When is a suit against a state?

1.) Professional Video vs. Tesda

FACTS:

In 1999, TESDA, an instrumentality of the government established under R.A. No. 7796 (the TESDA Act
of 1994) and attached to the DOLE to develop and establish a national system of skills standardization,
testing, and certification in the country.

To fulfill this mandate, it sought to issue security-printed certification and/or identification polyvinyl
(PVC) cards to trainees who have passed the certification process.

Professional Video Inc. (PROVI) signed and executed the “Contract Agreement Project PVC ID Card
issuance” for the provision of goods and services in the printing and encoding of the PVC cards. PROVI
was to provide TESDA with the system and equipment compliant with the specifications defined in the
proposal. In return, TESDA would pay PROVI a specified sum of money after TESDA’s acceptance of the
contracted goods and services. PPOVI alleged that TESDA has still an outstanding balance and still
remains unpaid.

TESDA claims that it entered the Contract Agreement and Addendum in the performance of its
governmental function to develop and establish a national system of skills standardization, testing, and
certification; in the performance of this governmental function, TESDA is immune from suit.

ISSUE:

Can TESDA be sued without its consent?

RULING:

TESDA, as an agency of the State, cannot be sued without its consent. The rule that a state may not be
sued without its consent is embodied in Section 3, Article XVI of the 1987 Constitution and has been an
established principle that antedates this Constitution. It is as well a universally recognized principle of
international law that exempts a state and its organs from the jurisdiction of another state.

Professional Video vs. Tesda

The principle is based on the very essence of sovereignty, and on the practical ground that there can be
no legal right as against the authority that makes the law on which the right depends. It also rests on
reasons of public policy. That public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every citizen and, consequently,
controlled in the uses and dispositions of the means required for the proper administration of the
government.

The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit
against the Republic by name; a suit against an unincorporated government agency; a suit against a
government agency covered by a charter with respect to the agencys performance of governmental
functions; and a suit that on its face is against a government officer, but where the ultimate liability will
fall on the government. In the present case, the writ of attachment was issued against a government
agency covered by its own charter.

As discussed above, TESDA performs governmental functions, and the issuance of certifications is a task
within its function of developing and establishing a system of skills standardization, testing, and
certification in the country. From the perspective of this function, the core reason for the existence of
state immunity applies i.e., the public policy reason that the performance of governmental function
cannot be hindered or delayed by suits, nor can these suits control the use and disposition of the means
for the performance of governmental functions.

2.) Heirs of Pidacan vs Ato

Facts:

Ø Mateo Pidacan and Romana Eigo had acquired parcel of land about 22 hectares in San Jose Mindoro
Occidental with original title certificate and issuance of land TCT No. 2204, patent No. 3383.

Ø The ATO (Air Transportation Office) used a portion of land and constructed an air base new terminal
building property upon the death of the Pidacan spouses.

Ø The heirs of the late Pidacan spouses as represented by Pacita Pidacan de Zubiri filed a petition for
issuance of owners duplicate because the old copy (original) was lost and later executed a judicial
settlement for them, unfortunately it was cancelled and TCT was issued in favor of heirs.
Ø The heirs presented the death certificate of their parents to the ATO but the latter still refuses to pay;
the former allege that the respondents must pay the rentals plus the value of property to them.
However, ATO insisted that the title was still under their parents name and it was formerly sold to its
predecessor, although

Heirs of Pidacan vs Ato

they failed to claim the property because it was just for taxation purposes.

Ø The heirs filed a subsequent complaint for payment of rentals and property to the respondent on the
other hand respondents filed a complaint for expropriation.

Ø The trial court dismissed the respondents petition and promulgated a decision that respondents
should pay the amount of 6, 249, 645.40 php per month with 12 % interest per annum until same is
fully paid, and 10 % amount must need for expenses of attorney’s fees and litigation.

Ø The heirs moved for reconsideration and were denied; afterwards the former filed an instant petition
alleging the honorable Court of Appeals grave error and abuse of discretion, disregarding the law in
reversing the trial court’s decision.

ISSUE:

WON the heirs shall successfully claim the said payment of rentals and property value from the assailed
respondents ATO.

Ruling:

Ø The CA set aside or reversed the trial court’s decision knowing that there was no contract of lease to
allege competent evidence among both parties.

