G.R. No.

202651 August 28, 2013

LUCENA B. RALLOS vs. CITY OF CEBU et.al

NATURE: Petition for Certiorari and Mandamus

SC RULLING: petition is DISMISSED

LEGAL DOCTRINE:
FACTS:
Two parcels of land with a total area of 4,654 square meters located in Barangay Sambag I
which were expropriated to be used as a public road in 1963. The Heirs of Fr. Rallos alleged
that the City of Cebu occupied the lots in bad faith sans the authority of the former's
predecessors-in-interest, who were the registered owners of the subject parcels of land
On June 11, 1997, the Heirs of Fr. Rallos filed before the RTC a Complaint for Forfeiture of
Improvements or Payment of Fair Market Value with Moral and Exemplary Damages
against the City of Cebu.The City of Cebu, contended that the subject parcels of land are
road lots and are not residential in character and that they have been withdrawn from the
commerce of men and were occupied by the City of Cebu without expropriation
proceedings pursuant to Ordinance No. 416 which was enacted in 1963 or more than 35
years before the Heirs of Fr. Rallos instituted their complaint.
On January 14, 2000, the RTC rendered a Decision, which found the City of Cebu is liable
to pay the Heirs of Fr. Rallos just compensation.The members of the Board of
Commissioners thereafter submitted their respective appraisal reports and the RTC
rendered a Decision,ordering City of Cebu to pay the Heirs of Fr. Rallos as just
compensation for Lots 485-D and 485-E the amount of Php34,905,000.00 plus interest at
12% per annum to start 40 days from [the] date of the decision.

The Heirs of Fr. Rallos filed before the RTC a Motion for Execution that in 2001, the City
of Cebu paid them, but there remained a balance of Php 46,546,920.00 left to be paid,
computed as of September 2, 2008. On its part, the City of Cebu admitted still owing the
Heirs of Fr. Rallos but only in the amount of Php 16,893,162.08. RTC issued a writ of
execution in favor of the Heirs of Fr. Rallos.

The City of Cebu was served a demand letter through Sheriff Belliones that they however
set aside and sought the reiteration of the directives stated in the Writ of Execution.
RTC issued an Order denying the City of Cebu's motion for the reiteration of the writ of
execution, set aside the demand letter served upon the City of Cebu by Sheriff Bellones
and interpreted the directives of the writ of execution issued on December 4, 2008 stating
that the amount of Php 44,213,000.00 shall be subjected to a 12% interest per annum to
start 40 days from the date the decision on July 24, 2001 until the amount of Php
34,905,000.00 was partially paid by the City of Cebu. After the payment by the City of
Cebu of a partial amount, the balance shall again be subjected to 12% interest until the
same shall have been fully paid.

The Heirs of Fr. Rallos assailed the abovementioned order on the ground that it effectively
modified the final and executory Decision rendered on July 24, 2001. RTC did not
favorably consider their claims
The Heirs of Fr. Rallos appealed before the CA The CA granted the petition after finding
that the two assailed orders effectively modified the final and executory disposition made
by the RTC on March 21, 2002 .
ISSUE/s:
1. WON Rallos may claim the remaining balance to the City of Cebu without filling money
claims before COA?
2. WON COA has jurisdiction over money claims owed to the Government and its
instrumentality.
RULLING:

1. NO.

Section 4(1) of P.D. No. 1445 and Section 305(a) of the Local Government Code both
categorically state that no money shall be paid out of any public treasury or depository
except in pursuance of an appropriation law or other specific statutory authority. Based
on considerations of public policy, government funds and properties may not be seized
under writs of execution or garnishment to satisfy judgments rendered by the courts and
disbursements of public funds must be covered by the corresponding appropriation as
required by law
An appropriation ordinance should be passed prior to the disbursement of public funds.
"Even though the rule as to immunity of a state from suit is relaxed, the power of the
courts ends when the judgment is rendered. Although the liability of the state has been
judicially ascertained, the state is at liberty to determine for itself whether to pay the
judgment or not, and execution cannot issue on a judgment against the state. Such
statutes do not authorize a seizure of state property to satisfy judgments recovered, and
only convey an implication that the legislature will recognize such judgment as final and
make provision for the satisfaction thereof."
In the case at bar, no appropriation ordinance had yet been passed relative to the claims
of the Heirs of Fr. Rallos. Such being the case, the respondents, as public officers, are
acting within lawful bounds in refusing the execution of the decisions and orders in Civil
Case No. CEB-20388.
Despite the rendition of a final and executory judgment validating a money claim against
an agency or instrumentality of the Government, its filing with the COA is a sine qua non
condition before payment can be effected.

