G.R. No. 171182 – 693 Phil. 226 – 679 SCRA 54 – Political Law – Constitutional Law – State Immunity From Suit – Waiver of Immunity – Consent to be Sued is not Consent of Liability
In 1990, the University of the Philippines entered into a construction agreement with Stern Builders Corporation (SBC) for the renovation of its UPLB campus. UP was not able to pay the third billing sent by SBC. SBC then sued UP and Judge Agustin Dizon ruled in favor of SBC. The court awarded about Php16M in damages in favor of SBC. Judge Dizon then issued a writ of garnishment against the account of UP with the DBP.
ISSUE: Whether or not the execution against UP’s bank account is proper.
HELD: No. UP is a government instrumentality. UP is performing the State’s constitutional mandate of promoting quality and accessible education. As a government instrumentality, the UP administers special funds sourced from the fees and income enumerated by law and from the yearly appropriations, to achieve the purposes laid down by law. 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 UP’s 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. Hence, the funds subject of this action could not be validly made the subject of the RTC’s writ of execution or garnishment. The adverse judgment rendered against the UP in a suit to which it had impliedly consented was not immediately enforceable by execution against the UP, because suability of the State did not necessarily mean its liability.
Trial judges should not immediately issue writs of execution or garnishment against the Government or any of its subdivisions, agencies and instrumentalities to enforce money judgments. They should bear in mind that the primary jurisdiction to examine, audit and settle all claims of any sort due from the Government or any of its subdivisions, agencies and instrumentalities pertains to the Commission on Audit (COA) pursuant to Presidential Decree No. 1445 (Government Auditing Code of the Philippines).
