Philippine Supreme Court Jurisprudence

This is a Petition for Review¹ under Rule 45 of the Rules of Court of the Decision² dated April 28, 2016 and Resolution³ dated July 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 126282. The CA affirmed the Order dated July 10, 2012 of Branch 59, Regional Trial Court (RTC), Makati City in Civil Case No. 12-282 that denied the Urgent Motion to Quash Writ of Attachment with Damages⁴ of Burgundy Realty Corporation (Burgundy), Rogelio T. Serafica (Serafica) and Luis G. Nakpil (Nakpil) (collectively, petitioners).

Antecedents

MAA General Assurance Phils., Inc. (MAA) filed a Complaint (with Very Urgent Prayer for Issuance of Writ Preliminary Attachment)⁵ dated March 30, 2012 against Burgundy, Serafica and Nakpil for recovery of P25,000,000.00 plus interest, attorney's fees, and liquidated damages.⁶

In its complaint, MAA alleged that on April 5, 2007, Burgundy entered into a Short Term Loan Agreement whereby Chinatrust Commercial Banking Corporation (Chinatrust) granted Burgundy a loan of P50,000,000.00 payable within two years.⁷

Thus, MAA alleged that sometime in the early part of 2008, Burgundy applied for a surety bond with MAA to serve as partial guarantee for the Short Term Loan Agreement. Burgundy then issued Surety Bond MAAGAP No. 755 in the amount of P25,000,000.00. For and in consideration of the surety agreement, petitioners executed an Indemnity Agreement whereby petitioners obligated themselves to, among other obligations, indemnify MAA and keep it indemnified for, and hold and save it harmless from all damages, payments, advances, losses, costs, stamps, taxes, penalties, charges, attorney's fees, and expenses for having become surety under Surety Bond MAAGAP No. 755. MAA alleged that Serafica and Nakpil signed the Indemnity Agreement both in their official and personal capacities.⁸

Considering petitioners' representations, MAA was led to believe that there was no more need for petitioners to post a collateral or security to ensure faithful performance of their obligations under the Indemnity Agreement. However, petitioners' representations turned out to be empty assurances and mere deceptions.⁹

Subsequently, Chinatrust wrote MAA a series of demand letters for the payment of P25,000,000.00. MAA then sent advice letters to petitioners, but the latter ignored the letters. Thus, Chinatrust eventually filed a complaint for sum of money against MAA before Branch 143, RTC, Makati City which ordered MAA to pay Chinatrust P25,000,000.00 plus interest. MAA paid Chinatrust P25,000,000.00. In exchange, Chinatrust executed a Deed of Assignment to MAA assigning to the latter the Promissory Note, which was previously executed by Burgundy in favor of Chinatrust.¹⁰

Thus, MAA sent demand letters to petitioners for the payment of P25,000,000.00 and other claims under the Indemnity Agreement. Subsequently, MAA and Serafica agreed on January 21, 2012 that Serafica would settle the P25,000,000.00 plus reasonable expenses within six months. In turn, MAA will put on hold the filing of a court action within the agreed period. The parties also agreed that Burgundy shall submit and turnover the original titles of the condominium units registered under its name.¹¹

However, what petitioners offered as guaranty in its letter were properties which were neither condominium units nor registered in petitioner Burgundy's name contrary to what was discussed in the January 21, 2012 meeting. Thus, MAA wrote petitioners a letter requesting the latter to complete the following within 10 days from receipt of the letter: (1) submission of acceptable original transfer certificates of title of the condominium units annotated in favor of MAA; (2) memorandum of agreement for the full settlement of the obligation within the agreed period; and (3) forwarding of postdated checks covering the six-month settlement upon signing of the memorandum of agreement. In reply, petitioners proposed to assign to MAA two years' worth of rental income derived from a unit in Burgundy Corporate Tower in the amount of P6,000,000.00, while the balance of P19,000,000.00 will be paid before the year 2014. But for MAA, this would lengthen the payment of the obligation to 24 months without any guaranty, contrary to the six-month period that they originally agreed upon.¹²

