Part 2 Corpo

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 171182 August 23, 2012

UNIVERSITY OF THE PHIIPPINES, !OSE V. A"UEVA, RAU P.#E GU$MAN, RU"EN P. ASPIRAS, EMMANUE P. "EO,%IFRE#O P. #AVI#, CASIANO S. A"RIGO, &'( !OSEFINA R.ICUANAN, Petitioners,vs.HON. AGUSTIN S. #I$ON, )*s +&&+*t- &s P/s*(*'g !u(g/ o t)/R/g*o'& T*& Cout o u/o' C*t-, "&'+) 80, STERN"UI#ERS, INC., &'( SERVIANO #EA CRU$, Respondents.

D ! I S I O N

"ERSAMIN, J.:

Trial "ud#es should not i$$ediatel% issue &rits of e'ecution or#arnish$ent a#ainst the (overn$ent or an% of its subdivisions,a#encies and instru$entalities to enforce $one% "ud#$ents.)The%should bear in $ind that the pri$ar% "urisdiction to e'a$ine, audit andsettle all clai$s of an% sort due fro$ the (overn$ent or an% of itssubdivisions, a#encies and instru$entalities pertains to the!o$$ission on *udit +!O* pursuant to Presidential Decree No.)-- (Government Auditing Code of the Philippines).

T)/ C&s/

On appeal b% the /niversit% of the Philippines and its then incu$bentofficials +collectivel%, the /P is the decision pro$ul#ated onSepte$ber )0, 122,1&hereb% the !ourt of *ppeals +!* upheld theorder of the Re#ional Trial !ourt +RT!, 3ranch 42, in 5ue6on !it% thatdirected the #arnish$ent of public funds a$ountin# to P)0,782,)9).8-belon#in# to the /P to satisf% the &rit of e'ecution issued to enforcethe alread% final and e'ecutor% "ud#$ent a#ainst the /P.

A't/+/(/'ts

On *u#ust 72, )992, the /P, throu#h its then President :ose V.*bueva, entered into a (eneral !onstruction *#ree$ent &ithrespondent Stern 3uilders !orporation +Stern 3uilders, representedb% its President and (eneral Mana#er Servillano dela !ru6, for theconstruction of the e'tension buildin# and the renovation of the !olle#eof *rts and Sciences 3uildin# in the ca$pus of the /niversit% of thePhilippines in ;os 3arespondent officials to collect the unpaidbillin# and to recover various da$a#es. The suit, entitled SternBuilders Corporation and Servillano R. Dela Cruz v. Universit of thePhilippines Sstems! "ose #. A$ueva! Raul P. de Guzman! Ru$en P.

Aspiras! %mmanuel P. Bello! &ilfredo P. David! Casiano S. A$rigo!and "osefina R. 'iuanan!&as doc=eted as !ivil !ase No. 5>97>)-98) of the Re#ional Trial !ourt in 5ue6on !it% +RT!.-

*fter trial, on Nove$ber 14, 122), the RT! rendered its decision infavor of the plaintiffs,viz

?herefore, in the li#ht of the fore#oin#, "ud#$ent is hereb% rendered infavor of the plaintiff and a#ainst the defendants orderin# the latter topa% plaintiff, "ointl% and severall%, the follo&in#, to &it@

). P27,-01.8- a$ount of the third billin#,additional acco$plished &or= and retention $one%

1. P,8)0,819.22 in actual da$a#es

7. P)2,222,222.22 in $oral da$a#es

-. P)2,222.22 and P),22.22 per appearance asattorne%As feesB and

. !osts of suit.

SO ORDRD.

Follo&in# the RT!As denial of its $otion for reconsideration on Ma% 8,1221,0the /P filed a notice of appeal on :une 7, 1221.8Stern 3uildersand dela !ru6 opposed the notice of appeal on the #round of its filin#bein# belated, and $oved for the e'ecution of the decision. The /Pcountered that the notice of appeal &as filed &ithin the re#le$entar%period because the /PAs Office of ;e#al *ffairs +O;S in Dili$an,5ue6on !it% received the order of denial onl% on Ma% 7), 1221. OnSepte$ber 10, 1221, the RT! denied due course to the notice ofappeal for havin# been filed out of ti$e and #ranted the privaterespondentsA $otion for e'ecution.4

The RT! issued the &rit of e'ecution on October -, 1221,9

and thesheriff of the RT! served the &rit of e'ecution and notice of de$andupon the /P, throu#h its counsel, on October 9, 1221.)2The /P filedan ur#ent $otion to reconsider the order dated Septe$ber 10, 1221, toCuash the &rit of e'ecution dated October -, 1221, and to restrain theproceedin#s.))o&ever, the RT! denied the ur#ent $otion on *pril ),1227.)1

On :une 1-, 1227, the /P assailed the denial of due course to itsappeal throu#h a petition for ertiorariin the !ourt of *ppeals +!*,doc=eted as !*>(.R. No. 8879.)7

On Februar% 1-, 122-, the !* dis$issed the petition for certiorari uponfindin# that the /PAs notice of appeal had been filed late,)-statin#@

Records clearl% sho& that petitioners received a cop% of the Decisiondated Nove$ber 14, 122) and :anuar% 8, 1221, thus, the% had until:anuar% 11, 1221 &ithin &hich to file their appeal. On :anuar% )0, 1221or after the lapse of nine +9 da%s, petitioners throu#h their counsel

*tt%. Nolasco filed a Motion for Reconsideration of the aforesaiddecision, hence, pursuant to the rules, petitioners still had si' +0re$ainin# da%s to file their appeal. *s ad$itted b% the petitioners intheir petition +Rollo, p. 1, *tt%. Nolasco received a cop% of the Orderden%in# their $otion for reconsideration on Ma% )8, 1221, thus,petitioners still has until Ma% 17, 1221 +the re$ainin# si' +0 da%s&ithin &hich to file their appeal. Obviousl%, petitioners &ere not able tofile their Notice of *ppeal on Ma% 17, 1221 as it &as onl% filed on :une7, 1221.

In vie& of the said circu$stances, ?e are of the belief and so holdsthat the Notice of *ppeal filed b% the petitioners &as reall% filed out of

ti$e, the sa$e havin# been filed seventeen +)8 da%s late of there#le$entar% period. 3% reason of &hich, the decision dated Nove$be14, 122) had alread% beco$e final and e'ecutor%. ESettled is the rulethat the perfection of an appeal in the $anner and &ithin the periodper$itted b% la& is not onl% $andator% but "urisdictional, and failure toperfect that appeal renders the challen#ed "ud#$ent final ande'ecutor%. This is not an e$pt% procedural rule but is #rounded onfunda$ental considerations of public polic% and sound practice.E+Ra$As Studio and Photo#raphic Cuip$ent, Inc. vs. !ourt of *ppeals,7-0 S!R* 09), 090. Indeed, *tt%. Nolasco received the order ofdenial of the Motion for Reconsideration on Ma% )8, 1221 but filed aNotice of *ppeal onl% on :une 7, 7227. *s such, the decision of thelo&er court ipso fatobeca$e final &hen no appeal &as perfectedafter the lapse of the re#le$entar% period. This procedural caveatcannot be trifled &ith, not even b% the i#h !ourt.)

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The /P sou#ht a reconsideration, but the !* denied the /PAs $otionfor reconsideration on *pril )9, 122-.)0

On Ma% )), 122-, the /P appealed to the !ourt b% petition for revie&on ertiorari+(.R. No. )072).

