EN BANC

[G.R. Nos. 237938 and 237944-45. December 4, 2018.]

BAYANI F. FERNANDO , petitioner, vs. THE COMMISSION ON AUDIT ,

respondent.

DECISION

TIJAM , J : p

The audit jurisdiction of the Commission on Audit (COA) over the Executive
Committee of the Metro Manila Film Festival (MMFF) is the subject matter of the
instant controversy brought before Us in this Petition for Certiorari 1 under Rule 64, in
relation to Rule 65 of the Rules of Court. In this petition, petitioner seeks the reversal of
the Fraud Audit O ce Notice of Finality of Decision (FAO NFD) Nos. 2017-008 to 2017-
10 all dated November 27, 2017 and Notices of Disallowance (ND) Nos. 2010-05-032
to 2010-05-034, all dated May 24, 2010 of the COA.

The Antecedents

Petitioner Bayani Fernando was the Chairman of the Executive Committee of

MMFF from 2002-2008. 2
On August 17, 2009, the COA issued an O ce Order No. 2009-602 authorizing
the Fraud Audit and Investigation O ce to conduct a special audit on the
disbursements of the Executive Committee of the MMFF for the Calendar Years 2002-
2008. 3
Through such investigation, the Fraud Audit and Investigation O ce found that
petitioner received the amount of P1,000,000.00 on May 20, 2003, and another
P1,000,000.00 on May 30, 2003 from the Executive Committee of the MMFF for the
Special Projects/Activities of the Metro Manila Development Authority (MMDA)
sourced from the advertising sponsorship of the MMFF for 2002 and 2003. Also, the
COA found that on March 15, 2005, petitioner received the amount of P1,000,000.00
from the Executive Committee of the MMFF as payment/release of funds for
petitioner's cultural projects, which payment was sourced from non-tax revenues of the
said Executive Committee of the MMFF. 4 CAIHTE

Afterwards, the COA issued three Notices of Disallowance: ND No. 2010-05-032,

ND No. 2010-05-033 and ND No. 2010-05-034 against petitioner covering the aforesaid
amounts. In the NDs issued by COA, it made a common observation that:
The amount of P1,000,000.00 paid to Mr. Bayani F. Fernando by the
Metro Manila Film Festival Executive Committee is disallowed in audit for the
reason that the check was encashed and was not issued an O cial
Receipt by the Collecting o cer of the MMDA. This constitutes irregular
transaction as de ned under COA Circular No. 85-55A for its (sic) violated the
provision of Section 77 of the Government Accounting and Auditing Manual
(GAAM) Volume I which states that: "Checks in payment for indebtedness to the
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 government must be drawn by the payor himself and made payable to the
agency or head or treasurer of agency. In the latter case, only the o cial title or
designation of the official concerned shall be stated as the payee."
xxx xxx xxx
Lastly, original copy of the aforementioned reference documents were
not submitted as required by Section 168, Volume I, Government Accounting
Rules and Regulations (GAAM). 5 (Emphasis ours)
On February 27, 2018, petitioner received FAO NFD Nos. 2017-008 to 2017-010
all dated November 27, 2017, ordering him to pay a total amount of P3,000,000.00
representing the amounts disallowed by COA.
Aggrieved, petitioner comes before this Court, submitting that the COA
committed grave abuse of discretion in disallowing the aforesaid amounts. Speci cally,
he submits that:
I
THE RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
CONDUCTING AN AUDIT OF THE FUNDS OF THE EXECUTIVE COMMITTEE OF
THE METRO MANILA FILM FESTIVAL DESPITE A CLEAR SHOWING THAT THE
COMMISSION ON AUDIT HAS NO JURISDICTION, AUTHORITY AND POWER TO
AUDIT THE FUNDS OF AN ORGANIZATION THAT IS NOT A PUBLIC OFFICE.
II
THE RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING
THE NOTICE OF DISALLOWANCE AND NOTICE OF FINALITY OF DECISION TO
PETITIONER FERNANDO DESPITE A CLEAR SHOWING THAT THE FUNDS OF
THE EXECUTIVE COMMITTEE OF THE MMFF SUBJECT OF THIS CASE AND
AUDITED BY THE HONORABLE COMMISSION ON AUDIT ARE NOT PUBLIC
FUNDS, HAVING BEEN SOURCED FROM NON-TAX REVENUES. 6

The Issue

As mentioned above, the issue in the instant case is whether the Executive
Committee of the MMFF is subject to the COA's audit jurisdiction. 7
Petitioner contends that the COA has no jurisdiction over the Executive
Committee of the MMFF, an organization composed of private individuals from the
movie industry, and whose funds come from non-tax revenues and private donations.
He claims that the Committee is neither a government-owned or controlled corporation,
nor a government instrumentality or agency for it to be subject to COA's audit
jurisdiction. 8 DETACa

Meanwhile, respondent COA, in its Comment, argues that petitioner is not entitled
to a Writ of Certiorari considering his failure to exhaust administrative remedies. COA
noted that petitioner did not appeal FAO NFD Nos. 2017-008 to 2017-010 before the
COA Proper. 9
COA further contends that the Executive Committee of the MMFF is a
government instrumentality created under Proclamation No. 1459 1 0 dated July 9,
1975, performing a public purpose. 1 1 It also argues that the committee's funds are
public in nature considering the public purpose it serves, which is to provide fund
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 assistance to lm-related organizations "in recognition of the value and importance of
the local movie industry in the over-all developmental effort for the country, a tting
celebration to encourage quality lm production both in substance and in form, as well
as provide incentives to the performing artists and the technicians in the industry." 1 2
Petitioner, in his reply, argued that the case should not be remanded to COA
because the government project has been contracted almost two decades ago, and to
bring the case back to COA would greatly prejudice him. 1 3 He also argues that the
questions in the case at bar are purely legal questions which are within the expertise of
this Court. 1 4

Our Ruling

The petition lacks merit.

