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: This case arose when the COA issued Resolution No. 99-011*5+ on August 19, 1999 (“the COA Resolution”), with the subject “Defining the Commission’s policy with respect to the audit of the Boy Scouts of the Philippines.” In its whereas clauses, the COA Resolution stated that the BSP was created as a public corporation under Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines v. National Labor Relations Commission, the Supreme Court ruled that the BSP, as constituted under its charter, was a “government-controlled corporation within the meaning of Article IX(B)(2)(1) of the Constitution”; and that “the BSP is appropriately regarded as a government instrumentality under the 1987 Administrative Code.”*7+ The COA Resolution also cited its constitutional mandate under Section 2(1), Article IX (D). Finally, the COA Resolution reads:
NOW THEREFORE, in consideration of the foregoing premises, the COMMISSION PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE, to conduct an annual financial audit of the Boy Scouts of the Philippines in accordance with generally accepted auditing standards, and express an opinion on whether the financial statements which include the Balance Sheet, the Income Statement and the Statement of Cash Flows present fairly its financial position and results of operations.
BE IT RESOLVED FURTHERMORE, that for purposes of audit supervision, the Boy Scouts of the Philippines shall be classified among the government corporations belonging to the Educational, Social, Scientific, Civic and Research Sector under the Corporate Audit Office I, to be audited, similar to the subsidiary corporations, by employing the team audit approach. (Emphases supplied.)
The BSP sought reconsideration of the COA Resolution in a letter dated November 26, 1999 signed by the BSP National President Jejomar C. Binay, who is now the Vice President of the Republic, wherein he wrote:
It is the position of the BSP, with all due respect, that it is not subject to the Commission’s jurisdiction on the following grounds:
1. We reckon that the ruling in the case of Boy Scouts of the Philippines vs. National Labor Relations Commission, et al. (G.R. No. 80767) classifying the BSP as a government-controlled corporation is anchored on the “substantial Government participation” in the National Executive Board of the BSP. It is to be noted that the case was decided when the BSP Charter is defined by Commonwealth Act No. 111 as amended by Presidential Decree 460.
However, may we humbly refer you to Republic Act No. 7278 which amended the BSP’s charter after the cited case was decided. The most salient of all amendments in RA No. 7278 is the alteration of the composition of the National Executive Board of the BSP.
The said RA virtually eliminated the “substantial government participation” in the National Executive Board by removing: (i) the President of the Philippines and executive secretaries, with the exception of the Secretary of Education, as members thereof; and (ii) the appointment and confirmation power of the President of the Philippines, as Chief Scout, over the members of the said Board.
The BSP believes that the cited case has been superseded by RA 7278. Thereby weakening the case’s conclusion that the BSP is a government-controlled corporation (sic). The 1987 Administrative Code itself, of which the BSP vs. NLRC relied on for some terms, defines government-owned and controlled corporations as agencies organized as stock or non-stock corporations which the BSP, under its present charter, is not.
Also, the Government, like in other GOCCs, does not have funds invested in the BSP. What RA 7278 only provides is that the Government or any of its subdivisions, branches, offices, agencies and instrumentalities can from time to time donate and contribute funds to the BSP.
Also the BSP respectfully believes that the BSP is not “appropriately regarded as a government instrumentality under the 1987 Administrative Code” as stated in the COA resolution. As defined by Section 2(10) of the said code, 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.”
The BSP is not an entity administering special funds. It is not even included in the DECS National Budget. xxx
It may be argued also that the BSP is not an “agency” of the Government. The 1987 Administrative Code, merely referred the BSP as an “attached agency” of the DECS as distinguished from an actual line agency of departments that are included in the National Budget. The BSP believes that an “attached agency” is different from an “agency.” Agency, as defined in Section 2(4) of the Administrative Code, is defined as any of the various units of the Government including a department, bureau, office, instrumentality, government-owned or controlled corporation or local government or distinct unit therein.
Under the above definition, the BSP is neither a unit of the Government; a department which refers to an executive department as created by law (Section 2 of the Administrative Code); nor a bureau which refers to any principal subdivision or unit of any department (Section 2, Administrative Code).
Subsequently, requests for reconsideration of the COA Resolution were also made separately by Robert P. Valdellon, Regional Scout Director, Western Visayas Region, Iloilo City and Eugenio F. Capreso, Council Scout Executive of Calbayog City.
In a letter dated July 3, 2000, Director Crescencio S. Sunico, Corporate Audit Officer (CAO) I of the COA, furnished the BSP with a copy of the Memorandum dated June 20, 2000 of Atty. Santos M. Alquizalas, the COA General Counsel. In said Memorandum, the COA General Counsel opined that Republic Act No. 7278 did not supersede the Court’s ruling in Boy Scouts of the Philippines v. National Labor Relations Commission, even though said law eliminated the substantial government participation in the selection of members of the National Executive Board of the BSP. The Memorandum further provides:
Analysis of the said case disclosed that the substantial government participation is only one (1) of the three (3) grounds relied upon by the Court in the resolution of the case. Other considerations include the character of the BSP’s purposes and functions which has a public aspect and the statutory designation of the BSP as a “public corporation”. These grounds have not been deleted by R.A. No. 7278.
On the contrary, these were strengthened as evidenced by the amendment made relative to BSP’s purposes stated in Section 3 of R.A. No. 7278.
On the argument that BSP is not appropriately regarded as “a government instrumentality” and “agency” of the government, such has already been answered and clarified. The Supreme Court has elucidated this matter in the BSP case when it declared that BSP is regarded as, both a “governmentcontrolled corporation with an original charter” and as an “instrumentality” of the Government. Likewise, it is not disputed that the Administrative Code of 1987 designated the BSP as one of the attached agencies of DECS. Being an attached agency, however, it does not change its nature as a government-controlled corporation with original charter and, necessarily, subject to COA audit jurisdiction. Besides, Section 2(1), Article IX-D of the Constitution provides that COA shall 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.
Based on the Memorandum of the COA General Counsel, Director Sunico wrote:
In view of the points clarified by said Memorandum upholding COA Resolution No. 99-011, we have to comply with the provisions of the latter, among which is to conduct an annual financial audit of the Boy Scouts of the Philippines.
In a letter dated November 20, 2000 signed by Director Amorsonia B. Escarda, CAO I, the COA informed the BSP that a preliminary survey of its organizational structure, operations and accounting system/records shall be conducted on November 21 to 22, 2000.
Upon the BSP’s request, the audit was deferred for thirty (30) days. The BSP then filed a Petition for Review with Prayer for Preliminary Injunction and/or Temporary Restraining Order before the COA. This was denied by the COA in its questioned Decision, which held that the BSP is under its audit jurisdiction. The BSP moved for reconsideration but this was likewise denied under its questioned Resolution.
This led to the filing by the BSP of this petition for prohibition with preliminary injunction and temporary restraining order against the COA.
The Issue As stated earlier, the sole issue to be resolved in this case is whether the BSP falls under the COA’s audit jurisdiction. The Parties’ Respective Arguments
The BSP contends that Boy Scouts of the Philippines v. National Labor Relations Commission is inapplicable for purposes of determining the audit jurisdiction of the COA as the issue therein was the jurisdiction of the National Labor Relations Commission over a case for illegal dismissal and unfair labor practice filed by certain BSP employees.
While the BSP concedes that its functions do relate to those that the government might otherwise completely assume on its own, it avers that this alone was not determinative of the COA’s audit jurisdiction over it. The BSP further avers that the Court in Boy Scouts of the Philippines v. National Labor Relations Commission “simply stated x x x that in respect of functions, the BSP is akin to a public corporation” but this was not synonymous to holding that the BSP is a government corporation or entity subject to audit by the COA.
The BSP contends that Republic Act No. 7278 introduced crucial amendments to its charter; hence, the findings of the Court in Boy Scouts of the Philippines v. National Labor Relations Commission are no longer valid as the government has ceased to play a controlling influence in it. The BSP claims that the pronouncements of the Court therein must be taken only within the context of that case; that the Court had categorically found that its assets were acquired from the Boy Scouts of America and not from the Philippine government, and that its operations are financed chiefly from membership dues of the Boy Scouts themselves as well as from property rentals; and that “the BSP may correctly be characterized as non-governmental, and hence, beyond the audit jurisdiction of the COA.” It further claims that the designation by the Court of the BSP as a government agency or instrumentality is mere obiter dictum.
The BSP maintains that the provisions of Republic Act No. 7278 suggest that “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.” It cites Philippine Airlines Inc. v. Commission on Audit*22+ wherein the Court declared that, “PAL, having ceased to be a government-owned or controlled corporation is no longer under the audit jurisdiction of the COA.”*23+ Claiming that the
COA has not alleged. as BSP has never been included in any appropriations act for the government.amendments introduced by Republic Act No. National Labor Relations Commission as its basis for the exercise of its jurisdiction and the issuance of COA Resolution No. has not been. To summarize its other arguments. BSP. BSP is not dependent in any way on any government appropriation. Neither has the government invested funds with BSP. Its operations are not in any way financed by the government. the BSP contends that it is not a government-owned or controlled corporation. For its operations. at any time. 7278 constituted a supervening event that changed the BSP’s corporate identity in the same way that the government’s privatization program changed PAL’s. the COA argues as follows: 1. neither is it an instrumentality. such as provinces. 111 dated October 31. BSP’s assets and funds were never acquired from the government. the assets and funds of BSP are not derived from any government grant. and whose functions relate to the fostering of public virtues of citizenship and patriotism and the . agency. 1936. in fact. receives or continues to receive assets and funds from any agency of the government. the BSP makes the case that the government no longer has control over it. the COA cannot use the Boy Scouts of the Philippines v. such as Land Bank of the Philippines and the Development Bank of the Philippines. In its Comment. thus. x x x. Unlike ordinary public corporations. The foregoing simply point to the private nature of the funds and assets of petitioner BSP. or government-owned and controlled corporations. to concede that BSP’s funds and assets are private in character. xxxx As stated in petitioner’s third argument. 99-011 or in the Memorandum of its General Counsel. it has not even been included in any appropriations for the government. To be sure. or subdivision of the government. cities. and municipalities. as a matter of fact. in its Resolution No. until this time. that BSP received. The BSP further claims as follows: It is not far-fetched. This is precisely the reason why. The BSP is a public corporation created under Commonwealth Act No. 99-011. a user of government property or funds. nor have properties of the government been held in trust by BSP. the COA has not attempted to subject BSP to its audit jurisdiction.
 The COA concludes that being a government agency. the funds and property owned or held by the BSP are subject to the audit authority of the COA pursuant to Section 2(1). and kindred virtues. courage. Republic Act No. National Labor Relations Commission. wherein the Court held that among the reasons why the VFP is a public corporation is that its charter. that as an attached agency of the Department of Education. Article IX-D of the 1987 Constitution. the funds and property owned or held in trust by the BSP are subject to the audit authority of respondent Commission on Audit pursuant to Section 2 (1). designates it as one. embraced under the term government instrumentality. Reyes. 2. Being a government agency. The COA contends that any attempt to classify the BSP as a private corporation would be incomprehensible since no less than the law which created it had designated it as a public corporation and its statutory mandate embraces performance of sovereign functions. The manner of creation and the purpose for which the BSP was created indubitably prove that it is a government agency. Culture and Sports (DECS). The COA maintains that the functions of the BSP that include. the COA quotes the Court as saying in that case: . the COA cites The Veterans Federation of the Philippines (VFP) v. the BSP is an agency of the government. 2640. Furthermore. and that the BSP is a chartered institution under Section 1(12) of the Revised Administrative Code of 1987. the teaching to the youth of patriotism. self-reliance. are undeniably sovereign functions enshrined under the Constitution and discussed by the Court in Boy Scouts of the Philippines v. Article IX (D) of the 1987 Constitution. 3. among others.general improvement of the moral spirit and fiber of the youth. The COA claims that the only reason why the BSP employees fell within the scope of the Civil Service Commission even before the 1987 Constitution was the fact that it was a government-owned or controlled corporation. 7278 did not change the character of the BSP as a government-owned or controlled corporation and government instrumentality. In support of its arguments. Republic Act No.
