Republic of the Philippines SUPREME COURT
Manila SECOND DIVISION
G.R. No. L-50378 September 30, 1982 FILINVEST CREDIT CR!R"T CR!R"TIN, IN, petitioner, vs. T#E #NR"$LE %&DGE $EN%"'IN RELV" (I) *+ p+t/ !re++) %e o t*e Cort o F+rt I)t)e o ')+4, $r)* I6 ) ERNEST S"L""R, respondents. Labaquis, Loyola & Angara Law Offices for petitioner. Cecilio D. Ignacio for respondents.
G&ERRER,
J.:
This is a special civil action for certiorari, with prayer for restraining order or preliminary injunction, filed by petitioner Filinvest Credit Corporation seeking to annul the Orders issued by respondent Judge dated February , !"#" and $pril %, !"#" in Civil Case &o. !'""''. $s shown shown by the records, records, the antecedents antecedents of the instant instant (etition (etition are as follows) follows) On $ugust , !"##, Filinvest Credit Corporation *hereinafter referred to as F++&-/T0 filed a complaint in the lower court against defendants 1allye 2otor Co., +nc. *hereinafter referred to as 1$30 and mesto /ala4ar for the collection of a sum of money with damages and preliminary writ of attachment. From the allegations of the complaint, 1 it appears that in payment of a motor vehicle described as) 5One *!0 6nit 2$78$ 8+/ 8+/ /C9OO /C9OO :6/, 2odel) %!'', /erial &o.) ;C%<(='<>?, 2otor &o.) 3=!#?,5 /ala4ar e@ecuted a promissory note dated 2ay >, !"## in favor of 1$3 1$3 for the amount of ("",AA.''. To To secure the note, /ala4ar also e@ecuted in favor of 1$3 1$3 a deed of chattel mortgage over the above described motor vehicle. On 2ay #, !"##, 1$3, 1$3 , for valuable consideration, assigned all its rights, title and interest to the aforementioned note and mortgage to F++&-/T. Thereafter, F++&-/T came to know that 1$3 had not delivered the motor vehicle subject of the chattel mortgage to /ala4ar, 5as the said vehicle *had0 been the sub ject of a sales agreement between the codefendants.5 /ala4ar defaulted in complying with the terms and conditions of the aforesaid promissory note and chattel mortgage. 1$3, 1$3, as assignor who guaranteed the validity of the obligation, also failed and refused to pay F++&-/ F++&-/T T despite demand. $ccording to F++&-/T, F++&-/T, the defendants intentionally, intentionally, fraudulently and with malice concealed from it the fact that there was no vehicle
delivered under the documents negotiated and assigned to it, otherwise, it would not have accepted the negotiation and assignment of the rights and interest covered by the promissory note and chattel mortgage. (raying for a writ of preliminary attachment, F++&-/T submitted with its complaint the affidavit of one Bil 2ananghaya, pertinent portions of which read thus) That he is the Collection 2anager, $utomotive 8ivision of Filinvest Credit Corporation That in the performance of his duties, he came to know of the account of rnesto /ala4ar, which is covered by a (romissory &ote and secured by a Chattel 2ortgage, which documents together with all the rights and interest thereto were assigned by 1allye 2otor Co., +nc. That for failure to pay a stipulated installment, and the fact that the principal debtor, rnesto /ala4ar, and the assignor, 1allye 2otor Co., +nc. concealed the fact that there was really no motor vehicle mortgaged under the terms of the (romissory &ote and the Chattel 2ortgage, the entire amount of the obligation stated in the (romissory &ote becomes due and demandable, which rnesto /ala4ar and 1allye 2otor Co., +nc. failed and refused to pay, so much so that a sufficient cause of action really e@ists for Filinvest Credit Corporation to institute the corresponding complaint against said person and entity That the case is one of those mentioned in /ection !, 1ule ># of his 1ules of Court, particularly an action against parties who have been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought 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 Filinvest Credit Corporation is as much as the sum for which the order is granted above all legal counterclaims That this affidavit is e@ecuted for the purpose of securing a writ of attachment from the court. 2 The specific provision adverted to in the above $ffidavit is /ection !*d0 of 1ule ># which includes 5an 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 brought5 as one of the cases in which a 5plaintiff 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.5 Judge Jorge 1. CoDuia *now Justice of the Court of $ppeals0, then presiding Judge of the lower court, granted the prayer for a writ of attachment in an Order d ated $ugust !#, !"## stating that) Finding the complaint sufficient in form and substance, and in view of the sworn statement of Bil 2ananghaya, Collection 2anager of the plaintiff that defendants have committed fraud in securing the obligation and are now avoiding payment of the same, let a writ of attachment issue upon the plaintiffEs filing of a bond in the sum of ("#,'''.''. +n the meantime, let summons issue on the defendants. 3
