Title
Source: Supreme Court
Chua vs. China Banking Corp.
Case
G.R. No. 202004
Decision Date
Nov 4, 2020
Interbrand defaulted on L/C obligations; sureties, including Chua, refused payment. Writ of attachment issued, lifted, reinstated by CA; SC affirmed, citing fraud and suretyship liability.

Case Digest (G.R. No. 202004)
Expanded Legal Reasoning Model

Facts:

  • Background of the Transactions
    • Interbrand Logistics & Distribution, Inc. (Interbrand), through its officer Almer L. Caras, applied for and obtained twelve (12) Domestic Letters of Credit (L/Cs) from China Banking Corporation (China Bank) to purchase goods from Nestlé Philippines.
    • China Bank advanced a total of ₱189,831,288.17 in full payment of the invoice value. The goods were delivered to Interbrand’s warehouses in Libis, Quezon City; Tarlac City; and Meycauayan, Bulacan.
  • Security Instruments Executed
    • Interbrand executed Trust Receipt Agreements whereby it agreed to hold the goods in trust for China Bank and to remit the proceeds of sale or return the goods upon maturity.
    • Two Surety Agreements were jointly signed:
      • First agreement naming Interbrand and its officers—Gil G. Chua, Carlos Francisco Mijares, and Almer L. Caras—as sureties.
      • Second agreement naming Edgar San Luis as individual surety.
  • Defaults and Trial Court Proceedings
    • Upon maturity, Interbrand failed to pay. China Bank demanded payment from the sureties, including Chua, who refused to pay.
    • On March 1, 2010, China Bank filed a Complaint for Sum of Money and Damages with an application for a Writ of Preliminary Attachment before the Makati RTC (Branch 59), alleging fraud in contracting the obligation.
    • RTC issued the writ on March 3, 2010, attaching all properties of the defendants up to the bond amount of ₱189,831,288.17.
    • Chua moved to lift the attachment, arguing he was not a debtor, officer, director, or stockholder of Interbrand when the obligation was incurred. The RTC granted the motion on May 21, 2010.
    • China Bank’s motion for reconsideration was denied; the RTC held that presented corporate documents did not prove Chua’s status during the material period (September–December 2009).
  • Court of Appeals Proceedings
    • China Bank petitioned the CA for certiorari and mandamus with an application for TRO and/or preliminary injunction, contesting the lifting of the attachment.
    • On November 10, 2011, the CA granted the petition, reinstating the March 3, 2010 Order and directing attachment of Chua’s properties.
    • The CA denied Chua’s motion for reconsideration on May 16, 2012.
  • Supreme Court Petition and Comments
    • Chua filed a Petition for Review on Certiorari, claiming due process violations, erroneous disregard of his evidence, misapplication of surety liability, and improper remedy via certiorari.
    • China Bank’s Comment emphasized that under the Surety Agreements, Chua’s obligation was direct, primary, and absolute; alleged fraud through misappropriation of proceeds; and argued that failure to remit sale proceeds under a trust receipt is also a crime.

Issues:

  • Whether the writ of preliminary attachment against Gil G. Chua’s properties was properly issued and maintained.
  • Whether the attachment remedy contested by Chua should have been corrected by appeal rather than by certiorari.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)

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