G.R. No. L-3905 October 31, 1951
GONZALO P. NAVA, ET AL., petitioners, vs. HON. RAMON SAN JOSE, ET AL., respondents.

FACTS

On April 27, 1940, Standard Investment of the Philippines filed an action against Toribio Teodoro (Civil Case No. 56897). Teodoro filed a third-party complaint against Gonzalo P. Nava on October 30, 1940. The Court of First Instance of Manila dismissed Teodoro’s claim against Nava on October 30, 1941. The Court of Appeals reversed this decision on December 24, 1943, sentencing Nava to pay Teodoro P10,000. The Supreme Court dismissed Nava’s petition for certiorari (G.R. No. L-1270) on March 9, 1949, and denied reconsideration on April 18, 1949. On January 31, 1950, Teodoro moved for execution of the judgment, which was granted. A writ of garnishment was served on the Philippine Bank of Commerce. The bank’s return disclosed that Nava had an overdraft line of P26,000, secured by a mortgage, with a used amount of P19,680.47 and an unused balance of P6,319.53 as of January 31, 1950. Teodoro moved for the bank to deliver this unused balance. The bank and Nava opposed, with Nava contending his obligation was a pre-war debt covered by the moratorium under Republic Act No. 342 and that the unused overdraft balance was not a garnishable credit. On June 12, 1950, the Court of First Instance of Manila, through Judge Ramon R. San Jose, ordered the bank to deliver the P6,319.53 to the Sheriff. On June 14, 1950, another order held Nava’s obligation was not covered by the Moratorium Law. Nava and the bank filed the present certiorari petition to annul the execution order of January 31, 1950, and the garnishment order of June 12, 1950.

ISSUE

1. Whether Nava’s obligation to pay Teodoro P10,000 is a pre-war obligation covered by the Moratorium Law ( Republic Act No. 342 ).
2. Whether the unused balance of P6,319.53 in Nava’s overdraft account with the Philippine Bank of Commerce is a credit subject to garnishment under the Rules of Court.

RULING

1. Yes, Nava’s obligation is a pre-war obligation covered by the Moratorium Law. The liability arose at the latest on October 30, 1940, when Teodoro filed his third-party complaint. The Court of Appeals’ decision merely gave judicial recognition to this pre-existing liability. However, Nava waived his right to invoke the moratorium by failing to set up this defense before March 9, 1949, when the Supreme Court’s dismissal of his petition became final, or at any time before that finality, especially since Republic Act No. 342 was enacted on July 26, 1948, during the pendency of G.R. No. L-1270.
2. No, the unused balance of the overdraft account is not a credit subject to garnishment. A credit, within the purview of garnishment, is the correlative of a debt, meaning something belonging to the defendant in the possession of the garnishee. The overdraft account is not a credit in favor of Nava; should he avail of it, he would become a debtor to the bank, not a creditor. An overdraft constitutes a loan. To garnish this unused balance would be tantamount to compelling a person, by judicial process, to borrow money to pay a judgment creditor.
The Court sustained the execution order of January 31, 1950, but set aside the garnishment order of June 12, 1950, directing the bank to deliver the unused overdraft balance.
Separate Opinions:
Justice Pablo dissented on the first issue, arguing that the moratorium defense could still be raised at the time Teodoro moved for execution, as it was the first opportunity to do so. He concurred with the rest of the decision. Justice Feria concurred with Justice Pablo.