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COMELEC Case Digest the RTC in a protest appealed to it from (Public Officer, Appointments, CSC)
the municipal trial court in barangay Facts: Petitioner was appointed Admin Officer II,
Office of the City Mayor, Cebu City, by Mayor
FLORES vs. COMELEC elections on questions of fact shall be Solon. The appointment was described as
184 SCRA 484 final and non-appealable. In his petition permanent but the CSC approved it as
for certiorari, the COMELEC is faulted temporary, subject to the final action taken in
Facts: Petitioner Roque Flores was for not taking cognizance of the the protest filed by the private respondent and
declared by the board of canvassers as petitioners appeal. another employee.
Subsequently, the CSC found the private
having the highest number of votes for respondent better qualified than the petitioner for
kagawad on the March 1989 elections, Issue: Whether or not the decisions of the contested position and, accordingly directed
in Barangay Poblacion, Tayum, Abra, Municipal or Metropolitan Courts in barangay that the latter be appointed to said position in
and thus proclaimed punong barangay election contests are subject to the exclusive place of the petitioner whose appointment is
in accordance with Section 5 of R.A. appellate jurisdiction of the COMELEC revoked. Hence, the private respondent was so
considering Section 9 of R.A. No. 6679? appointed to the position by Mayor Duterte, the
6679. However, his election was new mayor.
protested by private respondent Held: The dismissal of the appeal is justified, but The petitioner, invoking his earlier permanent
Rapisora, who placed second in the on an entirely different and more significant appointment, questions the order and the validity
election with one vote less than the ground, to wit, Article IX-C, Section 2(2) of the of the respondents appointment.
petitioner. The Municipal Circuit Trial Constitution, providing that the COMELEC shall Issue: WON the CSC is authorized to
Exercise exclusive original jurisdiction over all disapprove a permanent appointment on the
Court of Tayum sustained Rapisora and contests relating to the elections, returns and ground that another person is better qualified
installed him as punong barangay in qualifications of all elective regional, provincial, than the appointee and, on the basis of this
place of the petitioner after deducting and city officials, and appellate jurisdiction over finding, order his replacement.
two votes as stray from the latters total. all contests involving elective municipal officials Held: No. The appointment of the petitioner was
Flores appealed to the RTC, which decided by trial courts of general jurisdiction, or not temporary but permanent and was therefore
involving elective barangay officials decided by protected by Constitution. The appointing
affirmed the challenged decision in toto. trial courts of limited jurisdiction. Municipal or authority indicated that it was permanent, as he
The judge agreed that the four votes Metropolitan Courts being courts of limited had the right to do so, and it was not for the
cast for Flores only, without any jurisdiction, their decisions in barangay election respondent CSC to reverse him and call it
distinguishing first name or initial, should contests are subject to the exclusive appellate temporary.
all have been considered invalid instead jurisdiction of the COMELEC under the afore- Section 9(h), Art V of the Civil Service Decree
quoted section. Hence, the decision rendered by provides that the Commission shall have inter
of being divided equally between the the Municipal Circuit Trial Court, should have alia the power to approve all appointments,
petitioner and Anastacio Flores, another been appealed directly to the COMELEC and whether original or promotional, to positions in
candidate for kagawad. The total not to the RTC. Accordingly, Section 9 of Rep. the civil service .and disapprove those
credited to the petitioner was correctly Act No. 6679, insofar as it provides that the where the appointees do not possess
reduced by 2, demoting him to second decision of the municipal or metropolitan court in appropriate eligibility or required qualifications.
a barangay election case should be appealed to The CSC is not empowered to determine the
place. the RTC, must be declared unconstitutional. kind or nature of the appointment extended by
the appointing officer, its authority being limited
The petitioner went to the COMELEC, Luego vs CSC, 143 SCRA 327 to approving or reviewing the appointment in the
which dismissed his appeal on the Posted by Pius Morados on November 7, light of the requirements of the CSC Law. When
ground that it had no power to review 2011 the appointee is qualified and all the other legal
.entry-meta requirements are satisfied, the Commission has
the decision of the RTC, based on .entry-header no choice but to attest to the appointment in
Section 9 of R.A. 6679, that decisions of
accordance with the CSC Laws. promulgate its own rules concerning pleadings
CSC is without authority to revoke an and practice before it or before any of its offices,
appointment because of its belief that another GSIS V. CIVIL SERVICE which rules should not however diminish,
person was better qualified, which is an FACTS increase, or modify substantive rights.
