Torts

LocgovrOg dela Cuesta

Pasay city v. CFI of Manila (1984)

Tuesday, October 04, 2011

2:43 AM

= Plaintiffs; = Defendants

Facts: In 1964, V.D. Isip, Sons & Associates represented by Isip entered into a contract with the City of Pasay represented by then Mayor Pablo Cuneta. The contract entitled "Contract and Agreement" was for construction of a new Pasay City Hall at FB Harrison St., Pasay city. Pursuant to the contract, proceeded with the construction of the new Pasay City Hall building. accomplished various stages of construction the amount of work equivalent to P1.7million of the total contract price of P4.9million.

paid only the total amount of P1.1million leaving an amount of P613,000. failed to remit the amount to so latter filed for specific performance with damages. The parties arrived at a draft amicable agreement which was submitted to the Municipal Board of Pasay City for its consideration.

In 1969, Municipal Board enacted Ordinance No. 1012 wc approved the Compromise Agreement . CFI approved the compromise agreement. CFI issued writ of execution. An application for and notice of garnishment were effected upon the 's funds with the Philippine Natl Bank (PNB).

filed motion to quash the writ of execution: a) Sheriff has no power to levy or garnish on execution the general funds, specially the trust funds of Pasay City.

CFI: denied and ordered enforcement of garnishment.

So this suit. Issue: WON Pasay city funds deposited with PNB are exempt from execution or garnishment? NO since ordinance already appropriated the amount.

Held:

a. A compromise agreement not contrary to law, public order, public policy, morals or good customs is a valid contract wc is the law between the parties themselves.

A judgment on a compromise is final and executory. HERE, execution has already been issued. It is obvious that did not only succeed in enforcing the compromise but wants to rescind the compromise. Parties to compromise may either 1) enforce the compromise 2 to rescind and insist upon his original demand. HERE we cant allow to avail of both. It cant ask for rescission of compromise agreement after it has already enjoyed the first option of enforcing the compromise by asking for writ of execution resulting in garnishment of funds of deposited w/ PNB wc eventually was delivered to .

b. Pasay city's funds deposited with PNB not exempt from execution.

GR: All government funds deposited w/ PNB by any agency or instrumentality of the govt, WON by way of general or special deposit, remain government funds and may not be subject to garnishment or levy. BUT inasmuch as an ordinance has already been enacted expressly appropriating amount of P613k of payment to the , funds may be garnished.

Republic v. Palacio: Judgments against a State in cases where it has consent to be used, generally operate to merely liquidate and establish 's claim in absence of express provison; otherwise, they cannot be enforced by processes of the law; and it is for legislature to provide for the payment in such manner as it sees fit.

CFI correct in refusing 's motion to quash the writ of execution.

c. Submission of performance bond by not a condition precedent to payment of P613k by .

Parties envisioned a stage by stage construction on part of and payment on the part of as shown by the contract and agreement. The parties to the compromise thus contemplated a divisible obligation necessitating a performance bond "in proportion" to the uncompleted work.

Therefore, submission of the bond was not a condition precedent to the payment of the P613k to . Nowhere in the Contract nor in the Compromise Agreement could be found the fact that payment by s of such amount was dependent upon the submission by of the performance bond. It cannot be argued that reciprocal obligation was created in the Compromise, for the obligation to pay on the part of was established several years ago when finished some of the stages of construction. And this argument is already moot and academic, for the amount P613k has already been collected through execution and garnishment upon the funds of Pasay City w/ the PNB. Page 1 of 2