Pimentel v Aguirre

FACTS: This is a petition for certiorari and prohibition seeking to annul Section 1 of Administrative Order No. 372,
issued by the President, insofar as it requires local government units to reduce their expenditures by 25% of their
authorized regular appropriations for non-personal services and to enjoin respondents from implementing Section 4
of the Order, which withholds a portion of their internal revenue allotments.
HELD: Section 1 of the AO does not violate local fiscal autonomy. Local fiscal autonomy does not rule out any
manner of national government intervention by way of supervision, in order to ensure that local programs, fiscal and
otherwise, are consistent with national goals. AO 372 is merely directory and has been issued by the President
consistent with his powers of supervision over local governments. A directory order cannot be characterized as an
exercise of the power of control. The AO is intended only to advise all government agencies and instrumentalities to
undertake cost-reduction measures that will help maintain economic stability in the country. It does not contain any
sanction in case of noncompliance.
The Local Government Code also allows the President to interfere in local fiscal matters, provided that certain
requisites are met: (1) an unmanaged public sector deficit of the national government; (2) consultations with the
presiding officers of the Senate and the House of Representatives and the presidents of the various local leagues; (3)
the corresponding recommendation of the secretaries of the Department of Finance, Interior and Local Government,
and Budget and Management; and (4) any adjustment in the allotment shall in no case be less than 30% of the
collection of national internal revenue taxes of the third fiscal year preceding the current one.
Section 4 of AO 372 cannot be upheld. A basic feature of local fiscal autonomy is the automatic release of the shares
of LGUs in the national internal revenue. This is mandated by the Constitution and the Local Government Code.
Section 4 which orders the withholding of 10% of the LGUs IRA clearly contravenes the Constitution and the law.

Province of Batangas vs. Romulo

GR 152774
May 27, 2004
FACTS:
In 1998, then President Estrada issued EO No. 48 establishing the Program for
Devolution Adjustment and Equalization to enhance the capabilities of LGUs in
the discharge of the functions and services devolved to them through the LGC.
The Oversight Committee under Executive Secretary Ronaldo Zamora passed
Resolutions No. OCD-99-005, OCD-99-006 and OCD-99-003 which were
approved by Pres. Estrada on October 6, 1999. The guidelines formulated by the
Oversight Committee required the LGUs to identify the projects eligible for
funding under the portion of LGSEF and submit the project proposals and other

requirements to the DILG for appraisal before the Committee serves notice to
the DBM for the subsequent release of the corresponding funds.
Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare
unconstitutional and void certain provisos contained in the General
Appropriations Acts (GAAs) of 1999, 2000, and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of P5billion for the Internal
Revenue Allotment (IRA) for the Local Government Service Equalization Fund
(LGSEF) & imposed conditions for the release thereof.
ISSUE:
Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the
OCD resolutions infringe the Constitution and the LGC of 1991.
HELD:
Yes.
The assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD
resolutions constitute a withholding of a portion of the IRA they effectively
encroach on the fiscal autonomy enjoyed by LGUs and must be struck down.
According to Art. II, Sec.25 of the Constitution, the State shall ensure
the local autonomy of local governments. Consistent with the principle of
local autonomy, theConstitution confines the Presidents power over the LGUs to
one of general supervision, which has been interpreted to exclude the power
of control. Drilon v. Lim distinguishes supervision from control: control lays
down the rules in the doing of an act the officer has the discretion to order his
subordinate to do or redo the act, or decide to do it
himself;supervision merely sees to it that the rules are followed but has no
authority to set down the rules or the discretion to modify/replace them.
The entire process involving the distribution & release of the LGSEF is
constitutionally impermissible. The LGSEF is part of the IRA or just share of the
LGUs in the national taxes. Sec.6, Art.X of the Constitution mandates that
the just share shall beautomatically released to the LGUs. Since the release
is automatic, the LGUs arent required to perform any act to receive the just
share it shall be released to them without need of further action. To subject
its distribution & release to the vagaries of the implementing rules & regulations

