G.R. No. 258159 , June 13, 2023
EFRAIM C. GENUINO, PETITIONER, VS. COMMISSION ON AUDIT (COA), COMMISSION PROPER, OFFICE OF THE DIRECTOR, CORPORATE GOVERNMENT SECTOR, CLUSTER 6, REPRESENTED BY DIRECTOR JOSEPH B. ANACAY, AND OFFICE OF THE SUPERVISING AUDITOR, REPRESENTED BY BELEN B. LADINES, IN HER CAPACITY AS COA SUPERVISING AUDITOR – PHILIPPINE AMUSEMENT AND GAMING CORPORATION, RESPONDENTS.

FACTS

The case involves the audit jurisdiction of the Commission on Audit (COA) over the funds of the Philippine Amusement and Gaming Corporation (PAGCOR). On June 15, 2021, the Court rendered a Decision (2021 Genuino Decision) declaring that, under Section 15 of Presidential Decree No. 1869, COA’s audit jurisdiction over PAGCOR funds was limited to the 5% franchise tax and the Government’s 50% share of gross earnings. On February 14, 2023, the Court reversed this in a subsequent Decision (2023 Genuino Decision), striking down Section 15 of P.D. No. 1869 as unconstitutional. However, the 2023 Genuino Decision stated that its ruling should apply prospectively and not affect parties who had relied on the former contrary views. The ponencia in the present case held that the petitioner, Efraim C. Genuino, could not benefit from this prospective application because the disallowed transactions in his case occurred in 2008 and 2009, prior to the 2021 Genuino Decision, and he therefore could not have relied on that now-reversed doctrine.

ISSUE

Whether the prospective application doctrine declared in the 2023 Genuino Decision should apply to exempt the petitioner from liability for transactions occurring prior to that decision.

RULING

In his dissenting opinion, Justice Gaerlan disagreed with the ponencia’s conclusion. He argued that equity and fair play call for the application of the doctrine of operative fact, which recognizes the legal effects of a statute prior to its judicial invalidation when the public has relied on it in good faith. He posited that from the enactment of P.D. No. 1869 until the invalidation of its Section 15 in the 2023 Genuino Decision, the provision was presumed valid and its effects must be recognized. He further argued that the 2021 Genuino Decision’s interpretation of Section 15 constituted part of that law from the date of its original passage. Therefore, the 2021 Genuino Decision should govern the scope of COA’s audit jurisdiction from July 11, 1983 (the effectivity of P.D. No. 1869) until the day before the finality of the 2023 Genuino Decision. Consequently, Justice Gaerlan concluded that COA lacked jurisdiction to audit the PAGCOR funds subject of the instant case, and the petitioner could not be held personally liable.