G.R. No. 43306; May 26, 1938
LEVY & BLUM, INC., plaintiff-appellee, vs. JOSE A. DEL PRADO, ET AL., defendants. THE YEK TONG LIN FIRE & MARINE INSURANCE CO., LTD., appellant.

FACTS

Levy & Blum, Inc. (plaintiff) obtained a judgment against Jose A. del Prado (defendant) and had previously garnished the proceeds of del Prado’s fire insurance policy with Yek Tong Lin Fire & Marine Insurance Co., Ltd. (garnishee). In a separate case, del Prado sued Yek Tong Lin to recover the insurance proceeds. The Supreme Court, affirming a judgment for del Prado, left to the trial court the determination of who should receive the money, noting the garnishment. Yek Tong Lin, under threat of contempt from the trial court in the separate case, deposited the money with the clerk of court. The trial court then ordered the clerk to deliver the money to del Prado, which was done without notice to Yek Tong Lin or Levy & Blum. Levy & Blum then sued Yek Tong Lin for damages, alleging negligence in releasing the funds despite the garnishment. The trial court held Yek Tong Lin liable.

ISSUE

Whether the garnishee, Yek Tong Lin Fire & Marine Insurance Co., Ltd., was discharged from liability for delivering the garnished funds to the clerk of court under a court order in a separate case.

RULING

No. The Supreme Court reversed the trial court and absolved Yek Tong Lin from liability. The Court held that a garnishee who, after being notified of the garnishment, turns over the attached property in obedience to a legal process (such as a court order in a separate case) is discharged from responsibility. Here, Yek Tong Lin deposited the money with the clerk of court under the compulsion of a court order and threat of contempt. It cannot be faulted for obeying that order. The garnishee’s obligation was extinguished by the delivery made under legal compulsion. The proper remedy for the garnishing creditor was to pursue the funds in the hands of the party who received them, not to hold the garnishee liable.

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