as sanctioned by the assailed provisos in the GAAs of 1999-2001 and the OCD
Resolutions would violate this constitutional mandate.
The only possible exception to the mandatory automatic release of the LGUs IRA
is if the national internal revenue collections for the current fiscal year is less
than 40% of the collections of the 3rd preceding fiscal year. The exception does
not apply in this case.
The Oversight Committees authority is limited to the implementation of the
LGC of 1991 not to supplant or subvert the same, and neither can it exercise
control over the IRA of the LGUs.
Congress may amend any of the provisions of the LGC but only through a
separate lawand not through appropriations laws or GAAs. Congress cannot
include in a general appropriations bill matters that should be more
properly enacted in a separate legislation.
A general appropriations bill is a special type of legislation,
whose content is limited to specified sums of money dedicated to a specific
purpose or a separate fiscal unit any provision therein which is intended to
amend another law is considered an inappropriate provision.
Increasing/decreasing the IRA of LGUs fixed in the LGC of 1991 are matters of
general & substantive law. To permit the Congress to undertake these
amendments through the GAAs would unduly infringe the fiscal autonomy of the
LGUs.
The value of LGUs as institutions of democracy is measured by the
degree of autonomy they enjoy. Our national officials should not only comply
with the constitutional provisions in local autonomy but should also appreciate
the spirit and liberty upon which these provisions are based.

Republic of the Philippines

Supreme Court
Manila

EN BANC

PHILIPPINE SOCIETY FOR

G.R. No. 169752

THE PREVENTION OF
CRUELTY TO ANIMALS,
Petitioners,

Members:

PUNO, C.J.
QUISUMBING,
YNARES-SANTIAGO,
SANDOVALGUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
- versus -

CARPIO-MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
GARCIA,
VELASCO, JR.,
NACHURA, and

REYES, JJ.
COMMISSION ON AUDIT,
DIR. RODULFO J. ARIESGA
(in his
Director

official

capacity

as

of the Commission on Audit),

MS.
MERLE M. VALENTIN and MS.
SUSAN
official

GUARDIAN

(in

their

capacities as Team Leader and

Team

Promulgated:

Member, respectively, of the

audit
Team of the Commission on
Audit),
Responden

September 25, 2007

ts.
x---------------------------------------------------------- x

DECISION

AUSTRIA-MARTINEZ, J.:

Before
the
Court
is
a
special
civil
action
for Certiorari and Prohibition under Rule 65 of the Rules of Court,
in relation to Section 2 of Rule 64, filed by the petitioner assailing
Office Order No. 2005-021[1] dated September 14, 2005 issued by
the respondents which constituted the audit team, as well as its
September 23, 2005 Letter[2]informing the petitioner that
respondents audit team shall conduct an audit survey on the
petitioner for a detailed audit of its accounts, operations, and
financial transactions. No temporary restraining order was issued.

The petitioner was incorporated as a juridical entity over

one hundred years ago by virtue of Act No. 1285, enacted
on January 19, 1905, by the Philippine Commission. The
petitioner, at the time it was created, was composed of animal
aficionados and animal propagandists. The objects of the
petitioner, as stated in Section 2 of its charter, shall be to enforce
laws relating to cruelty inflicted upon animals or the protection of
animals in the Philippine Islands, and generally, to do and perform
all things which may tend in any way to alleviate the suffering of
animals and promote their welfare.[3]

At the time of the enactment of Act No. 1285, the original

Corporation Law, Act No. 1459, was not yet in existence. Act No.
1285 antedated both the Corporation Law and the constitution of
the Securities and Exchange Commission. Important to note is
that the nature of the petitioner as a corporate entity is
distinguished from the sociedadanonimas under the Spanish Code
of Commerce.

For the purpose of enhancing its powers in promoting

animal welfare and enforcing laws for the protection of animals,
the petitioner was initially imbued under its charter with the

power to apprehend violators of animal welfare laws. In addition,

the petitioner was to share one-half (1/2) of the fines imposed and
collected through its efforts for violations of the laws related
thereto. As originally worded, Sections 4 and 5 of Act No. 1285
provide:

SEC. 4. The said society is authorized to appoint not

to exceed five agents in the City of Manila, and not to
exceed two in each of the provinces of the Philippine
Islands who shall have all the power and authority of a
police officer to make arrests for violation of the
laws enacted for the prevention of cruelty to animals and
the protection of animals, and to serve any process in
connection with the execution of such laws; and in
addition thereto, all the police force of the Philippine
Islands, wherever organized, shall, as occasion requires,
assist said society, its members or agents, in the
enforcement of all such laws.