Ø Director of Department of transportation and Communication had a letter that endorse a person
named Parales for immediate payment rentals but it was a considered a hearsay and still doesn’t have
any proof of lease of contract between each parties negotiation.

Ø The petition was GRANTED, the assailed decision was set aside. However, the RTC’s decision was
AFFIRMED WITH MODIFICATION with regards to the actual area of occupation by the respondent to the
heir petitioner that reckons 304.39 php per square meter of area expropriated plus the appropriate
interest rate of 6% per annum from this total of 65, 668, 183. 43 until fully paid.

Ø The court decision was deemed pursuant to Article VIII of Sec. 13 of the constitution.

3.) ATO vs Ramos

FACTS: Respondent Spouses discovered that a portion of their registered land in Baguio City was being
used as part of the runway and running shoulder of the Loakan Airport being operated by petitioner Air
Transportation Office (ATO). The respondents agreed after negotiations to convey the affected portion by
deed of sale to the ATO in consideration of the amount of P778,150.00. However, the ATO failed to pay
despite repeated verbal and written demands.

Ato vs Ramos

Thus, the respondents filed an action for collection against the ATO and some of its officials in the RTC. In
their answer, the ATO and its co-defendants invoked as an affirmative defense the issuance of
Proclamation No. 1358, whereby President Marcos had reserved certain parcels of land that included the
respondents affected portion for use of the Loakan Airport. They asserted that the RTC had no
jurisdiction to entertain the action without the States consent considering that the deed of sale had
been entered into in the performance of governmental functions.

The RTC held in favor of the Spouses, ordering the ATO to pay the plaintiffs Spouses the amount of
P778,150.00 being the value of the parcel of land appropriated by the defendant ATO as embodied in the
Deed of Sale, plus an annual interest of 12% from August 11, 1995, the date of the Deed of Sale until
fully paid; (2) The amount of P150,000.00 by way of moral damages and P150,000.00 as exemplary
damages; (3) the amount of P50,000.00 by way of attorneys fees plus P15,000.00 representing the 10,
more or less, court appearances of plaintiffs counsel; (4) The costs of this suit.

On appeal, the CA affirmed the RTCs decision withmodification deleting the awarded cost, and reducing
the moral and exemplary damage to P30,000.00 each, and attorneys fees is lowered to P10,000.00.

ISSUE: Could ATO be sued without the State's consent?

HELD: An unincorporated government agency without any separate juridical personality of its own
enjoys immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a
claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is
violated. However, the need to distinguish between an unincorporated government agency performing
governmental function and one performing proprietary functions has arisen. The immunity has been
upheld in favor of the former because its function is governmental or incidental to such function; it has
not been upheld in favor of the latter whose function was not in pursuit of a necessary function of
government but was essentially a business. National Airports Corporation v. Teodoro, Sr. and Phil.
Airlines Inc., 91 Phil. 203 (1952)
Civil Aeronautics Administration vs. Court of Appeals (167 SCRA 28 [1988]),the Supreme Court,
reiterating the pronouncements laid down in Teodoro, declared that the CAA (predecessor of ATO) is an
agency not immune from suit, it being engaged in functions pertaining to a private entity.

The Civil Aeronautics Administration comes under the category of a private entity. Although not a body
corporate it was created, like the National Airports Corporation, not to maintain a necessary function of

ATO vs Ramos

government, but to run what is essentially a business, even if revenues be not its prime objective but
rather the promotion of travel and the convenience of the travelling public. It is engaged in an enterprise
which, far from being the exclusive prerogative of state, may, more than the construction of public roads,
be undertaken by private concerns. National Airports Corp. v. Teodoro, 91 Phil. 203 (1952)

The CA thereby correctly appreciated the juridical character of the ATO as an agency of the Government
not performing a purely governmental or sovereign function, but was instead involved in the
management and maintenance of the Loakan Airport, an activity that was not the exclusive prerogative
of the State in its sovereign capacity. Hence, the ATO had no claim to the States immunity from suit. We
uphold the CAs aforequoted holding.

The doctrine of sovereign immunity cannot be successfully invoked to defeat a valid claim for
compensation arising from the taking without just compensation and without the proper expropriation
proceedings being first resorted to of the plaintiffs property.Republic v. Sandiganbayan, G.R. No. 90478,
Nov. 2, 1991. DENIED.

