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G.R.No.177131:BOYSCOUTSOFTHEPHILIPPINES,petitioner,v.COMMISSIONONAUDIT,respondent.

Promulgated:

June7,2011

xx

DISSENTINGOPINION

CARPIO,J.:

Idissent.

TheBoyScoutsofthePhilippines(BSP)isneitheragovernmentownedorcontrolledcorporationnoragovernmentinstrumentalitysubjecttotheCommissiononAudits(COA)jurisdiction.TheBSPisaprivate,nonstock,andnonprofitcorporationbeyondtheCOAsauditjurisdiction.

I.

COAsAuditJurisdiction

Section2(1),ArticleIXDoftheConstitutionprovidesforCOAsauditjurisdiction,asfollows:

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SECTION2.(1)TheCommissiononAuditshallhavethepower,authorityanddutytoexamine,audit,andsettleallaccountspertainingtotherevenueandreceiptsof,andexpendituresorusesoffundsandproperty,ownedorheldintrustby,orpertainingto,theGovernment,oranyofitssubdivisions,agencies,orinstrumentalities,includinggovernmentownedandcontrolledcorporationswithoriginalcharters,andonapostauditbasis:(a)constitutionalbodies,commissionsandofficesthathavebeengrantedfiscalautonomyunderthisConstitution(b)autonomousstatecollegesanduniversities(c)othergovernmentownedorcontrolledcorporationsandtheirsubsidiariesand(d)suchnongovernmentalentitiesreceivingsubsidyorequity,directlyorindirectly,fromorthroughthegovernment,whicharerequiredbylaworthegrantinginstitutiontosubmittosuchauditasaconditionofsubsidyorequity.However,wheretheinternalcontrolsystemoftheauditedagenciesisinadequate,theCommissionmayadoptsuchmeasures,includingtemporaryorspecialpreaudit,asarenecessaryandappropriatetocorrectthedeficiencies.ItshallkeepthegeneralaccountsoftheGovernmentand,forsuchperiodasmaybeprovidedbylaw,preservethevouchersandothersupportingpaperspertainingthereto.

BasedonthisConstitutionalprovision,theCOAexercisesjurisdictiononapreauditbasisoverthe(1)Government,(2)anyofitssubdivisions,(3)agencies,(4)instrumentalities,and(5)GOCCswithoriginalcharters.

TheCOAalsohasjurisdictiononapostauditbasisover(1)constitutionalbodies,commissionsandofficesthathavebeengrantedfiscalautonomyundertheConstitution(2)autonomousstatecollegesanduniversities(3)otherGOCCs1andtheirsubsidiariesand(4)nongovernmentalentitiesreceivingsubsidyorequity,directlyorindirectly,fromorthroughthegovernment,whicharerequiredbylaworthegrantinginstitutiontosubmittosuchauditasaconditionofsubsidyorequity.

Hence,ifanentityisproperlyidentifiedandcategorizedasamongthoseenumeratedinSection2(1),ArticleIXDoftheConstitution,thentheCOAcanindisputablyexamine,audit,andsettleallaccountspertainingtotherevenueandreceiptsof,andexpendituresorusesoffundsandpropertyofthatparticularentity.

II.

HistoryoftheBSP

TheBoyScoutsofthePhilippinesbeganin1923withtheestablishmentofthe

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PhilippineCounciloftheBoyScoutsofAmerica,whenthePhilippineswasanAmericanpossessionatthetime.2

On31October1936,thePhilippineNationalAssemblyenactedCommonwealthActNo.111,orAnActtoCreateaPublicCorporationtobeKnownastheBoyScoutsofthePhilippines,andtoDefineitsPowersandPurposes,thepertinentprovisionsofwhichread:

Section1.J.E.H.Stevenot,A.N.Luz,C.P.Romulo,VicenteLim,ManuelCamus,JorgeB.Vargas,andG.A.DazaallofManila,Philippines,theirassociatesandsuccessors,areherebycreatedabodycorporateandpoliticindeedandinlaw,bythename,styleandtitleofBoyScoutsofthePhilippines(hereinaftercalledthecorporation).xxx

Section3.Thepurposeofthiscorporationshallbetopromote,throughorganization,andcooperationwithotheragencies,theabilityofboystodothingsforthemselvesandothers,totraintheminscoutcraft,andtoteachthempatriotism,courage,selfreliance,andkindredvirtues,usingthemethodswhicharenowincommonusebyboyscouts.

Section4.Untilsuchtimeasthecorporationshallhaveacquiredbypurchase,giftorotherequitablearrangementfromandwiththeBoyScoutsofAmericaalloftheexistingassetsandpropertiesoftheaforesaidBoyScoutsofAmericainthePhilippines,itshallcarryonitsoperationsinaccordancewithsucharrangementsasitmaymakewithsaidBoyScoutsofAmericaandthecorporationcreatedbythisActshalldefrayandprovideforanydebtsorliabilitiestothedischargeofwhichsaidassetsoftheBoyScoutsofAmericashallbeapplicable,butsaidcorporationshallhavenopowertoissuecertificatesofstockortodeclareorpaydividends,itsobjectsandpurposesbeingsolelyofabenevolentcharacterandnotforpecuniaryprofitbyitsmembers.

Section5.ThegoverningbodyofthesaidcorporationshallconsistofanexecutiveboardcomposedofresidentsofthePhilippines.Thenumber,qualifications,andtermsofofficeofmembersoftheexecutiveboardshallbeprescribedbythebylaws.xxx

On17May1974,thenPresidentFerdinandE.MarcosissuedPresidentialDecreeNo.460,AmendingCertainProvisionsofCommonwealthActNo.111,OtherwiseKnownastheNationalCharteroftheBoyScoutsofthePhilippines.OneofitsWhereasclausesreads:

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WHEREAS,recenteventshaveshownthatithasbecomenecessarytoeffectreformsintheorganizationsstructureinordertorevitalizeandstrengthenitsoperationalcapabilities,enhanceitseffectivenessasaninstrumenttopromotetheyouthdevelopmentprogramofthenation,andinsurethefullandactivecooperation,involvementandsupportofallsectorsofthecommunity,publicandprivatexxx

OneoftheamendmentsintroducedbyPD460pertainedtothecompositionoftheBSPsgoverningbody.PD460reorganizedandrestructured3theBSPsexecutiveboard,thus:

SectionII.Section5ofthesaidActisalsoamendedtoreadasfollows:

