Title
De la Victoria vs. Burgos
Case
G.R. No. 111190
Decision Date
Jun 27, 1995
A government official's salary checks, still in custody and undelivered, remain public funds and are immune from garnishment under public policy.
government official
salary checks
public funds

Case Summary (G.R. No. 111190)

Factual Background

Private respondent Raul H. Sesbreno obtained a final judgment against Assistant City Fiscals Bienvenido N. Mabanto, Jr., and Dario D. Rama, Jr., for P11,000.00. After a writ of execution issued on 15 January 1992, the sheriff served a notice of garnishment on petitioner as City Fiscal of Mandaue City on 4 February 1992 directing him to retain the salary and RATA checks, monies, or cash due to Mabanto, Jr. Petitioner contended that he possessed only salary and RATA checks payable to Mabanto, Jr., which were not yet the payee’s property because they had not been delivered, and that such checks remained public funds. Private respondent thereafter sought examination of garnishees and other execution processes to enforce the judgment.

Trial Court Proceedings

The trial court, after noting that an appeal to the Court of Appeals had been dismissed on 25 May 1992, directed petitioner on 4 November 1992 to report the amount of the garnished salaries within fifteen days, taking into account Sec. 12, pars. (f) and (i), Rule 39. When petitioner moved to quash the notice of garnishment on 19 January 1993 and private respondent sought to require petitioner to explain his alleged noncompliance, the trial court denied both motions on 9 March 1993 and ordered immediate compliance with its 4 November 1992 directive. The court concluded that the Department of Justice had released the checks through petitioner and that, upon service of the notice of garnishment, petitioner as custodian was obliged to hold them for the judgment creditor. The trial court rejected a contempt citation against petitioner on the ground that it was not morally convinced of willful noncompliance. Petitioner’s motion for reconsideration was denied on 20 April 1993.

Issues Presented

The petition raised, principally, two legal questions: (1) whether a check still in the hands of the maker or its duly authorized representative is owned by the payee before physical delivery to the payee; and (2) whether the salary check of a government official or employee funded with public funds may be subject to garnishment.

Parties’ Contentions

Petitioner argued that the salary and RATA checks in his custody had not been delivered to Mabanto, Jr., and therefore did not belong to the payee but remained public funds immune from garnishment; accordingly he had no legal duty to segregate or deliver portions of the salary to satisfy the judgment. The trial court and private respondent countered that the Department of Justice had released the checks, that petitioner functioned as custodian, and that upon service of the writ of garnishment petitioner was bound to hold and turn over the checks for the execution of the judgment. The trial court further relied on the general rule that a garnishee is not required to inquire into the validity of the writ or order.

Supreme Court Ruling and Disposition

The Supreme Court granted the petition. It set aside the trial court orders of 9 March 1993 and 20 April 1993 and ordered the notice of garnishment served on petitioner dated 3 February 1992 discharged. The Court concluded that the trial court exceeded its jurisdiction in issuing the garnishment with respect to the salary checks in petitioner’s possession.

Legal Basis and Reasoning

The Court examined the nature of negotiable instruments and of public funds. It noted that under Sec. 16, Negotiable Instruments Law, a contract on a negotiable instrument is incomplete and revocable until delivery, and that delivery ordinarily means transfer of possession by the maker or drawer with intent to transfer title to the payee. The trial court’s presumption that intentional delivery should be presumed where the instrument was no longer in the possession of a party whose signature appeared thereon was not decisive because the same provision allowed rebuttal by proof to the contrary. The Court emphasized that the checks in the custody of petitioner had not been delivered to Mabanto, Jr., and therefore still bore the character of public funds. The Court relied on Tiro v. Hontanosas, which it cited for the proposition that a salary check of a government officer does not belong to the payee before physical delivery and that, until delivery, the check remained government property and could not be assigned or garnished. The Court also invoked the public-policy rationale articulated in Commissioner of Public Highways v. San Diego that diversion of public funds from their legislatively appropriated objects would impair public service.

The Court further addressed the trial court’s reliance on the general rule that a garnishee is not obliged to inquire into the validity of execution processes, drawing from Philippine Commercial Industrial Bank v. Court of Appeals. The Court clarified that the general rule admits exceptions where there is a defect on the face of the writ or where the garnishee had actual knowledge of the garnisher’s lack of entitlement. Finding that petitioner had actual knowledge that the checks were not the private property of the judgment debtor, the Court held that petitioner was under no duty to comply with the garnishment of those public funds and that the trial court thus exceeded its jurisdiction.

Separate Opinion of Justice Davide, Jr.

In a separate opinion, Justice Davide, Jr. acknowledged the general practice of preparing salary checks in Manila days before the payroll period ends and of transmitting those checks through heads of offices for delivery to payees. He observed that if the salary and RATA checks corresponded to a payroll per

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