EN
BANC
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BOY SCOUTS OF THE PHILIPPINES,
Petitioner,
- versus -
COMMISSION ON AUDIT,
Respondent.
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G.R. No. 177131
Present:
CORONA,
C.J.,
CARPIO,
CARPIO
MORALES,
VELASCO,
JR.,
NACHURA,
LEONARDO-DE
CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL
CASTILLO,
ABAD,
VILLARAMA,
JR.,
PEREZ,
MENDOZA,
and
SERENO,
JJ.
Promulgated:
June
7, 2011
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D E C I S I O N
LEONARDO-DE
CASTRO, J.:
The jurisdiction of the Commission on
Audit (COA) over the Boy Scouts of the Philippines (BSP) is the subject matter
of this controversy that reached us via
petition for prohibition
filed by the BSP under Rule 65 of the 1997 Rules of Court. In this petition, the BSP seeks that the COA
be prohibited from implementing its June 18, 2002 Decision,
its February 21, 2007 Resolution, as
well as all other issuances arising therefrom, and that all of the foregoing be
rendered null and void.
Antecedent Facts and Background of the
Case
This case arose when the COA issued Resolution No. 99-011
on August 19, 1999 (“the COA Resolution”), with the subject “Defining the Commission’s policy with
respect to the audit of the Boy Scouts of the Philippines.” In its whereas clauses, the COA Resolution
stated 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 v.
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 COA Resolution also cited its
constitutional mandate under Section 2(1), Article IX (D). Finally, the COA Resolution reads:
NOW THEREFORE, in consideration of the foregoing premises,
the COMMISSION PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE, to conduct an annual financial audit of the
Boy Scouts of the Philippines in accordance with generally accepted auditing
standards, and express an opinion on whether the financial statements which
include the Balance Sheet, the Income Statement and the Statement of Cash Flows
present fairly its financial position and results of operations.
x x x x
BE IT RESOLVED FURTHERMORE, that for purposes of audit
supervision,
the Boy Scouts of the
Philippines shall be classified among the government corporations belonging to
the Educational, Social, Scientific, Civic and Research Sector under the
Corporate Audit Office I, to be audited, similar to the subsidiary
corporations, by employing the team audit approach.
(Emphases supplied.)
The BSP sought reconsideration of the COA Resolution
in a letter
dated November 26, 1999 signed by the BSP National President Jejomar C. Binay,
who is now the Vice President of the Republic, wherein he wrote:
It is the position of the BSP, with all due respect, that it
is not subject to the Commission’s jurisdiction on the following grounds:
1.
We reckon that the ruling in the case of Boy Scouts of
the Philippines vs. National Labor Relations Commission, et al. (G.R. No.
80767) classifying the BSP as a government-controlled corporation is anchored
on the “substantial Government participation” in the National Executive Board
of the BSP. It is to be noted that the case was decided when the BSP Charter is
defined by Commonwealth Act No. 111 as amended by Presidential Decree 460.
However, may we humbly refer you to Republic Act No. 7278
which amended the BSP’s charter after the cited case was decided. The most
salient of all amendments in RA No. 7278 is the alteration of the composition
of the National Executive Board of the BSP.
The said RA virtually 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 believes that the cited case has been superseded by RA
7278. Thereby weakening the case’s conclusion that the BSP is a
government-controlled corporation (sic).
The 1987 Administrative Code itself, of which the BSP vs. 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.
Also, the Government, like in other GOCCs, does not have funds
invested in the BSP. What RA 7278 only provides is that the Government or any
of its subdivisions, branches, offices, agencies and instrumentalities can from
time to time donate and contribute funds to the BSP.
x x x x
Also the BSP respectfully believes that the BSP is not
“appropriately regarded as a government instrumentality under the 1987
Administrative Code” as stated in the COA resolution. As defined by Section
2(10) of the said code, instrumentality refers to “any agency of the National
Government, not integrated within the department framework, vested with special
functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually
through a charter.”
The BSP is not an entity administering special funds. It is
not even included in the DECS National Budget. x x x
It may be argued also that the BSP is not an “agency” of the Government.
The 1987 Administrative Code, merely referred the BSP as an “attached agency”
of the DECS as distinguished from an actual line agency of departments that are
included in the National Budget. The BSP believes that an “attached agency” is
different from an “agency.” Agency, as defined in Section 2(4) of the
Administrative Code, is defined as any of the various units of the Government
including a department, bureau, office, instrumentality, government-owned or
controlled corporation or local government or distinct unit therein.
Under the above definition, the BSP is neither a unit of the
Government; a department which refers to an executive department as created by
law (Section 2[7] of the Administrative Code); nor a bureau which refers to any
principal subdivision or unit of any department (Section 2[8], Administrative
Code).
Subsequently, requests for reconsideration of the COA
Resolution were also made separately by Robert P. Valdellon, Regional Scout Director,
Western Visayas Region, Iloilo City and Eugenio F. Capreso, Council Scout
Executive of Calbayog City.
In a letter
dated July 3, 2000, Director Crescencio S. Sunico, Corporate Audit Officer
(CAO) I of the COA, furnished the BSP with a copy of the Memorandum
dated June 20, 2000 of Atty. Santos M. Alquizalas, the COA General
Counsel. In said Memorandum, the COA
General Counsel opined that Republic Act No. 7278 did not supersede the Court’s
ruling in Boy Scouts of the Philippines
v. National Labor Relations Commission, even though said law eliminated the
substantial government participation in the selection of members of the
National Executive Board of the BSP. The
Memorandum further provides:
Analysis of the said case disclosed that the substantial
government participation is only one (1) of the three (3) grounds relied upon
by the Court in the resolution of the case. Other considerations include the
character of the BSP’s purposes and functions which has a public aspect and
the statutory designation of the BSP as a “public corporation”. These
grounds have not been deleted by R.A. No. 7278. On the contrary, these were
strengthened as evidenced by the amendment made relative to BSP’s purposes
stated in Section 3 of R.A. No. 7278.
On the argument that BSP is not appropriately regarded as “a
government instrumentality” and “agency” of the government, such has already
been answered and clarified. The Supreme Court has elucidated this matter in
the BSP case when it declared that BSP is regarded as, both a
“government-controlled corporation with an original charter” and as an
“instrumentality” of the Government. Likewise, it is not disputed that the
Administrative Code of 1987 designated the BSP as one of the attached agencies
of DECS. Being an attached agency, however, it does not change its nature as a
government-controlled corporation with original charter and, necessarily,
subject to COA audit jurisdiction. Besides, Section 2(1), Article IX-D of the
Constitution provides that COA shall have the power, authority, and duty to
examine, audit and settle all accounts pertaining to the revenue and receipts
of, and expenditures or uses of funds and property, owned or held in trust by,
or pertaining to, the Government, or any of its subdivisions, agencies or instrumentalities,
including government-owned or controlled corporations with original charters.
