GR 171182 August 23, execution and to restrain the

2013 proceedings. However, the RTC denied the

urgent motion. UP assailed the denial of due
UNIVERSITY OF THE PHILIPPINES
course to its appeal through a petition
vs. HON. AGUSTIN S. DIZON
for certiorari in the Court of Appeals but the
Topic: Recovery of Moral Damages latter dismissed the petition
for certiorari upon finding that the UP’s
Doctrine: A corporation as an artificial notice of appeal had been filed late. The UP
person is incapable of experiencing pain sought a reconsideration, but the CA denied
and moral sufferings. the UP’s motion for reconsideration.
Facts: UP, through its then President Jose UP appealed to the Court by petition for
V. Abueva, entered into a General review on certiorari. The Court denied the
Construction Agreement with respondent petition for review. The UP moved for the
Stern Builders Corporation, for the reconsideration of the denial of its petition
construction of the extension building and for review but the Court denied the motion
the renovation of the College of Arts and which denial became final and executory. In
Sciences Building in the campus of UPLB. the meanwhile, that the UP was exhausting
In the course of the implementation of the the available remedies to overturn the denial
contract, Stern Builders submitted three of due course to the appeal and the issuance
progress billings corresponding to the work of the writ of execution, Stern Builders and
accomplished, but the UP paid only two of dela Cruz filed in the RTC their motions for
the billings. The third billing execution despite their previous motion
worth P273,729.47 was not paid due to its having already been granted and despite the
disallowance by COA. Despite the lifting of writ of execution having already issued. The
the disallowance, the UP failed to pay the RTC granted another motion for execution
billing, prompting Stern Builders and dela filed. The sheriff served notices of
Cruz to sue the UP and its co-respondent garnishment on the UP’s depository banks.
officials to collect the unpaid billing and to The UP assailed the garnishment through an
recover various damages (actual and moral) urgent motion to quash the notices of
and attorney’s fees. After trial, the RTC garnishment; and a motion to quash the writ
rendered its decision in favor of the of execution but was denied by the RTC. UP
plaintiffs. moved for the reconsideration of the order
but was denied by the same court.
Following the RTC’s denial of its motion for
reconsideration, UP filed a notice of appeal. On their part, Stern Builders and dela Cruz
The RTC denied due course to the notice of filed their ex parte motion for issuance of a
appeal for having been filed out of time and release order which the RTC granted and
granted the private respondents’ motion for authorized the release of the garnished funds
execution. The RTC issued the writ of of the UP. The UP brought a petition
execution and the sheriff of the RTC served for certiorari in the CA to challenge the
the writ of execution and notice of demand jurisdiction of the RTC in issuing the order
upon UP. UP filed an urgent motion to of December 21, 2004. While pending
reconsider the order, to quash the writ of
resolution, CA issued a temporary The funds of the UP are government funds
restraining order (TRO) upon application by that are public in character which cannot be
the UP. In its decision CA dismissed the made subject of the RTC’s writ of execution
UP’s petition for certiorari, ruling that the or garnishment hence the adverse judgment
UP had been given ample opportunity to rendered against the UP in a suit to which it
contest the motion to direct the DBP to had impliedly consented was not
deposit the check in the name of Stern immediately enforceable because suability
Builders and dela Cruz; and that the of the State did not necessarily mean its
garnished funds could be the proper subject liability.
of garnishment because they had been
already earmarked for the project, with the As discussed in Municipality of San
UP holding the funds only in a fiduciary Fernando, La Union v. Firme, suability
capacity. After the CA denied their motion depends on the consent of the state to be
for reconsideration on December 23, 2005, sued, liability on the applicable law and the
the petitioners appealed by petition for established facts. The circumstance that a
review. state is suable does not necessarily mean
that it is liable; on the other hand, it can
Issues: Whether or not UP’s funds can be never be held liable if it does not first
subject to garnishment consent to be sued.

