COMMISSION ON AUDIT
A. COMMON PROVISIONS
The CSC, COMELEC, and COA are equally pre-
eminent in their respective spheres. Neither one
may claim dominance over the others. In case of
conflicting rulings, it is the judiciary, which
interprets the meaning of the law and ascertains
which view shall prevail. (CSC v. Pobre, G.R. No.
160508, 15 Sept. 2004)
Guarantees of Independence provided for by
the Constitution to the 3 Commissions:
1. They are constitutionally-created; may not be
abolished by statute of its judicial functions. (Sec.
1, Art. IX-A, 1987 Constitution)
2. Each is conferred certain powers and functions
which cannot be reduced by statute. (Art. IX-B, C,
and D, 1987 Constitution)
3. Each is expressly described as independent.
(Sec. 1, Art. IX-A, 1987 Constitution)
4. Chairmen and members are given long terms of
office for seven (7) years. (Sec. 1(2), Art. IX1B, C,
and D, 1987 Constitution)
5. Chairmen and members cannot be removed
except by impeachment. (Sec. 2, Art. IX, 1987
Constitution)
6. Chairmen and members may not be reappointed
or appointed in an acting capacity. (Sec. 1(2), Art.
IX-B, C and D, 1987 Constitution)
NOTE: When an ad interim appointment is not
confirmed (as it was by-passed or that there was
no ample time for Commission on Appointments to
pass upon the same), another ad interim
appointment may be extended to the appointee
without violating the Constitution. (Matibag v.
Benipayo, G.R. No. 149036, 02 Apr. 2002)
7. Salaries of chairmen and members are relatively
high and may not be decreased during continuance
in office. (Sec. 17, Art. XVIII, 1987 Constitution;
Sec. 3, Art. IX-A, 1987 Constitution)
Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.
8. Commissions enjoy fiscal autonomy. (Sec. 5,
Art. IX-A, 1987 Constitution)
9. Each commission may promulgate its own
procedural rules, provided they do not diminish,
increase, or modify substantive rights [though
subject to disapproval by the Supreme Court].
(Sec. 7, Art. IX-A, 1987 Constitution)
10. Chairmen and members are subject to certain
disqualifications and inhibitions calculated to
strengthen their integrity. (Sec. 2, Art. IX-A, 1987
Constitution)
11. Commissions may appoint their own officials
and employees in accordance with Civil Service
Law. (Sec. 4, Art. IX-A, 1987 Constitution)
12. The Commissions follow the rotational scheme
or staggered appointments and terms of office.
NOTE: The Supreme Court held that the “no
report, no release” policy may not be validly
enforced against offices vested with fiscal
autonomy, without violating Sec. 5, Art. IX-A. The
“automatic release” of approved annual
appropriations to a Constitutional Commission
vested with fiscal autonomy should thus be
construed to mean that no condition to fund
releases may be imposed. (CSC v. DBM, G.R. No.
158791, 22 July 2005)
Salary
Salaries may be increased by a statute but may not
be decreased during incumbent’s term of office.
(Cruz, 2014)
NOTE: The decrease is prohibited to prevent the
legislature from exerting pressure upon the
Commissions by “operating on their necessities.”
Salaries may be increased, as a realistic
recognition
of the need that may arise to adjust the
compensation to any increase in the cost of living.
(ibid.)
Term
Seven years without reappointment.
NOTE:
Appointment to any vacancy shall be only for the
unexpired term of the predecessor. In no case shall
any Member be appointed or designated in a
temporary or acting capacity. (Sec. 1(2), Art. IX-C,
1987 Constitution)
NOTE: Once the Chairman or Commissioner shall
have served the full term of seven years, then he
can no longer be reappointed to either the position
of Chairman or Commissioner. The obvious intent
of the framers is to prevent the president from
"dominating" the Commission by allowing him to
appoint an additional or two more commissioners.
(Funa v. Villar, G.R. No. 192791, 24 Apr. 2012)
Requisites for the effective operation of the
rotational scheme of terms of constitutional
bodies
1. The original members of the Commission shall
begin their terms on a common date;
2. Any vacancy occurring before the expiration of
the term shall be filled only for the balance of such
term. (Republic v. Imperial, G.R. No. L18684, 31
Mar. 1995)
NOTE: The members of the Constitutional
Commissions have staggered terms:
1. To minimize the opportunity of the President to
appoint during his own term more than one
member or group of members in the Constitutional
Commissions; and
2. To ensure continuity of the body and its policies.
(ibid.)
B. POWERS, FUNCTIONS AND
JURISDICTION
Decision-making process in these
Commissions
1. The CSC, COMELEC, and CoA shall decide
matter or cases by a majority vote of all the
members within sixty (60) days from submission.
(Sec. 7 Art. IX-A)
a. COMELEC may sit en banc or in 2 divisions.
b. Election cases, including pre-proclamation
controversies are decided in division, with motions
for reconsideration filed with the
Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.
COMELEC en banc.
c. The SC has held that a majority decision decided
by a division of the COMELEC is a valid decision.
NOTE: Pursuant to COMELEC Rules of Procedure,
when the COMELEC en banc is equally divided in
an opinion and cannot have the required majority,
rehearing shall be done. If rehearing is originally
commenced in the Commission and no majority
decision is reached, rehearing shall be dismissed.
In appealed cases, the judgment or order appealed
from shall stand affirmed and the petition or
motion on all incidental matters shall be denied.
(Mamerto Sevilla v. COMELEC, G.R. No. 202833,
19 Mar. 2013)
2. As collegial bodies, each Commission must act
as one, and no one member can decide a case for
the entire commission.
3. Any decision, order or ruling of each Commission
may be brought to the SC on certiorari by the
aggrieved party within thirty (30) days from receipt
of a copy thereof.
NOTE: When the Court reviews a decision of the
COMELEC, it exercises extraordinary jurisdiction
thus, the proceeding is limited to issues involving
grave abuse of discretion resulting in lack or excess
of jurisdiction and not factual findings of the
Commission. (Aratuc v. COMELEC, G.R. No. L-
49705-09, 08 Feb. 1979)
The appropriate remedy to invalidate disputed
COMELEC resolutions (i.e. final orders, rulings and
decisions of the COMELEC rendered in the exercise
of its adjudicatory or quasi-judicial powers) is
