China Banking Corporation v Asian Construction Corp

CHINA BANKING CORPORATION - versus – ASIAN CONSTRUCTION and DEVELOPMENT CORPORATION G.R. N. !"#$%!. A&r'( #) $**# AUSTRIA-MARTINE+) ,. ACTS

China Bank granted respondent Asian Construction and Development Corp Corpora orati tion on (ACD (ACDC) C) an Omni Omnibu buss Cred Credit it Line Line in the the amou amount nt of P9! P9! !"" Alleging that ACDC failed to compl# $ith its obligations under  the Omnibus Credit Line! China Bank filed a Complaint for recover# of sum of mone# and damages $ith pra#er for the issuance of $rit of preliminar# attachment before the %egional &rial Court (%&C) of 'akati"

&he %&C issued an Order granting China Banks pra#er for $rit of   preliminar# attachment" Conseuentl#! as sho$n in the heriff*s %eport! the $rit of preliminar# attachment $as implemented lev#ing personal properties of ACDC! ACDC! i.e"! i.e"! vans! vans! dump dump trucks trucks!! cement cement mi+ers mi+ers!! cargo cargo trucks trucks!! utilit utilit# # vehicles! machiner#! euipment euipment and office machines and fi+tures"

upon motion of China Bank! the %&C issued a ummar# ,udgment - in favo favorr of Chin Chinaa Bank Bank"" Chin Chinaa Bank Bank file filed d a 'oti 'otion on to &ake Cust Custod od# # of  Attached Properties $ith 'otion for .rant of Authorit# to ell to the Branch heriff-/0 $ith the %&C! pra#ing that it be allo$ed to take custod# of  ACDCs properties for the purpose of selling them in an auction"

ACDC filed its Opposition to the ,une /1! 2 'otion arguing that there can be no sale of the latters attached properties in the absence of a final and e+ecutor# 3udgment against ACDC" According to the CA! selling the attached properties prior to final 3udgment of the appealed case is premature and contrar# to the intent and purpose of preliminar# attachment for the follo$ing follo$ing reasons4 reasons4 first,  first, the the reco record rdss reve reveal al that that the the atta attach ched ed prop proper erti ties es sub3ect of the motion are not perishable in nature5 and  second, $hile the sale of the attached properties ma# serve the interest of China Bank! it $ill not be so for ACDC" 6784 O: the honorable CO7%& O; APP8AL rendered the uestioned resolutions in a manner not in accord $ith the provisions of section //! rule 1< of the rules of civil procedure! as it shelved the demands of euit# b# arbitraril# disallo$ing the sale of the attached properties"

%7L6:.4 ection //! %ule 1< of the %ules of Court provides4 Se/. !!. When attached property may be sold after levy on attachment and  before entry of judgment.- henever it shall be made to appear to the court in $hich the action is pending! upon hearing $ith notice to both parties! that the propert# attached is perishable! r 01a0 01e 'n0eres0s 2 a(( 01e &ar0'es 0 01e a/0'n $ill be subserved b# the sale thereof! the court ma# order such  propert# to be sold at public auction in such manner as it ma# direct! and the  proceeds of such sale to be deposited in court to abide the 3udgment in the action" (8mphasis supplied)

&hus! an attached propert# ma# be sold after lev# on attachment and before entr# of 3udgment $henever it shall be made to appear to the court in $hich the action is pending! upon hearing $ith notice to both parties! that 01e a00a/1ed &r&er03 's &er's1a4(e r 01a0 01e 'n0eres0s 2 a(( 01e &ar0'es 0 01e a/0'n 5'(( 4e su4served 43 01e sa(e 2 01e a00a/1ed &r&er03.

&he issue hinges on the determination $hether the vehicles! office machines and fi+tures are perishable propert# under ection //! %ules 1< of the %ules of Court! $hich is actuall# one of first impression" :o local 3urisprudence or  authoritative $ork has touched upon this matter" &his being so! an e+amination of foreign la$s and 3urisprudence! particularl# those of  the 7nited tates$here some of our la$s and rules $ere patterned after! is in order"

6n Mossler Acceptance Co. v. Denmark, an order of the lo$er court in directing the sale of attached properties! consisting of 2 automobiles and 2 airplanes! $as reversed b# the upreme Court of Louisiana" 6n support of its contention that automobiles are perishable!  Mossler offered testimon# to the effect that automobile tires tend to dr#=rot in storage! batteries to deteriorate! crankcases to become damaged! paint and upholster# to fade! that generall# automobiles tend to depreciate $hile in storage" %e3ecting these arguments! the upreme Court of Louisiana held that $hile there might be a depreciation in the value of a car during storage! depending largel# on e+isting economic conditions! there $ould be no material deterioration of the car itself or an# of its appurtenances if the car $as properl# cared for! and therefore it could not be said that automobiles $ere of a perishable nature $ithin the intendment of the statute! $hich could onl# be invoked $hen the  propert# attached and sei>ed $as of a perishable nature"

China Bank argues that if the CA allo$ed the attached properties to be sold! $hatever monetar# value $hich the attached properties still have $ill be reali>ed and saved for both parties" China Bank further claims that should ACDC prevail in the final 3udgment of the collection suit! ACDC can

 proceed $ith the bond posted b# China Bank" &he Court finds said arguments to be specious and misplaced"

ection ?! %ule 1< of the %ules of Court provides4 ection ?" Condition of applicants bond. - &he part# appl#ing for the order  must thereafter give a bond e+ecuted to the adverse part# in the amount fi+ed b# the court in its order granting the issuance of the $rit! conditioned that the latter $ill pa# all the costs $hich ma# be ad3udged to the adverse  part# and all the damages $hich he ma# sustain b# reason of the attachment! if the court shall finall# ad3udge that the applicant $as not entitled thereto"

6t is clear from the foregoing provision that the bond posted b# China Bank  ans$ers onl# for the pa#ment of all damages $hich ACDC ma# sustain if  the court shall finall# ad3udge that China Bank $as not entitled to attachment" &he liabilit# attaches if the plaintiff is not entitled to the attachment because the reuirements entitling him to the $rit are $anting! or  if the plaintiff has no right to the attachment because the facts stated in his affidavit! or some of them are untrue" Clearl#! ACDC can onl# claim from the bond for all the damages $hich it ma# sustain b# reason of the attachment and not because of the sale of the attached properties prior to final 3udgment"

ale of attached propert# before final 3udgment is an euitable remed#  provided for the convenience of the parties and preservation of the propert#" &o repeat! the Court finds that the issue of $hether the sale of attached  properties is for the convenience of the parties and that the interests of all the  parties $ill be subserved b# the said sale is a uestion of fact" Again! the foregoing issue can onl# be resolved upon e+amination of the evidence  presented b# both parties $hich the Court cannot do in a petition for certiorari under %ule @1 of the %ules of Court"