UNIVERSITY OF THE PHILIPPINES, ET.AL. VS. HON. AGUSTIN S. DIZON, ET. AL.

G.R. No. 171182, August 23, 2012

FACTS:

UP failed to pay in a contract it entered with Stern Builders Corporation. The RTC ruled
in favor of Stern Builders Corporation. Consequently, the RTC authorized eventually the
release of the garnished funds of the UP directing DBP to release the funds. While UP
brought a petition for certiorari in the CA to challenge the jurisdiction of the RTC in
issuing the order averring that the UP funds, being government funds and properties,
could not be seized by virtue of writs of execution or garnishment.

ISSUE:

Whether UP funds are subject to garnishment.

RULING:

NO. The UP, as a government entity responsible for advancing quality and accessible
education, manages public funds that are considered government assets. These funds
encompass revenues generated from the use of granted real property and are designated
exclusively for fulfilling the university's institutional goals.

Therefore, the funds in question cannot be rightfully subjected to the RTC's execution or
garnishment orders. The adverse judgment against UP in a case it indirectly consented to
did not automatically permit enforcement, as the ability to sue the State is distinct from
establishing its liability. To prove liability, the plaintiff must demonstrate it through
applicable laws and established facts.

Both the CA and RTC overlooked the legal restriction imposed on government trust funds,
emphasizing that such funds should only be utilized for their designated purposes, with
explicit authorization from Congress or the relevant government agency head, adhering
to pertinent budgetary laws and regulations. Compliance with a congressional
appropriation was necessary to satisfy the judgment for moral, actual damages, and
attorney's fees, as these monetary obligations were not covered by the designated
project's allocations. The Constitution strictly required that funds from the Treasury
should be disbursed only through lawful appropriations.

All funds received by UP, including interest accrued in bank deposits, are considered
"special trust funds" and must align with UP's mission and purpose, subject to scrutiny
by the COA. Consequently, the RTC's execution or garnishment orders concerning these
funds were not valid. The State's suability did not automatically translate to its liability in
this context.

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