The audit jurisdiction of the
Commission on Audit

Section 2, Article IX-D of the 1987 Constitution provides for the COA's audit
jurisdiction:
SECTION 2. (1) The Commission on Audit shall have the power,
authority, and duty to examine, audit, and settle all accounts pertaining to the
revenue and receipts of, and expenditures or uses of funds and
property, owned or held in trust by, or pertaining to, the Government,
or any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations with original charters,
and on a post-audit basis: (a) constitutional bodies, commissions and
o ces that have been granted scal autonomy under this
Co nstitu tion; (b) autonomous state colleges and universities; (c) other
government-owned or controlled corporations and their subsidiaries;
and (d) such non-governmental entities receiving subsidy or equity,
directly or indirectly, from or through the Government, which are
required by law or the granting institution to submit to such audit as a
condition of subsidy or equity . However, where the internal control system
of the audited agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are necessary and
appropriate to correct the de ciencies. It shall keep the general accounts of the
Government and, for such period as may be provided by law, preserve the
vouchers and other supporting papers pertaining thereto.
The COA was envisioned by our Constitutional framers to be a dynamic, effective,
e cient and independent watchdog of the Government. 1 5 It granted the COA the
authority to determine whether government entities comply with laws and regulations
in disbursing government funds, and to disallow illegal or irregular disbursements of
government funds. 1 6
In the case of Funa v. Manila Economic and Cultural O ce, et al. , 1 7 this Court
enumerated and clari ed the COA's jurisdiction over various governmental entities. In
that case, this Court stated that the COA's audit jurisdiction extends to the following
entities: aDSIHc

1. The government, or any of its subdivisions, agencies and

instrumentalities;
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 2. GOCCs with original charters;
3. GOCCs without original charters;
4. Constitutional bodies, commissions and o ces that have been granted
fiscal autonomy under the Constitution; and
5. Non-governmental entities receiving subsidy or equity, directly or
indirectly, from or through the government, which are required by law or the
granting institution to submit to the COA for audit as a condition of subsidy or
equity. 1 8
COA's authority to examine and audit the accounts of government and, to a
certain extent, non-governmental entities, is consistent with Section (Sec.) 29 (1) of
Presidential Decree (P.D.) No. 1445 otherwise known as the Auditing Code of the
Philippines, which grants the COA visitorial authority over the following non-
governmental entities:
1. Non-governmental entities "subsidized by the government";
2. Non-governmental entities "required to pay levy or government share";
3. Non-governmental entities that have "received counterpart funds from the
government"; and
4. Non-governmental entities "partly funded by donations through the
government." 1 9
COA's audit jurisdiction is also laid down in Section 11, Chapter 4, Subtitle B, Title
I, Book V of the Administrative Code of 1987:
SECTION 11. General Jurisdiction. — (1) The Commission on Audit
shall have the power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and expenditures or uses of
funds and property, owned or held in trust by, or pertaining to, the Government,
or any of its subdivisions, agencies, or instrumentalities, including government-
owned or controlled corporations with original charters, and on a post-audit
basis: (a) constitutional bodies, commissions and o ces that have been
granted scal autonomy under this Constitution; (b) autonomous state colleges
and universities; (c) other government-owned or controlled corporations and
their subsidiaries; and (d) such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the Government, which are required
by law or the granting institution to submit to such audit as a condition of
subsidy or equity. However, where the internal control system of the audited
agencies is inadequate, the Commission may adopt such measures, including
temporary or special pre-audit, as are necessary and appropriate to correct the
de ciencies. It shall keep the general accounts of the Government and, for such
period as may be provided by law, preserve the vouchers and other supporting
papers pertaining thereto.
xxx xxx xxx.
As can be gleaned from the foregoing, the COA's audit jurisdiction generally
covers public entities. However, its authority to audit extends even to non-governmental
entities insofar as the latter receives nancial aid from the government. Thus, it is clear
that the determination of COA's jurisdiction over a speci c entity does not merely
require an examination of the nature of the entity. Should the entity be found to be non-
governmental, further determination must be had as to the source of its funds or the
nature of the account sought to be audited by the COA.
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 In the analysis of an entity's nature, this Court, in prior cases, examined the
statutory origin, the charter, purpose and the relations that a particular entity has with
the State. ETHIDa

In Phil. Society for the Prevention of Cruelty to Animals v. Commission on Audit ,

20 this Court clari ed that totality of an entity's relations with the State must be
considered. If the corporation is created by the State as the latter's own agency or
instrumentality to help it in carrying out its governmental functions, then that
corporation is considered public; otherwise, it is private. 2 1 This Court examined the
charter of therein petitioner, Philippine Society for the Prevention of Cruelty to Animals,
its employees' membership to social insurance system, and the presence of a
government o cials in its board, among others. In that case, this Court ruled that the
mere public purpose of an entity's existence does not, per se, make it a public
corporation:
Fourth. The respondents contend that the petitioner is a "body politic"
because its primary purpose is to secure the protection and welfare of animals
which, in turn, redounds to the public good.
This argument, is, at best, specious. The fact that a certain juridical entity
is impressed with public interest does not, by that circumstance alone, make the
entity a public corporation, inasmuch as a corporation may be private although
its charter contains provisions of a public character, incorporated solely for the
public good. This class of corporations may be considered quasi-public
corporations, which are private corporations that render public service, supply
public wants or pursue other eleemosynary objectives. While purposely
organized for the gain or bene t of its members, they are required by law to
discharge functions for the public bene t. Examples of these corporations are
utility, railroad, warehouse, telegraph, telephone, water supply corporations and
transportation companies. It must be stressed that a quasi-public corporation is
a species of private corporations, but the qualifying factor is the type of service
the former renders to the public: if it performs a public service, then it becomes a
quasi-public corporation.
Authorities are of the view that the purpose alone of the corporation
cannot be taken as a safe guide, for the fact is that almost all corporations are
nowadays created to promote the interest, good, or convenience of the public. A
bank, for example, is a private corporation; yet, it is created for a public bene t.
Private schools and universities are likewise private corporations; and yet, they
are rendering public service. Private hospitals and wards are charged with heavy
social responsibilities. More so with all common carriers. On the other hand,
there may exist a public corporation even if it is endowed with gifts or donations
from private individuals. 2 2
Meanwhile, in Engr. Feliciano v. Commission on Audit , 2 3 this Court ruled that
regardless of the nature of the corporation, the determining factor of COA's audit
jurisdiction is government ownership or control of the corporation. In this case, the
Court found that local water districts (LWDs), are owned and controlled by the
government, as evidenced from the fact that "there [was] no private party involved
in their creation, ownership of the national or local government of their
assets, the manner of appointment of their board of directors and their
employees' being subject to civil service laws." 2 4 The Court also noted as an
indication of the government's control, the latter's power to appoint LWD directors, to
provide for their compensation, as well as the Local Water Utilities Administration's
power to require LWDs to merge or consolidate their facilities or operations. TIADCc

