B2022 REPORTS ANNOTATED
Funa v MECO
I. Summary and relevant doctrines
Funa requested COA for a copy of MECO’s latest financial and audit
reports. COA however has never audited MECO. Funa filed a petition for
Mandamus claiming that COA should audit MECO because MECO is a
Government owned and controlled corporation.
The Court defined MECO not as a GOCC but as a Sui Generis entity.
COA can still audit MECO on government related funds such as the
verification and consular fees.
II. Facts of the case
Brief History of MECO
After the Chinese Civil War, China had 2 governments, communist
People’s Republic of China (PROC) which controls the mainland, and
nationalist Republic of China (ROC) which controls Taiwan. Both adhered
to the “One China Policy” (only one legitimate government in China). With
conflicting claims of sovereignty, the question arose as to which should be
recognized as the country’s legitimate government. ROC was originally
favoured, being a founding member of the UN; however most states
terminated their official relations with ROC and established diplomatic
relations with the PROC, the Philippines included.
The Philippines ended its official diplomatic relations with Taiwan on
June 9, 1975 when the PH and PROC expressed mutual recognition thru the
Joint Communique between the two states. It reads “The Philippines’
commitment to the One China policy of the PROC, however, did not preclude
the country from keeping unofficial relations with Taiwan on a "people-to-
people" basis.10 Maintaining ties with Taiwan that is permissible by the
terms of the Joint Communiqué, however, necessarily required the
Philippines, and Taiwan, to course any such relations thru offices outside of
the official or governmental organs.” Taiwan and the Philippines maintained
an unofficial relationship facilitated by the offices of the Taipei Economic
and Cultural Office, and the Manila Economic and Cultural Office (MECO).
MECO was organized on Dec 16, 1997 as a NON-STOCK, NON- PROFIT
CORPORATION, under BP 68 or the Corp. Code.
MECO became the corporate entity entrusted to foster friendly and
unofficial relations with Taiwan, in particular: trade, economic cooperation,
investment, cultural, scientific, and educational exchanges. MECO was
G.R. NO: 155207
ARTICLE; TOPIC OF CASE: Government functions through a Sui Generis entity
VOL 32 [Date]
Funa v MECO
“authorized” by the gov’t to perform certain “consular and other functions”
related to promotion, protection and facilitation of PH interests in Taiwan.
MECO currently oversees the rights of OFWs in Taiwan and promotes
the PH as a tourist and investment destination to Taiwan.
Facts Leading to the Mandamus
On Aug 23, 2010, Dennis Funa sent a letter to COA requesting a copy
“of the latest financial and audit report” of MECO invoking it as his
constitutional right to information of public matters. Funa believed that
MECO is a government owned and controlled corporation (GOCC) and
subject to audit jurisdiction of COA. On Aug 25 COA Assistant
Commissioner Jaime Naranjo revealed in a memorandum that MECO was
not among the agencies audited by any of the 3 Clusters of the Corporate
Government Sector
Funa filed an instant petition for mandamus on Sep 8 taking the
memorandum of COA to be an admission of never auditing MECO. Funa
claims that COA neglected its duty under Sec 2(1), Art IX-D of the
Constitution, to audit the accounts of a GOCC or government instrumentality
(GI). He agrued that MECO possess all essential characteristics of a GOCC;
it is a non-stock corporation vested with governmental functions relating to
public needs, and it is controlled by the gov’t thru a board of directors
appointed by the president. Funa also claims that the American Institute in
Taiwan, the counterpart of MECO in the USA, is audited by Comptroller
General.
MECO’s Position
MECO argues that the mandamus petition was prematurely filed. They
claim that there was no refusal by them or by COA to an audit and that Funa
never demanded an audit to be done. The only demand was requesting a copy
of the latest reports.
MECO argues on merits that it is not a GOCC despite performing public
functions. It is a corporation organized under the corporation code, and is
governed by provisions of the code, articles of incorporation and by-laws,
thus all of its directors, officers, and members are private individuals and not
government officials. The government only has policy supervision over the
MECO. MECO emphasized that categorizing it as a GOCC could violate the
country’s commitment to One China policy.
COA’s Position
PONENTE: Perez, J
DIGEST MAKER: Joshua Pena (edtied for Pubcorp by Brod)
 B2022 REPORTS ANNOTATED
Funa v MECO
COA argues that the petition be dismissed on the procedural grounds.
They claim that Funa is not aggrieved of prejudiced by their failure to audit
the accounts of MECO, thus having no locus standi. Funa also violated the