Based on the Memorandum of the COA General Counsel,
Director Sunico wrote:
In view of the points clarified by said Memorandum upholding
COA Resolution No. 99-011, we have to comply with the provisions of the latter,
among which is to conduct an annual financial audit of the Boy Scouts of the
Philippines.
In a letter dated November 20, 2000 signed by
Director Amorsonia B. Escarda, CAO I, the COA informed the BSP that a
preliminary survey of its organizational structure, operations and accounting
system/records shall be conducted on November 21 to 22, 2000.
Upon the BSP’s request, the audit was deferred for thirty
(30) days. The BSP then filed a Petition for Review with Prayer for Preliminary
Injunction and/or Temporary Restraining Order before the COA. This was denied
by the COA in its questioned Decision, which held that the BSP is under its
audit jurisdiction. The BSP moved for
reconsideration but this was likewise denied under its questioned Resolution.
This led to the filing by the BSP of this petition
for prohibition with preliminary injunction and temporary restraining order
against the COA.
The Issue
As stated earlier, the sole issue to be resolved in
this case is whether the BSP falls under the COA’s audit jurisdiction.
The
Parties’ Respective Arguments
The BSP contends that Boy Scouts of the Philippines v. National Labor Relations Commission
is inapplicable for purposes of determining the audit jurisdiction of the COA
as the issue therein was the jurisdiction of the National Labor Relations
Commission over a case for illegal dismissal and unfair labor practice filed by
certain BSP employees.
While the BSP concedes that its functions do relate
to those that the government might otherwise completely assume on its own, it
avers that this alone was not determinative of the COA’s audit jurisdiction
over it. The BSP further avers that the
Court in Boy Scouts of the Philippines v.
National Labor Relations Commission “simply stated x x x that in respect
of functions, the BSP is akin to a
public corporation” but this was not synonymous to holding that the BSP is a
government corporation or entity subject to audit by the COA.
The BSP contends that Republic Act No. 7278 introduced crucial amendments
to its charter; hence, the findings of the Court in Boy Scouts of the Philippines v. National Labor Relations Commission are no longer valid as the government
has ceased to play a controlling influence in it. The BSP claims that the
pronouncements of the Court therein must be taken only within the context of
that case; that the Court had categorically found that its assets were acquired
from the Boy Scouts of America and not from the Philippine government, and that
its operations are financed chiefly from membership dues of the Boy Scouts
themselves as well as from property rentals; and that “the BSP may correctly be
characterized as non-governmental, and hence, beyond the audit jurisdiction of
the COA.” It further claims that the
designation by the Court of the BSP as a government agency or instrumentality
is mere obiter dictum.
The BSP maintains that the provisions of Republic Act
No. 7278 suggest that “governance of BSP has come to be overwhelmingly a
private affair or nature, with government participation restricted to the seat
of the Secretary of Education, Culture and Sports.” It cites Philippine
Airlines Inc. v. Commission on Audit
wherein the Court declared that, “PAL, having ceased to be a government-owned
or controlled corporation is no longer under the audit jurisdiction of the
COA.” Claiming that the amendments introduced by
Republic Act No. 7278 constituted a supervening event that changed the BSP’s
corporate identity in the same way that the government’s privatization program
changed PAL’s, the BSP makes the case that the government no longer has control
over it; thus, the COA cannot use the Boy
Scouts of the Philippines v. National Labor Relations Commission as its
basis for the exercise of its jurisdiction and the issuance of COA Resolution
No. 99-011. The BSP further claims as follows:
It is not
far-fetched, in fact, to concede that BSP’s funds and assets are private in
character. Unlike ordinary public corporations, such as provinces, cities, and
municipalities, or government-owned and controlled corporations, such as Land
Bank of the Philippines and the Development Bank of the Philippines, the assets
and funds of BSP are not derived from any government grant. For its operations,
BSP is not dependent in any way on any government appropriation; as a matter of
fact, it has not even been included in any appropriations for the government.
To be sure, COA has not alleged, in its Resolution No. 99-011 or in the
Memorandum of its General Counsel, that BSP received, receives or continues to
receive assets and funds from any agency of the government. The foregoing
simply point to the private nature of the funds and assets of petitioner BSP.
x x x x
As stated in
petitioner’s third argument, BSP’s assets and funds were never acquired from
the government. Its operations are not in any way financed by the government,
as BSP has never been included in any appropriations act for the government.
Neither has the government invested funds with BSP. BSP, has not been, at any
time, a user of government property or funds; nor have properties of the
government been held in trust by BSP. This is precisely the reason why, until
this time, the COA has not attempted to subject BSP to its audit jurisdiction.
x x x.
To summarize its other arguments, the BSP contends
that it is not a government-owned or controlled corporation; neither is it an
instrumentality, agency, or subdivision of the government.
In its Comment,
the COA argues as follows:
1.
The BSP
is a public corporation created under Commonwealth Act No. 111 dated October
31, 1936, and whose functions relate to the fostering of public virtues of citizenship
and patriotism and the general improvement of the moral spirit and fiber of the
youth. The manner of creation and the purpose for which the BSP was created
indubitably prove that it is a government agency.
2.
Being a
government agency, the funds and property owned or held in trust by the BSP are
subject to the audit authority of respondent Commission on Audit pursuant to
Section 2 (1), Article IX-D of the 1987 Constitution.
3.
Republic
Act No. 7278 did not change the character of the BSP as a government-owned or
controlled corporation and government instrumentality.
The COA maintains that the functions of the BSP that
include, among others, the teaching to the youth of patriotism, courage,
self-reliance, and kindred virtues, are undeniably sovereign functions
enshrined under the Constitution and discussed by the Court in Boy Scouts of the Philippines v. National
Labor Relations Commission. The COA
contends that any attempt to classify the BSP as a private corporation would be
incomprehensible since no less than the law which created it had designated it
as a public corporation and its statutory mandate embraces performance of
sovereign functions.
The COA claims that the only reason why the BSP
employees fell within the scope of the Civil Service Commission even before the
1987 Constitution was the fact that it was a government-owned or controlled
corporation; that as an attached agency of the Department of Education, Culture
and Sports (DECS), the BSP is an agency of the government; and that the BSP is
a chartered institution under Section 1(12) of the Revised Administrative Code
of 1987, embraced under the term government instrumentality.
The COA concludes that being a government agency, the
funds and property owned or held by the BSP are subject to the audit authority
of the COA pursuant to Section 2(1), Article IX (D) of the 1987 Constitution.
