Municipality of Makati vs. Court of Appeals

MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA, respondents.

190 SCRA 206
October 1, 1990

FACTS:

An expropriation proceeding was initiated by petitioner Municipality of Makati against private respondent Admiral Finance Creditors Consortium Inc., Home Building System and Reality Corp., and Arceli P. Jo involving a parcel of land and improvements thereon located at San Antonio Village, Makati.

An action for eminent domain was filed. Attached to the petitioner‘s complaint was a certification that a bank account had been opened with the PNB. After the decision has become final and executory, a writ of execution was issued and a notice of garnishment was served upon the manager of PNB where the petitioner had bank accounts. However, the sheriff was informed that a hold code was placed on the account of the petitioner.

The petitioner contended that its funds at the PNB cocked neither be garnished nor levied upon execution for to do so would result in the disbursement of public funds without the proper appropriation required under the law.

In a petition with the Court of Appeals, petitioner alleges for the first time that it has actually two accounts with the PNB, one exclusively for the expropriation of the subject property with the outstanding balance of P99, 743. 94. The other account was for the obligations and other purposes of the municipal government with a balance of P170,098,421.72.

ISSUE:

Whether the bank account of a municipality may be levied on execution to satisfy a money judgment against it absent showing that the municipal council has passed an ordinance appropriating from its public funds an amount corresponding to the balance due to the RTC decision?

HELD:

YES. Since the first PNB account was specifically opened for expropriation proceedings it has initiated over the subject property, there is no objection to the garnishment or levy under execution of funds therein amounting to P4,965,506.40, the funds garnished in excess of P99,743.94, which are public funds earmarked for the municipal government. Other statutory obligations are exempted from execution without the proper appropriation required under the law.

The funds deposited in the 2^nd PNB account are public funds of the municipal government. The rule is well-settled that public funds are not subject to levy and execution, unless otherwise provided by the statute. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold on execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for financing governmental activities and functions of the municipality are exempt from execution. The foregoing rule finds application in the case at bar.

This is not to say that private respondents are left with no legal recourse. When a municipality fails or refuses without justifiable reason to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds. The court will not condone petitioner‘s blatant refusal to settle its obligation arising from an expropriation proceeding it has in fact initiated.

Within the context of the state‘s inherent power of eminent domain, just compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. The state‘s power of eminent domain should be exercised within the bounds of fair play and justice. In the case at bar, considering that valuable property has been taken, the compensation to be paid is fixed, and the municipal has had more than reasonable time to pay full compensation.