Government funds, including those of state universities like the University of the Philippines, are public in character and cannot be seized through writs of execution or garnishment to satisfy money judgments without the claim first being adjudicated by the Commission on Audit (COA) and a corresponding appropriation made by law; the power of courts in such cases ends with the judgment, as its satisfaction must follow the procedures outlined in P.D. No. 1445.

The University of the Philippines (UP) entered into a General Construction Agreement with Stern Builders Corporation (Stern Builders) for a project at UPLB. UP paid two of three progress billings but failed to pay the third billing, initially due to a COA disallowance which was later lifted. Stern Builders subsequently filed a suit for collection of the unpaid amount and damages against UP.

• On August 30, 1990, UP and Stern Builders entered into a General Construction Agreement for the extension and renovation of the College of Arts and Sciences Building at UPLB.
• Stern Builders submitted three progress billings; UP paid the first two but not the third (worth P273,729.47) due to a COA disallowance, which was later lifted. UP still failed to pay.
• Stern Builders sued UP and its officials for collection and damages (Civil Case No. Q-93-14971).
• On November 28, 2001, the RTC ruled in favor of Stern Builders, ordering UP to pay: (1) P503,462.74 for the third billing, additional work, and retention money; (2) P5,716,729.00 in actual damages; (3) P10,000,000.00 in moral damages; (4) P150,000.00 and P1,500.00 per appearance as attorney's fees; and (5) costs of suit.
• UP's notice of appeal from the RTC decision was denied due course for being filed late, and the RTC decision was declared final and executory. This was eventually upheld by the Supreme Court in G.R. No. 163501.
• The RTC issued a writ of execution on October 4, 2002, and the sheriff served notices of garnishment on UP's depository banks (Land Bank and DBP).
• On December 21, 2004, the RTC, through Judge Agustin S. Dizon, authorized the release of P16,370,191.74 in garnished funds from DBP to Stern Builders.
• UP filed a petition for certiorari with the CA (CA-G.R. CV No. 88125) challenging the RTC's order for the release of garnished funds, arguing that government funds are not subject to garnishment.
• On September 16, 2005, the CA dismissed UP's petition, ruling that the funds were already earmarked for the project and UP held them in a fiduciary capacity, thus subject to garnishment.
• During the pendency of the current SC petition, on January 3, 2007, RTC Judge Maria Theresa dela Torre-Yadao (who replaced Judge Dizon) ordered the withdrawal of the garnished amount by Stern Builders, which was effected on January 17, 2007.

• The Court of Appeals erred in allowing the garnishment of UP funds, as these funds were not earmarked for incidental matters like damages and attorney's fees, and such garnishment violates the principle that government funds cannot be seized without specific appropriation.
• The garnishment of a state university's funds contravenes Article XIV, Section 5(5) of the Constitution concerning fiscal autonomy.
• The awards for actual damages (P5,716,729.00) and moral damages (P10 million) were unconscionable, inequitable, and detrimental to public service and should be deleted or reduced.
• The RTC committed grave error in ordering the immediate release of the judgment award on January 3, 2007, and January 16, 2007, despite UP's pending remedies and without judicial courtesy to the Supreme Court.
• The RTC erred in not ordering the redeposit of the garnished amount despite a Supreme Court TRO, and in declaring the TRO functus officio.
• The amount earmarked for the construction project did not include the awarded actual damages, moral damages, and attorney's fees.
• Article 12.2 of the General Construction Agreement stipulated that no deductions would be allowed for payment of claims, damages, losses, and expenses arising from litigation.

• The petition for review was fatally defective for failure to mention other related cases and constituted forum shopping.
• The ruling in Commissioner of Public Works v. San Diego was inapplicable because there was an appropriation for the project, and UP retained the funds in a fiduciary capacity.
• The contract price had been adjusted to P22,338,553.25, an amount sufficient to cover the judgment award.
• The awarded damages were justified due to the grave wrong UP committed, depriving Stern Builders of income and causing untold miseries and humiliation.
• The RTC correctly declared the Supreme Court's TRO functus officio because the withdrawal of the garnished amount had already been accomplished.

• Whether the funds of the University of the Philippines, a state university, were the proper subject of garnishment to satisfy the judgment award.
• Whether the Regional Trial Court's awards for actual damages, moral damages, and attorney's fees, despite the prior declaration of finality of the RTC's main decision, could be deleted or modified by the Supreme Court.
• Whether the University of the Philippines' appeal from the RTC's decision was timely filed.

