University of the Philippines vs. Dizon

University of the Philippines vs. Dizon FACTS: The University of the Philippines (UP) entered into a General Construction Agreement with respondent Stern Builders Corporation (Stern Builders) for the construction of the extension building and the renovation of the College of Arts and Sciences Building in the campus of the University of the Philippines in Los Baños (UPLB). In the course of the implementation of the contract, Stern Builders submitted three progress billings corresponding to the work accomplished, but the UP paid only two of the billings. The third billing was not paid due to its disallowance by the Commission on Audit (COA). Despite the lifting of the disallowance, the UP failed to pay the billing, prompting Stern Builders to sue the UP and officials to collect the unpaid billing and to recover various damages. Meanwhile, the sheriff served notices of garnishment on the UP’s depository banks, namely: Land Bank of the Philippines (Buendia Branch) and the Development Bank of the Philippines (DBP), Commonwealth Branch. The UP assailed said garnishment of funds. Stern Builders and dela Cruz, meanwhile, again sought the release of the garnished funds. ISSUE: Whether or not the funds of UP are subject to garnishment HELD: Despite its establishment as a body corporate, the UP remains to be a “chartered institution” performing a legitimate government function. The UP is a government instrumentality, 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 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 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 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.