doctrine of hierarchy of courts, claiming the petition could have been well
presented before CA or RTC. They also argue that the petition is moot when
COA directed a team to proceed to Taiwan for the purposes of auditing
MECO.
III. Issue/s
W/N the COA is, under prevailing law, mandated to audit the accounts
of the MECO. Conversely, are the accounts of the MECO subject to the
audit of the COA. (Partial yes)
IV. Ratio/Legal Basis
Yes, the COA should audit MECO but only on certain government
related funds such as Verification and Consular fees.
Under Section 2(1) of Article IX-D of the Constitution, the COA was vested
with the "power, authority and duty" to "examine, audit and settle" the
"accounts" of the following entities:
1. The government, or any of its subdivisions, agencies and
instrumentalities;
2. GOCCs with original charters;
3. GOCCs without original charters;
4. Constitutional bodies, commissions and offices 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.
Complementing the constitutional power of the COA to audit accounts of
"non-governmental entities receiving subsidy or equity xxx from or
through the government" is Section 29(1) of the Audit Code, however these
are limited only to “funds coming from or through the gov’t”.
G.R. NO: 155207
ARTICLE; TOPIC OF CASE: Government functions through a Sui Generis entity
VOL 32 [Date]
Funa v MECO
Funa claims that MECO be audited because it is a GOCC or government
instrumentality (GI). The court states that it is not. GOCCs must be 1.)
stock or non-stock corporations, 2.) vested with functions relating to
public needs, 3.) owned by the gov’t directly or through its
instrumentalities.
MECO is a non-stock corporation as it was incorporated as one on DEC 16
1977 under the Corporation Code. MECO also performs functions with a
public aspect. It facilitates unofficial relations with the people in Taiwan.
However the Gov’t doesn’t own MECO.
The gov’t own a stock or non-stock corporation if it has controlling interest
in it. For stock corporations this is 51% of capital stock. For non-stock
corporations, controlling interest is affirmed, when majority of the members
are gov’t officials or if there is substantial participation of the gov’t in the
selection of the corporation’s governing board.
Petitioner argued that gov’t has controlling interest in MECO because the
President of PH indirectly appoints the directors thru “desire letters”
addressed to its board. MECO countered that these are merely
recommendatory. As a corporation under the Corporation Code, matters
relating to elections of officers and directors, as well as membership, are
governed by provisions of the code, articles of incorporation and its by-laws.
No members of MECO were established as gov’t appointees or public
officers.
Court defined MECO not as a Government Instrumentality but as a SUI
GENERIS ENTITY (unique entity).
MECO was not intended to operate as any other ordinary corporation.
The MECO was "entrusted" by the government with the "delicate and
precarious" responsibility of pursuing "unofficial" relations with the
people of a foreign land whose government the Philippines is bound not
to recognize. Although private, the executive department must exercise
some form of oversight, no matter how limited. It is clear the MECO is
uniquely situated compared to other private corporations, maintaining
its legal status as a non-gov’t entity while having functioning as one.
COA argues that despite it being a non-gov’t entity, it may still be
audited with respect to its Verification fees. MECO receives them by
reason of being the collection agent of DOLE in Taiwan. The verification
PONENTE: Perez, J
DIGEST MAKER: Joshua Pena (edtied for Pubcorp by Brod)
 B2022 REPORTS ANNOTATED VOL 32 [Date]

Funa v MECO Funa v MECO

fees are allocated as such MECO receives $10, DOLE receives $10,
common fund between them $10.
Consular fees are also auditable by COA as these are derived from their
exercise of consular functions entrusted to the MECO by the gov’t.

V. Disposition

VI. Notes

Mandamus. Order to perform a public or statutory duty

Government-Owned or -Controlled Corporation (GOCC) refers to any

agency organized as a stock or nonstock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature, and
owned by the Government of the Republic of the Philippines directly or
through its instrumentalities either wholly or, where applicable as in the case
of stock corporations, the extent of at least a majority of its outstanding
capital stock: Provided, however, That for purposes of this Act, the term
"GOCC" shall include GlCP/GCE and GFI as defined herein.
3 Attributes required to be a GOCC
1. Stock or non-stock Corporations
2. Vested with functions relating to public needs
3. Owned by the Government directly or through its instrumentalities

G.R. NO: 155207 PONENTE: Perez, J

ARTICLE; TOPIC OF CASE: Government functions through a Sui Generis entity DIGEST MAKER: Joshua Pena (edtied for Pubcorp by Brod)