8/18/2018 G.R. No.

L-15499

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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-15499 February 9, 1921

THE TAYABAS LAND COMPANY, plaintiff-appellee,

vs.
SALOMON SHARRUF, CANUTO BARTOLOME, sheriff of Tayabas,
SALVADOR FARRE and FRANCISCO ALVAREZ, defendants.
SALOMON SHARRUF, appellant.

Crossfield and O'Brien for appellant.

Alfredo Chicote and Jose Arnaiz for appellee.

STREET, J.:

On December 10, 1914, one Salvador Farre recovered a joint and several judgment against Salomon M. Sharruf
and Farham M. Sharruf in the Court of First Instance of the city of Manila for the sum of P1,300, with legal interest
from September 5, 1914, and with costs. This judgment having remained unsatisfied, and execution was upon April
3, 1916, issued thereon at the instance of the plaintiff.

Meanwhile on March 27, 1915, Salomon M. Sharruf had himself recovered a judgment, also in the Court of First
Instance of the city of Manila, against the Tayabas Land Company and A.M. Ginainati, for the sum of P6,841.36,
with interest and costs; and as there seems to have been no visible property belonging to Salomon M. Sharruf and
Farham M. Sharruf subject to seizure by the sheriff to satisfy the execution in favor of Salvador Farre, it became
important for Farre to subject the judgment in favor of Salomon M. Sharruf against the Tayabas Land Company and
A.M. Ginainati to the payment of his own claim.

To this end process of garnishment (notification de embargo) was, on April 6, 1916, issued at the instance of
Salvador Farre in aid of his execution against the Sharrufs and was on the same or succeeding day duly served
upon the Tayabas Land Company. By this process the Tayabas Land Company was informed that levy had, by
virtue of the execution aforesaid, been made upon all the property of S. M. Sharruf in the possession of said
Tayabas Land Company and upon all debts owing by the latter to said Sharruf, and in particular upon all
participation and interest of S. M. Sharruf in the judgment rendered in his favor in the action prosecuted by him
against the Tayabas Land Company and others.

In pursuance of the levy thus effected upon the judgment in favor of Salomon M. Sharruf against the Tayabas Land
Company, the sheriff of the city of Manila, as in ordinary cases of levy upon chattels of real property, proceeded
upon April 15, 1916, to expose to sale all right, title, and interest of said Sharruf in the judgment aforesaid. At this
sale Salvador Farre, the execution creditor himself, became the purchaser of the judgment in question for the sum
of P200; but the Tayabas Land Company, with a legitimate view to its own protection, afterwards stepped in, and
acting through Mr. Francisco Alvarez, as attorney and intermediary, purchased from Farre, on October 6, 1917, the
judgment of Salomon M. Sharruf against itself, paying to Farre the full amount due him, to wit, the sum of P1,588.24.

At this point it should be stated that when levy of execution was made in the manner above stated, upon the
judgment in favor of Sharruf against the Tayabas Land Company and others, the time allowed by law for an appeal
in that case of the Supreme Court had not passed; and said cause was in fact subsequently appealed to the
Supreme Court, where final judgment was rendered, affirming the decision of the lower court, on February 15,
1918.1

It may also be stated that on April 4, 1916, Salomon M. Sharruf, by a public document, which was duly incorporated
in the record in his case against the Tayabas Land Company, et al., sold and transferred unto O'Brien & Company, a
corporation, his right, title, and interest in the judgment aforesaid to the extent necessary to satisfy a debt for
P988.14, owing to O'Brien & Company, for merchandise purchased from said entity by Sharruf; and upon the same
date Messrs. Crossfield & O'Brien, as attorneys, filed a memorandum of an attorney's lien in their favor to the extent
of 25 per cent of the amount of the judgment. These transactions, as will be seen, had the result of reducing in a
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considerable degree the apparent beneficial interest of Salomon M. Sharruf in the result of the litigation, but they do
not affect the fundamentals of the case.

As a consequence of the facts above narrated the Tayabas Land Company supposes that the judgment obtained by
Salomon M. Sharruf against it and A.M. Ginainati has been wholly satisfied, while Salomon M. Sharruf and those
interested under him claim that the execution sale of the judgment in question was void and that as a consequence
said judgment remains wholly unsatisfied. Proceeding upon this conception of the case, Messrs. Crossfield and
O'Brien, as attorneys for the plaintiff in that action, procured an execution to be issued on August 30, 1918, upon
said judgment for the entire amount of the recovery, including accrued interest and costs, less the sum of P13.21,
which had been secured in a garnishment proceeding against one of the local banks.