SEC. 5. One-half of all the fines imposed and

collected through the efforts of said society, its members
or its agents, for violations of the laws enacted for the
prevention of cruelty to animals and for their protection,
shall belong to said society and shall be used to promote
its objects.

(emphasis supplied)

Subsequently, however, the power to make arrests as well

as the privilege to retain a portion of the fines collected for
violation of animal-related laws were recalled by virtue of

Commonwealth Act (C.A.) No. 148,[4] which reads, in its entirety,

thus:

Be it enacted by the National Assembly of the Philippines:

Section 1. Section four of Act Numbered Twelve

hundred and eighty-five as amended by Act Numbered
Thirty five hundred and forty-eight, is hereby further
amended so as to read as follows:

Sec. 4. The said society is authorized to

appoint not to exceed ten agents in the City of
Manila, and not to exceed one in each
municipality of the Philippines who shall have
the authority to denounce to regular peace
officers any violation of the laws enacted for
the prevention of cruelty to animals and the
protection of animals and to cooperate with
said peace officers in the prosecution of
transgressors of such laws.

Sec. 2. The full amount of the fines collected for

violation of the laws against cruelty to animals and for the
protection of animals, shall accrue to the general fund of
the Municipality where the offense was committed.

Sec.
approval.

3. This

Act

shall

take

effect

upon

its

Approved, November
supplied)

8,

1936. (Emphasis

Immediately
thereafter,
then
President
Manuel
L. Quezon issued Executive Order (E.O.) No. 63 dated November
12, 1936, portions of which provide:

Whereas, during the first regular session of the

National Assembly, Commonwealth Act Numbered One
Hundred Forty Eight was enacted depriving the agents of
the Society for the Prevention of Cruelty to Animals of
their power to arrest persons who have violated the laws
prohibiting cruelty to animals thereby correcting a serious
defect in one of the laws existing in our statute books.

xxxx

Whereas, the cruel treatment of animals is an offense against the

State, penalized under our statutes, which the Government is duty bound
to enforce;

Now, therefore, I, Manuel L. Quezon, President of

the Philippines, pursuant to the authority conferred upon
me by the Constitution, hereby decree, order, and direct
the Commissioner of Public Safety, the Provost Marshal
General as head of the Constabulary Division of the
Philippine Army, every Mayor of a chartered city, and
every municipal president to detail and organize special

members of the police force, local, national, and the

Constabulary to watch, capture, and prosecute
offenders against the laws enacted to prevent cruelty to
animals. (Emphasis supplied)

On December 1, 2003, an audit team from respondent

Commission on Audit (COA) visited the office of the petitioner to
conduct an audit survey pursuant to COA Office Order No. 2003051 dated November 18, 2003[5] addressed to the petitioner. The
petitioner demurred on the ground that it was a private entity not
under the jurisdiction of COA, citing Section 2(1) of Article IX of
the Constitution which specifies the general jurisdiction of the
COA, viz:

Section 1. General Jurisdiction. The Commission on

Audit shall have the power, authority, and duty to
examine, audit, and settle all accounts pertaining to the
revenue and receipts of, and expenditures or uses of
funds and property, owned or held in trust by, or
pertaining to the Government, or any of its subdivisions,
agencies, or instrumentalities, including governmentowned and controlled corporations with original charters,
and on a post-audit basis: (a) constitutional bodies,
commissions and officers that have been granted fiscal
autonomy under the Constitution; (b) autonomous state
colleges and universities; (c) other government-owned or
controlled corporations and their subsidiaries; and (d)
such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the
government, which are required by law or the granting
institution to submit to such audit as a condition of
subsidy or equity. However, where the internal control

system of the audited agencies is inadequate, the

Commission may adopt such measures, including
temporary or special pre-audit, as are necessary and
appropriate to correct the deficiencies. It shall keep the
general accounts of the Government, and for such period
as may be provided by law, preserve the vouchers and
other supporting papers pertaining thereto. (Emphasis
supplied)

