EN BANC
G.R. No. 211293, June 04, 2019
ADELAIDO ORIONDO, TEODORO M. HERNANDEZ, RENATO L. BASCO, CARMEN MERINO, AND REYNALDO SALVADOR, PETITIONERS, v. COMMISSION ON AUDIT, RESPONDENT.
D E C I S I O N
LEONEN, J.:
A corporation, whether with or without an original charter, is under the audit jurisdiction of the Commission on Audit so long as the government owns or has controlling interest in it.
This resolves the Petition1 under Rule 64 of the Rules of Court filed by Adelaido Oriondo, Teodoro M. Hernandez, Renato L. Basco, Carmen, Merino, and Reynaldo Salvador, former officers of the Philippine Tourism Authority who had received honoraria and cash gifts for concurrently rendering services to Corregidor Foundation, Inc. They assail the Commission on Audit's Decision2 No. 2010-095 dated October 21, 2010 and Resolution3 dated December 6, 2013, disallowing the payment of the honoraria and cash gifts to them for being contrary to Department of Budget and Management Budget Circular No. 2003-5 on the payment of honoraria and Article IX-B, Section 84 of the Constitution prohibiting the payment of additional or double compensation.
The submissions of the parties present the following facts.
Executive Order No. 58, series of 1954,5 made certain battlefield areas in Corregidor open to the public and accessible as tourist attractions. Executive Order No. 123, series of 1968, further amended Executive Order No. 58, thereby authorizing the Ministry of National Defense to enter into contracts for the conversion of areas within the Corregidor as tourist spots.6
Pursuant to Executive Order No. 123, the Ministry of National Defense and the Philippine Tourism Authority executed a Memorandum of Agreement7 dated July 10, 1986 for the development of Corregidor and its neighboring islands into major tourist attractions. Specifically, the Ministry of National Defense, with prior approval of the President, leased the entire island of Corregidor to the Philippine Tourism Authority for one peso (P1.00). As for the Philippine Tourism Authority, it undertook to maintain and preserve the war relics on the island and to fully develop Corregidor's potential as an international and local tourist destination. The Philippine Tourism Authority was thus authorized to "[p]ackage and source the necessary funds to develop and restore the Corregidor Island group."8
On February 6, 1987, the Philippine Tourism Authority Board of Directors adopted Resolution No. B-7-87,9 approving the creation of a foundation for the development of Corregidor. On October 28, 1987, the Corregidor Foundation, Inc. was incorporated under Securities and Exchange Commission Registration No. 145674.10
On August 3, 1993, the Philippine Tourism Authority executed a Memorandum of Agreement11 with Corregidor Foundation, Inc. to centralize the island's planning and development. The Philippine Tourism Authority agreed to release to the Corregidor Foundation, Inc. its operating funds based on a budget for its approval. For its part, the Corregidor Foundation, Inc. agreed to submit a quarterly report on the receipts and disbursements of Philippine Tourism Authority funds. It additionally agreed to deposit all collections of revenues in a distinct and separate account in the name of the island of Corregidor, with the disposition of the funds at the sole discretion of the Philippine Tourism Authority.
Another Memorandum of Agreement12 was subsequently entered into by the Philippine Tourism Authority and the Corregidor Foundation, Inc. on September 3, 1996. The subsequent Agreement reiterated the provisions of the August 3, 1993 Agreement but added some stipulations. In particular, the second paragraph of item 4 was included, providing that the disbursements of the Philippine Tourism Authority's funds by Corregidor Foundation, Inc. shall be subject to the audit of the Internal Auditor of the Philippine Tourism Authority and the Commission on Audit.
