G.R. No. 177131 ; June 7, 2011
BOY SCOUTS OF THE PHILIPPINES, Petitioner, vs. COMMISSION ON AUDIT, Respondent.

FACTS

This is a petition for prohibition filed by the Boy Scouts of the Philippines (BSP) seeking to prohibit the Commission on Audit (COA) from implementing its June 18, 2002 Decision and February 21, 2007 Resolution, which asserted COA’s audit jurisdiction over the BSP. The controversy originated from COA Resolution No. 99-011 dated August 19, 1999, which resolved to conduct an annual financial audit of the BSP. The COA based its resolution on the Supreme Court’s ruling in Boy Scouts of the Philippines v. National Labor Relations Commission ( G.R. No. 80767 , April 22, 1991), which classified the BSP as a “government-controlled corporation within the meaning of Article IX(B)(2)(1) of the Constitution” and as a “government instrumentality under the 1987 Administrative Code.”
The BSP sought reconsideration, arguing that Republic Act No. 7278 , which amended its charter after the cited case was decided, had superseded the ruling. The BSP contended that R.A. No. 7278 eliminated “substantial government participation” in its National Executive Board by removing the President of the Philippines and executive secretaries (except the Secretary of Education) as members and by removing the President’s appointment and confirmation power over the Board. The BSP also argued it was not a government-owned or controlled corporation (GOCC) as defined by the Administrative Code, nor an “instrumentality” or “agency” administering special government funds, and was not included in the national budget.
The COA, through a Memorandum from its General Counsel dated June 20, 2000, opined that R.A. No. 7278 did not supersede the Court’s prior ruling. The Memorandum stated that substantial government participation was only one of three grounds for the earlier decision; the other grounds—the public character of the BSP’s purposes and functions and its statutory designation as a “public corporation”—remained and were even strengthened by the amendments in R.A. No. 7278 . The COA proceeded to notify the BSP of an impending audit. The BSP’s Petition for Review before the COA was denied, leading to the filing of the instant petition.

ISSUE

Whether the Commission on Audit (COA) has jurisdiction to audit the Boy Scouts of the Philippines (BSP).

RULING

The Supreme Court DISMISSED the petition and upheld the jurisdiction of the Commission on Audit over the Boy Scouts of the Philippines.
The Court ruled that the BSP is a government-controlled corporation with an original charter and an instrumentality of the government, and is therefore subject to the audit jurisdiction of the COA under Section 2(1), Article IX-D of the 1987 Constitution . The Court reaffirmed its ruling in Boy Scouts of the Philippines v. NLRC, holding that the enactment of Republic Act No. 7278 did not alter the BSP’s fundamental nature as a public corporation created by special law for a public purpose. The amendments, while changing the composition of the National Executive Board, did not remove the public character of the BSP’s functions or its status as a public corporation. The government, through the Secretary of Education, retains representation in the Board. Furthermore, the BSP is treated as an attached agency of the Department of Education, and its assets are considered public in character, as they are devoted to a public purpose. Consequently, its accounts pertaining to the revenue, receipts, expenditures, uses of funds, and property are subject to the COA’s constitutional power to examine, audit, and settle.