UEM Mara Philippines Corporation vs. Ng Wee

A writ of preliminary attachment, being an ancillary remedy with no independent existence apart from the main suit, ceases to exist upon final judgment in the principal action—especially where the attached party is absolved from liability—because the attachment can only be maintained if the suit itself can be maintained.

Alejandro Ng Wee placed substantial funds with Westmont Investment Corporation (Wincorp), which were allegedly loaned to Power Merge Corporation, a company beneficially owned by Luis Juan L. Virata. Ng Wee discovered that Power Merge was a newly formed entity with minimal capitalization and no track record, yet was extended a credit line facility exceeding ₱2.5 billion through a side agreement relieving Power Merge of any repayment obligation. UEM Mara Philippines Corporation (UEM MARA) was a joint venture partner with the Public Estates Authority (PRA) in the Manila-Cavite Tollway Project. Ng Wee impleaded UEM MARA in his complaint for sum of money, alleging that Virata laundered proceeds of the Power Merge borrowings by acquiring interests in UEM MARA. A writ of preliminary attachment was issued and garnishment was sought on UEM MARA's proportionate share in the tollway project income collected by PRA.

Alejandro Ng Wee placed substantial funds with Westmont Investment Corporation (Wincorp) enticed by promises of high yield and no risk. Most of his money placements were loaned to Power Merge Corporation, a company beneficially owned by Luis Juan L. Virata. Ng Wee later discovered that Power Merge was a newly formed corporation with a subscribed capitalization of only ₱37,000,000.00, had no track record, and was not an ongoing business concern, yet Wincorp extended it a credit line facility exceeding ₱2,500,000,000.00. Through a side agreement, Wincorp agreed that Power Merge would not be liable to repay the amounts extended under the credit line facility. Ng Wee further discovered that this scheme traced its origins to the Hottick Line Credit Facility and involved Wincorp, its directors, and Virata.

On October 19, 2000, Ng Wee filed a complaint for sum of money against UEM MARA, Virata, and several other defendants, seeking to hold them jointly and severally liable for ₱210,595,991.62. The complaint included an application for a writ of preliminary attachment. On November 6, 2000, the RTC of Manila, Branch 39, granted the application. Pursuant to the writ, the court sheriff served a Notice of Garnishment dated November 7, 2000 on the Public Estates Authority (now Philippine Reclamation Authority or PRA), seeking to garnish UEM MARA's proportionate share in the project income of the Manila-Cavite Tollway Project. PRA advised the sheriff by letter dated November 13, 2000 that no income could be allocated for UEM MARA because the net revenue between the parties had not yet been distributed or approved by the Joint Venture Project Committee. Ng Wee also attached Virata's Forbes Park property covered by TCT No. 133645.

UEM MARA and Virata filed a Motion to Dismiss with Urgent Motion to Discharge Writ of Attachment, which the trial court denied in 2001 and 2002. They elevated the matter to the Supreme Court on certiorari, which was denied in 2003, and their petition for review (G.R. No. 162928) was likewise denied in 2004. In 2010, UEM MARA and Virata filed an Urgent Motion to Discharge Writ of Attachment, offering to post a counter-bond. The trial court granted the discharge only as to Virata's Forbes Park property but not as to UEM MARA's project income. After further motions, hearings, and subpoenas directed at PRA's General Manager, the trial court issued an Order on May 26, 2011 lifting and setting aside the writ of attachment on UEM MARA's project income while modifying the counter-bond for Virata's property from ₱60,000,000.00 to ₱174,100,000.00.

Ng Wee elevated the matter to the Court of Appeals via certiorari. The CA, in its August 29, 2012 Decision, annulled the RTC order and reinstated the writ of preliminary attachment over UEM MARA's project income, holding that the trial court committed grave abuse of discretion by lifting the attachment without conducting a hearing to determine the veracity of PRA's claim against UEM MARA's audited financial statements, which showed income from the tollway project. Meanwhile, the main case (Civil Case No. 00-99006) was decided with finality by the Supreme Court in 2017, which dismissed the complaint against UEM MARA for lack of merit, finding that UEM MARA was a separate and distinct entity from Power Merge, was not a party to the fraudulent transactions, and had no cause of action against it.

