G.R. No. 258159, June 13, 2023
EFRAIM C. GENUINO, PETITIONER, VS. COMMISSION ON AUDIT (COA), COMMISSION PROPER, OFFICE OF THE DIRECTOR, CORPORATE GOVERNMENT SECTOR, CLUSTER 6, REPRESENTED BY DIRECTOR JOSEPH B. ANACAY, AND OFFICE OF THE SUPERVISING AUDITOR, REPRESENTED BY BELEN B. LADINES, IN HER CAPACITY AS COA SUPERVISING AUDITOR – PHILIPPINE AMUSEMENT AND GAMING CORPORATION, RESPONDENTS.

FACTS

Petitioner Efraim C. Genuino was the Chairperson and CEO of the Philippine Amusement and Gaming Corporation (PAGCOR) from February 2001 to June 30, 2010. PAGCOR made two donations totaling ₱550,000.00 to the Magallanes Village Association, Inc. (MVAI), a private subdivision association, for the purchase and installation of customized lighted street signs and repainting of street gutters and curbs. The Commission on Audit (COA) issued a Notice of Disallowance (ND No. 2013-001(08/09) as amended by a Supplemental ND) against these donations. The COA ruled that the donations violated Section 4 of Presidential Decree No. 1445 (the Government Auditing Code), which mandates that government funds be used solely for public purposes, as the benefited sidewalks were privately owned by MVAI and had not been turned over to the local government. The COA Commission Proper affirmed the disallowance and held Genuino personally liable as an approving officer. Genuino filed a Petition for Certiorari before the Supreme Court, arguing that: (1) the COA had no audit jurisdiction over the donations as they were sourced from PAGCOR’s private corporate funds (Operating Expenses Fund) and not from the government’s share of PAGCOR’s earnings; (2) the donations were for a public purpose; and (3) he should not be held personally liable.

ISSUE

1. Whether the COA has audit jurisdiction over the PAGCOR donations sourced from its Operating Expenses Fund.
2. Whether the donations to MVAI were for a public purpose.
3. Whether Genuino can be held personally liable for approving the donations.

RULING

The Supreme Court DISMISSED the Petition and REMANDED the case to the COA for a final determination of the amount to be returned by Genuino.
1. On COA’s Audit Jurisdiction: The Court held that the COA has jurisdiction to audit all PAGCOR funds, regardless of source. It reaffirmed its ruling in Genuino v. Commission on Audit (the 2023 Genuino Resolution), which declared that the constitutional audit power of the COA under Article IX-D, Sections 2 and 3 of the 1987 Constitution is broad and covers government-owned or controlled corporations (GOCCs) with original charters like PAGCOR. Therefore, Section 15 of P.D. No. 1869 (the PAGCOR Charter), which purportedly limited COA’s audit to specific government shares, is inoperative for being inconsistent with the Constitution.
2. On Public Purpose: The Court ruled the donations were not for a public purpose. Citing the 2023 Genuino Resolution, it reiterated that for a donation to be valid, it must benefit the public and not a private entity or person. The donations were for the improvement of privately owned sidewalks within a private subdivision (MVAI). A letter from the Makati City Administrator confirmed the subject areas had not been turned over to the local government. Since the improvements primarily benefited the private lot owners of Magallanes Village, the donations were private in character and properly disallowed.
3. On Personal Liability: The Court held that Genuino, as PAGCOR Chairperson and CEO, was an approving officer for the donations and is therefore liable. The Court found his denial of participation unsubstantiated, noting his signatures on the disbursement vouchers and the Board Resolution authorizing the donations. However, applying the principle of quantum meruit and considering the potential liability of other persons named in the Supplemental ND, the Court remanded the case to the COA for a final determination of the exact amount Genuino must return.