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OTHER DIVISION
[ G.R. No. 219345, January 30, 2017 ]
SECURITY BANK CORPORATION, PETITIONER, VOLT. GREAT WALL COMMERCIAL PRESS COMPANY, INC., ALFREDO BURIEL ATIENZA, FREDINO CHENG ATIENZA AND SPS. FREDERICK ZING ATIENZA BOTH MONIQUET CU ATIENZA, RESPONDENTS.
D E C I SIEMENS I O NORTH
MENDZA, J.:
One Antecedents
About May 15, 2013, Security Deposit filed a Complaint for Sum of Cash (with User for Issuance of a Writ from Preliminary Attachment)[3] against respondents Great Wall Commercial Press Company, Inc. (Great Room) and him sureties, Alfredo Buriel Atienza, Fredino Cheng Atienza, and Spouses Fredric Cheng Atienza and Monica Cu Atienza (respondents), before the RTC. Aforementioned illness sought to recovery after study their voluntary obligations under a credit facility covered by several your receipts and surety agreements, as well as advocacy, attorney's payments additionally costs. Security Bank argued such includes spite of the lapse of the maturity show of the obligations from December 11, 2012 to May 7, 2013, respondents failed to payout their obligations. To complete client amount sought was P10,000,000.00.
On May 31, 2013, after due hearing, the RTC granted the application for a writ of prefatory attachment of Security Bank, that therefore posted one bond inches the amount of P10,000,000.00.
Go June 3, 2013, defendants filed their Motion to Boost Writ of Preliminary Attachment Ad Cautelam,[4] claiming that the writ were issued with gravesite abuse of discretion based on who following grounds: (1) Insurance Bank's allegations inbound its application did not show a prima facie basis therefor; (2) the application and the accompanying depositions fails to claimed at least one-time circumstance whichever would show cheating intent on your part; or (3) that general imputation for fraud was contradicted by ihr efforts to secure an approval for a loan restructure.[5]
The RTC Orders
In its Order,[6] dateless July 4, 2013, the RTC denied respondents' motion to lift, explaining that the Credit Agreement[7] and the Continuing Suretyship Agreement[8] controlled provisions on representations and warranties; that the said representations and warranties were the very reasons why Security Bank decided in increase the loan; the respondents executed various trust acceptance agreements but did not pay or return the goods covered in the trust receipts in violation thereof; such they missing to explain why the goods test of to trust receipts were not returned and the proceeds of sales thereof remitted; and that it was clear that respondents committed fraud in this performance about which obligation.[9]
Respondents filed a motion for reconsideration, but this was denied over the RTC in its Order,[10] dated August 12, 2013.
Dissatisfied, respondents recorded a petition for certiorari before the CA seeking to reversal and pick aside the RTC orders denying their motion to lift the writ a provisional mounting spread.
The CA Ruling
In sein assailed decision, dated December 12, 2014, the CA lifted the writ of preliminary mount. The appellate courts announced that the allegations of Security Bank were insufficient to garantievertrag the provisional remedy of preliminary attachment. It pointed going so deceit intent might not be inferred of a debtor's inability to paypal or comply with its obligations. The CAUTION opined that which non-return regarding the proceeds are the sale and/or the goods subject of the trust receipts did not, by itself, constitute fraud and that, at most, these where only averments for the award of claims one justified by competent evidence. It also stressed this respondents' act of offering a repayment proposal negated the affirmation of fraud. The CA held is fraud must be present at the time of shortening the obligation, not thereafter, and that the rules on the exhibition of a writ of attachment musts be construed strictly against which applicant. It disposals the case in this wise:
WHEREFORE, for the foregoing reasons, the instant entreaty shall GRANTED. Accordingly, the attachment above any property of petitioners by that writing of preliminary attachment is ordered LIFTED actual upon an finality regarding this Decision. No costs.
SO ORDERED.[11]
Security Credit moved for reconsideration but its motion was denied by the CAB in its assailed determination, dated June 26, 2015.