4.) China National vs Sta Maria

CHINA NATIONAL MACHINERY & EQUIPMENT CORP V. SANTAMARIA (2012)

FACTS: In September 2002, petitioner CNMEG entered into a memorandum of understanding (MOU)
with North Luzon Railways Corp (Northrail) to conduct a feasibility study on a construction of a railway
line from Manila to La Union (Northrail Project)1. Subsequently, Export Import Bank of China (EXIM
Bank) and Department of Finance entered into a MOU whereby China will extend a preferred buyers
credit to the Philippines to finance the Northrail Project. EXIM is to loan DOF $400 million payable in 20
years with a 5-year grace period at the rate of 3% per annum2. In December 2003, Northrail and CNMEG
executed a contract for the construction of Phase I of the Northrail Project. The contract price was
pegged at $421,050,0003. The Philippine Government then obtained a loan from EXIM for $400,000 to
finance the project4. Respondents, filed a complaint for annulment of contract, alleging that the contract
was void for being a. Contrary to the Constitution b. Government Procurement Reform Act (RA 9184)c.
Government Auditing Code (PD 1445)d. Administrative Code

ISSUES:1. WON CNMEG is entitled to immunity2. WON the contract agreement is an executive
agreement

HELD:FIRST ISSUE: No. CNMEG is engaged in proprietary activity

Theories on Sovereign Immunity: According to the classical or absolute theory, a sovereign cannot,
without its consent, be made a respondent in the courts of another sovereign. According to the newer or
restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure
imperii of a state, but not with regard to private acts or acts jure gestionis. Since the Philippines adheres
to the restrictive

China National vs Sta Maria

theory, it is crucial to ascertain the legal nature of the act involvedwhether the entity claiming immunity
performs governmental, as opposed to proprietary, functions.

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.

CAB: The Memorandum of Understanding dated 14 September 2002 between Northrail and CNMEG; the
letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho; and the Loan Agreement show
that CNMEG is engaged in a proprietary activity.1. The Memorandum of Understanding dated 14
September 2002 shows that CNMEG sought the construction of the Luzon Railways as a proprietary
venture. (Whereas clauses). It was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of any diplomatic gratuity from or
exercise of sovereign functions by the Chinese government, but was plainly a business strategy
employed by CNMEG with a view to securing this commercial enterprise.2. The desire of CNMEG to
secure the Northrail Project was in the ordinary or regular course of its business as a global construction
company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with
the Contract Agreement placing a contract price of USD 421,050,000 for the venture. The use of the
term "state corporation" to refer to CNMEG was only descriptive of its nature as a government-owned
and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was
acting on behalf of China in the performance of the latters sovereign functions3. The Loan agreement
specifically states that the execution of the contract agreement constitutes private and commercial acts
done and performed for commercial purposes under Philippine laws

Even assuming arguendo that CNMEG performs governmental functions, such claim does not
automatically vest it with immunity. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged regularly in a business or
trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.

APPLICATION OF GTZ CASE: it is readily apparent that CNMEG cannot claim immunity from suit, even if it
contends that it performs governmental functions. Its designation as the Primary Contractor does not
automatically grant it immunity, just as the term "implementing agency" has no precise definition for
purposes of ascertaining whether GTZ was immune from suit. Although CNMEG claims to be a
government-owned corporation, it failed to adduce evidence that it has not consented to be sued under
Chinese law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to
the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without
an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the
Corporation Code.

CNMEG failed to present a certification from DFA: In Public International Law, when a state or
international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the
Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to
immunity.

CAB: CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of
the Peoples Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity.
Surely, this is not the kind of certification that can establish CNMEGs entitlement to immunity from suit,
as Holy See unequivocally refers to the determination of the "Foreign Office of the state where it is
sued."

SECOND ISSUE: Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines
a treaty as follows: An international agreement concluded between States in written form and governed
by international law, whether embodied in a single instrument or in two or more related instruments
and whatever its particular designation.

An executive agreement is similar to a treaty, except that the former (a) does not require legislative
concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.

To be considered an executive agreement, the following three requisites provided under the Vienna
Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written;
and (c) it must governed by international law. The first and the third requisites do not obtain in the case
at bar.

