching party may apply for a
new order of attachment"4 (Emphasis supplied).4
As may be noted, the amount of the counter-attachment bond
is, under the terms of the aforequoted Section 12, to be
measured against the value of the attached property, as
determined by the judge to secure the payment of any
judgment that the attaching creditor may recover in the action.
Albeit not explicitly stated in the same section and without
necessarily diminishing the sound discretion of the issuing
judge on matters of bond approval, there can be no serious
objection, in turn, to the proposition that the attached property
- and logically the counter-bond necessary to discharge the lien
on such property - should as much as possible correspond in
value to, or approximately match the attaching creditors
principal claim. Else, excessive attachment, which ought to be
-
avoided at all times, shall ensue. As we held in Asuncion vs.
Court of Appeals:5
"We, however, find the counter-attachment bond in the
amount of P301,935.41 required of the private respondent by
the trial court as rather excessive under the circumstances.
Considering that the principal amounts claimed by the
petitioner . . . total only P185,685.00, and that he had posted a
bond of only P80,000.00 for the issuance of the writ of
preliminary attachment, we deem it reasonable to lower the
amount of the counter-attachment bond to be posted by the
private respondent . . . to the sum of P185,685.00."
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII,
1997 ed., p. 61, citing retired Justice Jose Y. Feria, drive home
the same point articulated in Asuncion:
"The sheriff is required to attach only so much of the property
of the party against whom the order is issued as may be
sufficient to satisfy the applicants demand, the amount of
which is stated in the order, unless a deposit is made or a
counter-bond is given equal to said amount. However, if the
value of the property to be attached is less than the amount of
the demand, the amount of the applicants bond may be equal
to the value of said property, and the amount of the adverse
partys deposit or counter-bond may be equal to the
applicants bond. The writ of preliminary attachment is issued
upon approval of the requisite bond". (Emphasis
supplied).1avvphi1.net
Turning to the case at bar, the records show that the principal
claim of respondent, as plaintiff a quo, is in the amount
of P25,200,000.00,6 representing the three (3) unfunded
checks drawn against, and presented for clearing to,
respondent bank. Jurisprudence teaches that a writ of
attachment cannot be issued for moral and exemplary
damages, and other unliquidated or contingent claim.7
The order of attachment dated January 22, 1992 fixed the bond
to be posted by respondent, as applicant, atP6,000,000.00. The
writ of attachment issued on January 27, 1992, in turn,
expressly indicated that petitioner is justly indebted to
respondent in the amount of P25,200,000.00.8 On February 11,
1992, before the Arbitration Committee of the Philippine
Clearing House Corporation, petitioner and respondent,
however, agreed to equally divide between themselves, albeit
on a temporary basis, the disputed amount of P25,200,000.00,
subject to the outcome of the arbitration proceedings. Thus,
the release by petitioner of the amount of P12,600,000.00 to
respondent. On March 7, 1994, petitioner filed a motion to
discharge attachment by counter-bond in the amount
of P12,600,000.009 which, to petitioner, is the extent that
respondent may actually be prejudiced in the event its basic
complaint for recovery of money against petitioner prospers.
As things stood, therefore, respondents principal claim against
petitioner immediately prior to the filing of the motion to
discharge attachment has effectively been pruned down
to P12,600,000.00. The trial court was fully aware of this
reality. Accordingly, it should have allowed a total discharge of
the attachment on a counter-bond based on the reduced claim
of respondent. If a portion of the claim is already secured, we
see no justifiable reason why such portion should still be
subject of counter-bond. It may be that a counter-bond is
intended to secure the payment of any judgment that the
attaching party may recover in the main action. Simple
common sense, if not consideration of fair play, however,
dictates that a part of a possible judgment that has veritably
been preemptively satisfied or secured need not be covered by
the counter-bond.
With the view we take of this case, the trial court, in requiring
petitioner to post a counter-bond in the amount
ofP27,237,700.00,
obviously glossed over one certain fundamental. We refer to
the fact that the attachment respondent applied for and the
corresponding writ issued was only for the amount of P25.2
Million. Respondent, it bears to stress, did not pray for
attachment on its other claims, contingent and unliquidated as
they were. Then, too, the attaching writ rightly excluded such
claims. While the records do not indicate, let alone provide a
clear answer as to the actual value of the property levied upon,
it may reasonably be assumed that it is equal to respondents
principal claim. Be that as it may, it was simply unjust for the
trial court to base the amount of the counter-bond on a figure
beyond the P25,200,000.00 threshold, as later reduced
to P12,600,200.00.