• The petition for review is meritorious; UP's funds, being government funds of a public character, are not subject to garnishment to satisfy judgment awards without prior adjudication by the Commission on Audit (COA) and a specific appropriation by Congress as required by law.
• The monetary liabilities for actual damages, moral damages, and attorney's fees were not covered by the "appropriations earmarked for the said project" and required a separate appropriation. The execution of such monetary judgment against UP falls within the primary jurisdiction of the COA under P.D. No. 1445.
• The RTC orders issued by Judge Yadao allowing the withdrawal of the garnished funds (January 3, 2007), directing DBP to release the amount (January 16, 2007), the sheriff's report of satisfaction (January 17, 2007), and the order denying UP's motion for redeposit (April 10, 2007) were void for being issued beyond the RTC's jurisdiction.
• The doctrine of immutability of final judgments admits exceptions, such as void judgments or when circumstances render execution unjust and inequitable. The prior declaration of finality of the RTC judgment was set aside because UP's right to due process was violated regarding the timeliness of its appeal.
• The service of the RTC's denial of UP's motion for reconsideration upon Atty. Nolasco of the UPLB Legal Office was invalid, as UP's counsel of record was its Office of Legal Affairs (OLS) in Diliman. The appeal period should be reckoned from OLS's receipt, making UP's notice of appeal filed on June 3, 2002, timely.
• Retroactive application of the "fresh-period rule" established in Neypes v. Court of Appeals also renders UP's appeal timely, as the 15-day period from receipt of denial of reconsideration (even if May 17, 2002, were the correct date) would end on June 1, 2002 (a Saturday), giving UP until June 3, 2002 (Monday) to file.
• The RTC's awards for actual damages, moral damages, and attorney's fees are void for lacking a clear and distinct statement of factual and legal bases in the body of the decision, violating Section 14, Article VIII of the Constitution and Section 1, Rule 36 of the Rules of Court. Such awards, being void, did not attain finality.
• The RTC's award for the unpaid third billing, additional work, and retention money (P503,462.74) stands, but its satisfaction is subject to COA procedures. Stern Builders and Servillano dela Cruz were ordered to redeposit the P16,370,191.74 they had withdrawn.

• Non-suability of the State/Immunity from Suit and Execution: The State cannot be sued without its consent, and even when consent is given, its funds and properties cannot be seized under writs of execution or garnishment to satisfy judgments unless there is a corresponding appropriation law. This doctrine was applied to protect UP's funds, as UP is a government instrumentality, and its funds are public funds.
• Public Funds Not Subject to Garnishment: Government funds are not subject to levy and execution unless otherwise provided by statute, as this would paralyze public services. This was the core principle used to invalidate the garnishment of UP's funds.
• Primary Jurisdiction of the Commission on Audit (COA): Under P.D. No. 1445, the COA has the primary jurisdiction to examine, audit, and settle all money claims against the Government or any of its subdivisions, agencies, and instrumentalities. The Court ruled that Stern Builders' claim, even after a final court judgment, must be processed through the COA.
• Doctrine of Immutability of Final Judgments and its Exceptions: While final judgments are generally unalterable, this rule admits exceptions, such as (a) correction of clerical errors, (b) nunc pro tunc entries, (c) void judgments, and (d) circumstances rendering execution unjust or inequitable. This was invoked to set aside the finality of the RTC decision concerning the appeal period (due to due process violation) and the damage awards (due to being void).
• Fresh-Period Rule (Neypes v. Court of Appeals): A procedural rule granting a litigant a fresh 15-day period from receipt of the denial of a motion for new trial or reconsideration to file a notice of appeal. This rule was applied retroactively to determine that UP's appeal was timely.
• Constitutional Requirement for Factual and Legal Basis in Decisions: Article VIII, Section 14 of the Constitution and Rule 36, Section 1 of the Rules of Court mandate that court decisions must clearly and distinctly state the facts and the law on which they are based. The RTC's awards for damages and attorney's fees were voided for failing to meet this requirement.
• Service of Pleadings and Judgments on Counsel of Record: Rule 13, Section 2 of the Rules of Court requires that if a party is represented by counsel, service of court processes must be made upon such counsel. Service on a mere employee or a lawyer not designated as counsel of record is invalid. This was applied to find that the service of the denial of UP's motion for reconsideration on a UPLB lawyer, instead of the UP OLS in Diliman (counsel of record), was ineffectual.
• Nature of UP Funds as Special Trust Funds: Funds of UP, derived from various sources including government appropriations, are considered special trust funds that can only be disbursed in alignment with UP's mission and purpose, subject to COA audit. This reinforced the public character of UP's funds and their protection from garnishment.
• Separate Legal Personality of a Corporation: A corporation has a juridical personality separate and distinct from its stockholders or members. This was relevant in discussing moral damages, as Stern Builders Inc., an artificial person, is generally incapable of experiencing moral suffering, and the suffering of its president is not automatically the corporation's suffering.

