[ G.R. No.

213821, January 26, 2021 ]

V. C. PONCE COMPANY, INC. PETITIONER, VS. COMMISSION ON AUDIT REPRESENTED BY

ITS CHAIRPERSON, HON. MARIA GRACIA M. PULIDO TAN, DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS REPRESENTED BY ITS SECRETARY, HON. ROGELIO L. SINGSON,
RESPONDENTS.

DECISION

INTING, J.:

Before the Court is a Petition1 for Certiorari with Prayer for the Issuance of a Temporary Restraining
Order and/or Preliminary Prohibitory Injunction under Rule 64 in relation to Rule 65 of the Rules of
Court assailing Decision No. 2012-0602 dated May 10, 2012 of the Commission on Audit (COA).
The COA denied the money claim filed by V. C. Ponce Company, Inc. (VCPCI), represented by its
President, Vicente C. Ponce (Ponce), for payment on the construction of the Mandaue-Opon Bridge
(Mandaue-Opon Bridge project) over Mactan Channel, Cebu, Phase II amounting to
P11,543,776,318.36. The COA further ordered VCPCI to refund the overpayment in the amount of
P21,511,666.99.

The Antecedents

On September. 16, 1996, VCPCI filed a petition for mandamus against the Department of Public
Works and Highways (DPWH) represented by its then Secretary Gregorio R. Vigilar. The case,
docketed as Civil Case No. Q-96-28795, was raffled to Branch 227, Regional Trial Court (RTC),
Quezon City.3

In the petition, VCPCI asked for a recomputation of its claim for the Mandaue-Opon Bridge project
Phase II.  It alleged the following:

The Mandaue-Opon Bridge Project for the construction of the main bridge superstructure was fully
completed and delivered as early as September 4, 1973 in accordance with the specifications drawn
up by the government. However, the Mandaue-Opon Bridge Project was criticized because it could
only allow the passage of small boats and not large international vessels. The observation caused
the government to renegotiate with VCPCI for a redesign of the project. To expedite the redesign
and construction, the government and VCPCI decided not to draw a new contract, but to undertake
extra work under the original contract flexible enough to cover alterations and new work that would
allow the passage of international vessels. The parties considered the extra work under "Section 9-4
Extra Force Account under Standard Specification for Highways and Bridges" (SSHB) wherein
VCPCI was to be compensated for Phase II of the contract with actual cost up to P9,197,194.50,
subject to Article II of the original contract; and with the actual cost over and above P9,197,194.50 to
be regarded as actual cost plus 15% allowance for profit margin.4

The amount of P9,197,194.50, as well as the 11.5% interest thereon, was to be paid from toll
collections by the Bureau of Public Highways (BPH). However, in November 1985, then President
Ferdinand E. Marcos instructed the Ministry of Public Works and Highways, through its then
Secretary Jesus S. Hipolito, to stop toll collections.5 Thus, the amount of P9,197,194.50 plus interest
and all other amounts over and above P9,197,194.50 were to be paid out of the appropriations
under Republic Act No. (RA) 5187.6
The parties could not agree on the amount owed by the government to VCPCI under Phase II of the
Mandaue-Opon Bridge project. On November 25, 1985, the government and VCPCI signed an
agreement to establish a fixed amount due and to be paid for the period 1968 to 1985 covering
Phase II of the Mandaue-Opon Bridge project. Three items were left blank in the agreement: (1) the
amount that would fix a sum due and to be paid in installments to VCPCI as contractor; (2) the
balance that was to be amortized by the government for a period of four years in four equal
installments, representing the fixed and liquidated sum due to VCPCI as of November 1985 for
Phase II; and (3) the initial payment, thus leaving undetermined the balance that was to be
amortized in four equal installments.7

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."
VCPCI rejected both proposals. From January 14, 1986 to December 10, 1991, DPWH paid a total
amount of P72,549,006.78 directly to two banks: UCPB and Metrobank. DPWH asserted that
P66,350,725.09 represented full payment for Phase II with P5,198,281.69 as overpayment. But for
VCPCI, the amount of P72,549,006.78 was only the payment for interest charged by the different
banks for loans covered by Certificates of Indebtedness issued by the government as collateral for
VCPCI's loans with the banks.8

On the other hand, DPWH opposed the petition for mandamus and alleged that mandamus does not
lie to compel the performance of a contractual duty especially if the contract is in dispute; the claim
or demand had either been paid or extinguished; and the complaint is a claim against the State
which it has not given its consent.

