Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

REPUBLIC OF THE G.R. No. 164800

PHILIPPINES,

Petitioner,

- versus -
Present:

ESTATE OF ALFONSO LIM, SR.,

ALFONSO LIM, JR., TEODORO YNARES-SANTIAGO,
Q. PENA, FERDINAND E.
MARCOS (now deceased and Chairperson,
Represented by his Estate/Heirs),
IMELDA R. MARCOS, TAGGAT CARPIO,*
INDUSTRIES, INC., PAMPLONA
VELASCO, JR.,
REDWOOD VENEER, INC.,
SOUTHERN PLYWOOD, NACHURA, and
WESTERN CAGAYAN LUMBER,
ACME PLYWOOD, VETERAN PERALTA, JJ.
WOODWORK, INC., SIERRA
MADRE WOOD INDUSTRIES,
INC., and TROPICAL
PHILIPPINES WOOD
INDUSTRIES, INC.,

Respondent.

* Additional member as per July 13, 2009 raffle.

 Promulgated:

July 22, 2009

x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

In this Petition for Certiorari under Rule 65, the Republic of the Philippines
assails and seeks to nullify the Resolution1[1] dated March 28, 2003 of the
Sandiganbayan, as effectively reiterated in another resolution of June 18, 2004,
which denied petitioners motion for the issuance of a writ of preliminary
attachment in Civil Case No. 0030, entitled Republic v. Alfonso Lim, et al.,2[2] a
suit to recover ill-gotten or unexplained wealth.

The Facts

On October 2, 1991, in Civil Case No. 0030, the Republic, represented by

the Presidential Commission on Good Government (PCGG), filed before the
Sandiganbayan, Second Division, an Amended Complaint for reconveyance,
reversion, accounting, restitution, and damages. In it, the Republic averred that
Alfonso Lim, Sr. (now deceased) and Alfonso Lim, Jr., acting by themselves and/or

1[1] Penned by Associate Justice Godofredo L. Legaspi and concurred in by Associate

Justices Sandoval and Victorino.

2[2] Specifically, the amended complaint named as defendants, apart from Lim, Sr., the
following: Lim, Jr., Teodoro Q. Pena, Ferdinand E. Marcos (now deceased and represented by
his Estate/Heirs), Imelda R. Marcos, Taggat Industries, Inc., Pamplona Redwood Veneer, Inc.,
Southern Plywood, Western Cagayan Lumber, Acme Plywood, Veteran Woodwork, Inc., Sierra
Madre Wood Industries, Inc., and Tropical Philippines Wood Industries, Inc.
in unlawful collusion with Ferdinand E. Marcos and Imelda R. Marcos, and taking
undue advantage of their relationship, influence, and connection with the latter,
embarked upon devices and stratagems to unjustly enrich themselves at the
expense of the Republic and the Filipino people. Among other acts, the Lims were
alleged to have:

(a) actively solicited and obtained, upon the personal behest of [the
Marcoses], with the active collaboration of Teodoro Q. Pea, who was then
Minister of Natural Resources, additional timber concession in favor of
Taggat Industries, Inc. (TAGGAT) and Pamplona Redwood Veneer, Inc.
(PAMPLONA), corporations beneficially held and controlled by Alfonso
Lim and Alfonso Lim, Jr., which, in addition to other areas already
awarded to TAGGAT and PAMPLONA, resulted in their concession
holdings in excess of the allowable limits prescribed under Section 11,
Article XIV of the 1973 Constitution;

(b) actively solicited and obtained, upon the personal behest of [the
Marcoses], a management contract in favor of TAGGAT to operate and
manage the logging concessions of Veterans Woodwork, Inc.
(VETERANS), Sierra Madre Wood Industries, Inc. (SIERRA MADRE),
and Tropical Philippines Wood Industries, Inc. (TROPICAL) over and
above the objections of VETERANS;

(c) obtained a permit to cut down a certain number of Narra and Amaciga
trees, and, on the very same day, was likewise given an authorization by
Ferdinand E. Marcos to export the same, in violation of existing ban
against cutting and export of the aforesaid trees;
(d) obtained, in favor of PAMPLONA, a syndicated loan in the amount of
millions of US dollars from a consortium of international banks, secured
by the guarantee of the National Investment and Development Corporation
(NIDC), a subsidiary of the Philippine National Bank; and in view of the
default by PAMPLONA in the payment of its principal and/or interest
amortizations, the loan was converted, under the debt rescheduling
arrangement between Republic and its foreign creditor banks, into a public
sector obligation of Republic, to the grave and irreparable damage of the
Republic and the Filipino people.
 The Republic also alleged that the foregoing acts, singly or collectively,
constituted grave and gross abuse of official position and authority, flagrant breach
of public trust and fiduciary obligations, brazen abuse of right and power, unjust
enrichment, and violation of the Constitution and laws of the Republic to the grave
and irreparable damage to it and its citizens.

As its main prayer, the Republic asked for the reconveyance of all funds and
property impressed with constructive trust in favor of the Republic and the Filipino
people, as well as funds and other property acquired with [respondents] abuse of
right and power and through unjust enrichment, including but not limited to the
properties listed in Annex A of the Complaint together with the accruing income or
increment from date of acquisition until final judgment.

The properties listed in the said Annex A3[3] consistbesides the Lims assets
sequestered in accordance wth Executive Order Nos. 1 and 2, Series of 1986of the
assets and other properties of Lim, Sr., as follows:

1. a parcel of land with TCT No. 2981 (Lot A), located at Barrio Birinayan,
Talisay, Batangas;
2. a parcel of raw land with TCT No. 11750 (Lot 8-C-53) located at Muzon,
San Isidro, Angono, Rizal;
3. a parcel of raw land with TCT No. 11749 (Lot 8-C-51) located at Muzon,
San Isidro, Angono. Rizal;
4. a parcel of land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San
Isidro, Angono, Rizal;
5. a parcel of land with TCT No. 11732 (Lot 8-C-17) located at Muzon, San
Isidro, Angono, Rizal;
6. a parcel of agricultural land with TCT No. 11728 (Lot 8-C-9) located at
Muzon, San Isidro, Angono, Rizal;
7. a parcel of agricultural land with TCT No. 11727 (Lot 8-C-7) located at
Muzon, San Isidro, Angono, Rizal;

3[3] Rollo, pp. 71-74.

8. a parcel of residential land with TCT No. 315 located at Maharlika,
Tagaytay City;
9. a parcel of agricultural/residential land with TCT No. 157570 located at
Berinayan, Laurel, Batangas;
10. a parcel of land and building in the name of SIERRA MADRE as
reported by Task Force SEAFRONT, Nov. 20, 1986;
11. a parcel of land and building in the name of PAMPLONA as reported by
Task Force SEAFRONT, November 20, 1986;
12. Contigous [13] parcels of land located at Claveria, Cagayan in the name
of TAGGAT Industries, Inc. as reported by Task Force SEAFRONT,
November 7, 1987:

xxxx

13. a parcel of agricultural land in the name of TAGGAT with OCT No. O-
1108 (S) Lot No. 1195;
14. a parcel of commercial land in the name of TAGGAT with TCT No.
78732 located at Romualdez Street, Paco, Manila;
15. buildings and improvements in the name of TAGGAT erected on OCT
No. 0-1104, 0-11017, 0-1109;
16. buildings in the name of TAGGAT erected on TCT No. 78732; Paco,
Manila.

