POLITICAL LAW REVIEW
Atty. Bong Lopez
CASE FACTS
University of the  This case involves the garnishment of
Philippines, et UP’s funds to pay for the third building
al. vs Hon. constructed in UPLB.
Agustin Dizon,  UP, through President Abueva,
et al. entered into a General Construction
Agreement with respondent Stern
GR No. 171182 Builders Corporation, for
23 August 2012 construction of the extension building
and renovation of College of Arts and
State Immunity Sciences in UPLB
 In the implementation of the contract,
Express Consent Stern Builders submitted 3 progress
billings.
 UP only paid for 2 buildings, due to
COA’s disallowance of payment for
the P273k worth third building.
 Despite lifting of disallowance, UP
failed to pay the building prompting
Stern Builders to file a suit for collection
of unpaid billing and damages
 RTC rendered a decision in favor Stern
Building ordering UP to pay.
 UP assailed denial of due course of its
appeal through a petition for certiorari
in CA
 CA dismissed petition upon finding
notice of appeal had been filed 17
days late.
 UP appealed to SC by petition for
review on certiorari.
 RTC granted another writ of execution,
upon which sheriff serves notices of
garnishment on UP’s depository banks:
LBP and DBP.
 RTC authorized release of the
garnished funds of UP.
ISSUE/HELD DOCTRINE/NOTES
 WON funds of UP were proper subject of  Presidential Decree No. 1445 defines
garnishment in order to satisfy the a “trust fund” as a fund that officially
judgment award comes in the possession of an
 NO agency of the government or of a
public officer as trustee, agent or
 UP’s funds being government funds, are administrator, or that is received for
not subject to garnishment. the fulfillment of some obligation.
the  Despite as UP’s establishment as a body  A trust fund may be utilized only for
corporate, it remains to be a chartered the “specific purpose for which the
institution performing a legitimate trust was created or the funds
government function. It is an institution of received.”
higher learning, not a corporation  The universal rule that where the
established for profit and declaring any State gives its consent to be sued by
dividends. private parties either by general or
 All funds going into the possession of UP, special law, it may limit claimant’s
including any interest accruing from the action “only up to the completion of
deposit of such funds in any banking proceedings anterior to the stage of
institution, constitute a “special trust fund,” execution” and that the power of the
the disbursement of which should be Courts ends when the judgment is
aligned with the UP’s mission and purpose rendered, since government funds
and should always be subject to auditing and properties may not be seized
by the COA. under writs of execution or
 The funds of the UP are government funds garnishment to satisfy such
that are public in character. The funds judgments, is based on obvious
subject of this action could not be validly considerations of public policy.
made the subject of the RTC’̂s writ of Disbursements of public funds must
execution or garnishment. The adverse be covered by the corresponding
judgment rendered against the UP in a suit appropriation as required by law. The
functions and public services
to which it had impliedly consented was
not immediately enforceable by rendered by the State cannot be
execution against the UP, because allowed to be paralyzed or disrupted
suability of the State did not necessarily by the diversion of public funds from
mean its liability. their legitimate and specific objects,
 A marked distinction exists between as appropriated by law.
suability of the State and its liability. As the
Court succinctly stated in Municipality of
San Fernando, La Union v. Firme: 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.
 CA and RTC unjustifiably ignored the legal
restriction imposed on the trust funds of the
Government and its agencies and
instrumentalities to be used exclusively to
fulfill the purposes for which the trusts were
created or for which the funds were
received except upon express
authorization by Congress or by the head
of a government agency in control of the
funds, and subject to pertinent budgetary
laws, rules and regulations.
 An appropriation by Congress was
required before the judgment that
rendered the UP liable for moral and
actual damages (including attorney’s
fees) would be satisfied considering that
such monetary liabilities were not covered
by the “appropriations earmarked for the
said project.” The Constitution strictly
mandated that “no money shall be paid
out of the Treasury except in pursuance of
an appropriation made by law.”