G.R. No. 211293 , June 4, 2019
ADELAIDO ORIONDO, TEODORO M. HERNANDEZ, RENATO L. BASCO, CARMEN MERINO, AND REYNALDO SALVADOR, Petitioners vs. COMMISSION ON AUDIT, Respondent

FACTS

Petitioners were officers and employees of the Philippine Tourism Authority (PTA), a government-owned and controlled corporation (GOCC). They concurrently rendered services to the Corregidor Foundation, Inc. (CFI), a non-stock, non-profit corporation created by PTA through a Board Resolution to develop Corregidor Island. For their services to CFI, petitioners received honoraria and cash gifts in 2003. The Commission on Audit (COA) disallowed these payments through a Notice of Disallowance.
The COA held that the grant of honoraria violated Department of Budget and Management Circular No. 2003-5, as petitioners did not fall under the categories of personnel authorized to receive such payments. Furthermore, the COA ruled that the cash gifts constituted prohibited double compensation under Article IX-B, Section 8 of the 1987 Constitution , since petitioners were already receiving compensation from PTA. Petitioners argued that CFI was a private entity not under COA’s audit jurisdiction and that their services to CFI were distinct and separate, thus the payments were not double compensation.

ISSUE

Whether the COA correctly disallowed the payment of honoraria and cash gifts to the petitioners.

RULING

Yes, the COA correctly disallowed the payments. The Supreme Court affirmed the COA’s decision. The legal logic rests on two key points: the audit jurisdiction of COA over CFI and the constitutional prohibition against double compensation.
First, CFI is subject to COA’s audit jurisdiction. While CFI was incorporated under the Corporation Code, it was established by the PTA, a GOCC, through a board resolution to undertake a governmental function—the development of a national historical landmark. The government, through PTA, exercised control over CFI as evidenced by memoranda of agreement where CFI’s funds were sourced from and its disbursements subject to PTA and COA audit. Following established jurisprudence, a corporation is under COA’s audit jurisdiction if the government owns or has a controlling interest in it, regardless of whether it has an original charter. CFI was effectively a subsidiary of PTA, performing a public function using government funds, thus falling under COA’s audit power.
Second, the honoraria and cash gifts constituted illegal double compensation. Petitioners were already full-time employees of PTA. The services they performed for CFI were in line with PTA’s mandate and were not outside their official duties or regular office hours. The payments from CFI were therefore additional compensation attached to their public office, which is expressly prohibited by the Constitution. The Court rejected the argument that the payments were for private services, emphasizing that CFI’s operations were imbued with public interest and funded by government money. Consequently, the disallowance was proper, and petitioners were liable to return the amounts received, consistent with the principle that one cannot retain disallowed benefits paid from public funds.