G.R. No. L-82446 July 29, 1988
STATE INVESTMENT HOUSE, INC., petitioner, vs. HON. COURT OF APPEALS, HON. DOROTEO N. CANEBA, in his capacity as Presiding Judge of Branch 20, Regional Trial Court, Manila, P.O. VALDEZ, INC., and PEDRO O. VALDEZ, respondents.

FACTS

Petitioner State Investment House, Inc. extended loans to respondent corporation P.O. Valdez, Inc., secured by surety agreements from its officers and various collaterals including corporate shares, a real estate mortgage, and later, deeds of sale covering postdated checks from respondent Pedro O. Valdez. When the checks were dishonored and the obligations remained unpaid, petitioner filed a collection suit with an application for a writ of preliminary attachment, which was initially granted. The trial court subsequently lifted the attachment upon a motion for reconsideration by the private respondents, a decision affirmed by the Court of Appeals. The lower court reasoned that the conjugal properties of the Valdez spouses could not be attached for a corporate debt and that no fraud attended the contracting of the loan.

ISSUE

Whether the trial court and the Court of Appeals committed grave abuse of discretion in lifting the writ of preliminary attachment.

RULING

The Supreme Court denied the petition, finding no grave abuse of discretion. The legal logic centers on the statutory grounds for preliminary attachment under Rule 57 of the Rules of Court, particularly the requirement of fraud in incurring the obligation. The Court upheld the factual findings of the Court of Appeals that no such fraud was proven. The decline in value of pledged shares was not evidence of bad faith at the inception of the loan, as market fluctuations are unforeseeable. Crucially, the issuance of the postdated checks, which were later dishonored, occurred after the loan had already been granted and released. Therefore, they constituted mere evidence of an existing obligation or additional security, not a fraudulent inducement to grant the loan. The Court emphasized that for attachment to lie based on fraud, the fraud must be in the execution of the contract itself, not in its subsequent performance. Since the petitioner failed to demonstrate that the false representations in the deeds of sale regarding the checks being for “actual sales” deceived it into granting the loan—especially given petitioner’s presumed knowledge that Pedro Valdez, as corporate president, was not an ordinary customer—the lifting of the attachment was justified. The appellate court’s factual conclusions on the absence of fraudulent intent are binding and supported by the record.