On February 14, 2005, the Commission on Audit, through Audit Team Leader Divina M. Telan, issued Audit Observation Memorandum No. 2004-00213 for comments of then Corregidor Foundation, Inc. Executive Director Artemio G. Matibag. There, the Audit Team noted that the following personnel of the Philippine Tourism Authority who were concurrently rendering services in Corregidor Foundation, Inc. received honoraria and cash gifts in 2003, to wit:
The Audit Team was of the opinion that the grant of honoraria to Oriondo, Hernandez, Basco, Merino, and Salvador were contrary to Department of Budget and Management Circular No. 2003-5.14 This budget circular, applicable to all national government agencies, government-owned and/or controlled corporations, and government financial institutions, enumerated in item 4 those exclusively entitled to honoraria:
Name Position Bonus Cash Gift Total Adelaido Oriondo Treasurer / Deputy General Manager of the Philippine Tourism Authority 42,000 1,500 43,500 Teodoro Hernandez Corporate Secretary 42,000 1,500 43,500 Renato L. Basco Technical Assistant 16,000 1,500 17,500 Carmen Merino Executive Secretary A 9,600 1,500 11,100 Reynaldo Salvador Utility Worker A 14,400 1,500 15,900 Total 124,000 7,500 131,500
4. General GuidelinesFurther, according to the Audit Team, the cash gifts given to Oriondo, Hernandez, Basco, Merino, and Salvador, as officers of the Corregidor Foundation, Inc., constituted double compensation prohibited in Article IX-B, Section 816 of the Constitution because they had already received honoraria and cash gifts as employees of the Philippine Tourism Authority.17
Heads of entities are authorized to use their respective appropriation for the payment of honoraria only to the following:
4.1. teaching personnel of the Department of Education, Commission on Higher Education, Technical Education and Skills Development Authority, State Universities and Colleges and other educational institutions engaged in actual classroom teaching whose teaching load is outside of the regular office hours and/or in excess of the regular load; 4.2 those who act as lecturers, resource persons, coordinators and facilitators in seminars, training programs and other similar activities in training institutions, including those conducted by entities for their officials and employees; and 4.3. chairs and members of Commissions/Board Councils and other similar entities which are hereinafter referred to as a collegial body including the personnel thereof, who are neither paid salaries nor per diems but compensated in the form of honoraria as provided by law, rules and regulations.15
WHEREFORE, the foregoing premises considered, this Board hereby DENIES the instant appeal for want of merit. Accordingly, LAO-Corporate Decision No. 2007-037 dated June 07, 2007 sustaining ND No. CFI-2006-001 dated June 15, 2006 is AFFIRMED.25 (Emphasis in the original)Oriondo, Hernandez, Basco, Merino, and Salvador appealed26 Decision No. 2009-002, but the appeal was denied by the Commission on Audit in its October 21, 2010 Decision No. 2010-095.27
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit. Accordingly, ASB Decision No. 2009-002 dated January 26, 2009 is AFFIRMED.31 (Emphasis in the original)Oriondo, Hernandez, Basco, Merino, and Salvador filed a Motion for Reconsideration, which the Commission on Audit En Banc denied in a its December 5, 2013 Resolution32 thus:
The [Commission on Audit Proper] denied the Motion for Reconsideration for lack of merit and affirmed with finality COA Decision No. 2010-095 dated October 21, 2010 affirming the disallowance on the grant of honoraria and cash gift to the Philippine Tourism Authority employees who are rendering services to Corregidor Foundation[,] Inc. in the amount of P131,500.00. The movant failed to present new and material evidence that would warrant a reversal or modification of the assailed decision.33On March 14, 2014, Oriondo, Hernandez, Basco, Merino, and Salvador filed before this Court a Petition34 designated as a "Petition for Review on Certiorari"35 under Rule 64 of the Rules of Court. The Commission on Audit, through the Office of the Solicitor General, filed its Comment36 on June 25, 2014, to which Oriondo, Hernandez, Basco, Merino, and Salvador replied37 on October 7, 2014. Upon the directive of this Court,38 the parties filed their respective Memoranda.39
On the other hand, Rule 64 of the Rules of Court pertains to "Review of Judgments and Final Orders or Resolutions of the Commission on Elections and the Commission on Audit." Section 1 of Rule 64 defines the scope of the Rule, while section 2 refers to "Mode of Review" and provides that the judgments, final orders, and resolutions of the Commission on Audit are to be brought on certiorari to this Court under Rule 65. The pertinent provisions of Rules 64 and 65 are as follows:RULE 45
Appeal by Certiorari to the Supreme Court
SECTION 1. Filing of Petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
That the remedy against an adverse decision, order, or ruling of the Commission on Audit is a petition for certiorari, not review or appeal, is based on Article IX-A, Section 7 of the Constitution, thus:RULE 64
Review of Judgments and Final Orders or Resolutions of the Commission on Elections and the Commission on Audit
SECTION 1. Scope. — This Rule shall govern the review of judgments and final orders or resolutions of the Commission on Elections and the Commission on Audit.
