Beruflich Dokumente
Kultur Dokumente
DECISION
EN BANC
BOY SCOUTS OF THE PHILIPPINES, G.R. No. 177131 LEONARDO-DE CASTRO, J.:
Petitioner,
Present:
CORONA, C.J., The jurisdiction of the Commission on Audit (COA) over the Boy
CARPIO,
Scouts of the Philippines (BSP) is the subject matter of this
CARPIO MORALES,
VELASCO, JR., controversy that reached us via petition for prohibition[1] filed by the
NACHURA, BSP under Rule 65 of the 1997 Rules of Court. In this petition, the
LEONARDO-DE CASTRO,
- versus - BSP seeks that the COA be prohibited from implementing its June
BRION,
PERALTA, 18, 2002 Decision,[2] its February 21, 2007 Resolution,[3] as well
BERSAMIN,
DEL CASTILLO, as all other issuances arising therefrom, and that all of the foregoing
ABAD, be rendered null and void. [4]
VILLARAMA, JR.,
PEREZ,
MENDOZA, and Antecedent Facts and
SERENO, JJ. Background of the Case
COMMISSION ON AUDIT,
Respondent. This case arose when the COA issued Resolution No. 99-
Promulgated: 011[5] on August 19, 1999 (the COA Resolution), with the
subject Defining the Commissions policy with respect to the audit of
the Boy Scouts of the Philippines. In its whereas clauses, the COA
June 7, 2011
Resolution stated that the BSP was created as a public corporation
under Commonwealth Act No. 111, as amended by Presidential
x------------------------------------------ Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the
--------x
Philippines v. National Labor Relations Commission,[6] the Supreme
Court ruled that the BSP, as constituted under its charter, was a
government-controlled corporation within the meaning of Article
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provides is that the Government or any of its refers to any principal subdivision or unit of any
subdivisions, branches, offices, agencies and department (Section 2[8], Administrative Code).[10]
instrumentalities can from time to time donate and
contribute funds to the BSP.
Subsequently, requests for reconsideration of the COA
xxxx
Resolution were also made separately by Robert P. Valdellon,
Also the BSP respectfully believes that the BSP is not Regional Scout Director, Western Visayas Region, Iloilo City and
appropriately regarded as a government Eugenio F. Capreso, Council Scout Executive of Calbayog City.[11]
instrumentality under the 1987 Administrative Code
as stated in the COA resolution. As defined by
Section 2(10) of the said code, instrumentality refers In a letter[12] dated July 3, 2000, Director Crescencio S.
to any agency of the National Government, not
integrated within the department framework, vested Sunico, Corporate Audit Officer (CAO) I of the COA, furnished the
with special functions or jurisdiction by law, endowed BSP with a copy of the Memorandum[13]dated June 20, 2000 of
with some if not all corporate powers, administering
special funds, and enjoying operational autonomy, Atty. Santos M. Alquizalas, the COA General Counsel. In said
usually through a charter. Memorandum, the COA General Counsel opined that Republic Act
The BSP is not an entity administering special funds. No. 7278 did not supersede the Courts ruling in Boy Scouts of the
It is not even included in the DECS National Budget. Philippines v. National Labor Relations Commission, even though
xxx
said law eliminated the substantial government participation in the
It may be argued also that the BSP is not an agency selection of members of the National Executive Board of the
of the Government. The 1987 Administrative Code,
merely referred the BSP as an attached agency of the BSP. The Memorandum further provides:
DECS as distinguished from an actual line agency of
departments that are included in the National Analysis of the said case disclosed that the substantial
Budget. The BSP believes that an attached agency is government participation is only one (1) of the three
different from an agency. Agency, as defined in (3) grounds relied upon by the Court in the resolution
Section 2(4) of the Administrative Code, is defined of the case. Other considerations include the
as any of the various units of the Government character of the BSPs purposes and functions which
including a department, bureau, office, has a public aspect and the statutory designation of
instrumentality, government-owned or controlled the BSP as a public corporation. These grounds have
corporation or local government or distinct unit not been deleted by R.A. No. 7278. On the contrary,
therein. these were strengthened as evidenced by the
amendment made relative to BSPs purposes stated in
Under the above definition, the BSP is neither a unit Section 3 of R.A. No. 7278.