ThegoverningbodyofthesaidcorporationshallconsistofaNationalExecutiveBoardcomposedof(a)thePresidentofthePhilippinesorhisrepresentative(b)thecharterandlifemembersoftheBoyScoutsofthePhilippines(c)theChairmanoftheBoardofTrusteesofthePhilippineScoutingFoundation(d)theRegionalChairmanoftheScoutRegionsofthePhilippines(e)theSecretaryofEducationandCulture,theSecretaryofSocialWelfare,theSecretaryofLabor,theSecretaryofFinance,theSecretaryofYouthandSports,andtheSecretaryofLocalGovernmentandCommunityDevelopment(f)anequalnumberofindividualsfromtheprivatesector(g)theNationalPresidentoftheGirlScoutsofthePhilippines(h)oneScoutofSenioragefromeachScoutRegiontorepresenttheboymembershipand(i)threerepresentativesoftheculturalminorities.ExceptfortheRegionalChairmanwhoshallbeelectedbytheRegionalScoutCouncilsduringtheirannualmeetings,andtheScoutsoftheirrespectiveregions,allmembersoftheNationalExecutiveBoardshallbeeitherbyappointmentorcooption,subjecttoratificationandconfirmationbytheChiefScout,whoshallbetheHeadoftheState.VacanciesintheExecutiveBoardshallbefilledbyamajorityvoteoftheremainingmembers,subjecttoratificationandconfirmationbytheChiefScout.ThebylawsmayprescribethenumberofmembersoftheNationalExecutiveBoardnecessarytoconstituteaquorumoftheboard,whichnumbermaybelessthanamajorityofthewholenumberoftheboard.TheNationalExecutiveBoardshallhavepowertomakeandtoamendthebylaws,and,byatwothirdsvoteofthewholeboardatameetingcalledforthispurpose,mayauthorizeandcausetobeexecutedmortgagesandliensuponthepropertyofthecorporation.

xxxx(Emphasissupplied)

On6December1991,thenPresidentCorazonC.Aquino,pursuanttoherdelegatedlegislativeauthorityunderSection22ofProclamationNo.50,issuedExecutiveOrderNo.495convertingtheBSP,togetherwiththePhilippineShippersCouncilandtheGirlScoutsofthePhilippines,intoaprivatecorporation.However,on4March1992,PresidentAquinoissuedExecutiveOrderNo.509revokingthedissolutionandconversionoftheBSPintoaprivatecorporation,andrestoredCommonwealthActNo.111andPD460priortotheirrepealunderEO495.

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On24March1992,RepublicActNo.7278,furtheramendingCommonwealthActNo.111,asamendedbyPD460,wasenacted.AimedatstrengtheningthevolunteeranddemocraticcharacteroftheBSP,RA7278amendedthecompositionofBSPsgoverningbodybydrasticallyreducingthenumberofCabinetsecretariesintheNationalExecutiveBoard,towit:

SEC.3.Sections5,6,7and8ofCommonwealthActNo.111,asamended,areherebyamendedtoreadasfollows:

SEC.5.ThegoverningbodyofthesaidcorporationshallconsistofaNationalExecutiveBoard,themembersofwhichshallbeFilipinocitizensofgoodmoralcharacter.TheBoardshallbecomposedofthefollowing:

(a)One(1)chartermemberoftheBoyScoutsofthePhilippineswhoshallbeelectedbythemembersoftheNationalCouncilatitsmeetingcalledforthispurpose

(b)Theregionalchairmenofthescoutsregionswhoshallbeelectedbytherepresentativesofallthelocalscoutscouncilsoftheregionduringitsmeetingcalledforthispurpose:Provided,Thatacandidateforregionalchairmanneednotbethechairmanofalocalscoutcouncil

(c)TheSecretaryofEducation,CultureandSports

(d)TheNationalPresidentoftheGirlScoutsofthePhilippines

(e)One(1)seniorscout,eachfromLuzon,VisayasandMindanaoareas,tobeelectedbytheseniorscoutdelegatesofthelocalscoutcouncilstothescoutyouthforumsintheirrespectiveareas,initsmeetingcalledforthispurpose,torepresenttheboyscoutmembership

(f)Twelve(12)regularmemberstobeelectedbythemembersoftheNationalCouncilinitsmeetingcalledforthispurpose

(g)Atleastten(10)butnotmorethanfifteen(15)additionalmembersfromtheprivatesectorwhoshallbeelectedbythemembersoftheNationalExecutiveBoardreferredtointheimmediatelyprecedingparagraphs(a),(b),(c),(d),(e)and(f)attheorganizationalmeetingofthenewlyreconstitutedNationalExecutiveBoardwhichshallbeheldimmediatelyafterthemeetingoftheNationalCouncilwhereinthetwelve(12)regularmembersandtheone(1)chartermemberwereelected.

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xxxx

III.

TherulinginBSPv.NLRC

TheCOAreliesontheCourtsrulinginBoyScoutsofthePhilippinesv.NationalLaborRelationsCommission,4promulgatedon22April1991,declaringtheBSPbothaGOCCandagovernmentinstrumentality5withinthemeaningofSection2(1)ofArticleIXBoftheConstitution6basedonthefollowingcriteria:

Firstly,BSPsfunctionsassetoutinitsstatutorycharterdohaveapublicaspect.BSPsfunctionsdorelatetothefosteringofthepublicvirtuesofcitizenshipandpatriotismandthegeneralimprovementofthemoralspiritandfiberofouryouth.

xxxx

ThesecondaspectthattheCourtmusttakeintoaccountrelatestothegovernanceoftheBSP.ThecompositionoftheNationalExecutiveBoardoftheBSPincludesxxxseven(7)SecretariesofExecutiveDepartments.xxxWemustnoteatthesametimethattheappointmentsofmembersoftheNationalExecutiveBoard,exceptonlytheappointmentsoftheRegionalChairmanandScoutsofSenioragefromthevariousScoutRegions,aresubjecttoratificationandconfirmationbytheChiefScout,whoisthePresidentofthePhilippines.xxxItdoesappearthereforethatthereissubstantialgovernmental(i.e.,Presidential)participationorinterventioninthechoiceofthemajorityofthemembersoftheNationalExecutiveBoardoftheBSP.

ThethirdaspectrelatestothecharacteroftheassetsandfundsoftheBSP.TheoriginalassetsoftheBSPwereacquiredbypurchaseorgiftorotherequitablearrangementwiththeBoyScoutsofAmerica,ofwhichtheBSPwaspartbeforetheestablishmentoftheCommonwealthofthePhilippines.xxxInthisrespect,theBSPappearssimilartoprivatenonstock,nonprofitcorporations,althoughitscharterexpresslyenvisagesdonationsandcontributionstoitfromtheGovernmentandanyofitsagenciesandinstrumentalities.7(Emphasissupplied)

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IV.

RepublicActNo.7278reducedthenumberof

CabinetsecretariesintheBSPgoverningbody.

WhenPD460,amendingCommonwealthActNo.111,wasissuedbythenPresidentMarcos,thePresidentofthePhilippinesandsixCabinetSecretarieswereamongthemembersoftheBSPsNationalExecutiveBoard.ThePresidentevenhadthefinalsayontheprivatesectorrepresentationintheBSPsgoverningbody.8TheleadershipoftheBSPwasvirtuallyundertheOfficeofthePresident.

