Ortega v. City of Cebu
REITERATIONFacts
The Antecedents: Spouses Ciriaco and Arminda Ortega are the registered owners of a parcel of land in Cebu City. A portion of this land, occupied by squatters, was the subject of an ejectment case filed by the Spouses Ortega, which they won. Subsequently, the Sangguniang Panglungsod of Cebu City enacted an ordinance authorizing the expropriation of one-half of the Spouses Ortega's land, which was occupied by the squatters, for socialized housing. The ordinance appropriated a specific amount for this purpose, based on a valuation by the City Appraisal Committee. Procedural History: Pursuant to the ordinance, Cebu City filed an eminent domain case against the Spouses Ortega. The Regional Trial Court (RTC) issued an order declaring the City's right to expropriate the property and later fixed the just compensation at P11,000.00 per square meter, totaling P31,416,000.00. Cebu City failed to appeal this decision, and a writ of execution was issued. The RTC subsequently ordered the garnishment of Cebu City's bank deposit to satisfy the judgment, based on the appropriated amount in the ordinance. Cebu City filed petitions for certiorari with the Court of Appeals (CA) challenging these orders, arguing that the compensation was excessive and that government funds are exempt from garnishment. The CA partially granted the petitions, annulling and setting aside orders related to the garnishment but affirming the denial of the City's motion to modify the judgment or withdraw from the expropriation. The Petition: Both the Spouses Ortega and Cebu City filed consolidated petitions for review on certiorari with the Supreme Court. The Spouses Ortega questioned the CA's affirmation of the RTC's denial of Cebu City's motion to modify the judgment and withdraw from the expropriation. Cebu City questioned the CA's ruling regarding the garnishment of its bank deposit, arguing that the appropriated funds were for a different purpose and that government funds are generally not subject to garnishment. The Supreme Court denied both petitions, affirming the CA's decision that the expropriation proceedings were final and executory, and that the garnishment was improper due to the non-existence of the specified bank account and the public policy against seizing government funds.
Issue(s)
Whether the Court of Appeals erred in affirming the Regional Trial Court's denial of Cebu City's Omnibus Motion to Modify Judgment and to be Allowed to Withdraw from the Expropriation Proceedings. Whether the deposit of Cebu City with the Philippine Postal Bank, appropriated for a different purpose by its Sangguniang Panglungsod, can be subject to garnishment as payment for the expropriated lot covered by City Ordinance No. 1519.
Ruling
The Supreme Court denied both petitions, affirming the decision of the Court of Appeals. The Court held that Cebu City could not withdraw from the expropriation proceedings or modify the judgment after the order of expropriation had become final and executory. The Court also ruled that Cebu City's bank deposit with the Philippine Postal Bank, even if purportedly appropriated by Ordinance No. 1519, was not subject to garnishment because government funds are generally exempt from execution and garnishment, and the specific account mentioned in the ordinance did not exist as a bank account.
Ratio Decidendi
On Issue 1: The Supreme Court affirmed the Court of Appeals' ruling that Cebu City could not withdraw from the expropriation proceedings or modify the judgment. The Court cited Section 4, Rule 67 of the Rules of Court, which states that after an order of expropriation has been issued, the plaintiff shall not be permitted to dismiss or discontinue the proceeding except on terms deemed just and equitable by the court. The Court emphasized that an order of expropriation signifies the end of the first stage of expropriation, establishing the plaintiff's right to take the property, and paves the way for the determination of just compensation. Since Cebu City failed to appeal the order of expropriation, it could no longer seek modification of the judgment or withdraw its complaint. The Court reiterated that the determination of just compensation is a judicial prerogative, citing Export Processing Zone Authority v. Dulay and other cases, and thus Cebu City's contention that the compensation was too high was not a valid ground to withdraw. On Issue 2: The Supreme Court upheld the Court of Appeals' disquisition regarding the garnishment of Cebu City's bank deposit. The Court reiterated the settled rule that government funds and properties may not be seized under writs of execution or garnishment to satisfy judgments, based on public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law, and the functions of the State should not be paralyzed. The Court noted that while Ordinance No. 1519 appropriated P3,284,400.00, the Philippine Postal Bank certified that the account numbers mentioned in the ordinance did not exist. Even if the ordinance were valid, the Court found that Cebu City's bank account with the Philippine Postal Bank was not specifically opened for the payment of just compensation nor was it specifically appropriated by Ordinance No. 1519 for such purpose, and thus it was exempt from garnishment. The Court cited Municipality of Makati v. Court of Appeals to support the principle that a trial court has no authority to garnish a municipality's other bank accounts to cover a deficiency when no ordinance has been passed appropriating funds from those accounts. Therefore, the RTC had no authority to order the release of the garnished deposits.
Main Doctrine
The Supreme Court affirmed that once an order of expropriation has been issued and has become final and executory, the expropriating entity, in this case, the City of Cebu, cannot unilaterally withdraw from the proceedings or seek modification of the judgment. The Court emphasized that the determination of just compensation is a judicial function and cannot be dictated by the executive or legislative branches. Furthermore, the Court reiterated the principle that government funds are generally exempt from garnishment, and the appropriate remedy for enforcing a money judgment against a local government unit is a writ of mandamus to compel the enactment of an appropriation ordinance.