2ore than a year later, in an 6rgent 2otion dated 8ecember !!, !"#A, defendant /ala4ar prayed that the writ of preliminary attachment issued e@ parte and implemented solely against his property be recalled andor Duashed. 9e argued that when he signed the promissory note and chattel mortgage on 2ay >, !"## in favor of 1$3, F++&-/T was hot vet his creditor or obligee, therefore, he could not be said to have committed fraud when he contracted the obligation on 2ay >, !"##. /ala4ar added that as the motor vehicle which was the object of the chattel mortgage and the consideration for the promissory note had admittedly not been delivered to him b y 1$3, his repudiation of the loan and mortgage is more justifiable. F++&-/T filed an Opposition, but on February , !"#", the court a quo, this time presided over by herein respondent Judge, ordered the dissolution and setting aside of the writ of preliminary attachment issued on $ugust !#, !"## and the return to defendant /ala4ar of all his properties attached by the /heriff by virtue of the said writ. +n this Order, respondent Judge e@plained that) Ghen the incident was called for hearing, the Court announced that, as a matter of procedure, when a motion to Duash a writ of preliminary attachment is filed, it is incumbent upon the plaintiff to prove the truth of the allegations which were the basis for the issuance of said writ. +n this hearing, counsel for the plaintiff manifested that he was not going to present evidence in support of the allegation of fraud. 9e maintained that it should be the defendant who should prove the truth of his allegation in the motion to dissolve the said writ. The Court disagrees. 5 F++&-/T filed a 2otion for 1econsideration of the above Order, and was subseDuently allowed to adduce evidence to prove that /ala4ar committed fraud as alleged in the affidavit of Bil 2ananghaya earlier Duoted. This notwithstanding, respondent Judge denied the 2otion in an Order dated $pril %, !"#" reasoning thus) The plaintiffEs evidence show that the defendant 1allye 2otor assigned to the former defendant /ala4arEs promissory note and chattel mortgage by virtue of which plaintiff discounted the note. 8efendant /ala4ar refused to pay the plaintiff for the reason that 1allye 2otor has not delivered to /ala4ar the motor vehicle which he bought from 1allye. +t is the position of plaintiff that defendant /ala4ar was in conspiracy with 1allye 2otor in defrauding plaintiff. rnesto /ala4ar, on his part complained that he was himself defrauded, because while he signed a promissory note and chattel mortgage over the motor vehicle which he bought from 1allye 2otor, 1allye 2otor did not deliver to him the personal property he bought that the address and e@istence of 1allye 2otor can no longer be found. Ghile it is true that the plaintiff may have been defrauded in this transaction, it having paid 1allye 2otor the amount of the promissory note, there is no evidence that rnesto /ala4ar had connived or in any way conspired with 1allye 2otor in the assignment of the promissory note to the plaintiff, because of which the plaintiff paid 1allye 2otor the amount of the promissory note. 8efendant rnesto /ala4ar was h imself a victim of fraud. 1allye 2otor was the only party which committed it. From the above order denying reconsideration and ordering the sheriff to return to /ala4ar the personal property attached by virtue of the writ of preliminary attachment issued on $ugust !#, !"##, F++&-/T filed the instant (etition on $pril !", !"#". On July !?, !"#", petitioner F++&-/T also filed an 6rgent (etition for 1estraining Order 7 alleging, among others, that pending this certiorari proceeding in this court,