SECTION 2. Mode of Review. — A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided.
SECTION 3. Time to File Petition. — The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial.
. . . .RULE 65
Certiorari, Prohibition and Mandamus
SECTION 1. Petition for Certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the paragraph of Section 3, Rule 46.
. . . .
SECTION 4. Where Petition Filed. — The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, and unless otherwise provided by law or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals.
The foregoing provisions readily reveal that a Petition for Review on Certiorari under Rule 45 is an appeal and a true review that involves "digging into the merits and unearthing errors of judgment."55 However, despite the repeated use of the word "review" in Rule 64, the remedy is principally one for certiorari that "deals exclusively with grave abuse of discretion, which may not exist even when the decision is otherwise erroneous."56
In the absence of grave abuse of discretion, questions of fact cannot be raised in a petition for certiorari, under Rule 64 of the Rules of Court. The office of the petition for certiorari is not to correct simple errors of judgment; any resort to the said petition under Rule 64, in relation to Rule 65, of the 1997 Rules of Civil Procedure is limited to the resolution of jurisdictional issues.58We agree with respondent Commission that petitioners erroneously denominated their Petition as a "Petition for Review on Certiorari." Except for the designation, however, we find that the Petition was filed under Rule 64 of the Rules of Court given that the Petition refers to Rule 64 and was filed within 30 days from notice of the Resolution dated December 6, 2013 denying petitioners' Motion for Reconsideration before the Commission on Audit. Therefore, we shall resolve the Petition in the exercise of our certiorari jurisdiction under Article IX-A, Section 7 of the Constitution.
SECTION 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining 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 with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such nongovernmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.A provision similar to Article IX-D, Section 2(1) is found in Book V, Title I, Subtitle B, Chapter 4, Section 11 of the Administrative Code:
(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties. (Emphasis supplied)
SECTION 11. General Jurisdiction. — (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining 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 with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. (Emphasis supplied)The Government Auditing Code of the Philippines, in Section 26, likewise provides:
SECTION 26. General Jurisdiction. — The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non-governmental entities subsidized by the government, those funded by donations through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. (Emphasis supplied)Based on the foregoing provisions, the Commission on Audit generally has audit jurisdiction over public entities.59 In the Administrative Code's Introductory Provisions, the Commission on Audit is even allowed to categorize government-owned or controlled corporations for purposes of the exercise and discharge of its powers, functions, and responsibilities with respect to such corporations.60
SECTION 2. Definition. — A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by a special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock;The Administrative Code, in section 2(13) of its Introductory Provisions, defines a government-owned or controlled corporation in this wise:
Provided, that a corporation organized under the general corporation law under private ownership at least a majority of the shares of stock of which were conveyed to a government financial institution, whether by a foreclosure or otherwise, or a subsidiary corporation of a government corporation organized exclusively to own and manage, or lease, or operate specific physical assets acquired by a government financial institution in satisfaction of debts incurred therewith, and which in any case by enunciated policy of the government is required to be disposed of to private ownership within a specified period of time, shall not be considered a government-owned or controlled corporation before such disposition and even if the ownership or control thereof is subsequently transferred to another government-owned or controlled corporation;
Provided, further, that a corporation created by special law which is explicitly intended under that law for ultimate transfer to private ownership under certain specified conditions shall be considered a government-owned or controlled corporation, until it is transferred to private ownership; and
Provided, finally, that a corporation that is authorized to be established by special law, but which is still required under that law to register with the Securities and Exchange Commission in order to acquire a juridical personality, shall not on the basis of the special law alone be considered a government-owned or controlled corporation.
SECTION 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning:In Republic Act No. 10149, otherwise known as the GOCC Governance Act of 2011, the term is defined in Section 3(o):
. . . . (13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations.
SECTION 3. Definition of Terms. —Based on the above provisions, an entity is considered a government-owned or controlled corporation if all three (3) attributes are present: (1) the entity is organized as a stock or non-stock corporation;65 (2) its functions are public in character;66 and (3) it is owned67 or, at the very least, controlled68 by the government.
