G.R. No. 80030 October 26, 1989
ROGELIO A. MIRANDA, petitioner, vs. THE COURT OF APPEALS and SPOUSES ORLANDO A. RAYOS and MERCEDES T. RAYOS, respondents.

FACTS

Petitioner Rogelio Miranda filed a complaint for damages against respondents, the spouses Orlando and Mercedes Rayos. Miranda alleged that he bought a parcel of land from the Rayos spouses under a Deed of Sale with Assumption of Mortgage. He paid P150,000.00 directly to Orlando Rayos and subsequently paid three quarterly amortizations totaling P87,864.94 to the mortgagee bank, Philippine Savings Bank. When Miranda attempted to make the final payment, the bank refused, informing him that Rayos had already paid the obligation and requested that the title not be delivered to Miranda. Rayos subsequently recovered the certificate of title and refused to surrender it or refund Miranda’s payments.
Based on these allegations, the trial court issued a writ of attachment under Rule 57, Section 1(d) of the Rules of Court, which authorizes attachment in an action against a party guilty of fraud in contracting the debt or incurring the obligation sued upon. The respondents filed a motion to discharge the attachment, arguing no such fraud was proven. The trial court granted the motion, lifting the writ. Miranda challenged this order via certiorari in the Court of Appeals, which dismissed his petition. Miranda then elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s order discharging the writ of attachment for lack of evidence of fraud in the inception of the obligation under Rule 57, Section 1(d).

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic centers on the specific requirement of Rule 57, Section 1(d). For a writ of attachment to issue on the ground of fraud, the fraud must be present at the very inception of the contract or obligation—that is, a fraud committed in contracting the debt or incurring the obligation.
The Court found Miranda’s claim of such inception fraud unsubstantiated. He argued that respondent Orlando Rayos, a lawyer, deceived him by not explicitly warning that the assumption of mortgage required bank approval, thus inveigling him into the contract. The evidence, however, contradicted this. The trial court found that Rayos had, in fact, informed Miranda of this necessity by sending him a bank loan application form for P100,000—the exact mortgage amount—which Miranda and his wife, both degree holders, duly accomplished and signed. This demonstrated Miranda’s awareness of the need for bank consent.
The alleged wrongful acts by Rayos—such as later paying the bank and retrieving the title—constituted events occurring after the contract’s execution. These may potentially amount to fraud committed in the performance of the obligation, which is not the fraud contemplated by Rule 57, Section 1(d) for pre-judgment attachment. Since no fraud at the inception was established, the writ was improperly issued and correctly discharged. The Court also noted that the order lifting the attachment was interlocutory and certiorari was an improper remedy absent a clear showing of grave abuse of discretion, which was not present.