Being thus menaced with the levy of an execution upon its property, the Tayabas Land Company instituted the
present action in the Court of First Instance of the city of Manila, Against Salomon M. Sharruf and others, including
the sheriff of the Province of Tayabas, to obtain an order restraining the threatened levy of execution and perpetually
enjoining all proceedings for the enforcement of the judgment against it. Upon hearing the cause the trial court,
while recognizing the validity of the claims of O'Brien & Company and of Crossfield and O'Brien, held that all other
interest in said judgment pertaining to Salomon M. Sharruf had passed by virtue of the execution sale to Salvador
Farre and thence by transfer through Francisco Alvarez to the Tayabas Land Company. As a consequence the court
declared the preliminary injunction perpetual. From said judgment Salomon M. Sharruf appealed to this court.

The principal question in the case relates to the validity of the proceedings whereby the judgment against the
Tayabas Land Company and A.M. Ginainati in favor of Salomon M. Sharruf was, on April 15, 1916, exposed to sale
by the sheriff under the execution issued in the action of Salvador Farre against the two Sharrufs; and we believe it
will be conducive to clarity in the discussion for us to proceed at once to consider the manner in which, under the
provisions of our Code of Civil Procedure, a judgment for a sum of money entered in favor of the plaintiff in one case
can be reached and applied to the payment of a judgment in another case against the party who occupies the
position of creditor in the former.

In the first place, we have no hesitancy in saying that a judgment for a sum of money, that is, the interest of the
plaintiff in such a judgment, is liable to execution. A judgment for a sum of money is, as to the party entitled to
payment, a credit; and as to the party who ought to pay the money, a debt. Furthermore, the interest of the creditor
in such a judgment is clearly property, though not capable of manual delivery. All of these elements of value —
"debts." "credits," and "all other property not capable of manual delivery" — are expressly declared, in section 450 of
the Code of Civil Procedure, to be liable to execution. It will be noted, however, that under the section just cited,
debts, credits, and other property not capable of manual delivery are to be dealt with in a different manner from that
prescribed in case of the execution of tangible property; for while tangible property is proceeded with by seizure and
sale under execution, debts and credits are to be attached by the citation of the debtor. The provisions governing the
execution of tangible property are found in sections 453 to 457, inclusive, of the Code of Civil Procedure; while the
provisions prescribing the method of reaching debts and credits are found chiefly in the chapter relating to
attachment, consisting principally of sections 431 to 436, inclusive, of the Code of Civil Procedure.

The proceeding thus indicated as proper, in order to subject a debt or credit is known in American civil procedure as
the process of garnishment; and it may be truly said that garnishment is one of the simplest processes, and the least
involved in technicalities, of any proceeding known to the law. It consists in the citation of some stranger to the
litigation, who is debtor to one of the parties to the action. By this means such debtor stranger becomes a forced
intervenor; and the court, having acquired jurisdiction over his person by means of the 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. Upon principle the remedy 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.

The situation involved supposes the existence of at least three persons, to wit, a judgment creditor, a judgment
debtor, and the garnishee, or person cited, who in turn is supposed to be indebted to the first debtor (i.e., judgment
debtor).

To proceed a little further with the barest details of the process of garnishment, we note that a citation issues from
the court having jurisdiction of the principal litigations, notifying the garnishee that the property and credits of the
judgment debtor have been levied upon or attached in the hands of such garnishee, and enjoining him not to deliver,
transfer, or otherwise dispose of any effects or credits belonging to that person, and requiring him furthermore to
make a statement to the court of the property of the judgment debtor in his hands and of the debts owing by the
garnishee to such debtor.

In cases where indebtedness is admitted, as not infrequently occurs, the payment of the money by the garnishee to
the judgment creditor or into court, brings the proceeding to a close, so far as the garnishee is concerned; but if the
garnishee fails to answer, or does not admit the indebtedness, he may be required to attend before the court in
which the action is pending to be examined on oath respecting the same. Finally, if the liability of the garnishee is

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made manifest, the officer of the court may, under paragraph No. 3 of section 436 of the Code of Civil Procedure,
collect the money and pay it to the person entitled.

The circumstances that garnishment has not been made the subject of independent treatment in our Code of Civil
Procedure and that the rules relating thereto are only brought out inferentially in connection with the subject of
attachment has undoubtedly contributed to obscure a matter which upon principle is simple enough. Additional light
on the subject may, however, be acquired by referring to sections 476, 481, and 486 of the Code of Civil
Procedures, which treat of supplementary proceedings. It will be found that those proceedings are identical in
principle with the proceeding for the citation of debtors explained in the chapter on attachment.

