Bagbagen vs. Perez

The salaries of a public official are subject to garnishment because no law exempts them from execution, and the exemption from execution for wages and salaries under Rule 39, Section 13(i) of the Rules of Court and Article 1708 of the Civil Code is confined to laborers whose work is manual.

Petitioner Atty. Fred L. Bagbagen was a city councilor of Baguio City. He and one Frank Leo Telintelo were charged with estafa against respondent Anna May F. Perez. After trial, the Regional Trial Court (RTC), Branch 61, Baguio City, acquitted both accused on reasonable doubt but found them civilly liable and ordered them to pay Perez and her co-heirs PHP 308,000.00, solidarily, with six percent (6%) legal interest per annum from finality until full payment. The decision became final and executory, and a writ of execution was issued. Pursuant to that writ, the RTC served a Notice of Garnishment dated August 29, 2019 on Philippine Veterans Bank, Baguio City Branch, where Bagbagen’s salaries as city councilor were deposited. Bagbagen then sought to lift the garnishment.

• The Criminal Case and Civil Liability: In Criminal Case No. 27971-R, Bagbagen, a Baguio City councilor, and co-accused Frank Leo Telintelo were charged with estafa allegedly committed against respondent Anna May F. Perez. After due proceedings, the RTC, Branch 61, Baguio City, rendered a Decision dated January 17, 2014, acquitting both accused on reasonable doubt but finding them solidarily civilly liable. The dispositive portion ordered them to indemnify Perez and her co-heirs the principal amount of PHP 308,000.00, with six percent (6%) legal interest per annum from finality until full payment, plus costs. This decision became final and executory.

• The Garnishment and Motion to Lift: Pursuant to the writ of execution, Judge Mia Joy Oallares-Cawed, as acting presiding judge, issued a Notice of Garnishment dated August 29, 2019 to Philippine Veterans Bank, Baguio City Branch, which had been withholding Bagbagen’s salary as city councilor deposited in his ATM account. On September 18, 2019, Bagbagen filed a Motion to Lift Notice of Garnishment. He relied on The Director of the Bureau of Commerce and Industry v. Concepcion and Avendaño v. Hon. Alikpala, which held that salaries of public officials are not subject to garnishment for reasons of public policy and that money not yet disbursed remains government funds. He prayed that the Notice of Garnishment be lifted.

• The RTC Orders: The RTC denied the motion in its Order dated October 22, 2019, reasoning that the salaries subject of the garnishment had already been deposited in Bagbagen’s personal account at Philippine Veterans Bank. Once deposited, the funds ceased to be government funds and were no longer exempt from garnishment. The RTC ordered Bagbagen to submit a monthly payment scheme suitable to Perez within ten days, failing which the bank was directed to deliver the garnished amounts to the ex-officio sheriff. Bagbagen’s Motion for Reconsideration was denied in an Order dated January 6, 2020, which reiterated the directive to submit a payment scheme.

• The CA Decision: Bagbagen elevated the matter to the Court of Appeals via a Petition for Certiorari, asserting that jurisprudence had settled that the salary and Christmas bonus of a government official could not be garnished. The CA dismissed the petition in its Decision dated August 18, 2023, finding no grave abuse of discretion. It upheld the RTC’s reasoning that the salaries, once deposited, lost their exempt character. The subsequent Motion for Reconsideration was denied in a Resolution dated April 15, 2024. Bagbagen then filed the present Petition for Review on Certiorari, also raising for the first time an issue that the monies could not be assigned to Danise Perez by Special Power of Attorney without the consent of Perez’s co-heirs.

• Exemption of Public Officials’ Salaries: Bagbagen maintained that the salaries and bonuses of a government official are exempt from garnishment under the rulings in Director of Commerce v. Concepcion and Avendaño v. Hon. Alikpala, which hold that public policy shields such salaries from execution and that money remaining undisbursed retains its character as government funds.

• Improper Assignment of Garnished Monies: Bagbagen argued that respondent Perez could not assign the garnished monies to Danise Perez by way of Special Power of Attorney without the consent of the other co-heirs to whom the civil liability was awarded.

• Garnishability of Deposited Salaries: Respondent maintained that the Notice of Garnishment was properly issued because Bagbagen’s salaries had already been deposited to his personal bank account, thereby losing their character as public funds and becoming ordinary private property subject to execution and garnishment.

