Background

The case stems from a labor dispute between security guards and their employers, Lockheed and UP. After winning their case for unpaid wages and benefits, the security guards sought to execute the judgment. This led to the garnishment of UP's funds in a PNB account. UP contested this garnishment, arguing that the funds were public funds and thus exempt from execution without going through the proper channels.

Facts

• 1. Lockheed entered into a contract for security services with UP.
• 2. In 1998, security guards filed complaints against Lockheed and UP for various unpaid wages and benefits.
• 3. The Labor Arbiter ruled in favor of the security guards, holding Lockheed and UP solidarily liable.
• 4. The NLRC modified the Labor Arbiter's decision but maintained UP's solidary liability.
• 5. A writ of execution was issued, and UP's funds in a PNB account were garnished.
• 6. UP filed a petition for certiorari before the CA, arguing that the garnished funds were public funds.

Arguments of the Petitioners

• 1. UP has a separate and distinct personality from the national government and can be sued and held liable.
• 2. UP's funds are not exempt from garnishment as it has full management and control of its financial affairs.
• 3. The rulings in the National Electrification Administration (NEA) and Manila International Airport Authority (MIAA) cases are inapplicable to UP.
• 4. Invoking state immunity would result in grave injustice.
• 5. The execution proceedings have already been terminated, making UP's protestations too late.

Arguments of the Respondents

• 1. UP did not invoke the doctrine of state immunity from suit and did not object to being sued.
• 2. The CA correctly applied the NEA ruling, requiring all money claims to be filed with the COA.
• 3. UP consented to be sued and participated in the proceedings, so there is no injustice.
• 4. Lockheed should be held liable for the illegal garnishment of UP's trust funds.

Issues

• 1. Whether UP's funds can be subject to garnishment and execution without filing a claim with the COA.
• 2. Whether the rulings in the NEA and MIAA cases are applicable to UP.
• 3. Whether the execution of the judgment award is already a fait accompli.

Ruling

• 1. The Supreme Court denied Lockheed's petition and upheld the CA's Amended Decision.
• 2. The Court ruled that before execution can be had against UP, a claim for payment of the judgment award must first be filed with the COA.
• 3. The Court ordered Lockheed to reimburse UP the amount of ₱12,062,398.71 plus interest.

Rationale

• 1. UP, like NEA, is a juridical personality separate and distinct from the government but still subject to COA's primary jurisdiction over money claims.
• 2. The COA has primary jurisdiction to examine, audit, and settle all debts and claims due from or owing to the Government or any of its subdivisions, agencies, and instrumentalities.
• 3. The garnishment was erroneously carried out without going through the proper procedure of filing a claim with the COA.

Doctrines

• 1. Primary jurisdiction of COA: The COA has primary jurisdiction over all money claims against the government or any of its subdivisions, agencies, and instrumentalities.
• 2. Suability vs. Liability: The fact that a government entity can be sued does not automatically mean it can be held liable or that execution can immediately ensue.

Precedents Cited

• 1. Republic v. COCOFED: Used to define public funds.
• 2. National Electrification Administration v. Morales: Applied to establish that money claims against government agencies must first be filed with the COA.
• 3. Manila International Airport Authority v. Court of Appeals: Cited to classify UP as a government instrumentality exercising corporate powers but not organized as a stock or non-stock corporation.