Posted by: Elmer Brabante | January 18, 2010

Oñate vs. Abrogar, GR No. 107303 [Feb. 21, 1994]


EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION vs. HON. ZUES C. ABROGAR and SUN LIFE ASSURANCE COMPANY OF CANADA

G.R. No. 107303

February 21, 1994

FACTS:

On December 23, 1991, respondent Sun Life Assurance Company of Canada (Sun Life) 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 at 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, which 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 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 in Makati but was not able to do so since there was no responsible officer to receive the same. 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) 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.

On January 30, 1992, petitioners and their co-defendants filed a memorandum in support of the motion to 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, (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 6, 1992 order. On September 6, 1992, respondent Judge denied the motion for reconsideration.

ISSUES:

  1. whether or not respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in 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. whether or not respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in allowing the examination of the bank records though no notice was given to them.

HELD:

Both petitions unmeritorious.

I.

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. The rationale behind this rule was stated by the Court in this wise:

A preliminary attachment may be defined 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 above-pointed 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.

Petitioners’ contention that the writ should have been discharged since the ground on which it was issued (fraud in contracting the obligation) was not present cannot be considered a ground for lifting the writ since this delves into the very complaint of the Sun Life.

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.

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. 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.

But 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 plaintiffs 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. 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.

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.

It is clear from the provision of Section 10, Rule 57 (ROC) 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.

Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, (Bank Deposits Secrecy Law) for Section 2 therefor provides an exception “in cases where the money deposited or invested is the subject matter of the litigation.”

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.

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Responses

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