SECOND DIVISION
LEONCIO S. SOLIDUM, G.R. No. 161647
Petitioner,
Present:
- versus - PUNO,
J., Chairman,
SANDOVAL-GUTIERREZ,
AZCUNA, and
COURT OF APPEALS GARCIA, JJ.
(Fifteenth division) AND
INSULAR LIFE ASSURANCE Promulgated:
CO. LTD.,
Respondents.
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D E C I S I O N
PUNO, J.:
Petitioner
Leoncio S. Solidum appeals via petition for review on certiorari the Decision
and the Resolution of the Court of Appeals dated September 29, 2003 and January
12, 2004, respectively, which gave due course to the petition for certiorari of
private respondent Insular Life Assurance Co. Ltd. (Insular). Petitioner avers that
there are other plain, adequate and speedy remedies available to Insular under
the ordinary course of law. Hence, respondent court should have dismissed the petition.
He further contends that being a mere garnishee, Insular is not a party to the
case and cannot avail of the writ of certiorari.
The instant case originated from a complaint for collection for a
sum of money which petitioner filed against Unified Capital Management
Corporation (UNICAP) with the Regional Trial Court of Makati – Branch 135. Petitioner
obtained favorable judgment on
On July 9, 1999, Sheriff Artemio Cruz
served upon Insular the first Notice of Garnishment[2]
which ordered Insular not to dispose of “all sums of money, credits, shares,
interest, accounts receivables and collectibles” arising from the aforementioned
policies. A second Notice of Garnishment[3]
dated
In a letter[4]
dated
On
Petitioner filed a Motion in the trial court to direct Insular to
comply with its Orders and Notices of Garnishment. On
Petitioner then filed a Manifestation and Motion[9]
dated
Still, Insular refused to release the garnished amounts. On
collect the proceeds of the policies.[14]
Insular opposed.[15]
Acting on the motion, the court issued its questioned Order[16]
on
On P550,000.00 loan
from each of the subject policies from UNICAP. As security for the loans, she
assigned to UNICAP her policies taken from Insular.[19]
He presented photocopies of the Policy Loan Agreement for Policy No. A001122777,[20]
the Deeds of Relative Assignment of the subject policies,[21]
and the Statement of Loan
Transaction for Policy No. A001122766.[22]
Insular formally offered its evidence on
excluded the questioned document. In its Order dated
On the Motion for Reconsideration, the
issues raised therein are mere rehash of the arguments previously considered
and resolved by the Court. Moreover, the exclusion of Exhibits “E”, “E-1” and
“F” leaves the movant with no evidence of the loan agreement between the
policyholder Susan Yee Soon and the movant. There being no such evidence, the
movant has no basis to withhold the proceeds of the policy. Thus, the Court
hereby orders the reiteration of the Order dated
Insular filed a Petition
for Certiorari with the Court of Appeals. It alleged that the judge gravely
abused his discretion when he issued the questioned Order despite its adverse
claim on the garnished amounts.
The Court of Appeals gave due course to the petition. It then annulled
and set aside the
WHETHER OR NOT PUBLIC RESPONDENT COURT OF
APPEALS ERRED AND/OR COMMITTTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF
JURISDICTION IN TAKING COGNIZANCE OF THE PETITION FOR CERTIORARI FILED BY
PRIVATE RESPONDENT GARNISHEE INSULAR DESPITE OF THE FACT THAT SAID GARNISHEE IS
NOT A PARTY IN THE CASE, BUT A THIRD[-]PARTY CLAIMANT.[25]
We grant the petition.
Garnishment is a species of attachment or execution for reaching
any property pertaining to a judgment debtor which may be found owing to such
debtor by a third person. It cites some stranger to the litigation who is
debtor to one of the parties to the action. Such debtor stranger becomes a
forced intervenor, and the court, having acquired jurisdiction over his person
by means of citation, requires him to pay his debt, not to his former creditor,
but to the new creditor, who is creditor in the main litigation. It is merely a
case of involuntary novation by the substitution of one creditor for another.[26]
Garnishment involves at least three (3) persons: the judgment
creditor, the judgment debtor, and the garnishee, or the person cited who in
turn is supposed to be indebted to the judgment creditor.[27]
In case the garnishee asserts his own rights over the garnished property, Section
16 of Rule 39 provides the remedies, viz.:
Section 16. Proceedings where property claimed by
third person. - If the
property levied on is claimed by any person other than the judgment obligor or
his agent, and such person makes an affidavit of his title thereto or right to
the possession thereof, stating the grounds of such right or title, and serves
the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the
property, unless such judgment obligee, on demand of
the officer, files a bond approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property levied on. In case of
disagreement as to such value, the same shall be determined by the court
issuing the writ of execution. No claim for damages for the taking or keeping
of the property may be enforced against the bond unless the action therefor is filed
within one hundred twenty (120) days from the date of the filing of the bond.
The officer
shall not be liable for damages for the taking or keeping of the property, to
any third-party claimant if such bond is filed. Nothing herein contained shall
prevent such claimant or any third person from vindicating his claim to the
property in a separate action, or prevent the judgment obligee
from claiming damages in the same or a separate action against a third-party
claimant who filed a frivolous or plainly spurious claim.
When the writ of
execution is issued in favor of the Republic of the Philippines, or any officer
duly representing it, the filing of such bond shall not be required, and in
case the sheriff or levying officer is sued for damages as a result of the
levy, he shall be represented by the Solicitor General and if held liable
therefor, the actual damages adjudged by the court shall be paid by the
National Treasurer out of such funds as may be appropriated for the purpose.