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 In Boy Scouts of the Philippines v. Commission on Audit , 2 5 the Court, in arriving
at the conclusion that BSP is subject to the COA's audit jurisdiction, examined its
charter, Commonwealth Act No. 111, 2 6 and the provisions of the same concerning
BSP's governing body, its classi cation and relationship with the National Government,
speci cally as an attached agency of then Department of Education, Culture and Sports
(DECS), as well as its sources of funds.
Taking into account the aforesaid cases, We now proceed to make a
determination as to the statutory origin and the operations of the MMFF Executive
Committee.
Nature of the Executive Committee
of Manila Film Festival

The Executive Committee of the MMFF was created pursuant to Proclamation

No. 1459:
MALACAÑANG
Manila
BY THE PRESIDENT OF THE PHILIPPINES
PROCLAMATION NO. 1459
DECLARING THE PERIOD FROM SEPTEMBER 10 TO 21, 1975 AS
METROPOLITAN FILM FESTIVAL AND CREATING AN EXECUTIVE COMMITTEE
TO TAKE CHARGE OF ITS OBSERVANCE AND AUTHORIZING THE SAME TO
CONDUCT FUND-RAISING CAMPAIGN FOR THE PURPOSE.
WHEREAS, the cinema, being a mass art and an effective tool of
communication that in uences the thoughts and changes the attitudes of
people, should serve as a vehicle for moral regeneration, social development
and cultural reawakening in the New Society;
WHEREAS, the movies should depict seriously and artistically our history,
traditions, cultures, aspirations and struggles as a nation through the lives of
both men of renown and the man in the street or on the farm;
WHEREAS, it is the commitment of the New Society to enrich Philippine culture,
to reawaken the people to their historical heritage and traditional values, and to
clarify the Filipino image, through the revival and refurbishment of native arts,
among which is the Filipino cinema which should rediscover itself by upholding
its inherent artistic and social responsibility;
WHEREAS, this administration has always been guided by the principal of social
justice and has pursued efforts to protect the workingman in all elds of human
endeavor, thus making it imperative to support welfare groups like the
MOWELFUND; and
WHEREAS, in recognition of the value and importance of the local movie
industry in the over-all developmental effort for the country, a tting celebration
to encourage quality lm production both in substance and in form, as well as
provide incentives to the performing artists and the technicians in the industry,
is most opportune; AIDSTE

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by

virtue of the powers vested in me by law, do hereby declare the period from
September 10 to 21, 1975, and henceforth, as "Metropolitan Film Festival." I urge
all citizens of the Greater Manila Area as well as all its local o cials and movie
organizations to celebrate the festival appropriately to encourage Filipinos to
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 appreciate Filipino cinema and make it form part of their cultural life.
In order to insure the successful celebration of this festival throughout the
Greater Manila Area, an Executive Committee is hereby formed to take charge of
the arrangement for its observance, composed of the following:

Dr. Guillermo C. de Vega Chairman

Chairman, Board of Censors for Motion
Pictures
Mayor Joseph Estrada Co-Chairman
President Philippine Motion Pictures
Producers Association
The Mayors of Metro Manila Vice-Chairman
Atty. Lazaro R. Banag, Jr. Member
President, Filipino Academy of Movie Arts
and Sciences (FAMAS)
Mr. Johnny Litton Member
Manila Theatre Owners Association
Atty. Espiridion Laxa Member
Philippine Motion Pictures
Producers Association
Director Gregorio Cendaña Member
National Media Production Center
Director Florentino Dauz Member
Department of Public Information
Board Member Jose Bautista Member
Board of Censors for Motion Pictures
Brig. Gen. Prospero Olivas Member
Metro Manila Police Force

