G.R. No. 230818 - Concurring and Dissenting Opinion

G.R. No. 230818, February 14, 2023,
♦ Decision, Hernando, [J]
♦ Separate Concurring Opinion, Leonen, [J]
♦ Concurring and Dissenting Opinion, Lazaro-Javier, [J]
♦ Concurring and Dissenting Opinion, Kho, [J]

I concur with the ponencia insofar as it overturns the Court's ruling in the original Decision dated June 15, 2021 in G.R. No. 230818, Genuino v. COA (2021 Genuino Decision),1 and which in effect likewise overturns the earlier 2021 Decision of the Court in Figueroa v. Commission on Audit, G.R. Nos. 213212, 213497, and 213655 dated April 27, 2021 (2021 Figueroa Decision),2 which held that the Commission on Audit (COA) has limited audit jurisdiction only to the five percent (5%) franchise tax and the Government's fifty percent (50%) share as stated in Section 15 of the Presidential Decree No. 1869 or "the PAGCOR Charter."

As discussed by the ponencia, Section 15 of the PAGCOR Charter has been repealed by the 1987 Constitution. Thus, I agree with the new doctrine enunciated in these cases that "PAGCOR, being a government-owned or controlled corporation with its own original charter, and its funds regardless of source, come within the broad purview of Art. IX-D, Sec. 2 and Sec. 3 of the 1987 Constitution. In effect, the 'revenue and receipts of, and expenditures or uses of funds which are held in trust by or pertaining to it, are subject to COA's audit jurisdiction, contrary to Sec. 15 of PD 1869, and the restrictions mentioned therein."3

I likewise fully concur with the ponencia that the new doctrine of the Court on the audit jurisdiction of COA over all funds of PAGCOR, regardless of source, should be prospective in nature, and citing People v. Jabinal,4 it "should not apply to parties who had relied on the old doctrine and acted on the faith thereof."5

However, I respectfully register my dissent on the determination by the ponencia of the propriety of the disallowance and petitioners' respective liabilities despite the pronouncement in these cases that the new doctrine on the expansive audit jurisdiction of COA shall be applied prospectively. Following the rules on retroactivity and prospectivity of judicial decisions, the reversal of the 2021 Genuino Decision should not be applied to the disbursements made in the cases herein.

Prior to the new doctrine espoused by the present ponencia, the Court in the 2021 Genuino Decision reasoned that COA only had limited audit jurisdiction over PAGCOR's funds (the old doctrine) based on the presumption of constitutionality as Section 15 of the PAGCOR Charter has not been "amended, repealed, or declared unconstitutional."6 Accordingly, the Court stated that:

PAGCOR was created pursuant to a special law and is, thus, governed primarily by its provisions. As a legislative act, P.D No. 1869 and in particular, Section 15, enjoys the presumption of constitutionality. Courts accord the presumption of constitutionality to legislative enactments, not only because the legislature is presumed to abide by the Constitution, but also because the Judiciary, in the determination of actual cases and controversies, must reflect the wisdom and justice of the people as expressed through their representatives in the Executive and Legislative departments of the Government. Hence, unless otherwise repealed by a subsequent law or adjudged unconstitutional by this Court, a law will always be presumed valid and the first and fundamental duty of the court is to apply the law. As it stands, since Section 15 of P. D. No. 1869 has yet to be amended, repealed, or declared unconstitutional, the Court is left with no recourse except as to apply the law as presently written, that is, any government audit over PAGCOR should be limited to its 5% franchise tax and 50% of its gross earnings pertaining to the Government as its share. Resultantly, any audit conducted by COA beyond the aforementioned is accomplished beyond the scope of its authority and functions.7

While implied repeals are not favored, the Court has nonetheless held that the same may be done when it is manifest that the legislative authority so intended the repeal or when it is convincingly and unambiguously demonstrated that the subject laws or orders are clearly repugnant and patently inconsistent that the laws cannot co-exist.8

As astutely observed by the ponencia, COA's jurisdiction and Section 15 of the PAGCOR Charter are inconsistent with each other. It should be emphasized that COA is constitutionally empowered to exercise its general auditing power to determine, prevent, and disallow illegal, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds.9 This power is "among the constitutional mechanisms that give life to the check and balance system inherit in our form of government."10 Hence, Section 2, Article IX-D of the 1987 Constitution gives COA a wide latitude to rule on the legality of the disbursement of government funds, viz:

A reading of the emphasized portions of Section 2, Article IX-D of the 1987 Constitution makes it clear that COA now has the power to examine and audit all funds pertaining to government-owned or controlled corporations with original charters.

Thus, it would be improbable for this Court to conclude that Section 15 of the PAGCOR Charter could not have been impliedly repealed by the clear and categorical import of the 1987 Constitution.1aшphi1

Finding that COA has the power to audit PAGCOR's funds without any limitation under its charter, the ponencia emphasized that "[it] shall apply prospectively and shall not affect parties who relied on, and acted upon, the force of former contrary views."11 According to the ponencia, the prospective application of the present ruling is rooted in "justice and fairness."12

As stated earlier, I fully concur with the ponencia insofar as its findings with regard to COA's audit jurisdiction should be prospective in character.