Whether or not RTC had authority to issue The CA and the RTC thereby unjustifiably
the subject writ of execution ignored the legal restriction imposed on the
trust funds of the Government and its
Whether or not Stern Builders is entitled to agencies and instrumentalities to be used
moral damages exclusively to fulfill the purposes for which
the trusts were created or for which the
I. UP’s funds being governmental funds were received except upon express
funds are not subject to authorization by Congress or by the head of
garnishment a government agency in control of the funds,
and subject to pertinent budgetary laws,
Despite its establishment as a body rules and regulations.
corporate, the UP remains to be a "chartered
institution" performing a legitimate II. The execution of the monetary
government function – promote quality and judgment against the UP was
accessible education. within the primary jurisdiction
of the COA
As a government instrumentality, the UP
administers special funds sourced from the
The RTC had no authority to direct the
fees and income enumerated under Act No.
immediate since it is settled jurisprudence
1870 and Section 1 of Executive Order No.
that upon determination of State liability, the
714, and from the yearly appropriations, to
prosecution, enforcement or satisfaction
achieve the purposes laid down by Section 2
thereof must still be pursued in accordance
of Act 1870, as expanded in RA No. 9500
with the rules and procedures laid down in
which constitutes a special trust fund.
P.D. No. 1445, otherwise known as the enforcement of such judgment sets at naught
Government Auditing Code of the the role and purpose of the courts to resolve
Philippines. All money claims against the justiciable controversies with
Government must first be filed with the finality. Indeed, all litigations must at some
Commission on Audit which must act upon time end, even at the risk of occasional
it within sixty days. Rejection of the claim errors.
will authorize the claimant to elevate the
matter to the Supreme Court But the doctrine of immutability of a final
on certiorari and in effect, sue the State judgment has not been absolute, and has
thereby. admitted several exceptions, among them:
(a) the correction of clerical errors; (b) the
In Viuda de Tan Toco v. Municipal Council so-called nunc pro tunc entries that cause no
of Iloilo, the Court ruled that "where prejudice to any party; (c) void judgments;
property of a municipal or other public and (d) whenever circumstances transpire
corporation is sought to be subjected to after the finality of the decision that render
execution to satisfy judgments recovered its execution unjust and inequitable.  Despite
against such corporation, the question as to the absence of the preceding circumstances,
whether such property is leviable or not is to the Court is not precluded from brushing
be determined by the usage and purposes for aside procedural norms if only to serve the
which it is held." higher interests of justice and equity.

III. Period of appeal did not start It is settled that where a party has appeared
without effective service of by counsel, service must be made upon such
decision upon counsel of counsel. Service on the party or the party’s
record; Fresh-period employee is not effective because such
rule announced in notice is not notice in law.
Neypes v. Court of Appeals
Equity calls for the retroactive application in
can be given retroactive
the UP’s favor of the fresh-period rule that
application
the Court first announced in its ruling in
Neypes v. Court of Appeals that to
It is true that a decision that has attained
standardize the appeal periods provided in
finality becomes immutable and unalterable,
the Rules and to afford litigants fair
and cannot be modified in any respect, even
opportunity to appeal their cases, the Court
if the modification is meant to correct
deems it practical to allow a fresh period of
erroneous conclusions of fact and law, and
15 days within which to file the notice of
whether the modification is made by the
appeal in the Regional Trial Court, counted
court that rendered it or by this Court as the
from receipt of the order dismissing a
highest court of the land. Public policy
motion for a new trial or motion for
dictates that once a judgment becomes final,
reconsideration.
executory and unappealable, the prevailing
party should not be deprived of the fruits of
The retroactive application of the fresh-
victory by some subterfuge devised by the
period rule, a procedural law that aims "to
losing party. Unjustified delay in the
regiment or make the appeal period uniform, experiencing pain and moral
to be counted from receipt of the order sufferings. Even provided that its
denying the motion for new trial, motion for President and General Manager dela
reconsideration (whether full or partial) or Cruz had experienced moral
any final order or resolution," is impervious sufferings, it is to be noted that his
to any serious challenge. This is because personality is separate and distinct
there are no vested rights in rules of from Stern Builders.
procedure.
c. Attorney’s Fees: The general rule is
that a successful litigant cannot
IV. Awards of monetary
recover attorney’s fees as part of the
damages,
damages to be assessed against the
being devoid of factual
losing party because of the policy
and legal bases,
that no premium should be placed on
did not attain finality
the right to litigate. Nonetheless,
and should be deleted
with attorney’s fees being allowed in
the concept of actual damages, their
a. Actual Damages: The statement that
amounts must be factually and
"due to defendants’ unjustified
legally justified in the body of the
refusal to pay their outstanding
decision and not stated for the first
obligation to plaintiff, the same
time in the decretal portion. That the
suffered losses and incurred
attorney’s fees granted to the private
expenses as he was forced to re-
respondents did not satisfy the
mortgage his house and lot located in
foregoing requirement suffices for
Quezon City to Metrobank (Exh.
the Court to undo them. The grant
"CC") and BPI Bank just to pay its
was ineffectual for being contrary to
monetary obligations in the form of
law and public policy, it being clear
interest and penalties incurred in the
that the express findings of fact and
course of the construction of the
law were intended to bring the case
subject project" was only a
within the exception and thereby
conclusion of fact and law that did
justify the award of the attorney’s.
not comply with the constitutional
and statutory prescription. The
Nonetheless, the absence of findings of
statement specified no detailed
fact and of any statement of the law and
expenses. The omission of such jurisprudence on which the awards of
expenses or losses directly indicated actual and moral damages, as well as of
that Stern Builders did not prove attorney’s fees, were based was a fatal
them at all. flaw that invalidated the decision of the
b. Moral Damages: The moral RTC only as to such awards. As the
damages constituted another judicial Court declared in Velarde v. Social
ipse dixit, Stern Builders, as an Justice Society, the failure to comply
artificial person, was incapable of with the constitutional requirement for a
clear and distinct statement of the
supporting facts and law "is a grave
abuse of discretion amounting to lack or
excess of jurisdiction" and that
"(d)ecisions or orders issued in careless
disregard of the constitutional mandate
are a patent nullity and must be struck
down as void."