Government instrumentalities with separate juridical personalities, like the University of the Philippines, are suable and their funds are not exempt from execution or garnishment; however, any money judgment against them must first be filed as a claim with the Commission on Audit (COA) before execution can proceed.

Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) had a contract for security services with respondent University of the Philippines (UP). This contractual relationship led to labor disputes when security guards assigned to UP filed complaints for various unpaid monetary benefits.

• Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a security services contract with the University of the Philippines (UP).
• In 1998, several security guards filed complaints against Lockheed and UP for various unpaid labor benefits including underpaid wages, overtime pay, holiday pay, 13th month pay, and refund of deductions.
• On February 16, 2000, the Labor Arbiter found Lockheed and UP solidarily liable for P1,184,763.12 to the complainants and also declared UP liable to Lockheed for unpaid legislated salary increases amounting to P13,066,794.14, from which the complainants' awards would be paid.
• The NLRC, on April 12, 2002, modified the Labor Arbiter's decision, dismissing some claims but affirming UP's solidary liability for the remaining claims. This decision became final and executory.
• A writ of execution was issued, then quashed, then ordered re-issued by the NLRC. The NLRC later modified its order, stating that execution against UP should only be against funds not identified as public funds.
• An alias writ of execution was granted, and on July 25, 2005, a Notice of Garnishment was issued to PNB UP Diliman Branch for P12,142,522.69.
• UP filed an Urgent Motion to Quash Garnishment, arguing the funds were public funds earmarked for specific purposes and could not be disbursed without legal appropriation. The Labor Arbiter dismissed this motion.
• On September 2, 2005, P12,062,398.71 was withdrawn by the sheriff from UP's PNB account.
• UP filed a petition for certiorari with the CA. The CA initially dismissed UP's petition but, on reconsideration, issued an Amended Decision on August 20, 2008.
• The CA's Amended Decision held that while UP's funds might not strictly be public funds, money claims against government entities like UP must first be filed with the Commission on Audit (COA) before execution, citing National Electrification Administration v. Morales.

• UP is a government entity with a separate and distinct personality from the National Government, possessing its own charter granting it the right to sue and be sued, and therefore cannot avail of state immunity from suit, making it liable for execution.
• Invoking state immunity would result in grave injustice, as UP admitted its liability and should not be allowed to renege on its contractual obligations.
• The protestations of UP are too late as the execution proceedings have already been terminated, making the garnishment a fait accompli.
• The rulings in National Electrification Administration (NEA) v. Morales and Manila International Airport Authority (MIAA) v. Court of Appeals are inapplicable because UP's COA jurisdiction is only post-audit, and UP's obligation is a private contractual one, unlike MIAA's tax liability.
• UP has full management and control of its affairs, including financial affairs, under Executive Order No. 714, and cannot shield itself from private contractual liabilities by invoking the public character of its funds.

• UP did not invoke state immunity from suit and consented to be sued by participating in the labor proceedings; however, suability does not equate to automatic liability for execution without proper procedure.
• The CA correctly applied the NEA v. Morales ruling that all money claims against government instrumentalities must first be filed with the Commission on Audit (COA).
• Lockheed cannot claim injustice from the invocation of state immunity, as UP never invoked it; UP only insists on the proper procedure for satisfying money judgments against it.
• The fait accompli argument is untenable because the garnishment was erroneous and caused damage to UP and its beneficiaries, as funds earmarked for educational purposes were misapplied.
• Lockheed, having procured the illegal garnishment, should be held liable to reimburse UP for the garnished amount plus damages and costs.

• Whether the funds of the University of the Philippines, a government instrumentality with its own charter, can be garnished to satisfy a final and executory judgment without first filing a claim with the Commission on Audit.
• Whether the prior garnishment of UP's funds renders the issue of its propriety moot and prevents UP from seeking reimbursement.

