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 Petition[1] 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. 2012-060[2] 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 Decision[9] 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 Decision[11] 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 Petition[12] 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 Resolution[13] 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 Execution[15] before the RTC. In an
Order[16] 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 Decision[17] 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 Phase II, and P33, 795,346.43
revenue from toll collections. P 243,695.39

(A.1) Interest on the difference (P243,695.39)

computed by VCPCI at 12% compounded 3,173,927.09
annually from November 16, 1985 to February
28, 2009

(B) Interest at 11 ½% per annum of 4,411,328.33

P9,197,194.50, the original contract amount,
from July 1973 until fully paid in 1979 101,158,432.22
(B.1) Interest computed by VCPCI at the rate
of. 11.5% on the interest of P4,411,328.33 from
January 1980 up to February 28, 2009 11,148,708,894.12

(C) Interest due on the sum of P24,841,847.82, 5,108,256.10

the other part of the P34,039,041.82 "actual
cost," which is over and above the original 280,971,785.11
contract amount of P9,197,194.50
P P11,543,776,318.36[20]
(D) Contractor's profit - 15% of P34,055,041.51

(E) Legal interest fixed at 12% per annum from

September 4, 1973 until fully paid on the sum
of

Total

In its assailed Decision[21] 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
Audit[23] (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. 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.