[OTHER PROPERTIES]

A. Shares of Stocks in:

1. Taggat Industries, Inc. 1350, Romualdez Street, Paco, Manila

(TAGGAT)
2. Pamplona Redwood Veneer, 1350, Romualdez Street, Paco, Manila
Inc. (PAMPLONA)
3. Sierra Madre Wood 79 Doa Hemady corner 13th St., New
Industries, Inc. (SIERRA Manila, Quezon City
MADRE)
79 Doa Hemady corner 13th St., New
4. Veterans Woodworks, Inc.
(VETERANS) Manila, Quezon City
5. Southern 5th Floor Jardine Davies Bldg., 222
Plywood
Corporation (SPC) Sen. J. Puyat Avenue, Makati, Metro
Manila
6. Western Cagayan Lumber Jardine Davies Building, 222 Sen. J.
(WCL) Puyat Avenue, Makati, Metro Manila

B. Property, Plant and Equipment

xxxx
 C. Aircraft [2 units]

xxxx

D. Current Assets [as reported]

xxxx
E. Investments and Other Assets

1. Due from affiliated companies, TAGGAT, as reported

2. Investment in Stocks, TAGGAT, as reported
3. Deferred Charges and Other Assets, TAGGAT, as reported

F. Bank Accounts

1. PAMPLONA Accounts

a. The Consolidated Bank and Trust Co.

b. Equitable Banking Corporation

2. TAGGAT Acccounts

a. The Consolidated Bank and Trust Co,

b. Philippine National Bank

c. Equitable Banking Corporation

d. Philippine Banking Corporation

e. Allied Banking Corporation

G. Other

1. Frozen Bank Accounts and Other Assets of Alfonso Lim, Sr., Alfonso
Lim, Jr. and Lawrence Lim

Meanwhile, Lim, Sr. passed away. On June 22, 1998, his estate filed a
motion to lift the sequestration4[4] over certain real properties5[5] contending that

4[4] Id. at 75-77.

the PCGG impleaded him owing to his alleged association with former Pres.
Marcos. The estate would add, however, that Lim, Sr. secured title over almost all
of his real properties thus sequestered way back in 1948, long before the Marcoses
came to power.

To the motion to lift, the Republic interposed an opposition, alleging that the sequestered lots
and titles stand as security for the satisfaction of any judgment the Republic may obtain against
the estate of Lim, Sr., his family, or his group of companies.

By Resolution6[6] dated March 17, 2001, the Sandiganbayan lifted the

sequestration order in question on the strength of the following pertinent premises,
to wit:

The sequestration of some of the real properties of movant-defendant

[estate of Lim, Sr.] is a remedial measure resorted to in order to preserve these
properties along with others alleged to have taken illegally x x x, and in order to
prevent the same from disappearance, destruction, loss or dissipation and /or to
foil acts that may render moot and academic the efforts to recover the aforesaid
alleged ill-gotten wealth. However, the pertinent provisions of Executive Order
Nos. 1, 2 and 14 are explicit in saying that the properties that are supposed to be
sequestered are those x x x amassed during the regime of the deposed President
Ferdinand E. Marcos and not before or later thereto. x x x

In time, the Republic sought but was later denied reconsideration of the
sequestration-lifting resolution of the Sandiganbayan.7[7]

Meanwhile, after presenting its evidence in the main case, the Republic filed
its Formal Offer of Evidence dated October 8, 2001.8[8] On December 5, 2001, the

5[5] The Estate of Alfonso Sr. moved for the lifting of sequestration over lands covered
by TCT Nos. 11727, 11728, 11732, 11748, 11749, and 11750 issued on December 15, 1948 by
the Register of Deeds of Rizal, and TCT No. 315 issued on November 25, 1948 issued by
Register of Deeds of Tagaytay City in the name of Lim, Sr.

6[6] Rollo, pp. 98-103.

7[7] Id. at 104-108.

Sandiganbayan issued a terse order admitting all the documentary exhibits of the
Republic consisting of Exhibits A to G, inclusive of their submarkings.9[9]

The following incidents/events then transpired:

(1) Sometime in January 2002, the estate of Lim, Sr., Ruthie Lim, and two
others, as defendants a quo, filed a Demurrer to Evidence10[10] dated January 14,
2002, on the ground of either irrelevancy or immateriality of the Republics
evidence. As argued, the same evidence did not prove or disprove that the
demurring defendants, on their own or in concert with the Marcoses, amassed ill-
gotten wealth. Lim, Jr. later filed a Manifestation11[11] adopting the demurrer to
evidence of the estate of Lim, Sr., et al.

(2) On July 4, 2002, the Sandiganbayan denied the Republics motion for

reconsideration of the graft courts resolution lifting the sequestration order.12[12]

(3) In an obvious bid to counter the effects of the lifting of the sequestration,
the Republic, on September 9, 2002, filed a Motion for the Issuance of a Writ of
Preliminary Attachment13[13] against respondents in the amount of its claim. The
Republic alleged that respondent Lims were guilty of fraud in incurring various
legal obligations which the present action has been brought, by taking undue

8[8] Id. at 109-113.

9[9] Id. at 188.

10[10] Id. at 189-195.

11[11] Id. at 196-198.

12[12] Id. at 206-208.

13[13] Id. at 209-214.

advantage of their relationship, influence and connection with the [Marcoses] to
unjustly enriched themselves to the prejudice of the Republic.

Except for one, all the other respondents belonging to the Lim group filed
their respective comment or opposition to the Republics motion for a writ of
attachment.

(4) On March 28, 2003, the Sandiganbayan, stating that bare allegations of
the commission of fraud by respondents in incurring the aforesaid obligations are
not sufficient for the granting of the writ of preliminary attachment, denied, via a
Resolution,14[14] the corresponding motion.

In due time, the Republic interposed a motion seeking reconsideration of the

Sandiganbayans March 28, 2003 denial action.15[15]

(5) By Resolution dated July 17, 2003, the Sandiganbayan denied

respondents demurrer to evidence.16[16]

Forthwith, the estate of Lim, Sr., Taggat Industries, Inc. (TAGGAT), and
Pamplona Redwood Veneer, Inc. (PAMPLONA), followed later by Lim, Jr.,
respectfully moved for reconsideration of the July 17, 2003 Resolution.

(6) On June 18, 2004, the Sandiganbayan resolved to affirm the denial of the
respondents demurrer to evidence. It also denied in its March 28, 2003 resolution
the Republics motion for the issuance of a writ of preliminary attachment.17[17]

14[14] Id. at 35-41.

15[15] Id. at 42-43.

16[16] Id. at 230-233.

 Hence, this recourse is before us.

The Issues

The two interrelated issues petitioner Republic tenders boils down to:
whether the Sandiganbayan, in the light of the denial of respondents demurrer to
evidence, acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in not considering that the evidence already on record support the
issuance of a writ or preliminary attachment.

The Republic contends that the pieces of evidence offered before and
admitted by the Sandiganbayan provide sufficient basis for the issuance of a writ of
preliminary attachment. Thus, the graft court, as the Republic argues, committed
grave abuse of discretion amounting to excess of jurisdiction in denying the writ of
preliminary injunction by not considering the evidence already on record and in
ruling contrary to its findings and conclusions when it denied respondents
demurrer to evidence.

Respondents, on the other hand, reiterate their position on the absence of

evidence of fraud, as required under Section 1(d), Rule 57 of the Rules of Court,
which would justify the issuance of the desired writ. In this regard, they
reproduced what the Sandiganbayan said in its March 28, 2003 resolution on the
matter of fraud, thus: These are general averments devoid of the particulars of
time, persons, etc., in support of the serious allegation that [respondents] are guilty
of fraud in incurring these alleged legal obligation. Bare allegations that

17[17] Id. at 44-51.

[respondents] have been guilty of fraud in incurring the aforesaid obligations are
not sufficient for the granting of the writ of attachment.18[18]

The Courts Ruling

An assiduous review of the antecedent facts and factual findings and

conclusions of the Sandiganbayan relative to the denial of demurrer to evidence
and the writ of preliminary injunction compels this Court to grant the instant
petition.

Nature of Preliminary Attachment

Attachment is an ancillary remedy applied for not for its own sake but to
enable the attaching party to realize upon relief sought and expected to be granted
in the main or principal action;19[19] it is a measure auxiliary or incidental to the
main action. As such, it is available during the pendency of the action which may
be resorted to by a litigant to preserve and protect certain rights and interests
therein pending rendition, and for purposes of the ultimate effects, of a final
judgment in the case. As a corollary proposition, an order granting an application
for a writ of preliminary attachment cannot, owing to the incidental or auxiliary
nature of such order, be the subject of an appeal independently of the main
action.20[20]

18[18] Id. at 39.

