Metro v. Lara's Gifts
REITERATIONFacts
1. The Antecedents: Lara's Gifts and Decors, Inc. (LGD) and Metro, Inc. are corporations involved in exporting handicrafts. In 2001, LGD, through its officers Luis Villafuerte, Jr. and Lara Maria R. Villafuerte, and Metro, Inc., through its officers Frederick Juan and Liza Juan, entered into an agreement. This agreement stipulated that LGD would endorse purchase orders from its US buyers to Metro, Inc. in exchange for a 15% commission, to be shared equally by LGD and its agent, James R. Paddon. The terms were later formalized in an e-mail referred to as the "2001 Agreement." 2. Procedural History: In May 2003, LGD and the Villafuertes filed a complaint against Metro, Inc. and the Juans with the Regional Trial Court (RTC) of Las Piñas City, alleging fraud and seeking damages and a writ of preliminary attachment. The RTC initially granted the writ of attachment. However, the RTC later granted Metro, Inc. and the Juans' motion to discharge the writ, finding insufficient evidence of fraud. LGD and the Villafuertes moved for reconsideration, which was denied. They then filed a petition for certiorari with the Court of Appeals (CA), arguing that the RTC gravely abused its discretion by discharging the writ without requiring a counter-bond. The CA granted the petition, annulling the RTC's orders and allowing the discharge of the writ only upon the posting of a counter-bond. The CA subsequently denied the motion for reconsideration. 3. The Petition: Metro, Inc. and the Juans filed this petition for review under Rule 45 of the Rules of Court, challenging the CA's decision. They contend that the writ of attachment was improperly issued and therefore should be dischargeable without a counter-bond. They argue that the amended complaint did not sufficiently allege specific acts of fraud and that their case was primarily for the collection of sums of money and damages, not an action based on fraud. They seek to overturn the CA's ruling that the writ could only be dissolved by posting a counter-bond.
Issue(s)
Whether the writ of attachment issued by the trial court was improperly issued such that it may be discharged without the filing of a counter-bond. Whether the allegations of fraud in the amended complaint were sufficient to support the issuance of the writ of preliminary attachment.
Ruling
The petition is denied. The Decision and Resolution of the Court of Appeals are affirmed. The writ of attachment can only be dissolved by posting a counter-bond.
Ratio Decidendi
On the propriety of discharging the writ of attachment without a counter-bond: The Supreme Court affirmed the ruling of the Court of Appeals. The Court reiterated the principle that when a writ of attachment is issued upon a ground which is also the applicant's cause of action, the writ can only be dissolved by posting a counter-bond as provided under Section 12, Rule 57 of the Rules of Court. The Court found that in this case, fraud was not only alleged as the ground for the issuance of the writ but was also the core of LGD's complaint. Therefore, the RTC committed grave abuse of discretion in ordering the discharge of the writ without requiring a counter-bond, as doing so would necessitate a trial on the merits of the case on a mere motion. The Court emphasized that the petitioners could not avail of Section 13, Rule 57 to have the attachment set aside without posting a counter-bond because the ground for the writ was intertwined with the cause of action. On the sufficiency of allegations of fraud: The Court found that the allegations in LGD's amended complaint were sufficient to support the application for a writ of preliminary attachment. Specifically, the allegations that Metro, Inc. undertook to sell exclusively through LGD but then transacted directly with LGD's foreign buyer, coupled with claims of machinations, schemes, and abandonment of contractual obligations in bad faith, sufficiently pleaded fraud in the contracting of the obligation and in its performance. The Court cited that fraudulent intent cannot be inferred from mere non-payment or failure to comply with an obligation, but the specific allegations of deceptive practices and breach of trust in this case went beyond mere non-payment. The Court quoted the relevant allegations from the amended complaint, highlighting the claims of "machinations and schemes," "pure bad faith and fraud," and "violation of the trust and confidence reposed upon them."
Main Doctrine
A writ of attachment issued on the ground of fraud, which is also the applicant's cause of action, can only be dissolved by posting a counter-bond, and not by a mere motion to discharge based on the alleged improper issuance of the writ.