. . . . (o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized as a stock or nonstock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock: Provided, however, That for purposes of this Act, the term "GOCC" shall include GICP/GCE and GFI as defined herein.
NINTH: That the Foundation is organized and shall be operated in the public interest and shall have no capital stock, no premium profit, and shall devote all of its income from whatever source including gifts, donations, grants, subsidies or other form of philantrophy (sic) and income derived from business - gate receipts, tourists, [and] entrance fees to the accomplishment of the purpose enumerated herein.79Corregidor Foundation, Inc. was organized primarily to maintain and preserve the war relics in Corregidor and develop the area's potential as an international and local tourist destination. Its Articles of Incorporation provides the following purposes:
SECOND: That the purposes for which the Foundation is formed are as follows:The enumeration shows that Corregidor Foundation, Inc.'s purposes are related to the promotion and development of tourism in the country, a declared state policy81 and, therefore, a function public in character.
1. To maintain and preserve war relics on Corregidor Island and the development of its potentials as an international and local tourist destination, and to that end and purpose, to promote and encourage the recovery, collection, preservation, restoration and protection of materials and objects, including land and buildings, forming part or otherwise depicting the historic character and role of the island fortress in the defense of the country's territorial integrity and sovereignty, such as but not limited to maps, sketches, drawings, flags, documents, books and military armaments, equipment and facilities.
2. To enter into, make, perform and carry out of (sic) cancel and rescind contracts of every kind and for any lawful purpose with any person, firm, association, corporation, entity, domestic or foreign, or others, in which it has a lawful interest.
3. To acquire, purchase, own, hold, operate, develop, lease, mortgage, pledge, exchange, sell, transfer, or otherwise in any manner permitted by law, real and personal property of every kind and description or any interest therein as may be necessary to carry out its purposes.
4. To raise or borrow money for any of the purposes of the Foundation and from time to time without limits as to amount to draw, make, accept, endorse, guarantee, execute and issue promisory (sic) notes, drafts, bills of exchange, warrants, debentures, and other negotiable or non-negotiable instruments and evidence of indebtedness, and to secure the payment thereof, and of the interest thereon by mortgage on, or pledge, conveyance or assignment in trust of the whole or any part of the assets of the Foundation, real, personal, or mixed, including contract rights, whether at the time owned or thereafter acquired; and to sell[,] pledge, or otherwise dispose of such securities or other obligations for the Foundation in furtherance of its purposes.
5. To invest funds as it may be able to obtain from donations, grants, or loans and from all other sources, in securities or properties from the return of which the foundation hopes to subsist and carry on the activities and purposes for which it was organized.
6. In general, to carry on any activity and to have and exercise any and all of the powers conferred by law, and to do any and all acts and things herein set forth to the same extent as juridical persons could do, and in any part of the world, as principal, factor, agent or otherwise either alone, or in syndicate, partnership, association or corporation, domestic or foreign, and to establish and maintain offices and agencies and to exercise all or any of its corporate powers and rights within the Philippines or abroad, as may be directly or indirectly incidental or conducive to the attainment of the above-mentioned purposes.80
SIXTH: That the affairs of the Foundation shall be administered and governed by the Board of Trustees composed of seven (7) members who are to serve until their successors are chosen or elected and qualified as provided by the By-Laws and their names, nationalities, residences and official address are as follows:There is no showing that these requirements were ever amended.
Name Citizenship Address HON. JOSE ANTONIO U. GONZALEZ
Secretary of Tourism Filipino . . .
DOT Bldg., Kalaw Street, Ermita, Manila HON. RAFAEL ILETO
Secretary of National Defense Filipino . . .
Camp Emilio Aguinaldo Quezon City GENERAL FIDEL RAMOS
Chief of Staff Filipino . . .
Camp Crame, Quezon City MS. BETH DAY ROMULO Filipino . . . MS. NINI QUEZON AVANCEÑA Filipino . . . MR. NICHOLAS PLATT American U.S. Embassy Roxas Blvd., Metro Manila ATTY. RAMON BINAMIRA
General Manager, Philippine Tourism Authority Filipino . . .
