Boy Scouts of The Philippines v. COA
Boy Scouts of The Philippines v. COA
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BOY SCOUTS OF THE PHILIPPINES, petitioner, vs.
COMMISSION ON AUDIT, respondent.
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* EN BANC.
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LEONARDO-DE CASTRO, J.:
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„It is the position of the BSP, with all due respect, that it is not subject to
the CommissionÊs 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 BSPÊs 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;
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8 Id., at pp. 42-43.
9 Id., at pp. 44-46.
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17 Id., at p. 9.
18 Id., at p. 11.
19 Id., at p. 13.
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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.27
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27 Id., at p. 67.
28 Id., at pp. 70-71.
29 Id., at pp. 72-73.
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„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.
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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.‰31 (Citations omitted.)
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32 Rollo, p. 76.
33 Id., at pp. 86-104.
34 Id., at pp. 129-130.
35 Id., at pp. 143-159.
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43 Id., at p. 2.
44 Id., at p. 3.
45 Id., at p. 4.
46 Id., at p. 6.
47 Id., at p. 7.
48 Id., at p. 8.
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49 Id.
50 Id., at p. 9.
51 Id., at p. 13, citing 16 Am Jur 2d 645 and 647.
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wherein the twelve (12) regular members and the one (1) charter
member were elected.
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„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.‰
„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.
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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.‰
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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:
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(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.)
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(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.‰
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Boy Scouts of the Philippines vs. Commission on Audit
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pines 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 shouldnÊt it be, this rhetorical
question, shouldnÊt it be better for this organization to seek
a mandate from, letÊs 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 thatÊs a
rhetorical question, they may or they may not answer, ano. I donÊt
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 donÊt 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, donÊt take that as an objection, IÊm not objecting. IÊm
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.
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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 donÊt
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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, thatÊs very well taken so I will
proceed with other issues, Mr. Chairman. x x x.60 (Emphases
added.)
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The nature of the funds of the BSP and the COAÊs audit
jurisdiction were likewise brought up in said congressional
deliberations, to wit:
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DISSENTING OPINION
CARPIO, J.:
I dissent.
The Boy Scouts of the Philippines (BSP) is neither a
government-owned or controlled corporation nor a
government instrumentality subject to the Commission on
AuditÊs (COA) jurisdiction. The BSP is a private, non-stock,
and non-profit corporation beyond the COAÊs audit
jurisdiction.
I.
COAÊs Audit Jurisdiction
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Boy Scouts of the Philippines vs. Commission on Audit
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II.
History of the BSP
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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‰
III.
The ruling in BSP v. NLRC
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IV.
Republic Act No. 7278 reduced the number of
Cabinet secretaries in the BSP governing body.
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V.
The BSP is not a GOCC.
Control test
1.
In Feliciano v. Commission on Audit,9 the Court
declared that the determining factor of COAÊs audit
jurisdiction is government ownership or control of the
corporation. Citing Philippine Veterans Bank Employees
Union-NUBE v. Philippine Veterans Bank,10 the Court held
in Feliciano that the criterion of ownership and
control is more important than the issue of original
charter, thus:
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15 Id.
16 Supra note 9.
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19 Section 5, RA 7278.
20 G.R. No. 139554, 21 July 2006, 496 SCRA 13.
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25 In Feliciano, supra note 9, where the Court held that the Local Water
Districts are government-owned or controlled corporations, the seed capital
assets of the Local Water Districts, such as waterworks and sewerage facilities,
were public property which were managed, operated by or under the control of
the city, municipality or province before the assets were transferred to the
Local Water Districts. The Local Water Districts also receive subsidies and
loans from the Local Water Utilities Administration. There is no private
capital invested in the Local Water Districts. The capital assets and
operating funds of the Local Water Districts all come from the government,
either through transfer of assets, loans, subsidies or the income from such
assets or funds.
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29 Id., at p. 132.
30 Feliciano v. Commission on Audit, supra note 9.
31 Id.
32 Id.
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„in the interest of the common good and subject to the test of
economic viability.‰ The addition includes the ideas that they
must show capacity to function efficiently in business and
that they should not go into activities which the private
sector can do better. Moreover, economic viability is more
than financial viability but also includes capability to make
profit and generate benefits not quantifiable in financial
terms.‰35 (Emphasis supplied)
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35 Id., at pp. 639-641.
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VI.
Neither is the BSP a government instrumentality.
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Boy Scouts of the Philippines vs. Commission on Audit
VII.
The BSP is a private, non-stock and non-profit
corporation performing public functions.
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44 http://scout.org/en/about_scouting/educational_methods/an_
educational_movement_for_young_pe ople (accessed 7 June 2011)
45 See http://scout.org/en/about_scouting/facts_figures/fact_sheets
[Fact sheet - Scouting Is.pdf] (accessed 7 June 2011).
46 http://scout.org/en/about_scouting/educational_methods/an_
educational_movement_for_young_people (accessed 7 June 2011) See also
Boy Scouts of the Phil. v. Araos, 102 Phil. 1080 (1958).
47 530 U.S. 640, 120 S.Ct. 2446, U.S.N.J., 2000.
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VIII.
Constitutionality of BSP charter, as amended
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53 65 Phil. 56, 88 (1935).
54 68 Phil. 320, 326 (1939).
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3,58 5,59
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6,60
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7,61
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Petition dismissed.
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