G.R. No. L-35990. June 17, 1981
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI, JR., JUDGE OF THE COURT OF FIRST INSTANCE OF DAVAO, AND THE PROVINCIAL SHERIFF OF DAVAO DEL SUR, PETITIONERS, VS. COTABATO BU…
DE CASTRO, J.:
The instant petition stemmed from Civil Case No. 7329 of the
Court of First Instance of Davao (Branch I) in which a writ of preliminary
attachment was issued ex-parte by the Court
on the strength of an affidavit of merit attached to the verified complaint
filed by petitioner herein, Aboitiz & Co., Inc., on November 2, 1971, as
plaintiff in said case, for the collection of money in the sum of P155,739.41,
which defendant therein, the respondent in the instant case, Cotabato Bus Co.,
owed the said petitioner.
By virtue of the writ of preliminary attachment, the provincial
sheriff attached personal properties of the defendant bus company consisting of
some buses, machinery and equipment. The
ground for the issuance of the writ is, as alleged in the complaint and the
affidavit of merit executed by the Assistant Manager of petitioner, that the
defendant “has removed or disposed of its properties or assets, or is
about to do so, with intent to defraud its creditors.”
Respondent company filed in the lower court an “Urgent
Motion to Dissolve or Quash Writ of Attachment” to which was attached an
affidavit executed by its Assistant Manager, Baldovino Lagbao, alleging among
other things that “the Cotabato Bus Company has not been selling or
disposing of its properties, neither does it intend to do so, much less to
defraud its creditors; that also the Cotabato Bus Company, Inc. has been
acquiring and buying more assets”.
An opposition and a supplemental opposition were filed to the urgent
motion. The lower court denied the
motion stating in its Order that “the testimony of Baldovino Lagbao,
witness for the defendant, corroborates the facts in the plaintiff’s affidavit
instead of disproving or showing them to be untrue.”
A motion for reconsideration
was filed by the defendant bus company but the lower court denied
it. Hence, the defendant went to the
Court of Appeals on a petition for certiorari alleging grave abuse of
discretion on the part of herein respondent Judge, Hon. Vicente R. Cusi,
Jr. On giving due course to the
petition, the Court of Appeals issued a restraining order restraining the trial
court from enforcing further the writ of attachment and from proceeding with
the hearing of Civil Case No. 7329. In
its decision promulgated on October 3, 1971, the Court of Appeals declared
“null and void the order/writ of attachment dated November 3, 1971 and the
orders of December 2, 1971, as well as that of December 11, 1971, ordered the
release of the attached properties, and made the restraining order originally
issued permanent.
The present recourse is
an appeal by certiorari from the decision of the Court of Appeals
reversing the assailed orders of the Court of First Instance of Davao, (Branch
I), petitioner assigning against the lower court the following errors:
“ERROR
I
“THE COURT OF APPEALS ERRED IN HASTILY AND PERFUNCTORILY
RENDERING, ON OCTOBER 3, 1971, A DECISION WITHOUT CONSIDERING MOST OF THE
EVIDENCE SUCH THAT –
“1) EVEN AN IMPORTANT
FACT, ESTABLISHED BY DOCUMENTARY EVIDENCE AND NOT DENIED BY RESPONDENT, IS
MENTIONED ONLY AS A “CLAIM” OF PETITIONER COMPANY;
“2) THE DECISION
CONTAINS NO DISCUSSION AND APPRECIATION OF THE FACTS AS PROVED, ASSEMBLED AND
PRESENTED BY PETITIONER COMPANY SHOWING – IN THEIR TOTALITY – THAT RESPONDENT
HAS REMOVED, DIVERTED OR DISPOSED OF ITS BANK DEPOSITS, INCOME AND OTHER LIQUID
ASSETS WITH INTENT TO DEFRAUD ITS CREDITORS, ESPECIALLY ITS UNSECURED
SUPPLIERS;
“3) THE DECISION
IGNORES THE SIGNIFICANCE OF THE REFUSAL OF RESPONDENT TO PERMIT, UNDER REP. ACT
NO. 1405, THE METROPOLITAN BANK
& TRUST CO. TO BRING, IN COMPLIANCE WITH A SUBPOENA DUCES TECUM, TO THE
TRIAL COURT ALL THE RECORDS OF RESPONDENT’S DEPOSITS AND WITHDRAWALS UNDER ITS
CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR EXAMINATION BY PETITIONER COMPANY
FOR THE PURPOSE OF SHOWING DIRECTLY THE REMOVAL, DIVERSION OR DISPOSAL OF
RESPONDENT’S DEPOSITS AND INCOME WITH INTENT TO DEFRAUD ITS CREDITORS.
“ERROR
II
“THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE FACTS THAT
RESPONDENT’S BANK DEPOSITS ARE NIL AS PROOF WHICH – TOGETHER WITH RESPONDENT’S
ADMISSION OF AN INCOME OF FROM P10,000.00
to P14,000.00 A DAY AND THE EVIDENCE THAT IT CANNOT PRODUCE P634.00
WITHOUT USING A PERSONAL CHECK OF ITS PRESIDENT AND MAJORITY STOCKHOLDER, AND
OTHER EVIDENCE – SHOWS THE REMOVAL OR CHANNELING OF ITS INCOME TO THE LATTER.