• Garnishment of Public Official’s Salary: Whether the salary of a city councilor deposited in a personal bank account is exempt from garnishment.

• Garnishment of Public Official’s Salary: The garnishment was sustained. No law exempts the salaries of public officials from execution. The exemption under Rule 39, Section 13(i) of the 2019 Amended Rules of Court and Article 1708 of the Civil Code is expressly limited to laborers or wages earners whose work is manual—individuals who depend on the immediate reward of a day’s labor for support—and does not extend to a city councilor. While prior cases treated the garnishability of a public official’s salary as turning on whether the funds had been deposited and thus lost their public character, the proper basis is the absence of any statutory exemption. The garnishment of salaries is lawful wherever the funds do not fall within the narrow enumerated exemptions. Public officials, who are compensated by fixed statutory salaries and are custodians of public trust, are subject to stricter rules, and no provision shields their compensation from execution. The issue regarding assignment of garnished monies was raised for the first time on appeal and therefore received no consideration.

• No-Exemption Rule for Public Officials’ Salaries — The salaries of public officials are not exempt from garnishment, as there is no law granting such an exemption. The exemption from execution for wages and earnings under Rule 39, Section 13(i) of the Rules of Court and Article 1708 of the Civil Code applies exclusively to laborers performing manual work, who ordinarily rely on the immediate fruits of a day’s labor for present support. The garnishability of a public official’s deposited salary rests not on the transformation of the funds into private property upon deposit, but on the straightforward absence of any legal exemption covering that compensation.

• “The Court deems it more wise to rule that the salaries of public officials are subject to garnishment not merely because they have lost their public character upon deposit, as previously held in numerous cases, but because they are not covered by the exemptions provided under existing laws and rules.” This passage clarifies the doctrinal shift from the “private fund” rationale to the “no-exemption” rationale.

• “[T]he exemption under Rule 39, Section 9(c) of the 2019 Amended Rules of Court and Article 1708 of the Civil Code is meant to favor only laboring men or women whose works are manual, and not public officials such as Bagbagen. Persons belonging to the former group usually look to the reward of a day’s labor for immediate or present support, and such persons are more in need of the exemption than any other.” This excerpt defines the limited scope of the wage exemption and the distinction between laborers and public officials.

• The Director of the Bureau of Commerce and Industry v. Concepcion, 43 Phil. 384 (1922) — Cited by petitioner for the rule that salaries of public officials are not subject to garnishment on public policy grounds. The Court did not overrule this precedent but reformulated the controlling principle, holding that the garnishability of deposited salaries is better explained by the absence of an exemption rather than the loss of public character.

• Avendaño v. Hon. Alikpala, 120 Phil. 1331 (1964) — Also invoked by petitioner for the proposition that money owed by the government to a public officer is not garnishable while still in the hands of the government. The Court distinguished the situation by focusing on the statutory exemption framework.

• D’ Armoured Security v. Orpia, 500 Phil. 97 (2005) — Relied on by the Court to emphasize that Article 1708 of the Civil Code protects only laborers whose work is manual, not public officials. This case defined the scope of the exemption.

• Rule 39, Section 9(c), 2019 Amended Rules of Court — Provides for levy by garnishment of debts and credits, including bank deposits. Applied as the procedural basis for the garnishment of Bagbagen’s account.

• Rule 39, Section 13(i), 2019 Amended Rules of Court — Lists “so much of the salaries, wages, or earnings of the judgment obligor for his personal services within the four months preceding the levy as are necessary for the support of his family” as exempt property. The Court ruled that this exemption does not cover public officials because it is intended for laborers.

• Article 1708, New Civil Code — “The laborer’s wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance.” The Court held that this provision exempts only laborers whose work is manual, not public officials like Bagbagen.

• Constitution, Article XI, Section 1 — Public office is a public trust. Cited to rationalize the stricter rules governing public officials’ accountability and their compensation.

• Constitution, Article XIII, Section 3 — Mandate of the State to afford full protection to labor. Cited to distinguish the protective measures afforded to laborers from the treatment of public officials’ salaries.

Caguioa (Chairperson), Inting, and Dimaampao, JJ., concur. Singh, J., on leave.