Thus, MAA filed a complaint with an application for an ex parte issuance of a writ of attachment over the leviable properties of petitioners. MAA asserted that petitioners committed fraud in incurring the obligation subject of the complaint which warranted the grant of preliminary attachment pursuant to Section 1(d), Rule 57 of the Rules of Court. MAA further averred that there was no sufficient security for its claim.¹³

In its Order dated April 17, 2012, the RTC granted MAA's application, and issued a Writ of Preliminary Attachment¹⁴ on April 26, 2012 upon the posting of MAA's bond. The sheriff then served and implemented the writ against the real properties of petitioners.¹⁵

Petitioners then filed their Urgent Motion to Quash Writ of Attachment with Damages. They argued that without notice of hearing, the RTC illegally, irregularly, and improvidently issued the writ of attachment since MAA was allowed to present ex parte evidence on its allegations in the Urgent Motion for Issuance of Preliminary Attachment with Damages. Further, MAA failed to establish the existence of any grounds for attachment under Section 1, Rule 57 of the Rules of Court.¹⁶

MAA then filed its Vehement Comment/Opposition to petitioners' Urgent Motion to Quash Writ of Attachment with Damages.¹⁷

RTC Ruling

In its Order dated July 10, 2012, the RTC denied petitioners' Urgent Motion to Quash Writ of Attachment with Damages for lack of merit.¹⁸

Thus, petitioners filed a petition for certiorari with the CA which was docketed as CA-G.R. SP No. 126282.

CA Ruling

Pending the proceedings before the CA and prior to the filing of the parties' respective Memoranda, MAA manifested on August 17, 2015 that the RTC already rendered its Decision dated July 9, 2015 in the main action for sum of money and damages.¹⁹

In the Decision²⁰ dated April 28, 2016, the CA denied the petition for certiorari. It refused to rule on the issue of whether the petition has been rendered moot by the RTC Decision dated July 9, 2015 in the main action for sum of money and damages. It recognized the rule that when the main action is appealed, the attachment which may have been issued as an incident of the action is also considered appealed and removed from the jurisdiction of the court a quo. However, it ruled that while MAA alleged in its Memorandum that it already appealed the RTC Decision dated April 28, 2016 before the CA, it failed to adduce any evidence attesting to its allegation. Further, it explained that a writ of preliminary attachment may be availed of at the commencement of the action or at any time before entry of judgment; that, however, MAA failed to present any proof as to whether there was already an entry of judgment of the RTC Decision.²¹

Still, the CA found no grave abuse of discretion on the part of the RTC when it denied the Urgent Motion to Quash Writ of Attachment.²² It explained that the RTC's pronouncements are supported by law. It further noted that petitioners' pleadings before the CA clearly sought a review of the parties' allegations and proof regarding the purported fraud, and ascribed errors on the RTC in its grasp of evidence both in support of and against the issuance of the writ of preliminary attachment. However, the CA ruled that certiorari will not lie to cure the errors of the RTC in its appreciation of the evidence of the parties, or its conclusions anchored on its findings and conclusions of law.²³

Petitioners filed a Motion for Reconsideration,²⁴ but the CA denied it in its Resolution²⁵ dated July 7, 2016.

Hence, the petition.

The Court�s Ruling

The petition should be denied for being moot.

In Pe�afrancia Sugar Mill, Inc. v. Sugar Regulatory Administration,²⁶ the Court explained when a case or issue is considered as moot; thus:

A case or issue is considered moot and academic when it ceases to present a justiciable controversy by virtue of supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or use. In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which would be negated by the dismissal of the petition. Courts generally decline jurisdiction over such case or dismiss it on the ground of mootness. This is because the judgment will not serve any useful purpose or have any practical legal effect because, in the nature of things, it cannot be enforced.²⁷

In determining the need to resolve the petition, the Court takes judicial notice of its ruling in G.R. No. 243036, which stemmed from and ultimately resolved with finality the main action for sum of money and damages filed by MAA against petitioners.

The Court deems it worthy to recall in brief the antecedents of G.R. No. 243036.