The erroneous application of the law by public officers does not bar a subsequent correct application of the law. its previous assertions will not prevent future budgetary appropriations to the VFP. If the DBM. however. The BSP filed its Reply on August 29. xxxx Petitioner claims that its funds are not public funds because no budgetary appropriations or government funds have been released to the VFP directly or indirectly from the DBM. reiterating its stand that Boy Scouts of the Philippines v. upheld the public sovereign nature of operations needed either to promote social justice or to stimulate patriotic sentiments and love of country. The DBM indeed did not see it fit to propose budgetary appropriations to the VFP. (Citations omitted. we have dealt with the issue of whether certain specific activities can be classified as sovereign functions. 2007 maintaining that its statutory designation as a “public corporation” and the public character of its purpose and functions are not determinative of the COA’s audit jurisdiction. The fact that no budgetary appropriations have been released to the VFP does not prove that it is a private corporation. is mistaken as to its conclusion regarding the nature of VFP's incorporation. which deal with activities not immediately apparent to be sovereign functions. and that “as a government instrumentality which continues to perform a vital function imbued with public interest and reflective of the government’s policy to stimulate patriotic sentiments and love of country. *7278+. and can be used solely for public purpose in pursuance of the provisions of Republic Act No.In several cases.) The COA points out that the government is not precluded by law from extending financial support to the BSP and adding to its funds. having itself believed that the VFP is a private corporation. National Labor Relations .”*32+ The COA claims that the fact that it has not yet audited the BSP’s funds may not bar the subsequent exercise of its audit jurisdiction. the BSP’s funds from whatever source are public funds. and because VFP funds come from membership dues and lease rentals earned from administering government lands reserved for the VFP. These cases.
 For its part. the parties filed their respective Comments.”*43+ The BSP further alleges: . 2010. 7278. 7278. considering the BSP’s claim that it is a private corporation. in a Resolution*34+ dated July 20. in its Comment filed on December 3.Commission is not applicable anymore because the aspect of government ownership and control has been removed by Republic Act No. and concluding that the funds and property that it either owned or held in trust are not public funds and are not subject to the COA’s audit jurisdiction. as amended by Republic Act No. this Court. the controversy may be resolved on other grounds.*39+ Lastly. the COA further alleges: The true criterion. the requisites before a judicial inquiry may be made. Court of Tax Appeals. as amended. neither is it a private corporation created by special law falling within the ambit of the constitutional prohibition x x x. as amended by Republic Act No. within a period of twenty (20) days from receipt of said Resolution. Article XII of the Constitution. Moreover. The COA likewise argues that contrary to the BSP’s position. Article XII of the 1987 Constitution with the creation or declaration of the BSP as a government corporation. the COA claims that there was no violation of Section 16. otherwise. is constitutional as it does not violate Section 16. the COA argues that the constitutionality of Commonwealth Act No. the BSP submits that its charter. required the parties to file. Thereafter. then that corporation is considered public. their respective comments on the issue of whether Commonwealth Act No. Commonwealth Act No. thus. 2010. the COA maintains that behind every law lies the presumption of constitutionality. is not determinative of the resolution of the present controversy on the COA’s audit jurisdiction over petitioner. it is private. to determine whether a corporation is public or private is found in the totality of the relation of the corporation to the State. 7278. 111. as set forth in Commissioner of Internal Revenue v. therefore. In compliance with the Court’s resolution. have not been fully met. In its Comment dated October 22. repeal of a law by implication is not favored. x x x. 2010. Commission on Audit. 111. and in fact. 111. is constitutional. The BSP alleges that “while *it+ is not a public corporation within the purview of COA’s audit jurisdiction. Citing Philippine Society for the Prevention of Cruelty to Animals v. If the corporation is created by the State as the latter’s own agency or instrumentality to help it in carrying out its governmental functions.
but it does not necessarily mean that petitioner is a private corporation. .Petitioner’s purpose is embodied in Section 3 of C. specifically of young boys. discipline and kindred virtues. civic consciousness and responsibility. Article XII of the Constitution.*47+ that it is not a quasi-public corporation. the enactment of its charter confers no special privilege to particular individuals. Hence. It avers that it merely stated in its Reply that the withdrawal of government control is akin to privatization. nor does it bring about the danger of granting undue favors to certain groups to the prejudice of others or of the interest of the country. as amended by Section 1 of R. not only of those boys. Thus. self-reliance. its creation is not contrary to the purpose of Section 16. courage. No. 7278. The BSP reiterates its stand that the public character of its purpose and functions do not place it within the ambit of the audit jurisdiction of the COA as it lacks the government ownership or control that the Constitution requires before an entity may be subject of said jurisdiction. and that the evil sought to be avoided by said provision is inexistent in the enactment of the BSP’s charter. (i) it was not created for any pecuniary purpose. which are the evils sought to be prevented by the constitutional provision involved.A. Petitioner’s members are trained in scoutcraft and taught patriotism. but of the public good or welfare.A. and that it may belong to a different class altogether.*49+ as. No. thus: xxxx A reading of the foregoing provision shows that petitioner was created to advance the interest of the youth. It does not limit its membership to a particular class of boys. The BSP claims that it has a unique characteristic which “neither classifies it as a purely public nor a purely private corporation”. 111. and (iv) it does not limit its membership to a particular class or group of boys. it can be said that petitioner’s purpose and functions are more of a public rather than a private character. The BSP claims that assuming arguendo that it is a private corporation. preparing them to become model citizens and outstanding leaders of the country. Ultimately. or groups. and to mold them into becoming good citizens. Petitioner caters to all boys who wish to join the organization without any distinction. (ii) those who will primarily benefit from its creation are not its officers but its entire membership consisting of boys being trained in scoutcraft all over the country. (iii) it caters to all boys who wish to join the organization without any distinction. the creation of petitioner redounds to the benefit. and moral values. families.
the BSP states that the presumption of constitutionality of a legislative enactment prevails absent any clear showing of its repugnancy to the Constitution. The purpose of this corporation shall be to promote through organization and cooperation with other agencies. 1974. selfreliance. (b) the charter and life members of the Boy Scouts of the Philippines. entitled “An Act to Create a Public Corporation to be Known as the Boy Scouts of the Philippines. 111 and provided substantial changes in the BSP organizational structure. the ability of boys to do useful things for themselves and others. the Secretary of Finance. amended Commonwealth Act No. the Secretary of Labor. (c) the Chairman of the Board of Trustees of the Philippine Scouting Foundation. we find that the BSP is a public corporation and its funds are subject to the COA’s audit jurisdiction. the Secretary of National Defense. (e) the Secretary of Education and Culture. (d) the Regional Chairman of the Scout Regions of the Philippines. Presidential Decree No. The Ruling of the Court After looking at the legislative history of its amended charter and carefully studying the applicable laws and the arguments of both parties. Pertinent provisions are quoted below: Section II. the Secretary of Youth and Sports. and moral values. approved on May 17. Section 5 of the said Act is also amended to read as follows: The governing body of the said corporation shall consist of a National Executive Board composed of (a) the President of the Philippines or his representative. using the method which are in common use by boy scouts. The BSP Charter (Commonwealth Act No. approved on October 31. and the Secretary of Local Government and . to train them in scoutcraft. 460. civic consciousness and responsibility. discipline and kindred virtues. 111. the Secretary of Social Welfare. and to inculcate in them patriotism. 1936). and to Define its Powers and Purposes” created the BSP as a “public corporation” to serve the following public interest or purpose: Sec. courage. 3.Finally.
(g) the National President of the Girl Scouts of the Philippines. own. Subsequently. and to accept and receive funds. The by-laws may prescribe the number of members of the National Executive Board necessary to constitute a quorum of the board. Vacancies in the Executive Board shall be filled by a majority vote of the remaining members. and (i) three representatives of the cultural minorities. to conduct fund-raising activities. municipalities. and generally to do all such acts and things. to acquire. That said corporation shall have no power to issue certificates of stock or to declare or pay dividends. No. is hereby amended to read as follows: "Sec. subject to ratification and confirmation by the Chief Scout. and.Community Development. . lease. rights and choses in action as shall be necessary for corporate purposes. its objectives and purposes being solely of benevolent character and not for pecuniary profit of its members. 111. rules and regulations not inconsistent with this Act and the laws of the Philippines. as amended. to enter into contracts. and barangays of the Philippines. provinces. 7278 further amended Commonwealth Act No. may authorize and cause to be executed mortgages and liens upon the property of the corporation. devise. 111 “by strengthening the volunteer and democratic character” of the BSP and reducing government representation in its governing body. to adopt and use a seal. subject to ratification and confirmation by the Chief Scout. (h) one Scout of Senior age from each Scout Region to represent the boy membership. and the Scouts of their respective regions. 2. who shall be the Head of State. as follows: Section 1. Sections 2 and 3 of Commonwealth Act. to sue and be sued. to make and adopt by-laws. which number may be less than a majority of the whole number of the board. by a two-thirds vote of the whole board at a meeting called for this purpose. land grants. Except for the Regional Chairman who shall be elected by the Regional Scout Councils during their annual meetings. bequest or other means. real and personal property by gift. to have offices and conduct its business and affairs in Metropolitan Manila and in the regions. all members of the National Executive Board shall be either by appointment or cooption. The National Executive Board shall have power to make and to amend the by-laws. convey and dispose of such real and personal estate. 1992. on March 24. Republic Act No. cities. as may be necessary to carry into effect the provisions of this Act and promote the purposes of said corporation: Provided. including the establishment of regulations for the election of associates and successors. (f) an equal number of individuals from the private sector. The said corporation shall have the powers of perpetual succession. and the same to alter and destroy.
That a candidate for regional chairman need not be the chairman of a local scout council. 111. as amended. 111." Sec. using the method which are in common use by boy scouts. The Board shall be composed of the following: "(a) One (1) charter member of the Boy Scouts of the Philippines who shall be elected by the members of the National Council at its meeting called for this purpose. are hereby amended to read as follows: "Sec. and moral values. 5. courage. the ability of boys to do useful things for themselves and others. . 6. "(c) The Secretary of Education. The President of the Philippines shall be the Chief Scout of the Boy Scouts of the Philippines. 7 and 8 of Commonwealth Act No. the members of which shall be Filipino citizens of good moral character. civic consciousness and responsibility. as amended. 4. The governing body of the said corporation shall consist of a National Executive Board. 3. selfreliance." Sec. Section 4 of Commonwealth Act No. Section 4 shall read as follows: "Sec. to train them in scoutcraft. 3. Sections 5. Culture and Sports. "(d) The National President of the Girl Scouts of the Philippines. 2. discipline and kindred virtues. "(b) The regional chairmen of the scout regions who shall be elected by the representatives of all the local scout councils of the region during its meeting called for this purpose: Provided. and to inculcate in them patriotism. is hereby repealed and in lieu thereof."Sec. The purpose of this corporation shall be to promote through organization and cooperation with other agencies.