Petitioner explained thus:

a. Although the petitioner was created by special

legislation, this necessarily came about because in
January 1905 there was as yet neither a Corporation Law
or any other general law under which it may be organized
and incorporated, nor a Securities and Exchange
Commission which would have passed upon its
organization and incorporation.

b. That Executive Order No. 63, issued during the

Commonwealth period, effectively deprived the petitioner
of its power to make arrests, and that the petitioner lost
its operational funding, underscore the fact that it
exercises no governmental function. In fine, the
government itself, by its overt acts, confirmed petitioners
status as a private juridical entity.

The
COA
General
Counsel
issued
a
[6]
Memorandum dated May 6, 2004, asserting that the petitioner
was subject to its audit authority. In a letter dated May 17, 2004,
[7]
respondent COA informed the petitioner of the result of the

evaluation, furnishing it with a copy of said Memorandum

dated May 6, 2004 of the General Counsel.

Petitioner thereafter filed with the respondent COA a

Request for Re-evaluation dated May 19, 2004,[8] insisting that it
was a private domestic corporation.

Acting on the said request, the General Counsel of

respondent COA, in a Memorandum dated July 13, 2004,
[9]
affirmed her earlier opinion that the petitioner was a
government entity that was subject to the audit jurisdiction of
respondent COA. In a letter dated September 14, 2004, the
respondent COA informed the petitioner of the result of the reevaluation, maintaining its position that the petitioner was subject
to its audit jurisdiction, and requested an initial conference with
the respondents.

In
a
Memorandum
dated September
16,
2004,
Director Delfin Aguilar
reported
to
COA
Assistant
Commissioner Juanito Espino, Corporate Government Sector, that
the audit survey was not conducted due to the refusal of the
petitioner because the latter maintained that it was a private
corporation.

Petitioner received on September 27, 2005 the subject COA

Office Order 2005-021 dated September 14, 2005 and the COA
Letter dated September 23, 2005.

Hence, herein Petition on the following grounds:

A.

RESPONDENT COMMISSION ON AUDIT COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT RULED THAT
PETITIONER IS SUBJECT TO ITS AUDIT AUTHORITY.

B.

PETITIONER IS ENTITLED TO THE RELIEF SOUGHT,

THERE BEING NO APPEAL, NOR ANY PLAIN, SPEEDY AND
ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW
AVAILABLE TO IT.[10]

The essential question before this Court is whether the

petitioner qualifies as a government agency that may be subject
to audit by respondent COA.

Petitioner argues: first, even though it was created by

special legislation in 1905 as there was no general law then
existing under which it may be organized or incorporated, it
exercises no governmental functions because these have been
revoked by C.A. No. 148 and E.O. No. 63; second, nowhere in its
charter is it indicated that it is a public corporation, unlike, for
instance, C.A. No. 111 which created the Boy Scouts of the
Philippines, defined its powers and purposes, and specifically

stated that it was An Act to Create a Public Corporation in which,

even as amended by Presidential Decree No. 460, the law still
adverted to the Boy Scouts of the Philippines as a public
corporation, all of which are not obtaining in the charter of the
petitioner; third, if it were a government body, there would have
been no need for the State to grant it tax exemptions under
Republic Act No. 1178, and the fact that it was so exempted
strengthens its position that it is a private institution; fourth, the
employees of the petitioner are registered and covered by the
Social Security System at the latters initiative and not through
the Government Service Insurance System, which should have
been the case had the employees been considered government
employees; fifth, the petitioner does not receive any form of
financial assistance from the government, since C.A. No. 148,
amending Section 5 of Act No. 1285, states that the full amount
of the fines, collected for violation of the laws against cruelty to
animals and for the protection of animals, shall accrue to the
general fund of the Municipality where the offense was
committed; sixth, C.A. No. 148 effectively deprived the petitioner
of its powers to make arrests and serve processes as these
functions were placed in the hands of the police force; seventh,
no government appointee or representative sits on the board of
trustees of the petitioner; eighth, a reading of the provisions of its
charter (Act No. 1285) fails to show that any act or decision of the
petitioner is subject to the approval of or control by any
government agency, except to the extent that it is governed by
the law on private corporations in general; and finally, ninth, the
Committee on Animal Welfare, under the Animal Welfare Act of
1998, includes members from both the private and the public
sectors.

