February 9, 1998

DAR OPINION NO. 21-98

Mr. Jesus F . Diaz

Executive Vice President

Land Bank of the Philippines

319 Sen. Gil Puyat Ave. Ext.

Makati City

Dear Mr. Diaz:

This has reference to your letter dated 18 November 1997 seeking opinion on whether or not monies, interests, stocks and other personal properties belonging to Land Bank of the Philippines can be the subject of garnishment.

As gleaned from your letter together with the enclosures therein attached, a notice of garnishment was served on Land Bank of the Philippines on 18 November 1997 pursuant to a writ of execution dated 10 November 1997; that said Writ of Executions was issued in connection with DARAB Case No. JC-RV-CAMSUR-0011-CO entitled: Sharp International Marketing (Phils.) Inc. vs. Land Bank of the Philippines; that as an opposition to the writ of garnishment, you are subscribing to the position that Land Bank's corporate assets cannot be the position that Land Bank's corporate assets cannot be the subject of garnishment for the reason that Land Bank's role in the implementation of the Comprehensive Agrarian Reform Program (CARP) is but a custodian of the agrarian reform funds with respect to compensation payments to affected landowners; and that even on the assumption there is valid garnishment, the same should be charged against the Agrarian Reform Fund (ARF) under Land Bank's custody.

We agree with your view that the writ of execution issued by the DARAB Central Office and the notice of garnishment issued pursuant thereto by RTC-Manila cannot be primarily charged against the assets of the Land Bank of the Philippines. While the writ of garnishment is intended to protect the prevailing party against possible fraudulent disposition of the bank's assets to the prejudice of its creditors, the same is not exclusive. Specifically, the satisfaction of the judgment should necessarily be charged primarily against the ARF as provided for by law and any other obligations which remain unsettled, if any, may be satisfied against the assets of the LBP.

The above conclusion could be legally inferred under Sections 63 and 64 of R.A. No. 6657 and the Supreme Court Ruling in the case of the Philippine National Bank vs. Pabalan (83 SCRA 595, June 15, 1978) wherein it was declared that government-owned and controlled corporations have personality of their own, separate and distinct from the Government, thus, their funds although considered to be public in character are not exempt from garnishment. Furthermore, the High Court likewise ruled that garnishment is the appropriate remedy for the prevailing party which could proceed against the funds of a corporation entity even if owned or controlled by the government (PNB VS. CIR, 81 SCRA 314).

We hope to have, clarified the matter with you.

Very truly yours,

(SGD.) ARTEMIO A. ADASA, JR.

Undersecretary for Legal Affairs, and Policy and Planning