2. YES

Section 26 of P.D. No. 1445 states that the COA has jurisdiction to examine, audit and
settle all debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. Under Section 5(b), Rule II of COA's Revised
Rules of Procedure, local government units are expressly included as among the entities
within the COA's jurisdiction. Section 2,Rule VIII lays down the procedure in filing money
claims against the Government.
This Court, in the case of University of the Philippines v. Dizon, thus held that despite the
existence of a final and executory judgment validating the claim against an agency or
instrumentality of the Government, the settlement of the said claim is still subject to the
primary jurisdiction of the COA. Ineluctably, the claimant has to first seek the COA's
approval of the monetary claim
MERRITT V. GOVERNMENT OF THE PHILIPPINE ISLANDS (G.R. No. L-11154.
MARCH 21, 1916)
TRENT, J

Legal Doctrine: Waiver of immunity; Suability vs Liability

FACTS: On March 25, 1913, E. Merritt, was riding a motorcycle when he was hit by
an ambulance that was owned by the General Hospital driven by the driver employed
by the said hospital. He acquired injuries to which As a consequence thereof, suffered
in the efficiency of his work as a contractor, he had to dissolved the partnership he
had formed with the engineer, he was incapacitated from making mathematical
calculations on account of the condition of his leg and of his mental faculties, and he
had to give up a contract he had for the construction of the Uy Chaco building

The Philippine legislature then enacted Act No. 2457 An Act authorizing E. Merritt to
bring suit against the Government of the Philippine Islands and authorizing the
Attorney-General of said Islands to appear in said suit, granting E.merrit to claim for
damages resulting from a collision between his motorcycle and the ambulance of the
General Hospital.
A suit was then filed before the Court of First Instance of Manila, the responsibility for
the accident was rendered solely on the driver of the ambulance and the amount to be
given to Merrit was also determined. Both Merritt and the ambulance driver appealed
as to the amount of damages and in rendering the amount against the government.
ISSUE:
1. Whether or not the government waived its immunity from suit and accepted
liability when Act No. 2457 was enacted by the legislature?
HELD:

YES. The State only waived its immunity from suit but it does not follow that it has
also accepted liabilities that may arise from the suit filed. The legislative enactment
only gives the plaintiff-petitioner to sue the government and the government to submit
itself to the jurisdiction of the court. But it does not mean that the State also conceded
to the liability to the plaintiff.

The Act No. 2457 does not operate to extend the Government's liability to any cause
not previously recognized, we will now examine the substantive law touching the
defendant's liability for the negligent acts of its officers, agents, and employees.
Paragraph 5 of article 1903 of the Civil Code reads:”The state is liable in this sense
when it acts through a special agent, but not when the damage should have been
caused by the official to whom properly it pertained to do the act performed, in which
case the provisions of the preceding article shall be applicable.”
Responsibility of the state is limited by article 1903 to the case wherein it acts through
a special agent so that in representation of the state and being bound to act as an
agent thereof, he executes the trust confided to him. This concept does not apply to
any executive agent who is an employee of the acting administration and who on his
own responsibility performs the functions which are inherent in and naturally pertain
to his office and which are regulated by law and the regulations
Therefore, the State is only liable, (according to the above quoted decisions of the
Supreme Court of Spain), for the acts of its agents, officers and employees when they
act as special agents within the meaning of paragraph 5 of article 1903, supra, and
that the chauffeur of the ambulance of the General Hospital was not such an agent.