The Executive Committee is authorized to engage in fund raising campaign

among all sectors of society including the local governments concerned which
may donate their amusement tax shares to the MOWELFUND during the period
of the celebration to make it a success. Pursuant to the agreement among the
participating lm producers, the theme of the Festival will center on the
Achievements under the New Society, and the best picture is thus to be
conferred the "Dangal ng Bagong Lipunan" award.
All departments, bureaus and agencies of the government are hereby directed to
give their full support and assistance to the said Committee to ensure the
success of the Metropolitan Film Festival.
IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the
Republic of the Philippines to be affixed.
Done in the City of Manila, this 9th day of July, in the year of Our Lord, nineteen
hundred and seventy-five.
(SGD.) FERDINAND E. MARCOS
President
Republic of the Philippines
Similar Presidential proclamations 2 7 were also passed which changed the
composition of the committee's members. The President has also issued Proclamation
No. 1533-A, s. 1976, changing the schedule of the MMFF from September 10 to 21, to
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 December 24 to January 2 of each year. On August 11, 1983, the President likewise
passed Proclamation No. 2302, s. 1983 which renamed the festival from Metropolitan
Film Festival to the Metro Manila Film Festival, and again rescheduled its holding to
November 7-17 of each year.
On October 4, 1985, Metropolitan Manila Commission Executive Order No. 85-04
was issued authorizing the MOWELFUND itself to manage the MMFF and all
amusement taxes accrued during the film festival are given solely to MOWELFUND.
In 1986, then Governor/OIC of Metro Manila Jose D. Lina, Jr. issued Metropolitan
Manila Commission Executive Order (E.O.) No. 86-09, which provides:
Executive Order No. 86-09
DECLARING THE HOLDING OF AN ANNUAL METRO MANILA FILM FESTIVAL
ORGANIZING AN EXECUTIVE COMMITTEE TO ASSIST THE METRO MANILA
COMMISSION TO MANAGE THE SAME AND AUTHORIZING THE
ACCRUAL/ALLOCATION OF AMUSEMENT TAXES AND OTHER PROCEEDS
DERIVED FROM THE TEN (10) DAY FILM FESTIVAL.
WHEREAS, the Metro Manila Commission has annually granted authority
for the holding of a Metro Manila Film Festival pursuant to the spirit and intents
of Presidential Proclamation Nos. 1459, 1485, 1533, 1533-A and 1647; AaCTcI

WHEREAS, the Metro Manila Film Festival has been traditionally

celebrated annually to promote and enhance the preservation, growth and
development of the local film industry;
WHEREAS, the lm as a popular entertainment and educational medium
is a potent force in the formation of the society's value system which can be
utilized to effectively ght social ills such as prostitution, drug addiction,
criminality and the like;
WHEREAS, the present national leadership is cognizant of the vital role of
the lm industry in the effort towards national reconstruction in all sectors of
society;
WHEREAS, it is imperative that the lm industry, which plays a
signi cant role in providing a serious and artistic depiction of our people's
history, traditions, culture, aspirations, and struggles, be given due recognition
and that efforts be undertaken to promote the economic upliftment and
professional development of its members;
NOW, THEREFORE, I, JOSE D. LINA, JR., Governor/O cer In Charge of
Metro Manila, by virtue of the powers vested in me by law and after a series of
consultations with the Metro Manila Mayors and the representatives of the
movie industry do hereby order:
Section 1. That the Metro Manila Film Festival shall be held for the period
December 24-January 3 every year.
Section 2. Executive Committee. — An Executive Committee shall be
organized to assist the Metro Manila Commission in the task of holding,
managing and supervising the annual Metro Manila Film Festival to be
composed of representatives of the donor cities and municipalities of Metro
Manila, the movie industry and such other government agencies as may be
chosen by the Governor, Metro Manila Commission.
Section 3. Donation of Amusement Taxes. — All city and municipal mayors
and treasurers are hereby directed to exempt all theaters from the computation
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 and remittance of amusement taxes during the ten (10)-day period, including
taxes from films rated by the Film Rating Board as mentioned in Executive Order
No. 84-06, all said taxes to accrue to the Metro Manila Film Festival Executive
Committee as TRUSTEE pending identification of beneficiaries.
Section 4. Period of Payment. — Amusement taxes referred to in Section 3
hereof shall be paid by the proprietor, lessee or theater operator concerned
directly to the Executive Committee not later than twenty (20) days after the last
day of the festival.
Section 5. Penalties. — If the tax is not paid within the time xed herein
above, the proprietor, lessee or theater operator shall be subject to the
surcharges, interests and penalties prescribed by Section 51 of the Metropolitan
Manila Revenue Code. In case of willful neglect to le the return and pay the tax
within the time required or in case a fraudulent return is led or a false return is
willfully made, the proprietor, lessee or theater operator shall be subject to a
surcharge of fty (50%) percent of the correct amount of the tax due in addition
to the interest and penalties provided in Section 169 of the same Code.
Section 6. Secretariat. — a Metro Manila Film Festival Secretariat shall be
created in the Metro Manila Commission to assist the Executive Committee as
the central coordinating body;
Section 7. Implementing Guidelines. — The Metro Manila Commission shall
issue the necessary guidelines, rules and regulations for the proper and effective
implementation of the Executive Order. EcTCAD

Section 8. Accordingly, all previous authorities granted concerning the

supervision, management and holding of the Metro Manila Film Festival which
are inconsistent herewith are hereby superseded.
Section 9. Effectivity. — This Executive Order shall take effect immediately.
Done in Quezon City, this 13th day of August, 1986.
(SGD.) JOSE D. LINA, JR.
Officer-in-Charge
Governor/General Manager
Considering the establishment and mechanism of the Executive Committee of
the MMFF, it is at once apparent that it is not a government-owned and controlled
corporation. The Introductory Provisions of the Administrative Code of 1987 de ne
GOCCs:
SEC. 2. General Terms Defined. — x x x
(13) Government-owned or controlled corporation refers to any
agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or proprietary
in nature, and owned by the Government directly or through its
instrumentalities either wholly, or where applicable as in the case of
stock corporations, to the extent of at least fty-one (51) percent of
its capital stock: Provided, That government-owned or controlled corporations
may be further categorized by the Department of the Budget, the Civil Service
Commission, and the Commission on Audit for purposes of the exercise and
discharge of their respective powers, functions and responsibilities with respect
to such corporations. (Emphasis ours)
In this case, there is nothing in the records which establishes that the Executive
Committee of the MMFF is organized as a stock or non-stock corporation. It does not
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 have capital which is to be divided into shares of stock, nor stockholders and voting
shares, as to qualify as a stock corporation.
We cannot also deem it a non-stock corporation. Though undoubtedly organized
for cultural purposes, the Executive Committee of the MMFF is ostensibly just a group
of representatives of various stakeholders in the Philippine movie industry, it has no
other members.
Such nding notwithstanding, We nd that the Executive Committee is subject to
COA jurisdiction, considering its administrative relationship to the Metro Manila
Development Authority, a government agency tasked to perform administrative,
coordinating and policy-setting functions for the local government units in the
Metropolitan Manila area.
The public nature of MMDA is apparent in its charter, Republic Act (R.A.) No.
7924, 2 8 particularly in the following provision:
Sec. 2. Creation of the Metropolitan Manila Development Authority.
— The affairs of Metropolitan Manila shall be administered by the Metropolitan
Manila Authority, hereinafter referred to as the MMDA, to replace the Metro
Manila Authority (MMA) organized under Executive Order No. 392, series of
1990.
The MMDA shall perform planning, monitoring and coordinative
functions, and in the process exercise regulatory and supervisory
authority over the delivery of metrowide services within Metro Manila
without diminution of the autonomy of the local government units
concerning purely local matters.
Sec. 3. Scope of MMDA Services. — Metro-wide services under
the jurisdiction of the MMDA are those services which have metro-
wide impact and transcend local political boundaries or entail huge
expenditures such that it would not be viable for said services to be
provided by the individual local government units (LGUs) comprising
Metropolitan Manila. These services shall include:
(a) Development planning which includes the preparation of
medium and long-term development plans, the development,
evaluation and packaging of projects, investments programming;
and coordination and monitoring of plan, program and project
implementation. HSAcaE