DOT Bldg., Kalaw Street Ermita, Manila
Provided, however, that the abovenamed government officials shall hold their position as members of the Board by reason of their respective offices.
Provided, further, that a representative of the Department of Science and Technology or any other governmental agency which may succeed to the functions of said agency shall be allowed to sit with the Board of Trustees of the Foundation as Department of Science and Technology representative therein.83
[T]he constitutional criterion on the exercise of [the Commission on Audit's] audit jurisdiction depends on the government's ownership or control of a corporation. The nature of the corporation, whether it is private, quasi-public, or public is immaterial.Just because the employees of Corregidor Foundation, Inc. are not under the jurisdiction of the Civil Service Commission does not mean that Corregidor Foundation, Inc. is not government-owned or controlled. Article IX-B, Section 2(1)89 of the Constitution is clear that the jurisdiction of the Civil Service Commission is over government-owned or controlled corporations with original charters, not over those without original charters like Corregidor Foundation, Inc. Addressing a similar argument, this Court in Davao City Water District v. Civil Service Commission,90 cited in Feliciano, said that:
The Constitution vests in the [Commission on Audit] audit jurisdiction over "government-owned and controlled corporations with original charters," as well "government-owned or controlled corporations" without original charters. [Government-owned or controlled corporations] with original charters are subject to [the Commission's] pre-audit, while [government-owned or controlled corporations] without original charters are subject to [the Commission's] post-audit. [Government-owned or controlled corporations] without original charters refer to corporations created under the Corporation Code but are owned or controlled by the government. The nature or purpose of the corporation is not material in determining [the Commission's] audit jurisdiction. Neither is the manner of creation of a corporation, whether under a general or special law.88 (Emphasis supplied)
By "government-owned or controlled corporation with original charter," We mean government owned or controlled corporation created by a special law and not under the Corporation Code of the Philippines. Thus, in the case of Lumanta v. NLRC (G.R. No. 82819, February 8, 1989, 170 SCRA 79, 82), We held:Also, there is no proof that Corregidor Foundation, Inc.'s funding primarily comes from grants and donations of international organizations or foreign entities as petitioners contend. On the contrary, for the period audited by the Commission on Audit or in 2003, 99.66% of Corregidor Foundation, Inc.'s budget or Four Hundred Twenty-Three Million, One Hundred Sixty-Four Thousand, One Hundred Fifteen Pesos (P423,164,115.00) came from the government, specifically, from the Department of Tourism, Duty Free Philippines, and the Philippine Tourism Authority.92 This was never controverted by petitioners."The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No. 69870, promulgated on 29 November 1988, quoting extensively from the deliberations of the 1986 Constitutional Commission in respect of the intent and meaning of the new phrase 'with original charter,' in effect held that government-owned and controlled corporations with original charter refer to corporations chartered by special law as distinguished from corporations organized under our general incorporation statute - the Corporation Code. In NASECO, the company involved had been organized under the general incorporation statute and was a subsidiary of the National Investment Development Corporation (NIDC) which in turn was a subsidiary of the Philippine National Bank, a bank chartered by a special statute. Thus, government-owned or controlled corporations like NASECO are effectively, excluded from the scope of the Civil Service." (Emphasis supplied)From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the [Civil Service Commission] are those corporations created pursuant to the Corporation Code.91
At any rate, even if it were true that Corregidor Foundation, Inc. is funded by international organizations and foreign entities, these foreign grants already became public funds the moment they were donated to Corregidor Foundation, Inc. Thus, these funds may be audited by the Commission on Audit. The Court elucidated in Fernando v. Commission on Audit:94MEMORANDUM OF AGREEMENT
CORREGIDOR ISLAND MANAGEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and entered into this 3rd day of September, 1996 by and between:The PHILIPPINE TOURISM AUTHORITY, a government owned corporation with office address at DOT Building, Kalaw, Ermita, Manila, represented herein by its General Manager, EDUARDO T. JOAQUIN, hereinafter referred to as AUTHORITY;-and-
CORREGIDOR FOUNDATION, INC., a private nonstock, non-profit corporation existing and doing business under the laws of the Philippines with office address at Tourism Building, T. M. Kalaw Street, Ermita, Manila, represented herein by its Executive Director, ALFRED A. X. BURGOS, SR., hereinafter referred to as FOUNDATION;-WITNESSETH-
WHEREAS, pursuant to a Memorandum of Agreement, referred to as ANNEX I, the then Ministry of National Defense ceded and conveyed Corregidor Island to the Department of Tourism/Philippine Tourism Authority for tourist development purposes;
WHEREAS, consistent with the avowed objective of the abovementioned Memorandum of Agreement, the FOUNDATION was eventually organized for private concern to work hand in hand with the government in enhancing the touristic potentials of the Island referred to as ANNEX II;
WHEREAS, the parties in order to further accelerate the desired development find it necessary to transfer the management of the Island to the FOUNDATION for the purpose of centralizing its planning and development;
WHEREAS, the AUTHORITY, cognizant of the inability of the FOUNDATION to source fund for the purpose, hereby assumes responsibility of providing the budgetary requirements that will enable the latter to perform the mandate it has received from the former under this agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises and covenants and undertakings hereinafter setforth (sic), parties hereto agreed to the following:
- PTA hereby authorizes FOUNDATION to manage and operate CORREGIDOR ISLAND including all existing facilities therein;
- FOUNDATION shall use, manage and operate the aforesaid Island together with its facilities in order to update and standardize its service systems;
. . . .