certiorari under Rule 65 of the Rules of Court.
(Loong v. COMELEC, G.R. No. 93986, 22 Dec.
1992)
Jurisdictions on Commission of Audit
The COA cannot be divested of its power to
examine and audit government agencies.
No law shall be passed exempting any entity of the
Government or its subsidiary in any guise, or any
investment of public funds, from the jurisdiction of
the Commission on Audit. (Sec. 3, ART. IX-D, 1987
Constitution)
The mere fact that private auditors may audit
government agencies does not divest the COA of
its power to examine and audit the same
government agencies. (Development Bank of the
Philippines v. COA, G.R. No. 88435, 16 Jan. 2002)
Audit jurisdiction of the COA on privatized,
formerly government-owned banks
Since the PNB is no longer owned by the
Government, the COA no longer has jurisdiction to
audit it as an institution. Under Sec. 2(2), Art. IX-
D of the Constitution, it is a GOCC and their
subsidiaries which are subject to audit by the COA.
However, in accordance with Sec. 2(1), Art. IX-D,
the COA can audit the PNB with respect to its
accounts because the Government still has equity
in it. (Philippine Airlines v. COA, G.R. No. 91890,
09 June 1995)
Extent of COA’s audit jurisdiction over
Manila Economic and Cultural Office (MECO)
MECO is a sui generis private entity and not a
GOCC or government instrumentality. The
Government entrusted with the facilitation of
unofficial relations with the people in Taiwan
without jeopardizing the country’s faithful
commitment to the One China policy of the PROC.
However, despite its non-governmental character,
the MECO handles government funds in the form
of the "verification fees" it collects on behalf of the
DOLE and the "consular fees" it collects under
Section 2(6) of EO No. 15, s. 2001. Hence,
accounts of the MECO pertaining to its collection of
such "verification fees" and "consular fees" should
be audited by the COA. (Funa v. MECO and COA,
G.R. No. 193462, 04 Feb.
2014)
C. COMPOSITION AND QUALIFICATIONS OF
MEMBERS
Composition
1. Chairman
2. Two (2) Commissioners
Term
Seven years without reappointment
Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.
Qualifications
1. Natural-born citizen;
2. At least 35 years old at the time of appointment;
3. Certified Public Accountant with not less than
ten years of auditing experience, or member of the
Philippine Bar who has been engaged in the
practice of law; and
4. Not a candidate in any election immediately
preceding the appointment.
NOTE: At no time shall all Members of the
Commission belong to the same profession. (Sec.
1(1), Art. IX-D, 1987 Constitution)
Powers and duties of COA
1. Examine, audit and settle all accounts pertaining
to revenue and receipts of, and expenditures or
uses of funds and property owned or held in trust
or pertaining to government.
2. Keep general accounts of government and
preserve vouchers and supporting papers.
3. Authority to define the scope of its audit and
examination, establish techniques and methods
required therein.
NOTE: The power of the Commission to define the
scope of its audit and to promulgate auditing rules
and regulations and the power to disallow
unnecessary expenditures is exclusive but its
power to examine and audit is not exclusive.
(Development Bank of the Philippines v.
Commission on Audit, G.R. No. 88435, 16 Jan.
2002)
4. Promulgate accounting and auditing rules and
regulations, including those for prevention and
disallowance. (Sec. 2, Art. IX-D, 1987
Constitution)
D. PROHIBITED OFFICES & INTERESTS
No member of a Constitutional Commission shall,
during his tenure:
1. Hold any other office or employment
2. Engage in the practice of any profession
3. Engage in the active management and control
of any business which in any way may be affected
by the function of his office
4. Be financially interested, directly or indirectly, in
any contract with, or in any franchise or privilege
granted by the Government, any of its
subdivisions, agencies or instrumentalities,
including GOCCs or their subsidiaries. (Sec. 2, Art.
IX-A, 1987 Constitution)
5. No officer or employee of the civil service shall
be removed or suspended except for cause
provided by law. (Sec. 2(3), Art. XI-B, 1987
Constitution)
6. No officer or employee in the civil service shall
engage, directly or indirectly, in anyelectioneering
or partisan political activity. (Sec. 2(4), Art. XI-B,
1987 Constitution)
7. No candidate who has lost in any election shall,
within one year after such election, be appointed
to any office in the Government or any
Government-owned or controlled corporation or in
any of their subsidiaries. (Sec. 6, Art. IX-B, 1987
Constitution)
8. No elective official shall be eligible for
appointment or designation in any capacity to any
public office or position during his tenure. (Sec.
7(1), Art. XI-B, 1987 Constitution)
9. Unless otherwise allowed by law or by the
primary functions of his position, no appointive
official shall hold any other office or employment
in the Government or any subdivision, agency, or
instrumentality thereof, including Government-
owned or controlled corporations or their
subsidiaries. (Sec. 7(2), Art. XI-B, 1987
Constitution)
10. No elective or appointive public officer or
employee shall receive additional, double, or
indirect compensation unless specifically
authorized by law, nor accept without the consent
of Congress, any present, emolument, office, or
title of any kind from any foreign government.
(Sec. 8, Art. XI-B, 1987 Constitution)
E. JUDICIAL REVIEW OF FINAL ORDERS,
RESOLUTIONS AND DECISIONS OF
CONSTITUTIONAL COMMISSIONS
Rendered in the Exercise of Quasi-judicial
Function
SC’s jurisdiction over decisions of the
Commissions
Judgments or final orders of the Commission on
Audit may be brought by an aggrieved party to
the Supreme Court on certiorari under Rule 65.
Only when COA acts without or in excess of
jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, may
the SC entertain a petition for certiorari under
Rule 65.
Procedural requisite before certiorari to the
Supreme Court may be availed of
Sec. 1 of Rule 65 provides that certiorari may be
resorted to when there is no other plain or
speedy and adequate remedy. But
reconsideration is a speedy and adequate
remedy. Hence, a case may be brought to the
Supreme Court only after reconsideration.
Rule on appeals
Decisions, orders or rulings of the COA may be
brought on certiorari to the SC under Rule 65.

