1

SALGADO VS. COURT OF APPEALS

March 26, 1984 (128 SCRA 395) FACTS: PCIB filed action to recover on a promissory note with prayer for writ of attachment. CFI Rizal lifted the writ of attachment it previously issued after petitioner moved to quash it. Bank posted bond. The Court of Appeals reconsidered and authorized the issuance of the writ of attachment. ISSUE: Can a writ of attachment issue if note sued upon is fully secured? HELD: Petition is impressed with merit. The chief purpose of attachment is to secure a contingent lien on defendants property until plaintiff can obtain a judgment and have such property applied to its satisfaction or to make some provision to unsecured debts in cases where the means of satisfaction thereof are liable to be removed beyond the jurisdiction, or improperly disposed of or concealed, or otherwise placed beyond the reach of creditors. Sec. 1, Rule 57 states the grounds on which attachment may issue. Sec. 3, Rule 57. An order of attachment shall be granted only when it appears by the affidavit of the applicant, or of some other person who personally knows the facts that xxxxx there is no other sufficient security for the claim sought to be enforced by the action. The reason for the rule prohibiting attachment where indebtedness was already secured is to prevent the secured creditors from attaching additional property and thus tying up more of the debtors property than was necessary to secure the indebtedness. To sustain an order of attachment, it is incumbent upon the plaintiff to establish either of these 2 facts: a) that the obligation had not been secured originally b) that, if secured at its beginning, the security later became valueless. Sec. 13, Rule 57 authorizes the discharge of an attachment where the same had been improperly or irregularly issued. Rule authorizing issuance of writ of attachment must be strictly construed in favor of defendant.

Rule 57

ABOITIZ and COMPANY VS. COTABATO BUS COMPANY

June 17, 1981 (105 SCRA 88) Case: FACTS: Writ of preliminary attachment issued ex parte by CFI Davao. (Aboitiz-plaintiff for collection of money P155,739.41 owed by Cotabato Bus Co.) Buses, machinery, equipment were attached. Petitioner alleges that the company made payment of a measly P634.00 obligation with personal check of company president and says companys bank account was reduced to nil. ISSUE: Whether the writ of attachment was properly issued upon a showing that defendant is on the verge of insolvency and may no longer satisfy its just debts without issuing the writ. HELD: Whether insolvency may be a ground for the issuance of a Writ of Attachment NEGATIVE. The Court of Appeals is correct. Appeal by certiorari from decision of Court of Appeals.

Rule 57

ADLAWAN VS. TORRES July 4, 1994 (233 SCRA 645) ISSUE: Legality of the writ of attachment issued by respondent judge in the consolidated cases for sums of money filed by Aboitiz and Company against the Spouses Adlawan. HELD: The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent removal, concealment and disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a preliminary attachment, the removal or disposal must have been made with intent to defraud defendant's creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz considered as fraudulent concealment of property to its prejudice. We find, however, that there is no factual allegation which may constitute as a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. As this Court said in JardineManila Finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void." Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly averred. The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one's property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with. Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]). Consequently, when petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counter-affidavits from the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates. This procedure should be followed because, as the Court has time and again said, attachment is a harsh, extraordinary and summary remedy and the rules governing its issuance must be construed strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]). Petition granted.

Rule 57

THE CONSOLIDATED BANK and TRUST CORP VS INTERMEDIATE APELLATE COURT

May 29, 1987 (150 SCRA 591) FACTS: Solidbank loaned NICOS P4,076,518.64. A collection case was filed. As a result of a writ of attachment, 2 real properties of defendant were levied and attached. These same properties were extrajudicially foreclosed by UCPB where properties have been mortgaged previously. UCPB sold its rights and interests over the properties to Manuel Go who also sold the same to GOLDEN STAR (private respondent). NICOS executed waiver of right of redemption in favor of Golden Star. Court granted writ of possession filed by Golden Star. Solidbank filed omnibus motion to annul the writ of possession which was denied. Solidbank filed appeal before IAC on the ground that the properties were under custodia legis. IAC affirmed in toto order of the Malolos court. ISSUE: Whether or not an attaching creditor acquires the right of redemption of a debtor over the attached properties of the latter which are subsequently extrajudicially foreclosed by third parties. WON the subject properties were under custodia legis by virtue of the prior annotation of a writ of attachment in petitioners favor at the time the properties were extrajudicially foreclosed. HELD: YES. Based on the evidence, conclusion is clear that the disputed real properties were under custodia legis by virtue of a valid attachment at the time the same were extrajudicially foreclosed by a third party mortgagee. The rule is well-settled that when a writ of attachment has been levied on real property or any interest therein belonging to the judgment debtor, the levy thus effected creates a lien which nothing can destroy but its dissolution. Necessary consequence: The writ of possession in favor of Golden Star is null and void ab initio because it interfered with the jurisdiction of a co-ordinate and co-equal court.

Rule 57