G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO (doing business under the name and style of A & L INDUSTRIES), respondents.

FACTS

On July 1, 1975, respondent Augusto Yulo obtained a loan from petitioner BA Finance Corporation in the amount of P591,003.59, evidenced by a promissory note he signed for himself and as representative of A & L Industries. He presented a Special Power of Attorney (SPA) purportedly executed by his wife, respondent Lily Yulo, the sole proprietor of A & L Industries, authorizing him to secure the loan. However, Augusto had already abandoned the conjugal home about two months prior to the loan. Upon default, petitioner filed a complaint against both spouses and secured a writ of attachment over A & L Industries’ properties, alleging fraud in a related Deed of Assignment.
Lily Yulo countered that she never authorized the loan, her signature on the SPA was forged, she received no proceeds, and she and Augusto were already separated. She claimed the wrongful attachment forced the closure of her business. The trial court dismissed the complaint against Lily and A & L Industries and awarded her substantial damages. The Court of Appeals affirmed but reduced some awards.

ISSUE

The primary issue is whether the petitioner was liable for damages due to the wrongful issuance of the writ of attachment against Lily Yulo’s properties.

RULING

The Supreme Court modified the appellate decision, holding petitioner liable only for actual damages proven from the wrongful attachment, but not for exemplary damages, attorney’s fees, or unproven unrealized profits. The Court found the SPA authorizing Augusto Yulo was indeed forged. Critical testimony from the notary public, Atty. Crispin Ordoña, revealed the parties did not sign the document in his presence, and he failed to state in the acknowledgment that Lily Yulo personally appeared, strongly indicating forgery. Consequently, Lily Yulo was not bound by the loan, and the writ of attachment against her sole proprietorship’s assets was improperly issued.
Regarding damages, the Court ruled the attachment was wrongful because the alleged fraud, a ground for issuance under the Rules, was not proven. However, this failure did not equate to bad faith or malice, as petitioner acted on a firm belief the properties were answerable for a legitimate debt. Thus, exemplary damages and attorney’s fees were unwarranted. The Court sustained the award of P660,000 as actual damages, representing the proven value of the attached properties. It disallowed the P500,000 award for unrealized profits for being speculative and unsubstantiated by evidence of average past profits. The Court ordered the release of any remaining attached properties to the petitioner.