Precatórios

Libra Capital LLC

Precatório is a special order or request from the Court to the Public Treasury, determining that the funds be included in the Budget Law and that the respective credit be at the disposal of the Court, to satisfy the credit of the beneficiary. So, Precatório is an order for payment issued against the Public Treasury, and its satisfaction is binding and compulsory on the Public Treasury.  

Payment of Precatórios shall follow their chronological order, exception made to “labor-related” (créditos alimentares) and small credits, which have differentiated rules, and the identification of specific cases and persons in the budget being forbidden (art. 100 of the Federal Constitution).  

Article 100, § 1º, of the Federal Constitution sets forth that the Public Treasury is obligated to pay the Precatórios, under the following terms: “budgetary inclusion of funds necessary to satisfy the payment of its debts arising from transit-in-rem-judicatum judgments, consisting of Precatórios, issued by July 1st, is compulsory. Payment is due by the end of the following fiscal year, when values will be monetarily adjusted”.  

Thus, the federal Constitution of 1988 sets forth the obligation of the Public Treasury to pay the Precatórios, duly monetarily adjusted plus interest rate, in time, i.e.: by the end of the following fiscal year to that of the budgetary inclusion, as long as the Precatório is issued by July 1st, and observed the chronological order of payment.  

We have experienced situations where Precatórios are not paid in time, mainly by State and Municipal Public Treasuries. For the Federal cases, according to our experience there are cases in which the Federal Public Treasury delays the payments for some months, mostly in cases where it disputes the calculation of monetary adjustment and interest.  

The Precatórios set forth in the Budget Law are a kind of public indebtedness and therefore constitute direct, unconditional, unsecured, unsubordinated and general obligation of the Public Treasury, and lack of payment constitutes violation to the Federal Constitution and to the legal and administrative moral principals, causing measures set forth in the Federal Constitution and in the Legislation to guarantee its enforcement.  

Precatórios rank equally in right of payment with other unsecured and unsubordinated public
indebtedness which are set forth in the Budget Law, exception made to, as aforesaid, “labor-related” and small credits.    

Public assets are not subject to attachment and forced sale[1]; therefore the law does not permit the creation of any lien upon the whole or any part of public assets. Preferences or priorities of payment of other obligations of Public Treasury can only be fixed by the Federal Constitution.

 

[1] Article 100 of the Civil Code and article 649,I, of the Code of Civil Procedure