Purpose

1. To compel the chairmen and members of the

Constitutional Commissions to devote their full
attention to the discharge of their duties; and
2. To remove from them any temptation to take
advantage of their official positions for selfish
purposes.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

 Case Digest – Political Law – Constitutional Commission

G.R. No. 140335 December 13, 2000

Thelma P. Gaminde, petitioner, vs. Commission on Audit and/or Hon. Celso D. Gangan, Hon. Raul C. Flores and
Emmanuel M. Dalman, respondents

Facts: On June 11, 1993, the President of the Philippines appointed petitioner Thelma P. Gaminde, ad interim,
Commissioner, Civil Service Commission. She assumed office on June 22, 1993, after taking an oath of office. On
September 07, 1993, the Commission on Appointment, Congress of the Philippines confirmed the appointment and that
the term would expire on February 2, 1999, as worded in the appointment paper. However, the petitioner sought
clarification as to the expiry date of her term of office. In reply, the expiry date of her term of office was on February 02,
2000, and not on February 02, 1999.

On February 04, 1999, Chairman Corazon Alma G. de Leon, wrote the Commission on Audit requesting opinion on
whether or not Commissioner Thelma P. Gaminde and her co-terminous staff may be paid their salaries notwithstanding
the expiration of their appointments on February 02, 1999.

On February 18, 1999, the General Counsel, Commission on Audit, issued an opinion that "the term of Commissioner
Gaminde has expired on February 02, 1999 as stated in her appointment conformably with the constitutional intent."

Issue: WON the petitioner and her co-terminous staff are entitled to their salaries despite the expiration of the petitioner’s
appointment on February 02, 1999.

Ruling: Yes. The Supreme Court ruled that the term of office of the petitioner of Ms. Thelma P. Gaminde as
Commissioner, Civil Service Commission, under an appointment extended to her by President Fidel V. Ramos on June
11, 1993, expired on February 02, 1999. However, she served as de facto officer in good faith until February 02, 2000,
and thus entitled to receive her salary and other emoluments for actual service rendered. Consequently, the Commission
on Audit erred in disallowing in audit such salary and other emoluments, including that of her co-terminous staff.

In concluding that February 02, 1987 is the proper starting point of the terms of office of the first appointees to the
Constitutional Commissions of a staggered 7-5-3 year terms, we considered the plain language of Article IX (B), Section
1 (2), Article IX (C), Section 1 (2) and Article IX (D), Section 1 (2) of the 1987 Constitution that uniformly prescribed a
seven-year term of office for Members of the Constitutional Commissions, without re-appointment, and for the first
appointees terms of seven, five and three years, without re-appointment. In no case shall any Member be appointed or
designated in a temporary or acting capacity. There is no need to expressly state the beginning of the term of office as
this is understood to coincide with the effectivity of the Constitution upon its ratification (on February 02, 1987).

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

G.R. No. 169752 September 25, 2007

Philippine Society for the Prevention of Cruelty to Animals vs. Commission on Audit

Facts: Petitioner herein was incorporated as a juridical entity over one hundred years ago by virtue of Act No. 1285 by
the Philippine Commission on January 19, 1905. The objects of the petitioner, as stated in Section 2 of its charter, shall
be to enforce laws relating to cruelty inflicted upon animals or the protection of animals in the Philippine Islands, and
generally, to do and perform all things which may tend in any way to alleviate the suffering of animals and promote their
welfare. For the purpose of enhancing its powers in promoting animal welfare and enforcing laws for the protection of
animals, the petitioner was initially imbued under its charter with the power to apprehend violators of animal welfare
laws. In addition, the petitioner was to share one-half (1/2) of the fines imposed and collected through its efforts for
violations of the laws related thereto. Noteworthy, at the time of the enactment of Act No. 1285, the original Corporation
Law, Act No. 1459, was not yet in existence. Act 1285 antedated both the Corporation Law and the constitution of the
Securities and Exchange Commission.