5.) doh vs phil pharma

Defense of state immunity does not apply where the public official is charged in his official capacity for
acts that are unauthorized or unlawful and injurious to the rights of others neither does it apply where
the public official is clearly being sued not in his official capacity but in his personal capacity, although
the acts complained of may have been committed while he occupied a public position. Secretary of
Health Alberto G. Romualdez, Jr. issued an Administrative Order providing for additional guidelines for
accreditation of drug suppliers aimed at ensuring that only qualified bidders can transact business with
petitioner Department of Health (DOH). Respondent Phil. Pharmawealth, Inc. (Pharmawealth) submitted
to DOH a request for the inclusion of additional items in its list of accredited drug products, including the
antibiotic ―Penicillin G Benzathine. Petitioner DOH issued an Invitation for Bids for the procurement of
1.2 million units vials of Penicillin G Benzathine. Despite the lack of response from DOH regarding
Pharmawealth‘s request for inclusion of additional items in its list of accredited products, the latter
submitted its bid for the Penicillin G Benzathine contract and gave the lowest bid thereof. . In view,
however, of the non- accreditation of respondent‘s Penicillin G Benzathine product, the contract was
awarded to Cathay/YSS Laboratories‘ (YSS). Respondent Pharmawealth filed a complaint for injunction,
mandamus and damages with prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order with the Regional Trial praying, inter alia, that the trial court ―nullify the
award of the Penicillin G Benzathine contract to YSS Laboratories, Inc. and direct petitioners DOH et al. to
declare Pharmawealth as the lowest complying responsible bidder for the Benzathine contract, and that
they accordingly award the same to plaintiff company‖ and ―adjudge defendants Romualdez, Galon and
Lopez liable, jointly and severally to plaintiff. Petitioners DOH et al. subsequently filed a motion to
dismiss praying for the dismissal of the complaint based on the doctrine of state immunity. The trial
court, however, denied the motion to dismiss. The Court of Appeals (CA) denied DOH‘s petition for
review which affirmed the order issued Regional Trial Court of Pasig City denying petitioners‘ motion to
dismiss the case.

Doh vs Phil Pharma

ISSUE:

Whether or not the charge against the public officers acting in their official capacity will prosper.

HELD:

The suability of a government official depends on whether the official concerned was acting within his
official or jurisdictional capacity, and whether the acts done in the performance of official functions will
result in a charge or financial liability against the government. In its complaint, DOH sufficiently imputes
grave abuse of discretion against petitioners in their official capacity. Since judicial review of acts alleged
to have been tainted with grave abuse of discretion is guaranteed by the Constitution, it necessarily
follows that it is the official concerned who should be impleaded as defendant or respondent in an
appropriate suit. As regards petitioner DOH, the defense of immunity from suit will not avail despite its
being an unincorporated agency of the government, for the only causes of action directed against it are
preliminary injunction and mandamus. Under Section 1, Rule 58 of the Rules of Court, preliminary
injunction may be directed against a party or a court, agency or a person. Moreover, the defense of state
immunity from suit does not apply in causes of action which do not seek to impose a charge or financial
liability against the State.

Hence, the rule does not apply where the public official is charged in his official capacity for acts that are
unauthorized or unlawful and injurious to the rights of others. Neither does it apply where the public
official is clearly being sued not in his official capacity but in his personal capacity, although the acts
complained of may have been committed while he occupied a public position. In the present case, suing
individual petitioners in their personal capacities for damages in connection with their alleged act of
―illegally abusing their official positions to make sure that plaintiff Pharmawealth would not be awarded
the Benzathine contract [which act was] done in bad faith and with full knowledge of the limits and
breadth of their powers given by law is permissible, in consonance with the foregoing principles. For an
officer who exceeds the power conferred on him by law cannot hide behind the plea of sovereign
immunity and must bear the liability personally.