UNIVERSITY OF THE PHILIPPINES V. DIZON (G.R. No. 171182. AUGUST 23,

2012) BERSAMIN, J:

SC: RULLING: WHEREFORE, the Court GRANTS the petition for review on
certiorari; REVERSES and SETS ASIDE the decision of the Court of Appeals under
review; ANNULS the orders for the garnishment of the funds of the University of the
Philippines and for the release of the garnished amount to Stern Builders Corporation
and Servillano dela Cruz; and DELETES from the decision of the Regional Trial Court
dated November 28, 2001 for being void only the awards of actual damages of ₱
5,716,729.00, moral damages of ₱ 10,000,000.00, and attorney's fees of ₱ 150,000.00,
plus ₱ 1,500.00 per appearance, in favor of Stern Builders Corporation and Servillano
dela Cruz.

The Court ORDERS Stem Builders Corporation and Servillano dela Cruz to redeposit
the amount of ₱ 16,370,191.74 within 10 days from receipt of this decision.

Costs of suit to be paid by the private respondents.

Legal Doctrine: Suits against public officers

FACTS: The University of the Philippines Los Baños, thru its then President Jose V.
Abueva, entered into an agreement for the construction and renovation of the College
of Arts and Sciences building in the campus with Stern Builders Corporation. The
University was able to pay the first two billing but the third billing, worth ₱
273,729.47 was not paid due to its disallowance by the Commission on Audit (COA).
The other party to the agreement filed a case against UP before the RTC to collect the
unpaid billing and to recover various damages. The RTC then issued a motion for
execution and thus the sheriff served notices of garnishment to UP’s depository banks.
The RTC also ordered that the funds of the University in the banks be released. UP
argues that the funds in their accounts are of government character and cannot be
subject to execution and garnishment. They further state that before disbursement,
there should be a proper appropriation to be made.
ISSUE: Whether or not the fund of the University of the Philippines can be subject to
garnishment?

HELD: No. The funds of UP cannot be subject to garnishment.

The funds of UP are governmental funds and of public character thus cannot be
subject to garnishment. Even if the University has its own charter, it is still an
institution performing legitimate governmental functions. The funds of UP constitute a
special trust fund and the disbursement of which should be aligned with the
University’s mission subject to auditing by COA.
The funds of the UP are government funds that are public in character. They include
the income accruing from the use of real property ceded to the UP that may be spent
only for the attainment of its institutional objectives. Hence, the funds subject of this
action could not be validly made the subject of the RTC’s writ of execution or
garnishment. The adverse judgment rendered against the UP in a suit to which it had
impliedly consented was not immediately enforceable by execution against the
UP, because suability of the State did not necessarily mean its liability.
Indeed, an appropriation by Congress was required before the judgment that rendered
the UP liable for moral and actual damages (including attorney’s fees) would be
satisfied considering that such monetary liabilities were not covered by the
"appropriations earmarked for the said project." The Constitution strictly mandated
that "(n)o money shall be paid out of the Treasury except in pursuance of an
appropriation made by law

LANSANG V. COURT OF APPEALS (G.R. No. 102667. FEBRUARY 23, 2000)

NATURE: Petition for review

SC Rulling: Petition is Granted.
Legal Doctrine: Suits against public officer

FACTS: National Parks Development Committee (NPDC) is a government initiated civic

body engaged in the development of national parks. Respondent is awarded a “verbal
contract of lease” by the NPDC. No documents were filled up to show the grant of
license to the respondent to occupy a portion of the government park. Respondents
were allegedly given office and space for kiosk. They were asked, however, to remit
40% of their profits to NPDC without any record who received the share of profits or
how they were used or spent by the Committee. With the change of government after
the EDSA Revolution, the new Chairman of the NPDC, herein petitioner, sought to
clean up Rizal Park. Petitioner terminated the verbal agreement and demanded that
they vacate the premises and the kiosks it ran privately within the public park.
ISSUE: Whether or not the petitioner is immune from suit?

HELD: No. The doctrine of state immunity from suit applies to complaints filed against
public officials for acts done in the performance of their duties. The rule does not
apply where the public official is charged in his official capacity for acts that are
unlawful and injurious to the rights of others. Neither does it apply where the public
official is clearly being sued not in his official capacity but in his personal capacity,
although the acts complained of may have been committed while he occupied a public
position.
The petitioner is being sued in his capacity as NPDC Chairman but in his personal
capacity. The complaint filed by the respondents merely identified petitioner as
chairman of the NPDC, but did not categorically state that he is being sued in that
capacity. The Chairman likewise did not abuse his authority in ordering the ejectment
of the respondents