44. The BSP as a Public Corporation under Par. to represent the boy scout membership."(e) One (1) senior scout. branches. Article 44 reads: Art. in its meeting called for this purpose. 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. (e) and (f) at the organizational meeting of the newly reconstituted National Executive Board which shall be held immediately after the meeting of the National Council wherein the twelve (12) regular members and the one (1) charter member were elected. (c). (b). (d). "(f) Twelve (12) regular members to be elected by the members of the National Council in its meeting called for this purpose. Visayas and Mindanao areas. agencies or instrumentalities or by a foreign government or by private. to be elected by the senior scout delegates of the local scout councils to the scout youth forums in their respective areas. xxxx "Sec. offices. 7278. "(g) At least ten (10) but not more than fifteen (15) additional members from the private sector who shall be elected by the members of the National Executive Board referred to in the immediately preceding paragraphs (a). The following are juridical persons: (1) The State and its political subdivisions. 2. 2 of the Civil Code There are three classes of juridical persons under Article 44 of the Civil Code and the BSP. as presently constituted under Republic Act No. 8. each from Luzon. Art. . entities and individuals shall be expended by the National Executive Board in pursuance of this Act. falls under the second classification.
which reads: ARTICLE II . Article 44 of the Civil Code and governed by the law which creates it. Juridical persons mentioned in Nos.) The purpose of the BSP as stated in its amended charter shows that it was created in order to implement a State policy declared in Article II. (3) Corporations. Private corporations are regulated by laws of general application on the subject. pursuant to Article 45 of the same Code. It shall inculcate in the youth patriotism and nationalism. comes within the class of “public corporations” defined by paragraph 2. partnerships and associations for private interest or purpose to which the law grants a juridical personality. (Emphases supplied. 1 and 2 of the preceding article are governed by the laws creating or recognizing them. Partnerships and associations for private interest or purpose are governed by the provisions of this Code concerning partnerships. . The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical. which was created by a special law to serve a public purpose in pursuit of a constitutional mandate. and encourage their involvement in public and civic affairs. and social well-being.DECLARATION OF PRINCIPLES AND STATE POLICIES Section 13. their personality begins as soon as they have been constituted according to law. separate and distinct from that of each shareholder.) The BSP. intellectual. 45. which is a corporation created for a public interest or purpose. moral. spiritual. Evidently.(2) Other corporations. institutions and entities for public interest or purpose created by law. partner or member. which provides: Art. (Emphasis and underscoring supplied. Section 13 of the Constitution. is subject to the law creating it under Article 45 of the Civil Code. the BSP.
CULTURE AND SPORTS Chapter 8 – Attached Agencies SEC. or the Administrative Code of 1987. which states: TITLE VI – EDUCATION. character of the BSP is recognized by the fact that. 292. along with the Girl Scouts of the Philippines. The administrative relationship of an attached agency to the department is defined in the Administrative Code of 1987 as follows: BOOK IV THE EXECUTIVE BRANCH Chapter 7 – ADMINISTRATIVE RELATIONSHIP . Attached Agencies.The BSP’s Classification Under the Administrative Code of 1987 The public. 20. rather than private. it is classified as an attached agency of the DECS under Executive Order No. – The following agencies are hereby attached to the Department: xxxx (12) Boy Scouts of the Philippines. (13) Girl Scouts of the Philippines.
with or without voting rights. – (a) This refers to the lateral relationship between the department or its equivalent and the attached agency or corporation for purposes of policy and program coordination. administrative relationships shall be categorized and defined as follows: xxxx (3) Attachment. The goals of the national economy are a more equitable distribution of opportunities.” Section 1 of Article XII is quoted as follows: SECTION 1.) As an attached agency. a sustained increase in the amount of goods and services produced by the nation . income. The coordination may be accomplished by having the department represented in the governing board of the attached agency or corporation. if this is permitted by the charter. – Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies. which in the case of the BSP is the DECS Secretary. it should be noted that the provision of Section 16 in issue is found in Article XII of the Constitution. Definition of Administrative Relationship. the BSP enjoys operational autonomy. and having the department or its equivalent provide general policies through its representative in the board. (Emphasis ours. In this sense. the BSP is not under government control or “supervision and control.” Still this characteristic does not make the attached chartered agency a private corporation covered by the constitutional proscription in question.SEC. Sec. 38. Art. entitled “National Economy and Patrimony. XII. and wealth. either as chairman or as a member. which shall serve as the framework for the internal policies of the attached corporation or agency. 16 of the Constitution refers to “private corporations” created by government for proprietary or economic/business purposes At the outset. as long as policy and program coordination is achieved by having at least one representative of government in its governing board. having the attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of programs and projects.
the State shall protect Filipino enterprises against unfair foreign competition and trade practices. The said constitutional provision should not be construed so as to prohibit the creation of public corporations or a corporate agency or instrumentality of the government intended to serve a public interest or purpose. Article XII of the Constitution can be seen from the aforementioned declaration of state policies and goals which pertains to national economy and patrimony and the interests of the people in economic development. Section 16 of the 1987 Constitution was explained in Feliciano v. in the following manner: The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens. cooperatives. families or groups special privileges denied to other citizens.”*52+ which should be done through a general law enacted by Congress. provides for an exception. through industries that make full and efficient use of human and natural resources. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform. In the pursuit of these goals. especially the underprivileged. (Emphasis added. Article XII deals with “the formation. Commission on Audit. . The purpose of this constitutional provision is to ban private corporations created by special charters. and it meets the test of economic viability. all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. and which are competitive in both domestic and foreign markets. Section 16. However. or regulation of private corporations. Private enterprises. shall be encouraged to broaden the base of their ownership. The scope and coverage of Section 16. that is: if the corporation is government owned or controlled. which historically gave certain individuals. and an expanding productivity as the key to raising the quality of life for all. including corporations. The rationale behind Article XII. which should not be measured on the basis of economic viability.for the benefit of the people. and similar collective organizations. Section 16 bans the creation of “private corporations” by special law. its creation is in the interest of the common good.) It may be gleaned from the above discussion that Article XII. organization.
Congress has enacted numerous laws creating public corporations or government agencies or instrumentalities vested with corporate powers. The BSP is a Public Corporation Not Subject to the Test of Government Ownership or Control and Economic Viability The BSP is a public corporation or a government agency or instrumentality with juridical personality. in so doing.” 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. In fact. which relates to National Economy and Patrimony. Justice Carpio contends that this ponente introduces “a totally different species of corporation. Moreover. which are not government owned or controlled. Carpio. insists that the Constitution recognizes only two classes of corporations: private corporations under a general law. is missing the fact that the BSP. Article XII should not be construed so as to prohibit Congress from creating public corporations. Section 16. Article XII. non-profit . We strongly disagree. Section 16. which does not fall within the constitutional prohibition in Article XII. notwithstanding the amendments to its charter. Article XII of the Constitution on National Economy and Patrimony The dissenting opinion of Associate Justice Antonio T. Not all corporations. could not have tied the hands of Congress in creating public corporations to serve any of the constitutional policies or objectives. citing a line of cases. Section 16. Classification of Corporations Under Section 16. which is neither a private corporation nor a government owned or controlled corporation” and. “which was created as a non-stock. In his dissent. 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. of Article 44 of the Civil Code and the pertinent provisions of the Administrative Code of 1987.but according to the public interest or purpose it serves as envisioned by paragraph (2). and government-owned or controlled corporations created by special charters.
refers to any agency organized or operating under a special charter. not integrated within the department framework. combining aspects of both public and private entities. An "agency of the Government" is defined as referring to any of the various units of the Government including a department. "Government instrumentality" is in turn defined in the 1987 Administrative Code in the following manner: Instrumentality . Culture and Sports ("DECS"). administering special funds.corporation. and vested by law with functions relating to specific constitutional policies or objectives. under its former charter. This term includes the state universities and colleges. chartered institutions and government-owned or controlled corporations. can only be either a private corporation or a government owned or controlled corporation. is a government-controlled corporation within the meaning of Article IX (B) (2) (1) of the Constitution. and enjoying operational autonomy usually through a charter. and the monetary authority of the State. We are fortified in this conclusion when we note that the Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department of Education.refers to any agency of the National Government. the statutory designation of the BSP as "a public corporation" and the substantial participation of the Government in the selection of members of the National Executive Board of the BSP. as presently constituted under its charter. National Labor Relations Commission. or local government or distinct unit therein. office.” The said case pertinently stated: While the BSP may be seen to be a mixed type of entity. . endowed with some if not all corporate powers. instrumentality. government-owned or -controlled corporation. we believe that considering the character of its purposes and its functions. bureau. The same Code describes a "chartered institution" in the following terms: Chartered institution . the BSP. was regarded as both a government owned or controlled corporation with original charter and a “public corporation. vested with special functions or jurisdiction by law. the BSP. This term includes regulatory agencies.” Note that in Boy Scouts of the Philippines v.
or a particular statute.) The existence of public or government corporate or juridical entities or chartered institutions by legislative fiat distinct from private corporations and government owned or controlled corporation is best exemplified by the 1987 Administrative Code cited above. This term includes regulatory agencies. and enjoying operational autonomy. or the context as a whole. General Terms Defined.We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987 Administrative Code. endowed with some if not all corporate powers. shall require a different meaning: xxxx (10) "Instrumentality" refers to any agency of the National Government. usually through a charter. (13) "Government-owned or controlled corporation" refers to any agency organized as a stock or nonstock corporation. It thus appears that the BSP may be regarded as both a "government controlled corporation with an original charter" and as an "instrumentality" of the Government within the meaning of Article IX (B) (2) (1) of the Constitution. not integrated within the department framework. x x x. administering special funds. chartered institutions and government-owned or controlled corporations. 2. This term includes the state universities and colleges and the monetary authority of the State. – Unless the specific words of the text. which we quote in part: Sec. and vested by law with functions relating to specific constitutional policies or objectives. vested with functions relating to public needs whether governmental or proprietary . (Emphases supplied. vested with special functions or jurisdiction by law. xxxx (12) "Chartered institution" refers to any agency organized or operating under a special charter.
It is a public corporation created by law for a public purpose. The dissent of Justice Carpio also submits that by recognizing “a new class of public corporation(s)” created by special charter that will not be subject to the test of economic viability. the Civil Service Commission. and owned by the Government directly or through its instrumentalities either wholly. functions and responsibilities with respect to such corporations. Assuming for the sake of argument that the BSP ceases to be owned or controlled by the government because of reduction of the number of representatives of the government in the BSP Board.in nature. and the Commission on Audit for purposes of the exercise and discharge of their respective powers. attached to the DECS pursuant to its Charter and the Administrative Code of 1987. Economic Viability and Ownership and Control Tests Inapplicable to Public Corporations As presently constituted. It is not a private corporation which is required to be owned or controlled by the government and be economically viable to justify its existence under a special law. That government-owned or controlled corporations may be further categorized by the Department of the Budget. or. Vesting corporate powers to an attached agency or instrumentality of the government is not constitutionally prohibited and is allowed by the above-mentioned provisions of the Civil Code and the 1987 Administrative Code. the constitutional provision will be circumvented. it does not follow that it also ceases to be a government instrumentality as it still retains all the characteristics of the latter as an attached agency of the DECS under the Administrative Code. the BSP still remains an instrumentality of the national government. to the extent of at least fifty-one (51) per cent of its capital stock: Provided. where applicable as in the case of stock corporations. a review of the Record of the 1986 Constitutional Convention reveals the intent of the framers of the highest law of our land to distinguish between government corporations performing governmental functions and corporations involved in business or proprietary functions: . However.
MR. the reason for this concern is really that when the government creates a corporation.THE PRESIDENT. MR. We know what happened in the past. may we be clarified by the committee on what is meant by economic viability? THE PRESIDENT. MR. Please proceed. so that these are not strictly financial criteria. Economic viability normally is determined by cost-benefit ratio that takes into consideration all benefits. I support the proposal to insert “ECONOMIC VIABILITY” as one of the grounds for organizing government corporations. Economic viability involves what we call economic returns or benefits of the country that are not quantifiable in financial terms. . QUESADA.” this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. Madam President. x x x. Madam President. when we insert the phrase “ECONOMIC VIABILITY” together with the “common good. OPLE. These are what they call externalities in economics. x x x. x x x. If a government corporation loses. Madam President. x x x Therefore. Commissioner Foz is recognized. then it makes its claim upon the taxpayers’ money through new equity infusions from the government and what is always invoked is the common good. MONSOD. including economic external as well as internal benefits. FOZ. there is a sense in which this corporation becomes exempt from the test of economic performance. xxxx THE PRESIDENT. MS. Commissioner Quesada is recognized.
