Metropolitan Bank and Trust Co. vs. Radio Philippines Network, Inc., Intercontinental Broadcasting Corp., and Banahaw Broadcasting Corporation, thru the Board of Administrators

A money judgment may be enforced against a judgment debtor's funds held in escrow by a third party only through the procedural mechanism of garnishment, which requires the service of a writ of garnishment upon the third party (garnishee) to vest the trial court with jurisdiction to compel compliance.

The case originated from a 1995 Regional Trial Court (RTC) judgment ordering Traders Royal Bank (Traders Royal) to pay actual damages and attorney's fees to respondents Radio Philippines Network, Inc. (RPN), Intercontinental Broadcasting Corp. (IBC), and Banahaw Broadcasting Corporation (BBC). After protracted appeals, the Supreme Court's 2002 modified judgment became final and executory in 2003. During the execution phase, the RTC issued subpoenas to Metrobank, which held an escrow fund established by Traders Royal and Bank of Commerce pursuant to a Purchase and Sale Agreement approved by the Bangko Sentral ng Pilipinas. The RTC ultimately issued an order for a writ of execution against, among other assets, the escrow fund with Metrobank. Metrobank challenged this order, arguing it was a non-party and that a separate action was required to reach the escrow fund.

• Nature of the Action: The case concerns the execution of a final and executory money judgment in a civil case for damages.
• The Judgment and Finality: The RTC's 1995 judgment against Traders Royal Bank was modified by the Supreme Court in 2002 (deleting exemplary damages) and became final in 2003.
• The Escrow Fund: Pursuant to a Purchase and Sale Agreement between Traders Royal and Bank of Commerce, approved by the BSP, a ₱50,000,000.00 escrow fund was established with Metrobank to be held for 15 years.
• Execution Proceedings: Respondents moved for execution and sought subpoenas against Metrobank to inquire about the escrow fund. Metrobank reported the fund was depleted.
• RTC's Execution Order: On August 15, 2005, the RTC granted a writ of execution against "any and all assets of TRB... including those subject of the... Purchase and Sale Agreement... and/or against the Escrow Fund."
• Challenge to the Order: Metrobank moved for reconsideration, arguing it was a non-party and the court lacked jurisdiction to execute against it directly. The RTC upheld its order.
• CA Proceedings: The CA dismissed Metrobank's and BankCom's certiorari petitions, finding no grave abuse of discretion by the RTC.

• Jurisdiction and Due Process: Petitioner Metrobank argued that the RTC lacked jurisdiction over its person as it was not a party to the case nor a judgment debtor. It maintained that any action against the escrow fund must be ventilated in a separate proceeding to afford it due process.
• Propriety of Execution: Petitioner contended that the RTC's order to execute directly against the escrow fund was improper and departed from the prescribed rules for enforcing money judgments.

• Jurisdiction Over Garnishee: Respondents countered that the RTC had jurisdiction over Metrobank as Traders Royal's escrow agent. They argued that the RTC could compel Metrobank to account for the fund under its general supervisory control over the execution process.
• Efficiency of Execution: Respondents maintained that the RTC's actions were proper and necessary to prevent the judgment from becoming an "empty triumph," emphasizing the long delay since the judgment's finality.

• Propriety of Execution Procedure: Whether the Regional Trial Court properly ordered the execution of the money judgment directly against the escrow fund held by Metrobank.
• Jurisdiction Over Third-Party Garnishee: Whether the RTC could acquire jurisdiction over Metrobank, a non-party, and compel it to comply with execution orders without following the garnishment procedure.

• Propriety of Execution Procedure: The RTC deviated from the mandatory procedure prescribed in Section 9, Rule 39 of the Rules of Court. The execution of a money judgment requires the sheriff to first demand payment from the judgment debtor (Traders Royal). Only if the debtor cannot pay may the sheriff levy its properties, including debts or credits (like the escrow fund) held by third parties, through garnishment.
• Jurisdiction Over Third-Party Garnishee: The RTC cannot require Metrobank to comply with its orders absent the service of a writ of garnishment. Jurisdiction over a garnishee is acquired not by summons or impleading, but by the service of the writ of garnishment. By issuing subpoenas and ordering reports before even granting the motion for execution, the RTC prematurely inquired into the escrow fund's status. The proper course is to issue the writ of execution and, if the judgment debtor cannot pay, then serve a notice of garnishment on the third party (Metrobank), which then becomes a "virtual party" bound by the court's orders.

• Garnishment as a Mode of Execution — Garnishment is a species of attachment for reaching credits belonging to the judgment debtor and held by a third party. It is the proper procedural mechanism under Section 9(c), Rule 39 of the Rules of Court to satisfy a money judgment from debts or bank deposits in the possession of a third-party garnishee. The court acquires jurisdiction over the garnishee not through summons, but through the service of the writ of garnishment, thereby making the garnishee a "virtual party" or "forced intervenor" bound to comply with the court's orders to satisfy the judgment.

• "Through service of this writ, the garnishee becomes a 'virtual party' to or a 'forced intervenor' in the case, and the trial court thereby acquires jurisdiction to bind him to compliance with all orders and processes of the trial court, with a view to the complete satisfaction of the judgment of the court." — This excerpt from National Power Corp. v. Philippine Commercial and Industrial Bank articulates the fundamental rule on how a court acquires jurisdiction over a third-party garnishee.

• National Power Corp. v. Philippine Commercial and Industrial Bank, 614 Phil. 506 (2009) — Cited as controlling authority on the nature of garnishment and the method by which a trial court acquires jurisdiction over a garnishee (through service of the writ, not summons).

• Section 9, Rule 39 of the Revised Rules of Court — Provides the exclusive procedure for enforcing money judgments. The Court held the RTC violated this rule by ordering execution against the escrow fund without first demanding payment from the judgment debtor and then resorting to garnishment if payment could not be made.

• Justice Marvic M.V.F. Leonen (Chairperson)
• Justice Henri Jean Paul B. Inting
• Justice Jhosep Y. Lopez
• Justice Antonio T. Kho, Jr.