China Banking v. Asian Construction
NEW DOCTRINEFacts
The Antecedents: China Banking Corporation (China Bank) granted Asian Construction and Development Corporation (ACDC) an Omnibus Credit Line. China Bank later filed a complaint against ACDC for recovery of sum of money and damages, alleging that ACDC misappropriated funds collected from construction contracts assigned to China Bank. A writ of preliminary attachment was issued, leading to the levy of ACDC's personal properties. The Regional Trial Court (RTC) issued a Summary Judgment in favor of China Bank, which ACDC appealed. Procedural History: China Bank filed a motion to take custody and sell the attached properties, which ACDC opposed, arguing that a final and executory judgment was necessary. The Court of Appeals (CA) denied China Bank's subsequent motion for authority to sell the attached properties, holding that such sale prior to final judgment was premature and contrary to the purpose of preliminary attachment, as the properties were not perishable and their preservation was important for ACDC in case the decision was reversed. The CA denied China Bank's motion for reconsideration. The Petition: China Bank filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's Resolutions denying its motion to sell the attached properties. China Bank argued that the CA's interpretation of 'perishable property' was too strict and that equity demanded the sale of the properties to prevent depreciation.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying the motion for authority to sell the attached properties. Whether the attached properties, consisting of vehicles, machinery, equipment, and office furniture, can be considered "perishable property" or if their sale before judgment would subserve the interests of all parties under Section 11, Rule 57 of the Rules of Court.
Ruling
The petition is DENIED. The assailed Resolutions of the Court of Appeals dated October 14, 2002 and May 16, 2003 are AFFIRMED.
Ratio Decidendi
On the Propriety of the Remedy (Related to Issue 1): The Court held that the assailed CA Resolutions were interlocutory in nature, as they did not completely dispose of the case. Therefore, the proper remedy should have been a special civil action for certiorari under Rule 65, not a petition for review on certiorari under Rule 45. However, the Court has, in numerous instances, treated a Rule 45 petition as a Rule 65 petition when warranted, particularly when issues of jurisdiction or grave abuse of discretion are involved. In this case, the Court noted that the petition did not involve any issue on jurisdiction, nor did it sufficiently demonstrate that the CA committed grave abuse of discretion. On the Sale of Attached Property, Nature of Properties, and the Bond (Related to Issue 2): The Court reiterated that Section 11, Rule 57 of the Rules of Court allows the sale of attached property before judgment if it is perishable or if the interests of all parties will be subserved by the sale. The Court noted that the determination of whether the attached vehicles were properly cared for, or whether the office furniture and equipment were likely to become worthless, are factual issues. Such factual determinations require the reception of evidence, which is beyond the scope of a certiorari proceeding. The Court emphasized that it does not make findings of facts, especially on evidence raised for the first time on appeal, such as the photographs of the attached properties presented by China Bank in its petition. The Court examined foreign jurisprudence regarding the definition of "perishable property." While acknowledging China Bank's argument that the attached properties were exposed to the elements and thus subject to depreciation, the Court found no evidence submitted to substantiate these claims before the CA. The Court distinguished the case from situations where properties are inherently prone to rapid decay or where the expense of keeping them outweighs their value. The Court found that the arguments presented by China Bank regarding the potential depreciation of the properties were speculative and did not sufficiently establish that the sale was necessary to subserve the interests of all parties. The Court clarified that the bond posted by China Bank under Section 4, Rule 57 of the Rules of Court answers only for damages sustained by ACDC if China Bank is found not entitled to the attachment. It does not cover damages arising from the sale of attached properties prior to final judgment. Therefore, China Bank's argument that ACDC could claim damages from the bond if it prevailed in the main case was found to be specious and misplaced in the context of seeking the sale of attached properties.
Main Doctrine
A petition for review on certiorari under Rule 45 is not the proper remedy to assail an interlocutory order; a special civil action for certiorari under Rule 65 is the appropriate remedy. However, the Court may treat a Rule 45 petition as a Rule 65 petition if grave abuse of discretion amounting to lack or excess of jurisdiction is alleged and proven. The sale of attached property before judgment under Section 11, Rule 57 of the Rules of Court requires proof that the property is perishable or that the interests of all parties will be subserved by the sale, which are factual issues not ordinarily resolved in a certiorari proceeding.