19[19] BAC Manufacturing and Sales Corporation v. Court of Appeals, G.R. No. 96784,
August 2, 1991, 200 SCRA 130, 139; citing Sievert v. CA, No. L-84034, December 22, 1988,
168 SCRA 692.

20[20] 1 Regalado, REMEDIAL LAW COMPENDIUM 606 (7th ed.).

 The instant case is one of those mentioned in Sec. 1, Rule 57 of the Rules,
specifically the sections paragraph d, wherein a writ of preliminary attachment
may be issued. It provides:

SECTION 1. Grounds upon which attachment may issue.A plaintiff or any

proper party may, at the commencement of the action or at any time thereafter,
have the property of the adverse party attached as security for the satisfaction of
any judgment that may be recovered in the following cases:

xxxx

(d) In an action against a party who has been guilty of fraud in contracting
the debt or incurring the obligation upon which the action is brought, or in
concealing or disposing of the property for the taking, detention or conversion of
which the action is brought;

For a writ of attachment to issue under the above-quoted rule, the applicant
must sufficiently show the factual circumstances of the alleged fraud.

Fraud may be defined as the voluntary execution of a wrongful act, or a

willful omission, knowing and intending the effects which naturally and
necessarily arise from such act or omission.21[21] In its general sense, fraud is
deemed to comprise anything calculated to deceive, including all acts and
omissions and concealment involving a breach of legal or equitable duty, trust, or
confidence justly reposed, resulting in damage to another, or by which an undue
and unconscientious advantage is taken of another.22[22] Fraud is also described
as embracing all multifarious means which human ingenuity can device, and which
are resorted to by one individual to secure an advantage over another by false

21[21] Legaspi Oil Co., Inc. v. Court of Appeals, G.R. No. 96505, July 1, 1993, 224
SCRA 213, 216.

22[22] Garcia v. People, G. R. No. 144785, September 11, 2003, 410 SCRA 582, 589;
Commissioner of Internal Revenue v. CA, G.R. No. 119322, June 4, 1996, 257 SCRA 200.
suggestions or by suppression of truth and includes all surprise, trick, cunning,
dissembling, and any unfair way by which another is cheated.23[23] Fraudulent,
on the other hand, connotes intentionally wrongful, dishonest, or unfair.24[24]

In the case at bar, the Republic has, to us, sufficiently discharged the burden
of demonstrating the commission of fraud committed by respondents Lims as a
condition sine qua non for the issuance of a writ of preliminary attachment. The
main supporting proving document is the Republics Exhibit B which the
Sandiganbayan unqualifiedly admitted in evidence. And the fraud or fraudulent
scheme principally came in the form of Lim, Sr. holding and/or operating logging
concessions which far exceeded the allowable area prescribed under the 1973
Constitution.

A cursory evaluation of the Republics Exhibit Bthe Decision dated

November 20, 1986 of then Minister Ernesto M. Maceda of the Ministry Natural
Resources (MNR)25[25] in an unnumbered MNR case entitled IN RE:
VIOLATIONS OF VETERANS WOODWORKS, INC. AND ALFONSO LIM, SR.
AND TAGGAT INDUSTRIES, INC., canceling the logging concessions26[26]
enjoyed by the Lim Groupyields the following undisputed relevant data:

23[23] People v. Balasa, G.R. No. 106357, September 3, 1998, 295 SCRA 49, 71-72; citing Alleje v. CA, G.R.
No. 107152, January 25, 1995, 240 SCRA 495.

24[24] Clapp, DICTIONARY OF THE LAW 194.

25[25] Now the Department of Environment and Natural Resources.

26[26] In part the cancellation decision reads: All the timber concessions of Alfonso Lim, Sr., namely: TLA
No. 071 (Taggat Industries, Inc.), TLA No. 074 (Pamplona Redwood Veneer Co., Inc.); TLA No. 321 (Southern
Plywood Corp.); and TLA No. 073 (Western Cagayan Lumber, Inc.) and TLA No. 075 (Acme Plywood & Veneer Co.,
Inc.) are hereby ordered REVOKED/CANCELLED, and the areas respectively covered thereby be reverted to the
mass of public forest. The District Foresters or the WIDA area Managers concerned, as the case may be, are hereby
 (1) Lim, Sr., through the seven (7) respondent corporations, had been
holding/operating/managing several timber concessions with a total area of
533,880 hectares, more or less, which was far in excess of the 100,000 hectares
allowed in the 1973 Constitution;27[27]

(2) Since a wide expanse of forest lands were in between the different Lim
concessions, the Lims had effectively access to a total of 633,880 hectares of
forests; and

(3) Other violation of the constitutional prohibition applies also to three (3)
corporations (Acme Plywood Co., Inc., Western Cagayan Lumber Co., Inc., and
Southern Plywood Corporation).

As is made abundantly clear in the aforesaid Maceda decision, the MNR

revoked or canceled the concessions or timber license agreements (TLAs) of Lim,
Sr. on the principal ground that the timber award was made in utter violation of the
Constitutional limitations on the granting of logging concessions.28[28] The same
decision also indicated that Lim, Sr.s influence, power and strong connection with
the past [i.e., Marcos] dispensation29[29] explained his receipt of special

directed to conduct inventories of the logs cut prior to these cancellation orders and to cause the removal of
logging equipments from the production areas of the licensee within thirty (30) days from date hereof.

27[27] Art. XIV, Sec. 11 of the 1973 Constitution provides that [N]o private corporation
or association may hold by lease, concession, license or permit, timber or forest lands and other
timber or forest resources in excess of one hundred hectares.

28[28] The canceled TLAs were those pertaining to TAGGAT, PAMPLONA, Southern
Plywood Corp., Western Cagayan Lumber, Inc., and Acme Plywood & Veneer Co., Inc.

29[29] Rollo, p. 163.

privileges and concessions unfettered by constitutional constraints. So influential
was Lim, Sr. that he and TAGGAT and sister companies received certain timber-
related benefits without the knowledge, let alone approval, of MNR.30[30] Lim,
Sr. doubtless utilized to the hilt his closeness to the Marcoses to amass what may
prima facie be considered as illegal wealth.

Scheme to Circumvent Constitutional Prohibition

Sec. 11 of Article XIV of the governing 1973 Constitution states that no private
corporation or association may hold by lease, concession, license, or permit,
timber or forest lands and other timber or forest resources in excess of one
hundred thousand hectares. Complementing this provision was Chapter I, No.
3(e) of Forestry Administrative Order (FAO) No. 11 prohibiting any individual,
corporation, partnership, or association from acquiring a timber license or license
agreement covering an area in excess of 100,000 hectares. Likewise, Chapter I, No.
3(d) of FAO No. 11 states that no individual corporation, partnership, or
association who is already a holder of an ordinary timber license or license
agreement nor any member of the family, incorporator, director, stockholder, or
member of such individual, corporation, partnership, or association shall be
allowed to acquire a new timber license or license agreement or any interest or
participation in it.

The constitutional and statutory limitations on allowable area leases and

concessions were obviously meant to prevent the concentration of large tracts of
public land in the hands of a single individual. But as the Office of the Solicitor
General aptly observed, citing the Maceda decision: For one Filipino out of 55
million to own, operate or in one form [or] another be financially interested in
more than 600,000 hectares out of a total forest land of 14 million hectares is
certainly unfair, unacceptable and unconstitutional by any standard.31[31]

Lim, Sr., as earlier stated, had been holding/operating/managing several timber

concessions through the seven (7) logging companies for an aggregate area of 533,880 hectares,
as follows:

30[30] Id. at 153.

31[31] Id. at 18-19.