On November 12, 1963, President Manuel L. Quezon issued Executive Order (E.O.) No. 63 and thus enacted which
provides that the Commonwealth Act Numbered One Hundred Forty-Eight (148) depriving the agents of the Society for
the Prevention of Cruelty to Animals of their power to arrest persons who have violated the laws prohibiting cruelty to
animals thereby correcting a serious defect in one of the laws existing in our statue books.

On December 1, 2003, an audit team from respondent Commission on Audit (COA) visited the office of the petitioner to
conduct an audit survey. The petitioner demurred on the ground that it was a private entity not under the jurisdiction of
COA, citing Section 2(1) of Article IX of the Constitution.

Issue: Whether or not the petitioner qualifies as a government agency subject to audit by respondent COA.

Ruling: No. The Supreme Court ruled in the negative and declared the petitioner as a private domestic corporation
subject to the jurisdiction of the Securities and Exchange Commission. The Honorable Court decide the case
categorically in this wise:

First, the Court agrees with the petitioner that the "charter test" cannot be applied. The test to determine whether a
corporation is government owned or controlled, or private in nature is simple. Is it created by its own charter for the
exercise of a public function, or by incorporation under the general corporation law? Those with special
charters are government corporations subject to its provisions, and its employees are under the jurisdiction of
the Civil Service Commission, and are compulsory members of the Government Service Insurance System.
(The charter test is predicated on the legal regime established by the 1935 Constitution, Section 7, Article XIII.) And
since the underpinnings of the charter test had been introduced by the 1935 Constitution and not earlier, it follows that
the test cannot apply to the petitioner, which was incorporated by virtue of Act No. 1285, enacted on January 19, 1905.
Settled is the rule that laws in general have no retroactive effect, unless the contrary is provided. All statutes are to be
construed as having only a prospective operation, unless the purpose and intention of the legislature to give them a
retrospective effect is expressly declared or is necessarily implied from the language used. In case of doubt, the doubt
must be resolved against the retrospective effect.

Notably, in a legal regime where the charter test doctrine cannot be applied, the mere fact that a corporation has
been created by virtue of a special law does not necessarily qualify it as a public corporation. The amendments
introduced by C.A. No. 148 made it clear that the petitioner was a private corporation and not an agency of the
government. This was evident in Executive Order No. 63, issued by then President of the Philippines Manuel L. Quezon,
declaring that the revocation of the powers of the petitioner to appoint agents with powers of arrest "corrected a serious
defect" in one of the laws existing in the statute books.

As a curative statute, and based on the doctrines so far discussed, C.A. No. 148 has to be given retroactive effect,
thereby freeing all doubt as to which class of corporations the petitioner belongs, that is, it is a quasi-public
corporation, a kind of private domestic corporation

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

Second, a reading of petitioner’s charter shows that it is not subject to control or supervision by any agency of the State,
unlike government-owned and -controlled corporations. No government representative sits on the board of trustees of
the petitioner. Like all private corporations, the successors of its members are determined voluntarily and solely by the
petitioner in accordance with its by-laws, and may exercise those powers generally accorded to private corporations,
such as the powers to hold property, to sue and be sued, to use a common seal, and so forth. It may adopt by-laws for
its internal operations: the petitioner shall be managed or operated by its officers "in accordance with its by-laws in
force."

Fourth, the fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone,
make the entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions
of a public character, incorporated solely for the public good. This class of corporations may be considered quasi-public
corporations, which are private corporations that render public service, supply public wants, or pursue other
eleemosynary objectives. While purposely organized for the gain or benefit of its members, they are required by law
to discharge functions for the public benefit. Examples of these corporations are utility, railroad, warehouse,
telegraph, telephone, water supply corporations and transportation companies. It must be stressed that a quasi-public
corporation is a species of private corporations, but the qualifying factor is the type of service the former renders to the
public: if it performs a public service, then it becomes a quasi-public corporation.

The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of the relation
of the corporation to the State. If the corporation is created by the State as the latter’s own agency or instrumentality to
help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private.
Applying the above test, provinces, chartered cities, and barangays can best exemplify public corporations. They are
created by the State as its own device and agency for the accomplishment of parts of its own public works.

Fifth, by virtue of the fiction that all corporations owe their very existence and powers to the State, the reportorial
requirement is applicable to all corporations of whatever nature, whether they are public, quasi-public, or private
corporations—as creatures of the State. In other words, the reportorial requirement is the principal means by which the
State may see to it that its creature acted according to the powers and functions conferred upon it.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

G.R. No. 177131 June 7, 2011

Boy Scouts of the Philippines vs. Commission on Audit

Facts: The COA issued a resolution with the subject “Defining the Commission’s policy with respect to the audit of the
Boy Scouts of the Philippines.” Also, COA states that “the BSP is appropriately regarded as a governmental
instrumentality under the 1987 Administrative Code.

In the case of Boy Scouts of the Philippines vs National Labor Relations Commission, et. al. (G.R. No. 80767) classifying
the BSP as a government-controlled corporation is anchored on the "substantial Government participation" in the
National Executive Board of the BSP. It is to be noted that the case was decided when the BSP Charter is defined by
Commonwealth Act No. 111 as amended by Presidential Decree 460.

However, BSP contends that R.A. No. 7278 which amended the BSP’s charter after the cited case (BSP vs NLRC) was
decided. The most salient of all amendments in R.A. No. 7278 is the alteration of the composition of the National
Executive Board of the BSP. The BSP believes that the cited case has been superseded by RA 7278. Thereby
weakening the case’s conclusion that the BSP is a government-controlled corporation.

