Case Summary (G.R. No. 237938)
Petitioner
Bayani F. Fernando, in his personal capacity as ex-Chairman of the MMFF Executive Committee, contests COA’s findings.
Respondent
Commission on Audit, asserting its constitutional and statutory authority to audit the MMFF Executive Committee.
Key Dates
• August 17, 2009: COA Office Order No. 2009-602 authorizes special audit of MMFF Executive Committee disbursements (2002–2008).
• May 24, 2010: COA issues Notices of Disallowance (ND Nos. 2010-05-032 to .034) disallowing P3,000,000.00.
• November 27, 2017: COA’s Fraud Audit Office issues Notices of Finality of Decision (FAO NFD Nos. 2017-008 to .010) affirming total disallowance of P3,000,000.00.
• December 4, 2018: Fernando files Petition for Certiorari under Rules 64 and 65.
• November 11, 2019: Supreme Court en banc decision rendered.
Applicable Law
• 1987 Philippine Constitution, Art. IX-D, Sec. 2(1) – COA’s audit jurisdiction.
• Presidential Decree No. 1445 (Auditing Code), Sec. 29(1) – visitorial authority over subsidized non-governmental entities.
• Administrative Code of 1987, Book V, Title I, Subtitle B, Chap. 4, Sec. 11 – general audit jurisdiction.
• Proclamation No. 1459 (1975) – creates MMFF and its Executive Committee.
• Republic Act No. 7924 (1995) – establishes MMDA as a public agency.
Antecedents
Pursuant to COA Office Order No. 2009-602, COA’s Fraud Audit and Investigation Office examined MMFF Executive Committee expenditures for 2002–2008 and discovered three P1,000,000.00 payments to Fernando in 2003 and 2005 without official receipts, in violation of GAAM Vol. I, Secs. 77 and 168. COA issued ND Nos. 2010-05-032 to .034 disallowing the amounts, later upheld by FAO NFD Nos. 2017-008 to .010.
Issue
Whether the MMFF Executive Committee is subject to COA’s audit jurisdiction under the 1987 Constitution and implementing statutes.
Parties’ Contentions
Fernando argues that the MMFF Executive Committee is a private entity not covered by COA jurisdiction and that its funds derive solely from non-tax revenues. COA counters that the Committee is a government instrumentality created by Proclamation No. 1459, performs a public function under MMDA, and administers public funds, thus falling within its audit mandate. COA also asserts non-exhaustion of administrative remedies.
COA’s Audit Jurisdiction
Article IX-D, Sec. 2(1) of the 1987 Constitution vests COA with power to audit all government funds and instrumentalities, including non-governmental entities receiving government subsidy or equity. PD 1445 Sec. 29(1) and Administrative Code Sec. 11 extend COA’s authority to subsidized non-governmental bodies.
Nature of the MMFF Executive Committee
Established by Proclamation No. 1459 and subsequent executive orders, the Committee is not a GOCC but an office within MMDA. MMDA’s charter (RA 7924) confers planning, coordinative, regulatory, and superv
...continue readingCase Syllabus (G.R. No. 237938)
Antecedents
- Bayani F. Fernando served as Chairman of the Metro Manila Film Festival (MMFF) Executive Committee from 2002 to 2008.
- On August 17, 2009, COA Office Order No. 2009-602 authorized a special audit of MMFF disbursements for Calendar Years 2002–2008.
- The Fraud Audit and Investigation Office found three P1,000,000 disbursements to petitioner: two in May 2003 for MMDA special projects (sourced from MMFF advertising sponsorship) and one in March 2005 for cultural projects (sourced from non-tax MMFF revenues).
- COA issued Notices of Disallowance (ND Nos. 2010-05-032 to 034, dated May 24, 2010) citing irregular transactions: payments made without official receipts, violation of GAAM Section 77, and lack of original supporting documents per GAAM Section 168.
- On November 27, 2017, FAO Notice of Finality of Decision (FAO NFD) Nos. 2017-008 to 010 ordered petitioner to pay a total of P3,000,000.
- Petitioner filed a Petition for Certiorari under Rule 64, in relation to Rule 65, seeking reversal of the FAO NFDs and NDs.
Petitioner’s Claim
- The COA committed grave abuse of discretion by auditing the funds of an entity not a public office.
- The MMFF Executive Committee is composed of private individuals; its funds derive exclusively from non-tax revenues and private donations.
- As such, COA lacks jurisdiction and authority to audit or disallow expenditures of the Executive Committee.
Commission on Audit’s Position
- Petitioner failed to exhaust administrative remedies by not appealing the FAO NFDs to the COA Proper.
- The MMFF Executive Committee is a government instrumentality created by Presidential Proclamation No. 1459 (July 9, 1975) to serve a public purpose.
- Its funds are public in nature, used to support film-related activities as part of a government-mandated festival.
Issue
- Whether the Executive Committee of the Metro Manila Film Festival