In a Decision9 dated January 30, 2004, the RTC ruled in favor of VCPCI and against DPWH as
follows:

WHEREFORE, premises considered, respondent DPWH is hereby held liable to petitioner and
therefore respondent DPWH is hereby DIRECTED:

(a) To pay petitioner the sum of PhP34,039,04l.82 - as "actual cost" for Phase II, as
of July, 1973, date of completion of the Mandaue-Opon Bridge less
PhP33,795,346.43 paid direct to petitioner herein from toll collections;

(b) To pay petitioner the amount of PhP4,411,328.33 for interest fixed at 11 112%
per annum of PhP9,197,194.50, from July, 1973 until fully paid in 1979;

(c) [W]ith respect to interest due on the sum of PhP24,841,847.82, the other part of
the Php34,039,041.82 "actual cost", which is over and above the original contract
amount of PhP9,197,194.50, petitioner and respondent are hereby DIRECTED to
immediately submit to arbitration, since the banks where the Certificates of
Indebtedness were put up as collateral, were not made parties to this law suit, in
order to determine (i) the interest due on the sum of PhP24,841,847.82, the other
part of the PhP34,039,041.82 "actual cost" which is over and above the original
contract amount of PhP9,197,194.50, from September 4, 1973 until fully paid, at
varied interest rates as certified to by the Bangko Sentral to be prevailing from time
to time to have been charged by banks, where the Certificates of Indebtedness
issued by the government were used as collateral - as guaranteed under the express
provisions of Certificates of Indebtedness; and deducting the sum of
PhP71,549,006.78 amount already paid directly to UCPB and Metrobank as partial
payment for interest due to banks on loans covered by the Certificates of
Indebtedness as collateral; (ii) the cost of money on the sum of PhP24,841,847.82 in
 view of the inflation and exchange rate differential from the P[hP]6.78 per dollar on
September 4, 1973 to the present PhP55.25 per dollar as of January 30, 2004;

(d) To pay petitioner the sum of PhP5,108,256.10 which is 15% of PhP34,055,041.51

representing allowance for contractor's profit; and

(e) To pay petitioner legal interest fixed at 12% per annum from September 4, 1973
until fully paid on the sum of PhP5,108,256.10.

SO ORDERED.10

The DPWH filed an appeal before the Court of Appeals (CA).

In a Decision11 promulgated on October 29, 2004 in CA-G.R. SP No. 83719, the CA affirmed in

toto the RTC Decision. The DPWH filed a motion for reconsideration, but the CA denied it in a
Resolution dated February 18, 2005.

The DPWH filed a Petition12 for Review under Rule 45 before the Court questioning the Decision
dated October 29, 2004 and the Resolution dated February 18, 2005 of the CA. In a
Resolution13 dated June 29, 2005, the Court denied the petition for failure of petitioner to sufficiently
show that the CA committed a reversible error in the challenged CA Decision and Resolution to
warrant the exercise of the Court of its discretionary appellate jurisdiction. DPWH filed a motion for
reconsideration, but the Court denied the motion in its Resolution dated October 17, 2005. The Court
Resolution became final and executory on November 18, 2005.14

VCPCI then filed a Motion for Issuance of Writ of Execution15 before the RTC. In an Order16 dated
December 29, 2006, the RTC granted the motion and issued a writ of execution.

DPWH filed a Petition for Certiorari before the CA questioning the Order dated December 29, 2006
of the RTC issuing the writ of execution. The case was docketed as CA-G.R. SP No. 97970.