- Upon execution of the Agreement, AUTHORITY shall release an operating fund as financial assistance to the FOUNDATION equivalent to three (3) months operating expenses based on the present budget provided for the Island by FOUNDATION. It is understood that with the execution of this Agreement, FOUNDATION shall submit a budget for Corregidor Island for AUTHORITY'S approval. Within five (5) days of the first month and every month thereafter, the equivalent of two (2) months operating fund based on the approved budget shall be released by AUTHORITY. Releases of the operating fund shall be scheduled in such manner that FOUNDATION shall always have at its disposal three (3) months operating fund.
FOUNDATION shall submit an annual report on receipts and disbursements of AUTHORITY funds on or before the 15th day of the first month of each year, duly approved and certified by the Executive Director. Said report shall be subject n to audit by AUTHORITY Internal Auditor and Commission on Audit.
. . . .
- All collections of revenue shall be taken up in the books of the FOUNDATION as accountability to AUTHORITY and to be deposited by FOUNDATION in a distinct and separate account in the name of Corregidor Island, the disposition of which shall be as per approved annual budget of the FOUNDATION whether for Capital Expenditures and for Operating Expenses.93 (Emphasis supplied)
[D]espite the private source of funds, ownership over the same was already transmitted to the government by way of donation. As donee, the government had become the owner of the funds, with full ownership rights and control over the use and disposition of the same, subject only to applicable laws and COA rules and regulations. Thus, upon donation to the government, the funds became public in character.Lastly, while it is true that just like any other corporation organized under the Corporation Code, Corregidor Foundation, Inc. may determine voluntarily and solely the successors of its members in accordance with its own by-laws, this does not change the public character of its functions and the control the government has over it. As discussed, the promotion and development of tourism is a public function and, as provided in its Articles of Incorporation, the members of Corregidor Foundation, Inc. must be government officials who shall hold their membership by reason of their office.
This is in contrast to cases where there is no transfer of ownership over the funds from private parties to the government, such as in the case of cash deposits required in election protests filed before the trial courts, Commission on Elections, and electoral tribunals. In these cases, the government becomes a mere depositary of such fund, the use and disposition of which is subject to the conformity of the private party-depositor who remains to be the owner thereof.95
4. General GuidelinesIt is obvious that Corregidor Foundation, Inc. is not an educational institution and petitioners are not its teaching personnel. Neither are petitioners lecturers by virtue of their positions in Corregidor Foundation, Inc. nor are there laws or rules allowing the payment of honoraria to personnel of the Corregidor Foundation, Inc.
4.1. teaching personnel of the Department of Education, Commission on Higher Education, Technical Education and Skills Development Authority, State Universities and Colleges and other educational institutions engaged in actual classroom teaching whose teaching load is outside of the regular office hours and/or in excess of the regular load; 4.2 those who act as lecturers, resource persons, coordinators and facilitators in seminars, training programs and other similar activities in training institutions, including those conducted by entities for their officials and employees; and 4.3. chairs and members of Commissions/Board Councils and other similar entities which are hereinafter referred to as a collegial body including the personnel thereof, who are neither paid salaries nor per diems but compensated in the form of honoraria as provided by law, rules and regulations.99
Very truly yours, (SGD) EDGAR O. ARICHETA Clerk of Court |
Endnotes:
1Rollo, pp. 3-24.
