!"#$#!!#%& ()*#&+, -). +"& !.&/&%+#)% )- *.

0&$+, +)
1%#21$( 34 *)22#((#)% )% 105#+6 78 9:4
;4.4 %<4 =>?@AB6 BA (7C87DE7F BGG@6 1HI8FJ9K29F8JL7M6 N4 O&L P9LQR

!"# %&'# (&)%#&)*+ %* ,#%#&-)+# ."#%"#& / (*&0*&/%)*+ )1 0'23)( *& 0&)4/%# )1 5*'+, )+ %"# %*%/3)%6 *5
%"# &#3/%)*+ *5 %"# (*&0*&/%)*+ %* %"# 7%/%#8 95 %"# (*&0*&/%)*+ )1 (&#/%#, 26 %"# 7%/%# /1 %"# 3/%%#&:1 *.+ /;#+(6
*& )+1%&'-#+%/3)%6 %* "#30 )% )+ (/&&6)+; *'% )%1 ;*4#&+-#+%/3 5'+(%)*+1< %"#+ %"/% (*&0*&/%)*+ )1 (*+1),#&#,
0'23)(= *%"#&.)1#< )% )1 0&)4/%#8

1he Philippine Society íor the Pre·ention oí Cruelty to Animals ,PSPCA,, composed
oí animal aíicionados and animal propagandists, was incorporated as a juridical entity on
January 19, 1905 by ·irtue oí Act 1285. Its object is to eníorce laws relating to cruelty
inílicted upon animals and to do all things which in any way promote the welíare oí the
animals.

At the time oí its incorporation, both the Corporation Law and the Securities and
Lxchange Commission were not yet in existence.

By ·irtue oí Commonwealth Act 148 ,C.A.148,, the powers oí PSPCA granted to it
by Act 1285, which included the power to apprehend ·iolators oí animal welíare laws and
the right to share one-halí oí the íines imposed and collected through its eííorts íor
·iolations oí the laws related thereto, were re·oked. C.A. 148 has limited the power oí
PSPCA by gi·ing it the authority to denounce to regular peace oííicers ·iolators oí animal
laws. It also depri·ed PSPCA its share in the íines collected íor ·iolation said laws. 1hen
President Manuel L. Quezon in his Lxecuti·e Order ,L.O.63, declared that C.A.148 had
corrected a serious deíect in Act 1285.

In 2003, the audit team írom Commission on Audit ,COA, iníormed PSPCA that it
would be conducting an audit sur·ey pursuant to a COA Oííice Order. PSPCA reíused the
audit sur·ey on the ground that being a pri·ate entity it is not co·ered by the authority oí
COA to audit. In support oí its contention, PSPCA ad·anced the íollowing arguments: ,1,
e·en though it was created by special legislation in 1905 as there was no general law then
existing under which it may be organized or incorporated, it exercises no go·ernmental
íunctions because these ha·e been re·oked by C.A. 148 and L.O. 63, ,2, nowhere in its
charter is it indicated that it is a public corporation, ,3, ií it were a go·ernment body, there
would ha·e been no need íor the State to grant it tax exemptions under Republic Act No.
11¯8, ,4, the employees oí the petitioner are registered and co·ered by the Social Security
System at the latter`s initiati·e and not through the Go·ernment Ser·ice Insurance System,
,5, it does not recei·e any íorm oí íinancial assistance írom the go·ernment as that was
re·oked by C.A. 148, ,6, C.A. 148 eííecti·ely depri·ed the it oí its powers to make arrests
and ser·e processes as these íunctions were placed in the hands oí the police íorce, ,¯, no
go·ernment appointee or representati·e sits on the board oí trustees oí the petitioner, ,8, a
reading oí the pro·isions oí its charter ,Act No. 1285, íails to show that any act or decision
oí it is subject to the appro·al oí or control by any go·ernment agency, except to the extent
that it is go·erned by the law on pri·ate corporations in general, and íinally, ,9, the
Committee on Animal \elíare, under the Animal \elíare Act oí 1998, includes members
írom both the pri·ate and the public sectors.

1he COA maintained that PSPCA is a body politic` created by ·irtue oí a special
legislation and endowed with a go·ernmental purpose, which is to eníorce laws íor the
protection and welíare oí animals. 1hus, the COA may audit the íinancial acti·ities oí the
latter.

#((0&S

\hether or not PSPCA qualiíies as a go·ernmental agency that may be subject to
audit by COA

"&$5S

Petition PAR1L\ GRAN1LD.

1he Supreme Court held that the charter test` cannot be applied in PSPCA case.
Lssentially, the charter test` as it stands today pro·ides that the test to determine whether a
corporation is go·ernment owned or controlled or pri·ate in nature is simple: 91 )% (&#/%#, 26
)%1 *.+ ("/&%#& 5*& %"# #>#&()1# *5 / 0'23)( 5'+(%)*+< *& 26 )+(*&0*&/%)*+ '+,#& %"# ;#+#&/3 (*&0*&/%)*+ 3/.?
!"*1# .)%" 10#()/3 ("/&%#&1 /&# ;*4#&+-#+% (*&0*&/%)*+1 1'2@#(% %* )%1 0&*4)1)*+1, and its employees are
under the jurisdiction oí the Ci·il Ser·ice Commission, and are compulsory members oí the
Go·ernment Ser·ice Insurance System.

