G.R. No. 115678 & G.R. No. 119723. February 23, 2001. PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. HON. COURT OF APPEALS and BERNARDINO VILLANUEVA and 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) based on trust receipts and surety agreements. The bank alleged that the respondents failed to remit the proceeds or return the goods covered by the trust receipts. Subsequently, the bank filed a Motion for Issuance of 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, specifically for embezzlement, fraudulent misapplication, or fraud in contracting the obligation. The bank also claimed the respondents were disposing of properties to the creditor’s detriment.
The Regional Trial Court granted the motion and issued the writ ex parte. The respondents separately challenged this order via certiorari before the Court of Appeals. The appellate court granted both petitions, setting aside the writ. In one case, it ruled the trial court gravely abused its discretion by not conducting a hearing. In the other, it found the bank’s allegations in its motion and supporting affidavit were mere general averments insufficient to establish 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 having been issued without a hearing.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals. The legal logic is anchored on the stringent requirements for the extraordinary remedy of preliminary attachment. The grounds for attachment under Rule 57 must be established by concrete and specific factual allegations, not by general averments merely parroting the words of the rules. The bank’s motion and affidavit only generically stated that the failure to remit proceeds or return goods under the trust receipts constituted a violation of fiduciary duty and, by legal presumption, estafa. This is insufficient. Fraud, embezzlement, or misappropriation cannot be presumed; they must be factually demonstrated in the application.
Furthermore, the writ was issued ex parte without a hearing. Due process requires that where the application is contested, a hearing should be conducted to allow the adverse party to refute the allegations, especially since the respondents claimed they had made substantial payments and that FTMI had ceased operations years prior. The rules on attachment, being harsh and summary, must be construed strictly against the applicant. The trial court’s failure to require specific factual substantiation and to conduct a hearing constituted a grave abuse of discretion, rendering the issued writ invalid for having been issued in excess of jurisdiction.