February 1994 - Philippine Supreme Court Decisions/Resolutions
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G.R. No. 107303 February 21, 1994 - EMMANUEL C. OÑATE, ET AL. v. ZUES C. ABROGAR:
SECOND DIVISION
[G.R. No. 107303. February 21, 1994.]
EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, Petitioners, v. HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, Respondents.
[G.R. No. 107491. February 21, 1994.]
BRUNNER DEVELOPMENT CORPORATION, Petitioner, v. HON. ZUES C. ABROGAR, Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, Respondents.
D E C I S I O N
NOCON, J.:
These are separate petitions for certiorari with a prayer for temporary restraining order filed by Emmanuel C. Oñate and Econ Holdings Corporation (in G.R. No. 107303), and Brunner Development Corporation (in G.R. No. 107491), both of which assail several orders issued by respondent Judge Zues C. Abrogar in Civil Case No. 91-3506.chanrobles virtual lawlibrary
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners, and Noel L. Diño, which was docketed as Civil Case No. 91-3506 and raffled to Branch 150 of the RTC Makati, presided over by respondent Judge. The following day, December 24, 1991, respondent Judge issued an order granting the issuance of a writ of attachment, and the writ was actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life’s ex-parte motion, the trial court amended the writ of attachment to reflect the alleged amount of the indebtedness. That same day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the amended writ of attachment upon petitioners at their known office address at 108 Aguirre St., Makati but was not able to do so since there was no responsible officer to receive the same. 1 Nonetheless, Sheriff Flores proceeded, over a period of several days, to serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Oñate.
Summons was eventually served upon petitioners on January 9, 1992, while defendant Diño was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed an ex-parte motion to examine the books of accounts and ledgers of petitioner Brunner Development Corporation (Brunner, for brevity) at the Urban Bank, Legaspi Village Branch, and to obtain copies thereof, which motion was granted by respondent Judge. The examination of said account took place on January 23, 1992. Petitioners filed a motion to nullify the proceedings taken thereat since they were not present.chanrobles virtual lawlibrary
On January 30, 1992, petitioners and their co-defendants filed a memorandum in support of the motion of discharge attachment. Also on that same day, Sun Life filed another motion for examination of bank accounts, this time seeking the examination of Account No. 0041-0277-03 with the Bank of Philippine Islands (BPI) — which, incidentally, petitioners claim not to be owned by them — and the records of Philippine National Bank (PNB) with regard to checks payable to Brunner. Sun Life asked the court to order both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying petitioners’ and the co-defendants’ motion to discharge the amended writ of attachment, (2) approving Sun Life’s additional attachment bond, (3) granting Sun Life’s motion to examine the BPI account, and (4) denying petitioners’ motion to nullify the proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the February, 1992 order. On September 6, 1992, respondent Judge denied the motion for reconsideration.
Hence, the instant petitions. Petitioners’ basic argument is that respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in (1) issuing ex parte the original and amended writs of preliminary attachment and the corresponding notices of garnishment and levy on attachment since the trial court had not yet acquired jurisdiction over them; and (2) allowing the examination of the bank records though no notice was given to them.chanrobles law library
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun Life’s prayer for a writ of preliminary attachment on the ground that the trial court had not acquired jurisdiction over them. This argument is clearly unavailing since it is well-settled that a writ of preliminary attachment may be validly applied for and granted even before the defendant is summoned or is heard from. 2 The rationale behind this rule was stated by the Court in this wise:chanrobles lawlibrary : rednad
"A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other proper party may, at the commencement of the action or any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant.
"Rule 57 in fact speaks of the grant of the remedy ‘at the commencement of the action or at any time thereafter.’ The phrase ‘at the commencement of the action,’ obviously refers to the date of the filing of the complaint — which, as abovepointed out, is the date that marks ‘the commencement of the action;’ and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced — by the filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counterclaim cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. 3
Petitioners then contend that the writ should have been discharged since the ground on which it was issued — fraud in contracting the obligation — was not present. This cannot be considered a ground for lifting the writ since this delves into the very complaint of the Sun Life. As this Court stated in Cuatro v. Court of Appeals: 4
"Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicant’s cause of action in the main case since an anomalous situation would result if the issues of the main case would be ventilated and resolved in a mere hearing of the motion (Davao Light and Power Co., Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank) v. Court of Appeals, 197 SCRA 663 [1991]).
