For Articles 44 and 45 of the Civil Code of the Philippines: Boy Scouts of the Philippines (BSP) versus Commission on Audit (COA) General Register No. 177131, 07 June 2011
Boy Scouts of the Philippines (BSP) versus Commission on Audit (COA)
General Register No. 177131, 07 June 2011
Facts:On 19 August 1999, COA issued resolution no. 99-011 stating that the BSP, being a government-controlled corporation and a government instrumentality, is to be subjected to audit by COA. This is based on the following:Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; and the Supreme Court ruling on Boys Scouts of the Philippines v. National Labor Relations Commission (G.R. No. 80767, 22 April 1991, 196 SCRA 176).
BSP responded to COA in a letter dated 26 November 1999, written by BSP National President Jejomar C. Binay, concurrently the Vice-President of the Philippines, stated BSP's position:
(i) that BSP is not a government-controlled corporation since only the Secretary of Education sits on their National Executive Board
(ii) that BSP only get donations and funds from the government from time to time and not in a regular basis such as being part of the Department of Education budget.
(iii) BSP is an attached agency of DECS and not a line agency.
The letter of the BSP National President to COA was seconded by requests for reconsideration from Regional Scout Director of the BSP Western Visayas Region and Council Scout Executive of Calbayog City.
On 03 July 2000, Director Cresencio S. Sunico, Corporate Auditor Officer (CAO) I of the COA, furnished the BSP a copy of memorandum dated 20 June 2000, penned by Atty. Santos M. Alquizalas, COA General Counsel, responded to the letter of the BSP. It stated the following:
(i) RA 7278 did not supersede the Court's ruling in G.R. No. 807607. The elimination of the government's substantial participation is only one of the three grounds considered by Court's ruling - it also considered the character of BSP's purposes and functions which has a public aspect, and the statutory designation of the BSP as a public corporation. The three considerations were not deleted in RA 7278.
(ii) In the Supreme Court ruling in G.R. No. 807607, BSP was declared as a government-controlled corporation with an original charter and a government instrumentality.
(iii) In the Administrative Code of 1987, BSP was designated as one of the attached agencies of DECS.
(iv) In Section 2(1), Article IX-D of the Constitution, COA 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.
As such, Director Amorsonia B. Escarda, CAO I, wrote a letter dated 20 November 2000 to the BSP that COA will conduct a preliminary audit procedures of the BSP on 21-22 November 2000. BSP requested the COA to defer audit procedures which the COA denied. Then BSP sent a motion for reconsideration which was also denied.
BSP filed a petition for prohibition with preliminary injunction and temporary restraining order against the COA at the Supreme Court.
Issue
Is the BSP a public corporation subject to COA audit?
Held:
Yes, the BSP is a public corporation subject to COA Audit. This is upon review of pertinent laws mentioned by both parties:
(i) The BSP Charter (Commonwealth Act No. 111, approved on 31 October 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.
(ii) Presidential Decree No. 460, approved on 17 May 1974, amended Commonwealth Act No. 111 and provided substantial changes in the BSP organizational structure (Section II. Section 5 of the said Act)
(iii) Subsequently, on 24 March 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.
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 chooses 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. 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.
Based on the classification of juridical persons of the Civil Code of the Philippines, Article 44, the BSP is classified as public corporation (Article 44(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.
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:
Article 45 of the Civil Code states that 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.
Under Executive Order No. 292, the Administrative Code of 1987, under Title VI (Education, Culture and Sports), Chapter 8 (Attached Agencies), Section 20 (Attached Agencies), the BSP and the Girl Scouts of the Philippines are attached agencies of DECS.
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.
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.
Since funds for the BSP do come from the government, as stated in Section 8 of RA 7278, as well as establishing the juridical personality of the BSP as a public corporation, the Supreme Court ruled that the BSP is subject to COA audits.
General Register No. 177131, 07 June 2011
Facts:On 19 August 1999, COA issued resolution no. 99-011 stating that the BSP, being a government-controlled corporation and a government instrumentality, is to be subjected to audit by COA. This is based on the following:Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; and the Supreme Court ruling on Boys Scouts of the Philippines v. National Labor Relations Commission (G.R. No. 80767, 22 April 1991, 196 SCRA 176).
BSP responded to COA in a letter dated 26 November 1999, written by BSP National President Jejomar C. Binay, concurrently the Vice-President of the Philippines, stated BSP's position:
(i) that BSP is not a government-controlled corporation since only the Secretary of Education sits on their National Executive Board
(ii) that BSP only get donations and funds from the government from time to time and not in a regular basis such as being part of the Department of Education budget.
(iii) BSP is an attached agency of DECS and not a line agency.
The letter of the BSP National President to COA was seconded by requests for reconsideration from Regional Scout Director of the BSP Western Visayas Region and Council Scout Executive of Calbayog City.
On 03 July 2000, Director Cresencio S. Sunico, Corporate Auditor Officer (CAO) I of the COA, furnished the BSP a copy of memorandum dated 20 June 2000, penned by Atty. Santos M. Alquizalas, COA General Counsel, responded to the letter of the BSP. It stated the following:
(i) RA 7278 did not supersede the Court's ruling in G.R. No. 807607. The elimination of the government's substantial participation is only one of the three grounds considered by Court's ruling - it also considered the character of BSP's purposes and functions which has a public aspect, and the statutory designation of the BSP as a public corporation. The three considerations were not deleted in RA 7278.
(ii) In the Supreme Court ruling in G.R. No. 807607, BSP was declared as a government-controlled corporation with an original charter and a government instrumentality.
(iii) In the Administrative Code of 1987, BSP was designated as one of the attached agencies of DECS.
(iv) In Section 2(1), Article IX-D of the Constitution, COA 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.
As such, Director Amorsonia B. Escarda, CAO I, wrote a letter dated 20 November 2000 to the BSP that COA will conduct a preliminary audit procedures of the BSP on 21-22 November 2000. BSP requested the COA to defer audit procedures which the COA denied. Then BSP sent a motion for reconsideration which was also denied.
BSP filed a petition for prohibition with preliminary injunction and temporary restraining order against the COA at the Supreme Court.
Issue
Is the BSP a public corporation subject to COA audit?
Held:
Yes, the BSP is a public corporation subject to COA Audit. This is upon review of pertinent laws mentioned by both parties:
(i) The BSP Charter (Commonwealth Act No. 111, approved on 31 October 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.
(ii) Presidential Decree No. 460, approved on 17 May 1974, amended Commonwealth Act No. 111 and provided substantial changes in the BSP organizational structure (Section II. Section 5 of the said Act)
(iii) Subsequently, on 24 March 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.
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 chooses 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. 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.
Based on the classification of juridical persons of the Civil Code of the Philippines, Article 44, the BSP is classified as public corporation (Article 44(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.
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:
Article 45 of the Civil Code states that 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.
Under Executive Order No. 292, the Administrative Code of 1987, under Title VI (Education, Culture and Sports), Chapter 8 (Attached Agencies), Section 20 (Attached Agencies), the BSP and the Girl Scouts of the Philippines are attached agencies of DECS.
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.
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.
Since funds for the BSP do come from the government, as stated in Section 8 of RA 7278, as well as establishing the juridical personality of the BSP as a public corporation, the Supreme Court ruled that the BSP is subject to COA audits.
Comments
Post a Comment