WiththeenactmentofRA7278,onlyoneCabinetSecretary,thatis,theSecretaryofEducation,remainsamemberoftheBSPsNationalExecutiveBoard.TheBSPreliesonthisdrasticchangeinthecompositionofitsgoverningbodyforitsclaimthattheBSPisnotaGOCCsubjecttoCOAsauditjurisdiction.AccordingtotheBSP,RA7278tookouttheelementofgovernmentcontrol,whichisakintoprivatization.ItfollowsthenthatthefindinginBSPv.NLRCthattheBSPisaGOCCwithoriginalcharternolongerholdswater.RA7278wasenactedafterBSPv.NLRC.

V.

TheBSPisnotaGOCC.

1.Controltest

InFelicianov.CommissiononAudit,9theCourtdeclaredthatthedeterminingfactorof

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COAsauditjurisdictionisgovernmentownershiporcontrolofthecorporation.CitingPhilippineVeteransBankEmployeesUnionNUBEv.PhilippineVeteransBank,10theCourtheldinFelicianothatthecriterionofownershipandcontrolismoreimportantthantheissueoforiginalcharter,thus:

ThispointisimportantbecausetheConstitutionprovidesinitsArticleIXB,Section2(1)thattheCivilServiceembracesallbranches,subdivisions,instrumentalities,andagenciesoftheGovernment,includinggovernmentownedorcontrolledcorporationswithoriginalcharters.AstheBankisnotownedorcontrolledbytheGovernmentalthoughitdoeshaveanoriginalcharterintheformofR.A.No.3518,itclearlydoesnotfallundertheCivilServiceandshouldberegardedasanordinarycommercialcorporation.Section28ofthesaidlawsoprovides.TheconsequenceisthattherelationsoftheBankwithitsemployeesshouldbegovernedbythelaborlaws,underwhichinfacttheyhavealreadybeenpaidsomeoftheirclaims.11(Emphasissupplied)

EmployingthetestlaiddowninFelicianoindeterminingCOAsjurisdiction,wefindthattheBSPisnotaGOCC.

A.ThegovernmentdoesnotowntheBSP.

UnderSection2(13)oftheRevisedAdministrativeCode,12aGOCCreferstoanyagencyorganizedasastockornonstockcorporation,vestedwithfunctionsrelatingtopublicneedswhethergovernmentalorproprietaryinnature,andownedbytheGovernmentdirectlyorthroughitsinstrumentalitieseitherwholly,or,whereapplicableasinthecaseofstockcorporations,totheextentofatleastfiftyone(51)percentofitscapitalstock.

Undertheabovedefinition,aGOCCmustbeownedorcontrolledbythegovernment,andinthecaseofastockcorporation,atleastamajorityofitscapitalstockmustbeownedbythegovernment.Inthecaseofanonstockcorporation,byanalogy,atleastamajorityofthemembersmustbegovernmentofficialsholdingsuchmembershipbyappointmentordesignationbythegovernment.13

Inthiscase,theBSPisanonstockandnonprofitorganizationcomposedalmostentirelyofmemberscomingfromtheprivatesector,moreparticularlyboysrangingfromagesfour(knownasKIDScouts)toseventeen(knownasSENIORScouts).TheBSPisoneofthelargestScoutorganizationsintheworldtoday(afterGerakan

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PramukaofIndonesiaandtheBoyScoutsofAmerica,firstandsecond,respectively)andisoneoftheworldsNationalScoutAssociationshavingthehighestpenetrationrate(Scoutdensity),withoneScoutoutoftwoboysofScoutingageenrolledintheScoutingprogram.14SincetheBSPiscomposedalmostentirelyofmembersandofficersfromtheprivatesector,theBSPisclearlynotownedbythegovernment.

B.ThegovernmentdoesnotcontroltheBSP.

PriortoRA7278,thePresidentofthePhilippinesandsixCabinetSecretarieswereamongthemembersoftheNationalExecutiveBoard.AccordingtoSenatorJoseA.LinaduringtheSenatedeliberationsonRA7278,the[voluntary]characterandthenongovernmentalcharacteroftheBoyScoutsofthePhilippineswasalteredbytheoldlaw,thusnecessitatingitsamendment.Moreimportantly,priortoRA7278,theappointmentofallothermembersofthegoverningboard,excepttheelectedregionalchairmenandseniorscoutrepresentatives,weremadesubjecttotheratificationandconfirmationofthePresidentofthePhilippines.15ThereisthereforenodoubtthatpriortoRA7278,thegovernmenthadeffectivecontrolofthestructureandmembershipoftheNationalExecutiveBoard.However,asclearlyintendedinRA7278,thegovernmentlostcontrolovertheBSPtotheprivatesectorupontheeffectivityofRA7278.

InFeliciano,16wefoundthatlocalwaterdistricts(LWDs)wereGOCCsconsideringthat,amongotherfactors,thegovernmentcontrolsLWDsbecauseunderPD198themunicipalorcitymayor,ortheprovincialgovernor,appointsalltheboarddirectorsofanLWDforafixedtermofsixyears.xxxLWDshavenoprivatestockholdersormembers.TheboardofdirectorsandotherpersonnelofLWDsaregovernmentemployeessubjecttocivilservicelawsandantigraftlaws.Inotherwords,wherethegovernmentappointsatleastamajorityofthemembersoftheboardofdirectorsofanentity,suchentityisundoubtedlyunderthecontrolofthegovernment.Likewise,ifthegovernmenthasthepowertofillupatleastamajorityofthevacanciesinthegoverningbodyofanentity,thensuchanentityisdefinitelygovernmentcontrolled.17

TheforegoingcircumstancesmanifestinggovernmentcontroloveranentityarewantinginBSPscaseunderRA7278.

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AspointedoutbytheBSP,underRA7278onlyoneCabinetSecretaryremainsamemberoftheNationalExecutiveBoard,asopposedtothepreviouscompositionwherethePresidentofthePhilippinesandsixcabinetsecretariesweremembersofthesameboard.Torepeat,theNationalExecutiveBoardispresentlycomposedof(1)achartermemberoftheBSP(2)theregionalchairmenofthescoutsregions(3)theSecretaryofEducation,CultureandSports(4)NationalPresidentoftheGirlScoutsofthePhilippines(5)aseniorscout,oneeachfromLuzon,VisayasandMindanao(6)twelveregularmemberstobeelectedbythemembersoftheNationalCouncil(7)atleasttenbutnotmorethanfifteenadditionalmembersfromtheprivatesector.Significantly,thelonecabinetmember,whoistheEducationSecretary,merelyservesasanexofficiomember.18Meanwhile,thePresidentofthePhilippinesisnolongeramemberoftheNationalExecutiveBoardandsimplyactsastheChiefScoutoftheBSP.ExceptfortheEducationSecretary,noneoftheothermembersoftheNationalExecutiveBoardisagovernmentofficialorholdssuchpositionormembershipthroughappointmentordesignationbythegovernment.Moreover,thegovernmentlacksthepowertofillupvacanciesintheNationalExecutiveBoardoftheBSPorremoveanyofitsmembers.Infact,vacanciesintheNationalExecutiveBoardshallbefilledbyamajorityvoteoftheremainingmembers.19ThisstructuralsetupandmembershipofBSPsgoverningbodyunderRA7278,whereallexceptonecomefromtheprivatesector,glaringlynegateanyformofgovernmentcontrolovertheBSP.

