G.R. No. 31984 , February 25, 1930
PRATS & COMPANY vs. PHOENIX INSURANCE COMPANY, HARTFORD, CONNECTICUT

(MENZI and CO., INC. and ANTONIO BRIMO, intervenors-appellants vs. BEN J. S. OHNICK and JOHN R. MCFIE, Jr., respondents-appellees)

FACTS

1. Prats & Company (plaintiff) sued Phoenix Insurance Company to recover on a fire insurance policy. The Supreme Court ultimately ordered the insurance company to pay Prats & Company P11,731.93 (representing salvage proceeds) in its final decision dated February 21, 1921.
2. The law firm Ohnick & McFie (attorneys for Prats & Company) filed an attorney’s lien for their fees and obtained a court order on March 22, 1929, directing payment of P11,109.56 to them from the insurance proceeds.
3. Before payment was made, Menzi & Co., Inc. and Antonio Brimo (intervenors) moved to intervene, claiming a superior lien over the funds. They alleged that on December 1011, 1924, they had sued Prats & Company, obtained writs of attachment, and served garnishment notices on the insurance company regarding the same funds. Judgments in their favor were rendered in 1925.
4. The intervenors argued that the agreement between Prats & Company and Ohnick & McFie for attorney’s fees was collusive and made with knowledge of the existing garnishment.
5. The trial court denied the motion to intervene and ordered payment to the attorneys. The intervenors appealed.

ISSUE

Whether the intervenors, by their delay in prosecuting the garnishment proceedings for over four years after service of the garnishee notices, lost any legal right to assert a superior lien over the insurance proceeds as against the attorneys’ lien.

RULING

NO, the intervenors lost their legal rights due to laches and abandonment of the garnishment proceedings.
The Supreme Court affirmed the trial court’s denial of the motion to intervene. The Court emphasized that the intervenors took no action to enforce or protect their rights under the garnishment notices from December 11, 1924, until they filed the motion to intervene on May 6, 1929a delay of four years, four months, and twenty-five days. This constituted an abandonment of the garnishment proceedings. The Court cited the principle that a creditor must prosecute garnishment proceedings with reasonable diligence; failure to do so results in loss of any rights acquired through the garnishment. Consequently, the attorneys’ lien, duly approved by the court, prevailed. The other issues raised by the parties were deemed unnecessary to resolve.