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G.R.No.84526

TodayisThursday,June23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.84526January28,1991
PHILIPPINECOMMERCIAL&INDUSTRIALBANKandJOSEHENARES,petitioners,
vs.
THEHON.COURTOFAPPEALSandMARINDUQUEMININGANDINDUSTRIALCORPORATION,
respondents.
Bengzon,Zarraga,Narciso,Cudala,Pecson&Bengsonforpetitioners.
RexesV.Alejanoforprivaterespondent.
SARMIENTO,J.:
Thisisapetitionforreviewoncertiorariwhichassailsboththeresolution 1datedJune27,1988oftheCourtof
Appeals2whichreconsideredandsetasideitsearlierdecisions3datedFebruary26,1988reversingthedecision4
ofthetrialcourtandthesubsequentresolution 5dated August 3, 1988 which denied the petitioners' motion for
reconsideration.ThedispositiveportionoftheresolutioninquestiondatedJune27,1988readsasfollows:
xxxxxxxxx
For the reasons above adduced, We are constrained to reconsider Our aforesaid decision and to set it
asideandinlieuthereofherebyenteranotherdecisionAFFIRMINGthedecisiondatedJanuary15,1985of
the Regional Trial Court of Manila, Branch 11, in Civil Case No. 103100 entitled "Marinduque Mining and
IndustrialCorporation(MMIC)vs.PhilippineCommercialandIndustrialBank,etal."6
Theundisputedfacts7asgatheredfromthefindingsofthetrialcourtareasfollows:
The instant case originated from an action8 filed with the National Labor Relations Commission (NLRC) by a
group of laborers who obtained therefrom a favorable judgment for the payment of backwages amounting to
P205,853.00againsttheprivaterespondent.
On April 26, 1976, the said Commission issued a writ of execution directing the Deputy Sheriff of Negros
Occidental, one Damian Rojas, to enforce the aforementioned judgment. The pertinent portion of the said writ
readsasfollows:
xxxxxxxxx
Further,youaretocollectfromsamerespondentthetotalamountofP205,853.00astheirbackwage(sic)
for twelve (12) months and then turn over said amount to this commission for further disposition. In case
you fail to collect said amount in cash, you are to cause the satisfaction of the same on the movable or
immovable properties of the respondent not exempt from execution. (Exhs. G, G1 and G3, also Exh. 3
Emphasissupplied).9
Accordingly, on April 28, 1976, the aforenamed deputy sheriff went to the mining site of the private respondent
andservedthewritofexecutiononthepersonsconcerned,butnothingseemedtohavehappenedthereat.
Thereafter, the Sheriff prepared on his own a Notice of Garnishment dated April 29, 1976 addressed to six (6)
banks, all located in Bacolod City, one of which being the petitioner herein, directing the bank concerned to
immediately issue a check in the name of the Deputy Provincial Sheriff of Negros Occidental in an amount
equivalenttotheamountofthegarnishmentandthatproperreceiptwouldbeissuedtherefor.
Incidentally, the house lawyer of the private respondent, Atty. Rexes V. Alejano, acting on a tip regarding the
existenceofthesaidnoticeofgarnishment,communicatedwiththebankmanager,thepetitionerJoseHenares,
verballyatfirstataround2:00o'clockintheafternoonofthatday,April29,1976,andlaterconfirmedinaformal
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letterreceivedbythepetitionerHenaresatabout5:00o'clockofthatsameday,requestingthewithholdingofany
releaseofthedepositoftheprivaterespondentwiththepetitionerbank.
Meanwhile,atabout9:30inthemorningofApril29,1976,thedeputysheriffpresentedtheNoticeofGarnishment
andtheWritofExecutionattachedtherewithtothepetitionerHenaresandlaterintheafternoon,demandedfrom
thelatter,underpainofcontempt,thereleaseofthedepositoftheprivaterespondent.
ThepetitionerHenares,uponknowingfromtheActingProvincialSheriffthattherewasnorestrainingorderfrom
theNationalLaborRelationsCommissionandonthefavorableadviceofthebank'slegalcounsel,issuedadebit
memo for the full balance of the private respondent's account with the petitioner bank. Thereafter, he issued a
manager'scheckinthenameoftheDeputyProvincialSheriffofNegrosOccidentalfortheamountofP37,466.18,
whichwastheexactbalanceoftheprivaterespondent'saccountasofthatday.
Onthefollowingday,April30,1976,atabout1:00o'clockintheafternoon,thedeputysheriffreturnedtothebank
inordertoencashthecheckbutbeforetheactualencashment,thepetitionerHenaresonceagaininquiredabout
anyexistingrestrainingorderfromtheNLRCanduponbeingtoldthattherewasnone,thelatterallowedthesaid
encashment.
OnJuly6,1976,theprivaterespondent,thenplaintiff,filedacomplaintbeforetheRegionalTrialCourtofManila,
Branch II, against the petitioners and Damian Rojas, the Deputy Provincial Sheriff of Negros Occidental, then
defendants, alleging that the former's current deposit with the petitioner bank was levied upon, garnished, and
withunduehasteunlawfullyallowedtobewithdrawn,andnotwithstandingtheallegedunauthorizeddisclosureof
thesaidcurrentdepositandunlawfulreleasethereof,thelatterhavefailedandrefusedtorestoretheamountof
P37,466.18totheformer'saccountdespiterepeateddemands.
BoththepetitionersandtheDeputySherifffiledtheirrespectiveanswersdenyingthematerialavermentsofthe
saidcomplaintandallegedthattheiractuationswereallinaccordancewithlawandlikewisefiledcounterclaims
fordamages,includingacrossclaimoftheformeragainstthelatter.Thethirdpartycomplaintofthepetitioners
againstthefortynine(49)laborersintheNLRCcasewas,however,dismissedforfailureofthesherifftoserve
summonsuponthelatter.
OnJanuary23,1982,afterseveralpostponements,thepretrialwasfinallyconductedandterminatedwithonly
thepetitionersandtheprivaterespondentparticipating,throughtheirrespectivecounsel.
On January 15, 1985, the trial court rendered its judgment in favor of the private respondent, the dispositive
portionofwhichreads:
WHEREFORE,judgmentisherebyrenderedinfavoroftheplaintiffandagainstthethree(3)defendantsby
orderingthelattertopay,jointlyandseverally,theplaintiffthefollowingamounts,towit:
(a)thesumofP37,466.18,withinterestthereonattherateof12%perannumfromdateoffirstdemandon
April29,1976untiltheamountshallhavebeenfullyandcompletelyrestoredandpaid
(b)thesumofP10,000.00asattorney'sfees.
Defendantsareorderedtopay,jointlyandseverally,doublecosts.10
xxxxxxxxx
Onappeal,therespondentcourtinadecisiondatedFebruary26,1988,firstreversedthesaidjudgmentofthe
lowercourt,buthowever,onthemotionforreconsiderationfiledbytheprivaterespondent,subsequentlyannulled
andsetasideitssaiddecisionintheresolutiondatedJune27,1988.OnAugust3,1988,therespondentcourt
deniedthepetitioner'sownmotionforreconsideration.
Hence,thispetition.
Thepetitionersraisetwoissues,11towit:
1.Whetherornotpetitionershadlegalbasisinreleasingthegarnisheddepositofprivaterespondenttothe
sheriff.
2. Whether or not petitioners violated Republic Act No. 1405, otherwise known as the Secrecy of Bank
DepositsAct,whentheyallowedthesherifftogarnishthedepositofprivaterespondent.
Thepetitionisimpressedwithmerit.
Thecruxoftheinstantcontroversyboilsdowntothequestionofwhetherornotabankisliableforreleasingits
depositor's funds on the strength of the notice of garnishment made by the deputy sheriff pursuant to a writ of
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executionissuedbytheNationalLaborRelationsCommission(NLRC).
TherespondentcourtinitsquestionedresolutiondatedJune27,1988,heldthatthepetitionerswereliable,inthis
wise:
In the case at bar, defendantappellant PCIB, despite vigorous objections from plaintiffappellee, with
indecenthastedisclosedandreleasedthedepositofplaintiffappelleeonthestrengthofamerenoticeof
garnishmentwhichtheHonorableSupremeCourtruleduponisnoauthorityforthereleaseofthedeposit,
thus:
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
moneyforthedefendant.
Thegarnishee,oroneinwhosehandspropertyisattachedorgarnished,isuniversallyregardedas
charged with its legal custody pending outcome of the attachment or garnishment unless, by local
statuteandpractice,heispermittedtosurrenderorpaythegarnishedpropertyorfundsintocourt,to
theattachingofficer,ortoareceiverortrusteeappointedtoreceivethem.(5Am.Jur.14)
Theeffectofthegarnishment,therefore,wastorequirethePhilippineTrustCompany,holderofthe
fundsoftheLuzonSuretyCo.,tosetasidesaidamountfromthefundsoftheLuzonSuretyCo.,and
keepthesamesubjecttothefinalordersoftheCourt.Inthecaseatbartherewasneveranorderto
deliver the full amount garnished to the plaintiffappellee 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
balanceoftheamountgarnished,therefore,remainedallthetimeinthepossessionofthebankas
partofthefundsoftheLuzonSuretyCo.althoughthesamecouldnotbedisposedofbytheowner.
(De la Rama vs. Villarosa, et al., L17927, June 29, 1963, 8 SCRA 413, 418419 Emphasis
supplied).12
TheabovementionedcontentioncitingDelaRamaisnotexactlyonallfourswiththefactsofthecaseatbar.In
De la Rama, the amount garnished was not actually taken possession of by the sheriff, even from the time of
garnishment,becausethejudgmentdebtorwasabletoappealtotheCourtofAppealsandobtainfromtheCourt
aninjunctionprohibitingexecutionofthejudgment.
Ontheotherhand,nowhereintherecordofthepresentcaseisthereanyevidenceofanappealbytheprivate
respondentfromthedecisionoftheNLRCortheexistenceofanyrestrainingordertopreventthereleaseofthe
privaterespondent'sdeposittothedeputysheriffatthetimeoftheserviceofthenoticeofgarnishmentandwritof
executiontothepetitioners.
Onthecontrary,theuncontrovertedstatementsinthedepositionofthepetitionerHenaresthathehadpreviously
soughttheadviceofthebank'scounselandthathehadcheckedtwicewiththeActingProvincialSheriffwhohad
informed him of the absence of any restraining order, belie any allegation of undue and indecent haste in the
releaseofthesaiddepositinquestion.
ThecasesmoreinpointtothepresentcontroversyaretherecentdecisionsinEngineering Construction Inc. v.
National Power Corporation 13 and Rizal Commercial Banking Corporation (RCBC) vs. De Castro 14 where the
Courtabsolvedbothgarnishees,MERALCOandRCBC,respectively,fromanyliabilityfortheirpromptcompliance
inthereleaseofgarnishedfunds,
The rationale behind Engineering Construction, Inc. and which was quoted in Rizal Commercial Banking
Corporationispersuasive
xxxxxxxxx
But while partial restitution is warranted in favor of NPC, we find that the Appellate Court erred in not
absolving MERALCO, the garnishee, from its obligations to NPC with respect to the payment to ECI of
P1,114,543.23, thus in effect subjecting MERALCO to double liability. MERALCO should not have been
faultedforitspromptobediencetoawritofgarnishment.Unlesstherearecompellingreasonssuchas:a
defectonthefaceofthewritoractualknowledgeonthepartofthegarnisheeoflackofentitlementonthe
partofthegarnisher,itisnotincumbentuponthegarnisheetoinquireortojudgeforitselfwhetherornot
theorderfortheadvanceexecutionofajudgmentisvalid.
Section8,Rule57oftheRulesofCourtprovides:
Effect of attachment of debts and credits. All persons having in their possession or under their
controlanycreditsorothersimilarpersonalpropertybelongingtothepartyagainstwhomattachment
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isissued,orowinganydebtstothesame,atthetimeofserviceuponthemofacopyoftheorderof
attachmentandnoticeasprovidedinthelastprecedingsection,shallbeliabletotheapplicantofthe
amountofsuchcredits,debtsorotherproperty,untiltheattachmentbedischarged,oranyjudgment
recovered by him be satisfied, unless such property be delivered or transferred, or such debts be
paid,totheclerk,sherifforotherproperofficerofthecourtissuingtheattachment.
1 w p h i1