On :une 17, 122-, the !ourt denied the petition for revie&.)8The /P$oved for the reconsideration of the denial of its petition for revie& on

*u#ust 19, 122-,)4but the !ourt denied the $otion on October 0,122-.)9The denial beca$e final and e'ecutor% on Nove$ber )1,122-.12

In the $ean&hile that the /P &as e'haustin# the available re$edies tooverturn the denial of due course to the appeal and the issuance of the&rit of e'ecution, Stern 3uilders and dela !ru6 filed in the RT! their$otions for e'ecution despite their previous $otion havin# alread%been #ranted and despite the &rit of e'ecution havin# alread% issued.On :une )), 1227, the RT! #ranted another $otion for e'ecution filedon Ma% 9, 1227 +althou#h the RT! had alread% issued the &rit ofe'ecution on October -, 1221.1)

On :une 17, 1227 and :ul% 1, 1227, respectivel%, the sheriff servednotices of #arnish$ent on the /PAs depositor% ban=s, na$el%@ ;and3an= of the Philippines +3uendia 3ranch and the Develop$ent 3an=of the Philippines +D3P, !o$$on&ealth 3ranch.11The /P assailedthe #arnish$ent throu#h an ur#ent $otion to Cuash the notices of#arnish$entB17and a $otion to Cuash the &rit of e'ecution dated Ma%

9, 1227.1-

On their part, Stern 3uilders and dela !ru6 filed their e' parte $otionfor issuance of a release order.1

On October )-, 1227, the RT! denied the /PAs ur#ent $otion toCuash, and #ranted Stern 3uilders and dela !ru6As e* parte$otion forissuance of a release order.10

The /P $oved for the reconsideration of the order of October )-,1227, but the RT! denied the $otion on Nove$ber 8, 1227.18

On :anuar% )1, 122-, Stern 3uilders and dela !ru6 a#ain sou#ht therelease of the #arnished funds.14Despite the /PAs opposition,19the

RT! #ranted the $otion to release the #arnished funds on March )0,122-.72On *pril 12, 122-, ho&ever, the RT! held in abe%ance theenforce$ent of the &rits of e'ecution issued on October -, 1221 and:une 7, 1227 and all the ensuin# notices of #arnish$ent, citin# Section-, Rule 1, Rules of !ourt, &hich provided that the pendenc% of ati$el% $otion for reconsideration sta%ed the e'ecution of the

"ud#$ent.7)

On Dece$ber 1), 122-, the RT!, throu#h respondent :ud#e *#ustinS. Di6on, authori6ed the release of the #arnished funds of the /P,71to&it@

?RFOR, pre$ises considered, there bein# no $ore le#ali$pedi$ent for the release of the #arnished a$ount in satisfaction ofthe "ud#$ent a&ard in the instant case, let the a$ount #arnished bei$$ediatel% released b% the Develop$ent 3an= of the Philippines,

!o$$on&ealth 3ranch, 5ue6on !it% in favor of the plaintiff.

SO ORDRD.

The /P &as served on :anuar% 7, 122 &ith the order of Dece$ber1), 122- directin# D3P to release the #arnished funds.77

On :anuar% 0, 122, Stern 3uilders and dela !ru6 $oved to cite D3Pin direct conte$pt of court for its non>co$pliance &ith the order ofrelease.7-

Thereupon, on :anuar% )2, 122, the /P brou#ht a petitionfor ertiorariin the !* to challen#e the "urisdiction of the RT! in

issuin# the order of Dece$ber 1), 122- +!*>(.R. !V No.44)1.7*side fro$ raisin# the denial of due process, the /P averredthat the RT! co$$itted #rave abuse of discretion a$ountin# to lac= ore'cess of "urisdiction in rulin# that there &as no lon#er an% le#ali$pedi$ent to the release of the #arnished funds. The /P ar#ued that#overn$ent funds and properties could not be sei6ed b% virtue of &ritsof e'ecution or #arnish$ent, as held in Department of Agriulture v.+ational 'a$or Relations Commission,70and citin# Section 4- ofPresidential Decree No. )-- to the effect that Erevenue funds shall nobe paid out of an% public treasur% or depositor% e'cept in pursuance ofan appropriation la& or other specific statutor% authorit%BE and that theorder of #arnish$ent clashed &ith the rulin# in Universit of the

Philippines Board of Regents v. 'igot,-elan78

to the effect that thefunds belon#in# to the /P &ere public funds.

On :anuar% )9, 122, the !* issued a te$porar% restrainin# order+TRO upon application b% the /P.74

On March 11, 122, Stern 3uilders and dela !ru6 filed in the RT! theira$ended $otion for sheriffAs assistance to i$ple$ent the release ordedated Dece$ber 1), 122-, statin# that the 02>da% period of the TRO ofthe !* had alread% lapsed.79The /P opposed the a$ended $otionand countered that the i$ple$entation of the release order besuspended.-2

On Ma% 7, 122, the RT! #ranted the a$ended $otion for sheriffAsassistance and directed the sheriff to proceed to the D3P to receive

the chec= in satisfaction of the "ud#$ent.-)

The /P sou#ht the reconsideration of the order of Ma% 7,122.-1

On Ma% )0, 122, D3P filed a $otion to consi#n the chec=representin# the "ud#$ent a&ard and to dis$iss the $otion to cite itsofficials in conte$pt of court.-7

On Ma% 17, 122, the /P presented a $otion to &ithhold the releaseof the pa%$ent of the "ud#$ent a&ard.--

On :ul% 4, 122, the RT! resolved all the pendin# $atters,-notin#that the D3P had alread% delivered to the sheriff Mana#erAs !hec= No.4))9-) for P)0,782,)9).8- representin# the #arnished funds pa%able

to the order of Stern 3uilders and dela !ru6 as its co$pliance &ith theRT!As order dated Dece$ber 1), 122-.-0o&ever, the RT! directedin the sa$e order that Stern 3uilders and dela !ru6 should not encashthe chec= or &ithdra& its a$ount pendin# the final resolution of the/PAs petition for ertiorari, to &it@-8

To enable the $one% represented in the chec= in Cuestion +No.22224))9-)) to earn interest durin# the pendenc% of the defendant/niversit% of the Philippines application for a &rit of in"unction &ith the!ourt of *ppeals the sa$e $a% no& be deposited b% the plaintiff at the#arnishee 3an= +Develop$ent 3an= of the Philippines, the dispositionof the a$ount represented therein bein# sub"ect to the final outco$e ofthe case of the /niversit% of the Philippines et al., vs. on. *#ustin S.Di6on et al., +!* (.R. 44)1 before the !ourt of *ppeals.

;et it be stated herein that the plaintiff is not authori6ed to encash and&ithdra& the a$ount represented in the chec= in Cuestion and en"o%the sa$e in the fashion of an o&ner durin# the pendenc% of the casebet&een the parties before the !ourt of *ppeals &hich $a% or $a% notbe resolved in plaintiffAs favor.

?ith the end in vie& of seein# to it that the chec= in Cuestion isdeposited b% the plaintiff at the Develop$ent 3an= of the Philippines+#arnishee ban=, 3ranch Sheriff erlan Velasco is directed toacco$pan% andor escort the plaintiff in $a=in# the deposit of thechec= in Cuestion.

SO ORDRD.

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On Septe$ber )0, 122, the !* pro$ul#ated its assailed decisiondis$issin# the /PAs petition for ertiorari, rulin# that the /P had been#iven a$ple opportunit% to contest the $otion to direct the D3P todeposit the chec= in the na$e of Stern 3uilders and dela !ru6B andthat the #arnished funds could be the proper sub"ect of #arnish$entbecause the% had been alread% ear$ar=ed for the pro"ect, &ith the /Pholdin# the funds onl% in a fiduciar% capacit%,-4viz

Petitioners ne't ar#ue that the /P funds $a% not be sei6ed fore'ecution or #arnish$ent to satisf% the "ud#$ent a&ard. !itin#Depart$ent of *#riculture vs. N;R!, /niversit% of the Philippines3oard of Re#ents vs. on. ;i#ot>Telan, petitioners contend that /Pdeposits at ;and 3an= and the Develop$ent 3an= of the Philippines,bein# #overn$ent funds, $a% not be released absent anappropriations bill fro$ !on#ress.

The ar#u$ent is specious. /P entered into a contract &ith privaterespondents for the e'pansion and renovation of the *rts and Sciences3uildin# of its ca$pus in ;os 3a!ircular No. 99>0 -.2 +-.7 Procedural (uidelines &hich provides thatall accounts pa%able that reverted to the !RO/ $a% be considered forpa%$ent upon deter$ination thru ad$inistrative process, of thee'istence, validit% and le#alit% of the clai$. Thus, the alle#ation of thedefendants that considerin# no appropriation for the pa%$ent of an%a$ount a&arded to plaintiffs appellee the funds of defendant>

appellants $a% not be sei6ed pursuant to a &rit of e'ecution issued b%the re#ular court is $isplaced. Surel% &hen the defendants and theplaintiff entered into the (eneral !onstruction of *#ree$ent there is ana$ount alread% allocated b% the latter for the said pro"ect &hich is nolon#er sub"ect of future appropriation.E-9

*fter the !* denied their $otion for reconsideration on Dece$ber 17,122, the petitioners appealed b% petition for revie&.

M&tt/s A*s*'g #u*'g t)/ P/'(/'+- o t)/ P/t*t*o'

On :anuar% 72, 1220, :ud#e Di6on of the RT! +3ranch 42 deniedStern 3uilders and dela !ru6As $otion to &ithdra& the deposit, inconsideration of the /PAs intention to appeal to the !*,2statin#@

Since it appears that the defendants are intendin# to file a petition forrevie& of the !ourt of *ppeals resolution in !*>(.R. No. 44)1 &ithinthe re#le$entar% period of fifteen +) da%s fro$ receipt of resolution,the !ourt a#rees &ith the defendants stand that the #rantin# ofplaintiffsA sub"ect $otion is pre$ature.

