G.R. No. L-30098 February 18, 1970
THE COMMISSIONER OF PUBLIC HIGHWAYS and the AUDITOR GENERAL, petitioners, vs. HON. LOURDES P. SAN DIEGO as Presiding Judge of the Court of First Instance of Rizal, Branch IX, sitting in Quezon City, TESTATE ESTATE OF N. T. HASHIM (Special Proceedings No. 71131 of the Court of First Instance of Manila) represented by its Judicial Administrator, Tomas N. Hashim, TOMAS N. HASHIM, personally, and as Judicial Administrator of the Estate of Hashim, Special Proceedings No. 71131 of the Court of First Instance of Manila, ALL THE LEGAL OR TESTAMENTARY HEIRS of the Estate of Hashim, MANUELA C. FLORENDO, personally as Deputy Clerk, Court of First Instance of Rizal, Quezon City, Branch IX, BENJAMIN GARCIA as “Special Sheriff” appointed by respondent Judge Lourdes P. San Diego, BENJAMIN V. CORUÑA, personally and as Chief Documentation Staff, Legal Department, Philippine National Bank, and the PHILIPPINE NATIONAL BANK, respondents.

FACTS

In 1940, the Government filed an expropriation case for a parcel of land belonging to N. T. Hashim, needed to construct Epifanio de los Santos Avenue. The Government took possession upon deposit of a provisional value. The records were destroyed during the war. In 1963, the Testate Estate of N. T. Hashim filed a complaint for recovery of the fair market price of the expropriated property against the Bureau of Public Highways, the Auditor General, and the City Engineer of Quezon City. The parties entered into a Compromise Agreement, which was approved by the lower court (respondent Judge Lourdes P. San Diego) in a judgment dated November 8, 1966, ordering the petitioners to pay the estate P209,076.00. In 1968, the estate moved for execution, alleging non-payment. Respondent judge granted the motion and appointed a special sheriff. The special sheriff served a Notice of Garnishment on the Philippine National Bank (PNB), where the Bureau of Public Highways had funds. PNB, through respondent Benjamin V. Coruña, replied that it was holding the amount. Upon ex-parte motion by the estate, respondent judge issued an order directing PNB to release the garnished amount. PNB then issued a cashier’s check for the amount to the estate. Petitioners filed this special civil action for certiorari and prohibition, arguing that government funds are not subject to execution or garnishment. The Supreme Court issued a preliminary mandatory injunction, and PNB restored the amount to the Bureau’s account. The estate subsequently deposited only a portion of the amount with PNB, with the balance having been paid as attorney’s fees.

ISSUE

Whether the respondent court’s orders for the execution and garnishment of funds belonging to the Bureau of Public Highways, a government agency, are valid.

RULING

No. The writs of certiorari and prohibition are granted. The respondent court’s Orders of October 14 and 18, 1968, are declared null and void. The Supreme Court held that government funds are not subject to execution or garnishment. This is a fundamental precept intended to ensure the uninterrupted and unhampered performance of essential government services. The State’s immunity from suit was not applicable in this case, as the suit was a continuation of expropriation proceedings initiated by the State itself to determine just compensation. The validity of the Compromise Agreement was also upheld, as it was entered into by the duly authorized Solicitor General. However, the execution levied upon public funds was void. The Court also ruled that the appointment of a “special sheriff” was devoid of authority. No civil liability attaches to the special sheriff and deputy clerk, as they acted pursuant to judicial orders, and the judge’s immunity covers them. The respondent estate and Tomas N. Hashim are ordered jointly and severally to reimburse PNB the amount of P209,076.00 with legal interest. Respondents Estate of N. T. Hashim, Philippine National Bank, and Benjamin Coruña are ordered jointly to pay treble costs.