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Atty. Bong Lopez

University of the  This case involves the garnishment of  WON funds of UP were proper subject of  Presidential Decree No. 1445 defines
Philippines, et UP’s funds to pay for the third building garnishment in order to satisfy the a “trust fund” as a fund that officially
judgment award comes in the possession of an
al. vs Hon. constructed in UPLB.
 NO agency of the government or of a
Agustin Dizon,  UP, through President Abueva, public officer as trustee, agent or
et al. entered into a General Construction  UP’s funds being government funds, are administrator, or that is received for
Agreement with respondent Stern not subject to garnishment. the fulfillment of some obligation.
GR No. 171182 Builders Corporation, for the  Despite as UP’s establishment as a body  A trust fund may be utilized only for
23 August 2012 construction of the extension building corporate, it remains to be a chartered the “specific purpose for which the
and renovation of College of Arts and institution performing a legitimate trust was created or the funds
government function. It is an institution of received.”
State Immunity Sciences in UPLB
higher learning, not a corporation  The universal rule that where the
 In the implementation of the contract, established for profit and declaring any State gives its consent to be sued by
Express Consent Stern Builders submitted 3 progress dividends. private parties either by general or
billings.  All funds going into the possession of UP, special law, it may limit claimant’s
 UP only paid for 2 buildings, due to including any interest accruing from the action “only up to the completion of
COA’s disallowance of payment for deposit of such funds in any banking proceedings anterior to the stage of
the P273k worth third building. 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
 Despite lifting of disallowance, UP
aligned with the UP’s mission and purpose rendered, since government funds
failed to pay the building prompting and should always be subject to auditing and properties may not be seized
Stern Builders to file a suit for collection by the COA. under writs of execution or
of unpaid billing and damages  The funds of the UP are government funds garnishment to satisfy such
 RTC rendered a decision in favor Stern that are public in character. The funds judgments, is based on obvious
Building ordering UP to pay. subject of this action could not be validly considerations of public policy.
 UP assailed denial of due course of its made the subject of the RTC’̂s writ of Disbursements of public funds must
appeal through a petition for certiorari execution or garnishment. The adverse be covered by the corresponding
judgment rendered against the UP in a suit appropriation as required by law. The
in CA functions and public services
to which it had impliedly consented was
 CA dismissed petition upon finding not immediately enforceable by rendered by the State cannot be
notice of appeal had been filed 17 execution against the UP, because allowed to be paralyzed or disrupted
days late. suability of the State did not necessarily by the diversion of public funds from
 UP appealed to SC by petition for mean its liability. their legitimate and specific objects,
review on certiorari.  A marked distinction exists between as appropriated by law.
 RTC granted another writ of execution, suability of the State and its liability. As the
Court succinctly stated in Municipality of
upon which sheriff serves notices of
San Fernando, La Union v. Firme: the
garnishment on UP’s depository banks: circumstance that a state is suable does
LBP and DBP. not necessarily mean that it is liable; on the
 RTC authorized release of the other hand, it can never be held liable if it
garnished funds of UP. 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.”