Fernando v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner Bayani Fernando, former Chairman of the Executive Committee of the Metro Manila Film Festival (MMFF) from 2002-2008, received a total of P3,000,000.00 from the MMFF Executive Committee for Special Projects/Activities of the Metro Manila Development Authority (MMDA) and for cultural projects. These funds were sourced from advertising sponsorship and non-tax revenues of the MMFF Executive Committee. Procedural History: The Commission on Audit (COA), through its Fraud Audit and Investigation Office, conducted a special audit on the MMFF Executive Committee's disbursements for the years 2002-2008. Subsequently, COA issued Notices of Disallowance (ND) Nos. 2010-05-032 to 2010-05-034 against petitioner for the P3,000,000.00 received, citing irregular transactions for failure to issue an Official Receipt and for not submitting required reference documents. Petitioner received Fraud Audit Office Notice of Finality of Decision (FAO NFD) Nos. 2017-008 to 2017-10, ordering him to pay the disallowed amounts. The Petition: Petitioner filed a Petition for Certiorari under Rule 64, in relation to Rule 65 of the Rules of Court, assailing the COA's FAO NFDs and NDs. He argued that the COA committed grave abuse of discretion by auditing the MMFF Executive Committee, claiming it is not a public office and its funds are not public funds as they are sourced from non-tax revenues.
Issue(s)
Whether the Commission on Audit (COA) has jurisdiction to audit the funds of the Executive Committee of the Metro Manila Film Festival (MMFF). Whether the COA committed grave abuse of discretion in disallowing the amounts received by the petitioner.
Ruling
The petition is denied for lack of merit. The Supreme Court affirmed the decision of the Commission on Audit.
Ratio Decidendi
On the jurisdiction of the COA over the MMFF Executive Committee: The Supreme Court reiterated that the COA's audit jurisdiction, as provided in Section 2, Article IX-D of the 1987 Constitution, extends to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations and non-governmental entities receiving subsidy or equity from the government. The Court clarified that the determining factor for COA's jurisdiction is not solely the nature of the entity but also the source and nature of the funds being audited. The MMFF Executive Committee, created by Proclamation No. 1459, performs a public purpose by supporting the local movie industry, which is recognized as vital to the country's developmental effort and cultural enrichment. Therefore, its funds, even if sourced from non-tax revenues or private donations, are considered public in nature when utilized for such public purpose, making them subject to COA's audit jurisdiction. The Court cited previous rulings in Funa v. Manila Economic and Cultural Office, et al., Phil. Society for the Prevention of Cruelty to Animals v. Commission on Audit, and Engr. Feliciano v. Commission on Audit to support its conclusion on the expansive nature of COA's audit powers. On the alleged grave abuse of discretion: The Court found no grave abuse of discretion on the part of the COA. The COA's issuance of the Notices of Disallowance was based on findings of irregular transactions, specifically the encashment of checks without an official receipt and the failure to submit required supporting documents, which are violations of government accounting and auditing rules. The petitioner's claim that the funds were not public funds was debunked by the Court's determination that the MMFF Executive Committee, in utilizing funds for a public purpose, falls within the COA's audit jurisdiction. The petitioner also failed to exhaust administrative remedies by not appealing the FAO NFDs to the COA Proper, which is a prerequisite for filing a petition for certiorari.
Main Doctrine
The Commission on Audit (COA) has audit jurisdiction over entities that are government instrumentalities or agencies, or non-governmental entities receiving subsidy or equity from the government, or those performing public functions and utilizing funds sourced from the government or public in nature, regardless of whether the funds are from taxes or non-tax revenues, when such funds are utilized for public purposes.