[LOPEZ] G.R. No. 177131 June 7, 2011 the Boy Scouts themselves.

BSP is not even included in any

BOY SCOUNTS OF THE PHILIPPINES, petitioner vs. COMMISSION ON appropriations for the Government.
AUDIT, respondents e. BSP is neither a government-owned or controlled
Topic: Unit 1, General Principles corporation; nor is it an instrumentality, agency or
subdivision of the Government, as defined by the
Facts: Administrative Code.
1. COA issued a Resolution Defining the Comissions Policy with f. While it is not a public corporation within purview of COAs
respect to the audit of the Boy Scouts of the Philippines. audit jurisdiction, neither is it a private corporation created by
2. The COA Resolution stated that: special law. BSP has unique characteristics which neither
a. BSP was created as a public corporation under classifies it as a purely public nor a purely private
Commonwealth Act No. 111 corporation
b. In Boy Scouts of the Philippines v NLRC, the SC ruled that 7. COA, however, argues that:
BSP was a government-controlled corporation under Art. a. BSP is a public corporation created under Commonwealth
IX(B)(2)(1) of the Constitution Act No. 111, whose functions relate to the forstering of public
c. Under the 1987 Admin. Code, BSP is regarded as a virtues of citizenship and patriotism and the general
government instrumentality improvement of the moral spirit and fiber of youth. Such
3. Under the COA Resolution, the COA resolved to conduct an annual manner of creation and purpose prove that it is a
financial audit of the Boy Scouts of the Philippines. government agency.
4. BSP, through its National President Jejomar Binay, sought for b. Any attempt to classify BSP as a private corporation would
reconsideration of the COA Resolution but was denied (reasons for be incomprehensible since no less than the law which
denial are mostly the same as the COA arguments below). created it had designated it as a public corporation and its
5. Hence, this petition for prohibition by the BSP. statutory mandate embraces performance of sovereign
6. BSP argues that: functions.
a. BSP v NLRC is inapplicable in determining the audit c. Since BSP is an attached agency of the DECS, BSP is an
jurisdiction of COA as the issue there was the jurisdiction of agency of the government; and that BSP is a chartered
the NLRC; institution under the Administrative Code, embraced under
b. Although the functions of BSP relate to those that the the term instrumentality.
government can do on its own, this alone cannot be d. The government is not precluded from extending financial
determinative of COAs audit jurisdiction over it. BSP v. support to the BSP and adding to its funds, and that as a
NLRC just stated that it is akin to a public corporation but government instrumentality imbued with public interest, the
this is not synonymous to holding BSP as a government BSPs funds from whatever source are public funds, and can
corporation or entity subject to COAs audit; be used solely for public purpose.
c. R.A. 7278 introduced crucial amendments to its charter;
hence, BSP v. NLRC findings are no longer valid. BSP v. Issue: Whether or not the BSP falls under the COAs audit jurisdiction
NLRC classified BSP as a government-controlled
corporation based on the substantial government Held: Yes. BSP is a public corporation and its funds are subject to the COAs
participation in its Executive Board. But R.A. 7278 audit jurisdiction.
eliminated substantial government participation in the
National Executive Board by removing: (1) the President + BSP as a Public Corporation under the Civil Code
Exec. Secretaries, and (2) the appointment and confirmation 1. Under Art. 44 of the Civil Code, there are three classes of juridical
power of the President of the PH as Chief Scout. R.A. 7278 persons and BSP falls under the second classification: xxx (2) other
suggest that governance of BSP has come to be corporations, institutions and entities for public interest or purpose
overwhelmingly a private affair or nature. created by law.
d. The assets of the BSP were acquired from the Boy Scouts of 2. BSP, which is a corporation created for public interest, is subject to
America, and not from the PH Government, and that their the law creating it. The purpose of the BSP, as stated in the BSP
operations were financed chiefly from membership dues of
 Charter (Commonwealth Act No. 111) as amended by R.A. 7278,1 2. The BSP is a public corporation or a government
shows that it was created in order to inculcate in the youth agency/instrumentality, which does not fall within the constitutional
patriotism and nationalism, and encourage their involvement in prohibition in Art. XII, Sec. 16, notwithstanding the amendments to its
public and civic affairs.2 charter.
3. Hence, the BSP, which was created by a special law to serve a 3. Not all corporations which are not government-owned or controlled,
public purpose, comes within the class of public corporations are ipso facto to be considered private corporations as there exists
defined by par. 2, Art. 44 of the CC. another distinct class of corporations known as public corporations.
Such corporations are not subject to tests of ownership/control and
BSPs Classification under the Administrative Code of 1987 economic viability, but to different criteria relation to public purposes.
1. The public character of the BSP is recognized by the fact that, along
with the Girl Scouts of the Philippines, it is classified as an attached Economic Viability and Ownership and Control Tests are Inapplicable to
agency of the DECS under Sec. 20 of the Admin. Code of 1987. Public Corporations
2. As an attached agency, the BSP enjoys operational autonomy, as 1. According to the discussion of the 1986 Constitutional Convention,
long there is at least one government representative in its governing the framers intended not to apply the economic viability tests on the
board, which in this case is the DECS Secretary. In this sense, BSP creation of public corporations, as said test would only aply if the
is not under governmental control; but still, this characteristic does corporation is engaged in some economic activity or business
not make an attached chartered agency into a private corporation. function for the govenrmnet.
3. Assuking for the sake of argument that the BSP ceases to be 2. In this case, BSP performs functions that are impressed with public
owned/controlled by the government because of the reduction of interest, as proven by the discussion on the Senate Bill that
government representatives in its Board, it does not follow that it eventually became R.A. 7278, stating that that BSP will inculcate
ceases to be a government instrumentality as it still retains all the moral uprightness among the young people.
characteristics of an attached agency3 under the Administrative
Code. BSP is a Public Corporation Impressed with Public Interest
1. R.A. 7278 did not intend to return the BSP to the private sector (as
Discussion on Art. XII, Sec. 16 of the Constitution stated by Justice Carpio in his dissent in BSP v. NLRC). It was not
1. Art. XII, Sec. 16 of the Constitution deals with the regulation of the intention of the Congress to give up all interests in this basic
PRIVATE CORPORATIONS, which should be done through a youth organization. It intended to rejuvenate the organization, as
general law enacted by Congress. Such provision bans creation of BSP suffered from low morale as Secretaries in different
private corporations by special law. But such provision should not be departments who were too busy to attend meetings of the BSP
construed so as to prohibit the creation of PUBLIC Board sent respresentatives who changed from meeting to meeting.
CORPORATIONS intended to serve a public purpose. Congress has Hence, such Secretaries were not in touch with everything thats
enacted numerous laws creating government agencies vested with happening.
corporate powers.