 Name of Corporation TLA No. Concession Area
(1) Taggat Industries, Inc. 071 107,845 has.
(2) Pamplona Redwood Veneer Co., Inc. 074 118,315 has
(3) Southern Plywood Corp. (one share) 321 71,300 has.
(4) Western Cagayan Lumber Co., Inc. (one share) 073 69,675 has.
(5) Acme Plywood & Veneer Co,, Inc. (one share) 075 84,525 has.
(6) Veterans Woodworks, Inc. 63,179 has.
(7) Sierra Madre Wood Ind., Inc. 345 19,050 has.
TOTAL 533,880 has.

The Maceda decision stressed that Lim, Sr. had one share each in the three
corporations, namely: (1) Acme Plywood and Veneer Co., Inc. (ACME); (2)
Western Cagayan Lumber Co., Inc. (WESTERN); and (3) Southern Plywood
Corporation (SPC). These corporations, the decision added, likewise violated the
Constitution considering that Lim, Sr. had control over them as owner-founder. To
cover the constitutional violation, Lim, Jr. was used as a front and made to appear
as President of the mentioned three corporations.32[32]

There can be no quibbling that MNR correctly revoked/canceled all the

timber concessions of Lim, Sr., namely: TLA No. 071 (TAGGAT), TLA No. 074
(PAMPLONA), TLA No. 321 (SPC), TLA No. 073 (WESTERN), and TLA No.
075 (ACME). As it were, the TLAs of TAGGAT and PAMPLONA each exceeded
the 100,000-hectare threshold prescribed by the 1973 Constitution. Initially, the
execution and granting of those timber license agreements were already tainted
with fraud. The Lims resorted to their close connection with the Marcoses for the
approval of the timber license agreements and the Lims were given access
effectively to a total 633,880 hectares in violation of the 1973 Constitution and
FAO No. 11.

32[32] Id. at 161.

 Indeed, the Lims availment and enjoyment of logging concessions grossly in
excess of constitutional limits amount to a voluntary execution of a wrongful act, if
not a serious breach of legal duty. By their acts, the Lims veritably defrauded and
cheated the Filipino peoplethe ultimate beneficiaries of the countrys natural
resources.

Denial of Demurrer to Evidence Indicative

of the Commission of Fraudulent Acts

The evidence that clearly supports the issuance of a writ of preliminary

attachment sought by Republic is already on record before the Sandiganbayan. As
a matter of fact, the anti-graft court already ruled and considered that the evidence
so far presented by the Republic had been sufficient to support a finding that
respondents had committed illegal and fraudulent acts against the Republic and the
Filipino people. This was the tenor of the Sandiganbayans resolution denying the
respondents demurrer to evidence.

A demurrer to evidence is defined as an objection by one of the parties in an

action, to the effect that the evidence which his adversary produced is insufficient
in point of law, whether true or not, to make out a case or sustain the issue.33[33]
The party demurring challenges the sufficiency of the whole evidence to sustain a
verdict.34[34] In passing upon the sufficiency of the evidence raised in a
demurrer, the court is merely required to ascertain whether there is competent or

33[33] Rivera v. People, G.R. No. 163996, June 9, 2005, 460 SCRA 85, 91; citing Gutib
v. Court of Appeals, G.R. No. 131209, August 13, 1999, 312 SCRA 365, 371.

34[34] Id.; citing Ong v. People, G.R. No. 140904, October 9, 2000, 342 SCRA 372, 383.
sufficient proof to sustain the indictment or to support a verdict of guilt.35[35] And
when the court denies the demurrer, the defendant has to present countervailing
evidence against the evidence adduced by the plaintiff.36[36]

In the case at bar, when the Sandiganbayan denied respondents demurrer to

evidence, it in effect ruled that the evidence presented by the prosecution is, absent
a countervailing evidence, prima facie sufficient to support an adverse verdict
against them for amassing illegal wealth. The Sandiganbayan, in its underlying
resolution of July 17, 2003 denying the demurrer, wrote:

The Demurrer is denied.

To support the charges, plaintiff introduced, among others, Exhibit B, a

decision dated November 20, 1986 by then DENR Secretary Ernesto Maceda
which, after hearing, revoked or cancelled the respective Timber License
Agreements (TLAs) of defendants Alfonso Lim, Sr., Taggat Industries, Inc.,
Pamplona Redwood Veneer, [etc.] after an investigation found that the same
entities held timber concessions in excess of what was allowed by the
Constitution. The same decision likewise made certain findings of facts that x x x
Lim, Sr. enjoyed close association with former President Ferdinand E. Marcos as
a consequence of which the latter granted x x x Lim, Sr. special privileges and
concessions in gross violation of the Constitution. In addition, Exhibit E indicates
that x x x Taggat Industries, chiefly owned by defendant Lim Sr., using his close
association with then President Marcos, acquired and controlled three (3) other
logging firms, namely Veteran Woodworks, Inc., Tropical Philippine Wood
Industries, Inc., and Sierra Madre Wood Industries, Inc. x x x. This resulted to the
acquisition of defendant Lim Sr. of excessive number of timber concessions.

Given the circumstances, this Court cannot simply brush aside the foregoing considering that
what the defendants-movants proffer are mere blanket denial of the charges. In demurrer to
evidence, the party demurring challenges the sufficiency of the whole evidence to sustain a
verdict. The court, in passing upon the sufficiency of the evidence raised in a demurrer, is merely
required to ascertain whether there is competent or sufficient evidence to sustain the indictment.

35[35] Id.; citing Choa v. Choa, G.R. No. 143376, November 26, 2002, 392 SCRA 641,
648.

36[36] RULES OF COURT, Rule 33, Section 1.

Applying the said ruling in the instant case, there exists prima facie evidence on record x x x to
support or sustain the charges against the defendants-movants. There is therefore a further need
on the part of the defendants-movants to submit the proof to the contrary other than their mere
simple disclaimer.37[37]

Sandiganbayan Did Not Consider

Evidence in Denying Attachment

Given the foregoing pronouncement from the Sandiganbayan, the Court is

completely at a loss to understand the graft courts denial of the Republics plea for
the ancillary remedy of preliminary attachment. The wrongful actthe fraud
perpetuated by Lim Sr. and/or his corporations on the Republicis written over or
easily deducible from the adverted Maceda decision and Exhibit E. While fraud
cannot be presumed, it need not be proved by direct evidence and it can well be
inferred from attendant circumstances.38[38] Withal, we cannot but agree with the
Republics contention that the Sandiganbayans denial of its motion for a writ of
preliminary attachment constitutes grave and patent abuse of discretion amounting
to lack or excess of jurisdiction.

A scrutiny of the above-quoted July 17, 2003 Resolution readily shows that
the Sandiganbayan indeed considered the evidence presented and offered by the
Republic, specifically Exhibits B and E which convincingly show the finding that
respondents acts were tainted with fraud in the acquisition of the logging
concessions due to their close association with the Marcoses.

It is incongruous, therefore, for the Sandiganbayan to deny the writ of

preliminary attachment when the pieces of evidence on record which it used and

37[37] Rollo, pp. 232-233.

38[38] Godinez v. Alano, A.M. No. RTJ-98-1409, February 18, 1999, 303 SCRA 259,
271.
based its findings and conclusions in denying the demurrer to evidence were the
same ones which demonstrate the propriety of the writ of preliminary attachment.
Clearly, the Republic has complied with and satisfied the legal obligation to show
the specific acts constitutive of the alleged fraud committed by respondents. The
denial of the prayed writ, thus, evidently constitutes grave abuse of discretion on
the part of Sandiganbayan. After all, attachment is a mere provisional remedy to
ensure the safety and preservation of the thing attached until the plaintiff can, by
appropriate proceedings, obtain a judgment and have such property applied to its
satisfaction.39[39] Indeed, the properties of respondents sought to be subjected to
the ancillary writ of preliminary attachment are not only in danger of being lost but
should be placed under custodia legis to answer for any liabilities that may be
adjudged against them in the instant case.

WHEREFORE, the Sandiganbayan Resolutions dated March 28, 2003 and

June 18, 2004 are hereby REVERSED and SET ASIDE. Accordingly, the 2nd
Division of Sandiganbayan is hereby DIRECTED to ISSUE the Writ of
Preliminary Attachment prayed for by the Republic. No costs.

