G.R. No. 115678 & 119723, February 23, 2001
Philippine Bank of Communications, petitioner, vs. Hon. Court of Appeals and Bernardino Villanueva/Filipinas Textile Mills, Inc., respondents.

FACTS

Petitioner Philippine Bank of Communications filed a complaint for sum of money against private respondents Bernardino Villanueva and Filipinas Textile Mills, Inc. (FTMI), alleging their failure to pay the value of goods covered by trust receipts and letters of credit, which were secured by surety agreements. The bank subsequently filed a Motion for a writ of preliminary attachment, contending that the violation of the trust receipts law constitutes estafa, providing grounds under Rule 57 of the Rules of Court for embezzlement, misapplication of property, and fraud. The bank also alleged that the respondents were disposing of properties to the detriment of creditors.
The Regional Trial Court granted the ex parte motion and issued the writ. The Court of Appeals, in consolidated certiorari petitions, nullified the RTC’s order. In one case, it found the lower court committed grave abuse of discretion by not conducting a hearing. In the other, it ruled that the bank’s motion contained only general averments insufficient to establish the specific grounds for attachment, such as fraud or embezzlement.

ISSUE

Whether the Court of Appeals erred in nullifying the writ of preliminary attachment for lack of sufficient factual basis and for failure to conduct a hearing.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals. The legal logic is anchored on the strict and extraordinary nature of the remedy of preliminary attachment. For a writ to issue under the specific grounds cited (e.g., embezzlement or fraud under Rule 57), the applicant must allege and substantiate concrete facts, not mere general conclusions or recitals of the rule’s language. The bank’s motion and affidavit failed this test; they merely stated that a violation of the trust receipts law constitutes estafa and that grounds for attachment existed, without detailing the specific fraudulent acts or circumstances of misappropriation.
Furthermore, the Court emphasized the necessity of a hearing, especially when the application is opposed. Due process requires that the defendant be given an opportunity to challenge the factual basis of the attachment. Here, private respondents opposed the motion, claiming substantial payments and that FTMI had ceased operations years prior, which refuted allegations of current fraudulent disposition of assets. The trial court’s failure to conduct a hearing to weigh these contentious factual issues constituted a denial of due process and an abuse of discretion. Since the stringent requisites for the harsh remedy of attachment were not complied with, the writ was properly annulled.