MR. MR. x x x. VILLEGAS. MR. not by eliminating government corporations or the idea of getting into state-owned corporations. QUESADA. QUESDA. OPLE. x x x. there had been a proliferation of government corporations. because it is also consistent with the economic philosophy that this Commission approved – that there should be minimum government participation and intervention in the economy. Madam President. and not the idea itself of government corporations? It is a problem of efficiency and effectiveness of management of these corporations which could be remedied. and many of which are now earmarked by the Presidential Reorganization Commission for liquidation because they failed the economic test. But this time around. would this particular formulation now really limit the entry of government corporations into activities engaged in by corporations? MR. we specifically mentioned economic viability. . but improving management which our technocrats should be able to do. xxxx MS. During the past three decades. Commissioner Ople will restate the reason for his introducing that amendment. That is part of the economic viability. So.xxxx MS. given the training and the experience. But would not the Commissioner say that the reason why many of the governmentowned or controlled corporations failed to come up with the economic test is due to the management of these corporations. very few of which have succeeded. I am obliged to repeat what I said earlier in moving for this particular amendment jointly with Commissioner Foz. Yes. MS. MONSOD. OPLE. QUESADA. Sometimes this Commission would just refer to Congress to provide the particular requirements when the government would get into corporations.
perhaps not exhaustively. However. There are two types of government corporations – those that are involved in performing governmental functions.MS. QUESADA. This is an inquiry to the committee. But the question is with regard to matters that are covered. It seems that under this provision the only qualification is economic viability and common good. like garbage disposal. Commissioner Padilla is recognized. and so on. PADILLA. in the future. x x x. This is one of the problems now because they go into all kinds of activities but are not even efficient in their proper functions. corporations established by the government will meet the test of the common good but within that framework we should also build a certain standard of economic viability. that will prevent the formation of a government corporation in accordance with a special charter given by Congress. there are two criteria that should be followed for corporations that want to go into business. they should not go into activities that the private sector can do better. MR. by private enterprise. will these be in the pioneer fields or in places where the private enterprise does not or cannot enter? Or is this so general that these government corporations can compete with private corporations organized under a general law? MR. First is for government corporations to first prove that they can be efficient in the areas of their proper functions. There is nothing here. So. MR. and those government corporations that are involved in business functions. PADILLA. is the Commissioner saying then that the Filipinos will benefit more if these government-controlled corporations were given to private hands. Madam President. There is no question about corporations performing governmental functions or functions that are impressed with public interest. but shall government. xxxx THE PRESIDENT. compete with private enterprise? . through government-controlled corporations. and that there will be more goods and services that will be affordable and within the reach of the ordinary citizens? MR. OPLE. Yes. Manila waterworks. With regard to corporations created by a special charter for government-owned or controlled corporations. MONSOD. we are raising the standard a little bit so that. Secondly. As we said earlier. Madam President.
MONSOD. to which category the BSP belongs. As we said. and also considering the importance of having an organization such as this that will inculcate moral uprightness among the young people. President. 7278. Furthermore. x x x. No. The said test would only apply if the corporation is engaged in some economic activity or business function for the government. and further considering that the development of these young people at that tender age of seven to sixteen is vital in the development of the country producing good citizens. Yes. I do not think there are other groups similarly situated. the test of economic viability clearly does not apply to public corporations dealing with governmental functions. The discussion above conveys the constitutional intent not to apply this constitutional ban on the creation of public corporations where the economic viability test would be irrelevant. this Court cannot agree with the dissenting opinion which equates the changes introduced by Republic Act No. Madam President. It is undisputed that the BSP performs functions that are impressed with public interest. (Emphases supplied. The Boy Scouts of the Philippines has a long history of providing value formation to our young. 7278 to give up all interests in this basic youth organization.) Thus. one of the bill’s sponsors. . that should be given this kind of a privilege – the Boy Scouts of the Philippines and the Girl Scouts of the Philippines. at this point in time. I can only think of two organizations involving the masses of our youth. which amended the BSP Charter. Outside of these two groups. during the consideration of the Senate Bill that eventually became Republic Act No. and considering how huge the population of the young people is. Mr. which has been its partner in forming responsible citizens for decades. described the BSP as follows: Senator Lina. the government should not engage in activities that private enterprise is engaged in and can do better.” It was not the intent of Congress in enacting Republic Act No. Senator Joey Lina. I believe that we can make an exception of the Boy Scouting movement of the Philippines from this general prohibition against providing tax exemption and privileges.MR. In fact. 7278 to the BSP Charter as clear manifestation of the intent of Congress “to return the BSP to the private sector.
our past and present national leaders. x x x. changed from meeting to meeting. Chairman. as it turned out. (Emphasis ours. the Scouting Councils established in the provinces and cities were not in touch with what was happening on the national level. public servants in government offices. 111. and not only in our country but all over the world many if not most of them have at one time or another been beneficiaries of the Scouting Movement. Thus. Mr. that we would like to have the early approval of this measure if only to pay back what we owe much to the Scouting Movement.) The following is another excerpt from the discussion on the House version of the bill. And to our mind. Mr. x x x [W]e were acknowledged as the third biggest scouting organization in the world x x x. And so. And so. Chairman. this erratic growth and this decrease in membership [number] is because of the bad policy measures that were enunciated with the enactment or promulgation by the President before of Presidential Decree No. Chairman. to bring it back to its former glory reached under its original charter. And that is why. but they were left to implement what was decided by the Board. Now. 460. The BSP suffered from low morale and decrease in number because the Secretaries of the different departments in government who were too busy to attend the meetings of the BSP’s National Executive Board (“the Board”) sent representatives who. x x x I need not mention to you the value and the tremendous good that the Boy Scout Movement has done not only for the youth in particular but for the country in general. Mr. Congress worked closely with the BSP to rejuvenate the organization. Commonwealth Act No. x x x. going to the meat of the matter. have the best interest of the Boy Scout Movement at heart and it is in this spirit. that we see no impediment towards working together. DEL MAR. Chairman. this is what we would like to be appraised of by the officers of the Boy [Scouts] of the Philippines whom we are also confident. the disenfranchisement of the National Council in the election of the national board. 1936 under Commonwealth Act No. And so. and to correct the perceived ills introduced by the amendments to its Charter under Presidential Decree No. this is specifically what we are attacking. 7278. it is along this line. 111. Mr. prominent men in the various fields of endeavor. if we look around. as may be seen in the deliberation of the House Bills that eventually resulted to Republic Act No.In fact. and civic leaders in the communities all over the land. in the Committee on Government Enterprises: . if I may just – the Scouting Movement was enacted into law in October 31. Mr. A portion of the legislators’ discussion is quoted below to clearly show their intent: HON. Chairman. the Boy Scout of the Philippines officers working together with the House of Representatives in coming out with a measure that will put back the vigor and enthusiasm of the Boy Scout Movement. 460 which we feel is the culprit of the ills that is flagging the Boy Scout Movement today.
I think. . obviously. Chairman. I don’t know what would be the benefit of a charter or a mandate being provided for by way of legislation versus a registration with the SEC under the Corporation Code of the Philippines inasmuch as they don’t get anything from the government anyway insofar as direct funding. It just occurred to me that since you have had very bad experience in the hands of government and you will always be open to such possible intervention even in the future as long as you have a legislative mandate or your mandate or your charter coming from legislative action. which to their mind has been inimical to the objectives and to the institution per se. and at the same time they have been subjected to a governmental intervention. Mr. there has been negative interference on their part and inasmuch as their mandate is coming from a legislative fiat. that is why they are seeking legislative fiat to restore back the original mandate that they had under Commonwealth Act 111. don’t take that as an objection. Incidentally. there may be a disadvantage if the Boy Scouts of the Philippines will be required to register with the SEC. let’s say. the only thing that they got from government was intervention in their affairs. I’m not objecting. The point here is. I’m all for the objectives of these two bills. this rhetorical question. anybody can file a complaint in the SEC against the Boy Scouts of the Philippines and the SEC may suspend the operation or freeze the assets of the organization and hamper the operation of the organization. I don’t know. then shouldn’t it be. the government the Corporation Code of the Philippines and register with the SEC as non-profit non-stock corporation so that government intervention could be very very minimal. meaning. Chairman. Maybe we can solicit some commentary comments from the resource persons. ESCUDERO: Mr. the two bills as well as the previous laws that have created the Boy Scouts of the Philippines did not provide for any direct government support by way of appropriation from the national budget to support the activities of this organization. xxxx MR. there could be a danger of proliferation of scout organization. they may or they may not answer. then the organization will lose control of the entire organization. If we are registered with the SEC. Chairman. HON. Such having been the experience in the hands of government. that I think would be a problem that will not be exclusive to corporations registered with the SEC because even if you are government corporation. In fact.HON. Another disadvantage. But. Maybe that’s a rhetorical question. If there will be a proliferation of this. how you look at it but there could be a danger for anybody filing a complaint against the organization in the SEC and the SEC might suspend the registration permit of the organization and we will not be able to operate. court action may be taken against you in other judicial bodies because the SEC is simply another quasi-judicial body. Mr. AQUINO: x x x Well. shouldn’t it be better for this organization to seek a mandate from. AQUINO: Well. Anybody can organize and then register with the SEC. ano.
The BSP remains an agency attached to a department of the government. you have been given some sort of a franchise with this movement. The BSP meets the minimum statutory requirement of an attached government agency as the DECS Secretary sits at the BSP Board ex officio. is defined in the Revised Administrative Code of 1987. Chairman.the first point would be very interesting. an attached agency.) Therefore. the future leaders of the country. ESCUDERO: Yes. Requisites for Declaration of Unconstitutionality Not Met in this Case . In effect. HON. as pointed out earlier. The BSP objectives. the first point that you raised. to the government. AQUINO: Exclusive franchise of that movement? MR. x x x. 460. the DECS. Mr. The amendments were not done with the view of changing the character of the BSP into a privatized corporation. are consistent with the public purpose of the promotion of the well-being of the youth. ESCUDERO: Yes. that’s very well taken so I will proceed with other issues. in effect. HON. even though the amended BSP charter did away with most of the governmental presence in the BSP Board. what you are saying is that with the legislative mandate creating your charter. thus facilitating the policy and program coordination between the BSP and the DECS. and it was not at all stripped of its public character. (Emphases added. through the DECS. The ownership and control test is likewise irrelevant for a public corporation like the BSP. the relationship of the BSP. this was done to more strongly promote the BSP’s objectives. MR. AQUINO: Well. which were not supported under Presidential Decree No. To reiterate.