The respondents contend that since the petitioner is a body

politic created by virtue of a special legislation and endowed
with a governmental purpose, then, indubitably, the COA may

audit the financial activities of the latter. Respondents in effect

divide their contentions into six strains: first, the test to
determine whether an entity is a government corporation lies in
the manner of its creation, and, since the petitioner was created
by virtue of a special charter, it is thus a government corporation
subject to respondents auditing power; second, the petitioner
exercises sovereign powers, that is, it is tasked to enforce the
laws for the protection and welfare of animals which ultimately
redound to the public good and welfare, and, therefore, it is
deemed to be a government instrumentality as defined under
the Administrative Code of 1987, the purpose of which is
connected with the administration of government, as purportedly
affirmed by American jurisprudence; third, by virtue of Section 23,
[11]
Title II, Book III of the same Code, the Office of the President
exercises supervision or control over the petitioner; fourth, under
the same Code, the requirement under its special charter for the
petitioner to render a report to the Civil Governor, whose
functions have been inherited by the Office of the President,
clearly reflects the nature of the petitioner as a government
instrumentality; fifth, despite the passage of the Corporation
Code, the law creating the petitioner had not been abolished, nor
had it been re-incorporated under any general corporation law;
and finally,sixth, Republic Act No. 8485, otherwise known as the
Animal Welfare Act of 1998, designates the petitioner as a
member of its Committee on Animal Welfare which is attached to
the Department of Agriculture.

In view of the phrase One-half of all the fines imposed and

collected through the efforts of said society, the Court, in a
Resolution dated January 30, 2007, required the Office of the
Solicitor General (OSG) and the parties to comment on: a)
petitioner's authority to impose fines and the validity of the
provisions of Act No. 1285 and Commonwealth Act No. 148
considering that there are no standard measures provided for in

the aforecited laws as to the manner of implementation, the

specific violations of the law, the person/s authorized to impose
fine and in what amount; and, b) the effect of the 1935 and 1987
Constitutions on whether petitioner continues to exist or should
organize as a private corporation under the Corporation
Code, B.P. Blg. 68 as amended.

Petitioner
and
the
OSG
filed
their
respective
Comments. Respondents filed a Manifestation stating that since
they were being represented by the OSG which filed its Comment,
they opted to dispense with the filing of a separate one and adopt
for the purpose that of the OSG.

The petitioner avers that it does not have the authority to

impose fines for violation of animal welfare laws; it only enjoyed
the privilege of sharing in the fines imposed and collected from its
efforts in the enforcement of animal welfare laws; such privilege,
however, was subsequently abolished by C.A. No. 148; that it
continues to exist as a private corporation since it was created by
the
Philippine
Commission
before
the effectivity of
the
Corporation law, Act No. 1459; and the 1935 and 1987
Constitutions.

The OSG submits that Act No. 1285 and its amendatory laws
did not give petitioner the authority to impose fines for violation
of laws[12] relating to the prevention of cruelty to animals and the
protection of animals; that even prior to the amendment of Act
No. 1285, petitioner was only entitled to share in the fines
imposed; C.A. No. 148 abolished that privilege to share in the
fines collected; that petitioner is a public corporation and has
continued to exist since Act No. 1285; petitioner was not repealed
by the 1935 and 1987 Constitutions which contain transitory

provisions maintaining all laws issued not inconsistent therewith

until amended, modified or repealed.

The petition is impressed with merit.

The arguments of the parties, interlaced as they are, can be

disposed of in five points.

First, the Court agrees with the petitioner that the charter
test cannot be applied.

