G.R. No. 47963 ; March 14, 1941
HIJOS DE F. ESCAÑO, INC., plaintiff-appellee, vs. JOAQUIN LAO GOO, defendant-appellant.

FACTS

On April 7, 1938, Hijos de F. Escaño, Inc. filed a complaint in the Court of First Instance of Leyte against Joaquin Lao Goo for the recovery of a sum of money. The plaintiff alleged that the defendant, on various occasions in 1927, 1928, and 1929, received several amounts totaling P4,000 from its Maasin, Leyte branch office. The defendant executed a promissory note (Exhibit B) dated October 22, 1929, binding himself to pay the amount on or before October 20, 1932. Despite the obligation’s maturity, the defendant refused to pay. The plaintiff prayed for a writ of attachment and a judgment for P4,000 with interest from October 20, 1932, plus damages and costs. The lower court rendered a decision on June 6, 1939, in favor of the plaintiff, ordering the defendant to pay P4,000 with legal interest from October 20, 1932, and costs. The defendant’s motion for a new trial was denied, prompting this appeal.

ISSUE

1. Whether the lower court erred in admitting Exhibit B (the promissory note) as proof of an unsecured debt.
2. Whether the lower court erred in not declaring the writ of attachment improper and illegal for being obtained with malice and without sufficient cause.
3. Whether the lower court erred in not dismissing the complaint and in not granting a new trial.

RULING

1. On the first assignment of error: The Supreme Court held that the lower court did not err. The appellant contended that the debt was secured by his life insurance policy (Policy No. 100324 with West Coast Life Insurance Company), citing paragraphs 3 and 4 of Exhibit B. The Court found that these paragraphs did not constitute a valid assignment of any interest in the policy to the creditor. The clauses merely contained a promise by the debtor to apply any amount he might collect from the insurance company upon or after the policy’s maturity to the payment of the debt. No cession or conveyance of rights in the policy to the appellee was evident. This interpretation was supported by paragraph 5 of Exhibit B, wherein the debtor acknowledged that the creditor could bring an action for collection and, upon obtaining a favorable judgment, execute it against all the debtor’s properties. The Court did not decide on the legality of encumbering the policy without the beneficiary’s consent, as it was unnecessary given the finding that no valid assignment occurred.
2. On the second assignment of error: The Supreme Court held that the lower court correctly issued the writ of attachment. Under Section 426 of the Code of Civil Procedure (now Section 3, Rule 59 of the Rules of Court), an attachment is proper when it appears by affidavit that: (a) a sufficient cause of action exists; (b) the case falls under those mentioned in Section 424; (c) there is no other sufficient security for the claim; and (d) the amount due is as much as the sum for which the order is granted. These requirements were satisfied in this case: a good cause of action existed, the case was specifically contemplated by law, and no sufficient security for the plaintiff’s claim existed. The action of the lower court was sustained, citing Central Capiz vs. Salas.
3. On the third assignment of error: The Supreme Court deemed it unnecessary to consider this assignment.
DISPOSITIVE:
The appealed decision is affirmed, with costs against the appellant.