National Housing Authority vs. Roxas

A writ of execution may issue against a government-owned and controlled corporation for specific performance of acts within its charter-authorized proprietary functions, but any monetary judgment against it must first be submitted to and passed upon by the Commission on Audit before enforcement by execution or garnishment. The distinction rests on whether the relief sought falls within the ordinary course of the entity's charter activities—such as the management and disposition of housing projects—or constitutes a monetary obligation requiring appropriation and audit settlement.

The National Housing Authority (NHA) is a government-owned and controlled corporation created under Presidential Decree No. 757, charged with, among other functions, the development and management of housing and resettlement projects. Its charter, specifically Section 6(i), authorizes the NHA to sue and be sued, thereby removing the mantle of State immunity from suits against it. Section 12 of the same decree empowers the NHA to determine, establish, and maintain programs for the management or disposition of specific housing or resettlement projects. The Dagat-dagatan Development Project in Navotas, Metro Manila, was one such project under the NHA's administration. Separately, Presidential Decree No. 1445, the Government Auditing Code of the Philippines, vests in the Commission on Audit (COA) broad jurisdiction to examine, audit, and settle all debts and claims of any sort due from or owing to the Government, including government-owned and controlled corporations with original charters.

On December 4, 1985, Ernesto Roxas applied for commercial lots in the Dagat-dagatan Development Project in Navotas, Metro Manila—a project administered by the National Housing Authority (NHA)—specifically Lot 9 and Lot 10 in Block 11, Area 3, Phase III A/B, covering 176 square meters, intended for his business of buying and selling gravel, sand, and cement products. The NHA approved his application and issued the order of payment on December 6, 1985, followed by the notice of award on December 27, 1985, at P1,500.00 per square meter. On the basis of these documents, Roxas made a downpayment of P79,200.00 and completed his payment for the lots on December 20, 1991. A relocation and reblocking survey had resulted in the renumbering of Lot 9 to Lot 5 and Lot 10 to Lot 6.

Subsequently, the NHA conducted a final subdivision project survey, which caused the area of the subject lots to increase from 176 to 320 square meters. The NHA informed Roxas of the increase and approved the award of the additional 144 square meters to him, but at a higher price of P3,500.00 per square meter. Roxas manifested his interest in acquiring the additional area but appealed for a reduction of the price to P1,500.00 per square meter, contending that Lots 5 and 6 were a substitution unilaterally imposed by the NHA and that any purchase of the increased area must conform to the terms and conditions in the original order of payment and notice of award. The NHA rejected his appeal.

Roxas then commenced an action for specific performance and damages in the RTC of Malabon City, with a prayer for a writ of preliminary injunction, later amending the complaint to compel the NHA to comply with the terms of the order of payment and notice of award. The NHA countered that Roxas's prayer to include the additional 144 square meters under the original contract terms was contrary to its existing rules and regulations, that he could claim no more than what was originally awarded, and that at the very least his right to the additional area was limited to a right of first refusal. After trial, the RTC rendered judgment on July 15, 1994, declaring Roxas the legal awardee of Lots 5 and 6 in their full area of 320 square meters, ordering the NHA to execute the corresponding Contract to Sell for the entire area at P1,500.00 per square meter under the same terms as the order of payment and notice of award, and awarding P30,000.00 in attorney's fees. The NHA's appeal to the CA and subsequent petition for certiorari to the Supreme Court were both unsuccessful, rendering the judgment final and executory. Roxas then moved for the issuance of a writ of execution, which the RTC granted on May 3, 2002, and issued on February 24, 2003, after denying the NHA's motion for reconsideration on January 6, 2003. The NHA sought to nullify the execution through a petition for certiorari in the CA, which dismissed the petition on February 20, 2006, finding no grave abuse of discretion and ruling that the NHA's funds were not exempt from execution and that prior COA filing was unnecessary.

