381 Phil. 282
YNARES-SANTIAGO, J.:
"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:Petitioners, however, insist that the writ of preliminary attachment was irregularly issued inasmuch as there was no evidence of fraud in incurring the obligations sued upon.x x x x x x x x x.
(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 concealing or disposing of the property for the taking, detention or conversion of which the action is brought;x x x x x x x x x."
COURT: Now . . . as of January 5, 1993 you delivered to him (referring to defendant FCY corporation) in cash and in kind amounting to Fifteen Million Pesos (P15,000,000.00), now why did you keep on delivering cash and materials to him if you were not paid a single centavo?A Because of every need for the project, and the Public Works official assured me that I will be given a new project after the Tandang Sora will be finished.Q Who is this public official that promised you?A Director Pendosa, Teodoro Encarnacion and Secretary de Jesus your Honor. (TSN, 6 July 1993, pp. 47-48)
A cursory reading of the above-cited testimony, however, readily shows that said reassurance from the DPWH officials came, not at the inception of the obligation or contract, but during its performance. On the other hand, the fraud of which petitioners are accused of and which was the basis for the issuance of the questioned attachment, is fraud alleged to have been committed upon contracting the obligation sued upon. Thus, petitioners’ argument that "the inducement was the mouth-watering temptation of a DPWH promise of a 'new project after the Tandang Sora Flyover project will be finished"' is clearly off-tangent as such inducement, if any, came not at the inception of the obligation.
Q What about these officials of the Department of Public Highways, what would they do to project their sub alleged project? A Secretary de Jesus is no longer connected there, your Honor. Q At the time? A At that time, he resigned. Q Before he resigned. A He gave me assurance that they will soon give assurance, they will soon give me another project . . . (TSN, 6 July 1993, p. 55)[8]
To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. 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. (Republic v. Gonzales, 13 SCRA 633).From the foregoing, therefore, the alleged inducement by the DPWH officials upon private respondent as well as the circumstances surrounding the execution of the joint venture agreement, both appear immaterial as they were not committed upon contracting the obligation sued upon but occurred long after the obligation has been established.
"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., x x x 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 plaintiff’s application and affidavits on which the writ was based and consequently that the writ based therein had been improperly or irregularly issued - the reason being that the hearing on such motion for dissolution of the writ would be tantamount to a trial on the merits. In other words, the merits of the action would be ventilated at a mere hearing of a motion; instead of the regular trial. Therefore, when the writ of attachment is of this nature, the only way it can be dissolved is by a counterbond."We now come to the issue of whether or not petitioner Francis Yu should remain as party-defendant. Petitioners argue that since the transactions were corporation to corporation only, petitioner Francis Yu should be dropped as party-defendant considering the hornbook law that corporate personality is a shield against personal liability of its officers. We agree that petitioner Francis Yu cannot be made liable in his individual capacity if he indeed entered into and signed the contract in his official capacity as President, in the absence of stipulation to that effect, due to the personality of the corporation being separate and distinct from the persons composing it.[12] However, while we agree that petitioner Francis Yu cannot be held solidarily liable with petitioner corporation merely because he is the President thereof and was involved in the transactions with private corporation, we also note that there exists instances when corporate officers may be held personally liable for corporate acts. Such exceptions were outlined in Tramat Mercantile, Inc. vs. Court of Appeals,[13] as follows --
"Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when -
The attendance of these circumstances, however, cannot be determined at this stage and should properly be threshed out during the trial on the merits. Stated differently, whether or not petitioner Francis Yu should be held personally and solidarily liable with petitioner corporation is a matter that should be left to the trial court's discretion, dependent as it is on evidence during trial.
- He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons;
- He consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;
- He agrees to hold himself personally and solidarily liable with the corporation; or
- He is made, by a specific provision of law, to personally answer for his corporate action."