BSP vs. COA, G.R. No.

177131, June 7, 2011

Facts:

The COA issued a resolution in 1999 defining its policy with respect to the audit of the
Boy Scouts of the Philippine, which was created as a public corporation and that in
BSP vs. NLRC, the SC ruled that the BSP, as constituted under its charter, was a GOCC
within the meaning of Art. IX (B) (2) (1) of the Constitution, and that the BSP is
regarded as a government instrumentality under the Administrative Code. For the
purposes of audit supervision, the BSP shall be classified among the government
corporations to be audited by employing the team audit approach. The BSP sought
reconsideration of the COA Resolution in a letter signed by then BSP National
President Jejomar C. Binay, saying that it is not subject to the COA’s jurisdiction.

Issue:

Are the funds and property owned or held by the BSP subject to the audit authority of
the COA pursuant to Section 2(1), Article IX (D) of the 1987 Constitution?

Held:

Yes. BSP is a public corporation and its funds are subject to the COA's audit
jurisdiction. The BSP is a public corporation whose functions relate to the fostering of
public virtues of citizenship and patriotism and the general improvement of the moral
spirit and fiber of the youth. The functions of the BSP include, among others, the
teaching to the youth of patriotism, courage, self-reliance, and kindred virtues are
undeniably sovereign functions enshrined under the Constitution. 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 manner of creation and
the purpose for which the BSP was created indubitably prove that it is a government
agency. Moreover, there are three classes of juridical persons under Article 44 of the
Civil Code and the BSP, as presently constituted under Republic Act No. 7278, falls
under the second classification.
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.