In support of its arguments, the COA cites The Veterans Federation of the Philippines
(VFP) v. Reyes,
wherein the Court held that among the reasons why the VFP is a public
corporation is that its charter, Republic Act No. 2640, designates it as
one. Furthermore, the COA quotes the
Court as saying in that case:
In several cases, we have dealt with the
issue of whether certain specific activities can be classified as sovereign
functions. These cases, which deal with activities not immediately apparent to
be sovereign functions, upheld the public sovereign nature of operations needed
either to promote social justice or to stimulate patriotic sentiments and love
of country.
x x x x
Petitioner claims that its funds are not
public funds because no budgetary appropriations or government funds have been
released to the VFP directly or indirectly from the DBM, and because VFP funds
come from membership dues and lease rentals earned from administering
government lands reserved for the VFP.
The fact that no budgetary appropriations
have been released to the VFP does not prove that it is a private corporation.
The DBM indeed did not see it fit to propose budgetary appropriations to the
VFP, having itself believed that the VFP is a private corporation. If the 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 VFP. The erroneous application of the law by public
officers does not bar a subsequent correct application of the law.
(Citations omitted.)
The COA points out that the government is not
precluded by law from extending financial support to the BSP and adding to its
funds, and that “as a government instrumentality which continues to perform a
vital function imbued with public interest and reflective of the government’s
policy to stimulate patriotic sentiments and love of country, the BSP’s funds
from whatever source are public funds, and can be used solely for public
purpose in pursuance of the provisions of Republic Act No. [7278].”
The COA claims that the fact that it has not yet audited
the BSP’s funds may not bar the subsequent exercise of its audit jurisdiction.
The BSP filed its Reply
on August 29, 2007 maintaining that its statutory designation as a “public
corporation” and the public character of its purpose and functions are not
determinative of the COA’s audit jurisdiction; reiterating its stand that Boy Scouts of the Philippines v. National
Labor Relations Commission is not applicable anymore because the aspect of
government ownership and control has been removed by Republic Act No. 7278; and
concluding that the funds and property that it either owned or held in trust
are not public funds and are not subject to the COA’s audit jurisdiction.
Thereafter, considering the BSP’s claim that it is a
private corporation, this Court, in a Resolution
dated July 20, 2010, required the parties to file, within a period of twenty
(20) days from receipt of said Resolution, their respective comments on the
issue of whether Commonwealth Act No. 111, as amended by Republic Act No. 7278,
is constitutional.
In compliance with the Court’s resolution, the
parties filed their respective Comments.
In its Comment
dated October 22, 2010, the COA argues that the constitutionality of
Commonwealth Act No. 111, as amended, is not determinative of the resolution of
the present controversy on the COA’s audit jurisdiction over petitioner, and in
fact, the controversy may be resolved on other grounds; thus, the requisites
before a judicial inquiry may be made, as set forth in Commissioner of Internal Revenue v. Court of Tax Appeals,
have not been fully met. Moreover, the COA maintains that behind every
law lies the presumption of constitutionality. The COA likewise argues that contrary to the
BSP’s position, repeal of a law by implication is not favored. Lastly, the COA claims that there was no
violation of Section 16, Article XII of the 1987 Constitution with the creation
or declaration of the BSP as a government corporation. Citing Philippine
Society for the Prevention of Cruelty to Animals v. Commission on Audit,
the COA further alleges:
The true
criterion, therefore, to determine whether a corporation is public or private
is found in the totality of the relation of the corporation to the State. If
the corporation is created by the State as the latter’s own agency or
instrumentality to help it in carrying out its governmental functions, then
that corporation is considered public; otherwise, it is private. x x x.
For its part, in its Comment filed on December 3, 2010, the BSP submits
that its charter, Commonwealth Act No. 111, as amended by Republic Act No.
7278, is constitutional as it does not violate Section 16, Article XII of the
Constitution. The BSP alleges that
“while [it] is not a public corporation within the purview of COA’s audit
jurisdiction, neither is it a private corporation created by special law
falling within the ambit of the constitutional prohibition x x x.” The BSP further alleges:
Petitioner’s purpose is embodied in Section 3 of C.A. No.
111, as amended by Section 1 of R.A. No. 7278, thus:
x x x x
A reading of the foregoing provision shows that petitioner
was created to advance the interest of the youth, specifically of young boys,
and to mold them into becoming good citizens. Ultimately, the creation of
petitioner redounds to the benefit, not only of those boys, but of the public
good or welfare. Hence, it can be said that petitioner’s purpose and functions
are more of a public rather than a private character. Petitioner caters to all
boys who wish to join the organization without any distinction. It does not
limit its membership to a particular class of boys. Petitioner’s members are
trained in scoutcraft and taught patriotism, civic consciousness and
responsibility, courage, self-reliance, discipline and kindred virtues, and
moral values, preparing them to become model citizens and outstanding leaders
of the country.
The BSP reiterates its stand that the public character
of its purpose and functions do not place it within the ambit of the audit
jurisdiction of the COA as it lacks the government ownership or control that
the Constitution requires before an entity may be subject of said jurisdiction. It avers that it merely stated in its Reply
that the withdrawal of government control is akin to privatization, but it does
not necessarily mean that petitioner is a private corporation. The BSP claims that it has a unique
characteristic which “neither classifies it as a purely public nor a purely
private corporation”;
that it is not a quasi-public corporation; and that it may belong to a
different class altogether.
The BSP claims that assuming arguendo that it is a private corporation, its creation is not
contrary to the purpose of Section 16, Article XII of the Constitution; and
that the evil sought to be avoided by said provision is inexistent in the
enactment of the BSP’s charter,
as, (i) it was not created for any pecuniary purpose; (ii) those who will
primarily benefit from its creation are not its officers but its entire
membership consisting of boys being trained in scoutcraft all over the country;
(iii) it caters to all boys who wish to join the organization without any
distinction; and (iv) it does not limit its membership to a particular class or
group of boys. Thus, the enactment of
its charter confers no special privilege to particular individuals, families,
or groups; nor does it bring about the danger of granting undue favors to
certain groups to the prejudice of others or of the interest of the country,
which are the evils sought to be prevented by the constitutional provision
involved.
Finally, the BSP states that the presumption of
constitutionality of a legislative enactment prevails absent any clear showing
of its repugnancy to the Constitution.
The Ruling
of the Court
After looking at the legislative history of its
amended charter and carefully studying the applicable laws and the arguments of
both parties, we find that the BSP is a public corporation and its funds are
subject to the COA’s audit jurisdiction.
The
BSP Charter (Commonwealth Act No. 111, approved on October 31, 1936), entitled
“An Act to Create a Public Corporation to
be Known as the Boy Scouts of the Philippines, and to Define its Powers and
Purposes” created the BSP as a “public corporation” to serve the following
public interest or purpose:
Sec. 3. The purpose of this
corporation shall be 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 scoutcraft, 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.