In a Decision17 dated May 29, 2007, the CA ruled that the RTC gravely abused its discretion in
issuing the writ of execution. It ruled that judgments in money claims should first be filed with the
COA; and that VCPCI should have waited for COA's imprimatur of its claim instead of moving for the
execution of the RTC Decision. The dispositive portion of the CA Decision reads:

WHEREFORE, the Order dated 29 December 2006 granting a Writ of Execution in favor of private
respondent VC Ponce Company, Inc. and the corresponding Writ of Execution and Notice of
Garnishment are NULLIFIED, and the temporary restraining order issued by this Court is
made PERMANENT.

The Commission on Audit is DIRECTED to determine and ascertain with dispatch the total
compensation due to VC Ponce Company, Inc. for the construction of the Mandaue-Opon Bridge in
accordance with the decision in Civil Case No. Q-96-28795, and to allow payment thereof upon the
completion of such determination.

SO ORDERED.18

The Decision of the CA in CA-G.R. SP No. 97970 dated May 29, 2007 became final and executory
on June 22, 2007.19 Following the ruling, VCPCI filed a money claim before the COA.
 The Decision of the COA

VCPCI's money claim before the COA amounted to P11,543,776,318.36 broken down by COA as
follows:

Particulars Amount

(A) Difference between P34,039,041.82, the "actual cost"  for P 243,695.39

Phase II, and P33, 795,346.43 revenue from toll collections.

(A.1) Interest on the difference (P243,695.39) computed by 3,173,927.09

VCPCI at 12% compounded annually from November 16, 1985
to February 28, 2009

(B) Interest at 11 ½% per annum of P9,197,194.50, the original 4,411,328.33

contract amount, from July 1973 until fully paid in 1979

(B.1) Interest computed by VCPCI at the rate of. 11.5% on the 101,158,432.22
interest of P4,411,328.33 from January 1980 up to February
28, 2009

(C) Interest due on the sum of P24,841,847.82, the other part 11,148,708,894.12
of the P34,039,041.82 "actual cost," which is over and above
the original contract amount of P9,197,194.50

(D) Contractor's profit - 15% of P34,055,041.51 5,108,256.10

(E) Legal interest fixed at 12% per annum from September 4, 280,971,785.11
1973 until fully paid on the sum of

Total P11,543,776,318.3620

In its assailed Decision21 dated May 10, 2012, the COA denied VCPCI's claim and required Ponce
to pay an overpayment amounting to P21,511,666.99.

The COA did not allow the payment of interest on the amount of P24,841,847.82 (Item C of the
claim) which is over and above the original contract amount of P9,197,194.50. The COA also ruled
that the amount of P24,841,847.82 cannot earn interest as it has already been paid by way of the
Certificates of Indebtedness amounting to P31,274,946.81 issued by the government as collateral
for VCPCI's loans with the banks; that the government already expended P71,549,006.78 in
payment of VCPCI's loan of 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.

In conclusion, the COA held that on one hand, VCPCI constructed the Mandaue-Opon Bridge
project in the total amount of P34,039,041.82, inclusive of cost of money during construction
amounting to P9,913,870.31 and profit; on the other hand, the government, through· the DPWH,
already paid VCPI P105,344,353.21 for the project: P33,795,346.43 from toll collections and
P71,549,006.78 from appropriations.

The dispositive portion of the COA Decision reads:

WHEREFORE, premises considered, the instant petition for money claim of Mr. Vicente C. Ponce
relative to the Construction of the Mandaue-Opon Bridge over Mactan Channel, Cebu Phase II in the
amount of P11,543,776,318.36 is hereby DENIED for lack of merit. Accordingly, Mr. Vicente C.
Ponce is required to refund the overpayment in the amount of P21,511,666.99.22

Thus, the petition before the Court.

Petitioner alleges that the COA has no authority to review, modify, and in effect, reverse a final and
executory judgment by the Court.

The Issue

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.

The Ruling of the Court

The petition is meritorious.

