Wednesday, February 22, 2012

Allied Banking Corporation vs. South Pacific Sugar [G.R. No. 163692 February 4, 2008]

Facts: South Pacific issued 3 promissory notes to Allied Bank to secure payment of loans. Failing to honor upon due, Allied Bank filed a complaint for collection of a sum of money with a prayer for the issuance of a writ of preliminary attachment. Account Officer Go testified that Allied Bank approved the loan on the misrepresentation of South Pacific that it was in good fiscal condition. Pacific filed a motion to discharge the attachment on the ground that the evidence of fraud was insufficient and self-serving. The RTC granted the deference of the writ. CA affirmed the order. It held that the inability of respondents to pay does not amount to a fraudulent intent. The core of the prayer for the attachment was the failure of the respondents to pay their obligations on maturity date, not fraudulent intent to evade their commitments; and that the inability to pay one’s creditors is not necessarily synonymous with fraudulent intent not to honor an obligation. Allied Bank was aware of the corporation’s financial standing and capacity to pay its loans when Allied Bank granted credit facilities to it. 

Issue: Whether there was fraud committed by respondents against petitioner bank such that a writ of attachment may be issued against respondents. 

Held: NO. Go’s testimony reveals it did not detail how respondents induced or deceived Allied Bank into granting the loans. She mentioned a Memorandum which allegedly misled Allied Bank to grant the loan. Yet, this was never presented in evidence. Such general averment will not suffice to support the issuance of the writ. In a prayer for a writ of attachment, it is not enough for the complaint to cite, as here, that the defendants are guilty of fraud in contracting an obligation. The need for a recitation of factual circumstances that support the application becomes more compelling considering that the ground relied upon is fraud. The complaint utterly failed to even give a hint about what constituted the fraud and how it was perpetrated for Fraud cannot be presumed. Written contracts are presumed to have been entered into voluntarily and for a sufficient consideration. The application for a writ of attachment, being a harsh remedy, is to be construed strictly in favor of the defendant, for by it; the reputation of the debtor may be seriously prejudiced. Thus, caution must be exercised in granting the writ. There must be more compelling reasons to justify attachment beyond a mere general assertion of fraud. This must be so lest we, as Garcia v. Reyes puts it, be “spinning tight webs on gossamer filigrees. 

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