Ting vs. Commission on Audit

When a court judgment awarding a sum of money against the government becomes final and executory, the COA cannot modify the reckoning date of the legal interest fixed therein; the 6% per annum interest must be computed from the date of finality of the judgment until full satisfaction.

The City of Cebu created the Metro Cebu Development Project (MCDP) III to oversee its road widening projects and to manage the Cebu South Reclamation Project. Through MCDP III, the City entered into a Memorandum of Agreement with spouses Roque and Fatima Ting for the exchange of lots — MCDP III's Lot C-1 (4,753 sq m) for the spouses' Lot Nos. 7-A and 7-B (1,643 sq m and 2,588 sq m, respectively). The dispute arose when MCDP III demolished the spouses' lots before the exchange was consummated, prompting the spouses to sue for specific performance and damages. Because the judgment debtor is a local government unit, execution of the final judgment required the filing of a money claim before the Commission on Audit pursuant to its constitutional mandate over government expenditures.

On 07 September 1997, Samuel B. Darza, Project Director of MCDP III, entered into a Memorandum of Agreement with spouses Roque and Fatima Ting for the exchange of lots. MCDP III would substitute its Lot C-1, covering 4,753 square meters, with the spouses' Lot Nos. 7-A and 7-B, covering 1,643 and 2,588 square meters, respectively. Sometime in 1999, MCDP III demolished the spouses' lots even though the exchange had not yet been effected.

The spouses filed a complaint for Specific Performance and Damages against the City of Cebu before the RTC of Cebu City, docketed as Civil Case No. CEB-26607. On 03 January 2008, the RTC rendered judgment in favor of the spouses, ordering the City to pay ₱33,700,000.00 for the value of Lot Nos. 7-B and 7-C, ₱3,912,500.00 for the two warehouses and resthouse demolished by MCDP III, ₱60,000.00 as attorney's fees, and ₱30,000.00 as expenses of litigation, all amounts to earn interest at 6% per annum from the date of the judgment until fully paid. The City of Cebu appealed to the Court of Appeals, which denied the appeal in a Decision dated 26 November 2013 and the subsequent motion for reconsideration in a Resolution dated 12 May 2014.

The City further elevated the matter to the Supreme Court via G.R. No. 212842, but the appeal was denied in a Resolution dated 30 July 2014. An Entry of Judgment was issued declaring that the case had become final and executory on 09 March 2015. Thereafter, the spouses lodged a petition for money claim before the COA seeking payment of the judgment award of ₱37,702,500.00 with 6% per annum interest from 03 January 2008 — the date of the RTC decision — until fully paid. The COA confirmed the principal award but fixed the reckoning date of the 6% interest from 23 May 2017, the day after the filing of the money claim, reasoning that the delay in filing the petition was occasioned by the spouses and not by the government. The COA denied the spouses' motion for partial reconsideration on 21 January 2020, prompting the present petition.

• COA Exceeded Jurisdiction: Petitioners maintained that the COA amended the final and executory decision of the RTC when it modified the reckoning date for the legal interest, and that the interest on the judgment award should be reckoned from 03 January 2008, the date the RTC rendered its decision in Civil Case No. CEB-26607.

• Delay Attributable to Petitioners: The COA ruled that the computation of interest should be reckoned only from 23 May 2017, the day after the filing of the petition for money claim, because the delay in filing the petition was occasioned by petitioners and not by the government, and that interest for the period from 09 March 2015 until 22 May 2017 should not be charged against the government.
• OSG's Position: The Office of the Solicitor General, representing the COA, filed a Manifestation in Lieu of Comment and prayed for partial grant of the petition, agreeing that the COA committed grave abuse of discretion and that the computation of interest should be reckoned from 09 March 2015, the date the ruling of the RTC became final and executory.

• Reckoning Date of Legal Interest: Whether the COA acted without or in excess of its jurisdiction or with grave abuse of discretion in modifying the final and executory decision of the RTC by changing the reckoning date of the computation of interest from the date of the RTC judgment to the date of the filing of the money claim before it.

• Reckoning Date of Legal Interest: Yes. The COA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it changed the reckoning date of the legal interest to 23 May 2017. Pursuant to Nacar vs. Gallery Frames, the 6% per annum legal interest on a judgment award must be reckoned from the date the judgment becomes final and executory — here, 09 March 2015 — until full satisfaction.