(b) Transport and tra c management which include the

formulation, coordination, and monitoring of policies, standards,
programs and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares,
and promotions of sale and convenient movement of persons and
goods; provision for the mass transport system and the institution
of a system to regulate road users; administration and
implementation of all tra c enforcement operations, tra c
engineering services and tra c education programs, including the
institution of a single ticketing system in Metropolitan Manila.
(c) Solid waste disposal and management which include
formulation and implementation of policies, standards, programs
and projects for proper and sanitary waste disposal. It shall
likewise include the establishment and operation of sanitary land
ll and related facilities and the implementation of other
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 alternative programs intended to reduce, reuse and recycle solid
waste.
(d) Flood control and sewerage management which include
the formulation and implementation of policies, standards
programs and projects for an integrated ood control, drainage
and sewerage system.
(e) Urban renewal, zoning, and land use planning, and shelter
services which include the formulation, adoption and
implementation of policies, standards, rules and regulations,
programs and projects to rationalize and optimize urban land use
and provide direction to urban growth and expansion, the
rehabilitation and development of slum and blighted areas, the
development of shelter and housing facilities and the provision of
necessary social services thereof.
(f) Health and Sanitation, urban protection and pollution
control which include the formulation and implementation of
policies, rules and regulations, standards, programs and projects
for the promotion and safeguarding of the health and sanitation
of the region and for the enhancement of ecological balance and
the prevention, control and abatement of environmental pollution.
(g) Public safety which includes the formulation and
implementation of programs and policies and procedures to
achieve public safety, especially preparedness for preventive or
rescue operations during times of calamities and disasters such
as con agrations, earthquakes, ood and tidal waves, and
coordination and mobilization of resources and the
implementation of contingency plans for the rehabilitation and
relief operations in coordination with national agencies concerned.
Sec. 4. Metro Manila Council. — The governing board and policy making
body of the MMDA shall be the Metro Manila Council, composed of the mayors
of the eight (8) cities and nine (9) municipalities enumerated in Section 1 hereof,
the president of the Metro Manila Vice Mayors League and the President of the
Metro Manila Councilors League.
The heads of the Department of Transportation and Communications
(DOTC), Department of Public Works and Highways (DPWH), Department of
Tourism (DOT), Department of Budget and Management (DBM), Housing and
Urban Development Coordinating Committee (HUDC), and Philippine National
Police (PNP) or their duly authorized representatives, will attend meetings of the
council as non-voting members. HESIcT

The Council shall be headed by a Chairman, who shall be

appointed by the President and who shall continue to hold o ce at
the discretion of the appointing authority. He shall be vested with the
rank, rights, privileges, disquali cations, and prohibitions of a Cabinet
member.
The Chairman shall be assisted by a General Manager, an Assistant
General Manager for Finance and Administration, an Assistant General Manager
for Planning and an Assistant General Manager for Operations, all of whom
shall be appointed by the President with the consent and concurrence of the
majority of the Council, subject to civil service laws and regulations. They shall
enjoy security of tenure and may be removed for cause in accordance with law.
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 Sec. 5. Functions and powers of the Metro Manila Development Authority.
— The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of
medium and long-term plans and programs for the delivery of
metro-wide services, land use and physical development within
Metropolitan Manila, consistent with national development
objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of
medium-term investment programs for metro-wide services which
shall indicate sources and uses of funds for priority programs and
projects, and which shall include the packaging of projects and
presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs
and projects for the delivery of speci c services under its
jurisdiction, subject to the approval of the Council. For this
purpose, MMDA can create appropriate project management
offices;
(d) Coordinate and monitor the implementation of such plans,
programs and projects in Metro Manila; identify bottlenecks and
adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning tra c in
Metro Manila, and shall coordinate and regulate the
implementation of all programs and projects concerning tra c
management, speci cally pertaining to enforcement, engineering
and education. Upon request, it shall be extended assistance and
cooperation, including but not limited to, assignment of personnel,
by all other government agencies and offices concerned;
(f) Install and administer a single ticketing system, x, impose
and collect nes and penalties for all kinds of violations of tra c
rules and regulations, whether moving or non-moving in nature,
and con scate and suspend or revoke drivers licenses in the
enforcement of such tra c laws and regulations, the provisions
of RA 4136 and PD 1605 to the contrary notwithstanding. For this
purpose, the Authority shall impose all tra c laws and regulations
in Metro Manila, through its tra c operation center, and may
deputize members of the PNP, tra c enforcers of local
government units, duly licensed security guards, or members of
non-governmental organizations to whom may be delegated
certain authority, subject to such conditions and requirements as
the Authority may impose; and
(g) Perform other related functions required to achieve the
objectives of the MMDA, including the undertaking of delivery of
basic services to the local government units, when deemed
necessary subject to prior coordination with and consent of the
local government unit concerned. (Emphasis ours)
This Court has likewise clari ed the nature of the MMDA in past cases. In
Metropolitan Manila Development Authority v. Bel-Air Village Association, Inc. , 2 9 this
Court, discussed MMDA's nature as a coordinating agency of the local government
units of Metropolitan Manila: caITAC

