PSPCA v. COA

PSPCA v.
COA
G.R. No. 169752 September 25, 2007 Austria-Martinez, J.:
Article II – Section 1 Created by: Dara Louise Adrienne G. Lopez
Petitioner Respondents
Philippine Society for the Prevention of Cruelty to Commission on Audit,
Animals Dir. Rodulfo J. Ariesga (in his official capacity as
Director of the Commission on Audit)
Ms. Merle M. Valentin and Ms. Susan Guardian
(in their official capacities as Team Leader and
Team Member, respectively, of the Audit Team of
the Commission on Audit)
Summary
 Amendments introduced by C.A. No. 148 made it clear that the petitioner was a private corporation
and not an agency of the government.
 A reading of petitioner’s charter shows that it is not subject to control or supervision by any agency
of the State, unlike government-owned and -controlled corporations.
 Employees of the petitioner are registered and covered by the Social Security System at the
latter’s initiative, and not through the Government Service Insurance System which should be the
case if the employees are considered government employees.
 Certain juridical entity is impressed with public interest does not, by that circumstance alone, make
the entity a public corporation, inasmuch as a corporation may be private though its charter
contains provisions of a public character incorporated solely for the public good.
Facts
The Philippine Society for the Prevention of Cruelty to Animals (PSPCA) was incorporated as a
juridical entity over one hundred years ago by virtue of Act No. 1285, enacted on January 19, 1905,
by the Philippine Commission to enforce laws relating to cruelty inflicted upon animals or the
protection of animals in the Philippine Islands, and generally, to do and perform all things which may
tend in any way to alleviate the suffering of animals and promote their welfare.
At the time of the enactment of Act No. 1285, the original Corporation Law, Act No. 1459, was not yet
in existence. For the purpose of enhancing its powers in promoting animal welfare and enforcing laws
for the protection of animals, the petitioner was initially imbued under its charter with the power to
apprehend violators of animal welfare laws.
Subsequently, however, the power to make arrests as well as the privilege to retain a portion of the
fines collected for violation of animal-related laws were recalled by virtue of Commonwealth Act (C.A.)
No. 148. Immediately thereafter, then President Manuel L. Quezon issued Executive Order (E.O.) No.
63 dated November 12, 1936 which
On December 1, 2003, an audit team from respondent Commission on Audit (COA) visited the office
of the petitioner to conduct an audit survey pursuant to COA Office Order No. 2003-051 dated
November 18, 2003 addressed to the petitioner. The petitioner demurred on the ground that it was a
private entity not under the jurisdiction of COA.
Issue Ruling
1. Whether or not PSPCA is a government agency that may be subject to audit by No
respondent COA.
Ruling
1. No, the “charter test” cannot be applied.
As it stands today, “charter test” provides: The test to determine whether a corporation is
government owned or controlled, or private in nature is simple. Is it created by its own charter for
the exercise of a public function, or by incorporation under the general corporation law? Those
with special charters are government corporations subject to its provisions, and its employees are
under the jurisdiction of the Civil Service Commission, and are compulsory members of the
Government Service Insurance System.
In this case, the following points supports Petitioner’s contention:
(1) Amendments introduced by C.A. No. 148 made it clear that the petitioner was a private
corporation and not an agency of the government. This was evident in Executive Order No.
63, issued by then President of the Philippines Manuel L. Quezon, declaring that the revocation
of the powers of the petitioner to appoint agents with powers of arrest “corrected a serious defect”
in one of the laws existing in the statute books.
(2) A reading of petitioner’s charter shows that it is not subject to control or supervision
by any agency of the State, unlike government-owned and -controlled corporations. No
government representative sits on the board of trustees of the petitioner. Like all private
corporations, the successors of its members are determined voluntarily and solely by the petitioner
in accordance with its bylaws, and may exercise those powers generally accorded to private
corporations, such as the powers to hold property, to sue and be sued, to use a common seal,
and so forth. It may adopt by-laws for its internal operations: the petitioner shall be managed or
operated by its officers “in accordance with its by-laws in force.”
(3) Employees of the petitioner are registered and covered by the Social Security System
at the latter’s initiative, and not through the Government Service Insurance System which
should be the case if the employees are considered government employees.
(4) Certain juridical entity is impressed with public interest does not, by that circumstance
alone, make the entity a public corporation, inasmuch as a corporation may be private
though its charter contains provisions of a public character incorporated solely for the
public good. This class of corporations may be considered quasi-public corporations, which are
private corporations that render public service, supply public wants, or pursue other eleemosynary
objectives. While purposely organized for the gain or benefit of its members, they are required by
law to discharge functions for the public benefit. Examples of these corporations are utility,
railroad, warehouse, telegraph, telephone, water supply corporations and transportation
companies. It must be stressed that a quasi-public corporation is a species of private corporations,
but the qualifying factor is the type of service the former renders to the public: if it performs a
public service, then it becomes a quasi-public corporation.
Dispositive Portion
WHEREFORE, the petition is GRANTED. Petitioner is DECLARED a private domestic corporation
subject to the jurisdiction of the Securities and Exchange Commission. The respondents are
ENJOINED from investigating, examining and auditing the petitioner’s fiscal and financial affairs.
SO ORDERED.
Separate Opinions
Puno (C.J.), Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Corona, Carpio-Morales,
Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr., Nachura and Reyes, JJ., concur.
Petition granted.

PSPCA v. COA

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