Case Summary (G.R. No. 84526)
Factual Background
A group of laborers obtained a judgment for backwages against the private respondent in an action before the National Labor Relations Commission for the sum of P205,853.00. On April 26, 1976 the NLRC issued a writ of execution directing the Deputy Sheriff of Negros Occidental, Damian Rojas, to enforce the judgment and to collect the amount due, or, if collection in cash failed, to cause satisfaction on the nonexempt properties of the respondent. On April 28 and 29, 1976 the deputy sheriff served a Notice of Garnishment and the writ on six banks in Bacolod, including the petitioner bank.
Events at the Bank
On April 29, 1976 the deputy sheriff presented the Notice of Garnishment and the writ to petitioner Jose Henares, bank manager, and later demanded release of the private respondent’s deposit under pain of contempt. The private respondent’s house counsel, Atty. Rexes V. Alejano, had earlier communicated with Henares and requested withholding of any release. Henares twice inquired with the Acting Provincial Sheriff and consulted the bank’s legal counsel. Being informed that there was no restraining order, Henares issued a debit memo and a manager’s check in the amount of P37,466.18, the exact balance of the respondent’s account, which the deputy sheriff encashed on April 30, 1976.
Trial Court Proceedings and Complaint
On July 6, 1976 the private respondent filed suit in the Regional Trial Court of Manila, Branch II, alleging unlawful garnishment, disclosure, and premature release of its deposit and seeking restoration of P37,466.18. The petitioners and the deputy sheriff denied liability and filed counterclaims and a third-party complaint. Pretrial occurred on January 23, 1982. On January 15, 1985 the trial court rendered judgment in favor of the private respondent ordering defendants to pay jointly and severally P37,466.18 with twelve percent interest from April 29, 1976, attorney’s fees of P10,000, and double costs.
Court of Appeals Proceedings and Resolutions Below
On appeal the Court of Appeals issued a decision dated February 26, 1988 reversing the trial court. The private respondent moved for reconsideration. In a resolution dated June 27, 1988 the Court of Appeals reconsidered and set aside its February 26 decision and entered a judgment affirming the trial court. The petitioners’ motion for reconsideration of the June 27 resolution was denied in a resolution dated August 3, 1988, which led to the present petition for certiorari.
Issues Presented to the Supreme Court
The petitioners framed two issues: whether the petitioners had legal basis in releasing the garnished deposit to the sheriff, and whether the petitioners violated Republic Act No. 1405 by allowing the sheriff to garnish the deposit. The Supreme Court treated the principal controversy as whether a bank is liable for releasing a depositor’s funds on the strength of a notice of garnishment issued pursuant to an execution writ of the NLRC.
Supreme Court’s Analysis on Liability for Release of Garnished Funds
The Court observed that the Court of Appeals relied on De la Rama v. Villarosa to hold the bank liable, but found that the cited authority was distinguishable in its facts. In De la Rama the sheriff never took possession because an injunction forestalled execution. Here the record showed no appeal by the private respondent from the NLRC judgment and no restraining order at the time of garnishment. The Court applied the doctrine of recent decisions absolving garnishees from liability when they promptly comply with writs of garnishment and have no defect on the face of the writ or actual knowledge of lack of entitlement. The Court cited Engineering Construction, Inc. v. National Power Corporation and Rizal Commercial Banking Corporation v. De Castro for the principle that a garnishee should not be exposed to double liability for obeying judicial processes unless there is a patent defect or actual knowledge that the garnisher lacks entitlement. The Court construed Sec. 8, Rule 57 and Sec. 41, Rule 39 of the Rules of Court as authorizing payment to the officer executing an attachment or execution and as supporting the garnishee’s discharge upon payment to the sheriff.
Supreme Court’s Analysis on Alleged Violation of R.A. 1405
The Court addressed the claim that disclosure of the deposit violated Republic Act No. 1405. Relying on China Banking Corporation v. Ortega, the Court held that the secrecy provision does not preclude garnishment to secure satisfaction of a judgment and that disclosure of a deposit in the execution process is incidental and permissible. The record contained no evidence that the petitioners voluntarily divulged the existence of the account; the account was disclosed in the course of a
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Case Syllabus (G.R. No. 84526)
Parties and Posture
- Philippine Commercial & Industrial Bank and Jose Henares were the petitioners in this petition for review on certiorari challenging actions of the Court of Appeals.
- The Hon. Court of Appeals and Marinduque Mining and Industrial Corporation were the respondents in the petition before the Supreme Court.
- The petition assailed the Court of Appeals' resolution dated June 27, 1988 that reconsidered and set aside the Court's earlier decision of February 26, 1988 and the subsequent resolution dated August 3, 1988 that denied the petitioners' motion for reconsideration.
- The underlying action originated as Civil Case No. 103100 before the Regional Trial Court of Manila, Branch II, and derived from an execution issued by the National Labor Relations Commission.
Key Facts
- The NLRC rendered a judgment for backwages totaling P205,853.00 in favor of a group of laborers against Marinduque Mining and Industrial Corporation and issued a writ of execution dated April 26, 1976.
- The writ directed Deputy Sheriff Damian Rojas to collect the amount or cause satisfaction from movable or immovable properties of the respondent not exempt from execution.
- On April 29, 1976 the deputy sheriff addressed a Notice of Garnishment to six banks in Bacolod City, including Philippine Commercial & Industrial Bank, and served the Notice and writ on petitioner Jose Henares.
- Atty. Rexes V. Alejano, counsel for the private respondent, telephoned and later wrote the petitioner Henares requesting that the bank withhold any release of the respondent's deposit.
- The petitioner Henares inquired of the Acting Provincial Sheriff and obtained information that there was no restraining order or injunction preventing release of the deposit.
- Relying on legal advice and the sheriff's information, the petitioner issued a debit memo and a manager's check for P37,466.18, representing the full balance of the respondent's account, which the deputy sheriff encashed on April 30, 1976.
- The private respondent filed suit on July 6, 1976 against the bank, Henares, and the deputy sheriff alleging unlawful disclosure and release of the deposit and seeking restoration of P37,466.18.
Procedural History
- The Regional Trial Court of Manila conducted pre-trial and issued judgment on January 15, 1985 in favor of Marinduque Mining and Industrial Corporation ordering payment of P37,466.18 with interest, P10,000 as attorney's fees, and double costs.
- The Court of Appeals rendered a decision dated February 26, 1988 that reversed the trial court's judgment and dismissed the complaint against the petitioners.
- The Court of Appeals issued a resolution dated June 27, 1988 that reconsidered and set aside its February 26, 1988 decision and affirmed the trial court judgment.
- The Court of Appeals denied the petitioners' motion for reconsideration by resolution dated August 3, 1988, prompting the present petition for review on certiorari to the Supreme Court.
Issues Presented
- The primary issue was whether the petitioners had a legal basis for releasing the garni