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 Clearly, the scope of the MMDA's function is limited to the delivery of the
seven (7) basic services. One of these is transport and tra c management
which includes the formulation and monitoring of policies, standards and
projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares and promotion of the safe movement of
persons and goods. It also covers the mass transport system and the institution
of a system of road regulation, the administration of all tra c enforcement
operations, tra c engineering services and tra c education programs,
including the institution of a single ticketing system in Metro Manila for tra c
violations. Under the service, the MMDA is expressly authorized "to set the
policies concerning tra c" and "coordinate and regulate the implementation of
all tra c management programs." In addition, the MMDA may "install and
administer a single ticketing system," x, impose and collect nes and penalties
for all traffic violations.
It will be noted that the powers of the MMDA are limited to the following
acts: formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installation of a system and
administration. There is no syllable in R.A. No. 7924 that grants the MMDA
police power, let alone legislative power. Even the Metro Manila Council has not
been delegated any legislative power. Unlike the legislative bodies of the local
government units, there is no provision in R.A. No. 7924 that empowers the
MMDA or its Council to "enact ordinances, approve resolutions, and appropriate
funds for the general welfare" of the inhabitants of Metro Manila. The MMDA
is, as termed in the charter itself, "development authority." It is an
agency created for the purpose of laying down policies and
coordinating with the various national government agencies, people's
organizations, non-governmental organizations and the private sector
for the e cient and expeditious delivery of basic services in the vast
metropolitan area. All its functions are administrative in nature and these are
actually summed up in the charter itself, viz.:
Sec. 2. Creation of the Metropolitan Manila Development
Authority. — . . . .
The MMDA shall perform planning, monitoring and
coordinative functions, and in the process exercise regulatory and
supervisory authority over the delivery of metro-wide services
within Metro Manila, without diminution of the autonomy of the
local government units concerning purely local matters.
xxx xxx xxx
Under the 1987 Constitution, the local government units became
primarily responsible for the governance of their respective political
subdivisions. The MMA's jurisdiction was limited to addressing
common problems involving basic services that transcended local
boundaries. It did not have legislative power. Its power was merely to
provide the local government units technical assistance in the preparation of
local development plans. Any semblance of legislative power it had was
con ned to a "review [of] legislation proposed by the local legislative
assemblies to ensure consistency among local governments and with the
comprehensive development plan of Metro Manila," and to "advise the local
governments accordingly."
When R.A. No. 7924 took effect, Metropolitan Manila became a "special
development and administrative region" and the MMDA a "special development
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 authority" whose functions were "without prejudice to the autonomy of the
affected local government units."
xxx xxx xxx
It is thus beyond doubt that the MMDA is not a local government unit or a
public corporation endowed with legislative power. It is not even a "special
metropolitan political subdivision" as contemplated in Section 11, Article X of
the Constitution. The creation of a "special metropolitan political subdivision"
requires the approval by a majority of the votes cast in a plebiscite in the
political units directly affected." R.A. No. 7924 was not submitted to the
inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is
not an o cial elected by the people, but appointed by the President
with the rank and privileges of a cabinet member. In fact, part of his
function is to perform such other duties as may be assigned to him by
the President, whereas in local government units, the President merely
exercises supervisory authority. This emphasizes the administrative
character of the MMDA. (Emphasis ours) ICHDca

Going back to the factual circumstances of the instant case, the Executive
Committee, having been created to assist the MMDA in the conduct of the annual
Manila Film Festival, cannot be treated separately from the legal existence and nature
of the agency it is tasked to give assistance to.
It is likewise apparent that the observance of the annual lm festival, entails
activities which impacts some, if not all local government units of the Metropolitan
Manila. The "Parade of the Stars," for instance, which is normally conducted along
Roxas Boulevard, affects the tra c situation in the cities it traverses. 3 0 The tra c
situation in Metro Manila is undoubtedly within the authority of the MMDA to manage.
The link between MMDA and the Executive Committee is likewise evident from
the establishment of a Secretariat within the MMDA, which will assist the committee in
the discharge of its function. To recall, Section 6 of E.O. No. 86-09 states:
Section 6. Secretariat. — a Metro Manila Film Festival Secretariat
shall be created in the Metro Manila Commission to assist the Executive
Committee as the central coordinating body.
In addition, this Court notes that the multi-sectoral membership of the executive
committee mirrors the network MMDA is authorized to establish under its Charter, viz.:
Sec. 9. Institutional Linkages of the MMDA. — The MMDA shall, in
carrying out its functions, consult, coordinate and work closely with the LGUs,
the National Economic and Development Authority (NEDA) and other national
government agencies mentioned in Section 4 hereof, and accredited people's
organization (POs), nongovernmental organizations (NGOs), and the private
sector operating in Metro Manila. The MMDA chairman or his authorized
representative from among the Council members, shall be ex-officio member of
the boards of government corporations and committees of the departments and
o ces of government whose activities are relevant to the objectives and
responsibilities of the MMDA which shall include but not limited to Metropolitan
Waterworks and Sewerage System (MWSS), DOTC, DPWH, HUDCC and
Department of the Interior and Local Government (DILG).
The MMDA shall have a master plan that shall serve as the framework
for the local development plans of the component LGUs.
The MMDA shall submit its development plans and investments
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 programs to the NEDA for integration into the Medium-Term Philippine
Development Plan (MTPDD) and public investment program.
The implementation of the MMDA's plans, programs, and projects shall
be undertaken by the LGUs, the concerned national governments agencies, the
Pos, NGOs and the private sector and the MMDA itself where appropriate. For
this purpose, the MMDA may enter into contracts, memoranda of agreement
and other cooperative agreements with these bodies for the delivery of the
required services within Metropolitan Manila.
The MMDA shall, in coordination with the NEDA and the Department of
Finance, interface with the foreign, assistance agencies for purposes of
obtaining nancing support, grants and donations in support of its programs
and projects.
Based from the aforesaid provisions, this Court cannot accord merit to
petitioner's arguments which seek to treat separately the Executive Committee from
the MMDA. Certainly, that would amount to creating another entity without basis in law
and in fact. The records simply establish that the Executive Committee is an o ce
under the MMDA, a public agency, subject to the audit jurisdiction of the COA. TCAScE

