Fortune Life Insurance Company, Inc. vs. Commission on Audit (COA) Proper

The Neypes fresh-period rule does not apply to a Rule 64 petition for certiorari, which must be filed within 30 days from notice and, if a motion for reconsideration is denied, within the remaining period but not less than five days from notice of denial; proof of service by registered mail requires both the affidavit and the registry receipts, not mere print-outs.

The Provincial Government of Antique is a local government unit that entered into a memorandum of agreement with Fortune Life Insurance Company, Inc. for the life insurance coverage of qualified barangay secretaries, treasurers, and tanod. The LGU obligated ₱4,393,593.60 for the premium.

After the Provincial Government of Antique and Fortune Life Insurance Company, Inc. executed their memorandum of agreement for the life insurance coverage of qualified barangay secretaries, treasurers, and tanod, the LGU submitted the corresponding disbursement voucher to COA Antique for pre-audit, with ₱4,393,593.60 obligated for the premium. COA Antique disallowed the payment for lack of legal basis under Republic Act No. 7160 (Local Government Code). The LGU appealed, but its appeal was denied. Fortune Life then filed a petition for money claim in the COA.

On November 15, 2012, the COA issued its decision denying the petition. Fortune Life received a copy of the COA decision on December 14, 2012 and filed its motion for reconsideration on January 14, 2013. The COA denied the motion, and Fortune Life received the denial on July 14, 2014. Fortune Life then filed a petition for certiorari on August 12, 2014.

The petition for certiorari carried an affidavit of service executed by Marcelino T. Pascua, Jr., who declared that he had served copies of the petition by registered mail under Registry Receipt Nos. 70449, 70453, 70458, 70498 and 70524 attached to the appropriate spaces on pages 64-65 of the petition. The petition, however, bore only cut print-outs of what appeared to be the registry receipt numbers, not the registry receipts themselves.

The SC dismissed the petition for certiorari on August 19, 2014 for late filing, non-submission of proof of service and verified declaration, and failure to show grave abuse of discretion on the part of the respondents. Fortune Life filed a motion for reconsideration of that resolution, which the SC resolved in the present resolution.

• Fresh Period Rule: Petitioner argued that it filed the petition for certiorari within the reglementary period following the fresh period rule in Neypes vs. Court of Appeals because its Rule 64 petition is akin to a petition for review under Rule 42, so the period should be reckoned from receipt of the denial of the motion for reconsideration.
• Proof of Service: Petitioner argued that the petition for certiorari included an affidavit of service in compliance with Section 3, Rule 13 of the Rules of Court.
• Verified Declaration / Substantial Compliance: Petitioner admitted overlooking the submission of a verified declaration and prayed that the declaration attached to the motion for reconsideration be admitted by virtue of substantial compliance with the Efficient Use of Paper Rule, having previously submitted a compact disc containing the petition for certiorari and its annexes.
• Grave Abuse of Discretion: Petitioner insisted that it showed and proved grave abuse of discretion on the part of the COA in issuing the assailed decision, citing the divided COA proper, the delays in promulgating the decision and resolving the motion for reconsideration, the two-sentence denial, the novel issue requiring interpretation of the Local Government Code, and the COA Commissioners’ treatment of former Senator Aquilino Pimentel’s opinion.
• Error in Finding Non-Compliance: Petitioner contended that the SC erred in appreciating its non-compliance with the proof of service requirement, alleging that even a perfunctory scrutiny of the petition and its annexes could have shown the attached affidavit of service.

• Proof of Service: Whether the petition for certiorari complied with the rule on proof of service by registered mail under Section 13, Rule 13 of the Rules of Court when it attached only cut print-outs of registry receipt numbers.
• Fresh Period Rule: Whether the fresh period rule under Neypes vs. Court of Appeals applies to a petition for certiorari under Rule 64 of the Rules of Court.
• Timeliness of Petition: Whether Fortune Life filed its Rule 64 petition within the reglementary period.
• Grave Abuse of Discretion: Whether the COA committed grave abuse of discretion in denying Fortune Life’s money claim.
• Contempt and Disbarment: Whether the petitioner and its counsel should be punished for indirect contempt and whether Atty. Eduardo S. Fortaleza should be disbarred for harsh and disrespectful language against the SC and its Members.