private respondent /ala4ar filed a 2otion for Contempt of Court in the court below directed against F++&-/T and four other persons allegedly for their failure to obey the Order of respondent Judge dated $pril %, !"#", which Order is the subject of this (etition. On July <, !"#", this Court issued a temporary restraining order 5enjoining respondent Judge or any person or persons acting in his behalf from hearing private respondentEs motion for contempt in Civil Case &o. !'""'', entitled, EFilinvest Credit Corporation, (laintiff, versus The 1allye 2otor Co., +nc., et al., 8efendantsE of the Court of First +nstance of 2anila, :ranch ;+. 5 8 (etitioner F++&-/T in its 22O1$&862 contends that respondent Judge erred) *!0 +n dissolving the writ of preliminary attachment already enforced by the /heriff of 2anila without /ala4arEs posting a counter=replevin bond as reDuired b y 1ule >#, /ection ! and *0 +n finding that there was no fraud on the part of /ala4ar, despite evidence in abundance to show the fraud perpetrated by /ala4ar at the very inception of the contract. +t is urged in petitionerEs first assignment of error that the writ of preliminary attachment having been validly and properly issued by the lower court on $ugust !#, !"##, the same may only be dissolved, Duashed or recalled by the posting of a counter=replevin bond under /ection !, 1ule ># of the 1evised 1ules of Court which provides that) Section 1 . Disc!arge of Attac!"ent upon, gluing counterbond .H$t any time after an order of attachment has been granted, the party whose property has been attached, or the person appearing on 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 a ttachment 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 e@ecuted 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 eDual 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. ... Citing the above provision, petitioner contends that the court below should not have issued the Orders dated February , !"#" and $pril %, !"#" for failure of private respondent /ala4ar to make a cash deposit or to file a counter=bond. On the other hand, private respondent counters that the subject writ of preliminary attachment was improperly or irregularly issued in the first place, in that it was issued e# parte without notice to him and without hearing. Ge do not agree with the contention of private respondent. &othing in the 1ules of Court makes notice and hearing indispensable and mandatory reDuisites for the issuance of a writ of attachment. The statement in the case of $lue %reen aters, Inc. 's. (on. Sundia" and )an 9 cited by private respondent, to the effect that the order of attachment issued without notice to therein petitioner :lue Breen Gaters, +nc. and without giving it a chance to prove that it was not fraudulently disposing of its properties is irregular, gives the wrong implication. $s clarified in the separate opinion of 2r. Justice Claudio Teehankee in the same cited case, 10 a writ of attachment may be issued e# parte. /ections < and %, 1ule >#, merely reDuire that an applicant for an order of attachment file an affidavit and a bond) the affida'it to be e@ecuted by the applicant himself or some other person who personally knows the facts and to show that *!0 there is a sufficient cause of action,
*0 the case is one of those mentioned in /ection ! of 1ule >#, *<0 there is no other sufficient security for the claim sought to be enforced, and *%0 the amount claimed in the action is as much as the sum for which the order is granted above a ll legal counterclaims and the bond to be 5e@ecuted to the adverse party in an amount fi@ed by the judge, not e@ceeding the applicantEs claim, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he ma y sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.5 Ge agree, however, with private respondents contention that a writ of attachment may be discharged without the necessity of filing the cash deposit or counter=bond reDuired by /ection !, 1ule >#, cited by petitioner. The following provision of the same 1ule allows it) /ec. !<. 8ischarge of attachment for improper or irregular issuance.HThe 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 disc!arge t!e attac!"ent on t!e ground t!at t!e sa"e was i"properly or irregularly issued . +f 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. $fter hearing, the judge shall order the discharge of the attachment if it appears that it was improperly or irregularly issued and the defect is not cured forthwith.5*mphasis supplied0 The foregoing provision grants an aggrieved party relief from baseless and unjustifiable attachments procured, among others, upon false allegations, without having to file any cash deposit or counter=bond. +n the instant case the order of attachment was granted upon the allegation of petitioner, as plaintiff in the court below, that private respondent 1$3, the defendants, had committed 5fraud in contracting the debt or incurring the obligation upon which the action is brought,5 covered by /ection i*d0, 1ule >#, earlier Duoted. /ubseDuent to the issuance of the attachment order on $ugust !