Garnishmentisconsideredasaspecieofattachmentforreachingcreditsbelongingtothejudgmentdebtor
and owing to him from a stranger to the litigation. Under the abovecited rule, the garnishee [the third
person]isobligedtodeliverthecredits,etc.totheproperofficerissuingthewritand"thelawexemptsfrom
liability the person having in his possession or under his control any credits or other personal property
belongingtothedefendant,...ifsuchpropertybedeliveredortransferred,...totheclerk,sheriff,orother
officerofthecourtinwhichtheactionispending."
Applyingtheforegoingtothecaseatbar,MERALCO,asgarnishee,afterhavingbeenjudiciallycompelled
topaytheamountofthejudgmentrepresentedbyfundsinitspossessionbelongingtothejudgmentdebtor
orNPC,shouldbereleasedfromallresponsibilitiesoversuchamountafterdeliverythereoftothesheriff.
The reason for the rule is self evident. To expose garnishees to risks for obeying court orders and
processeswouldonlyunderminetheadministrationofjustice.(Emphasisours.)15
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Moreover, there is no issue concerning the indebtedness of the petitioner bank to the private respondent since
thelatterhasneverdeniedtheexistenceofitsdepositwiththeformer,thesaiddepositbeingconsideredacredit
infavorofthedepositoragainstthebank.16WethereforeseenoapplicationforSec.39,Rule39oftheRulesof
Courtinvokedbytheprivaterespondentastonecessitatethe"examinationofthedebtorofthejudgmentdebtor."
17

