G.R. No. 226138 - Republic, represented by the Department of Public Works and Highways vs. Espina and Madarang Co. and Makar Agricultural Corp.

Case Summary (G.R. No. 226138)

Factual Background

The disputed property consisted of Lots A, G, and F, Plan Lot SC-6834, Subdivision Plan SWO-12-000103, a 3.5-kilometer tract of approximately 186,856 square meters traversed by the Cotabato-Kiamba-General Santos-Koronadal National Highway and taken for public use; the Olartes claimed a Road Right of Way (RROW) compensation and the DPWH began paying pursuant to RTC orders in Spec. Proc. No. 2004-074 and related directives, including a partial payment order of PHP 44,891,140.65 in 2007; respondents Espina and Makar asserted ownership by virtue of earlier transfers and subsequent titles, alleged prior payments to the heirs of Olarte, and filed Civil Case No. 7788 seeking injunctive relief and RROW compensation.

Lower Court Proceedings

The RTC in General Santos City granted a temporary restraining order and a writ of preliminary injunction in Civil Case No. 7788, later ruled the injunction moot after the Court of Appeals affirmed respondents’ titles in CA-G.R. SP No. 02303-MIN and ordered the DPWH to pay RROW compensation; the RTC issued a Supplemental Order fixing the amount to be paid at PHP 218,839,455.00 and, after entry of judgment and denials of reconsideration, issued writs of execution and garnishment directing the sheriff to levy upon DPWH assets.

Intermediate Appellate History

The Republic petitioned the Court of Appeals in CA-G.R. SP No. 03310-MIN and later in CA-G.R. SP No. 06472-MIN challenging the RTC orders; the CA denied relief in CA-G.R. SP No. 03310-MIN, holding that ownership issues had been resolved, and later affirmed in toto the RTC orders in CA-G.R. SP No. 06472-MIN on grounds that the issues were barred by res judicata arising from the finality of prior appellate decisions.

Supreme Court Entry and Prior Decision

The Republic elevated the matter to this Court in G.R. No. 202416 and subsequent proceedings culminated in this Court’s March 23, 2022 Decision, which affirmed the CA rulings but enjoined respondents to file a money claim with the Commission on Audit (COA) for satisfaction and enforcement of the monetary judgment validating their RROW compensation claim.

Motion for Partial Reconsideration and Timeliness Issue

Respondents filed a Motion for Partial Reconsideration challenging the portion of this Court’s March 23, 2022 Decision that required filing a money claim with the COA; respondents invoked the fourth exception to the immutability of judgments doctrine, asserting that COA Resolution No. 2021-008 (as clarified by COA Resolution No. 2021-040) changed the legal landscape and rendered the requirement unjust or impossible; the Court exercised its discretion to entertain the motion despite its late filing, finding that a circumstance arising after finality—here, COA issuances bearing on the COA’s jurisdiction and procedure—warranted revisiting the directive in the interest of substantial justice.

Parties’ Contentions on COA Approval and Public Funds

The Republic, through the Office of the Solicitor General, argued that COA’s power to examine disbursement of public funds could not be bypassed, that COA approval was required before disbursing public funds for court-adjudicated money judgments, and that irregularities attended the proceedings determining ownership and compensation; respondents countered that COA Resolution No. 2021-008 and COA Resolution No. 2021-040 removed the COA’s original jurisdiction over payment of just compensation based on final court judgments and limited COA action to post-audit, rendering prior requirements of pre-disbursement COA concurrence inapplicable.

Legal Issue on COA Jurisdiction and Harmonization

The Court posed and resolved whether COA approval for disbursement of just compensation was still necessary in light of COA Resolution No. 2021-008 and its clarification in COA Resolution No. 2021-040, and whether the general audit power of the COA, as vested in Art. IX-D, Sec. 2(1), 1987 Constitution and Section 26, PD No. 1445, must be harmonized with the constitutional mandate to pay just compensation under Art. III, Sec. 9, 1987 Constitution and the immutability of final judgments.

Court’s Reasoning on COA Authority and Final Judgments

The Court acknowledged the COA’s constitutional general audit power but emphasized precedents limiting COA review over final adjudicated money claims, notably Taisei Shimizu Joint Venture v. Commission on Audit and related authorities recognizing that COA lacks appellate power to alter final judgments and that its review is necessarily limited and akin to an execution court; the Court found that COA Resolution No. 2021-008, as amended by COA Resolution No. 2021-040, explicitly excluded payments of just compensation based on final and executory court judgments from the original jurisdiction of the COA Commission Proper and instructed that disbursement shall be subject to post-audit rather than prior concurrence.