Specifically, the RTC rendered its Decision dated July 9, 2015 in the main action for sum of money and damages in favor of MAA.²⁸ It ordered herein petitioners to jointly and severally pay MAA the following: (1) the amount of P25,000,000.00 representing the amount MAA paid to Chinatrust; (2) interest rate of 12% of the amount claimed from the date of demand on December 19, 2011 until fully paid; (3) attorney's fee of P1,000,000.00; and (4) costs of suit.²⁹ The RTC also denied petitioners' counterclaim for lack of merit.³⁰ The RTC ruled that the issue of whether there was a ground under Section 1(d), Rule 57 of the Rules of Court for the issuance of a writ of preliminary attachment was already resolved in the Order dated April 17, 2012 which granted the application for preliminary attachment.³¹

On August 7, 2015, petitioners elevated the main case through an appeal of the Decision dated July 9, 2015 to the CA.³² This was docketed as CA-G.R. CV No. 105560.³³

Notably, one of petitioners' arguments in CA-G.R. CV No. 105560 was that the writ of preliminary attachment was improperly issued because there existed no ground for issuing it.³⁴

In the Decision³⁵ dated May 23, 2018, the CA in CA-G.R. CV No. 105560 denied the appeal and affirmed the RTC Decision dated July 9, 2015. As to the propriety of the issuance of the writ of preliminary attachment, the CA in its Decision dated May 23, 2018 ruled that MAA was able to substantiate its factual allegation of fraud to warrant the issuance of the writ of preliminary attachment under Section 1 (d),³⁶ Rule 57 of the Rules of Court. The CA discussed:

In both the Indemnity Agreement and the Surety Bond, appellants undertook to indemnify MAA Insurance in case appellants fail to comply with their obligations to Chinatrust under the Term Loan Agreement executed on 05 April 2006, which is payable within two years, or will mature on 04 April 2008. Upon the other hand, the letter-advise, dated 14 April 2009, appeared unheeded by appellants.

The Term Loan Agreement had already matured on 04 April 2008, per Chinatrust's Statement of Account attached to the demand letter of 03 April 2009, when the Indemnity Agreement and the Surety Bond were executed both on 13 May 2008 without any evidence that MAA Insurance knew that appellants had already defaulted with their obligations under the Term Loan Agreement. Yet, appellants still misled MAA Insurance with their assurances that they will comply with their obligations in favor of Chinatrust.

Also, the Judicial Affidavit of Mr. Go, dated 26 March 2013, stated that a copy of the Term Loan Agreement which is payable within two years was submitted to his company by Burgundy in support of the latter�s application for a surety bond. Said application was approved for Php25,000,000.00 and thereafter, appellants issued the indemnity Agreement in favour of MAA Insurance, without requiring the appellants to submit or post a collateral or security because of their categorical representations in the said Indemnity Agreement.

Hence, from this alone, the Court finds that MAA Insurance was able to substantiate its factual allegation of fraud to warrant the issuance of the writ of preliminary attachment under Section 1 (d), Rule 57 of the Rules of Court xxx.³⁷

Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution³⁸ dated November 7, 2018.

Aggrieved, petitioners filed a petition for review on certiorari of the Decision and Resolution of the CA before the Court and docketed as G.R. No. 243036. However, the petition was denied by the Court in its Resolution³⁹ dated March 11, 2019 for lack of reversible error by the CA.

The Court's Resolution dated March 11, 2019 has since attained finality on June 13, 2019 and an Entry of Judgment issued.⁴⁰

Thus, considering that the Court in G.R. No. 243036 had already settled with finality the merits of MAA's claims against petitioners, including the propriety of the issuance of the writ of preliminary attachment, there will be no practical value in resolving the present petition.

In fact, the Court's ruling in G.R. No. 243036 is already res judicata on the present petition.

The doctrine of res judicata refers to the rule that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points and matters determined in the former suit.⁴¹ It rests on the principle that parties should not to be permitted to litigate the same issue more than once; that, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate.⁴²

Res judicata applies in the concept of "bar by prior judgment" if the following requisites concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and the second action, identity of parties, of subject matter, and of causes of action.⁴³

All of the elements of the doctrine of res judicata are present in this case.