Essentially, the charter test as it stands today provides:

[T]he test to determine whether a corporation is

government owned or controlled, or private in nature is
simple. Is it created by its own charter for the exercise of
a public function, or by incorporation under the general
corporation law? Those with special charters are
government corporations subject to its provisions, and its
employees are under the jurisdiction of the Civil Service
Commission, and are compulsory members of the
Government Service Insurance System. xxx (Emphasis
supplied)[13]

The petitioner is correct in stating that the charter test is

predicated, at best, on the legal regime established by the 1935
Constitution, Section 7, Article XIII, which states:

Sec. 7. The National Assembly shall not, except

by general law, provide for the formation, organization, or
regulation
of
private
corporations,
unless
such
corporations are owned or controlled by the Government
or any subdivision or instrumentality thereof.[14]

The foregoing proscription has been carried over to the

1973 and the 1987 Constitutions. Section 16 of Article XII of the
present Constitution provides:

Sec. 16. The Congress shall not, except by general law, provide
for the formation, organization, or regulation of private
corporations. Government-owned or controlled corporations may be
created or established by special charters in the interest of the common
good and subject to the test of economic viability.

Section 16 is essentially a re-enactment of Section 7 of

Article XVI of the 1935 Constitution and Section 4 of Article XIV of
the 1973 Constitution.

During the formulation of the 1935 Constitution, the

Committee
on
Franchises
recommended
the
foregoing
proscription to prevent the pressure of special interests upon the
lawmaking body in the creation of corporations or in the
regulation of the same. To permit the lawmaking body by special
law to provide for the organization, formation, or regulation of
private corporations would be in effect to offer to it the
temptation in many cases to favor certain groups, to the prejudice
of others or to the prejudice of the interests of the country. [15]

And since the underpinnings of the charter test had been

introduced by the 1935 Constitution and not earlier, it follows that
the test cannot apply to the petitioner, which was incorporated by
virtue of Act No. 1285, enacted on January 19, 1905. Settled is
the rule that laws in general have no retroactive effect, unless the
contrary is provided.[16] All statutes are to be construed as having
only a prospective operation, unless the purpose and intention of
the legislature to give them a retrospective effect is expressly
declared or is necessarily implied from the language used. In
case of doubt, the doubt must be resolved against the
retrospective effect.[17]

There are a few exceptions. Statutes can be given

retroactive effect in the following cases: (1) when the law itself so
expressly provides; (2) in case of remedial statutes; (3) in case of
curative statutes; (4) in case of laws interpreting others; and (5)
in case of laws creating new rights. [18] None of the exceptions is
present in the instant case.

The general principle of prospectivity of the law likewise

applies to Act No. 1459, otherwise known as the Corporation Law,
which had been enacted by virtue of the plenary powers of the
Philippine Commission on March 1, 1906, a little over a year
after January 19, 1905, the time the petitioner emerged as a
juridical entity. Even the Corporation Law respects the rights and
powers of juridical entities organized beforehand, viz:

SEC.
75. Any
or sociedad anonima formed, organized,
under

corporation
and existing
the

laws of the Philippine Islands and lawfully transactin

g business in the Philippine Islands on the date of the
passage of this Act, shall be subject to the provisions
hereof
so
far
as
such
provisions may be applicable and shall
be entitled at its option either to continue business as
such corporation or to reform and organize under and by
virtue of the provisions of this Act, transferring all
corporate interests to the new corporation which, if a
stock corporation, is authorized to issue its shares of
stock at par to the stockholders or members of the old
corporation according to their interests. (Emphasis
supplied).

As pointed out by the OSG, both the 1935 and 1987

Constitutions contain transitory provisions maintaining all laws
issued not inconsistent therewith until amended, modified or
repealed.[19]
In a legal regime where the charter test doctrine cannot be
applied, the mere fact that a corporation has been created by
virtue of a special law does not necessarily qualify it as a public
corporation.

What then is the nature of the petitioner as a corporate

entity? What legal regime governs its rights, powers, and duties?

As stated, at the time the petitioner was formed, the

applicable law was the Philippine Bill of 1902, and, emphatically,
as also stated above, no proscription similar to the charter test
can be found therein.

The textual foundation of the charter test, which placed a

limitation on the power of the legislature, first appeared in the
1935 Constitution. However, the petitioner was incorporated in
1905 by virtue of Act No. 1258, a law antedating the Corporation
Law (Act No. 1459) by a year, and the 1935 Constitution, by thirty
years. There being neither a general law on the formation and
organization of private corporations nor a restriction on the
legislature to create private corporations by direct legislation, the
Philippine Commission at that moment in history was well within
its powers in 1905 to constitute the petitioner as a private
juridical entity.