The trial court, therefore, committed grave abuse of discretion
when it denied petitioners motion to discharge attachment by
counter-bond in the amount of P12,600,000.00, an amount
more than double the attachment bond required of, and given
by, respondent. As a necessary consequence, the Court of
Appeals committed reversible error when it dismissed
petitioners recourse thereto in CA-G.R. SP No. 34876.
It bears to stress, as a final consideration, that the certiorari
proceedings before the appellate court and the denial of the
motion to discharge attachment subject of such proceedings,
transpired under the old rules on preliminary attachment
which has since been revised.10 And unlike the former Section
12 of Rule 57 of the Rules of Court where the value of the
property attached shall be the defining measure in the
computation of the discharging counter-attachment bond, the
present less stringent Section 12 of Rule 57 provides that the
court shall order the discharge of attachment if the movant
"makes a cash deposit, or files a counter-bond . . . in an amount
equal to that fixed by the court in the order of attachment,
exclusive of costs." Not being in the nature of a penal statute,
the Rules of Court cannot be given retroactive effect.11
This disposition should be taken in the light of then Section 12,
Rule 57 of the Rules of Court.
WHEREFORE, the instant petition is GRANTED. Accordingly,
the assailed decision and resolution of the Courts of Appeals
are hereby REVERSED and SET ASIDE, along with the orders
dated June 13, 1994 and July 20, 1994 of the Regional Trial
Court at Makati, Branch 135, in Civil Case No. 92-145 insofar
-
they denied petitioners motion to discharge attachment by
counter-bond in the amount of P12,600,000.00, and a new one
entered GRANTINGsuch motion upon the reposting of the
same counter-bond.
SO ORDERED.
G.R. No. 171750 January 25, 2012
UNITED PULP AND PAPER CO., INC., Petitioner,
vs.
ACROPOLIS CENTRAL GUARANTY
CORPORATION, Respondent.
D E C I S I O N
MENDOZA, J.:
This is a petition for review under Rule 45 praying for the
annulment of the November 17, 2005 Decision1 and the March
2, 2006 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP
No. 89135 entitled Acropolis Central Guaranty Corporation
(formerly known as the Philippine Pryce Assurance Corp.) v.
Hon. Oscar B. Pimentel, as Presiding Judge, RTC of Makati City,
Branch 148 (RTC), and United Pulp and Paper Co., Inc.
The Facts
On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a
civil case for collection of the amount ofP42,844,353.14 against
Unibox Packaging Corporation (Unibox) and Vicente Ortega
(Ortega) before the Regional Trial Court of Makati, Branch 148
(RTC).3 UPPC also prayed for a Writ of Preliminary Attachment
against the properties of Unibox and Ortega for the reason that
the latter were on the verge of insolvency and were
transferring assets in fraud of creditors.4 On August 29, 2002,
the RTC issued the Writ of Attachment5 after UPPC posted a
bond in the same amount of its claim. By virtue of the said writ,
several properties and assets of Unibox and Ortega were
attached.6
On October 10, 2002, Unibox and Ortega filed their Motion for
the Discharge of Attachment,7 praying that they be allowed to
file a counter-bond in the amount of P42,844,353.14 and that
the writ of preliminary attachment be discharged after the
filing of such bond. Although this was opposed by UPPC, the
RTC, in its Order dated October 25, 2002, granted the said
motion for the discharge of the writ of attachment subject to
the condition that Unibox and Ortega file a counter-
bond.8 Thus, on November 21, 2002, respondent Acropolis
Central Guaranty Corporation (Acropolis) issued the
Defendants Bond for Dissolution of Attachment9 in the amount
ofP42,844,353.14 in favor of Unibox.
Not satisfied with the counter-bond issued by Acropolis, UPPC
filed its Manifestation and Motion to Discharge the Counter-
Bond10 dated November 27, 2002, claiming that Acropolis was
among those insurance companies whose licenses were set to
be cancelled due to their failure to put up the minimum
amount of capitalization required by law. For that reason,
UPPC prayed for the discharge of the counter-bond and the
reinstatement of the attachment. In its December 10, 2002
Order,11 the RTC denied UPPCs Motion to Discharge Counter-
Bond and, instead, approved and admitted the counter-bond
posted by Acropolis. Accordingly, it ordered the sheriff to cause
the lifting of the attachment on the properties of Unibox and
Ortega.
