Aboitiz vs. Cotabato Bus Company

PROVREM CASE NO.
14
ABOITIZ & COMPANY, INC., HONORABLE VICENTE N. CUSI JR., Judge of the Court of First
Instance of Davao, and the PROVINCIAL SHERIFF OF DAVAO DEL SUR, INC., vs
COTABATO BUS COMPANY
G.R. No. L-35990 June 17, 1981
FACTS:
The instant petition stemmed from Civil Case No. 7329 of the Court of First Instance of Davao
(Branch 1) in which a writ of preliminary attachment was ex-parte by the Court on the strength
of an affidavit of merit attached to the verified complaint filed by petitioner herein, Aboitiz &
Co., Inc., on November 2, 1971, as plaintiff in said case, collection of money in the sum of
P155,739.41, which defendant therein, the respondent in the instant case, Cotabato Bus Co.,
owed the said petitioner. By virtue of the writ of preliminary attachment, the provincial sheriff
attached personal properties of the defendant bus company consisting of some buses,
machinery and equipment. The ground for the issuance of the writ is, as alleged in the
complaint and the affidavit of merit executed by the Assistant Manager of petitioner, that the
defendant "has removed or disposed of its properties or assets, or is about to do so, with intent
to defraud its creditors." Respondent company filed in the lower court an "Urgent Motion to
Dissolve or Quash Writ of Attachment" to which was attached an affidavit executed by its
Assistant Manager, Baldovino Lagbao, alleging among other things that "the Cotabato Bus
Company has not been selling or disposing of its properties, neither does it intend to do so,
much less to defraud its creditors; that also the Cotabato Bus Company, Inc. has been acquiring
and buying more assets". The lower court denied the motion stating in its Order that "the
testimony of Baldovino Lagbao, witness for the defendant, corroborates the facts in the
plaintiff's affidavit instead of disproving or showing them to be untrue." A motion for
reconsideration was filed by the defendant bus company but the lower court denied it.
A motion for reconsideration was filed by the defendant bus company but the lower court
denied it. Hence, the defendant went to the Court of Appeals on a petition for certiorari
alleging grave abuse of discretion on the part of herein respondent Judge, Hon. Vicente R. Cusi
Jr. On giving due course to the petition, the Court of Appeals issued a restraining order
restraining the trial court from enforcing further the writ of attachment and from proceeding
with the hearing of Civil Case No. 7329.
ISSUE: Whether the writ of attachment was properly issued upon a showing that defendant is
on the verge of insolvency and may no longer satisfy its just debts without issuing the writ.
HELD:
It is an undisputed fact that, as averred by petitioner itself, the several buses attached are
nearly junks. However, upon permission by the sheriff, five of them were repaired, but they
were substituted with five buses which were also in the same condition as the five repaired
ones before the repair. This cannot be the removal intended as ground for the issuance of a
writ of attachment under section 1 (e), Rule 57, of the Rules of Court. The repair of the five
buses was evidently motivated by a desire to serve the interest of the riding public, clearly not
to defraud its creditors, as there is no showing that they were not put on the run after their
repairs, as was the obvious purpose of their substitution to be placed in running condition.
Moreover, as the buses were mortgaged to the DBP, their removal or disposal as alleged by
petitioner to provide the basis for its prayer for the issuance of a writ of attachment should be
very remote, if not nil. If removal of the buses had in fact been committed, which seems to exist
only in petitioner's apprehensive imagination, the DBP should not have failed to take proper
court action, both civil and criminal, which apparently has not been done.
It is, indeed, extremely hard to remove the buses, machinery and other equipments which
respondent company have to own and keep to be able to engage and continue in the operation
of its transportation business. The sale or other form of disposition of any of this kind of
property is not difficult of detection or discovery, and strangely, petitioner, has adduced no
proof of any sale or transfer of any of them, which should have been easily obtainable.
In the main, therefore, the court find that the respondent Court of Appeals has not committed
any reversible error, much less grave abuse of discretion, except that the restraining order
issued by it should not have included restraining the trial court from hearing the case,
altogether. Accordingly, the instant petition is hereby denied, but the trial court is hereby
ordered to immediately proceed with the hearing of Civil Case No. 7329 and decide it in
accordance with the law and the evidence. No special pronouncement as to costs.

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PROVREM CASE NO.

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