BSP maintains that the provisions of R.A. No. 7278 suggest that “governance of BSP has come to be overwhelmingly
a private affair or nature, with government participation restricted to the seat of the Secretary of Education, Culture, and
Sports. Furthermore, it is not far-fetched, in fact, to concede that BSP’s funds and assets are private in character. Unlike
ordinary public corporations, such as provinces, cities, and municipalities, or government-owned and controlled
corporations, such as Land Bank of the Philippines and the Development Bank of the Philippines, the assets and funds
of BSP are not derived from any government grant. For its operations, BSP is not dependent in any way on any
government appropriation; as a matter of fact, it has not even been included in any appropriations for the government.

To summarize, BSP contends that it is not a government-owned or controlled corporation; neither is it an instrumentality,
agency, or subdivision of the government.

Succinctly, on the argument that BSP is not appropriately regarded as "a government instrumentality" and "agency" of
the government, such has already been answered and clarified. The Supreme Court has elucidated this matter in the
BSP case when it declared that BSP is regarded as, both a "government-controlled corporation with an original charter"
and as an "instrumentality" of the Government. Likewise, it is not disputed that the Administrative Code of 1987
designated the BSP as one of the attached agencies of DECS. Being an attached agency, however, it does not change
its nature as a government-controlled corporation with original charter and, necessarily, subject to COA audit jurisdiction.

Contrary to the COA’s view, COA General Counsel opined that Republic Act No. 7278 did not supersede the Court’s
ruling in Boy Scouts of the Philippines v. National Labor Relations Commission, even though said law eliminated the
substantial government participation in the selection of members of the National Executive Board of the BSP.

However, failed to accept the decision, the BSP filed a verified petition. Hence, the present case.

Issue: Whether or not the BSP falls under the COA’s audit jurisdiction.

Ruling: Yes. The Supreme Court ruled in the affirmative and that BSO is a public corporation and its funds are subject
to the COA’s audit jurisdiction in the manner consistent with the provision of the BSP Charter. Historically, therefore, the
BSP had been subjected to government audit in so far as public funds had been infused thereto. However, this practice
should not preclude the exercise of the audit jurisdiction of COA, clearly set forth under the 1987 Constitution in Section
2 of Article IX. Since the BSP, under its amended charter, continues to be a public corporation or a government
instrumentality, the Honorable Court come to the inevitable conclusion that it is subject to the exercise by the COA of
its audit jurisdiction in the manner consistent with the provisions of the BSP Charter.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

NOTE:

BSP as a public corporation

Furthermore, this Court cannot agree with the dissenting opinion which equates the changes introduced by Republic
Act No. 7278 to the BSP Charter as clear manifestation of the intent of Congress "to return the BSP to the private
sector." It was not the intent of Congress in enacting Republic Act No. 7278 to give up all interests in this basic youth
organization, which has been its partner in forming responsible citizens for decades.

In fact, as may be seen in the deliberation of the House Bills that eventually resulted to Republic Act No. 7278, Congress
worked closely with the BSP to rejuvenate the organization, to bring it back to its former glory reached under its original
charter, Commonwealth Act No. 111, and to correct the perceived ills introduced by the amendments to its Charter
under Presidential Decree No. 460. The BSP suffered from low morale and decrease in number because the Secretaries
of the different departments in government who were too busy to attend the meetings of the BSP’s National Executive
Board ("the Board") sent representatives who, as it turned out, changed from meeting to meeting

Therefore, even though the amended BSP charter did away with most of the governmental presence in the BSP Board,
this was done to more strongly promote the BSP’s objectives, which were not supported under Presidential Decree No.
460. The BSP objectives, as pointed out earlier, are consistent with the public purpose of the promotion of the well-
being of the youth, the future leaders of the country. The amendments were not done with the view of changing the
character of the BSP into a privatized corporation. The BSP remains an agency attached to a department of the
government, the DECS, and it was not at all stripped of its public character.

The ownership and control test is likewise irrelevant for a public corporation like the BSP. To reiterate, the relationship
of the BSP, an attached agency, to the government, through the DECS, is defined in the Revised Administrative Code
of 1987. The BSP meets the minimum statutory requirement of an attached government agency as the DECS Secretary
sits at the BSP Board ex officio, thus facilitating the policy and program coordination between the BSP and the DECS.

The BSP as a Public Corporation under Par.2, Article 2 of the Civil Code

Evidently, the BSP, which was created by a special law to serve a public purpose in pursuit of a constitutional mandate,
comes within the class of "public corporations" defined by paragraph 2, Article 44 of the Civil Code and governed by the
law which creates it, pursuant to Article 45 of the same Code.

The BSP’s Classification Under the Administrative Code of 1987

The public, rather than private, character of the BSP is recognized by the fact that, along with the Girl Scouts of the Philippines, it is
classified as an attached agency of the DECS under Executive Order No. 292, or the Administrative Code of 1987. Further, as an
attached agency, the BSP enjoys operational autonomy, as long as policy and program coordination is achieved by
having at least one representative of government in its governing board, which in the case of the BSP is the DECS
Secretary. In this sense, the BSP is not under government control or "supervision and control." Still this characteristic
does not make the attached chartered agency a private corporation covered by the constitutional proscription in
question.

