GR No 169752 PSPCA Vs COA

G.R. No.
169752, September 25, 2007
PHILIPPINE SOCIETY FOR THE PREVENTION

OF CRUELTY TO ANIMALS, Petitioners,
vs.
COMMISSION ON AUDIT, DIR. RODULFO J.
ARIESGA (in his official capacity as Director of
the Commission on Audit), MS. MERLE M.
VALENTIN and MS. SUSAN GUARDIAN (in their
official capacities as Team Leader and Team
Member, respectively, of the audit Team of the
Commission on Audit), Respondents.
FACTS:
By the virtue of Act No. 1285, PSPCA was incorporated as a

juridical entity by the Philippine Commission to enforce laws
relating to cruelty inflicted upon animals or the protection of
animals in the Philippine islands, and to do and perform all
things which may tend in any way to alleviate the sffering of
animals and promote their welfare and was composed of
animal afficionados and animal propagandists.
By the time of the enactment of Act No. 1285 year 1905, the
original Corporation Law (Act No. 1459) was not yet in
existence or any other general law under which may be
organized or incorporated, nor a Securities and Exchange
Commision.
In order to enhance its powers, PSPCA was initially imbued with 1)
power to apprehend violators of animal welfare laws and 2) share
of 50% of the fines imposed and collected through its efforts
pursuant to the violators of related laws.
However, Commonwealth Act No. 148 recalled the powers of

PCSPA to make arrests and to retain a portion of the fines collected
for the violation of animal-related laws. Under Commonwealth Act
148, the fines collected for the violation shall accrue to the general
funds of the Municipality where the offense was committed.
Then, Executive Order No. 6 issued by President Quezon (1936)

deprives the agents of PSPCA of their power and directing the
constabulary, Mayor, and Municipal President to prosecute
offenders against laws enacted preventing cruelty to animals.
In 2003, an audit team from Commission on Audit (COA)
visited the office of PSPCA to conduct an audit survey.
PSPCA demurred on the ground that it was a private entity
not under the jurisdiction of COA.
ISSUE:
Whether the petitioner qualifies as a government agency

that may be subject to audit by COA.
RULING:
The Supreme Court declared PSPCA as a private domestic

corporation subject to the jurisdiction of the Securities and
Exchange Commision.
First, the court agrees that the “Charter Test” cannot be applied.
The ‘Charter Test’ provides that the 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 GSIS.
And since the “charter test” had been introduced by the 1935
Constitution and not earlier, it follows that the test cannot
apply to PSPCA, 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. 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.

Second, a reading of PSPCA’s charter shows that it is not
subject to control or supervision by any agency of the State,
unlike GOCCs. No government representative sits on the
board of trustees of PSPCA.
Like all private corporations, the successors of its members

are determined voluntarily and solely by the PSPCA 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: PSPCA shall be managed or operated by its
officers “in accordance with its by-laws in force.”
Third, the employees of PSPCA are registered and covered
by the Social Security System at the latter’s initiative, and
not through the GSIS, which should be the case if the
employees are considered government employees. This is
another indication of petitioner’s nature as a private entity.

Fourth, COA contend that PSPCA 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 not tenable.
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, 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, railroad, warehouse,
telegraph, telephone, water supply corporations and
transportation companies.
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.
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 latter’s 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.
Fifth, COA argued that since the charter of PSPCA requires the
latter to render periodic reports to the Civil Governor, whose
functions have been inherited by the President, PSPCA 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
corporations—as 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.
Presented by:
Christine May Estorque-Vailoces
JD-4, FUCLJ

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G.R. No.

169752, September 25, 2007

PHILIPPINE SOCIETY FOR THE PREVENTION

By the virtue of Act No. 1285, PSPCA was incorporated as a

However, Commonwealth Act No. 148 recalled the powers of

Then, Executive Order No. 6 issued by President Quezon (1936)

Whether the petitioner qualifies as a government agency

The Supreme Court declared PSPCA as a private domestic

Settled is the rule that laws in general have no retroactive

Like all private corporations, the successors of its members

The fact that a certain juridical entity is impressed with

It must be stressed that a quasi-public corporation is a

A bank, for example, is a private corporation; yet, it is

If the corporation is created by the State as the latter’s own

Applying the above test, provinces, chartered cities, and

By virtue of the fiction that all corporations owe their very

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