Breach of Preliminary Attachment: Officials Liable for Undue Injury Under RA 3019

When a court issues a writ of preliminary attachment, it freezes specific property or funds to secure a potential judgment. For public officials, ignoring that writ is not merely a procedural lapse—it can be a criminal offense. The Supreme Court’s 2009 ruling in New Bian Yek Commercial, Inc. v. Office of the Ombudsman (G.R. No. 169338) clarifies when local officials who release funds despite such a writ may be held liable for graft.

The Dispute Over Retention Money

The Municipality of Valencia, Negros Oriental awarded a P14.6-million waterworks contract to Legacy Construction, owned by respondents Alex and Dominador Abelido. Legacy purchased pipes worth over P2.8 million from petitioner New Bian Yek Commercial, Inc., paying with two personal checks that were later dishonored. Legacy ignored demands for payment.

In April 2002, petitioner asked Mayor Rodolfo Gonzales Jr. to pay Legacy’s debt using retention money withheld from the project. Retention money is a percentage of progress payments held by the government to guarantee the contractor’s performance and cover third-party liabilities. Gonzales referred the matter to Provincial Attorney Erwin Vergara.

Vergara opined that Legacy’s project engineer lacked authority to buy supplies on the company’s behalf, so petitioner could not claim a supplier’s lien. He recommended releasing the retention money to Legacy.

Meanwhile, petitioner filed a civil case and obtained a writ of preliminary attachment on February 11, 2003, prohibiting Gonzales from releasing any payment—including retention money—to Legacy. Despite this, Gonzales adopted Vergara’s opinion and instructed Municipal Treasurer Rolando Obañana to release the funds on March 12, 2003.

The Ombudsman’s Dismissal and the Court’s Review

Petitioner filed a criminal complaint against the officials for violating Section 3(e) of the Anti-Graft and Corrupt Practices Act (RA 3019), which penalizes public officers who cause undue injury or give unwarranted benefits through manifest partiality, evident bad faith, or gross inexcusable negligence.

The Ombudsman dismissed the complaint, finding that Vergara’s opinion was legally sound and that Gonzales and Obañana acted in good faith by relying on it. Petitioner elevated the case to the Supreme Court, arguing grave abuse of discretion.

The Court generally respects the Ombudsman’s discretion in determining probable cause. However, it will intervene when the Ombudsman ignores clear evidence sufficient to support a finding of probable cause.

The Court’s Ruling

The Supreme Court partially granted the petition. It found no probable cause against Vergara, who rendered his opinion before the writ was issued and did not participate in releasing the funds. But the Court found probable cause against Gonzales, Obañana, and the Abelidos.

The Court reasoned that the writ of preliminary attachment created a lien over the retention money in petitioner’s favor. By releasing the funds, Gonzales and Obañana impaired that lien and caused petitioner undue injury. They effectively extended unwarranted benefits to Legacy and the Abelidos, who gained full control of money that was under court custody.

Significantly, the Court rejected the argument that the release was proper under procurement rules. Under the Implementing Rules and Regulations of PD 1594, retention money may be released only upon final acceptance of the works, or upon substitution with a surety bond callable on demand after 50% completion. Here, the municipality released the funds without requiring such a bond, and petitioner did not allege the work had been finally accepted.

Practical Takeaways

• A writ of preliminary attachment is a court order, not a suggestion. Public officials who knowingly release attached funds risk criminal liability under RA 3019, regardless of any legal opinion they may have relied on.

• Reliance on a legal opinion is not an automatic defense. The Court distinguished Vergara, who acted before the writ existed, from Gonzales and Obañana, who acted after it was issued. Officials must verify the status of court orders before releasing funds.

• Retention money has strict release conditions. Under PD 1594’s IRR, it is due only upon final acceptance of the works or substitution with a callable surety bond. Releasing it without meeting these conditions may expose officials to graft charges.

• Probable cause is a low threshold. The Ombudsman need only find a well-founded belief that an offense was committed. Grave abuse of discretion occurs when the Ombudsman ignores sufficient evidence supporting such a finding.

• Private individuals can be liable too. The Abelidos, as private persons, were found to have probable cause for conspiring with public officials in violating Section 3(e).

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.