Case Digest: Lockheed v. UP

G.R. No. 185918: April 18, 2012

LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC., Petitioner, v. UNIVERSITY OF THE PHILIPPINES, Respondent.


VILLARAMA, JR.,J.:

FACTS:

Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a contract for security services with respondent University of the Philippines (UP).

In 1998, several security guards assigned to UP filed separate complaints against Lockheed and UP for payment of underpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and attorneys fees.

The LA held Lockheed and UP as solidarily liable to complainants. As the parties did not appeal the NLRC decision, the same became final and executory. A writ of execution was then issued but later quashed by the Labor Arbiter upon motion of UP due to disputes regarding the amount of the award. Later, however, said order quashing the writ was reversed by the NLRC.

The NLRC order and resolution having become final, Lockheed filed a motion for the issuance of an alias writ of execution which was subsequently granted. A Notice of Garnishment was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award.

UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being subjected to garnishment at PNB are government/public funds. The Labor Arbiter, however, dismissed the urgent motion for lack of merit. UP filed a petition for certiorari before the CA. The CA held that although the subject funds do not constitute public funds, in light of the ruling in the case of National Electrification Administration v. Morales mandates that all money claims against the government must first be filed with the Commission on Audit (COA). Hence, petitioner filed this petition before the SC.

ISSUE: Whether or not the garnishment is against the funds of UP is valid.

HELD: No.

Political Law Doctrine: It is the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from or owing the Government or any of its subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries.

This Court finds that the CA correctly applied theNEAcase. Like NEA, UP is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with the COA.

Under Commonwealth Act No. 327, as amended by Section 26 of P.D. No. 1445, it is the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from or owing the Government or any of its subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries. With respect to money claims arising from the implementation of Republic Act No. 6758,their allowance or disallowance is for COA to decide, subject only to the remedy of appeal by petition for certiorari to this Court.

A reading of the pertinent Commonwealth Act provision clearly shows that it does not make any distinction as to which of the government subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries whose debts should be filed before the COA.

As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds of UP had already been garnished, since the garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred right after the withdrawal of the garnished funds from PNB. DENIED.

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