Private v.

Public Corporation

BOY SCOUTS OF THE PHILIPPINES

vs.
COMMISSION ON AUDIT
G.R. No. 177131.June 7, 2011

FACTS:

The COA maintains that the functions of the BSP that include, among others, the
teaching to the youth of patriotism, courage, self-reliance, and kindred virtues, are
undeniably sovereign functions enshrined under the Constitution and discussed by the
Court in Boy Scouts of the Philippines v. National Labor Relations Commission. 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 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; that as an attached agency
of the Department of Education, Culture and Sports (DECS), the BSP is an agency of
the government; and that the BSP is a chartered institution under Section 1(12) of the
Revised Administrative Code of 1987, embraced under the term government
instrumentality. 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), Article IX (D) of the 1987 Constitution.
BSP claims that it has a unique characteristic which "neither classifies it as a
purely public nor a purely private corporation"; that it is not a quasi-public corporation;
and that it may belong to a different class altogether.

ISSUE:

Whether or not the BSP is public corporation.

RULING:

YES.

BSP is a public corporation and its funds are subject to the COA’s audit
jurisdiction. It 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 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.
Note that the Administrative Code of 1987 designates the BSP as one of the
attached agencies of the Department of Education, Culture and Sports ("DECS"). An
"agency of the Government" is defined as referring to any of the various units of the
Government including a department, bureau, office, and instrumentality, government-
owned or -controlled corporation, or local government or distinct unit therein. BSP still
remains an instrumentality of the national government. It is a public corporation created
by law for a public purpose, attached to the DECS pursuant to its Charter and the
Administrative Code of 1987. 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.