• Consent to Suit vs. Consent to Liability: The NHA insisted that its submission to the litigation did not necessarily imply that the Government had thereby given its consent to liability, and that the judgment of the RTC did not lie against it on that ground.
• COA Prior Recourse for Monetary Judgments: The NHA argued that the money judgment awarded to Roxas could not be recovered by motion for execution but should have been first filed with the COA for examination, audit, and settlement before enforcement.

• Main Relief is Specific Performance: Roxas countered that the principal relief under the final and executory judgment directed the NHA to execute the contract to sell the subject lots at P1,500.00 per square meter as provided in the order of payment and notice of award, and that the award of attorney's fees was merely incidental to the main relief of specific performance.
• Waiver of Sovereign Capacity in Commercial Transactions: Roxas argued that the Government abandons its sovereign capacity and is treated like any other corporation whenever it enters into a commercial transaction, and that the NHA's funds were not exempt from garnishment or execution.

• State Immunity: Whether the NHA, as a government-owned and controlled corporation, was immune from suit by reason of State immunity.
• Execution of Specific Performance: Whether the writ of execution for the main relief of specific performance—directing the NHA to execute the Contract to Sell—could issue without prior COA approval.
• Execution of Monetary Award: Whether the writ of execution for the secondary monetary award of P30,000.00 in attorney's fees could issue against the NHA without the claim first being submitted to and passed upon by the COA.

• State Immunity: No. The NHA was not immune from suit, its charter under Section 6(i) of Presidential Decree No. 757 expressly authorizing it to sue and be sued.
• Execution of Specific Performance: Yes. The execution of the contract to sell by the NHA was in the ordinary course of the management and disposition of the Dagat-dagatan Development Project under Section 12 of PD 757, and the NHA possessed the legal competence to directly afford this relief without prior COA review.
• Execution of Monetary Award: No. The P30,000.00 award in attorney's fees, being a monetary obligation of the NHA not in the usual course of its charter activities, must first be submitted to the COA pursuant to Section 26 of Presidential Decree No. 1445 before enforcement by execution.

• State Immunity: 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, the NHA's charter, the corporation could sue and be sued. This express statutory consent removed the NHA from the protective umbrella of sovereign immunity, rendering it susceptible to suit by Roxas. The NHA's submission to the litigation was therefore proper, and the RTC validly acquired jurisdiction over it.

• Execution of Specific Performance: The Court found it necessary to distinguish between the main relief and the secondary relief in the RTC judgment. The main relief was the decree of specific performance—Roxas's right to acquire the subject lots at P1,500.00 per square meter as stated in the original agreement. Section 12 of Presidential Decree No. 757 authorized the NHA to determine, establish, and maintain programs for the management or disposition of specific housing or resettlement projects. The execution of the contract to sell conformably with the judgment was in the ordinary course of the management or disposition of the Dagat-dagatan Development Project. The NHA thus possessed the legal competence and authority to directly afford the main relief without Roxas needing to first submit the contract to sell to the COA for review and approval. To require otherwise would unconstitutionally grant the COA the power of judicial review over the decision of a court of law.

• Execution of Monetary Award: The secondary relief—the P30,000.00 in attorney's fees—was a monetary obligation of the NHA not in the usual course of its charter activities. That it was a consequence of the suit granting the main relief did not alter its character as a monetary claim. Pursuant to Section 26 of Presidential Decree No. 1445, the COA was vested with 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. The text of the provision made no distinction as to the class of claims; applying the maxim ubi lex non distinguere nec nos distinguere debemos, the audit jurisdiction of the COA extended to all government-owned and controlled corporations and to all claims without exception. The universal rule further provided that although the State may consent to be sued, it may limit the claimant's action only up to the completion of proceedings anterior to the stage of execution: government funds and property may not be seized pursuant to writs of execution or garnishment, because the functions and public services of the State cannot be disrupted by the diversion of public funds from their legitimate and specific objects as appropriated by law.