The case of Funa v. Manila

Economic and Cultural Office, et
al., is not applicable to the case at
bar

Reinforcing its claim that the Executive Committee is not one of the entities
subject to the COA's audit jurisdiction, petitioner claims that the committee is similar to
MECO, which this Court declared as a sui generis entity and where the COA's audit
jurisdiction is limited.
In the Funa case, this Court concluded:
The MECO is not a GOCC or government instrumentality. It is a sui
generic private entity especially entrusted by the government with the
facilitation of uno cial relations with the people in Taiwan without
jeopardizing the country's faithful commitment to the One China policy of the
PROC. However, despite its non-governmental character, the MECO handles
government funds in the form of the "veri cation fees" it collects on behalf of
the DOLE and the "consular fees" it collects under Section 2(6) of EO No. 15, s.
2001. Hence, under existing laws, the accounts of the MECO pertaining to its
collection of such "veri cation fees" and "consular fees" should be audited by
the COA. 3 1
This Court does not find merit in petitioner's contention.
MECO is markedly different from the Executive Committee of the MMFF. In Funa,
this Court explained that MECO is a non-stock corporation organized under and
governed by the provisions of the Corporation Code. In that case, this Court further
found that none of MECO's incorporators, as well as current members, o cers and
directors are government appointees or public o cers designated by reason of their
o ce. Likewise, this Court did not declare MECO a government instrumentality
because it is not created pursuant to a special law. This Court, however, recognized that
MECO is not an ordinary private corporation, as it performs a delicate responsibility of
"pursuing 'unofficial' relations with the people of a foreign land whose government the
Philippines is bound not to recognize." 3 2 Such functions, according to this Court, is
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 similar to that performed by the consular o ces of the Department of Foreign Affairs.
ASEcHI

The conclusion reached by the Court in Funa cannot be applied in the case at bar.
Compared to MECO, which is an incorporated body, the Executive Committee is merely
an o ce under MMDA, created pursuant to a Presidential Proclamation passed in
1975, when the legislative power was exercised by the President. It cannot likewise be
denied that some of the original members of the Executive Committee, as well as
current ones, are public o cials. The rst set of members of the Executive Committee,
as listed in Proclamation No. 1459 includes representatives from the Department of
Public Information and the police force. At present, this Court takes judicial notice of
the increase of committee's members coming from the public sector. Its current roster
includes Senator Grace Poe-Llamanzares, Batangas Congresswoman Vilma Santos-
Recto, Taguig City Mayor Laarni Cayetano representing the Metro Manila mayors, Police
Director Oscar Albayalde, Chief of the Philippine National Police-National Capital
Region; Rachel Arenas, Chairperson of the Movie, Television Review and Classi cation
Board. 3 3 To the mind of this Court, the public nature of the Executive Committee of the
MMFF is not altered despite the fact that some of its members come from the private
sector. Just like the MMDA which has institutional links with other government
agencies, NGOs and companies from the private sector, this Court deems the
membership of representatives from private companies, such as those coming from
the cinema owners, merely incidental to the operations and the activities held during the
duration of the annual film festival.
The funds of the Executive
Committee are considered public
funds

The Executive Committee has two sources of funds:

1. The donations from the local government units comprising the
Metropolitan Manila covering the period of holding the MMFF from
December 25 to January 3; and
2. The non-tax revenues that come in the form of donations from private
entities. 3 4
As a committee under MMDA, a public o ce, this Court nds that both sources
of funds can properly be subject of COA's audit jurisdiction.
That the Executive Committee of the MMFF administers funds from the
government is apparent in the following portion of Proclamation No. 1459:
The Executive Committee is authorized to engage in fund raising
campaign among all sectors of society including the local
governments concerned which may donate their amusement tax
shares to the MOWELFUND during the period of the celebration to make it a
success. x x x. (Emphasis ours)
Verily, if non-governmental entities may be audited by the COA as long as its
funds are partly coming from the government, with more reason should this principle
apply to the Executive Committee.
As to the committee's funds coming from non-tax revenues, the fact that such
funds come from purported private sources, do not convert the same to private funds.
Such funds must be viewed with the public purpose for which it was solicited, which is
the management of the MMFF. In Confederation of Coconut Farmers Organizations of
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 the Philippines, Inc. (CCFOP) v. His Excellency President Benigno Simeon C. Aquino III,
et al., 3 5 reiterating this Court's ruling in Republic of the Philippines v. COCOFED: 3 6
Even if the money is allocated for a special purpose and raised
by special means, it is still public in character. In the case before us, the
funds were even used to organize and nance State o ces . In Cocofed v.
PCGG, the Court observed that certain agencies or enterprises "were organized
and nanced with revenues derived from coconut levies imposed under a
succession of laws of the late dictatorship . . . with deposed Ferdinand Marcos
and his cronies as the suspected authors and chief bene ciaries of the resulting
coconut industry monopoly. The Court continued:" . . . It cannot be denied that
the coconut industry is one of the major industries supporting the national
economy. It is, therefore, the State's concern to make it a strong and secure
source not only of the livelihood of a signi cant segment of the population, but
also of export earnings the sustained growth of which is one of the imperatives
of economic stability. (Emphasis ours) ITAaHc

In The Veterans Federation of the Phils. represented by Esmeraldo R. Acordo v.