of the Government; a department which refers to an
executive department as created by law (Section On the argument that BSP is not appropriately
2[7] of the Administrative Code); nor a bureau which regarded as a government instrumentality and agency
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preliminary survey of its organizational structure, operations and National Labor Relations Commission is inapplicable for purposes of
accounting system/records shall be conducted on November 21 to determining the audit jurisdiction of the COA as the issue therein
22, 2000.[16] was the jurisdiction of the National Labor Relations Commission over
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a case for illegal dismissal and unfair labor practice filed by certain
BSP employees.[18] The BSP maintains that the provisions of Republic Act No.
7278 suggest that governance of BSP has come to be
While the BSP concedes that its functions do relate to those overwhelmingly a private affair or nature, with government
that the government might otherwise completely assume on its own, participation restricted to the seat of the Secretary of Education,
it avers that this alone was not determinative of the COAs audit Culture and Sports.[21] It cites Philippine Airlines Inc. v. Commission
jurisdiction over it. The BSP further avers that the Court in Boy on Audit[22] wherein the Court declared that, PAL, having ceased to
Scouts of the Philippines v. National Labor Relations be a government-owned or controlled corporation is no longer under
Commission simply stated x x x that in respect of functions, the BSP the audit jurisdiction of the COA.[23] Claiming that the amendments
is akin to a public corporation but this was not synonymous to introduced by Republic Act No. 7278 constituted a supervening event
holding that the BSP is a government corporation or entity subject that changed the BSPs corporate identity in the same way that the
to audit by the COA. [19]
governments privatization program changed PALs, the BSP makes
the case that the government no longer has control over it; thus,
The BSP contends that Republic Act No. 7278 introduced the COA cannot use the Boy Scouts of the Philippines v. National
crucial amendments to its charter; hence, the findings of the Court Labor Relations Commission as its basis for the exercise of its
in Boy Scouts of the Philippines v. National Labor Relations jurisdiction and the issuance of COA Resolution No. 99-011.[24] The
Commission are no longer valid as the government has ceased to BSP further claims as follows:
play a controlling influence in it. The BSP claims that the
It is not far-fetched, in fact, to concede that BSPs
pronouncements of the Court therein must be taken only within the
funds and assets are private in character. Unlike ordinary
context of that case; that the Court had categorically found that its public corporations, such as provinces, cities, and
municipalities, or government-owned and controlled
assets were acquired from the Boy Scouts of America and not from
corporations, such as Land Bank of the Philippines and
the Philippine government, and that its operations are financed the Development Bank of the Philippines, the assets and
chiefly from membership dues of the Boy Scouts themselves as well funds of BSP are not derived from any government grant.
For its operations, BSP is not dependent in any way on
as from property rentals; and that the BSP may correctly be any government appropriation; as a matter of fact, it has
characterized as non-governmental, and hence, beyond the audit not even been included in any appropriations for the
government. To be sure, COA has not alleged, in its
jurisdiction of the COA. It further claims that the designation by the Resolution No. 99-011 or in the Memorandum of its
Court of the BSP as a government agency or instrumentality is General Counsel, that BSP received, receives or
continues to receive assets and funds from any agency
mere obiter dictum.[20]
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of the government. The foregoing simply point to the 3. Republic Act No. 7278 did not change the
private nature of the funds and assets of petitioner BSP. character of the BSP as a government-owned or
controlled corporation and government
xxxx instrumentality.[27]
2. Being a government agency, the funds and The COA concludes that being a government agency, the
property owned or held in trust by the BSP are
subject to the audit authority of respondent funds and property owned or held by the BSP are subject to the audit
Commission on Audit pursuant to Section 2 (1), authority of the COA pursuant to Section 2(1), Article IX (D) of the
Article IX-D of the 1987 Constitution.