;et it be stated that &hat the !ourt $eant b% its Order dated :ul% 4,122 &hich states in part that the Edisposition of the a$ountrepresented therein bein# sub"ect to the final outco$e of the case ofthe /niversit% of the Philippines, et. al., vs. on. *#ustin S. Di6on etal., +!* (.R. No. 44)1 before the !ourt of *ppeals is that the

"ud#$ent or resolution of said court has to be final and e'ecutor%, for ifthe sa$e &ill still be elevated to the Supre$e !ourt, it &ill not attainfinalit% %et until the hi#hest court has rendered its o&n final "ud#$ent orresolution.)

o&ever, on :anuar% 11, 1228, the /P filed an Urgent Appliation forA -emporar Restraining rder and/or A &rit of Preliminar0n1untion,1averrin# that on :anuar% 7, 1228, :ud#e Maria Theresadela Torre>adao +&ho had $ean&hile replaced :ud#e Di6on upon thelatterAs appoint$ent to the !* had issued another order allo&in# Stern3uilders and dela !ru6 to &ithdra& the deposit,7to &it@

It bears stressin# that defendantsA liabilit% for the pa%$ent of the"ud#$ent obli#ation has beco$e indubitable due to the final ande'ecutor% nature of the Decision dated Nove$ber 14, 122). Insofar asthe pa%$ent of the GsicH "ud#$ent obli#ation is concerned, the !ourtbelieves that there is nothin# $ore the defendant can do to escapeliabilit%. It is observed that there is nothin# $ore the defendant can doto escape liabilit%. It is observed that defendant /.P. S%ste$ hadalread% e'hausted all its le#al re$edies to overturn, set aside or$odif% the decision +dated Nove$ber 14, 122)+ rendered a#ainst it.The &a% the !ourt sees it, defendant /.P. S%ste$As petition before theSupre$e !ourt concerns onl% &ith the $anner b% &hich said "ud#$enta&ard should be satisfied. It has nothin# to do &ith the le#alit% orpropriet% thereof, althou#h it pra%s for the deletion of GsicH reduction ofthe a&ard of $oral da$a#es.

It $ust be e$phasi6ed that this !ourtAs findin#, i.e., that there &assufficient appropriation ear$ar=ed for the pro"ect, &as upheld b% the!ourt of *ppeals in its decision dated Septe$ber )0, 122. 3ein# afindin# of fact, the Supre$e !ourt &ill, ordinaril%, not disturb the sa$e&as said !ourt is not a trier of fact. Such bein# the case, defendantsAar#u$ents that there &as no sufficient appropriation for the pa%$ent of

the "ud#$ent obli#ation $ust fail.

?hile it is true that the for$er Presidin# :ud#e of this !ourt in its Orderdated :anuar% 72, 1220 had stated that@

;et it be stated that &hat the !ourt $eant b% its Order dated :ul% 4,122 &hich states in part that the Edisposition of the a$ountrepresented therein bein# sub"ect to the final outco$e of the case ofthe /niversit% of the Philippines, et. al., vs. on. *#ustin S. Di6on etal., +!* (.R. No. 44)1 before the !ourt of *ppeals is that the

"ud#$ent or resolution of said court has to be final and e'ecutor%, for ifthe sa$e &ill still be elevated to the Supre$e !ourt, it &ill not attainfinalit% %et until the hi#hest court has rendered its o&n final "ud#$ent oresolution.

it should be noted that neither the !ourt of *ppeals nor the Supre$e!ourt issued a preli$inar% in"unction en"oinin# the release or&ithdra&al of the #arnished a$ount. In fact, in its present petition forrevie& before the Supre$e !ourt, /.P. S%ste$ has not pra%ed for theissuance of a &rit of preli$inar% in"unction. Thus, the !ourt doubts&hether such &rit is forthco$in#.

The !ourt honestl% believes that if defendantsA petition assailin# theOrder of this !ourt dated Dece$ber 7), 122- #rantin# the $otion forthe release of the #arnished a$ount &as $eritorious, the !ourt of

*ppeals &ould have issued a &rit of in"unction en"oinin# the sa$e.Instead, said appellate court not onl% refused to issue a &it ofpreli$inar% in"unction pra%ed for b% /.P. S%ste$ but denied thepetition, as &ell.-

The /P contended that :ud#e adao thereb% effectivel% reversed the:anuar% 72, 1220 order of :ud#e Di6on disallo&in# the &ithdra&al ofthe #arnished a$ount until after the decision in the case &ould havebeco$e final and e'ecutor%.

*lthou#h the !ourt issued a TRO on :anuar% 1-, 1228 to en"oin :ud#eadao and all persons actin# pursuant to her authorit% fro$ enforcin#her order of :anuar% 7, 1228,it appears that on :anuar% )0, 1228, orprior to the issuance of the TRO, she had alread% directed the D3P toforth&ith release the #arnished a$ount to Stern 3uilders and dela!ru6B0and that D3P had forth&ith co$plied &ith the order on :anuar%)8, 1228 upon the sheriffAs service of the order of :ud#e adao.8

These intervenin# develop$ents i$pelled the /P to file in this !ourt asupple$ental petition on :anuar% 10, 1228,4alle#in# that the RT!

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+:ud#e adao #ravel% erred in orderin# the i$$ediate release of the#arnished a$ount despite the pendenc% of the petition for revie& inthis !ourt.

The /P filed a second supple$ental petition9after the RT! +:ud#eadao denied the /PAs $otion for the redeposit of the &ithdra&na$ount on *pril )2, 1228,02to &it@

This resolves defendant /.P. S%ste$As /r#ent Motion to Redeposit:ud#$ent *&ard pra%in# that plaintiffs be directed to redeposit the

"ud#$ent a&ard to D3P pursuant to the Te$porar% Restrainin# Order

issued b% the Supre$e !ourt. Plaintiffs opposed the $otion andcountered that the Te$porar% Restrainin# Order issued b% theSupre$e !ourt has beco$e $oot and acade$ic considerin# that theact sou#ht to be restrained b% it has alread% been perfor$ed. The%also alle#ed that the redeposit of the "ud#$ent a&ard &as no lon#erfeasible as the% have alread% spent the sa$e.

It bears stressin#, if onl% to set the record strai#ht, that this !ourt didnot J in i ts Order dated :anuar% 7, 1228 +the i$ple$entation of &hich&as restrained b% the Supre$e !ourt in its Resolution dated :anuar%1-, 1221 J direct that that #arnished a$ount Ebe deposited &ith the#arnishee ban= +Develop$ent 3an= of the PhilippinesE. In the firstplace, there &as no need to order D3P to $a=e such deposit, as the#arnished a$ount &as alread% deposited in the account of plaintiffs&ith the D3P as earl% as Ma% )7, 122. ?hat the !ourt #ranted in itsOrder dated :anuar% 7, 1228 &as plaintiffAs $otion to allo& the release

of said deposit. It $ust be recalled that the !ourt found plaintiffAs$otion $eritorious and, at that ti$e, there &as no restrainin# order orpreli$inar% in"unction fro$ either the !ourt of *ppeals or the Supre$e!ourt &hich could have en"oined the release of plaintiffsA deposit. The!ourt also too= into account the follo&in# factors@

a the Decision in this case had lon# been finaland e'ecutor% after it &as rendered on Nove$ber14, 122)B

b the propriet% of the dis$issal of /.P. S%ste$Asappeal &as upheld b% the Supre$e !ourtB

c a &rit of e'ecution had been issuedB

d defendant /.P. S%ste$As deposit &ith D3P &as#arnished pursuant to a la&ful &rit of e'ecutionissued b% the !ourtB and

e the #arnished a$ount had alread% been turnedover to the plaintiffs and deposited in their account&ith D3P.

The #arnished a$ount, as discussed in the Order dated :anuar% )0,1228, &as alread% o&ned b% the plaintiffs, havin# been delivered tothe$ b% the Deput% Sheriff of this !ourt pursuant to par. +c, Section 9,Rule 79 of the )998 Rules of !ivil Procedure. Moreover, the "ud#$entobli#ation has alread% been full% satisfied as per Report of the Deput%Sheriff.

*nent the Te$porar% Restrainin# Order issued b% the Supre$e !ourt,the sa$e has beco$e funtus ofiio, havin# been issued after the#arnished a$ount had been released to the plaintiffs. The "ud#$entdebt &as released to the plaintiffs on :anuar% )8, 1228, &hile theTe$porar% Restrainin# Order issued b% the Supre$e !ourt &asreceived b% this !ourt on Februar% 1, 1228. *t the ti$e of the issuanceof the Restrainin# Order, the act sou#ht to be restrained had alread%been done, thereb% renderin# the said Order ineffectual.