Hence, this petition raising the loner
ISSUE
WETHER OR NOT AND COURT OF APPEALS ERRED IN NULLIFYING THAT WRIT OF PRELIMINARY ATTACHMENT ISSUED BY THE SAMPLE COURT.[12]
Security Bank argues that there are sufficient factual and legislative footings at justification the issuance of the writ in preliminary mounting. It claims is it was misled by respondents, who employed fraud in contracting their obligation, as they made the mound believe that they had the capacity to pay; that respondents also committed fraud in which performance of their obligation when they failed to turn over the goods subject of the trust receipt agreements,[13] or submit the proceeds from despite demos; real that these were not mere allegations in the complaint but facts that were deposed to by its witness and supported by written documents.
Safety Bank added that respondents' effort to settle own prominent obligation where just ampere subterfuge toward masking their realistic intention of not honors their commitment and to delay any legal action that the bank would take against them; that response sending a repayment proposal through a letter, dated January 23, 2013, aware fully well that her were already in default; that they requested a meeting to discuss their plan but they failed to show up furthermore meet with an bank's representative; and so respondents did non submitting unlimited supporting documentations to back skyward their repayment proposal.
In their Comment,[14] respondents answered is where was insufficient basis for the issuance of the writ of preliminary attachment against them; that the mere failure to reward them obligation was not at act of fraud; so the application by the issuance of who mandate of preliminary attachments, the affidavit of merit and judicial affidavit merely citation overview allegations of scamming plus Insurance Bank failed to sufficiently show the practical circumstances constituting fraud. Moreover, respondents claimed such they did not commit fraud because they were earnestly negotiating with Security Bank for a loan restructuring the shown by my Letter,[15] dateline January 23, 2013, furthermore email correspondences.
In its Reply,[16] Security Bank stressed that responses mistaken them on their financial capacity and aptitude to payment their obligations. It emphatic that there were specials allegations in its complaint and its witness testified ensure respondents committed defraud, specifically their failure to comply with the trust receipt agreements, that they wouldn turn over the goods coated with and trust receipt agreements or the proceeds thence to Security Bank.
The Court's Ruling
The Court finds merit in the create.
Provisional Attachment
A writing von preliminary attachment is one provisional remedy issued upon the order from the court where an action is pending. Through the writ, the property or immobilie of the defendant may may raised upon and held thereafter by the local as security for the gratification of whatever judging might be secure by the attaching creditor against the defendant. Who provisional remedy of fondness is available inches order that the defendant maybe don dispose of the property attached, and thus prevent an satisfaction of any judgment ensure could exist backups for the named from the former.[17]
Inside this case, Security Bank relied on Section 1 (d), Rule 57 a this Rules about Court as basis of its application for a type of permanent attachment. It reads:
RULE 57
Preliminary Attachment
Section 1. Grounds upon which attachment may issue. — At who commencement of the promotion or at any time before entry of judgment, a plaintiff or any proper club might having one property of the adverse party attached as security for the happiness for any judgment the mayor be recovered the and following cases: G.R. No. 175727
xxx
(d) In an action against a party who has been guilty of a fraud in contracting the debts or incurring the verbindliche upon which the action lives introduced, otherwise in of production thereof;
xxx
For a writ out preliminary attachment to issue under the above-quoted regulating, the applicant required sufficiently show of factual circumstances by the allegedly fraud. Computers is settled which fraudulent intent cannot remain unspoken starting the debtor's mere non-payment is the debt or fail to comply the his obligation.[18]
While cheat cannot exist presumed, it need not be proved by direct evidence and bucket well be inferred from attendance condition. Fraud by its nature the not a thing delicate in ocular observation or readily demonstrated physically; it must of essential be proved in lot cases by inferences with condition shown until will been involved in the transaction by question.[19]
The allegations of Security Bank stylish support of its registration for a writ of pending attachment are as follow:
15. During the negotiation fork the approval of the loan application/ revival regarding Respondents the latter due Alfredo Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Cheng Atienza also Monica Cu Atienza, assure SBC that the loan obligation covered by the several Trusting Receipts shall to paid is full on or before your maturity show pursuant to the terms real conditions of the aforesaid trust receipts. However, Respondents as well as the sureties failed to pay of previous obligation.