Hon. Reyes, 3 7 this Court also declared as public funds contributions from a liate
organizations of the VFP:
x x x. In the case at bar, some of the funds were raised by even more
special means, as the contributions from a liate organizations of the VFP can
hardly be regarded as enforced contributions as to be considered taxes. They
are more in the nature of donations which have always been recognized as a
source of public funding. 3 8
Furthermore, despite the private source of funds, ownership over the same was
already transmitted to the government by way of donation. As donee, the government
had become the owner of the funds, with full ownership rights and control over the use
and disposition of the same, subject only to applicable laws and COA rules and
regulations. Thus, upon donation to the government, the funds became public in
character.
This is in contrast to cases where there is no transfer of ownership over the
funds from private parties to the government, such as in the case of cash deposits
required in election protests led before the trial courts, Commission on Elections, and
electoral tribunals. In these cases, the government becomes a mere depositary of such
fund, the use and disposition of which is subject to the conformity of the private party-
depositor who remains to be the owner thereof.
Applying the principles enunciated in the aforesaid cases, and considering the
purpose for which COA was created, this Court nds that any such funds, though
coming from private sources, become public upon receipt by the Executive Committee,
for use in the purpose for which it was created. For all intents and purposes, the
Executive Committee, an o ce under the MMDA and created pursuant to Presidential
Proclamation No. 1459, as donee, has already become the owner of the funds and may
dispose of the same as it deems t; thus, such funds are considered public funds.
Being public in character, the COA can therefore validly conduct an audit over such
funds in accordance with its auditing rules and regulations.
WHEREFORE , the premises considered, the instant Petition for Certiorari is
DISMISSED . CHTAIc

SO ORDERED .
Bersamin, C.J., Carpio, Peralta, Del Castillo, Perlas-Bernabe, Leonen, Jardeleza,
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 Caguioa, A.B. Reyes, Jr., J.C. Reyes Jr. and Hernando, JJ., concur.
Gesmundo, * J., took no part due close relation to party.
Carandang, ** J., is on leave.

Footnotes
* No part.

** On leave.

1. Rollo, pp. 3-28.

2. Id. at 62-63.

3. Id. at 63.
4. Id.

5. Id. at 37-38.

6. Id. at 12.
7. Id. at 13-15.

8. Id.
9. Id. at 65-70.

10. DECLARING THE PERIOD FROM SEPTEMBER 10 TO 21, 1975 AS METROPOLITAN FILM
FESTIVAL AND CREATING AN EXECUTIVE COMMITTEE TO TAKE CHARGE OF ITS
OBSERVANCE AND AUTHORIZING THE SAME TO CONDUCT FUND-RAISING CAMPAIGN
FOR THE PURPOSE.
11. Id. at 73-74.

12. Id. at 78.

13. Id. at 102.

14. Id. at 100.

15. Caltex Philippines, Inc. v. Commission on Audit, 284-A Phil. 233, 257 (1992).
16. National Electrification Administration v. COA, 427 Phil. 464, 483 (2002).

17. 726 Phil. 63 (2014).

18. Id. at 86.

19. Id. at 87.

20. 560 Phil. 385 (2007).

21. Id. at 408.

22. Id. at 407-408.

23. 464 Phil. 439, 462 (2004).

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 24. Id. at 463.

25. 666 Phil. 140 (2011).

26. AN ACT TO CREATE A PUBLIC CORPORATION TO BE KNOWN AS THE BOY SCOUTS OF
THE PHILIPPINES, AND TO DEFINE ITS POWERS AND PURPOSES. Approved on October
31, 1936.

27. Presidential Proclamation No. 1533, s. 1976, changed the composition of the Executive
Committee. The committee was to be composed of the occupants of the positions of the
Chairman of the Board of Censors for Motion Pictures, to act as Chairman of the
Executive Committee, while the Director of the National Media Production Center and the
Director of the Bureau of Broadcast as members of the committee. Proclamation No.
1647, s. 1977 enumerated the following as members of the Executive Committee of the
MMFF: Governor, Metropolitan Manila Commission, Representative of the FAMAS,
Director, National Media Production Center, Director, Bureau of Broadcasts,
Commanding Officer, Metro Manila Police Force and Such officers of organizations of
local motion pictures producers, directors, actors, actresses and/or theater operators or
owners, film groups and other persons as may be chosen by the Governor, Metropolitan
Manila Commission.

28. AN ACT CREATING THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEFINING

ITS POWERS AND FUNCTION, PROVIDING FUNDS THEREFOR AND OTHER PURPOSES.
Approved on March 1, 1995.

29. 385 Phil. 586 (2000).

30. <https://newsinfo.inquirer.net/854636/mmff-parade-of-stars-rerouted-from-roxas-blvd-to-
city-hall-quiapo)> (Last visited October 29, 2018).

31. Funa v. Manila Economic and Cultural Office, et al., supra note 17, at 103.

32. Id. at 98.

33. http://mmda.gov.ph/44-news/news-2017/2425-mmff-launches-41st-film-festival-
announces-new-execom-members.html (Accessed on October 24, 2018).

34. Rollo, p. 25.

35. G.R. No. 217965, August 8, 2017.

36. 423 Phil. 735 (2001).

37. 518 Phil. 668 (2006).

38. Id. at 697.

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