encroachment on the discretion vested solely in The GSIS dismissed six government employees In light of all the foregoing consitutional and
the city mayor. on account of irregularities in the canvassing of statutory provisions, it would appear absurd to
supplies. The employees appealed to the Merit deny to the Civil Service Commission the power
Luego v. Civil Service Commission (G. R. Board. Said board found for the employees and or authority or order execution of its decisions,
No. L-69137) declared the dismissal as illegal because no resolutions or orders. It would seem quite
0 hearing took place. The GSIS took the issue to obvious that the authority to decide cases is
FACTS: Petitioner was appointed Administrative the Civil Service which then ruled that the inutile unless accompanied by the authority to
Officer II, Office of the City Mayor, Cebu City, by dismissal was indeed illegal. The CSC thereafter see that what has been decided is carried out.
Mayor Florentino Solon on 18 February 1983. ordered the reinstatement of the employees and Hence, the grant to a tribunal or agency of
The appointment was described as permanent demanded the payment of backwages. The adjudicatory power, or the authority to hear and
but the Civil Service Commission approved it as replacements of the dismissed employees adjudge cases, should normally and logically be
temporary. On 22 March 1984, the Civil should then be released from service. deemed to include the grant of authority to
Service Commission found the private The GSIS remained unconvinced and raised the enforce or execute the judgments it thus
respondent better qualified than the petitioner for issue to the SC. SC affirmed the Civil Service renders, unless the law otherwise provides.
the contested position and accordingly directed ruling saying o The CSC acted within its Therefore, the GSIS must yield to the order of
herein private respondent in place of petitioners authority o Reinstatement was proper o the CSC.
position. The private respondent was so However, the SC modified the requirement of
appointed on 28 June 1984, by the new mayor; backpay. Said backpay should be made after the
Mayor Ronald Duterte. The petitioner is now outcome of the disciplinary proceedings. Garces v CA
invoking his earlier permanent appointment as Heirs of the dismissed employees filed a motion
well as to question the Civil Service for execution of the Civil Service resolution so FACTS:
Commissions order and the private that backwages can be paid. GSIS however Lucita Garces was appointed Election Registrar
respondents title. denied the motion saying that the SC modified of Gutalac, Zamboanga del Norte on July 27,
ISSUE: Whether or not the Civil Service that part of the ruling. 1986. She was to replace respondent Election
Commission is authorized to disapprove a CSC nonetheless thumbed its nose to the GSIS Registrar Claudio Concepcion, who, in turn, was
permanent appointment on the ground that and granted the motion. GSIS was made to pay. transferred to Liloy, Zamboanga del Norte.
another person is better qualified than the Backed against the wall, GSIS filed certiorari Both appointments were to take effect upon
appointee and, on the basis of this finding, order with the SC asking that the CSC order be assumption of office. Concepcion, however,
his replacement by the latter? nullified. The GSIS contends that the CSC has refused to transfer post as he did not request for
HELD: The Supreme Court ruled in the no power to execute its judgments. it. Garces was directed by the Office of Assistant
negative. The Civil Service Commission is not ISSUE Director for Operations to assume the Gutalac
empowered to determine the kind or nature of Whether the Civil Service has the power to post. But she was not able to do so because of a
the appointment extended by the appointing enforce its judgments Memorandum issued by respondent Provincial
officer, its authority being limited to approving or HELD Election Supervisor Salvador Empeynado that
reviewing the appointment in the light of the YES. The Civil Service Commission is a prohibited her from assuming office as the same
requirements of the Civil Service Law. When the consitutional commission invested by the is not vacant.