Moreover,iftheBSPisaGOCC,aswhattheCOAinsists,thenitmustbeunderthePresidentspowerofcontrol.InRufinov.Endriga,20whichinvolvedthebattleforCulturalCenterofthePhilippines(CCP)leadershipbetweentheRufinoandEndrigagroups,theCourtexplainedexhaustivelythePresidentspowerofcontrol,thus:

Underoursystemofgovernment,allExecutivedepartments,bureaus,andofficesareunderthecontrolofthePresidentofthePhilippines.Section17,ArticleVIIofthe1987Constitutionprovides:

ThePresidentshallhavecontrolofalltheexecutivedepartments,bureaus,andoffices.Heshallensurethatthelawsbefaithfullyexecuted.(Emphasissupplied)

ThepresidentialpowerofcontrolovertheExecutivebranchofgovernmentextendstoallexecutiveemployeesfromtheDepartmentSecretarytothelowliestclerk.ThisconstitutionalpowerofthePresidentisselfexecutinganddoesnotrequireanyimplementinglaw.CongresscannotlimitorcurtailthePresidentspowerofcontrolovertheExecutivebranch.

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xxx

ThePresidentspowerofcontrolappliestotheactsordecisionsofallofficersintheExecutivebranch.ThisistruewhethersuchofficersareappointedbythePresidentorbyheadsofdepartments,agencies,commissions,orboards.Thepowerofcontrolmeansthepowertoreviseorreversetheactsordecisionsofasubordinateofficerinvolvingtheexerciseofdiscretion.

Inshort,thePresidentsitsattheapexoftheExecutivebranch,andexercisescontrolofalltheexecutivedepartments,bureaus,andoffices.TherecanbenoinstanceundertheConstitutionwhereanofficeroftheExecutivebranchisoutsidethecontrolofthePresident.TheExecutivebranchisunitarysincethereisonlyonePresidentvestedwithexecutivepowerexercisingcontrolovertheentireExecutivebranch.AnyofficeintheExecutivebranchthatisnotunderthecontrolofthePresidentisalostcommandwhoseexistenceiswithoutanylegalorconstitutionalbasis.21

However,inthiscase,unlikeinCCPscase,22thereisabsolutelynothingwhichdemonstratesthatthePresidentofthePhilippinesexercisescontrolovertheactsordecisionsoftheBSPsNationalExecutiveBoardoranyofitsmembers.23ThePresidentdoesnothavethepowertoalterormodifyornullifyorsetasidewhattheBSPsNationalExecutiveBoarddoesintheperformanceofitsdutiesandtosubstitutethejudgmentoftheformerforthatofthelatter.24ThetitleChiefScoutdoesnotconferonthePresidentanypowerofcontrolovertheaffairsandmanagementoftheBSP.ThisabsenceofanyformofpresidentialcontrolreinforcesthefactthatthegovernmentdoesnotcontroltheBSP.Inshort,thePresident,whileholdingthetitleofChiefScout,doesnotcontroltheBSP.

C.ThefundsoftheBSPareprivateinnature.

TheCourtnotedinBSPv.NLRCthattheoriginalassetsoftheBSPwereacquiredbypurchaseorgiftorotherequitablearrangementwiththeBoyScoutsofAmerica,ofwhichtheBSPwaspartbeforetheestablishmentoftheCommonwealthofthePhilippines.TheBSPcharter,however,doesnotindicatethatsuchassetswerepublicor

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statalincharacterorhadoriginatedfromthegovernment.NopubliccapitalwasinvestedintheBSP.25AccordingtotheBSP,itsoperatingfundsusedforcarryingoutitspurposesandprogramsarederivedprincipallyfrommembershipduespaidbytheBoyScoutsthemselvesandfrompropertyrentals.TheBSPdoesnothavegovernmentassetsanddoesnotreceiveanyappropriationfromCongress.ThiswasrevealedduringthedeliberationsintheHouseofRepresentativesonRA7278,thus:

MR.ESCUDERO.Yes,Mr.Chairman.Thequestionisthesourcesoffundsoftheorganization.First,Mr.Chairman,theBoyScoutsofthePhilippinesdonotreceiveannualallotmentfromthegovernment.Theorganizationhastoraiseitsownfundsthroughfunddrivesandfundcampaignsorfundraisingactivities.Asidefromthis,wehavesomerevenueproducingprojectsintheorganizationthatgivesusfundstosupporttheoperation.xxx26

Further,BSPspropertiesarebeingmanagedandoperatedbytheBSPitself,notbythegovernmentoranyofitsagencies.Therefore,itiscrystalclearthatthefundsoftheBSPcomefromprivatesources.Assuch,theBSPfundsarenecessarilybeyondthejurisdictionoftheCOA,whichexclusivelyauditspublicfundsandassets.

D.PublicpurposeofBSPisnotdeterminativeofstatus.

Indeed,theBSPperformsfunctionswhichmaybeclassifiedaspublicincharacter,inthesensethatitpromotesvirtuesofcitizenshipandpatriotismandthegeneralimprovementofthemoralspiritandfiberofouryouth.However,thisfactalonedoesnotautomaticallymaketheBSPaGOCC.Significantly,theCourtdeclaredinPhilippineSocietyforthePreventionofCrueltytoAnimalsv.CommissiononAudit,27thefactthatacertainjuridicalentityisimpressedwithpublicinterestdoesnot,bythatcircumstancealone,maketheentityapubliccorporation,inasmuchasacorporationmaybeprivatealthoughitschartercontainsprovisionsofapubliccharacter,incorporatedsolelyforthepublicgood.28TheCourtfurtherheld:

Authoritiesareoftheviewthatthepurposealoneofthecorporationcannotbetakenasasafeguide,forthefactisthatalmostallcorporationsarenowadayscreatedtopromotetheinterest,good,orconvenienceofthepublic.Abank,forexample,isaprivatecorporationyet,itiscreatedforapublicbenefit.Privateschoolsanduniversitiesarelikewiseprivatecorporationsandyet,theyarerenderingpublicservice.Privatehospitalsandwardsare

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chargedwithheavysocialresponsibilities.Moresowithallcommoncarriers.Ontheotherhand,theremayexistapubliccorporationevenifitisendowedwithgiftsordonationsfromprivateindividuals.

