# 10 G.R. Nos. 89898-99 October 1, 1990 MUNICIPALITY OF MAKATI, petitioner, vs. T ! ONORA"L! COURT OF APP!AL#, ON. #AL$A%OR P. %!

GU&MAN, 'R., (s ')*+e RTC o, M(-(t., "r(/c0 C1LII A%MIRAL FINANC! CR!%ITOR# CON#ORTIUM, INC., (/* # !RIFF #IL$INO R. PA#TRANA,respondents. The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner Municipality of Makati against private respondent Admiral Finance reditors onsortium, !nc., "ome #uilding $ystem % &ealty orporation and one Arceli '. (o, involving a parcel of land and improvements thereon located at Mayapis $t., $an Antonio )illage, Makati and registered in the name of Arceli '. (o under T T *o. $-+,--. FACT#2 !t appears that the action for eminent domain was filed on May ./, 0-12, docketed as ivil ase *o. 032--. Attached to petitioner4s complaint was a certification that a bank account 5Account *o. $6A .2+-+370+,-38 had been opened with the '*# #uendia #ranch under petitioner4s name containing the sum of ',07,+0/.//, made pursuant to the provisions of 'res. 9ecree *o. ,.. After due hearing where the parties presented their respective appraisal reports regarding the value of the property, respondent &T :udge rendered a decision on (une ,, 0-17, fixing the appraised value of the property at '+,.-0,222.//, and ordering petitioner to pay this amount minus the advanced payment of '331,02/.// which was earlier released to private respondent. After this decision became final and executory, private respondent moved for the issuance of a writ of execution. This motion was granted by respondent &T :udge. After issuance of the writ of execution, a *otice of ;arnishment dated (anuary 0,, 0-11 was served by respondent sheriff $ilvino &. 'astrana upon the manager of the '*# #uendia #ranch. "owever, respondent sheriff was informed that a <hold code< was placed on the account of petitioner. As a result of this, private respondent filed a

motion dated (anuary .7, 0-11 praying that an order be issued directing the bank to deliver to respondent sheriff the amount e=uivalent to the unpaid balance due under the &T decision dated (une ,, 0-17. 'etitioner filed a motion to lift the garnishment, on the ground that the manner of payment of the expropriation amount should be done in installments which the respondent &T :udge failed to state in his decision. 'rivate respondent filed its opposition to the motion. 'ending resolution of the above motions, petitioner filed on (uly ./, 0-11 a <Manifestation< informing the court that private respondent was no longer the true and lawful owner of the sub:ect property because a new title over the property had been registered in the name of 'hilippine $avings #ank, !nc. 5'$#8 &espondent &T :udge issued an order re=uiring '$# to make available the documents pertaining to its transactions over the sub:ect property, and the '*# #uendia #ranch to reveal the amount in petitioner4s account which was garnished by respondent sheriff. !n compliance with this order, '$# filed a manifestation informing the court that it had consolidated its ownership over the property as mortgagee6purchaser at an extra:udicial foreclosure sale held on April ./, 0-17. After several conferences, '$# and private respondent entered into a compromise agreement whereby they agreed to divide between themselves the compensation due from the expropriation proceedings. &espondent trial :udge subse=uently issued an order dated $eptember 1, 0-11 which> 508 approved the compromise agreement? 5.8 ordered '*# #uendia #ranch to immediately release to '$# the sum of ',,-+3,+/2.,+ which corresponds to the balance of the appraised value of the sub:ect property under the &T decision dated (une ,, 0-17, from the garnished account of petitioner? and, 538 ordered '$# and private respondent to execute the necessary deed of conveyance over the sub:ect property in favor of petitioner. 'etitioner4s motion to lift the garnishment was denied. 'etitioner filed a motion for reconsideration, which was duly opposed by private respondent. @n the other hand, for failure of the manager

of the '*# #uendia #ranch to comply with the order dated $eptember 1, 0-11, private respondent filed two succeeding motions to re=uire the bank manager to show cause why he should not be held in contempt of court. 9uring the hearings conducted for the above motions, the general manager of the '*# #uendia #ranch, a Mr. Antonio #autista, informed the court that he was still waiting for proper authoriAation from the '*# head office enabling him to make a disbursement for the amount so ordered. For its part, petitioner contended that its funds at the '*# #uendia #ranch could neither be garnished nor levied upon execution, for to do so would result in the disbursement of public funds without the proper appropriation re=uired under the law, citing the case of Republic of the Philippines v. Palacio B;.&. *o. C-./3.., May .-, 0-21, .3 $ &A 1--D. &espondent trial :udge issued an order dated 9ecember .0, 0-11 denying petitioner4s motion for reconsideration on the ground that the doctrine enunciated in Republic v. Palacio did not apply to the case because petitioner4s '*# Account *o. $6A .2+-+370+,-3 was an account specifically opened for the expropriation proceedings of the sub:ect property pursuant to 'res. 9ecree *o. ,.. &espondent &T :udge likewise declared Mr. Antonio #autista guilty of contempt of court for his inexcusable refusal to obey the order dated $eptember 1, 0-11, and thus ordered his arrest and detention until his compliance with the said order. 'etitioner and the bank manager of '*# #uendia #ranch then filed separate petitions for certiorari with the ourt of Appeals, which were eventually consolidated. !n a decision promulgated on (une .1, 0-1-, the ourt of Appeals dismissed both petitions for lack of merit, sustained the :urisdiction of respondent &T :udge over the funds contained in petitioner4s '*# Account *o. .2+-+370+,-3, and affirmed his authority to levy on such funds. !ts motion for reconsideration having been denied by the ourt of Appeals, petitioner now files the present petition for review with prayer for preliminary in:unction.

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Ghether or not the '*# funds may be levied in the expropriation proceeding 5to satisfy the balance8H

!L%2 G"F&FF@&F, the ourt &esolved to @&9F& petitioner Municipality of Makati to immediately pay 'hilippine $avings #ank, !nc. and private respondent the amount of ',,-+3,+/2.,+. 'etitioner is hereby re=uired to submit to this ourt a report of its compliance with the foregoing order within a nonextendible period of $!ITJ 52/8 9AJ$ from the date of receipt of this resolution. The order of respondent &T :udge dated 9ecember .0, 0-11, which was rendered in ivil ase *o. 032--, is $FT A$!9F and the temporary restraining order issued by the ourt on *ovember ./, 0-1- is MA9F 'F&MA*F*T.
ase digest summary 5from net8 The petitioner belatedly informed the court that there are two existing accounts with '*#. Account A was the one intended for the expropriation proceeding and account # is primarily intended for financing governmental functions and activities. #ecause account A has a fund that is insufficient to meet the remaining amount of itsbalance for the expropriation proceeding, it is unlawful to get the remaining balance from Account # without an ordinance appropriating said funds for expropriation purpose. Thus the court ruled that account A maybe levied but not account #. The respondents are without recourse however should the petitioner refuse to pay its remaining obligation. Ghere a municipality refuses without :ustifiable reason to effect payment of a final money :udgment rendered against it, the claimant may avail the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds for such purpose.

RATIO2 @n *ovember ./, 0-1-, the ourt resolved to issue a temporary restraining order en:oining respondent &T :udge, respondent sheriff, and their representatives, from enforcing and6or carrying out the &T order dated 9ecember .0, 0-11 and the writ of garnishment issued

pursuant thereto. 'rivate respondent then filed its comment to the petition, while petitioner filed its reply. 'etitioner not only reiterates the arguments adduced in its petition before the ourt of Appeals, but also alleges for the first time that it has actually two accounts with the '*# #uendia #ranch, to wit> xxx xxx xxx 508 Account *o. $6A .2+-+370+,-3 K exclusively for the expropriation of the sub:ect property, with an outstanding balance of '--,7,3.-,. 5.8 Account *o. $6A .23-+3/1+/-7 K for statutory obligations and other purposes of the municipal government, with a balance of '07/,/-1,,.0.7., as of (uly 0., 0-1-. #ecause the petitioner has belatedly alleged only in this ourt the existence of two bank accounts, it may fairly be asked whether the second account was opened only for the purpose of undermining the legal basis of the assailed orders of respondent &T :udge and the decision of the ourt of Appeals, and strengthening its reliance on the doctrine that public funds are exempted from garnishment or execution as enunciated in Republic v. PalacioBsupra.D At any rate, the ourt will give petitioner the benefit of the doubt, and proceed to resolve the principal issues presented based on the factual circumstances thus alleged by petitioner. Admitting that its '*# Account *o. $6A .2++370+,-3 was specifically opened for expropriation proceedings it had initiated over the sub:ect property, petitioner poses no ob:ection to the garnishment or the levy under execution of the funds deposited therein amounting to '--,7,3.-,. "owever, it is petitioner4s main contention that inasmuch as the assailed orders of respondent &T :udge involved the net amount of ',,-2+,+/2.,+, the funds garnished by respondent sheriff in excess of '--,7,3.-,, which are public funds earmarked for the municipal government4s other statutory obligations, are exempted from execution without the proper appropriation re=uired under the law.

