Friday, May 23, 2014

Execution of judgments against government agencies and local government units. - 181792.pdf

See - 181792.pdf

"x x x.

The Court’s Ruling

 The Court cannot blame petitioners for resorting to the remedy of
mandamus because they have done everything in the books to satisfy their
just and demandable claim. They went to the courts, the COA, the
Ombudsman, and the DILG. They resorted to the remedy of mandamus
because in at least three (3) cases, the Court sanctioned the remedy in cases
of final judgments rendered against a local government unit (LGU). The 
Court ruled that a claimant may resort to the remedy of mandamus to compel an LGU to enact the necessary ordinance and approve the corresponding disbursement in order to satisfy the judgment award. In Municipality of Makati v. The Honorable Court of Appeals,24 it was written:

There is merit in this contention. 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 [Republic v. Palacio, supra.; The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. 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 [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. 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 ₱99,743.94 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 [See Viuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)]. [Emphasis and underscoring supplied] 

This doctrine was reiterated in Teresita M. Yujuico v. Hon. Jose L. Atienza,25 as follows: 

Respondents also argue that the members of the CSB cannot be directed to decide a discretionary function in the specific manner the court desires. The question of whether the enactment of an ordinance to satisfy the appropriation of a final money judgment rendered against an LGU may be compelled by mandamus has already been settled in Municipality of Makati v. Court of Appeals.

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 therefore [See Viuda De Tan Toco v. The 
Municipal Council of Iloilo, supra, Baldivia v. Lota, 107 Phil 1099 (1960); Yuviengco v. Gonzales, 108 Phil 247 (1960)].

Clearly, mandamus is a remedy available to a property owner when a money judgment is rendered in its favor and against a municipality or city, as in this case. 
The same ruling was arrived at in the more recent case of Spouses Ciriaco and Arminda Ortega v. City of Cebu.

 It has been held, however, that a resort to the remedy of mandamus is 
improper if the standard modes of procedure and forms of remedy are still 
available and capable of affording relief. The equitable nature of a writ of 
mandamus was discussed in the case of Uy Kiao Eng vs. Nixon Lee,
27 thus:

Mandamus is a command issuing from a court of law of 
competent jurisdiction, in the name of the state or the sovereign, 
directed to some inferior court, tribunal, or board, or to some 
corporation or person requiring the performance of a particular 
duty therein specified, which duty results from the official station of 
the party to whom the writ is directed or from operation of law. This 
definition recognizes the public character of the remedy, and clearly 
excludes the idea that it may be resorted to for the purpose of 
enforcing the performance of duties in which the public has no 
interest. The writ is a proper recourse for citizens who seek to 
enforce a public right and to compel the performance of a public 
duty, most especially when the public right involved is mandated by 
the Constitution. As the quoted provision instructs, mandamus will 
lie if the tribunal, corporation, board, officer, or person unlawfully 
neglects the performance of an act which the law enjoins as a duty 
resulting from an office, trust or station. 
The writ of mandamus, however, will not issue to compel an 
official to do anything which is not his duty to do or which it is his 
duty not to do, or to give to the applicant anything to which he is 
not entitled by law. Nor will mandamus issue to enforce a right 
which is in substantial dispute or as to which a substantial doubt 
exists, although objection raising a mere technical question will be 
disregarded if the right is clear and the case is meritorious. As a 
rule, mandamus will not lie in the absence of any of the following 
grounds: [a] that the court, officer, board, or person against whom 
the action is taken unlawfully neglected the performance of an act 
which the law specifically enjoins as a duty resulting from office, 
trust, or station; or [b] that such court, officer, board, or person has 
unlawfully excluded petitioner/relator from the use and enjoyment 
of a right or office to which he is entitled. On the part of the relator, 
it is essential to the issuance of a writ of mandamus that he should 
have a clear legal right to the thing demanded and it must be the 
imperative duty of respondent to perform the act required. 
Recognized further in this jurisdiction is the principle that 
mandamus cannot be used to enforce contractual obligations. 
Generally, mandamus will not lie to enforce purely private contract 
rights, and will not lie against an individual unless some obligation 
in the nature of a public or quasi-public duty is imposed. The writ is 
not appropriate to enforce a private right against an individual. The 
writ of mandamus lies to enforce the execution of an act, when, 
otherwise, justice would be obstructed; and, regularly, issues only 
in cases relating to the public and to the government; hence, it is 
called a prerogative writ. To preserve its prerogative character, 
mandamus is not used for the redress of private wrongs, but only in 
matters relating to the public. 
Moreover, an important principle followed in the issuance of the writ is that there should be no plain, speedy and adequate remedy in the ordinary course of law other than the remedy of mandamus being invoked. In other words, mandamus can be issued only in cases where the usual modes of procedure and forms of remedy are powerless to afford relief. Although classified as a legal remedy, mandamus is equitable in its nature and its issuance is generally controlled by equitable principles. Indeed, the grant of the writ of mandamus lies in the sound discretion of the court. [Emphasis 
 Regarding final money judgment against the government or any of its 
agencies or instrumentalities, the legal remedy is to seek relief with the COA 
pursuant to Supreme Court Administrative Circular 10-2000 dated October 25, 2000, which states as follows: 