*fter a careful and thorou#h stud% of the ar#u$ents advanced b% theparties, the !ourt is of the considered opinion that there is no le#albasis to #rant defendant /.P. S%ste$As $otion to redeposit the

"ud#$ent a$ount. (rantin# said $otion is not onl% contrar% to la&, butit &ill also render this !ourtAs final e'ecutor% "ud#$ent nu#ator%.;iti#ation $ust end and ter$inate so$eti$e and so$e&here, and it is

essential to an effective ad$inistration of "ustice that once a "ud#$enthas beco$e final the issue or cause involved therein should be laid torest. This doctrine of finalit% of "ud#$ent is #rounded on funda$entalconsiderations of public polic% and sound practice. In fact, nothin# is$ore settled in la& than that once a "ud#$ent attains finalit% it thereb%beco$es i$$utable and unalterable. It $a% no lon#er be $odified inan% respect, even if the $odification is $eant to correct &hat isperceived to be an erroneous conclusion of fact or la&, and re#ardlessof &hether the $odification is atte$pted to be $ade b% the courtrenderin# it or b% the hi#hest court of the land.

?RFOR, pre$ises considered, findin# defendant /.P. S%ste$As/r#ent Motion to Redeposit :ud#$ent *&ard devoid of $erit, the sa$eis hereb% DNID.

SO ORDRD.

Issu/s

The /P no& sub$its that@

I

T !O/RT OF *PP*;S !OMMITTD (R*V RROR INDISMISSIN( T PTITION, *;;O?IN( IN FF!T T(*RNISMNT OF /P F/NDS, ?N IT R/;D T*T F/NDS*V *;R*D 3N *RM*RKD FOR T !ONSTR/!TIONPRO:!TB *ND T/S, TR IS NO ND FOR F/RTR

*PPROPRI*TIONS.

II

T !O/RT OF *PP*;S !OMMITTD (R*V RROR IN*;;O?IN( (*RNISMNT OF * ST*T /NIVRSITAS F/NDS INVIO;*TION OF *RTI!; LIV, S!TION + OF T!ONSTIT/TION.

III

IN T *;TRN*TIV, T /NIVRSIT INVOKS 5/IT *ND

T RVI? PO?RS OF TIS ONOR*3; !O/RT TOMODIF, IF NOT TOT*;; D;T T *?*RD OF P)2 MI;;ION

*S MOR*; D*M*(S TO RSPONDNTS.

IV

T RT!>3R*N! 42 !OMMITTD (R*V RROR IN ORDRIN(T IMMDI*T R;*S OF T :/D(MNT *?*RD IN ITSORDR D*TD 7 :*N/*R 1228 ON T (RO/ND OF 5/IT

*ND :/DI!I*; !O/RTS.

V

T RT!>3R*N! 42 !OMMITTD (R*V RROR IN ORDRIN(T IMMDI*T R;*S OF T :/D(MNT *?*RD IN ITS

ORDR D*TD )0 :*N/*R 1228 ON T (RO/ND T*TPTITIONR /NIVRSIT STI;; *S * PNDIN( MOTION FORR!ONSIDR*TION OF T ORDR D*TD 7 :*N/*R 1228.

VI

T RT!>3R*N! 42 !OMMITTD (R*V RROR IN NOTORDRIN( T RDPOSIT OF T (*RNISD *MO/NT TOT D3P IN VIO;*TION OF T !;*R ;*N(/*( OF TS/PRM !O/RT RSO;/TION D*TD 1- :*N/*R 1228.

The /P ar#ues that the a$ount ear$ar=ed for the construction pro"ecthad been purposel% set aside onl% for the aborted pro"ect and did notinclude incidental $atters li=e the a&ards of actual da$a#es, $oral

4
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da$a#es and attorne%As fees. In support of its ar#u$ent, the /P cited*rticle )1.1 of the (eneral !onstruction *#ree$ent, &hich stipulatedthat no deductions &ould be allo&ed for the pa%$ent of clai$s,da$a#es, losses and e'penses, includin# attorne%As fees, in case ofan% liti#ation arisin# out of the perfor$ance of the &or=. The /P insiststhat the !* decision &as inconsistent &ith the rulin#s in Commissionerof Pu$li 2igh3as v. San Diego0)andDepartment of Agriulture v.+'RC01to the effect that #overn$ent funds and properties could notbe sei6ed under &rits of e'ecution or #arnish$ent to satisf% "ud#$enta&ards.

Further$ore, the /P contends that the !* contravened Section ,*rticle LIV of the !onstitution b% allo&in# the #arnish$ent of /P funds,because the #arnish$ent resulted in a substantial reduction of the/PAs li$ited bud#et allocated for the re$uneration, "ob satisfaction andfulfill$ent of the best available teachersB that :ud#e adao shouldhave e'hibited "udicial courtes% to&ards the !ourt due to the pendenc%of the /PAs petition for revie&B and that she should have also desistedfro$ declarin# that the TRO issued b% this !ourt had beco$e funtusoffiio.

;astl%, the /P states that the a&ards of actual da$a#esof P,8)0,819.22 and $oral da$a#es of P)2 $illion should bereduced, if not entirel% deleted, due to its bein# unconscionable,ineCuitable and detri$ental to public service.

In contrast, Stern 3uilders and dela !ru6 aver that the petition for

revie& &as fatall% defective for its failure to $ention the other casesupon the sa$e issues pendin# bet&een the parties +i.e., !*>(.R. No.8879 and (.R No. )072)B that the /P &as evidentl% resortin# toforu$ shoppin#, and to dela%in# the satisfaction of the final "ud#$entb% the filin# of its petition for revie&B that the rulin# in Commissioner ofPu$li &or4s v. San Diegohad no application because there &as anappropriation for the pro"ectB that the /P retained the funds allotted forthe pro"ect onl% in a fiduciar% capacit%B that the contract price had been$ean&hile ad"usted to P11,774,7.1, an a$ount alread% $ore thansufficient to cover the "ud#$ent a&ardB that the /PAs pra%er to reduceor delete the a&ard of da$a#es had no factual basis, because the%had been #ravel% &ron#ed, had been deprived of their source ofinco$e, and had suffered untold $iseries, disco$fort, hu$iliation andsleepless %earsB that dela !ru6 had even been constrained to sell hishouse, his eCuip$ent and the i$ple$ents of his trade, and to#ether&ith his fa$il% had been forced to live $iserabl% because of the&ron#ful actuations of the /PB and that the RT! correctl% declared the

!ourtAs TRO to be alread% funtus offiiob% reason of the &ithdra&alof the #arnished a$ount fro$ the D3P.

The decisive issues to be considered and passed upon are, therefore@

+a &hether the funds of the /P &ere the proper sub"ect of#arnish$ent in order to satisf% the "ud#$ent a&ardB and +b &hetherthe /PAs pra%er for the deletion of the a&ards of actual da$a#esof P,8)0,819.22, $oral da$a#es of P)2,222,222.22 and attorne%Asfees of P)2,222.22 plus P),22.22 per appearance could be #ranteddespite the finalit% of the "ud#$ent of the RT!.

Ru*'g

The petition for revie& is $eritorious.

I.UP4s u'(s, 5/*'g go6/'/'t u'(s,

&/ 'ot su5/+t to g&'*s)/'t

The /P &as founded on :une )4, )924 throu#h *ct )482 to provideadvanced instruction in literature, philosoph%, the sciences, and arts,and to #ive professional and technical trainin# to deservin#students.07Despite its establish$ent as a bod% corporate,0-the /Pre$ains to be a Echartered institutionE0perfor$in# a le#iti$ate#overn$ent function. It is an institution of hi#her learnin#, not acorporation established for profit and declarin# an% dividends.00Inenactin# Republic *ct No. 922 (-he Universit of the PhilippinesCharter of 5667), !on#ress has declared the /P as the national

universit%08Ededicated to the search for truth and =no&led#e as &ell asthe develop$ent of future leaders.E04

Irrefra#abl%, the /P is a #overn$ent instru$entalit%,09perfor$in# theStateAs constitutional $andate of pro$otin# Cualit% and accessibleeducation.82*s a #overn$ent instru$entalit%, the /P ad$inistersspecial funds sourced fro$ the fees and inco$e enu$erated under *cNo. )482 and Section ) of 'ecutive Order No. 8)-,8)and fro$ the%earl% appropriations, to achieve the purposes laid do&n b% Section 1of *ct )482, as e'panded in Republic *ct No. 922.81*ll the funds#oin# into the possession of the /P, includin# an% interest accruin#fro$ the deposit of such funds in an% ban=in# institution, constitute aEspecial trust fund,E the disburse$ent of &hich should al&a%s beali#ned &ith the /PAs $ission and purpose,87and should al&a%s besub"ect to auditin# b% the !O*.8-