appointee is qualified and the other legal Constitution and relevant laws not only with Garces received a letter from the Acting
requirements are satisfied, the Commission has authority to administer the civil service, but also Manager, Finance Service Department, with an
no choice but to attest to the appointment in with quasi-judicial powers. It has the authority to enclosed check to cover for the expenses on
accordance with the Civil Service Laws. Hence, hear and decide administrative disciplinary construction of polling booths. It was addressed
the Civil Service Commissions resolution is set cases instituted directly with it or brought to it on Mrs. Lucita Garces E.R. Gutalac, Zamboanga
aside. appeal. It has the power, too, sitting en banc, to del Norte which Garces interpreted to mean as
superseding the deferment order. Meanwhile, Supreme Court on certiorari by the aggrieved cancelled. To accommodate the needs of its
since Concepcion continued occupying the party within thirty days from receipt of a copy stranded passengers, PAL initially gave out cash
Gutalac office, the COMELEC en banc cancelled thereof. assistance of P 100.00 and, the next day,
his appointment to Liloy. This provision is inapplicable as there was no P200.00, for their expected stay of 2 days in
Garces filed before the RTC a petition for case or matter filed before the COMELEC. On Cebu. Pantejo requested instead that he be
mandamus with preliminary prohibitory and the contrary, it was the COMELECs resolution billeted in a hotel at the PALs expense because
mandatory injunction and damages against that triggered this Controversy. he did not have cash with him at that time, but
Empeynado and Concepcion. Meantime, the The case or matter referred to by the PAL refused. Thus, Pantejo was forced to seek
COMELEC en banc resolved to recognize constitution must be something within the and accept the generosity of a co-passenger, an
respondent Concepcion as the Election jurisdiction of the COMELEC, i.e., it must pertain engineer named Andoni Dumlao, and he shared
Registrar of Gutalac and ordered that the to an election dispute. The settled rule is that a room with the latter at Sky View Hotel with the
appointments of Garces be cancelled. decision, rulings, order of the COMELEC that promise to pay his share of the expenses upon
Empeynado moved to dismiss the petition for may be brought to the Supreme Court reaching Surigao. On 25 October 1988 when the
mandamus alleging that the same was rendered on certiorari under Sec. 7 Art. IX-A are those flight for Surigao was resumed, Pantejo came to
moot and academic by the said COMELEC that relate to the COMELECs exercise of know that the hotel expenses of his co-
Resolution, and that the case is cognizable only its adjudicatory or quasi-judicial powers involving passengers, one Superintendent Ernesto
by the COMELEC under Sec. 7 Art. IX-A of the elective regional, provincial and city officials. Gonzales and a certain Mrs. Gloria Rocha, an
1987 Constitution. Empeynado argues that the In this case, what is being assailed is the Auditor of the Philippine National Bank, were
matter should be raised only on certiorari before COMELECs choice of an appointee to occupy reimbursed by PAL. At this point, Pantejo
the Supreme Court and not before the RTC, else the Gutalac Post which is an administrative duty informed Oscar Jereza, PALs Manager for
the latter court becomes a reviewer of an en done for the operational set-up of an agency. Departure Services at Mactan Airport and who
banc COMELEC resolution contrary to Sec. 7, The controversy involves an appointive, not an was in charge of cancelled flights, that he was
Art. IX-A. elective, official. Hardly can this matter call for going to sue the airline for discriminating against
RTC dismissed the petition for mandamus on the certiorari jurisdiction of the Supreme Court. him. It was only then that Jereza offered to pay
two grounds, viz., (1) that quo warranto is the To rule otherwise would surely burden the Court Pantejo P300.00 which, due to the ordeal and
proper remedy, and (2) that the cases or with trivial administrative questions that are best anguish he had undergone, the latter declined.
matters referred under the constitution pertain ventilated before the RTC, a court which the law
only to those involving the conduct of elections. vests with the power to exercise original Pantejo filed a suit for damages against PAL
CA affirmed the RTCs dismissal of the case. jurisdiction over all cases not within the with the RTC of Surigao City which, after trial,
ISSUE: exclusive jurisdiction of any court, tribunal, rendered judgment, ordering PAL to pay Pantejo
Whether or not the case is cognizable by the person or body exercising judicial or quasi- P300.00 for actual damages, P150,000.00 as
Supreme Court? judicial functions. moral damages, P100,000.00 as exemplary
HELD: CASE DIGEST (Transportation Law): PAL. vs. damages, P15,000.00 as attorneys fees, and
No. The case is cognizable in the RTC. C.A. 6% interest from the time of the filing of the
Sec. 7, Art. IX-A of the Constitution provides: complaint until said amounts shall have been
Each commission shall decide by a majority Philippine Air Lines vs. Court of Appeals fully paid, plus costs of suit.
