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Pbcom Vs Ca SCL

The Philippine Bank of Communications filed a complaint against Filipinas Textile Mills seeking payment for textile goods purchased under letters of credit and trust receipts. The bank filed a motion for attachment, claiming violation of the trust receipts constituted estafa. The lower court issued a writ of preliminary attachment. The Court of Appeals granted the respondents' petitions, finding the lower court failed to conduct a required hearing on the application and the bank's allegations were mere general averments without substantiation. The Supreme Court upheld the Court of Appeals, stating an attachment cannot be issued on general averments and the bank's application was defective for failing to hold a hearing, violating the respondents' right to due process to present their claims of substantial prior payments

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Krish Licup
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110 views2 pages

Pbcom Vs Ca SCL

The Philippine Bank of Communications filed a complaint against Filipinas Textile Mills seeking payment for textile goods purchased under letters of credit and trust receipts. The bank filed a motion for attachment, claiming violation of the trust receipts constituted estafa. The lower court issued a writ of preliminary attachment. The Court of Appeals granted the respondents' petitions, finding the lower court failed to conduct a required hearing on the application and the bank's allegations were mere general averments without substantiation. The Supreme Court upheld the Court of Appeals, stating an attachment cannot be issued on general averments and the bank's application was defective for failing to hold a hearing, violating the respondents' right to due process to present their claims of substantial prior payments

Uploaded by

Krish Licup
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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LICUP, Kristine Felva P.

Special Commercial Law

Philippine Bank of Communications v. Hon. CA and Filipinas Textile Mills, Inc., G.R. No.
115678, 23 February 2001

Ynares-Santiago, J.:

FACTS: On April 8, 1991, petitioner PBCom filed a complaint against private


respondents Bernardino Villanueva, Filipinas Textile Mills and one Sochi Villanueva
(now deceased) before RTC Manila. PBCom sought the payment of P2,244,926.30
representing the proceeds or value of various textile goods, the purchase of which was
covered by irrevocable letters of credit and trust receipts executed by petitioner with
private respondent Filipinas Textile Mills as obligor; which, in turn, were covered by
surety agreements executed by Bernardino and Sochi. In their Answer, private
respondents admitted the existence of the surety agreements and trust receipts but
countered that they had already made payments on the amount demanded and that
the interest and other charges imposed by petitioner were onerous.

On May 31, 1993, PBCom filed a Motion for Attachment, contending that violation
of the trust receipts law constitutes estafa, thus providing ground for the issuance of a
writ of preliminary attachment. The lower court issued an Order for the issuance of
said writ. Both private respondents filed separate petitions for certiorari before
respondent Court of Appeals assailing the order granting the writ of preliminary
attachment. The petitions were granted; the CA found that (1) the lower court was
guilty of grave abuse of discretion in not conducting a hearing on the application for a
writ of preliminary attachment and not requiring petitioner to substantiate its
allegations of fraud, embezzlement or misappropriation; and (2) the grounds cited by
petitioner in its Motion do not provide sufficient basis for the issuance of a writ of
preliminary attachment, they being mere general averments.

ISSUE: Was there sufficient basis for the issuance of the writ of preliminary
attachment?

RULING: NO. While the Motion refers to the transaction complained of as involving
trust receipts, the violation of the terms of which is qualified by law as constituting
estafa, it does not follow that a writ of attachment can and should automatically issue.
Petitioner cannot merely cite Section 1(b) and (d), Rule 57, of the Revised Rules of
Court, as mere reproduction of the rules, without more, cannot serve as good ground
for issuing a writ of attachment. An order of attachment cannot be issued on a general
averment, such as one ceremoniously quoting from a pertinent rule.
As was frowned upon in D.P. Lub Oil Marketing Center, Inc., not only was petitioner's
application defective for having merely given general averments; what is worse, there
was no hearing to afford private respondents an opportunity to ventilate their side, in
accordance with due process, in order to determine the truthfulness of the allegations
of petitioner. As already mentioned, private respondents claimed that substantial
payments were made on the proceeds of the trust receipts sued upon. They also
refuted the allegations of fraud, embezzlement and misappropriation by averring that
private respondent Filipinas Textile Mills could not have done these as it had ceased
its operations starting in June of 1984 due to workers' strike. These are matters which
should have been addressed in a preliminary hearing to guide the lower court to a
judicious exercise of its discretion regarding the attachment prayed for.

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