BOY SCOUTS OF THE PHILIPPINES V COA

(G.R. No. 177131, June 7, 2011)

On Public Corporations in the Philippines (BSP; Public Corporations; De facto corporations)

FACTS:
COA issued a resolution stating that the BSP was created as a public corporation under CA 111. Further
noting that in BSP v NLRC, 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.’

The BSP sought reconsideration of the resolution, claiming that RA 7278 eliminated the substantial
government participation when it removed 1) the President and the executive secretaries as members
thereof and 2) the appointment of the President as the Chief Scout. It further contended that the BSP is not
a GOCC as it was not organized as a stock or non-stock corporation, contrary to the definition provided for
in the 1987 Administrative Code itself, which the BSP v NLRC relied on.

BSP likewise alleged that unlike other GOCCs, the Government does not have funds invested in the BSP,
nor they are administering any special funds. Thus, they are not under the audit jurisdiction of the COA.
They averred that BSP is neither a unit of the Government; a department which refers to an executive
department as created by law; nor a bureau which refers to any principal subdivision or unit of any
department.

ISSUE:
W/N the BSP falls under the COA’s audit jurisdiction.

RULING:
YES. The BSP is a public corporation and its funds are subject to the COA’s audit jurisdiction

RATIO:
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 Art II, Sec 13 of the Constitution. Evidently, the BSP, which was created by a
special law to serve a public purpose in pursuit of a constitutional mandate, comes within the class of
‘public corporations’ defined by paragraph 2, Article 44 of the Civil Code and governed by the law which
creates it, pursuant to Article 45 of the same Code.
BSP is a public corporation or a government agency or instrumentality with juridical personality, which does
not fall within the constitutional prohibition in Art XII, Sec 16, notwithstanding the amendments to its charter.
Not all corporations, which are not government owned or controlled, are ipso facto to be considered private
corporations as there exist another distinct class of corporations or chartered institutions which are
otherwise known as ‘public corporations.’ These corporations are treated by law as agencies or
instrumentalities of the government which are not subject to the test 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.