vote of all its members GR 120262, 17 July 1997)
any case or matter brought before it within sixty On appeal, the appellate court affirmed the
days from the date of its submission for decision FACTS: decision of the court a quo, but with the
or resolution. A case or matter is deemed exclusion of the award of attorneys fees and
submitted for decision or resolution upon the On 23 October 1988, Leovigildo A. Pantejo, then litigation expenses.
filing of the last pleading, brief, or memorandum City Fiscal of Surigao City, boarded a PAL plane
required by the rules of the commission or by the in Manila and disembarked in Cebu City where The Supreme Court affirmed the challenged
commission itself. Unless otherwise provided by he was supposed to take his connecting flight to judgment of Court of Appeals, subject to the
this constitution or by law, any decision, order, or Surigao City. However, due to typhoon Osang, modification regarding the computation of the
ruling of each commission may be brought to the the connecting flight to Surigao City was 6% legal rate of interest on the monetary awards
granted therein to Pantejo. Appeals affirmed point by point the factual The Solicitor General for Respondents.
findings of the lower court upon which the award
ISSUE: of damages had been based.
Whether petitioner airlines acted in bad faith The interest of 6% imposed by the court should
when it failed and refused to provide hotel be computed from the date of rendition of
accommodations for respondent Pantejo or to judgment and not from the filing of the complaint. PUNO, J.:
reimburse him for hotel expenses incurred by
reason of the cancellation of its connecting flight The rule has been laid down in Eastern Shipping
to Surigao City due to force majeur. Lines, Inc. vs. Court of Appeals, et. al. that Foreign loans usually obligate the debtor country
when an obligation, not constituting a loan or to hire expatriate consultants. This part of the
HELD: forbearance of money, is breached, an interest package makes these loans more onerous. The
A contract to transport passengers is quite on the amount of damages awarded may be petition at bar assails the disallowance by the
different in kind and degree from any other imposed at the discretion of the court at the rate respondent COA of a contract extending the
contractual relation, and this is because of the of 6% per annum. No interest, however, shall be services of a foreign consultant on the ground
relation which an air carrier sustains with the adjudged on unliquidated claims or damages that his work could well be performed by
public. Its business is mainly with the travelling except when or until the demand can be Filipinos. It cannot
public. It invites people to avail of the comforts established with reasonable certainty. succeed.chanrobles.com:cralaw:red
and advantages it offers. The contract of air Accordingly, where the demand is established
carriage, therefore, generates a relation with reasonable certainty, the interest shall begin There are no uncertainties on the facts of the
attended with a public duty. Neglect or to run from the time the claim is made judicially case. Our government forged an agreement on
malfeasance of the carriers employees naturally or extrajudicially (Art. 1169, Civil Code) but when financial cooperation with the Republic of
could give ground for an action for damages. such certainty cannot be so reasonably Germany. On April 10, 1981, a Loan and Project
established at the time the demand is made, the Agreement was executed between the Republic
The discriminatory act of PAL against Pantejo interest shall begin to run only from the date the of the Philippines as "Borrower" and the National
ineludibly makes the former liable for moral judgment of the court is made (at which time the Housing Authority (NHA) as "Project Sponsor"
damages under Article 21 in relation to Article quantification of damages may be deemed to on the one hand, and the Kreditanstalt Fur
2219 (10) of the Civil Code. As held in Alitalia have been reasonably ascertained). The actual Weideraufbau (KFW) on the other hand, for
Airways vs. CA, et al., such inattention to and base for the computation of legal interest shall, Urban Housing Dagat-Dagatan Project II A/B. 1
lack of care by the airline for the interest of its in any case, be on the amount finally adjudged. The agreement empowered the NHA and the
passengers who are entitled to its utmost This is because at the time of the filling of the KFW to determine the details of the project as
consideration, particularly as to their complaint, the amount of the damages to which well as the goods and services to be financed
convenience, amount to bad faith which entitles Pantejo may be entitled remains unliquidated from the loan. They hired the services of
the passenger to the award of moral damages. and not known, until it is definitely ascertained, Engineer Brian W. Murdoch of Kinhill Pty. Ltd.
assessed and determined by the court, and only (Kinhill), a foreign corporation organized under
Moral damages are emphatically not intended to after the presentation of proof thereon. the laws of Australia.
enrich a plaintiff at the expense of the defendant. [G.R. No. 101370. September 2, 1993.]
