ROSENDO CORALES (Municipal Mayor of Nagcarlan, Laguna) and

Dr. RODOLFO ANGELES (Municipal Administrator) v. Republic of the

Phils. (COA, represented by Provincial State Auditor MAXIMO
ANDAL)
27 August 2013
Perez, J.
Digest by Hans Santos

CA reversed, finding that ANDAL was an indispensable party and that there
was no actual case or controversy. The AOM stated that CORALES should
reimburse the government for the salary of ANGELES but no action was
made to enforce this opinion. It merely directed CORALES to comment. CA
ordered that the petition be dismissed.
Hence, the present Petition for Review under Rule 45.

Topic: Judicial Department > Actual Case or Controversy

FACTS
In his first term as municipal mayor in 1998, CORALES appointed Dr.
ANGELES as municipal administrator, with the unanimous approval of the
Sangguniang Bayan. CORALES reappointed ANGELES in his second and
third terms in 2001 and 2004 respectively but these appointments were
disapproved by the Sanggunian for purported nepotism and unsatisfactory
performance. ANGELES continued to discharge his duties as Municipal
Administrator, receiving an annual salary of P210,012.00.
Provincial Auditor ANDAL issued an Audit Observation Memorandum
(AOM) addressed to CORALES, stating that:
(1) The appointments of ANGELES during his second and third term were
without legal basis having been disapproved by the Sanggunian but
ANGELES may be considered a de facto officer entitled to the emoluments
of the office for actual services rendered.
(2) It is not the Municipality of Nagcarlan that should be made liable to pay
such salaries but CORALES himself as appointing authority.
(3) A post audit of the salaries of ANGELES in 2001-06 amounted to
P1,282,829.99.
(4) A Notice of Disallowance should issue for the payment of salary
expenses incurred without legal basis by Nagcarlan in such stated amount.
The AOM directed CORALES to comment/reply but he instead filed a
Petition for Prohibition and Mandamus before the RTC-San Pablo seeking to:
(1) Require the Office of the Provincial Auditor, through ANDAL, to recall its
Memorandum and desist from collecting reimbursement from CORALES;
and
(2) Compel the Sangguniang Bayan to recall their resolutions disapproving
the appointment of ANGELES and instead confirm its validity.
OSG filed a Motion to Dismiss on behalf of ANDAL on the grounds of lack of
cause of action, prematurity and non-exhaustion of administrative
remedies. The issuance of the AOM was a mere initiatory step in the
administrative investigation of the COA, and only after such investigation
would a Resolution be issued concerning the disbursements in favor of
ANGELES. Moreover, CORALES should have commented on the AOM, then
elevated the matter to the proper COA authorities in case of an adverse
decision.
RTC denied the Motion to Dismiss, finding ANDAL a mere nominal party.
OSG filed a Petition for Certiorari with the CA.

ISSUES:
1) WON there was an actual case or controversy NO
2) WON CORALES had exhausted all administrative remedies NO
3) WON OSG had resorted to an improper remedy NO
HELD: CA Decision and Resolution ordering dismissal of the case
AFFIRMED.
RATIO
Ripeness
The Court reproduced the AOM in its Decision and found that CORALES was
simply required to submit his comment/reply. Any mention that he would
reimburse the salaries paid to Dr. ANGELES was merely an initial opinion
and not conclusive. It has not been shown that ANDAL had taken any
affirmative action to compel CORALES to make the necessary
reimbursement. Moreover, while the AOM recommends the issuance of a
Notice of Disallowance, there is no evidence such Notice had, in fact, been
issued.
COA Memorandum No. 2002-053 also reveals that the AOM was merely an
initial step:
(1) The Auditor would receive the comment/reply of the person being
audited then give a recommendation;
(2) These would then be coursed through the Cluster Director for his or her
own comment or recommendation.
(3) All these would then be submitted to the Director, Legal and
Adjudication Office or the Regional Legal and Adjudication Cluster Director
for them to evaluate the records and finally decide if the transaction would
be suspended or disallowed.
The Court cannot see any actual case or controversy to warrant the
exercise of its power of judicial review. For the courts to exercise such
power, the following must be extant:
(1) there must be an actual case calling for the exercise of judicial power;
(2) the question must be ripe for adjudication; and
(3) the person challenging must have the "standing."
An actual case or controversy involves a conflict of legal rights, an
assertion of opposite legal claims, susceptible of judicial resolution as
distinguished from a mere hypothetical or abstract difference or dispute.
There must be a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudence.