6.) Arigo vs Swif

Facts:

On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067,[3] otherwise known as the "Tubbataha
Reefs Natural Park (TRNP) Act of 2009" "to ensure the protection and conservation of the globally
significant economic, biological, sociocultural,... educational and scientific values of the Tubbataha Reefs
into perpetuity for the enjoyment of present and future generations." Under the "no-take" policy, entry
into the waters of TRNP

Arigo vs Swif

is strictly regulated and many human activities are prohibited and penalized or fined,... including fishing,
gathering, destroying and disturbing the resources within the TRNP. The law likewise created the
Tubbataha Protected Area Management Board (TPAMB) which shall be the sole policy-making and
permit-granting body of the TRNP.

In December 2012, the US Embassy in the Philippines requested diplomatic clearance for the said vessel
"to enter and exit the territorial waters of the Philippines and to arrive at the port of

Subic Bay for the purpose of routine ship replenishment, maintenance, and crew liberty."
On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on the northwest
side of South Shoal of the Tubbataha Reefs, about 80 miles... east-southeast of Palawan. No one was
injured in the incident, and there have been no reports of leaking fuel or oil.

on February 4, "reiterated his regrets over the grounding incident and assured Foreign Affairs Secretary
Albert F. del Rosario that the United States will provide appropriate compensation for damage to the reef
caused by the ship."[6]

By March 30, 2013, the US Navy-led salvage team had finished removing the last piece of the grounded
ship from the coral reef.

petitioners cite the following violations committed by US respondents under R.A. No. 10067:
unauthorized entry (Section 19); non-payment of conservation fees (Section 21); obstruction of law
enforcement officer (Section 30); damages to the reef (Section 20); and... destroying and disturbing
resources (Section 26[g]). Furthermore, petitioners assail certain provisions of the Visiting Forces
Agreement (VFA) which they want this Court to nullify for being unconstitutional.

Issues:

the grounds relied upon for the issuance of a TEPO or writ of Kalikasan have become fait accompli as the

Arigo vs Swif

salvage... operations on the USS Guardian were already completed; (2) the petition is defective in form
and substance; (3) the petition improperly raises issues involving the VFA between the Republic of the
Philippines and the United States of America; and (4) the determination of... the extent of responsibility
of the US Government as regards the damage to the Tubbataha Reefs rests exclusively with the executive
branch.

whether this Court has jurisdiction over the US respondents who did not submit any pleading or
manifestation in this case.

Ruling:
As a preliminary matter, there is no dispute on the legal standing of petitioners to file the present
petition.

In the landmark case of Oposa v. Factoran, Jr.,[13] we recognized the "public right" of citizens to "a
balanced and healthful ecology which, for the first time in our constitutional history, is solemnly
incorporated in the fundamental law." We... declared that the right to a balanced and healthful ecology
need not be written in the Constitution for it is assumed, like other civil and political rights guaranteed in
the Bill of Rights, to exist from the inception of mankind and it is an issue of transcendental importance...
with intergenerational implications. Such right carries with it the correlative duty to refrain from
impairing the environment.

ordinary citizens have legal standing to sue for the enforcement of environmental rights, they can do so
in representation of their own and future... generations.

Their personality... to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned

The liberalization of standing first enunciated in Oposa, insofar as it refers to minors and generations yet
unborn, is now enshrined in the Rules which allows the filing of a citizen suit in environmental cases.

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-suability
of the State,[17] is expressly provided in Article XVI of the 1987 Constitution which states:

Arigo vs Swif

Section 3. The State may not be sued without its consent.

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an
immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is,
rather, an immunity from the exercise of territorial... jurisdiction
In this case, the US respondents were sued in their official capacity as commanding officers of the US
Navy who had control and supervision over the USS Guardian and its crew. The alleged act or omission
resulting in the unfortunate grounding of the USS Guardian on... the TRNP was committed while they
were performing official military duties. Considering that the satisfaction of a judgment against said
officials will require remedial actions and appropriation of funds by the US government, the suit is
deemed to be one against the US itself.

The principle of State immunity therefore bars the exercise of jurisdiction by this Court over the persons
of respondents Swift, Rice and Robling.

in this case, when its warship entered a restricted area in violation of R.A. No. 10067 and caused damage
to the TRNP reef system, brings the matter within the ambit... of Article 31 of the United Nations
Convention on the Law of the Sea (UNCLOS). He explained that while historically, warships enjoy
sovereign immunity from suit as extensions of their flag State, Art. 31 of the UNCLOS creates an
exception to this rule in cases where they fail to... comply with the rules and regulations of the coastal
State regarding passage through the latter's internal waters and the territorial sea.