2 Id. at 25-29. The Commission on Audit Commission Proper was composed of Chair Reynaldo A. Villar and Commissioners Juanito G. Espino, Jr. and Evelyn R. San Buenaventura.
3 Id. at 30-31.
4 CONST., art. IX-B, sec. 8 provides:
SECTION 8. No elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government. Pensions or gratuities shall not be considered as additional, double, or indirect compensation.
5 Available at https://www.officialgazette.gov.ph/1954/08/16/executive-order-no-58-s-1954 (last accessed April 12, 2019).
6Rollo, p. 32, Annex "C" of the Petition. See also https://www.officialgazette.gov.ph/1968/03/15/executive-order-no-123-s-1968 (last accessed April 12, 2019).
7 Id. at 34-35.
8 Id. at 35.
9 Id. at 36.
10Id. at 38. Annex G of the Petition.
11 Id. at 46-47. Annex J of the Petition.
12 Id. at 53-55, Annex L of the Petition.
13 Id. at 62-64, Annex R of the Petition.
14 Id. at 73-75, Annex U of the Petition.
15 Id. at 74.
16 CONST., art. IX-B, sec. 8 provides:
SECTION 8. No elective or appointive public officer or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government.
Pensions or gratuities shall not be considered as additional, double, or indirect compensation.
17Rollo, p. 63.
18 Id.
19 Id. at 66-69, Annex S of the Petition.
20 Id. at 66-67.
21 Id. at 77-78.
22 Id. at 76-79, Annex V of the Petition. The Decision was penned by Ms. Janet D. Nation, Director IV.
23 Id. at 80-85, Annex W of the Petition. The Adjudication and Settlement Board was composed of Chairperson Elizabeth S. Zosa, Assistant Commissioner-Legal Services; and Members Emma M. Espina, Assistant Commissioner-National; Carmela S. Perez, Assistant Commissioner-Government Accountancy; Jaime P. Naranjo, Assistant Commissioner-Corporate; and Gloria S. Cornejo, Assistant Commissioner-Local.
24 Id. at 84.
25 Id.
26 Id. at 86-89, Annex X of the Petition. The pleading filed was a Motion for Reconsideration, but was treated as an appeal.
27 Id. at 25-29, Annex A of the Petition. The Commission on Audit Commission Proper was composed of Chair Reynaldo A. Villar and Commissioners Juanito G. Espino, Jr. and Evelyn R. San Buenaventura.
28 Id. at 27-28.
29 560 Phil. 385 (2007) [Per J. Austria-Martinez, En Banc].
30Rollo, p. 28.
31 Id. at 29.
32 Id. at 30-31, Annex B of the Petition.
33 Id. at 30.
34 Id. at 3-24.
35 Id. at 3.
36 Id. at 105-117.
37 Id. at 125-137.
38 Id. at 138-139, Resolution dated October 14, 2014.
39 Id. at 147-165, Memorandum for Petitioners; and 166-183, Memorandum for the Respondent.
40 CONST., art. IX-D, sec. 2(1) provides:
SECTION 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining 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 with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.
41Rollo, pp. 159-160.
42 Id. at 152-155.
43 Id. at 155-157.
44 Id. at 157-158.
45 Id. at 158.
46 Id. at 158-159.
47 Id. at 168.
48 Id. at 168-169.
49 Id. at 175.
50 Id. at 176.
51 294 Phil. 856 (1993) [Per C J. Narvasa, Second Division].
52 560 Phil. 385 (2007) [Per J. Austria-Martinez, En Banc].
53Rollo, p. 177.
54 Id. at 177-178.
55Aratuc v. Commission on Elections, 177 Phil. 205, 223 (1979) [Per J. Barredo, En Banc].
56 Id.
57 657 Phil. 209 (2011) [Per J. Peralta, En Banc].
58 Id. at 225.
59Fernando v. Commission on Audit, G.R. Nos. 237938 and 237944-45, December 4, 2018, [Per J. Tijam, En Banc].