The BSP is a Public Corporation Not Subject to the Test of Government Ownership or Control and Economic Viability

The BSP is a public corporation or a government agency or instrumentality with juridical personality, which does not fall
within the constitutional prohibition in Article XII, Section 16, notwithstanding the amendments to its charter. Not all
corporations, which are not government owned or controlled, are ipso facto to be considered private corporations as
there exists another distinct class of corporations or chartered institutions which are otherwise known as "public
corporations." These corporations are treated by law as agencies or instrumentalities of the government which are not
subject to the tests of ownership or control and economic viability but to different criteria relating to their public
purposes/interests or constitutional policies and objectives and their administrative relationship to the government or
any of its Departments or Offices.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

Economic Viability and Ownership and Control Tests Inapplicable to Public Corporation

As presently constituted, the BSP still remains an instrumentality of the national government. It is a public corporation
created by law for a public purpose, attached to the DECS pursuant to its Charter and the Administrative Code of 1987.
It is not a private corporation which is required to be owned or controlled by the government and be economically viable
to justify its existence under a special law.

Thus, the test of economic viability clearly does not apply to public corporations dealing with governmental functions, to
which category the BSP belongs. The discussion above conveys the constitutional intent not to apply this constitutional
ban on the creation of public corporations where the economic viability test would be irrelevant. The said test would only
apply if the corporation is engaged in some economic activity or business function for the government.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

G.R. No. 171548 February 22, 2008

Philippine Deposit Insurance Corporation, Petitioner vs. Commission on Audit, Respondent

Facts: Former Finance Secretary, Mr. Roberto de Ocampo, in his capacity as ex-officio Chairman of the Philippine
Deposit Insurance Corporation (PDIC) received a total amount of Php 440, 068.62 representing Business Policy
Development and Enforcement Expenses (BPDEE) and Christmas gift checks. The Auditor then issued Notice of
Disallowance disallowing in audit the payment of said expenses on the ground that it partook of the nature of additional
compensation or remuneration in violation of the rule on multiple positions proscribed under Section 13, Article VII of
the Philippine Constitution and Section 2(9), Republic Act No. 3591, as amended.

PDIC appealed to the Supreme Court in G.R. No. 155317 entitled “Philippine Deposit Insurance Corporation (PDIC) v.
Commission on Audit” affirmed with finality said COA decision and resolution. Notwithstanding the final decision of the
Supreme Court, the Final Order of Adjudication (FOA) was issued to PDIC for the enforcement of the decision. However,
PDIC did not comply the FOA but condoned the said amount invoking its power to condone under Section 8, paragraph
12 of its charter.

Issue: Whether or not the COA committed grave abuse of discretion when it disallowed the condonation of an audit
disallowance.

Ruling: No. The Supreme Court ruled in the negative. There is no dispute that the disallowance of the amounts
disbursed to former Finance Secretary Roberto De Ocampo had been affirmed by this Court in an en banc Resolution.
It is a fundamental rule that when a judgment becomes final and executory it becomes immutable and unalterable, the
prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes a ministerial
duty of the court. The writ of execution must conform to the judgment to be executed and adhere strictly to the very
essential particulars.

Following this rule, PDIC should have reasonably expected that an order directing the payment or refund of the
disallowed amount was forthcoming in accordance with the COA Rules as, in fact, a Final Order of Adjudication. Under
Rule XII of the COA Rules, execution shall issue upon a decision that finally disposes of the case. The auditor is tasked
to direct the persons liable to pay or refund the amount disallowed, failing which, an auditor's order shall be
issued directing the cashier, treasurer or disbursing officer to withhold the payment of any money due such
persons. The final order of adjudication thus functions as the writ of execution in audit proceedings.

In dismissing the petition and affirming the audit disallowance, the Supreme Court effectively declared that the payment
of the BPDEE to Secretary De Ocampo is prohibited as it violates the rule against double compensation. This declaration
necessarily also means that condonation of the same payment in favor of the same person is likewise prohibited.

To settle the matter once and for all, the audit disallowance is not subject to condonation following the principle that
what is prohibited directly is also prohibited indirectly. The audit disallowance cannot be circumvented and legitimized
by resorting to condonation. Quando aliquid prohibitur ex directo, prohibitur et per obliquum.

The Supreme Court agree with the COA's ruling that the authority of PDIC to condone applies only to ordinary
receivables, penalties and surcharges and must be submitted to the Commission before it is implemented. This
procedure would enable the Commission to inquire into the propriety of the condonation and to determine whether the
same will not prejudice the government's interest, consistent with COA's constitutional mandate to examine, audit and
settle all accounts of the government, its subdivisions, agencies and instrumentalities, including government-owned and
controlled corporations.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

G.R. No. 182559 March 13, 2009

Commission on Audit, represented by its Chairman, Guillermo Carague vs. Link Worth International, Inc.

Facts: The Commission on Audit's Bids and Awards Committee (COA-BAC) conducted a bidding for various information
communication technology equipment, specifically for Lot 6, which includes 3 units of document cameras. Link Worth
and Audio Visual were among the bidders declared by COA-BAC to have "passed" the technical specifications for the
equipment. However, COA-BAC did not disclose the respective specifications of the equipment offered by the bidders.

In the foregoing, Link Worth and Visual Driver conducted the product demonstration. Link Worth told the Technical
Working Group (TWG), before whom the project demonstration was conducted, that the equipment offered by Audio
Visual failed to satisfy the technical specifications required for the document camera.

