1. [G.R. NO.

163692 : February 4, 2008]

ALLIED BANKING CORPORATION, Petitioner, v. SOUTH PACIFIC SUGAR

CORPORATION, MARGARITA CHUA SIA, AGOSTO SIA, LIN FAR CHUA, GERRY
CHUA, SIU DY CHUA, and ANTONIO CHUA, Respondents.

FACTS:

South Pacific Sugar Corporation (South Pacific), on March 23, 1999, issued three
promissory notes totaling P96,000,0003 to the petitioner, Allied Banking Corporation
(hereafter Allied Bank), to secure payment of loans contracted during the same period.
Respondents Margarita Chua Sia, Agosto Sia, Lin Far Chua, Gerry Chua, Siu Dy Chua,
and Antonio Chua (guarantors) executed continuing guaranty/comprehensive surety
agreements binding themselves solidarily with the corporation. On maturity, South
Pacific and its guarantors failed to honor their respective covenants.

On January 26, 2001, Allied Bank filed a complaint for collection of a sum of money
with a prayer for the issuance of a writ of preliminary attachment against respondents.
Allied Bank prayed in its complaint (1) that upon its filing, a writ of preliminary
attachment be issued ex parte against all leviable properties of the respondents as may
be sufficient to satisfy petitioner's claim; and (2) that the respondents be ordered to
pay petitioner P90,000,000 plus interest and charges, as well as attorney's fees and
costs of suit.

During the ex parte hearing for the issuance of a writ of preliminary attachment, Allied
Bank's lone witness, Account Officer Marilou T. Go, testified that Allied Bank approved
the corporation's application for credit facilities on the latter's representation that (1) it
was in good fiscal condition and had positive business projections as stated in a
voluminous Information Memorandum, and that (2) it would use the loan to fund the
operations of the sugar refinery. Go further testified that Allied Bank discovered soon
after that these representations were false; that the loans were allegedly "diverted to
illegitimate purposes;" that as of January 2001, the loan amounted to P90 million; that
based on a project study by a consulting company, Seed Capital Ventures, Inc., South
Pacific was suffering losses and incurring debts in the millions; that there had been no
credit investigation to appraise the corporation's business operations; and that Allied
Bank relied on the financial statements of the corporation.

Thereafter, the trial court granted the attachment and Allied Bank posted the requisite
bond.

The respondents filed a motion to discharge the attachment with an urgent motion to
defer further the implementation of the writ, grounded upon the arguments
The trial court granted the respondents' motion to defer the implementation of the writ
of attachment. Allied Bank opposed the motion. After hearing, the court granted the
motion to discharge6 and denied the motion for reconsideration.7

On certiorari, Allied Bank averred that the trial court acted with precipitate haste in
deciding the motion to discharge the attachment without its written opposition, and
with grave abuse of discretion in dissolving the writ without requiring the guarantors to
post a counter-bond. Finally, it asserted that the trial court failed to appreciate evidence
of respondents' fraud.

ISSUE:

WHETHER OR NOT, THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT A
COUNTER-BOND WAS NECESSARY FOR THE DISCHARGE OF THE WRIT OF PRELIMINARY
ATTACHMENT.

HELD:

Such general averment will not suffice to support the issuance of the writ of preliminary
attachment. It is necessary to recite in what particular manner an applicant for the writ
of attachment was defrauded. In a prayer for a writ of attachment, as already held by
this Court:

'It is not enough for the complaint to ritualistically cite, as here, that the defendants are
"guilty of fraud in contracting an obligation." An order of attachment cannot be
issued on a general averment, such as one ceremoniously quoting from a pertinent
rule. The need for a recitation of factual circumstances that support the
application becomes more compelling here considering that the ground relied
upon is "fraud in contracting an obligation." The complaint utterly failed to
even give a hint about what constituted the fraud and how it was
perpetrated. Fraud cannot be presumed.14 (Emphasis supplied.)

