JOSE S. RAMISCAL, JR. v.

COMMISSION ON AUDIT
G.R. No. 213716 October 10, 2017
Jardeleza, J:

Case:

A Petition for Certiorari seeking the reversal of COA Decision No. 2012-139 dated September
13, 2012, which denied the Appeal for Exclusion from liability in Notice of Disallowance (ND)
No. 2010-07-084-(1996) and Notice of Charge (NC) No. 2010-07-001-(1996), of herein
Petitioner, Jose S. Ramiscal, Jr., relative to the land acquisition by the Armed Forces of the
Philippines – Retirement and Separation Benefits System (AFP-RSBS) from Concord Resources,
Inc. (Concord).

Facts:

Upon request of the Ombudsman to conduct an audit of prior transactions, the Commission
constituted a Special Audit Team (SAT) to investigate an anomalous acquisition of land by AFP-
RSBS in Laguna.

The SAT found that AFP-RSBS, represented by herein Petitioner, purchased four parcels of land,
with a total area of 227,562 square meters in Calamba, Laguna. The SAT found that the
purchases were covered by two Deeds of Sale, only one of which is registered in the Registry of
Deeds of Laguna, in the amount of ₱91,024,800.00. While, the consideration recorded in the
books of Concord was ₱341,343,000. The SAT concluded that the deed of sale filed before the
Registry of Laguna was the true deed of sale. As such, the government lost ₱250,318,200 and
the taxes that should have been paid was ₱22,187,295.

In 2005, the SAT issued an Audit Observation Memorandum (AOM). In 2010, it issued the ND
representing the excess payment for the Calamba properties and the NC representing the
deficiency for capital gains (CGT) and documentary stamp (DST) taxes. Petitioner appealed the
issuances but the Commission denied the same. Hence, this Petition.

Issues:

1. Whether the action of the Commission in issuing the ND and the NC had already
prescribed;
2. Whether the Commission had already lost its jurisdiction over the case and on the
person of Petitioner when a criminal case, involving the same set of facts and
circumstances, had already been filed with the Sandiganbanyan;
3. Whether the Commission is authorized to issue an NC involving the payment of CGT and
DST which are national internal revenue taxes; and
4. Whether the Commission has authority to institute an administrative complaint or
proceedings against petitioner who had already resigned.

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Ruling:

The Supreme Court (SC) partially granted the Petition. The SC affirmed the assailed decision but
excluded Petitioner from liability under the NC.

The right of State to recover public funds that have been established to be irregularly and
illegally disbursed does not prescribe.

Article 1108 (4)1 of the Civil Code expressly provides that prescription does not
run against the state and its subdivisions. Such right is an exercise of the State’s
sovereign functions to protect its interest over public property.2

Nevertheless, Petitioner still cannot rely on the provisions of Article 11493 and
11534 because the action of the Commission is not barred by the statute of limitations.
The first audit in 2004 was the first audit ever conducted over its funds. Further steps
were conducted to determine the propriety of the disbursements made. Thus, it was
only in 2005, or at the time of the issuance of AOM, that the Commission’s right of
action against Petitioner, or its right to disallow or charge AFP-RSBS accounts, would
have accrued. It was only then that the Commission would have actual knowledge of
any illegal or irregular disbursement of public funds. Hence, the Commission would have
had until 2010 within which to issue an ND or an NC, which is considered as an audit
decision, recommendation or disposition.

The right of government to discipline erring officials is lost when they cease their functions in
office; but not with civil and criminal cases.

An action that may result for each liability under the “threefold liability rule” 5
may proceed independently of one another, as in fact, the quantum of evidence
required in each case is different. The Commission’s audit proceedings determined
Petitioner’s civil liability and accountability over the excess in the disbursement of public
funds and the underpaid taxes. The audit proceeding is not an administrative case
against him. Thus, Petitioner’s resignation does not serve to bar the present case.

1
Art. 1108. Prescription, both acquisitive and extinctive, runs against:
xxx
(4) Juridical persons, except the State and its subdivisions.
2
Republic v. Grijaldo, G.R. No. L-20240, December 31, 1965
3
Art. 1149. All other actions whose periods are not fixed in this Code or in other laws must be brought within five
years from the time the right of action accrues. (n)
4
Art. 1153. The period for prescription of actions to demand accounting runs from the day the persons who should
render the same cease in their functions.
5
The State is not without remedy against xxx any public official who committed violations while in office, but had
already resigned or retired therefrom. Under the threefold liability rule, the wrongful acts or omissions of a public
officer may give rise to civil, criminal and administrative liability. (Office of the Ombudsman v. Andutan, Jr. G.R. No.
164679, July 27, 2011)

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The Commission’s duty to collect or settle taxes is only done in facilitative manner. The
Commission cannot charge in audit an agency which has no duty to collect taxes.

The Commission has authority to ascertain whether a government agency has

paid the correct taxes.6 However, its authority is limited over national revenue taxes. It
is the Bureau of Internal Revenue (BIR) which has the power and duty to both assess
and collect national internal revenue taxes. The Commission shall only issue the NC only
if the agency being audited has a duty to collect taxes.

In the instant case, the underpaid CGT and DST did not come from the account of
AFP-RSBS and did not form part of its revenues, receipts or other incomes. The
Commission erred when it issued the NC against Petitioner when the latter has no duty
to collect taxes, such as the BIR.

/APG
March 12, 2019

6
Section 28. Examining authority. The Commission shall have authority to examine books, papers, and documents
filed by individuals and corporations with, and which are in the custody of, government offices in connection with
government revenue collection operations, for the sole purpose of ascertaining that all funds determined by the
appropriate agencies as collectible and due the government have actually been collected, except as otherwise
provided in the Internal Revenue Code of 1977. (Presidential Decree No. 1445)

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