THIRD DIVISION

G.R. No. 181721, September 09, 2015

WATERCRAFT VENTURE CORPORATION, REPRESENTED BY ITS
VICE-PRESIDENT, ROSARIO E. RAOA, Petitioner, v. ALFRED
RAYMOND WOLFE, Respondent.
DECISION
PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of

Court, seeking to reverse and set aside the Court of Appeals (CA)
Resolution1 dated January 24, 2008 denying the motion for
reconsideration of its Decision2 dated September 27, 2007 in CA-G.R.
SP No. 97804.

The facts are as follows:chanRoblesvirtualLawlibrary

Petitioner Watercraft Venture Corporation (Watercraft) is engaged in

the business of building, repairing, storing and maintaining yachts,
boats and other pleasure crafts at the Subic Bay Freeport Zone, Subic,
Zambales. In connection with its operations and maintenance of boat
storage facilities, it charges a boat storage fee of Two Hundred
Seventy-Two US Dollars (US$272.00) per month with interest of 4% per
month for unpaid charges.

Sometime in June 1997, Watercraft hired respondent Alfred Raymond

Wolfe (Wolfe), a British national and resident of Subic Bay Freeport
Zone, Zambales, as its Shipyard Manager.

During his empolyment, Wolfe stored the sailboat, Knotty Gull, within
Watercraft1 s boat storage facilities, but never paid for the storage
fees.

On March 7, 2002, Watercraft terminated the employment of Wolfe.

Sometime in June 2002, Wolfe pulled out his sailboat from Watercraft's
storage facilities after signing a Boat Pull-Out Clearance dated June 29,
2002 where he allegedly acknowledged the outstanding obligation of
Sixteen Thousand Three Hundred and Twenty-Four and 82/100 US
Dollars (US$16,324.82) representing unpaid boat storage fees for the
period of June 1997 to June 2002. Despite repeated demands, he failed
to pay the said amount.

Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for

Collection of Sum of Money with Damages with an Application for the
Issuance of a Writ of Preliminary Attachment. The case was docketed
as Civil Case No. 4534-MN, and raffled to Branch 1703 of the Regional
Trial Court (RTC) of Malabon City.

In his Answer, Wolfe claimed he was hired as Service and Repair

Manager, instead of Shipyard Manager. He denied owing Watercraft the
amount of US$16,324.82 representing storage fees for the sailboat. He
explained that the sailboat was purchased in February 1998 as part of
an agreement between him and Watercraft1 s then General Manager,
Barry Bailey, and its President, Ricky Sandoval, for it to be repaired and
used as training or fill-in project for the staff, and to be sold later on.
He added that pursuant to a central Listing Agreement for the sale of
the sailboat, he was appointed as agent, placed in possession thereof
and entitled to a ten percent (10%) sales commission. He insisted that
nowhere in the agreement was there a stipulation that berthing and
storage fees will be charged during the entire time that the sailboat
was in Watercraft's dockyard. Thus, he claimed to have been surprised
when he received five (5) invoices billing him for the said fees two (2)
months after his services were terminated. Fie pointed out that the
complaint was an offshoot of an illegal dismissal case he filed against
Watercraft which had been decided in his favor by the Labor Arbiter.

Meanwhile, finding Watercraft's ex-parte application for writ of

preliminary attachment sufficient in form and in substance pursuant to
Section 1 of Rule 57 of the Rules of Court, the RTC granted the same in
the Order dated July 15, 2005, thus:

WHEREFORE, let a Writ of Preliminary Attachment be issued

accordingly in favor of the plaintiff, Watercraft Ventures Corporation
conditioned upon the filing of attachment bond in the amount of Three
Million Two Hundred Thirty-One Thousand Five Hundred and
Eighty-Nine and 25/100 Pesos (Php3,231,589.25) and the said
writ be served simultaneously with the summons, copies of the
complaint, application for attachment, applicant's affidavit and bond,
and this Order upon the defendant.

SO ORDERED.4
Pursuant to the Order dated July 15, 2005, the Writ of Attachment
dated August 3, 2005 and the Notice of Attachment dated August 5,
2005 were issued, and Wolfe's two vehicles, a gray Mercedes Benz
with plate number XGJ 819 and a maroon Toyota Corolla with plate
number TFW 110, were levied upon.