Presidential Decree No. )-- defines a Etrust fundE as a fund thatofficiall% co$es in the possession of an a#enc% of the #overn$ent or ofa public officer as trustee, a#ent or ad$inistrator, or that is received forthe fulfill$ent of so$e obli#ation.8* trust fund $a% be utili6ed onl% forthe Especific purpose for &hich the trust &as created or the fundsreceived.E80

The funds of the /P are #overn$ent funds that are public in characterThe% include the inco$e accruin# fro$ the use of real propert% cededto the /P that $a% be spent onl% for the attain$ent of its institutionalob"ectives.88ence, the funds sub"ect of this action could not be validl%

$ade the sub"ect of the RT!As &rit of e'ecution or #arnish$ent. Theadverse "ud#$ent rendered a#ainst the /P in a suit to &hich it hadi$pliedl% consented &as not i$$ediatel% enforceable b% e'ecutiona#ainst the /P,84because suabilit% of the State did not necessaril%$ean its liabilit%.89

* $ar=ed distinction e'ists bet&een suabilit% of the State and itsliabilit%. *s the !ourt succinctl% stated in8uniipalit of San 9ernando!'a Union v. 9irme42

* distinction should first be $ade bet&een suabilit% and liabilit%.ESuabilit% depends on the consent of the state to be sued, liabilit% onthe applicable la& and the established facts. The circu$stance that astate is suable does not necessaril% $ean that it is liableB on the otherhand, it can never be held liable if it does not first consent to be sued.;iabilit% is not conceded b% the $ere fact that the state has allo&ed

itself to be sued. ?hen the state does &aive its soverei#n i$$unit%, itis onl% #ivin# the plaintiff the chance to prove, if it can, that thedefendant is liable.

*lso, in Repu$li v. #illasor,4)&here the issuance of an alias &rit ofe'ecution directed a#ainst the funds of the *r$ed Forces of thePhilippines to satisf% a final and e'ecutor% "ud#$ent &as nullified, the!ourt said@

''' The universal rule that &here the State #ives its consent to besued b% private parties either b% #eneral or special la&, it $a% li$itclai$antAs action Eonl% up to the co$pletion of proceedin#s anterior tothe sta#e of e'ecutionE and that the po&er of the !ourts ends &hen the

"ud#$ent is rendered, since #overn$ent funds and properties $a% notbe sei6ed under &rits of e'ecution or #arnish$ent to satisf% such

"ud#$ents, is based on obvious considerations of public polic%.Disburse$ents of public funds $ust be covered b% the correspondin#appropriation as reCuired b% la&. The functions and public servicesrendered b% the State cannot be allo&ed to be paral%6ed or disruptedb% the diversion of public funds fro$ their le#iti$ate and specificob"ects, as appropriated b% la&.

The /P correctl% sub$its here that the #arnish$ent of its funds tosatisf% the "ud#$ent a&ards of actual and $oral da$a#es +includin#attorne%As fees &as not validl% $ade if there &as no specialappropriation b% !on#ress to cover the liabilit%. It &as, therefore,le#all% un&arranted for the !* to a#ree &ith the RT!As holdin# in theorder issued on *pril ), 1227 that no appropriation b% !on#ress toallocate and set aside the pa%$ent of the "ud#$ent a&ards &asnecessar% because Ethere +&ere alread% an appropriations +sicear$ar=ed for the said pro"ect.E41The !* and the RT! thereb%

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un"ustifiabl% i#nored the le#al restriction i$posed on the trust funds ofthe (overn$ent and its a#encies and instru$entalities to be usede'clusivel% to fulfill the purposes for &hich the trusts &ere created orfor &hich the funds &ere received e'cept upon e'press authori6ationb% !on#ress or b% the head of a #overn$ent a#enc% in control of thefunds, and sub"ect to pertinent bud#etar% la&s, rules and re#ulations.47

Indeed, an appropriation b% !on#ress &as reCuired before the"ud#$ent that rendered the /P liable for $oral and actual da$a#es+includin# attorne%As fees &ould be satisfied considerin# that such$onetar% liabilities &ere not covered b% the Eappropriations ear$ar=edfor the said pro"ect.E The !onstitution strictl% $andated that E+no$one% shall be paid out of the Treasur% e'cept in pursuance of anappropriation $ade b% la&.E4-

IICOA ust &(u(*+&t/ *6&t/ /so'(/'ts4 +&*

5/o/ /9/+ut*o' s)ou( o+//(

The e'ecution of the $onetar% "ud#$ent a#ainst the /P &as &ithin thepri$ar% "urisdiction of the !O*. This &as e'pressl% provided in Section10 of Presidential Decree No. )--, to &it@

Section 10. General 1urisdition.> The authorit% and po&ers of the!o$$ission shall e'tend to and co$prehend all $atters relatin# toauditin# procedures, s%ste$s and controls, the =eepin# of the #eneralaccounts of the (overn$ent, the preservation of vouchers pertainin#

thereto for a period of ten %ears, the e'a$ination and inspection of theboo=s, records, and papers relatin# to those accountsB and the auditand settle$ent of the accounts of all persons respectin# funds orpropert% received or held b% the$ in an accountable capacit%, as &ellas the e'a$ination, audit, and settle$ent of all debts and clai$s of an%sort due fro$ or o&in# to the (overn$ent or an% of i ts subdivisions,a#encies and instru$entalities. The said "urisdiction e'tends to all#overn$ent>o&ned or controlled corporations, includin# theirsubsidiaries, and other self>#overnin# boards, co$$issions, ora#encies of the (overn$ent, and as herein prescribed, includin# non#overn$ental entities subsidi6ed b% the #overn$ent, those funded b%donations throu#h the #overn$ent, those reCuired to pa% levies or#overn$ent share, and those for &hich the #overn$ent has put up acounterpart fund or those partl% funded b% the #overn$ent.

It &as of no $o$ent that a final and e'ecutor% decision alread%

validated the clai$ a#ainst the /P. The settle$ent of the $onetar%clai$ &as still sub"ect to the pri$ar% "urisdiction of the !O* despite thefinal decision of the RT! havin# alread% validated the clai$.4*s such,Stern 3uilders and dela !ru6 as the clai$ants had no alternativee'cept to first see= the approval of the !O* of their $onetar% clai$.

On its part, the RT! should have e'ercised ut$ost caution, prudenceand "udiciousness in dealin# &ith the $otions for e'ecution a#ainst the/P and the #arnish$ent of the /PAs funds. The RT! had no authorit%to direct the i$$ediate &ithdra&al of an% portion of the #arnishedfunds fro$ the depositor% ban=s of the /P. 3% esche&in# ut$ostcaution, prudence and "udiciousness in dealin# &ith the e'ecution and#arnish$ent, and b% authori6in# the &ithdra&al of the #arnished fundsof the /P, the RT! acted be%ond its "urisdiction, and all its orders andissuances thereon &ere void and of no le#al effect, specificall%@ +a theorder :ud#e adao issued on :anuar% 7, 1228 allo&in# Stern 3uilders

and dela !ru6 to &ithdra& the deposited #arnished a$ountB +b theorder :ud#e adao issued on :anuar% )0, 1228 directin# D3P toforth&ith release the #arnish a$ount to Stern 3uilders and dela !ru6B+c the sheriffAs report of :anuar% )8, 1228 $anifestin# the fullsatisfaction of the &rit of e'ecutionB and +d the order of *pril )2, 1228de%in# the /PAs $otion for the redeposit of the &ithdra&n a$ount.ence, such orders and issuances should be struc= do&n &ithoute'ception.

Nothin# e'tenuated :ud#e adaoAs successive violations ofPresidential Decree No. )--. She &as a&are of Presidential DecreeNo. )--, considerin# that the !ourt circulated to all "ud#es its

*d$inistrative !ircular No. )2>1222,40issued on October 1, 1222,en"oinin# the$ Eto observe ut$ost caution, prudence and

"udiciousness in the issuance of &rits of e'ecution to satisf% $one%

"ud#$ents a#ainst #overn$ent a#encies and local #overn$ent unitsEprecisel% in order to prevent the circu$vention of Presidential DecreeNo. )--, as &ell as of the rules and procedures of the !O*, to &it@

In order to prevent possible circu$vention of the rules and proceduresof the !o$$ission on *udit, "ud#es are hereb% en"oined to observeut$ost caution, prudence and "udiciousness in the issuance of &rits ofe'ecution to satisf% $one% "ud#$ents a#ainst #overn$ent a#enciesand local #overn$ent units.

