G.R. No. 91429, July 13, 1990
SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner, vs. COMMISSION ON AUDIT, CHAN CHIU, and CHEUNG I, respondents.

FACTS

In 1969, the Commissioner of Customs ordered the release of the seized vessel M/V “Hyojin Maru” to claimants Chan Chiu On and Cheung I. While the cargo was returned, the vessel remained in Bureau of Customs custody and subsequently sank. The claimants filed a monetary claim with the Commission on Audit (COA). In 1977, a “Decision No. 77-142,” denying the claim, was issued under the signature of Mr. Rogelio B. Espiritu, Manager of the COA Technical Service Office. This was later referenced in letters from then Acting COA Chairman Francisco S. Tantuico. The claimants, through counsel Atty. Juan David, persistently challenged this decision, arguing it was void as it was not rendered by the COA as a constitutionally mandated collegial body.
After the COA was fully constituted with a Chairman and two Commissioners, Atty. David renewed the claim. In a 4th Indorsement dated June 22, 1987, COA Chairman Eufemio C. Domingo, acting “FOR THE COMMISSION,” reconsidered and set aside Decision No. 77-142, stating the COA would interpose no objection to the claim as the vessel was lost due to the Bureau of Customs’ failure to preserve it. Petitioner Commissioner of Customs sought clarification, prompting the full COA to issue Decision No. 992 in 1989. This decision affirmed the 4th Indorsement as the final ruling, declaring Decision No. 77-142 void for having been issued without authority.

ISSUE

Whether the Commission on Audit committed grave abuse of discretion in affirming, through its fully constituted membership, the 4th Indorsement which granted the claimants’ monetary claim.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion. The legal logic centers on the constitutional composition and authority of the COA. Under the 1973 Constitution, the COA was a collegial body composed of a Chairman and two Commissioners, and the power to decide cases was vested in the Commission as such. The initial “Decision No. 77-142,” signed only by a technical office manager, was void ab initio as it was not an act of the Commission. Even subsequent letters from an Acting Chairman alone could not validate it, as the Chairman singly could not exercise the Commission’s adjudicative power.
The Court upheld the authority of the fully constituted COA in 1987 and 1989 to rule on the matter. The 4th Indorsement by Chairman Domingo, acting for the Commission, and its subsequent affirmation by the three-member Commission in Decision No. 992, constituted a valid exercise of the COA’s constitutional mandate. These decisions correctly treated the earlier void decision as a nullity and addressed the claim on its merits. The finding that the Bureau of Customs was liable for the vessel’s loss while in its illegal custody was a factual determination within the COA’s jurisdiction. Consequently, the COA’s actions were in accordance with law and devoid of arbitrariness.