UP VS DIZON

ISSUE:  Was UP's funds validly garnished? 

FACTS:  University of the Philippines (UP) entered into a General Construction Agreement with respondent Stern Builders Corporation (Stern Builders) for the construction and renovation of the buildings in the campus of the UP in Los Bas. UP was able to pay its first and second billing. However, the third billing worth P273,729.47 was not paid due to its disallowance by the Commission on Audit (COA). Thus, Stern Builders sued the UP to collect the unpaid balance. On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern Builders. Then on January 16, 2002, the UP filed its motion for reconsideration. The RTC denied the motion. The denial of the said motion was served upon Atty. Felimon Nolasco (Atty.Nolasco) of the UPLB Legal Office on May 17, 2002. Notably, Atty. Nolasco was not the counsel of record of the UP but the OLS in Diliman, Quezon City. Thereafter, the UP filed a notice of appeal on June 3, 2002. However, the RTC denied due course to the notice of appeal for having been filed out of time. On October 4, 2002, upon motion of Stern Builders, the RTC issued the writ of execution. On appeal, both the CA and the High Court denied UPs petition. The denial became final and executory. Hence, Stern Builders filed in the RTC its motion for execution despite their previous motion having already been granted and despite the writ of execution having already issued. On June 11, 2003, the RTC granted another motion for execution filed on May 9, 2003 (although the RTC had already issued the writ of execution on October 4, 2002). Consequently, the sheriff served notices of garnishment to the UPs depositary banks and the RTC ordered the release of the funds. Aggrieved, UP elevated the matter to the CA. The CA sustained the RTC. Hence, this petition. 

DECISION:  Granted 

​RATIO DECIDENDI:  UP's funds, being government funds, are not subject to garnishment. (Garnishment of public funds; suability vs. liability of the State) Despite its establishment as a body corporate, the UP remains to be a "chartered institution" performing a legitimate government function. Irrefragably, the UP is a government instrumentality, performing the States constitutional mandate of promoting quality and accessible education. As a government instrumentality, the UP administers special funds sourced from the fees and income enumerated under Act No. 1870 and Section 1 of Executive Order No. 714, and from the yearly appropriations, to achieve the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act No. 9500. All the funds going into the possession of the UP, including any interest accruing from the deposit of such funds in any banking institution, constitute a "special trust fund," the disbursement of which should always be aligned with the UPs mission and purpose, and should always be subject to auditing by the COA. The funds of the UP are government funds that are public in character. They include the income accruing from the use of real property ceded to the UP that may be spent only for the attainment of its institutional objectives. A marked distinction exists between suability of the State and its liability. As the Court succinctly stated in Municipality of San Fernando, La Union v. Firme: A distinction should first be made between suability and liability. "Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable. The Constitution strictly mandated that "no money shall be paid out of the Treasury except in pursuance of an appropriation made by law." The execution of the monetary judgment against the UP was within the primary jurisdiction of the COA. It was of no moment that a final and executory decision already validated the claim against the UP.