On August 12, 2005, Wolfe's accounts at the Bank of the Philippine

Islands were also garnished.

By virtue of the Notice of Attachment and Levy dated September 5,

2005, a white Dodge pick-up truck with plate number XXL 111 was also
levied upon. However, a certain Jeremy Simpson filed a Motion for
Leave of Court to Intervene, claiming that he is the owner of the truck
as shown by a duly-notarized Deed of Sale executed on August 4,
2005, the Certificate of Registration No. 3628665-1 and the Official
Receipt No. 271839105.

On November 8, 2005, Wolfe filed a Motion to Discharge the Writ of

Attachment, arguing that Watercraft failed to show the existence of
fraud and that the mere failure to pay or perform an obligation does
not amount to fraud. Me also claimed that he is not a flight risk for the
following reasons: (1) contrary to the claim that his Special Working
Visa expired in April 2005, his Special Subic Working Visa and Alien
Certificate of Registration are valid until April 25, 2007 and May 11,
2006, respectively; (2) he and his family have been residing in the
Philippines since 1997; (3) he is an existing stockholder and officer of
Wolfe Marine Corporation which is registered with the Securities and
Exchange Commission, and a consultant of "Sudeco/Ayala" projects in
Subic, a member of the Multipartite Committee for the new port
development in Subic, and the Subic Chamber of Commerce; and (4)
he intends to finish prosecuting his pending labor case against
Watercraft. On even date, Watercraft also filed a Motion for Preliminary
Hearing of its affirmative defenses of forum shopping, litis pendentia,
and laches.

In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to
Discharge Writ of Attachment and Motion for Preliminary Hearing for
lack of merit.

Wolfe filed a motion for reconsideration, but the RTC also denied it for
lack of merit in an Order dated November 10, 2006. Aggrieved, Wolfe
filed a petition for certiorari before the CA.

The CA granted Wolfe's petition in a Decision dated September 2007,

the dispositive portion of which reads:
WHEREFORE, the Order dated March 20, 2006 and the Order dated
November 10, 2006 of respondent Judge are
hereby ANNULLED and SET ASIDE. Accordingly, the Writ of
Attachment issued on August 3, 2005, the Notice of Attachment dated
August 5, 2005 and the Notice of Attachment and Levy dated
September 5, 2005 are hereby also declared NULL and VOID, and
private respondent is DIRECTED to return to their owners the vehicles
that were attached pursuant to the Writ.

SO ORDERED.5
The CA ruled that the act of issuing the writ of preliminary
attachment ex-parte constitutes grave abuse of discretion on the part
of the RTC, thus:
x x x In Cosiquien [v. Court of Appeals], the Supreme Court held that:
"Where a judge issues a fatally defective writ of preliminary
attachment based on an affidavit which failed to allege the
requisites prescribed for the issuance of the writ of
preliminary attachment, renders the writ of preliminary
attachment issued against the property of the defendant
fatally defective. The judge issuing it is deemed to have acted
in excess of jurisdiction. In fact, the defect cannot even be cured by
amendment. Since the attachment is a harsh and rigorous remedy
which exposed the debtor to humiliation and annoyance, the rule
authorizing its issuance must be strictly construed in favor of
defendant. It is the duty of the court before issuing the Avrit to
ensure that all the requisites of the law have been complied
with. Otherwise, a judge acquires no jurisdiction to issue the
writ." (emphasis supplied)
In the instant case, the Affidavit of Merit executed by Rosario E. Raoa,
Watercraft's Vice-President, failed to show fraudulent intent on the part
of Wolfe to defraud the company. It merely enumerated the
circumstances tending to show the alleged possibility of Wolfe's flight
from the country. And upon Wolfe's filing of the Motion to Discharge
the Writ, what the respondent Judge should have done was to
determine, through a hearing, whether the allegations of fraud were
true. As further held in Cosiquien:
"When a judge issues a writ of preliminary attachment ex-
parte, it is incumbent on him, upon proper challenge of his
order to determine whether or not the same was improvidently
issued. If the party against whom the writ is prayed for
squarely controverts the allegation of fraud, it is incumbent on
the applicant to prove his allegation. The burden of proving
that there indeed was fraud lies with the party making such
allegation. This finds support in Section 1, Rule 131 Rules of Court. In
this jurisdiction, fraud is never presumed." (Emphasis supplied)
As correctly noted by Wolfe, although Sec. 1 of Rule 57 allows a party
to invoke fraud as a ground for the issuance of a writ of attachment,
the Rules require that in all averments of fraud, the circumstances
constituting fraud must be stated with particularity, pursuant to Rule 8,
Section 5. The Complaint merely stated, in paragraph 23 thereof that
"For failing to pay the use [of] facilities and services in the form of boat
storage fees, the Defendant is clearly guilty of fraud which entitles the
Plaintiff to a Writ of Preliminary Attachment upon the property of the
Defendant as security for the satisfaction of any judgment herein."
This allegation does not constitute fraud as contemplated by law, fraud
being the "generic term embracing all multifarious means which
human ingenuity can devise, and which are resorted to by one
individual to secure an advantage over another by false suggestions or
by suppression of truth and includes all surprise, trick, cunning,
dissembling and any unfair way by which another is cheated." In this
instance, Wolfe's mere failure to pay the boat storage fees does not
necessarily amount to fraud, absent any showing that such failure was
due to [insidious] machinations and intent on his part to defraud
Watercraft of the amount due it.