Presidential Decree No. 460, approved on May 17, 1974,
amended Commonwealth Act No. 111 and provided substantial changes in the BSP
organizational structure. Pertinent provisions are quoted below:
Section II. Section 5
of the said Act is also amended to read as follows:
The governing body of
the said corporation shall consist of a National Executive Board composed of
(a) the President of the Philippines or his representative; (b) the charter and
life members of the Boy Scouts of the Philippines; (c) the Chairman of the
Board of Trustees of the Philippine Scouting Foundation; (d) the Regional
Chairman of the Scout Regions of the Philippines; (e) the Secretary of
Education and Culture, the Secretary of Social Welfare, the Secretary of
National Defense, the Secretary of Labor, the Secretary of Finance, the
Secretary of Youth and Sports, and the Secretary of Local Government and
Community Development; (f) an equal number of individuals from the private
sector; (g) the National President of the Girl Scouts of the Philippines; (h)
one Scout of Senior age from each Scout Region to represent the boy membership;
and (i) three representatives of the cultural minorities. Except for the
Regional Chairman who shall be elected by the Regional Scout Councils during
their annual meetings, and the Scouts of their respective regions, all members
of the National Executive Board shall be either by appointment or cooption,
subject to ratification and confirmation by the Chief Scout, who shall be the
Head of State. Vacancies in the Executive Board shall be filled by a majority
vote of the remaining members, subject to ratification and confirmation by the
Chief Scout. The by-laws may prescribe the number of members of the National
Executive Board necessary to constitute a quorum of the board, which number may
be less than a majority of the whole number of the board. The National
Executive Board shall have power to make and to amend the by-laws, and, by a
two-thirds vote of the whole board at a meeting called for this purpose, may
authorize and cause to be executed mortgages and liens upon the property of the
corporation.
Subsequently, on March 24, 1992,
Republic Act No. 7278 further amended Commonwealth Act No. 111 “by
strengthening the volunteer and
democratic character” of the BSP and reducing government representation
in its governing body, as follows:
Section
1. Sections 2 and 3 of Commonwealth Act. No. 111, as amended, is hereby
amended to read as follows:
"Sec.
2. The said corporation shall have the powers of perpetual succession, to
sue and be sued; to enter into contracts; to acquire, own, lease, convey and
dispose of such real and personal estate, land grants, rights and choses in
action as shall be necessary for corporate purposes, and to accept and receive
funds, real and personal property by gift, devise, bequest or other means, to
conduct fund-raising activities; to adopt and use a seal, and the same to alter
and destroy; to have offices and conduct its business and affairs in
Metropolitan Manila and in the regions, provinces, cities, municipalities, and
barangays of the Philippines, to make and adopt by-laws, rules and regulations
not inconsistent with this Act and the laws of the Philippines, and generally
to do all such acts and things, including the establishment of regulations for
the election of associates and successors, as may be necessary to carry into
effect the provisions of this Act and promote the purposes of said corporation:
Provided, That said corporation shall have no power to issue certificates 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.
"Sec.
3. The purpose of this corporation
shall be 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 scoutcraft, 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."
Sec.
2. Section 4 of Commonwealth Act No. 111, as amended, is hereby repealed
and in lieu thereof, Section 4 shall read as follows:
"Sec. 4. The President
of the Philippines shall be the Chief Scout of the Boy Scouts of the
Philippines."
Sec.
3. Sections 5, 6, 7 and 8 of Commonwealth Act No. 111, as amended, are
hereby amended to read as follows:
"Sec.
5. The governing body of the said
corporation shall consist of a National Executive Board, the members of
which shall be Filipino citizens of good moral character. The Board shall be composed of the following:
"(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 for this purpose;
"(b) The
regional chairmen of the scout regions who shall be elected by the
representatives of all the local scout councils of the region during its
meeting called for this purpose: Provided, That a candidate for regional
chairman need not be the chairman of a local scout council;
"(c) The Secretary of Education, Culture and
Sports;
"(d) The National President of the
Girl Scouts of the Philippines;
"(e) One
(1) senior scout, each from Luzon, Visayas and Mindanao areas, to be elected by
the senior scout delegates of the local scout councils to the scout youth
forums in their respective areas, in its meeting called for this purpose, to
represent the boy scout membership;
"(f) Twelve
(12) regular members to be elected by the members of the National Council in
its meeting called for this purpose;
"(g) At
least ten (10) but not more than fifteen (15) additional members from the
private sector who shall be elected by the members of the National Executive
Board referred to in the immediately preceding paragraphs (a), (b), (c), (d),
(e) and (f) at the organizational meeting of the newly reconstituted National
Executive Board which shall be held immediately after the meeting of the
National Council wherein the twelve (12) regular members and the one (1)
charter member were elected.
x
x x x
"Sec.
8. Any donation or contribution which from time to time may be made to the
Boy Scouts of the Philippines by the Government or any of its subdivisions,
branches, offices, agencies or instrumentalities or by a foreign government or
by private, entities and individuals shall be expended by the National
Executive Board in pursuance of this Act.
The BSP as a Public Corporation under
Par. 2, Art. 2 of the Civil Code
There are three classes of juridical persons
under Article 44 of the Civil Code and the BSP, as presently constituted under
Republic Act No. 7278, falls under the
second classification. Article 44
reads:
Art. 44. The following are juridical
persons:
(1)
The State and its political subdivisions;
(2)
Other corporations, institutions and entities for public interest or
purpose created by law; their personality begins as soon as they have been
constituted according to law;
(3)
Corporations, partnerships and associations for private interest or purpose
to which the law grants a juridical personality, separate and distinct from
that of each shareholder, partner or member. (Emphases supplied.)
The BSP, which
is a corporation created for a public interest or purpose, is subject to the
law creating it under Article 45 of the Civil Code, which provides:
Art. 45. Juridical persons
mentioned in Nos. 1 and 2 of the preceding article are governed by the laws
creating or recognizing them.
Private
corporations are regulated by laws of general application on the subject.
Partnerships
and associations for private interest or purpose are governed by the provisions
of this Code concerning partnerships. (Emphasis and underscoring supplied.)
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, which reads:
ARTICLE II - DECLARATION
OF PRINCIPLES AND STATE POLICIES
Section 13. The State recognizes the
vital role of the youth in nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and encourage their
involvement in public and civic affairs.
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 BSP’s
Classification Under the Administrative Code of 1987
The
public, rather than private, character of the BSP is recognized by the fact
that, along with the Girl Scouts of the Philippines, it is classified as an attached agency of the DECS under
Executive Order No. 292, or the Administrative
Code of 1987, which states:
TITLE VI – EDUCATION, CULTURE AND
SPORTS
Chapter
8 – Attached Agencies
SEC.
20. Attached
Agencies. – The following agencies
are hereby attached to the Department:
x
x x x
(12)
Boy Scouts of the Philippines;
(13)
Girl Scouts of the Philippines.