Likewise, written contracts are presumed to have been entered into voluntarily and for
a sufficient consideration. Section 1,15 Rule 131 of the Rules of Court instructs that each
party must prove his own affirmative allegations. To repeat, in this jurisdiction, fraud is
never presumed. Moreover, written contracts such as the documents executed by the
parties in the present case, are presumed to have been entered into for a sufficient
consideration.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated
February 3, 2004 and the Resolution dated May 13, 2004 of the Court of Appeals in CA-
G.R. SP No. 68619 are AFFIRMED. The Order23 dated May 23, 2001 of the Regional
Trial Court of Makati City, Branch 148, discharging the writ of preliminary attachment in
Civil Case No. 01-121 is UPHELD. No pronouncement as to costs.
SO ORDERED.

2. G.R. No. 171124, February 13, 2008

ALEJANDRO NG WEE, petitioner,
vs.
MANUEL TANKIANSEE, respondent.

FACTS:
X invested in a financial company in which Y works as vice-chairman and director. Upon hearing
a disturbing news regarding the financial condition of the company, X instituted a civil case for damages
before the RTC and impleaded Y and other parties as defendant. RTC ruled in favor X and issued writ of
preliminary attachments against the properties of Y and all other defendants. Y and other defendants
moved for discharge of the writ but it was not given due course until it reach finality of judgement.
Y file a second motion to discharge of the writ on the ground that he was not involved in the
fraudulent transactions of the company as he was absent during the board meetings and that he was also
a victim of the fraudulent scheme. The RTC denied once again motion but the CA, on a petition filed by Y,
reversed the decision of RTC and lifted the writ to the extent of the properties of Y based on the grounds
that general and sweeping allegation of fraud is not a sufficient basis for the issuance of the writ.

ISSUE:
Is the CA correct in lifting the writ?

RULINGS:
YES.

Jurisprudence provides that for a writ of attachment to issue under Section 1(d) of Rules
of Court, the applicant must sufficiently show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or
failure to comply with his obligation.

4 and 10 EXCELLENT QUALITY APPAREL, INC VS. VISAYAN

SURETY AND INSURANCE CORPORATION, G.R. NO. 212025

The Facts

On March 26, 1996, petitioner Excellent Quality Apparel, Inc. (petitioner),  then

represented by Max L.F. Ying (Ying),  Vice-President for Productions, and Alfiero R.
Orden, Treasurer, entered into a contract with Multi-Rich Builders (Multi-Rich),  a single
proprietorship, represented by Wilson G. Chua, its President and General Manager, for
the construction of a garment factory within the Cavite Philippine Economic Zone
Authority (CPEZA). The duration of the project was for a maximum period of five (5)
months or 150 consecutive calendar days. Included in the contract was an Arbitration
Clause in case of dispute.

On November 27, 1996, the construction of the factory building was completed.
On February 20, 1997, Win Multi-Rich Builders, Inc. (Win Multi-Rich)  was incorporated
with the Securities and Exchange Commission (SEC).

On January 26, 2004, Win Multi-Rich filed a complaint for sum of money and damages
against petitioner and Ying before the RTC.5 It also prayed for the issuance of a writ of
attachment, claiming that Ying was about to abscond and that petitioner had an
impending closure.

Win Multi-Rich then secured the necessary bond in the amount of P8,634,448.20 from
respondent Visayan Surety and Insurance Corporation (Visayan Surety).6 In the
Order,7 dated February 2, 2004, the RTC issued a writ of preliminary attachment in
favor of Win Multi-Rich.

To prevent the enforcement of the writ of preliminary attachment on its equipment and
machinery, petitioner issued Equitable PCI Bank Check No. 160149,8 dated February 16,
2004, in the amount of P8,634,448.20 payable to the Clerk of Court of the RTC.

On February 19, 2004, petitioner filed its Omnibus Motion, 9 seeking to discharge the
attachment. Petitioner also questioned the jurisdiction of the RTC due to the presence
of the Arbitration Clause in the contract. It asserted that the case should have been
referred first to the Construction Industry Arbitration Commission (CIAC)  pursuant to
Executive Order (E.O.)  No. 1008.