:ud#es should bear in $ind that in !o$$issioner of Public i#h&a%s

v. San Die#o +7) S!R* 0)8, 01 )982, this !ourt e'plicitl% stated@

EThe universal rule that &here the State #ives its consent to be sued b%private parties either b% #eneral or special la&, it $a% li$it clai$antAsaction onl% up to the co$pletion of proceedin#s anterior to the sta#e oe'ecutionA and that the po&er of the !ourt ends &hen the "ud#$ent isrendered, since #overn$ent funds and properties $a% not be sei6edunder &rits of e'ecution or #arnish$ent to satisf% such "ud#$ents, isbased on obvious considerations of public polic%. Disburse$ents ofpublic funds $ust be covered b% the correspondin# appropriation asreCuired b% la&. The functions and public services rendered b% theState cannot be allo&ed to be paral%6ed or disrupted b% the diversionof public funds fro$ their le#iti$ate and specific ob"ects, asappropriated b% la&.

Moreover, it is settled "urisprudence that upon deter$ination of State

liabilit%, the prosecution, enforce$ent or satisfaction thereof $ust stillbe pursued in accordance &ith the rules and procedures laid do&n inP.D. No. )--, other&ise =no&n as the (overn$ent *uditin# !ode ofthe Philippines +Depart$ent of *#riculture v. N;R!, 118 S!R* 097,82)>21 )997 citin# Republic vs. Villasor, - S!R* 4- )987. *ll $one%clai$s a#ainst the (overn$ent $ust first be filed &ith the !o$$issionon *udit &hich $ust act upon it &ithin si't% da%s. Re"ection of the clai$&ill authori6e the clai$ant to elevate the $atter to the Supre$e !ourton certiorari and in effect, sue the State thereb% +P.D. )--, Sections-9>2.

o&ever, not&ithstandin# the rule that #overn$ent properties are notsub"ect to lev% and e'ecution unless other&ise provided for b% statute+Republic v. Palacio, 17 S!R* 499 )904B !o$$issioner of Publici#h&a%s v. San Die#o, supra or $unicipal ordinance +Municipalit% ofMa=ati v. !ourt of *ppeals, )92 S!R* 120 )992, the !ourt has, in

various instances, distin#uished bet&een #overn$ent funds andproperties for public use and those not held for public use. Thus, inViuda de Tan Toco v. Municipal !ouncil of Iloilo +-9 Phil 1 )910, the!ourt ruled that E&here propert% of a $unicipal or other publiccorporation is sou#ht to be sub"ected to e'ecution to satisf% "ud#$entsrecovered a#ainst such corporation, the Cuestion as to &hether suchpropert% is leviable or not is to be deter$ined b% the usa#e andpurposes for &hich it is held.E The follo&in# can be culled fro$ Viudade Tan Toco v. Municipal !ouncil of Iloilo@

). Properties held for public uses J and #enerall% ever%thin# held for#overn$ental purposes J are not sub"ect to lev% and sale undere'ecution a#ainst such corporation. The sa$e rule applies to funds inthe hands of a public officer and ta'es due to a $unicipal corporation.

1. ?here a $unicipal corporation o&ns in its proprietar% capacit%, asdistin#uished fro$ its public or #overn$ent capacit%, propert% not usedor used for a public purpose but for Cuasi>private purposes, it is the#eneral rule that such propert% $a% be sei6ed and sold undere'ecution a#ainst the corporation.

7. Propert% held for public purposes is not sub"ect to e'ecution $erel%because it is te$poraril% used for private purposes. If the public use is&holl% abandoned, such propert% beco$es sub"ect to e'ecution.

This *d$inistrative !ircular shall ta=e effect i$$ediatel% and the !ourt*d$inistrator shall see to it that it is faithfull% i$ple$ented.

*lthou#h :ud#e adao pointed out that neither the !* nor the !ourthad issued as of thenan% &rit of preli$inar% in"unction to en"oin the

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release or &ithdra&al of the #arnished a$ount, she did not need an%&rit of in"unction fro$ a superior court to co$pel her obedience to thela&. The !ourt is disturbed that an e'perienced "ud#e li=e her shouldloo= at public la&s li=e Presidential Decree No. )-- dis$issivel%instead of lo%all% follo&in# and unCuestionin#l% i$ple$entin# the$.That she did so turned her court into an oppressive bastion of $indlesst%rann% instead of havin# it as a true haven for the see=ers of "usticeli=e the /P.

IIIP/*o( o &/& (*( 'ot st&t :*t)out //+t*6/

s/6*+/ o (/+*s*o' uo' +ou's/ o /+o(;F/s)


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#eneral rule prohibitin# the retroactive operation of statues, but is #ivenretroactive effect in actions pendin# and undeter$ined at the ti$e of itspassa#e &ithout violatin# an% ri#ht of a person &ho $a% feel that he isadversel% affected.

?e have further said that a procedural rule that is a$ended for thebenefit of liti#ants in furtherance of the ad$inistration of "ustice shall beretroactivel% applied to li=e&ise favor actions then pendin#, as eCuit%deli#hts in eCualit%.)21?e $a% even rela' strin#ent procedural rules inorder to serve substantial "ustice and in the e'ercise of this !ourtAseCuit% "urisdiction.)27Cuit% "urisdiction ai$s to do co$plete "ustice incases &here a court of la& is unable to adapt its "ud#$ents to thespecial circu$stances of a case because of the infle'ibilit% of itsstatutor% or le#al "urisdiction.)2-

It is co#ent to add in this re#ard that to den% the benefit of the fresh,period ruleto the /P &ould a$ount to in"ustice and absurdit% Jin"ustice, because the "ud#$ent in Cuestion &as issued on Nove$ber14, 122) as co$pared to the "ud#$ent in Ne%pes that &as rendered in)994B absurdit%, because parties receivin# notices of "ud#$ent andfinal orders issued in the %ear )994 &ould en"o% the benefit ofthe fresh,period rulebut the later rulin#s of the lo&er courts li=e thatherein &ould not.)2

!onseCuentl%, even if the rec=onin# started fro$ Ma% )8, 1221, &hen*tt%. Nolasco received the denial, the /PAs filin# on :une 7, 1221 of thenotice of appeal &as not tard% &ithin the conte't of the fresh,period

rule. For the /P, the fresh period of )>da%s counted fro$ service ofthe denial of the $otion for reconsideration &ould end on :une ),1221, &hich &as a Saturda%. ence, the /P had until the ne't &or=in#da%, or :une 7, 1221, a Monda%, &ithin &hich to appeal, confor$abl%&ith Section ) of Rule 11, Rules of !ourt, &hich holds that@ EIf the lastda% of the period, as thus co$puted, falls on a Saturda%, a Sunda%, ora le#al holida% in the place &here the court sits, the ti$e shall not rununtil the ne't &or=in# da%.E

IVA:&(s o o'/t&- (&&g/s,

5/*'g (/6o*( o &+tu& &'( /g& 5&s/s,(*( 'ot &tt&*' *'&*t- &'( s)ou( 5/ (//t/(

Section )- of *rticle VIII of the !onstitution prescribes that e'pressfindin#s of fact and of la& should be $ade in the decision rendered b%

an% court, to &it@

Section )-. No decision shall be rendered b% an% court &ithoute'pressin# therein clearl% and distinctl% the facts and the la& on &hichit is based.

No petition for revie& or $otion for reconsideration of a decision of thecourt shall be refused due course or denied &ithout statin# the le#albasis therefor.

I$ple$entin# the constitutional provision in civil actions is Section ) ofRule 70, Rules of Court! viz

Section ). Rendition of "ud#$ents and final orders. * "ud#$ent or

final order deter$inin# the $erits of the case shall be in &ritin#personall% and directl% prepared b% the "ud#e, statin# clearl% anddistinctl% the facts and the la& on &hich it is based, si#ned b% hi$, andfiled &ith the cler= of the court. +)a

The !onstitution and the Rules of Courtapparentl% delineate t&o $ainessential parts of a "ud#$ent, na$el%@ the$odand the deretal

portion. *lthou#h the latter is the controllin# part,)20the i$portance ofthe for$er is not to be li#htl% re#arded because it is there &here thecourt clearl% and distinctl% states its findin#s of fact and of la& on &hichthe decision is based. To state it differentl%, one &ithout the other isineffectual and useless. The o$ission of either inevitabl% results in a

"ud#$ent that violates the letter and the spirit of the !onstitution andthe Rules of Court.

The ter$ findings of fatthat $ust be found in the bod% of the decisionrefers to state$ents of fact, not to conclusions of la&.)28/nli=e inpleadin#s &here ulti$ate facts alone need to be stated, the!onstitution and the Rules of !ourt reCuire not onl% that a decisionshould state the ulti$ate facts but also that it should specif% thesupportin# evidentiar% facts, for the% are &hat are called the findin#s offact.