The
administrative relationship of an attached agency to the department is defined in
the Administrative Code of 1987 as follows:
BOOK
IV
THE
EXECUTIVE BRANCH
Chapter 7 – ADMINISTRATIVE
RELATIONSHIP
SEC.
38. Definition of Administrative
Relationship. – Unless otherwise expressly stated in the Code or in other
laws defining the special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:
x
x x x
(3)
Attachment. – (a) This refers to the lateral
relationship between the department or its equivalent and the attached agency
or corporation for purposes of policy
and program coordination. The coordination may be accomplished by
having the department represented in the governing board of the attached agency
or corporation, either as chairman or as a member, with or without voting rights,
if this is permitted by the charter; having the attached corporation or
agency comply with a system of periodic reporting which shall reflect the
progress of programs and projects; and having the department or its equivalent
provide general policies through its representative in the board, which shall
serve as the framework for the internal policies of the attached corporation or
agency. (Emphasis ours.)
As
an attached agency, the BSP enjoys operational autonomy, as long as policy and
program coordination is achieved by having at
least one representative of government in its governing board, which in the
case of the BSP is the DECS Secretary.
In this sense, the BSP is not under government control or “supervision
and control.” Still this characteristic
does not make the attached chartered agency a private corporation covered by
the constitutional proscription in question.
Art.
XII, Sec. 16 of the Constitution refers to “private corporations” created by government
for proprietary or economic/business purposes
At the outset,
it should be noted that the provision of Section 16 in issue is found in Article XII of the Constitution,
entitled “National Economy and Patrimony.” Section 1 of Article XII is quoted as
follows:
SECTION
1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods
and services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged.
The State
shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino
enterprises against unfair foreign competition and trade practices.
In the
pursuit of these goals, all sectors of the economy and all regions of the
country shall be given optimum opportunity to develop. Private enterprises,
including corporations, cooperatives, and similar collective organizations,
shall be encouraged to broaden the base of their ownership.
The scope and
coverage of Section 16, Article XII of the Constitution can be seen from the
aforementioned declaration of state policies and goals which pertains to national economy and patrimony and the interests of the people in economic development.
Section 16,
Article XII deals with “the formation,
organization, or regulation of private corporations,”
which should be done through a general law enacted by Congress,
provides for an exception, that is: if the corporation is government owned or
controlled; its creation is in the interest of the common good; and it meets
the test of economic viability. The
rationale behind Article XII, Section 16 of the 1987 Constitution was explained
in Feliciano v. Commission on Audit,
in the following manner:
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.
(Emphasis added.)
It may be gleaned from the above
discussion that Article XII, Section 16 bans the creation of “private corporations” by special law. The said
constitutional provision should not be construed so as to prohibit the creation
of public corporations or a corporate agency or instrumentality of the
government intended to serve a public interest or purpose, which should not be measured
on the basis of economic viability, but according to the public interest or
purpose it serves as envisioned by paragraph
(2), of Article 44 of the Civil Code and the pertinent provisions of the Administrative Code of 1987.
The BSP is a Public Corporation Not
Subject to the Test of Government Ownership or Control and Economic Viability
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 exists 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
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.
Classification
of Corporations Under Section 16, Article XII of the Constitution on National
Economy and Patrimony
The
dissenting opinion of Associate Justice Antonio T. Carpio, citing a line of
cases, insists that the Constitution
recognizes only two classes of corporations: private corporations under a general
law, and government-owned or controlled
corporations created by special
charters.
We strongly disagree. Section 16, Article XII should not be
construed so as to prohibit Congress from creating public 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, which relates to National Economy and Patrimony, could not have
tied the hands of Congress in creating public corporations to serve any of the
constitutional policies or objectives.
In his dissent, Justice Carpio contends that this ponente introduces “a totally different
species of corporation, which is neither a private corporation nor a government
owned or controlled corporation” and, in so doing, is missing the fact that the
BSP, “which was created as a non-stock, non-profit corporation, can only be
either a private corporation or a government owned or controlled corporation.”
Note that in Boy Scouts of the Philippines v. National Labor Relations Commission, the
BSP, under its former charter, was regarded as both a government owned or controlled corporation with original
charter and a “public corporation.”
The said case pertinently stated:
While the BSP may be seen to be a
mixed type of entity, combining aspects of both public and private entities, we believe that considering the
character of its purposes and its functions, the statutory designation of the
BSP as "a public corporation"
and the substantial participation of
the Government in the selection of members of the National Executive Board of
the BSP, the BSP, as presently constituted under its charter, is a government-controlled corporation
within the meaning of Article IX (B) (2) (1) of the Constitution.
We are fortified in this conclusion when we
note that the Administrative Code of 1987 designates the BSP as one of the
attached agencies of the Department of Education, Culture and Sports
("DECS"). An "agency of the Government" is defined as
referring to any of the various units of the Government including a department,
bureau, office, instrumentality, government-owned or -controlled corporation,
or local government or distinct unit therein.
"Government instrumentality" is in turn defined in the 1987
Administrative Code in the following manner:
Instrumentality - refers to any agency of the
National Government, not integrated within the department framework, vested
with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering
special funds, and enjoying operational autonomy usually through a charter.
This term includes regulatory agencies, chartered institutions and
government-owned or controlled corporations.
The same
Code describes a "chartered institution" in the following terms:
Chartered
institution -
refers to any agency organized or
operating under a special charter, and vested by law with functions
relating to specific constitutional policies or objectives. This term includes
the state universities and colleges, and the monetary authority of the State.
We
believe that the BSP is appropriately regarded as "a government
instrumentality" under the 1987 Administrative Code.
It thus appears that the BSP may
be regarded as both a "government controlled corporation with an original
charter" and as an "instrumentality" of the Government
within the meaning of Article IX (B) (2) (1) of the Constitution. x x
x.
(Emphases supplied.)
The existence of public or
government corporate or juridical entities or chartered institutions by
legislative fiat distinct from private corporations and government owned or
controlled corporation is best exemplified by the 1987 Administrative Code
cited above, which we quote in part:
Sec. 2.
General Terms Defined. – Unless the specific words of the text,
or the context as a whole, or a particular statute, shall require a different
meaning:
x x x x
(10)
"Instrumentality" refers to
any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter. This
term includes regulatory agencies, chartered institutions and government-owned
or controlled corporations.
x
x x x
(12)
"Chartered institution"
refers to any agency organized or operating under a special charter, and vested
by law with functions relating to
specific constitutional policies or objectives. This term includes the
state universities and colleges and the monetary authority of the State.
(13)
"Government-owned or controlled
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 stock corporations, to the
extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled
corporations may be further categorized by the Department of the Budget, the
Civil Service Commission, and the Commission on Audit for purposes of the
exercise and discharge of their respective powers, functions and
responsibilities with respect to such corporations.