A foreign warship's unauthorized entry into our internal waters with resulting damage to marine
resources is one situation in which the above provisions may apply.But what if the offending warship is a
non-party to the UNCLOS, as in this case, the US?

In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute. Although the
said treaty upholds the immunity of warships from the jurisdiction of Coastal States while navigating the
latter's territorial sea, the flag States shall be required to leave... the territorial sea immediately if they
flout the laws and regulations of the Coastal State, and they will be liable for damages caused by their
warships or any other government vessel operated for non-commercial purposes under Article 31.

Arigo vs Swif

We agree with respondents (Philippine officials) in asserting that this petition has become moot in the
sense that the salvage operation sought to be enjoined or restrained had already been accomplished
when petitioners sought recourse from this Court.

insofar as the... directives to Philippine respondents to protect and rehabilitate the coral reef structure
and marine habitat adversely affected by the grounding incident are concerned, petitioners are entitled
to these reliefs notwithstanding the completion of the removal of the USS
Guardian from the coral reef.

In the light of the foregoing, the Court defers to the Executive Branch on the matter of compensation
and rehabilitation measures through diplomatic channels. Resolution of these issues impinges on our
relations with another State in the context of common security... interests under the VFA. It is settled
that "[t]he conduct of the foreign relations of our government is committed by the Constitution to the
executive and legislative "the political"--departments of the government, and the propriety of what may
be done in the exercise of this... political power is not subject to judicial inquiry or decision."... we
cannot grant the additional reliefs prayed for in the petition to order a review of the VFA and to nullify
certain immunity provisions thereof... the VFA was duly concurred in by the Philippine Senate and has
been recognized as a treaty by the United States as attested and certified by the duly authorized
representative of... the United States government. The VFA being a valid and binding agreement, the
parties are required as a matter of international law to abide by its terms and provisions.

WHEREFORE, the petition for the issuance of the privilege of the Writ of Kalikasan is hereby DENIED.

7.) NHA vs Roxas

The Case

Being challenged on appeal by the NHA is the adverse decision promulgated on February 20, 2006,[2]
whereby the Court of Appeals (CA) dismissed the NHA's petition for certiorari brought to nullify the
orders issued in Special Civil Action No. 93-060-MN entitled Ernesto Roxas v. National Housing Authority,
et al. by the Regional Trial Court (RTC), Branch 72, in Malabon City. The first order, dated May 3, 2002,
had granted the motion for the issuance of the writ of execution filed by respondent Ernesto Roxas.[3]
The other order, dated January 6, 2003, had denied the NHA's motion for reconsideration.[4] The NHA
had also thereby assailed the writ of execution consequently issued on February 24, 2003.[5] In its
petition for certiorari, the NHA insisted that the RTC had thereby committed grave abuse of discretion
amounting to lack or excess of jurisdiction.

Antecedents

The NHA is charged, among others, with the development of the Dagat-dagatan Development Project
(project) situated in Navotas, Metro Manila.[6] On December 4, 1985, Roxas applied for commercial lots
in the project, particularly Lot 9 and Lot 10 in Block 11, Area 3, Phase III A/B, with an area of 176 square
meters, for the use of his business of buying and selling gravel, sand and cement products.[7] The NHA
approved his application, and issued on December 6, 1985 the order of payment respecting the lots. On
December 27, 1985, the NHA issued the notice of award for the lots in favor of Roxas,[8] at
P1,500.00/square meter.[9] On the basis of the order of payment and the notice of award, Roxas made
his downpayment of P79,200.00.[10] A relocation/reblocking survey resulted in the renumbering of Lot 9
to Lot 5 and Lot 10 to Lot 6 (subject lots).[11] He completed his payment for the subject lots on
December 20, 1991.