60 ADM. CODE OF 1987, Introductory Provisions, sec. 2(13) provides:
SECTION 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning:
(13) Government-owned or controlled corporation refers to any agency organized as a stock or nonstock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations.
61 Presidential Decree No. 1445, sec. 29 (1)(5).
62Villagracia v. Fifth Shari'a District Court, 734 Phil. 239, 251 (2014) [Per J. Leonen, Third Division] citing Reyes v. Diaz, 73 Phil. 484, 486 (1941) [Per J. Moran, En Banc].
63 464 Phil. 439 (2004) [Per J. Carpio, En Banc].
64 666 Phil. 140 (2011) [Per J. Leonardo-De Castro, En Banc].
65Funa v. Manila Economic and Cultural Office, 726 Phil. 63, 90 (2014) [Per J. Perez, En Banc].
66 Id.
67 Id.
68 Id. at 94.
69 464 Phil. 439, 462 (2004) [Per J. Carpio, En Banc].
70 666 Phil. 140 (2011) [Per J. Leonardo-De Castro, En Banc].
71 560 Phil. 385 (2007) [Per J. Austria-Martinez, En Banc].
72 Id. at 408.
73 Id.
74Funa v. Manila Economic and Cultural Office, 726 Phil. 63, 92 (2014) [Per J. Perez, En Banc].
75 726 Phil. 63 (2014) [Per J. Perez, En Banc].
76 G.R. Nos. 237938 and 237944-45, December 4, 2018, [Per J. Tijam, En Banc].
77Rollo, p. 38, Annex G of the Petition.
78 Id. at 39-43, Annex H of the Petition.
79 Id. at 42.
80 Id. at 39-40.
81 ADM. Code, Book IV, Title XIII, ch. 1, sec. 1 provides:
SECTION 1. Declaration of Policy. — The State shall promote, encourage and develop tourism as a major national activity in which private sector investment, effort and initiative are fostered and supported, and through which socio-economic development may be accelerated, foreign exchange earned, international visitors offered the opportunity to travel to the Philippines and appreciate its natural beauty, history and culture, and Filipinos themselves enabled to see more of their country and imbued with greater pride in and commitment to the nation.
82Rollo, pp. 40-41.
83 Id. at 41.
84Funa v. Manila Economic and Cultural Office, 726 Phil. 63, 94 (2014) [Per J. Perez, En Banc].
85See Presidential decree 2029 (1986), sec. 2.
86See Presidential decree 2029 (1986), sec. 2.
87 464 Phil. 439, 461-462 (2004) [Per J. Carpio, En Banc]. See also Philippine National Construction Corporation v. Pabion, 311 Phil. 1019 (1999) [Per J. Panganiban, Third Division].
88 464 Phil. 439, 461-462 (2004) [Per J. Carpio, En Banc].
89 CONST., art. IX-B, sec. 2(1) provides:
SECTION 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. (Emphasis supplied)
90 278 Phil. 605 (1991) [Per J. Medialdea, En Banc].
91 Id. at 612.
92Rollo, p. 27.
93 Id. at 53-54.
94 G.R. Nos. 237938 and 237944-45, December 4, 2018, [Per J. Tijam, En Banc].
95 Id.
96See Blaqnera v. Alcala, 356 Phil. 678 (1998) [Per J. Purisima, En Banc]; and De Jesus v. Commission on Audit, 451 Phil. 812 (2003) [Per J. Carpio, En Banc].
97Nayong Pilipino Foundation, Inc. v. Pitlido Tan, G.R. No. 213200, September 19, 2017, [Per J. A.B. Reyes, Jr., En Banc].
98 Id.
99Rollo, p. 74.
100 272 Phil. 147 (1991) [Per C.J. Fernan, En Banc].
101 Id. at 167.
102 356 Phil. 678 (1998) [Per J. Purisima, En Banc].
103 451 Phil. 812 (2003) [Per J. Carpio, En Banc].
104Blaquera v. Alcala, 356 Phil. 678, 766 (1998) [Per J. Purisima, En Banc].
105De Jesus v. Commission on Audit, 451 Phil. 812, 824 (2003) [Per J. Carpio, En Banc].