They are awarded only to allow the former to In 1987, the KFW proposed to extend the
obtain means, diversion, or amusements that will NATIONAL HOUSING CORPORATION, contract of Engr. Murdoch for another year. The
serve to alleviate the moral suffering he has Petitioner, v. COMMISSION ON AUDIT and NHA Board of Directors approved only a 3-
undergone due to the defendants culpable ARTURO D. DADUFALZA, in his capacity as month extension, from March 9 to June 9, 1987.
action and must, perforce, be proportional to the COA Director, Technical Services Office, 2 It also directed its management to make
suffering inflicted. However, substantial Respondents. representations with KFW to replace Engr.
damages do not translate into excessive Murdoch with a local consultant after June 9,
damages. Herein, except for attorneys fees and Government Corporate Counsel for petitioner 1987 if the project would still be unfinished. The
costs of suit, it will be noted that the Courts of 3-month consultancy contract was submitted to
the National Economic Development Authority Second Supplemental Contract extending the Paragraph 3.02 of the contract and Section 3 of
(NEDA) for approval. 3 On April 1, 1987, NEDA contract of Kinhill for another eight (8) months, Executive Order No. 164 dated May 5, 1987.
approved the contract with the following from April 4 to December 4, 1988. Its total cost
observations:jgc:chanrobles.com.ph was US $78,500.00 (foreign) and P315,000.00 b. The output requirements are not specified and
(local).chanrobles lawlibrary : rednad there is no PERT/CPM 4 Network Diagram or
"This Office has no objection to the approval of equivalent program of work, thus there is no
the contract. His (NHA-General Manager) The Loan Agreement was supposed to have clear basis for NHAs evaluation of the
attention is called however on the previous expired on December 4, 1988. Nonetheless, consultants accomplishment for purposes of
observations made by this Office in the review of there was another request for its extension for a payment. (Note: Appendix "AA" only reflects
previous extension of services of Engr. Murdoch period of six (6) months. KFW had no objection objectives).
that Engr. Murdoch has been the consultant of but again conditioned its approval on the
NHA since August 1978 or about 8 years now extension of the consultancy services of Kinhill c. There is no contract provision for liquidated
and that considering the relatively simple also for a period of six (6) months. This resulted damages in case of delay in project completion
supervision work required for the finishing in the signing on February 23, 1987 of the Third attributed to direct fault of the consultant.
stages of the Dagat-Dagatan Project, NHA Supplemental Contract which extended Kinhills
should have considered hiring local consultant. It consultancy services from January 4 to July 3, "In addition we reiterate our opinion that the
is expected that this extension of services of 1989. Its cost was US $58,200.00 (foreign) and KFW components of the Dagat-Dagatan Project
Engr. Murdoch is the last and that NHA shall P250,000.00 (local). involves simple design and construction
make representations with KFW to substitute a procedures and it being in its finishing stage,
qualified local consultant for Engr. Murdoch after NHAs legal difficulties started when the Third requires simple engineering advisory services
expiration of the contract if a consultant for the Supplemental Contract was reviewed in post that can be undertaken by NHA or DPWH in-
project is still necessary."cralaw virtua1aw library audit by the Technical Services Office (TSO). house technical staff or at the most a local
The contract was disallowed in view of the consultant. However, perusal of the documents
On April 10, 1987, NHA and Kinhill executed the following findings:jgc:chanrobles.com.ph submitted showed NHA was compelled to
consultancy contract (original) covering the continue the consultancy services of Kinhill,
months of March 9 to June 9, 1987. It involved "This has reference to the review of the Third otherwise, NHA cannot get reimbursement from
the amount of US $30,800.00 (foreign cost) and Supplemental Contract dated February 23, 1989 the KFW loan to pay their contractors.