The motion, however, was denied by the RTC in its Order,10 dated April 12, 2004,
because the issues of the case could be resolved after a full-blown trial.

On April 26, 2004, petitioner filed its Answer with Compulsory Counterclaim 11 before the
RTC. It denied the material allegation of the complaint and sought the immediate lifting
of the writ of attachment. It also prayed that the bond filed by Win Multi-Rich to
support its application for attachment be held to satisfy petitioner’s claim for damages
due to the improper issuance of such writ.

On April 29, 2004, the RTC issued another order 12 directing the deposit of the garnished
funds of petitioner to the cashier of the Clerk of Court of the RTC.

Win Multi-Rich then filed a motion,13 dated April 29, 2004, to release petitioner’s cash
deposit to it. Notably, the motion was granted by the RTC in the Order,14 dated May 3,
2004. Subsequently, on May 7, 2004, Win Multi-Rich posted Surety Bond No.
1019815 issued by respondent Far Eastern Surety and Insurance Co., Inc. (FESICO)  for
the amount of P9,000,000.00, to secure the withdrawal of the cash deposited by
petitioner. Thus, Win Multi-Rich was able to receive the funds of petitioner even before
the trial began.

ISSUE:
Whether or not Sureties are liable for damages

HELD:

NO. By its nature, preliminary attachment, under Rule 57 of the Rules of Court, "is an
ancillary remedy applied for not for its own sake but to enable the attaching party to
realize upon relief sought and expected to be granted in the main or principal action; it
is a measure auxiliary or incidental to the main action. As such, it is available during the
pendency of the action which may be resorted to by a litigant to preserve and protect
certain rights and interests therein pending rendition and for purposes of the ultimate
effects, of a final judgment in the case.38 In addition, attachment is also availed of in
order to acquire jurisdiction over the action by actual or constructive seizure of the
property in those instances where personal or substituted service of summons on the
defendant cannot be effected."39

The party applying for the order of attachment 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.40 The purpose of an attachment bond is 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.41

In this case, the attachment bond was issued by Visayan Surety in order for Win Multi-
Rich to secure the issuance of the writ of attachment. Hence, any application for
damages arising from the improper, irregular or excessive attachment shall be governed
by Section 20, Rule 57, which provides:

The requisites under Section 20, Rule 57 in order to claim damages against the bond,
as follows:

1. The application for damages must be filed in the same case where the bond
was issued;

2. Such application for damages must be filed before the entry of judgment; and

3. After hearing with notice to the surety.

In the present petition, the Court holds that petitioner sufficiently incorporated an application
for damages against the wrongful attachment in its answer with compulsory counterclaim filed
before the RTC. 

Clearly, petitioner failed to comply with the requisites under Section 20, Rule 57 because
Visayan Surety was not given due notice on the application for damages before the finality of
judgment. The subsequent motion for execution, which sought to implicate Visayan Surety,
cannot alter the immutable judgment anymore.
While Visayan Surety could not be held liable under Section 20, Rule 57, the same cannot be
said of FESICO. In the case at bench, to forestall the enforcement of the writ of preliminary
attachment, petitioner issued Equitable PCI Bank Check payable to the Clerk of Court of the
RTC. Pursuant to the RTC Order, dated April 29, 2004, the garnished funds of petitioner were
deposited to the cashier of the Clerk of Court of the RTC. Strictly speaking, the surety bond of
FESICO is not covered by any of the provisions in Rule 57 of the Rules of Court because, in the
first place, Win Multi-Rich should not have filed its motion to release the cash deposit of
petitioner and the RTC should not have granted the same. The release of the cash deposit to
the attaching party is anathema to the basic tenets of a preliminary attachment. The garnished
funds or attached properties could only be released to the attaching party after a

judgment in his favor is obtained. Under no circumstance, whatsoever, can the garnished funds
or attached properties, under the custody of the sheriff or the clerk of court, be released to the
attaching party before the promulgation of judgment.

