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X obtained a final money judgment against Y in the Regional Trial Court for PhP 500,000. The sheriff issues a writ of execution and garnishes a bank account in Bank Z that contains funds belonging to Y, held in trust by Bank Z for a third party in addition to Y’s own funds. Y’s spouse asserts a co-ownership or rightful claim over the funds in the account, arguing that part of the balance is not subject to execution. Bank Z withholds disbursement pending a court ruling on the competing interests.
(a) Identify the controlling doctrine governing garnishment of funds held by a bank as a third party in the possession of the garnishee under a writ of execution and the effect on the garnishee.
(b) Apply the doctrine to these facts and determine whether Bank Z should release any funds to satisfy the judgment, and, if it should, under what conditions.
(c) If a third-party claim is raised, outline the procedural steps the court should take and the orders it should issue to protect the interests of both the judgment creditor and the third party.