Assuming for the sake of argument that
the BSP ceases to be owned or controlled by the government because of reduction
of the number of representatives of the government in the BSP Board, it does
not follow that it also ceases to be a government instrumentality as it still
retains all the characteristics of the latter as an attached agency of the DECS
under the Administrative Code. Vesting
corporate powers to an attached agency or instrumentality of the government is
not constitutionally prohibited and is allowed by the above-mentioned
provisions of the Civil Code and the 1987 Administrative Code.
Economic Viability and Ownership and
Control Tests Inapplicable to Public Corporations
As presently
constituted, the BSP still remains an instrumentality
of the national government. It is a public corporation created by law for
a public purpose, attached to the DECS pursuant to its Charter and the
Administrative Code of 1987. It is not a
private corporation which is required to be owned or controlled by the
government and be economically viable to justify its existence under a special
law.
The dissent of
Justice Carpio also submits that by recognizing “a new class of public
corporation(s)” created by special charter that will not be subject to the test
of economic viability, the constitutional provision will be circumvented.
However, a review
of the Record of the 1986 Constitutional Convention reveals the intent of the
framers of the highest law of our land to distinguish between government corporations performing
governmental functions and corporations involved in business or proprietary
functions:
THE PRESIDENT. Commissioner Foz is
recognized.
MR. FOZ.
Madam President, I support the proposal to insert “ECONOMIC VIABILITY” as one
of the grounds for organizing government corporations. x x x.
MR. OPLE.
Madam President, the reason for this concern is really that when the government
creates a corporation, there is a sense in which this corporation becomes
exempt from the test of economic performance. We know what happened in the
past. If a government corporation loses, then it makes its claim upon the
taxpayers’ money through new equity infusions from the government and what is
always invoked is the common good. x x x
Therefore,
when we insert the phrase “ECONOMIC VIABILITY” together with the “common good,”
this becomes a restraint on future enthusiasts for state capitalism to excuse
themselves from the responsibility of meeting the market test so that they
become viable. x x x.
x x x x
THE
PRESIDENT. Commissioner Quesada is recognized.
MS.
QUESADA. Madam President, may we be clarified by the committee on what is meant
by economic viability?
THE
PRESIDENT. Please proceed.
MR.
MONSOD. Economic viability normally is determined by cost-benefit ratio that
takes into consideration all benefits, including economic external as well as
internal benefits. These are what they call externalities in economics, so that
these are not strictly financial criteria. Economic viability involves what we
call economic returns or benefits of the country that are not quantifiable in
financial terms. x x x.
x x x x
MS.
QUESADA. So, would this particular formulation now really limit the entry of
government corporations into activities engaged in by corporations?
MR.
MONSOD. Yes, because it is also
consistent with the economic philosophy that this Commission approved – that
there should be minimum government participation and intervention in the
economy.
MS.
QUESDA. Sometimes this Commission would just refer to Congress to provide the particular
requirements when the government would get into corporations. But this time
around, we specifically mentioned economic viability. x x x.
MR.
VILLEGAS. Commissioner Ople will restate the reason for his introducing that
amendment.
MR. OPLE.
I am obliged to repeat what I said earlier in moving for this particular
amendment jointly with Commissioner Foz. During the past three decades, there
had been a proliferation of government corporations, very few of which have
succeeded, and many of which are now earmarked by the Presidential
Reorganization Commission for liquidation because they failed the economic
test. x x x.
x x x x
MS.
QUESADA. But would not the Commissioner say that the reason why many of the
government-owned or controlled corporations failed to come up with the economic
test is due to the management of these corporations, and not the idea itself of
government corporations? It is a problem of efficiency and effectiveness of
management of these corporations which could be remedied, not by eliminating
government corporations or the idea of getting into state-owned corporations,
but improving management which our technocrats should be able to do, given the
training and the experience.
MR. OPLE.
That is part of the economic viability, Madam President.
MS.
QUESADA. So, is the Commissioner saying then that the Filipinos will benefit
more if these government-controlled corporations were given to private hands,
and that there will be more goods and services that will be affordable and
within the reach of the ordinary citizens?
MR. OPLE. Yes. There is nothing
here, Madam President, that will prevent the formation of a government
corporation in accordance with a special charter given by Congress. However, we
are raising the standard a little bit so that, in the future, corporations
established by the government will meet the test of the common good but within
that framework we should also build a certain standard of economic viability.
x x x x
THE
PRESIDENT. Commissioner Padilla is recognized.
MR.
PADILLA. This is an inquiry to the committee. With regard to corporations
created by a special charter for government-owned or controlled corporations,
will these be in the pioneer fields or in places where the private enterprise
does not or cannot enter? Or is this so general that these government
corporations can compete with private corporations organized under a general
law?
MR.
MONSOD. Madam President, x x x. There
are two types of government corporations – those that are involved in performing governmental functions,
like garbage disposal, Manila waterworks, and so on; and those government
corporations that are involved in
business functions. As we said earlier, there are two criteria that should be followed for corporations that want to go
into business. First is for government corporations to first prove that
they can be efficient in the areas of their proper functions. This is one of
the problems now because they go into all kinds of activities but are not even
efficient in their proper functions. Secondly,
they should not go into activities that the private sector can do better.
MR. PADILLA. There is no question
about corporations performing governmental functions or functions that are impressed
with public interest. But the question is with regard to matters that are
covered, perhaps not exhaustively, by private enterprise. It seems that under this
provision the only qualification is economic viability and common good, but
shall government, through government-controlled corporations, compete with
private enterprise?
MR.
MONSOD. No, Madam President. As we said, the government should not engage in
activities that private enterprise is engaged in and can do better. x x x.
(Emphases supplied.)
Thus, the test of economic viability
clearly does not apply to public corporations dealing with governmental
functions, to which category the BSP belongs.
The discussion above conveys the constitutional intent not to apply this
constitutional ban on the creation of public corporations where the economic
viability test would be irrelevant. The
said test would only apply if the corporation is engaged in some economic
activity or business function for the government.
It is
undisputed that the BSP performs functions that are impressed with public
interest. In fact, during the
consideration of the Senate Bill that eventually became Republic Act No. 7278,
which amended the BSP Charter, one of the bill’s sponsors, Senator Joey Lina,
described the BSP as follows:
Senator Lina. Yes, I can only think of two
organizations involving the masses of our youth, Mr. President, that should be
given this kind of a privilege – the Boy Scouts of the Philippines and the Girl
Scouts of the Philippines. Outside of these two groups, I do not think there
are other groups similarly situated.
The Boy Scouts of the Philippines
has a long history of providing value formation to our young, and considering
how huge the population of the young people is, at this point in time, and also
considering the importance of having an organization such as this that will
inculcate moral uprightness among the young people, and further considering
that the development of these young people at that tender age of seven to
sixteen is vital in the development of the country producing good citizens, I believe that we can make an
exception of the Boy Scouting movement of the Philippines from this general
prohibition against providing tax exemption and privileges.