"In the present case, one of the allegation in petitioner’s complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B"). The issue of fraud, then, is clearly within the competence of the lower court in the main action. 5
The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati on April 21, 1992 and was upheld by the Provincial Prosecutor on July 13, 1992 is of no moment since the same can be indicative only of the absence of criminal liability, but not of civil liability. Besides, Sun Life had elevated the case for review to the Department of Justice, where the case is presently pending.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
Finally, petitioners argue that the enforcement of the writ was invalid since it undisputedly preceded the actual service of summons by six days at most. Petitioners cite the decisions in Sievert v. Court of Appeals, Et. Al. 6 and BAC Manufacturing and Sales Corp. v. Court of Appeals, Et Al., 7 wherein this Court held that enforcement of the writ of attachment can not bind the defendant in view of the failure of the trial court to acquire jurisdiction over the defendant through either summons or his voluntary appearance.
We do not agree entirely with petitioners. True, this Court had held in a recent decision that the enforcement of writ of attachment may not validly be effected until and unless proceeded or contemporaneously accompanied by service of summons. 8
But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases. In those two cases, summons was never served upon the defendants. The plaintiffs therein did not even attempt to cause service of summons upon the defendants, right up to the time the cases went up to this Court. This is not true in the case at bar. The records reveal that Sheriff Flores and Sun Life did attempt a contemporaneous service of both summons and the writ of attachment on January 3, 1992, but were stymied by the absence of a responsible officer in petitioners’ offices. Note is taken of the fact that petitioners Oñate and Econ Holdings admitted in their answer 9 that the offices of both Brunner Development Corporation and Econ Holdings were located at the same address and that petitioner Oñate is the President of Econ Holdings while petitioner Diño is the President of Brunner Development Corporation as well as a stockholder and director of Econ Holdings.chanrobles virtual lawlibrary
Thus, an exception to the established rule on the enforcement of the writ of attachment can be made where a previous attempt to serve the summons and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server, provided that such service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a possibility that a defendant, having been alerted of plaintiff’s action by the attempted service of summons and the writ of attachment, would put his properties beyond the reach of the plaintiff while the latter is trying to serve the summons and the writ anew. By the time the plaintiff may have caused the service of summons and the writ, there might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six days later. To nullify the notices of garnishment issued prior thereto would again open the possibility that petitioners would transfer the garnished monies while Sun Life applied for new notices of garnishment.
Third, the ease by which a writ of attachment can be obtained is counter-balanced by the ease by which the same can be discharged: the defendant can either make a cash deposit or post a counter-bond equivalent to the value of the property attached. 10 The petitioners herein tried to have the writ of attachment discharged by posting a counter-bond, the same was denied by respondent Judge on the ground that the amount of the counter-bond was less than that of Sun Life’s bond.chanrobles virtual lawlibrary
Petitioners’ second ground assail the acts of respondent Judge in allowing the examination of Urban Banks’ records and in ordering that the examination of the bank records of BPI and PNB as invalid since no notice of said examinations were ever given them. Sun Life grounded its requests for the examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, which provided, to wit:jgc:chanrobles.com.ph
"Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer. — Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk or court, sheriff, or other proper officer on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action."cralaw virtua1aw library
It is clear from the foregoing provision that notice need only be given to the garnishee, but the person who is holding property or credits belonging to the defendant. The provision does not require that notice be furnished the defendant himself, except when there is a need to examine said defendant "for the purpose of giving information respecting his property.chanrobles lawlibrary : rednad
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits With Any Banking Institution and Providing Penalty Therefore," for Section 2 therefore provides an exception "in cases where the money deposited or invested is the subject matter of the litigation."cralaw virtua1aw library
The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the proceeds of the check it paid to petitioners.cralawnad
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining order issued on June 28, 1993 is hereby lifted.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners, and Noel L. Diño, which was docketed as Civil Case No. 91-3506 and raffled to Branch 150 of the RTC Makati, presided over by respondent Judge. The following day, December 24, 1991, respondent Judge issued an order granting the issuance of a writ of attachment, and the writ was actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life’s ex-parte motion, the trial court amended the writ of attachment to reflect the alleged amount of the indebtedness. That same day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the amended writ of attachment upon petitioners at their known office address at 108 Aguirre St., Makati but was not able to do so since there was no responsible officer to receive the same. 1 Nonetheless, Sheriff Flores proceeded, over a period of several days, to serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Oñate.