SO ORDERED.
 FIRST DIVISION

FOUNDATION SPECIALISTS, G.R. No. 170674

INC., Petitioner,

Present:PUNO, C.J., Chairperson, CARPIO,

-versus- CORONA, LEONARDO-DE CASTRO and BERSAMIN, JJ.

BETONVAL READY CONCRETE,

INC. and STRONGHOLD

INSURANCE CO., INC.,

Respondents.

Promulgated: August 24, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - x

DECISION

CORONA, J.:

On separate dates, petitioner Foundation Specialists, Inc. (FSI) and respondent Betonval Ready

Concrete, Inc. (Betonval) executed three contracts40[1] for the delivery of ready mixed concrete by

Betonval to FSI. The basic stipulations were: (a) for FSI to supply the cement to be made into ready

40[1] Individually denominated as "Contract Proposals and Agreements" dated July 23, 1991,
September 18, 1991 and March 26, 1992, respectively. Rollo, pp. 86-91.
mixed concrete; (b) for FSI to pay Betonval within seven days after presentation of the invoices plus 30%

interest p.a. in case of overdue payments and (c) a credit limit of P600,000 for FSI.

Betonval delivered the ready mixed concrete pursuant to the contracts but FSI failed to pay its

outstanding balances starting January 1992. As an accommodation to FSI, Betonval extended the seven

day credit period to 45 days.41[2]

On September 1, 1992, Betonval demanded from FSI its balance of P2,349,460.42[3] Betonval informed

FSI that further defaults would leave it no other choice but to impose the stipulated interest for late

payments and take appropriate legal action to protect its interest.43[4] While maintaining that it was

still verifying the correctness of Betonvals claims, FSI sent Betonval a proposed schedule of payments

devised with a liability for late payments fixed at 24% p.a.44[5]

41[2] Records, Vol. I, pp. 143-145. The extension of the credit term from seven days to 45 days
was made in a letter dated March 6, 1992. Attached to this letter was a detailed summary
of payments based on invoices not paid or covered by postdated checks issued by FSI for
various deliveries made or to be made by Betonval between January 14, 1992 to August
18, 1992. The 45-day credit extension was likewise reflected in the various invoices
dated between March 31, 1992 to September 3, 1992, all duly received by FSI. Id., pp.
16-66.

42[3] Records, Vol. I, pp. 68-69. This amount included the previously unpaid amount and new
billings.

43[4] Rollo, p. 203.

44[5] Id., pp. 72-73. FSIs proposed schedule of payments had reference to the statement of
account of Betonval. Of particular note in this statement of account is Betonvals
computation of interest at 24% computed from due date of the invoices, to which FSI
acceded per its September 3, 1992 letter.
Thereafter, FSI paid Betonval according to the terms of its proposed schedule of payments. It was able

to reduce its debt to P1,114,203.34 as of July 1993, inclusive of the 24% annual interest computed from

the due date of the invoices.45[6] Nevertheless, it failed to fully settle its obligation.

Betonval thereafter filed an action for sum of money and damages in the Regional Trial Court

(RTC).46[7] It also applied for the issuance of a writ of preliminary attachment alleging that FSI

employed fraud when it contracted with Betonval and that it was disposing of its assets in fraud of its

creditors.

FSI denied Betonvals allegations and moved for the dismissal of the complaint. The amount

claimed was allegedly not due and demandable because they were still reconciling their respective

records. FSI also filed a counterclaim and prayed for actual damages, alleging that its other projects

were delayed when Betonval attached its properties and garnished its bank accounts. It likewise prayed

for moral and exemplary damages and attorneys fees.

The RTC issued a writ of preliminary attachment and approved the P500,000 bond of respondent

Stronghold Insurance Co., Inc. (Stronghold). FSI filed a counterbond of P500,000 thereby discharging the

writ of preliminary attachment, except with respect to FSIs excavator, crawler crane and Isuzu pick-up

truck, which remained in custodia legis.47[8] An additional counterbond of P350,000 lifted the

garnishment of FSIs receivables from the Department of Public Works and Highways.

45[6] Id., p. 15.

46[7] Makati City, Branch 125. The action was docketed as Civil Case No. 93-2430. Id., p. 59.

47[8] Id., p. 63.

 On January 29, 1999, the RTC ruled for Betonval.48[9] However, it awarded P200,000

compensatory damages to FSI on the ground that the attachment of its properties was improper.49[10]

FSI and Stronghold separately filed motions for reconsideration while Betonval filed a motion for

clarification and reconsideration. In an order dated May 19, 1999, the RTC denied the motions for

48[9] Penned by then Acting Presiding Judge Oscar B. Pimentel. Id., pp. 214-221.

49[10] Id., pp. 214-221. The dispositive portion of the January 29, 1999 decision stated:

WHEREFORE, premises considered, judgment is hereby rendered, ordering the defendant to pay

plaintiff the sum of P1,114,203.34, plus legal interest at the rate of 12% per annum from date of

judicial demand or filing of this complaint until the full amount is paid; and, the sum of

P50,000.00 as and by way of reasonable attorneys fees, and the costs.

On defendants counterclaim, the award of moral and exemplary damages as prayed for is denied

for lack of merit.

However, plaintiff and surety are held jointly and severally liable on their attachment bond for

actual damages to defendant and are hereby ordered to pay defendant P200,000.00 as

reasonable compensatory damages arising from the improper attachment caused by the

negligence of plaintiff.

The writ of attachment having been improperly issued, is hereby ordered dissolved and the

counterbond of defendant discharged.

SO ORDERED.
reconsideration of Betonval and Stronghold. However, the January 29, 1999 decision was modified in

that the award of actual or compensatory damages to FSI was increased to P1.5 million.50[11]

50[11] Id., 235. The modification read:

WHEREFORE, premises considered, finding merit on the motion of defendant the same is hereby

given DUE COURSE. Consequently, the dispositive portion of the decision of this Court dated 29

January 1999, is hereby amended to read as:

WHEREFORE, premises considered, judgment is hereby rendered, ordering the

defendant to pay plaintiff the sum of P1,114,203.34, plus legal interest at the rate of

12% per annum from date of judicial demand or filing of this complaint until the full

amount is paid; and, the sum of P50,000.00 as and by way of reasonable attorneys fees,

and costs.

On defendants counterclaim, the award of moral and exemplary damages as prayed for

is denied for lack of merit.

However, plaintiff is hereby held liable on its attachment bond for actual damages to

defendant and is hereby ordered to pay said defendant a reasonable amount of

P1,500,000.00 as actual and compensatory damages arising from the improper

attachment caused by the negligence of plaintiff. As to the surety, Stronghold Insurance

Company, Inc. the same is hereby held jointly and severally liable with the plaintiff for

the aforesaid liability and is ordered to pay the defendant in the amount of P500,000.00

as covered by the attachment bond.

All parties appealed to the Court of Appeals (CA). However, only the respective appeals of Betonval and

Stronghold were given due course because FSIs appeal was dismissed for nonpayment of the appellate

docket fees.51[12]

In its appeal, Betonval assailed the award of actual damages as well as the imposition of legal interest at

only 12%, instead of 24% as agreed on. Stronghold, on the other hand, averred that the attachment was

proper.

In its decision52[13] dated January 20, 2005, the CA upheld the May 19, 1999 RTC order with

modification. The CA held that FSI should pay Betonval the value of unpaid ready mixed concrete at 24%

p.a. interest plus legal interest at 12%. The CA, however, reduced the award to FSI of actual and

compensatory damages, thus:

WHEREFORE, premises considered, the appealed Order dated May 19, 1999 is

MODIFIED as follows: (a) to increase the rate of interest imposable on the

P1,114,203.34 awarded to appellant Betonval from 12% to 24% per annum, with the

The writ of attachment having been improperly issued, is hereby ordered dissolved and

the counterbond of defendant discharged.

The motion for reconsideration filed by the plaintiff as well as that of Stronghold

Insurance Company, Inc. is hereby DENIED for lack of merit.