• Grave Abuse of Discretion: Petitioner argued that the CA erred in finding that the RTC committed grave abuse of discretion for its supposed gross misapprehension of the facts regarding the enforcement of the attachment writ.
• Justified Lifting Without Counter-Bond: Petitioner maintained that the lifting of the preliminary attachment writ was justified despite the absence of a counter-bond.
• Error of Judgment: Petitioner argued that the CA erred in granting certiorari over what was merely an error of judgment.

• Garnishment Not Time-Limited: Respondent argued that the garnishment was not limited to UEM MARA's net revenue share as of November 7, 2000, but extended to income collected by PRA after that date, since what was garnished was UEM MARA's proportionate share in the project income.
• Existence of Income: Respondent countered that UEM MARA's audited financial statements for 2000 and 2001 showed that its share in toll fees—amounting to ₱171,535,275.00 and ₱166,192,476.00, respectively—were listed as revenues, demonstrating that income existed which could be garnished.

• Ancillary Nature of Attachment: Whether the writ of preliminary attachment against UEM MARA's project income should be deemed lifted in view of the final adjudication of the main case in favor of UEM MARA.
• Liability of UEM MARA: Whether UEM MARA could be held liable for Ng Wee's investment losses.

• Ancillary Nature of Attachment: Yes. The writ of preliminary attachment was deemed lifted because the main case had been decided with finality in favor of UEM MARA, and attachment being merely ancillary to the principal suit, it ceases to exist upon final judgment—especially where the attached party is absolved from liability.
• Liability of UEM MARA: No. UEM MARA, being a separate and distinct entity from Power Merge, was not a party to the fraudulent transactions and had no cause of action against it; the complaint against UEM MARA was dismissed for lack of merit.

• Ancillary Nature of Attachment: The Court expounded on the nature of a writ of preliminary attachment as a provisional remedy governed by Rule 57 of the Revised Rules of Court. Attachment is ancillary to the main suit and can have no independent existence apart from a claim of the plaintiff against the defendant. Citing Lorenzo Shipping vs. Villarin, Adlawan vs. Judge Tomol, and Yu vs. Miranda, the Court reiterated the principle that "an attachment is but an incident to a suit; and unless the suit can be maintained, the attachment must fall." Rule 57, Section 1 provides that preliminary attachment may be obtained at the commencement of the action or at any time before entry of judgment, meaning the writ ceases to exist upon entry of judgment. In this case, the main case (Civil Case No. 00-99006) had been decided with finality by the Supreme Court in its 2017 Decision, which dismissed the complaint against UEM MARA for lack of merit. Not only did the final adjudication of the main case per se extinguish the writ, but the writ also lost its basis because the party against whom it was directed was absolved from liability. Accordingly, the CA's reinstatement of the writ was reversed.

• Liability of UEM MARA: The Court, relying on its 2017 Decision in Virata, et al. vs. Ng Wee, held that UEM MARA is an entity distinct and separate from Power Merge and was not established to have been guilty of perpetrating fraud against investors. UEM MARA was a non-party to the "sans recourse" transactions, the Credit Line Agreement, the Side Agreements, the Promissory Notes, the Confirmation Advices, and other transactions involving Wincorp, Power Merge, and Ng Wee. The third requisite of a cause of action—an act or omission by the defendant violating the plaintiff's right—was severely lacking. Ng Wee could not point to a specific wrong committed by UEM MARA; the mere allegation that Virata used proceeds of the Power Merge loan to acquire interests in UEM MARA did not constitute a valid cause of action against the company. UEM MARA's involvement was merely incidental, not direct.

