V.C. Ponce Company, Inc. vs. Commission on Audit

The COA's audit power over money claims already confirmed by final judgment of a court or other adjudicative body is necessarily limited; it has no authority to review, modify, or reverse a final and executory judgment. Once a court or other adjudicative body validly acquires jurisdiction over a money claim against the government, it exercises and retains jurisdiction over the subject matter to the exclusion of all others, including the COA. The COA's exercise of discretion in approving or disapproving money claims that have been determined by final judgment is akin to the power of an execution court.

V.C. Ponce Company, Inc. (VCPCI) was the contractor for the Mandaue-Opon Bridge project over Mactan Channel, Cebu, Phase II, which was fully completed and delivered on September 4, 1973. The project was originally contracted under a government contract, but the government and VCPCI agreed to undertake extra work under the original contract's "Section 9-4 Extra Force Account under Standard Specification for Highways and Bridges" (SSHB), with VCPCI to be compensated for Phase II with actual cost up to P9,197,194.50, and actual cost over that amount to be regarded as actual cost plus 15% allowance for profit margin. Payment was initially to come from toll collections by the Bureau of Public Highways, but in November 1985, President Ferdinand E. Marcos ordered the stoppage of toll collections, shifting payment to appropriations under Republic Act No. 5187.

V.C. Ponce Company, Inc. (VCPCI), represented by its President Vicente C. Ponce, was the contractor for the Mandaue-Opon Bridge project over Mactan Channel, Cebu, Phase II. The project was fully completed and delivered on September 4, 1973. Because the bridge could only allow the passage of small boats and not large international vessels, the government renegotiated with VCPCI for a redesign. To expedite the work, the parties decided not to draw a new contract but to undertake extra work under the original contract, with VCPCI to be compensated for Phase II with actual cost up to P9,197,194.50, and actual cost over that amount to be regarded as actual cost plus 15% allowance for profit margin. The amount of P9,197,194.50, as well as 11.5% interest thereon, was to be paid from toll collections by the Bureau of Public Highways, but in November 1985, President Ferdinand E. Marcos ordered the stoppage of toll collections, shifting payment to appropriations under Republic Act No. 5187.

The parties could not agree on the amount owed. On November 25, 1985, they signed an agreement to establish a fixed amount due for the period 1968 to 1985 covering Phase II, but three items were left blank: the amount fixing the sum due, the balance to be amortized over four years, and the initial payment. The government proposed a "Recomputation of Cost of Money Phase II November 29, 1968-August 31, 1973" and a "Computation of Contractual Liability from July 1, 1973 to November 15, 1985," both of which VCPCI rejected. From January 14, 1986 to December 10, 1991, DPWH paid a total of P72,549,006.78 directly to UCPB and Metrobank. DPWH asserted that P66,350,725.09 represented full payment for Phase II with P5,198,281.69 as overpayment, while VCPCI maintained that the amount was only payment for interest charged by banks for loans covered by Certificates of Indebtedness issued by the government as collateral.

On September 16, 1996, VCPCI filed a petition for mandamus against the DPWH before the RTC, Quezon City. The RTC ruled in favor of VCPCI on January 30, 2004, directing DPWH to pay various amounts and directing the parties to submit to arbitration the interest due on the sum of P24,841,847.82. The CA affirmed in toto, and the Supreme Court denied DPWH's petition, with the Resolution becoming final and executory on November 18, 2005. VCPCI then moved for execution, but the CA in CA-G.R. SP No. 97970 nullified the writ of execution, ruling that judgments in money claims should first be filed with the COA, and directed the COA to determine the total compensation due to VCPCI in accordance with the RTC Decision.

Following the CA ruling, VCPCI filed a money claim before the COA amounting to P11,543,776,318.36, broken down into items including the difference between actual cost and toll collections, interest computations, contractor's profit, and legal interest. In its Decision dated May 10, 2012, the COA denied the claim and required Ponce to refund an overpayment of P21,511,666.99. The COA did not allow payment of interest on the amount of P24,841,847.82, ruling that this amount had already been paid through Certificates of Indebtedness amounting to P31,274,946.81, and that because P34,039,041.82 was already paid from toll collections, there was an overpayment of P33,795,346.43. The COA concluded that VCPCI constructed the project for P34,039,041.82, while the government had already paid P105,344,353.21.

• COA Lack of Authority: Petitioner alleged that the COA has no authority to review, modify, and in effect, reverse a final and executory judgment by the Court.

• COA Primary Jurisdiction: The COA invoked its primary jurisdiction over all money claims against the government in denying VCPCI's money claim and ruling that VCPCI was liable to refund an overpayment.

• Grave Abuse of Discretion: Whether the COA committed grave abuse of discretion in reviewing the final and executory decision of the RTC with respect to the government's liability to VCPCI over the Mandaue-Opon Bridge project Phase II.

• Grave Abuse of Discretion: Yes. The COA gravely abused its discretion in denying VCPCI's money claim that was based on a final and executory judgment and when it substituted the RTC's findings and computations with its own. The money claim fell under the second type of money claims — those arising from a final and executory judgment of a court or arbitral body — over which the COA's audit power is necessarily limited.

