Peroxide Philippines Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Bank of the Philippine Islands (BPI) filed a collection case against Peroxide Philippines Corporation (Peroxide), Eastman Chemical Industries, Inc. (Eastman), and spouses Edmund O. Mapua and Rose U. Mapua (Mapuas), who were solidarily liable. BPI secured a writ of preliminary attachment, which was implemented on petitioners' properties. Procedural History: Eastman and the Mapuas moved to lift the attachment. The trial court, through Judge Pineda, initially denied BPI's motion for hearing and lifted the writ. Subsequently, Judge Reyes found the attachment proper due to fraudulent disposition of properties and directed its implementation. Judge Acosta, upon reconsideration, declared the writ immediately executory. Petitioners sought certiorari before the Intermediate Appellate Court (IAC), which dismissed their petition, holding the attachment valid. This Court denied their subsequent petition for review. Judge Acosta later suspended the writ ex parte, but this Court again denied petitioners' motion for clarification. BPI sought delivery of cash dividends on garnished shares, which Judge Gerona granted, holding the attachment valid. Judge Gerona's subsequent order suspending the writ ex parte was declared a nullity. Judge Rasul required parties to re-summarize positions. The trial court, through Judge Rasul, issued an order on August 23, 1988, stating that contempt charges against garnishee officers were unfounded due to Judge Acosta's suspension order and that properties of Eastman and Mapuas should not be attached pending determination of propriety. BPI filed an urgent ex parte motion to suspend the effects of this order, which was denied. BPI then filed a petition for certiorari with the Court of Appeals. The Petition: The Court of Appeals granted BPI's petition, declaring the writ of preliminary attachment valid and enforceable, setting aside the trial court's order of August 23, 1988, and ordering the delivery of cash dividends. Petitioners sought review of this decision.
Issue(s)
Whether the trial court acted with grave abuse of discretion in denying BPI's urgent ex parte motion to suspend the order of August 23, 1988. Whether the order of September 19, 1988 renders moot and academic BPI's pending motion for reconsideration. Whether the lower court erroneously held that the writ of attachment secured by BPI had ceased to be valid and effective or had been suspended by virtue of its orders of January 17, 1983 and May 29, 1986. Whether the trial court committed grave abuse of discretion when it nullified the writ of attachment as against Eastman and the Mapuas. Whether there is an inconsistency between the Supreme Court's resolution of October 27, 1986 and its subsequent resolution of November 10, 1987. Whether the attachment can validly issue against the conjugal properties of the Mapuas. Whether the trial court disregarded the clear and unequivocal records of the case when it issued its order of August 23, 1988.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The writ of preliminary attachment against the properties of Eastman and the Mapuas was declared valid and enforceable from the beginning. The orders of the trial court lifting or suspending the writ ex parte were declared void for lack of due process. The cash dividends declared on the garnished shares of stock were also declared subject to attachment.
Ratio Decidendi
On the issue of grave abuse of discretion in denying BPI's motion to suspend the order of August 23, 1988: The Court reiterated that orders lifting or suspending a writ of preliminary attachment, if issued ex parte and without notice and hearing, are void for violating due process. Section 13, Rule 57 of the Rules of Court mandates a hearing before a judge may order the discharge of an attachment. The burden of proof to sustain the writ rests on the attaching creditor, and the attaching creditor must be allowed to oppose the application for discharge by counter-affidavit or other evidence. The ex parte discharge or suspension of the attachment by the trial court was a disservice to the orderly administration of justice and nullified the purpose of preliminary attachment as an ancillary remedy. Therefore, the attachment remained valid and enforceable despite the void orders of discharge and suspension. On the issue of whether the order of September 19, 1988 renders moot and academic BPI's pending motion for reconsideration: The Court found that the temporary restraining order (TRO) issued by the IAC in AC-G.R. SP No. 05043 was effectively lifted when the motion for reconsideration was denied, as the TRO was merely reinstated to maintain the status quo pending resolution of the motion and had a limited effectivity. The argument that the TRO remained in effect was deemed misleading. On the issue of the validity and enforceability of the writ of preliminary attachment, and the effect of the trial court's orders of January 17, 1983 and May 29, 1986: The order of January 17, 1983, lifting the attachment, was issued without affording BPI due process, as it denied BPI's request for a hearing and opportunity to oppose. Similarly, the order of May 29, 1986, suspending the writ ex parte, was also void for lack of notice and hearing. Consequently, these orders could not have legally discharged or suspended the attachment, which continued to be valid and effective. On the issue of the propriety of attachment against Eastman and the Mapuas: The Court found that the issue of whether Eastman and the Mapuas were sureties or mere guarantors was a question of fact that should be determined in the main case, not in an auxiliary proceeding for attachment. The attachment was validly issued based on the initial claim of indebtedness and the alleged fraudulent disposition of properties. The Supreme Court's resolution stating that the propriety of attachment involves questions of fact meant that the trial court should determine it in appropriate proceedings, but until found improper, the attachment remains valid and subsisting. The Court rejected the theory that the attachment was not applicable to Eastman and the Mapuas, noting that they moved for discharge on grounds other than their liability status, and this issue was only raised later. On the effect of the Supreme Court's resolutions: The Court clarified that its resolution denying clarification on the nature of Eastman and Mapuas' liability, stating it involved questions of fact, did not mean the attachment was suspended pending determination. Instead, it meant the trial court should determine the propriety of the attachment in due course. The earlier resolution stating the writ was issued in accordance with law and jurisprudence affirmed its validity. There was no inconsistency between these resolutions. On the issue of whether the attachment can validly issue against the conjugal properties of the Mapuas and the cash dividends: The Court affirmed the Court of Appeals' ruling that cash dividends are incidents or fruits of shares of stock. Therefore, the attachment of the shares necessarily included the dividends declared subsequent to the notice of garnishment. The trial court's order that these dividends were not subject to attachment was erroneous and was set aside. On the issue of whether the trial court disregarded the clear and unequivocal records of the case when it issued its order of August 23, 1988: The attachment was validly issued based on the initial claim of indebtedness and the alleged fraudulent disposition of properties.
Main Doctrine
Orders lifting or suspending a writ of preliminary attachment, if issued ex parte and without notice and hearing, are void for lack of due process and do not discharge the attachment. The attachment remains valid and enforceable until the judgment is satisfied or the writ is validly discharged.