Enough has now been said to show clearly that the action of the sheriff in exposing to public sale the judgment
which had been procured by Salomon M. Sharruf in the action against the Tayabas Land Company, et al., was
wholly unauthorized, and said sale must be considered void. The proper step would have been for the court to
require the Tayabas Land Company, after the judgment against it had become final, to pay into court, in the cause
wherein Salvador Farre was plaintiff, a sufficient amount of money to satisfy Farre's claim against Sharruf; and if the
judgment against the Tayabas Land Company had been permitted to go to the stage of execution, the proceeds in
the hands of the sheriff would have been applied, under the direction of the court, to the payment of Farre's claim
before any part would have been payable to Sharruf.

In dealing with the problems which have from time to time arisen in connection with garnishment proceedings,
courts have sometimes been perplexed over the matter of protecting the garnishee from the danger of having to pay
his debt twice; and it goes without saying that the procedure must be so adjusted as not to subject the garnishee to
this risk. Otherwise it is a fatal obstacle to the garnishment. No such difficulty would arise in a case like this, where
the two judgments are both of record in the same court, and where consequently that court has control over the
process in both cases.

Our conclusion that the sale of the judgment in question under process of execution was void is supported by the
decisions of the Supreme Court of California, construing the very section of the California Code of Civil Procedure
from which section 450 of the Code of Civil Procedure of the Philippine Islands was taken. Thus, in McBride vs.
Fallon (65 Cal., 301, 303), the Supreme Court of that State said:

After enumerating the kinds of property of a judgment debtor liable to execution, the Code provides that
"shares and interests in any corporation or company" and debts and credits . . . and all other property not
capable of manual delivery, may be attached on execution in like manner as upon writs of attachments.

"Debts and credits and property not capable of manual delivery must be attached in the mode pointed out by
subdivision 5, sec. 542." (Corresponding to section 431 of the Philippine Code of Civil Procedure.) "That is
"by leaving with the person owing the debt or having in possession or under his control such credits and other
personal property" or with his agent, a copy of the writ, and a notice that the debts owing by him to the
defendant, or the credits and other personal property' in his possession or under his control, belonging to the
defendant are attached in pursuance of such writ.

"The fact that a debt is evidenced by a judgment does not, in our opinion, make it anything more or less than
a debt, or more capable of manual delivery than it would be if not so evidenced. No provision is made for
attaching or levying on evidences of debt. It is the debt itself which may be attached by writ of attachment, or
on execution in like manner as upon writs of attachment." This we think to be the meaning of the Code, and
the mode prescribed by it is exclusively . . .

In order to avoid misunderstanding, we wish to say that we make no question as to the propriety of the proceedings
up to the time when the judgment in question was advertised and exposed to sale by the sheriff. The issuance of the
execution and the service of the garnishment were appropriate; and the garnishment was effective for the purpose
of preventing the garnishee, the Tayabas Land Company, from paying the judgment to Salomon M. Sharruf.

Moreover, the garnishment was effective for the purpose of conferring upon the Tayabas Land Company the right to
pay off the judgment which Farre had obtained against Sharruf. This right is not only recognized in section 481 of
the Code of Civil Procedure but also in subsection 3 of article 1210 of the Civil Code; and by satisfying Farre's claim,
regardless of the manner in which it was accomplished, the Tayabas Land Company absolved itself pro tanto from
its indebtedness to Sharruf. It results that, although the judgment against the Tayabas Land Company has not yet
been satisfied in full, said company is entitled to be credited with the sum of P1,588.24, said by it, through Francisco
Alvarez, to Farre on October 6, 1917, with interest.

In the view we take of the case it becomes unnecessary to consider at length the fact that Sharruf's judgment
against the Tayabas Land Company was appealed to the Supreme Court after the process of garnishment had been
served on the company. Suffice is to say that this circumstance would at most merely postpone the realization of the
results without defeating the garnishment.

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Reflection upon this feature of the case, however, confirms the opinion that our lawmakers acted wisely in requiring
that debts and credits should be executed by means of the process of garnishment rather than by exposing them to
public sale. In the case before us a judgment for a large amount was sold for a merely nominal sum, and such would
generally be the case at a sale under similar conditions. This cannot fail to be highly prejudicial to the debtor who is
under immediate execution. The proceeding by garnishment, on the contrary, enables all parties to realize their
rights without unduly disturbing the position of any.

The judgment must be reserved, and the defendants will be absolved from the complaint. It is so ordered, without
express pronouncement as to costs of either instance.

Mapa, C.J., Araullo, Malcolm, Avanceña and Villamor, JJ., concur.

Footnotes
1See Sharruf vs. Tayabas Land Co. and Ginainati (37 Phil., 655).

The Lawphil Project - Arellano Law Foundation

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