Summons was eventually served upon petitioners on January 9, 1992, while defendant Diño was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed an ex-parte motion to examine the books of accounts and ledgers of petitioner Brunner Development Corporation (Brunner, for brevity) at the Urban Bank, Legaspi Village Branch, and to obtain copies thereof, which motion was granted by respondent Judge. The examination of said account took place on January 23, 1992. Petitioners filed a motion to nullify the proceedings taken thereat since they were not present.chanrobles virtual lawlibrary
On January 30, 1992, petitioners and their co-defendants filed a memorandum in support of the motion of discharge attachment. Also on that same day, Sun Life filed another motion for examination of bank accounts, this time seeking the examination of Account No. 0041-0277-03 with the Bank of Philippine Islands (BPI) — which, incidentally, petitioners claim not to be owned by them — and the records of Philippine National Bank (PNB) with regard to checks payable to Brunner. Sun Life asked the court to order both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying petitioners’ and the co-defendants’ motion to discharge the amended writ of attachment, (2) approving Sun Life’s additional attachment bond, (3) granting Sun Life’s motion to examine the BPI account, and (4) denying petitioners’ motion to nullify the proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the February, 1992 order. On September 6, 1992, respondent Judge denied the motion for reconsideration.
Hence, the instant petitions. Petitioners’ basic argument is that respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in (1) issuing ex parte the original and amended writs of preliminary attachment and the corresponding notices of garnishment and levy on attachment since the trial court had not yet acquired jurisdiction over them; and (2) allowing the examination of the bank records though no notice was given to them.chanrobles law library
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun Life’s prayer for a writ of preliminary attachment on the ground that the trial court had not acquired jurisdiction over them. This argument is clearly unavailing since it is well-settled that a writ of preliminary attachment may be validly applied for and granted even before the defendant is summoned or is heard from. 2 The rationale behind this rule was stated by the Court in this wise:chanrobles lawlibrary : rednad
"A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional remedy in virtue of which a plaintiff or other proper party may, at the commencement of the action or any time thereafter, have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant.
"Rule 57 in fact speaks of the grant of the remedy ‘at the commencement of the action or at any time thereafter.’ The phrase ‘at the commencement of the action,’ obviously refers to the date of the filing of the complaint — which, as abovepointed out, is the date that marks ‘the commencement of the action;’ and the reference plainly is to a time before summons is served on the defendant, or even before summons issues. What the rule is saying quite clearly is that after an action is properly commenced — by the filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may do so at any time, either before or after service of summons on the defendant. And this indeed, has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counterclaim cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. 3
Petitioners then contend that the writ should have been discharged since the ground on which it was issued — fraud in contracting the obligation — was not present. This cannot be considered a ground for lifting the writ since this delves into the very complaint of the Sun Life. As this Court stated in Cuatro v. Court of Appeals: 4
"Moreover, an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicant’s cause of action in the main case since an anomalous situation would result if the issues of the main case would be ventilated and resolved in a mere hearing of the motion (Davao Light and Power Co., Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp. (Solidbank) v. Court of Appeals, 197 SCRA 663 [1991]).
"In the present case, one of the allegation in petitioner’s complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B"). The issue of fraud, then, is clearly within the competence of the lower court in the main action. 5
The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati on April 21, 1992 and was upheld by the Provincial Prosecutor on July 13, 1992 is of no moment since the same can be indicative only of the absence of criminal liability, but not of civil liability. Besides, Sun Life had elevated the case for review to the Department of Justice, where the case is presently pending.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
Finally, petitioners argue that the enforcement of the writ was invalid since it undisputedly preceded the actual service of summons by six days at most. Petitioners cite the decisions in Sievert v. Court of Appeals, Et. Al. 6 and BAC Manufacturing and Sales Corp. v. Court of Appeals, Et Al., 7 wherein this Court held that enforcement of the writ of attachment can not bind the defendant in view of the failure of the trial court to acquire jurisdiction over the defendant through either summons or his voluntary appearance.
