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Gaminde vs. COA, December 13, 2000

FACTS:
Thelma Gaminde was appointed by the President of the Philippines as Commissioner of the Civil Service
Commission, ad interim and assumed office on June 22, 1993, after oath of office. The Commission on
Appointments (COA) and the Congress of the Philippines confirmed the appointment on September 7, 1993.
Gaminde, on February 24, 1998, sought the Office of the President for clarification on the expiry date of her
term of office. In response to her request, the Chief Presidential Legal Counsel opined that her term office will
expire on February 2, 2000, instead of February 2, 1999. Relying on said advisory opinion, Gaminde remained in
office after February 2, 1999. However, on February 4, 1999, Chairman Corazon Alma de Leon wrote COA
requesting opinion whether or not Gaminde and her co-terminus staff may be paid their salaries
notwithstanding the expiration of their appointments on February 2, 1999. The General Counsel of COA issued
an opinion on February 18, 1999, that “the term of Commissioner Gaminde has expired on February 2, 1999, as
stated in her appointment conformably with the constitutional intent.” Consequently, on March 24, 1999, CSC
Resident Auditor Flovitas Felipe issued a Notice of Disallowance, disallowing in audit the salaries and
emoluments of Gaminde and her co-terminus staff effective February 2, 1999. Gaminde appealed COA’s
disallowance, but it was dismissed, and affirmed the propriety of the disallowance; and held that the issue of
Gaminde’s office term may be properly addressed by mere reference to her appointment paper which set the
expiration date of February 2, 1999, and that the Commission was bereft of power to recognize an extension of
her term, not even with the implied acquiescence of the Office of the President. Gaminde moved for
reconsideration but was denied by COA.

ISSUE:
Whether the term of office of Thelma Gaminde, as Commissioner, Civil Service Commission, to which she was
appointed on June 11, 1993, expired on February 2, 1999, as stated in the appointment paper, or on February 2,
2000, as claimed by her.

RULING:
The term of office of Thelma P. Gaminde as the CSC Commissioner, as appointed by President Fidel V. Ramos,
expired on February 2, 1999. However, she served as de-facto officer in good faith until February 2, 2000. The
term of office of the Chairman and members of the Civil Service Commission is prescribed in the 1987
Constitution under Article IX-D, Section 1 (2):
“The Chairman and the Commissioners shall be appointed by the President withthe consent of
the Commission on Appointments for a term of seven years without reappointment. Of those first
appointed, the Chairman shall hold office for seven years, a Commissioner for five years, and another
Commissioner for three years, without reappointment. 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.”

Therefore, COA erred in disallowing in audit such salary and other emoluments. Gaminde and her co-terminus
staff are entitled to receive their salary and other emoluments for actual service rendered.

Philippine Society for the Prevention of Cruelty to Animals vs. COA, 534 SCRA 112

The respondents contend that the petitioner is a "body politic" because its primary purpose is to secure the protection and welfare of
animals which, in turn, redounds to the public good.

This argument, is, at best, specious. 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.

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.

FACTS:

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Petitioner Philippine Society for the Prevention of Cruelty to Animals (PSPCA) was incorporated as a juridical
entity by virtue of Act No. 1285, enacted in 1905, by the Philippine Commission.

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. Subsequently, however, the power to make arrests as well
as the privilege to retain a portion of the fines collected for violation of animal-related laws were recalled by
virtue of Commonwealth Act (C.A.) No. 148.
In 2003, an audit team from the Commission on Audit 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 which specifies the general jurisdiction of the COA.

ISSUE:
Whether PSPCA qualifies as a government agency that may be subject to audit by the COA. (No)

RULING:
First, the Court agrees with the petitioner that the "charter test" cannot be applied. Essentially, the "charter
test" as it stands today provides:
[T]he 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 petitioner is correct in stating that the charter test is predicated, at best, on the legal regime established by
the 1935 Constitution, Section 7, Article XIII, which states:
Sec. 7. The National Assembly shall not, except by general law, provide for the formation,
organization, or regulation of private corporations, unless such corporations are owned or controlled by
the Government or any subdivision or instrumentality thereof.

The foregoing proscription has been carried over to the 1973 and the 1987 Constitutions. Section 16 of Article
XII of the present Constitution provides:
Sec. 16. The Congress shall not, except by general law, provide for the formation, organization,
or regulation of private corporations. Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and subject to the test of economic
viability.

Section 16 is essentially a re-enactment of Section 7 of Article XVI of the 1935 Constitution and Section 4 of
Article XIV of the 1973 Constitution.
During the formulation of the 1935 Constitution, the Committee on Franchises recommended the foregoing
proscription to prevent the pressure of special interests upon the lawmaking body in the creation of
corporations or in the regulation of the same.
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.