Rather,wefindtheimmediatereleaseofthefundsbythepetitionersonthestrengthofthenoticeofgarnishment
andwritofexecution,whoseissuance,absentanypatentdefect,enjoysthepresumptionofregularity,sufficiently
supportedbySec.41,Rule39oftheRulesofCourtwhichreads:
xxxxxxxxx
Afteranexecutionagainstpropertyhasissued,apersonindebtedtothejudgmentdebtor,maypaytothe
officerholdingtheexecutiontheamountofhisdebtorsomuchthereofasmaybenecessarytosatisfythe
execution,andtheofficer'sreceiptshallbeasufficientdischargefortheamountsopaidordirectedtobe
creditedbythejudgmentcreditorontheexecution.
xxxxxxxxx
Finally,welikewisetakecognizanceofthesubjectofthejudgmentsoughttobeenforcedinthewritofexecution
inquestion,namely,laborers'backwages.Webelievethatthepetitionersshouldratherbecommendedforhaving
actedwithurgentdispatchdespiteattemptsbytheprivaterespondent,aswithsomanyschemingemployers,to
frustrateorunjustifiablydelaythepromptsatisfactionoffinaljudgmentswhichoftenresultinundueprejudiceto
thelegitimateclaimsoflabor.
With regard to the second issue, we find no violation whatsoever by the petitioners of Republic Act No. 1405,
otherwiseknownastheSecrecyofBankDepositsAct.TheCourtinChinaBankingCorporationvs.Ortega18had
theoccasiontodisposeofthisissuewhenitstated,thus:
ItisclearfromthediscussionoftheconferencecommitteereportonSenateBillNo.351andHouseBillNo.
3977, which later became Republic Act 1405, that the prohibition against examination of or inquiry into a
bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a
judgment. Indeed there is no real inquiry in such a case, and if existence of the deposit is disclosed the
disclosure is purely incidental to the execution process. It is hard to conceive that it was ever within the
intentionofCongresstoenabledebtorstoevadepaymentoftheirjustdebts,eveniforderedbytheCourt,
throughtheexpedientofconvertingtheirassetsintocashanddepositingthesameinabank.
Since there is no evidence that the petitioners themselves divulged the information that the private respondent
hadanaccountwiththepetitionerbankanditisundisputedthatthesaidaccountwasproperlytheobjectofthe
noticeofgarnishmentandwritofexecutioncarriedoutbythedeputysheriff,adulyauthorizedofficerofthecourt,
wecannotthereforeholdthepetitionersliableunderR.A.1405.
While the general rule is that the findings of fact of the appellate court are binding on this Court, the said rule
howeveradmitsofexceptions,suchaswhentheCourtofAppealsclearlymisconstruedandmisappliedthelaw,
drawnfromtheincorrectconclusionsoffactestablishedbyevidenceandotherwiseatcertainconclusionswhich
arebasedonmisapprehensionoffacts,19asinthecaseatbar.
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Thepetitionersarethereforeabsolvedfromanyliabilityforthedisclosureandreleaseoftheprivaterespondent's
deposittothecustodyofthedeputysheriffinsatisfactionofthefinaljudgmentforthelaborers'backwages.
WHEREFORE, the petition is GRANTED and the challenged Resolutions dated June 27, 1988 and August 13,
1988oftheCourtofAppealsareherebyANNULLEDandSETASIDEanditsDecisiondatedFebruary26,1988
dismissingthecomplaintisherebyREINSTATED.Withcostsagainsttheprivaterespondent.
SOORDERED.
MelencioHerrera,PadillaandRegalado,JJ.,concur.
Paras,J.,**tooknopart.