• Reckoning Date of Legal Interest: Under the doctrine in Nacar vs. Gallery Frames, when a judgment awarding a sum of money becomes final and executory, the rate of legal interest imposed shall be 6% per annum from such finality until its satisfaction, the interim period being deemed equivalent to a forbearance of credit. Civil Case No. CEB-26607 did not attain finality on 03 January 2008 — the date petitioners claimed as the proper reckoning point — because the City of Cebu appealed the RTC decision to the CA and then to the Supreme Court. The case became final and executory only on 09 March 2015, as evidenced by the Entry of Judgment. Hence, legal interest should begin to run from that date. The COA's ruling that interest should be reckoned from 23 May 2017 found no basis in law or jurisprudence. Moreover, as discussed in Taisei Shimizu Joint Venture vs. Commission on Audit, the COA's power of audit review over money claims already confirmed by final judgment is limited; when a court or tribunal having jurisdiction renders judgment that becomes final and executory, the COA cannot alter the same and must respect the principle of immutability of final judgments. By determining a different reckoning point for the legal interest, the COA violated this principle, warranting modification of its Decision and Resolution to reflect the ruling in the final and executory judgment in G.R. No. 212842.

• Immutability of Final Judgments — Once a judgment becomes final and executory, it can no longer be modified, amended, or altered by any court or tribunal, including the COA. The COA's limited power of audit review over money claims already confirmed by final judgment does not permit it to alter the terms of the judgment, including the reckoning date of legal interest fixed therein. The Court applied this principle to nullify the COA's resetting of the interest reckoning date from the date of finality to the date of filing the money claim.

• Nacar vs. Gallery Frames Doctrine on Legal Interest — When the judgment of a court awarding a sum of money becomes final and executory, the rate of legal interest imposed on the award shall be 6% per annum from such finality until its satisfaction, the interim period being deemed equivalent to a forbearance of credit. The Court applied this rule to fix the reckoning date at 09 March 2015, the date the RTC judgment became final and executory, rather than the date of the RTC decision (03 January 2008) or the date of filing the money claim (23 May 2017).

• "when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest imposed on the award shall be six percent (6%) per annum from such finality until its satisfaction, the interim period being deemed by then an equivalent to a forbearance of credit." — This passage states the controlling rule from Nacar vs. Gallery Frames as applied to the case, establishing that the reckoning point for legal interest on a final judgment is the date of finality, not the date of the judgment itself or the date of filing a money claim.

• "when a court or tribunal having jurisdiction over a money claim against the government renders judgment and the same becomes final and executory, the COA cannot alter the same and disregard the principle of immutability of final judgments." — This passage defines the limits of the COA's audit power over money claims already confirmed by final judgment, forming the ratio decidendi for why the COA's modification of the interest reckoning date constituted grave abuse of discretion.

• Nacar vs. Gallery Frames, 716 Phil. 267 (2013); G.R. No. 189871, 13 August 2013 — Controlling precedent followed. Established the rule that when a judgment awarding a sum of money becomes final and executory, the legal interest of 6% per annum shall run from the date of finality until full satisfaction. Applied directly to fix the reckoning date at 09 March 2015.

• Taisei Shimizu Joint Venture vs. Commission on Audit, G.R. No. 238671, 02 June 2020 — Controlling precedent followed. Discussed the limited power of the COA for audit review over money claims already confirmed by final judgment, establishing that the COA cannot alter a final and executory judgment. Applied to conclude that the COA's modification of the interest reckoning date violated the immutability principle.

• Rule 64, in relation to Rule 65, Rules of Court — Governs the petition for certiorari assailing decisions and resolutions of the Commission on Audit. Petitioners invoked this procedural remedy to challenge the COA's Decision No. 2019-129 and Resolution No. 2020-042 on the ground that the COA acted without or in excess of jurisdiction or with grave abuse of discretion.

Gesmondo, C.J., Perlas-Bernabe, Leonen, Caguioa, Carandang, Lazaro-Javier, Inting, M. Lopez, Delos Santos, Gaerlan, Rosario, and J. Lopez, JJ., concurred.