Thetruecriterion,therefore,todeterminewhetheracorporationispublicorprivateisfoundinthetotalityoftherelationofthecorporationtotheState.IfthecorporationiscreatedbytheStateasthelattersownagencyorinstrumentalitytohelpitincarryingoutitsgovernmentalfunctions,thenthatcorporationisconsideredpublicotherwise,itisprivate.Applyingtheabovetest,provinces,charteredcities,andbarangayscanbestexemplifypubliccorporations.TheyarecreatedbytheStateasitsowndeviceandagencyfortheaccomplishmentofpartsofitsownpublicworks.29(Emphasissupplied)

2.Economicviabilitytest

TheConstitutionrecognizesonlytwoclassesofcorporations.30Thefirstreferstoprivatecorporationscreatedunderagenerallaw.31Thesecondreferstogovernmentownedorcontrolledcorporationscreatedbyspecialcharters.32Section16,ArticleXIIoftheConstitutionprovides:

Sec.16.TheCongressshallnot,exceptbygenerallaw,providefortheformation,organization,orregulationofprivatecorporations.Governmentownedorcontrolledcorporationsmaybecreatedorestablishedbyspecialchartersintheinterestofthecommongoodandsubjecttothetestofeconomicviability.(Emphasissupplied)

Contrarytothisconstitutionalprovision,themajorityintroducesatotallydifferentspeciesofcorporation,whichisneitheraprivatecorporationnoragovernmentownedorcontrolledcorporation.ThemajoritygravelymissesthefactthattheBSP,whichwascreatedasanonstock,nonprofitcorporation,canonlybeeitheraprivatecorporationoragovernmentownedorcontrolledcorporation.TheLegislaturesusagein

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CommonwealthActNo.111ofthetermpubliccorporation33todesignatetheBSPmustneverbeconstruedascreatinganentirelynewtypeofcorporation,neitherprivatenorgovernmentownedorcontrolled.Otherwise,suchaninterpretationwillunjustifiablyandunlawfullyexpandtheclassesofcorporationsexpresslyrecognizedbytheConstitutioninSection16,ArticleXII,puttingthenewclassofcorporationoutsidethecoverageofSection16.Inshort,suchnewclassofpubliccorporationcreatedbyspecialcharterwillnotbesubjecttothetestofeconomicviability,ablatantcircumventionoftheConstitution.

InManilaInternationalAirportAuthority(MIAA)v.CourtofAppeals,34wheretheCourtruledthatMIAAisagovernmentinstrumentality,theCourtexplainedtheimportanceofthetestofeconomicviability,inthiswise:

TheConstitutionexpresslyauthorizesthelegislaturetocreategovernmentownedorcontrolledcorporationsthroughspecialchartersonlyiftheseentitiesarerequiredtomeetthetwinconditionsofcommongoodandeconomicviability.Inotherwords,Congresshasnopowertocreategovernmentownedorcontrolledcorporationswithspecialchartersunlesstheyaremadetocomplywiththetwoconditionsofcommongoodandeconomicviability.Thetestofeconomicviabilityappliesonlytogovernmentownedorcontrolledcorporationsthatperformeconomicorcommercialactivitiesandneedtocompeteinthemarketplace.BeingessentiallyeconomicvehiclesoftheStateforthecommongoodmeaningforeconomicdevelopmentpurposesthesegovernmentownedorcontrolledcorporationswithspecialchartersareusuallyorganizedasstockcorporationsjustlikeordinaryprivatecorporations.

xxxTheintentoftheConstitutionistopreventthecreationofgovernmentownedorcontrolledcorporationsthatcannotsurviveontheirowninthemarketplaceandthusmerelydrainthepubliccoffers.

CommissionerBlasF.Ople,proponentofthetestofeconomicviability,explainedtotheConstitutionalCommissionthepurposeofthistest,asfollows:

MR.OPLE:MadamPresident,thereasonforthisconcernisreallythatwhenthegovernmentcreatesacorporation,thereisasenseinwhichthiscorporationbecomesexemptfromthetestofeconomicperformance.Weknowwhathappenedinthepast.Ifagovernmentcorporationloses,thenitmakesitsclaimuponthetaxpayersmoneythroughnewequityinfusionsfromthegovernmentandwhatisalwaysinvokedisthecommongood.Thatisthereasonwhythisyear,outofabudgetofP115billionfortheentiregovernment,aboutP28billionofthiswillgointoequityinfusionstosupportafewgovernmentfinancialinstitutions.Andthisisalltaxpayersmoneywhichcouldhavebeenrelocatedtoagrarianreform,tosocialserviceslikehealthand

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education,toaugmentthesalariesofgrosslyunderpaidpublicemployees.Andyetthisisallgoingdownthedrain.

Therefore,whenweinsertthephraseECONOMICVIABILITYtogetherwiththecommongood,thisbecomesarestraintonfutureenthusiastsforstatecapitalismtoexcusethemselvesfromtheresponsibilityofmeetingthemarkettestsothattheybecomeviable.Andso,MadamPresident,Ireiterate,forthecommitteesconsiderationandIamgladthatIamjoinedinthisproposalbyCommissionerFoz,theinsertionofthestandardofECONOMICVIABILITYORTHEECONOMICTEST,togetherwiththecommongood.

FatherJoaquinG.Bernas,aleadingmemberoftheConstitutionalCommission,explainsinhistextbookThe1987ConstitutionoftheRepublicofthePhilippines:ACommentary:

Thesecondsentencewasaddedbythe1986ConstitutionalCommission.Thesignificantaddition,however,isthephraseintheinterestofthecommongoodandsubjecttothetestofeconomicviability.Theadditionincludestheideasthattheymustshowcapacitytofunctionefficientlyinbusinessandthattheyshouldnotgointoactivitieswhichtheprivatesectorcandobetter.Moreover,economicviabilityismorethanfinancialviabilitybutalsoincludescapabilitytomakeprofitandgeneratebenefitsnotquantifiableinfinancialterms.35(Emphasissupplied)

Indisputably,agovernmentownedorcontrolledcorporationcreatedbyspecialchartermustnecessarilymeetthetestofeconomicviability.Otherwise,thecreationbyCongressofagovernmentownedorcontrolledcorporationnotsatisfyingthetestofeconomicviabilityclearlyrunscountertotheexpressmandateofSection16,ArticleXIIoftheConstitution.Congresshasnopowertocreategovernmentownedorcontrolledcorporationswithspecialchartersunlesstheyaremadetocomplywiththetwoconditionsofcommongoodandeconomicviability.Torepeat,governmentownedorcontrolledcorporationsmaybecreatedorestablishedbyspecialchartersxxxsubjecttothetestofeconomicviability.Therefore,therecanbenopubliccorporationorgovernmentownedorcontrolledcorporationthatcannotbesubjecttothetestofeconomicviability.Inshort,themajoritysviewthatBSPisapubliccorporationwhichdoesnotfallundereitheroftheclassificationsofcorporationrecognizedunderSection16,ArticleXIIoftheConstitution,andconsequentlynotsubjecttothetestofeconomicviability,ispatentlyerroneousandbaseless.

ThetermpubliccorporationreferstoagovernmentownedorcontrolledcorporationasreferredtoinSection16,ArticleXIIoftheConstitution.However,inthiscase,theusageofthetermpubliccorporationinCommonwealthActNo.111todesignateBSPisnolongercontrollingindeterminingtherealnatureoftheBSP.AsamendedbyRA7278,CommonwealthActNo.111nowreferstoacorporationowned,managedandcontrolledbytheprivatesectoralthoughthepurposeofthecorporationremainspublic.

