G.R. No. 124642 - Ching vs. Court of Appeals

On September 26, 1978, Philippine Blooming Mills Company, Inc. (PBMCI) obtained a P9,000,000 loan from Allied Banking Corporation (ABC), evidenced by a promissory note executed by PBMCI’s Executive Vice-President Alfredo Ching, payable on December 22, 1978, with 14% annual interest.
On September 28, 1978, Alfredo Ching, Emilio TaAedo, and Chung Kiat Hua executed a continuing guaranty with ABC, jointly and severally guaranteeing PBMCI’s obligations up to P38,000,000.
The loan was renewed multiple times, the last renewal on December 4, 1980.
On December 28, 1979, ABC extended another loan to PBMCI amounting to P13,000,000 at 16% annual interest, maturing June 29, 1981, evidenced by a promissory note signed by Alfredo Ching. This loan was renewed once for one month.

PBMCI defaulted on payments. On August 21, 1981, ABC filed a complaint for sum of money with prayer for a writ of preliminary attachment against PBMCI to recover P12,612,972.88 plus interests, penalties and other bank charges. Co-defendants included Alfredo Ching, Emilio TaAedo, and Chung Kiat Hua as sureties.
ABC alleged fraud under Rule 57, Sec. 1(d) and (e), claiming defendants misrepresented their financial position and disposed or intended to dispose of properties to defraud creditors.
Initially, on August 26, 1981, the trial court denied ABC’s application for writ of preliminary attachment, ruling alleged grounds were conclusions of fact and law.
Upon reconsideration, on September 14, 1981, the court granted the writ of preliminary attachment against Alfredo Ching only, ordering attachment of properties not exceeding P12,612,972.82 upon ABC’s posting of bond.

ABC posted bond; writ of preliminary attachment issued; summons served except for Chung Kiat Hua.
On April 1, 1982, PBMCI and Alfredo Ching jointly filed a petition for suspension of payments and rehabilitation before SEC.
On July 9, 1982, SEC placed PBMCI under rehabilitation, suspending all actions for claims against PBMCI.
On January 31, 1983, PBMCI and Ching moved to dismiss and/or suspend trial court proceedings citing SEC’s jurisdiction. ABC opposed.

On July 26, 1983, the sheriff levied 100,000 Citycorp Investment Philippines common shares listed under Alfredo Ching.
September 16, 1983, trial court suspended proceedings vis-à-vis PBMCI but denied suspension or dismissal for individual defendants, including Ching.
Subsequent pleadings and motions filed by defendants between 1984 to 1987, including motions to dismiss, omnibus motions, and bond reduction motions.
On November 16, 1993, Encarnacion T. Ching (Alfredo’s wife), assisted by Alfredo Ching, filed a Motion to Set Aside the levy on attachment, claiming shares were conjugal property acquired during marriage with conjugal funds and not liable for the suretyship debt.
ABC opposed, arguing:

Encarnacion presented marriage contract and corporate documents showing Alfredo Ching as among top stockholders and board member.

December 15, 1993, trial court granted the motion to quash the attachment on the shares and ordered their return to petitioners.
February 17, 1994, trial court denied ABC’s motion for reconsideration.
ABC filed petition for certiorari before the Court of Appeals (CA), claiming trial court acted without jurisdiction and abused discretion in lifting attachment.
November 27, 1995, CA granted ABC's petition, setting aside the trial court’s orders, on grounds that:

Petitioner-wife had no legal personality as non-party and should have filed a separate action;
Motion was barred by laches;
Property was registered solely in Alfredo Ching’s name and presumption of conjugal ownership was not shown;
RTC abused discretion and had no jurisdiction to issue the orders.

CA denied petitioners’ motion for reconsideration on April 2, 1996.
Petitioners elevated the case to the Supreme Court via Rule 45 petition for review on certiorari.

Whether or not petitioner-wife (Encarnacion T. Ching), not a party to the main case, had the legal right to file a motion to quash the levy on the 100,000 shares of Citycorp stocks.
Whether or not the trial court (RTC) committed grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the orders lifting the writ of preliminary attachment over the subject shares.