The i$portance of the findin#s of fact and of la& cannot be overstated.The reason and purpose of the !onstitution and the Rules of Courtinthat re#ard are obviousl% to infor$ the parties &h% the% &in or lose,and &hat their ri#hts and obli#ations are. Onl% thereb% is the de$andof due process $et as to the parties. *s :ustice Isa#ani *. !ru6e'plained in Nicos Industrial !orporation v. !ourt of *ppeals@)24

It is a reCuire$ent of due process that the parties to a liti#ation beinfor$ed of ho& it &as decided, &ith an e'planation of the factual andle#al reasons that led to the conclusions of the court. The court cannotsi$pl% sa% that "ud#$ent is rendered in favor of L and a#ainst and

"ust leave it at that &ithout an% "ustification &hatsoever for its action.The losin# part% is entitled to =no& &h% he lost, so he $a% appeal to ahi#her court, if per$itted, should he believe that the decision should bereversed. * decision that does not clearl% and distinctl% state the factsand the la& on &hich it is based leaves the parties in the dar= as toho& it &as reached and is especiall% pre"udicial to the losin# part%,&ho is unable to pinpoint the possible errors of the court for revie& b%a hi#her tribunal.

ere, the decision of the RT! "ustified the #rant of actual and $oralda$a#es, and attorne%As fees in the follo&in# terse $anner, vi6@

''' The !ourt is not un$indful that due to defendantsA un"ustifiedrefusal to pa% their outstandin# obli#ation to plaintiff, the sa$e sufferedlosses and incurred e'penses as he &as forced to re>$ort#a#e hishouse and lot located in 5ue6on !it% to Metroban= +'h. E!!E and3PI 3an= "ust to pa% its $onetar% obli#ations in the for$ of interest andpenalties incurred in the course of the construction of the sub"ectpro"ect.)29

The state$ent that Edue to defendantsA un"ustified refusal to pa% theiroutstandin# obli#ation to plaintiff, the sa$e suffered losses andincurred e'penses as he &as forced to re>$ort#a#e his house and lotlocated in 5ue6on !it% to Metroban= +'h. E!!E and 3PI 3an= "ust to

pa% its $onetar% obli#ations in the for$ of interest and penaltiesincurred in the course of the construction of the sub"ect pro"ectE &asonl% a conclusion of fact and la& that did not co$pl% &ith theconstitutional and statutor% prescription. The state$ent specified nodetailed e'penses or losses constitutin# the P,8)0,819.22 actualda$a#es sustained b% Stern 3uilders in relation to the constructionpro"ect or to other pecuniar% hardships. The o$ission of suche'penses or losses directl% indicated that Stern 3uilders did not provethe$ at all, &hich then contravened *rticle 1)99, Civil Code, thestatutor% basis for the a&ard of actual da$a#es, &hich entitled aperson to an adeCuate co$pensation onl% for such pecuniar% losssuffered b% hi$ as he has dul proved. *s such, the actual da$a#esallo&ed b% the RT!, bein# bereft of factual support, &ere speculativeand &hi$sical. ?ithout the clear and distinct findin#s of fact and la&,the a&ard a$ounted onl% to anipse di*iton the part of the RT!,))2anddid not attain finalit%.

There &as also no clear and distinct state$ent of the factual and le#alsupport for the a&ard of $oral da$a#es in the substantial a$ountof P)2,222,222.22. The a&ard &as thus also speculative and&hi$sical. ;i=e the actual da$a#es, the $oral da$a#es constitutedanother "udicial ipse di'it, the inevitable conseCuence of &hich &as torender the a&ard of $oral da$a#es incapable of attainin# finalit%. Inaddition, the #rant of $oral da$a#es in that $anner contravened thela& that per$itted the recover% of $oral da$a#es as the $eans toassua#e Eph%sical sufferin#, $ental an#uish, fri#ht, serious an'iet%,bes$irched reputation, &ounded feelin#s, $oral shoc=, socialhu$iliation, and si$ilar in"ur%.E)))The contravention of the la& &as$anifest considerin# that Stern 3uilders, as an artificial person, &asincapable of e'periencin# pain and $oral sufferin#s.))1*ssu$in# thatin #rantin# the substantial a$ount of P)2,222,222.22 as $oralda$a#es, the RT! $i#ht have had in $ind that dela !ru6 had hi$self

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suffered $ental an#uish and an'iet%. If that &as the case, then theRT! obviousl% disre#arded his separate and distinct personalit% fro$that of Stern 3uilders.))7Moreover, his $oral and e$otional sufferin#sas the President of Stern 3uilders &ere not the sufferin#s of Stern3uilders. ;astl%, the RT! violated the basic principle that $oralda$a#es &ere not intended to enrich the plaintiff at the e'pense of thedefendant, but to restore the plaintiff to his status Cuo ante as $uch aspossible. Ta=en to#ether, therefore, all these considerations e'posedthe substantial a$ount of P)2,222,222.22 allo&ed as $oral da$a#esnot onl% to be factuall% baseless and le#all% indefensible, but also to beunconscionable, ineCuitable and unreasonable.

;i=e the actual and $oral da$a#es, the P)2,222.22, plus P),22.22per appearance, #ranted as attorne%As fees &ere factuall% un&arrantedand devoid of le#al basis. The #eneral rule is that a successful liti#antcannot recover attorne%As fees as part of the da$a#es to be assesseda#ainst the losin# part% because of the polic% that no pre$iu$ shouldbe placed on the ri#ht to liti#ate.))-Prior to the effectivit% of the present!ivil !ode, indeed, such fees could be recovered onl% &hen there &asa stipulation to that effect. It &as onl% under the present Civil Codethatthe ri#ht to collect attorne%As fees in the cases $entioned in *rticle1124))of the Civil Codeca$e to be reco#ni6ed.))0Nonetheless, &ithattorne%As fees bein# allo&ed in the concept of actual da$a#es,))8theira$ounts $ust be factuall% and le#all% "ustified in the bod% of thedecision and not stated for the first ti$e in the decretalportion.))4Statin# the a$ounts onl% in the dispositive portion of the

"ud#$ent is not enou#hB))9a rendition of the factual and le#al"ustifications for the$ $ust also be laid out in the bod% of the

decision.)12

That the attorne%As fees #ranted to the private respondents did notsatisf% the fore#oin# reCuire$ent suffices for the !ourt to undothe$.)1)The #rant &as ineffectual for bein# contrar% to la& and publicpolic%, it bein# clear that the e'press findin#s of fact and la& &ereintended to brin# the case &ithin the e'ception and thereb% "ustif% thea&ard of the attorne%As fees. Devoid of such e'press findin#s, thea&ard &as a conclusion &ithout a pre$ise, its basis bein# i$properl%left to speculation and con"ecture.)11

Nonetheless, the absence of findin#s of fact and of an% state$ent ofthe la& and "urisprudence on &hich the a&ards of actual and $oralda$a#es, as &ell as of attorne%As fees, &ere based &as a fatal fla&that invalidated the decision of the RT! onl% as to such a&ards. *s the!ourt declared in #elarde v. Soial "ustie Soiet,)17the failure to

co$pl% &ith the constitutional reCuire$ent for a clear and distinctstate$ent of the supportin# facts and la& Eis a #rave abuse ofdiscretion a$ountin# to lac= or e'cess of "urisdictionE and thatE+decisions or orders issued in careless disre#ard of the constitutional$andate are a patent nullit% and $ust be struc= do&n as void.E)1-Theother ite$ #ranted b% the RT! +i.e., P27,-01.8- shall stand, sub"ectto the action of the !O* as stated herein.

%HEREFORE, the !ourt GRANTSthe petition for revie& oncertiorariB REVERSESand SETS ASI#Ethe decision of the !ourt of

*ppeals under revie&B ANNUSthe orders for the #arnish$ent of thefunds of the /niversit% of the Philippines and for the release of the#arnished a$ount to Stern 3uilders !orporation and Servillano dela!ru6B and #EETESfro$ the decision of the Re#ional Trial !ourtdated Nove$ber 14, 122) for bein# void onl% the a&ards of actualda$a#es of P,8)0,819.22, $oral da$a#es of P)2,222,222.22, and

attorne%s fees ofP)2,222.22, plus P),22.22 per appearance, infavor of Stern 3uilders !orporation and Servillano dela !ru6.

The !ourt OR#ERSSte$ 3uilders !orporation and Servillano dela!ru6 to redeposit the a$ount ofP)0,782,)9).8- &ithin )2 da%s fro$receipt of this decision.

!osts of suit to be paid b% the private respondents.

SO ORDRD.