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Themajoritytheorizesthatpubliccorporationsaretreatedbylawasagenciesorinstrumentalitiesofthegovernmentwhicharenotsubjecttothetestsofownershiporcontrolandeconomicviabilitybuttodifferentcriteriarelatingtotheirpublicpurposes/interestsorconstitutionalpoliciesandobjectivesandtheiradministrativerelationshiptothegovernmentoranyofitsDepartmentsorOffices.

Thistheoryfindsnobasisinlaw.AstheCourtemphaticallystatedinPhilippineSocietyforthePreventionofCrueltytoAnimals,thefactthatacertainjuridicalentityisimpressedwithpublicinterestdoesnot,bythatcircumstancealone,maketheentityapubliccorporation,inasmuchasacorporationmaybeprivatealthoughitschartercontainsprovisionsofapubliccharacter,incorporatedsolelyforthepublicgood.36NeitherdoesadministrativerelationshiptothegovernmentindicatethatanentityisaninstrumentalitywithinthepurviewoftheCOAsauditjurisdiction.Onlycorporationscontrolledandownedbythegovernment,whicharesubjecttothetestofeconomicviability,andgovernmentinstrumentalities,asdefinedbytheAdministrativeCode,fallunderCOAsauditjurisdiction.TheBSPisneitherhence,itisbeyondtheCOAsauditjurisdiction.

VI.

NeitheristheBSPagovernmentinstrumentality.

AgovernmentinstrumentalityisdefinedbytheRevisedAdministrativeCodeasanyagencyoftheNationalGovernment,notintegratedwithinthedepartmentframeworkvestedwithspecialfunctionsorjurisdictionbylaw,endowedwithsomeifnotallcorporatepowers,administeringspecialfunds,andenjoyingoperationalautonomy,usuallythroughacharter.Inotherwords,tobeconsideredagovernmentinstrumentality,anentitymustbe(1)anagencyoftheNationalGovernment(2)outsidethedepartmentframeworkoftheNationalGovernment(3)vestedwithspecialfunctionsorjurisdictionbylaw(4)endowedwithsome,ifnotall,corporatepowers(5)administeringspecialfundsand(6)enjoyingoperationalautonomy.

TheBSPisnotanagencyoftheNationalGovernmentbecausetheBSPisnotaunitoftheNationalGovernment,likeadepartment,bureau,office,instrumentalityorgovernmentownedorcontrolledcorporation,oralocalgovernmentoradistinctunittherein.37ThereisalsonodisputethattheBSPdoesnotadministerspecialfundsofthe

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government.WhiletheBSPmayreceivedonationsorcontributionsfromthegovernmentjustlikeothernongovernmentorganizations,thesamecannotbecharacterizedasspecialfunds.Moreover,theBSPisnotvestedwithspecialfunctionsorjurisdictionbylaw.Hence,theBSPisnotagovernmentinstrumentality.

IftheBSPisagovernmentinstrumentality,thefollowingconsequencesareinevitable:(1)pursuanttoSection2(1),ArticleIXDoftheConstitution38itwillbesubjecttoCOAspreaudit,andnotpostaudit(2)itwillbesubjecttotheGovernmentProcurementReformActorRepublicActNo.9184and(3)theBSPsofficersandemployeeswillbeconsideredgovernmentpersonnelwhoare(a)subjecttoCivilServicelaws39(b)coveredbytheGovernmentServiceInsuranceSystem40(c)subjecttotheSalaryStandardizationLaw41(d)requiredtofileStatementsofAssets,LiabilitiesandNetworth42(e)underthejurisdictionoftheOmbudsman43and(f)subjecttothecontrolofthePresident.

UndertheAdministrativeCodeof1987,theBSPisanattachedagencyoftheDepartmentofEducationforpurposesofpolicyandprogramcoordination.However,thiswaschangedwiththeenactmentofRA7278whichremovedgovernmentcontrolovertheBSP.Torepeat,thedeterminingfactorofCOAsauditjurisdictionisgovernmentownershiporcontrol.Conversely,withoutsuchownershiporcontrol,theBSPisbeyondtheCOAsauditjurisdiction.Surprisingly,themajoritystatesthattheBSPisnotundergovernmentcontrolalthoughitisanattachedagencytotheDepartmentofEducation.Needlesstosay,theDepartmentofEducationandanyagencyorunitattachedtoitisunderthecontrolofthePresidentpursuanttoSection17,ArticleVIIoftheConstitution,whichmandatesthatthePresidentshallhavecontrolofalltheexecutivedepartments,bureaus,andoffices.Ifagovernmentoffice,unit,orinstrumentalityissubjecttothecontrolofthePresident,thenitisobviouslyundergovernmentcontrol.

VII.

TheBSPisaprivate,nonstock

andnonprofitcorporationperformingpublicfunctions.

Scoutingisanonpartisan,nongovernmentalworldwideyouthmovementgearedtowardsthedevelopmentofyoungpeopleinachievingtheirfullphysical,mental,social,

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intellectualandspiritualpotentialsasindividuals,asresponsiblecitizensandasmembersoftheirlocal,national

andinternationalcommunities.44Scoutingcomplementstheschoolandthefamily,fillingtheneedsnotmetbyeither.45Itbelongstothecategoryofnonformaleducationsince,whileittakesplaceoutsidetheformaleducationalsystem,itisanorganizedinstitutionwithaneducationalaimandisaddressedtoaspecificclientele.46

InBoyScoutsofAmericav.Dale,47whichinvolvedasuitforreinstatementanddamagesfiledbyanAssistantscoutmaster,whowasexpelledafterhepubliclydeclaredhewashomosexual,againstBoyScoutsofAmerica(BSA),theSupremeCourtoftheUnitedStatesstatedthattheBoyScoutsisaprivate,notforprofitorganizationengagedininstillingitssystemofvaluesinyoungpeople.

ThefactthattheBSP,liketheBSA,isaprivate,nonstock,nonprofitcorporationisconsistentwiththeclearintentoftheLegislatureinenactingRA7278.ThefollowingexchangesduringthedeliberationsintheSenateonRA7278revealtheintentoftheLegislaturetorestorethenongovernmentalandprivatecharacteroftheBSP,thus:

SPONSORSHIPSPEECHOFSENATORLINA

SenatorLina.Thankyou,Mr.President.