The general principle of prospectivity of the law likewise applies to Act No. 1459, otherwise known as the
Corporation Law, which had been enacted by virtue of the plenary powers of the Philippine Commission on
March 1, 1906, a little over a year after January 19, 1905, the time the petitioner emerged as a juridical entity.
Even the Corporation Law respects the rights and powers of juridical entities organized beforehand, viz:
SEC. 75. Any corporation or sociedad anonima formed, organized, and existing under the laws of
the Philippine Islands and lawfully transacting business in the Philippine Islands on the date of the
passage of this Act, shall be subject to the provisions hereof so far as such provisions may be applicable
and shall be entitled at its option either to continue business as such corporation or to reform and

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organize under and by virtue of the provisions of this Act, transferring all corporate interests to the new
corporation which, if a stock corporation, is authorized to issue its shares of stock at par to the
stockholders or members of the old corporation according to their interests.

As pointed out by the OSG, both the 1935 and 1987 Constitutions contain transitory provisions maintaining all
laws issued not inconsistent therewith until amended, modified or repealed. 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.
What then is the nature of the petitioner as a corporate entity? What legal regime governs its rights, powers,
and duties? As stated, at the time the petitioner was formed, the applicable law was the Philippine Bill of 1902,
and, emphatically, as also stated above, no proscription similar to the charter test can be found therein.
The textual foundation of the charter test, which placed a limitation on the power of the legislature, first
appeared in the 1935 Constitution. However, the petitioner was incorporated in 1905 by virtue of Act No. 1258,
a law antedating the Corporation Law (Act No. 1459) by a year, and the 1935 Constitution, by thirty years. There
being neither a general law on the formation and organization of private corporations nor a restriction on the
legislature to create private corporations by direct legislation, the Philippine Commission at that moment in
history was well within its powers in 1905 to constitute the petitioner as a private juridical entity.

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 Manuel
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, which the Court will further elaborate on under the
fourth point.

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 bylaws for its internal operations: the petitioner shall be managed or operated
by its officers "in accordance with its by-laws in force."

Third. The employees of the petitioner are registered and covered by the SSS at the latter's initiative, and not
through the GSIS, which should be the case if the employees are considered government employees. This is
another indication of petitioner's nature as a private entity.

Fourth. The respondents contend that the petitioner is a "body politic" because its primary purpose is to secure
the protection and welfare of animals which, in turn, redounds to the public good. This argument, is, at best,
specious. 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.

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. The respondents argue that since the charter of the petitioner requires the latter to render periodic
reports to the Civil Governor, whose functions have been inherited by the President, the petitioner is, therefore,
a government instrumentality.

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This contention is inconclusive. 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, there is a reserved right in the legislature
to investigate the activities of a corporation to determine whether it acted within its powers. 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.

Boy Scouts of the Philippines vs. COA, 651 SCRA 146

The BSP, under its amended charter, continues to be a public corporation or a government instrumentality subject to the exercise by the
COA of its audit jurisdiction in the manner consistent with the provisions of the BSP Charter.

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.

FACTS:

The Commission on Audit (COA) issued a Resolution with the subject “Defining the Commission’s policy with
respect to the audit of the Boy Scouts of the Philippines (BSP)". In its whereas clauses, the COA Resolution stated
that the BSP was created as a public corporation under Commonwealth Act No. 111, as amended by Presidential
Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines v. National Labor Relations
Commission, the Supreme Court ruled that the BSP, as constituted under its charter, was a "government-
controlled corporation within the meaning of Article IX (B)(2)(1) of the Constitution"; and that "the BSP is
appropriately regarded as a government instrumentality under the 1987 Administrative Code.

The BSP sought reconsideration of the COA Resolution in a letter signed by the BSP National President Jejomar C.
Binay. BSP alleged that Republic Act No. 7278 (R.A. No. 7278), which amended the BSP’s charter after the cited
case was decided, amended the composition of the National Executive Board of the BSP. RA 7287 virtually
eliminated the substantial government participation in the National Executive Board. BSP contends that it is not
a government-owned or controlled corporation; neither is it an instrumentality, agency, or subdivision of the
government.

The Corporate Audit Officer of the COA furnished BSP with a Memorandum of the COA General Counsel which
opined that R.A. 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. Thereafter, the COA informed the BSP that a preliminary
survey of its organizational structure, operations and accounting system/records shall be conducted on
November 21 to 22, 2000.

Upon the BSP’s request, the audit was deferred for thirty days. The BSP then filed a Petition for Review with
Prayer for Preliminary Injunction and/or Temporary Restraining Order before the COA. This was denied by the
COA in its questioned Decision, which held that the BSP is under its audit jurisdiction. The BSP moved for
reconsideration but this was likewise denied under its questioned Resolution. BSP then filed a petition for
prohibition with preliminary injunction and temporary restraining order against the COA.