As to the allegation that Wolfe is a flight risk, thereby warranting the

issuance of the writ, the same lacks merit. The mere fact that Wolfe is
a British national does not automatically mean that he would leave the
country at will. As Wolfe avers, he and his family had been staying in
the Philippines since 1997, with his daughters studying at a local
school. He also claims to be an existing stockholder and officer of
Wolfe Marine Corporation, a SEC-registered corporation, as well as a
consultant of projects in the Subic Area, a member of the Multipartite
Committee for the new port development in Subic, and a member of
the Subic Chamber of Commerce. More importantly, Wolfe has a
pending labor case against Watercraft - a fact which the company
glaringly failed to mention in its complaint - which Wolfe claims to
want to prosecute until its very end. The said circumstances, as well as
the existence of said labor case where Wolfe stands not only to be
vindicated for his alleged illegal dismissal, but also to receive
recompense, should have convinced the trial court that Wolfe would
not want to leave the country at will just because a suit for the
collection of the alleged unpaid boat storage fees has been filed
against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in
April 2005 lead automatically to the conclusion that he would leave the
country. It is worth noting that all visas issued by the government to
foreigners staying in the Philippines have expiration periods. These
visas, however, may be renewed, subject to the requirements of the
law. In Wolfe's case, he indeed renewed his visa, as shown by Special
Working Visa No. 05-WV-0124P issued by the Subic Bay Metropolitan
Authority Visa Processing Office on April 25, 2005, and with validity of
two (2) years therefrom. Moreover, his Alien Certificate of
Registration was valid up to May 11, 2006.

Based on the foregoing, it is therefore clear that the writ was

improvidently issued. It is well to emphasize that "[T]he rules on the
issuance of a writ of attachment must be construed strictly against the
applicants. This stringency is required because the remedy of
attachment is harsh, extraordinary and summary in nature. If all the
requisites for the granting of the writ are not present, then the court
which issues it acts in excess of its jurisdiction. Thus, in this case,
Watercraft failed to meet all the requisites for the issuance of the writ.
Thus, in granting the same, respondent Judge acted with grave abuse
of discretion.6
In a Resolution dated January 24, 2008, the CA denied Watercraft's
motion for reconsideration of its Decision, there being no new or
significant issues raised in the motion.

Dissatisfied with the CA Decision and Resolution, Watercraft filed this

petition for review on certiorari, raising these two issues:
I.

WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT

BY THE TRIAL COURT IN FAVOR OF THE PETITIONER IS VALID.

II.

WHETHER THE ALLEGATIONS IN THE AFFIDAVIT OF MERIT

CONCERNING FRAUD ARE SUFFICIENT TO WARRANT THE ISSUANCE OF
A PRELIMINARY WRIT OF ATTACHMENT BY THE TRIAL COURT IN FAVOR
OF THE PETITIONER.7
Watercraft argues that the CA erred in holding that the RTC committed
grave abuse of discretion in issuing the writ of preliminary attachment,
and in finding that the affidavit of merit only enumerated
circumstances tending to show the possibility of Wolfe's flight from the
country, but failed to show fraudulent intent on his part to defraud the
company.