To recapitulate, 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. The CA affirmed in toto the RTC Decision in its
Decision dated October 29, 2004 and Resolution dated February 18, 2005. The Court denied
DPWH's petition in its Resolution dated June 29, 2005 and its motion for reconsideration in its
Resolution dated October 17, 2005. The Court Resolution became final and executory on November
18, 2005.

Therefore, the COA, in denying VCPCI's money claim and in ruling that VCPCI is liable to refund an
overpayment amounting to P33,795,346.43, in effect reviewed and modified the final and executory
Decision of the RTC. In doing so, the COA invokes its primary jurisdiction over all money claims
against the government.

The issue in this case is not novel. In Taisei Shimizu Joint Venture v. Commission on
Audit23 (Tasei), the Court settled COA's exclusive jurisdiction over money claims due from or owing
to the government. In Taisei, the Court ruled that other tribunals or administrative bodies "may have
concurrent jurisdiction with the COA over money claims against the government or in the audit of the
funds of government agencies and instrumentalities,"24 citing as examples the "Central Bank's
jurisdiction to examine or audit, or cause the examination or audit, of government banks;"25 the Civil
Service Commission's (CSC) determination of a government employee's terminal leave
benefits;26 the CSC's jurisdiction to pass upon the issue of the legality and regularity of the grant of
allowances and benefits to members of tl1e boards of water districts designated by the Local Water
Utilities Administration (LWUA) in relation to an administrative case against LWUA officers for
violation of the Code of Conduct and Ethical Standards for Public Officials and Employees;27 and
where the parties validly agreed to submit their dispute to arbitration.28

Further the Court distinguished the two (2) main types of money claims which the COA may be
confronted with: (1) money claims originally filed with the COA; and (2) money claims which arise
from a final and executory judgment of a court or arbitral body. Adopting the opinion of COA
Chairperson Michael G. Aguinaldo, the Court ruled:
There is merit to Chairperson Aguinaldo's opinion pertaining to the two (2) main types of money
claims which the COA may be confronted with.

The first type covers money claims originally filed with the COA. Jurisprudence specifies the nature
of the money claims which may be brought to the COA at first instance. In Euro-Med Laboratories,
Phil., Inc. v. Province of Batangas, we explicitly ordained that these cases are limited to liquidated
claims, viz.:

The scope of the COA's authority to take cognizance of claims is circumscribed, however, by an

unbroken line of cases holding statutes of similar import to mean only liquidated claims, or
those determined or readily determinable from vouchers, invoices, and such other papers within
reach of accounting officers. Petitioner's claim was for a fixed amount and although respondent took
issue with the accuracy of petitioner's summation of its accountabilities, the amount thereof was
readily determinable from the receipts, invoices and other documents. Thus, the claim was well
within the COA's jurisdiction under the Government Auditing Code of the Philippines. (Emphasis and
Underscoring Supplied.)

We agree with Chairperson Aguinaldo that the following discussion in Uy involved the first type of
money claims, viz.:

SECOND. The case at bar brings to the fore the parameters of the power of the respondent COA to
decide administrative cases involving expenditure of public funds. Undoubtedly, the exercise of this
power involves the quasi-judicial aspect of government audit. As statutorily envisioned, this pertains
to 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 process of government
audit is adjudicative in nature. The decisions of COA presuppose an adjudicatory process involving
the determination and resolution of opposing claims. Its work as adjudicator of money claims for or
against the government means the exercise of judicial discretion. It includes the investigation,
weighing of evidence, and resolving whether items should or should not be included, or as applied to
claim, whether it should be allowed or disallowed in whole or in part. Its conclusions are not mere
opinions but are decisions which may be elevated to the Supreme Court on certiorari by the
aggrieved party. (Emphasis Supplied.)

We, too agree with Chairperson Aguinaldo that the second type of money claims refers to those
which arise from a final and executory judgment of a court or arbitral body. si He also correctly
cited Uy, reiterating our undeviating jurisprudence that 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.