There is merit in this contention. The funds deposited in the second '*# Account *o. $6A .23-+3/1+/-7 are public funds of the municipal government. !n this :urisdiction, well-settled is the rule that public funds are not sub:ect to levy and execution, unless otherwise provided for by statute B&epublic v. 'alacio, supra.? The ommissioner of 'ublic "ighways v. $an 9iego, ;.&. *o. C-3//-1, February 01, 0-7/, 30 $ &A 202D. 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 :udgment 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 BSee )iuda 9e Tan Toco v. The Municipal ouncil of !loilo, ,- 'hil. +. 50-.28> The Municipality of 'aoay, !locos *orte v. Manaois, 12 'hil. 2.- 50-+/8? Municipality of $an Miguel, #ulacan v. FernandeA, ;.&. *o. 207,,, (une .+, 0-1,, 03/ $ &A +2D. 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 &T decision dated (une ,, 0-17, less the sum of '--,7,3.-, deposited in Account *o. $6A .2+-+370+,-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account *o. $6A .23-+3/1+/-7. *evertheless, this is not to say that private respondent and '$# are left with no legal recourse. Ghere a municipality fails or refuses, without :ustifiable reason, to effect payment of a final money :udgment 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 BSee)iuda 9e Tan Toco v. The Municipal ouncil of !loilo, supra? #aldivia v. Cota, 0/7 'hil. 0/-- 50-2/8? Juviengco v. ;onAales, 0/1 'hil. .,7 50-2/8D. !n the case at bar, the validity of the &T decision dated (une ,, 0-17 is not disputed by petitioner. *o appeal was taken therefrom. For three years now, petitioner has en:oyed possession and use of the sub:ect property

notwithstanding its inexcusable failure to comply with its legal obligation to pay :ust compensation. 'etitioner has benefited from its possession of the property since the same has been the site of Makati Gest "igh $chool since the school year 0-12-0-17. This ourt will not condone petitioner4s blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact initiated. !t cannot be over-emphasiAed that, within the context of the $tate4s inherent power of eminent domain, . . . B:Dust 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. Githout prompt payment, compensation cannot be considered <:ust< for the property owner is made to suffer the conse=uence 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 B osculluela v. The "onorable ourt of Appeals, ;.&. *o. 7772+, August 0+, 0-11, 02, $ &A 3-3, ,//. See also 'rovincial ;overnment of $orsogon v. )da. de )illaroya, ;.&. *o. 2,/37, August .7, 0-17, 0+3 $ &A .-0D. The $tate4s power of eminent domain should be exercised within the bounds of fair play and :ustice. !n 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 utiliAing the property for public purpose, for three 538 years, the ourt finds that the municipality has had more than reasonable time to pay full compensation. G"F&FF@&F, the ourt &esolved to @&9F& petitioner Municipality of Makati to immediately pay 'hilippine $avings #ank, !nc. and private respondent the amount of ',,-+3,+/2.,+. 'etitioner is hereby re=uired to submit to this ourt a report of its compliance with the foregoing order within a nonextendible period of $!ITJ 52/8 9AJ$ from the date of receipt of this resolution. The order of respondent &T :udge dated 9ecember .0, 0-11, which was rendered in ivil ase *o. 032--, is $FT A$!9F and the

temporary restraining order issued by the ourt on *ovember ./, 0-1- is MA9F 'F&MA*F*T. $@ @&9F&F9.

(Wala koy gitang-tang kay murag di siya masabtan if nay mawala nga info especially sa filing sa motions and all).