Equitable Considerations and Impossibility of Restitution

The Court observed that respondents had been deprived of their property for more than fifteen years, that restoration of the land was now physically impossible because it serves as a national highway, and that further delay in payment would compound injustice; the Court held that respondents should not be penalized for prior erroneous payments made by the government to others, and that the State must pursue recovery from such recipients while honoring its constitutional duty to pay the rightful owners.

Interest on Just Compensation and Reckoning Date

Invoking precedents that recognize legal interest to compensate for delay in payment of just compensation, including Apo Fruits Corp. v. Land Bank of the Phili

Case Syllabus (G.R. No. 226138)

Parties and Procedural Posture

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) filed a Petition for Review from the Court of Appeals' decision affirming Regional Trial Court orders directing payment of Road Right of Way (RROW) compensation.
ESPINA & MADARANG, CO. and MAKAR AGRICULTURAL CORP. obtained judgment in the RTC and CA recognizing their ownership and entitlement to RROW compensation and thereafter filed a Motion for Partial Reconsideration before this Court.
The RTC issued writs of execution and directed the sheriff to levy and garnish DPWH funds to satisfy a Supplemental Order valuing the RROW at PHP 218,839,455.00.
The CA rendered decisions in CA-G.R. SP Nos. 03310-MIN and 06472-MIN that collectively affirmed the ownership of respondents and the RTC's orders, which ultimately prompted the Republic to seek relief up to this Court.
This en banc Resolution resolves respondents' Motion for Partial Reconsideration assailing this Court's March 23, 2022 Decision that had enjoined respondents to file a money claim before the Commission on Audit (COA).

Key Factual Allegations

Vincente L. Olarte, as attorney-in-fact of the Olarte Hermanos y Cia Estate, asserted an RROW claim for Lots A, G, and F, Plan Lot SC-6834, Subdivision Plan SWO-12-000103, along the National Highway in General Santos City.
The subject property comprised a 3.5-kilometer road with an area of approximately 186,856 square meters used for the Cotabato-Kiamba-General Santos-Koronadal National Highway.
The Olarte title (OCT No. 12) was allegedly mortgaged to El Hogar Filipino, foreclosed and transferred to El Hogar, then sold to the Espina sisters and later portions to MAKAR AGRICULTURAL CORP., with successive TCTs issued and portions subdivided and sold.
The DPWH received RTC orders to pay the Olartes and partially paid the Olarte claim pending resolution of competing ownership claims.
The RTC ultimately found respondents' ownership established and ordered DPWH to pay RROW compensation valued at PHP 218,839,455.00 as of June 30, 2007.

Questions Presented

Whether this Court may entertain respondents' Motion for Partial Reconsideration despite its tardiness.
Whether approval from the Commission on Audit is required for the disbursement of just compensation pursuant to a final court judgment in expropriation proceedings in light of COA Resolution No. 2021-008 and COA Resolution No. 2021-040.
Whether respondents are entitled to legal interest at the rate of 12% per annum from date of taking until June 30, 2013, and 6% per annum thereafter until full payment.

Contentions of the Parties

The Republic/Office of the Solicitor General (OSG) contended that the COA's power to examine disbursement of public funds and to require prior approval barred immediate execution of the RTC judgment, that ownership and valuation were tainted with irregularities, and that payment could not proceed absent appropriation and COA approval.
ESPINA & MADARANG, CO. and MAKAR AGRICULTURAL CORP. argued that ownership and entitlement were conclusively settled under res judicata and that COA Circular No. 2011-002 and subsequent COA resolutions obviated the need for prior COA approval, while urging prompt payment and interest for delay.

Statutory and Regulatory Framework

Article III, Section 9, 1987 Constitution provides the constitutional basis for the payment of just compensation in eminent domain.
Article IX-D, Section 2(1), 1987 Constitution vests the Commission on Audit with power to examine, audit, and settle government accounts on a post-audit basis.
Section 26, Presidential Decree No. 1445 defines the general jurisdiction and powers of the COA over debts and claims due from the Government.
COA Resolution No. 2021-008 amended the 2009 RRPC to exclude payment of just compensation based on a court