1987 Constitution.
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The fact that no budgetary appropriations have anymore because the aspect of government ownership and control
been released to the VFP does not prove that it is a has been removed by Republic Act No. 7278; and concluding that
private corporation. The DBM indeed did not see it fit to
propose budgetary appropriations to the VFP, having the funds and property that it either owned or held in trust are not
itself believed that the VFP is a private corporation. If the public funds and are not subject to the COAs audit jurisdiction.
DBM, however, is mistaken as to its conclusion regarding
the nature of VFP's incorporation, its previous assertions
will not prevent future budgetary appropriations to the Thereafter, considering the BSPs claim that it is a private
VFP. The erroneous application of the law by public
officers does not bar a subsequent correct application of corporation, this Court, in a Resolution[34] dated July 20, 2010,
the law.[31] (Citations omitted.) required the parties to file, within a period of twenty (20) days from
receipt of said Resolution, their respective comments on the issue of
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Finally, the BSP states that the presumption of changes in the BSP organizational structure. Pertinent provisions
constitutionality of a legislative enactment prevails absent any clear are quoted below:
showing of its repugnancy to the Constitution. [51]
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Section II. Section 5 of the said Act is also whole board at a meeting called for this purpose, may
amended to read as follows: authorize and cause to be executed mortgages and
liens upon the property of the corporation.
carry into effect the provisions of this Act and promote Board, the members of which shall be Filipino citizens
the purposes of said corporation: Provided, That said of good moral character. The Board shall be
corporation shall have no power to issue certificates composed of the following:
of stock or to declare or pay dividends, its objectives
and purposes being solely of benevolent character and
not for pecuniary profit of its members. "(a) One (1) charter member of the Boy Scouts
of the Philippines who shall be elected by the
members of the National Council at its meeting called
"Sec. 3. The purpose of this corporation for this purpose;
shall be to promote through organization and
cooperation with other agencies, the ability of
boys to do useful things for themselves and "(b) The regional chairmen of the scout regions
others, to train them in scoutcraft, and to who shall be elected by the representatives of all the
inculcate in them patriotism, civic local scout councils of the region during its meeting
consciousness and responsibility, courage, self- called for this purpose: Provided, That a candidate for
reliance, discipline and kindred virtues, and regional chairman need not be the chairman of a local
moral values, using the method which are in scout council;
common use by boy scouts."
shows that it was created in order to implement a State policy Chapter 8 Attached Agencies
declared in Article II, Section 13 of the Constitution, which reads:
SEC. 20. Attached Agencies. The following
agencies are hereby attached to the Department:
ARTICLE II - DECLARATION OF PRINCIPLES AND
STATE POLICIES xxxx
Section 13. The State recognizes the vital role (12) Boy Scouts of the Philippines;
of the youth in nation-building and shall promote and
protect their physical, moral, spiritual, intellectual, (13) Girl Scouts of the Philippines.
and social well-being. It shall inculcate in the youth
patriotism and nationalism, and encourage their
involvement in public and civic affairs.
The administrative relationship of an attached agency to the
department is defined in the Administrative Code of 1987 as follows:
BOOK IV
Evidently, the BSP, which was created by a special law to
serve a public purpose in pursuit of a constitutional mandate, comes THE EXECUTIVE BRANCH
within the class of public corporations defined by paragraph 2, Article
Chapter 7 ADMINISTRATIVE
44 of the Civil Code and governed by the law which creates it, RELATIONSHIP
pursuant to Article 45 of the same Code.
