Funa v.

MECO on the belief that the MECO, being under the "operational
GR No. 193462 | February 4, 2014 supervision" of DTI, is a GOCC and thus subject to the audit
Petitioner: Dennis Funa jurisdiction of the COA.
Respondents: Manila Economic and Cultural Office, and the • Assistant Commissioner Naranjo revealed through a memorandum
Commission on Audit that the MECO was "not among the agencies audited by any of the
three Clusters of the Corporate Government Sector. Funa took said
DOCTRINE: memorandum as an admission that the COA had never audited and
GOCCs are "stock or non-stock" corporations "vested with functions relating examined the accounts of the MECO, and then filed a petition for
to public needs" that are "owned by the Government directly or through its mandamus.
instrumentalities." By definition, three attributes thus make an entity a GOCC: • Funa claims that by failing to audit the accounts of the MECO, the
first, its organization as stock or non-stock corporation; second, the public COA is neglecting its duty under the Constitution to audit the
character of its function; and third, government ownership over the same. accounts of an otherwise bona fide GOCC or government
instrumentality. He believes that MECO is a GOCC without an
FACTS: original charter or, at least, a government instrumentality, the funds
• After the Chinese Civil War, China had two governments: the of which partake the nature of public funds.
communist People’s Republic of China which controls the mainland • According to Funa, MECO possesses all the essential characteristics
territories and the nationalist Republic of China which controls of a GOCC and an instrumentality under the Administrative Code: it
Taiwan. Both PROC and ROC adhered to the One China Policy is a non-stock corporation vested with governmental functions
which says that there is only one legitimate government in China, but relating to public needs; it is controlled by the government thru a
differed in their interpretation as to who that government is. board of directors appointed by the President of the Philippines; and
• The ROC used to enjoy diplomatic recognition from a majority of the while not integrated within the executive departmental framework, it
world’s states, partly due to being a founding member of the UN. is nonetheless under the operational and policy supervision of DTI.
However, the number of states partial to the PROC’s version of the • MECO, on the other hand, argues that even when they perform
One China policy gradually increased. Since then, almost all of the public functions, it is not owned or controlled by the government and
states terminated their official relations with ROC in favor of its funds are private funds. The President does not appoint its board
establishing diplomatic relations with the PROC, Philippines being of directors. The "desire letter" that the President transmits is merely
one of those countries. recommendatory and not binding on the corporation. The
• The Philippines formally ended its official diplomatic relations with the government merely has policy supervision over it wherein the
government in Taiwan when the country and the PROC expressed government’s oversight is limited only to ensuring that the
mutual recognition thru the Joint Communiqué. corporation’s activities are in tune with the country’s commitments
• The Philippines’ commitment to the One China policy of the PROC under the One China policy. The day-to-day operations of the
did not preclude the country from keeping unofficial relations with corporation remain to be controlled by its board of directors.
Taiwan on a "people-to-people" basis. However, maintaining ties with
Taiwan that is permissible by the terms of the Joint Communiqué RELEVANT PROVISION:
required the Philippines and Taiwan to course any such relations thru Section 2(1) of Article IX-D of the Constitution
offices outside of the official or governmental organs. Said The COA was vested with the "power, authority and duty" to "examine, audit
relationship was facilitated by the offices of the Taipei Economic and and settle" the "accounts" of the following entities:
Cultural Office and MECO, which was organized as a non-stock and 1. The government, or any of its subdivisions, agencies and instrumentalities;
non-profit corporation 2. GOCCs with original charters;
• At present, it is the MECO that oversees the rights and interests of 3. GOCCs without original charters;
(OFWs) in Taiwan; promotes the Philippines as a tourist and 4. Constitutional bodies, commissions and offices that have been granted
investment destination for the Taiwanese; and facilitates the travel of fiscal autonomy under the Constitution; and
Filipinos and Taiwanese to and from the Philippines and Taiwan. 5. Non-governmental entities receiving subsidy or equity, directly or
• In 2010, Funa sent a letter to the COA requesting for a "copy of the indirectly, from or through the government, which are required by law or the
latest financial and audit report" of the MECO invoking his granting institution to submit to the COA for audit as a condition of subsidy or
"constitutional right to information on matters of public concern” and equity.
 there is otherwise "substantial participation of the government in the
selection" of the corporation’s governing board.
ISSUE:
1. WON MECO is a GOCC, which makes it subject to the audit MECO is uniquely situated as compared with other private
jurisdiction of the COA - NO corporations. From its over-reaching corporate objectives, its special
duty and authority to exercise certain consular functions, up to the
RULING + RATIO: oversight by the executive department over its operations—all the
1. NO. The Court grants the petition in part. MECO is a non- while maintaining its legal status as a non-governmental entity,
governmental entity. However, the accounts of MECO pertaining to MECO is, for all intents and purposes, sui generis.
the "verification fees" it collects on behalf of the DOLE as well as the
fees it was authorized to collect under EO No. 15 are subject to the However, despite its non-governmental character, MECO handles
audit jurisdiction of the COA. Such fees pertain to the government government funds in the form of the "verification fees" it collects on
and should be audited by the COA. behalf of the DOLE and the "consular fees" it collects under Section
2(6) of EO No. 15. Hence, under existing laws, the accounts of the
GOCC refers to any agency organized as a stock or non-stock MECO pertaining to its collection of such "verification fees" and
corporation, vested with functions relating to public needs whether "consular fees" should be audited by the COA.
governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either wholly, or DISPOSITION:
as in the case of stock corporations, to the extent of at least 51% of Petition is PARTIALLY GRANTED. MECO is hereby declared a non-
its capital stock. GOCCs, therefore, are "stock or non-stock" governmental entity. However, the accounts pertaining to: the verification
corporations "vested with functions relating to public needs" that are fees contemplated by Section 7 of Executive Order No. 1022, that the former
"owned by the Government directly or through its collects on behalf of the Department of Labor and Employment, and the fees
instrumentalities." By definition, three attributes thus make an entity a it was authorized to collect under Section 2(6) of Executive Order No. 15 are
GOCC: first, its organization as stock or non-stock subject to the audit jurisdiction of the COA.
corporation; second, the public character of its function; and third,
government ownership over the same.

MECO possesses the first and second attributes, but not the third.
First, records disclose that the MECO was incorporated as a non-
stock corporation under the Corporation Code. Second, to a certain
degree, the functions of the MECO can be said to partake of the
nature of governmental functions. Consistent with its corporate
purposes, MECO was "authorized" by the Philippine government to
perform certain "consular and other functions" relating to the
promotion, protection and facilitation of Philippine interests in
Taiwan. Third however, MECO maintains that matters relating to the
election of its directors and officers, as well as its membership, are
governed by the appropriate provisions of the said code, its articles
of incorporation and its by-laws. The by-laws of MECO stipulates that
its directors are elected by its members; its officers are elected by its
directors; and its members, other than the original incorporators, are
admitted by way of a unanimous board resolution.

In a non-stock corporation, the controlling interest of the government