• Proof of Service: No. The petition carried only cut print-outs of registry receipt numbers, not the registry receipts themselves, so it did not comply with Section 13, Rule 13, which requires both the affidavit and the registry receipt.
• Fresh Period Rule: No. The fresh period rule under Neypes does not apply to a Rule 64 petition; Rule 64 has its own 30-day period and a remaining period of not less than five days from notice of denial.
• Timeliness of Petition: No. Fortune Life received the denial on July 14, 2014, had only until July 19, 2014 to file, but filed on August 13, 2014, 25 days late.
• Grave Abuse of Discretion: No. The COA’s alleged delays, terse denial, divided decision, novel issue, and disagreement with Senator Pimentel’s opinion did not approximate grave abuse of discretion; the COA also denied the claim for lack of publication under the Government Procurement Act.
• Contempt and Disbarment: Show-cause orders were issued. The SC ordered petitioner and Atty. Fortaleza to explain why they should not be punished for indirect contempt, and Atty. Fortaleza to show cause why he should not be disbarred, due to harsh and disrespectful language.

• Proof of Service: Section 13, Rule 13 concerns two types of proof of service: the affidavit and the registry receipt. If service is by registered mail, proof consists of the affidavit of the person effecting the mailing and the registry receipt, both appended to the paper served. Compliance is mandatory; there is no proof of service if either or both are not submitted. The petition had an affidavit of service by Marcelino T. Pascua, Jr. declaring service by registered mail under Registry Receipt Nos. 70449, 70453, 70458, 70498 and 70524 attached to pages 64-65, but it bore only cut print-outs of registry receipt numbers, not the receipts themselves. The cut print-outs did not substantially comply with the rule. Cruz vs. Court of Appeals was cited for this requirement.
• Fresh Period Rule: There is no parity between a petition for review under Rule 42 and a petition for certiorari under Rule 64. Rule 42 governs an appeal from a judgment or final order of the RTC in the exercise of its appellate jurisdiction; the appeal may involve a question of fact, law, or mixed question, and is given due course only upon a prima facie showing of error. Rule 64 certiorari is similar to Rule 65 and assails a judgment or final order of the COA or COMELEC; it is designed to correct errors of jurisdiction, not errors of judgment, and questions of fact cannot be raised except to determine grave abuse of discretion. The periods also differ: Rule 42 allows 15 days from receipt of the assailed decision or denial of a motion for new trial or reconsideration, while Rule 64 requires filing within 30 days from notice, with a motion for reconsideration interrupting the period and leaving a remaining period of not less than five days from notice of denial. Thus, the Neypes fresh-period rule did not apply. Reyna vs. Commission on Audit was cited for the distinction.
• Timeliness of Petition: Fortune Life filed its motion for reconsideration on January 14, 2013, which was 31 days after receiving the COA decision on December 14, 2012. Under Section 3, Rule 64, it had only five days from receipt of the denial of its motion for reconsideration to file the petition. It received the notice of denial on July 14, 2014, so it had only until July 19, 2014 to file. It filed the petition on August 13, 2014, which was 25 days too late. Pates vs. Commission on Elections held that a belated filing of a Rule 64 petition based on the belief that the fresh-period rule applied was fatal. Rules of procedure may be relaxed only to relieve a litigant of an injustice not commensurate with the degree of thoughtlessness in not complying; absent that reason, the petition cannot prosper. Canton vs. City of Cebu was cited for this rule.
• Grave Abuse of Discretion: Grave abuse of discretion implies a capricious and whimsical exercise of judgment equivalent to lack or excess of jurisdiction; the power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and the exercise is so patent or gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. The petition did not sufficiently disclose how the COA committed grave abuse of discretion. The delays were neither arbitrary nor whimsical; the terseness of the denial was not a factor; and Senator Pimentel’s opinion, even if he was the main proponent of the Local Government Code, did not matter because the COA Commissioners’ adjudication had value and decisiveness as constitutional officials entrusted with authority. The COA also denied the money claim for lack of sufficient publication under the Government Procurement Act, and thus acted within its authority. Delos Santos vs. Court of Appeals was cited for the definition of grave abuse of discretion.
• Contempt and Disbarment: The petitioner and its counsel exhibited an inability to accept the consequences of their own shortcomings and instead blamed the SC and its Members, using harsh and disrespectful language that accused the SC and its Members of ignorance and recklessness in the performance of their adjudicative function. The SC does not tolerate such language; the accusatory language was particularly offensive because it was unfounded and undeserved. The petition did not contain a proper affidavit of service. Had the petitioner and counsel been humbler and more contrite, they would have desisted from their harshness and disrespect. The SC assured that its resolutions are reached with care and caution, but in this instance it committed no error; the petition bore only cut reproductions of supposed registry receipts, which even a perfunctory scrutiny would not pass as the original registry receipts required by the Rules. Accordingly, the petitioner and Atty. Fortaleza were ordered to explain why they should not be punished for indirect contempt, and Atty. Fortaleza was further directed to show cause why he should not be disbarred.

