G.R. Nos. 237938 and 237944-45. December 04, 2018.
BAYANI F. FERNANDO, PETITIONER, V. THE COMMISSION ON AUDIT, RESPONDENT.

FACTS

Petitioner Bayani Fernando, as Chairman of the Executive Committee of the Metro Manila Film Festival (MMFF) from 2002-2008, received three separate disbursements totaling Three Million Pesos (P3,000,000.00) from MMFF funds for special and cultural projects. The Commission on Audit (COA), through a special audit, subsequently issued Notices of Disallowance (NDs) against these transactions. The COA’s common observation was that the checks were encashed and no official receipts were issued, constituting an irregular transaction that violated government accounting rules on proper payment procedures.
Petitioner sought the reversal of the NDs and the subsequent Notices of Finality of Decision before the Supreme Court via a Petition for Certiorari. He primarily argued that the COA committed grave abuse of discretion by exercising audit jurisdiction over the MMFF Executive Committee. He contended that the Committee is composed of private individuals from the movie industry, its funds are sourced from non-tax revenues and private donations, and it is neither a government instrumentality nor a corporation owned or controlled by the government.

ISSUE

Whether the Commission on Audit has audit jurisdiction over the Executive Committee of the Metro Manila Film Festival.

RULING

Yes, the Commission on Audit has audit jurisdiction over the MMFF Executive Committee. The Supreme Court ruled that the Committee is a government instrumentality whose funds are public in nature, thus falling within the constitutional audit power of the COA. The legal logic proceeds from the constitutional grant under Section 2, Article IX-D of the 1987 Constitution, which empowers COA to examine accounts pertaining to the government, its agencies, or instrumentalities. The Court emphasized that the determinative factor for COA jurisdiction is not the source of the funds but the character of the entity administering them.
The MMFF Executive Committee was created by Presidential Proclamation No. 1459, s. 1975, and its composition and oversight have historically been vested in government officials, including the Metropolitan Manila Development Authority (MMDA) Chairman. It performs a public purpose by regulating and promoting the local film industry for national development. Consequently, the funds it administers, even if derived from non-tax revenues like film festival proceeds, are imbued with public interest and are held in trust for a public purpose. Therefore, the Committee is a government instrumentality subject to COA’s audit authority. The Court found no grave abuse of discretion in COA’s disallowance of the irregular transactions.