Vicente CHUIDIAN V. SANDIGANBAYAN and the Republic
G.R. No. 1339941 | JANUARY 19, 2001
(modes of quashal of the
writ of attachment)
FACTS:
In September 1980, Chuidian allegedly a dummy of
Ferdinand and Imelda Marcos, was able to obtain, allegedly under false
pretenses, a loan guarantee from Philguarantee Corp., the BOI and the Central
Bank, in favor of the Asian Reliability Co. Inc. (ARCI). ARCI, 98% of which was
allegedly owned by Chuidian, was granted a loan guarantee of US $25M for the establishment
of 5 inter-related projects in the country.
However, Chuidian used the same in investing in
corporations operating in the US. ARCI then defaulted in the payments of
the loan, compelling Philguarantee to undertake payments for the same. Philguarantee
sued Chuidian before a Californian court, charging
him of violating the terms of the loan, defaulting in payments and misusing the
proceeds for his personal benefit. Chuidian claimed that he himself was a
victim of the systematic plunder perpetrated by the Marcoses.
On November 1985, Philguarantee entered into a
compromise agreement with Chuidian whereby Chuidian shall assign and surrender
title to all his companies in favor of the Phil. Gov’t. In return,
Philguarantee shall absolve Chuidian from all civil and criminal liability concerning
the payments Philguarantee had made on Chuidian’s defaulted loans. It was further stipulated that the Phil.
government shall pay Chuidian the amount of US $5.3M. Chuidian received the 1st
two installments of the payment. The remaining balance of US $4.6M was to be
paid through an irrevocable Letter of Credit (L/C) from which Chuidian would
draw US $100k monthly.
With the advent of the Aquino administration,
the newly-established PCGG exerted earnest efforts to search and recover
properties and assets suspected as having been illegally acquired by the
Marcoses, their relatives and cronies.
Chuidian was among those whose assets were sequestered by the
PCGG. The PNB was directed to place the letters of credit under its
custody, in behalf of the PCGG.
In the meantime, Philguarantee filed a motion
before the Superior Court of California, seeking to vacate the stipulated
judgment containing the settlement between Philguarantee and Chuidian on the
grounds that: (a) Philguarantee was compelled by the Marcos administration
to agree to the terms of the settlement; (b) Chuidian blackmailed Marcos into
pursuing the settlement agreement by threatening to expose the fact that the
Marcoses made investments in Chuidian’s American enterprises; and (c) the
Aquino administration had ordered Philguarantee not to make further payments on
the L/C to Chuidian. However, the Californian court concluded that
Philguarantee was not able to sufficiently show that the settlement should be
set aside. On
appeal, the CA of the State of California affirmed the judgment of the Superior
Court denying Philguarantee’s motion.
Chuidian filed before the California Central District Court, an action against
PNB seeking to compel the latter to pay the proceeds of the L/C. Philguarantee
intervened in said action, raising the same issues and arguments it had earlier
raised in the action before the Santa Clara Superior Court, alleging that PNB
was excused from making payments on the L/C since the settlement was void due
to illegality, duress and fraud.
The Federal Court rendered judgment ruling: (1)
in favor of PNB excusing the said bank from making payment on the L/C; and (2)
in Chuidian’s favor by denying intervenor Philguarantee’s action to set aside
the settlement agreement.
Meanwhile a Deed of Transfer was executed between then Sec. of Finance and
then PNB President Edgardo Espiritu, to facilitate the rehabilitation of PNB. Thus,
the gov’t assumed all liabilities of PNB including the L/C listed in favor of
Chuidian in the amount of US $4.4M
On July 1987, the gov’t filed before the
Sandiganbayan a civil case against the Marcos spouses, several gov’t officials,
and a number of individuals known to be cronies of the Marcoses, including
Chuidian, seeking the reconveyance, accounting and restitution of all forms of
wealth allegedly procured illegally by the defendants.
While the case was pending, the Republic filed a
motion for issuance of a writ of attachment
over the L/C in the name of Chuidian, citing as grounds therefor
the following:
(1) Chuidian
embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary
capacity, justifying issuance of the writ under Section 1(b), Rule 57 of the
Rules of Court;
(2) The
writ is justified under Section 1(d) of the same rule as Chuidian is guilty of
fraud in contracting the debt or incurring the obligation upon which the action
was brought, or that he concealed or disposed of the property that is the
subject of the action;
(3) Chuidian
has removed or disposed of his property with the intent of defrauding the
plaintiff as justified under Section 1(c) of Rule 57; and
(4) Chuidian
is residing out of the country or one on whom summons may be served by
publication, which justifies the writ of attachment prayed for under Section
1(e) of the same rule.
The Republic also averred that should the action
brought by Chuidian before the U.S. District Court of California to compel
payment of the L/C prosper, inspite of the sequestration of the said L/C,
Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to
pay the proceeds of the L/C. Eventually, Philguarantee will be made
to shoulder the expense resulting in further damage to the government. Thus,
there was an urgent need for the writ of attachment to place the L/C under the
custody of the Sandiganbayan so the same may be preserved as security for the
satisfaction of judgment in the case before said court.