ERROR
III
“THE COURT OF APPEALS ERRED IN NOT APPRECIATING THE RESCUE AND
REMOVAL BY RESPONDENT OF FIVE ATTACHED BUSES, DURING THE PENDENCY OF ITS MOTION
TO DISSOLVE THE ATTACHMENT IN THE TRIAL COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES BY RESPONDENT WITH INTENT TO
DEFRAUD PETITIONER COMPANY, FOR WHOSE BENEFIT SAID BUSES HAD BEEN
ATTACHED.”
The questions raised are mainly, if not solely, factual,
revolving on whether respondent bus company has in fact removed its
properties, or is about to do so, in fraud of its creditors. This being so, the findings of the Court of
Appeals on said issues of facts are generally considered conclusive and final,
and should no longer be disturbed.
However, We gave due course to the petition because it raises also a
legal question of whether the writ of attachment was properly issued upon a
showing that defendant is on the verge of insolvency and may no longer satisfy
its just debts without issuing the writ.
This may be inferred from the emphasis laid by petitioner on the fact
that even for the measly amount of P634.00 payment thereof was made with a
personal check of the respondent company’s president and majority stockholder,
and its debts to several creditors, including secured ones like the DBP, have
remained unpaid, despite its supposed daily income of an average of P12,000.00, as declared by its assistant
manager, Baldovino Lagbao.[1]
Going forthwith to this question of whether insolvency, which
petitioners in effect claims to have been proven by the evidence, particularly
by company’s bank account which has been reduced to nil, may be a ground for
the issuance of a writ of attachment, the respondent Court of Appeals correctly
took its position in the negative on the strength of the explicit ruling of
this Court in Max Chamorro & Co. vs. Philippine Ready Mix Concrete
Company, Inc. and Hon. Manuel P. Barcelona.[2]
Petitioner, however, disclaims any intention of advancing the
theory that insolvency is a ground for the issuance of a writ of attachment,[3]
and insists that its evidence is intended to prove his assertion that
respondent company has disposed, or is about to dispose, of its properties, in
fraud of its creditors. Aside from the
reference petitioner had made to respondent company’s “nil” bank
account, as if to show removal of company’s funds, petitioner also cited the
alleged non-payment of its other creditors, including secured creditors like
the DBP to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and the rescue and removal of five attached buses.
It is an undisputed fact that, as averred by petitioner itself,
the several buses attached are nearly junks.
However, upon permission by the sheriff, five of them were repaired, but
they were substituted with five buses which were also in the same condition as
the five repaired ones before the repair.
This cannot be the removal intended as ground for the issuance of a writ
of attachment under Section 1(e), Rule 57, of the Rules of Court. The repair of the five buses was evidently
motivated by a desire to serve the interest of the riding public, clearly not
to defraud its creditors, as there is no showing that they were not put on the
run after their repairs, as was the obvious purpose of their substitution to be
placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal
or disposal as alleged by petitioner to provide the basis for its prayer for
the issuance of a writ of attachment should be very remote, if not nil. If removal of the buses had in fact been
committed, which seems to exist only in petitioner’s apprehensive imagination,
the DBP should not have failed to take proper court action, both civil and
criminal, which apparently has not been done.
The dwindling of respondent’s bank account despite its daily
income of from P10,000.00 to P14,000.00 is easily explained by its having to
meet heavy operating expenses, which include salaries and wages of employees
and workers. If, indeed the income of
the company were sufficiently profitable, it should not allow its buses to fall
into disuse by lack of repairs. It
should also maintain a good credit standing with its suppliers of equipment and
other needs of the company to keep its business a going concern. Petitioner is only one of the suppliers.
It is, indeed, extremely hard to remove the buses, machinery and
other equipments which respondent company have to own and keep to be able to
engage and continue in the operation of its transportation business. The sale or other form of disposition of any
of this kind of property is not difficult of detection or discovery, and
strangely, petitioner has adduced no proof of any sale or transfer of any of
them, which should have been easily obtainable.
In the main, therefore, We find that the respondent Court of
Appeals has not committed any reversible error, much less grave abuse of
discretion, except that the restraining order issued by it should not have
included restraining the trial court from hearing the case, altogether. Accordingly, the instant petition is hereby
denied, but the trial court is hereby ordered to immediately proceed with the
hearing of Civil Case No. 7329 and decide it in accordance with the law and the
evidence. No special pronouncement as to
costs.
SO ORDERED.
Barredo, (Chairman), and
Abad Santos, JJ., concur.
Guerrero, J., designated in
place of J. Concepcion.
Aquino, J., in the result.
Concepcion, J., took no part.
[1] p. 24, Appellant’s Brief.
[2] 94 Phil. 1005.
[3] pages 8-9, Appellant’s Reply Brief.