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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.

rOg dela Cuesta

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
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rOg dela Cuesta

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.

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