Stressing that its application for such writ was anchored on two (2)
grounds under Section 1,8 Rule 57, Watercraft insists that, contrary to
the CA ruling, its affidavit of merit sufficiently averred with
particularity the circumstances constituting fraud as a common
element of said grounds.

Watercraft points out that its affidavit of merit shows that from 1997,
soon after Wolfe's employment as Shipyard Manager, up to 2002,
when his employment was terminated, or for a period of five (5) years,
not once did he pay the cost for the use of the company's boat storage
facilities, despite knowledge of obligation and obvious ability to pay by
reason of his position.

Watercraft adds that its affidavit clearly stated that Wolfe, in an

attempt to avoid settling of his outstanding obligations to the
company, signed a Boat Pull-Out Clearance where he merely
acknowledged but did not pay Sixteen Thousand Three Hundred and
Twenty-Four and 82/100 US Dollars (US$16,324.82) representing
unpaid boat storage fees for the period commencing June 1997 to June
2002. It avers that the execution of such clearance enabled Wolfe to
pull out his boat from the company storage facilities without payment
of storage fees.

Watercraft also faults the CA in finding no merit in its allegation that

Wolfe is a flight risk. It avers that he was supposed to stay and work in
the country for a limited period, and will eventually leave; that despite
the fact that his wife and children reside in the country, he can still
leave with them anytime; and that his work in the country will not
prevent him from leaving, thereby defeating the purpose of the action,
especially since he had denied responsibility for his outstanding
obligations. It submits that the CA overlooked paragraph 28 of its
Complaint which alleged that "[i]n support of the foregoing allegations
and the prayer for the issuance of a Writ of Preliminary Attachment in
the instant case, the Plaintiff has attached hereto the Affidavit of the
Vice-President of the Plaintiff, MS. ROSARIO E. RANOA x x x." 9

Watercraft asserts that it has sufficiently complied with the only

requisites for the issuance of the writ of preliminary attachment under
Section 3, Rule 57 of the Rules of Court, i.e., affidavit of merit and
bond of the applicant. It posits that contrary to the CA ruling, there is
no requirement that evidence must first be offered before a court can
grant such writ on the basis of Section 1 (d) of Rule 57, and that the
rules only require an affidavit showing that the case is one of those
mentioned in Section 1, Rule 57. It notes that although a party is
entitled to oppose an application for the issuance of the writ or to
move for the discharge thereof by controverting the allegations of
fraud, such rule does not apply when the same allegations constituting
fraud are the very facts disputed in the main action, as in this case.
Watercraft also points out the inconsistent stance of Wolfe with regard
to the ownership and possession of the sailboat. Contrary to Wolfe's
Answer that the purchase of the sailboat was made pursuant to a three
(3)-way partnership agreement between him and its General Manager
and Executive Vice-President, Barry Bailey, and its President, Ricky
Sandoval, Watercraft claims that he made a complete turnaround and
exhibited acts of sole-ownership by signing the Boat Pull-Out Clearance
in order to retrieve the sailboat. It argues that common sense and logic
would dictate that he should have invoked the existence of the
partnership to answer the demand for payment of the storage fees.

Watercraft contends that in order to pre-empt whatever action it may

decide to take with respect to the sailboat in relation to his liabilities,
Wolfe accomplished in no time the clearance that paved the way for its
removal from the company's premises without paying his outstanding
obligations. It claims that such act reveals a fraudulent intent to use
the company storage facilities without payment of storage fees, and
constitutes unjust enrichment.

The petition lacks merit.

A writ of preliminary attachment is defined as a provisional remedy

issued upon order of the court where an action is pending to be levied
upon the property or properties of the defendant therein, the same to
be held thereafter by the sheriff as security for the satisfaction of
whatever judgment that might be secured in the said action by the
attaching creditor against the defendant.10 However, it should be
resorted to only when necessary and as a last remedy because it
exposes the debtor to humiliation and annoyance.11 It must be granted
only on concrete and specific grounds and not merely on general
averments quoting the words of the rules.12 Since attachment is harsh,
extraordinary, and summary in nature,13 the rules on the application of
a writ of attachment must be strictly construed in favor of the
defendant.