#, !"##, private respondent filed in the lower court an 56rgent 2otion for the 1ecall and Iuashal of the Grit of (reliminary $ttachment on *his property05 dated 8ecember !!, !"#A 11 precisely upon the assertion that there was 5absolutely no fraud on *his0 part5 in contracting the obligation sued upon by petitioner. (rivate respondent was in effect claiming that petitionerEs allegation of fraud was false, that hence there was no ground for attachment, and that therefore the attachment order was 5improperly or irregularly issued.5 This Court was held that 5*i0f the grounds upon which the attachment was issued were not true ..., the defendant has his remedy by immediately presenting a motion for the dissolution of the same. 12 Ge find that private respondentEs abovementioned 6rgent 2otion was filed under option !<, 1ule >#. The last sentence of the said provision, however, indicates that a !earing must be conducted by the judge for the purpose of determining whether or not there reality was a defect in the issuance of the attachment. The Duestion is) $t this hearing, on whom does the burden of proof lie 6nder the circumstances of the present case, Ge sustain the ruling of the court a quo in its Duestioned Order dated February , !"#" that it should be the plaintiff *attaching creditor0, who should prove his allegation of fraud. This pronouncement finds support in the first sentence of /ection !, 1ule !
documents e@ecuted by the parties in the instant case, are presumed to have been entered into for a sufficient consideration. 15 +n a similar case of *illongco, et al., 's. (on. +anlilio, et al. , 1 a writ of preliminary attachment was issued e@ parte in a case for damages on the strength of the affidavit of therein petitioners to the effect that therein respondents had concealed, removed or disposed of their properties, credits or accounts collectible to defraud their creditors. /ubseDuently, the lower court dissolved the writ of attachment. This was Duestioned in a certiorari proceeding wherein this Court held, inter alia, that) The affidavit supporting the petition for the issuance of the preliminary attachment may have been sufficient to justify the issuance of the preliminary writ, but it cannot be considered as proof of the allegations contained in the affidavit. The reason is obvious. The allegations are mere conclusions of law, not statement of facts. &o acts of the defendants are ever mentioned in the affidavit to show or prove the supposed concealment to defraud creditors. /aid allegations are affirmative allegations, which plaintiffs had the obligation to prove ... 17 +t appears from the records that both herein private parties did in fact adduce evidence to support their respective claims. 18 $ttached to the instant (etition as its $nne@ 595 19 is a 2emorandum filed by herein petitioner F++&-/T in the court below on 2arch ', !"#". $fter private respondent filed his Comment to the (etition, 20 petitioner filed a 1eply 21 ,attaching another copy of the aforesaid 2emorandum as $nne@ 5$5 22 +n this case on February A, !"#" and 2arch !, !"#", the plaintiff *F++&-/T0 presented in evidence documentary e@hibits 5marked @hibit $, $= +, :, :=!, :=, :=<, :=%, C, C=!, 8, , F, B and B=!. The 2emorandum goes on to state that F++&-/T presented as its witness defendant /ala4ar himself who testified that he signed @hibits $, :, C, 8, and B that he is a holder of a masterEs degree in :usiness $dministration and is himself a very careful and prudent person that he does not sign post=dated documents that he does not sign contracts which do not reflect the truth or which are irregular on their face, that he intended to purchase a school bus from 1allye 2otors Co., +nc. from whom he had already acDuired one unit that he had been dealing with $bel /ahagun, manager of 1$3, whom he had known for a long time that he intended to purchase the school bus on installment basis so he applied for financing with the F++&-/T that he knew his application was approved that with his e@perience as a business e@ecutive, he knew that under a financing arrangement, upon approval of his application, when he signed @hibits $, :, C, 8, and B, the financing company *F++&-/T0 would release the proceeds of the loan to 1$3 and that he would be obligated to pay the installments to F++&-/T that he signed @hibits $, : and C simultaneously that it was h is wife who was always transacting business with 1$3 and $bel /ahagun. 23
Githout disputing the above summary of evidence, private respondent /ala4ar states in his Comment that 5the same evidence proferred by *petitionerEs0 counsel was adopted by *private respondent0 rnesto /ala4ar during the proceedings. 2 $ccording to the court a Duo in its assailed order of $pril %, !"#", mesto /ala4ar 5was himself defrauded because while he signed the promissory note and the chattel mortgage over the vehicle which he bought from 1allye 2otors, 1$3 did not deliver to him the personal property he bought.5 $nd since no fraud was committed by /ala4ar, the court accordingly ordered the sheriff to return to /ala4ar the properties attached by virtue of the writ of preliminary attachment issued on $ugust !#, !"##. Ge do not agree. Considering the claim of respondent /ala4ar that 1allye 2otors did n ot deliver the motor vehicle to him, it follows that the +nvoice, @hibit 5C5, for the motor vehicle and the 1eceipt, @hibit 5B5, for
its delivery and both signed by /ala4ar, @hibits 5C=! 5 and 5B=!5, were fictitious. +t also follows that the (romissory &ote, @hibit 5$5, to pay the price of the undelivered vehicle was without consideration and therefore fake the Chattel 2ortgage, @hibit 5:5, over the non=e@istent vehicle was likewise a fraud the registration of the vehicle in the name of /ala4ar was a falsity and the assignment of the promissory note by 1$3 with the conforme of respondent /ala4ar in favor of petitioner over the undelivered motor vehicle was fraudulent and a falsification. 1espondent /ala4ar, knowing that no motor vehicle was delivered to him by 1$3, e@ecuted and committed all the above acts as shown the e@hibits enumerated above. 9e agreed and consented to the assignment by 1$3 of the fictitious promissory note and the fraudulent chattel mortgage, affi@ing his signature thereto, in favor of petitioner F++&-/T who, in the ordinary course of business, relied on the regularity and validity of the transaction. 1espondent had p reviously applied for financing assistance from petitioner F++&-/T as shown in @hibits 5 5 and 5=! 5 and his application was approved, thus he negotiated for the acDuisition of the motor vehicle in Duestion from 1allye 2otors. /ince he claimed that the motor vehicle was not delivered to h im, then he was duty=bound to reveal that to F++&-/T, it being material in inducing the latter to accept the assignment of the promissory note and the chattel mortgage. 2ore than that, good faith as well as commercial usages or customs reDuire the disclosure of facts and circumstances which go into the very object and consideration of the contractual obligation. Ge rule that the failure of respondent /ala4ar to disclose the material fact of non=delivery of the motor vehicle, there being a duty on his part to reveal them, constitutes fraud. *$rticle !<<", &ew Civil Code0. Ge hold that the court a quo committed grave abuse of discretion in dissolving and setting aside the writ of preliminary attachment issued on $ugust !#, !"##. G91FO1, +& -+G OF T9 FO1BO+&B, the appealed Orders of the lower court dated February , !"#" and $pril %, !"#" are hereby 1-1/8 and /T $/+8. The temporary restraining order issued by 6s on July <, !"#" is hereby made permanent. &o costs. (etition granted. /O O1818.
+n )oledo ' . $urgos, 19 this Court ruled that a hearing on a motion or application for preliminary attachment is not generally necessary unless otherwise directed by the Trial Court in its discretion. 20 $nd in ilin'est Credit Corporation ' . -elo'a, 21 the Court declared that 5*n0othing in the 1ules of Court makes notice and hearing indispensable and mandatory reDuisites for the issuance of a writ of attachment.5 The only pre=reDuisite
is that the Court be satisfied, upon consideration of 5the affidavit of the applicant or of some other person who personally knows the facts, that a sufficient cause of action e@ists, that the case is one of those mentioned in /ection ! . . . *1ule >#0, 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 *of attachment0 is granted above all legal counterclaims.5 22 +f the court be so satisfied, the 5order of attachment shall be granted,5 23 and the writ shall issue upon the applicantEs posting of 5a bond e@ecuted to the adverse party in an amount to be fi@ed by the judge, not e@ceeding the plaintiffs 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.5 2