Time and again the Court must caution even the most
brilliant scholars of the law and all constitutional historians on the
danger of imposing legal concepts of a later date on facts of an
earlier date.[20]

The amendments introduced by C.A. No. 148 made it clear

that the petitioner was a private corporation and not an agency of
the government. This was evident in Executive Order No. 63,
issued by then President of the Philippines Manuel L. Quezon,
declaring that the revocation of the powers of the petitioner to
appoint agents with powers of arrest corrected a serious defect
in one of the laws existing in the statute books.

As a curative statute, and based on the doctrines so far

discussed, C.A. No. 148 has to be given retroactive effect, thereby
freeing all doubt as to which class of corporations the petitioner
belongs, that is, it is a quasi-public corporation, a kind of private
domestic corporation, which the Court will further elaborate on
under the fourth point.

Second, a reading of petitioners charter shows that it is not

subject to control or supervision by any agency of the State,
unlike government-owned and -controlled corporations. No
government representative sits on the board of trustees of the
petitioner. Like all private corporations, the successors of its
members are determined voluntarily and solely by the petitioner
in accordance with its by-laws, and may exercise those powers
generally accorded to private corporations, such as the powers to
hold property, to sue and be sued, to use a common seal, and so
forth. It may adopt by-laws for its internal operations: the
petitioner shall be managed or operated by its officers in
accordance with its by-laws in force. The pertinent provisions of
the charter provide:

Section 1. Anna L. Ide, Kate S. Wright, John L.

Chamberlain,
William
F.
Tucker,
Mary
S.
Fergusson, Amasa S. Crossfield, Spencer Cosby, Sealy
B. Rossiter, Richard P. Strong, Jose RoblesLahesa, Josefina
R. de Luzuriaga, and such other persons as may be
associated with them in conformity with this act, and their
successors, are hereby constituted and created a body
politic and corporate at law, under the name and style of
The Philippines Society for the Prevention of Cruelty to
Animals.

As incorporated by this Act, said society shall have

the power to add to its organization such and as many
members as it desires, to provide for and choose such
officers
as
it
may
deem
advisable,
and in such manner as it may
wish, and to remove members as it shall provide.

It shall have the right to sue and be sued, to use a

common
seal,
to
receive legacies and donations, to conduct social en
terprises for the purpose of obtaining funds, to levy
dues upon its members and provide for their collection
to hold real and personal estate such as may be
necessary for the accomplishment of the purposes of the
society, and to adopt such by-laws for its government as
may not be inconsistent with law or this charter.

xxxx

Sec. 3. The said society shall be operated under the

direction of its officers, in accordance with its by-laws in
force, and this charter.

xxxx

Sec. 6. The principal office of the society shall be

kept in the city of Manila, and the society shall have full
power to locate and establish branch offices of the society
wherever it may deem advisable in the Philippine Islands,
such branch offices to be under the supervision and
control of the principal office.

Third. The employees of the petitioner are registered and

covered by the Social Security System at the latters initiative,

and not through the Government Service Insurance System,

which should be the case if the employees are considered
government employees. This is another indication of petitioners
nature as a private entity. Section 1 of Republic Act No. 1161, as
amended by Republic Act No. 8282, otherwise known as the
Social Security Act of 1997, defines the employer:

Employer Any person, natural or juridical, domestic

or foreign, who carries on in the Philippines any trade,
business, industry, undertaking or activity of any kind and
uses the services of another person who is under his
orders as regards the employment, except the
Government and any of its political subdivisions,
branches or instrumentalities, including corporations
owned or controlled by the Government: Provided, That a
self-employed person shall be both employee and
employer at the same time. (Emphasis supplied)

Fourth. The respondents contend that the petitioner is a

body politic because its primary purpose is to secure the
protection and welfare of animals which, in turn, redounds to the
public good.