In the meanwhile, the NHA conducted a final subdivision project survey, causing the increase in the area
of the subject lots from 176 to 320 square meters. The NHA informed Roxas about the increase in the
area of the subject lots, and approved the award of the additional area of 144 square meters to him at
P3,500.00/square meter.[12] Although manifesting his interest in acquiring the additional area, he
appealed for the reduction of the price to Pl,500.00/square meter,[13] pointing out that Lot 5 and Lot 6
were a substitution unilaterally imposed by the NHA that resulted in the increase of 144 square meters
based on the technical description, and that although he desired to purchase the increased area, the
purchase must be in accordance with the terms and conditions contained in the order of payment and
notice of award issued to him. After the NHA rejected his appeal,[14] he commenced in the RTC this
action for specific performance and damages, with prayer for the issuance of a writ of preliminary
injunction. He amended the complaint[15] to compel the NHA to comply with the terms and conditions
of the order of payment and the notice of award.

The NHA countered in its answer[16] that Roxas' prayer to include in the original contract the increase in
lot measurement of 144 square meters was contrary to its existing rules and regulation; that he could
not claim more than what had been originally awarded to him; and that at the very least, his right in the
additional area was limited only to first refusal.

On July 15, 1994, after trial, the RTC rendered judgment against the NHA,[17] decreeing:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Ernesto Roxas and
against defendant NHA, represented by its General Manager and its Dagat-dagatan Development Project
Manager, as follows:

1. Declaring plaintiff Ernesto Roxas the legal awardee of subject lots 5 and 6 in the full total area thereof
of 320 sq. meters;
2. Ordering defendant NHA, thru its General Manager Robert P. Balao and the project Manager for its
Dagat-dagatan Development Project Evelyn V. Ramos, or whoever shall be the incumbents of the
positions at the time of the enforcement hereof to execute the corresponding Contract to Sell for the
entire area of subject lots 5 and 6 totaling to 320 sq. meters at the cost of PI,500.00 per sq. meter under
the same terms and conditions as that provided for in the Order of Payment and Notice of Award (Exhs.
B and D), respectively, deducting whatever has already been paid by plaintiff;

3. Ordering defendant NHA to pay plaintiff P30,000.00 by way of reasonable Attorney's Fees.

The Writ of Preliminary Injunction issued in this case on January 31, 1994 is hereby made permanent.

Costs against defendant NHA.

SO ORDERED.

The NHA appealed in due course, but the CA affirmed the judgment of the RTC, prompting the NHA to
seek to undo the adverse decision of the CA through its petition for certiorari. On July 5, 2000, however,
the Court dismissed the petition for certiorari. It later denied the NHA's motion for reconsideration.[18]

On July 27, 2001, Roxas filed his motion for the issuance of the writ of execution,[19] which the RTC
granted on May 3, 2002.[20] The NHA sought reconsideration, but its motion was denied on January 6,
2003. Accordingly, on February 24, 2003, the RTC issued the writ of execution to enforce the final and
executory decision of July 15, 1994.[21]

In order to prevent the execution, the NHA brought another petition for certiorari in the CA, docketed as
C.A.-G.R. SP No. 76468, imputing to the RTC grave abuse of discretion amounting to lack or excess of
jurisdiction for ordering the execution of the judgment.

On February 20, 2006, the CA dismissed the NFIA's petition for certiorari through the presently assailed
decision because it found that the RTC did not gravely abuse its discretion amounting to lack or excess of
jurisdiction in granting Roxas' motion for the issuance of the writ of execution and in issuing the writ of
execution.[22] The CA observed that the NHA was a government-owned and -controlled corporation
whose funds were not exempt from garnishment or execution; and ruled that Roxas did not need to first
file his claim in the COA.

Issues

The NHA insists that the judgment of the RTC did not lie against it because its submission to the litigation
did not necessarily imply that the Government had thereby given its consent to liability; and that the
money judgment awarded to Roxas could not be recovered by motion for execution but should have
been first filed in the COA.[23]

Roxas counters that the main relief under the final and executory judgment of the RTC directed the NHA
to execute the contract to sell the subject lots at the rate of P1,500.00/square meter as provided for in
the order of payment and the notice of award. He claims that the award of attorney's fees in his favor
was only incidental to the main relief of specific performance; and argues that the Government
abandons its sovereign capacity and is treated like any other corporations whenever it enters into a
commercial transaction.[24]

Ruling of the Court

The appeal is partly meritorious.

First of all, the mantle of the State's immunity from suit did not extend to the NHA despite its being a
government-owned and -controlled corporation. Under Section 6(i) of Presidential Decree No. 757,
which was its charter, the NHA could sue and be sued. As such, the NHA was not immune from the suit
of Roxas.