SO ORDERED. (emphasis in the original)

51[12] Id., p. 67.

52[13] Penned by Associate Justice Rebecca de Guia-Salvador and concurred in by Associate

Justices Portia Alio-Hormachuelos and Aurora Santiago-Lagman (now retired) of the
Seventh Division of the Court of Appeals. Id., pp. 59-78.
 aggregate sum to further earn an annual interest rate of 12% from the finality of this

decision, until full payment; (b) to reduce the award of actual damages in favor of

appellee from P1,500,000.00 to P200,000.00; (c) to hold both appellants jointly and

severally liable to pay said amount; and (d) to hold appellant Betonval liable for

whatever appellant surety may be held liable under the attachment bond. The rest is

AFFIRMED in toto.

FSIs motion for reconsideration was denied.53[14]

In this petition for review on certiorari,54[15] FSI prays for the following:

(a) decrease the rate of imposable interest on the P1,114,203.34 award to Betonval, from

12% to 6% p.a. from date of judicial demand or filing of the complaint until the full

amount is paid;

(b) deduct [from the award to Betonval] the cost or value of unused cement based on [its]

invoice stating 1,307.45 bags computed at the prevailing price;

(c) award actual and compensatory damages at P3,242,771.29;

(d) hold Betonval and Stronghold jointly and severally liable to pay such actual and

compensatory damages;

(e) hold Betonval liable for whatever Stronghold may be held liable under the attachment

bond and

(f) affirm in toto the rest of the order.55[16]

53[14] Id., pp. 80-84.

54[15] Under Rule 45 of the Rules of Court.

The petition has no merit.

BETONVALS COMPLAINT

WAS NOT PREMATURE

FSI argues that Betonvals complaint was prematurely filed. There was allegedly a need to

reconcile accounts, particularly with respect to the value of the unused cement supplied by FSI, totaling

2,801.2 bags56[17] which supposedly should have been deducted from FSIs outstanding obligation.

FSIs repeated requests for reconciliation of accounts were allegedly not heeded by Betonvals

representatives.

FSIs contention is untenable. It neither alleged any discrepancies in nor objected to the

accounts within a reasonable time.57[18] As held by the RTC, FSI was deemed to have admitted the

truth and correctness of the entries in the invoices since:

[N]o attempts were made to reconcile [FSIs] own record with [Betonval] until after the

filing of the complaint, inspite of claims in [FSIs] Answer about its significance, and

despite having had plenty of opportunity to do so from the time of receipt of the

invoices or demand letters from [Betonval]. [FSIs] excuse that it was impractical to

reconcile accounts during the middle of transactions is defeated by the absence of any

showing on record that a formal request to reconcile was issued to [Betonval] despite

55[16] Rollo, p. 53.

56[17] As reflected in FSIs record of Bulk Cement Status as opposed to Betonvals last invoice
which only reflected 1,307.45 bags. Id., p. 20.

57[18] Id., p. 217.

 the completion of deliveries or [FSIs] discovery of the alleged discrepancies, as well as

its failure to initiate any meeting with [Betonval], including one which the parties

were directed to hold for that purpose by the Court. Since [FSI] failed to prove the

correctness of its entries against those in [Betonvals] invoices, its record is self-serving.

xxx (emphasis supplied)

In view of FSIs failure to dispute this finding of the RTC because of its failure to perfect its appeal, FSI is

now estopped from raising this issue. There is no cogent reason to depart from the RTCs finding.

Undaunted, FSI retracts. Instead of claiming the balance of the unused cement as reflected in its

records, it now bases its claim on the invoices of Betonval. FSI relies on the RTCs statement in the May

19, 1999 order:

Still it can claim the cost of the balance of unused cement based on [Betonvals] invoices,

notwithstanding its admission of the obligation in the letter, as it neither expressed nor

implied any intent to waive that claim by said admission.

FSI contends that this declaration has become final and executory and must be implemented in the

name of substantial justice. Betonval, however, avers that that the issue on the alleged unused cement

was never raised as an affirmative defense in its answer or in its motion for reconsideration to the

January 29, 1999 decision. Neither was this issue raised in the CA. Hence, FSI must not be allowed to

broach it for the first time in this Court. Betonval is correct.

It is well-settled that issues not raised in the trial court may not be raised for the first time on appeal.

Furthermore, defenses and objections not pleaded either in a motion to dismiss or in the answer are

deemed waived.58[19]

More importantly, the portion of a decision that becomes the subject of an execution is that ordained or

decreed in the dispositive portion.59[20] In this case, there was no award in favor of FSI of the value of

the balance of the unused cement as reflected in the invoices.

THE APPLICABLE INTEREST RATE IS 24% P.A.

There is no dispute that FSI and Betonval stipulated the payment of a 30% p.a. interest in case of

overdue payments. There is likewise no doubt that FSI failed to pay Betonval on time.

FSI acknowledged its indebtedness to Betonval in the principal amount of P1,114,203.34. However, FSI

opposed the CAs imposition of a 24% p.a. interest on the award to Betonval allegedly because: (a) the

grant to FSI of a 45-day credit extension novated the contracts insofar as FSIs obligation to pay any

interest was concerned; (b) Betonval waived its right to enforce the payment of the 30% p.a. interest

when it granted FSI a new credit term and (c) Betonvals prayer for a 24% p.a. interest instead of 30%,

resulted in a situation where, in effect, no interest rate was supposedly stipulated, thus necessitating

the imposition only of the legal interest rate of 6% p.a. from judicial demand.

FSIs contentions have no merit.

Novation is one of the modes of extinguishing an obligation.60[21] It is done by the substitution or

change of the obligation by a subsequent one which extinguishes the first, either by changing the object

58[19] RULES OF COURT, Rule 9, Sec. 1.

59[20] Davao Light and Power Company, Inc. v. Diaz, G.R. No. 150253, 30 November 2006,
509 SCRA 152, 169.
or principal conditions, or by substituting the person of the debtor, or by subrogating a third person in

the rights of the creditor.61[22] Novation may:

[E]ither be extinctive or modificatory, much being dependent on the nature of the

change and the intention of the parties. Extinctive novation is never presumed; there

must be an express intention to novate; in cases where it is implied, the acts of the

parties must clearly demonstrate their intent to dissolve the old obligation as the

moving consideration for the emergence of the new one. Implied novation necessitates

that the incompatibility between the old and new obligation be total on every point

such that the old obligation is completely superceded by the new one. The test of

incompatibility is whether they can stand together, each one having an independent

existence; if they cannot and are irreconcilable, the subsequent obligation would also

extinguish the first.

An extinctive novation would thus have the twin effects of, first, extinguishing an

existing obligation and, second, creating a new one in its stead. This kind of novation

presupposes a confluence of four essential requisites: (1) a previous valid obligation, (2)

an agreement of all parties concerned to a new contract, (3) the extinguishment of the

old obligation, and (4) the birth of a valid new obligation. Novation is merely

modificatory where the change brought about by any subsequent agreement is merely

incidental to the main obligation (e.g., a change in interest rates or an extension of time

to pay; in this instance, the new agreement will not have the effect of extinguishing the

60[21] CIVIL CODE, Art. 1231.

61[22] Tolentino, Arturo M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL

CODE OF THE PHILIPPINES (VOLUME FOUR), Central Book Supply, Inc., p. 381.
 first but would merely supplement it or supplant some but not all of its

provisions.)62[23]

The obligation to pay a sum of money is not novated by an instrument that expressly recognizes

the old, changes only the terms of payment, adds other obligations not incompatible with the old ones

or the new contract merely supplements the old one.63[24]

The grant by Betonval to FSI of a 45-day credit extension did not novate the contracts so as to extinguish

the latter. There was no incompatibility between them. There was no intention by the parties to

supersede the obligations under the contracts. In fact, the intention of the 45-day credit extension was

precisely to revive the old obligation after the original period expired with the obligation unfulfilled. The

grant of a 45-day credit period merely modified the contracts by extending the period within which FSI

was allowed to settle its obligation. Since the contracts remained the source of FSIs obligation to

Betonval, the stipulation to pay 30% p.a. interest likewise remained.

