G.R. No. 210314 Concurring Opinion

G.R. No. 210314, October 12, 2021,
♦ Decision, Hernando, [J]
♦ Concurring Opinion, Perlas-Bernabe, [J]
♦ Separate Opinion, Leonen, [J]
♦ Concurring Opinion, Caguioa, [J]
♦ Concurring Opinion, Lazaro-Javier, [J]
♦ Separate Concurring Opinion, Zalameda, [J]

BANGKO SENTRAL NG PILIPINAS, PETITIONER, VS. THE COMMISSION ON AUDIT, RESPONDENT.

This case originated from the issuance of Opinion No. 2006-0311 dated July 27, 2006 and Memorandum2 dated July 3, 2007 by the Commission on Audit (COA), both opining that "the [Bangko Sentral ng Pilipinas (BSP)] is covered by the provisions of [Republic Act No. (RA)] 7656 [(entitled "An Act Requiring Government-Owned or -Controlled Corporations to Declare Dividends Under Certain Conditions to the National Government, and for Other Purposes")] notwithstanding [Section 43 of] the BSP's own charter,"3 i.e., RA 7653,4 and thus, "the proper basis for [its] dividend declaration shall be its net earnings undiminished by any reserves for whatever purpose."5

For reference, Section 43 of the BSP Charter provides that "[i]n the calculation of net profits, [BSP] shall make adequate allowance or establish adequate reserves for bad and doubtful accounts:"

Section 43. Computation of Profits and Losses. - Within the first thirty (30) days following the end of each year, the Bangko Sentral shall determine its net profits or losses. In the calculation of net profits, the Bangko Sentral shall make adequate allowance or establish adequate reserves for bad and doubtful accounts. (Emphasis supplied)

In contrast, Section 2 (d) of RA 7656 provides for a definition of "net earnings," which states - that "in no case shall any reserve for whatever purpose be allowed as a deduction from net earnings," viz.:

(d) "Net earnings" shall mean income derived from whatever source, whether exempt or subject to tax, net of deductions allowed under Section 29 of the National Internal Revenue Code, as amended, and income tax and other taxes paid thereon, but in no case shall any reserve for whatever purpose be allowed as a deduction from net earnings. (Emphasis supplied)

In relation to the foregoing, Section 3 of RA 7656 provides that "[a]ll government-owned or -controlled corporations shall declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National Government;" this rule "shall also apply to those government-owned or -controlled corporations whose profit distribution is provided by their respective charters or by special law," viz.:

SEC. 3. Dividends. - All government-owned or -controlled corporations shall declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or property dividends to the National Government. This section shall also apply to those government-owned or -controlled corporations whose profit distribution is provided by their respective charters or by special law, but shall exclude those enumerated in Section 4 hereof: Provided, That such dividends accruing to the National Government shall be received by the National Treasury and recorded as income of the General Fund. (Emphasis supplied)

The above-stated COA opinions then became the basis for the COA's issuance of Audit Observation Memoranda (AOM) Nos. RMS-2006-026 dated November 16, 2006 and FSAT-DP-AO-2007-027 dated March 27, 2008 (subject AOMs) against BSP. As shown by the records, the subject AOMs only pertain to the total underpayment of dividends paid to the [National Government (NG)] from 2003 to 2006 in the aggregate amount of P7.147 billion.8

In response to the subject AOMs, BSP wrote letters to the COA assailing their contents. In particular, in a letter dated May 9, 2008, BSP asserted the primacy of its charter (i.e., RA 7653) over RA 7656, arguing that a general law cannot repeal a special law and as such, it is allowed to make reserves in the calculation of its net profits. Consequently, it requested that the subject AOMs be reversed and set aside.9

In Decision No. 2010-4210 dated March 23, 2010, the COA affirmed the findings of the originally issued Opinion No. 2006-031 dated July 27, 2006 and Memorandum dated July 3, 2007, and by extension - the subject AOMs. Holding that a particular provision of a general law prevails over a general provision of a special law, it ruled that Section 43 of the BSP Charter was impliedly repealed by Section 2 (d) in relation to Section 3 of RA 7656. Accordingly, the COA directed the issuance of a Notice of Charge to enforce the collection of the understated dividends from BSP.11

In Resolution No. 2011-00712 dated January 25, 2011, the COA maintained its earlier opinion on implied repeal. However, in response to the controversy as to the proper amount of the unpaid dividends for the period 2003 to 2006, the COA recognized the supervening compromise agreement entered into between the respective heads of the COA, the Department of Finance (on behalf of the NG), the Department of Budget and Management, and the Senate Committee on Finance, on the one hand, and BSP, on the other, covering the unpaid dividends for said period, viz.:

Finally, BSP Governor [Amando M. Tetangco, Jr.], in his letter dated August 24, 2010, claims that the issues concerning the computation of dividends due the NG had been the subject of a discussion on August 23, 2010 among himself as BSP Governor, Chairman Reynaldo A. Villar of this Commission, Senator Franklin Drilon as Chairman of the Senate Committee on Finance, Secretary Cesar V. Purisima of the Department of Finance (DOF) and Secretary Florencio Abad of the Department of Budget and Management (DBM). x x x

At any rate, in view of the agreement between the creditor-agency (DOF) representing the NG and the debtor-agency (BSP), this Commission is inclined to consider the amount of P9.312 billion as the amount resulting from the compromise over the unpaid dividends due the NG for the years 2003 to 2006. x x x

x x x By virtue of this power, the amount of P9.312 billion that BSP acknowledges to be still accruing to the NG and which it intends to remit thereto, and which the DOF accepts as its receivable from the BSP, is deemed by this Commission to be the adjusted amount for settlement subsisting between the agencies.

Hence, the COA deemed the compromise agreement as the final closure to the issue regarding the unremitted amounts covered by the subject AOMs, as well as the assailed Decision No. 2010-42:

4. The concurrence of this Commission in the foregoing will put a final closure to AOM Nos. RMS-2006-02 dated November 16, 2006 and FSATDP-AO-2007-02 dated March 27, 2008 and the assailed COA Decision No. 2010-042 dated March 23, 2010.14 (Emphasis and underscoring supplied)

This notwithstanding, it appears from the very same Resolution No. 2011-007 dated January 25, 2011 that the COA went a step further and extended the underlying basis of the subject AOMs and the assailed Decision No. 2010-42, i.e., the implied repeal of the BSP Charter, to the years 2007 and onwards, viz.:

This Commission agrees only insofar as the unremitted amount stated in AOM Nos. RMS-2006-02 and FSAT-DP-AO-2007-02 are concerned, but not as to the bases of the findings stated therein. It is maintained that said AOMs and the assailed COA Decision No. 2010-042 shall stand.

Thus, for subsequent years, that is, for the years 2007 onwards, the BSP must compute the net earnings for purposes of dividends to be remitted to the NG undiminished by any reserve for whatever purpose. x x x

WHEREFORE, in view of the foregoing considerations, this Commission hereby AFFIRMS Decision No. 2010-042 dated March 23, 2010. Accordingly, no reserve for whatever purpose shall be allowed to be deducted from BSP's net earnings/income in the computation of dividends to be remitted to the NG. However, for the years 2003 to 2006, this commission interposes no objection to the agreement between the BSP and the DOF, in the presence of the DBM Secretary and the Senate Chairman of the Committee on Finance, that the BSP shall remit the NG dividends in the amount of only P9.312 billion, subject to the submission of the duly signed Agreement of the parties concerned to form part of the record of the herein case.15 (Emphases and underscoring supplied)

As BSP failed to avail of its proper remedies to question COA Resolution No. 2011-007 dated January, 25, 2011.(e.g., by invoking the Court's jurisdiction) - particularly with regard to the broad and sweeping pronouncement concerning the years 2007 and onwards - the same was considered as final and executory by the COA; this was declared by the COA in the herein assailed rulings, i.e., Decision No. 2012-15416 dated September 27, 2012 and Decision No. 2013-21417 dated December 3, 2013, which were issued in response to a new set of recourses (i.e., appeal and motion for reconsideration) filed by BSP questioning COA Resolution No. 2011-007 dated January 25, 2011. According to the COA, it had already conclusively settled the issue on the computation of dividends that BSP should remit to the national government for the years 2007 and onwards, which ruling should be treated as concrete basis for future dividends, viz.:

The issue to be resolved is whether or not COA Decision No. 2011-007 became final and executory as regards dividends for the years 2007 and onwards that BSP should remit to the NG.

An analysis of the afore-quoted COA Decision shows that it has conclusively settled the issue on the computation of the dividends that the BSP should remit to the NG, which is that based on Section 2(d) of R.A. No. 7656. On the other hand, the MOA merely states that the amount of dividends the BSP may actually remit to the NG for the years 2007 and onwards may still be subject to negotiation and compromise.

Hence, contrary to the BSP General Counsel's assertion, the COA ruling that "no reserve for whatever purpose shall be allowed to be deducted from the BSP's net earnings/income in the computation of dividends to be remitted to the NG" is the concrete precedent for future dividends since it has statutory basis.18 (Emphases and underscoring supplied)

BSP prays that this Commission set aside COA Decision No. 2012-154 and declare that the manner of computing the BSP's dividends to the national Government for Calendar Year 2007 and onward has not been settled conclusively.

