PERLA COMPANIA DE SEGUROS, INC., PETITIONER, VS. HON. JOSE R. RAMOLETE, PRIMITIVA Y. PALMES. HONORATO BORBON. SR., OFFICE OF THE PROVINCIAL SHERIFF, PROVINCE OF CEBU, RESPONDENTS.

The present Petition for Certiorari seeks to annul: (a) the Order
dated 6 August 1979^[1]which
ordered the Provincial Sheriff to garnish the third-party liability insurance
policy issued by petitioner Perla Compania
de, Seguros, Inc. (“Perla“)
in favor of Nelia Enriquez, judgment debtor in Civil
Case No. R-15391; (b) the Order dated 24
October 1979 which denied the motion for reconsideration of the 6 August 1979^[2]
Order; and (c) the Order dated 8 April
1980^[3]
which ordered the issuance of an alias writ of garnishment against petitioner.

In the afternoon of 1
June 1976, a Cimarron PUJ owned and registered in the name of Nelia Enriquez, and driven by Gosme
Casas, was travelling from Cebu City
to Danao City.
While passing through Liloan, Cebu, the Cimarron PUJ collided with a private
jeep owned by the late Calixto Palmes
(husband of private respondent Primitiva Palmes) who was then driving the private jeep. The impact
of the collision was such that the private jeep was flung away to a distance of
about thirty (30) feet and then fell on its right side pinning down Calixto Palmes. He died as a
result of cardio-respiratory arrest due to a crushed chest.^[4]  The accident also caused physical injuries on
the part of Adeudatus Borbon
who was then only two (2) years old.

On 25 June 1976, private respondents Primitiva
Palmes (widow of Calixto Palmes) and Honorato Borbon, Sr. (father of minor Adeudatus
Borbon) filed a complaint^[5]
against Cosme Casas and Nelia Enriquez (assisted by her husband Leonardo Enriquez)
before the then Court of First Instance of Cebu,
Branch 3, claiming actual, moral, nominal and exemplary damages as a result of
the accident.

The claim of private respondent Honorato
Borbon, Sr., being distinct and separate from that of
co-plaintiff Primitiva Palmes,
and the amount thereof falling properly within the jurisdiction of the inferior
court, respondent Judge Jose R. Ramolete ordered the Borbon claim excluded from the complaint, without prejudice
to its being filed with the proper inferior court.

On 4 April 1977, the Court of First Instance rendered a Decision^[6]
in favor of private respondent Primitiva Palmes, ordering common carrier Nelia
Enriquez to pay her P10,000.00 as moral damages, P12,000.00 as compensatory
damages for the death of Calixto Palmes,
P3,000.00 as exemplary damages, P5,000.00 as actual damages, and P1,000.00 as
attorney’s fees.

The judgment of the trial court, became
final and executory and a writ of execution was
thereafter issued. The writ of execution was, however, returned unsatisfied.
Consequently, the judgment debtor Nelia Enriquez was
summoned before the trial court for examination on 23 July 1979. 
She declared under oath that the Cimarron PUJ registered in her name was
covered by a third-party liability insurance policy issued by petitioner Perla.

Thus, on 31 July 1979,
private respondent Palmes filed a motion for
garnishment^[7]
praying that an order of garnishment be issued against the insurance policy
issued by petitioner in favor of the judgment debtor.  On 6
August 1979, respondent Judge issued an Order^[8]
directing the Provincial Sheriff or his deputy to garnish the third-party
liability insurance policy.

Petitioner then appeared before the trial court and moved for
reconsideration of the 6 August 1979 Order and for quashal
of the writ of garnishment^[9],
alleging- that the writ was void on the ground that it (Perla)
was not a party to the case and that jurisdiction over its person had never
been acquired by the trial court by service of summons or by any other
process.  The trial court denied
petitioner’s motion^[10].  An Order for issuance of an alias writ of
garnishment was subsequently issued on 8
April 1980.^[11]

More than two (2) years later, the present Petition for
Certiorari and Prohibition was filed with this Court on 25 June 1982 alleging grave abuse of discretion
on the part of respondent Judge Ramolete in ordering
garnishment of the third-party liability insurance contract issued by
petitioner Perla in favor of the judgment debtor, Nelia Enriquez.  The
Petition should have been dismissed forthwith for having been filed way out of
time but, for reasons which do not appear on the record, was nonetheless
entertained.

