Figueroa v. Commission on Audit
REITERATIONFacts
The Antecedents: The Philippine Amusement and Gaming Corporation (PAGCOR) released P26,700,000.00 to BIDA Foundation, Inc. (BFI) for the purchase of 89,000 tickets to the movie "Baler." This disbursement was charged against PAGCOR's Operating Expenses Fund, specifically its Marketing Expenses. Procedural History: The Commission on Audit (COA) issued Notice of Disallowance (ND) No. 2011-002(08) disallowing the entire amount and holding several PAGCOR officials liable. The COA Corporate Government Sector (CGS), Cluster C, modified the ND, reducing the liability to P24,660,420.00 and excluding some petitioners. The COA Proper, in Decision No. 2013-191, affirmed the disallowance of P26,700,000.00 and reinstated the liability of most of the original persons, except Edward F. King. Decision No. 2014-115 denied the motions for reconsideration. The Petition: Petitioners Rene Figueroa, Philip G. Lo, Manuel C. Roxas, and Efraim C. Genuino assailed the COA decisions through petitions for certiorari, arguing that the COA acted with grave abuse of discretion. Their arguments centered on the COA's audit jurisdiction over PAGCOR's funds, the nature of the funds used, the alleged ultra vires nature of the Board's act, and their individual liabilities.
Issue(s)
Whether the Commission on Audit (COA) committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing and affirming Notice of Disallowance (ND) No. 2011-002(08). Whether the COA has audit jurisdiction over PAGCOR's Operating Expenses Fund, specifically the disbursement for the "Baler" movie tickets. Whether the COA has the authority to declare the acts of PAGCOR's Board of Directors as ultra vires. Whether the PAGCOR Board of Directors acted within the limits of its power and authority in approving the purchase of the movie tickets. Whether the petitioners are liable for the disallowed transaction.
Ruling
The Supreme Court granted the petitions, reversed, and set aside the assailed COA decisions and the Notice of Disallowance. WHEREFORE, the petitions are GRANTED. Accordingly, the assailed Decision No. 2013-191 dated 20 November 2013, Decision No. 2014-115 dated 18 June 2014, and Notice of Disallowance No. 2011-002(08) dated 30 June 2011 issued by the Commission on Audit are hereby REVERSED and SET ASIDE.
Ratio Decidendi
On the COA's audit jurisdiction and grave abuse of discretion: The Court held that the COA committed grave abuse of discretion. Section 15 of the PAGCOR Charter explicitly limits the COA's audit jurisdiction to the 5% franchise tax and the 50% share of the government in PAGCOR's gross earnings. The P26,700,000.00 disbursed for the "Baler" movie tickets was sourced from PAGCOR's Operating Expenses Fund, specifically its Marketing Expenses, which are not part of the government's share or the franchise tax. These funds are considered private corporate funds, not public funds subject to the COA's general audit power under Article IX-D, Section 2 of the Constitution. The Court emphasized that Section 15 of the PAGCOR Charter has not been repealed and remains valid, and its constitutionality cannot be attacked collaterally. On the COA's audit jurisdiction over PAGCOR's Operating Expenses Fund: The Court ruled that the COA does not possess the power to declare the acts of the PAGCOR Board of Directors as ultra vires. The determination of whether a corporation's acts are within its powers lies with the provisions of its charter. The COA's principal duties, as outlined in the Constitution and P.D. No. 1445, do not include striking down or declaring ultra vires the acts of the board of directors of a GOCC. Such a power is beyond the COA's jurisdiction. On the COA's power to declare acts of PAGCOR's Board of Directors as ultra vires: The Court found that the PAGCOR Board acted well within the limits of its authority. Section 7(e) of the PAGCOR Charter grants the Board the power to perform "such other powers, functions and duties as may be directed and authorized by the President of the Philippines or as may be necessary or proper for the accomplishment of its purposes and objectives." The purchase of "Baler" movie tickets, considering its history-based plot, could be categorized as a socio-civic project, falling under the Board's purview. Furthermore, since the funds were sourced from Marketing Expenses, which are part of PAGCOR's operational flexibility to promote its business, the transaction was considered within its mandate. On whether the PAGCOR Board acted within its powers: Given that the COA acted without or in excess of its jurisdiction and that the disallowance lacked factual and legal basis, the Court found no basis to hold the petitioners liable. The disallowance was deemed bereft of any factual and legal basis, and the COA's actions were characterized as grave abuse of discretion. On the petitioners' liability: The Court noted that Figueroa signed the check voucher and check in good faith, relying on the clearance from the Finance and Treasury Department, and that Lo and Roxas asserted they did not sign any Board Resolution approving the use of operating expenses for ticket purchases. Genuino's liability was also questioned based on the nature of the funds and the Board's prerogative.
Main Doctrine
The Commission on Audit (COA) committed grave abuse of discretion amounting to lack or excess of jurisdiction in disallowing the disbursement of P26,700,000.00 from PAGCOR's Operating Expenses Fund for the purchase of movie tickets, as Section 15 of the PAGCOR Charter limits the COA's audit jurisdiction to the 5% franchise tax and the 50% share of the government in PAGCOR's gross earnings, and does not extend to the corporation's operating expenses, which are not public funds in the context of COA's audit mandate.