Section 8 reads: Section 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. the Court can exercise its power of judicial review only if the following requisites are present: (1) the existence of an actual and appropriate case. when it comes to the exercise of the power of judicial review. but the Court cannot be the one to raise a constitutional issue. Thus. True. (2) the existence of personal and substantial interest on the part of the party raising the constitutional question. which were clearly set forth in a recent case: When questions of constitutional significance are raised. These requirements would be ignored under the dissent’s rather overreaching view of how this case should have been decided. and that it should be raised by either of the parties. the constitutional issue should be the very lis mota.The dissenting opinion of Justice Carpio improperly raised the issue of unconstitutionality of certain provisions of the BSP Charter. branches. and the pertinent portion of the discussion is quoted below: . it was the Court that asked the parties to comment. Re: the COA’s Jurisdiction Regarding the COA’s jurisdiction over the BSP. The sources of funds to maintain the BSP were identified before the House Committee on Government Enterprises while the bill was being deliberated. and (4) the constitutional question is the lis mota of the case. Even if the parties were asked to Comment on the validity of the BSP charter by the Court. (Emphasis added. agencies or instrumentalities shall be expended by the Executive Board in pursuance of this Act. of the case. this alone does not comply with the requisites for judicial review. Section 8 of its amended charter allows the BSP to receive contributions or donations from the government. the Court chooses to once more exhibit restraint in the exercise of its power to pass upon the validity of a law. offices. or threshold issue. (3) recourse to judicial review is made at the earliest opportunity.) Thus.
but then this was… and the Boy Scouts then because of this funding partly from government was being subjected to audit in the contributions being made in the part of the Sweepstakes. Chairman. AQUINO: All right. in fact. The organization has to raise its own funds through fund drives and fund campaigns or fund raising activities. JESUS: May I? As historical backgrounder. . First. AQUINO: x x x Insofar as this organization being a government created organization. but before were you? MR. x x x From time to time. from private business and corporations. the Boy Scouts of the Philippines do not receive annual allotment from the government. The question is the sources of funds of the organization. We don’t fall under the jurisdiction of the COA. a government corporation classified as such. to wit: HON. Otherwise. Mr. Mr. when we have special activities we request for assistance or financial assistance from government agencies. but then in the case of the local councils and this legislative charter. And. but this is only during special activities that the Boy Scouts of the Philippines would conduct during the year. So the situation right now is that the Boy Scouts does not receive any funding from government. But this was removed later during the Martial Law years with the creation of the Human Settlements Commission. Our funds is not subjected. Yes. HON. we have to raise our own funds to support the organization. Chairman. MR. Mr. so to speak. this was the case also with the Girl Scouts at the Anti-TB. The nature of the funds of the BSP and the COA’s audit jurisdiction were likewise brought up in said congressional deliberations. Chairman. we are not. Commonwealth Act 111 was written by then Secretary Jorge Vargas and before and up to the middle of the Martial Law years. we have some revenue producing projects in the organization that gives us funds to support the operation. the BSP was receiving a subsidy in the form of an annual… a one draw from the Sweepstakes. Mr.MR. ESCUDERO. Chairman. Aside from this. ESCUDERO: No. Chairman. are your funds or your finances subjected to the COA audit? MR. ESCUDERO: Mr.
Chairman? THE CHAIRMAN: Yes. So all the funds donated or otherwise is accounted for at the end of the year by our external auditor. the BSP had been subjected to government audit in so far as public funds had been infused thereto. gentleman. this practice should not preclude the exercise of the audit jurisdiction of COA. xxxx HON. therefore. which pertinently provides: . but how about donated funds to this organization? What are the remedies of the donors of how will they know how their money are being spent? MR. in connection with that. AMATONG: There is no auditing being made because there’s no money put in the organization. clearly set forth under the Constitution. However. MR. In this case the SGV. Government bodies would be estopped from making donations to the Boy Scouts. this Commonwealth Act 111 as amended by PD 463. HON. THE CHAIRMAN: Yeah. ESCUDERO: The Boy Scouts of the Philippines has an external auditor and by the charter we are required to submit a financial report at the end of each year to the National Executive Board. Chairman. which at present is not the case because there is the Boy Scouts charter. Mr.enables the local councils even the national headquarters in view of the provisions in the existing law to receive donations from the government or any of its instrumentalities. ESCUDERO: May I answer. Historically. Gentleman from Zamboanga. which would be difficult if the Boy Scouts is registered as a private corporation with the Securities and Exchange Commission. AMATONG: Mr.
we come to the inevitable conclusion that it is subject to the exercise by the COA of its audit jurisdiction in the manner consistent with the provisions of the BSP Charter. the Government. SO ORDERED. (1) The Commission on Audit shall have the power. agencies. (b) autonomous state colleges and universities. and settle all accounts pertaining to the revenue and receipts of. continues to be a public corporation or a government instrumentality. authority. or any of its subdivisions. and (d) such non-governmental entities receiving subsidy or equity. premises considered. and on a post-audit basis: (a) constitutional bodies. or instrumentalities.  Since the BSP. including government-owned and controlled corporations with original charters. audit. (c) other government-owned or controlled corporations with original charters and their subsidiaries. or pertaining to. and expenditures or uses of funds and property. under its amended charter.Section 2. directly or indirectly. . which are required by law of the granting institution to submit to such audit as a condition of subsidy or equity. WHEREFORE. x x x. the instant petition for prohibition is DISMISSED. commissions and offices that have been granted fiscal autonomy under this Constitution. from or through the Government. owned or held in trust by. and duty to examine.
. The initiative petition does not comply with Section 2. et al. 1. The COMELEC. the Lambino Group filed a petition with the Commission on Elections (COMELEC) to hold a plebiscite that will ratify their initiative petition under Section 5(b) and (c) and Section 7 of Republic Act No. with each legislative district represented by at least 3% of its registered voters. however. 2006 Comments in Digests and Elections and Constitutional Law.nov. COMELEC (G. Fred October 25th. 8 On 15 February 2006. comelec 2006 res.327. 25 October 2006) – Digest Published by Atty. denied due course to the petition for lack of an enabling law governing initiative petitions to amend the Constitution. The proposed changes under the petition will shift the present Bicameral-Presidential system to a Unicameral-Parliamentary form of government. the people must first see the full text of the proposed amendments before they sign. While this provision does not expressly state that the petition must set forth the full text of the proposed amendments.21 2006 Lambino. 174153. 6735 or the Initiative and Referendum Act. and that the people must sign on a petition containing such full text. the deliberations of the framers of our Constitution clearly show that: (a) the framers intended to adopt the relevant American jurisprudence on peoples initiative. The Lambino Group claims that: (a) their petition had the support of 6.R. the group of Raul Lambino and Erico Aumentado (“Lambino Group”) commenced gathering signatures for an initiative petition to change the 1987 Constitution. No. On 25 August 2006. pursuant to the Supreme Courtâ€™s ruling in Santiago vs. vs. which also threw out the petition. Article XVII of the Constitution is the governing provision that allows a peopleâ€™s initiative to propose amendments to the Constitution.3 million individuals.Lambino v. and (b) in particular.952 individuals constituting at least 12% of all registered voters. Article XVII of the Constitution on direct proposal by the people Section 2. and (b) COMELEC election registrars had verified the signatures of the 6. The Lambino Group elevated the matter to the Supreme Court. Commission on Elections.
The full text of the proposed amendments may be either written on the face of the petition. First. Second. This means two essential elements must be present.The essence of amendments “directly proposed by the people through initiative upon a petition” is that the entire proposal on its face is a petition by the people. An initiative that gathers signatures from the people without first showing to the people the full text of the proposed amendments is most likely a deception. This omission is fatal. and unelected individuals. or sentence of text of the proposed changes in the signature sheet. If so attached. faceless. On so vital an issue as amending the nation’s fundamental law. and can operate as a gigantic fraud on the people. This is an assurance that every one of the several millions of signatories to the petition had seen the full text of the proposed amendments before – not after – signing. or attached to it. as an initiative upon a petition. That’s why the Constitution requires that an initiative must be “directly proposed by the people x x x in a petition” – meaning that the people must sign on a petition that contains the full text of the proposed amendments. the proposal must be embodied in a petition. Neither does the signature sheet state that the text of the proposed changes is attached to it. Moreover. . “an initiative signer must be informed at the time of signing of the nature and effect of that which is proposed” and failure to do so is “deceptive and misleading” which renders the initiative void. In the case of the Lambino Group’s petition. No agent or representative can sign on their behalf. the petition must state the fact of such attachment. These essential elements are present only if the full text of the proposed amendments is first shown to the people who express their assent by signing such complete proposal in a petition. the writing of the text of the proposed amendments cannot be hidden from the people under a general or special power of attorney to unnamed. phrase. The signature sheet merely asks a question whether the people approve a shift from the Bicameral-Presidential to the Unicameral. the people must author and thus sign the entire proposal.Parliamentary system of government. there’s not a single word. The signature sheet does not show to the people the draft of the proposed changes before they are asked to sign the signature sheet.
a change reducing Filipino ownership of mass media companies from 100% to 60% is an amendment and not a revision. Also. this Constitution. By any legal test and under any jurisdiction. or deletes without altering the basic principle involved. or revision of. applies to “any amendment to. Revision broadly implies a change that alters a basic principle in the constitution. The initiative violates Section 2. Courts have long recognized the distinction between an amendment and a revision of a constitution. the change may generally be considered an amendment and not a revision. . involving the abolition of the Office of the President and the abolition of one chamber of Congress. a change requiring a college degree as an additional qualification for election to the Presidency is an amendment and not a revision. amendment broadly refers to a change that adds. Section 1 of Article XVII. There is also revision if the change alters the substantial entirety of the constitution. Section 2 of Article XVII. Revision generally affects several provisions of the constitution. a shift from a Bicameral-Presidential to a UnicameralParliamentary system.2.” In contrast. as when the change affects substantial provisions of the constitution. is beyond doubt a revision. The third mode is through a people’s initiative. a change reducing the voting age from 18 years to 15 years is an amendment and not a revision. applies only to “amendments to this Constitution. Article XVII of the Constitution disallowing revision through initiatives Article XVII of the Constitution speaks of three modes of amending the Constitution. In contrast. The second mode is through a constitutional convention. Does the Lambino Group’s initiative constitute an amendment or revision of the Constitution? Yes. Where the proposed change applies only to a specific provision of the Constitution without affecting any other section or article. A people’s initiative to change the Constitution applies only to an amendment of the Constitution and not to its revision. reduces. like altering the principle of separation of powers or the system of checks-and-balances. For example. Congress or a constitutional convention can propose both amendments and revisions to the Constitution. referring to the first and second modes. not a mere amendment. Similarly. while amendment generally affects only the specific provision being amended. The first mode is through Congress upon three-fourths vote of all its Members.” This distinction was intentional as shown by the deliberations of the Constitutional Commission. On the other hand. referring to the third mode.