On September 29, 2003, Unibox, Ortega and UPPC executed a
compromise agreement,12 wherein Unibox and Ortega
acknowledged their obligation to UPPC in the amount
of P35,089,544.00 as of August 31, 2003, inclusive of the
principal and the accrued interest, and bound themselves to
pay the said amount in accordance with a schedule of
payments agreed upon by the parties. Consequently, the RTC
promulgated its Judgment13 dated October 2, 2003 approving
the compromise agreement.
For failure of Unibox and Ortega to pay the required amounts
for the months of May and June 2004 despite demand by UPPC,
the latter filed its Motion for Execution14 to satisfy the
remaining unpaid balance. In the July 30, 2004 Order,15 the
RTC acted favorably on the said motion and, on August 4, 2004,
it issued the requested Writ of Execution.16
The sheriff then proceeded to enforce the Writ of Execution. It
was discovered, however, that Unibox had already ceased its
business operation and all of its assets had been foreclosed by
its creditor bank. Moreover, the responses of the selected
banks which were served with notices of garnishment
indicated that Unibox and Ortega no longer had funds available
for garnishment. The sheriff also proceeded to the residence of
Ortega to serve the writ but he was denied entry to the
premises. Despite his efforts, the sheriff reported in his
November 4, 2008 Partial Return17 that there was no
satisfaction of the remaining unpaid balance by Unibox and
Ortega.
On the basis of the said return, UPPC filed its Motion to Order
Surety to Pay Amount of Counter-Bond18 directed at Acropolis.
On November 30, 2004, the RTC issued its Order19 granting the
motion and ordering Acropolis to comply with the terms of its
counter-bond and pay UPPC the unpaid balance of the
judgment in the amount ofP27,048,568.78 with interest of
12% per annum from default.
Thereafter, on December 13, 2004, Acropolis filed its
Manifestation and Very Urgent Motion for
Reconsideration,20 arguing that it could not be made to pay the
amount of the counter-bond because it did not receive a
demand for payment from UPPC. Furthermore, it reasoned that
its obligation had been discharged by virtue of the novation of
its obligation pursuant to the compromise agreement executed
by UPPC, Unibox and Ortega. The motion, which was set for
hearing on December 17, 2004, was received by the RTC and
UPPC only on December 20, 2004.21 In the Order dated
February 22, 2005, the RTC denied the motion for
-
reconsideration for lack of merit and for having been filed
three days after the date set for the hearing on the said
motion.22
Aggrieved, Acropolis filed a petition for certiorari before the
CA with a prayer for the issuance of a Temporary Restraining
Order and Writ of Preliminary Injunction.23 On November 17,
2005, the CA rendered its Decision24granting the petition,
reversing the February 22, 2005 Order of the RTC, and
absolving and relieving Acropolis of its liability to honor and
pay the amount of its counter-attachment bond. In arriving at
said disposition, the CA stated that, firstly, Acropolis was able
to comply with the three-day notice rule because the motion it
filed was sent by registered mail on December 13, 2004, four
days prior to the hearing set for December 17,
2004;25 secondly, UPPC failed to comply with the following
requirements for recovery of a judgment creditor from the
surety on the counter-bond in accordance with Section 17,
Rule 57 of the Rules of Court, to wit: (1) demand made by
creditor on the surety, (2) notice to surety and (3) summary
hearing as to his liability for the judgment under the counter-
bond;26 and, thirdly, the failure of UPPC to include Acropolis in
the compromise agreement was fatal to its case.27
UPPC then filed a motion for reconsideration but it was denied
by the CA in its Resolution dated March 1, 2006.28
Hence, this petition.
The Issues
For the allowance of its petition, UPPC raises the following
GROUNDS
I.
The Court of Appeals erred in not holding respondent liable on
its counter-attachment bond which it posted before the trial
court inasmuch as:
A. The requisites for recovering upon the respondent-surety
were clearly complied with by petitioner and the trial court,
inasmuch as prior demand and notice in writing was made
upon respondent, by personal service, of petitioners motion to
order respondent surety to pay the amount of its counter-
attachment bond, and a hearing thereon was held for the
purpose of determining the liability of the respondent-surety.
