G.R. No. 210314, October 12, 2021
Bangko Sentral ng Pilipinas, Petitioner, vs. The Commission on Audit, Respondent.

FACTS

The Bangko Sentral ng Pilipinas (BSP) filed a Petition for Certiorari assailing COA Decision No. 2012-154 and Resolution No. 2013-214. The core issue was whether the BSP could deduct reserves from its net profits before remitting dividends to the National Government. The BSP relied on Section 43 of Republic Act (R.A.) No. 7653 (The New Central Bank Act), which allowed it to establish adequate reserves for bad and doubtful accounts when computing net profits. The Commission on Audit (COA) disagreed, citing Section 2(d) in relation to Section 3 of R.A. No. 7656, which mandates Government-Owned or -Controlled Corporations (GOCCs) to remit at least 50% of their annual net earnings as dividends and explicitly states that “in no case shall any reserve for whatever purpose be allowed as a deduction from net earnings.”
The dispute originated from a post-audit of the BSP’s 2003 dividend payment, where COA found an understatement due to the deduction of reserves. COA issued Audit Observation Memoranda (AOMs) for the years 2003-2006, asserting an underpayment. COA, in Decision No. 2010-042, ruled that Section 2(d) of R.A. No. 7656 (a general provision on GOCC dividends) impliedly repealed Section 43 of R.A. No. 7653 (a special law for the BSP) based on the principle that a specific provision of a general statute can prevail over a general provision of a special law. The BSP’s motion for reconsideration was denied by COA Resolution No. 2011-007, which, while recognizing a settlement agreement for the years 2003-2006 (where BSP remitted P9.312 billion), maintained that for 2007 onwards, no reserves could be deducted. The BSP and COA subsequently executed a Memorandum of Agreement for the 2003-2006 settlement. COA later informed the BSP that the ruling for 2007 onwards had attained finality. The assailed COA Decision and Resolution upheld this position. During the pendency of the case, Congress amended Section 43 of R.A. No. 7653 on February 14, 2019, explicitly allowing the BSP’s Monetary Board to determine allowances and provisions for contingencies or other purposes in computing net profit.

ISSUE

Whether the BSP is allowed to deduct reserves from its net profits to be remitted to the National Government as dividends.

RULING

Yes. The Supreme Court granted the BSP’s petition and reversed the assailed COA rulings. The Court held that the BSP is authorized to deduct adequate allowances or establish adequate reserves when computing its net profit for dividend declaration purposes.
The Court ruled that there was no implied repeal. R.A. No. 7653 (The New Central Bank Act) is a special law that governs the BSP specifically and grants it fiscal and administrative autonomy. R.A. No. 7656 is a general law applicable to all GOCCs. The rule is that a special law prevails over a general law. The principle invoked by COA—that a specific provision in a general law can repeal a general provision in a special law—was found inapplicable. Both statutory provisions (Section 43 of R.A. No. 7653 and Section 2(d) of R.A. No. 7656) are specific in their respective contexts: one governs the BSP’s profit computation, and the other defines “net earnings” for GOCC dividend remittance. There is no irreconcilable conflict because R.A. No. 7656 can be interpreted to apply to GOCCs in general, while the BSP, due to its unique central banking functions and fiscal autonomy expressly granted by its charter, constitutes an exception.
The Court emphasized the BSP’s unique constitutional and statutory role as the independent central monetary authority. Its ability to maintain reserves is crucial for prudent financial management, effective central banking operations, and safeguarding the country’s international reserves. Requiring it to remit dividends without deducting necessary reserves would impair its financial strength and ability to perform its critical functions, including acting as lender of last resort.
Furthermore, the 2019 amendment to Section 43 of R.A. No. 7653, which explicitly authorizes allowances and provisions for contingencies as determined by the Monetary Board, was deemed a curative statute that clarified the legislative intent existing since the law’s enactment. This amendment affirmed the BSP’s authority to deduct such reserves, rendering the COA’s disallowance without legal basis.