In this Petition, petitioner Perla
reiterates its contention that its insurance contract cannot be subjected to
garnishment or execution to satisfy the judgment in Civil Case No. R-15391
because petitioner was not a party to the case and the trial court did not
acquire jurisdiction over petitioner’s person. 
Perla further argues that the writ of
garnishment had been issued solely on the basis of the testimony of the
judgment debtor during the examination on 23 July 1979 to the effect that the
Cimarron PUJ was covered by a third-party liability insurance issued by Perla, without granting it the opportunity to set up any defenses
which it may have under the insurance contract; and that the proceedings, taken
against petitioner are contrary to the procedure laid down in Economic
Insurance Company, Inc. v. Torres, et al.,^[12]
which held that under Rule 39, Section 45, the Court “may only
authorize” the judgment creditor to institute an action against a third
person who holds property belonging to the judgment debtor.

We find no grave abuse of discretion or act in excess of or
without jurisdiction on the part of respondent Judge Ramolete
in ordering the garnishment of the judgment debtor’s third-party liability
insurance.

Garnishment has been defined as a species of attachment for
reaching any property or credits pertaining or payable to a judgment debtor.^[13]  In legal contemplation, it is a forced novation by the substitution of creditors:^[14]
the judgment debtor, who is the original creditor of the garnishee
is, through service of the writ of garnishment, substituted by the judgment
creditor who thereby becomes creditor of the garnishee.  Garnishment has also been described as a
warning to a person having in his possession property or credits of the
judgment debtor, not to pay the money or deliver the property to the latter,
but rather to appear and answer the plaintiff’s suit.^[15]

In order that the trial court, may validly acquire jurisdiction
to bind the person of the garnishee, it is not necessary that summons be served
upon him.  The garnishee need not be imp
leaded as a party to the case.  All that
is necessary for the trial court lawfully to bind the person of the garnishee
or any person who has in his possession credits belonging to the judgment
debtor is service upon him of the writ of garnishment.

The Rules of Court themselves do not require that the garnishee
be served with summons or imp leaded in the case in order to make him liable.

Rule 39, Section 15 provides:

“Sec. 15.  Execution of money
judgments.  — The officer must
enforce an execution of a money judgment by levying on all the property, real
or personal of every name and nature whatsoever, and which may be disposed of
for value, of the judgment debtor not exempt from execution x x x.

Real property, stocks, shares, debts, credits, and other personal
property, or any interest in either real or personal property, may
be levied on in like manner and with like effect as under a writ of
attachment.”  (Underscoring
supplied).

Rule 57, Section 7(e) in turn reads:

“Sec. 7.  Attachment of real and
personal property; recording thereof. — Properties shall be attached
by the officer executing the order in the following manner:

x x
x                                         x
x x                                         x x
x

(e)  Debts and credits, and
other personal property not capable of manual delivery, by leaving with the
person owing such debts, or having in his possession or under his control, such
credits or other personal property, or with his agent, a copy of the order, and
notice that the debts owing by him to the party against whom attachment is
issued, and the credits and other personal property in his possession, or under
his control, belonging to said party, are attached in pursuance of such order;

x x
x              x
x x                 x x x“

(Underscoring supplied)

Through service of the writ of garnishment, the garnishee becomes
a “virtual party” to, or a “forced intervenor”
in, the case and the trial court thereby acquires jurisdiction to bind him to
compliance with all orders and processes of the trial court with a view to the
complete .satisfaction of the judgment of the court.  In Bautista v. Barredo,^[16]
the Court, through Mr. Justice Bautista Angelo, held:.

“While it is true that defendant Jose M. Barredo
was not a party in Civil Case No. 1636 when it was instituted by appellant
against the Philippine Ready Mix Concrete Company, Inc., however, jurisdiction
was acquired over him by the court and he became a virtual party to the case
when, after final judgment was rendered in said case against the company, the
sheriff served upon him a writ of garnishment in behalf of appellant. Thus,
as held by this Court in the case of Tayabas Land
Company vs. Sharruf, 41 Phil. 382, the proceeding by
garnishment is a species of attachment for reaching credits belonging to the
judgment debtor and owing to him from a stranger to the litigation. By means
of the citation, the stranger becomes a forced intervenor;
and the court, having acquired jurisdiction over him by means of the citation,
requires him to pay his debt, not to his former creditor, but to the new
creditor, who is creditor in the main litigation.”  (Underscoring supplied).

