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Republic ofthe Philippines S 9

Wouse of Representatives
Queson City, Metro Manila

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Seventeenth Congress

First Regular Session

House Bill No. 0914

Introduced by HON, ROMEO M. ACOP

EXPLANATORY NOTE

On June 18, 1963, Republic Act No. 3518 was passed creating the Philippine
Veterans Bank (PVB), owned by and operated for and in behalf of the veterans,
their widows, orphans or compulsory heirs.

The said law also created the Board of Trustees for Veterans of World War II
(BTVWWII) which was entrusted with the administration of the twenty per cent
(20%) of the net profits of the PVB for disposition and shall be available for 'grants-
in-aid' to veterans, their widows, orphans, or compulsory heirs, for educational,
social, charitable, and rehabilitation purposes, and for such other purposes
beneficial to the veterans.

According to Philippine Veterans Affairs Office (PVAO) Administrator Lt. Gen.
Ernesto Carolina, AFP (Ret.), as of 2016, the PVB has remitted roughly P 900
million to BTVWWII pursuant to RA 3518. However, the BTVWII refuses to undergo
government audit to account for the amount claiming it is a private entity and that
the funds entrusted to it are private funds.

The same issues have also been thoroughly discussed in the 16" Congress
that resulted to the adoption of House Resolution No. 206 which urged the
Commission on Audit (COA) to conduct an audit on the funds and operations of the
BTVWWII and to determine whether it has complied with government accounting
and disbursement procedures. The COA unit assigned attempted to conduct the
audit twice, but the BTVWWII continued to refuse audit and reiterated their
position that it is a private entity and that the funds entrusted to it are not public
funds. This despite the Opinion of the Department of Justice (No. 60, Series of
2014) stating that BTVWII is a public body citing the ruling in the case of
Veterans Federation of the Philippines vs. Angelo Reyes (GR No. 155027,
February 28, 2006), to wit :

“The definition of a public office, that it Is “the right, authority and
duty, created and conferred by law, by which, for a given period,


either fixed by law or enduring at the pleasure of the resting

‘In several cases, we have dealt with the issue of whether certain

specific activities can be classified as sovereign functions. These

cases, which deal with activities not immediately apparent to be

sovereign i oe upheld ole public_sovereign nature _of
ations her romot

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“The protection of the interests of war veterans Is not only meant to
promote social justice, but is also intended to reward patriotism. All
of the functions in Section 4 concern the well-being of war veterans,
‘our countrymen who risked their lives and lost their limbs in fighting
for and defending our nation. It would be injustice of catastrophic
proportions to say that it is beyond sovereignty’s power to reward
the people who defended her.’

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“The functions of the VFP are executive functions, designed to
implement not Just the provisions of Rep. Act No. 2640, but also,
sh wore inpestanety, the Constitutional mandate for the State to

In the present case, pursuant to RA 3518, the main function of the BTVWWII
is to hold in trust a certain portion of the net profits of the PVB as Trust Fund to be
available for grants-in-aid to veterans, their widows, orphans or compulsory heirs,
for educational, social, charitable and rehabilitation purposes, to organizations
doing services for the cause of the veterans, and for such other purposes beneficial
to the veterans. The functions being exercised by the BTVWWII, similar to the VFP,
fall within the category of sovereign functions in pursuit of the Constitutional
mandate to provide care and assistance to war veterans and their surviving spouses
and children. Hence, applying the ruling in VFP vs. Reyes, the BTVWWII can be
considered a public office.

Moreover, in Republic v. COCOFED, (423 Phil. 735, 2001), the Supreme
Court held that the Coconut Levy Funds are public funds because they were meant
to be for the benefit of the coconut industry, one of the major industries
supporting the national economy, and its farmers. The same is true with regard to
the BTVWWII trust funds. No less public is the use of the funds for "grants-in-aid"
to veterans, their widows, orphans or compulsory heirs, for educational, social,
charitable, and rehabilitation purposes, and for such other purposes beneficial to
the veterans.

In the same vein, in VFP vs. Reyes, the Court stated that the contributions
from affiliate organizations of the VFP can hardly be regarded as enforced
contributions as to be considered taxes. They are more in the nature of donations


which have always been recognized as a source of public funding. The ruling is
equally applicable in the case of the 20% share from the net profits of the PVB
entrusted to BTVWWII, notwithstanding the declaration of the Court that PVB is a
private commercial bank in the case of Philippine Veterans Bank Employees
Union vs. Philippine Veterans Bank.( GR No. 67125, August 24, 1990)

This bill seeks to erase all doubts as to the character of the BTVWWII and on
the nature of the trust funds under the Board's administration pursuant to RA
3518, and unequivocally declare the Board as a public office and its funds as
public funds. By doing so, BTVWWII will no longer have any excuse to allow COA
to audit the funds and their disbursements for the sake of transparency and public
accountability. Lest we lose sight of the fact that ultimately the funds are intended
for the promotion of the welfare and interests of Filipino war veterans, their
spouses and children.