• Grave Abuse of Discretion: The Court applied the ruling in Taisei Shimizu Joint Venture vs. Commission on Audit (Taisei), which settled COA's exclusive jurisdiction over money claims due from or owing to the government. Taisei distinguished two main types of money claims: (1) money claims originally filed with the COA, which are limited to liquidated claims; and (2) money claims which arise from a final and executory judgment of a court or arbitral body. For the second type, the Court laid down guidelines: (1) once a court or other adjudicative body validly acquires jurisdiction over a money claim against the government, it exercises and retains jurisdiction over the subject matter to the exclusion of all others, including the COA; (2) the COA has no appellate review power over the decisions of any other court or tribunal; (3) the COA is devoid of power to disregard the principle of immutability of final judgments; and (4) the COA's exercise of discretion in approving or disapproving money claims that have been determined by final judgment is akin to the power of an execution court. Applying these guidelines, the computation of the government's liability to VCPCI, except for the interest due on the sum of P24,841,847.82 which the RTC directed to be submitted to arbitration, had been settled in the RTC Decision dated January 30, 2004, affirmed by the CA and the Supreme Court, and had long become final and executory. The COA, in denying VCPCI's money claim and ruling that VCPCI was liable to refund an overpayment, in effect reviewed and modified the final and executory Decision of the RTC, which it had no authority to do.

• COA's Limited Audit Power over Final Judgments — The COA's audit power over money claims already confirmed by final judgment of a court or other adjudicative body is necessarily limited. The COA has no appellate review power over the decisions of any other court or tribunal and is devoid of power to disregard the principle of immutability of final judgments. The COA's exercise of discretion in approving or disapproving money claims determined by final judgment is akin to the power of an execution court. The Court applied this doctrine to hold that the COA gravely abused its discretion when it denied VCPCI's money claim based on a final and executory RTC decision.

• Two Types of Money Claims before the COA — The first type covers money claims originally filed with the COA, which are limited to liquidated claims, or those determined or readily determinable from vouchers, invoices, and such other papers within reach of accounting officers. The second type refers to money claims which arise from a final and executory judgment of a court or arbitral body. The Court applied this distinction to classify VCPCI's claim as falling under the second type, over which the COA's audit power is necessarily limited.

• Principle of Immutability of Final Judgments — Final judgments may no longer be reviewed or, in any way, be modified directly or indirectly by a higher court, not even by the Supreme Court, much less, by any other official, branch, or department of government. The Court applied this principle to hold that the COA could not review or modify the final and executory RTC Decision.

• "The COA's audit power over money claims already confirmed by final judgment of a court or other adjudicative body is necessarily limited." — This passage states the controlling doctrine that circumscribes the COA's authority when a money claim is based on a final judgment, forming the basis for the Court's ruling that the COA gravely abused its discretion.

• "Once a court or other adjudicative body validly acquires jurisdiction over a money claim against the government, it exercises and retains jurisdiction over the subject matter to the exclusion of all others, including the COA." — This is the first guideline from the Taisei framework, which the Court applied to hold that the RTC's jurisdiction over VCPCI's claim excluded the COA.

• "The COA is devoid of power to disregard the principle of immutability of final judgments." — This guideline from Taisei underscores that the COA cannot modify or reverse a final and executory judgment, which the COA did when it substituted the RTC's findings and computations with its own.

• Taisei Shimizu Joint Venture vs. Commission on Audit, G.R. No. 238671, June 2, 2020 — Controlling precedent that settled COA's exclusive jurisdiction over money claims due from or owing to the government, distinguished the two main types of money claims, and laid down the guidelines for the COA's audit power over the second type of money claims. The Court applied this case directly to the facts at bar.

• Euro-Med Laboratories, Phil., Inc. vs. Province of Batangas — Cited within Taisei to define the scope of the COA's authority over the first type of money claims, limiting them to liquidated claims or those determined or readily determinable from vouchers, invoices, and other papers within reach of accounting officers.

• Uy — Cited within Taisei to discuss the quasi-judicial aspect of government audit and to reiterate the principle that final judgments may no longer be reviewed or modified directly or indirectly.

• Development Bank of the Philippines vs. COA, 424 Phil. 411 (2002) — Cited in Taisei as an example of a tribunal with concurrent jurisdiction with the COA over money claims against the government, specifically the Central Bank's jurisdiction to examine or audit government banks.

• Civil Service Commission vs. Pobre, 481 Phil. 676 (2004) — Cited in Taisei as an example of the CSC's determination of a government employee's terminal leave benefits as a concurrent jurisdiction with the COA.

• De Jesus vs. Civil Service Commission, 508 Phil. 599 (2005) — Cited in Taisei as an example of the CSC's jurisdiction to pass upon the legality and regularity of the grant of allowances and benefits to members of boards of water districts.

• Tourism Infrastructure and Enterprise Zone Authority (TIEZA) vs. Global-V Builders Co., G.R. No. 219708, October 3, 2018 — Cited in Taisei as an example of a situation where the parties validly agreed to submit their dispute to arbitration, giving the arbitral body concurrent jurisdiction with the COA.

• Rule 64, Rules of Court — The procedural basis for the petition for certiorari against the COA, in relation to Rule 65, which the Court entertained in reviewing the COA Decision.

• Rule 65, Rules of Court — The procedural basis for the petition for certiorari with prayer for the issuance of a temporary restraining order and/or preliminary prohibitory injunction, which the Court used to review the COA's grave abuse of discretion.

• Republic Act No. 5187 — The statute appropriating funds for public works, which became the source of payment for VCPCI's claim after toll collections were stopped in November 1985.

Peralta, C.J., Perlas-Bernabe, Caguioa, Gesmundo, Hernando, Carandang, Lazaro-Javier, Zalameda, Lopez, Delos Santos, and Gaerlan, JJ., concurred. Leonen, J., was on official business. Rosario, J., took no part.