G.R. No. 160727 , June 26, 2007
Union Bank of the Philippines vs. Danilo L. Concepcion

FACTS

The EYCO Group of Companies, along with its controlling stockholders (the Yutingcos), filed a Petition for Suspension of Payments with the Securities and Exchange Commission (SEC). The SEC issued a Suspension Order halting all claims against EYCO. Petitioner Union Bank, a creditor, subsequently filed a collection suit before the Makati RTC against four EYCO corporations and the Yutingco spouses as sureties, and obtained a writ of preliminary attachment over properties. In a prior related case ( G.R. No. 131729 ), this Court ruled that the SEC had jurisdiction over the suspension petition filed by the corporate petitioners (EYCO) but not over the individual petitioners (Yutingcos). Consequently, the Makati RTC suspended proceedings against the corporate defendants but allowed the case against the Yutingco spouses to proceed.
Respondent Danilo L. Concepcion, claiming to be a trustee of one of the attached properties (held for Nikon Industrial Corporation), filed a Motion to Intervene and to Discharge Attachment in the RTC case. He argued the property was not owned by the Yutingcos and was wrongfully attached. The RTC denied his motion. The Court of Appeals reversed the RTC, granting Concepcion’s intervention and ordering the discharge of the attachment on the subject property.

ISSUE

Whether the Court of Appeals erred in allowing Danilo L. Concepcion to intervene and in ordering the discharge of the writ of preliminary attachment over the property covered by TCT No. V-49678.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic is twofold. First, on the right to intervene, Section 1, Rule 19 of the Rules of Court allows a person with a legal interest in the property in custody of the court to intervene. Concepcion, as the alleged trustee of the property registered under his name but held for Nikon Industrial Corporation, possessed a direct legal interest in preventing its attachment for a debt of the Yutingcos. His claim that the property was not an asset of the judgment debtors constituted a sufficient interest to support intervention.
Second, on the propriety of discharging the attachment, a writ of preliminary attachment can only be levied upon the property of the defendant. Since Concepcion asserted, with supporting evidence, that he held the property in trust for a corporation not impleaded as a defendant (Nikon Industrial Corporation), and not for the Yutingcos, the property was prima facie not subject to attachment for the Yutingcos’ personal obligation. The purpose of the hearing on the motion to discharge was to determine prima facie ownership, not to conduct a full-blown trial. Concepcion’s evidence sufficiently established that the attached property was not owned by the defendant spouses, warranting the discharge of the writ as to that specific property. The RTC’s denial of the motion was a grave abuse of discretion.