G.R. No. 167131 ; September 12, 2006
SPOUSES NAPOLEON FLORES, SR. and VERONIDIA FLORES, doing business under the name FLORES Garments Mfg., and ALEXANDER J. FLORES, in his capacity as Attorney-in-Fact of NAPOLEON M. FLORES, petitioners, vs. STRONGHOLD INSURANCE COMPANY, INC., respondent.

FACTS

Petitioner-spouses Napoleon and Veronidia Flores sold their garments business to Stephen Liu via a Memorandum of Agreement. Liu later sued them for specific performance and damages, securing writs of preliminary attachment and injunction by posting bonds issued by respondent Stronghold Insurance Company. The spouses countered that Liu breached the contract by failing to pay the balance of the purchase price. The Regional Trial Court (RTC) ruled in favor of the spouses, rescinded the agreement, and ordered Liu to pay them damages. Subsequently, the spouses filed an application for damages against the attachment and injunction bonds issued by Stronghold, which the RTC granted.
Stronghold appealed to the Court of Appeals (CA), arguing the application was filed out of time. The CA nullified the RTC’s award, ruling that the application was filed beyond the 120-day period from the entry of judgment under Section 20, Rule 57 of the Rules of Court. The CA computed the period from the RTC’s June 25, 1999 decision, finding the July 16, 1999 application late. The spouses sought reconsideration, which was denied.

ISSUE

Whether the Court of Appeals erred in ruling that the petitioners’ application for damages on the attachment bond was filed out of time.

RULING

Yes, the Supreme Court reversed the CA. The legal logic centers on the proper computation of the reglementary period for filing a claim on an attachment bond. The CA erroneously reckoned the 120-day period from the date of the RTC decision, June 25, 1999. The Supreme Court clarified that the period should be counted from the date the judgment awarding damages became final and executory. A decision becomes final after the lapse of the period to appeal, which is 15 days from notice of judgment, and no appeal is perfected. The records showed that notice of the RTC decision was received by the parties only on July 2, 1999. Therefore, the 15-day appeal period expired on July 17, 1999, making the judgment final only after that date. The petitioners filed their application by registered mail on July 16, 1999, which was within the appeal period and thus before the judgment became final. Consequently, the application was filed well within the 120-day period prescribed by the rules. The Supreme Court reinstated the appeal and remanded the case to the CA for proper resolution.