In the MOA, on the other hand, this Commission interposed no objection to the agreement between the BSP and the DOF that the former shall remit to the National Government dividends in the amount of only P9.312 billion for the years 2003 to 2006. But the same does not preclude the COA from exercise its authority from years 2007 and onwards. x x x19 (Emphasis supplied)

However, as will be explained below, the COA's pronouncements are patently erroneous. Hence, the assailed rulings were correctly set aside on certiorari.

The COA cannot establish binding precedent even if its rulings have attained finality.

At the onset, it bears emphasizing that only the Court, as the final arbiter of laws, can establish judicial doctrine. Article 8 of the Civil Code states:

Article 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.

Thus, decisions of the COA which involve the resolution of legal questions do not carry the same import as that of a judicial decision when it comes to precedent setting - even if they have attained finality. Therefore, although the COA declared with finality in Resolution No. 2011-007 that "[a]ccordingly, x x x no reserve for whatever purpose shall be allowed to be deducted from BSP's net earnings/income in the computation of dividends to be remitted to the NG[,]"20 the same cannot be deemed binding precedent in future cases. Indeed, in this jurisdiction, it is well-settled that only the Supreme Court can establish binding precedent through judicial decisions which carry the controlling interpretation of the law of the land.

COA Resolution No. 2011-007 should only be deemed final with respect to the amounts covered by the subject AOMs and COA Decision No. 2010-42, i.e., BSP's unremitted dividends for the years 2003 to 2006 in the amount of P9.312 billion only - and not for the years 2007 and onwards.

As earlier intimated, the COA committed a patent error by ruling, in its Resolution No. 2011-007, on the matter of BSP's dividends for the years 2007 and onwards.

To expound, in judicial proceedings, elementary is the rule that "courts of justice have no jurisdiction or power to decide a question not in issue."21 As such, "a judgment must conform to and be supported by both the pleadings and the evidence, and that it be in accordance with the theory of the action on which the pleadings were framed and the [issues upon which the] case was tried."22 On this score, case law holds that "the jurisdiction of a court or quasi-judicial or administrative organ is determined by the issues raised by the parties[.]"23 Thus, a quasi-judicial tribunal should exercise the authority conferred to it by law within the proper confines of the issues of a given case.

To recount, the controversy in this case originated from the issuance by the COA of Opinion No. 2006-031 dated July 27, 2006 and Memorandum dated July 3, 2007, as well as the subject AOMs. Based on the records, it is not disputed that all of these issuances relate to BSP's unremitted dividends for the years 2003 to 2006. In fact, COA Resolution No. 2011-007 itself states that the compromise agreement entered into between the NG and BSP concerning the years 2003 to 2006 was already a "final closure" of the subject AOMs, viz.:

By virtue of this power, the amount of P9.312 billion that BSP acknowledges to be still accruing to the NG and which it intends to remit thereto, and which the DOF accepts as its receivable from the BSP, is deemed by this Commission to be the adjusted amount for settlement subsisting between the agencies.

4. The concurrence of this Commission in the foregoing will put a final closure to AOM Nos. RMS-2006-02 dated November 16, 2006 and FSAT-DP-AO-2007-02 dated March 27, 2008 and the assailed COA Decision No. 2010-042 dated March 23, 2010.24 (Emphasis and underscoring supplied)

It therefore appears that the only issue raised before the COA by BSP was the unremitted dividends for the years 2003 to 2006. Hence, the COA exceeded its jurisdiction in pronouncing judgment over the unremitted dividends for the years 2007 and onwards as the same was not put at issue before it. As a result, COA Resolution No. 2011-007 should be deemed null and void insofar as the latter pronouncement is concerned. Being partly void, the finality doctrine does not bar BSP from assailing the same before the Court. As recognized by jurisprudence, "a void judgment never acquires finality."25

Moreover, the COA exceeded its jurisdiction by making a broad and categorical ruling over future transactions which have not even occurred. On this score, I echo the observations of Associate Justice Alfredo Benjamin S. Caguioa, to wit:

However, there can be no immutability of judgment as regards rulings on disputed audit observations on transactions which have not even occurred yet and were not part of the dispute between the COA Auditor/s and the BSP when Resolution No. 2011-07 was issued. To be clear, COA had not issued any AOM declaring understatements of dividends for the years 2007 onwards; consequently, BSP could not have raised any defenses against the application of Resolution No. 2011-07 to future dividends.