Indeed, FESICO cannot escape liability on its surety bond issued in favor of petitioner. The
purpose of FESICO's bond was to secure the withdrawal of the cash deposit and to answer any
damages that would be inflicted against petitioner in the course of the proceedings. Also, the
undertaking signed by FESICO stated that the duration of the effectivity of the bond shall be
from its approval by the court until the action is fully decided, resolved or terminated.

5. PHILIPPINES BANK OF COMMUNICATIONS vs. HON. COURT OF APPEALS

G.R. No. 115678. February 23, 2001

YNARES-SANTIAGO, J.:

FACTS:

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.

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.

ISSUE: WON the lower court erred in issuing the writ of preliminary attachment.

RULING:

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:

(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;

(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;

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.

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 Appealsas 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)

SC 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 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.

6.

TORRES V SATSATIN

GR 166759 | November 25, 2009 | J. Peralta

Facts:
Siblings Torres (petitioners) each owned adjacent 20,000 square meters track of land in
Dasmariñas, Cavite. Nicanor Satsatin, through petitioners’ mother Agripina Aledia, was
able to convince the siblings to sell their property and authorize him via SPA, to
negotiate for its sale. Nicanor offered to sell the properties to Solar Resources, to which
Solar allegedly agreed to buy the three parcels of land plus the property of one Rustica
Aledia for P35, 000,000. Petitioners claimed that Solar has already paid the entire
purchase price, however Nicanor only remitted P9, 000,000 out of the P28, 000,000
sum they are entitled to and that Nicanor had acquired a house and lot and a car
(which he registered in the names of his children). Despite the repeated verbal and
written demands, Nicanor failed to remit the balance prompting the petitioners to file a
complaint for sum of money against the family Satsatin.

Petitioners filed an Ex Parte Motion for the Issuance of a Writ of Attachment, alleging
among other things, that respondent was about to depart the country and that they are
willing to post a bond fixed by court. After filing a Motion for Deputation of Sheriff,
which the RTC granted, it issued a Writ of Attachment (WOA) on November 15. On
November 19, after serving a copy of the WOA upon the Satsatin, the sheriff levied
their real and personal properties. On November 21, the summons and copy of
complaint was served upon the respondents. Respondents filed their answer and a
Motion to Discharge Writ of Attachment, claiming, among others, that: the bond was
issued before the issuance of WOA, the WOA was issued before the summons was
received. Respondents posted a counter-bond for the lifting of WOA, which was denied
along with MR. Aggrieved, they filed with CA a Petition for Certiorari, Mandamus and
Prohibition with Preliminary Injunction and TRO under Rule 65. CA ruled in favor of
respondents and denied petitioners’ MR hence the petition for review on certiorari with
the SC.

Issue:
W/N CA erred in finding that RTC was guilty of GADALEJ in the issuance and
implementation of the WOA

Held:

No. A writ of preliminary attachment is defined as a provisional remedy issued upon

order of the court where an action is pending to be levied upon the property or
properties of the defendant therein, the same to be held thereafter by the sheriff as
security for the satisfaction of whatever judgment that might be secured in the said
action by the attaching creditor against the defendant.
In the case at bar, the CA correctly found that there was grave abuse of discretion
amounting to lack of or in excess of jurisdiction on the part of the trial court in
approving the bond posted by petitioners despite the fact that not all the requisites for
its approval were complied with. In accepting a surety bond, it is necessary that all the
requisites for its approval are met; otherwise, the bond should be rejected.

Moreover, in provisional remedies, particularly that of preliminary attachment, the

distinction between the issuance and the implementation of the writ of attachment is of
utmost importance to the validity of the writ. The distinction is indispensably necessary
to determine when jurisdiction over the person of the defendant should be acquired in
order to validly implement the writ of attachment upon his person.