For the issuance of an ex-parte issuance of the preliminary attachment

to be valid, an affidavit of merit and an applicant's bond must be filed
with the court14 in which the action is pending. Such bond executed to
the adverse party in the amount fixed by the court is subject to the
conditions that the applicant will pay: (1) all costs which may be
adjudged to the adverse party; and (2) all damages which such party
may sustain by reason of the attachment, if the court shall finally
adjudge that the applicant was not entitled thereto.15 As to the
requisite affidavit of merit, Section 3,16 Rule 57 of the Rules of Court
states that an order of attachment shall be granted only when it
appears in the affidavit of the applicant, or of some other person who
personally knows the facts:
that a sufficient cause of action exists;ChanRoblesVirtualawlibrary

that the case is one of those mentioned in Section

117 hereof;ChanRoblesVirtualawlibrary
that there is no other sufficient security for the claim sought to be
enforced by the action; and

that the amount due to the applicant, or the value of the property the
possession of which he is entitled to recover, is as much as the sum for
which the order is granted above all legal counterclaims.
The mere filing of an affidavit reciting the facts required by Section 3,
Rule 57, however, is not enough to compel the judge to grant the writ
of preliminary attachment. Whether or not the affidavit sufficiently
established facts therein stated is a question to be determined by the
court in the exercise of its discretion.18 "The sufficiency or insufficiency
of an affidavit depends upon the amount of credit given it by the
judge, and its acceptance or rejection, upon his sound
discretion."19 Thus, in reviewing the conflicting findings of the CA and
the RTC on the pivotal issue of whether or not Watercraft's affidavit of
merit sufficiently established facts which constitute as grounds upon
which attachment may be issued under Section 1 (a) 20 and (d),21 Rule
57, the Court will examine the Affidavit of Preliminary Attachment 22 of
Rosario E. Raoa, its Vice-President, which reiterated the following
allegations in its complaint to substantiate the application for a writ of
preliminary attachment:
xxxx

4. Sometime in June 1997, the Defendant was hired as Watercraft's

Shipyard Manager.

5. Soon thereafter, the Defendant placed his sailboat, the Knotty Gull,
within the boat storage facilities of Watercraft for purposes of storage
and safekeeping.

6. Despite having been employed by Watercraft, the Defendant was

not exempted from paying Watercraft boat storage fees for the use of
the said storage facilities.

7. By virtue of his then position and employment with Watercraft, the

Defendant was very much knowledgeable of the foregoing fact.

8. All throughout his employment with Watercraft, the Defendant used

the boat storage facilities of Watercraft for his Knotty Gull.

9. However, all throughout the said period of his employment, the

Defendant never paid the boat storage fees in favor of the Plaintiff.

10. The Defendant's contract of employment with Watercraft was

terminated on 07 March 2002.

11. [Sometime] thereafter, that is, in or about June 2002, the

Defendant pulled out the Knotty Gull from the boat storage facilities of
Watercraft.
12. Instead of settling in full his outstanding obligations concerning
unpaid storage fees before pulling our the Knotty Gull, the Defendant
signed a Boat Pull-Out Clearance dated 29 June 2002 wherein he
merely acknowledged the then outstanding balance of Sixteen
Thousand Three Hundred and Twenty-four and 82/100 US Dollars
(US$16,324.82), representing unpaid boat storage fees for the period
commencing June 1997 to June 2002, that he owed Watercraft.

13. By reason of Defendant's mere accomplishment of the said Boat

Pull-Out Clearance with acknowledgment of his outstanding obligation
to Watercraft in unpaid boat storage fees, Mr. Franz Urbanek, then the
Shipyard Manager who replaced the Defendant, contrary to company
policy, rules and regulations, permitted the latter to physically pull out
his boat from the storage facilities of the Plaintiff without paying any
portion of his outstanding obligation in storage fees.

14. Several demands were then made upon the Defendant for him to
settle his outstanding obligations to the Plaintiff in unpaid storage fees
but the same went unheeded.

15. As of 02 April 2005, the outstanding obligation of the Defendant to

the Plaintiff in unpaid boat storage fees stands at Three Million Two
Hundred Thirty-One Thousand Five Hundred and Eighty-Nine and
25/100 Pesos (Php3,231,589.25) inclusive of interest charges.