In Rizal Commercial Banking Corporation
v. De Castro,^[17]
the Court stressed that the asset or credit garnished is thereupon subjected to
a specific lien:

“The garnishment of property to satisfy a writ of execution
operates as an attachment and fastens upon the property a lien by which the
property is brought under the jurisdiction of the court issuing the writ.  It is brought into custodia
legis, under the sole control of such
court.”^[18]
(Underscoring supplied)

In the present case, there can be no doubt, therefore, that the trial
court actually acquired jurisdiction over petitioner Perla
when it was served with the writ of garnishment of the third-party liability
insurance policy it had issued in favor of judgment debtor Nelia
Enriquez.  Perla
cannot successfully evade liability thereon by such a contention.

Every interest which the judgment debtor may have in property may
be subjected to execution.^[19]  In the instant case, the judgment debtor Nella Enriquez clearly had an interest in the proceeds of
the third-party liability insurance contract. 
In a third-party liability insurance contract, the insurer assumes the
obligation of paying the injured third party to whom the insured is liable.^[20]  The insurer becomes liable as soon as the
liability of the insured to the injured third person attaches. Prior payment by
the insured to the injured third person is not necessary in order that the
obligation of the insurer may arise. From the moment that the insured became
liable to the third person, the insured, acquired an interest in the insurance
contract, which interest may be garnished like any other credit.^[21]

Petitioner also contends that in order that it may be held liable
under the third-party, liability insurance, a separate action should have been
commenced by private respondents to establish petitioner’s liability.
Petitioner invokes Economic Insurance Company, Inc. v. Torres,^[22]
which stated:

“It is clear from Section 45, Rule 39 that if a person
alleged to have property of the judgment debtor or to be indebted to him
claim’s an interest not applicable in the instant case, and we see no need
to require a separate action against Perla: a writ of
garnishment suffices to hold petitioner answerable to the judgment
creditor.  If Perla
had any substantive defenses against the judgment debtor, it is properly deemed
to have waived them by laches.

WHEREFORE, the
Petition for Certiorari and Prohibition is hereby DISMISSED for having been
filed out of time and for lack of merit. 
The assailed Orders of the trial court are hereby AFFIRMED.  Costs against petitioner.
This Decision is immediately executory.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino and Medialdea, JJ., concur.

^[1]
Rollo, p. 40.

^[2]
Id.,
p. 44.

^[3]
Id.,
p. 46

^[4]
Id.,
p. 41.

^[5]
Id.,
pp. 14-18.

^[6]Id., pp.
19-37.

^[7]Id., pp.38-39.

^[8]
Id.,
p. 40.

^[9]
Id.,
pp. 42-43.

^[10]
Id.,
p. 44.

^[11]Id., p. 46.

^[12]
79 SCRA 519 (1977).

^[13]
Tayabas
Land Company v. Sharuff, 41 Phil. 382 (1921);
Bautista v. Barredo, 13 SCRA 744 (1965).

^[14]
Tayabas
Land Company v. Sharuff, supra.

^[15]
Reliance Procoma, Inc. v. Phil-Asia
Tobacco Corporation, 57 SCRA 370 (1974).

^[16]
13 SCRA 744 (1965)

^[17]
168 SCRA 49 (1988).

^[18]
See also De Leon v. Salvador, 36 SCRA 567 (1970); National Power v. de Neyra, 3 SCRA 646 (1961); Hacbang
v. Leyte, 8 SCRA 103 (1963).

^[19]
Reyes v. Grey, 21 Phil. 73 (1911); Levy Hermanos,
Inc., v. Casimiro, 60 Phil. 978 (1934).

^[20]
Section 373 [f], Insurance Code.

^[21]
Landaker
v. Anderson, 261 P. 388 (1927).

^[22]
79 SCRA 519 (1977)