In Lucena B. Rallos v. City of Cebu, the Supreme Court addressed whether the City of Cebu was in contempt for impeding the execution of judgments in favor of the Heirs of Fr. Rallos regarding expropriated land. The Court found Lucena Rallos guilty of forum shopping for filing multiple indirect contempt petitions on the same issue. Additionally, the Court emphasized that government funds cannot be disbursed to satisfy judgments without an appropriation ordinance and compliance with the Commission on Audit (COA) rules, underscoring the protection of public funds even when a judgment validates a claim against the government.

Expropriation, Contempt, and Forum Shopping: When Multiple Suits Undermine Justice

This case originated from a complaint filed by the Heirs of Fr. Rallos against the City of Cebu in 1997, seeking compensation for two parcels of land expropriated in 1963 for road construction. The Regional Trial Court (RTC) initially ruled in favor of the Heirs, ordering the City to pay just compensation. This ruling led to a series of appeals and motions, ultimately reaching the Supreme Court in G.R. Nos. 179662 and 194111. Lucena B. Rallos then filed a petition for indirect contempt, alleging that the City of Cebu and its officials were impeding the execution of the final judgments, leading to the present Supreme Court resolution.

The central issue before the Supreme Court was whether the City of Cebu, Mayor Rama, members of the Sangguniang Panlungsod, and lawyers from the City Attorney’s Office were in contempt of court for preventing the execution of the judgments in G.R. Nos. 179662 and 194111. Lucena argued that the respondents’ actions, including filing a Petition for Annulment of Final Decisions and Orders and various motions before the RTC, were aimed at delaying or preventing the execution of final decisions. The respondents countered that their actions were to protect public funds and that the RTC sheriff failed to comply with legal requirements for executing the judgment.

The Supreme Court found Lucena Rallos guilty of forum shopping. Forum shopping occurs when litigants repetitively avail themselves of multiple judicial remedies in different fora, based on the same facts and circumstances, raising substantially similar issues. The Court noted that Lucena had filed five other pending actions for indirect contempt related to the same Civil Case No. CEB-20388. Comparing the instant petition with SCA No. CEB-38292 filed before the RTC of Cebu City, Branch 14, the Court found the elements of litis pendentia present. Litis pendentia requires identity of parties, identity of rights asserted and reliefs prayed for, and such identity that a judgment in one case would amount to res judicata in the other. The Court emphasized,

“[T]he grave evil sought to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two separate and contradictory decisions. To avoid any confusion, this Court adheres strictly to the rules against forum shopping, and any violation of these rules results in the dismissal of a case.”

As a result, the instant petition was dismissed, and the RTC of Cebu City, Branch 14, was directed to dismiss SCA No. CEB-38292.

Even if the Court were to overlook Lucena’s forum shopping, the petition would still fail because of the legal requirements for disbursing public funds. The Court underscored that enforcing rights accruing to property owners in expropriation cases is subject to compliance with laws protecting public funds. The respondents argued, and Lucena did not refute, that the City of Cebu had already paid Php 56,196,369.42 for the property. The Heirs of Fr. Rallos, however, insisted on collecting an additional Php 133,469,962.55, based on computations in the decisions and orders in Civil Case No. CEB-20388. The Court emphasized that the Heirs of Fr. Rallos are not adhering to the requisites laid down by law in enforcing their claims.

The first critical requirement is that an appropriation ordinance should be passed before disbursing public funds. Section 4(1) of P.D. No. 1445 and Section 305(a) of the Local Government Code both 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. Citing Republic of the Philippines v. Hon. Palacio, et al., the Court reiterated that “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.” Therefore, government funds and properties may not be seized under writs of execution or garnishment to satisfy judgments without the corresponding appropriation, safeguarding public policy.

The second requirement is compliance with the COA’s rules. Section 26 of P.D. No. 1445 grants the COA jurisdiction to examine, audit, and settle debts and claims due from or owing to the Government or any of its subdivisions. This requirement is a sine qua non condition, meaning it is indispensable. The Court stated, “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.” The claimant must first seek the COA’s approval, aligning with the ruling in University of the Philippines v. Dizon, where the Court held that the settlement of claims against government entities is subject to the COA’s primary jurisdiction. Without compliance with P.D. No. 1445 and the COA’s Revised Rules of Procedure, the Heirs of Fr. Rallos could not claim that the respondents were unjustly refusing to execute the decisions and orders in Civil Case No. CEB-20388.

FAQs

What was the key issue in this case?	The key issue was whether the City of Cebu and its officials were in contempt of court for allegedly impeding the execution of final judgments regarding just compensation for expropriated land.
What is forum shopping, and why was it relevant in this case?	Forum shopping is the act of filing multiple lawsuits based on the same facts and issues in different courts to increase the chances of a favorable outcome. The Supreme Court found Lucena Rallos guilty of forum shopping, leading to the dismissal of her petition.
What is the requirement for disbursing public funds to satisfy a court judgment?	Before disbursing public funds, an appropriation ordinance must be passed, and the claim must comply with the rules and procedures of the Commission on Audit (COA), as mandated by P.D. No. 1445 and the Local Government Code.
Why is COA approval necessary for claims against the government?	COA approval is necessary because the COA has the jurisdiction to examine, audit, and settle all debts and claims due from or owing to the government or any of its subdivisions, agencies, and instrumentalities, ensuring accountability and proper use of public funds.
What happens when a claimant fails to comply with COA rules?	If a claimant fails to comply with COA rules, their claims for the execution of judgments against government entities will not be valid, and public officials can lawfully refuse to execute the decisions and orders.
What legal provisions govern the disbursement of public funds?	Section 4(1) of P.D. No. 1445 and Section 305(a) of the Local Government Code 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.
Can government funds be garnished or seized under writs of execution?	No, government funds and properties may not be seized under writs of execution or garnishment to satisfy judgments rendered by the courts without the corresponding appropriation, to safeguard public policy and ensure fiscal responsibility.
What was the outcome of the Supreme Court’s decision in this case?	The Supreme Court dismissed Lucena Rallos’s petition and directed the RTC of Cebu City, Branch 14, to dismiss her petition for contempt, SCA No. CEB-38292, due to forum shopping and non-compliance with the requirements for disbursing public funds.

The Supreme Court’s decision in Rallos v. City of Cebu reinforces the importance of adhering to procedural rules and legal requirements, especially when dealing with government funds. The ruling highlights the need for claimants to comply with COA regulations and for local governments to pass appropriation ordinances before disbursing funds to satisfy court judgments. This ensures fiscal responsibility and prevents abuse of the legal system through forum shopping.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Lucena B. Rallos, vs. City of Cebu, G.R. No. 202651, August 28, 2013