Insular Savings Bank v Court of Appeals, Judge Amin, and Far East Bank and Trust Company June

15, 2005 | Garcia Facts: Far East instituted an Arbitration case against Insular before the Arbitration Committee of the Philippine Clearing House Corporation. Dispute. The dispute involved 3 unfunded checks with a total value of P25,200,000. The checks were drawn against Far East and were presented by Insular for clearing. Far East returned the checks beyond the reglementary period but after Insulars account had already been credited. Insular refused to refund the money to the bank. Action. Far East instituted a Civil Case in the RTC of Makati and prayed for a writ of preliminary attachment. This was granted upon the posting of an attachment bond for 6M. The writ was issued for P25,200,000. Money divided pending arbitration. Pending arbitration, the banks agreed to temporarily divide between themselves the 25,200,000; each bank had in its possession 12,600,000. Motion to discharge attachment. As half was with Far East, Insular filed a motion to discharge the attachment by counter-bond in the amount of P12,600,000. The Motion and the Motion for Reconsideration was denied by Judge Amin, who argued the counter-bond should be P27,237,700. Court of Appeals. Insular went to the CA on a petition for certiorari for GADALJ. They argued he erroneously factored in unliquidated claim items such as damages, legal interest and attorneys fees in his computation of the counterbond. However, the CA still dismissed the petition on the basis of Section 12, Rule 57. Issue: WON the CA erred in not ruling that the TC committed GAD in denying the motion to discharge attachment by counter-bond in the amount of P12,600,000. (Alternatively: Was the 27M counterbond wrong?) Held: Yes. SEC. 12. Discharge of attachment upon giving counter-bond. At any time after an order of attachment has been granted, the party whose property has been attached, . . . may upon reasonable notice to the applicant, apply to the judge who granted the order or to the judge of the court which the action is pending, for an order discharging the attachment 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 executed 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 equal 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. x x x . Should such counter-bond for any reason be found to be, or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching party may apply for a new order of attachment (Emphasis supplied) The amount of the counter-attachment bond is to be measured against the value of the attached property, as determined by the judge to secure payment of any judgment that the attaching creditor may recover. It is logical that the counterbond necessary to discharge the lien should correspond in value to or match the attaching creditors principal claim. Else, excessive attachment, which should be avoided at all times, shall ensue.

In the instant case, the principal claim is P25,200,00. Jurisprudence teaches that a writ of attachment cannot be issued for moral and exemplary damages and other unliquidated or contingent claim. The attachment applied for was only for 25.2 M. Far East did not pray for attachment on its other claims. The TC committed GAD when it denied the motion to discharge attachment by P12.6, an amount more than double the attachment bond required of and given by respondent. It must be noted that this case falls under the old rules, quite different from the less stringent rule today. Unlike the former Section 12, Rule 57 where the value of the property attached shall be defining measure in the computation, the present less stringent Section 12 provides that the court shall order the discharge if the movant makes a cash deposit or files a counter-bond in amount equal to that fixed by the court in the order of attachment, exclusive of costs. The ROC however cannot be given retroactive effect. Petition granted.