In Cuartero v. Court of Appeals, this Court held that the grant of the provisional remedy
of attachment involves three stages: first, the court issues the order granting the
application; second, the writ of attachment issues pursuant to the order granting the
writ; and third, the writ is implemented. For the initial two stages, it is not necessary
that jurisdiction over the person of the defendant be first obtained. However, once the
implementation of the writ commences, the court must have acquired jurisdiction over
the defendant, for without such jurisdiction, the court has no power and authority to act
in any manner against the defendant. Any order issuing from the Court will not bind the
defendant.
At the time the trial court issued the writ of attachment on November 15, 2002, it can
validly to do so since the motion for its issuance can be filed “at the commencement of
the action or at any time before entry of judgment.” However, at the time the writ was
implemented, the trial court has not acquired jurisdiction over the persons of the
respondent since no summons was yet served upon them. The proper officer should
have previously or simultaneously with the implementation of the writ of attachment,
served a copy of the summons upon the respondents in order for the trial court to have
acquired jurisdiction upon them and for the writ to have binding effect. Consequently,
even if the writ of attachment was validly issued, it was improperly or irregularly
enforced and, therefore, cannot bind and affect the respondents.
Moreover, again assuming arguendo that the writ of attachment was validly issued,
although the trial court later acquired jurisdiction over the respondents by service of the
summons upon them, such belated service of summons on respondents cannot be
deemed to have cured the fatal defect in the enforcement of the writ. The trial court
cannot enforce such a coercive process on respondents without first obtaining
jurisdiction over their person. The preliminary writ of attachment must be served
after or simultaneous with the service of summons on the defendant whether by
personal service, substituted service or by publication as warranted by the
circumstances of the case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction

7. Phil-Air Conditioning Center vs RCJ Lines and Rolando Abadilla, Jr.

 G.R. No. 193821, November 23, 2015

FACTS: On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to
respondent RCJ Lines four Carrier Paris 240 air conditioning units for buses (units). The units included
compressors, condensers, evaporators, switches, wiring, circuit boards, brackets, and fittings.

Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year warranty
on parts and labor. RCJ Lines issued three post-dated checks in favor of Phil-Air to partly cover the
unpaid balance.

All the post-dated checks were dishonored when Phil-Air subsequently presented them for payment.
Check No. 479759 was returned because it was drawn against insufficient funds, while Check Nos.
479760 and 479761 were returned because payments were stopped.

Before presenting the third check for payment, Phil-Air sent a demand letter to Rolando Abadilla, Sr.
asking him to fund the post-dated checks. In view of the failure of RCJ Lines to pay the balance despite
demand, Phil-Air filed on April 1, 1998 the complaint  for sum of money with prayer for the issuance of a
writ of preliminary attachment.

In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the total
amount of P1,240,000.00 and that it had only paid P400,000.00. It refused to pay the balance because
Phil-Air allegedly breached its warranty.

RCJ Lines averred that the units did not sufficiently cool the buses despite repeated repairs. Phil-Air
purportedly represented that the units were in accord with RCJ Lines’ cooling requirements as shown in
Phil-Air’s price quotation. The price quotation provided that full payment should be made upon the units’
complete installation. Complete installation, according to RCJ Lines, is equivalent to being in operational
condition.

RCJ Lines claimed that it was also entitled to be reimbursed for costs and damages occasioned by the
enforcement of the writ of attachment.

Issues:

(3) Whether RCJ Lines proved its alleged unrealized profits arising from the enforcement of the
preliminary writ of attachment.

Held:

3. RCJ Lines failed to prove its alleged unrealized profits.

In Spouses Yu v. Ngo Yet Te, we held that if the claim for actual damages covers unrealized profits, the
amount of unrealized profits must be established and supported by independent evidence of the mean
income of the business undertaking interrupted by the illegal seizure.

We explained in Spouses Yu that to merit an award of actual damages arising from a wrongful
attachment, the attachment defendant must prove, with the best evidence obtainable, the fact of loss or
injury suffered and the amount thereof. Such loss or injury must be of the kind which is not only capable
of proof but must actually be proved with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or speculation.

Similarly, the evidence adduced by RCJ Lines to show actual damages fell short of the required proof. Its
average daily income cannot be derived from the summary of daily cash collections from only two
separate occasions, i.e., August 22-23 and September 2-3, 2000. The data submitted is too meager and
insignificant to conclude that the buses were indeed earning an average daily income of P12,000.00.

