G.R. No. 171750 - United Pulp and Paper Co., Inc. vs. Acropolis Central Guaranty Corporation

On May 14, 2002, United Pulp and Paper Co., Inc. (UPPC) filed a civil case for collection of P42,844,353.14 against Unibox Packaging Corporation (Unibox) and Vicente Ortega before the RTC of Makati City, Branch 148.
UPPC prayed for a Writ of Preliminary Attachment against the properties of Unibox and Ortega citing their imminent insolvency and fraudulent asset transfer.
On August 29, 2002, the RTC issued the Writ of Attachment after UPPC posted a bond in the amount of the claim.
Several properties and assets of Unibox and Ortega were attached pursuant to the writ.

On October 10, 2002, Unibox and Ortega filed a Motion for the Discharge of Attachment, praying to file a counter-bond for the same amount to dissolve the attachment.
The RTC, in its Order dated October 25, 2002, granted the motion subject to posting of a counter-bond.
On November 21, 2002, Acropolis Central Guaranty Corporation (Acropolis) issued the Defendant's Bond for Dissolution of Attachment in the amount of P42,844,353.14 in favor of Unibox.
UPPC opposed the counter-bond on grounds that Acropolis’s license was to be cancelled due to insufficient capitalization.
The RTC denied UPPC’s motion to discharge the counter-bond and ordered the lifting of attachment via December 10, 2002 Order.

On September 29, 2003, UPPC, Unibox, and Ortega executed a compromise agreement where Unibox and Ortega acknowledged a reduced obligation of P35,089,544.
The RTC approved and promulgated a Judgment on October 2, 2003, incorporating the compromise agreement.

Unibox and Ortega failed to pay May and June 2004 amortizations despite demands.
UPPC moved for execution of judgment and the RTC issued Writ of Execution on August 4, 2004.
The sheriff found Unibox’s assets foreclosed and no funds for garnishment; Ortega denied access to residence.
After no satisfaction of the claim, UPPC filed a Motion to Order Surety (Acropolis) to pay the counter-bond amount.
On November 30, 2004, the RTC ordered Acropolis to pay unpaid balance of P27,048,568.78 with interest.

Acropolis filed a motion for reconsideration, claiming lack of demand and that its obligation was novated by the compromise agreement.
The motion was denied by the RTC for being late and lacking merit.
Acropolis petitioned the Court of Appeals (CA) for certiorari and injunctive relief.
On November 17, 2005, the CA reversed the RTC, absolving Acropolis of liability citing compliance issues with demand and notice and noting Acropolis was not a party to the compromise agreement.

The CA denied UPPC’s motion for reconsideration in a Resolution dated March 1, 2006.

Whether UPPC failed to comply with the statutory requisites of demand and notice to Acropolis before recovering on the counter-attachment bond.
Whether the execution of the compromise agreement between UPPC and Unibox and Ortega constitutes a novation that releases Acropolis from liability under the counter-attachment bond.
Whether the RTC properly denied Acropolis’s motion for reconsideration due to non-compliance with the three-day notice rule.