SEC. 38. Definition of Administrative
Relationship. Unless otherwise expressly stated in the
The BSPs Classification Code or in other laws defining the special relationships
Under the Administrative of particular agencies, administrative relationships
Code of 1987 shall be categorized and defined as follows:
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xxxx
The scope and coverage of Section 16, Article XII of the a corporate agency or instrumentality of the government intended
Constitution can be seen from the aforementioned declaration of to serve a public interest or purpose, which should not be measured
state policies and goals which pertains to national on the basis of economic viability, but according to the public interest
economy and patrimony and the interests of the people in or purpose it serves as envisioned by paragraph (2), of Article 44
Section 16, Article XII deals with the formation, The BSP is a Public
organization, or regulation of private corporations,[52] which Corporation Not Subject to
the Test of Government
should be done through a general law enacted by Congress, provides Ownership or Control and
for an exception, that is: if the corporation is government owned or Economic Viability
Section 16 of the 1987 Constitution was explained in Feliciano v. instrumentality with juridical personality, which does not fall within
Commission on Audit,[53] in the following manner: the constitutional prohibition in Article XII, Section 16,
notwithstanding the amendments to its charter. Not all corporations,
The Constitution emphatically prohibits the
creation of private corporations except by a general which are not government owned or controlled, are ipso facto to be
law applicable to all citizens. The purpose of this considered private corporations as there exists another distinct class
constitutional provision is to ban private
corporations created by special charters, which of corporations or chartered institutions which are otherwise known
historically gave certain individuals, families or as public corporations. These corporations are treated by law as
groups special privileges denied to other agencies or instrumentalities of the government which are not
citizens.[54] (Emphasis added.)
subject to the tests 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.
It may be gleaned from the above discussion that Article XII,
Section 16 bans the creation of private corporations by
Classification of
special law. The said constitutional provision should not be Corporations Under Section
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The dissenting opinion of Associate Justice Antonio T. Carpio, citing While the BSP may be seen to be a mixed
a line of cases, insists that the Constitution recognizes only two type of entity, combining aspects of both public
and private entities, we believe that considering the
classes of corporations: private corporations under a general law,
character of its purposes and its functions, the
and government-owned or controlled corporations created statutory designation of the BSP as "a public
by special charters. corporation" and the substantial participation of the
Government in the selection of members of the
National Executive Board of the BSP, the BSP, as
We strongly disagree. Section 16, Article XII should not be presently constituted under its charter, is a
construed so as to prohibit Congress from creating public government-controlled corporation within the
meaning of Article IX (B) (2) (1) of the Constitution.
corporations. In fact, Congress has enacted numerous laws creating
public corporations or government agencies or instrumentalities
vested with corporate powers. Moreover, Section 16, Article XII, We are fortified in this conclusion when we
note that the Administrative Code of 1987 designates
which relates to National Economy and Patrimony, could not have the BSP as one of the attached agencies of the
tied the hands of Congress in creating public corporations to serve Department of Education, Culture and Sports
any of the constitutional policies or objectives. ("DECS"). An "agency of the Government" is defined
as referring to any of the various units of the
In his dissent, Justice Carpio contends that Government including a department, bureau, office,
this ponente introduces a totally different species of corporation, instrumentality, government-owned or -controlled
corporation, or local government or distinct unit
which is neither a private corporation nor a government owned or
therein. "Government instrumentality" is in turn
controlled corporation and, in so doing, is missing the fact that the defined in the 1987 Administrative Code in the
BSP, which was created as a non-stock, non-profit corporation, can following manner:
The same Code describes a "chartered Sec. 2. General Terms Defined. Unless the
institution" in the following terms: specific words of the text, or the context as a whole,
or a particular statute, shall require a different
meaning:
Chartered institution - refers to
xxxx
any agency organized or operating
under a special charter, and vested (10) "Instrumentality" refers to any agency
by law with functions relating to specific of the National Government, not integrated within the
constitutional policies or objectives. department framework, vested with special functions
This term includes the state universities or jurisdiction by law, endowed with some if not all
and colleges, and the monetary corporate powers, administering special funds,
authority of the State. and enjoying operational autonomy, usually
through a charter. This term includes regulatory
agencies, chartered institutions and government-
owned or controlled corporations.