Themeasurebeforeusthisevening,SenateBillNo.132,seekstostrengthenthenatureofScouting,restorethedemocraticandnongovernmentalprocesstothemovement,andprovideaframeworkofleadershipwhichshallgivedirectionandpurposetothetwomillionboysandyoungmen,agessevento17.Representativesofthevitalgroupofouryouthwereherethisafternoon,waitingthatthisbillbesponsoredtoday.48

xxxx

SenatorLina.BeforeIanswerthatquestion,Mr.President,originally,theboyscoutingmovementinthiscountryisintrinsicallydemocraticanditsstrengthderivesfromtheeffortsofthenongovernmentalsector.TheConstitutionofthemovementdeclaresthatitisindependent,voluntary,nonpolitical,nonsectarian,andnongovernmental.ThelocalandnationalleadershipoftheBoysScoutMovement,fromitsinceptionupto1974,whenitwas

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amendedbyPresidentialDecreeNo.460,camefromelectedmembersoflocalcouncils,volunteerswhohaveworkedformanyyearsoftheirlivesforthedevelopmentofyoungboyssothattheywilllearnandheedthescoutoathandlaw.

However,Mr.President,inMay1974,thischaracterofthelocalboyscoutingmovementwasalteredbecausetheolddispensationissuedaPresidentialDecreewhichincludedinthemembershipofthegoverningboardthePresidentofthePhilippinesandsevenMembersoftheCabinet.ThatwasthemajorchangeinCommonwealthActNo.111.

So,thePresidentofthePhilippinesandsevenCabinetMemberswereincludedandinstitutionalizedasmembersofthegoverningbodyoftheBoyScoutsofthePhilippines.So,thenonvoluntary[sic]characterandthenongovernmentalcharacteroftheBoyScoutsofthePhilippineswasaltered.Notonlythat.

Allothermembersofthegoverningboard,excepttheelectedregionalchairmenandseniorscoutrepresentativesweremadesubjecttotheratificationandconfirmationofthePresidentofthePhilippines.So,iyonpoangnagingmajoramendmentnainistrodyusngPDNo.460.Andasaresultofthis,maramipoangnadiscouragesaboyscoutingmovement,sapagkatdatiratitalagangdemocraticiyan,walangsomuchimpositionfromgovernmentanditsofficials.Also,asaresultofPDNo.460,thevoluntarycharacteroftheboyscoutingmovementwaschanged.Halosnaginggobyerno,andimagine,thedictatorialcharacterofthatpreviousGovernmentwastransferredtotheBoyScoutsofthePhilippines,kasithemembersofthegoverningboardhavetobesubjectedtoconfirmationbythePresident.So,napulitikarinpoiyongboyscoutingthemovement.

Ngayon,angginagawaponatin,basically,istoremovethisundemocraticfeatureofthelawcreatingtheBoyScouts,andalsotoremovefromtheConstitutionofthepresentBoyScoutsofthePhilippinestheotherfeaturesthatmaketheboyscoutingmovementnowundemocractic.

SenatorGuingona.TheintentofthisbillistomakemoredemocraticthemembershipintheBoyScoutsofthePhilippines.

SenatorLina.Well,tolessengovernmentdirectinterference.49

============

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SenatorLina.xxx

Noongarawaymasaktiboangboyscoutingmovement.Peronoong1974,whenPresidentialDecreewasissuedbythethenPresidentamendingCommonwealthActNo.111,iyonpongNationalExecutiveBoard,thegoverningbody,aynapasukannghalospitongCabinetMembers.Dariratipo,walaiyon.IyonpolamangDepartmentofEducation,CultureandSportsandkasamasaBoyScoutsofthePhilippines.KungsinoangSecretary,iyonangnagigingexofficioorinstitutionalizedmember.Pero,nangmadagdaganitongmiyembromulasaDepartmentofNationalDefense,fromtheotherdepartments,patiDSWD,naginggovernmenthalosangcharacternito.Nawalanaiyongspiritofvoluntarism.SincetheCabinetMembersarebusydoingotherthings,hindipoitonabigyannggaanongpansinkungkayanagdeterioratenangmalakiangscoutingmovementofthePhilippines.Ngayonlamangpoitonarerevive,becauseSecretaryCarinoisthePresident.Rightnowheisverymuchinvolved.HeaspresidentbeforehebecametheSecretaryofEducation,CultureandSports.Underhisleadership,thingsareshapingup.Thereisgreaterrecruitmentandmoreactivities.

SenatorRomulo.Kayapo,mahalagaangbillnaito,sapagkatibinabaliknatinitosaprivatesectoratnangsaganoon,gayanoongnakaraan,thisismoreconducivetovoluntarismandtherefore,tothegrowthoftheBoyScoutmovement.

SenatorLina.Opo.50(Emphasissupplied)

ThereisnoquestionthatRA7278wasenactedpreciselytoremovegovernmentcontrolandreturntheBSPtotheprivatesectorandtoitsnongovernmentalstatus.Inotherwords,thegovernmentlostcontrolovertheBSPtotheprivatesectorupontheeffectivityofRA7278.Theabsenceofgovernmentcontrolorownership,coupledwiththeprivatenatureofBSPfunds,makestheBSPaprivatecorporationbeyondtheauditjurisdictionoftheCOA.Clearly,theattributesofBSPsrelationshipwiththeStatethatpointtoitsbeingaprivatenonstockcorporationareoverwhelmingandirrefutable.51

VIII.

ConstitutionalityofBSPcharter,asamended

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SincetheBSPisnotaGOCC,canCongresscreate,organizeandregulatetheBSPbyenactingitscharter,orCommonwealthActNo.111,asamendedbyPD460andfurtheramendedbyRA7278?

Theanswerisinthenegative.

Section7,ArticleXIVofthe1935Constitution,asamended,wasinforcewhentheBSPwascreatedbyspecialcharteron31October1936.Section7,ArticleXIVofthe1935Constitution,asamended,reads:

SEC.7.TheCongressshallnot,exceptbygenerallaw,providefortheformation,organization,orregulationofprivatecorporations,unlesssuchcorporationsareownedorcontrolledbytheGovernmentoranysubdivisionorinstrumentalitythereof.

Thesubsequent1973and1987Constitutionscontainsimilarprovisions.Thus,Section4,ArticleXIVofthe1973Constitutionprovides:

SEC.4.TheNationalAssemblyshallnot,exceptbygenerallaw,providefortheformation,organization,orregulationofprivatecorporations,unlesssuchcorporationsareownedorcontrolledbytheGovernmentoranysubdivisionorinstrumentalitythereof.

The1987ConstitutionsubstantiallyreiteratedtheaboveprovisioninSection16,ArticleXII,towit:

SEC.16.TheCongressshallnot,exceptbygenerallaw,providefortheformation,organization,orregulationofprivatecorporations.Governmentownedorcontrolledcorporationsmaybecreatedorestablishedbyspecialchartersintheinterestofthecommongoodandsubjecttothetestofeconomicviability.

InFeliciano,52theCourtdiscussedthesignificanceoftheaboveConstitutionalprovisioninthiswise:

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TheConstitutionemphaticallyprohibitsthecreationofprivatecorporationsexceptbyagenerallawapplicabletoallcitizens.Thepurposeofthisconstitutionalprovisionistobanprivatecorporationscreatedbyspecialcharters,whichhistoricallygavecertainindividuals,familiesorgroupsspecialprivilegesdeniedtoothercitizens.