• State Immunity from Suit and Consent to Be Sued — A government-owned and controlled corporation whose charter expressly authorizes it to sue and be sued is not immune from suit; the express statutory consent removes the mantle of State immunity. However, consent to be sued does not necessarily imply consent to the execution of monetary judgments against government funds. The State may limit the claimant's action only up to the completion of proceedings anterior to the stage of execution, as government funds and property may not be seized under writs of execution or garnishment to satisfy judgments.

• Distinction Between Specific Performance and Monetary Judgments Against Government Instrumentalities — Where a judgment against a government-owned and controlled corporation directs specific performance of acts within the ordinary course of its charter-authorized proprietary functions (e.g., management and disposition of housing projects), execution may issue without prior COA approval, because the entity possesses the legal competence to directly perform such acts. Monetary obligations, however, being outside the usual course of charter activities, must first be submitted to and passed upon by the COA under Section 26 of PD 1445 before enforcement.

• Ubi Lex Non Distinguit Nec Nos Distinguere Debemus — Where the law does not distinguish, courts should not distinguish. A general term or phrase should not be reduced into parts with one part distinguished from the other to justify exclusion from the operation of the law. Where the law makes no exception, courts may not exempt something therefrom absent compelling reason to the contrary. Applied in this case to Section 26 of PD 1445: because the provision's audit jurisdiction extends to "all debts and claims of any sort" without distinction as to class, no exception may be carved out for claims arising from court judgments.

• "no court should issue a writ of execution upon any monetary judgment rendered against the NHA unless such monetary judgment is first submitted to and passed upon by the Commission on Audit (COA)." — This opening statement of the decision frames the central ruling and establishes the procedural requirement that monetary judgments against the NHA must undergo COA settlement before execution.

• "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." — This passage articulates the rationale for exempting specific performance from the COA requirement: compelling COA review of a court-ordered contract execution would impermissibly vest the COA with judicial power.

• "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." — This formulation restates the canonical doctrine on the limits of consent to suit, frequently cited in jurisprudence on State immunity and execution against government funds.

• National Electrification Administration vs. Morales, G.R. No. 154200, July 24, 2007 — Followed. Cited for the proposition that monetary claims against government-owned and controlled corporations must first be brought to the COA prior to enforcement, pursuant to PD 1445.

• Star Special Watchman and Detective Agency, Inc. vs. Puerto Princesa City, G.R. No. 181792, April 21, 2014 — Followed. Cited in support of the requirement that claims against government instrumentalities must undergo COA settlement before execution.

• National Home Mortgage Finance Corporation vs. Abayari, G.R. No. 166508, October 2, 2009 — Followed. Cited alongside NEA vs. Morales for the same proposition regarding prior COA recourse for monetary claims.

• Philippine British Assurance Co., Inc. vs. Intermediate Appellate Court, No. L-72005, May 29, 1987 — Followed. Cited for the principle that where the law does not make any exception, courts may not exempt something therefrom absent compelling reason to the contrary.

• Commissioner of Public Highways vs. San Diego, L-30098, February 18, 1970 — Followed. Cited for the doctrine that government funds and property may not be seized under writs of execution or garnishment, and that disbursements of public funds must be covered by the corresponding appropriation as required by law.

• Section 6(i), Presidential Decree No. 757 (NHA Charter) — Authorizes the NHA to sue and be sued. Applied to establish that the NHA was not immune from Roxas's suit, the express statutory consent removing the mantle of State immunity.

• Section 12, Presidential Decree No. 757 (NHA Charter) — Authorizes the NHA to determine, establish, and maintain programs for the management or disposition of specific housing or resettlement projects. Applied to show that execution of the contract to sell was in the ordinary course of the NHA's charter-authorized activities, requiring no prior COA approval.

• Section 26, Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Vests in the COA the authority 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, and instrumentalities, including government-owned and controlled corporations. Applied to require that Roxas's claim for attorney's fees be first filed with and passed upon by the COA before enforcement by execution against the NHA.

Sereno, C.J., Velasco, Jr., Leonardo-De Castro, and Perlas-Bernabe, JJ., concurred.