GUILLERMO A. CU UNJIENG AND MARIANO CU UNJIENG, PETITIONERS, VS. LEONARD S. GODDARD, ACTING AS JUDGE OF FIRST INSTANCE OF MANILA, AND HONGKONG & SHANGHAI BANKING CORPORATION, RE…

Original
action for certiorari praying that a writ of attachment levied against
the properties of the petitioners and defendants in a civil action in
the Court of First Instance of Manila, brought by respondent Hongkong
& Shanghai Banking Corporation, be declared null and void.

In that civil action it was alleged in substance that the defendants,
the petitioners in this proceeding, entered into a fraudulent
conspiracy or combination with one Fernandez, by which .the
conspirators would hypothecate and pledge forged securities of various
kinds with the various banking institutions and other commercial firms
of the City of Manila, and pursuant to said fraudulent conspiracy,
secured credit with the bank, and the plaintiff was defrauded by the
defendants and Fernandez in the sum of P1,411,312.80. Simultaneously
with the filing of the complaint, plaintiffs asked for a writ of
attachment, which was granted.

The affidavit filed at that time reads:

“AFFIDAVIT

“B. C. M. Johnston, of legal age and resident of the City of Manila, being duly sworn, states:

“That
he is the Manager of the Hongkong & Shanghai Banking Corporation,
the plaintiff in the above-entitled cause, and that he knows that there
exists a cause of action in favor of said plaintiff and against the
defendants, as appears in the complaint on file in this case, reference
to which is hereby made as an integral part of this affidavit;

“That the complaint is one for the recovery of money on a cause of action arising from a fraud; and

“That,
as set out in the complaint, the defendants in said cause have been
guilty of fraud in contracting the debt and in incurring the obligation
upon which this action is brought.

(Sgd.) “B. C. M. JOHNSTON”

About one week thereafter, on October 20, 1931, petitioners herein
filed a motion to discharge the attachment on the ground that it had
been improperly and irregularly issued, which motion contains eight
paragraphs.

Paragraph (4) alleges that the affidavit was
defective in that it fails to state that there is no other sufficient
security for the claim sought to be enforced by the action and that the
amount due the plaintiff involves as much as the sum for which the
order of attachment was granted, while paragraph (5) alleges that the
affidavit for attachment fails to state that the allegations contained
in the unverified complaint to which it refers are true and that
likewise the affidavit fails to state that affiant knows the facts.

Shortly after the hearing to discharge the attachment had begun,
plaintiff asked leave to file an amended affidavit in support of its
petition for a writ of attachment.

After oral and written
arguments, the respondent judge on November 25, 1931, entered an order
admitting the amended affidavit of attachment. The amended affidavit
consists of three pages anti is admitted to be in full compliance with
the provisions of section 426 of the Code of Civil Procedure, which
sets out what must be shown to the court before a writ of attachment
shall issue.

Further proceedings were had in the trial
court, and on March 4 and April 11, 1932, it entered an order refusing
on the showing so far made to dissolve the attachment. On October 4,
1932, these proceedings were instituted, based on the two propositions
(1) that an affidavit of attachment cannot be amended and (2) that if a
cause of action arises ex delicto, it is not within the terms of our attachment statutes.

Respondents claim that petitioners had not exhausted their rights in
the trial court and that if the petitioner regarded the order of April
11 as a final order, petitioners are guilty of laches by waiting until
October before filing a complaint.

Without considering the
minor questions raised by respondents, we believe it is for the best
interests of all concerned to dispose of the case on the points raised
by petitioners.

As to whether amendments should be admitted, respondents rely upon section 110 of the Code of Civil Procedure, which reads:

“Sec. 110. Amendments in General.—The
court shall, in furtherance of justice, and on such terms, if any, as
may be proper, allow a party to amend any pleading or proceeding and at
any stage of the action, in either the Court of First Instance or the
Supreme Court, by adding or striking out the name of any party, either
plaintiff or defendant, or by correcting a mistake in the name of a
party, or a mistaken or inadequate allegation or description in any
other respect, so that the actual merits of the controversy may
speedily be determined, without regard to technicalities, and in the
most expeditious and inexpensive manner. The court may also, upon like
terms, allow an answer or other pleading to be made after the time
limited by the rules of the court for filing the same. Orders of the
court upon the matters provided in this section shall be made upon
motion filed in court, and after notice to the adverse party, and an
opportunity to be heard.” and claim it should be read in connection
with section 2 of the same Code:

“Sec. 2. Construction of Code.—The
provisions of this Code, and the proceedings under it, shall be
liberally construed, in order to promote its object and assist the
parties in obtaining speedy justice.”

This court has held in the case of Central Capiz vs.
Salas (43 Phil., 930), that section 2 applies to applications for
writs, of attachment and that the affidavit may be read in connection
with the complaint.

In the original affidavit, affiant did
not swear on information and belief but expressly swore on knowledge.
It is also clear from the affidavit that the ground on which the
attachment was sought to be secured, is paragraph 4 of section 412 of
the Code of Civil Procedure. It is defective in (a) that there
is no allegation, either in the affidavit or the complaint, that there
was no other sufficient security for the claim sought to be enforced by
the action and (b) that the amount due to the plaintiff above
all legal set-offs or counterclaims is as much as the sum for which the
order is granted. The claim of petitioners that the original affidavit
is defective is virtually admitted by respondents by their having filed
an amended affidavit and by their insistence upon their right to amend.

Our section 110 of the Code of Civil Procedure is based on section 473
of the California Code of Civil Procedure and is a general statute
authorizing, in the discretion of the court, any amendment, in the
further interest of justice, of pleadings or procedure at any stage of
the action. Proceedings in the Court of First Instance to discharge the
attachment were taken under section 441 of the Code of Civil Procedure,
which reads:

“Sec. 441. Discharge of Attachment on Motion.—The
defendant may also at any time either before or after the release of
the attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the plaintiff, apply to the
judge or justice of the peace who granted the order of attachment, or
to the judge of the court in which the action is pending, for an order
to discharge the attachment on the ground that the same was improperly
or irregularly issued. If the motion be made on affidavits on the part
of the defendant, but not otherwise, the plaintiff may oppose the same
by affidavits or other evidence in addition to those on which the
attachment was made.

“If upon such application it
satisfactorily appears that the writ of attachment was improperly or
irregularly issued, it must be discharged.”

The corresponding sections of the California Code, namely sections 556, 557, and 558, read:

“Sec. 556. When a motion to discharge attachment may be made, and upon what grounds.—The
defendant may also at any time, either before or after the release of
the attached property, or before any attachment shall have been
actually levied, apply, on motion, upon reasonable notice to the
plaintiff, to the court in which the action is brought; or to a judge
thereof, that the writ of attachment be discharged on the ground that
the same was improperly or irregularly issued.

“Sec. 557. When motion made on affidavit, it may be opposed by affidavit.—If
the motion be made upon affidavits on the part of the defendant, but
not otherwise, the plaintiff may oppose the same by affidavits or other
evidence, in addition to those on which the attachment was made.

“Sec. 558. When writ must be discharged.—If
upon such application, it satisfactorily appears that the writ of
attachment was improperly or irregularly issued it must be discharged;
provided that such attachment shall not be discharged if at or before
the hearing of such application, the writ of attachment, or the
affidavit, or undertaking upon which such attachment was based shall be
amended and made to conform to the provisions of this chapter.”

In a long line of decisions from Castle Bros., Wolf & Sons vs. Go-Juno (7 Phil., 144), where it was said:

“Inasmuch
as this section 95 is taken bodily from the California Code of
Procedure, we feel justified in following the decisions of the Supreme
Court of California in the interpretation of the same.”

to Pando vs. Kette and Sellner (54 Phil., 683), where this court uses the following language:

“The
provision of our Code of Civil Procedure having been adopted from
section 692 of the California Code, it must be understood that our law
was promulgated with the construction placed upon it by the State of
California.” where a provision of our Code of Civil Procedure has been
adopted bodily from one of the States of the Union, we have followed
the rule that it was undoubtedly the intention of the Legislature to
promulgate the law with the construction that had already been placed
upon it.

At the time sections 110 and 441
were adopted, the similar provisions of the California Code had already
been construed by the Supreme Court of California. In Winters vs. Pearson (72 Cal., 553), that court used the following language:

“On
a motion to discharge a writ of attachment, on the ground that it was
improperly or irregularly issued, the affidavit on which the writ was
issued is not amendable. This, in our opinion, is in accordance with
section 558 of the Code of Civil Procedure, which provides that if on
such an application, it satisfactorily appears that the writ was
improperly or irregularly issued, it must be discharged.

“To
allow the affidavit to be made good by amendment, and upon such action
refuse to discharge the writ, would, in our judgment, violate the
requirements of the section just above cited.”

In Tibbet vs. Tom Sue (122 Cal., 206), the court followed Winters vs. Pearson, saying:

“Respondent
asks the privilege of amending the undertaking, if it be held defective
by this court. From such relief he invokes section 473 of the Code of
Civil Procedure; wherein amendments are allowed to pleadings or
proceedings in furtherance of justice. In speaking as to an application
to discharge a writ of attachment, the Code says: ‘If upon such
application it satisfactorily appears that the writ of attachment was
improperly or irregularly issued, it must be discharged.’ (Code Civ.
Proc., sec. 558.) This section is specific and expressly directed to
the subject of attachments. It must be held to control and limit the
general provisions of the aforesaid section 473. The lawmaking body has
declared what shall be the action of the court under the circumstances
here presented, and such action demands that the writ should be
discharged. It is said in Winters vs. Pearson (72 Cal., 553),
that the affidavit on attachment is not amendable. The undertaking upon
attachment stands upon the same ground.”

The fact that California in 1909 changed the law by permitting
amendments of a defective affidavit for attachment under certain
specified circumstances, does not affect this case, as our Legislature
has allowed the law to stand unchanged.

It therefore follows
that where the affidavit for attachment is fatally defective, the
attachment must be held to have been improperly or irregularly issued
and must be discharged, and such fatal defect cannot be cured by
amendment. The writ of attachment in this case should therefore have
been discharged.

In view of the above views, the second
ground for the discharge of the writ of attachment presented by
petitioners herein, is reserved for discussion in another case.

The writ of certiorari herein prayed for must be granted. So ordered.

Avanceña, C. J., Street, Malcolm, Villa-Real, Abad Santos, and Butte, JJ., concur.

---

 

 DISSENTING

IMPERIAL J.:

Petitioners
brought this certiorari proceeding to annul the writ of attachment
issued by the Court of First Instance of Manila on October 14, 1931, as
well as the orders of November 25, 1931, March 4 and April 11, 1932,
granting the admission of an amended affidavit and denying the motion
to dissolve the attachment, respectively.

It is the purpose of this opinion to show: (a)
That the averments of the complaint, which were made integral part of
the affidavit supporting the petition for the issuance of the writ of
attachment, meet substantially the requirements of the statute on
attachment; (b) that the affidavit on which the petition for
attachment was based is sufficient and has substantially complied with
the grounds required by section 426 of the Code of Civil Procedure, and
(c) that the respondent judge did not act in excess of his
jurisdiction when issued the writ of attachment and denied the motion
for dissolution.

The complaint filed in the civil action
in which the writ of attachment was issued contains, among others, the
following allegations:

“III

“That
during the years 1930 and 1931, the said defendants entered into a
fraudulent conspiracy or combination with one Rafael Fernandez, who has
been adjudicated an involuntary insolvent by the Court of First
Instance of Manila, and for that reason is not made a defendant in this
action, pursuant to which fraudulent conspiracy and combination, it was
agreed that the said Fernandez, or the said Fernandez, or the said
defendant Guillermo A. Cu Unjieng, or the said Mariano Cu Unjieng
should hypothecate and pledge forged share certificates, forged
warehouse receipts, and forged securities of other kinds, in large
amounts, with various banking institutions and other commercial firms
of the City of Manila, with a view to a division of the proceeds among
the said fraudulent conspirators.

“IV

“That pursuant to said fraudulent combination and conspiracy the said
Guillermo A. Cu Unjieng employed a forger to forge the signatures of
the proper officers on a large number of warehouse receipts and share
certificates of the Pampanga Sugar Development Company, Inc., a
corporation organized under the laws of the Philippine Islands, and
operating a large sugar central in the Province of Pampanga, Philippine
Islands, after the said Rafael Fernandez, pursuant to said fraudulent
combination and conspiracy, had caused a large number of said share
certificates and warehouse receipts to be printed in blank, for the
purpose of having them so forged.

“V

“That pursuant to said fraudulent combination and conspiracy, the said
defendants, Guillermo and Mariano Cu Unjieng and the said Rafael
Fernandez pledged and hypothecated said forged share certificates and
said forged warehouse receipts in large amounts with various banking
institutions and commercial firms of the City of Manila, using the
proceeds in some cases for the purpose of taking up the forged
certificates and warehouse receipts so pledged and hypothecated in
other cases, so as to continue the scheme for the longest possible
time, and in other cases, dividing among themselves the proceeds of the
loans obtained on the security of said forged share certificates and
forged warehouse receipts so fraudulently pledged and hypothecated.

“VI

“That pursuant to said fraudulent conspiracy and combination, the said
Rafael Fernandez, at various dates, on and after June 16th, 1931,
pledged and hypothecated various forged warehouse receipts and
promissory notes to the plaintiff herein, as security for loans in
account current granted said Fernandez by the plaintiff in reliance
therein, on which there was a total debit balance due of P1,411,312.80,
on the date of the adjudication of Fernandez as an insolvent, that is,
on the 1st day of August, 1931, together with interest at 9 per cent
per annum on P1,010,886.96 thereof from the 1st day of July, 1931, and
interest on the balance at the rate of 9 per cent per annum from July
8, 1931.

“VII

“That of the
amounts so obtained by the said Fernandez from this plaintiff by the
fraudulent pledging and hypothecation of said forged warehouse receipts
and promissory notes, pursuant to said fraudulent combination and
conspiracy, as hereinbefore alleged, said Fernandez, pursuant to said
combination and conspiracy, paid directly to the defendant herein,
Guillermo A. Cu Unjieng, sums aggregating P325,000; to the defendant
herein, Mariano Cu Unjieng, the sum of P10,000; caused other large
amounts to be paid said defendants indirectly through other banking
institutions in the City of Manila; and utilized the balance in
covering overdrafts and loans obtained in his name with other banking
institutions in the City of Manila, on the security of forged share
certificates, warehouse receipts and other forged securities the
proceeds of which were divided between him and the defendants herein
pursuant to said fraudulent combination and conspiracy.

“VIII

“That as a result of said fraudulent conspiracy and combination,
between the defendants herein and the said insolvent, Rafael Fernandez,
and the pledging and hypothecation by said Fernandez of said forged
warehouse receipts and promissory notes with the plaintiff herein, the
said plaintiff has been defrauded by the defendants herein and by the
said Fernandez in the sum of P1,411,312.80, with interest on
P1,010,886.96 thereof at the rate of 9 per cent per annum from July 1,
1931, and with interest on the balance thereof at the rate of 9 per
cent per annum from July 8, 1931.”

The affidavit above referred to reads as follows:

“AFFIDAVIT

“B. C. M. Johnston, of legal age and a resident of the City of Manila, being duly sworn states:

“That
he is the Manager of the Hongkong & Shanghai Banking Corporation,
the plaintiff in the above entitled cause, and that he knows that there
exists a cause of action in favor of said plaintiff and against the
defendant, as appears in the complaint on file in this case, reference
to which is hereby made as an integral part of this affidavit.

“That the complaint is one for the recovery of money on a cause of action arising from a fraud; and

“That
as set out in the complaint, the defendant in said cause has been
guilty of fraud in contracting the debt and in incurring the obligation
upon which this action is brought.

(Sgd.) “B. C. M. JOHNSTON

“Subscribed
and sworn to before me this 11th day of July, 1931, affiant exhibiting
to me his cedula certificate No. F-14401, issued at Manila, P. I.,
January 19, 1931.

“Doc. No. 420	(Sgd.) “DOMINGO A. GUEVARA
“Page 71		Notary Public
“Book III	“Until December 31, 1932”

Section 426 of Act No. 190 provides:

“Sec. 426. Granting order of attachment.—A
judge or justice of the peace shall grant an order of attachment when
it is made to appear to the judge or justice of the peace by the
affidavit of the plaintiff, or of some other person who knows the
facts, that a sufficient cause of action exists, and that the case is
one of those mentioned in section four hundred and twenty-four, and
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 above
all legal set-offs or counterclaims is as much as the sum for which the
order is granted.”

From a perusal of said
section it is obvious that the law does not require conclusive evidence
to establish the requisites necessary in order a justice or judge may
issue a writ of attachment; all what the law requires is the
presentation of prima facie evidence which shows the
existence of said grounds. This is the reason why it calls for
affidavit in lieu of other material and competent evidence.

As alleged in the affidavit affiant made a part of his statement all
material and necessary averments contained in the complaint undoubtedly
for the purpose of making a complete narration of the facts and at the
same time to avoid superfluous repetition. In substance, it was alleged
in the complaint that the defendants in the civil action were guilty of
fraud at the time they incurred in the obligations set forth and that
Rafael Fernandez secured from the plaintiff the amount of over
P1,000,000, which is the subject matter of the action, thru conspiracy
and collusion with the defendants-petitioners, having delivered said
Fernandez warehouse receipts and share certificates which were forged
and valueless.

It is argued that the original affidavit was
fatally defective because it failed to recite: (1) That the plaintiff
in the action has no other sufficient security for the claims sought to
be enforced, and (2) that the amount due to it above all legal set-offs
or counterclaims is as much as the sum for which the order is prayed
for. While it may be conceded that the original affidavit as well as
the complaint are lacking of such specific averments, still from the
above quoted allegations the same facts can be reasonably inferred. If
the action was brought by plaintiff to recover the amount of over
P1,000,000 which it lost in the manner above described and if it is
especifically alleged that the security given by the defendants became
valueless because they were all forged it is hard to conceive how one
could not deduce the inference that no other security has been given
the plaintiff with the exception of those especifically alleged in the
complaint. The same inference was undoubtedly gathered by the
respondent judge when he granted the attachment upon said original
affidavit and as far as I am concerned I believe he did not exceed in
the exercise of the jurisdiction conferred upon him by the law. As to
the other ground, the same thing could be said.

In deciding
this case I believe technicalities of law should be overlooked in order
to attain the ends of justice. If the main action fails the
petitioners, as defendants, will get compensation for any damage or
injury they may have suffered upon the bond given by
plaintiff-respondent, while should the action prosper and the
attachment is already quashed plaintiff would not get anything so much
so as there are other creditors who are claiming big amounts from the
same defendants.

Based on the foregoing reasons I dissent
from the majority’s decision and I am of the opinion that the liberal
construction of the statute on attachment should have been applied in
this particular instance and the petition denied.