Obviously, the extension given to FSI was triggered by its own request, to help it through its financial

difficulties. FSI would now want to take advantage of that generous accommodation by claiming that its

liability for interest was extinguished by its creditors benevolence.

Neither did Betonval waive the stipulated interest rate of 30% p.a., as FSI erroneously claims. A waiver is

a voluntary and intentional relinquishment or abandonment of a known legal right or privilege.64[25] A

waiver must be couched in clear and unequivocal terms which leave no doubt as to the intention of a

62[23] Iloilo Traders Finance, Inc. v. Heirs of Oscar Soriano, Jr., 452 Phil. 82, 89-90 (2003).

63[24] Spouses Reyes v. BPI Family Savings Bank, G.R. Nos. 149840-41, 31 March 2006, 486
SCRA 276, 282.

64[25] R.B. Michael Press and Escobia v. Galit, G.R. No. 153510, 13 February 2008, 545
SCRA 23, 31.
party to give up a right or benefit which legally pertains to him.65[26] FSI did not adduce proof that a

valid waiver was made by Betonval. FSIs claim is therefore baseless.

Parties are bound by the express stipulations of their contract as well as by what is required by the

nature of the obligation in keeping with good faith, usage and law.66[27] Corollarily, if parties to a

contract expressly provide for a particular rate of interest, then that interest shall be applied.67[28]

It is clear that Betonval and FSI agreed on the payment of interest. It is beyond comprehension how

Betonvals prayer for a 24% interest on FSIs balance could have resulted in a situation as if no interest

rate had been agreed upon. Besides, FSIs proposed schedule of payments (September 3, 1992),68[29]

referring to Betonvals statement of account,69[30] contained computations of FSIs arrears and billings

with 24% p.a. interest.

There can be no other conclusion but that Betonval had reduced the imposable interest rate from 30%

to 24% p.a. and this reduced interest rate was accepted, albeit impliedly, by FSI when it proposed a new

schedule of payments and, in fact, actually made payments to Betonval with 24% p.a. interest. By its

own actions, therefore, FSI is estopped from questioning the imposable rate of interest.

65[26] Id.

66[27] Spouses Quiamco v. Capital Insurance & Surety Co., Inc., G.R. No. 170852, 12
September 2008.

67[28] Casa Filipino Development Corporation v. Deputy Executive Secretary, G.R. No. 96494,
28 May 1992, 209 SCRA 399, 405.

68[29] Records, Vol. I, p. 72.

69[30] Id., p. 73.

We likewise hold that the imposition of a 12% p.a. interest on the award to Betonval (in addition to the

24% p.a. interest) in the assailed judgment is proper. When the judgment of the court awarding a sum of

money becomes final and executory, the rate of legal interest shall be 12% p.a. from such finality until

its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of

credit.70[31]

THERE WAS IMPROPER ATTACHMENT OF FSIS PROPERTIES

Betonvals application for the issuance of the writ of preliminary attachment

was based on Section 1(d) and (e), Rule 57 of the Rules of Court.71[32] However,

the CA affirmed the RTCs factual findings that there was improper attachment of

FSIs properties. In debunking FSIs claim for actual damages, respondents insist

that the attachment was proper and that Betonval was able to sufficiently prove

the existence of the grounds for attachment. However, these are factual matters

70[31] Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 97.

71[32] SECTION 1. Grounds upon which attachment may issue. At the commencement of the action or at any
time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered in the following cases:

(a) xxx

(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance
thereof;

(e) In an action against a party who has removed or disposed of his property, or is about
to do so, with intent to defraud his creditors; xxx
that have been duly passed upon by the RTC and the CA and which are

inappropriate in a petition for review.

Moreover, we agree with the RTC and the CA that FSIs properties were

improperly attached. Betonval was not able to sufficiently show the factual

circumstances of the alleged fraud because fraudulent intent cannot be inferred

from FSIs mere nonpayment of the debt or failure to comply with its obligation. In

Ng Wee v. Tankiansee,72[33] we held that the applicant must be able to

demonstrate that the debtor intended to defraud the creditor. Furthermore:

The fraud must relate to the execution of the agreement and must have been
the reason which induced the other party into giving consent which he would not have
otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon contracting the obligation sued upon. A
debt is fraudulently contracted if at the time of contracting it the debtor has a
preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind
and need not be proved by direct evidence but may be inferred from the circumstances
attendant in each case.73[34]

In other words, mere failure to pay its debt is, of and by itself, not enough
to justify an attachment of the debtors properties. A fraudulent intention not to
pay (or not to comply with the obligation) must be present.

72[33] G.R. No. 171124, 13 February 2008, 545 SCRA 263, 272-273.

73[34] Id., citing Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 13 May 1993, 222 SCRA 37.
PETITIONER IS NOT ENTITLED TO THE AMOUNT OF ACTUAL DAMAGES PRAYED FOR

In its bid for a bigger award for actual damages it allegedly suffered from

the wrongful attachment of its properties, FSI enumerates the standby costs of

equipment74[35] and manpower standby costs75[36] it allegedly lost. We cannot

grant FSIs prayer. FSI did not pursue its appeal to the CA as shown by its failure to

pay the appellate docket fees. It is well-settled that a party who does not appeal

from the decision may not obtain any affirmative relief from the appellate court

other than what he has obtained from the lower court whose decision is brought

up on appeal.76[37]

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

74[35] Standby cost of equipment for its EDSA/Boni/Pioneer Interchange project amounted to
P2,353,952.29. For its Bulacan Bridge project, the standby equipment cost was pegged at
P98,154.

75[36] Manpower standby costs for its EDSA/Boni/Pioneer Interchange project was P312,312
and P478,344 for its Perla Mansion project.

76[37] Bank of the Philippine Islands v. Lifetime Marketing Corp., G.R. No. 176434, 25 June 2008, 555 SCRA 373,
382.
 FOUNDATION SPECIALISTS, INC., vs. BETONVAL READY CONCRETE INC. and
STRONGHOLD INSURANCE CO., INC.,
G.R. No. 170674
August 24, 2009

FACTS: On separate dates, petitioner FSI and respondent Betonval executed three contracts for
the delivery of ready mixed concrete by Betonval to FSI. Betonval delivered the ready mixed
concrete pursuant to the contracts but FSI failed to pay its outstanding balance. As an
accommodation to FSI, Betonval extended the seven day credit period to 45 days.

Betonval demanded from FSI its balance. Betonval informed FSI that further defaults would
leave it no other choice but to impose the stipulated interest for late payments and take
appropriate legal action to protect its interest. While maintaining that it was still verifying the
correctness of Betonvals claims, FSI sent Betonval a proposed schedule of payments devised
with a liability for late payments fixed at 24% p.a.

Thereafter, FSI paid Betonval according to the terms of its proposed schedule of payments. It
was able to reduce its debt, inclusive of the annual interest. Nevertheless, it failed to fully settle
its obligation.

Betonval thereafter filed an action for sum of money and damages in the RTC. It also applied for
the issuance of a writ of preliminary attachment alleging that FSI employed fraud when it
contracted with Betonval and that it was disposing of its assets in fraud of its creditors.

FSI denied Betonvals allegations and moved for the dismissal of the complaint. FSI also filed a
counterclaim and prayed for AD, MD, ED and AF.

The RTC issued a writ of preliminary attachment and approved the P500,000 bond of
Stronghold.

The RTC ruled for Betonval. However, it awarded compensatory damages to FSI on the ground
that the attachment of its properties was improper.

FSI and Stronghold separately filed MRs while Betonval filed a motion for clarification and
reconsideration. The RTC denied both MRs.. All parties appealed to the CA. However, only the
respective appeals of Betonval and Stronghold were given due course because FSIs appeal was
dismissed for nonpayment of the appellate docket fees.

the CA upheld the RTC order with modification. FSIs MR was denied, hence this petition for
review on certiorari

ISSUE:

WON THERE WAS IMPROPER ATTACHMENT OF FSIS PROPERTIES

WON PETITIONER IS ENTITLED TO THE AMOUNT OF ACTUAL DAMAGES PRAYED
FOR

HELD: WHEREFORE, the petition is hereby DENIED.

