G.R. No. L-17927. June 29, 1963.
LOURDES DE LA RAMA, plaintiff-appellee, vs. AUGUSTO R. VILLAROSA, ET AL., defendants, LUZON SURETY COMPANY, INC., defendant-appellant.

FACTS

Plaintiff Lourdes de la Rama sued lessee Augusto R. Villarosa and his surety, Luzon Surety Co., Inc., for rescission of a lease and payment of unpaid rentals. The Court of First Instance rendered a judgment against the defendants. During execution, the sheriff garnished P71,533.99 belonging to Luzon Surety from its deposit with Philippine Trust Company. However, Luzon Surety appealed and obtained a preliminary injunction from the Court of Appeals, which enjoined the sheriff from enforcing the garnishment order. Consequently, the garnished funds were never physically delivered to the sheriff or the plaintiff; they remained set aside with the bank.
The Court of Appeals later modified the trial court’s decision, reducing Luzon Surety’s liability to P24,864.78 plus interest. After this judgment became final, the trial court issued a fourth alias writ of execution for the reduced amount. Luzon Surety then filed a motion in the trial court, invoking Section 5, Rule 39 of the Rules of Court, seeking restitution of the balance of the garnished amount (the difference between the original garnished sum and the reduced judgment) plus 6% interest from the date of garnishment.

ISSUE

Is Luzon Surety Company, Inc., entitled to restitution, with interest, of the excess portion of its funds that were garnished but not physically delivered, following a modification of the judgment on appeal that reduced its monetary liability?

RULING

No. The Supreme Court affirmed the trial court’s denial of Luzon Surety’s motion for restitution with interest. The legal logic rests on several key points. First, Section 5, Rule 39, which provides for restitution of property after a reversed or modified judgment, presupposes that the property was actually delivered to the prevailing party or to the court. Here, due to the preliminary injunction issued by the Court of Appeals, the garnished funds were never delivered to the sheriff or the plaintiff; they were merely held in custody by Philippine Trust Company. Therefore, there was no actual delivery to reverse or restitute.
Second, garnishment is merely a process of securing the fund; it does not constitute a transfer of ownership or possession to the judgment creditor. The garnishee (the bank) holds the funds subject to the court’s orders. Since the appellate court’s final order only required the bank to release the reduced amount to satisfy the judgment, the balance automatically remained the property of Luzon Surety, albeit previously encumbered. No affirmative act of restitution was necessary.
Third, any claim for damages (such as interest for the deprivation of use) due to a wrongful or excessive garnishment must be asserted before the judgment becomes final, pursuant to Rule 59, Section 20. Luzon Surety’s motion was filed well after the Court of Appeals’ decision had become final and executory. Finally, the Court noted the absence of any allegation or proof that Luzon Surety suffered actual damages from the garnishment, such as being unable to use the funds to pay an obligation and thereby incurring interest.