Link Worth identified the following technical specifications which Audio Visual failed to satisfy:

Bid Audio Visual

Specifications Specifications

Frame Rate 15 frame/second 2-way Filter Control

Power Supply DC 12V 6V Power Supply

Maximum 1.5 Kg. 1.7 Kg.

Weight

Despite the irregularity, the Technical Working Group (TWG) recommended that the contract be awarded to Audio Visual
for the following reasons:

1. Performance, in terms of capture, projection of images on the screen, digital zoom and pan and 180 o rotation
function

2. Sharper image projection than that of the Lumens DC80A

3. Ease of Use

4. Compact and Sturdy

5. With remote Control

6. The 0.27kg. weight excess is immaterial

Thus, the case was elevated.

In the RTC, the said court set aside the decision of the COA and nullified the award of the subject bidding in favor of
private respondent. The RTC ruled that COA committed grave abuse of discretion in awarding the bid contract to
Audio Visual and in denying Link Worth's protest. Thus, the RTC found that "COA's manifest conduct in awarding the
contract to a bidder which failed to comply with the requisite bid specifications from the very beginning smacks of
favoritism and partiality toward [Audio Visual] to whom it awarded the contract. Furthermore, the RTC ruled that "if
COA knew that any such deviation would be immaterial, then it should not have specified the technical
standards/requirements which must be met at the first step of the bid qualification. The RTC notes that when COA

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

found that "the technical specifications submitted by [Audio Visual] were not the same as that of the bid
specifications provided by COA, it should have rejected [Audio Visual's] bid upon opening of its technical bid envelope
and not pronounce it as having 'passed' the bidding criteria." The RTC further ruled that "the certification xxx and
information from the internet was received and obtained after the product demonstration had already been
5
conducted," in violation of Section 26 of R.A. No. 9184.

The Court of Appeals affirmed the RTC's finding that Audio Visual failed to comply with several technical specifications
required of the document cameras, and that COA violated certain provisions of R.A. No. 9184 and its Implementing
Rules.

Issue: Whether or not COA erred in awarding the bidding contract to Audio Visual despite the irregularity of the requisite
bid specifications.

Ruling: Yes. The Supreme Court ruled in the affirmative. The Honorable Court decides the case in this manner. During
the preliminary examination stage, the BAC checks whether all the required documents were submitted by the
eligible bidders. Note should be taken of the fact that the technical specifications of the product bidded out is among
the documentary requirements evaluated by the BAC during the preliminary examination stage. At this point,
therefore, the BAC should have already discovered that the technical specifications of Audio Visual's document
camera differed from the bid specifications in at least three (3) respects, namely: the 15 frames/second frame rate,
the weight specification, and the power supply requirement. Using the non-discretionary criteria laid out in R.A. No.
9184 and IRR-A, therefore, the BAC should have rated Audio Visual's bid as "failed" instead of "passed."

In this case, the bidders ranked as the two lowest bidders, All Visual and Columbia Tech, were disqualified by the
BAC presumably at the post-qualification stage when their bids failed to meet the technical specifications for the
project. Remarkably, however, despite the fact that there also existed technical variances between the bid
specifications and Audio Visual's document camera, the BAC did not post-disqualify Audio Visual.

Noteworthy to mention, the Aver Vision 300's compliance with the 15 frames/second frame rate specification was
only made certain when the product's manufacturer, AverMedia Technologies, Inc. issued a certification upon the
TWG's request, it should be added, that it indeed complies with the 15 frames/second specification.

Assuming that there is no frame rate variance between Audio Visual's document camera and that required in the bid
specifications, the TWG's, and the BAC's, disregard of the fact that Audio Visual's document camera exceeded the
specified weight by 0.27 kg. and used a 6V power supply instead of the required 12V power supply, was still
unwarranted and highly irregular. The post-qualification procedure, under which the Lowest Calculated Bid
undergoes verification and validation to determine whether all the requirements and conditions specified in the
Bidding Documents, have been met, should have effectively weeded out Audio Visual's bid.

Verily, the function of post-qualification is to verify, inspect and test whether the technical specifications of the goods
offered comply with the requirements of the contract and the bidding documents. It does not give occasion for the
procuring entity to arbitrarily exercise its discretion and brush aside the very requirements it specified as vital
components of the goods it bids out.

The fact is all too glaring that during the post-qualification stage, the BAC considered some factors which were
extraneous to and not included in the bid documents, such as ease of use, compactness and sturdiness, and the
remote control of Audio Visual's document camera, and, at the same time, glossed over two of the requirements
which were indicated in the bid documents, i.e., the weight and power supply requirements. Had the prospective
bidders known that all of the above factors formed part of the bid specifications, a different set of bids might have
emerged. Essentially, it can be said that the eligible bidders did not bid upon the same thing.

It is remarkably ironic that COA, the constitutional watchdog, signed its imprimatur to a transaction which resulted
from an irreparably flawed bidding process. The Commission, in this case, has displayed a lamentable disregard of
its mandate as the sentinel of government resources. The nullification of the award of the contract to Audio Visual
and the mutual restitution directed by the Court of Appeals are both appropriate consequences. It is, however,
paramount that COA be reminded of its most important role, seemingly forgotten in this case, in the promotion of
transparency and accountability in public financial transactions.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

G.R. No. 193677 September 6, 2011

Luciano Veloso et. al. vs. Commission on Audit

Facts: The City Council of Manila enacted an Ordinance entitled An Ordinance Authorizing the Conferment of
Exemplary Public Service Award to Elective Local Officials of Manila Who Have Been Elected for Three (3) Consecutive
Terms in the Same Position. Further, a total amount of Php9, 923, 257.00 was the gratuity award. However, COA issued
notice of disallowance upon review and opined that the monetary reward under the EPSA is covered by the term
"compensation." Though it recognizes the local autonomy of LGUs, it emphasized the limitations thereof set forth in the
Salary Standardization Law (SSL). It explained that the SSL does not authorize the grant of such monetary reward or
gratuity. It also stressed the absence of a specific law passed by Congress which ordains the conferment of such
monetary reward or gratuity to the former councilors.