Footnotes
1

Limcaoco,C.T.,J.,ponenteMendoza,V.V.andParas,G.C.,JJ.,concurring.

MarinduqueMiningandIndustrialCorporationvs.PhilippineCommercialandIndustrialBankandJose
Henares,CAG.R.CVNo.06701.
3

Rollo,93101.

Hon.RosalioA.deLeon,PresidingJudge,RegionalTrialCourtofManila,BranchII,CivilCaseNo.
103100.
5

Supra.

Rollo,22.

Id.,8289.

"RodofoAcumabeg,etal.vs.MarinduqueMiningandIndustrialCorporation,etal.,"NLRCCaseNo.MC
44074.
9

Rollo,8.

10

Id.,9394.

11

Id.,11.

12

MarinduqueMiningandIndustrialCorporationvs.PhilippineCommercialandInvestmentBankandJose
A.Henares,CAG.R.CVNo.06701,June27,1988,
23.
13

G.R.No.L34589.June29,1988,163SCRA9.

14

G.R.No.L34548.November29,1988,168SCRA49.

15

Supra,1718.

16

Serranovs.CentralBankofthePhilippines,No.L30511,February14,1980,96SCRA96,102,citing
Article1980,CivilCodeandGullasvs.Phil.NationalBank,62Phil.519.
17

TayabasLandCo.vs.Shariff,41Phil.382.

18

G.R.No.L34964,January31,1973,49SCRA355.

19

Pajunarv.CourtofAppeals,G.R.No.77266,July19,1989,175SCRA464.

**

JusticeGloriaC.Paras,thewifeofJusticeE.Paras,tookpartintheCourtofAppeals.

TheLawphilProjectArellanoLawFoundation

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