• Fresh Period Rule Does Not Apply to Rule 64 — The Neypes fresh-period rule allows the period to file an appeal to be reckoned from receipt of the denial of a motion for reconsideration. The SC held that there is no parity between Rule 42 and Rule 64; a Rule 64 petition must be filed within 30 days from notice, and if a motion for reconsideration is denied, within the remaining period but not less than five days from notice of denial.
• Proof of Service by Registered Mail — Proof of service by registered mail consists of the affidavit of the person effecting the mailing and the registry receipt, both of which must be appended to the paper served. Compliance is mandatory; there is no proof of service if either or both are not submitted. Cut print-outs of registry receipt numbers are not substantial compliance.
• Grave Abuse of Discretion — Grave abuse of discretion is a capricious and whimsical exercise of judgment equivalent to lack or excess of jurisdiction; the power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and the exercise is so patent or gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Mere delays, a terse denial, a divided decision, a novel issue, or disagreement with a commentator do not suffice.
• Liberal Construction of Rules — Rules of procedure may be relaxed only to relieve a litigant of an injustice not commensurate with the degree of thoughtlessness in not complying with the prescribed procedure. Absent that reason, the petition cannot be allowed to prosper.
• Respect for the SC and Its Members — Harsh and disrespectful language accusing the SC and its Members of ignorance and recklessness is not tolerated and may lead to indirect contempt and disbarment proceedings.

• "There is no parity between the petition for review under Rule 42 and the petition for certiorari under Rule 64." — The SC rejected Fortune Life’s argument that the Neypes fresh-period rule should apply by analogy to a Rule 64 petition.
• "there is no proof of service if either or both are not submitted." — The SC held that the affidavit of service and registry receipts must both be appended; cut print-outs of registry receipt numbers did not comply.
• "Grave abuse of discretion implies such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at all in contemplation of law." — The SC used this definition to reject Fortune Life’s claim that the COA’s delays, terse denial, and other cited matters amounted to grave abuse of discretion.
• "We do not tolerate such harsh and disrespectful language being uttered against the Court and its Members." — The SC condemned Fortune Life and counsel’s accusations and ordered show-cause proceedings for indirect contempt and disbarment.

• Neypes vs. Court of Appeals, G.R. No. 141524, September 14, 2005, 469 SCRA 633 — Invoked by Fortune Life; the SC distinguished it and held its fresh-period rule did not apply to a Rule 64 petition.
• Pates vs. Commission on Elections, G.R. No. 184915, June 30, 2009, 591 SCRA 481, 488 — Followed; belated filing of a Rule 64 petition based on the belief that the fresh-period rule applied was fatal.
• Cruz vs. Court of Appeals, G.R. No. 123340, August 29, 2002, 388 SCRA 72, 80-81 — Followed for the rule that proof of service by registered mail requires both the affidavit and the registry receipt.
• Reyna vs. Commission on Audit, G.R. No. 167219, February 8, 2011, 647 SCRA 210, 225 — Followed for the distinction between Rule 64 certiorari and an appeal, and for the rule that Rule 64 is not designed to correct errors of judgment.
• Delos Santos vs. Court of Appeals, G.R. No. 169498, December 11, 2008, 573 SCRA 690, 700 — Followed for the definition of grave abuse of discretion.
• Canton vs. City of Cebu, G.R. No. 152898, February 12, 2007, 515 SCRA 441, 448 — Followed for the rule that procedural rules may be relaxed only to relieve a litigant of an injustice not commensurate with the degree of thoughtlessness in not complying.

• Section 13, Rule 13, Rules of Court — Requires proof of service by registered mail to consist of the affidavit of the person effecting the mailing and the registry receipt, both appended to the paper served; applied to reject the cut print-outs.
• Section 3, Rule 64, Rules of Court — Sets the 30-day period from notice of the judgment or final order or resolution; a motion for reconsideration interrupts the period, and if denied, the petition may be filed within the remaining period but not less than five days from notice of denial; applied to compute the late filing.
• Section 1, Rule 42, Rules of Court — Allows 15 days to file a petition for review from receipt of the assailed decision or final order, or from receipt of denial of a motion for new trial or reconsideration; cited to contrast with Rule 64.
• Section 6, Rule 42, Rules of Court — Provides that a petition for review under Rule 42 is on a question of fact, law, or mixed question, and is given due course only upon a prima facie showing of error; cited to distinguish Rule 42 from Rule 64.
• Sections 447 and 458, Republic Act No. 7160 (Local Government Code) — Cited by the COA as vesting only municipal or city governments with the power to secure group insurance coverage for barangay workers; the SC noted the COA’s denial of the money claim.
• Section 21, Republic Act No. 9184 (Government Procurement Reform Act) — Requires publication; the COA denied the money claim for lack of sufficient publication, and the SC held the COA acted within its authority.