More significant, the person who prepared the unsigned summary of daily cash collections was not
presented before the RTC to verify and explain how she arrived at the computation. The dispatchers who
prepared the collection reports were likewise not presented; some of the reports were also unsigned.
While the summary was approved by Rolando Abadilla, Jr., in his testimony on the alleged unrealized
profits was uncorroborated and self-serving.

Nonetheless, we recognize that RCJ Lines suffered some form of pecuniary loss when two of its buses
were wrongfully seized, although the amount cannot be determined with certainty.

We note that in its prayer for the issuance of the writ of preliminary attachment, Phil-Air alleged that RCJ
Lines was guilty of fraud in entering into the sale transaction. A perusal of the record, however, would
show that Phil-Air failed to prove this bare assertion. This justifies an award of temperate or moderate
damages in the amount of Php 50,000.00.

In this case, X affidavit is bereft of any factual statement that respondent committed a fraud. It
has not shown any specific act or deed to support the allegation that respondent is guilty of fraud. Hence,
lifting of the writ is correct.

8.WATERCRAFT VENTURE CORPORATION v. ALFRED RAYMOND WOLFE, GR

No. 181721, 2015-09-09
Facts:
Sometime in June 1997, Watercraft hired respondent Alfred Raymond Wolfe (Wolfe), a
British national and resident of Subic Bay Freeport Zone, Zambales, as its Shipyard
Manager.
During his employment, Wolfe stored the sailboat, Knotty Gull, within Watercraft1 s
boat storage facilities, but never paid for the storage fees.
On March 7, 2002, Watercraft terminated the employment of Wolfe.
Sometime in June 2002, Wolfe pulled out his sailboat from Watercraft's storage facilities
after signing a Boat Pull-Out Clearance dated June 29, 2002 where he allegedly
acknowledged the outstanding obligation of Sixteen Thousand Three Hundred and
Twenty-Four and 82/100 US
Dollars (US$16,324.82) representing unpaid boat storage fees for the period of June
1997 to June 2002. Despite repeated demands, he failed to pay the said amount.
Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for Collection of Sum
of Money with Damages with an Application for the Issuance of a Writ of Preliminary
Attachment.
Fie pointed out that the complaint was an offshoot of an illegal dismissal case he... filed
against Watercraft which had been decided in his favor by the Labor Arbiter.
Meanwhile, finding Watercraft's ex-parte application for writ of preliminary attachment
sufficient in form and in substance pursuant to Section 1 of Rule 57 of the Rules of
Court, the RTC granted the same in the Order dated July 15, 2005
Pursuant to the Order dated July 15, 2005, the Writ of Attachment dated August 3,
2005 and the Notice of Attachment dated August 5, 2005 were issued, and Wolfe's two
vehicles, a gray Mercedes Benz with plate number XGJ 819 and a maroon Toyota
Corolla with plate number TFW 110,... were levied upon.
On August 12, 2005, Wolfe's accounts at the Bank of the Philippine Islands were also
garnished.
On November 8, 2005, Wolfe filed a Motion to Discharge the Writ of Attachment,
arguing that Watercraft failed to show the existence of fraud and that the mere failure
to pay or perform an obligation does not amount to fraud. Me also claimed that he is
not a flight risk for the... following reasons: (1) contrary to the claim that his Special
Working Visa expired in April 2005, his Special Subic Working Visa and Alien Certificate
of Registration are valid until April 25, 2007 and May 11, 2006, respectively; (2) he and
his family have been residing in the
Philippines since 1997; (3) he is an existing stockholder and officer of Wolfe Marine
Corporation which is registered with the Securities and Exchange Commission, and a
consultant of "Sudeco/Ayala" projects in Subic, a member of the Multipartite Committee
for the new port... development in Subic, and the Subic Chamber of Commerce; and (4)
he intends to finish prosecuting his pending labor case against Watercraft.
In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to Discharge Writ of
Attachment and Motion for Preliminary Hearing for lack of merit.
Wolfe filed a petition for certiorari before the CA.
The CA granted Wolfe's petition in a Decision dated September 2007
The CA ruled that the act of issuing the writ of preliminary attachment ex-parte
constitutes grave abuse of discretion on the part of the RTC.
Issues:
WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE
TRIAL COURT IN FAVOR OF THE PETITIONER IS VALID.
Ruling:
The petition lacks merit.
In Liberty Insurance Corporation v. Court of Appeals,[25] the Court explained that to
constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, it
must be shown that the debtor in contracting the debt or incurring the... obligation
intended to defraud the creditor. A debt is fraudulently contracted if at the time of
contracting it, the debtor has a preconceived plan or intention not to pay. "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."[26]
Fraudulent intent is not a physical entity, but a condition of the mind beyond the reach
of the senses, usually kept secret, very unlikely to be confessed, and therefore, can
only be proved by unguarded expressions, conduct and circumstances.[27] Thus, the...
applicant for a writ of preliminary attachment must sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot be inferred from
the debtor's mere non-payment of the debt or failure to comply with his obligation.[28]
The particulars of such circumstances necessarily include the time, persons, places and
specific acts of fraud committed.[29] An affidavit which does not contain concrete and
specific grounds is inadequate to sustain the issuance of such writ. In fact, mere...
general averments render the writ defective and the court that ordered its issuance
acted with grave abuse of discretion amounting to excess of jurisdiction.
In this case, Watercraft's Affidavit of Preliminary Attachment does not contain specific
allegations of other factual circumstances to show that Wolfe, at the time of contracting
the obligation, had a preconceived plan or intention not to pay. Neither can it be
inferred from... such affidavit the particulars of why he was guilty of fraud in the
performance of such obligation. To be specific, Watercraft's following allegation is
unsupported by any particular averment of circumstances that will show why or how
such inference or conclusion was arrived at to wit: "16. For failing to pay for the use
[of] facilities and services - in the form of boat storage facilities - duly enjoyed by him
and for failing and refusing to fulfill his promise to pay for the said boat storage fees,
the Defendant is clearly guilty of fraud x x... x."[31] It is not an allegation of essential
facts constituting Watercraft's causes of action, but a mere conclusion of law.
With respect to Section 1 (a),[32] Rule 57, the other ground invoked by Watercraft for
the issuance of the writ of preliminary attachment, the Court finds no compelling reason
to depart from the CA's exhaustive ruling to the effect that such writ is... unnecessary
because Wolfe is not a flight risk
Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan[34] is displaced. It is
well settled that:... when the preliminary attachment is issued upon a ground which is
at the same time the applicant's cause of action... 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 issued - 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.
the foregoing rule is not applicable in this case because when Wolfe filed a motion to
dissolve the writ of preliminary attachment, he did not offer to show the falsity of the
factual averments in Watercraft's application and affidavit on which the writ was...
based. Instead, he sought the discharge of the writ on the ground that Watercraft failed
to particularly allege any circumstance amounting to fraud. No trial on the merits of the
action at a mere hearing of such motion will be had since only the sufficiency of the
factual... averments in the application and affidavit of merit will be examined in order to
find out whether or not Wolfe was guilty of fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in the performance thereof.
Furthermore, the other ground upon which the writ of preliminary attachment was
issued by the RTC is not at the same time the applicant's cause of action. Assuming
arguendo that the RTC was correct in issuing such writ on the ground that Watercraft's
complaint involves an... action for the recovery of a specified amount of money or
damages against a party, like Wolfe, who is about to depart from the Philippines with
intent to defraud his creditors, the Court stresses that the circumstances[36] cited in
support thereof are... merely allegations in support of its application for such writ.[37]
Such circumstances, however, are neither the core of Watercraft's complaint for
collection of sum of money and damages, nor one of its three (3) causes of action
therein.

9. SECURITY BANK CORPORATION,  v. GREAT WALL COMMERCIAL PRESS COMPANY, INC.,

G.R. No. 219345, January 30, 2017
MENDOZA, J.