P123,690.00 (local cost). involving the amount of US$58,200.00 (foreign (underscoring supplied).
cost) plus P250,000.00 (local cost) in the
The 3-month contract, however, did not satisfy contract amount and covering an extension of "It was also noted that in this supplemental
KFW. It wanted a 12-month contract. In June six (6) months issued in favor of Kinhill Pty. Ltd. contract the Management did not take into
1987, it got what it wanted. NHA and Kinhill relative to the Consulting Services for Technical consideration the results of our review made on
signed a First Supplemental Contract. It Assistance to National Housing Authority (NHA) the previous contracts contained in our
extended the consultancy contract for nine (9) under the Kreditanstalt Fuer Wiederaufbau Memorandum dated September 7, 1988.
more months from June 9, 1987 to March 8, (KFW) Loan for Dagat-Dagatan Project.
1988. Its total cost was US $85,500.00 (foreign "In view of the above observation, it is
cost) and P332,850.00 (local cost). "Please be informed that the Consultants recommended that the contract be disallowed in
monthly rate was established as reasonable, audit.
The Urban Housing Dagat-Dagatan Project II however, the review conducted disclosed the
was not completed as scheduled. On December following observations:chanrob1es virtual 1aw "Likewise, it is informed that the review of the
15, 1987, a request was made for an extension library selection and the manner of award and the
of the Loan Agreement for another year. KFW evaluation concerning all reimburseable direct
agreed provided the consultancy contract with a. Based on submitted documents, it was noted expense of the consultant are left with the
Kinhill would be extended until the end of that this supplemental contract has no approval Auditor.
December 1988. NHA did not appear to have from KFW and the Secretary of Public Works
much choice. On May 8, 1988, it signed a and Highways as required in Article III, "Attention is invited to the attached Consultancy
Contract Review dated April 11, 1989, which is the DPWH. project completion attributed to the fault of the
self-explanatory. consultant.
"ISSUE NO. 2. The output requirements are
"sgd. EDITHA A. DE LA CRUZ not specified . . . or equivalent program of work . "ANSWER: We reiterate in full our previous
. .thus there is no clear basis for . . . payment. explanation for this particular
Assistant Commissioner observation:jgc:chanrobles.com.ph
"ANSWER: In the original Consultancy Contract,
Officer-in-Charge as well as the First and the Second "It is confirmed that there is no contract provision
Supplemental Contract Agreements, the main for liquidated damages. However, there is a
Technical Services Office" basis for determining the consultants contract provision for termination for default or
responsibility have been defined in the Terms of for convenience of NHA. Further, considering
On November 26, 1990, NHA requested for Reference which specified the technical that the contract has already expired and there
reconsideration. It offered the following assistance to be provided by the Consultant to has been no record of consultants faults or
explanations:jgc:chanrobles.com.ph the National Housing Authority under the KFW delays in the project implementation, the
Loan Agreement, to wit:chanrob1es virtual 1aw required provision on liquidated damages has
"ISSUE NO. 1. This Supplemental Contract library become moot and academic."cralaw virtua1aw
has no approval from KFW and the Secretary of library
the Public Works and Highways. Assistance to the National Housing Authority for
the Dagat-Dagatan Project in the form of "With respect to your opinion that the KFW
"ANSWER: 1.1. On KFW approval, attached engineering designs, contract documentation, components of the Dagat-Dagatan involve
for your reference is a copy of KFW telex of no project programming, supervision and simple design and construction procedures, etc.,
objection, dated December 22, 1988 "EXHIBIT monitoring procedures, evaluation and let this be of record that we are 100% in accord
A." The reply, action of KFW is usually concurrence on contractors billings and with your observation. However, the hiring of an
communicated thru telex. Perusal of all previous institutional arrangements with regards expartriate consultant is mandated under the
consultancy contracts would support this. associated agencies. In addition, responsibility Loan Agreement to which NHA must adhere to,
Furthermore, let it be informed that it was KFWs will include all associated functions necessary unless otherwise authorized." (Italics ours).