This argument, is, at best, specious. The fact that a certain

juridical entity is impressed with public interest does not, by that
circumstance alone, make the entity a public corporation,
inasmuch as a corporation may be private although its charter
contains provisions of a public character, incorporated solely for
the public good. This class of corporations may be considered
quasi-public corporations, which are private corporations that
render public service, supply public wants, [21] or pursue other
eleemosynary objectives. While purposely organized for the gain

or benefit of its members, they are required by law to discharge

functions for the public benefit. Examples of these corporations
are utility,[22] railroad, warehouse, telegraph, telephone, water
supply corporations and transportation companies. [23] It must be
stressed that a quasi-public corporation is a species of private
corporations, but the qualifying factor is the type of service the
former renders to the public: if it performs a public service, then it
becomes a quasi-public corporation. [24]

Authorities are of the view that the purpose alone of the

corporation cannot be taken as a safe guide, for the fact is that
almost all corporations are nowadays created to promote the
interest, good, or convenience of the public. A bank, for example,
is a private corporation; yet, it is created for a public
benefit. Private schools and universities are likewise private
corporations; and yet, they are rendering public service. Private
hospitals and wards are charged with heavy social
responsibilities. More so with all common carriers. On the other
hand, there may exist a public corporation even if it is endowed
with gifts or donations from private individuals.

The true criterion, therefore, to determine whether a

corporation is public or private is found in the totality of the
relation of the corporation to the State. If the corporation is
created by the State as the latters own agency or instrumentality
to help it in carrying out its governmental functions, then that
corporation is considered public; otherwise, it is private. Applying
the above test, provinces, chartered cities, and barangays can
best exemplify public corporations. They are created by the State
as its own device and agency for the accomplishment of parts of
its own public works.[25]

It is clear that the amendments introduced by C.A. No. 148

revoked the powers of the petitioner to arrest offenders of animal
welfare laws and the power to serve processes in connection
therewith.

Fifth. The respondents argue that since the charter of the

petitioner requires the latter to render periodic reports to the Civil
Governor, whose functions have been inherited by the President,
the petitioner is, therefore, a government instrumentality.

This contention is inconclusive. By virtue of the fiction that

all corporations owe their very existence and powers to the State,
the reportorial requirement is applicable to all corporations of
whatever nature, whether they are public, quasi-public, or private
corporationsas creatures of the State, there is a reserved right
in the legislature to investigate the activities of a corporation to
determine whether it acted within its powers. In other words, the
reportorial requirement is the principal means by which the State
may see to it that its creature acted according to the powers and
functions conferred upon it. These principles were extensively
discussed in Bataan Shipyard & Engineering Co., Inc. v.
Presidential Commission on Good Government.[26] Here, the
Court, in holding that the subject corporation could not invoke the
right against self-incrimination whenever the State demanded the
production of its corporate books and papers, extensively
discussed the purpose of reportorial requirements, viz:

x x x The corporation is a creature of the state. It is

presumed to be incorporated for the benefit of the public.
It received certain special privileges and franchises, and
holds them subject to the laws of the state and the
limitations of its charter. Its powers are limited by law. It

can make no contract not authorized by its charter. Its

rights to act as a corporation are only preserved to it so
long as it obeys the laws of its creation. There is a
reserve[d] right in the legislature to investigate its
contracts and find out whether it has exceeded its
powers. It would be a strange anomaly to hold that a
state, having chartered a corporation to make use of
certain franchises, could not, in the exercise of
sovereignty, inquire how these franchises had been
employed, and whether they had been abused, and
demand the production of the corporate books and
papers for that purpose. The defense amounts to this,
that an officer of the corporation which is charged with a
criminal violation of the statute may plead the criminality
of such corporation as a refusal to produce its books. To
state this proposition is to answer it. While an individual
may lawfully refuse to answer incriminating questions
unless protected by an immunity statute, it does not
follow that a corporation vested with special privileges
and franchises may refuse to show its hand when
charged
with
an
abuse
of
such
privileges.
(Wilson v. United States, 55 Law Ed., 771, 780.)[27]

WHEREFORE,
the
petition
is GRANTED.
Petitioner
is DECLARED a private domestic corporation subject to the
jurisdiction of the Securities and Exchange Commission. The
respondents are ENJOINED from investigating, examining and
auditing the petitioner's fiscal and financial affairs.

SO ORDERED.