The qualitative test inquires into the qualitative effects of the proposed change in the constitution. â€œa change in the nature of [the] basic governmental planâ€• includes change in its fundamental framework or the fundamental powers of its Branches. which do not have fixed and identifiable deliberative bodies or recorded proceedings. but also the altered principles with those that remain unaltered. A change in a single word of one sentence of the Constitution may be a revision and not an amendment.â€• Whether there is an alteration in the structure of government is a proper subject of inquiry. Thus. there can be no fixed rule on whether a change is an amendment or a revision.• . a deliberative body with recorded proceedings is best suited to undertake a revision. depending on how it affects other provisions. The main inquiry is whether the change will â€œaccomplish such far reaching changes in the nature of our basic governmental plan as to amount to a revision. These changes do not also affect the structure of government or the system of checks-and-balances among or within the three branches. as well as how it affects the structure of government. For example. On the other hand. A revision requires harmonizing not only several provisions.• A change in the nature of the basic governmental plan also includes changes that jeopardize the traditional form of government and the system of check and balances. the carefully crafted system of checks-and-balances. to undertake only amendments and not revisions.The changes in these examples do not entail any modification of sections or articles of the Constitution other than the specific provision being amended. or several provisions of a constitution. In California where the initiative clause allows amendments but not revisions to the constitution just like in our Constitution. and the underlying ideological basis of the existing Constitution. Thus. constitutions normally authorize deliberative bodies like constituent assemblies or constitutional conventions to undertake revisions. courts have developed a two-part test: the quantitative test and the qualitative test. constitutions allow people’s initiatives. The quantitative test asks whether the proposed change is so extensive in its provisions as to change directly the substantial entirety of the constitution by the deletion or alteration of numerous existing provisions. Thus. Since a revision of a constitution affects basic principles. However. The court examines only the number of provisions affected and does not consider the degree of the change. Article II of the Constitution radically overhauls the entire structure of government and the fundamental ideological basis of the Constitution. the substitution of the word “republican” with “monarchic” or “theocratic” in Section 1. each specific change will have to be examined case-by-case.
when proposed through an initiative. ruled that the express intent of the framers and the plain language of the Constitution contradict the Lambino Groupâ€™s theory. The Lambino Group posits that when a deliberative body drafts and proposes changes to the Constitution. no need to revisit this Courts ruling in Santiago declaring RA 6735 incomplete.Under both the quantitative and qualitative tests. Merging the legislative and executive branches is a radical change in the structure of government. COMELEC is not necessary The petition failed to comply with the basic requirements of Section 2. A shift from the present Bicameral-Presidential system to a Unicameral-Parliamentary system is a revision of the Constitution. A revisit of Santiago vs. Article XVII of the Constitution on the conduct and scope of a peoples initiative to amend the Constitution. the proposed changes alter substantially the basic plan of government. The same substantive changes. The Lambino Group theorizes that the difference between â€œamendmentâ€• and â€œrevisionâ€• is only one of procedure. as when the three great coequal branches of government in the present Constitution are reduced into two. however. Quantitatively. not of substance. the abolition alone of one chamber of Congress alters the system of checks-and-balances within the legislature and constitutes a revision of the Constitution. . This alters the separation of powers in the Constitution. are called â€œamendmentsâ€• because the changes are made by ordinary people who do not make an â€œoccupation. A change in the structure of government is a revision of the Constitution. There is. therefore. the Lambino Group initiative is a revision and not merely an amendment. and from a bicameral to a unicameral legislature. Where the intent of the framers and the language of the Constitution are clear and plainly stated. Likewise. or vocationâ€• out of such endeavor. It settled that courts will not pass upon the constitutionality of a statute if the case can be resolved on some other grounds. An affirmation or reversal of Santiago will not change the outcome of the present petition. the Lambino Group proposed changes overhaul two articles – Article VI on the Legislature and Article VII on the Executive – affecting a total of 105 provisions in the entire Constitution. substantive changes are called â€œrevisionsâ€• because members of the deliberative body work full-time on the changes. The abolition alone of the Office of the President as the locus of Executive Power alters the separation of powers and thus constitutes a revision of the Constitution. 3. Qualitatively. profession. The SC. inadequate or wanting in essential terms and conditions• to cover the system of initiative to amend the Constitution. courts do not deviate from such categorical intent and language. from presidential to parliamentary.
) • Requirements for Initiative Petition • Constitutional Amendment vs. this will not change the result here because the present petition violates Section 2.3 million signatories did not sign the petition or the amended petition filed with the COMELEC. Section 5(b). Constitutional Revision • Tests to determine whether amendment or revision FACTS: The Lambino Group commenced gathering signatures for an initiative petition to changethe 1987 Constitution and then filed a petition with COMELEC to hold a plebiscite forratification under Sec. No. The proposed changes under thepetition will shift the present BicameralPresidential system to a Unicameral-Parliamentaryform of government. 5(b) and (c) and Sec. Article XVII of the Constitution.Even assuming that RA 6735 is valid. providing that no petition embracing more than one subject shall be submitted to the electorate. COMELEC G. COMELEC did not give it due course for lack of an enabling lawgoverning initiative petitions to amend the Constitution. 7 of RA 6735. ISSUES: • Whether or not the proposed changes constitute an amendment or revision . b. LAMBINO vs. 174153. The proposed Section 4(4) of the Transitory Provisions. which provision must first be complied with even before complying with RA 6735.R. Comelecruling. The 6. Donato and Agra signed the petition and amended petition. Section 10(a). Oct. mandating the interim Parliament to propose further amendments or revisions to the Constitution. J. 25. the petition violates the following provisions of RA 6735: a. is a subject matter totally unrelated to the shift in the form of government. requiring that the people must sign the petition as signatories. Worse. Lambino. pursuant to Santiago v. Only Attys. 2006(CARPIO.
pursuant to COA Memorandum No. 2. 1997. 156982. 2.. vs. the deliberations of theframers of our Constitution clearly show that: (a) the framers intended to adopt relevantAmerican jurisprudence on people’s initiative. No. 2004]. NAC resident auditor Eulalia disallowed on audit the payment of honoraria to these representatives amounting to P255. 1998. While this provision does not expressly state that thepetition must set forth the full text of the proposed amendments.. 1994 by then President Fidel V. It appears that after personally attending the initial NAC meetings. J. and that the people must sign ona petition containing such full text National amnesty comm. XVII on direct proposal by peopleSec. process and review amnesty applications.. 97-038. CORONA. However.: Petitioner National Amnesty Commission (NAC) is a government agency created on March 25. the NGAO upheld the auditor’s order and notices of disallowance were subsequently issued to the following:*7+ REPRESENTATIVES AMOUNT 1. Ramos through Proclamation No. coa 2004 [G. It is composed of seven members: a Chairperson. R. Art. 1997. National Defense and Interior and Local Government as ex officio members. on October 15. 1994 to June 27. Art. and the Secretaries of Justice. The NAC is tasked to receive. 1994. On September 1. Ramon Martinez . 347. and (b) in particular. the three ex officio members turned over said responsibility to their representatives who were paid honoraria beginning December 12. three regular members appointed by the President. Cesar Averilla P 2. the people must first seethe full text of the proposed amendments before they sign.750 for the period December 12.00 Department of National Defense 2. September 8. XVII.• Whether or not the initiative petition is sufficient compliance withthe constitutional requirement on direct proposal by the people RULING: Initiative petition does not comply with Sec.500.is the governing provision that allows a people’s initiative to proposeamendments to the Constitution.
000. on April 28. 73.00 Department of Justice 5. Cielito Mindaro. Purita Deynata 18.00 Department of Justice Section 1.750. Rule II thereof provides: 26. 1999. which was approved by then President Joseph Estrada on October 19.250.Department of National Defense 3.250. b) Three (3) Commissioners who shall be appointed by the President. Stephen Villaflor 71. Artemio Aspiras 1. c) Three (3) Ex-officio Members .00 Department of the Interior and Local Government 7. 1999.750.00 Department of Justice 4.00 Meanwhile. 2 (the new Implementing Rules and Regulations of Proclamation No. 347).00 Department of the Interior And Local Government 6.750. Alberto Bernardo 62.00 P255. Composition – The NAC shall be composed of seven (7) members: a) A Chairperson who shall be appointed by the President. Section 1.250. the NAC passed Administrative Order No.
(4) interpreting laws and rules outside of its mandate and declaring Section 1. honoraria or any allowance whatsoever to the NAC ex officio members’ official representatives. 97-038 without the required notice and publication under Article 2 of the Civil Code. Said Representatives shall be entitled to per diems. the Government. (2) invoking paragraph 2. The COA is correct that there is no legal basis to grant per diem. the NAC filed the present petition. and settle all accounts pertaining to the revenue and receipts of. (1) The Commission on Audit shall have the power. Thus.1. audit. We hold that the position of petitioner NAC is against the law and jurisprudence. 2 null and void. allowances. 2003. 2 in assailing before the COA the rulings of the resident auditor and the NGAO disallowing payment of honoraria to the ex officio members’ representatives. Article IX-B of the 1987 Constitution to sustain the disallowance of honoraria under said Memorandum. on March 14. or pertaining to. or any of its subdivisions. The Constitution mandates the Commission on Audit to ensure that the funds and properties of the government are validly. bonuses and other benefits as may be authorized by law. (3) applying the Memorandum to the NAC ex officio members’ representatives who were all appointive officials with ranks below that of an Assistant Secretary. Secretary of National Defense 3. Hence. Rule II of Administrative Order No. without any exception: Section 2. and expenditures or uses of funds and property. Secretary of the Interior and Local Government The ex officio members may designate their representatives to the Commission. and (5) disallowing the payment of honoraria on the ground of lack of authority of representatives to attend the NAC meetings in behalf of the ex officio members. (Emphasis supplied) Petitioner invoked Administrative Order No. efficiently and conscientiously used. authority and duty to examine. Section 7. contending that the COA committed grave abuse of discretion in: (1) implementing COA Memorandum No. Article IX-D of the Constitution ordains the COA to exercise exclusive and broad auditing powers over all government entities or trustees. Secretary of Justice 2. . to no avail. owned or held in trust by.
preserve the vouchers and other supporting papers pertaining thereto. It is in accordance with this constitutional mandate that the COA issued Memorandum No. including government-owned and controlled corporations with original charters. as are necessary and appropriate to correct the deficiencies. from or through the government. It shall keep the general accounts of the Government and. or unconscionable expenditures. subject to the limitations in this Article. unnecessary. in violation of the rule on multiple positions. or instrumentalities. (Emphasis supplied). or their representatives. and promulgate accounting and auditing rules and regulations. or any investment of public funds. (c) other government-owned or controlled corporations and their subsidiaries.agencies. and to effect the refund of any and all such additional compensation . and on a post-audit basis: (a) constitutional bodies. Committee on Accountability of Public Officers and Investigations and Committee on Civil Service and Government Reorganization. 509 urging the Commission on Audit to immediately cause the disallowance of any payment of any form of additional compensation or remuneration to cabinet secretaries. However. commissions and offices that have been granted fiscal autonomy under this Constitution. directly or indirectly. inexpensive. from the jurisdiction of the Commission on Audit. Section 3. which are required by law of the granting institution to submit to such audit as a condition of subsidy or equity. establish the techniques and methods required therefor. including temporary or special pre-audit. 97-038 SUBJECT: Implementation of Senate Committee Report No. 1997: COMMISSION ON AUDIT MEMORANDUM NO. including those for the prevention and disallowance of irregular. or uses of government funds and properties. 97-038 on September 19. and (d) such nongovernmental entities receiving subsidy or equity. (b) autonomous state colleges and universities. for such period as may be provided by law. extravagant. to define the scope of its audit and examination. No law shall be passed exempting any entity of the Government or its subsidiary in any guise whatever. (2) The Commission shall have exclusive authority. their deputies and assistants. The Commission received a copy of Senate Committee Report No. where the internal control system of the audited agencies is inadequate. the Commission may adopt such measures. 509.
all unit heads/auditors/team leaders of the national government agencies and government owned or controlled corporations which have effected payment of subject allowances. the Supreme Court ruled that Cabinet Secretaries. issue the corresponding notices of disallowance. On accounts that have been audited and settled under certificate of settlements and balances on record – to review and re-open said accounts. and certify a new balance thereon. from the time of the finality of the Supreme Court ruling in Civil Liberties Union v. their deputies and assistants to hold other offices in addition to their primary office and to receive compensation therefor. It is understood that the re-opening of accounts shall be limited to those that were settled within the prescriptive period of three (3) years prescribed in Section 52 of P. In view thereof. 1991 to present – to immediately issue the Notices of disallowance and corresponding certificate of settlements and balances. All auditors concerned shall ensure that all documents evidencing the disallowed payments are kept intact on file in their respective offices.D. In the Civil Liberties Union case. 1445. The said decision became final and executory on August 19. or their representatives. 1991. 2. their deputies and assistants may not hold any other office or employment.given to and received by the officials concerned. On disallowances previously made on these accounts – to submit a report on the status of the disallowances indicating whether those have been refunded/settled or have become final and executory and the latest action taken by the Auditor thereon. Any problem/issue arising from the implementation of this Memorandum shall be brought promptly to the attention of the Committee created under COA Officer Order No. 97-698 thru the Director concerned. Executive Secretary to the present. 3. for immediate resolution. On accounts that have not been audited and settled under certificate of settlements and balances on record from August 19. . are directed to implement the recommendation contained in the subject Senate Committee Report by undertaking the following audit action: 1. It declared Executive Order 284 unconstitutional insofar as it allows Cabinet members.
