Fortune Motors Corporation thereafter executed trust receipts covering the motor vehicles delivered to it by

CARCO under which it agreed to remit to the Entruster (CARCO) the proceeds of any sale and immediately
surrender the remaining unsold vehicles (Folder of Exhibits, pp. 2, 5, 7-A, 9, 12 and 15). The drafts and trust
receipts were assigned to plaintiff-appellant, under Deeds of Assignment executed by CARCO (Folder of
Exhibits, pp. 3, 6, 7-B, 10, 13 and 16).

"Upon failure of the defendant-appellant Fortune Motors Corporation to pay the amounts due under the drafts
and to remit the proceeds of motor vehicles sold or to return those remaining unsold in accordance with the
terms of the trust receipt agreements, BA Finance Corporation sent demand letter to Edgar C. Rodrigueza,
South City Homes, Inc., Aurelio Tablante, Palawan Lumber Manufacturing Corporation, Joseph L. G. Chua,
George D. Tan and Joselito C. Baltazar (Folder of Exhibits, pp. 29-37). Since the defendants-appellants failed
to settle their outstanding account with plaintiff-appellant, the latter filed on December 22, 1983 a complaint
for a sum of money with prayer for preliminary attachment, with the Regional Trial Court of Manila, Branch
1, which was docketed as Civil Case No. 83-21944 (Record, pp. 1-12). Plaintiff-appellant filed a surety bond
in the amount of P3,391,546.56 and accordingly, Judge Rosalio C. Segundo ordered the issuance of a writ of
preliminary attachment on January 3, 1984 (Record, pp. 37-47). Defendants Fortune Motors Corporation,
South City Homes, Inc., Edgar C. Rodrigueza, Aurelio F. Tablante, Palawan Lumber Manufacturing
Corporation, Joseph L. G. Chua, George D. Tan and Joselito C. Baltazar filed a Motion to Discharge
Attachment, which was opposed by plaintiff-appellant (Record, pp. 49-56). In an Order dated January 11,
1984, Judge Segundo dissolved the writ of attachment except as against defendant Fortune Motors
Corporation and set the said incident for hearing (Record, p. 57). On January 19, 1984, the defendants filed
a Motion to Dismiss. Therein, they alleged that conventional subrogation effected a novation without the
consent of the debtor (Fortune Motors Corporation) and thereby extinguished the latter's liability; that
pursuant to the trust receipt transaction, it was premature under P. D. No. 115 to immediately file a complaint
for a sum of money as the remedy of the entruster is an action for specific performance; that the suretyship
agreements are null and void for having been entered into without an existing principal obligation; and that
being such sureties does not make them solidary debtors (Record, pp. 58-64).

"After due hearing, the court denied the motion to discharge attachment with respect to defendant Fortune
Motors Corporation as well as the motion to dismiss by the defendants (Record, pp. 68 and 87). In their
Answer, defendants stressed that their obligations to the creditor (CARCO) was extinguished by the
assignment of the drafts and trust receipts to plaintiff-appellant without their knowledge and consent, and
pursuant to legal provision on conventional subrogation a novation was effected, thereby extinguishing the
liability of the sureties; that plaintiff-appellant failed to immediately demand the return of the goods under
the trust receipt agreements or exercise the courses of action by the entruster as provided for under P. D. No.
115; and that at the time the suretyship agreements were entered into, there were no principal obligations,
thus rendering them null and void. A counterclaim for the award of actual, moral and exemplary damages
was prayed for by defendants (Record, pp. 91-110).

"During the pre-trial, efforts to reach a compromise was not successful, and in view of the retirement of Judge
Rosalio C. Segundo of RTC Manila, Branch 1, the case was-re-raffled off to Branch XXXIII, presided over
by Judge Felix V. Barbers (Record, pp. 155-160).

"Fortune Motors Corporation filed a motion to lift the writ of attachment covering three (3) vehicles described
in the Third-Party Claim filed with the Office of Deputy Sheriff Jorge C. Victorino (RTC, Branch 1) by
Fortune Equipment, Inc. which was opposed by plaintiff-appellant (Record, pp. 173-181). On June 15, 1984,
Deputy Sheriff Jorge C. Victorino issued a "Notice of Levy Upon Personal Properties Pursuant to Order of
Attachment" which was duly served on defendant Fortune Motors Corporation (Record, pp. 191-199). In an
Order dated April 28, 1986, the court a quo denied the motion to lift the writ of attachment on three (3)
vehicles described in the Third-Party Claim filed by Fortune Equipment Inc. (Record, p. 207). On motion of
their respective counsel, the trial court granted the parties time to sit down and appraise the machineries and
spare parts owned by defendant Fortune Motors Corporation which are now in the possession of plaintiff
corporation by virtue of the attachment. A series of conferences was allowed by the court, as means toward
possible compromise agreement. In an Order dated June 2, 1987, the case was returned to Branch I, now
 presided over by Judge Rebecca G. Salvador (Record, p. 237). The pre-trial period was terminated and the
case was set for trial on the merits (Record, p. 259).

"Acting on the motion to sell levied properties filed by defendant George D. Tan, the trial court ordered the public
sale of the attached properties (Record, p. 406). The court likewise allowed the complaint-in-intervention filed by
Fortune Equipment Inc. and South Fortune Motors Corporation who claimed ownership of four (4) vehicles earlier
seized and attached (Record, p. 471-475). Plaintiff corporation admitted the allegations contained in the complaint-
in-intervention only with respect to one truck