Municipality of Makati vs CA

MUNICIPALITY OF MAKATI vs. COURT OF APPEALS

G.R. Nos. 89898-99. October 1, 1990

Facts:

Petitioner Municipality of Makati expropriated a portion of land owned by private respondents, Admiral Finance Creditors Consortium, Inc. Attached to petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3) had been opened with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, made pursuant to the provisions of Pres. Decree No. 42.

After due hearing, the RTC rendered a decision fixing the appraised value of the property at P5,291,666.00, and ordering petitioner to pay this amount minus the advanced payment of P338,160.00 which was earlier released to private respondent.

A writ of execution was issued and a Notice of Garnishment was served by respondent sheriff upon the manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold code" was placed on the account of petitioner.

Private respondent then filed a motion praying for the court to order the bank to deliver to the sheriff the unpaid balance, while petitioner also filed a motion to lift the garnishment.

While these motions are pending, however, a “Manifestation” was filed, informing the court that private respondent was no longer the owner of the subject property and that ownership to this has been transferred to Philippine Savings Bank, Inc. A compromise agreement was made between private respondent and Philippine Savings Bank, Inc., which was then approved by the court.

The court further ordered PNB Buendia Branch to immediately release to PSB the sum of P4,953,506.45 which corresponds to the balance of the appraised value of the subject property from the garnished account of petitioner.

Petitioner filed a motion for reconsideration contending that its funds at the PNB Buendia Branch could 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, citing the case of Republic of the Philippines v. Palacio.

The RTC dismissed such motion, which was appealed to the Court of Appeals; the latter affirmed said dismissal and petitioner now filed this petition for review.

While the case was in the Supreme Court, petitioner raised for the first time that it had two accounts with PNB Buendia Branch: one was made exclusively for the expropriation of the subject property (Account No. S/A 265-537154-3), and the other is for statutory obligations and other purposes of the municipal government (Account No. S/A 263-530850-7).

Issue:

WON the balance of the appraised value of the subject property may be levied upon the second account of petitioner municipality, which is earmarked for the municipal government’s other statutory obligations.

Held:

No. The funds deposited in the second PNB Account No. S/A 263-530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at 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 the purpose of financing the governmental activities and functions of the municipality, are exempt from execution. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7.

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where 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 therefor.

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject property notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. This Court will not condone petitioner's blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that, 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. Without prompt payment, compensation cannot be considered "just" for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss [Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291].

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 fixed and the municipality is in full possession and utilizing the property for public purpose, for three (3) years, the Court finds that the municipality has had more than reasonable time to pay full compensation.

Municipality of Makati was ordered to immediately pay PS Bank and private respondent the amount of P4,953,506.45.