COA Memorandum No. 97-698. need not be published. a quarterly progress report on the status of disallowances made shall be submitted. at present. Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or. shall supervise the implementation of this Memorandum which shall take effect immediately and shall submit a consolidated report thereon in response to the recommendation of the Senate Committee on Accountability of Public Officers and Investigation and Committee on Civil Service and Government Reorganization.An initial report on the implementation of this Memorandum shall be submitted to the Directors concerned not later than October 31. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette. shall be published as a condition for their effectivity. We clarified this publication requirement in Tañada vs. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. (Emphasis supplied. the publication required by Article 2 of the Civil Code: Art.) . Thereafter. 1997. dated September 10. unless it is otherwise provided. including those of local application and private laws. which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature. 2. for validity and effectivity. regulating only the personnel of the administrative agency and not the public. The Committee created under COA Office Order No. This Code shall take effect one year after such publication. Tuvera: [A]ll statutes. Interpretative regulations and those merely internal in nature. 1997. (Emphasis supplied) Contrary to petitioner’s claim. until all the disallowances shall have been enforced. that is. 97-038 does not need. directly conferred by the Constitution.
or their representatives from holding multiple offices and receiving double compensation. in effect. including government-owned or controlled corporations or their subsidiaries. which provides as follows: “Sec. or instrumentality thereof. albeit subject to the limitation therein imposed. Article VII of the Constitution on the President and his official family. and their deputies or assistants shall not. thus: "Unless otherwise allowed by law or by the primary functions of his position. 97-038. or in any franchise. including government-owned or controlled corporation or their subsidiaries. The President. allows members of the Cabinet. The Executive Secretary: Petitioners maintain that this Executive Order which. runs counter to Section 13. unless otherwise provided in this Constitution. Six years prior to the issuance of COA Memorandum No.COA Memorandum No. 13. hold any other office or employment during their tenure. no appointive official shall hold any other office or employment in the Government or any subdivision. par. They shall not. for easy reference is quoted anew. Article VII of the 1987 Constitution insofar as Cabinet members. their deputies or assistants are concerned admit of the broad exceptions made for appointive officials in general under Section 7. They shall strictly avoid conflict of interest in the conduct of their office. participate in any business. agency. 97-038 is merely an internal and interpretative regulation or letter of instruction which does not need publication to be effective and valid. Article IX-B which. agency or instrumentality thereof. directly or indirectly practice any other profession. the Members of the Cabinet.” xxx xxx xxx [D]oes the prohibition in Section 13." . their undersecretaries and assistant secretaries to hold other government offices or positions in addition to their primary positions. or special privilege granted by the Government or any subdivision. Vice-President. their deputies and assistants. Article VII of the 1987 Constitution. It is not an implementing rule or regulation of a statute but a directive issued by the COA to its auditors to enforce the self-executing prohibition imposed by Section 13. during said tenure. (2). or be financially interested in any contract with. the Court had the occasion to categorically explain this constitutional prohibition in Civil Liberties Union vs.
We rule in the negative. Article VII cannot possibly refer to the broad exceptions provided under Section 7. This being the case. Article VII. Members of the Cabinet. Article IX-B is meant to lay down the general rule applicable to all elective and appointive public officials and employees. while all other appointive officials in the civil service are allowed to hold other office or employment in the government during their tenure when such is allowed by law or by the primary functions of their positions. unless otherwise provided in the Constitution itself. be construed as applying to posts occupied by the Executive officials specified therein without additional compensation in an ex-officio capacity as provided by law and as required by the primary functions of said officials' office. their deputies and assistants may do so only when expressly authorized by the Constitution itself. The reason is that these posts do no comprise "any other office" within the contemplation of the constitutional prohibition but are properly an imposition of additional duties and functions on said officials. Article IX-B already contains a blanket prohibition against the holding of multiple offices or employment in the government subsuming both elective and appointive public officials. Sec. . members of the Cabinet. Article VII is meant to be the exception applicable only to the President. Vice-President. xxx xxx xxx Thus. their deputies and assistants. xxx xxx xxx But what is indeed significant is the fact that although Section 7. Section 7. the Constitutional Commission should see it fit to formulate another provision. xxx xxx xxx The prohibition against holding dual or multiple offices or employment under Section 13. Article VII of the Constitution must not. members of the Cabinet. … . however. the Vice-President. 13. In other words. specifically prohibiting the President. Article IX-B of the 1987 Constitution. . their deputies and assistants from holding any other office or employment during their tenure. the qualifying phrase "unless otherwise provided in this Constitution" in Section 13. while Section 13. .
by virtue of office. but rather annexed to the official position. the Secretary of Transportation and Communications is the ex-officio Chairman of the Board of the Philippine Ports Authority. not expressly conferred upon the individual character. and without further warrant or appointment. Article VII is not to be interpreted as covering positions held without additional compensation in ex-officio capacities as provided by law and as required by the primary functions of the concerned official's office.." Ex-officio likewise denotes an "act done in an official character. and the Light Rail Transit Authority. by express provision of law.xxx xxx xxx [T]he prohibition under Section 13. (Emphasis supplied). The reason is that these services are already paid for and covered by the compensation attached to his principal office.*13+ The Court’s interpretation of the law is part of that law as of the date of enactment because its interpretation merely establishes the contemporary legislative intent that the construed law purports to carry into effect." It refers to an "authority derived from official character merely. Supreme Court decisions assume the same authority as valid statutes." An ex-officio member of a board is one who is a member by virtue of his title to a certain office. such as the Civil Liberties Union doctrine.. or as a consequence of office. and without any other appointment or authority than that conferred by the office. xxx xxx xxx The ex-officio position being actually and in legal contemplation part of the principal office. form part of our legal system. . The term ex-officio means "from office. To illustrate. Judicial decisions applying or interpreting the laws or the Constitution. x x x xxx xxx xxx …*E+x-officio posts held by the executive official concerned without additional compensation as provided by law and as required by the primary functions of his office do not fall under the definition of "any other office" within the contemplation of the constitutional prohibition. it follows that the official concerned has no right to receive additional compensation for his services in the said position.
Hence. including government-owned or controlled corporations or their subsidiaries. In Civil Liberties Union. Article IX-B on all government employees against holding multiple government offices. The NAC ex officio members’ representatives who were all appointive officials with ranks below Assistant Secretary are covered by the two constitutional prohibitions. profession. unless otherwise allowed by law or the primary functions of their positions. rule against or affect the right of any individual. – (1) No elective official shall be eligible for appointment or designation in any capacity to any public office or position during his tenure. 54. xxx xxx xxx (3) Unless otherwise allowed by law or by the primary functions of his position. . Section 7. in any manner or on its own. whether government or private. except those provided for under the Constitution. business or financial interest. Sections 54 and 56 of the Administrative Code of 1987 reiterate the constitutional prohibition against multiple positions in the government and receiving additional or double compensation: SEC. we elucidated on the two constitutional prohibitions against holding multiple positions in the government and receiving double compensation: (1) the blanket prohibition of paragraph 2. Limitation on Appointment. 97-038 does not. and (2) the stricter prohibition under Section 13. effective and enforceable. the NAC ex officio members’ representatives are not exempt from the general prohibition because there is no law or administrative order creating a new office or position and authorizing additional compensation therefor. publication of said Memorandum is not required for it to be valid. First. Article VII on the President and his official family from holding any other office. agency or instrumentality thereof. unless allowed by the Constitution. no appointive official shall hold any other office or employment in the Government or any subdivision.COA Memorandum No.
in the attendance of the NAC meetings. are proscribed from receiving additional compensation because their services are already paid for and covered by the compensation attached to their principal offices. Additional or Double Compensation. a designation merely connotes an imposition of additional duties. Thus. Designation does not entail payment of additional benefits or grant upon the person so designated the right to claim the salary attached to the position. 56. and not a mere designation. RA 6758. the ex officio members’ representatives are also covered by the strict constitutional prohibition imposed on the President and his official family. An appointment is the selection by the proper authority of an individual who is to exercise the powers and functions of a given office. office. The legal basis of an employee’s right to claim the salary attached thereto is a duly issued and approved appointment to the position. a designation does not entitle the officer to receive the salary of the position. or title of any kind form any foreign state.No elective or appointive public officer or employee shall receive additional or double compensation unless specifically authorized by law nor accept without the consent of the President. also bars the receipt of such additional emolument. Second. the ex officio members were not entitled to. who hold positions in ex officio capacities. including their deputies and assistants. in Civil Liberties Union. There is a considerable difference between an appointment and designation. we held that cabinet secretaries. emolument. The representatives in fact assumed their responsibilities not by virtue of a new appointment but by mere designation from the ex officio members who were themselves also designated as such. Pensions and gratuities shall not be considered as additional. -.xxx xxx xxx SEC. upon a person already in the public service by virtue of an earlier appointment. double or indirect compensation. Without an appointment. any present. Again. and . usually by law. the Salary Standardization Law.
the Commission may motu propio review and revise the account or settlement and certify a new balance. Such additional compensation is prohibited by the Constitution. 1445. in de la Cruz vs. The agent. there is now no legal impediment since it was approved by the President. honoraria and other allowances. COA. Proclamation No. 1999 null and void. since the ex officio member is prohibited from receiving additional compensation for a position held in an ex officio capacity. Opening and revision of settled accounts.were in fact prohibited from. the presidential issuance creating the NAC. This Commission begs to disagree. (1) At any time before the expiration of three years after the settlement of any account by an auditor. In declaring Section 1.[18+ we upheld COA’s disallowance of the payment of honoraria and per diems to the officers concerned who sat as ex officio members or alternates. Said provision in the new IRR is null and void for having been promulgated in excess of its rule-making authority. so is his representative likewise restricted. 1978: SECTION 52. makes no mention that representatives of ex-officio members can take the place of said ex-officio members during its meetings and can receive per diems and allowances. Furthermore. More importantly. the COA ruled that: Petitioner further contends that with the new IRR issued by the NAC authorizing the ex-officio members to designate representatives to attend commission meetings and entitling them to receive per diems. 347. This . The laws. Rule II of Administrative Order No. The Court also finds that the re-opening of the NAC accounts within three years after its settlement is within COA’s jurisdiction under Section 52 of Presidential Decree No. promulgated on June 11. In short. alternate or representative cannot have a better right than his principal. the ex officio member. 2 s. Erroneous application and enforcement of the law by public officers do not preclude subsequent corrective application of the statute. rules. honorarium. prohibitions or restrictions that cover the ex officio member apply with equal force to his representative. collecting extra compensation. the Government is never estopped by the mistake or error on the part of its agents. whether it was called per diem. allowance or some other euphemism. COA and Bitonio vs.