We believe that the BSP is appropriately
regarded as "a government instrumentality" under the
xxxx
1987 Administrative Code.
(12) "Chartered institution" refers to any
agency organized or operating under a special
It thus appears that the BSP may be charter, and vested by law with functions relating to
regarded as both a "government controlled specific constitutional policies or objectives. This
corporation with an original charter" and as an term includes the state universities and colleges and
"instrumentality" of the Government within the the monetary authority of the State.
meaning of Article IX (B) (2) (1) of the
(13) "Government-owned or controlled
Constitution. x x x.[55] (Emphases supplied.)
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
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MR. MONSOD. Economic viability normally is MR. OPLE. I am obliged to repeat what I said
determined by cost-benefit ratio that takes into earlier in moving for this particular amendment jointly
consideration all benefits, including economic external with Commissioner Foz. During the past three
as well as internal benefits. These are what they call decades, there had been a proliferation of government
externalities in economics, so that these are not corporations, very few of which have succeeded, and
strictly financial criteria. Economic viability involves many of which are now earmarked by the Presidential
what we call economic returns or benefits of the Reorganization Commission for liquidation because
country that are not quantifiable in financial terms. x they failed the economic test. x x x.
x x.
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MS. QUESADA. So, is the Commissioner saying MR. MONSOD. Madam President, x x x. There
then that the Filipinos will benefit more if these are two types of government corporations those
government-controlled corporations were given to that are involved in performing governmental
private hands, and that there will be more goods and functions, like garbage disposal, Manila waterworks,
services that will be affordable and within the reach of and so on; and those government corporations that
the ordinary citizens? are involved in business functions. As we said
earlier, there are two criteria that should be
followed for corporations that want to go into
MR. OPLE. Yes. There is nothing here, business. First is for government corporations to
Madam President, that will prevent the first prove that they can be efficient in the areas of
formation of a government corporation in their proper functions. This is one of the problems now
accordance with a special charter given by because they go into all kinds of activities but are not
Congress. However, we are raising the standard even efficient in their proper functions. Secondly,
a little bit so that, in the future, corporations they should not go into activities that the private
established by the government will meet the sector can do better.
test of the common good but within that
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Therefore, even though the amended BSP charter did away When questions of constitutional significance
are raised, the Court can exercise its power of judicial
with most of the governmental presence in the BSP Board, this was
review only if the following requisites are present: (1)
done to more strongly promote the BSPs objectives, which were not the existence of an actual and appropriate case;
(2) the existence of personal and substantial
supported under Presidential Decree No. 460. The BSP objectives,
interest on the part of the party raising the
as pointed out earlier, are consistent with the public purpose of the constitutional question; (3) recourse to judicial
promotion of the well-being of the youth, the future leaders of the review is made at the earliest opportunity; and
(4) the constitutional question is the lis mota of
country. The amendments were not done with the view of changing the case.[61] (Emphasis added.)
the character of the BSP into a privatized corporation. The BSP
remains an agency attached to a department of the government, the
Thus, when it comes to the exercise of the power of judicial review,
DECS, and it was not at all stripped of its public character.
the constitutional issue should be the very lis mota, or threshold
issue, of the case, and that it should be raised by either of the
The ownership and control test is likewise irrelevant for a public
parties. These requirements would be ignored under the
corporation like the BSP. To reiterate, the relationship of the BSP,
dissents rather overreaching view of how this case should have been
an attached agency, to the government, through the DECS, is
decided. True, it was the Court that asked the parties to comment,
defined in the Revised Administrative Code of 1987. The BSP meets
but the Court cannot be the one to raise a constitutional issue. Thus,
the minimum statutory requirement of an attached government
the Court chooses to once more exhibit restraint in the exercise of
agency as the DECS Secretary sits at the BSP Board ex officio, thus
its power to pass upon the validity of a law.
25 | P a g e
xxxx the audit jurisdiction of COA, clearly set forth under the Constitution,
which pertinently provides:
HON. AMATONG: Mr. Chairman, in connection with
that.
