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Boy Scouts of the Philippines vs.

Commission on Audit
G.R. No. 177131, June 7, 2011

FACTS: The Commission on Audit issued COA Resolution No. 99-011 in which
the said resolution state 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 vs.
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.
The BSP sought reconsideration of the COA Resolution in a letter
signed by the BSP National President Jejomar Binay. He claimed that RA 7278
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
The BSP further claimed that the 1987 Administrative Code itself, of
which the BSP s. 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.
And finally, they claim that the Government, like in other GOCCs, does
not have funds invested in the BSP. The BSP is not an entity administering
special funds. The 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: Whether the BSP falls under the COAs audit jurisdiction.

RULING: After considering the legislative history of the amended charter

and the applicable laws and the arguments of both parties, the Court found
that the BSP is a public corporation and its funds are subject to the COAs
audit jurisdiction.
The BSP Charter created the BSP as a public corporation to serve the
following public interest or purpose: xxx to promote through organization and
cooperation with other agencies, the ability of boys to do useful things for
themselves and others, to train them in scout craft, and to inculcate in them
patriotism, civic consciousness and responsibility, courage, self-reliance,
discipline and kindred virtues, and moral values, using the method which are
in common use by boy scouts.
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,
Section 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.
The Constitution emphatically prohibits the creation of private
corporations except by a general law applicable to all citizens. The purpose
of this constitutional provision is to ban private corporations created by
special charters, which historically gave certain individuals, families or
groups special privileges denied to other citizens.
The BSP is a public corporation or a government agency or
instrumentality with juridical personality, which does not fall within the
constitutional prohibition in Article XII, Section 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.
Since BSP, under its amended charter, continues to be a public
corporation or a government instrumentality, the Court concludes 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.