Boy Scouts of the Philippines v. Commission on Audit
REITERATIONFacts
The Antecedents: The Commission on Audit (COA) issued Resolution No. 99-011 defining its policy to conduct an annual financial audit of the Boy Scouts of the Philippines (BSP), citing BSP's creation as a public corporation under Commonwealth Act No. 111, as amended, and a previous Supreme Court ruling classifying it as a government-controlled corporation. The BSP sought reconsideration, arguing that Republic Act No. 7278 significantly amended its charter, reducing government participation in its National Executive Board and thus superseding the previous ruling. The COA, through its General Counsel's Memorandum, opined that RA 7278 did not alter BSP's nature as a government instrumentality subject to COA audit, as other grounds in the previous ruling, such as the public aspect of its functions and statutory designation as a public corporation, remained. The COA proceeded with audit preparations, leading the BSP to file a Petition for Review with the COA, which was denied. Procedural History: The BSP filed a petition for prohibition with preliminary injunction and temporary restraining order before the Supreme Court, seeking to prohibit the COA from implementing its resolutions denying the BSP's request for reconsideration and asserting its audit jurisdiction over the BSP. The Petition: The BSP sought to prohibit the COA from exercising audit jurisdiction over it, arguing it is a private entity not subject to COA audit, and that RA 7278 rendered the previous ruling classifying it as a government-controlled corporation inapplicable.
Issue(s)
Whether the Boy Scouts of the Philippines (BSP) falls under the audit jurisdiction of the Commission on Audit (COA). Whether Commonwealth Act No. 111, as amended by Republic Act No. 7278, is constitutional.
Ruling
The petition for prohibition is DISMISSED. The Boy Scouts of the Philippines (BSP) is a public corporation and its funds are subject to the COA's audit jurisdiction.
Ratio Decidendi
On the issue of COA's audit jurisdiction over the BSP: The Supreme Court held that the BSP is a public corporation, not a private one. Its charter, Commonwealth Act No. 111, explicitly states it is a "public corporation" created for public interest or purpose, specifically to promote the ability of boys to do useful things, train them in scoutcraft, and inculcate patriotism, civic consciousness, and other virtues. This purpose aligns with the State's policy under Article II, Section 13 of the Constitution to promote and protect the well-being of the youth in nation-building. The BSP is also classified as an attached agency of the Department of Education, Culture and Sports (DECS) under the Administrative Code of 1987, further solidifying its status as a government instrumentality. The Court emphasized that the tests of government ownership or control and economic viability, which are relevant for government-owned or controlled corporations engaged in business or proprietary functions, are inapplicable to public corporations like the BSP that perform governmental functions. The amendments introduced by Republic Act No. 7278, which reduced government representation in the BSP's National Executive Board, were intended to strengthen the organization's volunteer and democratic character and correct perceived ills from previous amendments, not to privatize it or remove it from its public character. Therefore, as a public corporation and government instrumentality, the BSP's funds and property are subject to the audit authority of the COA under Section 2(1), Article IX (D) of the Constitution. On the issue of the constitutionality of the BSP Charter: The Court noted that while parties were asked to comment on the constitutionality of the BSP charter, the issue was not the lis mota of the case, and the requisites for judicial review were not fully met. However, the Court proceeded to discuss the matter, stating that Article XII, Section 16 of the Constitution, which prohibits the creation of private corporations except by general law, does not apply to public corporations created by special charter for public interest or purpose. The BSP, being a public corporation created for a public purpose, does not fall under this prohibition. The Court clarified that the constitutional intent behind Article XII, Section 16 was to ban private corporations created by special charters that gave special privileges, not to prevent the creation of public corporations serving public interest or constitutional objectives. The Court also distinguished between government corporations performing governmental functions and those engaged in business or proprietary functions, noting that the economic viability test applies to the latter, not the former. The BSP's functions are clearly impressed with public interest, and its creation by special law is consistent with its role in nation-building and youth development.
Main Doctrine
The Boy Scouts of the Philippines (BSP), as a public corporation created by law for a public purpose and attached to the Department of Education, Culture and Sports (DECS), remains subject to the audit jurisdiction of the Commission on Audit (COA) notwithstanding amendments to its charter that reduced government representation in its governing body. The tests of government ownership or control and economic viability are inapplicable to public corporations performing governmental functions.