And, secondly, for purposes of the implementation of the writ of execution, it is necessary to distinguish
between, on the one hand, the main relief adjudicated in the judgment of July 15, 1994, which was the
decree of specific performance as to the right of Roxas to acquire the subject lots at Pl,500.00/square
meter as stated in the original agreement between the parties, and, on the other, the secondary relief
for the attorney's fees of P30,000.00 to be paid by the NHA to Roxas.
Section 12 of Presidential Decree No. 757 has authorized the NHA to "determine, establish and maintain
the most feasible and effective program for the management or disposition of specific housing or
resettlement projects undertaken by [it]", and "[u]nless otherwise decided by the Board, completed
housing or resettlement projects shall be managed and administered by [it]." The execution of the
contract to sell by the NHA conformably with the main relief under the judgment would be in the
ordinary course of the management or disposition of the Dagat-dagatan Development Project
undertaken by the NHA. In other words, the NHA possessed the legal competence and authority to
directly afford the main relief without Roxas needing to first submit to the COA the contract to sell for
review and approval. To maintain otherwise is to unconstitutionally grant to the COA the power of
judicial review in respect of the decision of a court of law.

However, settling or paying off the secondary relief for the attorney's fees of £30,000.00, being a
monetary obligation of the NHA, would not be in the usual course of the activities of the NHA under its
charter. That such relief was the consequence of the suit that granted the main relief did not matter.
Pursuant to Section 26 of Presidential Decree No. 1445, Roxas should first bring it to the COA prior to its
enforcement against the NHA.[25] Indeed, Section 26 specifically vested in the COA the power, authority
and duty to examine, audit and settle "all debts and claims of any sort" due from or owing to the
Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and
controlled corporations with original charters, viz.:

Section 26. General jurisdiction. The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general
accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years,
the examination and inspection of the books, records, and papers relating to those accounts; and the
audit and settlement of the accounts of all persons respecting funds or property received or held by
them in an accountable capacity, as well as the examination, audit, and settlement of all debts and
claims of any sort due from or owing to the Government or any of its subdivisions, agencies and
instrumentalities. The said jurisdiction extends to all government-owned or controlled corporations,
including their subsidiaries, and other self-governing boards, commissions, or agencies of the
Government, and as herein prescribed, including nongovernmental entities subsidized by the
government, those funded by donations through the government, those required to pay levies or
government share, and those for which the government has put up a counterpart fund or those partly
funded by the government, (bold underscoring supplied for emphasis)

As the text of the legal provision plainly shows, the audit jurisdiction of the COA extends to all
government-owned or -controlled corporations, their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, as well as to all non-governmental entities subsidized by
the Government, or funded by donations through the Government, or required to pay levies or
government share, or for which the Government has put up a counterpart fund, or those partly funded
by the Government. There is no distinction as to the class of claims. Ubi lex non distinguish nee nos
distinguere debemos.[26] Indeed, a general term or phrase should not be reduced into parts and one
part distinguished from the other so as to justify its exclusion from the operation of the law. In other
words, there should be no distinction in the application of a statute where none is indicated. Corollary to
this rule is the principle that where the law does not make any exception, the courts may not exempt
something therefrom, unless there is compelling reason to the contrary.[27]

There is no question that the NHA could sue or be sued, and thus could be held liable under the
judgment rendered against it. But the universal rule remains to be that the State, although it gives its
consent to be sued either by general or special law, may limit the claimant's action only up to the
completion of proceedings anterior to the stage of execution. In other words, the power of the court
ends when the judgment is rendered because government funds and property may not be seized
pursuant to writs of execution or writs of garnishment to satisfy such judgments. The functions and
public services of the State cannot be allowed to be paralyzed or disrupted by the diversion of public
fund from their legitimate and specific objects, and as appropriated by law. The rule is based on obvious
considerations of public policy. Indeed, the disbursements of public funds must be covered by the
corresponding appropriation as required by law.[28]

WHEREFORE, the Court PARTLY GRANTS the petition for review on certiorari; and MODIFIES the writ of
execution dated February 24, 2003 by enjoining the respondent to file his claim for attorney's fees with
the Commission on Audit pursuant to Presidential Decree No. 1445.

SO ORDERED.

8.)