Tetangco v.

COA

DOCTRINE: The COA’s jurisdiction extends not only to gov’t agencies or instrumentalities, but also to
“gov’t-owned and controlled corp.” with original charters as well as other gov’t –owned or controlled
corp. without original charters. The PICC is not an originally chartered corp., but a subsidiary corp. of BSP
organized in accordance with the Corp. Code of the Phils.. Unquestionably, PICCI is a GOCC and is
subject to review and audit of COA.
FACTS:
- The petitioners appealed to the COA- Corporate Gov’t Sector, arguing that the grant
of RATA to ex-officio members of the PICCI Board who were primarily officers of the
BSP did not violate the constitutional proscription against double compensation. The
COA- CGS denied their appeal stating that additional compensation may be given only
when specifically authorized by law and not by mere PICCI by-laws. Upon appeal to
the COA proper, the preceding decision was modified, in that the grant of per diems
were allowed but only in an amount not exceeding P1,000. Petitioners now urge the
court to nullify, on the ground of lack of excess of jurisdiction, the assailed
disposition.
ISSUES:
1. Is PICCI a gov’t-owned or controlled corp., hence subject to the audit jurisdiction of COA?

Ans. Yes. The PICCI was incorporated pursuant to P.D. 520. PICCI’s sole stockholder is the
BSP. Verily, a corporation is a gov’t –owned or controlled corporation when the gov’t directly or
indirectly owns or controls at least a majority or 51 % of the capital stock. A gov’t owned or
controlled corp. is either a “parent” corp. one created by special law (Sec. 3 (a), PD 2029) or a
subsidiary corp., one created pursuant to law where at least a majority of the outstanding
voting capital stock is owned by the parent gov’t corp. and/or other gov’t owned subsidiaries,
or where the gov’t owns a majority of the outstanding capital stock. The COA’s jurisdiction
extends not only to government agencies or instrumentalities, but also to “gov.t-owned and
controlled corp.” with original charters as well as other gov’t –owned or controlled corps.
Without original charters. In the case of PICCI, it may not be an originally chartered corporation,
but it is a subsidiary corp. of the BSP organized in accordance with the Corp. Code of the
Philippines. The personality of PICCI as a GOCC subsidiary of BSP.

2. W/N benefits received constitute double compensation?

Ans. On further appeal to the COA proper, petitioners averred, in the main:
a. the benefits did not constitute double compensation;
b. they were authorized to receive the benefits from PICCI pursuant to section 30 of
the corporation code;
c. the benefits were given them in good faith.
On the other hand, the COA- CGS countered that petitioners arguments were
already addressed in full, hence, should no longer be entertained anew.
3. Were the increase per diems and RATA validly authorized, hence, should not be disallowed?
 Ans. Yes. Because the March 23, 2010 COA decision no. 2010-048, should not be applied
since the disallowed EMEs are incurred by the ex-officio MBMs in the yrs. 2007, 2008, and
2009, which yrs. are prior to the date of finality of the said decision.

a. Is the PICCI subject to the prohibition under Memorandum order no. 20?
Ans. Yes. Because the PICCI is governed by compensation and position standards
issued by the DBM and relevant laws. Among them is Memorandum order no. 20 directing the
suspension of any increases on the benefits of GOCC employees and executives.
b. Was the grants of the benefits subject to the prohibition under E.O. 24?
Ans. No. Executive order no. 24 does not provide for its retroactive application, the
same may not be applied for the purpose of deauthorizing the grant of benefits prior to it
effectivity. At most, it may serve as guidelines to acts done upon its effectivity onward.
c. Were the newly submitted documents SEC certificates of filing of PICC amended by
laws, MB resolution no 1518, MB Resolution no. 1901 attach to petitioners motion for
reconsideration before the COA-proper admissible in evidence?
Ans. Yes. There a valid authority to attach in the motion for reconsideration, by the
reasons that, these resolutions were passed by the PICCI Board of Directors and approved no
less by the BSP-MB pursuant to section 30 of the Corporation Code.
4. Are petitioners solidarily liable for the return of the amounts in question?
Ans. No. In the case of Singson pointedly resolved as valid the grant of RATA to
members of the PICCI Board of Directors who are also BSP officers.

Feliciano v. COA

Doctrine:
Sec.16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the
common good and subject to the test of economic viability.