They cannot substitute for the ex officio members for purposes of determining quorum. Section 4 of the administrative order categorically states: Decisions of the NAC shall be arrived at by a majority vote in a meeting where there is a quorum consisting of at least four members. the administrative order merely allows the ex officio members to designate their representatives to NAC meetings but not to decide for them while attending such meetings. we disagree with NAC’s position that the representatives are de facto officers and as such are entitled to allowances. statutes and judicial decisions. Said Representatives shall be entitled to per diems. although the administrative order does not preclude the representatives from attending the NAC meetings. However. Thus. allowances. We find that. cannot add. Second. as it merely provides that: The ex officio members may designate their representatives to the Commission. that is. expand or enlarge the provisions of the issuance it seeks to implement without committing an ultra vires act. participating in deliberations and making decisions. the NAC. Lastly. on its face. (Emphasis supplied). the payment of such allowances is not allowed. bonuses and other benefits as may be authorized by law. Section 1. The problem lies not in the administrative order but how the NAC and the COA interpreted it. Rule II of Administrative Order No.being the case. they may do so only as guests or witnesses to the proceedings. as already discussed. in the exercise of its quasi-legislative powers. First. pursuant to our pronouncement in Civil Liberties Union: . prohibited even. the Constitution. 2 is valid. the administrative order itself acknowledges that payment of allowances to the representatives must be authorized by the law.
if the office is an appointive office. Jr. given the express prohibition of the Constitution and the finality of our decision in Civil Liberties Union prior to their receipt of such allowances. so that the incumbent be not a mere volunteer. Furthermore. concur. C. however irregular or informal.. (He is) one who is in possession of an office and is discharging its duties under color of authority. who in good faith has had possession of the office and has discharged the duties pertaining thereto. Panganiban... Puno. Quisumbing.” A de facto officer “derives his appointment from one having colorable authority to appoint. Tinga and Chico-Nazario. fees and other compensation attached to the office. SO ORDERED. is legally entitled to the emoluments of the office. Ynares-Santiago. by which is meant authority derived from an appointment. Callejo. . JJ.”*21+ The representatives cannot be considered de facto officers because they were not appointed but were merely designated to act as such.J. they are not entitled to something their own principals are prohibited from receiving.. Azcuna. WHEREFORE the petition is hereby DISMISSED for lack of merit. and may in appropriate action recover the salary. Sr. Sandoval-Gutierrez. Austria-Martinez and Carpio Morales JJ. a de facto officer. Neither can they claim good faith. on official leave. Carpio. Davide.. and whose appointment is valid on its face.“where there is no de jure officer.
the petitioner had been assessed by the SEC’s Corporate and Legal Department a separate filing fee for the application for extension of corporate term equivalent to 1/10 of 1% of its authorized capital stock plus 20% thereof or an amount of P1. INC.212. 2008 SECURITIES AND EXCHANGE COMMISSION. 1. Series of 1986 should be the basis for computing the filing fee relative to GMA Network.’s (GMA’s) application for the amendment of its articles of incorporation for purposes of extending its corporate term. GMA NETWORK. for brevity). (SEC. among others. a domestic corporation. 1996." as well as the extension of the corporate term for another fifty (50) years from and after June 16. (GMA. the petitioner requested the SEC to approve the other amendments being requested by the petitioner without being deemed to have withdrawn its application for extension of corporate term. 2000. which directed that SEC Memorandum Circular No. respondent. Inc.. No. the petitioner informed the SEC of its intention to contest the legality and propriety of the said assessment.00. Inc. 1995.200. .00 for its application for extension of corporate term. 68163. filed an application for collective approval of various amendments to its Articles of Incorporation and ByLaws with the respondent Securities and Exchange Commission. petitioner. On October 20. the SEC approved the other amendments to the petitioner’s Articles of Incorporation. SP No. Upon such filing. 1995. 164026 December 23.200. the change in the corporate name of petitioner from "Republic Broadcasting System.Sec v." to "GMA Network.212. for brevity).R. specifically Article 1 thereof referring to the corporate name of the petitioner as well as Article 2 thereof referring to the principal purpose for which the petitioner was formed. The undisputed facts as narrated by the appellate court are as follows: On August 19. GMA NETWORK.. On September 26. 1995. the petitioner. The amendments applied for include. INC. However. On February 20. Inc.R. DECISION TINGA. gma 2008 G. 2004 of the Court of Appeals in CA-G. the petitioner formally protested the assessment amounting to P1. J. vs.: Petitioner Securities and Exchange Commission (SEC) assails the Decision dated February 20.
1996. . the SEC argues that it issued the questioned memorandum circular in the exercise of its delegated legislative power to fix fees and charges. its publication is required for its effectivity. we believe that the questioned assessment is in accordance with law. The challenged memorandum circular. The fees are not a form of penalty or sanction and. require no publication. the petitioner requested for an official opinion/ruling from the SEC on the validity and propriety of the assessment for application for extension of its corporate term. 2. Hence. following three (3) motions for early resolution filed by the petitioner. The appellate court denied reconsideration in a Resolution4 dated June 9. As such. The filing fees required by it are allegedly uniformly imposed on the transacting public and are essential to its supervisory and regulatory functions. Consequently. In its Memorandum5 dated September 6. on April 18. is not merely an internal or interpretative rule. the dispositive portion of which states: "In light of the foregoing.00 as filing fee for the extension of GMA’s corporate term. the Court of Appeals ruled that Memorandum Circular No. 2004. the instant Appeal is hereby dismissed. it is not an ordinary amendment but is analogous to the filing of new articles of incorporation. but affects the public in general.On March 19. Accordingly. which the SEC used as basis for assessing P1. 2001. In its petition for review3 with the Court of Appeals.212. the respondent SEC En Banc issued the assailed order dismissing the petitioner’s appeal. Series of 1994. the respondent SEC.200. through Associate Commissioner Fe Eloisa C. is not valid. therefore. Gloria. 1996. Series of 1994 is legally invalid and ineffective for not having been published in accordance with law. you are hereby required to comply with the required filing fee. the dispositive portion of which provides as follows: WHEREFORE. according to the appellate court. It further averred that SEC Memorandum Circular No. SO ORDERED." An appeal from the aforequoted ruling of the respondent SEC was subsequently taken by the petitioner on the ground that the assessment of filing fees for the petitioner’s application for extension of corporate term equivalent to 1/10 of 1% of the authorized capital stock plus 20% thereof is not in accordance with law. 2005. issued its ruling upholding the validity of the questioned assessment. However. The appellate court agreed with the SEC’s submission that an extension of the corporate term is a grant of a fresh license for a corporation to act as a juridical being endowed with the powers expressly bestowed by the State. On September 26. for lack of merit. 2. GMA argued that its application for the extension of its corporate term is akin to an amendment and not to a filing of new articles of incorporation.
is ineffective. effectuating its mandate under the aforequoted law and other pertinent laws. No.D. Thus. the SEC shall be entitled to collect and receive the same fees it assesses and collects both for the filing of articles of incorporation and the filing of an amended articles of incorporation for purposes of extending the term of corporate existence. being the one that specifically treats of applications for the extension of corporate term.9 issued SEC Memorandum Circular No. Likewise established is its power under Sec. is recognized. and 1/10 of .00 for stock corporations. 902-A to recommend to the President the revision. The subject of the present inquiry is not the authority of the SEC to collect and receive fees and charges.7 Its power to collect fees for examining and filing articles of incorporation and by-laws and amendments thereto. that SEC Memorandum Circular No. It should be mentioned at the outset that the authority of the SEC to collect and receive fees as authorized by law is not in question. 2005. certificates of increase or decrease of the capital stock. refers only to filing fees for articles of incorporation. GMA avers that the latter did not take effect and cannot be the basis for the imposition of the fees stated therein for the reasons that it was neither filed with the University of the Philippines Law Center nor published either in the Official Gazette or in a newspaper of general circulation as required under existing laws. on the other hand. Series of 1986. 3531 (R. Republic Act No. alteration. 1.A. 3531) provides that where the amendment consists in extending the term of corporate existence."8 As is clearly the import of this law. Series of 1994 is applicable. Series of 1986 refers to the filing fees for amended articles of incorporation where the amendment consists of extending the term of corporate existence. Assuming that Memorandum Circular No.For its part.00 nor more than P100. The questioned circular. the Court of Appeals held. among others. imposing the filing fee of 1/10 of 1% of the authorized capital stock but not less than P300. No. The SEC.6 dated September 23. the SEC "shall be entitled to collect and receive for the filing of the amended articles of incorporation the same fees collectible under existing law as the filing of articles of incorporation. but rather the validity of its imposition on the basis of a memorandum circular which. 2. GMA argues that the former circular. GMA points out in its Memorandum. 1. should apply to its case. 7 of P. amendment or adjustment of the charges which it is authorized to collect.000.
A reading of the two circulars readily reveals that they indeed pertain to different matters. Tuvera. 2.10 the Court.A. R. the former circular. Series of 1986 refers to the filing fee for the amendment of articles of incorporation to extend corporate life. however.1% of the authorized capital stock but not less than P200.00 nor more than P100. which repealed Art. . 200. provides that "laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines. 1. 2 of the Civil Code. What this proposition fails to consider. GMA’s argument notwithstanding. which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature. more importantly. we agree with the Court of Appeals that the questioned memorandum circular is invalid as it does not appear from the records that it has been published in the Official Gazette or in a newspaper of general circulation. No. Series of 1986. Thus. expounding on the publication requirement. the SEC issued Memorandum Circular No. 1. Several years after. as GMA points out. should be followed. held: We hold therefore that all statutes. 2.00 for stock corporations without par value. being squarely applicable and.000. is the clear directive of R. shall be published as a condition for their effectivity. No.00. 3531 provides an unmistakable standard which should guide the SEC in fixing and imposing its rates and fees. If such mandate were the only consideration. However.A. Series of 1994. SEC Memorandum Circular No. as GMA argues. Executive Order No. 3531 to impose the same fees for the filing of articles of incorporation and the filing of amended articles of incorporation to reflect an extension of corporate term." In Tañada v. the Court would have been inclined to rule that the SEC was correct in imposing the filing fees as outlined in the questioned memorandum circular. such that the fee for the filing of articles of incorporation became 1/10 of 1% of the authorized capital stock plus 20% thereof but not less than P500. Series of 1994 pertains to the filing fee for articles of incorporation. including those of local application and private laws. being more favorable to it. for the filing of amended articles of incorporation where the amendment consists of extending the term of corporate existence. unless it is otherwise provided. while Memorandum Circular No. imposing new fees and charges and deleting the maximum filing fee set forth in SEC Circular No.
has not been filed with the Office of the National Administrative Register of the University of the Philippines Law Center as required in the Administrative Code of 1987. therefore.12 In Philsa International Placement and Services Corp. regulating only the personnel of the administrative agency and not the public. furthermore. and proportionate to the service for which the fee . v. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. Series of 1983 of the Philippine Overseas Employment Administration. 2.13 Memorandum Circular No. need not be published. it should be emphasized. is that charged by a public official to accept a document for processing. This administrative issuance is an implementation of the mandate of R. Interpretative regulations and those merely internal in nature. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. which provided for the schedule of placement and documentation fees for private employment agencies or authority holders. by legal definition. No. The questioned memorandum circular. A related factor which precludes consideration of the questioned issuance as interpretative in nature merely is the fact the SEC’s assessment amounting to P1.200. be considered a mere internal rule or regulation.00 is exceedingly unreasonable and amounts to an imposition.A. or. but a rule which must be declared ineffective as it was neither published nor filed with the Office of the National Administrative Register.Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature. Secretary of Labor and Employment. 3531. No. was struck down as it was not published or filed with the National Administrative Register. nor an interpretation of the law. A filing fee. directly conferred by the Constitution. at present. that is. fair. It cannot.11 The questioned memorandum circular.212. The fee should be just. 3531 and indubitably regulates and affects the public at large.A. cannot be construed as simply interpretative of R.
No pronouncement as to costs. 68163. Rate-fixing is a legislative function which concededly has been delegated to the SEC by R. permits the courts to determine whether the regulation issued by the SEC is reasonable and within the bounds of its rate-fixing authority and to strike it down when it arbitrarily infringes on a person’s right to property. No.R. WHEREFORE. SO ORDERED. SP No. dated June 9. The Decision of the Court of Appeals in CA-G. The due process clause. the examination and verification of the documents submitted by GMA to warrant an extension of its corporate term. in this case. . are AFFIRMED. and its Resolution. 2004.A. dated February 20. the petition is DENIED.is being collected. 2004. 3531 and other pertinent laws. however.