Hence, the present petition by the petitioner.

Issue: a) Whether or not the COA has the authority to disallow the disbursement of local government funds.

b) Whether or not the COA committed grave abuse of discretion in affirming the disallowance of Php 9,923, 257.00
covering the EPSA of former three-term councilors of the City of Manila authorized by the said Ordinance.

Ruling: a) No. The Supreme Court ruled in the affirmative. Under Section 2, Article IX-D of the Constitution gives a
broad outline of the powers and functions of the COA. Furthermore, under Section 11, Chapter 4, Subtitle B, Title I,
Book V of the Administrative Code of 1987 echoes the said constitutional mandate to COA. Under the first paragraph
of the preceding provision, the COA's audit jurisdiction extends to the government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned or controlled corporations with original charters. Its
jurisdiction likewise covers, albeit on a post-audit basis, the constitutional bodies, commissions and offices that have
been granted fiscal autonomy, autonomous state colleges and universities, other government-owned or controlled
corporations and their subsidiaries, and such non-governmental entities receiving subsidy or equity from or through the
government. The power of the COA to examine and audit government agencies cannot be taken away from it as Section
3, Article IX-D of the Constitution mandates that "no law shall be passed exempting any entity of the Government or its
subsidiary in any guise whatever, or any investment of public funds, from the jurisdiction of the [COA]."

Pursuant to its mandate as the guardian of public funds, the COA is vested with broad powers over all accounts
pertaining to government revenue and expenditures and the uses of public funds and property. This includes the
exclusive authority to define the scope of its audit and examination, establish the techniques and methods for such
review, and promulgate accounting and auditing rules and regulations. The COA is endowed with enough latitude to
determine, prevent and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures of
government funds. It is tasked to be vigilant and conscientious in safeguarding the proper use of the governments, and
ultimately the people's, property. The exercise of its general audit power is among the constitutional mechanisms that
gives life to the check and balance system inherent in our form of government.

Thus, LGUs, though granted local fiscal autonomy, are still within the audit jurisdiction of the COA.

b) No. The Supreme Court ruled in the negative and that COA assailed the decision were made in faithful compliance
with its mandate and in judicious exercise of its general audit power as conferred on it by the Constitution. Under Section
458 of RA 7160 defines the power, duties, functions, and compensation of the Sangguniang Panglungsod. The
ordinance authorized the conferment of the EPSA to the former three-term councilors and, as part of the award, the
qualified city officials were to be given “retirement and gratuity pay remuneration.” However, the Honorable Court
affirmed, as held by the COA, that the power (refers to Section 458 of RA 7160) is not without limitations. Thus, the
limitations are embodied in Section 81 of RA 7160.

Section 2 of Ordinance No. 8040 provides for the payment of "retirement and gratuity pay remuneration equivalent
to the actual time served in the position for three (3) consecutive terms" as part of the EPSA. The recomputation

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.

of the award disclosed that it is equivalent to the total compensation received by each awardee for nine years that
includes basic salary, additional compensation, Personnel Economic Relief Allowance, representation and
transportation allowance, rice allowance, financial assistance, clothing allowance, 13th month pay and cash gift. This is
not disputed by petitioners. There is nothing wrong with the local government granting additional benefits to the officials
and employees. The laws even encourage the granting of incentive benefits aimed at improving the services of these
employees. Considering, however, that the payment of these benefits constitutes disbursement of public funds, it must
not contravene the law on disbursement of public funds.

Undoubtedly, the computation of the awardees' reward is excessive and tantamount to double and additional
compensation. This cannot be justified by the mere fact that the awardees have been elected for three (3) consecutive
terms in the same position. Neither can it be justified that the reward is given as a gratuity at the end of the last term of
the qualified elective official. The fact remains that the remuneration is equivalent to everything that the awardees
received during the entire period that he served as such official. Indirectly, their salaries and benefits are doubled, only
that they receive half of them at the end of their last term.

Note:

The purpose of the prohibition against additional or double compensation is best expressed in Peralta v. Auditor General,
to wit:

This is to manifest a commitment to the fundamental principle that a public office is a public trust. It is expected of a
government official or employee that he keeps uppermost in mind the demands of public welfare. He is there to render
public service. He is of course entitled to be rewarded for the performance of the functions entrusted to him, but that
should not be the overriding consideration. The intrusion of the thought of private gain should be unwelcome. The
temptation to further personal ends, public employment as a means for the acquisition of wealth, is to be resisted. That
at least is the idea. There is then to be an awareness on the part of the officer or employee of the government that he
is to receive only such compensation as may be fixed by law. With such a realization, he is expected not to avail
himself of devious or circuitous means to increase the remuneration attached to his position.

Gacho, R. – Gatchalian, S. – Golisao, F. – Guardiario, N. – Jugan, K. – Maneja, P.