16. For failing to pay for the use [of] facilities and servicesin the form
of boat storage facilitiesduly enjoyed by him and for failing and
refusing to fulfill his promise to pay for the said boat storage fees, the
Defendant is clearly guilty of fraud which entitles the Plaintiff to a Writ
of Preliminary Attachment upon the property of the Defendant as
security for the satisfaction of any judgment in its favor in accordance
with the provisions of Paragraph (d), Section 1, Rule 57 of the Rules of
Court.

17. The instant case clearly falls under the said provision of law.

18. Furthermore, lawful factual and legal grounds exist which show
that the Defendant may have departed or is about to depart the
country to defraud his creditors thus rendering it imperative that a
Writ of Preliminary Attachment be issued in favor of the Plaintiff in the
instant case.

19. The possibility of flight on the part of the Defendant is heightened

by the existence of the following circumstances:
a. The Special Working Visa issued in favor of the Defendant expired in
April 2005;ChanRoblesVirtualawlibrary

b. The Defendant is a British national who may easily leave the country
at will;ChanRoblesVirtualawlibrary

c. The Defendant has no real properties and visible, permanent

business or employment in the Philippines; and

e. The house last known to have been occupied by the Defendant is

merely being rented by him.
20. All told, the Defendant is a very serious flight risk which fact will
certainly render for naught the capacity of the Plaintiff to recover in
the instant case.23
After a careful perusal of the foregoing; allegations, the Court agrees
with the CA that Watercraft failed to state with particularity the
circumstances constituting fraud, as required by Section 5, 24 Rule 8 of
the Rules of Court, and that Wolfe's mere failure to pay the boat
storage fees does not necessarily amount to fraud, absent any
showing that such failure was due to insidious machinations and intent
on his part to defraud Watercraft of the amount due it.

In Liberty Insurance Corporation v. Court of Appeals,25 the Court

explained that to constitute a ground for attachment in Section 1(d),
Rule 57 of the Rules of Court, it must be shown that the debtor in
contracting the debt or incurring the obligation intended to defraud the
creditor. A debt is fraudulently contracted if at the time of contracting
it, the debtor has a preconceived plan or intention not to pay. "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."26

Fraudulent intent is not a physical entity, but a condition of the mind

beyond the reach of the senses, usually kept secret, very unlikely to be
confessed, and therefore, can only be proved by unguarded
expressions, conduct and circumstances.27 Thus, the applicant for a
writ of preliminary attachment must sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot
be inferred from the debtor's mere non-payment of the debt or failure
to comply with his obligation.28The particulars of such circumstances
necessarily include the time, persons, places and specific acts of fraud
committed.29 An affidavit which does not contain concrete and specific
grounds is inadequate to sustain the issuance of such writ. In fact,
mere general averments render the writ defective and the court that
ordered its issuance acted with grave abuse of discretion amounting to
excess of jurisdiction.30

In this case, Watercraft's Affidavit of Preliminary Attachment does not

contain specific allegations of other factual circumstances to show that
Wolfe, at the time of contracting the obligation, had a preconceived
plan or intention not to pay. Neither can it be inferred from such
affidavit the particulars of why he was guilty of fraud in the
performance of such obligation. To be specific, Watercraft's following
allegation is unsupported by any particular averment of circumstances
that will show why or how such inference or conclusion was arrived at,
to wit: "16. For failing to pay for the use [of] facilities and services - in
the form of boat storage facilities - duly enjoyed by him and for failing
and refusing to fulfill his promise to pay for the said boat storage fees,
the Defendant is clearly guilty of fraud x x x."31 It is not an allegation of
essential facts constituting Watercraft's causes of action, but a mere
conclusion of law.