In order to prevent possible circumvention of the rules and 
procedures of the Commission on Audit, judges are hereby enjoined 
to observe utmost caution, prudence and judiciousness in the 
issuance of writs of execution to satisfy money judgments against 
government agencies and local government units. 

Judges should bear in mind that in Commissioner of Public 
Highways v .San Diego (31 SCRA 617, 625 [1970]), this Court 
explicitly stated: 

"The universal rule that where the State gives its consent to 
be sued by private parties either by general or special law, it may 
limit claimant's action 'only up to the completion of proceedings 
anterior to the stage of execution' and that the power of the Court 
ends when the judgment is rendered, since government funds and 
properties may not be seized under writs of execution or 
garnishment to satisfy such judgments, is based on obvious 
considerations of public policy. Disbursements of public funds must 
be covered by the corresponding appropriation as required by law. 
The functions and public services rendered by the State cannot be 
allowed to be paralyzed or disrupted by the diversion of public 
funds from their legitimate and specific objects, as appropriated by 
Moreover, it is settled jurisprudence that upon determination 
of State liability, the prosecution, enforcement or satisfaction thereof 
must still be pursued in accordance with the rules and procedures laid 
down in P. D. No. 1445, otherwise known as the Government Auditing 
Code of the Philippines (Department of Agriculture v. NLRC, 227 
SCRA 693, 701-02 [1993] citing Republic v. Villasor, 54 SCRA 84 
[1973]). All money claims against the Government must first be filed 
with the Commission on Audit which must act upon it within sixty 
days. Rejection of the claim will authorize the claimant to elevate the 
matter to the Supreme Court on certiorari and, in effect, sue the State 
thereby (P. D. 1445, Sections 49-50)

However, notwithstanding the rule that government 
properties are not subject to levy and execution unless otherwise 
provided for by statute (Republic v. Palacio, 23 SCRA 899 [1968]; 
Commissioner of Public Highways v. San Diego, supra) or 
municipal ordinance (Municipality of Makati v. Court of Appeals, 
190 SCRA 206 [1990]), the Court has, in various instances, 
distinguised between government funds and properties for public 
use and those not held for public use. Thus, in Viuda de Tan Toco 
v. Muncipal Council of Iloilo (49 Phil 52 [1926]), the Court ruled 
that "[w]here property of a municipal or other public corporation 
is sought to be subjected to execution to satisfy judgments 
recovered against such corporation, the question as to whether 
such property is leviable or not is to be determined by the usage 
and purposes for which it is held." The following can be culled from 
Viuda de Tan Toco v. Municipal Council of Iloilo: 

1. Properties held for public uses - and generally everything 
held for governmental purposes - are not subject to levy and sale 
under execution against such corporation. The same rule applies to 
funds in the hands of a public officer and taxes due to a municipal 

2. Where a municipal corporation owns in its proprietary 
capacity, as distinguished from its public or governmental capacity, 
property not used or used for a public purpose but for quasi-private 
purposes, it is the general rule that such property may be seized and 
sold under execution against the corporation. 

3. Property held for public purposes is not subject to 
execution merely because it is temporarily used for private 
purposes. If the public use is wholly abandoned, such property 
becomes subject to execution. 

This Administrative Circular shall take effect immediately 
and the Court Administrator shall see to it that it is faithfully 
Issued this 25th day of October, 2000 in the City of Manila. 

On July 31, 2001, the COA itself issued COA Circular No. 2001-00228 which cited the full mandate of Supreme Court Administrative Circular 10-2000 for the information and guidance of its Heads of Departments, Chiefs of Bureaus and Offices, Managing Heads of 
Government-Owned and/or Controlled Corporations, Local Chief 
Executives, Assistant Commissioners, Directors, Officers-In-Charge, and 
Auditors of COA.

x x x."