Republic vs. Espina & Madarang, Co.

Even after a court's money judgment against the government becomes final and executory, the claimant must first file a money claim with the Commission on Audit to effect payment; a writ of execution or garnishment against public funds without prior COA approval is invalid.

The controversy stemmed from the government's acquisition of a parcel of land for the construction of the Cotabato-Kiamba-General Santos-Koronadal National Highway. The heirs of the Olarte family filed a road right-of-way (RROW) claim and received partial payments. Subsequently, Espina & Madarang, Co. and Makar Agricultural Corp. (respondents) filed an injunction suit, asserting they were the true owners based on a chain of title originating from a foreclosure sale. They sought to enjoin the DPWH from paying the Olarte heirs.

• The RROW Claim and Injunction Suit: The DPWH initially paid partial RROW compensation to the Olarte heirs. Respondents, claiming ownership through a chain of titles originating from El Hogar Filipino, filed an injunction case (Civil Case No. 7788) to stop further payments to the Olartes.
• Judicial Determinations of Ownership and Compensation: The RTC and CA, in prior proceedings, affirmed respondents' ownership. The RTC subsequently ordered the DPWH to pay respondents P218,839,455.00, based on a masterlist of revalidated claims and the 2009 BIR zonal valuation.
• Finality of Judgment and Execution Attempts: The Supreme Court denied the Republic's appeal (G.R. No. 202416), rendering the ownership and compensation judgment final. Respondents then sought execution, leading to RTC orders directing the sheriff to levy, garnish, and seize DPWH funds nationwide.
• Republic's Objections: The Republic argued that ownership was not conclusively proven, the compensation amount was unfounded, public funds are immune from garnishment, and the claim should have been filed with the COA.

• Ownership and Just Compensation: Petitioner argued that respondents failed to present conclusive proof of ownership and that the amount of P218,839,455.00 as just compensation lacked factual and legal basis.
• Propriety of Remedy: Petitioner maintained that the grant of RROW compensation in an injunction suit was improper, as the complaint contained no specific prayer for payment and a separate proceeding was required.
• Execution Against the State: Petitioner contended that execution against government funds requires two conditions: a corresponding appropriation and prior approval by the COA. It asserted that no appropriation existed as funds had been partially paid to the Olarte heirs and any balance reverted.
• Primary Jurisdiction of COA: Petitioner insisted that the proper remedy was to file a money claim before the COA, whose constitutional mandate to audit government expenditures cannot be waived.

• Res Judicata and Finality: Respondents countered that the issues of ownership, entitlement to compensation, and propriety of execution were already settled with finality in prior proceedings (CA-G.R. SP No. 03310-MIN and G.R. No. 202416), barring relitigation.
• Nature of Injunction: Respondents argued that injunction is not limited to restraining acts but also includes compelling the performance of an act, and the general prayer for "other reliefs" covered the payment order.
• Existing Appropriation and Waiver: Respondents posited that an appropriation existed under the General Appropriations Act, and the Republic was estopped from invoking COA jurisdiction after having paid the Olarte heirs without such approval.
• Simplified Procedure: Respondents cited the Right of Way Act (R.A. No. 10752) and COA Circular No. 2011-002, arguing that pre-audit requirements were lifted, simplifying the payment process.

• Res Judicata: Whether the CA erred in dismissing the petition based on res judicata, given the final judgment in G.R. No. 202416.
• COA Jurisdiction: Whether the CA erred in ruling that the petitioner was barred from invoking the requirement of prior COA approval for the execution of a money judgment against the government.

• Res Judicata: The doctrine of res judicata in the concept of "bar by prior judgment" applied. All its requisites were present: a final judgment (G.R. No. 202416), jurisdiction, a judgment on the merits, and identity of parties, subject matter, and causes of action. The issues of respondents' ownership and entitlement to compensation were conclusively settled.
• COA Jurisdiction: The CA erred. The State cannot be estopped by the errors of its officials, and the constitutional mandate of the COA to audit all government expenditures cannot be waived. Even with a final money judgment, the claimant must file a claim with the COA for execution, as its jurisdiction is akin to that of an execution court ensuring funds are disbursed pursuant to law. Non-compliance invalidates a writ of execution or garnishment against public funds.

• Res Judicata (Bar by Prior Judgment) — A final judgment on the merits by a court of competent jurisdiction is conclusive between the same parties and their privies in a subsequent suit involving the same subject matter and cause of action. The Court applied this to bar the re-litigation of respondents' ownership and right to compensation.
• Execution of Money Judgments Against the Government — While the State may be sued, the satisfaction of a money judgment against it must follow procedures that protect public funds. The claimant must file a money claim with the Commission on Audit. The COA's role in the execution stage is to determine the source of funds and ensure disbursement complies with appropriation laws, not to review the merits of the final judgment.

• "Under the doctrine of finality of judgment, a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law..."
• "The COA's audit review power over money claims already confirmed by final judgment of a court or other adjudicative body is necessarily limited... It has no power or authority to overturn a court's final and executory judgment against the State."
• "[F]or money judgments that have become final and executory, the filing of a prior claim before the COA serves as a sine qua non condition to effect payment."

• Taisei Shimizu Joint Venture v. Commission on Audit, G.R. No. 238671, June 2, 2020 — Distinguished between money claims originally filed with COA and those arising from final court judgments, outlining the limited audit power of COA over the latter.
• Roxas v. Republic Real Estate Corp., 786 Phil. 163 (2016) — Upheld the nullification of a writ of execution against government funds, emphasizing the requirement to first file a claim with COA pursuant to auditing laws.
• Republic v. Fetalvero, G.R. No. 198008, February 4, 2019 — Reiterated that even with an existing appropriation, a money claim against the government must be pursued through the COA before execution can proceed.

• Section 47(b) and (c), Rule 39 of the Rules of Court — Provides the legal basis for the doctrine of res judicata as bar by prior judgment and conclusiveness of judgment.
• Section 2, Article IX-D of the 1987 Constitution — Mandates the COA to examine, audit, and settle all government accounts and expenditures.
• Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Requires that all money claims against the government must first be filed with the COA.

• Alfredo Benjamin S. Caguioa, J. (Ponente)
• Marvic M.V.F. Leonen (Chairperson)
• Henri Jean Paul B. Inting
• Jhosep Y. Lopez