G.R. No. 189767 - Philippine Economic Zone Authority vs. Commission on Audit

The case involves the Philippine Economic Zone Authority (PEZA) as petitioner and the Commission on Audit (COA) along with Reynaldo A. Villar, Chairman, COA as respondents.
PEZA challenged COA Decision No. 2009-081, which affirmed a decision disallowing the payment of per diems totaling P5,451,500.00 to ex officio members of its Board of Directors for the period 2001–2006.
The disallowance was grounded on earlier Supreme Court rulings and COA memoranda that found the payment of per diems to be illegal under constitutional and statutory provisions.

The PEZA Board of Directors comprises 13 members, including the Undersecretaries from various government departments (Finance, Labor and Employment, Interior and Local Government, Environment and Natural Resources, Agriculture, Public Works and Highways, Science and Technology, and Energy).
These Undersecretaries serve in an ex officio capacity and were granted per diems for each board meeting attended.
A detailed list of disallowed per diem payments was provided, showing individual entries with dates, payees, and amounts, cumulatively totaling P5,451,500.00.

On September 13, 2007, PEZA Auditor Corazon V. EspaAo issued Notices of Disallowance covering various ND Nos. for the per diem payments made between 2001 and 2006.
The disallowance was based on prior Supreme Court resolutions, including the April 4, 2006 En Banc Resolution in the Cyril Del Callar case and related COA decisions that set aside the validity of these payments.
PEZA, on October 31, 2007, moved for reconsideration on the grounds of having acted in good faith, citing cases such as Home Development Mutual Fund v. COA and De Jesus v. COA.
This motion was denied by the COA Auditor, who maintained that knowledge of the disallowance negated any presumption of good faith.
Subsequent appeals by PEZA, including a petition for review filed on April 30, 2008, were also denied by the Office of the Cluster Director and later affirmed by COA on September 15, 2009.

The controversy centered on the interpretation of Republic Act (R.A.) No. 7916 and its amendatory law, R.A. No. 8748.
The key statutory issue was whether the provision allowing for per diem payments—specifically the last paragraph of Section 11 of R.A. No. 7916—had been effectively deleted by R.A. No. 8748.
Additionally, the payment of per diems to ex officio members was challenged on constitutional grounds, particularly in light of Section 13, Article VII of the 1987 Constitution, which prohibits additional compensation for ex officio functions.

Whether PEZA had a legal basis for granting per diems to the ex officio members of its Board of Directors.
Whether the interpretation of the statutory provisions—specifically the existence or deletion of the last paragraph of Section 11 of R.A. No. 7916—supports the payment of per diems.

Whether PEZA and the ex officio members acted in good faith in disbursing and receiving the per diem payments, given that the payments were made while the legal propriety was under question.
Whether the claim of “good faith” can serve as a valid defense against the constitutional prohibition on additional compensation for ex officio functions.