PEROXIDE PHILIPPINE CORP v COURT OF APPEALS

DOCTRINE: Where the order lifting of the writ of attachment was improperly
issued as the attaching creditor was not allowed to oppose the application for the
discharge of the attachment by counter-affidavit or other evidence, such order is
void and does not have any effect at all to the writ of attachment. The writ
continued to be valid from its issuance since the judgment had not been
satisfied , nor has there been a valid discharge thereof either by the filing of a
counter-bond or for improper or irregular issuance.

FACTS: Private respondent Bank of the Philippine Islands (BPI) sued herein
petitioners Peroxide Philippines Corporation (Peroxide), Eastman Chemical
Industries, Inc. (Eastman), and the spouses Edmund O. Mapua and Rose U.
Mapua (Mapuas) in Civil Case No. 48849 of the then Court of First Instance of
Pasig, Metro Manila for the collection of an indebtedness of Peroxide wherein
Eastman and the Mapuas bound themselves to be solidarily liable.

Upon the filing of said action, the trial court, then presided over by Judge
Gregorio G. Pineda, ordered the issuance of a writ of preliminary attachment
which was actually done after BPI filed an attachment bond in the amount of
P32,700,000.00. Petitioners' properties were accordingly attached by the sheriff.

Eastman and the Mapuas moved to lift the attachment, which motion was set for
hearing. On said date and on motion of BPI, it was granted up to January 17,
1983 to file a written opposition to the motion to lift the writ of attachment. BPI
also filed a motion to set for hearing the said motion to lift attachment and its
opposition thereto.

Judge Pineda issued two (2) orders, the first, denying BPI's motion for a hearing,
and, the second, lifting the writ of attachment as prayed for by Eastman and the
Mapuas. BPI filed a motion for reconsideration but, consequent to the then
judiciary reorganization, the case was re-raffled and assigned to the sala of Judge
Pastor Reyes.

Judge Reyes issued an order with an explicit finding that the attachment against
the properties of Eastman and the Mapuas was proper on the ground that they
had disposed of their properties in fraud of BPI. It also directed the sheriff to
implement the writ of attachment upon the finality of said order.

After a motion for partial reconsideration by BPI and some exchanges between
the parties, on December 17, 1984 the trial court, this time with Judge Eficio B.
Acosta presiding, issued an order granting BPI's motion for partial
reconsideration.

Contending that said order of December 17, 1984 was rendered with grave abuse
of discretion amounting to lack of jurisdiction, petitioners sought the annulment
thereof in a petition for certiorari and prohibition in AC-G.R. SP No. 05043 of the
Intermediate Appellate Court, wherein a temporary restraining order was issued.
This restraining order was lifted when said court rendered its decision in said case
on March 14, 1986 dismissing the petition and holding, among others, that there
is nothing wrong with the attachment of the properties of PEROXIDE.

Petitioners then sought the review of said decision by this Court in G.R. No.
74558, but no temporary restraining order was granted therein. In the meantime,
on May 29, 1986, Judge Acosta issued an order suspending the writ of
preliminary attachment.
This Court denied the aforesaid petition for review on certiorari "considering that
the writ of preliminary attachment issued was in accordance with law and
applicable jurisprudence.

Dissatisfied, petitioners again filed an urgent motion for clarification submitting

that the Court failed to pass upon.

BPI filed a motion to order Bataan Pulp and Paper Mills, Inc. (Bataan), jointly and
severally with petitioners, to deliver to the sheriff the cash dividends declared on
the garnished shares of stock of said petitioners with said paper company, and to
cite for contempt the officers of Bataan for releasing and/or paying the dividends
to petitioners in disregard of the notice of garnishment.

Judge Gerona sustained the position of BPI that dividends are but incidents or
mere fruits of the shares of stock and as such the attachment of the stock
necessarily included the dividends declared thereon if they were declared
subsequent to the notice of garnishment.

He further held that the preliminary attachment, being a provisional remedy,

must necessarily become effective immediately upon the issuance thereof and
must continue to be effective even during the pendency of an appeal from a
judgment of the court which issued the said provisional remedy and will only
cease to have effect when the judgment is satisfied or the attachment is
discharged or vacated in some manner provided by law.

ISSUE/s:
1. Whether or not the preliminary attachment was validly lifted and
suspended by the lower court's orders dated January 17, 1983 and May
29, 1986, respectively.

2. Whether or not there is a valid attachment of properties of Eastman and the

Mapuas.

HELD:

1. NO. The discharge is illegal and void because the order lifting the same is
violative of Section 13, Rule 57 of the Rules of Court which requires,
among others, a prior hearing before the judge may order the discharge of
the attachment upon proof adduced therein of the impropriety or
irregularity in the issuance of the writ and the defect is not cured
forthwith. We may mention in this regard that if the petition for the
discharge of the writ violates the requirements of the law, the trial judge
does not acquire jurisdiction to act thereon.

It is true that petitioner's motion to discharge was set for hearing with notice to
BPI but it is likewise true that counsel for the latter asked for an opportunity to
file a written opposition and for a hearing to which he asked that petitioner
Edmund O. Mapua be subpoenaed. Said counsel was allowed to file a written
opposition which he seasonably did, but Judge Pineda denied both the requested
subpoena and hearing and, instead, granted the discharge of the attachment.
These are the bases for BPI's complaint that it was denied due process.

Now, it is undeniable that when the attachment is challenged for having been
illegally or improperly issued, there must be a hearing with the burden of proof to
sustain the writ being on the attaching creditor. That hearing embraces not only
the right to present evidence but also a reasonable opportunity to know the
claims of the opposing parties and meet them. The right to submit arguments
implies that opportunity, otherwise the right would be a barren one. It means a
fair and open hearing. And, as provided by the aforecited Section 13 of Rule 57,
the attaching creditor should be allowed to oppose the application for the
discharge of the attachment by counter-affidavit or other evidence, in addition to
that on which the attachment was made.

Respondent court was, therefore, correct in holding that, on the above-stated

premises, the attachment of the properties of Eastman and the Mapuas remained
valid from its issuance since the judgment had not been satisfied, nor has the
writ been validly discharged either by the filing of a counterbond or for improper
or irregular issuance.

2. YES. The Court rejects petitioners' theory that the preliminary attachment is
not applicable to Eastman and the Mapuas. The writ was issued in Civil Case No.
48849 against the properties of all the petitioners herein. Eastman and the
Mapuas moved for the discharge of the attachment on the ground that they were
not disposing of their properties in fraud of creditors, but they did not raise the
issue of their liabilities as being allegedly those of mere guarantors. They did so
only when this Court resolved on October 27, 1986 that the writ of preliminary
attachment was issued in accordance with law and applicable jurisprudence.

As can be seen the paragraph begins with the holding that there is nothing wrong
with the attachment of properties of Peroxide. This holding on its face is limited
only to the upholding of attachment against the properties of petitioner Peroxide.
And yet the alienations mentioned in the subsequent sentences do not refer to
dispositions of properties of Peroxide and by Peroxide. A cursory glance of records
will show that they refer to dispositions alleged to have been fraudulently made
by Eastman Chemical Industries, Inc. and Edmund Mapua. Relating this point to
the dispositive portion which in effect sustains the attachment issued by the trial
court not only against Peroxide, but also against Eastman and Mapua spouses.