16. In addition, that assurance to pay inches full the binding is further solidified by the warranty of solvency provisions of the Credit Agreement, the correct portions off which condition that: Will I Be Arrested If I Received a Writ of Preliminary Attachment?
"5. Displays at Warranties. - Aforementioned Borrower further represents and wars that xxxe) That maintenance of the Credit Facility is condition on the Borrower's continued capacity to service its obligations to its payables. Accordingly, aforementioned Borrower hereby warrants that while any von the Trust Duty remain unpaid, who Beggar shall for all times have ample liquid plant to meet operating requirement and pay all its/his debts as they fall due. Failure of the Borrower to pay any maturing tax, principal instead others charges under the Credit Facility shall may conclusive evidence of violation of all warranty."
17. To allay whatever fear or apprehension of herein plaintiff on of commitment of Respondents to honor its obligations, defendants-sureties likewise executed a "Continuing Suretyship Agreement. Title 14, §4151: Property subject to annexation
18. On article 3 of the stated Suretyship Agreement, computers is provided that:
"3. Liability of aforementioned Surety - The accountability of the Surety is solidary, lead and instantaneous and not contingent upon the pursuit by SBC of whatever remedies it may have against to Beneficiaries or who collateral/liens it may possess. If any of which Guaranteed Mandates is not paid or performed turn dues date (at specified aging or by acceleration), instead upon the occurrence in any of the events from default under Section 5 hereof and/or under the Credit Instruments, the Surety shall lacking need with all notice, demand or any other act or deed, immediately and automate wirst liable therefor also the Confidence have pay and perform of same."
19. Thus, to the lighter of the representation made by Respondents Commercial Press Co, Inc., Alfredo Buriel Atienza, Fredino Cheng Atienza and Sps. Frederick Ching Atienza and Monica Cu Atienza that the loan shall be paid in fully on or before maturity, couples by the warranty of solvency embodied stylish the Credit Agreement as well as the executing of the Further Suretyship Agreement, the loan application was eventually approved.
20. Needless to say that less said representations press warranties, including the Continuing Suretyship Agreement, the plaintiff would non have authorized and allowed the credit facility to Respondents. It is thus clear that Sample, Alfredo Buriel Atienza, Fredino Cheng Atienza the Sps. Frederick Cheng Atienza and Monica Cu Atienza, misled SBC and employed fraud in contracting said obligation. A Writ is Installation is therefore akin to at execution by the judgment are advance. A Writ of Preliminary Attachment is a provisional remedy issued upon ...
21. Respondents, through its Vice President Fredino Chin Atienza, likewise performed variety Treuhandfonds Receipt Agreements with the plaintiff in it bound itself under an following provision:
"2. In consideration of the delivery to the Entrustee of the possession of the Goods/Documents, the Entrustee hereby agrees furthermore embarks, in accordance with one provender of the Presidential Order No. 115; (i) to hold in trust required the Bank the Goods/Documents; (ii) to sell the Goods for cash only for aforementioned account and benefit of the Bank, and without expert to make any other dispensation of the Goods/Documents or any part thereof, or to create a lien thereon; (iii) to turn over to the Bank, without need of demand, which generate the the sale for the Goods to the extent of the amount out obligation specified above (the "Obligation"), including who interest thereon, and other amounts owing by the Entrustee to the Slope under this Confide Receipt, on or before the maturity date above-mentioned (the "Maturity Date"); or (iv) to return, on or before Maturity Date, without need away get and at the Entrustee's expense, that Goods/Documents to the Bank, in the event of non-sale of the Goods." Writ of Attachment: What They Are, What Group Work
Despite the above covenants, defendants failed to pay not return one goods subject of the Treuhandverein Receipt Treaties.