On this score, we lay down a conceptual framework for the guidance of the COA, the Bench, and the
Bar pertaining to the COA's audit power vis-a-vis the second type of money claims which may be
brought before it during the execution stage.29

Thus, the Court ruled that the "COA's audit power over money claims already confirmed by final
judgment of a court or other adjudicative body is necessarily limited,"30 and laid down the
guidelines, as follows:

(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.31

Applying herein the ruling in the Taisei case, the money claim of VCPCI before the COA
undoubtedly falls under the second type of money claim, i.e., money claims which arise from a final
and executory judgment of a court or arbitral body. The money claim stemmed from the Decision
dated January 30, 2004 of the RTC, affirmed by theCA and the Court, that had long become final
and executory. 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.

WHEREFORE, the petition is GRANTED. The Decision No. 2012-060 dated May 10, 2012 of the
Commission on Audit dismissing the money claim of petitioner V. C. Ponce Company, Inc.
is REVERSED and SET ASIDE. The case is REMANDED to the Commission on Audit for payment
of the money claim in accordance with the Decision dated January 30, 2004 of Branch 227, Regional
Trial Court, Quezon City in Civil Case No. Q-96-28795.

SO ORDERED.

Peralta, C.J., Perlas-Bernabe, Caguioa, Gesmundo, Hernando, Carandang, Lazaro-Javier,

Zalameda, Lopez, Delos Santos, and Gaerlan, JJ., concur.

Leonen, J.,* on official business

Rosario, J.,** no part.

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on January 26, 2021 a Decision, copy attached herewith, was rendered by
the Supreme Court in the above-entitled case, the original of which was received by this Office on
June 8, 2021 at 11:20 a.m.

Footnotes

* on official business.

** Took no part.

1 Rollo, Vol. 1, pp. 3-24.

2 Id. at 27-36; signed by Chairperson Ma. Gracia M. Pulido Tan with Commissioners Juanito
G. Espino, Jr. and Heidi I. Mendoza, and attested by Director IV and Commission Secretariat
Fortunata M. Rubico.

3 Id. at 28.

4 As culled from the Decision dated January 30, 2004 of Branch 227, Regional Trial Court,
Quezon City in Civil Case No. Q-96-28795 as penned by Presiding Judge Vicente Q.
Roxas, id. at 52-54.

5 Id. at 55.

6 Entitled, "An Act Appropriating Funds for Public Works, Synchronizing the Same with
Previous Public Works Appropriations," approved on September 16, 1967.

7 Rollo, Vol. 1, pp. 56-57.

8 Id. at 57.

9 Id. at 52-95; penned by Presiding Judge Vicente Q. Roxas.

10 Id. at 93-95.

11 Id. at 99-107; penned by Asscociate Justice Rodrigo V. Cosico with Associate Justices
Danilo B. Pine and Vicente S.E. Veloso, concurring.

12 Id. at 341-375.

13 Id. at 97.

14 See Entry of Judgment dated November 18, 2005 in G.R. No. 167294, id. at 96.

15 Id. at 108-112.

16 Id. at 113; penned by Presiding Judge Elvira D.C. Panganiban.

17 Id. at 15-123; penned by Associate Justice Ricardo R. Rosario (now a member of the
Court) with Associate Justices Regalado E. Maambong and Magdangal M. De Leon.
concurring.

18 Id..at 122-123. ·

19 See Entry of Judgment dated June 25, 2007 in CA-G.R. SP No. 97970, id. at 125.

20  Id. at 27-28.

21 Id. at 27-37.

22 Id. at 36.
23 G.R. No. 238671, June 2, 2020.

24 Id.

25 Id., citing Development Bank of the Philippines v. COA, 424 Phil. 411, 430, 434-439
(2002).

26 Id., citing Civil Service Commission v. Pobre, 481 Phil. 676, 685 (2004).

27 Id., citing De Jesus v. Civil Service Commission, 508 Phil. 599, 608-610 (2005).

28 Id., citing Tourism lnfrastructure and Enterprise Zone Authority (TIEZA) v. Global-V

Builders Co., G.R. No. 219708, October 3, 2018.

29 Id.

30 Id.

31 Id.