Furthermore, this Court cannot agree with the dissenting
opinion which equates the changes introduced by Republic Act No. 7278 to the
BSP Charter as clear manifestation of the intent of Congress “to return the BSP
to the private sector.” It was not the
intent of Congress in enacting Republic Act No. 7278 to give up all interests
in this basic youth organization, which has been its partner in forming
responsible citizens for decades.
In fact, as may be seen in the deliberation of the House
Bills that eventually resulted to Republic Act No. 7278, Congress worked
closely with the BSP to rejuvenate the organization, to bring it back to its
former glory reached under its original charter, Commonwealth Act No. 111, and
to correct the perceived ills introduced by the amendments to its Charter under
Presidential Decree No. 460. The BSP
suffered from low morale and decrease in number because the Secretaries of the
different departments in government who were too busy to attend the meetings of
the BSP’s National Executive Board (“the Board”) sent representatives who, as
it turned out, changed from meeting to meeting.
Thus, the Scouting Councils established in the provinces and cities were
not in touch with what was happening on the national level, but they were left
to implement what was decided by the Board.
A portion of the legislators’ discussion is quoted below to
clearly show their intent:
HON.
DEL MAR. x x x I need not mention to you
the value and the tremendous good that the Boy Scout Movement has done not only
for the youth in particular but for the country in general. And that is why, if
we look around, our past and present national leaders, prominent men in the
various fields of endeavor, public servants in government offices, and civic
leaders in the communities all over the land, and not only in our country but
all over the world many if not most of them have at one time or another been
beneficiaries of the Scouting Movement. And so, it is along this line, Mr.
Chairman, that we would like to have the early approval of this measure if only
to pay back what we owe much to the Scouting Movement. Now, going to the meat
of the matter, Mr. Chairman, if I may just – the Scouting Movement was enacted
into law in October 31, 1936 under Commonwealth Act No. 111. x x x [W]e were
acknowledged as the third biggest scouting organization in the world x x x. And
to our mind, Mr. Chairman, this erratic growth and this decrease in membership
[number] is because of the bad policy measures that were enunciated with the
enactment or promulgation by the President before of Presidential Decree No.
460 which we feel is the culprit of the ills that is flagging the Boy Scout
Movement today. And so, this is specifically what we are attacking, Mr.
Chairman, the disenfranchisement of the National Council in the election of the
national board. x x x. And so, this is what we would like to be appraised of by
the officers of the Boy [Scouts] of the Philippines whom we are also confident,
have the best interest of the Boy Scout Movement at heart and it is in this
spirit, Mr. Chairman, that we see no impediment towards working together, the
Boy Scout of the Philippines officers working together with the House of
Representatives in coming out with a measure that will put back the vigor and
enthusiasm of the Boy Scout Movement. x x x. (Emphasis
ours.)
The following is
another excerpt from the discussion on the House version of the bill, in the
Committee on Government Enterprises:
HON.
AQUINO: x x x Well, obviously, the two bills as well as the previous laws that have
created the Boy Scouts of the Philippines did not provide for any direct
government support by way of appropriation from the national budget to support
the activities of this organization. The point here is, and at the same time
they have been subjected to a governmental intervention, which to their mind
has been inimical to the objectives and to the institution per se, that is why
they are seeking legislative fiat to restore back the original mandate that
they had under Commonwealth Act 111. Such having been the experience in the
hands of government, meaning, there has been negative interference on their
part and inasmuch as their mandate is coming from a legislative fiat, then
shouldn’t it be, this rhetorical question, shouldn’t it be better for this
organization to seek a mandate from, let’s say, the government the Corporation
Code of the Philippines and register with the SEC as non-profit non-stock
corporation so that government intervention could be very very minimal. Maybe that’s a rhetorical question, they may
or they may not answer, ano. I don’t know what would be the benefit of a
charter or a mandate being provided for by way of legislation versus a
registration with the SEC under the Corporation Code of the Philippines
inasmuch as they don’t get anything from the government anyway insofar as
direct funding. In fact, the only thing that they got from government was
intervention in their affairs. Maybe we
can solicit some commentary comments from the resource persons. Incidentally, don’t take that as an
objection, I’m not objecting. I’m all for the objectives of these two bills. It
just occurred to me that since you have had very bad experience in the hands of
government and you will always be open to such possible intervention even in
the future as long as you have a legislative mandate or your mandate or your
charter coming from legislative action.
x x x x
MR.
ESCUDERO: Mr. Chairman, there may be a
disadvantage if the Boy Scouts of the Philippines will be required to register
with the SEC. If we are registered with the SEC, there could be a danger of
proliferation of scout organization. Anybody can organize and then register
with the SEC. If there will be a proliferation of this, then the organization
will lose control of the entire organization. Another disadvantage, Mr.
Chairman, anybody can file a complaint in the SEC against the Boy Scouts of the
Philippines and the SEC may suspend the operation or freeze the assets of the
organization and hamper the operation of the organization. I don’t know, Mr.
Chairman, how you look at it but there could be a danger for anybody filing a
complaint against the organization in the SEC and the SEC might suspend the
registration permit of the organization and we will not be able to operate.
HON.
AQUINO: Well, that I think would be a problem that will not be exclusive to
corporations registered with the SEC because even if you are government
corporation, court action may be taken against you in other judicial bodies
because the SEC is simply another quasi-judicial body. But, I think, the first point would be very interesting, the first
point that you raised. In effect, what you are saying is that with the
legislative mandate creating your charter, in effect, you have been given some
sort of a franchise with this movement.
MR. ESCUDERO: Yes.
HON. AQUINO: Exclusive franchise of
that movement?
MR. ESCUDERO: Yes.
HON.
AQUINO: Well, that’s very well taken so I will proceed with other issues, Mr.
Chairman. x x x. (Emphases added.)
Therefore,
even though the amended BSP charter did away with most of the governmental
presence in the BSP Board, this was done to more strongly promote the BSP’s
objectives, which were not supported under Presidential Decree No. 460. The BSP objectives, as pointed out earlier,
are consistent with the public purpose
of the promotion of the well-being of the youth, the future leaders of the
country. The amendments were not done with the view of changing the
character of the BSP into a privatized corporation. The BSP remains an agency attached to a
department of the government, the DECS, and it was not at all stripped of its
public character.
The ownership and control test is
likewise irrelevant for a public corporation like the BSP. To reiterate, the relationship of the BSP, an
attached agency, to the government, through the DECS, is defined in the Revised
Administrative Code of 1987. The BSP
meets the minimum statutory requirement of an attached government agency as the
DECS Secretary sits at the BSP Board ex
officio, thus facilitating the policy and program coordination between the
BSP and the DECS.