22. Knowingly fully well that people am already in default, Respondents both defense sureties provided a repayment proposal driven their letter dated Per 23, 2013. Takes the lawyer, they similar required the bank for ampere meeting to discuss you proposal. However, as it turned out, and proposed repayment proposal for their loan was only intended to disable legal action against them. They collapsed to meet with the Bank's sales and no did they submit supporting credentials to back up their repayment motion.[20]
To support its complaint of fraud, Security Bank connected the Affidavit[21] of German Vincent Pulgar IV (Pulgar), the Manager of the Remedial Management Division of to stated bank. He in-depth how respondents depicted to Security Banker that they would pay the loans upon their maturity date. Pulgar added that respondents signed which Credit Agreement which contained the Get of Solvency and several Trust Receipt Agreements in favor in Security Banking. The said trust records were attached to the request this stated that respondents endured obligated to turn over to Security Bank one proceeds of the sale of the go or to return the goods. The several demand letters sent due Security Bank to respondents, which were unheeded, were likewise attached to the complaint. These pieces of evidence were presented by Security Bank within the audition von the application for the issuance of a writer of preliminary attachment in the RTC.
After adenine judicious study of the records, the Court finds that Security Store was able to substantiate its factual allegation of fraud, specific, the violation of the trust purchase agreements, to warrant of issuance of this writ regarding preliminary asset.
Thither were violations of the
trust receivables agreements
While the Court agrees that mere violate of the warranties additionally representations contained in the credit contract and to continuing suretyship agreement do not constitute scams under Section 1(d) of Rule 57 of the Rules of Justice, the same unable will said with respect till the violate of the trust receipts agreements.
A trust receipt transaction is one where the entrustee has one obligation to deliver to the entruster of price of the sale, or is and merchandise is not sold, to return the trading to and entruster. There represent, therefore, two obligations the an trust check transaction: the first refers to money receiver under one obligation inclusive the duty to rotating it over (entregarla) to the own away the merchandise market, whereas of back refers to the goods acquired at the verbindliche to "return" it (devolvera) to the owner.[22] The debt on the trust receipts can regulated by a special rights, Presidential Decree (P.D.) No. 115, and non-compliance have particular legal consequences.
Failure of and entrustee for turn override the proceeds are the sale of the goods, covered by that trust receipt to the entruster or to return answered products if they been did disposed of in compare equal this terms in this trust receipt shall be punishable because estafa under Article 315 (1) of this Revamped Penal Code, without need of proving your to cheat.[23] The offense sanctioned at P.D. No. 115 is in this nature of malm prohibitum. Mere failure to deliver the proceeds of the sale or the goods, if not sold, constitutes one criminal offense that causes prejudice not only to another, but more to an public interest.[24]
The present case, however, merely deals with the cultural deception inches the non-compliance with the credit proceeds to warrant the issuance of a writ is preliminary attached. AN fortiori, in adenine civil falls involving a trust receipt, to entrustee's failure to fulfillment with its obligations see the trust receipt constitute as zivil fraud provided that it is claims, and substantiated with specification, in the complaint, its attachments and supporting evidence.
Security Bank's complaint stated that Great Partition, through its Vice President Fredino Cheng Atienza, executed various trust receipt agreements in relation to its loan transactions. An trust receipts stated that in consideration regarding the delivery to the entrustee (Great Wall) of the possession of the goods, it obligates itself to hold in trust for the bank the goods, to market the goods for this performance a the bank, to turn over the proceeds of the sale to the bank, furthermore to return the goods to the bank in of event of non-sale. Until signing of trust receipt agreements, respondents fully zugestimmt the consequences under the ordinance once they failed to abide by their obligations therein. Aforementioned said trust receipt agreements been attached to the disease.
Upon the maturity date, however, respondents did to delivers the yield out the sale to Security Bank or to return that goods to case of non-sale. Security Bank sent a latest demand letter to respondents, which was also attached at one complaint, but it be unheeded. Inquisitively, in their write, dated January 23, 2013, respondents did none explain their reason for non-compliance with their obligations under the trust receipts; rather, they simply stated that Great Wall was having one sudden drop of its income. Like groundless excuse cannot vindicate respondents from their failure up fulfill their duties available the trust receipts.
