Municipality of Makati vs. Court of Appeals

Facts:

The Municipality of Makati filed an expropriation complaint on May 20, 1986 (Civil Case No. 13699) against private respondent Admiral Finance Creditors Consortium, Inc., Home Building System & Realty Corporation and Arceli P. Jo for a parcel in San Antonio Village (TCT No. S-5499). Attached to the complaint was a certification that a bank account (PNB Buendia, Account No. S/A 265-537154-3) had been opened in Makati’s name under Presidential Decree No. 42, containing P417,510.00 as an advanced deposit for the expropriation proceedings. After hearings and competing appraisals, the Regional Trial Court (RTC), Branch CXLII, rendered judgment on June 4, 1987, fixing just compensation at P5,291,666.00 and ordering Makati to pay that amount less an earlier release of P338,160.00 to the private respondent.

After the RTC decision became final, private respondent sought a writ of execution. The sheriff served a garnishment notice on PNB Buendia on January 14, 1988 but learned of a “hold code” on the account. Private respondent then moved (Jan. 27, 1988) for an order directing the bank to deliver the unpaid balance under the RTC decision. Makati moved to lift the garnishment, arguing that the RTC should have ordered installment payments; private respondent opposed.

While motions were pending, Makati manifested (July 20, 1988) that Philippine Savings Bank, Inc. (PSB) had registered a new title as mortgagee/purchaser after an extra-judicial foreclosure (April 20, 1987). The RTC ordered PSB and PNB to produce documents; PSB disclosed consolidation of its ownership and later entered into a compromise with private respondent to divide the expropriation proceeds. On September 8, 1988, the RTC approved the compromise, ordered PNB to release P4,953,506.45 (the balance under the RTC decision) from Makati’s garnished account, and directed PSB and private respondent to execute a deed of conveyance; Makati’s motion to lift garnishment was denied.

Makati moved for reconsideration; PNB’s manager failed to comply with the release order and was held in contempt in a December 21, 1988 RTC order which denied Makati’s reconsideration and directed the arrest of the bank manager for disobedience. Makati and the bank manager separately petitioned the Court of Appeals for certiorari; the petitions were consolidated and, in a decision promulgated June 28, 1989, the Court of Appeals dismissed both petitions, sustained the RTC’s jurisdiction over the funds in Account No. 265-537154-3, and affirmed the RTC’s authority to levy on such funds.

After the Court of Appeals denied reconsideration, Makati filed the present petition for review in the Supreme Court, praying for a preliminary injunction. On November 20, 1989, the Supreme Court issued a temporary restraining order enjoining enforcement of the RTC order dated December 21, 1988 and the writ of garnishment. In its pleading to the Supreme Court Makati additionally alleged—for the first time at that stage—that it had two PNB accounts: (1) Account No. S/A 265-537154-3 (expropriation account) with an outstanding balance of P99,743.94, and (2) Account No. S/A 263-530850-7 (municipal statutory obligations and other purposes) with P170,098,421.72 as of July 12, 1989. The Court acce...(Pro-only)

Issues:

• Are municipal public funds deposited in a general municipal bank account subject to garnishment or levy to satisfy a final expropriation judgment absent an appropriation ordinance?

• May funds in a bank account specifically opened for expropriation proceedings be garnished or levied to satisfy the judgment?

• If a municipality refuses or delays payment of just compensation, may the claimant compel paymen...(Pro-only)

Ruling:

• (Pro-only)

Ratio:

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Doctrine:

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