With respect to Section 1 (a),32 Rule 57, the other ground invoked by
Watercraft for the issuance of the writ of preliminary attachment, the
Court finds no compelling reason to depart from the CA's exhaustive
ruling to the effect that such writ is unnecessary because Wolfe is not
a flight risk, thus:
As to the allegation that Wolfe is a (light risk, thereby warranting the
issuance of the writ, the same lacks merit. The mere fact that Wolfe is
a British national does not automatically mean that he would leave the
country at will. As Wolfe avers, he and his family had been staying in
the Philippines since 1997, with his daughters studying at a local
school. He also claims to be an existing stockholder and officer of
Wolfe Marine Corporation, a SEC - registered corporation, as well as a
consultant of projects in the Subic Area, a member of the Multipartite
Committee for the new port development in Subic, and a member of
the Subic Chamber of Commerce. More importantly, Wolfe has a
pending labor case against Watercraft - a fact which the company
glaringly failed to mention in its complaint - which Wolfe claims to
want to prosecute until its very end. The said circumstances, as well as
the existence of said labor case where Wolfe stands not only to be
vindicated for his alleged illegal dismissal, but also to receive
recompense, should have convinced the trial court that Wolfe would
not want to leave the country at will just because a suit for the
collection of the alleged unpaid boat storage fees has been filed
against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in
April 2005 lead automatically to the conclusion that he would leave the
country. It is worth noting that all visas issued by the government to
foreigner staying in the Philippines have expiration periods. These
visas, however, may be renewed, subject to the requirements of the
law. In Wolfe's case, he indeed renewed his visa, as shown by Special
Working Visa No. 05-WV-0124P issued by the Subic Bay Metropolitan
Authority Visa Processing Office on April 25, 2005, and with validity of
two (2) years therefrom. Moreover, his Alien Certificate of
Registration was valid up to May 11, 2006.33
Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan34 is
displaced. It is well settled that:
x x x when the preliminary attachment is issued upon a ground
which is at the same time the applicant's cause of action; e.g.,
"an action for money or property embezzled or fraudulently misapplied
or converted to his own use by a public officer, or an officer of a
corporation, or an attorney, factor, broker, agent, or clerk, in the course
of his employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty," or "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," the defendant is not
allowed to file a motion to dissolve the attachment under
Section 13 of Rule 57 by offering to show the falsity of the
factual averments in the plaintiffs application and affidavits on
which the writ was based - and consequently that the writ
based thereon had been improperly or irregularly issued - the
reason being that the hearing on such a motion for dissolution
of the writ would be tantamount to a trial of the merits of the
action. In other words, the merits of the action would be ventilated at
a mere hearing of a motion, instead of at the regular trial. 35

Be that as it may, the foregoing rule is not applicable in this case

because when Wolfe filed a motion to dissolve the writ of preliminary
attachment, he did not offer to show the falsity of the factual
averments in Watercraft's application and affidavit on which the writ
was based. Instead, he sought the discharge of the writ on the ground
that Watercraft failed to particularly allege any circumstance
amounting to fraud. No trial on the merits of the action at a mere
hearing of such motion will be had since only the sufficiency of the
factual averments in the application and affidavit of merit will be
examined in order to find out whether or not Wolfe was guilty of fraud
in contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof.

Furthermore, the other ground upon which the writ of preliminary

attachment was issued by the RTC is not at the same time the
applicant's cause of action. Assuming arguendo that the RTC was
correct in issuing such writ on the ground that Watercraft's complaint
involves an action for the recovery of a specified amount of money or
damages against a party, like Wolfe, who is about to depart from the
Philippines with intent to defraud his creditors, the Court stresses that
the circumstances36 cited in support thereof are merely allegations in
support of its application for such writ.37 Such circumstances, however,
are neither the core of Watercraft's complaint for collection of sum of
money and damages, nor one of its three (3) causes of action therein. 38

All told, the CA correctly ruled that Watercraft failed to meet one of the
requisites for the issuance of a writ of preliminary attachment, i.e., that
the case is one of those mentioned in Section 1 of Rule 57, and that
the RTC gravely abused its discretion in improvidently issuing such
writ. Watercraft failed to particularly state in its affidavit of merit the
circumstances constituting intent to defraud creditors on the part of
Wolfe in contracting or in the performance of his purported obligation
to pay boat storage fees, as well as to establish that he is a flight risk.
Indeed, if all the requisites for granting such writ are not present, then
the court which issues it acts in excess of its
jurisdiction.39chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the petition is DENIED. The Court

of Appeals Decision dated September 27, 2007 and its Resolution
dated January 24, 2008 in CA-G.R. SP No. 97804, are AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibr