Mercado: Binay repeatedly blocked COA audit of BSP

MANILA, Philippines—Vice President Jejomar Binay as head of the Boy Scout of the Philippines repeatedly blocked efforts by the Commission on Audit (COA) to scrutinize the funds of the BSP, according to former Makati City Vice Mayor Ernesto Mercado.

“The Boy Scouts had just reelected Binay to his second term as their president and he was then mayor of Makati City when he actively opposed the COA’s bid to audit the funds of the BSP,” Mercado told the Inquirer.

Mercado said that in a letter to the COA which was submitted to the Supreme Court, Binay argued the COA had no audit jurisdiction over the BSP because the organization did not receive any government funds.

Mercado, who was then the senior vice president of the BSP, said that Binay also wrote the COA opposing its resolution subjecting the Boy Scout organization to an audit.

Struck down by SC

“If Vice President Binay had his way, the deal between the Boy Scouts of the Philippines and Alphaland, and other deals entered into by the BSP, will be buried from public and government scrutiny, but his plans were struck down by the Supreme Court,” Mercado said.

In a June 7, 2011, decision, the Supreme Court sided with the COA that the BSP was a government agency with its funds subject to COA audit.

“Be it resolved furthermore, that for purposes of audit supervision, the Boy Scouts of the Philippines shall be classified among the government corporations belonging to the Educational, Social, Scientific, Civic and Research Sector under the Corporate Audit Office I, to be audited, similar to the subsidiary corporations, by employing the team audit approach,” the high court said.

Mercado said it was around that time that the BSP and Sime Darby (the previous mother company of Silvertown before it was sold to Alphaland) were entering into a compromise agreement to amicably settle their court case over the lease.

In its decision, the high court said that on Aug. 19, 1999, the COA issued Resolution No. 99-011 stating that the BSP was created as a public corporation under Commonwealth Act No. 111 as amended by Presidential Decree No. 460 and Republic Act No. 7278, and was therefore a government instrumentality. It then resolved to conduct an annual financial audit and, to quote the resolution, “express an opinion on whether the financial statements which include the balance sheet, the income statement and the statement of cash flows present fairly its financial position and results of operations.”

Binay, however, argued that the Boy Scout organization was not a government agency but an attached agency of the Department of Education.

“It may be argued also that the BSP is not an agency of the government. The 1987 Administrative Code, merely referred the BSP as an attached agency of the DECS as distinguished from an actual line agency of departments that are included in the national budget. The BSP believes that an attached agency is different from an agency,” Binay said.

Fell within jurisdiction

The COA, however, argued that “the BSP is a public corporation created under Commonwealth Act No. 111 dated Oct. 31, 1936, and whose functions relate to the fostering of public virtues of citizenship and patriotism and the general improvement of the moral spirit and fiber of the youth.” Thus, the COA said the BSP fell within its audit jurisdiction.

The COA said that “any attempt to classify the BSP as a private corporation would be incomprehensible since no less than the law which created it had designated it as a public corporation and its statutory mandate embraces performance of sovereign functions.”

Mercado explained that in 2001, the BSP filed before the COA a petition for review of the latter’s resolution.

“Coincidentally, it was a few years after this period, around 2005, that the joint sale agreement between the Boy Scouts and Sime Darby had begun. It was also in 2001 that Binay became president again of the Boy Scouts,” Mercado said.