Closely related thereto is that the question must be ripe for adjudication. A
question is considered ripe for adjudication when the act being challenged
has had a direct adverse effect on the individual challenging it.
The third requisite is legal standing or locus standi, which has been defined
as a personal or substantial interest in the case such that the party has
sustained or will sustain direct injury as a result of the governmental act
that is being challenged, alleging more than a generalized grievance.
The requisites of actual case and ripeness are absent in this present case.
The Court observed that CORALES was actually assailing ANDALs authority
to request him to file the desired comment/reply to the AOM, which is
beyond the scope of the action for prohibition. Such request is neither an
actionable wrong nor constitutive of an act perceived to be illegal, since
ANDAL, as Provincial State Auditor, is clothed with the authority to audit
petitioners disbursements, conduct an investigation thereon and render a
final finding and recommendation thereafter.
Exhaustion of Administrative Remedies
Prohibition may only be resorted to when there is no appeal or any plain,
speedy and adequate remedy in the ordinary course of law. CORALES
insists that it is no longer necessary to exhaust administrative remedies
since there was no remedy to assail the imposition under the AOM aside
from an action for prohibition.
The Court disagreed. It reiterated that the action was premature as the
investigation was still in the initial phases. Moreover, even if the AOM were
tantamount to a directive from CORALES to reimburse the salaries, the
1997 Revised Rules of Procedure of the COA state that he should have
appealed with the Director with jurisdiction over the agency under audit,
and then to the Commission proper. It is only an adverse decision from the
Commission which can be appealed before the courts.
In the case of Special Audit Team, Commission on Audit v. Court of Appeals
(2013), the Court stated the reason behind the doctrine, thus:
The thrust of the rule is that courts must allow administrative agencies to
carry out their functions and discharge their responsibilities within the
specialized areas of their respective competence. The rationale for this
doctrine is obvious. It entails lesser expenses and provides for the speedier
resolution of controversies. Comity and convenience also impel courts of
justice to shy away from a dispute until the system of administrative
redress has been completed. xxx
The 1987 Constitution created the constitutional commissions as
independent constitutional bodies, tasked with specific roles in the system
of governance that require expertise in certain fields. xxx As one of the
three (3) independent constitutional commissions, COA has been
empowered to define the scope of its audit and examination and to
establish the techniques and methods required therefor; and to promulgate
accounting and auditing rules and regulations, including those for the

prevention and disallowance of irregular, unnecessary, excessive,

extravagant or unconscionable expenditures or uses of government funds
and properties.
Thus, in the light of this constitutionally delegated task, the courts must
exercise caution when intervening with disputes involving these
independent bodies, for the general rule is that before a party may seek
the intervention of the court, he should first avail of all the means afforded
him by administrative processes.

Procedural Argument
Finally, CORALES argues that the respondents had resorted to an improper
remedy. By filing a Motion to Dismiss based on lack of cause of action, they
admitted the material averments in the Petition for Prohibition. Thus, there
were no more questions of fact and the order of the trial court denying the
Motion to Dismiss should have been raised to the SC on petition for review
as it only involved pure questions of law.
The Court disagreed. An order denying a Motion to Dismiss is an
interlocutory order which neither terminates nor finally disposes of a case
as it leaves something to be done by the court before the case is finally
decided on the merits. Thus, it is not appealable. The only remedy is by
petition for certiorari by showing that the denial was made with grave
abuse of discretion.