requirement why this consultancy Contract was for the timely and satisfactory completion of the
engaged despite our earlier manifestation that revetment works along the river banks in which On February 28, 1991, TSO Director Arthur
we hire local consultants "EXHIBIT B."cralaw the Department of Public Works and Highways Dadufalza denied the reconsideration. He
virtua1aw library is the responsible agency. opined:jgc:chanrobles.com.ph

1.2 On the approval by the Secretary of the In this respect, since it is a prerequisite that all "1. Although not stated in the contract that there
Department of Public Works and Highways . . . billings to be processed for payment to the is no need for the approval of the DPWH
the Third Supplemental Agreement was contractors have to be certified by the Secretary, Section 3 of Executive Order No. 164
approved by the NHA Board under Resolution consultant, it is the direct responsibility of the dated May 5, 1987 requires the said approval.
No. 1231 5 of March 13, 1987 (sic) "EXHIBIT consultant to monitor, the consultant to monitor,
C."cralaw virtua1aw library verify and evaluate all the aspects of the project "2. The consultants responsibility which they
implementation for contracts funded by KFW mentioned, as specified in the Terms of
It may be pointed out at this juncture, that the Loan. This process will assure the NHA and Reference was general. The output
main reason why the consultancy had to be KFW that disbursement are effected only to requirements are not specified and there is no
extended was due to the delay in the completion cover works accomplishment in accordance with PERT/CPM Network Diagram or equivalent
of the KFW-Funded River Bank Improvement plans and specifications.chanrobles virtual program of work, hence, we still believed that
Works, which was directly implemented by the lawlibrary there is still no basis for NHAs evaluation of the
Department of Public Works and Highways, consultants accomplishments for purposes of
hence, the presence of the foreign consultant "ISSUE NO. 3 There is no contract provision payment.
was with the knowledge and acquiescence of for liquidated damages in case of delay in
"3. It was confirmed by NHA that there is really formalities of law. COA promulgated Circular No. 88-55-A dated
no contract provision for liquidated damages. It September 8, 1985 defining the term
so happened that the contract has expired and "b. Corollary to the above, is whether or not "unnecessary" expenditures,
there has been no record of consultants fault or COA acted beyond its constitutionally granted viz.:jgc:chanrobles.com.ph
delay, thus, the required provision may be powers by disallowing a contract on the basis of
considered moot and academic. However, it is its self-proclaimed and considered defects on "The term pertains to expenditures which could
recommended that for future projects, the the contract not otherwise provided for in its sets not pass the test of prudence or the diligence of
provisions should be specified/stipulated. of regulations promulgated pursuant to the a good father of a family, thereby denoting non-
mandate of the Constitution. responsiveness to the exigencies of the service.
"4. The main reason for the disallowance is that Unnecessary expenditures are those not
there is no more need for a foreign consultant in "c. Whether or not COA, by virtue of the powers supportive of the implementation of the
the final project stage since the remaining work granted to it under the Constitution, substitute its objectives and mission of the agency relative to
components of the Dagat-Dagatan Project which own judgment or disposition in lieu of the the nature of its operation. This would also
involved simple design and construction decision of the management or governing body include incurrence of expenditure not dictated by
procedure and it being in the finishing stage, of government entities."cralaw virtua1aw library the demands of good government, and those the
required simple advisory services that can be utility of which cannot be ascertained at a
undertaken by NHA or DPWH in-house technical The petition lacks merit. specific time. An expenditure that is not essential
staff or at the most, a local consultant. The or that which can be dispensed with without loss
findings was further reinforced by the statements The power of the Commission on Audit to audit or damage to property is considered
of the NEDA in the attached 1st Indorsement and examine government expenditures is unnecessary. The mission and thrust of the
dated April 1, 1987 . . . bearing on its no enshrined in Section 2 (1), Article IX-D of the agency incurring the expenditures must be
objection to the approval of the original 1987 Constitution, viz.:jgc:chanrobles.com.ph considered in determining whether or not an
contract:jgc:chanrobles.com.ph expenditure is necessary." (Italics ours).
