FLORES v DRILON

F: RA 7227 was passed, as a result of which Mayor Dick Gordon was also made the
chairman and CEO of the SBMA. This was assailed by the petitioners, claiming tha
t this appointment violates Art. IX-B Sec. 7 para 1 (no elective official for ap
pointment or designation in any capacity to any public officer or position durin
g tenure), Art. VII Sec. 16 on the rule on Presidential appointments, and Sec. 2
61.g of the OEC on the prohibited 45-day period prior to an election.
The Court prioritized the first issue as if the petition succeeds on that point,
all other issues need not be discussed.
I: Whether or not the questioned proviso in RA 7227 violates Art. IX-B Sec. 7 pa
ra 1 on elective officials.
The need for a public officer to focus on his elected/appointed task exclusively
was already well-established since CLU and Anti-Graft League. Here, verba legis
applies-- an elective official cannot be appointed to another post in any capac
ity during his tenure.
CA 1: Sec. 94 LGC allows appointment to another post if allowed by law/primary f
unctions.
The Constitution trumps the LGC. While appointive officials may be allowed to ha
ve multiple offices if a law allows it, the same is not extended to elective off
icials unless expressly recognized by the Constitution. Such is recognized in th
e ConComm proceedings.
CA 2: The posts are ex oficio, and fall within the exception in LU.
If the post were to be ex oficio it should have been stated that way. The provis
ion specifically refers to appointment, not a position held ex oficio. Chances a
re the Senators were aware of the possibility of contravening Art. IX-B, Sec. 7,
and continued with it at any rate.
CA 3: Legislative encroachment on apointing authority of President-- though Pres
ident has power to appoint, he really has no choice but appoint the Mayor of Olo
ngapo.
This is the case here. Though it merely appears the proviso merely sets the qual
ifications of the officer during the first year of operations, it shows here tha
t there really is just a limitation of who may be appointed-- given that appoint
ment involves discretion, the proviso contradicts the power given to the Preside
nt.
Effect:
- Gordon must resign from his position if he wishes to the SBMA head.
- He's ineligible for the appointment given Art. IX. (Contrast Art. VI Sec. 13-appointment to office makes them automatically lose their post; in Art. IX resi
gnation is required before appointment).
- Appointment invalid, but operative fact doctrine applies. Can also retain per
diems and the like.
-DBP v CoA
F: In 1986, the Aquino administrationed obtained from the World Bank an Economic
Recovery Loan in order to recoup the losses from the Marcos regime. Among the t
erms was that the government is to get a private external auditor for DBP. This

was done, with the COA still doing its original job of auditing the government b
anks (so 2 audits). This led to the hiring of Cunanan and Co. as the DBP's priva
te external auditor.
At first, the COA did not object to the hiring of an external auditor, but when
Domingo became chairman of DBP, he protested, saying that the hiring of an exter
nal auditor encroached upon the COA's constitutional and statutory power to audi
t government agencies (basic claim: they are the sole and exclusive auditing age
ncy for goverment agencies). Also, when the DBP paid their external auditor, the
COA disallowed the payments. At this point, the COA shut down their requests at
every turn, leading to the present case.
I: Whether or not the COA's power of audit under the Constitution was violated b
y DBP's hiring of an external auditor.
- What is the nature of the COA's power to audit government banks under Sec. 2,
Art. IX-D of the 1987 Constitution?
COA: Para 1 confers a sole and exclusive power to examine and audit all agencies
. Such is similar to their exclusive authority in Sec 2 to define the scope of i
ts audit, promulgate rules and regulations, and DISALLOW UNNECESSARY EXPENDITURE
S.
Court: The distinction is deliberate. Though some commissioners in the ConComm w
anted their power to be exclusive, it was soundly defeated in the end. In contra
st, the ConComm really intended the para 2 powers to be exclusive, given that th
is was not the case in the 1935 and 1973 Constitutions. The qualifier for para 2
cannot refer to a distant section-- it can only refer to the phrase it is immed
iately associated. What this means is the audit is concurrent.
Hence a distinction must be made as to various tasks-- some are exclusive, some
aren't. What the COA does have with respect to the private audit, is superiority
in deals with the government, and the fact that the hiring of private auditors
does not divest the COA of its power to audit the same agencies. Hence: concurre
nt.
Also, allowing the COA's interpretation would clash with the Central Bank's powe
r of supervision over banks under Art. XII, Sec. 20, including some audit of ban
ks-- such was held part of its supervision. At any rate, the COA's findings are
still given more weight.
- Does the Government Auditing Code prohibit the hiring of private auditors?
To start, no exclusive jurisdiction was given. In fact, concurrent jurisdiction
was recognized. There is no prohibition against the hiring of private auditors.
Neither is this present in PD 1445: it grants the COA authority to hire and depu
tize private agencies, but it does not bar the hiring of private auditors. These
are totally different situations.
On the other hand, the DBP cites a Central Bank Circular as basis for hiring a p
rivate auditor (annual audit req't). It recognizes this is as concurrent with th
e COA's audit. Such was done as part of its general rule making authority under
the General Banking Act, and recognized even in the Constitution. As such rules
were held to have the force and effect of law, there exists an obligation on the
DBP to conduct a private audit. Otherwise, they may be held liable.
PD 2029 is also cited-- it recognizes the concurrent jurisdiction (shall not pre
clude...).

-Was the hiring necessary and reasonable?

It was a condition imposed by the World Bank, and as such, we were obliged to do
it. Pacta sunt servanda.
The funds were quite reasonable (in fact, several tens of millions less than the
COA).