For the foregoing reasons, the immediate consideration and approval of the
bill is earnestly urged.

HON; ROMEO Mj ACOP
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2” District, Antipolo City


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Republic of the Philippines
Bouse of Representatives
Queson City, Metro Manila
Seventeenth Congress
First Regular Session

House Bill No. 9014

Introduced by HON. ROMEO M. ACOP

AN ACT
DECLARING THE BOARD OF TRUSTEES OF THE VETERANS OF WORLD
WAR II AS A PUBLIC OFFICE AND THE FUNDS ENTRUSTED TO IT AS
PUBLIC FUNDS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO.
3518

Be it enacted by the Senate and the House of Representatives of the
Republic of the Philippines in Congress assembled :

SECTION 1. Section 23 of Republic Act No. 3518, also known as ‘An Act
Creating the Philippine Veteran’s Bank, and for Other purposes, is hereby
amended to read as follows :

‘Section 23. Board of Trustees of World War II. - There is hereby
created a Board of Trustees for the veterans of Worid War II A
PUBLIC OFFICE to be known as “The Board of Trustees of the
Veterans of World War II", consisting of eleven (11) members to be
selected from among the veterans of World War II by the Supreme
Council of the Veterans Federation of the Philippines organized
pursuant to Republic Act Numbered Twenty-six hundred and forty.

The Board of Trustees shall be organized within ninety (90) days after
the approval of this Act. Immediately after its organization the
members of the Board of Trustees shall elect from among themselves
a Chairman and a Vice-Chairman. The members of the Board of
Trustees shall serve without compensation other than actual and
necessary expenses incurred either in attendance upon meetings of
the Board or upon other official business authorized by resolution
thereof, but a vote of the majority of all the members shall be
necessary to authorize the disposal of the funds held by the Board.

The Board shall appoint a secretary and such necessary other officials
and employees and fix their compensations.’


SECTION 2. Section 22 of the same is likewise hereby amended to read
as follows :

‘Section 22. Allocation of net Profits. - At the close of each calendar
year, the Bank shall determine the net result of its operations, in the
calculation of which, adequate allowances shall be made for probable
losses, and the net profit arrived thereat shall be distributed as
follows:

(a) Twenty (20%) per cent of such net profit shall accrue to the
reserve account: Provided, That should the accumulated reserves
equal to or in excess of the authorized capital of the Bank, the
twenty per cent herein authorized to be accumulated shall be
distributed under the subsection immediately following:

(b) From the remaining eighty (80%) per cent of the net profit shall be
deducted the guaranteed earning of the preferred shares of stock
owned by individual veterans, their widows, orphans or
compulsory heirs: Provided, That the share in the net profits
corresponding to the Republic of the Philippines shall first be
applied in payment of its capital stock subscription, until said
shares shall have been fully paid. Thereafter, twenty per centum
of the net profits after deducting the guaranteed earnings of the
preferred shares shall be paid in cash to the Board of Trustees as
hereinafter provided in Section 23 hereof for disposition and shall
be available for ‘grants-in-aid’ to veterans, their widows, orphans,
or compulsory heirs, for educational, social, charitable, and
rehabilitation purposes, to organization doing service for the cause
of the veterans, and for such other purposes beneficial to the
veterans.

THE TRUST FUND HELD BY THE BOARD OF TRUSTEES AS
PROVIDED FOR IN THIS SUB-SECTION, AND ALL OTHER
FUNDS HELD BY THE BOARD, ARE HEREBY DECLARED AS
PUBLIC FUNDS AND NOTHING HEREIN SHALL BE
CONSTRUED TO MEAN OTHERWISE.

The remaining profits shall be paid as dividends on common shares
held by the individual veterans as provided in Section three of this
Act.

SECTION 2. Separability Clause. - If any portion or provision of this
Act or the application thereof shall be declared invalid or unconstitutional,
the validity of other parts or provisions not affected thereby shall continue to
be in full force and effect.

SECTION 3. Repealing Clause. - A\| |aws, decrees, executive issuances,
rules and regulations inconsistent with this Act are hereby repealed or
modified accordingly.

SECTION 4. Effectivity Clause. - This Act shall take effect fifteen (15)

days after its publication in at least two (2) national newspapers of general
circulation.

Approved.