1 (3) Attachment. (a) This refers to the lateral relationship

"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 between the department or its equivalent and the attached agency
themselves and others, to train them in scoutcraft, and to inculcate in them patriotism, or corporation for purposes of policy and program coordination. The
civic consciousness and responsibility, courage, self-reliance, discipline and kindred coordination may be accomplished by having the department
virtues, and moral values, using the method which are in common use by boy represented in the governing board of the attached agency or
scouts." corporation, either as chairman or as a member, with or without
2 Art. II, Sec. 13 of the Constitution voting rights, if this is permitted by the charter; having the attached
3 Book IV, Chapter 7, SEC. 38. Definition of Administrative Relationship.
corporation or agency comply with a system of periodic reporting
Unless otherwise expressly stated in the Code or in other laws defining the which shall reflect the progress of programs and projects; and having
special relationships of particular agencies, administrative relationships shall the department or its equivalent provide general policies through its
be categorized and defined as follows: representative in the board, which shall serve as the framework for
xxxx the internal policies of the attached corporation or agency.
(Emphasis ours.)
 2. 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 objectives.
3. The amendments were not done with the view of changing BSP into
a privatized corporation, but remains to be an agency attached to the
DECS.

Re: COAs jurisdiction to audit BSP

1. Section 8 of its amended charter4 allows the BSP to receive
contributions or donations from the government.
2. 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 5.

3. Since the BSP, under its amended charter, continues to be a

public corporation or a government instrumentality, 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, petition for prohibition is DISMISSED.

4 Section 8. Any donation or contribution which from time to time may be made to the government-owned and controlled corporations with original charters, and on a post-
Boy Scouts of the Philippines by the Government or any of its subdivisions, branches, audit basis: (a) constitutional bodies, commissions and offices that have been granted
offices, agencies or instrumentalities shall be expended by the Executive Board in fiscal autonomy under this Constitution; (b) autonomous state colleges and
pursuance of this Act. universities; (c) other government-owned or controlled corporations with original
5 Section 2. (1) The Commission on Audit shall have the power, authority, and duty to charters and their subsidiaries; and (d) such non-governmental entities receiving
examine, audit, and settle all accounts pertaining to the revenue and receipts of, and subsidy or equity, directly or indirectly, from or through the Government, which are
expenditures or uses of funds and property, owned or held in trust by, or pertaining to, required by law of the granting institution to submit to such audit as a condition of
the Government, or any of its subdivisions, agencies, or instrumentalities, including subsidy or equity. x x x.