SO ORDERED.
WE CONCUR:
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RENATO C. CORONA
Chief Justice
A. ABAD MARTIN S. VILLARAMA, JR.
ustice Associate Justice
issent of J. Carpio
TUGAL PEREZ JOSE CATRAL MENDOZA
ustice Associate Justice
[1]
With prayer for preliminary injunction and/or temporary
restraining order.
[2]
Rollo, pp. 35-38; COA Decision No. 2002-107.
I join the dissent of J. Carpio [3]
Id. at 39-41; COA Decision No. 2007-008.
MARIA LOURDES P. A. SERENO [4]
Id. at 29.
Associate Justice [5]
Id. at 42-43.
[6]
G.R. No. 80767, April 22, 1991, 196 SCRA 176.
[7]
Rollo, p. 42.
[8]
Id. at 42-43.
CERTIFICATION [9]
Id. at 44-46.
[10]
Id. at 44-46.
[11]
Id. at 8.
[12]
Id. at 47.
[13]
Id. at 48-50.
Pursuant to Section 13, Article VIII of the Constitution, I certify that [14]
Id. at 49-50.
the conclusions in the above Resolution had been reached in [15]
Id. at 47.
consultation before the case was assigned to the writer of the opinion [16]
Id. at 51.
of the Court. [17]
Id. at 9.
[18]
Id. at 11.
[19]
Id. at 13.
[20]
Id. at 15-16.
[21]
Id. at 18.
[22]
314 Phil. 896 (1995).
[23]
Id at 903.
[24]
Rollo, pp. 19-20.
[25]
Id. at 21-22.
29 | P a g e
[26]
Id. at 61-82. [61]
Hon. Luis Mario M. General v. Hon. Alejandro S. Urro, G.R. No.
[27]
Id. at 67. 191560, March 29, 2011, citing Integrated Bar of the
[28]
Id. at 70-71. Philippines v. Zamora, 392 Phil. 618, 632 (2000).
[29]
Id. at 72-73. [62]
Committee on Government Enterprises, February 13, 1991, p.
[30]
G.R. No. 155027, February 28, 2006, 483 SCRA 426. 16.
[31]
Id. at 553-556. [63]
Id. at 37-39.
[32]
Rollo, p. 76.
[33]
Id. at 86-104.
[34]
Id. at 129-130.
[64]
1987 Constitution, Article IX (D).
[35]
Id. at 143-159.
[36]
G.R. No. 44007, March 20, 1991, 195 SCRA 444.
[37]
Rollo, pp. 147-148.
[38]
Id. at 149.
[39]
Id. at 152.
[40]
G.R. No. 169752, September 25, 2007, 534 SCRA 112.
[41]
Id. at 132.
[42]
The BSPs Comment, filed on December 3, 2010, has yet to be
incorporated in the rollo.
[43]
Id. at 2.
[44]
Id. at 3.
[45]
Id. at 4.
[46]
Id. at 6.
[47]
Id. at 7.
[48]
Id. at 8.
[49]
Id.
[50]
Id. at 9.
[51]
Id. at 13, citing 16 Am Jur 2d 645 and 647.
[52]
Record of the 1986 Constitutional Commission, Vol. 3, August
13, 1986, p. 260.
[53]
464 Phil. 439 (2004).
[54]
Id. at 454, citing Bernas, The 1987 Constitution of the Republic
of the Philippines: A Commentary 1181 (2003).
[55]
Boy Scouts of the Philippines v. National Labor Relations
Commission, supra note 6 at 186-187.
[56]
Record of the 1986 Constitutional Commission, Vol. 3, August
22, 1986, pp. 623-626.
[57]
Record of the Senate, Monday, November 5, 1990, p. 1533.
[58]
Committee on Government Enterprises, February 13, 1991, pp.
8-11.
[59]
Id. at 5-8.
[60]
Id. at 35-37.