Mison vs. Commission on Audit

A decision of the Commission on Audit rendered without collegial action by the Commission itself, composed of a Chairman and two Commissioners, is void ab initio, incapable of ratification or waiver, and never becomes final and executory. Applied to a denial signed only by a Technical Service Manager and merely adopted by the Acting Chairman alone, the defect deprived it of any legal effect and left the claim open to valid collegial reconsideration.

Salvador M. Mison sued in his capacity as Commissioner of Customs, the agency retaining custody of vessels seized for alleged customs violations, while respondents Chan Chiu On and Cheung I asserted ownership of a Japanese-registered vessel. The Commission on Audit was the constitutional body with jurisdiction over money claims against the government. Under the 1973 Constitution then in force, decisional power was lodged in the Commission on Audit, composed of a Chairman and two Commissioners acting as a collegial body.

In Customs Case No. 813, the Commissioner of Customs decided on August 11, 1969 that elements of the Philippine Navy had illegally seized the M/V Hyojin Maru, a vessel of Japanese registry, and ordered release of the vessel and its cargo to claimants Chan Chiu On and Cheung I. Return of the cargo was effected pursuant to a directive of the Secretary of Finance dated February 5, 1970. Release of the vessel itself was never effected because it sank while still in the custody of the Bureau of Customs, and requests by the Bureau to the Philippine Navy and the CADA to refloat or salvage the ship could not be complied with for lack of funds.

Thereafter Chan Chiu On and Cheung I filed a claim with the Commission on Audit for payment of the value of the vessel. By authority of the Acting Chairman, Rogelio B. Espiritu, Manager of the COA Technical Service Office, denied the claim in a registered letter to claimants' lawyer dated November 3, 1977, captioned Decision No. 77-142. Acting COA Chairman Francisco S. Tantuico sent a letter dated December 9, 1977 enclosing a copy of that decision as self-explanatory, then denied reconsideration by letter dated April 17, 1978 on the ground that the motion was filed beyond the 30-day reglementary period and the decision had become final and executory. Claimants' counsel, Atty. Juan T. David, replied on May 10, 1978 that Decision No. 77-142 was void because rendered only by the Manager and not by the duly constituted Commission under Section 2, Article XII-D of the 1973 Constitution; Tantuico answered on August 24, 1978 that there was no cogent reason to reverse. David again moved for reconsideration on April 5, 1979 and on April 20, 1981, asking for collegial resolution after appointment of Commissioners, which letters do not appear to have been acted upon.

On November 17, 1986, after the Commission on Audit had been fully constituted, David renewed the claim for the nominal depreciated value of the vessel in the sum of US $50,000.00 plus legal interest, alternatively proposing conveyance of forfeited merchandise of corresponding value plus interest. In a 4th Indorsement dated June 22, 1987 to the Auditor, Bureau of Customs, Chairman Eufemio C. Domingo, acting for the Commission, reconsidered Decision No. 77-142. After petitioner sought clarification in November 1988, the full three-member Commission responded by letter dated May 19, 1989, entitled COA Decision No. 992, received June 22, 1989, declaring Decision No. 77-142 open to question and deeming the June 22, 1987 Indorsement the final decision. Petitioner's motion for reconsideration filed August 30, 1989 was denied by letter dated October 20, 1989, denominated COA Decision No. 1053, notice of which was received December 4, 1989.

For purposes of review, the material factual premise sustained below was that the vessel sank while in the illegal custody of the Bureau of Customs, which should have pre-eminently taken adequate measures to preserve it but did not.

• Ratification by Acting Chairman: Petitioner argued that Decision No. 77-142, though signed only by the Manager, Technical Service Office, was ratified or made valid because adopted in toto as a COA decision in the letters of Acting Chairman Tantuico dated December 9, 1977, April 17, 1978, and August 24, 1978.
• Effect on Other Decisions: Petitioner argued that rejecting such ratification would invalidate hundreds of decisions and orders signed by or by authority of Acting Chairman Tantuico alone during the interval when only an Acting Chairman had been designated.
• Waiver and Finality: Petitioner maintained that the objection of lack of collegiality was waived because Atty. David confined his motion for reconsideration to the merits and thereafter failed to appeal to the Supreme Court, so that judgment became final and executory as of October 7, 1978.
• Parity of 4th Indorsement: Petitioner maintained that if Decision No. 77-142 was void for being signed only by the Acting Chairman, then the 4th Indorsement dated June 22, 1987 signed only by incumbent Chairman Domingo should also be pronounced void.

• Validity and Ratification: Whether Decision No. 77-142, signed only by the COA Technical Service Manager, was validated by its adoption by the Acting COA Chairman alone.
• Prospective Effect on Other Cases: Whether holding the Acting Chairman's unilateral adjudication void would invalidate all other decisions signed by or under his authority.
• Waiver and Finality: Whether failure to timely raise lack of collegiality and to appeal rendered Decision No. 77-142 final and executory through waiver.
• Validity of Collegial Reconsideration: Whether the 4th Indorsement dated June 22, 1987, signed by Chairman Domingo, was likewise void for lack of collegiality.