Chuidian opposed the motion for issuance of the writ
of attachment, contending that:
(1) The
plaintiff’s affidavit appended to the motion was in form and substance fatally
defective;
(2) Section
1(b) of Rule 57 does not apply since there was no fiduciary relationship
between the plaintiff and Chuidian;
(3) While
Chuidian does not admit fraud on his part, if ever there was breach of
contract, such fraud must be present at the time the contract is entered into;
(4) Chuidian
has not removed or disposed of his property in the absence of any intent to
defraud plaintiff;
(5) Chuidian’s
absence from the country does not necessarily make him a non-resident; and
(6) Service
of summons by publication cannot be used to justify the issuance of the writ
since Chuidian had already submitted to the jurisdiction of the Court by way of
a motion to lift the freeze order filed through his counsel.
On July 1993, the Sandiganbayan ordered the
issuance of a writ of attachment against the L/C as security for the
satisfaction of judgment. The Sandiganbayan ruled:
1) Although there was no separate was attached
to the motion, the motion itself contained all the requisites of an affidavit,
and the verification thereof is deemed a substantial compliance of Rule 57,
Section 3.
2) Fiduciary relationship exists between
Chuidian and ARCI but not with the Republic. Hence, the Republic cannot invoke
Sec. 1(b) of Rule 57.
3) There was a prima facie case of fraud
committed by Chuidian, justifying the issuance of the writ of attachment.
4) The Sandiganbayan also adopted the Republic’s
position that since it was compelled to pay, through Philguarantee, the bank
loans taken out by Chuidian, the proceeds of which were fraudulently diverted,
it is entitled to the issuance of the writ of attachment to protect its rights
as creditor.
5) Chuidian’s
absence from the country was considered by the Sandiganbayan to be the most
compelling ground for the issuance of the writ.
Almost four (4) years after the issuance of the
order of attachment, Chuidian filed a motion to lift the attachment based on
the following grounds:
1) He had returned to the Philippines, and
considering that his absence was the most compelling ground for the issuance of
the writ, the latter should be lifted.
2) There was no evidence at all of initial fraud
or subsequent concealment except for the affidavit submitted by the PCGG
Chairman whose statement is hearsay since he was not a witness
to the litigated incidents, was never presented as a witness by the Republic
and thus was not subject to cross-examination.
3) He denies that he ever disposed of his assets
to defraud the Republic, and there is nothing in the records that support the
Sandiganbayan’s erroneous conclusion on the matter.
4) He was never a defendant in any other
pending criminal action.
5) He was not guilty of fraud in contracting the
debt or incurring the obligation. L/C was not a product of fraudulent
transactions but the result of court-approved settlement.
6) Should the attachment be allowed to continue,
he will be deprived of his property without due process. The L/C was
payment to Chuidian in exchange for the assets he turned over to the Republic. Said
assets had already been sold by the Republic and cannot be returned to Chuidian
should the government succeed in depriving him of the proceeds of the L/C.
7) Finally, throughout the 4 years that the
preliminary attachment had been in effect, the gov’t had not set the case for
hearing. The case itself should be dismissed for laches owing to the
Republic’s failure to prosecute its action for an unreasonable length of time. Accordingly,
the preliminary attachment, being only a temporary or ancillary remedy, must be
lifted and the PNB ordered to immediately pay the proceeds of the L/C to
Chuidian.
The Republic opposed e motion and contended that
allowing the foreign judgment as a basis for the lifting of the attachment
would essentially amount to an abdication of the jurisdiction of the
Sandiganbayan to hear and decide the ill gotten wealth cases lodged before it
in deference to the judgment of foreign courts.
The Sandganbayan denied petitioner’s motion and
also the latter’s subsequent MR.
ISSUE:
WON
the writ of preliminary attachment should be lifted as a result of petitioner’s
return to the country and his averments that there was no fraud in incurring the
obligation
HELD: No
*Preliminary attachment issued upon a
ground which is at the same time the applicant’s cause of action. When the preliminary attachment is issued upon a
ground which is at the same time the applicant’s cause of action, the
defendant is not allowed to file a motion to dissolve the attachment under
Section 13 of Rule 57 by offering to show the falsity of the factual averments
in the plaintiff’s application and affidavits on which the writ was based –
and consequently that the writ based thereon had been improperly or irregularly
issued – the reason being that the hearing on such a motion for dissolution
of the writ would be tantamount to a trial of the merits of the action. In
other words, the merits of the action would be ventilated at a mere hearing of
a motion, instead of at the regular trial.
The
merits of the action in which a writ of preliminary attachment has been issued
are not triable on a motion for dissolution of the attachment; otherwise an
applicant for the lifting of the writ could force a trial of the merits of the
case on a mere motion.
There are only two ways of quashing a
writ of attachment: (a) by filing
a counterbound immediately; or (b) by moving to quash on the ground of improper
and irregular issuance. These grounds for the dissolution of an attachment are
fixed in Rule 57 of the Rules of Court and the power of the Court to dissolve
an attachment is circumscribed by the grounds specified therein. Petitioner’s
motion to lift attachment failed to demonstrate any infirmity or defect in the
issuance of the writ of attachment; neither did he file a counterbond.
*SC ruling taken from www.scribd.com/doc/110773918/BSL-CASE-DOCTRINES-IN-CIVIL-PROCEDURE-BRONDIAL