B. The terms of respondents counter-attachment bond are
clear, and unequivocally provide that respondent as surety
shall jointly and solidarily bind itself with defendants to secure
and pay any judgment that petitioner may recover in the
action. Hence, such being the terms of the bond, in accordance
with fair insurance practices, respondent cannot, and should
not be allowed to, evade its liability to pay on its counter-
attachment bond posted by it before the trial court.
II.
The Court of Appeals erred in holding that the trial court
gravely abused its discretion in denying respondents
manifestation and motion for reconsideration considering that
the said motion failed to comply with the three (3)-day notice
rule under Section 4, Rule 15 of the Rules of Court, and that it
had lacked substantial merit to warrant a reversal of the trial
courts previous order.29
Simply put, the issues to be dealt with in this case are as
follows:
(1) Whether UPPC failed to make the required demand and
notice upon Acropolis; and
(2) Whether the execution of the compromise agreement
between UPPC and Unibox and Ortega was tantamount to a
novation which had the effect of releasing Acropolis from its
obligation under the counter-attachment bond.
The Courts Ruling
UPPC complied with the twin requirements of notice and
demand
On the recovery upon the counter-bond, the Court finds merit
in the arguments of the petitioner.
UPPC argues that it complied with the requirement of
demanding payment from Acropolis by notifying it, in writing
and by personal service, of the hearing held on UPPCs Motion
to Order Respondent-Surety to Pay the Bond.30Moreover, it
points out that the terms of the counter-attachment bond are
clear in that Acropolis, as surety, shall jointly and solidarily
bind itself with Unibox and Ortega to secure the payment of
any judgment that UPPC may recover in the action.31
Section 17, Rule 57 of the Rules of Court sets forth the
procedure for the recovery from a surety on a counter-bond:
Sec. 17. Recovery upon the counter-bond. When the
judgment has become executory, the surety or sureties on any
counter-bond given pursuant to the provisions of this Rule to
secure the payment of the judgment shall become charged on
such counter-bond and bound to pay the judgment obligee
upon demand the amount due under the judgment, which
amount may be recovered from such surety or sureties after
notice and summary hearing on the same action.
From a reading of the abovequoted provision, it is evident that
a surety on a counter-bond given to secure the payment of a
judgment becomes liable for the payment of the amount due
upon: (1) demand made upon the surety; and (2) notice and
summary hearing on the same action. After a careful scrutiny
of the records of the case, the Court is of the view that UPPC
indeed complied with these twin requirements.
This Court has consistently held that the filing of a complaint
constitutes a judicial demand.32 Accordingly, the filing by UPPC
of the Motion to Order Surety to Pay Amount of Counter-Bond
was already a demand upon Acropolis, as surety, for the
payment of the amount due, pursuant to the terms of the bond.
-
In said bond, Acropolis bound itself in the sum
of P 42,844,353.14 to secure the payment of any judgment that
UPPC might recover against Unibox and Ortega.33
Furthermore, an examination of the records reveals that the
motion was filed by UPPC on November 11, 2004 and was set
for hearing on November 19, 2004.34 Acropolis was duly
notified of the hearing and it was personally served a copy of
the motion on November 11, 2004,35 contrary to its claim that
it did not receive a copy of the motion.
On November 19, 2004, the case was reset for hearing on
November 30, 2004. The minutes of the hearing on both dates
show that only the counsel for UPPC was present. Thus,
Acropolis was given the opportunity to defend itself. That it
chose to ignore its day in court is no longer the fault of the RTC
and of UPPC. It cannot now invoke the alleged lack of notice
and hearing when, undeniably, both requirements were met by
UPPC.
No novation despite compromise agreement; Acropolis still liable
under the terms of the counter-bond
UPPC argues that the undertaking of Acropolis is to secure any
judgment rendered by the RTC in its favor. It points out that
because of the posting of the counter-bond by Acropolis and
the dissolution of the writ of preliminary attachment against
Unibox and Ortega, UPPC lost its security against the latter two
who had gone bankrupt.36 It cites the cases of Guerrero v. Court
of Appeals37 and Martinez v. Cavives38 to support its position
that the execution of a compromise agreement between the
parties and the subsequent rendition of a judgment based on
the said compromise agreement does not release the surety
from its obligation nor does it novate the obligation.39
Acropolis, on the other hand, contends that it was not a party
to the compromise agreement. Neither was it aware of the
execution of such an agreement which contains an
a