Mindanao Savings & Loan Association, Inc. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Private respondents initiated a lawsuit against D.S. Homes, Inc., and its directors, seeking rescission of contract and damages. The complaint was later amended to include petitioners, Mindanao Savings & Loan Association, Inc. (formerly Davao Savings & Loan Association) and its president, Francisco Villamor, as additional defendants. The trial court issued an ex parte writ of preliminary attachment against all named defendants, including the petitioners. 2. Procedural History: Following the issuance of an amended order of attachment against them, petitioners Mindanao Savings & Loan Association, Inc. and Francisco Villamor filed a motion to quash the writ, which was denied by the trial court. Subsequently, they filed a petition for certiorari with the Court of Appeals, seeking to annul the order of attachment and the denial of their motion. The Court of Appeals dismissed their petition, holding that objections to the writ could no longer be invoked after a counterbond was filed for its dissolution and that the merits of the main action were not triable in a motion to quash. 3. The Petition: Petitioners Mindanao Savings & Loan Association, Inc. and Francisco Villamor seek review of the Court of Appeals' decision before this Court. They contend that the trial court erred in issuing the ex parte orders of preliminary attachment and in denying their motion to quash the writ. The petition argues that the appellate court's ruling was contrary to law and established jurisprudence regarding the issuance and quashing of attachment writs.
Issue(s)
Whether the Court of Appeals erred in holding that objections against the writ of attachment may no longer be invoked once a counterbond is filed, particularly when the ground for the issuance of the writ is also the core of the complaint. Whether the trial court acted in excess of its jurisdiction in issuing the ex parte orders of preliminary attachment and in denying the motion to quash; and whether after procuring the dissolution of an attachment by filing a counterbond, a defendant can ask for the cancellation of the counterbond on the ground that the order of attachment was improperly issued.
Ruling
The Supreme Court denied the petition for review for lack of merit, affirming the decision of the Court of Appeals. The Court held that objections to the impropriety or irregularity of a writ of attachment may no longer be invoked once a counterbond has been filed for its dissolution, especially when the grounds for the issuance of the writ form the core of the complaint, which can only be determined after a full trial on the merits.
Ratio Decidendi
On the issue of whether objections against the writ of attachment may no longer be invoked once a counterbond is filed: The Supreme Court reiterated that the only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of the Rules of Court are the affidavit and bond of the applicant. No notice to the adverse party or hearing of the application is required, as a hearing would defeat the purpose of this provisional remedy by allowing the defendant to abscond or dispose of property. However, a motion to quash the writ may not be granted without reasonable notice to the applicant and after hearing, as provided in Sections 12 and 13 of Rule 57. The Court affirmed the ruling of the Court of Appeals that objections to the impropriety or irregularity of the writ of attachment "may no longer be invoked once a counterbond is filed," particularly when the ground for the issuance of the writ is also the core of the complaint. This is because the filing of a counterbond effectively discharges the writ, rendering a subsequent motion to quash pointless. Furthermore, when the grounds for attachment are intertwined with the merits of the main case, the entitlement to the writ can only be determined after a full-blown trial. On the issue of whether the trial court acted in excess of its jurisdiction; and whether a defendant can ask for cancellation of a counterbond: The Court found no reversible error in the Court of Appeals' decision. The Court emphasized that the merits of a main action are not triable in a motion to discharge an attachment, as doing so would allow an applicant for dissolution to force a trial on the merits prematurely. This principle was established in G.B. Inc. vs. Sanchez, 98 Phil. 886. The Court also clarified that after procuring the dissolution of an attachment by filing a counterbond, a defendant cannot ask for the cancellation of the counterbond on the ground that the order of attachment was improperly issued. The obligors in the bond are absolutely liable for any judgment the plaintiff may recover, irrespective of whether the attachment was rightfully or wrongfully issued, as held in Uy Kimpang vs. Javier, 65 Phil. 170. The liability of the surety on the counterbond subsists until the Court finally absolves the defendant from the plaintiff's claims.
Main Doctrine
Objections against the propriety or irregularity of a writ of preliminary attachment may no longer be invoked once a counterbond has been filed for its dissolution, especially when the grounds for the issuance of the writ form the core of the complaint, necessitating a trial on the merits.