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Lipat vs. Pacific Banking Corporation Case Digest*&t 6s. P&+**+ "&'=*'g Coo&t*o'>GR 1?2?3@, 30 A* 2003

F&+tsBThe spouses *lfredo ;ipat and stelita 3ur#os ;ipat, o&nedE3elas 'port Tradin#E +3T, a sin#le proprietorship &ith principaloffice at No. 4)- *urora 3oulevard, !ubao, 5ue6on !it%. 3T &asen#a#ed in the $anufacture of #ar$ents for do$estic and forei#nconsu$ption. The ;ipats also o&ned the EM%stical FashionsE in the/nited States, &hich sells #oods i$ported fro$ the Philippines throu#h

3T. Mrs. ;ipat desi#nated her dau#hter, Teresita 3. ;ipat, to $ana#e3T in the Philippines &hile she &as $ana#in# EM%stical FashionsE inthe /nited States. In order to facilitate the convenient operation of3T, stelita ;ipat e'ecuted on )- Dece$ber )984, a special po&er ofattorne% appointin# Teresita ;ipat as her attorne%>in>fact to obtainloans and other credit acco$$odations fro$ Pacific 3an=in#!orporation +Pacific 3an=. She li=e&ise authori6ed Teresita toe'ecute $ort#a#e contracts on properties o&ned or co>o&ned b% heras securit% for the obli#ations to be e'tended b% Pacific 3an= includin#an% e'tension or rene&al thereof.

So$eti$e in *pril )989, Teresita, b% virtue of the special po&er ofattorne%, &as able to secure for and in behalf of her $other, Mrs. ;ipatand 3T, a loan fro$ Pacific 3an= a$ountin# to P47,4-.22 to bu%fabrics to be $anufactured b% 3T and e'ported to EM%sticalFashionsE in the /nited States. *s securit% therefor, the ;ipat spouses,as represented b% Teresita, e'ecuted a Real state Mort#a#e over

their propert% located at No. 4)- *urora 3lvd., !ubao, 5ue6on !it%.Said propert% &as li=e&ise $ade to secure other additional or ne&loans, etc. On Septe$ber )989, 3T &as incorporated into a fa$il%corporation na$ed 3elas 'port !orporation +3! in order tofacilitate the $ana#e$ent of the business. 3! &as en#a#ed in thebusiness of $anufacturin# and e'portation of all =inds of #ar$ents of&hatever =ind and description and utili6ed the sa$e $achineries andeCuip$ent previousl% used b% 3T. Its incorporators and directorsincluded the ;ipat spouses &ho o&ned a co$bined 722 shares out ofthe -12 shares subscribed, Teresita ;ipat &ho o&ned 12 shares, andother close relatives and friends of the ;ipats. stelita ;ipat &asna$ed president of 3!, &hile Teresita beca$e the vice>presidentand #eneral $ana#er. ventuall%, the loan &as later restructured in thena$e of 3! and subseCuent loans &ere obtained b% 3! &ith thecorrespondin# pro$issor% notes dul% e'ecuted b% Teresita on behalf ofthe corporation. * letter of credit &as also opened b% Pacific 3an= in

favor of *. O. Knittin# Manufacturin# !o., Inc., upon the reCuest of3! after 3! e'ecuted the correspondin# trust receipt therefor.'port bills &ere also e'ecuted in favor of Pacific 3an= for additionalfinances. These transactions &ere all secured b% the real estate$ort#a#e over the ;ipats propert%. The pro$issor% notes, e'port bills,and trust receipt eventuall% beca$e due and de$andable./nfortunatel%, 3! defaulted in its pa%$ents. *fter receipt of Pacific3an=s de$and letters, stelita ;ipat &ent to the office of the ban=sliCuidator and as=ed for additional ti$e to enable her to personall%settle 3!s obli#ations. The ban= acceded to her reCuest but stelitafailed to fulfill her pro$ise. !onseCuentl%, the real estate $ort#a#e &asforeclosed and after co$pliance &ith the reCuire$ents of the la& the$ort#a#ed propert% &as sold at public auction.

On 7) :anuar% )949, a certificate of sale &as issued to respondentu#enio D. Trinidad as the hi#hest bidder. On 14 Nove$ber )949, thespouses ;ipat filed before the 5ue6on !it% RT! a co$plaint for

annul$ent of the real estate $ort#a#e, e'tra"udicial foreclosure andthe certificate of sale issued over the propert% a#ainst Pacific 3an= andu#enio D. Trinidad. The co$plaint alle#ed, a$on# others, that thepro$issor% notes, trust receipt, and e'port bills &ere all ultra vires actsof Teresita as the% &ere e'ecuted &ithout the reCuisite boardresolution of the 3oard of Directors of 3!. The ;ipats also averredthat assu$in# said acts &ere valid and bindin# on 3!, the sa$e&ere the corporations sole obli#ation, it havin# a personalit% distinctand separate fro$ spouses ;ipat. It &as li=e&ise pointed out thatTeresitas authorit% to secure a loan fro$ Pacific 3an= &as specificall%li$ited to Mrs. ;ipats sole use and benefit and that the real estate$ort#a#e &as e'ecuted to secure the ;ipats and 3Ts P47,4-.22loan onl%. In their respective ans&ers, Pacific 3an= and Trinidadalle#ed in co$$on that petitioners ;ipat cannot evade pa%$ents of thevalue of the pro$issor% notes, trust receipt, and e'port bills &ith theirpropert% because the% and the 3! are one and the sa$e, the latter

bein# a fa$il% corporation. Trinidad further clai$ed that he &as abu%er in #ood faith and for value and that the ;ipat spouses areestopped fro$ den%in# 3!s e'istence after holdin# the$selves ouas a corporation. *fter trial on the $erits, the RT! dis$issed theco$plaint. The ;ipats ti$el% appealed the RT! decision to the !ourt o

*ppeals in !*>(.R. !V -)70. Said appeal, ho&ever, &as dis$issedb% the appellate court for lac= of $erit. The ;ipats then $oved foreconsideration, but this &as denied b% the appellate court in itsResolution of 17 Februar% 1222. The ;ipat spouses filed the petition forevie& on certiorari.

Issu/B?hether 3! and 3T are separate business entities, and thus

the ;ipt spouses can isolate the$selves behind the corporatepersonalit% of 3!.

H/(B?hen the corporation is the $ere alter e#o or business conduiof a person, the separate personalit% of the corporation $a% bedisre#arded. This is co$$onl% referred to as the Einstru$entalit% ruleEor the alter e#o doctrine, &hich the courts have applied in disre#ardin#the separate "uridical personalit% of corporations. *s held in one case&here one corporation is so or#ani6ed and controlled and its affairs areconducted so that it is, in fact, a $ere instru$entalit% or ad"unct of theother, the fiction of the corporate entit% of the instru$entalit% $a% bedisre#arded. The control necessar% to invo=e the rule is not $a"orit% oeven co$plete stoc= control but such do$ination of finances, policiesand practices that the controlled corporation has, so to spea=, noseparate $ind, &ill or e'istence of its o&n, and is but a conduit for itsprincipal. The evidence on record sho&s 3T and 3! are noseparate business entities. +) stelita and *lfredo ;ipat are the

o&ners and $a"orit% shareholders of 3T and 3!, respectivel%B +1both fir$s &ere $ana#ed b% their dau#hter, TeresitaB )9 +7 both fir$s&ere en#a#ed in the #ar$ent business, suppl%in# products to EM%sticaFashion,E a /.S. fir$ established b% stelita ;ipatB +- both fir$s heldoffice in the sa$e buildin# o&ned b% the ;ipatsB + 3! is a fa$il%corporation &ith the ;ipats as its $a"orit% stoc=holdersB +0 thebusiness operations of the 3! &ere so $er#ed &ith those of Mrs;ipat such that the% &ere practicall% indistin#uishableB +8 the corporatefunds &ere held b% stelita ;ipat and the corporation itself had novisible assetsB +4 the board of directors of 3! &as co$posed of the3ur#os and ;ipat fa$il% $e$bersB +9 stelita had full control over theactivities of and decided business $atters of the corporationB and tha+)2 stelita ;ipat had benefited fro$ the loans secured fro$ Pacific3an= to finance her business abroad and fro$ the e'port bills securedb% 3! for the account of EM%stical Fashion.E It could not have beencoincidental that 3T and 3! are so intert&ined &ith each other in

ter$s of o&nership, business purpose, and $ana#e$ent. *pparentl%3T and 3! are one and the sa$e and the latter is a conduit of and$erel% succeeded the for$er. The spouses atte$pt to isolatethe$selves fro$ and hide behind the corporate personalit% of 3! soas to evade their liabilities to Pacific 3an= is prec

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