Case Summary (G.R. No. L-35990)
Background and Procedural History
The proceedings began with the issuance of a writ of preliminary attachment on November 2, 1971, following Aboitiz & Company's verified complaint seeking collection of the sum of ₱155,739.41 from Cotabato Bus Company. The basis for the attachment was the claim that the respondent was removing or disposing of assets with the intent to defraud its creditors. In response, the Cotabato Bus Company filed an urgent motion to dissolve the writ, supported by an affidavit asserting the company's intention to maintain its assets and not engage in fraudulent activities. This motion was denied by the lower court, leading the Cotabato Bus Company to seek remedy through the Court of Appeals.
Court of Appeals Ruling
The Court of Appeals, upon reviewing the petition, restrained the lower court from enforcing the attachment and declared the initial orders null and void. The Appeals Court found that the testimony provided by the respondent’s assistant manager did not corroborate the petitioner’s allegations and noted that the arguments presented by Aboitiz & Company lacked sufficient substantiation.
Petitioner's Claims and Errors Assigned
In presenting their appeal, Aboitiz & Company contended that the Court of Appeals rendered its decision hastily without adequately considering all evidence, particularly facts indicating that the Cotabato Bus Company was attempting to defraud creditors by removing assets. The petitioner listed multiple errors regarding the appeals court's findings, emphasizing non-payment of debts, the status of bank accounts, and the removal of buses.
Findings on Factual Issues and Legal Implications
The Supreme Court observed that the primary questions raised were factual, centering on whether the respondent indeed disposed of its properties to defraud creditors. The Court reiterated that factual determinations made by the Court of Appeals are generally conclusive and should only be overturned under exceptional circumstances. Moreover, the petitioners’ assertions lacked significant legal grounding since the mere condition of a company’s bank account or its ability to meet obligations does not alone justify the issuance of a writ of attachment.
Examination of Respondent's Alleged Insolvency
The Supreme Court referenced past rulings emphasizing that mere insolvency does not automatically allow for a preliminary attachment writ's issuance. Aboitiz's claims regarding the Cotabato Bus Company’s financial practices, including a reduced bank account balance and unfulfilled obligations to other creditors, were deemed explanations for operational challenges rather than indicative of fraudulent intent.
Scrutiny of Allegations Regarding Property Disposal
The Court analyzed the alleged removal of buses, highlighting that the respondent’s actions were
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Case Background
- The case arises from Civil Case No. 7329 filed in the Court of First Instance of Davao, where Aboitiz & Company, Inc. (petitioner) sought a writ of preliminary attachment against Cotabato Bus Company, Inc. (respondent).
- Aboitiz & Company filed a verified complaint on November 2, 1971, claiming the sum of P155,739.41 owed by Cotabato Bus Company.
- The court issued a writ of preliminary attachment based on an affidavit asserting that the respondent was disposing of properties to defraud creditors.
Issuance of Writ of Preliminary Attachment
- The writ allowed the provincial sheriff to attach personal properties of Cotabato Bus Company, including buses, machinery, and equipment.
- The grounds for the attachment included allegations of the respondent's intent to defraud creditors by disposing of assets.
Respondent's Motion to Quash
- Cotabato Bus Company filed an "Urgent Motion to Dissolve or Quash Writ of Attachment," supported by an affidavit from its Assistant Manager, denying any intent to defraud and asserting the acquisition of new assets.
- The lower court denied this motion, stating the respondent's affidavit corroborated the petitioner's claims rather than disproving them.
Court of Appeals' Decision
- Th