UP vs.

Dizon GR 171182 August 23, 2012

FACTS:

In 1990, UP contracted with Stern Builders to renovate the CAS building in UPLB as well as build
an extension thereof. Stern then submitted billing statements to UP but was only paid for the first and
second ones. The third one was not settled because of a COA disallowance. Soon thereafter, the
disallowance was lifted but the third bill for the account of UP remained outstanding which prompted
Stern to sue for collection with damages at RTC-QC. The RTC rendered a decision in favor of Stern the
amount of approx. P16.35M plus attorney’s fees and cost of suit. It also dismissed UP’s appeal being filed
out of time. The CA also dismissed UP’s appeal to the decision for not being filed within the reglementary
period. The RTC granted request for motion of execution and denied all remedies submitted by UP and
ultimately authorized the release of the garnished funds to Stern. UP was served this order dated
December 21, 2004 on January 3, 2005. UP then filed for a petition for certiorari in the CA challenging the
jusridiction of the RTC in issuing the assailed order committing grave abuse of discretion amounting to
lack or excess of jurisdiction in ruling that there was no more legal impediment for the release of the
garnished amount. Ultimately, decreeing that the decision for UP to pay Stern has become final and
executory, RTC-QC approved the release of the garnished amount in 2007.

ISSUES:

 WON the funds of UP were properly garnished to satisfy the judgment award

HELD:

 No. The funds of UP is not properly garnished by the RTC.

o The execution of the money judgment against UP was within the primary jurisdiction of
the COA with express proviso in Sec. 26, PD 1445, “examination, audit, and settlement of
all debts and claims from or owing to the government… its subdivisions, agencies, and
intrumentalities… extending to all GOCCs, including subsidiaries… self-governing boards,
commissions, or agencies….” shall be under the authority and powers of the Commission
(COA).

o UP being a government instrumentality uses government funds, which is maintained as a

special trust fund with depository bank.

o The judges of RTC-QC should have exercised extreme caution and prudence in dealing
with motions for executions against government funds. Despite the finality of the
judgments, RTC should have directed Stern to seek the approval of COA for disbursement
rather than ordering the release.