In Senarillos v. Hermosisima,13 the Court En Banc, speaking through Justice Jose Benedicto Luis L. Reyes, laid down the fundamental rule that interpretations of the law made by the Supreme Court constitute part of the law as of the date it was originally passed since the Court's construction merely establishes the contemporaneous legislative intent that the interpreted law carried into effect.14

However, this canonical rule on retroactivity of judicial rulings admits of an exception. In People v. Jabinal,15 the Court, through Associate Justice Felix Q. Antonio, first laid down the rule that a new doctrine made by the Court shall be applied prospectively when an old doctrine is overruled and a different view is adopted, viz:

The rationale behind the rule on prospectivity of judicial decisions was expounded by the Court En Banc, through Justice Florenz D. Regalado, in Columbia Pictures, Inc. v. Court of Appeals,17 viz.:

Based on the foregoing rulings by the Court, the rule on prospectivity of judicial decisions applies to cases where parties relied on a previous ruling of the Court. Thus, it appears from these Court decisions that the old doctrine – that COA has limited jurisdiction over disbursements made by PAGCOR – applies only to the period between the finality of the 2021 Genuino Decision and the finality of the present ponencia, and that the new doctrine – that the audit jurisdiction of COA covers all funds of PAGCOR regardless of source – applies to transactions made after the finality of the present ponencia. This is because the approving and certifying officers may rely on the 2021 Genuino Decision in good faith in making disbursements covering the period between the two ponencias.

The foregoing discussion, however, leads to the important question of what doctrine to apply to PAGCOR transactions done prior to the old doctrine enunciated in the 2021 Genuino Decision – that is, from the effectivity of the PAGCOR Charter to the finality of the 2021 Genuino Decision.

It appears that the ponencia, despite the rule on prospectivity of the new doctrine, applied the new doctrine for transactions affecting PAGCOR funds done prior to the finality of the old doctrine as enunciated in the 2021 Genuino Decision, considering that it recognized the audit jurisdiction of COA to the transactions made by petitioners.

This is where my thoughts diverge from that of the ponencia. Hence, my dissent.

I respectfully enter my dissent with the ponencia’s determination on the propriety of the disallowances herein and, accordingly, the determination of petitioners' respective liabilities. In applying the rules on retroactivity and prospectivity of judicial decisions, the ponencia should have affirmed the Court's findings in G.R. No. 230818 insofar as it did not go into petitioner's liability therein and granted the petition in G.R. No. 244540.

In Philippine International Trading Corporation v. COA19 (PITC), the Court En Banc, speaking through Associate Justice Teresita J. Leonardo-De Castro, held that its prior ruling in relation to the interpretation of Executive Order No. 756 should retroactively apply considering that it did not reverse an old doctrine nor adopt a new one:

Applying the foregoing disquisition to the present case, the Court disagrees with PITC's position that the Decision in G.R. No. 183517 should be applied prospectively.

As the COA correctly argued, the Decision in G.R. No. 183517 neither reversed an old doctrine nor adopted a new one. The Court merely construed therein the meaning and application of Section 6 of Executive Order No. 756 by taking into consideration the rationale behind the provision, its interplay with pre-existing retirement laws, and the subsequent enactments and statutes that eventually repealed the same. Prior to the Decision in G.R. No. 183517, there was no other ruling from this Court that explained the nature of the retirement benefits under Section 6 of Executive Order No. 756. Thus, the Court's interpretation of the aforesaid provision embodied in the Decision in G.R. No. 183517 retroacts to the date when Executive Order No. 756 was enacted.20 (Emphasis and underscoring supplied)

Applying PITC to this case, the 2021 Genuino Decision enunciating the old doctrine should be retroactively applied and remain in force when it comes to disbursements made prior to the said case. Similar to PITC, the 2021 Figueroa Decision and thereafter the 2021 Genuino Decision did not reverse an old doctrine nor did it adopt a new one. In fact, the 2021 Genuino Decision even reiterated the earlier 2021 Figueroa Decision which was the first case addressing the issue of COA's audit jurisdiction over disbursements made by PAGCOR prior to the present cases. Thus, to hold otherwise amounts to the Court punishing parties who relied on their long-standing belief in good faith that COA only had limited jurisdiction – based on the PAGCOR Charter – which was in fact reaffirmed by all the members of the Court En Banc in the 2021 Genuino Decision.21

Moreover, the present situation of petitioners is akin to the badges of good faith as discussed in Madera v. COA,22 through Associate Justice Alfredo Benjamin S. Caguioa. In said case, the Court adopted Associate Justice Marvic M.V.F. Leonen's badges of good faith in determining an officer's liability. The badges of good faith are:

(1) Certificate of Availability of Funds pursuant to Section 40 of the Administrative Code, (2) In-house or Department of Justice legal opinion, (3) that there is no precedent disallowing a similar case in jurisprudence;23 (4) that it is traditionally practiced within the agency and no prior disallowance has been issued, and (5) with regard the question of law, that there is a reasonable textual interpretation on its legality.24 (Emphases supplied)

In view of the foregoing, the Court's reversal of the 2021 Genuino Decision in the present case should not be applied to the disbursements made in the cases herein. Hence, the Court should no longer look into the propriety of the disbursement as well as the corresponding liabilities of the approving and/or certifying officers and the recipients herein.

1. PARTLY GRANT the Motion for Reconsideration filed by respondent Commission on Audit in G.R. No. 230818 with regard to respondent's audit jurisdiction over PAGCOR;

2. GRANT petitioner Rene C. Figueroa's petition for certiorari in G.R. No. 244540; and

3. SET ASIDE the Commission on Audit Decision Nos. 2017-271 dated September 6, 2017, and 2015-420 dated December 28, 2015; and Commission on Audit Decision Nos. 2019-023 dated November 26, 2018, and 2017-073 dated March 21, 2017.