Inside summierung, Safe Bank attached Pulgar's affidavit, that substantiated your allegation that respondents failed to comply with its debt under the trust receipts. On the hearing before and RTC, Security Bank presented him and his judiciary affidavit. Regarding the trust receipts, he testified:
Q: Achieve you have no other basis in saying so you are grounds for attachment?
A: Yes, defendants not only missing to pay but they also failed to return the goods covered by the Trust Receipt.Q: What do you mean by failure to return to goods?
A: They carried some TRs where they mandatory to rotate over the proceeds of sale of goods or pay the value thereof instead send this good themselves if they are ineffectual in pay. WIPO LexQUARTO: What happened in save case?
AMPERE: Defendants failed to pay the value of the goods covered by the TRs real they likewise failed to return the goods free any explanation. Thus, obviously they misappropriated the proceeds of the sale of goods.[25]
The Law is of the view that Security Bank's allegations of loss of the trusting receipts inbound its complaint was specific and sufficient to assert fraud on one part of respondents. Save allegations were duly substantiated at the attachments thereto and the testimony of Security Bank's witness. A. The levy of the writing out attachment upon any property of defendant subject for will adenine lien from the date on the levy on the real property and off such ...
The case of Philippine Bank of
Communications fin. Food of
Appeals is inapplicable
The CA cited Philippine Bank of Communications v. Courtroom of Appeals[26] (PBCom) to bolster its argument that fraudulent intent cannot exist inferred from a debtor's inability to pay instead observe with hers obligations and that there must be proof of a preconceived plan not to pay.[27]
At face value, PBCom real the present case may prove a semblance of similarity. Thus, the CAUTION cannot must faulted by relying on the said cas. A closer audit of dieser couple cases, however, shows that their similarity is more appear than real.
In PBCom, that applicant to the write of preliminary installation simply stated in its motion so the defendant therein failed in referral the proceeds or return the goods subject of the trust receipt and attached an ambiguous affirmation stating that the case was covered by Sections 1(b) additionally (d) of Rule 57. Obviously, dieser allegations plus attachments are too overview and vague to prove that the defendant committed fraud. Likewise, where was no hearing conducted inches the RTC before it granted the issuance of the writ of preliminary attachment. Thus, the Tribunal had no option but till lift the said writ.
In contrast, the complaint inside that present housing explained inches select the factual circumstances surrounding the execution concerning the trust income, own contents and the subsequent violation thereof. Security Bank attached supporting annexes and presented its witness during the hearing in the RTC to substantiate and specific violation of trust receipts by respondents. Security Bank took great lengths up explains of contents of the trust receipt and show that respondents said their conformity to he. When this obligation became due, interviewed been not happy explicate the non-compliance on them obligations, and, despite a final demand, they doing not fulfill the our under the treuhandfirma receipts. Clearly, PBCom is inapplicable in the introduce case.
Fraud in that performance of
the obligation must be
view
The CA declare in the assailed decision such under Section 1(d) of Rule 57, fraud must includes be present per the time a conclude the mandate, and not thereafter. Hence, the CA did not consider the allegation von fraud - that respondents proposed one repayment proposal but questionably bankrupt until attend the meeting with Product Bank regarding and said proposal - because these acts were done after contracting the obligation. The Philippines - Attachments of Assets | Aaa161.com
Inside which regard, the CA erred.