• Validity and Ratification: No. The Espiritu decision was void ab initio for absolute lack of authority and could not be validated by adoption of the Acting Chairman alone, in whom decisional power was not lodged.
• Prospective Effect on Other Cases: Qualified. The principle applies only where there was timely and specific challenge to the Acting Chairman's adjudicative authority, not where parties expressly or impliedly accepted it.
• Waiver and Finality: No. A substantively void decision rendered without jurisdiction suffers an incurable defect that cannot be waived and never becomes final and executory; timely challenge was in any event shown.
• Validity of Collegial Reconsideration: Yes, valid. The 4th Indorsement was the act of the Commission with sufficient membership and concurrence, later ratified and reaffirmed by the full three-member Commission in Decision No. 992.

• Validity and Ratification: Decisional jurisdiction was lodged in the Commission on Audit as a collegial body composed of a Chairman and two Commissioners, with authority to decide any case brought before it subject to Supreme Court review on certiorari. As Manager of the Technical Service Office, Espiritu had no power to render a Commission decision, and even the Chairman alone lacked that power. Ratification was inconsequential because an act void ab initio for absolute want of authority must be done anew by the duly endowed entity, and the Acting Chairman, not being the Commission, could effect no proper validation.
• Prospective Effect on Other Cases: Reliance on an analogous ruling justified limiting invalidation to instances of timely and specific challenge to the Acting Chairman's power of adjudication. Where parties expressly or by implication accepted that authority, other cases would not be affected, thereby avoiding wholesale nullification while preserving objection in the present claim.
• Waiver and Finality: The record established repeated, timely objection: the May 10, 1978 letter disputing a Manager-signed decision and invoking the constitutionally required Commission, the April 5, 1979 reiteration seeking resolution after appointment of two Commissioners, and the April 20, 1981 request for collegial action. Beyond that, the defect was not merely technical but substantive voidness for lack of jurisdiction, which by nature could not be cured or waived and could not ripen into finality on October 7, 1978.
• Validity of Collegial Reconsideration: No parity existed because, unlike at the time of Decision No. 77-142 when only the Acting Chairman served, the 4th Indorsement was rendered when the Chairman and Commissioner Fernandez were in office, a number sufficient for collegial action. The Indorsement expressly embodied the Commission's decision, the designation for the Commission was supported by the presumption of regularity and by Fernandez's full concurrence, and any doubt was removed by Decision No. 992 of the full three-member Commission deeming the Indorsement the final decision. No grave abuse of discretion was shown, the allowance being in accord with facts and law that the vessel was lost in illegal custody through failure to preserve it.

• Collegial jurisdiction of the Commission on Audit — Decisional power belongs to the Commission as a collegial body composed of a Chairman and two Commissioners, not to a subordinate officer or to the Chairman acting alone. Applied here, neither the Technical Service Manager nor the Acting Chairman alone could render a valid COA decision on a money claim.
• Void ab initio acts cannot be ratified — Ratification cannot validate an act void from the beginning because done absolutely without authority; the act must be done anew by the person or entity duly endowed with authority. Applied here, adoption in toto by the Acting Chairman could not cure the void Espiritu decision.
• Incurability and non-waivability of jurisdictional voidness — A decision rendered without jurisdiction is substantively void, suffering an essential inherent defect that cannot be cured or waived and cannot become final and executory through inaction or appeal default. Applied here, alleged confinement to the merits and failure to appeal did not bar later collegial reconsideration.
• Limited retroactivity upon timely challenge — A ruling denying adjudicative authority to a usurping or unauthorized officer applies only prospectively except where there has been timely and specific challenge to such lack of authority, following Zaldivar vs. Sandiganbayan and Zaldivar vs. Gonzales. Applied here, the voidness ruling disturbed only the challenged denial, not all unchallenged dispositions of the Acting Chairman period.

• "Ratification cannot validate an act void ab initio because done absolutely without authority." — States the controlling reason for rejecting cure of the Manager-signed denial by the Acting Chairman's adoption.
• "composed of a Chairman and two Commissioners." — Defines the constitutionally required collegial composition in which COA decisional power was lodged.
• "this Commission will interpose no objection" — Embodies the operative allowance in the June 22, 1987 Indorsement, permitting the vessel-value claim subject to usual auditing requirements.
• "deemed for all legal intents and purposes as the final decision on the matter . . ." — States the effect given by full Commission Decision No. 992 to the June 22, 1987 Indorsement as the final collegial resolution.

• Zaldivar vs. Sandiganbayan, G.R. Nos. 79690-707, and Zaldivar vs. Gonzales, G.R. No. 80578, May 19, 1988 — Followed as analogous authority that a ruling denying authority to an unauthorized officer applies prospectively except where a timely and specific challenge to lack of authority was made.

• Section 1, Article XII-D, 1973 Constitution — Provides that the Commission on Audit is composed of a Chairman and two Commissioners; applied to show decisional power resided in the collegial Commission, not in a Manager or Chairman alone.
• Section 2, Article XII-D, 1973 Constitution — Grants the Commission jurisdiction to decide any case brought before it within sixty days from submission, subject to Supreme Court review on certiorari; applied to establish the jurisdictional and collegial requirement violated by Decision No. 77-142.
• Sections 6 and 7, Article IX, 1987 Constitution — Recognize COA en banc rule-making and require decision by majority vote of all members within sixty days, reviewable by the Supreme Court on certiorari within thirty days; applied as the procedural basis for the petition and for sustaining the three-member Decisions No. 992 and No. 1053.

Fernan, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.