Oriondo v. Commission on Audit
REITERATIONFacts
The Antecedents: The Philippine Tourism Authority (PTA) and the Ministry of National Defense entered into a Memorandum of Agreement (MOA) for the development of Corregidor Island into a tourist attraction. The PTA leased the island and subsequently entered into another MOA with Corregidor Foundation, Inc. (CFI) for its development and management. CFI was incorporated under the Corporation Code. CFI personnel, who were concurrently officers of the PTA, received honoraria and cash gifts in 2003. Procedural History: The Commission on Audit (COA), through an Audit Observation Memorandum, opined that the honoraria and cash gifts were contrary to DBM Budget Circular No. 2003-5 and Article IX-B, Section 8 of the Constitution (prohibiting double compensation). A Notice of Disallowance was issued. CFI and the recipients appealed, arguing CFI is a private corporation not subject to COA audit. The COA, through its various offices, consistently ruled that CFI is a government-owned or controlled corporation (GOCC) and thus subject to its audit jurisdiction. The COA affirmed the disallowance. The Petition: Petitioners, the recipients of the honoraria and cash gifts, filed a Petition for Certiorari before the Supreme Court, assailing the COA's Decision and Resolution. They argued that the COA has no jurisdiction to determine whether an entity is a GOCC and that CFI is not a GOCC. They also contended that the disallowance was void.
Issue(s)
Whether the Commission on Audit has jurisdiction to determine whether a corporation is a government-owned or controlled corporation. Whether Corregidor Foundation, Inc. is a government-owned or controlled corporation subject to the audit jurisdiction of the Commission on Audit. Whether the payment of honoraria and cash gifts to petitioners constituted double compensation prohibited by the Constitution.
Ruling
The Petition is dismissed. The Commission on Audit did not gravely abuse its discretion in issuing the Notice of Disallowance. It has the competency to determine the status of corporations as government-owned or controlled, and correctly found that Corregidor Foundation, Inc. is indeed a government-owned or controlled corporation under its audit jurisdiction. The disallowance of honoraria and cash gifts is affirmed.
Ratio Decidendi
On the Commission on Audit's Jurisdiction to Determine GOCC Status: The Court reiterated that the Commission on Audit has the constitutional mandate to examine, audit, and settle all accounts pertaining to government funds and properties, including those of government-owned or controlled corporations. Determining whether an entity falls within its audit jurisdiction, including its status as a GOCC, is a necessary incident to the performance of its duties. This power is supported by Article IX-D, Section 2 of the Constitution and relevant provisions in the Administrative Code and the Government Auditing Code. The Court has consistently upheld COA's competence in this regard in previous cases. On Corregidor Foundation, Inc. as a GOCC: The Court applied the three-pronged test for determining GOCC status: (1) organized as a stock or non-stock corporation; (2) functions are public in character; and (3) owned or controlled by the government. CFI was organized as a non-stock corporation under the Corporation Code for public interest purposes, specifically to maintain and preserve war relics and develop Corregidor as a tourist destination, which are public functions. Crucially, its incorporators and initial board of trustees were all government officials, holding positions by reason of their office, demonstrating government control. The Court emphasized that the "totality test" of the corporation's relation to the State is determinative, and CFI was created as the State's instrumentality. The fact that it was organized under the Corporation Code and not a special law does not preclude it from being a GOCC, as established in prior jurisprudence. On the Disallowance of Honoraria and Cash Gifts: The Court found that CFI is a GOCC, thus subject to DBM Budget Circular No. 2003-5, which limits honoraria to specific personnel not applicable to petitioners' roles in CFI. Furthermore, petitioners, as PTA employees, were already receiving compensation. Receiving additional honoraria and cash gifts for services rendered in CFI, where they held positions ex officio, constituted double compensation prohibited by Article IX-B, Section 8 of the Constitution. The Court rejected claims of good faith, noting the clear prohibitions and the lack of any ostensible legal basis for the payments, distinguishing the case from prior rulings where refunds were enjoined.
Main Doctrine
A corporation is under the audit jurisdiction of the Commission on Audit if the government owns or has controlling interest in it, regardless of whether it was organized under a special law or the Corporation Code. The payment of honoraria and cash gifts to public officers for services rendered in an ex-officio capacity to a government-owned or controlled corporation, when they already receive compensation from their primary government position, constitutes double compensation prohibited by the Constitution.