Requisites for
Declaration of Unconstitutionality Not Met in this Case
The dissenting opinion of Justice
Carpio improperly raised the issue of unconstitutionality of certain provisions
of the BSP Charter. Even if the parties were asked to Comment on the validity
of the BSP charter by the Court,
this alone does not comply with the requisites for judicial review, which were
clearly set forth in a recent case:
When
questions of constitutional significance are raised, the Court can exercise its
power of judicial review only if the following requisites are present: (1) the existence of an actual and
appropriate case; (2) the existence of personal and substantial interest on the
part of the party raising the constitutional question; (3) recourse to judicial
review is made at the earliest opportunity; and (4) the constitutional question
is the lis mota of the case.
(Emphasis added.)
Thus, when it comes to the exercise of
the power of judicial review, 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 parties. These requirements would be ignored under the
dissent’s rather overreaching view of
how this case should have been decided.
True, it was the Court that asked the parties to comment, but the Court
cannot be the one to raise a constitutional issue. Thus, the Court chooses to
once more exhibit restraint in the exercise of its power to pass upon the
validity of a law.
Re: the COA’s Jurisdiction
Regarding the COA’s jurisdiction over
the BSP, Section 8 of its amended charter allows the BSP to receive
contributions or donations from the government.
Section 8 reads:
Section 8. Any donation or contribution which from
time to time may be made to the Boy Scouts of the Philippines by the Government
or any of its subdivisions, branches, offices, agencies or instrumentalities
shall be expended by the Executive Board
in pursuance of this Act.
The sources of funds to maintain the BSP
were identified before the House Committee on Government Enterprises while the
bill was being deliberated, and the pertinent portion of the discussion is
quoted below:
MR. ESCUDERO. Yes,
Mr. Chairman. The question is the sources of funds of the organization. First,
Mr. Chairman, the Boy Scouts of the Philippines do not receive annual allotment
from the government. The organization has to raise its own funds through fund
drives and fund campaigns or fund raising activities. Aside from this, we have
some revenue producing projects in the organization that gives us funds to
support the operation. x x x From time to time, Mr. Chairman, when we have
special activities we request for assistance or financial assistance from
government agencies, from private business and corporations, but this is only
during special activities that the Boy Scouts of the Philippines would conduct
during the year. Otherwise, we have to raise our own funds to support the
organization.
The nature of the funds of the BSP and
the COA’s audit jurisdiction were likewise brought up in said congressional
deliberations, to wit:
HON.
AQUINO: x x x Insofar as this organization being a government created
organization, in fact, a government corporation classified as such, are your
funds or your finances subjected to the COA audit?
MR.
ESCUDERO: Mr. Chairman, we are not. Our funds is not subjected. We don’t fall
under the jurisdiction of the COA.
HON.
AQUINO: All right, but before were you?
MR.
ESCUDERO: No, Mr. Chairman.
MR.
JESUS: May I? As historical backgrounder, Commonwealth Act 111 was written by
then Secretary Jorge Vargas and before and up to the middle of the Martial Law
years, the BSP was receiving a subsidy in the form of an annual… a one draw
from the Sweepstakes. And, this was the case also with the Girl Scouts at the
Anti-TB, but then this was… and the Boy
Scouts then because of this funding partly from government was being subjected
to audit in the contributions being made in the part of the Sweepstakes.
But this was removed later during the Martial Law years with the creation of
the Human Settlements Commission. So the situation right now is that the Boy
Scouts does not receive any funding from government, but then in the case of
the local councils and this legislative charter, so to speak, enables the local
councils even the national headquarters in view of the provisions in the
existing law to receive donations from the government or any of its
instrumentalities, which would be difficult if the Boy Scouts is registered as
a private corporation with the Securities and Exchange Commission. Government
bodies would be estopped from making donations to the Boy Scouts, which at
present is not the case because there is the Boy Scouts charter, this
Commonwealth Act 111 as amended by PD 463.
x x x x
HON.
AMATONG: Mr. Chairman, in connection with that.
THE
CHAIRMAN: Yeah, Gentleman from Zamboanga.
HON. AMATONG:
There is no auditing being made because there’s no money put in the
organization, but how about donated funds to this organization? What are the
remedies of the donors of how will they know how their money are being spent?
MR.
ESCUDERO: May I answer, Mr. Chairman?
THE
CHAIRMAN: Yes, gentleman.
MR.
ESCUDERO: The Boy Scouts of the Philippines has an external auditor and by the
charter we are required to submit a financial report at the end of each year to
the National Executive Board. So all the funds donated or otherwise is
accounted for at the end of the year by our external auditor. In this case the
SGV.
Historically, therefore, the BSP
had been subjected to government audit in so far as public funds had been
infused thereto. However, this practice
should not preclude the exercise of the audit jurisdiction of COA, clearly set
forth under the Constitution, which pertinently provides:
Section 2. (1) The Commission on
Audit shall have the power, authority, and duty to examine, audit, and settle
all accounts pertaining to the revenue and receipts of, and expenditures or
uses of funds and property, owned or held in trust by, or pertaining to, the
Government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned and controlled
corporations with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and offices that have been granted fiscal
autonomy under this Constitution; (b) autonomous state colleges and
universities; (c) other government-owned or controlled corporations with
original charters and their subsidiaries; and (d) such non-governmental
entities receiving subsidy or equity, directly or indirectly, from or through
the Government, which are required by law of the granting institution to submit
to such audit as a condition of subsidy or equity. x x x.
Since the BSP, under its amended
charter, continues to be a public corporation or a government instrumentality,
we come to the inevitable conclusion 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.
WHEREFORE,
premises considered, the instant petition for prohibition is DISMISSED.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE
CONCUR:
RENATO
C. CORONA
Chief Justice
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See
Dissenting Opinion
ANTONIO T. CARPIO
Associate Justice
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I
join J. Carpio’s dissent
CONCHITA CARPIO MORALES
Associate Justice
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PRESBITERO J. VELASCO, JR.
Associate Justice
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ANTONIO EDUARDO B. NACHURA
Associate Justice
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ARTURO
D. BRION
Associate Justice
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DIOSDADO
M. PERALTA
Associate Justice
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LUCAS
P. BERSAMIN
Associate Justice
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MARIANO
C. DEL CASTILLO
Associate Justice
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ROBERTO A. ABAD
Associate Justice
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MARTIN
S. VILLARAMA, JR.
Associate Justice
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I join the dissent of J. Carpio
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JOSE
PORTUGAL PEREZ
Associate Justice
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JOSE
CATRAL MENDOZA
Associate Justice
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I join the
dissent of J. Carpio
MARIA LOURDES P. A. SERENO
Associate Justice
C
E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Court.
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RENATO
C. CORONA
Chief Justice
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