SC allows audit of Boy Scout funds

By Edu Punay (The Philippine Star) Updated June 29, 2011

MANILA, Philippines - The Supreme Court (SC) has issued a ruling allowing the Commission on Audit (COA) to conduct an audit on the funds of the Boy Scouts of the Philippines (BSP).

The SC justices, voting 11-4 last June 7, ruled that the BSP is a public corporation and therefore subject to government audit.

“After looking at the legislative history of its amended charter and carefully studying the applicable laws and the arguments of both parties, we found that the BSP is a public corporation and its funds are subject to the COA’s audit jurisdiction,” the court said in a ruling penned by Associate Justice Teresita Leonardo-de Castro.

Ten other justices, including Chief Justice Renato Corona, concurred with this ruling.

The Court said Article XII Section 16 of the Constitution should not be construed as prohibiting Congress from creating public corporations.

“In fact, Congress has enacted numerous laws creating public corporations or government agencies or instrumentalities vested with corporate powers. Moreover, Sec.16, Art. XII, which relates to National Economy and Patrimony, could not have tied the hands of Congress in creating public corporations to serve any of the constitutional policies or objectives,” the ruling said.

The majority ruling held that a review of the record of the 1986 Constitutional Commission showed 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.”

The dissenting opinion of Justice Antonio Carpio insisted that “the Constitution recognizes only two classes of corporations: private corporations under a general law, and government-owned or controlled corporations created by special charters.”

It contended that the court, in its majority ruling, “introduces a totally different species of corporation, which is neither a private corporation nor a government-owned or controlled corporation and in so doing, is missing the fact that the BSP, which was created as a non-stock, non-profit corporation, can only be either a private corporation or a government-owned or controlled corporation.”

The case stemmed from a resolution issued by the COA on Aug. 19, 1999, with the subject “Defining the Commission’s policy with respect to the audit of the BSP.”
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The commission stated that the BSP was created as a public corporation under Commonwealth Act No. 7278.

It cited that in “BSP vs. National Labor Relations Commission,” the SC 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.”

The COA said “the BSP is appropriately regarded as a government instrumentality under the 1987 Administrative Code.”

It likewise mentioned its mandate under Article IX(D) Section 2(1) of the Constitution.

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