National Power Corp. v. Philippine Commercial & Industrial Bank
REITERATIONFacts
The Antecedents: The dispute traces back to Civil Case No. 79092 filed by Philippine Commercial and Industrial Bank (PCIB, now Philippine Commercial International Bank) against B.R. Sebastian and Associates, Inc. (Sebastian) before the Court of First Instance (CFI) of Manila, Branch II, where on November 26, 1970, the court rendered judgment holding Sebastian liable for P151,306.40 plus daily interest of P42.569 from February 18, 1970 on the first cause of action; P181,786.23 inclusive of interests, commissions, and charges as of September 26, 1969 plus further interests on the second to fourth causes; and P20,000 attorney's fees and costs, jointly and severally. This decision was affirmed by the Court of Appeals (CA) and became final on March 2, 1972. Prior to execution, Sebastian obtained a favorable judgment against National Power Corporation (NPC) in Civil Case No. 77140 before CFI Manila, Branch XX, for P2,007,157, which became final on June 20, 1976. On July 20, 1976, CFI Branch II issued an alias writ of execution, leading to a Notice of Garnishment on July 21, 1976, served on NPC, attaching Sebastian's credits including the P2,007,157 judgment to cover P580,228.19 of Sebastian's liability. NPC partially complied by delivering P249,256.74 via PNB check on June 29, 1978, leaving an unsatisfied balance of P340,971.45 plus interests from July 21, 1976. Procedural History: On November 8, 1988, PCIB moved before RTC Manila, Branch 4 (formerly CFI Branch II) to compel NPC to pay the balance plus interests; NPC opposed claiming lack of jurisdiction due to no summons. On April 21, 1989, RTC ordered NPC anew to satisfy the 1970 judgment, citing garnishment principles from Tayabas Land Co. v. Sharruf. NPC filed certiorari (CA-G.R. SP No. 18475), dismissed by CA; Supreme Court denied petition (G.R. No. 93238) on grounds delay was NPC's fault, tolling execution period. RTC issued writ of execution on July 8, 1993, and alias on August 9, 1993, demanding P1,864,810.74 as of June 30, 1993 (principal P340,971.45 + 14% interest P820,528.25 + 12% penalty P703,310.44). NPC moved to quash, denied; NPC filed certiorari (CA-G.R. SP No. 32745), CA affirmed RTC on January 19, 2006. The Petition: NPC petitioned under Rule 45, arguing RTC/CA erred in holding it liable for interests and charges beyond the P340,971.45 balance in the 1976 Notice of Garnishment, as it was mere garnishee not party to Civil Case No. 79092, unbound by the 1970 judgment's interest provisions; dispositive portions of prior CA/SC decisions did not mention interests; it already paid partial amount, owing only balance without accruals.
Issue(s)
Whether the RTC validly acquired jurisdiction over NPC as garnishee and could bind it to the full 1970 judgment including interests and charges upon mere service of notice of garnishment. Whether NPC's liability is limited to the principal amount in the notice of garnishment or extends to interests and charges accumulated thereon until full payment.
Ruling
The petition is denied for lack of merit. The Court affirms the CA Decision dated January 19, 2006 in CA-G.R. SP No. 32745 and RTC Orders dated July 8, 1993, August 9, 1993, and August 24, 1993. NPC is ordered to pay the outstanding balance of P340,971.45 plus interests and bank charges from July 21, 1976 until fully paid, with double costs against NPC.
Ratio Decidendi
On Issue 1 (Jurisdiction over Garnishee): Garnishment under Section 9(c), Rule 39 of the Rules of Court is enforced by serving notice on the third party holding the judgment obligor's credits, levying thereon without need for summons or impleading, as the garnishee becomes a forced intervenor or virtual party, binding it to court orders for judgment satisfaction. Jurisdiction attaches solely via service of the writ/notice, as consistently ruled in Tayabas Land Co. v. Sharruf (41 Phil. 382), Bautista v. Barredo (G.R. No. L-20653, April 30, 1965, 13 SCRA 744), Perla Compania de Seguros v. Ramolete (G.R. No. 60887, November 13, 1991, 203 SCRA 487), and PNB Management v. R&R Metal Casting (G.R. No. 132245, January 2, 2002, 373 SCRA 1). NPC's non-party status is irrelevant, as the 1976 notice garnished its debt to Sebastian, subjecting NPC to the executing court's plenary execution powers. Prior rulings in CA-G.R. SP No. 18475 and G.R. No. 93238 affirmed RTC's April 21, 1989 order directing satisfaction of the 1970 judgment, implicitly upholding jurisdiction. Delays by NPC tolled the five-year execution period per settled doctrine excluding interruptions caused by the obligor, ensuring PCIB's rights despite 30-year lapse. On Issue 2 (Scope of Liability): The notice of garnishment, issued to execute the November 26, 1970 CFI judgment, must be read conjunctively with that judgment's dispositive portion imposing principal, interests, charges, and fees on Sebastian, binding NPC as garnishee to the full amount including accruals from garnishment date (July 21, 1976). NPC cannot cherry-pick the notice's P580,228.19 figure (later reduced post-partial payment), ignoring the judgment's integral interest provisions (e.g., daily interest, 14% p.a., 12% penalty as computed to P1,864,810.74 by 1993). Dispositive portions of affirming decisions (CA-G.R. SP No. 18475, G.R. No. 93238) upheld the RTC order to 'satisfy the judgment,' naturally encompassing all its elements without need for explicit re-iteration. Garnishment law exempts compliance only upon delivery to the officer, extending liability pro rata until satisfaction (RCBC v. de Castro, G.R. No. L-34548, November 29, 1988, 168 SCRA 49). NPC's tactics delaying payment for over 30 years mocked justice, warranting admonition per Banogan v. Zerna (G.R. No. L-35469, October 9, 1987, 154 SCRA 593) against procedural abuse.
Main Doctrine
Garnishment is a species of attachment under Section 9(c), Rule 39 of the Rules of Court, whereby the sheriff levies on debts due the judgment obligor held by third parties by serving a notice of garnishment, thereby binding the garnishee to deliver such credits to satisfy the judgment. The garnishee becomes a virtual party or forced intervenor upon service of the notice, acquiring jurisdiction over it without summons or impleading, and is liable co-extensive with the judgment debtor's obligations as specified in the judgment being executed. The notice of garnishment must be construed in conjunction with the underlying judgment, obligating the garnishee to pay not only the principal but also accumulated interests, penalties, and charges from the date of garnishment until full satisfaction. Delays caused by the garnishee or judgment debtor toll the five-year period for execution by motion, allowing revival beyond the prescriptive period if attributable to the obligor's actions. Courts retain authority to issue writs of execution enforcing the full judgment against the garnishee, and dilatory tactics abusing procedural rules merit admonition as they undermine speedy justice administration.