Municipality of Makati v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Municipality of Makati initiated expropriation proceedings against private respondent Admiral Finance Creditors Consortium, Inc. for a parcel of land. The RTC fixed the appraised value at P5,291,666.00, ordering payment minus advanced payment. After the decision became final, private respondent moved for execution, and a garnishment notice was served on petitioner's PNB account. Petitioner moved to lift the garnishment, arguing payment should be in installments. Subsequently, it was revealed that Philippine Savings Bank (PSB) had consolidated ownership over the property. PSB and private respondent entered into a compromise agreement to divide the compensation. The RTC approved the compromise, ordered the release of P4,953,506.45 from petitioner's garnished account to PSB, and directed PSB and private respondent to convey the property to petitioner. Petitioner's motion to lift garnishment was denied. Procedural History: Petitioner's motion for reconsideration was denied. The PNB branch manager was found guilty of contempt for failing to comply with the order. Petitioner and the bank manager filed separate petitions for certiorari with the Court of Appeals, which were dismissed. The Court of Appeals sustained the RTC judge's jurisdiction over the garnished funds and authority to levy. The Petition: Petitioner filed a petition for review with the Supreme Court, reiterating arguments before the CA and alleging for the first time the existence of a second PNB account for statutory obligations. Petitioner contended that funds in the second account, being public funds for other obligations, were exempt from execution without proper appropriation, citing Republic v. Palacio. The Supreme Court issued a temporary restraining order.
Issue(s)
Whether the funds in petitioner's second PNB account (Account No. S/A 263-530850-7), intended for statutory obligations, are exempt from garnishment and levy on execution without a proper appropriation ordinance. Whether the Municipality of Makati has had a reasonable time to pay just compensation for the expropriated property, considering its prolonged possession and use of the property.
Ruling
The Supreme Court set aside the RTC order dated December 21, 1988, and made permanent the temporary restraining order issued on November 20, 1989. It ordered the Municipality of Makati to immediately pay Philippine Savings Bank, Inc. and private respondent the amount of P4,953,506.45 within sixty (60) days.
Ratio Decidendi
On the exemption of public funds from execution: The Court held that public funds of a municipality are not subject to levy and execution unless otherwise provided by statute, citing Republic of the Philippines v. Palacio. Properties of a municipality necessary for public use cannot be attached and sold to satisfy a money judgment. Municipal revenues intended for governmental activities are exempt from execution. In this case, the funds in the second PNB account (Account No. S/A 263-530850-7) were public funds earmarked for the municipal government's statutory obligations. Absent an ordinance appropriating funds for the balance due under the RTC decision, no levy could be validly effected on these public funds. The Court acknowledged that the first account (Account No. S/A 265-537154-3), specifically opened for the expropriation, could be garnished. On the municipality's obligation to pay just compensation: The Court found merit in the petitioner's contention regarding the exemption of public funds from execution without appropriation. However, it emphasized that this did not leave private respondent and PSB without recourse. The Court noted that the validity of the RTC decision was not disputed and that petitioner had been in possession of the property for three years, utilizing it for the Makati West High School. The Court reiterated that just compensation means not only the correct determination of the amount but also prompt payment. Given the prolonged delay and the municipality's use of the property, the Court concluded that petitioner had more than a reasonable time to pay. The Court stated that it would not condone the petitioner's refusal to settle its legal obligation arising from the expropriation proceedings it initiated. The Court's resolution to order immediate payment underscored the principle that the State's power of eminent domain must be exercised within the bounds of fair play and justice, requiring prompt payment of just compensation.
Main Doctrine
Public funds of a municipality are not subject to levy and execution without a proper appropriation ordinance, unless otherwise provided by statute. However, a claimant may avail of the remedy of mandamus to compel the enactment of such an ordinance when a municipality fails to pay a final money judgment.