Background

The case originated from a construction contract dispute between UP and Stern Builders. When UP failed to pay, Stern Builders sued and won a judgment for damages. UP's attempts to appeal were denied for being late, leading to the garnishment of its funds. UP then challenged the garnishment through various legal actions, ultimately reaching the Supreme Court.

Facts

• 1. UP entered into a construction agreement with Stern Builders for a project at UP Los Baños.
• 2. UP failed to pay Stern Builders' third billing worth ₱273,729.47.
• 3. Stern Builders sued UP for collection and damages.
• 4. RTC ruled in favor of Stern Builders, awarding damages and attorney's fees.
• 5. UP's appeal was denied for being filed late, and the judgment became final and executory.
• 6. RTC issued writs of execution and garnishment against UP's funds.
• 7. UP challenged the garnishment, arguing its funds were public funds not subject to execution.

Arguments of the Petitioners

• 1. UP's funds are public funds not subject to garnishment or execution.
• 2. The garnishment violated UP's constitutional right to fiscal autonomy.
• 3. The RTC erred in immediately releasing the garnished funds.
• 4. The awards of damages were excessive and without basis.

Arguments of the Respondents

• 1. The funds were already earmarked for the project and held by UP in a fiduciary capacity.
• 2. UP was engaging in forum shopping and delaying tactics.
• 3. The damages awarded were justified due to the hardships suffered by Stern Builders and dela Cruz.

Issues

• 1. Whether UP's funds are subject to garnishment to satisfy the judgment award
• 2. Whether the Commission on Audit has primary jurisdiction over the monetary claim
• 3. Whether the awards of damages and attorney's fees were proper and had factual and legal bases

Ruling

• 1. UP's funds, being government funds, are not subject to garnishment. The Court cited laws and jurisprudence establishing that government funds cannot be seized under writs of execution or garnishment to satisfy judgments.
• 2. The Commission on Audit has primary jurisdiction over monetary claims against government agencies. The Court held that Stern Builders should have first sought approval from the COA before seeking execution of the judgment.
• 3. The awards of actual damages, moral damages, and attorney's fees were void for lack of factual and legal bases. The Court found that the RTC failed to provide clear and distinct statements of facts and law justifying these awards as required by the Constitution.

Doctrines

• 1. Suability vs. Liability of the State: The Court distinguished between the state's consent to be sued and its actual liability, emphasizing that suability does not automatically mean liability.
• 2. Primary Jurisdiction of COA: The Court affirmed the doctrine that the COA has primary jurisdiction to examine, audit, and settle all claims against the government.
• 3. Requirement of Factual and Legal Bases for Damages: The Court reiterated the constitutional requirement for courts to clearly state the factual and legal bases for awards of damages.
• 4. Immutability of Final Judgments: While recognizing this doctrine, the Court noted exceptions, including void judgments and equitable circumstances.
• 5. Fresh Period Rule: The Court applied the rule from Neypes v. Court of Appeals, allowing a fresh 15-day period to appeal from receipt of an order denying a motion for reconsideration.

Key Excerpts

• 1. "Trial judges should not immediately issue writs of execution or garnishment against the Government or any of its subdivisions, agencies and instrumentalities to enforce money judgments."
• 2. "Equity calls for the retroactive application in the UP's favor of the fresh-period rule that the Court first announced in mid-September of 2005 through its ruling in Neypes v. Court of Appeals."
• 3. "The term findings of fact that must be found in the body of the decision refers to statements of fact, not to conclusions of law."

Precedents Cited

• 1. Department of Agriculture v. NLRC (1993): Cited to support the principle that government funds cannot be seized under writs of execution or garnishment.
• 2. Commissioner of Public Highways v. San Diego (1970): Used to emphasize that the state's consent to be sued does not automatically mean it is liable.
• 3. Neypes v. Court of Appeals (2005): Applied retroactively to give UP a fresh period to file its appeal.
• 4. Heirs of Maura So v. Obliosca (2008): Cited to show that the Court can set aside procedural rules in the interest of substantial justice.

Statutory and Constitutional Provisions

• 1. Article VIII, Section 14 of the 1987 Constitution: Requiring decisions to clearly and distinctly state the facts and law on which they are based.
• 2. Article XIV, Section 5(5) of the 1987 Constitution: Cited by UP in arguing for its fiscal autonomy as a state university.
• 3. Article VI, Section 29(1) of the 1987 Constitution: "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law."