Jardine-Manila Finance, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Jardine-Manila Finance, Inc. (JARDINE) filed a complaint against Impact Corporation (IMPACT) and its officers Ricardo and Eduardo de Leon to collect P1,000,212.64 plus interest and attorney's fees. IMPACT had assigned receivables to JARDINE, with the agreement that IMPACT would collect them and remit the proceeds to JARDINE or repurchase the receivables. IMPACT allegedly collected the receivables but failed to remit the amounts to JARDINE. Procedural History: JARDINE applied for a writ of preliminary attachment, alleging that IMPACT and the de Leons had a mental reservation not to remit the proceeds and that they had no other sufficient security for the claim. The trial court granted the writ. The defendants moved to set aside the writ, arguing that the grounds were not among those specified in Rule 57, that they had other sufficient security, that there was no affidavit of merit, and that the verification was defective. The trial court denied the motion. The defendants then filed a petition for certiorari with the Court of Appeals. The Petition: The Court of Appeals annulled the writ of attachment, finding that while the allegations in the complaint made out a case of conversion, the application for attachment failed to allege that there was no sufficient security for the claim and that the amount due was as much as the sum for which the order was granted, above all legal counterclaims, as required by Section 3 of Rule 57. Jardine-Manila Finance, Inc. filed a petition for review on certiorari with the Supreme Court.
Issue(s)
Whether the Court of Appeals erred in annulling the writ of preliminary attachment. Whether the failure to strictly comply with the formal requirements of Section 3, Rule 57 of the Rules of Court invalidates a writ of preliminary attachment.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, declaring the writ of attachment null and void.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in annulling the writ of preliminary attachment: The Supreme Court held that the Court of Appeals did not err in annulling the writ of preliminary attachment. While the allegations in the complaint proper, which were repleaded in the application for attachment, did establish a cause of action for conversion or misappropriation of property held in trust, the application itself was deficient. Specifically, it failed to allege two crucial requisites mandated by Section 3 of Rule 57 of the Rules of Court. These requisites are that "there is no sufficient security for the claim sought to be enforced by the action" and that "the amount due to the applicant or the value of the property on the basis of which he is entitled to recover, is as much as the sum for which the order is granted above all legal counterclaims." The absence of these specific allegations rendered the issuance of the writ improper and irregular. On the issue of whether the failure to strictly comply with the formal requirements of Section 3, Rule 57 of the Rules of Court invalidates a writ of preliminary attachment: The Supreme Court reiterated that the authority to issue an attachment is based on express statutory provisions and must be strictly construed. Section 3 of Rule 57 explicitly outlines the requirements for an order of attachment to be granted, including the necessity of alleging in an affidavit that a sufficient cause of action exists, that the case is one of those mentioned in Section 1, that there is no sufficient security for the claim, and that the amount due is as much as the sum for which the order is granted above all legal counterclaims. The Court emphasized that the failure to allege these requisites renders the writ fatally defective, and the judge issuing it is deemed to have acted in excess of jurisdiction. Such defects cannot even be cured by amendment. The Court distinguished the present case from De Borja v. Platon, where the trial court had already considered evidence from both sides, unlike in this case where the writ was issued ex parte before the answer was filed and the court had no basis to conclude that the amount due was above all legal counterclaims.
Main Doctrine
The stringent requirements for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of the Rules of Court must be strictly complied with, and failure to allege the necessary requisites renders the writ fatally defective and the judge issuing it to have acted in excess of jurisdiction.