FACTS:
- COA audited the accounts of LMWD and charged it auditing fees, Petitioner,
as general manager, requested for COA to cease all audit services and to stop
charging auditing fees.
- It also requested for COA to cease all audit services and to refund all
auditing fees previously paid by LMWD. Petioner contends that LWDs are not
gov’t- owned and controlled corporations with original charter.
- He argues that LWD’s are private corporations hence not subject to the
audit jurisdiction of COA.
ISSUE:
 Whether LWD’s are private or government –owned and controlled corporations
with original charters.
HELD:
An LWD is a GOCC with an original charter.
The Constitution recognizes two classes of corporations. The first refers to
private corporations created under a general law. The second refers to government-
owned or controlled corporations created by special charters.
Private corporations may exist only under a general law. If the corporation is
private, it must necessarily exist under a general law. Stated differently, only
corporations created under a general law can qualify as private corporations. Under
existing laws, that general law is the corporation Code.
LWDs are not private corporations because they are not created under the
corporation code. LWDs are not registered with the SEC. LWDs have no AOI, no
incorporators and no stockholders or members. There are no stockholders to elect the
board of directors of LWDs as in this case of all corporations registered with the SEC.
The local mayor or the provincial governor appoints the directors of LWDs for a fixed
term of office.
LWDs exist by virtue of P.D. 198, w/c constitutes their special charter. Since
under the Constitution only GOCCs may have special charters, LWDs can validly exist
only if they are gov’t-owned or controlled. To claim that LWDs are private corporations
with a special charter is to admit that their existence is constitutionally infirm.

Baluyot v. Holgana

Doctrine:
The test to determine whether corporation is gov’t- owned and controlled, or
private in nature is simple. Is it created by its own charter for the exercise of a public
function, or by incorporation under the general corporation law? Those with special
charters are gov’t corporations subject to it’s provisions, and its employees are under
the jurisdiction of the civil service commission, and are compulsory members of the
gov’t service insurance system. The PNRC was not impliedly converted to a private
corporation simply because its charter was amended to vest in it the authority to secure
loansbe exempted from payment of all duties, taxes fees and other charges of all kinds
on all importations and purchases for its exclusive use, on donations for its disaster
relief work and other services and its benefits and fund raising drives, and be allotted
one lottery draw a year by the Philippine Charity Sweepstakes office for the support of
its disaster relief operation in addition to its existing lottery draws for blood program.

FACTS:
- Sometime on March 1977, A team of auditors from the Phil. Nat’l Red Cross
(PNRC) headquarters during a spot audit, they discovered a cash shortage of
funds in Bohol Chapter with the amount of P154,350.13.
- Petitioner Francisca Baluyot, chapter administrator was held accountable for
the cash shortage.
- Respondent Holganza, in his capacity as member of the board of directors of
the Bohol Chapter, filed a affidavit-complaint before the office of Ombudsman,
charging Petitioner of Malversation of Funds under Article217 of RPC. And
Administrative docket for Dishonesty was recommended by Graft Investigation
Officer 1 to respondent against the petitioner.
- Petitioner filed her counter-affidavit, sometime on March 1998, in her defense
Allegedly that public respondent had no jurisdiction over the controversy.
- Petitioner contends that the Ombudsman has no jurisdiction over the subject
matter of the controversy since the PNRC is allegedly a private voluntary
organization. The following circumstances, she insists are indicative of private
character of the organization: 1.) the PNRC does not receive any budgetary
support from the gov’t, and that all money given to it by the latter and its
instrumentalities become private funds of the organization; 2.) Fund’s for the
payment of personnel’s salaries and other emoluments come from yearly fund
campaigns, private contributions and rentals from its properties; and 3.) it is not
audited by the COA.
- Petitioner states that the PNRC falls under the power to discipline employees
accused of misconduct, malfeasance or immortality belongs to the PNRC
Secretary General by virtue of its by-laws. She threatens that” to classify the
PNRC as a gov’t-owned or controlled corporation would create a dangerous
precedent as it would lose its neutrality, independence and impartiality.

ISSUE:
Whether the Philippine National Red Cross is a government-owned and
controlled corporation.

HELD:
Yes. Philippine National Red Cross is a government-owned and
controlled corporation, with an original charter under Republic Act No. 95, as
amended. The test to determine whether a corporation is government-owned
or controlled, or private in nature is simple.