• The Supreme Court denied Lockheed's petition for lack of merit.
• The Court affirmed that UP, like the National Electrification Administration (NEA), is a juridical personality separate from the government with the capacity to sue and be sued, and its funds may be subject to garnishment or levy.
• However, before execution of a money judgment against UP can proceed, a claim for payment of the judgment award must first be filed with the Commission on Audit (COA), which has primary jurisdiction to examine, audit, and settle all debts and claims of any sort due from or owing the Government or any of its subdivisions, agencies, and instrumentalities, including government-owned or controlled corporations.
• The Court rejected Lockheed's argument that COA's jurisdiction over UP is only on a post-audit basis, stating that Commonwealth Act No. 327 makes no distinction regarding the timing of COA's jurisdiction for settling debts.
• The Court also dismissed the fait accompli argument, holding that since the garnishment was erroneously carried out without following the proper procedure (filing a claim with COA), UP is entitled to reimbursement of the garnished funds plus interest.
• Lockheed Detective and Watchman Agency, Inc. was ordered to reimburse UP the amount of P12,062,398.71 plus 6% per annum interest from September 12, 2005, up to the finality of the Decision, and 12% interest on the entire amount from the date of finality until fully paid.

• Primary Jurisdiction of the Commission on Audit (COA) — This doctrine states that the COA has the primary authority to examine, audit, and settle all debts and claims of any sort due from or owing the Government or any of its subdivisions, agencies, and instrumentalities, including government-owned or controlled corporations and their subsidiaries. In this case, the Court ruled that even if a judgment against UP (a government instrumentality) is final and executory, a claim for payment must first be filed with the COA before execution can proceed against UP's funds.
• Suability vs. Liability of Government Instrumentalities — Suability means that a government entity may be taken to court. Liability means that the entity can be held legally responsible for the claim. The Court reiterated that while UP, as a chartered institution, can sue and be sued (consented to suit by participating in the proceedings), its liability for a money judgment is subject to the procedural requirement of filing a claim with the COA before its funds can be garnished or levied. The consent to be sued does not automatically mean that its funds can be seized without following the processes applicable to government entities.
• Execution of Judgment Against Government Funds — While funds of government instrumentalities with separate juridical personalities like UP are not exempt from execution, the process of execution must comply with established procedures, specifically the requirement of filing a claim with the COA. Direct garnishment without this step is improper.

• "Like NEA, UP is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with the COA."
• "As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds of UP had already been garnished, since the garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds..."

• National Electrification Administration v. Morales — Cited as the primary basis for the ruling that money claims against government instrumentalities like UP must first be filed with the COA before execution. The Court found UP to be similarly situated to NEA in this regard.
• Manila International Airport Authority v. Court of Appeals — Referenced by the CA to classify UP as a government instrumentality exercising corporate powers but not organized as a stock or non-stock corporation, distinct from government-owned and controlled corporations in the strict sense. The Supreme Court did not extensively discuss its applicability beyond noting the CA's citation.
• Republic v. COCOFED — Cited by the CA in its initial decision (later amended) for the definition of public funds, which the CA initially found UP's garnished funds did not fall under. The Supreme Court did not directly rely on this for its final holding regarding the COA process.

• Commonwealth Act No. 327 — This law (specifically its provision on COA's primary jurisdiction, as amended) was invoked to establish that the COA has the primary jurisdiction to examine, audit, and settle all debts and claims of any sort due from or owing the Government or any of its subdivisions, agencies, and instrumentalities.
• Presidential Decree No. 1445 (Government Auditing Code of the Philippines), Section 26 — This section, amending Commonwealth Act No. 327, reinforces the COA's general jurisdiction over all government debts and claims. The Court emphasized that this provision does not distinguish as to which government entities' debts must first be filed with the COA, making it applicable to UP.
• Republic Act No. 6758 (Compensation and Position Classification Act of 1989) — Mentioned in the context of COA's jurisdiction over money claims arising from its implementation, with allowance or disallowance decided by COA subject to appeal to the Supreme Court.
• Executive Order No. 714 ("Fiscal Control and Management of the Funds of UP") — Cited by Lockheed to argue that UP has full management and control of its financial affairs and cannot shield itself from contractual liabilities. The Court did not find this to override the COA's primary jurisdiction.