PSPCA is correct in stating that the charter test is predicated on the legal regime
established by the 1935 Constitution, Section ¯, Article XIII, which states: 1he National
Assembly shall not, except by general law, pro·ide íor the íormation, organization, or
regulation oí pri·ate corporations, unless such corporations are owned or controlled by the
Go·ernment or any subdi·ision or instrumentality thereoí.` 1he íoregoing proscription has
been carried o·er to the 19¯3 and the 198¯ Constitutions.

And since the underpinnings oí the charter test had been introduced by the 1935
Constitution and not earlier, it íollows that the test cannot apply to the petitioner, which was
incorporated by ·irtue oí Act 1285, enacted on January 19, 1905. Settled is the rule that laws
in general ha·e no retroacti·e eííect, unless the contrary is pro·ided. All statutes are to be
construed as ha·ing only a prospecti·e operation, unless the purpose and intention oí the
legislature to gi·e them a retrospecti·e eííect is expressly declared or is necessarily implied
írom the language used. In case oí doubt, the doubt must be resol·ed against the
retrospecti·e eííect.

1he general principle oí prospecti·ity oí the law likewise applies to Act 1459,
otherwise known as the Corporation Law, which had been enacted by ·irtue oí the plenary
powers oí the Philippine Commission on March 1, 1906, a little o·er a year aíter January 19,
1905, the time the petitioner emerged as a juridical entity.

In a legal regime where the charter test doctrine cannot be applied, the mere íact that
a corporation has been created by ·irtue oí a special law does not necessarily qualiíy it as a
public corporation.

%98HF7 <T !(!*1 9I 9 *<FC<F987 &L8J8U

As stated, at the time the PSPCA was íormed, the applicable law was the Philippine
Bill oí 1902, and, emphatically, no proscription similar to the charter test can be íound
therein.

1he textual íoundation oí the charter test, which placed a limitation on the power oí
the legislature, íirst appeared in the 1935 Constitution. lowe·er, the petitioner was
incorporated in 1905. 1here being neither a general law on the íormation and organization
oí pri·ate corporations nor a restriction on the legislature to create pri·ate corporations by
direct legislation, the Philippine Commission at that moment in history was well within its
powers in 1905 to constitute the petitioner as a pri·ate juridical entity.

1he amendments introduced by C.A. 148 made it clear that the PSPCA was a pri·ate
corporation and not an agency oí the go·ernment. 1his was e·ident in Lxecuti·e Order 63,
issued by then President oí the Philippines Manuel L. Quezon, declaring that the re·ocation
oí the powers oí the PSPCA to appoint agents with powers oí arrest corrected a serious
deíect` in one oí the laws existing in the statute books.

As a curati·e statute, C.A. 148 has to be gi·en retroacti·e eííect, thereby íreeing all
doubt as to which class oí corporations the PSPCA belongs, that is, it is a quasi-public
corporation, a kind oí pri·ate domestic corporation. 1hus, the íact that a certain juridical
entity is impressed with public interest does not, by that circumstance alone, make it a public
corporation, inasmuch as a corporation may be pri·ate although its charter contains
pro·isions oí a public character. Quasi-public corporations are pri·ate corporations, which,
while purposely organized íor gain or beneíit oí their members, are required by law to
discharge íunctions íor public beneíit.

Moreo·er, a reading oí PSPCA`s charter shows that it is not subject to control or
super·ision by any agency oí the State, unlike go·ernment-owned and -controlled
corporations. No go·ernment representati·e sits on the board oí trustees oí the petitioner.
Like all pri·ate corporations, the successors oí its members are determined ·oluntarily and
solely by the petitioner in accordance with its by-laws, and may exercise those powers
generally accorded to pri·ate corporations, such as the powers to hold property, to sue and
be sued, to use a common seal, and so íorth. It may adopt by-laws íor its internal
operations: the petitioner shall be managed or operated by its oííicers in accordance with its
by-laws in íorce.`

Also, the employees oí the petitioner are registered and co·ered by the Social
Security System at the latter`s initiati·e, and not through the Go·ernment Ser·ice Insurance
System, which should be the case ií the employees are considered go·ernment employees.
1his is another indication oí petitioner`s nature as a pri·ate entity.

1he true criterion, thereíore, to determine whether a corporation is public or pri·ate
is íound in the totality oí the relation oí the corporation to the State. Ií the corporation is
created by the State as the latter`s own agency or instrumentality to help it in carrying out its
go·ernmental íunctions, then that corporation is considered public, otherwise, it is pri·ate.