"Section 2. (1) The Commission on Audit shall
"x x x."cralaw virtua1aw library have the power, authority, and duty to examine, In Caltex Philippines, Inc. v. COA, 7 We
audit and settle all accounts pertaining to the recognized the authority of COA to disallow
"The NHA agreed and is 100% in accord with revenue and receipts of, and expenditures or irregular, unnecessary, excessive, extravagant
the observation. However, we do not find in the uses of funds and property, owned or held in or unconscionable (IUEEU) expenditures. We
documents/records submitted that NHA has trust by, or pertaining to, the Government, or any ruled: "Since the COA is responsible for the
made stronger representation with the KFW for of its subdivision, agencies, or instrumentalities, enforcement of the rules and regulations, it goes
the hiring of a local consultant (or at all) as including government-owned or controlled without saying that failure to comply with them is
required by the NEDA." (Italics ours). corporations with original charters, or on a post a ground for disapproving the payment of the
audit basis: (a) constitutional bodies, proposed expenditure."cralaw virtua1aw library
On May 15, 1991, the COA, in its Decision No. commissions, and offices that have been
1895, affirmed Director Dadufalzas findings granted the fiscal autonomy under this There can be no dispute on the proposition that
except as regards the lack of provision for Constitution; . . ."cralaw virtua1aw library the continued extension of the services of Engr.
liquidated damages which was considered moot Murdoch as a foreign consultant constitutes at
and academic. The Constitution also granted to COA the power the very least an unnecessary expense.
to "promulgate accounting and auditing rules
NHA filed the instant petition for certiorari where and regulations, including those for the Crystal clear from the records is that the nature
it raises the following prevention and disallowance of irregular, of the terminal phase of the Dagat-Dagatan
issues:jgc:chanrobles.com.ph unnecessary, excessive, extravagant, or project does not require the expertise of a
unconscionable expenditures, or uses of foreign consultant. As early as April 1, 1987, the
"a. Whether or not the COA acted beyond its government funds and properties." 6 necessity of extending the services of Engr.
constitutionally granted powers by disallowing a Murdoch has been questioned by NEDA
duly entered contract, valid, regular, with all the Pursuant to the said constitutional mandate, "considering the relatively simple supervision
work required for the final stages of the project." almighty dollar can justify anybody, especially
8 This observation was echoed by COA in its foreigners, to mangle the mandates of our
post audit review of the First and Second fundamental law. The postulates of our
Supplemental Contracts, 9 Constitution are not mere platitudes which we
viz:jgc:chanrobles.com.ph should honor only in rhetorics but not in reality.
In fine, the power to contract a foreign loan does
"In addition, it is our opinion that the KFW not carry with it the authority to bargain away the
components of the Dagat-Dagatan Project ideals of our Constitution.
involves simple design and construction
procedures, and it being in its finishing stage, IN VIEW WHEREOF, the petition for certiorari is
requires simple advisory services that can be dismissed.
undertaken by NHA or DPWH in-house technical
staff or at the most a local consultant. Hence, SO ORDERED.
the NHA should have made stronger
representations with the KFW for the hiring of a
local consultant (or none at all) as required by
NEDA."cralaw virtua1aw library

Petitioner itself has taken the position that the

services of Engr. Murdoch can be dispensed
with and can well be done by Filipinos. In 1987,
petitioners Board already directed its
management to make representations with KFW
to replace Engr. Murdoch with a Filipino
consultant if the project would still be unfinished.
Again, in its memorandum dated November 26,
1990, petitioner categorically admitted that the
KFW components of the Dagat-dagatan Project
involved simple designs and construction
procedures which could easily be handled by a
local consultant. Despite all these admissions,
petitioner proceeded to extend the unnecessary
services of Engr. Murdoch as it consummated
the disputed Third Supplemental Contract. The
amount of money that was spent for the
unnecessary services of Engr. Murdoch speaks
for itself.chanrobles law library

Petitioner argues that the renewal of the loan

agreement with the KFW would have been
jeopardized if it did not agree to the extension of
the services of Engr. Murdoch. The short answer
to this argument is that the imperative necessity
to comply with the command of our Constitution
prohibiting unnecessary expenses of public
funds is beyond compromise. No amount of the