G.R. No. L-17927. June 29, 1963
LOURDES DE LA RAMA, PLAINTIFF AND APPELLEE, VS. AUGUSTO R. VILLABOSA, ET AL., DEFENDANTS, LUZON SURETY COMPANY, INC., DEFENDANT AND APPELLANT.
LABRADOR, J.:
Occidental, dated August 6, 1960, Hon. Jose R. Querubin, presiding,
issuing a fourth alias writ of execution directing the sheriff of
Manila to enforce the judgment of the Court of Appeals on the sum of
P33,002.72 out of a total of P71,533.99 garnished by the sheriff after
judgment of the Court of First Instance, and especially in so far as it
denies a petition of defendant-appellant for an order against the
sheriff of Manila and plaintiff to pay to appellant or return to him
the sum of P39,998.42 plus interest and costs.
The background of the present appeal is as follows: Plaintiff-lessor
Lourdes de la Rama brought an action in the Court of First Instance of
Negros Occidental, against defendant lessee Augusto R. Villarosa and
the latter’s surety, the Luzon Surety Co., Inc. for judicial
confirmation of the cancellation, rescission and annullment of a
contract of lease of sugar land, Annex “A”, and the payment of the
unpaid balance of the rental for the 1953-54 sugarcane crop year, the
rental for the 1954-55 crop year, rental and partly the reasonable
value for the use and occupation of the leased premises for the 1955-56
crop year, with stipulated attorney’s fees, and interests, etc On June
25, 1955, the court rendered a partial summary judgment decreeing the
lease rescinded, cancelled and annulled from the 14th day, of January
1955 and ordering defendant Augusto R. Villarosa to surrender and
deliver to plaintiff or her representatives the possession of the
leased premises, etc. After trial the court rendered a decision dated
March 28, 1957′ ordering the lessee and his surety to pay:
occupation of the lease premises for the 1955-56 crop year
for attorney’s fees stipulated in paragraph 4 (e) of the lease
contract aforesaid base upon the total of the sums stated in (a) , (b) and (c) above
On January 22, 1958, the lower court issued an order for the
immediate execution of the above judgment. Again on August 8, 1959, the
lower court, upon motion of plaintiff-appellee Lourdes de la Rama,
issued an order for the issuance of a third alias writ of execution
directing the sheriff of Manila to satisfy the judgment dated March 28,
1957. Accordingly, the sheriff of Manila garnished the deposit of
defendant-appellant with the Philippine Trust Co. to the amount of
P71,533.99, and required the latter not to deliver, transfer or
otherwise dispose of the said amount belonging to the defendant, to any
person except to the sheriff, or suffer the penalties prescribed by
law. The Philippine Trust Co., employing with such notice, set aside
the amount of P71,&53.99 out of the deposit of the
defendant-appellant in its possession for the benefit of the sheriff of
Manila and the plaintiff-appellee.
In the meantime and on July 5, 1958, the Luzon Surety Co., Inc.
perfected an appeal and the record on appeal was forwarded to the
Honorable Court of Appeals and docketed therein as CA-G.R. No. 23537-R.
The garnishee, the Philippine Trust Co., refused to deliver to the
sheriff of Manila, the amount garnished by the latter to satisfy the
writ of execution, so the lower court on September 3, 1959, ordered
said company to pay the sheriff out of the deposit of the Luzon Surety
Co., Inc. the amount stated in the amended garnishment dated August 18,
1959. On September 18, 1959, before the order could be complied with by
the garnishee, the defendant Luzon Surety Co. filed a petition for
certiorari with preliminary injunction with the Court of Appeals
(CA-G.R. No. 25322-R) against plaintiff-appellee, the Court of First
Instance of Negros Occidental, the sheriff of Manila and the Philippine
Trust Co. Upon filing of the petition the sheriff of Manila was
enjoined from enforcing the order of September 3, 1959, against the
Philippine Trust Co. So the garnishee did not deliver to the sheriff of
Manila any portion of the amount garnished and plaintiff-appellee never
received any amount either in full or partial satisfaction of the
original judgment of the trial court then under execution.
On January 14, 1960, the Court of Appeals issued a joint decision on
the main case (CA-G.R. No. 23537-R) and on the petition for certiorari
(CA-G.R. No. 25322-R).
The dispositive portion of the decision reads:
“Defendant Luzon Surety is hereby ordered to pay the
sum of P24.864.78, solidarity with defendant-Villarosa, to plaintiff
Lourdes de la Rama, in regard to the sums mentioned in sub-paragraphs
(a), (b) and (d) above and for the reasons mentioned elsewhere in this
decision, plus the legal interest on the sum of P24,864.78 from the
time of the filing of the complaint until full payment, even if
addition of such legal interest would make its judgment debt in excess
of the liability of P25,000.00 stated in the bond.”