• Ancillary Nature of Preliminary Attachment — A writ of preliminary attachment is a provisional remedy that is ancillary to and dependent on the principal proceeding. It can have no independent existence apart from the suit on the plaintiff's claim against the defendant. Unless the suit can be maintained, the attachment must fall. The writ ceases to exist upon entry of judgment in the proceeding where it was issued. In this case, because the main case was decided with finality in favor of UEM MARA (absolving it from liability), the writ of preliminary attachment necessarily ceased to exist.

• Separate Corporate Personality — A corporation is an entity distinct and separate from other corporations and individuals. Absent proof that the corporation was guilty of perpetrating fraud, it cannot be held liable for the acts of other entities or individuals, even if proceeds from fraudulent transactions were used to acquire interests in it. The Court applied this doctrine to hold that UEM MARA, being separate from Power Merge and not a party to the fraudulent transactions, could not be held liable for Ng Wee's investment losses.

• Elements of a Cause of Action — A cause of action requires: (1) a right in favor of the plaintiff; (2) an obligation on the part of the defendant to respect or not violate such right; and (3) an act or omission by the defendant in violation of the right or constituting a breach of the obligation. The third requisite was found lacking as against UEM MARA, as Ng Wee could not point to any specific wrong committed by UEM MARA.

• "An attachment is but an incident to a suit; and unless the suit can be maintained, the attachment must fall." — This formulation, drawn from Adlawan vs. Judge Tomol, encapsulates the ancillary nature of preliminary attachment and serves as the ratio decidendi for deeming the writ lifted upon final adjudication of the main case.

• "UEM-MARA is an entity distinct and separate from Power Merge, and it was not established that it was guilty in perpetrating fraud against the investors. It was a non-party to the 'sans recourse' transactions, the Credit Line Agreement, the Side Agreements, the Promissory Notes, the Confirmation Advices, and to the other transactions that involved Wincorp, Power Merge, and Ng Wee." — This passage from the Court's 2017 Decision in the main case establishes the basis for absolving UEM MARA from liability, which in turn extinguished the attachment writ.

• "Not only did this Court dispose of Civil Case No. 00-99006 with finality, it also decided the case in favor UEM MARA. Consequently, the assailed preliminary attachment writ has ceased to exist, not only because of the final adjudication of the main case per se, but also because it has lost basis in view of the absolution from liability of the party to which it was directed." — This passage states the dual ground for deeming the writ lifted: the final adjudication of the main case and the absolution of the attached party from liability.

• Lorenzo Shipping vs. Villarin, G.R. Nos. 175727 & 178713, March 6, 2019 — Followed for its explication of the nature and purpose of a writ of preliminary attachment as a provisional remedy that seizes upon property in advance of final judgment and holds it subject to appropriation.
• Adlawan vs. Judge Tomol, 262 Phil. 893 (1990) — Followed for the principle that attachment is an ancillary remedy with no independent existence apart from the main suit, and that "unless the suit can be maintained, the attachment must fall."
• Yu vs. Miranda, G.R. No. 225752, March 27, 2019 — Followed for affirming that a writ of preliminary attachment is only a provisional and ancillary remedy that ceases to exist upon the cessation or finality of the main case.
• Virata, et al. vs. Ng Wee, 813 Phil. 252 (2017) — The controlling decision in the main case (Civil Case No. 00-99006), which dismissed the complaint against UEM MARA for lack of merit, absolving it from liability and thereby extinguishing the basis for the attachment writ.

• Rule 57, Section 1, Revised Rules of Court — Provides that the remedy of preliminary attachment may be obtained at the commencement of the action or at any time before entry of judgment. The Court applied this provision to establish that the writ ceases to exist upon entry of judgment, which had occurred with the final adjudication of the main case.

Gesmundo (Acting Chairperson), Carandang, and Zalameda, JJ., concurred. Leonen (Chairperson), J., was on official leave.