G.R. No. 84481. April 18, 1989
MINDANAO SAVINGS & LOAN ASSOCIATION, INC. (FORMERLY DAVAO SAVINGS & LOAN ASSOCIATION) & FRANCISCO VILLAMOR, PETITIONERS, VS. HON. COURT OF APPEALS, POLY R. MERCADO, & JUAN P. ME…
GRIÑO-AQUINO, J.:
On September 10, 1986, private respondents filed in the Regional
Trial Court of Davao City, a complaint against
defendants D.S. Homes, Inc., and its directors, Laurentino
G. Cuevas, Saturnino R. Petalcorin,
Engr. Uldarico D. Dumdum,
Aurora P. De Leon, Ramon D. Basa, Francisco D. Villamor, Richard F. Magallanes,
Geronimo S. Palermo, Felicisimo V. Ramos and Eugenio M. De los Santos
(hereinafter referred to as D.S. Homes, et al.) for “Rescission of
Contract and Damages” with a prayer for the issuance of a writ of
preliminary attachment, docketed as Civil
Case No. 18263.
On September 28, 1986,
Judge Dinopol issued an order granting ex parte the application for a writ of
preliminary attachment.
On September
22, 1986, the
private respondents amended their complaint and on October 10, 1986, filed a second amended complaint impleading as additional defendants herein petitioners Davao Savings &
Loan Association, Inc. and its
president, Francisco Villamor, but
dropping Eugenio M. De los Santos.
On November
5, 1986, Judge Dinopol
issued ex parte an
amended order of attachment against all the defendants named in the second
amended complaint, including the petitioners but excluding Eugenio
C. de los Santos.
D.S. Homes, Inc., et al.
and the Davao Savings & Loan Association
(later renamed Mindanao Savings & Loan Association, Inc. or
“MSLA”) and Francisco Villamor filed
separate motions to quash the writ of attachment. When their motions were denied by the court,
D.S. Homes, Inc., et al. offered a counterbond in the
amount of P1,752,861.41 per certificate issued
by the Land Bank of the Philippines,
a banking partner of petitioner MSLA. The lower court accepted the Land Bank Certificate of Time Deposit for P1,752,861.41 as counterbond and lifted the writ of preliminary attachment on June 5, 1987 (Annex V).
On July 29,
1987, MSLA and Villamor filed in the Court of Appeals a petition for certiorari
(Annex A) to annul the order of attachment and the denial of their motion to
quash the same (CA-G.R. SP No. 12467).
The petitioners alleged that the trial court acted in excess of its
jurisdiction in issuing the ex parte orders
of preliminary attachment and in denying their motion to quash the writ
of attachment. D.S. Homes, Inc., et al. did not join them.
On May 5, 1988, the Court of Appeals dismissed the petition
for certiorari and remanded the records of Civil Case No. 18263 to the Regional Trial Court of Davao City,
Branch 13, for expeditious proceedings.
It held:
“Objections against the writ may no longer be invoked once a counterbond is filed for its lifting or dissolution.
“The grounds invoked for the issuance of the writ form the
core of the complaint and it is
right away obvious that a trial on the
merits was necessary. The merits
of a main action are not triable in a motion to discharge an attachment otherwise an
applicant for dissolution could force a trial on the merits on his motion (4
Am. Jur., Sec. 635, 934, cited in G.G. Inc. vs.
Sanchez, et al., 98 Phil. 886, 890, 891).” (Annex B, p. 185, Rollo.)
Dissatisfied, the
petitioners appealed to this Court.
A careful consideration
of the petition for review fails to yield any novel legal questions for this
Court to resolve.
The only requisites for
the issuance of a writ of preliminary attachment under Section 3, Rule 57 of
the Rules of Court are the affidavit and bond of the applicant.
“SEC.
3. Affidavit
and bond required. – An order of
attachment shall be granted only when it is made to appear 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 the 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.”
No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing would defeat
the purpose of this provisional remedy. The
time which such a hearing would take, could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment issues. Nevertheless, while no hearing is required by
the Rules of Court for the issuance of an attachment (Belisle
Investment & Finance Co., Inc. vs. State Investment House, Inc., 72927,
June 30, 1987; Filinvest Credit Corp. vs. Relova, 117 SCRA 420), a motion to quash the writ may not
be granted without “reasonable notice to the applicant” and only
“after hearing” (Secs. 12 and 13, Rule 57,
Rules of Court).
The Court of Appeals did
not err in holding that objections to the impropriety or irregularity of the
writ of attachment “may no longer be invoked once a counterbond is filed,” when the ground for the
issuance of the writ forms the core of the complaint.
Indeed, after the
defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of
Court, he may not file another motion under Section 13, Rule 57 to quash the
writ for impropriety or irregularity in
issuing it.
The reason is
simple. The writ had already been
quashed by filing a counterbond, hence, another motion to quash it would be pointless. Moreover, as the Court of Appeals correctly
observed, when the ground for the issuance of the writ is also the core of the
complaint, the question of whether the plaintiff was entitled to the writ can
only be determined after, not before, a full-blown trial on the merits of the case. This accords with our
ruling in G.B., Inc.
vs. Sanchez, 98 Phil. 886 that: “The merits of a main action are not triable in a motion to discharge an attachment, otherwise an applicant for the
dissolution could force a trial on the merits of the case on this motion.”
May the defendant, after
procuring the dissolution of the attachment by filing a counterbond, ask for the cancellation of the counterbond on the
ground that the order of attachment was improperly issued? That question was
answered by this Court when it ruled in Uy Kimpang vs. Javier, 65
Phil. 170, that “the obligors in the bond are absolutely liable for the amount of
any judgment that the plaintiff may recover in the action without reference to the question of whether the attachment was rightfully or wrongfully
issued.”
The liability of the
surety on the counterbond subsists until the Court
shall have finally absolved the defendant from the plaintiff’s claims. Only then may the counterbond
be released. The same rule applies
to the plaintiff’s attachment bond.
“The liability of the
surety on the bond subsists
because the final reckoning is
when the Court shall finally adjudge
that the attaching creditor was not entitled to the issuance of the attachment
writ,” (Calderon vs. Intermediate Appellate Court, 155 SCRA 531.)
WHEREFORE, finding no reversible error in the decision
of the Court of Appeals in CA-G.R. SP No. 12467, the petition
for review is denied for lack of merit with costs against the petitioners.
SO ORDERED.
Cruz, Gancayco, and Medialdea, JJ., concur.
Narvasa, (Chairman), see concurring and dissenting opinion.
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CONCURRING AND DISSENTING OPINION
NARVASA, J.:
I agree that the decision of the Court of Appeals subject of the
appeal in this case should be affirmed.
I write this separate opinion simply to stress certain principles
relative to the discharge of preliminary attachments so that our own decision
or that thereby affirmed be not applied to juridical situations beyond their
intendment, which may well result from the statement that “after the
defendant has obtained the discharge of the writ of attachment by filing a counterbond under Section 12, Rule 57 of the Rules of
Court, he may not file another motion under Section 13, Rule 57 to quash the
writ for impropriety or irregularity in issuing it.”
Rule 57 specifies in clear terms the modes by which a preliminary
attachment may be discharged at the instance of the party against whom it has
been issued. The first is by the
submission of a counterbond or security. The second is by a demonstration of the
attachment’s improper or irregular issuance.
1.0. The discharge of an attachment on security given is governed
by Section 12 of the Rule.
“SEC. 12. Discharge of attachment
upon giving counterbond. — At any time after an order of attachment has been granted, the party
whose property has been attached, or the person appearing in his behalf, may,
upon reasonable notice to the applicant, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an
order discharging the attachment wholly or in part on the security given * * 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 ataching
creditor may recover in the action.**.”
This mode of dissolution presents no apparent difficulty. It applies when there has already been a
seizure of property by the sheriff. All
that is entailed is the presentation of a motion to the proper court, seeking
approval of a cash or surety bond in an amount equivalent to the value of the
property seized and the lifting of the attachment on the basis thereof. The counter-bond stands, according to the
cited section, “in place of the property so released.”
1.1. But a party need not wait until his property has been seized
before seeking its dissolution upon security.
In fact he may prevent the seizure of his property under
attachment by giving security in an amount sufficient to satisfy the claims
against him. The relevant provision of
the Rule is Section 5.[1]
“SEC. 5. Manner
of attaching property. — The officer executing the order
shall without delay attach, to await judgment and execution in the action, all
the properties of the party against whom the order is issued in the province,
not exempt from execution, or so much thereof as may be sufficient to satisfy
the applicant’s demand, unless the former makes a deposit with the clerk or
judge of the court from which the order issued, or gives a counter-bond
executed to the applicant, in an amount sufficient to satisfy such demand
besides costs, or in an amount equal to the value of the property which is
about to be attached, to secure payment to the applicant of any judgment which
he may recover in the action. * *.”
2.0. The second way of lifting a preliminary attachment is by
proving its irregular or improper issuance, under Section 13 of Rule 57. Like the first, this second mode may be
availed of even before any property has been actually attached. It may even be resorted to after the
property has already been released from the levy on attachment, as the
pertinent provision makes clear.[2]
“SEC. 13. Discharge of attachment
for improper or irregular issuance. — The party whose property has been
attached 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 attaching creditor, apply to the judge who
granted the order, 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 party whose property has been
attached, but not otherwise, the attaching creditor may oppose the same by
counter-affidavits or other evidence in addition to that on which the
attachment was made. * * .”
As pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987),
“The attachment debtor cannot be deemed to have waived any defect in the
issuance of the attachment writ by simply availing himself of one way of
discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond
is a speedier way of discharging the attachment writ maliciously sought out by
the attaching creditor instead of the other way, which, in most instances **
would require presentation of evidence in a fullblown
trial on the merits and cannot easily be settled in a pending incident of the
case.”
3.0. However, when the preliminary attachment is issued upon a
ground which is at the same time the applicant’s cause of action; e.g.,
“an action for money or property embezzled or fraudulently misapplied or
converted to his own use 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,”1 or
“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,”2 the defendant is not allowed to file a motion to
dissolve the attachment under Section 13 of Rule 57 by offering to show the
falsity of the factual averments in the plaintiffs application and affidavits
on which the writ was based — and consequently that the writ based thereon had
been improperly or irregularly issued3 — the
reason being that the hearing on such a motion for dissolution of the writ
would be tantamount to a trial of the merits of the action. In other words, the merits of the action
would be ventilated at a mere hearing of a motion, instead of at the regular
trial. Therefore, when the writ of
attachment is of this nature, the only way it can be dissolved is by a
counter-bond.4
4.0. The dissolution of the preliminary attachment upon security
given, or a showing of its irregular or improper issuance, does not of course
operate to discharge the sureties on plaintiff’s own attachment bond. The reason is simple. That bond is “executed to the adverse
party, ** conditioned that the ** (applicant) 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.”5 Hence,
until that determination is made, as to the applicant’s entitlement to the attachment, his bond must stand
and cannot be withdrawn.
[1]
Emphasis supplied
[2]
Emphasis also supplied
1 Sec. 1 (b), Rule 57
2 Sec. 1 (d), Rule 57
3 SEE Benitez v. I.A.C.,
154 SCRA 41
4 G.B., Inc. v. Sanchez, 98
Phil. 886
5 Sec. 4, Rule 57