UNIVERSITY OF THE PHILIPPINES V DIZON
G.R. No. 171182, 23 August 2012
Petition: Petitioner filed a petition for review on certiorari to the Supreme Court to
reverse the decision of the Court of Appeals on the garnishment of 16, 370,191.74 from
its funds.
PETITIONER: UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA. RAUL P.
DE GUZMAN, RUBEN P. ASPIRAS, EMMANUEL P. BELLO, WILFREDO P.
DAVID, CASIANO S. ABRIGO, and JOSEFINA R. LICUANAN
RESPONDENTS: HON. AGUSTIN S. DIZON, in his capacity as Presiding Judge of the
Regional Trial Court of Quezon City, Branch 80, STERN BUILDERS, INC., and
SERVILLANO DELA CRUZ
(ACT NO. 187O AND SECTION 1 OF EXECUTIVE ORDER NO. 714)
DOCTRINE
The funds of the UP are government funds that are public of character which
couldnot be validly made the subject of a writ of execution or garnishment.
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)
andthe 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.
PROVSIONS
ACT NO. 1870
AN ACT FOR THE PURPOSE OF FOUNDING A UNIVERSITY FOR THE
PHILIPPINE ISLANDS, GIVING IT CORPORATE EXISTENCE, PROVIDING
FOR A BOARD OF REGENTS, DEFINING THE BOARD’S RESPONSIBILITIES
AND DUTIES, PROVIDING HIGHER AND PROFESSIONAL INSTRUCTION,
AND FOR OTHER PURPOSES.
By authority of the United States, be it enacted by the Philippine Legislature, that:
Section 1. The Governor-General is hereby authorized, within the powers and
limitations hereinafter specified, to establish in the city of Manila, or at the point
he may deem most convenient, a university which shall be known by the
designation of “University of the Philippines,” the same being organized as a
corporation under that name.
Sec. 2. The purpose of said university shall be to provide advanced instruction in
literature, philosophy, the sciences, and arts, and to give professional and
technical training.
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EXECUTIVE ORDER NO. 714
FISCAL CONTROL AND MANAGEMENT OF THE FUNDS OF
THE UNIVERSITY OF THE PHILIPPINES
WHEREAS, the University of the Philippines (“UP”) was established as an
institution of higher learning where the talented youth of the land can pursue the
search for truth and knowledge and benefit from a continuous exchange of ideas
in an atmosphere of academic freedom, free from the constricting influence of
any prescribed form and content of thought;
WHEREAS, as such institution of higher learning, UP has always been
guaranteed full management and control of its affairs, including its financial
affairs, thus according to UP the flexibility to allocate and utilize its resources with
the wisdom and dispatch that its needs require;
WHEREAS, in that atmosphere lies the excellence of a UP education, and the
foundation upon which UP is held in high esteem by the international academic
community;
WHEREAS, laws which have been enacted to insure proper fiscal planning and
management of governmental funds might be misinterpreted by implementing
agencies in a manner which unreasonably curtails or restricts the ability of UP to
pursue its prescribed mission and to maintain its standing in the international
academic community;
WHEREAS, it has always been the policy of the Government, particularly of this
Administration under the New Republic, to preserve and expand UP as an
institution of higher learning for the talented youth of the land and of other
countries in this part of the world;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
pursuant to the powers vested in me by the Constitution and by the laws of the
Philippines, do hereby order as follows:
SECTION 1. The following income, receipts and fees accruing to or derived by
UP shall, upon their collection, be automatically released to UP:
(a) Tuition, matriculation, registration, late registration entrance, laboratory,
medical, library, athletic school organ, cultural, graduation, diploma fees and all
other fees that UP is authorized to fix and collect under Act No. 1870, as
amended (the “UP Charter”);
(b) Income from the land grants ceded to UP pursuant to Act No. 3608, as
amended and from other land grants that may hereafter be ceded to UP;
(c) Income under R.A. No. 3870 and all other special laws;
(d) Income from the operation of service facilities, such as the facilities of the
Asian Institute of Tourism, College of Veterinary Medical Hospital and cafeterias;
(e) Income from extension services, such as, but not limited to, similar fees;
(f) Income from trusts, legacies, gifts and donations of real and personal property
of all kind, which shall continue to be administered in accordance with the
instructions of the trustor, testator or donor, pursuant to Section 6(i) of the UP
Charter;
(g) All other income classified as special or fiduciary funds within the context of
PD 711, PD 1177 and PD 1234.
SEC. 2. Until and unless otherwise specified by the President of the Philippines,
all appropriations for Government assistance to UP under the annual general
appropriations law and any supplemental or deficiency appropriations measure
shall be in lump sum. The UP, however, shall submit a program of expenditures
for the approval of the President of the Philippines.
DISCUSSION
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.
DISPOSITION
WHEREFORE, the Court GRANTS the petition for review on certiorari;
REVERSES and SETS ASIDE the decision of the Court of Appeals under review;
ANNULS the orders for the garnishment of the funds of the University of the Philippines
and for the release of the garnished amount to Stern Builders Corporation and Servillano
dela Cruz; and DELETES from the decision of the Regional Trial Court dated November
28, 2001 for being void only the awards of actual damages of P5,716,729.00, moral
damages of P10,000,000.00,and attorney’s fees of P150,000, plis P1,500.00 per
appearance, in favor of Stern Builders Corporation and Servillano dela Cruz.
The Court ORDERS Stern Builders Corporation and Servillano dela Cruz to
redeposit the amount of 16,370,191.71 within 10 days from receipt of this decision.
Costs of suit to be paid by the private respondents.
SO ORDERED.
Leonardo De Castro (Acting Chairperson), Del Castillo, Villarama, Jr., and
Perlas-Bernabe, JJ., concur.
