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UP vs.

Dizon GR 171182 August 23, 2012

FACTS:

In 1990, UP contracted with Stern Builders (sobrang stern talaga!) to renovate the CAS building
in UPLB as well as build an extension thereof.
Stern then submitted billing statements to UP but was only paid for the first and second ones.
The third one was not settled because of a COA disallowance.
Soon thereafter, the disallowance was lifted but the third bill for the account of UP remained
outstanding which prompted Stern to sue for collection with damages at RTC-QC.
The RTC rendered a decision in favor of Stern the amount of approx. P16.35M plus attorneys
fees and cost of suit. It also dismissed UPs appeal being filed out of time.
The CA also dismissed UPs appeal to the decision for not being filed within the reglementary
period.
The RTC granted request for motion of execution and denied all remedies submitted by UP and
ultimately authorized the release of the garnished funds to Stern. UP was served this order
dated December 21, 2004 on January 3, 2005.
UP then filed for a petition for certiorari in the CA challenging the jusridiction of the RTC in
issuing the assailed order committing grave abuse of discretion amounting to lack or excess of
jurisdiction (GAODATLOEOF, or better yet GAOD na lang!) in ruling that there was no more legal
impediment for the release of the garnished amount.
Ultimately, decreeing that the decision for UP to pay Stern has become final and executory, RTC-
QC approved the release of the garnished amount in 2007.

ISSUES:

WON the funds of UP were properly garnished to satisfy the judgment award; and
WON award of actual & moral damages, plus attorneys fees can be deleted despite finality of
the RTC judgment.

HELD:

No. The funds of UP is not properly garnished by the RTC.

o The execution of the money judgment against UP was within the primary jurisdiction of
the COA with express proviso in Sec. 26, PD 1445, examination, audit, and settlement
of all debts and claims from or owing to the government its subdivisions, agencies, and
intrumentalities extending to all GOCCs, including subsidiaries self-governing boards,
commissions, or agencies. shall be under the authority and powers of the
Commission (COA).

o UP being a government instrumentality uses government funds, which is maintained as


a special trust fund with depository bank.
o The judges of RTC-QC should have exercised extreme caution and prudence in dealing
with motions for executions against government funds. Despite the finality of the
judgments, RTC should have directed Stern to seek the approval of COA for
disbursement rather than ordering the release.

Yes. The court may delete actual & moral damages plus attorneys fees despite the seeming
finality of the RTC judgment.

o The general rule is when judgments have attained finality, it is immutable and
unalterable. However, in the case at bar, the SC has brushed aside the finality of the
judgment of RTC-QC being devoid of factual and legal bases. The decision contained no
basis on the computation of the P5.72 actual damages sustained by the petitioner nor
was there factual and legal support for the P10M moral damages. Additionally, moral
damage can only be inflicted on a person, and since Stern is a juridical person, it is
incapable of experiencing pain and moral suffering.

o As the court enunciated in Velarde vs. Social Justice Society case, failure to comply with
the constitutional requirement for a clear and distinct statement of the supporting facts
and law amounts to GAOD and that decisions or orders issued in careless disregard of
the constitutional mandate are a patent nullity and struck down as void.

o The SC annulled the order of garnishment and deleted award of damages and attorneys
fees. It also ordered Stern to redeposit the P16.37M within 10 days from receipt of the
decision.