As to the first three requisites, the Resolution dated March 11, 2019 in G.R. No. 243036 was rendered by the Court which had competent jurisdiction to decide on the appeal of the Decision dated May 23, 2018 and Resolution dated November 14, 2018 of the CA in CA�G.R. CV No. 105560 that affirmed the RTC Decision dated July 9, 2015 in Civil Case No. 12-282. The Court's denial of the petition with finality in G.R. No. 243036 is also a judgment on the merits.

As to the fourth requisite, the parties involved in G.R. No. 243036 are the same parties involved in the present case. Further, while G.R. No. 243036 originated from CA-G.R. CV No. 105560 which involved an appeal of the RTC Decision dated July 9, 2015, Civil Case No. 12-282, and while the present petition originated from CA-G.R. SP No. 126282 which involved a petition for certiorari of the RTC Order dated July 10, 2012 in Civil Case No. 12-282, in both cases, petitioners questioned the propriety of the RTC's issuance of the writ of preliminary attachment. Apparently, petitioners raised the issue of the writ of preliminary attachment in G.R. No. 243036 despite the pendency of the present petition questioning the propriety of the RTC's issuance of a writ of preliminary attachment in Civil Case No. 12-282.

Thus, considering that the only issue in CA-G.R. SP No. 126282, and consequently, the present petition, is the propriety of the issuance of the writ of attachment, a subsequent resolution of that issue already resolved by the Court in G.R. No. 243036 is conclusive on and bars the resolution of the present petition.

Considering the foregoing, the Court does not find the need to resolve the other issues in this case.

WHEREFORE, the petition is DENIED for being MOOT.

SO ORDERED.

Perlas-Bernabe, S.A.J., (Chairperson), A. Reyes, Jr., Carandang,^** and Delos Santos, JJ., concur.

chanroblesvirtuallawlibrary

Endnotes:

^* Rogelio T. Serafica and Luis G. Nakpil are both represented by Yvonne G. Bautista, rollo, p. 10

^** Designated additional Member per Raffle dated February 10, 2020 in lieu of Associate Justice Ramon Paul L. Hernando (now a member of the Court).

¹Rollo (G.R. No. 225610), pp. 9-23.

²Id. at 26-33; penned by Associate Justice Ramon Paul L. Hernando (now a member of the Court) with Associate Justices Jose C. Reyes, Jr. (now a member of the Court) and Stephen C. Cruz, concurring.

³Id. at 35-36.

⁴Id. at 58-66.

⁵Id. at 70-89.

⁶Id. at 26-27.

⁷Id. at 27.

⁸Id.

⁹Id.

¹⁰Id.

¹¹Id.

¹²Id. at 28.

¹³Id.

¹⁴Id. at 50-51.

¹⁵Id. at 28.

¹⁶Id. at 28-29.

¹⁷Id. at 29.

¹⁸Id.

¹⁹Id. at 29-30.

²⁰Id. at 26-33.

²¹Id. at 30.

²²Id.

²³Id. at 31-32.

²⁴Id. at 40-45.

²⁵Id. at 35-36.

²⁶ 728 Phil. 535, 540 (2014).

²⁷Id. Citations omitted.

²⁸Rollo (G.R. No. 243036), p. 36.

²⁹Id.

³⁰Id.

³¹Rollo (G.R. No. 225610), p. 125.

³²Rollo (G.R. No. 243036), p. 36.

³³Id. at 32.

³⁴Id. at 36-38.

³⁵Id. at 32-44.

³⁶ 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:

x x x x
(d) In an action against a party who has been guilty of a 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;
x x x x

³⁷Rollo (G.R. No. 243036), pp. 39-40.

³⁸Id. at 52-53.

³⁹Id. at 70.

⁴⁰Id. at 71.

⁴¹Degayo v Magbanua-Dinglasan, et al., 757 Phil. 376, 382 (2015), citing Gutierrez v. Court of Appeals, 271 Phil. 463, 465 (1991).

⁴²Id., citing Philippine National Bank v. Barreto, et al. 52 Phil. 818 (1929); Escudero, et al. v Flores, et al., 97 Phil. 240 (1955); Navarro v. Director of Lands, 115 Phil. 824 (1962).

⁴³Diaz, Jr. v. Valenciano, Jr., G.R. No. 209376, December 6, 2017, 848 SCRA 85, 96.