THE Supreme Court yesterday denied the petition of China Banking Corp. to take custody and sell properties of a construction firm after it failed to comply with what was stipulated in its P90-million credit line.

In a decision promulgated in Baguio City, the SC Third Division upheld the decision of the Court of Appeals that junked China Bank's bid for grant of authority to sell construction facilities of Asian Construction and Development Corporation.

The high court concurred with the ruling of the CA that since ACDC is a corporation engaged in a construction business, the preservation of its properties is of paramount importance; and that in the event that the decision of the lower court is reversed and a final judgment rendered in favor of ACDC, great prejudice will result if the attached properties were already sold.

The SC said that the sale of attached property before final judgment is an equitable remedy provided for the convenience of the parties and preservation of the property.

Since the subject properties are not perishable in nature, selling the attached properties prior to final judgment of the appealed case is premature and contrary to the intent and purpose of preliminary attachment, the Court added.

"While the sale of the attached properties may serve the interest of China Bank, it will not be so for ACDC," said the SC.

China Bank granted an Omnibus Credit Line amounting to P90 million to ACDC on July 24, 1996.

On April 12, 1999, the bank filed a complaint for recovery of sum of money and damages with prayer for the issuance of writ of preliminary attachment before the Makati regional trial court.

The bank complained that ACDC, after collecting and receiving the proceeds or receivables from construction contracts and purportedly holding them in trust under several Deeds of Assignment, misappropriated, converted, and used the funds for its own purpose and benefit, instead of remitting or delivering them to the bank.

On April 22, 1999, the Makati court granted China Bank's prayer for writ of preliminary attachment. Consequently, the writ of preliminary attachment was implemented levying personal properties of ACDC, such as vans, dump trucks, cement mixers, cargo trucks, utility vehicles, machinery, equipment and office machines and fixtures.

On March 27, 2000, upon motion of China Bank, the Makati court issued a Summary Judgment in favor of the bank.

On June 15, 2000, China Bank filed a Motion to Take Custody of Attached Properties with Motion for Grant of Authority to Sell to the Branch Sheriff with the RTC, praying that it be allowed to take custody of ACDC's properties for the purpose of selling them in an auction.

China Bank alleged that the attached properties are placed in locations where they are totally exposed to natural elements and adverse weather conditions since their attachment in 1999.

ACDC argued there can be no sale of its attached properties in the absence of a final and executory judgment against it.