FACTS:
In 2013, Security Bank filed a Complaint for Sum of Money (with Application for Issuance of a
Writ of Preliminary Attachment) against respondents Great Wall Commercial Press Company, Inc. (Great
Wall) and its sureties before the RTC. The complaint sought to recover from respondents their unpaid
obligations under a credit facility covered by several trust receipts and surety agreements.

Security Bank argued that in spite of the lapse of the maturity date of the obligations, respondents
failed to pay their obligations. After due hearing, the RTC granted the application for a writ of preliminary
attachment of Security Bank, which then posted a bond in the amount of P10,000,000.00.

On June 3, 2013, respondents filed their Motion to Lift Writ of Preliminary Attachment Ad
Cautelam, claiming that the writ was issued with grave abuse of discretion based on the following
grounds: (1) Security Bank's allegations in its application did not show a prima facie basis therefor; (2) the
application and the accompanying affidavits failed to allege at least one circumstance which would show
fraudulent intent on their part; and (3) the general imputation of fraud was contradicted by their efforts to
secure an approval for a loan restructure.

In its Order, the RTC denied respondents' motion to lift, explaining that the;
 1. that respondents executed various trust receipt agreements but did not pay or return the
goods covered by the trust receipts in violation thereof;
2. that they failed to explain why the goods subject of the trust receipts were not returned and
the proceeds of sale thereof remitted

Upon appeal, The Court of Appeals reversed the decision of the RTC. It pointed out that
fraudulent intent could not be inferred from a debtor's inability to pay or comply with its obligations. The
CA opined that the non-return of the proceeds of the sale and/or the goods subject of the trust receipts
did not, by itself, constitute fraud. Hence, this petition.

ISSUE:
Whether or not Great Wall committed fraud in the performance of their obligation when they failed
to turn over the goods subject of the trust receipt agreements.

RULING:
YES. The Supreme Court held that despite the above covenants between the petitioner and the
defendants, the latter failed to pay nor return the goods subject of the Trust Receipt Agreements.

A trust receipt transaction is one where the entrustee has the obligation to deliver to the entruster
the price of the sale, or if the merchandise is not sold, to return the merchandise to the entruster.
There are, therefore, two obligations in a trust receipt transaction: the first refers to money
received under the obligation involving the duty to turn it over (entregarla) to the owner of the
merchandise sold, while the second refers to the merchandise received under the obligation to "return" it
(devolvera) to the owner.  The obligations under the trust receipts are governed by a special law,
Presidential Decree (P.D.) No. 115, and non-compliance have particular legal consequences.
Failure of the entrustee to turn over the proceeds of the sale of the goods, covered by the trust
receipt to the entruster or to return said goods if they were not disposed of in accordance with the terms
of the trust receipt shall be punishable as estafa under Article 315 (1) of the Revised Penal Code, without
need of proving intent to defraud. 
 The offense punished under P.D. No. 115 is in the nature of malum prohibitum. Mere failure to
deliver the proceeds of the sale or the goods, if not sold, constitutes a criminal offense that causes
prejudice not only to another, but more to the public interest.
In this case, Security Bank's complaint stated that Great Wall, through its Vice President Fredino
Cheng Atienza, executed various trust receipt agreements, it obligates itself to hold in trust for the bank
the goods, to sell the goods for the benefit of the bank, to tum over the proceeds of the sale to the bank,
and to return the goods to the bank in the event of non-sale. By signing the trust receipt agreements,
respondents fully acknowledged the consequences under the law once they failed to abide by their
obligations therein. The said trust receipt agreements were attached to the complaint.
Upon the maturity date, however, respondents failed to deliver the proceeds of the sale to
Security Bank or to return the goods in case of non-sale. Security Bank sent a final demand letter to
respondents, which was also attached to the complaint, but it was unheeded. Curiously, in their letter,
dated January 23, 2013, respondents did not explain their reason for noncompliance with their obligations
under the trust receipts; rather, they simply stated that Great Wall was having a sudden drop of its
income. Such unsubstantiated excuse cannot vindicate respondents from their failure to fulfill their duties
under the trust receipts.