To emphasize, COA was effectively ruling upon future dividends which were not submitted to it for review. It was already executing audit observations which had not yet been issued.26 (Emphasis supplied)

Accordingly, it is my view that the application of the finality doctrine in this case should only cover the settlement of the unremitted dividends for the period covering 2003 to 2006. As such, the COA gravely abused its discretion in holding that its Resolution No. 2011-007 had become final in full; thus, the same should be partly nullified insofar as its broad and sweeping pronouncement for future transactions outside of the unremitted dividends for the years 2003 to 2006 is concerned.

Even on the underlying merits, no implied repeal of the BSP Charter may be appreciated in this case.

Since the controversy surrounding: (1) the unremitted dividends for the years 2003 to 2006 is already deemed final due to the settlement of the parties; and (2) those from 2007 and onwards are issues that should not have been threshed out by the COA for the reasons above-explained, it thus appears unnecessary to delve into the issue of whether or not Section 43 of the BSP Charter was impliedly repealed by RA 7656. Perceptibly, this is because the Court could already dispose of the present matter by merely affirming the COA's declaration of finality with respect to the unremitted dividends for the years 2003 to 2006. Thus, as ruled by the ponencia, the said issue on implied repeal is moot and academic.

Nevertheless, it is discerned that the issue on implied repeal necessitates resolution in order to guide the bench, the bar, and the public, and in addition, is capable of repetition yet evading review, both of which are exceptions to the mootness doctrine.

Well-settled under jurisprudence is the rule that implied repeals are disfavored. "In order to effect a repeal by implication, the latter statute must be so irreconcilably inconsistent and repugnant with the existing law that they cannot be made to reconcile and stand together. The clearest case possible must be made before the inference of implied repeal may be drawn, for inconsistency is never presumed."27 Notably, such categorical inference is necessary since "[a] [r]epeal by implication proceeds on the premise that x x x [there was] an intention on the part of the legislature to abrogate a prior act on the subject x x x. Hence, before there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the new law was to abrogate the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same from the time of the first enactment."28

Guided by the foregoing precepts, it cannot be said that Section 2 (d) in relation to Section 3 of RA 7656 had impliedly repealed Section 43 of the BSP Charter: While Section 129 of the BSP Charter explicitly characterizes the latter as a government-owned corporation, and as such, ostensibly covered by RA 7656, it bears highlighting that BSP - being constitutionally recognized as an independent central monetary authority charged with the essential state function of providing policy direction in the areas of money, banking, and credit - has been traditionally regarded as a special kind of government-owned corporation. As the ponencia correctly observed, this special characterization may be gathered from constitutional deliberations, the legislative deliberations on the BSP Charter, and subsequent legislation (e.g., RA 10149) - all of which attest to BSP's exceptional nature as compared to ordinary GOCCs.30 Viewed in this peculiar context, it is thus highly doubtful that Congress intended BSP to fall within the coverage of RA 7656, which, by its nature, is general legislation intended to govern the ordinary class of GOCCs.

The foregoing conclusion is bolstered by the fact that Congress subsequently passed RA 1121131 which confirmed BSP's power to deduct reserves from its earnings for enumerated purposes, viz.:

"Sec. 43. Computation of Profits and Losses. - Within the first sixty (60) days following the end of each year, the Bangko Sentral shall determine its net profits or losses. Notwithstanding any provision of law to the contrary, the net profit of the Bangko Sentral shall be determined after allowing for expenses of operation, adequate allowances and provisions for bad and doubtful debts, depreciation in assets, and such allowances and provisions for contingencies or other purposes as the Monetary Board may determine in accordance with prudent financial management and effective central banking operations."

Section 24. A new section entitled Section 43-A is hereby included in the same Act to read as follows:

"Sec. 43-A. Bangko Sentral Reserve Fund. - The Bangko Sentral shall establish a reserve fund, whenever it has income or positive surplus, to mitigate future risks such as, but not limited to, the impacts of foreign exchange and price fluctuations, and to address other contingencies inherent in carrying out the Bangko Sentral-mandated functions as central monetary authority. The reserve fund shall consist of fluctuation reserve, contingency reserve and such other reserves as the Monetary Board deems prudent or necessary." (Emphases and underscoring supplied)

Hence, with the rule disfavoring implied repeals in mind, an implied repeal should not be appreciated in this case.

In fine, I concur with the ponencia that the petition should be PARTLY GRANTED and that the assailed Commission on Audit (COA) rulings should be SET ASIDE insofar as they declare COA Resolution No. 2011-007 final with respect to the issue of the Bangko Sentral ng Pilipinas' (BSP) unremitted dividends for the years 2007 and onwards. Furthermore COA Resolution No. 2011-007 should be declared VOID insofar as it holds that "for the years 2007 [and] onwards, the BSP must compute the net earnings for purposes of dividends to be remitted to the NG undiminished by any reserve for whatever purpose" for the reasons herein stated.1âшphi1