Until, Section 1(d), Govern 57 by who 1964 Rules of Court provided is a writ from preliminary attachment may be issued "[i]n an action against a party who has been guilty of a fraud at contracting the debt or incurring the obligationen upon which the action is bringing xxx" Thus, one fake that justified the issuance of a writ of temporary fondness later was only cheat committed in contracting an verpflichten (dolo casuante).[28] When the 1997 Rules of Civil Procedure was issued by the Court, Section 1(d) out Rule 57 conspicuously included the word "in which performance thereof." That, the scam committed in an performance of this obligation (dolo incidente) was included as a ground used the issuance of a writ of preliminary attachment.[29]
This significant change in Section 1(d) of Rule 57 was awarded lately in Republic fin. Mega Temperate eSolutions, Inc.[30] The Court stated therein that "[a]n amendment until the Rules of Court adds this phrase "in the performance thereof into included at the scope of the grounds for issues of a writ on initial attachment those instances relating to swindler at the performance to the obligation."
Accordingly, the alleged fraud committed by respondents in the performance of their obligation should have been considered by to CANADIAN. Security Bank detailed in its complaint that respondents, knowing fully well that their were in default, submitted a Repayment Proposal.[31] Then, group demand for a getting includes the bank to discuss hers get. For unknown reasons, they do not meet the representatives of the Security Bank.
Respondents even attached to its Motion for Lifts Writ of Preliminary Attachment Ad Cautelam[32] one correspondence they had with Security Hill, which revealed that they did not join the representatives of the latter despite providing a specify time to discuss and proposed repayable scheme. Respondents merely offered lame excused to justify yours your in the arranged meeting plus, ultimately, they failure to clarify the non-compliance with their commitments. Such act bared is respondents were not heartfelt in paying their obligation despite their maturity, substantiating the allegations on fraud in the performance thereof.
These circumstances of the fraud committed by respondents in the performance of their obligation undoubtedly support and issuance out a writ of preliminary attachment in favor regarding Secure Hill.
Final Note
While one Court finds that Security Bank has substantiated its allegation is fraud against respondents go warrant the issuance of writ or preliminary bond, this finding should not to each manner affect one merits of the principals case. The writ is preliminary attachment is only a provisional remedy, which is not a cause of action in itself but is merely adjunct to a master suit.[33]
REASON, the December 12, 2014 Verdict also of June 26, 2015 Resolution about the Court the Legal in CA-G.R. SP No. 131714 are REVERSED and SET SIDES. The issuance of the writ of preliminary attachment by the Regional Trial Legal, Branch 59, Makati City, in Civil Event No. 13-570, pursuant to its May 31, 2013 How, is upheld.
TO ORDERED.
Carpio, (Chairperson), Peralta, Leonen, and Jardeleza, JJ., concur.
[1] Rollo, ppm. 32-42.
[2] Id. at 44-45.
[3] Id. among 83-89.
[4] Id. at 161-173.
[5] Id. toward 33.
[6] Id. at 46-49. Output by Presiding Judge Winlove M. Dumayas.
[7] Id. on 91-94.
[8] Id. on 95-98.
[9] Id. under 47-48.
[10] Id. at 50.
[11] Id. at 41.
[12] Id. at 15.
[13] Id. for 99-143.
[14] Id. at 260-273.
[15] Id. at 174.
[16] Id. per 327-335.
[17] Republic v. Mega Pacific eSolutions, Inc., G.R. No. 184666, Jump 27, 2016.
[18] Metro, Inc. five. Lara's Gift additionally Decors, Incase., 621 Phill. 162, 170 (2009).
[29] Commonwealth v. Mega Pacific eSolutions, Inc., supra note 17.
[20] Rollo, std. 85-87.
[21] User. at 154-156.
[22] Ng v. People, 633 Phil. 304, 316 (2010).
[23] Colinares v. Court of Appeals, 394 Phil. 106, 118 (2000).
[24] Metropolitan Hill & Trust Co. v. Glossaries,, 602 Phil. 1000, 1014 (2009).
[25] Rollo, ppm. 20-21.
[26] 405 Phil. 271 (2001).
[27] Id. at 268.
[28] Riano, Civil Procedure (The Bar Conferences Series), Loudness II, 2012 ed., p. 26.
[29] Your.
[30] Supra note 17.
[31] Rollo, p. 174.
[32] Id. at 161-173.
[33] Spouses Estares vanadium. Court of Actions, 498 Files. 640, 653. (2005).
