Boy Scouts of the Philippines vs COA DIGEST

Boy Scouts of the Philippines vs. Commission on Audit G.R. No. 177131, June 7, 2011 FACTS: The Commission on Audit issued COA Resolution No. 99-011 in which the said resolution state that the BSP was created as a public corporation under Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines vs. National Labor Relations Commission, the Supreme Court ruled that the BSP, as constituted under its charter, was a “government-controlled corporation within the meaning of Article IX (B)(2)(1) of the Constitution; and that “the BSP is appropriately regarded as a government instrumentality under the 1987 Administrative Code.” The BSP sought reconsideration of the COA Resolution in a letter signed by the BSP National President Jejomar Binay. He claimed that RA 7278 eliminated the “substantial government participation” in the National Executive Board by removing: (i) the President of the Philippines and executive secretaries, with the exception of the Secretary of Education, as members thereof; and (ii) the appointment and confirmation power of the President of the Philippines, as Chief Scout, over the members of the said Board. The BSP further claimed that the 1987 Administrative Code itself, of which the BSP s. NLRC relied on for some terms, defines government-owned and controlled corporations as agencies organized as stock or non-stock corporations which the BSP, under its present charter, is not. And finally, they claim that the Government, like in other GOCCs, does not have funds invested in the BSP. The BSP is not an entity administering special funds. The BSP is neither a unit of the Government; a department which refers to an executive department as created by law; nor a bureau which refers to any principal subdivision or unit of any department. ISSUE: Whether the BSP falls under the COA’s audit jurisdiction. RULING: After considering the legislative history of the amended charter and the applicable laws and the arguments of both parties, the Court found that the BSP is a public corporation and its funds are subject to the COA’s audit jurisdiction. The BSP Charter created the BSP as a “public corporation” to serve the following public interest or purpose: xxx to promote through organization and cooperation with other agencies, the ability of boys to do useful things for themselves and others, to train them in scout craft, and to inculcate in them

patriotism, civic consciousness and responsibility, courage, self-reliance, discipline and kindred virtues, and moral values, using the method which are in common use by boy scouts. The purpose of the BSP as stated in its amended charter shows that it was created in order to implement a State policy declared in Article II, Section 13 of the Constitution. Evidently, the BSP, which was created by a special law to serve a public purpose in pursuit of a constitutional mandate, comes within the class of “public corporations” defined by paragraph 2, Article 44 of the Civil Code and governed by the law which creates it, pursuant to Article 45 of the same Code. The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens. The purpose of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to other citizens. The BSP is a public corporation or a government agency or instrumentality with juridical personality, which does not fall within the constitutional prohibition in Article XII, Section 16, notwithstanding the amendments to its charter. Not all corporations, which are not government owned or controlled, are ipso facto to be considered private corporations as there exist another distinct class of corporations or chartered institutions which are otherwise known as “public corporations.” These corporations are treated by law as agencies or instrumentalities of the government which are not subject to the test of ownership or control and economic viability but to different criteria relating to their public purposes/interests or constitutional policies and objectives and their administrative relationship to the government or any of its Departments or Offices. Since BSP, under its amended charter, continues to be a public corporation or a government instrumentality, the Court concludes that it is subject to the exercise by the COA of its audit jurisdiction in the manner consistent with the provisions of the BSP Charter.