Understanding Interest on Final Judgments: A Guide for Property Owners and Legal Professionals

When a court awards money damages, the winning party naturally expects to be paid — with interest. But when the debtor is the government, a special procedure applies: the claim must first be filed with the Commission on Audit (COA). A recent Supreme Court decision clarifies a critical question: from what date does interest run on a final judgment against a government entity?

In Spouses Ting v. Commission on Audit (G.R. No. 254142, July 27, 2021), the Court ruled that the COA cannot change the reckoning date of interest set by a final and executory judgment. The decision protects the principle of immutability of final judgments and provides clear guidance for property owners and practitioners dealing with money claims against the government.

The Facts of the Case

The case arose from a lot exchange agreement between the spouses Ting and the Metro Cebu Development Project (MCDP) III, a project arm of the City of Cebu. In 1997, the parties agreed to swap lots, but in 1999, MCDP III demolished the Tings' properties without completing the exchange.

The Tings filed a case for specific performance and damages against the City of Cebu. On January 3, 2008, the Regional Trial Court (RTC) ruled in their favor, ordering the city to pay P33,700,000.00 for the value of the lots, P3,912,500.00 for demolished structures, plus attorney's fees and litigation expenses. The RTC also ordered that all amounts "shall earn interest at the rate of 6% per annum from the date of this judgment until fully paid."

The City of Cebu appealed, but the Court of Appeals affirmed the decision, and the Supreme Court denied the appeal. The judgment became final and executory on March 9, 2015.

The COA's Ruling and the Dispute

The Tings then filed a petition for money claim before the COA, seeking payment of the judgment award of P37,702,500.00 plus 6% interest from January 3, 2008 (the date of the RTC decision) until fully paid.

The COA partially granted the claim but fixed the interest reckoning point at May 23, 2017 — the day after the Tings filed their money claim. The COA reasoned that the delay in filing the claim was attributable to the Tings, not the government, so interest should not run during that period.

The Tings challenged this before the Supreme Court, arguing that the COA had improperly modified a final and executory judgment.

The Supreme Court's Ruling

The Supreme Court partly granted the petition, ruling in favor of the Tings on the interest issue.

The Court applied the doctrine established in Nacar v. Gallery Frames (716 Phil. 267 [2013]): when a money judgment becomes final and executory, the rate of legal interest is 6% per annum from finality until satisfaction. The interim period is considered an equivalent to a forbearance of credit.

In this case, the judgment did not become final when the RTC rendered its decision on January 3, 2008, because the City of Cebu appealed. The case only became final and executory on March 9, 2015, as shown in the Entry of Judgment. Therefore, legal interest should run from that date.

The Court found that the COA committed grave abuse of discretion when it set a different reckoning date. Citing Taisei Shimizu Joint Venture v. Commission on Audit (G.R. No. 238671, June 2, 2020), the Court emphasized that once a final judgment on a money claim against the government exists, the COA cannot alter it. The principle of immutability of final judgments bars the COA from changing the terms of a court's final ruling.

The Court modified the COA's decision, ordering the City of Cebu to pay P37,702,500.00 plus 6% interest per annum from March 9, 2015 until fully paid.

Practical Takeaways

• Interest runs from finality, not from the trial court's decision date. If a judgment is appealed, interest starts only when the case becomes final and executory — usually after all appeals are exhausted.

• The COA cannot modify a final judgment. When a court has finally ruled on a money claim against the government, the COA's role is limited to processing payment, not re-litigating the award or changing its terms.

• Delays in filing money claims do not stop interest. The government cannot avoid paying interest by arguing that the claimant was slow in filing the required money claim before the COA.

• Keep track of the Entry of Judgment date. This document records when a case became final and executory, and it is the critical date for computing legal interest.

• For property owners dealing with government expropriation or demolition cases, be prepared to follow the money claim procedure before the COA, but know that a final court judgment protects your right to interest.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.