• "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. They should bear in mind that the primary jurisdiction to examine, audit and settle all claims of any sort due from the Government or any of its subdivisions, agencies and instrumentalities pertains to the Commission on Audit (COA) pursuant to Presidential Decree No. 1445 (Government Auditing Code of the Philippines)."
• "xxx The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action “only up to the completion of proceedings anterior to the stage of execution” and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law." (Quoting Republic v. Villasor)
• "To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration." (Quoting Neypes v. Court of Appeals)
• "It is a requirement of due process that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action." (Quoting Nicos Industrial Corporation v. Court of Appeals)

• Department of Agriculture v. National Labor Relations Commission: Referenced to support the principle that government funds cannot be seized via writs of execution or garnishment to satisfy judgment awards.
• University of the Philippines Board of Regents v. Ligot-Telan: Cited to affirm that funds belonging to the UP are public funds.
• Commissioner of Public Highways v. San Diego: Cited for the established rule that government funds are not subject to execution or garnishment and that court power ends with judgment rendition against the State, with satisfaction requiring appropriation. Also highlighted in Administrative Circular No. 10-2000.
• Republic v. Villasor: Emphasized for the rule that government funds cannot be seized to satisfy judgments due to public policy, requiring appropriations for disbursements, and that the power of courts ends when judgment is rendered against the State.
• Municipality of San Fernando, La Union v. Firme: Used to distinguish between the State's suability (consent to be sued) and its liability, clarifying that suability does not automatically equate to liability or amenability to execution against State funds.
• Neypes v. Court of Appeals: The source of the "fresh-period rule" for appeals, which the Supreme Court applied retroactively to find UP's appeal timely.
• Heirs of Maura So v. Obliosca and Gumaru v. Quirino State College: Cited as examples where the Court set aside procedural rules or finality in the higher interest of justice, equity, or due to fundamental defects (like lack of proper representation for a state entity).
• Nicos Industrial Corporation v. Court of Appeals: Referenced to underscore the due process requirement that court decisions must explain their factual and legal bases.
• Velarde v. Social Justice Society: Cited to establish that a decision failing to provide clear factual and legal bases for its awards is a grave abuse of discretion and such awards are void.
• National Home Mortgage Finance Corporation v. Abayari: Supported the argument that even with a final court decision, monetary claims against government entities must still be processed through COA.
• Viuda de Tan Toco v. Municipal Council of Iloilo: Mentioned in Administrative Circular No. 10-2000, distinguishing between government property held for public use (not leviable) versus proprietary property.

• Presidential Decree No. 1445 (Government Auditing Code of the Philippines), Section 26: Establishes COA's general jurisdiction over auditing and settling all government claims. This was crucial in ruling that Stern Builders' claim must be submitted to COA.
• Presidential Decree No. 1445, Sections 3(4) and 4(3): Define "trust fund" and restrict its use to specific purposes. Applied to characterize UP funds and limit their use.
• Presidential Decree No. 1445, Section 84(2): Prohibits payment from public treasury without appropriation. Key to the ruling against garnishment without appropriation.
• Constitution, Article VI, Section 29(1): Mandates that no money shall be paid out of the Treasury except pursuant to an appropriation made by law. This constitutional provision underpinned the illegality of garnishing UP funds without legislative appropriation.
• Constitution, Article VIII, Section 14: Requires court decisions to state clearly the facts and law on which they are based. The RTC's damage awards were voided for violating this.
• Constitution, Article XIV, Section 5(5): Guarantees fiscal autonomy for institutions of higher learning. UP invoked this, arguing garnishment violated its fiscal autonomy.
• Rules of Court, Rule 13, Section 2: Governs service of pleadings on counsel of record. This rule was used to invalidate the service on Atty. Nolasco.
• Rules of Court, Rule 22, Section 1: On computation of time, allowing extension if the last day falls on a non-working day. Applied in conjunction with the fresh-period rule.
• Rules of Court, Rule 36, Section 1: Implements the constitutional requirement for the content of judgments. The RTC's damage awards violated this.
• Rules of Court, Rule 41, Section 3: (Old rule) on interruption of appeal period by a motion for reconsideration, contrasted with the applied fresh-period rule from Neypes.
• Act No. 1870 (UP's original charter) and Republic Act No. 9500 (UP Charter of 2008): Establish UP as a government instrumentality and its funds as public, supporting the non-garnishment argument.
• Civil Code, Article 2199: Requires proof for actual damages. The RTC award was voided for lack of such proof detailed in the decision.
• Civil Code, Article 2208: Lists grounds for awarding attorney's fees. The RTC award was voided for not meeting these requirements with proper justification.
• Civil Code, Article 2217: Defines moral damages. The award to Stern Builders, a corporation, was questioned based on its incapacity to suffer such damages.
• Administrative Circular No. 10-2000: Enjoins judges to exercise caution in issuing writs of execution against government entities and to follow P.D. No. 1445. Judge Yadao's actions were found to violate this circular.