We do not agree entirely with petitioners. True, this Court had held in a recent decision that the enforcement of writ of attachment may not validly be effected until and unless proceeded or contemporaneously accompanied by service of summons. 8
But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases. In those two cases, summons was never served upon the defendants. The plaintiffs therein did not even attempt to cause service of summons upon the defendants, right up to the time the cases went up to this Court. This is not true in the case at bar. The records reveal that Sheriff Flores and Sun Life did attempt a contemporaneous service of both summons and the writ of attachment on January 3, 1992, but were stymied by the absence of a responsible officer in petitioners’ offices. Note is taken of the fact that petitioners Oñate and Econ Holdings admitted in their answer 9 that the offices of both Brunner Development Corporation and Econ Holdings were located at the same address and that petitioner Oñate is the President of Econ Holdings while petitioner Diño is the President of Brunner Development Corporation as well as a stockholder and director of Econ Holdings.chanrobles virtual lawlibrary
Thus, an exception to the established rule on the enforcement of the writ of attachment can be made where a previous attempt to serve the summons and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server, provided that such service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a possibility that a defendant, having been alerted of plaintiff’s action by the attempted service of summons and the writ of attachment, would put his properties beyond the reach of the plaintiff while the latter is trying to serve the summons and the writ anew. By the time the plaintiff may have caused the service of summons and the writ, there might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six days later. To nullify the notices of garnishment issued prior thereto would again open the possibility that petitioners would transfer the garnished monies while Sun Life applied for new notices of garnishment.
Third, the ease by which a writ of attachment can be obtained is counter-balanced by the ease by which the same can be discharged: the defendant can either make a cash deposit or post a counter-bond equivalent to the value of the property attached. 10 The petitioners herein tried to have the writ of attachment discharged by posting a counter-bond, the same was denied by respondent Judge on the ground that the amount of the counter-bond was less than that of Sun Life’s bond.chanrobles virtual lawlibrary
II.
Petitioners’ second ground assail the acts of respondent Judge in allowing the examination of Urban Banks’ records and in ordering that the examination of the bank records of BPI and PNB as invalid since no notice of said examinations were ever given them. Sun Life grounded its requests for the examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, which provided, to wit:jgc:chanrobles.com.ph
"Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer. — Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk or court, sheriff, or other proper officer on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action."cralaw virtua1aw library
It is clear from the foregoing provision that notice need only be given to the garnishee, but the person who is holding property or credits belonging to the defendant. The provision does not require that notice be furnished the defendant himself, except when there is a need to examine said defendant "for the purpose of giving information respecting his property.chanrobles lawlibrary : rednad
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits With Any Banking Institution and Providing Penalty Therefore," for Section 2 therefore provides an exception "in cases where the money deposited or invested is the subject matter of the litigation."cralaw virtua1aw library
The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the proceeds of the check it paid to petitioners.cralawnad
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining order issued on June 28, 1993 is hereby lifted.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.
Endnotes:
1. Sheriffs Return, Rollo in G.R. No. 107303, pp. 47-48.
2. Davao Light & Power., Inc. v. Court of Appeals, Et Al., G.R. No. 93262, 204 SCRA 343 (1991); Cuartero v. Court of Appeals, Et Al., G.R. No. 102448, 212 SCRA 260 (1992).
3. Davao Light & Power Co., Inc. v. Court of Appeals, supra, 204 SCRA 343, 349-350. Citations omitted.
4. 212 SCRA 260.
5. Id., at 267.
6. G.R. No. L-84034, 168 SCRA 692 (1988).
7. G.R. No. 96748, 200 SCRA 130 (1991).
8. Id., p. 357.
9. Rollo in G.R. No. 107303, p. 90.
10. Rule 57, sec. 12, Rules of Court.
