G.R. No. 175727 & 178713, March 6, 2019
LORENZO SHIPPING CORPORATION, Petitioner, vs. FLORENCIO O. VILLARIN, et al., Respondents.

FACTS

Lorenzo Shipping Corporation (LSC) is a domestic shipping company. Cebu Arrastre and Stevedoring Services Corporation (CASSCOR), through its President Guerrero Dajao, had a contract to provide cargo handling services for LSC’s vessels. In 1997, Dajao entered into a Memorandum of Agreement (MOA) with Florencio Villarin and Serafin Cabanlit, wherein Villarin and Cabanlit undertook to operate and manage CASSCOR’s arrastre and stevedoring services for LSC. Alleging non-remittance of their shares from the operations starting July 1999, Villarin, et al. filed a complaint for specific performance and accounting against CASSCOR and Dajao, later amending it to implead LSC as a nominal defendant and to pray for a writ of preliminary attachment.
The Regional Trial Court (RTC) Branch 6 granted the motion for a writ of preliminary attachment against all defendants, including LSC. LSC contested this, arguing it had no direct contract with Villarin and was only a nominal party. The RTC maintained its order, prompting LSC to file a certiorari petition with the Court of Appeals (CA). Separately, after the case was re-raffled to RTC Branch 20, Villarin filed a motion to require LSC to deposit in court an amount representing LSC’s unpaid dues to CASSCOR, based on an audit report and a letter from an LSC officer. The RTC granted this order to deposit.

ISSUE

The primary issues were: (1) Whether the RTC committed grave abuse of discretion in issuing the writ of preliminary attachment against LSC; and (2) Whether the RTC committed grave abuse of discretion in ordering LSC to deposit the alleged debt in court.

RULING

The Supreme Court denied LSC’s petitions and affirmed the CA’s rulings. On the attachment issue, the Court held that the RTC did not commit grave abuse of discretion. A writ of preliminary attachment is a provisional remedy issued at the commencement of an action or during its pendency, based on specific grounds under Rule 57 of the Rules of Court. The trial court enjoys wide discretion in determining the existence of grounds for attachment. The RTC found an alleged fraud in the performance of the obligation involving all defendants. The Court ruled that the determination of whether LSC could be held liable for the claims, including under theories of conspiracy or trust, was a matter of evidence best threshed out in a full trial. The issuance of the writ was merely provisional and did not constitute a prejudgment of the main case.
Regarding the deposit order, the Court also found no grave abuse of discretion. The order was based on LSC’s own external audit report and a letter from its Vice-President for Finance, Julita Valeros, which indicated an outstanding payable to CASSCOR. The Court ruled that the RTC, under its inherent power to control its processes and orders to conform to law and justice (Rule 135, Section 5(g) of the Rules of Court), could issue such an ancillary order to preserve the res of the litigation and ensure the effective exercise of its jurisdiction. The deposit was merely for safekeeping to prevent the funds from being dissipated pending final adjudication of the main case over which the RTC had jurisdiction. The order did not determine ownership of the money but was a conservatory measure to secure the enforcement of a potential judgment.