YES; Betonvals application for the issuance of the writ of preliminary attachment was based on
Section 1(d) and (e), Rule 57 of the ROC. However, the CA affirmed the RTCs factual findings
that there was improper attachment of FSIs properties.. However, these are factual matters that
have been duly passed upon by the RTC and the CA and which are inappropriate in a petition for
review.

Moreover, we agree with the RTC and the CA that FSIs properties were improperly attached.
Betonval was not able to sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from FSIs mere nonpayment of the debt or failure to comply
with its obligation. In Ng Wee v. Tankiansee, we held that the applicant must be able to
demonstrate that the debtor intended to defraud the creditor. Furthermore:

The fraud must relate to the execution of the agreement and must have been the reason which
induced the other party into giving consent which he would not have otherwise given. To
constitute a ground for attachment in Section 1 (d), Rule 57 of the ROC, fraud should be
committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the
time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this
case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred
from the circumstances attendant in each case.

In other words, mere failure to pay its debt is, of and by itself, not enough to justify an
attachment of the debtors properties. A fraudulent intention not to pay (or not to comply with
the obligation) must be present.

NO; In its bid for a bigger award for actual damages it allegedly suffered from the wrongful
attachment of its properties, FSI enumerates the standby costs of equipment and manpower
standby costs it allegedly lost. We cannot grant FSIs prayer. FSI did not pursue its appeal to the
CA as shown by its failure to pay the appellate docket fees. It is well-settled that a party who
does not appeal from the decision may not obtain any affirmative relief from the appellate court
other than what he has obtained from the lower court whose decision is brought up on appeal.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-35990 June 17, 1981

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, petitioners,
vs.
COTABATO BUS COMPANY, INC., respondent.

DE CASTRO, J.:

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
issued 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, for the collection of money in the
sum of P 155,739.41, 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". An
opposition and a supplemental opposition were filed to the urgent motion. 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. 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. In its decision promulgated on October 3,
1971, the Court of Appeals declared "null and void the order/writ of
attachment dated November 3, 1971 and the orders of December 2, 1971, as
well as that of December 11, 1971, ordered the release of the attached
properties, and made the restraining order originally issued permanent.

The present recourse is an appeal by certiorari from the decision of the Court
of Appeals reversing the assailed orders of the Court of First Instance of
Davao, (Branch I), petitioner assigning against the lower court the following
errors:

ERROR I

THE COURT OF APPEALS ERRED IN HASTILY AND

PERFUNCTORILY RENDERING, ON OCTOBER 3, 1971, A
DECISION WITHOUT CONSIDERING MOST OF THE
EVIDENCE SUCH THAT

l) EVEN AN IMPORTANT FACT, ESTABLISHED BY

DOCUMENTARY EVIDENCE AND NOT DENIED BY
RESPONDENT, IS MENTIONED ONLY AS A "CLAIM" OF
PETITIONER COMPANY;

2) THE DECISION CONTAINS NO DISCUSSION AND

APPRECIATION OF THE FACTS AS PROVED, ASSEMBLED
AND PRESENTED BY PETITIONER COMPANY SHOWING IN
THEIR TOTALITY THAT RESPONDENT HAS REMOVED,
DIVERTED OR DISPOSED OF ITS BANK DEPOSITS, INCOME
AND OTHER LIQUID ASSETS WITH INTENT TO DEFRAUD ITS
CREDITORS, ESPECIALLY ITS UNSECURED SUPPLIERS;

3) THE DECISION IGNORES THE SIGNIFICANCE OF THE

REFUSAL OF RESPONDENT TO PERMIT, UNDER REP. ACT
NO. 1405, THE METROPOLITAN BANK & TRUST CO. TO
BRING, IN COMPLIANCE WITH A subpoena DUCES TECUM
TO THE TRIAL COURT ALL THE RECORDS OF
 RESPONDENT'S DEPOSITS AND WITHDRAWALS UNDER ITS
CURRENT AND SAVINGS ACCOUNTS (NOW NIL) FOR
EXAMINATION BY PETITIONER COMPANY FOR THE
PURPOSE OF SHOWING DIRECTLY THE REMOVAL,
DIVERSION OR DISPOSAL OF RESPONDENT'S DEPOSITS
AND INCOME WITH INTENT TO DEFRAUD ITS CREDITORS.

ERROR II

THE COURT OF APPEALS ERRED IN NOT APPRECIATING

THE FACTS THAT RESPONDENT'S BANK DEPOSITS ARE NIL
AS PROOF WHICH - TOGETHER WITH RESPONDENT'S
ADMISSION OF AN INCOME OF FROM P10,000.00 to P
14,000.00 A DAY AND THE EVIDENCE THAT IT CANNOT
PRODUCE P 634.00 WITHOUT USING A PERSONAL CHECK
OF ITS PRESIDENT AND MAJORITY STOCKHOLDER, AND
OTHER EVIDENCE SHOWS THE REMOVAL OR
CHANNELING OF ITS INCOME TO THE LATTER.

ERROR III

THE COURT OF APPEALS ERRED IN NOT APPRECIATING

THE RESCUE AND REMOVAL BY RESPONDENT OF FIVE
ATTACHED BUSES, DURING THE DEPENDENCY OF ITS
MOTION TO DISSOLVE THE ATTACHMENT IN THE, TRIAL
COURT, AS A FURTHER ACT OF REMOVAL OF PROPERTIES
BY RESPONDENT WITH INTENT TO DEFRAUD PETITIONER
COMPANY, FOR WHOSE BENEFIT SAID BUSES HAD BEEN
ATTACHED.

The questions raised are mainly, if not solely, factual revolving on whether
respondent bus company has in fact removed its properties, or is about to do
so, in fraud of its creditors. This being so, the findings of the Court of Appeals
on said issues of facts are generally considered conclusive and final, and
should no longer be disturbed. However, We gave due course to the petition
because it raises also a legal question of 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. This may be
inferred from the emphasis laid by petitioner on the fact that even for the
measly amount of P 634.00 payment thereof was made with a personal check
of the respondent company's president and majority stockholder, and its debts
to several creditors, including secured ones like the DBP, have remained
unpaid, despite its supposed daily income of an average of P 12,000.00, as
declared by its assistant manager, Baldovino Lagbao. 1
Going forthwith to this question of whether insolvency, which petitioners in effect claims to have been
proven by the evidence, particularly by company's bank account which has been reduced to nil, may be a
ground for the issuance of a writ of attachment, the respondent Court of Appeals correctly took its position
in the negative on the strength of the explicit ruling of this Court in Max Chamorro & Co. vs. Philippine
Ready Mix Concrete Company, Inc. and Hon. Manuel P. Barcelona. 2

Petitioner, however, disclaims any intention of advancing the theory that insolvency is a ground for the
issuance of a writ of attachment , 3 and insists that its evidence -is intended to prove his assertion that
respondent company has disposed, or is about to dispose, of its properties, in fraud of its creditors. Aside
from the reference petitioner had made to respondent company's "nil" bank account, as if to show
removal of company's funds, petitioner also cited the alleged non-payment of its other creditors, including
secured creditors like the DBP to which all its buses have been mortgaged, despite its daily income
averaging P12,000.00, and the rescue and removal of five attached buses.

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.

The dwindling of respondent's bank account despite its daily income of from P10,000.00 to P14,000.00 is
easily explained by its having to meet heavy operating expenses, which include salaries and wages of
employees and workers. If, indeed the income of the company were sufficiently profitable, it should not
allow its buses to fall into disuse by lack of repairs. It should also maintain a good credit standing with its
suppliers of equipment, and other needs of the company to keep its business a going concern. Petitioner
is only one of the suppliers.

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, We 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.

SO ORDERED.