On July 25, 1960, the defendant-appellant, invoking the provisions
of section 5 of Rule 39, Rules of Court, filed with the lower court a
verified motion for the restitution of the amount of P39,998.42 (?)
(P71,533.99 minus P33,002.72 equals P38,531.27), plus interest thereon
at the rate of 6% per annum from August 18, 1959 until paid. The above
amount represents the balance refundable to it after the Court of
Appeals modified the decision of the lower court, plus a 6% interest
thereon, invoking the provision of Section 5 of Rule 39.
Plaintiff-appellee opposed the motion, alleging that by virtue of
the writ of preliminary injunction issued by the Court of Appeals the
sheriff of Manila was never able to collect from the Philippine Trust
Company any portion of the amount garnished, and so section 5 of Rule
39, invoked by appellant has no application, there being no property
belonging to the defendant company which has been delivered to the
sheriff or the plaintiff and which has to be restituted.
On August 6, 1960, the lower court denied the motion of the Luzon
Surety Co., Inc. and, finding the counter-motion filed by plaintiff De
la Rama well-founded, issued a fourth alias writ of execution directing
the sheriff of Manila to enforce the judgment of the Court of Appeals
on the sum of P33,002.72 then under garnishment and in the possession
of the Philippine Trust Co. plus the legal sheriff’s fees, and
directing the Philippine Trust Co. to pay the sheriff of Manila the sum
of P33,002.72.
“Sec. 5. Effect of reversal of judgment
executed.—Where the judgment executed is reversed totally or partially
on appeal, the trial court, on motion, after the case is remanded to
it, may issue such orders of restitution as equity and justice may
warrant under the circumstances (Rules of Court)
There are various reasons why the petition for interest on the
balance of the amount garnished cannot be awarded to the
defendant-appellant. In the first place the amount garnished was not
actually taken possession of by the sheriff, even from the time of the
garnishment, because upon the perfection of the defendant-appellant’s
appeal to the Court of Appeals this Court issued an injunction
prohibiting execution of the judgment. The plaintiff-appellee was,
therefore, able to secure a full satisfaction of the judgment only upon
final judgment of the Court on August 6, 1960. The total sum garnished
was not delivered to the sheriff in execution, because the order for
the execution of the judgment of the lower court was suspended in time
by the appeal and the preliminary injunction issued on appeal.
In the second place, the mere garnishment of funds belonging to a
party upon order of the court does not have the effect of delivering
the money garnished to the sheriff or to the party in whose favor the
attachment is issued. The fund is retained by the garnishee or the
person holding the money for the defendant.
The above order of August 6, 1960, is the subject of this appeal to this Court.
The gist of the appellant’s appeal is that inasmuch as the full
amount of P71,533.99 was garnished but only the sum of P31,535.57 was
paid, the amount of the judgment awarded in the Court of Appeals,
plaintiff-appellee should pay an interest of 6% of the difference
between the total sum actually garnished and the sum obtained by the
plaintiff in the final judgment or an interest of 6%, etc. Basis for
this petition is Section 5 of Rule 39 which reads as follows:
“The garnishee, or one in whose hands property is
attached or garnished, is universally regarded as charged with its
legal custody pending the outcome of the attachment or garnishment,
unless, by local statute and practice, he is permitted to surrender or
pay the garnished property or funds into court, to the attaching
officer, or to a receiver or trustee appointed to receive them.” (6 Am.
Jur. 14)
The effect of the garnishment, therefore, was to require the
Philippine Trust Company, holder of the funds of the Luzon Surety Co.,
to set aside said amount from the funds of the Luzon Surety Co. and
keep the same subject to the final orders of the court. In the case at
bar there was never an order to deliver the full amount garnished to
the plaintiff-appellee; all that was ordered to be delivered after the
judgment had become final was the amount found by the Court of Appeals
to be due. The balance of the amount garnished, therefore, remained all
the time in the possession of the bank as part of the funds of the
Luzon Surety Co., although the same could not be disposed of by the
owner.
In the third place, the motion by the defendant-appellant for the
payment of damages or interest was presented when the judgment had
already become final. Damages incident to the issuance of an attachment
may only be claimed before final judgment. (Rule 59, Sec. 20). In the
case at bar the judgment of the Court of Appeals was issued on January
14, 1960. But the defendant-appellant’s request for interest or damages
is dated July 22, 1960. The defendant-appellant’s awn record on appeal
shows that the decision of the Court of Appeals had already become
final and executory at the time of the perfection of the appeal to this
Court.
A last reason is the absence of any allegation to the affect that
the garnishment of appellant’s funds in the Philippine Trust Company
caused actual damages to defendant-appellant, for example that the
funds could not be utilized to pay a pending obligation as a result of
which interest was paid on such obligation.
For all the foregoing, the judgment of the court below denying
defendant-appellant’s petition for interest on its funds garnished is
affirmed, with costs against defendant-appellant.
Padilla, Bautista Angelo, Concepcion, Reyes, J. B.L, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.