ISSUE:

Whether the BSP falls under the COA’s audit jurisdiction. (YES)

RULING:

The BSP is a public corporation and its funds are subject to the COA’s audit jurisdiction. Assuming for the sake of
argument that the BSP ceases to be owned or controlled by the government because of reduction of the number
of representatives of the government in the BSP Board, it does not follow that it also ceases to be a government
instrumentality as it still retains all the characteristics of the latter as an attached agency of the DECS under the
Administrative Code. Vesting corporate powers to an attached agency or instrumentality of the government is

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not constitutionally prohibited and is allowed by the above-mentioned provisions of the Civil Code and the 1987
Administrative Code.

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. 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 BSPs 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.

Since the BSP, under its amended charter, continues to be a public corporation or a government instrumentality,
we 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.

PDIC vs. COA, 546 SCRA 473

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.

FACTS:
The 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 P440,068.62 representing Business Policy
Development and Enforcement Expenses (BPDEE) and Christmas gift checks. The Auditor thereat issued Notice
of Disallowance No. 98-002 (94-96) dated February 17, 1997, 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/ PDIC sought
reconsideration of the subject disallowance but the same was denied in two COA Decisions
On appeal by the PDIC to the Supreme Court En Banc, the latter in its Resolutions dated November 12, 2002 and
January 21, 2003, entitled "Philippine Deposit Insurance Corporation (PDIC) v. Commission on Audit" affirmed
with finality said COA decision and resolution. With the finality of the decision of the Supreme Court, the Final
Order of Adjudication (FOA) was issued to PDIC for enforcement of the decision. However, instead of complying
with the Order, PDIC condoned the amount of P413,866.62.
On December 22, 2004, the Chairman, this Commission, referred the matter to the Office of the Solicitor General
(OSG) requesting assistance in the filing of appropriate action against PDIC officials for failure to comply with the
FOA and the final decision of the Supreme Court on the appeal.
ISSUE:
Whether or not the COA committed grave abuse of discretion when it disallowed the condonation of an audit
disallowance.
RULING:
NO. 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 in Philippine Deposit Insurance Corporation v.
Commission on Audit and that such affirmance had already attained finality. Being a final and executory
judgment, there was nothing left to be done but to execute the decision in accordance with its terms.
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

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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
was issued on October 7, 2003.
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.

VELOSO vs. COA, 656 SCRA 767

FACTS:

On December 7, 2000, the City Council of Manila enacted Ordinance No. 8040 which conferred the Exemplary
Public Service Award (EPSA) to Elective Local Officials of Manila Who Have Been Elected for Three (3)
Consecutive Terms in the Same Position. The EPSA includes retirement and gratuity pay remuneration
equivalent to the actual time served in the position for three (3) consecutive terms.

The ordinance was deemed approved on August 23, 2002. Pursuant to the ordinance, the City made partial
payments to select councilors. On August 8, 2005, there was issued an Audit Observation Memorandum (AOM)
which found that it was without legal basis, excessive and tantamount to double compensation, and
misclassified as Maintenance and Other Operating Expenses instead of Personal Services. After evaluation, a
Notice of Disallowance (ND) was issued by the Director of the Legal and Adjudication Office (LAO) - Local. This
ND was contested and was eventually decided in favor of the movants, holding that the monetary reward could
be gratuity instead of compensation. It upheld the Local Government Unit’s (LGU) power to grant allowances,
further backing it with the contention that the Department of Budget and Management did not disapprove of
the EPSA.

Upon review, the Commission on Audit (COA) opined that the EPSA falls under “compensation”. Further, it
stresses that the LGUs are still subject to the limitations of the Salary Standardization Law (SSL), that Congress
has not passed a specific law ordaining the conferment of such gratuity, and that the COA is vested by the
Constitution the power to determine the compliance of and to disallow irregular disbursements by government
entities.

Aggrieved, the petitioners come before this Court in the special action of certiorari claiming that the COA was
guilty of grave abuse of discretion amounting to lack or excess jurisdiction when it:
a. Ruled that the EPSA is compensation instead of gratuity; and
b. Nullified a duly enacted ordinance.

ISSUES:
1. WON the COA has the authority to disallow the disbursement of local government funds
2. WON the COA committed grave abuse of discretion in affirming the disallowance of the disbursement.

RULING:
1. YES, under the 1987 Constitution, the COA is vested with the authority to determine whether
government entities, including LGUs, comply with laws and regulations in disbursing government funds,
and to disallow illegal or irregular disbursements of these funds. LGUs, though granted fiscal autonomy,
are still within the audit jurisdiction of COA.
2. NO, the Court upheld the COA’s decision that the award is excessive and tantamount to double
compensation. It further upholds the decision that the grant of such remunerations is subject to
limitations.

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