Title
Commissioner of Public Highways vs. San Diego
Case
G.R. No. L-30098
Decision Date
Feb 18, 1970
Government funds immune from garnishment; compromise valid but execution void; garnished amount ordered returned.

Case Summary (G.R. No. L-30098)

Applicable Law

This decision is based on the principles established in the 1935 Philippine Constitution, since the decision date of the case is in 1970, before the adoption of the 1973 Constitution. Key legal principles concerning the immunity of government funds from garnishment and execution are central to this case.

Background Facts

The Government of the Philippines filed a complaint for eminent domain in 1940 to expropriate land owned by N. T. Hashim for public use, specifically for constructing a public road. The government took possession of the land by depositing a sum fixed by the court. However, due to the destruction of records during World War II, no further actions were traced until 1958 when Hashim’s estate claimed a larger compensation for the land now converted into a public highway.

Legal Proceedings and Compromise Agreement

In 1963, the estate of Hashim filed a complaint seeking the fair market price for the property. A compromise was eventually reached in 1966, whereby the estate was to receive P209,076.00, leading to a court judgment confirming this agreement. When the estate filed for a writ of execution in 1968, the court granted it, resulting in the garnishment of government funds held in the Philippine National Bank.

Issue of Garnishment

The case's pivotal legal issue arose when the Philippine National Bank complied with a court order to release the garnished funds to the estate of Hashim without recognizing that these were government funds, which are exempt from execution under Philippine law. The petitioners contested this, citing the protection of government funds from garnishment.

Court’s Decision on Government Funds

The court determined that government funds are not subject to execution or garnishment, reinforcing that such actions would disrupt public services funded by these appropriations. Since the order for garnishment was based on a judgment regarding government funds, the court declared the questioned orders null and void.

Analysis of the Petitioner's Claims

The petitioners' claims were supported by established precedents, elucidating that while the government may submit to jurisdiction and agree upon a compromise, it does not waive the protection of public funds from execution. The courts historically upheld that compensation claims must be resolved within legislative appropriations, not through execution.

Rebuttal of Respondents’ Arguments

The respondents, including the Philippine National Bank, failed to justify their release of government funds. Their claims that the nature of the deposits lost their government character upon deposit were rejected, as all funds held by government agencies remain public funds, regardless of the nature of the account.

Conclusion of the Case

Ultimately, the court decided to grant the writs of certiorari and prohibit

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