CASE DIGEST - SECURITY BANK CORPORATION V. GREAT WALL COMMERCIAL PRESS COMPANY, INC.

SECURITY BANK CORPORATION V. GREAT WALL COMMERCIAL PRESS COMPANY, INC.

G.R. No. 219345

30 January 2017

Mendoza, J.:

Facts:

Security Bank filed a complaint for the sum of money with application for the issuance of Writ of Preliminary Attachment against Great Wall Commercial Press Company, Inc. and its sureties before the Regional Trial Court. It alleges that despite the lapse of maturity date of the obligations Great Wall failed to pay the same. The RTC granted the application wherein Security Bank posted a bond.

Great Wall moved to lift the Writ of Preliminary Attachment but was denied. Thus, it filed a petition for certiorari before the Court of Appeals which then lifted the writ of preliminary attachment because Security Bank’s allegations were insufficient to warrant the provisional remedy of preliminary attachment because fraudulent intent could not be inferred from a debtor’s inability. Then, the Security Bank moved for reconsideration but was denied. Hence, the petition.

Issue:

Whether there was a sufficient ground for the issuance of the writ of preliminary attachment.

Ruling:

Security Bank relied on Section 1 (d), Rule 57 of the Rules of Court as the basis of its application for a writ of preliminary attachment. It reads:

RULE 57

Preliminary Attachment

Section 1. Grounds upon which attachment may issue. — At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:

xxx

(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof;

For a writ of preliminary attachment to issue under the above-quoted rule, the applicant must sufficiently show the factual circumstances of the alleged fraud. It is settled that fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation.

After a judicious study of the records, the Court finds that Security Bank was able to substantiate its factual allegation of fraud, particularly, the violation of the trust receipt agreements, to warrant the issuance of the writ of preliminary attachment.