Inshort,Congresscannotenactalawcreatingaprivatecorporationwithaspecialcharter.Suchlegislationwouldbeunconstitutional.Privatecorporationsmayexistonlyunderagenerallaw.Ifthecorporationisprivate,itmustnecessarilyexistunderagenerallaw.Stateddifferently,onlycorporationscreatedunderagenerallawcanqualifyasprivatecorporations.Underexistinglaws,thatgenerallawistheCorporationCode,exceptthattheCooperativeCodegovernstheincorporationofcooperatives.

TheConstitutionauthorizesCongresstocreategovernmentownedorcontrolledcorporationsthroughspecialcharters.Sinceprivatecorporationscannothavespecialcharters,itfollowsthatCongresscancreatecorporationswithspecialchartersonlyifsuchcorporationsaregovernmentownedorcontrolled.(Emphasissupplied)

WhilebothBSPandCOAsubmitthatCommonwealthActNo.111anditsamendatorylawsdonotviolateSection16,ArticleXIIoftheConstitution,theCourtshouldrejectsuchcontention.ConsideringthattheBSPisnotaGOCC,itfollowsthatthelawcreatingandregulatingtheBSPclearlyviolatesSection16,ArticleXIIoftheConstitutionwhichspecificallystatesthatCongressshallnot,exceptbygenerallaw,providefortheformation,organization,orregulationofprivatecorporations,unlesssuchcorporationsareownedorcontrolledbytheGovernmentoranyofitssubdivisionorinstrumentality.

Inthiscase,theCourtdirectedthepartiestocommentontheissueoftheconstitutionalityofCommonwealthActNo.111,asamended.ThisispreciselybecausetheconstitutionalityofCommonwealthActNo.111,asamended,isinextricablylinkedtotheissueofwhethertheBSPissubjecttoCOAsauditjurisdiction,whichinturndependsonwhethertheBSPisaprivateoragovernmentownedorcontrolledcorporation.Hence,thisissuewasproperlyaddressedandexhaustivelyargueduponbytheparties.

ThatthepartiesdidnotspecificallyraisetheissueontheconstitutionalityofCommonwealthActNo.111,asamended,doesnotprecludethisCourtfromresolvingsuchissuesinceitisabsolutelyindispensableforthecompletedispositionofthiscase.Infact,inexceptionalcases,suchasthis,itiswithintheCourtsdiscretionwhena

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constitutionalissuemayberuledupon.ItislikewisethedutyofthisCourttopassupontheconstitutionalityofCommonwealthActNo.111,asamended,sinceitclearlyappearsthatadeterminationoftheconstitutionalquestionisnecessarytodecidethiscase.InPeoplev.Vera,53theCourtheld:

Itistruethat,asageneralrule,thequestionofconstitutionalitymustberaisedattheearliestopportunity,sothatifnotraisedbythepleadings,ordinarilyitmaynotberaisedatthetrial,andifnotraisedinthetrialcourt,itwillnotconsideredonappeal.Butwemuststatethatthegeneralruleadmitsofexceptions.Courts,intheexerciseofsoundsdiscretion,maydeterminethetimewhenaquestionaffectingtheconstitutionalityofastatuteshouldbepresented.Thus,incriminalcases,althoughthereisaverysharpconflictofauthorities,itissaidthatthequestionmayberaisedforthefirsttimeatanystageoftheproceedings,eitherinthetrialcourtoronappeal.Evenincivilcases,ithasbeenheldthatitisthedutyofacourttopassontheconstitutionalquestion,thoughraisedforthefirsttimeonappeal,ifitappearsthatadeterminationofthequestionisnecessarytoadecisionofthecase.

Unless,therefore,theconstitutionalquestionisthustimelyraisedandpresented,itwillbeconsideredwaived,exceptinextraordinarycasesnotedinPeopleandHongkong&ShanghaiBankingCorporationvs.VeraandCuUnjieng,supra,orinexceptionalcaseswhere,theopinionofthiscourt,thequestionmaybesaidtobefairlyinvolveduponthefaceoftheundisputedrecord.(Emphasissuppliedcitationsomitted)

InRobbv.People,54theCourtreiterated:

Unless,therefore,theconstitutionalquestionisthustimelyraisedandpresented,itwillbeconsideredwaived,exceptinextraordinarycasesnotedinPeopleandHongkong&ShanghaiBankingCorporationvs.VeraandCuUnjieng,supra,orinexceptionalcaseswhere,theopinionofthiscourt,thequestionmaybesaidtobefairlyinvolveduponthefaceoftheundisputedrecord.(Emphasissupplied)

InMoldexRealty,Inc.v.HousingandLandUseRegulatoryBoard,55thisCourtheldthatconstitutionalchallengecanbemadeanytime:

Thatthequestionofconstitutionalityhasnotbeenraisedbeforeisnotavalidreasonforrefusingtoallowittoberaisedlater.Acontraryrulewouldmeanthatalaw,otherwiseunconstitutional,wouldlapseintoconstitutionalitybythemerefailureoftheproperpartytopromptlyfileacasetochallengethesame.(Emphasissupplied)

TheConstitutionprohibitsthecreationofaprivatecorporationthroughaspeciallaw.TheConstitutionalprohibitionunderSection16,ArticleXIIisclear,categorical,

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absolute,andadmitsofnoexception.SincetheBSPisaprivatecorporationandnotagovernmentownedorcontrolledcorporation,Sections1,562,573,585,596,607,619,62and1163ofCommonwealthActNo.111,asamended,areunconstitutional,andhencevoid,forcontraveningtheConstitutionalproscriptionagainstthecreation,organization,andregulationofprivatecorporationsbyCongress.

Therestoftheprovisions,namely,Sections4,648,65and1066ofCommonwealthActNo.111,asamended,remainvalidasthesedonotrefertoBSPscreationasacorporationandthus,donotviolatetheprohibitionunderSection16,ArticleXIIoftheConstitution.Moreover,Section5ofRA7278,amendingCommonwealthActNo.111,providesforaseparabilityclause.67

Insum,theBSPisaprivatecorporationbeyondtheauditjurisdictionoftheCOA.Accordingly,thespecificprovisionsintheBSPchartercreatingtheBSPasaprivatecorporationarevoid.ConsideringtheConstitutionalinfirmityofitscreation,BSPsrecourseiseithertoincorporateundertheCorporationCodeofthePhilippinesortoexistasanunincorporatedassociation.

ACCORDINGLY,IvotetoGRANTthepetition.TheBoyScoutsofthePhilippinesisaprivatecorporationbeyondtheauditjurisdictionoftheCommissiononAudit.Sections1,2,3,5,6,7,9,and11ofCommonwealthActNo.111,asamendedbyPresidentialDecreeNo.460andRepublicActNo.7278,arevoidforbeingviolativeoftheprohibitioninSection16,ArticleXIIoftheConstitution.

ANTONIOT.CARPIOAssociateJustice