Boy Scouts of the Philippines vs.

Commission on Audit
G.R. No. 177131 June 7, 2011 Ponente
Article 2 – Section 1 Created By: Ng
Petitioners Respondents
Boy Scouts of the Philippines Commission on Audit
Recit Ready Summary
The Commission on Audit resolution stated that Boy Scouts of the Philippines can be audited by
them because it is a government-controlled corporation and a government instrumentality. BSP
maintains that they are neither because RA 7278 changed its charter into a private one. The issue
is whether or not BSP is a private corporation. The Court held that it is a public corporation or
instrumentality. Not all corporations which are not government-owned or controlled are considered
to be private. It is a public corporation attached to the DECS created by law for public purpose. An
attached agency enjoys operational autonomy as long as policy and program coordination is
achieved by having at least one representative of the government in its governing board who is the
DECS Secretary as an ex officio member of the BSP board.
Facts of the Case
• The COA Resolution stated that the Boy Scouts of the Philippines (BSP) is a public corporation
under Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic
Act No. 7278 and that the SC decision in BSP vs NLRC stated that BSP is a government-
controlled corporation and a government instrumentality and that they should be audited by
COA
• BSP claims that it is not a government-owned or controlled corporation; neither it is an
instrumentality, agency, or subdivision of the government
o BSP claims that RA7278 changed its charter: “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”
• COA argues that BSP is under its jurisdiction because:
o BSP is a public corporation created by CA No. 111 whose functions relate to the
fostering of public virtues of citizenship and patriotism and the general improvement of
the moral spirit and fiber of youth
o Being a government agency, the funds and property or held in trust by the BSP are
subject to COA audit
o RA 7278 did not change the character of the BSP as a GOCC and government
instrumentality
Issues Ruling
1. W/N BSP is no longer a Government controlled corporation thus Philippine No
government no longer has control over it and has no power to be audited
under COA
Rationale/Analysis/Legal Basis
1. BSP is a public corporation not subject to the test of government ownership or control
and economic viability and it still remains as an instrumentality of the national government
a. BSP is a public corporation or government agency or instrumentality with juridical
personality that does not fall in the constitutional prohibition in Article 12 Section 16:
i. 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”
ii. 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
 b. BSP is a public corporation created by law for a public purpose attached to DECS
pursuant to its Charter and the Administrative Code of 1987
i. Falls under Article 44 (2) of the Civil Code (classification of juridical
persons): 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.
ii. Attached agency: enjoys operational autonomy as long as policy and
program coordination is achieved by having at least one representative of
the government in its governing board.
c. 1986 Constitutional Convention Record (Mickey might ask huhu): to distinguish
between government corporations performing governmental functions and
corporations involved in business or proprietary functions:
i. Mr. Monsod: 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.
1. 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.
2. they should not go into activities that the private sector can do
better
d. Economic viability test does not apply to public corporations dealing with
governmental functions (like BSP)
i. Only applies if the corporation is engaged in some economic activity or
business function for the government
e. RA 7278 does not return BSP to the private sector as it is not the intent of the
Legislature (Mr. Escudero said that BSP may be at disadvantage if they are
required to register with SEC like danger of proliferation of scout organization and
that anyone can file a complaint)
f. Ownership and control test does not apply to a public corporation
i. BSP meets the minimum statutory requirement of an attached government
agency (DECS secretary sits at the BSP Board ex officio)
2. Definitions (Administrative Code)
a. 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.
b. 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.
c. 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.
Disposition
Petition dismissed. BSP under the amended charter continues to be a public corporation or
government instrumentality and is subject to COA audit
Separate Opinions
J. Carpio – Dissent
• BSP is a private non-stock, and non-profit organization beyond COA’s audit jurisdiction
• The structural set-up and membership of BSP’s governing body under RA7278 does not have
government control because only one member is from the government
• A juridical entity impressed with public interest does not make the entity a public corporation
and a private corporation with provisions of public character in its charter be solely for public
good
• To be considered a government instrumentality:
o (1) an agency of the National Government;
o (2) outside the department framework of the National Government;
o (3) vested with special functions or jurisdiction by law;
o (4) endowed with some, if not all, corporate powers;
o (5) administering special funds; and
o (6) enjoying operational autonomy.
• BSP is not a government instrumentality
o BSP is not an agency of the National Government because it is not a unit of the
National Government
o BSP does not have special funds from the government
o BSP is not vested with special functions or jurisdiction by law
Mickey Notes
• According to COA, BSP is part of government corporations belonging to the Educational, Social,
Scientific, Civic and Research Sector
• Jejomar Binay was the BSP National President in 1999
• Purpose of BSP: 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.
• President of the PH is Chief Scout of the Boy Scouts of the PHilippines
• BSP under its former charter was regarded as both a GOCC with original charter and a public
corporation