University of the Philippines vs Dizon

Facts:
The University of the Philippines entered into a General Construction Agreement with
respondent Stern Builders Corporation for the construction of the extension building and
the renovation of the College of Arts and Sciences Building in the campus of the
University of the Philippines in Los Banos. In the course of the implementation of the
contract, Stern Builders submitted three progress billings corresponding to the work
accomplished, but the UP paid only two of the billings. The third billing was not paid due
to its disallowance by the Commission on Audit. Despite the lifting of the disallowance,
the UP failed to pay the billing, prompting Stern Builders to sue the UP and officials to
collect the unpaid billing to recover various damages.

Meanwhile, the sheriff served notices of the garnishment on the UP's depository banks,
namely: Land Bank of the Philippines (Buendia Branch) and the Development Bank of
the Philippines (DBP), Commonwealth Branch. The UP assailed said garnishment of
funds. Stern Builders and dela Cruz, meanwhile, again sought the release of the
garnished funds.

Issue: Whether or not the funds of UP are subject to garnishment?

Held:
No. The funds of the UP are government funds that are public character which could not
be validly made the subject of a writ of execution or garnishment.

Despite its establishment as a body corporate, the Up remains to be a "chartered

institution" performing a legitimate government function. The UP is a government
instrumentality, performing the State's constitutional mandate of promoting quality and
accessible education. As a government instrumentality, the UP administers special funds
sourced from the fees and income enumerated under Act No. 1870 and Section 1 of
Executive Order No. 174, and from the yearly appropriations, to achieve the purposes
laid down by Section 2 of Act No. 1870, as expanded in Republic Act No. 9500. All the
funds going into the possession of the UP, including any interest accruing from the
deposit of such funds in any banking institution, constitute a "special trust fund," the
disbursement of which should always be aligned with the UP's mission and purpose, and
shoould always be subject to auditng by the COA.

The funds of the UP are government funds that are public in character. They include the
income accruing from the use of real property ceded to the UP that may be soent only
for the attainment of its institutiona objectives. Hence, the fund subject of this action
could not be validly made the subject of writ of execution or garnishment. The adverse
judgment rendered against the UP in a suit to which it had impliedly consented was not
immediately enforceable by execution against the UP, because suability of the State did
not necessarily mean its liability.