G.R. No. 88379 November 15, 1989
PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, GATES LEARJET CORPORATION and GATES LEARJET EXPORT CORPORATION, respondents.

FACTS

Learjet Philippines, Inc. sued Gates Learjet Corporation and Gates Learjet Export Corporation. Upon Learjet Philippines’ application and the posting of an attachment bond by Philippine Charter Insurance Corporation (PCIC), the trial court issued a writ of preliminary attachment, leading to the seizure of a Learjet aircraft owned by the defendants. The trial court later rendered judgment in favor of Learjet Philippines. However, the Court of Appeals reversed this decision, dismissed the complaint for lack of merit, and declared the attachment wrongful. It awarded damages to Gates Learjet against Learjet Philippines. Four days after notice of this appellate judgment, Gates Learjet filed an urgent petition with the Court of Appeals to have these damages executed against the attachment bond posted by PCIC.
The Court of Appeals, in a resolution, noted the claim against the surety and referred it to the trial court for hearing and decision pursuant to Section 20, Rule 57 of the Rules of Court. After the Supreme Court denied Learjet Philippines’ petition for review, the case was remanded. The trial court then issued a writ of execution. When the sheriff sought to enforce it against PCIC, the surety moved to recall the notice, arguing no judgment against it existed and that due process required a separate hearing on its liability. The trial court granted a preliminary injunction against execution on the bond and set a hearing on the damages claim. PCIC challenged this order via certiorari in the Court of Appeals, which dismissed the petition. PCIC then elevated the matter to the Supreme Court.

ISSUE

Whether the trial court correctly assumed jurisdiction to hear the application for damages against the attachment bond after the Court of Appeals’ judgment had become final and executory.

RULING

Yes. The Supreme Court dismissed PCIC’s petition, upholding the trial court’s jurisdiction. The legal logic centers on the proper application of Section 20, Rule 57 of the Rules of Court, which governs claims for damages arising from a wrongful attachment. The rule provides that such an application must be filed before the judgment becomes executory. In this case, the attachment was sustained by the trial court’s judgment; it was only the Court of Appeals that declared it wrongful. Therefore, the occasion to claim damages for the wrongful attachment arose only after the appellate decision. Gates Learjet timely filed its application with the Court of Appeals before that judgment became executory. The appellate court, acting within its authority under the rule, properly referred the claim to the trial court for hearing and decision. This referral did not divest the trial court of jurisdiction. The rule expressly allows the appellate court to delegate the hearing to the trial court. Consequently, the trial court was correct in proceeding to hear the claim to determine the extent of the surety’s liability on its bond. The requirement of a hearing is essential to due process, as the surety’s liability, though derivative, must be ascertained based on evidence. The finality of the main judgment declaring the attachment wrongful did not bar a subsequent proceeding solely to fix the recoverable damages against the bond.