In the case at bar, it is
plain that private respondent Insular, as garnishee, did not avail any of the remedies
provided by the rules. After it was impleaded as garnishee, it wrote letters to
the trial court, initially not contesting petitioner’s right to the basic
proceeds of Susan Yee Soon’s insurance policies. Later on, however, it changed its stance and
resisted payment by filing an Omnibus Motion and Motions for Reconsideration of
the orders of the trial court. It even appealed
to respondent court via a petition for certiorari.
Trite to state, certiorari is an extraordinary remedy when there
is no appeal, nor any plain, speedy and adequate remedy in the ordinary course
of law. It is filed when a tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction.[28]
We have held that neither
an appeal nor a petition for certiorari is the proper remedy from the denial of
a third-party claim.[29]
In the case of Northern Motors, Inc. v. Coquia,[30]
the petitioner filed, among others, a third-party claim which was denied by the
respondent judge in the disputed resolution. Northern Motors, Inc. thereafter
filed a petition for certiorari to nullify the resolution and order of the
respondent judge. In resolving whether the respondent judge acted with grave
abuse of discretion in denying petitioner's third-party claim, the Court held:
Pursuant to [Section 17,[31] Rule 39
of the Revised Rules of Court], a third-party claimant has two remedies,
such as, an action for damages against the sheriff to be brought within
120 days from the filing of the bond, and a separate and independent action
to vindicate his claim to the property. In the case at bar, petitioner's and intervenor's remedy against the bond proved to be
unavailing because of the disputed order of the respondent Judge cancelling the indemnity bond. Such an order as well as the
order denying a motion to reconsider the same in effect discarded or quashed
the third-party claims. What then would the remedy be of the third-party
claimants?
In the
recent case of Serra vs. Rodriguez, xxx this Court
(First Division), thru Mr. Justice Makasiar, ruled:
From the
denial of a third-party claim to defeat the attachment caused to be levied by a
creditor, neither an appeal nor a petition for certiorari is the proper
remedy. The remedy of petitioner would be to file a separate and
independent action to determine the ownership of the attached property or to file
a complaint for damages chargeable against the bond filed by the judgment
creditor in favor of the provincial sheriff.
In Lara vs.
Bayona, L-7920,
Pursuant to this provision, nothing contained therein shall
prevent petitioner "from vindicating his claim to the property by any
proper action." Neither does the order complained of deprive petitioner
herein of the opportunity to enforce his alleged rights by appropriate
proceedings. In short, he has another "plain, speedy and adequate
remedy in the ordinary course of law," and, hence is not entitled either
to a writ of certiorari or to a writ of prohibition.[32] (Emphases
supplied.)
The Court further held that
since the third-party claimant is not one of the parties to the action, he
could not, strictly speaking, appeal from the order denying its claim, but
should file a separate reivindicatory action against the execution creditor or
a complaint for damages against the bond filed by the judgment creditor in
favor of the sheriff.[33]
The rights of a third-party claimant should be decided in a separate action to
be instituted by the third person. In fine, the appeal that should be
interposed, if the term “appeal” may be properly employed, is a separate
reivindicatory action against the execution creditor or complaint for damages
to be charged against the bond filed by the judgment creditor in favor of the
sheriff.[34]
IN VIEW WHEREOF, the petition is GRANTED. The Decision and
the Resolution of the Court of Appeals in CA-G.R. SP No. 72637 dated September
29, 2003 and January 12, 2004, respectively, are ANNULLED and SET ASIDE.
SO
ORDERED.
REYNATO
S. PUNO
Associate
Justice
WE
CONCUR:
CANCIO C. GARCIA
Associate Justice
I attest that the conclusions in the
above Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Associate Justice
Chairman
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairman’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
ARTEMIO
V. PANGANIBAN
[1] Annexes
“E” & “F,” Petition for Certiorari; CA rollo,
31-32.
[2] Annex “J,”
Petition for Review on Certiorari; rollo, 75.
[3] Annex “K,”
id.; id. at 76.
[4] Annex “O,”
id.; id. at 79.
[5] Annex “P,”
id.; id. at 80.
[6] Annex “Q,”
id.; id. at 81.
[7] Annex “S,”
id.; id. at 83.
[8] Annex “W,”
Petition for Certiorari; CA rollo, 49-50.
[9] Annex “W,”
Petition for Review on Certiorari; rollo,
87-90.
[10] Annex “X,”
id.; id. at 91.
[11] Annexes
“Y”-“Y-3,” id.; id. at 92-95.
[12] Annex “Z,”
id.; id. at 96-100.
[13] Annex “AA,”
id.; id. at 101.
[14] Annex “BB,”
id.; id. at 102-106.
[15] Annex “EE,”
Petition for Certiorari; CA rollo, 80-89.
[16] Annex “CC,”
Petition for Review on Certiorari; rollo, 107.
[17] Annex “EE,”
id.; id. at 109-115.
[18] Annex “FF,”
id.; id. at 116-120.
[19] Comment,
3; id. at 128.
[20] Exhibits
“E” & “E-1”; CA rollo, 31-32.
[21] Exhibits
“H” & “I”; id. at 36-37.
[22] Exhibits
“F” & “F-1”; id. at 38.
[23] Order,
Annex “GG,” Petition for Review on Certiorari; rollo,
121.
[24] CA
Decision, 9; id. at 43.
[25] Petition
for Review on Certiorari, 17; id. at 28.
[26] Tayabas Land Co. v. Sharruf,
G.R. No. L-15499,
[27] Ibid.
[28] Section
1, Rule 65, 1997 Rules on Civil Procedure.
[29] Serra v. Rodriguez, G.R. No. L-25546,
[30] G.R.
No. L-40018,
[31] Now
Section 16.
[32] Supra
Note 30 at 204. Citations omitted.
[33] Bayer
Philippines, Inc. v. Agana, No. L-38701,
[34] Lorenzana v. Cayetano,
No. L-37051,